CONSOLIDATED ANNUAL REPORT AND ACCOUNTS OF THE …...The shareholder Diego Della Valle owns shares...

CONSOLIDATED ANNUAL REPORT AND ACCOUNTS OF THE MARCOLIN GROUP

AT 31 DECEMBER 2008

Consolidated Annual Report and Accountsof the Marcolin Groupat 31 December 2008

MARCOLIN S.p.A. Registered office: Via Noai 31Frazione Vallesella32040 Domegge di Cadore (BL) - ItalyShare capital: EUR 32,312,475.00 fullypaid-upR.E.A. 64334Tax code and Belluno Companies Register no. 01774690273VAT no. 00298010257

Management and offices: Località Villanova 432013 Longarone (BL) - ItalyTel: +39.437.777111Fax +39.437.777282www.marcolin.com

BRAND PORTFOLIO

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CONTENTS

36 Corporate bodies and officers37 Marcolin Group structure38 Financial communications38 Stock market performance39 Shareholder composition40 Corporate Governance40 Direction and Coordination Activities40 Non-EU subsidiaries41 Marcolin Group Management Report54 Consolidated balance sheet55 Consolidated income statement56 Statement of changes in consolidated equity57 Consolidated cash flow statement59 Explanatory notes to consolidated accounts

MARCOLIN S.p.A. separate financial statements

101 Financial communications101 Stock market performance102 Shareholder composition103 Corporate Governance103 Direction and Coordination Activities103 Non-EU subsidiaries104 Marcolin S.p.A. Management Report116 Balance sheet117 Income statement117 Statement of changes in consolidated equity118 Cash flow statement121 Illustrative notes for Marcolin S.p.A. separate financial statements163 Declaration concerning the statutory and consolidated financial statements

pursuant to Article 81-ter of CONSOB Regulation no.11971.

35

Marcolin Group

Corporate bodies and officers

Board of directors (1)

Chairman Giovanni Marcolin Coffen (2)

Managing Director and General Manager Massimo Saracchi (2)

Director Luigi AbeteDirector Emanuele Alemagna (3)

Director Maurizio Boscarato (3)

Director and Deputy Chairman Cirillo Coffen Marcolin (2)

Director Maurizio Coffen Marcolin (2)

Director Diego Della ValleDirector Emilio MacellariDirector Carlo MontagnaDirector Stefano Salvatori (3)

Director Vito Varvaro

Internal audit committeeStefano Salvatori ChairmanEmanuele Alemagna Maurizio Boscarato

Remuneration committeeStefano Salvatori ChairmanEmanuele AlemagnaEmilio Macellari

board of statutory auditors (1)

Chairman Diego RivettiStanding statutory auditor Mario CognigniStanding statutory auditor Rossella PorfidoSubstitute statutory auditor Rino FunesSubstitute statutory auditor Ornella Piovesana

Independent auditorDeloitte & Touche S.p.A. (4)

(1) The term of office lasts until the date of the General Shareholder Meeting called to approve year-end accounts as at 31 December, 2010 (as decided by the General Shareholder Meeting on 29 April, 2008)

(2) Executive directors;(3) Independent directors;(4) Duration of assignment = 2008 – 2016 financial years (as decided by the General Shareholder Meeting on 29 April, 2008).

Nature of powers attributed to individual directors:The widest powers of management and representation of the Company, within certain limits, have been assigned to the Mana-ging Director Massimo Saracchi.

Consolidated Annual Report and Accounts as at 31 December 2008

36

37

Marcolin Group

Marcolin Group structure

14,60%

0,10%

Marcolin UK LtdEngland

Marcolin Portugal LdaPortugal

Marcolin Benelux SprlBelgium

Marcolin Iberica SASpain

Finitec SrlItaly

Marcolin do Brasil LtdaBrazil

Marcolin DeutschlandGermany

Marcolin Japan Co. LtdJapan

Marcolin GmbHSwitzerland

MARCOLIN S.p.A.

MarcolinInternational B.V.

Marcolin Asia LtdHong Kong

Marcolin USA. Inc.U.S.A.

CEBE Sport SA(in liquidazione)

Switzerland

100,00%

Marcolin France S.a.s.France

99,00%

100,00%

99,82%

99,98%

99,88%

100,00%

100,00%

99,90%

40,00%

40,00%

23,11%

100,00%

85,40%

76,89%

Financial communications

Marcolin S.p.A. constantly maintains contact with its shareholders, investors, and analysts, through the InvestorRelations office which guarantees continuous information about the Group for the financial markets.On the official website www.marcolin.com, in the Investor Relations section, economic-financial data is available,as well as the company presentation and periodic publications, official press releases, and real-time stock updates.

Stock market performance

Based on data from Borsa Italiana S.p.A.

The shares of Marcolin SpA have been listed on Milan’s electronic equity market (Mercato TelematicoAzionario – MTA) since July 1999. The above chart shows the stock’s performance from 1 January to 31 December, 2008.


38

2.1.2008 13.3.2008 25.5.2008 3.8.2008 15.10.2008 27.12.2008

0,9

1,0

1,1

1,2

1,3

1,4

1,5

1,6

1,7

1,8

1,9

2008 was characterised by an international macroeconomic situation that was heavily negative, decidedly worsethan 2007. Its effects severely penalised prices on the main world stock markets, whose indexes saw losses thatwere among the worst of the last few decades. The American financial crisis, which had already begun in the second half of 2007, became more acute over thecourse of 2008, leading to a global liquidity crisis. Despite numerous monetary policy interventions, and bailoutsof important financial and credit institutions, begun first in America, and then successively in Europe and through-out the world, the crisis in the international financial markets worsened over the last quarter of 2008, heavilyinfluencing world stock market indexes. With regards to the Italian market, Piazza Affari ended the year with a49% decrease, while the S&P Mib40 ended the year down 50%. The eyewear sector and more generally, producers of luxury items, were severely penalised and the main playersdrastically reduced their capitalisation in the stock market. In this context, Marcolin stocks saw a decrease of 45% with respect to 2007, substantially in line with the maincompetition in the sector.

39

Marcolin Group

Consolidated stock market information 2008

Consolidated result per share (euro) 0,100Consolidated shareholders’ equity per share (euro) 0,81Year-end price (euro) 1,01Maximum price (euro) 1,86Minimum price (euro) 0,99Price per share / Consolidated result per share 10,17Price per share / Consolidated shareholders’ equity per share 1,26Market capitalization at DEC 31, 2008 62.948.276Average number of outstanding shares 41.966Number of shares representing the share capital 62.139.375


40

Shareholder composition (based on voting rights)

*Members of the Marcolin family

The shareholder Giovanni Marcolin Coffen owns shares directly and indirectly via INMAR S.r.l.The shareholder Diego Della Valle owns shares via the company DDV Partecipazioni Srl.The shareholder Andrea Della Valle owns shares via the company ADV Partecipazioni Srl.The shareholder Luigi Abete owns shares via the company LUAB Partecipazioni S.r.l.

Share capital consists of 62,139,375 ordinary shares with a par value of € 0.52 each for a total amount of € 32,312,475.00.

The above figures represent updates received up to 24 March 2009.

Coffen Giovanni Marcolin*14,753%

Zandegiacomo Maria Giovanna*1,918%

Coffen Marcolin Cirillo*4,251%

Coffen Marcolin Maurizio*4,251%

Coffen Monica*5,404%

Diego Della Valle20,300%

Andrea Della Valle20,300%

Luigi Abete9,333%

Treasury stock1,906%

Market18,393%

Corporate Governance

Marcolin S.p.A. has adhered to the Corporate Governance code created by the Italian Stock Exchange’s Corporate Gover-nance Committee, completed in March 2006, including later amendments and adjustments.The company has defined an articulate and homogenous system of rules of conduct with regards to the organisational struc-ture and relationships with company stakeholders, characterised by principles of good governing, in order to maximise val-ues for shareholders and guarantee transparency.On the website www.marcolin.com, in the Investor Relations section, information is available regarding the company corpo-rate governance system, including the corporate charter.For more detailed information regarding corporate governance, please refer to the report created pursuant to the laws andregulations in force, which provides complete information about the methods of enforcing the corporate governance systemand adhesion to the Corporate Governance Code. This document will be deposited with Borsa Italiana S.p.A. in accordancewith the law and will also be available for consultation in the Investor Relations section on the website www.marcolin.com.

Direction and Coordination Activities

Marcolin S.p.A. is not subject to direction and coordination activities on the part of companies or organisations and definesits strategic, general, and operational plans in full autonomy.

Non-EU Subsidiaries

The administrative body of Marcolin S.p.A., a company which controls a company constituted and regulated by the laws ofa country which does not belong to the European Union, attests to the existence of the conditions found in article 35 ofCONSOB regulation no. 16191/2007, letters a)-c). In particular, it has ascertained that the non-EU subsidiaries:- have provided the controlling company’s auditors with all the information necessary to conduct control activities on the

annual and infra-annual accounting;- have an administrative-accounting system adequate to regularly provide the controlling company’s management, con-

trolling body and auditors with economic, equity and financial data necessary for preparation of the consolidated finan-cial statements.

41

Marcolin Group


42

Marcolin Group Management Report for the year ending on31 December, 2008

The Annual Financial Statements at 31 December 2008, including the balance sheet for the financial year, as a financial re-port called for under article 154-ter of Legislative Decree 58/1998 (Consolidated Finance Act), was prepared in conformancewith the valuation and measurement criteria established by the international accounting standards IAS/IFRS, adopted by theEuropean Commission, according to the procedure indicated in article 6 of the European Parliament Regulation no.1606/2002 and the Council of 19 July 2002, relative to application of international accounting standards, as well as the in-dications provided through implementation of Legislative Decree no. 38/2005.

Directors’ comments on operating performanceShareholders,Over the course of 2008, the international macro-context was characterised by a recession in the world economy and by aserious crisis in the international financial markets which became more acute during the second half and which still contin-ues to negatively influence consumption and investment on a global level.

In this unusual and difficult economic environment, we have watched the luxury segment go through an additional decreasein consumption during the fourth quarter of the year. After years of growth, the eyewear sector saw a slowing of demand, dueto the decreased propensity for spending on the part of consumers.

In this context, Marcolin stood out with its high-quality, top of the range products, combined with a balanced portfolio ofstrong brands, well-known throughout the world, and without overlap.

For the Marcolin Group, the year 2008 was characterised by the following important events:- a return to significant net profit after three years of losses;- a considerable increase in margins with EBITDA doubled compared with 2007;- growth in revenue generated mainly by the Luxury & Fashion segment;- completion of the work to close the manufacturing facilities of the Cébé company and to integrate its commercial busi-

ness with that of the subsidiary Marcolin France;- the signing of important new licensing agreements relating to the Tod’s, Hogan, Dsquared2 and John Galliano brands, which

are situated in the Luxury & Fashion market range, sales of which will begin during 2009.

The financial year ending at 31 December, 2008 records, in fact, profits of €6,124 thousand (with respect to losses of€6,891 thousand at 31 December, 2007, generated mainly by the subsidiary Cébé) and with an EBITDA of €20,857 thou-sand (€10,607 thousand at 31 December, 2007).

Revenues amounted to € 186,845 thousand, an increase of 2.5% on 31 December, 2007 (€ 182,275 thousand). The increase in the Group’s revenues at a constant exchange rate was 4.9%.

The overall improvement seen in terms of margins on operations activities was the fruit of actions undertaken on cost struc-tures, which allowed a reduction in impact on revenues, with respect to the previous year and development of brands in thefashion segment.

To better understand the balance sheet data, it is important to remember how financial year 2007 was negatively influencedby the events regarding the French subsidiary Cébé. Hence, during 2007, the Marcolin Group decided to close the businessesrelated to the winter sector of the Cébé brand (ski goggles and helmets) and concentrate on developing sunglasses and vi-sion eyewear under the Cébé brand, in view of the size of the losses which affected the Group’s results. In this way, the reor-ganisation process was begun, with the consequent impact of a series of non-recurring costs totalling €9.3 million, of which€5.7 million already allocated in the balance sheet of 31 December, 2006. Adding to this the management losses recordedduring the year by Cébé, the negative impact for the Marcolin Group’s 2007 balance sheet due to Cébé amounted to a totalof €9.2 million.

It should also be noted that Cébé’s business was concentrated in the winter season, with the greatest share of revenues oc-curring during the fourth quarter. Hence, comparing the economic data from 2008 with that of 2007, net of Cébé, revenues of €181,849 thousand wererecorded (+10% with respect to 31 December, 2007) and net income of €5,911 thousand (€2,364 thousand at 31 December,2007).

The following table summarises the Group’s key operating indicators:Consolidated economic highlights

L' EBITDA is (EBIT) before Amortisation and Depreciation

The Group’s net sales rose by € 4,571 thousand compared with the same period of the previous year. In percentage terms,this amounts to an increase of 2.5% (+4.9% at constant rates). Taking into account the extremely problematic interna-tional economic context, these results are extremely important and occurred thanks to the significant growth of licences inthe portfolio.

43

Marcolin Group

Year Net Change % EBITDA % EBIT % Net % Earning sales of net of net result of net per shares

(euro/000.000) sales sales sales (EPS)

2004 173,4 4,2% 17,5 10,1% 9,2 5,3% 0,9 0,5% 0,0202005 154,0 (11,2)% (2,6) (1,7)% (12,6) (8,2)% (16,7) (10,8)% (0,373)2006 157,4 2,3% 4,9 3,1% (6,7) (4,3)% (13,3) (8,4)% (0,291)2007 182,3 15,8% 10,6 5,8% (0,1) (0,1)% (6,9) (3,8)% (0,112)2008 186,8 2,5% 20,9 11,2% 13,8 7,4% 6,1 3,3% 0,100

Consolidated income statement DEC 31, 2008 % On sales DEC 31, 2007 % On sales(euro/000)

Net sales 186.845 100,0% 182.275 100,0%Gross profit 103.470 55,4% 96.913 53,2%Operating profit - EBIT 13.828 7,4% (130) (0,1)%Financial income and expenses (5.073) (2,7)% (3.991) (2,2)%Net result before taxes 8.755 4,7% (4.121) (2,3)%Net result 6.124 3,3% (6.891) (3,8)%EBITDA 20.857 11,2% 10.607 5,8%

Net sales by geografic area DEC 31, 2008ssssss DEC 31, 2007ssssss Increase (decrease)(euro/000) Turnover % on total Turnover % on total Turnover % on total

- Italy 36.314 19,4% 37.212 20,4% (898) (2,4)%- Europe 72.567 38,8% 73.860 40,5% (1.293) (1,8)%- U.S.A. 40.278 21,6% 40.004 21,9% 274 0,7%- Rest of the world 37.686 20,2% 31.199 17,1% 6.486 20,8%Total by geographical area 186.845 100,0% 182.275 100,0% 4.569 2,5%

As regards the breakdown of sales by geographical area, an increase in sales was seen in the Rest of the World (+20.8%)and in particular in Brazil (+38.8%), South Korea (+30.4%), the United Arab Emirates (+27.2%), and Turkey (+25.7%),confirming the Group’s greater internationalization, in line with Marcolin’s development strategies. In the U.S. market it should be noted that at a constant exchange rate, revenue would have increased by 12% compared with2007.The decline in revenue seen in Italy and Europe is mainly due to the effect of closing Cébé’s winter sports business.With reference to the revenue achieved in Europe, it is worth noting the significant increase recorded by the French subsidiary(+54.8% net of sales of products with the Cébé brand) and the Belgian subsidiary (+31%).

Fiscal year 2007 closed with EBITDA of €20,857 thousand (€10,607 thousand at 31 December, 2007), accounting for11.2% of sales (5.8% in 2007), with an absolute increase of € 10,250 thousand.

The improvement in the EBITDA in relation to the 2007 financial year is mainly due to the following factors:- the elimination of subsidiary Cébé’s losses, which decreased the Group’s EBITDA by €4,680 thousand in 2007, due to

the closure of winter sector related activities;- greater manufacturing efficiency and an increase in sales of products relating to brands with higher margins;- the containment of commercial, advertising and administrative costs (taking into account for 2007 the other, non-recur-

rent operating costs relating to Cébé) which increased proportionally less than revenues;- the improvement in margins on sales obtained by Marcolin USA which increased its EBITDA by €1.524 thousand.

In order to better understand the Group’s economic performance, it is worth noting the trend in EBITDA with reference onlyto the sunglasses and vision eyewear business (thus excluding the sports eyewear business) which brought in €19.904 thou-sand, compared with the €15.287 thousand at 31 December 2007.

The operating profit (EBIT) was €13,828 thousand compared with a negative € 130 thousand at 31 December 2007, a clearimprovement attributable mainly to the factors listed above.The same indicator net of the sports business (Cébé) improved by €4,790 thousand going up from €8,697 thousand in 2007to €13,486 thousand in 2008.

Finance income and expense increased by €1,048 thousand due to negative exchange rate differences which can mainly beattributed to devaluation of the Brazilian currency and an increase in interest rate expenses, due to the increased costs ofmoney, as explained better in the Illustrative Notes.


44

Capital and Financial SituationDetails of the net financial position at 31 December 2008 compared with that of the previous year are shown below:

The overall net financial position of the Marcolin Group improved by €3,489 thousand compared with the previous year asa result of the cash flow provided by operating activities (of €7,425 thousand) and used in part by investing activities (of€3,936 thousand).

With regards to the breakdown of debt over the year, compared with the situation at 31 December, 2007, an increase in theshort-term portion of long-term borrowing can be noted, due to the effects of (i) an increase in the reimbursement rate ofthe unsecured loan incurred from a consortium of banks, led by Efibanca, as called for in the loan’s original payoff plan,and (ii) use, over the course of the year, of the entire amount available in the stand-by credit line, provided through the samecredit institutions.

During the course of the year, the parent company Marcolin S.p.A. repaid the principal on existing loans for a total of €8,847 thousand.

In order to round off analysis of the composition of the Group’s financial position, we note that the year-end net debt/eq-uity ratio was 0.65 (vs. 0.83 at 31 December, 2007).

Details of the value of the net working capital, compared with the figures for the previous financial year, are illustrated in thefollowing table:

With reference to the different items that make up the net working capital, we note:- the increase, with respect to the previous financial year, of the inventory by €1,607 thousand, which can be traced to the

decision to anticipate market presentation of the sunglasses collection with respect to the previous year, as well as an in-crease in revenues;

45

Marcolin Group

Net financial position DEC 31, 2008 DEC 31, 2007(euro/000)

Cash 99 120 Cash equivalents 13.060 10.668 Short term borrowings (4.228) (6.781)Current portion of long term borrowings (12.995) (7.682)Long term borrowings (28.682) (32.562)Total Net financial position (32.747) (36.236)

Net working capital DEC 31, 2008 DEC 31, 2007(euro/000)

Inventory 52.216 50.609 Trade and other receivables 58.522 62.840 Trade payables (34.660) (37.508)Other current assets and liabilities (14.617) (16.372)Total Net working capital 61.462 59.569

- a decrease in the value of commercial debt, totalling €4,318 thousand, completely attributable to Cébé, as well a decreasein average number of collection days;

- a decrease in the amount of commercial debts totalling €2,849 thousand, traceable on one hand to a decrease in costssustained during the financial year, and on the other to the effects deriving from closure of Cébé’s activities.

As regards the other current assets and liabilities, the decrease of € 1,755 thousand can be almost entirely attributed tothe elimination of Cébé activities.

Gearing is the ratio between Net financial position and Net equity

Summary balance sheet figures were as shown below:

Please refer to the illustrative notes for the associated comments.


46

Consolidated financial highlights (euro/000)

Year Net financial position Shareholders' equity Gearing

2004 (44.526) 53.178 0,84 2005 (46.178) 36.693 1,26 2006 (32.060) 52.119 0,62 2007 (36.236) 43.854 0,83 2008 (32.747) 50.074 0,65

Balance sheet Marcolin Group DEC 31,2008 DEC 31,2007(euro/000)

AssetsNon current assets 26.214 25.668Current assets 124.425 124.696Total Assets 150.639 150.364

Shareholders' equityGroup Shareholders' equity 50.074 43.854

LiabilitiesNon current liabilities 33.537 37.710Current liabilities 67.027 68.801Total Liabilities and Net equity 150.639 150.364

Significant events after balance-sheet date and expected business progressIn the context of an extremely uncertain international macroeconomic framework and the unequivocal signs of demand weak-ness seen during the first few months of 2009, despite the recognition that the current financial year will represent a diffi-cult and challenging year, Marcolin Group believes that it can face this scenario by (i) counting on the effects of the incisiveactions taken during 2008 to improve production processes and total organisational efficiency, and (ii) paying great atten-tion to controlling the dynamics of working capital and cash-flows.The Group also has the advantage of a definitely competitive portfolio of licences, mainly aimed at the high-end of the mar-ket (Luxury & Fashion) and which was recently enriched by additional prestigious brands (Tod’s, Hogan, Dsquared, and JohnGalliano). There was a very favourable reception of the Dsquared2 collections, which was presented at the MIDO fair in thefirst few months of 2009, while work on the launch of the Tod’s and Hogan licences is at an advanced stage – presentationis planned for the summer. Work is also progressing on the John Galliano licence, with the launch planned for the end of theyear. Work is also in progress on analyzing the various proposals for further licences which Marcolin receives, in order to com-plete and further reinforce the Group’s current portfolio.

Main risks and uncertainties to which Marcolin S.p.A. and the Marcolin Group are exposed

Risks connected to the general conditions of the economyThe Marcolin Group’s economic, capital, and financial situation are influenced by various factors that influence the macro-economic framework found in the various countries in which the Group operates, including levels of consumer and companytrust. Over the course of 2008, and in particular during the last quarter, the financial markets were characterised by par-ticularly severe volatility, with serious effects and repercussions for various banking and financial institutions, and moregenerally, on overall economic performance. The significant and widespread deterioration in market conditions was addi-tionally worsened by the presence of a serious liquidity crisis, which led to difficulties in accessing credit, both for con-sumers as well as for companies. These effects were reflected in industrial development in many sectors, including those inwhich the Marcolin Group operates. These factors, combined with a contraction in disposable income for families led to, inparticular starting in the last quarter of 2008, a significant decrease in demand in the Group’s main reference markets.Despite the numerous and incisive monetary and financial policy initiatives, promoted on an international level, serious un-certainty remains about the time necessary to re-stabilise conditions in order to move past this situation Hence, it is not clearhow long it will take to return to normal market conditions. Additionally, in many countries a recession could occur, per-haps prolonged.In the case that this situation of serious weakness and uncertainty remains past the short-term, the Group’s activities, strate-gies, and prospective could be negatively impacted, with consequent negative impacts to the Group’s economic, capital, andfinancial situation.The generally negative economic context could additionally see the effect of an increase of the credit risk to which the Groupis subject, relative to exposure towards its clients, who may have increased difficulties in making payments. With regards tothis, the Group, in the field of its commercial risk management policies, is taking all possible actions to guarantee recoveryof trade receivables.

Risks connected with the Group’s resultsAny macroeconomic event, such as a significant fall in one of the main markets, the volatility of the financial markets andconsequent decrease in equity markets, an increase in commodities prices, as well as fluctuations in interest rates and ex-change rates, could have significantly negative effects on the Group’s prospects and assets, as well as on its economic re-sults and its financial situation. The profit generation of Marcolin Group’s activities is also subject to risks connected to fluctuations in interest rates andinflation, to the solvency of counterparties, and general economic conditions in the countries in which its activities are car-ried out.

47

Marcolin Group

Risks connected to needs for financial toolsThe evolution of the Group’s financial situation depends on numerous conditions. These include, in particular, reaching pre-set objectives, as well as the performance of general economic conditions, the financial markets, and the sectors in whichthe Group operates. The Marcolin Group plans to meet its needs, deriving from its maturing financial debts and planned investments, throughcash flows deriving from operations management, available liquidity, and renewal or refinancing of bank loans. Even in the current difficult market context, the Group believes it will be able to maintain an adequate capacity to gener-ate financial resources through operations management. However, significant and sudden reductions in sales volumes couldhave negative effects on the operations management’s ability to generate cash flow.Finally, despite the fact that the Group continues to receive the support of its banking and financial counterparties, it couldfind itself in a condition in which it needs to use additional financing, in unfavourable market conditions, with possible lim-itations on availability from certain providers, creating a possible increase in financial charges.

Risks connected to fluctuations in foreign exchange and interest ratesThe Marcolin Group operates in various markets throughout the world and is hence exposed to market risks connected tofluctuations in foreign exchange interest rates. Exposure to foreign exchange rate risks is mainly connected to the variedgeographic distribution of productive and commercial activities. In particular, the Group is mainly exposed to fluctuationsin the US dollar, relative to the supplies received from Asia and to sales made in the American market.In regards to risks connected to variations in interest rates, it is important to note that the Marcolin Group uses various typesof financing, intended to cover the needs of its industrial activities, mainly with variable interest rates. Hence, variations ininterest rate levels can lead to increases or decreases in the cost of financing. Due to this, in its risk management policies,the Marcolin Group attempts to face risks due to unfavourable foreign exchange and interest rate changes through hedges.Despite these hedging instruments, sudden and significant fluctuations in foreign exchange and interest rates could lead tonegative impacts on the Group’s economic and financial results. An analytical description of the Group’s risks and hedginginstruments with regards to this aspect is provided in the illustrated notes.

Risks connected to the Group’s capacity to negotiate and maintain its licensing contractsThe Group has signed multi-year licensing contracts which allow it to produce and distribute vision frames and sunglassesunder third-party proprietary trademarks. It is also constantly working to renew existing licences and research new li-cences which allow the Group to maintain its long-term prospects.In the case that the Group was not able to maintain or renew its licensing contracts with its current licensing companies,due to market conditions, or if it was not able to stipulate new licensing contracts with other successful brands, the prospectsof growth and economic results for Marcolin Group could be negatively influenced.Additionally, all licensing contracts call for minimum guaranteed annual royalties in favour of the licensing company, whichhence must be paid even in the case of changes of revenues under certain thresholds (so-called guaranteed minimum), withconsequent possible negative effects on the group’s financial and economic results.

Risks connected to supplier relationshipsThe Group uses third-party producers and suppliers for production and/or processing of some of its products. These producersand suppliers, mainly found in Asia and Italy, are subject to verifications and controls by the Group, in order to verify thatthey respect adequate qualitative and service standards, including aspects related to time and method of delivery.The use of third-party producers and suppliers leads to additional risk, such as the risk of ceding or ending of contractualagreements, of problems connected to the quality level of supplies and services provided, and in delays in delivery of com-missioned goods. Delays or defects in the products provided by third-parties, as well as the interruption or conclusion of theassociated contracts, without searching for adequate alternative sources, could lead to a negative impact on the Group’s ac-tivities, economic results, and financial situation.


48

Risks connected to the high level of competitiveness in the sector in which the Group operatesThe markets in which the Group operates are highly competitive in terms of product quality and innovation, as well as eco-nomic conditions. Additionally, the Group’s success is partially due to its capacity to introduce products with innovative design, continuouslysearching for new materials and productive processes, as well as its ability to adapt to consumers’ changing tastes, antici-pating changes in fashion and reacting quickly to such changes.The success of the Marcolin Group’s activities depends on its capacity to maintain and increase its market share in its cur-rent markets and/or expand into new markets. In particular, in the case that the Group was no longer able to develop andoffer innovative and competitive products with respect to its main competitors’ products, both in terms of design and in termsof good value for price, the Group’s market share could be reduced, with a negative impact on the Group’s economic and fi-nancial results.

Risks connected to dependence on key figuresThe Group’s success depends on certain key figures, who have provided decisive contributions to its development. The Com-pany believes that it has an operational and managerial structure able to ensure continuity in its management of its affairs.However, in the case that some of the above-mentioned key figures were to interrupt their collaboration with the Group, thereis no guarantee that the Group would be able to quickly replace them with appropriate persons and ensure, in the short-term,the same contributions, with possible negative consequences for the Group.

Human resourcesAt Marcolin, the value of its human resources is a critical factor in its success, and training of its staff constitutes an in-vestment in the development of the Group’s activities. Over the course of the financial year, analysis was done regarding activities necessary to bring the company in line with thenew norms on Work Safety and Security, introduced and brought into effect through Legislative Decree no. 81/08. In par-ticular, we note that the organisational structure has been defined to introduce a safety management system at MarcolinS.p.A. and will go into effect during the first months of 2009.

At 31 December, 2008, the Group had 972 employees, divided as follows:

49

Marcolin Group

Employees - Final numberCategory DEC 31, 2008 DEC 31, 2007

Managers 22 23First line managers 70 54Employees 449 485Workers 431 447Total 972 1.009

Collective bargaining agreementsWith regards to collective bargaining in terms of salaries, we note that during the course of the year the norms and eco-nomic parts of the national contract were renewed.

Stock Option plansOn 29 April, 2008, the General Shareholders’ Meeting of Marcolin S.p.A. approved the proposal to allocate a compensa-tion plan based on financial instruments in favour of the Managing Director and General Manager, Massimo Saracchi, pur-suant to article 114-bis of Legislative Decree 58/1998 (hereafter the “Plan”). To that regard, the Shareholders decided:1. to approve the adoption of the stock option plan destined for the Managing Director of Marcolin S.p.A., Massimo Sarac-chi (the Beneficiary), to be performed through the allocation, free of charge, of 500,000 personal and non-transferablestock option rights to acquire ordinary Marcolin S.p.A. shares, in accordance with the methods and terms illustrated in theinformative document created by the Directors, pursuant to article 94-bis of CONSOB Issuance Rules, and in the Directors’illustrative report, and in particular, states that:- the exercise, on the part of the Beneficiary, of the assigned stock option rights will be subordinated (i) to the condition thatthe Beneficiary hold the role of Managing Director at the end of the three-year maturity period of the rights and (ii) per-formance of Group objectives of an economic and/or financial nature, the determination of which is remanded to the Boardof Directors;- the Company, upon written request from the Beneficiary, can extinguish its obligations to the Beneficiary, by correspon-ding to such a sum in money equal to (i) the difference between the unit value of the Shares and the Strike Price at the datethe request to exercise the stock options is made, (ii) multiplied by the number of options that can be exercised;2. to provide to the Board of Directors, and in this case the Chairman, all powers necessary or opportune to exercise thestock option plan.Since the Plan will be used utilizing own shares acquired on the market and/or in portfolio, without any new issuances, nodilutive effects will occur.No constraints on ceding the Shares acquired due to exercising the stock options are called for. For additional and more detailed information, please refer to the informational document prepared pursuant to article 84-bis of the Issuance Rules, deposited and made available to the public in accordance with the law.

Research & development activitiesResearch and development activities at the parent company, Marcolin S.p.A., are implemented through two divisions: thefirst division aims to work in close partnership with licence-holders to come up with new collections, hone style, researchnew materials and develop collections related to sunglasses/vision eyewear; the second, which works closely with the former,handles product development and industrialisation.Over the course of the financial year 2008, the company continued with its research and development activities.

Infra-group and associated parties relationshipsWith regards to operations performed with associated parties, including infra-group operations, we note that these cannotbe defined as either atypical or unusual, as they are part of the normal activities of the Group’s companies. Said operationsare regulated by market conditions, taking into account the characteristics of the goods and services provided.Detailed information on relationships with associated parties, including those required by CONSOB Communication of 28July, 2006, can be found respectively in the Explanatory Notes to the Consolidated Annual Report and Accounts, and in theExplanatory Notes to the Separate Annual Report and Accounts for Marcolin S.p.A.We also note that during the month of November, parent company Marcolin S.p.A. purchased the Web trademark of one itsassociated parties.


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Treasury sharesAt 31 December, 2008, Marcolin S.p.A. held 681,000 of its own shares in its portfolio, for a nominal counter value of€354,120. The value in the balance sheet, valued at purchase cost, is equal to €947 thousand. Treasury shares held by thecompany accounts for approximately 1.10% of Marcolin SpA’s share capital.No Group company owns shares of the parent company Marcolin S.p.A.

Protection of personal dataWith regards to the activities called for by Legislative Decree 196/03, titled “Protection of Personal Data Code,” activi-ties intended to evaluate the data protection system in the Group’s companies that are subject to such legislation havebegun. These activities found that the requirements called for by the norms in terms of protection the personal data man-aged by these companies are substantially met, including writing of the Security Planning Document.

Secondary officesMarcolin S.p.A.’s registered offices are in via Noai 31, Domegge di Cadore (BL), Frazione Vallesella. Its administrativeand management offices are located in Longarone (BL), Localita’ Villanova, 4.

Comparison between the results and the equity of the parent company with the balances for the consolidated financialstatements.The following table provides a comparison between the result achieved and equity held by the parent company at 31 December,2008, and the similar figures of the Group for the same period.

Other events and newsNo further significant events have taken place such as to have had a significant effect on business performance or to havemodified the company’s capital, financial and business structure.

Milan, 25 March, 2009Chairman of the Board of DirectorsGIOVANNI MARCOLIN COFFEN

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Marcolin Group

(euro/000) Net Equity Net result

Marcolin S.p.A. 62.483 1.461Intercompany adjustments (2.765) 228Difference between holding company's participations and net equity of subsidiaries (10.787) 4.357Net equity method adjustment 176 8Deferred taxes 967 69Marcolin Group 50.074 6.124

MARCOLIN GROUPCONSOLIDATED BALANCE SHEET

Consolidated balance sheet


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(euro/000) Note DEC 31, 2008 Of which DEC 31, 2007 Of whichrelated parties related parties

ASSETS

NON CURRENT ASSETSProperty, plant and equipment 5 14.800 15.936 Intangible assets 6 4.131 2.942 Goodwill 6 2.322 2.195 Investments 7 759 1.148 Deferred tax assets 30 3.406 2.416 Other non current assets 8 796 1.030 Total non current assets 26.214 25.668

CURRENT ASSETSInventories 9 52.216 50.609 Trade and other receivables 10 58.522 787 62.840 567 Other current assets 11 527 457 Cash and cash equivalents 12 13.159 10.789 Total current assets 124.425 787 124.696 567

TOTAL ASSETS 150.639 787 150.364 567

SHAREHOLDERS' EQUITY 13Share capital 31.958 31.958 Additional paid in capital 24.517 26.315 Other reserves (2.064) (2.156)Retained earnings (losses) (10.461) (5.372)Profit (loss) for the period 6.124 (6.891)

Minority interests 0 0

TOTAL SHAREHOLDERS' EQUITY 50.074 43.854

LIABILITIESNON CURRENT LIABILITIES

Long term borrowings 14,18 28.682 32.562Long term provisions 15 4.039 3.940Deferred tax liabilities 30 772 1.178Other non current liabilities 16 44 30Total non current liabilities 33.537 37.710

CURRENT LIABILITIESTrade payables 17 34.660 1.603 37.508 1.345Short term borrowings 18 17.224 14.462 512Short term provisions 19 4.864 4.596Income taxes 30 2.401 1.930Other current liabilities 20 7.878 10.304Total current liabilities 67.027 1.603 68.801 1.857

TOTAL LIABILITIES 100.564 1.603 106.510 1.857

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 150.639 1.603 150.364 1.857

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Marcolin Group

Consolidated income statement

(euro/000) Note DEC 31, 2008 Of which % DEC 31, 2007 Of which %non recurrent non recurrent

NET SALES 22 186.845 1.493 100,0% 182.275 100,0%

COST OF SALES 23 (83.375) (2.569) (44,6)% (85.362) (357) (46,8)%

GROSS PROFIT 103.470 55,4% 96.913 53,2%

Selling and marketing costs 24 (79.062) (290) (42,3)% (80.467) (128) (44,1)%General and administrative expenses 25 (16.493) (8,8)% (14.317) (66) (7,9)%Other income and expenses 27 4.740 2,5% 1.442 0,8%Other non recurrent operating income and expenses 28 1.173 0,6% (3.701) (3.701) (2,0)%

OPERATING PROFIT - EBIT 13.828 7,4% (130) (0,1)%

FINANCIAL INCOME AND EXPENSES 29 (5.073) (2,7)% (3.991) (2,2)%

NET RESULT BEFORE TAXES 8.755 4,7% (4.121) (2,3)%Income taxes 30 (2.630) (1,4)% (2.770) (1,5)%Minority interests 0 0

NET RESULT 6.124 3,3% (6.891) (3,8)%

EARNINGS (LOSSES) PER SHARE 31 0,100 (0,112)


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Statement of changes in consolidated equity

(euro/000) Share Additional Other Retained Income Minorities Total capital paid in reserves earnings (loss) for interest Shareholders’

capital (losses) the period Equity

01.01.2007 31.958 37.320 (782) (3.093) (13.284) 0 52.119Disposition prior year income (11.005) (2.279) 13.284 0Earnings (losses) cash flow edge reserve (75) (75)Translation difference (1.299) (1.299)Result (6.891) (6.891)Net equity at 31.12.2007 31.958 26.315 (2.156) (5.372) (6.891) 0 43.854

01.01.2008 31.958 26.315 (2.156) (5.372) (6.891) 0 43.854Disposition prior year income (1.798) (5.089) 6.891 0Earning (losses) cash flow Earning (losses) cash flow edge reserve/stock option (182) (182)Translation difference 274 274Result 6.124 6.124Net equity at 31.12.2008 31.958 24.517 (2.064) (10.461) 6.124 0 50.074

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Marcolin Group

Consolidated cash flow statement

(euro/000) DEC 31, 2008 DEC 31, 2007

OPERATING ACTIVITIES:Income (loss) for the period 6.124 (6.891)Depreciation and Amortisation 4.184 4.753 Provisions 7.082 7.792 Impairment 0 475Income taxes 2.630 2.770 Interest expenses 3.154 2.677 Other non-cash items 220 (975)Operating profit before working capital changes 23.395 10.601

(Increase) decrease trade receivables 4.025 (800)(Increase) decrease other receivables 150 247 (Increase) decrease inventory (6.048) (1.643)(Decrease) increase trade payables (2.849) (2.553)(Decrease) increase other payables (2.404) 865 (Utilisation) of provisions (2.010) (896)(Decrease) increase tax payables 1.348 (1.460)Other non-cash items (3.356) 1.622Income taxes paid (1.918) (1.976)Interest paid (2.907) (2.896)Cash flows provided (used) by working capital changes (15.969) (9.489)

Cash flows provided by operating activities 7.425 1.112

INVESTING ACTIVITIES(Purchase) of property, plant and equipment (2.458) (3.629)Proceeds from the sale of property, plant and equipment 713 143(Purchase) of intangible assets (2.191) (427)Cash flows (used) in investing activities (3.936) (3.913)

FINANCING ACTIVITESIncrease (decrease) short term borrowings (3.778) 492 Borrowings- Increase 16.157 6.000- Decrease (13.647) (14.680)Changes in reserves 270 (1.299)Cash flows (used) in financing activities (998) (9.487)

Cash and cash equivalents increase (decrease) 2.491 (12.289)Effect of exchange rates on cash (121) (334)Cash and cash equivalents at beginning of year 10.789 23.411Cash and cash equivalents at year end 13.159 10.789

Explanatory Notes to the Consolidated Accounts of the Marcolin Group at 31 December, 2008

PREAMBLEThe Explanatory Notes set out below form an integral part of the Consolidated Annual Report & Accounts of the Marco-lin Group.

1. GENERAL INFORMATIONMarcolin S.p.A. (hereinafter referred to as the “Parent Company”) is a company incorporated under Italian law, registeredin the Belluno Companies Register with no. 01774690273 and whose shares are traded in Italy on the electronic equitymarket (Mercato Telematico Azionario) organised and managed by Borsa Italiana SpA.Marcolin S.p.A. is the parent company of the Marcolin Group, active in Italy and abroad in the production and marketing ofeyewear and sunglasses.

The addresses of the Company’s registered office and of the locations where its main activities take place are shown on theintroductory page of the Annual Report.

2. ACCOUNTING STANDARDSBasis of preparationThe 2008 consolidated financial statements have been prepared according to the International Accounting Standards(“IFRS”) issued by the International Accounting Standards Board (“IASB”) and approved by the European Union, as Reg-ulation no. 1606 issued by the European Parliament and the European Council in July 2002 provided for the compulsory ap-plication of the IAS/IFRS to the consolidated accounts of companies listed on the EU regulated marketed as from 2005.The IFRS are also deemed to include all the revised international accounting standards (“IAS”) and all the interpretationsof the International Financial Reporting Interpretations Committee (“IFRIC”), previously called the Standing Interpreta-tions Committee (“SIC”).These accounts have been prepared with a view to business continuity, using the accrual basis of accounting. The statutory accounts have been prepared based on the principle of historic cost, amended as required for the evaluationof several financial instruments, with the exception of some revaluations performed in previous financial years.The currency of the economic area in which the Group mainly operates is the euro and, since figures are shown in thousandsof euro, rounding differences may emerge in the totals.

Basis of presentation

In preparing the formats of the documents forming the consolidated year-end accounts, the Marcolin Group has applied thefollowing policies:- Balance sheet

Balance-sheet assets and liabilities have been separately classified as current and non-current as envisaged by IAS 1.More specifically, an asset must be classified as current when it meets one of the following criteria, i.e. when it is:(a) Held for collection, sale or consumption during the entity’s normal operating cycle;(b) Held primarily for the purpose of trading;(c) Assumed to be traded within 12 months after balance-sheet date;(d) Cash or a cash equivalent.All other assets have been classified as non-current.A liability must be classified as current when it meets one of the following criteria — i.e. when it is:(a) Expected to be settled within an entity’s normal operating cycle;(b) Held primarily for the purpose of trading;(c) Due to be settled within 12 months after balance-sheet date;(d) A liability for which the entity does not have an unconditional right to defer settlement of the liability beyond 12months.

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Marcolin Group

All other liabilities have been classified as non-current.Moreover, on the basis of IFRS 5, those assets (and related liabilities) whose book value will be recovered mainly on salerather than on continuing use have been classified as “Assets held for sale” and “Liabilities relating to assets held for sale”.

- Income statementCosts have been classified by function, separately indicating the costs of sales and distribution and administration costs,since it is believe that this method, based on the business sector in which the company is active, provides readers with moremeaningful and relevant information than the alternative classification of costs by nature.

- Statement of changes in equityThe statement was prepared presenting items in individual columns with reconciliation of the opening and closing balancesof each item forming equity.

- Cash flow statementPresentation of cash flows of operating activities is based on the indirect method, since this is considered to be the ap-proach most appropriate for the business sector in which the company operates. Based on this approach, the net result isadjusted for the effects of non-cash transactions on investment and finance transactions.

Basis of consolidationThe scope of consolidation includes companies directly and indirectly controlled. Below we provide a list of investments con-solidated on a 100% line-by-line basis and, for the sake of full information, a list of those recognised at equity. This methodrequires that investment initially be recognised at cost and that this amount be subsequently increased or decreased to recog-nise the investor’s relevant share of profit or loss after acquisition date, as well as the effects of other equity movements.


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List of interests

We also note that at the end of November 2008, the company Cébé S.A., after having acquired 100% of the subsidiaryMarcolin France S.a.r.l. from the Parent Company, incorporated said company through the procedure called T.U.P. (Trans-mission Universelle du Patrimoine) and at the same time modified its legal form from S.A. to S.A.S. and took on the de-nomination of an incorporated company, becoming Marcolin France S.A.S.

The consolidation method adopted is as follows: Companies are consolidated on a 100% line-by-line basis when the Groupexercises control over them (“subsidiary companies”) by virtue both via direct or indirect ownership of the majority of shareswith voting rights and via exercise of dominant influence expressed by the power to govern, even indirectly, the company’s fi-nancial and operating policies, obtaining related benefits from the same, also regardless of equity ownership. Any potentialvoting rights exercisable as at balance-sheet date are considered for the purpose of determining control. Subsidiary compa-nies are consolidated as from the date when control is acquired and are deconsolidated as from the date when such controlceases to exist.Business combinations by virtue of which control of a company is acquired are accounted for applying the purchase method,based on which the assets and liabilities acquired are initially measured at their fair value on acquisition date. If positive,the difference between the acquired assets’ and liabilities’ purchase cost and fair value is allocated to goodwill; if negativeit is recognised in the income statement. Purchase cost is determined on the basis of fair value, as at acquisition date, of as-sets given, liabilities incurred, and equity instruments issued, and all other related costs.During consolidation amounts stemming from transactions between consolidated subsidiaries, in particular receivables andpayables outstanding at the end of the period, costs and revenues, and finance expense and income, are eliminated. Similarly,significant profits and losses made between subsidiaries consolidated on a 100% line-by-line basis are eliminated. Any minority interest’s share of equity or of earnings is shown separately in a separate item in the statement of consolidatedequity called Minority Interest.Dividends distributed by companies consolidated on a 100% line-by-line basis are eliminated from the income statement, whichinstead incorporates the relevant companies’ results.

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Marcolin Group

Company Headquarters Currency Share capital Consolidation % ownership(euro/000) method Direct Indirect

Marcolin Asia Ltd. Hong Kong USD 198.863 line-by-line - 100,00%

Marcolin Benelux S.p.r.l. Faimes EUR 280.000 line-by-line 99,98% -

Marcolin do Brasil Ltda Jundiai BRL 2.509.030 line-by-line 99,90% 0,10%

Marcolin (Deutschland) GmbH Ludwigsburg EUR 300.000 line-by-line 100,00% -

Marcolin GmbH Fullinsdorf (CH) CHF 200.000 line-by-line 100,00% -

Marcolin Iberica S.A. Barcelona EUR 487.481 line-by-line 100,00% -

Marcolin International B.V. Amsterdam EUR 18.151 line-by-line 100,00% -

Marcolin Portugal Lda S. Joao do Estoril EUR 420.000 line-by-line 99,82% -

Marcolin (UK) Ltd Newbury GBP 850.000 line-by-line 99,88% -

Marcolin Usa Inc. New York USD 536.500 line-by-line 85,40% 14,60%

Marcolin France Sas Paris EUR 1.054.452 line-by-line 76,89% 23,11%

Cébé Sport S.A. in liquidation Nyon CHF 300.000 line-by-line - 99,00%

Marcolin Japan Co. Ltd. Tokyo JPY 40.000.000 Equity 40,00% -

Finitec S.r.l. Longarone EUR 54.080 Equity 40,00% -

Translation of foreign-currency financial statementsFinancial statements presented in a different currency are translated into euro according to IASs/IFRSs as follows:· Assets and liabilities are translated at the current exchange rates in force on balance-sheet date;· Revenues and costs, plus income and charges, are translated at the average exchange rate for the period considered to be

a reasonable approximation of the actual exchange rates at which the individual transactions took place;· Foreign exchange rate changes arising from translation of opening shareholders’ equity and the changes taking place in

the year are charged to the item “Reserve for translation differences” included in the item “Other reserves”.

The following table shows the exchange rates applied for translation:

Property, plant, and equipmentProperty, plant, and equipment are initially recorded at their acquisition or production cost, inclusive of pertinent ancillarycosts incurred to bring assets to working condition for their intended use, excluding land and buildings owned by the ParentCompany for which the deemed cost model has been used, on the transition date, based on the market value determinedthrough appraisal performed by an independent and qualified appraiser.Tangible assets are shown net of depreciation and of any impairment of value, with the exception of land, which is not de-preciated. Costs borne for ordinary and/or programmed maintenance and repairs go directly into the income statement in the financialyear when they are incurred. Costs concerning the extension, modernisation or upgrading of owned or leased third-party as-sets are capitalised to the extent that they can be separately classified as an asset or part of an assets. The amount initiallyrecognised undergoes systematic straight-line depreciation, calculated on the basis of assets’ useful life.If the asset depreciated is composed of items that can be identified separately, whose useful life differs significantly from thatof the other items of the fixed assets, depreciation is calculated separately for each of the items forming the asset accordingto the principle of component approach. Profits and losses deriving from the sale of assets or groups of assets are determinedby comparing the sale price with the relevant net book value.

Capital grants relating to tangible assets are recorded as deferred revenues and credited to the income statement over thedepreciation period of the assets concerned.Finance expenses relating to purchase of a fixed asset are charged to the income statement unless they are directly attrib-utable to the acquisition, construction or production of an asset justifying capitalisation.Assets acquired by virtue of a finance lease are recognised as tangible assets set against the related liability. Lease cost isbroken down into finance expense – charged to the income statement – and repayment of principal – recognised as reduc-tion of the relevant financial liability.Leases in which the lessor does not substantially transfer all the risks and benefits connected with ownership of the assetsare classified as operating leases. The costs of operating leases are shown line by line in the income statement for the dura-tion of the lease contract.


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Currency Final exchange rate Average exchange rateDEC 31, 2008 DEC 31, 2007 Change DEC 31, 2008 DEC 31, 2007 Change

English pound GBP 0,953 0,733 29,9% 0,796 0,684 16,4%Swiss franc CHF 1,485 1,655 (10,3)% 1,587 1,643 (3,4)%US dollar USD 1,392 1,472 (5,5)% 1,471 1,370 7,3%Brazilian real BRL 3,244 2,611 24,2% 2,674 2,664 0,4%Hong Kong Dollar HKD 10,786 11,480 (6,0)% 11,454 10,691 7,1%Japanese Yen JPY 126,14 164,93 (23,5)% 152,454 161,25 (5,5)%

Depreciation is calculated on a straight-line basis on assets’ estimated useful life, according to the depreciation rates indi-cated below:

Intangible fixed assetsIntangible assets consist of controllable, non-monetary assets without physical substance that are clearly identifiable and ableto generate future economic benefits. These assets are recognised at purchase and/or production cost, inclusive of directlyattributable expenses to bring the asset to working condition for use, net of cumulative amortisation (except for assets withan indefinite useful life) and of any impairment of value. Amortisation starts when the asset is available for use and is sys-tematically spread over the asset’s useful life.If any indications emerge suggesting impairment of value, the asset’s recoverable value is estimated, charging any impair-ment loss to the income statement. If the reasons for previous write-down cease to exist, carrying value is written back recog-nising this as income in the income statement, within the limits of what the asset’s net carrying value would have been if therehad been no impairment loss and the asset had been amortised.

GoodwillGoodwill is the excess of purchase cost over fair value of the share of the subsidiary company’s equity as at acquisition date,or of the business branch acquired. Goodwill deriving from the acquisition of subsidiary companies is posted in the “Good-will” account and is not amortised but subjected to annual testing – unless there are specific indicators making interim test-ing necessary – to ascertain the existence of impairment of value (i.e. impairment testing). Gains or losses on the sale of anentity are calculated considering the goodwill value of the entity sold.

Trademarks and licencesTrademarks and licences are recognised at cost. They have a finite useful life and are measured at cost net of cumulative amor-tisation. Amortisation is calculated on a straight-line base so as to allocate the cost of trademarks and licences accordingto their residual possibility of use.If impairment is found over and above the amortisation already charged, the asset would be consequently written down; ifthe reasons for write-down cease to exist in future financial years, the value is written back to the net book value that theasset would have had if the write-down had not been made or if amortisation had been made.Trademarks are amortised on a straight-line basis over their estimated useful life, ranging from 15 to 20 years.

SoftwareSoftware licences acquired are capitalised on the basis of the costs incurred for their purchase and the costs necessary tomake them serviceable. Amortisation is calculated on a straight-line basis over their estimated useful life (from 3 to 5 years).Costs associated with software programmes’ development and maintenance are posted as costs when they are incurred. Direct costs include the cost of employees who develop the software.

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Marcolin Group

Category Rate

Buildings 3%Non operating machinery 10%Depreciable equipments 40%Operating machines 15,5%Office furniture 12%Stand 27%Electronic machines 20%Vehicles 25%Trucks 20%

Research & development costsResearch and development costs for new products and/or processes are expensed when they are incurred when the require-ments laid down by IAS 38 regarding their capitalisation do not exist.

Impairment of asset value

In the presence of specific indications of loss of value, tangible and intangible assets are subject to impairment testing.For the purposes of impairment testing, goodwill is allocated to the smallest cash generating units (CGUs) that it is possi-ble to identify and compared with operating cash flows discounted to present value generated by such units.Testing consists of estimation of the asset’s recoverable value and comparison of the latter with its net carrying value. If anasset’s recoverable value is lower than its carrying value, the latter is reduced to recoverable value. This reduction is an im-pairment loss that is charged to the income statement.For assets that are not subject to depreciation and amortisation, and for intangible assets not yet available for use, impair-ment testing is performed at least annually, irrespective of the presence of specific indicators.The requisites and approach applied by the Group for restoring the value of an asset previously written down, excluding thatof goodwill, which cannot be written back – are those envisaged by IAS 36 (Impairment of Assets).

Financial derivativesDerivative financial instruments are used only with the intention of hedging, in order to reduce Group exposure to exchangerate and interest rate risks. All financial derivatives are measured at fair value, as provided for by IAS 39. In accordance withIAS 39, financial derivatives may only be entered in the accounts according to the hedge accounting method when, on com-mencement of hedging, the formal designation and documentation on the hedging relationship exists, it is presumed thathedging will be highly effective, the efficacy can be reliably measured and the hedging itself is highly effective during the var-ious accounting periods for which it is designated.If the hedge is effective, the following accounting policies apply:Fair value hedge – If a financial derivative is designated as a hedge for exposure to variations in the fair value of an asset ora liability shown in the financial statements attributable to a particular risk which may affect the income statement, the profitor loss deriving from the subsequent valuations of the fair value of the hedging instrument are recognised in the incomestatement. The item covered is adjusted to the fair value for the portion of risk covered and, as a counter value, there is aprofit or loss in the income statement. Cash flow hedge – if a derivative financial instrument is designed to hedge exposure to the variability of future cash flows ofan asset or liability booked in the financial statements, the actual portion of the fair value changes of the derivative finan-cial instrument is recorded in shareholders’ equity. The cumulative profit or loss is transferred from the equity and enteredin the income statement in the same period as that in which the transaction hedged took place. The profit or loss associatedwith a hedge (or part of a hedge) that has become ineffective is entered in the income statement immediately. If a hedge in-strument or a hedge account is closed, but the transaction hedged has not yet been realised, the cumulative profits or losses,recognised in equity up till then, are shown in the income statement at the time the relevant transaction takes place. If thetransaction hedged is no longer considered likely, the profits or losses not yet realised and outstanding in the equity arebooked to the income statement immediately. If hedge accounting cannot be applied, the profits or losses deriving from thevaluation at fair value of the financial derivative are recognised in the income statement immediately.

InventoriesInventories are measured at the lowest between average purchase or production cost and relevant presumed realisable valuebased on market trends. Presumed realisable value is calculated on the estimate of selling price in normal market conditionsnet of direct selling costs.Purchase cost has been used for products purchased for resale and for materials directly or indirectly used, purchased andused in the production process, whereas, for finished products or semi-finished products in process, production cost is used.


64

To determine purchase cost we have taken into account the price effectively paid, inclusive of directly attributable ancillarycosts, including: freight costs and customs duties net of trade discounts.In production cost, besides the cost of materials used, as defined above, we have included direct and indirect manufacturingcosts.Obsolete or slow-moving inventories are written down according to their possibility of use or realisation.

Financial assets – Receivables and borrowingsTrade receivables, current financial receivables and other current receivables, except for assets deriving from financial de-rivatives and all financial assets for which prices on an active market are not available and whose fair value cannot be de-termined reliably, are valued, if they have a prefixed maturity, at amortised cost calculated using the effective-interest method.When the financial assets do not have a prefixed maturity, they are valued at cost. Receivables maturing after more than ayear, not accruing interest or accruing interest below the market rate are discounted by applying the market rates and areentered in non-current assets. Valuations are regularly made in order to check whether there is any objective evidence thatthe financial assets taken individually or within a group of assets may have fallen in value. If such evidence exists, impair-ment is shown as a cost in the income statement for the period. With regard to trade receivables in particular, adjustment to realisation value is effected by means of an adjustment fund setup when there is an objective indication that the Group will not be able to collect the receivable at the original value.

Cash & banksCash and cash equivalents include cash, demand deposits held with banks, other highly liquid short-term investments, i.e.with an original duration of up to three months, and entered for amounts actually available at the year end.

Assets held for sale and related liabilitiesThese items should include non-current assets (or groups of assets and liabilities for sale) whose carrying value will be re-covered mainly through sale rather than through continuing use. Assets held for sale (or a disposal group) are valued at thelower of their net carrying value and the fair value net of costs of sale.If these assets (or a group held for sale) cease to be classified as an asset held for sale, the amounts are neither reclassifiednor resubmitted for comparative purposes with the classification in the balance sheet of the most recent year presented.

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Marcolin Group

EquityShare capitalShare capital consists of the parent company’s subscribed and paid-up capital. Costs strictly related to the issue of new shares are posted as a direct reduction of Equity net of the deferred tax effect.Treasury sharesTreasury shares are shown as a deduction of the Group’s equity. Treasury shares’ original cost and revenues stemming fromany subsequent sales of the same are shown as changes in equity. The own shares reserve in the portfolio recorded in previ-ous financial years is classified in the undivided profits reserve.

Stock optionsThe Group offers additional benefits to the Parent Company’s Managing Director through a stock options plan approved overthe course of 2008. In accordance with IFRS 2 - Stock Options, these plans represent a component in the beneficiary’s re-muneration. Hence, the cost is represented by the fair value of the stock option at the date it is assigned, and it is recorded atthe economic cost during the period between the date they are assigned and the date they mature, with the counter value reg-istered directly to equity. Variations in the fair value of the options after the date they are assigned do not affect initial value.

Employee benefitsEmployee benefits that are paid out upon or after cessation of the employment relation via defined-benefit programmes (asis the Italian employee severance indemnity system) are recognised at the time when the right to such benefits accrues. Liabilities relating to defined-benefit programmes are calculated on the basis of actuarial valuations and are posted on anaccrual basis consistently with the employee service necessary to obtain the benefits concerned. Our actuarial valuationshave been made by independent experts.Gains and losses stemming from actuarial valuations are posted in the income statement regardless of their value, withoutusing the so-called “corridor approach”.The employee severance indemnity fund, a peculiarity of the Italian entity, falls within the definition of defined-benefit pro-grammes. As from 1 January 2007 and only for companies with at least 50 employees, Financial Law 2007 (the law of 27December, 2006, no. 296, with associated implementing decrees) brought significant changes to the regulation of employeeseverance indemnity, including with regard to the possibility of the employee to choose how to allocate accruing indemnity.In particular, new severance pay flows may be assigned by the worker to pre-selected pension forms or kept within the com-pany (in which case the latter will pay the severance pay contributions into a treasury account held at the INPS).In light of these changes, the legislation must now consider a defined benefits plan exclusively for the amounts accrued be-fore 01 January, 2007 (and not yet paid at the balance sheet date), while after this date, it will be assimilated with a definedbenefits plan.

The changes that occurred in the reference laws led to variations in the actuarial assumptions used for valuating liabilitiesregarding funds matured through 31 December, 2006.The effects of these variations were recorded in 2007, which was the first year the accounting effects of this reform were ineffect, as well as its relative expenses (the so-called curtailment effect).

Provisions for risks and chargesProvisions for risks and charges comprise provisions stemming from present obligations (either legal or constructive) tothird parties as a result of a past event, settlement of which is likely to require an outflow of financial resources, the amountof which can be reliably estimated.Provisions are posted for an amount that is the best discounted estimate of the amount the company should pay to settle theobligation or to transfer it to third parties as at balance-sheet date.Changes in estimates are reflected in the income statement for the period when the change occurred.The risks for which the existence of a liability is only possible are identified in the section relating to commitments and guar-


66

antees without making any provision.

Trade and other non-financial payablesPayables whose due dates are consistent with normal terms of trade are not discounted to present value and are recorded attheir face value.

Financial liabilitiesLoans are initially recognised at cost, corresponding to the liability’s fair value net of the costs of its arrangement. After theinitial recording, these are valued at the amortised cost; any difference between the amount financed (net of the costs of in-curring the loan) and the par value is posted in the income statement throughout the life of the loan, using the effective in-terest method. If there is a change in expected cash flows and management is able to estimate them reliably, the value ofborrowings is recalculated to reflect any changes expected in cash flows.Loans are classified among current liabilities if they mature in less than 12 months after balance-sheet date and if the Groupdoes not have an unconditional right to defer their payment for at least 12 months.Loans are removed from the balance sheet when they are extinguished or when all risks and costs associated with them havebeen transferred to third parties.

Revenues and incomeRevenues are measured at fair value net of return sales, discounts, allowances, and bonuses.More specifically, the Group recognises revenues from the sale of goods in accounts when all risks and rewards of the goods’ownership are actually transferred to customers according to the terms of the sales agreement. These revenues are recog-nised net of an allocation which represents the best estimate of the profit lost due to customers returning merchandise. Thisallocation is based on specific historic figures.Revenue arising from performance of services is recognised with reference to the state of completion of the transaction atthe balance sheet date.Interest income is calculated on a time proportion basis and according to the effective yield of the asset to which such in-come refers.Dividends are recognised when the shareholder’s right to receive payment is established. This normally corresponds to theshareholders’ resolution on dividend distribution at the Annual General Meeting.

CostsCosts are posted according to the principles of relevance and economic accrual.

Financial income and expensesInterest is recognised on an accruals basis based on the effective-interest method, i.e. using the interest rate that renders allinflows and outflows constituting a specific transaction financially equivalent.

Translation of foreign currency amountsTransactions in currency other than the Euro are converted to the local currency using exchange rates in force at the trans-action date. Foreign exchange differences arising in the period go through profit or loss.Foreign currency receivables and payables are adjusted to the exchange rate in force as at balance-sheet date, recognisingthe whole amount of positive or negative foreign exchange differences in the income statement among finance income andexpense.

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Marcolin Group

Income taxesIncome taxes include all taxes calculated on Group companies’ taxable income, in compliance with legislative requirementsin force in the individual countries concerned. Income taxes are recognised in the income statement, with the exception ofthose concerning items directly debited or credited to equity, in which case the tax effect is recognised directly in equity.Deferred taxes are calculated based on the temporary differences generated between the value of the assets and liabilitiesincluded in the company accounts and the value attributed to those assets/liabilities for tax purposes.Deferred tax assets and liabilities are measured at the tax rates that are expected to be applicable, according to the respec-tive regulations in countries where the Group is active, in the financial years when temporary differences will be utilised orextinguished.Deferred tax assets (prepaid taxes) are recognised to the extent that it is likely that future taxable profit will be made againstwhich they will be able to be recovered. The carrying value of deferred tax assets is reviewed at each balance-sheet date and,if necessary, is reduced to the extent that it is no longer probable that sufficient taxable profit will be made to allow partialor total recovery of the assets. Any such reductions are reversed if the conditions causing them cease to exist.Other taxes not relating to income, such as property and capital taxes, are included in operating accounts.

Earnings per shareEarnings per share are calculated by dividing the Group’s net business result by the weighted average number of ordinaryshares outstanding during the financial year, excluding treasury shares.

Recording of revenuesRevenues are recorded net of returns, discounts, vouchers, and prizes, as well as taxes directly connected with the sales ofgoods and provision of services.Revenues from sales are recorded when the company has transferred significant risks and returns connected to ownership ofthe goods and the amount of revenue can be reliably determined. Revenue of a financial nature is recorded based on temporal competency.

Seasonality of revenuesIt should be noted that sales in the eyewear sector are mainly concentrated in the first half of the year.


68

NEW IFRS AND IFRIC INTERPRETATIONSThe Company has not opted for early adoption of the following Standards, Interpretations and Updates to standards alreadypublished and compulsory in future years:

69

Marcolin Group

IAS/IFRS Standard o IFRIC Interpretation Date Reg. UE Effectspublication (n.a. not applicable

date not relevant)

IFRS 8 – Operating sectors NOV 2006 JAN 2009 N.r. Marcolin SpA and Group 2008

IFRS 2 - Amendment relating to vesting conditions and cancellations JAN 2008 JAN 2009 N.a. 2008

IFRS 3 - Comprehensive revision on applying the acquisition method JAN 2008 JUL 2009 N.a. 2008

IAS 1 - Presentation of Financial Statements FEB 2008 JAN 2009 N.a. 2008IAS 32 - Financial Instruments: Presentation - Amendments relating to disclosure of puttable instruments and obligations arising on liquidation

IAS 27 - Consolidated and Separate Financial Statements MAY 2008 JUL 2009 N.a. 2008IAS 28 - Investments in AssociatesIAS 31 - Interests in Joint Ventures - Consequential amendments arising from amendments to IFRS 3

IFRS 1 – First-time Adoption of International Financial Reporting Standards MAY 2008 JAN 2009 N.a. 2008IAS 27 - Consolidated and Separate Financial StatementsAmendment relating to cost of an investment on first-time adoption

IAS 1 - Presentation of Financial Statements MAY 2008 JAN 2009 N.r. Marcolin SpA and Group 2008

IAS 16 - Property, Plant and EquipmentIAS 19 - Employee BenefitsIAS 20 - Governmenet Grants and Disclosure of Government AssistanceIAS 23 – Borrowing CostsIAS 27 - Consolidated and Separate Financial StatementsIAS 28 - Investments in AssociatesIAS 29 - Financial Reporting in Hyperinflationary EconomiesIAS 31 - Interests in Joint VenturesIAS 36 - Impairment of AssetsIAS 38 - Intangible AssetsIAS 39 - Financial Instruments: Recognition and MeasurementIAS 40 - Investment PropertyIAS 41 - Agriculture - Amendments resulting from May 2008 Annual Improvements to IFRSs

IFRS 5 - Non-current Assets Held for Sale and Discontinued Operations - Amendments resulting from May 2008 Annual Improvements to IFRSs MAY 2008 JUL 2009 N.a. 2008

IAS 39 - Financial Instruments: Recognition and Measurement - Amendments for eligible hedged items JUL 2008 JUL 2009 N.a. 2008

IAS 39 - Financial Instruments: Recognition and Measurement - Amendments for embedded derivatives when reclassifying financial instruments MAR 2009 JUL 2009 N.a. 2008

IFRS 7 - Financial Instruments: Disclosures - Amendments enhancing disclosures about N.r. Marcolin SpAfair value and liquidity risk MAR 2009 JAN 2009 and Group 2008

3. FINANCIAL RISK FACTORSMarket risksManagement of financial risks is an integral part of the Marcolin Group’s activities and is performed centrally by the par-ent company, based on guidelines covering some specific areas, i.e. hedging of foreign exchange risks (above all vis-à-vis theUS dollar) and of risks stemming from fluctuations in interest rates.The Group seeks to minimise the impact of such risks on its results also via use of some derivative instruments. Consistentlywith its chosen strategy, the company undertakes derivative transactions for the sole economic purpose of hedging. If, how-ever, according to application of the appropriate accounting standards (IAS 39 – Financial Instruments: Recognition andManagement) such transactions cannot be technically recognised in accounts as hedging transactions, they are not qualifiedas hedging transactions.

Foreign exchange riskThe Group operates internationally and is exposed to foreign exchange risk (particularly as regards the US dollar), cen-tralised management of which is entrusted to the Parent Company. The latter has the task, via its internal facilities, of ex-amining and monitoring the evolution of the amounts of the various foreign currency items and, consequently, of evaluatingpossible stipulation of appropriate contracts for hedging purposes via negotiation of the same on the derivatives market.This method makes it possible to maintain a balance of the key currency positions and based on sensitivity analysis of thechange in exchange rates, it is held that a change in exchange rates does not significantly impact the Group’s consolidatedfinancial statements.Note that the company has set up a specific policy for foreign exchange risk management.Details of the derivative contracts existing at year-end are as follows.


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Covering contracts for the change risk(euro/000)

Type Institute Notional Expiration date Mark to Marked

Forward purchase of foreign currency Cassa di Risparmio del Veneto 4.800 usd 25-06-2009 51(ex Banca Intesa)


date not relevant)

IFRIC 13 – Customer Loyalty Programmes JUN 2007 JUL 2008 N.a. 2008

IFRIC 15 - Agreements for the Construction of Real Estate JUL 2008 JAN 2009 N.a. 2008

IFRIC 16 - Hedges of a Net Investment in a Foreign Operation JUL 2008 OCT 2008 N.a. 2008

IFRIC 17 - Distributions of Non-cash Assets to Owners NOV 2008 JUL 2009 N.a. 2008

IFRIC 18 - Transfers of Assets from Customers JAN 2008 JUL 2009 N.a. 2008

Interest rate riskInterest-rate risk is split into fair value risk and cash flow risk.The Group is exposed predominantly to cash-flow risk originating from financial loans at variable interest rates. Note the matters shown in the section related to the risk of liquidity as regards the quantity analysis of the exposure to cash-flow risk of the Group, related to interest rates on loans.For details of the loans in question, see paragraphs 15 and 19 of this document.

The Group handles interest-rate oscillation risks through the use of derivative contracts, typically interest rate swap, whichmake it possible to reduce the variability of the interest rate.Details of the derivative contracts existing at year-end are as follows.

Sensitivity analysis on interest ratesA sensitivity analysis on the interest rate was conducted, assuming a parallel and symmetric shift up and down of 50 basispoints of the Euribor/Swap Eur interest rate curves, published by provider Bloomberg related to 31 December, 2008 and 31December, 2007. In this way, the impact on the income statement and shareholders’ equity that changes would have had couldbe estimated.The analysis did not include financial instruments not significantly exposed to changes in interest rates, such as short-termtrade receivables and payables Interest amounts on loans incurred with banks were recalculated based on the above-mentioned assumptions and the posi-tion in the year, redetermining the higher/lower financial charges calculated on an annual basis.

As regards interest rate derivatives, the interest pertaining to the year was recalculated based on the assumptions above. Atyear-end, derivative contracts were valued at the fair value using the interest rate curves modified based on the aforemen-tioned assumptions. For derivative contracts hedging cash flow, the opposite value of the fair value assessment is representedby the specific shareholders’ equity reserve, assuming full effectiveness of the report, while for the hedging derivatives, thevalue of the assessment to fair value is recorded on the income statement.

For cash and cash equivalents, the average balance for the period was calculated considering the values in the financial state-ments at the start and end of the year. On the amount calculated in this way, the income statement was affected by an in-crease/decrease in the interest rate of 50 basis points beginning on the first day of the period.

The sensitivity analysis, conducted according to the above criteria, indicates that the Group is exposed to interest rate riskin relation to expected cash flows. If interest rates rise by 50 basis points, the income statement would show a negativechange equal to € 48 thousand (€ -25 thousand in 2007) caused mainly by the increase in financial charges relating to bankborrowings, which is only partly offset by the improvements in the interest rate of derivatives, the positive revaluation oftrading derivatives and the higher interest income relating to cash. Contrariwise, shareholders’ equity would increase by €71 thousand (€127 thousand in 2007) due to the revaluation of hedge derivatives on cash-flow.

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Marcolin Group

Covering contracts for the interest rate risk(euro/000)

Type Institute Notional Expiration date Mark to Marked

Interest Rate Swap Efibanca 8.500 eur 27-06-2012 (351)Collar con knockout su cap Cassa di Risparmio del Veneto 7.801 eur 31-12-2010 (116)

(ex Banca Intesa)

If interest rates fall by 50 basis points, the income statement would show a positive change equal to € 52 thousand (€44thousand in 2007) caused mainly by the decrease in financial charges generated by bank borrowings, partly offset by the wors-ening of the interest rate on derivatives, the positive revaluation of trading derivatives and the lower interest income relatingto cash. Contrariwise, shareholders’ equity would increase by € 71 thousand (€129 thousand in 2007) due to the revalua-tion of hedge derivatives on cash-flow.

Credit riskThe Group does not feature significant concentration of credit risk. Assets are recognised in accounts net of any write-downcalculated based on the risk of counterparty non-performance determined based on the information available on the client’ssolvency and historic data.Guidelines have been implemented for managing customer credit to ensure that sales are undertaken only with reasonablyreliable and solvent parties, also via the creation of given and differentiated credit exposure ceilings.Below is the schedule with the breakdown of receivables by key areas in which the company operates in order to evaluatecountry risk.

Liquidity analysisLiquidity analysis regards loans, derivatives, and trade payables. Loans incurred have been indicated by time period, with cap-ital repayments and non-discounted interest. Future interest flows are determined based on the forward interest rates takenfrom the curve of spot rates published by Bloomberg at year-end.As regards derivatives, expected cash flows were considered based on the same market variables.None of the cash flows included in the table were subject to discounting.

For the assessment of the fair value of loans incurred, future cash flow was estimated on the basis of forward interest rateimplicit in the interest rate relative to the valuation date and, as regards calculation of the coupon in progress, of the mostrecent fixing available of the Euribor.The values calculated using this method were discounted based on the discount factors related to the various expiration datesof the cash flow mentioned above.

The derivatives used by the Company/Group are classified as OTC (over the counter) derivatives and therefore, there is no of-ficially recognised public price formed on the trading markets. To value these derivatives, the company used, respectively, dis-counted cash flow and Black & Scholes methods for interest rate swap and for the Cap and Floor, fed with input datapublished by Bloomberg.


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Receivables by gepgraphical area (euro/000)

Italy Rest of Europe North America Rest of the world Total31.12.2008 18.723 17.472 8.516 13.812 58.522 31.12.2007 25.430 13.386 5.733 8.361 52.909

4. USE OF ESTIMATESPreparation of the consolidated year-end accounts makes it necessary for management to make estimates that could affectthe carrying value of some assets and liabilities and reported costs and revenues, as well as disclosures concerning potentialassets/liabilities as at balance-sheet date.Estimates mainly refer to valuation of the recoverability of intangible assets, definition of tangible assets’ useful lives, the re-coverability of receivables (by prepaid taxes as well) and warehouse stock, and recognition or measurement of provisions. Es-timates and assumptions are based on data reflecting the present status of information to hand.The estimates and assumptions causing a significant risk of changes in the carrying values of assets and liabilities are:- Goodwill

The Group annually checks to see whether goodwill has to be subjected to impairment testing in accordance with ac-counting standards.Recoverable values have been calculated based on determination of “value in use”. These calculations require the use ofestimates of the future economic performance of the CGUs to which the goodwill refers, and on the discounting rate andprospective growth rate to be applied to the prospective cash flows.

- Write-down of non-current assetsIn accordance with the accounting standards and policies applied by the Group, non-current assets are subjected to test-ing to see whether value has been impaired, when indicators suggest that net carrying value exceeds relevant recoverablevalue, consisting of the higher of fair value (net of selling costs) and value in use. Verification of the effective materialityof such indicators requires directors to make subjective evaluations based on information available inside the Group andon market information, as well as on management’s knowledge. In the presence of potential impairment of value, theGroup calculates this using valuation techniques deemed to be appropriate. Proper identification of indicators of the ex-istence of potential impairment of value and estimates to calculate it depend on factors that may vary over time, affect-ing the valuations and estimates made by directors.

- Deferred income taxRecognition of deferred tax assets is based on expectations of income in future financial years. Assessment of expectedincome for the purposes of recognition of deferred taxes depends on factors that may vary over time and have significanteffects on the assessment of deferred tax assets.

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Marcolin Group

Financial payables Loans Derivatives Commercial TOTAL(euro/000) payables

within 3 months 0 0 35.477 35.477from 3 to 6 months 6.085 (15) 1.973 8.043from 3 to 12 months 5.148 (10) 58 5.196from 1 to 3 years 25.427 72 0 25.499from 3 to 5 years 10.056 9 0 10.065over 5 years 335 0 0 335TOTAL 31.12.2007 47.051 56 37.508 84.615

within 3 months 2.365 0 33.982 36.347from 3 to 6 months 7.061 102 959 8.122from 3 to 12 months 7.549 139 (281) 7.407from 1 to 3 years 25.232 219 0 25.451from 3 to 5 years 4.674 9 0 4.683over 5 years 251 0 0 251TOTAL 31.12.2008 47.133 469 34.660 82.263

5. PROPERTY, PLANT AND EQUIPMENTThese assets featured the following breakdown and changes:

Investments made in the year came to € 2,458 thousand (€ 3,629 thousand in 2007) and refer mainly to investments madeby the Parent Company intended to increase production capabilities for € 588 thousand (€ 930 thousand in 2007) and re-newal of industrial and commercial equipment for € 1,213 thousand (€ 1,360 thousand in 2007). The item “Other assets” increased, on a consolidated level, by € 564 thousand (€ 534 thousand in 2007) mainly pursuantto investments made in trade-fair stands.

Depreciation, of a total of € 3,265 thousand (€ 3,785 thousand in 2007), was booked for € 2,086 thousand (€ 2,458 thou-sand in 2007) in the item cost of goods sold, for € 754 thousand (€ 906 thousand in 2007) in the item distribution costsand for the remaining € 425 thousand (€ 421 thousand in 2007) in the item overheads and administration.Impairment, relative to 2007, refers entirely to value losses registered with reference to tangible assets of the company Cébé.

The gross value of property, plant and equipment and the value of the associated depreciation reserve at 31 December, 2008are shown in the following table:


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Property, plant and equipment Land Plant and Other Industrial and Assets under Totaland buildings machinery commercial construction

(in euro thousands) equipment

Opening 2007 9.851 2.097 1.755 1.730 204 15.636 Increases 60 945 1.769 534 320 3.629 Decreases (8) (1) (1) (12) 0 (22)Amortisation (649) (676) (1.595) (865) 0 (3.785)Translation difference (79) 0 (9) (23) 0 (110)Impairment (102) 0 (98) (86) 0 (285)Other movements 373 246 326 133 (203) 875 Net value at end of 2007 9.446 2.611 2.148 1.411 321 15.936

Opening 2008 9.446 2.611 2.148 1.411 321 15.936 Increases 15 588 1.244 564 47 2.458 Decreases (121) (66) (323) 99 0 (411)Amortisation (572) (623) (1.311) (759) 0 (3.265)Translation difference 287 0 1 (11) 1 278 Impairment 0 0 0 0 0 0Other movements (25) 0 35 136 (342) (196)Net value at end of 2008 9.029 2.510 1.794 1.440 27 14.800

Property, plant and equipment Land Plant and Other Industrial and Assets under Totaland buildings machinery commercial construction

(in euro thousands) equipment

Historical cost 16.904 12.456 14.997 9.370 27 53.754Accumulated amortisation (7.876) (9.946) (13.203) (7.959) 0 (38.984)Net book value 9.029 2.510 1.794 1.411 27 14.770

6. INTANGIBLE ASSETS AND GOODWILLThese assets featured the following breakdown and changes:

Over the course of the financial year, investments totalling €1,947 thousand (€394 thousand in 2007) were made, of which€1,800 thousand were for acquisition of the Web trademark.In fact, during the month of November, parent company Marcolin S.p.A., taking into account that the strategic guidelines fordevelopment of the Group called for the opportunity to create and/or acquire trademarks to integrate and stabilize the totaltrademark portfolio over time, acquired the Web trademark for the associated party Demo Holding S.A. Previously thistrademark had been used commercially by Marcolin through a licensing contract. In order to valorise this intangible asset and evaluate the appropriateness of the purchase price, an estimate from an inde-pendent professional was acquired, which confirmed the reasonability and congruence of the purchase price.Taking into account the fact that purchase of the trademark occurred at the end of the year, performance of an impairmenttest was not held to be necessary.

Depreciation, of a total of € 918 thousand (€ 967 thousand in 2007), was booked for € 180 thousand (€ 169 thousand in2007) in the item cost of goods sold, for € 538 thousand (€ 621 thousand in 2007) in the item distribution costs and forthe remaining € 199 thousand (€ 177 thousand in 2007) in the item overheads and administration.

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Marcolin Group

Intangible assets and goodwill Industrial Concessions, Other Total Intangible Goodwilland other licenses and assets

(in euro thousands) patent rights trademarks

Opening 2007 2.336 1.048 90 3.474 2.454 Increases 66 225 102 394 0Decreases 0 0 (6) (6) 0Amortisation (732) (209) (27) (967) 0Translation difference (12) (95) (1) (108) (259)Impairment 0 (189) 0 (189) 0Other movements 23 416 (93) 346 0Net value at end of 2007 1.682 1.196 65 2.942 2.195

Opening 2008 1.682 1.196 65 2.942 2.195 Increases 139 1.802 6 1.947 0Decreases 0 0 0 0 0Amortisation (752) (148) (19) (918) 0Translation difference (15) 39 3 26 127 Impairment 0 0 0 0 0Other movements 186 (71) 18 133 0Net value at end of 2008 1.240 2.818 74 4.131 2.322

The gross value and accumulated depreciation of intangible assets and goodwill are shown in the table below:

The item goodwill is relative to the previous acquisition of an American company by Marcolin USA, which was subjected toan appropriate impairment test based on determination of the enterprise value of the CGU to which it refers, consisting ofthe American subsidiary. The test structure and parameters utilized are described below.

Impairment test structureThe impairment test, according to the requirements of IAS 36, is performed at least once a year, with reference to intangi-ble assets with an indefinite useful life, and with reference to other types of assets, is performed in the presence of externalor internal indicators that may cause the belief that a loss of value exists. In particular, for preparation of the financialstatements for the year 2008, there were not indicators that suggested the presence of a loss of value with reference to tan-gible assets. With reference to intangible assets, as mentioned above, it should be noted that during this financial year thisitem saw a significant increase following the purchase of the Web trademark. This asset, subjected to a depreciation process,was acquired at the end of the year, and was subject to an appropriate appraisal as it was also a transaction with an associ-ated party. On this basis, in addition to its congruity with Group plans with regards to development and other production mar-gins to Web trademarks, it was held that no loss of value existed with reference to said asset. With regards to the goodwillbooked in the current consolidated financial statements with reference to assets in the US market, the verification of a lossof values was performed with regards to the totality of the American subsidiary. It was hence retained opportune to estimatethe value in use of the CGU identified with the company Marcolin USA based on the parameters specified below.

The value in use, which is compared with the accounting value of the assets, was estimated based on future financial cashflows congruent with the economic and financial forecasts of the Group with reference to financial year 2009. In fact, in con-sideration of the highly uncertain conditions that characterise the current macroeconomic situation, the Directors found itopportune to limit financial predictions to a single financial year. The approved budget for financial year 2009 takes into ac-count the economic crisis that took hold during the second half of 2008. However, it should be noted that the estimates arebased on valuations relative to future events that could occur with effects different from those that are expected, causing thepossibility of changes, possibly significant, with respect to the forecasted data considered here. The value in use was deter-mined as the sum of the actual value of cash flows predicted for 2009 and the terminal value determined based on the fore-cast data. Due to the generalized conditions of uncertainty, it was held to be prudent to use a growth rate of zero in determiningthe terminal value. For discounting of the cash flows, a rate of 8.68% was used, which reflects current market valuationsfor the cost of money and the specific risks connected with operations activities.The test results found that no losses of value exist with reference to the goodwill.Additionally three sensitivity analyses were performed on the impairment test, simulating respectively, a variation in thegrowth rate from 0 to 1%, in the exchange rate €/$ of +/- 5%, and a variation in the discounting rate of 0.5%, 1% and1.5%. None of these scenarios led to results in which write-downs would be necessary.


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Intangible assets and goodwill Industrial and Concessions, Other Total Goodwillother patent rights licenses and Intangible

(in euro thousands) trademarks assets

Historical cost 5.857 7.393 256 13.506 7.318Accumulated amortisation (4.619) (4.575) (181) (9.375) (4.996)Net book value 1.239 2.818 74 4.131 2.322

7. INTERESTSInformation on interests in associated companies is shown below.

Finitec S.r.l. galvanises and paints eye glasses and is the parent company’s supplier for such operations.The book value of the interest increased from € 592 thousand in 2007 to € 627 thousand following the profit of the yearpertaining to the Group for € 35 thousand.

The value of the net capital pertaining to the company Marcolin Japan Co. Ltd. went from a negative balance of €50 thou-sand in 2007, to a positive value of €132 thousand after the capital increase of 23.6 million Yen, occurring during the monthof December 2008, and due to profit for the year pertaining to the Group totalling €9 thousand.

8. OTHER NON-CURRENT ASSETSThis item consists mainly of the value of receivables arising from a barter credit transaction executed by the Marcolin USAsubsidiary, which was concluded by means of the sale of goods, undertaken in previous financial years, in exchange for ad-vertising services to be received in future. This contract’s end date, originally set for February 2008, was renegotiated, ex-tending it to December 2014. In addition, the possibility has now been envisaged of transferring the credit between Groupcompanies.

77

Marcolin Group

Interest in associates(euro/000)

Finitec S.r.l. Share Capital 54.080 eur DEC 31, 2008 DEC 31, 2007Assets 2.679 2.554

Liabilities 1.113 1.074

Shareholders' equity 1.567 1.480

Net sales 2.766 2.387

Income (loss) for the period 87 51

% Ownership 40% 40%

Marcolin Japan Co. Ltd. Share Capital 99.000.000 jpy DEC 31, 2008 DEC 31, 2007Assets 2.952 1.602


Shareholders' equity 330 (124)

Net sales 2.335 1.295

Income (loss) for the period 24 (358)

% Ownership 40% 40%

9. INVENTORIESDetails of inventories are shown below.

Comparing warehouse values, it can be noted:- an increase in the value of finished products and merchandise equal to €3,902 thousand, essentially generated by mov-

ing forward presentation of eyewear collections to the market with respect to the previous financial year;- a decrease in the value of commodities and total works in progress, totalling €3,214 thousand.The balance for the reserve for inventory decreased by €919 thousand.

10. TRADE AND OTHER RECEIVABLESDetails of trade and other receivables are as follows:

The balance of net trade receivables decreased by €2,271 thousand with respect to the previous financial year, mainly dueto closure of Cébé activities linked to winter items. The amount of receivables shown in the financial statements has not been discounted, as the carrying value of short-term re-ceivables provides a reasonable representation of the fair value.


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Inventories (euro/000) DEC 31, 2008 DEC 31, 2007

Finished goods 46.143 42.241Raw material 10.226 12.128Work in progress 8.334 9.646Gross inventory 64.703 64.015Inventory provision (12.486) (13.405)Net inventory 52.216 50.609

Trade and other receivables(euro/000) DEC 31, 2008 DEC 31, 2007

Gross receivables 61.191 64.304Provision for bad debts (4.330) (5.172)Net trade receivables 56.861 59.132Tax receivables 1.109 2.727Other receivables 552 981Total trade and other receivables 58.522 62.840

With a view to providing the information requested under IFRS 7, below is a detail of the trade receivables “falling due”,split by geographical area:

In compliance with the provisions of IFRS 7, the table below illustrates the expiration date of the trade receivables not sub-jected to protest. The value of the allowance for doubtful accounts remained substantially unchanged with respect to the pre-vious financial year.

In some markets where the Group operates, company policy dictates that receivables are collected beyond the expirationdate foreseen by contract without this leading to financial difficulties or liquidity problems on the part of customers. Hence,there are balances relative to receivables from clients which were not subject to write-downs, even if the terms of expirationfor payment had already occurred. The table below illustrates the balance of these commercial receivables, divided into uniform time classes.

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Marcolin Group

Receivables by geographical area DEC 31, 2008 DEC 31, 2007(euro/000)

Italy 13.583 17.566Rest of Europe 11.074 16.157North America 5.741 5.064Rest of the world 10.605 7.660Total 41.004 46.447

Ageing commercial receivable not protested Gross value Provision Net value (euro/000)

31-Dec-2007Not overdue 47.056 (34) 47.022Overdue less than 3 months 9.727 (569) 9.158Overdue from 3 to 6 months 2.078 (819) 1.259Overdue over 6 months 3.051 (1.828) 1.223Total 31-Dec-2007 61.911 (3.250) 58.661

31-Dec-2008Not overdue 41.178 (50) 41.128Overdue less than 3 months 7.068 (140) 6.929Overdue from 3 to 6 months 3.422 (547) 2.876Overdue over 6 months 7.298 (2.383) 4.915Total 31-Dec-2008 58.967 (3.119) 55.848

Trade receivables overdue and not written-down DEC 31, 2008 DEC 31, 2007(euro/000)

Overdue less than 3 months 5.463 7.095Overdue over 3 months 4.006 3.224Total 9.469 10.319

For the sake of full disclosure, below is an illustration of the maturity of the receivables submitted to protest. Note that thebook value of these receivables is immaterial.

Below is an explanation of the changes in the allowance for doubtful accounts.

Note that the use of funds refers for the most part to receivables that can be traced to Cébé, due to the effects of the above-mentioned closure of activities. The largest part of allocations with respect to the previous financial year, equal to €451 thou-sand, mainly refers to the subsidiary Marcolin USA. Note also that the amounts reported with trade receivables are not subject to guarantees.

11. OTHER CURRENT ASSETSThis item mainly comprises prepaid expenses relating to insurance premiums and rents paid on an advance basis.

12. CASH & CASH EQUIVALENTSThe item represents the value of cash balances and of highly liquid financial instruments, i.e. with an original maturity of lessthan three months. The increase of € 2,370 thousand is explained in the cash flow statement which shows the use of cash toward investmentsand loan repayment.


80

Ageing protested receivable Gross value Provision Net value (euro/000)

DEC 31, 2007Overdue less than 12 months 587 (423) 165Overdue over 12 months 1.806 (1.500) 306Total DEC 31, 2007 2.393 (1.922) 471

DEC 31, 2008Overdue less than 12 months 466 (441) 25Overdue over 12 months 721 (703) 18Total DEC 31, 2008 1.187 (1.144) 43

Provision for bad debts 2008 2007(euro/000)

Opening 5.172 3.353 Allowance 1.164 713 Utilisation (1.908) (596)Reclassification and other movements (83) 1.785 Translation difference (15) (82)Total short term provisions 4.330 5.172

13. EQUITYThe Parent Company’s share capital amounts to € 32,312,475.00 and is composed of 62,139,375 ordinary shares with apar value of € 0.52 each.Marcolin S.p.A. holds 681,000 treasury shares in portfolio with an overall equivalent value of € 947 thousand, used to re-duce the share capital by a nominal value of € 354 thousand and the remaining € 593 to reduce the treasury reserve in-cluded in the profits carried forward.For details of changes in the items forming the equity, refer to the relevant table.

Stock option reserveThe stock option reserve is in accordance with IFRS 2 principles. In fact, adoption of a stock option plan brings with it thenecessity of recording for accounting purposes a cost equal to the fair value of the options at the date of allocation. This costis recognised in the income statement for the duration of the period in which the conditions for use of such options matures,and a counter value is placed in the associated equity reserve.

At 31 December, 2008, the first financial year in which this reserve is booked, it amounted to €94 thousand, with a totalcounter value booked to the income statement for the year at an equivalent amount, completely traceable to the stock op-tion plan approved over the course of 2008 for the Managing Director of the Parent Company.

14. MEDIUM- AND LONG-TERM BORROWINGSThe balance of long-term loans at 31 December, 2008 (including the related short-term portion) is represented nearly en-tirely by loans distributed by Banca Intesa S.p.A. (now Cassa di Risparmio del Veneto) and Efibanca S.p.A. (head of a con-sortium of financial credit institutions). For the details, see point 18, Short-term loans.

Note that the contract sealed with a group of banks headed by Efibanca S.p.A., was signed on 27 June, 2007 for a maxi-mum of € 30 million, split into two equal portions of € 15 million each, the first of which was provided in the form of anunsecured loan and the second as a stand-by line of credit. At 31 December, 2008 the residual existing debt amounted to a total of €27.7 million.

Below the composition of the net financial position is illustrated. For more information please refer to that indicated abovein the Management Report.

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Marcolin Group


Cash 99 120 Cash equivalents 13.060 10.668 Short term borrowings (4.228) (6.781)Current portion of long term borrowings (12.995) (7.682)Long term borrowings (28.682) (32.562)Total Net financial position (32.747) (36.236)

15. LONG-TERM PROVISIONSThe item expresses the balance of the value of the defined benefit plan, which is distributable at the same time or subsequentto the termination of the employment relationship, and is totally represented by the employee severance indemnity reserveposted in the financial statements of the parent company and accrued as at 31 December 2006.Note that the severance indemnity accruing from 01 January, 2007 is treated as a defined contribution plan. Therefore, theGroup discharges its obligations with payment of the contributions to the severance reserves (public or private).

The changes in the aforesaid provisions are shown below:

The following table shows the various rates assumed for the relevant actuarial calculation:

16. OTHER NON-CURRENT LIABILITIESThis item consists mainly of the value of accrued liabilities and deferred income falling due more than 12 months after bal-ance-sheet date.


82

Long term provisions - Staff leaving indenities (euro/000)

DEC 31, 2007 3.940 Provisions 215 Utilization (418)Actuarial loss 303 Other movements 0DEC 31, 2008 4.039

Actuarial assumptions

Ipotesi attuariali 2008mortality rate: Tavola RG48disabilty rate: Tavole INPS distinte per età sessopersonnel turnover rate: 5,00%severance prepaiments: 2,00%discount rate: 4,60%wages increase rate: 3,90%inflation rate: 3,20%

17. TRADE PAYABLESThe following table details trade payables by geographical area:

The amount of trade payables seen in the balance sheet were not subject to discounting, as the amount booked in the bal-ance sheet represents a reasonable representation of the fair value in consideration of the fact that there are no payables withdeadlines past short-term.

18. SHORT-TERM BORROWINGSThe value shown represents the balance of short-term borrowings and other financial liabilities that mature within 12 monthsafter balance-sheet.

The contractual agreements relating to the loans granted to Marcolin S.p.A. by Banca Intesa S.p.A (now Cassa di Risparmiodel Veneto) and Efibanca S.p.A. include a series of obligations relating to operational and financial aspects. In particular,several financial economic indexes (“covenants”) need to be observed, calculated in the consolidated financial statementsat the end of each year. The contract with Banca Intesa requires compliance with the parameters at the end of each six-monthperiod.If these parameters are not observed, the conditions under which the loan agreements will continue will have to be negoti-ated, or the relevant changes made to the aforesaid parameters. Otherwise, the amounts granted may have to be repaidearly.The covenants are calculated on the main financial economic indicators (EBITDA, net financial position and equity). At 31December, 2008 and over the course of the financial year, the covenants were respected in their entirety.

83

Marcolin Group

Payables by gepgraphical area (euro/000) DEC 31, 2008 DEC 31, 2007

Italy 18.482 25.045Rest of Europe 3.447 4.632North America 1.080 1.086Rest of the world 11.651 6.745Total 34.660 37.508

In the following table we detail the characteristics of the main loans issued to the Group:

* These loans envisage contractual covenants as detailed in the explanatory notes to the accounts of Marcolin Group.

We point out that all loans in place were granted at arm’s length market conditions without provision of collateral.

The following table contains details of the maturity of the financial liabilities, whose value is entered either in current liabil-ities or in non-current liabilities. Please note that the item Lines of credit use (within 1 year) in 2007 included €2,709 thou-sand relative to the subsidiary Cébé.

With regards to the information about derivatives existing at 31 December, 2008, their characteristics, and a comparison withthe previous financial year, please refer to the information in the Explanatory notes to the separate annual report and ac-counts for Marcolin S.p.A.


84

Bank Currency Starting Residual Expiration Interest NotesAmount Amount Date Rate

Cassa di Risparmio EUR (credit line) 13.054.357 DEC 31, 2010 Euribor "Stand by" credit line "revolving" type, del Veneto 25.000.000 6 months dated FEB 16, 2006. Refundable in 8 half-year (ex banca Intesa) * + 1% installments from JUN 30, 2007.

EFIBANCA * EUR (credit line) 27.750.000 JUN 27, 2012 Euribor A "Term Loan Facility" of 15.000.000 and 30.000.000 6 months a "Stand by Facility" loan of 15.000.000,

+ 1,05% dated JUN 27, 2007. Paid out the "Term Loan Facility" line, refundable in 10 half-year installmentsfrom DEC 27, 2007 and part - payment of the "Stand by Facility" line of 6.000.000, refundable in 7 half-year installments from JUN 27, 2009.

Ministero delle EUR 793.171 640.861 JUN 26, 2016 1,012% Subsidized loan in accordance with the Law attività produttive no. 46, 1982, refundable in 10 year installments (Innovazione Tecnologica) from June 26, 2007.

Unicredit Corporate CHF 3.500.000 3.500.000 FEB 5, 2009 3,5375% Short term borrowings dated JAN 29, 2008 Banking due-date FEB 5,2009. Extention to MAY 11,

2009, tax rate 2%.

Borrowings Bank loans and overdrafts Bank borrowings Other financial TOTAL(euro/000) institutions

within 1 year 5.110 8.779 598 14.487between 1 and 3 years 0 22.514 176 22.690between 3 and 5 years 0 9.357 164 9.521over 5 years 0 0 327 327DEC 31, 2007 5.110 40.650 1.265 47.025

within 1 year 1.723 15.417 83 17.223between 1 and 3 years 0 23.678 185 23.863between 3 and 5 years 0 4.413 160 4.574over 5 years 0 0 246 246DEC 31, 2008 1.723 43.508 675 45.906

19. CURRENT PROVISIONSBelow we show a table containing the most significant changes occurring during the financial year:

The item Provisions for termination indemnities and similar obligations consists of provisions for agent indemnities payableupon cessation, the amount of which has been discounted to present value.The Other provisions amount consists of provisions made against the risk of customer return sales (€ 3,995 thousand) andof risk provisions for other liabilities arising from present legal or constructive obligations (€ 375 thousand).

20. OTHER CURRENT LIABILITIESBelow we show the detail of other liabilities:

The item Other current liabilities mainly consists of payables to personnel and payables to social security institutions whichsaw decreases of €1,198 thousand and €1,013 thousand, respectively.

21. COMMITMENTS AND GUARANTEESBelow we show details of the main commitments and guarantees of Group companies:

The item consisted mainly of a surety of € 761 thousand issued to the bank issuing a low-rate loan under Italian Law394/81.We also point out that contracts are in place for the use of trademarks owned by third parties for the production and saleof eyewear and sunglasses. These contracts require payment by the Marcolin Group of guaranteed minimum royalties through-out their duration. As at 31 December, 2008 the total of these future commitments amounted to € 94 million (€ 84 million

85

Marcolin Group

Short term provisions Provision for Other (euro/000) severance indemnities provisions

DEC 31,2007 431 4.165Provisions 144 1.866Actuarial (gain) (15) (41)Utilization (66) (1.705)Other movements 0 85DEC 31,2008 495 4.370

Other current liabilities DEC 31, 2008 DEC 31, 2007(euro/000)

Payables to personnel 5.570 6.768 Social security payables 1.697 2.710 Royalties 333 407 Other accrued expenses and deferred income 279 419 Total 7.878 10.303

Contingencies (euro/000) 2008 2007

Guarantees to third parties 1.465 1.853

in 2007), of which € 14 million falling due within the next 12 months.

Details of the rent and leasing commitments are shown below, in accordance with IAS 17:

The commitments relating to lease charges refer to a lease contract for the American subsidiary.


86

Commitments 2008 2007(euro/000)

RentsWithin one year 676 605 From one to five years 2.415 2.178 Over five years 0 513 Total rents 3.090 3.296

Operating leasesWithin one year 35 39 From one to five years 23 38 Over five yearsTotal operating leases 58 77

Total commitments 3.148 3.373

22. NET SALESThe breakdown of net sales as at 31 December, 2008 was as follows:

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Marcolin Group

CONSOLIDATED INCOME STATEMENT DEC 31, 2008 % On sales DEC 31, 2007 % On sales(euro/000) non recurrent non recurrent

NET SALES 186.845 100,0% 182.275 100,0%

COST OF SALES (83.375) (44,6)% (85.362) (46,8)%

GROSS PROFIT 103.470 55,4% 96.913 53,2%

Selling and marketing costs (79.062) (42,3)% (80.467) (44,1)%General and administrative expenses (16.493) (8,8)% (14.317) (7,9)%Other income and expenses 4.740 2,5% 1.442 0,8%Other non recurrent operating income and expenses 1.173 0,6% (3.701) (2,0)%

OPERATING PROFIT - EBIT 13.828 7,4% (130) (0,1)%

FINANCIAL INCOME AND EXPENSES (5.073) (2,7)% (3.991) (2,2)%

NET RESULT BEFORE TAXES 8.755 4,7% (4.121) (2,3)%Income taxes (2.630) (1,4)% (2.770) (1,5)%Minority interests 0 0

NET RESULT 6.124 3,3% (6.891) (3,8)%

EARNINGS (LOSSES) PER SHARE 0,100 (0,112)

Net sales details DEC 31, 2008 DEC 31, 2007 Increase (decrease)(euro/000) Turnover % on total Turnover % on total Turnover % on total

Category:- Frames 185.250 99,1% 171.860 94,3% 13.390 7,8%- Ski goggles 920 0,5% 7.435 4,1% (6.515) (87,6)%- Accessories 675 0,4% 2.980 1,6% (2.306) (77,4)%Total by category 186.845 100,0% 182.275 100,0% 4.569 2,5%

- Italy 36.314 19,4% 37.212 20,4% (898) (2,4)%- Europe 72.567 38,8% 73.860 40,5% (1.293) (1,8)%- U.S.A. 40.278 21,6% 40.004 21,9% 274 0,7%- Rest of the world 37.686 20,2% 31.199 17,1% 6.486 20,8%Total by geographical area 186.845 100,0% 182.275 100,0% 4.569 2,5%

23. COST OF SALESThe following table shows the detailed breakdown of cost of sales:

The value of cost of sales, in absolute terms, was reduced by €1,987 thousand (+€11,692 thousand in 2007), with a con-sequent reduction in the percentage of impact of revenues equal to 2.3%.

24. DISTRIBUTION & MARKETING COSTSBelow we show the detailed breakdown of distribution & marketing costs:

The impact of distribution and marketing costs with respect to sales revenues was reduced by 1.7% due to a decrease in im-pact for all cost items, with the exception of royalties, which can be directly traced to the increase of revenues for brandsunder licensing agreements.


88

Cost of sales DEC 31, 2008 DEC 31, 2007 Increase %(euro/000) (decrease)

Purchase of material and finished goods 52.223 52.453 (230) (0,4)%Changes in inventory (2.253) (1.061) (1.192) 112,3%Personnel expenses 14.656 15.392 (736) (4,8)%Outworks 11.404 10.906 498 4,6%Amortisation and depreciation 2.267 2.627 (360) (13,7)%Other expenses 5.077 5.045 32 0,6%Total cost of sales 83.375 85.362 (1.987) (2,3)%

Selling and marketing costs DEC 31, 2008 DEC 31, 2007 Increase %(euro/000) (decrease)

Personnel expenses 20.887 21.762 (876) (4,0)%Commissions 8.803 9.063 (260) (2,9)%Amortisation and depreciation 1.292 1.527 (236) (15,4)%Royalties 21.379 20.202 1.177 5,8%Advertising and PR 12.920 13.509 (590) (4,4)%Other costs 13.782 14.403 (621) (4,3)%Total selling and marketing costs 79.062 80.467 (1.406) (1,7)%

25. GENERAL & ADMINISTRATIVE COSTSThe detailed breakdown of general & administrative costs was as follows:

The total value of the item in question increased with respect to the previous period by €2,176 thousand, mainly due to thefollowing:- increased personnel costs sustained by the Parent Company and Cébé;- an increase in the item Other costs, mainly with reference to variable compensation due to Directors;- write-downs on receivables for greater allocations performed by the subsidiary Marcolin Usa.

Pursuant to Article 149-duodecies of the Regulation, note that the consideration pertaining to the year 2008 due to the in-dependent auditors of the parent company, and to the entities belonging to its network for subsidiaries, for the accountingaudit service amounted to € 254 thousand, while the fee paid for tax assistance and consulting amounted to € 39 thousand.

26. MARCOLIN GROUP EMPLOYEESDetails of the overall number of employees engaged by the various Group companies are shown below:

89

Marcolin Group

General and administrative expenses DEC 31, 2008 DEC 31, 2007 Increase %(euro/000) (decrease)

Personnel expenses 5.566 4.590 975 21,2%Bad debt provsion 1.164 713 451 63,3%Amortisation and depreciation 624 598 25 4,2%Other costs 9.138 8.416 722 8,6%Total general and administrative expenses 16.493 14.317 2.176 15,2%

Employees - Average numberCategory 2008 2007




27. OTHER REVENUES AND COSTSThe details of Other operating revenues and costs were as shown below:

The balance of this item was positive, €4,740 thousand, an improvement of €3,298 thousand with respect to the previousfinancial year, mainly due to the release of provisions for future risks and charges relative to Cébé, which had been allocatedin previous financial years in order to provide for restructuring of the subsidiary.

28. OTHER EXTRAORDINARY OPERATING COSTSBelow is the schedule with a detail of each item:

The item Non recurrent income and expenses had a positive balance, with an improvement of €4,874 thousand over 2007.The shift was generated by the non-recurring income booked to 2008 to record the windfall gains seen by Cébé. Referringto the data from the previous financial year, it is necessary to note the non-recurring costs recorded were due to expenses forrestructuring due to restructuring of Cébé.


90

Other operating income and expenses DEC 31, 2008 DEC 31, 2007(euro/000)

Transport refund 1.413 1.391Release of provision 2.630 81Other income 1.270 744Total other income 5.313 2.216

Loss on credits 0 (621)Loss on investments (573) (153)Total other (expenses) (573) (774)

Total other operating income and expenses 4.740 1.442

Other non-recurring operating expenses DEC 31, 2008 DEC 31, 2007(euro/000)

Cébé restructuring costs 0 (3.646)Non-recurring income 1.811 445Non-recurring expenses (636) (501)Total 1.173 (3.701)

29. FINANCE INCOME AND EXPENSEThe detail of the item Finance income and expense is as follows:

Finance income is described in detail in the following table:

Finance expense is described in detail in the following table:

The increase in the item Finance income and expense was equal to €1,082 thousand. In particular, we note:- an increase to the item Interest liabilities totalling €381 thousand, due to the effects of the interest rate increases;- increase costs for exchange rates, equal to €613 thousand with respect to the previous year, which can be attributed to

losses sustained on exchange rates, mainly in relation to operations denominated in the Brazilian real.

91

Marcolin Group

Financial income and expenses DEC 31, 2008 DEC 31, 2007(euro/000)

Financial income 3.335 1.691Financial expenses (8.408) (5.681)Total financial income and expenses (5.073) (3.991)

Financial income DEC 31, 2008 DEC 31, 2007(euro/000)

Interest income 223 217 Other income 248 206 Gains on exchage rate differences 2.864 1.267 Total financial income 3.335 1.691

Financial expenses DEC 31, 2008 DEC 31, 2007(euro/000)

Interest expenses (3.062) (2.681)Other expenses (1.119) (1.047)Cash discounts (819) (755)Losses on exchage rate differences (3.407) (1.197)Total financial expenses (8.408) (5.681)

30. INCOME TAXThe breakdown of deferred taxes and income tax for the year was as follows:

In relation to carrying forward of tax losses, we note that deferred tax assets for a total of €9 million were not recorded(€15.1 million in 2007), which can be traced to fiscal losses suffered by Cébé and Marcolin USA. We also note that an ad-ditional €4 million in deferred tax assets were not recorded, relative to Marcolin USA.

For current taxes, the tax burden was determined according to the taxable income arising from the year’s result, taking intoaccount use of any prior tax losses and applying the statutory tax rates in force in each country.


92

Net deferred taxes movements 2008 2007

Net deferred taxes at 1 JanuaryPositive (negative) deferred taxes 1.238 1.729 Credit (debit) to Income Statements 1.397 (489)Credit (debit) to Net Equity 0 0 Other movements 0 0Translation differences 0 (1)Net deferred taxes at 31 December 2.634 1.238

Income taxes 2008 2007

Current taxes 3.920 2.310Deferred taxes (1.547) 460Total income taxes 2.630 2.770

Deferred taxes 2008 2007

Non current assets 209 182Current assets 2.365 682Provisions 833 1.548Tax losses carried forward 4Deferred tax assets 3.406 2.416

Non current assets (1.567) (1.950)Current assets 795 998Provisions 0 (226)Deferred tax liabilities (772) (1.178)

Net deferred taxes 2.634 1.238

The theoretical tax rate for the year was 35.68% (-35.58% in 2007), while the effective tax rate was 30.05% (-67.23%in 2007).

Please note that payable for current taxes at 31 December, 2008 amounted to €2,401 thousand (€1,930 thousand at 31December, 2007) against an allocation during the year of €3,920 thousand.

Over the course of 2008, the Parent Company, with reference to that established in article 1, paragraph 48 of Law no. 244of 24 December, 2007 (Financial Law 2008), chose to realign the fiscal values to the values of the balance sheet for the yearfor the taxes relative to some tangible assets.Realignment of the fiscal values to the greater values recorded in the year’s balance sheet (the free value is equal to €420thousand) was obtained through payment of a substitute tax totalling €161 thousand to be paid in 3 annual payments. Thefirst payment of 30% (€48 thousand) was paid on 16 June, 2008, the second and third payments, equal to 40% (€64thousand) and 30% (€48 thousand), respectively, will be paid in June 2009 and June 2010.The effect of this operation was equal to €255 thousand, and its economic benefits are seen entirely in this financial year.

31. EARNINGS PER SHAREBase earnings per share (EPS) are given by the ratio of parent company earnings to the weighted average number of ordi-nary share outstanding during the financial year, with the exclusion of treasury shares. For further details on the values re-lating to the increase in share capital, refer to the section on Equity.The result per share is as follows:

93

Marcolin Group

Income (Loss) per share 2008 2007

Income (Loss) for the period (in euro) 6.124.136 (6.891.447)Number of shares 62.139.375 62.139.375 Treasury stock 681.000 681.000 Net number of shares 61.458.375 61.458.375 Income (Loss) per share 0,100 (0,112)

Tax rate reconciliation 2008 2007

Income (loss) before taxes 8.755 (4.121)Tax expected 3.124 1.466Taxes relating to prior periods 284 147Permanent differences 2.683 445Utilisation previous years losses (4.440) (768)Taxes on operations 980 1.480Total income taxes 2.630 2.770

32. FINANCIAL INSTRUMENTS BY TYPEThe financial instruments are shown by uniform classes in the table below which shows the fair value in accordance with IFRS7.For the assessment of the fair value of loans incurred, future cash flow was estimated on the basis of forward interest rateimplicit in the interest rate curve at year end and, as regards calculation of the coupon in progress, of the most recent fixingavailable of the Euribor.The values calculated using this method were discounted based on the discount factors related to the various expiration datesof the cash flow mentioned above.The derivatives used are classified as OTC (over the counter) derivatives and therefore, there is no officially recognised pub-lic price formed on the trading markets. To value these derivatives, the company used, respectively, discounted cash flow andBlack & Scholes methods for interest rate swap and for the Cap and Floor, fed with input data published by Bloomberg.


94

Classes of financial assets Loans and Assets at fair value Investments Available Total value Fair valueDEC 31, 2007 receivables through the profit hold to for sale(euro/000) and loss maturity

Trade receivables 59.132 0 0 0 59.132 n/a

Classes of financial liabilities Liabilities Derivatives Other financial Available Total value Fair valueDEC 31, 2007 at fair value used for liabilities for sale

through the profit hedgingand loss

Trade payable 0 0 37.508 0 37.508 n/aDerivatives (12) 75 0 0 0 63Loans 0 0 41.915 0 41.915 42.621

Classes of financial assets Loans and Assets at fair value Investments Available Total value Fair valueDEC 31, 2008 receivables through the profit hold to for sale

and loss maturity

Trade receivables 56.074 0 0 0 56.074 n/aDerivatives 0 51 0 0 0 51



Trade payable 0 0 34.660 0 34.660 n/aDerivatives (116) (351) 0 0 0 (467)Loans 0 0 45.906 0 45.906 42.542

TRANSACTIONS WITH SUBSIDIARY COMPANIES BOOKED AT EQUITY, RELATED AND ASSOCIATED COMPANIES

INFORMATION ON ABNORMAL AND UNUSUAL TRANSACTIONS AND TRANSACTIONS WITH RELATED PARTIESWith regard to the suggestions made with Consob Communications nos. DAC/98015375 of 27 February 1998 andDEM/6064293 of 28 July 2006, the necessary information on abnormal and unusual transactions and transactions with re-lated parties is provided below.

Abnormal and unusual transactionsNo abnormal and/or unusual transactions were reported, between Group companies, during the course of 2008, nor were thereany extraordinary business activities, or activities that might have a significant effect on the economic, capital or financialsituation of Marcolin S.p.A. and the Group.

Transactions with related partiesRelations with Group companies are mainly commercial and established under market conditions. At 31 December, 2008, the Group holds a debt with the company Demo Holding SA, owner of the Web brand associated withthe shareholder and Deputy Chairman of Marcolin S.p.A. Diego Della Valle, for an amount of € 81 thousand (€ 103 thou-sand in 2007), and costs totalling € 290 thousand (€ 493 thousand in 2007).During 2008, the Group had supply relations with the company Tod’s S.p.A., through the shareholders Diego Della Valle(Deputy Chairman of Marcolin S.p.A.) and Andrea Della Valle, for a total amount of € 142 thousand (€ 688 thousand in2007).As already noted in the information at item 6 Intangible assets, we repeat here that over the course of the year, Parent Com-pany Marcolin S.p.A. acquired the Web trademark for the amount of €1.8 million, a mark for which it already had a license,from the associated party Demo Holding S.A. The congruence of the price for this purchase was supported by an estimatereport provided by an independent professional.

In view of the foregoing, it is believed that the aforesaid transactions did not have a significant effect on the economic re-sults and on the capital and financial situation of the group.

Non-recurrent significant events and operationsNo significant non-recurrent events or operations occurred that had effects upon the Group’s equity, economic, and financialsituation over the course of 2008, beyond those that have already been noted in the associated items in the Consolidated In-come Statement.

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Marcolin Group

(euro/000) Expenses Revenues Receivables Payables Relation

Finitec S.r.l. (2.383) 0 (1.426) 0 AssociatedMarcolin Japan (105) 1.273 (96) 787 AssociatedDemo Holding SA (363) 73 (81) 0 AssociatedTod's S.p.A. (5) 147 0 0 AssociatedWin S.r.l. (3) 0 0 0 Associated

SEGMENT REPORTING

The information shown below is based on the geographical areas in which the Group is active. We have identified geograph-ical areas as our primary segments of activity. The methods used to identify primary segments of activity have been selectedalso in consideration of the Group’s operating policies. More specifically, these policies are based on grouping by geograph-ical area defined according to the registered location of Group companies. Consequently, the sales identified on the basis ofthis segmentation are calculated according to invoicing origin and not according to end-use market.

As at balance-sheet no secondary segmentation had been identified.


96

Segmental Information ITALY FRANCE REST NORTH OTHER & MARCOLINby Region (euro in thousands) OF EUROPE AMERICA CONSOLIDATION GROUP

2008 2007 2008 2007 2008 2007 2008 2007 2008 2007 2008 2007

Net sales 120.550 110.795 20.468 28.066 34.193 34.314 45.902 42.840 (37.335) (33.740) 183.778 182.275

Intersegment sales 40.311 32.464 (552) 6.117 16 37 62 114 (39.837) (38.732) - -

Net sales third parties 80.239 78.330 21.020 21.949 34.177 34.278 45.841 42.726 2.502 4.992 183.778 182.275

Gross profit 44.264 40.156 9.114 10.123 16.678 17.053 28.224 26.620 2.687 2.961 100.967 96.913

in % of net sales 36,7% 36,2% 44,5% 36,1% 48,8% 49,7% 61,5% 62,1% (7,2%) (8,8%) 54,9% 53,2%

Operating profit 6.206 (3.726) (3.178) (1.971) 275 (549) 4.403 2.797 5.059 3.319 12.874 (130)

Share of P/(L) 8 (118) 0 0 0 0 0 0 0 0 8 (118)

of associates and

Net Equity Method

Assets 146.334 146.334 16.689 16.727 21.426 21.611 18.956 18.956 (52.734) (53.265) 150.639 150.364

Investment 759 1.148 0 0 0 0 0 0 0 0 759 1.148

in Associates

Liabilities 44.958 44.958 13.027 12.074 8.775 10.057 11.127 11.127 22.678 28.294 100.564 106.510

Capital expenditure 2.879 2.879 683 683 161 161 289 289 393 10 4.405 4.022

Amortization (4.258) (10.550) (1.139) (2.984) (507) (546) (1.078) (1.160) (47) 8.484 (7.029) (6.756)

and depreciation

Other non cash items (3.368) (2.269) 4.180 (1.822) (256) (167) 373 1.238 1.755 929 (1.264)

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Marcolin Group

MARCOLIN S.P.A.SEPARATE FINANCIAL STATEMENTS

AT 31 DECEMBER 2008

Financial communicationsMarcolin S.p.A. constantly maintains contact with its shareholders, investors, and analysts, through the Investor Relationsoffice which guarantees continuous information about the Group for the financial markets.On the official website www.marcolin.com, in the Investor Relations section, economic-financial data is available, as well asthe company presentation and periodic publications, official press releases, and real-time stock updates.

Stock market performance

Based on data from Borsa Italiana S.p.A.

The shares of Marcolin SpA have been listed on Milan’s electronic equity market (Mercato Telematico Azionario – MTA)since July 1999. The above chart shows the stock’s performance from 1 January to 31 December, 2008.

2008 was characterised by an international macroeconomic situation that was heavily negative, decidedly worse than 2007.Its effects severely penalised prices on the main world stock markets, whose indexes saw losses that were among the worstof the last few decades. The American financial crisis, which had already begun in the second half of 2007, became more acute over the course of2008, leading to a global liquidity crisis. Despite numerous monetary policy interventions, and bailouts of important finan-cial and credit institutions, begun first in America, and then successively in Europe and throughout the world, the crisis inthe international financial markets worsened over the last quarter of 2008, heavily influencing world stock market indexes.With regards to the Italian market, Piazza Affari ended the year with a 49% decrease, while the S&P Mib40 ended the yeardown 50%.

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Marcolin S.p.A.

2.1.2008 13.3.2008 25.5.2008 3.8.2008 15.10.2008 27.12.2008

0,9

1,0

1,1

1,2

1,3

1,4

1,5

1,6

1,7

1,8

1,9

The eyewear sector, and more generally, producers of luxury items, were severely penalised and the main players drasticallyreduced their capitalisation in the stock market. In this context, Marcolin stocks saw a decrease of 45% with respect to 2007,substantially in line with the main competition in the sector.

SHAREHOLDER COMPOSITION (based on voting rights)

*Members of the Marcolin family


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Marcolin SpA stock market information 2008

Result per share (euro) 0,024Shareholders’ equity per share (euro) 1,01Year-end price (euro) 1,86Maximum price (euro) 1,86Minimum price (euro) 0,99Price per share / Result per share 78,35Price per share / Shareholders’ equity per share 1,85Market capitalization at DEC 31, 2008 62.948.276Average number of outstanding shares 41.966Number of shares representing the share capital 62.139.375

Coffen Giovanni Marcolin*14,753%

Zandegiacomo Maria Giovanna*1,918%

Coffen Marcolin Cirillo*4,251%

Coffen Marcolin Maurizio*4,251%

Coffen Monica*5,404%

Diego Della Valle20,300%

Andrea Della Valle20,300%

Luigi Abete9,333%

Treasury stock1,906%

Market18,393%

The shareholder Giovanni Marcolin Coffen owns shares directly and indirectly via INMAR S.r.l.The shareholder Diego Della Valle owns shares via the company DDV Partecipazioni Srl.The shareholder Andrea Della Valle owns shares via the company ADV Partecipazioni Srl.The shareholder Luigi Abete owns shares via the company LUAB Partecipazioni S.r.l.

Share capital consists of 62,139,375 ordinary shares with a par value of € 0.52 each for a total amount of € 32,312,475.00.

The above figures represent updates received up to 24 March 2009.

Corporate GovernanceMarcolin S.p.A. adheres to the Corporate Governance code created by the Italian Stock Exchange’s Corporate GovernanceCommittee, completed in March 2006, including later amendments and adjustments.Marcolin has defined an articulate and homogenous system of rules of conduct with regards to the organisational structureand relationships with company stakeholders, characterised by principles of good governing, in order to maximise values forshareholders and guarantee transparency.On the website www.marcolin.com, in the Investor Relations section, information is available regarding the company corpo-rate governance system, including the corporate charter.For more detailed information regarding corporate governance, please refer to the report created pursuant to the laws andregulations in force, which provides complete information about the methods of enforcing the corporate governance systemand adhesion to the Corporate Governance Code. This document will be deposited with Borsa Italiana S.p.A. in accordancewith the law and will also be available for consultation in the Investor Relations section on the website www.marcolin.com.

Direction and Coordination ActivitiesMarcolin S.p.A. is not subject to direction and coordination activities on the part of companies or organisations and definesits strategic, general, and operational plans in full autonomy.

Non-EU SubsidiariesThe administrative body of Marcolin S.p.A., a company which controls a company constituted and regulated by the laws ofa country which does not belong to the European Union, attests to the existence of the conditions found in article 35 ofCONSOB regulation no. 16191/2007, letters a)-c). In particular, it has ascertained that the non-EU subsidiary:- have provided the controlling company’s auditors with all the information necessary to conduct control activities on the

annual and infra-annual accounting;- have an administrative-accounting system adequate to regularly provide the controlling company’s management, con-

trolling body and auditors with economic, equity and financial data necessary for preparation of the consolidated finan-cial statements.

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Marcolin S.p.A.


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Marcolin S.p.A. Management Report for the year ending on 31 December, 2008

The Annual Financial Statements at 31 December, 2008, including the balance sheet for the financial year, as a financial re-port called for under article 154-ter of Legislative Decree 58/1998 (Consolidated Finance Act), was prepared in conformancewith the valuation and measurement criteria established by the international accounting standards IAS/IFRS, adopted by theEuropean Commission, according to the procedure indicated in article 6 of the European Parliament Regulation no.1606/2002 and the Council of 19 July 2002, relative to application of international accounting standards, as well as the in-dications provided through implementation of Legislative Decree no. 38/2005.

Directors’ comments on operating performanceShareholders,Over the course of 2008, the international macro-context was characterised by a recession in the world economy and by aserious crisis in the international financial markets which became more acute during the second half and which still contin-ues to negatively influence consumptions and investments on a global level.

In this unusual and difficult economic environment, we have watched the luxury segment go through an additional decreasein consumption during the fourth quarter of the year. After years of growth, the eyewear sector saw a slowing of demand, dueto the decreased propensity for spending on the part of consumers.

In this context, Marcolin S.p.A. stood out with its high-quality, top of the range products, combined with a balanced portfo-lio of strong brands, well-known throughout the world, and without overlap.

For Marcolin S.p.A., the year 2008 was characterised by the following important events:a return to significant net profit after three years of losses;growth in revenue generated mainly by the Luxury & Fashion segment;the signing of important new licensing agreements relating to the Tod’s, Hogan, Dsquared2 and John Galliano brands, whichare situated in the Luxury & Fashion market range, sales of which will begin during 2009.

The financial year ending at 31 December, 2008 records, in fact, profits of €1,461 thousand (with respect to a loss of€1,798 thousand at 31 December, 2007, generated mainly by the subsidiary Cébé) and with an EBITDA of €11,201 thou-sand (€10,442 thousand at 31 December, 2007).

Revenues amounted to € 120,550 thousand, an increase of 8.8% on 31 December, 2007 (€ 110,795 thousand).

The following table summarises Marcolin S.p.A.’s key economic indicators

L' EBITDA is (EBIT) before Amortisation and Depreciation

The Group’s net sales rose by €9,756 thousand compared with the same period in the previous year. This amounts to an in-crease of 8.8%. Taking into account the extremely problematic international economic context, these results are extremelyimportant, occurring thanks to the significant growth of licences in the portfolio.

With regards to the allocation of sales by geographic area, we saw an increase in sales in the Rest of the World (+17.5%)and in Europe (+16.3%), demonstrating the greater internationalization of Marcolin S.p.A.In the US market, there was a 6.9% increase in sales. The contraction of revenues in Italy was mainly due to the effects ofclosing the winter-sports related activities for the Cébé brand.Analysing revenues towards subsidiaries, there was an increase in sales to the French branch (+61%) and to the Americanbranch (+23%).

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Year Net Change % EBITDA % EBIT % Net % Earning sales of net of net result of net per shares

(euro/000.000) sales sales sales (EPS)

2004 98,4 14,7% 14,9 15,2% 11,0 11,1% 1,7 1,7% 0,0372005 85,2 (13,4)% 6,1 7,2% (10,6) (12,4)% (12,0) (14,1)% (0,269)2006 87,8 3,1% 8,8 10,1% (6,2) (7,0)% (11,0) (12,5)% (0,241)2007 110,8 26,1% 10,4 9,4% 3,4 3,0% (1,8) (1,6)% (0,029)2008 120,6 8,8% 11,2 9,3% 6,7 5,5% 1,5 1,2% 0,024

Marcolin SpA income statement DEC 31, 2008 % On sales DEC 31, 2007 % On sales(euro/000)

Net sales 120.550 100,0% 110.795 100,0%Gross profit 44.264 36,7% 40.156 36,2%Operating profit - EBIT 6.650 5,5% 3.377 3,0%Financial income and expenses (3.030) (2,5)% (2.909) (2,6)%Net result before taxes 3.621 3,0% 468 0,4%Net result 1.461 1,2% (1.798) (1,6)%EBITDA 11.201 9,3% 10.442 9,4%

Net sales by geografic area DEC 31, 2008ssssss DEC 31, 2007ssssss Increase (decrease)(euro/000) Turnover % on total Turnover % on total Turnover % on total

- Italy 35.712 29,6% 37.133 33,5% (1.421) (3,8)%- Europe 45.315 37,6% 38.979 35,2% 6.337 16,3%- U.S.A. 12.434 10,3% 11.634 10,5% 800 6,9%- Rest of the world 27.089 22,5% 23.049 20,8% 4.040 17,5%Total by geographical area 120.550 100,0% 110.795 100% 9.756 8,8%

Fiscal year 2008 closed with EBITDA of €11,201thousand (€10,442 thousand at 31 December, 2007) and accounting for9.3% of sales (9.4% in 2007), with an absolute increase of € 759 thousand.

Operating profit (EBIT) was €6,650 thousand (equal to 5.5% of revenues), with respect to a total of €3,377 thousand at31 December, 2007 (3%).

Finance income and expense saw a slight increase of €121 thousand, but with a lower percentage weight with respect to theprevious year.

Capital and Financial SituationDetails of the net financial position at 31 December, 2008 compared with that of the previous year are shown below:

Marcolin S.p.A.’s overall net financial position worsened by €2,362 thousand with respect to the previous year, due to in-vestments in tangible and intangible assets.

With regards to the breakdown of debt over the year, compared with the situation at 31 December, 2007, an increase in theshort-term portion of long-term borrowing can be noted, due to the effects of (i) an increase in the reimbursement rate ofthe unsecured loan incurred from a consortium of banks, led by Efibanca, as called for in the loan’s original payoff plan,and (ii) use, over the course of the year, of the entire amount available in the stand-by credit line, provided through the samecredit institutions.

During the course of the year, the parent company Marcolin S.p.A. repaid the principal on existing loans for a total of €8,847 thousand.

In order to round off analysis of the composition of Marcolin S.p.A.’s financial position, we note that the year-end netdebt/equity ratio was 0.66 (vs. 0.64 at 31 December, 2007).


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Cash 23 50Cash equivalents 4.667 4.782Short term borrowings (4.222) (11.172)Current portion of long term borrowings (12.995) (77)Long term borrowings (28.654) (32.519)Total Net financial position (41.181) (38.936)

Details of the value of the net working capital, compared with the figures for the previous financial year, are illustrated in thefollowing table:

With reference to the different items that make up the net working capital, we note:- the increase, with respect to the previous financial year, of the inventory amounting to €1,127 thousand, which can be

traced to the decision to anticipate market presentation of the sunglasses collection with respect to the previous year, aswell as an increase in revenues;

- the increase in the value of commercial debt totalling €2,993 thousand, attributable to the increase in revenues;- the increase of other current assets and liabilities mainly due to the increase in payables for current taxes (€1,345 thou-

sand) and other liabilities (€793 thousand).

Gearing is the ratio between Net financial position and Net equity

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Marcolin S.p.A.

Net working capital DEC 31, 2008 DEC 31, 2007(euro/000)

Inventory 41.312 40.185Trade and other receivables 55.196 52.203Trade payables (34.559) (34.995)Other current assets and liabilities (8.578) (6.453)Total Net working capital 53.370 50.940

Marcolin SpA financial highlights(euro/000)

Year Net financial position Shareholders' equity Gearing

2004 (41.322) 53.766 0,77 2005 (47.255) 44.481 1,06 2006 (33.863) 63.077 0,54 2007 (38.936) 61.204 0,64 2008 (41.181) 62.483 0,66

Summary balance sheet figures were as shown below:

Please refer to the illustrative notes for the associated comments.

Shareholdings held by members of the Boards of Directors and the Statutory Auditors, general managers and execu-tives with strategic responsibilities (Art. 79 Consob regulation, resolution 11971 of 14 May, 1999)In compliance with Attachment 3C, outline 3 of Consob Regulation 11971 of 14 May 1999, note below the list of share-holdings in Marcolin S.p.A. held by directors, auditors and managers with strategic responsibilities at the year-end dateof 31 December, 2008.

* Cébé SA, after the acquisition of Macolin France S.a.r.l, changed the name in Marcolin France S.a.s.


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Name Participated N. of shares N. of shares N. of shares N. of shares held companies held prior year purchased sold at year end

Abete Luigi Marcolin S.p.A. 3.108.663 1.462.265 4.570.928

Della Valle Diego Marcolin S.p.A. 12.614.279 12.614.279

Coffen Giovanni Marcolin Marcolin S.p.A. 9.167.646 9.167.646Marcolin France S.a.s.* 1 1

Coffen Marcolin Cirillo Marcolin S.p.A. 2.641.853 2.641.853Marcolin France S.a.r.l.* 4 quota 4 0 quotaMarcolin UK Ltd. 1 quota 1 quotaMarcolin France S.a.s. * 2 2Marcolin Portugal Lda 1 quota 1 quota

Coffen Marcolin Maurizio Marcolin S.p.A. 2.641.853 2.641.853Marcolin France S.a.s.* 1 1Marcolin Benelux S.p.r.l. 1 quota 1 quota

Balance sheet Marcolin SpA DEC 31,2008 DEC 31,2007(euro/000)

AssetsNon current assets 56.073 55.876Current assets 101.529 97.464Total Assets 157.603 153.340


LiabilitiesNon current liabilities 34.433 38.684Current liabilities 60.686 53.452Total Liabilities and Net equity 157.602 153.340

SIGNIFICANT EVENTS AFTER BALANCE-SHEET DATE AND EXPECTED BUSINESS PROGRESSIn the context of an extremely uncertain international macroeconomic framework and the unequivocal signs of demand weak-ness seen during the first few months of 2009, despite the recognition that the current financial year will represent a diffi-cult and challenging year, Marcolin believes that it can face this scenario by (i) counting on the effects of the incisive actionstaken during 2008 to improve production processes and total organisational efficiency, and (ii) paying great attention to con-trolling the dynamics of working capital and cash-flows.The company also has the advantage of a definitely competitive portfolio of licences, mainly aimed at the high-end of the mar-ket (Luxury & Fashion) and which was recently enriched by additional prestigious brands (Tod’s, Hogan, Dsquared, and JohnGalliano). In the early months of 2009, there was a very favourable reception of the Dsquared2 collections, which were pre-sented at the MIDO fair, while work is at an advanced stage on the launch of the Tod’s and Hogan licences – with presenta-tion planned for the summer – and on the John Galliano licence, with the launch planned for the end of the year. Work is alsoin progress on analyzing the various proposals for further licences which Marcolin receives, in order to complete and furtherreinforce the Group’s current portfolio.

MAIN RISKS AND UNCERTAINTIES TO WHICH MARCOLIN S.P.A. AND THE MARCOLIN GROUP ARE EXPOSEDRisks connected to the general conditions of the economyThe Marcolin Group’s economic, capital, and financial situation are influenced by various factors that influence the macro-economic framework found in the various countries in which the Group operates, including levels of consumer and companytrust. Over the course of 2008, and in particular during the last quarter, the financial markets were characterised by par-ticularly severe volatility, with serious effects and repercussions for various banking and financial institutions, and moregenerally, on overall economic performance. The significant and widespread deterioration in market conditions was addi-tionally worsened by the presence of a serious liquidity crisis, which led to difficulties in accessing credit, both for con-sumers as well as for companies. These effects were reflected in industrial development in many sectors, including those inwhich the Marcolin Group operates. These factors, combined with a contraction in disposable income for families led to, inparticular starting in the last quarter of 2008, a significant decrease in demand in the Group’s main reference markets.Despite the numerous and incisive monetary and financial policy initiatives, promoted on an international level, serious un-certainty remains about the time necessary to re-stabilise conditions in order to move past this situation Hence, it is not clearhow long it will take to return to normal market conditions. Additionally, in many countries a recession could occur, per-haps prolonged.In the case that this situation of serious weakness and uncertainty remains past the short-term, the Group’s activities, strate-gies, and prospective could be negatively impacted, with consequent negative impacts to the Group’s economic, capital, andfinancial situation.The generally negative economic context could additionally see the effect of an increase of the credit risk to which the Groupis subject, relative to exposure towards its clients, who may have increased difficulties in making payments. With regards tothis, the Group, in the field of its commercial risk management policies, is taking all possible actions to guarantee recoveryof trade receivables.

Risks connected with the Group’s resultsAny macroeconomic event, such as a significant fall in one of the main markets, the volatility of the financial markets andconsequent decrease in equity markets, an increase in commodities prices, as well as fluctuations in interest rates and ex-change rates, could have significantly negative effects on the Group’s prospects and assets, as well as on its economic re-sults and its financial situation. The profit generation of Marcolin Group’s activities is also subject to risks connected to fluctuations in interest rates andinflation, to the solvency of counterparties, and general economic conditions in the countries in which its activities are car-ried out.

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Marcolin S.p.A.

Risks connected to needs for financial toolsThe evolution of the Group’s financial situation depends on numerous conditions. These include, in particular, reaching pre-set objectives, as well as the performance of general economic conditions, the financial markets, and the sectors in whichthe Group operates. The Marcolin Group plans to meet its needs, deriving from its maturing financial debts and planned investments, throughcash flows deriving from operations management, available liquidity, and renewal or refinancing of bank loans. Even in the current difficult market context, the Group believes it will be able to maintain an adequate capacity to gener-ate financial resources through operations management. However, significant and sudden reductions in sales volumes couldhave negative effects on the operations management’s ability to generate cash flow.Finally, despite the fact that the Group continues to receive the support of its banking and financial counterparties, it couldfind itself in a condition in which it needs to use additional financing, in unfavourable market conditions, with possible lim-itations on availability from certain providers, creating a possible increase in financial charges.

Risks connected to fluctuations in foreign exchange and interest ratesThe Marcolin Group operates in various markets throughout the world and is hence exposed to market risks connected tofluctuations in foreign exchange interest rates. Exposure to foreign exchange rate risks is mainly connected to the variedgeographic distribution of productive and commercial activities. In particular, the Group is mainly exposed to fluctuationsin the US dollar, relative to the supplies received from Asia and to sales made in the American market.In regards to risks connected to variations in interest rates, it is important to note that the Marcolin Group uses various typesof financing, intended to cover the needs of its industrial activities, mainly with variable interest rates. Hence, variations ininterest rate levels can lead to increases or decreases in the cost of financing. Due to this, in its risk management policies,the Marcolin Group attempts to face risks due to unfavourable foreign exchange and interest rate changes through hedges.Despite these hedging instruments, sudden and significant fluctuations in foreign exchange and interest rates could lead tonegative impacts on the Group’s economic and financial results. An analytical description of the Group’s risks and hedginginstruments with regards to this aspect is provided in the illustrated notes.

Risks connected to the Group’s capacity to negotiate and maintain its licensing contractsThe Group has signed multi-year licensing contracts which allow it to produce and distribute vision frames and sunglassesunder third-party proprietary trademarks. It is also constantly working to renew existing licences and research new li-cences which allow the Group to maintain its long-term prospects.In the case that the Group was not able to maintain or renew its licensing contracts with its current licensing companies,due to market conditions, or if it was not able to stipulate new licensing contracts with other successful brands, the prospectsof growth and economic results for Marcolin Group could be negatively influenced.Additionally, all licensing contracts call for minimum guaranteed annual royalties in favour of the licensing company, whichhence must be paid even in the case of changes of revenues under certain thresholds (so-called guaranteed minimum), withconsequent possible negative effects on the group’s financial and economic results.

Risks connected to supplier relationshipsThe Group uses third-party producers and suppliers for production and/or processing of some of its products. These producersand suppliers, mainly found in Asia and Italy, are subject to verifications and controls by the Group, in order to verify thatthey respect adequate qualitative and service standards, including aspects related to time and method of delivery.The use of third-party producers and suppliers leads to additional risk, such as the risk of ceding or ending of contractualagreements, of problems connected to the quality level of supplies and services provided, and in delays in delivery of com-missioned goods. Delays or defects in the products provided by third-parties, as well as the interruption or conclusion of theassociated contracts, without searching for adequate alternative sources, could lead to a negative impact on the Group’s ac-tivities, economic results, and financial situation.


110

Risks connected to the high level of competitiveness in the sector in which the Group operatesThe markets in which the Group operates are highly competitive in terms of product quality and innovation, as well as eco-nomic conditions. Additionally, the Group’s success is partially due to its capacity to introduce products with innovative design, continuouslysearching for new materials and productive processes, as well as its ability to adapt to consumers’ changing tastes, antici-pating changes in fashion and reacting quickly to such changes.The success of the Marcolin Group’s activities depends on its capacity to maintain and increase its market share in its cur-rent markets and/or expand into new markets. In particular, in the case that the Group was no longer able to develop andoffer innovative and competitive products with respect to its main competitors’ products, both in terms of design and in termsof good value for price, the Group’s market share could be reduced, with a negative impact on the Group’s economic and fi-nancial results.

Risks connected to dependence on key figuresThe Group’s success depends on certain key figures, who have provided decisive contributions to its development. The Com-pany believes that it has an operational and managerial structure able to ensure continuity in its management of its affairs.However, in the case that some of the above-mentioned key figures were to interrupt their collaboration with the Group, thereis no guarantee that the Group would be able to quickly replace them with appropriate persons and ensure, in the short-term,the same contributions, with possible negative consequences for the Group.

Human resourcesAt Marcolin, the value of its human resources is a critical factor in its success, and training of its staff constitutes an in-vestment in the development of activities. Over the course of the financial year, analysis was done regarding activities necessary to bring the company in line with thenew norms on Work Safety and Security, introduced and brought into effect through Legislative Decree no. 81/08. In par-ticular, we note that the organisational structure has been defined to introduce a safety management system at MarcolinS.p.A. and will go into effect during the first months of 2009.

At 31 December, 2008, the Group had 606 employees, divided as follows:

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Marcolin S.p.A.


Managers 12 12First line managers 13 18Employees 163 176Workers 418 378Total 606 584

Collective bargaining agreementsWith regards to collective bargaining in terms of salaries, we note that during the course of the year the norms and eco-nomic parts of the national contract were renewed.

Stock Option plansOn 29 April, 2008, the General Shareholders’ Meeting of Marcolin S.p.A. approved the proposal to allocate a compensa-tion plan based on financial instruments in favour of the Managing Director and General Manager, Massimo Saracchi, pur-suant to article 114-bis of Legislative Decree 58/1998 (hereafter the “Plan”). To that regard, the Shareholders decided:1. to approve the adoption of the stock option plan destined for the Managing Director of Marcolin S.p.A., Massimo Sarac-chi (the Beneficiary), to be performed through the allocation, free of charge, of 500,000 personal and non-transferablestock option rights to acquire ordinary Marcolin S.p.A. shares, in accordance with the methods and terms illustrated in theinformative document created by the Directors, pursuant to article 94-bis of CONSOB Issuance Rules, and in the Directors’illustrative report, and in particular, states that:the exercise, on the part of the Beneficiary, of the assigned stock option rights will be subordinated (i) to the condition thatthe Beneficiary hold the role of Managing Director at the end of the three-year maturity period of the rights and (ii) per-formance of Group objectives of an economic and/or financial nature, whose determination is remanded to the Board of Di-rectors;- the Company, upon written request from the Beneficiary, can extinguish its obligations to the Beneficiary, by correspon-ding to such a sum in money equal to (i) the difference between the unit value of the Shares and the Strike Price at the datethe request to exercise the stock options is made, (ii) multiplied by the number of options that can be exercised;2. to provide to the Board of Directors, and in this case the Chairman, all powers necessary or opportune to exercise thestock option plan.Since the Plan will be used utilizing own shares acquired on the market and/or in portfolio, without any new issuances, nodilutive effects will occur.No constraints on ceding the Shares acquired due to exercising the stock options are called for. For additional and more detailed information, please refer to the informational document prepared pursuant to article 84-bis of the Issuance Rules, deposited and made available to the public in accordance with the law.

Research & development activitiesResearch and development is implemented through two divisions: the first division aims to work in close partnership withlicence-holders to come up with new collections, hone style, research new materials and develop collections related to sun-glasses/vision eyewear; the second, which works closely with the former, handles product development and industrialisation.Over the course of the financial year 2008, the company continued with its research and development activities.

Infra-group and associated parties relationshipsWith regards to operations performed with associated parties, including infra-group operations, we note that these cannotbe defined as either atypical or unusual, as they are part of the normal activities of the Group’s companies. Said operationsare regulated by market conditions, taking into account the characteristics of the goods and services provided.Detailed information on relationships with associated parties, including those required by CONSOB Communication of 28July, 2006, can be found respectively in the Explanatory Notes to the Consolidated Annual Report and Accounts, and in theExplanatory Notes to the Separate Annual Report and Accounts for Marcolin S.p.A.We also note that during the month of November, parent company Marcolin S.p.A. purchased the Web trademark of one itsassociated parties.


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Treasury sharesAt 31 December, 2008, Marcolin S.p.A. held no. 681,000 own shares in its portfolio, for a nominal counter value of€354,120. The value in the balance sheet, valued at purchase cost, is equal to €947 thousand. Treasury shares held by thecompany accounts for approximately 1.10% of Marcolin SpA’s share capital.No Group company owns shares of the parent company Marcolin S.p.A.

Protection of personal dataWith regards to the activities called for by Legislative Decree 196/03, titled “Protection of Personal Data Code,” activi-ties intended to evaluate the data protection system in the Group’s companies that are subject to such legislation havebegun. These activities found that the requirements called for by the norms in terms of protection the personal data man-aged by these companies are substantially met, including writing of the Security Planning Document.

Secondary officesMarcolin S.p.A.’s registered offices are in via Noai 31, Domegge di Cadore (BL), Frazione Vallesella. Its administrativeand management offices are located in Longarone (BL), Localita’ Villanova, 4.

Other events and newsNo further significant events have taken place such as to have had a significant effect on business performance or to havemodified the company’s capital, financial and business structure.

Proposal for coverage of the year’s lossTo Our Shareholdersthe financial statements at 31 December, 2008, which we provide for your approval, show a positive net profit for the yearof €1,461,316 of which we propose to place €73,065.80 in the Legal Reserve and €1,388,250.20 in Profit Carried For-ward.

Milan, 25 March, 2009Chairman of the Board of DirectorsGIOVANNI MARCOLIN COFFEN

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Marcolin S.p.A.

MARCOLIN S.P.A.BALANCE SHEET


116

Consolidated balance sheet

(euro) Note DEC 31, 2008 Of which DEC 31, 2007 Of whichrelated parties related parties

ASSETS

NON CURRENT ASSETSProperty, plant and equipment 5 11.295.798 12.149.504 Intangible assets 6 2.793.233 1.289.856 Goodwill 0 0 Investments 7 31.991.994 33.713.468 Deferred tax assets 30 3.374.953 2.382.616 Other non current assets 8 6.617.458 6.617.458 6.340.742 6.340.742 TOTAL NON CURRENT ASSETS 56.073.436 55.876.187

CURRENT ASSETSInventories 9 41.311.645 40.184.758 Trade and other receivables 10 55.195.521 26.556.185 52.203.411 21.078.568 Other current assets 11 331.603 243.964 Cash and cash equivalents 12 4.690.329 4.831.733 TOTAL CURRENT ASSETS 101.529.097 97.463.866

TOTAL ASSETS 157.602.533 153.340.052

SHAREHOLDERS' EQUITY 13Share capital 31.958.355 31.958.355 Additional paid in capital 24.517.276 26.315.079 Other reserves 8.119.301 8.301.464 Retained earnings (losses) (3.572.800) (3.572.800)Profit (loss) for the period 1.461.316 (1.797.802)

TOTAL SHAREHOLDERS' EQUITY 62.483.449 61.204.296

LIABILITIESNON CURRENT LIABILITIES

Long term borrowings 14 28.654.131 32.519.278Long term provisions 15 4.039.181 3.939.516Deferred tax liabilities 30 1.739.612 2.225.149Other non current liabilities 16 0 0TOTAL NON CURRENT LIABILITIES 34.432.924 38.683.944

CURRENT LIABILITIESTrade payables 17 34.558.922 7.584.465 34.995.351 6.598.982Short term borrowings 18 17.217.644 11.759.830 511.583Short term provisions 19 2.626.039 2.627.044Income taxes 30 2.018.929 673.761Other current liabilities 20 4.264.626 3.395.828TOTAL CURRENT LIABILITIES 60.686.160 53.451.814

TOTAL LIABILITIES 95.119.084 92.135.757TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 157.602.533 153.340.052

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Income statement

Statement of changes in equity

(euro/000) Share Additional Other Retained Income Total capital paid in reserves earnings (loss) for Shareholders’

capital (losses) the period Equity

01.01.2007 31.958 37.320 8.376 (3.573) (11.005) 63.076Disposition prior year income (11.005) 11.005 0Earnings (losses) cash flow edge reserve (75) (75)Result (1.798) (1.798)Net equity at 31.12.2007 31.958 26.315 8.301 (3.573) (1.798) 61.204

01.01.2008 31.958 26.315 8.301 (3.573) (1.798) 61.204Disposition prior year income (1.798) 1.798 0Earnings (losses) cash flow edge reserve (182) (182)Result 1.461 1.461Net equity at 31.12.2008 31.958 24.517 8.119 (3.573) 1.461 62.484

(euro/000) Note DEC 31, 2008 Of which DEC 31, 2007 Of which %non recurrent non recurrent

NET SALES 22 120.550.182 48.787.977 110.794.649 36.953.670 100,0%

COST OF SALES 23 (76.286.478) 1.870.795 (70.638.863) (2.320.677) (63,8)%

GROSS PROFIT 44.263.704 40.155.786 36,2%

Selling and marketing costs 24 (37.154.627) (971.994) (33.859.865) (764.629) (30,6)%General and administrative expenses 25 (9.392.059) (14.492.200) (13,1)%Other income and expenses 27 8.933.173 11.573.684 10,4%

OPERATING PROFIT - EBIT 6.650.191 3.377.405 3,0%

FINANCIAL INCOME AND EXPENSES 28 (3.029.527) (318.141) (2.909.257) (728.478) (2,6)%

NET RESULT BEFORE TAXES 3.620.663 468.148 0,4%Income taxes 30 (2.159.347) (2.265.950) (2,0)%

NET RESULT 1.461.316 (1.797.802) (1,6)%

EARNINGS (LOSSES) PER SHARE 31 0,024 (0,241)


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Cash flow statement

(euro/000) DEC 31, 2008 DEC 31, 2007

OPERATING ACTIVITIES:Income (loss) for the period 1.461 (1.798)Depreciation and Amortisation 3.488 3.488 Provisions 10.778 10.201 Impairment 417 (7.120)Income taxes 2.266 2.266 Interest expenses 2.495 2.483 Other non-cash items 713 (293)Operating profit before working capital changes 21.619 9.227

(Increase) decrease trade receivables (10.150) (2.041)(Increase) decrease other receivables (364) (1.525)(Increase) decrease inventory (4.716) (5.431)(Decrease) increase trade payables (436) 1.247(Decrease) increase other payables 869 664(Utilisation) of provisions (879) (598)(Decrease) increase tax payables (1.318) (1.882)Other non-cash items (550) 1.888Income taxes paid (531) (1.307)Interest paid (2.843) (2.546)Cash flows provided (used) by working capital changes (20.918) (11.531)

Cash flows provided by operating activities 701 (2.304)

INVESTING ACTIVITIES(Purchase) of property, plant and equipment (2.073) (2.813)Proceeds from the sale of property, plant and equipment (129) 9 (Purchase) of intangible assets (1.936) (66)(Purchase) disposal of investments 1304 0Cash flows (used) in investing activities (2.834) (2.871)

FINANCING ACTIVITESIncrease (decrease) short term borrowings (518) 2.480Borrowings- Increase 16.157 6.000- Decrease (13.647) (14.680)Increase in capital 0 0Changes in reserves 0 0

Cash flows (used) in financing activities 1.992 (6.200)Cash and cash equivalents increase (decrease) (141) (11.374)Cash and cash equivalents at beginning of year 4.832 16.206

Cash and cash equivalents at beginning of year 4.690 4.832

ILLUSTRATIVE NOTES FOR MARCOLIN S.P.A.SEPARATE FINANCIAL STATEMENTS

ON 31 DECEMBER, 2008

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Illustrative notes for Marcolin S.p.A. separate financial statementson 31 December, 2008

PREAMBLEThe Explanatory Notes set out below form an integral part of the Separate Accounts of Marcolin S.p.A. and have been pre-pared in accordance with the accounting documents updated to 31 December, 2008. The report on the operations of Mar-colin S.p.A. has also been prepared.

1. GENERAL INFORMATIONMarcolin SpA is a company incorporated under Italian law, registered in the Belluno Companies Register with no.01774690273 and whose shares are traded in Italy on the electronic equity market (Mercato Telematico Azionario) or-ganised and managed by Borsa Italiana SpA.Marcolin S.p.A. is the parent company of the Marcolin Group, active in Italy and abroad in the production and marketing ofeyewear and sunglasses.

The addresses of the Company’s registered office and of the locations where its main activities take place are shown on theintroductory page of the Annual Report.

Pursuant to Article 2497-bis of the Italian Civil Code, we note that Marcolin S.p.A. is not subject to direction and coordi-nation activities on the part of any entity, as it is the Parent Company.

2. ACCOUNTING STANDARDSBasis of preparationThe 2008 financial statements have been prepared according to the International Accounting Standards (“IFRS”) issuedby the International Accounting Standards Board (“IASB”) and approved by the European Union, as Regulation no. 1606issued by the European Parliament and the European Council in July 2002 provided for the compulsory application of theIAS/IFRS to the consolidated accounts of companies listed on the EU regulated marketed as from 2005. The IFRS are alsodeemed to include all the revised international accounting standards (“IAS”) and all the interpretations of the InternationalFinancial Reporting Interpretations Committee (“IFRIC”), previously called the Standing Interpretations Committee(“SIC”).The accounting policies adopted are uniform with the policies used a year earlier, except for the changes brought by the in-troduction of IFRS 7.These accounts have been prepared with a view to business continuity, using the accrual basis of accounting. The statutory accounts have been prepared based on the principle of historic cost, amended as required for the evaluationof several financial instruments, with the exception of some revaluations performed in previous financial years.The currency in the economic area in which the company mainly operates is the euro.

Basis of presentationIn conformance with the requirements in CONSOB Deliberation no. 15519 of 27 July, 2006 “Provisions with regards to fi-nancial statements implemented with article 9, paragraph 3, of Legislative Decree no. 38 of 28 February, 2005” with re-gards to the preparation of formats for the documents which make up the separated financial statements, Marcolin S.p.A.has adopted the following criteria:

- Balance sheetBalance-sheet assets and liabilities have been separately classified as current and non-current as envisaged by IAS 1.More specifically, an asset must be classified as current when it meets one of the following criteria, i.e. when it is:(a) Held for collection, sale or consumption during the entity’s normal operating cycle;(b) Held primarily for the purpose of trading;(c) Assumed to be traded within 12 months after balance-sheet date;(d) Cash or a cash equivalent.

All other assets have been classified as non-current.

A liability must be classified as current when it meets one of the following criteria — i.e. when it is:(a) Expected to be settled within an entity’s normal operating cycle;(b) Held primarily for the purpose of trading;(c) Due to be settled within 12 months after balance-sheet date;(d) A liability for which the entity does not have an unconditional right to defer settlement of the liability beyond 12months.All other liabilities have been classified as non-current.Moreover, on the basis of IFRS 5, those assets (and related liabilities) whose book value will be recovered mainly on salerather than on continuing use have been classified as “Assets held for sale” and “Liabilities relating to assets held for sale”.

- Income statementCosts have been classified by function, separately indicating the costs of sales and distribution and administration costs,since it is believe that this method, based on the business sector in which the company is active, provides readers with moremeaningful and relevant information than the alternative classification of costs by nature.

- Statement of changes in equityThe statement was prepared presenting items in individual columns with reconciliation of the opening and closing balancesof each item forming equity.

- Cash flow statementPresentation of cash flows of operating activities is based on the indirect method, since this is considered to be the ap-proach most appropriate for the business sector in which the company operates. Based on this approach, the net result isadjusted for the effects of non-cash transactions on investment and finance transactions.

Property, plant, and equipmentProperty, plant, and equipment are initially recorded at their acquisition or production cost, inclusive of pertinent ancillarycosts incurred to bring assets to working condition for their intended use, excluding land and buildings owned by the ParentCompany for which the deemed cost model has been used, on the transition date, based on the market value determinedthrough appraisal performed by an independent and qualified appraiser.Tangible assets are shown net of depreciation and of any impairment of value, with the exception of land, which is not de-preciated. Costs borne for ordinary and/or programmed maintenance and repairs go directly into the income statement in the financialyear when they are incurred. Costs concerning the extension, modernisation or upgrading of owned or leased third-party as-sets are capitalised to the extent that they can be separately classified as an asset or part of an assets. The amount initiallyrecognised undergoes systematic straight-line depreciation, calculated on the basis of assets’ useful life.If the asset depreciated is composed of items that can be identified separately, whose useful life differs significantly from thatof the other items of the fixed assets, depreciation is calculated separately for each of the items forming the asset accordingto the principle of component approach. Profits and losses deriving from the sale of assets or groups of assets are determinedby comparing the sale price with the relevant net book value.Capital grants relating to tangible assets are recorded as deferred revenues and credited to the income statement over thedepreciation period of the assets concerned.Finance expenses relating to purchase of a fixed asset are charged to the income statement unless they are directly attrib-utable to the acquisition, construction or production of an asset justifying capitalisation.Assets acquired by virtue of a finance lease are recognised as tangible assets set against the related liability. Lease cost isbroken down into finance expense – charged to the income statement – and repayment of principal – recognised as reduc-


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tion of the relevant financial liability.Leases in which the lessor does not substantially transfer all the risks and benefits connected with ownership of the assetsare classified as operating leases. The costs of operating leases are shown line by line in the income statement for the dura-tion of the lease contract.

Depreciation is calculated on a straight-line basis on assets’ estimated useful life, according to the depreciation rates indi-cated below:

Intangible fixed assetsIntangible assets consist of controllable, non-monetary assets without physical substance that are clearly identifiable and ableto generate future economic benefits. These assets are recognised at purchase and/or production cost, inclusive of directlyattributable expenses to bring the asset to working condition for use, net of cumulative amortisation (except for assets withan indefinite useful life) and of any impairment of value. Amortisation starts when the asset is available for use and is sys-tematically spread over the asset’s useful life.If any indications emerge suggesting impairment of value, the asset’s recoverable value is estimated, charging any impair-ment loss to the income statement. If the reasons for previous write-down cease to exist, carrying value is written back recog-nising this as income in the income statement, within the limits of what the asset’s net carrying value would have been if therehad been no impairment loss and the asset had been amortised.

GoodwillGoodwill is the excess of purchase cost over fair value of the share of the subsidiary company’s equity as at acquisition date,or of the business branch acquired. Goodwill deriving from the acquisition of subsidiary companies is posted in the “Good-will” account and is not amortised but subjected to annual testing – unless there are specific indicators making interim test-ing necessary – to ascertain the existence of impairment of value (i.e. impairment testing). Gains or losses on the sale of anentity are calculated considering the goodwill value of the entity sold.

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Marcolin S.p.A.

Category Rate

Buildings 3%Light construction equipment 10%Non operating machinery 10%Non operating plastic machinery 10%Depreciable equipments 40%Operating machines 15,5%Operating plastic machines 15,5%Office furniture 12%Stand 27%Electronic machines 20%Vehicles 25%Trucks 20%

Trademarks and licencesTrademarks and licences are recognised at cost. They have a finite useful life and are measured at cost net of cumulative amor-tisation. Amortisation is calculated on a straight-line base so as to allocate the cost of trademarks and licences accordingto their residual possibility of use.If impairment is found over and above the amortisation already charged, the asset would be consequently written down; ifthe reasons for write-down cease to exist in future financial years, the value is written back to the net book value that theasset would have had if the write-down had not been made or if amortisation had been made.Trademarks are amortised on a straight-line basis over their estimated useful life, ranging from 15 to 20 years.

SoftwareSoftware licenses acquired are capitalised on the basis of the costs incurred for their purchase and the costs necessary tomake them serviceable. Amortisation is calculated on a straight-line basis over their estimated useful life (from 3 to 5 years).Costs associated with software programmes’ development and maintenance are posted as costs when they are incurred. Direct costs include the cost of employees who develop the software.

Research & development costsResearch and development costs for new products and/or processes are expensed when they are incurred when the require-ments laid down by IAS 38 regarding their capitalisation do not exist.

Impairment of asset valueIn the presence of specific indications of loss of value, tangible and intangible assets are subject to impairment testing.For the purposes of impairment testing, goodwill is allocated to the smallest cash generating units (CGUs) that it is possi-ble to identify and compared with operating cash flows discounted to present value generated by such units.Testing consists of estimation of the asset’s recoverable value and comparison of the latter with its net carrying value. If anasset’s recoverable value is lower than its carrying value, the latter is reduced to recoverable value. This reduction is an im-pairment loss that is charged to the income statement.For assets that are not subject to depreciation and amortisation, and for intangible assets not yet available for use, impair-ment testing is performed at least annually, irrespective of the presence of specific indicators.The requisites and approach applied by the Group for restoring the value of an asset previously written down, excluding thatof goodwill, which cannot be written back – are those envisaged by IAS 36 (Impairment of Assets).

Financial derivativesDerivative financial instruments are used only with the intention of hedging, in order to reduce company exposure to ex-change rate and interest rate risks. All financial derivatives are measured at fair value, as provided for by IAS 39. In accor-dance with IAS 39, financial derivatives may only be entered in the accounts according to the hedge accounting methodwhen, on commencement of hedging, the formal designation and documentation on the hedging relationship exists, it is pre-sumed that hedging will be highly effective, the efficacy can be reliably measured and the hedging itself is highly effective dur-ing the various accounting periods for which it is designated.If the hedge is effective, the following accounting policies apply:Fair value hedge – If a financial derivative is designated as a hedge for exposure to variations in the fair value of an asset ora liability shown in the financial statements attributable to a particular risk which may affect the income statement, the profitor loss deriving from the subsequent valuations of the fair value of the hedging instrument are recognised in the incomestatement. The item covered is adjusted to the fair value for the portion of risk covered and, as a counter value, there is aprofit or loss in the income statement. Cash flow hedge – if a derivative financial instrument is designed to hedge exposure to the variability of future cash flows ofan asset or liability booked in the financial statements, the actual portion of the fair value changes of the derivative finan-cial instrument is recorded in shareholders’ equity. The cumulative profit or loss is transferred from the equity and entered


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in the income statement in the same period as that in which the transaction hedged took place. The profit or loss associatedwith a hedge (or part of a hedge) that has become ineffective is entered in the income statement immediately. If a hedge in-strument or a hedge account is closed, but the transaction hedged has not yet been realised, the cumulative profits or losses,recognised in equity up till then, are shown in the income statement at the time the relevant transaction takes place. If thetransaction hedged is no longer considered likely, the profits or losses not yet realised and outstanding in the equity arebooked to the income statement immediately. If hedge accounting cannot be applied, the profits or losses deriving from thevaluation at fair value of the financial derivative are recognised in the income statement immediately.

InventoriesInventories are measured at the lowest between average purchase or production cost and relevant presumed realisable valuebased on market trends. Presumed realisable value is calculated on the estimate of selling price in normal market conditionsnet of direct selling costs.Purchase cost has been used for products purchased for resale and for materials directly or indirectly used, purchased andused in the production process, whereas, for finished products or semi-finished products in process, production cost is used.To determine purchase cost we have taken into account the price effectively paid, inclusive of directly attributable ancillarycosts, including: freight costs and customs duties net of trade discounts.In production cost, besides the cost of materials used, as defined above, we have included direct and indirect manufacturingcosts.Obsolete or slow-moving inventories are written down according to their possibility of use or realisation.

Financial assets – Receivables and borrowingsTrade receivables, current financial receivables and other current receivables, except for assets deriving from financial de-rivatives and all financial assets for which prices on an active market are not available and whose fair value cannot be de-termined reliably, are valued, if they have a prefixed maturity, at amortised cost calculated using the effective-interest method.When the financial assets do not have a prefixed maturity, they are valued at cost. Receivables maturing after more than ayear, not accruing interest or accruing interest below the market rate are discounted by applying the market rates and areentered in non-current assets. Valuations are regularly made in order to check whether there is any objective evidence thatthe financial assets taken individually or within a group of assets may have fallen in value. If such evidence exists, impair-ment is shown as a cost in the income statement for the period. With regard to trade receivables in particular, adjustment to realisation value is effected by means of an adjustment fund setup when there is an objective indication that the Group will not be able to collect the receivable at the original value.

Cash & banksCash and cash equivalents include cash, demand deposits held with banks, other highly liquid short-term investments, i.e.with an original duration of up to three months, and entered for amounts actually available at the year end.

Assets held for sale and related liabilitiesThese items should include non-current assets (or groups of assets and liabilities for sale) whose carrying value will be re-covered mainly through sale rather than through continuing use. Assets held for sale (or a disposal group) are valued at thelower of their net carrying value and the fair value net of costs of sale.If these assets (or a group held for sale) cease to be classified as an asset held for sale, the amounts are neither reclassifiednor resubmitted for comparative purposes with the classification in the balance sheet of the most recent year presented.

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EquityShare capitalShare capital consists of the parent company’s subscribed and paid-up capital. Costs strictly related to the issue of new shares are posted as a direct reduction of Equity net of the deferred tax effect.Treasury sharesTreasury shares are shown as a deduction of equity. Treasury shares’ original cost and revenues stemming from any subse-quent sales of the same are shown as changes in equity. The own shares reserve in the portfolio recorded in previous finan-cial years is classified in the undivided profits reserve.

Stock optionsMarcolin S.p.A. offers additional benefits to the Parent Company’s Managing Director through a stock options plan ap-proved over the course of 2008. In accordance with IFRS 2 - Stock Options, these plans represent a component in the ben-eficiary’s remuneration. Hence, the cost is represented by the fair value of the stock option at the date it is assigned, and itis recorded at the economic cost during the period between the date they are assigned and the date they mature, with thecounter value registered directly to equity. Variations in the fair value of the options after the date they are assigned do noteffect initial value.

Employee benefitsEmployee benefits that are paid out upon or after cessation of the employment relation via defined-benefit programmes (asis the Italian employee severance indemnity system) are recognised at the time when the right to such benefits accrues. Liabilities relating to defined-benefit programmes are calculated on the basis of actuarial valuations and are posted on anaccrual basis consistently with the employee service necessary to obtain the benefits concerned. Our actuarial valuationshave been made by independent experts.Gains and losses stemming from actuarial valuations are posted in the income statement regardless of their value, withoutusing the so-called “corridor approach”.The employee severance indemnity fund, a peculiarity of the Italian entity, falls within the definition of defined-benefit pro-grammes. As from 1 January 2007 and only for companies with at least 50 employees, Financial Law 2007 (the law of 27December, 2006, no. 296, with associated implementing decrees) brought significant changes to the regulation of employeeseverance indemnity, including with regard to the possibility of the employee to choose how to allocate accruing indemnity.In particular, new severance pay flows may be assigned by the worker to pre-selected pension forms or kept within the com-pany (in which case the latter will pay the severance pay contributions into a treasury account held at the INPS).In light of these changes, the legislation must now consider a defined benefits plan exclusively for the amounts accrued be-fore 01 January, 2007 (and not yet paid at the balance sheet date), while after this date, it will be assimilated with a definedbenefits plan.

The changes that occurred in the reference laws led to variations in the actuarial assumptions used for valuating liabilitiesregarding funds matured through 31 December, 2006.The effects of these variations were recorded in 2007, which was the first year the accounting effects of this reform were ineffect, as well as its relative expenses (the so-called curtailment effect).


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Provisions for risks and chargesProvisions for risks and charges comprise provisions stemming from present obligations (either legal or constructive) tothird parties as a result of a past event, settlement of which is likely to require an outflow of financial resources, the amountof which can be reliably estimated.Provisions are posted for an amount that is the best discounted estimate of the amount the company should pay to settle theobligation or to transfer it to third parties as at balance-sheet date.Changes in estimates are reflected in the income statement for the period when the change occurred.The risks for which the existence of a liability is only possible are identified in the section relating to commitments and guar-antees without making any provision.

Trade and other non-financial payablesPayables whose due dates are consistent with normal terms of trade are not discounted to present value and are recorded attheir face value.

Financial liabilitiesLoans are initially recognised at cost, corresponding to the liability’s fair value net of the costs of its arrangement. After theinitial recording, these are valued at the amortised cost; any difference between the amount financed (net of the costs of in-curring the loan) and the par value is posted in the income statement throughout the life of the loan, using the effective in-terest method. If there is a change in expected cash flows and management is able to estimate them reliably, the value ofborrowings is recalculated to reflect any changes expected in cash flows.Loans are classified among current liabilities if they mature in less than 12 months after balance-sheet date and if the com-pany does not have an unconditional right to defer their payment for at least 12 months.Loans are removed from the balance sheet when they are extinguished or when all risks and costs associated with them havebeen transferred to third parties.

Revenues and incomeRevenues are measured at fair value net of return sales, discounts, allowances, and bonuses.More specifically, the Group recognises revenues from the sale of goods in accounts when all risks and rewards of the goods’ownership are actually transferred to customers according to the terms of the sales agreement. These revenues are recog-nised net of an allocation which represents the best estimate of the profit lost due to customers returning merchandise. Thisallocation is based on specific historic figures.Revenue arising from performance of services is recognised with reference to the state of completion of the transaction atthe balance sheet date.Interest income is calculated on a time proportion basis and according to the effective yield of the asset to which such in-come refers.Dividends are recognised when the shareholder’s right to receive payment is established. This normally corresponds to theshareholders’ resolution on dividend distribution at the Annual General Meeting.

CostsCosts are posted according to the principles of relevance and economic accrual.

Financial income and expensesInterest is recognised on an accruals basis based on the effective-interest method, i.e. using the interest rate that renders allinflows and outflows constituting a specific transaction financially equivalent.

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Translation of foreign currency amountsTransactions in currency other than the Euro are converted to the local currency using exchange rates in force at the trans-action date. Foreign exchange differences arising in the period go through profit or loss.Foreign currency receivables and payables are adjusted to the exchange rate in force as at balance-sheet date, recognisingthe whole amount of positive or negative foreign exchange differences in the income statement among finance income andexpense.

Income taxesIncome taxes are recognised in the income statement, with the exception of those concerning items directly debited or cred-ited to equity, in which case the tax effect is recognised directly in equity.Deferred taxes are calculated based on the temporary differences generated between the value of the assets and liabilitiesincluded in the company accounts and the value attributed to those assets/liabilities for tax purposes.Deferred tax assets and liabilities are measured at the tax rates that are expected to be applicable, in the financial years whentemporary differences will be utilised or extinguished.Deferred tax assets (prepaid taxes) are recognised to the extent that it is likely that future taxable profit will be made againstwhich they will be able to be recovered. The carrying value of deferred tax assets is reviewed at each balance-sheet date and,if necessary, is reduced to the extent that it is no longer probable that sufficient taxable profit will be made to allow partialor total recovery of the assets. Any such reductions are reversed if the conditions causing them cease to exist.Other taxes not relating to income, such as property and capital taxes, are included in operating accounts.

Earnings per shareEarnings per share are calculated by dividing the Company’s net business result by the weighted average number of ordinaryshares outstanding during the financial year, excluding treasury shares.

Recording of revenuesRevenues are recorded net of returns, discounts, vouchers, and prizes, as well as taxes directly connected with the sales ofgoods and provision of services.Revenues from sales are recorded when the company has transferred significant risks and returns connected to ownership ofthe goods and the amount of revenue can be reliably determined. Revenue of a financial nature is recorded based on temporal competency.

Seasonality of revenuesIt should be noted that sales in the eyewear sector are mainly concentrated in the first half of the year.


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NEW IFRS AND IFRIC INTERPRETATIONSThe Company has not opted for early adoption of the following Standards, Interpretations and Updates to standards alreadypublished and compulsory in future years:

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date not relevant)

IFRS 8 – Operating sectors NOV 2006 JAN 2009 N.r. Marcolin SpA and Group 2008

IFRS 2 - Amendment relating to vesting conditions and cancellations JAN 2008 JAN 2009 N.a. 2008

IFRS 3 - Comprehensive revision on applying the acquisition method JAN 2008 JUL 2009 N.a. 2008

IAS 1 - Presentation of Financial Statements FEB 2008 JAN 2009 N.a. 2008IAS 32 - Financial Instruments: Presentation - Amendments relating to disclosure of puttable instruments and obligations arising on liquidation

IAS 27 - Consolidated and Separate Financial Statements MAY 2008 JUL 2009 N.a. 2008IAS 28 - Investments in AssociatesIAS 31 - Interests in Joint Ventures - Consequential amendments arising from amendments to IFRS 3

IFRS 1 – First-time Adoption of International Financial Reporting Standards MAY 2008 JAN 2009 N.a. 2008IAS 27 - Consolidated and Separate Financial StatementsAmendment relating to cost of an investment on first-time adoption

IAS 1 - Presentation of Financial Statements MAY 2008 JAN 2009 N.r. Marcolin SpA and Group 2008

IAS 16 - Property, Plant and EquipmentIAS 19 - Employee BenefitsIAS 20 - Governmenet Grants and Disclosure of Government AssistanceIAS 23 – Borrowing CostsIAS 27 - Consolidated and Separate Financial StatementsIAS 28 - Investments in AssociatesIAS 29 - Financial Reporting in Hyperinflationary EconomiesIAS 31 - Interests in Joint VenturesIAS 36 - Impairment of AssetsIAS 38 - Intangible AssetsIAS 39 - Financial Instruments: Recognition and MeasurementIAS 40 - Investment PropertyIAS 41 - Agriculture - Amendments resulting from May 2008 Annual Improvements to IFRSs

IFRS 5 - Non-current Assets Held for Sale and Discontinued Operations - Amendments resulting from May 2008 Annual Improvements to IFRSs MAY 2008 JUL 2009 N.a. 2008

IAS 39 - Financial Instruments: Recognition and Measurement - Amendments for eligible hedged items JUL 2008 JUL 2009 N.a. 2008

IAS 39 - Financial Instruments: Recognition and Measurement - Amendments for embedded derivatives when reclassifying financial instruments MAR 2009 JUL 2009 N.a. 2008

IFRS 7 - Financial Instruments: Disclosures - Amendments enhancing disclosures about N.r. Marcolin SpAfair value and liquidity risk MAR 2009 JAN 2009 and Group 2008

3. FINANCIAL RISK FACTORSMarket risksManagement of financial risks is done by the Parent Company based on guidelines covering some specific areas, i.e. hedgingof foreign exchange risks (above all vis-à-vis the US dollar) and of risks stemming from fluctuations in interest rates.The company seeks to minimise the impact of such risks on its results also via use of some derivative instruments. Consis-tently with its chosen strategy, the company undertakes derivative transactions for the sole economic purpose of hedging. If,however, according to application of the appropriate accounting standards (IAS 39 – Financial Instruments: Recognition andManagement) such transactions cannot be technically recognised in accounts as hedging transactions, they are not qualifiedas hedging transactions.

Foreign exchange riskThe company operates internationally and is exposed to foreign exchange risk (particularly as regards the US dollar). Thecompany has the task, via its internal facilities, of examining and monitoring the evolution of the amounts of the various for-eign currency items and, consequently, of evaluating possible stipulation of appropriate contracts for hedging purposes vianegotiation of the same on the derivatives market.This method makes it possible to maintain a balance of the key currency positions and based on sensitivity analysis of thechange in exchange rates, it is held that a change in exchange rates does not significantly impact the company’s financial state-ments.Note that the company has set up a specific policy for foreign exchange risk management.Details of the derivative contracts existing at year-end are as follows.


130

Covering contracts for the change risk(euro/000)

Type Institute Notional Expiration date Mark to Marked Forward purchase of foreign currency Cassa di Risparmio del Veneto 4.800 usd 25-06-2009 51

(ex Banca Intesa)


date not relevant)

IFRIC 13 – Customer Loyalty Programmes JUN 2007 JUL 2008 N.a. 2008

IFRIC 15 - Agreements for the Construction of Real Estate JUL 2008 JAN 2009 N.a. 2008

IFRIC 16 - Hedges of a Net Investment in a Foreign Operation JUL 2008 OCT 2008 N.a. 2008

IFRIC 17 - Distributions of Non-cash Assets to Owners NOV 2008 JUL 2009 N.a. 2008

IFRIC 18 - Transfers of Assets from Customers JAN 2008 JUL 2009 N.a. 2008

Interest rate riskInterest-rate risk is split into fair value risk and cash flow risk.The company is mainly exposed to cash flow risk, originating from financial loans at floating interest rates. Note the matters shown in the section related to the risk of liquidity as regards the quantity analysis of the exposure to cash-flow risk of the company, related to interest rates on loans.For details on the loans in force, see paragraph 19 of this document.

The company handles interest-rate oscillation risks through the use of derivative contracts, typically interest rate swap, whichmake it possible to reduce the variability of the interest rate.Details of the derivative contracts existing at year-end are as follows.

In the section dealing with financial liabilities more details can be found regarding these derivative instruments.

Sensitivity analysis on interest ratesA sensitivity analysis on the interest rate was conducted, assuming a parallel and symmetric shift up and down of 50 basispoints of the Euribor/Swap Eur interest rate curves, published by provider Bloomberg related to 31 December, 2008 and 31December, 2007. In this way, the impact on the income statement and shareholders’ equity that changes would have had couldbe estimated.The analysis did not include financial instruments not significantly exposed to changes in interest rates, such as short-termtrade receivables and payables Interest amounts on loans incurred with banks were recalculated based on the above-mentioned assumptions and the posi-tion in the year, redetermining the higher/lower financial charges calculated on an annual basis.

As regards interest rate derivatives, the interest pertaining to the year was recalculated based on the assumptions above. Atyear-end, derivative contracts were valued at the fair value using the interest rate curves modified based on the aforemen-tioned assumptions. For derivative contracts hedging cash flow, the opposite value of the fair value assessment is representedby the specific shareholders’ equity reserve, assuming full effectiveness of the report, while for the hedging derivatives, thevalue of the assessment to fair value is recorded on the income statement.

For cash and cash equivalents, the average balance for the period was calculated considering the values in the financial state-ments at the start and end of the year. On the amount calculated in this way, the income statement was affected by an in-crease/decrease in the interest rate of 50 basis points beginning on the first day of the period.

The sensitivity analysis, conducted according to the above criteria, indicates that the Group is exposed to interest rate riskin relation to expected cash flows. If interest rates rise by 50 basis points, the income statement would show a negativechange equal to € 48 thousand (€ -25 thousand in 2007) caused mainly by the increase in financial charges relating to bankborrowings, which is only partly offset by the improvements in the interest rate of derivatives, the positive revaluation oftrading derivatives and the higher interest income relating to cash. Contrariwise, shareholders’ equity would increase by €71 thousand (€127 thousand in 2007) due to the revaluation of hedge derivatives on cash-flow.

131

Marcolin S.p.A.

Covering contracts for the interest rate risk(euro/000)

Type Institute Notional Expiration date Mark to Marked Interest Rate Swap Efibanca 8.500 eur 27-06-2012 (351)Collar con knockout su cap Cassa di Risparmio del Veneto 7.801 eur 31-12-2010 (116)

(ex Banca Intesa)

If interest rates fall by 50 basis points, the income statement would show a positive change equal to € 52 thousand (€44thousand in 2007) caused mainly by the decrease in financial charges generated by bank borrowings, partly offset by the wors-ening of the interest rate on derivatives, the positive revaluation of trading derivatives and the lower interest income relatingto cash. Contrariwise, shareholders’ equity would increase by € 71 thousand (€129 thousand in 2007) due to the revalua-tion of hedge derivatives on cash-flow.

Credit riskThe Company does not feature significant concentration of credit risk. Assets are recognised in accounts net of any write-down calculated based on the risk of counterparty non-performance determined based on the information available on theclient’s solvency and historic data.Guidelines have been implemented for managing customer credit to ensure that sales are undertaken only with reasonablyreliable and solvent parties, also via the creation of given and differentiated credit exposure ceilings.Below is the schedule with the breakdown of receivables by key areas in which the company operates in order to evaluatecountry risk.

Liquidity riskPrudent management of liquidity risk implies maintenance of an adequate level of cash and cash equivalents and the avail-ability of funds obtainable via an adequate amount of lines of credit. Due to the dynamic nature of the business in which itis active, the company gives preference to flexibility in funding via use of lines of credit. At the current state, the companybelieves it has sufficient access to funds from available income and lines of credit to meet the financial needs for ordinaryactivities. The types of credit lines available and the base rate on the reference date are shown below in paragraph 19 of theExplanatory Notes to the Annual Report and Accounts.

Liquidity analysisLiquidity analysis regards loans, derivatives, and trade payables. Loans incurred have been indicated by time period, with cap-ital repayments and non-discounted interest. Future interest flows are determined based on the forward interest rates takenfrom the curve of spot rates published by Bloomberg at year-end.As regards derivatives, expected cash flows were considered based on the same market variables.None of the cash flows included in the table were subject to discounting.

For the assessment of the fair value of loans incurred, future cash flow was estimated on the basis of forward interest rateimplicit in the interest rate relative to the valuation date and, as regards calculation of the coupon in progress, of the mostrecent fixing available of the Euribor.The values calculated using this method were discounted based on the discount factors related to the various expiration datesof the cash flow mentioned above.

The derivatives used by the Company are classified as OTC (over the counter) derivatives and therefore, there is no officiallyrecognised public price formed on the trading markets. To value these derivatives, the company used, respectively, discountedcash flow and Black & Scholes methods for interest rate swap and for the Cap and Floor, fed with input data published byBloomberg.


132

Receivables by gepgraphical area (euro/000)

Italy Rest of Europe Nord America Rest of the world Total31.12.2008 18.727 17.535 7.673 11.262 55.19631.12.2007 23.176 13.419 6.849 8.759 52.203

4. USE OF ESTIMATESPreparation of the year-end accounts makes it necessary for management to make estimates that could affect the carryingvalue of some assets and liabilities and reported costs and revenues, as well as disclosures concerning potential assets/lia-bilities as at balance-sheet date.Estimates mainly refer to valuation of the recoverability of intangible assets, definition of tangible assets’ useful lives, the re-coverability of receivables (by prepaid taxes as well) and warehouse stock, and recognition or measurement of provisions. Es-timates and assumptions are based on data reflecting the present status of information to hand.The estimates and assumptions causing a significant risk of changes in the carrying values of assets and liabilities are:

- GoodwillThe company checks annually to see whether goodwill has to be subjected to impairment testing in accordance with ac-counting standards.Recoverable values have been calculated based on determination of “value in use”. These calculations require the use of es-timates of the future economic performance of the CGUs to which the goodwill refers, and on the discounting rate andprospective growth rate to be applied to the prospective cash flows.- Write-down of non-current assetsIn accordance with the applied accounting standards and policies, non-current assets are subjected to testing to see whethervalue has been impaired, when indicators suggest that net carrying value exceeds relevant recoverable value, consisting of thehigher of fair value (net of selling costs) and value in use. Verification of the effective materiality of such indicators requiresdirectors to make subjective evaluations based on information available inside the company and on market information, aswell as on management’s knowledge. In the presence of potential impairment of value, the Company calculates this using val-uation techniques deemed to be appropriate. Proper identification of indicators of the existence of potential impairment ofvalue and estimates to calculate it depend on factors that may vary over time, affecting the valuations and estimates madeby directors.- Deferred income taxRecognition of deferred tax assets is based on expectations of income in future financial years. Assessment of expected in-come for the purposes of recognition of deferred taxes depends on factors that may vary over time and have significant ef-

133

Marcolin S.p.A.

Financial payables Loans Derivatives Commercial TOTAL(euro/000) payables

within 3 months 0 0 32.827 32.827from 3 to 6 months 6.085 (15) 2.168 8.238from 3 to 12 months 5.148 (10) 0 5.138from 1 to 3 years 25.427 72 0 25.499from 3 to 5 years 10.056 9 0 10.065over 5 years 335 0 0 335TOTAL 31.12.2007 47.051 56 34.995 82.102

within 3 months 2.365 0 33.906 36.271from 3 to 6 months 7.061 102 959 8.122from 3 to 12 months 7.549 139 (306) 7.382from 1 to 3 years 25.232 219 0 25.451from 3 to 5 years 4.674 9 0 4.683over 5 years 251 0 0 251TOTAL 31.12.2008 47.133 469 34.559 82.162

fects on the assessment of deferred tax assets.

5. PROPERTY, PLANT AND EQUIPMENTThese assets featured the following breakdown and changes:

Investments made in the year came to € 2,113 thousand (€ 2,813 thousand in 2007) and refer mainly to investments in-tended to increase production capabilities for € 588 thousand (€ 930 thousand in 2007) and renewal of industrial andcommercial equipment for € 1,213 thousand (€ 1,360 thousand in 2007). The item Other assets increased by €276 thousand (€219 thousand in 2007), mainly following investments made for up-dating of fair/convention stands totalling €111 thousand, and for the purchase of electronic machines totalling €102 thou-sand.

The gross value of property, plant and equipment and the value of the associated depreciation reserve at 31 December, 2008are shown in the following table:


134

Property, plant and equipment Land and Plant and Industrial and Other Assets Total Property, buildings machinery commercial under construction plant and

(in euro thousands) equipment equipment

Opening 2007 6.698 2.097 1.298 1.206 199 11.498Increases 0 930 1.360 219 304 2.813 Decreases 0 (1) 0 (12) 0 (13)Amortisation (453) (638) (1.269) (500) 0 (2.860)Translation difference 0 0 0 0 0 0Other movements 411 157 338 4 (199) 711Net value at end of 2007 6.656 2.545 1.727 917 304 12.149

Opening 2008 6.656 2.545 1.727 917 304 12.149 Increases 10 587 1.213 276 27 2.113 Decreases 0 0 0 (5) 0 (5)Amortisation (453) (623) (1.249) (428) 0 (2.752)Translation difference 0 0 0 0 0 0 Impairment 0 0 0 0 0 0 Other movements (15) 0 35 73 (304) (211)Net value at end of 2008 6.198 2.510 1.728 833 27 11.296

Property, plant and equipment Land and Plant and Industrial and Other Assets Total Property, buildings machinery commercial under construction plant and

(in euro thousands) equipment equipment

Historical cost 12.315 12.456 14.111 5.669 27 44.579Accumulated amortisation (6.118) (9.946) (12.383) (4.836) 0 (33.283)Net book value 6.198 2.510 1.728 833 27 11.296

6. INTANGIBLE ASSETS AND GOODWILLThese assets featured the following breakdown and changes:

Over the course of the financial year, investments totalling €1,939 thousand (€66 thousand in 2007) were made, of which€1,800 thousand were relative to acquisition of the Web trademark.

In fact, during the month of November, Marcolin S.p.A., taking into account that the strategic guidelines for development ofthe Group called for the opportunity to create and/or acquire trademarks to integrate and stabilise the total trademark port-folio over time, acquired the Web trademark for the associated party Demo Holding S.A. Previously this trademark had beenused commercially by Marcolin through a licensing contract. In order to valorise this intangible asset and evaluate the appropriateness of the purchase price, an estimate from an inde-pendent professional was acquired, which confirmed the reasonability and congruence of the purchase price.Taking into account the fact that purchase of the trademark occurred at the end of the year, performance of an impairmenttest was not held to be necessary.This asset is amortised over an estimated useful life of 18 years. The useful life was identified based on the prospective foruse and exploitation of the trademark in the future.At 31 December, 2008 there are no intangible assets with an indefinite useful life, nor values recorded as goodwill.

135

Marcolin S.p.A.

Intangible assets and goodwill Industrial Concessions, Other Assets Total Goodwilland other licenses and under

(in euro thousands) patent rights trademarks construction

Opening 2007 1.785 67 707 0 2.559 0Increses 66 0 0 66 Decreases 0 0 0 0 Amortisation (567) (61) 0 (628)Translation difference 0 0 0 0 Impairment 0 0 (707) (707)Other movements 0 0 0 0 Net value at end of 2007 1.284 6 0 0 1.290 0

Opening 2008 1.284 6 0 0 1.290 0Increses 139 1.800 1.939 Decreases 0 0 0 Amortisation (615) (17) (632)Translation difference 0 0 0 Impairment 0 0 0 Other movements 186 10 196 Net value at end of 2008 994 1.799 0 0 2.793 0

The gross value and accumulated depreciation of intangible assets and goodwill are shown in the table below:

7. INTERESTSThe detailed report on investments and their movement during the financial year is as follows:

With reference to some cash generating units (CGU), identified with the subsidiaries, the company conducted a test basedon performance indicators at year-end and based on calculating the enterprise value, determined by estimated expected cashflows. The value of the interests was then adjusted to fair value, with the resulting entry:- for Marcolin France Sas (formerly Cébé), a partial reinstatement totalling €1,346 thousand;- for Marcolin Deutschland Gmbh, a write-down of €1,340 thousand;- for Marcolin Gmbh (Switzerland), a complete write-down of the book value of the interest, equal to €424 thousand.


136

Intangible assets and goodwill Industrial and Concessions, Other Assets under Total Goodwillother patent rights licenses and construction Intangible

(in euro thousands) trademarks assets

Historical cost 5.067 1.817 0 0 6.884 0Accumulated amortisation (4.072) (18) 0 0 (4.091) 0Net book value 995 1.799 0 0 2.793 0

Subsidiaries Value at Depreciation Revaluation Capital Value at (euro/000) DEC 31, 2007 increase DEC 31, 2008

Marcolin & Co. S.p.A. (in liquidazione) 563 0 0 (563) 0Marcolin France Sarl 958 0 0 (958) 0Marcolin (Deutschland) GmbH 2.109 (1.340) 0 0 769Marcolin (UK) Ltd 1.029 0 0 0 1.029Marcolin Iberica S.A. 826 0 0 0 826Marcolin GmbH (Svizzera) 424 (424) 0 0 0Marcolin Portugal Lda 414 0 0 0 414Marcolin Benelux S.p.r.l. 495 0 0 0 495Marcolin do Brasil Ltda 1.156 0 0 0 1.156Marcolin Usa Inc. 25.373 0 0 0 25.373Marcolin France S.a.s. (Ex Cébé) 0 0 1.346 0 1.346Marcolin Intern. B.V. 0 0 0 0 0Totale 33.347 (1.764) 1.346 (1.521) 31.408

In regards to Marcolin International BV, part of the reserve already recorded to liabilities was released, totalling €971thousand.The values obtained using the impairment test represent the value in use of the individual units that generate cash flows. Thelevel of aggregation for the CGUs did not change with regards to the previous year.

Other movements in the item Equity investments over the course of 2008 refer to the subsidiary Marcolin & Co S.p.A., forwhich liquidation was completed, and to Marcolin France Sarl which was sold to Cébé.

Information on interests in associated companies is shown below.

Finitec S.r.l. galvanises and paints eye glasses and is the company’s supplier for such operations.

Interest in the two associated companies is valued at cost in conformance with IAS 28.13.

Impairment test structureThe impairment test, according to the requirements of IAS 36, is performed at least once a year, with reference to intangi-ble assets with an indefinite useful life, and with reference to other types of assets, is performed in the presence of externalor internal indicators that may cause the belief that a loss of value exists. In particular, for preparation of the financial state-ments for the year 2008, there were not indicators that suggested the presence of a loss of value with reference to tangible

137

Marcolin S.p.A.

Associated company Value at Depreciation Revaluation Capital Value at (euro/000) DEC 31, 2008 DEC 31, 2007 increase DEC 31, 2008

FINITEC Srl 258 0 0 0 258Macolin Japan Co Ltd 108 0 0 217 325Totale 366 0 0 217 583

Interest in associates(euro/000)

Finitec S.r.l. Share Capital 54.080 eur DEC 31, 2008 DEC 31, 2007Assets 2.679 2.554



Net sales 2.766 2.387

Income (loss) for the period 87 51

% Ownership 40% 40%

Marcolin Japan Co. Ltd. Share Capital 99.000.000 jpy DEC 31, 2008 DEC 31, 2007Assets 2.952 1.602


Shareholders' equity 330 (124)

Net sales 2.335 1.295

Income (loss) for the period 24 (358)

% Ownership 40% 40%

assets. With reference to intangible assets, as mentioned above, it should be noted that during this financial year this item sawa significant increase following the purchase of the Web trademark. This asset, subjected to a depreciation process, was ac-quired at the end of the year, and was subject to an appropriate appraisal as it was also a transaction with an associated party.On this basis, in addition to its congruity with Group plans with regards to development and other production margins to Webtrademarks, it was held that no loss of value existed with reference to said asset. With regards to equity interests recordedto the separate balance sheet, it was held to be opportune to verify the presence of a loss of value in the case that impair-ment indicators were found. It was hence retained opportune to estimate the value in use of the CGU identified with the sub-sidiary, based on the parameters specified below.

The value in use, which is compared with the accounting value of the investments, was estimated based on future financialcash flows congruent with the economic and financial forecasts of the Group with reference to financial year 2009. In fact,in consideration of the highly uncertain conditions that characterise the current macroeconomic situation, the Directorsfound it opportune to limit financial predictions to a single financial year.The approved budget for financial year 2009 takes into account the economic crisis that was created during the second halfof 2008. However, it should be noted that the estimates are based on valuations relative to future events that could occurwith effects different from those that are expected, causing the possibility of changes, possibly significant, with respect to theforecasted data considered here.The value in use was determined as the sum of the actual value of cash flows predicted for 2009 and the terminal value de-termined based on the forecast data, which was appropriately modified to take into account the effects of normalisation inorder to estimate a balanced cash flow. Due to the generalized conditions of uncertainty, it was held to be prudent to use agrowth rate of zero in determining the terminal value. For discounting of the cash flows, a rate of 8.68% was used, which re-flects current market valuations for the cost of money and the specific risks connected with operations activities. After thetest was performed, it was necessary to perform the write-downs and reinstatements indicated above.

Additionally three sensitivity analyses were performed on the impairment test, simulating respectively, a variation in thegrowth rate from 0 to 1%, in the exchange rate of +/- 5%, and a variation in the discounting rate of 0.5%, 1% and 1.5%.

With reference solely to the subsidiary Marcolin Deutschland Gmbh, such variations would have led to variations in theamount of the write-down recorded.In particular, in the scenario with the worst results (growth rate of zero and WACC of 10.18%) a write-down that was largerby circa €74 thousand would have occurred.

8. OTHER NON-CURRENT ASSETSThis item represents the value of receivables arising from loans granted by Marcolin S.p.A. to subsidiaries for a total valueof € 6,617 thousand and more specifically, for a value of € 4,261 thousand to the subsidiary Marcolin International BV and€ 2,357 thousand to the subsidiary Marcolin GmbH (Switzerland).


138

9. INVENTORIESDetails of inventories are shown below.

Comparing warehouse values, it can be noted:- an increase in the value of finished products and merchandise equal to €6,011 thousand, essentially generated by mov-

ing forward presentation of eyewear collections to the market with respect to the previous financial year;- a decrease in the value of commodities and total works in progress, totalling €1,294 thousand.The balance for the reserve for inventory decreased by €3,589 thousand.

The increase in the Reserve for obsolete and slow-moving goods was due to a more aggressive write-down policy adopted dur-ing 2008 for all inventory, based on the recoverable value in use based on historic experience.

10. TRADE AND OTHER RECEIVABLESDetails of trade and other receivables are as follows:

The balance of net trade receivables increased by €5,907 thousand with respect to the previous financial year, mainly dueto the increase in revenues. The amount of receivables shown in the financial statements has not been discounted, as there are no long-term receivablesor their use is not foreseen beyond the short-term, and the carrying value of short-term receivables provides a reasonable rep-resentation of the fair value.

139

Marcolin S.p.A.

Inventories (euro/000) DEC 31, 2008 DEC 31, 2007

Finished goods 32.106 26.095Advances 0 0Raw material 10.226 10.551Work in progress 8.334 9.303Gross inventory 50.666 45.950Inventory provision (9.354) (5.765)Net inventory 41.312 40.185

Trade and other receivables(euro/000) DEC 31, 2008 DEC 31, 2007

Gross receivables 60.024 53.978Provision for bad debts (5.135) (4.996)Net trade receivables 54.889 48.982Tax receivables 72 2.622Other receivables 235 600Total other receivables 307 3.221Total trade and other receivables 55.196 52.203

With a view to providing the information requested under IFRS 7, below is a detail of the trade receivables “falling due”,split by geographical area:

In compliance with the provisions of IFRS 7, the table below illustrates the expiration date of the trade receivables not sub-jected to protest. The value of the allowance for doubtful accounts remained substantially unchanged with respect to the pre-vious financial year.

In some markets where Marcolin S.p.A. operates, company policy dictates that receivables are collected beyond the expira-tion date foreseen by contract without this leading to financial difficulties or liquidity problems on the part of customers.Hence, there are balances relative to receivables from clients which were not subject to write-downs, even if the terms of ex-piration for payment have already occurred. The table below illustrates the balance of these commercial receivables, divided into uniform time classes.


140

Receivables by geographical area DEC 31, 2008 DEC 31, 2007(euro/000)

Italy 13.521 17.490Rest ofEurope 14.034 9.648North America 5.216 3.931Rest of the world 6.363 4.133Total 39.135 35.202

Ageing commercial receivable not protested Gross value Provision Net value (euro/000)

31-Dec-2007Not overdue 36.348 (1.146) 35.202Overdue less than 3 months 9.633 (8) 9.625Overdue from 3 to 6 months 3.801 (2.009) 1.792Overdue over 6 months 3.362 (998) 2.364Total 31-Dec-2007 53.143 (4.161) 48.982

31-Dec-2008Not overdue 39.135 0 39.135Overdue less than 3 months 3.359 0 3.359Overdue from 3 to 6 months 8.786 (362) 8.424Overdue over 6 months 7.845 (3.874) 3.971Total 31-Dec-2008 59.125 (4.236) 54.889

Trade receivables overdue and not written-down DEC 31, 2008 DEC 31, 2007(euro/000)

Overdue less than 3 months 3.359 9.625Overdue over 3 months 12.395 4.155Total 15.754 13.780

For the sake of full disclosure, below is an illustration of the maturity of the receivables submitted to protest. Note that thebook value of these receivables is immaterial.

Below is an explanation of the changes in the allowance for doubtful accounts.

Note also that the amounts reported with trade receivables are not subject to guarantees.

Details of receivables from subsidiaries

141

Marcolin S.p.A.

Ageing protested receivable Gross value Provision Net value (euro/000)

DEC 31, 2007Overdue less than 12 months 162 (162) 0Overdue over 12 months 673 (673) 0Total DEC 31, 2007 835 (835) 0

DEC 31, 2008Overdue less than 12 months 270 (270) 0Overdue over 12 months 630 (630) 0Total DEC 31, 2008 899 (899) 0

Provision for bad debts 2008 2007(euro/000)

Opening 4.996 1.656Allowance 400 3.768Utilisation (261) (428)Reclassification and other movements 0 0Total short term provisions 5.135 4.996

Receivables from subsidiaries DEC 31, 2008 DEC 31, 2007(euro/000)

Marcolin & Co. S.p.A. (in liquidazione) 0 27Marcolin France Sarl 0 2.910Marcolin (Deutschland) GmbH 2.055 1.334Marcolin (UK) Ltd 446 95Marcolin Iberica S.A. 1.189 1.696Marcolin GmbH (Svizzera) 470 365Marcolin Portugal Lda 2.486 1.632Marcolin Benelux S.p.r.l. 1.155 820Marcolin Usa Inc. 7.654 6.819Marcolin Internantional B.V. 1.084 833Marcolin Asia Ltd. 155 3Marcolin do Brasil Ltda 4.060 3.327Cébé S.A. 4.229 269Totale 24.982 20.129

11. OTHER CURRENT ASSETSThis item mainly comprises prepaid expenses relating to insurance premiums and rents paid on an advance basis.

12. CASH & CASH EQUIVALENTSThe item represents the value of cash balances and of highly liquid financial instruments, i.e. with an original maturity of lessthan three months. The decrease of € 141 thousand is explained in the cash flow statement which shows the use of cash toward investments andloan repayment.

13. EQUITYMarcolin S.p.A.’s share capital amounts to € 32,312,475.00 and is composed of 62,139,375 ordinary shares with a parvalue of € 0.52 each.Marcolin S.p.A. holds 681,000 treasury shares in portfolio with an overall equivalent value of € 947 thousand, used to re-duce the share capital by a nominal value of € 354 thousand and the remaining € 593 to reduce the treasury reserve in-cluded in the profits carried forward.For details of changes in the items forming the equity, refer to the relevant table.

* Available quota to distribute e 19.828 thousand


142

Description Value Possible Available Previous years allocations utilization reserve - Losses - Other

(euro/000) coverage reasons

Equity 31.958 0Share premium reserve 24.517 A-B-C* 24.517 16.515 Legal reserve 1.703 B 0 0Fair value reserve land and buildings (FTA) 2.931 A-B 2.931 0FTA reserve 5.445 0 0Stock Option reserve 94 A-B-C 94 0Cash Flow Hedge reserve (351) 0 0Losses carried forward (5.276) 0 6.516 Resul of the period 1.461 0 0Total 62.483 27.543 23.031 0

Amount not to be distributed ex art. 2426, comma 1 n. 5 c.c. 0 0 0Amount not to be distributed ex art. 2431 c.c. 4.689 Residual amount which can be distributed 22.854 Bound amount ex art. 109 comma 4 lettera b) del T.U.I.R. 0 0 0

Legenda:

A – to capital increase B – to losses coverage C – to shareholders’ distribution D – other

Among the variations which occurred during the financial year, we note the negative adjustment to the cash flow hedge re-serve, relative to derivatives on interest rates stipulated with Efibanca for €277 thousand and the effects on the stock op-tion reserve totalling €94 thousand, which is detailed in the following paragraph.

Stock option reserveThe stock option reserve is in accordance with IFRS 2 principles. In fact, adoption of a stock option plan brings with it thenecessity of recording for accounting purposes a cost equal to the fair value of the options at the date of allocation. This costis recognised in the income statement for the duration of the period in which the conditions for use of such options matures,and a counter value is placed in the associated equity reserve.

At 31 December, 2008, the first financial year in which this reserve is booked, it amounted to €94 thousand, with a totalcounter value booked to the income statement for the year at an equivalent amount, completely traceable to the stock op-tion plan approved over the course of 2008 for the Managing Director of the Parent Company.

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Marcolin S.p.A.

Statement of changes Share Share Other Profit Profit Totalin shareholders’ equity capital premium reserve (losses) (losses)

reserve carried for the period(euro/000) forward

Beginning Balance previous year 31.958 37.320 8.376 (3.573) (11.005) 63.076 Profit for the period allocation: 0 (11.005) 0 0 11.005 0 - dividend allocation 0 0 0 0 0 0 - other allocation 0 0 0 0 0 0 Other changes 0 0 (75) 0 0 (75)Profit (losses) for the period 0 0 0 0 (1.798) (1.798)

Ending Balance previous year 31.958 26.315 8.301 (3.573) (1.798) 61.204 Profit for the period allocation: 0 (1.798) 0 0 1.798 0 - dividend allocation 0 0 0 0 0 0 - other allocation 0 0 0 0 0 0 Other changes 0 0 (182) 0 0 (182)Increase share capital 0 0 0 0 0 0 Dividends

0 0 0 0 0 0 Profit (losses) for the period 0 0 0 0 1.461 1.461

Ending Balance Values 31.958 24.517 8.119 (3.573) 1.461 62.483

14. MEDIUM- AND LONG-TERM BORROWINGSThe balance of long-term loans at 31 December, 2008 is represented almost entirely by loans distributed by Banca IntesaS.p.A. (now Cassa di Risparmio del Veneto) and Efibanca S.p.A. (head of a consortium of financial credit institutions). Forthe details, see point 18, Short-term loans.

Note that the contract sealed with a group of banks headed by Efibanca S.p.A., was signed on 27 June, 2007 for a maxi-mum of € 30 million, split into two equal portions of € 15 million each, the first of which was provided in the form of anunsecured loan and the second as a stand-by line of credit. At 31 December, 2008 the loan with Efibanca S.p.A., amounted to € 27.7 million.

Below the composition of the net financial position is illustrated. For more information please refer to that indicated abovein the Management Report.


144


Cash 23 50Cash equivalents 4.667 4.782Short term borrowings (4.222) (11.172)Current portion of long term borrowings (12.995) (77)Long term borrowings (28.654) (32.519)Total Net financial position (41.181) (38.936)


A Cash 23 50B Cash equivalents (detail) 4.667 4.782C Securities held for trading 0 0D Liquidity (A+B+C) 4.690 4.832E Current financial receivables 0 0F Current bank payable 4.222 11.172G Non current debt - current portion 12.995 77I Current financial debt (F+G) 17.218 11.249J Net current financial debt (I-E-D) (12.527) (6.417)K Non current bank loans 28.654 32.519L Issued bonds 0 0M Other non current debt 0 0N Non current financial debt (K+L+M) 28.654 32.519O Net financial debt (J+N) (41.181) (38.936)

15. LONG-TERM PROVISIONSThe item expresses the balance of the value of the defined benefit plan, which is distributable at the same time or subsequentto the termination of the employment relationship, and is totally represented by the employee severance indemnity reserveaccrued as at 31 December 2006.Note that the severance indemnity accruing from 01 January, 2007 is treated as a defined contribution plan. Therefore, thecompany discharges its obligations with payment of the contributions to the severance reserves (public or private).

The changes in the aforesaid provisions are shown below:

Other movements (negative €36 thousand) were generated by interest related assets with respect to the previous year.

The following table shows the various rates assumed and the other actuarial hypotheses used for the relevant actuarial cal-culation:

16. OTHER NON-CURRENT LIABILITIESThere were no other non-current liabilities.

145

Marcolin S.p.A.

Long term provisions - Staff leaving indenities (euro/000)

DEC 31, 2007 3.940 Provisions 215 Utilization (418)Actuarial loss 339 Other movements (36)DEC 31, 2008 4.039

Actuarial assumptions

Ipotesi attuariali 2008mortality rate: Tavola RG48disabilty rate: Tavole INPS distinte per età sessopersonnel turnover rate: 5,00%severance prepaiments: 2,00%discount rate: 4,60%wages increase rate: 3,90%inflation rate: 3,20%

17. TRADE PAYABLESThe following table details trade payables by geographical area:

The amount of trade payables seen in the balance sheet were not subject to discounting, as the amount booked in the bal-ance sheet represents a reasonable representation of the fair value in consideration of the fact that there are no payables withdeadlines past short-term.

18. SHORT-TERM BORROWINGSThe value shown represents the balance of short-term borrowings and other financial liabilities that mature within 12 monthsafter balance-sheet.

The contractual agreements relating to the loans granted to Marcolin S.p.A. by Banca Intesa S.p.A (now Cassa di Risparmiodel Veneto) and Efibanca S.p.A. include a series of obligations relating to operational and financial aspects. In particular,several financial economic indexes (“covenants”) need to be observed, calculated in the consolidated financial statementsat the end of each year. The contract with Banca Intesa requires compliance with the parameters at the end of each six-monthperiod.If these parameters are not observed, the conditions under which the loan agreements will continue will have to be negoti-ated, or the relevant changes made to the aforesaid parameters. Otherwise, the amounts granted may have to be repaidearly.The covenants are calculated on the main financial economic indicators (EBITDA, net financial position and equity). At 31December, 2008 and over the course of the financial year, the covenants were respected in their entirety.


146

Payable by gepgraphical area(euro/000)

Italy Rest of Europe North America Rest of the world Total31.12.2008 19.107 3.641 2.778 9.032 34.559 31.12.2007 24.933 3.755 2.029 4.278 34.995

In the following table we detail the characteristics of the main loans issued to the company:

* These loans envisage contractual covenants as detailed in the explanatory notes to the accounts of Marcolin Group.

We point out that all loans in place were granted at arm’s length market conditions without provision of collateral.The following table contains details of the maturity of the financial liabilities, whose value is entered either in current liabil-ities or in non-current liabilities.

Information follows with regards to derivatives existing at 31 December, 2008., their characteristics, and a comparison tothe previous financial year.

147

Marcolin S.p.A.

Borrowings Bank loans and overdrafts Bank borrowings Other financial TOTAL(euro/000) institutions

within 1 year 5.110 8.779 598 14.487between 1 and 3 years 0 22.514 176 22.690between 3 and 5 years 0 9.357 164 9.521over 5 years 0 0 327 32731.12.2007 5.110 40.650 1.265 47.025

within 1 year 1.723 15.417 77 17.217between 1 and 3 years 0 23.678 157 23.835between 3 and 5 years 0 4.413 160 4.574over 5 years 0 0 246 24631.12.2008 1.723 43.508 641 45.872

Bank Currency Starting Residual Expiration Interest NotesAmount Amount Date Rate

Cassa di Risparmio EUR (credit line) 13.054.357 DEC 31, 2010 Euribor "Stand by" credit line "revolving" type, del Veneto 25.000.000 6 months dated FEB 16, 2006. Refundable in 8 half-year (ex banca Intesa) * + 1% installments from JUN 30, 2007.

EFIBANCA * EUR (credit line) 27.750.000 JUN 27, 2012 Euribor A "Term Loan Facility" of 15.000.000 and 30.000.000 6 months a "Stand by Facility" loan of 15.000.000,

+ 1,05% dated JUN 27, 2007. Paid out the "Term Loan Facility" line, refundable in 10 half-year installmentsfrom DEC 27, 2007 and part - payment of the "Stand by Facility" line of 6.000.000, refundable in 7 half-year installments from JUN 27, 2009.

Ministero delle EUR 793.171 640.861 JUN 26, 2016 1,012% Subsidized loan in accordance with the Law attività produttive no. 46, 1982, refundable in 10 year installments (Innovazione Tecnologica) from June 26, 2007.

Unicredit Corporate CHF 3.500.000 3.500.000 FEB 5, 2009 3,5375% Short term borrowings dated JAN 29, 2008 Banking due-date FEB 5,2009. Extention to MAY 11,

2009, tax rate 2%.

Financial assets measured at fair value booked to the income statement.On 09 October, 2008, a derivatives currency contract was stipulated with Cassa di Risparmio del Veneto (formerly Banca In-tesa), in which Marcolin undertook to buy $4.8 million, divided into six pieces, from January to June 2009, at a predeter-mined set exchange rate. The relative fair value at 31 December, 2008 is positive at €52 thousand and the amount wasbooked to the income statement as financial income.

Financial liabilities measured at fair value booked to the income statement.On 28 April, 2006, Marcolin stipulated a derivatives contract on interest rates (IRS) with the Cassa di Risparmio del Veneto(formerly Banca Intesa) in order to protect itself against risk related to variations in interest rates. This contract refers tothe variable interest rate financing obtained from the institute. The fair value of the derivatives instrument at 31 December, 2008 was negative by €116 thousand (positive by €10 thou-sand at 31 December, 2007).This derivative, while created in order to cover the risk associated with interest rate variations, was not considered as a hedgeaccounting item for accounting purposes for IAS, as it calls for a Knock Out barrier, which impedes effective hedging accordingto IAS 39.

Financial liabilities measured at fair value booked to equity.On 30 July, 2007, a derivatives contract on interest rates (IRS) was stipulated with Efibanca in order to cover risks relatedto interest rate variations on financing provided by Efibanca. This instrument was classified and accounted for by the Company as a hedging instrument in that it respects the provisionsof IAS 39. In fact:- it was contractually established, at the moment the financing was provided, to cover at least 50% of the notional value ofsaid financing;- the maturity of the derivative contract corresponds to that of the hedged financing;- the set dates for calculation of Euribor are the same as those for the derivative instrument and the underlying financing.

The instrument’s fair value at 31 December, 2008 was negative by €351 thousand, of which €176 thousand short-term, and€175 thousand long-term. Fair value at 31 December, 2007 was negative by €74 thousand. Fair value variations werebooked to equity in an associated reserve (see the table with regard to movements for equity items).

During the year, total financial charges deriving from periodic liquidation of reciprocal positions on two interest rate deriva-tive instruments amounted to €62 thousand.

19. CURRENT PROVISIONSBelow we show a table containing the most significant changes occurring during the financial year:


148

Short term provisions JAN 1, 2008 Provisions Actuarial Utilization Other DEC 31, 2008(euro/000) (income) movements

Provision for severance indemnities 431 144 (15) (66) 0 495Tax fund 0 0 0 0 0Other provisions 2.196 331 (395) 2.131Provisions for risks and charges 0 0 0 0 0Total short term provisions 2.627 475 (15) (461) 0 2.626

The item Provisions for termination indemnities and similar obligations consists of provisions for agent indemnities payableupon cessation, the amount of which has been discounted to present value.The Other provisions amount consists of provisions made against the risk of customer return sales (€ 1,181 thousand), thevalue of the provisions made for other liabilities deriving from current legal or constructive obligations (€104 thousand), aswell as risk provisions for losses due to equity investments deriving from measurement at fair value of the subsidiary Mar-colin International BV (€846 thousand).

20. OTHER CURRENT LIABILITIESBelow we show the detail of other liabilities:

The item Other current liabilities mainly consists of payables to personnel and payables to social security institutions whichsaw an increase, respectively, of €793 thousand and €116 thousand.

21. COMMITMENTS AND GUARANTEESBelow we show details of the main commitments and guarantees of Group companies:

The item consisted mainly of a surety of € 761 thousand issued to the bank issuing a low-rate loan under Italian Law394/81.We also point out that contracts are in place for the use of trademarks owned by third parties for the production and saleof eyewear and sunglasses. These contracts require payment by Marcolin of guaranteed minimum royalties throughout theirduration. As at 31 December, 2008 the total of these future commitments amounted to € 133 million (€ 74 million in 2007),of which € 30 million falling due within the next 12 months.

149

Marcolin S.p.A.

Other current liabilities DEC 31, 2008 DEC 31, 2007(euro/000)

Payables to personnel 2.817 2.024Social security payables 1.357 1.286Royalties 0 0Other accrued expenses and deferred income 90 86Interest expenses 0 0Other deferred charges 0 0Total 4.265 3.396

Contingencies 2008 2007(euro/000)

Guarantees to third parties 1.465 1.853Guarantees to Group companies 9.053 11.169Total contingencies 10.518 13.022

INCOME STATEMENT

22. NET SALESThe breakdown of net sales in financial year 2008 was as follows:

Revenue earned in Italy accounted for 29.6% of total revenue on the market. Note the increase in sales in the European mar-ket totalling 16.3%, an increase in the American market of 6.9%, and in the rest of the world, 17.5%.

23. COST OF SALESThe following table shows the detailed breakdown of cost of sales:

The value of cost of sales, in absolute terms, increased by €5,648 thousand (an increase of €17,797 thousand in 2007), witha consequent reduction in the percentage of impact of revenues equal to 0.5%.


150

Net sales details DEC 31, 2008 DEC 31, 2007 Increase (decrease)(euro/000) Turnover % on total Turnover % on total Turnover % on total

Category:- Frames 120.550 100,0% 109.942 99,2% 10.608 26,5%- Ski goggles 0 0,0% 428 0,4% (428) (22,0)%- Accessories 0 0,0% 424 0,4% (424) 19,2%Total by category 120.550 100,0% 110.795 100% 9.756 8,8%

- Italy 35.712 29,6% 37.133 33,5% (1.421) (3,8)%- Europe 45.315 37,6% 38.979 35,2% 6.337 16,3%- U.S.A. 12.434 10,3% 11.634 10,5% 800 6,9%- Rest of the world 27.089 22,5% 23.049 20,8% 4.040 17,5%Total by geographical area 120.550 100,0% 110.795 100% 9.756 8,8%

Cost of sales DEC 31, 2008 DEC 31, 2007 Increase %(euro/000) (decrease)

Purchase of material and finished goods 45.751 45.143 609 1,3%Changes in inventory (1.243) (2.763) 1.519 (55,0)%Personnel expenses 14.344 12.830 1.514 11,8%Outworks 11.396 10.589 807 7,6%Amortisation and depreciation 2.267 2.283 (16) (0,7)%Other expenses 3.772 2.558 1.215 47,5%Total cost of sales 76.286 70.639 5.648 8,0%

24. DISTRIBUTION & MARKETING COSTSBelow we show the detailed breakdown of distribution & marketing costs:

The impact of distribution and marketing costs with respect to sales revenues remained largely unchanged with respect tothe previous year. With regards to individual cost items, the main increase can be seen in the item Advertising and Public Re-lations and Other Costs.

25. GENERAL & ADMINISTRATIVE COSTSThe detailed breakdown of general & administrative costs was as follows:

The total value of the item in question increased with respect to the previous period by €5,100 thousand, mainly due tominor write-downs on receivables.In fact, during 2007, write-downs on receivables from the subsidiary Cébé were made totalling €6,097 thousand. An increase in personnel costs of €435 thousand was also seen, as well as an increase in Other costs for €620 thousand,mainly due to the effects of an increase in compensation due to Directors.

Pursuant to Article 149-duodecies of the Regulation, we note here that the consideration pertaining to the year 2008 dueto the independent auditors for the accounting audit service amounted to €164 thousand.

151

Marcolin S.p.A.

Selling and marketing costs DEC 31, 2008 DEC 31, 2007 Increase %(euro/000) (decrease)

Personnel expenses 5.012 4.832 180 3,7%Commissions 4.681 4.887 (206) (4,2)%Amortisation and depreciation 719 800 (82) (10,2)%Royalties 10.062 9.239 823 8,9%Advertising and PR 10.172 8.838 1.334 15,1%Other costs 6.509 5.263 1.247 23,7%Total selling and marketing costs 37.155 33.860 3.295 9,7%

General and administrative expenses DEC 31, 2008 DEC 31, 2007 Increase %(euro/000) (decrease)

Personnel expenses 2.939 2.504 435 17,4%Bad debt provsion 400 6.547 (6.147) (93,9)%Amortisation and depreciation 397 405 (8) (1,9)%Other costs 5.656 5.036 620 12,3%Total general and administrative expenses 9.392 14.492 (5.100) (35,2)%

(euro/000) Service provider Entity 2008 fees

Audit PricewaterhouseCoopers SpA Marcolin SpA 120Deloitte & Touche S.p.A Marcolin SpA 44

Total 164

26. MARCOLIN S.p.A. EMPLOYEESDetails of the overall number of employees engaged are shown below:

27. OTHER REVENUES AND COSTSThe details of Other operating revenues and costs were as shown below:

The balance of the item is positive for €8,933 thousand, with a negative change equal to €2,641thousand with respect tothe previous year. This is mainly connected to adjustments made to the value of equity investments.The item Other charges includes recharges for advertising royalties and branch transportation expenses, for €5,530 thou-sand and €1,499 thousand, respectively.


152

Employees - Average numberCategory 2008 2007




Other operating income and expenses DEC 31, 2008 DEC 31, 2007 Increase %(euro/000) (decrease)

Capital gain 6 10 (4) -37%Revaluation of participation 1.471 8.148 (6.677) -82%Extraordinary income 538 24 514 2147%Other revenues 8.930 7.930 1.000 13%Total other revenues 10.945 16.112 (5.167) -32%

Capital losses (4) (3) (1) 38%Devaluation of participation (1.764) (4.243) 2.479 -58%Extraordinary loss (182) (102) (80) 79%Other expenses (62) (191) 129 -68%Total other expenses (2.011) (4.538) 2.527 -56%

Total 8.933 11.574 (2.641) -23%

28. FINANCE INCOME AND EXPENSEThe detail of the item Finance income and expense is as follows:

Finance income is described in detail in the following table:

Finance expense is described in detail in the following table:

Finance income and expense increased by €121 thousand with regards to 31 December, 2007, mainly due to the combinedeffects of smaller exchange rate differences (€797 thousand) and greater interest rate liabilities due to the increase in thecost of money (€580 thousand).

153

Marcolin S.p.A.

Financial income and expenses DEC 31, 2008 DEC 31, 2007(euro/000)

Financial income 2.424 1.300Financial expenses (5.453) (4.209)Total financial income and expenses (3.030) (2.909)

Financial income DEC 31, 2008 DEC 31, 2007(euro/000)

Interest income 318 749 Other income 122 66 Gains on exchage rate differences 1.983 485 Total financial income 2.424 1.300

Financial expenses DEC 31, 2008 DEC 31, 2007(euro/000)

Interest expenses (2.994) (2.464)Other expenses (702) (660)Cash discounts (55) (44)Losses on exchage rate differences (1.702) (1.041)Total financial expenses (5.453) (4.209)

30. INCOME TAXFor current taxes, the tax burden was determined according to the taxable income arising from the year’s result, taking intoaccount use of any prior tax losses and applying the statutory tax rates in force in each country.

Below is the report on reconciliation of the tax burden:


154

IRES(euro/000)

Profit (loss) before taxes 3.621 Theoretical Fiscal Charge 27,50% 996Temporary differences to be taxed in following years 0 Differences to be deducted in following years 4.546 Previous years temporary differences cancellation (781)Permanent differences not to be cancelled in following years 1.364 Loss of the prior year 0Total differences 5.129 Taxable income 8.749 Income taxes 27,5% 2.406Effective tax rate 66,45%

IRAP(euro/000)

Differences between value and cost of production 29.841 (except not considerable items) Reclassification 0 Deduction for subordinate employment 7.438 Theoretical taxable 37.279 Theoretical Fiscal Charge 3,90% 1.454Temporary differences to be taxed in following years 0 Differences to be deducted in following years 840 Previous years temporary differences cancellation (209)Permanent differences not to be cancelled in following years (5)Total differences 625 Taxable income 25.131 Current taxes 3,90% 980Incidence of real taxable 2,63%

The breakdown of deferred taxes and income tax for the year was as follows:

Over the course of 2008, Marcolin S.p.A., with reference to that established in article 1, paragraph 48 of Law no. 244 of24 December, 2007 (Financial Law 2008), chose to realign the fiscal values to the values of the balance sheet for the yearfor the taxes relative to some tangible assets.Realignment of the fiscal values to the greater values recorded in the year’s balance sheet (the free value is equal to €420thousand) was obtained through the total payment of a substitute tax equal to €161 thousand to be paid in 3 annual pay-ments. The first payment of 30% (€48 thousand) was paid on 16 June, 2008, the second and third payments, equal to 40%(€64 thousand) and 30% (€48 thousand), respectively, will be paid in June 2009 and June 2010.The effects of this operation, whose economic benefits were entirely seen in this financial year, was equal to €255 thousand,which is the net effect between the expenses deriving from the substitute tax and the releasing of the deferred taxes fund al-located at 31 December, 2007 for the taxes subject to realignment.

155

Marcolin S.p.A.

Deferred tax assets/liabilities 2008 2007(euro/000)

Deferred taxDepreciation and amortization Non-current assets 420 0 Not realized active exchange differences Current assets 41 163 Fair Value land and buildings Non-current assets 1.483 291 Agents' severance indemnity Non-current liabilities 193 0 Buildings Current liabilities 33 1.229 Buildings leasing 0 0 Revaluation treasury stock Non-current assets 47 47 Instalment contributions and donations (year 2002) Current assets 9 9 Total 2.225 1.740

Deferred tax assetsCash contributions and fees Current assets 35 141 Entertainment expenses Current assets 118 74 Write-down receivable Current assets 420 424 Not realized passive exchange differences Current liabilities 95 163 Deductible allowance ex art 108 Non-current assets 72 48 Agents' severance indemnity Current assets 141 155 Other devaluation and provisions Allocation 1.398 633 Stock Option Current assets 0 26 Inventories IRES Current assets 0 1.599 CFC Current assets 0 112 Write-down goodwill IAS compliant Current assets 104 0

Total 2.383 3.375 Net value (157) (1.635)

31. EARNINGS PER SHAREBase earnings per share (EPS) are given by the ratio of parent company earnings to the weighted average number of ordi-nary share outstanding during the financial year, with the exclusion of treasury shares. For further details on the values re-lating to the increase in share capital, refer to the section on Equity.The result per share is as follows:


156

Income (Loss) per share 2008 2007

Income (Loss) for the period (in euro thousands) 1.461 (1.798)Number of shares 62.139.375 62.139.375 Treasury stock 681.000 681.000 Net number of shares 61.458.375 61.458.375 Income (Loss) per share 0,024 (0,291)

32. FINANCIAL INSTRUMENTS BY TYPEThe financial instruments are shown by uniform classes in the table below which shows the fair value in accordance with IFRS7.For the assessment of the fair value of loans incurred, future cash flow was estimated on the basis of forward interest rateimplicit in the interest rate curve at year end and, as regards calculation of the coupon in progress, of the most recent fixingavailable of the Euribor.The values calculated using this method were discounted based on the discount factors related to the various expiration datesof the cash flow mentioned above.The derivatives used are classified as OTC (over the counter) derivatives and therefore, there is no officially recognised pub-lic price formed on the trading markets. To value these derivatives, the company used, respectively, discounted cash flow andBlack & Scholes methods for interest rate swap and for the Cap and Floor, fed with input data published by Bloomberg.

157

Marcolin S.p.A.

Classes of financial assets Loans and Assets at fair value Investments Available Total value Fair valueDEC 31, 2007 receivables through the profit hold to for sale(euro/000) and loss maturity

Trade receivables 48.982 0 0 0 48.982 n/aDerivatives 0 0 0 0 0



Trade payable 0 0 34.995 0 34.995 n/aDerivatives (12) 0 0 0 0 63Loans 0 0 41.915 0 41.915 42.621

Classes of financial assets Loans and Assets at fair value Investments Available Total value Fair valueDEC 31, 2008 receivables through the profit hold to for sale

and loss maturity

Trade receivables 54.889 0 0 0 54.889 n/aDerivatives 0 51 0 0 0 51



Trade payable 0 0 34.559 0 34.559 n/aDerivatives (116) (351) 0 0 0 (467)Loans 0 0 45.872 0 45.872 42.542

Costs and revenue to subsidiary and related companies are shown below.

TRANSACTIONS WITH SUBSIDIARY COMPANIES BOOKED AT EQUITY, RELATED AND ASSOCIATED COMPANIES


158

Company Revenues from sales Other Financial income Cost of raw materials, Cost for service DEC 31, 2008(euro/000) and services income from financial auxiliary materials,

receivables spare parts and goods

Company:Marcolin Asia Ltd. 40 2 0 32 740 (730)Marcolin & Co. S.p.A. 0 0 0 0 0 0Marcolin (Deutschland) GmbH 2.339 507 0 0 21 2.826Marcolin GmbH 1.045 176 67 0 0 1.288Marcolin France Sarl 6.815 1.660 0 0 40 8.435Marcolin Iberica S.A. 7.149 829 0 0 8 7.971Marcolin Benelux S.p.r.l. 1.785 349 0 0 36 2.097Marcolin Portugal Lda 1.843 324 0 0 2 2.165Marcolin (UK) Ltd 2.964 583 0 2 54 3.491Marcolin Usa Inc. 12.266 2.539 0 145 0 14.661Marcolin International BV 0 0 251 0 0 251Marcolin France SAS 2.318 322 0 626 71 1.943Marcolin do Brasil Ltda 1.747 643 0 2.390Total Group 40.311 7.935 318 804 972 46.788

Revenues from associated companies (Finitec S.r.l.) 0 0 0 0 2.383 (2.383)Revenues from associated companies (Marcolin Japan) 1.168 0 0 0 0 1.168Total 41.479 7.935 318 804 3.355 45.572

(euro/000) Expenses Revenues Receivables Payables Relation

Finitec S.r.l. (2.383) 0 (1.426) 0 AssociatedMarcolin Japan (105) 1.273 (96) 787 AssociatedDemo Holding SA (363) 73 (81) 0 AssociatedTod's S.p.A. (5) 147 0 0 AssociatedWin S.r.l. (3) 0 0 0 Associated

INFORMATION ON ABNORMAL AND UNUSUAL TRANSACTIONS AND TRANSACTIONS WITH RELATED PARTIESWith regard to the suggestions made with Consob Communications nos. DAC/98015375 of 27 February 1998 andDEM/6064293 of 28 July 2006, the necessary information on abnormal and unusual transactions and transactions with re-lated parties is provided below.

Abnormal and unusual transactionsNo abnormal and/or unusual transactions were reported, between Group companies, during the course of 2008, nor were thereany extraordinary business activities, or activities that might have a significant effect on the economic, capital or financialsituation of Marcolin S.p.A. and the Group.

Transactions with related partiesRelations with Group companies are mainly commercial and established under market conditions. At 31 December, 2008, the Group does not register a debt with the company Demo Holding SA, associated with the share-holder and Director of Marcolin S.p.A. Diego Della Valle, (previously €103 thousand in 2007), and registers costs totalling€ 290 thousand (€ 493 thousand in 2007).During 2008, the Group had supply relations with the company Tod’s S.p.A., through the shareholders Diego Della Valle (Di-rector of Marcolin S.p.A.) and Andrea Della Valle, for a total amount of € 142 thousand (€ 688 thousand in 2007).As already noted in the information at item 6 Intangible assets, we repeat here that over the course of the year, Parent Com-pany Marcolin S.p.A. acquired the Web trademark, a mark for which it already had a license, from the associated partyDemo Holding S.A. The congruence of the price for this purchase was supported by an estimate report provided by an inde-pendent professional.

In view of the foregoing, it is believed that the aforesaid transactions did not have a significant effect on the economic re-sults and on the capital and financial situation of the group.

Non-recurrent significant events and operations

No significant non-recurrent events or operations occurred that had effects upon the Group’s equity, economic, and financialsituation over the course of 2008.

OTHER INFORMATIONIn compliance with Attachment 3C, Template 1 of CONSOB Regulation no. 11971 of 14 May, 1999, below we list remu-neration for directors, statutory auditors, general managers and managers with strategic responsibilities, posted on the basisof temporal applicability.

159

Marcolin S.p.A.

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Pursuant to the requirements in article 43 paragraph 1 no. 13 of the CEE IV Directive 78/660, we note that at 31 Decem-ber, 2008 no financing provided to members of administrative, management, or control bodies were in existence, nor were thereany commitments made with guaranty effects with any members of administrative, management, or control bodies, to Di-rectors, or to statutory auditors.

STOCK OPTION PLANSIn compliance with Attachment 3C, Template 2 of CONSOB Regulation no. 11971 of 14 May, 1999, below we list stock op-tions allocated to the Managing Director and General Manager of the Group:

For a description of the characteristics of said Stock Option plan, please refer to the Marcolin S.p.A. Management Report.

INFORMATION RELATED TO DIRECT AND INDIRECT PARTICIPATION

161

Marcolin S.p.A.

(a) (b)

Options outstanding at the beginning

of the year(1) (2) (3)

Options allottedduring the year

(4) (5) (6)

Options exercisedduring the year

(7) (8) (9)

Options overdue

in the year(10)

Options outstanding at the end of the year

(11)=1+4+7-10 (12) (13)

Numbers Average Averageof exercise maturityoptions price

Numbers Average Averageof exercise maturityoptions price

Numbers Average Averageof exercise marketoptions price price

Number optionNumbers Average Averageof exercise maturityoptions price

Massimo SaracchiGeneral Director

0 500.000 1,53 2014 0 500.000

Company Headquarters Currency Share Net Result of % ownership(euro) capital Equity the period Direct Indirect

Marcolin Asia Ltd. Hong Kong USD 1.539.785 3.923.489 601.741 - 100,00%Marcolin Benelux S.p.r.l. Faimes EUR 280.000 135.314 (94.507) 99,98% -Marcolin do Brasil Ltda Jundiai BRL 2.509.030 2.367.251 (859.142) 99,90% 0,10%Marcolin (Deutschland) GmbH Ludwigsburg EUR 300.000 20.558 (324.830) 100,00% -Marcolin GmbH Fullinsdorf (CH) CHF 200.000 472.231 (532.634) 100,00% -Marcolin Iberica S.A. Barcelona EUR 487.481 3.837.116 361.194 100,00% -Marcolin International B.V. Amsterdam EUR 18.151 (846.230) 124.482 100,00% -Marcolin Portugal Lda S. Joao do Estoril EUR 420.000 1.060.188 7.854 99,82% -Marcolin (UK) Ltd Newbury GBP 850.000 1.509.968 77.510 99,88% -Marcolin Usa Inc. New York USD 536.500 21.336.403 5.863.716 85,40% 14,60%Marcolin France Sas Paris EUR 1.054.452 1.751.197 547.111 76,89% 23,11%Cébé Sport S.A. in liquidation Nyon CHF 300.000 663.641 0 - 99,00%Marcolin Japan Co. Ltd. Tokyo JPY 99.000.000 41.591.034 3.026.011 40,00% -Finitec S.r.l. Longarone EUR 54.080 1.566.758 86.911 40,00% -

ANNEX 3C-terDeclaration of the consolidated financial statements in accordance with Article 81-ter of Consob Regulation no. 11971

of 14 May 1999 as amended.

The undersigned: Massimo Saracchi Managing Director and Dr. Sandro Bartoletti, the Financial Reporting Officer of Mar-colin S.p.A. declare, in consideration of the matters set forth by Article 154-bis, sections 3 and 4, of Leg. Decree 58 of 24February:

• the adequacy in relation to the characteristics of the company and• the actual application of

the administrative and accounting policies for forming the statutory and consolidated financial statements for the periodfrom 1 January to 31 December, 2008.

In addition, note that the statutory and consolidated financial statements:

a) correspond to the results of the accounting ledgers and accounting entries;

b) have been drawn up in compliance with the International Financial Reporting Standards adopted by the European Com-munity, as well as the measures issued in implementation of Art. 9 of Leg. Decree 38/2005, and to the best of their knowl-edge, provide a clear and true representation of the capital and financial situation and the economic results of the issuer andthe group of companies included in its consolidation.

Longarone, 25 march, 2009

Massimo Saracchi Sandro BartolettiManaging Director Financial Reporting Officer

Printed in Italyby Linea Grafica S.r.l.

(Castelfranco Veneto TV)

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