2009 1st Half Report

Transcription

1 2009 1st Half Report

2 HALF-YEAR REPORT AT 30 JUNE 2009

3 Half-year report at 30 June 2009 Milan, 30 July 2009 Highlights Revenue of 1,203.7 million euro (1,525.3 million euro in the first half of 2008). Revenue down by 15.2% at constant exchange rates; down by 21.1% at current exchange rates. Contraction of 20.3% in the volume of sales of household appliances due to the slowdown in demand. Net non-recurring charges of 34.8 million euro (16.8 million euro in the first half of 2008), mainly due to the reorganisation of manufacturing activities. Operating profit, gross of non-recurring charges of 50.2 million euro (89.2 million euro in the first half of 2008). Operating profit at constant exchange rates of 48.4 million euro; 15.4 million euro at current exchange rates. Average European market share up by 0.5 percentage points during the first four months of the year. Net working capital of million euro (250.3 million euro at 30 June 2008). Net borrowing of million euro (592.5 million euro at 30 June 2008). Negative free cash flow of 50.2 million euro (negative by million euro in the first half of 2008). Contents Highlights 2 Company bodies 3 Interim report on operations 4 Condensed half-year consolidated financial statements 19 Notes 25 Attachments june june 2008 Change Euro Euro Euro % % milion milion milion Revenue 1.203,7 100,0% 1.525,3 100,0% (321,6) (21,1%) Gross operating profit before non recurring items 110,0 9,1% 149,8 9,8% (39,8) (26,6%) Gross operating profit 83,0 6,9% 136,8 9,0% (53,8) (39,3%) Operating profit before non recurring items 50,2 4,2% 89,2 5,9% (39,1) (43,8%) Operating profit 15,4 1,3% 72,4 4,7% (57,0) (78,8%) Profit before taxation (20,8) (1,7%) 58,5 3,8% (79,3) (135,5%) Profit for the period (22,6) (1,9%) 34,1 2,2% (56,7) (166,3%) Profit attributable to the Group (22,5) (1,9%) 33,7 2,2% (56,2) (166,9%) II Q 2009 II Q 2008 Change Euro Euro Euro % % milion milion milion Revenue 613,0 100,0% 769,1 100,0% (156,1) (20,3%) Gross operating profit before non recurring items 62,6 10,2% 73,6 9,6% (11,0) (14,9%) Gross operating profit 49,3 8,0% 59,5 7,7% (10,3) (17,2%) Operating profit before non recurring items 32,3 5,3% 44,1 5,7% (11,7) (26,7%) Operating profit 14,1 2,3% 26,2 3,4% (12,0) (46,0%) Profit before taxation (4,3) (0,7%) 22,7 2,9% (27,0) (119,0%) Profit for the period (7,9) (1,3%) 12,6 1,6% (20,5) (162,8%) Profit attributable to the Group (8,0) (1,3%) 12,1 1,6% (20,1) (165,8%) % % 2

4 Board of Directors Chairman Vice Chairman Chief Executive Officer Directors Board of Statutory Auditors Chairman Auditors Alternate Auditors Human Resources Committee Audit Committee Innovation and Technology Committee Members who are directors Members who are not directors Representative of the savings shareholders Indipendent Auditor Company bodies Vittorio Merloni Andrea Merloni Marco Milani Bruno Busacca Innocenzo Cipolletta Adriano De Maio Luca Garavoglia Mario Greco Hugh Malim Emma Marcegaglia Antonella Merloni Maria Paola Merloni Paolo Monferino Angelo Casò Andrea Amaduzzi Luigi Biscozzi Francesco Nobili Serenella Rossano Mario Greco (Chairman) Maria Paola Merloni Paolo Monferino Hugh Malim (Chairman) Innocenzo Cipolletta Antonella Merloni Adriano De Maio (Chairman) Andrea Merloni Marco Milani Luca Garavoglia Paolo Monferino Francesco Trovato Adriano Mencarini Massimo Rosini Adriano Gandola KPMG S.p.A. Manager charged with preparing the company s financial reports Andrea Crenna 3

5 Interim report on operations at 30 June

6 Introduction The Half-year Report at 30 June 2009, presented pursuant to paragraph 2 of article 154-ter of the Consolidated Finance Act, has been prepared in accordance with International Financial Reporting Standards (IFRS) and, in particular, IAS 34 Interim Financial Reporting. It comprises this Interim report on operations, the condensed, half-year consolidated financial statements and the confirmation required by paragraph 5 of article 154-bis of the Consolidated Finance Act. The condensed, half-year consolidated financial statements have been reviewed by KPMG S.p.A.. All the amounts presented below are stated in millions of euro, and the comparisons made (in brackets) relate to information for the prior year. Percentages (margins and changes) are determined with reference to amounts stated in thousands of euro. The Group reporting to Indesit Company S.p.A. is hereafter referred to Indesit Company or Indesit or simply the Group. When the commentary relates to the parent company or individual subsidiaries, their names and legal form are stated in full. The amounts presented at constant exchange rates with respect to 2008 were estimated by taking account of the transaction effects and the effect of translating to euro (the Group's functional currency) the operations reported in the foreign currency financial statements. Economic background During the first half of 2009, the Group was heavily penalised by the major contraction in demand for household appliances in almost every market and, in particular, in those where Indesit Company has a leadership position: UK, Italy, France and Russia. By contrast, the slowdown in demand in countries where the Group's market share is not significant or, in any case, is lower - such as Germany - was less marked, with moderate growth in some cases. In western markets, the downward trend has affected sales of built-in products more than those of free-standing appliances, while the opposite is true in eastern markets where there is less emphasis on built-in items due to lifestyle considerations. The market downturn has been most severe for the cooking and refrigeration families of products. Demand for washers and dryers has fallen by slightly less than the overall average. 5,0% 0,0% -5,0% -10,0% -15,0% -20,0% Industry shipment (variation % vs the same period of previous year) Exchage rates vs EUR 30 June June 08 1,6% 1,0% GBP Average exchange rate 0,894 0,775 Closing exchange rate 0,852 0,792 RUR -1,9% Average exchange rate Closing exchange rate 44,103 43,881 36,620 36,948 PLN Average exchange rate 4,475 3,490-11,4% Closing exchange rate 4,452 3,351-17,4% -15,6% TRY Average exchange rate 2,165 1,890 Closing exchange rate 2,161 1,932 Q108 Q208 Q308 Q408 Q109 Q209 The considerations for the principal currencies used by the Group are somewhat similar to those made above in relation to market demand: the generalised depreciation against the euro of the British pound, the Russian rouble, the Polish zloty and the Turkish lira has squeezed the results of the Group in terms of both sales and margins. 5

7 During the first half of 2009, with respect to the first half of 2008, the euro 1 appreciated by 10.9% against the British pound, 18.6% against the Russian rouble, 8.6% against the Turkish lira and 30.6% against the Polish zloty. Consolidated results Group revenue for the first half of 2009 totalled 1,203.7 million euro (1,525.3 million euro), down 21.1%. At constant exchange rates, 2009 first half revenue would have been 1,293.7 million euro, down 15.2%. The reduction in revenue principally reflects the lower sales of finished products, while revenue from services was down only slightly despite the depreciation of the British pound Total Revenue (euro/million) Q Q Q Q Q Q Revenue Breakdown 30 June June 08 Change % Appliances 1.102, ,9-22,5% Services 101,6 103,4-1,7% Total Revenue 1.203, ,3-21,1% The decline in revenue from the sale of finished products was mainly due to lower volume, down about 20.3%, following the slump in demand in certain markets where the Group has a leadership position. This was compounded by approximately a 5.6% exchange rate effect resulting from the appreciation of the euro against the principal currencies in which the Group operates. These adverse effects were partially offset by a significant 3.5% rise in unit revenues (price/mix effect). 1 Determined with reference to the average monthly rates reported by the European Central Bank 6

8 The gross operating profit (EBITDA 2 ) for the first half of 2009 was 83.0 million euro (136.8 million euro), representing 6.9% (9.0%) of revenue. The operating profit (EBIT 3 ) for the first half of 2009 was 15.4 million euro (72.4 million euro), representing 1.3% (4.7%) of revenue. Before non-recurring income and expenses, operating profit (EBIT) was 50.2 million euro (89.2 million euro), representing 4.2% (5.8%) of revenue. 7,0% 6,0% 5,0% 4,0% 3,0% 2,0% 1,0% 0,0% EBIT after of non recurring items by quarter Q108 Q208 Q308 Q408 IQ09 IIQ EBIT after of non recurring (million euro - right) EBIT after of non recurring (% of revenue -left ) Non recurring items - first half 2009 Non recurring charges for restructuring (41,1) Other non recurrings items 6,3 Total (34,8) The decline in operating profitability with respect to the first half of 2008 was due to negative factors associated with international market conditions, negative factors affecting the results for 2009 which will benefit the Group over the medium term, and positive factors deriving from successful actions and corporate transactions. The Group's operating results were penalised by a marked reduction in the volume of sales caused by the collapse in demand; with regard to production, this contraction in volume resulted in the lower absorption of industrial fixed costs. Unfavourable exchange rate movements during the first half of 2009 also lowered operating profits by about 33.0 million euro overall. The higher non-recurring charges will, on the other hand, benefit future years. These charges principally relate to closure of the Kinmel Park factory in the UK and the reorganisation of production at the None factory in Italy. The Group has partially offset the adverse effects described above by an improvement in the price/mix, the constant enhancement of product quality and the positive results from Service activities. Additional positive effects stemmed from a reduction in logistics costs, mainly due to lower volume despite a deterioration in the market mix with respect to the first half of 2008, as well as from the lower cost of raw materials and lower transformation costs due to the steady improvement of production processes. Efforts have also continued to lower general expenses and, in particular, to reduce advertising and promotion costs. At constant exchange rates, EBIT for the first half of 2009 would have been 48.4 million euro. Net financial expenses amounted to 36.2 million euro (13.9 million euro); this increase mainly reflects the higher cost of hedging exchange rate risks and an increase in the exchange rate losses incurred in relation to unhedged exposures, due to the greater volatility of exchange rates and a rise in the total average exposure. An additional adverse effect came from the mark-to-market adjustment of derivatives hedging the interest-rate risk on borrowings, including the income statement effect generated by financial instruments representing cash flow hedges. Net borrowing costs, on the other hand, fall due to the decline in interest rates. 2 EBITDA: operating profit reported in the consolidated income statement, stated gross of depreciation and amortisation. 3 EBIT: operating profit reported in the consolidated income statement. 7

9 The consolidated net loss for the first half of 2009 was 22.5 million euro (profit of 33.7 million euro), after recognising significant net non-recurring charges, as mentioned above, totalling 34.8 million euro (16.8 million euro). Results by segment The Group's operating segments consist of geographical areas. Pursuant to IFRS 8, these were determined with reference to the availability of separate financial information and consistent with the principal way in which results are periodically reviewed by the Chief operating decision maker, in order to evaluate performance and the effect of strategic decisions. The Group identifies the following operating segments: - Italy; - UK and Ireland; - Russia, comprising Russia and the Asian republics; - Western Europe, comprising France, Spain, Portugal, Germany, Austria, Switzerland, Benelux, Scandinavia, Lithuania, Estonia and Latvia; - Eastern Europe, comprising Poland, Ukraine, Moldova, Czech Republic, Hungary, Romania, Greece, Turkey, Bulgaria and the Balkans; - Overseas, which includes all other non-european markets. First half of 2009 (million Euro) Total Areas Costs not allocated Total Group Revenue 1.203, ,7 Operative costs (1.129,3) (59,1) (1.188,4) Operating margin 74,5 (59,1) 15,4 First half of 2008 (million Euro) Total Areas Costs not allocated Total Group Revenue 1.525, ,3 Operative costs (1.409,9) (43,1) (1.452,9) Operating margin 115,4 (43,1) 72,4 The costs not allocated to segments principally comprise corporate costs and restructuring charges. 8

10 Italy Area (million Euro) 30 June June 2008 Change Revenue 229,0 250,2 (21,2) Operating Margin 26,0 25,0 1,0 Operating Margin % 11,4% 10,0% 1,4% The Industry shipment of household appliances sales to retailers in Italy declined in the first half 2009 by approximately 8.6% compared to the comparative prior year period. This fall in demand has contributed significantly to the erosion of the revenue generated by the Italy Area. In particular, the decline in the market for built-in appliances was somewhat greater than that for free-standing items. The total revenue deriving from the Group's Italian sales reflects this trend, although the effect has been attenuated by a noticeable price-mix effect combined, essentially, with the maintenance of market share and therefore market leadership. In this context and despite the higher provision for doubtful accounts with respect to 2008, the operating profit for the period achieved by the Italy Area was in line with that for the comparative prior year period. This was due to the improvement in the price/mix, a focus on fixed costs and an inevitable reduction in advertising and promotional costs. 140,0 135,0 130,0 125,0 120,0 115,0 110,0 105,0 100,0 120,6 107,6 Italy Area Revenue (million Euro) 129,6 121, ,0 45,0 40,0 35,0 30,0 25,0 20,0 15,0 10,0 5,0-14,7 Italy Area Operating Margin (million Euro) 9,2 10,3 16, Q1 Q2 Q1 Q2 UK and Ireland Area (million Euro) 30 June June 2008 Change Revenue 340,3 385,4 (45,1) Operating Margin 20,7 7,4 13,3 Operating Margin % 6,1% 1,9% 4,2% The results for the UK and Ireland Area reflect the most significant discontinuity experienced by the Group during the first half of Despite the marked depreciation of the Uk pound with respect to the comparative prior year period (15.4% drop in the average exchange rate) and the steady reduction in the proportion of production carried out in the UK (down from 40% in the first half of 2008 to 31% in the first half of 2009), the British organisation easily offset the adverse exchange rate effect with an improvement in the sales price/mix and a significant reduction in non-quality costs. Operating profit was more than the double of that achieved in 2008 and the market share also increased significantly, almost overshadowing the approximately 16% contraction in the market (industry shipment) during the first half of 2009 with respect to the comparative period. In general, all the performance indicators for the UK and Ireland Area were very good in the first half of the year. 9

11 220,0 210,0 200,0 190,0 180,0 170,0 160,0 150,0 140,0 198,6 169,1 UK and Ireland Area Revenue (million Euro) 186,8 171, ,0 45,0 40,0 35,0 30,0 25,0 20,0 15,0 10,0 5,0-4,7 UK and Ireland Area Operating Margin( million Euro) 3,2 2,6 17, Q1 Q2 Q1 Q2 West Europe Area (million Euro) 30 June June 2008 Change Revenue 261,9 293,2 (31,3) Operating Margin 6,0 2,4 3,6 Operating Margin % 2,3% 0,8% 1,5% Overall, sales in Western Europe declined faster during the second quarter than in the first, when the fall was relatively moderate. In particular, the two most significant markets in this area, France and Spain, suffered serious losses in sales due, once again, to the slump in demand by an estimated 10% in France and 22% in Spain (industry shipment). Despite the drop in sales, the Area's operating profit rose by 3.6 million euro with respect to the comparative period, largely due to an improvement in the sales price/mix for free-standing products, the reduction of fixed costs, the containment of advertising and promotion costs, and the lower incidence of distribution expenses. The sales performance of built-in appliances was less satisfactory in almost all West European countries, given the effects of the real estate market crisis afflicting this area. 180,0 170,0 160,0 150,0 140,0 130,0 120,0 110,0 100,0 90,0 80,0 144,6 West Europe Area Revenue (million Euro) 148,6 131,7 130, ,0 35,0 30,0 25,0 20,0 15,0 10,0 5,0 - -5,0 3,0 Q1 West Europe Area Operating Margin (million Euro) 1,0-0,6 Q2 5, Q1 Q2 Russian Fed. Area (million Euro) 30 June June 2008 Change Revenue 152,6 274,1 (121,5) Operating Margin 17,6 58,0 (40,4) Operating Margin % 11,5% 21,2% (9,6%) In Russia, excluding the growth achieved in January 2009, the remaining months of the period experienced contractions (industry shipment) of largely more than 30% with respect to the prior year. The large decline in euro revenue from this geographical area reflects a combination of lower demand with the major depreciation of the rouble with respect to the comparative period in 2008 (20.8% drop in the average exchange rate). The decrease in operating profit, equal to 40.4 million euro, was however slowed down due to the essential self-sufficiency of the Russia Area in terms of production (74 % of sales were produced 10

12 locally during the first half), the improvement in the price/mix and the actions taken to contain overheads. Even under these circumstances, the profitability percentage achieved by the Russia Area is still among the best in the Group. 140,0 120,0 140,3 Russian Fed. Area Revenue (million Euro) 133,8 90,0 80,0 70,0 60,0 Russian Fed. Area Operating Margin (million Euro) 100,0 80,0 90, ,0 40,0 30,0 30,0 28, ,0 61,7 20,0 10,0 13,0 4,6 40,0 - Q1 Q2 Q1 Q2 East Europe Area (million Euro) 30 June June 2008 Change Revenue 160,7 233,8 (73,1) Operating Margin -0,7 14,9 (15,6) Operating Margin % -0,4% 6,4% (6,8%) The decline in operating profit and revenue experienced in Eastern Europe during the first half of 2009 was second only to that seen in Russia. The only significant exception was found in Turkey, where there was a notable rise in sales (+6.6%) and operating profit (3.4 million euro); this positive performance reflects an improvement in the market situation due to the introduction of government incentives and an increase in the Group's market penetration. Results in Poland were penalised by the marked depreciation of the zloty with respect to the first half of the prior year (28.8% fall in the average exchange rate) and the overall weakness of demand (down in the second quarter following a positive first quarter), although the limited price increases made during the second quarter did have some positive effect. Although positive operating profit is expected for the full year, this Area - as elsewhere - will only return to acceptable levels of profitability when market demand picks up again. 150,0 140,0 130,0 120,0 110,0 100,0 90,0 80,0 70,0 60,0 50,0 111,4 65,4 Q1 East Europa Area Revenue (million Euro) Q2 122,4 95, ,0 30,0 25,0 20,0 15,0 10,0 5,0 - -5,0-10,0 5,8 Q1 East Europe Area Operating Margin (million Euro) -5,9 9,1 Q2 5, Overseas Area (million Euro) 30 June June 2008 Change Revenue 59,2 88,6 (29,4) Operating Margin 4,9 7,8 (2,9) Operating Margin % 8,2% 8,8% (0,6%) The Overseas Area includes those markets that are usually served by independent 11

13 distributors. As an exception, the Group has a direct presence in Argentina via a commercial branch. The principal contractions in revenue and operating profit were suffered in the United States, the Middle East and Asia. 60,0 55,0 50,0 45,0 40,0 35,0 30,0 25,0 20,0 15,0 10,0 40,7 26,1 Q1 Overseas Area Revenue (million Euro) Q2 47,9 33, ,0 30,0 25,0 20,0 15,0 10,0 5,0-3,9 3,9 1,6 Q1 Overseas Area Operating Margin (million Euro) Q2 3, Revenue by product line and brand In the first half of 2009 sales of free-standing and built-in appliances declined in an almost identical fashion, by 22.4% and 22.6% respectively, although the dynamics were different when analysed by channel, product and geographical area. (million Euro) 30 June June 2008 Change % Free Standing 832, ,7-22,4% Built In 270,1 349,2-22,6% Total 1.102, ,9-22,5% The decline in sales affected the Indesit brand more than Hotpoint-Ariston, since Indesit has a greater presence in the geographical areas more seriously hit by the crisis, such as Eastern Europe and Russia. (million Euro) 30 June June 2008 Change % Indesit 515,5 675,2-23,6% Hotpoint-Ariston 550,3 695,2-20,8% Altri marchi 36,3 51,6-29,6% Total 1.102, ,9-22,5% The larger reduction in the revenue from Other brands confirms pursuit of the Group's strategy of focusing sales on the two principal brands. (million Euro) 30 June June 2008 Change % Cooking 266,0 359,2-26,0% Cooling 346,1 442,2-21,7% Washing 490,0 620,4-21,0% Total 1.102, ,9-22,5% Cooking and cooling were the product families that saw the greatest declines. The reduction in the sales of washing appliances was lower due to the performance achieved in Western Europe. 12

14 Cash flows 4 (million Euro) 30 June Dec June 08 EBITDA 83,0 270,5 136,8 Change in NWC (98,7) (62,7) (247,9) Other Operating Flow (15,9) (162,0) (53,2) Operating cash flow (31,5) 45,8 (164,3) Net CapEx (18,5) (136,1) (44,4) Cash Flow before financial activies (50,0) (90,3) (208,7) Financial operations & others (0,2) (52,4) (52,7) Free cash flow (50,2) (142,7) (261,3) The cash flow absorbed by operating activities during the first half of 2009 was 31.5 million euro (absorbed million euro). The absorption of cash flow was much lower than in the first half of 2008, despite the reduction in gross operating profit (EBITDA). This improvement in cash flows was mainly due to the management of net working capital. In particular, aside from the lower volume of sales, the reduction in trade receivables was also due to the sale without recourse of trade receivables totalling 54.3 million euro. Capital expenditure net of the proceeds from asset disposals diminished significantly, consistency with the policy announced by the Group, and amounted to 18.5 million euro (44.4 million euro). Lastly, no dividends were paid during the first half of The free cash flow 5 generated during the first half of 2009 was therefore negative by 50.2 million euro (261.3 million euro), resulting in an increase in net borrowings of the same amount since 31 December In the above Cash flow view, the change in net working capital includes the change in Trade payables incurred for investment purposes, classified as part of the Cash flows from investing activities in the Consolidated statement of cash flows, where the amounts of cash flow from operating activities and Cash flow from investing activities are different. 5 Free Cash Flow: the cash flow from/for operating and investing activities, net of dividend payments and capital increases. 13

15 Balance sheet 6 (million Euro) 30 June Dec June 08 Trade receivables 416,2 459,0 649,0 Inventories 338,0 374,1 457,6 Trade payables (590,5) (767,9) (856,3) Net working capital 163,8 65,1 250,3 Non-current assets 1.088, , ,0 Other current assets and liabilities and non-current liabilities (327,1) (282,2) (321,0) Net invested capital 924,9 896, ,4 Net financial indebtedness 524,1 473,8 592,5 Equity attributable to the Group 398,3 420,0 530,7 Minority interests 2,5 2,5 2,2 Equity and financial liabilities 924,9 896, ,4 The reduction in Net working capital as a percentage of sales (from 7.4% of rolling sales in June 2008 to 5.8% in June 2009) was made possible by the sale without recourse of trade receivables. Without these sales, the incidence on sales would have been 7.9%. The fall in the volume of production was greater than the decline in the volume of sales, resulting in a reduction in trade payables that was larger than the decrease in trade receivables, despite the slowdown in collections due to the challenging general economic situation. Lastly, consistent with the Group s policy, inventory levels were reduced. The decrease in shareholders' equity since 31 December 2008 was mainly due to the net loss for the half year period of 22.5 million euro. The translation reserve increased by 10.8 million euro overall, due the appreciation of Uk pound against the euro since 31 December 2008, which more than offset the effect on the reserve of the appreciation of the euro against the zloty and the rouble. The cash flow hedge reserve, on the other hand, decreased by 9.9 million euro. 6 The trade receivables and payables, inventories and equity reported in the above reclassified balance sheet are the same as the amounts reported in the consolidated balance sheet; net financial indebtedness is analysed in the notes to the condensed, half-year consolidated financial statements; Non-current assets and Other current assets and liabilities and non-current liabilities comprise the captions of the consolidated balance sheet that are not mentioned above or included as part of net financial indebtedness. 14

16 Financial position (million Euro) 30 June Dec June 2008 Current financial assets 27,6 43,8 53,5 Cash and cash equivalents 136,1 193,2 152,3 Banks and other financial payables (297,3) (268,2) (513,8) Net financial position - short term (133,6) (31,2) (307,9) Medium/long-term financial payables (392,6) (451,9) (297,8) Net financial position (*) (526,2) (483,1) (605,7) Other non-current financial assets 2,1 9,3 13,3 Net financial indebtedness (524,1) (473,8) (592,5) *) As defined in CONSOB Communication DEM / dated 28/07/2006, applying the CESR recommendations dated 10/02/2005 The net financial indebtedness amounts to million euro (592.5 million euro). The Gross financial indebtedness totals million euro (811.6 million euro), of which 57% is classified as medium and long term and 43% as short term. The maturity profile of medium and long-term loans is presented below: Medium/longterm MATURITY Bonds 201,2 4,7 57,1 6,8 6,5 111,4 0,8 13,8 Due to banks and Other payables 191,4 5,6 17,4 147,4 1,3 16,8 0,0 2,8 Total 392,6 10,4 74,5 154,2 7,9 128,2 0,8 16,6 At 30 June 2009, the Group has unused, committed lines of credit totalling million euro. Reorganisation of activities In February 2009, Indesit Company informed the parties concerned of its intention to close the factory at Kinmel Park in the UK. Consultation with the trade unions was completed in June, with the final decision agreed with the social partners being to close the factory at the end of July. In June 2009, Indesit Company reached an agreement with the social partners and the institutions on the reorganisation of activities at the None factory in Italy. This agreement, involving a reduction in production levels, was signed at the Ministry for Economic Development in July. Significant events during the first half of 2009 and subsequent to period end Other than the events mentioned above, there were no additional significant events or transactions during the first half of 2009 or subsequent to period end. 15

17 Reconciliation with the shareholders' equity and net profit for the period of the parent company In accordance with Consob Communication no. DEM/ dated 28 July 2006, the shareholders' equity and net results for the period of the parent company are reconciled below with the related consolidated amounts. (million Euro) 30 June Dec 08 Profit (Loss) Equity Profit (Loss) Equity Financial statements of the parent company (18,9) 410,2 62,6 428,7 Consolidation adjustments Difference between carrying amount and equity of group companies (4,7) (7,7) 123,0 (4,4) Dividends received from subsidiaries - - (132,7) - Effect of aligning separate financial statements with group accounting policies 0,8 3,0 2,7 2,4 Elimination of intercompany profits 0,3 (13,3) (1,2) (13,3) Tax effect of adjustments (0,1) 6,1 1,0 6,2 Other minor effects 0,0 0,1 0,1 0,4 Total consolidation adjustments (3,7) (11,9) (7,1) (8,7) Consolidated financial statements (22,6) 398,3 55,5 420,0 Intercompany and related-party transactions, and significant, atypical or unusual transactions Transactions between Group companies are settled on arms'-length terms, having regard for the quality of the goods and services provided. The notes to the condensed, half year consolidated financial statements describe the nature of the principal transactions arranged by the parent and other Group companies with related parties. They also contain the detailed information required by Consob regulations and IAS 24. In accordance with Consob regulations, 7 Attachments 3 and 4 to the condensed, half year consolidated financial statements present the consolidated income statement and balance sheet showing nonrecurring items and transactions with related parties separately, together with the percentage incidence with respect to each caption. Transactions with related parties are not significant to the economic and financial position of the Group. Stock option plans The stock option plans are described in the notes to the condensed, half-year consolidated financial statements at 30 June 2009, which describe the plans and provide the information required by law and the relevant Consob communications. Corporate governance The system of corporate governance adopted by Indesit Company is essentially consistent with the principles established in the Code of Conduct for Listed Companies and with international best practice. On 26 March 2009, the Board of Directors approved the Annual 7 Resolution no dated 27 July 2006 and Consob Communication no. DEM/ dated 28 July

18 Report on Corporate Governance, which provides a complete description of the governance model adopted by the Company and reports on the implementation of the Code. The Parent Company has adopted the ordinary model of administration and control (envisaged under Italian law), including a Board of Directors, a Board of Statutory Auditors and Independent Auditors. The company bodies are appointed at the Shareholders' Meeting and remain in office for a period of three years. The significant presence of Independent Directors, as defined in the Code, and the important role they play on both the Board and Board Committees (Human Resources Committee, Audit Committee and Innovation and Technology Committee), ensures that the interests of all shareholders are appropriately balanced and guarantees a high level of discussion at Board meetings. Further information is available in the Annual Report on Corporate Governance (available on the Company's website: Forecast for operations The forecast falls in GDP 8 during 2009 in the principal geographical areas in which the Group operates, being the UK (-4.2%), the Euro area (-4.8%) and Russia (-6.5%), has been revised downwards with respect to the previous quarter. It is likely that demand for durable goods, including household appliances, during the second half of the year will remain affected by the currently difficult economic conditions. Demand for household appliances and trends in the three main currencies that influence the Group's results (British pound, Russian rouble and Polish zloty) will, remain decisive factors for the achievement of the Group's economic and financial objectives also in the second half year. In this context, the greatest concerns continue to be the situation in Russia and the East European markets. Demand in Russia contracted even further during the second quarter, almost halving in certain months with respect to the comparative period of the prior year. Growing unemployment and the continuing credit squeeze do not allow the coming months to be viewed with optimism; expectations for the second half year suggest that a slight improvement might emerge, but only towards the end of the fourth quarter. The pressure on the rouble, which struggles to maintain a rate of 44/45 to the euro, represents an additional risk, since it would be hard to pass on further depreciation in the form of higher selling prices. As mentioned in the last quarter, despite the expected, significant further reduction in sales and profitability, Russia will still remain one of the most important areas for the Group. Sales and profitability also fell in Eastern Europe, and this is likely to continue. Demand in the region remains poor (down about 24 % in the first half) and the weakness of the local currencies (PLN, HUF, CZK) continues with respect to the euro. The Group's priority in this area is to recoup profitability in order to offset the effects of currency depreciation and the possible loss of market share. Performance during the second quarter and current forecasts suggest that the following areas can be viewed with confidence: a) UK. The price adjustments made to cover the depreciation of the GBP, together with the cost containment measures taken, should mean in the absence of a further significant decline in Uk pounds that the UK will close the year with lower sales but higher profitability, despite an expected contraction of the market by at least 10% over the whole of International Monetary Fund forecasts from World Economic Outlook July

19 b) Italy and other West European countries. Italy too, despite a likely contraction in the market, is expected to close the year with profitability in line with or better than in the prior year. Similar results are expected from the other markets in Western Europe. c) Cost of purchasing raw materials and components. The stabilisation of the oil price at around USD and the steel price at current levels will enable the Group to achieve considerable savings on procurement costs. d) Service and warranty costs. Consistently with the performance in recent years, service costs are expected to fall further in 2009 due to the significant improvements made to the product/ process quality and the efficiency of the Service area. The results for 2009 will be burdened by substantial restructuring costs (recorded during the first half) associated, in large measure, with the closure of the Kinmel Park factory (UK) and the reorganisation of production at the None factory (Italy). The outlook on the second half of the year remains hazy, especially in relation to Russia and Eastern Europe, making it difficult to develop forecasts with a low margin of error. At this time, the best expectations for market performance are based more on favourable comparisons with the prior period than on an actual upturn in consumption. Nevertheless in this difficult context, the Group believes that given: 1) Stable exchange rates 2) Lower market demand during the second half year in line with the second quarter trend - 10% and -15% sales should be between 2.5 and 2.6 billion euro, and operating profit (EBIT) should be between 60 and 70 million euro; net financial position at 31 December 2009 is expected to be essentially in line with the situation at 31 December Milan, 30 July 2009 On behalf of the Board of Directors The Vice Chairman Andrea Merloni 18

20 19 Condensed interim consolidated financial statements at 30 June 2009

21 Consolidated income statement for the first half of (million Euro) Note 30 June June 2008 Revenue , ,3 Cost of sales 8.2 (937,6) (1.142,6) Selling and distribution expenses 8.3 (198,2) (251,9) General and administrative expenses 8.4 (52,5) (58,4) Operating profit ,4 72,4 Interest paid 8.6 (18,9) (16,9) Interest received 8.6 0,9 6,6 Exchage rates and Net financial expenses 8.6 (18,2) (3,6) Share of profit (losses) of associates - - Profit before tax (20,8) 58,5 Income tax expenses 8.7 (1,8) (24,4) Profit for the period (22,6) 34,1 of which: Attributable to minority interests (0,1) 0,4 Attributable to the group (22,5) 33,7 Basic earnings per share 8.14 (0,22) 0,33 Diluted earnings per share 8.14 (0,22) 0,33 1 Pursuant to Consob Resolution no dated 27 July 2006, the effects of related-party and non-recurring transactions on the consolidated income statement are reported in Attachment 3 and in notes 10 and 8.5 respectively. 20

22 Consolidated statement of comprehensive income for the first half of 2009 (million Euro) Note 30 June June 2008 Profit (loss) for the period (A) (22,6) 34,1 Gains/(Losses) on cash flow hedges 8.14 (9,9) 1,0 Gains/(Losses) on exchange rate differences on translating ,8 (29,4) foreign operations Total Other comprehensive income, net of tax (B) 0,8 (28,4) Total Comprehensive income (A+B) (21,7) 5,7 of which: Attributable to minority interests (0,1) 0,4 Attributable to the group (21,6) 5,3 21

23 Consolidated balance sheet at 30 June (million Euro) Note 30 June December June 2008 Assets Property, plant and equipment ,5 692,8 747,5 Goodwill and other intangible assets with an indefinite useful life ,0 207,7 275,4 Other intangible assets with a finite useful life ,7 123,9 102,3 Investments in associates 0,6 0,5 0,5 Other non-current assets 31,7 33,9 33,5 Deferred tax assets 68,8 54,6 36,9 Other non-current financial assets ,1 9,3 13,3 Total non-current assets 1.090, , ,3 Inventories ,0 374,1 457,6 Trade receivables ,2 459,0 649,0 Current financial assets ,6 43,8 53,5 Tax receivables 44,2 44,1 61,4 Other receivables and current assets ,7 63,6 67,9 Cash and cash equivalents ,1 193,2 152,3 Total current assets 1.004, , ,7 Total assets 2.095, , ,0 Equity Share capital 92,8 92,8 92,8 Reserves 176,8 176,0 308,4 Retained earnings 151,3 95,8 95,8 Profit attributable to the group (22,6) 55,5 33,7 Equity attributable to the group ,3 420,0 530,7 Minority interests 2,5 2,5 2,2 Total equity 400,8 422,6 532,9 Liabilities Medium and long-term interest-bearing loans and borrowings ,6 451,9 297,8 Employee benefits ,6 66,3 76,9 Provisions for risks and charges ,4 43,3 41,3 Deferred tax liabilities 41,5 46,0 53,1 Other non-current liabilities ,6 42,3 52,6 Total non-current liabilities 588,6 649,8 521,7 Banks and other financial payables ,3 268,2 513,8 Provisions for risks and charges ,6 51,9 54,2 Trade payables 590,5 767,9 856,3 Tax payables 33,5 34,6 36,2 Other payables ,9 105,5 136,0 Total current liabilities 1.105, , ,4 Total liabilities 1.694, , ,1 Total equity and liabilities 2.095, , ,0 2 Pursuant to Consob Resolution no dated 27 July 2006, the effects of related-party transactions on the consolidated balance sheet are reported in Attachment 4 and in note 10. The effects of non-recurring transactions on the balance sheet and financial position are described in note

24 Consolidated statement of cash flows for the six-month period ended 30 June (million Euro) Note 30 June December June 2008 Total profit 8.21 (22,6) 56,0 34,1 Income taxes ,8 38,9 24,4 Depreciation and amortisation ,7 129,9 64,4 Other non-monetary income and expenses, net ,0 30,7 10,2 Change in trade receivables ,7 63,7 (126,3) Change in inventories ,1 (39,9) (123,4) Change in trade payables 8.23 (151,5) (86,0) 27,2 Change in other assets and liabilities ,5 (65,8) (15,5) Income taxes 8.21 (15,3) (50,9) (20,1) Interest paid 8.22 (17,2) (42,1) (17,3) Interest received ,2 11,7 3,6 Cash flows from operating activities (5,6) 46,4 (138,8) Acquisition of property, plant and equipment 8.25 (40,3) (114,4) (63,4) Proceeds from sale of property, plant and equipment ,0 7,6 3,0 Acquisition of intangible assets 8.26 (10,3) (30,6) (9,5) Proceeds from sale of non-current intangible assets ,1-0,1 Proceeds from sale of non-current financial assets ,7 - Acquisition of non-current financial assets and other investments 8.27 (0,2) - (0,2) Cash flows from (used in) investing activities (44,7) (136,6) (70,0) Dividends paid - (52,5) (52,5) New medium/long-term payables - 200,2 - Repayment of borrowing for acquisition of GDAH - (40,9) - Other repayments of medium/long-term financial payables 8.28 (7,9) (30,0) (0,2) Change in current financial payables ,2 20,0 227,3 Cash flows from (used in) financing activities Net cash flows (6,7) 96,8 174,6 (57,0) 6,6 (34,2) - Cash and cash equivalents, start of period 193,2 186,5 186,5 Cash and cash equivalents, end of period 136,1 193,2 152,3 Total change in cash and cash equivalents (57,0) 6,6 (34,2) 3 Pursuant to Consob Resolution no dated 27 July 2006, the financial effects of non-recurring transactions are reported in note

25 Opening balances Other profit (losses) net of taxation Profit for the period Income (expense) recognised directly in equity Dividends paid Exercise of stock options Allocation of profit of the year Changes in scope of consolidation and acquisition of minority interests Total effects of transactions with shareholders Closing balances Nota 8.14 Statement of changes in consolidated equity at 30 June 2009 (million euro) Share capital 92, ,8 Share premium reserve 35, ,8 Legal reserve 22, ,7 Translation reserve (139,8) 10,8 10, (129,0) Other reserves 257,2 (9,9) (9,9) ,3 Retained earnings 95, ,5-55,5 151,3 Profit attributable to the group 55,5 - (22,6) (22,6) (55,5) (55,5) (22,6) Equity attributable to the group 420,0 0,8 (22,6) (21,7) ,3 Minority interests 2,5 - (0,1) (0,1) - 2,5 Total equity 422,6 0,8 (22,5) (21,7) ,8 Statement of changes in consolidated equity at 30 June 2008 (million euro) Share capital 92, ,8 Share premium reserve 35, ,8 Legal reserve 22, ,7 Translation reserve 19,8 (29,4) - (29,4) (9,6) Other reserves 258,5 1,0-1, ,5 Retained earnings 42, (52,5) - 105,4-52,9 95,8 Profit attributable to the group 105,4-33,7 33,7 - - (105,4) - (105,4) 33,7 Equity attributable to the group 577,9 (28,4) 33,7 5,3 (52,5) - 0,0 - (52,5) 530,7 Minority interests 1,8 0,4 0,4-2,2 Total equity 579,6 (28,4) 34,1 5,7 (52,5) - 0,0 - (52,5) 532,9 24

26 25 Explanatory notes

27 1. Group structure and activities Indesit Company is a Group led by Indesit Company S.p.A., an Italian company based in Fabriano (near Ancona) that is listed on the Milan Stock Exchange. The Group is active in the production and sale of white goods, namely household appliances for the cooking sector (cookers, ovens and hobs), the refrigeration sector (refrigerators and freezers), and the washing sector (washing machines, dryers, combined washer-dryers and dishwashers). The Group operates mainly in Europe, Turkey and Russia. The Group's operating segments, as defined in IFRS 8 Operating Segments, comprise the geographical areas which, in organisational terms, generate revenue and costs that are periodically reviewed by the most senior decision makers in order to evaluate performance and decide on the allocation of resources, and for which separate financial information is available. The household appliances sector is highly seasonal, which affects all the main economic and financial parameters. The reporting by business segment required by IFRS 8 is provided in note Approval of the consolidated half-year report at 30 June 2009 The consolidated half-year report at 30 June 2009 was approved by the Board of Directors on 30 July 2009 and the condensed interim consolidated financial statements included therein have been reviewed by the independent auditors. There have not been any significant events subsequent to the end of the first half of Declaration of compliance with IFRS international accounting standards and basis of presentation These condensed interim consolidated financial statements have been prepared in compliance with IAS 34 and the requirements of art. 154-ter of Legislative Decree no. 58 dated 24 February 1998 (Consolidated Finance Law) and subsequent amendments. They do not include all the information required for annual financial statements and should be read together with the consolidated financial statements at 31 December In particular, the income statement, balance sheet and statement of cash flows are presented in extended form using the formats adopted for the consolidated financial statements at 31 December 2008, except as discussed below regarding adoption of the statement of comprehensive income and the consequent modifications made to the statement of changes in equity. On the other hand, the following notes are presented in summary form and, accordingly, do not include all the information required for annual financial statements. In particular, as envisaged by IAS 34 in order to avoid repeating the information already published, the explanatory notes relate solely to those elements of the income statement, balance sheet and statement of cash flows whose content or change, in terms of nature or amount or because unusual, must be known in order to understand the economic and financial position of the Group. The condensed interim consolidated financial statements at 30 June 2009 comprise the balance sheet, the income statement, the statement of comprehensive income, the statement of cash flows, the statement of changes in equity and these notes. The comparative figures presented together with the balance sheet and the statement of cash flows include those at 30 June 2008 for the balance sheet and at 31 December 2008 for the statement of cash flows, as well as those required by IAS 34 (31 December 2008 for the 26

28 balance sheet and 30 June 2008 for the statement of cash flows). This decision was made to permit the consistent comparison of data that is significantly affected by the seasonality of the sector. The income statement presents figures for the first half of 2009 and the first half of 2008, since the Group has adopted the six-month period for interim reference purposes. The consolidated income statement is classified with reference to the reasons for which costs were incurred, the balance sheet distinguishes between current and non-current assets and liabilities, the statement of cash flows is presented using the indirect method, and the Statement of Changes in Equity format has been adopted. In addition, as required by the revised version of IAS 1 Presentation of financial statements, the Consolidated statement of comprehensive income is presented for the first time. This statement comprises the various components forming the results for the period, together with the income and charges deriving from transactions not carried out with shareholders that were recognised directly in equity. The transactions carried out with shareholders are presented in the statement of changes in shareholders' equity, together with the equity transactions reported in the statement of comprehensive income. The format adopted for the classification of the consolidated income statement was chosen to help the market understand more clearly the profitability of the Group; in particular, performance can be measured better with reference to the profit and cost centeres used for the allocation of income and expenses. Additionally, this format assures the provision of precise segment information that is consistent with the way results are normally measured for management accounting purposes. This approach also ensures greater comparability with direct competitors and the multinationals operating in related sectors, since classification of the income statement by function is the format most widely used in international practice. In addition, the notes provide information on the nature of expenditure and the other disclosures necessary for the market, investors and all stakeholders. 4. Principal accounting policies Except as discussed in note 5 below, the accounting policies and consolidation criteria applied for the preparation of the condensed interim consolidated financial statements are consistent with those adopted for the consolidated financial statements at 31 December 2008, to which explicit reference is made for further details, and which form an integral part of these notes. Basis of preparation The currency of presentation of the condensed interim consolidated financial statements is the euro, and the financial statement balances are expressed in millions of euro (except where stated otherwise). The condensed interim consolidated financial statements are prepared on an historical cost basis, except for derivative financial instruments, financial assets held for sale and financial instruments classified as available for sale, which are measured at their fair value, as applicable to going concerns. Despite the difficult economic and financial conditions, the Group has determined that there are no significant uncertainties about business continuity. This confidence takes account of the actions already identified and, in part, already implemented to adjust to the marked reduction in the level of demand and preserve the Group's financial strength and solidity. The accounting policies are applied on a consistent basis by all Group companies. There are no financial assets held to maturity. Financial transactions are recognised with reference to the trade date. The accounting policies adopted for the preparation of the condensed interim consolidated financial statements at 30 June 2009 have also been applied on a consistent basis to all the comparative financial information. 27

29 Accounting estimates The preparation of condensed interim consolidated financial statements involves making assumptions and estimates that affect the value of assets and liabilities and the related explanatory information, as well as the value of contingent assets and liabilities at the reference date. These estimates are used to measure the property, plant and equipment and intangible assets subject to impairment, as well as to recognise provisions for doubtful accounts, inventory obsolescence, depreciation and amortisation and the write-down of assets, employee benefits, taxation, and risks and charges. The estimates and underlying assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances. In this context, the difficult general economic situation caused by the deterioration of the international financial crisis has heightened the uncertainties inherent in the assumptions about future performance used to make certain estimates. The financial statement captions most affected by these uncertainties are the provisions for doubtful accounts, the provisions for obsolescence and the recoverable amount of non-current assets. With regard to these captions, the prolonging and possible deterioration of the current economic and financial crisis could worsen the financial condition of debtors, or increase the risk of product obsolescence linked to high inventory levels, or reduce the forecast cash flows used for the impairment testing of non-current assets, with respect to the deterioration already contemplated when making the estimates included in these condensed interim consolidated financial statements. Estimates and assumptions are reviewed regularly and, if later estimates differ from those made initially, the effects - which obviously cannot be estimated or forecast at this time - are immediately reflected in the income statement. If the changes in estimates relate to both the current and future periods, their effects are reflected in the income statements for the periods concerned. 5. Changes in accounting policies, changes in accounting estimates and reclassifications 5.1 New accounting standards, amendments and interpretations adopted The revised version of IAS 1 Presentation of Financial Statements took effect from 1 January The new version of the standard requires all changes generated by transactions with shareholders to be reported in a statement of changes in equity. The effect of all transactions with third parties (comprehensive income) must be reported in a single statement of comprehensive income, or in two separate statements (income statement and statement of comprehensive income). The Group has taken the second approach to the presentation of comprehensive income, including in a separate statement entitled Consolidated statement of comprehensive income all the changes in equity accounts generated by transactions with parties who are not shareholders. The retrospective adoption of this standard from 1 January 2009 has had no effect on the measurement of the captions. As a consequence of the change, the Group has modified the presentation of the statement of changes in equity. IFRS 8 Operating segments took effect from 1 January 2009, replacing IAS 14 Sector information. The new accounting standard requires companies to base their segment information disclosures on the information used by the highest level of decision makers to make operating decisions. Accordingly, the standard requires the identification of operating segments with reference to the internal reports that are reviewed regularly by those decision makers for the purpose of allocating resources to such segments and analysing their performance. The adoption of this standard has had no effect on the measurement of the captions. Further information is provided in note 7. 28

30 The revised version of IAS 23 Borrowing costs has been applied from 1 January The new version of this standard prevents the immediate expensing of financial expenses incurred in relation to assets that normally require time before they become available for use or for sale. The adoption of this standard has had no significant effect on the measurement of the captions. The amendment to IAS 19 Employee benefits took effect from 1 January 2009: this amendment clarifies the definition of cost/income relating to past service and establishes, in the event of a plan curtailment, that the effect to be recognised immediately in the income statement must comprise solely the reduction in benefit relating to future periods, while the effect deriving from any reductions associated with past service must be treated as a negative cost in relation to such past service. The amendment has also redefined the meaning of short-term and long-term benefits and modified the definition of return on plan assets, establishing that this caption must be stated net of any plan administration charges not already included in the amount of the obligation. The adoption of this standard has had no significant effect on the measurement of the captions. The following amendments and interpretations, applicable from 1 January 2009, govern situations and cases not relevant to the Group at the date of these condensed interim consolidated financial statements: - Amendments to IAS 32 Financial Instruments: Presentation and IAS 1 Presentation of Financial Statements Financial Instruments. - Improvement to IAS 29 Financial Reporting in Hyperinflationary Economies. - Improvement to IAS 36 Impairment of Assets. - Improvement to IAS 39 Financial Instruments: Recognition and Measurement. - Improvement to IAS 40 Investment Property. - IFRIC 13 Customer Loyalty Programmes. - IFRIC 15 Agreements for the Construction of Real Estate. - IFRIC 16 Hedges of a Net Investment in a Foreign Operation. 5.2 Reclassifications In order to improve the presentation of the financial statements, commencing from 1 January 2009 certain costs (mainly relating to the central technical departments) have been reclassified to Cost of sales from General and administrative expenses. The 2008 comparative information has also been reclassified accordingly. These reclassifications did not affect the Group's operating profit (EBIT), net results or shareholders' equity. In addition, in order to improve the presentation of financial captions, interest expense, interest income, exchange rate differences and other net financial expenses are stated separately in the income statement from 1 January Previously, these captions were grouped together as Net financial expenses. The 2008 comparative information has also been reclassified accordingly. 5.3 New accounting standards not yet applicable In January 2008, the IASB issued an updated version of IFRS 3 Business Combinations, and amended IAS 27 Consolidated and Separate Financial Statements. The principal modifications made to IFRS 3 relate to elimination of the obligation to measure the individual assets and liabilities of a subsidiary at fair value in each subsequent acquisition, in the case of an acquisition in stages. Goodwill in this case will be determined as the difference between the value of the investment immediately prior to the acquisition, the consideration for the transaction and the value of the net assets acquired. In addition, if the company does not acquire 100% of the equity investment, the minority interest in shareholders' equity may be measured either at fair value or using the methodology already envisaged in the previous 29

31 version of IFRS 3. The revised version of the standard also requires that all costs associated with the business combination be charged to the income statement, as well as recognition at the acquisition date of the liability for contingent consideration. In the amendment to IAS 27, the IASB established that changes in equity investments interests not involving the loss of control must be recognised as equity transactions. In addition, it was also established that when a parent company relinquishes control over an investment but will retain an equity investment in that company, such equity investment must be remeasured at fair value in the balance sheet and any profits or losses deriving from the loss of control must be recognised in the income statement. Lastly, the amendment to IAS 27 requires that all losses attributable to minority shareholders be allocated to equity pertaining to minority interest, even if they exceed their interest in the equity of the subsidiary concerned. The new rules must be applied on a prospective basis from 1 January As part of the 2008 Improvement process carried out by the IASB, the amendment made to IFRS 5 Non-current Assets Held for Sale and Discontinued Operations states that if a company is committed to a sale involving loss of control of a subsidiary, all the assets and liabilities of that subsidiary must be reclassified as held for sale, even if the company will retain a non-controlling interest in its former subsidiary after the sale. This amendment must be adopted on a prospective basis from 1 January On 31 July 2008, the IASB issued an amendment to IAS 39 Financial Instruments: Recognition and Measurement which must be applied on a retrospective basis from 1 January The amendment clarifies how to apply the standard when defining the underlying that is hedged in particular situations. At the date of preparing these condensed interim consolidated financial statements, the competent EU bodies have not yet completed the endorsement process necessary for the adoption of this amendment. On 27 November 2008, the IFRIC issued IFRIC 17 Distributions of Non-cash Assets to Owners in order to align the accounting treatment of such distributions. In particular, this interpretation clarifies that dividends payable must be recognised when such dividends have been appropriately authorised and that the payable must reflect the fair value of the net assets that will be used to make the payment. Lastly, the business must recognise in the income statement the difference between the dividend paid and the net carrying amount of the assets used to make the payment. This interpretation is applicable on a prospective basis from 1 January At the date of preparing these condensed interim consolidated financial statements, the competent EU bodies have not yet completed the endorsement process necessary for its adoption. On 29 January 2009, the IFRIC issued IFRIC 18 Transfers of Assets from Customers to clarify the accounting treatment applicable if the business signs a contract under which it receives a tangible asset from a customer that must be used to connect it to a network, or to provide it with specific access to the supply of goods and services (such as the supply of electricity, gas or water). In particular, in certain cases the business receives cash from the customer in order to construct or purchase the tangible asset that will be used in the performance of the contract. This interpretation is applicable on a prospective basis from 1 January At the date of preparing these condensed interim consolidated financial statements, the competent EU bodies have not yet completed the endorsement process necessary for its adoption. On 5 March 2009, the IASB issued an amendment to IFRS 7 Financial Instruments: Disclosures to increase the information required in the case of measurement at fair value and to strengthen existing standards with regard to disclosure of the liquidity risks associated with financial instruments. This amendment is applicable from 1 January At the date of preparing these condensed interim consolidated financial statements, the competent EU bodies have not yet completed the endorsement process necessary for its adoption. On 12 March 2009, the IASB issued amendments to IFRIC 9 Reassessment of Embedded Derivatives and IAS 39 - Financial Instruments: Recognition and Measurement that allow, in specific circumstances, the reclassification of certain financial instruments away from the measured at fair value through profit or loss category. These amendments clarify that, 30

32 when reclassifying a financial instrument away from the above category, all related embedded derivatives must be measured and, if necessary, recognised separately in the financial statements. These amendments are applicable on a retrospective basis from 31 December At the date of preparing these condensed interim consolidated financial statements, the competent EU bodies have not yet completed the endorsement process necessary for their adoption. On 16 April 2009, the IASB issued a number of improvements to the IFRSs. The following are mentioned since they were described by the IASB as requiring changes in the presentation, recognition or measurement of captions, while those merely involving changes in terminology or editorial corrections, with minimal effect in accounting terms, and those affecting principles and interpretations not applicable to the Indesit Group have been ignored. - IFRS 2 Share-based Payments: this amendment, which must be applied from 1 January 2010 (early adoption is allowed), clarifies - following amendment of the definition of a business combination in IFRS 3 - that the contribution of a line of business on the formation of a joint venture and the combination of businesses and lines of business in entities under joint control do not fall within the scope of application of IFRS 2. - IFRS 5 Non-current Assets Held for Sale and Discontinued Operations: this amendment, which is applicable on a prospective basis from 1 January 2010, clarifies that IFRS 5 and the other IFRSs making specific reference to non-current assets (or groups of assets) classified as available for sale or as discontinued operations, establish all the disclosures required for these types of assets or operations. 6. Changes in the scope of consolidation Commencing from these condensed interim consolidated financial statements, Indesit Company Ireland Ltd and Indesit Middle East FZE are consolidated on a line-by-line basis. In addition, commencing from these condensed interim consolidated financial statements, Aeradriatica S.p.A. is now part of the scope of consolidation following its spin-off from Aermarche S.p.A., which has been sold to third parties and therefore deconsolidated. These changes in the scope of consolidation have not resulted in significant changes affecting the comparability of amounts with respect to prior periods. 7. Operating segments The Group's operating segments, as defined in IFRS 8 Operating Segments, comprise the geographical areas which, in organisational terms, generate revenues and costs that are periodically reviewed by the most senior decision makers in order to evaluate performance and decide on the allocation of resources, and for which separate financial information is available. The Group identifies the following operating segments: Italy; UK and Ireland; Russia, comprising Russia and the Asian republics; Western Europe, comprising France, Spain, Portugal, Germany, Austria, Benelux, Scandinavia, Switzerland, Estonia, Lithuania and Latvia; Eastern Europe, comprising Poland, Ukraine, Moldova, Czech Republic, Hungary, Romania, Greece, Bulgaria, Turkey and the Balkans; Overseas, which includes all other non-european markets. 31

33 Segment revenue is calculated based on the final destination of the products and segment results take account of all expenses that can be directly allocated to the geographical areas concerned. The costs not allocated to geographical areas include non-recurring charges and corporate costs. Similarly, financial income and expenses and taxation are not allocated to the various geographical areas. Except for trade receivables, assets, liabilities and investments are not allocated to geographical areas and are examined by senior management at Group level. The trade receivables allocated to geographical areas and reviewed by the most senior decision makers comprise those deriving from the sale of finished products. They do not include receivables deriving from the provision of services, advances to suppliers and the effects of any disposals of receivables. The following tables present the Group's operating information analysed by geographical area based on the final destination of the products. Analysis by operating segment at 30 June 2009 (million Euro) UK and West East Russian Overseas Costs not Italy Area Ireland Europe Europe Total Fed. Area Area allocated Area Area Area Total Sales 229,0 340,3 152,6 261,9 160,7 59,2 0, ,7 Total Sales 229,0 340,3 152,6 261,9 160,7 59,2 0, ,7 Cost of sales (171,7) (261,6) (114,2) (198,1) (131,9) (43,1) (17,1) (937,6) Selling and distribution expenses (29,0) (50,5) (15,2) (51,9) (26,7) (10,3) (14,6) (198,2) General and administrative expenses (2,3) (7,5) (5,6) (5,9) (2,8) (1,0) (27,4) (52,5) Segment results 26,0 20,7 17,6 6,0 (0,7) 4,9 (59,1) 15,4 Net financial expenses 0,0 0,0 0,0 0,0 0,0 0,0 (36,2) Share of profit (losses) of associates 0,0 0,0 0,0 0,0 0,0 0,0 0,0 Income tax expense 0,0 0,0 (4,6) (0,1) 0,1 0,0 (1,8) Profit attributable to the Group (22,6) Analysis by operating segment of 30 June 2008 (million Euro) UK and West East Russian Overseas Costs not Italy Area Ireland Europe Europe Total Fed. Area Area allocated Area Area Area Total Sales 250,2 385,4 274,1 293,2 233,8 88,6 0, ,3 Total Sales 250,2 385,4 274,1 293,2 233,8 88,6 0, ,3 Cost of sales (188,8) (307,5) (184,6) (226,3) (180,6) (65,9) 11,0 (1.142,6) Selling and distribution expenses (34,3) (60,7) (25,0) (58,1) (35,1) (13,5) (25,2) (251,9) General and administrative expenses (2,2) (9,8) (6,5) (6,4) (3,2) (1,4) (28,9) (58,4) Segment results 25,0 7,4 58,0 2,4 14,9 7,8 (43,1) 72,4 Net financial expenses 0,0 0,0 0,0 0,0 0,0 0,0 (13,9) Share of profit (losses) of associates 0,0 0,0 0,0 0,0 0,0 0,0 0,0 Income tax expense 0,0 0,0 (14,9) (0,1) (0,2) 0,0 (24,4) Profit attributable to the Group 34,1 32

34 Trade receivables by operating segment at 30 June 2009 (million Euro) 30 June 2009 % of rolling sales (12 months) 30 June 2008 % of rolling sales (12 months) Italy Area 110,6 21,3% 122,5 21,9% Uk and Ireland Area 53,1 6,1% 76,2 7,3% Russia Area 29,2 5,4% 66,7 8,9% West Europe Area 74,5 11,6% 104,0 14,3% East Europe Area 89,7 18,6% 117,4 20,2% Overseas Area 29,4 20,7% 42,9 23,9% Not allocated trade receivables 29,7-119,4 - Total 416,2 12,6% 649,0 16,6% 33

35 8. NOTES TO THE CONSOLIDATED INCOME STATEMENT, BALANCE SHEET AND STATEMENT OF CASH FLOWS 8.1. Revenue Revenue is analysed as follows: (million Euro) 30 June June 2008 Revenue from sale of finished products 1.102, ,9 Revenue from provision of services 101,6 103,4 Total Revenue 1.203, ,3 Revenues from the provision of services relate to services provided to customers (transport) and to end consumers (after-sales maintenance) and to the sale of extended warranties beyond the legal minimum period Cost of sales Cost of sales consists of all production-related costs and mainly comprises the cost of raw materials and components, external processing, direct and indirect labour, the depreciation of property, plant and equipment, internal handling and logistics, inventory write-downs, provisions for product warranty and provisions for risks and charges, research and development expenses that are not capitalised. Cost of sales is analysed below by type of expenditure. (million Euro ) 30 June June 2008 Change in the inventories of finished products 1,6 133,9 Purchase of raw materials, components, materials and change in inventories (655,4) (974,1) Services (66,2) (75,5) Payroll costs (131,9) (171,6) Depreciation and amortization (55,6) (52,3) Other expenses (45,9) (23,6) Other income 15,9 20,6 Total (937,6) (1.142,6) The cost of sales fell by slightly less than the decrease in volume. This was due to the lower absorption of industrial overheads, partially offset by the lower cost of raw materials, an improvement in production efficiency and the positive effect of the depreciation of the Polish zloty and Russian rouble on the production costs incurred in those currencies Selling and distribution expenses Selling and distribution expenses comprise all the costs incurred to commercialise products, including advertising and promotion, and provide after-sales services, as well as the costs of distributing products to the Group's warehouses and to customers. Selling and distribution expenses are analysed below by type. (million Euro ) 30 June June 2008 Change in the inventories of finished products (0,6) (0,4) Purchase of raw materials, components, materials and change in inventories (3,6) (6,8) Services (128,6) (173,5) Payroll costs (47,5) (53,1) Depreciation and amortization (4,8) (4,1) Other expenses (17,3) (21,6) Other income 4,2 7,6 Total (198,2) (251,9) 34

36 The reduction in selling and distribution expenses reflects the lower volume of sales. The most significant decrease relates to the cost of services, mainly as a result of lower distribution costs and the significant reduction in advertising and promotional expenditure General and administrative expenses General and administrative expenses include all general management and administrative costs, and all expenditure not directly attributable to production, sales or research and development units. General and administrative expenses are analysed below by type: (million Euro ) 30 June June 2008 Purchase of raw materials, components, materials and change in inventories (1,2) (0,3) Services (27,4) (34,2) Payroll costs (22,6) (23,4) Depreciation and amortization (7,3) (8,0) Other expenses (4,5) (4,9) Other income 10,6 12,1 Total (52,5) (58,7) 35

37 8.5. Operating profit Operating profit is analysed below by type of cost. (million Euro) 30 June June 2008 Revenue 1.203, ,3 Change in the inventories of finished products 0,9 133,7 Purchase of raw materials, components, materials and change in inventories (660,2) (981,2) Services (222,4) (283,3) Payroll costs (202,1) (247,9) Depreciation and amortisation (67,7) (64,4) Other income and expenses (37,0) (9,8) Operating profit 15,4 72,4 In order to improve the presentation of the financial statements, the visible fees recovered (recharge of waste equipment disposal costs) are now deducted from the corresponding charges classified as part of the cost of services. The comparative data at 30 June 2008 has also been reclassified. The number of employees at 30 June 2009 is 16,805 (17,483). In addition to the factors discussed above, the increase in other costs and revenues was due to the recognition of higher restructuring charges in relation to the reorganisation of production by the Group. This caption also includes non-recurring income deriving from the relief of social security contributions and taxes for the areas affected by the 1997 earthquake. As required by Consob Communication DEM/ dated 28 July 2006, non-operating income and expenses are detailed in the following table. They mainly comprise restructuring charges. (million Euro) Cost of Sales Selling and distribution expenses General and administrative expenses 30 June 2009 Non recurring restructuring charges (36,3) (4,1) (0,8) (41,1) Other non-recurring items 4,8 0,8 0,8 6,3 Total (31,3) (3,3) (0,0) (34,8) The restructuring charges relate to the above-mentioned reorganisations and, in particular, to the closure of the Kinmel Park factory in the UK and the reorganisation of production at the None factory in Italy. The other net non-recurring income and charges mainly reflect the accounting recognition of relief from taxes and contributions for the areas affected by the 1997 earthquake (Law 103/2008) and certain penalties incurred. Non-recurring charges have an immediate cash flow effect, except for restructuring costs whose cash flow effect is spread over a number of years consistent with the reorganisation plans concerned. Total payables and provisions for non-recurring transactions at 30 June 2009 amount to 32.5 million euro and the cash flows absorbed by them was 0.9 million euro Interest expense, interest income, exchange rate differences and other net financial expenses Net financial expenses are analysed at 30 June 2009 as follows: 36

38 (million Euro) 30 June June 2008 Interest income 0,6 5,6 Interest income on UK pension schemes 0,3 3,1 Mark-to-market derivatives - 0,1 Total interest income 0,9 6,6 Interest expense (14,0) (20,5) Interest expense on post employment employee benefits (1,2) (1,2) Mark-to-market derivatives (3,7) 4,8 Total interest expense (18,9) (16,9) Exchange rate fluctuations (16,6) (2,3) Commissions (1,6) (1,3) Total net financial expenses (36,2) (13,9) See note 9 for information about derivatives outstanding at 30 June Income tax Income tax, amounting to 1.8 million euro (24.4 million euro), comprises current taxes of 23.1 million euro (29.9 million euro) and net deferred tax assets of 21.3 million euro (5.5 million euro), mainly recognised in relation to the provisions for restructuring costs Property, plant and equipment Property, plant and equipment are analysed as follows: (million Euro) 30 June December June 2008 Land and buildings 259,3 270,8 266,4 Plant and machinery 240,6 261,9 271,1 Industrial and commercial equipment 81,0 86,2 86,5 Assets under construction 28,2 41,4 88,7 Other assets 26,4 32,4 34,8 Total 635,5 692,8 747,5 The change in the historical cost of property, plant and equipment is shown below: (million Euro) 31 December 2008 Additions Decreases Exchange rate Reclassifications 30 June 2009 differences Land and buildings 398,7 0,4 (1,5) (2,9) - 394,7 Plant and machinery 722,9 5,6 (23,5) (0,4) 4,5 709,1 Industrial and commercial equipment 423,2 1,0 (7,1) (1,8) 13,1 428,6 Assets under construction 41,4 7,0 (0,4) (2,5) (17,5) 28,2 Other assets 122,0 0,3 (4,6) 2,9 0,7 121,4 Total 1.708,3 14,4 (37,1) (4,6) 0, ,9 The changes in the related accumulated depreciation were as follows: (million Euro) 31 December 2008 Depreciation and impairment losses Decreases Exchange rate differences Reclassifications 30 June 2009 Land and buildings (127,9) (6,6) 1,1 (2,0) - (135,4) Plant and machinery (461,0) (27,2) 23,3 (3,4) (0,1) (468,4) Industrial and commercial equipment (337,0) (14,9) 6,5 (1,7) (0,5) (347,5) Other assets (89,6) (2,9) 0,4 (2,9) 0,0 (95,0) Totale (1.015,5) (51,7) 31,4 (10,0) (0,6) (1.046,4) The changes in the net carrying amount of property, plant and equipment are summarised in the following table: 37

39 (million Euro) 31 December 2008 Additions Depreciation and impairment Decreases Exchange rate differences Reclassificat ions 30 June 2009 Land and buildings 270,8 0,4 (6,6) (0,3) (4,9) - 259,3 Plant and machinery 261,9 5,6 (27,2) (0,2) (3,8) 4,3 240,6 Industrial and commercial equipment 86,2 1,0 (14,9) (0,5) (3,5) 12,7 81,0 Assets under construction 41,4 7,0 - (0,4) (2,5) (17,5) 28,2 Other assets 32,4 0,3 (2,9) (4,2) 0,0 0,7 26,4 Total 692,8 14,4 (51,7) (5,7) (14,7) 0,2 635,5 In line with the containment policy announced by the Group, in 2009 investments have been restricted to strategic and/or essential projects, with a focus on the development and launch of new products and the improvement of manufacturing processes Goodwill and other intangible assets with an indefinite useful life Goodwill and other intangible assets with an indefinite useful life are analysed as follows: (million Euro) 30 June Dec June 2008 Goodwill 129,8 116,4 139,9 Brands with an indefinite useful life 102,2 91,4 135,5 Total goodwill and other intangible assets with an indefinite useful life 232,0 207,7 275,4 The changes in the net carrying amount of goodwill and other intangible assets with an indefinite useful life are summarised in the following table: (million Euro) 31 Dec 08 Exchange rate differences Reclassifications 30 June 09 Goodwill 116,4 13,5-129,8 Brands with an indefinite useful life 91,4 10,8-102,2 Total 207,7 24,3-232,0 The brand name with an indefinite useful life (Hotpoint) and goodwill relate to the acquisition of General Domestic Appliances Holding Ltd. As mentioned in the consolidated financial statements at 31 December 2008, part of the goodwill deriving from this acquisition was allocated to the Group Cash Generating Units (CGUs) that benefit from the synergies deriving from this acquisition. Considering the results for the first half of 2009, checks were made on the principal plan assumptions made when preparing the consolidated financial statements at 31 December 2008, in order to calculate the recoverable value of the CGUs to which the intangible assets with an indefinite useful life were allocated. These checks did not identify any circumstances at 30 June 2009 making it necessary to repeat the impairment tests at the level of the group CGU o the UK CGU. There is no apparent need to adjust the carrying amounts of these assets, given broad compliance with the plans made by the Group and recent trends in exchange and interest rates Other intangible assets with a finite life Other intangible assets are analysed as follows: (million Euro) 30 June Dec June 2008 Development expenses 45,8 37,7 35,7 Licences and software 39,1 42,0 39,7 Brands with a finite useful life 25,3 26,5 8,4 Intangible assets under development 4,3 12,4 11,9 Other 5,2 5,3 6,7 Total 119,7 123,9 102,3 The development expenditure capitalised during the first half of 2009 totalled 8.2 million euro (6.1 million euro). The changes in the historical cost of other intangible assets with a finite useful life during the period are shown below: 38

40 (million Euro) 31 Dec 2008 Increases Decreases Exchange rate differences Reclassificat ions 30 June 2009 Development expenses 81,8 7,0 (13,8) 3,7 6,2 84,9 Licences and software 76,1 1,5 (8,5) 1,1 0,8 70,9 Brands with a finite useful life 18, ,4-23,7 Intangible assets under development 12,3 1,5 0,2 (2,2) (7,6) 4,3 Other 4,1 0,0 (0,5) (0,2) 0,3 3,6 Total 192,6 10,0 (22,7) 7,8 (0,3) The changes in the related accumulated amortisation were as follows: 187,4 (million Euro) 31 Dec 2008 Amortization and impairment losses Decreases Exchange Reclassificat rate ions differences 30 June 2009 Development expenses (44,1) (7,6) 13,5 (1,5) 0,6 (39,1) Licences and software (34,0) (5,6) 8,5 (0,7) - (31,9) Brands with a finite useful life 8,2 (2,5) (0,0) (4,1) - 1,7 Other 1,2 (0,2) 0,5 0,0 0,0 1,6 Total (68,7) (15,8) 22,6 (6,4) 0,6 (67,7) The changes in the net carrying amount of other intangible assets with a finite life are summarised in the following table: (million Euro) 31 Dec 2008 Increases Amortization and impairment losses Decreases Exchange rate differences Reclassificati ons 30 June 2009 Development expenses 37,7 7,0 (7,6) (0,3) 2,1 6,8 45,8 Licences and software 42,0 1,5 (5,6) (0,0) 0,4 0,8 39,1 Brands with a finite useful life 26,4 - (2,5) (0,0) 1,2-25,3 Intangible assets under development 12,3 1,5-0,2 (2,2) (7,6) 4,3 Other 5,1 0,0 (0,2) (0,0) (0,2) 0,3 5,2 Total 123,7 10,0 (15,8) (0,1) 1,4 0,3 119, Inventories Inventories are analysed as follows: (million Euro) 30 June Dec June 2008 Raw materials, components and semi-finished products 74,9 114,5 106,3 Obsolescence provision (2,8) (2,2) (1,9) Total raw materials 72,1 112,2 104,4 Finished products, components and semi-finished products 244,4 246,0 330,9 Obsolescence provision (9,9) (11,3) (10,8) Total finished products and semi-finished products 234,5 234,7 320,1 Spare parts 33,1 28,8 36,5 Obsolescence provision (1,7) (1,7) (3,4) Total Spare part 31,4 27,1 33,1 Total Inventories 338,0 374,1 457,6 The reduction in inventories mainly reflects the adjustment of stocks to reflect forecasts for production and future sales. The obsolescence provision at 30 June 2009 totals 14.4 million euro (16.0 million euro) and the amount accrual for the period was 0.8 million euro (utilisation of 2.1 million euro) Trade receivables Trade receivables comprise amounts due from customers as a result of commercial transactions and the provision of services, stated net of the provision for doubtful accounts. The provision for doubtful accounts totals 53.3 million euro (38.1 million euro) at 30 June 2009, and the related provision during the period amounted to 6.9 million euro (utilisation of 1.8 million euro). 39

41 The reduction in trade receivables mainly reflects the sale without recourse of receivables and notes falling due subsequent to 30 June 2009, equal to 54.3 million euro, and the lower volume of sales Other receivables and current assets Other receivables and current assets are analysed as follows: (million Euro) 30 June Dec June 2008 Due from employees 2,8 2,2 3,0 Due from social security and pension institutions 6,1 3,0 3,9 Grants due from public bodies 5,9 5,6 6,3 Insurance reimbursements - 0,2 7,5 VAT receivable 20,5 46,3 42,9 Other receivables 7,5 6,3 4,3 Total other receivables and other current assets 42,7 63,6 67,9 The reduction since 31 December 2008 was mainly due to the decrease in the receivable VAT recoverable due to the decline in purchases linked to the decrease in sales Equity attributable to the Group Share capital comprises ordinary shares and savings shares, as analysed below inclusive of treasury shares. Description 30 June 09 Number Euro Ordinary shares Savings shares Total No dividends were paid during the first half of 2009 (52.5 million euro in 2008). With reference to the amounts reported in the Consolidated Statement of Comprehensive Income, during the first half of 2009 the loss on cash flow hedges is negative for 9.9 million euro and it comprises: the pre-tax reduction in cash flow hedges generated during the period for 0.3 million euro, the pre-tax increase in cash flow hedges reclassified to the income statement for 14.7 million euro, and related tax effects of 4.5 million euro. The gain on the translation of foreign currency financial statements for the first half of 2009 was 10.8 million euro. The calculations of basic earnings per share and diluted earnings per share reported in the consolidated income statements for the six months ended 30 June 2009 and 2008 are set out in the following table. 40

42 Basic EPS 30 June June 2008 Basic attributable earnings (million Euro) (22,6) 33,7 Basic average number of ordinary shares (thousand) , ,9 Ordinary EPS (without savings shares effect) (0,22) 0,33 Unit earnings attributed to savings shares (Euro) (0,22) 0,33 Number of savings shares (thousand) 511,3 511,3 Earnings attributed to savings shares (million Euro) 0,1 (0,2) Basic attributable earnings (million Euro) (22,5) 33,5 Basic average number of ordinary shares (thousands) , ,9 Basic EPS (Euro) (0,22) 0,33 Diluted EPS Basic attributable earnings (Euro million) (22,5) 33,5 Basic average number of ordinary shares (thousands) , ,9 Average number of shares granted to Directors without payment (thousands) - - Average number of shares granted to employees without payment (thousands) 21,9 150,7 Total , ,7 Diluted EPS (Euro) (0,22) 0, Net financial indebtness The net financial indebtness of the Group is analysed below. (million Euro) 30 June Dec June 2008 Current financial assets ,6 43,8 53,5 Cash and cash equivalents ,1 193,2 152,3 Banks and other financial payables (297,3) (268,2) (513,8) Net financial position - short term (133,6) (31,2) (307,9) Medium/long-term financial payables (392,6) (451,9) (297,8) Net financial position (1) (526,2) (483,1) (605,7) Other non-current financial assets ,1 9,3 13,3 Net financial position (524,1) (473,8) (592,5) 1) As defined in CONSOB Communication DEM / dated 28/07/2006, applying the CESR recommendations dated 10/02/ Current financial assets Current financial assets include assets deriving from the measurement of financial transactions in accordance with IAS 39. See note 9 below for more information about these financial transactions Cash and cash equivalents Cash and cash equivalents include bank and postal deposits, as well as cheques and other amounts on hand. The changes in liquidity during the period are analysed in the consolidated statement of cash flows Banks and other financial payables Banks and other financial payables mainly comprise amounts due within the current year. This caption is analysed below. 41

43 (million Euro) 30 June Dec June 2008 Short-term bank loans 197,5 172,4 322,4 Short-term advances for transfer of receivables 8,3 3,8 105,8 Liability from the measurement of derivative instruments 18,2 18,4 8,2 Current portion of bonds issued 57,1 58,5 11,0 Current portion of liability from the acquisition of GDAH ,1 Current portion of medium/long-term bank loans 15,5 14,3 30,5 Current portion of other medium/long-term loans 0,8 0,8 0,8 Total 297,3 268,2 513,8 Short-term bank borrowings comprise bank overdrafts, the current portion of the revolving lines of credit drawn down and other short-term advances in various forms. Short-term advances for transfer of receivables mainly relate to the sale of receivables with recourse basis Medium and long-term interest-bearing loansand borrowing Medium and long-term interest-bearing loans and borrowingare analysed as follows: (million Euro) 30 June Dec June 2008 Bonds 201,2 212,0 212,3 Due to banks 168,1 227,3 31,0 Other financial payables 23,3 12,6 54,5 Total 392,6 451,9 297,8 The bonds were subscribed by institutional investors (U.S. Private Placement) and are denominated in USD. The change in their fair value is offset by the change in the fair value of the derivative arranged to hedge this liability (Cross Currency Swap). The interest and exchange rate risks relating to the above-mentioned U.S. Private Placement have been hedged by a Cross Currency Swap which is described below in note 9 on Financial instruments. The long-term amounts due to banks mainly comprise the partial draw down of million euro against a revolving line of credit for million euro that expires in Other payables are analysed as follows: (million Euro) 30 June Dec June 2008 Lease payables 0,7 0,9 1,1 Liability from the measurement of derivatives 22,2 11,1 52,8 Other financial payables 0,4 0,6 0,6 Total 23,3 12,6 Medium and long-term payables are analysed by maturity in the following table. 54,5 (million Euro) Medium/long-term financial payables Between 1 and 5 years Beyond 5 years Bonds 201,2 78,4 122,8 Due to banks 168,1 168,1 - Other fiancial payables 23,3 3,8 19,6 Total 392,6 250,2 142,4 Among other obligations, the bond and the committed bank loans require compliance with certain financial covenants. In particular, the financial parameters applying at 30 June each year are set out below: 42

44 Covenants EBITDA / Net financial expenses 3,5 Net borrowing / EBITDA 3,5 Equity covenant limit 320 million Euro In addition to the financial covenants, the bond and the committed lines of credit require Indesit Company S.p.A. and, in certain cases, a number of Group companies to comply with other undertakings (affirmative and negative covenants) that reflect market standards for transactions of a similar nature, amount, maturity and risk profile. Failure to comply with these covenants would, following the elapse of a given period of time available to correct such non-compliance, give the counterparty a right to the early repayment of the related borrowings. The above parameters are monitored constantly by the Group and, at 30 June 2009 all the covenants have been respected. The maturity profile of long-term borrowing is presented below: Medium/longterm financial payables MATURITY Bonds 201,2 4,7 57,1 6,8 6,5 111,4 0,8 13,8 Due to banks 168,1 3,9 15,7 147,3 1,2 0,0 0,0 0,0 Other financial payables 23,3 1,7 1,7 0,1 0,2 16,8 0,0 2,8 Total 392,6 10,4 74,5 154,2 7,9 128,2 0,8 16, Other non-current financial assets Other non-current financial assets are analysed as follows: (million Euro) 30 June Dec June 2008 Term deposits 0,0 5,1 5,1 Asset from the measurement of derivative instruments 2,0 4,2 8,2 Total 2,1 9,3 All mature other non-current financial assets within 5 years. 13, Employee benefits Employee benefits reflect the provisions recorded for such post-employment benefits as severance indemnities and pension plans. This caption solely comprises the liability arising in relation to defined benefit plans; these plans principally relate to the TFR accrued by Italian companies up to 31 December 2006, for 46.3 million euro (48.9 million euro), the pension funds of the British companies, for 19.1 million euro (25.8 million euro) and other smaller plans, for 2.2 million euro (2.3 million euro) Provisions for risks and charges The provisions for risks and charges are analysed as follows: 43

45 2009 Opening balance 1/1/2009 Provisions Uses Other movements Closing balance 30/6/2009 Current portion Noncurrent portion Provision for warranties 57,2 5,3 (5,6) 0,3 57,3 31,2 25,9 Provision for agents' termination indemnities 1,4 0,0 (0,0) - 1,4 (0,0) 1,4 Provisions for restructuring 0,3 21,9 (0,1) - 22,1 5,9 16,2 Provision for WEEE 8,0 0,8 (0,4) 0,1 8,5 3,8 4,8 Provision for onerous contracts 5,0 - (2,1) 0,5 3,4 3,4 - Provision for disputes 23,3 0,2 (2,8) (0,3) 20,3 20,3 0,1 Total 95,2 28,2 (11,0) 0,6 113,0 64,6 48, Opening balance 1/1/2008 Provisions Uses Other movements Closing balance 30/6/2008 Current portion Noncurrent portion Provision for warranties 61,6 4,3 (5,3) 0,4 60,9 35,0 25,9 Provision for agents' termination indemnities 1,3 0,1 (0,1) (0,0) 1,3-1,3 Provisions for restructuring 1,4 - (0,3) - 1,1 0,1 1,0 Provision for WEEE 10,2 1,4 (2,5) 0,2 9,3 0,2 9,0 Provision for onerous contracts 3,5 0,4 - (0,3) 3,6 3,6 - Provision for disputes 14,0 8,5 (2,6) (0,6) 19,3 15,3 4,0 Total 92,0 14,6 (10,8) (0,3) 95,5 54,2 41,3 The increase in the provision for restructuring reflects provisions for charges associated with the reorganisation of the Group's production activities Other non-current liabilities Other non-current liabilities solely relate to deferred grants from the government and other bodies. These grants are analysed by country below: (million Euro ) 30 June Dec June 2008 Italy 6,9 7,6 8,3 Poland 31,7 34,7 44,2 Other countries - - 0,1 Other non-current liabilities 38,6 42,3 52,6 Deferred Italian government grants totalling 0.7 million euro (0.7 million euro) were credited to the income statement for the period, together with deferred Polish government grants amounting to 2.0 million euro (1.6 million euro) Other payables Other payables are analysed as follows: (million Euro ) 30 June Dec June 2008 Due to social security and pension institutions 23,3 24,5 27,1 Due to employees 69,7 48,0 72,8 VAT payable 25,2 27,0 29,5 Other payables 1,6 6,0 6,5 Total 119,9 105,5 136, Share-based payments (stock options) Stock option plan for Group executives and managers The resolutions adopted at the extraordinary meetings held on 16 September 1998 and on 23 October 2001 authorised, pursuant to art of the Italian Civil Code, two increases in share capital by up to 2,700,000 euro each, via the issue of a combined maximum of 6,000,000 ordinary shares, nominal value Euro 0.90 each, to service the stock option plan for the Group's executives and managers. The Board of Directors, in the person of the Chairman, determines the number of options to be granted each year and identifies - on the recommendation of the Chief Executive Officer - the beneficiaries of the options. The options granted on 24 July 2003 (last grant date) envisage a vesting period of 3 years for the first 50% and 4 years for the remaining 50%. The options granted previously envisage a vesting 44

46 period of 2 years and 3, years respectively, and may be exercised within 10 years of the grant date. No new plans were authorised during the first half of 2009 and no stock options were granted. STATEMENT OF CASH FLOWS Total profit, Income taxes, Depreciation and amortization, Income Taxes paid The total profit, income taxes, depreciation and amortization, all non-monetary items, are reported directly on the face of the income statement and in the related notes, to which reference is made. The provision for income taxes recorded in the first half of 2009 totalled 1.8 million euro, while payments of 15.3 million euro have been made to settle the residual amount due for the prior year and make tax advances. The amounts due are determined with reference to tax regulations in the various countries in which the Group operates Other non-monetary income and expenses, net The other non-monetary income and expenses, net, comprise all non-monetary items recorded in the income statement, except for income taxes, depreciation and amortization and the provisions deducted directly from asset captions (provision for doubtful accounts and provisions for obsolescence). Accordingly, they include provisions for warranties, provisions for risks and charges, disposal gains and losses, unrealised exchange rate fluctuations, and accrued interest income and expense. The interest collected and paid, reported separately, was essentially the same as the amounts recognised in the income statement Change in trade receivables, inventories, trade payables This caption reports the cash absorbed or generated by the changes in net working capital, which comprises trade receivables, inventories and trade payables. The changes in trade payables relate solely to the supply of raw materials, goods and services, and exclude the changes in amounts due to suppliers of fixed assets, which are reported in the section of the statement of cash flows that reports the cash flows generated (absorbed) by investing activities Change in other assets and liabilities This caption reports the change in all other current and non-current assets and liabilities, net of the lelated effect of the provisions for non-monetary income and expense. This represents the changes in the related balances with a direct effect on the absorption or generation of cash Payments for acquisition of property, plant and equipment and proceeds from their disposal The cash flow from acquisition of property, plant and equipment reflect investments in the replacement of plant and in new plant, mainly by the companies operating in Turkey, Poland and the CIS. In this context, there were also changes in payables, receivables and advances to suppliers of property, plant and equipment Payments for acquisition of intangible assets The cash flow from investments in intangible assets relate to the purchase of licences and software, and the capitalisation of development costs. The cash flows generated (absorbed) by investing activities include the amounts capitalised since these involve payments for the related internal costs incurred (mainly payroll). These payments essentially reflect the costs capitalised during the period. 45

47 8.27. Proceeds from the sale of non-current financial assets and investment in financial and other fixed assets Proceeds from the sale of non-current financial assets include the cash flows relating to changes in the carrying amount of non-current financial assets due to the collection of dividends from associates measured using the equity method Other refunds of medium/long-term borrowings The repayments of other medium/long-term borrowings relate to loans from banks and other providers of finance Change in current financial payables The change in current financial payables includes the change in short-term bank borrowing since this represents a technical form of short-term borrowing. 9. Financial instruments Risk management policies The Group is exposed to the following principal financial risks deriving from operations: Liquidity risk: the Group defines liquidity risk as the risk that a Group company, or the Group as a whole, may be unable to meet its obligations on a timely basis. Market risks: o exchange rate: exchange rate risk relates to the adverse effects of changes in the exchange rates for foreign currencies on the economic-financial results and equity position of the Group. o interest rate: the Group defines interest rate risk as the risk that adverse movements in the interest rate curve (both changes in slope and parallel shifts) might have a negative effect on the cost of liabilities or the yield from financial assets and, in the final analysis, on the Group's net financal expenses. o commodity prices: the Group is subject to the risk that fluctuations in the prices for the commodities used in the production process might have an adverse effect on the results for the period. Credit risk: credit risk represents the Group's exposure to potential losses deriving from the failure of counterparts to meet their obligations. The above risks are managed in accordance with the guidelines established in the Treasury Policy approved by the Board of Directors and, with regard to the commodity price risk, in the context of the Group's purchasing policies. Information about the Group's exposure to and assessment of the above financial risks is provided in the consolidated financial statements at 31 December There have not been any significant changes subsequent to that date. Transactions outstanding at period end The transactions outstanding at 30 June 2009 and their fair values are reported in the following table, which also indicates the change in the carrying amount value of the underlyings (where applicable). This is followed by detailed information on the individual transactions. 46

48 Nature of risk hedged Fair value of derivatives at Fair value of derivatives at Change in fair value of derivatives at versus Change in Fair value of underlyings at vs. inception date Change in Fair value of underlyings at vs. inception date Change in Fair value of underlyings at versus Other non-current financial assets Current financial assets Medium/long-term financial payables Banks and other financial payables Total Half-year report at 30 June 2009 Financial Instruments Classification at 30 June 2009 Operation of cash flow hedging a Currency options Currency 0,5 19,2 (18,7) na na na - 1,9 - (1,4) 0,5 b IRS on loans Interest rate - 0,0 (0,0) na na na c Irs on Securitization Interest rate (6,8) (1,0) (5,7) na na na - - (2,9) (3,9) (6,8) d Forward Price (4,1) (6,3) 2,2 na na na - 0,9 - (4,9) (4,1) Total (10,3) 11,9 (22,2) na na na - 2,8 (2,9) (10,2) (10,3) Fair value hedges e CCS on bonds Currency/Interest rate (20,6) (11,3) (9,3) 17,3 4,9 12,4 0,9 1,8 (19,3) (4,0) (20,6) f IRS on bonds Interest rate 1,7 1,2 0,5 (1,7) (1,4) (0,2) 1,1 0, ,7 Total (19,0) (10,1) (8,9) 15,6 3,5 12,1 2,0 2,3 (19,3) (4,0) (19,0) Other hedges g Currency options Currency - 0,1 (0,1) na na na h Forward Currency (3,0) 5,8 (8,8) na na na - 1,0 - (4,0) (3,0) Totale (3,0) 5,9 (8,9) na na na - 1,0 - (4,0) (3,0) Totale generale (32,3) 7,7 (39,9) 15,6 3,5 12,1 2,0 6,1 (22,2) (18,2) (32,3) a. The currency options recognised as cash flow hedges were acquired to hedge the exchange rate risk on highly likely future transactions and have a notional value of million euro. The principal hedged currencies are the British pound and the Polish zloty. The reduction was mainly due to the close-out, during the first half of the year, of transactions that had a positive value at year end (especially hedges of the British pound). b. The float-to-fix interest rate swap on loans outstanding at 31 December 2008 was closed-out during the first half of c. Float-to-fix Interest Rate Swaps with a nominal value of million euro, initially arranged to transform the exposure to the U.S. Private Placement from floating rate euro to fixed rate euro during the period March 2007 March 2011 and not recognised as a hedge, have been designated from 1 July 2008 as cash flow hedges of the interest rate risk on part of the short-term loans, the use of which is expected to be equivalent to such Interest Rate Swaps in terms of their nominal value and maturities. The necessary effectiveness tests for the adoption of hedge accounting have been performed for this hedging relationship. The reduction was mainly due to the decrease in interest rates during the first half of the year. d. The forwards, designated as cash flow hedges, were arranged to hedge the exchange rate risk on future, highly likely transactions, and the price risk on future, highly likely purchases of commodities and semi-finished products; they have a nominal value of million euro. With regard to the forwards hedging the rate exchange risk, the principal hedged currencies are the British pound, the Polish zloty, the Turkish lira and the Chinese reminbi. The commodity forwards relate to the forward purchase of copper and aluminium at fixed exchange rates. e. The cross currency swap was arranged to hedge the interest rate and exchange rate risks deriving from commitments in relation to the US Private Placement of bonds with a nominal value of million dollars. This transaction converted the fixed rate US dollar bonds into floating rate euro. The notional value amounts to million euro. f. The interest rate swap on the bonds relates to the euro tranche of the US Private Placement, with a nominal value of 18.3 million euro, and was arranged to hedge the 47

49 interest rate risk which was swapped from fixed to floating at the time the loan was arranged. g. The currency options not recognised for hedge accounting purposes were all closed out during the first half of the year. h. The currency forwards not recognised for hedge accounting purposes were mainly arranged to hedge exposures in the following currencies: British pound, Polish zloty, Turkish lira, Chinese reminbi, Hungarian forint and US dollar, and have a notional value of million euro. The reduction was mainly due to the close-out during the first half of 2009 of transactions that had a positive value at year end, and to the negative fair value of instruments arranged during the period. 10. Information required by IAS 24 on the remuneration of management and on related parties Remuneration of management In addition to the executive and non-executive directors and the statutory auditors, the managers with strategic responsibility for operations, planning and control include the Administration, Finance and Control Manager, the Marketing Manager, the Industrial Technical Manager and the Supply Chain and IT Manager. The expected gross remuneration of the above persons for 2009, comprising all forms of compensation (gross pay, bonuses, fringe benefits, etc.), and the bonuses provided but not yet paid, since subject to the achievement of long-term objectives, is shown in the following table. Remunerations of directors, statutory auditors and managers with strategic responsibility operations at 30/06/2009 (million Euro) Short-term benefits Long-term benefits Stock options Directors 4,6 0,1 - Statutory Auditors 0,1 - - Managers with strategic responsibility operations 3,7 1,7 - Total 8,4 1,7 - Remunerations of directors, statutory auditors and managers with strategic responsibility operations at 30/06/2008 (million Euro) Short-term benefits Long-term benefits Stock options Directors 4,0 1,7 - Statutory Auditors 0,1 - - Managers with strategic responsibility operations 3,0 2,1 - Total 7,1 3,8 - List of related parties The principal related parties (other than subsidiaries), as defined in IAS 24, with which commercial and financial transactions have been carried out, are listed below. All commercial and financial transactions with these entities were arranged on arms'-length terms and in the interest of the Group. 48

50 List of related parties Faber Factor Spa Fines Fineldo Spa LTT Life Tool Technologies Spa Marcegaglia Spa Marcegaglia Building Spa M&B Marchi e Brevetti Spa MCP eventi Srl Merloni Maria Paola Merloni Progetti Spa MPE Spa M P & S Srl Mita srl MPE Energia Srl Protecno Sa Tradeplace BV Indesit Company UK Ltd Group Personal Pension Plan Co Env Type of relationship Other related - Controlled by Fineldo S.p.A., Group parent of Indesit company Other related - Related to a member of the Merloni family Group parent belonging to Vittorio Merloni Other related - Related to a member of the Merloni family Other related - Related to a Director of the Group Other related - Related to a Director of the Group Associate Other related - Related to a member of the Merloni family Other related - Member of the Merloni family Other related - Controlled by Fineldo S.p.A., Group parent of Indesit company Other related - Controlled by Fineldo S.p.A., Group parent of Indesit company Other related - Related to a member of the Merloni family Other related - Related to a member of the Vigilance Committee Other related - Controlled by Fineldo S.p.A., Group parent of Indesit company Other related - Related to a member of the Merloni family Associate Pension fund Associate Merloni Ireland Pension Plan Pension fund In addition to the above companies, the following physical persons are also deemed to be related parties: members of the Board of Directors and the Board of Statutory Auditors, managers with strategic responsibility for management, planning and control activities, and the close family members of these parties, as defined in IAS 24. Nature of relations with the principal related parties Indesit Company UK Ltd Group Personal Pension Plan and Merloni Ireland Pension Plan Indesit Company UK Ltd and the employees concerned contribute to The Indesit Company UK Ltd Group Personal Pension Plan and the Merloni Ireland Pension Plan under the pension rules applicable in the UK. The Merloni Progetti Group The Merloni Progetti Group leases property to Indesit Company. Schedules summarising transactions with related parties The table on the next page summarises the balances and transactions with the related parties identified above, distinguishing between the transactions with the parent company, associates and other related parties. Furthermore, in accordance with Consob Resolution no dated 27 July 2006 and Consob Communication no. DEM/ dated 28 July 2006, Attachments 3 and 4 present the consolidated income statement and balance sheet showing the transactions with related parties separately and indicating their percentage incidence with respect to each financial statement caption. There have not been any significant, atypical and/or unusual transactions with related parties (except those with regard to the pension funds described above). The increase in the cost of purchasing from related parties reported in Cost of sales is due to the classification of the cost of purchasing raw materials from the Marcegaglia group, which is considered a related part following the appointment of Emma Marcegaglia as a director of Indesit Company. Purchases for similar amounts were also made in previous years. 49

51 Schedules summarizing transactions with related parties (million Euro) 30 June June 2008 Revenue Other related 0,0 0,0 Associates - - Parent Company 0,2 0,2 Total 0,2 0,2 Cost of sales Associates - - Other related (3,5) (9,7) Total (3,5) (9,7) Selling and distribution expenses Other related (0,0) (0,5) Associates - - Total (0,0) (0,5) General and administrative expenses Associates - (0,4) Other related (0,0) (0,3) Parent Company - (0,1) Total (0,0) (0,7) Property, plant and equipment Associates - - Other related 3,5 Total 3,5 - Trade receivables Associates - - Other related 0,9 0,2 Parent Company 0,2 0,2 Total 1,2 0,4 Trade payables Associates - 0,0 Other related (2,9) 3,7 Parent Company 0,0 0,1 Total (2,9) 3,8 Other payables Parent Company - - Other related (0,1) (0,1) Total (0,1) (0,1) The amounts for other related parties within Cost of sales mainly relate to the Marcegaglia group, 2.8 million Euro, for the purchase of raw materials. The amounts for other related parties within Trade payables mainly relate to the Marcegaglia group, 2.6 million Euro. The amounts for other related parties within Trade receivables mainly relate to the advance paid to Vittorio Merloni (Chairman), 0.9 million Euro, for the property disposal assigned to home and guest quarters for Executives and Managers of the Group. The total amount of property disposal is 2.3 million Euro. 50

52 Attachment 1. List of companies consolidated on a line-by-line basis List of companies consolidated on a line-by-line basis Name Registered Note Share capital Group interest office direct indirect Indesit Company Luxembourg Sa Luxembourg EUR ,65 100,00 - Indesit Electrodomesticos Sa Spain EUR ,95 21,05 Merloni Domestic Appliances Ltd UK GBP ,60 80,40 Indesit Company Portugal Electrodomésticos Sa Portugal EUR ,44 Indesit Company International Bv The Netherlands EUR ,00 Indesit Pts Ltd UK GBP ,00 Indesit Company France Sas France EUR ,99 Fabrica Portugal Sa Portugal EUR ,40 Indesit Company Beyaz Esya Sanayi ve Ticaret A.S. Turkey TUL ,00 Indesit Company Beyaz Esya Pazarlama A.S. Turkey TUL ,00 - Indesit Company Deutschland GmbH Germany EUR ,75 Indesit Company Ireland Reinsurance Ltd Ireland USD ,00 Closed Joint Stock Company Indesit International Russia RBL ,00 - Indesit Company Polska Sp.z o.o. Poland PLN ,00 - (1) Argentron Sa Argentina ARS ,00 Indesit Company Magyarország Kft Hungary HUF ,00 Indesit Company Ceská s.r.o Czech Republic CZK ,00 - Indesit Company International Business Sa Switzerland SFR ,00 Indesit Company UK Finance Llp UK EUR ,00 1,00 Indesit Company Uk Holdings Ltd UK EUR ,00 General Domestic Appliances Holdings Ltd UK GBP ,00 Indesit IP Srl Italy EUR ,00 - Indesit Aeradriatica Spa Italy EUR ,00 - Indesit Company Ireland LTD UK EUR ,00 Airdum Ltd UK GBP ,00 Cannon Industries Ltd UK GBP ,00 Creda Domestic Appliances Service Ltd UK GBP ,00 Creda Ltd UK GBP ,00 Fixt Ltd UK GBP 2-100,00 General Domestic Appliances International Ltd UK GBP ,00 Hotpoint Sales Ltd UK GBP ,00 Hotpoint UK Ltd UK GBP ,00 Jackson Appliances Ltd UK GBP ,00 Indesit Company UK Ltd UK GBP ,00 Xpelair Ltd UK GBP ,00 Ariston Group Services Ltd UK GBP ,00 RTC International Ltd UK GBP ,00 Wuxi Indesit Home Appliance Co. Ltd China USD ,00 Indesit Company Österreich Ges. m.b.h. Austria EUR ,21-100,00 Indesit Company Belgium SA Belgium EUR ,00 Indesit Middle East FZE Dubai AED ,00 - (1) includes the percentage held subject to a resale clause. 51

53 Attachment 2. List of other investments in subsidiaries and associates List of other investments in subsidiaries and associates Name Registered office Share capital Group interest direct indirect Indesit Company Bulgaria Ltd Bulgaria BGL ,00 - Indesit Company Domestic Appliances Hellas Mepe Greece EUR ,00 Indesit Company Norge Ltd Norway NOK ,00 Indesit Company Singapore Pte. Ltd. Singapore SGD ,00 Co Env Italy EUR ,20 - Tradeplace B.V. The Nederlands EUR ,00 - Indesit Rus Ltd Russia RBL ,00 99,00 52

54 Attachment 3. Consolidated income statement for the period ended 30 June 2009, prepared in accordance with Consob Resolution no dated 27 July 2006 and Consob Communication no. DEM/ dated 28 July 2006 (million Euro) 30 June June 2008 Balances of which non recurring of which with related parties Balances of which non recurring of which with related parties Revenue 1.203,7 - (0,2) 1.525,3 - (0,2) Cost of sales (937,6) (31,3) (3,5) (1.142,6) (16,7) (9,7) Selling and distribution expenses (198,2) (3,3) (0,0) (251,9) - (0,5) General and administrative expenses (52,5) (0,0) (0,0) (58,4) (0,1) (0,7) Operating profit 15, ,4 - - Net financial expenses (36,2) - - (13,8) - - Share of profit (losses) of associates Profit before tax (20,8) ,6 - - Income tax expenses (1) (1,8) 9,5 n.a. (24,4) 4,7 n.a. Profit (loss) for the period (22,6) ,1 - - Percentage weight over Consolidated Income Statement items 30 June June 2008 Balances of which non recurring of which with related parties Balances of which non recurring of which with related parties Revenue 100,0% - (0,0%) 100,0% - 0,0% Cost of sales 100,0% 3,3% 0,4% 100,0% 1,5% 0,8% Selling and distribution expenses 100,0% 1,7% 0,0% 100,0% - 0,2% General and administrative expenses 100,0% 0,0% 0,0% 100,0% 0,2% 1,2% Other income Other expenses Operating profit 100,0% ,0% - - Net financial expenses 100,0% ,0% - - Share of profit (losses) of associates Profit before tax 100,0% ,0% Income tax expenses 100,0% (531,5%) n.a. 100,0% (19,3%) n.a. Profit (loss) for the period 100,0% ,0% - - (1) Tax effects calculated referring to tax rate of the countries in which the operations took place. 53

55 Attachment 4. Consolidated balance sheet at 30 June 2009, prepared in accordance with Consob Resolution no dated 27 July 2006 and Consob Communication no. DEM/ dated 28 July 2006 Million Euro and percentage weight over Consolidated Balance Sheet items 30 June June 2008 Balances of which with related parties Weight % Balances of which with related parties Weight % Assets Property, plant and equipment 635,5 3,5 0,1% 747,5 - - Goodwill and other intangible assets with an 232, ,4 - - indefinite useful life Other intangible assets with a finite useful life 119, ,3 - - Investments in associates 0, ,5 - - Other non-current assets 31, ,5 - - Deferred tax assets 68, ,9 - - Other non-current financial assets 2, ,3 - - Total non-current assets 1.090, ,3 - - Inventories 338, ,6 - - Trade receivables 416,2 1,2 0,3% 649,0 0,4 0,1% Current financial assets 27,6-0,0% 53,5 - - Tax receivables 44, ,4 - - Other receivables and current assets 42, ,9 - - Cash and cash equivalents 136, ,3 - - Assets held for sale Total current assets 1.004, ,7 Total assets 2.095, ,0 Equity Share capital 92, ,8 - - Reserves 176, ,4 - - Retained earnings 151, ,8 - - Profit attributable to the group (22,6) ,7 - - Equity attributable to the group 398, ,7 - - Minority interests 2, ,2 - - Total equity 400, ,9 - - Liabilities Medium and long-term interest-bearing loans 392, ,8 - - and borrowings Employee benefits 67, ,9 - - Provisions for risks and charges 48, ,3 - - Deferred tax liabilities 41, ,1 - - Other non-current liabilities 38, ,6 - - Total non-current liabilities 588, ,7 - - Banks and other financial payables 297, ,8 - - Provisions for risks and charges 64, ,2 - - Trade payables 590,5 2,9 0,5% 856,3 (3,8) (0,4%) Tax payables 33, ,2 - - Other payables 119,9 0,1 0,1% 136,0 0,1 0,1% Total current liabilities 1.105, ,4 Total liabilities 1.694, ,1 - - Total equity and liabilities 2.095, ,0 Milan, 30 July 2009 on behalf of the Board of Directors The Vice Chairman Andrea Merloni 54

56 Attestation in respect of the Company s condensed half-yearly consolidated financial statements in accordance with art. 81-ter of Consob Regulation of 14 May 1999 and subsequent amendments and additions The Chief Executive Officer Marco Milani and the Manager charged with preparing the company s financial reports Andrea Crenna of Indesit Company S.p.A, pursuant to the provisions of Article 154-bis, clauses 3 and 4, of Legislative Decree no. 58 of 1998, hereby attest to: the adequacy with respect to the Company structure, and the effective application, of the administrative and accounting procedures applied in the preparation of the Company s condensed half-yearly consolidated financial statements as of 30 June The undersigned moreover attest that the condensed half-yearly consolidated financial statements: a) have been prepared in accordance with International Financial Reporting Standards, as endorsed by the European Union through Regulation (EC) 1606/2002 of the European Parliament and Counsel, dated 19 July 2002; b) correspond to the results documented in the books, accounting and other records; c) provide a fair and correct representation of the financial conditions, results of operations and cash flows of the Company and its consolidated subsidiaries as of 30 June The interim management Report contains a reliable analysis of the reference to the important events affecting the Company during the first six month of the current fiscal year, including the impact of such events on the Company s condensed half-yearly consolidated financial statements and a description of the principal risks and uncertainties for the remaining six months of the year along with a description of material related party transactions. 30 July 2009 The Chief Executive Officer Marco Milani The manager charged with preparing the company s financial reports Andrea Crenna