directors' report and financial statements as at … the luxembourg subsidiary provided indesit...
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Directors' reportand financial statementsas at December 31, 2004
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INDESIT COMPANY S.P.A.
Registered office: V.le A. Merloni, 47 - 60044 Fabriano
Secondary headquarters: Via della Scrofa, 64 – 00186 Roma
Share capital: Euro 101,029,694.40 fully paid in
Tax code/VAT no. 00693740425
Ancona Companies Register no. 9677
BOARD OF DIRECTORS’ REPORT ON THE
THE FINANCIAL STATEMENTS OF INDESIT COMPANY S.P.A. AT 31st DECEMBER 2004
Economic background
The world economy grew by 3.8% in 2004, driven mainly by the US economy, which grew by 4.4%. In the Euro area signs of recovery were weak and growth of GDP stopped at around 2%, while in Eastern Europe Russia and Poland recorded growth of 6.8% and 5.6% respectively. In the European Union, the UK economy continued to grow (3%). Inflation in EU countries ran at 2.1%. Currency markets
2004 was characterized by a constant weakening of the dollar against the euro (average rate), which had gained 10% by the year end. The zloty too lost ground (2.9%) as did the Turkish lira (4.9%) and the rouble (3.3%). UK sterling on the other hand gained 1.9% on the euro. The cost of money in the euro area was 2.00%, in line with the end of 2003, while the interest rate in the UK rose to 4.75% (up 1% on the end of 2003). The interest rate also continued to rise in the USA, where it reached 2.25% at the end of 2004 (up 1.25% on the end of 2003). The white goods market in Europe
Demand for household appliances in Greater Europe in 2004 grew 6.7% by volume in 2004. In Western European markets growth in volumes was up 4% overall, though growth rates were uneven. While there was substantial growth in the UK (8%), Spain (7%) and Portugal (6%), there was a slackening of demand for white goods in some countries, such as Germany (1%) and The Netherlands (1%). The story was different in Eastern Europe (excepting the CIS and Turkey), as volumes fell by 3% overall (Slovakia +21%, Czech Republic +11%, Bulgaria –9%, Romania –24% and Croatia –31%). The CIS and Turkey saw growth of 15% and 60% respectively. There was strong pressure on prices in both Western and Eastern Europe.
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In this competitive and macroeconomic scenario Indesit Company managed to increase its market share by 0.3%. Significant events in 2004 and post-balance sheet events
On 1st January 2005 Merloni Elettrodomestici S.p.A changed its name to Indesit Company S.p.A. The change put the Group in line with other major operators in the consumer durables industry whose name is that of their main brand. The name change thus met the need to effectively communicate the links between the company and “Indesit”, the Group’s most international and widely sold brand. In this Report we will use Indesit Company to indicate the Group and Indesit Company S.p.A., or the Company, to indicate the Group parent company. In September 2004 Indesit Company Sa (Luxembourg) contracted a $330m medium/long-term loan (U.S. private placement), with various maturities, from certain institutional investors, mainly American. Designed to lengthen the average maturity of overall debt, the operation was closed on disbursement of the funds in September 2004. Following this operation the Luxembourg subsidiary provided Indesit Company Spa a €208m medium/long-term loan (maturity over 5years). In December 2004 Indesit Company transferred 30% of Faber Factor S.p.A. to Fineldo S.p.A., thus zeroing its interest in the factoring company, no longer deemed strategic. At the same time Gruppo Faber Factor transferred 29.4% of Aermarche S.p.A. to Indesit Company S.p.A., which already held 41.4% of the company. As a result, Aermarche S.p.A., a supplier of air transport services to Indesit Company and 3rd parties, became a subsidiary. Expression of values
All the comments and comparisons in the rest of this report refer to economic and financial data for financial 2004 with respect to financial 2003 (the latter indicated in brackets), unless otherwise specified. All the values in the annual report and summary accounts are in millions of euro, whereas the balance sheet, income statement and cash flow statement are in thousands of euro, as are the relative comments in the Notes. All percentages (margins and growth) are based on values in thousands of euro. Figures for the previous year are indicated in brackets. Income statement
Indesit Company S.p.A.’s income statement is summarized in the table below.
Consolidated income statement (€m)
31 December 2004 31 December 2003 Delta % Delta %
SALES 1.782 1.6618 122 7.3%
GROSS OPERATING MARGIN (EBITDA) 111 131 -20 -15.2%
% of sales 6.2% 7.9%
OPERATING MARGIN (EBIT) 32 59 -27 -45.1%
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% of sales 1.8% 3.6%
PROFITS BEFORE TAX (PBT) 99 64 35 54.9%
% of sales 5.6% 3.9%
TOTAL NET PROFITS 75 39 35 89.5%
% of sales 4.2% 2.4%
Total sales reached €1,782m (€1,661m), up 7.3%. EBITDA moved to €111m (€131m), down 15.2%. EBITDA over sales moved from 7.9% to 6.2% due to increasing pressure on prices, higher service and distribution costs incurred to improve customer service quality and, for the last quarter only, increases in raw materials costs not covered by annual agreements signed in 2003. The operating margin (EBIT) was €32m (€59m), down 45.1% and with an impact on sales of 1.8% (3.6%). The reduction in EBIT over sales reflects increased depreciation and amortization charges, which amounted to €79m (€72m). The increase in depreciation and amortization reflects higher levels of investment in both intangible and tangible fixed assets in 2003 and 2004. Financial income and charges shows a positive balance of €59m (€14m), which is 3.3% (0.8%) of sales. The increase in financial income was mainly due to increased dividends paid out by the subsidiary Closed Joint Stock Company Indesit CIS (former Zao Refrigerator Plant Stinol). Extraordinary income and charges shows a positive balance of €8m (€9m of charges). This positive balance was largely due to the effects of the disposal of the Indesit Company Magayarorszg Kft business and fiscal “de-pollution” following the Vietti reform. Profit before tax (PBT), at €99m (€64m), was 5.6% of sales (3.9%). Tax for the period, including current and deferred amounts, amounted to €24m (€24m) with net profits at €75m (€39m), which is 4.2% of sales (2.4%). Financial performance
The securitization operation initiated in 2002 and carried forward in 2004, with a major European bank, involved without-recourse transfer of almost all Indesit Company S.p.A.’s receivables from Italian clients. At the year-end, transferred receivables amounted to €114m, with €2m of financial charges written to the income statement in 2004. Operating cash flows (self-financing) reached €157m (€118m), whilst flows from working capital amounted to a positive €183m (€205m). Total cash flows amounted to €185m, thus bringing financial indebtedness to around €110m (€295m). Amounts payable to the Group company Indesit Company Luxembourg Sa, amounting to €208,000,000, refer to the private placement operation, as explained in the report on the consolidated statements. Dividend payout was €36m, on profits from 2003.
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Given that treasury management is centralized and financial indebtedness is managed at Group level, a wider-reaching and more detailed view of the financial management can be found in the directors’ report on the consolidated financial statements. Subsidiaries All the Indesit Company S.p.A. subsidiaries making up the Indesit Company Group operate in the white goods industry (production and marketing) or in any case do business that is instrumental to it. Indesit Company Group manages its shareholdings (listed in Annex 2 to the Supplementary Notes) on a regional basis. For further information on the regions, see the tables attached to the annual report on the consolidated statements and in general the comments in the consolidated statements on the main events concerning subsidiaries. Brands, products and R&D activities
2004 saw significant investments in ongoing renewal of the product range. Investments in product development amounted to €18m (€14m) across all the product lines (cooking, cooling, washing, dishwashers) and focussed on innovation in both products and processes. In 2004 the INDESIT brand attained leadership in the free standing segment with an increase of 0.3% of market share, mainly thanks to the launch of new washing machines (TIME4U) and fridges (PLAYZONE and GRAFFITI). 2004 also saw the start up of washing machine production in the new Lipetsk plant (CIS) and fridge and combi production (A+ and A++ Class consumption) in the new Lodz plant (Poland). Further, the hob, oven, dishwasher, hood and tumble dryer ranges were completely renewed. On the advertising front, the Company continued its classic media activities and also invested in the name change from Merloni Elettrodomestici S.p.A. to Indesit Company S.p.A. and the related changes in Group company names. Indesit Company stepped up its efforts to associate the Indesit brand with sport by sponsoring a number of important international events including volleyball and above all tennis (Indesit ATP Race). Regarding the ARISTON brand in 2004, new advertising campaigns were launched (and won significant recognition, including the prestigious top brand advertising) and new technological innovations were made (silent washing machines and the EVERFRESH system for fridges), confirming the ARISTON brand’s major role in the market. Further, the oven range was extended with the launch of the Experience line and the tumble dryerand top-loading washing machine ranges were completely renewed. HOTPOINT, judged for the 5th year in a row the UK’s best known and most reliable brand, launched its new brand identity and continued the process of integration with the ARISTON brand in terms of product ranges. The washing machine, dryer, dishwasher, hob, oven, fridge, combi and dishwasher ranges were fully renewed, with particular impact in the built-in segment, where the brand strengthened its positioning. Infra-Group business and business with affiliated parties
Business between Group companies is conducted at arm’s length and takes into account the quality of goods and services provided. Business conducted by the Group parent company and Group companies with affiliated parties, associated companies, subsidiaries, parent companies and companies controlled by the latter is dealt with in the relevant section of the Notes, where
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the nature of the main relationships with such parties is described, along with the detailed information required by Consob and IAS 24.
Indesit Company has adopted a procedure for carrying out significant operations with affiliated parties based on a series of principles of conduct designed to guarantee the transparency and correctness (material and procedural) of such operations. Under this procedure the board of directors is provided with full information on the nature of the affiliation, the type of operation, the terms (including economic) under which it is transacted, the evaluation procedure adopted, the underlying interest and motives and any risks for the Company. The procedure also provides for consultation of one or more independent experts regarding the economic conditions and/or legality and/or technical aspects of such operations. The same scope of information and the possibility of consulting independent experts are also provided for when such operations are carried out by executive directors or other persons representing the Company. In the case of operations indicated in art. 71-bis of Consob Rights Issue Rules, Indesit Company S.p.A. makes a public disclosure in the format required by said Rules. Shareholder resolutions on stock option plans
Stock option plan for Group managers and middle managers
The extraordinary shareholders’ meetings held on 16/09/98 (as modified by the meetings on 05/05/2000 and 07/05/2001) and 23rd October 2001 resolved to increase the share capital pursuant to art. 2441, paragraph 8 of the Italian Civil Code, by a maximum amount of €2,700,0000 each, issuing a maximum of 6,000,000 ordinary shares with a nominal value of €0.9 to fund a stock option plan for Group managers and middle managers. The Board of Directors, or the Chairman on its behalf, fixes the amount of options to allot each year and identifies the beneficiaries of stock options, as indicated by the CEO. For options allotted after 24th July 2003 there is a vesting period of three years for the first 50% and four years for the remaining 50%, whereas for options allotted prior to such date the vesting period was two and three years respectively. For further details on the progress of the stock option plans, see Annex 3. The CEO, as an employee of the Company, is the beneficiary of a stock option plan tied to his permanence in office for the period 2004-2006 and the achievement within said period of the sales and profits objectives fixed in the MTP (Medium term Plan) approved by the Board. The plan provides for the allotment of 900,000 options (300,000 for each exercising) on the acquisition of 900,000 of the Company’s own shares (ordinary). Allotment takes place at the end of each year. The price of exercise of the options is equal to the average stockmarket price of the Company’s ordinary shares over the 30 (thirty) days prior to 31st December each year. The price of exercise for the 2004 allotment was €12.5649, which is more than the book value of such own shares.
STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS HOLDING SIGNIFICANT POSTS
The extraordinary shareholders’ meetings on 23rd October 2001 and 6th May 2002 voted two capital increases, up to a maximum of 1,600,000 new shares, to fund a stock option plan for non-employee directors in posts significant for the strategic management of the company. The
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options allotted may be exercised as of 31st March 2004 and in any case no later than 31st March 2006. The subscription price is €4.76 for the 1,400,000 options allotted in 2001 and €9.6954 for the 200,000 options allotted in 2002. (Annex 3 bis). The shareholders’ meeting on 5th May 2004 approved a new capital increase of up to 1,000,000 new ordinary shares for the exercising of stock options by the chairman of the board of directors. The plan is tied to his permanence in office and achievement of the sales and profits objectives fixed in the 2004-2006 MTP. The subscription price is Euro 14.70. Corporate Governance The corporate governance system adopted by Indesit Company conforms for the most part with the principles of the “Listed Companies Code of Self-discipline” (hereafter “Code”), which the board of directors decided to adopt in 2001 and to international best practice. Meeting on 24th March 2005 the Board approved the relative annual corporate governance report, which illustrates the Company’s corporate governance model and reports on the state of enforcement of the Code (summarized in the three synoptic tables in annexes 5, 6 and 7). The Group parent company’s management and control system is “ordinary” (as defined by Italian law), ie. based on a board of directors, a statutory audit committee and external accountants. These bodies are appointed by the shareholders and hold office for three year periods. The majority of independent directors and the key roles they play both on the Board and in its committees (Human Resources, Internal Control and Innovation and Technology) ensure effective reconciliation of interests across all the shareholders and a wide base for board room discussion. Detailed information on Indesit Company S.p.A.’s corporate governance system can be found in the Annual Corporate Governance Report, which will be made available together with financial statement documentation, as required by Stock Exchange Rules. Indesit Company S.p.A. drew up a programme document on security in accordance with Annex B of decree law 196/03 (“consolidated privacy law”). Italian subsidiaries which have not already done so will produce said document within the term fixed by current law. In 2004 Indesit Company S.p.A. adopted an organization model and code of conduct pursuant to and for the purposes of decree law 231/01. Regarding “control and co-ordination” as contemplated in to art. 2497 and subsequ. Civil Code, the directors of Indesit Company S.p.A. and external experts consulted for the purpose deem that the Group parent company is not subject to control and co-ordination by any other subjects, including the holding company. Transition to international accounting standards
In line with the provisions of European regulation 1606/2002 (19th July 2002) requiring companies listed in the EU to draw up financial statements to International Financial Reporting Standards (IFRSTM), hereafter either IFRS or IAS, as of 1st January 2005, Indesit Company initiated transition from current Italian to IAS accounting standards in 2003 so that the new accounting rules can be adopted in due time. Transition to IFRS is nearing completion. On the basis of analysis conducted to date, the most significant effects of switching IFRS regard the format of balance sheet accounts, the contents of notes to financial statements, treatment of treasury stock and goodwill and accounting procedures for financial derivatives, intangible fixed assets, employee severance indemnity, stock options and securitization operations. Other effects may emerge as a result of developments in the IFRS and Italian accounting and fiscal regulations. Indesit Company S.p.A.’s financial statements
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will be drawn up to IFRS as of the accounts for 2006; the Company will decide in the meantime whether to apply IFRS to 2005 as well. WEEE and RoHS directives
In December 2002 the European Union introduced legislation on the disposal of electrical and electronic products (WEEE, Waste Electrical and Electronic Equipment), making manufacturers responsible for recovery and disposal of old products. To date, a number of major countries have not yet fully assimilated this legislation but given the laws promulgated on a local level with respect to the main body of EU legislation, it is now possible to delineate the extent of manufacturers’ and distributors’ responsibilities more clearly than was possible when the directive was issued. The directive defines two areas of responsibility. Old waste (products put on the market before 13th August 2005): disposal costs are
covered by one or more systems to which all manufacturers present on the market at the time such costs are incurred will contribute on a proportional basis (eg. on the basis of market share). This approach is defined as “manufacturers’ joint liability” and the law provides that for a 10 year transition period from when the directive becomes law the costs of collection, treatment and disposal (“visible fee”) will be disclosed to purchasers at the time of sale where contemplated by local legislation.
New waste (products put on the market after 13th August 2005): all manufacturers are responsible for funding the collection, treatment, recovery and disposal of waste produced by their own products. Manufacturers may choose to fulfil this obligation on an individual or joint basis. The directive also requires manufacturers to provide guarantees (through participation in appropriate management or insurance schemes, etc.) to cover the funding of disposal when the manufacturer is no longer present in the territory. In this case the Directive prohibits separately indicating the visible fee to the consumer.
On the basis of such provisions, it may be assumed that the disposal costs for old waste will be totally or partially covered by the visible fee, whereas in the case of new waste, it may become necessary to make provisions to cover future charges for the disposal of new products put on the market in those countries where transition periods or other forms of guarantee are not in place. The amount of such provisions cannot be quantified in the present state of uncertainty, particularly with regard to the actual cost of disposal (which will depend on the percentage of products recovered, which is not known on a current, let alone a future, basis and on recycling technology, which is developing rapidly). We may reasonably assume, however, that in the case of new waste the costs will be at least partially offset by increases in retail prices. In December 2002 the European Parliament and Council also adopted EC Directive 2002/95/CE (the RoHS Directive - Restriction of the Use of Certain Hazardous Substances in Electrical and Electronic Equipment). Under this directive, new electrical and electronic equipment put on the market as of 1st July 2006 may not contain such pollutant substances. As in the case of the WEEE restrictions, EU countries should have taken the legal and administrative measures needed to be able to comply with the Directive by 13th August 2004. At the end of December 2004, most of the member States had not assimilated the directive in their national laws. Indesit Company ensured compliance with the directive by informing all its suppliers that it will not accept components not conforming to RoHS as from July 2005 and that after July 2005 there will be a planned phase out of non-conforming production. On the basis of the information available to date it may reasonably be assumed that the realization value of stock in hand at 31st December 2004 will not be compromised.
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Prospects for 2005 The economic and competitive scenario in 2005 will be characterized by appreciable increases in raw materials costs. Indesit Company will take strong measures over the year to contain costs by improving production efficiency. Significant benefits are expected to flow from our investment policies, from increased production in Eastern Europe and from the growing tendency to source from low-cost countries. In addition to this, Indesit Company started to raise its retail prices at the end of December 2004. Other information Further information on R&D activities, business with associated companies, subsidiaries, the parent company and other companies controlled by the latter, and treasury stock, can be found in the Notes. Neither Indesit Company S.p.A. nor any other companies in the Indesit Company Group hold or have traded shares in the parent company.
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PROPOSALS FOR APPROPRIATION OF PROFITS AND DISTRIBUTION OF DIVIDENDS Shareholders, Your Company’s financial statements for 2004 show profits of €74,838,468.21, which after appropriation of 5% (€3,741,923.41) for the legal reserve, leaves profits of €71,096,544.80.
Our dividend proposal is of €0.326 per ordinary share and €0.344 per savings share, part of residual profits for 2004 to be used for such end.
The exact amount of residual profits to use for the dividend pay-out will be determined on the day of the shareholders’ meeting and will depend on the actual number of shares existing after possible exercise of the stock option rights allocated by the Company. In fact, the total number of ordinary shares subscribed and paid up may vary from a minimum of 109,894.372, (number of shares as of the date of the board meeting approving the draft financial statements) to a maximum of 111,525,622, (if rights are exercised on a further 1,634,250 (max.) newly issued ordinary shares).
With reference to the resolution voted by shareholders on 6th September 2004 concerning the acquisition of treasury shares, dividends due to such shares will be allocated, on a proportional basis, to the holders of the remaining shares in circulation.
Regarding the residual profits after the dividend pay-out, we propose their appropriation to the extraordinary reserve.
The text of the proposed resolution can be found in the “Directors’ report on item 1 on the agenda, ordinary business” drafted by the Board for the shareholders’ meeting (1st call 29th April 2005 – 2nd call 12th May 2005).
As required by CONSOB regulations, you are hereby given notice that the dividends will be made payable as from 26th May 2005 (coupon detachment date 23rd May 2005).
24th March 2005 For the Board of Directors
Vittorio Merloni
(Chairman)
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Annexes The following annexes appear below this report:
• Annex 1: Investments held by directors, statutory auditors and general managers, as of 31/12/2004;
• Annex 2: Stock options allotted to directors and general managers; • Annex 3: Stock options allotted to managers and line managers; • Annex 3 bis: Stock option plans for non-employee directors; • Annex 4: Emoluments paid to directors, statutory auditors and general managers; • Annex 5: Positions held by directors of Indesit Company S.p.A. in other listed
companies, finance houses, banks, insurance companies and other large concerns; • Annex 6: Board of directors and its committees; • Annex 7: Statutory audit committee; • Annex 8: Other provisions of the code of self-discipline.
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Annex 1
Annex 2
STOCK OPTIONS ALLOCATED TO DIRECTORS AND GENERAL MANAGERS - 2004
Options held at start of year
Options allocated during year
Options exercised during year
Options lapsed during year
Options held at year end
SHAREHOLDINGS OF DIRECTORS, STATUTORY AUDITORS AND OPERATING OFFICERS - 31/12/2004
Name Company invested in Type of ownership Number of shares
held at end of previous year
Number of shares acquired
Number of shares
sold
Number of shares held at end of
year
Merloni Vittorio Indesit Company s.p.a. – ordinary shares through trust company Sirefid Spa 698,300 698,300
indirect through Fineldo Spa 42,875,155 1,120,198 37,384 43,957,969
indirect through Merloni Progetti Spa 416,787 416,787
indirect through Merloni Progetti Int.Sa 934,995 934,995
indirect through Indesit Company s.p.a., treasury shares without voting rights in shareholder meetings 11,039,750 11,039,750
through Franca Carloni, wife, trust company Sirefid SpA 254,840 254,840
Indesit Company s.p.a. -savings shares indirect through Fineldo Spa 6,000 44,060 50,060
Indesit Company France Sa direct 1 1
Merloni Ester Indesit Company s.p.a. -ordinary shares indirect through Fines Spa 7,343,866 71,324 7,415,190
direct 5,042,400 5,042,400
Colombo Felice Indesit Company s.p.a. -ordinary shares direct 100,000 35,000 65,000
through subsidiary CO.GE.FIN. 1,804,722 110,000 1,694,722
Merloni Andrea Indesit Company s.p.a. -ordinary shares through trust company Sirefid Spa n. 254.840 - direct n. 1.560 256,400 765 255,635
Merloni Antonella Indesit Company s.p.a. -ordinary shares through trust company Sirefid Spa n. 254.840 - direct n. 5.490 260,330 260,330
Merloni Aristide Indesit Company s.p.a. -ordinary shares through trust company Sirefid Spa n. 254.840 - direct n. 12.000 266,840 266,840
Caio Francesco Indesit Company s.p.a. -ordinary shares direct 1,000 200,000 200,000 1,000
Merloni Francesco Indesit Company s.p.a. -ordinary shares direct 2,329,000 500,000 1,829,000
through trust company Cordusio Spa 2,685,653 2,685,653
through Maria Cecilia Lazzarini, wife 1,653,000 1,653,000
through Maria Cecilia Lazzarini, wife, trust company Cordusio Spa 1,623,700 1,623,700
Ruozi Roberto Indesit Company s.p.a. –ordinary shares direct - 100,000 100,000 0
Guerra Andrea Indesit Company s.p.a. –ordinary shares direct - 465,000 465,000 0
(Sasso Andrea Indesit Company s.p.a. -ordinary shares direct - 22,500 22,500 0
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(A) (B) (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13)
=1+4-7-10
Name Office
Number of options
Average maturity
Number of options
Average maturity
Number of options
Number of options
Number of options
Average maturity
Average strike price
Average strike price
Average strike price
Average strike price
Averagemarket strike price
Vittorio Merloni Presidente 1,000,000 4.760 2006 1,000,000 14.700 2009 2,000,000 9.730 2008
Andrea Guerra* CEO 465,000 4.741 2008 465,000 4.741 14.628 0
Marco Milani** CEO 175,000 4.808 2006 300,000 12,565 2009 475,000 9.707 2008
Andrea Sasso COO 42,500 7.008 2012 22,500 6.194 15.056 20,000 7.9258 2012
Roberto Ruozi Director 100,000 4.760 2006 100,000 4.760 13.93 0
Felice Colombo*** Director 100,000 4.760 2006 100,000 4.760 14.535 0
Hugh Charles Blagden Malim Director 100,000 9.695 2006 100,000 9.695 2006
Carl H. Hahn Director 100,000 4.760 2006 100,000 4.760 2006
Francesco Caio*** Director 200,000 4.709 2008 200,000 4.709 14.535 0
Alberto Fresco Director 100,000 9,6954 2006 100,000 9.695 2006
2,382,500 1,300,000 887,500 2,795,000
* Stood down, from directorship and CEO, 30th June 2004 ** Appointed director 30th June 2004, appointed CEO 27th July 2004 *** Term of office ended 5th May 2004 with shareholders’ meeting to approve financial statements at 31/12/2003
Annex 3
Stock option allocated to managers and line-managers
2004 2003 2002 2001 2000 1999
Number of options
Striking price
Mkt price
Number of
options
Striking price
Mkt price
Number of
options
Striking price
Mkt price
Number of
options
Striking price
Mkt price
Number of
options
Striking price
Mkt price
Number of
options
Striking price
Mkt price
Rights existing at 1/1 2,193,500 14,858 2.460.250 10,072 2.527.500 5,824 1.372.500 4,702 665.000 4,6588 4,138
New rights assigned in year 0 13,8343 405.000 12,6479 12,1474 700.000 7,9258 9,5865 1.192.500 4,8082 4,7378 762.500 4,8481 740.000 4,6588 4,1481
Detail 635.000 4,488
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127.500 4,88
Rights exercised in year 987.250 13,8343 466.750 12,1474 682.250 9,5865 5000 4,6588 4,7378
Detail 145.000 4,6588 40.000 4,6588 420.000 4,6588 152.250 4,488 174.250 4,488 38.750 4,88 3.750 4,88 42.500 4,88 223.500 4,488 548.750 4,8082 210.000 4,8082 137.500 7,9258
Rights expired in year - -
Rights forfeited in year 175.000 13,8343 205.000 12,1474 85.000 9,5865 32.500 4,7378 55.000 4,8481 75.000 4,6588
Detail 4,488 5.000 4,6588 25.000 4,488 12.500 4,6588 37.500 4,6588 47.500 4,8282 10.000 4,488 10.000 4,88 15.000 4,488 12.500 4,488 80.000 7,9258 5.000 4,88 50.000 4,8082 5.000 4,88 5.000 4,88
45.000 12,6479 60.000 4,8082 120.000 7,9258 5.000 12,6479
Rights existing at year end 1.031.250 12,605 2.193.500 14,858 2.460.250 10,072 2.527.500 5,824 1.372.500 4,702 665.000 4,6588 4,138of which exercisable at year end 495.000 607.250 242.750 332.500 4,6588 -
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Annex 3 bis . Non-employee director stock option plans
2004 2003 2002 2001
Number of options
Striking price
Number of options
Striking price
Number of options
Striking price
Number of options
Striking price
Rights existing at 1/1
1.600.000 1.600.000 1.400.000 4,76 0 -
Detail 1.400.000 200.000
4,76 9,6954
1.400.000 200.000
4,76 9,6954
New rights assigned in year
0 - 0 - 200.000 9,6954 1.400.000 4,76
Rights exercised in year
300.000 4,76 - - - - - -
Rights expired in year
0 - 0 - 0 - 0 -
Rights forfeited in year
0 - 0 - 0 - 0 -
Rights existing at year end
1.300.000 1.600.000 1.600.000 1.400.000 4,76
Detail 1.100.000 200.000
4,76 9,6954
1.400.000 200.000
4,76 9,6954
1.400.000 200.000
4,76 9,6954
of which exercisable at year end
1.300.000 0 - 0 - 0 -
Detail 1.100.000 200.000
4,76 9,6954
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Annex 4 (values in euro)
Emoluments paid to directors, statutory auditors and general managers in 2004
(A) (B) (C) (D) (E) (F) (G) (H)
Name Office Period in office End of term Emoluments for office held in company Non-cash Bonuses and
Other remuneration
issuing statements benefits other incentivies
Vittorio Merloni
Chairman of Board 01/01/2004 - 31/12/2004 Balance sheet 2006 995,644.77 300,000.00 90,000.00 (1)
Marco Milani CEO 27/07/2004 - 31/12/2004 Balance sheet 2006 202,331.15 2,679.01 141,000.00 649,447.75 (5)
Andrea Guerra CEO 01/01/2004 - 29/06/2004 - 181,620.23 2,712.32 150,138.68 (2)
Francesco Caio Director 01/01/2004 - 04/05/2004 - 5,333.00
Innocenzo Cipolletta Director 05/05/2004 - 31/12/2004 Balance sheet 2006 50,835.69
Felice Colombo Director 01/01/2004 - 04/05/2004 - 10,330.00
Luca Cordero di Montezemolo Director 01/01/2004 - 31/12/2004 Balance sheet 2006 27,275.23
Adriano de Maio Director 05/05/2004 - 31/12/2004 Balance sheet 2006 33,890.46
Alberto Fresco Director 01/01/2004 - 31/12/2004 Balance sheet 2006 74,803.31
Mario Greco Director 05/05/2004 - 31/12/2004 Balance sheet 2006 33,890.46 (7)
Carl H. Hahn Director 01/01/2004 - 31/12/2004 Balance sheet 2006 56,168.69 998.92 (3)
Hugh Charles Blagden Malim Director 01/01/2004 - 31/12/2004 Balance sheet 2006 66,330.69
Andrea Merloni Director 01/01/2004 - 31/12/2004 Balance sheet 2006 52,693.08 80,000.00 (4)
Antonella Merloni Director 05/05/2004 - 31/12/2004 Balance sheet 2006 42,363.08
Aristide Merloni Director 01/01/2004 - 04/05/2004 - 15,495.00
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Ester Merloni Director 01/01/2004 - 31/12/2004 Balance sheet 2006 57,858.08
Francesco Merloni Director 01/01/2004 - 04/05/2004 - 10,330.00
Roberto Ruozi Director 01/01/2004 - 31/12/2004 Balance sheet 2006 52,693.08
Angelo Casò
Chairman, statutory audit committee 01/01/2004 - 31/12/2004 Balance sheet 2004 51,000.00 2,734.41 (3)
Demetrio Minuto
Statutory auditor 01/01/2004 - 31/12/2004 Balance sheet 2004 30,600.00 2,237.80 (3)
Paolo Omodeo Salè
Statutory auditor 01/01/2004 - 31/12/2004 Balance sheet 2004 30,600.00 3,060.00 (3)
Giovanni Carlino COO 01/01/2004 - 31/12/2004 Indefinite - 2,052.64 100,106.80 306,153.85 (2)
Andrea Sasso COO 01/01/2004 – 31/12/2004 Indefinite - 9,913.19 301,597.49 376,923.08 (6)
(1) Lump sum reimbursement of expenses. (2) Employment based remuneration as a manager of Indesit Company s.p.a. (3) Reimbursement of expenses (4) Fees for chairing the board of directors of Wrap S.p.A. (5) Employed by Indesit Company s.p.a. €249,551.99 - Emoluments as CEO Indesit Company UK H Ltd €1, 399.895.76
(6) Other fees refer to annual gross remuneration as a manager of Indesit Company S.p.A.; plus
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Annex 5
Positions held by directors of Indesit Company S.p.A. in other listed companies, finance houses, banks, insurance companies and other large concerns. Director Office Company Vittorio Merloni Chairman Fineldo S.p.A. Director MerloniTermoSanitari S.p.A. Innocenzo Cipolletta Chairman UBS Corporate Finance S.p.A.
Il Sole 24 Ore S.p.A. Director Biesse S.p.A.
Erikson Italia S.p.A. Adriano De Maio Chariman Dike Aedifica S.p.A. Director Impregilo S.p.A.
Saes Getters S.p.A. Telecom Italia Media s.p.a. TXT e-solution s.p.a.
Alberto Fresco Director Ca.Ri.Ge Assicurazioni Carl H. Hahn Director Atradius ngs AG
Perot Systems Corporation Hawesko Holding AG
Mario Greco CEO Ras SpA Director Unicredit SpA
Ifil spa Fastweb SpA Pirelli&C SpA
Hugh Malim Chairman Barclays Financial Services Italia SpA Banca Woolwich SpA
Vice-Chairman Barclays Private Equity SpA Director Gabetti Holding SpA Andrea Merloni Director Fineldo SpA Antonella Merloni Chairman Faber Factor SpA Director Fineldo SpA Ester Merloni Sole Director Fines SpA Director Fineldo SpA
MerloniTermoSanitari SpA Luca Cordero di Montezemolo Chairman and CEO Ferrari SpA
Maserati SpA
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Chairman Fiat SpA Director Tod’s SpA
PPR–Pinault/Printemps Redoute Campari SpA
Roberto Ruozi Chairman Factorit SpA Palladio Finanziaria SpA ePlanet SpA AXA Interlife SpA AXA Assicurazioni SpA AXA Sim SpA UAP VITA SpA Mediolanum SpA
Director Mediaset SpA GEWISS SpA Data Service SpA L’Oreal Italia SpA Airliquide S.p.A. Finanziaria Fratelli Cerreti S.p.A. Convergenza S.A.
Chairman of Statutory Audit Committee
Borsa Italiana S.p.A. Monte Titoli S.p.A.
Annex 6 Corporate governance - board of directors and its committees
Board of directors Internal
Control Committee
Human Resources Committee
Innovation and Technology Committee
Office Members Executive Non-executive Independent ****
Number of other posts **
*** **** *** **** *** ****
Chairman Vittorio Merloni
100% 2 100% 100%
CEO Milani Marco*
100% 0 33% 100%
Director Innocenzo Cipolletta*
100% 4 100%
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Director Adriano De Maio*
80% 5 100% 100%
Director Alberto Fresco
100% 1 100%
Director Mario Greco *
60% 5 25%
Director H. Carl Hahn 62.5% 3 100%
Director Hugh Malim 100% 4 100%
Director Andrea Merloni
100% 1 100%
Director Antonella Merloni *
100% 2
Director Ester Merloni 100% 3
Director Luca Cordero Montezemolo
50% 6
Chairman Roberto Ruozi
75% 17 100%
Number of meetings held in the reference period
Board: 8
Internal Control Committee: 4
Human Resources Committee: 5
Innovation and Technology Committee (created 23rd March 2004): 1
NB.:
• Departure from recommendations of the Code: the Chairman sits on this Committee even though he is an executive director, given the Committee’s focus on operating management risk
evaluation. His participation is a guarantee for stakeholders
* This shows a director was appointed during the year, so the percentages refer to time of appointment.
** This column shows the number of positions held (director or statutory auditor) in other companies listed in regulated markets, including nonItalian ones, finance houses, banks, insurance
companies and other large organizations. Annex 4 to the Report details such posts in full..
*** A “•” in this column indicates that a director is also a committee member.
**** This column shows directors’ attendance (in %) at Board and committee meetings.
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Annex 7 Statutory audit committee
Office Members Attendance (%) at statutory audit committee meetings
Number of other posts**
Chairman Casò Angelo 100% 4
Standing auditor * Minuto Demetrio 100% 0
Standing auditor Salè Paolo Omodeo 100% 0
Riserve auditor Venceslai Leonello
Riserve auditor * Colombo Fabrizio
Number of meetings in the reference period: 8
Quorum for submission of lists by minorities for election of one or more standing auditors (pursuant to art. 148 TUF): 2%
NB.:
* A single asterisk indicates that the auditor was appointed from a minority list.
* * This column shows the number of positions held (director or statutory auditor) in other companies listed in regulated
markets in Italy
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Annex 8 Other provisions of the code of self-discipline
. YES NO Reasons for departure from the recommendations
of the Code
Delegation of powers and operations with correlated parties
Has the Board delegated powers and defined their:
a) limits
b) mode of exercise
c) and reporting frequency?
Does the Board review and approve operations of special economic, equity and financial importance (including operations with correlated parties)?
Has the Board defined guidelines and criteria for identifying “significant” operations?
Are the aforesaid guidelines and criteria described in the report?
Has the Board defined special procedures for reviewing and approving operations with correlated parties?
Are the procedures for reviewing and approving operations with correlated parties described in the report?
Procedures in the most recent appointment of directors and statutory auditors
Submission of candidacies for directorships occurred at least ten days beforehand?
Were candidacies for directorships accompanied by full information?
Were candidacies for directorships accompanied by statements of eligibility for “independent” status?
Submission of candidacies for the post of auditor occurred at least ten days beforehand?
Submission was made five days beforehand in accordance with the by-laws. An extraordinary shareholders’ meeting on 6th September approved a modification to the by-laws increasing the term for submission to 10 days.
Were candidacies for the post of auditor accompanied by full information?
SHAREHOLDER MEETINGS
Has the Company approved rules disciplining shareholders’ meetings?
Are the Rules attached to the report (or does the report say where they can be obtained/downloaded)?
INTERNAL CONTROL
Has the Company appointed internal control officers1?
Are such officers independent of operating area managers?
INVESTOR RELATIONS
Has the Company appointed an investor relations manager2?
1 The internal control officer (pursuant to art. 9.3 of the Code) is the Group Chief Internal Auditor.
2 Elisabetta Vilizzi Investor Relation Manager – address: Viale Certosa, 247 – 20151 Milano - [email protected]
Emoluments paid to directors, statutory auditors and general managers in 2004 Annex 4
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Balance sheet
ASSETS 31st December
2004 31st December
2004 A) Share capital issued and not yet paid - called 0 0 - callable 0 0 - total 0 0 B) Fixed assets: I- Intangible fixed assets: 1) installation and expansion costs 947,085 1,170,716 2) research, development and advertising costs 32,022,171 11,422,967 3) industrial patent rights and utilization of know-how 1,170,716 31,110,816 4) concessions, licenses, trademarks and similar rights 11,422,967 9,929,707 5) goodwill 1,170,716 2,167,871 5-bis) consolidation difference 76,031 39,632 6) intangible assets in progress and payments on account 0 15 7) others 322,807 91,448 Total 73,401,921 55,893,525 II- Tangible fixed assets: 1) land and buildings 80,510,659 82,623,167 2) plant and machinery 93,947,450 104,310,954 3) industrial and commercial equipment 40,485,139 43,716,610 4) other assets 8,597,641 8,618,206 5) tangible assets in progress and payments on account 18,534,985 22,302,503 Total 242,075,874 261,571,440 III- Financial fixed assets: 1) shareholdings in: a) subsidiaries 499,154,895 408,994,852 b) associated companies 22,536,764 35,346,086 c) parent companies 0 0 d) other enterprises 201,019 757,216 2) receivables: a) from subsidiaries 0 0 - of which falling due in the subsequent period 0 0 b) from associated companies 0 0 - of which falling due in the subsequent period 0 0 c) from parent companies 0 0 - of which falling due in the subsequent period 0 0 d) from others 761,578 859,186 - of which falling due in the subsequent period 0 859 3) other securities 12 10 4) treasury shares 32,974,037 32,974,037 total nominal value 10,929.00 10,929.00 Total 135,100.00 153,182.00 Total fixed assets (B) 1,111,522.00 1,013,450.00 C) Current assets: I- Inventories:
1) raw and auxiliary materials and spare parts 22,262,916 23,789,437
2) work in progress 9,237,635 8,733,266 3) contract work in progress 280 40
4) finished goods 128,208,548 129,645,795
5) advances 157,215 196,316 Total 159,866,314 162,364,814 II- Receivables
1) trade receivables 70,571,310 70,858,230
- of which falling due after the subsequent period 0 109
2) from subsidiaries 402,521,788 341,309,321
- of which falling due after the subsequent period 0 696,436 0 20,359,957
3) from associated companies 128,850 60,300
- of which falling due after the subsequent period 0 70,571,310 0 70,858,230
4) from parent companies - of which falling due after the subsequent period 0 0
4bis) Tax receivables 20,734,090 20,466,425 4ter) Advance taxes 24,571 16,035 - of which falling due after the subsequent period 11,899 7,093 5) from others 22,744,827 30,972,392 - of which falling due after the subsequent period 74 75
Total 518,429,587 490,304,094 III- Financial assets not held as fixed assets:
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1) shareholdings in subsidiaries 0 0 2) shareholdings in associated companies 0 0 3) shareholdings in parent companies 0 0 4) other shareholdings 0 0 5) shares and quotas of Group 0 0 Total nominal value 0 0 6) other securities 26,877 29,732 6 bis) financial assets not held as fixed assets 6,357 2,897 Total 33,234 32,629.00 IV- Cash: 1) banks and postal deposits 6,622,009 48,366,778 2) cheques 10 22 3) cash on hand 103,725 158,746 Total 6,725,734 48,525,524 Total current assets (C) 686,357,613 701,194,433
D) Accrued income and prepayments 2,824,43 1,537,602 - disagio on loans 0 0 TOTAL 1,560,420,344 1,499,235,556
Shareholders’ equity
LIABILITIES 31st December
2004 31 st December
2003 A) Shareholders’ equity:
I- Share capital 101,029,694 99,871,169
II- Share premium reserve 26,076,621 20,701,675 III- Revaluation reserve - -
IV- Legal reserve 11,601,139 9,626,843 V- Statutory reserves 0 0
VI- Reserve for treasury shares 32,974,037 32,974,037
VII- Other reserves, indicated separately in the notes 103,271,774 101,917,315 VIII- Profit (loss) carried forward
IX- Group profit (loss) 74,838,468 39,485,905 Shareholders’ equity, Group X Share capital and reserves - minority interests X1 Profit (loss) for the year - minority interests Shareholders’ equity - minority interests
Total 349,791,733 304,576,944 B) Reserves for risks and charges: 1) pensions and similar obligations 2) taxation, including deferred 2 bis) consolidation reserve for future risks and charges 0
3) others. 20,647,624 17,484,704
Total 20,647,624 17,484,704 C) Staff leaving indemnity 65,446,839 61,782,248 D) Payables 1) debentures - of which falling due after the subsequent period 2) convertible debentures - of which falling due after the subsequent period 4) banks loans payable 210,043,858 422,636,403 - of which falling due after the subsequent period 77,854,548 5) other financing payables 10,979,031 2,623,301 - of which falling due after the subsequent period 10,747,404 6) advances 2,273,749 983,211 - of which falling due after the subsequent period 0 7) trade payables 509,871,506 300,031,874 - of which falling due after the subsequent period 8) secured payables - of which falling due after the subsequent period 0 9) payables to subsidiaries 292,194,177 89,528,235 - of which falling due after the subsequent period 0 10) payables to associated companies 3,523,701 195,984,228 - of which falling due after the subsequent period 0 11) payables to parent companies 446,952 464,811 - of which falling due after the subsequent period 0 0 12) tax payables 20,860,643 22,200,035
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- of which falling due after the subsequent period 13) social security payables 33,076,218 33,159,691 - of which falling due after the subsequent period 0 0 14) other payables 21,619,782 23,831,599 - of which falling due after the subsequent period 0 Total 1,104,889,617 1,091,443,388 E) Accrued liabilities and deferred charges 19,644,532 23,948,271 - agio on loans 0 0 TOTAL 1,560,420,344 1,499,235,556
Income statement (euro thousands) A) Value of production: 1) revenues from sales and services 1,782,223,146 1,660,545,930 2) variations in work in progress and finished goods 3) variations in contract work in progress -31.31 4) variations in fixed assets 11,692,777 10,087,052 5) other revenues and income 23,483,513 24,247,693 - of which grants to operating account Total 1,816,466,559 1,736,154,315B) Cost of production: 6) raw and auxiliary materials, spare parts and goods 1,165,927,959 1,094,379,989 7) services 280,013,427 270,397,626 8) utilization of 3rd party assets
20,228,249
17,343,405
9) personnel: a) payroll 160,027,069 149,675,768 b) social security 54,054,751 51,024,126 c) staff leaving indemnity 10,897,312 10,411,110 d) pensions and similar 3,053,709 2,512,639 e) other costs 160,027,069 149,675,768 10) amortization, depreciation and writedowns: a) amortization of intangible fixed assets 25,200,897 20,230,610 b) depreciation of tangible fixed assets 53,703,155 52,105,551 c) other writedowns of fixed assets d) writedown of receivables under current assets and cash balances 11) variations in raw and auxiliary, spare parts, and goods inventories 1,526,521 2,301,298 12) provisions for risks 63,298 199,464 13) other provisions 14) other operating charges 7,398,065 5,611,603 Total 1,784,053,624 1,677,162,341 Difference between value and cost of production (A-B) 32,412,935 58,991,974 C) Financial income and charges: 15) income from shareholdings: 84,036,707 42,103,483 - subsidiaries 0 0
- associated companies 0 0 - other enterprises 16) other financial income: a) receivables stated as fixed assets - subsidiaries 0 0 - associated companies - parent companies 0 0 - others 0 0 b) securities under fixed assets other than shareholdings 0 0 c) securities under current assets other than shareholdings 0 0 d) income different from the previous - subsidiaries 0 0 - associated companies 0 0 - parent companies 0 0 - others 17) interest and other financial charges 26,941,751 25,587,297 - subsidiaries 0 0 - associated companies 0 - parent companies - others 17 bis) foreign exchange gains and losses (1,361,274) (7,843,531) Total 58,719,340 13,552,098D) Adjustments to the value financial assets: 18) revaluations: a) shareholdings b) financial fixed assets other than shareholdings c) securities under current assets other than shareholdings 0 0 19) writedowns:
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a) shareholdings b) financial fixed assets other than shareholdings c) securities under current assets other than shareholdings Total E) Extraordinary income and charges: 20) income 17,726,810 602,933 - capital gains on disposals 10,700,000 - others 21) charges 9,820,041 9,210,965 - capital losses on disposals - prior year taxes - others Total 7,906,769 (8,608,032) Result before taxes (A-B+C+D+E) 99,039,044 63,936040 22) Income tax: current, deferred, advance 24,200,576 24,450,135 23) Profit (loss) for year 74,838,468 39,485,905 Profit (loss) for year, minority interests Profit (loss) for year, Group
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NOTES TO THE FINANCIAL STATEMENTS OF INDESIT COMPANY S.p.A. AT 31st DECEMBER 2004
The financial statements for the year closing 31 December 2004, of which these supplementary notes form an integral part pursuant to art. 2423, clause 1, Civil Code, correspond to the duly held accounting records and are based on the “principles of presentation” set forth in articles 2423, 2423 bis, 2423-ter, 2424, 2424 bis, 2425, 2425 bis and on the evaluation criteria in art. 2426, Civil Code, as well as on the accounting standards of the “Dottori Commercialisti e dei Ragionieri”, on OIC document 1 and where necessary on those of the International Accounting Standards Board (I.A.S.B.) and in accordance with the provisions regarding disclosure of financial information in decree law 58/1998 (“Draghi” consolidated law) and subsequent decrees in enforcement thereof. There were no special reasons for operating the exemptions allowed by art. 2423, clause 4, art. 2423 bis, clause 2, Civil Code. The amounts of the items in the current year’s accounts are comparable with those of the previous year. In the case of new items introduced by the company law reform (arts. 2424, c. 1 and 2425) in the balance sheet and income statement, the previous year’s figures have been reclassified on the basis of the new items. Changes in the values of assets and liabilities are explained in the notes if significant. Risks and losses pertaining to the year are taken into account even if they became known after the year-end. Regarding the Consob recommendation dated 02.03.1998 and IAS 24, relationships with associated and affiliated parties are explained in the comments on the individual balance sheet and income statement items, and in the attached consolidated accounts there is a special section on the subject. Further details on the Consob recommendations dated 27th October 1998 and IAS 14 (information to be provided on categories of assets and the geographical regions in which the Company operates) are to be found in the relevant section of the Notes to the Consolidated Statements. In general, information on matters not treated specifically in this document may be found in the consolidated financial statements. Information on management and co-ordination is provided in the directors’ report. EVALUATION CRITERIA Individual items are stated in accordance with the principle of conservative accounting, on the basis of a going concern and in line with the modifications to art. 2423 bis introduced by the company law reform. Values are calculated taking into account the economic function of the items and on the basis of the principle whereby substance prevails over form. The evaluation criteria adopted are the same as those used the previous year excepting as provided for in the company law reform (decree law 6, 17/01/2003) and the aforementioned OIC document no. 1 regarding adjustments for purely fiscal purposes and operations involving buy-back clauses. In particular, the transfers to Simest of quotas in the Russian closed joint stock company Indesit CIS (former Zao RefirigeratorPlant Stinol) and the Polish Indesit Company Polska Sp.z.o.o (former Merloni Indesit Polska Sp.z.o.o.), shareholdings transferred under buy-back agreements with Simest are reflected in the balance sheet as financial payables to Simest, as required by art. 2424 bis Civil Code. The effects of the new accounting criteria are commented on in the relevant sections of the Notes. The main evaluation criteria adopted in preparing the financial statements, pursuant to art. 2426 Civil Code, are as detailed below. INTANGIBLE FIXED ASSETS
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Intangible fixed assets are stated at purchase or production cost, including accessory charges and amortized on a straight line basis over the residual period of possible utilization; they may be written down if the estimated realization value at the year end is seen as permanently less than the cost. Detailed below are the various types of intangible fixed assets. - Installation and expansion costs are amortized over five years. - New product design costs and advertising costs arising from the name change are amortized
over five years. - Industrial patent rights and utilization of know-how, including the costs of development and
integration of data processing systems, are stated at purchase or production cost, including accessory charges. Such costs are amortized each year with regard to their residual useful economic life, which is normally five years.
- Costs for licenses and trademarks are stated at purchase cost including accessory costs and are amortized on the basis of the residual possibility of utilization, which is normally five years. In particular, trademarks are considered intangible assets with an indefinite life span and their value may be written down in line with any reduction in their capacity to contribute to producing income.
- Goodwill is stated net of extraordinary operations where admissible and is based on appropriate appraisals. The value stated is amortized over ten years.
Other intangible assets include charges for the acquisition of mortgages and expenses incurred on 3rd party assets and are amortized over the duration of the relative contracts.
Tangible fixed assets
Tangible fixed assets, stated net of accumulated depreciation, are booked at purchase or production cost, with the exception of fixed assets revalued in accordance with the provisions of laws 72/83 and 413/91 and following partial attribution of the Philco and Star demerger difference. Costs include accessory charges and costs directly attributable to the assets. Fixed assets arising from contribution (30th June 1981) and the amalgamation of ICE Srl are stated at appraisal values. Maintenance costs of a routine nature are fully charged to the income statement, while maintenance costs of an extraordinary or incremental nature are written to the fixed assets to which they refer and depreciated in relation to their residual possibility of utilization. Tangible fixed assets are depreciated on a straight line basis at rates reflecting the residual possibility of utilization of each asset. Such rates are deemed in line with the maximum ordinary rates set by fiscal legislation, reduced by 50 percent in the first year of operation of the assets.
The depreciation rates/ranges for the various categories of fixed assets are as follows: DESCRIPTION RATES Buildings and lightweight constructions 3%-10% Plant and machinery 10%-15.5% Industrial and commercial equipment 20%-25% Other assets: - motor vehicles and internal means of transport 20%-25% - furniture, office machines and EDP 10%-20% When there is permanent loss in value irrespective of depreciation already accumulated, fixed assets are written down over the residual period of their usefulness. If in subsequent periods the reasons for writedown no longer hold, the original values are written back. Tangible fixed assets under construction and advances to suppliers are stated under assets on the basis of costs incurred and/or
18
advances paid including directly attributable expenses. Financial fixed assets − Shareholdings are stated at acquisition or subscription cost, including any non-financial
accessory charges. Such costs are written down to reflect permanent loss of value in cases where the companies have sustained losses and are not likely to make profits in the short-term capable of covering them. The original value may be restored in subsequent periods if the reasons for the writedown cease to hold. Shareholdings in foreign companies are converted at the exchange rates in force at the time of acquisition or in relation to the accounting value of assets contributed. Shareholdings are written down if conversion of foreign currency values at year-end exchange rates produces permanent loss of value.
− Receivables stated under financial fixed assets are stated at presumed realization value. − Securities are stated at purchase cost. If the market value of such assets is seen to fall below book
value, they are written down to market value. Treasury shares, acquired on shareholder approval in the manner and within the limits required under Italian law, are stated under financial fixed assets in that they are unlikely to be disposed of in the short-term. They are stated at cost and may be written down to reflect permanent loss in value. As required by law, the same amount is written to a reserve for writedowns under consolidated shareholders’ equity. Inventories Inventories are stated at purchase/production cost on a LIFO basis or presumed market value, whichever is lower. Purchase costs are calculated on the basis of prices paid to suppliers and any directly attributable accessory expenses. Production costs include costs incurred to bring goods to the state they are in at the balance sheet date (raw materials and components costs and production costs). Presumed realization value includes cost of sale. Obsolete and slow moving stock is written down on the basis of possible use or sale. Receivables Receivables are stated at presumed realization value by way of provision to the bad debt reserve and direct reduction of value under assets. Calculation of such values takes into account the risk of loss arising from analysis of individual positions, historical trends in losses on receivables and country risk factors.
Cash Cash balances at the year end are stated at nominal value. The supplementary notes indicate restrictions on the use of cash balances under agreements and/or guarantees with 3rd parties.
Financial assets not held as fixed assets Securities are stated at acquisition cost or market value, whichever is lower. Accruals and deferrals Accruals and deferrals are dealt with according to the principles of accrual concept accounting, with
19
cost and revenues being correlated over specific periods. Grants to capital and operating accounts
Grants to capital accounts under laws passed after 1st January, 1998 are posted to the income statement as “Other revenues and income” for the portion pertaining to the current period; portions pertaining to future periods are posted to the balance sheet as “Deferred income”. These funds are only written to the income statement when the company is certain of their collection. Grants to capital accounts under laws passed prior to 1993 are recorded as “Other reserves” under shareholders’ equity in the balance sheet, gross of the relevant taxes. Grants received under laws passed between 1993 and 1997 are also recorded as “Other reserves” but net of relevant deferred taxes, which are written to the tax reserves due to the change in taxation procedure. Since 1997, non-repayable grants that may be classified as “Grants to plant accounts” are recorded when the relevant admission decree is issued and deferred to future exercises in amounts equal to the residual values of the financed assets. Amounts paid into the operating account are posted in the relevant items of the income statement. Reserves for risks and charges
Provisions for risks and charges are set aside to cover losses or payables of a precise nature and either certain or likely occurrence but which at the year end cannot be known in terms of amount and date of occurrence. Provisions reflect the best estimate of liability on the basis of available information.
Risks involving what is considered only a potential liability are indicated in the supplementary notes but no provision is made for them in these reserves.
Staff leaving indemnity
The staff leaving indemnity item, stated in accordance with the requirements of the relevant national labour contracts and in compliance with current legislation (including decree law 47/2000 and subsequent amendments), reflects the actual commitment regarding individual employees at the balance sheet date, less advances paid and withholding tax IRPEF as per law 140, 28th May 1997.
Payables
Payables stated under liabilities in the balance sheet are nominal values deemed representative of their discharge value.
Revenues and costs
Revenues from the sale of products are recognized at the time of transfer of ownership, which generally corresponds with shipment, net of commercial discounts, allowances, bonuses and any taxes relating to sale of products. Revenues from the provision of services are stated at the time the services are provided, net of relative taxes. Costs are stated on the principles of conservative, accrual based accounting.
Dividends Dividends and relative tax credit are booked in the period in which they are collected.
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Income taxes for the year
Taxes for the year are determined on the basis of a realistic forecast of tax charges for the current year and other years not fiscally settled, taking into account possible exemptions and tax credits and applying existing fiscal legislation. They are stated net of advances paid and withholding taxes in the item “taxes payable”, or if the balance is positive in “tax receivables”. Deferred taxes arise mainly from the following conditions:
• a different fiscal treatment with respect to the accounting approach to a given income item; • temporary differences between the accounting and fiscal values of assets, liabilities or
shareholders’ equity item; • deduction of negative components not written to the income statement pursuant to art. 109,
clause 4, TUIR. They are calculated by applying the rates of probable settlement of such temporary differences; in subsequent periods the provision is adjusted to reflect changes in the rates in force at the year-end. Regarding deferred taxes, as per the accounting standards of the “Consiglio Nazionale dei Dottori Commercialisti e dei Ragionieri” on this matter, both deferred tax receivables and deferred tax payables are stated. For the sake of prudence, values are stated taking into account the estimated effects in relation to expected income results. Deferred tax credit which is not certain to be recovered is written down. Deferred tax liabilities and advance tax receivables are offset where this is legally admissible. In this case, a positive balance is written to “Advance tax receivables”, while a negative balance is written to “Tax reserves”. Value adjustments and provisions made exclusively for tax purposes Following the company law reform which modified art. 2426, Civil Code, it is no longer possible to make value adjustments and provisions for purely fiscal purposes. All fiscal operations of this sort in the financial statements of the previous period have been eliminated and the correct balance sheet values restored, as reflected under “Extraordinary income” in the income statement. At the same time, the relative deferred taxes were stated, as reflected in the income statement under “Extraordinary charges”.
Leased assets Leasing payments for technical assets under financial leasing contracts are stated as operating costs. Financial leasing payments for industrial assets are stated as operating costs and reflected in the memorandum accounts as future payment commitments. Information required pursuant to art. 2427, c 22, Civil Code, is provided in the Notes. The information required by art. 2427 c. 22, Civil Code, is provided in the Notes. Sales with buyback clauses
2004 Profit/(Loss) for year
Profit/(Loss) for year Shareholders’ equity
Values before fiscal “depollution” 71,308 39,486 304,577 Fiscal interference, including deferred taxes: Excess amortization and depreciation
d ti5,665 508 5,157
Total gross interference 5,665 508 5,157 Correlated deferred taxes (2,135) (192) (1,943)Total interference, net of deferred taxes 3.530 316 3,214 Values after fiscal “depollution” 74,838 39,802 307,791
2003
21
Assets covered by contracts of sale with a buyback clause are stated in the balance sheet. Similarly, income and charges arising from such operations must be stated on an accrual basis. Transactions in foreign currencies Fixed assets in foreign currencies are stated at cost and are written down if conversion at year-end rates causes a permanent loss of value. Trade and financial receivables and payables originally expressed in currencies not belonging to the euro zone and recorded at the exchange rate on the day of the operation are posted in the balance sheet at the year-end exchange rate. Gains and losses arising from conversion of such amounts are written to the income statement. The relevant section of the Notes specifies amounts of exchange gains and losses that are realized and not realized. In the case of hedging operations, positive/negative differences between the invoicing and hedging exchange rates are written to "Financial income and charges", as recommended in CONSOB DAC/28731, dated 14.04.2000. Interest and exchange rate hedging contracts Variable rate loans hedged by IRS operations are stated at the interest rate fixed by the IRS and booked on an accrual basis. The nominal value of said IRSs is stated in the memorandum accounts. In the case of forward contracts sealing commitments to future sale in foreign currency, any differences arising between rates when sales are booked and rates at the time of eventual hedging operations (forward rates) are stated under financial income and charges on an accrual basis. The nominal value of such hedging contracts is written to the memorandum accounts. Commitments, guarantees and risks Commitments and guarantees are indicated in the memorandum accounts at contractual value. Risks for which the occurrence of a liability is either certain or likely are described in the notes and provision is made to the relevant reserves. Risks involving what is considered only a potential liability are indicated in the supplementary notes but no provision is made for them in the reserves. SECURITIZATION (TRANSFER OF TRADE RECEIVABLES In the course of 2004 Indesit Company carried forward its 5-year revolving securitization operation (maturity 2007). This involves monthly without-recourse transfer of a portfolio of commercial paper, the receivables being written off the balance sheet when the relative amounts are collected. Against this transfer of receivables, Indesit Company subscribes subordinated securities issued by the Hexagon vehicle, with which the Group does not have any contractual relationships that would require it to be included amongst affiliated parties. The securities are stated under “other financial assets not held as fixed assets”, at subscription cost or market value, whichever is lower. Indesit Company’s role is that of collecting the debt under transfer. It also acts as servicer for Crédit Agricole Indosuez, in that it is charged with the operation’s accounting and operating arrangements. In 2004 the securitization programme involved an average value of €116m. The balance sheet items affected by this securitization operation are indicated in the notes hereunder.
22
COMMENTS ON THE MAIN BALANCE SHEET ITEMS Unless otherwise specified, the values in these Notes are in thousands of euro.
ASSETS Intangible fixed assets Composition and movements in intangible fixed assets were as follows: Description Installati
on and expansion costs
R&D and
Advertising costs
Industrial patent
rights and utilization of know
how
Concessions,
licences, trademar
ks and similar rights
Goowill
Other Total
OPENING VALUES
Historical cost 4,397 21,381 66,076 17,937 2,409 1,321 113,779
Accumulated depr, (3,226) (9,958) (34,965) (8,007) (241) (1,230) (57,628)
Total 1,171 11,423 31,111 9,930 2,168 91 55,894
CHANGES
Acquisitions 21 26,542 6,485 3,627 - 370 37,045
Disposals - (2,169) (5,184) (83) - (1,001) (8,437)
Depollution 639 1,691 3,324 11 - - 5,665
Use of depr. fund - 2,169 5,184 83 - 1,001 8,437
Depr. for the year (884) (7,634) (14,283) (2,022) (241) (138) (25,202)
Total (224) 20,599 (4,474) 1,616 (241) 232 17,508
CLOSING VALUES
Historical cost 4,418 45,753 67,377 21,481 2,409 690 142,129
Accumulated depr. (3,471) (13,730) (40,740) (9,935) (482) (367) (68,725)
Total 947 32,022 26,637 11,546 1,927 323 73,402
Installation and expansion costs and research and development and advertising costs (historical) break down as follows:
Description Historical cost
31/12/2004
Historical cost
31/12/2003
Installation and expansion costs 4,418 4,397
23
Description Historical cost
31/12/2004
Historical cost
31/12/2003
Total installation and expansion costs 4,418 4,397
R&D costs 35,307 21,381
Advertising 10,446 -
Total R&D and advertising costs 45,753 21,381
Installation and expansion costs relate largely to implementation of the Indesit Company S.p.A. website, amounting to €3.194,000, the on-line product catalogue (€938,000) and the supply chain logistics project (€173,000). The amortization charge for 2004 was €884,000. The €16,096,000 increase in R&D costs was due mainly to development, both internal and external of new products and relative design work. The difference between costs capitalized in 2004 and those in 2003 reflects the strong focus on renewing the product range.
The main development costs related to:
1) projects renewing the hob (built-in), cooker and oven lines;
2) projects renewing various combined fridge-freezer lines implementing a platform that will bring complete standardization of production across all the Group’s facilities;
3) projects developing new washing machine lines to deliver standardized production of new generation three-phase models, and develop new “big size” products for certain niche markets the Group has identified;
4) projects renewing dishwasher lines.
Costs incurred on these projects were capitalized in view of in-depth analyses of their future usefulness and within the framework of the Company’s process of transition IFRS. Zeroing of historical costs arising from elimination of fully amortized assets amounts to €2,169,000. The amortization charge for 2004 was €6,589,000.
Over the year there were extraordinary advertising costs for the Indesit brand (€10.446,000) in connection with the name change, capitalized in accordance with accounting standard 24. The future usefulness of such costs was stated in consideration of the economic benefits expected to arise from association of the company name with that of the Group’s most important/best known brand. The amortization charge for 2004 was €523,000. The acquisitions under the industrial patent rights and utilization of know-how item, amounting to €6,485,000, relate to development and upgrading of integrated software programmes. Zeroing of historical costs arising from elimination of fully amortized assets amounts to €5,184,000. The amortization charge for 2004 was €14,283,000. The trademarks item includes the capitalized value of the Indesit brand €1.149,000, the Indesit Elettronica brand acquired from the indirect subsidiary Merloni Financial Services Sa €1,136,000, amortizable over 13 years, the Solutions brand €16,000 and lastly the Star brand €74,000 acquired
24
in the amalgamation of Star in 2003. Total amortization for the year amounted to €212,000. Licenses amount to €10,732,000 and relate mainly to use of the Ariston brand and use of various computer programmes. The increase for the year was €3,627,000, of which €155,000 relative to the Ariston brand and the other €3,472,000 to various types of software licenses (SAP, Microsoft, etc.). The amortization charge for the year was €1,810,000. Zeroing of historical costs arising from elimination of fully amortized assets amounts to €10,000. The goodwill item is the appraisal value of €2,409,000 stated following the amalgamation of the subsidiary Star S.p.A. (as of 1st January 2003) and amortized over 10 years. The residual balance sheet value at the year-end was €1,927,000. The “other fixed assets” item relates mainly to: − consulting costs for company re-organization in the planning & control area, showing a residual
value of €27,000; − long-term expenses of €369,000 on rented properties in 2004; the amortization charge of €74,000
leaves a residual €295,000. Zeroing of the historical costs fully amortized assets amounts to €1,001,000. Following new legislation (Vietti Reform) and in accordance with OIC accounting standard 1, intangible fixed asset values have been fiscally “depolluted”, as explained in the Notes, with respect to previous period. The accounting values of amortization reserves thus restored ate indicated separately in the table above. The resulting contingent gains were written to the income statement under Extraordinary income, while the deferred tax liabilities stated (for comments, see the relevant item in the notes) are reflected in Extraordinary charges. No writedowns of the values of intangible fixed assets were made in 2004 or in prior years (disclosure pursuant to art. 2427, clause 3-bis, Civil Code).
Tangible fixed assets The table below details the composition and movements of tangible fixed assets.
Movements Land and buildings
Plant and machinery
Industrial and commercial equipment
Other assets
Fixed assets under constr. and advances
TOTAL
OPENING VALUES
Historical cost (*) 98,558 322,430 237,827 35,651 22,302 716,768
Revaluations 24,485 292 5 - - 24,782
Accum. depreciation (40,420) (218,411) (194,115) (27,033) - (479,979)
Total 82,623 104,311 43,717 8,618 22,302 261,571
CHANGES
Acquisitions 2,310 11,877 18,266 3,303 111 35,867
Reclassifications 43 2,840 995 - (3,878) -
Disposals (523) (308) (4,874) (619) - (6,324)
Use of depreciation funds
7 286 3,949 511 - 4,753
Depreciation for year (3,949) (25,059) (21,568) (3,215) - (53,791)
Total (2,112) (10,364) (3,232) (20) (3,767) (19,495)
25
Movements Land and buildings
Plant and machinery
Industrial and commercial equipment
Other assets
Fixed assets under constr. and advances
TOTAL
CLOSING VALUES
Historical cost 100,388 336,839 252,214 38,335 18,535 746,311
Revaluations 24,485 292 5 - - 24,782
Accum, depreciation (44,362) (243,184) (211,734) (29,737) - (529,017)
Total 80,511 93,947 40,485 8,598 18,535 242,076
The historical values of assets include legal revaluations and those operated under exemption from the criteria in art. 2425, Civil Code, as follows:
Description Lands Civil buildings
Industrial buildings
Plants and
machinery
Equipment.
Total
Historical cost:
- non revalued goods 5,431 1,945 47,482 336,705 252,208 643,771
- revalued goods 240 - 45,290 134 6 45,670
Revaluation from
Philco demerger
- - 11,267 - - 11,267
Revaluation from Star
merger
- - 1,553 - - 1,553
Law 413/1991 - - 5,358 - - 5,358
Other revaluations 160 - 6,147 292 5 6,604
Book value net of depreciation
5,831 1,945 117,097 337,131 252,219 714,223
The €1,553,000 revaluation of Star S.p.A. reflects the portion of “merger difference” attributed to the industrial buildings received on the basis of the appraisal values. No leased assets are recorded under the fixed assets. Financial fixed assets
This item stands at €555,760,000.
Shareholdings
Composition and movements in shareholdings were as follows: Description Subsidiaries Associated
companies
Other ventures Total
26
Description Subsidiaries Associated
companies
Other ventures Total
OPENING VALUES
Historical cost 446,420 35,346 757 482,523
Writedowns (37,425) - - (37,425)
Total 408,995 35,346 757 445,098
CHANGES
Acquisitions/Increases 80,400 30 55 80,485
Writeback of transfers under buy-back agreements (OIC 1)
9,042
-
-
9,042
Reclassifications 10,350 (10,360) 10 -
Disposals (9,632) (2,479) (621) (12,732)
Total 90,160 (12,809) (556) 76,795
CLOSING VALUES
Historical cost 536,580 22,537 201 559,318
Writedowns (37,425) - - (37,425)
Total 499,155 22,537 201 521,893
The balance sheet figure breaks down by company as follows:
Company name % 31/12/2004 31/12/2003
SUBSIDIARIES:
Aermarche S.p.A.. (reclassified from associated companies) 70.80 17,700 -
Argentron Sa 71.18 4,975 4,975
Consorzio Consumer Care 98.12 5 5
Indesit Company Luxembourg 99.99 62,889 62,889
Merloni Domestic Appliances Ltd 19.60 13,586 13,586
Indesit Company Portugal (*) - -
Indesit Electrodomesticos Sa (Spagna) 78.95 8,862 8,862
Indesit Company Pazarlama As 100.00 1,151 1,151
Indesit Company Sanayi As (*) - -
Indesit Company Ceska 100.00 26 26
Indesit Company Financial Services Sa 99.99 5,165 5,165
Indesit Company Bulgaria 100.00 21 21
27
Company name % 31/12/2004 31/12/2003
Indesit Company Magyar. 99.00 - -
Indesit Company Polska 98.53 122,108 70,681
Merloni UK Finance LLP 99.00 94,792 94,792
Closed Joint Stock Company Indesit international 90.00 142,767 121,734
Wrap SpA 89.30 25,108 25,108
Total subsidiaries 499,155 408,995
ASSOCIATED COMPANIES:
Adria Lab Srl 40.00 290 290
Aermarche S.p.A.. (reclassified under subsidiaries) - 10,350
Consorzio Borgo Tufico 50.00 3 3
Consorzio Ecodom 43.48 30 -
Distretto dell’elettrodomestico (reclassified under other
ventures)
- 11
Faber Factor S.p.A.. - 2,479
Haier Merloni Electrical Appliance Co. Ltd 15.00 1,596 1,596
Haier Merloni WM Ltd 30.00 9,200 9,200
M. & B. Marchi e Brevetti Srl 50.00 10 10
Merloni Progetti S.p.A.. 33.00 6,596 6,595
MPE S.p.A.. 33.00 4,312 4,312
Trade Place Bv 20.00 500 500
Total associated companies 22,537 35,346
OTHER VENTURES:
Beni Stabili S.p.A.. - 61
CO PRO S.p.A.. 6.42 129 129
Consorzio CONAI 0.07 3 3
Consorzio delle Dennie 14.28 1 1
Distretto dell’elettrodomestico (reclass. from associated
companies)
6.45 11 -
SanPaolo-IMI - 561
Emittente Titoli S.p.A.. 1,10 55 -
UNIFABRIANO Scarl 10.41 2 2
Total other ventures 201 757
(*) amounts below Euro 1,000.
28
The changes, excluding re-classifications, were due to: ACQUISITIONS/SUBSCRIPTIONS, SUBSIDIARIES Amount
Aermarche S.p.A.. 7,350
Indesit Company Polska Spzoo 58,806
Closed Joint Stock Company Indesit CIS 14,244
Total 80,400
ACQUISITIONS/SUBSCRIPTIONS, ASSOCIATED COMPANIES
Consorzio ECODOM 30
Total 30
ACQUISITIONS/SUBSCRIPTIONS, OTHER VENTURES
Emittente Titoli S.p.A. 55
Total 55
WRITEBACK OF TRANSFERS UNDER BUY-BACK AGREEMENTS (OIC 1)
Indesit Company Polska Spzoo 2,253
Closed Joint Stock Company Indesit CIS 6,789
Total 9,042
REPAYMENT OF LOANS FROM SHAREHOLDERS
Indesit Company Polska Spzoo 9,632
Total 9,632
DISPOSALS ASSOCIATED COMPANIES (*)
Faber Factor S.p.A.. 2,479
Total 2,479
DISPOSALS other companies (*)
San Paolo-IMI S.p.A.. 560
Beni Stabili S.p.A.. 61
Total 621
(*) Liquidations and cancellations of shareholdings are stated inclusive of any writedowns made in prior years (where present). Following the reform of the Civil Code concerning financial statements (the so-called Vietti Reform) and in accordance with OIC 1, transfers of shareholdings under contracts with a buy-back clause with Simest S.p.A. (relating to subsidiaries Indesit Company Polska and Closed Joint Stock Company Indesit CIS) were reinstated. The value written back into the balance sheet for Indesit Company Polska is €2,253,000 and for Stinol €6,789,000. At the same time, financial payables of €9,042,000 were stated under “Other financing payables” in the income statement.
29
In April, the Polish subsidiary Indesit Company Polska voted a capital increase which the Company underwrote, pro quota, in the amount of €58,806,000. The new capital is intended to fund production of the new factory opened in October. Later in the year, Indesit Company Polska repaid €9,632,000 provided in prior years to cover losses accumulated by the old commercial company in Poland before it was amalgamated into the current Polish subsidiary. The value of the shareholding has thus been written down accordingly. In 2004 a €14,244,000 capital increase in the subsidiary Stinol was completed. Payment was made by way of contribution of tangible fixed assets made at cost. Companies in the white goods industry agreed to set up an ad hoc consortiums, ECODOM, in accordance with the provisions of EC WEEE Directive (Waste Electrical and Electronic Equipment). Indesit Company S.p.A. holds a €30,000 stake in the consortium. Minor shareholdings also include the acquisition an interest in Emittente Titoli S.p.A. (€55,000). In December 2004 Indesit Company S.p.A. transferred to Fineldo S.p.A. the entire interest held in Faber Factor S.p.A., no longer deeded strategic. The transfer was priced on the basis of an independent appraisal and produced capital gains of €671,000 for the Company. Gruppo Faber Factor, in turn, transferred 29.4% of Aermarche S.p.A. to Indesit Company S.p.A., which already held 41.4% of it, for €7,350,000. As a result, Aermarche S.p.A., a supplier of air transport services to Indesit Company and 3rd parties, was re-classified from an associated company shareholding to a subsidiary shareholdings. Over the year, the Company disposed of minor shareholdings, including S. Paolo-IMI S.p.A. and Beni Stabili S.p.A., producing capital gains of €396,000 and €11,000 respectively. In view of the substance of its majority shareholdings, the Company has provided consolidated financial statements to accompany its own accounts, as required by decree law 127/91. The consolidated financial statements show results in line with those that would have been stated had the Company used the shareholders’ equity method to state shareholdings in subsidiaries and associated companies. The effect of this method would increase the value of Indesit Company S.p.A.’s shareholders’ equity at 31st December 2004 by around €225,849,000 and profits for the year by €41,203,000, net of the relative fiscal effect, as explained in the consolidated financial statements. Consolidated shareholders’ equity and profits for the year differ from the corresponding values in the statements of Indesit Company S.p.A. as a result of line and by line consolidation of the results of subsidiaries and associated companies, consolidation-related postings and alignment of consolidated companies with reference accounting standards. Payments to future capital increase account Subsidiaries This item includes €107,000 relative to Indesit Company As (Turkey) and €25,000 to Distretto dell’Elettrodomestico.
30
Receivables
From others This item includes €475,000 of long-term loans to employees. These loans enjoy preferential rates (under the relevant tax laws) and mature over ten years, with monthly repayment on a straight-line basis. The portion falling due within the next period is €81,000. Medium/long-term caution money receivables amount to €287,000. Treasury shares The value of treasury shares did not change in 2004. At the year-end the Company held a total of 11,039,750 treasury shares (ordinary), equal to 9.8% of total shares making up the share capital, with a book value of €32,974,000 (average per share purchase price €2.99 Euro). The Group parent company has a treasury share reserve covering this amount. A portion of the treasury shares (900,000,000, book value €2,691,000) are tied to a stock option plan in favour of the CEO but are stated under financial fixed assets in that they cannot be disposed of or otherwise used. WORKING CAPITAL
Inventories This item shows a balance of €159,866,000 (€162,365,000), as detailed below:
Description Opening
balance
Movements in
year
Closing
balance
Raw and accessory materials and spares 23,790 (1,527) 22,263
Work in progress 8,733 505 9,238
Finished products, spares and goods 129,646 (1,438) 128,208
Advances 196 (39) 157
Total 162,365 (2,499) 159,866
The inventories item is stated net of the obsolescence fund (€3,172,000), which reflects the presumed realization value of slow-moving and obsolete goods, Closing inventories include raw materials, finished products and purchased spare parts not yet booked into warehouses but the property of the Company. The Company states inventories on a LIFO basis. Had Indesit Company S.p.A. used the weighted average cost method (current costs), shareholders’ equity would be down by €2,200,000 (net of fiscal effects). Slow moving and obsolete goods funds has changed as follows: Opening balance Movements in year Closing balance Raw materials 620 392 1,012
31
Finished products 1,262 152 1,414 Spares parts 911 (165) 746 Total 2,793 379 3,172 Receivables This item shows a balance of €518,430,000 (€490,304,000), as follows:
Description Opening
balance
Bad debt reserve
Provs (-) Approp+
Other
mov.+/(-)
Closing
balance
Trade 70,858 (1,959) 1,571 101 70,571
Subsidiaries 341,309 - - 61,213 402,522
Associated companies 20,360 - - (19,663) 697
Parent company 61 - - 68 129
Tax receivables 20,466 - - 268 20,734
Advance tax 6,277 (5,245) 1,032
Others 30,972 (8,227) 22,745
Total 490,304 (1,959) 1,571 28,514 518,430
- Trade receivables This item relates to trade operations and provision of services. The securitization operation initiated in June 2002 went ahead in 2004 and at the end of the year showed a total without-recourse transfer of credit in Italy of €114m. The item includes €16,794,000 from Faber Factor S.p.A. and €66,000 from Centro Energia Teverola. Foreign currency sales are guaranteed, in part, by insurance or documentary credit. The balance of trade receivables is net of €9,114,000 of bad debt, which is deemed in line with estimated losses on non-discounted, non-insured or excess receivables. Detailed below are the movements in the bad debt reserve:
Description 31/12/2004 31/12/2003
Opening balance 8,521 9,409
Provisions 1,959 969
Appropriations (1,571) (1,857)
Reclassifications 205 -
Closing balance 9,114 8,521
With reference to the breakdown by geographical region, trade receivables from Italian customers amounted to €33,291,000 and from foreign customers €37,280,000. A more detailed analysis of the
32
geographical distribution of receivables at Group level can be found in the annexes to the consolidated statements (business by geographical region). Accounting details of the securitization operation are given below, as required by Consob notice DAC/RM/97003369 dated 9/4/1997. The table below details nominal total amounts of receivables transferred, payments collected, deferred and the effect on the net financial position.
Securitization operation 31/12/2004 31/12/2003Nominal value of receivables transferred to the vehicle (Turnover)
529,253 504,800
Payments received from the vehicle 493,115 473,664Interest charges and expenses (2,259) (1,757)Deferred payments 33,879 29,378EFFECT ON NET FINANCIAL POSITION Receivables transferred, not yet collected by vehicle and not yet due
93,824 103,758
Receivables transferred, not yet collected by vehicle and due
20,492 16,982
Total receivables to be collected by vehicle
114,316 120,740
The deferred amount is €33,879,000 (€29,378,000). Receivables collected on behalf of the vehicle and not yet paid to same amount to €45,912,000 (€45,037,000). The differential between collection and deferral (stated under payables to banks) amounts to €12,033,000 (€15,659,000). The total of €114,316,000 at 31st December 2004 (€120,740,000) represents amounts already received by the Company on receivables that the vehicle has not yet collected from clients. Without the securitization operation, the value for trade receivables and short-term financial position posted at 31st December 2004 would have been higher by €114,316,000 (€120,740,000). As the securitization operation is of the without recourse type, the nominal value of the receivables transferred is written off the item “Trade receivables” at the time of the transfer, while amounts collected are reflected under financial assets and amounts deferred under receivables from the vehicle. Receivables from the vehicle company at 31st December are classified under trade receivables as they are of a commercial nature. Costs accessory to the securitization operation (commission and interest charges) amounted to €2,259,000 (€1,757,000). The receivables transferred, recorded in the appropriate customer ledgers on behalf of the vehicle, are settled upon collection from clients and balanced by payables to the vehicle. Receivables from subsidiaries and associated companies These are receivables from subsidiaries and associated companies relative to trade operations and provision of services, excepting loans of €6,638,000, as follows: €5,311,000 to Indesit Company International Business Sa as the balance of current account
33
business between the Company and its central Group treasury subsidiary; advances for provision of services:
− €101,000 from Indesit Company Domestic Appliances Hella Mepe (Greece); − €295,000 from Indesit Company Norge Ltd; − €88,000 from Indesit Company Bulgaria Ltd; − €643,000 from Indesit Company Ceska Sro; − €200,000 from M&B;
The item breaks down as follows: Subsidiaries 31/12/2004 31/12/2003
Fabrica Portugal Sa 433 433
INDESIT COMPANY UK LTD 74,256 68,524
Indesit Company Portugal Electrodomesticos (Portugal) Sa 25,919 24,833
Indesit Company (Spain) Sa 32,608 37,367
Indesit Company France Sa 66,768 76,852
Indesit Company Deutschland Gmbh 10,992 20,143
Indesit Company Nederland 7,691 12,348
Indesit Company International BV 1,131 861
Indesit Company Bulgaria Ltd 88 122
Indesit Company International Business Sa 125,543 56,010
Indesit Company Ceska Sro 1,409 403
Indesit Company Magyarorszag Kft 23,944 76
Indesit Company Polska Spz oo 13,444 25,438
Indesit Company Domestic Appliances Hella Mepe (Greece) 101 17
Indesit Company Beyaz Esya Sanayi Ve Ticaret As 11,811 10,803
Indesit Company Norge Ltd 295 1,144
Argentron Sa 1,866 1,022
Wrap Inc - 3
Wrap S.p.A.. 260 -
Stinol 3,963 4,910
Total subsidiaries 402,522 341,309
Associated companies 31/12/2004 31/12/2003
Adria Lab Srl 159 162
M. & B. – Marchi and Brevetti Srl 207 89
Merloni Progetti S.p.A.. 19 18
MPE S.p.A.. 300 310
34
Subsidiaries 31/12/2004 31/12/2003
Protecno Sa 12 59
Faber Factor S.p.A.. (reclassified in 3rd parties) - 19,722
Total associated companies 697 20,360
All of the receivables detailed above fall due within the next period. - Receivables from parent companies The balance of €129,000 (all due within the next period) relates to charging of costs for personnel on loan and services. - Tax receivables This breaks down as follows: Description 31/12/2004 31/12/2003
VAT 15,170 12,573
Irpeg 5,228 7,697
Irap 140 -
Other taxes 196 196
Total other receivables 20,734 20,466
All of the receivables detailed above fall due within the next period. - Advance taxes In these statements, as explained above, provision has been made for deferred tax receivables to the extent that an overall evaluation of the temporary differences between taxable income and accounting results gives rise to a future reduction in the tax burden. With reference to accounting standard 25, and on the grounds that it is reasonably certain there will be sufficient future taxable income to absorb such advance taxes (all which within the medium term for which reliable evaluations can be made), the amount stated for advance taxes is €1,032,000, down €5,245,000 on the previous year, as detailed below:
• €2,135,000 due to statement of deferred tax on values that have been fiscally “depolluted”, as reflected in “Extraordinary charges”; • €3,109,000 due to statement of "income tax" costs arising from an overall assessment generating deferred tax payables due largely to deferral of taxation on the capital gains realized on the transfer of a company division. Statement of such receivables, in accordance with the aforementioned accounting standard 25, was made net of deferred tax payables.
Net deferred tax receivables (IRES rate = 33%; IRAP average rate = 4.70%)
DEFERRED TAXES (euro) 2003 Changes 2004
Deferred tax payables Irpeg Irap Ires Irap Ires 2005 / 2009 Irap 2005 / 2009
35
Advance amortization, prior years 89 (13) (156) 4 (67) (9) Grants to capital account (435) (62) 285 41 (150) (21)
Capital gains on transfer of company division 0 0 (2,825) 0 (2,825)
Writeback of accounting values of intangible fixed assets 0 0 1,361 (194) (1,361) (194)
Advance amort. current year 0 0 (841) (120) (841) (120) Total (346) (75) 4,898 (269) (5,244) (344)
Advance tax receivables Entertainment expenses 312 44 51 8 363 52
Director’s emoluments 792 0 (621) 0 171
Writedown of receivables, prior years 1,605 0 28 0 1,633 Other provisions 1,135 162 613 87 1,748 249
Product guarantee provisions, prior years 1,095 156 3 1,098 156
Amort. intangible fixed assets and goodwill 715 102 (79) (12) 636 90
Depreciat. tangible fixed assets to recover for assessment 75 11 (1) (1) 74 10 Sundry provisions 474 0 (266) 0 208
Writedown of shareholding 198 0 (66) 0 132 Total 6,401 475 (338) 82 6,063 557 Difference, credit side 6,055 400 (5,236) (187) 819 213 Balance 6,455 5,423 1,032
- Other receivables This breaks down as follows: Description 31/12/2004 31/12/2003
Social security organizations 489 501
Advances to employees 1,664 1,560
Government subsidies 16,799 23,056
Suppliers, advances for services account 2,873 2,208
Sundry 920 3,647
Total other receivables 22,745 30,972
“Government subsidies” includes €7,302,000 of steel export rebates and €9,497,000 of grants to the plant account (to be collected). Of these receivables, €7,302,000 fall due beyond 12 months.
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The “Sundry” item consists of: • €315,000 of insurance rebates to collect. Financial assets not held as fixed assets This item is made up of the following:
• current account balance with Faber Factor, which in 2004 was transferred to the holding company Fineldo and is thus no longer classified as an associated company;
• a loan from the Company to the consortium partnership “Distretto dell’elettrodomestico”. All of the receivables detailed above fall due within the next period.
Cash balances Cash balances stand at €6,726,000, and are bank and post office current accounts and cash and cash equivalents in hand. balances. The decrease on the previous year is of €41,800,000. ACCRUED INCOME AND PREPAYMENTS The balance of €2,824,000 shows an net increase on 2003 of €1,287,000. The main items are as follows: • €1,120,000: accrual of interest from banks; • €147,000: deferral of commissions on a loan from Mediocredito Centrale (Closed Joint Stock
Company Indesit International acquisition); • €128,000: deferral of commissions on a loan from Mediocredito Centrale (investments in
Indesit Company Polska - cooking); • €155,000: deferral of commissions on a loan from Mediocredito Centrale (investments in
Indesit Company Polska - cooling); • €507,000: deferral of financial charges accruing in 2004 relative to the securitization operation; • €577,000: deferral of software maintenance charges agreed with Microsoft Enterprise; • €190,000: deferral for leasing instalments and other services accruing in future periods.
37
LIABILITIES SHAREHOLDERS’ EQUITY The balance of €349,792,000 breaks down as follows:
Share capital
Share premium reserve
Revaluation reserves
Legal reserve
Treasury share reserve
Other reserves
Profit/loss for year
Shareholders’ equity
Balances 31.12.2002
99,451 18,937 - 4,252 32,974 30,825 107,495 293,934
Appropriation of profits:
- Reserves 5,375 69,990 (75,365) -
- Dividends (32,130) (32,130)
Grants under law 488
820 820
Merger surplus 282 282
Stock options 420 1,765 2,185
Profit for year 39,486 39,486
Balances 31.12.2003
98,871 20,702 - 9,627 32,974 101,917 39,486 304,577
Appropriation of profits:
- Reserves 1,974 1,352 (3,326) -
- Dividends (36,160) (36,160)
Grants under law 488
3 3
Stock options 1,159 5,375 6,534
Profit for year 74,838 74,838,
Balances 31.12.2004
101,030 26,076 - 11,601 32,974 103,272 74,838 349,792
The fully subscribed and paid up share capital at 31st December 2004 was as follows:
Description Shares at the year-end number €
Ordinary shares 109,752,372 98,777,134.80 Savings shares 2,502,844 2,252,559.60 Total 112,255,216 101,029,694.40
Share capital rose by €1,159,000 as a result of the exercising of stock options in 2004. Voted share capital
(*) Share capital subscribed
and paid in (*) (**) Share capital after savings to ordinary
share conversion 98,832,569,40 98,832,569,40
38
1st stock option plan, employees, initiated September 19, 1998
2,700,000,00 1,927,125,00
2nd stock option plan, employees, initiated October 23, 2001
2,700,000,00
1st stock option plan, directors, initiated October 23, 2001
1,260,000,00 270,000,00
2nd stock option plan, directors, initiated May 6, 2002
180,000,00 -
1st stock option plan, chairman of the Board, initiated 5th May 2004
900,000,00
Total 105,672,569,40 101,029,694,40 (**) (*) ordinary and savings shares (**) as per the Companies Register at December 31, 2004 The share premium reserve shows an increase of €5,375,000 following exercise of Stock Options. €16,401,000 of the share premium reserve is tied till 31/12/2005 in order to obtain subsidies for industrial investments requiring investment of own capital under the programme contract “Distretto dell’elettrodomestico società consortile arl”, as per CIPE (inter-ministerial committee for economic programming) resolution dated 15/11/2001. The Revaluation reserves were fully utilized in 2001 for the purposes of a gratuitous capital increase, on conversion to the euro. The Legal reserve was increased by the appropriation of 5% of profits for 2003, as voted by the shareholders’ meeting on 5th May 2004. The Treasury share reserve shows no changes. Other reserves The “other reserves” item breaks down as follows: Description 31/12/2004 31/12/2003
Extraordinary reserve 83,974 70,344
Reserve pursuant to art. 14, law 64/86 2,151 2,151
Advance amortization/depreciation reserves 877 13,155
Grant under regional law 29/82 15 15
Grant under law 308, 29/05/82 81 81
Adjustment to cost of plant (Casmez) - Law 218/78 705 705
Reserve pursuant to art. 21, law 219, 14/05/81 3,955 3,955
Non-repayable grant under regional law 19/84 36 36
Non-repayable grant under law 488/92 11,177 11,174
39
Reserve pursuant to art. 13, decree law 124/1993 19 19
Euro conversion reserve (*) - -
Merger surplus reserve 282 282
Total 103,272 101,917
(*) The value of this reserve is less than €1,000. The extraordinary reserve shows an increase of €1,352,000 following allocation of profits for the year 2003, as voted by the shareholders’ meeting on 5th May 2004 and of €12,278,000 following reclassification of the available portion from the Advance amortization/depreciation reserves. €5,263,212 of the reserve is tied in connection with investments in the Comunanza plant under a “Territorial Pact”. To obtain subsidies for industrial investments in the Albacina and Melano plants, under law 488/92, the aforementioned shareholders’ meeting voted to tie the reserve in the amounts indicated in the following decree laws: − €13,014,714 (Albacina), Ministry of Productive Activities decree 100679, dated 10.07.2001; − €5,939,255 (Melano), Ministry of Productive Activities decree 111820, dated 12.02.2002. The Reserve pursuant to art. 14, law 64/86 contains subsidies paid by the Indstry Ministry following definitive inspection of the investments made in the Comunanza facility. There were no changes in this reserve. The Grants under regional law 29/82 item refers to upgrading of liquid waste discharge and disposal of muds. There were no changes in the reserve. The Grants under regional law 308/82 item refers to investments in energy source recovery and energy saving. There were no changes in the reserve. The Reserve pursuant to law 218/78, containing grants to the capital account paid by Casmez in connection with investments in the Comunanza and Acerra lants stands at €705,000. There were no changes in the reserve. The Reserve pursuant to art. 21, law 219/81 contains grants to the capital account (tax exempt) for investments in the restoration and functional upgrading of factories in Southern Italy damaged by an earthquake in 1980. There were no changes in the Reserve pursuant to regional law 19/84 in 2004. In the current year the Company received non-repayable subsidies under law 488/92 totalling €3,000 in connection with investments made in the Carinaro and Teverola plants. The amount was written to reserves under shareholders’ equity in accordance with the laws in force in 1997 because the payments received in the current year are part of a grant issued by a decree based on laws preceding those in force today. The Reserve pursuant to art. 13, decree law 124/1993 and subsequent amendments was created using profits for 2000 for the purpose of obtaining fiscal benefits in relation to provisions to the staff leaving indemnity reserve for a pension fund. There were no changes in this reserve in 2004. The Euro conversion reserve, standing at €260.24, arises from the conversion of financial
40
statements from lira to euro in 2001. The Merger surplus reserve was set up following the elimination of the shareholding in Philco Italia S.p.A. (renamed M. Brembate S.p.A. during the year) at the time of its amalgamation on 1st December.
Type/description Amount Possible
uses Portion
available
of which, portion
distributable Appropriations over last
three years
to cover losses
for other reasons
Share capital 101.030 B --- --- Capital reserves: Share premium reserve (1) 26.077 A,B 26.077 --- --- --- Revaluation reserve --- A,B --- --- --- --- Treasury share reserve 32.974 --- --- --- --- ---
Reserve for grants to capital account (2) 18.139 A,B,C 18.139 6.962 --- ---
Profit reserves: Legal reserve 11.601 B 11.601 --- --- --- Statutory reserves --- --- --- --- --- ---
Reserve for statement of shareholdings on an equity basis 3.530,00 --- --- --- --- ---
Reserves for profits carried forward (3) 84.851 A,B,C 84.851 60.634 --- 14.331
Total capital and profits reserves 274.953 140.950 67.596 Consolidation reserves 720,00 --- --- --- --- --- Currency conversion difference reserve (50.715,18) --- --- --- --- --- Result for year 116.041,00 --- --- --- --- --- Total 575.641,00 365.446,75 67.596,00 14.331,00 Restricted as per art. 2426 c. 5 (4) 32.969 32.969 Restriction on non-realized exchange gains Net total 332.030,07 34.179,32
Of which, under suspended taxation (5)
Key: A: for capital increases - B: to cover losses - C: for distribution to shareholders
Notes:
(1) Under art. 2431, Civil Code, this reserve can only be distributed if the legal reserve has reached the limit indicated in art. 2430, Civil Code. The reserve is in any case tied, in the amount of €16,401,000, in connection with public subsidies requested.
(2) Part of the reserve is non-distributable because the investment the subsidy applies to are not yet in depreciation.
(3) Part of the reserve is non-distributable because tied to applications for public funding.
(4) Represents the non-distributable portion set aside to cover long-term costs not yet amortized.
(5) Total off-balance sheet fiscal deductions taxable to the extent the sum exceeds available reserves excluding the legal reserve (art.109,
c.4 b T.U.I.R.).
Reserves for risks and charges This item shows a balance €20,648,000 (€17,485,000), as detailed below:
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Description Opening balance
Provisions
Appropriations
Other movements
Closing balance
- Product guarantee reserve 15,848 8 (3,688) 4,744 16,912
- Future risks reserve 729 2,170 (205) 2,694
- Supplementary customer indemnity reserve
908 177 (43) - 1,042
Total 17,485 2,355 (3,731) 4,539 20,648
Product guarantee reserve This represents estimated costs of service intervention on products under guarantee. It amounts to €16,912,000 and is deemed sufficient to cover the risk involved. In 2004 a provision of €8,000 was made to the ordinary guarantee reserve. The reserve is calculated on the basis of the call rate (% of work on products under guarantee), time between sell in and sell out (time to start of guarantee) and average unit cost of intervention (cost of replacements plus cost of labour). Over and above the ordinary guarantee, the Company offers clients wider reaching and longer guarantees (up to 10 years) on certain products, for a fixed fee. The guarantee reserve shows a decrease of €3,688,000 following the writing of the portion of guarantees due in the current year to the income statement and an increase of €4,744,000 reflecting new guarantees subscribed in the year but referring to future periods.
Future risks reserve The reserve is made up as follows: − €130,000 relating to litigation with employees. − €115,000 relating to a payment to make in favour of the heirs of a deceased employee. − €500,000 relating to litigation with INPS against claims by INPS for repayment of contributions
facilities granted for trainee contracts in the period 1999-2003. − €1,500,000 for future charges relating to re-organization of a commercial area. − €25,000 relating to legal action over imitations. − €93,000 relating to litigation involving the former Star S.p.A. − €52,000 relating to extraordinary gratuities. − €279,000 for sundry smaller risks. Supplementary customer indemnity reserve Set up in 1995, this reserve stands at €1,042,000. Over the year provisions to the reserve amounted to €177,000 and appropriations from it to €43,000. EMPLOYEE SEVERANCE INDEMNITY RESERVE This item shows a balance of €65,447,000 (€61,782,000 the previous year), as detailed below: Description 31/12/2004
Opening balance 61,782
Portion accrued and written to the income statement 10,981
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Appropriation for reimbursements and advances (5,611)
Payments to supplementary pension funds (1,621)
Revaluation of withholding tax on severance indemnity (84)
Closing balance 65,447
The finance bill for 1997, decree law 79/97 and the conversion law 140/97 introduced and disciplined an advance payment of income tax on severance indemnity which would otherwise have been due at the time of payment of the indemnity to the employee. The Company decided to write such advance payments to the severance indemnity reserve itself in that the tax paid on behalf of the employee is an integral part of total payables. The law also provides for a revaluation (taxable for the Company) of advance payments, further reducing overall payables and reflected in the income statement by adjusting the gross provision for the year (item B.9.c.). Employees per category break down as follows: Grade Employees
at 31st December 2004
Employees
at 31st December 2003
Monthly
average 2004
Indefinite term fixed-term Indefinite term fixed-
term
Managers 104 97 106
Line managers 215 202 187
Office staff 923 95 821 128 1,018
Operatives 4,177 154 4,048 530 4,766
Total 5,419 249 5,168 658 6,077
The number of employees at 31st December 2004 includes those resident abroad and 70 on secondment. Payables This shows a balance of €1,104,890,000 (€1,091,443,000), as detailed below: Description 31/12/2004 31/12/2003
Bank loans payable 210,044 422,636
Other financing payables 10,979 2,623
Advances 2,274 983
Trade payables 509,871 300,032
Payables to subsidiaries 292,194 89,528
Payables to associated companies 3,524 195,984
Payables to parent company 447 465
43
Tax payables 20,861 22,200
Social security payables 33,076 33,160
Other payables 21,620 23,831
Total 1,104,890 1,091,443
- Bank loans payable
Composition and changes are as follows:
Description 31/12/2004 31/12/2003 Change
Short-term borrowing from banks 132,189 343,173 (210,984)
Long-term bank loans 77,855 79,463 (1,608)
Total 210,044 422,636 (212,592)
The reduction of payables to banks has increased the financial payables to Group companies (in particular, Indesit Company Luxembourg Sa) by €208,000,000. For the sake of greater clarity regarding medium/long-term relationships with banks, bank loans were reclassified from “other financing payables” to “payables to banks” and the relevant balances were also reclassified in the balance sheet at 31st December 2003 (€77,468,000) to assist comparison. Current account overdrafts amounted to €28,661,000, short-term borrowing to €91,637,000 and the net financial debt towards Calyon for Securitization to €11,891,000. Maturities on medium-long-term bank loans at 31st December 2004 were as follows: Maturity Amount
within the next year 15,494
from the 2nd to the 5th subsequent year 64,105
beyond the 5th ° subsequent year 13,750
Total 93,348
In 2004 the Company received a new loan of €27,500,000 from Mediocredito Centrale to fund development of the new cooling product factory in Poland. Repayments (current portions and advance repayments) amounted to €13,616,000. Loans are usually repayable on a six-monthly basis. - Other financing payables
Other financing payables at 31st December 2004 were as follows: Maturity Amount
within the next year 232
44
from the 2nd to the 5th subsequent year 10,060
beyond the 5th ° subsequent year 687
Total 10,979
In 2004 the Company made repayments totalling €686,000. Repayments are generally six-monthly. Loans falling due from the 2nd to the 5th subsequent year also include financial payables to Simest in connection with a buy-back agreement concerning shares in the closed joint stock company Indesit CIS and Indesit Company Polska Sp.z.o.o., as explained in the comment on “shareholdings”. - Advances The balance of €2,274,000 relates mainly to amounts advanced by foreign clients. - Trade payables The balance of trade payables at the year-end was €509,871,000 (€300,032,000 the previous year). The €209,839,000 increase includes €175,483,000 arising from reclassification of payables (invoice discounting and services rendered) from the former associated company Faber Factor S.p.A. which were recorded in the previous fiscal year in the payables to affiliated companies item for €194,649,000. The item includes trade payables towards the following affiliated companies: * €2,651,000 to Thermowatt; * €727,000 to MCP Srl; * €135,000 to Centro Energia Teverola S.p.A.; * €24,000 to Antonio Merloni S.p.A.; All such payables fall due within the next period. - Payables to subsidiaries These are as follows: Description 31/12/2004 31/12/2003
Indesit Company Polska Sp.z.o.o. 7,623 1,768
Indesit Company International Business Sa 7,653 6,455
Indesit Company UK Ltd 11,469 5,597
Indesit Company Portugal Electrodomesticos (Portugal) Sa 2,588 4,592
Indesit Electrodomesticos (Spain) Sa 2 8
Indesit Company France Sa 25,622 49,727
Indesit Company Beyaz Esya Sanayi Ve Ticaret As 2,253 6,420
Indesit Company Deutschland Gmbh 6 38
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Description 31/12/2004 31/12/2003
Indesit Company Nederland 4,127 353
MDA 50 72
Indesit Company Domestic Appliances Hellas Mepe 165 154
Indesit Company Indesit Bulgaria Ltd 284 204
Indesit Company Ceska Sro - 529
Stinol 9 13
Wrap S.p.A.. 18,252 12,219
Indesit Company Norge Ltd 506 1,379
Indesit Hausgerate Vertriebsges Mbh 426 -
Aermarche S.p.A.. (reclass. from associated companies) 891 -
MAI Lux 210,268 -
Total subsidiaries 292,194 89,528
Such payables arise from trade operations and/or provision of services except for the debt to Indesit Company Luxembourg, which is financial. This value includes a €208,000,000 loan (maturity over 5 years) and €2,268,000 of interest accrued and not yet paid. - Payables to associated companies These are as follows: Description 31/12/2004 31/12/2003
Adria Lab Srl 467 424
M. & B. Marchi and Brevetti Srl 225 160
Aermarche (reclass. under subsidiaries) - 184
Merloni Progetti S.p.A.. 652 566
MPE 2,180 -
Faber Factor S.p.A.. (reclass. under 3rd parties) - 194,649
Faber Factor International (reclass. under 3rd parties) - 1
Total associated companies 3,524 195,984
Such payables arise from trade operations and provision of services. They all fall due within the next period. - Payables to parent company The balance of €447,000 includes amounts relating to bank guarantees provided by Fineldo S.p.A. in favour of Mediocredito Centrale.
46
- Tax payables The main amounts under this item are as follows: ∗ €257,000 wealth tax; ∗ €3.024,000 VAT to pay abroad; ∗ €770,000 withholding tax relating to professionals and self-employed workers (of which
€587,000 not paid due to suspension granted to residents in area affected by an earthquake); ∗ €16,810,000 withholding tax for employees and collaborators (of which €8,225,000 is employee
income tax withheld and not paid due to the suspension mentioned above and €1,421,000 as a second rate of income tax pre-payment on the employee severance indemnity reserve, this too not paid for the same reason).
- Social security payables The main amounts include: • €27,603,000 to Inps for contributions for employees and regular collaborators (of which
€18,256,000 not paid in 1997 and 1998 due to earthquake suspension); • €1,584,000 to other social security organizations (Inail, Inpdai, Previndai, Enasarco), of which
€1,102,000 not paid in the year due to earthquake suspension; • €3,889,000 social contributions on wages and holidays accrued at the balance sheet date. - Other payables This item is made up as follows: Description 31/12/2004 31/12/2003
Payables to personnel 18,891 20,622
Sundry 2,729 3,209
Total 21,620 23,831
The main amounts payable here are: • Payables to personnel: wages and holidays accrued at the balance sheet date. • Sundry: €287,000 to various city administrations for the balance of ICI tax due for 1997 and not
paid due to earthquake suspension; €518,000 insurance organizations and €718,000 to the Cometa supplementary pension fund.
All such payables fall due within the next period. • ACCRUED LIABILITIES AND DEFERRED CHARGES Standing at €19,645,000 (€23,948,000 the previous year), this item includes: • €1,214,000: charges on loans with repayment due beyond the year; • €18,410,000: deferral of subsidies to the capital account and plant account received in the current
year and prior years. The deferrals include €392,000 for subsidies to the capital account, €15,263,000 relating to the programme contract and the remaining €2,755,000 for subsidies under law 488. The charge written to the income statement in 2004 breaks down as follows:
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€481,000 relating to capital account subsidies, €3,865,000 to the programme contract and €1,655,000 to law 488.
• €21,000: sundry accruals.
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MEMORANDUM ACCOUNTS
Bank guarantees in favour of 3rd parties include: ∗ US$228,480,000 (equal to €167,740,988 at the exchange rate at 31/12/2004) in favour of
Barclays Bank to secure the standby letter of credit it issued for Indesit Company UK Holdings Limited;
∗ €4,200,000 in favour of Fineldo S.p.A. for the acquisition of 40% of the investment in Faber Factor S.p.A. securing receivables existing at the time of the transfer. The amount corresponds to the transfer value;
∗ €232,000 in favour of Banca Nazionale del Lavoro di Napoli, partially securing a credit line for Co.Pro S.p.A.;
∗ €11,012,000 covering credit lines provided by Citibank N.A. in favour of Group companies; ∗ €52,000 in favour of the European Commission securing a grant to Wrap S.p.A. for the E-Pasta
project; ∗ €10,000,000 in favour of Credit Agricole covering securitization commitments. No commission accrues on these bank guarantees. The other memorandum accounts, standing at €44,264,000, break down as follows:
Description Amount
Leasing payment commitments 2,199
Banks guarantees received from 3rd parties 11,025
Commitments to acquire fixed assets 6,037
Total 19,261
Bank guarantees received from 3rd parties include: • €929,000 from Assicurazioni Generali relating to subsidies received under law 219/81 for
production facilities in Southern Italy; • €206,000 from Banca Commerciale Italiana in favour of public administrations; • €222,000 from Istituto Bancario San Paolo IMI securing payments to public administrations and
3rd party suppliers; • €54,000 from Credito Italiano, in favour of the finance authorities, to secure lotteries and prize
competitions; • €9.558,000 from Banca Nazionale del Lavoro, of which €701,000 for training courses in
production facilities in Southern Italy, €8,076,000 relating to a programme contract loan, €177,000 for prize competitions; the rest to suppliers;
• €55,000 to public administrations in connection with urbanization charges in None.
With respect to the financial statements at 31st December 2003, these memorandum accounts do not include bank guarantees issued by the parent company Fineldo S.p.A amounting to €77,468,000 as they are included under payables and commented on in the Notes.
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The subsidiary Indesit Company Business Sa acts as the Group’s central treasury and provides exchange and interest rate and commodities risk hedging operations in order to neutralize or limit risk on interest and exchange rates and fluctuations in raw material prices. The operations detailed below are transacted between Indesit Company Business Sa and Indesit company S.p.A.
Operations hedging fluctuations in raw materials prices include options on nickel for an underlying quantity of 1,078 tons and a strike price of US$14,000 a ton. All the options fall due by 31st December 2005. All the options mature by 31st December 2005. The mark to market at 31/12/2004 was a positive €1,501,000.The cost of the options acquired on 02/09/04 and the mark to market were deferred to the next period. The interest rate hedging operations were as follows: • IRS on a residual notional €30,987,000 to hedge loan contracts for the same amount and
maturity (running from June 2001 to December 2008), with sale at a fixed half-year 4.99% and purchase at a 6-month Euribor plus 55 bps; the mark to market of the IRS at 31st December 2004 was a negative €1,161,000.
• IRS on a residual notional €34,860,000 to hedge loan contracts for the same amount and maturity (running from October 2001 to April 2009), with sale at a fixed half-year 5.145% and purchase at a 6-month Euribor plus 55 bps; the mark to market of the IRS at 31st December 2004 was a negative €1,587,000.
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COMMENTS ON THE MAIN INCOME STATEMENT ITEMS
VALUE OF PRODUCTION
This item shows a closing balance of €1,816,467,000, with an increase of €80,313,000 on the previous year. It includes the following revenues from affiliated companies:
* €455,000 of revenues from Faber Factor S.p.A.; * €155,000 of sales revenues from MCP Eventi Srl; * €55,000 of revenues for provision services from Centro Energia Teverola S.p.A.; * €14,000 from Thermowatt.
Revenues from sales of goods and provision of services break down as follows: REVENUES FROM SALES 31/12/2004 31/12/2003
Revenues from sales of finished products and spares 1,656,533 1,553,074
Revenues from sales of raw materials 57,988 47,776
Sundry 5,745 4,177
Total 1,720,266 1,605,027
REVENUES FROM PROVISION OF SERVICES
Recovery of transport expenses 9,683 8,383
Other 52,274 47,136
Total 61,957 55,519
Total revenues from sales and provision of services 1,782,223 1,660,546
Revenues from sales of goods and services breaks down by region as follows: Region 31/12/2004 % 31/12/2003 % Italy 503,175 28.23 468,0942 28,19
West Europe 759,633 42.62 702,860 42,33
East Europe 308,523 17.31 440,836 26,55
Rest of world 210,892 11.83 48,756 2,94
Total sales revenues 1,782,223 100.00 1,660,546 100,00
Revenues from sales to subsidiaries were as follows: Subsidiaries 31/12/2004 31/12/2003 Indesit Company Portugal Electrodomesticos (Portugal) Sa 42,228 41,779 Indesit Electrodomesticos (Spagna) Sa 56,992 54,158 Indesit Company France Sa 235,814 224,718 Indesit Company Deutschland Gmbh 58,278 58,632
51
Indesit Company Nederland 25,104 30,545 Indesit Company Polska Spz oo 59,943 51,649 Indesit Company International Business Sa 283,348 226,668 Indesit Company Beyaz Esya Sanayi Ve Ticaret As 26,120 29,282 Indesit Company Magyarorszag Kft 62,565 - Indesit Company UK Ltd 227,960 187,367 Argentron Sa 7,901 5,798 Closed Joint Stock Company Indesit International 385 - Wrap S.p.A. 100 - Merloni Brembate S.p.A. (merged in 2003) - 73 Total subsidiaries 1,086,738 910,669 Revenues from provision of services includes services provided to the parent company, subsidiaries and associated companies, as follows: Subsidiaries 31/12/2004 31/12/2003 Indesit Company Portugal Electrodomesticos (Portogallo) Sa 3,366 3,537 Indesit Electrodomesticos (Spagna) Sa 1,938 1,705 Indesit Company France Sa 7,935 9,599 Indesit Company Deutschland Gmbh 1,784 1,558 Indesit Company Nederland 827 934 Indesit Company International BV 1,131 861 Indesit Company Polska Spz oo 5,009 4,552 Indesit Company International Business Sa 6,606 5,761 Indesit Company Beyaz Esya Sanayi Ve Ticaret As 4,476 4,369 Indesit Company Magyarorszag Kft 2,106 - Argentron Sa 23 303 Indesit Company UK Ltd 6,166 4,666 Indesit Company UK Holding Ltd 234 43 Closed Joint Stock Company Indesit International 8,655 4,538 Wrap S,p,A, 73 15 Merloni Brembate S.p.A. (incorporata nel 2003) - 178 Total subsidiaries 50,329 42,619 Associated companies Merloni Progetti S.p.A. 15 14 Merloni Progetti Energia S.p.A. - 250 Faber Factor S.p.A. (reclass. under third parties) - 409 Total Associated companies 15 673 Parent company - Fineldo S.p.A. 250 245 Totale Parent company 250 245 Total purchases/services from subsidiaries, associated companies 1,137,332 43,537 “Other revenues and income” breaks down as follows: Description 31/12/2004 31/12/2003
Grants to the capital account 6.002 3.635
52
Description 31/12/2004 31/12/2003
Capital gains on disposals 194 285
Royalties and technological assistance 21 4,004
Contingent gains 2,091 3,126
Appropriation of guarantee reserve surplus 1,700
Revenues from employee loans 223 436
Sundry 14,953 11,061
Total 23,484 24,248
Capital gains on disposals refer to assets disposed of for the purpose of routine renewal. Contingent gains include: ∗ amounts from suppliers for returns of raw and accessory materials purchased in 2003 and
returned in 2004. The main “sundry” revenues include: ∗ rebates on Customs dues on exports of finished products: €2,649,000; ∗ revenues accruing in year on voluntary paid guarantees (extra-guarantees): €3,668,000; ∗ insurance rebates: €286,000; ∗ €8,350,000 from provision of accessory services and revenues not classifiable under “Revenues
from sales and provision of services”. COST OF PRODUCTION
Cost of production amounted to €1,784,054,000, up €106,892,000 on the previous year. The item includes the following costs relating to affiliated companies:
* €5,992,000 of costs for services received from Thermowatt; * €2,175,000 of costs for services received from MCP Eventi Srl; * €556,000 of costs for services received from Nautica Due S.p.A.; * €128,000 of costs for services received from Netscalibur Italia S.p.A.; * €62,000 of costs for services received from Antonio Merloni S.p.A.;
Subsidiaries 31/12/2004 31/12/2003 Indesit Company Domestic Appliances Hellas Mepe (Grecia) 820 609 Indesit Company Osterreich GES.M.B.H (Austria) 570 616 Indesit Company Bulgaria Ltd 558 598 Indesit Company Norge Ltd 2,347 2,533 Indesit Company Ceska s.r.o. 161 1,518 Indesit Company International Business Sa 2,510 2,067 Indesit Company UK LTD 23,922 10,567 Indesit Company Portugal Electrodomesticos (Portogallo) Sa 23,943 32,775 Fabrica Portugal As - 15 Indesit Electrodomesticos (Spagna) 20 16
53
Indesit Company France Sa 67,428 75,767 Indesit Company Deutschland Gmbh 33 91 Indesit Company Nederland 3,484 71 Indesit Company Beyaz Esya Sanayi Ve Ticaret As 30,393 32,110 Indesit Company Polska Spzoo 34,443 29,120 Wrap S,p,A, 1,214 4,420 Closed Joint Stock Company Indesit International 186 235 Aermarche S.p.A. 1,440 Merloni Brembate S.p.A. (merged in 2003) - 6 Totale subsidiaries 193,472 193,134 Associated companies 31/12/2004 31/12/2003 M. & B. Marchi e Brevetti Srl 70 148 Merloni Progetti S.p.A. 720 384 Faber Factor S.p.A (reclass. under third parties) - 38 Aermarche S.p.A. (reclass. under subsidiaries) - 1,192 Total Associated companies 790 1,762 Total purchase and services from subsidiaries and associated companies194,262 194,262 Costs for the provision of services were as follows: Description 31/12/2004 31/12/2003
Maintenance 9,163 8,767
Distribution 99,644 93,371
Advertising 47,490 50,161
Sundry 3rd party services 18,286 18,112
Directors’ emoluments (*) 2,596 3,951
Statutory auditors’ emoluments (**) 118 124
Reimbursements of employees’ expenses 11,464 7,074
Insurance 2,673 3,121
Provision of services from subsidiaries and
associated companies
19,198 19,786
Technical assistance 21,084 19,343
General expenses 48,297 46,588
Total 280,013 270,398
Emoluments amounted, respectively to (*) €2,595,742, of which €520,000 not yet paid, and (**) €118,275 (including contributions of various kinds payable by the Company as required by law). The attached consolidated financial statements detail the fees due to directors and statutory auditors
54
who hold more than one post and the companies (subsidiaries, associated and affiliated companies) that pay them. The writedown of receivables and cash balances item reflects a provision of €1,959,000 to the bad debt reserve. Sundry operating charges include: Description 31/12/2004 31/12/2003
Losses on disposals 42 586
Losses on receivables 42 17
ICI tax 763 814
Membership fees 1,420 792
Entertainment expenses 1,845 1,800
Sundry 3,286 1,602
Total 7,398 5,611
The Losses on disposals item includes capital losses on sales of technical fixed assets for the purposes of routine replacement. “Sundry” includes €850,000 for donations, of which €695,000 in favour of organizations promoting charity, cultural and social initiatives, €120,000 to physical persons and €35,000 to political parties and candidates, paid in compliance with the provisions of the law. FINANCIAL INCOME AND CHARGES The net financial balance is a positive €58,719,000 (€45,167,000). In 2004 the Company received dividends from subsidiaries and associated companies amounting to €83,994,000 (of which €77,419 from Stinol, €6.574 from MDA) and dividends from other companies totalling €42,000 (of which €2,000 from Beni Stabili S.p.A. and €40,000 from SanPaolo-IMI S.p.A.). The “income different the previous” item includes: • interest from banks: €11,000; • interest from subsidiaries: €784,000 (of which €398,000 from Indesit Company International
Business Sa, €59,000 from Indesit Electrodomesticos (Spain) Sa, €132,000 from Indesit Company France Sa, €37,000 from Indesit Company Portugal Electrodomesticos (Portugal) Sa, €41,000 from Indesit Company Nederland, €64,000 from Indesit Company Deutschland Gmbh, €53,000 from Indesit Company Elettrodomestici UK LTD);
• profits on sales of derivatives: €1,504,000. to Indesit Company International Business Sa; • financial discounts received from subsidiaries: €7,000 (Indesit Company Electromenager Sa); • interest from Adria Lab Srl: €5,000 • other interest and income: €675,000; The main financial charges were as follows:
55
• interest to banks €8,929,000, of which €297,000 on long-term loans, net of grants to the interest account;
• interest to other lenders: €1,132,000 on long-term loans; • interest and other financial charges to subsidiaries: €8,734,000 (€4,098,000 to Indesit Company
International Business Sa, €4,000 to Indesit Company Hausgerate, €318,000 to Indesit Company Electromenager Sa, €377,000 to Indesit Company Indesit Polska and €18,000 Indesit Company Electrodomesticos (Portugal) Sa, €1,000 to Indesit Company Electrodomesticos (Spain) Sa, €1,421,000 to Indesit Company Elettrodomestici UK LTD, €229,000 to Wrap S.p.A..), €2,268,000 to Indesit Company Luxembourg;
• exchange losses: €6,960,000; • €4,821,000 of charges on acquisitions of derivatives to Indesit Company International Business
Sa; • other charges: €3,326, of which €2,178,000 of interest on the securitization operation. Adjustment of trade and financial receivables and payables expressed in currencies other than euro to the exchange rates in force at the balance sheet date is written to the income statement, in accordance with accounting standard 26 of the “Consiglio Nazionale dei Dottori Commercialisti e dei Ragionieri”. In particular: • income from currency operations €5,599,000; • losses on currency operations €6,960,000. Foreign exchange gains and losses not realized at 31/12/2004 amounted to €848,000. EXTRAORDINARY INCOME AND CHARGES This shows a net closing balance of €7,906,000 of charges. Extraordinary income, standing at €17,727,000, includes: ∗ €10,700,000 of capital gains on the transfer of a company division in Hungary to the subsidiary
Indesit Company Magyarorszag Kft; ∗ €5,948,000 of other contingent gains; ∗ €1,078,000 of profits on sales of shareholdings (€671,000 Faber Factor, €396,000 Ist. San Paolo
IMI, €11,000 Beni stabili.) Extraordinary charges amounted to €9,820,000, the main amounts being: ∗ €1,636,000 for incentives to employees to leave; ∗ €4,048,000 for other contingent costs in prior years; ∗ €2,136,000 for fiscal “de-pollution” in line with the Vietti reform; ∗ €500,000 relating to litigation with INPS against claims by INPS for repayment of contributions
facilities granted for trainee contracts in the period 1999-2003. The reserve is deemed sufficient to cover the Company’s potential risks on the basis of the documented exceptions that can be raised against INPS’s claims.
∗ €1,500,000 of future charges for the re-organization of a commercial area. INCOME TAX FOR THE YEAR
56
Tax for year, standing at €24,201,000, includes €12,920,000 of IRAP, €7,390,000 of IRES and €3,891,000 of foreign taxes. The IRES amount includes net deferred tax liabilities of €3,697,000 referring largely to capital gains from sale of a company division to the Hungarian subsidiary. The IRAP amount is stated net of advance tax payments (€7,000). Tax charges, both current and deferred, in connection with fiscal depollution, were stated under Extraordinary charges and do not, therefore, affect this item. The current portion of such charges is €580,000 (€508,000 of IRES and €72,000 of IRAP), while the deferred portion is €1,555,000 (€1,361,000 of IRES and €194,000 of IRAP). Reconciliation between the theoretical and actual tax burden, by type of taxation, and excluding amounts written to Extraordinary charges, is as follows: - IRES
Description Partial Total Actual burden Theoretical burden
Pre-tax result 99,039 Theoretical tax burden (33%) 32,683
Increases 22,268 of which: - Dividends from subsidiary 4,200 - Non-deductible amortization/depreciation 365 - Capital gain, current portion 2,140 - Contingent liabilities 5,193 - Others 10,370 Decreases -110,119 of which: - Dividend from subsidiaries -83,994 - Total capital gains -10,700 - Tecno-Tremonti -1,800 - Amortization/depreciation -2,548 - Others -11,077 Taxable income 11,188 - Net taxes 7,390 Of which: Taxes on taxable income 3,693 Deferred tax liabilities 3,697 - Foreign taxes 3,891 Total balance sheet value (11.39%) 11,281
- IRAP
57
Description Partial Total Actual burden Theoretical burden
Difference between value and cost of production 32,413 Costs not relevant to IRAP 240,425 Theoretical taxable income 272,838 Theoretical tax burden (4.70%) 12,823
Increases 6,015 Decreases -3,806 Actual taxable income 275,047 Net taxes 12,920
of which: Taxes on taxable income 12,927 Appropriation from deferred tax reserve -7 Total balance sheet value (4.70%) 12,920
LIST OF ANNEXES N. 1 Cash flow statement N. 2 Shareholdings over 10% N. 3 Shareholdings in subsidiaries, associated companies and others
58
ANNEX 1 CASH FLOW STATEMENT (euro thousands) 31/12/2004 31/12/2003 A. OPENING NET LIQUIDITY (1) (294,647) (337,397) ----------- -----------B. OPERATING CASH FLOW Profit for the year 74,838 39,486 Fiscal depollution (3,530) - Ordinary amortization and depreciation 78,904 72,337 (Revaluations) writedowns of shareholdings - - Net change in staff leaving indemnity reserve 3,665 5,665 Tax reserve - - Other reserves 3,162 248 ----------- ----------- Operating profit (loss) before changes in working capital
157,039 117,736 ----------- ----------- (Increase) decrease in inventories 2,499 (42,247) (Increase) decrease in receivables under working capital (30,261) 155,513 Increase (decrease) in non-capitalized financial assets (1,336) - Increase (decrease) in trade and other payables 87,828 Increase of financial payables to Group companies 208,000 - (Increase) decrease in other working capital items (5,591) 3,856 ----------- ----------- 182,995 204,950 ----------- ----------- 340,034 322,686 ----------- -----------C. CASH FLOW FROM INVESTMENTS (Investments)/disinvestments in/of fixed assets: - intangible (37,044) (31,028) - tangible (34,208) (65,618) - financial (67,680) (602) ----------- ----------- (138,932) (97,248)D. CASH FLOW FROM FINANCING ACTIVITIES Paid increase in capital and reserves 6,534 2,467 Grants to capital account 3 820 Distribution of profits (36,160) (32,130) New loans 27,500 541 Loan repayments (14,302) (154,387) ----------- ----------- (16,425) (182,689) ----------- -----------E. CASH FLOW FOR YEAR (B+C+D) 184,678 42,750 ----------- -----------F. CLOSING NET LIQUIDITY (1) (A+E) (109,970) (294,647) (1) i.e. net short-term financial indebtedness. ----------- -----------
ANNEX. 2
59
Shareholdings over 10% (CONSOB 11971, 14th May 1999)
Registered office
Share capital Group interest
direct indirect
Name at 31/12/2004 New name as of 01/01/2005 Merloni Ariston International Sa
Indesit Company Luxembourg Sa
Luxembourg EUR 100,289,985 99.99 -
Merloni Electrodomesticos Sa
Indesit Electrodomesticos Sa Spain EUR 11,500,000,01
78.95 21.05
Merloni Domestic Appliances Ltd
UK GBP 90,175,500 19.60 80.40
Merloni Electrodomesticos Sa
Indesit Company Portugal Electrodomésticos Sa
Portugal EUR 16,825,000 - 99.44
Merloni International Trading Bv
Indesit Company Internationa Bv
Netherlands EUR 272,270 - 100
Indesit Pts Ltd UK GBP 1,000 - 100 Merloni Electromenager Sa
Indesit Company France Sa France EUR 17,000,000 - 99.99
Scholtes Nederland Bv Netherlands EUR 79,412 - 100 Indesit Hausgerate Vetriebs. Ges. m.b.h.
Indesit Company Österreich Ges. m.b.h.
Austria EUR 11,250,000 - 100
Fabrica Portugal Sa Portugal EUR 11,250,000 - 96.4 Merloni Elettrodomestici Beyaz Esya Sanayi Ve Ticaret As
Indesit Company Beyaz Esya Sanayi ve Ticaret A.S.
Turkey
TUL 6,992,921,114,000
-
99.99
Merloni Elettrodomestici Beyaz Esya Pazarlama As
Indesit Company Beyaz Esya Pazarlama A.S.
Turkey
TUL 17,000,000,000
100
-
Merloni Financial Services Sa
Indesit Company Financial Services Luxembourg Sa
Luxembourg EUR 5,170,000 99.99 0.01
Merloni Hausgerate Gmbh Indesit Company Deutschland GmbH
Germany EUR 550,000 - 99.75
Merloni Reinsurance Company Ltd
Indesit Company Ireland Reinsurance Ltd
Ireland USD 750,000 - 100
Wrap Spa Italy EUR 27,766,950 89.3 - Zao Refrigerators Plant Stinol
Russia RBL 1,175,145,000
85 -
Merloni Indesit Polska Spzoo
Indesit Company Polska Sp.z o.o.
Poland PLN 540,876,500 98.255 -
Merloni Progetti Spa Italy EUR 10,000,000 33 - Argentron Sa Argentina ARS 22,000,000 71.18 - M&B Marchi and Brevetti Srl
Italy EUR 20,000 50 -
Sofarem Sarl La Rèunion EUR 382,500 - 20 Merloni Appl. Asia Pacific Pte Ltd
Indesit Company Singapore Pte. Ltd.
Rep. Singapore
SGD 100,000 - 100
Merloni Indesit Haztartastechnikai kft
Indesit Company Magyarország Kft
Hungary HUF 3,283,660,000
100
Merloni Indesit Bulgaria Srlu
Indesit Company Bulgaria Bulgaria BGL 7,805,000 100 -
Merloni Elettrodomestici Ceska Republika Sro
Indesit Company Ceská s.r.o Czech Rep. CZK 1,000,000 100 -
UNIFABRIANO Scarl Italy EUR 19,584 10.41 -
60
Shareholdings over 10% (CONSOB 11971, 14th May 1999)
Registered office
Share capital Group interest
direct indirect
Haier Merloni Washing Machine Co.Ltd
Haier Indesit (QingDao) Washing Machines Co., Ltd
China USD 24,000,000 30 -
Haier Merloni Electrical Appliance Co.Ltd
Haier Indesit (QingDao) Electrical Appliance Co., Ltd
China
USD 12,000,000
15.00
15.00
Adria Lab Srl Italy EUR 150,000 40 - RTC International Ltd UK GBP 50,000 - 100 Merloni Domestic Appliances Hellas Mepe
Indesit Company Domestic Appliances Hellas Mepe
Greece EUR 18,000 - 100
MPE Spa Italy EUR 10,000,000 33 - Merloni International Business Sa
Indesit Company International Business Sa
Switzerland SFR 250,000 100
Merloni Domestic Appliances Norway Ltd
Indesit Company Norge Ltd Norway NOK 100,000 - 100
Tradeplace B.V. Netherlands EUR 30,000 20 Merloni UK Finance Llp Indesit Company UK Finance
Llp UK EUR 95,750,000 99 1
Merloni Elettrodomestici UK Holdings Ltd
Indesit Company Uk Holdings Ltd
UK EUR 163,000,000 100
General Domestic Appliances Holdings Ltd
UK GPB 26,000,000 68
Aermarche SpA Italy EUR 25,000,000 70.80 Agorà SAS France EUR 40,000 12.5 AEI Gala Ltd UK GPB 1,000 68
Airdum Ltd UK GPB 15,000 68
Cannon Industries Ltd UK GPB 1,500,000 68
Creda Appliances Ltd UK GPB 100 68
Creda Domestic Appliances Service Ltd
UK GPB 1,000 68
Creda Ltd UK GPB 5,850,000 68
Fixt Ltd UK GPB 2 68
General Domestic Appliances International Ltd
UK GPB 100,000 68
General Domestic Appliances Sales Ltd
UK GPB 100 68
Gwyn J Evans Ltd UK GPB 5,000 68
Hotpoint Sales Ltd UK GPB 775,000 68
Hotpoint UK Ltd UK GPB 50 68
Industrial Design Unit Ltd UK GPB 100 68
Jackson Appliances Ltd UK GPB 750,000 68
Merloni Elettrodomestici UK Ltd
Indesit Company UK Ltd UK GPB 5,010,000 68
Oatley Technical Development Ltd
UK GPB 400 68
Xpelair Ltd UK GPB 825,000 68
61
Shareholdings over 10% (CONSOB 11971, 14th May 1999)
Registered office
Share capital Group interest
direct indirect
Ariston Group Services Ltd
UK GPB 100 68
S.S. Fabriano Basket SpA Italy EUR 100,000 100 ECODOM Consorzio Italiano per il Recupero and Riciclaggio Elettrodomestici
Italy EUR 69,000 43.48
Consorzio Burgo Tufico Italy Eur 6,000 50
62
ANNEX 3 Shareholdings in subsidiaries, associated companies and other enterprises IN ATTESA DI RICEVERE I BILANCI DALLE SOCIETA’ PARTECIPATE
63
ANNEX 4