185000000 IT Holding Finance SA

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IT HOLDING S.p.A. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 1. Activities of the Group FOR THE YEAR ENDED DECEMBER 31, 2002 IT HOLDING S.p.A., is one of the leading players in the luxury goods sector, and controls a group of companies that design, produce and distribute high-quality products (apparel and accessories, eyewear and perfumes) under owned brands—Gianfranco Ferré, GF Ferré, Malo, Extè, Try Ultralight—as well as under license agreements—D&G, Versus, Versace Jeans Couture, Versace Jeans Signature, Romeo Gigli, Desil Gold Filled, Anna Sui Vision and ZeroRH+ (eyewear only). According to its strategic objectives, the Group rules and sustains the autonomous development of its brands through an integrated production and distribution system. Its production facilities are located in Italy, while the worldwide distribution network includes 34 directly operated stores. IT HOLDING has over 2,000 employees and posted net revenues of Euro 660 million in 2002. It went public on November 1997 and its shares are traded on the Milan Stock Exchange. IT HOLDING is now a leading player in the luxury industry trough a multi-brand and a multi-product strategy. 2. Significant accounting policies IT HOLDING S.p.A. is a company domiciled in Italy. The consolidated financial statements of the Company for the year ended December 31, 2002 comprise the Company and its subsidiaries (together referred to as the "Group"). The financial statements were authorized for issue by the directors on September 28, 2004. Statement of compliance The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) adopted by the International Accounting Standards Boards (IASB). These are the Group’s first consolidated financial statements prepared in accordance with IFRS. All standards revised or issued within December 31, 2003, if permitted, have been early adopted in the preparation of the Group’s consolidated financial statements. The following standards, revised in 2003, have been adopted before their effective date: IFRS 1, First time adoption of IFRSs IAS 2, Inventories IAS 8, Accounting Policies, Changes in Accounting Estimates and Errors IAS 10, Events after the Balance Sheet Date IAS 16, Property, Plant and Equipment IAS 17, Leases IAS 21, The Effects of Changes in Foreign Exchange Rates IAS 24, Related Party Disclosures IAS 27, Consolidated and Separate Financial Statements IAS 28, Investment in Associates IAS 31, Investment in Joint Ventures IAS 32, Financial Instruments: Disclosure and Presentation IAS 33, Earnings per Share IAS 39, Financial Instruments: Measurement and Recognition IAS 40, Investment Property The company has approved its consolidated financial statements as December 31, 2002 under Italian accounting principles in May, 6, 2003. A reconciliation between the Company’s consolidated financial statements under Italian accounting principles and IFRS is provided in note 30.
IT HOLDING S.p.A. Notes to the consolidated financial statements for the year ended December 31, 2002 The following is a summary of the significant accounting policies used by the Group to prepare the financial statements in accordance with IFRS. Basis of preparation The financial statements are presented in euro, rounded to the nearest thousand. The consolidated financial statements have been prepared under the historical cost convention except as disclosed in the accounting principles below. The accounting policies set out below have been applied consistently to all periods presented in these consolidated financial statements and in preparing an opening IFRS balance sheet at January 1, 2001 for the purposes of the transition to IFRS. The accounting policies have been applied consistently by Group entities. Principles of consolidation Subsidiaries are those entities controlled by the Company. Control exists when the Company has the power, directly or indirectly, to govern the financial statements and operating policies of an entity so as obtain benefits from its activities. In assessing control, potential voting rights that presently are exercisable or sconvertible are taken into account. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. There are no “Associates” or “Jointly Controlled Entities” consolidated as at January 1, 2001, December 31, 2001 and December 31, 2002. The purchase method of accounting is used to account for the acquisition of subsidiaries. The cost of acquisition is measured at the fair value of the assets given up, shares issued or liabilities undertaken at the date of acquisition plus costs directly attributable to the acquisition. The excess of cost of acquisition over the fair value of the net assets and liabilities of the subsidiary acquired is recorded as goodwill. The assets and liabilities and statement of income captions of consolidated companies are included on a line-by-line basis by eliminating the book value of the related investments against Group’s share of equity of the subsidiaries at the moment of their acquisition. The portion of net asset and net income attributable to third parties is stated separately as minority interests. All significant intragroup balances, transactions and unrealized profits and losses are eliminated. Foreign currency Foreign currency transactions Foreign currency transactions are translated into euro using the exchange rates prevailing at the dates of transactions. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated to euro at the foreign exchange rate ruling at the date. Foreign exchange differences arising on the settlement of such transactions and on the translation are recognized in the income statement, except when deferred in equity as qualifying cash flow hedges. Non-monetary assets and liabilities denominated in foreign currencies that are stated at fair value are translated to euro at foreign exchange rates ruling at the dates the values were determined. Financial statements of foreign operations The Group’s foreign operations are not considered an integral part of the Company’s operations. Accordingly, financial statements of foreign companies are translated into Euros as follows: assets and liabilities including goodwill and fair value adjustments arising on consolidation are translated at the exchange rates ruling at the balance sheet date; F- 88
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CONFIDENTIAL Rule 144A Global Note
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Definitions In this annual report:
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• risks related to our principal
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Our Strategic Refocusing Program Du
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manufacturing of our products to th
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income tax on a consolidated basis
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(3) Net working capital is defined
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We must anticipate trends and respo
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We are subject to significant restr
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event of a foreclosure on the secur
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• avoid or invalidate all or a po
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a maximum of two years); (ii) a pro
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• pursuant to article 445 of the
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Our Company DESCRIPTION OF BUSINESS
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Versus is a medium-priced fashion b
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in print (fashion magazines and new
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We maintain a close working relatio
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Licensor and Brands Gianni Versace
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Legal proceedings Ordinary Course L
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OPERATING AND FINANCIAL REVIEW AND
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each year, when payments to our sup
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Income taxes In 2004, we incurred a
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Facilities and bank overdraft facil
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• €150.0 million principal amou
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Contractual obligations The followi
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An impairment loss in respect of go
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Salvatore Vicari has been a directo
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PRINCIPAL SHAREHOLDERS The table be
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invoiced to us by Pavia e Ansaldo -
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The Board of Directors IT Holding S
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REPORT OF THE AUDITORS The Board of
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IT HOLDING S.p.A. CONSOLIDATED BALA
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Acquisition of Subsidiary During 20
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IT HOLDING S.P.A. NOTES TO THE CONS
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IT HOLDING S.p.A. Notes to the cons
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