The Benetton Group Directors and Other

DIRECTORS AND OTHER OFFICERS

THE BENETTON Board of Directors Luciano Benetton (1) Chairman GROUP Carlo Benetton Deputy Chairman Alessandro Benetton Deputy Chairman Giuliana Benetton Directors Gilberto Benetton Luigi Arturo Bianchi Giorgio Brunetti Silvano Cassano (2) (Chief Executive Officer until 11.13.2006) Gianni Mion Robert Singer Ulrich Weiss Pierluigi Bortolussi Secretary to the Board

Board of Statutory Auditors Angelo Casò Chairman Filippo Duodo Auditors Antonio Cortellazzo Marco Leotta Alternate Auditors Piermauro Carabellese

Independent Auditors PricewaterhouseCoopers S.p.A.

Powers granted (1) Company representation and power to carry out any action that is consistent with the Company’s purpose, except for those powers expressly reserved by law to the Board of Directors and to the Shareholders’ Meeting, with restrictions on certain types of action. (2) The Chief Executive Officer has the power to carry out any action relating to the ordinary administration of the Company as well as certain acts of extraordinary administration subject to limits on amounts. Silvano Cassano relinquished this authority on November 13, 2006, while retaining the office of Director.

The BenettonThe Group Main consolidated companies as of December 31, 2006

Benetton Group S.p.A. Ponzano Veneto (TV)

(1) Benetton Realty France S.A. Benind S.p.A. Fabrica S.p.A. Bencom S.r.l. Bentec S.p.A. Benetton Deutschland GmbH Paris Ponzano Veneto (TV) Ponzano Veneto (TV) Ponzano Veneto (TV) Ponzano Veneto (TV) München 56.31% 100% 100% 100% 100% 100%

Benetton International Benetton Retail Italia S.r.l. S.I.G.I. S.r.l. Benetton Australia Pty. Ltd. Olimpias S.p.A. Benetton USA Corp. Benetton Holding International Property N.V. S.A. Amsterdam Ponzano Veneto (TV) Ponzano Veneto (TV) Hawthorne Ponzano Veneto (TV) Wilmington N.V.S.A. Amsterdam 100% 100% 100% 100% 100% 100% 100%

Benetton Realty Spain S.L. Benetton Real Estate Milano Report S.p.A. Benetton Realty Russia O.O.O. Benair S.p.A. Filatura di Vittorio Veneto S.p.A. Benetton International S.A. Barcelona International S.A. Luxembourg Bergamo Moscow Ponzano Veneto (TV) Vittorio Veneto (TV) Luxembourg 100% 100% 50% 100% 100% 50% 100%

Benetton Real Estate Spain S.L. United Colors of Benetton Benetton Denmark A.p.S. Benetton Giyim Sanayi ve United Colors Benetton International Benetton Ungheria Kft. Barcelona do Brasil Ltda. Curitiba Copenhagen Ticaret A.S. Istanbul Communication S.A. Lugano Kish Co. Ltd. Kish Island - Iran Nagykálló 100% 100% 100% 50% 100% 100% 100%

(2) Benetton Real Estate Real Estate Latvia L.L.C. Benetton Realty Portugal Property Russia Z.A.O. Benetton Realty Benetton Retail Benetton International Benetton Argentina S.A. Benetton Trading USA Inc. Benetton Tunisia S.à r.l. Benetton India Pvt. Ltd. Belgique S.A. Bruxelles Riga - Lettonia Imobiliaria S.A. Porto Samara Netherlands N.V. Amsterdam Poland Sp. z o.o. Warsaw Emirates L.L.C. Dubai Buenos Aires Lawrenceville Sahline Gurgaon 100% 100% 100% 100% 100% 100% 49% 95% 100% 100% 100%

(3) Benetton France S.à r.l. Benetton Real Estate Real Estate Russia Z.A.O. Real Estate Ukraine L.L.C. Benetton Real Estate Lairb Property Ltd. Benetton Japan Co., Ltd. Benetton Manufacturing Benetton Asia Pacific Ltd. Benetton Società di Servizi S.A. Paris Kazakhstan L.L.P. Almaty St. Petersburg Kiev Austria GmbH Wien Dublin Tokyo Holding N.V. Amsterdam Hong Kong Lugano 100% 100% 100% 100% 97% 100% 100% 100% 100% 100%

(3) Benetton France Commercial Benetton Retailing Japan Co. Ltd. Benetton Korea Inc. Shanghai Benetton Trading Benlin Ltd. S.A.S. Paris Tokyo Seoul Company Ltd. Shanghai Hong Kong 100% 95% 50% 100% 50%

Benetton Trading Ungheria Kft. Benetton Retail (1988) Ltd. Benetton Retail Spain S.L. Benetton Retail Deutschland Benetton Manufacturing Benetton Beograd D.O.O. Benetton 2 Retail Comércio de Benrom S.r.l. Benetton Istria D.O.O. Benetton Slovakia s.r.o. Benetton Croatia D.O.O. Nagykálló London Barcelona GmbH München Tunisia S.à r.l. Shaline Beograd Produtos Têxteis S.A. Porto Miercurea Sibiului - Romania Labin Dolny Kubin Osijek 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%

New Ben GmbH Benetton Commerciale Tunisie Frankfurt am Main S.à r.l. Sousse 50% 100%

10 The BenettonThe Group Benetton Group S.p.A. Ponzano Veneto (TV)

New Ben GmbH Benetton Commerciale Tunisie (1) The remaining participation is directly owned by Benetton France S.àr.l. Frankfurt am Main S.à r.l. Sousse (2) The remaining participation is directly owned by Benetton Manufacturing Holding N.V. 50% 100% (3) The remaining participation is directly owned by Benetton International S.A.

11 The BenettonThe Group LETTER TO THE SHAREHOLDERS FROM THE CHAIRMAN AND FOUNDER OF THE BENETTON GROUP, LUCIANO BENETTON

To the shareholders,

Our second 40 years have got off to a good start. The year 2006 was one of solid growth in revenues, earnings and investments.

Now is the time to step up development. We must continue to grow in our traditional markets, like Europe, by identifying new business opportunities.

And we must also take decisive steps for growth on new markets like those in the Far East. Even if competition is extremely fierce, our manufacturing and sales organization is as vibrant as ever thanks to its ability to constantly adapt to change, its flexibility, the creativity of our collections and our collaboration with an accredited network of international business partners.

The market potential in the Far East must be faced on all fronts, which is why we have set up the new logistics-manufacturing facilities in China and India to distribute our products quickly to all the surrounding countries. But the Far East should not distract us from our continued exploration of new frontier markets, especially those in the Middle East.

We can relay on a strong identity rooted in our history: a unique and particular way of being international, which has made us special and different from our competitors. Above all, because Benetton has always been a group open to the world and the future.

12 The BenettonThe Group Now, more than ever, we have a winning business model which is fuelled by the energy, enthusiasm and collaboration of many partners, united in a cohesive, efficient team that spans the entire world.

Benetton is a continuing story. Every day we face the challenge of change with greater speed and efficiency in order to take better care of our customers.

We change in order to move ahead and grow. But the necessary, constant evolution of strategies, goals and leadership still rests on our founding principles and values: new ideas, passion and the courage to realize them.

Luciano Benetton Chairman, Benetton Group S.p.A.

13 The BenettonThe Group Disclaimer This document contains forward-looking statements, specifically in the section entitled “Outlook for 2007”, relating to future events and operating, economic and financial results of the Benetton Group. By their nature such forecasts contain an element of risk and uncertainty, because they depend on the occurrence of future events and developments. The actual results may differ, even significantly, from those announced for a number of reasons, particularly in relation to those described in the section on “Risk factors”.

KEY FINANCIAL DATA - HIGHLIGHTS Application of IFRS The Group’s financial statements for 2006 and comparative years have been drawn up in accordance with the International Financial Reporting Standards (IFRS) adopted by the European Union which are in force at the date of preparing this report. These standards do not differ, in any material respect, from those issued by the International Accounting Standards Board (IASB), meaning that any application of the latter would not have any significant effect on the Group’s financial statements.

Key operating data (millions of Euro) 2006 % 2005 % Change % Revenues 1,911 100.0 1,765 100.0 146 8.3 Gross operating income 806 42.2 770 43.6 36 4.7 Contribution margin 669 35.0 643 36.4 26 3.9 EBITDA 276 14.4 285 16.2 (9) (3.3) Operating profit 180 9.4 157 8.9 23 14.2 Net income for the year attributable to the Parent Company and minority interests 128 6.7 114 6.5 14 12.1 Net income for the year attributable to the Parent Company 125 6.5 112 6.3 13 11.7

14 The BenettonThe Group Key financial data (millions of Euro) 12.31.2006 12.31.2005 Working capital 623 688 Assets held for sale 7 8 Net capital employed 1,710 1,626 Net financial indebtedness 369 351 Total shareholders’ equity 1,341 1,275 Free cash flow (normalized) 21 167 (A) Net total investments/(disposals) (excluding purchase and sale of securities) 216 118 (A) Excludes Euro 118 million in proceeds from the sale of financial assets.

Financial ratios (in %) 12.31.2006 12.31.2005 ROE (Net income / Shareholders’ equity) 9.47 8.87 ROI (Operating profit / Net capital employed) 10.50 9.67 EBITDA/Revenues ((Operating profit + depreciation and amortization + other non-monetary costs) / Revenues) 14.43 16.20 ROS (Operating profit / Revenues) 9.39 8.90 Income / Revenues 6.54 6.34

Share and market data 12.31.2006 12.31.2005 Basic earnings per share (Euro) 0.69 0.62 Shareholders’ equity per share (Euro) 7.22 6.95 Price at year end (Euro) 14.47 9.62 Screen-based market: high (Euro) 15.61 10.15 Screen-based market: low (Euro) 9.62 7.01 Market capitalization (thousands of Euro) 2,630,909 1,746,596 Average no. of shares outstanding 181,868,467 181,558,811 Number of shares outstanding 182,675,492 181,558,811

Number of personnel 12.31.2006 12.31.2005 Total employees 8,894 7,978

15 The BenettonThe Group

A LOOK AT THE FUTURE WITH THE DEPUTY CHAIRMAN, ALESSANDRO BENETTON

Values and growth

Benetton’s first 40 years owe their success above all to the ideas, creativity and commitment of its founders. What values will the Group adopt for its growth in the next 40 years? Our future must not betray the fundamental characteristics of the past, the link forming part of this company’s DNA: change in the name of innovation. This is the philosophy that guided the founders and which has let the Benetton Group express its vision of the world over time, giving it a high-profile corporate identity. Now, with the explosion of markets and competition, the ability to change is an essential for those seeking continued growth which, fortunately for us, is a way of life, based on our values: team, know-how, quality. We want to focus on this updated version of our philosophy to offer high-quality, rapid service and to simplify processes in order to achieve our ambitious targets regarding new opportunities and acceleration of the Group’s growth.

What areas do you think will most contribute to future growth? The growth of a group of our size is driven by different factors: geographical expansion, product lines, brand extension and ultimately growth through acquisitions and partnerships. It is not therefore a question of setting priorities but of managing and seeking opportunities. Take geographical expansion, this has been a constant in the company’s history and we are now entering areas that many regard as more than frontier markets. We must also concentrate on the opportunities that a global brand like ours offers in areas complementary to apparel, just like we must segment our products in order to boost sales to consumer groups where our market share is small. In short, it is a question of working on many areas at the same time.

17 The BenettonThe Group But surely an all-encompassing approach of this kind risks lacking focus. Absolutely not, also because it is not a question of going forward with everything on a trial basis but of making strategic decisions that are consistent with the business and the brand and then of experimenting in areas in which the best growth opportunities have been identified, while still maintaining a high degree of flexibility. Take our business model, for example. We have a winning model with accredited partners that mostly allows us to achieve excellent results, but this does not detract from our duty to manage the business directly when we believe this to be the best option for the company or to enter a new market with a partnership in order to share risks and opportunities with someone who knows the market.

The future also relates to the relationship between shareholders, management and corporate governance. What will change? Once again our future decisions have their roots in the past: the main decisions have already been taken. Our corporate governance is of a high standard, in which the roles of shareholders, management and all the company’s governing bodies are clear. Management has the key task of implementing with the utmost efficiency the strategy decided by shareholders and the Board of Directors, having agreed objectives and priorities. As far as I am concerned, I am deeply committed to strengthening the business’s managerialization process by supporting management in the identification of actions to be taken and priorities, as well as stimulating the exchange of ideas between the company structures. I am firmly convinced that by so doing we shall be able to take up all the opportunities, also by dedicating resources to exploring and experimenting new projects and by putting our experience and expertise into play. Everything we do must be based on our guiding values of team, know-how and quality, accompanied by a deep ethical sense of role and a moral assumption of responsibility.

18 The BenettonThe Group