2a) Italy. Since 1990, the Group has sold its upholstered products in Italy principally through the
Divani&Divani by Natuzzi franchise network of furniture stores. As of March 31, 2020, there were 67 Divani&Divani by Natuzzi stores (of which 14 directly operated by the Company), and six Natuzzi Italia stores, all
directly operated by the Company.
2b) Europe (Outside Italy). The Group sells its products in other European markets mainly through stores
(franchises or directly operated stores). As of March 31, 2020, 88 stores were operating in Europe: two under the Divani&Divani by Natuzzi, all located in Portugal; 68 were under the Natuzzi Italia name (15 in the United
Kingdom, 13 in Spain, six in Turkey, four in each of France and the Czech Republic, three in each of Russia, Switzerland and Ukraine, two in each of Bosnia and the Netherlands and one in each of Azerbaijan, Croatia, Cyprus, Greece, Hungary, Latvia,
Malta, Poland, Romania, Serbia, Slovakia, Slovenia and Uzbekistan). As of the same date, there were 18 Natuzzi Editions of which 10 located in the UK, four in the Czech Republic and one in each of the Croatia, Serbia, Spain and Turkey. Of
these stores, as of March 31, 2020, the Group directly owned 21, of which 19 were operated under the Natuzzi Italia name (11 in Spain, four in the UK, three in Switzerland, and one in France) and two were operated under the Natuzzi
Editions name, both opened in December 2019 and located in the UK. During the first months of 2019, the Company decided to close all the UK based concessions that were operating under the Natuzzi Italia name.
2c) Middle East, Africa and India. As of March 31, 2020, the Group had a total of 25 Natuzzi Italia stores in the Middle
East, Africa and India: five in each of India and Israel, three in each of Saudi Arabia and the United Arab Emirates, and one in each of Algeria, Bahrain, Egypt, Ivory Coast, Kuwait, Lebanon, Pakistan, Qatar and Sri Lanka. In addition, one
Natuzzi Editions store was operating in Israel. All of these stores are operated by franchise partners.
In January 2012, following the worsening
of the European Unions diplomatic relations with Iran and Syria, the Company decided to cease all business relations with these two countries. No impairment issue arose following the cessation of business relations with those two
countries. The Group had no sales in Iran or Syria in 2019, 2018, 2017 and 2016. Our prior interests and activities in Iran or Syria were not a material investment risk, either from an economic, financial or reputational point of view. The
Group has not had, nor does it plan to have, any commercial contacts with the governments of Iran or Syria, or with entities connected with such governments.
The Group has never generated sales in Sudan, North Korea or Cuba.
3. Asia-Pacific Region
In 2019, net sales from our core
business in the Asia-Pacific region were 63.9 million, down 16.9% compared to 2018, and the number of seats sold decreased by 12.3%, to 133,363 in 2019. In 2019, Natuzzi branded sales decreased by 16.8% to 59.4 million, and
unbranded sales decreased by 18.2% to 4.5 million compared to 2018.
The general strategy for the Natuzzi brand is to further expand the
store network throughout the region, with a strong emphasis on the Chinese market.
The Groups commercial part of the business throughout the
Asia-Pacific region was run by Natuzzi Trading (Shanghai) Co., Ltd. until July 27, 2018. On that date, the Company announced the completion of the transactions (the Closing) contemplated by the joint venture agreement, signed in
March 2018, between the Company and Kuka Furniture (Ningbo) co., Ltd. (Kuka). As a result of the Closing, the Companys wholly-owned Chinese subsidiary, Natuzzi Trading (Shanghai) Co., Ltd. (Trading Co.) became a joint
venture in which each of the Company and Kuka currently owns a 49% and a 51% stake, respectively.
This joint venture is aimed at expanding the
Companys retail network in Mainland China, Hong Kong and Macau (the Territory). Trading Co. will distribute the Natuzzi Italia and Natuzzi Editions branded products through a network of single-brand directly operated
stores and franchise stores in the Territory, as well as through online stores.
As of March 31, 2020, 98 Natuzzi Italia franchise stores were
operating in the Asia-Pacific market: 74 in China, seven in Australia, six in Taiwan, three in each of Hong Kong and in South Korea, and one in each of Indonesia, Philippines, Singapore, Thailand and Vietnam. In addition, as of the same date, the
Group had 181 Natuzzi Editions stores, of which 177 located in China, two in Taiwan and one in each of Hong Kong and Thailand. Following the execution of this joint venture in China, the 11 Natuzzi Editions DOS were transferred to
Trading Co.
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