Annual report and financial statements 2009 and financial statements Annual report Annual report and financial statements 2009 ANNUAL REPORT AND FINANCIAL STATEMENTS 2009 81° FISCAL YEARS RENO DE MEDICI pag 1 RENO DE MEDICI Annual report and financial statements ended 31 December 2009 (1) 81° Fiscal Years Ordinary shareholders’ meeting of 26 April 2010 first call of 27 April 2010 second call Reno De Medici S.p.A. Milano, Via Durini 16/18 Share capital Euro 185,122,487.06 Fiscal code and VAT no. 00883670150 (1) This document is an English translation from Italian. The Italian original shall prevail in case of difference in interpretation and/or factual errors. pag 3 Contents CONTENTS NOTICE OF ORDINARY SHAREHOLDERS’ MEETING SUMMARISED AND GENERAL INFORMATION Company bodies and independent auditors pag. 9 Principal economic and financial data of the Group and of Reno De Medici s.p.a. pag. 10 Operating companies of the Reno De Medici Group at 31 december 2009 pag. 13 Shareholders pag. 14 REPORT OF THE BOARD OF DIRECTORS Reference market and performance pag. 15 Major operations of the Reno De Medici Group in 2009 pag. 16 Principal risks and uncertainties to which Reno De Medici S.p.A. and the Group are exposed pag. 20 Economic and financial performance of the Reno De Medici Group pag. 22 Economic and financial performance of Reno De Medici S.p.A. pag. 28 Reconciliation between the group’s net result for the year and net equity and those of the parent company Reno De Medici S.p.A. pag. 33 Reconciliation between the Group’s net financial position for the year end those of the parent company Reno De Medici S.p.A. pag. 34 Other information pag. 35 Subsequent events pag. 39 Outlook for operations pag. 40 Report on corporate governance and ownership structures pag. 41 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AT 31 DECEMBER 2009 Consolidated income statement pag. 98 Consolidated statement of comprehensive income pag. 99 Consolidated statement of financial position pag. 100 Consolidated cash flow statement pag. 102 Statement of changes in consolidated shareholders’ equity pag. 103 pag 5 Contents Notes to the consolidated financial statements pag. 104 Accounting principles and policies pag. 108 Financial instrument and risk management pag. 153 Other information pag. 167 Related parties transactions pag. 171 Subsequent events pag. 174 Attestation pag. 175 Report of the independent auditors pag. 176 FINANCIAL STATEMENTS OF PARENT COMPANY AT 31 DECEMBER 2009 Income statement pag. 180 Statement of comprehensive income pag. 181 Statement of financial position pag. 182 Cash flow statement pag. 184 Statement of changes in shareholders’ equity pag. 185 Notes to financial statements pag. 186 Accounting principles and policies pag. 190 Financial instrument and risk management pag. 233 Attachment A – details of transactions with related parties and group companies as at and for the year ended 31 december 2009. pag. 248 Attachment B – remuneration of members of the board of directors, member of the board of statutory auditors and general managers pag. 252 Attachment C – list of investments in subsidiary companies and associates pag. 253 Attachment D – compensation plans based on financial instruments pag. 255 Report of the board of statutory auditors pag. 256 Information pursuant to article 149-duodecies of the consob regulations for issuers pag. 261 Report of the independent auditors pag. 262 Attestation pag. 264 PROPOSAL TO THE SHAREHOLDERS’ MEETING pag. 265 SUMMARY OF THE PRINCIPAL FIGURES FROM THE MOST RECENT FINANCIAL STATEMENTS OF THE SUBSIDIARY COMPANIES, ASSOCIATES AND JOINT VENTURE OF THE RENO DE MEDICI GROUP pag. 266 pag 6 Notice of ordinary shareholders’ meeting NOTICE OF ORDINARY SHAREHOLDERS’ MEETING The shareholders of Reno De Medici S.p.A. are called to an Ordinary General Meeting at 11.30 a.m. on 26 April 2010 at the company’s registered office in Via Durini 16/18 - Milan, Italy in first call and, as required, at 11.30 a.m. on 27 April 2010 at Borsa Italiana, Piazza degli Affari 6, Milan, Italy in second call, to discuss and adopt resolutions on the following AGENDA 1. Annual financial statements for the year ended 31 December 2009: 1.1 Approval of the annual financial statements for the year ended 31 December 2009 and Reports of the Board of Directors, the Board of Statutory Auditors and the Independent Auditors; 1.2 Presentation of the consolidated financial statements for the year ended 31 December 2009. 2. Appointment of one member to the Board of Directors: 2.1 Decisions regarding the number of members of the Board of Directors; 2.2 Appointment of one member to the Board of Directors. Addition to the Agenda Pursuant to article 126-bis of Legislative Decree no. 58/98, shareholders representing at least one fortieth of share capital with voting powers, also jointly, may request additions to be made to the matters to be discussed within five days of this notice, providing an indication in their application of the additional matters being proposed. Additions are not permitted for matters on which, by law, the shareholders’ meeting adopts resolutions on proposals made by the board of directors or on the basis of a project or report that the board has prepared. The list of matters to be discussed at the shareholders’ meeting, with additions as applicable, will be published by the same means as this notice. Attendance rights Pursuant to article 2370 of the Italian civil code and article 8 of the company’s bylaws, shareholders are entitled to attend if they hold ordinary pag 7 Notice of ordinary shares for which the company has received a notification of attendance shareholders’ meeting from an authorised intermediary, which pursuant to prevailing provisions must be by the second working day prior to that of the shareholders’ meeting. Each shareholder may be represented by written proxy by another person, who does not necessarily have to be a shareholder, by the means and under the terms of the law. In this case on lodging their shares for attendance shareholders can obtain a proxy form from authorised intermediaries for delegating participation at the shareholders’ meeting. Shareholders are requested to arrive before the time for which the meeting has been called to facilitate registration and to this end to present themselves with a copy of this notice. The following is noted pursuant to article 84 of Consob Regulation no. 11971/99: a) The company’s share capital is currently Euro 185,122,487.06 consisting of 377,800,994 shares divided into: 1) 377,431,930 ordinary shares each of nominal value Euro 0.49; 2) 369,064 convertible savings shares. Pursuant to article 6 of the company’s bylaws savings shares are not entitled to vote in either ordinary or extraordinary shareholders’ meetings; b) each ordinary share provides the entitlement to one vote in a shareholders’ meeting; c) the company holds no treasury shares. Appointment of one member to the Board of Directors Pursuant to paragraph 16b) of article 12 of the company’s bylaws, to which reference should be made, if any directors leave office during the year then provided the majority of the board continues to consist of directors appointed by the shareholders’ meeting measures must be taken pursuant to article 2386 of the Italian civil code, and the shareholders’ meeting must appoint the member(s) of the board of directors with the majorities required by law, without a list vote. Pursuant to paragraph 17 of said article 12 of the company’s bylaws, the board of directors and the shareholders must arrange for the appointment in such a way as to ensure that there is the minimum number of independent directors required by the laws and regulations prevailing at that time. The shareholders’ meeting may, however, resolve to reduce the number of members of the board of directors to that of the directors in office, for the remaining period of their term. The names of any persons wishing to stand may be lodged at the company’s registered office. pag 8 Notice of ordinary Documentation shareholders’ meeting It is hereby noted that the documentation relating to the matters on the agenda that is required by prevailing laws and regulations must be put at the public’s disposal within the terms of law at the company’s registered office at Via Durini 16/18, Milan, Italy and at Borsa Italiana S.p.A.; copies may be made of this. This documentation may also be consulted on the website www.renodemedici.it Milan, 26 March 2010 On behalf of the Board of Directors The Chairman Christian Dubè pag 9 Summarised and general information COMPANY BODIES AND INDEPENDENT AUDITORS BOARD OF DIRECTORS Christian Dubé Chairman Giuseppe Garofano Deputy Chairman Ignazio Capuano Managing Director Riccardo Ciardullo Director Robert Hall Director Sergio Garribba Director Laurent Lemaire Director Mirko Leo Director Vincenzo Nicastro Director Carlo Peretti Director Emanuele Rossini Director BOARD OF STATUTORY AUDITORS Sergio Pivato Chairman Giovanni Maria Conti Standing Auditor Carlo Tavormina Standing Auditor Domenico Maisano Substitute Auditor Myrta de’ Mozzi Substitute Auditor INDEPENDENT AUDITORS PricewaterhouseCoopers S.p.A. pag 10 Summarised and general information PRINCIPAL ECONOMIC AND FINANCIAL DATA OF THE GROUP AND OF RENO DE MEDICI S.P.A. The principal figures of the consolidated profit and loss account and balance sheet of the Reno De Medici Group (“RDM” or “Group”) at 31 December 2009 and for the year then ended, with comparative data for the prior year, are set out in the following. RDM GROUP (millions