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CONSOLIDATED ANNUAL REPORT AND ACCOUNTS OF THE MARCOLIN GROUP AT 31 DECEMBER, 2009

Consolidated Annual Report and Accounts of the Marcolin Group at 31 December, 2009

MARCOLIN S.p.A.Registered head office: Via Noai 31 – Frazione Vallesella – 32040 Domegge di Cadore (BL) - ItalyShare capital: Euro 32,312,475.00fully paid-upEconomic Admin. Index n. 64334Tax code and Belluno Companies Register no. 01774690273VAT no. 00298010257

Management and offices: Località Villanova 4 32013 Longarone (BL) – ItalyTel: +39.437.777111Fax +39.437.777282www.marcolin.com

BRAND PORTFOLIO

FRAMEYOURSTYLE

COVER GIRL

DSQUARED2

FERRARI

HOGANWORLD.COM

JOHN GALLIANO

JUST CAVALLI

KENNETH COLE NEW YORK

KENNETH COLE REACTION

MISS SIXTY

misssixty.com

MONTBLANC

The distinctive sign of discreet elegance: the new Montblanc Eyewear Collection.

REPLAY

ROBERTO CAVALLI

TIMBERLAND

TOD’S

TOM FORD

CONTENTS

36 Corporate bodies and officers37 Marcolin Group structure38 Financial communications38 Stock market performance40 Shareholder composition41 Corporate Governance41 Direction and Coordination Activities41 Non-EU subsidiaries42 Marcolin Group Management Report56 Consolidated Balance Sheet57 Consolidated Income Statement58 Statement of changes in consolidated equity61 Consolidated cash flow statement67 Explanatory notes to consolidated accounts

MARCOLIN S.p.A. separate financial statements

105 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.

41

Marcolin Group

CORPORATE BODIES AND OFFICERS

BOARD OF DIRECTORS (1)

Chairman Giovanni Marcolin Coffen (2)

Managing Director and General Manager Massimo Saracchi (2)

Director Antonio Abete (3)

Director Luigi AbeteDirector Emanuele Alemagna (4)

Director Maurizio Boscarato (4)

Director and Deputy Chairman Cirillo Coffen Marcolin (2)

Director Maurizio Coffen Marcolin (2)

Director Diego Della ValleDirector Emilio MacellariDirector Carlo MontagnaDirector Stefano Salvatori (4)

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 PorfidoStanding statutory auditor Rino FunesStanding statutory auditor Ornella Piovesana

INDEPENDENT AUDITING FIRMDeloitte & Touche S.p.A. (5 )

FINANCIAL REPORTING OFFICERSandro Bartoletti (6 )

(1) The term of office lasts until the date of the Shareholders’ Meeting called to approve year-end accounts as at 31 December, 2010 (pursuant to resolution of the Shareholder’sMeeting on 29 April, 2008);

(2) Executive directors;(3) Appointed by resolution of the Shareholders’ Meeting on 28 April 2009. The term of office lasts until the date of the General Shareholders’ Meeting called to approveyear-end accounts at 31 December, 2010;

(4) Independent directors;(5) Term of mandate: financial years 2008 – 2016 (pursuant to resolution of the Shareholders’ Meeting on 29 April, 2008);(6) Appointed by resolution of the Shareholders’ Meeting on 29 April 2008. The term of office lasts until the date of the Shareholders’ Meeting called to approve year-endaccounts at 31 December, 2010.

NATURE OF POWERS CONFERRED ON INDIVIDUAL DIRECTORS:The widest powers of management and representation of the Company, within specific limits, have been conferred on the ManagingDirector Massimo Saracchi.

Consolidated Annual Report and Accounts as at 31 December 2009

42

43

Marcolin Group

Marcolin Group structure

14,60%

0,10%

Marcolin UK LtdEngland

Marcolin Portugal LdaPortugal

Marcolin Benelux SprlBelgium

Marcolin Iberica SASpain

F initec SrlItaly

Marcolin do Brasil LtdaBrazil

Marcolin Deutschland Gmbh Germany

Marcolin Japan Co. LtdJapan

Marcolin GmbhSwitzerland

MARCOLIN S.p.A.

MarcolinInternational B.V.

Marcolin Asia LtdHong Kong

Marcolin USA. Inc.U.S.A .

100,00%

Marcolin France S.a.s.France

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 avail-able, as well as the company presentation and periodic publications, official press releases, and real-timestock updates.

Stock market performance Official price

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 2009 to 31 December, 2009.


44

2.1.2009 13.2.2009 27.3.2009 13.5.2009 24.6.2009 5.8.2009 16.9.2009 28.10.2009 9.12.2009

0,9

1,0

1,1

1,2

1,3

1,4

1,5

1,6

1,7

1,8

1,9

Prezzo UfficialeOfficial price

2009 began negatively on an international level, with a risk of holding the financial system after the significantdecreases that marked 2008. In the first few months of the year, the markets dropped further, reaching recordlows before showing constant signs of an increase as from the second half of the year.Production showed signs of improving, also thanks to the physical and monetary stimuli introduced in 2008and the greater stability of the financial system, together with the great liquidity on the financial markets. Thislaid the basis for an important recovery of the share markets, despite the fact that trust has not entirely beenrestored and 2010 still looks to be rather uncertain.Most of the markets ended the year recovering part of 2008 losses, with Milan having gained 19%. In this con-text, the Marcolin stock has recorded a 46% increase on 2008, with the sector indicator having improved by17%.Please recall that at end 2007, the stock value was 1.85, and the stock is therefore gradually re-approachingthe levels of two years ago.

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Marcolin Group

CONSOLIDATED STOCK MARKET INFORMATION 2009

Result per share (euro) 0,115Shareholders’ equity per share (euro) 0,92Year-end price (euro) 1,48Maximum price (euro) 1,82Minimum price (euro) 1,02Price per share / Result per share 12,87Price per share / Consolidated shareholders’ equity per share 1,60Market capitalization at DEC 31, 2009 92.134.334Average number of outstanding shares 25.584Number of shares representing the share capital 62.139.375


46

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 22.03.10.

Coffen Giovanni Marcolin*14,753%

Zandegiacomo Maria Giovanna*1,918%

Coffen Marcolin Cir illo*4,251%

Coffen Marcolin Maurizio*4,251%

Coffen Monica*5,404%

Diego Della Valle20,300%

Andrea Della Valle20,300%

Luigi Abete9,658%

Treasury stock1,096%

Market18,068%

Corporate Governance

Marcolin S.p.A. adheres to the Corporate Governance code created by the Italian Stock Exchange’s Corpo-rate Governance 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 or-ganisational structure and relationships with company stakeholders, characterised by principles of good gov-erning, in order to maximise values for shareholders and guarantee transparency.On the website www.marcolin.com, in the Investor Relations section, information is available regarding thecompany corporate governance system, including the corporate charter.For more detailed information regarding corporate governance, please refer to the report created pursuant tothe laws and regulations in force, which provides complete information about the methods of enforcing thecorporate governance system and adhesion to the Corporate Governance Code. This document will be de-posited with Borsa Italiana S.p.A. in accordance with the law and will also be available for consultation in theInvestor Relations section on the website www.marcolin.com.Information in accordance with Art. 123-bis of the Consolidated Finance ActAt the same time as approving the financial statements, the Board of Directors of Marcolin S.p.A. also approvedthe annual corporate governance report. This report supplies information on the shareholders in accordancewith the provisions of subsection 1 of Art. 123-bis of the Consolidated Finance Act, in addition to illustratingthe corporate governance system in accordance with the information required by subsection 2 of the statedArt. 123-bis and the principals of governance recommended by the above-specified Code of Self-Regulation.These are as implemented by Marcolin S.p.A.. The annual report on corporate governance is made availableto the public together with the financial statements documents. It is available for consultation in the InvestorRelations section of 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 organisa-tions and defines its 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 regulatedby the laws of a country which does not belong to the European Union, attests to the existence of the condi-tions found in article 35 of CONSOB regulation no. 16191/2007, letters a)-c). In particular, it has ascertainedthat the non-EU subsidiaries:have provided the controlling company’s auditors with all the information necessary to conduct control activ-ities on the annual and intra-annual accounting;have an administrative-accounting system adequate to regularly provide the controlling company’s manage-ment, controlling body and auditors with economic, equity and financial data necessary for preparation of theconsolidated financial statements.

47

Marcolin Group


48

Marcolin Group Management Report for the year ending on 31st December 2009

The Annual Financial Statements at 31.12.09 - comprising the consolidated balance sheet for the Marcolin Group andthe separate balance sheet for Marcolin s.p.A. -–as a financial report called for under article 154-ter of Legislative Decree58/1998 (Consolidated Finance Act), was prepared in conformance with the valuation and measurement criteria estab-lished by the international accounting standards IAS/IFRS, adopted by the European Commission, according to the pro-cedure 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 indications provided through implementationof Legislative Decree no. 38/2005.

Directors’ comments on management trendTo Our ShareholdersIn 2009, the international economic context was marked by the continuation of the market crisis that had begun in 2008and continued to negatively affect consumption and investments worldwide. This, even if some signs of a reprieve can nowbe seen, that allow us to believe that the most acute phase of the crisis has perhaps been overcome.

In this difficult climate, Marcolin distinguished itself by its ability to achieve positive results, in confirmation of the signsshown in 2008. The Marcolin Group has, in fact, been able to respond effectively to the international crisis, through in-ternal reorganisations and efficiency improvements, as well as its success in bringing new brands to market.

The results attained during the year ended on 31st December 2009 include a significant net profit up on last year, turnoverthat is basically stable, and an important improvement in the net financial position.

On a general level, the main factors and events that marked the year 2009 for the Marcolin Group can be summarisedas follows:

- turnover that basically held fast on last year, despite the difficult macroeconomic context;- significant net profits, recorded for the second year running and in excess of those reported for last year;- Ebit and Ebitda that, net of non-recurring items, are slightly down on last year, due to the greater incidence of the guar-anteed minimums on license agreements and investments made in order to fully exploit the launch of the new brandsacquired;

- a significant improvement of the net financial position, thanks to the careful management of working capital;the significant reduction of warehouse value, obtained thanks to a greater efficiency of the planning process and thesale of stock;

- the renewal of licences which are key to company revenue and profitability: Tom Ford, Roberto Cavalli and Just Cav-alli, licenses held to be fundamental to the Group;

- an excellent start for the new licensed brands: Tod’s, Hogan and Dsquared2;- the new licence agreement for the production and worldwide distribution of Swarovski brand sunglasses and specta-cle frames.

In greater detail, net profits as of 31st December 2009 amount to 7,080 thousand euros (as compared with net profits of6,124 thousand euros as of 31st December 2008), whilst turnover amounts to 180,321 thousand euros, down by 3.5%as compared with 31st December 2008 (186,845 thousand euros). The decrease in the Group’s revenues at a constant exchange rate was 4.4%.

With regards to the operating result (Ebit) and the Ebitda value, we should point out that in 2008, non-recurring proceedswere reported in relation to the closure of the subsidiary Cébé, deriving from the release of the risk reserve set up duringprevious years, and excess results, in addition to windfall gains for an amount of 3.6 million euros. As such, in order toallow for a more correct, homogenous reading of the trend of company margins, we need to compare these parametersnet of these non-recurring positive effects.

Given the above, the economic results for 2009 are marked by a basic maintenance of margins, as will be better speci-fied further on in the report. Ebit value as of 31st December 2009 amounts to 9,388 thousand euros as compared withthe 9,626 thousand euros as of 31st December 2008 (net of the above non-recurrent effects) and Ebitda is 15,126 thou-sand euros as compared with the 16,655 thousand euros as of 31st December 2008 (again, net of the above-specifiednon-recurring effects).We would also point out that, in calculating the Ebitda performance indicator, according to the literal definition of the term,and therefore considering the operative result (Ebit) prior to amortisation and depreciation, as of 31st December 2009, thevalue would be 13,990 thousand euros. This is compared with a value (net of the non-recurring effects specified above,deriving from the closure of Cébé) as of 31st December 2008, amounting to 13,810 thousand euros, thereby showing anincrease of +1.3%.These positive results have been achieved despite the recognition of significant costs sustained during the year in rela-tion to structural and marketing investments for the development of existing brands in the portfolio and to support thelaunch and promotion of the latest licences acquired.

ANALYSIS OF THE MAIN ECONOMIC INDICATORSThe following table summarises the Group’s key operating indicators:

L'EBITDA is (EBIT) before Amortisation and Depreciation.

We should point out that during 2009, some costs were reclassified that had previously been posted amongst the finan-cial expenses and which, according to the accounting standards applied, are more correctly to be considered as costs forgeneral and administrative services. The relevant amount has therefore been posted to this latter item of the balancesheet. In order to allow for comparison of the values in relation to previous years, the items of the income statement con-cerned by the reclassification have been recalculated in application of the new criteria.

Net income from sales made by the Group at 31.12.09 was €180.321 thousand (€186,845 thousand at 31.12.08), witha fall of €6,524 thousand compared with the same period last year. In percentage terms the change was 3.5% (-4.4%with constant exchange rates).

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Marcolin Group

Year Net Change % EBITDA % EBIT % Net % EPS sales of net sales of net sales result of net sales

(euro/000.000) (euro)

2005 154,0 (11,2)% (3,0) (2,0)% (13,0) (8,4)% (16,7) (10,8)% (0,373) 2006 157,4 2,3% 4,3 2,8% (7,3) (4,6)% (13,3) (8,4)% (0,291)2007 182,3 15,8% 9,5 5,2% (1,2) (0,7)% (6,9) (3,8)% (0,112)2008 186,8 2,5% 20,3 10,8% 13,2 7,1% 6,1 3,3% 0,1002009 180,3 (3,5)% 15,1 8,4% 9,4 5,2% 7,1 3,9% 0,115

Consolidated income statement DEC 31, 2009 % of net sales DEC 31, 2008 % on sales

(euro/000)

Net sales 180.321 100,0% 186.845 100,0%Gross profit 102.092 56,6% 103.470 55,4%Operating profit - EBIT 9.388 5,2% 13.226 7,1%Financial income and expenses (2.137) (1,2)% (4.471) (2,4)%Net result before taxes 7.251 4,0% 8.755 4,7%Net result 7.080 3,9% 6.124 3,3%EBITDA 15.126 8,4% 20.255 10,8%

The trend of turnover should be assessed as absolutely positive, considering the particularly difficult international econo-mic context, and the fact that the deliveries of the products for the new Tod's and Hogan line began with significant vo-lumes only as from October 2009.

The data in the table shows the significant increase in revenue achieved in the domestic market (+11.6%), while the areawhich has suffered most from the negative economic climate has been the rest of Europe. In particular, the most markedfalls were experienced in the Spanish and Russian markets.

In the Rest of the World zone, the Group recorded turnover largely in line with the previous year (-1.2%), despite the fallin the United Arab Emirates in particular, which has been offset by the upward sales trends in Australia and Brazil.

As regards the North American (US) market, revenue remains largely stable (-1.7%) at current exchange rates, with a de-crease of -6.8% at constant exchange rates.

The results realised as a whole by the Group, shown in the above table from the consolidated income statement, highlightan improvement in the industrial gross result and a reduction of operative margins as compared with the same period forlast year. Please recall that margins, net of non-recurrent proceeds in relation to Cébé as specified above (amounting 3.6million euros), remains basically stable.

More specifically:- gross operating profit was 56.6% of revenue and is an improvement compared to 55.4% at 31.12.08;- Ebit represents 5.2% of turnover and amounts to 9,388 thousand euros, as compared with a value as of 31st Decem-ber 2008 amounting to 9,626 thousand euros (5.2% of turnover), net of non-recurring proceeds in relation to Cébé. Thevalue as of 31st December 2008 shown in the table, gross of these non-recurring effects, amounts to 13,226 thousandeuros (7.1% of turnover);- Ebitda amounts to 15,126 thousand euros (equal to 8.4% of turnover) as compared with a value as of 31st December2008, net of non-recurring proceeds in relation to Cébé, equal to 16,655 thousand euros (8.9% of turnover). The valueas of 31st December 2008 shown in the table, gross of these non-recurring effects, amounts to 20,255 thousand euros(10.8% of turnover); - net profit was Euro 7,080 thousand (3.9% of sales), compared with a Euro 6,124 thousand (3.3% of sales) at 31.12.08.

An increase in the efficiency of the planning and manufacturing processes during the year has led to an improved grossindustrial result, which was partially offset by the adoption of more aggressive sales policies, in terms of Customer di-scounts offered in response to the demands of the market, which has been negatively influenced by the reduction in de-mand.Additional negative effects on margins were experienced, principally as a result ofthe greater impact of the guaranteed minimum royalties on the licence contracts;


50

Net sales by geographic area DEC 31, 2009ssssss DEC 31, 2008ssssss Increase (decrease)

(euro/000) Turnover % on total Turnover % on total Turnover Change

- Italy 40.515 22,5% 36.314 19,4% 4.201 11,6%- Europe 62.965 34,9% 72.567 38,8% (9.602) (13,2)%- U.S.A. 39.603 22,0% 40.278 21,6% (675) (1,7)%- Rest of the World 37.238 20,7% 37.686 20,2% (448) (1,2)%Total 180.321 100,0% 186.845 100,0% (6.524) (3,5)%

investments made, in structural terms as well as in commercial activities, in order to profit fully from the launch of the newlyacquired brands.

With regard to the greater impact of the guaranteed minimum royalties, we can report that a series of measures have beenput in place, and are still taking effect, in order to reduce them.

The trend of financial management was distinctly improved on 31st December 2008, with a negative balance of 2,137thousand euros as compared with a negative figure of 4,471 thousand euros, and therefore with a reduction in costs of2,334 thousand euros. This has been obtained thanks to:- the decrease in interest expense on loans of the parent company Marcolin S.p.A. (amounting to 1,551 thousand euros)mainly by effect of the decrease of interest rates of reference;- the improvement of exchange differences (amounting to 758 thousand euros), in particular with reference to the Brazi-lian subsidiary.

It is also worth noting the economic benefit deriving from the registration of prepaid tax (amounting to 2,490 thousandeuros), resulting from the possibility of posting the tax losses generated in the previous financial year by Marcolin USA,rendered possible by the fact that the United States subsidiary has started to regularly produce profit, thus creating theconditions required for this entry.

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Marcolin Group

CAPITAL AND FINANCIAL SITUATION Details of the net financial position at 31 December, 2009 compared with that of the previous year are shown below:

The overall net financial position of the Marcolin Group improved appreciably on the previous year, by 8,908 thousandeuros, as a result of the cash flow generated by operating activities and used in part by the investment activities.

The cash flow generated by operating activities amounted to 14,524 thousand euros and has benefited from the signifi-cant proceeds from the disposal of warehouse stocks.

Net investments used cash for a total of 5,561 thousand euros, mainly by effect of the development of a new property,which is currently under construction. This allows for the focus of all Group delivery activities, consequently improvingthe logistic and after-sales service and having the structures and spaces available for internal management of the stra-tegic finishing stage.

Please see the cash flow statement for further details.

During 2009, the parent company Marcolin S.p.A. began negotiations with some credit institutes for the supply of newlong-term loans, in order to support investments in production. These negotiations were completed in 2009 and the firstfew months of 2010.

As concerns the year in question, we would point out that Marcolin S.p.A. has subscribed the following loans:- in October a loan agreement for 15 million euros, unsecured, with the Cassa di Risparmio del Veneto (Intesa San PaoloGroup);

- in December, a loan agreement for 10 million euros, with mortgage guarantee on the new property currently under con-struction, with Mediocredito Italiano (Intesa San Paolo Group).

Please refer to the comments specified in the explanatory notes for details of these loan operations.

With reference to the breakdown of the year’s borrowings, as compared with the situation as of 31st December 2008, wecan see an increase in available funds of 11,192 thousand euros. This is a temporary effect due to the partial use of theabove new loans, the resources of which were used in January 2010.

We would also point out that during the course of the year, the parent company Marcolin S.p.A. repaid the principal onexisting loans for a total of € 12,995 thousand.


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Net financial position DEC 31, 2009 DEC 31, 2008(euro/000)

Cash 198 99 Cash equivalents 24.153 13.060 Short term borrowings (9.322) (4.228)Current portion of long term borrowings (9.614) (12.995)Long term borrowings (29.254) (28.682)Total (23.839) (32.747)

In order to round off analysis of the composition of the Group’s financial position, we note that the year-end net debt/equityratio improves further and was 0.41 (vs. 0.65 as at 31.12.08).

*Gearing is the ratio between Net financial position and Net equity

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

With reference to the different items that make up the net working capital, we note:- the significant reduction, as compared with last year, of inventories for 13,899 thousand euros, due to the greater effi-ciency of the planning process and the sale of stock; the change is mainly in relation to finished products and is ac-companied by a significant drop in the average inventory turnaround time;

- the increase of the value of trade receivables and others, for 3,780 thousand euros, with a slight improvement in theindex of average days for collection, despite the particularly difficult period. This was also without noting any lossesabove the company's historical average. We should also note that during the last quarter of the year, a 9% increase inturnover was reported as compared with the same period last year;

- the decrease in the value of trade payables for 1,905 thousand euros, traceable to the lesser production purchases madeduring the period, despite the increased index in relation to average payment terms of suppliers.

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Marcolin Group

Consolidated financial highlights(euro/000)

Year Net financial position Shareholders’ equity Gearing*

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 0,652009 (23.839) 57.445 0,41

Net working capital DEC 31, 2009 DEC 31, 2008(euro/000)

Inventory 38.318 52.216 Trade and other receivables 62.302 58.522 Trade payables (32.755) (34.660)Other current assets and liabilities (12.851) (14.617)Total 55.014 61.462

Summary balance sheet figures were as shown below:

Please refer to the illustrative notes for the associated comments.


54

Balance sheet Marcolin Group DEC 31, 2009 DEC 31, 2008(euro/000)

AssetsNon current assets 30.851 26.214Current assets 125.567 124.425Total Assets 156.418 150.639

Shareholders’ equityGroup Shareholders’ equity 57.445 50.074

LiabilitiesNon current liabilities 33.835 33.537Current liabilities 65.138 67.027Total Liabilities and Net equity 156.418 150.639

Significant events after balance-sheet date and expected business progress2010 has begun brightly for Marcolin Group. The excellent results achieved by the collections launched during Januaryand February, which have been very well received by the market, have enabled the Group to record a significant increasein orders compared to the same period of the previous year. The launch of the new John Galliano licence has also beenencouraging, thanks to the highly original range presented.

On 16 February 2010, the licence renewal was formalised until 31 December 2015 for the design, production and wor-ldwide distribution of Tom Ford brand spectacle frames and sunglasses.

At the beginning of March, the licence agreement for producing and distributing Kenneth Cole New York and Kenneth ColeReaction spectacle frames and sunglasses was renewed early and is now set to run until 2014. Our relationship with Ken-neth Cole Productions, the company of the New York stylist of the same name, represents one of Marcolin Group’s lon-gest established partnerships and this may be considered one of the key brands for the Group, especially for the NorthAmerican market.

With reference to the financial structure, we would point out that on 21st January 2010, the parent company Marcolin Sp.A.signed a loan agreement with the Banca Nazionale del Lavoro S.p.A. (BNP Paribas Group), for an amount of 10 millioneuros. This is an unsecured loan with a duration of five years. This agreement represents the last step in the Marcolin re-financing process, which is now equipped with all financial means necessary to support its production and commercialinvestment plan.

With regards to the foreseeable outlook, we believe that the international macroeconomic context for 2010 will be far from easy.

However, during the coming year, the Marcolin Group will be able to make its production investments operative, develo-ped with a view to improving the logistical and after-sales services offered to customers and to centralising some strate-gic stages to production, all with the forecast positive returns in terms of efficiency.

During 2010, the Group will also focus on improving its competitiveness in all its operating markets. Quality, product costand productivity will continue to be the drivers in 2010, which will see targeted action taken to grow international sales,supported by a competitive and comprehensive licence portfolio.

Considering, therefore, that our Company has thus far only materialised a limited part of its effective potential, if we con-tinue to pursue the direction we have been taking for the last two years or so, we are convinced that we will be able tooffer our shareholders increasing results and satisfaction.

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 ma-croeconomic framework found in the various countries in which the Group operates, including levels of consumer and com-pany trust. 2009 began negatively on an international level, with a risk of holding the financial system after the significantdecreases that marked 2008. In the first few months of the year, the markets dropped further, reaching record lows be-fore showing constant signs of an increase as from the second half of the year.Production has shown some signs of improvement, also thanks to the tax and monetary incentives introduced in 2008.The growth prospects for Italy and the economies of the major advanced countries remain, however, modest and expo-sed to the uncertainties linked to the re-absorption of economic support policies.In the case that this situation of serious weakness and uncertainty remains past the short-term, the Group's activities, stra-

55

Marcolin Group

tegies, and prospective could be negatively impacted, with consequent negative impacts to the Group's economic, capi-tal, and financial situation.The generally negative economic context could additionally see the effect of an increase of the credit risk to which theGroup is subject, relative to exposure towards its clients, who may have increased difficulties in making payments. Withregards to this, the Group, in the field of its commercial risk management policies, is taking all possible actions to gua-rantee recovery of trade receivables.

Risks connected to needs for financial toolsThe evolution of the Group’s financial situation depends on numerous conditions. These include, in particular, reachingpreset objectives, as well as the performance of general economic conditions, the financial markets, and the sectors inwhich the 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 gene-rate financial resources through operations management. However, significant and sudden reductions in sales volumescould have negative effects on the operations management's ability to generate cash flow.

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 connectedto fluctuations in foreign exchange interest rates. Exposure to foreign exchange rate risks is mainly connected to the va-ried geographic distribution of productive and commercial activities. In particular, the Group is mainly exposed to fluc-tuations in 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 varioustypes of financing, intended to cover the needs of its industrial activities, mainly with variable interest rates. Hence, va-riations in interest rate levels can lead to increases or decreases in the cost of financing. Due to this, in its risk manage-ment policies, the Marcolin Group attempts to face risks due to unfavourable foreign exchange and interest rate changesthrough hedges.Despite these hedging instruments, sudden and significant fluctuations in foreign exchange and interest rates could leadto negative impacts on the Group's economic and financial results. An analytical description of the Group's risks and hed-ging instruments with regards to this aspect is provided in the illustrated notes.

Risks connected to the Group's capacity to negotiate and maintain its licensing contracts The 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, continuou-sly searching for new materials and productive processes, as well as its ability to adapt to consumers' changing tastes,anticipating changes in fashion and reacting quickly to such changes.The Group has signed multi-year licensing contracts which allow it to produce and distribute vision frames and sunglas-ses under third-party proprietary trademarks. It is also constantly working to renew existing licences and research newlicences 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 pro-spects of 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),with consequent possible negative effects on the group's financial and economic results.


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Risks connected to supplier relationshipsThe Group uses third-party producers and suppliers for production and/or processing of some of its products. These pro-ducers and suppliers, mainly found in Asia and Italy, are subject to verifications and controls by the Group, in order to ve-rify that they 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 contrac-tual agreements, of problems connected to the quality level of supplies and services provided, and in delays in deliveryof commissioned goods. Delays or defects in the products provided by third-parties, as well as the interruption or conclusionof the associated contracts, without searching for adequate alternative sources, could lead to a negative impact on theGroup's activities, economic results, and financial situation.

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.

At 31 December, 2009, the Group had 962 employees, divided as follows:

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 Sa-racchi (the Beneficiary), to be performed through the allocation, free of charge, of 500,000 personal and non-transfera-ble stock option rights to acquire ordinary Marcolin S.p.A. shares, in accordance with the methods and terms illustratedin the informative document created by the Directors, pursuant to article 94-bis of CONSOB Issuance Rules, and in theDirectors' 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 conditionthat the Beneficiary hold the role of Managing Director at the end of the three-year maturity period of the rights and (ii)performance of Group objectives of an economic and/or financial nature, the determination of which is remanded to theBoard of Directors;- the Company, upon written request from the Beneficiary, can extinguish its obligations to the Beneficiary, by corre-sponding to such a sum in money equal to (i) the difference between the unit value of the Shares and the Strike Price atthe date the request to exercise the stock options is made, (ii) multiplied by the number of options that can be exercised;

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Marcolin Group

Employees - Final numberCategory DEC 31, 2009 DEC 31, 2008

Managers 23 22First line managers 68 70Employees 453 449Workers 418 431Total 962 972

2. to provide to the Board of Directors, and in this case the Chairman, all powers necessary or opportune to exercise thestock option plan.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 for-mer, handles product development and industrialisation.Over the course of the financial year 2009, the company continued with its research and development activities.

Intra-group transactions and transactions with associated partiesWith regards to operations performed with associated parties, including intra-group operations, we note that these can-not be defined as either atypical or unusual, as they are part of the normal activities of the Group’s companies. Such tran-sactions take place under normal market conditions, taking into account the nature of the goods and services supplied.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 inthe Explanatory Notes to the Separate Annual Report and Accounts for Marcolin S.p.A.

Treasury sharesAt 31 December, 2009, 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 bythe company 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," activitiesintended to evaluate the data protection system in the Group’s companies that are subject to such legislation have begun.These activities found that the requirements called for by the norms in terms of protection the personal data managed bythese 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 administrative andmanagement offices are located in Longarone (BL), Localita’ Villanova, 4.


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Comparison between the results and the equity of the parent company with the balances for the consolidated financial sta-tements.The following table provides a comparison between the result achieved and equity held by the parent company at 31 De-cember, 2009, and the similar figures of the Group for the same period.

Longarone, 25 March, 2010Chairman of the Board of DirectorsCOFFEN GIOVANNI MARCOLIN

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Marcolin Group

(euro/000) Net Equity Net result

Marcolin S.p.A. 63.735 1.144Difference between holding company’s Participations and net equity of subsidiaries (4.366) 6.240Intercompany adjustments (2.294) 471Intercompany dividends 0 (240)Net equity method adjustment (186) (115)Opening consolidation difference/ Extraordinary differences (247) (255)Deferred taxes 803 (165)Marcolin Group 57.445 7.080

MARCOLIN GROUPCONSOLIDATED BALANCE SHEET

Consolidated balance sheet Marcolin Group


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(euro/000) Note DEC 31, 2009 Of which DEC 31, 2008 Of which related parties related parties

ASSETS

NON CURRENT ASSETSProperty, Plant And Equipment 5 17.425 14.800 Intangible Assets 6 3.150 4.131 Goodwill 6 2.243 2.322 Investments 7 372 759 Deferred tax assets 8 7.031 3.406 Other non current assets 9 630 796 Total non current assets 30.851 26.214

CURRENT ASSETSInventory 10 38.318 52.216 Trade and other receivables 11 62.302 470 58.522 787 Other current assets 12 596 527 Cash and cash equivalents 13 24.351 13.159 Total current assets 125.567 470 124.425 787

Total assets 156.418 470 150.639 787

SHAREHOLDERS’ EQUITY 14

Share capital 31.958 31.958 Additional paid in capital 24.517 24.517 Legal reserve 1.776 1.703Other reserves (1.770) (2.064)Retained earnings (losses) (6.117) (12.164)Profit (loss) for the period 7.080 6.124

Minority interests 0 0

TOTAL SHAREHOLDERS’ EQUITY 57.445 50.074

LIABILITIESNON CURRENT LIABILITIESLong term borrowings 15,19 29.254 28.682Long term provisions 16 3.784 4.039Deferred tax liabilities 8 769 772Other non current liabilities 17 28 44Total non current liabilities 33.835 33.537

CURRENT LIABILITIESTrade payables 18 32.755 2.209 34.660 1.603 Short term borrowings 19 18.936 17.224Short term provisions 20 4.490 4.864Income taxes 31 1.917 2.401Other current liabilities 21 7.040 7.878Total current liabilities 65.138 2.209 67.027 1.603

TOTAL LIABILITIES 98.973 2.209 100.564 1.603

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY 156.418 2.209 150.639 1.603

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Marcolin Group

Consolidated income statement

(euro/000) Note DEC 31, 2009 Of which % DEC 31, 2008 Of which %related parties related parties

NET SALES 23 180.321 997 100,0% 186.845 1.493 100,0%

COST OF SALES 24 (78.229) (1.355) (43,4)% (83.375) (2.569) (44,6)%

GROSS PROFIT 102.092 56,6% 103.470 55,4%

Selling and marketing costs 25 (80.704) (1.440) (44,8)% (79.062) (290) (42,3)%General and administrative expenses 26 (15.755) (8,7)% (17.095) (9,1)%Other income and expenses 28 2.750 1,5% 4.740 2,5%Other non recurrent operating income and expenses 29 1.005 0,6% 1.173 0,6%

OPERATING PROFIT - EBIT 9.388 5,2% 13.226 7,1%

FINANCIAL INCOME AND EXPENSES 30 (2.137) (1,2)% (4.471) (2,4)%

NET RESULT BEFORE TAXES 7.251 4,0% 8.755 4,7%Income taxes 31 (171) (0,1)% (2.630) (1,4)%Minority interests 0 0% 0 0%

NET RESULT 7.080 3,9% 6.124 3,3%

EPS (in euro) 32 0,115 0,100

EPS DILUTED (in euro) 32 0,114 0,099

Statement of Comprehensive Income DEC 31, 2009 DEC 31, 2008

NET RESULT 7.080 6.124

Currency translation 186 274Net gain (loss) of cash flow hedge 17 (277)

NET COMPREHENSIVE INCOME 7.283 6.122


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Statement of changes in consolidated equity

(euro/000) Share Additional Legal Other Retained Income Minorities Total capital paid reserve reserves earnings (loss) for interest

in capital (losses) the period

DEC 1,2008 31.958 26.315 1.703 (2.156) (7.075) (6.891) 0 43.854Earnings (losses) stock option reserve 0 0 0 94 0 0 0 94Net comprehensive income 0 (1.798) 0 (3) (5.094) 13.016 0 6.122DEC 31, 2008 31.958 24.517 1.703 (2.064) (12.164) 6.124 0 50.074

DEC 1,2009 31.958 24.517 1.703 (2.064) (12.164) 6.124 0 50.074Earnings (losses) stock option reserve 0 0 0 91 0 0 0 91Net comprehensive income 0 0 73 203 6.051 956 0 7.283DEC 31, 2009 31.958 24.517 1.776 (1.770) (6.117) 7.080 0 57.445

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Marcolin Group

Consolidated cash flow statement

(euro/000) Note 2009 2008

OPERATING ACTIVITIES:Income (loss) for the period 7.080 6.124Depreciation and Amortisation 5,6 4.501 4.184 Provisions 10,11,20 6.305 7.082 Impairment 0 0Income taxes 31 171 2.630 Interest expenses 30 2.229 3.154 Other non-cash items 5,6,1,16,20, Mov. PN (647) 220 Operating profit before working capital changes 19.639 23.395

(Increase) decrease trade receivables 11 (5.157) 4.025(Increase) decrease other receivables 12 97 150 (Increase) decrease inventory 10 9.870 (6.048)(Decrease) increase other payables 18 (1.905) (2.849)(Decrease) increase trade payables 21 (854) (2.404) (Utilisation) of provisions 20,16 (1.425) (2.010)(Decrease) increase tax payables 31 6.146 1.348Other non-cash items 31 (4.796) (3.356)Income taxes paid 31 (5.669) (1.918)Interest paid 30 (1.422) (2.907)Cash flows provided (used) by working capital changes (5.115) (15.969)

Cash flows provided by operating activities 14.524 7.425

INVESTING ACTIVITIES(Purchase) of property, plant and equipment 5 (6.049) (2.458)Proceeds from the sale of property, plant and equipment 5 818 713 (Purchase) of intangible assets 6 (330) (2.191)Cash flows (used) in investing activities (5.561) (3.936)

FINANCING ACTIVITESIncrease (decrease) short term borrowings 15,19 (2.076) (3.778) Borrowings:- Increase 15,19 28.150 16.157 - Decrease 15,19 (24.145) (13.647)Changes in reserves Mov. PN 182 270 Cash flows (used) in financing activities 2.111 (998)

Cash and cash equivalents increase (decrease) 13,15 11.073 2.491Effect of exchange rates on cash 13,15 119 (121)Cash and cash equivalents at beginning of year 13.159 10.789 Cash and cash equivalents at year end 24.351 13.159

Explanatory Notes to the Consolidated Accounts of the Marcolin Group at 31 December, 2009

PREAMBLEThe Explanatory Notes set out below form an integral part of the Consolidated Annual Report & Accounts of the MarcolinGroup.

1. GENERAL INFORMATIONMarcolin S.p.A. (hereinafter referred to as the “Parent Company”) is a company incorporated under Italian law, registe-red in the Belluno Companies Register with no. 01774690273 and whose shares are traded in Italy on the electronicequity market (Mercato Telematico Azionario) organised and managed by Borsa Italiana SpA.Marcolin S.p.A. is the parent company of the Marcolin Group, which operates in Italy and abroad in the production andmarketing of eyewear and sunglasses.

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

2. ACCOUNTING STANDARDSBasis of preparationThe 2009 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 Re-gulation no. 1606 issued by the European Parliament and the European Council in July 2002 provided for the compul-sory application of the IAS/IFRS to the consolidated accounts of companies listed on the EU regulated marketed as from2005. The IFRS are also deemed to include all the revised international accounting standards (“IAS”) and all the inter-pretations of the International Financial Reporting Interpretations Committee (“IFRIC”), previously called the Standing In-terpretations 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 evalua-tion of 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 thou-sands of 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 appliedthe following policies:- 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;

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Marcolin Group

(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, where existing, those assets (and related liabilities) whose book value will be reco-vered mainly on sale rather than on continuing use have been classified as “Assets held for sale” and “Liabilities rela-ting to assets held for sale”.

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

- Statement of changes in equity The statement was prepared presenting items in individual columns with reconciliation of the opening and closing ba-lances of 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 re-sult is adjusted 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 investmentsconsolidated on a 100% line-by-line basis and, for the sake of full information, a list of those recognised at equity. Thismethod requires that investment initially be recognised at cost and that this amount be subsequently increased or de-creased to recognise the investor’s relevant share of profit or loss after acquisition date, as well as the effects of other equitymovements.


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LIST OF INTERESTS

We would point out that the only change to the consolidation area of the Marcolin Group took place in October 2009, withthe completion of the liquidation of the company Cébé Sport S.A..

The consolidation method adopted is as follows: Companies are consolidated on a 100% line-by-line basis when theGroup exercises control over them (“subsidiary companies”) by virtue both via direct or indirect ownership of the majo-rity of shares with voting rights and via exercise of dominant influence expressed by the power to govern, even indirectly,the company’s financial and operating policies, obtaining related benefits from the same, also regardless of equity ow-nership. Any potential voting rights exercisable as at balance-sheet date are considered for the purpose of determiningcontrol. Subsidiary companies are consolidated as from the date when control is acquired and are deconsolidated asfrom the date when such control ceases to exist.Business combinations by virtue of which control of a company is acquired are accounted for applying the purchase me-thod, based on which the assets and liabilities acquired are initially measured at their fair value on acquisition date. If po-sitive, the difference between the acquired assets’ and liabilities’ purchase cost and fair value is allocated to goodwill; ifnegative it is recognised in the income statement. Purchase cost is determined on the basis of fair value, as at acquisi-tion date, of assets given, liabilities incurred, and equity instruments issued, and all other related costs.During consolidation amounts stemming from transactions between consolidated subsidiaries, in particular receivablesand payables outstanding at the end of the period, costs and revenues, and finance expense and income, are elimina-ted. Similarly, significant profits and losses made between subsidiaries consolidated on a 100% line-by-line basis are eli-minated. Any minority interest’s share of equity or of earnings is shown separately in a separate item in the statement of consoli-dated equity called Minority Interest.Dividends distributed by companies consolidated on a 100% line-by-line basis are eliminated from the income statement,which instead incorporates the relevant companies’ results.

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Marcolin Group

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

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

Marcolin Benelux Sprl Faimes EUR 280.000 Line-by-line 99,98% -

Marcolin do Brasil Ltda Jundiai BRL 9.575.240 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 SA Barcellona EUR 487.481 Line-by-line 100,00% -

Marcolin International BV 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 Parigi EUR 1.054.452 Line-by-line 76,89% 23,11%

Marcolin Japan Co Ltd Tokyo JPY 99.000.000 Equity 40,00% -

Finitec Srl 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 tobe 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 placein 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 ancil-lary costs incurred to bring assets to working condition for their intended use, excluding land and buildings owned by theParent Company for which the deemed cost model has been used, on the transition date, based on the market value de-termined through 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-partyassets are capitalised to the extent that they can be separately classified as an asset or part of an assets. The amount ini-tially recognised 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 fromthat of the other items of the fixed assets, depreciation is calculated separately for each of the items forming the asset ac-cording to the principle of component approach. Profits and losses deriving from the sale of assets or groups of assets aredetermined by 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 at-tributable 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 costis broken down into finance expense – charged to the income statement – and repayment of principal – recognised asreduction of the relevant financial liability.Leases in which the lessor does not substantially transfer all the risks and benefits connected with ownership of the as-sets are classified as operating leases. The costs of operating leases are shown line by line in the income statement forthe duration of the lease contract.


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Currency Final exchange rate Average exchange rateDEC 31, 2009 DEC 31, 2008 Change 2009 2008 Change

English pound GBP 0,888 0,953 (6,8)% 0,891 0,796 11,9%Swiss franc CHF 1,484 1,485 (0,1)% 1,510 1,587 (4,9)%US dollar USD 1,441 1,392 3,5% 1,395 1,471 (5,2)%Brazilian real BRL 2,511 3,244 (22,6)% 2,767 2,674 3,5%Hong Kong Dollar HKD 11,171 10,786 3,6% 10,811 11,454 (5,6)%Japanese Yen JPY 133,160 126,14 5,6% 130,337 152,454 (14,5)%

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

Intangible fixed assetsIntangible assets consist of controllable, non-monetary assets without physical substance that are clearly identifiable andable to generate future economic benefits. These assets are recognised at purchase and/or production cost, inclusive ofdirectly attributable expenses to bring the asset to working condition for use, net of cumulative amortisation (except forassets with an indefinite useful life) and of any impairment of value. Amortisation starts when the asset is available for useand is systematically spread over the asset’s useful life.If any indications emerge suggesting impairment of value, the asset’s recoverable value is estimated, charging any im-pairment loss to the income statement. If the reasons for previous write-down cease to exist, carrying value is written backrecognising this as income in the income statement, within the limits of what the asset’s net carrying value would havebeen if there had 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 acquisitiondate, or of the business branch acquired. Goodwill deriving from the acquisition of subsidiary companies is posted in the“Goodwill” account and is not amortised but subjected to annual testing – unless there are specific indicators making in-terim testing necessary – to ascertain the existence of impairment of value (i.e. impairment testing). Gains or losses onthe sale of an entity 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 cumula-tive amortisation. Amortisation is calculated on a straight-line base so as to allocate the cost of trademarks and licencesaccording to their residual possibility of use.If impairment is found over and above the amortisation already charged, the asset would be consequently written down;if the reasons for write-down cease to exist in future financial years, the value is written back to the net book value thatthe asset 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.

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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%

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 re-quirements 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, assets are 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. Ifan asset’s recoverable value is lower than its carrying value, the latter is reduced to recoverable value. This reduction isan impairment 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, im-pairment 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, excludingthat of 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 ex-change rate and interest rate risks. All financial derivatives are measured at fair value, as provided for by IAS 39. In ac-cordance 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 ispresumed that hedging will be highly effective, the efficacy can be reliably measured and the hedging itself is highly ef-fective during 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 assetor a liability shown in the financial statements attributable to a particular risk which may affect the income statement, theprofit or loss deriving from the subsequent valuations of the fair value of the hedging instrument are recognised in the in-come statement. The item covered is adjusted to the fair value for the portion of risk covered and, as a counter value, thereis a profit 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 flowsof an asset or liability booked in the financial statements, the actual portion of the fair value changes of the derivative fi-nancial instrument is recorded in shareholders' equity. The cumulative profit or loss is transferred from the equity andentered in the income statement in the same period as that in which the transaction hedged took place. The profit orloss associated with a hedge (or part of a hedge) that has become ineffective is entered in the income statement im-mediately. If a hedge instrument 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 re-levant transaction takes place. If the transaction hedged is no longer considered likely, the profits or losses not yet rea-lised and outstanding in the equity are booked to the income statement immediately. If hedge accounting cannot beapplied, the profits or losses deriving from the valuation at fair value of the financial derivative are recognised in the in-come statement immediately.

InventoriesInventories are measured at the lowest between average purchase or production cost and relevant presumed realisablevalue based on market trends. Presumed realisable value is calculated on the estimate of selling price in normal marketconditions net of direct selling costs.


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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 ancil-lary costs, 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 manufac-turing costs.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-interestmethod. When the financial assets do not have a prefixed maturity, they are valued at cost. Receivables maturing aftermore than a year, not accruing interest or accruing interest below the market rate are discounted by applying the marketrates and are entered in non-current assets. Valuations are regularly made in order to check whether there is any objec-tive evidence that the financial assets taken individually or within a group of assets may have fallen in value. If such evi-dence exists, impairment 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 fundset up 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 berecovered mainly through sale rather than through continuing use. Assets held for sale (or a disposal group) are valuedat the lower 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 reclas-sified nor resubmitted for comparative purposes with the classification in the balance sheet of the most recent year pre-sented.

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 stemmingfrom any subsequent sales of the same are shown as changes in equity. The own shares reserve in the portfolio recordedin previous 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 retri-bution. Hence, the cost is represented by the fair value of the stock option at the date it is assigned, and it is recorded at theeconomic cost during the period between the date they are assigned and the date they mature, with the counter value regi-stered directly to equity. Variations in the fair value of the options after the date they are assigned do not effect initial value.

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Marcolin Group

Employee benefitsEmployee benefits that are paid out upon or after cessation of the employment relation via defined-benefit programmes(as is the Italian employee severance indemnity system) are recognised at the time when the right to such benefits ac-crues. 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 emplo-yee severance indemnity, including with regard to the possibility of the employee to choose how to allocate accruing in-demnity. In particular, new severance pay flows may be assigned by the worker to pre-selected pension forms or kept withinthe company (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 accruedbefore 01 January, 2007 (and not yet paid at the balance sheet date), while after this date, it will be assimilated with adefined benefits plan.The changes that occurred in the reference laws led to variations in the actuarial assumptions used for valuating liabili-ties regarding 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 werein effect, 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 set-tle the obligation 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 gua-rantees 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 recor-ded at their face value.

Financial liabilitiesLoans are initially recognised at cost, corresponding to the liability’s fair value net of the costs of its arrangement. Afterthe initial recording, these are valued at the amortised cost; any difference between the amount financed (net of the costsof incurring the loan) and the par value is posted in the income statement throughout the life of the loan, using the ef-fective interest method. If there is a change in expected cash flows and management is able to estimate them reliably, thevalue of borrowings 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 themhave been transferred to third parties.


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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 thegoods’ ownership are actually transferred to customers according to the terms of the sales agreement. These revenuesare recognised net of an allocation which represents the best estimate of the profit lost due to customers returning mer-chandise. This allocation is based on specific historic figures.Revenue arising from performance of services is recognised with reference to the state of completion of the transactionat the 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 tothe shareholders’ 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 rendersall inflows 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 thetransaction 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, recogni-sing the whole amount of positive or negative foreign exchange differences in the income statement among finance in-come and expense.

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 exceptionof those 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 liabili-ties included 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 re-spective regulations in countries where the Group is active, in the financial years when temporary differences will be uti-lised 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 dateand, if necessary, is reduced to the extent that it is no longer probable that sufficient taxable profit will be made to allow par-tial or 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 ordi-nary shares outstanding during the financial year, excluding treasury shares.

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Marcolin Group

Recording of revenuesRevenues are recorded net of returns, discounts, vouchers, and prizes, as well as taxes directly connected with the salesof goods and provision of services.Revenues from sales are recorded when the company has transferred significant risks and returns connected to owner-ship of the 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 INTERPRETATIONSAccounting standards, amendments and interpretations applied as from 1st January 2009The following is a brief description of the standards that have been applied for the first time in the financial statementsfor 2009.

IFRS 8 - Operating Sectors: the new standard is applicable as from 1st January 2009 in lieu of IAS 14 – Segment repor-ting. It requires the segment reporting to be based on elements used by the management to make its operative decisions.The adoption of this standard has not had any effect on the financial statements as the Group has, in fact, determinedthat the operative sectors are the same as those established previously according to IAS 14 – Segment Reporting.

IAS 1 - Presentation of the interim report: the new version of the standard requires the company to present the changesfrom transactions with shareholders in the statement of changes to the net equity, whilst all other transactions with thirdparties must, instead, be posted in a single comprehensive income statement, or, alternatively in two separate statements(income statement and comprehensive income statement or total income statement). With reference to the income sta-tement, the Group has opted for the presentation of two separate statements: the income statement and the total incomestatement. In 2009, transactions with non-shareholders reported in this statement concerned changes to the cash flowhedge reserve and the effects of the change into euros of the financial statements pertaining to subsidiaries and drawnup in a foreign currency.

The following accounting standards, amendments and interpretations, applicable as from 1st January 2009, have not, onthe other hand, proved to be relevant as they govern situations and cases that are not relevant for the Group as of the dateof these financial statements:- IAS 23 amended - Financial Charges;- Amendment to IFRS 2 – Share-based payment – Vesting conditions and cancellations;- Amendment to IAS 32 – Financial instruments: Presentation and IAS 1 – Presentation of Financial Statements – Financialinstruments;

- Improvement to IAS 16 – Property, plant and equipment;- Improvement to IAS 19 – Employee benefits; - Improvement to IAS 20 – Accounting for government grants and disclosure of government assistance;- Improvement to IAS 28 – Investments in associates;- Improvement to IAS 29 – Financial reporting in hyperinflated economies;- Improvement to IAS 36 – Impairment of assets;- Improvement to IAS 38 – Intangible assets; - Improvement to IAS 39 – Financial instruments: Recognition and measurement;- Improvement to IAS 40 – Investment property;- Amendment to IAS 32 – Financial instruments: presentation and IAS 1 – Presentation of financial statements - Putta-ble instruments and instruments with obligations arising on liquidation;

- Amendment to IFRS 7 – Financial instruments: enhancing disclosures about fair value measurements;- IFRIC 13 – Customer loyalty programmes;- IFRIC 15 – Agreements for the construction of real estate;- IFRIC 16 – Hedges of a net investment in a foreign operation.

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Marcolin Group

Accounting standards, amendments and interpretations not yet applicable and not adopted in advanceThe Company has not opted for early adoption of the following Standards, Interpretations and Updates to standards al-ready published and compulsory in future years:


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IAS/IFRS Standard or IFRIC Interpretation date of date of Effectsissue enforcement (n.a. not applicable

n.r. nor relevant)

IFRS 3 - Business Combinations JAN 2008 JAN 2010 N.r. 2009 IAS 27 - Consolidated and Separate Financial Statements

IFRS 5 - Non-Current Assets Held for Sale and Discontinued Operations 2008 JAN 2010 N.a. 2009

IAS 39 - Financial Instruments: Recognition and Measurement JUL 2008 JAN 2010 N.a. 2009

IFRIC 17 - Distributions of Non-cash Assets to Owners NOV 2008 JAN 2010 N.a. 2009

IFRIC 18 - Transfers of Assets from Customers JAN 2009 JAN 2010 N.r. 2009

AMENDMENTS TO IFRS ("improvement") NOT ADOPTED:IFRS 2 - Share-based PaymentIFRS 5 - Non-current Assets held for sale and Discontinued OperationsIFRS 8 - Operating SegmentsIAS 1 - Presentation of Financial StatementsIAS 7 - Statement of Cash FlowsIAS 17 - Leases APR 2009 JAN 2010 N.a. 2009IAS 36 - Impairment of AssetsIAS 38 - Intangible AssetsIAS 39 - Financial Instruments: Recognition and MeasurementIFRIC 9 - Reassessment of Embedded Derivatives

IFRS 2 - Share based payment: Group Cash-settled Share-basedPayment transactions JUN 2009 JAN 2010 N.a. 2009

IAS 32 - Classification of Rights Issues OCT 2009 JAN 2011 N.a. 2009

IAS 24 - Related Party Disclosures NOV 2009 JAN 2011 N.a. 2009

IFRS 9 - Financial Instruments NOV 2009 JAN 2013 N.a. 2009

IFRIC 14 - Prepayments of a Minimum Funding Requirement NOV 2009 JAN 2010 N.a. 2009

IFRIC 19 - Extinguishing Financial Liabilities with Equity Instruments NOV 2009 JAN 2010 N.a. 2009

3. FINANCIAL RISK FACTORSMarket risksManagement of financial risks is an integral part of the Marcolin Group’s activities and is performed centrally by the pa-rent company, based on guidelines covering some specific areas, i.e. hedging of foreign exchange risks and of risks stem-ming 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. Consi-stently with its chosen strategy, the company undertakes derivative transactions for the sole economic purpose of hed-ging. If, however, according to application of the appropriate accounting standards (IAS 39 – Financial Instruments:Recognition and Management) such transactions cannot be technically recognised in accounts as hedging transactions,they are not qualified as 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 exa-mining 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 ofthe change in exchange rates, it is held that a change in exchange rates does not significantly impact the Group’s con-solidated financial statements.In fact, the company has adopted a specific policy for foreign exchange risk management.

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 tocash-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 manages the risk of fluctuations in interest rates through the use of derivative contracts, generally interest rateswaps, which allow for mitigating the variations in interest rates.Details of the derivative contracts existing at year-end are as follows.

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Marcolin Group

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

Type Institute Notional Currency Expiration date Mark to Market

Interest Rate Swap Efibanca 7.000 EUR 27.06.2012 (334)Collar con knockout su cap Cassa di Risparmio del Veneto 3.979 EUR 31.12.2010 (80)

(ex Banca Intesa)

Sensitivity analysis on interest ratesA sensitivity analysis on the interest rate was conducted, assuming a parallel and symmetric shift up and down of 50basis points of the Euribor/Swap Eur interest rate curves, published by provider Bloomberg related to 31 December, 2009and 31 December, 2008. In this way, the impact on the income statement and shareholders' equity that changes wouldhave had could be estimated.The analysis did not include financial instruments not significantly exposed to changes in interest rates, such as short-term trade receivables and payables Interest amounts on loans incurred with banks were recalculated based on the above-mentioned assumptions and theposition in the year, re-determining 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.At year-end, derivative contracts were valued at the fair value using the interest rate curves modified based on the afore-mentioned assumptions. For derivative contracts hedging cash flow, the opposite value of the fair value assessment is re-presented by the specific shareholders' equity reserve, assuming full effectiveness of the report, while for the hedgingderivatives, the value of the assessment to fair value is represented by the income statement.

For cash and cash equivalents, the average balance for the period was calculated considering the values in the financialstatements at the start and end of the year. On the amount calculated in this way, the income statement was affected byan increase/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 € 55 thousand (€ -48 thousand in 2008) caused mainly by the increase in financial charges relating tobank borrowings, which is only partly offset by the improvements in the interest rate of derivatives, the positive revalua-tion of trading derivatives and the higher interest income relating to cash. Contrariwise, shareholders' equity would increaseby € 38 thousand (€71 thousand in 2008) due to the revaluation of hedge derivatives on cash-flow.

If interest rates fall by 50 basis points, the income statement would show a positive change equal to € 20 thousand (€52thousand in 2008) caused mainly by the decrease in financial charges generated by bank borrowings, partly offset by theworsening of the interest rate on derivatives, the positive revaluation of trading derivatives and the lower interest incomerelating to cash. Contrariwise, shareholders' equity would increase by € 38 thousand (€71 thousand in 2008) due to therevaluation of hedge derivatives on cash-flow.


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Credit riskThe Group has no significant concentration of credit risk. Assets are recognised in accounts net of any write-down cal-culated based on the risk of counterparty non-performance determined based on the information available on the clien-t’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 the liquidity risk implies maintenance of an adequate level of cash and cash equivalents and theavailability of funds obtainable via adequate credit lines. Due to the dynamic nature of its business, the Group gives pre-ference to flexibility in funding via the use of credit lines. At present, the Group believes it has sufficient access to fundsfrom available income and credit lines to meet the financial needs of ordinary business requirements. The types of cre-dit lines available and the base rate on the reference date are shown below in paragraph 19 of the present document.

Liquidity analysisLiquidity analysis regards loans, derivatives, and trade payables. Loans incurred have been indicated by time period, withcapital repayments and non-discounted interest. Future interest flows are determined based on the forward interest ratestaken from 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 expirationdates of the cash flow mentioned above.

The derivatives used by the Group 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, di-scounted 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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Marcolin Group

Receivables by geographical area(euro/000)

DEC 31, 2009 DEC 31, 2008Italy 22.747 18.723Rest of Europe 17.340 17.472North America 8.555 8.516Rest of the World 13.660 13.812Total 62.302 58.522

4. USE OF ESTIMATES Preparation of the consolidated year-end accounts makes it necessary for management to make estimates that could af-fect the carrying value of some assets and liabilities and reported costs and revenues, as well as disclosures concerningpotential assets/liabilities as at balance-sheet date.Estimates mainly refer to valuation of the recoverability of intangible assets, definition of tangible assets’ useful lives, therecoverability of receivables (by prepaid taxes as well) and warehouse stock, and recognition or measurement of provi-sions. Estimates 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 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 useof estimates of the future economic performance of the CGUs to which the goodwill refers, and on the discounting rateand prospective 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 totesting to see whether value has been impaired, when indicators suggest that net carrying value exceeds relevant re-coverable value, consisting of the higher of fair value (net of selling costs) and value in use. Verification of the effectivemateriality of such indicators requires directors to make subjective evaluations based on information available inside theGroup and on market information, as well as on management’s knowledge. In the presence of potential impairment ofvalue, the Group calculates this using valuation techniques deemed to be appropriate. Proper identification of indica-tors of the existence of potential impairment of value and estimates to calculate it depend on factors that may vary overtime, affecting the valuations and estimates made by directors.


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

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 82.262

within 3 months 155 0 29.093 29.248from 3 to 6 months 9.701 188 3.109 12.998from 3 to 12 months 9.772 184 553 10.509from 1 to 3 years 21.363 48 0 21.411from 3 to 5 years 7.358 0 0 7.358over 5 years 3.001 0 0 3.001TOTAL 31.12.2009 51.350 420 32.755 84.525

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

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

Investments made during the year amounted to 6,049 thousand euros (2,458 thousand for 2008). These mainly refer tothe Parent company for the development of a new property that will allow for a centralisation of the Group’s delivery acti-vities, thereby improving the logistics and after-sales service and increasing production capacity.This investment relates to the purchase of land for 1,100 thousand euros and advances for 2,435 thousand euros alreadypaid for the construction of the new building.Furthermore, the parent company Marcolin S.p.A. has purchased commercial and industrial equipment for 1,053 thou-sand euros and plants and machines for 253 thousand euros.The item ‘Other assets’ is up by 1,183 thousand euros, mainly following investments made for the renewal of the fairstand for 688 thousand euros.

The sales of the item ‘Other assets’ mainly refer to Marcolin S.p.A. for the sale of the trade fair stand that was no longerin use.

The item ‘Amortisation’, net of uses for sales, amounting to a total of 1,775 thousand euros (3,265 thousand in 2008),consists of uses of the depreciation fund for sales of goods of 1,433 thousand euros and depreciation for 3,208 thousandeuros.

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Marcolin Group

PROPERTY, PLANT AND EQUIPMENT Land and Plant and Industrial and Other Assets under Total(euro/000) buildings machinery commercial tangible construction

equipment assets

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 Other movements (25) 0 35 136 (342) (196)Net value at end of 2008 9.029 2.510 1.794 1.440 27 14.800

Opening 2009 9.029 2.510 1.794 1.440 27 14.800 Increases 1.100 253 1.053 1.183 2.460 6.049 Decreases (38) (292) (7) (1.246) 0 (1.582)Amortisation (547) (309) (1.321) 402 0 (1.775)Translation difference 1 0 0 3 0 4 Impairment (98) 0 0 0 0 (98)Other movements 4 0 39 (4) (12) 28Net value at end of 2009 9.451 2.162 1.559 1.779 2.475 17.425

The Amortisation is posted as follows:- for 2,109 thousand euros (2,086 thousand in 2008) amongst the items of sales cost;- for 771 thousand euros (754 thousand in 2008) amongst distribution costs;- for 329 thousand euros (425 thousand in 2008) amongst general and administrative costs.The item ‘impairment’ relates to the adjustment to market value of the property owned by Marcolin Switzerland, followingthe estimate made by an external expert. This estimate expresses a fair value of 146 thousand Swiss francs (98 thousandeuros) less than the book value.The properties owned by the parent company were also expertly assessed at end 2009. For these, no differences werereported between the fair value and the book value.

The gross value of property, plant and equipment and the value of the associated depreciation reserve at December, 2009are shown in the following table:

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


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INTANGIBLE ASSETS Industrial and Concessions, Other Total GoodwillAND GOODWILL other patent rights licenses and (euro/000) trademarks

Opening 2008 1.682 1.196 65 2.942 2.195 Increases 139 1.802 6 1.947 0Amortisation (752) (148) (19) (918) 0Translation difference (15) 39 3 26 127 Other movements 186 (71) 18 133 0Net value at end of 2008 1.239 2.818 74 4.131 2.322

Opening 2009 1.239 2.818 74 4.131 2.322 Increases 293 18 19 330 0Decreases (1) 0 0 (1) 0Amortisation (803) (465) (23) (1.291) 0Translation difference 4 (21) (2) (19) (78) Other movements 10 (10) 0 0 0Net value at end of 2009 741 2.340 68 3.150 2.243

PROPERTY, PLANT AND EQUIPMENT Land and Plant and Industrial and Other Assets Total(euro/000) buildings machinery commercial tangible under

equipment assets construction

Historical cost 17.998 12.417 15.670 8.987 2.475 57.548Accumulated amortisation (8.547) (10.255) (14.112) (7.208) 0 (40.123)Net book value 9.451 2.162 1.559 1.779 2.475 17.425

During the year, investments were made for 330 thousand euros (1,947 thousand in 2008), mainly for investments madeby the parent company for the implementation and update of software.

Amortisation, of a total of € 1,291 thousand (€ 918 thousand in 2008), was booked for € 187 thousand (€ 180 thou-sand in 2008) in the item cost of goods sold, for € 895 thousand (€ 538 thousand in 2008) in the item distribution costsand for the remaining € 210 thousand (€ 199 thousand in 2008) in the item overheads and administration.

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

The goodwill amortisation fund refers to amortisation calculated up until the date of transition to the international ac-counting standards.

The item concessions, licenses and trademarks includes the Web brand. This activity, acquired in November 2008 andwhose purchase value has been specifically and expertly estimated by an independent professional, given that it is a tran-saction with an associated party, is subjected to amortisation. The value as of 31st December 2009 has also been sub-jected to impairment testing on the basis of the Group plans with regards to the development and margins of Web brandproduction. From this calculation, it is held that there has been no loss of value with reference to this asset.

The item goodwill is relative to the previous acquisition of an American company by Marcolin USA, which was subjectedto an appropriate impairment test based on determination of the enterprise value of the CGU to which it refers, consistingof the 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 intan-gible assets with an indefinite useful life, and with reference to other types of assets, is performed in the presence of ex-ternal or internal indicators that may cause the belief that a loss of value exists.In particular, for preparation of the financial statements for the year 2009, there were not indicators that suggested thepresence of a loss of value with reference to tangible assets.With regards specifically to the goodwill booked in the current consolidated financial statements with reference to assetsin the US market, the verification of a loss of values was performed with regards to the totality of the American subsidiary.It was hence retained opportune to estimate the value in use of the CGU identified with the company Marcolin USA basedon the parameters specified below.The use value, which is provided as a comparison with the book value of the asset has been estimated on the basis of fo-recast future cash flow, in line with the economic and financial forecasts prepared by the Group with reference to 2010. In view of the continuing conditions of great uncertainty that mark the current macroeconomic scenario, the Directors heldit appropriate to limit the forecast to just one year, for this year too.The approved budget for financial year 2010 takes into account the economic crisis that took hold during 2008. Howe-ver, it should be noted that the estimates are based on valuations relative to future events that could occur with effectsdifferent from those that are expected, causing the possibility of changes, possibly significant, with respect to the foreca-

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Marcolin Group

INTANGIBLE ASSETS Industrial and Concessions, Other Total GoodwillAND GOODWILL other patent rights licenses and(euro/000) trademarks

Historical cost 6.071 7.285 267 13.623 8.050Accumulated amortisation (5.330) (4.945) (199) (10.473) (5.807)Net book value 741 2.340 68 3.150 2.243

sted data considered here. The value in use was determined as the sum of the actual value of cash flows predicted for2010 and the terminal value determined based on the forecast data.Due to the generalized conditions of uncertainty, it was held to be prudent to use a growth rate of zero in determining theterminal value.

With reference to the Web brand, updated forecast data was used, as prepared by management, with reference to a me-dium-term timescale (until 2015). Forecasts have therefore been prepared for the residual period of amortisation of theasset, using assumptions held to be prudent, and which reflect the expected brand life cycle and, in particular, a decreasein volumes, margins and investments after the initial launch phase forecast for the medium-term.

For discounting of the cash flows, a rate of 7.28%, net of the tax effect, was used, which reflects current market valua-tions for 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.Furthermore, three sensitivity analyses were carried out on the impairment test, simulating, respectively, a growth ratechange from zero to 1% and a change in discounting rates of 0.5% down, and up by 1% and 1.5%. None of these sce-narios led to results in which write-downs would be necessary.

7. INTERESTSThis item, in total amounting to 372 thousand euros, refers to the associates Fintec S.r.l. for 277 thousand euros and Mar-colin Japan Co. Ltd. For 95 thousand euros. Information 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 year loss pertaining to the Group amounts to 69 thousand euros. This is after having adapted the statutory financialstatements of the associate to the Group’s accounting standards.The value of the net capital pertaining to the company Marcolin Japan Co. Ltd. goes from a balance of 132 thousand eurosto a value of 95 thousand euros, following the negative year result attained by the associate and altered exchange rate.


86

INTEREST IN ASSOCIATES(euro/000)

Finitec S.r.l. Share Capital 54.080 EUR DEC 31, 2009 DEC 31, 2008Assets 2.482 2.679

Liabilities 1.087 1.113

Shareholders’ equity 1.395 1.567

Net sales 1.583 2.766

Income (loss) for the period (284) 87

% ownership 40% 40%

Marcolin Japan Co. Ltd. Share Capital 99.000.000 JPY DEC 31, 2009 DEC 31, 2008Assets 2.422 2.952


Shareholders’ equity 238 330

Net sales 2.663 2.335


% ownership 40% 40%

8. DEFERRED TAX ASSETS AND LIABILITIESAs of 31st December 2009, the item 'deferred tax assets’ had a balance of 7,031 thousand euros, up by 3,625 thousandeuros on December 2008.The item is mainly due to the parent company, for temporary differences, amounting to 4,506 thousand euros, and to Mar-colin USA that has booked, for the year, assets in relation to temporary differences and tax benefits linked to tax lossesgenerated in previous years, for 2,490 thousand euros. This posting was made during the year insofar as it was made pos-sible by the fact that the US subsidiary had begun to produce regular income.

With regards to deferred tax liabilities, the balance amounts to 769 thousand euros (772 thousand euros as of 31.12.2008)due to temporary differences between the tax-recognised values and the values posted on the accounts.

9. 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 foradvertising services to be received in future. The contract expires in February 2011 and there is the option of transferringthe credit within Group companies. It is held that this asset is entirely recoverable by means of the acquisition of serviceswithin the terms of contract validity.

10. INVENTORIESDetails of inventories are shown below.

By comparing stock values, we can see a significant reduction in inventories overall as compared with last year, amoun-ting to 13,898 thousand euros (on the net inventory values), traceable to the greater efficiency of the planning processand the sale of stock accompanied by a significant drop in the average number of days for stock rotation.More in detail, we have seen:- a decrease in the value of finished products and goods amounting to 9,332 thousand euros;- a value of raw materials that is basically unchanged as compared with last year;- a decrease in the value of products under construction for 712 thousand euros.

The value of the inventories impairment reserve as of 31st December 2009 increases by 3,919 thousand euros, mainlyby effect of the prudent assessments of the inventories of raw materials and semi-worked products.

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Marcolin Group

Inventories(euro/000) DEC 31, 2009 DEC 31, 2008

Finished goods 36.811 46.143Raw material 10.289 10.226Work in progress 7.623 8.334Gross inventory 54.723 64.703Inventory provision (16.405) (12.486)Net inventory 38.318 52.216

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

The balance of the value of net trade receivables increases for 1,969 thousand euros on last year, with a slight improve-ment in the index of average days for collection, despite the particularly difficult period. This was also without noting anylosses above the company's historical average. We should also note that during the last quarter of the year, a 9% increasein turnover was reported as compared with the same period last year. The amount of receivables stated on the financialstatements has not been discounted, as all receivables are due in the short-term.

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:


88

Trade and other receivables DEC 31, 2009 DEC 31, 2008(euro/000)

Gross receivables 63.008 61.191Provision for bad debts (4.533) (4.330)Net trade receivables 58.475 56.861Tax receivables 3.320 1.109Other receivables 508 552Total other receivables 3.827 1.661Total 62.302 58.522

Receivables not overdue by gepgraphical area DEC 31, 2009 DEC 31, 2008(euro/000)

Italy 19.092 13.583Rest of Europe 11.110 11.074North America 5.913 5.741Rest of the World 11.595 10.605Total 47.709 41.004

The following table provides a breakdown of due dates for trade receivables that are not subjected to protest.

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 expira-tion for payment had already occurred. The table below illustrates the balance of these commercial receivables, divided into uniform time classes.

For the sake of full disclosure, below is an illustration of the maturity of the receivables submitted to protest.

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

DEC 31, 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 58.967 (3.119) 55.848

DEC 31, 2009Not overdue 47.709 (92) 47.617Overdue less than 3 months 5.278 (145) 5.133Overdue from 3 to 6 months 3.432 (520) 2.911Overdue over 6 months 3.800 (1.613) 2.187Total 60.219 (2.370) 57.848

Trade receivables overdue and not written-down DEC 31, 2009 DEC 31, 2008(euro/000)

Overdue less than 3 months 5.133 5.463Overdue over 3 months 5.098 4.006Total 10.231 9.469

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

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

DEC 31, 2009Overdue less than 12 months 278 (269) 9Overdue over 12 months 2.080 (1.894) 186Total 2.358 (2.163) 195

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

The allowance for doubtful accounts increases by 203 thousand euros as compared with last year. We would point outthat the use of this mainly refers to the subsidiary Marcolin USA, to the parent company and to Marcolin France. Duringlast year, uses mainly referred to positions traceable to Cébé by effect of the closure.Note also that the amounts reported with trade receivables are not subject to guarantees.

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

13. CASH & CASH EQUIVALENTSThe item represents the value of cash balances and of highly liquid financial instruments, i.e. with an original maturity ofless than three months. The increase of 11,192 thousand euros, as shown from the cash flow statement noting the use of cash and cash equi-valents for investments and for repayments of loans and the effect of the supply of new loans resolved in favour of the pa-rent company at year end.We would point out that part of the balance was used in January 2010.

14. EQUITYThe Parent Company’s share capital amounts to € 32,312,475.00 and is composed of 62,139,375 ordinary shares witha par 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 calculated in accordance with IFRS 2 principles. In fact, adoption of a stock option planbrings with it the necessity of recording for accounting purposes a cost equal to the fair value of the options at the dateof allocation. This cost is recognised in the income statement for the duration of the period in which the conditions for useof such options matures, and a counter value is placed in the associated equity reserve.

At 31 December, 2009, the second financial year in which this reserve is booked, it amounted to €186 thousand, with acounter 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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Provision for bad debts 2009 2008(euro/000)

Opening 4.330 5.172

Allowance 1.429 1.164

Utilisation (1.165) (1.908)

Reclassification and other movements (49) (83)

Translation difference (12) (15)

Total 4.533 4.330

15. MEDIUM- AND LONG-TERM BORROWINGSThe balance as of 31st December 2009 of the long-term loans (including the relevant short-term share), is representedalmost entirely by loans supplied by Cassa di Risparmio del Veneto S.p.A. (ex Banca Intesa), by Efibanca S.p.A. (lead bankof a pool of lending institutes) and by new loans taken out during the year with the bank institutes Cassa di Risparmio delVeneto S.p.A. and Mediocredito Italiano (both from the Intesa San Paolo Group). For details, please see note 19 ‘Short-term loans’.

Please note that the loan taken out with Mediocredito Italiano for a total amount of 10 million euros, was used for 2 mil-lion euros as of 31st December 2009.At year end, the amount of residual debt for this item totalled 48.2 million euros.

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

16. LONG-TERM PROVISIONSThe item is totally represented by the employee severance indemnity fund (TFR) posted in the financial statements of theparent company. It expresses the balance of the employee defined benefit plan to be supplied at the time of, or subse-quent to termination of the employment. It is represented entirely of liabilities posted on the financial statements pertai-ning to the parent company, accrued as of 31.12.2006. In actual fact, the TFR accrued as from 1st January 2007 istreated as a defined benefit plan and as such, with payment of the contributions to welfare funds (public and/or private),the Group complies with all relevant obligations.

The changes in the aforesaid provisions are shown below:

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Marcolin Group


Cash 198 99 Cash equivalents 24.153 13.060 Short term borrowings (9.322) (4.228)Current portion of long term borrowings (9.614) (12.995)Long term borrowings (29.254) (28.682)Total (23.839) (32.747)

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

Opening 4.039Utilization (306)Interest 177Actuarial loss (gain) (127) DEC 31, 2009 3.784

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

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

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

The decrease in the value of trade payables for 1,905 thousand euros is due to the lesser purchases of production madeduring the period. We would also point out an increase of the index in relation to the average days of payment to suppliers.

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

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


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Actuarial assumptions 2009

mortality rate: Table RG48disabilty rate: Table INPSpersonnel turnover rate: 5,00%severance prepaiments: 2,00%discount rate: 4,10%wages increase rate: 3,00%inflation rate: 2,00%

Payables by gepgraphical area 31.12.2009 31.12.2008(euro/000)

Italy 19.945 18.482Rest of Europe 2.703 3.447North America 869 1.080Rest of the world 9.239 11.651Total 32.755 34.660

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.

Contractual agreements in relation to loans granted to Marcolin S.p.A. by the Cassa di Risparmio del Veneto (Intesa SanPaolo Group), by Efibanca and by Mediocredito Italiano (Intesa San Paolo Group), include a series of obligations concer-ning operative and financial aspects. In particular, several financial economic indexes (“covenants”) need to be observed,calculated in the consolidated financial statements at the end of each year. The agreement signed with Cassa di Rispar-mio del Veneto (Intesa San Paolo Group) also envisages compliance with the parameters at the end of the six-month pe-riod of each year.If these parameters are not observed, the conditions under which the loan agreements will continue will have to be ne-gotiated, or the relevant changes made to the aforesaid parameters. Otherwise, the amounts granted may have to be re-paid early.The covenants are calculated on the main financial economic indicators (EBITDA, net financial position and equity). At31 December, 2009 and over the course of the financial year, the covenants were respected in their entirety.The following table contains details of the maturity of the financial liabilities, whose value is entered either in current lia-bilities or in non-current liabilities.

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Marcolin Group

Bank Currency Starting Residual Expiration Interest NotesAmount Amount date rate

Cassa di Risparmio EUR (credit line) 6.672.074 dec 31, 2010 Euribor "Stand by" credit line "revolving" type,del Veneto 25.000.000 6 months dated FEB 16, 2006. Refundable in 8 (ex banca Intesa) * + 1% half-year instalments from JUN 30, 2007.

EFIBANCA * EUR (credit line) 21.214.286 jun 27, 2012 Euribor A "Term Loan Facility" of 15.000.000 and a 30.000.000 6 months "Stand by Facility" loan of 15.000.000, dated

+ 1,30% JUN 27, 2007. Paid out the "Term Loan Facility" line, refundable in 10 half-year instalments from DEC 27, 2007 and part - payment of the "Stand by Facility" line of 6.000.000, refundable in 7 half-year instalments from JUN 27, 2009.

Ministero delle EUR 793.171 563.548 jun 26, 2016 1,012% Subsidized loan in accordance with the Law no. attività produttive 46, 1982, refundable in 10 year instalments (Innovazione Tecnologica) from JUN 26, 2007.

Unicredit Corporate CHF 3.500.000 3.500.000 may 12, 2010 1,85% Short term borrowings dated JAN 29, 2008. Banking

Cassa di Risparmio EUR (credit line) 15.000.000 mar 31, 2015 Euribor Loan dated OCT 26, 2010, refundable in 10del Veneto 15.000.000 6 months half-year instalments from SEP 30, 2010.(ex banca Intesa) * + 1,70%

Mediocredito EUR 2.000.000 2.000.000 sep 30, 2019 Euribor Real-estate loan dated DEC 22, 2009, italiano 3 months refundable in 34 quarterly instalments

from JUN 30, 2011.

The following is a disclosure on derivatives in place as of 31st December 2009. We would specify that the contracts inplace were drawn up by the parent company Marcolin S.p.A..

Financial liabilities measured at fair value booked to the income statement.

On 28 April, 2006, the parent company stipulated a derivatives contract on interest rates (IRS) with the Cassa di Rispar-mio del Veneto (formerly Banca Intesa) in order to protect itself against risk related to variations in interest rates. This con-tract refers to the variable interest rate financing obtained from the institute. The fair value of the derivatives instrument at 31 December, 2009 was negative by €80 thousand (negative by €116thousand at 31 December, 2008).This derivative, while created in order to cover the risk associated with interest rate variations, was not considered as ahedge accounting item for accounting purposes for IAS, as it calls for a Knock Out barrier, which impedes effective hed-ging according to 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 rela-ted to 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 provi-sions of IAS 39. In fact:- it was contractually established, at the moment the financing was provided, to cover at least 50% of the notional valueof said 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, 2009 was negative by €334 thousand, of which €229 thousand short-term,and €105 thousand long-term. Fair value at 31 December, 2008 was negative by €351 thousand. Fair value variationswere booked 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 deri-vative instruments amounted to €316 thousand.


94

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

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 43.508 674 45.906

within 1 year 0 18.847 89 18.936between 1 and 3 years 0 19.644 178 19.821between 3 and 5 years 0 6.471 179 6.650over 5 years 0 2.618 165 2.783DEC 31, 2009 0 47.579 611 48.190

20. 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 paya-ble upon 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 (€ 3,431 thousand)and of risk provisions for other liabilities arising from present legal or constructive obligations (€ 470 thousand).

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

The item ‘other current liabilities’ mainly consists of:- payables due to staff, which records a decrease of 888 thousand euros;- payables due to welfare institutes, which records an increase of 149 thousand euros.

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Marcolin Group

SHORT TERM PROVISIONS Provision for Other provisions TOTAL(euro/000) severance indemnities

Opening 2009 495 4.370 4.864Allowance 147 659 806Utilisation (47) (846) (893)Actuarial loss (gain) 8 0 8Translation difference 0 (69) (69)Other movements (14) (212) (226)Closing 2009 589 3.901 4.490

OTHER CURRENT LIABILITIES DEC 31, 2009 DEC 31, 2008(euro/000)

Payables to personnel 4.682 5.570 Social security payables 1.846 1.697 Royalties 194 333 Other accrued expenses and deferred income 318 279 Total 7.040 7.877

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

The item consisted mainly of a surety of € 374 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 throughout their duration. Asat 31 December, 2009 the total of these future commitments amounted to € 222 million (€ 94 million in 2007), of which€ 39 million falling due within the next 12 months. We would point out that the increase of future commitments as com-pared with last year relates to the signing of new license agreements with durations spanning several years, and the re-newal of others already held in the Group's brand portfolio.

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

Commitments in relation to rent and leasing charges mainly relate to a lease agreement for the premises of the Americanbranch and the parent company in relation to the lease of a property used as a logistics centre.


96

Contingencies (euro/000) 2009 2008

Guarantees to third parties 1.473 1.465

Commitments 2009 2008(euro/000)

RentsWithin one year 1.058 676 From one to five years 1.845 2.415 Over five years 97 0 Total 3.000 3.090

Operating leasesWithin one year 314 35 From one to five years 95 23 Over five years 0 0Total 410 58

Total commitments 3.410 3.148

INCOME STATEMENT

23. NET SALESThe breakdown of net sales as at 31 December, 2009 was as follows:

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Marcolin Group

CONSOLIDATED INCOME STATEMENT DEC 31, 2009 % of net sales DEC 31, 2008 % of net sales(euro/000)

NET SALES 180.321 100,0% 186.845 100,0%

COST OF SALES (78.229) (43,4)% (83.375) (44,6)%

GROSS PROFIT 102.092 56,6% 103.470 55,4%

Selling and marketing costs (80.704) (44,8)% (79.062) (42,3)%General and administrative expenses (15.755) (8,7)% (17.095) (9,1)%Other income and expenses 2.750 1,5% 4.740 2,5%Other non recurrent operating income and expenses 1.005 0,6% 1.173 0,6%

OPERATING PROFIT - EBIT 9.388 5,2% 13.226 7,1%

FINANCIAL INCOME AND EXPENSES (2.137) (1,2)% (4.471) (2,4)%

NET RESULT BEFORE TAXES 7.251 4,0% 8.755 4,7%Income taxes (171) (0,1)% (2.630) (1,4)%Minority interests 0 0,0% 0 0,0%

NET RESULT 7.080 3,9% 6.124 3,3%

EPS 15.126 8,4% 20.255 10,8%

Net sales by geographic area DEC 31, 2009 DEC 31, 2008 Increase (decrease)


- Italy 40.515 22,5% 36.314 19,4% 4.201 11,6%- Europa 62.965 34,9% 72.567 38,8% (9.602) (13,2)%- U.S.A. 39.603 22,0% 40.278 21,6% (675) (1,7)%- Rest of the World 37.238 20,7% 37.686 20,2% (448) (1,2)%Total 180.321 100,0% 186.845 100,0% (6.524) (3,5)%

24. 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 €5,146 thousand (-€ 1,987 thousand in 2008), with a con-sequent reduction in the percentage of impact of revenues equal to 1.2%, from 44.6% to 43.4%.This improvement is a consequence of the greater efficiency of the planning processes and industrial production, al-though has been partially reduced following the adoption of more aggressive sales policies in terms of discounts grantedto customers, in order to meet market demands negatively affected by the drop in demand.

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

The item increases by a total of 1,641 thousand euros, or 2.1%, mainly due to the greater incidence of minimum gua-rantees on license agreements. The increase is partially offset by the reduction of the item Other distribution costs andmarketing.


98

Cost of sales DEC 31, 2009 DEC 31, 2008 Increase %(euro/000) (decrease)

Purchase of material and finished goods 37.508 52.223 (14.715) (28,2)%Changes in inventory 13.056 (2.253) 15.309 (679,4)%Personnel expenses 14.743 14.656 87 0,6%Outworks 6.090 11.404 (5.315) (46,6)%Amortisation and depreciation 2.296 2.267 29 1,3%Other expenses 4.536 5.077 (542) (10,7)%Total 78.229 83.375 (5.146) (6,2)%

Selling and marketing costs DEC 31, 2009 DEC 31, 2008 Increase %(euro/000) (decrease)

Personnel expenses 21.264 20.887 377 1,8%Commissions 8.675 8.803 (127) (1,4)%Amortisation and depreciation 1.665 1.292 372 28,8%Royalties 24.563 21.379 3.184 14,9%Advertising and PR 12.709 12.920 (211) (1,6)%Other costs 11.828 13.782 (1.954) (14,2)%Total 80.704 79.062 1.641 2,1%

26. GENERAL & ADMINISTRATIVE COSTSBreakdown of general overheads and administrative costs:

The total value of the item in question, as compared with last year, drops by 1,340 thousand euros. In greater detail, wecan see a decrease in the item of 'other costs’ for 1,185 thousand euros. This item includes:- directors’ fees;- legal and administrative consulting;- EDP costs;- other services.

We should point out that during 2009, some costs were reclassified that had previously been posted amongst the finan-cial expenses and which are more correctly to be considered as costs for general and administrative services. The rele-vant amount has therefore been posted to this latter item. The item of the income statement concerned by thisreclassification has also be recalculated for 2008, with an effect amounting to 602 thousand euros.

Pursuant to Article 149-duodecies of the Regulation, we note here that the consideration pertaining to the year 2009 dueto the independent auditors for the parent company, and to the bodies pertaining to its network for the subsidiaries, forthe accounting audit service amounted to €304 thousand.

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

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Marcolin Group

General and administrative expenses DEC 31, 2009 DEC 31, 2008 Increase %(euro/000) (decrease)

Personnel expenses 5.130 5.566 (438) (7,9)%Bad debt provsion 1.429 1.164 265 22,7%Amortisation and depreciation 640 624 15 2,4%Other costs 8.556 9.740 (1.185) (12,2)%Total 15.755 17.095 (1.340) (7,8)%

Employees - Average numberCategory 2009 2008




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

The balance of this item is positive for 2,750 thousand euros, down from 31st December 2008 by 1,990 thousand euros.Last year, the positive effect on the total of the item ‘other revenues' was mainly due to the release of the funds for futurerisks and charges in relation to Cébé (now Marcolin France Sas), allocated during previous years to face up to the re-structuring of assets in relation to Cébé, whose closure was completed in 2008.

29. NON-RECURRENT OPERATIVE COSTS AND REVENUESBelow is the schedule with a detail of each item:

The item non-recurrent operative costs and revenues presents a positive balance for 1,005 thousand euros, with a de-crease of 168 thousand euros as compared with 2008.The item non-recurrent revenues mainly concerns the revenues deriving from the sale of the Cébé brand by the subsi-diary Marcolin France Sas, realising a capital gains of 600 thousand euros. In 2008, this item mainly included out-of-period assets deriving from the closure of Cébé assets.


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Other income and expenses DEC 31, 2009 DEC 31, 2008(euro/000)

Transport refund 1.315 1.413Release of provision 884 2.630Other income 884 1.270Total other income 3.084 5.313

Loss on credits (3) 0Loss on investments (331) (573)Total other (expenses) (334) (573)

Total 2.750 4.740

Non-recurring operating income and expenses DEC 31, 2009 DEC 31, 2008(euro/000)

Non-recurring income 1.378 1.811Non-recurring expenses (373) (638)Total 1.005 1.173

30. 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 item financial income and expense has an overall negative balance of 2,137 thousand euros as compared with a ne-gative value of 4,471 as of 31st December 2008. The significant improvement has been obtained thanks to the following:- the decrease in interest expense (of 1,286 thousand euros) with reference to loans of the parent company MarcolinS.p.A. mainly by effect of the decrease of interest rates of reference;

- the improvement of exchange differences (amounting to 758 thousand euros), in particular with reference to the Bra-zilian subsidiary.

As explained in the comment to the general and administrative costs, some costs previously ascribed to financial expensehave been reclassified to that item. In order, therefore, to guarantee comparability of data, a similar reclassification hasbeen applied to the 2008 data, for an amount of 602 thousand euros.

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Financial income and expenses DEC 31, 2009 DEC 31, 2008(euro/000)

Financial income 1.856 3.335Financial expenses (3.993) (7.806)Total financial income and expenses (2.137) (4.471)

Financial income DEC 31, 2009 DEC 31, 2008(euro/000)

Interest income 169 223 Other income 73 248 Gains on exchage rate differences 1.614 2.864 Total financial income 1.856 3.335

Financial expenses DEC 31, 2009 DEC 31, 2008(euro/000)

Interest expenses (1.776) (3.062)Other expenses (53) (518)Cash discounts (765) (819)Losses on exchage rate differences (1.398) (3.407)Total financial expenses (3.993) (7.806)

31. 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 €9.2 million were not recorded(€9 million in 2008), which can mainly be traced to fiscal losses suffered by Cébé and Marcolin USA.

It is also worth noting part of prepaid tax assets have been posted during the year (amounting to 2,490 thousand euros),resulting from temporary differences and the possibility of posting the tax losses generated in the previous financial yearby Marcolin USA, rendered possible by the fact that the United States subsidiary has started to regularly produce profit,thus creating the conditions required for this entry.

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


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Net deferred taxes movements 2009 2008(euro/000)

Net deferred taxes at 1 JanuaryPositive (negative) deferred taxes 2.634 1.238 Credit (debit) to Income Statements 3.627 1.397 Credit (debit) to Net Equity 0 0 Other movements 0 0Translation differences 0 (1)Net deferred taxes at 31 December 6.262 2.634

Deferred taxes 2009 2008(euro/000)

Non current assets 47 209Current assets 3.666 2.365Provisions 828 833Tax losses carried forward 2.490 0Deferred tax assets 7.031 3.406

Non current assets (1.518) (1.567)Current assets 748 795Provisions 0 0Deferred tax liabilities (769) (772)

Total deferred tax 6.262 2.634

The theoretical year tax rate settles at 39.11% (35.68% in 2008), whilst the effective tax rate amounts to 2.36% (30.05%in 2008) by effect of the stated posting during the year of positive tax effects deriving from previous years.

Please note that payable for current taxes at 31 December, 2009 amounted to €1,917 thousand (€2,401 thousand at31 December, 2008) against an allocation during the year of €3,630 thousand.

32. EARNINGS PER SHAREBase earnings per share (EPS) are given by the ratio of parent company shareholder earnings to the weighted averagenumber of ordinary share outstanding during the financial year, with the exclusion of treasury shares.The result per share is as follows:

The diluted profits have been calculated by dividing the period result by the number of shares in circulation, net of trea-sury stock, increased by the shares involved in the stock option plan.

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Income taxes 2009 2008(euro/000)

Current taxes 3.630 3.920Deferred taxes (3.627) (1.547)Taxes relating to prior period 168 257Total income taxes 171 2.630

Tax rate reconciliation 2009 2008(euro/000)

Income (loss) before taxes 7.251 8.755Tax expected 2.836 3.124Taxes relating to prior periods 168 284Permanent differences (1.133) 2.683 Utilisation previous years losses (2.495) (4.440)Taxes on operations 794 980Total income taxes 171 2.631

Income (Loss) per share DEC 31, 2009 DEC 31, 2008

Income (Loss) for the period (euro) 7.080.037 6.124.136Number 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 0,115 0,100Diluted income (Loss) per share 0,114 0,099

33. FINANCIAL INSTRUMENTS BY TYPEThe financial instruments are shown by uniform classes in the table below which shows the fair value in accordance with IFRS 7.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 fi-xing available of the Euribor.The values calculated using this method were discounted based on the discount factors related to the various expirationdates of the cash flow mentioned above.The derivatives used are classified as OTC (over the counter) derivatives and therefore, there is no officially recognised pu-blic price formed on the trading markets. To value these derivatives, the company used, respectively, discounted cash flowand Black & Scholes methods for interest rate swap and for the Cap and Floor, fed with input data published by Bloomberg.

The derivates shown in the table are classified amongst loan liabilities (note no. 19).


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Classes of financial assets Trade Derivatives(euro/000) receivables

2008Loans and receivables 56.074 0Assets at fair value through the profit and loss 0 51Investments hold to maturity 0 0Available for sale 0 0Total value 56.074Fair value n/a 51

2009Loans and receivables 58.043 0Assets at fair value through the profit and loss 0 0Investments hold to maturity 0 0Available for sale 0 0Total value 58.043 0Fair value n/a

Classes of financial liabilities Trade Derivatives Loans(euro/000) payable

2008Liabilities at fair value through the profit and loss 0 116 0Derivatives used for hedging 0 351 0Other financial liabilities 34.660 0 45.439Available for sale 0 0 0Total value 34.660 45.439Fair value n/a 467 n/a

2009Liabilities at fair value through the profit and loss 0 80 0Derivatives used for hedging 0 334 0Other financial liabilities 32.755 0 47.776Available for sale 0 0 0Total value 32.755 47.776Fair value n/a 414 n/a

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

INFORMATION ON ABNORMAL AND UNUSUAL TRANSACTIONS AND TRANSACTIONS WITH RELATED PARTIES.With regard to the suggestions of the CONSOB in its Circulars nos. DAC/98015375 of 27 February 1998 and DEM/6064293of 28 July 2006, the necessary information on atypical and unusual transactions and transactions with related parties isprovided below.

Atypical and unusual transactionsNo abnormal and/or unusual transactions were reported, between Group companies, during the course of 2009, nor werethere any extraordinary business activities, or activities that might have a significant effect on the economic, capital or fi-nancial situation of Marcolin S.p.A. and the Group.

Transactions with related partiesRelations with Group companies are mainly commercial and established under market conditions. During 2009, the Group had supply relations with the company Tod’s S.p.A. by virtue of the license agreement signed with thecompany and traceable to the shareholders Diego Della Valle (Director of Marcolin S.p.A.) and Andrea Della Valle, as detailedin the above table.

In view of the foregoing, it is believed that the aforesaid transactions did not have a significant effect on the economic resultsand 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 fi-nancial situation over the course of 2009, beyond those that have already been noted in the associated items in the Con-solidated Income Statement.

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31 December 2009 Expenses Revenues Receivables Payables Relation(euro/000)

Finitec S.r.l. 1.355 2 934 3 AssociatedMarcolin Japan 223 379 112 431 AssociatedTod's S.p.A. 1.216 616 1.163 36 Correlated

SEGMENT REPORTING

The following information specifically regards the geographical areas in which the Group operates. The geographical areashave been identified as primary segments of business. The methods used to identify primary business segments have beenselected also in consideration of the Group’s operating policies. More specifically, these policies are based on groupingby geographical area defined according to the location of the registered head offices of the companies of the Group. Con-sequently, the sales indicated on the basis of this segmentation are calculated according to invoicing origin and not ac-cording to end-use market.

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


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Segmental Information ITALY FRANCE REST OF EUROPE NORTH AMERICA OTHER & MARCOLIN GROUPby Region CONSOLIDATION(euro/000) 2009 2008 2009 2008 2009 2008 2009 2008 2009 2008 2009 2008

Net sales 112.626 120.550 17.660 20.468 31.220 34.193 45.902 45.902 (27.087) (37.335) 180.321 183.778 Intersegment sales 23.735 40.311 0 (552) 20 16 62 62 (23.817) (39.837) - - Net sales third parties 88.891 80.239 17.660 21.020 31.200 34.177 45.841 45.841 (3.270) 2.502 180.321 183.778 Gross profit 44.422 44.264 8.983 9.114 15.312 16.678 28.224 28.224 5.152 2.687 102.092 100.967 in % of net sales 39,4% 36,7% 50,9% 44,5% 49,0% 48,8% 61,5% 61,5% (19,0)% (7,2)% 56,6% 54,9%Operating profit 4.696 6.316 139 (3.178) (196) 275 4.403 4.403 346 5.059 9.388 12.874Share of P/(L) of associates and net equity method (114) 8 (114) 8Assets 156.236 146.301 6.521 16.689 24.280 21.426 18.956 18.956 (49.575) (46.955) 156.418 156.418Investment in Associates 372 372 372 372 Liabilities (23.490) 44.958 4.769 13.027 18.801 8.775 11.127 11.127 87.766 21.086 98.973 98.973Capital expenditure 6.074 2.879 1 683 167 161 120 289 16 393 6.379 4.405Amortization and depreciation (2.642) (4.258) (147) (1.139) (747) (507) (71) (1.078) (2.131) (47) (5.738) (7.029)Other non cash items (2.480) (3.368) (221) 4.180 (3.624) (256) (110) 373 3.309 0 (3.125) 929

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MARCOLIN S.P.A.SEPARATE FINANCIAL STATEMENTS

AT 31 DECEMBER 2009

Marcolin S.p.A. Management Report for the year ending on 31st December 2009

The Annual Financial Statements at 31 December, 2009, including the balance sheet for the financial year, as a financialreport called for under article 154-ter of Legislative Decree 58/1998 (Consolidated Finance Act), was prepared in con-formance with the valuation and measurement criteria established by the international accounting standards IAS/IFRS,adopted by the European Commission, according to the procedure indicated in article 6 of the European Parliament Re-gulation no. 1606/2002 and the Council of 19 July 2002, relative to application of international accounting standards, aswell as the indications provided through implementation of Legislative Decree no. 38/2005.

Directors’ comments on management trendShareholders,As already described in the Management Report of the Marcolin Group as of 31st December 2009, to which we wouldrefer you for more in-depth explanations, the international macroeconomic context for 2009 was marked by a general re-cession in the world economy and the severe international financial markets crisis that continues to negatively affect con-sumption and investments on a world level.

In this difficult scenario, Marcolin S.p.A. in any case stood out for having attained positive results, and successfully gai-ned the right stimuli from the international crisis, both to reorganise internally and improve efficiency, and to introducenew brands onto the market with great success.

For Marcolin S.p.A., the year 2009 was characterised by the following important events:- turnover that is slightly down on last year, despite the difficult macroeconomic context;- a positive net result, recorded for the second year running;- an improvement of the net financial position, thanks to the careful management of working capital;- the significant reduction of warehouse value, obtained thanks to a greater efficiency of the planning process and thesale of stock;

- the renewal of licences which are key to company revenue and profitability: Tom Ford, Roberto Cavalli and Just Cavalli,licenses held to be fundamental to the company;

- an excellent start for the new licensed brands: Tod’s, Hogan and Dsquared2;- the new licence agreement for the production and worldwide distribution of Swarovski brand sunglasses and specta-cle frames.

The financial year ending at 31 December, 2009 records, in fact, profits of €1,144 thousand (with respect to a loss of€1,461 thousand at 31 December, 2008) and turnover of €112,626 thousand, down 6.6% on 31st December 2008(€120,550 thousand).

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

We should point out that during 2009, some costs were reclassified that had previously been posted amongst the finan-cial expenses and which, according to current accounting standards, have been more correctly considered as costs forgeneral and administrative services. The relevant amount has therefore been posted to this latter item of the balancesheet. In order to allow for comparison of the values in relation to previous years, the items of the income statement con-cerned by the reclassification have been recalculated in application of the new criteria.

The Group’s net sales dropped by €7,924 thousand compared with the same period in the previous year. This amountsto an decrease of 6.6%. The trend of turnover should be assessed as absolutely positive, considering the particularly dif-ficult international economic context, and the fact that the deliveries of the products for the new Tod's and Hogan line beganwith significant volumes only as from October 2009.


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Consolidated income statement DEC 31, 2009 % of net sales DEC 31, 2008 % of net sales

(euro/000)

Net sales 112.626 100,0% 120.550 100,0%Gross profit 44.422 39,4% 44.264 36,7%Operating profit - EBIT 4.696 4,2% 6.466 5,4%Financial income and expenses (2.204) (2,0)% (2.845) (2,4)%Net result before taxes 2.493 2,2% 3.621 3,0%Net result 1.144 1,0% 1.461 1,2%EBITDA 7.364 6,5% 11.017 9,1%



- Italy 40.515 36,0% 35.712 29,6% 4.804 13,5%- Europe 37.690 33,5% 45.315 37,6% (7.625) (16,8)%- U.S.A. 9.585 8,5% 12.434 10,3% (2.849) (22,9)%- Rest of the World 24.836 22,1% 27.089 22,5% (2.253) (8,3)%Total 112.626 100,0% 120.550 100,0% (7.924) (6,6)%

Year Net Change % EBITDA % EBIT % Net % EPS sales of net sales of net sales result of net sales

(euro/000.000) (euro)

2005 85,2 (13,4)% 5,9 7,0% (10,7) (12,6)% (12,0) (14,1)% (0,269) 2006 87,8 3,1% 8,6 9,8% (6,4) (7,3)% (11,0) (12,5)% (0,241)2007 110,8 26,1% 9,7 8,8% 2,7 2,4% (1,8) (1,6)% (0,029)2008 120,6 8,8% 11,0 9,1% 6,5 5,4% 1,5 1,2% 0,0242009 112,6 (6,6)% 7,4 6,5% 47,0 41,7% 1,1 1,0% 0,019

With regards to the breakdown of sales according to geographic area, we have seen an increase in turnover on the do-mestic market (+13.5%), whilst the rest of Europe suffered the negative outlook more greatly (+16.8%) as did the Restof the World (-8.3%). More specifically, the most marked decreases have been seen on the Spanish, Russian and ArabEmirates markets, whilst positive trends have been recorded for sales in Australia and Brazil.

With regards to the U.S.A. market, we have seen a 22.9% decrease in sales also in relation to the fact that the Americansubsidiary acquired greater product volumes last year, which it has therefore not required this year.In analysing the sales towards subsidiaries, we would particularly point out the increase in sales towards the Belgian bran-ches (+8.6%) and Portuguese branches (+5.6%) and the drop towards the Spanish (-31.8%) and American (-22%) sub-sidiaries.

2009 closed with a gross industrial result of 39.4% of sales as compared with 2008’s 36.7%. This therefore booked animprovement of 2.7%, thanks to a greater efficiency of the planning processes and industrial production. This positive ef-fect has been partially offset by the adoption of more aggressive sales policies, in terms of Customer discounts offered inresponse to the demands of the market which has been negatively influenced by the fall in demand.

With regards to the Ebitda, for the purpose of allowing for a homogenous comparison, we would specify that in 2009, partof the financial receivables owing from the French subsidiary (ex Cébé S.A. now Marcolin France S.a.s.) for 1.7 millioneuros, was restored. At the time this value had been fully impaired, but recovery became possible in 2009 by virtue of thepositive economic result realised by the subsidiary. As such, in order to allow for a more standardised reading of theEbitda performance indicator trend in 2009 as compared with 2008, we have recalculated the Ebitda for 2009, excludingthese non-recurrent effects.

2009 ended with a positive EBITDA (considering the above-stated non-recurrent effects) of 9.1 million euros (11 millionas at 31 December 2008), corresponding to 8.1% of revenues (as against 9.1% impact on revenues at the end of 2008).

The Ebitda then recalculated, considering the non-recurrent effects, records a positive value for 7,364 thousand euros(11,016 thousand euros as of 31st December 2008), which represents 6.5% of the turnover (9.1% in 2008), with a de-crease in absolute terms of 3,653 thousand euros.

Operating profit (EBIT) was €4,696 thousand (equal to 4.2% of revenues), with respect to a total of €6,466 thousand at31 December, 2008 (5.4%).

Margins suffered, and mainly the following factors:- the greater impact of the guaranteed minimum royalties on the licence contracts;- the investments realised in relation to both the structure and commercial activities, in order to exploitthe launch of the new brands acquired, to the full.With regard to the greater impact of the guaranteed minimum royalties, we can report that a series of measures have beenput in place, and are still taking effect, in order to reduce them.

The financial income and expense record an improvement of 641 thousand euros thanks to the decrease of interest ex-pense on loans, mainly by effect of the decreased interest rates of reference.

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Marcolin S.p.A.

Capital and Financial Situation

Details of the net financial position at 31 December, 2009 compared with that of the previous year are shown below:

The overall net financial position improved appreciably on the previous year, by 4,944 thousand euros, as a result of thecash flow generated by operating activities and used in part by the investment activities.The net financial position, inclusive of financial receivables due from the subsidiaries (Marcolin Svizzera and MarcolinInternational BV and Marcolin France), as of 31st December 2009, was 27,849 thousand euros and as of 31st Decem-ber 2008 was 34,564 thousand euros, thereby showing an improvement of 6,715 thousand euros.The cash flow generated by operating activities amounted to 13,623 thousand euros and has benefited from the signifi-cant proceeds from the disposal of warehouse stocks.Net investments used cash for a total of 8,326 thousand euros, mainly by effect of the development of a new property.This allows for the focus of all Group delivery activities, consequently improving the logistic and after-sales service andhaving the structures and spaces available for internal management of the strategic finishing stage. Please see the cash flow statement for further details.

During 2009, the parent company Marcolin S.p.A. began negotiations with some credit institutes for the supply of newlong-term loans, in order to support investments in production. These negotiations were completed in 2009 and the firstfew months of 2010.As concerns the year in question, we would point out that Marcolin S.p.A. has subscribed the following loans:- in October a loan agreement for 15 million euros, unsecured, with the Cassa di Risparmio del Veneto (Intesa San PaoloGroup);in December, a loan agreement for 10 million euros, with mortgage guarantee on the new property currently under con-struction, with Mediocredito Italiano (Intesa San Paolo Group).Please refer to the comments specified in the explanatory notes for details of these loan operations.

With reference to the breakdown of the year’s borrowings, as compared with the situation as of 31st December 2008,we can see an increase in available funds of 7,258 thousand euros. This is a temporary effect due to the partial use ofthe above new loans, the resources of which were used in January 2010.

During the course of the year, the parent company Marcolin S.p.A. repaid the principal on existing loans for a total of €12,995 thousand.


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Cash 24 23Cash equivalents 11.924 4.667Short term borrowings (9.318) (4.222)Current portion of long term borrowings (9.614) (12.995)Long term borrowings (29.254) (28.654)Total (36.237) (41.181)

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 0.57 (vs. 0.66 at 31 December, 2008).

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

With reference to the different items that make up the net working capital, we note:- the decrease, as compared with last year, of inventories for 11,888 thousand euros, due to the greater efficiency of theplanning process and the sale of stock; the change is mainly in relation to finished products and is accompanied bya significant drop in the average inventory turnaround time;

- the decrease in the value of trade receivables for 4,110 thousand euros accompanied by a significant improvement inthe indicator of average collection time, despite the particularly difficult period and without reporting any losses abovethe historic company average;

- the decrease in trade payables for 3,344 thousand euros, traceable to the lesser production purchases made duringthe period, despite the increased index in relation to average payment terms of suppliers.

- the decrease in other current assets and liabilities for 898 thousand euros, mainly due to the decreased payable forcurrent taxes (716 thousand euros).

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Marcolin SpA financial highlights(euro/000)

Year Net financial position Shareholders’ equity Gearing*

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 2009 (36.237) 63.735 0,57

Net working capital DEC 31, 2009 DEC 31, 2008(euro/000)

Inventory 29.424 41.312Trade and other receivables 51.085 55.196Trade payables (31.215) (34.559)Other current assets and liabilities (7.680) (8.578)Total 41.614 53.370

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 executives withstrategic 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, 2009.


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Balance sheet Marcolin Group DEC 31, 2009 DEC 31, 2008(euro/000)

AssetsNon current assets 63.716 56.073Current assets 92.732 101.529Total Assets 156.448 157.603


LiabilitiesNon current liabilities 34.612 34.433Current liabilities 58.101 60.686Total Liabilities and Net equity 156.448 157.603

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

sold year end

Abete Luigi Marcolin S.p.A. 4.570.928 1.430.443 6.001.371

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 quota 1 quota

Coffen Marcolin Cirillo Marcolin S.p.A. 2.641.853 2.641.853Marcolin Asia Ltd. 1 quota 1 quotaMarcolin UK Ltd. 1 quota 1 quotaMarcolin France S.a.s. 2 quote 2 quoteMarcolin Portugal Lda 1 quota 1 quota

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

SIGNIFICANT EVENTS AFTER BALANCE-SHEET DATE AND EXPECTED BUSINESS PROGRESSOn 16 February 2010, the licence renewal was formalised until 31 December 2015 for the design, production and wor-ldwide distribution of Tom Ford brand spectacle frames and sunglasses.With reference to the financial structure, we would point out that on 21st January 2010, Marcolin Sp.A. signed a loanagreement with the Banca Nazionale del Lavoro S.p.A. (BNP Paribas Group), for an amount of 10 million euros. This isan unsecured loan with a duration of five years. This agreement represents the last step in the Marcolin refinancing pro-cess, which is now equipped with all financial means necessary to support its production and commercial investmentplan. With regards to the foreseeable outlook, we believe that the international macroeconomic context for 2010 will be far fromeasy. However, during the coming year, the Company will be able to make its production investments operative, developed witha view to improving the logistical and after-sales services offered to customers and to centralising some strategic stagesto production, all with the forecast positive returns in terms of efficiency. During 2010, the Company will also focus on improving its competitiveness in all its operating markets. Quality, productcost and productivity will continue to be the drivers in 2010, which will see targeted action taken to grow internationalsales, supported by a competitive and comprehensive licence portfolio.Please refer to the comment specified in the Management Report pertaining to the Marcolin Group as of 31st Decem-ber 2009 for further details.

MAIN RISKS AND UNCERTAINTIES FOR MARCOLIN S.P.A.In relation to the analysis of the main risks and uncertainties to which Marcolin S.p.A. is subjected, and in particular forrisks related to the general conditions of the economy, the need for financial means, the changes in interest and exchangerates, the capacity to negotiation and maintain license agreements and relations with suppliers, please refer to that de-tailed in the Management Report pertaining to the Marcolin Group as of 31st December 2009.

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.

At 31 December, 2009, the Group had 607 employees, divided as follows:

Collective bargaining agreementsWith regards to collective bargaining agreements, we would point out that the national employment contract in place asof year end was renewed in February 2010, until 31st December 2012.

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Stock Option plansOn 29 April, 2008, the General Shareholders’ Meeting of Marcolin S.p.A. approved the proposal to allocate a compen-sation plan based on financial instruments in favour of the Managing Director and General Manager, Massimo Saracchi,pursuant 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 Sa-racchi (the Beneficiary), to be performed through the allocation, free of charge, of 500,000 personal and non-transfera-ble stock option rights to acquire ordinary Marcolin S.p.A. shares (the Options), in accordance with the methods and termsillustrated in the informative 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 conditionthat the Beneficiary hold the role of Managing Director at the end of the three-year maturity period of the rights and (ii)performance of Group objectives of an economic and/or financial nature, whose determination is remanded to the Boardof Directors;- the Company, upon written request from the Beneficiary, can extinguish its obligations to the Beneficiary, by corre-sponding to such a sum in money equal to (i) the difference between the unit value of the Shares and the Strike Priceat the date the request to exercise the stock options is made, (ii) multiplied by the number of options that can be exer-cised;

2. to provide to the Board of Directors, and in this case the Chairman, all powers necessary or opportune to exercise thestock option plan.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 tosunglasses/vision eyewear; the second, working with the former, handles product development and industrialisation.Over the course of the financial year 2009, the company continued with its research and development activities.

Intra-group transactions and transactions with associated partiesWith regards to operations performed with associated parties, including intra-group operations, we note that these can-not be defined as either atypical or unusual, as they are part of the normal activities of the Group’s companies. Such tran-sactions take place under normal market conditions, taking into account the nature of the goods and services supplied.Detailed information on relations with associated parties, including that required by the Consob Communication dated28th July 2006, is presented in the Explanatory Notes.

Treasury sharesAt 31 December, 2009, 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 heldby the company 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," activitiesintended to evaluate the data protection system in the Group’s companies that are subject to such legislation have begun.These activities found that the requirements called for by the norms in terms of protection the personal data managed


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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 newsThere have been no other significant events which could have had a relevant influence on business performance or mo-dified the company’s capital, financial and business structure.

Proposal for coverage of the year’s lossTo Our Shareholdersthe financial statements at 31 December, 2009, which we provide for your approval, show a positive net profit for the yearof €1,143,662.60 of which we propose to place €57,183.13 in the Legal Reserve and €1,086,479.47 in Profit CarriedForward.

Longarone, 25 March, 2010Chairman of the Board of DirectorsCOFFEN GIOVANNI MARCOLIN

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MARCOLIN S.P.A.BALANCE SHEET


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Balance sheet

(euro) Note DEC 31, 2009 Of which DEC 31, 2008 Of which related parties related parties

ASSETS

NON CURRENT ASSETSProperty, plant and equipment 8 14.209.957 11.295.798 Intangible assets 9 2.261.976 2.793.233 Goodwill 0 0 Investments 10 34.349.494 31.991.994Deferred tax assets 34 4.506.407 3.374.953 Other non current assets 12 8.388.527 8.388.527 6.617.458 6.617.458 TOTAL NON CURRENT ASSETS 63.716.361 56.073.436

CURRENT ASSETSInventories 13 29.423.541 41.311.645Trade and other receivables 14 51.085.324 18.473.612 55.195.521 26.556.185 Other current assets 15 274.686 331.603 Cash and cash equivalents 16 11.948.395 4.690.329 TOTAL CURRENT ASSETS 92.731.946 101.529.097

TOTAL ASSETS 156.448.307 157.602.532

SHAREHOLDERS’ EQUITY 18Share capital 31.958.355 31.958.355 Additional paid in capital 24.517.276 24.517.276 Legal reserve 1.775.962 1.702.893 Other reserves 8.227.615 8.119.301Retained earnings (losses) (3.887.445) (5.275.693)Profit (loss) for the period 1.143.663 1.461.316TOTAL SHAREHOLDERS’ EQUITY 63.735.426 62.483.449

LIABILITIESNON CURRENT LIABILITIESLong term borrowings 19 29.254.129 28.654.131Long term provisions 20 3.783.587 4.039.181Deferred tax liabilities 34 1.573.790 1.739.612Other non current liabilities 0 0TOTAL NON CURRENT LIABILITIES 34.611.507 34.432.924

CURRENT LIABILITIESTrade payables 21 31.214.774 4.838.867 34.558.922 7.584.465Short term borrowings 22 18.931.594 17.217.644Short term provisions 23 2.667.958 2.626.039Income taxes 24 1.303.293 2.018.929Other current liabilities 25 3.983.755 4.264.626TOTAL CURRENT LIABILITIES 58.101.374 60.686.160

TOTAL LIABILITIES 92.712.881 95.119.083TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY 156.448.307 157.602.532

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Income statement

(euro) Note DEC 31, 2009 Of which % DEC 31, 2008 Of which %related parties related parties

NET SALES 27 112.625.719 36.100.904 100,0% 120.550.182 48.787.977 100,0%

COST OF SALES 28 (68.204.007) (2.537.152) (60,6)% (76.286.478) 1.870.795 (63,3)%

GROSS PROFIT 44.421.712 39,4% 44.263.704 36,7%

Selling and marketing costs 29 (40.888.063) (1.933.375) (36,3)% (37.154.627) (971.994) (30,8)%General and administrative expenses 30 (8.108.738) (7,2)% (9.576.492) (7,9)%Other income and expenses 32 8.727.850 3.757.288 7,7% 8.577.480 7,1%Other non recurrent operating income and expenses 30 543.529 0,5% 355.693 0,3%

OPERATING PROFIT - EBIT 4.696.289 4,2% 6.465.758 5,4%

Financial income and expenses 33 (2.203.786) 154.902 (2,0)% (2.845.095) (317.141) (2,4)%

NET RESULT BEFORE TAXES 2.492.504 2,2% 3.620.663 3,0%Income taxes 34 (1.348.841) (1,2)% (2.159.347) (1,8)%

NET RESULT 1.143.663 1,0% 1.461.316 1,2%

Statement of changes in equity

(euro/000) Share Additional Legal Other Retained Income Total capital paid reserve reserves earnings (loss) for

in capital (losses) the period

DEC 1,2008 31.958 26.315 1.703 8.301 (5.276) (1.798) 61.204Earnings (losses) stock option reserve 0 0 0 94 0 0 94Net Comprehensive Income 0 (1.798) 0 (277) 0 3.259 1.185DEC 31, 2008 31.958 24.517 1.703 8.119 (5.276) 1.461 62.483

DEC 1,2009 31.958 24.517 1.703 8.119 (5.276) 1.461 62.483Earnings (losses) stock option reserve 0 0 0 91 0 0 91Net Comprehensive Income 0 0 73 17 1.388 (318) 1.161DEC 31, 2009 31.958 24.517 1.776 8.228 (3.887) 1.144 63.735

Statement of Comprehensive Income DEC 31, 2009 DEC 31, 2008

NET RESULT 1.143.663 1.461.316

NET GAIN (LOSS) OF CASH FLOW HEDGE 16.840 (276.519)

NET COMPREHENSIVE INCOME 1.160.503 1.184.798


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Cash flow statement

(euro/000) Note 2009 2008

OPERATING ACTIVITIES:Income (loss) for the period 1.144 1.461 Depreciation and Amortisation 5,6 3.559 3.488 Provisions 9,10,15,18 2.665 10.778 Fair value investment 7 26 417Income taxes 30 1.349 2.266 Interest expenses 27 1.811 2.495 Other non-cash items 15,27 513 713 Operating profit before working capital changes 11.066 21.619

(Increase) decrease trade receivables 10,27 4.775 (10.150)(Increase) decrease other receivables 8,11 (1.714) (364)(Increase) decrease inventory 9 8.555 (4.716)(Decrease) increase other payables 17 (3.344) (436)(Decrease) increase trade payables 20 (281) 869(Utilisation) of provisions 15,19 (651) (879)(Decrease) increase tax payables 604 (1.318)Other non-cash items 0 (550)Income taxes paid (3.965) (531)Interest paid (1.421) (2.843)Cash flows provided (used) by working capital changes 2.557 (20.918)

Cash flows provided by operating activities 13.623 701

INVESTING ACTIVITIES(Purchase) of property, plant and equipment 5 (5.845) (2.073)Proceeds from the sale of property, plant and equipment 5 132 (129)(Purchase) of intangible assets 6 (230) (1.936)(Purchase) disposal of investments 7 (2.384) 1.304Cash flows (used) in investing activities (8.326) (2.834)

FINANCING ACTIVITESIncrease (decrease) short term borrowings 14,18 (2.044) (518)Borrowings:- Increase 14,18 28.150 16.157- Decrease 14,18 (24.145) (13.647)Changes in reserves 0 0

Cash flows (used) in financing activities 1.960 1.992Cash and cash equivalents increase (decrease) 7.258 (141)Cash and cash equivalents at beginning of year 4.690 4.832

Cash and cash equivalents at year end 11.948 4.690

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

ON 31 DECEMBER, 2009

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Illustrative notes for Marcolin S.p.A. separate financial statements as of 31st December 2009

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, 2009. 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, which operates in Italy and abroad in the production andmarketing of eyewear and sunglasses.

The addresses of the Company’s registered office and of the locations where its main activities take place are shown onthe introductory 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 2009 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 Internatio-nal Financial 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 theintroduction 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 evalua-tion of 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 forsale”.

- 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 withmore meaningful and relevant information than the alternative classification of costs by nature.

- Statement of changes in equity The statement was prepared presenting items in individual columns with reconciliation of the opening and closing ba-lances of 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 re-sult is adjusted 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 ancil-lary costs incurred to bring assets to working condition for their intended use, excluding land and buildings owned by theParent Company for which the deemed cost model has been used, on the transition date, based on the market value de-termined through 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-partyassets are capitalised to the extent that they can be separately classified as an asset or part of an assets. The amount ini-tially recognised 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 fromthat of the other items of the fixed assets, depreciation is calculated separately for each of the items forming the asset ac-cording to the principle of component approach. Profits and losses deriving from the sale of assets or groups of assets aredetermined by 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 at-tributable 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


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is broken down into finance expense – charged to the income statement – and repayment of principal – recognised asreduction of the relevant financial liability.Leases in which the lessor does not substantially transfer all the risks and benefits connected with ownership of the as-sets are classified as operating leases. The costs of operating leases are shown line by line in the income statement forthe duration of the lease contract.

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

Intangible fixed assetsIntangible assets consist of controllable, non-monetary assets without physical substance that are clearly identifiable andable to generate future economic benefits. These assets are recognised at purchase and/or production cost, inclusive ofdirectly attributable expenses to bring the asset to working condition for use, net of cumulative amortisation (except forassets with an indefinite useful life) and of any impairment of value. Amortisation starts when the asset is available for useand is systematically spread over the asset’s useful life.If any indications emerge suggesting impairment of value, the asset’s recoverable value is estimated, charging any im-pairment loss to the income statement. If the reasons for previous write-down cease to exist, carrying value is written backrecognising this as income in the income statement, within the limits of what the asset’s net carrying value would havebeen if there had been no impairment loss and the asset had been amortised.

GoodwillGoodwill represents the excess of purchase cost as compared with the fair value of the asset acquired. Goodwill is not amor-tised but subjected to annual testing – unless there are specific indicators making interim testing necessary – to ascer-tain the existence of impairment of value (i.e. impairment testing). Profits and losses deriving from the sale of assets towhich the goodwill refers, are determined considering the value of the relevant goodwill.

Trademarks and licencesTrademarks and licences are recognised at cost. They have a finite useful life and are measured at cost net of cumula-tive amortisation. Amortisation is calculated on a straight-line base so as to allocate the cost of trademarks and licencesaccording to their residual possibility of use.If impairment is found over and above the amortisation already charged, the asset would be consequently written down;

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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%

if the reasons for write-down cease to exist in future financial years, the value is written back to the net book value thatthe asset 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 necessaryto make them serviceable. Amortisation is calculated on a straight-line basis over their estimated useful life (from 3 to 5years). Costs associated with software programmes’ development and maintenance are posted as costs when they are in-curred. 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 re-quirements 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 pos-sible 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. Ifan asset’s recoverable value is lower than its carrying value, the latter is reduced to recoverable value. This reduction isan impairment 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, im-pairment testing is performed at least annually, irrespective of the presence of specific indicators.The requisites and approach applied by the Company for restoring the value of an asset previously written down, exclu-ding that of 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 ac-cordance 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 ispresumed that hedging will be highly effective, the efficacy can be reliably measured and the hedging itself is highly ef-fective during 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 assetor a liability shown in the financial statements attributable to a particular risk which may affect the income statement, theprofit or loss deriving from the subsequent valuations of the fair value of the hedging instrument are recognised in the in-come statement. The item covered is adjusted to the fair value for the portion of risk covered and, as a counter value, thereis a profit 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 flowsof an asset or liability booked in the financial statements, the actual portion of the fair value changes of the derivative fi-nancial instrument is recorded in shareholders' equity. The cumulative profit or loss is transferred from the equity and en-tered in the income statement in the same period as that in which the transaction hedged took place. The profit or lossassociated with a hedge (or part of a hedge) that has become ineffective is entered in the income statement immediately.If a hedge instrument or a hedge account is closed, but the transaction hedged has not yet been realised, the cumulativeprofits or losses, recognised in equity up till then, are shown in the income statement at the time the relevant transaction


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takes place. If the transaction hedged is no longer considered likely, the profits or losses not yet realised and outstandingin the equity are booked to the income statement immediately. If hedge accounting cannot be applied, the profits or lossesderiving from the valuation 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 realisablevalue based on market trends. Presumed realisable value is calculated on the estimate of selling price in normal marketconditions net of direct selling costs.Purchase cost has been used for products purchased for resale and for materials directly or indirectly used, purchasedand used in the production process, whereas, for finished products or semi-finished products in process, production costis used.To determine purchase cost we have taken into account the price effectively paid, inclusive of directly attributable ancil-lary costs, 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 manufac-turing costs.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-interestmethod. When the financial assets do not have a prefixed maturity, they are valued at cost. Receivables maturing aftermore than a year, not accruing interest or accruing interest below the market rate are discounted by applying the marketrates and are entered in non-current assets. Valuations are regularly made in order to check whether there is any objec-tive evidence that the financial assets taken individually or within a group of assets may have fallen in value. If such evi-dence exists, impairment 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 fundset up when there is an objective indication that the Company 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 berecovered mainly through sale rather than through continuing use. Assets held for sale (or a disposal group) are valuedat the lower 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 reclas-sified nor resubmitted for comparative purposes with the classification in the balance sheet of the most recent year pre-sented.

EquityShare capitalShare capital consists of the 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 sub-

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sequent sales of the same are shown as changes in equity. The own shares reserve in the portfolio recorded in previousfinancial 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 thebeneficiary’s retribution. Hence, the cost is represented by the fair value of the stock option at the date it is assigned, andit is recorded at the economic cost during the period between the date they are assigned and the date they mature, withthe counter value registered directly to equity. Variations in the fair value of the options after the date they are assigneddo not effect 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 an ac-crual basis consistently with the employee service necessary to obtain the benefits concerned. Our actuarial valuations havebeen 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 emplo-yee severance indemnity, including with regard to the possibility of the employee to choose how to allocate accruing indem-nity. In particular, new severance pay flows may be assigned by the worker to pre-selected pension forms or kept within thecompany (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 set-tle the obligation 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 gua-rantees 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 recordedat their face value.


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Financial liabilitiesLoans are initially recognised at cost, corresponding to the liability’s fair value net of the costs of its arrangement. Afterthe initial recording, these are valued at the amortised cost; any difference between the amount financed (net of the costsof incurring the loan) and the par value is posted in the income statement throughout the life of the loan, using the ef-fective interest method. If there is a change in expected cash flows and management is able to estimate them reliably, thevalue of borrowings 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 themhave been 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 thegoods’ ownership are actually transferred to customers according to the terms of the sales agreement. These revenuesare recognised net of an allocation which represents the best estimate of the profit lost due to customers returning mer-chandise. This allocation is based on specific historic figures.Revenue arising from performance of services is recognised with reference to the state of completion of the transactionat the 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 tothe shareholders’ 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 rendersall inflows 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 thetransaction 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, recogni-sing the whole amount of positive or negative foreign exchange differences in the income statement among finance in-come and expense.

Income taxesIncome taxes are recognised in the income statement, with the exception of those concerning items directly debited orcredited 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 liabili-ties included 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 yearswhen temporary 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 madeagainst which they will be able to be recovered. The carrying value of deferred tax assets is reviewed at each balance-sheetdate and, if necessary, is reduced to the extent that it is no longer probable that sufficient taxable profit will be made toallow partial or total recovery of the assets. Any such reductions are reversed if the conditions causing them cease toexist.Other taxes not relating to income, such as property and capital taxes, are included in operating accounts.

Recording of revenuesRevenues are recorded net of returns, discounts, vouchers, and prizes, as well as taxes directly connected with the salesof goods and provision of services.Revenues from sales are recorded when the company has transferred significant risks and returns connected to owner-ship of the 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 INTERPRETATIONS

Accounting standards, amendments and interpretations applied as from 1st January 2009The following is a brief description of the standards that have been applied for the first time in the financial statementsfor 2009.

IFRS 8 - Operating Sectors: the new standard is applicable as from 1st January 2009 in lieu of IAS 14 – Segment repor-ting. It requires the segment reporting to be based on elements used by the management to make its operative decisions.The adoption of this standard has not had any effect on the financial statements as the Company has, in fact, determi-ned that the operative sectors are the same as those established previously according to IAS 14 – Segment Reporting.

IAS 1 - Presentation of the interim report: the new version of the standard requires the company to present the changesfrom transactions with shareholders in the statement of changes to the net equity, whilst all other transactions with thirdparties must, instead, be posted in a single comprehensive income statement, or, alternatively in two separate statements(income statement and comprehensive income statement or total income statement). With reference to the income sta-tement, the Company has opted for the presentation of two separate statements: the income statement and the total in-come statement. In 2009, transactions with non-shareholders reported in this statement concerned only changes to thecash flow hedge reserve and the effects of the change into euros of the financial statements pertaining to subsidiaries anddrawn up in a foreign currency.

The following accounting standards, amendments and interpretations, applicable as from 1st January 2009, have not, onthe other hand, proved to be relevant as they govern situations and cases that are not relevant for the Company as of thedate of these financial statements:− IAS 23 amended - Financial Charges;− Amendment to IFRS 2 – Share-based payment – Vesting conditions and cancellations;− Amendment to IAS 32 – Financial instruments: Presentation and IAS 1 – Presentation of Financial Statements – Financialinstruments;

− Improvement to IAS 16 – Property, plant and equipment;− Improvement to IAS 19 – Employee benefits; − Improvement to IAS 20 – Accounting for government grants and disclosure of government assistance;− Improvement to IAS 28 – Investments in associates;− Improvement to IAS 29 – Financial reporting in hyperinflated economies;− Improvement to IAS 36 – Impairment of assets;− Improvement to IAS 38 – Intangible assets; − Improvement to IAS 39 – Financial instruments: Recognition and measurement;− Improvement to IAS 40 – Investment property;− Amendment to IAS 32 – Financial instruments: presentation and IAS 1 – Presentation of financial statements - Putta-ble instruments and instruments with obligations arising on liquidation;

− Amendment to IFRS 7 – Financial instruments: enhancing disclosures about fair value measurements;− IFRIC 13 – Customer loyalty programmes;− IFRIC 15 – Agreements for the construction of real estate;− IFRIC 16 – Hedges of a net investment in a foreign operation.

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Accounting standards, amendments and interpretations not yet applicable and not adopted in advanceThe Company has not opted for early adoption of the following Standards, Interpretations and Updates to standards al-ready published and compulsory in future years:


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IAS/IFRS Standard or IFRIC Interpretation date of date of Effectsissue enforcement (n.a. not applicable

n.r. nor relevant)

IFRS 3 - Business Combinations JAN 2008 JAN 2010 N.r. 2009 IAS 27 - Consolidated and Separate Financial Statements

IFRS 5 - Non-Current Assets Held for Sale and Discontinued Operations 2008 JAN 2010 N.a. 2009

IAS 39 - Financial Instruments: Recognition and Measurement JUL 2008 JAN 2010 N.a. 2009

IFRIC 17 - Distributions of Non-cash Assets to Owners NOV 2008 JAN 2010 N.a. 2009

IFRIC 18 - Transfers of Assets from Customers JAN 2009 JAN 2010 N.r. 2009

AMENDMENTS TO IFRS ("improvement") NOT ADOPTED:IFRS 2 - Share-based PaymentIFRS 5 - Non-current Assets held for sale and Discontinued OperationsIFRS 8 - Operating SegmentsIAS 1 - Presentation of Financial StatementsIAS 7 - Statement of Cash FlowsIAS 17 - Leases APR 2009 JAN 2010 N.a. 2009IAS 36 - Impairment of AssetsIAS 38 - Intangible AssetsIAS 39 - Financial Instruments: Recognition and MeasurementIFRIC 9 - Reassessment of Embedded Derivatives

IFRS 2 - Share based payment: Group Cash-settled Share-basedPayment transactions JUN 2009 JAN 2010 N.a. 2009

IAS 32 - Classification of Rights Issues OCT 2009 JAN 2011 N.a. 2009

IAS 24 - Related Party Disclosures NOV 2009 JAN 2011 N.a. 2009

IFRS 9 - Financial Instruments NOV 2009 JAN 2013 N.a. 2009

IFRIC 14 - Prepayments of a Minimum Funding Requirement NOV 2009 JAN 2010 N.a. 2009

IFRIC 19 - Extinguishing Financial Liabilities with Equity Instruments NOV 2009 JAN 2010 N.a. 2009

3. FINANCIAL RISK FACTORSMarket risksManagement of financial risks is done based on guidelines covering some specific areas, i.e. hedging of foreign exchangerisks (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. Con-sistently with its chosen strategy, the company undertakes derivative transactions for the sole economic purpose of hed-ging. If, however, according to application of the appropriate accounting standards (IAS 39 – Financial Instruments:Recognition and Management) such transactions cannot be technically recognised in accounts as hedging transactions,they are not qualified as 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 variousforeign currency items and, consequently, of evaluating possible stipulation of appropriate contracts for hedging purpo-ses 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 ofthe change in exchange rates, it is held that a change in exchange rates does not significantly impact the Company’s fi-nancial statements.In fact, the Company has adopted a specific policy for foreign exchange risk management.

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 tocash-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,which make 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 50basis points of the Euribor/Swap Eur interest rate curves, published by provider Bloomberg related to 31 December, 2009and 31 December, 2008. In this way, the impact on the income statement and shareholders' equity that changes wouldhave had could be estimated.The analysis did not include financial instruments not significantly exposed to changes in interest rates, such as short-

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

Type Institute Notional Currency Expiration date Mark to Market Interest Rate Swap Efibanca 7.000 EUR 27.06.2012 (334)Collar con knockout su cap Cassa di Risparmio del Veneto 3.979 EUR 31.12.2010 (80)

(ex Banca Intesa)

term trade receivables and payables Interest amounts on loans incurred with banks were recalculated based on the above-mentioned assumptions and theposition in the year, re-determining 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.At year-end, derivative contracts were valued at the fair value using the interest rate curves modified based on the afore-mentioned assumptions. For derivative contracts hedging cash flow, the opposite value of the fair value assessment is re-presented by the specific shareholders' equity reserve, assuming full effectiveness of the report, while for the hedgingderivatives, the value 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 financialstatements at the start and end of the year. On the amount calculated in this way, the income statement was affected byan increase/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 Company is exposed to interest raterisk in relation to expected cash flows. If interest rates rise by 50 basis points, the income statement would show a nega-tive change equal to € 55 thousand (€ -48 thousand in 2008) caused mainly by the increase in financial charges rela-ting to bank borrowings, which is only partly offset by the improvements in the interest rate of derivatives, the positiverevaluation of trading derivatives and the higher interest income relating to cash. Contrariwise, shareholders' equity wouldincrease by € 38 thousand (€71 thousand in 2008) due to the revaluation of hedge derivatives on cash-flow.

If interest rates fall by 50 basis points, the income statement would show a positive change equal to € 20 thousand (€52thousand in 2008) caused mainly by the decrease in financial charges generated by bank borrowings, partly offset by theworsening of the interest rate on derivatives, the positive revaluation of trading derivatives and the lower interest incomerelating to cash. Contrariwise, shareholders' equity would increase by € 38 thousand (€71 thousand in 2008) due to therevaluation 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 onthe client’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 eva-luate country risk.


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Receivables by geo,graphical area(euro/000)

DEC 31, 2009 DEC 31, 2008Italy 22.747 18.727Rest of Europe 15.858 17.535North America 4.294 7.673Rest of the World 8.186 11.262Total 51.085 55.196

Liquidity riskPrudent management of the liquidity risk implies maintenance of an adequate level of cash and cash equivalents and theavailability of funds obtainable via adequate credit lines. Due to the dynamic nature of the business in which it is active,the Company gives preference to flexibility in funding via use of lines of credit. At the current state, the Company belie-ves it has sufficient access to funds from available income and lines of credit to meet the financial needs for ordinary ac-tivities. 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, withcapital repayments and non-discounted interest. Future interest flows are determined based on the forward interest ratestaken from 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 expirationdates of the cash flow mentioned above.

The derivatives used by the Company are classified as OTC (over the counter) derivatives and therefore, there is no offi-cially recognised public price formed on the trading markets.

To value these derivatives, the company used, respectively, discounted cash flow and Black & Scholes methods for inte-rest rate swap and for the Cap and Floor, fed with input data published by Bloomberg.

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

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 47.133 468 34.660 82.262

within 3 months 155 0 29.093 29.248from 3 to 6 months 9.701 188 3.109 12.998from 3 to 12 months 9.772 184 553 10.509from 1 to 3 years 21.363 48 0 21.411from 3 to 5 years 7.358 0 0 7.358over 5 years 3.001 0 0 3.001TOTAL 31.12.2009 51.350 420 32.755 84.525

4. USE OF ESTIMATES Preparation of the year-end accounts makes it necessary for management to make estimates that could affect the carrying

value of some assets and liabilities and reported costs and revenues, as well as disclosures concerning potential as-sets/liabilities as at balance-sheet date.Estimates mainly refer to valuation of the recoverability of intangible assets, definition of tangible assets’ useful lives, therecoverability of receivables (by prepaid taxes as well) and warehouse stock, and recognition or measurement of provi-sions. Estimates 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:- Write-down of non-current assetsIn accordance with the applied accounting standards and policies, non-current assets are subjected to testing to see whe-ther value has been impaired, when indicators suggest that net carrying value exceeds relevant recoverable value, con-sisting of the higher of fair value (net of selling costs) and value in use. Recoverable values have been calculated basedon determination of “value in use”. These calculations require the use of estimates of the future economic performance,the discounting rate and prospective growth rate to be applied to the prospective cash flows. Verification of the effectivemateriality of such indicators requires directors to make subjective evaluations based on information available inside theCompany and on market information, as well as on management’s knowledge. In the presence of potential impairmentof value, the Company calculates this using valuation techniques deemed to be appropriate. Proper identification of indi-cators of the existence of potential impairment of value and estimates to calculate it depend on factors that may vary overtime, affecting 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.

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


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PROPERTY, PLANT AND EQUIPMENT Land and Plant and Industrial and Other Assets under Total(euro/000) buildings machinery commercial tangible construction

equipment assets

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)Other movements (15) 0 35 73 (304) (211)Net value at end of 2008 6.198 2.510 1.727 833 27 11.295

Opening 2009 6.198 2.510 1.727 833 27 11.295 Increases 1.100 253 1.024 1.033 2.435 5.845 Decreases 0 (1) 0 (131) 0 (132)Amortisation (448) (600) (1.269) (481) 0 (2.798)Other movements 0 0 12 0 (12) 0Net value at end of 2009 6.849 2.163 1.495 1.253 2.451 14.210

Investments made during the year amounted to 5,845 thousand euros (2,113 thousand for 2008). Much of these referto the development of a new property that will allow for a centralisation of the Group’s delivery activities, thereby impro-ving the logistics and after-sales service and increasing production capacity. This investment relates to the purchase ofland for 1,100 thousand euros and advances for 2,435 thousand euros already paid for the construction of the new buil-ding.Furthermore, industrial and commercial equipment was purchased for 1,024 thousand euros, and plants and machineryfor 253 thousand euros. The item ‘Other assets’ is up by 1,033 thousand euros, mainly following investments made forthe renewal of the fair stand for 688 thousand euros.The sales of the item ‘Other assets’ refer to the sale of the trade fair stand that was no longer in use.

The gross value of property, plant and equipment and the value of the associated depreciation reserve at December, 2009are shown in the following table:

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

During the year, investments were made for 230 thousand euros (1,939 thousand in 2008), mainly for the implementa-tion and update of software.

At 31 December, 2009 there are no intangible assets with an indefinite useful life, nor values recorded as goodwill.

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INTANGIBLE ASSETS Industrial and Concessions, Total AND GOODWILL other patent rights licenses and(euro/000) trademarks

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

Opening 2009 994 1.799 2.793 Increases 230 0 230 Amortisation 0 0 0 Translation difference (660) (101) (761)Other movements 0 0 0 Net value at end of 2009 564 1.698 2.262

PROPERTY, PLANT AND EQUIPMENT Land and Plant and Industrial and Other Assets Total(euro/000) buildings machinery commercial tangible under

equipment assets construction

Historical cost 13.406 12.417 15.140 5.460 2.451 48.874Accumulated amortisation (6.556) (10.255) (13.646) (4.207) (34.664)Net book value 6.849 2.163 1.495 1.253 2.451 14.210

The purchase cost and accumulated amortisation of intangible assets posted as a direct deduction of costs, are shownin the following table:

The item concessions, licenses and trademarks includes the Web brand. This activity, acquired in November 2008 andwhose purchase value has been specifically and expertly estimated by an independent professional, given that it is a tran-saction with an associated party, is subjected to amortisation. Amortisation is applied over an estimated useful life of 18years. The value as of 31st December 2009 has also been subjected to impairment testing on the basis of the Group planswith regards to the development and margins of Web brand production. From this calculation, it is held that there has beenno loss of value with reference to this asset. For a description of the criteria used to carry out the test, please see that re-ported below as comments to the investments.

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

The investment concerning Marcolin International BV has been impaired to the book value and a fund has been alloca-ted for future risks, for a value of 846 thousand euros (note no. 19).Please note that in 2009, the share capital of the subsidiary Marcolin do Brasil Ltda was increased by 2,384 million euros(7,066 million Brazilian real), through the renunciation of some trade payables that are no longer demandable.


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PROPERTY, PLANT AND EQUIPMENT Industrial Concessions, Total(euro/000) and other licenses and

patent rights trademarks

Historical cost 5.296 2.326 7.622Accumulated amortisation (4.733) (628) (5.361)Net book value 564 1.698 2.262

Subsidiaries Value at Depreciation Revaluation Capital Value at (euro/000) DEC 31, 2008 increase DEC 31, 2009

Marcolin (Deutschland) GmbH 769 0 0 0 769Marcolin (UK) Ltd 1.029 0 0 0 1.029Marcolin Iberica S.A. 826 0 0 0 826Marcolin GmbH (Svizzera) 0 0 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 2.384 3.540Marcolin Usa Inc. 25.373 0 0 0 25.373Marcolin France S.a.s. 1.346 0 0 0 1.346Marcolin Intern. B.V. 0 0 0 0 0Total 31.408 0 0 2.384 33.792

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 expectedcash flows. This test did not reveal any lasting loss of value.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 intan-gible assets with an indefinite useful life, and with reference to other types of assets, is performed in the presence of ex-ternal or internal indicators that may cause the belief that a loss of value exists. In the separate balance sheet, no assetswith an undefined useful life have been posted, and for preparation of the financial statements for the year 2009, therewere not indicators that suggested the presence of a loss of value with reference to tangible assets. With reference to theintangible assets, as previously mentioned, please recall that the Web brand is subjected to amortisation and has beenduly expertly assessed as of the date of purchase. On this basis, in addition to its congruity with Group plans with regardsto development and other production margins to Web trademarks, it was held that no loss of value existed with referenceto said asset. For the performance of the impairment test on the Web brand, updated forecast data was used, as prepa-

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Associated company Value at Depreciation Revaluation Capital Value at (euro/000) DEC 31, 2008 increase DEC 31, 2009

FINITEC Srl 258 0 0 0 258Marcolin Japan Co Ltd 325 (26) 0 0 299Total 583 (26) 0 0 557

INTEREST IN ASSOCIATES(euro/000)

Finitec S.r.l. Share Capital 54.080 EUR DEC 31, 2009 DEC 31, 2008Assets 2.482 2.679



Net sales 1.583 2.766


% ownership 40% 40%

Marcolin Japan Co. Ltd. Share Capital 99.000.000 JPY DEC 31, 2009 DEC 31, 2008Assets 2.422 2.952


Shareholders’ equity 238 330

Net sales 2.663 2.335


% ownership 40% 40%

red by management, with reference to a medium-term timescale (until 2015). Forecasts have therefore been preparedfor the residual period of amortisation of the asset, using assumptions held to be prudent, and which reflect the expec-ted brand life cycle and, in particular, a decrease in volumes, margins and investments after the initial launch phase fo-recast for the medium-term.

With regards to equity interests recorded to the separate balance sheet, it was held to be opportune to verify the presenceof a loss of value in the case that impairment indicators were found. It was hence retained opportune to estimate thevalue in use of the CGU identified with the subsidiary, 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 finan-cial cash flows congruent with the economic and financial forecasts of the Group with reference to financial year 2010.In fact, in consideration of the highly uncertain conditions that characterise the current macroeconomic situation, the Di-rectors found it opportune to limit financial predictions to a single financial year. The approved budget for financial year2010 takes into account the economic crisis that took hold during the second half of 2008. However, it should be notedthat the estimates are based on valuations relative to future events that could occur with effects different from those thatare expected, causing the possibility of changes, possibly significant, with respect to the forecasted data considered here.The value in use was determined as the sum of the actual value of cash flows predicted for 2010 and the terminal valuedetermined based on the forecast data, which was appropriately modified to take into account the effects of normalisa-tion in order to estimate a balanced cash flow. Due to the generalized conditions of uncertainty, it was held to be prudentto use a growth rate of zero in determining the terminal value. For discounting of the cash flows, a rate of 7.68% was used,which reflects current market valuations for the cost of money and the specific risks connected with operations activities.Additionally three sensitivity analyses were performed on the impairment test, simulating respectively, a variation in thegrowth rate from 0 to 1%, and a variation in the discounting rate of 0.5%, 1% and 1.5%.

None of these scenarios led to results in which write-downs would be necessary.

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 € 8,389 thousand and more specifically, for a value of € 4,290 thousand to the subsidiary Marcolin International BV,for € 2,359 thousand to the subsidiary Marcolin GmbH (Switzerland), and for € 1,739 thousand to the subsidiary Mar-colin France S.a.s.. As compared with last year, the increase of this item of the financial statement is due to the receiva-ble owing from the subsidiary Marcolin France, by virtue of the restoration of part of the financial receivables in place duringprevious years, that had been impaired. This amount was received in January 2010.

Pursuant to the requirements in article 43 paragraph 1 no. 13 of the EEC IV Directive 78/660, we note that at 31 December,2009 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.


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9. INVENTORIESDetails of inventories are shown below.

By comparing stock values, we can see a significant reduction in inventories overall as compared with last year, amoun-ting to 11,888 thousand euros (on the net inventory values), traceable to the greater efficiency of the planning processand the sale of stock accompanied by a significant drop in the average number of days of stock.More in detail, we have seen:- a decrease in the value of finished products and goods amounting to 7,907 thousand euros;- a value of raw materials that is basically unchanged as compared with last year;- a decrease in the value of works under construction for 712 thousand euros.The value for the reserve for inventory impairment increased by € 3,333 thousand as of 31st December 2009.

The increase of the inventories impairment fund is due to the impairment policy adopted for all classes of inventories, onthe basis of the recoverable value with use taken from past experience as from last year.

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

The balance of net trade receivables is down by 5,275 thousand euros as compared with last year, in relation to the re-duced turnover and significant improvement of the index of average collection days, despite the particularly difficult pe-riod and without reporting losses in excess of the company historic average.The amount of receivables stated on the financial statements has not been discounted, as there are no long-term creditsor credits whose realisation is forecast beyond the short-term.

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Inventories DEC 31, 2009 DEC 31, 2008(euro/000)

Finished goods 24.199 32.106Raw material 10.289 10.226Work in progress 7.623 8.334Gross inventory 42.111 50.666Inventory provision (12.687) (9.354)Net inventory 29.424 41.312

Trade and other receivables DEC 31, 2009 DEC 31, 2008(euro/000)

Gross receivables 54.394 60.024Provision for bad debts (5.230) (5.135)Net trade receivables 49.164 54.889Tax receivables 1.745 72Other receivables 177 235Total other receivables 1.921 307Total 51.085 55.196

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 theprevious financial year.

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


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Receivables not overdue by geographical area DEC 31, 2009 DEC 31, 2008(euro/000)

Italy 18.991 13.521Rest of Europe 8.698 14.034North America 4.158 5.216Rest of the World 7.270 6.363Total 39.118 39.135

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

DEC 31, 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 DEC 31, 2008 59.125 (4.236) 54.889

DEC 31, 2009Not overdue 19.448 0 19.448Overdue less than 3 months 4.978 0 4.978Overdue from 3 to 6 months 3.562 (339) 3.222Overdue over 6 months 5.931 (4.086) 1.845Total DEC 31, 2009 33.918 (4.425) 29.493

Trade receivables overdue and not written-down DEC 31, 2009 DEC 31, 2008(euro/000)

Overdue less than 3 months 4.978 3.359Overdue over 3 months 5.068 12.395Total 10.046 15.754

For the sake of full disclosure, below is an illustration of the maturity of the receivables submitted to protest. We wouldpoint out that the net book value of these receivables is null due to the impairment applied.

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

We should point out that during the year, part of a financial payable due from the ex French subsidiary, ex Cébé S.a.s.(now Marcolin France S.a.s.) has been restored for 1,740 thousand euros. This had been entirely impaired and has beenrestored by reducing the relevant fund by the same amount. The original value of the financial receivable was 8,475 thousand euros and is posted in the item 'Other non-current as-sets'. It has been entirely impaired with the posting of the relevant fund in the same item of the financial statements. As such, the year allocations, excluding the above-stated effect, amounted to 440 thousand euros, in line with last year.

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

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Marcolin S.p.A.

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

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

DEC 31, 2009Overdue less than 12 months 87 (87) 0Overdue over 12 months 718 (718) 0Total DEC 31, 2009 805 (805) 0

Provision for bad debts 2009 2008(euro/000)

Opening 1.818 1.679Allowance (1.300) 400Utilisation (346) (261)Reclassification and other movements 1.740 0Total 1.912 1.818

Details of receivables from subsidiaries

We should point out that during the year, receivables due from the subsidiary Marcolin do Brasil Ltda, decreased by 2,384thousand euros, for the stated conversion to the share capital.

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 ofless than three months. As compared with the situation as of 31st December 2008, we note an increase of cash and cash equivalents amountingto 7,258 thousand euros. This is a temporary effect due to the partial use of the new, above-stated loans, whose resour-ces were used in January 2010.

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 attached to the Management Report.


148

Receivables from subsidiaries DEC 31, 2009 DEC 31, 2008(euro/000)

Marcolin (Deutschland) GmbH 2.314 2.055Marcolin (UK) Ltd 1.352 446Marcolin Iberica S.A. 993 1.189Marcolin GmbH (Svizzera) 599 470Marcolin Portugal Lda 2.733 2.486Marcolin Benelux S.p.r.l. 1.387 1.155Marcolin Usa Inc. 4.256 7.654Marcolin Internantional B.V. 1.189 1.084Marcolin Asia Ltd. 1 155Marcolin do Brasil Ltda 1.247 4.060Marcolin France Sas 1.933 4.229Total 18.004 24.982

* Available quota to distribute e 19.828 thousand

Among the variations which occurred during the financial year, we note, in addition to the period result, the positive ad-justment to the cash flow hedge reserve, relative to derivatives on interest rates stipulated with Efibanca for €17 thousandand the effects on the stock option reserve totalling €91 thousand, covered in the total economic result.

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

As of 31st December 2009, this item amounts to 186 thousand euros. This year, a cost of 91 thousand euros was repor-ted on the income statement and entirely refers to the share of the stock option plan resolved in 2008, in the favour of theManaging Director of the parent company, and which matured in 2009.

149

Marcolin S.p.A.

Description Value Possible Available Previousutilization reserve years allocations

- Losses - Other (euro/000) coverage reasons

Equity 31.958 Share premium reserve 24.517 A-B-C* 24.517 12.803 Legal reserve 1.776 B 0 Fair value reserve land and buildings (FTA) 2.931 A-B 2.931 FTA reserve 5.445 0 Stock Option reserve 186 A-B-C 186 Cash Flow Hedge reserve (334)Losses carried forward (3.887)Total 62.592 27.634 12.803 0

Amount not to be distributed ex art. 2426, comma 1 n. 5 c.c. 0 Amount not to be distributed ex art. 2431 c.c. 4.616 Residual amount which can be distributed 23.018 Bound amount ex art. 109 comma 4 lettera b) del T.U.I.R. 0

Legenda:

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

14. MEDIUM- AND LONG-TERM BORROWINGSThe balance of long-term loans at 31 December, 2009 is represented almost entirely by loans distributed by Cassa di Rispar-mio del Veneto, Mediocredito Italiano (both Intesa San Paolo Group) and Efibanca S.p.A. (head of a consortium of financial cre-dit institutions). For the details, see point 18, Short-term loans. As already mentioned previously in the Management Report, we would point out that during the year, Marcolin S.p.A. subscri-bed the following loans:- in October a loan agreement for 15 million euros, unsecured, with the Cassa di Risparmio del Veneto (Intesa San Paolo Group);in December, a loan agreement for 10 million euros, with mortgage guarantee on the new property currently under construc-tion, with Mediocredito Italiano (Intesa San Paolo Group).Note that the contract sealed with a group of banks headed by Efibanca S.p.A., was signed on 27 June, 2007 for a maximumof € 30 million, split into two equal portions of € 15 million each, the first of which was provided in the form of an unsecuredloan and the second as a stand-by line of credit. At 31 December, 2009 the loan with Efibanca S.p.A., amounted to € 21.2 million.Below the composition of the net financial position is illustrated. For more information please refer to that indicated above in theManagement Report.

The increase of short-term loans is due to the loan to Cassa di Risparmio del Veneto, previously posted amongst the long-termloans, but which is now due on 31st December 2010.


150


Cash 24 23Cash equivalents 11.924 4.667Short term borrowings (9.318) (4.222)Current portion of long term borrowings (9.614) (12.995)Long term borrowings (29.254) (28.654)Total (36.237) (41.181)


A Cash 24 23B Cash equivalents (detail) 11.924 4.667C Securities held for trading 0 0D Liquidity (A+B+C) 11.948 4.690E Current financial receivables 0 0F Current bank payable 5.927 4.222G Non current debt - current portion I Current financial debt (F+G) 13.005 12.995I Current financial debt (F+G) 18.932 17.218J Net current financial debt (I-E-D) (6.983) (12.527)K Non current bank loans 29.254 28.654L Issued bonds 0 0M Other non current debt 0 0N Non current financial debt (K+L+M) 29.254 28.654O Net financial debt (J+N) (36.237) (41.181)

15. LONG-TERM PROVISIONSThe item expresses the balance of the value of the defined benefit plan, which is distributable at the same time or sub-sequent to the termination of the employment relationship, and is totally represented by the employee severance indem-nity reserve accrued as at 31 December 2006. Note that the severance indemnity accruing from 01 January, 2007 is treated as a defined contribution plan. Therefore,the company 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 and the other actuarial hypotheses used for the relevant actuarialcalculation:

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

151

Marcolin S.p.A.

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

Opening 4.039Utilization (306)Interest 177Actuarial loss (gain) (127) DEC 31, 2009 3.784

Actuarial assumptions 2009

mortality rate: Table RG48disabilty rate: Table INPSpersonnel turnover rate: 5,00%severance prepaiments: 2,00%discount rate: 4,10%wages increase rate: 3,00%inflation rate: 2,00%

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

the decrease in trade payables for 3,344 thousand euros, traceable to the lesser production purchases made during theperiod, despite the increased index in relation to average payment terms of suppliers.The amount of trade payables seen in the balance sheet were not subject to discounting, as the amount booked in thebalance sheet represents a reasonable representation of the fair value in consideration of the fact that there are no paya-bles with deadlines past short-term.


152

Payables by geographical area(euro/000)

DEC 31, 2009 DEC 31, 2008Italy 19.904 19.107Rest of Europe 3.587 3.641North America 684 2.778Rest of the World 7.040 9.032Total 31.215 34.559

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

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.

The contractual agreements relating to the loans granted to Marcolin S.p.A. by Cassa di Risparmio del Veneto, MediocreditoItaliano (both Intesa San Paolo Group) and Efibanca S.p.A. include a series of obligations relating to operational and fi-nancial aspects. In particular, several financial economic indexes (“covenants”) need to be observed, calculated in theconsolidated financial statements at the end of each year. The first of the two agreements with Cassa di Risparmio del Ve-neto also entails compliance with the parameters at the end of the six-month period of each year.If these parameters are not observed, the conditions under which the loan agreements will continue will have to be ne-gotiated, or the relevant changes made to the aforesaid parameters. Otherwise, the amounts granted may have to be re-paid early.The covenants are calculated on the main financial economic indicators (EBITDA, net financial position and equity). At31 December, 2009 and over the course of the financial year, the parameters were respected in their entirety.We would point out that the agreement with Mediocredito Italiano is guaranteed by a mortgage on the new building cur-rently under construction, whilst all other loans in place have been granted at market conditions, without the issue of se-curity guarantees.

153

Marcolin S.p.A.

Bank Currency Starting Residual Expiration Interest NotesAmount Amount date rate

Cassa di Risparmio EUR (credit line) 6.672.074 dec 31, 2010 Euribor "Stand by" credit line "revolving" type,del Veneto 25.000.000 6 months dated FEB 16, 2006. Refundable in 8 (ex banca Intesa) * + 1% half-year instalments from JUN 30, 2007.

EFIBANCA * EUR (credit line) 21.214.286 jun 27, 2012 Euribor A "Term Loan Facility" of 15.000.000 and a 30.000.000 6 months "Stand by Facility" loan of 15.000.000, dated

+ 1,30% JUN 27, 2007. Paid out the "Term Loan Facility" line, refundable in 10 half-year instalments from DEC 27, 2007 and part - payment of the "Stand by Facility" line of 6.000.000, refundable in 7 half-year instalments from JUN 27, 2009.

Ministero delle EUR 793.171 563.548 jun 26, 2016 1,012% Subsidized loan in accordance with the Law no. attività produttive 46, 1982, refundable in 10 year instalments (Innovazione Tecnologica) from JUN 26, 2007.

Unicredit Corporate CHF 3.500.000 3.500.000 may 12, 2010 1,85% Short term borrowings dated JAN 29, 2008. Banking

Cassa di Risparmio EUR (credit line) 15.000.000 mar 31, 2015 Euribor Loan dated OCT 26, 2010, refundable in 10del Veneto 15.000.000 6 months half-year instalments from SEP 30, 2010.(ex banca Intesa) * + 1,70%

Mediocredito EUR 2.000.000 2.000.000 sep 30, 2019 Euribor Real-estate loan dated DEC 22, 2009, italiano 3 months refundable in 34 quarterly instalments

from JUN 30, 2011.

The following table contains details of the maturity of the financial liabilities, whose value is entered either in current lia-bilities or in non-current liabilities.

Information follows with regards to derivative financial instruments existing at 31 December, 2009., their characteristics,and a comparison to the previous financial year.

Financial assets measured at fair value booked to the income statement.No values are booked to this item.

Financial liabilities measured at fair value booked to the income statement.On 28 April, 2006, Marcolin S.p.A. stipulated a derivatives contract on interest rates (IRS) with the Cassa di Risparmiodel Veneto (formerly Banca Intesa) in order to protect itself against risk related to variations in interest rates. This con-tract refers to the variable interest rate financing obtained from the institute. The fair value of the derivatives instrument at 31 December, 2009 was negative by €80 thousand (negative by €116thousand at 31 December, 2008).This derivative, while created in order to cover the risk associated with interest rate variations, was not considered as ahedge accounting item for accounting purposes for IAS, as it calls for a Knock Out barrier, which impedes effective hed-ging according to 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 rela-ted to 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 provi-sions of IAS 39. In fact:- it was contractually established, at the moment the financing was provided, to cover at least 50% of the notional valueof said 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.


154

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

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 4.573over 5 years 0 0 246 246DEC 31, 2008 1.723 43.508 641 45.872

within 1 year 0 18.845 87 18.932between 1 and 3 years 0 19.644 178 19.821between 3 and 5 years 0 6.471 179 6.650over 5 years 0 2.618 165 2.783DEC 31, 2009 0 47.577 609 48.185

The instrument’s fair value at 31 December, 2009 was negative by €334 thousand, of which €229 thousand short-term,and €105 thousand long-term. Fair value at 31 December, 2008 was negative by €351 thousand. Fair value variationswere booked 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 deri-vative instruments amounted to € 316 thousand.

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 paya-ble upon 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 (€ 916 thousand), thevalue of the provisions made for other liabilities deriving from current legal or constructive obligations (€ 316 thousand),as well as risk provisions for losses due to equity investments deriving from measurement at fair value of the subsidiaryMarcolin 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, which are down by 401 thousand euros, andpayables to social security institutions which saw an increase of € 129 thousand.

155

Marcolin S.p.A.

OTHER CURRENT LIABILITIES DEC 31, 2009 DEC 31, 2008(euro/000)

Payables to personnel 2.416 2.817 Social security payables 1.486 1.357Other accrued expenses and deferred income 82 90Total 3.984 4.264

SHORT TERM PROVISIONS Provision for Other provisions Total(euro/000) severance indemnities

Opening 2009 495 2.131 2.626Allowance 147 231 378Utilisation and other movements (53) (284) (336)Closing 2009 589 2.079 2.668

21. COMMITMENTS AND GUARANTEESBelow we show details of the Company’s main commitments and guarantees:

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 S.p.A. of guaranteed minimum royalties throughout their duration. As at 31December, 2009 the total of these future commitments amounted to € 222 million (€ 133 million in 2007), of which €37 million falling due within the next 12 months. We would point out that the increase of future commitments as compa-red with last year relates to the signing of new license agreements with durations spanning several years, and the rene-wal of other brands already held in the Company’s portfolio.


156

Contingencies 2009 2008(euro/000)

Guarantees to third parties 1.473 1.465Guarantees to Group companies 4.522 9.053Total contingencies 5.995 10.518

INCOME STATEMENT

22. NET SALESThe breakdown of net sales in financial year 2009 was as follows:

The incidence of revenues Italy on the total sales increases on last year and amounts to 36%. At the same time, there isa decrease in the incidence of the Rest of Europe, from 37.6% to 33.5%.

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

The value of the cost of sales, in absolute terms, decreases by 8,082 thousand euros, with a reduction of the percentageincidence on sales equal to 2.6%, thanks to a greater efficiency of planning processes and industrial production. This po-sitive effect has been partially offset by the adoption of more aggressive sales policies, in terms of Customer discounts of-fered in response to the demands of the market which has been negatively influenced by the fall in demand.

157

Marcolin S.p.A.

Cost of sales DEC 31, 2009 DEC 31, 2008 Increase %(euro/000) (decrease)

Purchase of material and finished goods 30.776 45.751 (14.976) (32,7)%Changes in inventory 11.096 (1.243) 12.339 (992,3)%Personnel expenses 14.417 14.344 73 0,5%Outworks 6.088 11.396 (5.307) (46,6)%Amortisation and depreciation 2.296 2.267 29 1,3%Other expenses 3.531 3.772 (241) (6,4)%Total 68.204 76.286 (8.082) (10,6)%



- Italy 40.515 36,0% 35.712 29,6% 4.804 13,5%- Europe 37.690 33,5% 45.315 37,6% (7.625) (16,8)%- U.S.A. 9.585 8,5% 12.434 10,3% (2.849) (22,9)%- Rest of the World 24.836 22,1% 27.089 22,5% (2.253) (8,3)%Total 112.626 100,0% 120.550 100,0% (7.924) (6,6)%

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

The item increases by a total of 3,733 thousand euros (or 10%), mainly due to the greater incidence of minimum gua-rantees on license agreements. The increase is partially offset by the reduction of the item Other distribution costs andmarketing.

With regard to the greater impact of the guaranteed minimum royalties, we can report that a series of measures have beenput in place, and are still taking effect, in order to reduce them.

25. GENERAL & ADMINISTRATIVE COSTSBreakdown of general overheads and administrative costs:

The total value of the item in question increased with respect to the previous period by €1,283 thousand, mainly due tominor write-downs on receivables.

As already mentioned, the dynamics of this item derives from the fact that during the year, part of a financial payable duefrom the French subsidiary, (ex Cébé S.a.s. now Marcolin France S.a.s.) has been restored for 1,739 thousand euros. Thishad been entirely impaired and has been restored by releasing the fund for the same amount. Without this effect, the yearreceivable impairment amounts to 440 thousand euros.

An increase in other costs is also reported for 325 thousand euros, mainly by virtue of the costs sustained for consulting(136 thousand euros), EDP expenses (219 thousand euros) and other general area services (227 thousand euros). Thisis offset by a decrease in travel expenses (-282 thousand euros).Pursuant to Article 149-duodecies of the Regulation, we note here that the consideration pertaining to the year 2009 dueto the independent auditors for the accounting audit service amounted to €155 thousand.


158

Selling and marketing costs DEC 31, 2009 DEC 31, 2008 Increase %(euro/000) (decrease)

Personnel expenses 5.204 5.012 191 3,8%Commissions 4.774 4.681 93 2,0%Amortisation and depreciation 875 719 156 21,7%Royalties 13.668 10.062 3.606 35,8%Advertising and PR 10.968 10.172 796 7,8%Other costs 5.400 6.508 (1.108) (17,0)%Total 40.888 37.155 3.733 10,0%

General and administrative expenses DEC 31, 2009 DEC 31, 2008 Increase %(euro/000) (decrease)

Personnel expenses 3.036 2.939 97 3,3%Bad debt provsion (1.300) 400 (1.700) (425,0)%Amortisation and depreciation 392 397 (5) (1,3)%Other costs 5.981 5.656 325 5,7%Total 8.109 9.392 (1.283) (13,7)%

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 this item is positive for 8,728 thousand euros, with a positive change of 150 thousand euros as compared withlast year. The item ‘other revenues’ includes the re-debiting of advertising royalties to branches for 5,696 thousand euros.

159

Marcolin S.p.A.

Employees - Average numberCategory 2009 2008




Other income and expenses DEC 31, 2009 DEC 31, 2008(euro/000)

Transport refund 1.488 1.868Release of provision 281 0Other income 7.098 8.539Total other income 8.867 10.407

Loss on credits 0 (621)Loss on investments (140) (1.208)Total other (expenses) (140) (1.829)Total 8.728 8.577

28. OTHER REVENUES AND NON-RECURRENT COSTSThe details of Other non-recurrent revenues and costs were as shown below:

The balance of this item is positive for 544 thousand euros, with a positive change of 188 thousand euros as comparedwith last year.

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:


160

Non-recurring operating income and expenses DEC 31, 2009 DEC 31, 2008(euro/000)

Non-recurring income 612 538Non-recurring expenses (68) (182)Total 544 356

Financial income and expenses DEC 31, 2009 DEC 31, 2008(euro/000)

Financial income 1.000 2.424Financial expenses (3.204) (5.269)Total financial income and expenses (2.204) (2.845)

Financial income DEC 31, 2009 DEC 31, 2008(euro/000)

Interes income 155 318 Other income 6 122 Gains on exchage rate differences 840 1.983 Total financial income 1.000 2.424

Financial expenses DEC 31, 2009 DEC 31, 2008(euro/000)

Interest expenses (1.775) (2.994)Other expenses (51) (518)Cash discounts (51) (55)Losses on exchage rate differences (1.327) (1.702)Total financial expenses (3.204) (5.269)

The item financial income and expense presents a total balance, negative for 2,204 thousand euros, as compared with anegative value of 2,845 as of 31st December 2008. The considerable improvement has been obtained thanks to a de-crease of interest expense (of 1,219 thousand euros) on loans, mainly due to the decrease in interest rates of referenceand the reduced average borrowings.

Please refer to the comments on the item General and administrative costs for the reclassification of some costs that hadpreviously been booked amongst the financial expenses. This reclassification has led to a decrease in the item for 184thousand euros for 2008.

30. INCOME TAXFor current taxes, the tax burden was determined according to the taxable income arising from the year’s result, takinginto account 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:

161

Marcolin S.p.A.

IRES - Define(euro/000)

Profit (loss) before taxes 2.492.504 Theoretical Fiscal Charge 27,50% 685.439Temporary differences to be taxed in following years 0 Differences to be deducted in following years 5.999.747 Previous years temporary differences cancellation (3.615.643)Permanent differences not to be cancelled in following years 1.417.410 Loss of the prior yearTotal differences 3.801.514 Taxable income 6.294.018 Income taxes 27% 1.684.984Effective tax rate 68%

IRAP- Define(euro/000)

Differences between value and cost of production 26.069.920 (except not considerable items)Reclassification 0 Deduction for subordinate employment (7.722.393) Theoretical taxable 18.347.527 Theoretical Fiscal Charge 3,90% 715.554Temporary differences to be taxed in following years 0 Differences to be deducted in following years 363.059 Previous years temporary differences cancellation (424.988)Permanent differences not to be cancelled in following years (5.640.571)Total differences (5.702.501) Taxable income 20.367.420 Current taxes 3,90% 794.329Incidence of real taxable 4,33%

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


162

Deferred tax assets/liabilities 2008 2009(euro/000)

Deferred taxDepreciation and amortization Non current assets 0 0 Not realized active exchange differences Current assets 163 47 Fair value land and buildings Non current assets 291 314 Agents' severance indemnity Non current liabilities 0 0 Buildings Current liabilities 1.229 1.157 Buildings leasing 0 0 Revaluation treasury stock Non current assets 47 47 Instalment contributions and donations (year 2002) Current assets 9 9 Total 1.740 1.574

Deferred tax assetsCash contributions and fees Current assets 141 150 Entertainment expenses Current assets 74 40 Write-down receivable Current assets 424 459 Not realized passive exchange differences Current liabilities 163 36 Deductible allowance ex art 108 Non current assets 48 24Agents' severance indemnity Current assets 155 185 Other devaluation and provisions Allocation 613 552 Stock option Current assets 26 51 Inventories IRES Current assets 1.599 2.879 CFC Current assets 131 131 Write-down goodwill IAS compliant Current assets 0 0

Total 3.375 4.506 Net value (1.635) (2.933)

31. FINANCIAL INSTRUMENTS BY TYPEThe financial instruments are shown by uniform classes in the table below which shows the fair value in accordance with IFRS 7.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 fi-xing available of the Euribor.The values calculated using this method were discounted based on the discount factors related to the various expirationdates of the cash flow mentioned above.The derivatives used are classified as OTC (over the counter) derivatives and therefore, there is no officially recognised publicprice formed on the trading markets. To value these derivatives, the company used, respectively, discounted cash flow and Black& Scholes methods for interest rate swap and for the Cap and Floor, fed with input data published by Bloomberg.

163

Marcolin S.p.A.

Classes of financial assets Trade Derivatives(euro/000) receivables

2008Loans and receivables 54.889 0Assets at fair value through the profit and loss 0 51Investments hold to maturity 0 0Available for sale 0 0Total value 54.889Fair value n/a 51

2009Loans and receivables 49.164 0Assets at fair value through the profit and loss 0 0Investments hold to maturity 0 0Available for sale 0 0Total value 49.164Fair value n/a

Classes of financial liabilities Trade Derivatives Loans(euro/000) payable

2008Liabilities at fair value through the profit and loss 0 116 0Derivatives used for hedging 0 351 0Other financial liabilities 34.559 0 45.405Available for sale 0 0 0Total value 34.559 467 45.405Fair value n/a 467 n/a

2009Liabilities at fair value through the profit and loss 0 80 0Derivatives used for hedging 0 334 0Other financial liabilities 31.215 0 47.772Available for sale 0 0 0Total value 31.215 414 47.772Fair value n/a 414 n/a

COSTS AND REVENUES TOWARDS ASSOCIATED COMPANIESCosts and revenue to subsidiary and related companies are shown below.

RELATIONS WITH ASSOCIATED AND AFFILIATED COMPANIES

INFORMATION ON ABNORMAL AND UNUSUAL TRANSACTIONS AND TRANSACTIONS WITH RELATED PARTIESWith regard to the suggestions of the CONSOB in its Circulars nos. DAC/98015375 of 27 February 1998 and DEM/6064293of 28 July 2006, the necessary information on atypical and unusual transactions and transactions with related parties isprovided below.

Atypical and unusual transactions

No abnormal and/or unusual transactions were reported, between Group companies, during the course of 2009, nor werethere any extraordinary business activities, or activities that might have a significant effect on the economic, capital or fi-nancial situation of Marcolin S.p.A.

Transactions with related parties

Relations with Group companies are mainly commercial and established under market conditions. During 2009, Marcolin S.p.A. had supply relations with the company Tod’s S.p.A., through the shareholders Diego DellaValle (Director of Marcolin S.p.A.) and Andrea Della Valle, for a total amount of € 616 thousand (€ 142 thousand in 2008).


164

Company Revenues from sales Other Financial income Cost of raw materials, Service DEC 31,(euro/000) and services income from financial auxiliary materials, expenses 2009

receivables spare parts and goods

Company:Marcolin Asia Ltd. 70 7 0 42 0 36Marcolin & Co. S.p.A. 0 0 0 0 922 (922)Marcolin (Deutschland) GmbH 2.427 118 0 0 92 2.453Marcolin GmbH 900 69 50 0 0 1.018Marcolin Iberica S.A. 4.909 134 0 0 33 5.010Marcolin Benelux S.p.r.l. 1.952 116 0 4 81 1.984Marcolin Portugal Lda 1.953 144 0 18 6 2.073Marcolin (UK) Ltd 3.082 166 0 1 106 3.141Marcolin Usa Inc. 9.585 288 0 191 0 9.681Marcolin International BV 0 0 105 0 0 105Marcolin France SAS 8.513 2.258 0 5 176 10.590Marcolin do Brasil Ltda 1.783 149 0 0 0 1.931Total 35.173 3.448 155 260 1.415 37.100

(euro/000) Expenses Revenues Receivables Payables Relation

Finitec S.r.l. 1.355 2 934 3 AssociatedMarcolin Japan 223 379 112 431 AssociatedTod's S.p.A. 1.216 616 1.163 36 Correlated

It also booked costs for royalties in relation to license agreements for the brands Tod’s and Hogan, for 1,216 thou-sand euros.

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 Company.

Non-recurrent significant events and operations

No significant non-recurrent events or operations occurred that had effects upon the Company’s equity, economic, andfinancial situation over the course of 2009.

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.

165

Marcolin S.p.A.

166

Nam

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ents

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Coffen Giovanni Marcolin

Chairm

an of Board of Directors

of Marcolin S.p.A.

APR 29, 2008

Approval 2010 Fin. Stats.

150

Saracchi Massimo

Managing Director of M

arcolin S.p.A.

APR 29, 2008


550

General Director of M

arcolin S.p.A.

DEC 10, 2007

205

Abete Antonio

Director of M

arcolin S.p.A.

APR 28, 2009


13

Abete Luigi

Director of M

arcolin S.p.A.

APR 29, 2008


20

Alemagna Emanuele

Director of M

arcolin S.p.A.

APR 29, 2008


35

Boscarato Maurizio

Director of M

arcolin S.p.A.

APR 29, 2008


25

Coffen Marcolin Cirillo

Director of M

arcolin S.p.A.

APR 29, 2008


250

Coffen Marcolin Maurizio

Director of M

arcolin S.p.A.

APR 29, 2008


402

13

Della Valle Diego

Director of M

arcolin S.p.A.

APR 29, 2008


20

Macellari Em

ilio

Director of M

arcolin S.p.A.

APR 29, 2008


25

Montagna Carlo

Director of M

arcolin S.p.A.

APR 29, 2008


20

Salvatori Stefano

Director of M

arcolin S.p.A.

APR 29, 2008


35

Varvaro Vito

Director of M

arcolin S.p.A.

APR 29, 2008


20

Managers with strategic responsability

1.625

Nam

eDe

tails

of o

ffice

hel

dOf

fice

from

ToEm

olum

ents

Ot

her Be

nefit

s

Cognigni Mario

Auditor Marcolin S.p.A.

APR 29, 2008


25

Rivetti Diego

Chairm

an of the Board

APR 29, 2008


37

of Statutory Auditors

Porfido Rossella

Auditor Marcolin S.p.A.

APR 29, 2008


24

* Em

olum

ents gross of social charges

Pursuant to the requirements in article 43 paragraph 1 no. 13 of the EEC IV Directive 78/660, we note that at 31 December,2009 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 stockoptions allocated to the Managing Director and General Manager:

INFORMATION RELATED TO DIRECT AND INDIRECT PARTICIPATION

167

Marcolin S.p.A.

(a) (b)

Options outstanding at the

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

Options allotted during the year

(4) (5) (6)

Options exercised during the year

(7) (8) (9)

Options overdue

in the year(10)

Options outstanding at the endof 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

Numbers of options

Numbers Average Averageof exercise expirated options price

Massimo SaracchiGeneral DirectorAD

500.000 1,53 2014 500.000 1,53 2014

Company Headquarters Currency Share Net Result of % ownership(euro) capital Equity the period Direct Indirect

Marcolin Asia Ltd. Hong Kong HKD 1.539.785 4.474.903 551.413 - 100,00%Marcolin Benelux Sprl Faimes EUR 280.000 (30.329) (165.643) 99,98% -Marcolin do Brasil Ltda Jundiai BRL 9.575.240 13.251.291 3.798.139 99,90% 0,10%Marcolin (Deutschland) GmbH Ludwigsburg EUR 300.000 (530.222) (550.779) 100,00% -Marcolin GmbH Fullinsdorf (CH) CHF 200.000 88.316 (383.914) 100,00% -Marcolin Iberica SA Barcellona EUR 487.481 3.887.196 50.080 100,00% -Marcolin International BV Amsterdam EUR 18.151 (967.432) (121.202) 100,00% -Marcolin Portugal Lda S. Joao do Estoril EUR 420.000 1.107.143 46.955 99,82% -Marcolin (UK) Ltd Newbury GBP 850.000 1.734.343 224.375 99,88% -Marcolin Usa Inc New York USD 536.500 29.090.693 7.754.290 85,40% 14,60%Marcolin France Sas Parigi EUR 1.054.452 1.751.197 0 76,89% 23,11%Marcolin Japan Co Ltd Tokyo JPY 99.000.000 31.666.353 (9.924.681) 40,00% -Finitec Srl Longarone EUR 54.080 1.395.312 (283.924) 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 separate and consolidated financial statements for the periodfrom 1 January to 31 December, 2009.

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 EuropeanCommunity, as well as the measures issued in implementation of Art. 9 of Leg. Decree 38/2005, and to the best of theirknowledge, provide a clear and true representation of the capital and financial situation and the economic results of theissuer and the group of companies included in its consolidation.

Longarone, 25 March, 2010

Massimo Saracchi Sandro BartolettiManaging Director Corporate Financial

Reporting Manager

169

Printed in Italy 04/2010

Linea Grafica S.r.l. (Castelfranco Veneto - TV)

consolidated annual report and accounts …en.marcolin.com/upload/documenti/507d67e1757ad.pdf ·...

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