interim report for the period ended september 30, 2014 zv interim... · interim report for the...

Interim Report for the period

ended September 30, 2014

2

Interim Report for the period

ended September 30, 2014

Zignago Vetro SpA

Registered office: Fossalta di Portogruaro (VE), Via Ita Marzotto n. 8

Share Capital: Euro 8,800,000 fully paid-in

Tax Number and Venice Companies Register No.: 00717800247

www.zignagovetro.com

2

Contents

Group Structure pag. 3

Corporate Boards pag. 5

Interim Report:

- The Zignago Vetro Group pag. 8

- The Company Zignago Vetro SpA pag. 32

- The Consolidated Subsidiaries pag. 39

- Significant events after September 30, 2014 pag. 64

- Outlook pag. 64

Consolidated Financial Statements:

- Interim consolidated statement of financial position pag. 66

- Interim consolidated statement of profit and loss pag. 67

- Interim consolidated statement of comprehensive income pag. 68

- Interim consolidated statement of cash flows pag. 69

- Interim consolidated statement of changes in Equity pag. 70

- Notes to the financial statements pag. 71

Declaration as per Article 154 bis, para. 2 of Leg. Decree 58/1998 pag. 84

3

100%

100% 79%

30%

50%

100%

100%

STRUCTURE OF THE ZIGNAGO VETRO GROUP

AT NOVEMBER 7, 2014

ACTIVITIES AND SHAREHOLDINGS

ZIGNAGO VETRO SpA

PRODUCTION AND SALE OF HOLLOW

GLASS CONTAINERS

VERRERIES BROSSE

SAS

PRODUCTION AND SALE OF

GLASS BOTTLES FOR

LUXURY FRAGRANCES

BROSSE USA Inc.

DISTRIBUTION OF GLASS

BOTTLES FOR LUXURY

FRAGRANCES

VETRI SPECIALI SpA

PRODUCTION AND SALES OF

SPECIALITY HOLLOW

GLASS CONTAINERS

HUTA SZKŁA

CZECHY S.A.

PRODUCTION AND SALE OF

HOLLOW

GLASS CONTAINERS

VETRECO Srl

TREATMENT AND SALE OF

RECYCLED GLASS

5

CORPORATE BOARDS

Board of Directors Board of Statutory Auditors

in office for the three-year period 2013 - 2015 in office for the three-year period 2013 - 2015

chairman statutory auditors

Franco Grisan Carlo Pesce - chairman

Stefano Meneghini

vice chairman Carmen Pezzuto

Nicolò Marzotto

alternate statutory auditors

chief executive officer Alessandro Bentsik

Paolo Giacobbo Chiara Bedei

directors

Lino Benassi

Ferdinando Businaro

Alberto Faggion

Daniela Manzoni Suppiej Supervisory Board

Gaetano Marzotto

Luca Marzotto Alessandro Bentsik - chairman

Stefano Marzotto Massimiliano Agnetti

Chiara Mio Nicola Campana

Manuela Romei Pasetti

Maurizio Sobrero

Giovanni Tamburi

Independent Audit Firm

Control and Risks Committee for the period 2007 - 2015

Reconta Ernst & Young SpA

Maurizio Sobrero

Ferdinando Businaro

Luca Marzotto

Management

industrial director &

deputy general manager

Remuneration Committee Ovidio Dri

Stefano Marzotto chief financial officer

Lino Benassi and investor relations manager

Giovanni Tamburi Roberto Celot

commercial management

Committee for Transactions Biagio Costantini

with Related Parties Stefano Bortoli

Lino Benassi

Ferdinando Businaro

Maurizio Sobrero

Lead Independent Director

Lino Benassi

7

Interim Report

Interim Report

8

THE ZIGNAGO VETRO GROUP

The Zignago Vetro Group operates in the production and marketing of high quality hollow glass

containers prevalently for the Food and Beverage, Cosmetics and Perfumery and “Specialty Glass”

sectors (highly customised glass containers in small batches, typically used for wine, liquors and

oils).

The Zignago Vetro Group utilises a business-to-business model supplying containers to its clients, which are

then used in their respective industrial activities. Specifically, in the Italian market, the Group is one of

the leading producers and distributors of glass containers for the food and beverage sector, while

at international level it has a strong market share in the cosmetics and perfumery and specialty

glass sectors.

* * *

The Interim Report as at September 30, 2014, unaudited, was prepared in accordance with

International Financial Reporting Standards issued by the International Accounting Standards

Board (“IASB”) and approved by the European Union in accordance with Regulation No.

1606/2002 (“IFRS”).

In particular, the accounting principles and policies adopted for the preparation of the Interim

Report to September 30, 2014 are the same as those used for the consolidated annual accounts of

the Zignago Vetro Group for the full year 2013. They have been consistently applied for all

periods presented with the exception of IFRS 11– Joint Arrangements and IAS 28 –Investments in

Associates and Joint Ventures, applicable for the Group from January 1, 2014. In particular, IFRS

11, in replacement of IAS 31 Investments in Joint Ventures and SIC 13 Jointly controlled entities –

non-monetary contributions by venturers, eliminates the option to recognise companies held under

joint control under the proportional consolidation method and establishes that jointly controlled

subsidiaries which satisfy the joint venture definition must be recognised at equity.

Within the Zignago Vetro Group, the subsidiaries Vetri Speciali S.p.A. and Vetreco S.r.l. fulfill

the definition of a joint venture. Therefore in the Interim Report at September 30, 2014, the Group

recognised these investments in accordance with the equity method, rather than the proportional

consolidation method.

However, in the Directors’ Report the figures (and the subsequent comments) are based on the

“management view of the Group business”, which provides for the proportional consolidation of

the joint venture, in continuity with the accounting policies adopted until December 31, 2013.

These figures however must not be considered as an alternative to those as per IFRS, but rather

exclusively for supplementary disclosure.

In addition, for complete disclosure a reconciliation of the statement of financial position and of

the statement of profit and loss prepared according to IFRS in force from January 1, 2014 and

those in force at December 31, 2013 is provided in the Directors’ Report.

Interim Report

9

Pursuant to CONSOB communication DEM 6064293 of July 28, 2006 and CESR

recommendation 05/178-b on alternative performance indicators, we provide the following

information:

- the net financial debt is defined by the Company as the sum of short-term financial payables,

cash and cash equivalents and medium-long term financial payables. This net figure is the

same as the net financial position as per CONSOB communication No. DEM/6064293 of July

28, 2006;

- for the purposes of monitoring its business, the Company, in addition to the normal

performance measures established by IAS/IFRS, also considers other performance indicators

useful that, although not specifically established by the aforementioned standards, are

particularly important. Specifically, we have introduced the following indicators:

- Value of production: the Company defines this as the arithmetical sum of sales revenues

and the change in finished product, semi-finished product, and work-in-progress

inventories and the internal production of fixed assets;

- Value added: the Company defines this as the difference between value of production and

raw materials consumed (purchase costs plus or minus the change in raw materials

inventories and costs for outside services);

- EBITDA: the Company defines this as the difference between value added and payroll &

employee benefit costs, including those of temporary workers. EBITDA is a measure

utilised by the issuer to monitor and measure operating performance although not an

accounting measure as per IFRS. The measurement criteria of this indicator may not be in

line with that utilised by other entities and therefore it may not be entirely comparable.

Within this context the issuer utilised a calculation model in line with its core business

which included the effects deriving from the application of IFRS 11. The company

considers the results deriving from its holdings in joint ventures as operating items and

non-financial items of the Group’s business, related to a clearly defined investment

strategy and as such classified within the Groups operating results;

- EBIT: the Company defines this as the difference between Ebitda and depreciation &

amortisation of tangible assets plus provisions & write-downs, including allowance for

bad debts;

- Operating profit: this performance measure is also contained in IFRS and is defined as the

difference between EBIT and the net balance of non-recurrent operating costs and income.

We point out that this latter item includes incidental income and costs, capital gains and

losses on asset disposals, insurance indemnities, grants, and other minor positive and

negative items;

- Free cash flow: the Company defines this as the sum of the operating cash flow generated

from self financing and cash flow deriving from investment operations.

Interim Report

10

The figures reported in the tables of the Interim Report are expressed for greater clarity in

thousands of Euro. The comments in the Report are expressed in millions of Euro, except where

otherwise specified.

* * *

The Zignago Vetro Group operates through five Business Units, each being a separate legal entity.

Given this, information concerning operating performance in the various business segments and

geographical areas (segment reporting as per IFRS 8) is included in the illustration of the financial

reporting data for each company and is an integral part of the Interim Report.

Segment reporting which coincides with the various legal entities is provided below.

Disclosure by region is not considered appropriate for the Group.

Interim Report

11

The operating segments (“Business Units”) are identified as follows:

- Zignago Vetro SpA: this Business Unit carries out the production of glass containers for food

and beverages and for cosmetics and perfumery;

- Verreries Brosse SAS and its subsidiary Brosse USA Inc: this Business Unit carries out the

production of glass containers for perfumes;

- Vetri Speciali SpA: this Business Unit includes the production of specialty containers,

principally for wine, vinegar and olive oil;

- HSC SA: this Business Unit undertakes the production of a wide range of customised

products for cosmetic and perfumery containers and also for food and beverage niche markets

worldwide;

- Vetreco Srl: this Business Unit is engaged in the processing of raw glass into the finished

material ready for use by glassmakers. Vetreco Srl has been operative since August 2013.

The consolidation scope of the Zignago Vetro Group at September 30, 2014 and 2013 and at

December 31, 2013 was as follows:

- Zignago Vetro SpA (parent company)

- under the 100% line-by-line method:

- Verreries Brosse SAS and its subsidiary:

- Brosse USA Inc.

- Huta Szkła “Czechy” S.A.(HSC SA).

- under the equity method:

- Vetri Speciali SpA

- Vetreco Srl

* * *

Interim Report

12

Significant events in the first nine months of 2014

Distribution of dividends

The Shareholders’ Meeting of Zignago Vetro SpA on April 28, 2014 approved the distribution of a

dividend of Euro 0.22 per share, totaling Euro 19 million, with payment date of May 15, 2014.

Treasury shares

On March 13, 2014 the Board of Directors of Zignago Vetro SpA resolved to propose to the

Shareholders’ Meeting to revoke, for the part not executed, the resolution granted in favour of the

Board of Directors’ to purchase and utilise treasury shares as approved by the Shareholders’

Meeting of April 29, 2013 and authorised the Board of Directors to purchase and utilise treasury

shares for a maximum number of ordinary shares not greater than one-fifth of the share capital,

within the limits established by Article 2357, paragraph three of the Civil Code. The authorisation

was granted for a period of 18 months commencing from April 29, 2013. The minimum purchase

price shall not be less than 20% and the maximum price not more than 20% of the share price

registered on the trading day prior to each operation; the disposal price shall not be 20% higher or

lower than the share price registered on the trading day prior to each operation.

Within the share buy-back programme reported above, at September 30, 2014, 1,421,390 treasury

shares, taking account of the number of treasury shares held and of the effect from the Scrip issue

approved on April 23, 2012, had been acquired, corresponding to 1.615% of the share capital, for a

payment of Euro 5 million. In 2014, no treasury shares were sold or acquired.

Operating Performance

In the first nine months of 2014, the European Food and Beverage hollow glass market showed

signs of recovery in a number of countries – in particular Germany. Such signs were evident also

in Italy, although to a contained extent and uneven among the various market segments. In the

third quarter, sales were impacted by difficult climatic conditions. Demand also continues to lag

behind supply levels domestically.

Demand on the Perfumery markets continues to appear robust, also in view of operations

undertaken by leading market players. A recovery was also apparent in the Cosmetics segment in

the third quarter.

Interim Report

13

For a clearer representation of the operating performance, the result for the period is reported

below utilising a consistent basis for the classification of the accounts, therefore excluding the

above-stated amendment to IFRS 11 and its mandatory adoption from January 1, 2014.

Consolidated revenues of the Zignago Vetro Group for the third quarter of 2014 amounted to

Euro 74.4 million (+ 2.2 % on the same period of the previous year: Euro 72.8 million); in the first

nine months of 2014 revenues amounted to Euro 226.5 million, +5% on the same period of 2013

(Euro 215.8 million).

Material costs and external services, including changes in inventories and internal production of

fixed assets, in the third quarter of 2014 amounted to Euro 42.5 million (57.1% of revenues),

+2.7% compared to Euro 41.4 million (56.9% of revenues) in Q3 2013; in the first nine months of

2014, these costs amounted to Euro 126.7 million compared to Euro 116 million (+9.2%), with an

increased percentage of revenues from 53.8% to 55.9%.

The consolidated added value in the first nine months of 2014 was Euro 99.7 million,

substantially unchanged on the same period of the previous year. The added value decreased as a

percentage of revenues from 46.2% to 44%. In the third quarter of 2014 the added value grew by

1.6% (Euro 31.9 million compared to Euro 31.4 million for the same period of the preceding year)

and the added value margin decreased from 43.1% to 42.8%.

Labour costs in the third quarter of 2014 amounted to Euro 17 million compared to Euro 16.1

million in 2013 (+6%), accounting for 22.9% of revenues compared to 22.1%. In the first nine

months labour costs totalled Euro 51.7 million in 2014 compared to Euro 51.1 million (+1.2%),

with the percentage of revenues decreasing from 23.7% in 2013 to 22.8% in 2014. The increase in

the first nine months of the current year is principally related to higher wage costs.

The Consolidated Ebitda in the third quarter of 2014 was Euro 14.9 million compared to Euro

15.3 million in the third quarter of 2013 (-2.9%) – a margin of 20% compared to 21% in Q3 2013.

Consolidated Ebitda in the first nine months amounted to Euro 48 million compared to Euro 48.6

million in the first nine months of 2013 (-1.3%). The revenue margin was 21.2% compared to

22.5% in 2013.

The Consolidated Ebit in the third quarter of 2014 amounted to Euro 8 million compared to Euro

8.6 million in Q3 2013 (-7%). In the first nine months of 2014 the Consolidated Ebit totaled Euro

26.5 million compared to Euro 28.3 million in the same period of the previous year (-6.1%). The

margin decreased from 11.8% to 10.7% in the third quarter and from 13.1% to 11.7% in the first

nine months of 2014 compared to 2013.

Interim Report

14

The consolidated operating profit in the third quarter of 2014 decreased 6% (Euro 8 million

compared to Euro 8.5 million in Q3 2013), with the margin decreasing from 11.7% to 10.7%. The

operating profit for the first nine months of 2014 reduced on the same period of the previous year

by 4.5% (Euro 27.4 million compared to Euro 28.7 million), with the margin decreasing from

13.3% in the first nine months of 2013 to 12.1%.

The consolidated net profit in the third quarter of 2014 amounted to Euro 4.8 million (6.5%

margin) compared to Euro 5.2 million and a 7.2% margin in the same period of the previous year

(-7.8%). The net profit for the first nine months of the year amounted to Euro 16.3 million,

decreasing 5.8% on Euro 17.3 million in the first nine months of 2013, while the margin amounted

to 7.2% (8% in the previous year). The tax-rate in the first nine months was 35.6%, compared to

35.4% in 2013.

The cash flow generated from the net profit and amortisation/depreciation in the first nine months

of the year amounted to Euro 37.2 million (16.4% of revenues) compared to Euro 37.1 million

(17.2% of revenues) in the same period of the previous year.

Interim Report

15

The key data of the reclassified consolidated statement of profit and loss of the Zignago Vetro

Group in Q3 2014 and 2013 are shown below.

Consolidated Revenues for Q3 2014 and 2013 are shown below:

Change

Euro thou. % Euro thou. % %

74,423 100.0% 72,786 100.0% 2.2%

Changes in inventories of fin. & semi-

fin. prods. and work in progress 1,759 2.4% (1,741) (2.4%) n.s.

Internal production of fixed assets 73 0.1% 411 0.6% n.s.

76,255 102.5% 71,456 98.2% 6.7%

Cost of goods and services (44,368) (59.6%) (40,079) (55.1%) 10.7%

31,887 42.8% 31,377 43.1% 1.6%

Labour costs (17,016) (22.9%) (16,056) (22.1%) 6.0%

14,871 20.0% 15,321 21.0% (2.9%)

Amortisation & depreciation (7,032) (9.4%) (6,681) (9.2%) 5.3%

Provisions 125 0.2% (76) (0.1%) n.s.

7,964 10.7% 8,564 11.8% (7.0%)

Net recurring non-operating income 20 --- (74) --- n.s.

7,984 10.7% 8,490 11.7% (6.0%)

Net financial charges (745) (1.0%) (670) (0.9%) 11.2%

Net exchange gains/(losses) 74 0.1% 165 0.2% (55.2%)

7,313 9.8% 7,985 11.0% (8.4%)

Income taxes (2,495) (3.4%) (2,758) (3.8%) (9.5%)

(Tax-rate Q3 2014: 34.1%)

(Tax-rate Q3 2013: 34.5%)

4,818 6.5% 5,227 7.2% (7.8%)Net profit

EBIT

O perating profit

Profit before taxes

Q3 2013

EBITDA

Revenues

Value of production

Value added

Q3 2014

(Euro thousands) Q3 2014 Q3 2013 Change%

Zignago Vetro SpA 41,513 42,162 (1.5%)

Verreries Brosse SAS and its subsidiary 12,537 12,815 (2.2%)

Vetri Speciali SpA 16,404 14,610 12.3%

HSC SA 4,860 5,528 (12.1%)

Vetreco Srl 610 72 n.s.

Total aggregate 75,924 75,187 1.0%

Elimination of intercompany sales (1,501) (2,401) (37.5%)

Total consolidated 74,423 72,786 2.2%

Interim Report

16


Group in 9M 2014 and 2013 are shown below.

Consolidated Revenues for 9M 2014 and 2013 were as follows:

Change


226,470 100.0% 215,781 100.0% 5.0%

Cge. in inventories of fin. and semi-

fin. prod. and work in progress 3,067 1.4% 8,803 4.1% n.s.


229,801 101.5% 225,232 104.4% 2.0%


99,736 44.0% 99,768 46.2% (0.0%)

Labour costs (51,712) (22.8%) (51,118) (23.7%) 1.2%

48,024 21.2% 48,650 22.5% (1.3%)


Provisions (634) (0.3%) (581) (0.3%) 9.1%

26,535 11.7% 28,263 13.1% (6.1%)

Net recurring non-operating income 891 0.4% 454 0.2% 96.3%

27,426 12.1% 28,717 13.3% (4.5%)

Net financial charges (2,151) (0.9%) (1,785) (0.8%) 20.5%

Net exchange gains/(losses) 75 --- (144) --- n.s.

25,350 11.2% 26,788 12.4% (5.4%)

Income taxes (9,032) (4.0%) (9,472) (4.4%) (4.6%)

(Tax-rate 9M 2014: 35.6%)

(Tax-rate 9M 2013: 35.4%)

16,318 7.2% 17,316 8.0% (5.8%)

EBIT

O perating profit

Profit before taxes

Net profit

9M 2013

EBITDA

Revenues

Value of production

Value added

9M 2014

(Euro thousands) 9M 2014 9M 2013 Change %

Zignago Vetro SpA 122,907 120,944 1.6%

Verreries Brosse SAS and its subsidiary 40,638 38,002 6.9%

Vetri Speciali SpA 51,226 47,258 8.4%

HSC SA 14,176 14,860 (4.6%)

Vetreco Srl 1,987 72 n.s

Total aggregate 230,934 221,136 4.4%

Elimination of intercompany sales (4,464) (5,355) (16.6%)

Total consolidated 226,470 215,781 5.0%

Interim Report

17

Consolidated Revenues breakdown by geographic area:

Group revenues outside Italy, net of inter-group sales, for the first nine months amounted to

Euro 82.4 million, compared to Euro 81.5 million in the first nine months of 2013 (+1.1%) and

account for 36.4% of total revenues (first nine months 2013: 37.8%). The revenues for both

periods are summarised below:

The consolidated net profit for the third quarter and the first nine months of 2014 and 2013 was

as follows:

The consolidation adjustments at September 30, 2014 and 2013 relate principally to the

elimination of the Vetri Speciali SpA dividends (Euro 7.5 million in 2014, Euro 8 million in 2013).

(Euro thousands)

2014 2013 Change % 2014 2013 Change %

Italy 48,209 46,062 4.7% 144,076 134,294 7.3%

European Union 21,124 21,077 0.2% 65,303 65,419 (0.2%)

Other regions 5,090 5,647 (9.9%) 17,091 16,068 6.4%

Total 74,423 72,786 2.2% 226,470 215,781 5.0%

Q3 9M

(Euro thousands)

2014 2013 Change % 2014 2013 Change %

Zignago Vetro SpA 7,278 7,475 (2.6%) 25,075 24,575 2.0%

Verreries Brosse SAS and its

subsidiary11,848 12,016 (1.4%) 36,359 35,971 1.1%

Vetri Speciali SpA 3,580 3,536 1.2% 11,128 11,665 (4.6%)

HSC SA 3,508 3,697 (5.1%) 9,832 9,276 6.0%

Total 26,214 26,724 (1.9%) 82,394 81,487 1.1%

% on revenues 35.2% 36.7% 36.4% 37.8%

Q3 9M

(Euro thousands)

2014 2013 Change % 2014 2013 Change %

Zignago Vetro SpA 2,220 2,857 (22.3%) 15,354 17,315 (11.3%)

Verreries Brosse SAS and its

subsidiary(288) (501) (42.5%) (197) (438) n.s.

Vetri Speciali SpA 2,675 2,327 15.0% 8,232 7,552 9.0%

HSC SA 288 599 n.s. 647 1,004 (35.6%)

Vetreco Srl (57) (32) n.s. (224) (91) n.s.

Total aggregate 4,838 5,250 (7.8%) 23,812 25,342 (6.0%)

Consolidation adjustment (20) (23) n.s. (7,494) (8,026) (6.6%)

Group net profit 4,818 5,227 (7.8%) 16,318 17,316 (5.8%)

Q3 9M

Interim Report

18


Group in Q3 2014 and 2013, based on the application of IFRS 11 and compared with the same

quarter of the previous year, restated in application of the above-mentioned standard, are

illustrated below.

(*) Figures restated in accordance with requirements of IFRS 11 – Joint Arrangements and

IAS 28 – Interests in associates and joint ventures. For further information reference should be made to the

paragraph “Basis of the preparation – New accounting standards and interpretations adopted by the Group from

January 1, 2014” included in the explanatory notes to the Interim Report.

Change

Euro thous. % Euro thous. % %

57,854 100.0% 58,331 100.0% (0.8%)

Changes in finished and semi-finished

products and work in progress 1,057 1.8% (3,238) (5.6%) (132.6%)

Internal production of fixed assets 73 0.1% 411 0.7% (82.2%)

58,984 102.0% 55,504 95.2% 6.3%


23,230 40.2% 23,267 39.9% (0.2%)

Labour costs (13,642) (23.6%) (12,799) (21.9%) 6.6%

Valuation of JV at Equity 2,598 4.5% 2,272 3.9% 14.3%

12,186 21.1% 12,740 21.8% (4.3%)


Provisions 98 0.2% (49) (0.1%) n.s.

6,495 11.2% 7,228 12.4% (10.1%)

Net recurring non-operating income (41) (0.1%) (115) (0.2%) n.s.

6,454 11.2% 7,113 12.2% (9.3%)


Exchange gains/(losses) 69 0.1% 174 0.3% n.s.

5,992 10.4% 6,819 11.7% (12.1%)

Income taxes (1,174) (2.0%) (1,592) (2.7%) (26.3%)

(Tax-rate 2014: 19.6 %)

(Tax-rate 2013: 23.3%)

4,818 8.3% 5,227 9.0% (7.8%)Group net profit

O perating profit

Q3 2014 Restated (*) Q3 2013

Profit before taxes

Revenues

Value of production

Value added

EBIT

EBITDA

Interim Report

19

For a better understanding of the results for 9M 2014, stated in accordance with management’s

view, a reconciliation is provided below of the reclassified statement of profit and loss between the

version which values the investments in joint ventures at equity and the version utilising the

proportional consolidation method, as adopted by the Group until December 31, 2013.

Consolidated proportionaly

Q3 2014

IAS/ IFRS

Vetri

Speciali SpA

Vetreco Srl Adjustment

Parent

company

account. prin.

Eliminate JV

effect under

Equity method

Q3 2014 pre

IFRS 11

(management

view )

Euro thous. Euro thous. Euro thous. Euro thous. Euro thous. Euro thous.

57,854 16,404 610 (322) (123) 74,423

Changes in finished and semi-

finished products and work in

progress 1,057 340 40 322 --- 1,759

Internal prod. of fixed assets 73 --- --- --- --- 73

58,984 16,744 650 --- (123) 76,255

Cost of goods and services (35,754) (8,216) (521) --- 123 (44,368)

23,230 8,528 129 --- --- 31,887

Labour costs (13,642) (3,293) (81) --- --- (17,016)

Valuation of JV at Equity 2,598 --- --- --- (2,598) ---

12,186 5,235 48 --- (2,598) 14,871

Amortisation & depreciation (5,789) (1,168) (75) --- --- (7,032)

Provisions 98 27 --- --- --- 125

6,495 4,094 (27) --- (2,598) 7,964

Net recur. non-oper. income (41) 90 --- (29) --- 20

6,454 4,184 (27) (29) (2,598) 7,984

Net financial charges (531) (175) (39) --- --- (745)

Net exchange gains/(losses) 69 5 --- --- --- 74

5,992 4,014 (66) (29) (2,598) 7,313

Income taxes (1,174) (1,339) 9 9 --- (2,495)

4,818 2,675 (57) (20) (2,598) 4,818

O perating profit/(loss)

Consolidated net profit/(loss)

Profit/(loss) before taxes

Revenues

Value of production

Value added

EBIT

EBITDA

Interim Report

20

The key data of the reclassified statement of profit and loss of the Zignago Vetro Group in 9M

2014 and 2013, based on the application of IFRS 11 and compared with the same period of the

previous year, restated in application of the above-mentioned standard, are illustrated below.





Change


174,671 100.0% 169,279 100.0% 3.2%


products and work in progress 3,006 1.7% 5,984 3.5% (49.8%)


177,941 101.9% 175,911 103.9% 1.2%


73,284 42.0% 74,579 44.1% (1.7%)

Labour costs (41,309) (23.6%) (41,003) (24.2%) 0.7%

Valuation of JV at Equity 7,993 4.6% 7,412 4.4% 7.8%

39,968 22.9% 40,988 24.2% (2.5%)


Provisions (551) (0.3%) (482) (0.3%) 14.3%

22,074 12.6% 24,097 14.2% (8.4%)

Net recurring non-oper. income 598 0.3% 295 0.2% n.s.

22,672 13.0% 24,392 14.4% (7.1%)

Net financial charges (1,478) (0.8%) (1,232) (0.7%) 20.0%

Net exchange gains/(losses) 71 --- (140) (0.1%) n.s.

21,265 12.2% 23,020 13.6% (7.6%)

Income taxes (4,947) (2.8%) (5,704) (3.4%) (13.3%)

(Tax-rate 2014: 23.3%)

(Tax-rate 2013: 24.7%)

16,318 9.3% 17,316 10.2% (5.8%)Group net profit

O perating profit

9M 2014 Restated (*) 9M 2013

Profit before taxes

Revenues

Value of production

Value added

EBIT

EBITDA

Interim Report

21

For a better understanding of the results for 9M 2014, stated in accordance with management’s

view, a reconciliation is provided below of the reclassified statement of profit and loss between the

version which values the investments in joint ventures at equity and the version utilising the

proportional consolidation method, as adopted by the Group until December 31, 2013.


9M 2014

IAS/ IFRS

Vetri

Speciali SpA


Parent

company

account. prin.

Eliminate JV

effect under

Equity method

9M 2014 pre

IFRS 11

(management

view )


174,671 51,226 1,987 (966) (448) 226,470

Changes in finished and semi-

finished products and work in

progress 3,006 (940) 35 966 --- 3,067

Internal prod. of fixed assets 264 --- --- --- --- 264

177,941 50,286 2,022 --- (448) 229,801

Cost of goods and services (104,657) (24,182) (1,674) --- 448 (130,065)

73,284 26,104 348 --- --- 99,736

Labour costs (41,309) (10,164) (239) --- --- (51,712)

Valuation of JV at Equity 7,993 --- --- --- (7,993) ---

39,968 15,940 109 --- (7,993) 48,024

Amortisation & depreciation (17,343) (3,291) (221) --- --- (20,855)

Provisions (551) (83) --- --- --- (634)

22,074 12,566 (112) --- (7,993) 26,535

Net recurring non-oper. income 598 315 --- (22) --- 891

22,672 12,881 (112) (22) (7,993) 27,426

Net financial charges (1,478) (527) (146) --- --- (2,151)

Net exchange gains/(losses) 71 4 --- --- --- 75

21,265 12,358 (258) (22) (7,993) 25,350

Income taxes (4,947) (4,126) 34 7 --- (9,032)

16,318 8,232 (224)(224) (15) (7,993) 16,318

Group Net profit/(loss) for the

period


Profit/(loss) before taxes

Revenues

Value of production

Value added

EBIT

EBITDA

Interim Report

22

Statement of financial position

The reclassified consolidated statement of financial position at September 30 and June 30, 2014

and at December 31 and September 30, 2013, according the management view described

previously, of the Zignago Vetro Group are summarised below:

30.09.2014 30.06.2014 31.12.2013 30.09.2013

Euro thous. Euro thous. Euro thous. Euro thous.

Trade receivables 64,064 67,591 62,907 58,661

Other receivables 7,864 6,425 9,848 5,082

Inventories 70,269 68,998 68,110 70,773

Current non-financial payables (63,928) (61,247) (57,817) (59,170)

Payables on fixed assets (8,035) (4,553) (7,009) (7,640)

A) Working capital 70,234 77,214 76,039 67,706

Net tangible and intangible assets 128,181 125,856 128,655 126,651

Goodwill 40,704 40,708 40,708 40,695

Non-consolidated investments and other non-

current assets 3,614 3,796 3,750 3,104

Non-current provisions and non-financial

payables (13,957) (14,028) (13,752) (13,725)

B) Net fixed capital 158,542 156,332 159,361 156,725

A+B= Net capital employed 228,776 233,546 235,400 224,431

Financed by:

Short-term debt 127,179 133,565 113,016 111,252

Cash and cash equivalents (42,073) (40,952) (39,367) (41,574)

Short-term net debt 85,106 92,613 73,649 69,678

Medium/long term debt 16,835 18,864 32,132 34,021

C) Net financial debt 101,941 111,477 105,781 103,699

Opening Equity 129,619 129,619 125,478 125,479

Dividends paid in the period (19,047) (19,047) (21,645) (21,645)

Change in translation reserve (55) (3) (348) (418)

Net profit 16,318 11,500 26,134 17,316

D) Closing equity 126,835 122,069 129,619 120,732

C+D = Total financial debt and equity

228,776 233,546 235,400 224,431

Interim Report

23

The working capital overall decreased by 7.6% (- Euro 5.8 million) compared to December 31,

2013, while decreasing Euro 7 million (-9%) on June 30, 2014.

Trade receivables increased 1.8% (Euro 1.1 million) compared to the end of 2013 and reduced

5.2% (Euro 3.5 million) compared to June 30, 2014. Inventories increased by Euro 2.2 million on

the end of 2013 and Euro 1.3 million on June 30, 2013. Current non-financial payables increased

Euro 6.1 million compared to December 31, 2013 and by Euro 2.7 million compared to June 30,

2014.

Net fixed capital at September 30, 2014 reduced Euro 0.8 million compared to December 31,

2013. Capital and intangible asset investment by the companies of the Zignago Vetro Group in

the first nine months 2014 amounted to Euro 23.8 million, of which Euro 10.6 million in the third

quarter. In the previous year, capital investments amounted to Euro 28.3 million, of which Euro

10.4 million in the third quarter.

Investments in the first nine months of 2014 and 2013 concerned in particular:

- Zignago Vetro SpA for Euro 18.5 million (Euro 15.9 million in the same period of 2013), of

which Euro 9.4 million relating to the refurbishment of a kiln and related production lines;

- Verreries Brosse SAS for Euro 2.5 million (Euro 2.4 million in the first nine months of 2013),

principally for new investments and plant and industrial equipment refurbishment, including

moulds;

- Vetri Speciali SpA, for its share, for Euro 1.8 million (Euro 1.6 million in the first nine

months of 2013) for scheduled plant and equipment replacement;

- Huta Szkła “Czechy” SA for Euro 0.9 million for the replacement of plant and equipment

(Euro 6 million in 9M 2013);

- Vetreco Srl for its share of Euro 0.1 million (Euro 2.4 million in 9M 2013), relating to normal

fixed asset interventions.

Interim Report

24

Consolidated net equity, including the net result for the first nine months of the year, amounted

at September 30, 2014 to Euro 126.8 million compared to Euro 129.6 million at December 31,

2013 (-2.1%) and Euro 122.1 million at June 30, 2014 (+3.9%). The reduction on December 31,

2013 of Euro 2.8 million is due to a consolidated net profit for the period (Euro 16.3 million)

lower than the dividend distributed (Euro 19 million) and the change in the translation reserve (-

Euro 0.1 million).

The Zignago Vetro Group workforce at September 30, 2014 numbered 1,869 compared to 1,813

at September 30, 2013. At June 30, 2014 there were 1,864 employees while at December 31, 2013

numbering 1,835. The employees of Vetri Speciali SpA and its subsidiaries and of Vetreco Srl

have been fully incorporated.

The composition of Group personnel at September 30, 2014 is shown in the table below:

Executives Managers White-collar Blue-collar

Male (number) 18 68 243 1205

Female (number) 2 20 97 216

of which:

- long term contracts 19 82 322 1317

- fixed term contracts 1 6 18 104

Average age 52 46 42 41

Employment period 11 17 15 14

Interim Report

25

The net financial debt, again based on the management view described in the introduction, at

September 30, 2014 amounted to Euro 101.9 million, decreasing Euro 3.8 million (-3.6%)

compared to Euro 105.8 million at December 31, 2013 and reducing Euro 9.5 million (-8.6%)

compared to June 30, 2014.

The cash flow movements affecting the consolidated net financial position in the third quarter and

in the first nine months of the year compared with the same periods in the previous year were as

follows:

(Euro thousands) Q3 20149M 2014

Q3 20139M 2013

(111,477) (105,781) (110,123) (91,401)

Self financing:

- net profit for the period 4,818 16,318 5,227 17,316

- amortisation and depreciation 7,032 20,855 6,681 19,806

- provisions (utilisations) (71) 205 216 131

- net unrealised gains/(losses) on property, plant

& equipment --- (89) 141 34

11,779 37,289 12,265 37,287

6,980 5,805 3,771 (2,966)

Investments in property, plant and equipment (10,574) (23,732) (10,233) (28,000)

Intangible asset investments (1) (35) (207) (293)

186 140 (220) 76

1,231 3,475 1,007 3,345

(2,178) (14,347) (5,882) (27,838)

Free cash flow 9,601 22,942 6,383 9,449

Dividends distibuted --- (19,047) --- (21,645)

Currency conv. foreign co. & other changes (65) (55) 41 (102)

9,536 3,840 6,424 (12,298)

Net debt at end of period (101,941) (101,941) (103,699) (103,699)

Net debt at end of previous period

Change in net debt

Decrease (increase) other medium/long-term

assets

Book value of property, plant & equipment sold

Decrease (increase) in working capital

Interim Report

26

The following table highlights the composition of the net financial debt according to the

management view at September 30 and June 30, 2014 and at December 31 and September 30,

2013 in accordance with CONSOB communication No. DEM/6064293 of July 28, 2006:

Net Financial Position

(Euro thousands)

30.09.2014 30.06.2014 31.12.2013 30.09.2013

A. Cash 24 25 28 25

B. Other cash equivalents 42,049 40,927 39,339 41,549

D. Liquidity (A)+(B)+(C) 42,073 40,952 39,367 41,574

E. Current financial receivables --- --- --- ---

F. Current bank payables 106,396 116,396 101,068 98,866

G. Current portion of non-current debt 20,702 17,099 11,811 12,228

H. Other current financial payables 81 70 137 158

I. Current debt (F)+(G)+(H) 127,179 133,565 113,016 111,252

J. (I)-(E)-(D) 85,106 92,613 73,649 69,678

K. Medium/long-term loans 16,835 18,864 32,132 34,021

L. Bonds issued --- --- --- ---

M. Other non-current payables --- --- --- ---

N. (K)+(L)+(M) 16,835 18,864 32,132 34,021

O. (J)+(N) 101,941 111,477 105,781 103,699

Net current debt

Non-current financial debt

Net financial debt

Interim Report

27

Reconciliation between the Group and Parent Company net result and net equity

The reconciliation between the net result for the first nine months of 2014 and the net equity at

September 30, 2014 of the Parent Company and the consolidated result are summarised below:

(Euro thousands) Net result

9M 2014

Equity

30.09.2014

Financial statements of the Parent Company 15,354 87,310

Adjustments for change in accounting principles and consolidation scope:

- reclassified fix. assets from inventory, net of fis. effect (15) (374)

- reversal inter-company profit 17 (48)

- reversal of inter-group dividend (7,496) ---

- reversal of "Fond de Commerce" in Verreries Brosse SAS --- (100)

- reclassified emission trading in Verreries Brosse SAS 22 351

- goodwill allocated on acquisition of HSC SA & adjustment to period-

end exchange rate (4) 737

- other consolidation adjustments 63 570

(7,413) 1,136

Carrying value of consolidated companies:

Verreries Brosse SAS --- (4,000)

Brosse USA Inc. --- (69)

Vetri Speciali SpA --- (25,320)

Huta Szkla Czechy SA --- (10,327)

Vetreco Srl --- (600)

--- (40,316)

Net result and equity of the subsidiaries:

Verreries Brosse SAS (128) 12,970

Brosse USA Inc. (150) (196)

Vetri Speciali SpA 8,232 52,271

Huta Szkla Czechy SA 647 13,473

Vetreco Srl (224) 187

8,377 78,705

Consolidated financial statements 16,318 126,835

Interim Report

28

The reclassified statement of financial position of the Zignago Vetro Group at September 30,

2014, reported below as per IFRS 11, is presented in condensed form and compared with

September 30, 2013 and December 31, 2013, restated in application of IFRS 11:





30.09.2014 30.06.2014

Euro thou. Euro thou. Euro thou. Euro thou.



Inventories 58,736 57,769 55,753 57,736




Net tangible & intangible assets 97,138 94,307 95,921 93,748

Goodwill 737 741 741 728

Valuation of investments at Equity 52,084 49,486 51,587 48,509

Other investments & non-current assets 3,058 3,255 3,158 2,558

Non-current prov & fin. payables (10,722) (10,836) (10,564) (10,443)


A+B = Net capital employed 201,177 200,317 202,673 190,639

Financed by:

Short-term debt 106,700 106,621 94,761 92,246


Net short-term debt 65,714 65,949 55,489 50,699

Medium/long-term debt 8,628 12,299 17,565 19,208


D) Minority interest equity --- --- --- ---

Opening Equity 129,619 129,619 125,478 125,478

Dividends (19,047) (19,047) (21,645) (21,645)

Other changes in Equity (55) (3) (348) (417)

Net profit for the period 16,318 11,500 26,134 17,316

E) Closing equity 126,835 122,069 129,619 120,732

C+D+E = Total financial debt and Eq. 201,177 200,317 202,673 190,639

Restated (*)

30.09.2013

Restated (*)

31.12.2013

Interim Report

29

For a better understanding of the statement of financial position at September 30, 2014, stated in

accordance with management’s view, a reconciliation is provided below of the version which

values the investments in joint ventures at equity and the version utilising the proportional

consolidation method, as adopted by the Group until 31/12/2013.

* * *

30.09.2014

IAS/IFRS

Vetri Speciali

SpA


Parent

Company

accounting

principles

Eliminate JV

effect under

Equity method

30.09.2014

pre IFRS 11

(management

view )


Trade receivables 51,461 12,202 441 --- (40) 64,064

Other receivables 6,062 793 1,009 --- --- 7,864

Inventories 58,736 11,872 207 (546) --- 70,269

Current non-fin. payables (49,765) (12,930) (1,273) --- 40 (63,928)

Payables on fixed assets (7,612) (395) (28) --- --- (8,035)

A) Working capital 58,882 11,542 356 (546) --- 70,234

Net tang. & intang. assets 97,138 26,019 5,024 --- --- 128,181

Goodwill 737 39,967 --- --- --- 40,704

Valuation of investments

at Equity 52,084 --- --- --- (52,084) ---Other investments & non-

current assets 3,058 378 6 172 --- 3,614

Non-current prov & fin.

payables (10,722) (3,229) (6) --- --- (13,957)

B) Net fixed capital 142,295 63,135 5,024 172 (52,084) 158,542

A+B = Net capital emp. 201,177 74,677 5,380 (374) (52,084) 228,776

Financed by:

Short-term debt 106,700 15,286 5,193 --- --- 127,179

Cash and cash equivalents (40,986) (1,087) --- --- --- (42,073)

Net short-term debt 65,714 14,199 5,193 --- --- 85,106

Medium/long-term debt 8,628 8,207 --- 16,835

C) Net financial debt 74,342 22,406 5,193 --- --- 101,941

D) Minority interest equity --- --- --- --- --- ---

Opening Equity 129,619 51,535 411 (359) (51,587) 129,619

Dividends (19,047) (7,496) --- --- 7,496 (19,047)

Other changes in Equity (55) --- --- --- --- (55)

Net profit/(loss) 16,318 8,232 (224) (15) (7,993) 16,318

E) Closing equity 126,835 52,271 187 (374) (52,084) 126,835

C+D+E = Total financial

debt & equity 201,177 74,677 5,380 (374) (52,084) 228,776


Interim Report

30

Research, development and advertising costs

The research and development activities, related to innovation in the processes and products,

developed lighter containers for the “food and beverages” and innovative shaped containers for the

“cosmetics and perfumery” sector and for the “specialty glass” sector.

Environmental information

In the first nine months of 2014, the commitment of the companies of the Zignago Vetro Group

continued in the protection of the environment with the continual improvement of the policies of

territorial protection and management of environmental issues with actions aimed to reduce

atmospheric emissions and energy consumption in the utilisation of natural resources and the

optimisation of the production cycle, while remaining continually attentive to new and future

technology developed internationally.

Risks related to personnel, security and management

The Companies of the Zignago Vetro Group implement plant management policies to minimise

the risk of accidents ensuring high levels of security in line with best industrial practices, utilising

insurance to guarantee an extensive degree of protection for company structures, third party risks

and interruptions in production activity. The company trains and motivates the workforce to

guarantee efficiency and normal operational continuity.

Personal data security and protection

Pursuant to rule 26 of Attachment B of Legislative Decree No. 196 of June 30, 2003 (Employee

data protection code), the Companies of the Group adopted new security measures required by the

above-mentioned decree and updated the “Security Programming Document”.

Interim Report

31

Financial instruments: Group objectives & policies and description of risks

The main financial instruments used by the Zignago Vetro Group consist of trade receivables and

payables, cash & cash equivalents, bank borrowing and interest rate swap contracts.

As regards the Group’s financial management, the operating cash flow is considered to be

consistent with objectives for repayment of existing debt and such as to assure appropriate

financial equilibrium and adequate remuneration of equity via dividend flows.

The Zignago Vetro SpA Group had undertaken at September 30, 2014 an interest rate swap in

order to hedge the interest rate risk on medium-long term loans undertaken in 2011 by Zignago

Vetro SpA. The mark-to-market of this derivative at September 30, 2014 was as follows:

The above-mentioned operation was undertaken for hedging purposes. However this operation

does not comply with all the requirements of IAS / IFRS accounting standards to be considered as

such for accounting purposes. For these reasons Zignago Vetro SpA does not use the so-called

hedge accounting method and records the economic effects of hedging directly to the statement of

profit and loss.

We consider that the Zignago Vetro Group is not exposed to credit risk any higher than the

industry average, given that most receivables relate to customers of well-established commercial

reliability and that receivables are insured. Allowance for doubtful debts has in any case been

made to cover against any residual credit risks. We specify that such provisions were made in the

period and in previous periods against specific positions involved in procedures or with longer past-

due status than the Group companies average collection times. General provisions have also been

made for potential insolvency of debtors.

The exchange risk is currently not considered significant, as transactions are almost exclusively

carried out in Euro.

Company Bank Underlying Nature Notional Maturity Market

of value at value

Contract reference at

date 30.09.2014

(Euro tho us ands )

Zignago Vetro

SpA

UnicreditBanca

SpA Loan Hedge 4,015 31/05/2016 (81)

Interim Report

32

The Group’s present reference market does not involve areas possibly requiring country-risk

management. Trade transactions substantially take place with western countries, primarily in the

Euro and USD areas.

* * *

Pursuant to the Bank of Italy/ Consob /Isvap document No. 2 of February 6, 2009 and IAS 1.25-26,

it is considered, based on the strong profitability, on the Group’s solid balance sheet and in spite of

the current economic environment, that there are no uncertainties or risks on the going concern of

the business.

* * *

It is considered that the information provided, together with the information illustrated below and

relating to the performance of the individual companies, represents a true, balanced and exhaustive

analysis of the situation of the Group and of the operational results, for the overall operations and

in the various sectors, in accordance with the size and complexity of the Group’s business

operations.

For greater clarity, the operating results and statements of financial position of the parent company

and subsidiaries are presented according to the contribution of each of them to the Consolidated

Interim Report at September 30, 2014. They are shown according to normal reporting practices.

Interim Report

33

THE COMPANY

Zignago Vetro SpA In the first nine months of 2014, food and beverage container demand in Europe appeared to

improve. In Italy, the recovery has been slower, impacted by continued weak internal demand,

while sustained however by more vibrant export activity.

Demand on the global Perfumery markets was strong, as was the case on the Cosmetics markets,

which in the first half of the year had showed signs of slowdown, with growth picking up in the

last quarter.

The result was impacted also by technical issues causing production slowdowns, which will be

resolved with the refurbishment of kilns in the coming months.

Interim Report

34

The reclassified income statement of Zignago Vetro SpA in the third quarter of 2014 compared

to the previous year is shown below:

Change


41,513 100.0% 42,162 100.0% (1.5%)


products and work in progress 407 1.0% (2,063) (4.9%) n.s.

Internal production of fixed assets --- --- 342 0.8% n.s.

41,920 101.0% 40,441 95.9% 3.7%


15,101 36.4% 15,227 36.1% (0.8%)

Labour costs (7,959) (19.2%) (7,313) (17.3%) 8.8%

7,142 17.2% 7,914 18.8% (9.8%)


Provisions (30) (0.1%) (30) (0.1%) ---

3,791 9.1% 4,880 11.6% (22.3%)

Net recurring non-operating income (17) --- (151) (0.4%) n.s.

3,774 9.1% 4,729 11.2% (20.2%)

Net financial charges (296) (0.7%) (243) 0.6% 21.8%

Exchange gains/(losses) (11) --- 48 0.1% n.s.

3,467 8.4% 4,534 10.8% (23.5%)

Income taxes (1,247) (3.0%) (1,677) (4.0%) (25.6%)

(Tax-rate Q3 2014: 36%)

(Tax-rate Q3 2013: 37%)

2,220 5.3% 2,857 6.8% (22.3%)

O perating profit

Net profit for the period

Q3 2014 Q3 2013

Profit before taxes

Revenues

Value of production

Value added

EBIT

EBITDA

Interim Report

35

The reclassified statement of profit and loss of Zignago Vetro SpA in the first nine months of

2014, compared with the same period of the previous year, is presented below:

In the third quarter revenues amounted to Euro 41.5 million, reducing 1.5% on the same period of

2013 (Euro 42.2 million). Sales of glass containers and accessories decreased from Euro 38.7

million in the third quarter of 2013 to Euro 38.2 million in Q3 2014 (-1.4%).

Revenues in the first nine months of 2014 amounted to Euro 122.9 million compared to Euro

120.9 million in the same period in the previous year (+1.6%). Sales of glass containers and

accessories (the latter referring to Zignago Vetro SpA’s services on the market) amounted to Euro

112.8 million compared to Euro 111.4 million in 9M 2013 (+1.3%).

Change


122,907 100.0% 120,944 100.0% 1.6%


products and work in progress 2,525 2.1% 2,900 2.4% n.s.

Internal production of fixed assets --- --- 342 0.3% n.s.

125,432 102.1% 124,186 102.7% 1.0%


47,539 38.7% 48,027 39.7% (1.0%)

Labour costs (24,419) (19.9%) (23,497) (19.4%) 3.9%

23,120 18.8% 24,530 20.3% (5.7%)


Provisions (207) (0.2%) (214) (0.2%) (3.3%)

12,948 10.5% 15,303 12.7% (15.4%)

Net recurring non-operating income 543 0.4% 180 0.1% n.s.

13,491 11.0% 15,483 12.8% (12.9%)

Investment income 7,496 6.1% 8,050 6.7% (6.9%)


Exchange gains/(losses) (35) --- (71) (0.1%) (50.7%)

20,200 16.4% 22,880 18.9% (11.7%)

Income taxes (4,846) (3.9%) (5,565) (4.6%) (12.9%)

(Tax-rate 9M 2014: 24%)

(Tax-rate 9M 2013: 24.3%)

15,354 12.5% 17,315 14.3% (11.3%)

O perating profit


9M 2014 9M 2013

Profit before taxes

Revenues

Value of production

Value added

EBIT

EBITDA

Interim Report

36

Revenues by geographic area, excluding sundry materials and services:

In the first nine months of the year, exports decreased by 2.0% on the same period of 2013,

accounting for 22.8% of containers and accessories revenues (23.6% in 2013). In the third quarter

of 2014, exports rose 4.4% and accounted for 22.2% of revenues (21% in Q3 2012).

Material costs and external services, including changes in inventories and internal production of

fixed assets, increased in the first nine months of 2014 on the same period of 2013 from Euro 72.9

million to Euro 75.4 million (3.4%). These costs as a percentage of revenues were 61.3% (60.3%

in 9M 2013). In the third quarter of 2014 the account decreased on Q3 2013 from Euro 26.9

million to Euro 26.4 million (1.9%), while as a percentage of revenues decreasing from 63.9% to

63.6%.

Labour costs in the first nine months of the year increased compared to the same period of 2013 by

3.9%. These costs as a percentage of revenues were 19.9% compared to 19.4%. In the third quarter

of 2014, labour costs rose by 8.8% and accounted for 19.2% of revenues (17.3% in 2013).

Ebitda in the first nine months of the year amounted to Euro 23.1 million compared to Euro 24.5

million in 2013 (-5.7%) with a revenue margin of 18.8% compared to 20.3% in the first nine

months of 2013. In Q3 2014 Ebitda reduced 9.8% (from Euro 7.9 million to Euro 7.1 million),

while the revenue margin decreased from 18.8% to 17.2%.

Ebit in the first nine months of 2014 totalled Euro 12.9 million, decreasing 15.4% compared to

Euro 15.3 million in the same period of the previous year. The Ebit margin decreased from 12.7%

in the first nine months of 2013 to 10.5% in the first nine months of 2014. The reduction in Q3

2014 on the same period of 2013 was 22.3% (from Euro 4.9 million to Euro 3.8 million), with the

revenue margin decreasing from 11.6% to 9.1%.

(Euro thousand)

2014 2013 Change % 2014 2013 Change %

Italy 29,699 30,580 (2.9%) 87,085 85,105 2.3%

European Union 6,565 6,286 4.4% 20,012 20,844 (4.0%)

Other regions 1,933 1,855 4.2% 5,752 5,451 5.5%

Total 38,197 38,721 (1.4%) 112,849 111,400 1.3%

of which export 8,498 8,141 4.4% 25,764 26,295 (2.0%)

% 22.2% 21.0% 22.8% 23.6%

Q3 9M

Interim Report

37

Investment income in the first nine months of 2014 amounted to Euro 7.5 million and concerns

Vetri Speciali SpA dividends (Euro 8.1 million in 2013: -6.9%).

The pre-tax profit for the first nine months of 2014 was Euro 20.2 million, decreasing 11.7% on

Euro 22.9 million in the first nine months of 2013. The revenue margin reduced to 16.4% from

18.9%. In the third quarter of 2014 the profit before taxes decreased 23.5% (from Euro 4.5 million

to Euro 3.5 million), with a profit margin of 8.4% (10.8% in 2013).

In the third quarter of 2014 the net profit totalled Euro 2.2 million, 22.3% lower than the third

quarter of 2013 (Euro 2.9 million) – 5.3% of revenues (6.8% in 2013). The net profit for the first

nine months of 2014 was Euro 15.4 million compared to Euro 17.3 million in the first nine months

of 2013 (-11.3%), after income taxes respectively of Euro 4.8 million and Euro 5.6 million. The

tax rate for the first nine months of 2014 was 24% compared to 24.3% in 9M 2013.

Cash flow generated from profits and amortisation/depreciation for the nine months ended

September 30, 2014 amounted to Euro 25.4 million (Euro 26.3 million in the same period of 2013),

a decrease of 3.4%. Cash flow as a percentage of revenues was respectively 20.7% and 21.8%. In

the third quarter cash flow amounted to Euro 5.5 million compared to Euro 5.9 million in 2013 (-

6.8%).

Interim Report

38

The reclassified statement of financial position of Zignago Vetro SpA at September 30 and June

30, 2014 and at December 31 and September 30, 2013 are as follows:

The working capital in the first nine months decreased on December 31, 2013 by Euro 4.8 million

(-12.1%) and in Q3 2014 by Euro 3.9 million (-10%). Trade receivables reduced compared to the

end of 2013 by Euro 0.5 million and other receivables by Euro 1.9 million; compared to June 30,

2014 respectively reducing by Euro 0.7 million and increasing Euro 0.6 million.

Inventories increased by Euro 1.5 million (+4.6%) compared to December 31, 2013, while

decreasing by Euro 0.2 million compared to June 30, 2014.

Current non-financial payables increased Euro 1.8 million, while payables on fixed assets

increased by Euro 2.1 million, on December 31, 2013, related to investments made in the first nine

months of the year, principally due to the previously reported refurbishment of a kiln at the Empoli

production site.

30.09.2014 30.06.2014 31.12.2013 30.09.2013




Inventories 36,248 36,476 34,661 34,402





Equity investments 40,247 40,247 40,247 40,247

Other investments & non-curr. assets 1,513 1,662 1,705 1,586

Non-current provisions and financial payables (8,191) (8,179) (8,308) (8,096)



Financed by:

Short-term debt 83,776 81,145 69,807 67,647


Net short-term debt 35,088 36,001 27,444 22,045

Medium/long-term debt 4,222 5,414 7,790 8,984


Opening equity 91,003 91,003 90,609 90,609

Dividends paid (19,047) (19,047) (21,645) (21,645)


Other changes --- --- (70) ---

D) Closing equity 87,310 85,090 91,003 86,279

C+D = Total financial debt and Equity 126,620 126,505 126,237 117,308

Interim Report

39

The net fixed capital at September 30, 2014 increased compared to December 31, 2013 by Euro

5.2 million, principally concerning capital expenditure (Euro 18.5 million) greater than

depreciation provisioned in the same period (Euro 10 million).

The decrease in net equity at September 30, 2014 compared to December 31, 2013 (Euro 3.7

million) reflects the net profit in the period lower than the dividend distributed.

Due to that outlined above the net debt at September 30, 2014 amounted to Euro 39.3 million,

Euro 4.1 million higher than December 31, 2013 (+11.6%) but Euro 2.1 million lower compared to

June 30, 2014 (-5.1%).

At September 30, 2014, there were 601 employees (at December 31, 2013 and September 30, 2013

respectively 590 and 573 employees).

Based on the available figures, the revenue and margin performance for the first nine months is

expected to be confirmed also in the final quarter.

Interim Report

40

THE CONSOLIDATED SUBSIDIARIES

Verreries Brosse SAS and its subsidiary Brosse USA Inc.

Registered office: Vieux-Rouen-sur-Bresle (France)

Business sector: glass bottles for luxury fragrances

Chairman Paolo Giacobbo

“Comité de Direction” Olivier Caspar

Roberto Celot

Ovidio Dri

Alberto Faggion

Franco Grisan

Maurizio Guseo

Nicolò Marzotto

Michele Pezza

Verreries Brosse SAS sells its products on the North American market, drawing on the marketing

support of its wholly-owned subsidiary Brosse USA Inc..

In the first nine months of 2014 global luxury Perfume demand appeared strong - driven by the

Asian and South American markets. The weakest markets appear to be those in Europe.

The major sector players also carried out a significant degree of existing product review.

Interim Report

41

The reclassified consolidated statement of profit and loss of Verreries Brosse for Q3 2014

compared to the same period of the previous year is shown below:

Change


12,537 100.0% 12,815 100.0% (2.2%)


products and work in progress 653 5.2% (814) (6.4%) (180.2%)

13,190 105.2% 12,001 93.6% 9.9%


5,780 46.1% 5,698 44.5% 1.4%

Labour costs (4,368) (34.8%) (4,265) (33.3%) 2.4%

1,412 11.3% 1,433 11.2% (1.5%)

Amortisation & depreciation (1,832) (14.6%) (1,937) (15.1%) (5.4%)

Provisions 135 1.1% (5) --- n.s.

(285) (2.3%) (509) (4.0%) (44.0%)

Net non-recurring charges (26) (0.2%) --- --- n.s.

(311) (2.5%) (509) (4.0%) (38.9%)


Exchange gains/(losses) 76 0.6% (53) (0.4%) n.s.

(437) (3.5%) (744) (5.8%) (41.3%)

Income taxes 149 1.2% 243 1.9% (38.7%)

(288) (2.3%) (501) (3.9%) (42.5%)

O perating loss

Net loss for the period

Q3 2014 Q3 2013

Loss before taxes

Revenues

Value of production

Value added

EBIT

EBITDA

Interim Report

42

The reclassified consolidated statement of profit and loss of Verreries Brosse for 9M 2014

compared to the same period of the previous year is shown below:

Revenues by geographic area:

Change


40,638 100.0% 38,002 100.0% 6.9%


products and work in progress 549 1.4% 3,892 10.2% n.s.

41,187 101.4% 41,894 110.2% (1.7%)


19,215 47.3% 20,084 52.8% (4.3%)

Labour costs (13,211) (32.5%) (14,075) (37.0%) (6.1%)

6,004 14.8% 6,009 15.8% (0.1%)


Provisions (295) (0.7%) (225) (0.6%) 31.1%

212 0.5% (28) (0.1%) n.s.

Net non-recurring charges 1 --- 12 --- n.s.

213 0.5% (16) --- n.s.


Exchange gains/(losses) 121 0.3% (43) (0.1%) n.s.

(276) (0.7%) (599) (1.6%) (53.9%)

Income taxes 79 0.2% 161 0.4% (50.9%)

(197) (0.5%) (438) (1.2%) (55.0%)


Net loss for the period

9M 2014 9M 2013

Loss before taxes

Revenues

Value of production

Value added

EBIT

EBITDA

(Euro thousands)

2014 2013 Change % 2014 2013 Change

Italy 689 799 (13.8%) 4,279 2,031 110.7%

EU 10,655 9,844 8.2% 30,891 31,624 (2.3%)

Other regions 1,193 2,172 (45.1%) 5,468 4,347 25.8%

Total 12,537 12,815 (2.2%) 40,638 38,002 6.9%

Q3 9M

Interim Report

43

In the first nine months of 2014, revenues amounted to Euro 40.6 million, growth of 6.9% on the

same period of 2013 (Euro 38 million). In the third quarter revenues decreased 2.2%.

Material costs and external services, including inventory changes, in the first nine months of 2014

were 52.7% of revenues compared to 47.2% in 2013. In Q3 2014 they accounted for 53.9%

compared to 55.5% in Q3 2013.

Labour costs in the first nine months of 2014 decreased 6.1% compared to the same period of

2013. The percentage of revenues decreased from 37% to 32.5%. In the third quarter of the year,

labour costs increased on Q3 2013 (+2.4%), from Euro 4.3 million to Euro 4.4 million, with the

percentage of revenues increasing from 33.3% to 34.8%.

The Ebitda in the first nine months of the year amounted to Euro 6 million (in line with the same

period of 2013); the revenue margin decreased from 15.8% to 14.8%. In the third quarter of 2014

the Ebitda margin was 11.3% compared to 11.2%.

The pre-tax result in 9M 2014 was a loss of Euro 0.3 million, improving on a loss of Euro 0.6

million in the same period of 2013.

The cash flow generated from the net profit and amortisation/depreciation in the first nine months

of the year amounted to Euro 5.3 million, compared to Euro 5.4 million in the same period of the

previous year.

Interim Report

44

The reclassified consolidated statement of financial position of Verreries Brosse at September

30 and June 30, 2014 and at December 31 and September 30, 2013 were as follows:

The working capital at September 30, 2014 increased by Euro 0.3 million compared to December

31, 2013 (+2.2%) and reduced Euro 1.2 million compared to June 30, 2014 (-5.8%).

Trade receivables at September 30, 2014 amounted to Euro 12.3 million, increasing Euro 1.5

million on December 31, 2013 (+13.5%) and reducing Euro 0.8 million compared to June 30, 2014

(-6.4%).

Inventories of Euro 16.9 million increased by Euro 0.7 million compared to December 31, 2013

(+4.3%), while increasing Euro 0.9 million (+5.3%) compared to June 30, 2014.

30.09.2014 30.06.2014 31.12.2013 30.09.2013




Inventories 16,880 16,031 16,189 18,642


Payables on fixed assets (1,121) (806) (1,069) (1,045)


Net tangible and intangible assets27,054 27,915 29,994 29,933

Investments and other non-current assets 967 1,011 861 495

Non-current provisions and non-financial

payables (1,442) (1,588) (1,178) (1,236)



Financed by:

Short-term debt 33,293 31,834 29,036 28,268





Opening Equity 13,705 13,704 13,776 13,776

Other changes in equity 18 1 (11) 34

Net profit/(loss) for the period (197) 91 (61) (438)

D) Closing Equity 13,526 13,796 13,704 13,372


Interim Report

45

Net fixed capital at September 30, 2014 decreased by Euro 3.1 million compared to the end of

2013 (-10.4%), due principally to amortisation and depreciation in the period (Euro 5.5 million)

being higher than investments (Euro 2.5 million).

The net financial debt at September 30, 2014, due to the reported movements, totalled Euro 31.2

million compared to Euro 33.7 million (-7.5%) at December 31, 2013 and Euro 32.8 million (-

4.9%) at June 30, 2014.

At September 30, 2014, there were 342 employees (at December 31 and September 30, 2013


Results are expected to improve for the current period.

Interim Report

46

Huta Szkła “Czechy” S.A. (HSC SA)

Registered office: Trabkj (Poland)

Business sector: glass containers

Chairman: Paolo Giacobbo

“Management Board”: Roberto Cardini

Roberto Celot

Alberto Faggion

Franco Grisan

Nicolò Marzotto

Stefano Marzotto

“Supervisory Board”: Paolo Nicolai - chairman

Stefano Perosa

Carlo Pesce

General Manager Roberto Cardini

Cosmetic and Perfumery demand generally appeared to be stable, while the recovery in the

Beverage and Food market was more vibrant, driven by a gradual consumer level recovery.

Interim Report

47

The reclassified consolidated statement of profit and loss of HSC SA for Q3 2014 compared to

the same period of the previous year is shown below:

Change


4,860 100.0% 5,528 100.0% (12.1%)

Changes in finished & semi-finished

products & work in progress 319 6.6% (99) (1.8%) n.s.


5,252 108.1% 5,498 99.5% (4.5%)

Cost of goods and services (2,903) (59.7%) (3,156) (57.1%) (8.0%)

2,349 48.3% 2,342 42.4% 0.3%

Labour costs (1,315) (27.1%) (1,221) (22.1%) 7.7%

1,034 21.3% 1,121 20.3% (7.8%)

Amortisation & depreciation (636) (13.1%) (522) (9.4%) 21.8%

Provisions (7) (0.1%) (14) (0.3%) (50.0%)

391 8.0% 585 10.6% (33.2%)

Net recurring non-operating income 2 --- 35 0.6% n.s.

393 8.1% 620 11.2% (36.6%)

Net financial charges (33) (0.7%) (42) (0.8%) (21.4%)

Exchange gains/(losses) 4 0.1% 179 3.2% n.s.

364 7.5% 757 13.7% (51.9%)

Income taxes (76) (1.6%) (158) (2.9%) (51.9%)

288 5.9% 599 10.8% (51.9%)

Q3 2014 Q3 2013


Revenues

Value of production

Value added

EBIT

EBITDA

Profit before taxes

O perating profit

Interim Report

48

The reclassified statement of profit and loss of HSC SA for 9M 2014, compared to the same

period of the previous year is as follows:

Revenues in the first nine months of 2014 totalled Euro 14.2 million, reducing 4.6% compared to

9M 2013 (Euro 14.9 million). In the third quarter revenues amounted to Euro 4.9 million,

decreasing 12.1% on the same period of 2013 (Euro 5.5 million).

Change


14,176 100.0% 14,860 100.0% (4.6%)


products & work in progress 898 6.3% 20 0.1% n.s.


15,338 108.2% 15,186 102.2% 1.0%


6,505 45.9% 6,361 42.8% 2.3%

Labour costs (3,679) (26.0%) (3,431) (23.1%) 7.2%

2,826 19.9% 2,930 19.7% (3.5%)


Provisions (49) (0.3%) (43) (0.3%) 14.0%

896 6.3% 1,303 8.8% (31.2%)

Net recurring non-operating income 54 0.4% 103 0.7% (47.6%)

950 6.7% 1,406 9.5% (32.4%)


Exchange gains/(losses) (15) (0.1%) (26) (0.2%) (42.3%)

819 5.8% 1,270 8.5% (35.5%)

Income taxes (172) (1.2%) (266) (1.8%) (35.3%)

(Tax-rate 9M 2014: 21%)

(Tax-rate 9M 2013: 20.9%)

647 4.6% 1,004 6.8% (35.6%)

O perating profit


9M 2014 9M 2013

Profit before taxes

Revenues

Value of production

Value added

EBIT

EBITDA

Interim Report

49

Revenues by geographic area:

Materials and external services, including changes in inventories and internal production of fixed

assets, amounted in the first nine months of 2014 to Euro 7.7 million – 54.1% of revenues (57.2%

in 9M 2013). In the third quarter of 2014 the account totalled Euro 2.5 million, with a percentage

of revenues of 51.7% compared to Euro 3.2 million and 57.6% in the same period of 2013.

The cost of labour was Euro 3.7 million, amounting to 26% of revenues (23.1% in the same period

of 2013). In the third quarter, labour costs increased 7.7% compared to the same period of the

previous year. The average workforce numbers increased, as did hours worked.

The Ebitda in 9M 2014 amounted to Euro 2.8 million, a 19.9% revenue margin (in the previous

year Euro 2.9 million and 19.7%). Ebitda in Q3 2014 amounted to Euro 1 million, a reduction of

7.8% compared to the previous year, with a margin of 21.3% compared to 20.3%.

Ebit amounted to Euro 0.9 million in 9M 2014 and Euro 1.3 million in 9M 2013 (-31.2%), with a

6.3% revenue margin compared to 8.8%. In the third quarter of 2014 Ebit amounted to Euro 0.4

million compared to Euro 0.6 million, with a margin of 8% compared to 10.6%.

The net profit in the first nine months of the year totaled Euro 0.6 million, compared to Euro 1

million in 2013 (-35.6%), respectively a revenue margin of 4.6% and 6.8%. The net profit in the

quarter was Euro 0.3 million (5.9% of revenues), compared to Euro 0.6 million in the same period

of 2011 (10.8% of revenues).

The Cash Flow generated by the net result and amortisation and depreciation amounts to Euro 2.5

million, comprising 17.8% of revenues in 9M 2014, while in 2013 totalling Euro 2.6 million and

17.4% of revenues.

(Euro thousands)

2014 2013 Change % 2014 2013 Change %

Italy 1,352 1,831 (26.2%) 4,344 5,584 (22.2%)

European Union 2,839 3,325 (14.6%) 8,381 8,083 3.7%

Other regions 669 372 79.8% 1,451 1,193 21.6%

Total 4,860 5,528 (12.1%) 14,176 14,860 (4.6%)

Q3 9M

Interim Report

50

The reclassified consolidated statement of financial position of HSC SA at September 30 and

June 30, 2014 2014 and at December 31 and September 30, 2013 was as follows:

The working capital at September 30, 2014 increased overall on December 31, 2013 by Euro 1.4

million, of which reducing Euro 0.4 million for trade receivables and increasing Euro 0.7 million

for inventories and by Euro 0.9 million due to the reduction in short-term non-financial payables.

30.09.2014 30.06.2014 31.12.2013 30.09.2013



Other receivables 359 421 466 362

Inventories 5,678 5,332 4,998 4,692


Payables on fixed assets (27) (45) (430) (114)


Net intangible and tangible fixed assets 11,652 12,091 12,743 12,292

Other investments & non-current assets 556 560 562 477

Non-current provisions & non-financial

payables (1,089) (1,069) (1,078) (1,073)



Financed by:

Short-term debt 2,631 2,642 3,918 4,531

Cash & cash equivalents (1,326) (1,426) (3,194) (2,821)

Short-term net debt 1,305 1,216 724 1,710



Opening Equity 12,895 12,895 11,434 11,434

Other changes in equity (69) (3) (202) (425)

Net profit for the period 647 359 1,663 1,004

D) Closing Equity 13,473 13,251 12,895 12,013

C+D = Total financial debt ansd Equity 17,307 17,279 16,982 17,363

Interim Report

51

The net fixed capital amounted to Euro 11.1 million at September 30, 2014, decreasing on

December 31, 2013 by Euro 1.1 million and by Euro 0.5 million on June 30, 2014.

The net debt at September 30, 2014 amounted to Euro 3.8 million compared to Euro 4 million at

June 30, 2014 and Euro 4.1 million at the end of 2013.

At September 30, 2014 employees numbered 371, while at December 31 and September 30, 2013

respectively 352 and 345.

Sales and margins are expected to improve in the current year.

Interim Report

52

Vetri Speciali SpA

Registered office: Trento, Via Manci, 5

Business sector: specialty glass containers

Chairman: Vitaliano Torno

Vice Chairman: Stefano Marzotto

Chief Executive Officer: Giorgio Mazzer

Directors: Luca Marzotto

Massimo Noviello

Statutory Auditors: Carlo Pesce - chairman

Lorenzo Buraggi

Stefano Meneghini

In the first nine months of 2014, special container market demand appeared strong. Demand

however remains subject to a degree of volatility based on the wider economy. The finished

product export component also drove this component.

Interim Report

53

The reclassified statement of profit and loss of Vetri Speciali SpA for Q3 2014 compared to the

same period of the previous year, for the share pertaining to Zignago Vetro SpA (50%), is

summarised below:

Change


16,404 100.0% 14,610 100.0% 12.3%


products & work in progress 340 2.1% 1,182 8.1% (71.2%)

16,744 102.1% 15,792 108.1% 6.0%


8,528 52.0% 8,069 55.2% 5.7%

Labour costs (3,293) (20.1%) (3,239) (22.2%) 1.7%

5,235 31.9% 4,830 33.1% 8.4%


Provisions 27 0.2% (27) (0.2%) n.s.

4,094 25.0% 3,615 24.7% 13.3%


4,184 25.5% 3,725 25.5% 12.3%


Exchange gains/(losses) 5 --- (8) --- n.s.

4,014 24.5% 3,513 24.0% 14.3%

Income taxes (1,339) (8.2%) (1,186) (8.1%) 12.9%

(Tax-rate Q3 2014: 33.3%)

(Tax-rate Q3 2013: 33.8%)

2,675 16.3% 2,327 15.9% 15.0%

Q3 2013Q3 2014


Revenues

Value of production

Value added

EBIT

EBITDA

Profit before taxes

O perating profit

Interim Report

54

The reclassified statement of profit and loss of Vetri Speciali SpA for 9M 2014 compared to the

same period of the previous year, for the share pertaining to Zignago Vetro SpA (50%), is

summarised below:

The share of consolidated revenues in the first nine months of the year amounted to Euro 51.2

million, an increase of 8.4% compared to Euro 47.3 million in the same period of the previous

year. Revenues in the third quarter 2014 totaled Euro 16.4 million, up 12.3% compared to Euro

14.6 million in the third quarter of 2013.

Revenues by geographic area

Change


51,226 100.0% 47,258 100.0% 8.4%

Changes in finished & semi-

finished products & work in

progress (940) (1.8%) 1,938 4.1% n.s.

50,286 98.2% 49,196 104.1% 2.2%


26,104 51.0% 25,229 53.4% 3.5%

Labour costs (10,164) (19.8%) (10,062) (21.3%) 1.0%

15,940 31.1% 15,167 32.1% 5.1%


Provisions (83) (0.2%) (99) (0.2%) (16.2%)

12,566 24.5% 11,702 24.8% 7.4%

Net recurring non-operating

income 315 0.6% 231 0.5% 36.4%

12,881 25.1% 11,933 25.3% 7.9%



12,358 24.1% 11,376 24.1% 8.6%

Income taxes (4,126) (8.1%) (3,824) (8.1%) 7.9%

(Tax-rate 9M 2014: 33.4%)

(Tax-rate 9M 2013: 33.6%)

8,232 16.1% 7,552 16.0% 9.0%

9M 20139M 2014


Revenues

Value of production

Value added

EBIT

EBITDA

Profit before taxes

O perating profit

(Euro thousands) 2014 2013 Change % 2014 2013 Change %

Italy 12,824 11,074 15.8% 40,098 35,593 12.7%

European Union 2,261 2,281 (0.9%) 6,719 6,587 2.0%

Other regions 1,319 1,255 5.1% 4,409 5,078 (13.2%)

Total 16,404 14,610 12.3% 51,226 47,258 8.4%

Q3 9M

Interim Report

55

Material costs and external services in the first nine months of 2014, including the changes in

inventories, increased by 14% compared to the same period of 2013, while the percentage of

revenues increased from 46.6% to 49%. In the third quarter of 2014, the percentage of these costs

on revenues increased by 20.4%, comprising 48% of revenues compared to 44.8% in Q3 2013.

Labour costs in the first nine months of 2014 rose - due to salary increases - by 1% compared to

the same period of 2013. In the third quarter of 2014 labour costs increased 1.7%. The percentage

of total revenues in 9M 2014 and 2013 was respectively 19.8% and 21.3% and in the respective

third quarters totalled 20.1% and 22.2%.

The Ebitda amounted to Euro 15.9 million in the first nine months of 2014 compared to Euro 15.2

million in the first nine months of 2013 (+5.1%). The margin in 9M 2014 was 31.1% compared to

32.1% in the same period of 2013. In the third quarter of 2014 Ebitda increased 8.4% (Euro 5.2

million compared to Euro 4.8 million), with the margin decreasing from 33.1% to 31.9%.

The Ebit amounted to Euro 12.6 million in the first nine months of 2014, increasing 7.4% on the

first nine months of 2013 and with a margin of 24.5% of revenues compared to 24.8%. The Ebit in

the third quarter increased 13.3% on Q3 2013 (Euro 0.4 million), with the revenue margin

increasing to 25% from 24.7%.

The profit before taxes amounted to Euro 12.4 million in the first nine months of 2014, up 8.6% on

Euro 11.4 million in the first nine months of 2013. The margin was 24.1%. In the third quarter of

2014 the profit before taxes improved 14.3% (Euro 0.5 million), with a revenue margin of 24.5%

compared to 24%.

Income taxes of Euro 4.1 million in the first nine months of 2014 were 7.9% higher than the same

period of 2013 (Euro 3.8 million). The tax-rate in the period was 33.4% compared to 33.6%.

The share of the consolidated net profit in the first nine months of 2014 was Euro 8.2 million

compared to Euro 7.6 million in the same period of 2010 (9%), equal to 16.1% and 16% of

revenues respectively. The net profit in the quarter was Euro 2.7 million (16.3% of revenues),

compared to Euro 2.3 million (15.9% of revenues) in the same period of 2013 (+15%).

The cash flow generated from the net profits and amortisation and depreciation in the first nine

months of 2014 amounted to Euro 11.5 million compared to Euro 10.9 million in the same period

of 2013 (+5.5%), which as a percentage of revenues was 22.5% (23.1% in the first nine months of

2013).

Interim Report

56

The consolidated reclassified statement of financial position at September 30 and June 30, 2014

and December 31 and September 30, 2013 for the share pertaining to Zignago Vetro SpA (50%)

was as follows:

The share of working capital at September 30, 2014 amounted to Euro 11.5 million, a decrease on

June 30, 2014 (-18.1%) and on December 31, 2013 (-21.3%). In particular, trade receivables at

September 30, 2014 amounted to Euro 12.2 million, decreasing on June 30, 2014 (Euro 14 million;

-12.9%) and on December 31, 2013 (Euro 12.6 million: -3.3%).

Inventories at September 30, 2014 increased by Euro 0.3 million compared to June 30, 2014 and

reduced Euro 0.9 million compared to December 31, 2013.

30.09.2014 30.06.2014 31.12.2013 30.09.2013



Other receivables 793 859 1,454 756

Inventories 11,872 11,608 12,729 13,545


Payables on fixed assets (395) (565) (628) (365)



Goodwill 39,967 39,967 39,967 39,967

Invest. & other non-current assets 378 372 355 369

Non-current prov. & non fin. payables (3,229) (3,186) (3,185) (3,280)



Financed by:

Short-term debt 15,286 21,823 13,332 14,206

Cash and cash equivalents (1,087) (280) (95) (88)




Opening Equity 51,535 51,535 48,923 48,923

Dividends paid (7,496) (7,496) (8,050) (8,050)

Other changes in Equity --- (53) ---


D) Closing Equity 52,271 49,596 51,535 48,425


Interim Report

57

The net fixed capital of Euro 63.1 million at September 30, 2014 decreased Euro 0.5 million

compared to June 30, 2014 and by Euro 1.5 million compared to December 31, 2013. Capital

expenditure (Euro 1.8 million) was lower than depreciation in the period.

The net equity at September 30, 2014 amounted to Euro 52.3 million, increasing Euro 2.7 million

and Euro 0.7 million respectively on June 30, 2014 and on December 31, 2013. These changes

follow the recording of the result for the period, net of the distribution of the dividend (Euro 7.5

million).

The net financial debt at September 30, 2014 totalled Euro 22.4 million, a decrease of Euro 5.4

million (-19.4%) on December 31, 2013 and of Euro 5.7 million (-20.3%) on June 30, 2014.



The market performance indicates revenue numbers in line with those reported to date for the

remainder of the year.

Interim Report

58

For completeness the reclassified statement of profit and loss and statement of financial position of

Vetri Speciali SpA (100% of the relative data) are shown below.

The reclassified statement of profit and loss of Vetri Speciali SpA for the Q3 2014 and 2013

(with 100% of data) is reported below.

Change


32,809 100.0% 29,221 100.0% 12.3%


products and work in progress 679 2.1% 2,364 8.1% (71.3%)

33,488 102.1% 31,585 108.1% 6.0%


17,055 52.0% 16,139 55.2% 5.7%

Labour costs (6,586) (20.1%) (6,478) (22.2%) 1.7%

10,469 31.9% 9,661 33.1% 8.4%


Provisions 55 0.2% (54) (0.2%) n.s.

8,188 25.0% 7,231 24.7% 13.2%


8,368 25.5% 7,452 25.5% 12.3%


Exchange gains/(losses) 9 --- (17) (0.1%) n.s.

8,027 24.5% 7,027 24.0% 14.2%

Income taxes (2,679) (8.2%) (2,373) (8.1%) 12.9%

(Tax-rate Q3 2014: 33.3%)

(Tax-rate Q3 2013: 33.8%)

5,348 16.3% 4,654 15.9% 14.9%

Q3 2013Q3 2014


Revenues

Value of production

Value added

EBIT

EBITDA

Profit before taxes

O perating profit

Interim Report

59

The reclassified income statement of Vetri Speciali SpA for 9M 2014 and 2013 (with 100% of

data) is reported below.

Change


102,452 100.0% 94,516 100.0% 8.4%


products and work in progress (1,880) (1.8%) 3,875 4.1% n.s.

100,572 98.2% 98,391 104.1% 2.2%


52,208 51.0% 50,458 53.4% 3.5%

Labour costs (20,327) (19.8%) (20,124) (21.3%) 1.0%

31,881 31.1% 30,334 32.8% 5.1%


Provisions (165) (0.2%) (198) (0.2%) (16.7%)

25,134 24.5% 23,404 24.8% 7.4%

Net recurring non-operating income 630 0.6% 462 0.5% 36.4%

25,764 25.1% 23,866 25.3% 8.0%

Net financial charges (1,054) (1.0%) (1,106) (1.2%) (4.7%)


24,717 24.1% 22,752 24.1% 8.6%

Income taxes (8,254) (8.1%) (7,648) (8.1%) 7.9%

(Tax-rate 9M 2014: 33.4%)

(Tax-rate 9M 2013: 33.6%)

16,463 16.1% 15,104 16.0% 9.0%

9M 20139M 2014


Revenues

Value of production

Value added

EBIT

EBITDA

Profit before taxes

O perating profit

Interim Report

60

The reclassified statement of financial position of Vetri Speciali SpA at September 30 and June

30, 2014 and at December 31 and September 30, 2013 (100% of the data) are reported below.

30.09.2014 30.06.2014 31.12.2013 30.09.2013




Inventories 23,743 23,216 25,457 27,090


Payables on fixed assets (789) (1,130) (1,255) (729)



Goodwill 79,934 79,934 79,934 79,934

Equity investments 756 743 710 738

Non-current provisions & non-financial

payables (6,455) (6,371) (6,369) (6,564)



Financed by:

Short-term debt 30,572 43,645 26,664 28,412

Cash and cash equivalents (2,173) (559) (190) (176)




Opening Equity 103,071 103,071 97,844 97,844

Dividends paid (14,993) (14,993) (16,100) (16,100)

Other changes in equity --- --- (104) ---


D) Closing equity 104,541 99,193 103,071 96,848


Interim Report

61

Vetreco Srl (*)

Registered office: Latina – Via Don Torrello,69

Business sector: treatment and sale of recycled glass

Chairman: Rocco Furia

Vice Chairman: Leonardo Fredianelli

Directors: Roberto Celot

Dario Lorenzon

John Gerard Sadlier

Germana Signa

Statutory Auditors: Roberto Monticelli - chairman

Alberto Faggion

Augusto Valchera

(*) The amounts reported in the comments represent 100% of the Company data.

In 2014, the company gradually improved the production process, initially rolled out in the second

half of 2013 following the start-up phase.

This process is still in progress and in the coming months the reaching of the forecast production

levels is expected, in addition to the resolution of a number of inefficiencies, particularly those

related to energy supply.

The results for the current period are not comparable with the previous year.

Interim Report

62

The reclassified statement of profit and loss of Vetreco Srl (100% of the data) for the Q3 2014

and 2013 was as follows:

Euro thous. % Euro thous. %

2,032 100.0% 239 100.0%


products and work in progress 130 6.4% 119 49.8%

2,162 106.4% 358 149.8%

Cost of goods and services (1,737) (85.5%) (222) (92.9%)

425 20.9% 136 56.9%

Labour costs (270) (13.3%) (178) (74.5%)

155 7.6% (42) (17.6%)

Amortisation & depreciation (250) (12.3%) (97) (40.6%)

(95) (4.7%) (139) (58.2%)

Net financial charges (130) (6.4%) --- ---

(225) (11.1%) (139) (58.2%)

Income taxes 32 1.6% 36 15.1%

(193) (9.5%) (103) (43.1%)Net loss for the period

Revenues

Value of production

Value added

EBIT

EBITDA

Loss before taxes

Q3 2014 Q3 2013

Interim Report

63

The reclassified statement of profit and loss of Vetreco Srl (100% of the data) for the 9M 2013

and 2013 was as follows:

Revenues almost entirely concern the processing of raw glass and the supply of cullet ready for re-

use.

The principal cost accounts concern raw material, services and labour costs.

Deferred tax assets were provisioned for Euro 111 thousand, based on the capacity of the

Company to generate an assessable base in the near future.

Euro thous. % Euro thous. %

6,623 100.0% 240 100.0%


products and work in progress 115 1.7% 119 49.6%

6,738 101.7% 359 149.6%

Cost of goods and services (5,579) (84.2%) (377) n.s.

1,159 17.5% (18) (7.5%)

Labour costs (798) (12.0%) (293) n.s.

361 5.5% (311) n.s.

Amortisation & depreciation (738) (11.1%) (100) (41.7%)

(377) (5.7%) (411) n.s.

Net financial charges (486) (7.3%) --- ---

(863) (13.0%) (411) n.s.

Income taxes 113 1.7% 111 46.3%

(750) (11.3%) (300) n.s.Net loss for the period

Revenues

Value of production

Value added

EBIT

EBITDA

Loss before taxes

9M 2014 9M 2013

Interim Report

64

The reclassified statement of financial position of Vetreco Srl (100% of the data) at September

30 and June 30, 2014 and December 31 and September 30, 2013 was as follows:

The reclassified statement of financial position reports net tangible and intangible fixed assets

totalling Euro 16.7 million, almost entirely concerning the construction of the production facility.

These investments were partly financed through available funds and largely through short-term

loans undertaken with a leading Italian bank.

The net financial debt at September 30, 2014 amounted to Euro 17.3 million.

The other receivables account substantially concerns tax receivables, particularly for VAT.



30.09.2014 30.06.2014 31.12.2013 30.09.2013


Trade receivables 1,471 1,789 924 239


Inventories 690 459 507 120

Current non-financial payables (4,242) (4,304) (2,321) (447)

Payables on fixed assets (94) (186) (1,698) (2,023)

A) Working capital 1,189 930 405 620


Investments and other non-current assets 20 21 21 ---

Non-current prov. & non-fin. payables (21) (17) (9) (6)



Financed by:

Short-term debt 17,311 17,069 16,408 16,204

Cash and cash equivalents --- --- --- (2)


Opening Equity 1,372 1,372 1,862 1,862

Net loss for the period (750) (557) (490) (300)

D) Closing equity 622 815 1,372 1,562


Significant events after September 30, 2014.

Outlook.

65

SIGNIFICANT EVENTS AFTER SEPTEMBER 30, 2014

AND OUTLOOK

Significant events after September 30, 2014

No significant events further to those previously outlined took place after September 30, 2014.

Outlook

In the final quarter the recovery is expected to consolidate, with results in line with the first nine

months.

Fossalta di Portogruaro, November 7, 2014

For the Board of Directors

The Chairperson

Franco Grisan

66

Consolidated Financial Statements


67

Consolidated statement of financial position



paragraph “Basis of the preparation – New accounting standards and interpretations adopted by the Group from January 1, 2014” included in the explanatory notes to the Interim Report.

(Euro thousands)

30.09.2014 30.06.2014 Restated (*)

31.12.2013

Restated (*)

30.09.2013

ASSETS

Non-current assets

Property, plant & equipment 97,072 94,201 95,728 93,650

Goodwill 737 741 741 727

Intangible assets 66 106 193 98

52,084 49,488 51,588 48,509

Equity investments 386 386 386 387

Other non-current assets 53 201 192 182

Deferred tax assets 2,619 2,667 2,580 1,989

Total non-current assets 153,017 147,790 151,408 145,542

Current assets

Inventories 58,736 57,769 55,753 57,736


Other current assets 4,119 2,432 3,050 1,544

Tax receivables 1,943 2,182 4,511 1,963

Cash and cash equivalents 40,986 40,672 39,272 41,547

Total current assets 157,245 156,130 152,593 150,596

TO TAL ASSETS 310,262 303,920 304,001 296,138

SHAREHOLDERS' EQUITY & LIABILITIES

SHAREHO LDERS' EQ UITY

Share capital 8,800 8,800 8,800 8,800

Reserves 35,521 35,521 35,521 35,521

Acquisition of treasury shares (5,027) (5,027) (5,027) (5,027)

Retained earnings and profit for the period 88,766 83,948 91,495 82,725

Other net equity items (1,225) (1,173) (1,170) (1,287)

TO TAL GRO UP SHAREHO LDERS' EQ UITY 126,835 122,069 129,619 120,732

MINO RITY INTEREST EQ UITY --- --- - ---

TO TAL SHAREHO LDERS' EQ UITY 126,835 122,069 129,619 120,732

LIABILITIES

Non-current liabilities

Provisions for risks and charges 2,861 2,998 2,547 2,436

4,790 4,757 4,839 4,660

Medium/long term loans 8,628 12,299 17,565 19,208

Deferred tax liabilit ies 3,071 3,083 3,178 3,346

Total non-current liabilities 19,350 23,137 28,129 29,650

Current liabilities

Bank payables and current portion

of medium/long term loans 106,700 106,621 94,761 92,246

Trade and other payables 40,653 37,802 37,154 38,300

Other current liabilit ies 15,298 13,522 13,934 13,493

Current income taxes 1,426 769 404 1,717

Total current liabilities 164,077 158,714 146,253 145,756

TO TAL LIABILITIES 183,427 181,851 174,382 175,406

TO TAL SHAREHO LDERS' EQ . & LIAB. 310,262 303,920 304,001 296,138

Post-employment benefits

Investments valued at equity


68

Consolidated statement of profit and loss




(Euro thousands)

Revenues 57,854 58,331 174,671 169,279

Raw material, ancillary,

consumables and goods (14,273) (14,577) (42,235) (34,025)

Services (19,806) (20,019) (57,621) (59,199)

Labour costs (13,610) (12,799) (41,208) (41,003)

Amortisation and depreciation (5,789) (5,463) (17,343) (16,409)

Other operating expenses (491) (778) (2,291) (2,326)

Other operating income (30) 145 706 663

2,598 2,272 7,993 7,412

O perating profit 6,453 7,112 22,672 24,392

Financial income 132 190 584 667

Financial charges (662) (656) (2,062) (1,899)

Net exchange gains/(losses) 69 173 71 (140)

Profit before taxes 5,992 6,819 21,265 23,020

Income taxes (1,174) (1,592) (4,947) (5,704)

Net profit 4,818 5,227 16,318 17,316

Minority interest profit/(loss) --- --- --- ---

Group net profit 4,818 5,227 16,318 17,316

Earnings per share:

Basic (and diluted) earnings per share 0.057 0.061 0.192 0.203

Investments valued at equity

Q3 2014 Restated (*) Q3

2013

9M 2014 Restared (*) 9M

2013


69

Consolidated statement of comprehensive income


IAS 28 – Interests in associates and joint ventures. For further information reference should be made to the paragraph “Basis of the preparation – New accounting standards and interpretations adopted by the Group from


(Euro thousands)

Net profit 4,818 5,227 16,318 17,316

Translation difference(52) 297 (55) (459)

Tax effect--- --- --- ---

(52) 297 (55) (459)

(52) 297 (55) (459)

Actuarial losses on defined benefit plans --- --- --- ---

Tax effect --- --- --- ---

--- --- --- ---

--- --- --- ---

(52) 297 (55) (459)

4,766 5,524 16,263 16,857

Group 4,766 5,524 16,263 16,857

Minority interests --- --- --- ---

4,766 5,524 16,263 16,857

Q3 2014 Restated (*) Q3

2013

9M 2014 Restated (*) 9M

2013

Total other comprehensive income statement

items, net of taxes

Total comprehensive net profit

Attributable to :

Other comprehensive income statement items

subsequently to be reclassified to the net profit

(loss) for the period

Other comprehensive income statement items not

subsequently to be reclassified to the net profit



items subsequently to be reclassified to net profit



items not subsequently to be reclassified to net

profit (loss) for the period


70

Consolidated statement of cash flows




(Euro thousands) 30.09.2014 30.06.2014 Restated (*)

31.12.2013

Restated (*)

30.09.2013

CASH FLO W FRO M O PERATING ACTIVITIES:

Net profit 21,265 15,273 33,616 23,020

Adjustments to reconcile net profit with

cash flow generated from operating activities:

Amortisation and depreciation 17,343 11,554 20,938 16,409

(88) (88) (185) 34

Doubtful debt provision 64 42 52 165

(49) (82) (263) (60)

Net change in other provisions 314 450 341 230

(584) (452) (961) (667)

Financial charges and exchange losses 1,991 1,398 2,855 2,039

Income taxes paid in the year (1,503) (1,261) (10,088) (3,737)

Valuation of joint ventures at equity (7,993) (5,395) (10,543) (7,412)

Dividends distributed of joint ventures at equity 7,496 7,496 8,050 8,050

Change in operating assets and liabilities

Decrease (increase) in trade receivables (1,518) (3,110) 1,652 3,741

Decrease (increase) in other current assets (1,069) 618 681 2,187

Decrease (increase) in inventories (2,983) (2,016) (4,643) (6,626)

Increase (decrease) in trade and other payables 1,759 2,588 (4,279) (4,211)

Increase (decrease) in other current liabilit ies 1,364 (412) (169) (610)

Other non-current assets and liabilit ies 139 (9) (108) (72)

Total operating adjustments and changes 14,683 11,321 3,330 9,460

(A) 35,948 26,594 36,946 32,480

CASH FLO W FRO M INVESTING ACTIVITIES:

Investments in intangible assets (22) (22) (159) (40)

Investments in tangible assets (21,914) (12,076) (31,616) (24,256)

Increase (decrease) in fixed asset payables 1,740 (1,940) (527) 551

Investments (divestments) in financial assets --- --- (2) (3)

Sales price of property, plant and equipment 3,393 2,233 4,447 3,345

(B) (16,803) (11,805) (27,857) (20,403)

CASH FLO W FRO M FINANCING ACTIVITIES:

Interest paid in the period (2,092) (1,511) (2,676) (2,189)

Interest received in the period 584 452 961 667

Increase (decrease) in short-term bank borrowings 12,040 11,973 12,117 9,718

New medium/long-term loans --- --- 11,000 ---

Repayment of medium/long-term loans (8,937) (5,266) (13,971) (1,328)

Dividends (19,047) (19,047) (21,645) (21,645)

(C) (17,452) (13,399) (14,214) (14,777)

(D) 21 10 15 (135)

(A+B+C+D) 1,714 1,400 (5,110) (2,835)

Cash available at beginning of the period 39,272 39,272 44,382 44,382

Cash available at end of the period 40,986 40,672 39,272 41,547

Net change in cash and cash equivalents

Net cash flow from operating activities

Losses/(gains) on disposals of property, plant & equipment

Net changes in post employment benefits

Change in balance sheet accounts translation effect

Financial income and exchange gains

Net cash flow from investing activities

Net cash flow from financing activities


Consolidated statement of changes in Equity

71

S

hare

cap

ital

Leg

al r

eser

ve

Rev

alua

tion

res

erve

Oth

er r

eser

ves

Tra

nsla

tion

res

erve

Cap

ital

pai

d-in

Tre

asur

y sh

ares

Act

uari

al p

rofi

ts

(los

ses)

on

indi

vidu

al

defe

rred

ben

efit

s

Ret

aine

d ea

rnin

gs

Net

res

ult

Tot

al c

onso

lida

ted

equi

ty

B a l. a t Ju n e 3 0 ,

2 0 13 8,800 1,760 27,334 6,270 (1,233) 157 (5,027) (351) 65,409 12,089 115,208

Consol. ne t profit - - - - - - - - - - - - - - - - - - - - - - - - - - - 5,227 5,227

Othe r profits /(losse s)

ne t of tax e ffe c t - - - - - - - - - - - - 297 - - - - - - - - - - - - - - - 297

Tota l c ompre he ns ive

profit - - - - - - - - - - - - 297 - - - - - - - - - - - - 5,227 5,524

B a l. a t S e p te mb e r

3 0 , 2 0 13 8,800 1,760 27,334 6,270 (936) 157 (5,027) (351) 65,409 17,316 120,732



ne t of tax e ffe c t - - - - - - - - - - - - 239 - - - - - - (122) - - - - - - 117


profit/(loss ) - - - - - - - - - - - - 239 - - - - - - (122) - - - 8,818 8,935

Othe r c ha nge s - - - - - - - - - - - - - - - - - - - - - - - - (48) - - - (48)

B a la n c e a t

De c . 3 1, 2 0 13 8,800 1,760 27,334 6,270 (697) 157 (5,027) (473) 65,361 26,134 129,619



ne t of tax e ffe c t - - - - - - - - - - - - (3) - - - - - - - - - - - - - - - (3)


profit/(loss ) - - - - - - - - - - - - (3) - - - - - - - - - - - - 11,500 11,497

Alloc a tion of the re sult - - - - - - - - - - - - - - - - - - - - - - - - 26,134 (26,134) - - -

Divide nds - - - - - - - - - - - - - - - - - - - - - - - - (19,047) - - - (19,047)

B a la n c e a t

Ju n e 3 0 , 2 0 14 8,800 1,760 27,334 6,270 (700) 157 (5,027) (473) 72,448 11,500 122,069



ne t of tax e ffe c t - - - - - - - - - - - - (52) - - - - - - - - - - - - - - - (52)


profit/(loss ) - - - - - - - - - - - - (52) - - - - - - - - - - - - 4,818 4,766

B a la n c e a t

S e p . 3 0 , 2 0 14 8,800 1,760 27,334 6,270 (752) 157 (5,027) (473) 72,448 16,318 126,835

72

Notes to the financial statements

Explanatory Notes

73

SUMMARY OF THE IFRS INTERNATIONAL ACCOUNTING STANDARDS USED FOR

THE PREPARATION OF THE INTERIM REPORT AT SEPTEMBER 30, 2014

Activities of the Group

Zignago Vetro SpA is a limited liability company and is domiciled at Fossalta di Portogruaro via

Ita Marzotto No. 8.

The publication of the Interim report at September 30, 2014 of Zignago Vetro S.p.A. was

approved by the Board of Directors on November 7, 2014.

General preparation criteria

The Interim Report at September 30, 2014 was presented in accordance with IAS 34 – Interim

financial reporting, which relates to the reporting of interim financial information and data.

Accounting standard IAS 34 provides for a minimum level of information significantly lower than

that required by IFRS, where information has already been published on the complete Financial

Statements prepared in accordance with IFRS.

Therefore, the present Interim Report, which was prepared in “summary” form and include the

minimum disclosures required by IAS 34, should be read together with the Group consolidated

financial statements for the year ended December 31, 2013, for full and complete disclosure of the

Group accounts.

The accounting standards adopted for the preparation of the Interim Report are those utilised for

the 2013 consolidated financial statements of the Zignango Vetro Group, with the exception of the

adoption of the new standards and interpretations in force from January 1, 2014.

Explanatory Notes

74

New accounting standards and interpretations adopted by the Group from January 1, 2014:

IFRS 11 “Joint arrangements” and IAS 28 “Interest in associates and joint ventures” – IFRS 11

replaces IAS 31 - Investments in Joint Ventures and SIC 13 - Jointly controlled entities - Non-

monetary contributions by venturers and eliminates the option to record jointly held companies

under the proportional consolidation method. The standard in accordance with the definition of

joint ventures as per IAS 31 identifies two types of joint control agreements: joint operations and

joint ventures. IFRS 11 requires that subsidiary companies which fulfil the definition of a joint

venture must be recognised using the equity method. The application of the standard had an

impact on the statement of profit and loss and the statement of financial position of the Group,

which no longer consolidates proportionally the joint ventures Vetri Speciali S.p.A. and Vetreco

S.r.l.; both companies are now valued at equity.

For comparative purposes a reconciliation is provided of the statement of financial position,

statement of profit and loss and statement of cash flows at June 30, 2013 and December 31, 2013,

which illustrates the accounting effects from the adoption of the new standard.

Explanatory Notes

75

Reconciliation of the Consolidated statement of financial position at September 30, 2013:

(Euro thousands)

Vetri

Speciali

SpA

Vetreco

Srl

ASSETS

Non-current assets

Property, plant & equipment 126,267 (27,723) (4,894) --- --- 93,650

Goodwill 40,695 (39,968) --- --- --- 727

Intangible assets 384 (35) (251) --- --- 98

--- --- --- --- 48,509 48,509

Equity investments 392 (5) --- --- --- 387

Other non-current assets 229 (47) --- --- --- 182

Deferred tax assets 2,483 (317) --- (177) --- 1,989

Total non- current assets 170,450 (68,095) (5,145) (177) 48,509 145,542

Current assets

Inventories 70,773 (13,545) (52) 560 --- 57,736

Trade receivables 58,661 (10,783) (72) --- --- 47,806

Other current assets 2,695 (378) (773) --- --- 1,544

Tax receivables 2,387 (378) (46) --- --- 1,963

Cash and cash equivalents 41,574 (88) 61 --- --- 41,547

Total current assets 176,090 (25,172) (882) 560 --- 150,596

TO TAL ASSETS 346,540 (93,267) (6,027) 383 48,509 296,138

EQUITY & LIABILITIES

EQ UITY

Share capital 8,800 (5,031) (120) --- 5,151 8,800

Reserves 35,521 (1,007) (438) --- 1,445 35,521

Acquisition of treasury shares (5,027) --- --- --- --- (5,027)

Retained earnings and profit for the period 82,374 (42,387) 91 383 42,264 82,725

Other equity items (936) --- --- (351) (1,287)

TO TAL GRO UP EQ UITY 120,732 (48,425) (467) 383 48,509 120,732

NO N-CO NTRO L. INTER. EQ UITY --- --- --- --- --- ---

TO TAL EQ UITY & LIABILITIES 120,732 (48,425) (467) 383 48,509 120,732

LIABILITIES


Provisions for risks and charges 2,888 (452) --- --- --- 2,436

6,931 (2,269) (2) --- --- 4,660

Medium/long term loans 34,021 (14,813) --- --- --- 19,208

Other non-current liabilit ies 6 (6) --- --- --- ---

Deferred tax liabilit ies 3,900 (554) --- --- --- 3,346

Total non-current liabilities 47,746 (18,094) (2) --- --- 29,650

Current liabilities


of medium/long term loans 111,252 (14,206) (4,800) --- --- 92,246

Trade and other payables 46,984 (7,943) (741) --- --- 38,300

Other current liabilit ies 16,065 (2,557) (15) --- --- 13,493

Current income taxes 3,761 (2,042) (2) --- --- 1,717

Total current liabilities 178,062 (26,748) (5,558) --- --- 145,756

TO TAL LIABILITIES 225,808 (44,842) (5,560) --- --- 175,406

TO TAL EQ UITY & LIABILITIES 346,540 (93,267) (6,027) 383 48,509 296,138

Restated

30.09.2013

Post-employment benefit provision

Investments valued under Equity method

Deconsolidated

IFRS 11 Adoption

Adjustment

Parent Co.

Accounting

principles

Valuation JV

under Equity

method

Published

30.09.2013

Explanatory Notes

76

Reconciliation of the Consolidated Statement of financial position at December 31, 2013:

(Euro thousands)

Vetri Speciali

SpA

Vetreco Srl

ASSETS

Non-current assets

Property, plant & equipment 128,380 (27,491) (5,161) --- --- 95,728

Goodwill 40,708 (39,967) --- --- --- 741

Intangible assets 276 (35) (48) --- --- 193

--- --- --- --- 51,588 51,588

Equity investments 391 (5) --- --- --- 386

Other non-current assets 244 (46) (6) --- --- 192

Deferred tax assets 3,115 (305) (65) (165) --- 2,580

Total non- current assets 173,114 (67,849) (5,280) (165) 51,588 151,408

Current assets

Inventories 68,110 (12,729) (152) 524 --- 55,753

Trade receivables 62,907 (12,623) (277) --- --- 50,007

Other current assets 4,607 (724) (833) --- --- 3,050

Tax receivables 5,242 (731) --- --- --- 4,511

Cash and cash equivalents 39,367 (95) --- --- --- 39,272

Total current assets 180,233 (26,902) (1,262) 524 --- 152,593

TO TAL ASSETS 353,347 (94,751) (6,542) 359 51,588 304,001

EQUITY & LIABILITIES

EQ UITY

Share capital 8,800 (5,031) (120) --- 5,151 8,800

Reserves 35,521 (10,742) (439) --- 11,181 35,521

Acquisition of treasury shares (5,027) --- --- --- --- (5,027)

Retained earnings and profit for the period 91,495 (35,762) 147 359 35,256 91,495

Other equity items (1,170) --- --- --- --- (1,170)

TO TAL GRO UP EQ UITY 129,619 (51,535) (412) 359 51,588 129,619

NO N-CO NTRO L. INTER. EQ UITY --- --- --- --- --- ---

TO TAL EQ UITY & LIABILITIES 129,619 (51,535) (412) 359 51,588 129,619

LIABILITIES


Provisions for risks and charges 2,936 (389) --- --- --- 2,547

7,114 (2,272) (3) --- --- 4,839

Medium/long term loans 32,132 (14,567) --- --- --- 17,565

Other non-current liabilit ies 7 (7) --- --- --- ---

Deferred tax liabilit ies 3,697 (519) --- --- --- 3,178

Total non-current liabilities 45,886 (17,754) (3) --- --- 28,129

Current liabilities


of medium/long term loans 113,015 (13,332) (4,922) --- --- 94,761

Trade and other payables 47,246 (8,912) (1,180) --- --- 37,154

Other current liabilit ies 17,143 (3,184) (25) --- --- 13,934

Current income taxes 438 (34) --- --- --- 404

Total current liabilities 177,842 (25,462) (6,127) --- --- 146,253

TO TAL LIABILITIES 223,728 (43,216) (6,130) --- --- 174,382

TO TAL EQ UITY & LIABILITIES 353,347 (94,751) (6,542) 359 51,588 304,001

Restated

31.12.2013

Post-employment benefit provision

Investments valued under Equity method

Deconsolidated

IFRS Adoption 11

Published

31.12.2013

Adjustment

Parent Co.

Accounting

principles

Valuation JV

under Equity

method

Explanatory Notes

77

Reconciliation of the 2013 Consolidated Nine Month Statement of profit and loss

(Euro thousands)

Vetri

Speciali SpA

Vetreco Srl

Revenues 215,781 (47,258) (72) 828 --- 169,279

Raw material, ancillary,

consumables and goods (41,148) 7,898 53 (828) --- (34,025)

Services (73,159) 13,853 107 --- --- (59,199)

Labour costs (51,118) 10,062 53 --- --- (41,003)

Amortisation and depreciation (19,806) 3,366 31 --- --- (16,409)

Other operating expenses (2,698) 367 5 --- --- (2,326)

Other operating costs 865 (221) (53) 72 --- 663

--- --- --- --- 7,412 7,412

O perating profit/(loss) 28,717 (11,933) 124 72 7,412 24,392

Financial income 670 (3) --- --- --- 667

Financial charges (2,455) 556 --- --- --- (1,899)

Net exchange gains/(losses) (144) 4 --- --- --- (140)

Profit/(loss) before taxes 26,788 (11,376) 124 72 7,412 23,020

Income taxes (9,472) 3,824 (33) (23) --- (5,704)

Group net profit/(loss) 17,316 (7,552) 91 49 7,412 17,316

Restated

30.09.2013

Valuation of investments under

Equity method

IFRS 11 Adoption

Deconsolidamento Valuation JV

under Equity

method

Adjustment

Parent Co.

Accounting

principles

Published

30.09.2013

Explanatory Notes

78

Reconciliation of the Consolidated statement of cash flows at September 30, 2013:

(Euro thousands)Published

30.09.2013

Effect from

application of

IFRS 11

Restated

30.09.2013

CASH FLO W FRO M O PERATING ACTIVITIES:

Net profit/(loss) 26,788 (3,768) 23,020

Adjustments to reconcile net profit with

cash flow generated from operating activities:

Amortisation and depreciation 19,806 (3,397) 16,409

34 --- 34

Doubtful debt provision 180 (15) 165

(132) 72 (60)

Net change in other provisions 304 (74) 230

(670) 3 (667)

Financial charges and exchange losses 2,599 (560) 2,039

Income taxes paid in the period (4,482) 745 (3,737)

JV valued at equity --- (7,412) (7,412)

Dividends from JV valued at equity --- 8,050 8,050

Change in operating assets and liabilities:

Decrease (increase) in trade receivables 4,497 (756) 3,741

Decrease (increase) in other current assets 1,942 245 2,187

Decrease (increase) in inventories (8,852) 2,226 (6,626)

Increase (decrease) in trade and other payables (4,525) 314 (4,211)

Increase (decrease) in other current liabilit ies (1,174) 564 (610)

Other non-current assets and liabilit ies (64) (8) (72)

Total adjustments and changes 9,463 (3) 9,460

(A) 36,251 (3,771) 32,480

CASH FLO W FRO M INVESTING ACTIVITIES:

Investments in intangible assets (293) 253 (40)

Investments in tangible assets (28,000) 3,744 (24,256)

Increase (decrease) in fixed asset payables 104 447 551

Investments (divestments) in financial assets (3) --- (3)

Sales price of property, plant and equipment 3,345 --- 3,345

(B) (24,847) 4,444 (20,403)

CASH FLO W FRO M FINANCING ACTIVITIES:

Interest paid in the period (2,786) 597 (2,189)

Interest received in the period 670 (3) 667

Increase (decrease) in short-term bank borrowings 4,344 5,374 9,718

New medium/long-term loans 9,737 (9,737) ---

Repayment of medium/long-term loans (4,711) 3,383 (1,328)

Dividends (21,645) --- (21,645)

(C) (14,391) (386) (14,777)

(D) (128) (7) (135)

(A+B+C+D) (3,115) 280 (2,835)

Cash available at beginning of the period 44,689 (307) 44,382

Cash available at end of the period 41,574 (27) 41,547

Losses/(gains) on disposals of property, plant & equipment

Net changes in post employment benefits

Financial income and exchange gains

Net change in cash and cash equivalents

Change in balance sheet accounts translation effect

Net cash flow from financing activities

Net cash flow from investing activities

Net cash flow from operating activities

Explanatory Notes

79

In addition to the effects outlined above in the reconciliation of the published and restated

statement of financial position and the statement of profit and loss at September 30, 2013, the

application of this standard had an impact on the Group net financial position at September 30 and

December 31, 2013 concerning respective improvements of Euro 34 million and Euro 33 million.

Other new standards and amendments entered into force from January 1, 2014, but did not have a

significant impact on the condensed consolidated financial statements at September 30, 2014 of

the Zignago Vetro Group. Among these we highlight:

- IFRS 10 “Consolidated Financial Statements”

- Amendments to IAS 32 – “Offsetting of financial assets and liabilities”;

- Amendments to IFRS 10, IFRS 12 and IAS 27 – “Guide to Investment Entities”

- Amendments to IAS 36 – “Additional disclosure on the recoverable amount of non-financial

assets”.

- Amendments to IAS 39 “Novation of derivatives and continuity of hedge accounting".

The Group did not adopt in advance new standards, interpretations or amendments which have

been issued but are not yet in force.

The results and cash flows in the first three and nine months of 2014 are presented in comparative

form with the same period of the previous year.

The statement of financial position is presented in comparative form with September 30 and

December 31, 2013. The results reported were consistent in the three periods presented and show

the consolidated statement of financial position of the Zignago Vetro Group, with the full

consolidation of Verreries Brosse SAS and of its subsidiary Brosse USA Inc. (Brosse Group), the

full consolidation of HSC SA and the consolidation at Equity of Vetri Speciali SpA and Vetreco

Srl.

The present Interim Report of the Zignago Group for the period ended September 30, 2014 were

prepared under the historical cost convention, except for investments in financial assets and in

derivative instruments, which are recorded at fair value.

The present Interim Report was presented in Euro, being the currency in which the Group operates

and consists of the consolidated statement of financial position, statement of profit and loss,

statement of comprehensive income, statement of cash flows, statement of changes in consolidated

Equity and the Notes to the financial statements. All the amounts reported in the financial

statements mentioned are expressed in thousands of Euro, unless otherwise indicated.

Explanatory Notes

80

The nature and effects of these changes are illustrated in the document.

The principal consolidation principles adopted were as follows:

- the elimination of the carrying value of the investment against the recording of the assets and

liabilities of the subsidiary according to the line-by-line method or the proportional

consolidation;

- the recognition of any possible non-controlling interest in equity;

- the elimination of all intergroup transactions, consisting of payables and receivables, sales and

purchases, and unrealised profits and losses.

The assets and liabilities, charges and income of the companies consolidated under the line-by-line

method are fully included in the Consolidated Interim Report; the book value of the investments is

eliminated against the corresponding fraction of the net equity of the subsidiaries.

At the control acquisition date, the equity of the consolidated companies is established attributing

to the individual assets and liabilities their present value. Any positive difference between the

acquisition cost and the fair value of the net assets acquired is recorded in the asset account

“Goodwill”; if negative, it is recognised to the statement of profit and loss.

The share of the equity and of the result for the year relating to non-controlling interests is recognised

in specific accounts in equity and the statement of profit and loss. In the case of full control not

being acquired the non-controlling interest equity is established based on the share of the current

value attributable to the assets and liabilities at the date of acquisition of control, excluding any

attributable goodwill (so-called partial goodwill method). Alternatively, in the case of full control

not being acquired, the entire amount of goodwill (negative goodwill) generated by the acquisition

is recorded considering therefore also the shareholding of non-controlling interests (so-called full

goodwill method); they are expressed at their overall fair value including therefore the share of

goodwill (negative goodwill). The goodwill calculation method (negative goodwill) is chosen on a

case by case basis for each business combination.

With regard to holdings acquired subsequent to the acquisition of control (non-controlling interest

acquisitions), any difference between the acquisition cost and the corresponding fraction of equity

acquired is recognised to equity; similarly the effects from the sale of the non-controlling share

without loss of control are recognised to equity.

If the acquisition value of the investments is above the pro-rata value of the equity of the

investment, the positive difference is attributed, where possible, to the net assets acquired based on

the fair value of the same while the residual is recorded in the account “Goodwill”.

Goodwill is not amortised but is subject to verification, at least annually, of an impairment test

when events or changes occur indicating that the carrying value can no longer be recovered. The

goodwill is stated at cost net of any impairment losses.

If the carrying value of the investments is lower than the share of the value of the equity of the

investment, the negative difference is recorded in the statement of profit and loss. The acquisition

costs are expensed to the statement of profit and loss.

Explanatory Notes

81

The interim financial statements of the subsidiaries utilised for the preparation of the Interim

Report are those approved by the respective Board of Directors. The quarterly financial statements

of the consolidated companies coincide with those of the Parent Company. The data of the

consolidated companies are adjusted, where necessary, in line with the accounting principles

utilised by the Parent Company, which are in accordance with the IFRS adopted by the European

Union.

The Companies included in the consolidation scope at September 30, 2014 and September 30 and

December 31, 2013 are shown below:

Consolidated Companies

(Euro)

Registered office

Share capital

(in local

currency)

Percentage

holding of the Group

Zignago Vetro SpA (parent company) Fossalta di Portogruaro (VE) 8,800,000 ---

Companies consolidated by the line-by-line

method:

Verreries Brosse SAS

Vieux-Rouen-sur-Bresle

(France) 4,000,000 100.00%

- Brosse USA Inc. New Jersey (U.S.A.)

USD

10,000 100.00%

Huty Szkla “Czechy” S.A. (HSC SA) Varsavia (Poland) PNL 3,594,000 100.00%

Companies consolidated under the equity

method:

Vetri Speciali SpA Trento (TN) 10,062,400 50%

Vetreco Srl Latina (LT) 400,000 30%

Translation of financial statements in currencies other than the Euro

The rules for the translation of financial statements of Companies which operate in a currency

other than the Euro are the following:

- the assets and the liabilities were translated using the exchange rate at the balance sheet date;

- the costs and revenues, and income and charges, were translated using the average exchange

rate for the period;

- the “Translation reserve” includes both the foreign exchange differences generated from the

translation of foreign currency transactions at a rate different than at the balance sheet date

and those generated from the translation of the opening equity at a different rate than that at

the balance sheet date;

- goodwill related to the acquisition of a foreign entity is treated as assets and liabilities of the

foreign entity and translated at the balance sheet date.

Explanatory Notes

82

For the conversion of the Financial Statements expressed in foreign currencies, the rates indicated

in the following table are applied (foreign currency for every 1 Euro).

Description USD

US Dollar

PLN

Polish Zloty

Average exchange rate:

- January/September 2014

1.3548

4.1754

- January/December 2013 1.3283 4.1983

- January/September 2013 1.3172 4.2029

Exchange rate at:

- September 30, 2014

1.2583

4.1776

- December 31, 2013 1.3197 4.1540

- September 30, 2013 1.3505 4.2288

Use of estimates

The preparation of the Consolidated Interim Report and the relative notes in application of IFRS

require that management make estimates and assumptions on the values of the assets and liabilities

contained in the Report and on the information relating to the assets and potential liabilities at the

balance sheet date. The actual results may differ from those estimated. The estimates are used to

value the provisions for risk on receivables, inventory obsolescence, depreciation and amortisation,

write-down of assets, employee benefits, income taxes, other provisions and funds. The estimates

and assumptions are reviewed periodically and the effects of all variations are immediately

recognised in the statement of profit and loss.

The estimate criteria are the same for all periods presented.

Explanatory Notes

83

Hedging policies of risks relating to the fluctuation of exchange rates

Some Companies of the Group undertake transactions in currencies other than the functional

currency of the Group. Where these transactions are significant, the Group Companies assesses the

possibility of undertaking exchange risk hedges in order to mitigate these fluctuations.

During the years presented the Group has not undertaken exchange risk hedge operations, as such

transactions undertaken by the companies of the Group are not considered significant.

Hedging policies of risks connected to interest rate fluctuations

The companies of the Group are exposed to the risk of fluctuations in interest rates principally in

relation to the medium-long term debt. Where these risks are considered as significant, the

Companies of the Group undertake interest rate swaps in order to convert the variable rate of the

medium-long term loans into fixed rates, which permits a reduction of the impact deriving from

the fluctuations in the interest rates.

At September 30, 2014 the parent company Zignago Vetro SpA had an interest rate swap in order

to hedge the interest rate risk on medium-long term loans. Although the operation was carried out

for hedging purposes, not all of the characteristics established by the IAS / IFRS accounting

principles to be considered as such were fulfilled. Therefore the negative fair value at September

30, 2014, amounting to Euro 81 thousand, was entirely recorded under bank payables and the

current portion of medium/long-term loans and the decrease between the fair value at September

30, 2014 and that of December 31, 2013 was recognised under financial charges in the period.

Credit and country risk policies

The Group only deals with established and reliable clients. Customers that request extensions of

payment are subject to a credit rate check. Moreover, the collection of receivables is monitored

during the year so that the exposure to losses is not substantial. Finally, in the case of new clients

and some clients not operating in the EU, the Group companies obtain letters of credit and advance

payment.

The “trading partner” credit risks are minimised through insurance instruments to protect against

client insolvency or risks concerning the economic system in which the client operates.

Explanatory Notes

84

Policies concerning the management of liquidity risk

The Zignago Vetro Group has payables to financial intermediaries and has a financial debt

position related to the development plan of the business. The breakdown of the net financial

position is described at page 25. Financial covenants exist on a loan issued in 2011, of a residual

amount of Euro 4,015 thousand, to be calculated at a consolidated level and on an annual basis,

which the Parent Company is committed to respect. These parameters will therefore be verified in

the drawing up of the 2014 consolidated financial statements.

The high levels of cash generated from operating activities, as highlighted in the statement of cash

flows, and the debt profile, described in more detail in the paragraph above, enable the Group

Companies to meet the repayments of the loans in place, without any particular liquidity risks.

Hedging policies of risks related to the fluctuation in energy prices

The Group Companies are exposed to the risk of fluctuation in energy costs, which comprise a

central productive component in the glass sector. Where this risk is considered as significant,

hedging operations may be undertaken in order to convert the variable cost into a fixed cost, which

reduces the impact of fluctuations in energy costs.

Management of capital

The capital management objective of the Group is to guarantee that the capital indicator levels are

maintained at adequate levels in order to support activity and maximise the value for shareholders,

also through adequate dividend policies.

The Group manages the capital structure and carries out modifications based on changes in

economic conditions. To maintain or adjust the capital structure, the Group may issue new shares,

in addition to treasury share buybacks.

Declaration of the Executive Responsible

85

Declaration of the Executive Responsible

The Executive Responsible for the preparation of the corporate and accounting documents, Mr.

Roberto Celot, declares in accordance with Article 154 bis, paragraph 2, of the Consolidated

Finance Act, that the accounting information contained in the present Consolidated Interim Report

at September 30, 2014 corresponds to the underlying accounting documents, records and

accounting entries.

ZIGNAGO VETRO SpA

Registered office: Fossalta di Portogruaro (VE), Via Ita Marzotto n. 8

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