ermenegildo zegna annual report ermenegildo zegna annual report year ended december table contents page letter chairman part board report introduction preparation report certain defined terms cautionary note regarding forward looking statements company business overview history development company business overview property plants equipment employees sustainability financial overview selected consolidated financial data results operations cash flows management discussion analysis financial condition results operations overview trends uncertainties opportunities results operations revenues cost sales gross profit selling general administrative expenses marketing expenses financial income financial expenses foreign exchange losses result investments accounted using equity method income taxes results segment critical accounting estimates non ifrs financial measures liquidity capital resources overview cash flows capital expenditure contractual obligations net financial indebtedness cash surplus outlook risk management risk factors risk management risk appetite control framework risk factors corporate governance report introduction board general meetings share capital company group values compliance code ethics compliance dcgc report non executive directors compensation report remuneration policy historical compensation major shareholders related party transactions response measures part financial statements consolidated financial statements company financial statements part iii information auditors report information auditors report letter chairman dear shareholders challenging yet transformative year group persistent inflationary pressures ongoing wars rising geopolitical tensions continued weigh global outlook companies prospect rising tariffs trade barriers added uncertainty leading questions pace consistency growth sector amid complexity remained focused reinforcing group long term used moment take bold decisions even caused short term challenges believe changes necessary set stronger path towards future group revenues reached billion increase adjusted ebit million adjusted ebit margin profits reached million year invested million capex develop retail network reinforcing group infrastructure strengthening state art filiera integrated supply chain eponymous brand zegna heart group generated billion revenues contributing group total revenues year continued reinforce zegna leadership timeless luxury menswear segment launched villa zegna immersive experience engage key clients around brand legacy core values starting milan april villa zegna traveled shanghai may new york september acting testament brand journey successful launch vellus aureum finest rarest highest quality wool world early proof strength brand relentless pursuit ultimate quality innovation customer centricity commitment continues zegna brand vision promise future next like talk thom browne following five years impressive growth year realignment brand decided streamline wholesale business accelerate brand shift towards dtc context brand exposed industry wide slowdown luxury segment china combined factors led revenues declining million wholesale consolidation continue confident long term strategy thom browne bolster brand future growth profitability tom ford fashion iconic business added group first fully consolidated twelve month period reached revenues million milestone year brand september alongside estée lauder companies welcomed haider ackermann tom ford new creative director haider renowned sophisticated modern touch characterized elegant tailoring innovative use materials colors first show paris unanimously acclaimed one outstanding fall winter fashion calendar receiving praise media industry insiders alike operational side continued strengthen tom ford fashion team enhance infrastructure ensure well prepared meet ambitious goals brand finally filiera group one kind house supply chain continued strengthen internal production capacity know important shoe factory project parma progressing well additionally accademia dei maestri internal school established preserve transmit group invaluable skills across generations proudly nominated first maestri esteemed teachers custodians unique knowledge dedicated conveying future generations also challenging year luxury sector equity markets including group context monterubello group holding company owned members zegna family acquired three million additional shares based firm belief best investment family could make invest group also testament commitment ongoing development company family led three generations fourth already leadership positions want continue grow generations come looking ahead macroeconomic challenges geopolitical tensions shaped expected continue backdrop vision remains clear based three fundamental principles protect authenticity brands values legacy valuable assets crucial protect strengthen remains top priority prioritize work continue focus key priorities shape long term success brands remain agile believe need flexible possible path reaching long term goals ready adapt work efficiencies take advantage synergies wherever find custodian three authentic brands well unparalleled filiera firmly believe building luxury group journey takes time patience also requires swift decisive execution know actions took poised take reinforce position luxury industry let conclude expressing deepest appreciation whole team everyone involved group passion dedication greatest reward every day feel proud chairman ceo group would also like thank members board directors valuable insights investors ongoing thoughtful collaboration support volatile market together steadfast determination shared vision continue build legacy shaping even stronger group step step ermenegildo gildo zegna chairman ceo milan may part board report introduction preparation report annual report prepared ermenegildo zegna management approved ermenegildo zegna board directors contains inter alia board report pursuant section dutch civil code dcc information added pursuant dutch corporate governance code dcgc includes non executive directors report iii ermenegildo zegna dutch statutory annual accounts defined section dcc information added pursuant section dcc extent relevant financial statements included sections board report prepared accordance international financial reporting standards adopted european commission ifrs part book dcc report ermenegildo zegna independent auditor deloitte accountants included section annual report ermenegildo zegna company results cross border conversion whereby december italian limited company ermenegildo zegna holditalia means execution dutch notarial deed cross border conversion amendment articles association converted dutch public limited liability company naamloze vennootschap transferred legal seat italy netherlands amended articles association upon company changed name ermenegildo zegna conversion certain defined terms report terms zegna company refer ermenegildo zegna dutch public limited liability company naamloze vennootschap terms ermenegildo zegna group group refer company together consolidated subsidiaries unless otherwise specified terms refer group company context may require report affiliate means respect person person directly indirectly one intermediaries controls controlled common control person term control means possession directly indirectly power direct cause direction management policies person whether ownership voting securities contract otherwise terms controlled controlling meanings correlative thereto articles association means articles association company audit committee means audit committee board board means company board directors board regulations means regulations board amended supplemented time time business combination means business combination company iiac completed december business combination agreement means certain business combination agreement dated july among iiac company zegna merger sub amended supplemented time time closing means closing business combination closing date means december compensation committee means compensation committee board conversion means cross border conversion whereby december company means execution dutch notarial deed cross border conversion amendment articles association converted dutch public limited liability company naamloze vennootschap transferred legal seat italy netherlands amended articles association result company assumed current legal name ermenegildo zegna dcc means dutch civil code burgerlijk wetboek dcgc means dutch corporate governance code director means executive director non executive director disposition meaning set forth section trends uncertainties opportunities disposition certain businesses doss means directly operated stores dtc means direct consumer refers retail channel includes directly managed full price boutiques outlets online business exchange act means united states securities exchange act amended executive director means executive member board general meeting means corporate body consists shareholders company persons meeting rights also meeting shareholders company persons meeting rights assemble case may governance sustainability committee means governance sustainability committee board hedged positions means hedging positions arrangements effectively transfer economic interest member sponsor group company third party forward sale contracts provided definition hedged positions shall include hedging positions arrangements economic interest member sponsor group company retained pledges margin loans minimize exposure certain risks independent business operations company currency exchange swaps marginally cap limit upside downside risk member sponsor group maintaining material economic exposure puts calls collars determined good faith board member sponsor group iiac means investindustrial acquisition corp cayman islands exempted company iiac sponsor means investindustrial acquisition corp limited partnership incorporated england wales lead non executive director means director serving lead non executive director loyalty register means separate part company shareholder register instrumental company loyalty voting structure minimum holding requirement means beneficial ownership term defined rule exchange act sponsor group least issued outstanding ordinary shares excluding hedged positions evidenced iiac sponsor writing monterubello means monterubello italian società semplice non executive director means non executive member board nyse means new york stock exchange ordinary shares means ordinary shares nominal value per share company person means individual partnership corporation limited liability company joint stock company unincorporated organization association trust joint venture similar entity whether legal entity sarbanes oxley act means sarbanes oxley act amended sec means united states securities exchange commission securities act means united states securities act amended senior management team means group senior management special voting shares means collectively special voting shares special voting shares special voting shares special voting shares means special voting shares class nominal value per share company special voting shares means special voting shares class nominal value per share company special voting shares means special voting shares class nominal value per share company sponsor group means iiac sponsor together affiliates sponsor nominee means non executive director nominated iiac sponsor accordance articles association terms conditions special voting shares means terms conditions apply issuance allocation acquisition conversion sale holding repurchase transfer special voting shares certain aspects registration ordinary shares loyalty register tfi acquisition means acquisition tom ford international tfi described section history development company zegna merger sub means cayman cayman islands exempted company cautionary note regarding forward looking statements report contains forward looking statements forward looking statements provide current expectations forecasts future events company forward looking statements include statements company expectations beliefs plans objectives intentions assumptions statements historical facts words phrases anticipate believe continue could estimate expect intend may might objective ongoing plan potential predict project would similar words phrases negatives words phrases may identify forward looking statements absence words necessarily mean statement forward looking examples forward looking statements report include limited statements regarding group operations cash flows financial position dividend policy forward looking statements subject known unknown risks uncertainties based potentially inaccurate assumptions could cause actual results differ materially expected implied forward looking statements risks uncertainties include limited ability group safeguard recognition integrity reputation brands identify respond new changing customer preferences impact public health crises covid pandemic group business disruptions arising political social economic instability geopolitical tensions civil unrest including current conflict ukraine sanctions imposed onto russia ability group successfully implement strategy including respect newly acquired tom ford fashion business ability group achieve expected benefits businesses may acquire disruptions group manufacturing logistics facilities well doss risks related operation group doss including result difficulties renewing existing lease agreements increase rental charges decline sales operation points sale third parties wholesale channel ability group accurately forecast consumer demand fluctuations price quality disruptions availability raw materials used group products commodities energy could cause group incur increased costs disrupt manufacturing processes prevent delay group meeting customers demand ability group negotiate maintain renew license branding agreements high end third party brands shifts travel patterns declines travel volumes ability attract retain key senior skilled personnel preserve craftsmanship skills group ability protect intellectual property rights disruptions breaches group information technology systems compromising group business operations personal information group customers including result cybercrimes fact market price company securities may volatile due variety factors ability develop maintain effective internal controls company identified material weaknesses internal control financial reporting company fails remediate material weaknesses maintain effective system internal controls could result material misstatement company consolidated financial statements may subject adverse regulatory consequences affect investor confidence result price securities ability access capital markets forms financing future may impaired changes local economic business regulatory social political conditions well changes general economic conditions significant inflation demand luxury goods imposition new trade restrictions tightening existing restrictions exchange rate fluctuations interest rate changes credit risk market risks high levels competition luxury goods market compliance laws including laws regulation related intellectual property competition product safety packaging labeling import processing certain raw materials finished goods data protection privacy limits cash payments sanctions workers health safety human rights environment risks related climate change environmental impacts well increased focus regulators stakeholders environmental social governance matters changes trade policy imposition tariffs enactment tax reforms changes laws regulations factors discussed elsewhere report section risk factors actual results could differ materially anticipated forward looking statements many reasons including factors described section risk factors report accordingly rely forward looking statements speak date report company undertakes obligation publicly revise forward looking statement reflect circumstances events date report reflect occurrence unanticipated events although company believes expectations reflected forward looking statements reasonable time made cannot guarantee future results level activity performance achievements moreover neither company person assumes responsibility accuracy completeness forward looking statements carefully consider cautionary statements contained referred section connection forward looking statements contained report subsequent written oral forward looking statements may issued company persons acting behalf company business overview history development company ermenegildo zegna dutch public limited liability company naamloze vennootschap parent company ermenegildo zegna group company results cross border conversion ermenegildo zegna holditalia italian joint stock company società per azioni december transferred legal seat italy netherlands amended articles association ermenegildo zegna group named founder ermenegildo zegna grandfather group current chairman chief executive officer established trivero biella northern italy group born vision weave world finest fabrics create future craftsmanship community nature coexist perfect harmony vision beginning twentieth century ermenegildo built world class wool mill also thriving community schools hospital gym facilities employees families carved roads mountains connect people opportunities long sustainability became necessity began reforesting barren landscape transforming lush vibrant oasi zegna living testament deep respect nature years group business guided commitment entrepreneurship quality responsibility century later spirit endures ermenegildo zegna group custodian three authentic brands unique italian filiera integrated supply chain also custodians greater purpose preserve environment enhance world around ermenegildo zegna group fact believe true luxury create create integrity care promise give back business model adopted within group committed vertical integration widening span activities within industry bold vision quest innovation beauty underpin expansion investing culture beauty promote knowledge skills acquisition human capital social capital trust well symbolic capital identity recognition intellectual capital social relationship capital commitment inspires everything technology use create products constant dialogue customers suppliers shareholders stakeholders mission carried forward three generations zegna family led group since foundation small wool mill trivero zegna internationalization strategy continued opening first boutique paris followed boutiques milan new york london tokyo beijing hong kong making ermenegildo zegna one first luxury brands establish presence greater china company incorporated italian joint stock company name ermenegildo zegna holditalia conversion limited partnership called ermenegildo zegna figli third generation zegna family entered business angelo son ermenegildo gildo zegna aldo son paolo became chief executive officers gildo zegna became sole chief executive office paolo zegna elected chairman ceo leadership company began strategy brand extension organically strategic acquisitions well full verticalization supply chain years group acquired equity interests number specialized textiles manufacturers illustrated image thus creating made italy luxury textiles platform enhancing control textile supply chain percentages indicated image refer equity interests acquired made italy luxury textiles platform acquisitions group expansion continued acquisition thom browne recently tom ford fashion business group acquired interest thom browne leading fast growing luxury brand focused high end menswear womenswear founded thom browne based new york june company acquired additional interest thom browne june thom browne exercised put option sell company additional thom browne inc parent company thom browne group total consideration million thousand following group holds thom browne group april company completed acquisition tom ford international tfi tfi acquisition acquired company owns operates tom ford fashion business part transaction sole ownership tom ford brand trademarks intellectual property rights acquired estée lauder companies inc elc tfi become long term licensee elc tom ford men women fashion well accessories underwear fine jewelry childrenswear textile home design products virtue long term licensing collaboration agreement elc years subject renewal tfi option one year period subject certain minimum performance conditions group charge end end tom ford fashion business collection creation development production merchandising well retail wholesale distribution tom ford fashion business group operates network directly operated stores globally december completion tfi acquisition group already owned tfi fully owned subsidiary holding inc tfi acquisition acquired remaining equity interest transaction implied value acquired stake tfi million cash cash free debt free basis assuming normalized working capital information relating purchase price allocation tfi acquisition see note business combinations consolidated financial statements included elsewhere within annual report result tfi acquisition group also obtained tizeta tizeta previously held interest accounted investment using equity method remaining interest owned tfi acquired group tfi acquisition new york stock exchange listing july company entered business combination agreement certain agreements connection business combination business combination consummated december result december company ordinary shares started trading nyse immediately prior consummation business combination closing date company time ermenegildo zegna holditalia italian joint stock company implemented conversion became dutch public limited liability company naamloze vennootschap upon changed name ermenegildo zegna underwent share split warrant redemption immediately following business combination company public warrants outstanding private placement warrants outstanding january company announced redemption warrants following warrants exercised cashless basis warrants exercised cash resulting issuance aggregate ordinary shares remaining outstanding warrants redeemed february business overview ermenegildo zegna group global luxury player leader high end menswear business internationally recognized unique supply chain called filiera made finest italian textile producers fully integrated group unique luxury manufacturing capabilities grounded centenary thoughtful vision spirit think act inclusively responsibly ermenegildo zegna group years continued uphold legacy true innovator uncompromising focus quality caring protection environment nurturing communities around business heritage italian craftsmanship quality innovation key ingredients three complementary brands zegna thom browne tom ford fashion group reach expands touch different communities absolute iconic luxury eponymous brand zegna modern tailoring thom browne luxury glamour tom ford fashion brands group designs produces markets distributes luxury menswear footwear leather goods accessories luxury womenswear thom browne tom ford fashion brands children clothing thom browne brand three brands also selected third party license agreements specific product categories thanks filiera group covers entire value chain production finest raw materials brands lanificio ermenegildo zegna dondi bonotto tessitura novara tessitura ubertino well minority owned filati biagioli modesto luigi fedeli figlio finished products realized luxury manufacturing facilities group operates three segments zegna segment comprising three product lines zegna brand textile mainly relates agreements third party brands thom browne segment following tfi acquisition tom ford fashion segment following charts show consolidated revenues segment years ended december consolidated revenues segment geographic area millions except percentages ______________________ note revenues excluding intercompany eliminations equal million million million group distributes products world wide well balanced presence among regions following charts provide breakdown consolidated revenues geographic area years ended december ______________________ note emea comprises europe middle east africa americas includes united states america canada mexico brazil central south american countries rest apac includes japan south korea singapore thailand malaysia vietnam indonesia philippines australia new zealand india southeast asian countries revenues excludes revenues mainly royalties thousand thousand thousand industry industry information contained section based bain altagamma luxury goods worldwide market study fall bain altagamma study unless otherwise indicated ermenegildo zegna group operates personal luxury goods market includes following product segments accessories jewelry beauty apparel watches product primarily focus apparel accessories segments personal luxury goods market luxury textiles market accounts less group consolidated revenues eliminations discussed section demand personal luxury goods market especially absolute luxury segment characterized low price sensitivity instead demand likely driven tangible intangible factors fuel brand equity desirability brand equity made several important components including heritage exclusivity recognizability quality experience according bain altagamma study global personal luxury goods market total estimated value year approximately billion steady growth two decades compound annual growth rate cagr shaped rebound followed covid pandemic led continued growth first time years since crisis excluding decline caused covid pandemic personal luxury goods market expected report decrease versus current exchange rates chart sets forth evolution sales global personal luxury goods market data estimate personal luxury goods market evolution source bain altagamma luxury goods worldwide market study fall dated november bain altagamma study estimates personal luxury goods market reach range growth constant exchange rates compared china rest asia excluding china japan leading growth expected yoy respectively addition bain altagamma study estimates market reach growth constant exchange rates compared estimated level online channel main driver representing one third total compared approximately growing addressable market paired growing polarization wealth expected main driver growth sector personal luxury goods market characterized significant barriers entry among others brand heritage embodied unreplaceable assets like brand history values dna brand equity perception uniqueness high reputation brand built time among others important investments advertising iii know characterized many aspects saper fare savoir faire starting design innovation capacity ability provide products superior quality utmost experience clients high end distribution network embraces prime locations important highly competitive luxury streets malls competitive strengths ermenegildo zegna group operate personal luxury goods market although arena compete global companies believe unique advantages successfully compete strengthen presence leading position heritage italian craftsmanship undisputed legacy along portfolio complementary brands significant untapped growth potentials represent strong prime assets group believe following key competitive strengths primary drivers group historic success continue pillars future growth strategy heritage since foundation lanificio ermenegildo zegna figli lanificio lanificio ermenegildo zegna beginning past century name zegna synonymous quality style innovation men fashion continues true zegna brand ermenegildo zegna group luxury menswear leadership ermenegildo zegna group consolidated leadership position luxury menswear rooted years history undisputed legacy along portfolio unique complementary brands constitutes group main competitive strength zegna evolved one recognized brands men tailoring become icon brand men timeless luxury segment top class retail network important luxury streets shopping malls addition thom browne tom ford fashion strengthened group leadership capturing distinctive complementary segments clientele leveraging group textile manufacturing know luxury filiera ermenegildo zegna group controls integrated luxury textiles manufacturing chain vertically integrated sourcing finest raw material production high quality garments historical lanificio ermenegildo zegna well recent acquisitions dondi bonotto tessitura ubertino minority interests filati biagioli modesto group built house textiles platform provides unique competitive hedge term innovation capacity research finest highest performing fabrics best quality importance innovation also testified employees dedicated research development activities textile platform integrated state art manufacturing capabilities represents key competitive advantage group offer brands portfolio also offers significant barrier entry strategic made measure business group offers personalized products made measure misura bespoke services take customization higher level three brands best class lead time goes weeks key stores weeks management believes breadth offering lead times well service quality experience provided customers setting standards industry services enable cultivate meaningful client relationships develop loyal customer base drive new customer engagement complementary portfolio uniquely positioned luxury brands ermenegildo zegna group made three brands complementary across styles occasions use aesthetic zegna group eponym brand leading brand men timeless luxury segment authenticity represents brand core true value brand authenticity stands years unique heritage also responsible vision started since foundation passed generations ensuring giving back responsibility towards environment community well remain key values brand expression vision freely accessible natural reserve covering approximately square kilometers small village trivero group originated peaks biella alps italy area created group founder years ago rebranded oasi zegna oasi zegna continues important source inspiration zegna brand collections brand iconic products thom browne distinctive craftsmanship undisputed tailoring know proud community key ingredients brand success men womenswear thom browne wide range luxury fashion clients appreciate unique design quality tom ford fashion added group tom ford fashion completes group offering delivering alluringly modern aesthetic client pursues recognition product excellence impeccable fit three brands untapped growth potential terms products countries channels exploited respective reference markets particular thom browne tom ford fashion also give exposure womenswear leather goods luxury markets world class customer relationship management crm capabilities group clienteling business model puts customer center believe controlled distribution network along unique crm expertise provide distinctive world class experience clients recent years group leveraging undisputed clienteling know developed highly sophisticated innovative crm tools able connect clients across multiple touchpoints offering expanded range services allowing reach wider younger increasingly diverse audience reinforcing identity history values brands aimed meeting growing challenges luxury market facing dtc network essential implement successfully clienteling strategy embracing unique client journey group developed strong well balanced international network directly operated stores doss countries around world december accounting consolidated revenues group strengthening dtc channels continue remain significant pillar future growth strategy brands zegna advanced journey potential aggregator luxury goods market brands maintain identity unique design flair group skills experience act long term industrial partner aggregator leading luxury brands group house laboratory platform manufacturing know capable management team led zegna family extensive knowledge global luxury market term among others real estate development retail expertise allow group add value businesses partners strategy ermenegildo zegna group intends reinforce extend leading position luxury market continuing develop three brands unique highly complementary reference markets strengthening one kind filiera always seeking respect planet foster community particular group intends continue nourishing zegna reference brand timeless luxury menswear business support rebalance thom browne distribution channels focusing strengthening dtc presence fostering brand global business expansion particular north america developing womenswear collections leather goods accessories business always respecting brand authenticity unique dna continue work aligning business tom ford fashion brand world wide awareness allure luxury sector support new creative designer brand vision completing reinforcement organization structure centrally regional level consistently pursue sustainable development group business leveraging superior made italy integrated know respect planet community diversity support traceability important pillars group future growth addition group aims investing directly controlled made italy luxury textiles manufacturing platform represents strategic competitive advantage fueling quality speed innovation capacity zegna brand strategy one brand fall winter season ermenegildo zegna zegna ermenegildo zegna xxx brands consolidated single brand zegna characterized new logo distinctive signifier new brand logo signifier designed iconic immediately recognizable strategy keeps proving successful new existing customers one brand strategy together evolution collections described enabled brand enrich sales mix towards higher end luxury goods pyramid offered additional opportunities successful brand amplification allowing zegna expand reach broader younger client base collections evolution recent years part one brand strategy zegna collections evolved primarily pure formalwear new definition men style call luxury leisurewear new understated versatile wardrobe utmost zegna quality combined performance comfort designed meet changing preferences customers demand greater comfort modern aesthetic excellent quality product style durability meantime management also pursued creation iconic timeless products shoes segment triple stitch family believe significant opportunities capitalize brand recognition iconizing products along evolution management intends continue protect elevate leadership zegna formalwear capitalize formalwear broadening occasions use office social life increasing elevation products customer services including offering unique made measure bespoke services innovative forms tailoring case chore jackets vertical integration group supply chain represents unique enabler evolution zegna collections client centricity experience management intends continue develop uniquely recognizable zegna retail experience fully designed around customers needs able convey brand values unique legacy zegna clienteling journey one brand strategy evolved engaging clients purchase transactions creating relations providing immersive experiences engage brand ultimate expression journey represented villa zegna project started launch oasi zegna book april milan moved shanghai may new york city september expected travel around world providing exclusive intimate shopping experience along dedicated personalized collections new frontier brand clienteling approach thom browne brand strategy distinctive innovative brand thom browne brand distinctive innovative well established among luxury designer brands loyal authentic customer base proud part thom browne community expanded products offering across menswear womenswear accessories established asia strengthening presence increasing penetration europe americas growth strategy group intends continue leveraging brand unique proposition strengthening brand equity menswear even womenswear leather goods continuing develop iconic styles maintaining creative thought provoking design style strong tailoring aesthetics innovative communication approach brand five main growth levers protect unique distinctive style expanding community reinforce dtc driven organization enhance brand awareness key regions particular united states boost expansion unpenetrated categories particular womenswear shoes leather goods maintain highly selective presence wholesale distribution channel aim developing long term valuable partnership tier wholesalers tom ford fashion strategy alluringly modern aesthetic brand tom ford iconic brand perceived influential voice global luxury industry tom ford fashion collections enjoy glamour luxury positioning characterized absolute product excellence impeccable fit september tom ford announced appointment haider ackermann creative director new role ackermann assumed creative leadership across tom ford fashion categories including menswear womenswear accessories guides creative vision overall brand fashion business strategy group ambition create collections blend innovation artisan craftsmanship aim aligning fashion business extraordinary global recognition group intends grow tom ford fashion business pursuing following strategies support new creative designer amplifying brand positioning glamour luxury space enhance retail experience focusing improving productivity existing network selectively expanding enhance crm clienteling tools leveraging group know infrastructure leverage geographic expansion fulfilling untapped potentials markets brand strong recognition starting penetrate underexplored markets diversify product merchandising rebalancing gender mix goal increasing contribution womenswear collections leather goods accessories shoes optimize supply chain leveraging group platform best practices ermenegildo zegna group business model group carries business activities three operating segments zegna segment thom browne segment tom ford fashion segment prior tfi acquisition completed april ermenegildo zegna group organized two segments zegna segment thom browne segment zegna segment consists three product lines zegna brand textile mainly consists third party brand revenues thom browne segment corresponds thom browne business headed company majority owned subsidiary thom browne inc tom ford fashion segment corresponds fashion business tom ford fashion brand became part group following tfi acquisition tom ford fashion segment includes activities related tom ford fashion collection creation development merchandising production well retail wholesale distribution zegna segment zegna brand product line years ended december zegna brand generated revenues equal thousand thousand thousand respectively representing revenues eliminations zegna brand includes luxury leisurewear formalwear leather accessories zegna brand products zegna offers pre collections main collections organized two seasons fall winter spring summer zegna collections include seasonal products change season season continuative products called essentials generally cross season models essentials collections increasingly include iconic products highly distinctive easily recognizable brand moved traditional approach seasonal deliveries store offer monthly drops degree activation among touch points communication windows clienteling actions zegna brand collections include luxury leisurewear recent years zegna menswear collections shifted towards new definition menswear style commonly referred luxury leisurewear new versatile wardrobe builds tradition excellence yet designed face needs man living fast paced world define way modern man dress different occasions zegna luxury leisurewear ranges knitwear jeans jersey shirts fabric leather outerwear accessories tailoring zegna historically known forefront men tailoring iconic suits tuxedos zegna formalwear offering ranges formal suits tuxedos shirts blazers formal coats accessories new evolutions formalwear represented chore jackets made measure offer luxury leisurewear formalwear also includes made measure misura service whereby customers may following meeting style advisor order custom made garments fabric style finish choice service available suits also shoes outerwear shirts pants knitwear denim jersey top made measure services zegna offers also bespoke services take customization higher level including full experience putting together unique piece sketches design choice fabrics piece made specifically customer tailors ateliers milan paris exclusive upon invitation events like example villa zegna suite zegna trunk shows top clients experience dedicated service crafted around needs characteristics leather accessories leather accessories comprise shoes sneakers shoes bags belts small leather accessories shoes offer recent years shifted prevalence formal shoes towards increasing importance certain highly recognizable luxury casual sneaker triple stitch family shoes made italy like leather accessories also provide customers possibility customize preferred shoes made measure service zegna brand products zegna licenses brand third parties manufacturing distribution eyewear cufflinks jewelry beachwear underwear fragrances licensed products generally sold zegna dtc channel licensing partners wholesale customers prestigious retailers table shows product categories license zegna brand date report product category licensee start date eyewear marcolin group since cufflinks jewelry tateossian since underwear beachwear isaseta since underwear since beachwear fragrances give back beauty since july ______________________ zegna signed license agreement products expected launch agreements governing licensed products provide obligations licensees comply high quality standards ensure licensed products available selected prestigious points sale timely delivered distribution network agreements fixed term contain automatic renewal mechanism see section risk factors risk factors relating group business strategy operations could adversely affected unable negotiate maintain renew license branding agreements high end third party brands part activities zegna also entered strategic partnerships branding projects order strengthen link luxury brands mutually enhance respective brands value branding agreements set forth terms production certain selected branded products relevant marketing activities branded products sold dtc channel monobrand stores distribution networks branding partners textile product line years ended december textile product line generated revenues eliminations equal thousand thousand thousand respectively representing revenues eliminations textile product line engaged design manufacturing sale luxury fabrics brands lanificio ermenegildo zegna dondi bonotto tessitura novara tessitura ubertino believe exceptional quality textiles used garments one principal reasons success group years group also holds minority interest filati biagioli modesto acquired interest luigi fedeli figlio world renowned maker fine italian knitwear yarns activities textile product line focused research development excellence fabrics terms product quality style design technical features fabrics developed exclusively zegna brand including used oasi cashmere oasi lino collections otherwise sell fabrics product lines zegna segment thom browne tom ford fashion segments third party customers include luxury brands specialized players tailoring businesses regularly take part textile fairs exhibitions market products textile product line industry specialized players addition global network sales representatives assist marketing products tailors worldwide lanificio ermenegildo zegna wool mill founded trivero italy backbone company success renowned internationally fine textiles three generations zegna family led textile success carefully balancing science nature craftsmanship technology result lanificio ermenegildo zegna pioneered sophisticated men fabrics lighter smoother refined improved performance functionality bonotto acquired interest textile manufacturer based molvena italy originally founded brand focuses handcraftsmanship traditional techniques characterized creative experimental dimensions fabrics take inspiration art world bonotto premised philosophy slow factory rejects concepts industrial standardization mass production low cost favor traditional innovative production techniques create exquisite precious fabrics dondi acquired interest leader manufacturing high quality jersey fabrics men women made italy dondi production cycle covers phases fabric design distribution dondi counts among customers group companies also prestigious brands fashion world dondi production facilities based carpi italy tessitura ubertino acquired interest june boutique weaving mill based pratrivero italy founded adalgiso ubertino tessitura ubertino creating premium quality fabrics women tweed jacquard years today supplies fabrics major fashion brands product line years ended december product line generated revenues eliminations equal thousand thousand thousand respectively representing revenues eliminations product line primarily engaged manufacturing supply apparel men dunhill gucci closing tfi acquisition product line also involved manufacturing fall winter collection also distribution menswear tom ford brand tom ford acted exclusive licensee manufacturing distribution menswear tom ford brand fall winter collection connection closing tfi acquisition ermenegildo zegna group become long term licensee estée lauder companies tom ford men women fashion well accessories underwear fine jewelry childrenswear textile home design products virtue long term licensing collaboration agreement elc years subject renewal tfi option one year period subject certain minimum performance conditions result april tom ford fashion business reported separate operating segment group prior tfi acquisition reported within product line previously referred third party brands within zegna segment dunhill acted manufacturer supplier suits jackets blazers formal overcoats dunhill brand since relevant agreement required comply designs specifications supplied alfred dunhill ltd well certain restrictions relating intellectual property confidentiality agreement alfred dunhill ltd provide express expiration date gucci acted manufacturer supplier jackets formal overcoats slacks knitwear ready wear made measure gucci brand since relevant agreement required comply designs specifications supplied gucci well certain restrictions relating intellectual property sustainability confidentiality gucci agreed best effort basis place minimum number orders season jackets formal overcoats granted exclusivity made measure products agreement gucci set expire upon completion spring summer collection unless renewal agreed upon parties thom browne segment years ended december thom browne segment generated revenues eliminations equal thousand thousand thousand respectively representing revenues respectively eliminations thom browne renowned luxury brand founded thom browne new york group completed acquisition shareholding thom browne inc holding company thom browne business june acquired additional equity interest thom browne inc june thom browne exercised put option sell group additional thom browne inc total consideration million million following group holds share capital thom browne inc put option agreement ermenegildo zegna group thom browne thom browne right obligation sell company remaining share capital thom browne inc owned group two tranches representing based ebitda thom browne group respectively subject potential deferral year thom browne offers pre collections main collections organized two seasons fall winter spring summer men women children browne started designing clothes friends family early popularity fashion designer grown ever since thom browne signature line grey suits redefined concept male silhouette collections lean heavily two main colors grey navy brand uses highest quality materials obtain garments beautiful classic durable distinctive traits absence form bold logo cropped silhouette garments use visual identifiers trademarks four white horizontal bands uniquely located left upper sleeve upper pant leg grosgrain ribbon tab white red white blue white also uniquely positioned garments thom browne piece designed aesthetically perfect classic long lasting inspired browne philosophy something beautifully made never fashion tom ford fashion segment years ended december tom ford fashion segment generated revenues eliminations equal thousand thousand since consolidation april respectively representing group revenues eliminations tom ford brand founded partnerships established estée lauder companies inc marcolin develop tom ford beauty eyewear products respectively tom ford launched menswear collaboration ermenegildo zegna group womenswear april estée lauder companies inc completed acquisition tom ford brand trademarks intellectual property rights day ermenegildo zegna group completed tfi acquisition tfi consolidated group results since april group charge end end tom ford fashion business collection creation development merchandising production well retail wholesale distribution addition virtue long term licensing collaboration agreement elc duration years automatic renewal one year period subject certain minimum performance conditions ermenegildo zegna group become long term licensee elc tom ford men women fashion well accessories underwear fine jewelry childrenswear textile home design products building tom ford dna confidence modern luxury glamour refined elegance mysterious allure tom ford fashion cards positioned global luxury lifestyle house blends innovation artisan craftsmanship delivering alluringly modern aesthetic across diverse yet unified offerings prioritize luxury product excellence impeccable fit september tom ford announced appointment haider ackermann new creative director role ackermann assumed creative leadership across tom ford fashion categories including menswear womenswear accessories eyewear guide creative vision overall brand ermenegildo zegna group activities group primary activities consist designing manufacturing distribute ready wear shoes leather goods collections three brands activities divided following major stages overseen dedicated functions operating independently brand level design product development iii sales campaign procurement manufacturing logistics vii marketing advertising viii distribution procurement manufacturing needs brand partially met textile product line group manufacturing facilities first sketch store delivery preparation collection takes approximately months activities textile product line third party brands product line follow operational phases logics design merchandising product development new collections created design team brand considering brand identity market analyses seasonal fashion trends developing collections design team works close coordination merchandising team make sure offer complete congruent price structure line needs trends market design merchandising teams work closely product developers modelers transform sketches models prototypes key phase production process allows design product teams assess look feel functionality products possibly anticipate issues may arise manufacturing process prototypes approved develop sample collections sales campaign ready sample collections presented wholesale customers retail buyers zegna thom browne tom ford fashion respective showrooms sales campaign retail buyers wholesalers place orders basis brand buying guidelines sales campaign merchandising supply chain teams regularly share information evolution order portfolio align initial forecasts raw material procurement production planning procurement based forecasts order portfolio brand sources necessary raw materials trimmings finished goods network selected suppliers initial purchases based forecasts adjust supplement purchases based actual orders sales campaign progresses based proposition best garments come best natural resources group dedicated efforts years research finest raw materials fabrics crucial role context played textile product line instance brand sources portion requirements fabrics lanificio jersey dondi printed fabrics bonotto cashmere biagioli manufacturing logistics sales campaign still ongoing brand starts planning manufacturing activities production quantities continuously refined based results sales campaign distinctive feature manufacturing made italy represents large majority overall production brands products portion products manufactured internally facilities zegna currently brand highest incidence house production group production facilities located verrone italy knitwear san pietro mosezzo italy formal jackets suits parma italy outerwear leather accessories mendrisio switzerland jackets suits shirts turkey shirts facility produces ready wear made measure products products categories manufactured internally brand relies selected network external long standing suppliers largely based italy sourcing team committed carefully selecting suppliers managing relationships suppliers entire duration aiming ensure quality esg standards aligned group requirements timing deliveries adequately met group outsourced products manufactured using two different approaches common façon manufacturing third parties production second full package manufacturing process using façon manufacturing model brand outsources external manufacturers confection stage cut make trim phase including cutting sewing washing pressing remains responsible providing designs product specifications raw materials alternatively full package approach brand outsources entire production process produced internally partners products delivered distribution centers transferred brand monobrand stores wholesale customers logistics department brand responsible organizing managing distribution finished products well management warehouses group several logistics centers italy switzerland north america china japan south korea marketing advertising advertising promotional activities critical luxury companies like enhance brand recognizability influence purchase selection encourage brand loyalty time group invests significant resources advertising communication marketing include full set activities ranging pure digital social media marketing initiatives events like fashion shows product collaborations marketing projects marketing expenses amounted thousand thousand thousand respectively zegna marketing strategy based round approach customer center sophisticated one approach manage relationship customers omni channel perspective enhancing interaction digital physical dimensions customers shop across different channels digital tools directly regularly inform new campaigns products collaborations using original content develop produce specific project collection aim provide tailored content messages customers presence social media translate craft products narrative aimed attracting customers inspiration marketing campaigns focus storytelling strategically solidify values unique legacy customers minds one brand strategy repositioning provided enhanced opportunities brand amplification including advertising campaigns focusing iconic products triple stitch oasi cashmere oasi lino collections since founding inspired men define style identity ensuring character found every detail outfits zegna brand count many leaders business sports entertainment design culture friends even become part extended family years acting ambassadors brands also conduct targeted product placement activities key opinion leaders celebrities influencers respect thom browne segment thom browne presents seasonal collections new york paris spectacular theatrical conceptual fashion shows men women fashion weeks shows contribute positioning brand pinnacle fashion creativity source narrative season help generate significant editorial coverage fashion art culture publications paper online innovative approach makes thom browne brand choice number vips celebrities worldwide highly successful actors musicians athletes actors musicians worldwide fame brand proven strong appeal seeking strengthen historical customer loyalty enjoyed thom browne brand reinforced customer relationship management tools initiatives addressing marketing message wider audience tom ford fashion aims creating consistent storytelling lookbooks editorial campaign assets runway shows create unified narrative across men women eyewear beauty offerings goal establishing brand true global lifestyle icon seasonal collections unveiled sophisticated elegant modern fashion shows empower brand position pinnacle true luxury create engaging content indulge entertain top clients partners well develop carefully curated list vip attendees encompass tom ford fashion man woman segment internal teams dedicated marketing advertising activities following slightly different marketing strategies depending brand better reach wide selected consumer target use various communication tools organic institutional product press coverage media partnerships varied media mix including digital marketing digital media campaign print billboards direct marketing hoc initiatives boutiques visual merchandising windows displays conceived consistently adhere seasonal marketing strategy plan distribution channels sales teams bring customers community sharing creativity craft well story journey item relationships nurtured store respect dtc channel showrooms respect wholesale channel aim deliver consistent unique customer experience distribute sell products countries worldwide well established network comprised dtc wholesale distribution channels monobrand presence includes doss divided full price boutiques outlets directly managed online boutiques franchisees monobrand stores multi brand presence includes department stores specialty stores tailers zegna segment year ended december million zegna brand revenues equal total revenues product line generated dtc channel million generated wholesale distribution channel royalties dtc channel december zegna operated doss emea americas greater china region rest apac year ended december dtc channel generated revenues representing zegna brand revenues zegna dtc channel distributed throughout main markets brand operates zegna focuses maintaining presence prestigious strategic locations certain cases enters joint ventures local partners jurisdictions zegna would able operate directly without local partner presence local partner beneficial due knowledge local market regulations example zegna entered joint ventures united arab emirates vietnam india controlled group consolidated line line basis accounting purposes aesthetics customer experience doss carefully planned designed zegna artistic direction team opened internal staff architects visual merchandisers supported external professional firms constantly maintain restyle doss required addition zegna management place specific training programs dedicated sales staff focusing product knowledge outreach clienteling customer service dtc channel also includes commerce shop operated directly www zegna com website outlets concessions within department stores around world certain travel retail stores directly operated brand commerce platforms brand operates directly concessions tmall luxury pavilion farfetch wechat whose sales systems integrated zegna sales warehouse management systems wholesale channel december zegna monobrand distribution network included points sale operated wholesale partners emea americas greater china region rest apac year ended december wholesale channel including multibrand stores royalties generated revenues representing zegna brand revenues wholesale distribution channel developed different types agreements wholesale customers including particular franchisees operate monobrand stores exclusively zegna brand exchange payment royalty fees zegna based sales volumes franchising agreements governing relationships typically medium term providing automatic renewal renegotiation period prior term expiry contractual arrangements may also provide minimum purchase obligations franchisee obligation zegna franchisee invest certain amounts marketing activities starting january zegna internalized franchising operation south korea operated via doss department stores multibrand specialty stores purchase zegna products resale stores sometimes specific zegna branded wall units contractual arrangements type customer vary based relevant store standard terms online multibrand stores zegna brand also sold via prestigious online multi brand stores ssense porter dtc channel zegna carefully manages necessary customizes distribution policies wholesale customers believe selected wholesale presence still strategic provides constant benchmarking opportunities external feedback hence allowing constant monitoring positioning zegna brand products vis vis competitors thom browne segment year ended december million thom browne segment revenues generated dtc channel equal total revenues product line million generated points sale operated thom browne wholesale distribution channel royalties dtc channel december thom browne operated doss emea americas greater china region rest apac july thom browne began directly operating business south korea network stores business wholly owned subsidiary thom browne korea operated region external support former franchise partner unlike luxury fashion brands including zegna thom browne leveraging customers awareness brand presence main digital channels dos locations comparatively smaller size usually destination stores highly trained staff allows flexibility negotiations landlords alleviates pressure rental charges thom browne still benefits inflow loyal customers thom browne strategy puts emphasis developing customer relationships rather positioning key streets actively working increase visibility doss attract new customers establish specific training programs dos staff order ensure consistent high quality retail experience various geographies thom browne doss also include commerce shop operated directly website www thombrowne com carefully selected directly operated outlet sale locations wholesale channel december thom browne monobrand distribution network included points sale emea americas greater china region rest apac top wholesale monobrand stores thom browne segment wholesale distribution channel also consists selected multibrand department specialty stores globally tailers tom ford fashion segment year ended december million tom ford fashion segment revenues generated dtc channel equal total revenues product line million generated wholesale distribution channel royalties dtc channel december tom ford fashion business operated doss emea americas greater china region rest apac wholesale channel december tom ford fashion monobrand distribution network included points sale operated emea americas greater china region rest apac tom ford fashion wholesale distribution channel also consists presence selected number wholesale multibrand stores globally intellectual property zegna segment date report overall trademark portfolio including registrations principal owned trademarks trade names use zegna segment business zegna new logo brand mark well trademarks protecting certain products main marketing projects capsule collections filed registered relevant products services classes countries operate logo version word standard characters version versions adapted various local alphabets ideographs zegna written japanese katakana syllabary chinese ideographs thai characters arabic georgian alphabet additionally portfolio domain names including registrations countries operate common zegna ermenegildo zegna typos iii early basic protection main business marketing projects besides trademarks invest significant resources protecting aspects brands uniqueness design copyright registrations covering several countries including european union china united states every season select relevant original products patterns extent necessary protect rights labels take action protect design defend counterfeiting addition patents one copyright engineering work thanks special protections available italy result solid roots fabric making pioneering efforts improve performance functionality products devote significant resources protection enhancement intellectual property assets actively monitor market offline online infringements abuses trademarks domain names product designs also active enforcing rights third party infringements including judicial actions addition monitor third party applications registration trademarks could confused trademarks file oppositions applications registration trademarks accordance laws regulations relevant jurisdictions cooperate competent authorities worldwide fight counterfeiting products thanks long standing efforts discussed judicial administrative decision countries including china turkey mexico brazil india recognized trademarks well known famous giving zegna ability benefit cross class protection thom browne segment date report thom browne inc subsidiary thom browne japan inc control approximately trademark registrations worldwide number additional applications pending principal owned trademarks trade names used thom browne thom browne four band design grosgrain ribbon white red white blue white thom grey registered applications registration submitted text form design form virtually jurisdictions thom browne operates addition design marks shown location marks tab back collar shirt jacket registered application registration submitted including native language certain important markets thom browne also registered certain marks used products main marketing projects maintains ongoing program constantly review update filings protections extend registrations classes goods new products introduced time time addition thom browne portfolio domain names including number domain names featuring thom browne name thombrowne com thombrowne similar domain names jurisdictions thom browne operates thom browne devotes significant resources protection intellectual property assets worldwide highly specialized brand protection program house outside specialists monitor major markets well global social media websites misuse thom browne intellectual property extent infringements detected adequate enforcement steps taken including cooperation relevant authorities tom ford fashion segment date report tfi subsidiaries operating tom ford fashion business generally maintain trademarks copyrights patents domain names name rather pursuant tff license estée lauder companies tfi licensed use tom ford fashion intellectual property men women fashion well accessories underwear fine jewelry childrenswear textile home design products worldwide tom ford fashion cooperates closely estée lauder companies protect misuse licensed tom ford fashion intellectual property extent counterfeiting activities infringements licensed tom ford fashion intellectual property detected tom ford fashion cooperates estée lauder companies enforcement efforts including cooperation relevant authorities research development competitiveness depends among things ability anticipate trends identify respond new changing consumer preferences therefore devote significant resources various research development activities design create develop new products collections date report employees involved research development activities across zegna thom browne tom ford fashion segments research development activities mainly relate development new patterns designs fabrics research innovative technological materials specific features design modeling development new products creation prototypes recent years research development efforts dedicated creating iconic products high visibility strong growth potential designing catwalk collections selective drops developing innovative materials vellus aureum exclusive high end fabric crafted finest rarest merino wool regulatory environment required comply laws regulations applying products operations various jurisdictions operate particularly relation protection intellectual property rights competition product safety packaging labeling import processing certain raw materials finished goods including materials animal origin data protection limits cash payments worker health safety environment economic sanctions also use certain rare raw materials vicuña yarns available limited quantity subject strict export processing regulations virtually imported products subject custom duties taxes may impact price products maintain compliance procedures policies assist managing import export activities ensure compliance laws regulations jurisdictions operate property plants equipment operate manufacturing facilities corporate offices showrooms warehouses stores land buildings around world part owned part leased third parties lease part real estate assets used group business operations real estate real estate alan real estate subsidiaries company november real estate assets include buildings host manufacturing facilities corporate offices showrooms warehouses land buildings including main manufacturing plants offices italy group headquarter offices milan manufacturing facility parma san pietro mosezzo verrone oleggio well part building located valdilana mostly occupied switzerland including offices stabio manufacturing plant mendrisio certain zegna stores namely sandigliano oleggio italy london united kingdom also certain real estate assets manufacturing facilities warehouses offices used cappellificio cervo sagliano micca italy dondi fossoli carpi italy novi modena italy manufacturing facilities currently capacity increase production volumes necessary meet higher demand following table sets forth information relating owned real estate assets used conduct business date report location use approximate square meters italy sagliano micca via della libertà factory storage offices italy fossoli carpi italy via budrione migliarina factory storage offices italy novi modena fraz rovereto sul secchia via foscolo factory storage offices italy valdilana via diagonale factory storage offices addition lease space third parties mainly related doss direct points sale around world well warehouses offices housing personnel december directly operated doss totaling approximately square meters gross area pursuant lease agreements february group announced plans open new luxury footwear leather goods production facility sala baganza parma italy facility currently expected completed end expand group production capacity focusing mainly men footwear leather goods new facility also act research development center expected employ employees full capacity group purchased plots land sala baganza square meters collecchio square meters new facility built aggregate amount million group also made additional investments million ongoing construction facility capitalized property plant equipment consolidated statement financial position december included elsewhere document total carrying value property plant equipment december thousand compared thousand december information principal expenditures property plant equipment see section liquidity capital resources capital expenditure employees vertically integrated much value chain outsourced part group workforce artisanal craftsmanship excellence adds value brands contributing intellectual capital committed improving lives lives communities whence come contributing human capital social relationship capital guaranteeing human rights december respectively following number employees divided categories activity geographic locations outlined tables december white collars blue collars temporary employees total december emea north america latin america apac total group reported increase number employees excluding temporary staff rising end end growth primarily driven strengthening tom ford fashion organization headquarters opening new tom ford fashion stores rome sandigliano taormina rinascente china expansion leather goods division tizeta opening new thom browne stores apac china macau japan iii expansion zegna retail network new store openings monaco saudi arabia hiring additional personnel reinforce group team zegna brand marketing functions reflecting group commitment operational excellence enhancement zegna brand client engagement strategy region number employees saw increase people emea apac americas external temporary employees reduced italian production plants december december group continues good labor relationships employees committed maintaining positive constructive relationship past experienced material job action labor stoppage material impact business sustainability sustainability part ethos since inception much part dna history quality clothes carries everything technology use create products constant dialogue customers suppliers shareholders potential shareholders analysts stakeholders conscious role play economy communities near operations group recognizes key role stakeholders hold group success importance engaging stakeholders transparent consistent ethical manner regard january board adopted stakeholder engagement policy amended existing policy bilateral contacts shareholders policies available corporate website group proceeded update materiality analysis compliance gri universal standards analysis aimed either confirming identifying new material topics respect previous analysis conducted confirmed first step identification new material topics consisted desk analysis group main activities design value chain better identify impacts group might economy environment people contribution sustainable long term value creation main impacts fashion industry also considered consultation official sources fashion pact textile exchange fashion transparency index well sustainability reports group main competitors analysis led identification impacts actual potential positive negative assess significance impacts prioritized based following parameters according gri standards scale grave impact scope widespread impact irremediable character hard remedy impact generated combination three parameters defines severity impact assessed together probability occurring potential impacts finally threshold determined define material impacts resulted definition material impacts spread across material topics considered pivotal value creation destruction group short long term period group unveiled esg strategy capital markets day may strategy consists commitments defined goals three years later reached goals deadlines particular adopted recognized international reported standards frameworks gri sasb tcfd voluntary third party audited group esg reporting introduced esg linked metric variable remuneration top executives long term incentive program adopted strategy delivering several implementation initiatives including policy extended parental leave started gender parity certification process italian entities group adopted sbti approved group emission reduction targets baselined february include tom ford fashion segment flag forest land agriculture targets reached renewable electricity sourcing european operations innovative open digital platform adopted engaged suppliers collect energy water chemical waste data response rate esg commitments still progress includeg following top priority raw materials used group products traceable point origin exceeding group aims electricity renewable sources scope group level impact investing wool cashmere cotton raw material sources regenerative agriculture carbon sequestration initiatives also achieved important milestones across different areas among governance expansion group policies update supplier code conduct creation group esg committee brand esg committees social launch first people engagement survey participation rate group level group parental leave policy implementation employees dedicating one day volunteering initiatives italy switzerland environment definition group water strategy adoption water related targets aligned science based targets network sbtn evolution traceable lower impact top priority raw materials like like excluding tom ford fashion segment also group upheld validity assessment financial impact specific climate related risks opportunities carried conforming recommendations task force climate related financial disclosures tcfd see also section risk factors risk factors relating industry group operates group sustainability report prepared accordance gri sasb standards describes detailed information group esg commitments goals performance including governance strategy risk assessment tcfd framework relation best practice provision dcgc reference made section sustainability group sustainability report available corporate website financial overview selected consolidated financial data selected consolidated financial data year ended december compared year ended december year ended december compared year ended december derived audited consolidated financial statements notes thereto set forth section annual report following selected consolidated financial data read conjunction section management discussion analysis financial condition results operations consolidated financial statements related notes appearing elsewhere annual report financial statements included herein prepared accordance ifrs part book dcc results operations following discussion group results operations year ended december compared year ended december year ended december compared year ended december years ended december thousands except percentages percentage revenues percentage revenues percentage revenues revenues cost sales gross profit selling general administrative marketing expenses operating profit financial income financial expenses foreign exchange losses result investments accounted using equity method profit taxes income taxes profit additional information relating constant currency information see section results operations non ifrs financial measures constant currency information cash flows following table summarizes cash flows used operating investing financing activities years ended december additional information relating group cash flows refer consolidated cash flow statement accompanying notes consolidated financial statements included elsewhere annual report years ended december increase decrease thousands net cash flows operating activities net cash flows used investing activities net cash flows used financing activities effects exchange rate changes cash cash equivalents net decrease increase cash cash equivalents cash cash equivalents beginning year cash cash equivalents end year management discussion analysis financial condition results operations cautionary note following discussion financial condition results operations read together rest document including information included note presentation section company business overview consolidated financial statements included elsewhere document discussion includes forward looking statements involves numerous risks uncertainties including limited described section cautionary note regarding forward looking statements section risk factors actual results may differ materially contained forward looking statements overview ermenegildo zegna dutch public limited liability company naamloze vennootschap ordinary shares listed new york stock exchange zgn ticker ermenegildo zegna group global luxury player leading position high end menswear business internationally recognized unique textile manufacturing platform heritage italian craftsmanship quality innovation key ingredients three complementary brands zegna thom browne tom ford fashion group reaches different communities zegna absolute luxury modern tailoring thom browne luxury glamour tom ford fashion thanks thom browne tom ford fashion group also play important growing role luxury womenswear leather goods segment group founded northern italy town trivero wool mill ermenegildo zegna grandfather group current chairman chief executive officer dream creating beautiful luxurious fabrics world ies company moved textile men ready wear ies expanded business internationally opening first monobrand boutique paris marking beginning extensive retail network development worldwide level acquired thom browne inc group owns thom browne inc december april following completion acquisition tom ford international tfi tfi acquisition group became long term licensee estée lauder companies inc elc tom ford brand men women fashion accessories business group filiera unique supply chain composed finest italian high end textile producers fully integrated group luxury manufacturing capabilities represents undeniable competitive advantage group brands group controls important phases value chain designing manufacturing distribution years group reached significant international presence direct consumer retail channel well selected wholesale customers group brands led world class management team group operates business three segments zegna segment comprising three product lines zegna brand textile mainly relates agreements third party brands thom browne segment iii tom ford fashion segment following table presents group revenues profit adjusted ebit adjusted profit years additional information regarding adjusted ebit adjusted profit non ifrs financial measures including reconciliation adjusted ebit adjusted profit profit see section results operation non ifrs financial measures years ended december thousands revenues profit adjusted ebit adjusted profit group primarily operates via worldwide direct consumer dtc distribution channel network zegna thom browne tom ford fashion doss december zegna thom browne tom ford fashion doss december including boutiques outlets well concessions department stores dtc channel also includes multibrand commerce marketplace group also distributes products worldwide monobrand multibrand points sale operated wholesale customers including franchisees department stores multibrand specialty stores online multi brand tailers taking account dtc wholesale distribution channels group present countries worldwide activities textile product line included within zegna segment follows operational phases logics textile product line designs manufactures sells luxury fabrics various brands third party customers well product lines within group product line primarily engaged manufacturing supply apparel men third party fashion brands well thom browne tom ford fashion trends uncertainties opportunities main trends uncertainties opportunities affecting group summarized general economic conditions macro events international tourism purchases group products tend discretionary therefore sales may highly volatile particularly periods economic slowdown influenced among factors general economic conditions consumer confidence disposable consumer income well levels international travel tourism significant amount group sales generated customers purchase products traveling times economic growth consumers tend disposable income travel frequently may increase demand group products conversely economic growth stagnant negative consumers may delay avoid discretionary spending may result reduced demand group products addition adverse economic conditions global political developments social geopolitical sources unrest natural disasters travel restrictions imposed governments imposed response covid pandemic events may also result shift travel patterns decline travel volumes past may future adverse effect group business financial position results operations cash flows example consumer trends global trade conditions originated covid pandemic led shifts tourism patterns recent years emergence new tourist destinations influenced geographical landscape store distribution network shifts resulted increased expenditure associated physical logistical expansion distribution network well need adjust distribution strategies logistics moreover continued remote working arrangements may result lower luxury purchases recent years economies around world experienced significant inflationary pressures coupled government measures combat inflation prevent mitigate economic recession group experienced significant increase price energy certain raw materials used production well higher prices transportation logistics activities higher costs labor outsourced production despite increases costs effects margins substantially offset price impacts implementing one brand strategy zegna segment passing portion increase costs customers well actions implemented improve production processes efficiencies lower per unit energy costs although effects inflation less significant inflation remains elevated levels increases future group could face increases costs energy raw materials production costs services could adversely affect group business results operations able pass increased costs customers successfully implement mitigating actions result recent inflation many central banks increased interest rates may continue turn may increase borrowing costs additionally increasing costs rising interest rates impact consumer spending power could result decline sales due ongoing conflict ukraine resulting geopolitical tensions many governments around world including united states european union jurisdictions imposed variety sanctions certain industries parties russia ukrainian regions donetsk luhansk well enhanced export controls certain industries products exclusion certain russian financial institutions swift system march president united states issued executive order prohibiting exports russia luxury goods including inter alia apparel footwear certain accessories per unit wholesale price council european union imposed sanctions russia prohibiting export luxury goods value excess per item including clothing footwear leather fashion accessories group suspended production starting fall winter collection items ordered russian franchisees distributors redirected products ordered russian franchises distributors fall winter collection doss franchisees distributors countries since revenues russia residual represented less total revenues period acquisitions addition organic growth operations growth strategy may time time include strategic acquisitions investments designed strengthen vertical integration expand new market segments product categories economic financial outcomes transactions may present uncertainties see section risk factors risk factors relating group business strategy operations exposed risks relating recent potential future acquisitions following paragraphs describe acquisitions made group years ended december additional information relating purchase price allocation disclosures relating business acquisitions see note business combinations consolidated financial statements included elsewhere annual report tfi acquisition april group completed tfi acquisition acquired tfi company owns operates tom ford fashion business part transaction sole ownership tom ford brand trademarks intellectual property rights acquired elc tfi become long term licensee elc tom ford men women fashion well accessories underwear fine jewelry childrenswear textile home design products virtue long term licensing collaboration agreement elc years automatic renewal one year period subject certain minimum performance conditions group charge end end tom ford fashion business collection creation development production merchandising well retail wholesale distribution tom ford fashion group operates network directly operated tom ford fashion stores globally december directly operated stores december tom ford fashion business identified one group three operating reportable segments completion tfi acquisition group already owned tfi wholly owned subsidiary holding inc tfi acquisition acquired remaining equity interest transaction implied value acquired stake tfi million cash free debt free basis assuming normalized working capital contingent consideration arrangements agreed part transaction result tfi acquisition group also obtained tizeta tizeta previously held interest tizeta previously accounted using equity method consolidated group following closing tfi acquisition acquisitions january group acquired interest ermenegildo zegna korea ltd purchase consideration thousand including cash consideration thousand thousand settlement pre existing intercompany balances following group began directly operating zegna business south korea network zegna retail stores converted direct consumer points sale previously managed franchising arrangements september ermenegildo zegna group prada group completed previously announced acquisition interest luigi fedeli figlio world renowned maker fine italian knitwear yarns group acquiring company group paid consideration million company july group acquired thom browne business south korea began directly operating thom browne business south korea network stores business wholly owned thom browne korea ltd newly formed wholly owned subsidiary operated external support former franchise partner group paid cash consideration thousand recognized deferred consideration thousand acquisition date group paid two tranches deferred consideration thousand thousand january july respectively december remaining deferred consideration expected paid two tranches january july amounted thousand classified within current liabilities march group completed acquisition interest canadian technical trail running shoe company norda run inc consideration million option gradually increase stake following nine years luxury outdoor space continues area focus group norda run uses finest materials planet produce world best performing weather footwear aligns perfectly group values creating best products best materials agreement secures possibility accelerating brand growth strong industrial commercial partnership transaction costs thousand thousand thousand respectively primarily consultancy legal fees relating tfi acquisition presented adjusting item calculation adjusted ebit adjusted ebitda adjusted profit adjusted basic earnings per share adjusted diluted earnings per share see also section results operation non ifrs financial measures increased focus dtc distribution channel including expansion dtc store network investments made reinforce retail operations strengthening direct consumer dtc distribution channel continue remain significant pillar future growth strategy brands dtc network essential successfully implement clienteling strategy embracing unique client experience consists directly operated stores doss include full price freestanding stores boutique outlet stores shop shop within department stores also managed concessions addition dtc channel includes directly managed online boutique commerce platforms sell directly customers period group developed strong well balanced international network countries around world growing doss end tom ford fashion yet part group doss end related tom ford fashion following table presents group doss network segment geography december december stores zegna thom browne tom ford fashion group zegna thom browne tom ford fashion group zegna thom browne group emea americas rest apac greater china region total direct customer dtc expansion dtc store network executed primarily following actions opening selected new stores conversion wholesale stores doss including zegna brand conversion january stores following acquisition zegna business south korea conversion harry rosen stores canada thom browne brand conversion second half stores following acquisition thom browne business south korea conversion nordstrom stores united states holt renfrew stores canada majority significantly smaller average store size brand dtc network addition tom ford fashion network stores following completion tfi acquisition april focus dtc channel expansion dtc store network resulted higher overall revenues higher proportion dtc sales compared wholesale sales period percentage revenues branded products include dtc wholesale dtc increased increase proportion dtc sales higher gross margins compared wholesale sales driven higher gross profit percentage revenues period together factors increasing however despite higher gross margins dtc channel normally carries higher level fixed costs compared wholesale channel addition new stores generally require start period achieve expected levels revenues profitability based historical experience typically extends three years following date opening time new stores may operate profit margins rest group stores converted wholesale dtc may repurchase related inventory wholesaler results buyback obligation additional costs current preceding period furthermore focus dtc channel expansion dtc store network required significant investments capital expenditure property plant equipment mainly relation new store openings increase payments lease liabilities stores resulting decrease free cash flow compared additional information relating free cash flow non ifrs financial measure see section results operations non ifrs financial measures well cash outflows acquisitions zegna thom browne businesses south korea respectively resulting conversion stores wholesale dtc additionally incurred significant operating costs support expansion dtc store network invest customers experience connectivity brands reinforce retail clienteling operations develop talents organization continuously renew remodel stores order enhance customers experience contributed downward pressure operating profit operating profit margin profit profit margin compared however believe investments necessary order lay foundation sustainable future growth group fluctuations price raw materials group requires high quality raw materials products primarily include fibers yarns wool silk cotton linen cashmere fabrics composition well leather rare raw materials vellus aureum vicuña group cost sales profitability impacted fluctuations price raw materials may driven several factors including among others natural elements weather conditions diseases livestock inflation trade restrictions tariffs similar government measures may limit increase cost importing exporting raw materials market price wool often volatile subject significant fluctuations example average price australian merino wool one key raw materials doubled declined significantly period increased prices decreased period characterized relatively stable prices compared previous periods group seeks mitigate risk price increases wool materials procurement policy tends spread purchases time advance actual requirements order average purchase costs although group remains exposed fluctuations prices fluctuations exchange rates large portion group operations international markets outside eurozone group records revenues expenses various currencies euro group functional currency mainly chinese renminbi dollar well various currencies particular revenues generated currencies euro represented group revenues respectively see table presented additional details relating group revenues currency origin group revenues denominated mainly local currencies respective markets significant portion group costs denominated euro mainly related production corporate headquarters related functions result group results affected fluctuations foreign currency exchange rates translation foreign currency financial statements euro upon consolidation group subsidiaries functional currencies euro translation impact transactions group entities currencies functional currencies transaction impact generally appreciation chinese renminbi dollar currencies group operates compared euro would positive impact group revenues results operations depreciation currencies compared euro would negative impact appreciation dollar euro may also adversely affect group results operations due certain significant liabilities group denominated dollars liability written put option non controlling interests thom browne group remeasured fair value recognized profit loss end reporting period based present value exercise price option dollars following table sets forth group revenues currency origin years ended december years ended december thousands except percentages revenues revenues revenues revenues revenues revenues euro dollar chinese renminbi united arab emirates dirham japanese yen pound sterling south korean hong kong dollar currencies total revenues last three years characterized volatility exchange rates example based average exchange rates chinese renminbi dollar two main non euro currencies group generated revenues evidenced table depreciated euro period primarily although considering year end spot exchange rates depreciation chinese renminbi less half percentage terms dollar actually appreciated compared euro time driven strong table shows exchange rates main foreign currencies used group compared euro december average december average december average dollar chinese renminbi united arab emirates dirham japanese yen pound sterling south korean hong kong dollar swiss franc group seeks mitigate effects currency exposure entering derivative contracts generally forward contracts sale foreign currencies order either fix exchange rates advance determine predefined range exchange rates future date zegna tom ford fashion segments group initially defines sales prices euro sets corresponding prices currencies applying exchange rates selected management based reasonable expectations assumptions forward sales contracts made seasonal price lists given currency set order mitigate impact divergence actual exchange rates expected exchange rates used management based estimated revenues setting hedge contract maturity line planned date payment customers additional hedging transactions may entered relevant season depending actual developments exchange rates considered appropriate group may also implement similar hedging policies within thom browne segment become exposed currency impact expands international markets information relating market risks group exposed see note qualitative quantitative information financial risks consolidated financial statements included within report funding strategy aim reducing cost financing continuing ensure group adequate access liquidity meet financial commitments guarantee flexibility operations expansion programs starting group replaced portion short term debt maturities new bilateral committed revolving credit facilities may drawn group time relevant term result group reduced financial borrowings primarily use cash disposal certain financial investments held group additional information see liquidity capital resources net financial indebtedness cash surplus tax obligations changes tax laws estimates treaties regulations group subject taxation italy united states china well various jurisdictions applicable tax rates varying jurisdiction result group overall effective tax rate affected proportion earnings various tax jurisdictions ability generate sufficient suitable future taxable profits reversal deferred tax assets deducted group recognizes tax expenses multiple tax jurisdictions based estimates taxable income required reserves uncertain tax positions iii deductible temporary differences tax loss carry forwards tax credits extent future offset probable withholding taxes unremitted earnings way group intends recover settle carrying amount deferred tax assets liabilities given time multiple tax years subject examinations various tax authorities additionally group subject duties applicable importation products various countries operate may impact cost products moreover countries group ships products may impose safeguard quotas limit quantity products may imported group relies free trade agreements supply chain initiatives order maximize efficiencies relating importation group products seasonality luxury apparel market group operates subject seasonal fluctuations sales group sales usually higher months year wholesale customers concentrate purchases example deliveries seasonal goods wholesale customers tend concentrate november february spring summer collection june september fall winter collection regard retail sales group doss sales tend higher last quarter year driven holiday shopping season january february correspondence chinese new year celebrations however several events may also affect retail sales including adverse weather conditions macroeconomic external events operating costs contrast generally experience significant seasonal fluctuations except certain increases months november december due variable costs associated sales commissions variable leases well marketing activities including events group hosts participates may occur evenly throughout year periods result foregoing financial results interim periods may indicative results entire fiscal year management expects seasonal trends continue results operations following discussion group results operations year ended december compared year ended december year ended december compared year ended december years ended december thousands except percentages percentage revenues percentage revenues percentage revenues revenues cost sales gross profit selling general administrative marketing expenses operating profit financial income financial expenses foreign exchange losses result investments accounted using equity method profit taxes income taxes profit revenues group generates revenues sale products services well royalties received licensees third parties revenues recognized net returns discounts addition presenting revenues current currency basis following analysis revenues includes change revenues organic basis refer organic change revenues organic basis non ifrs financial measure see non ifrs financial measures additional information relating measure reconciliations revenue growth organic compared revenues year ended december amounted thousand increase thousand organic compared thousand year ended december driven positive performance zegna segment mainly due zegna brand well tom ford fashion segment benefited full year contribution compared eight months two days following completion tfi acquisition april partially offset iii decrease thom browne segment compared revenues year ended december amounted thousand increase thousand organic compared thousand year ended december driven double digit growth zegna thom browne segments including organic basis well revenues contributed tom ford fashion segment following completion tfi acquisition april following discussion presents analysis revenues brand product line distribution channel iii geographical area details relating revenues group operating segments see results segment revenues brand product line following table sets forth breakdown revenues brand product line years ended december years ended december increase decrease thousands except percentages organic organic zegna brand thom browne tom ford fashion textile total revenues ______________________ throughout document means meaningful mainly includes revenues agreements third party brands compared brand product line increase revenues mainly attributable increase tom ford fashion thousand organic benefited full year contribution compared eight months two days following completion tfi acquisition april revenues period april december substantially line corresponding period tfi part group organic growth driven decrease wholesale business offset increase dtc channel increase zegna brand thousand organic primarily attributable continued positive performance luxury leisurewear footwear well personalization offerings performance formalwear substantially line additionally zegna brand benefited higher average unit retail aur primarily driven mix higher value products sold partially offset iii decrease thom browne thousand organic driven decrease thom browne wholesale channel thousand reflecting impact decision streamline wholesale business year primarily impacted emea region well negative double digit performance greater china region continues impacted challenging conditions luxury sector partially offset positive performance dtc channel thousand reflecting growth japan conversion stores wholesale dtc following acquisition thom browne business south korea second half decrease revenues mainly include revenues third party brands thousand organic reflecting impact revenues recognized prior year supply agreement tfi prior tfi acquisition april following revenues tfi reported intercompany revenues eliminated group consolidated results well lower orders third party brands decrease textile thousand organic driven lower orders new collections compared previous year across several textile brands reflecting challenges uncertainties excludes foreign exchange impact revenues south korea dtc wholesale period since group purchased zegna business south korea january excludes foreign exchange impact revenues south korea dtc wholesale january june period since group purchased thom browne business south korea july currently affecting luxury sector compared brand product line increase revenues mainly attributable increase zegna brand thousand organic primarily driven continued positive performance luxury leisurewear footwear represented revenues zegna brand year respectively well tailoring made measure businesses increase thom browne thousand organic driven growth across lines particular womenswear iii revenues thousand tom ford fashion following completion tfi acquisition april increase thousand organic textile primarily attributable double digit growth lanificio ermenegildo zegna partially offset decrease revenues thousand organic reflecting end previous tfi distribution license agreement menswear deliveries fall winter collection start supply agreement act exclusive supplier certain tom ford menswear products spring summer collection following completion tfi acquisition april revenues supply agreement tfi reported intercompany revenues eliminated group consolidated results revenues distribution channel following table sets forth breakdown revenues distribution channel years ended december years ended december increase decrease thousands except percentages organic organic direct consumer dtc zegna brand thom browne tom ford fashion total direct consumer dtc percentage branded products wholesale branded zegna brand thom browne tom ford fashion total wholesale branded percentage branded products textile total revenues ______________________ branded products refer products sold three brands group operates dtc wholesale branded distribution channels mainly includes revenues agreements third party brands compared distribution channel increase branded revenues mainly attributable increase dtc channel thousand organic composed increase tom ford fashion dtc channel thousand organic primarily benefiting full year contribution compared eight months two days following completion tfi acquisition april organic growth driven positive performance united states emea well expansion dtc store network net store openings dtc stores december compared dtc stores december increase zegna brand dtc channel thousand organic reflecting growth emea including strong performance middle east americas primarily united states japan well expansion store network net dtc store openings including conversion wholesale dtc stores south korea starting january harry rosen stores canada second half doss december compared doss december partially offset performance greater china region continues impacted challenges luxury sector increase thom browne thousand organic driven strong performance japan increase thousand thom browne business south korea acquired second half stores subsequently converted wholesale dtc following agreement former franchise partner well expansion store network net dtc store openings doss december compared doss december included conversion wholesale dtc saks fifth avenue store new york well conversion nordstrom stores united states holt renfrew stores canada majority significantly smaller average store size brand dtc network partially offset performance greater china region continues impacted challenging conditions luxury sector decrease wholesale branded channel thousand organic due combined effects decrease thom browne wholesale revenues thousand organic primarily reflecting impact decision streamline wholesale business lesser extent aforementioned conversion stores wholesale dtc south korea following agreement former franchise partner decrease zegna brand wholesale revenues thousand organic primarily reflecting aforementioned conversion wholesale dtc stores south korea starting january harry rosen stores canada second half partially offset positive performance rest apac emea united states partially offset increase tom ford fashion wholesale revenues thousand organic primarily benefiting full year contribution compared eight months two days following completion tfi acquisition april organic growth primarily due conversion two wholesale stores retail third quarter harrods london men saks fifth avenue new york women well lower shipments fall winter collection ahead new collection revealed march new creative director haider ackermann compared distribution channel increase branded revenues mainly attributable increase dtc channel thousand organic composed increase zegna brand dtc thousand organic driven double digit growth regions reflecting higher average sales prices increased store traffic well selected dtc store openings dtc stores december compared dtc stores december increase thom browne dtc thousand organic driven expansion store network net store openings dtc stores december compared dtc stores december mainly apac including conversion stores south korea wholesale dtc following agreement former franchise partner well performance existing stores japan dtc revenues thousand generated tom ford fashion dtc network consisted dtc stores december following completion tfi acquisition april increase wholesale branded channel thousand organic mainly due increase zegna brand thousand organic driven positive performance particularly emea partially offset effects planned change merchandising strategy whereby portion spring summer deliveries intentionally shifted fourth quarter first quarter increase thom browne thousand organic driven double digit growth emea partially offset lower deliveries south korean market ahead change business wholesale dtc starting third quarter following agreement former franchise partner wholesale revenues thousand tom ford fashion following completion tfi acquisition april revenues geographic area following table sets forth breakdown revenues geographic area years ended december years ended december increase decrease thousands except percentages organic organic emea americas greater china region rest apac total revenues ______________________ emea includes europe middle east africa americas includes united states america canada mexico brazil central south american countries rest apac includes japan south korea singapore thailand malaysia vietnam indonesia philippines australia new zealand india southeast asian countries revenues mainly include royalties compared geographic area increase revenues mainly attributable increase americas thousand organic driven double digit growth zegna brand dtc channel united states mexico brazil well full year contribution tom ford fashion increase rest apac thousand organic driven aforementioned conversion thom browne zegna brand stores wholesale dtc south korea strong performance japan mainly thom browne zegna brand benefited tourist customers depreciation japanese yen iii increase emea thousand organic primarily attributable double digit growth zegna brand driven dtc channel including strong performance middle east well full year contribution tom ford fashion including new store openings including rome london harrods men madrid taormina partially offset thom browne mainly reflecting decision streamline wholesale business partially offset decrease greater china region thousand organic reflecting challenging conditions luxury sector region particular mainland china impacting group brands compared geographic area increase revenues attributable growth regions including increase emea thousand organic driven zegna brand dtc channel europe united arab emirates uae benefited domestic tourist customers well increase wholesale channel driven zegna brand thom browne textile partially offset effects planned change merchandising strategy whereby portion spring summer deliveries intentionally shifted fourth quarter first quarter increase americas thousand organic driven united states including contribution tom ford fashion segment directly operated stores following completion tfi acquisition april well double digit revenue growth zegna brand dtc channel partially offset impact aforementioned shift wholesale deliveries well conversion saks fifth avenue store new york wholesale dtc iii increase greater china region thousand organic driven growth greater china region particularly zegna brand dtc channel comparison also impacted adverse effects revenues prior year due covid related restrictions greater china region substantially reversed increase rest apac thousand organic details relating revenues group operating segments see results segment cost sales cost sales comprises costs directly related production procurement supply goods services including direct labor costs costs raw materials components used manufacture group products fibers yarns wool silk cotton linen cashmere fabrics composition well leather costs semi finished products finished goods consumables outsourced manufacturing third parties cost sales also includes depreciation amortization impairment assets lease expenses maintenance write downs inventory freight duty production related costs including manufacturing overhead following table sets forth cost sales years ended december years ended december increase decrease thousands except percentages cost sales cost sales revenues compared cost sales year ended december amounted thousand decrease thousand compared thousand year ended december percentage revenues cost sales decreased primarily driven change distribution channel mix described gross profit decrease cost sales primarily attributable lower sales volumes thom browne segment revenues decreased thousand compared decrease inventory write downs thousand thousand compared thousand driven improved inventory management primarily thom browne segment iii lower costs duties freight thousand mainly due improved inventory management thom browne segment resulted lower relative purchase volumes finished goods partially offset higher costs tom ford fashion driven increase revenues thousand primarily reflecting full year compared eight months two days despite lower costs thousand relating acquisition method accounting tfi acquisition thousand compared thousand including thousand related purchase price step fair value acquired tfi inventory sold subsequent acquisition thousand related order backlog compared cost sales year ended december amounted thousand increase thousand compared thousand years ended december increase cost sales primarily attributable impact tom ford fashion acquired tfi acquisition april including effects acquisition method accounting business acquisition comprising thousand related purchase price step fair value acquired tfi inventory sold subsequent acquisition thousand related order backlog higher sales volumes zegna brand thom browne textile gross profit following table sets forth gross profit years ended december years ended december increase decrease thousands except percentages gross profit gross profit revenues compared gross profit year ended december amounted thousand increase thousand compared thousand year ended december gross profit percentage revenues increased primarily driven higher proportion dtc sales compared wholesale sales dtc sales higher margins compared wholesale sales represented total sales compared total sales lower write downs inventory thousand thousand compared thousand driven improved inventory management primarily thom browne segment iii lower costs duties freight thousand mainly due improved inventory management thom browne segment resulted lower purchase volumes finished goods lower costs thousand relating acquisition method accounting tfi acquisition thousand compared thousand including thousand related purchase price step fair value acquired tfi inventory sold subsequent acquisition thousand related order backlog compared gross profit year ended december amounted thousand increase thousand compared thousand year ended december gross profit percentage revenues increased year ended december year ended december primarily driven higher proportion dtc sales compared wholesale sales dtc sales higher margins compared wholesale sales represented total sales year ended december compared year ended december effects price increases price repositioning reduction end season sales part zegna one brand strategy started rollout fall winter collection prior year iii higher absorption fixed costs supply chain higher proportion sales essentials collections compared seasonal collections line zegna one brand strategy resulted proportionately lower provisions slow moving obsolete inventory selling general administrative expenses selling general administrative expenses primarily include costs sales administrative personnel selling expenses fees corporate bodies consultancies accounting services royalties amortization relation tom ford fashion license administrative general expenses well depreciation amortization impairment assets used selling administrative activities following table sets forth selling general administrative expenses years ended december years ended december increase decrease thousands except percentages selling general administrative expenses selling general administrative expenses revenues compared selling general administrative expenses year ended december amounted thousand increase thousand compared thousand year ended december percentage revenues selling general administrative expenses increased increase selling general administrative expenses primarily attributable increase thousand related tom ford fashion reflecting full year contribution compared eight months two days additional costs integration business expansion net dtc store openings reinforce corporate governance retail business functions well increase personnel subsequent tfi acquisition april higher costs support expansion zegna brand thom browne dtc network net store openings zegna brand december compared december including costs convert stores south korea wholesale dtc starting january net store openings thom browne december compared december including costs convert stores south korea wholesale dtc starting july iii increase net impairment leased owned stores thousand thousand compared thousand impairment charges primarily related leased stores europe united states part thom browne segment greater china region south korea part tom ford fashion segment united states emea greater china region part zegna segment costs related global retail convention zegna dtc sales management held milan first half event held partially offset lower costs relating long term incentives management including equity settled share based payments thousand thousand compared thousand lower transaction costs thousand thousand compared thousand primarily related consultancy legal fees related tfi acquisition completed vii net income related lease agreements thousand recognized repeated related derecognition lease liabilities following change terms lease agreement hong kong selling general administrative expenses years ended december included thousand thousand relating adjusting items presentation adjusted ebit management considers items reflective underlying operating activities additional information please refer non ifrs financial measures adjusted ebit compared selling general administrative expenses year ended december amounted thousand increase thousand compared thousand year ended december increase selling general administrative expenses primarily attributable thousand related tom ford fashion acquired tfi acquisition april including royalties relating tff license well thousand related amortization tff license recognized fair value acquisition date part acquisition method accounting tfi acquisition higher personnel costs excluding tom ford fashion thousand thousand year ended december compared thousand year ended december mainly reinforce group corporate governance result becoming public company well support new store openings iii transaction costs thousand primarily consultancy legal fees related tfi acquisition lesser extent acquisition thom browne business south korea interest norda run increase thousand variable rents excluding tom ford fashion result higher revenues management fees related thom browne business south korea following agreement signed july selling general administrative expenses percentage revenues increased year ended december year ended december selling general administrative expenses years ended december included thousand thousand relating adjusting items presentation adjusted ebit management considers items reflective underlying operating activities additional information please refer non ifrs financial measures adjusted ebit marketing expenses marketing expenses primarily include costs related advertising marketing activities including personnel costs costs advertising communications media events fashion shows store windows displays marketing expenses also include depreciation amortization impairment assets used advertising marketing activities following table sets forth marketing expenses years ended december years ended december increase decrease thousands except percentages marketing expenses marketing expenses revenues compared marketing expenses year ended december amounted thousand increase thousand compared thousand year ended december percentage revenues marketing expenses increased increase marketing expenses driven impact full year contribution tom ford fashion compared eight months two days following tfi acquisition resulting higher marketing expenses thousand aligned brand strategy group continued investing significantly marketing activities particular focus enhancing brand experience engagement zegna brand summary significant initiatives group three brands zegna brand milan design week salone del mobile milan design week zegna significantly enhanced brand presence visibility hosting immersive exhibition headquarters unveiling new flowerbeds piazza del duomo initiative part zegna role official curator iconic piazza duomo flowerbeds next three years launch special edition born oasi zegna book recalls years brand heritage iii two villa zegna events shanghai new york reflecting zegna new approach interacting customers offering immersive experiences connected brand thom browne milan design week thom browne hosted unique installation announce launch home furnishing collection collaboration frette year old italian label fashion shows thom browne presented two fashion shows first new york fashion week second fall couture week paris immersive experience centered muslin fabric influences olympic games tom ford fashion fashion shows february tom ford hosted fashion show milan milan fashion week events throughout year tom ford fashion hosted various store events celebrate key openings compared marketing expenses year ended december amounted thousand increase thousand compared thousand year ended december increase marketing expenses primarily attributable increase thousand expenses zegna thom browne excluding costs personnel depreciation amortization impairment assets line group marketing strategy announced capital markets day may including costs presentation zegna collections men fashion week milan thom browne met gala new york debut thom browne haute couture collection paris well thousand related tom ford fashion acquired tfi acquisition april iii higher costs personnel thousand higher depreciation amortization impairment assets thousand marketing expenses percentage revenues increased year ended december year ended december financial income financial expenses financial income financial expenses include effects fair value changes liabilities relating put options owned non controlling interests group investments thom browne inc gruppo dondi well income expenses relating group financial assets liabilities including interest costs hedging transactions completion warrant redemption first quarter described financial income financial expenses also included fair value changes liability classified warrants following table sets forth financial income years ended december years ended december increase decrease thousands except percentages financial income financial income revenues compared financial income year ended december amounted thousand decrease thousand compared thousand year ended december decrease financial income primarily attributable lower gains thousand fair value remeasurement liabilities put options held non controlling interests gain thousand relating dondi non controlling interest put option compared gains thousand thousand relating thom browne non controlling interest put option thousand relating dondi non controlling interest put option lower gains thousand securities held group gain thousand compared gain thousand driven fewer disposals securities iii lower gains thousand derivative financial instruments partially offset gain thousand recognized disposal interest sharmoon garments ltd following group continues interest company account investment fair value higher gains thousand hedging operations compared financial income year ended december amounted thousand increase thousand compared thousand year ended december increase financial income primarily attributable higher gains change fair value thom browne dondi put options thousand gain thousand thom browne put option compared loss gain thousand dondi put option compared gain thousand higher gains derivative financial instruments thousand iii higher income interest financial assets hedging operations thousand following table sets forth financial expenses years ended december years ended december increase decrease thousands except percentages financial expenses financial expenses revenues compared financial expenses year ended december amounted thousand decrease thousand compared thousand year ended december decrease financial expenses primarily attributable thousand recognized prior year relating warrant liabilities mainly due exercise redemption warrants first quarter following remaining public private placement warrants outstanding lower losses thousand securities held group driven performance financial markets loss thousand compared loss thousand iii decrease thousand relating hedging costs partially offset increase thousand interest financial charges lease liabilities including increase thousand related tom ford fashion reflecting full year contribution compared eight months two days driven expansion leased store network higher losses thousand fair value remeasurement thom browne non controlling interest put option liability loss thousand compared gain increase thousand interest expenses bank loans overdrafts driven higher interest rates compared financial expenses year ended december amounted thousand increase thousand compared thousand year ended december increase financial expenses primarily attributable higher losses thousand warrant liabilities loss thousand compared loss thousand driven exercise redemption warrants first quarter see note current non current financial liabilities consolidated financial statements included elsewhere annual report additional information increase thousand interest bank loans overdrafts driven higher interest rates iii increase thousand interest financial charges lease liabilities including thousand related tom ford fashion partially offset lower losses fair value remeasurement thom browne non controlling interest put option liability thousand gain compared loss thousand lower losses thousand securities held group driven performance financial markets loss thousand compared loss thousand decrease thousand relating hedging costs foreign exchange losses foreign exchange losses include realized gains losses exchange differences fair value adjustments derivatives effects exchange rates remeasurement options warrant liabilities following table sets forth exchange losses years ended december years ended december increase decrease thousands except percentages foreign exchange losses foreign exchange losses revenues compared foreign exchange losses year ended december amounted thousand increase thousand compared foreign exchange losses thousand year ended december increase foreign exchange losses driven unfavorable foreign exchange impact thousand related thom browne non controlling interest put option liability foreign currency losses thousand primarily unrealized compared unrealized foreign currency gains thousand partially offset decrease thousand cumulative translation losses reclassified comprehensive income profit thousand following group sale interest ezesa argentina compared thousand related investment held tfi prior tfi acquisition iii thousand related securities held group foreign exchange gains thousand compared foreign exchange losses thousand thousand related lease liabilities foreign exchange gains thousand compared foreign exchange losses thousand thousand lower foreign exchange losses primarily related transactions foreign currencies compared foreign exchange losses year ended december amounted thousand decrease thousand compared thousand year ended december decrease foreign exchange losses driven favorable foreign exchange impact thousand related thom browne non controlling interest put option liability unrealized foreign currency gains thousand compared unrealized foreign currency losses thousand partially offset unfavorable foreign exchange impact thousand reclassification cumulative translation losses related investment held tfi comprehensive income profit loss date tfi acquisition iii thousand related securities held group foreign exchange losses thousand compared foreign exchange gains thousand thousand related lease liabilities foreign exchange losses thousand compared foreign exchange losses thousand thousand higher foreign exchange losses primarily related transactions foreign currencies result investments accounted using equity method result investments accounted using equity method includes group share income loss related investments associates joint arrangements accounted using equity method following tables set forth result investments accounted using equity method years ended december years ended december increase decrease thousands except percentages result investments accounted using equity method result investments accounted using equity method revenues compared result investments accounted using equity method year ended december amounted profit thousand improvement thousand compared loss thousand year ended december primarily related gain thousand relating group investment filati biagioli modesto including effects increase interest owned group following conversion previous equity contribution share capital compared loss thousand well loss thousand relating group interest tfi prior tfi acquisition including transaction costs incurred tfi prior closing tfi acquisition compared result investments accounted using equity method years ended december amounted loss thousand change thousand compared profit thousand years ended december primarily related group interest tfi prior tfi acquisition thousand reflecting loss thousand prior tfi acquisition includes transaction costs incurred tfi prior closing tfi acquisition compared gain thousand year ended december filati biagioli modesto thousand loss thousand compared gain thousand iii tizeta thousand gain thousand compared gain thousand following completion tfi acquisition april tfi tizeta previously owned group tfi consolidated group income taxes income taxes include current taxes results group operations changes deferred income taxes following table sets forth income taxes years ended december years ended december increase decrease thousands except percentages income taxes income taxes revenues compared income taxes year ended december amounted thousand compared thousand year ended december thousand thousand respectively related general corporate income taxes italy italian corporate income tax ires countries group operates thousand thousand respectively related italian regional income tax irap calculated measure income defined italian civil code difference operating revenues costs financial income expense cost fixed term employees credit losses interest included lease payments effective tax rate year ended december compared year ended december effective tax rate net irap year ended december compared year ended december increase effective tax rate compared primarily driven lower non taxable income recognized remeasurement put option liabilities non controlling interests thom browne dondi higher proportion taxable income jurisdictions higher tax rates compared previous year including effects certain jurisdictions raising corporate tax rates response pillar two tax rules aim raise minimum level tax applicable companies iii higher deferred tax assets recognized compared partially offset higher deferred tax assets recognized previous years compared income taxes year ended december amounted thousand compared thousand year ended december thousand thousand respectively related general corporate income taxes italy ires countries group operates thousand thousand respectively related irap calculated measure income defined italian civil code difference operating revenues costs financial income expense cost fixed term employees credit losses interest included lease payments effective tax rate year ended december compared year ended december effective tax rate net irap year ended december compared year ended december decrease effective tax rate compared primarily driven non taxable income recognized remeasurement put option liability non controlling interests thom browne dondi well deferred taxes recognized previous years results segment following tables set forth revenues intersegment eliminations adjusted ebit adjusted ebit margin segment years ended december years ended december increase decrease thousands except percentages organic organic revenues zegna thom browne tom ford fashion intersegment eliminations total revenues years ended december increase decrease thousands except percentages adjusted ebit zegna thom browne tom ford fashion corporate intersegment eliminations total adjusted ebit margin zegna thom browne tom ford fashion additional information relating adjusted ebit adjusted ebit margin non ifrs financial measures see non ifrs financial measures adjusted ebit adjusted ebit margin following discussion revenues adjusted ebit adjusted ebit margin segment year ended december compared year ended december year ended december compared year ended december zegna segment following table sets forth revenues adjusted ebit adjusted ebit margin zegna segment years ended december intersegment eliminations years ended december increase decrease thousands except percentages revenues intersegment eliminations adjusted ebit adjusted ebit margin revenues compared revenues intersegment eliminations zegna segment year ended december amounted thousand increase thousand organic compared thousand year ended december increase revenues intersegment eliminations zegna segment primarily attributable increase zegna brand dtc channel thousand organic reflecting growth emea including strong performance middle east americas primarily united states japan well expansion store network net dtc store openings including conversion wholesale dtc stores south korea starting january harry rosen stores canada second half doss december compared doss december partially offset performance greater china region continues impacted challenges luxury sector partially offset decrease zegna brand wholesale branded channel thousand organic primarily reflecting aforementioned conversion wholesale dtc stores south korea starting january harry rosen stores canada second half partially offset positive performance rest apac emea united states iii decrease textile thousand driven lower orders new collections compared previous year across several textile brands reflecting challenges uncertainties currently affecting luxury sector decrease revenues thousand primarily due lower orders third party brands well fewer purchases thom browne segment partially offset higher orders tom ford fashion segment compared revenues intersegment eliminations zegna segment year ended december amounted thousand increase thousand organic compared thousand year ended december increase revenues intersegment eliminations zegna segment primarily attributable increase zegna brand thousand comprised increase dtc channel thousand driven continued positive performance luxury leisurewear footwear represented revenues zegna branded products year respectively well tailoring made measure businesses reflecting double digit growth regions higher average sales prices increased store traffic well selected dtc store openings dtc stores december compared dtc stores december increase wholesale branded channel thousand driven positive performance particularly emea partially offset effects planned change merchandising strategy whereby portion spring summer deliveries intentionally shifted fourth quarter first quarter increase textile thousand primarily attributable positive lanificio ermenegildo zegna partially offset iii decrease revenues thousand reflecting end previous tfi distribution license agreement menswear deliveries fall winter collection start supply agreement act exclusive supplier certain tom ford menswear products spring summer collection following completion tfi acquisition april revenues supply agreement tfi reported intercompany revenues eliminated group consolidated results partially offset contribution tizeta group acquired interest held tfi part tfi acquisition bringing interest tizeta adjusted ebit adjusted ebit margin compared adjusted ebit zegna segment amounted thousand year ended december decrease thousand compared thousand year ended december adjusted ebit margin respectively decrease adjusted ebit zegna segment primarily attributable increase selling general administrative expenses driven higher costs support expansion zegna brand net store openings december compared december including costs convert stores south korea wholesale dtc starting january costs incurred business organizational development including hiring new personnel global retail convention zegna dtc sales personnel held milan first half event held well investments information technology digital transformation projects partially offset higher revenues thousand described iii improved gross profit margin due higher proportion dtc sales higher margins compared wholesale aligned brand strategy zegna segment continued investing significantly marketing activities particular focus enhancing brand experience engagement zegna brand selected initiatives included following milan design week salone del mobile milan design week zegna significantly enhanced brand presence visibility hosting immersive exhibition headquarters unveiling new flowerbeds piazza del duomo initiative part zegna role official curator iconic piazza duomo flowerbeds next three years launch special edition born oasi zegna book recalls years brand heritage iii two villa zegna events shanghai new york reflecting zegna new approach interacting customers offering immersive experiences connected brand compared adjusted ebit zegna segment amounted thousand years ended december increase thousand compared thousand year ended december adjusted ebit margin respectively increase adjusted ebit primarily attributable higher revenues thousand described including effects higher average sales prices improved profitability driven higher proportion dtc sales compared wholesale sales improved retail store productivity including effects store right sizing higher absorption fixed costs supply chain price increases reduction end season sales part zegna one brand strategy higher proportion sales essentials collections compared seasonal collections proportionately lower provisions slow moving obsolete inventory partially offset iii increase selling general administrative expenses driven growth business new resources reinforce corporate governance certain functions within zegna segment higher advertising marketing expenses line group marketing strategy brand thom browne segment following table sets forth revenues adjusted ebit adjusted ebit margin thom browne segment years ended december intersegment eliminations years ended december increase decrease thousands except percentages revenues intersegment eliminations adjusted ebit adjusted ebit margin revenues compared revenues intersegment eliminations thom browne segment year ended december amounted thousand decrease thousand organic compared thousand year ended december decrease revenues intersegment eliminations thom browne segment primarily attribute decrease wholesale branded channel thousand organic primarily reflecting decision streamline wholesale business conversion stores wholesale dtc following acquisition thom browne business south korea second half partially offset increase dtc channel thousand organic driven strong performance japan increase thousand thom browne business south korea acquired second half stores subsequently converted wholesale dtc following agreement former franchise partner well expansion store network net dtc store openings doss december compared doss december included conversion wholesale dtc saks fifth avenue store new york well conversion nordstrom stores united states holt renfrew stores canada majority significantly smaller average store size brand dtc network partially offset performance greater china region continues impacted challenging conditions luxury sector compared revenues intersegment eliminations thom browne segment year ended december amounted thousand increase thousand organic compared thousand year ended december increase revenues intersegment eliminations thom browne segment reflects growth across lines particular womenswear childrenswear comprises increase dtc channel thousand driven expansion store network net store openings dtc stores december compared dtc stores december mainly apac including conversion stores south korea wholesale dtc following agreement former franchise partner well performance existing stores japan macau increase wholesale branded channel thousand driven double digit growth emea partially offset lower deliveries south korean market ahead change business wholesale dtc starting third quarter following agreement former franchise partner adjusted ebit adjusted ebit margin compared adjusted ebit thom browne segment amounted thousand years ended december decrease thousand compared thousand year ended december adjusted ebit margin respectively decrease adjusted ebit thom browne segment primarily attributable lower revenues thousand described higher selling general administrative expenses support expansion dtc network net store openings december compared december including costs aforementioned conversion stores wholesale dtc second half following acquisition thom browne business south korea conversion saks fifth avenue store new york well nordstrom stores united states holt renfrew stores canada iii marginal increase marketing expenses selected marketing related initiatives included following milan design week thom browne hosted unique installation announce launch home furnishing collection collaboration frette year old italian label fashion shows thom browne presented two fashion shows first new york fashion week second fall couture week paris immersive experience centered muslin fabric influences olympic games partially offset lower write downs inventory driven improved inventory management lower costs long term incentives management variable remuneration compared adjusted ebit thom browne segment amounted thousand years ended december increase thousand compared thousand year ended december adjusted ebit margin respectively increase adjusted ebit thom browne segment primarily attributable higher revenues thousand described partially offset costs related expansion dtc store network net store openings dtc stores december compared dtc stores december including conversion stores south korea wholesale dtc starting july iii increase personnel costs driven growth business new resources reinforce certain functions within thom browne segment tom ford fashion segment following table sets forth revenues adjusted ebit adjusted ebit margin tom ford fashion segment years ended december intersegment eliminations years ended december increase decrease thousands except percentages revenues intersegment eliminations adjusted ebit adjusted ebit margin revenues compared revenues intersegment eliminations tom ford fashion segment amounted thousand year ended december increase thousand organic compared thousand years ended december increase revenues intersegment eliminations tom ford fashion segment primarily attributable increase dtc channel thousand organic primarily benefiting full year contribution compared eight months two days following completion tfi acquisition april organic growth driven positive performance united states emea well expansion dtc store network net store openings dtc stores december compared dtc stores december increase wholesale branded channel thousand organic primarily benefiting full year contribution compared eight months two days following completion tfi acquisition april organic growth primarily due conversion two wholesale stores retail third quarter harrods london men saks fifth avenue new york women well lower shipments fall winter collection ahead new collection revealed march new creative director haider ackermann compared tom ford fashion segment acquired tfi acquisition april contributed revenues intersegment eliminations thousand including thousand dtc channel thousand wholesale channel adjusted ebit adjusted ebit margin compared adjusted ebit tom ford fashion segment amounted thousand years ended december decrease thousand compared thousand year ended december adjusted ebit margin respectively decrease adjusted ebit tom ford fashion segment primarily attributable increase selling general administrative expenses reflecting full year contribution compared eight months two days additional costs integration business expansion net dtc store openings partially offset net wholesale store closures reinforce corporate governance retail business functions well increase personnel subsequent tfi acquisition april higher marketing expenses reflecting full year contribution compared eight months two days selected marketing related initiatives included following fashion shows february tom ford hosted fashion show milan milan fashion week events throughout year tom ford fashion hosted various store events celebrate key openings including october event launch china world chinese flagship partially offset iii higher revenues thousand described compared following completion tfi acquisition april tom ford fashion segment contributed adjusted ebit thousand adjusted ebit margin adjusted ebit negatively impacted costs thousand relating effects acquisition method accounting business acquisition comprising thousand related purchase price step fair value acquired tfi inventory sold subsequent acquisition thousand related amortization license agreement amortized years thousand amortization intangible asset recognized relation order backlog royalties relating tff license corporate corporate includes costs certain central corporate functions directly attributable group operating segments corporate costs amounted thousand thousand thousand years ended december decrease corporate costs compared mainly due lower costs short term long term remuneration corporate costs primarily relate compensation group board directors costs functions managed centrally behalf entire group including general counsel central finance internal audit investor relations insurance coverage directors officers compliance certain centralized activities related public company costs allocated segments certain costs reinforce corporate governance certain functions within group directly attributable individual segments allocated accordingly operating segments described zegna segment thom browne segment tom ford fashion segment critical accounting estimates please refer note key sources estimation uncertainty use estimates critical accounting judgments use estimates consolidated financial statements included elsewhere annual report information relating critical accounting estimates applicable group non ifrs financial measures group management monitors evaluates operating financial performance using several non ifrs financial measures including adjusted earnings interest taxes adjusted ebit adjusted ebit margin adjusted earnings interest taxes depreciation amortization adjusted ebitda adjusted profit adjusted basic earnings per share adjusted diluted earnings per share net financial indebtedness cash surplus trade working capital free cash flow revenues constant currency basis constant currency revenues organic growth basis organic organic growth group management believes non ifrs financial measures provide useful relevant information regarding group financial performance financial condition improve ability management investors assess compare financial performance financial position group companies also provide comparable measures facilitate management ability identify operational trends well make decisions regarding future spending resource allocations strategic operational decisions similar measures widely used industry group operates financial measures group uses may comparable similarly named measures used companies intended substitutes measures financial performance financial position prepared accordance ifrs accounting standards definition explanation relevance reconciliation non ifrs financial measure directly comparable measure calculated presented accordance ifrs accounting standards set adjusted ebit adjusted ebit margin adjusted ebit defined profit loss income taxes plus financial income financial expenses foreign exchange losses result investments accounted using equity method adjusted income costs significant nature management considers reflective underlying operating activities including one periods presented described net impairment leased owned stores severance indemnities provisions severance expenses legal costs trademark dispute transaction costs related acquisitions costs related business combination special donations social responsibility net income related lease agreements adjusted ebit margin defined adjusted ebit divided revenues applicable period group management uses adjusted ebit adjusted ebit margin internal reporting assess performance part forecasting budgeting decision making processes provide additional transparency regarding group underlying operating performance group management believes non ifrs financial measures useful exclude items management believes indicative group underlying operating performance allow management view operating trends perform analytical comparisons benchmark performance periods among segments group management also believes adjusted ebit adjusted ebit margin useful investors analysts better understand management assesses group underlying operating performance consistent basis compare group performance companies accordingly management believes adjusted ebit adjusted ebit margin provide useful information third party stakeholders understanding evaluating group operating results following table presents reconciliation profit adjusted ebit calculation profit margin adjusted ebit margin years ended december years ended december thousands except percentages profit income taxes financial income financial expenses foreign exchange losses result investments accounted using equity method operating profit adjustments net impairment leased owned stores severance indemnities provisions severance expenses legal costs trademark dispute transaction costs related acquisitions costs related business combination special donations social responsibility net income related lease agreements adjusted ebit revenues profit margin profit revenues adjusted ebit margin adjusted ebit revenues ______________________ net impairment leased owned stores includes years ended december thousands right use assets property plant equipment intangible assets total relates severance indemnities thousand thousand thousand respectively relates legal costs thousand net reimbursements thousand thousand respectively connection legal dispute adidas adidas thom browne primarily relation use trademarks relates transaction costs thousand thousand thousand respectively primarily consultancy legal fees related group acquisition zegna business south korea acquisition thom browne business south korea tfi acquisition acquisition interest norda costs related business combination thousand thousand respectively relate grant equity awards management vesting subject public listing company shares certain performance service conditions relates donations support initiatives related humanitarian emergencies turkey thousand ukraine thousand net income related lease agreements thousand relates derecognition lease liabilities following change terms lease agreement hong kong net income related lease agreements include proceeds thousand received new tenants order group withdraw existing lease agreements commercial properties thousand reversals previously recognized provisions respect legal claim related lease agreement partially offset iii thousand losses related sublease agreement adjusted ebitda adjusted ebitda defined profit loss income taxes plus financial income financial expenses foreign exchange losses depreciation amortization impairment assets result investments accounted using equity method adjusted income costs significant nature management considers reflective underlying operating activities including one periods presented described severance indemnities provisions severance expenses legal costs trademark dispute transaction costs related acquisitions costs related business combination special donations social responsibility net income related lease agreements group management uses adjusted ebitda understand evaluate group underlying operating performance group management believes non ifrs financial measure useful excludes items management believes indicative group underlying operating performance allows management view operating trends perform analytical comparisons benchmark performance periods group management also believes adjusted ebitda useful investors analysts better understand management assesses group underlying operating performance consistent basis compare group performance companies accordingly management believes adjusted ebitda provides useful information third party stakeholders understanding evaluating group operating result following table presents reconciliation profit adjusted ebitda years ended december years ended december thousands profit income taxes financial income financial expenses foreign exchange losses depreciation amortization impairment assets result investments accounted using equity method severance indemnities provisions severance expenses legal costs trademark dispute transaction costs related acquisitions costs related business combination special donations social responsibility net income related lease agreements adjusted ebitda ______________________ relates severance indemnities thousand thousand thousand respectively relates legal costs thousand net reimbursements thousand thousand respectively connection legal dispute adidas adidas thom browne primarily relation use trademarks relates transaction costs thousand thousand thousand respectively primarily consultancy legal fees related group acquisition zegna business south korea acquisition thom browne business south korea tfi acquisition acquisition interest norda costs related business combination thousand thousand respectively relate grant equity awards management vesting subject public listing company shares certain performance service conditions relates donations support initiatives related humanitarian emergencies turkey thousand ukraine thousand net income related lease agreements thousand relates derecognition lease liabilities following change terms lease agreement hong kong net income related lease agreements include proceeds thousand received new tenants order group withdraw existing lease agreements commercial properties thousand reversals previously recognized provisions respect legal claim related lease agreement partially offset iii thousand losses related sublease agreement adjusted profit adjusted profit defined profit adjusted income costs net related tax effects significant nature management considers reflective underlying activities including one periods presented described net impairment leased owned stores severance indemnities provisions severance expenses legal costs trademark dispute transaction costs related acquisitions costs related business combination special donations social responsibility net income related lease agreements gain disposal investment well tax effects adjusting items group management uses adjusted profit understand evaluate group underlying performance group management believes non ifrs financial measure useful excludes items management believes indicative group underlying performance allows management view performance trends perform analytical comparisons benchmark performance periods group management also believes adjusted profit useful investors analysts better understand management assesses group underlying performance consistent basis compare group performance companies accordingly management believes adjusted profit provides useful information third party stakeholders understanding evaluating group results following table presents reconciliation profit adjusted profit years ended december years ended december thousands profit net impairment leased owned stores severance indemnities provisions severance expenses legal costs trademark dispute transaction costs related acquisitions costs related business combination special donations social responsibility net income related lease agreements gain disposal investment tax effects adjusting items adjusted profit ______________________ net impairment leased owned stores includes years ended december thousands right use assets property plant equipment intangible assets total relates severance indemnities thousand thousand thousand respectively relates legal costs thousand net reimbursements thousand thousand respectively connection legal dispute adidas adidas thom browne primarily relation use trademarks relates transaction costs thousand thousand thousand respectively primarily consultancy legal fees related group acquisition zegna business south korea acquisition thom browne business south korea tfi acquisition acquisition interest norda costs related business combination thousand thousand respectively relate grant equity awards management vesting subject public listing company shares certain performance service conditions relates donations support initiatives related humanitarian emergencies turkey thousand ukraine thousand net income related lease agreements thousand relates derecognition lease liabilities following change terms lease agreement hong kong net income related lease agreements include proceeds thousand received new tenants order group withdraw existing lease agreements commercial properties thousand reversals previously recognized provisions respect legal claim related lease agreement partially offset iii thousand losses related sublease agreement relates gain thousand disposal interest sharmoon garments ltd previously fully impaired group due dispute shareholder includes tax effects aforementioned adjustments calculated current deferred tax effects pre tax items excluded adjusted profit using statutory tax rates related jurisdiction impacted adjustment considering items deductible taxable impact temporary differences ultimate recoverability deferred tax assets applicable adjusted basic earnings per share adjusted diluted earnings per share adjusted basic earnings per share adjusted diluted earnings per share defined basic earnings per share diluted earnings per share adjusted income costs net related tax effects significant nature management considers reflective underlying activities including one periods presented described net impairment leased owned stores severance indemnities provisions severance expenses legal costs trademark dispute transaction costs related acquisitions costs related business combination special donations social responsibility net income related lease agreements gain disposal investment well tax effects adjusting items excluding impact non controlling interests adjusting items group management uses adjusted basic earnings per share adjusted diluted earnings per share understand evaluate group underlying performance group management believes non ifrs financial measure useful excludes items believe indicative underlying performance allows view operating trends perform analytical comparisons benchmark performance periods accordingly management believes adjusted basic diluted earnings per share provides useful information third party stakeholders understanding evaluating group results following table presents reconciliation profit adjusted basic earnings per share adjusted diluted earnings per share years ended december years ended december thousands except per share data profit net impairment leased owned stores severance indemnities provisions severance expenses legal costs trademark dispute transaction costs related acquisitions costs related business combination special donations social responsibility net income related lease agreements gain disposal investment tax effects adjusting items adjusted profit impact non controlling interests adjusted profit attributable shareholders parent company weighted average number shares basic earnings per share basic earnings per share adjusted basic earnings per share weighted average number shares diluted earnings per share diluted earnings per share adjusted diluted earnings per share ______________________ net impairment leased owned stores includes years ended december thousands right use assets property plant equipment intangible assets total relates severance indemnities thousand thousand thousand respectively relates legal costs thousand thousand thousand respectively connection legal dispute adidas thom browne primarily relation use trademarks relates transaction costs thousand thousand thousand respectively primarily consultancy legal fees related group acquisition zegna business south korea tfi acquisition acquisition interest norda costs related business combination thousand thousand respectively relate grant equity awards management vesting subject public listing company shares certain performance service conditions relates donations support initiatives related humanitarian emergencies turkey thousand ukraine thousand net income related lease agreements thousand relates derecognition lease liabilities following change terms lease agreement hong kong net income related lease agreements include proceeds thousand received new tenants order group withdraw existing lease agreements commercial properties thousand reversals previously recognized provisions respect legal claim related lease agreement partially offset iii thousand losses related sublease agreement relates gain thousand disposal interest sharmoon garments ltd previously fully impaired group due dispute shareholder includes tax effects aforementioned adjustments calculated current deferred tax effects pre tax items excluded adjusted basic earnings per share adjusted diluted earnings per share using statutory tax rates related jurisdiction impacted adjustment considering items deductible taxable impact temporary differences ultimate recoverability deferred tax assets applicable represents profit attributable non controlling interests plus impact non controlling interests adjusting items net financial indebtedness cash surplus net financial indebtedness cash surplus defined sum financial borrowings current non current derivative financial instrument liabilities net cash cash equivalents derivative financial instrument assets securities recorded within current financial assets consolidated statement financial position group management believes net financial indebtedness cash surplus useful monitor level net liquidity financial resources available group group management believes non ifrs financial measure aids management investors analysts analyze group financial position financial resources available compare group financial position financial resources available companies following table sets forth calculation net financial indebtedness cash surplus december december thousands non current borrowings current borrowings derivative financial instruments liabilities total borrowings financial liabilities derivatives cash cash equivalents derivative financial instruments assets current financial assets securities total cash cash equivalents current financial assets derivatives net financial indebtedness cash surplus additional details relating net financial indebtedness cash surplus see section liquidity capital resources net financial indebtedness cash surplus trade working capital trade working capital defined current assets less current liabilities adjusted derivative assets liabilities tax receivables liabilities cash cash equivalents borrowings lease liabilities certain current assets liabilities group management uses trade working capital understand evaluate group liquidity generation absorption group management believes non ifrs financial measure important supplemental information investors evaluating liquidity provides insight availability net current resources fund ongoing operations trade working capital measure used management internal evaluations cash availability operational performance following table sets forth calculation trade working capital december december thousands current assets current liabilities working capital less derivative financial instruments assets tax receivables current financial assets current assets cash cash equivalents current borrowings current lease liabilities derivative financial instruments liabilities current financial liabilities current provisions risks charges tax liabilities current liabilities trade working capital trade receivables inventories trade payables customer advances trade working capital december positively influenced improved inventory management inventory remaining substantially line previous year slightly higher trade receivables partially counterbalanced decrease payables free cash flow free cash flow defined net cash flows operating activities less payments property plant equipment net proceeds disposals intangible assets lease liabilities group management believes free cash flow useful metric management investors analysts evaluate monitor group ability generate cash including comparison companies free cash flow representative residual cash flows available discretionary purposes following table sets forth free cash flow years ended december years ended december thousands net cash flows operating activities payments property plant equipment payments intangible assets payments lease liabilities free cash flow explanation drivers free cash flow see section liquidity capital resources cash flows revenues constant currency basis constant currency addition presenting revenues current currency basis also present certain revenue information constant currency basis constant currency excludes effects foreign currency translation subsidiaries functional currencies different euro calculate constant currency revenues applying current period average foreign currency exchange rates translate prior period revenues foreign subsidiaries expressed local functional currencies different euro use revenues constant currency basis analyze underlying revenues changed periods independent effects foreign currency translation revenues constant currency basis substitute revenues current currency basis ifrs related measures however believe revenues excluding impact foreign currency translation provide additional useful information management investors analyzing evaluating revenues operating performance revenues organic growth basis organic organic growth addition presenting revenues current currency basis also present certain revenue information organic growth basis organic organic growth organic growth calculated change revenues period period excluding effects foreign exchange acquisitions disposals changes license agreements group operates licensee calculating organic performance following adjustments made revenues foreign exchange current period average foreign currency exchange rates used translate prior period revenues foreign subsidiaries expressed local functional currencies different euro acquisitions disposals revenues generated businesses operations acquired current year excluded revenues generated businesses operations acquired prior year excluded current year period corresponds pre acquisition period prior year additionally business operation customer prior acquisition related pre acquisition revenues excluded current prior periods revenues generated businesses operations disposed current year prior year excluded periods applicable changes license agreements group operates licensee revenues generated license agreements group operates licensee new terminated current year prior year excluded periods except effects already included acquisitions disposals additionally revenues generated license agreements group operates licensee experienced structural change scope perimeter current year prior year excluded periods including changes product categories distribution channels geographies underlying license agreements believe presentation revenues organic basis useful better understand analyze underlying change group revenues period period consistent perimeter constant currency basis revenues organic basis substitute revenues current currency basis ifrs related measures however believe revenues excluding effects foreign exchange acquisitions disposals changes license agreements group operates licensee provide additional useful information management investors analyzing evaluating revenues operating performance tables show reconciliation reported revenue performance constant currency excluding effects foreign exchange organic performance excludes also acquisitions disposals changes license agreements group operates licensee segment brand product line distribution channel geographic area year ended december compared year ended december year ended december compared year ended december segment revenues growth less foreign exchange constant currency less acquisitions disposals less changes license agreements group operates licensee organic zegna thom browne tom ford fashion total revenues growth less foreign exchange constant currency less acquisitions disposals less changes license agreements group operates licensee organic zegna thom browne tom ford fashion total ______________________ meaningful group began operating tom ford fashion segment following tfi acquisition completed april therefore comparison figure period brand product line revenues growth less foreign exchange constant currency less acquisitions disposals less changes license agreements group operates licensee organic zegna brand thom browne brand tom ford fashion textile total revenues growth less foreign exchange constant currency less acquisitions disposals less changes license agreements group operates licensee organic zegna brand thom browne brand tom ford fashion textile total ______________________ mainly includes revenues agreements third party brands distribution channel revenues growth less foreign exchange constant currency less acquisitions disposals less changes license agreements group operates licensee organic direct consumer dtc zegna brand thom browne brand tom ford fashion total direct consumer dtc wholesale branded zegna brand thom browne brand tom ford fashion total wholesale branded textile total revenues growth less foreign exchange constant currency less acquisitions disposals less changes license agreements group operates licensee organic direct consumer dtc zegna brand thom browne tom ford fashion total direct consumer dtc wholesale branded zegna brand thom browne tom ford fashion total wholesale branded textile total ______________________ mainly includes revenues agreements third party brands geographic area revenues growth less foreign exchange constant currency less acquisitions disposals less changes license agreements group operates licensee organic emea americas greater china region rest apac total revenues growth less foreign exchange constant currency less acquisitions disposals less changes license agreements group operates licensee organic emea americas greater china region rest apac total ______________________ emea includes europe middle east africa americas includes united states america canada mexico brazil central south american countries rest apac includes japan south korea singapore thailand malaysia vietnam indonesia philippines australia new zealand india southeast asian countries revenues mainly include royalties liquidity capital resources overview group principal sources liquidity cash flows operations borrowings available bank credit lines forms indebtedness well available cash cash equivalents group requires liquidity order meet obligations fund business short term liquidity required fund ongoing cash requirements including purchase raw materials consumables goods production pay personnel costs well fund costs services expenses addition general working capital operational needs group uses cash following purposes capital expenditures support existing future commercial network production facilities principal interest payments financial obligations iii acquisitions returns capital shareholders primarily dividends group makes capital investments primarily opening new stores renovation existing stores well initiatives enhance adapt production facilities new technologies emerging needs upgrade information technology systems group believes cash generation together available liquidity sufficient meet short term long term liquidity requirements including obligations fund business capital expenditures foreseeable future starting group implemented funding strategy aim reducing cost financing continuing ensure group adequate access liquidity meet financial commitments guarantee flexibility operations expansion initiatives line strategy group replaced portion short term debt maturities new bilateral committed revolving credit facilities may drawn group time relevant term additionally group disposed significant portion financial asset securities holdings particular group disposed securities primarily investments insurance contracts fixed income hedge funds amounting thousand proceeds thousand group primarily used finalize tfi acquisition capital expenditures well repay borrowings cash flows net cash flows operating activities compared net cash flows operating activities amounted thousand compared thousand positive change thousand periods primarily attributable combined effects thousand positive change cash flows used inventories trade receivables trade payables cash absorbed thousand compared thousand primarily driven improved inventory management actions taken prior year build raw materials finished products order support growth business including inventory essentials collections line zegna one brand strategy classic collections thom browne lower taxes paid thousand thousand compared thousand partially offset thousand negative change cash flow operating assets liabilities cash absorbed thousand compared cash absorbed thousand including bonuses earned key management previous years paid decrease profit excluding non cash items thousand thousand compared thousand iii higher interest paid thousand thousand compared thousand compared net cash flows operating activities amounted thousand compared thousand positive change thousand periods primarily attributable combined effects increase profit excluding non cash items thousand thousand compared thousand thousand positive change cash flow operating assets liabilities cash used thousand compared cash used thousand iii thousand relating positive change current non current provisions risks charges primarily due payments thousand settle claims relating lease agreements partially offset thousand negative change cash flows used inventories trade receivables trade payables customer advances including effects tfi following tfi acquisition cash absorbed thousand compared thousand cash used inventories trade receivables trade payables thousand includes thousand relating inventories reflecting also higher raw materials finished products order support growth business including build inventory essentials collections line zegna one brand strategy classic collections thom browne thousand relating increase trade receivables partially offset thousand relating increase trade payables customer advances higher taxes paid thousand thousand compared thousand net cash flows used investing activities compared net cash flows used investing activities amounted thousand compared net cash flows investing activities thousand negative change thousand periods primarily attributable combined effects lower proceeds disposals current financial assets derivative instruments thousand proceeds thousand compared proceeds thousand line actions taken group dispose financial asset securities holdings primarily fund tfi acquisition capital expenditures well repay borrowings higher payments investments property plant equipment thousand thousand compared thousand additional information relating group investments see capital expenditure iii higher payments investments intangible assets thousand thousand compared thousand additional information relating group investments see capital expenditure partially offset lower net cash outflows business combinations net cash acquired thousand thousand thousand related acquisition zegna business south korea thousand related deferred consideration paid prior year acquisition thom browne business south korea compared thousand thousand tfi acquisition completed april thousand paid acquisition thom browne business south korea payments acquisition investments accounted using equity method including thousand acquisition interest norda run inc norda thousand acquisition interest luigi fedeli figlio thousand capital contribution filati biagioli modesto additional information relating transactions see note investments accounted using equity method within consolidated financial statements included elsewhere annual report iii lower payments acquisitions current financial assets derivative instruments thousand payments thousand compared payments thousand cash proceeds thousand sale interest sharmoon garments ltd compared net cash flows investing activities amounted thousand compared thousand positive change thousand periods primarily attributable combined effects higher proceeds disposals current financial assets derivative instruments thousand proceeds thousand compared proceeds thousand line actions taken group dispose financial asset securities holdings primarily fund tfi acquisition capital expenditures well repay borrowings lower payments investments intangible assets thousand thousand compared thousand additional information relating group investments see capital expenditure partially offset net cash outflows thousand related tfi acquisition completed april thousand related acquisition thom browne business south korea completed july thousand related earn payment acquisition tessitura ubertino additional information relating acquisitions see note business combinations within consolidated financial statements included elsewhere annual report payments acquisition investments accounted using equity method including thousand acquisition interest norda run inc norda thousand acquisition interest luigi fedeli figlio thousand capital contribution filati biagioli modesto additional information relating transactions see note investments accounted using equity method within consolidated financial statements included elsewhere annual report iii higher payments investments property plant equipment thousand thousand compared thousand additional information relating group investments see capital expenditure higher payments acquisitions current financial assets derivative instruments thousand payments thousand compared payments thousand net cash flows used financing activities compared net cash flows used financing activities amounted thousand compared thousand positive change thousand periods primarily attributable combined effects lower net repayments borrowings thousand repayments borrowings net proceeds thousand compared thousand primarily reflecting actions taken repay borrowings primarily cash proceeds disposal certain financial investments held group partially offset payments thousand acquisition non controlling interests including thousand acquisition additional thom browne group result thom browne exercising put option thousand acquisition remaining interest ermenegildo zegna madrid previously owned group higher payments lease liabilities thousand thousand compared thousand iii cash proceeds received repeat thousand warrant holders exercising warrants exercise price per ordinary share exchanged thousand sales shares held treasury higher dividends paid owners parent thousand thousand compared thousand compared net cash flows used financing activities amounted thousand compared thousand positive change thousand periods primarily attributable combined effects lower net repayments borrowings thousand net repayments thousand compared thousand thousand proceeds warrant holders exercising warrants exercise price per ordinary share exchanged partially offset higher payments lease liabilities thousand thousand compared thousand primarily driven lease contracts new store openings including contribution tom ford fashion partially offset termination certain lease contracts apac lower capital contributions result thousand received reimbursement group monterubello special gift employees group result company listing completed december iii higher dividends paid owners parent thousand thousand compared thousand higher dividends paid non controlling interests thousand thousand compared thousand capital expenditure capital expenditure defined sum cash outflows result additions property plant equipment intangible assets following table shows breakdown capital expenditure category years ended december years ended december thousands payments property plant equipment payments intangible assets capital expenditure group main capital expenditure primarily relates investments store network new store openings store renewals relocations remodeling franchising contributions amounted million million million years ended december respectively primarily related zegna segment relevant investments periods presented mainly related production activities apparel textile million million million years ended december respectively including investments new luxury footwear leather goods production facility sala baganza parma italy information technology million million million years ended december respectively primarily intangible assets related digital business transformation projects store network following table presents capital expenditure develop store network split segment years ended december millions zegna thom browne tom ford fashion capital expenditure related store network ______________________ group began operating tom ford fashion segment following tfi acquisition completed april zegna segment main new store openings zegna segment presented emea monte carlo riyadh saudi arabia astir marina greece taormina italy puerto banus spain paris france fiumicino airport italy zurich airport switzerland americas new york meatpacking district honolulu miramar united states greater china region nanchang nanjing shanghai airport wuhan hong kong rest apac kuala lumpur malaysia changi airport singapore emea porto portugal moritz switzerland courchevel france copenhagen denmark dubai uae kuwait city kuwait americas new york three stores including east hampton beverly hills atlanta united states greater china region beijing nanjing wuhan nanning taipei emea madrid spain americas palm beach united states greater china region chengdu jinan fuzhou lanzhou rest apac tokyo japan thom browne segment main new store openings thom browne segment presented greater china region beijing wuhan shenyang kunming macau rest apac kobe japan daejeon south korea americas new york saks avenue united states greater china region wuhan shenzhen harbin jinan rest apac nagoya yokohama japan greater china region shanghai beijing guangzhou tianjin nanjing chengdu chongqing zhengzhou tom ford fashion segment main new store openings tom ford fashion segment presented emea milan rome taormina italy madrid spain london harrods united kingdom greater china region beijing shanghai nanjing hangzhou rest apac fukuoka kobe japan singapore americas new york united states rest apac seoul south korea contractual obligations information significant contractual commitments december see note borrowings note qualitative quantitative information financial risks consolidated financial statements included elsewhere annual report net financial indebtedness cash surplus net financial indebtedness cash surplus defined sum financial borrowings current non current derivative financial instrument liabilities net cash cash equivalents derivative financial instrument assets securities recorded within current financial assets consolidated statement financial position net financial indebtedness cash surplus non ifrs financial measure see results operations non ifrs financial measures important information relating non ifrs financial measures group management believes net financial indebtedness cash surplus useful monitor level net liquidity financial resources available group aids management investors analysts analyze group financial position financial resources available well compare group financial position financial resources available companies following table sets forth calculation net financial indebtedness cash surplus december december thousands non current borrowings current borrowings derivative financial instruments liabilities total borrowings financial liabilities derivatives cash cash equivalents derivative financial instruments assets current financial assets securities total cash cash equivalents current financial assets derivatives net financial indebtedness cash surplus net financial indebtedness cash surplus amounted thousand december compared thousand december primarily reflecting combined effects positive free cash flow thousand cash proceeds thousand sale interest sharmoon garments ltd cash used iii business combinations net cash acquired thousand including deferred consideration paid acquisition thom browne business south korea acquisitions non controlling interests thousand dividends owners parent thousand dividends non controlling interests thousand well vii change fair value derivative financial instruments thousand additional information relating change cash cash equivalents see cash flow additional information definition free cash flow see results operations non ifrs financial measures free cash flow main components net financial indebtedness cash surplus explained borrowings group enters manages debt facilities centrally order satisfy short medium term needs subsidiaries based criteria efficiency cost effectiveness group enters maintains bilateral committed credit lines diversified pool lenders total amount considered consistent group overall needs ensure adequate liquidity available time satisfy comply financial obligations commitments well guarantee suitable level operational flexibility expansion programs group extended average maturity debt repaying existing borrowings obtaining new borrowings longer average maturities key interest rate terms group borrowings amount outstanding december presented tables based maturity dates thousands except percentages interest rates bps amount within year years years years beyond years fixed variable total december ______________________ represents spread variable component interest rate generally based euribor thousands except percentages interest rates bps amount within year years years years beyond years fixed variable total december ______________________ represents spread variable component interest rate generally based euribor december group committed revolving lines amounting aggregate million maturity ranging years million december maturity ranging years lines drawn million december million december certain committed revolving lines interest rates linked following two important environment social governance esg targets previously disclosed group least top priority raw materials traced geography origin lower impact sources electricity renewable sources europe united states lines amounted million december undrawn additional information see note borrowings consolidated financial statements included elsewhere annual report debt covenants certain group borrowings revolving lines subject financial covenants requiring group maintain ratio net financial indebtedness adjusted ebitda equal lower calculated annual basis based definition adjusted ebitda specified related agreements may differ similarly named non ifrs financial measure included elsewhere annual report well negative pledges pari passu cross default change control clauses failure comply covenants may require group fully repay outstanding amounts demand december december group net financial indebtedness cash surplus thousand thousand respectively resulting ratio net financial indebtedness adjusted ebitda respectively therefore group compliance covenants derivative financial instruments group enters certain derivative contracts course risk management activities primarily hedge interest rate risk bank debt currency risk sales made currencies euro group enters contracts hedging purposes group financial management policy permit trading financial instruments speculative purposes derivative financial instruments meeting hedge requirements ifrs financial instruments ifrs accounted using hedge accounting changes fair value derivative financial instruments qualifying hedge accounting recognized profit loss relevant reporting period interest rate currency derivatives used group counter otc instruments meaning negotiated bilaterally market counterparties determination current value based valuation techniques use input parameters interest rate curves foreign exchange rates etc observable market level fair value hierarchy defined ifrs fair value measurement derivatives measured fair value reporting date taking reference applicable foreign currency exchange rates interest rates yield curves observable commonly quoted intervals following table sets forth group outstanding hedges december december thousands notional amount positive fair value negative fair value notional amount positive fair value negative fair value foreign currency exchange risk foreign currency derivatives interest rate risk interest rate swaps total derivatives instruments asset liabilities additional information relating derivative financial instruments see note derivative financial instruments consolidated financial statements included elsewhere annual report cash cash equivalents table sets forth breakdown group cash cash equivalents december december increase decrease thousands except percentages cash hand bank balances cash cash equivalents group may subject restrictions limit ability use cash particular cash held china subject certain repatriation restrictions may repatriated dividends group believe transfer restrictions adverse impacts ability meet liquidity requirements cash held china december amounted thousand thousand december current financial assets securities table sets forth breakdown group securities included within net financial indebtedness cash surplus recorded within current financial assets december december increase decrease thousands except percentages fair value profit loss private equity private debt hedge funds real estate funds money market funds equity total fair value profit loss fair value comprehensive income loss fixed income floating income total fair value comprehensive income loss securities recorded within current financial assets additional information relating group securities see note current financial assets consolidated financial statements included elsewhere annual report balance sheet arrangements part tfi acquisition group become long term licensee tom ford men women fashion well accessories underwear fine jewelry childrenswear textile home design products years automatic renewal one additional year period subject certain minimum performance conditions tff license part tff license group required pay minimum annual guaranteed royalties first years tff license december amounted aggregate million million undiscounted remaining term tff license minimum annual guaranteed royalties paid group calculated based percentage net sales preceding annual period tff license also requires group make minimum investments marketing activities percentage net sales licensed products per customary market practices additional information relating tfi acquisition tff license see note business combinations within consolidated financial statements included elsewhere within annual report group provided financial guarantee tfi prior tfi acquisition group held interest associate group amount thousand relation payment obligations bank loan issued tfi financial guarantee subsequently reduced thousand closed part transactions contemplated tfi acquisition amounts claimed guarantee recent developments see note subsequent events consolidated financial statements included elsewhere annual report outlook group updated medium term targets march context financial results release stating group expects reach revenues range million adjusted ebit million risk management risk factors risk management risk appetite control framework management board responsible identifying risks associated group strategy activities reviewing company risk management control systems relation financial reporting group board entrusted audit committee responsibility assist advise board oversight among others integrity group financial statements including published interim reports adequacy effectiveness group internal control financial reporting financial reporting procedures disclosure controls procedures iii group policy tax planning group policy reservations dividends group financing group application information communication technology vii systems internal controls management board established viii group compliance legal regulatory requirements group compliance recommendations observations internal independent auditors open ongoing communications regarding group financial position results operations board independent auditors group management internal audit department group policies procedures addressing certain actual perceived conflicts interest xii qualifications independence oversight remuneration independent auditors non audit services provided group independent auditors xiii determining process selecting external auditor audit firm independent registered public accounting firm applicable nomination extend assignment carry statutory audit xiv performance group internal auditors independent auditors design operation internal risk management control system risk assessment guidelines policies including major financial risk exposure whether strategic financial operating sustainability cybersecurity compliance related otherwise steps taken monitor control risks xvi implementation effectiveness group ethics compliance program business performance depends ability identify opportunities assessing maintaining appropriate risk appetite approach risk management enterprise risk management erm embraces entire organization dimensions business operations dynamic mode long term strategic view erm system consists identifying assessing managing variety risks formalized erm guidelines based main international best practices coso erm erm process involves entire organization governance bodies within scope competence includes several stages including identification risks detailed risk catalog well analysis evaluation risks planning mitigation measures ongoing monitoring ensure effective risk management ensure effective implementation process erm system structured along three lines first line consists operational teams act risk owners managing risks day day activities implementing controls ensuring operational effectiveness second line consists group compliance risk management function provides oversight support ensures risk management objectives met monitors controls function also assists risk owners setting target risk exposures twice year reports risk related information throughout organization third line group internal audit function provides independent assurance policies followed processes carried line management risk strategy risk management framework key global risks identified significant discussed senior management audit committee risks catalog related external factors local economic regulatory social political conditions well climate change environmental impacts business strategy iii financial resources holding ordinary shares exposure fluctuations financial market variables management human resources day day operations processes including supply chain management product pricing quality business interruption information technology systems risks related cybersecurity breaches system disruption unauthorized access vii financial reporting tax matters compliance laws regulations applicable group including environmental social regulations within category risk included risk factors section risk factors contain summary principal risk factors could material adverse effect business results operations financial condition approach risk management protect group potential financial losses damage reputation negative impacts furthermore risk management process helps management define appropriate strategies mitigate identified risks strategies may include implementing reinforcing internal controls ensuring certain risks managed changing way business managed additionally group committed constantly monitoring effectiveness risk management measures making necessary adjustments process crucial ensuring continuity business operations protecting group interests risk appetite reflects strategy ethical principles corporate culture integral part corporate decision making levels specific aspects risk appetite described various chapters report including sections trends uncertainties opportunities respect financial risk management note qualitative quantitative information financial risks consolidated financial statements included elsewhere annual report disclosure controls procedures maintain disclosure controls procedures term defined rules securities exchange act amended exchange act designed provide reasonable assurance information required disclosed group reports exchange act recorded processed summarized reported within time periods specified sec rules forms information accumulated communicated management including chief executive officer chief financial officer appropriate allow timely decisions regarding required disclosures disclosure controls procedures matter well designed operated provide reasonable assurance achieving desired control objectives management supervision participation chief executive officer chief financial officer evaluated effectiveness design operation disclosure controls procedures december based upon evaluation chief executive officer chief financial officer concluded disclosure controls procedures effective reasonable assurance level december due material weaknesses reported section management annual report internal control financial reporting considering material weaknesses along additional analyses procedures conducted ensure compliance consolidated financial statements included annual report generally accepted accounting principles management concluded consolidated financial statements present fairly material aspects financial position results operations cash flows disclosed period accordance international financial reporting standards issued international accounting standards board previously disclosed material weaknesses year ended december management identified deficiencies internal control financial reporting constituted material weaknesses year ended december group identified material weakness principles associated control activities component mainly caused ineffective segregation duties consequently resulted inadequate design implementation operating effectiveness control activities including management review controls across significant number financial statement account balances disclosures result aforementioned material weakness group identified material weakness information communication component committee sponsoring organizations treadway commission coso specifically related principle associated inability generate provide quality information communication necessary support functioning internal control addition group identified material weakness monitoring component coso specifically related timely performance control testing communication internal control deficiencies parties responsible taking corrective action timely manner allow remediation remediation activities oversight audit committee board directors group continued implement remediation plan address material weaknesses identified december noted management conducted specific actions aimed remediate previously disclosed deficiencies including completion significant structured multi year project initiated involving organizational areas included organizational design risk assessment clean user profiles design implementation new control activities actions appropriately addressed segregation duties risks improved ability generate provide quality information communication necessary support functioning internal control addition management designed implemented new controls improved level documentation controls provided awareness sessions internal control practices procedures new control owners actions contributed improving control framework tom ford fashion management implemented adequate controls financial closing leases treasury processes based internal control system financial reporting established group level partially implemented controls business processes however design implementation core business processes still ongoing require longer period time complete despite progress discussed material weaknesses associated control activities information communication components coso still remain unremediated december december management executed timely monitoring activities including tom ford fashion allow prompt identification communication internal control deficiencies parties responsible taking corrective action actions allowed remediation material weakness identified associated monitoring component coso management annual report internal control financial reporting management including chief executive officer chief financial officer responsible establishing maintaining adequate internal control financial reporting term defined rules exchange act internal control financial reporting process designed provide reasonable assurance regarding reliability financial reporting preparation consolidated financial statements external purposes accordance ifrs includes policies procedures pertain maintenance records reasonable detail accurately fairly reflect transactions dispositions assets provide reasonable assurance transactions recorded necessary permit preparation financial statements accordance ifrs receipts expenditures made accordance authorizations management directors group iii provide reasonable assurance regarding prevention timely detection unauthorized acquisition use disposition assets could material effect consolidated financial statements inherent limitations internal control financial reporting may prevent detect misstatements also projections evaluation effectiveness future periods subject risk controls may become inadequate changes conditions degree compliance policies procedures may deteriorate management evaluated effectiveness internal control financial reporting december based criteria established internal control integrated framework issued coso based assessment management concluded internal control financial reporting effective december due material weaknesses described material weaknesses internal control financial reporting material weakness deficiency combination control deficiencies internal control financial reporting reasonable possibility material misstatement group annual interim financial statements prevented detected timely basis evaluation effectiveness group internal control financial reporting december identified deficiencies either individually aggregate rise level material weaknesses group continued identify material weakness principles associated control activities component substantially affecting tom ford fashion specifically relating segregation duties inadequate design implementation operating effectiveness control activities across multiple number financial statement account balances disclosures result aforementioned material weakness group identified material weakness information communication component coso specifically related principle associated inability generate provide quality information communication necessary support functioning internal control additionally material weaknesses could result material misstatements interim annual consolidated financial statements disclosures would prevented detected planned remediation activities fiscal year management remediation plan address material weaknesses existing december consists continuing design missing controls implement control activities including segregation duties tom ford fashion across specific business processes financial statement account balances disclosures actions also improve ability generate provide quality information communication necessary support functioning internal control cannot give assurance measures taking remediate material weaknesses sufficient prevent future material weaknesses management continues evaluate work improve internal control financial reporting may determine necessary take additional measures modify remediation plan described material weaknesses cannot considered remediated applicable controls operate sufficient period time management concluded testing controls operating effectively changes internal control financial reporting except changes described changes group internal control financial reporting occurred period covered annual report materially affected reasonably likely materially affect internal control financial reporting statement board directors based assessment performed board directors believes board report provides sufficient insights material weakness effectiveness internal risk management control systems internal control financial reporting effective december due existence material weaknesses described notwithstanding material weaknesses consolidated financial statements related financial information included annual report fairly present material respects company financial condition results operations cash flows dates presented periods ended dates conformity ifrs iii based current state affairs justified consolidated company financial reporting prepared going concern basis board report states material risks uncertainties board director judgment relevant expectation company continuity period twelve months preparation board report please refer section risk factors risk factors summary risk factors following summary principal risk factors could material adverse effect business results operations financial condition please carefully consider information discussed risk factors detailed description risks business depends recognition integrity reputation brands ability identify respond new changing customer preferences pandemics public health crises may materially adversely affect business disruptions arising political social economic instability geopolitical tensions civil unrest including current conflict ukraine sanctions imposed onto russia may adversely affect business may able successfully implement strategy including strengthening zegna brand successful expansion tom ford fashion business reinforcement thom browne dtc channel disruptions manufacturing logistics facilities well stores may adversely affect business sale products dtc channel subject certain risks including result difficulties renewing existing lease agreements increases rental charges declines sales may adversely affect business wholesale channel subject certain risks arising points sale operated third parties including credit risk dependent local partners sell products certain markets fluctuations price quality disruptions availability raw materials used products commodities energy could cause incur increased costs disrupt manufacturing processes prevent delay meeting customers demands could adversely affected unable negotiate maintain renew license branding agreements loss unavailability certain key senior personnel well skilled personnel could adversely affect business could adversely affected fluctuations exchange rates risk factors relating group business strategy operations business depends recognition integrity reputation brands design manufacture promote sell luxury goods number brands including zegna thom browne pursuant long term license agreement estée lauder companies also operate tom ford fashion tff business sales ability achieve premium pricing depend perception recognition reputation brands turn depend factors product design distinctive character quality products customer service experience image stores franchisees wholesale customers success advertising communication activities general corporate profile recognition integrity reputation brands among valuable assets influenced several factors outside control factors may adversely affect brands image include inability respond adequately needs expectations customers regard quality style creative vision design well social environmental sustainability products service provide stores dissemination third parties information untrue defamatory commencement litigation proceedings well factors attributable parallel distribution counterfeiting products brand appeal closely tied creative vision expression leadership strive align brands creative output evolving market demands may face difficulties maintaining brands identity appeal changes creative director expression talent significantly influence consumers perceive brands brand creative output fails resonate target audience could lead loss brand appeal expand new marketing channels may pursue new collaborations designers artists promoters influencers attract new customers drive engagement existing customers collaborators could engage behavior make statements use platforms manner reflects poorly brand otherwise adversely affect may unable prevent actions actions take address may effective cases foregoing factors could harm recognition appeal integrity reputation brands causing lose existing customers fail attract new customers otherwise material adverse effect business results operations financial condition reputation may also suffer result factors actions attributable suppliers closely monitor suppliers ensure comply applicable laws regulations suppliers fail comply applicable law contractual standards including relating labor social security health safety human rights deliver products defective differ specifications quality standards comply applicable law could adverse effects production cycle cause delays product deliveries customers could damage reputation possible adverse effects business results operations financial condition success depends ability anticipate trends identify respond new changing consumer preferences continued success depends part ability set define product fashion trends part ability identify respond changing consumer preferences timely manner recognize importance adapting evolving expectations new generations consumers elevating brand within luxury market includes continuing embrace digital innovations sustainability practices products must appeal evolving customer base whose preferences cannot predicted certainty subject increasingly rapid change preserving image recognition brands although dedicate considerable resources market analysis identification new fashion trends may able promptly anticipate fashion trends quickly adapt trends design manufacturing stages fail identify promptly respond new trends changing consumer preferences including concerns perceptions regarding sustainability environmental impact products brands reputation may affected could result unsold products decline sales customers well worsening luxury positioning could material adverse effect business results operations financial condition financial condition results operations may adversely affected occurrence global pandemic health crises significant outbreak epidemic pandemic contagious disease covid geographic area operate plan operate could result health crisis adversely affecting economy consumer spending behavior tourism overall demand products supply chain financial markets areas preventative protective government mandated restrictive measures responsive actions adopted private sector individual consumers response health crisis travel restrictions quarantines site closures may adversely impact business operations store traffic employee availability supply chain financial condition liquidity cash flows foregoing events could adversely affect business results operations financial condition global trade conditions consumer trends originated covid pandemic continue effect may also long lasting adverse impacts business independently progress pandemic instance pandemic led shifts tourism patterns emerging new tourist destinations thus reshaping geographical landscape store distribution network shifts resulted increased expenditure associated physical logistical expansion distribution network well need adjust distribution strategies logistics moreover continued remote working arrangements may result lower luxury purchases addition widespread public health crisis may also exacerbate risks disclosed risk factors including limited competitiveness demand products shifting consumer preferences exchange rate fluctuations availability price raw materials operate many countries around world accordingly exposed various international business regulatory social political risks operate countries worldwide direct indirect distribution network year ended december revenues generated emea generated americas generated greater china region generated rest apac operations various international markets expose various risks including arising competition local competitors may greater resources favorable market positions diversity consumers tastes preferences ability anticipate respond tastes preferences appetite spend level wealth changes deterioration political social economic environments countries operate changes regulations including tax regulations imposition new tariffs duties protectionist measures financial sanctions strict regulations affecting import processing certain raw materials finished goods occurrence acts terrorism similar events conflicts geopolitical tensions civil unrest situations political instability parallel imports goods terms inconsistent guidelines distribution products violation exclusive territorial rights granted importers licensees called gray market may force reposition pricing certain countries erode profitability factors may harm business international markets cause incur significant costs markets may unable pass costs customers foregoing factors could material adverse effect business results operations financial condition developments greater china growth emerging markets may adversely affect business operate number growth emerging markets directly distribution partners particular significant proportion sales greater china region reporting purposes includes chinese mainland hong kong macau taiwan representing revenues respectively direct retail presence since markets presented sustained economic growth growth personal income wealth recent years demand luxury products slowed due challenging consumer confidence downturn influenced several factors including economic uncertainty decline real estate market shifts consumer behavior towards overseas shopping phenomenon may continue future rising geopolitical tensions slowdown rate growth emerging markets could cause decline sales limit opportunity increase sales products revenues regions near term example increase tensions around taiwan including threats military actions escalation military activities well rising protests could adversely affect sales greater china region economic political developments emerging markets including economic crises political instability geopolitical tensions could future material adverse effects business results operations financial condition government actions tax changes measures aimed limiting import foreign goods active discouragement luxury purchases measures aimed regulating excessively high incomes may also impact market luxury goods markets regulatory action related statements governmental authorities may also affect social acceptability spending luxury goods consumer spending habits markets may also change due factors outside control maintaining position growth emerging markets key component global strategy however initiatives several global luxury goods manufacturers increased competitive pressures luxury goods several emerging markets markets continue grow anticipate additional competitors international domestic seek enter markets existing market participants try aggressively protect increase sales increased competition may result pricing pressure reduced margins inability increase maintain sales levels could material adverse effect results operations financial condition see also risk factors relating industry group operates markets operate highly competitive conflict ukraine sanctions imposed onto russia may adversely affect business ongoing conflict ukraine resulting geopolitical tensions abrupt impact global economy resulting sharp increase energy prices higher prices certain raw materials goods services turn contributed higher inflation around world extent duration military action sanctions resulting market disruptions impossible predict could material adverse many governments around world including united states european union united kingdom jurisdictions announced imposition sanctions certain industries parties russia belarus ukrainian regions donetsk luhansk well export controls certain industries products including luxury goods exclusion certain russian financial institutions swift system march president united states issued executive order prohibiting exports russia luxury goods including inter alia apparel footwear certain accessories per unit wholesale price march council european union imposed new sanctions russia prohibiting export luxury goods value excess per item including clothing footwear leather fashion accessories additional sanctions export controls well counter responses governments russia countries adversely affecting continue adversely affect directly indirectly supply chain customers well global financial markets financial services industry prior onset conflict business operations russian market used conducted franchisees distribution partners pursuant aforementioned sanctions suspended indefinitely deliveries franchisees distributors russia accordingly either suspended production products starting fall winter collection ordered russian franchisees distributors redirected products ordered russian franchises distributors fall winter collection doss regions franchisees distributors uncertain whether able resume production since revenues russia residual represented less total revenues period general banking economic monetary crisis well escalating energy prices triggered conflict may reduce customers interest financial ability buy luxury products expansion conflict european countries united states parts world worsening world economic situation terms inflation energy prices purchase power likely translate lower propensity spend luxury good products potentially impact business failure implement strategy could adversely affect results operations ability increase revenues pursue growth development objectives generate profits cash flows depends part upon success carrying strategic plan part strategy pursuing among things strengthening zegna brand timeless luxury segment successful evolution growth tom ford fashion thom browne businesses see section business overview strategy description strategy result zegna brand strategy focusing developing iconic products could become significantly exposed certain specific products lose appeal may difficult replace revenues generated therefrom brands pursue ambitious growth strategies require alignment creative efforts broader business objectives investments marketing campaigns product development resonate consumers demand expectations may lead inefficient use time financial resources resulting missed opportunities sales growth could affect business results operations initiatives grow direct consumers channel opening new stores involve significant investments selection appropriate locations personnel execution stores roll plan successful may realize return investment growth profitability anticipate initiatives develop increasingly sustainable business leverage made italy textiles manufacturing platform involve significant investments possible operational changes implementation initiatives successful realize return investments initiatives anticipate results operations could adversely affected strategy premised upon certain assumptions global economy evolution demand luxury goods various regions world operate seek operate competitive position ability management team carry strategic plan fail implement strategic plan assumptions prove incorrect geopolitical situation triggers economic crisis conflict situation regions operate ability increase revenues profitability could affected could material adverse effect business results operations financial condition exposed risks relating recent potential future acquisitions growth strategy may time time include acquisitions acquisitions may cause face uncertainties concerning economic financial outcomes transactions respect past future acquisitions including tfi acquisition closed april may exposed liabilities including tax liabilities detected due diligence process covered contractual provisions furthermore assessments acquired business made time initial investment could prove incorrect achievement anticipated benefits acquisition subject number uncertainties including general competitive factors marketplace ability integrate businesses efficient effective manner establish implement effective operational principles procedures may also encounter unexpected difficulties costs unable retain certain key employees achieve minimal unplanned attrition could increase hiring training costs disrupt business connection hiring new senior managers process coordinating integrating businesses acquired group required continue require significant management financial resources may otherwise focused ordinary course management activities integration process also requires application financial reporting management control systems acquired companies well integration systems compliance risk management policies may apply different standards procedures tools training new personnel needs could require considerable resources entailing significant costs incur liabilities result acquisitions liabilities exceed contractual indemnification caps indemnification available reason could material adverse effect furthermore exposed risk evaluations assumptions underlying investment decisions could turn incorrect could lead unexpected difficulties process integrating acquired assets companies business costs unforeseen liabilities group may obtain benefits synergies expected transactions circumstances could adverse effects business results operations financial condition depend manufacturing logistics facilities subject disruption operate manufacturing logistics facilities italy switzerland turkey logistics facilities people republic china hong kong japan south korea united states well minor logistics facilities countries facilities subject operational risks including mechanical information technology system failure work stoppage civil unrest increases transportation costs natural disasters fire government imposed shutdowns disruption supplies raw materials commodities energy interruption activity manufacturing logistics facilities due similar events outside control could result disruption operations reduction sales could adverse effect business results operations financial condition see financial condition results operations may adversely affected occurrence global pandemic health crises subject certain risks related sale products dtc channel particular directly operated stores distribution model dtc channel consists full price mono brand stores boutique managed directly outlets managed concessions department stores well directly managed online boutique commerce platforms sell directly customers december operated zegna thom browne tom ford fashion doss zegna thom browne tom ford fashion doss december dtc channel generated revenues million consolidated revenues branded products risks related managing currently existing doss mainly relate possible difficulties renewing existing lease agreements increase rental charges decline sales doss located properties lease third parties significant competition among retail operators industry obtain commercial spaces prestigious locations major cities towns resort destinations worldwide accordingly find prime locations new stores renew lease agreements may compete operators including industry greater economic financial resources otherwise bargaining power unable renew lease agreements economic terms consistent beneficial currently applicable forced accept rental charges substantially higher existing ones could material adverse effect business results operations financial condition doss high level fixed costs decrease revenues retail channel could light high level fixed costs material adverse effect business results operations financial condition analyze performance doss market trends order assess whether open new doss move doss different location renew existing leases close doss underperforming analysis inadequate based wrong assumptions could select sub optimal locations stores keep open underperforming stores could material adverse effect business results operations financial condition event decide close underperforming dos terms lease may allow terminate lease without significant penalties payment rent expiry contractual term addition although adopted internal policies training initiatives ensure staff doss operate manner consistent image prestige brands assurance staff abide policies inappropriate illicit behavior certain employees occur allegation brought result negligence impermissible conduct dos staff may exposed legal proceedings increased public scrutiny may result substantial costs diversion resources management attention potential harm reputation operations retail channel doss also subject risks information technology system failure work stoppage wars conflicts civil unrest natural disasters fire government imposed shutdowns interruption activity retail channel doss due similar events control could result disruption operations reduction sales could adverse effect business results operations financial condition failure accurately forecast consumer demand could lead excess inventories inventory shortages meet anticipated demand products dtc channel forecast inventory needs arrange manufacturing activities based estimates future demand particular products ability accurately forecast demand products could affected several factors including increase decrease customer demand products products competitors changing consumer preferences changing product trends failure accurately forecast consumer acceptance new products product introductions competitors unanticipated changes general market conditions weakening economic conditions consumer confidence future economic conditions fail accurately forecast consumer demand may experience excess inventory levels shortage products available sale stores delivery customers inventory levels excess customer demand may result increase inventory obsolescence leading inventory write downs write offs sale excess inventory discounted prices could cause gross margin suffer impair strength exclusivity brands adverse effect results operations financial condition cash flows conversely underestimate customer demand products fail arrange sufficient manufacturing capacities advance may able deliver products meet requirements may experience inventory shortages inventory shortages stores third party distribution centers could result delayed shipments customers lost sales negative customer experience lower brand loyalty damage reputation customer relationships could adverse effect results operations financial condition cash flows wholesale channel subject certain risks arising points sale operated third parties dependent local partners sell products certain markets wholesale channel sell products franchisees specialty stores department stores online retailers year ended december revenues attributable wholesale channel zegna brand thom browne tom ford fashion amounted million consolidated revenues branded products termination loss existing commercial relationships primary wholesale customers failure develop new commercial relationships economically favorable terms significant decrease wholesale channel revenues could material adverse effect business results operation financial condition addition failure retailers directly operated manage stores local partners act manner consistent image prestige brands line agreed contractual commitments including terms sale prices failure online retailers comply consumer protection laws provide accurate product descriptions could damage competitive position image brand potential material adverse effects business results operations financial condition see business depends recognition integrity reputation brands certain geographic markets operate distribution products carried sometimes exclusively franchising agreements local operators although generally experienced significant problems past wholesale customers loss one important commercial relationships occurrence material disagreements distribution partners failure renew develop commercial relationships economically favorable terms could material adverse effect business results operations financial condition furthermore possibility parallel markets developing wholesalers poses additional risks parallel markets arise products sold outside official distribution channels often lower prices may undermine pricing strategy brand equity customer loyalty addition actions taken parallel markets may result decline sales may offset increase sales official channels operations also subject risk insolvency wholesale customers includes potential debt restructuring actions taken third parties may jeopardize ability collect full amount credit timely manner despite efforts mitigate risk assurance able successfully business results operations financial condition could materially adversely affected fluctuations price quality disruptions availability raw materials used products could cause incur increased costs disrupt manufacturing processes prevent delay meeting customers demands require high quality raw materials order produce products market price raw materials require production depends many factors largely control difficult predict primary raw materials use fibers yarns wool silk cotton linen cashmere fabrics composition well leather availability wool silk depends unpredictable factors outside control including weather conditions areas raw materials originate mainly australia new zealand wool greater china mongolia cashmere turkey egypt united states cotton europe caribbean linen greater china silk well diseases pests affecting livestock plants result fiber quality also use rare raw materials vellus aureum vicuna fine yarns fabrics specially selected calf leather available limited quantity subject strict export processing regulations may change possible legislative political economic developments potential social instability introduction export restrictions tariffs countries suppliers operate introduction import restrictions products countries could negative impact procurement activities factors could affect availability price raw materials required production instance price cashmere rose significantly last three years fine linen fiber prices continued grow result various factors including droughts reduced available quantity high quality flax price raw materials also affected high inflationary environment globally supply raw materials decreases including due shortages decrease number producers suppliers raw materials may face difficulties obtaining sufficient supplies high quality raw materials relevant prices may increase thus could face supply shortages medium term rising costs purchasing may unable pass customers addition suppliers could cancel delay delivery raw materials may fail provide raw materials meet high quality standards may fail comply increasingly stringent sustainability traceability requirements could delay manufacturing process cause incur increased costs obtain raw materials quality require foregoing factors could material adverse effect business results operations financial condition suppliers actions may also damage reputation see business depends recognition integrity reputation brands could adversely affected unable negotiate maintain renew license branding agreements high end third party brands party various agreements third party brands licensee supplier license agreements licensor licensee accordance definitive agreements acquisition tfi closed april tfi entered license agreement pursuant tfi licensee estée lauder companies tom ford men women fashion well accessories underwear fine jewelry childrenswear textile home design products term years subject renewal tfi option one year period subject certain minimum performance conditions tff license tff license required pay royalties licensor unable run licensed business efficiently considering royalties costs profitability may adversely affected addition tff license provides certain minimum guaranteed royalties payable estée lauder companies regardless level sales actually achieved also party certain license agreements whereby grant certain period time use brand third parties production products adjacent luxury sectors including fragrances glasses sunglasses cufflinks beachwear underwear year ended december royalties relating arrangements million licensees perform obligations towards group including failing ensure required quality sustainability traceability standards complying directions respect distribution channels sale services breaching obligations related intellectual property rights failing comply timeline product launches may unable commercially reasonable time replace licensee another producer capable ensuring equivalent quality production standards procure services upon substantially financial terms inability maintain presence adjacent luxury sectors provide products sectors quality comparable products may reflect negatively reputation integrity brands time time enter branding projects different brands design production sale certain selected branded products also enter collaborations brands offer new products lines norda baccarat frette fail negotiate enter renew relationships mutually satisfactory manner brands particular respect distribution branded products ownership protection intellectual property rights related projects may unable replace revenues generated past collaborations foregoing licensing agreements branding projects third party brands terminated reason renewed upon expiration renewed less favorable terms conditions could material adverse effect business results operations financial condition business depends tourist traffic demand significant amount sales generated customers purchase products travelling consequently adverse economic conditions financial crises exchange rate volatility global political developments social geopolitical tensions instability disorders riots civil wars military conflicts natural disasters fire floods blizzards global pandemics covid pandemic earthquakes events well travel restrictions imposed governments result shift travel patterns decline travel volumes past may future adverse effect business results operations financial condition see also financial condition results operations may adversely affected occurrence global pandemic health crises global economic conditions macro events may adversely affect conflict ukraine sanctions imposed onto russia may adversely affect business business success depends certain key senior personnel well skilled personnel loss unavailability could adversely affect business performance business depends significantly efforts abilities key senior personnel including without limitation chairperson chief executive officer ermenegildo gildo zegna key personnel substantial experience expertise luxury goods business made significant contributions success business although succession planning process place certain key roles key personnel leave abruptly become otherwise unable unwilling continue roles may able replace timely fashion individuals equivalent experience capabilities includes potential departure creative director could lead period uncertainty significantly impacts brand image reputation addition replacement key personnel generates significant hiring costs failure retain replace key personnel skilled personnel capable integrating operations efficiently could lead delays development collections inefficiencies management business accordingly could material adverse effect business results operations financial condition addition future success depends ability continue attract retain motivate skilled employees develop internal talent step key roles competition employees becoming intense ability attract hire retain skilled personnel depends ability provide meaningful work competitive compensation inability effectively would constrain ability timely complete certain projects could adversely affect business results operations financial condition depend highly specialized craftsmanship skills one distinguishing features certain products highly specialized craftsmanship involved manufacturing also result experience specialized employees acquired course years although try preserve craftsmanship skills ensure passed next generations number specialized employees may decrease future craftsmanship skills may longer readily available occur could affect ability ensure distinctive quality certain products future turn could material adverse effect business results operations financial condition depend protection intellectual property rights believe intellectual property essential success products competitive position dedicate significant resources protection intellectual property assets including trademarks designs production processes technologies utility patents distinctive marks jurisdictions operate assurance however succeed protecting intellectual property rights respect designs particular design rights prevent competitors developing products substantially equivalent better products infringing intellectual property rights moreover actions take establish protect designs trademarks patents intellectual property rights may adequate prevent counterfeiting imitation products competitors third parties prevent persons asserting rights ownership brand trademarks intellectual property rights may therefore forced spend significant resources defend intellectual property infringement third party claims addition third parties register intellectual property rights overlap attempt enter new markets third parties registered intellectual property rights similar would wish register may constrained developing business markets may spend resources support registration addition applications register intellectual property may face objections trademark offices seek register may mature registrations face judicial administrative challenges involving registered intellectual property rights instance requesting cancellation grounds non use may able successfully resolve types conflicts satisfaction could material adverse effect business results operations financial condition addition laws certain countries may protect trademarks designs copyrights intellectual property rights extent laws united states european union third parties could make claims bring legal action alleged infringement third parties intellectual property rights result may required discontinue sale certain products pay damages incur licensing costs modify production processes products scope validity intellectual property rights determined court order authorized sell products instance june adidas adidas commenced action thom browne inc southern district new york among things trademark infringement unfair competition dilution various state claims connection use thom browne five color grosgrain ribbon four bars sleeves pants sporting goods sportswear athletic wear allegedly infringing three stripe marks adidas case assigned jury trial january jury found time thom browne inc infringe adidas trademarks adidas appeal denied addition based evidence submitted another trial thom browne inc adidas filed motion requesting new trial based discovery flaws motion denied adidas appealed lower court denial motion oral argument appeal expected late spring meanwhile opposition filed adidas several trademarks thom browne inc filed registration european union substantially denied although adidas appealed decision thom browne inc able register trademarks thom browne inc also commenced cancellation proceedings european union well number adidas trademarks could used restrain access thom browne inc products markets result adidas filed counterclaims high court justice london alleging infringement marks thom browne inc use grosgrain ribbon signature well four bar design november high court justice london dismissed adidas claims trademark infringement invalidated several adidas trademarks registrations adidas asked received permission appeal decision invalidating trademarks appeal decision denying claims trademark infringement final addition adidas commenced lawsuit nuremberg furth district court germany thom browne inc thom browne retail italy alleging thom browne four bar signature infringed adidas three stripe mark first instance court rejected adidas claims infringement adidas appealed decision case pending thom browne intends continue vigorously defend position aforementioned proceedings events may entail significant losses addition legal costs possible adverse effects business results operations financial condition information legal costs incurred connection matter december see results operations non ifrs financial measures note segment reporting consolidated financial statements included elsewhere document disruption information technology including result cybercrimes could disrupt business operations compromise confidential sensitive information depend information technology data processing systems operate business significant malfunction disruption operation systems human error interruption power supply security breach compromises confidential sensitive information stored systems could disrupt business adversely impact ability operate ability keep business operating effectively depends functional efficient operation third party service providers information data processing telecommunications systems including product design manufacturing distribution sales marketing billing payment systems rely systems enable number business processes help make variety day day business decisions well track operations billings payments inventory recently also enhancing solutions advanced analytics customer experience furthering use artificial intelligence machine learning areas marketing product recommendation matching learning customer preferences customer profiling segmentation generative introduced augment creative content creation processes legal regulatory environment relating jurisdictions operate uncertain rapidly evolving includes laws regulations targeted specifically well provisions intellectual property privacy consumer protection employment laws applicable use evolving laws regulations could require changes use increase compliance costs risk non compliance use could also lead novel urgent cybersecurity risks including new enhanced governmental regulatory scrutiny litigation confidentiality security risks ethical concerns complications could adversely affect reputation business results operations financial condition systems susceptible malfunctions interruptions due equipment damage power outages connection interruption range hardware software network problems systems also susceptible cybercrime threats intentional disruption increasing terms sophistication including use technologies frequency consequence cyber incidents may remain undetected addition transition part workforce hybrid work environment employees often working remotely could also increase vulnerability risks related hardware software systems including risks phishing cybersecurity attacks foregoing reasons may experience system malfunctions interruptions example august subject ransomware attack impacted majority group systems refused engage discussions relating payment ransom responsible parties published certain accounting materials extracted systems publicly announced systems breach gradually restored systems secure back servers weeks following breach although systems diversified including multiple server locations third party cloud providers range software applications different regions functions periodically assess implement actions ameliorate risks systems significant large scale malfunction interruption systems could adversely affect ability manage keep operations running efficiently damage reputation unable track transactions deliver products customers malfunction results wider sustained disruption business could material adverse effect business results operations financial condition addition recently acquired businesses may use different information technology data processing systems used broader group level could make complex prevent timely address foregoing events addition supporting operations use systems collect store confidential sensitive data including information business customers employees unauthorized access information systems may compromise privacy data expose claims well reputational damage ultimately significant violation integrity data security could material adverse effect business results operations financial condition see exposed risk personal information customers employees parties collected course operations may damaged lost stolen divulged processed unauthorized purposes exposed risk personal information customers employees parties collected course operations may damaged lost stolen divulged processed unauthorized purposes carrying business collect store process personal data customers employees parties deal including data gather product development marketing purposes therefore subject variety strict ever changing data protection privacy laws global basis including general data protection regulation personal information protection law people republic china california invasion privacy act laws complex subject continuously evolving interpretations including result use information technology result may subject claims investigations respect interpretation application laws exposed risk personal data store use may damaged lost stolen divulged treated processed unauthorized purposes individuals responsible data management unauthorized individuals including third parties group employees destruction damage loss personal data well theft unauthorized treatment processing dissemination could significantly impair reputation impact operations could also lead governmental investigations imposition fines competent authorities possible adverse effects business results operations financial condition see also disruption information technology including result cybercrimes could disrupt business operations compromise confidential sensitive information subject certain risks related related party transactions engaged continue engage relationships commercial nature related parties relationships consist mainly provision industrial services licensing agreements financial guarantees collaterals purchase raw materials certain contributions fondazione zegna addition lease certain real estate properties related parties see section major shareholders related party transactions believe terms conditions transactions related parties arm length commercial terms normal respective markets considering characteristics goods services involved however assurance transactions concluded third parties parties would negotiated entered agreements carried transactions substantially similar terms conditions addition assurance able renew agreements end term terms conditions exposed currency related risks operate numerous markets worldwide exposed market risks stemming fluctuations currency exchange rates particular changes exchange rates euro main foreign currencies operate affect revenues results operations exposure currency risk mainly linked differences geographic distribution sourcing manufacturing activities commercial activities result cash flows sales denominated currencies different related purchases production activities particular incur large portion capital operating expenses euro receive majority revenues currencies euro mainly chinese renminbi dollars japanese yen hong kong dollars british pound therefore results may adversely affected currencies depreciate euro trend first months risk heightened given extended time period moment sale prices collection set moment revenues converted euro may extend months addition foreign exchange fluctuations might also negatively affect relative purchasing power clients could also adverse effect results operations see section trend uncertainties opportunities appreciation dollar euro may adversely affect results operations due certain significant liabilities consolidated statement financial position originally denominated dollars particular recognize financial liability corresponding present value exercise price dollars put option granted non controlling interest investment thom browne group remeasured fair value end period remeasurement liability reporting date recognized profit loss based latest available information additional information refer note current non current financial liabilities consolidated financial statements included elsewhere document appreciation depreciation dollar euro results corresponding unrealized loss gain consolidated statement profit loss foreign exchange line item dollar appreciation euro resulted unrealized loss million year ended december first months characterized significant currency volatility exchange rate fluctuation may also adversely affect competitive position compared operators luxury goods market may incur costs currencies favorable exchange rates relative currencies principal markets zegna segment tom ford fashion segment seek manage risks associated fluctuations currency financial hedging instruments mainly forward contracts collar plain vanilla zero cost option sale foreign currencies thom browne segment undertaken may continue undertake steps gradually align similar hedging policies considered appropriate however assurance able hedge currency related risks successfully business results operations financial condition could nevertheless adversely affected fluctuations market rates particularly fluctuations extended time addition euro functional currency used consolidated financial statements fluctuations exchange rates used translate figures subsidiaries financial statements originally expressed foreign currency could significant impact results net financial indebtedness consolidated net shareholders equity expressed euro consolidated financial statements exposed risks relating fluctuations interest rates market risks entered euro denominated financing agreements revolving credit facilities providing floating interest rate december floating rate loans represented approximately total borrowings financed amount approximately million addition also undrawn euro denominated revolving floating rate credit facilities available although entered derivative financial instruments hedge part exposure interest rate risk increase interest rates term financing agreements would result higher interest payments thereunder could material adverse effect business results operations financial condition addition increase interest rate different countries could material impact hedging cost related derivatives instruments hedge exposure foreign currencies see exposed currency related risks december approximately million securities invested listed unlisted financial instruments recorded within current financial assets enter investments trading speculative purposes primary objective investment activities preserve principal maximizing income receive investments without significantly increasing risk loss connection investment activities may exposed market risk risk loss related changes market prices volatility counterparty liquidity financial instruments could material adverse effect business results operations financial condition risk factors relating industry group operates markets operate highly competitive markets products characterized high levels competition presence number established operators new entrants significant financial resources well known fashionable brands succeed must interpret anticipate tastes preferences lifestyles customers anticipate changes tastes preferences lifestyles well identify fashion luxury market trends producing high quality desirable luxury products exceptional customer experiences competitors may successful interpreting market trends may able produce products lower costs particular larger competitors may better equipped changing conditions affect competitive market including transformation customer experience supply chain operations use new digital technologies artificial intelligence business heightening customer expectations addition newer entrants may viewed desirable fashion conscious consumers failure compete effectively chosen markets including failure identify respond new changing trends consumer preferences failure successfully invest innovative initiatives could material adverse effect business results operations financial condition global economic conditions macro events may adversely affect sales volumes revenues may affected overall general economic conditions within different countries operate deteriorating general economic conditions may affect disposable incomes reduce consumer wealth impacting client demand particularly luxury goods may negatively impact profitability put downward pressure prices volumes furthermore recessionary periods social acceptability luxury purchases may decrease higher taxes may likely imposed certain luxury goods including products may affect sales sell products throughout world particular conduct business emea north latin america apac majority current sales greater china united states presence various international markets exposes risks connected among things geopolitical macroeconomic conditions countries operate sales could affected various events example market instability terrorism war natural disasters socio political upheavals therefore slowing economic conditions regions operate may adversely affect revenues results operations regions also made investments expand direct operations middle east macroeconomic socio political natural events regions could adversely affect revenues results operations see also risk factors relating group business strategy operations developments greater china growth emerging markets may adversely affect business risk factors relating group business strategy operations conflict ukraine sanctions imposed onto russia may adversely affect business events difficult predict occur could adverse effect demand luxury goods specific country could cause contraction tourist flow may material adverse effect business results operations financial condition significant inflation could adversely affect results operations financial condition recent years economies around world experienced significant inflationary pressures coupled government measures fight inflation prevent mitigate economic recessions inflation increases future could face increases costs raw materials energy costs labor costs production costs could adversely affect business results operations able pass increased costs customers successfully implement mitigating actions foregoing could reduce profit margins material adverse effect results operations financial condition additionally many central banks increased may increase interest rates result recent inflation turn may increase borrowing costs addition significant increases costs products required consumers well raise interest rates may affect consumer spending power result overall reduced spending significant increase price products result inflationary pressure could result decline sales new trade restrictions imposed existing restrictions become burdensome may unable sell products profitably certain countries purchase raw materials finished goods several countries import products regions operate substantially import operations subject complex trade customs laws regulations tax requirements sanctions orders tariffs set governments mutual agreements unilateral actions addition countries products manufactured imported may time time impose additional duties tariffs restrictions regulations adversely modify existing restrictions tariff levels following recent elections united states europe upcoming elections globally heightened global uncertainty regarding potential imposition tariffs trade barriers protectionist industrial policies united states china european union governments may turn trade barriers protect domestic industries foreign imports retaliate protective trade measures imposed countries unknown whether extent new tariffs adopted effect actions would business financial condition results operations well industry purchase ability consumers globally escalation tariff duty activity protectionist industrial policies among major global economies could negatively impact global economic activity global supply chain demand products could materially adversely affect business results operations financial condition subject legal regulatory risk required comply laws regulations applying products operations various jurisdictions operate particularly relation protection intellectual property rights competition product safety traceability packaging labeling import processing certain raw materials finished goods data protection privacy limits cash payments sanctions workers health safety human rights environment laws regulations related water usage carbon emissions new legislation amendments existing legislation may require adopt stricter standards could lead increased costs adapting product characteristics performing due diligence across supply chain reporting thereon requiring collect external data little control could also lead change suppliers limit operations may material adverse effect business results operations financial condition suppliers unable provide certificates origin demanded group timely manner supply chain turn deliveries united states could adversely impacted see also risk factors relating group business strategy operations exposed risk personal information customers employees parties collected course operations may damaged lost stolen divulged processed unauthorized purposes regards risks relating laws data protection privacy addition subject foreign corrupt practices act amended anti bribery anti corruption anti money laundering laws countries conduct activities distribution partners may direct indirect interactions officials employees government agencies state owned affiliated entities third parties may held liable corrupt illegal activities even explicitly authorize also subject sanctions legislation may lead commercial economic sanctions prohibitions restrictive measures imposed different authorities governments involved including european union united states united nations international organizations see also risk factors relating group business strategy operations conflict ukraine sanctions imposed onto russia may adversely affect business time time may conduct limited activities countries subject sanctions restrictive measures believe activities compliance applicable laws sanctions legislation including embargoes cannot exclude possibility distribution partners may violate laws violation foregoing laws could lead regulatory judicial proceedings sanctions including civil penalties denial export privileges injunctions asset seizures revocations restrictions licenses well criminal fines imprisonment may material adverse effect reputation business results operations financial condition subject risks associated climate change environmental impacts business subject risks associated climate change widespread impact climate related effects lead reduced availability quality core raw materials consequent possible increases price available volumes selected top quality specimen thereby adversely affecting financial performance additionally increased frequency intensity extreme physical events including storms floods due climate change could also lead business interruptions production processes production facilities supply chain disruption scarcity raw materials frequent closures doss lost sales customers prioritize basic needs may able reach points sale finally increasing introduction new national international laws regulations aim reduce potential impacts climate change may hinder efforts enter specific markets may cause increased costs complexity comply new evolving climate change regulatory requirements obligations failure part comply laws regulations could lead adverse consumer actions investment decisions investors well expose government enforcement action private litigation foregoing factors could material adverse effect business results operations financial condition subject risks associated increased focus stakeholders environment social governance matters recent years companies across industries subject increased scrutiny variety stakeholders including consumers employees investors proxy advisory firms media environment activists esg rating agencies ngos corporate responsibility including environmental social governance esg matters traceability transparency sustainability claims product labeling requirements carbon emissions responsible sourcing animal welfare deforestation use energy water recyclability recoverability products packaging raw materials human rights labor rights diversity equality inclusion practices adapt comply investor stakeholder expectations standards esg matters meet sustainability goals targets set continue evolve perceived responded appropriately quickly enough growing concern esg sustainability issues regardless whether regulatory legal requirement may face increased litigation risk reputational damage business results operations financial condition could materially adversely affected various global national organizations including esg rating agencies research analysts disclosure standards organizations evaluate disclosures esg data organizations developed ratings processes evaluating companies approach esg matters results ratings publicly available negative score could adversely impact reputation brand value investor sentiment trust placed stakeholders could adverse impact among things share price cost capital social environmental impacts associated raw materials essential business obtained labor practices involved sourcing manufacturing processes raw materials may raise issues inadequate wages poor working conditions use forced child labor certain sourcing manufacturing processes lead environmental degradation including loss biodiversity pollution resource depletion addition conditions certain raw materials sourced raise concerns animal welfare social acceptability suppliers sourcing practices perceived harmful animals environment may lead public backlash diminished consumer trust fail develop robust network suppliers meet qualification criteria fail adequately monitor suppliers compliance standards may struggle ensure quality sustainability raw materials ultimately impacting ability meet consumer expectations maintain competitive position suppliers fails comply requirements traceability raw materials sourcing methods may unable commercially reasonable time replace supplier another supplier capable ensuring equivalent quality quantitative standards may unable procure relevant raw materials similar favorable commercial terms factors may result disruption supply chain delays production activities increased costs reputational damage furthermore supplier failure meet requirements may affect also ability complete calculation disclosure progress sustainability strategy esg goals could potentially adverse impact esg ratings receive esg rating agencies announced plan announce progress accomplishments sustainability strategy esg goals well possibly add new aspirations commitments assurance stakeholders agree strategy satisfied disclosures successful achieving goals esg practices meet stakeholders expectations standards fail perceived fail implement strategy achieve goals reputation could damaged causing investors consumers lose confidence brands negatively impacting employee retention business negative effect sales results operations addition implementing esg strategy pursuing esg goals involves costs investments could adversely affect results operations risk factors relating tax matters changes tax tariff fiscal policies could adversely affect demand products imposition additional taxes levies products could adversely affect demand products results operations changes corporate taxation policies well changes export incentives given various governments import tariff policies could also adversely affect results operations considerable uncertainty surrounds introduction scope tariffs countries around world well potential trade actions imposition tariffs trade restrictions result international trade disputes changes trade policies may adversely affect sales profitability see also risk factors relating industry group operates new trade restrictions imposed existing restrictions become burdensome may unable sell products profitably certain countries occurrence may material adverse effect business results operations financial condition changes taxation interpretation application tax laws could adverse impact results operations financial condition business subject various taxes different jurisdictions mainly italy include among others italian corporate income tax ires regional trade tax irap value added tax vat excise duty registration tax indirect taxes business outside italy subject corporate income taxes every country business subsidiaries branches remittances subsidiaries back italy may subject withholding taxes exposed risk overall tax burden may increase future changes tax laws regulations position relevant italian non italian authorities regarding application administration interpretation laws regulations particularly applied retrospectively could material adverse effect business results operations financial condition changes include introduction global minimum tax rate two pillar solution address tax challenges digitalisation economy agreed upon jurisdictions organisation economic operation development inclusive framework base erosion profit shifting oecd inclusive framework pursuant council directive pillar two directive december italian legislative decree adopted tax reform international taxation including implementation italian domestic law pillar two legislation reform scope multinational enterprise groups subject top tax least via two interlocking global anti base erosion rules income inclusion rule imposta minima integrativa iir applying fiscal years beginning december taxed profits rule imposta minima suppletiva utpr applying fiscal years beginning december additionally italy implemented qualified domestic minimum top tax imposta minima nazionale qdmtt applying fiscal years beginning december intended meet requirements qualified domestic minimum top tax safe harbor detailed implementation rules qdmtt set forth ministerial decree july oecd inclusive framework also agreed upon number safe harbor provisions including transitional cbcr safe harbor minimis test simplified etr test routine profits test transitional utpr safe harbor qdmtt safe harbor mentioned provisions included referred oecd model rules pillar two directive italy implemented safe harbor provisions line illustrated documents made available oecd articles legislative decree detailed implementation rules set forth ministerial decree may transitional cbcr safe harbor transtitional utpr safe harbor ministerial decree july qdmtt safe harbor light current state regulations countries group located subject future regulatory specifications currently expect italian legislation implementing pillar two directive lead significant adverse tax consequences however may adverse effect tax compliance burden tax laws complex subject subjective valuations interpretive decisions periodically may subject tax audits aimed assessing compliance direct indirect taxes tax authorities may agree positions taken intend take tax laws applicable ordinary activities extraordinary transactions case challenges tax authorities interpretations could face long tax proceedings could result payment additional tax penalties potential material adverse effects business results operations financial conditions passive foreign investment company tax considerations holders non corporation treated passive foreign investment company pfic federal income tax purposes respect holder taxable year holder held shares stock application applicable look rules percent gross income taxable year consists passive income including dividends interest gains sale exchange investment property rents royalties rents royalties received unrelated parties connection active conduct trade business defined applicable treasury regulations least percent assets taxable year averaged year determined based upon value produce held production passive income persons directly treated indirectly owning shares pfic generally subject annual reporting requirements potentially disadvantageous federal income tax treatment respect distributions receive pfic gain derive sale disposition directly indirectly shares pfic believe shares stock stock pfic federal income tax purposes reporting period conclusion based factual determination made annually thus subject change moreover common shares may become stock pfic future taxable years changes assets income operations intend treated exclusively resident republic italy tax purposes tax authorities may seek treat tax resident another jurisdiction result could subject increased different taxes intend maintain management organizational structure manner place effective management would italy regarded tax resident italy italian domestic law purposes considered exclusively tax resident italy purposes applicable tax treaties including convention kingdom netherlands republic italy avoidance double taxation prevention fiscal evasion respect taxes income capital italy netherlands tax treaty iii regarded tax resident jurisdiction italy purposes domestic tax laws jurisdiction purposes applicable tax treaty however determination tax residency depends primarily upon place effective management largely question fact based relevant circumstances therefore assurance given regarding final determination tax residency tax authorities addition changes applicable laws income tax treaties including change provisional reservation made italy multilateral convention implement tax treaty related measures prevent base erosion profit shifting mli made time signing mli respect article dual resident entities mli interpretations thereof changes applicable facts circumstances change board members place board meetings take place may bearing determination tax residency consequent tax treatment competent tax authorities jurisdiction italy take position treated exclusively tax resident jurisdiction purposes applicable tax treaty would subject corporation tax distributions made shareholders would subject applicable dividend withholding tax jurisdiction well italy resolve dual tax residency issue may access mutual agreement procedure dispute resolution mechanisms applicable tax treaty dispute resolution mechanism arbitration directive jurisdiction could submit case judicial review relevant courts procedures would require substantial time costs efforts certain double taxation issues resolved circumstances dividends generally subject italian dividend withholding tax believe dividends subject dutch dividend withholding tax regardless made rule based company incorporated dutch law deemed dutch tax resident apply company incorporated italian law converted dutch company company view confirmed dutch tax authorities tax ruling obtained september covers tax years january december consequences loyalty voting program uncertain statutory judicial administrative authority directly discusses receipt ownership disposition special voting shares company loyalty voting program implemented connection business combination treated italian tax purposes result tax consequences jurisdictions uncertain fair market value special voting shares may relevant tax purposes factual determination governed guidance directly addresses situation among things special voting shares transferable limited circumstances together associated ordinary shares shareholder receive amounts respect special voting shares company liquidated expect take position fair market value special voting share minimal however relevant tax authorities could assert value special voting shares determined company incorrect tax treatment loyalty voting program implemented connection business combination unclear shareholders urged consult tax advisors respect consequences acquiring owning disposing special voting shares benefit seek benefit certain special tax regimes may available future currently calculate taxes due italy based among things certain tax incentives recognized italian tax regulations research development expenses addition benefit measures introduced italy art law decree converted law opened voluntary step tangible assets application substitutive tax rate furthermore italian law subsequently amended supplemented introduced optional patent box regime italian tax system patent box regime tax exemption related among others use intellectual property assets business income derived use qualified intangible asset partially exempted taxation ires irap purposes applied patent box tax regime period line applicable tax regulations italy amount related tax benefits received tax regime remains subject limited uncertainty patent box tax regime revised current regime longer provides partial exemption business income derived use qualified intangible assets new regime amount qualifying expenses relevant ires irap purposes increased specific rules regulate transition old patent box regime new one special tax regimes tax incentives may allow mitigate tax burden italy significant changes regulations interpretation thereof might adversely affect availability exemptions result higher tax charges may result material adverse effect business results operations financial condition subject risks related complexity uncertainty interpretation transfer pricing rules operate countries worldwide integrated industrial commercial stylist communication functions trademarks used different jurisdictions subject taxation italy foreign countries subsidiaries located within group transactions related parties located different countries carried ordinary course business mainly related purchase sale goods provision services transactions subject transfer pricing rules defined globally organization economic operation development oecd local tax laws respect intercompany prices set consistently guidance provided oecd transfer pricing guidelines subsidiaries prepare specific transfer pricing documentation respect transactions although believe transfer pricing compliant international tax laws due complexity rules uncertainties interpretation tax authorities might challenge prices certain intercompany transactions propose transfer pricing adjustments consequently adjustments may increase related taxes impose penalties late payment interests may result material adverse effect business results operations financial condition risk factors relating holding ordinary shares active liquid trading market ordinary shares may maintained market price may volatile investors may suffer loss ordinary shares listed nyse ticker zgn however assurance active liquid trading market ordinary shares maintained active liquid trading markets generally result lower price volatility efficient execution buy sell orders investors actual market price ordinary shares may fluctuate several factors including described section risk factors including low liquidity result price ordinary shares may reflect actual operating performance may lower price investors paid purchase ordinary shares price ordinary shares may volatile price ordinary shares may fluctuate due variety factors including variations operating performance performance competitors general actual anticipated fluctuations annual interim operating results publication research reports securities analysts competitors industry public reaction press releases public announcements filings sec failure failure competitors meet analysts projections guidance competitors may give market impact global health crises global economy additions departures key personnel changes laws regulations affecting business commencement involvement litigation involving mergers acquisitions significant corporate restructurings harm reputation including due dissemination third parties information untrue defamatory changes capital structure future issuances securities incurrence additional debt changes investors market risk premium resulting potential changes asset allocation strategies volume ordinary shares available public sale general economic political conditions recessions interest rates fuel prices foreign currency fluctuations inflation international tariffs social political economic risks acts war terrorism factors described section risk factors market industry factors may materially reduce market price ordinary shares regardless operating performance addition price ordinary shares may depressed case substantial sales ordinary shares shareholders anticipation market possible sale reports published analysts including projections reports differ actual results could adversely affect price trading volume shares securities research analysts may establish publish periodic projections company projections may vary widely may accurately predict results actually achieve share price may decline actual results match projections securities research analysts similarly one analysts write reports downgrades stock publishes inaccurate unfavorable research business share price could decline one analysts ceases coverage fails publish reports regularly share price trading volume could decline loyalty voting program may affect liquidity ordinary shares reduce share price implementation company loyalty voting program could reduce trading liquidity adversely affect trading prices ordinary shares loyalty voting program intended reward shareholders maintaining long term share ownership granting persons holding ordinary shares continuously least two years option elect receive special voting shares special voting shares cannot transferred except limited circumstances ordinary shares participating loyalty voting program transferred must deregistered loyalty register corresponding special voting shares transferred consideration niet loyalty voting program designed encourage stable shareholder base conversely may deter trading shareholders may interested participating loyalty voting program therefore loyalty voting program may reduce liquidity ordinary shares adversely affect trading price majority shareholders exercise control company may limit shareholders ability influence corporate matters could delay prevent change corporate control interests majority shareholders may differ shareholders march monterubello held approximately ordinary shares issued outstanding voting power please see section major shareholders related party transactions result monterubello able influence management affairs control outcome matters submitted shareholder meetings approval including election directors sale merger consolidation sale substantially assets addition loyalty voting program established articles association may make difficult third party acquire attempt acquire control company even change control considered favorably shareholders holding majority ordinary shares result monterubello ownership loyalty voting program relatively large proportion voting power company could concentrated relatively small number shareholders would significant influence company monterubello shareholders participating loyalty voting program may power effectively prevent delay change control transactions may otherwise benefit company shareholders may also prevent discourage shareholder initiatives aimed changing company management strategy otherwise exerting influence company addition monterubello exercise voting power interest may line even conflict interests remaining shareholders company dutch public company limited liability shareholders may rights different shareholders companies organized united states rights shareholders company may different rights shareholders companies governed laws jurisdictions company dutch public company limited liability naamloze vennootschap corporate affairs governed articles association board regulations dutch law rights company shareholders responsibilities members board may different rights shareholders responsibilities members board directors companies governed laws jurisdictions including united states responsibilities executive directors non executive directors may different rights obligations board members companies governed laws jurisdictions performance duties board required dutch law consider company interests interests shareholders employees stakeholders cases due observation principles reasonableness fairness possible parties interests different addition interests shareholders assurance dutch law change future serve protect investors similar fashion afforded corporate law principles could adversely affect rights investors company foreign private issuer rules regulations sec thus exempt number rules exchange act permitted file less information sec company incorporated united states foreign private issuer company exempt rules exchange act impose certain disclosure procedural requirements proxy solicitations section exchange act addition officers directors principal shareholders exempt reporting short swing profit recovery provisions section exchange act rules exchange act respect purchases sales ordinary shares moreover company required file periodic reports financial statements sec frequently promptly companies whose securities registered exchange act required comply regulation restricts selective disclosure material information accordingly may less publicly available information concerning company public companies identified material weaknesses internal control financial reporting unable remediate material weaknesses otherwise fail maintain effective system internal controls could result material misstatements consolidated financial statements failure comply applicable laws regulations may adversely affect business price securities connection preparation audit consolidated financial statements december three years period ended december included elsewhere report identified material weaknesses internal control financial reporting also previously identified certain material weaknesses internal control financial reporting december certain able remedy course material weakness deficiency combination deficiencies internal control financial reporting reasonable possibility material misstatement annual interim consolidated financial statements prevented detected timely basis summary material weaknesses identified december steps taken taking remedy remaining material weaknesses control deficiencies see section risk management risk appetite control framework material weaknesses internal control financial reporting could result misstatement accounts disclosures may result material misstatement annual interim consolidated financial statements result material weaknesses internal controls financial reporting management concluded december disclosure controls procedures internal control financial reporting effective taken continuing take steps remedy material weaknesses control deficiencies remediation plan accomplished time offer assurance initiatives ultimately intended effects cannot provide assurance able complete full remediation able avoid identification additional material weaknesses future addition process assessing effectiveness internal control financial reporting may require investment significant time resources including members senior management team result process may divert internal resources take substantial amount time effort complete unable remediate material weaknesses identified identify additional material weaknesses future otherwise fail develop maintain effective system internal controls may able produce timely accurate consolidated financial statements may subject adverse regulatory consequences adversely affect investor confidence result price securities ability access capital markets forms financing future company ability pay dividends may limited level future dividends subject change dividend policy target payout ratio profit attributable shareholders parent company without reducing dividends least maintaining increasing dividends year payment dividends future subject business conditions financial conditions earnings cash balances commitments strategic plans factors board may deem relevant time recommends approval dividend addition dividend policy subject change based changes statutory requirements market trends strategic developments capital requirements number factors articles association dutch law dividends may declared ordinary shares amount equity exceeds paid called capital plus reserves maintained pursuant dutch law articles association even company permitted articles association dutch law pay cash dividends shares may sufficient cash pay dividends cash shares company holding company operations carried subsidiaries result company ability pay dividends primarily depend ability subsidiaries generate earnings provide company necessary financial resources may difficult enforce judgments company company incorporated laws netherlands substantial portion assets outside united states directors members senior management team independent auditors resident outside united states substantial portion respective assets may located outside united states result may difficult investors effect service process within united states upon persons may also difficult investors enforce within united states judgments predicated upon civil liability provisions securities laws united states state thereof addition uncertainty whether courts outside united states would recognize enforce judgments courts obtained directors officers predicated upon civil liability provisions securities laws united states state thereof therefore may difficult enforce judgments directors officers independent auditors corporate governance report introduction ermenegildo zegna dutch public limited liability company naamloze vennootschap results conversion ermenegildo zegna holditalia italian joint stock company ermenegildo zegna december securities company listed nyse company corporate seat amsterdam netherlands address viale roma valdilana loc trivero italy registered dutch trade register number company place effective management italy section annual report company describes relevant elements corporate governance practices provides information required dutch law dcgc respect dcgc noted company endorses governance principles best practice provisions dcgc adheres dcgc apart deviations explained compliance dcgc company made every effort report line dcgc extent possible continue years lie ahead company governed laws netherlands dcgc articles association dcgc contains governance principles best practices one tier boards executive non executive directors shareholders general meetings financial reporting auditors disclosure compliance enforcement standards dcgc applies comply explain basis meaning company required disclose whether complying various provisions dcgc company comply one provisions company required explain reasons non compliance dcgc publicly available monitoring commission corporate governance code website www mccg articles association publicly available company website www zegnagroup com addition given company shares trade nyse company also subject certain laws regulations board one tier board company one tier board consisting one executive directors responsibility day day management company one non executive directors oversight responsibilities responsibility day day management number executive directors determined board accordance company articles association provided majority board consists non executive directors non executive directors duties include among things oversight executive directors performance duties company general affairs business rendering advice direction executive directors iii effectiveness company internal risk management control systems integrity quality financial sustainability reporting well performance duties allocated pursuant dutch law articles association executive directors shall timely provide non executive directors information need carry duties board whole responsible strategy company focus sustainable long term value creation company taking account relevant stakeholders interests board may allocate duties powers among directors committees board accordance board regulations otherwise writing pursuant articles association general authority represent company vested board executive director composition nomination appointment dismissal board board determines number executive directors non executive directors provided majority board consists non executive directors board currently composed eleven members board may discretion grant one non executive directors title vice chairman may grant additional titles board deems appropriate director board determines non executive director act lead non executive director chair voorzitter referred dutch law directors appointed general meeting binding nomination board provided one non executive director appointed binding nomination iiac sponsor time convocation relevant general meeting sponsor group satisfies minimum holding requirement minimum deelnemingsvereiste defined articles association nomination sponsor nominee iiac sponsor subject approval board discretion previously served director iiac sponsor right nominate non executive director lapse immediate effect sponsor group fails satisfy minimum holding requirement provided failure caused sale transfer ordinary shares member sponsor group iiac sponsor nomination right lapse failure continues period trading days date member sponsor group knowledge failure upon termination nomination right sponsor nominee temporary director replacing sponsor nominee shall resign board immediate effect request company general meeting times allowed overrule binding nomination appointment director simple majority votes cast representing one third company issued share capital majority votes cast favor overruling binding nomination majority represent one third company issued share capital new general meeting may convened resolution overrule binding nomination may adopted simple majority votes cast regardless company issued share capital represented majority event binding nomination appointment director sponsor nominee overruled board allowed make new binding nomination fill vacancy event also binding nomination overruled general meeting shall free appoint director fill vacancy event binding nomination appointment sponsor nominee overruled iiac sponsor may make new binding nomination fill vacancy provided time convocation relevant general meeting sponsor group satisfies minimum holding requirement director appointed term ending close first annual general meeting following appointment director may reappointed general meeting may times suspend dismiss director resolution require majority least two thirds votes cast representing half company issued share capital resolution proposed board simple majority votes cast representing half company issued share capital current board senior management team date report board composed eleven members set forth following table unless otherwise indicated business address person listed ermenegildo zegna viale roma valdilana loc trivero italy name year birth position ermenegildo zegna monte rubello chairperson chief executive officer executive director andrea bonomi non executive director angelica cheung non executive director domenico sole non executive director sergio ermotti lead non executive director non executive director ronald johnson non executive director valerie mars non executive director michele norsa non executive director henry peter non executive director anna zegna monte rubello non executive director paolo zegna monte rubello non executive director andrea bonomi nominated sponsor nominee directors nominated board current members board reappointed annual general meeting held june term office member board end close next annual general meeting director may reappointed board designated ermenegildo gildo zegna monte rubello executive director also chairperson chief executive officer sergio ermotti non executive director lead non executive director chair voorzitter referred dutch law summary biographies directors set ermenegildo gildo zegna monte rubello chairperson chief executive officer executive director gildo zegna currently chairman ceo ermenegildo zegna group member zegna family third generation zegna oversees company founded grandfather namesake december led group public listing new york stock exchange making history first italian luxury group listed world largest stock exchange zegna born turin italy graduated university london starting career bloomingdale new york joined family business leading company business north america spain joined company board directors served chief executive officer addition role group also chairman board directors monterubello thom browne inc starting tom ford international llc also served member board directors fiat chrysler automobiles appointed chairman board filati biagioli modesto since serves member board directors luigi fedeli figlio since member strategic committee advisor camera nazionale della moda italiana national chamber italian fashion active member council united states italy zegna nominated cavaliere del lavoro president italian republic received leonardo prize prestigious award given italian leader meaningfully promoted italy image global scale president italian republic zegna oversaw successful acquisition integration thom browne rebranding zegna recently tfi acquisition entry tff license prior zegna actively involved company expansion america europe oversaw opening brand first store china leadership group started single wool mill trivero italy grown leading italian luxury group building portfolio three complementary luxury brands encompassing one kind made italy luxury textile laboratory platform produces world finest textiles fabrics andrea bonomi non executive director bonomi currently member board position held since bonomi investindustrial founder chairman industrial advisory teams committees prior founding investindustrial bonomi responsible saffa group diversified holding company investments europe united states prior saffa worked kleinwort benson london responsible spain italy lazard frères new york bonomi private equity investor years served chairman director number industrial financial companies including bpm rcs mediagroup permasteelisa investimenti centrale partners inversiones ibersuizas trustee new york university member nyu president global council private equity awards hall fame inductee born new york city usa bonomi holds business administration new york university angelica cheung non executive director cheung currently member board position held since also serves member governance sustainability committee cheung founding editor chief vogue china served editor chief february cheung joined sequoia capital china venture partner focuses investments fashion lifestyle entertainment industry especially new generation chinese innovation international brands seeking expansion china since june cheung served board directors ssense montreal based fashion platform appointed member board directors ami holding ami paris rare inc done holzweizer oslo asia ambassador british fashion council serves advisory board advance global alumni strategic advisor several international brands born beijing china cheung holds degrees law literature beijing university well university south australia domenico sole non executive director sole currently member board position held since also serves member compensation committee sole founder luxury retailer tom ford international llc chairman board directors formation consummation tfi acquisition time sole also advised private equity firms transactions field fashion business sole served president chief executive officer gucci america served president chief executive officer gucci group tenure made significant acquisitions ysl bottega veneta balenciaga sole served board directors numerous public private company currently serves director pirelli tod formerly served chairman sotheby director conde nast bausch lomb incorporated delta airlines inc gap inc newell brands inc procter gamble born rome italy sole graduated university rome law degree received harvard law school also currently serves member dean advisory board sergio ermotti non executive director ermotti currently member board position held since ermotti serves chair voorzitter dutch law granted title lead non executive director ermotti currently group chief executive officer ubs group president executive board ubs previously group chief executive officer joined ubs swiss ltd served chairman board directors april ermotti elected board directors swiss ltd chairman board directors april april swiss ltd also chaired governance nomination committee prior joining ubs unicredit group served group deputy chief executive officer head corporate investment banking private banking served head markets investment banking division held various positions merrill lynch areas equity derivatives capital markets became head global equity markets member executive management committee global markets investment banking born lugano switzerland ermotti swiss certified banking expert graduate advanced management programme oxford university ronald johnson non executive director johnson currently member board position held since also serves member audit committee governance sustainability committee johnson also member board directors ermenegildo zegna corporation subsidiary company united states johnson founder enjoy technology inc served chief executive officer sale majority assets company shutdown remainder company year also served member board directors globality inc philz cofee inc currently member board fish six restaurant corp melt previously johnson served chief executive officer jcpenney company inc november april senior vice president retail apple inc january october vice president merchandising target corporation september december born minneapolis usa johnson holds economics stanford university harvard business school valerie mars non executive director mars currently member board position held since mars also serves chairperson audit committee member compensation committee mars served senior vice president head corporate development mars incorporated diversified food business operating countries focused acquisitions joint ventures divestitures company retirement effective december previously mars served member board directors fiat chrysler automobiles merger peugeot ahlstrom munksjo finnish swedish listed specialty paper business delisting celebrity inc nasdaq listed company mars also involved number community educational organizations currently serves board directors conservation international chairs audit committee born new york city usa mars holds bachelor arts degree yale university columbia business school michele norsa non executive director norsa currently member board position held since also serves chairperson governance sustainability committee member audit committee december norsa executive vice chairman salvatore ferragamo previously served chief executive officer appointed member board directors palazzo feroni finanziaria engaged business real estate luxury hospitality also director horacio pagani member international advisory board china europe international business school shanghai ceibs furthermore member board directors azimut benetti since september norsa become global senior advisor boston consulting group previously norsa served board directors thom browne inc rocco forte hotels oettinger davidoff group hugo boss successfully led two ipos luxury sector salvatore ferragamo valentino fashion group norsa extensive experience fashion consumer goods publishing sectors marzotto benetton sergio tacchini rizzoli editore mondadori editore born lecco italy norsa graduated business economics università cattolica del sacro cuore milan henry peter non executive director peter currently member board position held since also serves chairperson compensation committee director consitex subsidiary company peter serves board directors swiss life switzerland largest life insurance company among others banque lombard odier cie chairs audit committee chairman board directors sigurd rück captive reinsurance company italian saipem group also chairman board directors brembo reinsurance captive reinsurance company italian group brembo member swiss takeover board member sanctions commission six swiss exchange since born boston usa peter holds law university geneva since peter partner lugano law firm currently kellerhals carrard lugano serving counsel starting also served professor business law president geneva center philanthropy university geneva termination office since peter vice chairman swiss sports disciplinary chamber swiss olympic association charge disciplinary cases also serves chairman member board various non profit foundations organisations anna zegna monte rubello non executive director zegna currently member board position held since zegna also sustainability officer oasi zegna position held since prior directed store planning zegna group image zegna member board directors monterubello well chairman fondazione zegna oversees planning coordination local international humanitarian initiatives related conservation sustainable development education also member board directors non profit foundation fondo ambiente italiano fai san patrignano foundation previously zegna headed public relations department gianni versace joining zegna head corporate advertising external relations manager along laura zegna zegna developed oasi zegna project years become model environmental sustainability green globe award work company support environmental issues appointed management committee touring club italiano recognition social commitment received marcopolo award prestigious babson college boston nominated aidaf italian association family businesses ambassador italian enterprise culture born turin italy zegna holds degree political sciences university lausanne post graduate studies advertising marketing watford college ermenegildo zegna monte rubello anna zegna monte rubello siblings paolo zegna monte rubello non executive director paolo zegna currently member board served chairman december previously served member board chief executive officer paolo zegna also vice chairman board directors monterubello chairman board directors lanificio ermenegildo zegna figli achill land pty ltd member board directors bonotto gruppo dondi elah dufour member board sistema moda italia since represents companies entire supply chain official interlocutor relations italian international institutions organizations also member director council euratex european association textile clothing state members representative italian association also served vice president altagamma foundation committed gathering high end cultural creative companies increasing competitiveness high end industry born turin italy paolo zegna holds degree economics university geneva paolo zegna monte rubello cousin ermenegildo zegna monte rubello anna zegna monte rubello senior management team senior management team group comprises following individuals ermenegildo zegna monte rubello chairman chief executive officer gianluca ambrogio tagliabue chief operating officer chief financial officer alessandro sartori zegna artistic director franco ferraris head textiles rodrigo bazan chief executive officer thom browne thom browne founder chief creative officer thom browne lelio gavazza chief executive officer tom ford fashion summary biographies members senior management team set ermenegildo gildo zegna monte rubello biography gildo zegna please see current board senior management team section gianluca tagliabue tagliabue currently serves group chief financial officer chief operating officer positions held since january tagliabue joined group january chief financial officer head business development joining group tagliabue chief financial officer senior vice president strategy shared services oakley group based california usa previously served group business development director international business development director retail sun luxury luxottica group january june june december respectively tagliabue years experience strategic consulting worked value partners italy brazil partner senior manager earlier gemini consulting born milan italy tagliabue holds degree business administration bocconi university milan alessandro sartori sartori currently artistic director zegna position held since oversees brands creative functions zegna brand product line started professional career company worked menswear designer years sartori appointed creative director zegna eight year tenure creative director oversaw launch brand including first runway show new york city sartori joined berluti paris based menswear brand become part lvmh group artistic director responsible developing brand born trivero italy sartori studied textile fashion design franco ferraris ferraris currently head textiles position held since ferraris served chief executive officer general manager lanificio ermenegildo zegna figli since serving managing director starting also chairman board directors bonotto gruppo dondi tessitura ubertino ferraris also serves board directors number private companies industrial services real estate sector including finissaggio tintoria ferraris pettinatura verrone immobiliare giulia immobiliare magda served chairman fondazione cassa risparmio biella plays active role supporting initiatives aimed promoting cultural economic social growth province biella born turin italy ferraris holds degree business economics university ancona franco ferraris spouse anna zegna monte rubello rodrigo bazan bazan currently chief executive officer thom browne position held since leadership thom browne expanded dtc channel opening directly operated stores north america europe korea japan greater china region middle east partners hong kong sar south east asia bazan also led digital retail footprint business including partnering platforms like farfetch tmall joining thom browne bazan served president alexander wang oversaw merchandising marketing sales finance operations digital well company retail expansion prior appointment alexander wang bazan served vice president general manager marc jacobs international europe middle east india previously served general manager chief financial officer alexander mcqueen oversaw wholesale ready wear accessories team retail network flagship stores since bazan served member cfda vogue fashion fund business advisory committee actively involved fund mentorship program since bazan recognized business fashion bof annual list influential people shaping global fashion industry born mar del plata argentina bazan graduated universidad argentina empresa buenos aires thom browne browne founder chief creative officer thom browne position held since acquisition thom browne company november browne widely recognized challenging modernizing today uniform suit browne began eponymous business early five suits small appointment shop new york city west village following years expanded include complete ready wear accessories collections men women browne also become known highly conceptual runway presentations gained global attention thought provoking dramatic themes settings october browne elected chairman council fashion designers america succeeding tom ford starting january born allentown pennsylvania browne holds bachelor science university notre dame lelio gavazza lelio gavazza chief executive officer tom ford fashion position held since september currently responsible end end management tom ford fashion business collection development merchandising production well retail wholesale distribution previously spent years bulgari consolidated strong expertise luxury focus jewelry watches accessories perfumes retail wholesale role gavazza extensively promoted bulgari brand made italy world leveraging italian dna company promoting italian lifestyle key element differentiation time bulgari covered several roles managing director greater china managing director europe middle east africa executive vice president sales retail bulgari group prior bulgari chief executive officer sharmoon ermenegildo zegna garments ltd china two years chief operations officer mantero seta five years member board directors mantero orient operating shanghai china engineer background entering luxury arena gavazza gained experience chemical field focusing activities supply chain responsibilities different roles four year experience strategic consulting born asti italy gavazza holds bachelor degree chemical engineering genova university board regulations decision making pursuant articles association board adopted regulations dealing internal organization manner decisions taken place manner meetings held composition duties organization committees board matters concerning board directors committees established board pursuant board regulations board strives adopt resolutions consensus possible resolutions adopted majority votes cast unless provided otherwise board regulations event tied vote proposal rejected unless board regulations provide otherwise director shall one vote pursuant board regulations board adopt resolutions meeting majority directors entitled vote present represented meeting lead non executive director chairperson believe urgent situation requires immediate resolution board may decide aforementioned quorum requirement apply provided least two directors entitled vote present represented meeting including least one executive director provided however executive director entitled vote matters considered reasonable efforts made involve directors decision making board regulations prescribe board powers authorities duties vested pursuant dutch law articles association board shall focus sustainable long term value creation company business end board considers whenever relevant impact actions company affiliated enterprises people environment weights stakeholder interests context accordance board regulations board shall develop strategy sustainable long term value creation company business shall approve monitor assess implementation execution strategy articles association dutch law provide resolutions board regarding important change company identity character associated business enterprise subject approval general meeting resolutions include event transfer business enterprise practically entire business enterprise third party concluding cancelling long lasting cooperation company subsidiary another legal entity company fully liable partner partnership provided cooperation cancellation material significance company iii acquiring disposing participating interest share capital company value least one third company assets shown consolidated balance sheet explanatory notes according last adopted annual accounts company subsidiary conflicts interest transactions company shareholders pursuant articles association board regulations director participate deliberations decision making process director direct indirect personal conflict interest company associated business enterprise board decides whether director conflict interest without director present board unable adopt resolution result directors unable participate deliberations decision making process due conflict interest resolution may nevertheless adopted board disregarding identified conflict interests specific instance transactions carried financial year group related parties including directors legal natural persons hold least ten percent shares company duly identified analyzed reported detail section related party disclosures note related party transactions consolidated financial statements section necessary information regarding potential conflicts interests directors executives strategic responsibilities close family obtained company entered transactions legal natural persons hold least ten percent shares company material significance company persons iii best practice provisions dcgc complied committees board pursuant articles association board power establish committees may allocate specific duties tasks procedures committees board established three standing committees audit committee compensation committee iii governance sustainability committee standing committee comprised least three directors majority independent nyse listing standards dcgc rules company committee written charter adopted board current charters found company website www zegnagroup com date report members company audit committee governance sustainability committee well two members three compensation committee considered independent nyse listing standards dcgc rules audit committee audit committee responsible assisting advising board oversight among things integrity company financial statements including published interim reports adequacy effectiveness company internal control financial reporting financial reporting procedures disclosure controls procedures iii company policy tax planning company policy reservations dividends company financing company application information communication technology vii systems internal controls management board established viii company compliance legal regulatory requirements company compliance recommendations observations internal independent auditors open ongoing communications regarding company financial position results operations board independent auditors company management internal audit department company policies procedures addressing certain actual perceived conflicts interest xii qualifications independence oversight remuneration independent auditors non audit services provided company independent auditors xiii determination process selecting external auditor audit firm independent registered public accounting firm applicable nomination extend assignment carry statutory audit xiv performance company internal auditors independent auditors design operation internal risk management control system risk assessment guidelines policies including major financial risk exposure whether strategic financial operating sustainability cybersecurity compliance related otherwise steps taken monitor control risks xvi implementation effectiveness company ethics compliance program audit committee comprised least three non executive directors member audit committee required material relationship company serve auditors accountants company independent purposes nyse rules rule exchange act dcgc iii financially literate accounting selected financial management expertise determined board least one member audit committee must financial expert defined sarbanes oxley act rules sec audit committee member may serve four audit committees public companies absent waiver board must disclosed company annual report unless decided otherwise audit committee independent auditors company chief financial officer head internal audit attend meetings chief executive officer entitled attend meetings audit committee unless audit committee determines otherwise attend meetings audit committee audit committee requires audit committee meets independent auditors least per year outside presence executive directors management audit committee comprised valerie mars chairperson ronald johnson michele norsa members independent purposes nyse rules rule exchange act dcgc eleven meetings audit committee took place besides several decisions adopted writing members audit committee time meeting attended meetings audit committee external auditors attended meetings report meeting decision made board main activities carried audit committee following review audited unaudited financial statements financial disclosures including review accounting policies methodology plans used impairment tests review financial risk sections annual reports relation financial year review filings sec related corporate communications regular oversight group internal control financial reporting enterprise risk management implementation misconduct reporting follow risk management general including supply chain management cybersecurity risk relevant incident reporting required review internal audit plan execution assessment internal audit function organization resources review external auditor performance fees audit plan updates litigation compliance program subsequent adoption amendment compliance policies required updates sustainability related initiatives regulations reporting analysis dividend policy dividend proposal review approval delegation board related party transactions separate private sessions management external independent auditor head internal audit function self assessment functioning audit committee compensation committee compensation committee responsible among things assisting advising board determining executive compensation consistent company remuneration policy reviewing approving remuneration structure non executive directors iii administering equity incentive plans deferred compensation benefit plans discussing management company policies practices related compensation issuing recommendations respect compensation preparing remuneration report accordance dcgc compensation committee comprised least three non executive directors half members including chairperson independent dcgc unless decided otherwise compensation committee head human resources company relevant subsidiaries may invited attend discussions compensation committee discussions relating compensation non executive directors compensation committee comprised henry peter chairperson domenico sole valerie mars henry peter valerie mars independent purposes nyse rules dcgc three meetings compensation committee took place members compensation committee present report meeting made board compensation committee assisted non executive directors determination compensation executive director taking consideration relevant pay ratio well setting compensation conducted scenario analysis compensation committee also assisted non executive directors setting compensation non executive directors accordance remuneration policy adopted company reviewed remuneration sections annual reports relation financial year compensation committee advised board preparation new ceo senior executive agreement details please refer historical compensation year ended december new executive agreement adoption implementation new long term equity incentive plan granted management lti plan well new short term variable incentive system tailored executives managers employees tested implemented gradually governance sustainability committee governance sustainability committee responsible among things assisting advising board recommendations criteria professional personal qualifications candidates serve directors periodic assessment size composition board iii periodic assessment performance individual directors reporting board proposals non executive directors nomination nomination directors appointed general meeting supervision policy selection appointment criteria senior management succession planning monitoring evaluation reporting group sustainable development policies practices management standards performance governance globally vii review assessment formulation recommendations strategic guidelines sustainability related issues viii review annual sustainability report advise oversight integrity sustainability reporting related corporate communications governance sustainability committee comprised least three non executive directors half members independent dcgc governance sustainability committee comprised michele norsa chairperson ronald johnson angelica cheung independent purposes nyse rules dcgc four meetings governance sustainability committee took place members governance sustainability committee present report meeting made board consultation lead non executive director governance sustainability committee prepared annual evaluation functioning board committees individual performance directors governance sustainability committee supported board carrying directors independence analysis review continuation analyses performed individual basis carefully examining impact certain events group governance structure committees composition field sustainability jointly audit committee governance sustainability committee reviewed sustainability report notably light applicable standards gri sasb reporting standards tcfd framework also reviewed governance sections annual reports governance sustainability committee advised board amendment corporate governance documents following entry force dcgc content human rights policy definition relevant components esg multiplier used variable remuneration management also reviewed advised succession planning top management governance sustainability committee regularly informed group climate strategy well new sustainability related initiatives regard supported deployment brand specific strategies designed fit brand business specificity committee educated ongoing basis latest esg requirements evolution esg legal landscape groups readiness face critical changes board diversity board acknowledges diverse board composition contributes better understanding industry corporate environment company group operate turn fosters company capacity create sustainable long term value board generally considers composition attempt reflect geographic spread business well strategic orientations company group therefore accordance dcgc board adopted diversity inclusion policy board directors ermenegildo zegna diversity inclusion policy ensure gender representation diversity composition board promote inclusiveness practices accordance applicable law pursuit best market practices principles diversity inclusion aspects laid diversity inclusion policy aim ensure board sufficient diversity views expertise needed good understanding current affairs longer term risks strategic opportunities related business company group diversity also helps board consider nature complexity company business well social environmental context company group operate diversity inclusion policy also affirms value inclusive working environment ideas insights member respectfully heard considered strategic advantage creation sustainable long term value selection candidates appointment board primarily based merit due regard thereof board governance sustainability committee shall seek fill vacancies considering candidates bring diversity amongst others nationality cultural background age iii gender experience competencies educational professional background board considers aspects key drivers promoting debate balanced decision making operating independently critically vis vis directors company company aim board composition reflects geographic spread strategic orientations business therefore comprises directors asian european north american background nationality working experience otherwise group non executive directors comprises least male least women members gender balance criteria applicable today executive directors since ermenegildo zegna monte rubello sole executive officer company group met diversity targets least non executive directors women three ten non executive directors non executive directors include directors asian european north american background nationality working experience otherwise consistent geographic presence group business non executive directors strong balanced diversity skills complementary expertise elicits fruitful discussions enables board perform oversight duties best interests group company proud achieved initial goal set diversity policy remains committed strengthen diversity composition board selecting candidates appointment board rules generally accepted principles non discrimination also taken account composition board furthermore follows profile board annexed board regulations profile aims composition board requisite mix specific experience qualifications skills order assure board whole necessary tools perform functions effectively light company structure business general meetings general meetings held amsterdam haarlemmermeer includes schiphol airport hague rotterdam netherlands annual general meeting shall held later six months end financial year date place mentioned convocation notice additional extraordinary general meetings may also held whenever considered appropriate board pursuant dutch law one shareholders solely jointly represent least issued outstanding share capital may request board convene general meeting board taken steps necessary ensure general meeting held within relevant statutory period request requesting person may request authorized court preliminary relief proceedings convene general meeting general meetings shall convened announcement dutch daily newspaper notice shall include agenda stating items discussed including annual general meeting among things discussion adoption annual accounts appropriation group profits proposals relating board including appointment appointment directors filling vacancies board addition agenda shall include items included therein board one shareholders alone together representing least issued outstanding share capital may also request include items agenda general meeting requests must made writing received board least days day meeting resolutions shall adopted items included agenda accordance dcgc shareholder may request inclusion item agenda consulting board respect one company shareholders intend request item put agenda general meeting may result change company strategy pursuant dcgc board may invoke response time maximum days day general meeting addition shareholders request change composition board corresponding provisions articles association case unsolicited public offer statutory response time may invoked board period depending circumstances days general meeting presided chairperson chairperson absent lead non executive director chairperson lead non executive director absent general meeting chaired one directors person designated purpose board directors may attend general meeting person electronic means communication chairperson meeting may decide discretion admit persons meeting external auditor company may attend annual general meeting annual accounts discussed may questioned general meeting relation report fairness company financial statements record date convening general meeting board allowed determine persons right vote attend meeting considered persons rights day prior date meeting record date registered register designated board purpose regardless whether rights date meeting order person able attend general meeting right vote meeting person must notify company writing intention later day manner mentioned convocation notice general meeting voting rights quorum general meetings ordinary share special voting share confers right cast one vote special voting share confers right cast four votes special voting share confers right cast nine votes general meeting information special voting shares please refer share capital company loyalty voting votes may cast general meeting shares held company company subsidiaries nonetheless holders right usufruct respect ordinary shares excluded right vote shares right usufruct right pledge granted prior time share acquired company company subsidiaries company may cast votes shares respect company subsidiary holds right usufruct right pledge ordinary shares entitled voting rights pursuant preceding sentences taken account purpose determining number shares votes may cast amount share capital present represented general meeting unless dutch law articles association state otherwise resolutions adopted general meeting adopted simple majority votes cast quorum requirements apply pursuant dutch law determining extent shareholders vote present represented extent share capital present represented account shall taken shares respect law articles association provide votes may cast meetings holders shares specific class meetings holders shares specific class held whenever board calls meetings meetings holders shares specific class may convened later sixth day day meeting provisions applicable general meetings except concerning frequency notice period record date apply mutatis mutandis meetings holders shares specific class share capital company general company share capital comprises ordinary shares special voting shares special voting shares special voting shares described voting rights quorum general meetings section ordinary share special voting share entitles holder thereof cast one vote holder special voting share right cast four votes holder special voting share right cast nine votes december company authorized share capital amounted divided ordinary shares nominal value special voting shares nominal value special voting shares nominal value special voting shares nominal value order facilitate company loyalty voting structure articles association provide transitional provisions increase authorized share capital board makes required filings dutch trade register december ordinary shares special voting shares issued outstanding december ordinary shares held company treasury issued outstanding ordinary shares special voting shares held registered form share certificates may issued issued ordinary shares special voting shares fully paid loyalty voting company adopted loyalty voting structure order strengthen stability company foster development continuous involvement stable base long term company shareholders special voting shares governed provisions included articles association terms conditions special voting shares documents govern issuance allocation acquisition conversion sale holding repurchase transfer special voting shares certain aspects registration ordinary shares loyalty register purpose loyalty voting structure grant long term shareholders extra voting rights means granting special voting shares without entitling shareholders economic rights pertaining ordinary shares however dutch law special voting shares cannot totally excluded economic entitlements result pursuant articles association holders special voting shares entitled minimum dividend amount one percent aggregate nominal value issued outstanding special voting shares allocated separate special voting shares dividend reserves distribution special voting shares dividend reserve partial full release reserve require prior proposal board resolution meeting holders relevant class special voting shares made exclusively holders relevant class special voting shares proportion aggregate nominal value relevant class special voting shares powers vote upon distribution special voting shares dividend reserve cancellation issued special voting shares specific class powers granted meeting holders special voting shares relevant class pursuant articles association group values compliance code ethics code ethics group adopted code ethics applies employees officers directors including officers responsible financial reporting anyone act business dealings group code ethics available website www zegnagroup com code ethics cornerstone group governance model aimed disseminating promoting across organization following ethical principles group strongly believes accepts complies legality carrying activities behalf interests group persons subject code ethics shall conduct full compliance applicable laws regulations countries operate equality impartiality group promotes protects respect human dignity opposes forms discrimination based age sex sexual orientation personal social condition race language nationality political opinion trade union membership religious belief carrying various corporate activities making related decisions persons subject code ethics must conduct impartial manner best interests group shall make decisions professionally objectively based neutral objective evaluation methods transparency correctness reliability actions operations negotiations generally conduct subject code ethics shall based utmost transparency correctness reliability professionalism group considers professionalism value essential growth establishment domestic international markets professional work environment devoid politics requires employees focus best supporting others produce high quality work accordingly business activities take place professionalism commitment due diligence required given nature duties responsibilities entrusted person confidentiality group considers confidentiality essential rule actions means information remains confidential rigorous compliance applicable legislation personal data security value human resources human resources indispensable precious existence future development group merit based assessment criteria adopted develop skills abilities employees equal opportunities guaranteed human resources management aims improve abilities employee also training courses development activities working conditions designed ensure employees perform duties climate collaboration respect calm order guarantee full respect individual group involved fight child labour countries operates avoids forms exploitation child labour group respects human rights guarantees employment founded upon principles dignity respect without form coercion mistreatment abuse corporal punishment health safety group undertakes organize maintain safe healthy workplaces compliance health safety regulations countries operates promotes safety oriented culture awareness risks involved workplace activities expects employees levels act responsibly respect safety system adopted company procedures form part environmental protection group seeks protect environment activities group seek strike right balance economic growth creation value respect protection environment fair competition group firmly believes fair healthy competition makes positive contribution pursuit corporate mission accordingly complies competition rules countries operates engage encourage conduct could lead forms unfair competition values code ethics aim provide essential guidance leadership employees stakeholders including shareholders suppliers best navigate roles responsible ethical manner ensuring compliance laws regulation group strives open sustainable transparent culture enable openness transparency incorporate principles day day business practices group adopted specific policies policies related anti corruption anti money laundering sanctions tax antitrust human rights diversity equity inclusion well parental leave recently group revised code conduct suppliers line ambitious standards evolving industry norms regulatory requirements increasing customer expectations revised code conduct suppliers formally approved march sets clear supplier obligations working group reinforces group efforts promote responsible sustainable practices throughout supply chain since crucial adequate system reporting investigating suspected breaches code ethics group misconduct reporting policy aimed reporting misconduct virtue employees third parties required report suspected breaches code ethics committed course business activities whistleblowers guaranteed protected kind reprisal accordance principles transparency traceability confidentiality code ethics brought attention employees third parties appropriate manner english nine main languages spoken group systematic communication campaigns regular training sessions organized ensure consistent application code ethics policies employees requested inform third parties business dealings provisions code ethics compliance risk management function support legal affairs human resources functions monitors effective observance code ethics execution internal training activities effectiveness compliance code ethics monitored ongoing basis support group compliance risk management function cases potential non compliance code ethics identified compliance reviews periodic specific audits performed group internal audit function reports received internal whistleblowing channels potential cases non compliance identified duly investigated deviation code ethics occurred appropriate proportionated action taken audit committee systematically informed complaint fraud regarding accounting internal control receives regular updates status misconduct reporting activities reports thereon board immediately following meeting detailed information code ethics found sustainability report group people culture ermenegildo zegna group recognizes pivotal role people driving sustainable growth fostering positive societal impact commitment environmental social governance principles extends beyond mere compliance integral part organizational dna people strategy built pillars addressing key aspects people management organizational development talent attraction acquisition performance career management learning development employee engagement well diversity equity inclusion digitalization process optimization culture within group inclusive equitable safe sustainable transparent open authentic innovative collaborative prioritize diversity respect individuals ensure fair treatment opportunities everyone prioritize health well integrate sustainable practices every aspect business maintain clear communication accountability endeavors foster environment openness uphold honesty integrity interactions encourage innovation drive positive change believe power collaboration achieve goals one discriminated basis age gender sexual orientation social personal status race language nationality political opinions union membership religious beliefs opportunity improve contribute group thrive craft profession based feedback evaluation stakeholders currently desired implement significant changes values culture outlined aligns core values positively received employees customers partners values culture outlined paragraph conduct promoted within enterprise contribute sustainable long term value creation fostering employee engagement attracting top talent enhancing brand reputation building trust stakeholders promoting innovation continuous improvement achieve goals maintain positive work environment ultimately drive business success following initiatives implemented enhance people engagement performance within cultural context employee feedback surveys assess culture alignment ongoing training development programs reinforce desired behaviours leadership led initiatives promote diversity equity inclusion within organization diversity equity inclusion grounded desire embrace diversity many forms understand value cultural richness diversity brands sold globally therefore embrace diversity bring global perspective run business market brands respect celebrate unique gifts cultures communities particularly presence april board directors approved diversity equity inclusion policy policy setting forth global group approach related measures invite diversity build equity promote inclusion diversity refers many ways people differ visible forms diversity skin color race gender visible invisible age ethnicity nationality culture religion physical ability invisible gender identity hidden disabilities sexual orientation education values equity creating fair access opportunity advancement everyone according knowledge qualifications competences performance motivation regards personal conditions creating equal playing field within group inclusion means fostering welcoming fair environment bring authentic selves work connect contribute meaningfully inclusion fabric holds together different threads bring world ultimately everyone feeling sense belonging part team well within group whole approach characterized desire hear people understand unique needs believe power value diversity individuals seen heard organization treats people respect dignity values unique gifts stronger resilient human diversity fact choose include diversity weaving talents unique expressions people organizational tapestry whereby every voice valued every perspective heard every individual empowered policy set forth target measures incentivize gender balance top management positions infra defined onward aiming reach increase women representation top management annual average linear progression resulting gender ratio men women end year ended december approximately percent top management positions women persons december approximately percent target gender balance top management achieved initiatives targeted management group ultimately represents succession pool top management specific gender related targets defined part group talent acquisition strategy team based gender representation kpi assigned top management dedicated leadership development retention plans women talents managerial roles kpis women representation succession pipeline systematic gender pay gap analysis defining multi year action plan close gap top management refers ceo direct reports along positions mostly focused group strategy design ceo artistic director group cfo group director marketing director head region etc middle management positions responsible executing functional strategy across team manager finance manager retail manager etc percentage women board details diversity board composition please refer section board board diversity report additional information following table sets forth information relating employees gender excluding temporary staff december employees gender december december men women disclosed total men women disclosed total employees delta total consistently previous year women composed overall headcount distribution share men women remained unchanged similar ratios categories following table gives insight inflow progression retention employees employees new hires turnover december december employees employees new hires employees turnover employees men women disclosed total due updated employees gender declarations data employees per gender may differ experienced turnover rate accounting exits outweighed new recruits indicating strong responsive growth workforce gender distribution among new hires remained steady compared previous year women constituting intake key initiatives implemented strengthened commitments building foundation policy approved april reflecting commitment new group parental leave standards approved formally implemented first quarter standards ensure eligible employees receive six weeks working days fully paid parental leave childbirth adoption child custody alternative forms birth accordance local regulations law favorable additional provisions apply benefit granted regardless gender sexual orientation marital relationship status protected characteristic moreover continued refine talent acquisition retention strategy strengthen group commitment progress toward goal becoming equal opportunity employer one key objectives building new global recruiting procedure introduced established standardized transparent framework attracting assessing selecting qualified candidates year focused training teams hiring managers involved recruitment process training ensured consistency applying methodologies tools defined procedure also emphasizing mitigation unconscious biases selection processes analysis interview management recognizing importance equity meritocracy performance across processes publicly set target gender balance top management aim achieve target initiatives targeted management level group represents succession pool top management enhance female representation top management implemented monitoring system using periodic dashboards shared team tools enable track turnover new hires also identifying actions improve effectiveness hiring processes strengthen monitor efforts improvement gender balance measures also launched pilot phase obtain gender equality certification including four entities italy aim extend initiative companies group next two three years meanwhile activities related creation policies awareness raising training ongoing also launched talk inclusion initiative foster discussion raise awareness around topics initiative consisted various person events aimed encouraging meaningful conversations brought together participants per site finally discrimination monitoring within organization conducted internal audits oversight ethics committee ensuring workplace remains free discrimination compliance dcgc company complied almost provisions dcgc amendments pursuance new best practice provisions dcgc incorporated group governance documents january implemented due course clarity purposes company listed remaining deviations dcgc reasons deviating best practice provision best practice provision set composition independence criteria non executive directors best practice provision provides certain limitations number non independent non executive directors non executive directors three directors non independent due affiliation shareholder directly indirectly holding shares company anna zegna monte rubello paolo zegna monte rubello andrea bonomi non executive directors anna zegna monte rubello paolo zegna monte rubello belong zegna monte rubello family controls monterubello furthermore domenico sole sergio ermotti qualify independent directors important business relationship company result thereof non executives qualify independent result zegna comply best practice provision company believes zegna stakeholders benefit affiliates monterubello especially respect expertise valuable knowledge company business industry company operates company furthermore believes domenico sole sergio ermotti andrea bonomi experience well strong recognition peers board benefit company shareholders stakeholders outweighing perceived disadvantages qualifying independent dcgc outcome independence evaluation please refer report non executive directors independence non executive directors best practice provision sound succession planning ceo sole executive director place respect succession plan non executive directors since pursuant articles association directors appointed term ending close first annual general meeting following appointment company far prepared retirement schedule referred best practice provision dcgc best practice provisions chief executive officer also granted title chairperson qualify chairperson voorzitter within meaning dcgc accordance articles association board regulations board granted sergio ermotti title lead non executive director lead non executive director serves chairperson voorzitter board dutch law within meaning dcgc view thereof certain tasks set best practice provisions carried chief executive officer chairperson deviation best practice provision lead non executive director chairs meetings board absence chairperson result division tasks chief executive officer chairperson lead non executive directors considered best interests company best practice provision board granted intends grant options performance shares chief executive officer part remuneration deviation best practice provision dcgc options may exercised within first three years grant date performance shares awarded chief executive officer subject five years holding period although deviation dcgc foregoing market practice among companies listed nyse best practice provision management services agreement chief executive officer provides severance payment excess one year base salary severance payment agreement terminated among things initiative chief executive officer severance provisions considered consistent market practice although deviation best practice provision dcgc best practice provision remuneration non executive directors payable cash shares subject lock period two years non executive directors may decide based proposal compensation committee grant additional cash equity awards individual non executive director given year case exceptional achievements non executive director provided however additional grant result significant discrepancy size award company results performance non executive directors granted bonus henry peter recognition specific contribution company public listing nyse ipo bonus plan ipo psus pursuant granted performance share units giving right receive equal number ordinary shares upon attainment certain performance conditions also subject continued service december non executive directors deemed appropriate conditionally grant henry peter right acquire ordinary shares given exceptional achievements connection preparation closing business combination conditions satisfied december performance share units vested number ordinary shares delivered henry peter remuneration form ordinary shares accordance market practice among companies listed nyse although deviation suggested governance provision dcgc best practice provision executive director non executive directors nominated appointment attend general meeting votes cast nomination pursuant best practice provision dcgc publishing relevant biographical details curriculum vitae nominee appointment company ensures general meeting well informed respect nominees appointment practice chief executive officer present general meeting best practice provision resolution suspend dismiss director proposal board requires two thirds majority votes cast representing company issued share capital although deviation best practice provision dcgc provides threshold may higher simple majority votes cast representing one third issued share capital line article dcc provides majority quorum requirements board believes deviation provides board needed stability execute strategy create long term value stakeholders general meeting may overrule binding nomination appointment iiac sponsor nominee defined articles association majority votes cast favour overruling binding nomination majority represent one third company issued share capital new general meeting may convened meeting majority requirements still apply simple majority representing one third share capital latter deviation best practice provision dcgc prescribes simple majority votes favour overruling binding nomination majority represent one third company share capital new general meeting may convened resolution may passed simple majority votes cast irrespective company share capital represented board believes deviation provides board needed stability execute strategy create sustainable long term value stakeholders best practice provision sergio ermotti serves lead independent director thereby chairperson voorzitter board dutch law within meaning dcgc also serves ceo president group executive board ubs zegna lasting significant relationship result deviation best practice provision sergio ermotti role chairperson voorzitter qualify independent dcgc however company believes sergio ermotti educational professional background competences benefit company shareholders stakeholders acting role lead independent director outweighs potential downside non independent chairperson voorzitter report non executive directors report non executive directors company financial year referred best practice provision dcgc provides information performance non executive directors duties throughout board activity involvement non executive directors establishment company strategy accordance articles association executive directors non executive directors jointly responsible strategic management company non executive directors responsibility day day operations company group vested executive director non executive directors oversee executive director performance duties supervise company general affairs business non executive directors shall also oversee effectiveness company internal risk management control systems integrity quality financial sustainability reporting discharging duties financial year non executive directors monitored design execution group strategy aim creating sustainable long term value company stakeholders including shareholders throughout entire year regular basis executive director engaged day day management interacted non executive directors discuss define group strategic objectives across three segments zegna segment thom browne segment tom ford fashion segment taking consideration market trends growth levers main regions group operate drivers long term value creation specific three brands reviewed main internal external growth initiatives non executive directors reviewed advised budgets mid term plans taken decisions allocation resources including investments dividend distribution advised supported management implementation new harmonized incentive system part standardized compensation framework adopted help attract talent incentivize performance line stakeholders interests discussed engagement stakeholders including shareholders advised corporate communication non executive directors received updates works performed committees regarding notably internal control financial reporting risk management sustainability strategy commitments legal compliance matters took consideration decisions non executive directors also involved review approval related party transactions set objectives compensation executive director adopted long term equity incentive plans reviewed assessed pillars succession planning top management including executive director non executive directors contributed establishment oversight implementation group sustainable long term strategy non executive directors prepared reviewed discussed conclusions annual evaluation board committees director see also evaluation board committees directors board meetings attendance seven meetings board convened meetings board generally followed executive session meeting non executive directors chaired lead non executive director reports thereon chairperson five executive sessions took place accordance articles association board regulations directors may attend meetings board remotely provided participants hear simultaneously individual attendance directors average despite several meetings rescheduled short notice table summarizes attendance rate directors name board meetings attendance ermenegildo zegna monte rubello andrea bonomi angelica cheung domenico sole sergio ermotti ronald johnson valerie mars michele norsa henry peter anna zegna monte rubello paolo zegna monte rubello _________________ absent excused two meetings independence non executive directors board determined fiscal year cheung johnson mars norsa peter five ten non executive directors independent best practice provisions dcgc sole situation described iii best practice provisions dcgc due involvement tfi acquisition year preceding appointment june considered material company sole upon effectiveness appointment ceo president group executive board ubs effective april ermotti situation described iii best practice provisions dcgc light lasting significant relationship company ubs result thereof longer qualifies independent dcgc zegna monte rubello paolo zegna monte rubello representatives monterubello majority shareholder company therefore independent aforementioned best practice provision bonomi also representative shareholder holding ten percent ordinary shares therefore also qualify independent dcgc since sole ermotti situation described best practice provision iii zegna monte rubello paolo zegna monte rubello representatives majority shareholder company independence criteria met half non executive directors company deviated best practice provision dcgc explanation respect deviation please refer compliance dcgc evaluation board committees directors accordance dcgc board regulations charters three committees board carries annual evaluations functioning board three committees also includes evaluations performance individual director two board evaluations carried support external expert major changes board composition company operational governance structure board evaluation conducted online anonymous questionnaire questionnaire focused board composition organization dynamics deepened recommendations made previous evaluations included also evaluation committees board individual assessment director outcome assessment analyzed governance sustainability committee presented board proposed action plan non executive directors discussed findings without chairman chief executive officer present committee deliberated evaluation lead non executive director reviewed results self peer individual reports conclusion reiterated board size composition strong directors bringing extensive relevant experience valuable insights engagement brand allowing opportunity bring younger independent members collective leadership chair lead non executive director appreciated iii committees contributing positively board overall performance board functioning overall effective evaluations committees concluded immediate need amend size composition audit committee compensation committee governance sustainability committee reason amend charters pursuance evaluation non executive directors adopted action plan containing concrete actions improve board effectiveness execution action plan followed next evaluation board non executive directors promptly regularly informed committee activities carried accordance best practice provision dcgc opinion committee properly carried duties throughout financial year detailed description composition board committees number meetings main items discussed please refer section board committees board compensation report introduction section provides information related remuneration earned board senior management team year ended december form amount remuneration received board determined accordance remuneration policy remuneration policy adopted december amended june general meeting accordance dutch law articles association remuneration received senior management team determined consistent group prior practice based principles aimed ensure talent retention align remuneration group strategy group performance individual contribution performance non executive directors board oversee remuneration policy remuneration plans practices group recommend changes appropriate half members compensation committee including chairperson independent pursuant dcgc company may time time amend remuneration policy subject general meeting adopting amendment required majority compensation report consists two sections remuneration policy details current remuneration policy available corporate website governs compensation executive non executive directors historical compensation year ended december details remuneration features actual remuneration received awarded executive non executive director senior management team compared previous year remuneration policy pursuant section dcc general meeting adopted remuneration policy directors remuneration policy provides framework non executive directors determine remuneration executive directors non executive directors remuneration policy provides structure aligns remuneration board successful delivery group long term strategy sustainable long term value creation therefore aims ensure directors interests closely aligned company stakeholders including shareholders purpose remuneration policy define competitive remuneration package designed attract retain motivate directors possess necessary leadership qualities requisite skills experience relevant areas group business also providing appropriate flexibility tailor remuneration practices based specific circumstances formulating remuneration policy non executive directors taken consideration group strategy core values focused long term value creation sustainable development group pay ratios within group scenario analyses also considered remuneration policy based upon following principles general remuneration board follows pay performance principle incentivizes directors create long term value shareholders stakeholders achievement strategic objectives remuneration appropriately balanced fixed variable remuneration components aiming ensure long term value creation alignment directors interests group strategic objectives remuneration board competitive relation market group operates relative size business specificity group governance structure duties responsibilities board resulting therefrom respect executive director remuneration predominantly long term nature long term equity incentives linked achievement group strategic objectives highly competitive industry group operates respect non executive directors remuneration non executive directors designed attract retain non executive directors talent skills foster long term value creation group respecting core values remuneration non executive directors consists cash consideration share based compensation accordance market practice among companies listed nyse ensure structural alignment non executive directors interests interests company stakeholders including shareholders evaluation non executive directors evaluate objectives structures remuneration policy regular intervals ensure policy fit intended purpose non executive directors assisted compensation committee executive director basis remuneration policy objectives compensation executive director consists elements discussed base salary base salary set level attract motivate retain executive director reimbursement expenses group reimburse expenses costs reasonably incurred relation performance executive director duties short term incentives objective short term variable compensation incentivize executive director achieve annual targets objectives related short term focus group annual short term incentive payment granted individual executive director exceed individual executive director base salary notwithstanding foregoing non executive directors may decide based proposal compensation committee increase short term incentive payable individual executive director given year case exceptional achievements executive director long term incentives objective long term equity incentive provide retention tool executive director align long term interests executive director group stakeholders granting long term equity incentives also aims motivate executive directors pursue implement group sustainability strategy furthermore granting long term incentive form equity executive director participate directly growth value group contributes amount equity awarded executive director determined non executive directors taking account applicable performance conditions may include financial non financial conditions continuous service requirements intent creating long term shareholder value non executive directors may resolve upon recommendation compensation committee grant equity awards accordance equity incentive plan approved general meeting implemented board executive director may entitled annually acquire ordinary shares maximum value base salary annual variable cash compensation awarded previous year value per share based enterprise value corresponding times group adjusted ebit year preceding year executive director wishes acquire ordinary shares recoupment incentive compensation adjustment clawback grant award actual payment relation short term long term incentives may relevant performance vesting period period three years following actual award sole discretion non executive directors whether instigation compensation committee decreased eliminated grant award actual payment deemed unacceptable according principles reasonableness fairness clawed back grant award actual payment took place basis incorrect data including data maliciously altered therefore incorrect september board adopted new clawback policy clawback policy accordance listing requirements new york stock exchange clawback policy became effective december provides recovery certain erroneously share based compensation current former executive director company event company required prepare accounting restatement remuneration event termination group may pay severance compensation accordance terms conditions applicable services agreement individual executive director severance compensation exceed executive director annual base salary severance benefits may also include outplacement services continuation insurance benefits paid made available executive director prior termination service specific terms severance package executive director established services agreement accordance framework provided remuneration policy benefits group may provide executive director customary benefits company cars car allowance travel expenses work related costs medical insurance accident insurance insurance tax assistance relocation allowances addition individual cases company housing benefits may also offered annual clothing allowances benefits line general prevailing market practice also providing non executive directors enough flexibility tailor remuneration benefits practices specific situation loans advances guarantees group provide loans advances guarantees executive director non executive director basis remuneration policy objectives compensation non executive directors consists elements discussed year non executive directors review remuneration levels structure applicable non executive directors consider whether adjustment required annual base remuneration group pay non executive director annual base fee payable cash ordinary shares subject restricted stock award equity awards lead non executive director entitled additional fee additional duties responsibilities related role payable cash number equity awards granted non executive directors established based closing stock price last trading day month preceding date grant converted euros reference rate published european central bank closing day rounded nearest whole share date grant equity awards determined non executive directors equity awards vest second anniversary date grant annual committee fee group pay non executive director serving one group committees board additional fee set forth audit committee chairperson members compensation committee chairperson members governance sustainability committee chairperson members additional cash equity awards notwithstanding annual base fee committee fees received non executive directors non executive directors may decide based proposal compensation committee grant additional cash equity awards individual non executive director given year case exceptional achievements non executive director provided however additional grant result significant discrepancy size award group results performance reimbursement expenses group reimburse expenses costs reasonably incurred relation performance non executive director duties accordance group expense policy benefits group subscribe benefit non executive directors liability insurance coverage line general market practice prevailing among companies similar group loans advances guarantees group provide loans advances guarantees non executive directors unless majority non executive directors give prior written approval historical compensation year ended december board directors executive director base salary base salary earned gildo zegna executive director ceo year ended december amounted inclusive personal income tax year ended december represents fixed compensation earned gildo zegna company group subsidiaries short term incentive plan gildo zegna eligible earn short term variable cash compensation based group profitability considering share price performance year gildo zegna proactively suggested significantly reduce short term variable cash compensation compared result arithmetic calculation entitled accordance terms ceo executive agreement non executive directors welcomed gildo zegna proposal result determined short term variable cash compensation earned gildo zegna year ended december amount year ended december share based compensation accordance ceo executive agreement amended restated july amended august company granted following share based compensation benefits gildo zegna long term incentive plan december connection completion business combination board approved equity incentive plan eip approved general meeting december addition board adopted ceo long term incentive plan ceo ltip sub plan eip sets modalities arrangements agreed upon pursuant gildo zegna executive agreement discussed accordance amendment remuneration policy june ceo ltip amended include among measures non financial performance measure linked sustainability strategy group ceo ltip group granted gildo zegna maximum performance share units psus ceo psus vest three tranches based achievement defined performance targets ceo continued service group date vesting performance targets measured settled independently targets total number shares assigned upon vesting depends level achievement financial performance targets performance period achievement rate may eventually discounted certain objectives relevant business reflecting contribution sustainable long term value creation reduction carbon emissions assessment water footprint measurement employee satisfaction completion suppliers sub suppliers audits traceability key raw materials achievement employee training targets esg multiplier achieved year ended december group recognized share based compensation expense relation ceo psus representing credit costs period reflect value number ordinary shares actually delivered gildo zegna achievement performance service conditions year ended december group accrued share based compensation expense share purchase rights gildo zegna entitled purchase ordinary shares value per share based enterprise value corresponding times group adjusted ebit previous year maximum amount corresponding base salary net personal income tax plus short term variable cash compensation previous year gildo zegna exercise share purchase rights group incurred costs reversed accruals respect share purchase rights april board determined level achievement performance conditions ceo psus result determination ordinary shares vested delivered gildo zegna march board determined level achievement performance conditions ceo psus result determination ordinary shares vested delivered gildo zegna may ipo performance bonus december board adopted ipo bonus plan ipo bonus plan sub plan eip ipo bonus plan gildo zegna granted psus related company public listing ceo ipo psus two tranches respectively ceo ipo psus ceo ipo psus april january respectively board checked confirmed achievement conditions applicable vesting first second tranches ceo ipo psus ordinary shares delivered gildo zegna may year ended december group incurred costs reversed accruals respect ceo ipo psus year ended december group recognized share based compensation expense relation ceo ipo psus year ended december total compensation reported chairman ceo amounts year ended december see also historical compensation year ended december december remuneration event termination gildo zegna executive agreement provided event reason leaves position ceo regardless whether maintains position chairperson board entitled severance payment amount equal two years base salary net income taxes year ended december group recognized provision termination compensation new executive agreement compensation committee support independent external expert selected compensation committee reviewed gildo zegna executive agreement proposed new remuneration structure designing remuneration structure compensation committee took consideration inter alia principles remuneration policy particular pay performance contribution long term value creation alignment company strategic objectives peers practices iii feedback received stakeholders including shareholders upon recommendation compensation committee non executive directors determined remuneration structure gildo zegna period new executive agreement concluded effective january new executive agreement remuneration structure gildo zegna years split three parts annual base salary representing gross amount short term incentive cash representing principle maximum annual base salary long term equity incentive composed three successive grants rights receive ordinary shares upon satisfaction pre defined performance executive service conditions assessed period three years first grant vesting period january december second grant vesting period january december third grant vesting period january december grant target represent right receive number ordinary shares corresponding annual base salary calculated dividing target opportunity average share price ordinary shares calendar days preceding beginning vesting period grant number shares eventually awarded shall exceed number shares granted target pre defined performance conditions tied shareholder return relative peer group aggregate basic earnings per share delta adjusted net financial indebtedness cash surplus achievement rate may discounted certain objectives esg multiplier achieved event reason gildo zegna leaves position group ceo regardless whether maintains position chairperson board entitled severance payment amount equal two years base salary setting ceo new remuneration package non executive directors applied following principles new ceo remuneration awarded form shares total short term long term variable components remuneration target related stock performance appropriately focuses creation long term value shareholders stakeholders weight variable components represents total target opportunity subject stringent payout curves designed manner reward non performance strongly incentivize outperformance compliance pay performance principle target proportion cash equity components remuneration predominantly long term character defining new executive agreement establishing potential pay opportunity board reviewed scenario analysis verify degree sensitivity chairman ceo remuneration group performance appropriate took consideration overall group pay ratio ensure potential pay opportunity appropriate interest long term value creation stakeholders board directors non executive directors non executive directors received annual base fee paid cash ordinary shares granted pursuant restricted share units plan rsus non executive directors acting members committees received additional fee defined remuneration policy aggregate amount compensation earned non executive directors role directors company year ended december related portion paid cash related share based compensation year ended december related portion paid cash related share based compensation year ended december group also recognized earned paolo zegna monte rubello earned henry peter relation remuneration directors group subsidiaries respectively year ended december addition compliance remuneration policy recognition specific contribution listing board granted henry peter non executive director psus related company public listing ipo bonus plan ipo psus split two tranches ipo psus april january respectively board checked confirmed achievement conditions applicable vesting first second tranches ipo psus ordinary shares delivered henry peter may services rendered non executive director received ordinary shares june services rendered non executive director received ordinary shares february services rendered non executive director receive ordinary shares february historical compensation year ended december december following table summarizes compensation received members board year ended december name office held fixed compensation variable compensation cash share based compensation pension benefits fringe benefits compensation total ermenegildo zegna monte rubello chairperson chief executive officer executive director total executive director andrea bonomi non executive director angelica cheung non executive director domenico sole non executive director sergio ermotti lead non executive director non executive director ronald johnson non executive director valerie mars non executive director michele norsa non executive director henry peter non executive director anna zegna monte rubello non executive director paolo zegna monte rubello non executive director total non executive directors ______________________ relates social contributions provision termination compensation relates customary benefits clothing allowance provided gildo zegna paolo zegna monte rubello relates difference short term variable cash compensation acknowledged actual payment made following table summarizes compensation received members board year ended december name office held fixed compensation variable compensation cash share based compensation pension benefits fringe benefits compensation total ermenegildo zegna monte rubello chairperson chief executive officer executive director total executive director andrea bonomi non executive director angelica cheung non executive director domenico sole non executive director sergio ermotti lead non executive director non executive director ronald johnson non executive director valerie mars non executive director michele norsa non executive director henry peter non executive director anna zegna monte rubello non executive director paolo zegna monte rubello non executive director total non executive directors __________________ relates social contributions provision termination compensation relates customary benefits clothing allowance provided gildo zegna paolo zegna monte rubello relates difference short term variable cash compensation acknowledged actual payment made following table summarizes compensation received ermenegildo zegna monte rubello group executive director years ended december years ended december fixed compensation variable compensation cash share based compensation pension benefits fringe benefits compensation total senior management team zegna senior management team consisted ermenegildo zegna monte rubello chief executive officer gianluca ambrogio tagliabue chief operating officer chief financial officer alessandro sartori zegna artistic director franco ferraris head textiles rodrigo bazan chief executive officer thom browne thom browne founder chief creative officer thom browne lelio gavazza chief executive officer tom ford fashion following section provides aggregate amount compensation earned senior management team excluding ceo whose compensation included discussion year ended december group recognized relation fixed compensation includes base salary consulting fees compensation service director group subsidiaries year ended december year ended december group recognized relation short term variable cash compensation performance management program pmp provides eligible employees including senior management team opportunity earn cash incentive payment extent pre established business individual performance goals achieved year ended december year ended december group recognized relation long term incentive plans cash based long term incentives share based compensation year ended december cash based long term incentives share based compensation particular align interests senior management team shareholders promote retention senior management february board adopted long term incentive plan sub plan eip pursuant certain members senior management team excluding ceo granted psus representing total awards granted retention rsus representing remaining total awards granted represents right receive one ordinary share long term incentive awards particular terms plan psus vest subject level achievement financial performance targets multiplier based achievement certain environmental social governance objectives performance period contributing creation sustainable long term value participant continued service december new participants long term incentive plan could designated june rsus vest subject participant continued service december good leaver provisions case earlier termination employment total psus rsus granted certain members senior management team excluding ceo plan year ended december group recognized share based compensation expense relation long term incentive awards year ended december september new participants long term incentive plan could longer designated june board adopted rsu plan rsu plan sub plan eip group granted rsus represent right receive one ordinary share senior management team excluding ceo rsu plan year ended december group recognized share based compensation expense relation awards year ended december align interests senior management team company stakeholders including shareholders group modified contractual terms certain cash based long term incentives order entitle senior management team settle portion bonus ordinary shares extent equivalent amount year ended december recognized share based compensation expense additional bonus awarded one third paid ordinary shares expected delivered result group recognized relation compensation settled ordinary shares reinforce meritocratic compensation approach align group overarching strategy foster sustainable shareholder value long term january zegna board approved new long term incentive plan lti plan plan applies zegna brand division rest group including thom browne tom ford fashion segments new lti plan move one long term incentive awards plan three year rolling plans annual allocation cycles one subject achievement targets defined every year allocation cycle lti plan sets targets following criteria revenues adjusted ebit delta adjusted nfi esg multiplier relative total shareholder return tsr based selection peers european companies luxury business listed europe asia including zegna performance results criterion evaluated end three year performance cycle following approval audited financial statement zegna board payout curve ensure meeting targets overperformance rewarded underperformance penalized allocation cycle group granted rights receive shares members senior management team result group recognized year ended december relation lti plan awards senior management team year ended december group recognized relation pension post employment benefits year ended december year ended december group recognized relation fringe benefits year ended december pay ratio line dutch corporate governance code information taken consideration determination compensation executive director analysis executives compensation structure group calculated pay ratio within company affiliated enterprise internal pay ratio calculated ratio total annual remuneration ceo average annual remuneration employees company group companies whose financial data company consolidates total annual remuneration ceo includes remuneration components fixed remuneration variable remuneration cash bonus share based part remuneration social security contributions pension expense allowance etc included consolidated financial statements ifrs basis average annual remuneration employees determined dividing total wage costs financial year included consolidated financial statements ifrs basis average number full time equivalent fte financial year value share based remuneration determined time assignment line applicable rules applied reporting requirements following table presents internal pay ratio figures include tom ford fashion segment employees thousands december december december total group labor cost group chairman ceo labor cost total labor cost net group chairman ceo fte average cost pay ratio __________________ methodological note group discloses evolution pay ratio onwards since business combination pursuant company ordinary shares listed nyse starting december implemented december pay ratio compensation executive director year ended december average global employee salary year would misrepresent give true fair view normalized outcome remuneration policy company risk distorting future analysis whilst pay ratio remained stable compared previous year significant drop pay ratio total labor cost net group chairman ceo workforce increased similar proportion therefore average cost remained eventually stable contrary group chairman ceo labor cost significantly reduced caused subsequent decrease pay ratio details please refer historical compensation year ended december board directors executive director major shareholders related party transactions following table sets forth information relating beneficial ownership ordinary shares march based information company shareholder register sources available person known beneficial owner issued outstanding ordinary shares special voting shares directors members senior management team december special voting shares assigned respectively monterubello ermenegildo gildo zegna monte rubello terms loyalty voting program monterubello controlling shareholder company shareholding interest company issued outstanding ordinary shares march result participation loyalty voting program monterubello voting power approximately march information company loyalty voting structure see section share capital company beneficial ownership determined according rules sec generally provide person beneficial ownership security possesses sole shared voting investment power security right acquire security within days including exercise options warrants percentages table computed basis ordinary shares issued outstanding special voting shares issued outstanding march percentages ownership voting power report calculated based number outstanding shares excluding shares held treasury holders monterubello strategic holding group directors ermenegildo zegna monte rubello andrea bonomi angelica cheung domenico sole sergio ermotti ronald johnson valerie mars michele norsa henry peter anna zegna monte rubello paolo zegna monte rubello senior management team gianluca ambrogio tagliabue rodrigo bazan thom browne franco ferraris lelio gavazza alessandro sartori beneficial owner number ordinary shares ordinary shares number special voting shares special voting shares outstanding less class shares outstanding monterubello italian società semplice whose quotas currently held members zegna family directors monterubello december ermenegildo zegna monte rubello chairman board directors paolo zegna monte rubello vice chairman board directors anna zegna monte rubello angelo zegna monte rubello giovanni schneider alessandro andrea trabaldo togna franca calcia riccardo mulone monterubello participates loyalty voting program march monterubello voting power zegna approximately percentage calculated ratio aggregate number ordinary shares special voting shares beneficially owned monterubello ordinary shares issued outstanding special voting shares issued outstanding march based filings sec schedule filed february file schedule strategic holding group governed five member board managers time sec filing included kamel aliat amélie flammia john crostarosa mowinckel marjorie simoes anuj amarshi action five member board managers simple majority vote individual manager board managers voting dispositive control reported securities therefore individual manager shares beneficial ownership securities zegna participates loyalty voting program march zegna voting power zegna approximately percentage calculated ratio aggregate number ordinary shares special voting shares beneficially owned ermenegildo zegna monte rubello ordinary shares issued outstanding special voting shares issued outstanding march based information company shareholder register march ordinary shares held united states date record holders registered addresses united states transactions company company shareholders pursuant best practice provision dcgc transactions company legal natural persons hold least ten percent shares company agreed terms customary market decisions enter transactions persons material significance company persons require approval non executive directors since december date company became dutch public limited liability company company entered transactions legal natural persons hold least ten percent shares company material significance company persons related party transactions related parties group entities individuals including close family members capable exercising control joint control significant influence group subsidiaries including group controlling shareholder monterubello well companies owned monterubello shareholders related parties also include company associates joint arrangements members board executives strategic responsibilities well families entities controlled include transactions carrying potential conflict interest meaning provision dcgc group carries transactions related parties commercial terms normal respective markets considering characteristics goods services involved accordance charter audit committee responsible reviewing approving ratifying disapproving transactions proposed transactions related persons would require disclosure pursuant policy related party transactions policy transactions related parties exceeding certain amounts shall submitted audit committee prior approval ratification determining whether approve ratify disapprove related party transaction audit committee must take account among factors deems appropriate whether transaction proposed undertaken ordinary course business company whether concluded arm length basis terms comparable terms available unrelated party charter permits audit committee may request services third party service providers audit committee composed members independent purposes nyse rules rule exchange act dcgc transactions carried group related parties primarily commercial financial nature mainly relate transactions associates transactions tfi subsidiaries tfi group prior completion tfi acquisition related licensing agreement production worldwide distribution luxury men ready wear made measure clothing footwear accessories tom ford brand ended deliveries fall winter collection well supply agreement act exclusive supplier certain tom ford menswear products starting spring summer collection supply commenced financial loans tfi settled period financial guarantee provided group tfi time associate group amount thousand relation payment obligations bank loan issued tfi guarantee subsequently reduced thousand terminated part transactions contemplated tfi acquisition amounts claimed guarantee purchase raw materials particular carded yarns filati biagioli modesto purchase finished products norda run inc luigi fedeli figlio transactions monterubello companies controlled monterubello shareholders directors members senior management team purchase raw materials particular wool gruppo schneider subsidiaries schneider group purchase industrial services particular fabrics finishing finissaggio tintoria ferraris purchase industrial services pettinatura verrone transactions pkb bank relating interest bearing loan amounting thousand fully repaid first half rental properties real estate subsidiaries lease agreements group receives licensing marketing sustainability related services oasi zegna support activities fondazione zegna charitable organization provides opportunity charitable work part zegna family group employees fondazione zegna supports funds projects cooperation non profit organizations operating various fields different parts world put contract entered part group investments thom browne group whereby group required may future required purchase portion remaining non controlling interests thom browne inc group currently owns thom browne inc additional information relating thom browne put contract see note current non current financial liabilities consolidated financial statements transactions related parties connected directors shareholders transactions ubs group subsidiaries together referred ubs group borrowings revolving credit lines financial assets group holds mainly cash cash equivalents securities well derivative contracts course group risk management activities ubs group also provides certain financial guarantees third parties behalf group following sergio ermotti appointment group chief executive officer ubs group effective april ubs group subsidiaries qualify related parties group transactions carried group related parties duly identified analyzed reported detail note related party transactions consolidated financial statements included elsewhere annual report necessary information regarding potential conflicts interests members board executives strategic responsibilities close family obtained best practice provisions dcgc complied response measures dutch law various response measures company takeovers possible permissible within boundaries set dutch law dutch case law company adopted specific response measures several procedures requirements place may effect making takeover company difficult less attractive five year period following december board authorized general meeting issue ordinary shares limit exclude pre emptive rights regard could enable company dilute holding acquirer issuing ordinary shares third parties thus make difficult shareholder potential acquirer obtain control company articles association provide directors appointed upon binding nomination nomination may overruled general meeting simple majority votes cast representing one third company issued share capital articles association provide dismissal directors unless proposed board requires majority least two thirds votes cast representing half company issued share capital articles association provide certain matters including amendment articles association may resolved upon general meeting proposal board annual report signed signed signed zegna monte rubello zegna monte rubello title chairperson chief executive officer position non executive director signed signed zegna monte rubello mars position non executive director position non executive director signed signed ermotti bonomi title lead non executive director position non executive director signed signed johnson sole position non executive director position non executive director signed signed peter cheung position non executive director position non executive director signed norsa position non executive director part financial statements consolidated financial statements ermenegildo zegna consolidated statement profit loss years ended december years ended december thousands except per share data notes revenues cost sales gross profit selling general administrative expenses marketing expenses operating profit financial income financial expenses foreign exchange losses result investments accounted using equity method profit taxes income taxes profit attributable shareholders parent company non controlling interests basic earnings per share diluted earnings per share accompanying notes integral part consolidated financial statements ermenegildo zegna consolidated statement comprehensive income loss years ended december years ended december thousands notes profit comprehensive loss income net tax items subsequently reclassified statement profit loss foreign currency exchange differences arising translation foreign operations net loss gain cash flow hedges net gain loss financial instruments measured fair value items subsequently reclassified statement profit loss net actuarial gain defined benefit plans total comprehensive income loss net tax total comprehensive income attributable shareholders parent company non controlling interests accompanying notes integral part consolidated financial statements ermenegildo zegna consolidated statement financial position december december thousands notes assets non current assets intangible assets property plant equipment right use assets investments accounted using equity method deferred tax assets non current financial assets total non current assets current assets inventories trade receivables derivative financial instruments tax receivables current financial assets current assets cash cash equivalents total current assets total assets liabilities equity equity attributable shareholders parent company equity attributable non controlling interests total equity non current liabilities non current borrowings non current financial liabilities non current lease liabilities non current provisions risks charges employee benefits deferred tax liabilities non current liabilities total non current liabilities current liabilities current borrowings current financial liabilities current lease liabilities derivative financial instruments current provisions risks charges trade payables customer advances tax liabilities current liabilities total current liabilities total equity liabilities accompanying notes integral part consolidated financial statements ermenegildo zegna consolidated cash flow statement years ended december years ended december thousands notes operating activities profit income taxes depreciation amortization impairment assets financial income financial expenses foreign exchange losses write downs provisions write downs provision obsolete inventory result investments accounted using equity method gains arising disposal fixed assets non cash expenses net change inventories change trade receivables change trade payables including customer advances change operating assets liabilities interest paid income taxes paid net cash flows operating activities investing activities payments property plant equipment payments intangible assets proceeds sale investment proceeds disposals non current financial assets payments purchases non current financial assets proceeds disposals current financial assets derivative instruments payments acquisitions current financial assets derivative instruments business combinations net cash acquired acquisition investments accounted using equity method net cash flows used investing activities financing activities repayments borrowings proceeds borrowings payments lease liabilities proceeds repayments non current financial liabilities dividends owners parent dividends paid non controlling interests payments acquisition non controlling interests proceeds exercise warrants sales shares held treasury proceeds capital contribution monterubello net cash flows used financing activities effects exchange rate changes cash cash equivalents net decrease increase cash cash equivalents cash cash equivalents beginning year cash cash equivalents end year accompanying notes integral part consolidated financial statements ermenegildo zegna consolidated statement changes equity years ended december thousands share capital share premium currency translation difference cash flow hedge reserve reserve remeasurement defined benefit plans financial assets fvoci reserve legal reserves reserve treasury shares reserves retained earnings total equity attributable shareholders parent company total equity attributable non controlling interests total equity january profit comprehensive income loss total comprehensive income legal reserves dividends sale treasury shares net share based payments changes december profit comprehensive income loss total comprehensive income legal reserves dividends sale treasury shares net exercise warrants issuance special voting shares share based payments settlement share based payments changes december profit comprehensive income loss total comprehensive income legal reserves dividends share based payments settlement share based payments changes december legal reserves accompanying notes integral part consolidated financial statements ermenegildo zegna notes consolidated financial statements december years ended december general information ermenegildo zegna formerly known ermenegildo zegna holditalia hereinafter referred company parent company together consolidated subsidiaries one context may require ermenegildo zegna group group holding company group incorporated public company naamloze vennootschap laws netherlands ordinary shares listed new york stock exchange zgn ticker company domiciled amsterdam netherlands company registered office viale roma valdilana biella italy ermenegildo zegna group global luxury player leading position high end menswear business internationally recognized unique textile manufacturing platform heritage italian craftsmanship quality innovation key ingredients three complementary brands zegna thom browne tom ford fashion group reaches different communities zegna absolute luxury modern tailoring thom browne luxury glamour tom ford fashion thanks thom browne tom ford fashion group also play important growing role luxury womenswear leather goods segment group founded northern italy town trivero wool mill ermenegildo zegna grandfather group current chairman chief executive officer dream creating beautiful luxurious fabrics world ies company moved textile men ready wear ies expanded business internationally opening first monobrand boutique paris marking beginning extensive retail network development worldwide level acquired thom browne inc april following completion acquisition tom ford international tfi tfi acquisition group became long term licensee estée lauder companies inc elc tom ford brand men women fashion accessories business group filiera unique supply chain composed finest italian high end textile producers fully integrated group luxury manufacturing capabilities group controls important phases value chain designing manufacturing distribution years group reached significant international presence direct consumer retail channel well selected wholesale customers basis preparation statement compliance ifrs financial information relating ermenegildo zegna presented consolidated financial statements accordingly accordance article dutch civil code company financial statements contain abridged profit loss account consolidated financial statements ermenegildo zegna prepared accordance ifrs accounting standards ifrs accounting standards issued international accounting standards board iasb well ifrs accounting standards adopted european union part book dutch civil code effect consolidated financial statements resulting differences ifrs accounting standards issued iasb ifrs accounting standards adopted european union financial statements approved authorized issuance board directors ermenegildo zegna may annual report form filed securities exchange commission approved authorized issuance board directors ermenegildo zegna march adoption financial statements adoption dividend reserved shareholders annual general meeting shareholders june contents structure consolidated financial statements consolidated financial statements include consolidated statement profit loss consolidated statement comprehensive income loss consolidated statement financial position consolidated cash flow statement consolidated statement changes equity accompanying notes collectively referred consolidated financial statements financial reporting formats presented group following characteristics group presents consolidated statement profit loss function representative way chief operating decision maker management view business consistent international practice consolidated statement comprehensive income loss presented separate statement addition presenting components profit loss recognized directly consolidated statement profit loss period presents components profit loss recognized profit loss required permitted ifrs accounting standards consolidated statement financial position presents assets liabilities current non current items current items expected realized within months reporting date sold consumed normal operating cycle group consolidated cash flow statement prepared using indirect method permitted ias statement cash flows ias presents cash flows operating investing financing activities consolidated statement changes equity presents movements shareholder equity notes consolidated financial statements comprise summary material accounting policy information explanatory information consolidated financial statements presented euro functional presentation currency company amounts stated thousands euros unless otherwise indicated consolidated financial statements prepared going concern basis applying historical cost method modified required certain financial assets liabilities including derivative instruments measured fair value described accounting policy information income expenses accounted accrual basis summary material accounting policy information new standards amendments effective january following new amendments effective january adopted group preparation consolidated financial statements january iasb issued amendments ias presentation financial statements classification liabilities current non current clarify classify debt liabilities current non current particular classify liabilities uncertain settlement date liabilities may settled converting equity effect adoption amendments september iasb issued amendments ifrs leases liability sale leaseback improve requirements sale leaseback transactions specify measurement liability arising sale leaseback transaction ensure seller lessee recognize amount gain loss relates right use retains effect adoption amendments october iasb issued amendments ias presentation financial statements non current liabilities covenants clarify conditions entity must comply within twelve months reporting period affect classification liability effect adoption amendments may iasb issued amendments ias statement cash flows ifrs financial instruments disclosures supplier finance arrangements introduce new disclosure requirements enhance transparency usefulness information provided entities supplier finance arrangements intended assist users financial statements understanding effects supplier finance arrangements entity liabilities cash flows exposure liquidity risk amendments applicable annual reporting periods beginning january interim periods ending december include certain specific transition reliefs first annual reporting period effect adoption amendments new standards amendments interpretations yet effective standards amendments interpretations issued iasb mandatory application subsequent years listed august iasb issued amendments ias effects changes foreign exchange rates lack exchangeability clarify entity apply consistent approach assessing whether currency exchangeable another currency determine exchange rate use disclosures provide amendments effective january group evaluating potential impact adoption standard april iasb issued ifrs presentation disclosure financial statements introduces new concepts relating structure statement profit loss required disclosures financial statements certain profit loss performance measures reported outside entity financial statements management defined performance measures iii enhanced principles aggregation disaggregation apply primary financial statements notes general standard effective january group evaluating potential impact adoption standard may iasb issued ifrs subsidiaries without public accountability disclosures permits eligible subsidiaries use ifrs accounting standards reduced disclosures better suited needs users financial statements well keep one set accounting records meet needs parent company users financial statements standard effective january earlier application permitted group expect impact adoption standard may iasb issued amendments classification measurement financial instruments amended ifrs financial instruments ifrs financial instruments disclosures aim addressing diversity practice making requirements understandable consistent amendments clarify date recognition derecognition certain financial assets liabilities new exception certain financial liabilities settled electronic cash transfer system derecognized settlement date certain criteria met clarify add guidance assessing whether financial asset meets solely payments principal interest sppi criterion add new disclosures certain instruments contractual terms change cash flows certain instruments features linked achievement environment social governance esg targets update disclosures equity instruments designated fair value comprehensive income fvoci amendments effective january earlier application permitted group evaluating potential impact adoption amendments july iasb issued annual improvements ifrs accounting standards volume contains amendments five standards result iasb annual improvements project iasb uses annual improvements process make necessary non urgent amendments ifrs accounting standards included part another major project amended standards ifrs first time adoption international financial reporting standards ifrs financial instruments disclosures accompanying guidance implementing ifrs ifrs financial instruments ifrs consolidated financial statements ias statement cash flows amendments effective january earlier application permitted group evaluating potential impact adoption amendments december iasb issued amendments nature dependent electricity contracts amended ifrs financial instruments ifrs financial instruments disclosures help companies better report financial effects nature dependent electricity contracts often structured power purchase agreements ppas light increased use contracts amendments effective january earlier application permitted group evaluating potential impact adoption amendments material accounting policy information basis consolidation subsidiaries subsidiaries entities group control control achieved group power investee exposed rights variable returns involvement investee ability use power affect returns subsidiaries consolidated line line basis date group obtains control group reassesses whether controls investee facts circumstances indicate changes one three elements control listed subsidiaries deconsolidated date control ceases group ceases control subsidiary derecognizes assets including goodwill liabilities subsidiaries carrying amounts derecognizes carrying amount non controlling interests former subsidiary recognizes fair value consideration received transaction retained interest former subsidiary remeasured fair value group recognizes non controlling interests nci acquiree acquisition acquisition basis either fair value non controlling interests share acquiree identifiable net assets net profit loss component comprehensive income loss attributed owners parent non controlling interests intra group balances transactions unrealized gains losses arising intra group transactions eliminated preparing consolidated financial statements foreign currency transactions functional currency group entities currency primary economic environment transactions foreign currencies recorded exchange rate prevailing date transaction monetary assets liabilities denominated foreign currencies balance sheet date translated foreign currency exchange rate prevailing date exchange differences arising settlement monetary items reporting monetary items rates different initially recorded period previous financial statements recognized consolidated statement profit loss consolidation foreign entities upon consolidation assets liabilities group entities functional currency euro translated using closing rates date consolidated statement financial position income expenses translated euro average foreign currency exchange rate period translation differences resulting application method recognized within comprehensive income loss accumulated currency translation reserve disposal investment date accumulated amount reclassified profit loss average foreign currency exchange rates period used translate cash flows foreign subsidiaries preparing consolidated statement cash flows goodwill assets acquired liabilities assumed arising acquisition entities functional currency euro recognized consolidated financial statements functional currency translated foreign currency exchange rate acquisition date balances translated subsequent balance sheet dates relevant foreign currency exchange rate following table presents principal foreign currency exchange rates used group translate currencies euro december average december average december average dollar swiss franc chinese renminbi pound sterling hong kong dollar singapore dollar united arab emirates dirham japanese yen south korean interests associates joint arrangements associate entity group significant influence significant influence power participate financial operating policy decisions investee without control joint control policies joint venture joint arrangement whereby parties joint control arrangement rights net assets arrangement associates joint ventures accounted using equity method accounting date significant influence joint control obtained respectively equity method investments initially recognized cost adjusted thereafter recognize group share profit loss comprehensive income loss investee group share investee profit loss recognized consolidated statement profit loss distributions received investee reduce carrying amount investment post acquisition movements comprehensive income loss recognized comprehensive income loss corresponding adjustment carrying amount investment unrealized gains transactions group associates joint ventures eliminated extent group interest unrealized losses also eliminated unless transaction provides evidence impairment asset transferred group share losses associate joint venture exceeds carrying amount group investment group discontinues recognizing share losses additional losses provided liability recognized extent group incurred legal constructive obligations made payments behalf related investee group discontinues use equity method date investment ceases associate joint venture classified available sale scope consolidation ermenegildo zegna parent company group holds directly indirectly interests group subsidiaries following table presents group scope consolidation december companies consolidated line line basis parent company ermenegildo zegna amsterdam netherlands italian subsidiaries valdilana ermenegildo zegna company registered office share capital functional currency held directly group december tizeta sesto fiorentino ermenegildo zegna tom ford international llc tom ford distribution lanificio ermenegildo zegna figli valdilana ermenegildo zegna ezi milan ermenegildo zegna service valdilana ermenegildo zegna bonotto colceresa ermenegildo zegna cappellificio cervo biella ermenegildo zegna thom browne services italy milan thom browne trading thom browne retail italy milan thom browne services italy gruppo dondi carpi ermenegildo zegna tessitura ubertino valdilana ermenegildo zegna tom ford distribution sesto fiorentino tom ford switzerland sagl tom ford international llc foreign subsidiaries ermenegildo zegna giyim sanayi tic istanbul turkey ermenegildo zegna ermenegildo zegna wien austria ermenegildo zegna société textiles astrum france paris france ermenegildo zegna ermenegildo zegna gmbh munich germany ermenegildo zegna zegna japan ltd minato tokyo japan ermenegildo zegna fantasia london limited london ermenegildo zegna ermenegildo zegna ciudad mexico mexico ermenegildo zegna ezeti portugal lisbon portugal ermenegildo zegna ermenegildo zegna madrid barcelona spain ezeti ezeti barcelona spain italco italco sant quirze spain ermenegildo zegna ermenegildo zegna czech prague czech republic ermenegildo zegna service stabio switzerland ermenegildo zegna consitex stabio switzerland ermenegildo zegna ermenegildo zegna corporation new york ermenegildo zegna zegna china enterprise management ltd shanghai china ermenegildo zegna ermenegildo zegna china ltd shanghai china ermenegildo zegna ermenegildo zegna far east pte ltd singapore consitex ermenegildo zegna hong kong ltd hong kong ermenegildo zegna trading hong kong ltd hong kong ermenegildo zegna ermenegildo zegna canada inc toronto canada ermenegildo zegna ermenegildo zegna australia pty ltd sydney australia ermenegildo zegna far east pte ltd new zealand ltd auckland new zealand ermenegildo zegna ezesa argentina buenos aires argentina ermenegildo zegna italco thai holding ltd bangkok thailand ermenegildo zegna italian fashion ltd bangkok thailand thai holding ltd ermenegildo zegna far east pte ltd zegna south asia private ltd mumbai india ermenegildo zegna ismaco teksti ted rketi istanbul turkey ermenegildo zegna ezesa brasil participacoes ltda san paolo brazil ermenegildo zegna company registered office share capital functional currency held directly group december ermenegildo zegna macau ltd kowloon bay hong kong consitex ermenegildo zegna malaysia sdn bhd kuala lumpur malaysia ermenegildo zegna far east pte ltd ermenegildo zegna maroc casablanca morocco ermenegildo zegna ermenegildo zegna vietnam llc hanoi city vietnam ermenegildo zegna zegna gulf trading llc dubai uae consitex zegna consitex arabia trading llc riyadh ksa consitex holding inc wilmington ermenegildo zegna zegna attica single member societé anonyme athens greece ermenegildo zegna zegna retail readymade novelty clothes kuwait city kuwait zegna gulf trading llc ermenelgildo zegna denmark aps aarhus denmark ermenegildo zegna holding corp toronto canada ermenegildo zegna ermenegildo zegna korea ltd seoul korea ermenegildo zegna ermenegildo zegna monaco principato monaco ermenegildo zegna consitex thom browne inc wilmington ermenegildo zegna thom browne japan inc tokyo japan thom browne inc thom browne trading stabio switzerland thom browne inc thom browne france services paris france thom browne trading thom browne limited beckenham thom browne trading thom browne china ltd shanghai china thom browne trading thom browne macau limited hong kong thom browne trading thom browne canada vancouver canada thom browne trading thom browne hong kong limited hong kong thom browne trading thom browne eyewear stabio switzerland thom browne trading thom browne eyewear france sas paris france thom browne eyewear thom browne korea ltd seoul south korea thom browne trading tom ford international llc delaware holding inc tom ford switzerland sagl stabio switzerland tom ford international llc tom ford showroom limited london tom ford distribution tom ford retail limited london tom ford international llc tom ford studio limited london tom ford international llc property ltd london tom ford international llc tom ford retail llc new york tom ford international llc tom ford retail hong kong limited hong kong tom ford international llc tom ford hong kong limited hong kong tom ford international llc tom ford retail macau limited macau tom ford retail hong kong limited tom ford hong kong limited tom ford retail korea yuhan hoesa seoul korea tom ford international llc tom ford retail japan godo kaisha tokyo japan tom ford international llc tom ford clothing retail shanghai company limited shanghai china tom ford retail hong kong limited italian associates joint arrangements filati biagioli modesto montale ermenegildo zegna luigi fedeli figlio monza ermenegildo zegna foreign associates joint arrangements norda run inc toronto canada holding corp investments valued fair value company registered office share capital functional currency held directly group december acquedotto piancone valdilana lanificio ermenegildo zegna figli pettinatura verrone verrone lanificio ermenegildo zegna figli sharmoon garments ltd wenzhou china ermenegildo zegna schio bonotto consorzio crea milan ermenegildo zegna company registered office share capital functional currency held directly group december following changes scope consolidation group occurred year ended december january group acquired interest ermenegildo zegna korea ltd cash consideration million following group began directly operating zegna business south korea network stores additional information see note business combinations february group sold interest ezesa argentina following ezesa argentina deconsolidated group march ermenegildo zegna monaco incorporated group primarily manage group operating activities principality monaco group held interest company june april zegna consitex arabia trading llc limited liability company owned consitex incorporated primarily manage group operating activities kingdom saudi arabia group held interest company june june thom browne exercised put option sell group additional thom browne inc parent company thom browne group total consideration million thousand following group holds thom browne group result group derecognized portion liability written put option non controlling interests amount thousand additionally equity attributable non controlling interests reduced thousand offsetting increase equity attributable shareholders parent company additional information relating put option non controlling interests see note current non current financial liabilities june ezeti acquired remaining interest ermenegildo zegna madrid previously owned group cash consideration thousand following group owns company interest held consorzio crea reduced december december due capital increase consortium december group sold interest sharmoon garments ltd gain thousand following group continues interest company account investment fair value september interest held filati biagioli modesto increased following conversion previous equity contribution share capital october pelletteria tizeta company fully owned group changed name tizeta increased share capital thousand property plant equipment cost property plant equipment initially recognized cost comprises purchase price costs directly attributable bringing assets location condition necessary capable operating manner intended management capitalized borrowing costs initial estimate costs dismantling removing item restoring site located self constructed assets initially recognized production cost including labor costs subsequent costs capitalized increase future economic benefits embodied related assets expenditures expensed incurred parts replaced carrying amount parts replaced written consolidated statement profit loss property plant equipment presented net accumulated depreciation calculated basis useful lives assets impairment losses depreciation depreciation calculated straight line basis estimated useful lives assets follows category property plant equipment depreciation rate buildings plants machinery industrial commercial equipment leasehold improvements tangible assets land assets construction depreciated asset depreciated consists separately identifiable components whose useful life differs parts making asset depreciation charged separately component parts application component approach property plant equipment tested impairment impairment indicators identified scheduled closure store site redundancy plan downward revision market forecasts asset recoverable amount less net carrying amount impairment loss recognized recoverable amount individual asset cannot determined precisely group determines recoverable amount cash generating unit cgu group cgus asset belongs gain loss disposal property plant equipment recognized profit loss intangible assets indefinite useful life goodwill brands indefinite useful lives goodwill originated acquisitions subsidiaries brands indefinite useful lives acquired separately initially recognized accordance ifrs business combinations described recorded within intangible assets accordance ias impairment assets ias goodwill brands indefinite useful lives amortized tested impairment annually frequently facts circumstances indicate asset may impaired goodwill brands indefinite useful lives allocated group cgus groups cgus expected benefit synergies combination cgus groups cgus goodwill brands indefinite useful lives allocated tested impairment annually frequently indication unit may impaired order verify recoverable amount cgu groups cgus less carrying amount cgu groups cgus recoverable amount cgus groups cgus based value use calculation uses cash flow projections based recent budget forecast calculations prepared separately cgu approved management budget forecast calculations generally cover period three years long term growth rate calculated applied project future cash flows third year assessing value use estimated future cash flows discounted present value using pre tax discount rate reflects current market assessments time value money risks specific asset intangible assets finite useful life identifiable non monetary asset without physical substance controlled group capable producing future economic benefits recognized intangible assets intangible assets finite useful life include trademarks licenses software development costs concession licenses trademarks patents concession licenses trademarks patents recognized cost value attributed upon acquisition include cost trademark registration various countries group operates assuming risks limitations control use group main intangible asset finite useful life license agreement entered part tfi acquisition group long term licensee elc tom ford brand men women fashion accessories estimated useful life license agreement years includes guaranteed years per contract plus automatic renewal period years subject certain minimum performance conditions management believes satisfied based business plan information currently available software software acquired part recurring operations software developed house group meet relevant criteria ias intangible assets ias capitalized amortized straight line basis useful lives know result acquisition tessitura ubertino june group recognized intangible assets relating know initially recognized fair value date acquisition amortized year period development costs development costs recognized asset following conditions ias met development costs measured reliably technical feasibility product volumes pricing support view development expenditure generate future economic benefits capitalized development costs include direct indirect costs may directly attributed development process research development costs expensed incurred intangible assets definite useful life amortized straight line basis following rates category intangible assets finite useful life depreciation rate concessions licenses trademarks patents software know development costs intangibles ______________________ estimated useful life license agreement entered part tfi acquisition group long term licensee elc tom ford brand men women fashion accessories years includes guaranteed years per contract plus automatic renewal period years subject certain minimum performance conditions management believes satisfied based business plan information currently available group continuously monitors operations assess whether indication intangible assets definite useful life including intangible assets progress impaired see impairment non current assets additional information leases group recognizes right use asset corresponding lease liability date leased asset available use lease payment allocated principal liability finance costs finance costs charged statement profit loss lease period using effective interest rate method right use assets depreciated straight line basis lease term shorter useful life asset right use assets measured cost comprising following amount initial measurement lease liability lease payments made commencement date less lease incentives received iii initial direct costs applicable restoration costs payments associated short term leases less months inception leases low value assets recognized expense statement profit loss straight line basis lease liabilities measured net present value following fixed lease payments variable lease payments based index rate applicable iii amounts expected payable lessee residual value guarantees exercise price purchase option lessee reasonably certain exercise option lease liabilities include non lease components may included related contracts lease payments discounted using interest rate implicit lease rate cannot determined group incremental borrowing rate used rate group would pay borrow funds necessary obtain asset similar value similar economic environment similar terms conditions variable lease payments recognized statement profit loss period condition triggers payments occurs determining lease term management considers facts circumstances create economic incentive exercise extension option exercise termination option group determines lease term non cancellable period lease together periods covered option extend lessee reasonably certain extend periods optional termination date lessee reasonably certain terminate early management evaluates exercise option considered reasonably certain based several factors circumstances create incentive lessee exercise exercise option including expected changes facts circumstances commencement date exercise date option group subleases certain spaces third parties accounting right use asset depends classification sublease accounting head lease liability remains unchanged sublease classified finance lease group derecognizes right use asset extent subject sublease recognizes lease receivable sublease classified operating lease group continues recognize right use asset operating income sublease recognized straight line basis term agreement impairment non current assets group continuously monitors operations assess whether indication non current assets impaired including goodwill brands indefinite useful life intangible assets definite useful life including intangible assets progress property plant equipment right use assets goodwill brands indefinite useful life intangible assets progress tested impairment annually frequently indication may impaired impairment indicators present carrying amount asset reduced recoverable amount higher fair value less costs disposal value use recoverable amount determined individual asset unless asset generate cash inflows largely independent cash inflows assets groups assets case asset tested part cgu asset belongs cgu smallest identifiable group assets generates cash inflows largely independent cash inflows assets groups assets group identifies dos separate cgu new doss require start period achieve expected level profitability generally extends three years following date store opening dos start period operating loss necessarily considered indicator possible impairment group considers operating loss indicator possible impairment doss cash flows start period lower doss cash flows approved operational plan strategic stores considered separate cgus determining whether impairment indicators present impairment indicator identified assessed whether stores benefited strategic store strategic store determined benefit stores impairment test strategic store performed group cgus segment level assessing value use asset cgu estimated future cash flows discounted present value using discount rate reflects current market assessments time value money risks specific asset cgu impairment loss recognized recoverable amount lower carrying amount impairment loss assets goodwill subsequently longer exists decreased carrying amount asset cgu increased revised estimate recoverable amount excess carrying amount would recorded impairment loss recognized reversal impairment loss recognized consolidated statement profit loss business combinations business combinations accounted using acquisition method accordance ifrs accordingly consideration transferred acquisition price business combination measured fair value measured fair value assets transferred liabilities incurred acquirer equity interest issued date control changed following items constitute exception instead valued according reference principle deferred tax assets liabilities assets liabilities employee benefits iii assets held sale acquisition related costs recognized consolidated statement profit loss incurred goodwill measured excess acquisition price plus amount non controlling interests acquiree net fair value identifiable assets acquired liabilities assumed reassessment results negative difference excess recognized immediately consolidated statement profit loss bargain purchase gain event fair values assets liabilities contingent liabilities determined provisionally business combination recognized using provisional values adjustments deriving completion valuation process recognized within twelve months acquisition date price component linked realization future events component considered estimate fair value time business combination significant gains losses related tax effects deriving transactions carried fully consolidated companies yet realized third parties eliminated except losses eliminated transaction provides evidence reduction value transferred asset reciprocal debit credit relationships costs revenues well financial income expenses also eliminated significant purchase holdings subsidiaries sale shares involve loss control considered transactions shareholders accounting effects recognized directly group equity put call agreement non controlling interests case put options granted non controlling interests group recognizes financial liability corresponding present value exercise price option initial recognition put option terms conditions give group access economic benefits non controlling interests group recognizes financial liability reduction equity attributable non controlling interests non controlling interest acquired group put option terms conditions give group access economic benefits non controlling interests group recognizes financial liability reduction group retained earnings liability subsequently remeasured end period liability subsequently accreted financial expenses redemption amount payable date option first becomes exercisable event option expires unexercised liability derecognized corresponding adjustment equity financial instruments classification financial asset based group business model managing related financial assets contractual cash flows group considers whether contractual cash flows represent solely payments principal interest consistent basic lending arrangement contractual terms introduce exposure risk volatility inconsistent basic lending arrangement related financial assets classified measured fair value profit loss exception trade receivables contain significant financing component group applied practical expedient available ifrs revenue contracts customers ifrs measured transaction price defined ifrs financial assets initially measured fair value plus case financial assets fair value profit loss transaction costs directly attributable acquisition asset measurement subsequent initial recognition based classification financial assets one following categories financial assets amortized cost financial assets fair value comprehensive income loss subsequent recycling cumulative gains losses statement profit loss fvoci financial assets fair value profit loss fvpl financial assets amortized cost financial assets amortized cost subsequently measured using effective interest rate method subject impairment testing gains losses recognized statement profit loss asset derecognized modified impaired group financial assets amortized cost primarily include trade receivables guarantee deposits certain non current financial assets financial assets fair value comprehensive income loss fvoci financial assets fvoci initially recognized fair value subsequent fair value changes recognized within comprehensive income loss interest income foreign exchange revaluations impairment losses reversals recognized consolidated statement profit loss upon derecognition cumulative reserve fair value changes recognized within comprehensive income loss recycled profit loss group financial assets fvoci primarily include derivative instruments qualify hedge accounting well fixed income floating income securities financial assets fair value profit loss fvpl financial assets fvpl initially recognized fair value subsequent fair value changes recognized consolidated statement profit loss financial assets fvpl include derivative instruments listed equity investments group irrevocably elected classify instruments fvoci dividends listed equity investments recognized income consolidated statement profit loss right payment established group financial assets measured fvpl primarily include insurance contracts equity instruments fixed income securities well investments hedge funds private equity private debts money market funds floating income real estate funds reclassification financial asset reclassified change contractual terms significantly affects previously expected cash flows group changes business model managing financial assets reclassifications made prospectively reclassification date without restating previously recognized gains losses interest derecognition group derecognizes financial asset contractual rights cash flows asset expire transfers financial asset substantially risks rewards ownership asset another entity group neither transfers retains substantially risks rewards ownership continues control transferred asset group recognizes retained interest asset associated liability obligations created retained group retains substantially risks rewards ownership transferred financial asset group continues recognize financial asset also recognizes collateralized borrowing proceeds received derecognition financial asset measured amortized cost difference asset carrying amount sum consideration received receivable recognized profit loss addition derecognition investment debt instrument classified fvoci cumulative gain loss previously accumulated investment revaluation reserve within comprehensive income loss reclassified profit loss impairment financial assets group recognizes loss allowance expected credit losses investments debt instruments measured amortized cost fvoci lease receivables trade receivables contract assets well financial guarantee contracts amount expected credit losses updated reporting date reflect changes credit risk since initial recognition respective financial instrument group always recognizes lifetime expected credit losses ecl trade receivables contract assets lease receivables securities expected credit losses financial assets estimated using provision matrix based group historical credit loss experience adjusted factors specific debtors general economic conditions assessment current well forecast direction conditions reporting date including time value money appropriate trade receivables trade receivables amounts due clients goods sold services provided ordinary course business trade receivables recognized initially fair value subsequently measured amortized cost using effective interest rate method less loss allowances financial liabilities financial liabilities include loans bonds lease liabilities trade payables liabilities instruments recorded fair value initial recognition net costs ascribed subsequently financial liabilities measured amortized cost using effective interest method group derecognizes financial liability extinguished obligation contract discharged canceled expired derivative financial instruments group enters variety derivative financial instruments manage exposure interest rate foreign exchange rate risks including foreign exchange forward contracts options interest rate swaps derivatives recognized initially fair value date derivative contract entered subsequently remeasured fair value reporting date resulting gain loss recognized immediately profit loss unless derivative designated effective hedging instrument case timing recognition profit loss depends nature hedge relationship derivative positive fair value recognized financial asset whereas derivative negative fair value recognized financial liability derivative classified non current asset non current liability remaining maturity instrument months due realized settled within months derivatives held trading classified current assets current liabilities hedge accounting group designates certain derivatives hedging instruments respect foreign currency interest rate risk fair value hedges cash flow hedges hedges net investments foreign operations hedges foreign exchange risk firm commitments accounted cash flow hedges inception hedge relationship group documents relationship hedging instrument hedged item along risk management objectives strategy undertaking various hedge transactions furthermore inception hedge ongoing basis group documents whether hedging instrument effective offsetting changes fair values cash flows hedged item attributable hedged risk hedging relationship meets following hedge effectiveness requirements economic relationship hedged item hedging instrument effect credit risk dominate value changes result economic relationship hedge ratio hedging relationship resulting quantity hedged item group actually hedges quantity hedging instrument group actually uses hedge quantity hedged item hedging relationship ceases meet hedge effectiveness requirement relating hedge ratio risk management objective designated hedging relationship remains group adjusts hedge ratio hedging relationship rebalances hedge meets qualifying criteria group designates full change fair value forward contract including forward elements hedging instrument hedging relationships involving forward contracts group designates intrinsic value option contracts hedged item excludes time value option changes fair value aligned time value option recognized comprehensive income loss accumulated hedge reserve hedged item transaction related time value reclassified profit loss hedged item affects profit loss hedged item time period related amount accumulated hedge reserve reclassified profit loss rational basis group applies straight line amortization reclassified amounts recognized profit loss line related hedged item hedged item non financial item amount accumulated hedge reserve removed directly equity included initial carrying amount recognized non financial item furthermore group expects loss accumulated hedge reserve recovered future amount immediately reclassified profit loss group designates certain derivatives either hedges fair value recognized assets liabilities firm commitment fair value hedge derivative financial instrument designated hedge fluctuation fair value recognized asset liability fair value hedge gain loss measuring hedging instrument fair value recognized statement profit loss together changes fair value hedged asset liability attributable hedged risk consistently hedged items adjusted consider changes fair value hedged risk gain loss relating effective portion interest rate swaps hedging fixed rate borrowings recognized statement profit loss gain loss relating ineffective portion recognized statement profit loss changes fair value hedged fixed rate borrowings attributable interest rate risk recognized statement profit loss hedge longer meets criteria hedge accounting adjustment carrying amount hedged item effective interest rate method used amortized statement profit loss period maturity hedges particular risk associated recognized asset liability highly probable forecast transaction cash flow hedge derivative financial instrument designated hedge foreign exchange rate interest rate relation future cash flow cash flow hedge effective portion gain loss derivative financial instrument recognized directly comprehensive income loss within equity gain loss associated ineffective portion hedge recognized statement profit loss cumulative gain loss removed equity recognized statement profit loss time hedged transaction affects statement profit loss adjustment caption statement profit loss affected hedged cash flows gain loss relating effective portion interest rate swaps hedging variable rate borrowings recognized statement profit loss gain loss relating effective portion forward foreign exchange contracts hedging export sales recognized statement profit loss within revenues however forecast transaction hedged results recognition non financial asset example inventory non financial liability gains losses previously deferred equity transferred equity included initial measurement cost asset liability hedging instrument expires sold hedge longer meets criteria hedge accounting cumulative gain loss existing equity time remains equity recognized forecast transaction ultimately recognized statement profit loss forecast transaction longer expected occur cumulative gain loss reported equity immediately transferred statement profit loss warrant liabilities group accounts warrants either equity classified liability classified instruments based assessment warrant specific terms issued modified warrants meet criteria equity classification warrants required recorded component share premium within equity time issuance issued modified warrants meet criteria equity classification warrants recognized liability initial fair value date issuance balance sheet date thereafter changes estimated fair value liability classified warrants recognized non cash gain loss statement profit loss order determine fair value group public warrants measured trading price group private warrants measured fair value using monte carlo simulation model cash cash equivalents cash cash equivalents include cash hand deposits held call banks short term highly liquid investments cash cash equivalents primarily held purpose meeting short term cash commitments classified cash cash equivalents asset must readily convertible cash insignificant risk changes value maturity period three months less acquisition inventories inventories recognized lower cost acquisition production net realizable value cost includes direct production costs indirect costs incurred bringing inventories location condition necessary capable use production process cost determined weighted average basis net realizable value estimated selling price less estimated costs completion estimated costs sale distribution inventories presented net provisions slow moving obsolete inventories employee benefits pension plans defined contribution plans costs arising defined contribution plans expensed incurred defined benefit plans group net obligations determined separately plan estimating present value future benefits employees earned current prior periods deducting fair value plan assets present value defined benefit obligations measured using actuarial techniques benefits attributable periods obligation provide post employment benefits arise using projected unit credit method actuarial assumptions based management best estimates components defined benefit cost recognized follows service costs recognized consolidated statement profit loss personnel cost line item net interest expense defined benefit liability recognized consolidated statement profit loss within financial expenses remeasurement components net obligation comprise actuarial gain losses recognized immediately comprehensive income loss remeasurement components reclassified consolidated statement profit loss subsequent period post employment benefits include italian employee severance indemnity trattamento fine rapporto tfr obligation required italian law amount tfr employee entitled must paid employee leaves group calculated based period employment taxable earnings employee certain conditions entitlement may partially advanced employee working life tfr scheme classified defined contribution plan group recognizes associated costs period employee renders service long term employee benefits group obligations represent present value future benefits employees earned return service current prior periods remeasurement components long term employee benefits recognized consolidated statement profit loss period arise provisions risks charges provisions recognized group present obligation legal constructive result past event probable outflow resources embodying economic benefits required settle obligation reliable estimate amount obligation made economic benefits required settle provision expected recovered third party receivable recognized asset virtually certain reimbursement received amount receivable measured reliably restructuring provision recognized group developed detailed formal plan restructuring raised valid expectation affected carry restructuring starting implement plan announcing main features affected measurement restructuring provision includes direct expenditures arising restructuring amounts necessarily entailed restructuring associated ongoing activities entity present obligations arising onerous contracts recognized measured provisions onerous contract considered exist group contract unavoidable costs meeting obligations contract exceed economic benefits expected received provisions costs restore leased plant assets original condition required terms conditions lease recognized obligation incurred either commencement date consequence used underlying asset particular period lease directors best estimate expenditure would required restore assets estimates regularly reviewed adjusted appropriate new circumstances treasury shares treasury shares measured purchase cost reduction shareholders equity nominal value treasury shares held deducted directly share capital gains losses disposal net income taxes recognized directly equity revenue recognition revenue mainly comprises sales goods together income associated services income royalties operating licenses revenue recognized control product service transferred customer revenue measured transaction price based amount consideration group expects receive exchange transferring promised goods services customer excludes sales incentives rebates discounts including end season discounts offered retail channel well taxes collected customers remitted government authorities revenues wholesale operations direct sales customers retail stores online channels recognized point time control product transferred customers revenues sales services recognized group satisfies performance obligation group standard contract terms retail customers entitled right returns within days enables receive full partial cash refund amount paid store coupon another product exchange exchanges one product another type quality condition price considered returns unless product exchange occurs days original sale wholesalers generally contractual right return provisions returns presented consolidated statement financial position liabilities corresponding adjustment revenue respect future refunds corresponding asset offsetting adjustment cost sales representing right recover goods client also recognized group uses historical experience estimate number returns portfolio level using expected value method royalties received respect operating licenses recognized accordance contractual obligations specific agreement generally sales occur sales based licensing agreements otherwise time performance obligations satisfied types licensing agreements payment retail sales typically required time purchase within days occasion advance payment terms wholesale sales generally longer group may adopt various measures aimed ensuring collectability related consideration requiring customers provide advanced payments financial guarantees well performing credit analysis customers obtaining insurance receivables revenues sales department stores consignment basis recognized goods ultimately sold department stores end customers personnel costs personnel expenses primarily consist wages salaries social contributions pension plans indemnities share based payments severance indemnities long term benefits well costs payroll taxes uniforms insurance benefits wages salaries primarily include fixed remuneration variable short term remuneration plans directors fees costs related employee profit sharing incentive plans associated payroll taxes share based payments cash settled share based payments group issues cash settled share based transactions cost cash settled transactions initially valued fair value date beneficiary informed allocation fair value recognized statement profit loss period vesting recognition corresponding liability liability settled fair value recalculated year end date settlement date charging related changes statement profit loss equity settled share based payments equity settled share based payments accounted accordance ifrs requires company recognize share based compensation expense based fair value awards granted compensation expense equity settled awards containing market non market performance conditions well escrow shares issued part business combination described note general information measured grant date fair value award using monte carlo simulation model requires input assumptions including expected volatility company shares dividend yield interest rates correlation coefficient shares relevant market index fair value equity awards conditional recipient continued service company measured using share price grant date adjusted present value future distributions employees receive vesting period share based compensation expense relating equity settled share based payments recognized consolidated income statement service period offsetting increase equity group recognizes effects modifications increase total fair value share based payment arrangements otherwise beneficial employee group modifies terms conditions awards granted manner reduces total fair value share based payment arrangement otherwise beneficial employee increasing vesting period adding non market performance group continues recognize share based payments modification occurred income taxes income tax expense comprises current deferred tax expense current tax tax currently payable based taxable profit year group liability current tax calculated using tax rates enacted substantively enacted end reporting period provision recognized uncertain tax positions tax determination uncertain considered probable future outflow funds tax authority accordance ifric uncertainty income tax treatments deferred tax deferred tax calculated using liability method temporary differences carrying amount recorded consolidated balance sheet tax value assets liabilities except goodwill deductible tax purposes certain exceptions valuation deferred tax balances depends way group intends recover settle carrying amount assets liabilities using tax rates enacted substantively enacted end reporting period deferred tax assets liabilities discounted presented separately balance sheet within non current assets liabilities deferred tax asset recognized deductible temporary differences tax loss carry forwards tax credits extent future offset probable deferred tax liability recognized taxable temporary differences relating investments subsidiaries associates unless group able control timing reversal temporary difference probable temporary difference reverse foreseeable future earnings per share basic earnings per share basic earnings per share calculated dividing profit loss attributable shareholders parent company weighted average number ordinary shares outstanding period excluding treasury shares diluted earnings per share diluted earnings per share calculated dividing profit loss attributable holders parent company excluding treasury shares weighted average number ordinary shares outstanding taking account dilutive potential ordinary shares calculate diluted earnings per share weighted average number shares outstanding adjusted assuming conversion potential shares dilutive effects entity net profit adjusted take account effects net taxes conversion dividend distribution dividend distribution company shareholders recognized liability group consolidated financial statements period dividends approved company shareholders segment information operating segments reported manner consistent internal reporting provided board directors identified chief operating decision maker group responsible allocating resources assessing performance operating segments rounding amounts disclosed financial statements notes rounded nearest thousand euro unless otherwise stated key sources estimation uncertainty use estimates critical accounting judgments preparation consolidated financial statements accordance ifrs accounting standards requires use estimates assumptions may involve application judgment applying group accounting policy information affect carrying amounts assets liabilities well assessment contingent assets liabilities amount income expenses recognized estimates assumptions based historical experience factors considered relevant actual results might fully correspond estimates estimates underlying assumptions reviewed continuously group effects changes accounting estimates recognized consolidated statement profit loss period adjustment made prospectively future periods key sources estimation uncertainty key assumptions concerning future key sources estimation uncertainty requiring estimates risk material difference may arise respect carrying amounts assets liabilities future discussed related notes impairment non current assets definite useful lives non current assets definite useful lives include property plant equipment right assets intangible assets group periodically reviews carrying amount non current assets definite useful lives events circumstances indicate asset may impaired impairment tests performed comparing carrying amount recoverable amount cgu recoverable amount higher cgu fair value less costs disposal value use assessing value use estimated future cash flows discounted present value using pre tax discount rate reflects current market assessments time value money risks specific cgu additional information please refer note intangible assets note property plant equipment note right use assets recoverability goodwill brands indefinite useful life accordance ias impairment assets ias goodwill brands indefinite useful life amortized tested impairment annually frequently facts circumstances indicate asset may impaired impairment test performed comparing carrying amount recoverable amount cgu recoverable amount cgu higher fair value less costs disposal value use additional information please refer note intangible assets use estimates items requiring estimates addition described risk material difference may arise respect carrying amounts assets liabilities future discussed related notes derivatives fair value derivatives traded active market determined using mark model valuation technique active markets exist component parts fair value determined basis relevant market prices component parts financial liabilities put options granted non controlling interests measured based present value exercise price option liability subsequently remeasured fair value end period valuation techniques based significant inputs observable referred level valuations based techniques use significant unobservable inputs referred level valuations estimates assumptions made support corporate functions appropriate independent specialists regularly reviewed additional information please refer note derivative financial instruments provisions obsolete inventory since group products subject market trends changes fashion trends product inventories end season subject impairment specifically provision obsolete inventory finished products reflects management estimate expected impairment losses products collections previous seasons considering ability sell group various distribution channels generally impairment assumptions involve percentages impairment become greater older collections reflect decline selling prices secondary channels mainly outlets hand decrease probability selling time goes provision obsolete raw materials reflects management estimates decline probability used based calculation slow moving raw materials additional information please refer note inventories recoverability deferred tax assets deferred tax assets recognized premise likely group able generate sufficient suitable future taxable profits reversal asset deducted group unable generate sufficient taxable profits certain jurisdictions significant change actual effective tax rates time period within underlying temporary differences become taxable deductible group could required write deferred tax assets resulting increase effective tax rate adverse impact future operating results additional information please refer note income taxes provision risks charges group recognizes liability facing legal tax dispute lawsuits believes probable require outflow financial resources reliable estimate made amount potential losses given uncertainty surrounding outcome proceedings hard reliably estimate outflow resources required settle therefore amount provisions legal tax disputes may change result future developments outstanding proceedings group monitors status ongoing lawsuits proceedings consults legal advisors well legal tax experts additional information please refer note provisions risks charges fair value estimates fair value defined price would received sale asset paid transfer liability orderly transaction market participants measurement date ifrs fair value measurement ifrs establishes three tier fair value hierarchy prioritizes inputs used measuring fair value hierarchy gives highest priority unadjusted quoted prices active markets identical assets liabilities level measurements lowest priority unobservable inputs level measurements tiers include level defined observable inputs quoted prices unadjusted identical instruments active markets level defined inputs quoted prices active markets either directly indirectly observable quoted prices similar instruments active markets quoted prices identical similar instruments markets active level defined unobservable inputs little market data exists therefore requiring entity develop assumptions valuations derived valuation techniques one significant inputs significant value drivers unobservable circumstances inputs used measure fair value might categorized within different levels fair value hierarchy instances fair value measurement categorized entirety fair value hierarchy based lowest level input significant fair value measurement additional information please refer note fair value measurement financial liability relating group obligation purchase non controlling interest thom browne group group party option agreement obligation purchase remaining non controlling interest thom browne group two tranches financial liability arising obligation measured fair value reporting date particular financial liability measured present value expected exercise price option calculated ebitda thom browne group recorded multiplied given multiple requires management estimate future ebitda performance thom browne group based projections contained latest business plan cover period critical judgments applying group accounting policies following critical judgments apart involving estimations presented separately group made process applying accounting policies significant effect amounts recognized consolidated financial statements years ended december group applied judgment determining significant influence luigi fedeli figlio despite group owing equity shares company making judgment group determined significant influence accordance ias investments associates joint ventures ias based representation board directors company participation policy making processes result determination group accounts investment luigi fedeli figlio equity method year ended december group applied judgment determining significant influence tom ford international llc tfi despite group owing equity shares tfi making judgment group determined significant influence accordance ias investments associates joint ventures ias based representation board directors tfi participation policy making processes furthermore material transactions group tfi result determination group accounted investment tfi equity method tfi acquisition april point tfi consolidated group additional information see note investments accounted using equity method segment reporting group determined operating segments based reports reviewed board directors considered chief operating decision maker codm defined ifrs operating segments ifrs purposes allocating resources assessing performance group group organized three operating reportable segments based brand perspective described zegna segment includes activities related zegna brand textile product lines thom browne segment includes activities related thom browne brand tom ford fashion segment includes activities related tom ford fashion business adjusted earnings interest taxes adjusted ebit key profit measure used codm assess performance allocate resources group operating segments well analyze operating trends perform analytical comparisons benchmark performance periods among segments adjusted ebit defined profit loss income taxes plus financial income financial expenses foreign exchange losses result investments accounted using equity method adjusted income costs significant nature management considers reflective underlying operating activities including one periods presented described net impairment leased owned stores severance indemnities provisions severance expenses legal costs trademark dispute transaction costs related acquisitions costs related business combination special donations social responsibility net income related lease agreements transactions segments executed commercial terms normal respective markets primarily relate intersegment sales measures assets liabilities segment reported codm therefore information presented following tables summarize selected financial information segment years ended december year ended december thousands zegna thom browne tom ford fashion corporate intercompany eliminations group consolidated revenues third parties inter segment revenues revenues profit taxes financial income financial expenses foreign exchange losses result investments accounted using equity method operating profit adjustments net impairments leased owned stores severance indemnities provisions severance expenses legal costs trademark dispute transaction costs related acquisitions adjusted ebit depreciation amortization ______________________ net impairment leased owned stores includes impairment thousand related property plant equipment impairment thousand related right use assets iii impairment thousand related intangible assets amounts recorded within selling general administrative expenses consolidated statement profit loss relates severance indemnities thousand amount recorded within selling general administrative expenses consolidated statement profit loss relates legal costs net reimbursements thousand connection defending legal dispute initiated adidas alleging thom browne infringed intellectual property rights amount recorded within selling general administrative expenses consolidated statement profit loss relates transaction costs thousand consultancy legal fees related acquisition zegna business south korea amount recorded within selling general administrative expenses consolidated statement profit loss year ended december thousands zegna thom browne tom ford fashion corporate intercompany eliminations group consolidated revenues third parties inter segment revenues revenues profit taxes financial income financial expenses foreign exchange losses result investments accounted using equity method operating profit adjustments transaction costs related acquisitions severance indemnities provisions severance expenses legal costs trademark dispute costs related business combination net impairment leased owned stores special donations social responsibility net income related lease agreements adjusted ebit depreciation amortization ______________________ relates transaction costs thousand consultancy legal fees primarily related tfi acquisition lesser extent acquisition thom browne business south korea acquisition interest norda amount recorded within selling general administrative expenses consolidated statement profit loss relates severance indemnities thousand amount recorded within selling general administrative expenses consolidated statement profit loss relates legal costs thousand connection defending legal dispute initiated adidas alleging thom browne infringed intellectual property rights amount recorded within selling general administrative expenses consolidated statement profit loss costs related business combination thousand relate grant equity awards management vesting subject public listing company shares certain performance service conditions amount recorded within selling general administrative expenses thousand cost sales thousand consolidated statement profit loss net impairment leased owned stores includes impairment thousand related property plant equipment impairment thousand related right use assets iii impairment thousand related intangible assets amounts recorded within selling general administrative expenses consolidated statement profit loss relates donation thousand support initiatives related humanitarian emergencies turkey amount recorded within selling general administrative expenses consolidated statement profit loss net income related lease agreements thousand relates derecognition lease liabilities following change terms lease agreement hong kong amount recorded within selling general administrative expenses consolidated statement profit loss year ended december thousands zegna thom browne corporate intercompany eliminations group consolidated revenues third parties inter segment revenues revenues profit taxes financial income financial expenses foreign exchange losses result investments accounted using equity method operating profit adjustments legal costs trademark dispute transaction costs related acquisitions severance indemnities provisions severance expenses costs related business combination net impairment leased owned stores special donations social responsibility net income related lease agreements adjusted ebit depreciation amortization ______________________ relates legal costs thousand connection legal dispute adidas thom browne primarily relation use trademarks amount recorded within selling general administrative expenses consolidated statement profit loss relates transaction costs thousand consultancy legal fees related tfi acquisition lesser extent acquisition interest norda amount recorded within selling general administrative expenses consolidated statement profit loss relates severance indemnities thousand amount recorded within selling general administrative expenses consolidated statement profit loss costs related business combination thousand relate grant equity awards management vesting subject public listing company shares certain performance service conditions amount recorded within selling general administrative expenses thousand cost sales thousand consolidated statement profit loss additional information please refer note share based payments net impairment leased owned stores includes impairment thousand related right use assets reversals impairment thousand related property plant equipment iii impairment thousand related intangible assets amounts recorded within selling general administrative expenses consolidated statement profit loss relates donation thousand united nations high commissioner refugees unhcr support initiatives related humanitarian emergency ukraine amount recorded within selling general administrative expenses consolidated statement profit loss net income related lease agreements recorded within selling general administrative expenses consolidated statement profit loss include proceeds thousand received new tenants order group withdraw existing lease agreements commercial properties thousand reversals previously recognized provisions respect legal claim related lease agreement united states partially offset iii thousand costs related sublease agreement united states following table summarizes non current assets financial instruments deferred tax assets geography december december thousands emea italy americas united states greater china region rest apac total non current assets financial instruments deferred tax assets ______________________ emea includes europe middle east africa americas includes united states america canada mexico brazil central south american countries rest apac includes japan south korea singapore thailand malaysia vietnam indonesia philippines australia new zealand india southeast asian countries non current assets financial instruments deferred tax assets netherlands company country domicile amounted thousand thousand december respectively revenues group generates revenues primarily sale products services well royalties received third parties licensees revenues recognized net returns discounts following table provides breakdown revenues product line years ended december thousands zegna brand thom browne brand tom ford fashion textile total revenues ______________________ zegna brand includes revenues apparel bags shoes small large leather goods well licensed goods royalties mainly includes revenues agreements third party brands following table provides breakdown revenues distribution channel years ended december thousands direct consumer dtc zegna brand thom browne brand tom ford fashion total direct consumer dtc wholesale branded zegna brand thom browne brand tom ford fashion total wholesale branded textile total revenues ______________________ mainly includes revenues agreements third party brands following table provides breakdown revenues geographic area years ended december thousands emea italy americas united states greater china region rest apac total revenues ______________________ emea includes europe middle east africa americas includes united states america canada mexico brazil central south american countries rest apac includes japan south korea singapore thailand malaysia vietnam indonesia philippines australia new zealand india southeast asian countries revenues mainly include royalties revenues netherlands company country domicile amounted thousand thousand thousand years ended december respectively cost sales cost sales amounted thousand thousand thousand respectively consisting costs directly related production procurement supply goods services including direct labor costs costs raw materials components used manufacture group products fibers yarns wool silk cotton linen cashmere fabrics composition well leather costs semi finished products finished goods consumables outsourced manufacturing third parties cost sales also includes depreciation amortization impairment assets used production lease expenses maintenance write downs inventory freight duty production related costs including manufacturing overhead remaining costs mainly include insurance transportation costs selling general administrative expenses selling general administrative expenses amounted thousand thousand thousand respectively consisting mainly costs sales administrative personnel corporate bodies consultancy accounting fees well depreciation amortization impairment assets used selling administrative activities costs related business combination amounted thousand thousand respectively costs related business combination marketing expenses marketing expenses amounted thousand thousand thousand respectively consisting mainly costs advertising marketing activities including personnel costs costs advertising communications media events fashion shows store windows displays marketing expenses also include depreciation amortization impairment assets used advertising marketing activities financial income financial expenses foreign exchange losses following table provides breakdown financial income financial expenses foreign exchange losses years ended december thousands financial income options changes fair value thom browne option dondi option securities hedging operations interest financial assets interest financial receivables loans interest income interest rate swaps financial income total financial income financial expenses options changes fair value thom browne option dondi option hedging operations interest financial charges lease liabilities warrants changes fair value securities interest bank loans overdrafts interest expenses interest rate swaps financial expenses total financial expenses foreign exchange losses financial income financial expenses relating options represent fair value changes period liabilities put options owned non controlling interests group investments thom browne group gruppo dondi dondi see note current non current financial liabilities additional details relating group written put options non controlling interests result exercise redemption warrants first quarter group remeasured related warrant liabilities recognized financial expenses thousand financial income financial expenses securities relate investments securities held group financial income includes gain thousand disposal interest sharmoon garments ltd following group continues interest company account investment fair value foreign exchange losses years ended december amounted thousand thousand thousand respectively include exchange rate effects arising remeasurement put options owned non controlling interests group investments result sale group interest ezesa argentina february cumulative translation losses amounting thousand relating original investment held company reclassified comprehensive income loss foreign exchange losses within consolidated statement profit loss year ended december result acquisition tom ford international april cumulative translation losses amounting thousand related original investment held tom ford international reclassified comprehensive income loss foreign exchange losses within consolidated statement profit loss year ended december additional information relating tfi acquisition see note business combinations income taxes following table provides breakdown income taxes years ended december thousands current taxes deferred taxes income taxes table provides reconciliation actual income taxes theoretical income taxes calculated basis applicable corporate tax rate effect italy years ended december years ended december thousands except percentages profit taxes theoretical income tax expense benefit tax rate tax effect non taxable income non deductible costs differences foreign tax rates theoretical applicable tax rate tax benefit expense relating prior years deferred tax assets recognized previous years deferred tax assets recognized tax dividends earnings tax items total tax expense excluding irap effective tax rate excluding irap italian regional income tax expense irap total income tax effective tax rate order facilitate understanding tax rate reconciliation presented income tax expense includes presentation net italian regional income tax irap based measure income defined italian civil code difference operating revenues costs financial income expense cost fixed term employees credit losses interest included lease payments applicable irap rate parent company italian components years ended december following enactment new tax legislation italy previous patent box tax regime replaced new patent box tax regime amount qualifying expenses deductible additional ires irap purposes specific transitional rules regulate transition previous patent box tax regime new regime first quarter group filed new patent box tax regime started recognizing benefit starting year ended december tax items includes thousand recognized uncertain tax positions thousand year ended december pillar two legislative tax framework introduced organisation economic operation development oecd aims ensure large multinational corporations pay minimum level tax income arising jurisdictions operate subsequently progressively enacted local tax legislation many countries around world considering group ultimate parent company tax resident italy italian tax authorities enacted new tax legislation implement pillar two framework global minimum top tax must applied respect subsidiaries group starting january impact applying pillar two tax rules group limited certain operations abroad pillar two transitional safe harbor apply pillar two effective tax rate percent group applied mandatory temporary exception recognition disclosure relating deferred tax assets liabilities arising jurisdictional implementation pillar two model rules deferred tax assets deferred tax liabilities deferred taxes reflect net tax effect temporary differences book value taxable amount assets liabilities accounting assets deferred taxes duly adjusted take account effective possibility realized certain italian entities group participate group italian tax consolidation tax unity group parent company ermenegildo zegna may therefore offset taxable income tax losses companies participating italian tax consolidation regime following tables provide breakdown deferred tax assets deferred tax liabilities thousands december recognized profit loss recognized comprehensive income loss business combination exchange differences december deferred tax assets arising employee benefits property plant equipment lease liabilities intangible assets provision obsolete inventory elimination intercompany margin inventory provisions financial assets tax losses deferred tax assets prior offsetting offsetting deferred tax assets total deferred tax assets deferred tax liabilities arising property plant equipment right use assets intangible assets financial assets fair value deferred tax liabilities prior offsetting offsetting deferred tax liabilities total deferred tax liabilities thousands december recognized profit loss recognized comprehensive income loss business combination exchange differences december deferred tax assets arising employee benefits property plant equipment lease liabilities intangible assets provision obsolete inventory elimination intercompany margin inventory provisions financial assets tax losses deferred tax assets prior offsetting offsetting deferred tax assets total deferred tax assets deferred tax liabilities arising property plant equipment right use assets intangible assets financial assets fair value deferred tax liabilities prior offsetting offsetting deferred tax liabilities total deferred tax liabilities decision recognize deferred tax assets made company group assessing whether conditions exist future recoverability assets taking account basis recent forecasts budgets business plans deferred tax assets deferred tax liabilities individual companies offset may legally offset management intention settle netting following table provides details tax losses carried forward deferred tax assets recognized december thousands expiry within year expiry years expiry years expiration total tax losses carried forward earnings per share basic diluted earnings per share calculated ratio net profit loss attributable shareholders company weighted average number outstanding ordinary shares basic diluted company following table summarizes amounts used calculate basic diluted earnings per share years ended december thousands except per share data profit loss attributable shareholders parent company weighted average number shares basic earnings per share adjustments calculation diluted earnings per share long term incentive awards long term incentive awards ceo psus ceo remuneration shares ipo psus long term equity incentives non executive directors remuneration shares restricted stock units plan weighted average number shares diluted earnings per share basic earnings per share euro diluted earnings per share euro years ended december diluted weighted average number shares outstanding increased take consideration theoretical effect potential ordinary shares relating equity awards granted group extent dilutive potential ordinary shares assumed converted ordinary shares beginning period later date grant potential ordinary shares adjustments calculation weighted average number shares diluted earnings per share explained additional information see also note share based payments long term incentive awards performance share units psus granted group senior management senior management team considered potential ordinary shares performance conditions relating adjusted ebit adjusted net financial indebtedness cash surplus total shareholder return targets would met based group performance reporting date long term incentive awards psus retention restricted share units rsus granted group senior management team case psus considered potential ordinary shares performance conditions relating adjusted ebit adjusted net financial indebtedness cash surplus targets would met based group performance reporting date case rsus considered potential ordinary shares recipient still employed group reporting date ceo psus psus granted ceo considered potential ordinary shares performance conditions relating adjusted ebit adjusted net financial indebtedness cash surplus targets would met based group performance reporting date ceo remuneration shares potential ordinary shares exercise share purchase rights part ceo fixed remuneration ipo psus psus related company public listing granted ceo certain members senior management team considered potential ordinary shares performance market conditions met recipient still employed group reporting date long term equity incentives potential ordinary shares company granted senior management team equal value thousand considered potential ordinary shares recipient still employed group reporting date non executive directors remuneration shares potential ordinary shares company granted non executive directors annual base remuneration services provided assigned recipients restricted stock units plan rsus granted senior management team considered potential ordinary shares recipient still employed group reporting date information nature following table provides breakdown depreciation amortization personnel costs within consolidated statement profit loss years ended december thousands depreciation amortization personnel costs depreciation amortization personnel costs depreciation amortization personnel costs cost sales selling general administrative expenses marketing expenses total december group employees respectively intangible assets following table provides breakdown intangible assets thousands goodwill brand concessions licenses trademarks patents intangible assets intangible assets progress total historical cost january additions disposals business combinations exchange differences movements reclassifications balance december additions disposals business combinations exchange differences movements reclassifications balance december accumulated amortization january amortization disposals impairment exchange differences movements reclassifications balance december amortization disposals impairment exchange differences movements reclassifications balance december carrying amount january december december goodwill thousand recognized period related acquisition zegna business south korea additional information see note business combinations goodwill brands indefinite useful life goodwill originated acquisitions made group brands indefinite useful life acquired separately attributable following operating segments december thousands zegna thom browne total goodwill brands indefinite useful life accordance ias goodwill brands indefinite useful life amortized tested impairment annually frequently facts circumstances indicate asset may impaired goodwill brands indefinite useful life allocated group cgus groups cgus recoverable amount cgus groups cgus based value use calculation uses cash flow projections based last approved budget forecast calculations prepared separately cgu budget forecast calculations generally cover period three years long term growth rate calculated applied project future cash flows third year assessing value use estimated future cash flows discounted present value using post tax discount rate reflects current market assessments time value money risks specific asset main assumptions calculate recoverable amount following terminal value determined using perpetuity method long term growth rate represents present value last year projection expected future cash flows growth rate used calculate terminal value zegna segment ranged thom browne segment determined according diverging inflation gdp outlook related geographical areas discount rate rate used discount cash flows calculated using weighted average cost capital wacc post tax impairment test wacc used discounting purposes ranged wacc calculated cgu group cgus subject impairment considering parameters specific geographical area market risk premium sovereign bond yield ebitda see table ebitda compound annual growth rate cagr assumptions utilized calculate expected future cash flows calculation value use cgus groups cgus sensitive following assumptions discount rates wacc growth rates used extrapolate cash flows beyond forecast period ebitda cagr rate forecast period following tables detail sensitivity impairment testing reasonably possible changes assumptions cgus significant goodwill brands indefinite useful life allocated existing assumptions sensitivity effects headroom millions except percentages basis points headroom wacc bps growth rate bps ebitda cagr wacc bps growth rate bps ebitda bps cgu thom browne group cgu thom browne korea ltd cgu ermenegildo zegna korea ltd cgu gruppo dondi cgu bonotto cgu cgu tessitura ubertino existing assumptions sensitivity effects headroom millions except percentages basis points headroom wacc bps growth rate bps ebitda cagr wacc bps growth rate bps ebitda bps cgu thom browne group cgu thom browne korea ltd cgu gruppo dondi cgu bonotto cgu cgu tessitura ubertino based analysis performed impairment goodwill brands indefinite useful life recognized years ended december tom ford fashion license agreement part tfi acquisition completed april group became long term licensee tom ford men women fashion well accessories underwear fine jewelry childrenswear textile home design products recognized fair value tom ford fashion license agreement within intangible assets property plant equipment include total amount thousand acquisition date estimated useful life license agreement years additional information relating tfi acquisition see note business combinations result slowing demand luxury products due challenging consumer confidence conditions luxury sector management performed impairment test tom ford fashion segment based results test performed impairment identified calculation value use tom ford fashion segment sensitive following assumptions discount rate wacc growth rate used extrapolate cash flows years eleven thirty license agreement ebitda cagr rate forecast period sensitivity analysis order ensure changes main assumptions significantly affect results impairment test sensitivity analyses conducted following table presents sensitivity impairment test tom ford fashion segment reasonably possible changes aforementioned assumptions existing assumptions sensitivity effects impairment millions except percentages basis points headroom wacc growth rate ebitda cagr current year wacc bps growth rate bps ebitda bps tom ford fashion segment sensitivity analysis aforementioned assumptions wacc growth rate used determine recoverable value tom ford fashion segment confirmed impairment property plant equipment following table provides breakdown property plant equipment thousands land buildings plant machinery industrial commercial equipment leasehold improvements tangible assets tangible assets construction advances total historical cost january additions disposals business combinations exchange differences reclassifications balance december additions disposals business combinations exchange differences reclassifications balance december accumulated depreciation january depreciation disposals impairment exchange differences reclassifications balance december depreciation disposals impairment exchange differences reclassifications balance december carrying amount january december december impairment testing assets amortized depreciated systematic basis tested impairment indications changes planning assumptions suggesting carrying amount assets recoverable purpose preparing annual budget plan group conducts triggering event test store defined year year profitability indicators reached non current assets store question tested impairment method used identify recoverable amount value use aforementioned cgus except brands consisted discounting projected cash flows discounted cash flow generated activities directly attributable segment intangible asset net invested capital assigned cgu value use sum present value future cash flows expected business plan projections prepared cgu present value related operating activities end period terminal value business plans used prepare impairment test cover last three months three years rate used discount cash flows calculated using weighted average cost capital wacc year ended december wacc used discounting purposes ranged december wacc calculated cgu subject impairment considering parameters specific geographical area market risk premium sovereign bond yield rate growth used calculate terminal value determined according diverging inflation gdp outlooks various countries growth rate zegna segment ranged thom browne segment doss impairment test impairment test doss assets takes consideration right use assets intangible assets property plant equipment elements relating directly operated stores zegna segment thom browne segment tom ford fashion segment result impairment test doss consolidated financial statements obtained comparing recoverable amount based value use cgu carrying amount tangible intangible assets allocated cgu including leases according ifrs following table presents impairment reversal impairment doss recognized year ended december thousand property plant equipment right use assets intangible assets zegna segment doss impairment total zegna segment doss thom browne segment doss impairment total thom browne segment doss tom ford fashion segment doss impairment total tom ford fashion segment doss total group year ended december thousand property plant equipment right use assets intangible assets zegna segment doss impairment reversal impairment total zegna segment doss thom browne segment doss impairment total thom browne segment doss tom ford fashion segment doss impairment total tom ford fashion segment doss total group year ended december thousand property plant equipment right use assets intangible assets zegna segment doss impairment reversal impairment total zegna segment doss thom browne segment doss impairment total thom browne segment doss total group calculation value use cgus sensitive following assumptions discount rates growth rates used extrapolate cash flows beyond forecast period revenue compounded annual rate growth cagr sensitivity analysis order ensure changes main assumptions significantly affect results impairment tests sensitivity analyses conducted following table presents sensitivity impairment tests doss zegna thom browne tom ford fashion segments reasonably possible changes aforementioned assumptions existing assumptions sensitivity effects impairment millions except percentages basis points impairment wacc growth rate revenues cagr current year wacc bps growth rate bps revenues bps zegna segment doss thom browne segment doss tom ford fashion segment doss sensitivity analysis aforementioned assumptions wacc growth rate revenues cagr used determine recoverable value carried cgus subject impairment testing showed negative changes basic assumptions could lead additional impairment loss corporate assets impairment test corporate assets tested impairment facts circumstances indicate carrying amount may impaired basis trigger events reporting segment level impairment indicators identified corporate assets right use assets following table provides breakdown right use assets thousands land buildings industrial commercial equipment plant machinery right use assets total historical cost january additions disposals business combinations exchange differences balance december additions disposals exchange differences balance december accumulated amortization january amortization impairments disposals exchange differences balance december amortization impairments disposals exchange differences balance december carrying amount january december december group leases various retail stores warehouses equipment vehicles rental contracts typically made fixed periods year years may extension options contracts may contain lease non lease components lease terms negotiated individual basis contain wide range different terms conditions lease agreements impose covenants security interests leased assets held lessor extension options range year years included number property leases across group used maximize operational flexibility terms managing assets used group operations extension options exercisable group respective lessor tangible assets mainly refer vehicles years ended december impairments recognized amount thousand primarily related leased stores europe united states part thom browne segment greater china region south korea part tom ford fashion segment united states emea greater china region part zegna segment thousand primarily related leased stores greater china region part tom ford fashion segment europe part zegna segment thousand primarily related leased stores greater china region europe part thom browne segment details related impairment testing performed right use assets please refer note property plant equipment investments accounted using equity method group ownership percentages carrying value investments accounted using equity method follows thousands except percentages filati biagioli modesto norda run inc luigi fedeli figlio tom ford internation llc tizeta total investments accounted using equity method group percentage interest december group percentage interest december january additions disposal net loss income translation differences business combinations december net loss income translation differences december result tfi acquisition completed april group obtained tfi tizeta previously owned group owned tfi group previously held equity interests tfi tizeta measured fair value acquisition date recognized part consideration transferred according ifrs business combinations ifrs cumulative translation losses related previously held investment tfi amounting thousand reclassified comprehensive income profit loss acquisition date foreign exchange losses following completion tfi acquisition tfi tizeta consolidated group additional information relating tfi acquisition see note business combinations prior tfi acquisition group accounted interest equity shares tom ford international llc usingi equity method following requirements ias investments associates joint ventures ias met representation board directors participation policy making processes additions year ended december included thousand capital increase filati biagioli modesto thousand contributed cash thousand related financial receivables converted equity capital contribution july second half thousand capital contribution converted share capital thus increasing share owned group thousand acquisition minority stake interest canadian technical trail running shoe company norda completed march iii thousand acquisition minority stake interest luigi fedeli figlio world renowned maker fine italian knitwear yarns thousand conversion financial receivables tfi capital contribution prior tfi acquisition certain financial information companies accounted using equity method provided period acquisition date december year ended december required ifrs disclosure interest entities ifrs thousands norda run inc filati biagioli modesto luigi fedeli figlio total assets total liabilities total equity net revenues net income loss non current financial assets following table provides breakdown non current financial assets december thousands guarantee deposits lease receivables sublease total non current financial assets expected credit losses associated guarantee deposits primarily related investments companies measured fair value december inventories following table provides breakdown inventories net provision slow moving obsolete inventories december thousands raw materials ancillary materials consumables work progress semi finished products finished goods total inventories amount provisions slow moving obsolete inventories recognized years ended december thousand thousand thousand respectively following table provides changes total provision slow moving obsolete inventories years ended december january provisions utilizations releases exchange differences changes december trade receivables following table provides breakdown trade receivables december thousands trade receivables loss allowance loss allowance total trade receivables following table provides breakdown loss allowance relating trade receivables loss allowance thousands january provisions utilizations releases exchange differences december group applies simplified approach available ifrs always measure loss allowance trade receivables amount equal lifetime expected credit losses expected credit losses trade receivables estimated using provision matrix reference past default experience debtor analysis debtor current financial position adjusted factors specific debtors general economic conditions industry debtors operate assessment current well forecast direction conditions reporting date see note qualitative quantitative information financial risks additional information group recognized loss allowance receivables greater days past due historical experience indicated receivables generally recoverable except certain cases receivables covered insurance agreements group generally writes trade receivable information indicating debtor severe financial difficulty realistic prospect recovery debtor placed liquidation entered bankruptcy proceedings none trade receivables written subject enforcement activities following table presents trade receivables geographic area december thousands emea italy americas united states greater china region rest apac total trade receivables ______________________ emea includes europe middle east africa americas includes united states america canada mexico brazil central south american countries rest apac includes japan south korea singapore thailand malaysia vietnam indonesia philippines australia new zealand india southeast asian countries derivative financial instruments group enters certain derivative contracts course risk management activities primarily hedge interest rate risk bank debt currency risk sales made currencies euro company enters contracts hedging purposes group financial management policy permit trading financial instruments speculative purposes derivative financial instruments meeting hedge requirements ifrs accounted using hedge accounting changes fair value derivative financial instruments qualifying hedge accounting recognized profit loss relevant reporting period interest rate currency derivatives used company counter otc instruments meaning negotiated bilaterally market counterparties determination current value based valuation techniques use input parameters interest rate curves foreign exchange rates etc observable market level fair value hierarchy defined ifrs fair value measurement derivatives measured fair value reporting date taking reference applicable foreign currency exchange rates interest rates yield curves observable commonly quoted intervals reporting date group outstanding hedges detailed tables december december thousands notional amount positive fair value negative fair value notional amount positive fair value negative fair value foreign currency exchange risk foreign currency derivatives interest rate risk interest rate swaps total derivatives instruments notional assets liabilities hedging derivatives contracts place reporting date entered major financial institutions counterparties expected default liquidity analysis derivative contract maturities provided financial risks section notes cash flows resulting group international activities exposed exchange rate volatility order hedge risk group enters forward sale purchase agreements guarantee value identified cash flows euro currencies used locally projected future cash flows mainly relate collection trade receivables settlement trade payables financial cash flows notional amount foreign exchange forward contracts hedge projected future cash flows detailed follows years ended december thousands usd cny gbp jpy hkd total notional amount key features interest rate swap irs agreements summarized follows thousands except percentages notional amount december fair value december contract maturity date fixed interest rate irs irs irs irs irs irs total current financial assets following table provides breakdown current financial assets see note fair value measurement breakdown current financial assets fair value level december thousands securities guarantee deposits financial receivables total current financial assets following tables provide breakdown movements securities thousands december investments disposals fair value adjustments realized gains losses exchange rate gains losses december fair value profit loss fvpl private equity private debt hedge funds real estate funds money market funds equity total fvpl fair value comprehensive income fvoci fixed income floating income total fvoci total securities thousands december investments disposals fair value adjustments realized gains losses exchange rate gains losses december fair value profit loss fvpl private equity real estate funds private debt hedge funds money market funds equity insurance contracts fixed income commodities total fvpl fair value comprehensive income fvoci floating income fixed income total fvoci total securities line group funding strategy group disposed securities primarily investments insurance contracts fixed income hedge funds amounting thousand proceeds thousand group primarily used finalize tfi acquisition capital expenditures well repay borrowings current assets current assets amount thousand thousand december respectively mainly relate accrued income deferred charges indirect tax receivables cash cash equivalents following table provides breakdown cash cash equivalents december thousands cash hand bank balances total cash cash equivalents group may subject restrictions limit ability use cash particular cash held china subject certain repatriation restrictions may repatriated dividends capital distributions repay debt liabilities group believe transfer restrictions adverse impacts ability meet liquidity requirements cash held china december amounted thousand thousand december shareholders equity share capital share premium december fully paid share capital company thousand consisting ordinary shares special voting shares nominal value ordinary share confers right cast one vote holders ordinary shares become entitled special voting shares upon registering ordinary shares loyalty register thereby blocking shares trading nyse maintaining registered register uninterrupted period time prescribed articles association company ordinary shares carry right receive dividends ordinary share carries right repayment capital event dissolution liquidation remaining equity debts satisfied benefit holders ordinary shares proportion aggregate nominal value ordinary shares ordinary shares carry preemptive rights proportion aggregate number ordinary shares held upon issuance new ordinary shares granting rights subscribe ordinary shares subject certain exceptions ordinary shares registered loyalty register uninterrupted period two years name shareholder shares become eligible receive special voting shares company relevant shareholder receive one company special voting share per eligible ordinary share company special voting share automatically converted special voting share company holding number ordinary shares uninterrupted period five years following registration ordinary shares loyalty register company special voting share automatically converted special voting share company holding number ordinary shares uninterrupted period ten years following registration ordinary shares loyalty register class company special voting shares entitle relevant holders following number votes addition voting rights attached ordinary share special voting share company confers right cast one vote special voting share company confers right cast four votes special voting share company confers right cast nine votes company general meeting holders company special voting shares receive dividends respect company special voting shares however company maintains separate dividend reserve class company special voting shares sole purpose allocation mandatory minimum profits accrue company special voting shares following table summarizes changes share capital share premium number ordinary shares special voting shares company years ended december share capital thousand share premium thousand outstanding ordinary shares ordinary shares held treasury total ordinary shares special voting shares january ordinary shares issued warrant holders ordinary shares delivered share based payments special voting shares issued december ordinary shares delivered share based payments december ______________________ february group completed previously announced redemption outstanding public private placement warrants purchase ordinary shares company remained outstanding new york city time february redemption date following warrants exercised warrant holders exercise price per ordinary share group received total cash proceeds million exchange newly issued ordinary shares warrants exercised warrant holders cashless basis exchange ordinary shares company per warrant company issuing aggregate newly issued ordinary shares result transactions approximately outstanding warrants exercised approximately exercised cash approximately exercised cashless basis remaining warrants remained unexercised redemption date redeemed company cash redemption price per warrant accordance terms related warrant agreements total thousand result vesting certain equity incentive arrangements ordinary shares previously held treasury delivered participants share based payments plans includes ordinary shares delivered ceo ceo ltip relation performance period ordinary shares delivered ceo ceo ipo psus plan ordinary shares delivered directors group excluding ceo key executives strategic responsibilities employees group management ipo psus plan ordinary shares delivered ceo right convert ceo fixed remuneration shares company aggregate purchase price thousand additional information relating equity incentive arrangements group see note share based payments december upon fulfillment conditions outlined company articles association special voting shares issued delivered monterubello ermenegildo gildo zegna monte rubello consideration result vesting certain equity incentive arrangements ordinary shares previously held treasury delivered participants share based payments plans described ordinary shares senior management team settle portion bonus ordinary shares equal value thousand part long term equity incentives provided ordinary shares ceo ceo long term incentive plan relation performance period ordinary shares ceo ceo ipo psu plan ordinary shares directors group key executives strategic responsibilities employees group management ipo psu plan ordinary shares non executive directors group portion annual base remuneration services provided ordinary shares senior management team excluding ceo rsu plan connection achievement service condition first installment additional information relating equity incentive arrangements group see note share based payments legal reserves pursuant dutch law limitations exist relating distribution shareholders equity least total amount legal reserve december december amounted thousand thousand respectively included following legal reserves subsidiaries consisting earnings subsidiaries associates subject restrictions distributions company capitalized development costs recognized subsidiaries company thousand december thousand december translation reserve translation differences arising consolidation subsidiaries functional currency different euro amounting thousand december thousand december cash flow hedge reserve changes fair value derivative financial instruments held company designated hedge exposure variability currency exchange rate interest rate risk amounting thousand december thousand december gains losses remeasurement defined benefit plans actuarial gains losses arising period offset related net defined benefit liabilities amounting thousand december thousand december financial assets fvoci reserve arises changes fair value debt instruments held company hold collect sell business model reversed investment derecognized impaired amounting thousand december thousand december reserve treasury shares december reserve treasury shares amounted thousand thousand december ordinary shares held treasury ordinary shares december reserves reserves detailed follows december thousands share based payments reserve non controlling interests options reserve reserves non controlling interests options reserve includes reduction equity attributable shareholders company resulting initial recognition financial liabilities fair value subsequently remeasured end period statement profit loss relating put options held non controlling interests thom browne group thousand thousand december respectively originally recognized partially reclassified within reserves result first tranche put option completely exercised gruppo dondi thousand december originally recognized see note current non current financial liabilities additional details relating group written put options non controlling interests retained earnings retained earnings include group accumulated earnings less dividends paid equity holders changes including effects first time adoption ifrs accounting standards occurred january annual general meeting shareholders held june shareholders approved dividend distribution per ordinary share corresponding total dividend thousand dividend distribution paid july made retained earnings reserve annual general meeting shareholders held june shareholders approved dividend distribution per ordinary share corresponding total dividend thousand dividend distribution paid july made retained earnings reserve annual general meeting shareholders held june shareholders approved dividend distribution per ordinary share corresponding total dividend thousand dividend distribution paid july made retained earnings reserve non controlling interests following tables show financial information consolidated companies entirely controlled group required ifrs amounts disclosed subsidiary intercompany eliminations years ended december year ended december functional currency thousands country group percentage interest non controlling interest percentage functional currency total assets total equity net revenues net income loss dividends paid non controlling shareholders company thom browne group usd ermenegildo zegna vietnam llc vietnam vtd gruppo dondi italy eur thai holding ltd thailand thb bonotto italy eur tessitura ubertino italy eur cappellificio cervo italy eur zegna south asia private ltd india inr zegna gulf trading llc uae aed italian fashion ltd thailand thb zegna retail readymade novelty clothes kuwait kwd zegna consitex arabia trading llc ksa sar year ended december functional currency thousands country group percentage interest non controlling interest percentage functional currency total assets total equity net revenues net income loss dividends paid non controlling shareholders company thom browne group usd ermenegildo zegna vietnam llc vietnam vtd ermenegildo zegna madrid spain eur gruppo dondi italy eur thai holding ltd thailand thb bonotto italy eur tessitura ubertino italy eur cappellificio cervo italy eur zegna south asia private ltd india inr zegna gulf trading llc uae aed italian fashion ltd thailand thb zegna retail readymade novelty clothes kuwait kwd borrowings following table provides breakdown non current current borrowings thousands committed loans borrowings total borrowings committed loans borrowings total borrowings january business combinations repayments proceeds december non current current period group extended average maturity debt repaying existing borrowings obtaining new borrowings longer average maturities repayment schedule borrowings summarized thousands december year year year year year beyond committed loans borrowings total borrowings thousands december year year year year year beyond committed loans borrowings total borrowings information relating contractual cash flows group borrowings see note qualitative quantitative information financial risks liquidity risks interest certain group borrowings calculated based variable rates management may use interest rate swaps irs derivative financial instruments hedge exposure fluctuations interest rates associated monetary flows speculative purposes see note qualitative quantitative information financial risks additional information related group management interest rate financial risks following tables provide details relating group individual borrowings december borrower interest rate interest rate terms expiry date current non current thousands ermenegildo zegna variable euribor january ermenegildo zegna variable euribor january ermenegildo zegna variable euribor february ermenegildo zegna variable euribor may ermenegildo zegna variable euribor december ermenegildo zegna variable euribor january ermenegildo zegna variable euribor april ermenegildo zegna variable euribor december ermenegildo zegna variable irs june ermenegildo zegna variable irs june ermenegildo zegna variable euribor august ermenegildo zegna fixed september ermenegildo zegna variable euribor november service fixed february service fixed april borrowing facilities fixed variable total fixed variable ______________________ represents spread variable component interest rate generally based euribor december borrower interest rate interest rate terms expiry date current non current thousands ermenegildo zegna variable euribor february ermenegildo zegna variable euribor february ermenegildo zegna variable euribor february ermenegildo zegna fixed february ermenegildo zegna fixed march ermenegildo zegna fixed march ermenegildo zegna variable irs april ermenegildo zegna variable irs december ermenegildo zegna variable euribor may ermenegildo zegna variable euribor december ermenegildo zegna variable euribor december ermenegildo zegna fixed september service fixed april service fixed august borrowing facilities fixed variable total fixed variable ______________________ represents spread variable component interest rate generally based euribor december group committed revolving lines amounting aggregate million maturity ranging years million december maturity ranging years lines drawn million december million december certain committed revolving lines interest rates linked following two important environmental social governance esg targets previously disclosed group least top priority raw materials traced geography origin lower impact sources electricity renewable sources europe united states lines amounted million december undrawn current non current financial liabilities following table provides breakdown current non current financial liabilities december thousands written put options non controlling interests thom browne option dondi option non current financial liabilities written put options non controlling interests thom browne option current financial liabilities total written put options non controlling interests thom browne group party option agreement provides thom browne put option giving right sell group remaining interest thom browne group owned group two remaining tranches exercise price option established ebitda thom browne group recorded multiplied given multiple exercise formula financial liability arising obligation group purchase non controlling interest thom browne group measured present value expected exercise amount calculated exercise formula per projections contained latest business plan cover period liability originally related non controlling interest initially recognized equity thousand remeasured reporting date profit loss based latest available information june group purchased additional thom browne group total consideration thousand reducing non controlling interest first half thom browne exercised put option sell group additional thom browne inc based ebitda thom browne group consideration thousand following group owns thom browne group group derecognized portion liability written put option non controlling interests amount thousand additionally equity attributable non controlling interests reduced thousand offsetting increase equity attributable shareholders parent company put option liability relating remaining non controlling interest remeasured fair value december put option liability relates two tranches representing non controlling interests based ebitda thom browne group respectively amounted thousand classified non current thousand december thousand classified current relating tranche based ebitda exercised thousand classified non current dondi group party option agreement provides dondi family put option giving right sell group dondi family remaining interest dondi owned group two tranches exercise price option established ebitda dondi exercise date less net indebtedness multiplied given multiple less given discount dondi exercise formula financial liability arising obligation measured present value expected exercise amount calculated dondi exercise formula per projections contained approved business plan remeasurement liability reporting date recognized profit loss based latest available information liability related written put option december amounted thousand classified non current thousand december lease liabilities following table provides breakdown lease liabilities thousands january interest expense repayment lease liabilities including interest expense business combinations additions due new leases store renewals decrease lease liabilities due store closures translation differences december non current current certain countries leases stores entail payment minimum amounts variable amounts especially stores lease payments indexed revenue required ifrs minimum fixed lease payments capitalized following table summarizes lease liabilities maturity date thousands december year year year year beyond information relating contractual cash flows group lease agreements see note qualitative quantitative information financial risks liquidity risks provisions risks charges provisions risks charges amount thousand thousand represent management best estimate amount potential liabilities directors opinion based information available total amount allocated risks charges reporting date adequate respect liabilities could arise underlying circumstances following tables show movement provision risks charges thousands legal fiscal risks leased store restoration refund liability returns provisions total provisions january current non current provisions releases utilizations exchange differences business combination reclassifications december current non current group defendant various legal fiscal lawsuits arising ordinary course business opinion management company meritorious defenses outstanding claims company vigorously pursue outcome claims individually aggregate material adverse effect group consolidated financial position results operations except otherwise described employee benefits following table presents breakdown employee benefits december thousands italian leaving indemnities tfr leaving indemnities post employment benefits long term employee benefits termination benefits total defined benefit obligations long term payables employees total employee benefits defined benefit obligations following table shows changes defined benefit obligations thousands january changes statement profit loss service cost financial charges changes statement comprehensive income loss actuarial gain loss translation differences benefits paid business combination december italian leaving indemnities relate italian employee severance indemnity tfr obligation required italian law leaving indemnities primarily relate leaving indemnities relating group subsidiaries spain china following table summarizes main financial assumptions used determining present value tfr leaving indemnities december december italy spain china italy spain china discount rate inflation rate turn rate determining defined benefit obligations group italian companies group used italian national institute statistics istat benchmark estimated mortality rates italy broken age gender defined benefit obligations group non italian companies group used standard mortality rate benchmark individual country broken age gender estimated annual staff turnover rates calculated based individual companies data following table presents quantitative sensitivity analysis main assumptions relating group main employee benefit obligations service costs december december bps bps bps bps bps bps bps bps thousands employee benefit obligations service costs employee benefit obligations service costs discount rate inflation rate turn rate average duration defined benefit obligations italian tfr end reporting period years years leaving indemnities china years years leaving indemnities spain years years post employment benefits december primarily relate group ceo trade payables customer advances following table provides breakdown trade payables customer advances december thousands trade payables customer advances total trade payables including customer advances current non current liabilities following table provides breakdown current non current liabilities december thousands due employees vat taxes accrued expenses social security institutions deferred income current liabilities total current liabilities non current liabilities total non current liabilities amounts due employees include deferred compensation accrued untaken leave related social contributions december thousand related bonuses earned key management classified current thousand december classified current accrued expenses primarily include payroll accruals rental expenses december current liabilities included deferred consideration related acquisition thom browne business south korea thousand expected paid thousand december thousand classified current thousand classified non current group paid deferred consideration relating acquisition thom browne business south korea thousand additional information see note business combinations fair value measurement reported amount derivative instruments whether assets liabilities reflects fair value reporting date carrying amount cash cash equivalents financial assets trade receivables adjusted impairment necessary required ifrs approximates estimated realizable value fair value lease liabilities reported present value financial liabilities recorded amortized cost approximate fair value units investment funds sensitivity calculated valuation made basis latest available net asset value nav categories financial assets liabilities according ifrs following tables provide breakdown financial assets category december december financial assets fair value level thousands fvpl fvoci amortized cost total note derivative financial instruments cash cash equivalents trade receivables non current financial assets current financial assets financial assets following table provides additional breakdown current financial assets december december current financial assets fair value level thousands fvpl fvoci amortized cost total private equity private debt hedge funds real estate funds money market funds floating income fixed income guarantee deposits equity financial receivables total current financial assets following table presents changes level items years ended december thousands fair value level january investments disposals fair value adjustments realized gains exchange rate gains losses december fair value level items mainly estimated basis data provided pricing services non active markets fair value level items estimated basis last available nav december financial assets fair value level thousands fvpl fvoci amortized cost total note derivative financial instruments cash cash equivalents trade receivables non current financial assets current financial assets financial assets following table provides additional breakdown current financial assets december december current financial assets fair value level thousands fvpl fvoci amortized cost total private equity money market funds floating income real estate funds fixed income private debt hedge funds guarantee deposits equity financial receivables total current financial assets fair value level items mainly estimated basis data provided pricing services non active markets fair value level items estimated basis last available nav following tables provide breakdown financial liabilities category december financial liabilities fair value level thousands fvpl fvoci amortized cost total note derivative financial instruments non current borrowings current borrowings non current financial liabilities trade payables customer advances lease liabilities current non current financial liabilities december financial liabilities fair value level thousands fvpl fvoci amortized cost total note derivative financial instruments non current borrowings current borrowings non current financial liabilities current financial liabilities trade payables customer advances lease liabilities current non current financial liabilities qualitative quantitative information financial risks group exposed several financial risks connected operations financial market risk primarily related foreign currency exchange rates interest rates commodity prices liquidity risk relating availability funds access credit required financial instruments general credit risk relating counterparties failing repay amounts owed meet contractual obligations risks could significantly affect group financial position results operations cash flows reason group identifies monitors risks order detect potential negative effects advance take necessary action mitigate primarily group operating financing activities required use derivative financial instruments summary qualitative quantitative factors relating risks provided quantitative data reported following section predictive value particular sensitivity analysis finance market risks reflect complexity market reaction may result changes assumed take place foreign currency risk group operates numerous markets worldwide exposed market risks stemming fluctuations currency exchange rates exposure currency risk mainly linked differences geographic distribution group sourcing manufacturing activities commercial activities result cash flows sales denominated currencies different related purchases production activities particular group incurs large portion capital operating expenses euro group functional presentation currency receives majority revenues currencies euro mainly chinese renminbi dollars japanese yen united arab emirates dirham british pound risk management mainly centralized group distribution companies goods transferred consideration associates settled directly currency country operate sell exception countries local currency cannot delivered outside country creates risk corresponding value euro revenues moment collection insufficient cover production costs achieve desired profit margin risk heightened period moment sale prices collection set moment revenues converted euro may extend months zegna tom ford fashion segments group manages risks associated fluctuations currency financial hedging instruments mainly forward contracts sale foreign currencies order establish conversion rate advance predefined range conversion rates future dates considered appropriate group may also implement similar hedging practices thom browne segment become exposed currency impact expands international markets years ended december zegna segment covered exchange rate risk primarily currency forward exchange contracts end preparation price list based market expectations conditions group arranges hedges cannot exceed forecast sales foreign currencies period following preparation price list total outstanding hedge adjusted basis market conditions orders effectively managed entered production addition group controls hedges exposure deriving changes due exchange rate changes value assets liabilities denominated currencies accounting currency individual company typically intercompany financial receivables payables may affect group net results financial instruments whose recognition accordance ifrs accounting standards follows rules fair value hedges profit loss arising subsequent remeasurements fair value hedging instrument hedged item recorded within profit loss hedges group future transactions foreign currencies classified cash flow hedges pursuant ifrs accounting standards accounted accordance hedge accounting rules group estimated potential effects shock change main currencies group exposed reporting date using internal assessment models based generally accepted principles following table presents potential effects profit tax hypothetical change bps year end exchange rates applied group net balances receivables payables foreign currencies december december thousands except basis points receivables payables bps bps receivables payables bps bps currency impact profit tax impact profit tax usd jpy cny hkd gbp sgd chf krw total following table presents potential impact profit tax hypothetical change bps year end exchange rates applied group hedged positions main currencies group exposed december december thousands except basis points notional amount bps bps notional amount bps bps currency impact profit tax impact profit tax usd jpy cny gbp hkd chf sgd krw total following table presents potential change equity gross tax hypothetical change bps year end exchange rates applied group foreign currency hedging instruments highly probable transactions december december thousands except basis points notional amount bps bps notional amount bps bps currency impact hedge reserve impact hedge reserve usd chf jpy hkd gbp cny sgd krw total following table presents potential impact profit tax hypothetical change bps eur usd year end exchange rate applied thom browne put option dollars non controlling interests recorded within non current financial liabilities december december thousands except basis points notional amount bps bps notional amount bps bps currency impact profit tax impact profit tax usd total interest rate risk overall exposure interest rate risk monitored group level coordinated management debt available liquidity relevant due dates group principal sources exposure interest rate risk derive loans revolving credit lines variable rates december notional value interest rate swap derivatives hedge risk potential increase cost servicing financial debt due fluctuations market rates thousand thousand december negative fair value thousand positive fair value thousand december short term portion bank debt used mainly finance working capital needs covered interest rate hedges cost bank debt equal euribor period plus spread depends type credit facility used year ended december hypothetical increase short term interest rates floating rate non current financial liabilities variables held constant would resulted financial expenses annual basis approximately thousand thousand year ended december year ended december hypothetical decrease short term interest rates floating rate non current financial liabilities variables held constant would resulted financial expenses annual basis approximately thousand thousand year ended december following table presents sensitivity floating rate borrowings covered interest rate swaps december amount total interest rate interest expense impact profit tax impact profit tax thousands except percentages ______________________ overall rate indicated compounded fixed spread plus variable rate variable rate december amount total interest rate interest expense impact profit tax impact profit tax thousands except percentages ______________________ overall rate indicated compounded fixed spread plus variable rate variable rate following table presents sensitivity hypothetical change bps year end cost debt rate written put option non controlling interests december december thousands except basis points notional amount bps bps notional amount bps bps impact profit tax impact profit tax thom browne dondi total liquidity risk liquidity risk represents risk group cannot meet financial obligations due problems obtaining funds current market price conditions funding liquidity risk liquidating assets market find necessary financial resources asset liquidity risk could negatively impact group results group forced incur additional costs obtain liquidity meet commitments following tables summarize group financial liabilities relevant maturity groupings based contractual maturities contractual cash flows december thousands within year years years beyond years total contractual cash flows carrying amount december derivative financial instruments trade payables customer advances borrowings lease liabilities current non current financial liabilities total contractual cash flows december thousands within year years years beyond years total contractual cash flows carrying amount december derivative financial instruments trade payables customer advances borrowings lease liabilities current non current financial liabilities total factors mainly influence group liquidity resources generated absorbed current operating investing activities possible distribution dividends maturity refinancing debt management surplus cash liquidity needs surpluses monitored daily basis parent company order guarantee effective sourcing financial resources adequate investment excess liquidity negotiation management credit lines coordinated parent company aim satisfying short medium term financing needs individual companies within group according efficiency cost effectiveness criteria always group policy sign constantly maintain various diversified banks total amount committed credit lines considered consistent needs individual companies suitable ensure time liquidity needed satisfy comply group financial commitments established economic conditions well guaranteeing availability adequate level operational flexibility expansion programs credit risk credit risk defined risk financial loss caused failure counterparty repay amounts owed meet contractual obligations maximum risk entity exposed represented financial assets recognized financial statements management considers credit risk relate primarily trade receivables generated wholesale channel mitigates related effects specific commercial financial strategies regards trade receivables credit risk management carried monitoring reliability solvency customers well insurance agreements following table provides aging trade receivables thousands yet due days overdue days overdue days overdue total trade receivables gross loss allowance total trade receivables december trade receivables gross loss allowance total trade receivables december related party transactions pursuant ias related party disclosures ias related parties group entities individuals close family members capable exercising control joint control significant influence group subsidiaries including group controlling shareholder monterubello monterubello well companies owned monterubello shareholders related parties also include group associates joint arrangements members group board directors executives strategic responsibilities well families entities controlled group transactions related parties primarily commercial financial nature commercial terms normal respective markets considering characteristics goods services involved transactions carried group related parties described transactions associates transactions tfi subsidiaries tfi group prior completion tfi acquisition following tfi group part ermenegildo zegna group longer related party requires separate disclosure primarily related licensing agreement production worldwide distribution luxury men ready wear made measure clothing footwear accessories tom ford brand ended deliveries fall winter collection well supply agreement act exclusive supplier certain tom ford menswear products starting spring summer collection supply commenced financial loans tfi fully settled financial guarantee provided group tfi time associate group amount thousand relation payment obligations bank loan issued tfi guarantee subsequently reduced thousand terminated part transactions contemplated tfi acquisition amounts claimed guarantee purchase raw materials primarily carded yarns filati biagioli modesto purchase finished products norda run inc luigi fedeli figlio transactions monterubello companies controlled monterubello shareholders company directors senior management team purchase raw materials primarily wool gruppo schneider subsidiaries schneider group purchase industrial services primarily finishing fabrics finissaggio tintoria ferraris purchase industrial services pettinatura verrone transactions pkb bank relating interest bearing loan amounting thousand fully repaid first half rental properties real estate real estate subsidiaries lease agreements real estate subsidiaries part group prior disposition group real estate business november licensing marketing sustainability related services oasi zegna support activities fondazione zegna charitable organization provides opportunity charitable work part zegna family group employees fondazione zegna supports funds projects cooperation non profit organizations operating various fields different parts world put contracts entered thom browne part group investments thom browne whereby group required may future required purchase portion remaining non controlling interests thom browne additional information relating thom browne put option see note current non current financial liabilities transactions related parties connected directors shareholders transactions ubs group subsidiaries together referred ubs group borrowings revolving credit lines financial assets group holds mainly cash cash equivalents securities well derivative contracts course group risk management activities ubs group also provides certain financial guarantees third parties behalf group following sergio ermotti appointment group chief executive officer ubs group effective april ubs group subsidiaries qualify related parties group following table summarizes transactions related parties years ended december years ended december thousands revenues cost sales selling general administr ative expenses marketing expenses financial income expenses foreign exchange gains losses revenues cost sales selling general administr ative expenses marketing expenses financial income expenses foreign exchange gains losses revenues cost sales selling general administra tive expenses marketing expenses financial income expenses foreign exchange gains losses associates tfi group filati biagioli modesto norda run inc tizeta luigi fedeli figlio total associates companies controlled monterubello shareholders company directors senior management team real estate schneider group alan real estate agnona west street llc companies controlled monterubello shareholders company directors senior management team related parties connected directors shareholders ubs group total transactions related parties total group ______________________ following tfi acquisition completed april tfi group tizeta controlled group longer related parties costs tfi group include royalties prior completion tfi acquisition amounting thousand thousand years ended december respectively entities disposed part disposition november certain businesses previously part group includes transactions fondazione zegna finissaggio tintoria ferraris pkb privatbank pettinatura verrone following table summarizes assets liabilities related parties december december thousands non current assets current assets non current liabilities current liabilities non current assets current assets non current liabilities current liabilities associates filati biagioli modesto luigi fedeli figlio norda run inc total associates monterubello companies controlled monterubello shareholders company directors senior management team real estate alan real estate schneider group agnona companies controlled monterubello shareholders company directors senior management team related parties connected directors shareholders ubs group total transactions related parties total group ______________________ entities disposed part disposition november certain businesses previously part group includes transactions fondazione zegna finissaggio tintoria ferraris pkb privatbank achill station pty ltd pettinatura verrone following table summarizes remuneration outstanding balances directors group key executives strategic responsibilities key management personnel outstanding balance thousands short term employee benefits post employment benefits long term benefits share based payments financial income employee benefits current non current financial liabilities current liabilities non current financial assets ______________________ includes corporate bodies fees consultancy fees personnel compensation primarily relates liabilities put contracts entered part group investment thom browne share based payments group several equity incentive arrangements share based payments awarded chief executive officer ceo senior management team employees group well non executive directors equity incentives primarily consist performance share units psus retention restricted share units rsus represent right receive one ordinary share company described following table presents share based compensation expense recognized group years ended december december thousands ceo ceo psus ceo ipo psus management psus psus rsus rsus management ipo psus non executive directors non executive directors remuneration shares share based payments total following table summarizes changes number outstanding number awards group equity incentive arrangements ceo management psus rsus ipo psus ipo psus psus psus rsus rsus management ipo psus outstanding awards december granted forfeited vested outstanding awards december granted forfeited vested outstanding awards december ______________________ shares delivered delivered result vesting awards provided treasury shares held company march board determined level achievement performance conditions ceo psus result determination ordinary shares vested delivered gildo zegna may remaining awards outstanding march board determined level achievement performance conditions psus result determination ordinary shares vested delivered recipients may remaining awards outstanding following table summarizes fair value accounting purposes share based payment awards respective grant dates key valuation assumptions used ceo management psus rsus ipo psus ipo psus psus psus rsus rsus management ipo psus fair value grant date share price expected volatility dividend yield risk free rate ______________________ based historical implied volatility group comparable companies ceo psus amended company granted ceo maximum psus ceo psus vest three tranches according achievement defined targets based group adjusted ebit change adjusted net financial indebtedness cash surplus defined related agreement compared previous year performance periods ceo continued service group date vesting performance targets settled independently targets total number shares assigned upon vesting depends level achievement performance targets well multiplier based performance certain esg indicators performance period december unrecognized compensation expense relating ceo psus amounted thousand thousand respectively nil december ceo ipo psus company granted psus ceo connection company public listing ceo ipo psus ceo ipo psus vest upon satisfaction following conditions public listing company shares company share price least twenty consecutive trading days following public listing december ceo ipo psus vest upon satisfaction following conditions public listing company shares company share price least twenty consecutive trading days following public listing december iii ceo continued service company award grant date december psus company awarded psus psus senior management team excluding ceo certain employees group vest based achievement targets relating cumulated revenues cumulated adjusted ebit achieved performance period change adjusted net financial indebtedness cash surplus end compared end iii total shareholder return tsr achieved performance period well recipient continued service group date vesting performance targets measured settled independently targets total number ordinary shares delivered upon vesting depends level achievement performance targets well multiplier based performance certain environmental social governance indicators performance period december unrecognized compensation expense relating psus amounted thousand expected recognized remaining vesting period psus company granted senior management team excluding ceo certain employees group target number psus psus vest based achievement defined targets related adjusted ebit change adjusted net financial indebtedness cash surplus compared previous year performance periods recipient continued service group date vesting additional awards subsequently granted plan performance targets settled independently targets total number shares assigned upon vesting depends level achievement performance targets well multiplier based performance certain environmental social governance indicators performance period case underachievement targets multiplier number awards vest adjusted according predefined parameters rsus october company granted rsus rsus senior management team rsus vested two equal installments april december following continued service recipients vesting periods rsus vest three equal installments december vested december december subject continued service recipients vesting periods july company granted additional rsus senior management team awards vested december following continued service recipients vesting period december unrecognized compensation expense relating rsus amounted thousand expected recognized remaining vesting periods rsus company granted senior management team excluding ceo certain employees group maximum rsus rsus vest based recipient continued service group additional awards subsequently granted plan december unrecognized compensation expense relating rsus amounted thousand expected recognized remaining vesting period management ipo psus company granted psus directors group excluding ceo key executives strategic responsibilities employees group connection company public listing management ipo psus management ipo psus vest upon satisfaction following conditions public listing company shares december company share price least ten consecutive trading days following public listing december management ipo psus vest upon satisfaction following conditions public listing company shares december company share price least twenty consecutive trading days following public listing december iii recipient continued employment company award grant date december non executive directors remuneration shares remuneration policy non executive directors receive annual base remuneration cash company ordinary shares non executive directors remuneration shares number ordinary shares company assigned non executive directors determined based closing share price company ordinary shares last trading date month preceding grant date non executive director ceases employed group within given year shares vest pro rata basis date non executive director provided services total ordinary shares company earned non executive directors annual base remuneration services provided delivered recipients two years following grant date remuneration january share based payments group modified contractual terms agreement order entitle senior management team settle portion bonus ordinary shares equal value thousand result compensation settled ordinary shares accounted equity settled share based compensation measured fair value related compensation offsetting increase equity thousand additional bonus awarded one third paid ordinary shares expected delivered result group recognized equity settled share base compensation measured fair value thousand offsetting increase equity ceo entitled share purchase rights ceo may purchase ordinary shares company rate based multiplier ebit maximum amount corresponding base salary net personal income tax plus short term variable cash compensation previous year ceo remuneration shares annual right vests year exercised directly ceo within months end year june result exercise share purchase rights ordinary shares previously held treasury delivered ceo aggregate purchase price thousand june result exercise share purchase rights ordinary shares previously held treasury delivered ceo aggregate purchase price thousand ceo exercise right relation remuneration notes consolidated cash flow statement operating activities non cash expenses income net consolidated cash flow statement primarily include equity settled share based compensation bonuses earned senior management team employees group paid period change operating assets liabilities primarily relates indirect taxes accrued income expenses deferred charges investing activities following table presents cash used business combinations net cash acquired years ended december thousand acquisition zegna business south korea acquisition thom browne business south korea tfi acquisition acquisition tessitura ubertino net cash acquired ______________________ amount paid thousand relates deferred consideration stipulated acquisition purchase agreement amounts paid thousand relate earn payments acquisition tessitura ubertino following achievement predetermined operating performance targets company additional information relating group business acquisitions see note business combinations non cash investing activities primarily related acquisitions right use assets thousand thousand thousand acquisitions property plant equipment thousand thousand thousand acquisitions intangible assets thousand thousand thousand business combinations acquisition zegna business south korea january group acquired interest ermenegildo zegna korea ltd following group began directly operating zegna business south korea network stores details purchase consideration net assets acquired goodwill presented thousands acquisition date cash consideration paid deferred consideration total consideration assets liabilities recognized result acquisition follows thousands fair value acquisition date cash cash equivalents trade receivables inventories intangible assets property plant equipment current non current assets trade payables customer advances employee benefits current non current liabilities net identifiable assets acquired goodwill net assets acquired including goodwill goodwill arising acquisition thousand primarily attributable expected synergies combining operations acquiree acquirer acquisition related costs thousand expensed incurred details net cash outflows related acquisition shown thousands acquisition date cash consideration paid cash cash equivalents acquired payment acquisition related liabilities net cash outflow investing activities acquired business contributed revenues thousand net loss thousand group period date acquisition january december trade receivables gross contractual value thousand best estimate acquisition date contractual cash flows collected thousand acquisition thom browne business south korea july thom browne began directly operating business south korea network stores business wholly owned thom browne korea ltd newly formed wholly owned company operates region external support former franchise partner details purchase consideration net assets acquired goodwill follows thousands acquisition date cash consideration paid deferred consideration total consideration acquisition date group recognized net present value deferred consideration related acquisition thom browne business south korea thousand group paid portion deferred consideration thousand cash payment remaining portion expected paid january july assets liabilities recognized result acquisition follows thousands fair value acquisition date inventories current assets property plant equipment current liabilities deferred tax liabilities net identifiable assets acquired goodwill net assets acquired including goodwill goodwill arising acquisition thousand primarily attributable expected synergies combining operations acquiree acquirer acquisition related costs thousand expensed details net cash outflows related acquisition presented thousands acquisition date cash consideration paid net cash outflow investing activities acquired business contributed revenues thousand net loss thousand group period date acquisition december acquisition tom ford international tfi april group completed tfi acquisition acquired tfi company owns operates tom ford fashion business part transaction sole ownership tom ford brand trademarks intellectual property rights acquired elc group become long term licensee tom ford men women fashion well accessories underwear fine jewelry childrenswear textile home design products group charge end end tom ford fashion business collection creation development production merchandising well retail wholesale distribution tom ford fashion group operates network directly operated tom ford fashion stores globally december completion tfi acquisition group already owned tfi fully owned subsidiary holding inc tfi acquisition acquired remaining equity interest transaction implied value acquired stake tfi million cash cash free debt free basis assuming normalized working capital final purchase price subject customary final confirmation purchase price adjustments related primarily indebtedness trade working capital transaction expenses stipulated related agreements contingent consideration arrangements agreed part transaction connection tfi acquisition group entered long term license agreement tfi elc group licensee tom ford men women fashion well accessories underwear fine jewelry childrenswear textile home design products described result tfi acquisition group also obtained tizeta previously held interest accounted investment using equity method remaining interest owned tfi acquired group tfi acquisition see note investments accounted using equity method additional information financial guarantee provided tfi relation payment obligations bank loan amount thousand closed part transactions contemplated tfi acquisition amounts claimed guarantee group accounted tfi acquisition using acquisition method accounting accordance ifrs business combinations ifrs applies fair value concepts defined ifrs fair value measurement ifrs requires group recognize assets acquired liabilities assumed fair values acquisition date april certain exceptions following tfi acquisition earnings group reflect impacts purchase accounting adjustments including amortization depreciation certain acquired assets acquisition related costs amounted thousand expensed consolidated statement profit loss details purchase consideration previously equity interest held net assets acquired presented thousands acquisition date cash consideration paid tfi fair value previously equity interests held settlement pre existing intercompany balances total consideration thousands fair value acquisition date cash cash equivalents trade receivables inventories right use assets intangible assets property plant equipment current non current assets current non current liabilities current non current lease liabilities current non current borrowings trade payables customer advances employee benefits deferred tax liabilities net identifiable assets acquired intangible assets property plant equipment include fair value license agreement group become long term licensee tom ford men women fashion well accessories underwear fine jewelry childrenswear textile home design products amounting thousand determined income approach based multi period excess earnings method requires estimate future expected cash flows estimated useful life license agreement years includes guaranteed years per contract plus automatic renewal period years subject certain minimum performance conditions management believes satisfied based business plan information currently available details net cash outflows related acquisition presented thousands acquisition date consideration paid tfi cash cash equivalents acquired payment tfi acquisition related liabilities net cash outflow investing activities tfi contributed revenues thousand loss thousand group acquisition date december including additional costs result purchase price accounting acquisition occurred january consolidated statement profit loss year ended december would included additional revenues million additional loss million including transaction costs incurred tfi prior closing tfi acquisition total assets total revenues tfi represent approximately approximately respectively related consolidated financial statement amounts year ended december trade receivables gross contractual value thousand best estimate acquisition date contractual cash flows collected thousand part license agreement group become long term licensee elc tom ford men women fashion well accessories underwear fine jewelry childrenswear textile home design products virtue long term licensing collaboration agreement elc years automatic renewal one year period subject certain minimum performance conditions part license agreement group required pay minimum annual guaranteed royalties term license agreement december remaining minimum annual guaranteed royalties covering first year period license agreement follows undiscounted december millions due within year due years due years total translated dollars euro december end day exchange rate remaining term license minimum annual guaranteed royalties paid group calculated based percentage net sales preceding annual period license agreement also requires group make minimum investments marketing activities percentage net sales licensed products per customary market practices subsequent events group evaluated subsequent events may date consolidated financial statements authorized issuance identified following events non adjusting defined ias march board directors zegna proposed make dividend distribution per share holders company ordinary shares corresponding total dividend distribution approximately million dividend proposal subject finalization adoption annual statutory accounts company provided distribution permitted dutch law approval company shareholders annual general meeting expected held june company financial statements ermenegildo zegna statement profit loss years ended december thousands note share result participating interests income expenses taxes result taxes years ended december accompanying notes integral part company financial statements ermenegildo zegna statement financial position december december thousands appropriation results note assets non current assets property plant equipment right use assets participating interests group companies deferred tax assets non current financial receivables group companies non current financial assets total non current assets current assets trade receivables group companies current financial receivables group companies derivative financial instruments tax receivables current financial assets current assets cash cash equivalents total current assets total assets liabilities shareholders equity share capital share premium legal reserves reserve treasury shares reserves retained earnings unappropriated result total shareholders equity non current liabilities non current borrowings non current borrowings group companies non current financial liabilities employee benefits deferred tax liabilities total non current liabilities current liabilities current borrowings current borrowings group companies current financial liabilities derivative financial instruments current provisions risks charges trade payables customer advances trade payables customer advances group companies tax liabilities current liabilities total current liabilities total shareholders equity liabilities accompanying notes integral part company financial statements ermenegildo zegna notes company financial statements years ended december general information ermenegildo zegna formerly known ermenegildo zegna holditalia hereinafter referred company parent company together consolidated subsidiaries one context may require ermenegildo zegna group group holding company group incorporated public company naamloze vennootschap laws netherlands ordinary shares listed new york stock exchange zgn ticker company domiciled amsterdam netherlands company registered office viale roma valdilana biella italy company registered dutch trade register number financial information company included within company consolidated financial statements presented herein ermenegildo zegna group global luxury player leading position high end menswear business internationally recognized unique textile manufacturing platform heritage italian craftsmanship quality innovation key ingredients three complementary brands zegna thom browne tom ford fashion group reaches different communities zegna absolute luxury modern tailoring thom browne luxury glamour tom ford fashion thanks thom browne tom ford fashion group also play important growing role luxury womenswear leather goods segment group founded northern italy town trivero wool mill ermenegildo zegna grandfather group current chairman chief executive officer dream creating beautiful luxurious fabrics world ies company moved textile men ready wear ies expanded business internationally opening first monobrand boutique paris marking beginning extensive retail network development worldwide level acquired thom browne inc subsequently increased april following completion acquisition tom ford international tfi tfi acquisition group became long term licensee estée lauder companies inc elc tom ford brand men women fashion accessories business group filiera unique supply chain composed finest italian high end textile producers fully integrated group luxury manufacturing capabilities group controls important phases value chain designing manufacturing distribution years group reached significant international presence direct consumer retail channel well selected wholesale customers basis preparation accounting policies general company financial statements years ended december company financial statements prepared accordance provisions part book dutch civil code company uses option article part book dutch civil code allows companies apply international financial reporting standards ifrs accounting standards adopted european union consolidated financial statements prepare company financial statements using accounting policies applied consolidated financial statements combination addition accounting policies described accounting policies described note summary material accounting policy information consolidated financial statements included annual report allowed dutch law investments subsidiaries associates joint ventures also referred participating interests group companies accounted using equity method company financial statements appropriate interpretation company financial statements read together consolidated financial statements accounting policy referenced refer accounting policies described consolidated financial statements format disclosed consolidated financial statements financial information relating company included consolidated financial statements company financial statements presented euro functional currency company amounts stated thousands euros unless otherwise indicated investments investments participating interests group companies including subsidiaries associates joint ventures accounted using equity method applying ifrs accounting standards endorsed european union share profit investments company share investments results presented result participating interests statement profit loss results transfers assets liabilities company participating interests eliminated upon identification credit loss intercompany loan receivable company eliminates carrying amount intercompany loan receivable value identified credit loss participating interests negative net equity value measured nil likewise takes account long term interests effectively considered part net investment participation company fully partially guarantees liabilities participation concerned enable participation pay share liabilities effective obligation provision formed amount capital requirement participation upon determining provision provisions doubtful debts already deducted receivables participating interest taken account cash cash equivalents cash cash equivalents include cash hand deposits held call banks short term highly liquid investments cash cash equivalents primarily held purpose meeting short term cash needs commitments classified cash cash equivalents asset must readily convertible cash insignificant risk changes value maturity period three months less acquisition related parties related parties company include entities group entities individuals including close family members capable exercising control joint control significant influence company subsidiaries including company controlling shareholder monterubello well companies owned monterubello shareholders related parties also include company associates joint arrangements members board directors executives strategic responsibilities well families entities controlled company carries transactions related parties commercial terms normal respective markets considering characteristics goods services involved shareholders equity translation reserve legal reserves recognized accordance dutch civil code participating interests group companies list subsidiaries directly indirectly owned affiliated companies included note summary material accounting policy information scope consolidation consolidated financial statements included annual report following table provides overview movements participating interests group companies thousands balance january share result participating interests capital increases acquisition non controlling interests without change control dividends foreign exchange differences movements balance december june group purchased additional thom browne inc parent company thom browne group total consideration thousand thousand following group holds thom browne group additional information relating put option non controlling interests see note current non current financial liabilities non current financial receivables group companies following table provides breakdown non current financial receivables group companies december thousands currency holding inc usd ermenegildo zegna far east pte ltd sgd ermenegildo zegna korea ltd eur ermenegildo zegna macau ltd hkd ermenegildo zegna malaysia sdn bhd eur ermenegildo zegna hong kong ltd eur italian fashion ltd thb thai holding ltd thb total receivables primarily due bear variable rates interest based euribor recognized benchmark interest rates plus spread generally around receivable holding inc amounting thousand december thousand december primarily relates funding provided company holding inc finance tfi acquisition receivable generates interest based sofr month plus spread due april additional information related tfi acquisition see note business combinations consolidated financial statements trade receivables group companies following table provides breakdown trade receivables group companies december thousands trade receivables group companies receivables group companies total receivables group companies primarily relate group tax consolidation italy recharges group companies share based payments provided employees current financial receivables group companies current borrowings group companies current financial receivables group companies current borrowings group companies primarily relate amounts provided received companies group part group wide cash management system certain treasury activities group including liquidity management financing operations centrally coordinated company financial assets liabilities typically generate interest based euribor recognized benchmark interest rates plus spread current financial assets current financial assets amounted thousand thousand december respectively related financial securities owned company shareholders equity following table presents movements shareholders equity years ended december legal reserves thousands share capital share premium currency translation difference cash flow hedge reserve reserve remeasur ement defined benefit plans financial assets fvoci reserve reserve subsidiar ies reserve treasury shares reserves retained earnings undi stributed result total share holders equity january allocation prior year result result year comprehensive income loss year net tax reduction legal reserves subsidiaries dividends exercise warrants issuance special voting shares sale treasury shares net share based payments settlement share based payments changes december allocation prior year result result year comprehensive income loss year net tax reduction legal reserves subsidiaries dividends share based payments settlement share based payments changes december share capital share premium december fully paid share capital company thousand consisting ordinary shares special voting shares nominal value ordinary share confers right cast one vote holders ordinary shares become entitled special voting shares upon registering ordinary shares loyalty register thereby blocking shares trading nyse maintaining registered register uninterrupted period time prescribed articles association company ordinary shares carry right receive dividends ordinary share carries right repayment capital event dissolution liquidation remaining equity debts satisfied benefit holders ordinary shares proportion aggregate nominal value ordinary shares ordinary shares carry preemptive rights proportion aggregate number ordinary shares held upon issuance new ordinary shares granting rights subscribe ordinary shares subject certain exceptions ordinary shares registered loyalty register uninterrupted period two years name shareholder shares become eligible receive special voting shares company relevant shareholder receive one company special voting share per eligible ordinary share company special voting share automatically converted special voting share company holding number ordinary shares uninterrupted period five years following registration ordinary shares loyalty register company special voting share automatically converted special voting share company holding number ordinary shares uninterrupted period ten years following registration ordinary shares loyalty register class company special voting shares entitle relevant holders following number votes addition voting rights attached ordinary share special voting share company confers right cast one vote special voting share company confers right cast four votes special voting share company confers right cast nine votes company general meeting holders company special voting shares receive dividends respect company special voting shares however company maintains separate dividend reserve class company special voting shares sole purpose allocation mandatory minimum profits accrue company special voting shares following table summarizes changes share capital share premium number ordinary shares special voting shares company years ended december share capital thousand share premium thousand outstanding ordinary shares ordinary shares held treasury total ordinary shares special voting shares january ordinary shares issued warrant holders ordinary shares delivered share based payments special voting shares issued december ordinary shares delivered share based payments december ______________________ february group completed previously announced redemption outstanding public private placement warrants purchase ordinary shares company remained outstanding new york city time february redemption date following warrants exercised warrant holders exercise price per ordinary share group received total cash proceeds million exchange newly issued ordinary shares warrants exercised warrant holders cashless basis exchange ordinary shares company per warrant company issuing aggregate newly issued ordinary shares result transactions approximately outstanding warrants exercised approximately exercised cash approximately exercised cashless basis remaining warrants remained unexercised redemption date redeemed company cash redemption price per warrant accordance terms related warrant agreements total thousand result vesting certain equity incentive arrangements ordinary shares previously held treasury delivered participants share based payments plans includes ordinary shares delivered ceo ceo ltip relation performance period ordinary shares delivered ceo ceo ipo psus plan ordinary shares delivered directors company excluding ceo key executives strategic responsibilities employees group management ipo psus plan ordinary shares delivered ceo right convert ceo fixed remuneration shares company aggregate purchase price thousand december upon fulfillment conditions outlined company articles association special voting shares issued delivered monterubello ermenegildo gildo zegna monte rubello consideration result vesting certain equity incentive arrangements ordinary shares previously held treasury delivered participants share based payments plans described ordinary shares senior management team settle portion bonus ordinary shares equal value thousand part long term equity incentives provided ordinary shares ceo ceo long term incentive plan relation performance period ordinary shares ceo ceo ipo psu plan ordinary shares directors group key executives strategic responsibilities employees group management ipo psu plan ordinary shares non executive directors group portion annual base remuneration services provided ordinary shares senior management team excluding ceo rsu plan connection achievement service condition first installment legal reserves pursuant dutch law limitations exist relating distribution shareholders equity least total amount legal reserve december december amounted thousand thousand respectively included following legal reserves subsidiaries consisting earnings subsidiaries associates subject restrictions distributions company capitalized development costs recognized subsidiaries company thousand december thousand december translation reserve translation differences arising consolidation subsidiaries functional currency different euro amounting thousand december thousand december cash flow hedge reserve changes fair value derivative financial instruments held company designated hedge exposure variability currency exchange rate interest rate risk amounting thousand december thousand december gains losses remeasurement defined benefit plans actuarial gains losses arising period offset related net defined benefit liabilities amounting thousand december thousand december financial assets fvoci reserve arises changes fair value debt instruments held company hold collect sell business model reversed investment derecognized impaired amounting thousand december thousand december reserve treasury shares december reserve treasury shares amounted thousand thousand december ordinary shares held treasury ordinary shares december reserves reserves detailed follows december thousands share based payments reserve non controlling interests options reserve reserves non controlling interests options reserve includes reduction equity attributable shareholders company resulting initial recognition financial liabilities fair value subsequently remeasured end period statement profit loss relating put options held non controlling interests thom browne group thousand thousand december respectively originally recognized partially reclassified within reserves result first tranche put option completely exercised gruppo dondi thousand december originally recognized retained earnings retained earnings include company accumulated earnings less dividends paid equity holders changes including effects first time adoption ifrs accounting standards occurred january annual general meeting shareholders held june shareholders approved dividend distribution per ordinary share corresponding total dividend thousand dividend distribution paid july made retained earnings reserve annual general meeting shareholders held june shareholders approved dividend distribution per ordinary share corresponding total dividend thousand dividend distribution paid july made retained earnings reserve borrowings following table provides breakdown non current current borrowings thousands committed loans borrowings total borrowings committed loans borrowings total borrowings january repayments proceeds december non current current repayment schedule borrowings summarized thousands december year year year year year beyond committed loans borrowings total borrowings thousands december year year year year year beyond committed loans borrowings total borrowings interest certain borrowings company calculated based variable rates management may use interest rate swaps irs derivative financial instruments hedge exposure fluctuations interest rates associated monetary flows speculative purposes additional information related group management interest rate financial risks see note qualitative quantitative information financial risks consolidated financial statements following tables provide details relating company individual borrowings december interest rate interest rate terms expiry date current non current thousands variable euribor january variable euribor january variable euribor february variable euribor may variable euribor december variable euribor january variable euribor april variable euribor december variable irs june variable irs june variable euribor august fixed september variable euribor november total fixed variable december interest rate interest rate terms expiry date current non current thousands variable euribor february variable euribor february variable euribor february fixed february fixed march fixed march variable irs april variable irs december variable euribor may variable euribor december variable euribor december fixed september total fixed variable december company committed revolving lines amounting aggregate million maturity ranging years million december maturity ranging years lines drawn million december million december certain committed revolving lines interest rates linked following two important environmental social governance esg targets previously disclosed group least top priority raw materials traced geography origin lower impact sources electricity renewable sources europe united states lines amounted million december undrawn current non current financial liabilities following table provides breakdown current non current financial liabilities december thousands written put options non controlling interests thom browne option dondi option lease liabilities non current financial liabilities written put options non controlling interests thom browne option lease liabilities current financial liabilities total written put options non controlling interests thom browne company party option agreement provides thom browne put option giving right sell company remaining interest thom browne group owned company two remaining tranches exercise price option established ebitda thom browne group recorded multiplied given multiple exercise formula financial liability arising obligation company purchase non controlling interest thom browne group measured present value expected exercise amount calculated exercise formula per projections contained latest business plan cover period liability originally related non controlling interest initially recognized equity thousand remeasured reporting date profit loss based latest available information june company purchased additional thom browne group total consideration thousand reducing non controlling interest first half thom browne exercised put option sell company additional thom browne inc based ebitda thom browne group consideration thousand following company owns thom browne group company derecognized portion liability written put option non controlling interests amount thousand additionally equity attributable non controlling interests reduced thousand offsetting increase equity attributable shareholders parent company put option liability relating remaining non controlling interest remeasured fair value december put option liability relates two tranches representing non controlling interests based ebitda thom browne group respectively amounted thousand classified non current thousand december thousand classified current relating tranche based ebitda exercised thousand classified non current dondi company party option agreement provides dondi family put option giving right sell company dondi family remaining interest dondi owned company two tranches exercise price option established ebitda dondi exercise date less net indebtedness multiplied given multiple less given discount dondi exercise formula financial liability arising obligation measured present value expected exercise amount calculated dondi exercise formula per projections contained approved business plan remeasurement liability reporting date recognized profit loss based latest available information liability related written put option december amounted thousand classified non current thousand december current provisions risks charges current provisions risks charges relate entirely amount capital requirement participating interests group companies negative net equity company fully partially guarantees liabilities participation concerned enable participation pay share liabilities company effective obligation following table provides movements current provisions risks charges thousands january reversals additional provisions december reversals additional provisions december board remuneration detailed information relating compensation executive non executive members board directors including shares share awards included compensation report section annual report auditor fees deloitte accountants member firms deloitte touche tohmatsu limited respective affiliates collectively deloitte entities appointed serve company independent registered public accounting firm years ended december company incurred following fees deloitte entities professional services years ended december respectively deloitte accountants deloitte member firms affiliates total thousands audit ermenegildo zegna subsidiaries assurance services tax services non audit services total fees mentioned table relate total fees respective professional services irrespective whether activities performed respective financial year commitments contingent liabilities company provided financial guarantees relation indirect tax payment obligations service inco subsidiaries amounting thousand december thousand december date annual report guarantees still effective amounts claimed certain italian entities group participate group italian tax consolidation fiscal unity company pursuant standard conditions company assumed joint several liability tax liabilities tax consolidation company material commitments contingent liabilities already disclosed elsewhere company financial statements disclosures following disclosures reference made notes consolidated financial statements note income taxes note non current financial assets note derivative financial instruments note current financial assets note cash cash equivalents note shareholders equity note qualitative quantitative information financial risks note related party transactions note share based payments average number employees company years ended december none netherlands subsequent events information relating subsequent events see note subsequent events consolidated financial statements may board directors ermenegildo zegna monte rubello andrea bonomi angelica cheung domenico sole sergio ermotti ronald johnson valerie mars michele norsa henry peter anna zegna monte rubello paolo zegna monte rubello part iii information auditors report information statutory rules regarding appropriation profits article company articles association provides follows profit loss distributions profit loss distributions shares distribution dividends pursuant article take place adoption annual accounts show distribution allowed company may make distributions shares extent shareholders equity exceeds sum paid called part capital reserves must maintained dutch law articles association company shall maintain separate dividend reserve class special voting shares special voting shares shall carry entitlement reserve company distributions dividend reserve class special voting shares shall made exclusively holders special voting shares class proportion aggregate nominal value special voting shares distribution special voting shares dividend reserve partial full release reserve require prior proposal board resolution meeting holders relevant class special voting shares board may determine amount profit added reserves profits remaining thereafter shall first applied allocate add dividend reserve class special voting shares amount equal one percent aggregate nominal value issued outstanding special voting shares class profit remaining application article disposal general meeting general meeting may resolve make distribution ordinary shares kind form ordinary shares proposal board subject provisions article general meeting may proposal board resolve make distributions ordinary shares one several reserves company prohibited distributing virtue dutch law articles association purpose calculating amount distribution shares held company taken account distribution made ordinary shares held company unless ordinary shares encumbered right usufruct right pledge interim distributions board general meeting proposal board may resolve make interim distributions ordinary shares interim statement assets liabilities shows requirement article met interim distributions may made cash kind form ordinary shares made one several reserves company prohibited distributing virtue dutch law articles association interim statement assets liabilities referred article relates condition assets liabilities date earlier first day third month preceding month resolution distribute published interim statement must prepared basis generally acceptable valuation methods amounts reserved dutch law articles association must included statement assets liabilities statement must signed directors one signatures missing absence reason absence must stated notices payments proposal distribution ordinary shares must immediately published board accordance regulations stock exchange ordinary shares officially listed company request notification must specify date manner distribution payable case proposal distribution expected made payable distributions payable day determined board persons entitled distribution shall relevant shareholders holders right usufruct shares holders right pledge ordinary shares date determined board purpose date shall earlier date distribution announced distributions claimed upon expiry five years one day date became payable forfeited company carried reserves board may determine distributions shares made payable either euro another currency special statutory voting rights article company articles association provides nomination rights favor iiac sponsor board determines number executive directors non executive directors provided majority board consists non executive directors directors appointed general meeting binding nomination board provided one non executive director appointed binding nomination iiac sponsor time convocation relevant general meeting sponsor group satisfies minimum holding requirement nomination sponsor nominee iiac sponsor subject approval board discretion previously served director iiac sponsor right make nomination one non executive director lapse immediate effect sponsor group fails satisfy minimum holding requirement provided failure caused sale transfer ordinary shares member sponsor group iiac sponsor nomination right lapse failure continues period twenty trading days date member sponsor group knowledge failure upon termination nomination right sponsor nominee temporary director replacing sponsor nominee shall resign board immediate effect request company general meeting times allowed overrule binding nomination appointment director simple majority votes cast representing one third company issued share capital majority votes cast favor overruling binding nomination majority represent one third company issued share capital new general meeting may convened resolution overrule binding nomination may adopted simple majority votes cast regardless company issued share capital represented majority event binding nomination appointment director sponsor nominee overruled board allowed make new binding nomination fill vacancy event also binding nomination overruled general meeting shall free appoint director fill vacancy event binding nomination appointment sponsor nominee overruled iiac sponsor may make new binding nomination fill vacancy provided time convocation relevant general meeting sponsor group satisfies minimum holding requirement article company articles association provides affirmative vote favor iiac sponsor pursuant articles association affirmative vote sponsor nominee required resolutions board concerning following matters provided sponsor group satisfies minimum holding requirement making proposal general meeting concerning amendment articles association adversely affects rights iiac sponsor specifically opposed rights arising ownership ordinary shares special voting shares shared pro rata basis holders class cessation material alteration principal business company including material change corporate purpose change jurisdiction organization expansion board fifteen members without granting iiac sponsor right nominate additional director preserve proportional representation dissolution termination standing committee board deregistration company delisting ordinary shares nyse making proposal general meeting appointment removal company independent auditors replacement among deloitte ernst young kpmg pricewaterhousecoopers iiac sponsor rights described lapse immediate effect sponsor group fails satisfy minimum holding requirement provided failure caused sale transfer ordinary shares member sponsor group iiac sponsor rights lapse failure continues period trading days date members sponsor group knowledge failure non voting shares treasury shares accordance article company articles association vote may cast general meeting share held company one subsidiaries respect share holds depository receipts holders right usufruct right pledge shares belonging company subsidiaries excluded voting right usufruct right pledge created share concerned belonged company one subsidiaries company subsidiary may cast vote respect share holds right usufruct right pledge determining extent shareholders entitled vote present represented extent share capital present represented account shall taken shares respect dutch law company articles association provide votes may cast december ordinary shares held company treasury shares carrying limited economic rights special voting shares company adopted loyalty voting structure order strengthen stability company foster development continuous involvement stable base long term company shareholders special voting shares governed provisions included articles association terms conditions special voting shares documents govern issuance allocation acquisition conversion sale holding repurchase transfer special voting shares certain aspects registration ordinary shares loyalty register purpose loyalty voting structure grant long term shareholders extra voting rights means granting special voting shares without entitling shareholders economic rights pertaining ordinary shares however dutch law special voting shares cannot totally excluded economic entitlements result pursuant articles association holders special voting shares entitled minimum dividend amount one percent aggregate nominal value issued outstanding special voting shares allocated separate special voting shares dividend reserves distribution special voting shares dividend reserve partial full release reserve require prior proposal board resolution meeting holders relevant class special voting shares made exclusively holders relevant class special voting shares proportion aggregate nominal value relevant class special voting shares special voting share entitles holder thereof cast one vote holder special voting share right cast four votes holder special voting share right cast nine votes powers vote upon distribution special voting shares dividend reserve cancellation issued special voting shares specific class powers granted meeting holders special voting shares relevant class pursuant articles association december special voting shares issued outstanding branches ermenegildo zegna secondary establishment italy dividend policy aim grow group business solidly steadily create long term value shareholders priority invest growth business providing return shareholders taking consideration priorities target payout ratio profit attributable shareholders parent company without reducing dividends least maintaining increasing dividends year however decision declare pay dividends future ultimately made discretion board depend group results operations business conditions financial conditions earnings cash balances commitments strategic plans factors board may deem relevant time recommends approval dividend including economic market conditions pursuant dutch law articles association distribution dividends take place following adoption annual accounts determine whether distribution permitted may make distributions shareholders whether profits freely distributable reserves insofar shareholders equity exceeds sum paid called share capital plus reserves maintained dutch law articles association board may resolve reserve profits part profits profits remaining reservation referred previous sentence board first applied allocate add dividend reserve class special voting shares amount equal aggregate nominal value issued outstanding special voting shares class profits remaining application preceding sentence disposal general meeting may resolve add remaining profits reserves distribute holders ordinary shares distributions dividends made company shareholders proportion nominal value ordinary shares pursuant dutch law articles association board general meeting proposal board allowed resolve upon interim distributions ordinary shares purpose board must prepare interim statement assets liabilities interim statement shall show financial position earlier first day third month month resolution make interim distribution announced interim dividend paid interim statement assets liabilities drawn showing funds available distribution sufficient shareholders equity exceeds sum paid called share capital reserves maintained dutch law articles association interim distributions made cash kind form ordinary shares since ermenegildo zegna holding company operations carried subsidiaries company ability pay dividends primarily depend ability subsidiaries generate earnings provide necessary financial resources july company made dividend distribution holders ordinary shares per ordinary share corresponding total dividend distribution million subject finalization adoption annual statutory accounts company provided distribution permitted dutch law also subject approval proposed distribution company annual general meeting currently expected june company intends make dividend distribution holders ordinary shares per share corresponding total dividend distribution shareholders approximately million auditors report shareholders board directors ermenegildo zegna report audit financial statements included annual report opinion audited financial statements ermenegildo zegna based amsterdam hereafter group financial statements comprise consolidated financial statements company financial statements opinion accompanying consolidated financial statements give true fair view financial position ermenegildo zegna december result cash flows accordance international financial reporting standards adopted european union ifrs accounting standards part book dutch civil code accompanying company financial statements give true fair view financial position ermenegildo zegna december result accordance part book dutch civil code consolidated financial statements comprise consolidated statement financial position december following statements consolidated statement profit loss consolidated statements comprehensive income loss consolidated cash flow statement consolidated statement changes equity notes comprising summary material accounting policy information explanatory information company financial statements comprise company statement financial position december company statement profit loss notes comprising summary accounting policies explanatory information basis opinion conducted audit accordance dutch law including dutch standards auditing responsibilities standards described responsibilities audit financial statements section report independent ermenegildo zegna accordance wet toezicht accountantsorganisaties wta audit firms supervision act verordening inzake onafhankelijkheid van accountants bij assurance opdrachten vio code ethics professional accountants regulation respect independence relevant independence regulations netherlands furthermore complied verordening gedrags beroepsregels accountants vgba dutch code ethics deloitte accountants audit gustav mahlerlaan amsterdam box amsterdam netherlands tel www deloitte believe audit evidence obtained sufficient appropriate provide basis opinion information support opinion designed audit procedures context audit financial statements whole forming opinion thereon following information support opinion addressed context provide separate opinion conclusion matters materiality based professional judgment determined materiality financial statements whole eur million eur million materiality based consolidated profit taxes also taken account misstatements possible misstatements opinion material users financial statements qualitative reasons audits group entities components performed using materiality levels determined judgment group audit team taking account materiality financial statements whole reporting structure within group component materiality exceed eur million eur million agreed board directors audit committee misstatements excess eur thousand eur thousand identified audit would reported well smaller misstatements view must reported qualitative grounds scope group audit ermenegildo zegna head group components financial information group included financial statements ermenegildo zegna appointed auditor group financial statements financial year result ultimately responsible opinion also responsible directing supervising performing group audit respect established detailed plan directing group audit involving deloitte italy primary component auditor execution thereof based risk assessment determined nature timing extent audit procedures performed including determining components perform audit procedures carried primary component auditor component auditors assessment done part audit planning aimed obtain sufficient coverage risk material misstatement significant account balances classes transactions disclosures identified addition considered qualitative factors part assessment addition considered qualitative factors part assessment result involved component auditors audit procedures italy greater china korea united states establishing overall group audit strategy plan determined type work needed performed group engagement team component auditors responded changes relevant group determining components scope nature procedures performed work performed primary component auditor component auditors determined level involvement needed respective audit work able conclude whether sufficient appropriate audit evidence obtained basis opinion group financial statements whole group engagement team directed planning reviewed work performed component auditors assessed discussed results findings component auditors provided instructions deloitte italy primary component auditor turn instructed component auditor primary component auditor file reviews conducted evaluate work undertaken assess findings group consolidation financial statements disclosures certain centrally coordinated topics audited primary component auditor supervision group level include among others impairment testing goodwill intangible assets directly operated store assets purchase price accounting acquisitions consolidated tax position share based payment accounting claims litigations specialists involved areas covering ifrs tax accounting information technology data analytics valuation part year end audit procedures components group scope considered whether obtained appropriate coverage risks material misstatement significant account balances classes transactions disclosures identified remaining components supervision primary component auditor performed combination specific audit procedures analytical procedures group level relating risks material misstatement significant account balances classes transactions disclosures identified performing procedures mentioned components together additional procedures group level able obtain sufficient appropriate audit evidence group financial information provide opinion financial statements audit approach fraud risks description accordance dutch standards auditing responsible obtaining reasonable assurance financial statements taken whole free material misstatements whether due fraud error inherent responsibilities audit financial statements unavoidable risk material misstatements undetected even though audit planned performed accordance dutch law risk undetected material misstatements due fraud even higher fraud may involve collusion forgery intentional omissions misrepresentations override internal control also responsible prevention detection fraud non compliance laws regulations audit procedures differ forensic legal investigation often depth character identified assessed risks material misstatements financial statements due fraud audit obtained understanding company environment components system internal control including risk assessment process management process responding risks fraud monitoring system internal control non executive board exercises oversight well outcomes refer section risk governance board report management fraud risk assessment evaluated design relevant aspects system internal control particular fraud risk assessment well among others code conduct whistle blower procedures incident registration evaluated design implementation internal controls designed mitigate fraud risks part process identifying fraud risks evaluated fraud risk factors respect financial reporting fraud misappropriation assets bribery corruption evaluated whether factors indicate risk material misstatement due fraud present following procedures presumed risk prevailing auditing standards considered fraud risks relation management override controls applicable audit summarized related audit procedures fraud risk management override controls identified inherent risk management unique position perpetrate fraud management ability manipulate accounting records overriding controls specifically journal entries manual adjustments made preparation financial statements use estimates including high level judgement assumptions subject management bias significant transactions outside normal course business group audit evaluated design implementation relevant internal controls mitigating risk management override controls performed journal entry testing audit procedures using selected criteria investigation journal entries recorded general ledger adjustments made preparation financial statements evaluated whether judgments decisions made management making accounting estimates included financial statements indicate possible bias may represent risk material misstatement due fraud management insights estimates assumptions might major impact financial statements disclosed note consolidated financial statements performed retrospective review management judgments assumptions related significant accounting estimates reflected prior year financial statements evaluated whether business rationale significant transactions suggests may entered engage fraudulent financial reporting conceal misappropriation assets based audit procedures performed identify instances suspicions fraud due management override controls additional fraud related procedures addition procedures summarized related identified significant fraud risk also considered available information made inquiries group local management charged governance others within group including limited internal audit function legal governance group control evaluated whether selection application accounting policies group particularly related subjective measurements complex transactions may indicative fraudulent financial reporting incorporated elements unpredictability audit selection nature timing extent audit procedures performed direction supervision review procedures instructed procedures performed primary component auditor considered outcome audit procedures evaluated whether findings indicative fraud procedures lead indications fraud potentially resulting material misstatement audit approach compliance laws regulations assessed laws regulations relevant group discussion management group legal counsel inspection selected documents regarding compliance laws regulations result risk assessment procedures realizing effects non compliance could considerably vary considered following laws regulations corporate tax law requirements ifrs accounting standards part book dutch civil code direct effect financial statements integrated part audit procedures extent material financial statements obtained sufficient appropriate audit evidence regarding provisions laws regulations generally recognized direct effect financial statements apart ermenegildo zegna subject laws regulations consequences non compliance could material effect amounts disclosures financial statements instance imposing fines litigation procedures limited respect laws regulations direct effect determination amounts disclosures financial statements compliance laws regulations may fundamental operating aspects business ermenegildo zegna ability continue business avoid material penalties compliance terms operating licenses permits compliance environmental regulations therefore non compliance laws regulations may material effect financial statements responsibility limited undertaking specified audit procedures help identify non compliance laws regulations may material effect financial statements procedures limited inquiry management audit committee board directors others within ermenegildo zegna whether ermenegildo zegna compliance laws regulations inspecting correspondence relevant licensing regulatory authorities help identify non compliance laws regulations may material effect financial statements naturally remained alert indications suspected non compliance throughout audit finally obtained written representations known instances suspected fraud non compliance laws regulations disclosed audit approach going concern responsibilities well responsibilities board directors audit committee related going concern prevailing standards outlined description responsibilities regarding financial statements section board directors assessed going concern assumption part preparation consolidated financial statements disclosed note consolidated financial statements board directors believes events conditions give rise doubt ability group continue operation least months adoption financial statements obtained board director assessment group ability continue going concern assessed going concern assumption applied part procedures evaluated whether sufficient appropriate audit evidence obtained regarding concluded appropriateness management use going concern basis accounting preparation consolidated financial statements based procedures identify reportable findings related entity ability continue going concern key audit matters key audit matters matters professional judgment significance audit financial statements communicated key audit matters board directors audit committee key audit matters comprehensive reflection matters discussed matters addressed context audit financial statements whole forming opinion thereon provide separate opinion matters impairment directly operated store assets identified triggering event key audit matter description property plant equipment ppe right use assets rou assets include assets relating directly operated stores strategic stores together dos group recognized net impairment year ended december eur million comprising net impairment eur million related ppe eur million related rou assets discussed note consolidated financial statements purposes impairment testing group determines cash generating unit cgu ppe rou assets related dos individual store level year management performed triggering event analyses cgus dos performed impairment analysis cgus dos trigger identified impairment recognized carrying value cgu dos assets exceeds recoverable amount cgus dos impairment analysis performed order determine recoverable amount group estimated dos assets value use making significant estimates assumptions related among others future forecasted revenues profitability individual store determination appropriate discount rates estimates assumptions related future cash flows determined based approved management budget forecast period three years estimate long term growth rate identified impairment dos assets identified triggering events key audit matter estimate future store cash flows assess recoverability dos assets required significant management judgment primarily relation forecasting future revenues profitability well relation determination discount rates changes estimates could significant impact measurement recoverable amount resulting possible adjustment impairment charge recorded area management estimate required high degree auditor judgment increased extent effort including need involve fair value specialists performing audit procedures evaluate reasonableness management judgments used preparing estimates key audit matter addressed audit audit procedures related management judgments primarily relation forecasting future revenues profitability well relation determination discount rates included following evaluated management ability accurately perform forecasts including management basis approach considering impacts changes market conditions economic events inquiring group executives understand business initiatives supporting assumptions future revenues profitability performing retrospective analysis assess management ability accurately forecast comparing actual results management historical forecast comparing forecasts historical revenue operating results internal communications regarding group business plan strategy industry market conditions assistance fair value specialists evaluated reasonableness discount rates testing source information underlying management determination discount rate mathematical accuracy calculations observation based procedures performed assessment disclosures made identified reportable matters audit procedures deemed appropriate sufficient address risks material misstatements thom browne group valuation put option key audit matter description discussed note consolidated financial statements december group put option buy remaining non controlling interests thom browne inc thom browne recognized non current financial liability context noted year thom browne exercised put option sell group shares representing thom browne inc consideration eur million consequence group december owns shares thom browne group valuation non current financial liability based management forecasts thom browne future profitability determination appropriate discount rate management accounts put option agreement recognizing non current financial liability group estimated obligation option exercise price put option dependent measure operating segment profitability exercise date therefore group fair value determination non current financial liability required management make significant estimates assumptions related forecasts future revenues profitability determine appropriate discount rate identified valuation put option key audit matter estimate operating segment future profitability required significant management judgments primarily relation future revenues profitability operating segment well determination discount rate changes estimates could significant impact valuation put option recorded area management estimate required high degree auditor judgment increased extent effort including involvement fair value specialists performing audit procedures evaluate reasonableness management judgments used preparing estimates key audit matter addressed audit procedures related valuation put option included following evaluated management ability accurately forecast revenues profitability thom browne group comparing actual revenue profitability management historical forecasts evaluated management assumptions related future revenues profitability inquiring group executives understand business initiatives supporting assumptions future revenues profitability comparing forecasts current past performance thom browne group external market industry data benchmarks assistance fair value specialists evaluated reasonableness discount rate testing source information underlying management determination discount rate mathematical accuracy calculations observation based procedures performed assessment disclosures made identified reportable matters audit procedures deemed appropriate sufficient address risks material misstatements report information included annual report addition financial statements auditor report thereon annual report contains information information consists report board directors report risk management risk factors corporate governance report compensation report information required part book dutch civil code based following procedures performed conclude information consistent financial statements contain material misstatements contains information required part book dutch civil code read information based knowledge understanding obtained audit financial statements otherwise considered whether information contains material misstatements performing procedures comply requirements part book dutch civil code dutch standard auditing scope procedures performed substantially less scope performed audit financial statements board directors responsible preparation information including board directors report accordance part book dutch civil code information required part book dutch civil code report legal regulatory requirements engagement engaged auditor ermenegildo zegna operated statutory auditor since financial year description responsibilities regarding financial statements responsibilities management board directors financial statements board directors responsible preparation fair presentation financial statements accordance ifrs accounting standards part book dutch civil code furthermore management board directors responsible internal control management board directors determines necessary enable preparation financial statements free material misstatement whether due fraud error part preparation financial statements management board directors responsible assessing group ability continue going concern based financial reporting frameworks mentioned management board directors prepare financial statements using going concern basis accounting unless management board directors either intends liquidate group cease operations realistic alternative board directors disclose events circumstances may cast significant doubt group ability continue going concern financial statements audit committee responsible overseeing group financial reporting process responsibilities audit financial statements objective plan perform audit engagement manner allows obtain sufficient appropriate audit evidence opinion audit performed high absolute level assurance means may detect material misstatements whether due fraud error audit misstatements arise fraud error considered material individually aggregate could reasonably expected influence economic decisions users taken basis financial statements materiality affects nature timing extent audit procedures evaluation effect identified misstatements opinion exercised professional judgment maintained professional skepticism throughout audit accordance dutch standards auditing ethical requirements independence requirements audit included among others identifying assessing risks material misstatement financial statements whether due fraud error designing performing audit procedures responsive risks obtaining audit evidence sufficient appropriate provide basis opinion risk detecting material misstatement resulting fraud higher one resulting error fraud may involve collusion forgery intentional omissions misrepresentations override internal control obtaining understanding internal control relevant audit order design audit procedures appropriate circumstances purpose expressing opinion effectiveness group system internal control evaluating appropriateness accounting policies used reasonableness accounting estimates related disclosures made management board directors concluding appropriateness management board directors use going concern basis accounting based audit evidence obtained whether material uncertainty exists related events conditions may cast significant doubt group ability continue going concern conclude material uncertainty exists required draw attention auditor report related disclosures financial statements disclosures inadequate modify opinion conclusions based audit evidence obtained date auditor report however future events conditions may cause group cease continue going concern evaluating overall presentation structure content financial statements including disclosures evaluating whether financial statements represent underlying transactions events manner achieves fair presentation responsible planning performing group audit obtain sufficient appropriate audit evidence regarding financial information entities business units within group basis forming opinion financial statements also responsible direction supervision review audit work performed purposes group audit bear full responsibility auditor report communicate board directors audit committee regarding among matters planned scope timing audit significant audit findings including significant findings internal control identified audit matters communicated board directors determine key audit matters matters significance audit financial statements describe matters auditor report unless law regulation precludes public disclosure matter extremely rare circumstances communicating matter public interest amsterdam may deloitte accountants signed original scheffer