STATUTORY AND CONSOLIDATED FINANCIAL STATEMENTS AT DECEMBER 31ST, 2007 Antichi Pellettieri 2007 Annual report - page 1 ANTICHI PELLETTIERI GROUP - 2007 Annual Report Antichi Pellettieri 2007 Annual report - page 2 CONTENTS 3 Directors' report 4 Officers 5 Main events in 2007 6 Group performance 8 Distribution network 9 Brand portfolio 10 Group structure 13 Investments and research & development 14 Results 20 Personnel and corporate governance 24 Financial risks 25 Business outlook 26 Consolidated financial statements of the Antichi Pellettieri Group at December 31st, 2007 27 Consolidated balance sheet 29 Consolidated profit and loss account 30 Consolidated IFRS cash flow statement 31 Consolidated statement of changes in shareholders' equity 33 Consolidated balance sheet pursuant to CONSOB Resolution 11519 of July 27th, 2006 35 Consolidated profit and loss account pursuant to CONSOB Resolution 11519 of July 27th, 2006 36 IFRS cash flow statement pursuant to CONSOB Resolution 11519 of July 27th, 2006 37 Notes to the consolidated financial statements 72 Intercompany and related party transactions 73 Consolidated net financial position 76 Annex 1 to the consolidated financial statements: consolidated companies 77 Annex 2 to the consolidated financial statements: companies excluded from the consolidation 78 Annex 3: Map of the consolidation 79 Annex 4: Reconciliation between the parent company's net profit and shareholders’ equity and the corresponding consolidated figures 80 Information pursuant to Art. 80-duodecies of the CONSOB Regulations for Issuers 81 Certification of the consolidated financial statements pursuant to Art. 81-ter of CONSOB Regulation 11971 of May 14th, 1999, as amended 82 Separate financial statements of Antichi Pellettieri SpA at December 31st, 2007 83 Directors' report 83 Results 86 Reconciliation between the parent company's net profit and shareholders’ equity and the corresponding consolidated figures 87 Other information 90 Motions 91 Balance sheet 93 Profit and loss account 94 IFRS cash flow statement 95 Statement of changes in shareholders' equity 96 Balance sheet pursuant to CONSOB Resolution 11519 of July 27th, 2006 98 Profit and loss account pursuant to CONSOB Resolution 11519 of July 27th, 2006 99 IFRS cash flow statement pursuant to CONSOB Resolution 11519 of July 27th, 2006 100 Notes to the financial statements 134 Intercompany and related party transactions 135 Net financial position 141 Certification of the separate financial statements pursuant to Art. 141-ter of CONSOB Regulation 11971 of May 14th, 1999, as amended 142 Appendix – Transition to International Accounting Standards (IAS/IFRS) by Antichi Pellettieri SpA 153 Report of the Board of Statutory Auditors and external auditors' report Antichi Pellettieri 2007 Annual report - page 3 DIRECTORS' REPORT The Antichi Pellettieri Group, listed in the Expandi section of the Milan Stock Exchange since June 7th, 2006 and chaired by Giovanni Burani, operates in the leather goods and apparel sectors. Antichi Pellettieri SpA is an Italian joint-stock company. Its registered office is at Via della Repubblica 82, Cavriago (RE), Italy. Share capital: €11,374,831 fully paid-in. Companies Register of Reggio Emilia; VAT and tax identification no. 04271670962 Under the management and coordination of Mariella Burani Fashion Group SpA This report can be downloaded from www.antichipellettieri.it. Antichi Pellettieri 2007 Annual report - page 4 Officers Board of Directors Chairman and CEO – Giovanni Burani Managing Director – Giovanni Stella Director – Walter Burani Director - Andrea Burani Director –Riccardo Braccialini Director – Giuseppe Gullo Independent director - Roberto Pilotto Board of Statutory Auditors Chairman – Giovanni Grazzini Standing Auditor – Fabrizio Fontanesi Standing Auditor – Pietro Lia Alternate auditor – Elvira Grazzini Alternate auditor – Gian Marco Pilotti External auditors Mazars & Guérard SpA Antichi Pellettieri 2007 Annual report - page 5 The annual report consists of the consolidated report on operations, consolidated balance sheet, consolidated profit and loss account, consolidated cash flow statement, consolidated statement of changes in shareholders' equity and notes to the consolidated financial statements, and of the parent company's report on operations, balance sheet, profit and loss account, cash flow statement, statement of changes in shareholders' equity and notes. The financial statements of Antichi Pellettieri SpA and the consolidated financial statements have been prepared in accordance with the International Accounting Standards (IAS/IFRS). Figures are expressed in thousands of euros (€/000), unless otherwise noted. MAIN EVENTS IN 2007 On January 15th, Antichi Pellettieri decided to redeem the full €10,994,386 allowable (per regulations and as described in the prospectus) of the €13,992,853 in convertible bonds issued on April 12th, 2006. The total outlay for Antichi Pellettieri was €11,971,291, including the redemption premium and accrued interest. On the same date, again in accordance with the bond regulations and as described in the prospectus, Development Capital decided to convert as of January 31st, 2007 the remaining €2,998,467 in bonds into 503,944 shares of Antichi Pellettieri SpA. On July 12th, the subsidiary Braccialini Srl acquired 90% of Dadorosa Srl, the worldwide licensee of renowned brand Gherardini. On July 24th, Braccialini acquired the remaining 10% of Dadorosa from Misaki Shoji Co. Ltd., a leading Japanese luxury goods distributor. Gherardini, a Florentine label dating to 1885, is admired internationally for the unique style of its innovative collections of handbags, small leather goods, footwear and accessories. DADOROSA Dadorosa Srl is based in Scandicci, near Florence—Italy's premiere leather goods district—and is licensed globally for the production and distribution of the complete range of Gherardini merchandise. It also operates three Gherardini boutiques, in Milan, Florence and Rome. In 2006, Dadorosa grossed €16.8 million and reported EBITDA of €1.4 million, or 8.5% of sales. Export revenues account for 61% of total sales, with 50% generated in the Far East. THE ACQUISITION The full purchase price for Dadorosa is €8.9 million. With net debt of €0.7 million at April 30th, 2007, the enterprise value of Dadorosa is calculated at €9.6 million, resulting in an EV/EBITDA multiple of 6.7x. Group performance In 2007 the Antichi Pellettieri Group earned consolidated revenues of €300.2 million, up from €257.5 million in 2006, an increase of 16.6%. Sales growth owes mainly to the existing Group companies, which did well in the New Europe, the Far East and the Middle East, and to the consolidation of the new acquiree Dadorosa. Antichi Pellettieri 2007 Annual report - page 6 Thanks to the improved sales mix, revenues from own brands came to 86.2% of the total and exports to 61.2%, fueled by sales in emerging markets (Eastern Europe, Russia, the Middle East and the Far East) which now accounts for 40.3% of total turnover. Revenues from direct distribution channels (directly owned stores [DOS], franchising and multi- brand boutiques that buy directly from Group showrooms) increased, generating 58.7% of consolidated sales. EBITDA for the year came to €47.8 million, an increase of 36.7% on the 2006 result of €35 million, and amounted to 15.9% of sales (16.6% the previous year). The growth stems from a development strategy based on the constant improvement of the sales mix, through more profitable goods and distribution channels, and from the economies of scale generated by the increase in revenues and volumes. EBIT rose from €26.1 million in 2006 to €35.9 million for the year (+37.3%), coming in at 11.9% of sales. The pre tax profit was €27.8 million, an increase of 47.2% on the previous year (€18.9 million). Net debt at December 31st, 2007 was €64.3 million, reflecting an optimal debt/equity ratio of 0.37. These results confirm the Group's potential as it continues to reinforce proprietary brands through PR efforts and the opening of single-label boutiques (DOS and franchises) in strategic locations (with a 30.4% increase in revenues compared with 2006), while working to integrate and develop new synergies among the companies that make up the Group. Net revenues by category 12/31/07 % 12/31/06 % Revenues from own brands 258,828 86.2% 221,908 86.2% Revenues from licensed brands 41,029 13.7% 35,553 13.8% TOTAL 299,857 100% 257,461 100% Royalties 319 0.1% 0 0.0% GRAND TOTAL 300,176 100% 257,461 100% The international competitive context The Group's fine results confirm that it is correctly positioned in the accessible luxury sector, which is relatively ignored by most competitors. Antichi Pellettieri's advantage is the way it blends a range of companies to optimize production, distribution and financial synergies, in order to strengthen its hold on traditional markets and penetrate those where it is not yet active. In the second half of 2007, the international consumer goods industry suffered at the hands of the subprime mortgage crisis. Antichi Pellettieri, thanks to its focus on emerging countries (Russia, Eastern Europe and the Middle East) and its minimal exposure to the U.S. market, achieved excellent growth results and in December enjoyed outstanding sales figures at its directly operated stores. The sales campaigns for spring/summer 2008, conducted from September through November 2007, showed a 20% increase in orders with respect to the same season the previous year. While nurturing its traditional buyers, the Group also brought in several new Antichi Pellettieri 2007 Annual report - page 7 customers. The fact that most of these are based in emerging countries testifies to the great potential still waiting to be tapped in these markets. Revenues by region Europe remains the Group's key market, contributing 81.8% of total revenues in 2007. Within the region, growth rates are swift in Eastern European and Russia, which accounted for 26.2% of the total (21% in 2006). Emerging markets in the Far East made up 9.4% of total sales, thanks to major development efforts by the Group in recent years.