Annual Report 2008

MISSION Piaggio is an Italian industrial Group operating with a multinational strategy, whose activities are directed towards offering transport solutions at an affordable price and with low environmental impact to customers in more than fifty countries in Europe, India, Asia and America. Its objectives are to create value for its shareholders, while fully complying with business ethics and recognising the social role that it has to play, contributing to the professional advancement of its employees and partners and to the economic and civil development of the Communities in which it operates. 2 INTERNATIONALIZATION The Piaggio Group has a commercial presence in over fifty countries, in Europe, India, Asia and America. It operates out of production facilities located in Italy, Spain, India and China. In 2009, production operations will commence in the new facilities in Vietnam. 3 4 INNOVATION For the Piaggio Group, which continually strives to satisfy market needs, the industrial development of products and new technologies capable of offering performances that are superior to those of the competition, is a key factor for success. 5 6 SAFETY The Piaggio Group is constantly committed to safety. During the course of 2008, Aprilia introduced ABS on all its most recent models, underscoring its commitment to “maximising enjoyment while minimising risk”. 7 ENVIRONMENT FRIENDLY The Piaggio Group has always been sensitive to environmental issues. Vehicles currently being produced meet the most stringent international pollution regulations. During the course of 2008, the company began selling commercial vehicles equipped with a dual - petrol and autogas (LPG) - fuel system. It is developing a hybrid engine (electric and petrol) for the immediate future that will be sold on a number of scooter models. 8 9 10 NETWORK CAPILLARITY The sales network consists of more than 10 thousand operators in the primary and sub-network in Europe, 250 exclusive dealers in India and 300 dealers in the USA, to which must be added the distribution network of Piaggio importers in the other countries. 11 12 Financial statement and consolidated financial statement closed at 31 December 2008. Shareholders’ meeting The Annual Shareholders’ General Meeting is convened in the company’s offices in Pontedera, Viale Rinaldo Piaggio 25, on 14 April 2009 at 9:00 on first call and on 16 April 2009 on second call, in Intesa Sanpaolo’s Meeting Hall in Milan, Piazza Belgioioso n. 1 at 3 o’ clock p.m., to decide on the following Agenda 1) Piaggio & C. S.p.A.’s financial statement at 31 December 2008; Company Directors’ Report on financial year 2008 and proposal for allocating the net income; Board of Statutory Auditors’ Report; Report from the Auditing Company; related and consequent resolutions; submission of the Piaggio Group’s Consoli- dated financial statements at 31 December 2008 and respective reports. 2) Appointing the Board of Directors, upon determining the number of board members, the term of office, their remuneration and the related and consequent resolutions. 3) Appointing the Board of Statutory Auditors and its Chairman; determining the remuneration and related and consequent resolutions. 4) The purchase authorization and disposition for own shares in accordance with the combined provisions set out by articles 2357 and 2357-ter of the Civil Code, as well as article 132 of Legislative Decree 58/1998 and the respective operating dispositions with prior revocation of the authorization given on the Annual General Meeting of June 24th 2008 for the part that was not carried out. Related and consequent resolutions. 5) The modification on the accounting auditing assignment given to Deloitte & Touche S.p.A. on the Com- pany’s Annual General Meeting of March 30th 2006, in accordance with article 155 and subsequent articles of Legislative Decree 58/1998, and consequent re-calculations of the amount dues for the same assignment for the accounting years 2008-2001. Related and consequent resolutions. 13 14 Summary The Group’s structure Page 15 Company Boards Page 16 Approval proposal for the financial statement and for the allocation of the net income Page 17 Financial Highlights Page 19 Main information by business unit Page 20 Main information by geographical area Page 21 Piaggio and the financial markets Page 25 Significant events during the year Page 24 Management Report Page 29 Piaggio Group profile Page 29 Financial and business performance of the Piaggio Group Page 30 Significant events after 31 December 2008 Page 34 Management progress Page 34 Dealings with related parties Page 34 The market scenario Page 35 The regulatory framework Page 39 The Piaggio Group Page 42 Risk factors Page 51 Human resources and quality systems Page 56 Other information Page 59 Corporate governance report Page 61 The Piaggio Group – Consolidated financial statements at 31 December 2008 Page 90 - Income statement Page 91 - Balance sheet Page 92 - Cash flow statement Page 94 - Net financial position Page 96 - Schedule of changes in consolidated shareholders’ equity Page 98 - Explanatory and additional note Page 100 Piaggio & C. S.p.A. – Financial statement at 31 December 2008 Page 160 - Financial and economic performance of Piaggio & C. S.p.A. Page 161 - Economic performance of Parent Company Piaggio & C. S.p.A. Page 162 - Income statement Page 167 - Balance sheet Page 168 - Cash flow statement Page 170 - Net financial position Page 173 - Schedule of changes in shareholders’ equity Page 174 - Explanatory and additional notes Page 176 Report Board of Statutory Auditors’ Report Page 240 Auditing Company’s Report Page 245 15 The Group’s structure 15 Company boards 16 Approval proposal for the financial statement and for the allocation of the net income 17 Financial Highlights 19 Main information by business unit 20 Main information by geographical area 21 Piaggio and the financial markets 23 Significant events during the year 24 16 THE GROUP’S STRUCTURE The Piaggio Group’s Corporate Framework December 31st, 2008 ITALY 32,5% NACIONAL PIAGGIO ZONGSHEN MOTOR SA VEHICLES PIAGGIO FOSHAN Spain PVT.LTD MOTORCYCLE 51% 100% India CO.LTD Cina 99,99% 45% PIAGGIO VIETNAM CO.LTD Vietnam 87,5% 12,5% PIAGGIO APRILIA DERBI PIAGGIO CHINA APRILIA WORLD VESPA B.V. 36,5% RACING SRL RACING SL CO.LTD SERVICE B.V. Holland 100% 100% Hong Kong Holland 99,99% 100% 100% APRILIA WORLD PIAGGIO PIAGGIO PIAGGIO GROUP APRILIA FINANCE S.A. LIMITED MOTO UK LTD SERVICE B.V. AMERICAS Inc. Swiss Lussemburgo UK USA U.K. 99,99% 99,99% 100% branch 100% office APRILIA PIAGGIO PIAGGIO IMMSI AUDIT WORLD SERVICE FRANCE SAS HELLAS S.A. HOLDING Scarl France Greece DO BRASIL Ltda. 25% 100% 100% Brasil 99,99% PIAGGIO GROUP PIAGGIO APRILIA JAPAN BENELUX BV BRASIL S.A. Japan Holland Brasil 100% 100% 51% PIAGGIO PIAGGIO DEUTSCHLAND HRVATSKA GMBH DOO Croatia ASSOCIATED COMPANIES: Germany 75% • Pont-Tech S.r.l. (20.44%) 100% • SAT S.A. (20%) • Acciones Depuradora (22% stakeholder by Nacional Motor S.A.) PIAGGIO ASIA PACIFIC LTD Singapore COMPANIES UNDER LIQUIDATION: 100% • P & D S.p.A. (100% stakeholder by Piaggio & C. S.p.A,) • Moto Laverda S.r.l. (100% stakeholder by Piaggio & C. S.p.A,) • Piaggio Portugal Ltda (100% stakeholder by Piaggio Vespa B.V.) 17 18 BOARD OF DIRECTORS CONSIGLIO DI AMMINISTRAZIONE1 President Roberto Colaninno (1) Vice-president Matteo Colaninno CEO Roberto Colaninno Advisors Gian Giacomo Attolico Trivulzio Michele Colaninno Franco Debenedetti (3), (4) Daniele Discepolo (2), (5) Luciano La Noce (3), (4) Giorgio Magnoni Gianclaudio Neri Luca Paravicini Crespi (3), (5) Riccardo Varaldo (4), (5) (1) Director in charge of internal audit (2) Lead Independent Director (3) Member of the Appointments Committee (4) Member of the Remuneration Committee (5) Member of the Internal Control Committee BOARD OF STATUTORY AUDITORS President Giovanni Barbara Standing auditors Attilio Francesco Arietti Alessandro Lai Substitute Auditors Mauro Girelli Elena Fornara (6) (6) Appointed on 7 May 2008 SUPERVISORY BODY Enrico Ingrillì Giovanni Barbara Alessandro Bertolini (7) (7) Up to November 30 2008 GENERAL MANAGERS Daniele Bandiera Michele Pallottini MANAGER IN CHARGE OF PREPA- Alessandra Simonotto RING THE COMPANy’s corPORATE ACCOUNTING DOCUMENTS INDEPENDENT AUDITORS Deloitte & Touche S.p.A. 19 Summary Approval proposal for the financial statement and for the allocation of the net income Dear Shareholders, We wish to propose the approval of the financial statement at 31 December 2008, recorded therein accor- ding to IFRS (International Financial Reporting Standards). Furthermore, considering the need to have an available reserve, enough to cover non-amortised development costs recorded in the assets (in accordance with art. 2426, nr. 5 of the Civil Code), we wish to propose the allocation of profits of Euro 29,984,275.47 as follow: • Euro 1,499,213.77 for legal reserve; • Euro 6,364,985.84 for profit carried forward; • the remaining Euro 22,120,075.86 for dividend distribution. Depending on the approval by the assembly, the Company will payout a dividend of 0.06 per share, starting from 21 May 2009, with a dividend payment date on 18 May 2009, inclusive of the portion for own shares in accordance with art. 2357-ter of the Civil Code. Milan, 26 February 2009 For the Board of Directors Chairman and Chief Executive Officer Roberto Colaninno 20 Summary FINANCIAL HIGHLIGHTS PIAGGIO GROUP (amounts in ML€) 2008 2007 Income statement (reclassified) Net sales 1,570.1 1,692.1 Gross industrial margin 468.8 498.4 Operating costs -374.3 -361.8

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