Reply SpA

Income statement
Statement of comprehensive income
Statement of financial position
Statement of changes in equity
Statement of cash flows
Notes to the financial statements
Annexed tables
Employee benefits
The scheme underlying the employee severance indemnity of the Italian Group companies (the TFR) was classified as
a defined benefit plan until December 31, 2006. The legislation regarding this scheme and leading to this classification
was amended by Law no. 296 of December 27, 2006 (the “2007 Finance Law”) and subsequent decrees and
regulations issued in the first part of 2007. In view of these changes, and with specific reference to those regarding
companies with at least 50 employees, this scheme only continues to be classified as a defined benefit plan in the
financial statements for those benefits accruing up to December 31, 2006 (and not yet settled by the balance sheet
date), while after that date the scheme is classified as a defined contribution plan.
Employee termination indemnities was classified until December 31, 2006 as “post-employment benefit” falling under
the category of a “defined benefit plan”; the amount already accrued must be projected in order to estimate the
payable amount at the time of employee termination and subsequently be discounted through the “Projected Unit
Credit Method”, an actuarial method based on demographic and finance data that allows to reasonably estimate the
extent of benefits that each employee has matured in relation to the time worked.
Actuarial income and losses that reflect the effects resulting from changes in the actuarial assumptions used are
directly recognized in Shareholders’ equity.
Share based payment plans (“Stock options”)
The Company has applied the standard set out by IFRS 2 “Share-based payment”. Pursuant to the transitional
standards, IFRS 2 has been applied to all the stock options granted after November 7, 2002 and that have not yet
vested as at January 1, 2005. The Company stock option plans foresee only the physical delivery of the share when
exercised.
Share-based payments are measured at fair value at granting date. Such amount is recognized in the income statement
over a straight-line basis and over the vesting period.
The fair value of the option, measured at grating date, is assessed through actuarial calculations, taking into account
the terms and conditions of the options granted.
Provisions and reserves for risks
Provisions for risks and liabilities are costs and liabilities having an established nature and the existence of which
is certain or probable that at the reporting date the amount cannot be determined or the occurrence of which is
uncertain. Such provisions are recognized when a commitment actually exists arising from past events of legal or
contractual nature or arising from statements or company conduct that determine valid expectations from the persons
involved (implicit obligations).
Provisions are recognized when the Company has a present commitment arising from a past event and it is probable
that it will be required to fulfill the commitment. Provisions are accrued at the directors’ best estimate of the expenditure
required to settle the liability at the balance sheet date, and are discounted when the effect is significant.
Revenue recognition
Revenue from sales and services is recognized when the transfer of all the risks and benefits arising from the passage
of title takes place or upon execution of a service.
Revenues from services also include the activities that the Company carries out as sole manager of the procedures
that comply to quality standards. These activities are also executed by incurring expenses by other group companies
and such expenses are recognized in the income statement as “Other service costs”.
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