{"url_path":"/sec/ntz/10-k/2026/item-18","section_key":"item-18","section_title":"Item 18 FINANCIAL STATEMENTS","topic":"sec","document":{"doc_type":"20-F","doc_date":"2026-05-15","source_url":"https://www.sec.gov/Archives/edgar/data/900391/0001193125-26-226962-index.html","accession_number":"0001193125-26-226962","cik":"0000900391","ticker":"NTZ","issuer_name":"NATUZZI S P A","edgar_url":"https://www.sec.gov/Archives/edgar/data/900391/0001193125-26-226962-index.html","primary_entity_key":"0000900391","primary_entity_name":"NATUZZI S P A"},"word_count":42236,"has_tables":true,"body_markdown":"## ITEM 18. FINANCIAL STATEMENTS\n\nOur audited consolidated financial statements are included in this Annual Report beginning at page F-1.\n\n91\n\n[Table of Contents](#toc)\n\n \n\n \n\nIndex to Consolidated Financial Statements\n\n \n\nPage\n\n \n\n \n\n \n\n[Reports of Independent Registered Public Accounting Firm](#auditors_report)\n\n \n\nF-1\n\n[Consolidated statements of financial position as at December 31, 2025 and 2024](#consolidated_statements_financial_positi)\n\n \n\nF-5\n\n[Consolidated statements of profit or loss for the years ended December 31, 2025, 2024 and 2023](#consolidated_statements_prit_or_loss_for)\n\n \n\nF-6\n\n[Consolidated statements of comprehensive income for the years ended December 31, 2025, 2024 and 2023](#consolidated_statements_comprehensive_in)\n\n \n\nF-7\n\n[Consolidated statements of changes in equity for the years ended December 31, 2025, 2024 and 2023](#consolidated_statements_changes_in_equit)\n\n \n\nF-8\n\n[Consolidated statements of cash flows for the years ended December 31, 2025, 2024 and 2023](#consolidated_statements_cash_flows_for_y)\n\n \n\nF-9\n\n[Notes to consolidated financial statements](#notes_to_consolidated_financial_statemen)\n\n \n\nF-10\n\n \n\n92\n\n \n\n \n\nReport of Independent Registered Public Accounting Firm\n\n \n\n \n\nTo the Board of Directors and Shareholders of Natuzzi SpA\n\n \n\n \n\nOpinion on the Financial Statements\n\n \n\n \n\nWe have audited the accompanying consolidated statements of financial position of Natuzzi SpA and its subsidiaries (the “Company”) as of December 31, 2025 and 2024, and the related consolidated statements of profit or loss, comprehensive income, changes in equity and cash flows for each of the two years in the period ended December 31, 2025, including the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2025 in conformity with IFRS Accounting Standards as issued by the International Accounting Standards Board.\n\n \n\nSubstantial Doubt about the Company’s Ability to Continue as a Going Concern\n\n \n\nThe accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the consolidated financial statements, the Company incurred recurring losses from operations, has a net negative working capital and, in 2025, cash outflows from operating activities, and needs additional fundings to support its operations and has stated that these events or conditions indicate that a material uncertainty exists that may cast significant doubt (or raise substantial doubt as contemplated by PCAOB standards) on the Company’s ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 3. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.\n\n \n\nBasis for Opinion\n\n \n\nThese consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.\n\n \n\nWe conducted our audits of these consolidated financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.\n\n \n\nOur audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.\n\n \n\n \n\nF-1\n\n \n\nCritical Audit Matters\n\n \n\nThe critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.\n\n \n\nImpairment Assessment of Property, Plant and Equipment of the Italian Upholstered Furniture Plant and Right-of-Use Assets of Certain Directly Operated Retail Stores\n\n \n\nAs described in Notes 4, 8, and 9 to the consolidated financial statements, the Company’s consolidated\n\nproperty, plant and equipment (PP&E) balance was €64.1 million and the right-of-use assets (ROU) balance was €33.6 million as of December 31, 2025. Related to PP&E, there was an impairment loss of €2.6 million and no reversal for the year ended December 31, 2025. Related to ROU, there was an impairment loss of €3.6 million, an impairment reversal of €0.7 million, and a net impairment expense of €2.9 million for the year ended December 31, 2025. For impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or cash generating units (CGUs). The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. Value in use is based on the estimated future cash flows, discounted to their present value using a discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU. The key assumptions used in estimating the value in use include the annual sales growth rates used to project expected revenues for the period 2026-2028, the weighted average cost of capital rates and the long-term growth rates, all of which were determined at the CGU level. The fair value less costs of disposal was supported by appraisals performed by independent third-party valuation specialists. The fair value of land and buildings has been derived by reference to observable market evidence for comparable properties, adjusted to reflect the specific attributes and characteristics of the subject asset. The fair value of plant and machinery has been derived by using the depreciated replacement cost method.\n\n \n\nThe principal considerations for our determination that performing procedures relating to the impairment assessment of PP&E of the Italian upholstered furniture plant and ROU assets of certain directly operated retail stores is a critical audit matter are (i) the significant judgment by management when estimating the recoverable amounts; (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating audit evidence related to the weighted average cost of capital rates, annual sales growth rates, long-term growth rates, appraisals performed and observable market evidence for comparable properties; and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.\n\n \n\nAddressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included, among others: (i) testing management’s process for estimating the recoverable amount of PP&E of the Italian upholstered furniture plant and ROU assets of certain directly operated retail stores; (ii), evaluating the appropriateness of the methodology used to determine the recoverable amounts; (iii) testing the completeness, accuracy, and relevance of underlying data used in the models; and (iv) evaluating the reasonableness of the significant assumptions used by management. As it relates to value-in-use, this included evaluating the reasonableness in estimating future cash flows related to the weighted average cost of capital rates, annual sales growth rates, and long-term growth rates. Evaluating the reasonableness of management’s assumptions related to annual sales growth rates and long-term growth rate involved evaluating whether the assumptions used were reasonable considering (i) consistency with external market and industry data, (ii) the current and past performance of the Company and (iii) whether the assumptions were consistent with evidence obtained in other areas of the audit. As it relates to fair value less costs of disposal, this included evaluating the reasonableness of appraisals performed and observable market evidence for comparable properties. Professionals with specialized skill and knowledge were used to assist in evaluating (i) the appropriateness of the value in use models, (ii) the reasonableness of the weighted average cost of capital rates assumption, (iii) evaluating the appropriateness of the valuation methodologies applied for the determination of the fair value less costs of disposal; and (iv) evaluating management’s process for allocating the impairment loss to individual assets of the Italian upholstered furniture plant.\n\n \n\n \n\nF-2\n\n \n\n \n\n/s/ PricewaterhouseCoopers SpA\n\nMilan, Italy\n\nMay 15, 2026\n\n \n\n \n\n \n\nWe have served as the Company's auditor since 2024.\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nF-3\n\n \n\nReport of Independent Registered Public Accounting Firm\n\nTo the Stockholders and Board of Directors\nNatuzzi S.p.A.\n\nOpinion on the Consolidated Financial Statements\n\nWe have audited the accompanying consolidated statement of profit or loss, comprehensive income, changes in equity, and cash flows of Natuzzi S.p.A. and subsidiaries (the Company) for the year ended December 31, 2023, and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the results of operations of the Company and its cash flows for the year ended December 31, 2023, in conformity with IFRS Accounting Standards as issued by the International Accounting Standards Board.\n\nBasis for Opinion\n\nThese consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.\n\nWe conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion.\n\nWe served as the Company’s auditor from 2016 to 2024.\n\n/s/ KPMG S.p.A.\n\nBari, Italy\nApril 30, 2024\n\n \n\nF-4\n\n[Table of Contents](#toc)\n\n \n\nNatuzzi S.p.A. and subsidiaries\n\nConsolidated statements of financial position as at December 31, 2025 and 2024\n\n(Expressed in thousands of euros except as otherwise indicated)\n\n \n\n \n\nDecember 31, 2025\n\n \n\n \n\nDecember 31, 2024\n\n \n\n \n\nNote\n\n \n\nASSETS\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nNon-current assets\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nProperty, plant and equipment\n\n \n\n \n\n64,114\n\n \n\n \n\n \n\n74,189\n\n \n\n \n\n \n\n8\n\n \n\nRight-of-use assets\n\n \n\n \n\n33,641\n\n \n\n \n\n \n\n44,378\n\n \n\n \n\n \n\n9\n\n \n\nIntangible assets and goodwill\n\n \n\n \n\n2,947\n\n \n\n \n\n \n\n6,628\n\n \n\n \n\n \n\n10\n\n \n\nEquity-method investees\n\n \n\n \n\n37,458\n\n \n\n \n\n \n\n40,875\n\n \n\n \n\n \n\n11\n\n \n\nOther non-current receivables\n\n \n\n \n\n4,981\n\n \n\n \n\n \n\n6,124\n\n \n\n \n\n \n\n12\n\n \n\nOther non-current assets\n\n \n\n \n\n1,766\n\n \n\n \n\n \n\n1,749\n\n \n\n \n\n \n\n13\n\n \n\nDeferred tax assets\n\n \n\n \n\n1,981\n\n \n\n \n\n \n\n1,653\n\n \n\n \n\n \n\n41\n\n \n\nTotal non-current assets\n\n \n\n \n\n146,888\n\n \n\n \n\n \n\n175,596\n\n \n\n \n\n \n\n \n\nCurrent assets\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nInventories\n\n \n\n \n\n49,534\n\n \n\n \n\n \n\n62,815\n\n \n\n \n\n \n\n14\n\n \n\nTrade receivables\n\n \n\n \n\n32,508\n\n \n\n \n\n \n\n32,819\n\n \n\n \n\n \n\n15\n\n \n\nOther current receivables\n\n \n\n \n\n7,562\n\n \n\n \n\n \n\n10,618\n\n \n\n \n\n \n\n16\n\n \n\nOther current financial receivables\n\n \n\n \n\n4,121\n\n \n\n \n\n \n\n1,348\n\n \n\n \n\n \n\n17\n\n \n\nOther current assets\n\n \n\n \n\n4,991\n\n \n\n \n\n \n\n5,073\n\n \n\n \n\n \n\n13\n\n \n\nCurrent income tax assets\n\n \n\n \n\n1,758\n\n \n\n \n\n \n\n1,642\n\n \n\n \n\n \n\n41\n\n \n\nGains on derivative financial instruments\n\n \n\n \n\n76\n\n \n\n \n\n \n\n24\n\n \n\n \n\n \n\n32\n\n \n\nCash and cash equivalents\n\n \n\n \n\n20,320\n\n \n\n \n\n \n\n20,322\n\n \n\n \n\n \n\n18\n\n \n\nAsset held for sale\n\n \n\n \n\n1,105\n\n \n\n \n\n \n\n8,767\n\n \n\n \n\n \n\n7\n\n \n\nTotal current assets\n\n \n\n \n\n121,975\n\n \n\n \n\n \n\n143,428\n\n \n\n \n\n \n\n \n\nTOTAL ASSETS\n\n \n\n \n\n268,863\n\n \n\n \n\n \n\n319,024\n\n \n\n \n\n \n\n \n\nEQUITY\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nShare capital\n\n \n\n \n\n55,073\n\n \n\n \n\n \n\n55,073\n\n \n\n \n\n \n\n19\n\n \n\nReserves\n\n \n\n \n\n19,566\n\n \n\n \n\n \n\n20,659\n\n \n\n \n\n \n\n19\n\n \n\nRetained earnings\n\n \n\n \n\n(51,659\n\n)\n\n \n\n \n\n(21,726\n\n)\n\n \n\n \n\n19\n\n \n\nEQUITY ATTRIBUTABLE TO OWNERS OF THE COMPANY\n\n \n\n \n\n22,980\n\n \n\n \n\n \n\n54,006\n\n \n\n \n\n \n\n \n\nNon-controlling interests\n\n \n\n \n\n2,902\n\n \n\n \n\n \n\n4,202\n\n \n\n \n\n \n\n \n\nTOTAL EQUITY\n\n \n\n \n\n25,882\n\n \n\n \n\n \n\n58,208\n\n \n\n \n\n \n\n \n\nLIABILITIES\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nNon-current liabilities\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nLong-term borrowings\n\n \n\n \n\n23,095\n\n \n\n \n\n \n\n14,188\n\n \n\n \n\n \n\n20\n\n \n\nLong-term lease liabilities\n\n \n\n \n\n39,963\n\n \n\n \n\n \n\n47,400\n\n \n\n \n\n \n\n21\n\n \n\nOther non-current debts\n\n \n\n \n\n—\n\n \n\n \n\n \n\n465\n\n \n\n \n\n \n\n22\n\n \n\nEmployees’ leaving entitlement\n\n \n\n \n\n11,482\n\n \n\n \n\n \n\n11,646\n\n \n\n \n\n \n\n24\n\n \n\nNon-current contract liabilities\n\n \n\n \n\n6,860\n\n \n\n \n\n \n\n6,786\n\n \n\n \n\n \n\n25\n\n \n\nProvisions\n\n \n\n \n\n5,957\n\n \n\n \n\n \n\n7,791\n\n \n\n \n\n \n\n26\n\n \n\nDeferred income for government grants\n\n \n\n \n\n9,983\n\n \n\n \n\n \n\n11,036\n\n \n\n \n\n \n\n27\n\n \n\nOther non-current liabilities\n\n \n\n \n\n1,386\n\n \n\n \n\n \n\n2,160\n\n \n\n \n\n \n\n23\n\n \n\nDeferred tax liabilities\n\n \n\n \n\n5\n\n \n\n \n\n \n\n998\n\n \n\n \n\n \n\n41\n\n \n\nTotal non-current liabilities\n\n \n\n \n\n98,731\n\n \n\n \n\n \n\n102,470\n\n \n\n \n\n \n\n \n\nCurrent liabilities\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nBank overdrafts and short-term borrowings\n\n \n\n \n\n22,197\n\n \n\n \n\n \n\n23,327\n\n \n\n \n\n \n\n28\n\n \n\nCurrent portion of long-term borrowings\n\n \n\n \n\n7,251\n\n \n\n \n\n \n\n4,532\n\n \n\n \n\n \n\n20\n\n \n\nCurrent portion of lease liabilities\n\n \n\n \n\n9,480\n\n \n\n \n\n \n\n10,350\n\n \n\n \n\n \n\n21\n\n \n\nTrade payables\n\n \n\n \n\n57,447\n\n \n\n \n\n \n\n66,477\n\n \n\n \n\n \n\n29\n\n \n\nOther payables\n\n \n\n \n\n25,084\n\n \n\n \n\n \n\n26,706\n\n \n\n \n\n \n\n30\n\n \n\nCurrent contract liabilities\n\n \n\n \n\n19,818\n\n \n\n \n\n \n\n23,587\n\n \n\n \n\n \n\n25\n\n \n\nProvisions\n\n \n\n \n\n1,680\n\n \n\n \n\n \n\n1,866\n\n \n\n \n\n \n\n26\n\n \n\nOther liabilities\n\n \n\n \n\n403\n\n \n\n \n\n \n\n403\n\n \n\n \n\n \n\n31\n\n \n\nLiabilities for current income tax\n\n \n\n \n\n871\n\n \n\n \n\n \n\n830\n\n \n\n \n\n \n\n41\n\n \n\nLosses on derivative financial instruments\n\n \n\n \n\n19\n\n \n\n \n\n \n\n268\n\n \n\n \n\n \n\n32\n\n \n\nTotal current liabilities\n\n \n\n \n\n144,250\n\n \n\n \n\n \n\n158,346\n\n \n\n \n\n \n\n \n\nTOTAL LIABILITIES\n\n \n\n \n\n242,981\n\n \n\n \n\n \n\n260,816\n\n \n\n \n\n \n\n \n\nTOTAL EQUITY AND LIABILITIES\n\n \n\n \n\n268,863\n\n \n\n \n\n \n\n319,024\n\n \n\n \n\n \n\n \n\n \n\nThe accompanying notes are an integral part of the Company Financial Statements.\n\n \n\nF-5\n\n[Table of Contents](#toc)\n\n \n\nNatuzzi S.p.A. and subsidiaries\n\nConsolidated statements of profit or loss for the years ended December 31, 2025, 2024 and 2023\n\n(Expressed in thousands of euros except as otherwise indicated)\n\n \n\n \n\n \n\n2025\n\n \n\n \n\n2024\n\n \n\n \n\n2023\n\n \n\n \n\nNote\n\n \n\nRevenue\n\n \n\n \n\n308,217\n\n \n\n \n\n \n\n318,797\n\n \n\n \n\n \n\n328,618\n\n \n\n \n\n \n\n34\n\n \n\nCost of sales\n\n \n\n \n\n(204,807\n\n)\n\n \n\n \n\n(203,095\n\n)\n\n \n\n \n\n(215,763\n\n)\n\n \n\n \n\n35\n\n \n\nGross Profit\n\n \n\n \n\n103,410\n\n \n\n \n\n \n\n115,702\n\n \n\n \n\n \n\n112,855\n\n \n\n \n\n \n\n \n\nOther income\n\n \n\n \n\n9,602\n\n \n\n \n\n \n\n4,801\n\n \n\n \n\n \n\n7,116\n\n \n\n \n\n \n\n36\n\n \n\nSelling expenses\n\n \n\n \n\n(90,511\n\n)\n\n \n\n \n\n(90,229\n\n)\n\n \n\n \n\n(91,373\n\n)\n\n \n\n \n\n37\n\n \n\nAdministrative expenses\n\n \n\n \n\n(40,773\n\n)\n\n \n\n \n\n(35,994\n\n)\n\n \n\n \n\n(37,607\n\n)\n\n \n\n \n\n38\n\n \n\nImpairment on trade receivables\n\n \n\n \n\n(46\n\n)\n\n \n\n \n\n(289\n\n)\n\n \n\n \n\n(33\n\n)\n\n \n\n \n\n15\n\n \n\nOther expenses\n\n \n\n \n\n(497\n\n)\n\n \n\n \n\n(260\n\n)\n\n \n\n \n\n(457\n\n)\n\n \n\n \n\n36\n\n \n\nOperating profit/(loss)\n\n \n\n \n\n(18,815\n\n)\n\n \n\n \n\n(6,269\n\n)\n\n \n\n \n\n(9,499\n\n)\n\n \n\n \n\n \n\nFinance income\n\n \n\n \n\n554\n\n \n\n \n\n \n\n829\n\n \n\n \n\n \n\n941\n\n \n\n \n\n \n\n39\n\n \n\nFinance costs\n\n \n\n \n\n(8,691\n\n)\n\n \n\n \n\n(10,201\n\n)\n\n \n\n \n\n(9,267\n\n)\n\n \n\n \n\n39\n\n \n\nNet exchange rate gains/(losses)\n\n \n\n \n\n(2,233\n\n)\n\n \n\n \n\n554\n\n \n\n \n\n \n\n(144\n\n)\n\n \n\n \n\n40\n\n \n\nNet finance income/(costs)\n\n \n\n \n\n(10,370\n\n)\n\n \n\n \n\n(8,818\n\n)\n\n \n\n \n\n(8,470\n\n)\n\n \n\n \n\n \n\nShare of profit/(loss) of equity-method investees\n\n \n\n \n\n(371\n\n)\n\n \n\n \n\n389\n\n \n\n \n\n \n\n2,897\n\n \n\n \n\n \n\n11\n\n \n\nProfit/(loss) before tax\n\n \n\n \n\n(29,556\n\n)\n\n \n\n \n\n(14,698\n\n)\n\n \n\n \n\n(15,072\n\n)\n\n \n\n \n\n \n\nIncome tax expense\n\n \n\n \n\n(1,036\n\n)\n\n \n\n \n\n(684\n\n)\n\n \n\n \n\n(1,090\n\n)\n\n \n\n \n\n41\n\n \n\nProfit/(loss) for the year\n\n \n\n \n\n(30,592\n\n)\n\n \n\n \n\n(15,382\n\n)\n\n \n\n \n\n(16,162\n\n)\n\n \n\n \n\n \n\nProfit/(loss) attributable to:\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nOwners of the Company\n\n \n\n \n\n(29,933\n\n)\n\n \n\n \n\n(15,150\n\n)\n\n \n\n \n\n(16,069\n\n)\n\n \n\n \n\n \n\nNon-controlling interests\n\n \n\n \n\n(659\n\n)\n\n \n\n \n\n(232\n\n)\n\n \n\n \n\n(93\n\n)\n\n \n\n \n\n \n\nProfit/(loss) per share\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nBasic earnings/(loss) per ordinary share\n\n \n\n \n\n(0.54\n\n)\n\n \n\n \n\n(0.28\n\n)\n\n \n\n \n\n(0.29\n\n)\n\n \n\n \n\n42\n\n \n\nDiluted earnings/(loss) per ordinary share\n\n \n\n \n\n(0.54\n\n)\n\n \n\n \n\n(0.28\n\n)\n\n \n\n \n\n(0.29\n\n)\n\n \n\n \n\n42\n\n \n\n \n\nThe accompanying notes are an integral part of the Company Financial Statements.\n\n \n\nF-6\n\n[Table of Contents](#toc)\n\n \n\nNatuzzi S.p.A. and subsidiaries\n\nConsolidated statements of comprehensive income for the years ended December 31, 2025, 2024 and 2023\n\n(Expressed in thousands of euros except as otherwise indicated)\n\n \n\n \n\n \n\n2025\n\n \n\n \n\n2024\n\n \n\n \n\n2023\n\n \n\n \n\nNote\n\n \n\nProfit/(loss) for the year\n\n \n\n \n\n(30,592\n\n)\n\n \n\n \n\n(15,382\n\n)\n\n \n\n \n\n(16,162\n\n)\n\n \n\n \n\n \n\nOther comprehensive income\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nItems that will not be reclassified to profit or loss\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nActuarial gains/(losses) on employees’ leaving entitlement\n\n \n\n \n\n229\n\n \n\n \n\n \n\n68\n\n \n\n \n\n \n\n(185\n\n)\n\n \n\n \n\n19\n\n \n\nTax impact\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n41\n\n \n\nTotal\n\n \n\n \n\n229\n\n \n\n \n\n \n\n68\n\n \n\n \n\n \n\n(185\n\n)\n\n \n\n \n\n \n\nItems that are or may be reclassified subsequently to profit or loss\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nExchange rate differences on translation of foreign operations\n\n \n\n \n\n(3,100\n\n)\n\n \n\n \n\n(378\n\n)\n\n \n\n \n\n(3,260\n\n)\n\n \n\n \n\n19\n\n \n\nTax impact\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n41\n\n \n\nTotal\n\n \n\n \n\n(3,100\n\n)\n\n \n\n \n\n(378\n\n)\n\n \n\n \n\n(3,260\n\n)\n\n \n\n \n\n \n\nOther comprehensive income/(loss) for the year, net of tax\n\n \n\n \n\n(2,871\n\n)\n\n \n\n \n\n(310\n\n)\n\n \n\n \n\n(3,445\n\n)\n\n \n\n \n\n19\n\n \n\nTotal comprehensive income/(loss) for the year\n\n \n\n \n\n(33,463\n\n)\n\n \n\n \n\n(15,692\n\n)\n\n \n\n \n\n(19,607\n\n)\n\n \n\n \n\n \n\nTotal comprehensive income/(loss) attributable to:\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nOwners of the Company\n\n \n\n \n\n(33,396\n\n)\n\n \n\n \n\n(15,625\n\n)\n\n \n\n \n\n(19,387\n\n)\n\n \n\n \n\n \n\nNon-controlling interests\n\n \n\n \n\n(67\n\n)\n\n \n\n \n\n(67\n\n)\n\n \n\n \n\n(220\n\n)\n\n \n\n \n\n \n\n \n\nThe accompanying notes are an integral part of the Company Financial Statements.\n\n \n\nF-7\n\n[Table of Contents](#toc)\n\n \n\nNatuzzi S.p.A. and subsidiaries\n\nConsolidated statements of changes in equity for the years ended December 31, 2025, 2024 and 2023\n\n(Expressed in thousands of euros except as otherwise indicated)\n\n \n\n \n\n \n\nShare\nCapital\namount\n\n \n\n \n\nTranslation\nreserve\n\n \n\n \n\nIAS 19\nreserve\n\n \n\n \n\nOther\nreserves\n\n \n\n \n\nRetained\nearnings\n\n \n\n \n\nEquity\nattributable\nto owners\nof the\nCompany\n\n \n\n \n\nEquity\nattributable\nto Non-\ncontrolling\ninterests\n\n \n\n \n\nTotal\nequity\n\n \n\nBalance as at December 31, 2022\n\n \n\n \n\n55,073\n\n \n\n \n\n \n\n5,468\n\n \n\n \n\n \n\n1,312\n\n \n\n \n\n \n\n16,512\n\n \n\n \n\n \n\n9,493\n\n \n\n \n\n \n\n87,858\n\n \n\n \n\n \n\n4,698\n\n \n\n \n\n \n\n92,556\n\n \n\nShare capital increase\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n474\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n474\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n474\n\n \n\nDividend distribution\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n(135\n\n)\n\n \n\n \n\n(135\n\n)\n\nProfit for the year\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n(16,069\n\n)\n\n \n\n \n\n(16,069\n\n)\n\n \n\n \n\n(93\n\n)\n\n \n\n \n\n(16,162\n\n)\n\nOther comprehensive income/(loss) for the year\n\n \n\n \n\n—\n\n \n\n \n\n \n\n(3,133\n\n)\n\n \n\n \n\n(185\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n(3,318\n\n)\n\n \n\n \n\n(127\n\n)\n\n \n\n \n\n(3,445\n\n)\n\nBalance as at December 31, 2023\n\n \n\n \n\n55,073\n\n \n\n \n\n \n\n2,335\n\n \n\n \n\n \n\n1,127\n\n \n\n \n\n \n\n16,986\n\n \n\n \n\n \n\n(6,576\n\n)\n\n \n\n \n\n68,945\n\n \n\n \n\n \n\n4,343\n\n \n\n \n\n \n\n73,288\n\n \n\nShare capital increase\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n686\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n686\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n686\n\n \n\nDividend distribution\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n(74\n\n)\n\n \n\n \n\n(74\n\n)\n\nProfit for the year\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n(15,150\n\n)\n\n \n\n \n\n(15,150\n\n)\n\n \n\n \n\n(232\n\n)\n\n \n\n \n\n(15,382\n\n)\n\nOther comprehensive income/(loss) for the year\n\n \n\n \n\n—\n\n \n\n \n\n \n\n(543\n\n)\n\n \n\n \n\n68\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n(475\n\n)\n\n \n\n \n\n165\n\n \n\n \n\n \n\n(310\n\n)\n\nBalance as at December 31, 2024\n\n \n\n \n\n55,073\n\n \n\n \n\n \n\n1,792\n\n \n\n \n\n \n\n1,195\n\n \n\n \n\n \n\n17,672\n\n \n\n \n\n \n\n(21,726\n\n)\n\n \n\n \n\n54,006\n\n \n\n \n\n \n\n4,202\n\n \n\n \n\n \n\n58,208\n\n \n\nShare capital increase\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n1,512\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n1,512\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n1,512\n\n \n\nDividend distribution\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n(375\n\n)\n\n \n\n \n\n(375\n\n)\n\nProfit for the year\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n(29,933\n\n)\n\n \n\n \n\n(29,933\n\n)\n\n \n\n \n\n(659\n\n)\n\n \n\n \n\n(30,592\n\n)\n\nOther comprehensive income/(loss) for the year\n\n \n\n \n\n—\n\n \n\n \n\n \n\n(2,834\n\n)\n\n \n\n \n\n229\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n(2,605\n\n)\n\n \n\n \n\n(266\n\n)\n\n \n\n \n\n(2,871\n\n)\n\nBalance as at December 31, 2025\n\n \n\n \n\n55,073\n\n \n\n \n\n \n\n(1,042\n\n)\n\n \n\n \n\n1,424\n\n \n\n \n\n \n\n19,184\n\n \n\n \n\n \n\n(51,659\n\n)\n\n \n\n \n\n22,980\n\n \n\n \n\n \n\n2,902\n\n \n\n \n\n \n\n25,882\n\n \n\n \n\nThe accompanying notes are an integral part of the Company Financial Statements.\n\n \n\nF-8\n\n[Table of Contents](#toc)\n\n \n\nNatuzzi S.p.A. and subsidiaries\n\nConsolidated statements of cash flows for the years ended December 31, 2025, 2024 and 2023\n\n(Expressed in thousands of euros except as otherwise indicated)\n\n \n\n \n\n2025\n\n \n\n \n\n2024\n\n \n\n \n\n2023\n\n \n\n \n\nNote\n\nCash flows from operating activities:\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nProfit/(loss) for the period\n\n \n\n \n\n(30,592\n\n)\n\n \n\n \n\n(15,382\n\n)\n\n \n\n \n\n(16,162\n\n)\n\n \n\n \n\nAdjustments for:\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nDepreciation\n\n \n\n \n\n18,843\n\n \n\n \n\n \n\n19,619\n\n \n\n \n\n \n\n21,331\n\n \n\n \n\n8 and 9\n\nAmortisation\n\n \n\n \n\n2,152\n\n \n\n \n\n \n\n1,569\n\n \n\n \n\n \n\n1,041\n\n \n\n \n\n10\n\nImpairment of non-financial assets\n\n \n\n \n\n8,229\n\n \n\n \n\n \n\n441\n\n \n\n \n\n \n\n—\n\n \n\n \n\n9 and 10\n\n(Gain)/loss on sale of property, plant and equipment\n\n \n\n \n\n(4,246\n\n)\n\n \n\n \n\n110\n\n \n\n \n\n \n\n117\n\n \n\n \n\n \n\nDeferred income for capital grants\n\n \n\n \n\n(1,408\n\n)\n\n \n\n \n\n(1,455\n\n)\n\n \n\n \n\n(1,648\n\n)\n\n \n\n \n\nRent concessions\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n21\n\nInterest expenses\n\n \n\n \n\n6,148\n\n \n\n \n\n \n\n7,013\n\n \n\n \n\n \n\n7,111\n\n \n\n \n\n39\n\nUnrealised foreign exchange (gains)/losses\n\n \n\n \n\n(301\n\n)\n\n \n\n \n\n355\n\n \n\n \n\n \n\n748\n\n \n\n \n\n40\n\nShare of (profit)/loss of equity-method investees\n\n \n\n \n\n371\n\n \n\n \n\n \n\n(389\n\n)\n\n \n\n \n\n(2,897\n\n)\n\n \n\n11\n\nTax expense\n\n \n\n \n\n1,036\n\n \n\n \n\n \n\n684\n\n \n\n \n\n \n\n1,090\n\n \n\n \n\n41\n\nTotal adjustment\n\n \n\n \n\n30,824\n\n \n\n \n\n \n\n27,947\n\n \n\n \n\n \n\n26,893\n\n \n\n \n\n \n\nChanges in:\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nInventories\n\n \n\n \n\n13,281\n\n \n\n \n\n \n\n(728\n\n)\n\n \n\n \n\n8,033\n\n \n\n \n\n \n\nTrade and other receivables\n\n \n\n \n\n3,897\n\n \n\n \n\n \n\n2,357\n\n \n\n \n\n \n\n7,332\n\n \n\n \n\n \n\nOther assets\n\n \n\n \n\n65\n\n \n\n \n\n \n\n146\n\n \n\n \n\n \n\n2,457\n\n \n\n \n\n \n\nTrade and other payables\n\n \n\n \n\n(7,623\n\n)\n\n \n\n \n\n5,108\n\n \n\n \n\n \n\n(14,205\n\n)\n\n \n\n \n\nContract liabilities\n\n \n\n \n\n(3,695\n\n)\n\n \n\n \n\n2,840\n\n \n\n \n\n \n\n2,983\n\n \n\n \n\n \n\nProvisions\n\n \n\n \n\n(2,384\n\n)\n\n \n\n \n\n(2,581\n\n)\n\n \n\n \n\n(1,412\n\n)\n\n \n\n \n\nOne-time termination benefit payments\n\n \n\n \n\n(658\n\n)\n\n \n\n \n\n(9,597\n\n)\n\n \n\n \n\n(3,050\n\n)\n\n \n\n \n\nEmployees’ leaving entitlement\n\n \n\n \n\n(364\n\n)\n\n \n\n \n\n(1,116\n\n)\n\n \n\n \n\n(1,402\n\n)\n\n \n\n \n\nTotal changes\n\n \n\n \n\n2,519\n\n \n\n \n\n \n\n(3,571\n\n)\n\n \n\n \n\n736\n\n \n\n \n\n \n\nCash provided by (used in) operating activities\n\n \n\n \n\n2,751\n\n \n\n \n\n \n\n8,994\n\n \n\n \n\n \n\n11,467\n\n \n\n \n\n \n\nInterest paid\n\n \n\n \n\n(5,862\n\n)\n\n \n\n \n\n(6,980\n\n)\n\n \n\n \n\n(5,641\n\n)\n\n \n\n \n\nIncome taxes paid\n\n \n\n \n\n(1,364\n\n)\n\n \n\n \n\n(292\n\n)\n\n \n\n \n\n(2,616\n\n)\n\n \n\n \n\nNet cash provided by (used in) operating activities\n\n \n\n \n\n(4,475\n\n)\n\n \n\n \n\n1,722\n\n \n\n \n\n \n\n3,210\n\n \n\n \n\n \n\nCash flows from investing activities:\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nProperty, plant and equipment:\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nAdditions\n\n \n\n \n\n(6,222\n\n)\n\n \n\n \n\n(5,209\n\n)\n\n \n\n \n\n(10,299\n\n)\n\n \n\n \n\nDisposals\n\n \n\n \n\n10,056\n\n \n\n \n\n \n\n4,084\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\nIntangible assets\n\n \n\n \n\n(1,441\n\n)\n\n \n\n \n\n(1,927\n\n)\n\n \n\n \n\n(1,519\n\n)\n\n \n\n \n\nGovernment grants received for PPE\n\n \n\n \n\n203\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n918\n\n \n\n \n\n \n\nDividends from equity-accounted investees\n\n \n\n \n\n2,221\n\n \n\n \n\n \n\n77\n\n \n\n \n\n \n\n3,024\n\n \n\n \n\n11\n\nOther current financial receivables\n\n \n\n \n\n(2,025\n\n)\n\n \n\n \n\n(1,348\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n17\n\nPurchase of business, net of cash acquired\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n11\n\nDisposal of a business, net of cash disposed of\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\nNet cash provided by (used in) investing activities\n\n \n\n \n\n2,792\n\n \n\n \n\n \n\n(4,323\n\n)\n\n \n\n \n\n(7,876\n\n)\n\n \n\n \n\nCash flows from financing activities:\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nLong-term borrowings:\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nProceeds\n\n \n\n \n\n17,846\n\n \n\n \n\n \n\n3,314\n\n \n\n \n\n \n\n10,912\n\n \n\n \n\n \n\nRepayments\n\n \n\n \n\n(4,717\n\n)\n\n \n\n \n\n(4,839\n\n)\n\n \n\n \n\n(8,715\n\n)\n\n \n\n \n\nShort-term borrowings\n\n \n\n \n\n(1,976\n\n)\n\n \n\n \n\n(798\n\n)\n\n \n\n \n\n(6,703\n\n)\n\n \n\n \n\nPayment of lease liabilities\n\n \n\n \n\n(9,482\n\n)\n\n \n\n \n\n(10,288\n\n)\n\n \n\n \n\n(11,057\n\n)\n\n \n\n9 and 21\n\nProceeds from increase in share capital\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\nDividends distribution to non-controlling interests\n\n \n\n \n\n(419\n\n)\n\n \n\n \n\n(149\n\n)\n\n \n\n \n\n(135\n\n)\n\n \n\n \n\nCapital contribution by non-controlling interests\n\n \n\n \n\n150\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\nNet cash provided by (used in) financing activities\n\n \n\n \n\n1,402\n\n \n\n \n\n \n\n(12,760\n\n)\n\n \n\n \n\n(15,698\n\n)\n\n \n\n \n\nIncrease (decrease) in cash and cash equivalents\n\n \n\n \n\n(281\n\n)\n\n \n\n \n\n(15,361\n\n)\n\n \n\n \n\n(20,364\n\n)\n\n \n\n \n\nCash and cash equivalents as at January 1 (*)\n\n \n\n \n\n16,994\n\n \n\n \n\n \n\n31,573\n\n \n\n \n\n \n\n52,721\n\n \n\n \n\n \n\nEffect of movements in exchange rates on cash held\n\n \n\n \n\n(567\n\n)\n\n \n\n \n\n782\n\n \n\n \n\n \n\n(784\n\n)\n\n \n\n \n\nCash and cash equivalents as at December 31 (*)\n\n \n\n \n\n16,146\n\n \n\n \n\n \n\n16,994\n\n \n\n \n\n \n\n31,573\n\n \n\n \n\n18\n\n(*) As at December 31, 2025, 2024 and 2023, cash and cash equivalents include bank overdrafts of 4,174, 3,328 and 2,037, respectively, that are repayable on demand and form an integral part of the Group’s cash management.\n\nThe accompanying notes are an integral part of the Company Financial Statements.\n\n \n\nF-9\n\n[Table of Contents](#toc)\n\n \n\nNatuzzi S.p.A. and Subsidiaries\n\nNotes to consolidated financial statements\n\n(Expressed in thousands of euros except as otherwise indicated)\n\n1. Introduction\n\nThe consolidated financial statements of Natuzzi S.p.A. have been prepared in accordance with IFRS Accounting Standards as issued by the International Accounting Standards Board, including interpretations issued by the IFRS Interpretations Committee (IFRS IC) applicable to companies reporting under IFRS.\n\n2. Description of the business and Group composition\n\nNatuzzi S.p.A. (“Natuzzi”, the “Company” or the “Parent”) is domiciled in Italy. The Company’s registered office is at via Iazzitiello 47, 70029 Santeramo in Colle (Bari, Italy). These consolidated financial statements include the accounts of Natuzzi S.p.A. and of its subsidiaries (together with the Company, the “Group”). The Group’s primary activity is the design, manufacture and marketing of leather and fabric upholstered furniture (see note 6 on operating segment).\n\nDuring 2025, 2024 and 2023 no significant non-recurring events or unusual transactions have occurred. All transactions performed by the Group during 2025, 2024 and 2023 are part of the Group’s ordinary business.\n\nThe consolidated financial statements of the Group as at December 31, 2025 have been approved and authorized by the Company’s Board of Directors (the Board) on May 14, 2026.\n\nThe subsidiaries included in the consolidation as at December 31, 2025, 2024 and 2023, together with the related percentages of ownership and other information, are as follows:\n\nName\n\nPercentage as at\n31/12/2025\n\n \n\nPercentage as at\n31/12/2024\n\n \n\nPercentage as at\n31/12/2023\n\n \n\nShare/\nquota capital\n\n \n\nOwnership\nregistered office\n\n \n\nActivity\n\nItalsofa Romania S.r.l.\n\n \n\n100.00\n\n \n\n \n\n100.00\n\n \n\n \n\n100.00\n\n \n\nRON 109,271,750\n\n \n\nBaia Mare, Romania\n\n \n\n(1)\n\nNatuzzi (China) Ltd\n\n \n\n100.00\n\n \n\n \n\n100.00\n\n \n\n \n\n100.00\n\n \n\nCNY 106,414,300\n\n \n\nShanghai, China\n\n \n\n(1)\n\nItalsofa Nordeste S/A\n\n \n\n100.00\n\n \n\n \n\n100.00\n\n \n\n \n\n100.00\n\n \n\nBRL 159,300,558\n\n \n\nSalvador de Bahia, Brazil\n\n \n\n(1)\n\nNatuzzi Quanjiao Limited\n\n \n\n100.00\n\n \n\n \n\n100.00\n\n \n\n \n\n100.00\n\n \n\nCNY 10,000,000\n\n \n\nQuanjiao County-Anhui province, China\n\n \n\n(1)\n\nNatuzzi Vietnam JSC\n\n \n\n69.19\n\n \n\n \n\n—\n\n \n\n \n\n—\n\n \n\nVDONG 30.625.000.000\n\n \n\nHo Chi Minh City, Vietnam\n\n \n\n(1)\n\nNatco S.p.A.\n\n \n\n99.99\n\n \n\n \n\n99.99\n\n \n\n \n\n99.99\n\n \n\nEUR 4,420,000\n\n \n\nSanteramo in Colle, Italy\n\n \n\n(2)\n\nNacon S.p.A.\n\n \n\n100.00\n\n \n\n \n\n100.00\n\n \n\n \n\n100.00\n\n \n\nEUR 2,800,000\n\n \n\nSanteramo in Colle, Italy\n\n \n\n(3)\n\nLagene S.r.l.\n\n \n\n100.00\n\n \n\n \n\n100.00\n\n \n\n \n\n100.00\n\n \n\nEUR 10,000\n\n \n\nSanteramo in Colle, Italy\n\n \n\n(3)\n\nNatuzzi Americas Inc.\n\n \n\n100.00\n\n \n\n \n\n100.00\n\n \n\n \n\n100.00\n\n \n\nUSD 89\n\n \n\nHigh Point, N. Carolina, USA\n\n \n\n(3)\n\nNatuzzi Florida LLC\n\n \n\n51.00\n\n \n\n \n\n51.00\n\n \n\n \n\n51.00\n\n \n\nUSD 4,955,186\n\n \n\nHigh Point, N. Carolina, USA\n\n \n\n(3)\n\nNatuzzi Iberica S.A.\n\n \n\n100.00\n\n \n\n \n\n100.00\n\n \n\n \n\n100.00\n\n \n\nEUR 386,255\n\n \n\nMadrid, Spain\n\n \n\n(3)\n\nNatuzzi Switzerland AG\n\n \n\n100.00\n\n \n\n \n\n100.00\n\n \n\n \n\n100.00\n\n \n\nCHF 2,000,000\n\n \n\nDietikon, Switzerland\n\n \n\n(3)\n\nNatuzzi Services Limited\n\n \n\n100.00\n\n \n\n \n\n100.00\n\n \n\n \n\n100.00\n\n \n\nGBP 25,349,353\n\n \n\nLondon, UK\n\n \n\n(3)\n\nNatuzzi UK Retail Limited\n\n \n\n70.00\n\n \n\n \n\n70.00\n\n \n\n \n\n70.00\n\n \n\nGBP 100\n\n \n\nCardiff, UK\n\n \n\n(3)\n\nNatuzzi Germany Gmbh\n\n \n\n100.00\n\n \n\n \n\n100.00\n\n \n\n \n\n100.00\n\n \n\nEUR 25,000\n\n \n\nKöln, Germany\n\n \n\n(3)\n\nNatuzzi Japan KK\n\n \n\n74.40\n\n \n\n \n\n74.40\n\n \n\n \n\n74.40\n\n \n\nJPY 28,000,000\n\n \n\nTokyo, Japan\n\n \n\n(3)\n\nNatuzzi Russia OOO\n\n \n\n100.00\n\n \n\n \n\n100.00\n\n \n\n \n\n100.00\n\n \n\nRUB 8,700,000\n\n \n\nMoscow, Russia\n\n \n\n(3)\n\nNatmx S.DE.R.L.DE.C.V\n\n \n\n100.00\n\n \n\n \n\n100.00\n\n \n\n \n\n100.00\n\n \n\nMXN 68,504,040\n\n \n\nMexico City, Mexico\n\n \n\n(3)\n\nNatuzzi France S.a.s.\n\n \n\n100.00\n\n \n\n \n\n100.00\n\n \n\n \n\n100.00\n\n \n\nEUR 70,727\n\n \n\nParis, France\n\n \n\n(3)\n\nNatuzzi Oceania PTI Ltd\n\n \n\n74.40\n\n \n\n \n\n74.40\n\n \n\n \n\n74.40\n\n \n\nAUD 320,002\n\n \n\nSydney, Australia\n\n \n\n(3)\n\nNatuzzi Singapore PTE. LTD.\n\n \n\n74.40\n\n \n\n \n\n74.40\n\n \n\n \n\n74.40\n\n \n\nUSD 7,654,207\n\n \n\nSingapore, Republic of Singapore\n\n \n\n(3)\n\nNatuzzi Shanghai Co. Ltd\n\n \n\n100.00\n\n \n\n \n\n100.00\n\n \n\n \n\n—\n\n \n\nCNY 500,000\n\n \n\nShanghai, China\n\n \n\n(3)\n\nNatuzzi Netherlands Holding\n\n \n\n100.00\n\n \n\n \n\n100.00\n\n \n\n \n\n100.00\n\n \n\nEUR 34,605,000\n\n \n\nAmsterdam, Holland\n\n \n\n(4)\n\nNatuzzi Trade Service S.r.l.\n\n \n\n100.00\n\n \n\n \n\n100.00\n\n \n\n \n\n100.00\n\n \n\nEUR 14,000,000\n\n \n\nSanteramo in Colle, Italy\n\n \n\n(5)\n\nNatuzzi Industrial S.r.l.\n\n \n\n100.00\n\n \n\n \n\n—\n\n \n\n \n\n—\n\n \n\nEUR 10,000.00\n\n \n\nSanteramo in Colle, Italy\n\n \n\n(5)\n\n \n\n(1) Manufacture and distribution\n\n(2) Intragroup leather dyeing and finishing\n\n(3) Services and distribution\n\n(4) Investment holding\n\n(5) Dormant\n\n \n\nF-10\n\n[Table of Contents](#toc)\n\n \n\nNatuzzi S.p.A. and Subsidiaries\n\nNotes to consolidated financial statements\n\n(Expressed in thousands of euros except as otherwise indicated)\n\n \n\nDuring 2025, the following companies were added to the scope of consolidation:\n\n•\nNatuzzi Vietnam JSC, a manufacturing company established in April 2025 and 93% owned by Natuzzi Singapore and 7% by two Vietnamese partners. Natuzzi Vietnam JSC began manufacturing operations in September 2025.\n\n•\nNatuzzi Industrial S.r.l., a company established in December 2025 and not yet operational, 100% controlled by Natuzzi S.p.A.\n\n \n\nNo business combinations occurred in 2025, 2024 and 2023.\n\nThe following table summarises the information related to the only material non-controlling interests (NCI) of the Group’s subsidiary Natuzzi Florida LLC, before any intra-group eliminations.\n\nSummarised statement of financial position of Natuzzi Florida LLC and Non-controlling interests share in equity as at December 31, 2025 and 2024.\n\n \n\n \n\n \n\n31/12/25\n\n \n\n \n\n31/12/24\n\n \n\nCurrent assets\n\n \n\n \n\n8,212\n\n \n\n \n\n \n\n11,496\n\n \n\nNon-current assets\n\n \n\n \n\n10,331\n\n \n\n \n\n \n\n12,833\n\n \n\nCurrent liabilities\n\n \n\n \n\n(9,652\n\n)\n\n \n\n \n\n(12,738\n\n)\n\nNon-current liabilities\n\n \n\n \n\n(6,501\n\n)\n\n \n\n \n\n(7,822\n\n)\n\nNet assets\n\n \n\n \n\n2,390\n\n \n\n \n\n \n\n3,769\n\n \n\nNet assets attributable to NCI – 49%\n\n \n\n \n\n1,171\n\n \n\n \n\n \n\n1,847\n\n \n\n \n\nSummarised statement of profit or loss of Natuzzi Florida LLC and Non-controlling interests share of loss for the years ended December 31, 2025, 2024 and 2023.\n\n \n\n \n\n \n\n2025\n\n \n\n \n\n2024\n\n \n\n \n\n2023\n\n \n\nRevenue\n\n \n\n \n\n24,299\n\n \n\n \n\n \n\n20,487\n\n \n\n \n\n \n\n18,643\n\n \n\nExpenses\n\n \n\n \n\n(24,483\n\n)\n\n \n\n \n\n(20,525\n\n)\n\n \n\n \n\n(19,540\n\n)\n\nProfit/(loss) for the year\n\n \n\n \n\n(184\n\n)\n\n \n\n \n\n(38\n\n)\n\n \n\n \n\n(897\n\n)\n\nOther comprehensive income/(loss)\n\n \n\n \n\n(341\n\n)\n\n \n\n \n\n240\n\n \n\n \n\n \n\n(219\n\n)\n\nTotal comprehensive income/(loss) for the year\n\n \n\n \n\n(525\n\n)\n\n \n\n \n\n202\n\n \n\n \n\n \n\n(1,116\n\n)\n\nProfit/(loss) allocated to NCI – 49%\n\n \n\n \n\n(90\n\n)\n\n \n\n \n\n(19\n\n)\n\n \n\n \n\n(440\n\n)\n\nOther comprehensive income/(loss) allocated to NCI\n\n \n\n \n\n(167\n\n)\n\n \n\n \n\n118\n\n \n\n \n\n \n\n(107\n\n)\n\nCash flow provided by operating activities\n\n \n\n \n\n3,279\n\n \n\n \n\n \n\n2,122\n\n \n\n \n\n \n\n2,463\n\n \n\nCash flow used in investing activities\n\n \n\n \n\n(13\n\n)\n\n \n\n \n\n(87\n\n)\n\n \n\n \n\n(1,122\n\n)\n\nCash flow used in financing activities (dividends to NCI for years ended December 31, 2025, 2024 and 2023, respectively 419, 149 and 698)\n\n \n\n \n\n(2,160\n\n)\n\n \n\n \n\n(2,324\n\n)\n\n \n\n \n\n(2,401\n\n)\n\n \n\n3. General principles for the preparation of the consolidated financial statements\n\n(a) Compliance with IFRS\n\nThe consolidated financial statements of the Natuzzi Group have been prepared in accordance with IFRS Accounting Standards issued by the International Accounting Standards Board (IASB) and interpretations issued by the IFRS Interpretations Committee (IFRS IC) applicable to companies reporting under IFRS.\n\nDetails of Group’s accounting policies are included in note 4.\n\n \n\nF-11\n\n[Table of Contents](#toc)\n\n \n\nNatuzzi S.p.A. and Subsidiaries\n\nNotes to consolidated financial statements\n\n(Expressed in thousands of euros except as otherwise indicated)\n\n \n\n(b) Historical cost convention\n\nThe consolidated financial statements have been prepared on a historical cost basis, except for derivative financial instruments measured at fair value (see note 33).\n\n(c) Basis of preparation\n\nThe consolidated financial statements consist of the consolidated statement of financial position, the consolidated statement of profit or loss, the consolidated statement of comprehensive income, consolidated statement of changes in equity, consolidated statement of cash flows and the notes to the consolidated financial statements.\n\nThe consolidated statement of financial position has been prepared based on the nature of the transactions. Assets and liabilities have been distinguished in current and non-current in accordance with paragraphs 66–76B of IAS 1.\n\nThe consolidated statement of profit or loss has been prepared based on the function of the expenses, with a separate statement for the comprehensive income.\n\nThe consolidated statement of cash flows has been prepared using the indirect method.\n\nThe statement of changes in equity includes the components of comprehensive income, distinguishing those attributable to the parent company's shareholders from those pertaining to non-controlling interests. For each component of equity, this statement presents the changes during the year resulting from the net income for the period, other comprehensive income components, and other equity transactions affecting the parent company's shareholders and non-controlling interests.\n\nThe consolidated financial statements present all amounts rounded to the nearest thousands of Euro, unless otherwise stated. They also present comparative information in respect to the previous period.\n\n(d) Functional and presentation currency\n\nThese consolidated financial statements are presented in Euro (the Group’s presentation currency), which is the Natuzzi S.p.A.’s functional currency.\n\n(e) Use of estimates and judgement\n\nIn preparing these consolidated financial statements, management has made judgements and estimates that affect the application of the Group’s accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.\n\nEstimates and underlying assumptions are reviewed on an ongoing basis. Revisions to estimates are recognised prospectively. Estimates are based on historical experience and other factors, including expectations about future events that may have a financial impact on the Group and that are believed to be reasonable under the circumstances.\n\n(i) Judgements\n\nInformation about judgments made in applying accounting policies that have the most significant effects on the amounts recognised in the financial statements is included in the following notes.\n\n—\nNote 29: reverse factoring, presentation of amounts related to supply chain financing arrangements in the statement of financial position and in the statement of cash flow.\n\n—\nNotes 4(f), 9 and 21: assessment of the lease term of lease liabilities depending on whether the Group is reasonably certain to exercise the extension options.\n\n(ii) Assumptions and estimation uncertainties\n\nInformation about assumptions and estimates as at December 31, 2025 that have an high risk of resulting in a material adjustment to the carrying amounts of assets and liabilities in the next financial year is included in the following notes.\n\n \n\nF-12\n\n[Table of Contents](#toc)\n\n \n\nNatuzzi S.p.A. and Subsidiaries\n\nNotes to consolidated financial statements\n\n(Expressed in thousands of euros except as otherwise indicated)\n\n \n\n—\nNotes 4(i), 8, 9, 10 and 11: impairment test of property, plant and equipment, right-of-use assets, intangible assets including goodwill and interest in joint ventures and associates, with particular reference to the key assumptions applied by management in estimating value in use (annual sales growth rates, weighted average cost of capital rates and long-term growth rates).\n\n—\nNotes 4(n)(i), 15 and 33: measurement of the provision for impairment on trade receivables, for the significant assumptions used by management in estimating the expected credit losses (weighted-average loss rate or default rate, current and future financial situation of debtors for individual receivables that management is aware will be difficult to collect, future general economic conditions).\n\n—\nNotes 4(r) and 26: provision for warranties for the significant assumptions underlying the estimation of the expected warranties.\n\n—\nNotes 4(r), 26 and 44: recognition and measurement of provisions and contingencies for the key assumptions about the likelihood and magnitude of an outflow of resources.\n\n—\nNotes 4(aa) and 41: recognition of deferred tax assets, for the estimation of the available future taxable profits against which deductible temporary differences and tax losses carried forward can be utilised.\n\nIn preparing the consolidated financial statements, management has considered the impact of climate change in the context of the disclosures. These considerations did not have a material impact on the financial reporting judgements and estimates, and at this time, the Group does not expect that climate change will have a significant impact on the Group’s going concern assessment, its ability to recover the carrying value of its long-lived assets or its liquidity.\n\n(f) Going concern assumption\n\nThe consolidated financial statements have been prepared on a going concern basis, which assumes that the Group will be able to meet its obligations as they fall due within one year from the date of the approval of these consolidated financial statements. However there is material uncertainty that raises substantial doubt as contemplated by Public Company Accounting Oversight Board (“PCAOB”) to continue as a going concern within one year from the date of the approval of these financial statements. Circumstances and events, management’s plans and Directors’ conclusions on the Group’s going concern assumption as at December 31, 2025 are reported below.\n\n(i) Circumstances and events\n\nThe Group incurred recurring losses from operations, has a net negative working capital and, in 2025, cash outflows from operating activities. In particular, the Group recognised a net loss after tax of 30,592 and an operating loss of 18,815 for the year ended December 31, 2025 and, as at that date, current liabilities exceeded current assets by 22,275 and total equity amounted to 25,882. Due to the loss for the year, the Group was unable to generate sufficient cash flow from operating activities during the year which adversely affected its net working capital and net financial position as at December 31, 2025. Based on these circumstances, Company has a material uncertainty to have sufficient liquidity to cover the operating losses for the next twelve months after the approval of these consolidated financial statements.\n\nFor the year ended December 31, 2025, the Group reported a revenue decline of 10,580 compared to the year ended December 31, 2024, resulting in total revenue of 308,217. The 3.32% decrease in revenue is primarily attributable to a combination of unfavorable macroeconomic conditions, including prolonged geopolitical instability, a significant discontinuity in international demand for upholstered furniture - further compounded by the recent tightening of the US tariff framework - elevated inflation leading to a reduction in consumers' disposable income, and a subdued real estate market. These factors have given rise to structural challenges, particularly excess workforce capacity and high labor costs at the Group's Italian operations.\n\nUpon approval of the Company’s unaudited financial statements for the first nine months and third quarter ended September 30, 2025, the Company had recorded a loss for the quarter of 5,089, resulting in a reduction of the share capital by more than one-third, thereby triggering the obligations set forth in Article 2446 of the Civil Code, which requires the\n\n \n\nF-13\n\n[Table of Contents](#toc)\n\n \n\nNatuzzi S.p.A. and Subsidiaries\n\nNotes to consolidated financial statements\n\n(Expressed in thousands of euros except as otherwise indicated)\n\n \n\nboard of directors of Italian joint-stock companies (società per azioni) to promptly convene a shareholders’ meeting to take appropriate actions. Accordingly, at the shareholders’ meeting held on February 16, 2026, the Company’s shareholders resolved to postpone any decision regarding the reduction of share capital pursuant to Article 2446 of the Civil Code to the forthcoming shareholders’ meeting to be called to approve the Company’s stand-alone financial statements for the year ended December 31, 2025. Such share capital reduction is essentially an accounting adjustment that aligns the nominal value of the share capital with its actual value as of December 31, 2025.\n\n(ii) Management plans\n\nManagement’s plans to mitigate the adverse effects of such circumstances and events are set forth below.\n\nThe Company's directors, following the guidelines approved by Board of Directors in December 2025 and subsequent amendments, developed an economic and financial plan covering the period up to June 2027 (the “one-year budget”), and conferred delegated authority to the CEO to initiate an out-of-court composition proceeding (Composizione negoziata della crisi, the “Composition”) which is the context for a multi-year business plan aimed at restoring efficiency across the Group.\n\nThe one-year budget envisages:\n\n•\na significant reduction in fixed costs, including enhanced access to government-funded wage support schemes for temporary layoff workers and employees (CIGS - Cassa Integrazione Guadagni Straordinaria);\n\n•\na more flexible production capacity, including shutdown of certain underutilized facilities and the outsourcing of low value-added activities, which do not require any kind of negotiation with trade unions and competent Italian Ministry;\n\n•\nthe closure of non-performing directly operated stores (\"DOS\") to improve the quality of the retail network, in particular in North America;\n\n•\nthe reinforcement of ongoing initiative finalized to a strong focus on liquidity preservation, through tight control of working capital, disciplined spending, and close monitoring of cash flows, and\n\n•\nexpected cash proceeds from dividend distribution by the joint venture, Natuzzi Trading Shanghai, in China.\n\nMost notably, the one-year budget envisages raising resources to cover the cash requirements to finance the operating cash outflow through a combination of (i) non-strategic asset disposals and (ii) a review of the Company’s capital structure and potential capital strengthening actions, including a capital increase with potential access by national government relaunch agency.\n\nThe Directors note that certain actions have already been undertaken by the Group in response to the challenging conditions described above, including the following:\n\n•\non November 5, 2025, the Company entered into a new agreement with the Italian trade unions pursuant to which government funds will be used, for the entirety of 2026, to pay a substantial portion of the salaries of redundant workers and employees who are subject to temporary layoffs (Cassa Integrazione Guadagni Straordinaria);\n\n•\non November 21, 2025, INVEST 2003 S.r.l. (the “Parent Company”) provided a binding commitment of up to 15,000 to grant the Company a credit facility to support its cash requirements and the transformation process. The Company has the option to convert the amounts drawn into capital (versamento in conto futuro aumento di capitale) in connection with future capital strengthening transactions. As of December 31, 2025, the total amount drawn by the Company on this facility was 10,000 (see note 45);\n\n•\nin December 2025, the Company started the due diligence procedure, required by national government relaunch agency, mandatory to evaluate a potential equity investment in the Group, as well as any other form of financial support;\n\n \n\nF-14\n\n[Table of Contents](#toc)\n\n \n\nNatuzzi S.p.A. and Subsidiaries\n\nNotes to consolidated financial statements\n\n(Expressed in thousands of euros except as otherwise indicated)\n\n \n\n•\non January 29, 2026, the Company divested its photovoltaic facilities for 7,115, compared to a carrying amount of 1,105.\n\n•\nin February 2026, the Company started preliminary discussions with prospective purchasers of an underutilized manufacturing facility located in Italy and with potential investors for the outsourcing of low value-added activities;\n\n•\non March 31, 2026, the Company and INVEST 2003 S.r.l. entered into an agreement pursuant to which the total outstanding amount owed by the Company to INVEST 2003 S.r.l. as at that date, amounting to 12,500 in aggregate, was irrevocably reclassified as an advance payment on account of a future capital increase (versamento in conto futuro aumento di capitale), strengthening the Company’s equity (see note 46);\n\n•\nIn April 2026, the Company filed application to the U.S. Customs and Border Protection (CBP) for the refund of custom duties imposed by the the U.S. administration for about 2 million dollars.\n\n•\nOn May 14, 2026, the board of directors conferred delegated authority on the CEO to initiate an out-of-court composition proceeding (Composizione negoziata della crisi, the “Composition”), a voluntary, debtor-in-possession restructuring tool under the Italian Insolvency and Restructuring Code (Legislative Decree no. 14 of January 12, 2019) designed to address financial distress at an early stage through consensual negotiations, with limited court involvement. The formal request to initiate the Composition will be filed in the next forthcoming days. The procedure will involve the Company and its Italian subsidiaries.\n\nBy virtue of its nature as an out-of-court composition proceeding, Company’s management retains both ordinary and extraordinary powers of administration, since it is not divested of Company’s assets. Consequently, the company's shareholders continue to exercise their ordinary rights as equity holders of the Company.\n\nSpecifically, according to the named out-of-court composition proceeding, a debtor in financial difficulty (i.e., a condition of economic or financial imbalance that is likely to result in distress or insolvency) may access the Composition if recovery appears reasonably achievable. The process is initiated by the debtor through the filing of an application with the local chamber of commerce for the appointment of an independent expert. The expert’s role is to facilitate negotiations between the debtor, creditors and other stakeholders with a view to addressing the debtor’s financial distress and reaching a consensual solution within six (6) months (subject to a possible extension of an additional six (6) months) of the expert’s appointment.\n\nDuring the Composition, the debtor remains in full control of its business and operations, and the corporate rules relating to minimum statutory capital of companies (including the requirement that a company with negative capital be recapitalized or liquidated) may be suspended. Such suspension operates at the option of the debtor, by means of a statement to be published on the Companies’ Register.\n\nThe Composition is primarily an out-of-court process; however, it allows the debtor to seek targeted court involvement, including to obtain protective measures (i.e., a moratorium) operating as a temporary stay on enforcement actions, where appropriate to facilitate a successful outcome of the negotiations. Such measures are subject to confirmation by the court and may apply for up to 240 days. The court may revoke them at any time if it determines that they are no longer necessary or proportionate, or if the Composition proves unsuccessful.\n\nWhile the debtor may in principle take actions beyond the ordinary course of business (e.g., sale of a business unit, new financing), it may seek court authorization prior to doing so in order to obtain certain benefits or protections not otherwise available (e.g., protection against bankruptcy claw-back).\n\nThe process is intended to result in a consensual restructuring, which may take the form of bilateral or multilateral agreements or standstill arrangements. If the parties are unable to reach an agreement, the debtor may access more formal restructuring proceedings under Italian law, including court-based procedures that provide for binding effects on dissenting creditors.\n\n \n\n(iii) Directors’ conclusions\n\n \n\nF-15\n\n[Table of Contents](#toc)\n\n \n\nNatuzzi S.p.A. and Subsidiaries\n\nNotes to consolidated financial statements\n\n(Expressed in thousands of euros except as otherwise indicated)\n\n \n\nAs of December 31, 2025, the Group’s cash and cash equivalents amount to 20,320, while its long-term borrowings amount to 23,095 (including a current portion of 7,251) and its bank overdrafts and short-term borrowings amount to 22,197. Furthermore, as of December 31, 2025, the unused portion of credit facilities available to the Group, for which no commitment fees are due, amounts to 4,445, comprising non-recourse factoring agreements for export-related trade receivables, borrowings secured by trade receivables, and bank overdrafts. For further details, please refer to note 28.\n\nThe Board of Directors notes that the inflows forecasted for covering the above operating net cash outflow, which include the request of the residual 5,000 granted in November 2025 by INVEST 2003 S.r.l. as a credit facility, are heavily dependent on disposal of non-strategic assets and/or on a capital increase with potential access by national government relaunch agency in the context of the mentioned out of court composition proceeding. Even if management intends to execute its mitigation plans, there can be no assurance that the necessary financing will be available, or that it will be available on terms acceptable to the Company or within the envisaged timeframe.\n\nAs a result of these events and conditions, the Board concluded a material uncertainty exists that might cast significant doubt (or raises substantial doubt as contemplated by Public Company Accounting Oversight Board (“PCAOB”)) to continue as a going concern for a reasonable period of time and, therefore, to continue realizing its assets and discharging its liabilities in the normal course of business. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty if the Group were unable to continue as a going concern.\n\n4. Material accounting policy information\n\nThis note presents the significant accounting policies adopted in the preparation of these consolidated financial statements. These policies have been applied consistently by the Group’s entities to all the years presented, unless otherwise indicated.\n\n(a) Basis of consolidation\n\n(i) Subsidiaries\n\nSubsidiaries are all entities over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases.\n\nThe acquisition method of accounting is used to account for business combinations by the Group.\n\nIntragroup transactions, balances and unrealised gains on transactions between the Group’s entities are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the transferred asset.\n\nNon-controlling interests (NCI) in the profit or loss and equity of subsidiaries are shown separately in the consolidated statement of financial position, consolidated statement of profit or loss, consolidated statement of comprehensive income and consolidated statement of changes in equity. Non-controlling interests are measured initially at their proportionate share of the fair value of the acquiree’s identifiable net assets at the date of acquisition. Changes in the Group’s interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions.\n\n(ii) Associates\n\nAssociates are all entities over which the Group has significant influence but not control or joint control. This is generally the case where the Group holds between 20% and 50% of the voting rights. Investments in associates are accounted for using the equity method of accounting (see (v) below), after initially being recognised at cost.\n\n \n\nF-16\n\n[Table of Contents](#toc)\n\n \n\nNatuzzi S.p.A. and Subsidiaries\n\nNotes to consolidated financial statements\n\n(Expressed in thousands of euros except as otherwise indicated)\n\n \n\n(iii) Joint arrangements\n\nUnder IFRS 11 “Joint Arrangements”, investments in joint arrangements are classified as either joint operations or joint ventures. The classification depends on the contractual rights and obligations of each investor, rather than the legal structure of the joint arrangement.\n\n(iv) Joint ventures\n\nInterests in joint ventures are accounted for using the equity method (see (v) below), after initially being recognised at cost in the consolidated statement of financial position.\n\n(v) Equity method\n\nUnder the equity method of accounting, investments are initially recognised at cost and adjusted thereafter to recognise the Group’s share of the post-acquisition profits or losses of the investee in profit or loss, and the Group’s share of variations in other comprehensive income of the investee. Dividends received or receivable from associates and joint ventures are recognised as a reduction in the carrying amount of the investment.\n\nWhen the Group’s share of losses in an equity-accounted investment equals or exceeds its interest in the entity, including any other unsecured long-term receivables, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the other entity.\n\nUnrealised gains on transactions between the Group and its associates and joint ventures are eliminated to the extent of the Group’s interest in these entities. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred. The accounting policies of equity-accounted investees have been aligned where necessary to ensure consistency with the policies adopted by the Group.\n\nThe carrying amount of equity-accounted investments is tested for impairment in accordance with the policy described in note 4 (i).\n\n(vi) Changes in ownership interests\n\nThe Group treats transactions with non-controlling interests that do not result in a loss of control as transactions with equity owners of the Group. A change in ownership interest results in an adjustment between the carrying amounts of the controlling and non-controlling interests to reflect their relative interests in the subsidiary. Any difference between the amount of the adjustment to non-controlling interests and any consideration paid or received is recognised in a separate reserve within equity attributable to owners of Natuzzi S.p.A.\n\nWhen the Group ceases to consolidate or equity account for an investment because of a loss of control or significant influence, any retained interest in the entity is remeasured to its fair value with the change in carrying amount recognised in profit or loss. This fair value becomes the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in other comprehensive income are reclassified to profit or loss.\n\nIf the ownership interest in a joint venture or an associate is reduced but significant influence is retained, only a proportionate share of the amounts previously recognised in other comprehensive income are reclassified to profit or loss where appropriate.\n\n(b) Segment reporting\n\nOperating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker identified as the Board of Directors.\n\n \n\nF-17\n\n[Table of Contents](#toc)\n\n \n\nNatuzzi S.p.A. and Subsidiaries\n\nNotes to consolidated financial statements\n\n(Expressed in thousands of euros except as otherwise indicated)\n\n \n\n(c) Group Companies\n\n(i) Foreign operations that have a functional currency different from the presentation currency\n\nThe results and financial position of foreign operations (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency (Euro) are translated into the presentation currency as follows: (a) assets and liabilities for each statement of financial position presented are translated at the closing rate at the date of that statement of financial position; (b) revenue and expenses for each statement of profit or loss and statement of comprehensive income are translated at the average exchange rates of the year; and (c) all resulting exchange differences are recognised in other comprehensive income in the translation reserve.\n\nWhen a foreign operation is sold, the associated exchange differences are reclassified to profit or loss, as part of the gain or loss on sale.\n\n(ii) Foreign operations that have a functional currency that is the presentation currency\n\nAs at December 31, 2025 and 2024, there is one foreign subsidiary, Italsofa Romania, considered to be an integral part of Natuzzi S.p.A. due to the primary and secondary indicators reported in IAS 21, paragraphs 9 and 10. Therefore, the functional currency for this foreign subsidiary is the Parent’s functional currency, namely the Euro. As a result, all monetary assets and liabilities are remeasured, at the end of each reporting period, using the Euro and the resulting gain or loss is recognised in profit or loss. For all non-monetary assets and liabilities, share capital, reserves and retained earnings, the historical exchange rates are used. The average exchange rates of the year are used to translate non-Euro denominated revenue and expenses, except for those non-Euro denominated revenue and expenses related to assets and liabilities which are translated at historical exchange rates. The resulting exchange differences are recognised in profit or loss.\n\n(d) Foreign currency transactions\n\nTransactions in foreign currencies are translated into the functional currency using the exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency using the closing rate. Non-monetary items that are measured based on their historical cost in a foreign currency are translated at the exchange rate at the date of the transaction. If a currency is not generally exchangeable into the functional currency and/or presentation currency, an initial assessment is made whether the currency is exchangeable for the specific purpose (i.e., whether the currency can be exchanged for some purposes but not for others). If, at the measurement date, a currency is not exchangeable for another currency, the entity must estimate the spot exchange rate at that date. To estimate the spot exchange rate, depending on the situation, an exchange rate observable on the market without adjustments may be used, or a different estimation technique may be adopted.\n\nForeign currency exchange gains and losses are recognised in profit or loss and presented within net exchange rate gains/(losses).\n\n(e) Property, plant and equipment\n\nItems of property, plant and equipment (PPE) are measured at cost, which includes capitalised borrowing costs, less accumulated depreciation and any accumulated impairment losses. The cost of certain buildings as at January, 1 2017, the Group’s date of transition to IFRS, was determined with reference to their deemed cost at that date.\n\nIf significant parts of an item of property, plant and equipment have different useful lives, then they are accounted for as separate items (major components) of property, plant and equipment.\n\nAny gain or loss on the disposal of an item of property, plant and equipment is recognised in profit or loss.\n\nSubsequent expenditure is capitalised only if it is probable that the future economic benefits associated with the expenditure will flow to the Group.\n\n \n\nF-18\n\n[Table of Contents](#toc)\n\n \n\nNatuzzi S.p.A. and Subsidiaries\n\nNotes to consolidated financial statements\n\n(Expressed in thousands of euros except as otherwise indicated)\n\n \n\nDepreciation is calculated to write off the cost of items of property, plant and equipment less their estimated residual values using the straight-line method over their estimated useful lives, and is recognised in profit or loss. Land is not depreciated.\n\nThe estimated useful lives of property, plant and equipment (see note 8) for current and comparative periods are as follows: (a) buildings, 30–50 years; (b) machinery and equipment, 4–10 years; (c) office furniture and equipment, 5–10 years; (d) retail gallery and store furnishing, 3–4 years; (e) leasehold improvements, 5–10 years.\n\nDepreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.\n\n(f) Leases\n\nAs at December 31, 2025, the Group act as lessor in some lease contracts for a not significant amount.\n\n(i) Policy as a lessee\n\nAt inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Group uses the definition of a lease in IFRS 16.\n\nAt commencement or on modification of a contract that contains a lease component, the Group allocates the consideration in the contract to each lease component on the basis of its relative stand-alone prices.\n\nThe Group recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received.\n\nThe right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the end of the lease term, unless the lease transfers ownership of the underlying asset to the Group by the end of the lease term or the cost of the right-of-use asset reflects that the Group will exercise a purchase option. In that case, the right-of-use asset will be depreciated over the useful life of the underlying asset, which is determined on the same basis as those of property and equipment. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain re-measurements of the lease liability.\n\nThe lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, which is generally the case for the Group’s leases, the lessee’s incremental borrowing rate, being the rate that the individual lessee would have to pay to borrow the funds necessary to obtain an asset of similar value to the right-of-use asset in a similar economic environment with similar terms, security and conditions.\n\nTo determine the incremental borrowing rate, the Group: (a) where possible, uses recent third-party financing received by the individual lessee as a starting point, adjusted to reflect changes in financing conditions since third party financing was received; (b) uses a build-up approach that starts with a risk-free interest rate adjusted for credit risk for leases held by the Group, which does not have recent third party financing, and (c) makes adjustments specific to the lease to reflect for instance the term of the lease, type of the asset leased, country, currency and security.\n\nLease payments included in the measurement of the lease liability comprise the following: (a) fixed payments, including in-substance fixed payments; (b) variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date; (c) amounts expected to be payable under a residual value guarantee; (d) the exercise price under a purchase option that the Group is reasonably certain to exercise; (e) lease payments in an optional renewal period if the Group is reasonably certain to exercise an extension option; and (f) penalties for early termination of a lease unless the Group is reasonably certain not to terminate early.\n\nThe lease liability is measured at amortised cost using the effective interest method. It is remeasured when there is a change in future lease payments arising from a change in an index or rate, if there is a change in the Group’s estimate of the amount\n\n \n\nF-19\n\n[Table of Contents](#toc)\n\n \n\nNatuzzi S.p.A. and Subsidiaries\n\nNotes to consolidated financial statements\n\n(Expressed in thousands of euros except as otherwise indicated)\n\n \n\nexpected to be payable under a residual value guarantee, if the Group changes its assessment of whether it will exercise a purchase, extension or termination option or if there is a revised in-substance fixed lease payment.\n\nWhen the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.\n\nThe Group presents right-of-use assets and lease liabilities in specific captions in the consolidated statement of financial position.\n\nThe Group has elected not to recognise right-of-use assets and lease liabilities for leases of low-value assets and short-term leases, including IT equipment. The Group recognises the lease payments associated with these leases as an expense on a straight-line basis over the lease term.\n\n(g) Business combinations\n\nThe Group accounts for business combinations using the acquisition method when the acquired set of activities and assets meets the definition of a business and control is transferred to the Group (see note 4 (a)(i)). In determining whether a particular set of activities and assets is a business, the Group assesses whether the set of assets and activities acquired includes, as a minimum, an input and substantive process and whether the acquired set has the ability to produce outputs.\n\nThe Group has the option to apply a “concentration test” that permits a simplified assessment of whether an acquired set of activities and assets is not a business. The optional concentration test is met if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets.\n\nThe consideration transferred in the acquisition is generally measured at fair value, as are the identifiable net assets acquired. Any goodwill that arises is tested annually for impairment (see note 4(i)). Any gain on a bargain purchase is recognised in profit or loss immediately. Transaction costs are expensed as incurred, except if related to the issue of debt or equity securities.\n\nThe consideration transferred does not include amounts related to the settlement of pre‑existing relationships. Such amounts are generally recognised in profit or loss.\n\nAny contingent consideration is measured at fair value at the date of acquisition. If an obligation to pay contingent consideration that meets the definition of a financial instrument is classified as equity, then it is not remeasured and settlement is accounted for within equity. Otherwise, other contingent consideration is measured at fair value at each reporting date and subsequent changes in the fair value of the contingent consideration are recognised in profit or loss.\n\nIf share‑based payment awards (replacement awards) are required to be exchanged for awards held by the acquiree’s employees (acquiree’s awards), then all or a portion of the amount of the acquirer’s replacement awards is included in measuring the consideration transferred in the business combination. This determination is based on the market‑based measure of the replacement awards compared with the market‑based measure of the acquiree’s awards and the extent to which the replacement awards relate to pre-combination service.\n\n(h) Intangible assets and goodwill\n\nExpenditure on research activities is recognised in profit or loss as incurred.\n\nDevelopment expenditure is capitalised only if the expenditure can be measured reliably, the product or process is technically and commercially feasible, future economic benefits are probable and the Group intends to and has sufficient resources to complete development and to use or sell the asset. Otherwise, it is recognised in profit or loss as incurred. Subsequent to initial recognition, development expenditure is measured at cost less accumulated amortisation and any accumulated impairment losses.\n\nOther intangible assets, including software, trademarks and patents, that are acquired by the Group and have finite useful lives are measured at cost less accumulated amortisation and any accumulated impairment losses.\n\n \n\nF-20\n\n[Table of Contents](#toc)\n\n \n\nNatuzzi S.p.A. and Subsidiaries\n\nNotes to consolidated financial statements\n\n(Expressed in thousands of euros except as otherwise indicated)\n\n \n\nGoodwill arising on the acquisition of subsidiaries is measured at cost less accumulated impairment losses. In respect of acquisitions prior to January 1, 2017, goodwill is included on the basis of its deemed cost, which represents the amount recorded under previous GAAP.\n\nSubsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific intangible asset to which it relates. All other expenditure, including expenditure on internally generated goodwill and brands, is recognised in profit or loss as incurred.\n\nAmortisation is calculated to write off the cost of intangible assets less their estimated residual values using the straight-line method over their estimated useful lives, and is recognised in profit or loss. Goodwill is not amortised.\n\nThe estimated useful lives for current and comparative periods are as follows: software 3-5 years, trademarks and patents 3–5 years, other 2–5 years.\n\nAmortisation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.\n\n(i) Impairment of non-financial assets\n\nAt each reporting date, the Group reviews the carrying amounts of its non-financial assets (other than inventories and deferred tax assets) to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated. Goodwill is tested annually for impairment.\n\nFor impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or cash generating units (hereinafter also CGUs). Goodwill arising from a business combination is allocated to the CGU or groups of CGUs that are expected to benefit from the synergies of the combination.\n\nThe identified CGUs are the sofa manufacturing facilities located in Italy, Brazil, Romania, China and Vietnam, as well as each of the retail stores directly operated by the Group and the interest in the Joint Venture Natuzzi Trading Shanghai.\n\nThe recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. Value in use is based on the estimated future cash flows, discounted to their present value using a discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU.\n\nAn impairment loss is recognised if the carrying amount of an asset or CGU exceeds its recoverable amount.\n\nImpairment losses are recognised in profit or loss. They are allocated first to reduce the carrying amount of any goodwill allocated to the CGU, and then to reduce the carrying amounts of the other assets in the CGU on a pro rata basis.\n\nAn impairment loss in respect of goodwill is not reversed. For other assets, an impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.\n\n(j) Interests in equity-accounted investees\n\nThe Group’s interests in equity-accounted investees comprise interests in associates and joint ventures (see (a) (ii) and (iv).\n\nInterests in associates and joint ventures are accounted for using the equity method. They are initially recognised at cost, which includes transaction costs. Subsequent to initial recognition, the consolidated financial statements include the Group’s share of the profit or loss and other comprehensive income (OCI) of equity-accounted investees, until the date on which significant influence or joint control ceases.\n\n \n\nF-21\n\n[Table of Contents](#toc)\n\n \n\nNatuzzi S.p.A. and Subsidiaries\n\nNotes to consolidated financial statements\n\n(Expressed in thousands of euros except as otherwise indicated)\n\n \n\n(k) Inventories\n\nRaw materials are stated at the lower of cost (determined under the specific cost method for raw hides and under the weighted-average method for finished hides and other raw materials) and net realisable value.\n\nGoods in process and finished goods are valued at the lower of production cost and net realisable value. Production cost includes direct production costs and production overhead costs. The production overhead costs are allocated to inventory based on the manufacturing facility’s normal capacity.\n\nFinished goods acquired for reselling (e.g., home furnishings accessories) are stated at the lower of cost, determined under the weighted-average method, and net realisable value.\n\nThe provision for slow moving and obsolete raw materials and finished goods is based on the estimated realisable value net of the costs of disposal.\n\n(l) Trade and other receivables\n\nTrade receivables and other receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less allowance for doubtful accounts.\n\nIn particular, trade receivables are amounts due from customers for goods sold or services performed in the ordinary course of business. They are generally due for settlement within 90 days and therefore are all classified as current. Trade receivables are recognised initially at the amount of consideration that is unconditional unless they contain significant financing components, when they are recognised at fair value. The Group holds the trade receivables with the objective to collect the contractual cash flows and therefore measures them subsequently at amortised cost using the effective interest method. Details about the Group’s impairment policies and the calculation of the loss allowance are provided in note 4(n)(i).\n\nThe Group derecognises trade receivables when the contractual rights to the cash flows from such financial asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of such financial asset are transferred or in which the Group neither transfers nor retains substantially all of the risks and rewards of ownership and it does not retain control of such financial asset.\n\n(m) Cash and cash equivalents\n\nCash and cash equivalents are recorded at their nominal amount as it substantially coincides with the fair value.\n\nFor the purpose of presentation in the consolidated statement of cash flows, cash and cash equivalents includes cash on hand, on-demand deposits with financial institutions, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are shown within bank overdrafts and short-term borrowings in current liabilities in the statement of financial position.\n\n(n) Impairment of financial assets\n\nThe Group has the following types of financial assets that are subject to the expected credit loss model: (i) trade receivables for sales of goods and services; (ii) other receivables; (iii) cash and cash equivalents.\n\n(i) Trade receivables\n\nThe Group applies the IFRS 9 simplified approach to measure expected credit losses which uses a lifetime expected loss allowance for all trade receivables.\n\nIn particular, for the credit losses on trade receivables determined on a collective basis, the Group adopted the practical expedient to use a provision matrix that is based on its historical credit loss experience, adjusted for forward-looking\n\n \n\nF-22\n\n[Table of Contents](#toc)\n\n \n\nNatuzzi S.p.A. and Subsidiaries\n\nNotes to consolidated financial statements\n\n(Expressed in thousands of euros except as otherwise indicated)\n\n \n\nfactors specific to the debtors and the economic environment. To measure the expected credit losses, trade receivables are grouped based on shared credit risk characteristics and the days past due. The expected loss rates are based on the historical credit losses experienced in the past five years. The historical loss rates are adjusted to reflect current and forward-looking information on macroeconomic factors affecting the ability of the customers to settle the receivables.\n\nThe Group recognised the expected credit losses for individual receivables which are known to be difficult to collect based on the financial difficulties of the debtor, the probability that the debtor will enter bankruptcy or financial reorganisation and default or late payments.\n\nThe Group records the expected credit losses on trade receivables determined on a collective and individual basis through the provision for doubtful accounts (see note 15). Trade receivables for which an impairment allowance is recognised are written off when there is no reasonable expectation of recovering additional cash. Indicators that there is no reasonable expectation of recovery include, amongst others, the failure of a debtor to engage in a repayment plan with the Group and a failure to make contractual payments for a period of greater than 180 days past due.\n\nImpairment losses on trade receivables are presented as net impairment losses within operating profit/(loss). Subsequent recoveries of amounts previously written off are credited against the same line item.\n\n(ii) Other receivables\n\nOther receivables are considered to have low credit risk and the impairment loss is measured on a 12–month expected credit loss basis. Management considers other receivables to have a low credit risk if they have a low risk of default and the Group’s counterparties are able to meet its contractual cash flow obligations in the short-term.\n\n(iii) Cash and cash equivalents\n\nThe Group considers its cash and cash equivalents to have “low credit risk” based on the external credit ratings of the financial institutions. Indeed, the Group’s cash and cash equivalents are held with financial institutions which have external credit risk ratings that are “investment grade”. Impairment of cash and cash equivalents is measured on a 12-month expected credit loss basis and reflects the short-term nature of the exposures.\n\n(o) Trade and other payables\n\nThese amounts represent liabilities for goods and services provided to the Group prior to year-end which are unpaid. The amounts are unsecured and are usually paid within 90 days of recognition. Trade and other payables are presented as current liabilities unless payment is not due within 12 months after the reporting period. They are recognised initially at their fair value and subsequently measured at amortised cost using the effective interest method. The Group derecognises trade and other payables when its contractual obligations are discharged or cancelled or expired.\n\n(p) Borrowings\n\nBorrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in profit or loss over the period of the borrowings using the effective interest method. Fees paid on the establishment of loan facilities are recognised as transaction costs to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a prepayment for liquidity services and amortised over the period of the facility to which it relates.\n\nBorrowings are removed from the statement of financial position when the obligation specified in the contract is discharged, cancelled or expired. The difference between the carrying amount of a borrowing that has been extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss as finance income or finance costs.\n\n \n\nF-23\n\n[Table of Contents](#toc)\n\n \n\nNatuzzi S.p.A. and Subsidiaries\n\nNotes to consolidated financial statements\n\n(Expressed in thousands of euros except as otherwise indicated)\n\n \n\nBorrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the reporting period.\n\nFurther, general and specific borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalised during the period of time that is required to complete and prepare the asset for its intended use or sale. Qualifying assets are assets that necessarily take a substantial period of time to get ready for their intended use or sale. Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.\n\nOther borrowing costs are expensed in the period in which they are incurred.\n\n(q) Employee benefits\n\nInformation about employee benefits accounting policies is reported below.\n\n(i) Share-based payment arrangements\n\nThe grant-date fair value of equity-settled share-based payment arrangements granted to employees is generally recognised as an expense, with a corresponding increase in equity, over the vesting period of the awards. The amount recognised as a expense is adjusted to reflect the number of awards for which the related service and non-market performance conditions are expected to be met, such that the amount ultimately recognised is based on the number of awards that meet the related service and non-market performance conditions at the vesting date. For share-based payment awards with non-vesting conditions, the grant-date fair value of the share-based payment is measured to reflect such conditions and there is no true-up for differences between expected and actual outcomes.\n\nThe fair value of the amount payable to employees in respect of SARs, which are settled in cash, is recognised as an expense with a corresponding increase in liabilities, over the period during which the employees become unconditionally entitled to payment. The liability is remeasured at each reporting date and at settlement date based on the fair value of the SARs. Any changes in the liability are recognised in profit or loss.\n\n(ii) Employees' leaving entitlement\n\nThe Group provides its Italian employees with benefits on the termination of their employment. The benefits fall under the definition of defined benefit plans whose existence and amount is certain but whose date is not. The liability is calculated as the present value of the obligation at the reporting date, in compliance with applicable regulations and adjusted to take into account actuarial gains or losses. The amount of the obligation is remeasured annually based on the “projected unit credit” method. Actuarial gains or losses are recorded in full during the relevant period. Actuarial gains/(losses) are stated under “Other comprehensive income” (OCI) in accordance with IAS 19.\n\n(iii) Benefits to employees for termination of the employment relationship\n\nThese are the benefits due to employees for the termination of their employment relationship due to the fact that the event that gives rise to the obligation is the termination of the employment relationship. The benefits due to employees for the termination of the employment relationship result from the Group's decision to terminate the employment relationship or from the decision of an employee to accept an offer from the Group consisting of benefits in exchange for the termination of the employment relationship. The liabilities for benefits due to employees for the early termination of the employment relationship (so-called liabilities for termination benefits) are accounted for on the earliest date among the following: (a) the moment in which the company is no longer able to withdraw the offer of such benefits made to employees; and (b) the moment in which the company recognizes the costs of a restructuring that involves the payment of benefits due to employees for the termination of the employment relationship. These liabilities are valued based on the nature of the benefit granted. The liability for termination benefits is determined by applying the provisions envisaged: (i) for short-term benefits, if it is expected that the termination benefits will be paid to employees entirely within twelve months from the closing date of the financial year in which they were recognized; or (ii) for long-term benefits if it is expected that the termination benefits will not be paid to employees in full within twelve months from the end of the financial year in which they were recognized.\n\n \n\nF-24\n\n[Table of Contents](#toc)\n\n \n\nNatuzzi S.p.A. and Subsidiaries\n\nNotes to consolidated financial statements\n\n(Expressed in thousands of euros except as otherwise indicated)\n\n \n\n(r) Provisions\n\nProvisions for legal claims, service warranties and one-time termination benefits for certain employees are recognised when the Group has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated. Provisions are not recognised for future operating losses.\n\nWhere there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations is small.\n\nProvisions are measured at the present value of management’s best estimate of the expenditure required to settle the present obligation at the end of the reporting period. The discount rate used to determine the present value is a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The increase in the provision due to the passage of time is recognised as interest expense.\n\n(s) Derivative financial instruments and hedging activities\n\nDerivatives financial instruments are accounted for in accordance with IFRS 9, except for hedging activities that are treated in accordance with IAS 39.\n\nDerivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently remeasured at their fair value at the end of each reporting period. The accounting for subsequent changes in fair value depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged. The Group designates certain derivatives as hedges of a particular risk associated with the cash flows of recognised assets (trade receivables) and highly probable forecast transactions (sales orders) (cash flow hedges).\n\nAt inception of the hedge relationship, the Group documents the economic relationship between hedging instruments and hedged items including whether changes in the cash flows of the hedging instruments are expected to offset changes in the cash flows of hedged items (trade receivables and/or sales orders). The Group documents its risk management objective and strategy for undertaking its hedge transactions.\n\nThe full fair value of a hedging derivative is classified as a non-current asset or liability when the remaining maturity of the hedged item is more than 12 months; it is classified as a current asset or liability when the remaining maturity of the hedged item is less than 12 months.\n\n(i) Cash flow hedges that qualify for hedge accounting\n\nThe effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognised in the hedging reserve within equity. The gain or loss relating to the ineffective portion is recognised immediately in profit or loss, within net exchange rate gains/(losses).\n\nWhen forward contracts are used to hedge forecast transactions, the Group generally designates only the change in fair value of the forward contract related to the spot component as the hedging instrument. Gains or losses relating to the effective portion of the change in the spot component of the forward contracts are recognised in the hedging reserve within equity. The change in the forward element of the contract that relates to the hedged item (“aligned forward element”) is recognised within OCI in the costs of the hedging reserve within equity. In some cases, the Group may designate the full change in fair value of the forward contract (including forward points) as the hedging instrument. In such cases, the gains or losses relating to the effective portion of the change in fair value of the entire forward contract are recognised in the hedging reserve within equity.\n\nAmounts accumulated in equity are reclassified in the periods when the hedged item affects profit or loss.\n\nWhen a hedging instrument expires, or is sold or terminated, or when a hedge no longer meets the criteria for hedge accounting, any cumulative deferred gain or loss and deferred costs of hedging in equity at that time remain in equity until the forecast transaction occurs, resulting in the recognition of a non-financial asset such as inventory. When the forecast\n\n \n\nF-25\n\n[Table of Contents](#toc)\n\n \n\nNatuzzi S.p.A. and Subsidiaries\n\nNotes to consolidated financial statements\n\n(Expressed in thousands of euros except as otherwise indicated)\n\n \n\ntransaction is no longer expected to occur, the cumulative gain or loss and deferred costs of hedging that were reported in equity are immediately reclassified to profit or loss.\n\n(ii) Derivatives that do not qualify for hedge accounting\n\nCertain derivative instruments do not qualify for hedge accounting. Changes in the fair value of any derivative instrument that does not qualify for hedge accounting are recognised immediately in profit or loss and are included in net exchange rate gains/(losses). The fair value of derivative instruments is disclosed in note 32.\n\n(t) Revenue from contracts with customers\n\n(i) Sale of upholstered furniture and home furnishings accessories – wholesale (distributors and retailers)\n\nThe Group sells a wide range of upholstered furniture (upholstered sofas and beds) and home furnishing accessories (for instance coffee tables, lamps, rugs and wall units) in the wholesale market to distributors and retailers. The upholstered furniture is manufactured in the plants located in Italy, Romania, China, Vietnam and Brazil. Sales are recognised when control of the products has been transferred, i.e., when the products are delivered to the wholesaler, the wholesaler has full discretion over the channel and price to sell the products, and there is no unfulfilled obligation that could affect the wholesaler’s acceptance of the products. Delivery occurs when the products have been dispatched from the Group’s warehouse or shipped to the location specified by the wholesaler, the risks of obsolescence and loss have been transferred to the wholesaler, and the Group has objective evidence that all criteria for acceptance have been satisfied.\n\nThe goods are often sold with retrospective volume discounts based on aggregate sales over a 12-month period. As part of variable considerations, revenue from these sales is recognised based on the price specified in the contract, net of the estimated volume discounts. Accumulated historical experience is used to estimate and provide for the discounts, using the expected value method, and revenue is only recognised to the extent that it is highly probable that a significant reversal will not occur. A refund liability is recognised for the expected volume discounts payable to wholesalers in relation to sales made until the end of the reporting period. No element of financing is deemed present as the sales are made with a credit term of 30-90 days, which is consistent with market practice. The Group’s obligation to repair or replace faulty products under the standard assurance warranty terms is recognised as a provision (see note 26).\n\nA trade receivable is recognised when the goods are delivered as this is the point in time that the consideration is unconditional because only the passage of time is required before the payment is due.\n\nIt is the Group’s policy not to sell its products to the wholesaler with a right of return.\n\n(ii) Sale of upholstered furniture and home furnishings accessories—retail (end consumers)\n\nThe Group operates a chain of retail stores (Natuzzi Italia stores, Natuzzi Editions stores and Divani&Divani by Natuzzi stores) selling to end consumers a wide range of upholstered furniture (upholstered sofas and beds) and home furnishing accessories (for instance coffee tables, lamps, rugs and wall units). The upholstered furniture is manufactured in the plants located in Italy, Romania, China, Vietnam and Brazil.\n\nRevenue from the sale of the goods is recognised when the products are delivered and have been accepted by the customer in store or at its premise.\n\nPayment of the transaction price is due immediately when the product is delivered to the customer. The Group’s obligation to repair or replace faulty products under the standard assurance warranty terms is recognised as a provision (see note 26).\n\nIt is the Group’s policy not to sell its products to the end consumer with a right of return.\n\n(iii) Sale of polyurethane foam and leather processing by-products – wholesale\n\nThe Group sells leather processing by-products in the wholesale market. Such sales are recognised when control of the products has been transferred, i.e., when the products are delivered to the customer. Delivery occurs when the products\n\n \n\nF-26\n\n[Table of Contents](#toc)\n\n \n\nNatuzzi S.p.A. and Subsidiaries\n\nNotes to consolidated financial statements\n\n(Expressed in thousands of euros except as otherwise indicated)\n\n \n\nhave been dispatched from the Group’s warehouse or shipped to the location specified by the customer, the risks of obsolescence and loss have been transferred to the customer, and the Group has objective evidence that all criteria for acceptance have been satisfied.\n\nRevenue from these sales is recognised based on the price specified in the contract. No element of financing is deemed present as the sales are made with a credit term of 30-90 days, which is consistent with market practice. The Group’s obligation to repair or replace faulty products under the standard assurance warranty terms is recognised as a provision (see note 26).\n\nA trade receivable is recognised when the goods are delivered as this is the point in time that the consideration is unconditional because only the passage of time is required before the payment is due.\n\nIt is the Group’s policy not to sell these products to the wholesaler with a right of return.\n\n(iv) Sale of Natuzzi Display System and related slotting fees\n\nThe Group sells the Natuzzi Display System (NDS) to retailers, used to set up their stores. Revenue from such sales is recognised over time based on the length of the distribution contract signed with the retailer. Revenue is accounted for based on the price specified in the contract. No element of financing is deemed present as the sales are made with a credit term of 30-90 days, which is consistent with market practice. The deferred revenue for the sales of Natuzzi Display System is included under the caption “Contract liabilities” of the statement of financial position.\n\nThe Group pays retailers slotting fees as contributions to prepare the retailer’s system to accept and sell the Group’s products. Slotting fees are recognised over time based on the length of the contract signed with the retailers and are treated as a reduction of revenue. Deferred slotting fees are included under the caption “Other assets” of the statement of financial position.\n\n(v) Service-type warranty\n\nCustomers who purchase the Group’s products may require a service-type warranty. The Group allocates a portion of the consideration received to the service-type warranty. This allocation is based on the relative stand-alone selling price. The amount allocated to the service-type warranty is deferred, and is recognised as revenue over time based on the validity period of such warranty. The deferred revenue is included in the caption “Contract liabilities” of the statement of financial position.\n\n(vi) Contract Sales\n\nDuring the year, the Company launched a specific commercial activity based on signing contracts with customers for the design of interior spaces and the supply of furniture (sofas, beds, accessories and other furniture), both manufactured in-house and purchased from third-party suppliers, for restaurants, hotels, and residential apartments. In the case of partnerships with third parties that build residential buildings with interior design and supply of Natuzzi-branded products, these contracts may also provide for the granting of the right to use the trademark during the period of sale of the apartments to end customers. These contracts are subject to revenue recognition in accordance with IFRS 15 (at the point of time or over time) based on the specific conditions set out in each individual contract.\n\nContract costs are initially recognized as assets and expensed on a systematic basis in line with the transfer to the customer of the goods or services to which those costs relate and, therefore, in line with the recognition of revenue at the point of time or over time. These costs are the incremental costs of obtaining the contract (e.g., sales commissions, i.e., costs that would not have been incurred if the contract had not been signed) and the costs of fulfilling the contract that do not fall within the scope of other IFRSs (IAS 2, IAS 16, IAS 38) that allow new and additional resources to be made available to fulfill the obligation and that will be recovered in the sale price.\n\n \n\nF-27\n\n[Table of Contents](#toc)\n\n \n\nNatuzzi S.p.A. and Subsidiaries\n\nNotes to consolidated financial statements\n\n(Expressed in thousands of euros except as otherwise indicated)\n\n \n\n(vii) Financing components\n\nThe Group does not expect to have any contracts where the period between the transfer of the promised goods or services to the customer and payment by the customer exceeds one year. As a consequence, the Group does not adjust any of the transaction prices for the time value of money.\n\n(u) Cost of sales, selling expenses and administrative expenses\n\nCost of sales consist of the following expenses: change in opening and closing inventories, purchases of raw materials, purchases of finished goods for reselling, labour costs (included one-time termination benefit accruals), third party manufacturing costs, depreciation expense of property, plant and equipment and right-of-use-assets used in the production of finished goods, impairment of property, plant and equipment and right-of-use-assets, energy and water expenses (for instance light and power expenses), expenses for maintenance and repairs of production facilities, distribution network costs (including inbound freight charges, warehousing costs, internal transfer costs and other logistic costs involved in the production cycle), security costs for production facilities, small-tools replacement costs, insurance costs and other minor expenses.\n\nSelling expenses consist of the following expenses: shipping and handling costs incurred for transporting finished products to customers, advertising costs, labour costs for sales personnel, expenses related to leases (e.g., short-term and low-value leases), customs duties, commissions to sales representatives and related costs, depreciation expense of property, plant and equipment and right-of-use-assets used in the selling activities, amortisation of intangible assets that, based on their usage, are allocated to selling expenses, impairment of property, plant and equipment and right-of-use-assets, impairment of intangible assets and goodwill, energy and water expenses for trade buildings (for instance, light and heating expenses), sales catalogue and related expenses, exhibition and trade-fair costs, advisory fees for sales and marketing of finished products, expenses for maintenance of stores and other trade buildings, insurance costs for trade receivables and other miscellaneous expenses.\n\nAdministrative expenses consist of the following expenses: labour costs for administrative personnel, advisory fees for accounting and information-technology services, non-income tax expenses, traveling expenses for management and other personnel, depreciation expense related to property, plant and equipment and right-of-use-assets used in the administrative activities, amortisation of intangible assets that, based on their usage, are allocated to administrative expenses, impairment of property, plant and equipment and right-of-use-assets, impairment of intangible assets, postage and telephone costs, stationery and other office supplies costs, expenses for maintenance of administrative facilities and softwares, directors’ fees, audit committee and external auditors’ fees, energy and water expenses for administrative buildings (for instance, light and heating expenses) and other miscellaneous expenses.\n\nAs noted above, the costs of the Group’s distributions network, which include inbound freight charges, warehousing costs, internal transfer costs and other logistic costs involved in the production cycle, are classified under the “Cost of sales” line item.\n\n(v) Shipping and handling costs\n\nShipping and handling costs incurred to transport products to customers are expensed in the periods incurred and are included in selling expenses. Under IFRS 15, shipping and handling costs related to activities before the customer obtains control of the finished goods, are accounted for as fulfillment costs under the caption “Other assets” of the statement of financial position. Such costs are recognised in profit or loss consistent with the pattern of transfer of the finished goods. Shipping and handling expenses recorded for the years ended December 31, 2025, 2024 and 2023, come to 23,596, 24,767 and 26,325, respectively (see note 37).\n\n(w) Advertising costs\n\nAdvertising costs are expensed in the periods incurred and are included in selling expenses. Advertising expenses recorded for the years ended December 31, 2025, 2024 and 2023 amount to 5,957, 5,986 and 5,936, respectively (see note 37).\n\n \n\nF-28\n\n[Table of Contents](#toc)\n\n \n\nNatuzzi S.p.A. and Subsidiaries\n\nNotes to consolidated financial statements\n\n(Expressed in thousands of euros except as otherwise indicated)\n\n \n\n(x) Commission expense\n\nCommissions payable to sales representatives and the related expenses are recorded at the time revenue from sale of products is recognised and are included in selling expenses. Commissions are not paid until payment for the related sale’s invoice is remitted to the Group by the customer. Under IFRS 15, sale commissions are considered costs of obtaining a contract and the Group has elected to apply the practical expedient under which such costs are expensed in profit or loss, as the amortisation period is less than one year. Commissions expenses recorded in profit or loss for the years ended December 31, 2025, 2024 and 2023 amount to 4,700, 5,327 and 5,861, respectively (see note 37).\n\n(y) Government grants\n\nGrants from the government are recognised at their fair value when there is reasonable assurance that the grant will be received and the Group will comply with all attached conditions. Government grants relating to costs are deferred and recognised in profit or loss over the period necessary to match them with the costs that they are intended to compensate. Government grants relating to the purchase of property, plant and equipment are deferred and credited to profit or loss on a straight-line basis over the expected lives of the related assets. Amortisation of the deferred grant is recognised in profit or loss as a reduction in the cost of sales, selling expenses or administrative expenses.\n\n(z) Net finance income/(costs)\n\nThe Group’s net finance income/(costs) include: interest income, interest expense, commission expense, gain or loss on derivative financial instruments, exchange rate gain or loss on financial assets and financial liabilities, and hedge ineffectiveness recognised in profit or loss.\n\nInterest income or expense is recognised using the “effective interest rate”. The “effective interest rate” is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument to the gross carrying amount of the financial asset or the amortised cost of the financial liability.\n\nIn calculating interest income and expense, the effective interest rate is applied to the gross carrying amount of the asset (when the asset is not credit-impaired) or to the amortised cost of the liability. However, for financial assets that have become credit-impaired subsequent to initial recognition, interest income is calculated by applying the effective interest rate to the amortised cost of the financial asset. If the asset is no longer credit-impaired, then the calculation of interest income reverts to the gross basis.\n\n(aa) Income tax\n\nIncome tax expense comprises current and deferred tax. It is recognised in profit or loss except to the extent that it relates to a business combination, or items recognised directly in equity or in other comprehensive income.\n\nThe Group has determined that interest and penalties related to income taxes, including uncertain tax treatments, meet the definition of income taxes, and therefore accounted for them under IAS 12 “Income Taxes”.\n\n(i) Current tax\n\nCurrent tax comprises the expected tax payable or receivable on the taxable profit or loss for the year and any adjustment to the tax payable or receivable in respect of previous years. The amount of current tax payable or receivable is the best estimate of the tax expected to be paid or received that reflects uncertainty related to income taxes, if any. It is measured using tax rates enacted or substantively enacted at the reporting date.\n\nCurrent tax assets and tax liabilities are offset when the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.\n\n \n\nF-29\n\n[Table of Contents](#toc)\n\n \n\nNatuzzi S.p.A. and Subsidiaries\n\nNotes to consolidated financial statements\n\n(Expressed in thousands of euros except as otherwise indicated)\n\n \n\n(ii) Deferred tax\n\nDeferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for: (a) temporary differences on the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss, unless it gives rise to equal taxable and deductible temporary differences; (b) temporary differences related to investments in subsidiaries, associates and joint arrangements (mainly unremitted earnings and withholding taxes) to the extent that the Group is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future; and (c) taxable temporary differences arising on the initial recognition of goodwill.\n\nDeferred tax assets are recognised for unused tax losses, unused tax credits and deductible temporary differences to the extent that it is probable that future taxable profits will be available against which they can be used. Future taxable profits are determined based on the reversal of relevant taxable temporary differences. If the amount of taxable temporary differences is insufficient to recognise a deferred tax asset in full, then future taxable profits, adjusted for reversals of existing temporary differences, are considered, based on the business plans for individual subsidiaries in the Group. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised; such reductions are reversed when the probability of future taxable profits improves.\n\nUnrecognised deferred tax assets are reassessed at each reporting date and recognised to the extent that it has become probable that future taxable profits will be available against which they can be used.\n\nDeferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, using tax rates enacted or substantively enacted at the reporting date.\n\nThe measurement of deferred tax reflects the tax consequences that would follow from the manner in which the Group expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities.\n\nDeferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority.\n\n(ab) Operating profit/(loss)\n\nOperating profit/(loss) is the result generated from the continuing principal revenue-producing activities of the Group as well as other income and expenses related to operating activities. Operating profit/(loss) excludes net finance income/(costs), share of profit/(loss) of equity-accounted investees and income tax expense.\n\n(ac) Fair value measurement\n\n“Fair value” is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date in the principal or, in its absence, the most advantageous market to which the Group has access at that date. The fair value of a liability reflects its non-performance risk.\n\nA number of the Group’s accounting policies and disclosures require the measurement of fair values, for both financial and non-financial assets and liabilities.\n\nWhen available, the Group measures the fair value of an instrument using the quoted price in an active market for that instrument. A market is regarded as “active” if transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis.\n\nIf there is no quoted price in an active market, then the Group uses valuation techniques that maximise the use of relevant observable inputs and minimise the use of unobservable inputs. The chosen valuation technique incorporates all of the factors that market participants would take into account in pricing a transaction.\n\n \n\nF-30\n\n[Table of Contents](#toc)\n\n \n\nNatuzzi S.p.A. and Subsidiaries\n\nNotes to consolidated financial statements\n\n(Expressed in thousands of euros except as otherwise indicated)\n\n \n\nIf an asset or a liability measured at fair value has a bid price and an ask price, then the Group measures assets and long positions at a bid price and liabilities and short positions at an ask price.\n\nThe best evidence of the fair value of a financial instrument on initial recognition is normally the transaction price – i.e., the fair value of the consideration given or received. If the Group determines that the fair value on initial recognition differs from the transaction price and the fair value is evidenced neither by a quoted price in an active market for an identical asset or liability nor based on a valuation technique for which any unobservable inputs are judged to be insignificant in relation to the measurement, then the financial instrument is initially measured at fair value, adjusted to defer the difference between the fair value on initial recognition and the transaction price.\n\nSubsequently, that difference is recognised in profit or loss on an appropriate basis over the life of the instrument but no later than when the valuation is wholly supported by observable market data or the transaction is closed out.\n\n(ad) Earnings/(loss) per share\n\n(i) Basic earnings/(loss) per share\n\nBasic earnings/(loss) per share are calculated by dividing the profit/(loss) attributable to the owners of the Parent, excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the year, adjusted for bonus elements in ordinary shares issued during the year and excluding treasury shares.\n\n(ii) Diluted earnings/(loss) per share\n\nDiluted earnings/(loss) per share adjust the figures used in the determination of basic earnings/(loss) per share to take into account the post-income/(loss) tax effect of interest and other financing costs associated with dilutive potential ordinary shares, and the weighted average number of additional ordinary shares that would have been outstanding assuming the conversion of all dilutive potential ordinary shares.\n\n(ae) New standards, amendments and interpretations issued but not yet effective\n\nThe standards, amendments and interpretations issued by the International Accounting Standards Board (“IASB”) that will have mandatory application in 2026 or subsequent years are listed below.\n\nIn April 2024, the IASB issued IFRS 18 “Presentation and Disclosure in Financial Statements” which replaces IAS 1. The new principle establishes the structure for the statements of profit or loss, requires disclosures in the financial statements for some profit or loss performance measures that are reported (Management performance measures), introduces limited changes to the statement of cash flows and to the balance sheet, introduces new criteria for aggregation and disaggregation of information presented in the primary financial statements or disclosed in the notes. IFRS 18 is effective on or after January 1, 2027, with early adoption.\n\nIn May 2024 the IASB issued IFRS 19 “Subsidiaries without Public Accountability: Disclosures” which simplifies the preparation for the subsidiary’s financial statements by allowing it to apply group accounting principles in the preparation of its local financial statements. Further in August 2025 IASB issued amendments to IFRS 19. IFRS 19 is effective on or after January 1, 2027 with early adoption.\n\nIn November 2025 the IASB issued the Amendments to IAS 21: The Effects of Changes in Foreign Exchange Rates: Translation to a Hyperinflationary Presentation Currency These amendments are effective on or after January 1, 2027.\n\nThe Group is still in the process of assessing the impact of these new accounting standards.\n\nIn May 2024 the IASB issued the Amendments to the Classification and Measurement of Financial Instruments – Amendments to IFRS 9 and IFRS 7. These amendments are effective on or after January 1, 2026. The Group does not expect any significant impact from the adoption of them.\n\n \n\nF-31\n\n[Table of Contents](#toc)\n\n \n\nNatuzzi S.p.A. and Subsidiaries\n\nNotes to consolidated financial statements\n\n(Expressed in thousands of euros except as otherwise indicated)\n\n \n\nIn July 2024, the IASB published the document “Annual Improvements to IFRS – Volume 11”, which mainly includes technical and editorial amendments to existing standards. The amendments are effective from January 1st, 2026. The Group does not expect any significant impact from the adoption of it.\n\nOn 18 December 2024, the IASB issued amendments to enhance companies’ reporting of the financial effects of contracts for the purchase of electricity from natural sources, often structured as Power Purchase Agreements (PPAs). The IASB made targeted changes to IFRS 9 Financial Instruments and IFRS 7 Financial Instruments: Disclosures in order to improve the information provided in financial statements regarding these contracts. The amendments are effective from January 1st, 2026. The Group does not expect any significant impact from the adoption of it.\n\n5. Changes in significant accounting policies\n\nChanges in significant accounting policies for the years ended December 31, 2025 and 2024 are reported below.\n\n(A) Amendment to IAS 12 International Tax Reform\n\nIn May 2023, the IASB issued an amendment to IAS 12 regarding the application of Pillar Two model rules, which\nintroduced a temporary exception to the recognition of deferred taxes related to the application of Pillar Two provisions\npublished by the OECD, as well as targeted additional disclosures for affected entities. The Group has not been impacted from the adoption of these amendments considering that Group consolidated revenue is less than 750,000 in 2025 and in each of the prior three years.\n\n(B) Amendments to IAS 21: The effects of Changes in Foreing Exchange rates: lack of Exchangeability\n\nIn August 2023, the International Accounting Standards Board (IASB) issued an amendment to IAS 21 The Effects of Changes in Foreign Exchange Rates concerning the lack of exchangeability. These amendments are to be applied by entities from the beginning of the first financial year commencing on or after 1 January 2025.\n\nWhen a currency is not generally convertible into the functional currency and/or the presentation currency, the first step is to assess whether the currency is not convertible for the specific purpose (this occurs when the currency can be exchanged for some purposes but not for others). If, at the measurement date, a currency cannot be exchanged for another currency, the entity must estimate the spot exchange rate at that date. To estimate the spot exchange rate, depending on the circumstances, an observable market rate without adjustments may be used, or an alternative estimation technique may be adopted.\n\nThe adoption of this amendment did not have a significant impact on the financial statements.\n\n(C) Other standards\n\nThere were no other amendments or new accounting standards effective as of 1 January 2025.\n\n6. Segment Information\n\nThe Group operates in two operating segments, “Natuzzi brand” and “Private label”. The Natuzzi brand segment includes net sales from the “Natuzzi ltalia”, “Natuzzi Editions” and “Divani&Divani by Natuzzi” product lines. Segment disclosure is rendered by aggregating the operating segments into one reporting segment, that is the design, manufacture and marketing of leather and fabric upholstered sofas, beds and home furnishings accessories. It offers a wide range of upholstered furniture for sale, manufactured in production facilities located in Italy and abroad (Romania, China and Brazil and, from 2025, Vietnam). “Private label” is no more strategic for the Group and remains a minor business with selected numbers of clients (see note 34).\n\nOperating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker.\n\n \n\nF-32\n\n[Table of Contents](#toc)\n\n \n\nNatuzzi S.p.A. and Subsidiaries\n\nNotes to consolidated financial statements\n\n(Expressed in thousands of euros except as otherwise indicated)\n\n \n\nThe two operating segments have been aggregated into a single reporting segment as the two segments have similar characteristics, and are similar in each of the following respects: (a) the nature of the products; (b) the nature of the production processes; (c) the type of customer for their products; (d) the methods used to distribute their products.\n\nReference should be made to note 34 “Revenue” for details on revenue streams and disaggregation of revenue from contracts with customers by types of goods, geographical markets, geographical location of customers, distribution channels, brands and timing of revenue recognition, to note 33(C)(ii-a) \"Trade receivables\" for information about major customers, and to note 8 \"Property, plant and equipment\", note 9 \"Right-of-use-assets\", note 10 \"Intangible assets and goodwill\" for information about geographical areas of non-current assets.\n\n7. Assets held for sale\n\nDuring 2025, the disposal of the High Point building, located in North Carolina (USA), was completed by a U.S. subsidiary. The preliminary sale agreement, for a total consideration of USD 12.1 million, had been signed in October 2024, with the receipt of a down payment of 3,658 (USD 3.8 million). Following the completion of the transaction in March 2025, the subsidiary collected the remaining balance of 7,644 (USD 8.3 million). The transaction generated a capital gain of 1,595 (USD 1.8 million). See Note 36.\n\nAlso in 2025, the disposal of a land plot by the Romanian subsidiary was completed. The subsidiary had entered into a preliminary sale agreement in November 2024 for a total consideration of 2,769, receiving an advance payment of 400. The transaction was finalized in June 2025, with the collection of the remaining balance of 2,369. The disposal resulted in a capital gain of 2,773. See Note 36.\n\nAt the end of November 2025, the Parent Company entered into a preliminary agreement for the disposal of the photovoltaic plant to a company specialized in the sector.\n\nThe disposal transaction was finalized at the end of January 2026 and, on the closing date, the Company collected the total consideration for the sale amounting to 7,115. The net carrying amount of the photovoltaic plant as at 31 December 2025 amounted to 1,105 (see Note 46).\n\n \n\nF-33\n\n[Table of Contents](#toc)\n\n \n\nNatuzzi S.p.A. and Subsidiaries\n\nNotes to consolidated financial statements\n\n(Expressed in thousands of euros except as otherwise indicated)\n\n \n\n8. Property, plant and equipment\n\nChanges in the carrying amount of property, plant and equipment for the years ended December 31, 2025, 2024 and 2023 are analysed in the following tables.\n\n \n\n \n\nLand\nand\nbuildings\n\n \n\nMachinery\nand\nequipment\n\n \n\nOffice\nfurniture\nand\nequipment\n\n \n\nRetail\ngallery\nand store\nfurnishing\n\n \n\nLeasehold\nimprovements\n\n \n\nConstr. in\nprogress\n\n \n\nTotal\n\n \n\nCost as at December 31, 2023\n\n \n\n157,867\n\n \n\n \n\n116,032\n\n \n\n \n\n12,995\n\n \n\n \n\n5,858\n\n \n\n \n\n27,050\n\n \n\n \n\n1,839\n\n \n\n \n\n321,641\n\n \n\nAdditions\n\n \n\n385\n\n \n\n \n\n3,459\n\n \n\n \n\n363\n\n \n\n \n\n138\n\n \n\n \n\n2,823\n\n \n\n \n\n95\n\n \n\n \n\n7,263\n\n \n\nDisposals\n\n \n\n(79\n\n)\n\n \n\n(3,121\n\n)\n\n \n\n(988\n\n)\n\n \n\n(360\n\n)\n\n \n\n(6,576\n\n)\n\n \n\n(4\n\n)\n\n \n\n(11,128\n\n)\n\nReclassifications to asset held for sale\n\n \n\n(23,665\n\n)\n\n \n\n—\n\n \n\n \n\n—\n\n \n\n \n\n—\n\n \n\n \n\n—\n\n \n\n \n\n—\n\n \n\n \n\n(23,665\n\n)\n\nImpairment loss\n\n \n\n21\n\n \n\n \n\n75\n\n \n\n \n\n11\n\n \n\n \n\n36\n\n \n\n \n\n—\n\n \n\n \n\n—\n\n \n\n \n\n143\n\n \n\nReclassifications from constr. in progress\n\n \n\n550\n\n \n\n \n\n859\n\n \n\n \n\n23\n\n \n\n \n\n—\n\n \n\n \n\n260\n\n \n\n \n\n(1,692\n\n)\n\n \n\n—\n\n \n\nEffect of translation adj.\n\n \n\n671\n\n \n\n \n\n(660\n\n)\n\n \n\n58\n\n \n\n \n\n40\n\n \n\n \n\n1,093\n\n \n\n \n\n(9\n\n)\n\n \n\n1,193\n\n \n\nCost as at December 31, 2024\n\n \n\n135,750\n\n \n\n \n\n116,644\n\n \n\n \n\n12,462\n\n \n\n \n\n5,712\n\n \n\n \n\n24,650\n\n \n\n \n\n229\n\n \n\n \n\n295,447\n\n \n\nAdditions\n\n \n\n104\n\n \n\n \n\n3,318\n\n \n\n \n\n336\n\n \n\n \n\n149\n\n \n\n \n\n281\n\n \n\n \n\n67\n\n \n\n \n\n4,255\n\n \n\nDisposals\n\n \n\n—\n\n \n\n \n\n(1,008\n\n)\n\n \n\n(154\n\n)\n\n \n\n(99\n\n)\n\n \n\n(140\n\n)\n\n \n\n(13\n\n)\n\n \n\n(1,414\n\n)\n\nReclassifications to asset held for sale\n\n \n\n—\n\n \n\n \n\n(4,815\n\n)\n\n \n\n—\n\n \n\n \n\n—\n\n \n\n \n\n—\n\n \n\n \n\n—\n\n \n\n \n\n(4,815\n\n)\n\nImpairment loss\n\n \n\n—\n\n \n\n \n\n(2,300\n\n)\n\n \n\n(1\n\n)\n\n \n\n—\n\n \n\n \n\n(271\n\n)\n\n \n\n—\n\n \n\n \n\n(2,572\n\n)\n\nReclassifications from constr. in progress\n\n \n\n—\n\n \n\n \n\n106\n\n \n\n \n\n12\n\n \n\n \n\n—\n\n \n\n \n\n—\n\n \n\n \n\n(118\n\n)\n\n \n\n—\n\n \n\nEffect of translation adj.\n\n \n\n(127\n\n)\n\n \n\n(43\n\n)\n\n \n\n(130\n\n)\n\n \n\n(86\n\n)\n\n \n\n(2,119\n\n)\n\n \n\n—\n\n \n\n \n\n(2,505\n\n)\n\nCost as at December 31, 2025\n\n \n\n135,727\n\n \n\n \n\n111,902\n\n \n\n \n\n12,525\n\n \n\n \n\n5,676\n\n \n\n \n\n22,401\n\n \n\n \n\n165\n\n \n\n \n\n288,396\n\n \n\n \n\n \n\nF-34\n\n[Table of Contents](#toc)\n\n \n\nNatuzzi S.p.A. and Subsidiaries\n\nNotes to consolidated financial statements\n\n(Expressed in thousands of euros except as otherwise indicated)\n\n \n\n \n\n \n\nLand\nand\nbuildings\n\n \n\nMachinery\nand\nequipment\n\n \n\nOffice\nfurniture\nand\nequipment\n\n \n\nRetail\ngallery\nand store\nfurnishing\n\n \n\nLeasehold\nimprovements\n\n \n\nConstr. in\nprogress\n\n \n\nTotal\n\n \n\nAccumulated depreciation as at\nDecember 31, 2023\n\n \n\n(99,463\n\n)\n\n \n\n(103,396\n\n)\n\n \n\n(11,928\n\n)\n\n \n\n(5,624\n\n)\n\n \n\n(16,713\n\n)\n\n \n\n—\n\n \n\n \n\n(237,124\n\n)\n\nDepreciation\n\n \n\n(3,485\n\n)\n\n \n\n(3,318\n\n)\n\n \n\n(373\n\n)\n\n \n\n(159\n\n)\n\n \n\n(1,640\n\n)\n\n \n\n—\n\n \n\n \n\n(8,975\n\n)\n\nDisposals\n\n \n\n42\n\n \n\n \n\n2,423\n\n \n\n \n\n955\n\n \n\n \n\n340\n\n \n\n \n\n6,548\n\n \n\n \n\n—\n\n \n\n \n\n10,308\n\n \n\nReclassifications to asset held for sale\n\n \n\n14,898\n\n \n\n \n\n—\n\n \n\n \n\n—\n\n \n\n \n\n—\n\n \n\n \n\n—\n\n \n\n \n\n—\n\n \n\n \n\n14,898\n\n \n\nEffect of translation adj.\n\n \n\n(669\n\n)\n\n \n\n510\n\n \n\n \n\n(57\n\n)\n\n \n\n(39\n\n)\n\n \n\n(110\n\n)\n\n \n\n—\n\n \n\n \n\n(365\n\n)\n\nAccumulated depreciation as at\nDecember 31, 2024\n\n \n\n(88,677\n\n)\n\n \n\n(103,781\n\n)\n\n \n\n(11,403\n\n)\n\n \n\n(5,482\n\n)\n\n \n\n(11,915\n\n)\n\n \n\n—\n\n \n\n \n\n(221,258\n\n)\n\nDepreciation\n\n \n\n(3,021\n\n)\n\n \n\n(3,295\n\n)\n\n \n\n(398\n\n)\n\n \n\n(109\n\n)\n\n \n\n(2,059\n\n)\n\n \n\n—\n\n \n\n \n\n(8,882\n\n)\n\nDisposals\n\n \n\n—\n\n \n\n \n\n917\n\n \n\n \n\n151\n\n \n\n \n\n89\n\n \n\n \n\n101\n\n \n\n \n\n—\n\n \n\n \n\n1,258\n\n \n\nReclassifications to asset held for sale\n\n \n\n—\n\n \n\n \n\n3,711\n\n \n\n \n\n—\n\n \n\n \n\n—\n\n \n\n \n\n—\n\n \n\n \n\n—\n\n \n\n \n\n3,711\n\n \n\nEffect of translation adj.\n\n \n\n(234\n\n)\n\n \n\n(19\n\n)\n\n \n\n129\n\n \n\n \n\n85\n\n \n\n \n\n928\n\n \n\n \n\n—\n\n \n\n \n\n889\n\n \n\nAccumulated depreciation as at\nDecember 31, 2025\n\n \n\n(91,932\n\n)\n\n \n\n(102,467\n\n)\n\n \n\n(11,521\n\n)\n\n \n\n(5,417\n\n)\n\n \n\n(12,945\n\n)\n\n \n\n—\n\n \n\n \n\n(224,282\n\n)\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nNet book value as at December 31, 2023\n\n \n\n58,404\n\n \n\n \n\n12,636\n\n \n\n \n\n1,067\n\n \n\n \n\n234\n\n \n\n \n\n10,337\n\n \n\n \n\n1,839\n\n \n\n \n\n84,517\n\n \n\nNet book value as at December 31, 2024\n\n \n\n47,073\n\n \n\n \n\n12,863\n\n \n\n \n\n1,059\n\n \n\n \n\n230\n\n \n\n \n\n12,735\n\n \n\n \n\n229\n\n \n\n \n\n74,189\n\n \n\nNet book value as at December 31, 2025\n\n \n\n43,795\n\n \n\n \n\n9,435\n\n \n\n \n\n1,004\n\n \n\n \n\n259\n\n \n\n \n\n9,456\n\n \n\n \n\n165\n\n \n\n \n\n64,114\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nAnnual rate of depreciation for 2024 and 2023\n\n0%-10%\n\n \n\n10%-25%\n\n \n\n10%-20%\n\n \n\n25%-35%\n\n \n\n10%-20%\n\n \n\n \n\n—\n\n \n\n \n\n \n\nAs at December 31, 2025 and 2024, the carrying amount of property, plant and equipment temporarily idle is 3,987 and 4,744, respectively.\n\nAs at December 31, 2025, properties with a carrying amount of 24.631 (32,231 as at December 31, 2024) are subject to registered mortgages to guarantee the long-term borrowings (see note 20).\n\nThe following tables show a breakdown of property, plant and equipment by country.\n\n \n\n \n\n \n\n31/12/25\n\n \n\n \n\n31/12/24\n\n \n\nItaly\n\n \n\n \n\n35,161\n\n \n\n \n\n \n\n41,523\n\n \n\nRomania\n\n \n\n \n\n15,707\n\n \n\n \n\n \n\n16,585\n\n \n\nUnited States of America\n\n \n\n \n\n8,317\n\n \n\n \n\n \n\n11,381\n\n \n\nBrazil\n\n \n\n \n\n2,570\n\n \n\n \n\n \n\n2,574\n\n \n\nChina\n\n \n\n \n\n1,013\n\n \n\n \n\n \n\n1,168\n\n \n\nEurope\n\n \n\n \n\n597\n\n \n\n \n\n \n\n779\n\n \n\nOther countries\n\n \n\n \n\n749\n\n \n\n \n\n \n\n179\n\n \n\nTotal\n\n \n\n \n\n64,114\n\n \n\n \n\n \n\n74,189\n\n \n\n \n\n \n\n \n\n \n\nF-35\n\n[Table of Contents](#toc)\n\n \n\nNatuzzi S.p.A. and Subsidiaries\n\nNotes to consolidated financial statements\n\n(Expressed in thousands of euros except as otherwise indicated)\n\n \n\nThe following tables show a breakdown of property, plant and equipment based on the cash generating units in which they are included.\n\n \n\n \n\n \n\n31/12/25\n\n \n\n \n\n31/12/24\n\n \n\nItalian upholstered furniture plant\n\n \n\n \n\n25,631\n\n \n\n \n\n \n\n29,279\n\n \n\nRomanian upholstered furniture plant\n\n \n\n \n\n16,879\n\n \n\n \n\n \n\n17,856\n\n \n\nBrazilian upholstered furniture plant\n\n \n\n \n\n2,782\n\n \n\n \n\n \n\n2,862\n\n \n\nChinese upholstered furniture plant\n\n \n\n \n\n1,409\n\n \n\n \n\n \n\n2,353\n\n \n\nVietnamese upholstered furniture plant\n\n \n\n \n\n262\n\n \n\n \n\n \n\n—\n\n \n\nOthers\n\n \n\n \n\n17,151\n\n \n\n \n\n \n\n21,839\n\n \n\nTotal\n\n \n\n \n\n64,114\n\n \n\n \n\n \n\n74,189\n\n \n\n \n\nAs at December 31, 2025, the Group performed the impairment assessment of property, plant and equipment, right-of-use assets and goodwill included in several cash generating units (CGUs), such as the Italian upholstered furniture plant CGU and certain directly operated retail stores CGUs that presented indicators of impairment.\n\n \n\nFurther, Company performed an impairment assessment on the equity method investee Natuzzi Trading Shanghai.\n\nThe Group performed the impairment assessment in accordance with its accounting policy discussed in note 4(i).\n\nWith reference to the determination of value in use, the key assumptions applied by the Group in estimating such value include the annual sales growth rates used to project expected revenues for the period 2026–2028, with revenue levels for 2029 and 2030 equal to revenue in 2028, the weighted average cost of capital rates and the long-term growth rates, all of which were determined at the CGU level, including the effects of the duration of the current economic uncertainty. Such significant assumptions involved a high degree of subjectivity by management and reasonably possible changes to these assumptions have a significant effect on the value in use. Specifically, such assumptions were based on the Group’s future business performances and other forward-looking assumptions that entail significant judgments by management and are heavily impacted by several external events. Finally, cash flow projections for the period 2026–2028 were prepared on the basis of cash flow forecasts approved by the Board of Directors. These forecasts were developed taking into account both the Group’s historical performance and the expectation of a decline in sales in 2026, as a result of the current highly uncertain economic environment, which adversely affects demand for durable goods such as furniture.\n\nThe significant assumptions that were used in performing the impairment test for the Italian upholstered furniture plant CGU and certain directly operated retail stores CGUs are as follows:\n\n— Italian upholstered furniture plant CGU: weighted average cost of capital rate 9.79%, long-term growth rate 1.98%, annual sales growth rate for 2026 equal to -13.03% and annual sales growth rate (average of 2027-2030 period) equal to +6.30%.\n\n— Directly operated retail stores CGUs located in the U.S.: weighted average cost of capital rate 9.39%, long-term growth rate 2.56%, annual sales growth rate for 2026 equal to -7.71% and annual sales growth rate (average of 2027-2030 period) equal to +3.55%.\n\n— Directly operated retail stores CGUs located in Italy: weighted average cost of capital rate 9.79%, long-term growth rate 1.98%, annual sales growth rate for 2026 equal to -0.31% and annual sales growth rate (average of 2027-2030 period) equal to +2.43%.\n\n— Directly operated retail stores CGUs located in Spain: weighted average cost of capital rate 9.09%, long-term growth rate 2.13%, annual sales growth rate for 2026 equal to -0.33% and annual sales growth rate (average of 2027-2030 period) equal to +1.36%.\n\n— Directly operated retail stores CGUs located in the UK: weighted average cost of capital rate 9.05%, long-term growth rate 2.87%, annual sales growth rate for 2026 equal to +3.45% and annual sales growth rate (average of 2027-2030 period) equal to +4.16%.\n\n \n\nF-36\n\n[Table of Contents](#toc)\n\n \n\nNatuzzi S.p.A. and Subsidiaries\n\nNotes to consolidated financial statements\n\n(Expressed in thousands of euros except as otherwise indicated)\n\n \n\nFor the Italian upholstered furniture plant CGU, the Group has concluded that it is not possible to determine the fair value less cost to disposal based on a single, unitary reorganization/restructuring plan, given the significant uncertainties identified. Based on value in use the Group allocated the impairment loss if the carrying amount of an asset was below the highest of: (a) its fair value less costs of disposal (if measurable); (b) its value in use (if determinable) and (c) zero, recognizing an impairment of 2,300 for machinery and equipment and 1,900 for software (see note 10)\n\nIn line with the market-based perspective required by IFRS 13, the Group considered alternative valuation approaches and determined the recoverable amount of property, plant and equipment on a disaggregated basis, using fair value less costs of disposal. This assessment was supported by appraisals performed by independent third-party valuation specialists. The fair value of land and buildings has been derived by reference to observable market evidence for comparable properties (“comparables”), adjusted to reflect the specific attributes and characteristics of the subject asset relative to those of the comparables (fair value level 2 under ifrs13). The fair value of plant and machinery using the depreciated replacement cost method, adjusted for the functional and economics obsolescence and marketability factors. (fair value level 3 under IFRS13).\n\nAs a result of the impairment tests performed by the Group on property, plant and equipment, the following were recognized in 2025: i) an impairment loss of 4,200 of which 2,300 on machinery and equipment, and 1,900 on software related to upholstered furniture plant CGU (see note 10), and ii) an impairment loss of 272, related to directly operated retail stores CGUs.\n\nNo impairment losses were identified in 2024.\n\nConversely, with reference to specific CGUs, no reversal of impairment was recognized in 2025, whereas reversal of impairment amounting to 143 was recognized in 2024.\n\nThe Group conducted sensitivity analyses across all Cash Generating Units (CGUs). In particular, stress scenarios were defined by gradually increasing the WACC rate by up to 2 percentage points and reducing the terminal growth rate (g-rate) assumptions down to zero. The results of the analysis for the year 2025 indicated that, even under these adverse conditions, the majority of store CGUs would not require impairment. Within the negative stress scenario considered, there would be an additional impairment loss for the already impaired store CGUs, which have a residual net value of about €6,624; in the same negative stress scenario, the risk of impairment related to store CGUs with no current impairment loss would be limited to three stores CGUs in the United States and four stores in Italy.\n\n \n\nF-37\n\n[Table of Contents](#toc)\n\n \n\nNatuzzi S.p.A. and Subsidiaries\n\nNotes to consolidated financial statements\n\n(Expressed in thousands of euros except as otherwise indicated)\n\n \n\n9. Right-of-use-assets\n\nChanges in the carrying amount of right-of-use assets for the years ended December 31, 2025 and 2024, are reported in the following tables.\n\n \n\n \n\n \n\nBuildings\n\n \n\n \n\nVehicles\n\n \n\n \n\nTotal\n\n \n\nCost as at December 31, 2023\n\n \n\n \n\n101,592\n\n \n\n \n\n \n\n907\n\n \n\n \n\n \n\n102,499\n\n \n\nAdditions\n\n \n\n \n\n4,861\n\n \n\n \n\n \n\n353\n\n \n\n \n\n \n\n5,214\n\n \n\nDisposals\n\n \n\n \n\n(10,329\n\n)\n\n \n\n \n\n(103\n\n)\n\n \n\n \n\n(10,432\n\n)\n\nAdjustments due to remeasurements\n\n \n\n \n\n22\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n22\n\n \n\nAdjustments due to modifications\n\n \n\n \n\n182\n\n \n\n \n\n \n\n93\n\n \n\n \n\n \n\n275\n\n \n\nEffect of translation adjustments\n\n \n\n \n\n3,228\n\n \n\n \n\n \n\n11\n\n \n\n \n\n \n\n3,239\n\n \n\nCost as at December 31, 2024\n\n \n\n \n\n99,556\n\n \n\n \n\n \n\n1,261\n\n \n\n \n\n \n\n100,817\n\n \n\nAdditions\n\n \n\n \n\n9,074\n\n \n\n \n\n \n\n224\n\n \n\n \n\n \n\n9,298\n\n \n\nDisposals\n\n \n\n \n\n(14,510\n\n)\n\n \n\n \n\n(55\n\n)\n\n \n\n \n\n(14,565\n\n)\n\nAdjustments due to remeasurements\n\n \n\n \n\n476\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n476\n\n \n\nAdjustments due to modifications\n\n \n\n \n\n—\n\n \n\n \n\n \n\n(161\n\n)\n\n \n\n \n\n(161\n\n)\n\nEffect of translation adjustments\n\n \n\n \n\n(6,176\n\n)\n\n \n\n \n\n(21\n\n)\n\n \n\n \n\n(6,197\n\n)\n\nCost as at December 31, 2025\n\n \n\n \n\n88,420\n\n \n\n \n\n \n\n1,248\n\n \n\n \n\n \n\n89,668\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nAccumulated depreciation and impairment loss as at Dec. 31, 2023\n\n \n\n \n\n(51,686\n\n)\n\n \n\n \n\n(369\n\n)\n\n \n\n \n\n(52,055\n\n)\n\nDepreciation\n\n \n\n \n\n(10,372\n\n)\n\n \n\n \n\n(271\n\n)\n\n \n\n \n\n(10,643\n\n)\n\nDisposals\n\n \n\n \n\n8,299\n\n \n\n \n\n \n\n103\n\n \n\n \n\n \n\n8,402\n\n \n\nImpairment loss\n\n \n\n \n\n(458\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n(458\n\n)\n\nAdjustments due to remeasurements\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\nAdjustments due to modifications\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\nEffect of translation adjustments\n\n \n\n \n\n(1,673\n\n)\n\n \n\n \n\n(12\n\n)\n\n \n\n \n\n(1,685\n\n)\n\nAccumulated depreciation and impairment loss as at Dec. 31, 2024\n\n \n\n \n\n(55,890\n\n)\n\n \n\n \n\n(549\n\n)\n\n \n\n \n\n(56,439\n\n)\n\nDepreciation\n\n \n\n \n\n(9,645\n\n)\n\n \n\n \n\n(314\n\n)\n\n \n\n \n\n(9,959\n\n)\n\nDisposals\n\n \n\n \n\n9,605\n\n \n\n \n\n \n\n55\n\n \n\n \n\n \n\n9,660\n\n \n\nImpairment loss\n\n \n\n \n\n(2,926\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n(2,926\n\n)\n\nAdjustments due to remeasurements\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\nAdjustments due to modifications\n\n \n\n \n\n(4\n\n)\n\n \n\n \n\n160\n\n \n\n \n\n \n\n156\n\n \n\nEffect of translation adjustments\n\n \n\n \n\n3,460\n\n \n\n \n\n \n\n21\n\n \n\n \n\n \n\n3,481\n\n \n\nAccumulated depreciation and impairment loss as at Dec. 31, 2025\n\n \n\n \n\n(55,400\n\n)\n\n \n\n \n\n(627\n\n)\n\n \n\n \n\n(56,027\n\n)\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nNet book value as at December 31, 2023\n\n \n\n \n\n49,906\n\n \n\n \n\n \n\n538\n\n \n\n \n\n \n\n50,444\n\n \n\nNet book value as at December 31, 2024\n\n \n\n \n\n43,666\n\n \n\n \n\n \n\n712\n\n \n\n \n\n \n\n44,378\n\n \n\nNet book value as at December 31, 2025\n\n \n\n \n\n33,020\n\n \n\n \n\n \n\n621\n\n \n\n \n\n \n\n33,641\n\n \n\n \n\n \n\nF-38\n\n[Table of Contents](#toc)\n\n \n\nNatuzzi S.p.A. and Subsidiaries\n\nNotes to consolidated financial statements\n\n(Expressed in thousands of euros except as otherwise indicated)\n\n \n\nThe Group leases buildings for its retail stores, warehouses and factory facilities. These leases typically run for a period of five to ten years. Some leases include an option to renew the lease for an additional period of the same duration after the end of the contract term. Some of such leases provide for additional rent payments that are based on changes in local price indices. For certain of these leases, the Group is restricted from entering into any sub-lease arrangements. A significant portion of retail stores, warehouse and factory facilities leases were entered into several years ago.\n\nIn March 2025, the High Point building, located in North Carolina (USA), was sold to a company belonging to the majority shareholder. This transaction was followed by the execution of a lease agreement for the entire property with a term of nine years and nine months, expiring on 31 December 2034. As at 31 December 2025, the net carrying amount of the right-of-use asset relating to the aforementioned property amounted to 2,717. See Notes 7 and 45.\n\nThe Group leases vehicles under a number of leases. The contract lease term of such leases run for a period of two to four years.\n\nThe Group leases also IT and office equipment with contract terms of one to three years. These leases are short-term and/or leases of low-value items. The Group has elected not to recognise right-of-use assets and lease liabilities for these leases.\n\nThe following tables show a breakdown of right-of-use assets based on geographical location of the cash generating units (mainly directly operated retail stores) in which they are included.\n\n \n\n \n\n \n\n31/12/25\n\n \n\n \n\n31/12/24\n\n \n\nUnited States of America\n\n \n\n \n\n17,019\n\n \n\n \n\n \n\n21,810\n\n \n\nItaly\n\n \n\n \n\n10,628\n\n \n\n \n\n \n\n12,008\n\n \n\nSpain\n\n \n\n \n\n823\n\n \n\n \n\n \n\n1,424\n\n \n\nUnited Kingdom\n\n \n\n \n\n914\n\n \n\n \n\n \n\n4,591\n\n \n\nChina\n\n \n\n \n\n2,665\n\n \n\n \n\n \n\n2,923\n\n \n\nOthers\n\n \n\n \n\n1,592\n\n \n\n \n\n \n\n1,622\n\n \n\nTotal\n\n \n\n \n\n33,641\n\n \n\n \n\n \n\n44,378\n\n \n\n \n\nAs at December 31, 2025, the Group performed the impairment test of right-of-use assets included in cash generating units (CGUs) represented by every directly operated retail stores that presented indicators of impairment. For additional information on the impairment assessment, reference should be made to note 8.\n\nAs result of the 2025, 2024 and 2023 impairment losses were recognized on right-of-use assets relating to specific retail store CGUs, amounting to 3,615, 1,420 and 1,092, respectively. The impairment loss recorded in 2025 related to three stores in Italy, five in the United States, two in the United Kingdom and two in Australia, reflecting the fact that the sales forecasts for these stores—based on approved cash flow projections—resulted in a value in use lower than the carrying amount of the underlying assets.\n\nMore specifically, with reference to 2025:\n\n•\nfor the stores in Italy, the impairment test resulted in a loss of 128 on right-of-use assets. In addition, the impairment test resulted in an impairment loss on goodwill for two of the four Italian stores amounting to 831 (See Note 10). The total impairment loss therefore amounted to 959, compared with a carrying amount of 3,228, based on a weighted average cost of capital of 9.79% and a long-term growth rate of 1.98%;\n\n•\nfor the stores in the United States, an impairment loss of 2,494 was recognized, compared with a carrying amount of 7,825, based on a weighted average cost of capital of 9.39% and a long-term growth rate of 2.56%;\n\n•\nfor the stores in the United Kingdom, an impairment loss of 611 was recognized, compared with a carrying amount of 754, based on a weighted average cost of capital of 9.05% and a long-term growth rate of 2.87%;\n\n•\nfor the stores in Australia, an impairment loss of 382 was recognized, compared with a carrying amount of 419, based on a weighted average cost of capital of 8.83% and a long-term growth rate of 2.78%.\n\n•\nFor other retail stores, reversals of impairment amounting to 689 in 2025 and 962 in 2024 were recognized.\n\n \n\nF-39\n\n[Table of Contents](#toc)\n\n \n\nNatuzzi S.p.A. and Subsidiaries\n\nNotes to consolidated financial statements\n\n(Expressed in thousands of euros except as otherwise indicated)\n\n \n\nOther information about leases for which the Group is a lessee is presented below.\n\nThe following tables show the amounts recognized in profit or loss under IFRS 16 for the years ended December 31, 2025, 2024 and 2023.\n\n \n\n \n\n \n\n2025\n\n \n\n \n\n2024\n\n \n\n \n\n2023\n\n \n\nDepreciation charge of right-of-use assets\n\n \n\n \n\n9,959\n\n \n\n \n\n \n\n10,643\n\n \n\n \n\n \n\n12,021\n\n \n\nInterest on lease liabilities\n\n \n\n \n\n3,286\n\n \n\n \n\n \n\n3,810\n\n \n\n \n\n \n\n3,090\n\n \n\nExpenses relating to short-term leases\n\n \n\n \n\n1,721\n\n \n\n \n\n \n\n1,970\n\n \n\n \n\n \n\n2,326\n\n \n\nExpenses relating to leases of low-value assets, excluding short-term leases\n\n \n\n \n\n166\n\n \n\n \n\n \n\n156\n\n \n\n \n\n \n\n133\n\n \n\nTotal\n\n \n\n \n\n15,132\n\n \n\n \n\n \n\n16,579\n\n \n\n \n\n \n\n17,570\n\n \n\n \n\nLease payments recognised in statement of cash flows for the years ended December 31, 2025, 2024 and 2023 amount to 12,768, 14,098 and 14,147 , respectively, and include interest paid for 3,286, 3,810 and 3,090, respectively (see note 21).\n\n10. Intangible assets and goodwill\n\nChanges in the carrying amount of intangible assets and goodwill for the years ended December 31, 2025 and 2024 are analysed in the following tables.\n\n \n\n \n\n \n\nTrademarks,\npatents and\nother\n\n \n\n \n\nSoftware\n\n \n\n \n\nGoodwill\n\n \n\n \n\nTotal\n\n \n\nCost as at December 31, 2023\n\n \n\n \n\n3,359\n\n \n\n \n\n \n\n17,416\n\n \n\n \n\n \n\n1,921\n\n \n\n \n\n \n\n22,696\n\n \n\nAdditions\n\n \n\n \n\n220\n\n \n\n \n\n \n\n3,853\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n4,073\n\n \n\nDisposals\n\n \n\n \n\n(302\n\n)\n\n \n\n \n\n(7,842\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n(8,144\n\n)\n\nEffect of translation adjustments\n\n \n\n \n\n4\n\n \n\n \n\n \n\n16\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n20\n\n \n\nCost as at December 31, 2024\n\n \n\n \n\n3,281\n\n \n\n \n\n \n\n13,443\n\n \n\n \n\n \n\n1,921\n\n \n\n \n\n \n\n18,645\n\n \n\nAdditions\n\n \n\n \n\n205\n\n \n\n \n\n \n\n1,004\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n1,209\n\n \n\nImpairment loss\n\n \n\n \n\n—\n\n \n\n \n\n \n\n(1,900\n\n)\n\n \n\n \n\n(831\n\n)\n\n \n\n \n\n(2,731\n\n)\n\nDisposals\n\n \n\n \n\n—\n\n \n\n \n\n \n\n(324\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n(324\n\n)\n\nEffect of translation adjustments\n\n \n\n \n\n(3\n\n)\n\n \n\n \n\n(41\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n(44\n\n)\n\nCost as at December 31, 2025\n\n \n\n \n\n3,483\n\n \n\n \n\n \n\n12,182\n\n \n\n \n\n \n\n1,090\n\n \n\n \n\n \n\n16,755\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nAccumulated amortisation as at December 31, 2023\n\n \n\n \n\n(2,963\n\n)\n\n \n\n \n\n(15,573\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n(18,536\n\n)\n\nAmortisation\n\n \n\n \n\n(156\n\n)\n\n \n\n \n\n(1,414\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n(1,570\n\n)\n\nDisposals\n\n \n\n \n\n260\n\n \n\n \n\n \n\n7,842\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n8,102\n\n \n\nEffect of translation adjustments\n\n \n\n \n\n(3\n\n)\n\n \n\n \n\n(10\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n(13\n\n)\n\nAccumulated amortisation as at December 31, 2024\n\n \n\n \n\n(2,862\n\n)\n\n \n\n \n\n(9,155\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n(12,017\n\n)\n\nAmortisation\n\n \n\n \n\n(164\n\n)\n\n \n\n \n\n(1,987\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n(2,151\n\n)\n\nDisposals\n\n \n\n \n\n—\n\n \n\n \n\n \n\n320\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n320\n\n \n\nEffect of translation adjustments\n\n \n\n \n\n—\n\n \n\n \n\n \n\n40\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n40\n\n \n\nAccumulated amortisation as at December 31, 2025\n\n \n\n \n\n(3,026\n\n)\n\n \n\n \n\n(10,782\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n(13,808\n\n)\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nNet book value as at December 31, 2023\n\n \n\n \n\n396\n\n \n\n \n\n \n\n1,843\n\n \n\n \n\n \n\n1,921\n\n \n\n \n\n \n\n4,160\n\n \n\nNet book value as at December 31, 2024\n\n \n\n \n\n419\n\n \n\n \n\n \n\n4,288\n\n \n\n \n\n \n\n1,921\n\n \n\n \n\n \n\n6,628\n\n \n\nNet book value as at December 31, 2025\n\n \n\n \n\n457\n\n \n\n \n\n \n\n1,400\n\n \n\n \n\n \n\n1,090\n\n \n\n \n\n \n\n2,947\n\n \n\n \n\n \n\nF-40\n\n[Table of Contents](#toc)\n\n \n\nNatuzzi S.p.A. and Subsidiaries\n\nNotes to consolidated financial statements\n\n(Expressed in thousands of euros except as otherwise indicated)\n\n \n\nAs at December 31, 2025 and 2024, goodwill of 1,090 and 1,921, respectively, relates to the “Italy – retail stores” CGU. It arose from the 2017 acquisition by the Parent of three “Divani&Divani by Natuzzi” stores located in the North East of Italy.\n\nAs at December 31, 2025 the impairment loss on software was 1,900 (see note 8).\n\nIn 2025, the item \"disposals\" refers to the writing-off of assets fully depreciated.\n\nWith reference to goodwill, since it is allocated to specific DOS, the Group has carried out an impairment test on property, plant and equipment, right-of-use assets as well as the goodwill for each cash-generating unit (CGU) of directly managed retail stores. As a result of this impairment test, for two of the three directly operated stores (DOS) to which goodwill is allocated, an impairment was identified, leading to the recognition of a loss of 831.\n\nFurther, the cash flows included specific estimates for three years and a long-term growth rate thereafter. Cash flow projections were prepared on the basis of forecasts approved by the Board of Directors. For additional information on the impairment assessment, reference should be made to note 8.\n\n11. Equity-method investees\n\nChanges in the carrying amount of equity-method investees for the years ended December 31, 2025 and 2024 are analysed as follows.\n\n \n\n \n\n \n\nNatuzzi\nTrading\n Shanghai\n\n \n\n \n\nNars\nMiami\nLLC\n\n \n\n \n\nNatuzzi\nTexas\nLLC\n\n \n\n \n\nNatuzzi\nStore (UK)\nltd\n\n \n\n \n\nFoundation \"Made in Italy circolare e sostenibile\"\n\n \n\n \n\nSalena\nS.r.l.\n\n \n\n \n\nTotal\n\n \n\nBalance as at December 31, 2023\n\n \n\n \n\n38,645\n\n \n\n \n\n \n\n609\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n569\n\n \n\n \n\n \n\n8\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n39,831\n\n \n\nShare of profit for the year\n\n \n\n \n\n988\n\n \n\n \n\n \n\n(4\n\n)\n\n \n\n \n\n(548\n\n)\n\n \n\n \n\n(47\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n389\n\n \n\nLoss allowance\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n602\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n602\n\n \n\nShare of other comprehensive income\n\n \n\n \n\n686\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n686\n\n \n\nDividends received/(distributed)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n(77\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n(77\n\n)\n\nLiquidation\n\n \n\n \n\n—\n\n \n\n \n\n \n\n(520\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n(520\n\n)\n\nEffect of translation adjustments\n\n \n\n \n\n—\n\n \n\n \n\n \n\n(8\n\n)\n\n \n\n \n\n(54\n\n)\n\n \n\n \n\n26\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n(36\n\n)\n\nBalance as at December 31, 2024\n\n \n\n \n\n40,319\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n548\n\n \n\n \n\n \n\n8\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n40,875\n\n \n\nShare of profit for the year\n\n \n\n \n\n82\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n(512\n\n)\n\n \n\n \n\n59\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n(371\n\n)\n\nLoss allowance\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n364\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n364\n\n \n\nShare of other comprehensive income\n\n \n\n \n\n(1,309\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n(1,309\n\n)\n\nDividends received/(distributed)\n\n \n\n \n\n(2,221\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n(2,221\n\n)\n\nLiquidation\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\nEffect of translation adjustments\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n148\n\n \n\n \n\n \n\n(28\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n120\n\n \n\nBalance as at December 31, 2025\n\n \n\n \n\n36,871\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n579\n\n \n\n \n\n \n\n8\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n37,458\n\n \n\n \n\nAs at December 31, 2025 and 2024 equity-method investees include: (a) the 49% stake in the joint venture Natuzzi Trading Shanghai; (b) the 51% stake in the joint venture Natuzzi Texas LLC; (c) the 30% stake in the associate Natuzzi Store (UK) ltd; (d) the 49% interest in the associate Salena S.r.l., whose carrying value was totally impaired in 2014 in consideration of some legal disputes among shareholders.\n\nWith reference to the investment in the associate Nars Miami LLC, the entity was liquidated in early 2024 following the closure of its sole store in 2023.\n\nAll such investments are accounted for using the equity method.\n\n \n\n \n\nF-41\n\n[Table of Contents](#toc)\n\n \n\nNatuzzi S.p.A. and Subsidiaries\n\nNotes to consolidated financial statements\n\n(Expressed in thousands of euros except as otherwise indicated)\n\n \n\n(i) Disclosures on Natuzzi Trading (Shanghai) Co. Ltd., joint venture\n\nThe following table shows the reconciliation of the carrying amount of the retained interest in Natuzzi Trading Shanghai as at December 31, 2024 with the carrying amount as at December 31, 2025 included in the consolidated statement of financial position.\n\n \n\nCarrying amount as at December 31, 2024\n\n \n\n \n\n \n\n \n\n \n\n40,319\n\n \n\nDividends distribution\n\n \n\n \n\n \n\n \n\n \n\n(2,221\n\n)\n\nShare capital reduction\n\n \n\n \n\n \n\n \n\n \n\n—\n\n \n\nGroup’s share of profit for the year\n\n \n\n \n\n(366\n\n)\n\n \n\n \n\n \n\nElimination of amortisation of Natuzzi’s trademarks\n\n \n\n \n\n368\n\n \n\n \n\n \n\n \n\nElimination of intercompany profit on inventories\n\n \n\n \n\n469\n\n \n\n \n\n \n\n \n\nAmortisation of intangibles assets\n\n \n\n \n\n(519\n\n)\n\n \n\n \n\n \n\nReversal of deferred tax liabilities\n\n \n\n \n\n130\n\n \n\n \n\n \n\n \n\nGroup’s share of profit for the year, net of equity method adjustments\n\n \n\n \n\n82\n\n \n\n \n\n \n\n82\n\n \n\nGroup’s share of other comprehensive income\n\n \n\n \n\n \n\n \n\n \n\n(1,309\n\n)\n\nCarrying amount as at December 31, 2025\n\n \n\n \n\n \n\n \n\n \n\n36,871\n\n \n\nThe following table shows the reconciliation of the carrying amount of the retained interest in Natuzzi Trading Shanghai as at December 31, 2023 with the carrying amount as at December 31, 2024 included in the consolidated statement of financial position.\n\n \n\nCarrying amount as at December 31, 2023\n\n \n\n \n\n \n\n \n\n \n\n38,645\n\n \n\nDividends distribution\n\n \n\n \n\n \n\n \n\n \n\n—\n\n \n\nShare capital reduction\n\n \n\n \n\n \n\n \n\n \n\n—\n\n \n\nGroup’s share of profit for the year\n\n \n\n \n\n292\n\n \n\n \n\n \n\n \n\nElimination of amortisation of Natuzzi’s trademarks\n\n \n\n \n\n368\n\n \n\n \n\n \n\n \n\nElimination of intercompany profit on inventories\n\n \n\n \n\n717\n\n \n\n \n\n \n\n \n\nAmortisation of intangibles assets\n\n \n\n \n\n(519\n\n)\n\n \n\n \n\n \n\nReversal of deferred tax liabilities\n\n \n\n \n\n130\n\n \n\n \n\n \n\n \n\nGroup’s share of profit for the year, net of equity method adjustments\n\n \n\n \n\n988\n\n \n\n \n\n \n\n988\n\n \n\nGroup’s share of other comprehensive income\n\n \n\n \n\n \n\n \n\n \n\n686\n\n \n\nCarrying amount as at December 31, 2024\n\n \n\n \n\n \n\n \n\n \n\n40,319\n\n \n\nSummarised financial information of the joint venture Natuzzi Trading Shanghai, based on its IFRS financial statements, and reconciliation with the carrying amount of the Group’s share in net assets and in profit or loss as reported in the consolidated financial statements are set out below. As at December 31, 2025, the Group performed, in accordance with its accounting policy discussed in note 4(i), the impairment assessment. No impairment losses arose from the test performed.\n\nThe significant assumptions that were used in performing the impairment test for the interest in Natuzzi Trading Shanghai are as follows: weighted average cost of capital rate of 10.35%, long-term growth rate of 1.74%, annual sales growth rate for 2026 equal to -5.40% and annual sales growth rate (average of 2027-2030 period) equal to +8.97%, and equivalent to a compound annual sales growth rate (average of 2026-2030 period) of +5.93%.\n\nThe Group conducted sensitivity analyses on its interest in the joint venture, Natuzzi Trading Shanghai. In particular, stress scenarios were defined by gradually reducing the terminal growth rate (g-rate) assumptions down to zero. The results of the analysis for the year 2025 indicated that, even under these adverse conditions, the impairment would not be material.\n\nWith reference to the determination of value in use, the key assumptions applied by the Group in estimating such value include the annual sales growth rates used to project expected revenues for the period 2026–2030, the weighted average\n\n \n\nF-42\n\n[Table of Contents](#toc)\n\n \n\nNatuzzi S.p.A. and Subsidiaries\n\nNotes to consolidated financial statements\n\n(Expressed in thousands of euros except as otherwise indicated)\n\n \n\ncost of capital rates and the long-term growth rates, all of which were determined at the asset level, including the effects of the duration of the current economic uncertainty. Such significant assumptions involved a high degree of subjectivity by management and reasonably possible changes to these assumptions have a significant effect on the value in use. Specifically, such assumptions were based on the joint venture’s future business performances and other forward-looking assumptions that entail significant judgments by management and are heavily impacted by several external events. These projections, leading to a 5,93% CAGR in net sales for the period 2026-2030, were developed taking into account both the joint venture’s historical performance and the expectation of a decline in sales in 2026, as a result of the current highly uncertain economic environment, which adversely affects demand for durable goods such as furniture.\n\nSummarised statement of financial position of Natuzzi Trading Shanghai and Group’s share in net assets as at December 31, 2025 and 2024\n\n \n\n \n\n \n\n31/12/25\n\n \n\n \n\n31/12/24\n\n \n\nCurrent assets\n\n \n\n \n\n41,569\n\n \n\n \n\n \n\n52,951\n\n \n\nNon-current assets\n\n \n\n \n\n14,262\n\n \n\n \n\n \n\n16,954\n\n \n\nCurrent liabilities\n\n \n\n \n\n(20,903\n\n)\n\n \n\n \n\n(25,753\n\n)\n\nNon-current liabilities\n\n \n\n \n\n(1,611\n\n)\n\n \n\n \n\n(2,885\n\n)\n\nNet Assets\n\n \n\n \n\n33,317\n\n \n\n \n\n \n\n41,267\n\n \n\nGroup’s share in net assets – 49% of net assets\n\n \n\n \n\n16,325\n\n \n\n \n\n \n\n20,221\n\n \n\nIntangible assets\n\n \n\n \n\n753\n\n \n\n \n\n \n\n1,272\n\n \n\nGoodwill\n\n \n\n \n\n26,140\n\n \n\n \n\n \n\n26,140\n\n \n\nElimination of intercompany profit from licensing Natuzzi’s trademarks\n\n \n\n \n\n(4,626\n\n)\n\n \n\n \n\n(4,994\n\n)\n\nElimination of intercompany profit on inventories\n\n \n\n \n\n(1,530\n\n)\n\n \n\n \n\n(1,999\n\n)\n\nDeferred tax liabilities\n\n \n\n \n\n(191\n\n)\n\n \n\n \n\n(321\n\n)\n\nGroup’s carrying amount of interest\n\n \n\n \n\n36,871\n\n \n\n \n\n \n\n40,319\n\n \n\n \n\nAs at December 31, 2025 and 2024 cash and cash equivalents, bank overdrafts and borrowings, lease liabilities current and non-current are set out below.\n\n \n\n \n\n \n\n31/12/25\n\n \n\n \n\n31/12/24\n\n \n\nCash and cash equivalents\n\n \n\n \n\n25,461\n\n \n\n \n\n \n\n33,230\n\n \n\nLease liabilities current\n\n \n\n \n\n(1,611\n\n)\n\n \n\n \n\n(2,885\n\n)\n\nLease liabilities non-current\n\n \n\n \n\n(1,202\n\n)\n\n \n\n \n\n(767\n\n)\n\nTotal, net\n\n \n\n \n\n22,648\n\n \n\n \n\n \n\n29,578\n\n \n\n \n\n \n\nF-43\n\n[Table of Contents](#toc)\n\n \n\nNatuzzi S.p.A. and Subsidiaries\n\nNotes to consolidated financial statements\n\n(Expressed in thousands of euros except as otherwise indicated)\n\n \n\nSummarised statement of profit or loss of Natuzzi Trading Shanghai and Group’s share of profit for the year ended December 31, 2025, 2024 and 2023.\n\n \n\n \n\n \n\n2025\n\n \n\n \n\n2024\n\n \n\n \n\n2023\n\n \n\nRevenue\n\n \n\n \n\n48,508\n\n \n\n \n\n \n\n57,222\n\n \n\n \n\n \n\n69,939\n\n \n\nCost of sales\n\n \n\n \n\n(29,320\n\n)\n\n \n\n \n\n(33,492\n\n)\n\n \n\n \n\n(39,823\n\n)\n\nOther income and expenses, net\n\n \n\n \n\n(34\n\n)\n\n \n\n \n\n(7\n\n)\n\n \n\n \n\n(747\n\n)\n\nSelling expenses\n\n \n\n \n\n(17,687\n\n)\n\n \n\n \n\n(19,036\n\n)\n\n \n\n \n\n(24,297\n\n)\n\nAdministrative expenses\n\n \n\n \n\n(1,623\n\n)\n\n \n\n \n\n(2,775\n\n)\n\n \n\n \n\n(3,332\n\n)\n\nImpairment on trade receivables\n\n \n\n \n\n122\n\n \n\n \n\n \n\n(520\n\n)\n\n \n\n \n\n—\n\n \n\nNet finance income\n\n \n\n \n\n(37\n\n)\n\n \n\n \n\n78\n\n \n\n \n\n \n\n315\n\n \n\nProfit before tax\n\n \n\n \n\n(71\n\n)\n\n \n\n \n\n1,470\n\n \n\n \n\n \n\n2,055\n\n \n\nIncome tax expense\n\n \n\n \n\n(675\n\n)\n\n \n\n \n\n(874\n\n)\n\n \n\n \n\n(522\n\n)\n\nProfit for the period\n\n \n\n \n\n(746\n\n)\n\n \n\n \n\n596\n\n \n\n \n\n \n\n1,533\n\n \n\nOther comprehensive profit/(loss)\n\n \n\n \n\n(2,671\n\n)\n\n \n\n \n\n1,400\n\n \n\n \n\n \n\n(2,565\n\n)\n\nTotal comprehensive profit for the period\n\n \n\n \n\n(3,417\n\n)\n\n \n\n \n\n1,996\n\n \n\n \n\n \n\n(1,032\n\n)\n\nGroup’s share of profit for the period – 49%\n\n \n\n \n\n(366\n\n)\n\n \n\n \n\n292\n\n \n\n \n\n \n\n751\n\n \n\nElimination of amortisation of Natuzzi’s trademarks\n\n \n\n \n\n368\n\n \n\n \n\n \n\n368\n\n \n\n \n\n \n\n367\n\n \n\nElimination of intercompany profit on inventories\n\n \n\n \n\n469\n\n \n\n \n\n \n\n717\n\n \n\n \n\n \n\n2,144\n\n \n\nAmortisation of intangible assets\n\n \n\n \n\n(519\n\n)\n\n \n\n \n\n(519\n\n)\n\n \n\n \n\n(519\n\n)\n\nDeferred tax liabilities\n\n \n\n \n\n130\n\n \n\n \n\n \n\n130\n\n \n\n \n\n \n\n130\n\n \n\nGroup’s share of profit/(loss), net of equity method adj.\n\n \n\n \n\n82\n\n \n\n \n\n \n\n988\n\n \n\n \n\n \n\n2,873\n\n \n\nGroup’s share of other comprehensive income/(loss) for the period\n\n \n\n \n\n(1,309\n\n)\n\n \n\n \n\n686\n\n \n\n \n\n \n\n(1,257\n\n)\n\nGroup’s share of total comprehensive income/(loss) for the period\n\n \n\n \n\n(1,227\n\n)\n\n \n\n \n\n1,674\n\n \n\n \n\n \n\n1,616\n\n \n\nDividends received by the Group\n\n \n\n \n\n2,221\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\nFor the years ended December 31, 2025, 2024 and 2023, depreciation and amortisation, interest income, interest expense and income tax expense are set below.\n\n \n\n \n\n2025\n\n \n\n \n\n2024\n\n \n\n \n\n2023\n\n \n\nDepreciation and amortisation\n\n \n\n \n\n2,710\n\n \n\n \n\n \n\n4,153\n\n \n\n \n\n \n\n5,571\n\n \n\nInterest income\n\n \n\n \n\n130\n\n \n\n \n\n \n\n263\n\n \n\n \n\n \n\n557\n\n \n\nInterest expense\n\n \n\n \n\n165\n\n \n\n \n\n \n\n354\n\n \n\n \n\n \n\n242\n\n \n\nIncome tax expense\n\n \n\n \n\n675\n\n \n\n \n\n \n\n874\n\n \n\n \n\n \n\n522\n\n \n\n \n\n(ii) Disclosures on Natuzzi Texas LLC, joint venture\n\nNatuzzi Texas LLC is an immaterial joint venture, set up in 2021, which is engaged in the sale of the Group’s Natuzzi upholstery furniture and home furnishings accessories to end consumers through directly-operated single-brand stores (Natuzzi Italia stores). The company opened its first store in February 2022.\n\n(iii) Disclosures on Natuzzi Stores (UK) Ltd, associate\n\nNatuzzi Stores (UK) Ltd is an immaterial associate, in which the Group acquired a 30% stake in early 2021. Natuzzi Stores (UK) Ltd is engaged in the sale of upholstered furniture and home furnishings accessories to end consumers through directly-operated Natuzzi Italia mono-brand stores.\n\n \n\nF-44\n\n[Table of Contents](#toc)\n\n \n\nNatuzzi S.p.A. and Subsidiaries\n\nNotes to consolidated financial statements\n\n(Expressed in thousands of euros except as otherwise indicated)\n\n \n\n12. Other non-current receivables\n\nOther non-current receivables consist of the following:\n\n \n\n \n\n \n\n31/12/25\n\n \n\n \n\n31/12/24\n\n \n\nSecurity deposits for lease and other contracts\n\n \n\n \n\n4,981\n\n \n\n \n\n \n\n6,124\n\n \n\nTotal\n\n \n\n \n\n4,981\n\n \n\n \n\n \n\n6,124\n\n \n\nThe security deposits for lease contracts, essentially consisting of leasing contracts, include the restricted cash for 892 as at December 31, 2025 and 2024, respectively, which relates to the early retirement contract that the Company signed with certain employees in 2023 (see note 23).\n\n13. Other assets (non-current and current)\n\nOther assets are analysed as follows:\n\n \n\n \n\n \n\n31/12/25\n\n \n\n \n\n31/12/24\n\n \n\nAdvances to suppliers\n\n \n\n \n\n2,077\n\n \n\n \n\n \n\n2,719\n\n \n\nDeferred delivery and commission costs related to finished goods\n\n \n\n \n\n1,160\n\n \n\n \n\n \n\n844\n\n \n\nDeferred costs for Natuzzi Display System\n\n \n\n \n\n1,687\n\n \n\n \n\n \n\n1,666\n\n \n\nDeferred costs for slotting fees\n\n \n\n \n\n681\n\n \n\n \n\n \n\n842\n\n \n\nDeferred costs for Service-Type Warranty\n\n \n\n \n\n552\n\n \n\n \n\n \n\n316\n\n \n\nOther prepaid expenses and accrued income\n\n \n\n \n\n600\n\n \n\n \n\n \n\n435\n\n \n\nTotal other assets\n\n \n\n \n\n6,757\n\n \n\n \n\n \n\n6,822\n\n \n\nLess current portion\n\n \n\n \n\n(4,991\n\n)\n\n \n\n \n\n(5,073\n\n)\n\nNon-current portion\n\n \n\n \n\n1,766\n\n \n\n \n\n \n\n1,749\n\n \n\n \n\n“Advances to suppliers” represent advance payments for raw materials, services and other expenses.\n\n“Deferred delivery and commission costs related to finished goods” are related to the deferral of shipping and handling costs and commission expenses for finished goods that had not been delivered at year-end.\n\n“Deferred costs for Natuzzi Display System” refer to the deferred costs incurred by the Company to purchase store fittings, which are then sold to retailers and used to set up their stores (“Natuzzi Display System” – NDS). Such costs are recognised over the life of the distribution contract signed with the retailer (usually five years).\n\n“Deferred costs for slotting fees” refer to contributions made by the Company to retailers to prepare the retailer’s system to accept and sell the Group’s products. Such fees are recognised over the life of the contract signed with the retailers (usually five years).\n\n“Deferred costs for Service-Type Warranty” refer to the deferral of costs incurred by the Company for the sale of a service-type warranty to end customers, considering that this insurance is provided by a third-party. Such costs are recognised over the life of the contractual insurance period, which is five years.\n\n14. Inventories\n\nInventories are analysed as follows:\n\n \n\n \n\n \n\n31/12/25\n\n \n\n \n\n31/12/24\n\n \n\nLeather and other raw materials\n\n \n\n \n\n13,858\n\n \n\n \n\n \n\n19,700\n\n \n\nGoods in process\n\n \n\n \n\n10,241\n\n \n\n \n\n \n\n9,327\n\n \n\nFinished goods\n\n \n\n \n\n25,435\n\n \n\n \n\n \n\n33,788\n\n \n\nTotal\n\n \n\n \n\n49,534\n\n \n\n \n\n \n\n62,815\n\n \n\n \n\n \n\nF-45\n\n[Table of Contents](#toc)\n\n \n\nNatuzzi S.p.A. and Subsidiaries\n\nNotes to consolidated financial statements\n\n(Expressed in thousands of euros except as otherwise indicated)\n\n \n\nThe following tables summarise the changes to the provision for slow moving and obsolete raw materials and finished goods included in inventories for the years ended December 31, 2025 and 2024.\n\n \n\n \n\n \n\n31/12/25\n\n \n\n \n\n31/12/24\n\n \n\nBalance at beginning of year\n\n \n\n \n\n13,961\n\n \n\n \n\n \n\n14,986\n\n \n\nAdditions\n\n \n\n \n\n907\n\n \n\n \n\n \n\n1,172\n\n \n\nReductions\n\n \n\n \n\n(1,185\n\n)\n\n \n\n \n\n(2,197\n\n)\n\nBalance at end of year\n\n \n\n \n\n13,683\n\n \n\n \n\n \n\n13,961\n\n \n\nThe additions and reductions are included in “cost of sales”.\n\nThere are no pledged inventories that could be limited in their availability.\n\n15. Trade receivables\n\nTrade receivables are due primarily from distributors and retailers who sell directly to end customers.\n\nTrade receivables disaggregated by nature of the relationship with the customers are as follows:\n\n \n\n \n\n31/12/25\n\n \n\n \n\n31/12/24\n\n \n\nThird parties\n\n \n\n \n\n27,917\n\n \n\n \n\n \n\n31,157\n\n \n\nRelated parties\n\n \n\n \n\n7,963\n\n \n\n \n\n \n\n5,323\n\n \n\nGross trade receivables\n\n \n\n \n\n35,880\n\n \n\n \n\n \n\n36,480\n\n \n\nAllowance for doubtful accounts\n\n \n\n \n\n(3,372\n\n)\n\n \n\n \n\n(3,661\n\n)\n\nTotal trade receivables\n\n \n\n \n\n32,508\n\n \n\n \n\n \n\n32,819\n\n \n\nFor further information about transactions with related parties see note 45.\n\nTrade receivables by geographic region are analysed as follows:\n\n \n\n \n\n \n\n31/12/25\n\n \n\n \n\n31/12/24\n\n \n\nItalian customers\n\n \n\n \n\n7,104\n\n \n\n \n\n \n\n6,633\n\n \n\nOther European customers\n\n \n\n \n\n8,397\n\n \n\n \n\n \n\n8,402\n\n \n\nNorth American customers\n\n \n\n \n\n9,040\n\n \n\n \n\n \n\n9,277\n\n \n\nChinese customers\n\n \n\n \n\n2,354\n\n \n\n \n\n \n\n4,435\n\n \n\nSouth American customers\n\n \n\n \n\n4,148\n\n \n\n \n\n \n\n4,300\n\n \n\nOther foreign customers\n\n \n\n \n\n4,837\n\n \n\n \n\n \n\n3,433\n\n \n\nGross trade receivables\n\n \n\n \n\n35,880\n\n \n\n \n\n \n\n36,480\n\n \n\nProvision for doubtful accounts\n\n \n\n \n\n(3,372\n\n)\n\n \n\n \n\n(3,661\n\n)\n\nTotal trade receivables\n\n \n\n \n\n32,508\n\n \n\n \n\n \n\n32,819\n\n \n\n \n\nThe following tables provide the movements in the provision for doubtful accounts for the years ended December 31, 2025 and 2024.\n\n \n\n \n\n \n\n31/12/25\n\n \n\n \n\n31/12/24\n\n \n\nBalance at beginning of year\n\n \n\n \n\n3,661\n\n \n\n \n\n \n\n4,263\n\n \n\nCharges – bad debt expense\n\n \n\n \n\n46\n\n \n\n \n\n \n\n289\n\n \n\nReductions – write off of uncollectible amounts\n\n \n\n \n\n(222\n\n)\n\n \n\n \n\n(806\n\n)\n\nForeign exchange effect\n\n \n\n \n\n(113\n\n)\n\n \n\n \n\n(85\n\n)\n\nBalance at end of year\n\n \n\n \n\n3,372\n\n \n\n \n\n \n\n3,661\n\n \n\n \n\n \n\nF-46\n\n[Table of Contents](#toc)\n\n \n\nNatuzzi S.p.A. and Subsidiaries\n\nNotes to consolidated financial statements\n\n(Expressed in thousands of euros except as otherwise indicated)\n\n \n\nThe Parent sold trade receivables to a financial institution for cash advances (for further details, see note 33(C)(iii)). These trade receivables have not been derecognized from the statement of financial position, because the Parent retains substantially all of the risks and rewards – primarily credit risk. The amount received on their transfer has been recognised as a secured bank borrowing (see note 28).\n\nThe arrangement with the financial institution is such that the customers remit cash directly to the Parent and the Parent transfers the collected amounts to the financial institution. The receivables are considered to be held within a held‑to‑collect business model consistent with the Group’s continuing recognition of the receivables.\n\nThe following information shows the reporting-date carrying amount of trade receivables that have been transferred but have not been derecognised and the associated liabilities.\n\n \n\n \n\n \n\n31/12/25\n\n \n\n \n\n31/12/24\n\n \n\nCarrying amount of trade receivables transferred\n\n \n\n \n\n14,617\n\n \n\n \n\n \n\n11,588\n\n \n\nCarrying amount of associated liabilities\n\n \n\n \n\n(13,434\n\n)\n\n \n\n \n\n(10,665\n\n)\n\nTotal, net\n\n \n\n \n\n1,183\n\n \n\n \n\n \n\n923\n\n \n\n \n\nInformation about the Group’s exposure to credit risk and impairment losses for trade receivables is included in note 33(C)(ii-a).\n\n16. Other current receivables\n\nOther current receivables are analysed as follows:\n\n \n\n \n\n \n\n31/12/25\n\n \n\n \n\n31/12/24\n\n \n\nVAT\n\n \n\n \n\n1,971\n\n \n\n \n\n \n\n2,408\n\n \n\nReceivables from National Institute for Social Security\n\n \n\n \n\n3,041\n\n \n\n \n\n \n\n4,615\n\n \n\nOther\n\n \n\n \n\n2,550\n\n \n\n \n\n \n\n3,595\n\n \n\nTotal\n\n \n\n \n\n7,562\n\n \n\n \n\n \n\n10,618\n\n \n\n \n\nThe “VAT” receivables include value added taxes and related interest reimbursable to the various companies of the Group. While currently due at the reporting date, the collection of the VAT receivable may extend over a maximum period of up to two years.\n\nThe “Receivables from National Institute for Social Security” represent the amounts paid in advance by the Company on behalf the governmental institute related to salaries and wages for those workers and employees subject to temporary work force reduction.\n\nThe “Other“ caption mainly includes certain receivables related to incentives on photovoltaic investments, receivables for advance payments on sales commissions related to the Group's Concessions in Mexico, and receivables from lessors.\n\n17. Other current financial receivables\n\nOther current financial receivables are analysed as follows:\n\n \n\nOther current financial receivables\n\n \n\n31/12/25\n\n \n\n \n\n31/12/24\n\n \n\nShort-term borrowings\n\n \n\n \n\n4,121\n\n \n\n \n\n \n\n1,348\n\n \n\nTotal\n\n \n\n \n\n4,121\n\n \n\n \n\n \n\n1,348\n\n \n\nDuring 2025, the Brazilian subsidiary made short-term financial investments amounting to 2,930 (18,857 Brazilian reais), through the purchase of government securities yielding approximately an interest of 1.0% per month.\n\nIn 2024, the Board of Directors of a subsidiary, in light of its liquidity position, approved the granting of a renewable annual loan to the minority shareholder, Truong Thanh Furniture Corporation (“TTF”), upon request. The loan carries an\n\n \n\nF-47\n\n[Table of Contents](#toc)\n\n \n\nNatuzzi S.p.A. and Subsidiaries\n\nNotes to consolidated financial statements\n\n(Expressed in thousands of euros except as otherwise indicated)\n\n \n\ninterest rate of LIBOR USD 1M - 0.25%, aligned with the yield of the Time Deposit in which the same subsidiary invested its excess liquidity. This loan, amounting to 1,191 ($1,400), has been renewed for a further 12 months. See Note 45.\n\n18. Cash and cash equivalents\n\nCash and cash equivalents are analysed as follows:\n\n \n\n \n\n \n\n31/12/25\n\n \n\n \n\n31/12/24\n\n \n\nCash on hand\n\n \n\n \n\n135\n\n \n\n \n\n \n\n116\n\n \n\nBank accounts\n\n \n\n \n\n20,185\n\n \n\n \n\n \n\n20,206\n\n \n\nTotal\n\n \n\n \n\n20,320\n\n \n\n \n\n \n\n20,322\n\n \n\n \n\nThe following tables show the Group’s cash and cash equivalents broken-down by region.\n\n \n\n \n\n \n\n31/12/25\n\n \n\n \n\n31/12/24\n\n \n\nEurope\n\n \n\n \n\n11,272\n\n \n\n \n\n \n\n10,486\n\n \n\nAsia\n\n \n\n \n\n4,906\n\n \n\n \n\n \n\n5,069\n\n \n\nNorth America\n\n \n\n \n\n3,812\n\n \n\n \n\n \n\n3,261\n\n \n\nSouth America\n\n \n\n \n\n205\n\n \n\n \n\n \n\n1,337\n\n \n\nOther\n\n \n\n \n\n125\n\n \n\n \n\n \n\n169\n\n \n\nTotal\n\n \n\n \n\n20,320\n\n \n\n \n\n \n\n20,322\n\n \n\n \n\nFor the purpose of the statement of cash flows, cash and cash equivalents comprise the following:\n\n \n\n \n\n \n\n31/12/25\n\n \n\n \n\n31/12/24\n\n \n\n \n\n31/12/23\n\n \n\nCash and cash equivalents in the statement of financial position\n\n \n\n \n\n20,320\n\n \n\n \n\n \n\n20,322\n\n \n\n \n\n \n\n33,610\n\n \n\nBank overdrafts repayable on demand\n\n \n\n \n\n(4,174\n\n)\n\n \n\n \n\n(3,328\n\n)\n\n \n\n \n\n(2,037\n\n)\n\nCash and cash equivalents in the statement of cash flows\n\n \n\n \n\n16,146\n\n \n\n \n\n \n\n16,994\n\n \n\n \n\n \n\n31,573\n\n \n\n \n\nBank overdrafts repayable on demand form an integral part of the Group’s cash management (see note 28).\n\n19. Share capital, reserves and retained earnings\n\nAs at December 31, 2025, 2024 and 2023 the equity attributable to owners of the Company is analysed as follows:\n\n \n\n \n\n \n\n31/12/25\n\n \n\n \n\n31/12/24\n\n \n\n \n\n31/12/23\n\n \n\nShare capital\n\n \n\n \n\n55,073\n\n \n\n \n\n \n\n55,073\n\n \n\n \n\n \n\n55,073\n\n \n\nReserves\n\n \n\n \n\n19,566\n\n \n\n \n\n \n\n20,659\n\n \n\n \n\n \n\n20,448\n\n \n\nRetained earnings\n\n \n\n \n\n(51,659\n\n)\n\n \n\n \n\n(21,726\n\n)\n\n \n\n \n\n(6,576\n\n)\n\nTotal\n\n \n\n \n\n22,980\n\n \n\n \n\n \n\n54,006\n\n \n\n \n\n \n\n68,945\n\n \n\n \n\nAs at December 31, 2025, the Company’s share capital, which is totally authorized and issued, is composed of 55,073,045 ordinary shares with par value of Euro 1 each, for a total of 55,073. Please, refer to Note 3(f) \"Going concern assumption\" for the reduction of share capital by more than one-third and related obligations set forth in Article 2446 of the Italian civil code.\n\nOrdinary shareholders have the right to receive dividends, as approved by shareholders’ meetings, and to express one vote per each share owned.\n\n \n\nF-48\n\n[Table of Contents](#toc)\n\n \n\nNatuzzi S.p.A. and Subsidiaries\n\nNotes to consolidated financial statements\n\n(Expressed in thousands of euros except as otherwise indicated)\n\n \n\nShare capital is owned, as at December 31, 2025, 2024 and 2023, as follows:\n\n \n\n \n\n \n\n31/12/25\n\n \n\n \n\n31/12/24\n\n \n\n \n\n31/12/23\n\n \n\nMr. Pasquale Natuzzi\n\n \n\n \n\n56.2\n\n%\n\n \n\n \n\n56.2\n\n%\n\n \n\n \n\n56.2\n\n%\n\nMrs. Anna Maria Natuzzi\n\n \n\n \n\n2.6\n\n%\n\n \n\n \n\n2.6\n\n%\n\n \n\n \n\n2.6\n\n%\n\nMrs. Annunziata Natuzzi\n\n \n\n \n\n2.5\n\n%\n\n \n\n \n\n2.5\n\n%\n\n \n\n \n\n2.5\n\n%\n\nOther investors\n\n \n\n \n\n38.7\n\n%\n\n \n\n \n\n38.7\n\n%\n\n \n\n \n\n38.7\n\n%\n\nTotal\n\n \n\n \n\n100.0\n\n%\n\n \n\n \n\n100.0\n\n%\n\n \n\n \n\n100.0\n\n%\n\nAn analysis of “Reserves” is as follows:\n\n \n\n \n\n \n\n31/12/25\n\n \n\n \n\n31/12/24\n\n \n\n \n\n31/12/23\n\n \n\nLegal reserve\n\n \n\n \n\n10,971\n\n \n\n \n\n \n\n10,971\n\n \n\n \n\n \n\n10,971\n\n \n\nMajority shareholder capital contribution\n\n \n\n \n\n488\n\n \n\n \n\n \n\n488\n\n \n\n \n\n \n\n488\n\n \n\nShare premium reserve\n\n \n\n \n\n175\n\n \n\n \n\n \n\n175\n\n \n\n \n\n \n\n175\n\n \n\nStock option reserve\n\n \n\n \n\n1,501\n\n \n\n \n\n \n\n1,501\n\n \n\n \n\n \n\n1,133\n\n \n\nReserve for gain on disposal of Non-controlling interests\n\n \n\n \n\n4,219\n\n \n\n \n\n \n\n4,219\n\n \n\n \n\n \n\n4,219\n\n \n\nForeign operations translation reserve\n\n \n\n \n\n(1,042\n\n)\n\n \n\n \n\n1,792\n\n \n\n \n\n \n\n2,335\n\n \n\nRemeasurement of defined benefit plan\n\n \n\n \n\n1,424\n\n \n\n \n\n \n\n1,195\n\n \n\n \n\n \n\n1,127\n\n \n\nReserve from Shareholder Financing\n\n \n\n \n\n1,830\n\n \n\n \n\n \n\n318\n\n \n\n \n\n \n\n—\n\n \n\nTotal\n\n \n\n \n\n19,566\n\n \n\n \n\n \n\n20,659\n\n \n\n \n\n \n\n20,448\n\n \n\nThe “Legal reserve” is related to the requirements of Italian law, which provide that 5% of net income of the Parent Company is retained as a legal reserve, until such reserve is 20% of the issued share capital. The legal reserve may be utilized to offset losses; any portion which exceeds 20% of the issued share capital is distributable as dividends. The legal reserve totaled 10,971 as at December 31, 2025, 2024 and 2023.\n\nThe “Majority shareholder capital contribution” is one of the Parent Company’s reserves, which is restricted for capital grants received.\n\nThe \"Share premium reserve\" refers to the value of the service provided by the beneficiary who subscribed to the stock option, for the portion accrued in 2022.\n\nThe \"Stock option reserve\" represents the value of the services provided as at 31 December 2025 by the beneficiaries of\nthe stock option plan.\n\nThe “Reserve for gain on disposal of Non-controlling interests” reports the recognition, for the share pertaining to the Group, of the contribution by the shareholder Troung Thanh Furniture (TTF) who carried out the relevant payment in March 2022 for the acquisition of 20% stake in Natuzzi Singapore PTE LTD. No further contribution took place in 2024 and 2025.\n\nThe “Foreign operations translation reserve” relates to the translation of foreign subsidiaries’ financial statements for those subsidiaries which have assessed their functional currency being different from Euro.\n\nThe “Remeasurement of defined benefit plan” refers to the calculation of the present value of the employees’ leaving entitlement at each reporting date, in compliance with applicable regulations and adjusted to take into account actuarial gains or losses. In particular, such actuarial gains or losses are reported in OCI (see note 4 (q)).\n\nThe “Reserve from Shareholder Financing” increased compared to the balance as at 31 December 2024, following the disbursement in 2025 of a three-year interest-free loan amounting to 10,000. The benefit arising from the absence of market-rate interest is recognized as an equity contribution. This increase is therefore in addition to that recognized in 2024, when the majority shareholder granted an initial three-year loan at below-market terms. See Notes 20 and 45.\n\nOCI accumulated in reserves, net of tax, is reported in the following tables.\n\n \n\n \n\nF-49\n\n[Table of Contents](#toc)\n\n \n\nNatuzzi S.p.A. and Subsidiaries\n\nNotes to consolidated financial statements\n\n(Expressed in thousands of euros except as otherwise indicated)\n\n \n\n \n\n \n\n31/12/25\n\n \n\n \n\n31/12/24\n\n \n\n \n\n31/12/23\n\n \n\nForeign operations translation reserve\n\n \n\n \n\n(1,042\n\n)\n\n \n\n \n\n1,792\n\n \n\n \n\n \n\n2,335\n\n \n\nRemeasurement of defined benefit plan\n\n \n\n \n\n1,424\n\n \n\n \n\n \n\n1,195\n\n \n\n \n\n \n\n1,127\n\n \n\nOwners of the Company\n\n \n\n \n\n382\n\n \n\n \n\n \n\n2,987\n\n \n\n \n\n \n\n3,462\n\n \n\nNon-controlling interests\n\n \n\n \n\n(117\n\n)\n\n \n\n \n\n148\n\n \n\n \n\n \n\n(17\n\n)\n\nTotal OCI\n\n \n\n \n\n265\n\n \n\n \n\n \n\n3,135\n\n \n\n \n\n \n\n3,445\n\n \n\nThe disaggregation of changes of OCI by each type of reserve in equity is shown in the tables below.\n\nYear ended December 31, 2025\n\n \n\n \n\nForeign\noperations\ntranslation\nreserve\n\n \n\n \n\nRemeasurement\nof defined\nbenefit plan\n\n \n\n \n\nTotal\n\n \n\nExchange difference on translation of foreign operations\n\n \n\n \n\n(1,791\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n(1,791\n\n)\n\nShare of OCI of equity-method investees\n\n \n\n \n\n(1,309\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n(1,309\n\n)\n\nActuarial gains/(losses) on employees’ leaving entitlement\n\n \n\n \n\n—\n\n \n\n \n\n \n\n229\n\n \n\n \n\n \n\n229\n\n \n\nTotal\n\n \n\n \n\n(3,100\n\n)\n\n \n\n \n\n229\n\n \n\n \n\n \n\n(2,871\n\n)\n\nYear ended December 31, 2024\n\n \n\n \n\nForeign\noperations\ntranslation\nreserve\n\n \n\n \n\nRemeasurement\nof defined\nbenefit plan\n\n \n\n \n\nTotal\n\n \n\nExchange difference on translation of foreign operations\n\n \n\n \n\n(1,064\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n(1,064\n\n)\n\nShare of OCI of equity-method investees\n\n \n\n \n\n686\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n686\n\n \n\nActuarial gains/(losses) on employees’ leaving entitlement\n\n \n\n \n\n—\n\n \n\n \n\n \n\n68\n\n \n\n \n\n \n\n68\n\n \n\nTotal\n\n \n\n \n\n(378\n\n)\n\n \n\n \n\n68\n\n \n\n \n\n \n\n(310\n\n)\n\nYear ended December 31, 2023\n\n \n\n \n\nForeign\noperations\ntranslation\nreserve\n\n \n\n \n\nRemeasurement\nof defined\nbenefit plan\n\n \n\n \n\nTotal\n\n \n\nExchange difference on translation of foreign operations\n\n \n\n \n\n(2,003\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n(2,003\n\n)\n\nShare of OCI of equity-method investees\n\n \n\n \n\n(1,257\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n(1,257\n\n)\n\nActuarial gains/(losses) on employees’ leaving entitlement\n\n \n\n \n\n—\n\n \n\n \n\n \n\n(185\n\n)\n\n \n\n \n\n(185\n\n)\n\nTotal\n\n \n\n \n\n(3,260\n\n)\n\n \n\n \n\n(185\n\n)\n\n \n\n \n\n(3,445\n\n)\n\n \n\n \n\n \n\nF-50\n\n[Table of Contents](#toc)\n\n \n\nNatuzzi S.p.A. and Subsidiaries\n\nNotes to consolidated financial statements\n\n(Expressed in thousands of euros except as otherwise indicated)\n\n \n\n20. Long-term borrowings\n\nLong-term borrowings (debts) as at December 31, 2025 and 2024 consist of the following:\n\n \n\n \n\n \n\n31/12/25\n\n \n\n \n\n31/12/24\n\n \n\nSix-month Euribor (360) plus a 2.5% spread long-term debt with final payment due July 2025\n\n \n\n \n\n—\n\n \n\n \n\n \n\n1,313\n\n \n\n2.3% fixed long-term debt with final payment due January 2026\n\n \n\n \n\n—\n\n \n\n \n\n \n\n1,240\n\n \n\n1.5% fixed long-term debt with final payment due September 2027\n\n \n\n \n\n146\n\n \n\n \n\n \n\n217\n\n \n\n0.21% fixed long-term debt with final payment due December 2034\n\n \n\n \n\n7,734\n\n \n\n \n\n \n\n7,734\n\n \n\n80% of six-month Euribor (360) plus a 0.95% spread long-term debt with final payment due January 2035\n\n \n\n \n\n894\n\n \n\n \n\n \n\n1,035\n\n \n\nThree-month Euribor (360) plus a 2.00% spread long-term debt with final payment due December 2027\n\n \n\n \n\n1,600\n\n \n\n \n\n \n\n2,400\n\n \n\nThree-month Euribor (360) plus a 2.95% spread long-term debt with final payment due December 2028\n\n \n\n \n\n1,895\n\n \n\n \n\n \n\n2,526\n\n \n\n2.5% Fixed rate long-term debt to majority shareholder with final payment due March 2027\n\n \n\n \n\n2,359\n\n \n\n \n\n \n\n2,255\n\n \n\nSix-month Euribor (360) plus a 2.75% spread long-term debt with final payment due May 2027\n\n \n\n \n\n4,096\n\n \n\n \n\n \n\n—\n\n \n\nShort-term financing (two disbursements with monthly interest rates of 1.00% and 1.45%), with the final tranche payable in November 2026.\n\n \n\n \n\n3,107\n\n \n\n \n\n \n\n—\n\n \n\nInterest-free shareholder loan, repayable on 31 December 2028\n\n \n\n \n\n8,515\n\n \n\n \n\n \n\n—\n\n \n\nTotal long-term borrowings\n\n \n\n \n\n30,346\n\n \n\n \n\n \n\n18,720\n\n \n\nLess current installments\n\n \n\n \n\n(7,251\n\n)\n\n \n\n \n\n(4,532\n\n)\n\nLong-term borrowings, excluding current installments\n\n \n\n \n\n23,095\n\n \n\n \n\n \n\n14,188\n\n \n\nDuring 2025, the actual level of rates ranged from 2.19% to 6.44%.\n\nDuring 2023, the Romanian subsidiary renegotiated the two existing loans, one amounting to 10,000 obtained in 2015 with residual debt renewals every two years and maturing in August 2023, and the other amounting to 5,000 maturing in March 2025 with government guarantee, into a single loan with a balance as of December 31, 2024, of 1,313. The new repayment plan involves monthly installments until July 2025. The variable interest rate is based on the performance of the 6-month Euribor (360) plus a spread of 2.5%. The loan is secured by a mortgage on the Romanian plant for 16,628 and by the following covenants: (a) cash receipts >= 60% of turnover; (b) earnings before taxes and depreciation (EBITDA) >= 4.5%; (c) net debt / EBITDA <=3; (d) Debt Service Cover Ratio >= 1.35. The outstanding loan balance was fully repaid in July 2025.\n\nIn July 2017, the Company incurred long-term debt for a 7,000 nominal amount with installments payable on a monthly basis, fixed interest rate of 2.3% and with final payment due January 2026. The loan was early repaid in December 2025, resulting in the release of the mortgage over properties located in Matera for an amount of 14,000.\n\nIn March 2020, the Swiss subsidiary obtained a long-term loan from a financial institution, amounting to 378. This loan has been obtained as part of the COVID-19 measures to support business approved by the Swiss government. Such loan, of which 146 remains at year-end, has installments repayable on a six-month basis starting from 2022 and ending in September 2027. Since April 2023, the bank has informed us that the government authority has decided to apply a fixed annual interest rate of 1.5%.\n\nIn December 2019, the Company incurred long-term debt for a 4,181 nominal amount with installments payable on semi-annual basis, fixed interest rate of 0.21% and with final payment due December 2034. This long-term debt, of which 7,735 remains at year-end, following a further disbursement obtained in 2023 and a new disbursement in 2024, as well as the update of the amortization plan by the financial institution, is guaranteed by a mortgage on the properties located in Ginosa,\n\n \n\nF-51\n\n[Table of Contents](#toc)\n\n \n\nNatuzzi S.p.A. and Subsidiaries\n\nNotes to consolidated financial statements\n\n(Expressed in thousands of euros except as otherwise indicated)\n\n \n\nLaterza and Santeramo in Colle (Italy) for a total amount of 13,936. Repayment of the aforementioned long-term debt will commence during 2026.\n\nIn December 2019, one of the Italian subsidiaries incurred long-term debt for a 435 nominal amount with installments payable on semi-annual basis and with final payment due January 2035. This long-term financing, which benefited from additional disbursements in 2021 and 2023 and had an outstanding balance of 894 at year-end, bears interest at a variable rate based on 80% of the 6-month Euribor (360) plus a spread of 0.95%. Such loan is guaranteed by a mortgage on the properties located in Pozzuolo del Friuli (Italy) for a total amount of 3,000.\n\nIn January 2022, the Parent obtained a long-term loan from a financial institution, amounting to 4,000. This loan, which is guaranteed by an Italian governmental authority, has been made available by the Italian government as part of the COVID-19 measures to support businesses. Such loan, of which 1,600 remains at year-end, has installments repayable on a quarterly basis starting from January 2023, after the 12-month interest-only period, and ending in December 2027. This long-term debt provides for variable interest installments determined based on the three-month Euribor (360) plus a 2.00% spread.\n\nIn January 2024, the Parent Company obtained a long-term bank loan with a nominal amount of 3,000, repayable in quarterly installments starting from June 2024, at an interest rate of Euribor 3M + a 2.95% spread, with a final payment due on December 31, 2028. The debt is secured by a government entity guarantee covering 90% of the loan. As of December 31, 2025, the outstanding debt amounts to 1,895.\n\nOn March 31, 2024, the Parent Company obtained a three-year loan from the majority shareholder, due on March 31, 2027, with a nominal amount of 2,500, at an annual interest rate of 2.5%, with annual interest payments and full repayment of the debt on March 31, 2027. As of December 31, 2025, the outstanding debt amounts to 2,359.\n\nDuring 2025, the Romanian subsidiary obtained a long-term loan of 5,000, repayable in monthly installments until May 2027. The loan bears a variable interest rate based on the 6-month Euribor (360) plus a spread of 2.75%. The financing is secured by a mortgage over the Romanian plant and is subject to the following covenants: (a) collections ≥ 70% of revenue; (b) earnings before interest, taxes, depreciation, and amortization (EBITDA) ≥ 4.5%; (c) net debt / EBITDA ≤ 3; and (d) Debt Service Cover Ratio ≥ 1.35. As at 31 December 2025, the outstanding balance of the loan amounted to 4,096.\n\nIn August and October 2025, the Brazilian subsidiary contracted two short-term loans, each with a nominal amount of BRL 10 million, for a total of 3,107. The first loan is structured with repayment in two installments: the first due in February 2026 and the second in August 2026, bearing a fixed monthly interest rate of 1.0%. The second loan is repayable in a single installment in November 2026, with a fixed monthly interest rate of 1.45%.\n\nOn 21 November 2025, the majority shareholder and CEO of the Group entered into an agreement with the Parent Company to support the industrial restructuring plan through a credit facility. Under this facility, the Parent Company may request, until 31 December 2026, multiple tranches of an interest-free loan up to a total amount of 15,000, with the option to convert the disbursed loan tranches into equity contributions in the event of a capital increase. In the absence of a capital increase, the loan is repayable by 31 December 2028. The Parent Company requested and received two tranches of 5,000 each, the first at the end of November and the second in mid-December. As the loan is interest-free, a market interest rate of 5.50% was determined, resulting in the recognition of the present value of the loan at the time of disbursement of 8,488, with the difference of 1,512 recorded in an equity reserve (see Notes 19 and 45). As at 31 December 2025, interest of 26 had accrued on the loan, bringing the outstanding balance to 8,514.\n\nDuring 2025 and 2024, the Company made all installment payments related to the aforementioned long-term borrowings.\n\nInterest expense related to long-term borrowings for the years ended December 31, 2025, 2024 and 2023 is 699, 768 and 599, respectively. Interest due is paid with the related installment.\n\n \n\nF-52\n\n[Table of Contents](#toc)\n\n \n\nNatuzzi S.p.A. and Subsidiaries\n\nNotes to consolidated financial statements\n\n(Expressed in thousands of euros except as otherwise indicated)\n\n \n\n21. Lease liabilities (non-current and current)\n\nThe non-current and current portion of the lease liabilities as at December 31, 2025 and 2024 is as follows:\n\n \n\n \n\n \n\n31/12/25\n\n \n\n \n\n31/12/24\n\n \n\nNon-current portion of the lease liabilities\n\n \n\n \n\n39,963\n\n \n\n \n\n \n\n47,400\n\n \n\nCurrent portion of the lease liabilities\n\n \n\n \n\n9,480\n\n \n\n \n\n \n\n10,350\n\n \n\nTotal\n\n \n\n \n\n49,443\n\n \n\n \n\n \n\n57,750\n\n \n\n \n\nChanges in the carrying amount of the lease liabilities for the year ended December 31, 2025 and 2024 are reported in the following tables.\n\n \n\n \n\n \n\n31/12/25\n\n \n\n \n\n31/12/24\n\n \n\nBalance at beginning of year\n\n \n\n \n\n57,750\n\n \n\n \n\n \n\n62,327\n\n \n\nAdditions for new leases\n\n \n\n \n\n10,313\n\n \n\n \n\n \n\n5,215\n\n \n\nInterest expenses\n\n \n\n \n\n3,286\n\n \n\n \n\n \n\n3,810\n\n \n\nLease payments\n\n \n\n \n\n(12,768\n\n)\n\n \n\n \n\n(14,098\n\n)\n\nDisposal of leases\n\n \n\n \n\n(5,301\n\n)\n\n \n\n \n\n(1,911\n\n)\n\nAdjustments due to remeasurements\n\n \n\n \n\n45\n\n \n\n \n\n \n\n43\n\n \n\nAdjustments due to modifications\n\n \n\n \n\n243\n\n \n\n \n\n \n\n9\n\n \n\nEffect of translation adjustments\n\n \n\n \n\n(4,125\n\n)\n\n \n\n \n\n2,356\n\n \n\nBalance at end of year\n\n \n\n \n\n49,443\n\n \n\n \n\n \n\n57,750\n\n \n\n \n\nAs at December 31, 2025, the incremental borrowing rate is within the range of 3% and 12% (the same range as at December 31, 2024).\n\nThe maturity analysis of the contractual undiscounted cash flows of the lease liabilities as at December 31, 2025 and 2024 are reported in the tables below.\n\n \n\n \n\n \n\n31/12/25\n\n \n\n \n\n31/12/24\n\n \n\nLess than one year\n\n \n\n \n\n11,788\n\n \n\n \n\n \n\n13,629\n\n \n\nOne to five years\n\n \n\n \n\n32,076\n\n \n\n \n\n \n\n39,294\n\n \n\nMore than five years\n\n \n\n \n\n12,033\n\n \n\n \n\n \n\n17,970\n\n \n\nTotal undiscounted lease liabilities\n\n \n\n \n\n55,897\n\n \n\n \n\n \n\n70,893\n\n \n\n \n\nSome property leases contain extension options exercisable by the Group up to one year before the end of the non-cancellable contract period. Where practicable, the Group seeks to include extension options in new leases to provide operational flexibility. The extension options held are exercisable only by the Group and not by the lessors. The Group assesses at lease commencement date whether it is reasonably certain to exercise the extension options. The Group reassesses whether it is reasonably certain to exercise the options if there is a significant event or significant changes in circumstances within its control. The Group has estimated that the potential future lease payments, should it exercise the extension option, would result in an increase in lease liability of 39,967 as at December 31, 2025 (43,309 as at December 31, 2024).\n\n22. Other non-current debts\n\nThe installment liability related to the adaptation works of the plant of a Chinese subsidiary, originated in 2024, was settled early in 2025.\n\n \n\n \n\n \n\nF-53\n\n[Table of Contents](#toc)\n\n \n\nNatuzzi S.p.A. and Subsidiaries\n\nNotes to consolidated financial statements\n\n(Expressed in thousands of euros except as otherwise indicated)\n\n \n\n \n\n \n\n31/12/25\n\n \n\n \n\n31/12/24\n\n \n\nTrade payables on leasehold improvements\n\n \n\n \n\n—\n\n \n\n \n\n \n\n465\n\n \n\nTotal Other non-current debts\n\n \n\n \n\n—\n\n \n\n \n\n \n\n465\n\n \n\n \n\n23. Other non-current liabilities\n\nThe item \"Other non-current liabilities\" as at December 31, 2025 and 2024 is as follows:\n\n \n\n \n\n31/12/25\n\n \n\n \n\n31/12/24\n\n \n\nOther non-current liabilities\n\n \n\n \n\n1,386\n\n \n\n \n\n \n\n2,160\n\n \n\nTotal Other non-current liabilities\n\n \n\n \n\n1,386\n\n \n\n \n\n \n\n2,160\n\n \n\nThe item reports the non-current portion of the debt to employees of the Parent Company following acceptance of the offer (\"early retirement agreement\") for termination of the employment relationship regulated by a specific legislative regulation providing for the early retirement of specific employees.\n\nIn particular, on 30 November 2023, 59 employees of the Parent Company signed up to a voluntary exit plan regulated by specific Italian regulations aimed at encouraging the retirement of staff earlier than indicated by Italian laws, with the commitment of the Company to hire new staff with professional skills more suited to current and prospective needs.\n\nThe early retirement agreement provides that the Company makes monthly payments to the government agency, INPS-National Social Security Institute, for the people who have left, equal to the amount of the allowance communicated by the same government agency, whose amount is lower than the salary such people were entitled to, and the related social contribution according to a plan that for each individual employee covers the time period remaining until accrual of pension rights.\n\nThe total amount of non-discounted installment payments to be completed in 2028 is 2,169, of which the debt payable beyond one year (from 2027 onwards) amounts to 1,402.\n\nThe total debt has been discounted at a rate of 6.308%, and as at December 31, 2025 the amount of the discounted debt beyond the year is equal to 1,386 (2,160 as at December 31, 2024).\n\nIn 2023, the early retirement agreement required the opening of a deposit account as a guarantee for 892 (see note 12) and the issuance of a surety bond for 4,459 in favor of the government entity (see note 44).\n\n24. Employees’ leaving entitlement\n\nChanges to employees’ leaving entitlement occurring during 2025 and 2024 are analysed as follows:\n\n \n\n \n\n \n\n31/12/25\n\n \n\n \n\n31/12/24\n\n \n\nBalance at beginning of year\n\n \n\n \n\n11,646\n\n \n\n \n\n \n\n12,389\n\n \n\nCurrent service cost\n\n \n\n \n\n65\n\n \n\n \n\n \n\n77\n\n \n\nInterest expense\n\n \n\n \n\n365\n\n \n\n \n\n \n\n364\n\n \n\nBenefits paid\n\n \n\n \n\n(365\n\n)\n\n \n\n \n\n(1,116\n\n)\n\nActuarial losses/(gains)\n\n \n\n \n\n(229\n\n)\n\n \n\n \n\n(68\n\n)\n\nBalance at end of year\n\n \n\n \n\n11,482\n\n \n\n \n\n \n\n11,646\n\n \n\n \n\nThe employees’ leaving entitlement refers to a defined benefit plan provided for by the Italian legislation due and payable upon termination of employment, assuming immediate separation (see note 4(q)).\n\n \n\nF-54\n\n[Table of Contents](#toc)\n\n \n\nNatuzzi S.p.A. and Subsidiaries\n\nNotes to consolidated financial statements\n\n(Expressed in thousands of euros except as otherwise indicated)\n\n \n\nThe principal assumptions used in determining the present value of such defined benefit obligation (“DBO”) related to the employee benefit obligation are reported as follows:\n\n \n\n \n\n \n\n31/12/25\n\n \n\n31/12/24\n\nAnnual discount rate\n\n \n\n3.37%\n\n \n\n3.18%\n\nAnnual future salary increase rate\n\n \n\n2.00%\n\n \n\n2.00%\n\nAnnual inflation rate\n\n \n\n2.00%\n\n \n\n2.00%\n\nAnnual DBO increase rate\n\n \n\n3.00%\n\n \n\n3.00%\n\nMortality\n\n \n\nRG48 mortality tables published by the General State Accounting\n\nInability\n\n \n\nNational Institute for Social Security tables, by age and sex\n\nRetirement\n\n \n\n100% upon achievement of AGO requisites\n\nAnnual frequency of turnover\n\n \n\n2.00%\n\n \n\n2.00%\n\nAnnual frequency of DBO advances\n\n \n\n2.00%\n\n \n\n2.00%\n\n \n\nA quantitative sensitivity analysis for significant assumptions impacting the DBO as at December 31, 2025 and 2024 is reported as follows:\n\n \n\n \n\n \n\n31/12/25\n\n \n\n \n\n31/12/24\n\n \n\n+1.00% on turnover rate\n\n \n\n \n\n42\n\n \n\n \n\n \n\n39\n\n \n\n-1.00% on turnover rate\n\n \n\n \n\n(45\n\n)\n\n \n\n \n\n(42\n\n)\n\n+0.25% on annual inflation rate\n\n \n\n \n\n128\n\n \n\n \n\n \n\n143\n\n \n\n-0.25% on annual inflation rate\n\n \n\n \n\n(126\n\n)\n\n \n\n \n\n(141\n\n)\n\n+0.25% on annual discount rate\n\n \n\n \n\n(197\n\n)\n\n \n\n \n\n(220\n\n)\n\n-0.25% on annual discount rate\n\n \n\n \n\n202\n\n \n\n \n\n \n\n226\n\n \n\n \n\nThe sensitivity analysis above has been determined based on a method that extrapolates the impact on the defined benefit obligation as a result of reasonable changes in key assumptions occurring at the end of the reporting period. The sensitivity analysis is based on a change in a significant assumption, keeping all other assumptions constant. Such analysis may not be representative of an actual change in the defined benefit obligation as it is unlikely that changes in assumptions would occur in isolation from one another.\n\nThe following are the expected payments of the employees’ leaving entitlement in future years:\n\n \n\n \n\n \n\n31/12/25\n\n \n\n \n\n31/12/24\n\n \n\nWithin 1 year\n\n \n\n \n\n1,099\n\n \n\n \n\n \n\n742\n\n \n\nBetween 2 and 5 years\n\n \n\n \n\n3,471\n\n \n\n \n\n \n\n3,263\n\n \n\n \n\nThe average duration of the defined benefit plan as at December 31, 2025 and 2024 are 8.2 and 8.7 years, respectively.\n\nEmployee benefits\n\nShare-based payment arrangements\n\nThe grant-date fair value of equity-settled share-based payment arrangements granted to employees is generally recognised as an expense, with a corresponding increase in equity, over the vesting period of the awards. The amount recognised as an expense is adjusted to reflect the number of awards for which the related service and non-market performance conditions are expected to be met, such that the amount ultimately recognised is based on the number of awards that meet the related service and non-market performance conditions at the vesting date. For share-based payment awards with non-vesting conditions, the grant-date fair value of the share-based payment is measured to reflect such conditions and there is no true-up for differences between expected and actual outcomes.\n\nA. Description of share-based payment arrangement\n\nOn July 1, 2022, the extraordinary shareholders’ meeting of Natuzzi S.p.A. approved the “Natuzzi 2022-2026” Stock Option Plan for the Natuzzi Group’s key employees and directors (the “SOP”) and granted the Company’s Board of\n\n \n\nF-55\n\n[Table of Contents](#toc)\n\n \n\nNatuzzi S.p.A. and Subsidiaries\n\nNotes to consolidated financial statements\n\n(Expressed in thousands of euros except as otherwise indicated)\n\n \n\nDirectors the right to carry out an increase in the share capital of Natuzzi S.p.A., in one or more tranches, with the exclusion of preemptive rights that will be necessary to issue ordinary shares of the Company to the beneficiaries under the SOP.\n\nOn July 15, 2022, Natuzzi S.p.A. entered into an award agreement with each of three key officers of the Natuzzi Group having strategic functions. The award agreements have the following characteristics:\n\n•\nThe beneficiaries of the awards have the right to exercise a predetermined number of options to purchase ordinary shares of Natuzzi S.p.A.;\n\n•\nThe right to exercise options by each beneficiary is subject to the continuation of the relevant working relationship as specified in the individual award agreements;\n\n•\nIf the continuation of the relevant working relationship requirement is met, then the beneficiary of the award will be entitled to exercise the options on the dates specified in the relevant individual award agreement;\n\n•\nThe award agreement also regulates specific events such as termination of continuous service status, disability, death, change in control and delisting of Natuzzi S.p.A.\n\nThe ordinary shares of Natuzzi S.p.A. are listed on the New York Stock Exchange (“NYSE”) in the form of American Depositary Shares (“ADSs”), issued by a U.S. depositary bank. Each ADS represents 5 ordinary shares of Natuzzi S.p.A.\n\nTo determine the fair value of an option, it was necessary to compare the price of the underlying ADS of the Company with the strike price relating to each tranche subject to evaluation, the latter multiplied by 5, since each ADS represents 5 ordinary shares of Natuzzi S.p.A.\n\nThe terms and conditions of the award agreements entered into are set forth below.\n\n \n\nGrant date/beneficiaries\n\n \n\nNumber of equity-based instruments\n\n \n\nVesting conditions\n\n \n\nContractual life of the options\n\nThree key officers having strategic functions – July 15, 2022\n\n \n\n562,512 ADSs equivalent to\n2,812,560 ordinary shares\n\n \n\nContinuous service status until the vesting date\n\n \n\nFrom 1 to 6 years\n\nIn particular, the number of ordinary shares of Natuzzi S.p.A. that each of the three beneficiaries can subscribe for pursuant to the relevant award agreements is broken down below and shown in terms of ADS equivalent.\n\nVesting Date\n\n \n\nBeneficiary 1\n\n \n\n \n\nBeneficiary 2\n\n \n\n \n\nBeneficiary 3\n\n \n\n \n\nTotal\n\n \n\n15/Aug/22\n\n \n\n \n\n36,533\n\n \n\n \n\n \n\n6,583\n\n \n\n \n\n \n\n44,000\n\n \n\n \n\n \n\n87,116\n\n \n\n31/May/23\n\n \n\n \n\n54,800\n\n \n\n \n\n \n\n9,874\n\n \n\n \n\n \n\n33,000\n\n \n\n \n\n \n\n97,674\n\n \n\n31/May/24\n\n \n\n \n\n54,800\n\n \n\n \n\n \n\n9,874\n\n \n\n \n\n \n\n38,338\n\n \n\n \n\n \n\n103,012\n\n \n\n31/May/25\n\n \n\n \n\n73,067\n\n \n\n \n\n \n\n13,165\n\n \n\n \n\n \n\n5,338\n\n \n\n \n\n \n\n91,570\n\n \n\n31/May/26\n\n \n\n \n\n73,067\n\n \n\n \n\n \n\n13,165\n\n \n\n \n\n \n\n5,338\n\n \n\n \n\n \n\n91,570\n\n \n\n31/May/27\n\n \n\n \n\n73,067\n\n \n\n \n\n \n\n13,165\n\n \n\n \n\n \n\n5,338\n\n \n\n \n\n \n\n91,570\n\n \n\nTotal\n\n \n\n \n\n365,334\n\n \n\n \n\n \n\n65,826\n\n \n\n \n\n \n\n131,352\n\n \n\n \n\n \n\n562,512\n\n \n\nThe exercise date for the stock options is 31 December 2027 for Beneficiaries 1 and 2, and 31 December of each vesting year up to 31 December 2027 for Beneficiary 3. In addition to Beneficiary 3, who left the Group in February 2024, both Beneficiary 1 and Beneficiary 2 waived their vested stock options upon resigning from the Parent Company during 2025. Consequently, as at 31 December 2025, no employees held any outstanding stock options.\n\nB. Measurement of fair values\n\nThe fair value of the stock options granted to each of the three beneficiaries was measured based on the binomial tree model by Cox, Ross e Rubinstein (binomial tree lattice model). Service and non-market performance conditions attached to the arrangements were not taken into account in measuring fair value.\n\nThe inputs used in the measurement of the fair values at grant date of the stock options were as follows:\n\n \n\nF-56\n\n[Table of Contents](#toc)\n\n \n\nNatuzzi S.p.A. and Subsidiaries\n\nNotes to consolidated financial statements\n\n(Expressed in thousands of euros except as otherwise indicated)\n\n \n\nInput data\n\n \n\nBeneficiary 1\n\n \n\n \n\nBeneficiary 2\n\n \n\n \n\nBeneficiary 3\n(sub 1)\n\n \n\n \n\nBeneficiary 3\n(sub 2)\n\n \n\nFair value of the ADS option at grant date\n\n \n\n$\n\n4.3900\n\n \n\n \n\n$\n\n4.3000\n\n \n\n \n\n$\n\n4.5300\n\n \n\n \n\n$\n\n3.3700\n\n \n\nEURUSD exchange rate at grant date\n\n \n\nn.a.\n\n \n\n \n\nn.a.\n\n \n\n \n\n \n\n1.0059\n\n \n\n \n\nn.a.\n\n \n\nClosing price of the ADS at grant date\n\n \n\n$\n\n8.8700\n\n \n\n \n\n$\n\n8.8700\n\n \n\n \n\n$\n\n8.8700\n\n \n\n \n\n$\n\n8.8700\n\n \n\nCurrency of the exercise price\n\n \n\nU.S. dollar\n\n \n\n \n\nU.S. dollar\n\n \n\n \n\nEuro\n\n \n\n \n\nU.S. dollar\n\n \n\nExercise price\n\n \n\n$\n\n14.5950\n\n \n\n \n\n$\n\n15.3450\n\n \n\n \n\n$\n\n5.0295\n\n \n\n \n\n$\n\n15.6000\n\n \n\nExpected volatility of the stock price (weighted-average)\n\n \n\n \n\n67.73\n\n%\n\n \n\n \n\n67.73\n\n%\n\n \n\n \n\n67.73\n\n%\n\n \n\n \n\n67.73\n\n%\n\nExpected volatility of the EURUSD exchange rate\n\n \n\nn.a.\n\n \n\n \n\nn.a.\n\n \n\n \n\n \n\n7.27\n\n%\n\n \n\nn.a.\n\n \n\nExpected life (weighted-average) *\n\n \n\n2.72 years\n\n \n\n \n\n2.72 years\n\n \n\n \n\n0.51 years\n\n \n\n \n\n0.59 years\n\n \n\nExpected dividends\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\nRisk-free interest rate (based on government bonds)\n\n \n\n \n\n2.80\n\n%\n\n \n\n \n\n2.80\n\n%\n\n \n\n \n\n2.80\n\n%\n\n \n\n \n\n2.80\n\n%\n\n(*) average of the different vesting dates.\n\nExpected volatility was based on an evaluation of the historical volatility of both the price of the underlying ADSs of Natuzzi S.p.A. and EURUSD exchange rate, in particular by considering the relevant time series of the preceding 260 business days.\n\nThe total fair value of the SOP as at July 15, 2022, as determined by the abovementioned financial method, was equal to $2,458,542.\n\nC. Reconciliation of outstanding share options\n\nThe number and weighted-average exercise prices of the stock options granted in 2025 are the following:\n\n \n\n \n\nNumber of options (ADS)\n\n \n\n \n\nWeighted-average exercise price (ADS)\n\n \n\nOutstanding as at January 1, 2025\n\n \n\n \n\n431,160\n\n \n\n \n\n$\n\n14.71\n\n \n\nGranted during the year\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\nForfeited during the year\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\nExercised during the year\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\nOutstanding as at December 31, 2025\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\nExercisable as at December 31, 2025\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\nThere are no further options granted during the year in addition to those granted on 15 July 2022.\n\nDuring 2025, no beneficiaries exercised the vested portion of their options, and Beneficiaries 1 and 2 waived, upon resignation, the right to exercise options on shares vested during their service, a right that under the terms of the plan would have expired on 31 December 2027. Consequently, as at 31 December 2025, the number of outstanding and exercisable shares under the plan was nil.\n\n \n\n \n\nF-57\n\n[Table of Contents](#toc)\n\n \n\nNatuzzi S.p.A. and Subsidiaries\n\nNotes to consolidated financial statements\n\n(Expressed in thousands of euros except as otherwise indicated)\n\n \n\n25. Contract liabilities (non-current and current)\n\nContract liabilities as at December 31, 2025 and 2024 consist of the following:\n\n \n\n \n\n \n\n31/12/25\n\n \n\n \n\n31/12/24\n\n \n\nAdvance payments from customers\n\n \n\n \n\n18,055\n\n \n\n \n\n \n\n22,041\n\n \n\nDeferred income from licensing of Natuzzi’s trademarks\n\n \n\n \n\n4,814\n\n \n\n \n\n \n\n5,196\n\n \n\nDeferred revenue for Natuzzi Display System\n\n \n\n \n\n2,191\n\n \n\n \n\n \n\n2,162\n\n \n\nDeferred revenue for Service-Type Warranty\n\n \n\n \n\n1,618\n\n \n\n \n\n \n\n974\n\n \n\nTotal contract liabilities\n\n \n\n \n\n26,678\n\n \n\n \n\n \n\n30,373\n\n \n\nLess current portion\n\n \n\n \n\n(19,818\n\n)\n\n \n\n \n\n(23,587\n\n)\n\nNon-current portion\n\n \n\n \n\n6,860\n\n \n\n \n\n \n\n6,786\n\n \n\n \n\n“Advance payments from customers” are related to considerations received by the Group upon sale of the Group’s products, and before their delivery to end customers.\n\n“Deferred income from licensing Natuzzi’s trademarks” refers to the deferral of revenue deriving from licensing Natuzzi’s Trademarks, to the former subsidiary Natuzzi Trading Shanghai. Such revenue, in the amount of 4,184 (net of the elimination of intercompany profit on the transaction), has been deferred over the useful life (20 years) of the licensed trademarks.\n\n“Deferred revenue for Natuzzi Display System” refers to the deferral of revenue deriving from the sale of store fittings to retailers, which are used to set up their stores (“Natuzzi Display System” – NDS). Such revenue is recognised over time based on the length of the distribution contract signed with the retailer (usually five years).\n\n“Deferred revenue for Service-Type Warranty” refers to the deferral of revenue deriving from the sale of a service-type warranty to end customers, which is recognised over time based on the contractual length of the insurance period (five years).\n\nThe amount of revenue recognised for the years ended December 31, 2025, 2024 and 2023 that was included in the opening contract liabilities balance amounts to 23,587, 20,333 and 17,124, respectively.\n\n26. Provisions (non-current and current)\n\nProvisions as at December 31, 2025 and 2024 consist of the following:\n\n \n\n \n\n \n\n31/12/25\n\n \n\n \n\n31/12/24\n\n \n\nProvision for legal claims\n\n \n\n \n\n2,862\n\n \n\n \n\n \n\n5,425\n\n \n\nProvision for tax claims\n\n \n\n \n\n400\n\n \n\n \n\n \n\n436\n\n \n\nProvision for warranties\n\n \n\n \n\n1,680\n\n \n\n \n\n \n\n1,866\n\n \n\nTermination indemnities for sales agents\n\n \n\n \n\n1,183\n\n \n\n \n\n \n\n825\n\n \n\nOther provisions\n\n \n\n \n\n1,512\n\n \n\n \n\n \n\n1,105\n\n \n\nTotal provisions\n\n \n\n \n\n7,637\n\n \n\n \n\n \n\n9,657\n\n \n\nLess current portion\n\n \n\n \n\n(1,680\n\n)\n\n \n\n \n\n(1,866\n\n)\n\nNon-current portion\n\n \n\n \n\n5,957\n\n \n\n \n\n \n\n7,791\n\n \n\n \n\nThe provision for legal claims includes the amounts accrued by the Group for the probable contingent liability related to legal procedures initiated by several third parties as result of past events.\n\nThe provision for tax claims refers to the amounts accrued by the Group for the probable liability that will be paid to settle some tax claims.\n\nThe provision for warranties includes the estimated liabilities for the Group’s obligation to repair or replace faulty products under the assurance warranty terms (see notes 4(r) and 4(t)). The warranty claims for the finished products sold are\n\n \n\nF-58\n\n[Table of Contents](#toc)\n\n \n\nNatuzzi S.p.A. and Subsidiaries\n\nNotes to consolidated financial statements\n\n(Expressed in thousands of euros except as otherwise indicated)\n\n \n\nestimated based on past experience of the level of repairs, faulty products and disputes with customers. The Company expects that these costs will be incurred mainly in the next financial year. Significant assumptions used to calculate the provision for such assurance type warranty are the warranty period for all products sold, current sales levels and historical information available about repairs, faulty products and dispute with customers.\n\nThe termination indemnities for sales agents refer to termination indemnities, provided for by the current regulations, due to the Group’s agents upon termination of their agreement with the Company or relevant subsidiary.\n\nThe item \"other provisions\" includes amounts set aside for investments in joint ventures that have already been fully written down.\n\nChanges in the above provisions for the years ended December 31, 2025 and 2024 are analysed as follows:\n\n \n\n \n\n \n\nProvision\nfor legal\nclaims\n\n \n\n \n\nProvision\nfor tax\nclaims\n\n \n\n \n\nProvision\nfor\nwarranties\n\n \n\n \n\nTermination\nindemnities\nfor sales\nagents\n\n \n\n \n\nOther provisions\n\n \n\n \n\nTotal\n\n \n\nBalance as at December 31, 2023\n\n \n\n \n\n7,432\n\n \n\n \n\n \n\n489\n\n \n\n \n\n \n\n2,352\n\n \n\n \n\n \n\n861\n\n \n\n \n\n \n\n502\n\n \n\n \n\n \n\n11,636\n\n \n\nProvisions made during the year\n\n \n\n \n\n1,108\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n871\n\n \n\n \n\n \n\n156\n\n \n\n \n\n \n\n603\n\n \n\n \n\n \n\n2,738\n\n \n\nProvisions used during the year\n\n \n\n \n\n(2,566\n\n)\n\n \n\n \n\n(2\n\n)\n\n \n\n \n\n(1,357\n\n)\n\n \n\n \n\n(192\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n(4,117\n\n)\n\nProvisions reversed during the year\n\n \n\n \n\n(549\n\n)\n\n \n\n \n\n(51\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n(600\n\n)\n\nBalance as at December 31, 2024\n\n \n\n \n\n5,425\n\n \n\n \n\n \n\n436\n\n \n\n \n\n \n\n1,866\n\n \n\n \n\n \n\n825\n\n \n\n \n\n \n\n1,105\n\n \n\n \n\n \n\n9,657\n\n \n\nProvisions made during the year\n\n \n\n \n\n557\n\n \n\n \n\n \n\n6\n\n \n\n \n\n \n\n747\n\n \n\n \n\n \n\n633\n\n \n\n \n\n \n\n407\n\n \n\n \n\n \n\n2,350\n\n \n\nProvisions used during the year\n\n \n\n \n\n(2,410\n\n)\n\n \n\n \n\n(42\n\n)\n\n \n\n \n\n(924\n\n)\n\n \n\n \n\n(266\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n(3,642\n\n)\n\nProvisions reversed during the year\n\n \n\n \n\n(710\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n(9\n\n)\n\n \n\n \n\n(9\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n(728\n\n)\n\nBalance as at December 31, 2025\n\n \n\n \n\n2,862\n\n \n\n \n\n \n\n400\n\n \n\n \n\n \n\n1,680\n\n \n\n \n\n \n\n1,183\n\n \n\n \n\n \n\n1,512\n\n \n\n \n\n \n\n7,637\n\n \n\nAs at 31 December 2025, the provision for legal disputes relates to 1,397 (3,795 as at 31 December 2024) and represents a probable contingent liability arising from legal claims brought by a group of employees against the Company in connection with an alleged misapplication of the social security procedure “CIGS—Cassa Integrazione Guadagni Straordinaria” without the correct implementation of temporal rotation during the period 2004–2016. According to the “CIGS” procedure, the Company pays a reduced salary to the worker for a certain period of time based on formal agreements signed with the Trade Unions and other Public Social parties. The Company, with the support of its legal advisors, has assessed the probable liability in respect of these legal claims at 1,397.\n\n27. Deferred income for government grants\n\nChanges in the carrying amount of deferred income for government grants for the years ended December 31, 2025 and 2024 are analysed as follows:\n\n \n\n \n\n \n\n31/12/25\n\n \n\n \n\n31/12/24\n\n \n\nBalance at beginning of year\n\n \n\n \n\n11,036\n\n \n\n \n\n \n\n13,135\n\n \n\nAdditions\n\n \n\n \n\n398\n\n \n\n \n\n \n\n88\n\n \n\nCredit to profit or loss\n\n \n\n \n\n(1,451\n\n)\n\n \n\n \n\n(2,187\n\n)\n\nBalance at end of year\n\n \n\n \n\n9,983\n\n \n\n \n\n \n\n11,036\n\n \n\n \n\nGovernment grants are related to benefits the Group obtained in 2025 and previous years from the Italian government as part of the incentive programs for under-industrialised regions in Southern Italy. They have been received to compensate the Group for the purchase of certain items of property, plant and equipment and for certain expenses mainly related to research projects. Deferred income for grants related to property, plant and equipment are credited to profit or loss on a straight-line basis over the expected lives of the related assets. Deferred income for grants related to expenses are credited to profit or loss in the periods in which the costs are recognised.\n\n \n\nF-59\n\n[Table of Contents](#toc)\n\n \n\nNatuzzi S.p.A. and Subsidiaries\n\nNotes to consolidated financial statements\n\n(Expressed in thousands of euros except as otherwise indicated)\n\n \n\nThere are no unfulfilled conditions or contingencies attached to these grants, except for that in accordance with the terms of some grants, the Group is prohibited from selling certain items of property, plant and equipment for a period of five years from the date on which the related grant was finally approved by the Italian governmental agency.\n\n28. Bank overdrafts and short-term borrowings\n\nBank overdrafts and short-term borrowings as at December 31, 2025 and 2024 are analysed as follows:\n\n \n\n \n\n \n\n31/12/25\n\n \n\n \n\n31/12/24\n\n \n\nBank overdrafts\n\n \n\n \n\n4,174\n\n \n\n \n\n \n\n3,328\n\n \n\nBorrowings related to a recourse factoring agreement\n\n \n\n \n\n13,434\n\n \n\n \n\n \n\n10,665\n\n \n\nBorrowings secured with trade receivables not part of factoring agreement\n\n \n\n \n\n3,828\n\n \n\n \n\n \n\n8,734\n\n \n\nBorrowings unsecured\n\n \n\n \n\n761\n\n \n\n \n\n \n\n600\n\n \n\nTotal\n\n \n\n \n\n22,197\n\n \n\n \n\n \n\n23,327\n\n \n\n \n\nThe weighted average interest rates on the bank overdrafts and short-term borrowings for the years ended December 31, 2025 and 2024 are as follows:\n\n \n\n \n\n \n\n2025\n\n \n\n \n\n2024\n\n \n\nBank overdrafts\n\n \n\n \n\n6.07\n\n%\n\n \n\n \n\n7.02\n\n%\n\nBorrowings\n\n \n\n \n\n5.68\n\n%\n\n \n\n \n\n6.37\n\n%\n\n \n\nAs at December31, 2025, the unused portion of credit facilities available to the Group, for which no commitment fees are due, amount to 4,445 (30,640 as at December 31, 2024). Such unused portion is mainly related to a recourse factoring agreement for export-related trade receivables (3,383) and bank overdrafts (1,062).\n\n29. Trade payables\n\nTrade payables as at December 31, 2025 and 2024 are analysed as follows:\n\n \n\n \n\n \n\n31/12/25\n\n \n\n \n\n31/12/24\n\n \n\nInvoices received - supplier not part of factoring facility\n\n \n\n \n\n36,140\n\n \n\n \n\n \n\n40,474\n\n \n\nInvoices received - supplier factoring facility\n\n \n\n \n\n10,097\n\n \n\n \n\n \n\n11,670\n\n \n\nAccruals for invoices to be received\n\n \n\n \n\n11,210\n\n \n\n \n\n \n\n14,333\n\n \n\nTotal\n\n \n\n \n\n57,447\n\n \n\n \n\n \n\n66,477\n\n \n\n \n\nTrade payables mainly represent amounts payable for purchases of goods and services in Italy and abroad.\n\nThere were no trade payables outstanding to related parties as of December 31, 2025 and 2024. For further details, reference is made to Note 45.\n\nThe Parent participates in a supply chain finance programme (SCF), also known as 'reverse factoring', under which certain of its suppliers may elect to receive early payment of their invoices from a bank by factoring their receivables from the Parent. Under the arrangement, a bank agrees to pay amounts to a participating supplier in respect of invoices owed by the Parent and receives settlement from the Parent at a later date.\n\nThe principal purpose of this programme is to enable the willing suppliers to sell their receivables due from the Parent to a bank before their due date. This also enables the Parent to facilitate efficient payment processing.\n\nThe Parent has not derecognised the original liabilities to which the arrangement applies because neither a legal release was obtained nor was the original liability substantially modified on entering into the arrangement. This is because the replacement of the commercial invoice with another debt instrument is not foreseen, nor is the company required to provide guarantees or request the opening of credit lines.\n\n \n\nF-60\n\n[Table of Contents](#toc)\n\n \n\nNatuzzi S.p.A. and Subsidiaries\n\nNotes to consolidated financial statements\n\n(Expressed in thousands of euros except as otherwise indicated)\n\n \n\nFrom the Parent’s perspective, the arrangement does not significantly extend payment terms beyond the normal terms agreed with other suppliers that have not elected to participate in the program.\n\nThe settlement of trade payables, measured in terms of the average number of days between the invoice date and the payment date, occurs within a timeframe ranging from 90 to 150 days, including payables subject to reverse factoring arrangements.\n\nThe Parent, therefore, presents the amounts factored by these suppliers as trade payables because the nature and function of the financial liability remain the same as those of other trade payables but discloses disaggregated amounts in this note. All payables under the SCF program are classified as current as at December 31, 2025 and 2024.\n\nThe payments to the bank are included within operating cash flows because they continue to be part of the Group’s normal operating cycle and their principal nature remains operating – i.e., payments for the purchase of goods and services.\n\nOf the invoices received from suppliers and included in the factoring agreement, totaling 10,097 and 11,670 as of December 31, 2025 and 2024, respectively, suppliers had collected a total amount of 5,280 and 5,444, respectively.\n\nNo significant changes unrelated to cash flows have been identified in the carrying amount of trade payables subject to reverse factoring arrangements.\n\n30. Other payables\n\nOther payables as at December 31, 2025 and 2024 are analysed as follows:\n\n \n\n \n\n \n\n31/12/25\n\n \n\n \n\n31/12/24\n\n \n\nSalaries and wages\n\n \n\n \n\n6,653\n\n \n\n \n\n \n\n6,014\n\n \n\nSocial security contributions\n\n \n\n \n\n5,643\n\n \n\n \n\n \n\n5,292\n\n \n\nVacation accrual\n\n \n\n \n\n5,265\n\n \n\n \n\n \n\n4,499\n\n \n\nWithholding taxes on payroll and on others\n\n \n\n \n\n1,928\n\n \n\n \n\n \n\n1,966\n\n \n\nAdvance payment from the sale of a building (High Point, NC, USA)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n3,658\n\n \n\nOther accounts payable\n\n \n\n \n\n5,595\n\n \n\n \n\n \n\n5,277\n\n \n\nTotal\n\n \n\n \n\n25,084\n\n \n\n \n\n \n\n26,706\n\n \n\n \n\nLiabilities to employees, social security institutions, and for accrued but unused vacation primarily relate to obligations for the payment of monthly salaries, provisions for vacation, and the related social charges. The item 'Withholding taxes on payroll and on others' reflects tax withholdings made in accordance with applicable tax legislation.\n\nAs at 31 December 2025, the item 'Social security contributions'includes the current portion of the early retirement agreement ('expansion contract’), amounting to 660 (668 as at 31 December 2024).\n\nThe liability arising from the advance payment for the sale of the building located in High Point was zero as at 31 December 2025, following the execution of the property sale agreement in March 2025 (see Notes 7 and 45). As at 31 December 2024, a liability of 3,658 had been recognized in relation to the advance received from the majority shareholder upon signing the preliminary agreement for the disposal of the High Point building in October 2024.\n\n31. Other liabilities\n\nOther liabilities as at December 31, 2025 and 2024 are analysed as follows:\n\n \n\n \n\n \n\n31/12/25\n\n \n\n \n\n31/12/24\n\n \n\nAdvance payments for government grants\n\n \n\n \n\n403\n\n \n\n \n\n \n\n403\n\n \n\nTotal\n\n \n\n \n\n403\n\n \n\n \n\n \n\n403\n\n \n\n \n\n \n\nF-61\n\n[Table of Contents](#toc)\n\n \n\nNatuzzi S.p.A. and Subsidiaries\n\nNotes to consolidated financial statements\n\n(Expressed in thousands of euros except as otherwise indicated)\n\n \n\nAs at December 31, 2025 and 2024, advance payments for government grants are related to considerations received by the Parent for government grants obtained for research projects.\n\n \n\n32. Derivative financial instruments\n\nA significant portion of the Group’s revenue and costs are denominated in currencies other than the Euro. Consequently, a significant portion of its revenue and costs is exposed to fluctuations in the exchange rates between the Euro and other currencies. The Group uses forward exchange contracts (known in Italy as domestic currency swaps) to reduce its exposure to the risks of short-term decrease in the value of its foreign currency denominated revenue. The Group uses such derivative instruments to protect the value of its foreign currency denominated revenue, and not for speculative or trading purposes. Despite being entered into such domestic currency swaps with the intent to reduce the foreign currency exposure risk for trade receivables and expected sales, the Group’s derivative financial instruments do not qualify for being accounted for as hedging instruments according to IAS 39. Therefore, the Company reflects the positive or negative changes in the fair value of those derivatives through profit or loss in the caption “Net exchange rate gains/(losses)”.\n\nThe tables below summarise in euro equivalent the contractual amounts of forward exchange contracts used to hedge principally future cash flows from trade receivables and sale orders as at December 31, 2025 and 2024.\n\n \n\n \n\n \n\n31/12/25\n\n \n\n \n\n31/12/24\n\n \n\nU.S. dollars\n\n \n\n \n\n3,434\n\n \n\n \n\n \n\n5,515\n\n \n\nBritish pounds\n\n \n\n \n\n3,414\n\n \n\n \n\n \n\n4,304\n\n \n\nEuro\n\n \n\n \n\n4,850\n\n \n\n \n\n \n\n2,416\n\n \n\nAustralian dollars\n\n \n\n \n\n592\n\n \n\n \n\n \n\n369\n\n \n\nMexican pesos\n\n \n\n \n\n422\n\n \n\n \n\n \n\n—\n\n \n\nJapanese yen\n\n \n\n \n\n113\n\n \n\n \n\n \n\n124\n\n \n\nTotal\n\n \n\n \n\n12,825\n\n \n\n \n\n \n\n12,728\n\n \n\nThe following tables present information regarding the contract amount in euro equivalent amount and the estimated fair value of all of the Group’s forward exchange contracts. Contracts with net unrealized gains are presented as “assets” (within the caption “Gains on derivative financial instruments”) and contracts with net unrealized losses are presented as “liabilities” (within the caption “Losses on derivative financial instruments”).\n\n \n\n \n\n \n\n2025\n\n \n\n \n\n2024\n\n \n\n \n\n \n\nContract\namount\n\n \n\n \n\nUnrealised\ngains/(losses)\n\n \n\n \n\nContract\namount\n\n \n\n \n\nUnrealised\ngains/(losses)\n\n \n\nAssets\n\n \n\n \n\n8,767\n\n \n\n \n\n \n\n76\n\n \n\n \n\n \n\n2,909\n\n \n\n \n\n \n\n24\n\n \n\nLiabilities\n\n \n\n \n\n4,058\n\n \n\n \n\n \n\n(19\n\n)\n\n \n\n \n\n9,819\n\n \n\n \n\n \n\n(268\n\n)\n\nTotal\n\n \n\n \n\n12,825\n\n \n\n \n\n \n\n57\n\n \n\n \n\n \n\n12,728\n\n \n\n \n\n \n\n(244\n\n)\n\nAs at December 31, 2025 and 2024, the forward exchange contracts have a net unrealized gain of 57 and a net unrealized loss of 244, respectively. These amounts are recorded in net exchange rate gains/(losses) in the consolidated statements of profit or loss (see note 40).\n\n33. Financial Instruments – Fair values and risk management\n\nIFRS 9 “Financial Instruments” sets out requirements for recognising and measuring financial assets, financial liabilities and some contracts to buy or sell non-financial items. This standard replaced IAS 39 “Financial Instruments: Recognition and Measurement”.\n\nIFRS 9 contains three principal classification categories for financial assets: measured at amortised cost, fair value through other comprehensive income (FVOCI) and fair value through profit and loss (FVTPL). The classification of financial assets under IFRS 9 is generally based on the business model within which a financial asset is managed and its contractual cash flow characteristics.\n\n \n\nF-62\n\n[Table of Contents](#toc)\n\n \n\nNatuzzi S.p.A. and Subsidiaries\n\nNotes to consolidated financial statements\n\n(Expressed in thousands of euros except as otherwise indicated)\n\n \n\nThe Group’s principal financial assets, other than derivatives, include cash and cash equivalents, trade and other receivables that derive directly from operations. The Group’s principal financial liabilities, other than derivatives, comprise of long-term borrowings, lease liabilities, bank overdrafts and short-term borrowings, trade and other payables. The main purpose of these financial liabilities is to finance the Group’s operations. The Group also enters into derivative transactions, namely forward exchange contracts, to protect the value of its foreign currency denominated revenue, not for speculative or trading purposes (see note 32).\n\nFor an explanation of how the Group classifies and measures financial instruments and accounts for related gains and losses under IFRS 9, see notes 4(l), 4(m), 4(n), 4(o), 4(p) and 4(s).\n\nA. Accounting classification of financial assets and financial liabilities\n\nThe following tables show the classification and carrying amounts of Group’s financial assets and financial liabilities as at December 31, 2025 and 2024.\n\n \n\nFinancial assets\n\n \n\n31/12/25\n\n \n\n \n\n31/12/24\n\n \n\nFinancial assets measured at amortised cost\n\n \n\n \n\n \n\n \n\n \n\n \n\nOther non-current receivables\n\n \n\n \n\n4,981\n\n \n\n \n\n \n\n6,124\n\n \n\nTrade receivables\n\n \n\n \n\n32,508\n\n \n\n \n\n \n\n32,819\n\n \n\nOther current receivables\n\n \n\n \n\n7,562\n\n \n\n \n\n \n\n10,618\n\n \n\nOther current financial receivables\n\n \n\n \n\n4,121\n\n \n\n \n\n \n\n1,348\n\n \n\nCash and cash equivalents\n\n \n\n \n\n20,320\n\n \n\n \n\n \n\n20,322\n\n \n\nTotal (a)\n\n \n\n \n\n69,492\n\n \n\n \n\n \n\n71,231\n\n \n\nFinancial assets measured at fair value\n\n \n\n \n\n \n\n \n\n \n\n \n\nForward exchange contracts\n\n \n\n \n\n76\n\n \n\n \n\n \n\n24\n\n \n\nTotal (b)\n\n \n\n \n\n76\n\n \n\n \n\n \n\n24\n\n \n\nTotal financial assets (a+b)\n\n \n\n \n\n69,568\n\n \n\n \n\n \n\n71,255\n\n \n\n \n\nFinancial assets measured at amortised cost include trade receivables, other receivables (non-current and current) and cash and cash equivalents. Financial assets at fair value reflect the positive change in fair value of forward exchange contracts that are not designated as hedge relationships, but are, nevertheless, intended to reduce the level of foreign currency risk for future cash flows from accounts receivables and sale orders.\n\nFor further details on “Trade receivables”, “Other receivables”, “Cash and cash equivalents” and “Forward exchange contracts” reference should be made to notes 15, 12-16, 18 and 32, respectively.\n\n \n\nFinancial liabilities\n\n \n\n31/12/25\n\n \n\n \n\n31/12/24\n\n \n\nFinancial liabilities measured at amortised cost\n\n \n\n \n\n \n\n \n\n \n\n \n\nLong-term borrowings\n\n \n\n \n\n30,346\n\n \n\n \n\n \n\n18,720\n\n \n\nLease liabilities\n\n \n\n \n\n49,443\n\n \n\n \n\n \n\n57,750\n\n \n\nOther non-current debts\n\n \n\n \n\n—\n\n \n\n \n\n \n\n465\n\n \n\nBank overdrafts and short-term borrowings\n\n \n\n \n\n22,197\n\n \n\n \n\n \n\n23,327\n\n \n\nTrade payables\n\n \n\n \n\n57,447\n\n \n\n \n\n \n\n66,477\n\n \n\nOther payables\n\n \n\n \n\n25,084\n\n \n\n \n\n \n\n26,706\n\n \n\nOther non-current liabilities\n\n \n\n \n\n1,386\n\n \n\n \n\n \n\n2,160\n\n \n\nTotal (a)\n\n \n\n \n\n185,903\n\n \n\n \n\n \n\n195,605\n\n \n\nFinancial liabilities measured at fair value\n\n \n\n \n\n \n\n \n\n \n\n \n\nForward exchange contracts\n\n \n\n \n\n19\n\n \n\n \n\n \n\n268\n\n \n\nTotal (b)\n\n \n\n \n\n19\n\n \n\n \n\n \n\n268\n\n \n\nTotal financial liabilities (a+b)\n\n \n\n \n\n185,922\n\n \n\n \n\n \n\n195,873\n\n \n\n \n\n \n\nF-63\n\n[Table of Contents](#toc)\n\n \n\nNatuzzi S.p.A. and Subsidiaries\n\nNotes to consolidated financial statements\n\n(Expressed in thousands of euros except as otherwise indicated)\n\n \n\nFinancial liabilities measured at amortised cost include long-term borrowings (non-current and current portion), lease liabilities (non-current and current portion), bank overdrafts and short-term borrowings, trade payables and other payables. Financial liabilities measured at fair value reflect the negative change in fair value of forward exchange contracts that are not designated as hedge relationships, but are, nevertheless, intended to reduce the level of foreign currency risk for expected future cash flows from trade receivables and sale orders.\n\nFor further details on “Long-term borrowings”, “Lease liabilities”, “Other non-current liabilities\", “Bank overdrafts and short-term borrowings”, “Trade payables”, “Other payables” and “Forward exchange contracts” reference should be made to notes 20, 21, 22, 23, 28, 29, 30 and 32, respectively.\n\nB. Fair value and measurement of fair values of financial assets and financial liabilities\n\nManagement has assessed that the fair values of cash and cash equivalents, trade and other receivables, trade and other payables, bank overdrafts and short-term borrowings approximate their carrying amounts largely due to the short-term maturities of these instruments.\n\nThe following tables show the carrying amount and fair value of Group’s financial assets and financial liabilities as at December 31, 2025 and 2024, other than those with carrying amount that are reasonable approximation of fair value.\n\n \n\n \n\n \n\n31/12/25\n\n \n\n \n\n31/12/24\n\n \n\n \n\n \n\nCarrying\namount\n\n \n\n \n\nFair\nvalue\n\n \n\n \n\nCarrying\namount\n\n \n\n \n\nFair\nvalue\n\n \n\nFinancial assets\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nForward exchange contracts\n\n \n\n \n\n76\n\n \n\n \n\n \n\n76\n\n \n\n \n\n \n\n24\n\n \n\n \n\n \n\n24\n\n \n\nFinancial liabilities\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nFloating-rate borrowings\n\n \n\n \n\n8,485\n\n \n\n \n\n \n\n8,778\n\n \n\n \n\n \n\n7,274\n\n \n\n \n\n \n\n7,552\n\n \n\nFixed rate borrowings\n\n \n\n \n\n21,861\n\n \n\n \n\n \n\n24,390\n\n \n\n \n\n \n\n11,446\n\n \n\n \n\n \n\n14,078\n\n \n\nTotal long-term borrowings\n\n \n\n \n\n30,346\n\n \n\n \n\n \n\n33,168\n\n \n\n \n\n \n\n18,720\n\n \n\n \n\n \n\n21,630\n\n \n\nForward exchange contracts\n\n \n\n \n\n19\n\n \n\n \n\n \n\n19\n\n \n\n \n\n \n\n268\n\n \n\n \n\n \n\n268\n\n \n\n \n\nAs at December 31, 2025 and 2024, the fair value measurement hierarchy of the forward exchange contracts and long-term borrowings is “significant observable inputs” (level 2).\n\nThere were no transfers between level 1 (quoted prices in active markets) and level 2 during 2025 and 2024. There were no level 3 (significant unobservable inputs) fair values estimated as at December 31, 2025 and 2024.\n\nThe following methods and assumptions are used to estimate the fair values.\n\nForward exchange contracts are valued using valuation techniques, which employ the use of market observable inputs. The most frequently applied valuation techniques include forward pricing using present value calculations. The models incorporate various inputs, including the credit quality of counterparties, foreign exchange spot and forward rates, yield curves of the respective currencies, currency basis spreads between the respective currencies, interest rate curves and forward rate curves of the underlying commodity.\n\nThe fair values of the Group’s interest-bearing borrowings are determined using the discounted cash flow method. The discount rate used reflects the issuer’s borrowing rate as at the end of the reporting period. The own non-performance risk as at December 31, 2025 and 2024 is determined to be insignificant.\n\nC. Financial risk management\n\nThe Group has exposure to the following risks arising from financial instruments:\n\n—\ncredit risk;\n\n—\nliquidity risk and\n\n—\nmarket risk.\n\n \n\nF-64\n\n[Table of Contents](#toc)\n\n \n\nNatuzzi S.p.A. and Subsidiaries\n\nNotes to consolidated financial statements\n\n(Expressed in thousands of euros except as otherwise indicated)\n\n \n\n(i) Risk management framework\n\nThe management of the Group’s risks arising from financial instruments is performed on the basis of guidelines set by the Company’s Board of Directors. The main purpose of these guidelines is to balance the Group’s liabilities and assets, in order to ensure an adequate capital viability. The main financial sources of the Group are represented by a mix of equity and financial liabilities, including long-term borrowings used to finance investments, bank overdrafts and short-term borrowings used to finance the Group’s working capital.\n\n(ii) Credit risk\n\nCredit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations and arises principally from the Group’s receivables from customers. The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets disclosed in this note.\n\nImpairment losses on financial assets recognised in profit or loss for the years ended December 31, 2025, 2024 and 2023 are related mainly to trade receivables and are as follows:\n\n \n\n \n\n \n\n2025\n\n \n\n \n\n2024\n\n \n\n \n\n2023\n\n \n\nImpairment loss on trade receivables\n\n \n\n \n\n46\n\n \n\n \n\n \n\n289\n\n \n\n \n\n \n\n33\n\n \n\n \n\n \n\n(ii-a) Trade receivables\n\nThe Group’s customers are distributors, retailers and end consumers.\n\nThe Group’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. However, management also considers the factors that may influence the credit risk of its customer base, including the default risk associated with the industry and country in which customers operate. Details of concentration of revenue are included in note 34.\n\nCustomer credit risk is managed on the basis of the Group’s established policies, procedures and controls relating to customer credit risk management.\n\nIn particular, the Group has established a credit policy under which each customer is analysed individually for creditworthiness before the Group’s standard payment and delivery terms and conditions are offered. The Group’s review includes external ratings, if they are available, financial statements, credit agency information, industry information and in some cases bank references. After such review, sale limits are established for each customer and reviewed periodically. Any sales exceeding those limits require approval from senior management.\n\nFurthermore, the Group limits its exposure to credit risk from trade receivables by establishing a maximum payment period in the range of 30-90 days for individual customers. All extensions were granted within current sales limits after careful consideration of the creditworthiness of the customer and each customer that was granted an extension is closely monitored for credit deterioration. In order to mitigate credit risk, sales to distributors or retailers for which no payment extensions are granted due to an uncertain creditworthiness assessment, are required to be settled in cash (“cash against documents”, “cash on delivery”, “payment in advance”). Furthermore, sales to the end consumers are also required to be settled in cash or using major credit cards, thus mitigating the credit risk.\n\nMore than 80% of the Group’s distributors and retailers have been transacting with the Group for at least five years, and none of these customers’ balances have been written off or are credit‑impaired at the reporting date. In monitoring customer credit risk, customers are grouped according to their credit characteristics, including whether they are an individual or a legal entity, whether they are a distributor or retailer, their geographic location, industry, trading history with the Group and the existence of previous financial difficulties.\n\n \n\nF-65\n\n[Table of Contents](#toc)\n\n \n\nNatuzzi S.p.A. and Subsidiaries\n\nNotes to consolidated financial statements\n\n(Expressed in thousands of euros except as otherwise indicated)\n\n \n\nThe Group does not require collateral to be given for trade receivables. The Group does not have trade receivables for which no loss allowance is recognised because of collateral provided.\n\nManagement closely monitors the outstanding trade receivables to prevent losses.\n\nFinally, in order to significantly reduce its exposure to credit risk, the Group insures the non-collection risk related to a significant portion of its trade receivables with a third party insurer and, in the case of customer insolvency, the insurance company refunds about 85% of the uncollected outstanding balances. Accordingly, the credit risk is entirely borne by the Group for non-insured trade receivables while it is only exposed to approximately 15% for insured trade receivables.\n\nThe Group evaluates the concentration of risk with respect to trade receivables and revenue as low, as its customers are located in several jurisdictions and operate in largely independent markets (see notes 15 and 34). Furthermore, as at December 31, 2025, 2024 and 2023, the Group had one customer, the joint venture Natuzzi Trading Shanghai, whose purchases exceeded 5% of revenue and trade receivables (see note 45).\n\n \n\n \n\n31/12/25\n\n \n\n \n\n31/12/24\n\n \n\n \n\n31/12/23\n\n \n\nRevenue\n\n \n\n \n\n23,215\n\n \n\n \n\n \n\n25,192\n\n \n\n \n\n \n\n26,523\n\n \n\nTrade receivables\n\n \n\n \n\n2,341\n\n \n\n \n\n \n\n4,022\n\n \n\n \n\n \n\n4,198\n\n \n\nAs at December 31, 2025 and 2024, insured and non-insured trade receivables are as follows:\n\n \n\n \n\n31/12/25\n\n \n\n \n\n31/12/24\n\n \n\nInsured trade receivables\n\n \n\n \n\n24,250\n\n \n\n \n\n \n\n23,253\n\n \n\nNon-insured trade receivables\n\n \n\n \n\n11,630\n\n \n\n \n\n \n\n13,227\n\n \n\nGross trade receivables\n\n \n\n \n\n35,880\n\n \n\n \n\n \n\n36,480\n\n \n\nProvision for doubtful accounts\n\n \n\n \n\n(3,372\n\n)\n\n \n\n \n\n(3,661\n\n)\n\nNet trade receivables\n\n \n\n \n\n32,508\n\n \n\n \n\n \n\n32,819\n\n \n\n \n\nAs at December 31, 2025 and 2024 the ageing of trade receivables is as follows:\n\n \n\n \n\n \n\n31/12/25\n\n \n\n \n\n31/12/24\n\n \n\nCurrent (not past due)\n\n \n\n \n\n26,534\n\n \n\n \n\n \n\n24,462\n\n \n\nFrom 1 to 29 days past due\n\n \n\n \n\n5,199\n\n \n\n \n\n \n\n3,945\n\n \n\nFrom 30 to 60 days past due\n\n \n\n \n\n841\n\n \n\n \n\n \n\n746\n\n \n\nFrom 61 to 90 days past due\n\n \n\n \n\n595\n\n \n\n \n\n \n\n582\n\n \n\nMore than 90 days past due\n\n \n\n \n\n2,711\n\n \n\n \n\n \n\n6,745\n\n \n\nGross trade receivables\n\n \n\n \n\n35,880\n\n \n\n \n\n \n\n36,480\n\n \n\nProvision for doubtful accounts\n\n \n\n \n\n(3,372\n\n)\n\n \n\n \n\n(3,661\n\n)\n\nNet trade receivables\n\n \n\n \n\n32,508\n\n \n\n \n\n \n\n32,819\n\n \n\n \n\nThe movements in the provision for doubtful accounts in respect of trade receivables for the years ended December 31, 2025 and 2024 are reported in note 15.\n\nThe provision for doubtful accounts is estimated by the Group based on the insurance in place, the credit worthiness of its customers, historical trends, as well as current and future general economic conditions.\n\nSpecifically, for receivables subject to collective valuation an impairment analysis is performed at each reporting date using a provision matrix to measure expected credit losses. The impairment allowance rates (default rates) are based on days past due for groupings of various customer segments with similar loss patterns (i.e., by customer type and rating, and coverage by credit insurance). The calculation reflects the probability-weighted outcome based on reasonable and supportable information available at the reporting date about past events, current conditions and forecasts of future economic conditions.\n\n \n\nF-66\n\n[Table of Contents](#toc)\n\n \n\nNatuzzi S.p.A. and Subsidiaries\n\nNotes to consolidated financial statements\n\n(Expressed in thousands of euros except as otherwise indicated)\n\n \n\nInstead, for individual receivables which are known to be difficult to collect an impairment analysis is performed at each reporting date to measure expected credit losses. The impairment allowance is estimated by the Group based on the financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation and default or late payments.\n\nSet out below is the information about the credit risk exposure on the Group’s trade receivables using a provision matrix as at December 31, 2025 and 2024, further to the adoption of IFRS 9.\n\nDecember 31, 2025\n\n \n\n \n\nDays past due\n\n \n\n \n\n \n\n \n\n \n\n \n\n<30 days\n\n \n\n \n\n30-60 days\n\n \n\n \n\n61-90 days\n\n \n\n \n\n> 90 days\n\n \n\n \n\nTotal\n\n \n\nTrade receivables subject to collective valuation\n\n \n\n \n\n125\n\n \n\n \n\n \n\n23\n\n \n\n \n\n \n\n5\n\n \n\n \n\n \n\n62\n\n \n\n \n\n \n\n215\n\n \n\nTrade receivables subject to specific valuation\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n35,665\n\n \n\nTotal gross carrying amount\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n35,880\n\n \n\nDefault rate\n\n \n\n \n\n0.57\n\n%\n\n \n\n \n\n7.04\n\n%\n\n \n\n \n\n12.72\n\n%\n\n \n\n \n\n19.75\n\n%\n\n \n\n \n\n \n\nExpected credit loss\n\n \n\n \n\n1\n\n \n\n \n\n \n\n2\n\n \n\n \n\n \n\n1\n\n \n\n \n\n \n\n12\n\n \n\n \n\n \n\n16\n\n \n\n \n\nDecember 31, 2024\n\n \n\n \n\nDays past due\n\n \n\n \n\n \n\n \n\n \n\n \n\n<30 days\n\n \n\n \n\n30-60 days\n\n \n\n \n\n61-90 days\n\n \n\n \n\n> 90 days\n\n \n\n \n\nTotal\n\n \n\nTrade receivables subject to collective valuation\n\n \n\n \n\n1,279\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n79\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n1,358\n\n \n\nTrade receivables subject to specific valuation\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n35,122\n\n \n\nTotal gross carrying amount\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n36,480\n\n \n\nDefault rate\n\n \n\n \n\n0.65\n\n%\n\n \n\n \n\n9.60\n\n%\n\n \n\n \n\n26.31\n\n%\n\n \n\n \n\n58.83\n\n%\n\n \n\n \n\n \n\nExpected credit loss\n\n \n\n \n\n8\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n21\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n29\n\n \n\n \n\n(ii-b) Other receivables\n\nAs at December 31, 2025, and 2024 other receivables current and non-current amount to 16,668 and 18,089, respectively. Such receivables are considered to have a low credit risk and the impairment loss has been measured on a 12-months expected credit loss basis. Management considers its other receivables to have a low credit risk as they have a low risk of default and their counterparties are able to meet their contractual cash flow obligations in the short-term. As at December 31, 2025 and 2024 the identified impairment loss of other receivables is immaterial.\n\n(ii-c) Cash and cash equivalents\n\nAs at December 31, 2025 and 2024 the Group has cash and cash equivalents of 20,320 and 20,322, respectively. Indeed, the Group considers its cash and cash equivalents to have a low credit risk based on the external credit ratings of the financial institutions. Indeed, the Group’s cash and cash equivalents are held with financial institutions, which have external credit risk ratings that are equivalent to the understood definition of “investment grade”. Impairment of cash and cash equivalents has been measured on a 12-months expected credit loss basis and reflects the short-term nature of the exposures. As at December 31, 2025 and 2024 the identified impairment loss of cash and cash equivalents is immaterial.\n\n(ii-d) Derivative financial instruments\n\nDomestic currency swaps (see note 32) are entered into with financial institutions that have outstanding external credit ratings (“investment grade”). As at December 31, 2025 and 2024 the identified impairment loss of the favourable domestic currency swaps is immaterial.\n\n \n\nF-67\n\n[Table of Contents](#toc)\n\n \n\nNatuzzi S.p.A. and Subsidiaries\n\nNotes to consolidated financial statements\n\n(Expressed in thousands of euros except as otherwise indicated)\n\n \n\n(iii) Liquidity risk\n\nLiquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Group’s approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group’s reputation.\n\nThe Group aims to maintain the level of its cash and cash equivalents at an amount in excess of expected cash outflows on financial liabilities over the next 60 days. The Group also monitors the level of expected cash inflows on trade and other receivables together with expected cash outflows on trade and other payables. As at December 31, 2025, the expected cash flows from trade and other receivables maturing within two months were in excess of the expected cash outflows for trade and other payables due within two months. This excludes the potential impact of extreme circumstances that cannot reasonably be predicted.\n\nTherefore, the Group’s objective is to maintain a balance between continuity of funding and flexibility through the use of bank overdrafts, short-term borrowings and long-term borrowings.\n\nThe steps taken by the Group in 2025 to manage its liquidity needs, together with the impact of those steps on the consolidated financial statements, include the following:\n\n—\nDuring 2025, the Parent Company renewed for a further 12 months a factoring agreement with a leading Italian financial institution. Under this arrangement, the Parent Company assigns certain trade receivables to the financial institution in exchange for short-term financing up to a maximum amount of 18,000. The trade receivables transferred under this agreement are not derecognized from the statement of financial position, as the Parent Company retains substantially all the risks and rewards, primarily credit risk (see Note 15). The consideration received at the time of transfer is recognized as a bank advance secured by receivables (see Note 28).\n\n—\nDuring 2025, the Romanian subsidiary obtained a long-term loan of 5,000, repayable in monthly installments through May 2027. The variable interest rate is based on the six-month Euribor (360-day basis) plus a spread of 2.75%. As of December 31, 2025, the outstanding balance of the loan amounted to 4,096 (see Note 20).\n\n—\nAlso during 2025, the Brazilian affiliate entered into two short-term loans for a total amount of 3,107 (20,000 Brazilian reais), repayable in installments through November 2026 (see Note 20).\n\n—\nOn November 21, 2025, the Group’s majority shareholder and Chief Executive Officer entered into an agreement with the Parent Company aimed at supporting the industrial restructuring plan through a credit facility. Under this arrangement, the Parent Company may request, in multiple tranches through December 31, 2026, an interest-free loan of up to 15,000, with the option to convert the amounts drawn into equity contributions in the event of a share capital increase. In the absence of a capital increase, the loan would be repayable by December 31, 2028. The Parent Company requested and obtained two tranches of 5,000 each, the first at the end of November and the second in mid-December (see Notes 19 and 45).\n\n—\nDuring 2025, the disposal of the building in High Point, North Carolina, USA, by a U.S. subsidiary was completed, resulting in the receipt of the outstanding balance of 7,644. In addition, a Romanian subsidiary completed the sale of a plot of land, collecting the remaining balance of 2,369 (see Note 7).\n\n—\nAt the end of November 2025, the Parent Company entered into a preliminary agreement for the sale of a photovoltaic plant for a consideration of 7,115. The transaction was completed with the collection of the proceeds in January 2026 (see Notes 7 and 46).\n\n—\nIn addition, it should be noted that in March 2026 the Parent Company received the final tranche of financing amounting to 2,114 and a non-repayable grant of 591 from a public authority, relating to the production investments envisaged under the program agreement (see Note 46).\n\n \n\nF-68\n\n[Table of Contents](#toc)\n\n \n\nNatuzzi S.p.A. and Subsidiaries\n\nNotes to consolidated financial statements\n\n(Expressed in thousands of euros except as otherwise indicated)\n\n \n\nThe tables below summarize the remaining contractual maturities of financial liabilities as at December 31, 2025 and 2024. The amounts are gross and undiscounted, and include contractual interest payments and exclude the impact of netting agreements.\n\n \n\nDecember 31, 2025\n\n \n\n \n\nLess than\n2 months\n\n \n\n \n\n2 to 12\nmonths\n\n \n\n \n\n1 to 2\nyears\n\n \n\n \n\n2 to 5\nyears\n\n \n\n \n\nMore than\n5 years\n\n \n\n \n\nTotal\n\n \n\nLong-term borrowings\n\n \n\n \n\n378\n\n \n\n \n\n \n\n7,056\n\n \n\n \n\n \n\n7,678\n\n \n\n \n\n \n\n14,128\n\n \n\n \n\n \n\n4,700\n\n \n\n \n\n \n\n33,940\n\n \n\nLease liabilities\n\n \n\n \n\n2,079\n\n \n\n \n\n \n\n9,709\n\n \n\n \n\n \n\n10,639\n\n \n\n \n\n \n\n21,437\n\n \n\n \n\n \n\n12,033\n\n \n\n \n\n \n\n55,897\n\n \n\nBank overdrafts and short-term borrowings\n\n \n\n \n\n22,197\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n22,197\n\n \n\nTrade and other payables\n\n \n\n \n\n25,084\n\n \n\n \n\n \n\n57,447\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n82,531\n\n \n\nLosses on derivative financial instruments\n\n \n\n \n\n19\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n19\n\n \n\nTotal financial liabilities\n\n \n\n \n\n49,757\n\n \n\n \n\n \n\n74,212\n\n \n\n \n\n \n\n18,317\n\n \n\n \n\n \n\n35,565\n\n \n\n \n\n \n\n16,733\n\n \n\n \n\n \n\n194,584\n\n \n\n \n\nDecember 31, 2024\n\n \n\n \n\nLess than\n2 months\n\n \n\n \n\n2 to 12\nmonths\n\n \n\n \n\n1 to 2\nyears\n\n \n\n \n\n2 to 5\nyears\n\n \n\n \n\nMore than\n5 years\n\n \n\n \n\nTotal\n\n \n\nLong-term borrowings\n\n \n\n \n\n626\n\n \n\n \n\n \n\n4,459\n\n \n\n \n\n \n\n2,568\n\n \n\n \n\n \n\n8,034\n\n \n\n \n\n \n\n5,943\n\n \n\n \n\n \n\n21,630\n\n \n\nLease liabilities\n\n \n\n \n\n2,379\n\n \n\n \n\n \n\n11,250\n\n \n\n \n\n \n\n12,513\n\n \n\n \n\n \n\n26,781\n\n \n\n \n\n \n\n17,970\n\n \n\n \n\n \n\n70,893\n\n \n\nBank overdrafts and short-term borrowings\n\n \n\n \n\n23,327\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n23,327\n\n \n\nTrade and other payables\n\n \n\n \n\n26,706\n\n \n\n \n\n \n\n66,942\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n93,648\n\n \n\nLosses on derivative financial instruments\n\n \n\n \n\n268\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n268\n\n \n\nTotal financial liabilities\n\n \n\n \n\n53,306\n\n \n\n \n\n \n\n82,651\n\n \n\n \n\n \n\n15,081\n\n \n\n \n\n \n\n34,815\n\n \n\n \n\n \n\n23,913\n\n \n\n \n\n \n\n209,766\n\n \n\nInterest payments on variable-rate borrowings presented in the tables above reflect forward interest rates as at the reporting date and may vary in line with changes in market interest rates.\n\nWith the exception of such financial liabilities, the cash outflows included in the maturity analysis are not expected to occur significantly earlier, nor for amounts materially different from those presented.\n\nIn addition, the following is to be considered: (a) as at December 31, 2025, the Group has unused credit lines of 4,445 (see note 28); (b) the Parent Company can use the credit facilities of its subsidiaries adhering to the cash pooling contract in place; from time to time, the Parent Company evaluates the adequacy of such credit facilities, requesting additional facilities as needed; (c) the Group holds cash at foreign subsidiaries, that can be withdrawn by the Company subject to the approval of a dividend distribution; some of these dividends are subject to withholding taxes; (d) the Group can apply for long-term borrowings to sustain long-term investments; (e) there are no significant liquidity risk concentrations, both on financial assets and on financial liabilities.\n\n(iv) Market risk\n\nMarket risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices (e.g., interest rates, foreign exchange rates). Market risk, mainly, depends on the trend of the demand for furniture and other finished products, the trend in prices of raw materials and the fluctuation of interest rates and foreign currencies.\n\n \n\nF-69\n\n[Table of Contents](#toc)\n\n \n\nNatuzzi S.p.A. and Subsidiaries\n\nNotes to consolidated financial statements\n\n(Expressed in thousands of euros except as otherwise indicated)\n\n \n\nThe market demand risk is managed by way of a constant monitoring of markets, performed by the commercial division of the Group, market diversification in the different geographical locations of customers and a product diversification in the different brands and models.\n\nIn order to manage the prices of raw materials risk, the Group constantly monitors procurement policies and attempts to diversify suppliers while respecting the quality standards expected by the market.\n\nInterest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Group’s exposure to the risk of changes in market interest rates relates primarily to the Group’s long-term borrowings obligations with floating interest rates. The Group manages its interest rate risk by having a portfolio of fixed and variable rate borrowings. As at December 31, 2025, approximately 72.04% of the Group’s borrowings were at a fixed rate of interest (2024: 61.14%). No derivative financial instruments were entered into by the Group to manage the cash flow risk on floating interest-rate borrowings.\n\nThe following tables demonstrate the sensitivity to a reasonably possible change in interest rates on that portion of loans and borrowings affected. With all other variables held constant, the Group’s profit before tax is affected through the impact on floating rate borrowings as follows:\n\n \n\n \n\n \n\nIncrease/decrease\nin basis points\n\n \n\nEffect on profit\nbefore tax\n\n \n\nDecember 31, 2025\n\n \n\n+45\n\n \n\n \n\n46\n\n \n\nDecember 31, 2025\n\n \n\n-45\n\n \n\n \n\n(46\n\n)\n\nDecember 31, 2024\n\n \n\n+45\n\n \n\n \n\n(40\n\n)\n\nDecember 31, 2024\n\n \n\n-45\n\n \n\n \n\n40\n\n \n\nDecember 31, 2023\n\n \n\n+45\n\n \n\n \n\n(40\n\n)\n\nDecember 31, 2023\n\n \n\n-45\n\n \n\n \n\n40\n\n \n\n \n\nForeign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Group’s exposure to the risk of changes in foreign exchange rates relates primarily to the Group’s operating activities (when revenue or expense is denominated in a foreign currency) and the Group’s net investments in foreign subsidiaries. In particular, a significant portion of the Group’s revenue and costs are denominated in currencies other than the Euro. Consequently, a significant portion of its revenue and costs is exposed to fluctuations in the exchange rates between the Euro and other currencies. The Group uses forward exchange contracts (known in Italy as domestic currency swaps) to reduce its exposure to the risks of short-term decreases in the value of its foreign currency denominated revenue. For further details, see note 32.\n\nWhen a derivative is entered into for the purpose of being a hedge, the Group negotiates the terms of the derivative to match the terms of the hedged exposure. For hedges of forecast transactions, the derivative covers the period of exposure from the point the cash flows of the transactions are forecasted up to the point of settlement of the resulting receivable that is denominated in the foreign currency.\n\nThe following tables demonstrate the sensitivity to a reasonably possible change in foreign exchange rates, with all other variables held constant.\n\nThe Group’s profit before tax is affected through the change in foreign in exchange rates as follows:\n\n \n\n \n\n \n\nChange in foreign\nexchange rates\n\n \n\nEffect on profit\nbefore tax\n\n \n\nDecember 31, 2025\n\n \n\n+5%\n\n \n\n \n\n1,666\n\n \n\nDecember 31, 2025\n\n \n\n-5%\n\n \n\n \n\n(1,639\n\n)\n\nDecember 31, 2024\n\n \n\n+5%\n\n \n\n \n\n2,150\n\n \n\nDecember 31, 2024\n\n \n\n-5%\n\n \n\n \n\n(2,403\n\n)\n\nDecember 31, 2023\n\n \n\n+5%\n\n \n\n \n\n1,707\n\n \n\nDecember 31, 2023\n\n \n\n-5%\n\n \n\n \n\n(1,848\n\n)\n\n \n\n \n\nF-70\n\n[Table of Contents](#toc)\n\n \n\nNatuzzi S.p.A. and Subsidiaries\n\nNotes to consolidated financial statements\n\n(Expressed in thousands of euros except as otherwise indicated)\n\n \n\n \n\nAs at December 31, 2025 and 2024 the Group’s financial assets and financial liabilities denominated in foreign currency are as follows:\n\n \n\nFinancial assets\n\n \n\n31/12/25\n\n \n\n \n\n31/12/24\n\n \n\nTrade receivables\n\n \n\n \n\n21,643\n\n \n\n \n\n \n\n23,384\n\n \n\nCash and cash equivalents\n\n \n\n \n\n18,225\n\n \n\n \n\n \n\n16,224\n\n \n\nTotal financial assets\n\n \n\n \n\n39,868\n\n \n\n \n\n \n\n39,608\n\n \n\n \n\nFinancial liabilities\n\n \n\n31/12/25\n\n \n\n \n\n31/12/24\n\n \n\nLong-term borrowings\n\n \n\n \n\n3,253\n\n \n\n \n\n \n\n216\n\n \n\nLease liabilities\n\n \n\n \n\n35,374\n\n \n\n \n\n \n\n41,604\n\n \n\nBank overdraft and short-term borrowings\n\n \n\n \n\n11,500\n\n \n\n \n\n \n\n10,336\n\n \n\nTrade payables\n\n \n\n \n\n19,059\n\n \n\n \n\n \n\n21,355\n\n \n\nTotal financial liabilities\n\n \n\n \n\n69,186\n\n \n\n \n\n \n\n73,511\n\n \n\n \n\nAs at December 31, 2025 and 2024, the summary quantitative data about Group’s exposure to currency risk as reported to the management of the Group is as follows:\n\nDecember 31, 2025\n\n \n\n \n\nFinancial\nAssets (a)\n\n \n\n \n\nFinancial\nliabilities (b)\n\n \n\n \n\nNet Exposure\n(c) = (a)-(b)\n\n \n\nU.S. dollars\n\n \n\n \n\n21,014\n\n \n\n \n\n \n\n42,157\n\n \n\n \n\n \n\n(21,143\n\n)\n\nChinese Yuan\n\n \n\n \n\n6,412\n\n \n\n \n\n \n\n6,841\n\n \n\n \n\n \n\n(429\n\n)\n\nBritish pounds\n\n \n\n \n\n4,496\n\n \n\n \n\n \n\n5,369\n\n \n\n \n\n \n\n(873\n\n)\n\nBrazilian Reais\n\n \n\n \n\n2,888\n\n \n\n \n\n \n\n4,246\n\n \n\n \n\n \n\n(1,358\n\n)\n\nCanadian dollars\n\n \n\n \n\n18\n\n \n\n \n\n \n\n17\n\n \n\n \n\n \n\n1\n\n \n\nRomanian Leu\n\n \n\n \n\n684\n\n \n\n \n\n \n\n6,256\n\n \n\n \n\n \n\n(5,572\n\n)\n\nMexican pesos\n\n \n\n \n\n529\n\n \n\n \n\n \n\n1,342\n\n \n\n \n\n \n\n(813\n\n)\n\nOther\n\n \n\n \n\n3,827\n\n \n\n \n\n \n\n2,958\n\n \n\n \n\n \n\n869\n\n \n\nTotal\n\n \n\n \n\n39,868\n\n \n\n \n\n \n\n69,186\n\n \n\n \n\n \n\n(29,318\n\n)\n\n \n\nDecember 31, 2024\n\n \n\n \n\nFinancial\nAssets (a)\n\n \n\n \n\nFinancial\nliabilities (b)\n\n \n\n \n\nNet Exposure\n(c) = (a)-(b)\n\n \n\nU.S. dollars\n\n \n\n \n\n21,705\n\n \n\n \n\n \n\n42,212\n\n \n\n \n\n \n\n(20,507\n\n)\n\nChinese Yuan\n\n \n\n \n\n5,173\n\n \n\n \n\n \n\n10,005\n\n \n\n \n\n \n\n(4,832\n\n)\n\nBritish pounds\n\n \n\n \n\n4,453\n\n \n\n \n\n \n\n7,722\n\n \n\n \n\n \n\n(3,269\n\n)\n\nBrazilian Reais\n\n \n\n \n\n4,089\n\n \n\n \n\n \n\n2,497\n\n \n\n \n\n \n\n1,592\n\n \n\nMexican pesos\n\n \n\n \n\n1,229\n\n \n\n \n\n \n\n1,415\n\n \n\n \n\n \n\n(186\n\n)\n\nCanadian dollars\n\n \n\n \n\n62\n\n \n\n \n\n \n\n4\n\n \n\n \n\n \n\n58\n\n \n\nRomanian Leu\n\n \n\n \n\n810\n\n \n\n \n\n \n\n6,772\n\n \n\n \n\n \n\n(5,962\n\n)\n\nOther\n\n \n\n \n\n2,087\n\n \n\n \n\n \n\n2,884\n\n \n\n \n\n \n\n(797\n\n)\n\nTotal\n\n \n\n \n\n39,608\n\n \n\n \n\n \n\n73,511\n\n \n\n \n\n \n\n(33,903\n\n)\n\n \n\n \n\nF-71\n\n[Table of Contents](#toc)\n\n \n\nNatuzzi S.p.A. and Subsidiaries\n\nNotes to consolidated financial statements\n\n(Expressed in thousands of euros except as otherwise indicated)\n\n \n\n(v) Reconciliation of movements of liabilities to cash flows arising from financing activities\n\nThe following tables show the reconciliation of movements of financial liabilities to cash flows arising from financing activities for the three years ended December 31, 2025, 2024 and 2023.\n\n \n\nDecember 31, 2025\n\n \n\n \n\n \n\nJan. 1, 2025\n\n \n\n \n\nCash outflows\n\n \n\n \n\nCash inflows\n\n \n\n \n\nChanges in\nfair value\n\n \n\n \n\nOther\nchanges\n\n \n\n \n\nDec. 31, 2025\n\n \n\nLong-term borrowings\n\n \n\n \n\n18,720\n\n \n\n \n\n \n\n(4,717\n\n)\n\n \n\n \n\n17,846\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n(1,503\n\n)\n\n \n\n \n\n30,346\n\n \n\nLease liabilities\n\n \n\n \n\n57,750\n\n \n\n \n\n \n\n(9,482\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n1,175\n\n \n\n \n\n \n\n49,443\n\n \n\nShort-term borrowings\n\n \n\n \n\n19,999\n\n \n\n \n\n \n\n(1,976\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n18,023\n\n \n\nBank overdrafts\n\n \n\n \n\n3,328\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n846\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n4,174\n\n \n\nNon-controlling interests\n\n \n\n \n\n4,202\n\n \n\n \n\n \n\n(419\n\n)\n\n \n\n \n\n70\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n(951\n\n)\n\n \n\n \n\n2,902\n\n \n\nTotal liabilities from financing activities\n\n \n\n \n\n103,999\n\n \n\n \n\n \n\n(16,594\n\n)\n\n \n\n \n\n18,762\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n(1,279\n\n)\n\n \n\n \n\n104,888\n\n \n\nBank overdrafts are used only for cash management purposes.\n\n \n\nDecember 31, 2024\n\n \n\n \n\nJan. 1, 2024\n\n \n\n \n\nCash outflows\n\n \n\n \n\nCash inflows\n\n \n\n \n\nChanges in\nfair value\n\n \n\n \n\nOther\nchanges\n\n \n\n \n\nDec. 31, 2024\n\n \n\nLong-term borrowings\n\n \n\n \n\n17,353\n\n \n\n \n\n \n\n(4,839\n\n)\n\n \n\n \n\n3,314\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n2,892\n\n \n\n \n\n \n\n18,720\n\n \n\nLease liabilities\n\n \n\n \n\n62,327\n\n \n\n \n\n \n\n(10,288\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n5,711\n\n \n\n \n\n \n\n57,750\n\n \n\nShort-term borrowings\n\n \n\n \n\n20,797\n\n \n\n \n\n \n\n(798\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n19,999\n\n \n\nBank overdrafts\n\n \n\n \n\n2,037\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n1,291\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n3,328\n\n \n\nNon-controlling interests\n\n \n\n \n\n4,343\n\n \n\n \n\n \n\n(149\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n8\n\n \n\n \n\n \n\n4,202\n\n \n\nTotal liabilities from financing activities\n\n \n\n \n\n106,857\n\n \n\n \n\n \n\n(16,074\n\n)\n\n \n\n \n\n4,605\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n8,611\n\n \n\n \n\n \n\n103,999\n\n \n\nBank overdrafts are used only for cash management purposes.\n\n \n\nDecember 31, 2023\n\n \n\n \n\nJan. 1, 2023\n\n \n\n \n\nCash outflows\n\n \n\n \n\nCash inflows\n\n \n\n \n\nChanges in\nfair value\n\n \n\n \n\nOther\nchanges\n\n \n\n \n\nDec. 31, 2023\n\n \n\nLong-term borrowings\n\n \n\n \n\n17,290\n\n \n\n \n\n \n\n(8,715\n\n)\n\n \n\n \n\n10,912\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n(2,134\n\n)\n\n \n\n \n\n17,353\n\n \n\nLease liabilities\n\n \n\n \n\n51,849\n\n \n\n \n\n \n\n(11,057\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n21,535\n\n \n\n \n\n \n\n62,327\n\n \n\nShort-term borrowings\n\n \n\n \n\n27,500\n\n \n\n \n\n \n\n(6,703\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n20,797\n\n \n\nBank overdrafts\n\n \n\n \n\n1,754\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n283\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n2,037\n\n \n\nNon-controlling interests\n\n \n\n \n\n4,698\n\n \n\n \n\n \n\n(135\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n(220\n\n)\n\n \n\n \n\n4,343\n\n \n\nTotal liabilities from financing activities\n\n \n\n \n\n103,091\n\n \n\n \n\n \n\n(26,610\n\n)\n\n \n\n \n\n11,195\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n19,181\n\n \n\n \n\n \n\n106,857\n\n \n\nBank overdrafts are used only for cash management purposes.\n\n \n\n34. Revenue\n\n(i) Revenue streams\n\nThe Group generates revenue primarily from the sale of leather and fabric upholstered furniture and home furnishing accessories to its customers. Other sources of revenue include sale of polyurethane foam, sale of leather-by products, sale of Natuzzi Display System and sale of Service Type Warranty.\n\n \n\nF-72\n\n[Table of Contents](#toc)\n\n \n\nNatuzzi S.p.A. and Subsidiaries\n\nNotes to consolidated financial statements\n\n(Expressed in thousands of euros except as otherwise indicated)\n\n \n\nTherefore, all the Group’s revenue is related to revenue from contracts with customers.\n\n(ii) Disaggregation of revenue from contracts with customers\n\nIn the following tables, revenue from contracts with customers are disaggregated by types of goods, primary geographical markets, geographical location of customers, distribution channels, brands and timing of revenue recognition.\n\n \n\nTypes of goods\n\n \n\n2025\n\n \n\n \n\n2024\n\n \n\n \n\n2023\n\n \n\nSale of upholstery furniture\n\n \n\n \n\n260,824\n\n \n\n \n\n \n\n272,935\n\n \n\n \n\n \n\n281,638\n\n \n\nSale of home furnishing accessories\n\n \n\n \n\n34,478\n\n \n\n \n\n \n\n37,610\n\n \n\n \n\n \n\n38,199\n\n \n\nSales of Contract\n\n \n\n \n\n3,357\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\nSale of polyurethane foam\n\n \n\n \n\n2,329\n\n \n\n \n\n \n\n1,932\n\n \n\n \n\n \n\n2,509\n\n \n\nSale of other goods\n\n \n\n \n\n7,229\n\n \n\n \n\n \n\n6,320\n\n \n\n \n\n \n\n6,272\n\n \n\nTotal\n\n \n\n \n\n308,217\n\n \n\n \n\n \n\n318,797\n\n \n\n \n\n \n\n328,618\n\n \n\n \n\nThe sale of upholstery furniture includes the following categories: stationary furniture (sofas, loveseats and armchairs), sectional furniture, motion furniture, sofa beds and occasional chairs, including recliners and massage chairs.\n\n \n\nGeographical markets\n\n \n\n2025\n\n \n\n \n\n2024\n\n \n\n \n\n2023\n\n \n\nEurope, Middle East and Africa\n\n \n\n \n\n152,059\n\n \n\n \n\n \n\n153,033\n\n \n\n \n\n \n\n159,570\n\n \n\nAmericas\n\n \n\n \n\n118,028\n\n \n\n \n\n \n\n125,063\n\n \n\n \n\n \n\n122,820\n\n \n\nAsia-Pacific\n\n \n\n \n\n38,130\n\n \n\n \n\n \n\n40,702\n\n \n\n \n\n \n\n46,228\n\n \n\nTotal\n\n \n\n \n\n308,217\n\n \n\n \n\n \n\n318,797\n\n \n\n \n\n \n\n328,618\n\n \n\n \n\nGeographical location of customers\n\n \n\n2025\n\n \n\n \n\n2024\n\n \n\n \n\n2023\n\n \n\nUnited States of America\n\n \n\n \n\n88,010\n\n \n\n \n\n \n\n90,921\n\n \n\n \n\n \n\n87,250\n\n \n\nItaly\n\n \n\n \n\n50,796\n\n \n\n \n\n \n\n47,509\n\n \n\n \n\n \n\n39,037\n\n \n\nUnited Kingdom\n\n \n\n \n\n26,114\n\n \n\n \n\n \n\n32,252\n\n \n\n \n\n \n\n36,291\n\n \n\nChina\n\n \n\n \n\n21,295\n\n \n\n \n\n \n\n22,178\n\n \n\n \n\n \n\n26,211\n\n \n\nSpain\n\n \n\n \n\n12,826\n\n \n\n \n\n \n\n13,534\n\n \n\n \n\n \n\n11,634\n\n \n\nBrazil\n\n \n\n \n\n10,822\n\n \n\n \n\n \n\n13,516\n\n \n\n \n\n \n\n14,498\n\n \n\nMexico\n\n \n\n \n\n10,148\n\n \n\n \n\n \n\n9,913\n\n \n\n \n\n \n\n8,197\n\n \n\nAustralia\n\n \n\n \n\n5,744\n\n \n\n \n\n \n\n5,723\n\n \n\n \n\n \n\n6,256\n\n \n\nCanada\n\n \n\n \n\n5,413\n\n \n\n \n\n \n\n7,275\n\n \n\n \n\n \n\n8,117\n\n \n\nBelgium\n\n \n\n \n\n4,391\n\n \n\n \n\n \n\n4,605\n\n \n\n \n\n \n\n5,302\n\n \n\nSouth Korea\n\n \n\n \n\n3,713\n\n \n\n \n\n \n\n3,395\n\n \n\n \n\n \n\n3,518\n\n \n\nIsrael\n\n \n\n \n\n3,190\n\n \n\n \n\n \n\n3,514\n\n \n\n \n\n \n\n3,371\n\n \n\nUnited Arab Emirates\n\n \n\n \n\n2,988\n\n \n\n \n\n \n\n3,181\n\n \n\n \n\n \n\n4,839\n\n \n\nOther countries (none greater than 5%)\n\n \n\n \n\n62,766\n\n \n\n \n\n \n\n61,281\n\n \n\n \n\n \n\n74,097\n\n \n\nTotal\n\n \n\n \n\n308,217\n\n \n\n \n\n \n\n318,797\n\n \n\n \n\n \n\n328,618\n\n \n\n \n\nDistribution channels\n\n \n\n2025\n\n \n\n \n\n2024\n\n \n\n \n\n2023\n\n \n\nWholesale (distributors and retailers)\n\n \n\n \n\n238,972\n\n \n\n \n\n \n\n242,667\n\n \n\n \n\n \n\n255,507\n\n \n\nDirectly operated stores (end consumers)\n\n \n\n \n\n69,245\n\n \n\n \n\n \n\n76,130\n\n \n\n \n\n \n\n73,111\n\n \n\nTotal\n\n \n\n \n\n308,217\n\n \n\n \n\n \n\n318,797\n\n \n\n \n\n \n\n328,618\n\n \n\n \n\n \n\nF-73\n\n[Table of Contents](#toc)\n\n \n\nNatuzzi S.p.A. and Subsidiaries\n\nNotes to consolidated financial statements\n\n(Expressed in thousands of euros except as otherwise indicated)\n\n \n\n \n\nBrands\n\n \n\n2025\n\n \n\n \n\n2024\n\n \n\n \n\n2023\n\n \n\nNatuzzi Editions\n\n \n\n \n\n164,028\n\n \n\n \n\n \n\n167,416\n\n \n\n \n\n \n\n176,600\n\n \n\nNatuzzi Italia\n\n \n\n \n\n119,504\n\n \n\n \n\n \n\n120,487\n\n \n\n \n\n \n\n119,323\n\n \n\nPrivate label\n\n \n\n \n\n15,127\n\n \n\n \n\n \n\n22,639\n\n \n\n \n\n \n\n23,914\n\n \n\nOther\n\n \n\n \n\n9,558\n\n \n\n \n\n \n\n8,255\n\n \n\n \n\n \n\n8,781\n\n \n\nTotal\n\n \n\n \n\n308,217\n\n \n\n \n\n \n\n318,797\n\n \n\n \n\n \n\n328,618\n\n \n\n \n\nTiming of revenue recognition\n\n \n\n2025\n\n \n\n \n\n2024\n\n \n\n \n\n2023\n\n \n\nGoods transferred at a point in time\n\n \n\n \n\n307,886\n\n \n\n \n\n \n\n318,250\n\n \n\n \n\n \n\n327,316\n\n \n\nGoods and services transferred over time\n\n \n\n \n\n331\n\n \n\n \n\n \n\n547\n\n \n\n \n\n \n\n1,302\n\n \n\nTotal\n\n \n\n \n\n308,217\n\n \n\n \n\n \n\n318,797\n\n \n\n \n\n \n\n328,618\n\n \n\n \n\n(iii) Contract balances\n\nThe following table provides information about receivables and contract liabilities from contracts with customers.\n\n \n\n \n\n \n\n31/12/25\n\n \n\n \n\n31/12/24\n\n \n\nTrade receivables\n\n \n\n \n\n32,508\n\n \n\n \n\n \n\n32,819\n\n \n\nContract liabilities\n\n \n\n \n\n26,678\n\n \n\n \n\n \n\n30,373\n\n \n\n \n\nReference should be made to note 15 “Trade receivables” and note 23 “Contract liabilities (non-current and current)” for details about such contract balances.\n\n(iv) Performance obligations and revenue recognition policies\n\nRevenue is measured based on the consideration specified in the customer contract. The Group recognises revenue when it transfers control over a good or service to a customer at an amount that reflects the consideration to which the Group expects to be entitled in exchange for goods or services. The Group has generally concluded that it is the principal in its revenue arrangements, because it controls the goods or services before transferring them to the customer.\n\nIn determining the transaction price for its contracts with customers, the Group considers the effects of variable consideration and the existence of significant financing components.\n\nThe Group considers whether there are other promises in the contract that are separate performance obligations to which a portion of the transaction price needs to be allocated. The allocation of the transaction price to the Group’s performance obligations is performed using the relative stand-alone selling price method.\n\nFor detailed information about the nature and timing of the satisfaction of performance obligations in contracts with customers, including significant payment terms and related revenue recognition policies, see note 4(t).\n\n \n\nF-74\n\n[Table of Contents](#toc)\n\n \n\nNatuzzi S.p.A. and Subsidiaries\n\nNotes to consolidated financial statements\n\n(Expressed in thousands of euros except as otherwise indicated)\n\n \n\nThe transaction price allocated to the remaining performance obligations (partially unsatisfied) as at December 31, 2025 and 2024 is as follows:\n\n \n\n \n\n \n\n31/12/25\n\n \n\n \n\n31/12/24\n\n \n\nSale of the license for Natuzzi trademarks\n\n \n\n \n\n \n\n \n\n \n\n \n\nWithin a year\n\n \n\n \n\n383\n\n \n\n \n\n \n\n383\n\n \n\nMore than a year\n\n \n\n \n\n4,428\n\n \n\n \n\n \n\n4,811\n\n \n\nTotal\n\n \n\n \n\n4,811\n\n \n\n \n\n \n\n5,194\n\n \n\nSale of Natuzzi Display System\n\n \n\n \n\n \n\n \n\n \n\n \n\nWithin a year\n\n \n\n \n\n884\n\n \n\n \n\n \n\n851\n\n \n\nMore than a year\n\n \n\n \n\n1,307\n\n \n\n \n\n \n\n1,311\n\n \n\nTotal\n\n \n\n \n\n2,191\n\n \n\n \n\n \n\n2,162\n\n \n\nSale of Service-Type Warranties\n\n \n\n \n\n \n\n \n\n \n\n \n\nWithin a year\n\n \n\n \n\n497\n\n \n\n \n\n \n\n179\n\n \n\nMore than a year\n\n \n\n \n\n1,121\n\n \n\n \n\n \n\n260\n\n \n\nTotal\n\n \n\n \n\n1,618\n\n \n\n \n\n \n\n439\n\n \n\n \n\n(v) Variable considerations\n\nIf the consideration in a contract includes a variable amount, the Group estimates the amount of consideration to which it will be entitled in exchange for transferring the goods to the customer. The variable consideration is estimated at contract inception and constrained until it is highly probable that a significant revenue reversal in the amount of cumulative revenue recognised will not occur when the associated uncertainty with the variable consideration is subsequently resolved. Some contracts for the sale of furniture provide customers with volume discounts, which give rise to variable consideration.\n\nIn particular, the Group provides retrospective volume discounts to certain customers once the quantity of products purchased during the period exceeds a threshold specified in the contract. Discounts are offset against amounts payable by the customer. Accumulated experience is used to estimate and provide for the discounts, using the expected value method. A refund liability is recognised for expected volume discounts payable to customers in relation to sales made until the end of the reporting period.\n\n(vi) Financing components\n\nFor information about financing components, reference should be made to note 4(t)(vii).\n\n(vii) Warranty obligations\n\nThe Group typically provides warranties for general repairs of defects that existed at the time of sale, as required by law.\n\nCustomers who purchase the Group’s upholstered furniture and home furnishings accessories may require a service-type warranty. As disclosed in note 4(t)(v), the Group allocates a portion of the consideration received to the service-type warranty, based on the relative stand-alone selling price. The amount allocated to the service-type warranty is deferred, and is recognised as revenue over the time based on the validity period of such warranty.\n\nThese warranties are accounted for under IAS 37. Refer to the accounting policy on warranty provision in note 4(r).\n\n(viii) Cost to obtain a contract\n\nThe Group pays sales commission to its agents for each contract that they obtain. For information about the accounting policy elected by the Group on sales commissions, reference should be made to note 4(x).\n\n(ix) Fulfillment costs\n\nThe Group accounts for shipping and handling costs related to activities before the customer obtains control of the finished goods as fulfillment costs under the caption “Other assets” of the consolidated statement of financial position. For\n\n \n\nF-75\n\n[Table of Contents](#toc)\n\n \n\nNatuzzi S.p.A. and Subsidiaries\n\nNotes to consolidated financial statements\n\n(Expressed in thousands of euros except as otherwise indicated)\n\n \n\ninformation about the accounting policy applied by the Group for shipping and handling costs, reference should be made to note 4(v).\n\n35. Cost of sales\n\nCost of sales is analysed as follows:\n\n \n\n \n\n \n\n2025\n\n \n\n \n\n2024\n\n \n\n \n\n2023\n\n \n\nOpening inventories\n\n \n\n \n\n62,815\n\n \n\n \n\n \n\n62,087\n\n \n\n \n\n \n\n70,120\n\n \n\nPurchases of raw materials\n\n \n\n \n\n83,750\n\n \n\n \n\n \n\n92,851\n\n \n\n \n\n \n\n92,457\n\n \n\nPurchases of finished products\n\n \n\n \n\n16,294\n\n \n\n \n\n \n\n21,393\n\n \n\n \n\n \n\n20,459\n\n \n\nLabour costs\n\n \n\n \n\n71,049\n\n \n\n \n\n \n\n69,827\n\n \n\n \n\n \n\n72,862\n\n \n\nDepreciation and amortisation\n\n \n\n \n\n6,620\n\n \n\n \n\n \n\n6,526\n\n \n\n \n\n \n\n8,639\n\n \n\nThird party manufacturers costs\n\n \n\n \n\n1,210\n\n \n\n \n\n \n\n1,176\n\n \n\n \n\n \n\n1,276\n\n \n\nOther manufacturing costs\n\n \n\n \n\n12,664\n\n \n\n \n\n \n\n13,956\n\n \n\n \n\n \n\n13,540\n\n \n\nImpairment of non-financial assets\n\n \n\n \n\n2,300\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\nGovernment grants related to PPE\n\n \n\n \n\n(2,361\n\n)\n\n \n\n \n\n(1,906\n\n)\n\n \n\n \n\n(1,503\n\n)\n\nClosing inventories\n\n \n\n \n\n(49,534\n\n)\n\n \n\n \n\n(62,815\n\n)\n\n \n\n \n\n(62,087\n\n)\n\nTotal\n\n \n\n \n\n204,807\n\n \n\n \n\n \n\n203,095\n\n \n\n \n\n \n\n215,763\n\n \n\n \n\nThe line item “Depreciation and amortisation” includes the depreciation expenses of property plant and equipment and right-of-use assets used in the production of finished goods.\n\n36. Other income and other expenses\n\nOther income is analysed as follows:\n\n \n\n \n\n \n\n2025\n\n \n\n \n\n2024\n\n \n\n \n\n2023\n\n \n\nGain on disposal of certain items of property\n\n \n\n \n\n4,522\n\n \n\n \n\n \n\n3\n\n \n\n \n\n \n\n4\n\n \n\nVAT relief\n\n \n\n \n\n951\n\n \n\n \n\n \n\n1,169\n\n \n\n \n\n \n\n1,475\n\n \n\nReimbursements\n\n \n\n \n\n698\n\n \n\n \n\n \n\n935\n\n \n\n \n\n \n\n2,875\n\n \n\nOther\n\n \n\n \n\n3,431\n\n \n\n \n\n \n\n2,694\n\n \n\n \n\n \n\n2,762\n\n \n\nTotal\n\n \n\n \n\n9,602\n\n \n\n \n\n \n\n4,801\n\n \n\n \n\n \n\n7,116\n\n \n\n \n\nThe item 'Gain on disposal of certain items of property' includes a capital gain of 2,773 arising from the sale of a land plot. See Note 7.\n\nDuring 2025, 2024 and 2023 the Brazilian subsidiary obtained a VAT relief of 951, 1,169 and 1,475, respectively, connected to local tax rules on VAT payments.\n\nDuring 2025, 2024 and 2023, the Group recorded different reimbursements of 698, 935 and 2,875, respectively, mainly related to refund of transportation expenses and other items.\n\nIn 2025, the item “Other” primarily includes rental income earned by a U.S. subsidiary of 597, proceeds from the sale of photovoltaic energy of 1,765, the capital gain on the disposal of the building located in High Point of 1,595 (see Note 7), and other minor income.\n\nOther expenses amounted to 497, 260 and 457 in 2025, 2024 and 2023, respectively, and mainly refer to minor costs incurred by the Group and not related to cost of sales, selling and administrative expenses.\n\n \n\n \n\nF-76\n\n[Table of Contents](#toc)\n\n \n\nNatuzzi S.p.A. and Subsidiaries\n\nNotes to consolidated financial statements\n\n(Expressed in thousands of euros except as otherwise indicated)\n\n \n\n37. Selling expenses\n\nSelling expenses are analysed as follows:\n\n \n\n \n\n \n\n2025\n\n \n\n \n\n2024\n\n \n\n \n\n2023\n\n \n\nShipping and handling costs\n\n \n\n \n\n23,596\n\n \n\n \n\n \n\n24,767\n\n \n\n \n\n \n\n26,325\n\n \n\nLabour costs\n\n \n\n \n\n24,587\n\n \n\n \n\n \n\n26,027\n\n \n\n \n\n \n\n25,971\n\n \n\nDepreciation and amortisation\n\n \n\n \n\n11,529\n\n \n\n \n\n \n\n12,450\n\n \n\n \n\n \n\n12,369\n\n \n\nCustoms duties\n\n \n\n \n\n5,593\n\n \n\n \n\n \n\n4,568\n\n \n\n \n\n \n\n5,473\n\n \n\nCommissions to sales representatives\n\n \n\n \n\n4,700\n\n \n\n \n\n \n\n5,327\n\n \n\n \n\n \n\n5,861\n\n \n\nAdvertising expenses\n\n \n\n \n\n5,957\n\n \n\n \n\n \n\n5,986\n\n \n\n \n\n \n\n5,936\n\n \n\nUtilities\n\n \n\n \n\n4,454\n\n \n\n \n\n \n\n4,271\n\n \n\n \n\n \n\n3,960\n\n \n\nFairs\n\n \n\n \n\n1,058\n\n \n\n \n\n \n\n638\n\n \n\n \n\n \n\n596\n\n \n\nOther insurance costs\n\n \n\n \n\n929\n\n \n\n \n\n \n\n1,047\n\n \n\n \n\n \n\n1,042\n\n \n\nImpairment of non-financial assets\n\n \n\n \n\n4,029\n\n \n\n \n\n \n\n441\n\n \n\n \n\n \n\n3\n\n \n\nLeases\n\n \n\n \n\n1,094\n\n \n\n \n\n \n\n1,271\n\n \n\n \n\n \n\n1,627\n\n \n\nPromotions\n\n \n\n \n\n606\n\n \n\n \n\n \n\n512\n\n \n\n \n\n \n\n632\n\n \n\nAdvisory services\n\n \n\n \n\n147\n\n \n\n \n\n \n\n329\n\n \n\n \n\n \n\n528\n\n \n\nInsurance costs on trade receivables\n\n \n\n \n\n202\n\n \n\n \n\n \n\n175\n\n \n\n \n\n \n\n312\n\n \n\nSamples\n\n \n\n \n\n585\n\n \n\n \n\n \n\n494\n\n \n\n \n\n \n\n505\n\n \n\nOther\n\n \n\n \n\n1,445\n\n \n\n \n\n \n\n1,926\n\n \n\n \n\n \n\n233\n\n \n\nTotal\n\n \n\n \n\n90,511\n\n \n\n \n\n \n\n90,229\n\n \n\n \n\n \n\n91,373\n\n \n\n \n\n38. Administrative expenses\n\nAdministrative expenses are analysed as follows:\n\n \n\n \n\n \n\n2025\n\n \n\n \n\n2024\n\n \n\n \n\n2023\n\n \n\nLabour costs\n\n \n\n \n\n21,188\n\n \n\n \n\n \n\n20,663\n\n \n\n \n\n \n\n20,416\n\n \n\nProfessional services costs\n\n \n\n \n\n3,466\n\n \n\n \n\n \n\n3,340\n\n \n\n \n\n \n\n2,979\n\n \n\nIndirect taxes\n\n \n\n \n\n2,452\n\n \n\n \n\n \n\n1,919\n\n \n\n \n\n \n\n1,991\n\n \n\nDirectors and audit committee fees\n\n \n\n \n\n1,635\n\n \n\n \n\n \n\n1,791\n\n \n\n \n\n \n\n1,886\n\n \n\nOffice and software maintenance\n\n \n\n \n\n2,221\n\n \n\n \n\n \n\n2,448\n\n \n\n \n\n \n\n2,549\n\n \n\nDepreciation and amortisation\n\n \n\n \n\n2,846\n\n \n\n \n\n \n\n2,212\n\n \n\n \n\n \n\n1,364\n\n \n\nTravel expenses\n\n \n\n \n\n1,957\n\n \n\n \n\n \n\n2,279\n\n \n\n \n\n \n\n2,677\n\n \n\nMail and Phone\n\n \n\n \n\n490\n\n \n\n \n\n \n\n509\n\n \n\n \n\n \n\n552\n\n \n\nPrinting and Stationery\n\n \n\n \n\n361\n\n \n\n \n\n \n\n295\n\n \n\n \n\n \n\n519\n\n \n\nCar costs\n\n \n\n \n\n312\n\n \n\n \n\n \n\n443\n\n \n\n \n\n \n\n661\n\n \n\nImpairment of non-financial assets\n\n \n\n \n\n1,900\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\nGovernment grants related to PPE\n\n \n\n \n\n(66\n\n)\n\n \n\n \n\n(1,333\n\n)\n\n \n\n \n\n(145\n\n)\n\nOther\n\n \n\n \n\n2,011\n\n \n\n \n\n \n\n1,428\n\n \n\n \n\n \n\n2,158\n\n \n\nTotal\n\n \n\n \n\n40,773\n\n \n\n \n\n \n\n35,994\n\n \n\n \n\n \n\n37,607\n\n \n\n \n\n \n\nF-77\n\n[Table of Contents](#toc)\n\n \n\nNatuzzi S.p.A. and Subsidiaries\n\nNotes to consolidated financial statements\n\n(Expressed in thousands of euros except as otherwise indicated)\n\n \n\n39. Finance income and costs\n\nFinance income is analysed as follows:\n\n \n\n \n\n \n\n2025\n\n \n\n \n\n2024\n\n \n\n \n\n2023\n\n \n\nInterest income from financial institutions\n\n \n\n \n\n321\n\n \n\n \n\n \n\n474\n\n \n\n \n\n \n\n711\n\n \n\nOther interest income\n\n \n\n \n\n233\n\n \n\n \n\n \n\n355\n\n \n\n \n\n \n\n230\n\n \n\nTotal\n\n \n\n \n\n554\n\n \n\n \n\n \n\n829\n\n \n\n \n\n \n\n941\n\n \n\n \n\nFinance costs are analysed as follows:\n\n \n\n \n\n \n\n2025\n\n \n\n \n\n2024\n\n \n\n \n\n2023\n\n \n\nInterest expenses due to financial institutions\n\n \n\n \n\n2,561\n\n \n\n \n\n \n\n2,864\n\n \n\n \n\n \n\n3,346\n\n \n\nInterest expenses related to lease liabilities\n\n \n\n \n\n3,286\n\n \n\n \n\n \n\n3,810\n\n \n\n \n\n \n\n3,090\n\n \n\nOther interest expenses\n\n \n\n \n\n855\n\n \n\n \n\n \n\n1,168\n\n \n\n \n\n \n\n675\n\n \n\nFinancial institution commissions\n\n \n\n \n\n1,989\n\n \n\n \n\n \n\n2,359\n\n \n\n \n\n \n\n2,156\n\n \n\nTotal\n\n \n\n \n\n8,691\n\n \n\n \n\n \n\n10,201\n\n \n\n \n\n \n\n9,267\n\n \n\n \n\n40. Net exchange rate gains/(losses)\n\nNet exchange rate gains/(losses) are analysed as follows:\n\n \n\n \n\n \n\n2025\n\n \n\n \n\n2024\n\n \n\n \n\n2023\n\n \n\nNet realised gains/(losses) on derivative instruments\n\n \n\n \n\n18\n\n \n\n \n\n \n\n(196\n\n)\n\n \n\n \n\n1,251\n\n \n\nNet realised gains/(losses) on trade receivables and payables\n\n \n\n \n\n(1,004\n\n)\n\n \n\n \n\n424\n\n \n\n \n\n \n\n(422\n\n)\n\nTotal net realised gains/(losses) (a)\n\n \n\n \n\n(986\n\n)\n\n \n\n \n\n228\n\n \n\n \n\n \n\n829\n\n \n\nNet unrealised gains/(losses) on derivative instruments\n\n \n\n \n\n299\n\n \n\n \n\n \n\n(438\n\n)\n\n \n\n \n\n(746\n\n)\n\nNet unrealised gains/(losses) on trade receivables and payables\n\n \n\n \n\n(218\n\n)\n\n \n\n \n\n1,006\n\n \n\n \n\n \n\n142\n\n \n\nNet unrealised gains/(losses) on non-monetary assets\n\n \n\n \n\n(1,328\n\n)\n\n \n\n \n\n(242\n\n)\n\n \n\n \n\n(369\n\n)\n\nTotal net unrealised gains/(losses) (b)\n\n \n\n \n\n(1,247\n\n)\n\n \n\n \n\n326\n\n \n\n \n\n \n\n(973\n\n)\n\nTotal realised and unrealised exchange rate gains/(losses) (a+b)\n\n \n\n \n\n(2,233\n\n)\n\n \n\n \n\n554\n\n \n\n \n\n \n\n(144\n\n)\n\n \n\n“Net unrealised gains/(losses) on non-monetary assets” refers to the remeasurement of non-monetary assets of the subsidiary Italsofa Romania, since such entity has the same functional currency as the Parent, namely the Euro (see note 4(c)(ii)).\n\n41. Income tax expense\n\nItalian companies are subject to two enacted income taxes at the following rates:\n\n \n\n \n\n \n\n2025\n\n \n\n \n\n2024\n\n \n\n \n\n2023\n\n \n\nIRES (state tax)\n\n \n\n \n\n24.00\n\n%\n\n \n\n \n\n24.00\n\n%\n\n \n\n \n\n24.00\n\n%\n\nIRAP (regional tax)\n\n \n\n \n\n4.82\n\n%\n\n \n\n \n\n4.82\n\n%\n\n \n\n \n\n4.82\n\n%\n\n \n\nIRES is a state tax and is calculated on the taxable income determined on the income before taxes modified to reflect all temporary and permanent differences regulated by the tax law.\n\nIRAP is a regional tax and each Italian region has the power to increase the current rate of 3.90% by a maximum of 0.92%. In general, the taxable base of IRAP is a form of gross profit determined as the difference between gross revenues (excluding interest and dividend income) and direct production costs (excluding interest expense and other financial costs). The enacted IRAP tax rate due in the Puglia region of Italy for 2025, 2024 and 2023 is 4.82% (3.90% plus 0.92%).\n\n \n\nF-78\n\n[Table of Contents](#toc)\n\n \n\nNatuzzi S.p.A. and Subsidiaries\n\nNotes to consolidated financial statements\n\n(Expressed in thousands of euros except as otherwise indicated)\n\n \n\nTotal income taxes for the years ended December 31, 2025, 2024 and 2023 are allocated as follows:\n\n \n\n \n\n2025\n\n \n\n \n\n2024\n\n \n\n \n\n2023\n\n \n\nCurrent:\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n- Domestic\n\n \n\n \n\n(332\n\n)\n\n \n\n \n\n(6\n\n)\n\n \n\n \n\n(1,065\n\n)\n\n- Foreign\n\n \n\n \n\n(2,016\n\n)\n\n \n\n \n\n(865\n\n)\n\n \n\n \n\n(659\n\n)\n\nTotal (a)\n\n \n\n \n\n(2,348\n\n)\n\n \n\n \n\n(871\n\n)\n\n \n\n \n\n(1,724\n\n)\n\nDeferred:\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n- Domestic\n\n \n\n \n\n514\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n- Foreign\n\n \n\n \n\n798\n\n \n\n \n\n \n\n187\n\n \n\n \n\n \n\n634\n\n \n\nTotal (b)\n\n \n\n \n\n1,312\n\n \n\n \n\n \n\n187\n\n \n\n \n\n \n\n634\n\n \n\nTotal (a + b)\n\n \n\n \n\n(1,036\n\n)\n\n \n\n \n\n(684\n\n)\n\n \n\n \n\n(1,090\n\n)\n\n \n\nConsolidated profit/(loss) before income taxes and Non-controlling interests of the consolidated statement of profit or loss for the years ended December 31, 2025, 2024 and 2023, is analysed as follows:\n\n \n\n \n\n \n\n2025\n\n \n\n \n\n2024\n\n \n\n \n\n2023\n\n \n\nDomestic\n\n \n\n \n\n(29,738\n\n)\n\n \n\n \n\n(6,199\n\n)\n\n \n\n \n\n(12,078\n\n)\n\nForeign\n\n \n\n \n\n182\n\n \n\n \n\n \n\n(8,499\n\n)\n\n \n\n \n\n(2,994\n\n)\n\nTotal\n\n \n\n \n\n(29,556\n\n)\n\n \n\n \n\n(14,698\n\n)\n\n \n\n \n\n(15,072\n\n)\n\n \n\nThe effective income taxes differ from the expected income tax expense (computed by applying the IRES state tax to profit before income taxes and non-controlling interests) as follows:\n\n \n\n \n\n \n\n2025\n\n \n\n \n\n2024\n\n \n\n \n\n2023\n\n \n\nExpected tax benefit (expense) at statutory tax rates\n\n \n\n \n\n7,093\n\n \n\n \n\n \n\n3,527\n\n \n\n \n\n \n\n3,617\n\n \n\nEffect of:\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n- Tax exempt income\n\n \n\n \n\n1,799\n\n \n\n \n\n \n\n1,657\n\n \n\n \n\n \n\n4,530\n\n \n\n- Aggregate effect of different tax rates in foreign jurisdictions\n\n \n\n \n\n568\n\n \n\n \n\n \n\n(254\n\n)\n\n \n\n \n\n(481\n\n)\n\n- Italian regional tax\n\n \n\n \n\n—\n\n \n\n \n\n \n\n(11\n\n)\n\n \n\n \n\n(8\n\n)\n\n- Non-deductible expenses\n\n \n\n \n\n(4,580\n\n)\n\n \n\n \n\n(3,140\n\n)\n\n \n\n \n\n(5,675\n\n)\n\n- Tax effect on unremitted earnings\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n- Chinese withholding tax on income not recoverable\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n(1,100\n\n)\n\n- Effect of net change in deferred tax assets unrecognised\n\n \n\n \n\n(5,916\n\n)\n\n \n\n \n\n(2,463\n\n)\n\n \n\n \n\n(1,973\n\n)\n\nActual tax charge\n\n \n\n \n\n(1,036\n\n)\n\n \n\n \n\n(684\n\n)\n\n \n\n \n\n(1,090\n\n)\n\n \n\nIn 2025, the Group reported a loss before tax of 29,556 and income tax expense of 1,036, compared to a loss before tax of 14,698 and income tax expense of 684 in 2024, and a loss before tax of 15,072 and income tax expense of 1,090 in 2023.\n\nThe tax effects of temporary differences that give rise to deferred tax assets and deferred tax liabilities as at December 31, 2025 and 2024 are presented below:\n\n \n\nDeferred tax assets\n\n \n\n31/12/25\n\n \n\n \n\n31/12/24\n\n \n\nTax loss carry forward\n\n \n\n \n\n752\n\n \n\n \n\n \n\n753\n\n \n\nInventories obsolescence\n\n \n\n \n\n1,201\n\n \n\n \n\n \n\n886\n\n \n\nProvision for contingent liabilities\n\n \n\n \n\n28\n\n \n\n \n\n \n\n14\n\n \n\nTotal deferred tax assets\n\n \n\n \n\n1,981\n\n \n\n \n\n \n\n1,653\n\n \n\n \n\n \n\nF-79\n\n[Table of Contents](#toc)\n\n \n\nNatuzzi S.p.A. and Subsidiaries\n\nNotes to consolidated financial statements\n\n(Expressed in thousands of euros except as otherwise indicated)\n\n \n\n \n\nDeferred tax liabilities\n\n \n\n31/12/25\n\n \n\n \n\n31/12/24\n\n \n\nWithholding tax on unremitted earnings of subsidiaries\n\n \n\n \n\n—\n\n \n\n \n\n \n\n(516\n\n)\n\nWithholding tax on liquidation of subsidiaries\n\n \n\n \n\n—\n\n \n\n \n\n \n\n(480\n\n)\n\nUnrealised net gains on foreign exchange rate\n\n \n\n \n\n(5\n\n)\n\n \n\n \n\n(2\n\n)\n\nTotal deferred tax liabilities\n\n \n\n \n\n(5\n\n)\n\n \n\n \n\n(998\n\n)\n\n \n\nMovements in deferred tax balances occurred during 2023, 2024 and 2025 are analysed as follows:\n\n \n\n \n\n \n\nDeferred tax assets\n\n \n\n \n\nDeferred tax liabilities\n\n \n\n \n\nTotal\n\n \n\nBalance as at December 31, 2022\n\n \n\n \n\n1,965\n\n \n\n \n\n \n\n(1,929\n\n)\n\n \n\n \n\n36\n\n \n\nRecognised in profit or loss\n\n \n\n \n\n10\n\n \n\n \n\n \n\n623\n\n \n\n \n\n \n\n633\n\n \n\nRecognised in OCI\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\nRecognised directly in equity\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\nBalance as at December 31, 2023\n\n \n\n \n\n1,975\n\n \n\n \n\n \n\n(1,306\n\n)\n\n \n\n \n\n669\n\n \n\nRecognised in profit or loss\n\n \n\n \n\n(121\n\n)\n\n \n\n \n\n308\n\n \n\n \n\n \n\n187\n\n \n\nRecognised in OCI\n\n \n\n \n\n(201\n\n)\n\n \n\n \n\n—\n\n \n\n \n\n \n\n(201\n\n)\n\nRecognised directly in equity\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\nBalance as at December 31, 2024\n\n \n\n \n\n1,653\n\n \n\n \n\n \n\n(998\n\n)\n\n \n\n \n\n655\n\n \n\nRecognised in profit or loss\n\n \n\n \n\n308\n\n \n\n \n\n \n\n993\n\n \n\n \n\n \n\n1,301\n\n \n\nRecognised in OCI\n\n \n\n \n\n20\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n20\n\n \n\nRecognised directly in equity\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\nBalance as at December 31, 2025\n\n \n\n \n\n1,981\n\n \n\n \n\n \n\n(5\n\n)\n\n \n\n \n\n1,976\n\n \n\n \n\nThe following tables show the reconciliation of deferred tax assets and deferred tax liabilities with the balances included in the consolidated statements of financial position as at December 31, 2025 and 2024.\n\n \n\n \n\n31/12/25\n\n \n\n \n\n31/12/24\n\n \n\nDeferred tax assets\n\n \n\n \n\n1,981\n\n \n\n \n\n \n\n1,653\n\n \n\nDeferred tax liabilities compensated\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\nNet deferred tax assets\n\n \n\n \n\n1,981\n\n \n\n \n\n \n\n1,653\n\n \n\nDeferred tax liabilities\n\n \n\n \n\n(5\n\n)\n\n \n\n \n\n(998\n\n)\n\n \n\nAs of December 31, 2025, deferred tax assets mainly relate to carried-forward tax losses, inventory write-down for obsolescence, and provision for risks accounted for by some subsidiaries.\n\nThe application of the amendment to IAS 12 Deferred tax related to Assets and Liabilities Arising from a Single Transaction determined net unrecognized deferred tax assets of 617 as of December 31, 2025 and net unrecognized deferred tax assets of 2,297 as of December 31, 2024, related to leases, included in the “Other temporary differences” of the “Unrecognised deferred tax assets” table.\n\nIn assessing the reliability of deferred tax assets, management considers whether it is probable that some portion or all of the deferred tax assets will not be realised. The ultimate realisation of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible and the tax loss carry-forwards are utilised.\n\nGiven the cumulative loss position of the domestic companies and of some of foreign subsidiaries as at December 31, 2025 and 2024, management has considered the scheduled reversal of deferred tax liabilities and tax planning strategies, in making their assessment. After an analysis as at December 31, 2025 and 2024, management has not identified any relevant tax planning strategies prudent and feasible available to recognise the deferred tax assets. Therefore, as at December 31,\n\n \n\nF-80\n\n[Table of Contents](#toc)\n\n \n\nNatuzzi S.p.A. and Subsidiaries\n\nNotes to consolidated financial statements\n\n(Expressed in thousands of euros except as otherwise indicated)\n\n \n\n2025 and 2024 the realisation of the deferred tax assets is primarily based on the scheduled reversal of deferred tax liabilities, except in certain historically profitable jurisdictions.\n\nBased upon this analysis, management believes that the Natuzzi Group will realise the deferred tax assets of 1,981 as at December 31, 2025 (1,653 as at December 31, 2024).\n\nAs at December 31, 2025 and 2024 deferred tax assets have not been recognised in respect of the following items, because it is not probable that future taxable profit will be available against which the Group can use the benefits therefrom.\n\n \n\nUnrecognised deferred tax assets\n\n \n\n31/12/25\n\n \n\n \n\n31/12/24\n\n \n\n \n\n \n\nGross Amount\n\n \n\nTax effect\n\n \n\n \n\nGross Amount\n\n \n\nTax effect\n\n \n\nTax loss carry-forwards\n\n \n\n \n\n399,843\n\n \n\n \n\n97,381\n\n \n\n \n\n \n\n378,307\n\n \n\n \n\n93,266\n\n \n\nProvision for contingent liabilities\n\n \n\n \n\n2,442\n\n \n\n \n\n687\n\n \n\n \n\n \n\n4,892\n\n \n\n \n\n1,396\n\n \n\nInventory obsolescence\n\n \n\n \n\n11,537\n\n \n\n \n\n3,326\n\n \n\n \n\n \n\n10,989\n\n \n\n \n\n2,272\n\n \n\nAllowance for doubtful accounts\n\n \n\n \n\n2,996\n\n \n\n \n\n719\n\n \n\n \n\n \n\n3,218\n\n \n\n \n\n772\n\n \n\nIntercompany profit on inventories\n\n \n\n \n\n6,867\n\n \n\n \n\n1,979\n\n \n\n \n\n \n\n7,644\n\n \n\n \n\n2,203\n\n \n\nProvision for warranties\n\n \n\n \n\n1,751\n\n \n\n \n\n505\n\n \n\n \n\n \n\n1,929\n\n \n\n \n\n556\n\n \n\nImpairment of non-financial assets\n\n \n\n \n\n7,443\n\n \n\n \n\n638\n\n \n\n \n\n \n\n3,051\n\n \n\n \n\n587\n\n \n\nOther temporary differences\n\n \n\n \n\n2,506\n\n \n\n \n\n3,975\n\n \n\n \n\n \n\n17,799\n\n \n\n \n\n3,921\n\n \n\nTotal unrecognised deferred tax assets\n\n \n\n \n\n435,385\n\n \n\n \n\n109,210\n\n \n\n \n\n \n\n427,829\n\n \n\n \n\n104,973\n\n \n\n \n\nThe Group does not expect to distribute dividends from its subsidiaries, primarily due to the losses incurred by the majority of such entities. Accordingly, no provision has been recognized for taxes attributable to the Group’s share of these undistributed profits.\n\nAs at December 31, 2025 and 2024 the tax losses carried-forward of the Group expire as follows:\n\n \n\n \n\n \n\n2025\n\n \n\n \n\nExpire date\n\n \n\n \n\n2024\n\n \n\n \n\nExpire date\n\n \n\nExpire in five years\n\n \n\n \n\n11,827\n\n \n\n \n\n2026-2030\n\n \n\n \n\n \n\n7,720\n\n \n\n \n\n2025-2029\n\n \n\nExpire after five years\n\n \n\n \n\n181\n\n \n\n \n\n> 2030\n\n \n\n \n\n \n\n127\n\n \n\n \n\n> 2029\n\n \n\nNever expire\n\n \n\n \n\n389,665\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n372,675\n\n \n\n \n\n \n\n—\n\n \n\nTotal\n\n \n\n \n\n401,673\n\n \n\n \n\n \n\n \n\n \n\n \n\n380,522\n\n \n\n \n\n \n\n \n\n \n\nIn Italy all tax losses carried-forward no longer expire, with the only limitation being that such tax losses carried-forward can be utilised to off-set a maximum of 80% of the taxable income in each following year.\n\nThe income tax payable recorded as at December 31, 2025 and 2024 is 871 and 830, respectively. Whereas, the current income tax receivable recorded as at December 31, 2025 and 2024 is 1,758 and 1,642, respectively.\n\nThe tax audit initiated by the Italian Revenue Agency (Agenzia delle Entrate) in October 2020 was completed in 2025, with the examination of the documentation relating to the 2019 fiscal year. In particular, the tax auditors’ focus was on the uncertain tax treatment concerning the interpretation of how tax regulations apply to the Group’s transfer pricing arrangements. The outcome of the audit did not identify any requirement to recognize tax liabilities, also in light of the tax losses incurred in the 2019 fiscal year.\n\nThe Group believes that its accruals for tax liabilities are adequate for all open tax years based on its assessment of many factors, including interpretations of tax law and prior experience.\n\nThe Company operates in many foreign jurisdictions. With no substantial exceptions, the Company and its main subsidiaries located in Romania and China are no longer subject to tax audits for years preceding 2020.\n\n \n\n \n\nF-81\n\n[Table of Contents](#toc)\n\n \n\nNatuzzi S.p.A. and Subsidiaries\n\nNotes to consolidated financial statements\n\n(Expressed in thousands of euros except as otherwise indicated)\n\n \n\n42. Earnings/(loss) per share\n\nBasic and diluted earnings/(loss) per share is analysed as follows:\n\n \n\n \n\n \n\n2025\n\n \n\n \n\n2024\n\n \n\n \n\n2023\n\n \n\nWeighted average number of ordinary shares\n\n \n\n \n\n55,073,045\n\n \n\n \n\n \n\n55,073,045\n\n \n\n \n\n \n\n55,073,045\n\n \n\nBasic earnings/(losses) per share\n\n \n\n \n\n(0.54\n\n)\n\n \n\n \n\n(0.28\n\n)\n\n \n\n \n\n(0.29\n\n)\n\nDiluted earnings/(losses) per share\n\n \n\n \n\n(0.54\n\n)\n\n \n\n \n\n(0.28\n\n)\n\n \n\n \n\n(0.29\n\n)\n\n \n\nBasic earnings/(loss) per share is calculated by dividing earnings/(loss) for the year, attributable to ordinary equity holders of the Parent Company, by the weighted average number of ordinary shares outstanding.\n\nDiluted earnings/(loss) per share as at December 31, 2025, 2024 and 2023 equals the basic earnings/(loss) per share.\n\nOn February 8, 2019 the Company announced a change in the ratio of its American Depositary Receipts (ADRs) to ordinary shares, from 1 ADR representing 1 share to 1 ADR representing 5 shares. The effective date of the ratio change was February 21, 2019. No new shares have been issued in connection with the ratio change.\n\n43. Expenses by nature\n\nThe following tables show the expenses by nature for the years ended December 31, 2025, 2024 and 2023 as required by IAS 1.104.\n\n \n\n \n\n \n\n2025\n\n \n\n \n\n2024\n\n \n\n \n\n2023\n\n \n\nChanges in inventories\n\n \n\n \n\n13,281\n\n \n\n \n\n \n\n(728\n\n)\n\n \n\n \n\n8,033\n\n \n\nPurchases of raw materials\n\n \n\n \n\n83,750\n\n \n\n \n\n \n\n92,851\n\n \n\n \n\n \n\n92,457\n\n \n\nPurchases of finished products\n\n \n\n \n\n16,294\n\n \n\n \n\n \n\n21,393\n\n \n\n \n\n \n\n20,459\n\n \n\nServices costs\n\n \n\n \n\n67,553\n\n \n\n \n\n \n\n69,296\n\n \n\n \n\n \n\n75,457\n\n \n\nEmployee benefits expenses\n\n \n\n \n\n116,824\n\n \n\n \n\n \n\n116,517\n\n \n\n \n\n \n\n119,249\n\n \n\nDepreciation and amortisation, net of government grants\n\n \n\n \n\n19,587\n\n \n\n \n\n \n\n19,733\n\n \n\n \n\n \n\n20,724\n\n \n\nOther\n\n \n\n \n\n18,802\n\n \n\n \n\n \n\n10,256\n\n \n\n \n\n \n\n8,364\n\n \n\nTotal cost of sales, selling and administrative expenses\n\n \n\n \n\n336,091\n\n \n\n \n\n \n\n329,318\n\n \n\n \n\n \n\n344,743\n\n \n\n \n\n \n\nF-82\n\n[Table of Contents](#toc)\n\n \n\nNatuzzi S.p.A. and Subsidiaries\n\nNotes to consolidated financial statements\n\n(Expressed in thousands of euros except as otherwise indicated)\n\n \n\nThe following tables show in which caption is included the depreciation and amortisation, net of government grants.\n\n \n\n \n\n \n\n2025\n\n \n\n \n\n2024\n\n \n\n \n\n2023\n\n \n\nIncluded in cost of sales\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nDepreciation of property, plant and equipment\n\n \n\n \n\n6,309\n\n \n\n \n\n \n\n6,272\n\n \n\n \n\n \n\n6,535\n\n \n\nDepreciation of right-of-use assets\n\n \n\n \n\n310\n\n \n\n \n\n \n\n253\n\n \n\n \n\n \n\n2,102\n\n \n\nAmortisation of intangible assets\n\n \n\n \n\n1\n\n \n\n \n\n \n\n1\n\n \n\n \n\n \n\n2\n\n \n\nGovernment grants\n\n \n\n \n\n(1,342\n\n)\n\n \n\n \n\n(1,388\n\n)\n\n \n\n \n\n(1,503\n\n)\n\nTotal (a)\n\n \n\n \n\n5,278\n\n \n\n \n\n \n\n5,138\n\n \n\n \n\n \n\n7,136\n\n \n\nIncluded in selling expenses\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nDepreciation of property, plant and equipment\n\n \n\n \n\n2,177\n\n \n\n \n\n \n\n2,329\n\n \n\n \n\n \n\n2,450\n\n \n\nDepreciation of right-of-use assets\n\n \n\n \n\n9,352\n\n \n\n \n\n \n\n10,121\n\n \n\n \n\n \n\n9,919\n\n \n\nAmortisation of intangible assets\n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\nTotal (b)\n\n \n\n \n\n11,529\n\n \n\n \n\n \n\n12,450\n\n \n\n \n\n \n\n12,369\n\n \n\nIncluded in administrative expenses\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nDepreciation of property, plant and equipment\n\n \n\n \n\n398\n\n \n\n \n\n \n\n373\n\n \n\n \n\n \n\n325\n\n \n\nDepreciation of right-of-use assets\n\n \n\n \n\n297\n\n \n\n \n\n \n\n271\n\n \n\n \n\n \n\n—\n\n \n\nAmortisation of intangible assets\n\n \n\n \n\n2,151\n\n \n\n \n\n \n\n1,568\n\n \n\n \n\n \n\n1,039\n\n \n\nGovernment grants\n\n \n\n \n\n(66\n\n)\n\n \n\n \n\n(67\n\n)\n\n \n\n \n\n(145\n\n)\n\nTotal (c)\n\n \n\n \n\n2,780\n\n \n\n \n\n \n\n2,145\n\n \n\n \n\n \n\n1,219\n\n \n\nTotal depreciation and amortisation (a+b+c)\n\n \n\n \n\n19,587\n\n \n\n \n\n \n\n19,733\n\n \n\n \n\n \n\n20,724\n\n \n\n \n\nThe following tables show in which caption is included the employee benefits expenses.\n\n \n\n \n\n \n\n2025\n\n \n\n \n\n2024\n\n \n\n \n\n2023\n\n \n\nIncluded in cost of sales\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nSalaries and wages\n\n \n\n \n\n50,594\n\n \n\n \n\n \n\n47,739\n\n \n\n \n\n \n\n49,968\n\n \n\nSocial security contributions\n\n \n\n \n\n15,271\n\n \n\n \n\n \n\n16,113\n\n \n\n \n\n \n\n14,825\n\n \n\nEmployees’ leaving entitlement\n\n \n\n \n\n3,405\n\n \n\n \n\n \n\n3,353\n\n \n\n \n\n \n\n4,611\n\n \n\nOther costs\n\n \n\n \n\n1,779\n\n \n\n \n\n \n\n2,622\n\n \n\n \n\n \n\n3,458\n\n \n\nTotal (a)\n\n \n\n \n\n71,049\n\n \n\n \n\n \n\n69,827\n\n \n\n \n\n \n\n72,862\n\n \n\nIncluded in selling expenses\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nSalaries and wages\n\n \n\n \n\n19,474\n\n \n\n \n\n \n\n20,558\n\n \n\n \n\n \n\n20,641\n\n \n\nSocial security contributions\n\n \n\n \n\n3,680\n\n \n\n \n\n \n\n3,756\n\n \n\n \n\n \n\n3,716\n\n \n\nEmployees’ leaving entitlement\n\n \n\n \n\n473\n\n \n\n \n\n \n\n494\n\n \n\n \n\n \n\n604\n\n \n\nOther costs\n\n \n\n \n\n960\n\n \n\n \n\n \n\n1,219\n\n \n\n \n\n \n\n1,010\n\n \n\nTotal (b)\n\n \n\n \n\n24,587\n\n \n\n \n\n \n\n26,027\n\n \n\n \n\n \n\n25,971\n\n \n\nIncluded in administrative expenses\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nSalaries and wages\n\n \n\n \n\n15,327\n\n \n\n \n\n \n\n14,871\n\n \n\n \n\n \n\n15,376\n\n \n\nSocial security contributions\n\n \n\n \n\n3,689\n\n \n\n \n\n \n\n3,404\n\n \n\n \n\n \n\n3,007\n\n \n\nEmployees’ leaving entitlement\n\n \n\n \n\n707\n\n \n\n \n\n \n\n637\n\n \n\n \n\n \n\n643\n\n \n\nOther costs\n\n \n\n \n\n1,465\n\n \n\n \n\n \n\n1,751\n\n \n\n \n\n \n\n1,390\n\n \n\nTotal (c)\n\n \n\n \n\n21,188\n\n \n\n \n\n \n\n20,663\n\n \n\n \n\n \n\n20,416\n\n \n\nTotal employee benefits expenses (a+b+c)\n\n \n\n \n\n116,824\n\n \n\n \n\n \n\n116,517\n\n \n\n \n\n \n\n119,249\n\n \n\n \n\n \n\n \n\nF-83\n\n[Table of Contents](#toc)\n\n \n\nNatuzzi S.p.A. and Subsidiaries\n\nNotes to consolidated financial statements\n\n(Expressed in thousands of euros except as otherwise indicated)\n\n \n\n44. Commitments and contingent liabilities\n\nAs at December 31, 2025, the Group is not committed to investing in significant property, plant and equipment, intangibles assets and other capital expenditure.\n\nCertain financial institutions have provided guarantees as at December 31, 2025 to secure payments to third parties amounting to 8,805, (11,767 as at December 31, 2024). These guarantees are unsecured and have various maturities extending through May 2029.\n\nThe most significant guarantee relates to the early retirement agreement ('expansion contract’), amounting to 4,459, with maturity in May 2029 (see Note 23).\n\nThe Group is involved in a number of claims (including tax claims) and legal actions arising in the ordinary course of business. In the opinion of management, the ultimate disposition of these matters, after the provisions accrued, will not have a material adverse effect on the Group’s consolidated financial position or results of operations (see note 26).\n\n45. Related parties\n\nRelated parties of the Group include mainly associates and joint ventures of the Group and the Group’s key management personnel.\n\nThe following tables provide the total amount of transactions that have been entered into with related parties for the relevant financial year.\n\n(i) Compensation of key management personnel of the Group\n\nThe compensation of key management personnel of the Group is analysed as follows:\n\n \n\n \n\n \n\n2025\n\n \n\n \n\n2024\n\n \n\n \n\n2023\n\n \n\nDirectors’ fee\n\n \n\n \n\n428\n\n \n\n \n\n \n\n642\n\n \n\n \n\n \n\n849\n\n \n\nShort-term employee benefits\n\n \n\n \n\n3,251\n\n \n\n \n\n \n\n3,343\n\n \n\n \n\n \n\n2,772\n\n \n\nSocial security contributions and defined contribution plans\n\n \n\n \n\n911\n\n \n\n \n\n \n\n913\n\n \n\n \n\n \n\n777\n\n \n\nEmployee benefit obligations\n\n \n\n \n\n183\n\n \n\n \n\n \n\n254\n\n \n\n \n\n \n\n188\n\n \n\nExpenses for stock options\n\n \n\n \n\n—\n\n \n\n \n\n \n\n367\n\n \n\n \n\n \n\n587\n\n \n\nTotal\n\n \n\n \n\n4,773\n\n \n\n \n\n \n\n5,519\n\n \n\n \n\n \n\n5,173\n\n \n\n \n\nThe amounts disclosed in the tables are the amounts recognised as an expense during the reporting period related to key management personnel. No loans and/or guarantees have been provided for or agreed to with key management personnel.\n\n(ii) Transactions with directors of the Group\n\nThe aggregate value of transactions and outstanding balances related to directors were as follows.\n\n \n\n \n\n \n\n2025\n\n \n\n \n\n2024\n\n \n\n \n\n2023\n\n \n\n \n\n \n\nCost\n\n \n\n \n\nAmounts\ndue\n\n \n\n \n\nCost\n\n \n\n \n\nAmounts\ndue\n\n \n\n \n\nCost\n\n \n\n \n\nAmounts\ndue\n\n \n\nFinished products purchased from TTF\n\n \n\n \n\n3,509\n\n \n\n \n\n \n\n960\n\n \n\n \n\n \n\n3,823\n\n \n\n \n\n \n\n652\n\n \n\n \n\n \n\n1,340\n\n \n\n \n\n \n\n412\n\n \n\nPurchase of agency services from the company REFLEX MARKETING\n\n \n\n \n\n422\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n960\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n992\n\n \n\n \n\n \n\n1\n\n \n\nRent service rendered by Steel Vessel Corporation\n\n \n\n \n\n476\n\n \n\n \n\n \n\n50\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\nTotal\n\n \n\n \n\n4,407\n\n \n\n \n\n \n\n1,010\n\n \n\n \n\n \n\n4,783\n\n \n\n \n\n \n\n652\n\n \n\n \n\n \n\n2,332\n\n \n\n \n\n \n\n413\n\n \n\n \n\n \n\n \n\n \n\nF-84\n\n[Table of Contents](#toc)\n\n \n\nNatuzzi S.p.A. and Subsidiaries\n\nNotes to consolidated financial statements\n\n(Expressed in thousands of euros except as otherwise indicated)\n\n \n\n \n\n \n\n2025\n\n \n\n \n\n2024\n\n \n\n \n\n2023\n\n \n\n \n\n \n\nIncome\n\n \n\n \n\nAmounts\nowed\n\n \n\n \n\nIncome\n\n \n\n \n\nAmounts\nowed\n\n \n\n \n\nIncome\n\n \n\n \n\nAmounts\nowed\n\n \n\nSelling of finished products to NAT STORE LTD\n\n \n\n \n\n729\n\n \n\n \n\n \n\n81\n\n \n\n \n\n \n\n1,350\n\n \n\n \n\n \n\n303\n\n \n\n \n\n \n\n1,631\n\n \n\n \n\n \n\n171\n\n \n\nSelling of finished products to IN CASA GROUP PTY\n\n \n\n \n\n2,738\n\n \n\n \n\n \n\n726\n\n \n\n \n\n \n\n1,741\n\n \n\n \n\n \n\n593\n\n \n\n \n\n \n\n1,735\n\n \n\n \n\n \n\n732\n\n \n\nTotal\n\n \n\n \n\n3,467\n\n \n\n \n\n \n\n807\n\n \n\n \n\n \n\n3,091\n\n \n\n \n\n \n\n896\n\n \n\n \n\n \n\n3,366\n\n \n\n \n\n \n\n903\n\n \n\n \n\nFollowing the disposal of the building located in High Point, NC, USA, the Company's U.S. subsidiary entered into a lease agreement with the purchaser, The Steel Vessel Corporation, a company owned by the majority shareholder, for a term of nine years and nine months, expiring on 31 December 2034, with an annual rent of USD 700. The lease rate is at market terms, as it was determined based on a dedicated third-party valuation report. As of December 31, 2025, the carrying amount of the lease liability is 3,733.\n\nWith reference to the purchases of finished products from the outsourcer Truong Thanh Furniture Corporation (\"TTF\"), which since March 2022 has become a minority partner with a 20% stake in the subsidiary Natuzzi Singapore, and, as of June 2025, also holds a 5% stake in Natuzzi Vietnam JSC, and whose president, Mr. Mai Hữu Tín, has become a Board Member of the same Natuzzi Singapore, the supply business relationship is based on agreements signed in 2020, which are still in force.\n\nWith reference to the purchase of agency services from the company REFLEX MARKETING (whose agency agreement was terminated in March 2025) and the sale of finished products to NAT STORE LTD, a company in which Mr. R. Mynett is a partner, who is also a minority shareholder at 30% in the subsidiary Natuzzi UK Retail Limited and its Board Member, the business relationship is based on pre-existing agreements predating the establishment of Natuzzi UK Retail Limited.\n\nWith reference to the sales of finished products to IN CASA GROUP PTY, Ms. J. Francis, who has served as director, is no longer a Board Member of Natuzzi Oceania PTI Ltd, having resigned from the position in September 2024..\n\nFrom time to time, Directors of the Group, or their related entities, may buy goods from the Group. These purchases are made on the same terms and conditions as those entered into by the Group’s other employees or customers.\n\nThe majority shareholder and Executive Chairman of the Board of Directors, in early April 2024, granted a three year loan to the Parent Company amounting to 2,500. The loan is set to mature on March 31, 2027, with a below-market interest rate of 2.50%. The interest rate differential compared to the market interest rate has been recognized under the caption “Reserves” within the Total Equity. See notes 20 and 46.\n\nFurthermore, during 2025, the following additional transactions involving Group directors took place:\n\n1.\nOn November 21, 2025, the majority shareholder and CEO of the Group entered into an agreement with the Parent Company to support the industrial restructuring plan through a credit facility. Under this facility, the Parent Company may request, in multiple tranches until December 31, 2026, an interest-free loan of up to 15,000, with the option to convert the disbursed loan tranches into equity in the event of a capital increase. In the absence of a capital increase, the loan is repayable by December 31, 2028. The Parent Company requested and received two tranches of 5,000 each, the first at the end of November and the second in mid-December. As the loan is interest-free, a market interest rate was determined, and the benefit arising from the absence of interest was recognized in an equity reserve. See Notes 19, 20 and 46.\n\n2.\nThe majority shareholder also completed the preliminary agreement signed in October 2024 for the acquisition from a U.S. subsidiary of the building located in High Point, North Carolina, USA, through the execution of the purchase deed in March 2025. The sale price, established under the preliminary agreement at USD 12.1 million, was partially paid as a deposit in October 2024 in the amount of 3,658 (USD 3.8 million), with the balance of 7,644 (USD 8.3 million) paid on March 25, 2025 upon execution of the sale agreement. The transaction was carried out at market terms, as the price was determined based on a dedicated valuation report performed in October 2024. See Notes 7 and 30. Following the sale, the U.S. subsidiary entered into a lease agreement for the entire property with a term of nine years and nine months, expiring on December 31, 2034.\n\n \n\nF-85\n\n[Table of Contents](#toc)\n\n \n\nNatuzzi S.p.A. and Subsidiaries\n\nNotes to consolidated financial statements\n\n(Expressed in thousands of euros except as otherwise indicated)\n\n \n\n3.\nIn June 2024, a subsidiary of the Company granted a loan to TTF, a minority shareholder of Natuzzi Singapore, for USD 1.4 million for a 12-month term, renewable for an additional 12 months. The agreed interest rate, set at USD 1-Month Libor minus 0.25%, matches the rate the subsidiary would have obtained from a bank deposit. See note 17.\n\n(iii) Transactions with associates, joint ventures and other related parties\n\nThe following tables provide the total amount of transactions that have been entered into with such related parties for the relevant financial year. Such transactions have been conducted at arm’s length.\n\nDecember 31, 2025\n\n \n\n \n\nSales\n\n \n\n \n\nExpenses\n\n \n\n \n\nDividends\nreceived\n\n \n\n \n\nAmounts\nowed by\nrelated\nparties\n\n \n\n \n\nAmounts\ndue to\nrelated\nparties\n\n \n\nNatuzzi Trading Shanghai Co, Ltd. (joint venture)\n\n \n\n \n\n23,215\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n2,023\n\n \n\n \n\n \n\n2,341\n\n \n\n \n\n \n\n—\n\n \n\nNatuzzi Texas LLC (joint venture)\n\n \n\n \n\n1,577\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n4,739\n\n \n\n \n\n \n\n—\n\n \n\nNatuzzi Stores (UK) LTD (associate)\n\n \n\n \n\n4,683\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n548\n\n \n\n \n\n \n\n—\n\n \n\nNatuzzi Design S.a.s. (other related party)\n\n \n\n \n\n2,181\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n293\n\n \n\n \n\n \n\n—\n\n \n\nNatuzzi Arredamenti S.r.l. (other related party)\n\n \n\n \n\n1,150\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n5\n\n \n\n \n\n \n\n—\n\n \n\nNatuzzi Sofa S.r.l. (other related party)\n\n \n\n \n\n438\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n37\n\n \n\n \n\n \n\n—\n\n \n\nTotal\n\n \n\n \n\n33,244\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n2,023\n\n \n\n \n\n \n\n7,963\n\n \n\n \n\n \n\n—\n\n \n\nThe Parent Company received dividends declared by Natuzzi Trading Shanghai Co. Ltd in October 2025.\n\nDecember 31, 2024\n\n \n\n \n\nSales\n\n \n\n \n\nExpenses\n\n \n\n \n\nDividends\nreceived\n\n \n\n \n\nAmounts\nowed by\nrelated\nparties\n\n \n\n \n\nAmounts\ndue to\nrelated\nparties\n\n \n\nNatuzzi Trading Shanghai Co, Ltd. (joint venture)\n\n \n\n \n\n25,192\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n4,022\n\n \n\n \n\n \n\n—\n\n \n\nNatuzzi Texas LLC (joint venture)\n\n \n\n \n\n1,251\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n3,515\n\n \n\n \n\n \n\n—\n\n \n\nNatuzzi Stores (UK) LTD (associate)\n\n \n\n \n\n4,699\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n110\n\n \n\n \n\n \n\n—\n\n \n\nNatuzzi Design S.a.s. (other related party)\n\n \n\n \n\n2,004\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n534\n\n \n\n \n\n \n\n—\n\n \n\nNatuzzi Arredamenti S.r.l. (other related party)\n\n \n\n \n\n1,083\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n263\n\n \n\n \n\n \n\n—\n\n \n\nNatuzzi Sofa S.r.l. (other related party)\n\n \n\n \n\n322\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n84\n\n \n\n \n\n \n\n—\n\n \n\nTotal\n\n \n\n \n\n34,551\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n8,528\n\n \n\n \n\n \n\n—\n\n \n\nDecember 31, 2023\n\n \n\n \n\nSales\n\n \n\n \n\nExpenses\n\n \n\n \n\nDividends\nreceived\n\n \n\n \n\nAmounts\nowed by\nrelated\nparties\n\n \n\n \n\nAmounts\ndue to\nrelated\nparties\n\n \n\nNatuzzi Trading Shanghai Co, Ltd. (joint venture)\n\n \n\n \n\n26,523\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n4,198\n\n \n\n \n\n \n\n—\n\n \n\nNars Miami LLC (associate)\n\n \n\n \n\n167\n\n \n\n \n\n \n\n431\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n103\n\n \n\n \n\n \n\n75\n\n \n\nNatuzzi Texas LLC (joint venture)\n\n \n\n \n\n1,951\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n2,598\n\n \n\n \n\n \n\n—\n\n \n\nNatuzzi Stores (UK) LTD (associate)\n\n \n\n \n\n5,876\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n44\n\n \n\n \n\n \n\n—\n\n \n\nNatuzzi Design S.a.s. (other related party)\n\n \n\n \n\n2,130\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n724\n\n \n\n \n\n \n\n—\n\n \n\nNatuzzi Arredamenti S.r.l. (other related party)\n\n \n\n \n\n1,619\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n243\n\n \n\n \n\n \n\n—\n\n \n\nNatuzzi Sofa S.r.l. (other related party)\n\n \n\n \n\n385\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n56\n\n \n\n \n\n \n\n—\n\n \n\nTotal\n\n \n\n \n\n38,651\n\n \n\n \n\n \n\n431\n\n \n\n \n\n \n\n—\n\n \n\n \n\n \n\n7,966\n\n \n\n \n\n \n\n75\n\n \n\n \n\n \n\nF-86\n\n[Table of Contents](#toc)\n\n \n\nNatuzzi S.p.A. and Subsidiaries\n\nNotes to consolidated financial statements\n\n(Expressed in thousands of euros except as otherwise indicated)\n\n \n\n \n\nAll outstanding balances with these related parties are to be settled in cash within three months of the reporting date. None of the balances are secured. No guarantees have been given or received.\n\n46. Subsequent events\n\nThe following events have occurred in the period between the reporting date and the date of authorisation of these consolidated financial statements.\n\nAt the end of November 2025, the Parent Company entered into a preliminary agreement for the disposal of the photovoltaic plant to a company specialized in the sector. The disposal was completed at the end of January 2026 and, on the closing date, the Company received the total sale consideration of 7,115. The net carrying amount of the photovoltaic plant as at 31 December 2025 amounted to 1,105 (see Note 7). The Group has entered into a power purchase agreement with the buyer of the photovoltaic plant.\n\nIn March 2026, the Parent Company received a total of 2,705 from the government agency INVITALIA, of which 2,114 relates to a loan and 590 to a non-repayable grant, following the completion of the planned industrial investments. In 2019, the Parent Company entered into a development agreement with the agency, which provided for an investment program supported by public funding covering 71.3% of the total, granted as a combination of non-repayable contributions and subsidized financing. The March 2026 collection represents the final tranche of this program, which concluded in 2025.\n\nOn March 31, 2026, the majority shareholder formally expressed its irrevocable intention to convert the two loans made in favor of the Parent Company, amounting to 2,500 and 10,000 and granted, respectively, in 2024 and 2025, into a capital contribution to be allocated to a future share capital increase, with the aim of strengthening the Group’s equity position. This decision has been taken in anticipation of a share capital increase, for which an extraordinary shareholders’ meeting will be convened to resolve upon the proposed capital increase.\n\nOn May 14, 2026, the board of directors approved an economic and financial plan covering the period up to June 2027 (the “one-year budget”) and conferred delegated authority on the CEO to initiate an out-of-court composition proceeding (Composizione negoziata della crisi, the “Composition”), a voluntary, debtor-in-possession restructuring tool under the Italian Insolvency and Restructuring Code (Legislative Decree no. 14 of January 12, 2019) designed to address financial distress at an early stage through consensual negotiations, with limited court involvement. The formal request to initiate the Composition is expected to be filed in the next forthcoming weeks. (See Note 3(f)).\n\n \n\n \n\n \n\nF-87\n\n[Table of Contents](#toc)"}