Benetton Group Annual Report 2009

Benetton Group Annual Report 2009 Benetton Group S.p.A. Villa Minelli Ponzano Veneto (Treviso) - Italy Share capital: Euro 237,482,715.60 fully paid-in Tax ID/Treviso Company register: 00193320264 Contents The Benetton Group 5 Directors and other officers 5 Group structure at December 31, 2009 6 Notice of ordinary general meeting 8 Letter to the shareholders 10 Disclaimer 11 Key performance indicators 11 Directors’ report 13 2009 in overview 13 Brands 14 Markets 16 Opening Soon... and store evolution 17 Benetton on the stock market 18 Financial calendar 19 Supplementary information 20 - Corporate governance report and Ownership structure 20 - Benetton shares and shareholders 20 - Stock option plan 21 - Controlling interest 22 - Relations with the holding company, its subsidiaries and other related parties 22 - Compliance with personal data protection laws 22 - Articles 36 and 39 of the Market Regulations 22 - Principal organizational and corporate changes 22 - Significant events after December 31, 2009 23 - Outlook for 2010 23 Consolidated Group results 24 - Consolidated statement of income 24 - Operating segments 28 - Balance sheet and financial position highlights 30 - Financials by quarter 34 Benetton risk factors 35 Consolidated financial statements 39 Consolidated statement of income 40 Statement of comprehensive income 41 Consolidated balance sheet – Assets 42 Consolidated balance sheet – Shareholders’ equity and liabilities 43 Shareholders’ equity – Statement of changes 44 Consolidated statement of cash flows 45 2 THE BENETTON GROUP DIRECTOR’S REPORT CONSOLIDATED FINANCIAL STATEMENTS EXPLANATORY NOTES CERTIFICATION OF THE CONSOLIDATED FINANCIAL STATEMENTS AUDITORS’ REPORT SUPPLEMENTARY SCHEDULES GLOSSARY Explanatory notes 46 Summary of main accounting standards and policies 46 Financial risk management 57 Capital management 63 Comments on the principal items in the statement of income 64 Statement of comprehensive income 73 Comments on the principal asset items 74 Comments on the principal items in shareholders’ equity and liabilities 85 Commentary on the statement of cash flows 93 Supplementary information 94 Certification of the consolidated financial statements 107 Auditors’ report 108 Supplementary schedules 110 Glossary 115 3 4 THE BENETTON GROUP DIRECTOR’S REPORT CONSOLIDATED FINANCIAL STATEMENTS EXPLANATORY NOTES CERTIFICATION OF THE CONSOLIDATED FINANCIAL STATEMENTS AUDITORS’ REPORT SUPPLEMENTARY SCHEDULES GLOSSARY The Benetton Group Directors and other officers Board of Directors Luciano Benetton Chairman Carlo Benetton Deputy Chairman Alessandro Benetton Executive Deputy Chairman Gerolamo Caccia Dominioni Chief Executive Officer Gilberto Benetton Directors Giuliana Benetton Luigi Arturo Bianchi Giorgio Brunetti Alfredo Malguzzi Gianni Mion Robert Singer Andrea Pezzangora Secretary to the Board Board of Statutory Auditors Angelo Casò Chairman Antonio Cortellazzo Auditors Filippo Duodo Piermauro Carabellese Alternate Auditors Marco Leotta Independent Auditors PricewaterhouseCoopers S.p.A. 5 Group structure at December 31, 2009 6 THE BENETTON GROUP DIRECTOR’S REPORT CONSOLIDATED FINANCIAL STATEMENTS EXPLANATORY NOTES CERTIFICATION OF THE CONSOLIDATED FINANCIAL STATEMENTS AUDITORS’ REPORT SUPPLEMENTARY SCHEDULES GLOSSARY 7 Notice of ordinary general meeting Shareholders are called to the Ordinary General Meeting to be held in first calling at 11.00 a.m. on April 22nd, 2010, at Via Villa Minelli 1, Ponzano Veneto (TV), Italy, or in second calling, if needed, on April 23rd, 2010, same time and place. Agenda 1. To examine the Annual Report as of December 31, 2009. Pertinent and related resolutions; 2. To appoint the Board of Directors, upon fixing the number of members and the duration of their term of office; 3. To determine the annual Directors' emolument; 4. To authorise the Board of Directors to the purchase and sale of own shares. Given the Company’s shareholder composition, it is expected that the General Meeting will be duly convened and may validly vote in first calling. Pursuant to the law in force and provided by Art. 9 of the Articles of Association, the right to attend and vote is reserved to those Shareholders who shall submit the communication issued by their relevant intermediaries. The communication must reach the Company at least two business days before the General Meeting's date. The shares will become available again after the General Meeting has taken place. The issued and fully paid share capital of the Company is of Euro 237,482,715.60=, divided into No. 182,679,012= ordinary shares with par value of Euro 1.30. Each ordinary share into circulation has one right to vote during the General Meeting. As of today the Company owns No. 10,345,910 ordinary shares for which the right to vote is suspended. The Shareholders may be represented by third parties through written proxy in accordance with the law, available at the Company’s website www.benettongroup.com/investors. The Chairman of the General Meeting shall verify the qualifications of the proxy holders and their right to intervene during the proceedings of the General Meeting. Regarding the appointment of the Board of Directors reference is made to the Company’s Articles of Association as specifically stated in Art. 14 also available in the website of the Company www.benettongroup.com/investors, section “Governance – Articles of Association”. It is pointed out that the appointment is done on the basis of lists presented by the shareholders containing a maximum of fifteen candidates, each appearing with a consecutive number. The candidates shall be in possession of the qualifications required by prevailing statutory and regulatory provisions. Each list shall include one or more candidates satisfying the independence qualifications in compliance with prevailing statutory and regulatory provisions ("Independent Directors"). Lists may be presented by only those shareholders who own, alone or together with others, at least 2% of share capital (percentage determined by CONSOB Resolution No. 17148 dated on January 27, 2010). The lists, signed by those presenting them, shall be filed at the Company's registered offices at least fifteen days in advance of the date set for the first calling of the Shareholders' Meeting convened to vote on the appointment of directors, accompanied by (i) information about the shareholders who have filed the lists, specifying their overall percentage interest in share capital, and (ii) documentation confirming them as shareholders and the percentage of share capital they own, (iii) comprehensive details on the personal characteristics and experience of the candidates, (iv) details as to whether the candidates qualify as Independent Directors, (v) a statement by the candidates themselves confirming that they are in possession of the requirements envisaged by prevailing statutory and regulatory provisions and the absence of any reasons for incompatibility and/or ineligibility, (vi) statements by the candidates in which they accept their candidacy and provide details of their appointments as directors or statutory auditors in other companies, (vii) any other information required by prevailing statutory and regulatory provisions. 8 THE BENETTON GROUP DIRECTOR’S REPORT CONSOLIDATED FINANCIAL STATEMENTS EXPLANATORY NOTES CERTIFICATION OF THE CONSOLIDATED FINANCIAL STATEMENTS AUDITORS’ REPORT SUPPLEMENTARY SCHEDULES GLOSSARY The lists shall be promptly published and, however, at least ten days in advance of the date set for the Shareholders’ meeting, to comply with the formalities provided by Art. 144 octies of CONSOB Regulation. Each shareholder may present or be involved in presenting only one list, including through a third party or trust company. Each candidate may appear in only one list, otherwise he will be disqualified. Lists for which the above provisions are not observed shall be treated as if they had not been presented. Shareholders presenting a minority list for the appointment of the Board of Directors shall file a declaration attesting they are not linked in any way, even indirectly, pursuant to Art. 147 ter, paragraph 3 of the Legislative Decree No. 58/98. All relevant documentation on the proposed resolutions will be available, within the established period, at the headquarters of the Company, at the office of Borsa Italiana S.p.A. and on the website of the Company www.benettongroup.com/investors. 9 Letter to the shareholders To the shareholders, Despite the difficult international economic environment, 2009 closed positively, confirming the solidity and seriousness of our Group, which for more than 40 years has stood for commitment, growth and consistency of results. The seriousness of our work, which in practice means doing the things we know how to do well, is guiding us responsibly in our development plans, primarily the commercial ones, by following a vision that always has the future in its sights. In 2009, the Opening Soon… project marked the start of an investment program in the store network, by seeking out and applying new ideas to the sales space, our established identity card, the mirror of the values of the Benetton brands and the object over the years of a continuous series of innovations. The new store in Istanbul, opened in 2009, represents the first concrete step in this innovative commercial development policy which, thanks to the collaboration of an established, active network of business partners, looks ahead to respond with energy and dynamism to the complexity of the world market, taking

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