Style and operations
Base collection
The base collection is the fundamental part within each collection (Spring, Summer, Autumn, Winter), the first one to be designed and presented to clients. The base collection includes both basic and Benetton classic items and fashion items which identify the brand.
Commercial network
Benetton Group commercial network includes stores mainly managed by independent partners for the distribution of Benetton products in 120 countries. The relationship with the partners consists in the sale of goods and the authorization to use the brand name, free of charge, as signage in the stores.
Continuative collection
This is a collection consisting of a very select range of articles that clearly communicate the brand’s personality, while defining its values and market positioning. Articles therefore remain in the collection for at least 18 months. Replenishable on-line.
Directly operated stores (DOS)
Directly operated stores are those stores that are managed directly by Benetton Group, as opposed to the wholesale stores with Benetton brands, which are managed by independent businesspeople who buy Benetton Group products.
Flash collection and integrations
The flash collection is a smaller collection than the base collection and with the main aim of completing the base collection with specific fashion themes and presented after the base collection.
Integrations
Additions of product items not included in the collection.
Lead time
Time period from the collection of the orders to the products shipment.
Manufacturing delocalization
Benetton Group works throughout the world in the search for specific competencies and international industrial districts in which to take our know-how, so as to guarantee the quality of our products and the satisfaction of our customers. As such, our manufacturing has evolved into a “network of skills”, which, in turn, depends on the best industrial capabilities available in the international marketplace.
Reassortments
Reassortments include replenishments of products included in the collection, mainly in terms of colors and sizes.
Time to market
Time period from the idea and design of the products to the arrival on the market (delivery to stores).
Administration and finance
Business combination
The bringing together of separate entities or businesses into one for the purposes of financial reporting.
Cash-generating unit (CGU)
A cash-generating unit is defined as the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets.
Dividend yield
Ratio between the last dividend per share paid and the share price. This ratio is used as immediate expression of the stock return. For Benetton Group dividend yield, see Financial Highlights, where the ratio is calculated as dividend paid (referred to the previous year) and price at period end.
EBITDA
Acronym for Earnings Before Interests, Taxes, Depreciation and Amortization, EBITDA is a measurement of operating profit before non-monetary items and is equal to operating income (EBIT) plus depreciation, amortization, and other non-monetary costs.
EPS
Acronym of Earning Per Share. The EPS indicates the ratio between Net income/(loss) for the year and number of shares outstanding. The number of shares in Benetton Group share capital is 181,558,811, with par value of 1.30 euro each.
EV
Acronym of Enterprise Value, value of the company: EV represents the sum between market capitalization and Net Financial Position.
EVA
Acronym of Economic Value Added. The EVA is a measure of the performance of the company and is calculated as average Invested Capital multiplied by the difference between the return on capital employed (ROIC) and the average cost of capital (WACC).
Benetton Group uses EVA as an absolute measure of the Group performance, also for the assignment of stock options to the top management.
For Benetton Group Stock option plan, see Corporate Governance.
Fair value
The price at which an asset or liability could be exchanged in a current transaction between knowledgeable, unrelated willing parties.
Form 20-F
In accordance with U.S. law, non-U.S. companies listed on regulated markets in the U.S. are required to submit annual financial statements to the Securities and Exchange Commission (SEC) using Form 20-F, on which consolidated net income and equity, measured in accordance with IFRS, are reconciled with the U.S. generally accepted accounting principles (GAAP).
Benetton Group, which has been listed on the New York Stock Exchange since 1989, files this form by June 30 of the year following the fiscal year in question.
Free cash flow
This item on the cash flow statement represents the sum of cash flows generated by operating and investment activities.
Gross operating income
This item on the income statement by function of cost is equal to revenues less materials and subcontracted work, employee benefit costs, industrial depreciation and amortization, and other manufacturing costs.
Gross operating investments
Investments in intangible assets, property, plant, and equipment, excluding gains on the acquisition of business combinations, which are allocated to intangible assets, property, plant, and equipment.
IAS / IFRS
Acronyms for International Accounting Standards and International Financial Reporting Standards, respectively, adopted by Benetton Group.
Impairment testing
The activity by which the Group determines whether there is, as of the closing date of each financial reporting period, objective evidence that an asset has undergone a longterm loss in value, including a measurement of the asset’s recoverable value.
Invested capital
This balance sheet term is used to indicate the total resources employed and includes the following: working capital; property, plant and equipment; intangible assets; assets held for sale; equity investments; and other assets and liabilities.
Net Financial Position
Balance sheet item which represents the financial indebtedness net of cash. Benetton Group net financial position includes:
- liabilities: bank loans, bonds, short-term loans, medium and long-term loans (current portion and long-term portion) and lease financing (current portion and long-term portion);
- assets: cash and banks, marketable securities, financial receivable (current and noncurrent).
NOPAT
Acronym of Net Operating Profit After Taxes. The NOPAT is calculated as Operating profit net of taxes calculated on Operating profit. NOPAT is used to calculate EVA.
Pay out ratio
Ratio between dividends and Net income/(loss)for the year which represents the percentage of net income distributed to the shareholders as dividend.
Revenues
This income statement item includes: sales of core products, other sales, royalty income, and other revenues, less discounts.
ROE
Acronym of Return On Equity, which represents the ratio between Net income/(loss)for the year and average shareholders’ equity. The ROE measures the return on shareholders’ equity after remunerating the other sources of capital and indicates the return for the shareholders.
ROIC
Acronym of Return On Invested Capital, which represents the ratio between Operating profit and average Invested capital. The ROIC measures the return on the capital invested to service both shareholders and creditors.
Total net investment/(divestment)
Investments in and divestments of property, plant and equipment, intangible assets, equity investments, and other net non-operating investments.
WACC
Acronym of Weighted Average Cost of Capital, WACC represents the average cost of the different sources of capital of the company, both as debt and equity. WACC is commonly used as discount rate for the operating cash flow of a company and to calculate EVA.
Working capital
This balance sheet term is used to indicate the capital used in the company’s ordinary operations and includes trade receivables, inventories, and the net of other receivables and payables, less trade payables.
Market
ADR
Acronym of American Depositary Receipt. The ADR is negotiable certificate that represents ownership of shares in a non-US company. In 1989 Benetton Group was listed on the New York Stock Exchange, NYSE, through a Level III Program. Each Benetton ADR represents two Benetton ordinary shares.
ADR - Level III Program
In 1989 Benetton Group was listed on the New York Stock Exchange, NYSE, through an ADR issue structured as a Level III Program: the ADR were distributed through a public offering (with capital issue) with a ratio of 1 ADR corresponding to 2 ordinary shares, were registered under the 1933 Securities Act and under the 1934 Exchange Act and were listed on the NYSE. In addition, Benetton Group provides a full reconciliation of its annual report to US GAAP, filing a Form 20 - F and meets the NYSE listing requirements.
CUSPID
Acronym of Committee on Uniform Securities and Identification Procedures, standards body which creates and maintains a classification system for securities. The Cuspid is a nine-character number that uniquely identifies a particular security in the US. Benetton Group ADR CUSPID is 081795403.
Free float
Free float identifies the percentage of outstanding shares of a listed company which are available for negotiation, and are not under the control of a strategic reference shareholder. Benetton Group free float includes 59,653,172 shares, equal to 32.856% of outstanding shares. The remaining 67.144% is hold by Edizione Holding S.p.A., holding company, wholly owned by the Benetton family.
ISIN
Acronym of International Securities Identification Number, a unique international code which identifies a securities issue. Each country has a national numbering agency which assigns ISIN numbers for securities in that country. Benetton ordinary shares ISIN is IT0003106777.
Sedol
Acronym of Stock Exchange Daily Official List number, a code used by the London Stock Exchange to identify foreign stocks (London Stock Exchange). Benetton Group ordinary shares Sedol is 7128563, while for Benetton Group ADR is 2091671.
Corporate Governance
Board of Directors
Main governing body for the administration of a company. The functionality of the Board of Directors is disciplined by the Articles of Association of the company itself. The Board of Directors of Benetton is invested with the widest possible powers for the ordinary and extraordinary administration of the Company. The Board of Directors can delegate its powers to one or more of the Directors who will exercise them, jointly or severally, in conformity with decisions taken by the Board of Directors. The Board of Directors may also entrust part of its authority to an Executive Committee made up of certain Board members.
For information on Benetton Board of Directors members, see Corporate Governance.
Code of Ethics
Official document of the Company and its subsidiaries, directly or indirectly controlled. The Code contains a set of principles according to which the Company conducts its activity and that of the parties who operate on its behalf.
For Benetton Code of Ethics, see Corporate Governance.
Corporate Governance
Set of rules and relations referring to the company administration, ownership structure and management efficiency to reach the company targets.
For information on Benetton Corporate Governance, see Corporate Governance.
Executive Committee
Governing body for the administration of a company.
Benetton Executive Committee was set up in 2003 to ease and quicken the decisional processes of the Group. One of the Executive Committee’s tasks is to define, upon proposal by the Chief Executive Officer, company and group industrial and financial plans, strategies, the annual budget and interim adjustments for subsequent submittal to the Board of Directors. The Executive Committee also examines and approves particularly important investment and disinvestment plans, lines of credit facilities, the furnishing of guarantees and analyses the chief problems connected with company performance, so that the Board of Directors can accomplish its legal duties more efficiently.
For information on Benetton Executive Committee members, see Corporate Governance.
Statutory Auditors
Internal body of a company, which is responsible for the control of the company management activities. The Statutory Auditors monitor the compliance of the other governing bodies, in particular the Board of Directors, with the law and the Articles of Association. Benetton Board of Statutory Auditors consists of three standing members and two alternate members, who can be re-appointed. The members remain in office for three financial years to the date of the General Meeting for the approval of the latest financial year results.
For information on Benetton Statutory Auditors members, see Corporate Governance.
Stock options
Right for the option beneficiary to subscribe a certain number of shares per option, at a predetermined price (exercise price) at or by a certain date (Vesting period). In September 2004, Benetton Board of Directors, in application of the powers authorized by the Extraordinary Shareholders’ Meeting, approved a capital increase to service a Stock option plan for Benetton top management, subject to achievement of the objectives for creation of accumulated value envisaged in the 2004-2007 Guidelines.
For information on Benetton Group stock option plan, see Corporate Governance.
Stock option plan
Document which rules the award of stock options for the subscription of shares at a predetermined price (exercise price) at or by a certain date (Vesting period). In September 2004, Benetton Board of Directors, in application of the powers authorized by the Extraordinary Shareholders’ Meeting, approved a capital increase to service a Stock option plan for Benetton top management, subject to achievement of the objectives for creation of accumulated value envisaged in the 2004-2007 Guidelines.
For information on Benetton Group stock option plan, see Corporate Governance.
Vesting period
Time period before stock options become exercisable and the underlying stocks can be acquired by the beneficiary according to a certain stock option plan.
According to Benetton Stock Option Plan approved in September 2004 the vesting period for the top management options on Benetton stocks is equal to 2 years after award date for 50% of the assigned options and 4 years for the remaining 50%, subject to achievement of objectives for creation of accumulated value.
For information on Benetton Group stock option plan, see Corporate Governance.