185000000 IT Holding Finance SA

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IT HOLDING S.P.A. INDEX TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS Reports of the Independent Auditors for the Audited Consolidated Financial Statements as of and for the Years Ended December 31, 2004, 2003 and 2002................................................................................................ Consolidated Statements of Income .........................................................................................................................F-5 Consolidated Balance Sheets................................................................................................................................ F-6 Consolidated Statements of Cash Flows ..................................................................................................................F-7 Consolidated Statements of Changes in the Shareholders’ Equity...........................................................................F-9 Notes to the Consolidated Financial Statements for the Year Ended December 31, 2004....................................... F-10 Notes to the Consolidated Financial Statements for the Year Ended December 31, 2003....................................... F-47 Notes to the Consolidated Financial Statements for the Year Ended December 31, 2002....................................... F-87 F- 1 Page F-2
The Board of Directors IT Holding S . p . A . REPORT OF THE AUDITORS We have audited the accompanying consolidated balance sheet of IT Holding S.p.A. and its subsidiaries (“the Group”) as of 31 December 2004, and the related consolidated statements of income, changes in the shareholders' equity and cash flows for the year then ended. These consolidated financial statements are the responsibility of the parent Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with the auditing standards recommended by Consob, the Italian Commission for Listed Companies and the Stock Exchange. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatements and are, as a whole, reliable. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. Reference should be made to the ruport dated 30 September 2004 for our opinion on the prior year figures which are presented for comparative purposes.In our opinion, the consolidated financial statements give a true and fair view of the financial position of the Group as of 31 December 2004, and the results of its operations and its cash flows for the year then ended in accordance with International Financial Reporting Standards. Without qualifying our opinion, we draw your attention to the following matters: The Group incurred heavy net losses for the years ended 3l December 2004 and 2003 and the Group's net financial debt as of 31 December 2004 is considerable. As reported in the notes, the financial statements have been prepared on a going concern basis as management believes that the measures taken by the Group aimed at ensuring the Group's ability to repay the debt maturing in 2005 and focusing on its core profitable operations, in order to strengthen its market position and facilitate the planned growth for the next few year, will allow the Group to return to profitability in the medium term. The measures taken to repay the debt maturing in 2005, commenced during 2004, included the partial repurchase, and subsequent cancellation, of the Ferrè Finance 7% 05/05 bonds for a nominal amount of Euro 25 million. The repurchase was made using the proceeds on the sale of the fragrance company. It also involved the placing of new Senior Notes 2012 for Euro 150 million, with an eight-years maturity, and the taking out of a new five-year loan of Euro 85 million, granted by a pool of banks led by San Paolo IMI S.p.A.. This loan was used to repay in advance the original loan of the same amount (original due date: December 2005). In early 2005, the Group a) finalized the tender offer made by IT Holding Finance S.A. for the purchase of the Ferrè Finance 7% 05/05 notes for a nominal value of approximately Euro 80.4 million and b) placed another bond issue (Additional Senior Notes 2012) for Euro 35 million. The funds obtained with this placing will be used to repurchase or reimburse the Ferrè Finance 7% 05/05 bonds which expire in May 2005. The Directors have called an extraordinary meeting of the holding company's shareholders in April 2005 to approve a proposal to change article 5 of the bylaws and to grant the Board, pursuant to article 2443 of the Civil Code, the power to increase the share capital, with the exclusion of the option in accordance with paragraph 5 of article 2441 of the Italian Civil Code. The focusing on its core business, aimed at developing the businesses of the Ferrè, Extè and Malo brands, mainly comprises the sale of the companies active in the fragrance and eyewear businesses, of Gigli S.p.A., the indirect owner of the Romeo Gigli brand, and of the Gentryportofino business unit and brand. As commented in note 30 to the consolidated financial statements, the subsidiary Ittierre S.p.A. has received summons further to claims for damages on the basis of alleged breach of contract in relation to a design collaboration agreement signed prior to 31 December 1996. In this respect and with regard to any other potential litigation, reference should be made to the description in the notes to the consolidated financial statements of the hold harmless agreement signed with the parent company P.A. Investments S.A. to hold harmless and indemnify IT Holding S.p.A. and its subsidiaries from any negative consequences of situations which arose before 31 December 1996. Naples, 5 April 2005 KPMG S.p.A. Giovanni Enrico Esposito Director of Audit F- 2
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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
Page 7 and 8: Our Strategic Refocusing Program Du
Page 9 and 10: manufacturing of our products to th
Page 11 and 12: income tax on a consolidated basis
Page 13 and 14: (3) Net working capital is defined
Page 15 and 16: We must anticipate trends and respo
Page 17 and 18: We are subject to significant restr
Page 19 and 20: event of a foreclosure on the secur
Page 21 and 22: • avoid or invalidate all or a po
Page 23 and 24: a maximum of two years); (ii) a pro
Page 25 and 26: • pursuant to article 445 of the
Page 27 and 28: Our Company DESCRIPTION OF BUSINESS
Page 29 and 30: Versus is a medium-priced fashion b
Page 31 and 32: in print (fashion magazines and new
Page 33 and 34: We maintain a close working relatio
Page 35 and 36: Licensor and Brands Gianni Versace
Page 37 and 38: Legal proceedings Ordinary Course L
Page 39 and 40: OPERATING AND FINANCIAL REVIEW AND
Page 41 and 42: each year, when payments to our sup
Page 43 and 44: Income taxes In 2004, we incurred a
Page 45 and 46: Facilities and bank overdraft facil
Page 47 and 48: • €150.0 million principal amou
Page 49 and 50: Contractual obligations The followi
Page 51 and 52: An impairment loss in respect of go
Page 53 and 54: Salvatore Vicari has been a directo
Page 55 and 56: PRINCIPAL SHAREHOLDERS The table be
Page 57: invoiced to us by Pavia e Ansaldo -
Page 61 and 62: REPORT OF THE AUDITORS The Board of
Page 63 and 64: IT HOLDING S.p.A. CONSOLIDATED BALA
Page 65 and 66: Acquisition of Subsidiary During 20
Page 67 and 68: IT HOLDING S.P.A. NOTES TO THE CONS
Page 69 and 70: 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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