2013 Consolidated Financial Statements

Transcription

1 2013 Consolidated Financial Statements

2

3 2013 Consolidated Financial Statements Zignago Vetro SpA Registered office: Fossalta di Portogruaro (VE), Via Ita Marzotto n. 8 Share Capital: Euro 8,800,000 fully paid-in Tax Number and Venice Companies Register No.:

4 Contents Structure of the Zignago Vetro Group pag. 3 Corporate Boards pag. 5 Directors Report on the 2013 Consolidated & Separate Financial Statements: - The Zignago Vetro Group pag. 8 - Significant events after December 31, 2013 pag Outlook pag The Company pag The Consolidated Subsidiaries pag. 30 Proposal to the Shareholders Meeting pag. 50 Notice of the Shareholders Meeting pag. 51 Summary of Shareholders Meeting resolutions pag. 54 Consolidated Financial Statements: - Balance Sheet pag Income Statement pag Comprehensive Income Statement pag Cash flow statement pag Statement of changes in shareholders equity pag. 62 Notes to the Consolidated Financial Statements pag. 64 Declaration of the Consolidated Financial Statements as per Art bis of Leg. Decree 58/98 pag. 125 Independent Auditors Report pag. 127 Corporate Governance and Ownership Structure Report of Zignago Vetro SpA pag

5 STRUCTURE OF THE ZIGNAGO VETRO GROUP AT MARCH 13, 2014 ACTIVITIES AND SHAREHOLDINGS ZIGNAGO VETRO SpA PRODUCTION AND SALE OF HOLLOW GLASS CONTAINERS 100% 50% 79% 100% VERRERIES BROSSE SAS PRODUCTION AND SALE OF GLASS BOTTLES FOR LUXURY FRAGRANCES VETRI SPECIALI SpA PRODUCTION AND SALES OF SPECIALITY HOLLOW GLASS CONTAINERS HUTA SZKŁA CZECHY S.A. PRODUCTION AND SALE OF HOLLOW GLASS CONTAINERS BROSSE USA Inc. DISTRIBUTION OF GLASS BOTTLES FOR LUXURY FRAGRANCES 30% VETRECO Srl TREATMENT AND SALE OF RECYCLED GLASS 100% 3

6

7 CORPORATE BOARDS Board of Directors Board of Statutory Auditors in office for the three-year period in office for the three-year period chairman Franco Grisan vice chairman Nicolò Marzotto chief executive officer Paolo Giacobbo statutory auditors Carlo Pesce - chairman Stefano Meneghini Carmen Pezzuto alternate statutory auditors Alessandro Bentsik Chiara Bedei directors Lino Benassi Ferdinando Businaro Alberto Faggion Daniela Manzoni Suppiej Gaetano Marzotto Luca Marzotto Stefano Marzotto Chiara Mio Manuela Romei Pasetti Maurizio Sobrero Giovanni Tamburi Control and Risks Committee Supervisory Board Alessandro Bentsik - chairman Massimiliano Agnetti Nicola Campana Management Maurizio Sobrero Ferdinando Businaro Luca Marzotto industrial director & deputy general manager Ovidio Dri Remuneration Committee chief financial officer and investor relations manager Roberto Celot Stefano Marzotto Lino Benassi Giovanni Tamburi Committee for Transactions with Related Parties sales & marketing director Maurizio Guseo chief development director Roberto Moretto Lino Benassi Ferdinando Businaro Maurizio Sobrero Lead Independent Director Lino Benassi Independent Audit Firm for the period Reconta Ernst & Young SpA 5

8 6

9 Directors Report on the 2013 Consolidated and Separate Financial Statements 7

10 Directors Report on the Consolidated and Separate Financial Statements THE ZIGNAGO VETRO GROUP The Zignago Vetro Group operates in the production and marketing of high quality hollow glass containers prevalently for the Food and Beverage, Cosmetics and Perfumery and Specialty Glass sectors (highly customised glass containers in small batches, typically used for wine, liquors and oils). The Group operates in the market with a business-to-business model, supplying containers to its clients, which are then used in their respective industrial activities. Specifically, in the Italian market, the Group is one of the leading producers and distributors of glass containers for the food and beverage sector, while at international level it has a strong market share in the cosmetics and perfumery and specialty glass sectors. In accordance with Article 70, paragraph 8 and Article 71, paragraph 1-bis of the Consob Issuers Regulation, Zignago Vetro SpA announced that it would employ the exemption from publication of the required disclosure documents concerning significant merger, spin-off, and share capital increase operations through conferment of assets in kind, acquisitions and sales. * * * * * The Consolidated Financial Statements at December 31, 2013 were prepared in accordance with the International Financial Reporting Standards (IFRS) adopted by the European Union at the date of the preparation of the present document. The Explanatory Notes include all the disclosures required by current regulations and accounting standards, appropriately reported with reference to the financial statements. In accordance with the provisions of Legislative Decree No. 32 of February 2, 2007, which enacted European Directive EU/2003/51 into Italian legislation, the Company avails of the option to prepare the Directors Report on Operations of the Parent Company Zignago Vetro SpA and the Consolidated Directors Report in one single document, included within the Consolidated Financial Statements. Therefore, the present consolidated Directors Report also contains the disclosures pursuant to Article 2428 of the Civil Code, with reference to the separate Financial Statements of Zignago Vetro SpA. The Zignago Vetro Group operates through four Business Units, each being a separate legal entity. Given this, information concerning operating performance in the various business segments and geographical areas (segment reporting) is included in the illustration of the financial reporting data for each company and is an integral part of the Directors Report. 8

11 Directors Report on the Consolidated and Separate Financial Statements The consolidation scope of the Zignago Vetro Group at December 31, 2013 has not changed compared to December 31, The scope and the consolidation method at December 31, 2013 was as follows: - Zignago Vetro SpA (parent company) - under the 100% line-by-line method: - Verreries Brosse SAS and its subsidiary: - Brosse USA Inc. - Huta Szkła Czechy S.A.(HSC SA). - under the proportional line-by-line method for the shareholdings: - Vetri Speciali SpA (50%) - Vetreco Srl (30%) The consolidation and accounting principles, including the percentage holdings held by Zignago Vetro S.p.A. are outlined in the paragraph accounting principles and policies in the notes to the consolidated financial statements. The following are reported in accordance with Consob Communication No. DEM of July 28, 2006 and the CESR/05-178b recommendation on alternative performance indicators utilised by the Parent Company which, although not specifically established by IAS/IFRS, are particularly important for business monitoring purposes: - The net financial debt is defined by the Company as the sum of short-term financial payables, cash and cash equivalents and medium-long term financial payables. This net figure is the same as the net financial position as per CONSOB communication No. DEM/ of July 28, 2006; - Value of production: the Company defines this as the arithmetical sum of revenues and the change in finished product, semi-finished product, and work-in-progress inventories and the internal production of fixed assets; - Value added: the Company defines this as the difference between value of production and raw materials consumed (purchase costs plus or minus the change in raw materials inventories and costs for outside services); 9

12 Directors Report on the Consolidated and Separate Financial Statements - EBITDA: the Company defines this as the difference between value added and payroll & employee benefit costs, including those of temporary workers; - EBIT: the Company defines this as the difference between Ebitda and depreciation & amortisation of tangible assets plus provisions & write-downs, including allowance for bad debts; - Operating profit: this performance measure is also contained in IFRS and is defined as the difference between EBIT and the net balance of non-recurrent operating costs and income. We point out that this latter item includes incidental income and costs, capital gains and losses on asset disposals, insurance indemnities, grants, and other minor positive and negative items; - Free cash flow: the Company defines this as the sum of the operating cash flow generated from self financing and cash flow deriving from investment operations. The figures reported in the Directors Report and in the tables of the Notes to the financial statements are expressed to facilitate analysis in thousands of Euro and in millions of Euro in the comments to the Directors Report. Audit The audit of the financial statements of Zignago Vetro S.p.A. for the period was awarded to the Audit Firm RECONTA ERNST & YOUNG S.p.A., in accordance with Article 14 and 16 of Legislative Decree No 39 of

13 Directors Report on the Consolidated and Separate Financial Statements Key events in 2013 Distribution of dividends The Shareholders Meeting of Zignago Vetro SpA on April 29, 2013 approved the distribution of a dividend of Euro 0.25 per share, totaling Euro 21.6 million, with payment date of May 16, Treasury shares On April 29, 2013 the Shareholders Meeting revoked, for the part not executed, the authorisation of the Board of Directors to purchase and utilise treasury shares as approved by the Shareholders Meeting of April 23, 2012 and authorised the Board of Directors to purchase and utilise treasury shares for a maximum number of ordinary shares not greater than one-fifth of the share capital, within the limits established by Article 2357, paragraph three of the Civil Code. The authorisation was granted for a period of 18 months commencing from April 23, The minimum purchase price shall not be less than 20% and the maximum price not more than 20% of the share price registered on the trading day prior to each operation; the disposal price shall not be 20% higher or lower than the share price registered on the trading day prior to each operation. Within the share buy-back programme reported above, at December 31, 2013, 1,421,390 treasury shares, taking account of the number of treasury shares held and of the effect from the Scrip issue approved on April 23, 2012, had been acquired, corresponding to 1.615% of the share capital, for a payment of Euro 5 million. In 2013, no treasury shares were acquired. 11

14 Directors Report on the Consolidated and Separate Financial Statements Operating performance The glass container market in 2013 was impacted by uncertainty. In particular, the Food and Beverage sector - in which production outstripped demand - reflected the general economic conditions, although positive signs emerged in a number of segments with greater export focus. Demand in the Perfumery and Cosmetic markets remains stable and more robust, in part due to emerging fashion trends. Within this environment, Zignago Vetro Group consolidated revenues in 2013 amounted to Euro million (- 2.2% on Euro million in 2012). Materials and external services in 2013, including changes in inventories of finished and semifinished products, totaled Euro million compared to Euro million in the previous year (-1.7%). These costs increased as a percentage of revenues from 53.8% to 54.1%. The decrease of 0.3% in labour costs in 2013 is related to wage cost movements. They amount to Euro 67.2 million, compared to Euro 67.4 million in 2012 and account for 23% of revenues (22.5% in 2012). Labour costs include the actuarial valuation of post-employment benefits, excluding the actuarial profits/losses, in addition to temporary staff. Ebitda in 2013 was Euro 67 million compared to Euro 70.6 million in 2012 (-5.1%), corresponding to 22.9% and 23.6% of revenues respectively. The Ebit in 2013 totaled Euro 40.6 million compared to Euro 45 million in the previous year (- 9.8%). The revenue margin reduced to 13.9% from 15.1% in The operating profit in 2013 of Euro 41.4 million reduced 10.9% on 2012 (Euro 46.4 million). These costs as a percentage of revenues were 14.2% compared to 15.5%. The Group share of consolidated net profit for the year was Euro 26.1 million, a decrease of 15.4% on Euro 30.9 million in The revenue margin was 8.9% compared to 10.3% in the previous year. The tax-rate increased to 32.3% from 29.8% in the previous year, which included the benefit of Euro 1.6 million related to the partial IRAP deductibility for IRES purposes concerning previous years (from 2007 to 2011), in accordance with Legislative Decree 16/2012. On a comparable basis the 2012 tax-rate would have been 33.5%. The cash flow generated from net profit and depreciation/amortisation decreased from Euro 55.9 million in 2012 to Euro 51.7 million in 2013 (-7.5%) and represents 18.3% of revenues (18.7% in 2012). 12

15 Directors Report on the Consolidated and Separate Financial Statements The key data of the Zignago Vetro Group reclassified consolidated income statement for 2013 and 2012 are shown below: Change Euro thou. % Euro thou. % % Revenues 292, % 298, % (2.2%) Changes in finished and semi-finished prod. and work in progress 5, % 7, % n.s. Internal production of fixed assets % % n.s. Value of production 298, % 306, % (2.5%) Costs of goods and services (164,250) (56.2%) (168,093) (56.3%) (2.3%) Value added 134, % 137, % (2.7%) Labour costs (67,166) (23.0%) (67,362) (22.5%) (0.3%) EBITDA 67, % 70, % (5.1%) Amortisation and depreciation (25,526) (8.7%) (24,968) (8.4%) 2.2% Provisions (876) (0.3%) (630) (0.2%) 39.0% EBIT 40, % 45, % (9.8%) Net recurring non-operating income % 1, % (47.1%) Operating profit 41, % 46, % (10.9%) Net financial charges (2,625) (0.9%) (2,606) (0.9%) 0.7% Net exchange differences (137) (0.1%) % n.s. Profit before taxes 38, % 43, % (12.2%) Income taxes & regional tax (12,469) (4.3%) (13,080) (4.4%) (4.7%) (tax-rate 2013: 32.3%) (tax-rate 2012: 29.8%) Group net profit 26, % 30, % (15.4%) The breakdown of the consolidated revenues for 2013 and 2012 are shown below: (Euro thousand) Change % Zignago Vetro SpA 161, ,923 (4.7%) Verreries Brosse SAS and its subsidiary 53,067 52, % Vetri Speciali SpA (*) 64,870 64, % HSC SA 20,190 16, % Vetreco n.s. Total aggregate 300, ,777 (1.1%) Elimination of intergroup sales and adjustments (8,158) (5,026) 62.3% Total consolidated 292, ,751 (2.2%) 13

16 Directors Report on the Consolidated and Separate Financial Statements Group revenues outside Italy amounted to Euro million, compared to Euro million in 2012 (+0.3%) and account for 38.3% of total revenues (2012: 37.4%). In detail: (Euro thousand) Change % Zignago Vetro SpA 35,019 35, % Verreries Brosse SAS and its subsidiary 49,069 47, % Vetri Speciali SpA 16,063 16,881 (4.8%) HSC SA 11,757 11,808 (0.4%) Total 111, , % % of total revenues 38.3% 37.4% Breakdown of foreign sales: (Euro thousand) Change % European Union 92,881 92, % Other countries 19,027 18, % Total 111, , % The net profit in 2013 and 2012 is composed of: (Euro thousand) Change% Zignago Vetro SpA 22,109 29,249 (24.4%) Verreries Brosse SAS and its subsidiary (61) (1,577) n.s. Vetri Speciali SpA 10,715 11,761 (8.9%) HSC SA 1,663 1, % Vetreco Srl (147) (36) n.s. Total aggregate 34,279 40,578 (15.5%) Consolidation adjustments (8,145) (9,695) (16.0%) Group net profit 26,134 30,883 (15.4%) 14

17 Directors Report on the Consolidated and Separate Financial Statements Balance sheet and financial position The reclassified balance sheet and financial position of the Zignago Vetro Group at December 31, 2013 and 2012 are summarised below: Change Euro thou. % Euro thou. % Euro thou. Trade receivables 62,907 63,337 (430) Other receivables 9,848 9, Inventories 68,110 61,921 6,189 Current non-financial payables (57,817) (62,029) 4,212 Payables on fixed assets (7,009) (7,536) 527 A) Working capital 76, % 64, % 11,299 Net tangible and intangible assets 128, ,832 6,823 Goodwill 40,708 40,722 (14) Other investments and non-current assets 3,750 3, Non- current provisions and non-financial payables (13,752) (13,594) (158) B) Net fixed capital 159, % 152, % 7,221 A+B = Net capital employed 235, % 216, % 18,520 Financed by: Short-term debt 113, ,095 5,921 Cash and cash equivalents (39,367) (44,689) 5,322 Short-term net debt 73, % 62, % 11,243 Medium/long term debt 32, % 28, % 3,137 C) Net financial debt 105, % 91, % 14,380 Opening Shareholders' equity 125, ,316 Dividends paid in the year (21,645) (24,399) Other shareholders' equity changes (348) 679 Group net profit 26,134 30,883 D) Closing Shareholders' equity 129, % 125, % 4,140 C+D = Total financial debt and Shareholders' equity 235, % 216, % 18,520 Working capital increased overall by Euro 11.3 million. Increases were recorded in inventories of Euro 6.2 million and other receivables of Euro 0.8 million, due to an increase in tax receivables from higher payments on account, with decreases in non-financial short-term payables of Euro 4.2 million and payables to fixed asset suppliers of Euro 0.5 million for investments realised at the end of the year. 15

18 Directors Report on the Consolidated and Separate Financial Statements Trade receivables at December 31, 2013 decreased by 0.7% on the previous year, related to the reduction in revenues of 2.2%. The net fixed capital increased from Euro million at December 31, 2012 to Euro million at December 31, 2013 (Euro +7.2 million; +4.7%), in particular concerning property, plant and equipment and intangible assets (Euro +6.8 million), which saw new investments exceeding amortisation and depreciation. Group capital expenditures in 2013 totaled Euro 36.6 million (Euro 34.7 million in 2012; +5.5%). They principally relate to: - Zignago Vetro SpA for Euro 21.2 million (Euro 15 million in 2012), mainly for the scheduled restoration of a new kiln and related production lines, the replacement of plant, machinery and equipment and the purchase of moulds and pallets; - Verreries Brosse SAS for Euro 3.8 million (Euro 7.7 million in 2012), principally for plant and industrial equipment, including moulds; - Vetri Speciali SpA (for its share) for Euro 2.5 million (Euro 6.4 million in 2012), essentially for the renewal of production plant and new moulds; - Huta Szkła Czechy S.A. for Euro 6.6 million (Euro 2.9 million in 2012), principally for the refurbishment of a production line and the start-up of new decorating and coating plant, as well as the renewal of plant and moulds. - Vetreco S.r.l. (for its share) of Euro 2.5 million (Euro 2.7 million in 2012), for the completion and start-up of the new production site. Consolidated shareholders equity amounted to Euro million (at December 31, 2012: Euro million; + 3.3%). The increase of Euro 4.1 million concerns the consolidated net profit (Euro 26.1 million), exceeding the amount of dividend distributed (Euro 21.6 million) and other net decreases, principally relating to the translation reserve. 16

19 Directors Report on the Consolidated and Separate Financial Statements The net financial position at December 31, 2013, as a result of the movements illustrated, was a net debt of Euro million - increasing Euro 14.4 million (+15.7%) on December 31, The cash flow movements in the consolidated net financial position at December 31, 2013 compared to December 31, 2012 were as follows: (Euro thousand) Net financial debt at January 1 (91,401) (75,680) Self-financing: - Group net profit for the year 26,134 30,883 - amortisation & depreciation 25,526 24,968 - net change in provisions gains (losses) on sale of property, plant and equipment (195) (37) 51,623 55,875 (Increase)/ decrease in working capital (11,299) (14,390) Net investments in property, plant and equipment (36,576) (34,657) Net intangible asset investments (217) (186) Decrease of other medium/long term assets (570) (199) Book value of property, plant and equipment sold 4,461 4,661 (44,201) (44,771) Free cash flow 7,422 11,104 Purchase of investment in HSC SA, net of the company's net financial position --- (2,733) Distribution of dividends (21,645) (24,399) Effect on net equity of currency conversion of financial statements of foreign companies (157) 307 (21,802) (26,825) Increase of net debt (14,380) (15,721) Net financial debt at December 31 (105,781) (91,401) 17

20 Directors Report on the Consolidated and Separate Financial Statements The principal operating and financial ratios concerning the Consolidated Financial Statements for the year ended December 31, 2013 and 2012 are summarised in the table below: Operating Indicators ROE Net Profit for the year/average Consolidated Net Equity for the year 20.49% 25.34% ROI Operating margin (Ebit)/Average capital employed for the year 17.97% 21.77% ROS Operating Margin (Ebit)/Revenues 13.90% 15.07% Rotation of Capital Employed Revenues/Average capital employed for the year Financial Indicators (Euro thousand) Net Financial charges (2,625) (2,606) Gross Operating Margin (EBITDA) 67,030 70,616 Financial charges/ebitda 3.9% 3.7% Net Financial debt 105,781 91,401 Net Financial debt / EBITDA Free cash flow At December 31, 2013, the Group had 1,835 employees; at December 31, 2012, the number was 1,833. The employees of Vetri Speciali SpA have been fully incorporated. The composition of Group personnel at December 31, 2013 is shown in the table below. Composition Executives Managers White-collar Blue-collar Wo rkfo rce ,413 Average age Years of service in group companies Indefinite period contracts ,325 Fixed-term contracts The turnover of employees at December 31, 2013 is shown at Note

21 Directors Report on the Consolidated and Separate Financial Statements Transactions with related parties The Group has undertaken commercial and service transactions with related parties during the year, as detailed in the notes to the financial statements, to which reference should be made. Research, development and advertising costs The research and development activities, related to innovation in the processes and products, developed lighter containers for the food and beverages and cosmetics and perfumery sectors, and innovative shaped containers for the specialty glass sector. Environmental information In 2013, the commitment of the Zignago Vetro Group continued in the protection of the environment with the continual improvement of the policies of territorial protection and management of environmental issues with actions aimed to reduce atmospheric emissions and energy consumption in the utilisation of natural resources and the optimisation of the production cycle, while remaining continually attentive to new and future technology developed internationally. Risks related to personnel, security and management The Companies of the Zignago Vetro Group implement plant management policies to minimise the risk of accidents ensuring high levels of security in line with best industrial practices, utilising insurance to guarantee an extensive degree of protection for company structures, third party risks and interruptions in production activity. The company trains and motivates the workforce to guarantee efficiency and normal operational continuity. Personal data security and protection Pursuant to rule 26 of Attachment B of Legislative Decree No. 196 of June 30, 2003 (Employee data protection code), the Companies of the Group adopted new security measures required by the above-mentioned decree and updated the Personal Data Protection Document. 19

22 Directors Report on the Consolidated and Separate Financial Statements Financial instruments: Group objectives & policies and description of risks With regard to point No. 6-bis, paragraph 3 of Article 2428 of the Italian Civil Code and Article 40, paragraph 2, letter d}-bis of Legs. Decree 127/1991, the main financial instruments used by Zignago Vetro SpA, the Parent Company, and the companies of the Zignago Vetro Group consist of trade receivables and payables, cash & cash equivalents, bank borrowing, leasing contracts and interest rate swap contracts. As regards the Group s financial management, the operating cash flow is considered to be consistent with objectives for repayment of existing debt and such as to assure appropriate financial equilibrium and adequate remuneration of equity via dividend flows. The Zignago Vetro SpA Group had undertaken at December 31, 2013 an interest rate swap in order to hedge the interest rate risk on medium-long term loans undertaken by Zignago Vetro SpA. The mark-to-market of this derivative at December 31, 2013 was as follows: Company Bank Underlying Nature Notional Expiry Market of value value Contract at the at reference date (Euro tho us and) Zignago Vetro SpA UnicreditBanca SpA Loan Hedge 5,685 31/08/2016 (137) The above-mentioned operation was undertaken for hedging purposes. However this operation does not comply with all the requirements of IAS / IFRS accounting standards to be considered as such for accounting purposes. For these reasons Zignago Vetro SpA does not use the so-called hedge accounting method and records the economic effects of hedging directly to the income statement. We consider that the Zignago Vetro Group is not exposed to credit risk any higher than the industry average, given that most receivables relate to customers of well-established commercial reliability and also that most are insured. Allowance for doubtful debts has in any case been made to cover against any residual credit risks. We specify that such provisions were made in the period and in previous periods against specific positions involved in procedures or with longer past-due status than the Group companies average collection times. General provisions have also been made for potential insolvency of debtors. 20

23 Directors Report on the Consolidated and Separate Financial Statements The currency risk is currently not considered significant, as transactions are almost exclusively carried out in Euro. The Group s present reference market does not involve areas possibly requiring country-risk management. Trade transactions substantially take place with western countries, primarily in the Euro and USD areas. Pursuant to the Bank of Italy/ Consob /Isvap document No. 2 of February 6, 2009, it is considered, based on the strong profitability, on the Group s solid balance sheet and in spite of the current economic environment, that there are no uncertainties or risks on the going concern of the business. It is considered that the information provided, together with the information illustrated below and relating to the performance of the individual companies, represents a true, balanced and exhaustive analysis of the situation of the Group and of the operational results, for the overall operations and in the various sectors, in accordance with the size and complexity of the Group s business operations. 21

24 Directors Report on the Consolidated and Separate Financial Statements Reconciliation between the Group and Zignago Vetro SpA net result and net equity The reconciliation of the net equity and net profit of Zignago Vetro SpA and the consolidated accounts at December 31, 2013 and 2012 are disclosed below as per Consob communication No. DEM/ of July 28, Reconciliation with December 31, (Euro thousand) 2013 Net Profit Net equity 31/12/2013 Financial statements of the Parent Company 22,109 91,003 Adjustments for change in accounting principles and consolidation adj.: - reclassify fixed assets from inventory, net of the relative fiscal effect (25) (359) - reversal of inter-group dividends (8,050) reversal of inter-company profit 8 (65) - reversal of "Fond de Commerce" in Verreries Brosse SAS --- (100) - reclassification of emission trading in Verreries Brosse SA (78) deferred tax asset on pension fund and profit participation fund in Verreries Brosse SAS goodwill on acquisition of HSC SA and adjustment to year end exchange rate other consolidation adjustments (7,732) 961 Carrying value of consolidated companies: Verreries Brosse SAS --- (4,000) Brosse USA Inc. --- (69) Vetri Speciali SpA --- (25,320) HSC SA --- (10,327) Vetreco Srl --- (600) --- (40,316) Net profit/(loss) and net equity of the subsidiaries: Verreries Brosse SAS (291) 13,162 Brosse USA Inc. (183) (33) Vetri Speciali SpA 10,715 51,536 HSC SA 1,663 12,894 Vetreco Srl (147) ,757 77,971 Consolidated financial statements 26, ,619 22

25 Directors Report on the Consolidated and Separate Financial Statements Reconciliation with December 31, (Euro thousand) Net Profit 2012 Net equity at 31/12/2012 Financial statements of the Parent Company 29,249 90,609 Adustments for change in accounting principles and consolidation adj.: - reclassify fixed assets from inventory, net of the relative fiscal effect (69) (334) - reversal of inter-group dividends (9,559) reversal of inter-company profit (24) (73) - reversal of "Fond de Commerce" in Verreries Brosse SAS --- (100) - reclassification of emission trading in Verreries Brosse SA (43) 78 - deferred tax asset on pension fund and profit participation fund in Verreries Brosse SAS (43) goodwill on acquisition of HSC SA and adjustment to year end exchange rate other consolidation adjustments (9,618) 683 Carrying value of consolidated companies: Verreries Brosse SAS --- (4,000) Brosse USA Inc. --- (69) Vetri Speciali SpA --- (25,320) HSC SA --- (10,327) Vetreco Srl --- (600) --- (40,316) Net profit/(loss) and net equity of the subsidiaries: Verreries Brosse SAS (1,568) 13,439 Brosse USA Inc. (86) 150 Vetri Speciali SpA 11,761 48,923 HSC SA 1,181 11,433 Vetreco Srl (36) ,252 74,503 Consolidated financial statements 30, ,479 * * * * * 23

26 Significant events after December 31, 2013 & Outlook SIGNIFICANT EVENTS AFTER DECEMBER 31, 2013 In the period subsequent to the reporting date no significant events took place which may impact the Company performance. OUTLOOK Although the current market is generally uncertain, container demand is expected to pick up in 2014 principally on a number of segments which were particularly weak in The impact of competition on sales prices should therefore also ease. * * * * * In the following pages we review and comment upon the results of the Parent Company and of individual subsidiaries. For greater clarity the operating results and balance sheets of Zignago Vetro SpA and its subsidiaries are presented according to the contribution of each of them to the consolidated financial statements. They are shown according to normal reporting practices. 24

27 Directors Report on the Consolidated and Separate Financial Statements THE COMPANY Zignago Vetro SpA In 2013 beverage and food container demand in Europe appared weak, impacted by macroeconomic uncertainties and reduced consumption levels in many countries. The Italian market performed in line with Europe in general - with results partially offset a more dynamic trend of consumption linked to exports. Demand in the global Cosmetic and Perfumery markets was positive, driven by fashion trends and consumption levels in the emerging markets, Asia and South America. 25

28 Directors Report on the Consolidated and Separate Financial Statements The reclassified income statement of Zignago Vetro SpA in 2013 compared to the previous year is shown below: Revenues Change Euro thou. % Euro thou. % % 161, % 169, % (4.7%) Changes in finished, semi-finished products and works in progress 2, % 2, % (13.2%) Internal production of fixed assets % n.s. Value of production 164, % 172, % (4.6%) Cost of goods and services (99,605) (61.5%) (101,932) (60.0%) (2.3%) Value added 65, % 70, % (8.0%) Labour costs (30,747) (19.0%) (31,119) (18.3%) (1.2%) EBITDA 34, % 39, % (13.3%) Amortisation & depreciation (12,053) (7.4%) (11,518) (6.8%) 4.6% Provisions (373) (0.2%) (194) (0.1%) 92.3% EBIT 21, % 28, % (21.5%) Net recurring non-operating income % % (29.5%) Operating profit 22, % 28, % (21.6%) Investment income 8, % 9, % (15.8%) Net financial charges (904) (0.6%) (1,021) (0.6%) (11.5%) Net exchange differences (37) % n.s. Profit before taxes 29, % 37, % (21.2%) Income Taxes (7,461) (4.6%) (8,295) (4.9%) (10.1%) (tax-rate 2013: 25.2%) (tax-rate 2012: 22.1%) Net profit , % 29, % (24.4%) Revenues in 2013 of Euro million decreased 4.7% on 2012 (Euro million). Sales of glass containers and accessories (the latter referring to Zignago Vetro SpA s services on the market) amounted to Euro million, reducing 3.9% on Euro million in Exports in 2013 increased 2.7% on accounting for 22.4% of containers and accessories revenues (20.9% in 2012). 26

29 Directors Report on the Consolidated and Separate Financial Statements In particular: Revenues by geographic area, excluding sundry materials and services (Euro thousand) Change % Italy 115, ,434 (5.7%) European Union (excluding Italy) 27,034 24, % Other countries 6,260 7,811 (19.9%) Total 148, ,848 (3.9%) of which export 33,294 32, % % 22.4% 20.9% Materials costs and external services, including changes in inventories of finished and semifinished products, decreased from Euro 99.1 million in 2012 to Euro 96.7 million in 2013 (-2.4%), increasing as a percentage of revenues from 58.3% to 59.7%. Labour costs decreased on the previous year by 1.2% on the basis of wage cost movements. They include the actuarial valuation of post-employment benefits, excluding the actuarial profits/losses, and temporary staff. These costs accounted for 19% of revenues in 2013 compared to 18.3% in The Ebitda in 2013 was Euro 34.4 million compared to Euro 39.7 million in 2013 (-13.3%). The margin was 21.3% in 2013 compared to 23.4% in Ebit in 2013 reduced 21.5% compared to the previous year (Euro 22 million compared to Euro 28 million). The margin was 13.6% in 2013 compared to 16.5% in Investment income in 2013 (Euro 8.1 million) and in 2012 (Euro 9.6 million) refers solely to dividends from Vetri Speciali SpA. Net financial charges of Euro 0.9 million (Euro 1 million in 2012) reduced due to the lower cost of lending, with the average debt in the year higher than the previous year. The Net profit in 2013 amounted to Euro 22.1 million (Euro 29.2 million in 2012: %) after income taxes of Euro 7.5 million (Euro 8.3 million in 2012). The tax-rate in 2013 was 25.2% compared to 22.1% in 2012; however excluding the benefit related to the partial IRAP deductibility for IRES purposes concerning previous years (from 2007 to 2011) in accordance with Legislative Decree 16/2012, in 2012 the tax-rate would have been 25.4%. The cash flow generated from net profit and depreciation/amortisation amounted to Euro 34.2 million in 2013 compared to Euro 40.8 million in 2012 (-16.2%) and represents 21.1% of revenues (24% in 2012). 27

30 Directors Report on the Consolidated and Separate Financial Statements The reclassified balance sheet and financial position of Zignago Vetro SpA at December 31, 2013 and 2012 were as follows: Change Euro thou. % Euro thou. % Euro thou. Trade receivables 37,928 39,248 (1,320) Other receivables 5,397 3,970 1,427 Inventories 34,661 32,103 2,558 Current non-financial payables (34,204) (38,043) 3,839 Payables on fixed assets (4,373) (3,163) (1,210) A) Working capital 39, % 34, % 5,294 Net tangible and intangible assets 53,184 48,179 5,005 Investments 40,247 40,247 0 Other investments and non-current assets 1,705 1, Non-cur. provisions and non-financial payables (8,308) (8,093) (215) B) Net fixed capital 86, % 81, % 4,856 A+B= Net capital employed 126, % 116, % 10,150 Financed by: Current financial payables 69,807 58,895 10,912 Cash and cash equivalents (42,363) (45,917) 3,554 Short term net debt 27, % 12, % 14,466 Medium/long term debt 7, % 12, % (4,710) C) Net financial debt 35, % 25, % 9,756 Opening Shareholders' equity 90,609 86,017 Dividends paid in the year (21,645) (24,399) Net profit for the year 22,109 29,249 Other changes (70) (258) D) Closing shareholders' equity 91, % 90, % 394 C+D = Total Financial debt and Shareholders Equity 126, % 116, % 10,150 The working capital at December 31, 2013 increased by Euro 5.3 million compared to December 31, 2012, due to the decrease in trade receivables (-3.3%), related to reduced revenues (-4.7%), the increase in other receivables, in tax receivables for increased taxes paid on account, the increase in inventories of Euro 2.6 million (+8%) and the reduction in short-term non-financial payables of Euro 3.8 million and the increase in payables to suppliers of fixed assets. 28

31 Directors Report on the Consolidated and Separate Financial Statements Net fixed capital at December 31, 2013 increased by Euro 4.9 million compared to December 31, 2012; the increase is due to the greater expenditure on tangible and intangible assets than amortisation and depreciation in the year. Capital expenditure in the year amounted to Euro 21.2 million (Euro 15 million in 2012), mainly due to the scheduled refurbishment of a kiln and related production lines, as well as the replacement of plant, machinery and equipment, including moulds and pallets. The increase in shareholders equity at December 31, 2013 of Euro 0.4 million results from the net profit for the year (Euro 22.1 million) being higher than the dividends distributed in the year (Euro 21.6 million). The net debt at December 31, 2013, following the movements described above, was Euro 35.2 million - an increase of Euro 9.8 million (+38.3%) on December 31, The number of employees of the Company at December 31, 2013 was 590: 11 executives, 134 white-collar and 445 blue-collar. There were 28 fixed-term employees. At December 31, 2012, employees numbered 580: 11 executives, 132 white-collar and 437 blue-collar. There were 6 fixed-term employees. The table below shows the composition of the Zignago Vetro SpA workforce at December 31, Composition Executives Managers White-collar Blue-collar Workforce Average age Years of service in the Company Indefinite period contracts Fixed-term contracts Current year operating performance. Based on the currently available information, sales revenues are expected to improve on 2013 as demand levels are set to recover. The 2014 results are expected to improve on

32 Directors Report on the Consolidated and Separate Financial Statements THE CONSOLIDATED SUBSIDIARIES Verreries Brosse SAS and its subsidiary Brosse USA Inc. Registered office: Vieux-Rouen-sur-Bresle (France) Business sector: glass bottles for luxury fragrances Chairman Comité de Direction Paolo Giacobbo Olivier Caspar Roberto Celot Ovidio Dri Alberto Faggion Franco Grisan Maurizio Guseo Nicolò Marzotto Michele Pezza The consolidated data of Verreries Brosse SAS includes: * Verreries Brosse SAS, parent company, which markets its products globally. * Brosse USA Inc., a wholly-owned subsidiary of Verreries Brosse SAS, which operates as a sales agent in the North American market. In 2013 the global Luxury Perfume market was generally positive, although with divergent regional performances. The principal sector players focused principally on restyling existing products. 30

33 Directors Report on the Consolidated and Separate Financial Statements The reclassified consolidated income statement compared to the previous year is shown below: Revenues Change Euro thou. % Euro thou. % % 53, % 52, % 1.1% Changes in finished, semi-finished and products in work in progress 1, % % n.s. Value of production 54, % 52, % 3.1% Cost of goods and services (28,765) (54.2%) (27,323) (52.1%) 5.3% Value added 25, % 25, % 0.8% Labour costs (18,175) (34.2%) (18,810) (35.9%) (3.4%) EBITDA 7, % 6, % 12.7% Amortisation & depreciation (7,008) (13.2%) (7,476) (14.2%) (6.3%) Provisions (58) (0.1%) (52) (0.1%) 11.5% EBIT Net recurring non-operating income Operating profit/(loss) % (933) (1.8%) n.s. (53) (0.1%) (172) (0.3%) n.s % (1,105) (2.1%) n.s. Net financial charges (741) (1.4%) (780) (1.5%) (5.0%) Net exchange differences (44) (0.1%) (21) --- n.s. Loss before taxes (469) (0.9%) (1,906) (3.6%) n.s. Current and deferred income taxes % % n.s. --- Net profit/(loss) for the year (61) (0.1%) (1,577) (3.0%) n.s. Revenues in 2013 amounted to Euro 53,067 thousand (in 2012: Euro 52,466 thousand; 1.1 %). Revenues of glass containers amounted to Euro 51,227 thousand (in 2012: Euro 50,946 thousand; 0.6%). Exports accounted for 41.7% (in 2012: 34.1%) of revenues. Other revenues include - in addition to the contribution charged to clients for the creation of moulds for specific products - other services, including particularly transport costs. In particular: Revenues breakdown (Euro thousand) Change % Glass containers 51,227 50, % Other revenues 1,840 1, % Total 53,067 52, % 31

34 Directors Report on the Consolidated and Separate Financial Statements Revenues by geographic area (Euro thousand) Change % Europe 48,810 48, % North America 3,738 3, % Other countries 519 1,030 (49.6%) Total 53,067 52, % Materials and external services, including changes in inventories of finished and semi-finished products, in 2013 amounted to Euro 27,457 thousand compared to Euro 27,061 thousand in 2012 (+1.5%). The percentage of revenues was 51.7% compared to 51.6%. The reduction in labour costs from Euro 18,810 thousand in 2012 to Euro 18,175 thousand in 2013 (-3.4%) is related to the smaller workforce and the introduction of a contribution, by the state, to incentivise employment, including for short-term contracts (minimum two years). As a percentage of revenues, these cost decreased from 35.9% in 2012 to 34.2% in Ebitda amounted to Euro 7,435 thousand compared to Euro 6,595 thousand in the previous year (+12.7%), with a revenue margin of 14% (12.6% in 2012). Amortisation and depreciation decreased by 6.3% in the year and was 13.2% of revenues compared to 14.2% in Net recurring non-operating charges of Euro 53 thousand relate to costs of previous years partially offset from the release of excess provisions from previous years. Net financial charges in the year decreased by 5%, due to lower interest rates. The year 2013 reports a consolidated loss of Euro 61 thousand (in 2012: loss of Euro 1,577 thousand) after recognition of a deferred tax asset of Euro 408 thousand (in 2012: Euro 329 thousand). The cash flow generated from the net profit and amortisation and depreciation in 2013 was Euro 6,947 thousand, +17.8% on 2012 (Euro 5,899 thousand), amounting to 13.1% of revenues (11.2% in 2012). 32

35 Directors Report on the Consolidated and Separate Financial Statements The consolidated and reclassified balance sheet and financial position at December 31, 2013 and 2012 were as follows: Change Euro thousand % Euro thousand %Euro thousand Trade receivables 10,836 11,083 (247) Other receivables 1,698 2,083 (385) Inventories 16,189 14,212 1,977 Current non-financial payables (9,894) (11,014) 1,120 Payables on fixed assets (1,069) (1,954) 885 A) Working capital 17, % 14, % 3,350 Net tangible and intangible assets 29,994 33,316 (3,322) Investments not fully consolidated and other medium/long-term assets Non-current provisions and non-financial payables (1,178) (1,063) (115) B) Net fixed capital 29, % 32, % (3,108) A+B= Net capital employed 47, % 47, % 242 Financed by: Current financial payables 29,036 26,307 2,729 Cash and cash equivalents (1,715) (888) (827) Short term net debt 27, % 25, % 1,902 Medium/long term debt 6, % 8, % (1,588) C) Net financial debt 33, % 33, % 314 Opening Shareholders' equity 13,776 15,352 Other shareholders' equity changes (11) 1 Net loss for the year (61) (1,577) D) Closing shareholders' equity 13, % 13, % (72) C+D = Total Financial Debt and Shareholders' Equity 47, % 47, % 242 The working capital at December 31, 2013 increased on December 31, 2012 by Euro 3,350 thousand. Trade receivables at December 31, 2013 decreased by 2.2% on 2012, against an increase in revenues of 1.1%. Other receivables reduced Euro 385 thousand and principally relate to minor receivables from the Tax authorities. Inventories at the end of 2013 increased by Euro 1,977 thousand (+13.9%) compared to December 31, 2012, related to future sales programmes. 33

36 Directors Report on the Consolidated and Separate Financial Statements Current non-financial payables at December 31, 2013 decreased on the end of the previous year (- Euro 1,120 thousand). Payables to suppliers for fixed assets totaled Euro 1,069 thousand compared to Euro 1,954 thousand at December 31, 2012 (Euro -885 thousand). Capital expenditure payments to suppliers in the year totaled Euro 4,727 thousand. Net capital employed at December 31, 2013 increased slightly on December 31, 2012 (Euro +242 thousand), taking account that the investments realised in the year (Euro 3,842 thousand) were lower than depreciation (Euro 7,008 thousand). The net debt at year-end amounted to Euro 33,733 thousand compared to Euro 33,419 thousand at December 31, 2012 (increase of Euro 314 thousand), due to the changes outlined above. The net equity at year-end was Euro 13,704 thousand compared to Euro 13,776 thousand at December 31, 2012, having recorded a loss in the year of Euro 61 thousand. Capital expenditure in the year was as follows: (Euro thousand) Investments in the year: Plant and machinery 615 4,084 Equipment 3,057 3,582 Other Intangible assets Total 3,842 8,069 At December 31, 2013, employees numbered 345 (at December 31, 2012: 372 employees). The composition of Verreries Brosse Group personnel at December 31, 2013 is shown in the table below. Composition Executives Managers White-collar Blue-collar Workforce Average age Years of service in the Company Indefinite period contracts Fixed-term contracts Operating performance for the year The 2014 results are expected to improve on

37 Directors Report on the Consolidated and Separate Financial Statements Huta Szkła Czechy S.A. (HSC SA) Registered office: Trabkj (Poland) Business sector: glass containers Chairman: Management Board : Paolo Giacobbo Roberto Cardini Roberto Celot Alberto Faggion Franco Grisan Nicolò Marzotto Stefano Marzotto Supervisory Board : Paolo Nicolai - chairman Stefano Perosa Carlo Pesce General Manager Roberto Cardini In 2013 market demand improved - in line with the previous year - although within an uncertain and cautious general economy. 35

38 Directors Report on the Consolidated and Separate Financial Statements The reclassified income statement is shown below: Change Euro thou. % Euro thou. % % Revenues 20, % 16, % 20.4% Change in finished, semifinished products and works in progress % 1, % (89.0%) Internal production of fixed assets % % 29.0% Value of production 20, % 18, % 13.5% Cost of goods and services (11,810) (58.5%) (10,778) (64.2%) 9.6% Value added 8, % 7, % 19.0% Labour costs (4,848) (24.0%) (4,251) (25.3%) 14.0% EBITDA 4, % 3, % 25.6% Amortisation & depreciation (1,877) (9.3%) (1,537) (9.2%) 22.1% Provisions (31) (0.2%) (63) (0.4%) (50.8%) EBIT 2, % 1, % 31.8% Net recurring non-operating income % % 907.7% Operating profit 2, % 1, % 38.7% Net financial charges (115) (0.6%) (22) (0.1%) 422.7% Net exchange differences (53) (0.3%) (157) (0.9%) (66.2%) Profit before taxes , % 1, % 44.2% Income taxes (462) (2.3%) (293) (1.7%) 57.7% Net profit for year 1, % 1, % 40.8% Revenues in 2013 amounted to Euro 20,190 thousand (in 2012: Euro 16,776 thousand; +20.4%). Revenues of glass containers amounted to Euro 18,345 thousand (in 2012: Euro 15,506 thousand; +18.3%). Exports accounted for 79.2% (in 2012: 68.1%) of revenues. Revenues include, in addition to glass containers, also product decoration services for third parties, the contribution charged to clients for the creation of moulds for specific products and other services including, in particular, transport costs. Specifically: Revenues breakdown (Euro thousand) Change % Glass containers 18,345 15, % Other materials and services 1,845 1, % Total 20,190 16, % 36

39 Directors Report on the Consolidated and Separate Financial Statements Revenues by geographic area (Euro thousand) Change % Europe 18,335 15, % North America 1, % Other countries % Total 20,190 16, % Materials and external services, including changes in inventories of finished and semi-finished products, in 2013 amounted to Euro 11,272 thousand compared to Euro 9,285 thousand in 2012 (+21.4%). The percentage of revenues was 55.9% compared to 55.3%. The increase in labour costs from Euro 4,251 thousand in 2012 to Euro 4,848 thousand in 2013 (+14%), is related in particular to the larger workforce, related to the new production lines and decoration activity. The Ebitda amounted to Euro 4,070 thousand (20.2% revenue margin) compared to Euro 3,240 thousand in the previous year (19.3% revenue margin, +25.6%). Amortisation and depreciation amounted to Euro 1,877 thousand (in 2012: Euro 1,537 thousand (+22.1%, due to new investments entering into use). Net financial charges amount to Euro 115 thousand, related to the net debt of the Company. Net exchange differences principally concern the conversion into Euro at year-end of trade receivables and payables in foreign currencies. The tax rate was 21.8% in 2013 compared to 19.9% in reports a net profit of Euro 1,663 thousand (8.2% margin) compared to Euro 1,181 thousand in 2012 (7%) - an increase of 40.8%. The tax rate in 2013 was 21.8% compared to 19.9% in The cash flow generated from the net profit and amortisation and depreciation amounted to Euro 3,540 thousand, 17.6% of revenues (in the previous year: Euro 2,718 thousand, 16.2% of revenues; +30.2%). 37

40 Directors Report on the Consolidated and Separate Financial Statements The reclassified balance sheet and financial position at December 31, 2013 and 2012 were as follows: Change Euro thou. % Euro thou. % Euro thou. Trade receivables 3,210 2, Other receivables Inventories 4,998 4, Current non-financial payables (3,489) (3,204) (285) Payables on fixed assets (430) (1,000) 570 A) Working capital 4, % 3, % 970 Net tangible and intangible assets 12,743 8,175 4,568 Investments not fully consolidated and other medium/long-term assets Non-current provisions and non-financial payables (1,078) (1,092) 14 B) Net fixed capital 12, % 7, % 4,643 A+B= Net capital employed 16, % 11, % 5,613 Financed by: Current financial payables 3, ,942 Cash and cash equivalents (3,194) (1,077) (2,117) Short term net debt/ liquidity % (101) (0.9%) 825 Medium/long term debt 3, % % 3,327 C) Net financial debt/ liquidity 4, % (65) (0.6%) 4,152 Opening Shareholders' equity 11,434 9,343 Other shareholders' equity changes (202) 910 Net profit for the year 1,663 1,181 D) Closing Shareholders' equity 12, % 11, % 1,461 C+D = Total financial debt and shareholders' equity 16, % 11, % 5,613 The working capital at December 31, 2013 increased on December 31, 2012 by Euro 970 thousand, concerning: - trade receivables increased Euro 583 thousand (+22.2%), due to the higher revenues in the year; - inventories, in particular finished product inventories, increased Euro 96 thousand, due to increased production activity and future sales programmes; - short-term non-financial payables increased Euro 285 thousand, principally due to higher trade payables; 38

41 Directors Report on the Consolidated and Separate Financial Statements - payables to fixed assets suppliers decreased by Euro 570 thousand, which concern payments on capital expenditures also realised in the previous year and a payable of Euro 612 thousand recorded on the acquisition of the Company following judgment of the Polish Supreme Court in favour of HSC SA declaring ownership of the land on which the industrial complex is located. The net debt at December 31, 2013 amounted to Euro 4,087 thousand (net cash position of Euro 65 thousand at December 31, 2012), following the significant capital investments during the year. The Shareholders equity at year-end amounted to Euro 12,895 thousand compared to Euro 11,434 thousand at December 31, 2012 (+12.8%), after the net profit for the year (Euro 1,663 thousand) and exchange losses at December 31, 2013 recognised to the translation reserve (Euro -202 thousand). Investments in tangible and intangible fixed assets amounted to Euro 6,625 thousand (in 2012: Euro 2,870 thousand). The investments principally refer to the refurbishment of a production line, the start-up of the new decoration and coating lines, in addition to the normal ongoing renewal of machinery and equipment, in particular moulds. The workforce at December 31, 2013 numbered 352; 333 employees at December 31, The table below shows the composition of the HSC SA workforce at December 31, Composition Executives Managers White-collar Blue-collar Workforce Average age Years of service in the Company Indefinite period contracts Fixed-term contracts Operating performance for the year The market is expected to improve in 2014, allowing the company to grow revenues and profit levels. 39

42 Directors Report on the Consolidated and Separate Financial Statements Vetri Speciali SpA Registered office: Trento, Via Manci, 5 Business sector: specialty glass containers Chairman: Vice Chairman: Chief Executive Officer: Directors: Statutory Auditors: Stefano Marzotto Vitaliano Torno Giorgio Mazzer Luca Marzotto Massimo Noviello Lorenzo Buraggi - chairman Giuseppe Baratella Carlo Pesce In 2013 demand for specialty glass containers was stable. The sector was principally driven by consumer spending levels on foreign markets - particularly on the high-end segments. 40

43 Directors Report on the Consolidated and Separate Financial Statements The reclassified income statement at December 31, 2013 and 2012 of Vetri Speciali SpA, for the share pertaining to Zignago Vetro SpA (50%) was as follows: Revenues Change Euro thou. % Euro thou. % % 64, % 64, % 0.4% Changes in finished, semi-finished, and products in work in progress 1, % 2, % (52.6%) Value of production 66, % 67, % (1.7%) Costs of goods and services (31,704) (48.9%) (32,951) (51.0%) (3.8%) Value added 34, % 34, % 0.2% Labour costs (13,249) (20.4%) (13,191) (20.4%) 0.4% EBITDA 21, % 21, % 0.1% Amortisation & depreciation (4,493) (6.9%) (4,437) (6.9%) 1.3% Provisions (414) (0.6%) (321) (0.4%) 29.0% EBIT 16, % 16, % (0.8%) Net recurring non-operating income % % (69.2%) Operating profit 16, % 17, % (4.7%) Investment income (834) (1.3%) (750) (1.2%) 11.2% Net financial charges (3) --- (5) --- n.s. Profit before taxes 15, % 16, % (5.4%) Income tax (5,050) (7.8%) (4,898) (7.6%) 3.1% (tax-rate 2013: 32%) (tax-rate 2012: 29.4%) Net profit for the year 10, % 11, % (8.9%) Revenues in 2013 amounted to Euro 64.9 million compared to Euro 64.6 million in the previous year (+0.4%) Exports in the year accounted for 24.8% of revenues in 2013 (26.1% in 2012) and amounted to Euro 16.1 million (Euro 16.9 million in 2012; -4.8%). Geographic breakdown of sales (for Group share): (Euro thousand) % Italy 48,807 47, % European Union 9,427 10,580 (10.9%) Other countries 6,636 6, % Total 64,870 64, % of which export 16,063 16,881 (4.8%) % 24.8% 26.1% 41

44 Directors Report on the Consolidated and Separate Financial Statements Material costs and external services in 2013, including the changes in inventory of finished and semi-finished products, represent 46.9% of revenues compared to 46.8% in The share of labour costs is in line with 2012 (+0.4%), based on the reduced workforce and wage cost movements. The share of Ebitda amounts to Euro 21.2 million in 2013, in line with the previous year. The Ebitda margin was 32.7% (in 2012: 32.8%). The Ebit share in 2013 amounted to Euro 16.3 million compared to Euro 16.4 million in 2012 (- 0.8%), a margin of 25.1% and 25.4% respectively. The share of net financial charges in the year increased 11.2% compared to 2012, due to the increase in interest rates. They remained stable as a percentage of revenues (1.3% in 2013, 1.2% in 2012). The tax-rate in 2013 was 32% compared to 29.4% in previous year, which benefitted from Legislative Decree 16/2012 relating to preceding years (the 2012 tax-rate on comparable basis would have been 31.7%). The share of the net profit was Euro 10.7 million compared to Euro 11.8 million in the previous year (-8.9%), equal to 16.1% and 18.2% of revenues respectively. The cash flow generated from net profit and depreciation/amortisation amounted to Euro 15.2 million in 2013 compared to Euro 16.2 million in 2012 (-6.1%) and represents 23.4% of revenues (25.1% in 2012). 42

45 Directors Report on the Consolidated and Separate Financial Statements The reclassified balance sheet and financial position of Vetri Speciali SpA at December 31, 2013 and 2012, for the share pertaining to Zignago Vetro SpA (50%), was as follows: Change Euro thou. % Euro thou. % Euro thou. Trade receivables 12,623 11, Other receivables 1,454 2,036 (582) Inventories 12,729 11,299 1,430 Current non-financial payables (11,501) (11,147) (354) Payables on fixed assets (628) (632) 4 A) Working capital 14, % 13, % 1,495 Net tangible and intangible assets 27,525 29,542 (2,017) Goodwill 39,967 39, Other non current assets and investments Non-current provisions and non-financial payables (3,185) (3,308) 123 B) Net fixed capital 64, % 66, % (1,859) A+B= Net capital employed 79, % 79, % (364) Financed by: Current financial payables 13,332 22,377 (9,045) Cash and cash equivalents (95) (56) (39) Short term net debt 13, % 22, % (9,084) Medium/long term debt 14, % 8, % 6,108 C) Net financial debt 27, % 30, % (2,976) Opening Shareholders' equity 48,923 46,814 Dividends paid in the year (8,050) (9,559) Other shareholders' equity changes (53) (94) Net profit for the year 10,715 11,762 D) Closing shareholders' equity 51, % 48, % 2,612 C+D = Total Financial Debt and Shareholders' Equity 79, % 79, % (364) 43

46 Directors Report on the Consolidated and Separate Financial Statements The increase in the share of working capital compared to December 31, 2012 (Euro 1.5 million: +11.3%) is principally due to the increase in trade receivables and inventories. The decrease in other receivables is related to the lower tax payments on account. The share of net fixed capital is lower than the end of 2012 by Euro 1.9 million, due to lower net investments in tangible and intangible fixed assets than depreciation and amortisation (share of net investments of Euro 2.5 million, share of amortisation and depreciation of Euro 4.5 million). The share of shareholders' equity at December 31, 2013, including the net profit for the year and after the distribution of dividends, increased Euro 2.6 million (+5.3%) to Euro 51.5 million (Euro 48.9 million at December 31, 2012). The share of net debt reduced from Euro 30.8 million at December 31, 2012 to Euro 27.8 million at December 31, 2013 (Euro 3 million; - 9.7%), due to the changes outlined above. At December 31, 2013, the workforce numbered 540, as follows: 7 executives, 118 white-collar office, commercial and technical staff and 415 blue-collar. At December 31, 2012, employees numbered 546, of which: 7 executives, 131 white-collar and 408 blue-collar. The above data refers to 100% of the group s workforce. Current year operating performance. The market appears to be positive in the initial months of

47 Directors Report on the Consolidated and Separate Financial Statements For completeness the reclassified income statement and balance sheet and financial position of Vetri Speciali SpA (100% of the data) are shown below. The reclassified income statement of Vetri Speciali SpA for the year and the previous year is shown below: Change Euro thou. % Euro thou. % % Revenues 129, % 129, % 0.4% Changes in finished, semi-finished and products in work in progress 2, % 5, % (52.6%) Value of production 132, % 134, % (1.7%) Cost of goods and services (63,407) (48.9%) (65,902) (51.0%) (3.8%) Value added 68, % 68, % 0.2% Labour costs (26,498) (20.4%) (26,382) (20.4%) 0.4% EBITDA 42, % 42, % 0.1% Amortisation & depreciation (8,985) (6.9%) (8,873) (6.9%) 1.3% Provisions (828) (0.6%) (643) (0.5%) 28.8% EBIT 32, % 32, % (0.8%) Net recurring non-operating income % 1, % (69.2%) Operating profit , % 34, % (4.7%) Net financial charges (1,667) (1.3%) (1,501) (1.2%) 11.1% Net exchange differences (6) --- (10) --- n.s. Profit before taxes 31, % 33, % (5.4%) Income tax (10,100) (7.8%) (9,796) (7.6%) 3.1% (tax-rate 2013: 32%) (tax-rate 2012: 29.4%) Net profit for the year 21, % 23, % (8.9%) 45

48 Directors Report on the Consolidated and Separate Financial Statements The reclassified balance sheet and financial position of Vetri Speciali SpA at December 31, 2013 compared to December 31, 2012 is summarised below: Change Euro thou. % Euro thou. % Euro thou. Trade receivables 25,245 23,252 1,993 Other receivables 2,908 4,071 (1,163) Inventories 25,457 22,598 2,859 Current non-financial payables (23,001) (22,295) (706) Payables on fixed assets (1,255) (1,263) 8 A) Working capital 29, % 26, % 2,991 Net tangible and intangible assets 55,050 59,083 (4,033) Goodwill 79,934 79, Other non-current assets and investments Non-current provisions and non-financial payables (6,369) (6,615) 246 B) Net fixed capital 129, % 133, % (3,717) A+B= Net capital employed 158, % 159, % (726) Financed by: Current financial payables 26,664 44,754 (18,090) Cash and cash equivalents (190) (111) (79) Short term net debt 26, % 44, % (18,169) Medium/long term debt 29, % 16, % 12,216 C) Net financial debt 55, % 61, % (5,953) Opening Shareholders' equity 97,844 93,627 Dividends paid in the year (16,100) (19,119) Other shareholders' equity changes (104) (187) Net profit for the year 21,431 23,523 D) Closing shareholders' equity 103, % 97, % 5,227 C+D = Total Financial Debt and Shareholders' Equity 158, % 159, % (726) 46

49 Directors Report on the Consolidated and Separate Financial Statements Vetreco Srl Registered office: Supino (FR) Via Morolense km. 5,500 Business sector: treatment and sale of recycled glass Chairman: Roberto Celot Vice Chairman: Directors: Rocco Furia Roberto Buzio Leonardo Fredianelli Dario Lorenzon John Gerard Sadlier Statutory Auditors: Roberto Monticelli - chairman Alberto Faggion Augusto Valchera (*) The figures reported in the tables and in the comments represent, for greater clarity, 100% of the Company data. Vetreco S.r.l. is consolidated under the proportional method for its share (30%). The Company commenced operations in September In the months preceding operations, activities particularly focused on the start-up of plant in order to reach the scheduled production targets. The 2013 Income Statement is not directly comparable with the previous year. 47

50 Directors Report on the Consolidated and Separate Financial Statements The reclassified income statement of Vetreco Srl in 2013 compared to the previous year is shown below: Euro Euro Revenues 1,406, Changes in finished, semi-finished and products of work in progress 413, Internal production of fixed assets 77, Value of production 1,897, Cost of goods and services (1,656,097) (79,363) Value added 241,772 (79,363) Labour costs (491,336) (76,213) EBITDA (249,564) (155,576) Amortisation & depreciation (316,494) (1,087) EBIT (566,058) (156,663) Net recurring non-operating income 6, Operating loss (559,997) (156,524) Net financial charges (103,887) (1,514) Loss before taxes (663,884) (158,038) Income taxes 173,922 39,331 Net loss for year (489,962) (118,707) Revenues comprise Euro 1,051 thousand for the processing of raw glass for furnaces, Euro 45 thousand of waste material sales and Euro 311 thousand revenues for processing of materials on behalf of third parties and revenues from conferment of glass. The principal cost items concern material purchases and external services, labour costs and amortisation and depreciation. The result for the year was a loss of Euro 490 thousand. Deferred tax assets were recorded for Euro 174 thousand, based on their future assessable use by the Company. 48

51 Directors Report on the Consolidated and Separate Financial Statements The reclassified balance sheet and financial position of Vetreco Srl at December 31, 2013 and 2012 was as follows: Change Euro % Euro % Euro Trade receivables 924, ,191 Other receivables 2,993,455 1,275,229 1,718,226 Inventories 507, ,095 Current non-financial payables (2,321,827) (50,458) (2,271,369) Payables on fixed assets (1,697,718) (2,623,382) 925,664 A) Working capital 405, % (1,398,611) (17.9%) 1,803,807 Net tangible and intangible assets 17,363,503 9,222,430 8,141,073 Other investments & non-current assets 21, ,265 Non-current provisions & non-financial payables (9,409) --- (9,409) B) Net fixed capital 17,375, % 9,222, % 8,152,929 A+B= Net capital employed 17,780, % 7,823, % 9,956,736 Financed by: Short-term debt 16,408,129 6,800,000 9,608,129 Cash and cash equivalents --- (838,569) 838,569 C) Net financial debt 16,408, % 5,961, % 10,446,698 Opening Shareholders' equity 1,862,388 1,981,095 (118,707) Net loss for the year (489,962) (118,707) (371,255) D) Closing shareholders' equity 1,372, % 1,862, % (489,962) C+D = Total Financial Debt and Shareholders' Equity 17,780, % 7,823, % 9,956,736 The consolidated balance sheet continues to reflect the significant investments made by the Company in 2012 and 2013, which included the almost complete construction of the production facilities. These investments were partly financed through available funds and largely through loans undertaken with a leading Italian bank. The other receivables account substantially concerns deferred tax assets and VAT receivables. At December 31, 2013 the Company workforce numbered 21, of which 13 temporary personnel. 49

52 Proposals to the Shareholders AGM PROPOSALS TO THE SHAREHOLDERS AGM The proposals to be presented to the Shareholders Meeting approved by the Board meeting of March 13, 2014 of Zignago Vetro S.p.A., the parent company, are shown below. Dear Shareholders, We trust that you will be in agreement with the criteria for the preparation of the financial statements for the year ended December 31, 2013 and we invite you to approve them. As the Legal Reserve has reached one-fifth of the share capital, we propose the allocation of the net profit of Euro 22,108,588, as follows: - to dividends the amount of Euro 19,047,294 as Euro 0.22 for each of the 86,578,610 ordinary shares - the residual amount to the Retained earnings reserve, Euro 3,061,294 with this reserve amounting to Euro 33,146,518. Euro 22,108,588» Fossalta di Portogruaro, March 13, 2014 For the BOARD OF DIRECTORS The Chairman Franco Grisan 50

53 Notice of the Shareholders Meeting NOTICE OF THE SHAREHOLDERS MEETING Those with the right to attend and vote are called to the Ordinary Shareholders Meeting at the registered office of the company in Fossalta di Portogruaro (VE), Via Ita Marzotto, 8 on April 28, 2014 at 11 AM in first call and on April 29, 2014 at the same time and place in second call, to discuss and vote upon the following AGENDA 1) Financial Statements for the year ended December 31, 2013, Directors Report, Board of Statutory Auditors Report and the Independent Auditors Report. 1.1 Review and approval of Financial Statements for the year ended December 31, 2013, Directors Report, Board of Statutory Auditors Report and the Independent Auditors Report. 1.2 Allocation of the profit 2) 2013 Remuneration Report motions concerning the First Section, in accordance with Article 123-ter of Legislative Decree 58/1998 and Article 84-quater of Consob Regulation 11971/ ) Authorisation for the purchase and utilisation of treasury shares, with prior revocation, where not utilised, of the previous Shareholders resolution of April 29, INFORMATION ON THE SHARE CAPITAL The share capital subscribed and paid-in amounts to Euro 8,800,000.00, divided into 88,000, ordinary shares, each with a nominal value of Euro At the date of the present call notice, the Company holds 1,421,390 treasury shares in portfolio, comprising 1.615% of the share capital, for which the voting right is suspended. Therefore 86,578,610 votes are exercisable at the Shareholders' Meeting called. Any change in treasury shares will be communicated at the Shareholders Meeting. The share capital structure is available on the company website in the Investors section. RIGHT TO ATTEND AND VOTE AT THE SHAREHOLDERS MEETING In accordance with Article 83-sexies and Legislative Decree 58/98 (the "CFA") those who have sent to the Company the relative communication through an authorised intermediary based on the accounting records on the seventh trading day before the Shareholders Meeting, therefore April 15, 2014, have the right to attend and vote at the Shareholders Meeting. Those who hold shares only after April 15, 2014 will not have the right to attend or vote at the Shareholders Meeting. The Communication of the intermediary must be received by the Company by the end of the third trading day before the Shareholders Meeting is held in first call. The right to attend and vote at the Shareholders Meeting remains valid if the communication of the above-stated intermediary is 51

54 Notice of the Shareholders Meeting sent to the Company outside the stated time period, although by the beginning of the relative Shareholders Meeting. PROXY REPRESENTATION AND VOTING Each shareholder who has the right to attend the Shareholders Meeting can be represented by written proxy in accordance with current regulations. For this purpose, a proxy form is available at the registered office of the company, on the company internet site Investors section, and through authorised intermediaries. The form may be sent to the registered office of the company at Via Ita Marzotto, No. 8, Fossalta di Portogruaro (VE) for the attention of Mr. Roberto Celot (Investor Relation Manager) or through fax to 0421/ Prior notice does not exempt the proxy granted the right to attend the shareholders meeting from the obligation to declare, in good faith, conformity with the original notified copy and to identify the principal. In accordance with applicable regulations, the proxy must maintain the original proxy form and any voting instructions received for one year from the conclusion of the shareholders' meeting. Proxy may also be conferred, in accordance with law, electronically through a document signed in electronic form in accordance with Article 21, paragraph 2, of Legislative Decree No 82 of March 7, In accordance with the Company By-Laws, a designated agent has not been appointed for the Shareholders Meeting in accordance with Article 135-undecies of Legislative Decree No. 58 of February 24, Voting may not take place through correspondence or electronic means. SUPPLEMENTS TO THE AGENDA AND PRESENTATION OF NEW PROPOSALS In accordance with Article 126-bis of Legislative Decree 58/98 shareholders who, also jointly, represent at least one-fortieth of the share capital, may apply to supplement the Shareholders Meeting Agenda within 10 days of publication of the present notice, therefore by April 7, 2014, indicating the further matters proposed or by presenting proposals concerning matters already on the Agenda. The request must be sent in writing to the registered office of the company at Via Ita Marzotto, No. 8, Fossalta di Portogruaro (VE) for the attention of Mr. Roberto Celot (Investor Relations Manager) or through fax to 0421/ Within the above-stated timeframe certification confirming ownership of the holding, approved by an intermediary who holds the accounts where the shares of the requesting party are registered, must be sent together with a report containing the reasons for resolutions on new matters to be added to the agenda by the applicant, or the reasoning for the further proposals on matters already on the agenda. Supplementation is not permitted for matters on which the Shareholders Meeting will vote, in accordance with law, on proposals of the directors or concerning projects or reports other than those prepared in accordance with Art.125 ter paragraph 1 of the CFA. The above-stated report, supplemented by any evaluations by the Board of Directors, will be made available to the public at least 15 days before the Shareholders Meeting using the same means as for the publication of the present notice and the other Shareholders Meeting documentation, together with the publication of the agenda supplementation notice or the presentation of further proposals on matters already on the Agenda. 52

55 Notice of the Shareholders Meeting RIGHT TO SUBMIT QUESTIONS REGARDING THE MATTERS OF THE AGENDA In accordance with Article 127-ter of Legislative Decree No. 58/98, those with the right to vote may submit questions regarding the matters on the agenda, also before the Shareholders Meeting, through registered to within three days prior to the Shareholders Meeting in first call (April 25, 2014). In order to exercise this right, certification by the intermediary confirming the right to vote must be sent to the Company. For questions submitted, responses will be made at the latest during the meeting itself. Responses may be provided in written form at the Shareholders Meeting and made available to all those with voting rights at the beginning of the Shareholders Meeting. DOCUMENTATION Documentation relating to the Shareholders Meeting, including the reports of the Board of Directors and the proposals regarding the matters of the Agenda, will be made available to the public under the terms and conditions and in the manners established by the applicable regulations, with shareholders and those with voting rights permitted to obtain a copy. This documentation will be available at the registered office of the company, on the internet site in the Investor Relations section, as well as at the Borsa Italiana S.p.A. website. Specifically: - by March 28, 2014, the Remuneration Report, prepared in accordance with Article 123-ter of Legislative Decree No 58/98, the Annual Report and the other documents established by Article 154-ter of Legislative Decree No 58/98; - by March 28, 2014, the Board of Directors Report on the authorisation to purchase and utilise treasury shares. ORGANISATIONAL ASPECTS The shareholders are kindly requested to register at least one hour before the commencement of the Shareholders Meeting. Fossalta di Portogruaro, March 28, 2014 For the Board of Directors Mr. Franco Grisan 53

56 Summary of the Shareholders Meeting resolutions SUMMARY OF THE SHAREHOLDERS MEETING RESOLUTIONS 54

57 Summary of the Shareholders Meeting resolutions 55

58 Summary of the Shareholders Meeting resolutions 56

59 Consolidated Financial Statements 57

60 Consolidated Financial Statements Consolidated Balance Sheet (Euro thou.) Note ASSETS Non-current assets Property, plant & equipment 128, ,559 (1) Goodwill 40,708 40,722 (2) Intangible assets (3) Equity investments (4) Other non-current assets (5) Deferred tax assets 3,115 2,651 (6) Total non-current assets 173, ,734 Current assets Inventories 68,110 61,921 (7) Trade receivables 62,907 63,337 (8) Other current assets 4,607 4,637 (9) Tax receivables 5,242 4,410 (10) Cash and cash equivalents 39,367 44,689 (11) Total current assets 180, ,994 TOTAL ASSETS 353, ,728 SHAREHOLDERS' EQUITY & LIABILITIES SHAREHOLDERS' EQUITY Share capital 8,800 8,800 Reserves 35,521 35,361 Acquisition of treasury shares (5,027) (5,027) Retained earnings 91,495 87,172 (*) Other net equity items (1,170) (828) (*) TOTAL GROUP SHAREHOLDERS EQUITY 129, ,478 (12) MINORITY INTEREST EQUITY TOTAL SHAREHOLDERS' EQUITY 129, ,478 LIABILITIES Non-current liabilities Provisions for risks and charges 2,936 2,584 (13) Post-employment benefit provision 7,114 7,063 (14) Medium/long term loans 32,132 28,995 (15) Other non-current liabilities 7 7 (16) Deferred tax liabilities 3,697 3,940 (17) Total non-current liabilities 45,886 42,589 Current liabilities Bank payables and current portion of medium/long term loans 113, ,095 (18) Trade and other payables 47,246 51,405 (19) Other current liabilities 17,143 17,239 (20) Current income taxes (21) Total current liabilities 177, ,661 TOTAL LIABILITIES 223, ,250 TOTAL SHAREHOLDERS' EQ. & LIAB. 353, ,728 (*) Following the application from January 1, 2012 (in retrospective manner) of the amendment to IAS 19, the comparative data at December 31, 2012 was restated as per IAS 1. For further details, reference should be made to the paragraph New accounting standards adopted by the company from January 1, 2013 of the Explanatory Notes. 58

61 Consolidated Financial Statements Consolidated Income Statement (Euro thou.) restated (*) Note Revenues 292, ,751 (22) Raw material, ancillary, consumable consumables and goods (59,212) (59,257) (23) Services (97,296) (99,274) (24) Labour costs (66,567) (67,251) (25) Amortisation and depreciation (25,526) (24,968) (26) Other operating expenses (4,130) (3,240) (27) Other operating income 1,812 1,649 (28) Operating profit 41,365 46,410 Financial income (29) Financial charges (3,591) (3,589) (30) Net exchange gains/(losses) (137) 158 Profit before taxes 38,603 43,962 Income taxes (12,469) (13,079) (31) Net profit 26,134 30,883 Attributable to Group 26,134 30,883 Minority interests ,134 30,883 Earnings per share: Basic (and diluted) earnings per share (*) Following the application from January 1, 2012 (in retrospective manner) of the amendment to IAS 19, the comparative data at December 31, 2012 was restated as per IAS 1. For further details, reference should be made to the paragraph New accounting standards adopted by the company from January 1, 2013 of the Explanatory Notes. 59

62 Consolidated Financial Statements Comprehensive Consolidated income statement (Euro thousands) restated (*) Group net profit 26,134 30,883 Other comprehensive income statement items subsequently to be reclassified to net proft (loss) for the year Translation difference Fiscal effect (220) (220) 976 Total other comprehensive income statement items subsequently to be reclassified to net proft (loss) for the year (220) 976 Other comprehensive income statement items not subsequently to be reclassified to net proft (loss) for the year Actuarial losses on defined benefit plans (169) (484) Fiscal effect (122) (351) Total other comprehensive income statement items not subsequently to be reclassified to net proft (loss) for the year (122) (351) Total other comprehensive income statement items, net of taxes Total comprehensive net profit (342) ,792 31,508 Attributable to: Group 25,792 31,508 Minority interests ,792 31,508 (*) Following the application from January 1, 2012 (in retrospective manner) of the amendment to IAS 19, the comparative data at December 31, 2012 was restated as per IAS 1. For further details, reference should be made to the paragraph New accounting standards adopted by the company from January 1, 2013 of the Explanatory Notes. 60

63 Consolidated Financial Statements Consolidated Cash Flow Statement (Euro thou.) restated (*) CASH FLOW FROM OPERATING ACTIVITIES: Net profit 38,603 43,963 Adjustments to reconcile net profit with cash flow generated from operating activities: Amortisation & depreciation 25,526 24,968 Losses/(gains) on disposals of property, plant and equipment (195) (37) Doubtful debt provision Net changes in post-employment benefits (331) (508) Net change in other provisions Financial income and exchange gains (966) (1,141) Financial charges and exchange losses 3,728 3,589 Income taxes paid in the year (14,445) (18,381) Changes in operating assets and liabilities: Decrease/(increase) in trade receivables 315 (260) Decrease/(increase) in other current assets 30 (783) Decrease/(increase) in inventories (6,189) (8,498) Increase/(decrease) in trade & other payables (3,632) (1,351) Increase/(decrease) in other current liabilities (96) 127 Other non-current assets and liabilities (104) 18 Total adjustments and changes 4,108 (1,916) Net cash flow generated from operating activities (A) 42,711 42,047 CASH FLOW FROM INVESTING ACTIVITIES: Investments in intangible assets (217) (186) Investments in tangible assets (36,576) (34,657) Increase (decrease) in fixed asset payables (527) 1,250 Investments (divestments) in financial assets (2) 2 Acquisition of investments, net of cash acquired --- (2,733) Sales price of property, plant and equipment 4,461 4,661 Net cash flow from investing activities (B) (32,861) (31,663) CASH FLOW FROM FINANCING ACTIVITIES: Interest paid in the year (3,549) (2,437) Interest received in the year Net change in short-term bank borrowings 5,954 7,909 New medium/long term loans 11,000 18,448 Repayment of medium/long term loans (7,863) (13,080) Dividends (21,645) (24,399) Net cash flow from financing activities (C) (15,137) (12,576) Change in balance sheet accounts translation effect Net change in cash and cash equivalents (D) (35) 422 (A+B+C+D) (5,322) (1,770) Cash available at beginning of the year 44,689 46,459 Cash available at end of the year 39,367 44,689 (*) Following the application from January 1, 2012 (in retrospective manner) of the amendment to IAS 19, the comparative data at December 31, 2012 was restated as per IAS 1. For further details, reference should be made to the paragraph New accounting standards adopted by the company from January 1, 2013 of the Explanatory Notes. 61

64 Consolidated Financial Statements Statement of change in Consolidated Shareholders Equity (Euro thousands) 62

65 Consolidated Financial Statements (*) Data restated according to amendments to IAS 19 Employee benefits. For further information, reference should be made to the section New accounting standards and interpretations adopted by the Company from January 1, 2013 in the Explanatory Notes. Notes to the Consolidated Financial Statements 63

66 Notes to the Consolidated Financial Statements GENERAL INFORMATION Zignago Vetro SpA is an Italian limited liability company and is domiciled at Fossalta di Portogruaro via Ita Marzotto No. 8. Together with the subsidiaries, the Group operates in the production and marketing of high quality hollow glass containers prevalently for the Food and Beverage, Cosmetics and Perfumery and Specialty Glass sectors (highly customised glass containers in small batches, typically used for wine, liquors and oils). The Group operates in the market with a business-to-business model, supplying containers to its clients, which are then used in their respective industrial activities. Specifically, in the Italian market, the Group is one of the leading producers and distributors of glass containers for the food and beverage sector, while at international level it has a strong market share in the cosmetics and perfumery and specialty glass sectors. The publication of the financial statements of Zignago Vetro SpA was approved by the Board of Directors on March 13, ACCOUNTING PRINCIPLES AND VALUATION CRITERIA Accounting standards The consolidated Financial Statements for the years ended December 31, 2013 and 2012 of Zignago Vetro SpA were prepared in accordance with International Financial Reporting Standards (IFRS) approved by the European Union in force at the date of the preparation of the present document. They consist of the Balance Sheet, the Income Statement, the Comprehensive Income Statement, the Cash Flow Statement, the Statement of changes in Shareholders Equity and the Notes to the financial statements. The Consolidated Financial Statements include the financial statements of the Parent Company Zignago Vetro S.p.A. and of the Italian and foreign Subsidiaries upon which Zignago Vetro has the right to exercise control, directly or indirectly, and also jointly. The Explanatory Notes include all the disclosures required by current regulations and accounting standards, appropriately reported with reference to the financial statements. The Company, under the various options allowed by IAS 1, presents separately in the balance sheet the current and non-current assets and liabilities based on their realisation or settlement within the normal operating cycle, not more than 12 months subsequent to the reporting date and provides in the income statement a cost analysis by type. The cash flow statement is prepared applying the indirect method. 64

67 Notes to the Consolidated Financial Statements The Consolidated Financial Statements, as for the Directors Report, is presented, for a better understanding of the balance sheet and the income statement and the relative notes thereto, in thousands of Euro unless otherwise indicated. For purposes of comparison, we report that the consolidation scope of the Zignago Vetro Group at December 31, 2013 was unchanged on December 31, The scope and the consolidation method at December 31, 2013 was therefore as follows: - Zignago Vetro SpA (parent company) - under the 100% line-by-line method: - Verreries Brosse SAS and its subsidiary: - Brosse USA Inc. - Huta Szkła Czechy SA(HSC SA). - under the proportional line-by-line method for the shareholdings: - Vetri Speciali SpA (50%) - Vetreco Srl (30%) Declaration of conformity with IFRS international accounting standards The consolidated financial information for the years 2013 and 2012 were prepared in accordance with IFRS issued by the International Accounting Standards Board ( IASB) and approved by the European Union. IFRS include all the revised international accounting standards (IAS), and all of the interpretations of the International Financial Reporting Interpretations Committee ( IFRIC ). New accounting standards and interpretations adopted from January 1, 2013 The accounting standards adopted at December 31, 2013 are in line with those utilised at December 31, 2012, with the exception of those applied by the Group for the first time from January 1, 2013, which produced the effects outlined below on the financial statement presentation and relative disclosure. Amendment to IAS 1 Presentation of Financial Statements - Disclosure in the financial statements of the other items in the comprehensive income statement. On June 16, 2011, the IASB issued amendments to IAS 1 Presentation of other comprehensive income statement items which introduced, among other issues, the obligation to group comprehensive income statement items according to whether they may be reclassified to the income statement in accordance with IFRS. The amendment, applied by the company from January 1, 2013 in line with the indications contained in the amendment, only concerns the manner for presentation in the comprehensive income statement of the relative items and does not have any effect on the results or the financial position of the Company. 65

68 Notes to the Consolidated Financial Statements IAS 19 Employee Benefits The IASB issued the new version of IAS 19 Employee Benefits which introduces, among other issues: (i) the obligation to recognise actuarial gains/(losses) in the comprehensive income statement, removing the possibility to adopt the corridor approach. Actuarial gains/(losses) recognised in the comprehensive income statement are not subsequently recognised to the income statement; and (ii) the elimination of the separate indication of the cost components concerning defined benefit liabilities, according to the expected return of the plan assets and the interest cost, and replacement with the net interest aggregate cost. This aggregate is determined applying to these liabilities, net of the plan assets, the discount rate established for the liabilities. The new provisions require also additional financial statement disclosure for defined benefit plans. The provisions are effective from periods beginning on, or subsequent to, January 1, The company adopted these amendments under the transition rules established by IAS 19, restating the Consolidated Balance Sheet, Consolidated Income Statement, Consolidated Comprehensive Income Statement and the Consolidated Cash Flow Statement for the comparative year. In relation to the Consolidated Balance Sheet, the Other net equity components include the actuarial gains/(losses) on defined benefit plans (actuarial loss of Euro 351 thousand), which are recognised to the Consolidated Comprehensive Income Statement items which may not be subsequently reclassified to the net result in the Consolidated Income Statement. The Consolidated Financial Statements of Zignago Vetro SpA for the years ended December 31, 2013 and December 31, 2012 were prepared under the historical cost convention, except for investments in financial assets and in derivative instruments, which are recorded at fair value. The effects on the income statement, the comprehensive income statement and the cash flow statement are summarised below. 66

69 Notes to the Consolidated Financial Statements Consolidated Income Statement (in Euro) 2012 Published Effect from application of IAS 19 amended 2012 Restated Revenues 298, ,751 Raw material, ancillary, consumable consumables and goods (59,257) --- (59,257) Services (99,274) --- (99,274) Labour costs (68,055) 804 (67,251) Amortisation and depreciation (24,968) --- (24,968) Other operating expenses (3,240) --- (3,240) Other operating income 1, ,649 Operating profit 45, ,410 Investment income Financial income --- Financial charges (3,269) (320) (3,589) Net exchange gains/(losses) Profit before taxes 43, ,962 Income taxes (12,946) (133) (13,079) Net profit 30, ,883 67

70 Notes to the Consolidated Financial Statements Consolidated Comprehensive Income Statement (Euro thousands) 2012 Published Effect from application of IAS 19 amended 2012 Restated (*) Group net profit 30, ,883 Other comprehensive income statement items subsequently to be reclassified to net proft (loss) for the year Translation difference Fiscal effect Total other comprehensive income statement items subsequently to be reclassified to net proft (loss) for the year Other comprehensive income statement items not subsequently to be reclassified to net proft (loss) for the year Actuarial losses on defined benefit plans --- (484) (484) Fiscal effect (351) (351) Total other comprehensive income statement items not subsequently to be reclassified to net proft (loss) for the year --- (351) (351) Total other comprehensive income statement items, net of taxes Total comprehensive net profit 976 (351) , ,508 68

71 Notes to the Consolidated Financial Statements Consolidated Cash Flow Statement (Euro thousands) CASH FLOW FROM OPERATING ACTIVITIES: 2012 Published Effect from application of IAS 19 amended 2012 Restated Net profit 43, ,963 Adjustments to reconcile net profit with cash flow generated from operating activities: Amortisation & depreciation 24, ,968 Losses/(gains) on disposals of --- property, plant and equipment (37) --- (37) Doubtful debt provision Net change in --- post-employment benefits 296 (804) (508) Net change in other provisions Financial income and exchange gains (1,141) --- (1,141) Financial charges and exchange losses 3, ,589 Income taxes paid in the year (18,381) --- (18,381) Changes in operating assets and liabilities: --- Decrease/(increase) in trade receivables (260) --- (260) Decrease/(increase) in other current assets (783) --- (783) Decrease/(increase) in inventories (8,498) --- (8,498) Increase/(decrease) in trade & other payables (1,351) --- (1,351) Increase/(decrease) in other current liabilities Other non-current assets and liabilities Total adjustments and changes (1,431) (485) (1,916) Net cash flow generated from operating activities (A) 42, ,047 CASH FLOW FROM INVESTING ACTIVITIES: Investments in intangible assets (186) --- (186) Investments in tangible assets (34,657) --- (34,657) Increase (decrease) in fixed asset payables 1, ,250 Investments (divestments) in financial assets (2,733) Acquisition of investments, net of cash acquired 4, (2,733) Sales price of property, plant and equipment ,661 Net cash flow from investing activities CASH FLOW FROM FINANCING ACTIVITIES: (B) (31,663) --- (31,663) Interest paid in the year (2,437) --- (2,437) Interest received in the year Net change in short-term bank borrowings 7, ,909 New medium/long term loans 18, ,448 Repayment of medium/long term loans (13,080) --- (13,080) Dividends (24,399) --- (24,399) Net cash flow from financing activities Change in balance sheet accounts translation effect Net change in cash and cash equivalents (C) (12,576) --- (12,576) (D) D) (1,770) --- (1,770) Cash available at beginning of the year 46, ,459 Cash available at end of the year 44, ,689 69

72 Notes to the Consolidated Financial Statements Other new standards and amendments entered into force from January 1, 2013, but did not impact the 2013 financial statements. Among these we highlight: IFRS 13 Fair value measurement; IFRS 7 Additional disclosure - offsetting of financial assets and liabilities ; and within the annual cycle of improvements of the principal international accounting standards ; IAS 1 Presentation of financial statements Clarification on comparative disclosure required. IAS 16 - Property, plant and equipment; IAS 32 Financial instruments: presentation and additional disclosure. Accounting standards, amendments and interpretations approved by the European Union, but not yet applied and adopted in advance They will however be applied upon entry into force of the following standards or interpretations issued by the IASB and already approved by the European Union, whose adoption is obligatory for accounting periods beginning from January 1, They principally relate to: IFRS 10 Consolidated Financial Statements IAS 27 Separate financial statements (updated version); IFRS 11 Joint Arrangements, and IAS 28 Investments in associates and joint ventures; Amendments to IAS 32 Offsetting of financial assets and liabilities; Amendments to IFRS 10, IFRS 11 and IFRS 12 Guide to transitional provisions; Amendments to IAS 36 - Additional disclosure on the recoverable amount of non-financial assets. The Group will adopt the following standards when they enter into force. From a preliminary analysis there should not be any significant impact in the measurement of the assets, liabilities, costs and revenues of the company, with the exception of those arising from the application of IFRS 11 Joint arrangements, applied for the Group from January 1, IFRS 11 in fact, replacing IAS 31 Interests in Joint Ventures and SIC 13 Jointly Controlled Entities non-monetary contributions by ventures, identifies, on the basis of the rights and obligations of the participants, two types of agreements - joint operations and joint ventures - and governs the consequent accounting treatment to be adopted for recognition in the financial statements. The investment in a joint operation results in the recognition of the assets/liabilities and costs/revenues related to the agreement based on the rights/commitments of the participants, independent of their shareholding. In relation to the recognition of joint ventures, IFRS 11 eliminates the option to recognise companies under joint control utilising the proportional consolidation method and requires subsidiaries jointly controlled fulfilling the definition of a joint venture to be recognised utilising the equity method. 70

73 Notes to the Consolidated Financial Statements Within the Zignago Vetro Group, the subsidiaries Vetri Speciali S.p.A. and Vetreco S.r.l. fulfill the definition of a joint venture. Therefore in the Interim and Annual Accounts for the year ended December 31, 2014, the Group must recognise these investments in accordance with the equity method, rather than the proportional consolidation method. The standard must be applied retrospectively, from periods beginning January 1, The explanatory notes of the annual consolidated financial statements must report the disclosures required by IFRS 11 concerning joint ventures no longer subject to the proportional consolidation method. In relation to the current year to December 31, 2013, the Group estimates that the adoption of the new standard, although with no effect on the net result or overall net equity, will result in a decrease in the net debt of Euro 32.7 million. At income statement level, a reduction in revenues of Euro 64 million is estimated, while the measurement under the equity method of Euro 10.5 million on the basis of the current review made by management and taking into account the strategic and industrial values of the jointly controlled investments, will be presented in the operating result in a separate account. The current assets and current liabilities will reduce respectively by Euro 27.7 million and Euro 31.6 million, while non-current assets and liabilities will reduce respectively by Euro 21.7 million and Euro 17.8 million. Consolidation scope and criteria The principal consolidation principles adopted were as follows: - the elimination of the carrying value of the investment against the recording of the assets and liabilities of the subsidiary according to the line-by-line method or the proportional consolidation; - the recognition of any possible minority interest in net equity and result; - the elimination of all intergroup transactions, consisting of payables and receivables, sales and purchases, and unrealised profits and losses; 71

74 Notes to the Consolidated Financial Statements - The financial statements of the Subsidiaries utilised for the preparation of the consolidated financial statements are those approved by the respective Board of Directors which will be presented to their respective shareholders meeting for approval. The reporting date of the consolidated companies is the same as the parent company. The financial statements of the consolidated companies are adjusted, where necessary, in line with the accounting principles utilised by the Parent Company, which are in accordance with the IFRS adopted by the European Union. The assets and liabilities, charges and income of the companies consolidated under the line-by-line method are fully included in the consolidated financial statements; the book value of the investments is eliminated against the corresponding fraction of the net equity of the subsidiaries. 72

75 Notes to the Consolidated Financial Statements The Companies included in the Consolidated Financial Statements at December 31, 2013 are shown in the following table: Consolidated Companies Registered office Share capital (in local currency) Percentage holding of the Group Zignago Vetro SpA (parent company) Fossalta di Portogruaro (VE) 8,800, Companies consolidated by the line-by-line method: Verreries Brosse SAS Vieux-Rouen-sur-Bresle (France) 4,000, % - Brosse USA Inc. New Jersey (U.S.A.) USD 10, % Huta Szkła S.A. (HSC SA) Varsavia (Poland) PNL 3,594, % Companies consolidated by the proportional method: Vetri Speciali SpA Trento (TN) 10,062,400 50% Vetreco Srl Supino (FR) 400,000 30% Translation of financial statements in currencies other than the Euro The rules for the translation of financial statements of Companies which operate in a currency other than the Euro are the following: - the assets and the liabilities were translated using the exchange rate at the balance sheet date; - the costs and revenues, and income and charges, were translated using the average exchange rate for the year; - the Translation reserve includes both the foreign exchange differences generated from the translation of foreign currency transactions at a rate different than at the balance sheet date and those generated from the translation of the opening shareholders equity at a different rate than that at the balance sheet date; - goodwill related to the acquisition of a foreign entity is treated as assets and liabilities of the foreign entity and translated at the balance sheet date. The exchange rates applied are reported in the following table those published by the Italian Exchange Office: 2013 Exchange Rates 2012 Exchange Rates Value at December 31 year average at December 31 year average USD PLN

76 Notes to the Consolidated Financial Statements Accounting principles The Consolidated Financial Statements of the Zignago Vetro Group for the year ended December 31, 2013 were prepared under the historical cost convention, except for investments in financial assets and in derivative instruments, which are recorded at fair value. The Consolidated Financial Statements were prepared on the going concern basis, which is considered to have been largely satisfied. For further information, reference should be made to the Directors Report. Property, plant & equipment Property, plant & equipment are recognised at historical cost, including directly allocated accessory costs and those necessary for bringing the asset to the condition for which it was acquired. Land, both constructible and relating to civil and industrial buildings, is generally accounted for separately and is not depreciated in that it has an unlimited useful life. Maintenance and repair expenses, which do not increase the value and/or extend the residual useful life of the asset are expensed in the year in which they are incurred; where they increase the value and/or extend the residual life of the assets, they are capitalised. Tangible assets are presented net of accumulated depreciation and any losses in value, established by an impairment test. Depreciation is calculated on a straight-line basis according to the estimated useful life of the asset; the useful life is reviewed annually, and any changes (if necessary) are made on the basis of the new estimate. The principal depreciation rates applied are as follows: Category Depreciation rate Industrial buildings 1% -5.5% General plant and machinery 4%-10% Specific plant and machinery 8%-15% Equipment (moulds) 40% - 100% Kilns and related equipment 10% - 22% Office furniture and fittings 12% EDP 20% Commercial equipment and furnishings 15% Internal communication systems 25% Transport vehicles 25% The book value of tangible assets is tested to ascertain possible losses in value if events or circumstances indicate that the book value cannot be recovered. If there is an indication of this type and in the case where the carrying value exceeds the realisable value, the assets must be written down to their realisable value. The realisable value of the property, plant and equipment is the higher between the sales price (fair value), minus any relative expenses, and the value in use. 74

77 Notes to the Consolidated Financial Statements The losses in value are recognised in the income statement. Such losses are restated when the reasons for their write-down no longer exist. At the time of sale, or when there are no expected future economic benefits from the use of an asset, it is eliminated from the financial statements and any loss or profit (calculated as the difference between sale s price and book value) is charged to the income statement in the year of its elimination. Leased assets The assets acquired through finance lease contracts, which transfer the majority of the risks and benefits related to the ownership of an asset to the Group, are capitalised among property, plant and equipment at the commencement of the lease at the fair value of the leased assets or, if lower, at the current value of the minimum lease payments. A payable is recorded under liabilities for a similar amount, which is progressively reduced based on the repayment of the capital portion included in the contractual instalments. Lease instalments are allocated to principal and interest to obtain application of a constant interest rate on the balance of the debt (principal). Financial expenses are charged to the income statement. The depreciation of these assets is calculated based on the economic useful life similar to the other tangible fixed assets. Leases in which the lessor substantially retains all of the typical risks and rewards of ownership are classified as operative. The initial costs incurred on operating leasing contracts are considered increases in the cost of the asset leased and are recorded over the duration of the lease contract against the revenues generated from the lease. Operative lease instalments are charged to the income statement over the duration of the lease contract. Business combinations and goodwill Business combinations are recognised using the purchase method. At the control acquisition date, the net equity of the consolidated companies is established attributing to the individual assets and liabilities their fair value. Any positive difference between the acquisition cost and the fair value of the net assets acquired is recorded in the asset account Goodwill ; if negative, it is recognised to the income statement. In the case of full control not being acquired the minority interest net equity is established based on the share of the fair value attributable to the assets and liabilities at the date of acquisition of control, excluding any attributable goodwill (so-called partial goodwill method). Alternatively, in the case of full control not being acquired, the entire amount of goodwill generated by the acquisition is recorded considering therefore also the minority interest share (full goodwill method); they are expressed at their overall fair value including therefore the share of goodwill. The goodwill calculation method is chosen on a case by case basis for each business combination. In the case of business combinations undertaken in a series of phases, the previous holding is revalued at fair value at the acquisition date and any gain or loss is recorded to the income statement. It is therefore considered in the determination of the goodwill. 75

78 Notes to the Consolidated Financial Statements Any potential payment to be recognised is recorded by the acquirer at fair value at the acquisition date. The change in the fair value of the potential payment classified as an asset or liability, as a financial instrument which is subject to IAS 39 financial instruments: recognition and measurement, must be recognised in the income statement and in the other items of the comprehensive income statement. Where the potential payment is not within the scope of IAS 39, the amount is measured in accordance with the appropriate IFRS. If the potential payment is classified in equity, the amount is not revalued and its subsequent settlement is recorded in equity. With regard to holdings acquired subsequent to the acquisition of control (minority interest acquisitions), any positive difference between the acquisition cost and the corresponding fraction of net equity acquired is recognised to net equity; similarly the effects from the sale of the minority share without loss of control are recognised to net equity. Goodwill deriving from the acquisition of subsidiaries is initially recorded at cost, and represents the surplus of acquisition cost compared to the purchaser s share of net fair value with respect to identifiable values of the assets and liabilities acquired, current and potential. After initial recognition, goodwill is not amortised and is reduced in the case of loss in value. This is determined following an impairment test, as described below. If the goodwill is allocated to a cash-generating unit and the entity sells part of the activities of this unit, the goodwill associated with the activity sold is included in the book value of the activity when determining the gain or loss deriving from the sale. The goodwill associated with assets sold is calculated based on the relative values of the asset sold and the part maintained by the cash generating unit. On the first-time adoption of IFRS, the Group has chosen not to apply IFRS 3 - Business Combinations in retrospective manner for the acquisition of companies prior to January 1, consequently, the possible goodwill generated on the acquisitions prior to the transition date to IFRS was maintained at the previous value determined in accordance with Italian GAAP, with the prior verification and recording of any loss in value. Intangible assets The intangible assets with definite lives are subject to verification of any loss in value when events or changes occur indicating that the carrying value can no longer be recovered. Intangible assets acquired separately are recorded under assets at purchase price including incidental costs directly attributable to the asset. After their initial recognition, intangible assets with definite useful lives are recognised net of the relative accumulated amortisation and any permanent impairment in value, determined in the same manner as that for tangible assets. The useful life is reviewed on an annual basis and any changes, where necessary, are made in accordance with future estimates. The amortisation rates of intangible fixed assets with definite useful life were as follows: Category Rate Concessions, licences and trademarks 8.33% -20% % 76

79 Notes to the Consolidated Financial Statements The Group does not hold intangible assets with indefinite useful lives. The gains and losses deriving from the disposal of intangible assets are determined as the difference between the value of disposal and the carrying value of the asset and are recorded in the income statement at the moment of the disposal. Research and development costs Research costs are recognised in the income statement in the year in which they are incurred. The development costs incurred in relation to a specific project are capitalised only when the Group can demonstrate the technical possibility to complete the intangible asset in order to make it available for use or sale, the intention of the company to complete this asset for use or sale, the manner in which it will generate probable future economic benefits, the availability of technical and financial resources in order to complete the development and the capacity to evaluate in a reliable manner the cost attributable to the activity during its development and the existence of a market for the products and services deriving from the activities or their use for internal purposes. 77

80 Notes to the Consolidated Financial Statements Impairment of goodwill and intangible and tangible fixed assets At each half-year and year-end financial statements, the Group assesses for the existence of indicators of a loss in value of goodwill, of intangible assets with definite useful lives and of tangible assets, including finance lease assets. Where such indicators arise, an impairment test is made. Goodwill is subject to an impairment test, independently of the existence of any indicators of loss in value. In both cases, an annual verification of the carrying value of the goodwill and of the intangible assets with indefinite useful life is carried out, or of the tangible fixed assets and intangible assets with definite useful life; in the presence of indicators of loss in value, the Group makes an estimate of the recoverable value. The recoverable value is the higher between the fair value of an asset or a cash generating unit less costs to sell and its value in use and is determined for each asset, except when the asset does not generate cash flows which are sufficiently independent from those generated from other assets or groups of assets, in which case the Group estimates the recoverable value of the unit generating the cash flows of the asset to which it belongs. In particular, as the goodwill does not generate cash flows independent from other assets or group of assets, the verification for the reduction in value relates to the unit or the group of units to which the goodwill was allocated. In the determination of the value in use, the estimated future cash flows are discounted by the Group at a pre-tax rate that reflects the market assessment of the time value of money and the risks specific to the asset. For the purposes of the estimate of the value in use of the future revenue streams, the business plans approved by Management are used, which constitute the best estimate made by the Group on the expected economic conditions in the period of the plan. The projections of the plan normally cover a period of three years; the long term growth rate utilised for the purposes of the estimate of the terminal value of the asset or of the unit is normally lower than the average long term growth rate of the sector, of the country or of the market and, if appropriate, may amount to zero or may even be negative. Future cash flows shall be estimated taking account of its current condition. The estimates therefore does not consider the benefits deriving from the future restructurings for which the Company has not committed any future improvements or optimisation of the assets or of the unit. If the book value of an asset or the unit generating cash flows is higher than its recoverable value, this asset has incurred a loss in value and is consequently written down to the recoverable value. The losses in value incurred by operating assets are recorded in the income statement in the category of costs relating to those assets. At each balance sheet date, the Group evaluates, in addition, the existence of indicators of a decrease in the loss of value previously recorded and, where these indicators exist, makes a new estimate of the recoverable value. The value of an asset previously written down, except for goodwill, may be restated only if there have been changes in the estimates used to determine the recoverable value of the asset after the last recording of a loss in value. In this case, the book value of the asset is recorded at the recoverable value, with the restated value not exceeding the book value which would have been determined, after depreciation, if no loss in value had been recorded in previous years. Each revaluation is recorded as income in the income statement; after the recording of the amount restated, the depreciation of the asset is adjusted in future years, in order to record the adjusted book value, net of any residual value, over the useful life of the asset. 78

81 Notes to the Consolidated Financial Statements The value of the goodwill previously written down may not be restated. Interests in joint ventures The Group holds investments in two joint ventures classified as jointly controlled enterprises. As permitted by IFRS 11 in force since December 31, 2013, the Group consolidates its investments in joint ventures under the proportional method, aggregating the line-by-line share of assets, liabilities, revenues and costs of the jointly controlled enterprise with the respective accounts of the consolidated financial statements. The joint venture prepares its financial statements for the same financial year as the parent company and applies uniform accounting principles. The share of non-realised profits and loss relating to transactions between the Group and the joint ventures were eliminated from the Group consolidated financial statements. The proportional consolidation of the joint-venture is interrupted when the Group ceases to have joint control. Once joint control is lost the Group evaluates and records its residual investments at fair value. Any difference between the carrying value of the former jointly controlled enterprise and the fair value of the residual investment and the income deriving from the sale are recorded in the income statement. When the residual investment comprises an enterprise with significant influence it is recognised as an associate. Investments The investments in companies not consolidated which represent long term investments are recorded under fixed assets and measured at cost if the holding is less than 20% or under the equity method if the holding is between 20% and 50%. The value recorded in the financial statements of the former is determined based on the purchase price or subscription or value attributed on assets conferred, including possible accessory charges. The investments are subject to a verification of any loss in value each year, or if necessary more frequently. Where there is an indication that these investments have incurred a loss in value, the loss is recognised in the income statement as a write-down; the original value is written back in subsequent years if the reasons for the write-down no longer exist. Inventories Inventories are stated at the lower of purchase and/or production cost, determined by the weighted average cost method annually and the net realisable value or substitution cost. The net realisable value is determined based on the estimated selling price in normal market conditions, net of direct sales costs. Obsolete and/or slow-moving inventories are written down in relation to their presumed utilisation or future realisable value. The write-downs made are restored in future years should the reason for the write-down no longer exist. 79

82 Notes to the Consolidated Financial Statements Trade receivables The trade receivables, which mature within the normal commercial terms, are recognised at cost (identified by their nominal value) net of the relative loss in value. They are adjusted to their realisable value through the recording of a specific provision, which is created when there is evidence that the Group will not be able to collect the receivable for the original value. The trade receivables, which mature beyond the normal commercial terms, are discounted in order to separately consider the implied financial component. Cash and cash equivalents This includes the balances and those values which are available on demand at short notice, certain in nature and with no payment expenses. Medium/long-term loans The medium/long term loans are initially recognised at fair value, net of the transaction costs sustained. After initial recognition, the financial liabilities shall be measured at amortised cost using the original effective interest rate, which is the rate that renders equal, on the initial recognition, the current cash flow value and the initial recognition value (amortised cost method). Derivative financial instruments The Group may hold financial derivatives in order to cover its exposure to interest rate risk regarding specific liabilities. In line with the strategy chosen, the Group does not carry out operations and derivatives for speculative purposes. However, in the case where these operations may not be accounted for as hedging operations, they are recorded as speculative operations. The derivatives are classified as hedging instruments when the relation between the derivative and the hedged item is formally documented and the effectiveness of the hedge, periodically verified, is high. When the hedged derivatives cover the risk of change of the fair value of the instruments hedged (fair value hedge; e.g. hedge in the variability of the fair value of asset/liabilities at fixed rate), these are recorded at fair value through the income statement; therefore, the hedging instruments are adjusted to reflect the changes in fair value associated to the risk covered. When the derivatives hedge the risk of changes in the cash flows of the hedge instrument (cash flow hedge; e.g. coverage of changes in cash flow of asset/liabilities at variable interest rate due to changes in the interest rates), the changes in the fair value are initially recognised under equity and subsequently through the income statement in line with the economic effects produced from the operation hedged. The changes in the fair value of the derivatives compared to their initial value, which do not satisfy the conditions for hedge accounting, are recorded through the income statement. 80

83 Notes to the Consolidated Financial Statements Elimination of financial assets and liabilities Financial assets (or, where applicable, part of a financial asset or part of a group of similar financial assets) are eliminated from the financial statements when: the right to receive the financial flows of the asset terminate; the company retains the right to receive cash flows from the asset, but has a contractual obligation to pay them fully and without delay to a third party; the company has transferred its right to receive the cash flows from the asset and (i) has transferred substantially all of the risks and rewards of ownership of the financial asset or (ii) has not transferred or retained substantially all of the risks and rewards of the asset, but has transferred control. Where the Company has transferred all the rights to receive the financial flows of an asset and has not substantially transferred or withheld all of the risks and rewards or has not lost control, the asset is recorded in the financial statements of the Company up to the amount of its residual holding in the asset. A financial liability is derecognised from the financial statements when the underlying liability is settled or cancelled. If an existing financial liability is replaced by another by the same lender but under substantially different conditions, or if the conditions of an existing financial liability are substantially changed, such a swap or change is treated as an elimination of the original liability and the opening of a new liability, with any differences in accounting values recorded in the income statement. Gas emissions The Group receives free gas emission rights in Italy under the European Emission Trading Schemes. The rights are conferred annually and in exchange the Group must offset the emissions made. The Group has adopted a policy which provides for the recording of the assets/liabilities relating to the emission rights granted. Therefore, a provision is recorded only when the effective emissions exceed the emission rights granted and still available. The costs related to the emissions are recorded under other operating costs. When the emission rights are acquired from other parties, they are recorded at cost and treated as repayment rights and therefore recorded as emission liabilities and re-valued at fair value, with the recognition to the income statement of the changes in fair value. Treasury shares Treasury shares are recorded as a reduction of shareholders equity based on the relative acquisition cost. No profit or loss is recorded to the income statement on the acquisition, sale or cancellation of treasury shares. Any difference between the book value and the amount paid is recorded in other capital reserves. Provisions for risks and charges The provisions for risks and charges are recorded when a legal or implicit current obligation exists that derives from a past event and a payment of resources is probable to satisfy the obligation and 81

84 Notes to the Consolidated Financial Statements the amount of this payment can be reliably estimated. Provisions are recorded at the value representing the best estimate of the amount that the Company would pay to discharge the obligation or to transfer it to a third party at the balance sheet date. If the effect of discounting is significant, the provisions are calculated by discounting the expected future cash flows at a pre-tax discount rate which reflects the current market assessment of the time value of money. Where discounting is applied, the increase in the provision due to the passage of time is recognised as an interest expense. Post-employment benefits The benefits guaranteed to employees paid on the termination of employment (post-employment benefits) or other long-term benefits are recognised in the period the right matures. The amounts due from Italian companies of the Group concerning benefits due on termination of employment are categorised by type: defined contribution plans, concerning amounts matured since January 1, 2007; defined benefit plans, concerning the post-employment benefit provision matured until December 31, For the defined contribution plans, the legal or implied obligation is limited to the amount of contributions to be paid: consequently, the actuarial risk and the investment risk is borne by the employee. For the defined benefit plans, the obligation of the company concerns the granting and assurance of the agreed employee plans: consequently, the actuarial risk and the investment risk is borne by the company. The liability for defined benefit plans, net of any plan assets, is calculated on the basis of actuarial assumptions and is recorded by the accrual method consistent with the years of employment necessary to obtain such benefits. The liability is calculated by independent actuaries utilising the projected unit credit method, on the basis of demographic assumptions in relation to mortality rates and population rotation, and financial assumptions concerning the discount rate which reflects the value of money over time and the inflation rate. The cost to be recognised to the income statement is based on: current service cost, recognised to personnel costs; the cost of interest, recognised to borrowing costs; the expected return on plan assets, if existing, recognised to financial items. The gains and losses deriving from the actuarial calculation are however fully recognised to the comprehensive income statement in the period in which they arise, under the items which may not be subsequently reclassified to the income statement. Trade payables The trade payables, which mature within the normal commercial terms, are not discounted and are recognised at amortised cost (identified by their nominal value). This account includes certain liabilities both in their amount and due date. 82

85 Notes to the Consolidated Financial Statements Other current liabilities The other current liabilities are recorded at their nominal value. Revenues and costs Revenues and costs are accounted for on an accrual basis. Revenues and incomes are recorded at fair value, net of returns, discounts and premiums. Revenues from the sale of products are recognised at the moment of the transfer of ownership which generally coincides with the shipment of the goods and which transfers all the risks and benefits connected to the products sold. Costs are recorded when relating to goods and services sold or consumed in the year or when there is no future utility. Personnel costs include the amount of remuneration paid, pension fund provisions, provisions for vacation days matured and social security charges due according to existing contracts and applicable legislation. Grants Grants are recorded at fair value when there is a reasonable certainty that they will be received and that the conditions required to obtain them will be satisfied. When the grants refer to specific components of operating costs (excluding depreciation) they are recorded directly as a reduction of these costs. In particular: i) the tariff subsidies received as an industrial enterprise consuming large amounts of energy (so-called energy consuming enterprise) are recognised on the basis of consumption recorded and as a reduction of energy costs; ii) the energy efficiency securities (TEE, or also white certificates) against energy efficiency projects authorised by the GSE (electric service operator) are recorded on the basis of production volumes and the consequent energy absorbed and as a reduction of energy costs; iii) the tariff incentives related to the self-production of energy with photovoltaic plant are recognised based on the self-produced volumes and also recorded as a reduction of energy costs. Financial income and charges Financial income and expenses are recorded on an accruals basis on the interest matured on the net value of the relative financial assets and liabilities and utilising the effective interest rate. Dividends Dividends are recorded when the shareholders have the right to receive them. 83

86 Notes to the Consolidated Financial Statements Income taxes Income taxes for the year are calculated based on the fiscal charge in accordance with current fiscal legislation. The provisions for current income taxes are recorded in the balance sheet net of payments on account and withholding taxes. Deferred tax assets and liabilities are calculated on temporary differences between the values recorded in the financial statements and the corresponding values recognised for fiscal purposes, except goodwill deriving from business combinations. Deferred tax assets are recorded only when their future recovery is probable - that it to say that is expected that sufficient tax profits will be attained by them to allow their recovery - while the deferred tax liabilities are not recorded where the relative payable is improbable. Deferred tax assets and liabilities are determined with the tax rates that are expected to be applied, in accordance with the regulations of the countries in which the Group operates, in the years in which the temporary differences will be realised or settled. In accordance with IAS 12, the Group records deferred tax liabilities on the suspended taxes in the net equity reserve, only where these reserves are not considered by Management to be permanently acquired by the Group and when it is not probable that the realisation will result in a fiscal liability. Foreign currency transactions The functional and presentation currency adopted by the Zignago Vetro Group is the Euro. The transactions in currencies other than the Euro are recognised, initially, at the exchange rate at the date of the transaction. The monetary assets and liabilities in foreign currencies other than the Euro are translated to the operating currency at the exchange rate at the balance sheet date. The non-monetary accounts measured at historical cost in foreign currencies are translated using the exchange rate at the date of initial recognition of the operation. Non-monetary items The non-monetary accounts recorded at fair value are translated using the exchange rate at the date the value was determined. 84

87 Notes to the Consolidated Financial Statements Earnings per share The basic earnings per share is calculated by dividing the consolidated net profit for the year attributable to the Company s shareholders by the weighted average number of ordinary shares outstanding during the year, net of treasury shares. In order to calculate the diluted earnings per share, the average weighted number of shares outstanding is adjusted assuming the conversion of all shares with potential dilution effect. The Group s net result is also adjusted to account for the effects of conversion of potential shares, net of taxes. Discretional valuations and use of estimates The preparation of the financial statements and the relative notes in application of IFRS require that Management make estimates and assumptions on the values of the assets, liabilities, costs and revenues in the financial statements and on the disclosures relating to the assets and contingent liabilities at the balance sheet date. The uncertainty concerning these assumptions and estimates could result in significant changes in the book value of these assets and/or liabilities in the future. The estimates are used to value the provisions for risk on receivables, inventory obsolescence, depreciation and amortisation, write-down of assets, employee benefits, income taxes, other provisions and funds. The amounts of the individual categories are reported in the notes to the financial statements. The estimates and assumptions are reviewed periodically and the effects of any changes are recorded immediately in the income statement in the period of the revision of the estimate, if the revision has effect only on that period, or also in subsequent periods if the revision has effect on the current year and on future years. 85

88 Notes to the Consolidated Financial Statements COMMENTS ON THE PRINCIPAL BALANCE SHEET ACCOUNTS NON-CURRENT ASSETS (Euro thousands) 173, , Property, plant and equipment (Euro thousands) 128, ,559 The table below shows the historical cost, depreciation provisions and net values of tangible fixed assets in the two years: (Euro thousand) Historical Accumulated Net Historical Accumulated Net Cost Depreciation Value Cost Depreciation Value Land and buildings 71,846 (37,818) 34,028 68,414 (35,611) 32,803 Plant & machinery 295,145 (214,115) 81, ,330 (212,505) 63,825 Commercial and industrial equipment Balance at Balance at ,344 (69,654) 7,690 74,767 (67,527) 7,240 Other assets 6,604 (5,160) 1,444 6,304 (4,996) 1,308 Assets in prog. & advances 4, ,188 16, ,383 Total 455,127 (326,747) 128, ,198 (320,639) 121,559 The table below shows the movements in property, plant and equipment in (Euro thousand) Balance at Acquisitio ns and capital. Decreases Depreciation Exchange difference Balance at Land and buildings 32,803 4,034 (470) (2,290) (49) 34,028 Plant & machinery 63,825 34,133 (279) (16,563) (86) 81,030 Commercial and industrial equipment 7,240 10,371 (3,986) (5,924) (11) 7,690 Other assets 1, (2) (534) (8) 1,444 Assets in prog. & advances 16, (12,862) --- (20) 4,188 Total 121,559 49,905 (17,599) (25,311) (174) 128,380 86

89 Notes to the Consolidated Financial Statements The table below shows the movements in property, plant and equipment in (Euro thousand) Balance at Acquisitions and capital. Decreases Depreciation Exchange difference Balance at Land and buildings 28,770 6,197 (2) (2,377) ,803 Plant & machinery 67,671 12,454 (339) (16,236) ,825 Commercial and industrial equipment 7,368 9,862 (4,258) (5,754) 22 7,240 Other assets 1, (90) (406) 20 1,308 Assets in prog. & advances 10,752 7,260 (1,655) ,383 Total 115,821 36,297 (6,344) (24,773) ,559 Land and buildings The table below shows the value of buildings recorded in accordance with the finance method (with indication of the value of the building and any improvements), and the value of the buildings owned for the year 2013: (Euro thousand) Balance at Increases Decreases and reclass. Depreciation Exchange differences Balance at Rental cont. 4, (2,840) (69) --- 1,699 Leasehold improv (941) (4) Total assets leased 5, (3,781) (73) --- 1,710 Total buildings owned 27,239 4,034 3,310 (2,217) (48) 32,318 Total land and buildings 32,803 4,034 (471) (2,290) (48) 34,028 The balance at December 31, 2013 was Euro 34,028 thousand compared to Euro 32,803 thousand at December 31, The increases in 2013 principally refer to the completion of the production plant at Vetreco Srl. Depreciation amounted to Euro 2,290 thousand in 2013 and to Euro 2,377 thousand in

90 Notes to the Consolidated Financial Statements Plant and machinery The balance at December 31, 2013 was Euro 81,030 thousand compared to Euro 63,825 thousand at December 31, The increases in 2013, totaling Euro 34,133 thousand, refer principally to the refurbishment of a kiln and related production lines at Zignago Vetro SpA, in addition to the normal renewal of plant. Depreciation amounted to Euro 16,563 thousand in 2013, compared to Euro 16,236 thousand in Industrial and commercial equipment The balance at December 31, 2013 was Euro 7,690 thousand compared to Euro 7,240 thousand at December 31, The increases in 2013, amounting to Euro 10,371 thousand, refer to the renewal of equipment, in particular moulds and pallets. The decreases in 2013 amounted to Euro 3,986 thousand and relate principally to the sale of moulds and pallets no longer utilised. Other assets This account at December 31, 2013 amounts to Euro 1,444 thousand and at December 31, 2012 amounted to Euro 1,308 thousand. Assets in progress and advances The balance at December 31, 2013 was Euro 4,188 thousand compared to Euro 16,383 thousand at December 31, Work in progress refers in particular to the acquisition of materials and plant related to the company Verreries Brosse Sas Goodwill (Euro thousands) 40,708 40,722 Euro 40,708 thousand recorded as goodwill refers to the higher value paid on acquisition, by Vetri Speciali SpA, of industries operating in the specialty glass sector in 2004 for Euro 39,967 thousand and the acquisition of HSC SA for Euro 741 thousand in The decrease in the year relates to the adjustments for exchange differences concerning the share of goodwill relating to assets in currencies other than the Euro. The value of the goodwill was subject to an impairment test In particular the goodwill of Vetri Speciali was subject to an impairment test, in which the following the goodwill was 88

91 Notes to the Consolidated Financial Statements allocated to the Cash Generating Units as an intangible asset not independently producing future economic benefits; the financial data is taken from the business plans prepared by Vetri Speciali SpA and approved by the Board of Directors; in order to identify the revenue streams, Ebitda was considered net of investments and changes in net working capital. In particular, the cash flow of 2018, utilised as a constant value to obtain the terminal value, was obtained assuming that the value of the investments were equal to the value of depreciation; The cash flows were discounted utilising WACC (average weighed cost of capital), with reference to the Capital Asset Pricing Model, based on indicators and parameters observable on the market, at the present value of money and specific risks related to the business valued at the reference date of the estimate. In particular the following assumptions and estimates were made: - risk free: 4.13%; - beta: 0.60; - risk premium (country risk): 5%; - debt/equity ratio: based on the financial statements of the Company at December 31, 2013 and the business plan budget; the terminal value was determined considering the same cash flows of 2018 constant for 8 years and discounting these amounts. The growth rate g was prudently assumed to be equal to zero; to determine the recoverable value, reference was made to the value in use. The impairment test did not indicate the necessity to record a write-down in the value of goodwill of both CGU s. The sensitivity analysis which increased the discount rate (WACC) by 1% did not affect the conclusions reached Intangible assets (Euro thousands) The following tables show the movements in intangible assets in the years considered: (Euro thousand) Balance at Purchases Decreases Amortisation Balance at Conc., licenses, trademarks & similar rights (3) (214)

92 Notes to the Consolidated Financial Statements (Euro thou.) Balance at Balance at Historical Accumulated Net Historical Accumulated Net Costs amortisation value Costs amortisation value Conc., licenses, trade marks 1,704 (1,428) 276 1,487 (1,214) 273 The account principally refers to costs incurred for the purchase of long-term application software, used for operational management Equity investments (Euro thousands) The table below shows the composition, unchanged in the year, of investments in other companies for the years ended December 31, 2013 and 2012: (Euro thousand) Balance at Balance at La Vecchia Scarl Consorzio Nazionale Imballaggi (CONAI) Energetico (A.I.C.E.) Vega - Parco Tecnologico 9 6 Consorzio Recupero Vetro (CO.RE.VE.) 9 9 Other 2 4 Total La Vecchia Scarl undertakes the management of the wastewater and treatment purification plant for primary water in service of the industrial headquarters at Fossalta di Portogruaro. 90

93 Notes to the Consolidated Financial Statements The information required by Article 2427, No 5 of the Civil Code concerning La Vecchia Scarl, associated company is reported below. Name % held Total assets Net equity Net profit Book and registered office by Total Total Total Proquota Proquota Proquota value at (Euro thousand) Parent amount amount amount amount amount amount Investments recorded under Associates Share capital La Vecchia Scarl 25% 1, , via Ita Marzotto 8, Fossalta di Portogruaro (Ve) Other non-current assets (Euro thousands) The account includes receivables for deposits provided to suppliers and for leased premises, the duration of which correlates to that of the contract, normally between one and five years. 91

94 Notes to the Consolidated Financial Statements Deferred tax assets (Euro thousands) 3,115 2,651 The table below shows the composition of the deferred tax assets: (Euro thousand) Balance at Balance at Temporary Tax Temporary Tax difference Effect difference Effect Doubtful debt provision not deductible 2, , Agents' supplementary indemnity Provision for industrial risks , Provision for contractual risks Pension fund 1, , Inventory provision 1, , Provision for emission trading Intercompany profit on Depreciation deductible in future years 1, Costs deductible in future years Tax losses carried forward 1, Uniform accounting principles Other Total 3,115 2,651 The Companies of the Group recorded deferred tax assets considering that the future assessable amounts will absorb all the temporary differences (including the consolidation adjustments). In measuring the deferred tax assets, reference is made to the IRES tax-rate of 27.50% and IRAP of 3.90%. The deferred tax assets principally refer to temporary deductible differences on risk provisions, the doubtful debt provisions, the pension indemnity provision, costs deductible in future years, in addition to tax losses carried forward. These may be carried forward indefinitely and concern Verreries Brosse SAS for Euro 1,582 thousand and Vetreco Srl for Euro 238 thousand. 92

95 Notes to the Consolidated Financial Statements Movements during the years of deferred tax assets are as follows: (Euro thousand) Balance at December 31, ,439 Utilisations (158) Increases Balance at December 31, ,651 Utilisations (308) Increases Balance at Decmber 31, , CURRENT ASSETS (Euro thousands) 180, , Inventories (Euro thousands) 68,110 61,921 The table below shows the composition of inventories: (Euro thousand) Balance at Balance at Raw materials, ancillary and consumables 10,991 10,194 Work-in-progress and semi-finished products 6,042 11,034 Finished products 54,553 43,656 Inventory provision (3,476) (2,963) Total 68,110 61,921 The increase in inventories (+10%), principally concerning finished products, is related to the planned increase in activity volumes. The movement during the year in the inventory obsolescence provision is as follows: (Euro thousand) Balance at December 31, ,763 Utilisations (19) Provisions Balance at December 31, ,963 Utilisations (20) Provisions Balance at December 31, ,476 93

96 Notes to the Consolidated Financial Statements Trade receivables (Euro thousands) 62,907 63,337 The table below illustrates the trade receivables and the relative doubtful debt provision: (Euro thousand) Balance at Balance at Trade receivables - Italy 37,210 34,994 Trade receivables - foreign 19,270 19,017 Bills receivables 10,220 13,196 Doubtful debt provision (3,793) (3,870) Total 62,907 63,337 Trade receivables were substantially unchanged compared to the previous year. The table below shows the breakdown of trade receivables by geographic area: (Euro thousand) Balance at Balance at Italy 43,347 43,614 European Union 15,825 13,320 Other countries 3,735 6,403 Total 62,907 63,337 The movement during the year in the doubtful debt provision is as follows: (Euro thousand) Individual Collective Total write-downs write-downs At December 31, ,175 1,636 3,811 Provisions Utilisations (151) --- (151) At December 31, ,138 1,732 3,870 Provisions Utilisations (213) --- (213) At December 31, ,950 1,843 3,793 The doubtful debt provision, taking into account the insurance policies, reduced Euro 77 thousand. 94

97 Notes to the Consolidated Financial Statements At December 31, 2013 and 2012 the overdue trade receivables, but not individually written down were as follows: (Euro thousand) Not overdue < 30 days other Total days days ,131 9,527 3,876 1,991 1,225 64, ,544 10,306 3, ,341 65,069 The majority of the receivables of Zignago Vetro SpA, representing 56.9% of the Group receivables, are covered by insurance policies. The Group does not have significant concentrations of credit risk at the balance sheet date. The trade receivables are non-interest bearing and are payable within 60 days Other current assets (Euro thousands) 4,607 4,637 The table below shows the composition of Other current assets : (Euro thousand) Balance at Balance at Advances to social security institutions and receivables from employees and agents VAT receivables 2,278 2,643 Advances to suppliers Other receivables 1, sub) 3,922 3,823 Accrued income for: - interest on bank deposits services Prepayments: - insurance premiums services sub) Total 4,607 4,637 95

98 Notes to the Consolidated Financial Statements Income tax receivables (Euro thousands) 5,242 4,410 The table below shows the breakdown of current income tax receivables: (Euro thousand) Balance at Balance at Income taxes 1,401 1,708 IRAP Parent Company - Fiscal Consolidation 2, Parent Company - Reimbursement tax on IRAP tax deductions 1,236 1,236 Tax receivables - reimburs. tax on IRAP tax deductions Total 5,242 4,410 The income tax receivable refers to payments on account made in the year and above the actual amount due at the year-end. The account Parent Company - fiscal Consolidation of Euro 2,090 thousand relates to the payment of taxes greater than that subsequently established according to the assessable base for the period. The further account Parent Company - Reimbursement tax on IRAP tax deductions of Euro 1,236 thousand concerns the requested IRES repayment based on the deductibility of IRAP on the cost of labour for the years from 2007 to 2011 inclusive Cash and cash equivalents (Euro thousands) 39,367 44,689 The table below shows the composition of cash and cash equivalents: (Euro thousand) Balance at Balance at Term bank deposits 21,955 36,938 Bank and postal accounts 17,384 7,729 Cash in hand and similar Total 39,367 44,689 Cash and cash equivalents at December 31, 2013, amounting to Euro 39,367 thousand compared to Euro 44,689 thousand at December 31, 2012, are not subject to restrictions. Reference is made to the cash flow statement in relation to liquidity. 96

99 Notes to the Consolidated Financial Statements CONSOLIDATED SHAREHOLDERS EQUITY (Euro thousands) 129, , Group shareholders' equity (Euro thousands) 129, ,478 The increase in Group shareholders equity at December 31, 2013 on the end of 2012 of Euro 4,141 thousand is attributable principally to the group net profit for the year (Euro 26,134 thousand), the distribution of dividends (Euro 21,645 thousand), the decrease in the translation reserve (Euro 220 thousand) and actuarial losses on individual defined benefit plans (Euro 122 thousand). With reference to the Statement of changes in Consolidated Shareholders Equity the following information is provided below. Share capital The share capital of Zignago Vetro SpA, the Parent Company, at December 31, 2013 and 2012, Euro 8,800 thousand, which is fully subscribed and paid-in, comprises 88,000,000 ordinary shares with a par value of Euro 0.10 each. Legal reserve The legal reserve of Zignago Vetro SpA of Euro 1,760 thousand increased by Euro 160 thousand during the year and at December 31, 2013 amounts to one-fifth of the share capital. Revaluation reserve The revaluation reserve, unchanged in the year, derives essentially from the application of the following laws: (Euro thousand) Balance at Balance at Reserve as per law 342/2000, on suspension of taxes 24,823 24,823 Reserve as per law 72/1983, on suspension of taxes Reserve as per law 413/1991 1,579 1,579 Total 27,334 27,334 The reserve as per law No. 342/2000 is shown net of the substitute tax (19%). Translation reserve The Translation reserve, negative for Euro 697 thousand at December 31, 2013 compared to a negative Euro 477 thousand at December 31, 2012, reflects the translation differences in the accounts in foreign currency of HSC SA. 97

100 Notes to the Consolidated Financial Statements Other reserves The Other reserves of Euro 6,270 thousand, unchanged from the previous year, includes the extraordinary reserve of Euro 103 thousand and the reserve as per article 55 - DPR 597/1973 and 917/1986 for Euro 6,167 thousand. The composition of the reserves in suspension of income taxes is shown below: (Euro thousand) Balance at Balance at Reserve as per law 72/ Reserve as per law 342/ ,823 24,823 Contributions as per art. 55 DPR 917/1986 6,044 6,044 Contributions as per art.55 DPR 598/ Total 31,922 31,922 On the first-time adoption the Group considered it prudent to record the deferred tax liabilities on the suspension of taxes for grants reserve as per article 55 of Presidential Decree 917/1986, amounting to Euro 6,044 thousand. On the remaining suspension of taxes reserves no deferred tax liability was recorded as no distribution is expected. The account Purchase of treasury shares of Euro 5,027 thousand comprises the purchases made at December 31, The table below shows the reconciliation of the number of shares outstanding at the beginning of the purchase operation until December 31, 2013: Period Description Number Treasury Shares Unitary Total of shares shares in circulation value value Year 2007 Opening bal. 80,000, ,000, ,000,000 Acquisition --- (40,000) 79,960, ,996,000 Year 2008 Acquisition --- (1,014,900) 78,945, ,894,510 Year 2009 Acquisition --- (237,240) 78,707, ,870,786 Year 2012 Scrip issue 8,000, Allocation from scrip issue --- (129,250) 86,578, ,657,861 Year Total at December 31, ,000,000 (1,421,390) 86,578, ,657,861 98

101 Notes to the Consolidated Financial Statements NON-CURRENT LIABILITIES (Euro thousands) 45,886 42, Provisions for risks and charges (Euro thousands) 2,936 2,584 The table below shows the composition of the provisions for risks and charges: (Euro thousand) Balance at Balance at Agents' supplementary indemnity provision Provision for contractual risks Provision for industrial risks 1,249 1,121 Post-employment benefit provision Provision for emission trading risks Total 2,936 2,584 Agents supplementary indemnity provision The Agents supplementary indemnity provision is made on the basis of legislative provisions and collective agreements relating to the termination of agents mandates. The table below shows the movements in the provision in the year: (Euro thousand) Balance at Balance at Balance at January Provisions Balance at December Provision for contractual risks The Provisions for contractual risks is made based on legal disputes principally in relation to employees. The table below shows the movements in the provision in the year: (Euro thousand) Balance at Balance at Balance at January Provisions Utilisations (40) (24) Balance at December

102 Notes to the Consolidated Financial Statements Industrial risks provision The Industrial risk provision is made against claims by clients for defects in production and potential losses on packaging material for which a commitment to repurchase was agreed, in addition to potential risks related to the case currently being pursued by the Empoli Municipality regarding the method for calculation of the environmental sanitation charge. The table below shows the movements in the provision in the year: (Euro thousand) Balance at Balance at Balance at January 1 1, Provisions Utilisations (352) (162) Balance at December 31 1,249 1,121 Post-employment benefits provision The Post-employment benefits provision, recorded by Verreries Brosse SAS, refers to the liability estimated against employees who terminate their employment with their company only due to pension, net of the amounts paid to a separate insurance fund. The table below shows the movements in the provision in the year: (Euro thousand) Balance at Balance at Balance at January Provisions Utilisations (105) (242) Balance at December Provision for emission trading risks The Provision for emission trading risks was made against higher CO 2 emissions compared to those assigned by the Ministry, according to the net liability approach, for Zignago Vetro SpA. The table below shows the movements in the provision in the year: (Euro thousand) Balance at Balance at Balance at January Provisions Utilisations (142) (8) Balance at December

103 Notes to the Consolidated Financial Statements Post-employment benefits (Euro thousands) 7,114 7,063 Post-employment benefits entirely refer to the employee leaving indemnity provision whose changes at December 31, 2013 were as follows: (Euro thousand) Balance at Balance at Balance at January 1 7,063 6,767 Interest Actuarial profit/(loss) Payments (483) (509) Balance at December 31 7,114 7,063 Following the amendments to post-employment benefits introduced by Law No. 296 of December 27, 2006 (Finance Law 2007) and subsequent Decrees and Regulations issued in the first months of 2007, the Post-Employment Benefit of the Group matured from January 1, 2007, or from the option date chosen by the employee, is included under defined contribution plans, both in the case of supplementary pension options and in the case of allocation to the INPS Treasury Fund. The accounting treatment of this Post-Employment Benefit is therefore the same as other contribution payments, not including therefore any annual cost for the service provided. However, an actuarial calculation was made of the post-employment benefit matured until December 31, 2016 by an independent expert in accordance with IAS 19, actuarial method, which allows for an estimate of the present value of the obligation based on a series of demographic and financial assumptions. 101

104 Notes to the Consolidated Financial Statements The principal assumptions adopted for the actuarial recalculation of the provision at December 31, 2013 compared with December 31, 2012 are summarised below: Actual mortality rate ISTAT 2004 ISTAT 2004 Actual invalidity rate INPS inability/ invalidity tables INPS inability/ invalidity tables Advanced rate of employee departures (dismissal and resignations): Rate of post-employment benefit advances Annual technical discounting rate constant annual average frequency of 7.2% Constant annual average rate of 2.5% - average amount of 70% of accumulated Post-employment Benefit 3.1% was assumed based on the bond yields with comparable duration of those subject to valuation Future annual inflation rate 2% 2% Date of pension Annual increase in employee leaving indemnity in line with the applicable regulation rate of 1.5% plus the 75% of the inflation rate recorded by ISTAT in December of the previous year. constant annual average frequency of 9.5% - constant annual average rate of 2.5% - average amount of 70% of accumulated Post-employment Benefit 3.3% was assumed based on the bond yields with comparable duration of those subject to valuation in line with the applicable regulation rate of 1.5% plus the 75% of the inflation rate recorded by ISTAT in December of the previous year. In accordance with IAS 19, the obligation concerning matured post-employment benefits was valued without pro-rata application of the past service costs, resulting in no pension costs towards current employees. This is due to, following the amendments to post-employment benefits introduced by Law No. 296 of December 27, 2006 (Finance Law 2007) and subsequent Decrees and Regulations issued in the first months of 2007, the Post-Employment Benefit of the Group matured from January 1, 2007 being allocated to a supplementary pension or an INPS Treasury Fund according to the option chosen by the employee. Therefore, it is included in the defined contribution plan category, both in the case of the option for the supplementary pension and in the case of the allocation to the INPS Treasury Fund. 102

105 Notes to the Consolidated Financial Statements Medium/long term loans (Euro thousands) 32,132 28,995 The table below shows the composition of medium/long term loans: (Euro thousands) Balance at Balance at A. Mediocredito Trentino Alto Adige loan, repayable by 2013, at a variable rate --- 1,343 B. Mediocredito Trentino Alto Adige, repayable by 2013, at a variable rate --- 1,750 C. Unicredit SpA loan, repayable by 2013, at a variable rate D. Banca Popolare Friuladria SpA loan, repayable by 2013, at a variable rate --- 1,799 E. HSC SA finance leases F. Advance on Banca Popolare Friuladria SpA loan, repayable by 2016, at a variable rate 8,000 12,000 G. Unicredit SpA loan, repayable by 2016, at a variable rate 5,660 7,831 H. ICCREA finance lease, repayable by 2029, at a variable rate 977 1,011 I. Mediocredito Trentino Alto Adige loan, repayable by 2015, at a variable rate 7,489 7,482 J. Unsecured loan nominal value of Euro 10 million from GE Capital-Interbanca, Euribor 3 months variable rate, maturity 3 years with option of one year 6,840 9,328 K. Unicredit Banca d'impresa SpA loan, repayable by 2018, at a Variable rate 2, L. GE Capital loan, repayable by 2021, at a variable rate 4, M. French banking system loan to Verreries Brosse SAS 3, N. Bank Pekao Loan HSC SA 4, Total medium/long-term loans 43,942 43,477 Less current portion (11,810) (14,482) Medium and long-term portion 32,132 28,

106 Notes to the Consolidated Financial Statements At December 31, 2013 and 2012, the future capital repayments of the medium-long term loans were as follows: (Euro thousand) Balance at Balance at Year ,482 Year ,810 8,782 Year ,949 18,148 Beyond ,183 2,065 Total 43,942 43,477 The increase in the total amount of medium/long-term loans from Euro 43,477 thousand to Euro 43,942 thousand follows the payment of installments due in 2013 of existing loans of Euro 14,482 thousand and the undertaking of new medium/long-term loans, as described above, of Euro 14,947 thousand. The medium/long-term loans existing at December 31, 2013 and December 31, 2012 were as follows: A.B.C.D. The Loans related to these letters, now matured, were fully repaid during the year. F. Unsecured medium term loan of Verreries Brosse SAS with Banca Popolare Friuladria SpA for an initial amount of Euro 20 million, with repayment in 10 half-yearly payments in arrears, with the first repayment on September 30, 2011, and with the final repayment on March 31, 2016, and a residual amount due of Euro 8 million at December 31, 2013 and a short-term portion of Euro 4 million; G. Unsecured loan signed in 2011 by Zignago Vetro SpA with Unicredit Banca SpA for Euro 5,660 thousand at December 31, 2013, with the current portion amounting to Euro 2,171 thousand, and repayment in 18 quarterly repayments from February 29, 2012, and final payment on May 31, 2016; H. ICCREA finance lease of Vetri Speciali, sub-entering a contract signed by Officine Fadel Louis & Adriano Snc, for an amount at December 31, 2013 of Euro 977 thousand, repayable by 2029, at a variable rate and with a short-term portion of Euro 34 thousand; I. Mediocredito Trentino Alto Adige loan for a share of Euro 7,489 thousand undertaken by Vetri Speciali, with half-yearly deferred interest payment and capital portion repayment in a single installment at February 10, 2015; J. The GE Capital Interbanca loan, undertaken by Zignago Vetro SpA, of a nominal Euro 10,000 thousand, of which a residual Euro 6,840 thousand at December 31, 2013, is repayable in eleven quarterly installments of Euro 625 thousand with a twelfth of Euro 3,125 thousand, with the option to request extension through five further quarterly installments amounting to Euro 625 thousand each, of which the first replacing the abovestated twelfth installment; 104

107 Notes to the Consolidated Financial Statements K. Loan obtained by Vetri Speciali SpA on June 6, 2013 with Unicredit Banca d Impresa SpA, for a residual share of Euro 2,373 thousand, of which Euro 468 thousand short-term, with repayment through 20 quarterly instalments from October 31, There is no mortgage or other pledge on this loan; L. Loan obtained by Vetri Speciali SpA on July 12, 2013 with GE Capital Interbanca SpA, for a residual share of Euro 4,727 thousand, of which Euro 496 thousand short-term, with repayment through 32 quarterly instalments from September 30, This loan is guaranteed by mortgages and pledges on the factories owned by Vetri Speciali. Loan covenants Against the loans reported in the table, indicated at letters G), J) and L), the Companies are bound by a set of financial covenant ratios to be calculated on the Parent Company and Consolidated financial statements, for the duration of the loans: (i) maintain a ratio between net debt and net equity of below 1.5 for letter J) and lower than 1 for letter G); (ii) maintain a ratio between net debt and EBITDA of below 2, for letters G) and J); (iii) maintain a ratio between net debt and EBITDA of equal to or below 3.5 for letter L). These parameters at December 31, 2013 had been comfortably complied with. 105

108 Notes to the Consolidated Financial Statements Net Financial Position In accordance with Consob Communication No. DEM/ of July 28, 2006, the net financial position is determined in accordance with CESR recommendation of February 10, 2005 Recommendations for the uniform implementation of the European Commission regulations on information prospectus. (Euro thousand) A. Cash B. Other cash equivalents 39,339 44,667 D. Cash and cash equivalents (A) + (B) + (C) 39,367 44,689 E. Current financial receivables F. Current bank payables 101,068 92,342 G. Current portion of non-current debt 11,810 14,482 H. Other current financial payables (derivatives) I. Current financial debt (F) + (G) + (H) 113, ,095 J. Net current financial debt (I) - (E) - (D) 73,648 62,406 K. Medium/long term loans 32,132 28,995 L. Bonds issued M. Other non-current payables N. Non-current financial debt (K) + (L) + (M) 32,132 28,995 O. Net financial debt (J) + (N) 105,780 91,

109 Notes to the Consolidated Financial Statements Financial instrument classes and hierarchical levels of fair value valuation The following table outlines the classes of financial instruments held by the Company: (Euro thousand) Financial assets as per Loans Financial Deriv. Invest. AFS Total Note and assets at instrum. held to financial receivables fair value maturity assets through P&L Non-current financial assets (5) Trade receivables and others 66, ,458 (8) & (9) Other current assets (9) Cash & cash equivalents 39, ,367 (11) Total 106, ,125 (Euro thousand) Other Financial Derivative Total Note liabilities at liabilities at instruments amortised fair value cost through P&L Provisions for risks and charges (13) Bank payables and loans 145, ,147 (15) & (18) Trade payables and other 64, ,161 (19) & (20) Other liabilities (20) Total 209, ,657 The company only values energy efficiency securities and derivative contracts at fair value. The value of bank payables and other loans, recorded at amortised cost and variable interest rate contracts, are not significantly different from the fair value. All financial instruments recorded at fair value are classifiable in the three following categories: Level 1: market listing Level 2: technical valuations (based on observable market data) Level 3: technical valuations (not based on observable market data) All assets and liabilities valued at fair value at December 31, 2013 are classifiable at Level 2. During the year, no transfers occurred from Level 1 to Level 2 or Level 3 or vice-versa. 107

110 Notes to the Consolidated Financial Statements Other non-current liabilities (Euro thousands) 7 7 This account comprises provincial grants concerning future years and reported in the following table: (Euro thousand) Balance at Balance at Contributions future years Deferred tax liabilities (Euro thousands) 3,697 3,940 The table below shows the composition of the deferred tax liabilities: The Deferred tax liabilities principally include the temporary differences relating to depreciation calculated by the Companies based on previous Italian fiscal regulations (accelerated depreciation and excess depreciation), the temporary differences originating from the value of inventories calculated under the LIFO method, utilised for tax purposes, and those calculated under the average weighted cost method and the tax effects from the measurement of leases under the finance method. The account also includes the effects of the tax liabilities relating to the residual value of the higher values allocated, principally to plant, on the acquisition of the three glassworks by Vetri Speciali SpA. The deferred tax liability was calculated as the amortisation on such allocations are not fiscally deductible. 108

111 Notes to the Consolidated Financial Statements Deferred tax liabilities were also recorded for Euro 1,898 thousand relating to the reserves in suspension of taxes amounting to Euro 6,044 thousand and relating to the capital grant reserves (Reserves as per article 55, DPR 597/1973 and 917/1986). The following table shows the movements in the deferred tax liabilities: (Euro thousand) Balance at December 31, ,096 Utilisations (253) Increases 97 (156) Balance at December 31, ,940 Utilisations (268) Increases 25 (243) Balance at December 31, , CURRENT LIABILITIES (Euro thousands) 177, , Bank payables and current portion of medium/long term loans (Euro thousands) 113, ,095 The table below shows the composition of the bank payables and the current portion of the medium-long term loans: (Euro thousand) Balance at Balance at Current accounts --- 2,848 Advances on bank drafts 10,069 13,324 Advances on invoices 4,639 15,907 Advances in foreign currencies Short-term loans 85,791 59,540 Bank payables for mark to market Current portion of medium/long term loans 11,810 14,482 Total 113, ,095 For the medium-long term loans and leasing, the short-term portion of which is included in this account for a value of Euro 11,810 thousand at December 31, 2013 and Euro 14,482 thousand at December 31, 2012, reference should be made to the paragraph Medium/long term loans. 109

112 Notes to the Consolidated Financial Statements Trade and other payables (Euro thousands) 47,246 51,405 The table below shows the breakdown of trade and other payables by geographic area at December 31, 2013 and 2012: (Euro thousand) Balance at Balance at Italy 36,021 41,367 European Union 11,139 9,883 Other countries Total 47,246 51,405 Trade and other payables at December 31, 2013 reduced on December 31, 2012; the payables for Group capital expenditures at December 31, 2013 amount to Euro 7,009 thousand (December 31, 2012: Euro 7,536 thousand) ) Other current liabilities (Euro thousands) 17,143 17,239 The table below shows the breakdown of other current liabilities" at December 31, 2013 and 2012: (Euro thousand) Balance at Balance at Payables to social security institutions 4,099 3,923 Employee & consultant withholding taxes 1,815 1,715 Employee payables 8,554 8,604 Associations Client advances Payables of HSC SA for purchase of industrial land Other payables VAT payables Accrued liabilities and deferred income: - employees interest expense contributions 2 4 Total 17,143 17,239 Payables to social security institutions The payables to social security institutions principally refer to payables for contributions on salaries in the month of December and agents commissions and consultants fees accrued and paid in the following year. 110

113 Notes to the Consolidated Financial Statements Employee payables The table below shows the breakdown of employee payables at December 31, 2013 and 2012: (Euro thousand) Balance at Balance at Vacation days, month due and premiums matured 6,609 6,423 December salaries and wages 1,945 2,181 Total 8,554 8,604 Employee payables refer to vacation days matured but not taken at year-end and productivity premiums and managerial bonuses matured and to be paid in the following year Current tax payables (Euro thousands) The account is broken down in the following table. (Euro thousand) Balance at Balance at Income taxes for the year Foreign subsidiary taxes Total

114 Notes to the Consolidated Financial Statements NOTES TO THE MAIN INCOME STATEMENT ACCOUNTS Revenues (Euro thousands) 292, ,751 The following table shows the breakdown of revenues by product line: (Euro thousand) Core business products 273, ,808 Various materials 11,232 12,123 Service revenues 3,998 4,402 Other 3,717 3,418 Total 292, ,751 The following table shows the breakdown of revenues by geographic area: (Euro thousand) Italy 182, ,915 European Union 90,363 89,010 Other countries 19,027 18,826 Total 292, ,751 Revenues decreased on the previous year by 2.2%. For further information, reference should be made to the Directors Report Raw materials, consumables and goods (Euro thousands) 59,212 59,257 The table below shows the costs for raw materials, consumables and goods: (Euro thousand) Purchases 65,598 67,460 Changes in inventory of raw materials, ancillary, consumables and goods Change in inventories of products in work in process, semifinished and finished products (849) (1,235) (5,537) (6,968) Total 59,212 59,257 The change in this cost is not significant, against a reduction in purchases of 2.8%. 112

115 Notes to the Consolidated Financial Statements Service costs (Euro thousands) 97,296 99,274 The following table shows service costs: (Euro thousand) Energy and industrial services 74,046 75,817 Transport and other trading costs 14,121 13,578 Conai contribution 3,184 3,420 Other costs 5,945 6,459 Total 97,296 99,274 The decrease in service costs (-2%) compared to the previous year is principally related to the reduction in revenues Labour costs (Euro thousands) 66,567 67,251 The following table reports labour costs: (Euro thousand) Salaries and wages 47,623 48,518 Social security charges 16,719 16,640 Post-employment benefit provisions 2,096 2,069 Other costs Total 66,567 67,251 Costs decreased 1.1% compared to the previous year. As illustrated in the table below, in which the entire workforce of Vetri Speciali SpA is considered, the movement of Group employees divided by category is reported: New Depart Average Executives 26 3 (2) White-collar (17) Blue-collar 1, (84) 1,413 1,409.5 Total 1, (103) 1,835 1,

116 Notes to the Consolidated Financial Statements Amortisation & Depreciation (Euro thousands) 25,526 24,968 The following table reports amortisation & depreciation: (Euro thousand) Depreciation of fixed assets 25,311 24,771 Amortisation of intangible assets Total 25,526 24,968 Further details are reported in the Intangible and tangible fixed assets section Other operating costs (Euro thousands) 4,130 3,240 The following table reports the other operating costs: (Euro thousand) Provision of industrial risk fund Agents' supplementary indemnity provision Provision for emission trading risks Provision for contractual risks Provision industrial risks Total provision for risks sub) Doubtful debt provision sub) Various taxes 2,384 1,505 Losses on asset disposals Membership fees Prior year charges Other Total other charges sub) 3,164 2,545 Total 4,130 3,

117 Notes to the Consolidated Financial Statements Other operating income (Euro thousands) 1,812 1,649 The following table reports other operating income: (Euro thousand) Prior year income Release of provisions Gain on asset disposals Insurance claim reimbursements Others Total 1,812 1,649 The prior year income principally derives from differences on accruals made on the preparation of the financial statements in the preceding year. The gains on fixed asset disposals relates to sales and in particular of Zignago Vetro SpA Financial income (Euro thousands) The following table reports financial income: (Euro thousand) Bank interest Other Total Financial charges (Euro thousands) 3,591 3,589 The following table shows the financial charges: (Euro thousand) Loan interest Interest on current accounts 2,453 2,556 Discounts and other financial charges Effect derivative fair value Other Total 3,591 3,589 In 2013 the account Others include financial charges relating to the actuarial revaluation of Postemployment benefits as per IAS 19 of Euro 138 thousand. 115

118 Notes to the Consolidated Financial Statements Income taxes (Euro thousands) 12,469 13,079 The table below shows the composition of the income taxes between deferred and/or current taxes: (Euro thousand) Current income tax 12,667 15,285 Deferred tax (income)/charge (198) (592) Benefit direct taxes as per Legs. Decree 17/ (1,614) Total 12,469 13,079 The income tax charge in the year, estimated in accordance with existing tax legislation, amounted to Euro 12,469 thousand (Euro 13,079 thousand in the previous year), which benefited from the rule established under Article 2 of Legislative Decree No. 201/2011, as amended by Legislative Decree 16/2012, which enables deductibility from company income of IRAP concerning labour costs also for prior years. The receivable matured for the years was Euro 1,614 thousand. The tax-rate in 2013 was 32.3% compared to 29.7% in Excluding the above mentioned IRAP benefit, the overall tax-rate in 2012 would have amounted to 33.4%. The IRES income tax and IRAP regional tax rates reflect the effective tax charge payable by the Group. The table below shows the reconciliation between the theoretical fiscal charge and the effective charge for the years under consideration: (Euro thousand) 2013 Tax rate 2012 Tax rate Profit before taxes 38,603 43,962 Ordinary rate applied 27.50% 27.50% Theoretical tax charge 10,616 12,090 Other permanent differences (516) (174) Effect of differences between Italian and foreign tax rates (122) (43) Effect of temporary differences (134) (4) Current IRAP 2,625 2,825 Tota tax charges 12, % 14, % Tax benefit IRES reduct. for IRAP --- (1,615) Total income tax 12, % 13, % 116

119 Notes to the Consolidated Financial Statements OTHER INFORMATION Earnings per share Basic and diluted earnings per share The share capital of Zignago Vetro SpA at December 31, 2013 and 2012, consists of 88,000,000 ordinary shares with a par value of Euro 0.10 each, fully subscribed and paid-in. The earnings per share for 2013 and 2012 are calculated based on the Parent Company result in the respective periods, taking account of the average weighted number of shares in circulation, excluding treasury shares. No calculation of the diluted earnings per share was made as in both periods financial instruments with dilutive effects on the earnings concerning the shares in circulation were not in place. The average weighted number of shares and the net profit attributable is reported below: Value at Value at Net profit attrib. to shareholders of the par. com. (Euro thous.) 26,134 30,883 Average weighed number of ordinary shares, including treasury shares, for earnings per share 86,518,610 85,488,889 Average weighed number of treasury shares (1,380,795) (1,380,795) Average weighed number of ordinary shares, excluding treasury shares, for earnings per share 85,137,815 84,108,094 Earnings per share (in Euro) Segment information Segment reporting which coincides with the various legal entities is provided below. Disclosure by region is not considered appropriate for the Group. The operating segments ( Business Units ) are identified as follows: - Zignago Vetro SpA: this Business Unit carries out the production of glass containers for food and beverages and for cosmetics and perfumery; - Verreries Brosse SAS and its subsidiary Brosse USA Inc: this Business Unit carries out the production of glass containers for perfumes; 117

120 Notes to the Consolidated Financial Statements - Vetri Speciali SpA: this Business Unit includes the production of specialty containers, principally for wine, vinegar and olive oil; - HSC SA: this Business Unit undertakes the production of a wide range of customised products for cosmetic and perfumery containers and also for food and beverage niche markets worldwide; Vetreco Srl: this Business Unit is engaged in the processing of raw glass into the finished material ready for use by glassmakers and in the present year is in the start-up phase. The criteria applied for the identification of the operating segments of activity were inspired, among other issues, by the manner in which management directs the Group and attributes managerial responsibility. The segment information is provided below: (Euro thousand) 2013 Zignago Verreries Vetri HSC SA Vetreco Consol. Vetro SpA Brosse SAS Speciali SpA Srl Consol. adj. Revenues 161,893 53,067 64,870 20, (8,158) 292,284 Amortisation & dep. (12,053) (7,008) (4,493) (1,877) (95) --- (25,526) Oper. profit/(loss) 22, ,602 2,294 (168) (140) 41,365 Net profit/(loss) 22,109 (61) 10,715 1,663 (147) (8,145) 26,134 Assets 215,485 61,293 94,751 25,173 6,542 (49,897) 353,347 Liabilities 124,482 47,589 43,215 12,279 6,130 (9,967) 223,728 Investments in: Intangible assets , ,984 Prop., plant & eq. 53,060 29,937 27,491 12,731 5, ,380 (Euro thousand) 2012 Zignago Verreries Vetri HSC Vetreco Vetro SpA Brosse SAS Speciali SpA SA Srl Consol. Adj Consol. Revenues 169,923 52,466 64,612 16, (5,026) 298,751 Amortisation & dep. (11,518) (7,476) (4,437) (1,537) (24,968) Oper. profit/(loss) 28,665 (1,105) 17,415 1,685 (47) (202) 46,411 Net profit/(loss) 29,249 (1,577) 11,761 1,181 (36) (9,695) 30,883 Assets 211,303 62,114 94,846 17,742 3,400 (44,677) 344,728 Liabilities 120,694 48,338 45,923 6,309 2,842 (4,856) 219,250 Investments in: Intangible assets , ,995 Prop., plant & eq. 48,026 33,130 29,500 8,141 2, ,

121 Notes to the Consolidated Financial Statements Transactions with related parties The table below shows the composition of the receivables, principally trade receivables, of Group companies with related party companies at the balance sheet date: (Euro thousand) Balance at Balance at Zignago Holding SpA 3,479 2,345 Zignago Immobiliare Srl Santa Margherita SpA and its subsidiaries La Vecchia Scarl New High Glass Inc Zignago Power Srl Owens-Illinois Manufacturing Italy SpA Total receivables from related companies 4,725 3,933 The receivables from Zignago Holding SpA, the Parent Company, of Euro 3,479 thousand and from Zignago Immobiliare Srl, a Company of the Zignago Group for Euro 113 thousand, principally reflect the IRES related to the IRAP repayment request presented by Zignago Vetro SpA and current IRES. The table below shows the composition of the payables of Group companies to related companies at the balance sheet date: (Euro thousand) Balance at Balance at Zignago Immobiliare Srl 25 7 La Vecchia Scarl Zignago Servizi Srl Owens-Illinois Manufacturing Italy SpA Santa Margherita SpA and its subsidiaries Zignago Power Zignago Holding SpA Multitecno Srl Total payables to related parties 1,

122 Notes to the Consolidated Financial Statements The table below shows the composition of Group company revenues from related companies in the year: (Euro thousand) New High Glass Inc. 2,642 2,693 Santa Margherita SpA and its subsidiaries 4,495 4,421 Owens-Illinois Manufacturing Italy SpA La Vecchia Scarl 2 1 Zignago Holding SpA 1 1 Zignago Servizi Srl 1 1 Zignago Power Srl 3 6 Multitecno Srl Total revenues from related companies 7,544 7,505 The table below shows the composition of Group company costs from related companies in the year: (Euro thousand) Zignago Holding SpA Santa Margherita SpA and its subsidiaries Zignago Immobiliare Srl Zignago Servizi Srl 1,471 1,348 Zignago Power Srl 4,294 4,736 La Vecchia Scarl Owens-Illinois Manufacturing Italy SpA Multitecno Srl 13 3 Total costs from related companies 7,048 7,

123 Notes to the Consolidated Financial Statements Management of capital The share capital includes the shares and the net equity attributable to Parent Company shareholders. In order to achieve this objective, the management of Group capital aims, among other matters, to ensure compliance with covenants, related to interest bearing loans, based on balance sheet performance indicators. Breaches in the covenants would permit the banks to request immediate repayment of the loans. There were no breaches of the covenants in the current year in relation to interest bearing loans for any of the Group companies. The primary capital management objective of the Group is to guarantee the maintenance of a strong credit rating in order to support operations and to maximise value for shareholders. The Zignago Vetro Group has payables to financial intermediaries and has a financial debt position related to the development plan of the business. The high generation of operating cash flows allows Group Companies not only to repay existing loans, but also guarantees an adequate dividend to Shareholders and to pursue the growth strategy. In this context, the Group, in order to maintain or amend the capital structure, may pay dividends to Shareholders, acquire treasury shares on the market or issue new shares. No substantial amendments were made to these objectives, to policies or to processes in 2013 or 2012, although in 2012 the Parent Company carried out a scrip issue. Risk management policy The Group will continue to prudently manage risks in all departments with careful monitoring in order to identify, reduce and eliminate such risk, therefore extensively protecting shareholder interests. Currency risk The currency risk is the risk that the fair value or the future cash flows of a financial instrument are altered following changes in exchange rates. The exposure of the Group to changes in exchange rates principally concerns the operating activities of the Group (when revenues and costs are denominated in a currency other than the presentation currency of the Group). Where these transactions are significant, the Group Companies assesses the possibility of undertaking exchange risk hedges in order to mitigate these fluctuations. Nel corso dei periodi presentati il Gruppo non ha posto in essere operazioni di copertura del rischio di oscillazione dei tassi di cambio, in quanto le transazioni poste in essere dalle Società del Gruppo nella valuta non funzionale sono considerate come non significative. Credit and country risks The credit risk represents the exposure of the Group to potential losses deriving from noncompliance with obligations by trading partners; this activity is subject to ongoing monitoring within the normal management of business operations, in order to minimise the exposure to 121

124 Notes to the Consolidated Financial Statements counterparty credit risk, also utilising appropriate insurance instruments to protect the solvency of the client or of the country risk in which this latter operates. The Group Companies constantly evaluate political, social and economic risks in the areas in which they operate. No significant cases of non fulfilment by trading partners have occurred and no significant credit risk by individual area and/or client exists. The Group in fact only deals with established and reliable clients. Customers that request extensions of payment are subject to a credit rate check. Moreover, the collection of receivables is monitored during the year so that the exposure to losses is not substantial. Finally, in the case of new clients and some clients not operating in the EU, the Group companies obtain letters of credit and advance payment. Interest rate risk The interest rate risk is a risk that the fair value of the future cash streams of a financial instrument alters due to changes in market interest rates. The Companies of the Group are exposed to the risk of fluctuations in interest rates principally in relation to the medium/long-term debt, negotiated at variable interest rates, and amount to Euro 43.4 million. Where these risks are considered as significant, the Companies of the Group undertake interest rate swaps in order to convert the variable rate of the medium-long term loans into fixed rates, which permits a reduction of the impact deriving from the fluctuations in the interest rates. Therefore, the Parent Company undertook an interest rate swap in order to hedge the interest rate risk on medium-long term loans for a notional value of Euro 7.9 million. Liquidity risk The Group monitors the risk of a deficiency in liquidity utilising liquidity planning instruments. The Group objective is to maintain a balance between continuity of available funds, flexibility of utilisation through use of instruments such as bank overdrafts, bank loans, finance leases and adequate remuneration of its liquidity, temporarily investing exclusively with banking counterparties. The Group evaluated the risk concentration, with reference to the debt refinancing, and concluded that the risk was low. The sourcing of financing is sufficiently accessible and the payables within 12 months can be extended with the current lenders. 122

125 Notes to the Consolidated Financial Statements In particular the profile of the financial liabilities at December 31, 2013 on the basis of the nondiscounted contractual payments, including trade payables and other current liabilities, is summarised as follows: (Euro thousand) 2013 Less than 3 3 to 12 1 to 5 Other Total December 31, 2013 months months years Medium/long term loans ,102 3,030 32,132 Other non current liabilities Bank payables and current portion of medium/long term loans 96,188 16, ,015 Trade payables & other 44,440 2, ,246 Other current liabilities 16, ,143 Income tax payables Total 157,332 20,373 29,246 3, ,981 The same profile at December 31, 2012 was as follows: (Euro thousand) 2012 Less than 3 3 to 12 1 to 5 Other Total December 31, 2012 months months years Medium/long term loans , ,995 Other non current liabilities Bank payables and current portion of medium/long term loans 92,514 14, ,095 Trade payables & other 48,909 2, ,405 Other current liabilities 16, ,239 Income tax payables Total 158,896 17,494 28, ,663 The terms and conditions of financial liabilities are listed below: There is no interest on trade payables and they are normally paid at 60 days; Other payables are normally paid within the month following recognition. 123

126 Notes to the Consolidated Financial Statements Risks related to the fluctuation in energy prices The Group is exposed to fluctuations in energy purchase costs, a significant cost component in the glass sector. Where this risk is considered as significant, hedging operations may be undertaken in order to convert the variable cost into a fixed cost, which reduces the impact of fluctuations. From 2012 the supply of energy at Fossalta di Portogruaro of the Parent Company has been guaranteed by Zignago Power Srl, a company wholly-owned by the parent company Zignago Holding SpA., which started up a natural biomass energy production plant. The risk concerning energy cost fluctuation is therefore greatly reduced. Disclosure pursuant to Article 149 of the Consob Issuers Regulation The following table, prepared pursuant to article 149 of the CONSOB Issuer s Regulations, reports the payments made in 2013 for audit and other services carried out by the independent audit firm and entities associated with the independent audit firm. (Euro thousand) Service Company providing the service Company 2013 Audit Auditor of the parent company Parent Company 82 Other services Network of Auds. of the Parent Parent Company --- sub) 82 Audit i) Auditor of the parent company Subsidiary companies --- ii) Network of Auds. of the Parent Subsidiary companies 75 Audit i) Auditor of the parent company Joint subsidiary companies 44 ii) Network of Auds. of the Parent Joint subsidiary companies --- Other services i) Auditor of the parent company Subsidiary companies --- ii) Network of Auds. of the Parent Joint subsidiary companies --- sub) 119 Total

127 Declaration of the Consolidated Financial Statements (Article 81-ter of Consob Regulation No /1999 and subsequent amendments and supplements) 125

128 Declaration of the Consolidated Financial Statements Declaration of the Consolidated Financial Statements as per Article 81-ter of Consob Regulation No of May 14, 1999 and subsequent amendments modifications and additions 1. The undersigned Paolo Giacobbo, CEO, and Mr. Roberto Celot, executive responsible for the preparation of the corporate accounting documents of Zignago Vetro SpA affirm, and also in consideration of Article 154-bis, paragraphs 3 and 4, of Legislative Decree No. 58 of February 24, 1998: the accuracy of the information on company operations and the effective application of the administrative and accounting procedures for the compilation of the financial statements for the year ended No significant aspect emerged concerning the above. 3. We also declare that: 3.1. the consolidated financial statements: a) is drawn up in conformity with the applicable international accounting standards recognised by the European Union in conformity with Regulation (CE) No. 1606/2002 of the European Parliament and the Commission of 19 July 2002; b) correspond to the underlying accounting documents and records; c) provides a true and correct representation of the capital, economic and financial situation of the issuer and of the other companies in the consolidation scope The Directors Report includes a reliable analysis on the performance and operating result as well as the situation of the issuer, together with a description of the principal risks and uncertainties to which they are exposed. Fossalta di Portogruaro, March 13, 2014 Zignago Vetro SpA Mr. Paolo Giacobbo Chief Executive Officer Mr. Roberto Celot Executive in charge of the preparation of the corporate accounting documents 126

129 Independent Auditors Report (Arts. 14 and 16 of Legislative Decree No. 39 of 27/1/2010) 127

130 Reconta Ernst & Young S.p.A. Viale Appiani, 20/b Treviso Tel: Fax: ey.com Independent auditors report pursuant to art. 14 and 16 of Legislative Decree n. 39 dated January 27, 2010 (Translation from the original Italian text) To the Shareholders of Zignago Vetro S.p.A. 1. We have audited the consolidated financial statements of Zignago Vetro S.p.A. and its subsidiaries, (the Zignago Vetro Group ) as of and for the year ended December 31, 2013, comprising the consolidated balance sheet, the consolidated income statement, the consolidated comprehensive income statement, the consolidated cash flows statement, the statement of changes in consolidated shareholders equity, and the related explanatory notes. The preparation of these consolidated financial statements in compliance with International Financial Reporting Standards as adopted by the European Union and with art. 9 of Legislative Decree n. 38/2005 are the responsibility of Zignago Vetro S.p.A. s Directors. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. 2. Our audit was performed in accordance with auditing standards recommended by CONSOB (the Italian Stock Exchange Regulatory Agency). In accordance with such standards, we planned and performed our audit to obtain the information necessary to determine whether the consolidated financial statements are materially misstated and if such financial statements, taken as a whole, may be relied upon. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, as well as assessing the appropriateness and correct application of the accounting principles and the reasonableness of the estimates made by Directors. We believe that our audit provides a reasonable basis for our opinion. The consolidated financial statements of the prior year are presented for comparative purposes. As described in the explanatory notes, the Directors have restated certain comparative data related to the prior year with respect to the data previously presented, on which we issued our audit report dated March 18, We have examined the method used to restate the comparative financial data and the related disclosures presented in the explanatory notes for the purpose of expressing our opinion on the consolidated financial statements as of December 31, 2013 and for the year then ended. 3. In our opinion, the consolidated financial statements of the Zignago Vetro Group at December 31, 2013 have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union and with art. 9 of Legislative Decree n. 38/2005; accordingly, they present clearly and give a true and fair view of the financial position, the results of operations and the cash flows of the Zignago Vetro Group for the year then ended. 4. The Directors of Zignago Vetro S.p.A. are responsible for the preparation of the Report on Operations and the Report on Corporate Governance and the Company s Ownership Structure in accordance with the applicable laws and regulations. Our responsibility is to express an opinion on the consistency with the financial statements of the Report on Operations and the information included therein in compliance with art. 123-bis of Legislative Decree n. 58/1998, paragraph 1, letters c), d), f), l), m) and paragraph 2, letter b) presented in the Report on Corporate Governance and Ownership Structure, as required by the law. For this purpose, we have Reconta Ernst & Young S.p.A. Sede Legale: Roma - Via Po, 32 Capitale Sociale ,00 i.v. Iscritta alla S.O. del Registro delle Imprese presso la C.C.I.A.A. di Roma Codice fiscale e numero di iscrizione P.IVA Iscritta all Albo Revisori Contabili al n Pubblicato sulla G.U. Suppl IV Serie Speciale del 17/2/1998 Iscritta all Albo Speciale delle società di revisione Consob al progressivo n. 2 delibera n del 16/7/1997 A member firm of Ernst & Young Global Limited

131 performed the procedures required under Auditing Standard n. 001 issued by the Italian Accounting Profession (CNDCEC) and recommended by CONSOB. In our opinion, the Report on Operations and the information presented in compliance with art. 123-bis of Legislative Decree n. 58/1998, paragraph 1, letters c), d), f), l), m) and paragraph 2), letter b) in the Report on Corporate Governance and the Company s Ownership Structure, are consistent with the consolidated financial statements of the Zignago Vetro Group at December 31, Treviso, Italy March 24, 2014 Reconta Ernst & Young S.p.A. Signed by: Claudio Passelli - partner This report has been translated into the English language solely for the convenience of international readers

132 130

133 Corporate Governance and Ownership Structure Report as per Article 123-bis of the CFA (traditional administration and control model) Issuer: Zignago Vetro SpA Website: Year: 2013 Date of approval of the Report: March 13,

134 Corporate Governance and Ownership Structure Report CONTENTS Glossary Profile of the issuer Information on the ownership structure (as per Article 123 bis, paragraph 1, CFA) Compliance Board of Directors Appointment and replacement (as per Article 123-bis, paragraph 1, letter l), CFA) Composition (as per Article 123-bis, paragraph 2, letter d), CFA) Role of the board of directors (as per Article 123-bis, paragraph 2, letter d), CFA) Executive bodies Other Executive Directors Independent directors Lead independent director Handling of corporate information Internal Committees to the Board (as per Article 123-bis, paragraph 2, letter d) CFA) Nomination committee Remuneration Committee Director remuneration Control and Risks Committee Internal control and risk management system Director in charge of the Internal Control and Risk Management System Internal Audit Manager Organisation Model pursuant to Legislative Decree 231/ Independent Auditors Executive officer responsible for preparation of the company s financial statements Coordination of the parties involved in the Internal Control and Risk Management System Transactions with related parties Appointment of Statutory Auditors Composition and operation of the Board of Statutory Auditors (as per Article 123-bis, paragraph 2, letter d) CFA) Relations with shareholders Shareholders Meetings (as per Article 123-bis, paragraph 2, letter c), CFA) Changes subsequent to the year-end

135 Corporate Governance and Ownership Structure Report GLOSSARY Borsa Italiana: Borsa Italiana S.p.A.. Self-Governance Code: the Self-Governance Code of listed companies approved in March 2011 by the Corporate Governance Committee and promoted by Borsa Italiana S.p.A., ABI, Ania, Assogestioni, Assonime and Confindustria, available to the public on the Borsa Italiana website Civil Code: the civil code. Board of Statutory Auditors: the Board of Statutory Auditors of the Issuer. Board: the Issuer s Board of Directors. Issuer or ZV or the Company: Zignago Vetro S.p.A. The Year: financial year 2013, to which the Report refers, therefore the year ending December 31, Regulation instructions: the Instructions to the Regulations for Markets organised and managed by Borsa Italiana S.p.A.. Stock Exchange Regulations: the Regulations for Markets organised and managed by Borsa Italiana S.p.A.. Issuers Regulation: the Regulation issued by Consob resolution No of 1999 (as subsequently amended), concerning the governance of the issuer. Market Regulations: the Market Regulations issued by Consob resolution No of 2007 (as subsequently amended), concerning the governance of the markets. Report: the corporate governance and ownership structure report which the company must prepare as per Article 123-bis CFA. By-Laws: the By-Laws of the Company in force at the date of the Report. CFA: Legislative Decree of February 24, 1998, No. 58 and subsequent amendments and additions. 133

136 Corporate Governance and Ownership Structure Report 1. PROFILE OF THE ISSUER The present Report, (hereafter the Report ), prepared in compliance with the obligations for listed companies on the Mercato Telematico Azionario, organised and managed by Borsa Italiana S.p.A. (hereafter Borsa Italiana ), illustrates the corporate governance system of Zignago Vetro S.p.A ( hereafter Zignago Vetro or the Company or the Issuer ), whose general guidelines are the subject of the present Section 1. The corporate governance structure of Zignago Vetro is a traditional system comprising of a Board of Directors and a Board of Statutory Auditors; an audit is undertaken by an independent audit company in accordance with law. The Company, as much as possible in line with the recent regulations introduced and with the principles contained in the Self-Governance Code, has adopted the following governance structure: - The Shareholders Meeting; - Board of Directors; - Control and Risks Committee; - Remuneration Committee; - Committee for Transactions with Related Parties - Lead Independent Director; - Board of Statutory Auditors; - Independent Auditors; - Supervisory Board; - Executive responsible for the preparation of the corporate accounting documents; - Internal Audit Manager; - Director appointed to oversee the Internal Control and Risk Management System. Shareholders Meeting The Shareholders Meeting represents all of the shareholders and is convened in accordance with the provisions of law and regulations for companies with listed shares to pass resolutions reserved for them by law or by the Company By-Laws. Board of Directors The central role in planning the strategy of the Company is attributed to the Board of Directors which, in accordance with article 15 of the By-Laws is composed of between 5 and 15 members. The Shareholders Meeting decides the number of members on the Board of Directors, their appointments within the above-mentioned limits and the duration of office which cannot be more than 3 years. The offices held by the directors appointed expire on the date of the Shareholders Meeting called for the approval of the financial statements of the final year of office and they may be re-elected. 134

137 Corporate Governance and Ownership Structure Report The appointment of the Board of Directors must occur through the voting of slates which allows the minority shareholders to elect at least one director. The minimum shareholding required for the presentation of the slate of candidates is 2.5% of the ordinary shares, or where otherwise established by Consob with regulations taking into consideration the capitalisation of the share float and of the share ownership of listed companies. Each slate must indicate at least one independent candidate in possession of the necessary legal requisites, or 2 in the case of a Board of Directors which is composed of more than 7 members. The Board of Directors, in accordance with Article 17 of the By-Laws, on March 22, 2007, set up a Control and Risks Committee (previously the Internal Control Committee) and a Remuneration Committee. Control and Risks Committee (previously called the Internal Control Committee). The Control and Risks Committee is composed of three non-executive directors, with sufficient accountancy, financial and risk management experience, of which two are independent and has the duty, among others, to identify and evaluate the business issues and risks and carry out the consultative and prepositional functions required by the Self-Governance Code. Remuneration Committee The Remuneration Committee is composed of three non-executive Directors, with an adequate knowledge and experience of finance and remuneration policies, of which two independent, and has the duty to formulate proposals with regard to the remuneration of Chief Executive Officers and those holding particular offices. Lead Independent Director In compliance with Article 2 of the Self-Governance Code, the Company has designated a lead independent director. The other non-executive directors, and in particular the independent directors, report to the lead independent director, for a better contribution to the activities and the functioning of the Board of Directors. Board of Statutory Auditors The Board of the Statutory Auditors verifies, among other issues (i) compliance with law and the By-Laws, (ii) respect of the principles of correct administration and in particular on the adequacy of the organisational structure of the Company, of the internal control system as well as the administration and accounting structure and its ability to correctly represent the operational events and (iii) the method for establishing corporate governance regulations which the company declares it is in observance of. 135

138 Corporate Governance and Ownership Structure Report The functions in accordance with law are reserved to the Statutory Auditors. In accordance with Article 20 of the By-Laws, the Board of Statutory Auditors consists of three Statutory Auditors and two alternate auditors - shareholders or non-shareholders. Each of the members of the Board of Statutory Auditors must possess the good standing and professionalism requisites and be independent in accordance with law. The appointment of a Statutory Auditor and an Alternate Auditor, in accordance with the By-laws (Article 20), is reserved for the minority slate of Shareholders with a minimum holding of at least 2.5% of ordinary shares or an alternative amount established by Consob, taking account of the capitalisation and Shareholder structure of listed companies. The statutory auditor elected by the minority slate is elected the Chairman of the Board of Statutory Auditors. Independent Auditors The audit activities are carried out by an independent audit company in accordance with applicable regulations. The Audit Firm is appointed by the Shareholders Meeting with prior consultation of the Board of Statutory Auditors. The independent auditors who carry out the audit of Zignago Vetro also carry out the audit of the subsidiary companies. Supervisory Board The Supervisory Board, appointed by the Board of Directors, has the responsibility to ensure the Organisational, Management and Control Model pursuant to Legislative Decree 231/2001 is adequate and efficient, effective and updated. Executive responsible for the preparation of the corporate accounting documents The executive responsible for the preparation of the corporate accounting documents, among other matters, has the responsibility to implement adequate administrative and accounting procedures for the preparation of the parent company accounts, the consolidated financial statements and all other financial documents, certifying, together with the appointed boards, the adequacy and application of these procedures and that the accounting information including interim reports correspond to the underlying accounting documents, records and accounting entries. Internal Audit Manager (previously called the Internal Control Manager). The Internal Audit Manager is charged with, among other issues, establishing that the Internal Control and Risk Management System is functional and adequate, in addition to verifying the functionality and appropriateness of the Internal Control and Risk Management System. 136

139 Corporate Governance and Ownership Structure Report Director Appointed to oversee the Internal Control and Risk Management System (previously called the Executive responsible to oversee the Internal Control System). The Executive Director responsible for the Internal Control and Risk Management System ensures the correct functioning of the internal control system, and among other matters, proposes to the Board of Directors the appointment and revocation of the Internal Audit Manager, identifying the principal company risks and implementing the guidelines outlined by the Board of Directors. He/she may also request the Internal Audit Manager to carry out verifications on the specific operating areas and on compliance with the internal rules and procedures and reports promptly to the Control and Risks Committee (or the Board of Directors) in relation to problem issues emerging in the course of their activities or which they have however become aware of in carrying out their duties. The present Report and all related documents may be downloaded from the internet site of the Company at Investors section. 2. DISCLOSURES ON SHAREHOLDERS (ARTICLE 123, PARAGRAPH 1 OF THE CONSOLIDATED FINANCE ACT) The present Section 2 is also prepared in accordance with article 123-bis of the Finance Act. It should be noted that: (a) the disclosures required by Article 123-bis paragraph 1, letter i) of the CFA are illustrated in the section of the Report concerning Directors remuneration (section 9); (b) the disclosure required by Article 123-bis paragraph 1, letter l) is illustrated in the section concerning the Board of Directors (section 4.1); (c) the disclosure required by the above-stated regulation and not reported in the present Section 2 is not considered applicable to the Company. a) Shareholders (as per article 123-bis, paragraph 1, letter a), CFA) The share capital is Euro 8,800,000, entirely subscribed and paid in, and is composed of 88,000,000 ordinary shares having a nominal value of 0.10 Euro each. At the Reporting date, no special share classes have been issued, such as shares without voting rights or with limited voting rights, nor other financial instruments which attribute the right to undertake newly issued shares. b) Restriction on the transfer of shares (as per article 123-bis, paragraph 1, letter b), CFA) The shares of the Company, at the Reporting date, are freely transferable by an act between persons or by succession following death and are subject to the rules for shares issued by listed companies in Italy. 137

140 Corporate Governance and Ownership Structure Report c) Significant holdings (as per article 123-bis, paragraph 1, letter c), CFA) At the date of the present Report, and based on the results of the Shareholders Register and communications received in accordance with Article 120 of the Finance Act, the following parties hold at least 2% of the share capital, directly or indirectly: Shareholder Direct shareholder Number of ordinary shares held % of ordinary share capital % of voting capital Zignago Holding S.p.A. Zignago Holding S.p.A. 57,200, % 65.0% PFC S.r.l. PFC S.r.l. 1,792, % 2.037% ING Investment Management ING Investment Management 1,775, % 2.017% d) Shares which confer special rights (as per Article 123-bis, paragraph 1, letter d), CFA) At the date of the present Report, all of the Company s shares are nominative, freely transferable and indivisible and each of them has a right to one vote at the ordinary and extraordinary Shareholders Meeting of the Company, as well as other equity and other administrative rights, in accordance with law and the applicable By-Laws. The Company has also not issued shares with special rights, privileges or restrictions at the date of the present report and has not issued securities which confer special control rights. e) Employee shareholdings: voting mechanism (as per article 123-bis, paragraph 1, letter f), CFA) At the date of the present Report, there are no shareholding agreements with employees in relation to the share capital of the company. f) Voting restrictions (as per Article 123-bis, paragraph 1, letter f), CFA) At the date of the present report, there are no restrictions on voting rights. g) Shareholder agreements (as per article 123-bis, paragraph 1, letter g), CFA) At the date of the present Report, the share capital of Zignago Vetro is held 65% by Zignago Holding S.p.A. (hereafter Zignago Holding ), with the current shareholders of Zignago Holding having signed a shareholder Agreement (the Agreement ). 138

141 Corporate Governance and Ownership Structure Report The parties subject to the Agreement are the shareholders of Zignago Holding: GA.MA. S.r.l. Single Shareholder Company ("GA.MA."), MARVIT S.r.l. Single Shareholder Company ("MARVIT"), LIBRA S.r.l. ("LIBRA"), LUMAR S.r.l. ("LUMAR"), Margherita Marzotto, Cristiana Marzotto, Maria Rosaria Marzotto (jointly the "Shareholders of Zignago Holding"), as well as Gaetano Marzotto, Stefano Marzotto, Nicolò Marzotto, Luca Marzotto and M.D.D.R. S.r.l. ("M.D.D.R.") (hereafter, together with the shareholders of Zignago Holding, the "Parties"). The financial instruments of Zignago Holding held by shareholders of Zignago Holding are as follows: Shareholder Zignago Holding share GA.MA (1) % MARVIT (2) % LUMAR (3) % LIBRA (4) % Cristiana Marzotto 3.120% Maria Rosaria Marzotto 3.192% Margherita Marzotto 2.358% TOTAL % (1) The share capital of GA.MA. S.r.l. single shareholder company of Euro 10, is entirely held by Gaetano Marzotto. (2) The share capital of MARVIT S.r.l. single shareholder company of Euro 98, is entirely held by Stefano Marzotto. (3) The share capital of LUMAR S.r.l. of Euro 10, is held for a nominal amount of Euro 10, by Luca Marzotto and for a nominal amount of Euro by Nicolò Marzotto. (4) The share capital of LIBRA S.r.l. of Euro 11, is held for a nominal amount of Euro 10, by Nicolò Marzotto and for a nominal amount of Euro by Luca Marzotto. The Agreement, originally signed on July 11, 2006 and subsequently amended on December 19, 2008 and July 11, 2009, was agreed between, among others, FIMIZ S.r.l. ( FIMIZ ) and the shareholders of FIMIZ and concerned, among other issues, the conduct rules and regulations which govern the transactions between the shareholders of FIMIZ, as well as the Corporate Governance regulations of FIMIZ, and through this company of Zignago Holding (whose share capital, at the date of first signing, was entirely held by FIMIZ). On December 17, 2009, the reverse merger deed (the Merger ), under which FIMIZ was incorporated into Zignago Holding, with effectiveness from December 31, 2009, whose share capital before the Merger was entirely held by FIMIZ (and which post Merger was held by the former shareholders of FIMIZ based on the shareholdings indicated in the table above). 139

142 Corporate Governance and Ownership Structure Report Therefore on December 21, 2009, the shareholders of FIMIZ signed a private contract establishing that the shareholder agreements contained in the Agreement relating to the corporate governance of FIMIZ must concur with the corporate governance of Zignago Holding (due to the discontinuation of FIMIZ as a result of the Merger), for the entire duration of the Agreement. Except for that relating to the Merger, the Agreement remains in force and fully effective without amendment of any of the conditions contained therein. The Agreement became effective on July 11, 2006 with an original duration of three years. Upon expiry, the Agreement renews automatically for 3 years with the exception of the case in which one of the Parties revokes the renewal through sending a written communication to the other Parties at least six months before the expiry of the relative term. On first expiry on July 11, 2009, the agreement was tacitly renewed for a period of three years; this period was then tacitly extended on July 11, 2012 for a further period of three years. h) Change of control clause (as per Article 123-bis, paragraph 1, letter h), CFA) The Company or its subsidiaries have not stipulated significant agreements that are effective or would be modified or discharged in the case of a change in control of the Issuer. i) Power to increase the share capital and authorisation to purchase treasury shares (as per Article 123-bis, paragraph 1, letter a), CFA) The Company By-Laws do not permit the Board of Directors to increase the share capital in accordance with Article 2443 of the civil code. The Shareholders Meeting of April 29, 2013 authorised, following revocation of the motion passed by the Meeting of April 23, 2012 for the part not executed, the Board of Directors of the Issuer, and on its behalf the Chairman including proxies nominated by him, pursuant to Article 2357 of the Civil Code, to acquire treasury shares of the Company, for the amount, price and terms and conditions as illustrated below: the purchases may be made on one or more occasions, within 18 months from the date of the shareholders meeting resolution and within the limits of the available reserves and distributable profits from the last approved financial statements and will be accounted in accordance with the provisions of law and applicable accounting principles; the purchase price of each share may not be 20% above or below the share price recorded on the Stock Exchange in the trading day prior to each operation; the maximum number of shares purchased cannot have a nominal value, including any shares held by Subsidiary companies, exceeding one-tenth of the share capital; 140

143 Corporate Governance and Ownership Structure Report the purchase of shares must be made in compliance with the current regulations for listed companies and thus in accordance with Article 144-bis of the Consob Issuers Regulation, Article 132 of the CFA and the Stock Exchange Regulations and any other Regulation applicable, including those of the EU Directive 2003/6 of January 28, 2003 and relative European Union and National legislation and Regulation (EC) No. 2273/2000 of the European Commission of December 22, The same Shareholders Meeting of Zignago Vetro, in ordinary session, also decided, among other matters, to: a) authorise the Board of Directors, in accordance with Article 2357-ter, first paragraph of the Civil Code, to utilise all or part, without time limits, of the treasury shares acquired also before exhausting the purchases; the shares may be transferred in one or more tranches, including through a public offer and/or to the shareholders, on regulated markets and/or non-regulated markets, or outside of the stock exchange, also through a public offer and/or an offer to shareholders, on regulated markets and/or non-regulated markets, also outside of the stock exchange, on regulated and/or non-regulated markets, institutional placement, placement of warrants, or as payment for acquisition or of public exchange offer, at a price not higher than 20% above the share price recorded on the trading day preceding each operation; however these price limits will not be applied where the sale of the shares is to employees, including management, executive directors, and consultants of Zignago Vetro and its subsidiaries in relation to Incentive Stock Option plans; b) authorise the Board of Directors, in accordance with Article 2357-ter, third paragraph of the Civil Code, to carry out all accounting registration considered necessary or appropriate, in relation to the treasury shares operations, in accordance with that required by law and the applicable accounting principles; in addition to c) to confer to the Board of Directors, and on its behalf to the Chairman, all powers necessary to undertake the purchases and in any case to implement the above motions, including through attorneys where necessarily appointed, complying with any requests by the relevant authorities. In accordance with Article 144-bis of the Issuers regulation, the Company, on April 29, 2013, communicated to the public the details of its buy-back programme. At December 31, 2013, the Company held in portfolio 1,421,354 treasury shares for a total investment of Euro 5,027 thousand. 141

144 Corporate Governance and Ownership Structure Report The Board of Directors, in the meeting of March 13, 2014, approved the proposal to the Shareholders Meeting for the renewal of the authorisation to purchase and to utilise the treasury shares at the same terms and conditions as that approved by the previous Shareholders Meeting. l) Direction and co-ordination activities (as per Article 2497 and subsequent of the Civil Code) Zignago Vetro is not subject to direction or control by Zignago Holding and operates autonomously and with entrepreneurial independence of its holding company Zignago Holding. Zignago Vetro avails of some services supplied by Zignago Holding and of its subsidiary companies, at market conditions and for reasons of technical, economic and commercial benefit. * * * The information required by Article 123-bis, first paragraph, letter i) of the CFA (indemnities of directors in the case of dismissal and termination of employment following a public purchase offer) are set out in the section of the report concerning director s remuneration. The information required by Article 123-bis, first paragraph, letter l) of the CFA (appointment and replacement of directors and amendments to the by-laws) is illustrated in the section of the Report dedicated to the Board of Directors. 3. COMPLIANCE The Company adopts the Self-Governance Code in substantial compliance with the applicable regulations. The sections below disclose procedures implemented by the Company or the amendments which the Company is currently implementing in relation to the Organisational Model outlined in the Self-Governance Code, accessible on the website or the reasons for which the company adopted other options. The present Report and all related documents may be downloaded from the internet site of the Company at Investors section. The Issuer and it strategic subsidiaries are not subject to laws in force outside Italy which affect the corporate governance structures of the Issuer. 142

145 Corporate Governance and Ownership Structure Report 4. BOARD OF DIRECTORS 4.1. APPOINTMENT AND REPLACEMENT (as per Article 123-bis, paragraph 1, letter l), CFA) The Board of Directors, in accordance with Article 15 of the By-Laws is composed of between 5 and 15 members, including the Chairman, with the number of members of the under-represented gender matching at least the regulatory required minimum in force. The Shareholders Meeting decides the number of members on the Board of Directors, their appointments within the above-mentioned limits and the duration of office, which cannot be more than 3 years. The offices held by the directors appointed expire on the date of the Shareholders Meeting called for the approval of the financial statements of the final year of office and they may be re-elected. The Shareholders Meeting can change the number of directors during the course of its mandate, within the limits set out above and in the manner that is described as follows; the mandate of these directors ceases with that of the other directors previously appointed. Article 15 of the By-Laws of the Issuer, in relation to the appointment and replacement of the Board, and/or its members, establishes that the election of members takes place on the basis of slates of candidates in the manner outlined below, in order to ensure that minority shareholders may elect at least one Director and in compliance with the applicable regulations in relation to gender balance. Shareholders who represent at least 2.5% of the paid-in and subscribed share capital at the date of the presentation of the slate can present a slate of candidates with no more candidates than those to be elected, progressively numbered. This quota is in line with that established by Article 144-quarter of the Issuers' Regulations. The call notice will indicate the holding required to present slates. Each shareholder may present or be a candidate on only one slate; in case of breach, they are excluded from all slates. Shareholders belonging to the same shareholder pact as per Article 122 of the CFA and subsequent amendments and supplements, the parent company, subsidiary companies and those subject to the common control, also in the case in which they act through nominees or trust companies, may present and vote on only one slate. The votes in breach of this are not attributed to any slate. Each candidate can be presented only on one slate at the risk of being declared ineligible. The slates shall be filed at the Company s registered office at least 25 days prior to the date established for the Shareholders Meeting in first call, or within a different minimum time period established by applicable regulations. The call notice will indicate at least one means of distance communication of the filing of slates which enables the identification of those presenting or involved in the presentation of slates. Ownership of the minimum shareholding necessary to present a slate must be declared in the manner and under the terms and conditions established by the existing law and regulations. Together with each slate, within the terms indicated above, the following must be filed (i) information relating to the identity of the shareholders presenting the slate and their shareholding; (ii) declarations that the individual candidates accept their candidature and attest to the inexistence of causes of ineligibility and of incompatibility and the existence of the requisites required by regulations in force for the assumption of office, including any possible declarations of 143

146 Corporate Governance and Ownership Structure Report independence required in accordance with the Self-Governance Code and regulations in force, and (iii) the curriculum vitae of each candidate, with indication of offices held. Each slate must contain and expressly indicate the candidature of at least one party, or two in the case of a Board of Directors composed of more than seven members, being independent in accordance with Article 148, paragraph 3, of the Finance Act and with Article 147-ter, paragraph 4, of the Finance Act (hereafter Independent Directors ex Article 147-ter ). Each slate presenting a number of candidates equal to or above three must present a number of candidates from the underrepresented gender which ensures, within the slate itself, compliance with the regulatory gender quota in force. The candidates elected at the end of the voting shall be those on the two slates that have obtained the higher number of votes, with the following criteria: a) From the slate which obtained the highest number of votes (hereafter the Majority Slate ) all of the members of the Board are elected except one, as established by the Shareholders Meeting; the candidates are elected, up to the number required from the slate; b) From the slate which obtained the second highest number of votes and not connected in any way, even indirectly, with the shareholders who presented or voted on the majority slate (hereafter the Minority Slate ), one director is elected, who is the candidate indicated in the first position on the same slate; however, when from the Majority Slate one or two Independent Directors in accordance with Article 147-ter cannot be elected, the first person on the Minority Slate, (or the first two, in the case of a Board of Directors composed of more than seven members) is elected as an Independent Director in accordance with Article 147-ter indicated in the Minority Slate. The candidate listed in first position on the Majority Slate is elected as Chairman of Board of Directors. 144

147 Corporate Governance and Ownership Structure Report When two slates obtain an equal amount of votes, a new vote is taken by the Shareholders Meeting, putting only the two slates concerned to the meeting. The same rule will apply in the case of parity between the slates with the second highest number of votes. If under the above procedure the composition of the Board of Directors does not permit compliance with the gender balance regulation, the number of votes to be attributed to each candidate is calculated by dividing the number of votes for each slate by the number by which the individual candidates are listed. The numbers of votes thus attained are listed in decreasing order. The candidate of the over-represented gender with the lowest number of votes among the candidates which will be elected is replaced by the first unelected candidate belonging to the under-represented gender indicated on the same slate of the replaced candidate, in compliance with the minimum number of Independent Directors. In the case in which candidates from another slate have obtained the same number of votes, the candidate of the slate with the highest number of Directors is replaced. If the replacement of the candidate of the over-represented gender with the lower number of votes on the slate does not allow the reaching of the minimum threshold established by the Gender Balance Regulation, the replacement operation indicated above is carried out also in relation to the candidate of the over-represented gender with the penultimate number of votes and thereafter proceeding, where necessary, to the candidate above. In all cases in which the above-stated procedure is not applicable, the replacement is carried out by the Shareholders Meeting based on statutory majority. Should only one slate be presented, the Shareholders Meeting shall vote on it and should this slate obtain the statutory majority, the candidates listed in progressive order up to the number fixed by the Shareholders Meeting shall be elected as Directors, and however in compliance with the applicable regulation concerning gender balance and the required number of Independent Directors. The candidate listed in the first position is elected as the Chairman of the Board of Directors. For the inclusion of the Directors to be elected, consideration is not taken of the slates which have not obtained at least half of the votes required by the By-Laws for the presentation of the slates. In the case of no slates being presented, the Shareholders Meeting appoints the Board of Directors by statutory majority. The Independent Directors in accordance with Article 147-ter of the CFA who, after their appointment, are no longer independent, immediately must communicate such to the Board of Directors and, in every case, relinquish office. 145

148 Corporate Governance and Ownership Structure Report In the case of the termination of office, for any reason, of one or more Directors, the replacement is made in accordance with law, without the necessity to appoint a Director from the slate of the Director that resigned from the majority slate or from the minority slate, ensuring the presence on the Board of Directors of the required number of members considered independent in accordance with the applicable regulations, in addition to compliance with that established and in force in relation to gender balance, considering that if the majority of the members of the Board of Directors for any reason is not in place, the entire Board is considered lapsed, the Shareholders Meeting must be called without delay by the remaining Directors in office to reincorporate the Board. The Board of Directors, in consideration of the structure and the size of the Group, has not adopted succession plans for Executive Directors, considering the methods for replacement adopted appropriate to ensure continuity and certainty in operational management. Currently, the Company has not set up an Appointment Committee as the Board of Directors considers that such committee is substantially not necessary for the Company s profile. The Board of Directors periodically reviews this choice. The table attached to the present Report sub 1 indicates the Independent Directors in accordance with Article 147-ter of the CFA and those also considered independent in accordance with Article 3 of the Self-Governance Code COMPOSITION (as per Article 123-bis, paragraph 2, letter h), CFA) Article 15 of the By-Laws establishes that the Company is governed by a Board of Directors composed of a minimum of 5 and a maximum of 15 members, including the Chairman, with members of the under-represented gender holding at least the minimum number required by applicable law and regulations. At least one of the members of the Board of Directors, or two if the Board of Directors comprises of more than seven members, must be independent in accordance with Article 148, paragraph 3 of the CFA. The Shareholders Meeting of April 29, 2013 appointed the Board of Directors, establishing the number of members at 14, who will remain in office until the approval of the financial statements at December 31, All of the members were elected from the only slate presented by the majority shareholder Zignago Holding S.p.A.. 146

149 Corporate Governance and Ownership Structure Report This slate included the following candidates: Franco Grisan, born in Pola on June 24, 1942; Lino Benassi, born in Trento on December 2, 1943; Ferdinando Businaro, born in Padova on February 26, 1965; Alberto Faggion, born in Trissino (VI) on August 30, 1944; Paolo Giacobbo, born in Vicenza on April 21, 1949; Daniela Manzoni Suppiej, born in Udine on February 8, 1969; Gaetano Marzotto, born in Valdagno (VI) on 21 December 1952; Luca Marzotto, born in Rome on January 9, 1971; Nicolò Marzotto, born in Rome on September 28, 1968; Stefano Marzotto, born in Valdagno (VI) on April 24, 1955; Chiara Mio, born in Pordenone on November 19, 1964; Manuela Romei Pasetti, born in Ancona on February 15, 1943; Maurizio Sobrero, born in Bologna on February 16, 1967; Giovanni Tamburi, born in Rome on April 21, All of the candidates on the only slate presented were elected by a majority of those present. In particular, the candidates were elected with 58,837,792 favourable votes, comprising 95.20% of votes, with 2,963,984 opposing shares, comprising 4.80% of votes. The share capital present with voting rights totaled 70.23% of the entire share capital. Of the 14 directors appointed, 4 are independent. The Board evaluates annually the independence of the Directors, based on the information provided by the parties. The presence of four independent directors has the objective of achieving the greatest possible best governance through debate and dialogue between all of the Directors. The contribution of the independent directors in addition permits the Board of Directors to verify whether adequate independent opinion exists in cases of potential conflicts of interest of the Company with the controlling shareholder. The composition of the Board of Directors and of the Committees is reported in Table 1 sub 1 of the present Report, along with the number of meetings and attendances, while Attachment 1 contains the profile of each director. The offices held by each Director at December 31, 2013 on Boards of Directors or Boards of Statutory Auditors of listed and non listed companies are reported in Attachment 2. The Board of Directors has not defined the general criteria relating to the maximum number of offices of administration and control in other companies that may be considered compatible with the proper carrying out of their duties as directors of the Issuer as no circumstances have arisen which necessitates such a requirement. 147

150 Corporate Governance and Ownership Structure Report In order to remain fully briefed on industry developments, the Board periodically receives information and updates, also through material prepared by the Company. The composition of the Board of Directors of the Company has not changed since year-end ROLE OF THE BOARD OF DIRECTORS (as per Article 123-bis, paragraph 2, letter d), CFA) Article 16 of the By-Laws provides that the Board of Directors is convened in the place indicated on the convocation notice, even if a place differing from the registered office, but in Italy or in another European Union country, whenever the Chairman or the Vice-Chairman if nominated, or the Chief Executive Officer if nominated, considers it necessary or when it is requested in written form by at least three of its members. The Board of Directors can be convened by the Board of Statutory Auditors, also individually, in accordance with Article 151 of the Finance Act. In accordance with the same Article, the convocation of the meetings can be through telegram, telefax, or electronic message sent to each member of the Board of Directors and each member of the Board of Statutory Auditors at least three calendar days before the meeting. In cases of urgency, the By-Laws establish that the convening can be carried out, in the same manner, with notice of at least one day. In any case, also if the above-stated formalities are not observed, the Board of Directors is considered validly constituted when all of the Directors and all of the Statutory Auditors are present. The third paragraph of the same article provides moreover for the possibility that the meetings of the Board of Directors are held by teleconference or video-conference and is permitted on condition that all of the participants can be identified and that they can follow the discussions and intervene in real time in relation to the subject matters under discussion. A meeting of the Board of Directors shall be validly constituted when the majority of its members in office are present. Resolutions shall be adopted by a majority of Directors present; in case of a tie, the vote of the person chairing the meeting shall be decisive. The meetings are chaired by the Chairman or, in his absence or impediment, by the Vice Chairman if appointed. In the case of absence or impediment of the Vice Chairman, the meetings are chaired by the most senior director or by seniority established by age. The minutes of the Board meetings are prepared by the secretary of the Board of Directors and signed by the Chairman of the meeting and by the secretary. 148

151 Corporate Governance and Ownership Structure Report The Board of Directors must be called at least four times during the year on the preparation of the accounting results for the period. In 2013, 6 Board of Directors meetings were held with a duration of between 1 hour and 30 minutes and 5 hours and thirty minutes. Six meetings are scheduled for the current year, of which two already held. The Chairman oversees the preparations for Board meetings. For such purpose, the Board of Directors and Board of Statutory Auditors, in a timely and adequate manner, are provided the documentation and the information necessary to ensure a correct and full evaluation of the facts to be examined by the Board, to enable them to express with full disclosure and knowledge, opinions on the matters provided for their examination upon which decisions are made and ensures that the matters on the Agenda are allocated the time necessary for a constructive debate. For these reasons, the necessary information, as well as that relating to the principal regulatory and legislative developments and updates regarding the Company and the corporate boards, are issued to the directors in a timely manner before the meeting, except in the case where other requirements limit the information provided (in particular urgent cases and for reasons of extreme confidentiality). In 2013 information was provided in relation to all of the significant matters on the Agendas of the board meetings. It is underlined that the Chief Executive Officer, in accordance with the consolidated practices of the Company, report extensively to the Board of Directors on the principal operations having a significant economic, equity and financial impact. Parties other than board members may attend Board of Director meetings if invited. In particular, management of the Issuer and of the Group participate, whose presence assists greater understanding of the matters on the Agenda. A number of executives of the Issuer attended the meetings held in In relation to the role of the Board of Directors, the powers of the Board of Directors, in accordance with Article 17 of the By-Laws and with that established by the Self-Governance Code, relate to the ordinary and extraordinary management of the Company, extending to all acts which the Board considers necessary for the reaching of the corporate objectives, excluding only that which is reserved by law to the Shareholders Meeting. 149

152 Corporate Governance and Ownership Structure Report The matters at point 1.C.1 of the Self-Governance Code, not having been delegated to the CEO, are reserved for consideration by the Board of Directors. In particular, in accordance with the Self- Governance Code, the examination and approval of the strategic, industrial and financial plans of the Issuer and of the Group, the nature and levels of risk compatible with the strategic objectives of the Group, the Corporate Governance System of the Issuer, the adequacy of the organisational structure of the Company and of the structure of the Group which the Issuer heads, are reserved to the Board of Directors. In accordance with Article 17, the Board of Directors is attributed the powers to: (i) deliberate on mergers in accordance with Articles 2505 and 2505 bis of the Civil Code; (ii) the establishment and closing of secondary offices; (iii) the reduction of share capital in the case of a decrease in the number of shareholders; (iv) the amendment of the by-laws in accordance with regulations; (v) attributing the right of representation of the Company to directors; (vi) the appointment of executives responsible for the preparation of the corporate accounting documents; (vii) the transfer of the registered office within the national territory. Wherever reasons of urgency exist in relation to transactions with related parties not within the ambit of the Shareholders Meetings or which must not be authorised by the meeting, the Board of Directors may approve these transactions with related parties, which may be carried out also through subsidiary companies, in place of the normal procedures established in the internal procedure for transactions with related parties adopted by the company, although in compliance with and under the terms and conditions established by the same procedure. The following areas are also reserved for the exclusive competence of the Board of Directors: (i) the appointment and revocation of office of the executive responsible for the preparation of the corporate accounting documents; and (ii) the verification that the executive responsible for the preparation of the corporate accounting documents may avail of sufficient powers and means for the exercise of duties attributed by law, as well as full conformity with the administrative and accounting procedures. The Board of Directors, after examining the proposals by the relevant committee and the Board of Statutory Auditors, set the remuneration of the Chief Executive Officer. In addition, the Board of Directors assesses the adequacy of the organisational, administration and general accounting system of the Issuer and of the subsidiaries with strategic relevance, prepared by the Chief Executive Officers, with particular reference to the internal control and risk management system and the management of conflicts of interest. In relation to the management of conflict of interests, the CEO, at least quarterly refer to the Board of Directors on operations in which the directors are found to be in a situation of potential conflict of interest. 150

153 Corporate Governance and Ownership Structure Report In accordance with Article 1 and the relative Self-Governance Code criteria, the Board of Directors approved the governance system of the Company, resulting in, in particular, the delegation of powers and functions, including the establishment of internal and related committees to the Board, in addition to the internal procedural regulations relating to operations with related parties and in which a director has an interest. The Board of Directors monitors the general performance of operations, taking into account, in particular, the information received from the executive directors, as well as periodically comparing the results with the budgets. During the year no operations having significant strategic, economic and equity importance for the Issuer or its subsidiaries were undertaken. The Board of Directors did not consider it necessary, in light of the structure of the Company and the internal boards, to consider the size, composition and functioning of the Board and its committees. The Directors are subject to the curtailment under Article 2390 of the civil code, except in the case where they are exonerated by the Shareholders Meeting. At the date of the present report, the Shareholders Meeting has not authorised exceptions to the competition prohibition EXECUTIVE BODIES In accordance with Article 18 of the By-Laws, the representation of the Company in relation to judicial or administrative authorities and with third parties, as well as the corporate signature, lies with the Chairman of the Board of Directors as well as the Vice Chairman, and in a residual manner, to the Directors and the legal representatives to which the Board of Directors has delegated powers, within the limits of those delegations. The Vice-Chairman Nicolò Marzotto exercises the function of Chairman in the case of the absence or impediment of this latter (appointed in the person of Franco Grisan). In accordance with Article 17 of the By-Laws, the Board of Directors can delegate part of its responsibilities and powers, with the right of sub-delegation, including signature powers, to one or more of its members, determining the responsibilities and remuneration. The office of Chairman and Chief Executive Officer may be unified. The Board of Directors may also (i) institute an Executive Committee composed of members chosen from the Board including the Chairman, (ii) incorporate committees, comprised of members of the Board, of a consultative and/or propositional nature, (iii) appoint general directors, agents, attorneys and proxies in general for certain deeds or category of deeds chosen from among the employees of the Company or third parties. 151

154 Corporate Governance and Ownership Structure Report As set out above, the By-Laws provide that the Board of Directors can establish committees, from members of the same Board, of a consultative and/or proposal nature, determining the number of members of these committees and the functions attributed to them, in accordance with regulations in force in relation to companies with shares listed on the regular markets. The Board of Directors has set up a Control and Risks Committee, a Remuneration Committee and a Committee for Transactions with Related Parties. The Board of Directors meeting of April 29, 2013 conferred to the Chairman Mr. Franco Grisan the following duties and responsibilities: - to call the meetings of the Board of Directors and ensure that the members are provided, within a reasonable period in advance of the meeting (except in the cases of necessity and urgency), the necessary documentation and information to discuss the matters submitted for examination and approval; - to co-ordinate the activities of the Board of Directors and direct the meetings of the board; - to receive the proposals from the Chief Executive Officer and express to the Board of Directors his opinion in relation to the objectives, policies and strategic organisational decisions (key roles and positions) of the Companies of the Group; - to determine with the Chief Executive Officer the strategies to be presented for the approval of the Board of Directors; - within the strategies approved and in tandem with the Chief Executive Officer, to implement and supervise the introduction of new development initiatives of the Group, utilising for these purposes the organisational structures of the Company and external organisations within an approved budget; - to represent the Company, where this power has not been conferred by the Board of Directors, at the Industry Confederation, with the Industrial Unions and the Chambers of Commerce and with local interest groups and organisations, participating at meetings and with the power to sign agreements; - to oversee the implementation of the resolutions approved by the Board of Directors; - to co-ordinate the financial communication activities of the Company; - to represent, with power to sub-delegate, the Company at the Shareholders Meetings of the subsidiary Vetreco Srl, including the exercise of all relative rights, powers or faculties of the Company, informing the Board of Directors of such at the first possible meeting. The same Board motion of April 29, 2013 conferred to the Chief Executive Officer Mr. Paolo Giacobbo the following duties and responsibilities: - to report to the Board of Directors on the management, operations and development of the Company and of the Group. Specifically, he is responsible for the results based on the objectives, strategies and policies approved; 152

155 Corporate Governance and Ownership Structure Report - to ensure the timely and valid drawing up, for the purposes of the decisions of the Board of Directors, of strategic objectives (of portfolio, business etc.) and policies (human resources, financial resources etc.) for the management, operations and development of the Group; - to report in a timely manner to the Chairman of the Company on the points illustrated above, in order that he may coordinate the activities of the Board of Directors, and to express his opinion on these issues. The Chief Executive Officer Mr. Paolo Giacobbo is assigned also the following executive powers: purchase of raw materials, services and stock, agreeing prices and purchase conditions; sell company products, establishing the prices and sales conditions; purchase, sell or exchange, utilising the annual budget, by individual investment, approved by the Board of Directors, machinery and other mobile vehicles in general, purchase and sell vehicles establishing the conditions and the prices as well as pay the amounts for a value not above Euro 500 thousand; purchase, sell or exchange, machinery and other mobile vehicles in general, purchase and sell vehicles establishing the conditions and the prices, in necessary cases and with subsequent ratification by the Board of Directors, for a maximum non-authorised amount of Euro 700 thousand, approved on a case by case basis by the board; sign agreements, settle accounts and invoices, also as final settlement; sign with all appropriate clauses, including arbitration clauses, amend or settle contracts for the rental, transport, tender, granting of a loan, administration, or operation and concerning the presentation of services in general, mediation, commission, sending, agency and concession of sale and filing with the State administration, with public and private entities and in particular with the Railway Administration; undertake the necessary deeds for trade patents such as, for example purposes, the corrections, amendments, extension of confidentiality, divisions, proposed or resisted by opposing administrations, interferences, appeals and to complete any other necessary deed useful to seek, obtain or maintain trademarks, sign all necessary deeds for fulfilling that conferred above, appoint trade patent agents in Italy and abroad, conferring their relative powers; complete with the public administration, entities and public offices, all of the deeds and necessary operations to obtain concessions, licences and authorisations in general, signing, and settling as far as possible based on the applicable regulations, conventions, deeds and any other preliminary deeds of the above-mentioned provisions; 153

156 Corporate Governance and Ownership Structure Report fulfil obligations, including those related to production and consumption taxes and revenue and monopoly duties; deposit and withdraw amounts from banks, credit issuing institutions, also through third party cheques for liquidity and related needs and utilisation of credit lines granted to the Company, acquire or sell currencies relating to significant import or export operations, with total value not above Euro 250 thousand for each operation or a set of similar operations; represent, with power to sub-delegate, the Company in the Shareholders Meetings of the subsidiary company Vetri Speciali S.p.A., with power to exercise all the Company rights and faculties, with prior approval of the Board of Directors; represent, with power to sub-delegate, the Company in the Shareholders Meetings of companies in which a holding exists, with power to exercise all the Company s rights and faculties, with prior approval of the Board of Directors; sign and transfer amounts, receipts and transfers to banks for deposit in current accounts of the Company; sign all documentation relating to import and export operations; make any types of deposits and withdrawals from post offices, banks, credit institutions, Regional Tax Offices, at the central and local offices of the Cassa Depositi e Prestiti, customs, State and Private Rail Companies, transport and shipping companies etc.; receive from post, telegraph, custom, rail, transport and shipping companies, and in general any public office, or any company or factory, money orders, packages, letters, including registered, and insured with declarations of value, goods, money, etc., issuing acknowledgments for that received; pay or receive sums, receivables, interests, dividends, cheques and payment mandates from whoever issues them in favour of the Company; acquire, sale or exchange shares, holdings, bonds as well as holdings in Consortiums in companies and/or non commercial entities, with exclusion of holdings in subsidiary or associated companies, including fixed assets, in cases in which a resolution of the relevant Corporate Boards has been acquired, for amounts not above Euro 250 thousand; represent the Company at civil authorities or entities, administrative or legal of any level, as well as at the Revenue Office and every other Tax Office and in front of the Tax and Administrative Commissions of any type or level, presenting petitions, records, proceedings, declarations; propose and accept transactions (however within a limit of Euro 500 thousand per individual transaction), initiate proceedings, convened or appealed, proposing all of the deeds deemed necessary and represent the Company at creditor meetings, make proposals or approve debts in bankruptcies, approve agreements and request relative amounts, settle any amount or claim (although within a limit of Euro 500 thousand for individual transaction or claim), compromising arbitration (although within the limit of Euro 500 thousand for individual arbitration), also friendly, also in a non appealable manner, administer the execution of rulings, defer, refer, accept legal decisions, petition seizures or sequestrations or other acts from debtors or third parties and the revocation, appointment of attorneys, lawyers and experts, and revoking, substituting and electing such persons; represent the Company at the Regional Tax Offices and the central and local offices of the Cassa Depositi e Prestiti; disburse and accept bills of exchange, in Euro or in foreign currency to suppliers for payment of raw materials, machinery, inventories and auxiliary materials in general to satisfy company requirements; 154

157 Corporate Governance and Ownership Structure Report receive any types of grants from Ministries, Regions, Provinces and other national public bodies and European Union bodies; administrate the property of the Company signing and settling rental contracts; sign and settle contracts concerning the rental of property, within the operational requirements of the Company and within a limit of Euro 150 thousand for each single operation; authorise persons to use vehicles owned by the company in Italy and abroad and in any European State, in compliance also with applicable laws; employ, within the budget, staff under fixed term contracts with a maximum duration of 12 months, managers and white-collar and blue-collar staff; agree, within the budget, outsourcing contracts; agree, within the budget, one-off contracts or projects for a maximum value of Euro 50,000; sign, within the budget, trade union agreements with the trade union representatives and the workers unions, as well as agreements with trade union management; confer and revoke by single act or category including those above, procure from third parties also from non-employees of the company. The Chief Executive Officer Mr. Paolo Giacobbo also has the following powers, to be exercised with joint signature: purchase, sell or exchange, utilising the annual budget, by individual investment, approved by the Board of Directors, machinery and other mobile vehicles in general, purchase and sell vehicles establishing the conditions and the prices as well as pay the amounts for a value not above Euro 500 thousand, with joint signature of the Vice General Manager Mr. Ovidio Dri; request from banking institutes and sign loans of any type, also bills exchanged, within the current requirements of the Company with joint signature of the Chief Financial Officer Mr. Roberto Celot or the Director Mr. Alberto Faggion; deposit and withdraw amounts from banks, credit issuing institutions, also through third party cheques for liquidity and related needs and utilisation of credit lines granted to the Company, acquire or sell currencies relating to significant import or export operations, with total value above Euro 250 thousand for each operation or a set of similar operations, with joint signature of the Chief Financial Officer Mr. Roberto Celot or the Director Mr. Alberto Faggion; 155

158 Corporate Governance and Ownership Structure Report sign sureties in favour of third parties in the case in which the concession of the surety guarantee is previously approved by the relevant Company Boards, with joint signature of the Chief Financial Officer Mr. Robert Celot or the Director Mr. Alberto Faggion; cancel judicial and/or voluntary mortgages registered or to be registered in favour of the Company, against creditor positions of the same Company and subsequently settled, exonerating the Agreement of Property Registries from every responsibility in relation to the cancelation, with joint signature of the Chief Financial Officer Mr. Roberto Celot or the Director Mr. Alberto Faggion; sign and settle insurance contracts of any type, signing the relative policies with power also to settle and request, in the case of a claim, the relative indemnity, issuing acknowledgments to the competent authorities, settling any other indemnity due to third parties for any type of claim, with joint signature of the Chief Financial Officer Mr. Roberto Celot or the Director Mr. Alberto Faggion; purchase, sell or exchange shares, quotas, bonds and financial instruments in general, not comprising fixed assets, with joint signature of the Chief Financial Officer Mr. Roberto Celot and with the Director Mr. Alberto Faggion; purchase, sell or exchange shares, quotas, bonds as well as holdings in Consortium companies and/or non commercial Entities, with the exclusion of shareholdings in subsidiary and associated companies, including fixed assets, in the case in which prior approval is given by the Corporate Boards, for values above Euro 250 thousand, with joint signature with the Chief Financial Officer Mr. Roberto Celot or the Director Mr. Alberto Faggion; employ or dismiss, within the budget or approved programmes by the Board of Directors, executives with fixed term or long-term contracts, managers, white and blue collar workers, with long-term contracts or extending beyond 12 months, with joint signature of the Chief Financial Officer Mr. Roberto Celot or Mr. Michele Pezza; agree, within the budget, one-off contracts or projects for a maximum value of Euro 50,000, with joint signature of the Chief Financial Officer Mr. Roberto Celot or Mr. Michele Pezza. The Chief Executive Officer Mr. Paolo Giacobbo may, in exercising the above stated powers, utilise qualified partners, whom however he must oversee. Considering the powers delegated by the Board of Directors, the Chief Executive Officer, Mr. Paolo Giacobbo, qualifies as the person in charge of Company operations. Mr. Paolo Giacobbo is not subjected to any interlocking situations. 156

159 Corporate Governance and Ownership Structure Report The Board has also delegated to the Chairman and Chief Executive Officer the functions of: manage, address and organise security aspects and workplace health, in all of the productive units and in the other work areas of the Company, and to attribute him the position of employer in accordance with Legislative Decree 81/2008 and subsequent amendments and additions, with mandate to put in place every act and function necessary to comply with applicable regulations; manage, address and organise all aspects in relation to environmental protection, with mandate to carry out every necessary act for the compliance with applicable regulations; manage, address and organise all aspects in relation to the protection of personal data held by the Company, with mandate to carry out every necessary act for the compliance with applicable regulations. Disclosure to the Board of Statutory Auditors The directors report to the Board of Statutory Auditors in a timely manner, and at least quarterly at the meetings of the Board of Directors, or also through written communication to the Chairman of the Board of Statutory Auditors on the activities carried out and on the most significant economic, financial and balance sheet operations carried out by the Company and by the subsidiary companies, in order to enable the Board of Statutory Auditors to evaluate if the operations decided upon and implemented conform with law and the By-Laws and are not broadly imprudent or in conflict with the motions undertaken by the Shareholders Meeting or such as to compromise the value of the company. In particular, the Directors report on operations in which they have an interest, either on their own behalf or on behalf of third parties, or that are affected by any individual who directs and coordinates the operation. At the date of the present Report, the Company has not set up an Executive Committee OTHER EXECUTIVE DIRECTORS The Board of Directors resolutions of April 29, 2013 conferred Alberto Faggion a series of powers of ordinary administration, with value limits, exercisable with single signature; while, particularly in relation to the financial aspects of the Company, Alberto Faggion was conferred powers, with value limits, exercisable exclusively with joint signature. On April 29, 2013, the Board of Directors conferred to Mr. Stefano Marzotto the power to represent, with faculty to sub-delegate, the Company at the shareholders meeting of the subsidiary Vetri Speciali S.p.A., including all related powers exercised by the Company, with prior approval of the Board of Directors. 157

160 Corporate Governance and Ownership Structure Report 4.6. INDEPENDENT DIRECTORS The Board of Directors in the meeting of April 29, 2013 considered, based on the available information and taking account of the parameters established by the Self-Governance Code and the Stock Exchange Regulation Instructions, the Directors Lino Benassi, Ferdinando Businaro, Maurizio Sobrero and Giovanni Tamburi to qualify as independent. The number of independent Directors in comparison with the total number of Board members is in line with that established by the CFA and the Stock Market Regulation Instructions. The review of independent standing was announced in the press release of April 29, The Board of Statutory Auditors also verified the correct application of the assessment criteria and procedures adopted by the Board to evaluate the independence of its members. During the year, no meetings of the independent directors without the presence of other directors were held, in that no matters and/or situations occurred which required the specific and reserved dealing of the independent directors, also in relation to the protection of minority shareholders. As far as the Issuer is aware, the Independent Directors, which within the slates for their appointment to the Board of Directors indicated their independence, are committed to maintain such independence throughout the Board mandate LEAD INDEPENDENT DIRECTOR As per Article 2 of the Self-Governance Code, the Board of Directors on April 29, 2013 appointed Mr. Lino Benassi as the Lead Independent Director, to whom the non-executive directors report, and in particular the independent directors, which allows for a greater contribution to the activities and the functioning of the Board of Directors. The Board of Directors considered it beneficial to maintain the role of Lead Independent Director also on the renewal on the Corporate Boards (on the approval of the 2012 Annual Accounts), in line therefore with that recommended by the Self-Governance Code. The Self-Governance Code recommends in fact the appointment of this role in order to ensure balance on the Board of Directors: The Lead Independent Director works with the Chairman in order to guarantee that the Directors be fully and immediately informed upon relevant matters. The Non-executive Directors must report to the Lead Independent Director, and specifically the Independent Directors, for a better contribution to the activities and the functioning of the Board. 158

161 Corporate Governance and Ownership Structure Report The Lead Independent Director provides a point of reference and coordination for the petitions and contributions of Non-executive Directors, improving the functioning of the Board of Directors, working together with the Chairman of the Board of Directors in order to ensure that Directors receive complete and timely information and has the power to call meetings of the Independent Directors to discuss issues considered of interest in relation to the functioning of the Board and the management of the company. During the year the Lead Independent Director, Mr. Lino Benassi, coordinated where necessary and also opportune, the requests and the contributions of the non executive directors and in particular the independent directors. 5. HANDLING OF CORPORATE INFORMATION In accordance with the principles contained in the Self-Governance Code, the Board of Directors of the Company adopted regulations for the handling of corporate information and the setting up of the relative register (so-called Insider Register), which regulates internal management procedures and the manner for the communication externally of documents and disclosure relating to the Company and its subsidiaries, with particular regard to confidential information. These regulations: (i) preserve the secrecy of the confidential information, ensuring at the same time that the information provided to the market is correct, complete, adequate, timely and non-selective; and (ii) regulate, in conformity with Article 115-bis of the Finance Act and 152-bis of the Issuers Regulations, a procedure for the management of the register containing the details of anyone who, through their employment or professional activity in relation to the company, regularly or occasionally accesses confidential information. The Board of Directors on December 22, 2006 appointed Mr. Roberto Celot as the person responsible for the above-mentioned register. With regards to this, the person responsible reports to the Chairman of the Board of Directors with regard to the updating of the register and the criteria adopted for the management and research of the data which it contains. In accordance with that contained in the Self-Governance Code, the Board of Directors of the Company adopted a regulation (Internal Dealing Code), which governs the information to be made public relating to the operations undertaken and the financial instruments issued by the Company by relevant parties and parties to them in accordance with Article 152 and subsequent of the Issuers Regulations. This regulation provides for the so-called black out period. This amendment was necessary in order to comply with one of the new clauses introduced by the Stock Exchange Regulation from March 26, 2007 and immediately applicable and in order to satisfy one of the new requirements to maintain STAR segment qualification. 159

162 Corporate Governance and Ownership Structure Report Where necessary, the Company issued communications in relation to internal dealing during the year. 6. INTERNAL COMMITTEES TO THE BOARD (as per Article 123-bis, paragraph 2, letter d) CFA) The Board of Directors, in accordance with Article 17 of the By-Laws, on March 22, 2007, incorporated a Control and Risks Committee (previously the Internal Control Committee), which has the duty, among others, to identify and evaluate the business issues and risks and carry out the consultative and proposal functions required by the Self-Governance Code, and a Remuneration Committee, with the duty to formulate proposals regarding the remuneration of executive directors and those holding certain positions. For further information in relation to the Remuneration Committee and the Control and Risks Committee, reference should be made to the subsequent sections 8 and 10. The Board of Directors of the Company, in the meeting of November 26, 2010, created a Committee for Transactions with Related Parties, with a significant role in the evaluation of the Transactions with Related Parties and in compliance with the above-stated procedure. This Committee has the duty to guarantee substantial correctness of the transactions with related parties, through the issue of an opinion on the interest of the company served through the specific transaction as well as the suitability and correctness of the conditions. For further information on the Committee for Transactions with Related Parties, reference should be made to section 12. No further committees were constituted or committees which carry out the functions of 2 or more committees. 7. APPOINTMENTS COMMITTEE The Company did not consider it necessary to set up an appointments committee within the Board, considering the present mechanisms for establishing the professional characteristics of the candidates for the Board of Directors currently utilised and implemented by the Board as adequate. 8. REMUNERATION COMMITTEE It should be noted that the disclosures in the present section relating to the functions of the Remuneration Committee are made in Section 1, paragraph Remuneration Committee of the Remuneration Report published in accordance with Article 123-ter of the Finance Act. 160

163 Corporate Governance and Ownership Structure Report The Remuneration Committee was appointed with Board motion of March 22, The Board of Directors meeting of July 29, 2013 re-elected the members of the Remuneration Committee, whose mandate expired, in the persons of Lino Benassi (Independent Director), Stefano Marzotto (Non-Executive Director) and Giovanni Tamburi (Independent Director). The Remuneration Committee has not appointed a Chairman. The Board of Directors, on its appointment, evaluated and considered adequate the financial and accounting qualifications of the members of the Committee, in addition to their knowledge and experience in terms of remuneration policies. The Remuneration Committee has the duty, in particular, to formulate proposals regarding the remuneration of the Chief Executive Officers and those who hold particular offices. The Directors did not attend the Committee meetings where the proposals to the Board relative to their remuneration are drawn up. The Remuneration Committee periodically evaluates the criteria adopted for the remuneration of the executives with strategic responsibilities, supervises their application on the basis of the information provided by the Chief Executive Officers and formulates general recommendations on the matter to the Board of Directors. During the year, the Remuneration Committee met three times. The average duration of meetings was approximately one hour. In table 2 attached to the present Report sub 2 the number of meetings of the Committee during 2013 is reported along with the relative attendances. Considering the type of activities carried out by the Remuneration Committee, the Company did not consider it necessary to provide the above stated Committee with a pre-established budget, establishing periodically the funding requirements necessary. At least three Remuneration Committee meetings are scheduled for 2014 and at the date of the present Report the Committee has met once. Minutes are kept of the Remuneration Committee meetings. The Directors did not attend the Committee meetings where the proposals to the Board relative to their remuneration are drawn up. No parties attended the Committee meetings who are not members. 161

164 Corporate Governance and Ownership Structure Report 9. REMUNERATION OF DIRECTORS It should be noted that the disclosures in the present section relating to the general remuneration policy, the share-based incentive plans, the remuneration of executive directors, of the executives with strategic responsibilities and non executive directors, are reported through reference to Section I of the Remuneration Report issued in accordance with Article 123-ter of the Finance Act. No agreements have been signed between the Parent Company and the Directors which provide indemnity in the case of resignation or dismissal/revocation of office without just cause or termination of employment following a public purchase offer. 10. CONTROL AND RISKS COMMITTEE The Control and Risks Committee (previously called the Internal Control Committee) was appointed with Board of Directors Resolution of March 22, 2007 and confirmed subsequently with Board of Directors Resolution which provides for the change in name and duties attributable, in line with the amendments to the Self-Governance Code. The Committee currently comprises Messrs. Ferdinando Businaro (Independent Director), Luca Marzotto (Non-Executive Director as per Article 2 of the Self-Governance Code) and Maurizio Sobrero (Independent Director). These directors, all non-executive and two of whom independent, were conferred the task to identify and evaluate the problems and risks concerning company operations. The Control and Risks Committee appointed from within its membership a Director in charge of coordination, in the person of Mr. Maurizio Sobrero. The Control and Risks Committee, in compliance with the Self-Governance Code, in relation to identification and evaluation of risks substantially carries out a role of a consultative and proposal nature for the Board of Directors, working together with the existing Committees. The proposal duties which the Committee is required to discharge concern certain matters identified by the Self- Governance Code, although not considered compulsory. The Board of Directors, at the time of the appointment, evaluated and considered adequate the financial, accounting and risk management expertise of the members of the Control and Risks Committee. The Control and Risks Committee meets at least quarterly and outlines its activities at least halfyearly. In 2013 the Control and Risks Committee met five times. Minutes are kept of the Committee meetings. The average duration of meetings was approximately one hour. 162

165 Corporate Governance and Ownership Structure Report In 2014 at least four meetings of the Control and Risks Committee are scheduled and at the date of the present Report the Committee has met once. The Chairman of the Statutory Auditors or another standing statutory auditor designated by him/her attends the meetings. In table 1 attached to the present Report sub 1 the number of meetings of the Committee in 2013 is reported along with the relative attendances. The Control and Risks Committee has the consultative and proposal functions listed in Article 7 of the Self-Governance Code. In the undertaking of their functions, the Control and Risks Committee may access all information and departments necessary for the undertaking of their duties, as well as utilising external consultants, within the terms established by the Board of Directors. In view of the type of activities carried out by the Control and Risks Committee, the Company did not consider it necessary to provide the above-stated Committee with a pre-established budget, establishing periodically the funding requirements necessary. 11. INTERNAL CONTROL AND RISKS MANAGEMENT SYSTEM The internal control and risk management system is the overall rules, procedures and organisational structures aimed at permitting, through an adequate process of identification, measurement, management and monitoring of the principal risks, a safe, correct and coherent management of the enterprise with it set strategic objectives, conformity with law and the regulations and correct and transparent internal and market disclosure. The principal elements upon which the internal control system of the Company is based are as follows: The Ethics Code In February 2008, the Company adopted an Ethics Code, in line with best international practice, which sets out the principles and founding ethical values of the company, as well as the conduct regulations and legislation. The Ethics Code, which is an integral part of the organisational, management and control model as per Legislative Decree 231/01, is binding for the conduct of directors, employees and all collaborators of the company. A specific procedure for the recording of potential violations of the Ethics Code and Model 231 was set up. 163

166 Corporate Governance and Ownership Structure Report Organisational structure The general organisational structure and the appointment of senior managers and of their principal operating roles was drawn up by the Chief Executive Officer. The Board of Directors is systematically informed in relation to principal organisational amendments. Powers and delegations The Board of Directors on April 29, 2013 (and through subsequent amendments and additions) attribute the powers of management. The principal conditions adopted for achieving the strategic and operational objectives, as well as the monitoring of the efficacy and efficiency of the activities and the safeguarding of the company s assets, are as follows: Drawing up of objectives, budgets, reporting and management control The Company operates a structured system for the definition of corporate objectives (strategic and operational), for the development of annual budgets, of their interim review, of the monitoring and analysis of the variance between objectives and performance, through a structured system of management control and reporting. Internal communication A system of internal communication which is structured to facilitate and promote the communication of significant information to specific parties within the Company and the Group is operational. System of operational procedures For the correct application of corporate directives and the reduction of risks related to the reaching of corporate objectives, the Company has put in place an ISO procedure which regulates internal processes, governing both the activities carried out within departments and relations with other entities. Information Systems Almost all of the corporate information processes, both operational and accounting and financial, are facilitated by an IT system, based on highly integrated software packages. The use of the systems is governed by internal procedures which guarantee security, privacy and correct utilisation by users. The availability of data when required is guaranteed by a comprehensive hardware and software infrastructure. Confidentiality of data and information is guaranteed principally through a system of segregation, principally based on user authorisation profile. Security is guaranteed by a hardware and software infrastructure designed with the necessary remit in mind and subject to ongoing maintenance and which is subject to periodic testing. The platforms and the applications utilised are integrated in order to minimise the introduction of multiple data sets and to render the process flows automatic. The services are supplied by outsourcers. 164

167 Corporate Governance and Ownership Structure Report The principal guides for the achievement of legal and regulatory compliance and for correct and transparent disclosure to the market are the following: Organisational model as per legislative decree 231/01 In March 2008 the Company approved the Organisational model in accordance with legislative decree 231/01, in order to avoid the possibility of the commission of significant offences under the decree and consequently by the administrative of the Company. The Model adopted provides for an organisational structure, a system of procedures and delegations, general principles, rules of conduct, instruments of control and organisational procedure, as well as training activity and information and a disciplinary system, drawn up in order to ensure the prevention of the commission of offences. The Board of Directors appointed a Supervisory Board, which was entrusted with the duties of monitoring the correct functioning of the Model and its development and reports to the Board of Directors and Board of Statutory Auditors on a half-yearly basis. The model is continually updated, with the most recent version 5.0 of April 29, 2013 approved by the Board of Directors on April 29, For further information, reference should be made to section Model of accounting control as per law 262/2005 in relation to financial disclosure In compliance with the above-stated law on the protection of savings, the Company adopted a model for the management of administrative and accounting procedures, for the drawing up of financial and accounting control communications, as well as management regulations, periodic verification and the declaration of adequacy of the model, attributing the responsibility within the organisation in particular to the Executive Responsible for the preparation of the corporate accounting documents. In particular, the model seeks to provide the reasonable certainty that accounting disclosure is provided to users with a true and correct representation of the facts, and corresponding to the documented results, the books and accounting entries and communications of the company provided to the market. Security, environment and quality The Company has adopted a system of organisational structures and procedures dedicated to the management of data security (which also fulfils the Privacy regulation), the protection of the environment, security of plant and personnel and the quality of services provided. The Evaluation Document of Risks is constantly monitored and updated. Confidential information The Company has adopted a procedural system for internal management and external communication of confidential information, in conformity with the requirements introduced by the EU directive in relation to market abuse. For further information, reference should be made to section

168 Corporate Governance and Ownership Structure Report Considering the activities carried out by the Control and Risks Committee, by the Supervisory Board, the contribution of the Board of Statutory Auditors, management, the Executive Director appointed to oversee the internal control system, the Internal Audit Manager and the Executive appointed for the preparation of the accounting and corporate documents, the Board of Directors considers the system of internal control adequate and effective DIRECTOR IN CHARGE OF THE INTERNAL CONTROL AND RISK MANAGEMENT SYSTEM In order to create an organised and coherent system of internal control, the Board of Directors on March 14, 2008, appointed the Director Mr. Alberto Faggion as executive responsible for the internal control system. The Board of Directors, subsequent to the amendments in line with the Self-Governance Code, confirmed this role, appointing the Director Mr. Alberto Faggion as Director in charge of the Internal Control and Risk Management System, attributing the functions indicated by the Self-Governance Code. The Director in charge of the Internal Control and Risk Management System: (a) identifies the principal corporate risks, considering the principal features of the activities carried out by the Issuer and its subsidiaries, and periodically submits them for the review of the Board of Directors; (b) implements the guidelines established by the Board of Directors, designing, implementing and managing the internal control and risk management system and verifying its adequacy and efficacy on an ongoing basis; (c) adapts the system to operating conditions and the legislative and regulatory framework; (d) may request the internal audit department to carry out checks on specific operating areas and compliance with the internal rules and procedures in the execution of company operations, simultaneously communicating on such matters with the Chairman of the Board of Directors, the Chairman of the Control and Risks Committee and the Chairman of the Board of Statutory Auditors; (e) reports in a timely manner to the Control and Risks Committee (or to the Board of Directors) in relation to problems and issues which have emerged during the course of their activity or of which they have become aware, so that the Committee (or the Board) can take the actions necessary INTERNAL AUDIT MANAGER The Board of Directors, on March 14, 2008, appointed on the proposal of the executive director appointed to oversee the internal control system and having consulted with the Control and Risks Committee and the Board of Statutory Auditors, Mr. Gianpiero Canciani as Internal Control Manager. 166

169 Corporate Governance and Ownership Structure Report Subsequently to the amendments in line with the Self-Governance Code, the Board of Directors confirmed Mr. Gianpiero Canciani as the Internal Audit Manager, attributing the functions established in the Self-Governance Code. The Internal Audit Manager, inter alia, has the duty to verify that the internal control system is adequate, fully operative and functioning and reports to the Control and Risks Committee, to the Board of Statutory Auditors and to the Executive responsible for overseeing the internal control and risk management system. He/she is not responsible for any operational area of the Issuer. In carrying out his/her duties, he/she has direct access to all useful information for the discharge of office and reports exclusively to the Control and Risks Committee. During the year, the Internal Audit Manager supported the activities of the Control and Risks Committee ORGANISATION MODEL PURSUANT TO LEGISLATIVE DECREE 231/2001 The Board of Directors of the Company, in the meeting of March 14, 2008, in relation to Legislative Decree No. 231 of June 8, 2001 (and successive modifications and integrations), which introduced a specific code of responsibility for companies for any type of offence established by the regulations of Borsa Italiana for listing on the STAR segment, adopted the Model of organisation, management and control in accordance with Legislative Decree 231/2001, addressing the requirements of the same Legislative Decree and prepared in accordance with the guidelines issued by Confindustria. At the reporting date, the Board of Directors have not considered the allocation of supervisory board duties to the Board of Statutory Auditors. The adoption and efficient implementation of the organisational, management and control model is appropriate to prevent offences under the Legislative Decree; the Company may be exonerated from the responsibility consequent of offences made by applicable parties and by persons subject to their supervision and direction. The Model provides for a series of regulations on conduct, procedures and control activities, as well as a system of powers and delegations, in order to prevent the above responsibility arising. Moreover a disciplinary system was introduced which is applied in the cases in which the above model is not complied with. To implement the model set out by Legs. Decree 231/2001, a Supervisory Board ( SB ), appointed by the Board of Directors, was created, which has the responsibility to ensure the Organisational, Management and Control Model pursuant to Legislative Decree 231/2001 is adequate and efficient, effective and updated. 167

170 Corporate Governance and Ownership Structure Report The Supervisory Board is currently composed of: Office Chairman of the Supervisory Board Member Member Name Alessandro Bentsik Massimiliano Agnetti Nicola Campana For the carrying out of the duties, the Supervisory Board is allocated its own budget. Also at the meeting of March 14, 2008, the Board of Directors approved the By-Laws of the Supervisory Board, establishing the method for its appointment and composition, as well as its functions and powers. The Supervisory Board (SB) in the year carried out monitoring of the functioning, efficacy and compliance with the model as well as the recording of significant updates of the model and of the corporate procedures and protocols. In this remit, the SB coordinated with the Control and Risks Committee, reporting on the results of the verification and the modifications to the model following changes in the internal organisation, in the corporate activities and in the relevant regulatory provisions, particularly in relation to the updates to Legislative Decree 231/201, with the addition of new types of offences. The Supervisory Board, through the Control and Risks Committee, communicates to the Board of Directors, half-yearly, a written report on the Organisational, Management and Control Model. The implementation of the detailed aspects of the activities contained in the Model has been substantially completed. The Model has been communicated to all personnel and third party consultants, clients, suppliers and partners, where deemed suitable and necessary. Also in relation to the activities carried out and implemented by the Organisational and Management Model in accordance with Legislative Decree 231/2001, the Board of Directors on March 14, 2008 adopted the Ethics Code of the Company. In fact, as evidenced in the Guidelines for the construction of the models in accordance with Legislative Decree 231/2001, issued by Confindustria, the adoption of the relative ethics principles in order to prevent offences constitute an essential element of the preventative control system. In particular, the Ethics Code identifies the corporate values, together with the rights and the responsibilities of its subject, and applies sanctions in the case of breaches of the principles expressed in the same Code. In 2013, the Supervisory Board met 9 times. 168

171 Corporate Governance and Ownership Structure Report INDEPENDENT AUDIT FIRM The audit activities are carried out by an Independent Audit Firm in accordance with applicable regulations. The Independent Audit Firm is appointed by the Shareholders Meeting, with prior consultation of the Board of Statutory Auditors. The auditor of the consolidated and separate financial statements of Zignago Vetro for the years , of the limited audit of the half-year consolidated reports for the same period, as well as the verification and control of accounting and the correct recording of the operational events in the accounting records of the above-mentioned years was conferred, in accordance with Article 159 of the Consolidated Finance Act, to Reconta Ernst & Young S.p.A. with Shareholders Meeting motion of December 22, 2006 and subsequently at the Shareholders Meeting of February 16, 2007, in accordance with the amendments introduced by Legislative Decree 303/2006 published in the Official Gazette of January 10, The independent auditors who carry out the audit of Zignago Vetro also carry out the audit of the subsidiary companies EXECUTIVE RESPONSIBLE FOR THE PREPARATION OF CORPORATE ACCOUNTING DOCUMENTS AND OTHER CORPORATE ROLES AND FUNCTIONS The executive responsible for the preparation of the corporate accounting documents has the responsibility to implement adequate administrative and accounting procedures for the preparation of the parent company accounts, the consolidated financial statements and all other financial documents, certifying their application, and that accounting information including interim reports correspond to the underlying accounting documents, records and accounting entries. In accordance with Article 23 of the By-Laws and in conformity with the regulations currently in force, the Board of Directors, in the meeting of July 30, 2007, appointed Mr. Roberto Celot, Administration, Finance and Control Director of the Issuer, as executive responsible for the preparation of the corporate accounting documents in accordance with Article 154 bis of the Finance Act, considering satisfactory his appointment criteria and in particular his proven accounting and financial experience COORDINATION OF THE PARTIES INVOLVED IN THE INTERNAL CONTROL AND RISKS MANAGEMENT SYSTEM At the reporting date, in consideration also of the size and structure of the Group, the Issuer had not evaluated the adoption of coordinating methods between the parties involved in the Internal Control and Risk Management System, considering the various bodies and departments sufficiently integrated. 169

172 Corporate Governance and Ownership Structure Report 12. TRANSACTIONS WITH RELATED PARTIES In accordance with the Self-Governance Code, in addition to the new regulation issued by Consob through resolution No of March 12, 2010 and subsequent interpretative communications, the Board of Directors of the Company in the meeting of November 26, 2010 approved a new procedure for transactions with related parties, in compliance with the new regulatory provisions introduced by the Commission with the above-stated Consob regulation and in line with the recommendations of the Commission in relation to Interpretative Communications. The most significant aspects of the new procedure include: (i) transactions with related parties are classified as transactions of significant value (concerning transactions exceeding thresholds established by Consob), of insignificant value (those of a value which prima facia do not pose significant risk for investor interests and therefore excluded from the application of the new procedure) and those of intermediate value (a residual category comprising transactions with related parties not covered by the first two categories); (ii) the transparency and market communication regulations are more stringent in relation to transactions of significant value, requiring publication of a disclosure document; (iii) the procedural regulations which establish the involvement of the Committee for Transactions with Related Parties for the transaction approval procedure. The Board of Directors of the Company, in the meeting of November 26, 2010, created a Committee for Transactions with Related Parties, with a significant role in the evaluation of the Transactions with Related Parties and in compliance with the above-stated procedure. This Committee has the duty to guarantee the substantial correctness of the transactions with related parties, through the issue of an opinion on the interest of the company served through the specific transaction as well as the suitability and correctness of the conditions. The Committee comprises Directors considered independent in accordance with the Self- Governance Code. As established by Consob regulation No of March 12, 2010 and subsequent interpretative communications, the Committee for Transactions with Related Parties preliminarily approved the new procedure for transactions with related parties, establishing compliance with the regulatory provisions. The Committee comprises three independent directors - Lino Benassi, Ferdinando Businaro and Maurizio Sobrero. Considering that since adoption of the procedure which governs transactions with related parties, no significant events or changes to the ownership structure have taken place and that the procedure has been demonstrated as effective, the Company has not made any changes to the procedure. 170

173 Corporate Governance and Ownership Structure Report 13. APPOINTMENT OF STATUTORY AUDITORS The appointment of the Statutory Auditors is carried out based on slates presented to the shareholders according to the procedure set out by Article 20 of the By-Laws, reported below, in order to ensure that the minority slate appoints a Statutory Auditor holding the position of Chairman and an Alternate Auditor. In relation to this, slates are presented in which the candidates are listed by progressive numbering. The slate is composed of two sections: one for candidates for the office of Statutory Auditor, and the other for candidates for the office of Alternate Auditor. Only shareholders who together or with others represent at least 2.5% of the subscribed and paidin share capital at the moment of presentation of the slate or another limit established by Consob with regulations taking account of the floating capital and the ownership of the listed companies have the right to present slates. The call notice indicates the holding required to present slates. Each shareholder may present only one slate; in case of breach, they are excluded from all slates. Shareholders belonging to the same shareholder pact as per Article 122 of the CFA and subsequent modifications and additions, the parent company, the subsidiary companies and those subject to the common control, may present and vote on only one slate. The votes in breach of this are not attributed to any slate. The slates shall be filed at the Company s registered office at least 25 (twenty five) days prior to the date established for the Shareholders Meeting in first call or within a differing minimum time period established by applicable regulation. The call notice will indicate at least one means of distance communication of the filing of slates which enables the identification of those presenting or involved in the presentation of slates. Each slate presenting a number of candidates equal to or above three must present a number of candidates from the under-represented gender which ensures, within the slate itself, compliance with the regulatory gender quota in force. Ownership of the minimum shareholding necessary to present a slate must be declared in the manner and under the terms and conditions established by the existing law and regulations. In the case where only one slate is filed at the expiry date of the term for presentation of the slates, or slates are only presented by related shareholders pursuant to the applicable directives, slates can be presented up to the third day subsequent to such date. In this case, the threshold established for the presentation of the slate is reduced by half. 171

174 Corporate Governance and Ownership Structure Report Together with each slate, within the terms indicated above, the following must be filed (i) information relating to the identity of the shareholders presenting the slate and their shareholding; (ii) declarations that the individual candidates accept their candidature and attest to the inexistence of causes of ineligibility and of incompatibility and the existence of the requisites required by regulations in force for the assumption of office, (iii) the curriculum vitae of each candidate, with indication of offices held. In addition to that established by the previous points, in the case of the presentation of a slate by shareholders other than those who hold, also jointly, a controlling or majority holding of the share capital of the Company, such slate must be accompanied by a declaration of the shareholders presenting, declaring the absence of association with one or more of the main shareholders, as defined by existing regulations. Slates presented that do not comply with all of the above formalities are considered as not presented. All those entitled to vote shall vote for only one slate. The procedure for electing Statutory Auditors shall be as follows: a) from the slate that has obtained the higher number of votes, based on the progressive order with which they are shown on the slate, two statutory auditors and an alternate auditor (hereafter the Majority slate ) are elected; (b) from the slate that has obtained the second highest number of votes and that is not associated, even indirectly, with the shareholders who have presented or voted on the Majority slate, based on the progressive order with which they are shown on the slate, the remaining statutory auditor and other alternate auditor are elected (the Minority slate ). When the first two slates obtain an equal amount of votes, a new vote is taken by the Shareholders Meeting, putting only the first two slates concerned to the meeting. The same rule will apply in the case of parity between the slates with the second highest number of votes. The Chairman of the Board of Statutory Auditors shall be the first candidate on the Minority Slate. In the case in which the minimum established requirement for the under-represented gender of Standing or Alternate Auditors is not elected, within the slate which attracted the highest number of votes the necessary substitutions of candidates elected to the roles of Standing or Alternate Auditor is made, according to the progressive order in which the candidates were elected. In the absence of candidates from the under-represented gender within the relevant section of the majority slate of a sufficient number to proceed with replacement, the Shareholders Meeting appoints the Standing or Alternate Members required through statutory majority, ensuring compliance with the requirements. Where his/her legal requisites no longer exist, the statutory auditor must leave office. 172

175 Corporate Governance and Ownership Structure Report In the case of the replacement of a Statutory Auditor until the next Shareholders Meeting, the Alternate Auditor is taken from the same slate as the auditor vacating office. If the replacement as indicated above does not allow compliance with the applicable Gender Balance Regulation, the Shareholders Meetings must be called at the earliest opportunity to ensure compliance with the regulation. When a Statutory Auditor vacates office, including the chairman of the Board of Statutory Auditors, the chair is assumed until the next Shareholders Meeting by the alternate member of the same slate from which the Chairman was elected. If the alternate auditor cannot complete the Board of Statutory Auditors, a Shareholders Meeting is called to elect the Statutory Auditors and chose, where the statutory auditors may still be elected, from among the candidates on the slate from which the vacating statutory auditor was a member. In all of the cases in which it is not possible to form the Board of Statutory Auditors by that set out above, the provisions of law are applied. In the case in which only one slate is presented or in the case in which no slate is presented, the Shareholders Meeting votes by statutory majority and in compliance with the regulation enforced concerning gender balance. 14. COMPOSITION AND OPERATION OF THE BOARD OF STATUTORY AUDITORS (as per Article 123-bis, paragraph 2, letter d) CFA) The Board of the Statutory Auditors verifies compliance with law and the By-Laws, in respect of the principles of correct administration and in particular the adequacy of the internal control system, as well as of the organisation, administration and accounting structure and its functioning, in addition to the method for establishing corporate governance regulations which the company declares it is in observance of. In accordance with Article 20 of the By-laws, the Board of Statutory Auditors is composed of three Standing Members and two Alternate Members, Shareholders and Non-Shareholders, with the under-represented gender complying with the applicable regulation, and appointed by the Shareholders Meeting, which determines their annual remuneration and the duration of office. The attributes, duties and duration of the Board of Statutory Auditors are based on that required by law. In accordance with law, the outgoing Statutory Auditors may be re-elected. Each of the members of the Board of Statutory Auditors must possess the good standing requisites and be independent in accordance with law. The Board of Statutory Auditors was appointed by the Shareholders Meeting of April 29, 2013 and will remain in office until the approval of the 2015 Annual Accounts. 173

176 Corporate Governance and Ownership Structure Report All of the members were elected from the only slate presented by the majority shareholder Zignago Holding S.p.A.. This slate included the following candidates: Standing Auditors: Carlo Pesce, born in San Martin (Argentina) on March 8, 1951; Stefano Meneghini, born in Vicenza on June 2, 1966; Carmen Pezzuto, born in Sacile (PN) on November 22, Alternate Auditors: Chiara Bedei, born in Padova on February 8, 1969; Alessandro Bentsik, born in Venice on February 13, All of the candidates on the only slate presented were elected by a majority of those present. In particular, the candidates were elected with 61,347,881 favourable votes, comprising 99.27% of votes cast, with 453,895 opposing shares, comprising 0.73% of votes cast. The share capital present with voting rights totaled 70.23% of the entire share capital. In table 2 attached to the present report sub 2 the number of meetings of the Board of Statutory Auditors during the year is reported along with the relative attendances. In Attachment 2 a brief description of the personal profiles and professional characteristics of each of the members of the Board of Statutory Auditors is provided, while the offices held at December 31, 2013 by each statutory auditor are reported as an attachment to the Report in accordance with Article 148-bis of the CFA. The new Board of Statutory Auditors was appointed in replacement of the Board whose mandate concluded on approval of the 2012 Annual Accounts on the basis of the motion of April 29, The composition of the Board of Statutory Auditors has not changed since the beginning of the year. During the year the Statutory Auditors met at least quarterly for a total of six meetings, whose average duration was approx. 4 hours. The Board of Statutory Auditors also attended regularly the meetings of the Control and Risks Committee. In order to remain fully briefed on sector developments, the Board of Statutory Auditors periodically receives information and updates, also through material prepared by the Company. 174

177 Corporate Governance and Ownership Structure Report Six meetings are scheduled for the current year, of which two already held. The Board of Statutory Auditors has reviewed the continuance of its members independence during the financial year. All the criteria established in the Self-Governance Code with reference to the independence of Directors were reviewed. Statutory Auditors who, on their own behalf or that of third parties, have an interest in a determined transaction of the issuer inform the other statutory auditors and the chairman of the Board, in a timely and comprehensive manner, regarding the nature, terms, origin and extent of their interest. The Board of Statutory Auditors reviewed the independence of the independent audit firm, ensuring compliance with regulatory provisions, and the nature and extent of the various services provided to the Company and its subsidiaries by the independent audit firm and its network of firms. The Board of Statutory Auditors, in discharging its duties, coordinated with the Control and Risks Committee, the Supervisory Board and the Internal Audit department. 15. RELATIONS WITH SHAREHOLDERS In order to maintain a constant dialogue with the shareholders and the financial world in general, the Company has created an Investors function. On December 22, 2006, the Board of Directors appointed an Investor Relator, in the person of Mr. Roberto Celot, responsible for the relations with the institutional investors and others shareholders; the Investor Relator also maintains the Insider register. In 2013, the Company regularly held meetings with the financial community, some of which were open to all operators within the sector, and the financial press. For the publication of information to the public, the Company adheres to the principles contained in the Market Information Guide and the Regulations and Communications of Consob. Particular attention is paid to the Company Internet site ( in which in the Investors section, it is possible to view the corporate accounting documents (financial statements, half-yearly statements and quarterly reports etc.), in both Italian and English, as well as other corporate documents addressed to the market (presentations, press releases, financial notices etc.). 175

178 Corporate Governance and Ownership Structure Report 16. SHAREHOLDER MEETINGS (as per Article 123-bis, paragraph 2, letter c), CFA) The Shareholders Meeting represents all of the shareholders and is called in accordance with the provisions of law and regulations for companies with listed shares to pass motions reserved for them by law or by the Company By-Laws. The Shareholders Meetings provide periodic opportunities to meet and communicate with the shareholders. The Ordinary and Extraordinary Shareholders Meetings are validly constituted through statutory majority. In the case in which the Shareholders Meeting is called to approve matters in accordance with law, or to authorise in accordance with the By-Law, a transaction with related parties qualifying as significant in accordance with the internal procedure for transactions with related parties adopted by the Company and the Committee for Transactions with Related Parties has expressed a negative opinion in relation to the proposal submitted for approval to the Shareholders Meeting, the Shareholders Meeting may approve or authorise this transaction resolving, in addition to the statutory majority required by law, also the favourable vote of the majority of non-related shareholders attending the Shareholders Meeting, if at the time of the vote such shareholders represent at least 10% of the share capital with voting rights of the Company. Where the nonrelated shareholders present at the Shareholders Meeting do not represent the voting capital percentage required, for the approval of the transaction, the reaching of statutory majority will be sufficient. A relevant motion by the Company in accordance with the preceding provisions will also be necessary in the case of significant transactions with related parties approved by the Shareholders Meeting in relation to which the Committee for Transactions with Related Parties has expressed a negative opinion. In accordance with law and Article 11 of the By-Laws, the Shareholders Meetings, both Ordinary and Extraordinary, of the Company are called by the Board of Directors, and may be called in a place other than the registered office although in Italy or in another member state of the European Union, through a notice to be published on the internet site of the Company as well as through the other means established by law and applicable regulations. The Shareholders Meeting can be called by the Board of Directors on the request of shareholders holding at least one-twentieth of the share capital, within that provided by Article 2367, final paragraph, of the civil code, or by the Board of Statutory Auditors or by at least 2 of its members. The shareholders which, including jointly, represent at least one-fourtieth of the share capital may request supplementation of the matters on the Agenda, or present proposals on matters already on the Agenda, within the limits and manner established by law. The addition of the matters to the Agenda is not permitted for those matters on which the Shareholders Meeting passes motions, as prescribed by law, on proposals of the Board of Directors or in relation to a project or report prepared by the Board, other than the Report on the Agenda as per Article 125-ter, paragraph 1 of the CFA. The call notice must indicate the day, hour and place for the meeting, the Agenda of the meeting and any other information required by current legislation and regulations. 176

179 Corporate Governance and Ownership Structure Report Article 13 of the by-laws states: All those with voting rights may attend the Shareholders Meeting, on the provision that such right is declared according to the manner and within the time periods established by the legislation and regulations in force. Each shareholder who has the right to attend the Shareholders Meeting may be represented by others, through written proxy, in accordance with law. Proxy may be granted through a computer generated document signed in electronic form in accordance with Article 21, paragraph 2 of Legislative Decree No. 82 of March 7, Electronic notification of proxy to the company may be carried out through to the certified address of the company indicated in the call notice. The Company does not appoint an agent for the conferment of proxy by the shareholders. The Chairman of the meeting shall verify the propriety of the proxies and announce the results of the voting. Those with voting rights may draw up questions on the matters on the agenda, in accordance with the law. The Company has not adopted a shareholders meeting regulation as it is considered that the statutory powers attributed to the Chairman of the Shareholders Meeting, who oversees the workings of the meeting, including the determination of the Agenda and the voting system, allows them to undertake a correct functioning of the shareholders meeting, avoiding therefore the risks and the inconvenience which could derive from non compliance, by the Shareholders Meeting, of the regulatory provisions. The Board of Directors reported to the Shareholders Meeting on the activities carried out and planned at the Shareholders' Meetings and endeavoured to ensure shareholders had all necessary information so that they could take, with sufficient knowledge, the decisions within the authority of a Shareholders' Meeting. The Directors Franco Grisan, Lino Benassi, Ferdinando Businaro, Alberto Faggion, Paolo Giacobbo, Gaetano Marzotto, Luca Marzotto, Nicolò Marzotto, Stefano Marzotto and Maurizio Sombrero attended the Shareholders Meeting of April 29, 2013; the Director Giovanni Tamburi was justifiably absent. All standing auditors of the Company also attended the Shareholders Meeting. During the year, the majority Shareholder did not submit to the Shareholders Meeting any further matters than those proposed by the Board of Directors. In the year there were no significant changes in the market capitalisation of the shares of Zignago Vetro or in the composition of its shareholders, and therefore the Board does not consider it necessary to consider the possibility to propose to the Shareholders Meeting changes to the By- Laws in relation to the percentages established for the exercise of the shares and of the protection of minority shareholders. 17. CHANGES SUBSEQUENT TO THE YEAR-END No significant changes have been made to the corporate governance structure since the year-end. 177

180 TABLE 1: STRUCTURE OF THE BOARD OF DIRECTORS AND OF THE COMMITTEES Office Members In office from Chairman Franco Grisan 29/04/2013 Vice Chairman Chief Executive Officer Director & Lead Independent director Director Director Director Director Director Director Director Director Director Nicolò Marzotto 29/04/2013 Paolo Giacobbo 29/04/2013 Lino Benassi 29/04/2013 Ferdinando Businaro 29/04/2013 Alberto Faggion 29/04/2013 Daniela Manzoni Suppiej 29/04/2013 Gaetano Marzotto 29/04/2013 Luca Marzotto 29/04/2013 Stefano Marzotto 29/04/2013 Chiara Mio Manuela Romei Pasetti 29/04/ /04/2013 Maurizio Sobrero 29/04/2013 In office until Approv. Financial Statements 31/12/2015 Approv. Financial Statements 31/12/2015 Approv. Financial Statements 31/12/2015 Approv. Financial Statements 31/12/2015 Approv. Financial Statements 31/12/2015 Approv. Financial Statements 31/12/2015 Approv. Financial Statements 31/12/2015 Approv. Financial Statements 31/12/2015 Approv. Financial Statements 31/12/2015 Approv. Financial Statements 31/12/2015 Approv. Financial Statements 31/12/2015 Approv. Financial Statements 31/12/2015 Approv. Financial Statements 31/12/2015 Date of first appoint. 08/03/ /09/ /04/ /03/ /03/ /03/ /04/ /03/ /03/ /03/ /04/ /04/ /03/2007 Slate (M/m) (*) Exec. Non- Exec Ind. as per Code Ind. as per CFA % (**) M X 100% M X 90% M X 100% No. of other offices (***) 2 of which: 2 4 di cui:4 2 of which: 2 Control and Risks Committee ** Remuneratio n Committee **** ** **** ** M X X X 100% 2 X 100% M X X X 100% M X 100% M X X X 100% M X 100% M X 100% M X 100% 4 of which: 2 5 of which: 4 4 of which: 2 5 of which: 4 5 of which: 5 M X X X 90% 2 M X X X 100% X 100% X 100% M X X X 100% X 100% ** x 100% 178

181 Director BOD: 6 Giovanni Tamburi 29/04/2013 Approv. Financial Statements 31/12/2015 CRC: 5 22/03/2007 M X X X 90% 5 X 100% RC: 3 NOTE * In this column M/m is indicated according to whether the member was elected by the majority (M) or minority (m) slate. ** This column indicates the attendance of Directors respectively at Board of Directors and Committee meetings (no. of attendances/no. of meetings held during the effective term of office). *** This column indicates the number of offices a Director or Statutory Auditor holds in other companies listed on regulated markets, including foreign markets, in holding, banking or insurance companies or large enterprises, indicating whether the company in which the office is held is part of a Group containing the Issuer (also as Parent Company). This indication appears after "of which: ". **** This column indicates with an X whether the member of the BoD is a member of the Committee. 179

182 TABLE 2: STRUCTURE OF THE BOARD OF STATUTORY AUDITORS Board of Statutory Auditors Office Members In office from In office until Chair. Board of Statutory Auditors Statutory Auditor Statutory Auditor Alternate Auditor Alternate Auditor Carlo Pesce 29/04/2013 Carmen Pezzuto Stefano Meneghini 29/04/ /04/2013 Chiara Bedei 29/04/2013 Alessandro Bentsik 29/04/2013 Approv. Financial Statements 31/12/2015 Approv. Financial Statements 31/12/2015 Approv. Financial Statements 31/12/2015 Approv. Financial Statements 31/12/2015 Approv. Financial Statements 31/12/2015 Slate (M/m) (*) Ind. as per Code STATUTORY AUDITORS RESIGNING DURING THE YEAR % (**) M x 100% 1 M x 100% 2 M X 100% 1 M M X X No. of other offices (***) Chair. Board of Statutory Auditors Paolo Nicolai 29/04/ /04/2013 M x 100% 1 QUORUM REQUIRED FOR THE PRESENTATION OF SLATES FOR LAST APPOINTMENT: 2.5% N. NUMBER OF MEETINGS HELD DURING THE YEAR: 5 180

183 NOTE * In this column M/m is indicated according to whether the member was elected by the majority (M) or minority (m) slate. ** In this column the attendance percentage of the statutory auditors at the meetings of the Board is indicated (No. of attendances/no. of meetings carried out during the effective period of office of the statutory auditor). *** This column indicates the number of offices of director or statutory auditor in accordance with Article 148-bis of the CFA. The complete list of offices held is published by Consob on its website pursuant to Article 144-quinquiesdecies of the Consob Issuers Regulations. 181

184 Corporate Governance and Ownership Structure Report Attachment 1 - Summary of the curriculum vitae of the members of the Board of Directors A brief curriculum vitae of the members of the Board of Directors is provided: Franco Grisan. Graduated in Mechanical Engineering, and after working in the commercial and technical sectors with a major Italian oil group, in 1979 joined the Holding company of the Zignago Group as Director of Development Activities. He joined Zignago Vetro SpA in 1984 as the Commercial Director. In 1992, he was appointed the General Manager. He was Chief Executive Officer between 2000 and He has been a Chairman of the Board of Directors since Currently he is also Chairman of Huta Szkła Czechy S.A., a Director of Verreries Brosse SAS, member of the Committee and Vice Chairman of the Vetro Meccanico Cavo section of Assovetro, Vice Chairman of CO.RE.VE., member of the Board and Chairman of the Flaconnage Committee of the FEVE and a member of the Board of Confindustria Venezia. Nicolò Marzotto. Graduated in Economics and Commerce and gained experience, in the following sectors: commercial policies and structures, asset equity management and trading on currencies and securities, valuation of credit risk, financial and tax product studies, financial consultancy and economic-financial analysis of businesses and groups in specific sectors and marketing techniques. Since 2000, he has been a member of the Board of Directors of various companies controlled by the Marzotto family. He is a member of the Board of Directors of Verreries Brosse SAS. He is directly involved in entrepreneurial initiatives in the area of distribution. Paolo Giacobbo. He graduated in Engineering from the University of Padua in 1972, completing his military service as an officer in the Alpine division and began working in the hollow glass industry in 1974 (Vetrerie Italiane) as a production engineer. Subsequently he became a production manager and factory director, and as part of the St. Gobain Group carried out roles in general management, direction, coordination and company restructuring in various countries. His last role with this company was as Senior Corporate Executive VP for investment, production, quality, technology, engineering and R&D. Since June 2009 he has been president of the European Glass Industry Confederation, Glass Alliance Europe, in Brussels. He is also the Chairman of Verreries Brosse SAS. Lino Benassi. He has a Diploma in Accountancy and Auditing and has held many offices of administration and direction with numerous credit institutions and companies in Italy, including listed companies, in Italy and abroad (among which, Banca Credit Suisse Italy, Banca Commerciale Italiana, Banca IntesaBCI, SEAT, INA - Istituto Nazionale delle Assicurazioni Toro Assicurazioni etc.). The offices currently held include Chairman of Finanziaria Trentina SpA, Vice Chairman of Idea Fimit SGR and Ladurner SpA, Director of De Agostini SpA, Dea Capital SpA and Lunelli SpA. From 1984, Cavaliere dell Ordine al Merito of the Italian Republic; from 1997, Commander; from 2003, Main Official. 182

185 Corporate Governance and Ownership Structure Report Ferdinando Businaro. Graduated in Political Science, following which he completed a Masters in International Economics and Management from the SDA Bocconi of Milan. He has worked in major Italian and foreign businesses, principally in the area of management and market development. He is a member of the Board of Directors of many major companies, including Marzotto SpA, Zignago Holding SpA, Zignago Immobiliare Srl, Santex Holding Sa, M31 SpA, Centervue SpA and is Chairman of Rocca di Monselice Srl. Alberto Faggion. Diploma in Accounting, appointed Official Auditor of Accounts; since 1967, he has worked with companies belonging to the Zignago Group. He is currently a Director of Zignago Holding SpA, Zignago Vetro SpA, Santa Margherita SpA, Verreries Brosse SAS, Huta Szkła Czechy S.A., Zignago Immobiliare Srl, Multitecno Srl, Zignago Power Srl, Tenute Santa Margherita Srl Società Agricola and Villanova Servizi Srl and is Chairman of La Vecchia Scarl and a Sole Director of Eurocostruzioni 2000 Srl. He is a Director of Banca San Biagio del Veneto Orientale Banca di Credito Cooperativo. He is a member of the Board of Statutory Auditors of Vetreco Srl. Daniela Manzoni Suppiej. Graduated in Corporate Economics from the Cà Foscari University in Between 1995 and 1996 he carried out his Accountancy and Corporate Consultancy apprenticeship at the Michelutti firm of Udine. In 1996 he completed a specialisation entitled Internationalisation of small and medium-sized enterprises at the IAL FVG of Pordenone. In 1996 he carried out an Internship at Pittini Group SpA. Between 1997 and 2004 he was a Store Manager of Coin S.p.A.. Between 2000 and 2005 he was Buyer for Coin S.p.A. for the Accessories, Children s Apparel and Make Up goods section. Between 2005 and 2012 he was a Product Manager for Gruppo Coin S.p.A., coordinating Fragrances and Cosmetics purchasing and positioning. In March 2012 he co-founded a consultancy company PDSolutions Srl and carried out marketing and development consultancy for companies within the cosmetics and accessories sector. Gaetano Marzotto. Graduated in Business Economics from the Bocconi University of Milan and carried out professional duties in various companies (Deloitte, Olivetti and Necchi), developing a great deal of experience in the sectors of business finance, management and control. In 1980, he joined the Mazotto Group, where he remained until becoming Vice-Chairman. Between 2000 and the current date he has been Vice Chairman of J.Hirsch & Co Management & Consulting Srl, Chairman of Pitti Immagine, Chairman of Gruppo Vini Santa Margherita and a Director of Zignago Holding SpA, Hugo Boss AG., Alpitour SpA and Toywatch SpA. 183

186 Corporate Governance and Ownership Structure Report Luca Marzotto. Graduated in Law, from 1995 he has worked in companies belonging to the Marzotto family. Since 1997, he has developed a notable degree of experience in the textile and clothing market, and in particular in the production, management control and marketing sectors. From 2000 concentrated his activities on the Asian markets and the development of the Valentino Fashion Group SpA in Asia. In 2003, he was appointed Director of the Marlboro Classics Division, the sportswear division of Valentino Fashion Group SpA. On September 30, 2005 appointed Vice Chairman of Santa Margherita SpA, and on May 10, 2007 was nominated Chief Executive Officer of Zignago Holding SpA. He is also Vice Chairman of Kettmeir SpA, Cantine Torresella Srl and New High Glass Inc. He is the Vice Chairman of New High Glass Inc. He is also a director of Vetri Speciali SpA, Multitecno Srl and Cà del Bosco Srl an agricultural company. Since 2005 he has been Chairman of S.M. Tenimenti Pile e Lamole e Vistarenni e San Disdagio Società Agricola Srl and from 2008 Chairman of Zignago Power Srl and since 2012 of Villanova Servizi Srl. He is a Director and a member of the Working Committee of Hugo Brosse AG. He also holds other offices in Italian companies. Stefano Marzotto. Graduated in Business Economics at the Ca Foscari University of Venice and has held many professional positions or management roles with Italian businesses. Since 1980 he has been Responsible for Marketing at Gresicotto SpA, a company operating in the construction sector; from 1984 to 1991, he was the Purchasing Office Manager and Director of the Hotel Supply Centre of Jolly Hotel SpA. He was the Chief Executive Officer of Margraf Industria Marmi Vicentini SpA between 1992 and Since 1998, he has held, and holds, the office of Director in some of the companies belonging to the Marzotto family, among which: Marzotto SpA, Gresicotto SpA, Zignago Vetro SpA, Santa Margherita SpA, Cà del Bosco Srl Società Agricola, S.M. Tenimenti Pile e Lamole e Vistarenni e San Disdagio Srl Società Agricola, Zignago Power Srl and Villanova Servizi Srl. Since 2005 he has been the Chairman of Zignago Holding SpA and of Zignago Immobiliare Srl. Since March 30, 2011 he has been Chairman of Vetri Speciali SpA, following the position of Vice Chairman from April 7, He is currently Chairman of Tenute Santa Margherita Srl Società Agricola. Mio Chiara. Professor at the Management Department of the Cà Foscari University and overseeing the following courses: Cost Analysis and Accounting (three-year degree), Business Planning and Performance measurement (three-year degree), Planning and control (Master s degree) and Sustainability strategic planning and management (Master s degree). She carries out teaching duties for: Masters in Corporate Communications Upa - Cà Foscari University; Masters in Tourism Economics Ciset - Cà Foscari University; Mega Masters Masters in Company Ethic Management. Director of the Mega Masters, first level university Masters in Company Ethics Management and the Masters in Sustainability and Carbon Footprint, first level university masters. She is the member of the Teaching Board of the Master s course Enterprise economics and management. Designate of the Dean of Environmental Sustainability and of Social Responsibility since She is a specialist in the following sectors: - Operating control systems, both in the entrepreneurial environment and public bodies and nonprofit organisations; 184

187 Corporate Governance and Ownership Structure Report - Performance measures; - Performance measures in terms of Triple bottom line; - Corporate social responsibility and corporate governance systems; - Public corporate disclosure and the voluntary social and environmental component; - Declaration and control of sustainability communications; - Financial statements and accounting standards. She attended various national research networks, including Prin 2001 Corporate Governance and operating control systems national coordinator Prof. D.M. Salvioni; the GSA (Aidea study and focus group) Innovation and measuring of results at companies and public administrations coordinators Prof. L. D Alessio and Prof. M. Bergamin. She has worked together with a number of journals such as the Italian Accountancy and Company Economics Journal, Company Culture and Accounting and the Social and Environmental Accountability Journal. Since 2010 she has been a member of the Editorial Committee and reviewer of the Corporate social responsibility and environmental and management journal. She is a member of Aidea Italian academy of company economics. Since 2012 she has been a member of the WCOA Scientific Committee, International Ifac congress 2014 and since 2011 has been Chairman of the working group on the social and environmental reports of Cilea (association of accountancy profession of Latin, European and American countries). Since 2011 she he has been a member of the Expert Group set up by the European Commission, the General Internal Market and Services and the Accounting and Financial Reporting Directorates and is also a member of the Integrated Reporting Academic Network. Since 2011 she has been Deputy Chairman of the Sustainability Group Fee Federations Experts Comptables Europeens. In 2006 she was appointed to the SEAP (Sustainability Expert Advisory Panel), the consultative body of IFAC (International Federation of Accountants). She has been a member of the Accountants Role No. 165 since 12/12/1991 Pordenone section and since 2000 enrolled at No of the Accountants Register, Official Gazette No. 14 S4 of 18/02/2000. Chairman of the Environmental Consultancy Commission of the National Board of Accountants and Accountancy Experts. Since 2010 she has been a member of the Working Group on green certificates of the IAO (Italian Accounting Organisation) and a member of the Working Group on Integrated Financial Statements of the Financial Statement Oscars. Since 2011 she has been a member of the Directive Council of the GBS, a study group on social reports and a member of the Steering Committee of Global Compact Italian, in addition to a member of Integrated Reporting Academic Network. She has worked at various operating control levels of private companies and public companies (healthcare bodies, public bodies), carrying out strategic planning activities, the design of responsibility mapping, reporting structures, the identification of critical issues and the clarification of objective parameters and indicators. Social, environmental and sustainability reports: drawing up and support for the preparation of social, environmental and sustainability reports for private companies and public bodies. Training on the above-indicated issues for private and public entities. 185

188 Corporate Governance and Ownership Structure Report Between 2006 and 2012 she was an assessor for the Pordenone Municipality (duties: Financial statements, Planning, Innovation and Development; subsequently with the Saperi per l Innovazione). Manuela Romei Pasetti. Graduated in Jurisprudence from the University of Padova in Between 1965 and 1969 she worked as a lawyer in relation to arbitration, tenders and public works; between 1970 and 1978 she was a Magistrate in Bassano del Grappa and between 1978 and 1987 she was a Magistrate in Venice. She sat on the Court of Appeal of Venice until 1990, handling many processes, a number of which with important consequences in relation to the issues of drugs and kidnapping. Between 1990 and 1998 she was the Vice General Prosecutor of Venice, handling preventative measures for the seizure of assets and collaborating as a member of the commission of Prof. Gallo on the Law Reform Bill. Between 1998 and 2002 she acted as a member of the High Court, subsequently from 2002 to 2008 as a General Lawyer of the Milan Prosecutors Office. Between March 2008 and February 2012 she was the first woman to act as the Chair of the Venice Court of Appeal. On February 2, 2012 she was appointed as Head of the Department of Juvenile Justice of the Ministry of Justice, with the duty to re-organise the Department, a role which she held until March 31, In June 2009 she was awarded the Marisa Bellisario Award Women for Real Justice ; Between April 1, 2012 and February 25, 2013 (resignation) she was a member of the Supervisory Board of Finmeccanica. Since October 1, 2012 she has been a member of Board of Directors of Banca Nuova. Maurizio Sobrero. Graduated in Economics and Commerce from the University of Bologna, gained a Ph.D from the Massachusetts Institute of Technology and was Professor of Innovation Management from the University of Bologna, Business Sciences Department. He is the author of numerous international publications on economics and innovation management. He has taught many programmes for executives in South America, China and many European countries. In 2005, he contributed to the United Nations World Investment Report. He has been a consultant for many companies and institutions such as GM, Enel, European Patent Office, ILVA, Telecom Italia, the Ministry for Economic Development, the Piedmont Region, the Lombardy Region and the Emilia Romagna Region. Since May 2012 he has been a Founding Faculty Fellow of the Skolkovo Institute of Science and Technology, Moscow. Giovanni Tamburi. He graduated in Economics and Commerce, is a founder and Chairman of Tamburi Investment Partners SpA, an investment/independent merchant bank made up of numerous important entrepreneurial Italian families who carry out advisory activities and investments in medium-sized businesses in order to introduce excellence to the industrial and entrepreneurial plans. He has held directorships and undertaken consultancy positions in leading Italian companies and he is a lecturer for the Masters in Merchant Banking with the LUIC (Castellanza - Varese) and in Extraordinary Financial Operations for the Masters in Business Administration from the LUISS in Rome. He is the author of numerous publications in the finance area. 186

189 Corporate Governance and Ownership Structure Report Attachment 2 List of offices held by each director in other listed companies including overseas, in financial, banking and insurance companies or of significant size. In the table below, the offices held on Board of Directors' or Board of Statutory Auditors' in quoted or non-quoted companies by members of the Board of Directors of the Company at December 31, 2013 are reported: Name Company Office Franco Grisan Huta Szkła Czechy S.A. * Chairman ** Verreries Brosse SAS * Director ** Assovetro Member of the Board and Vice- Chairman of Vetro Cavo Meccanico Section CO.RE.VE Vice Chairman FEVE Member of the Board and Chairman of Flaconnage Committee Confindustria Venezia Member of the Committee Nicolò Marzotto Zignago Holding SpA * Director ** Paolo Giacobbo Santa Margherita SpA * Director ** Verreries Brosse SAS * Director ** Huta Szkła Czechy S.A. * Director ** Retail Group Retail Sport Retail Fashion Retail Shop Chairman Chairman Chairman & Chief Executive Officer Chairman & Chief Executive Officer Associazione Europea degli industriali del vetro CPIV (Brussels) Chairman D&P Glass Consulting srl Director Verreries Brosse SAS * Chairman ** Huta Szkła Czechy S.A. * Director ** Lino Benassi La Finanziaria Trentina SpA Chairman B & D di Marco Drago & C. SapA Partner De Agostini SpA Director ** Dea Capital SpA (listed) Director ** Idea Fimit SGR Ladurner SpA Lunelli SpA Vice Chairman Vice Chairman Director 187

190 Corporate Governance and Ownership Structure Report Marzotto SpA Director ** Ferdinando Businaro Isotex Engeneering Srl Director Zignago Holding SpA * Director ** Wizard SpA Director ** M31 SpA Centervue SpA Rocca di Monselice Srl Koris Italia Srl Director Director Chairman Sole Director Santa Margherita SpA * Director ** Immobili e partecipazioni SpA Santex Holding SpA Executive Director Director Zignago Immobiliare Srl * Director Adant Srl M31 Italia Srl Associazione Progetto Marzotto Fondazione Progetto Marzotto Director Director Executive Director Executive Director Alberto Faggion Zignago Holding SpA * Director ** Santa Margherita SpA * Director ** Tenute Santa Margherita Srl Società Agricola * Director Verreries Brosse SAS * Director ** Huta Szkła Czechy S.A. * Director ** Vetreco Srl * Statutory Auditor Zignago Immobiliare Srl * Director Multitecno Srl * Director Zignago Power Srl * Director La Vecchia Scarl * Chairman Daniela Manzoni Suppiej Gaetano Marzotto Villanova Servizi Srl * Director Eurocostruzioni 2000 Srl * Sole Director Banca S.Biagio del Veneto Orientale Banca di Credito Cooperativo PD Solutions S.r.l. J. Hirsch & Co. Management & Consulting Srl Pitti Immagine Srl Director ** Director Vice Chairman Chairman Zignago Holding SpA * Director ** Santa Margherita SpA * Chairman ** Hugo Boss AG Member of the Supervisory Board ** Clouditalia Communications SpA Director Alpitour SpA Director ** Toywatch SpA Director 188

191 Corporate Governance and Ownership Structure Report Luca Marzotto Zignago Holding SpA * Chief Executive Officer ** Santa Margherita SpA * Vice Chairman ** Ca' del Bosco Srl - Società Agricola * Director ** S.M. Tenimenti Pile e Lamole e Vistarenni * Chairman e San Disdagio Srl Società Agricola Vetri Speciali SpA * Director ** Zignago Power Srl * Chairman Zignago Servizi Srl * Sole Director Multitecno Srl * Director Villanova Servizi Srl * Chairman New High Glass * Vice Chairman Hugo Boss AG Sindacato A Federvini Centervue SpA Director and member of the Working Committee. Chairman Director Stefano Marzotto Zignago Holding SpA * Chairman ** Santa Margherita SpA * Director ** Ca' del Bosco Srl. - Società Agricola * Director ** S.M. Tenimenti Pile e Lamole e Vistarenni * Vice Chairman e San Disdagio Srl Società Agricola Vetri Speciali SpA * Chairman ** Huta Szkła Czechy S.A. * Director ** Zignago Power Srl * Director Zignago Immobiliare Srl * Chairman Multitecno Srl * Chairman Villanova Servizi Srl * Director Tenute Santa Margherita Srl Società Agricola * Chairman Mio Chiara Eurotech SpA Director ** Danieli SpA Statutory Auditor ** Mcz Group Cadel Srl Statutory Auditor Statutory Auditor ** Romei Pasetti Manuela Maurizio Sobrero Banca Nuova Director Giovanni Tamburi Tamburi Investment Partners SpA (listed) Chairman & Chief Executive Officer ** Amplifon SpA (listed) Director ** Datalogic SpA (listed) Director ** Interpump SpA (listed) Director ** Prysmian SpA Director ** *Related company **Disclosure pursuant to Article 144 of the Consob Issuer s Regulation 189

192 Corporate Governance and Ownership Structure Report Attachment 3 curriculum vitae of the members of the Board of Statutory Auditors. Carlo Pesce. Graduated in Economics and Commerce from the University of Studies of Venice "Ca' Foscari". He is a member of the Accountants Register of Venezia and of the Auditors Register. He is involved in tax, corporate and financial statements consultancy with businesses. He is a founding partner of Studio Grimani & Pesce, with head offices in Venice Mestre. He is a member of the Board of Statutory Auditors of various Italian companies, a member of the Supervisory Board of foreign companies, and a member of the Credit Union Audit Board. He is an expert in business and corporate evaluations. He has been a Statutory Auditor with Zignago Vetro SpA since March 22, 2007 and the Chairman of the Board of Statutory Auditors since April 29, Stefano Meneghini. Graduated in Economics and Commerce from the University of Studies of Venice "Ca' Foscari". He is a member of the Accountants Register and of the Auditors Register and since 1994 has provided tax and corporate consultancy services to companies. Since 2007, he has been a partner with Giacobbo e Associati of Venice. He has been a statutory auditor of Zignago Vetro SpA since May Carmen Pezzuto. Graduated in Economics and Business from the Venice "Ca' Foscari University in Member of the Accountants Register of Padova since 1994 and of the Auditors Register since She began her professional career at the firm of Mr. Mauro Beghin (today a Professor at the University of Padova), specialising in tax consultancy and tax disputes and is enrolled at the Accountants Register in In 1994 she became a Professional Consultant at the Studio Associato di Consulenza Tributaria of Padova, becoming an Associate in She has been a Partner at the firm since January She has been a statutory auditor with Zignago Vetro SpA since April 29, Chiara Bedei. Graduated in Economics and Commerce from the University of Studies of Venice "Ca' Foscari" in Member of the Accountants Register of Padova since 1998 and of the Auditors Register since In 1996 she became a Professional Consultant at the Studio Associato di Consulenza Tributaria of Padova, becoming an Associate in She has been a Partner of the firm since January She has been an alternate auditor of Zignago Vetro SpA since April 29, Alessandro Bentsik. Graduated in Economics and Commerce from the University of Studies of Venice "Ca' Foscari". He is a member of the Accountants Register of Venezia and of the Auditors Register. He undertakes fiscal and corporate consultancy activities concerning the audit and preparation of separate and consolidated financial statements, business evaluations, budgets and business planning. He is a partner with the Accountancy Firm Grimani & Pesce, with head office in Venice. He is a member of the board of statutory auditors or independent auditors of various industrial and service sector companies. He has been an alternate auditor with Zignago Vetro SpA since March 22,

193 Corporate Governance and Ownership Structure Report Attachment 4- other provisions of the self-governance code Powers delegated and transactions with related parties The BoD has attributed powers defining: a) limits X b) functioning X c) and periodical information? X The BoD reviews and approves the transactions of an important economic and financial nature (including transactions with related parties)? The BoD has defined guidelines and criteria for the identification of significant operations? The above guidelines and the criteria are described in the report? The BoD has defined specific procedures for the review and approval of operations with related persons? Are the procedures for approval of transactions with related parties described in the report? Procedures for the most recent appointment of directors and statutory auditors The proposal of the candidates for the office of director is made at least ten days in advance? The candidature for director is accompanied by full and complete information? The candidature for director is accompanied by indications of independence? The proposal of the candidates for the office of statutory auditor is made at least ten days in advance? The candidature for statutory auditor is accompanied by full and complete information? 1.2 Shareholders Meetings Has the Company approved Shareholder Meeting Regulations? Are the Regulations attached to the report (or is it stated where they can be obtained/downloaded)? YES X X X X X X X X N/A NO N/A* N/A* X Summary of the reasons for any differences from the recommendations of the Code The Company has not adopted a Shareholders Meeting regulation as it is considered that the statutory powers attributed to the Chairman of the Shareholders Meeting, who oversees the workings of the meeting, including the determination of the agenda and the voting system, allows the correct functioning of the shareholders meeting, avoiding therefore the risks and the inconvenience which could derive from any non compliance, by the Shareholders Meeting, of the regulatory provisions. 191

194 Corporate Governance and Ownership Structure Report 1.3 Internal Control Has the company appointed persons responsible for internal control? Are they hierarchically independent from Business Area managers? Organisational Department responsible for internal control 1.4 Investor relations Has the Company appointed an investor relations manager? Dept. (address /telephone/fax/ ) and person responsible for investor relations YES X X X X NO Investor Relations Office: Roberto Celot Investor Relations Chief Financial Officer Summary of the reasons for any differences from the recommendations of the Code NOTE * The nomination of the current board in office was made in accordance with the statutory majority as (i) the relative appointment was made when the Company was not yet listed and (ii) the By-Laws containing the provisions required for listed companies entered into force on the approval by Borsa Italiana of the admission for listing. The mechanism of the slate voting will therefore be applied on the renewal of the Board. Zignago Vetro S.p.A. Via Ita Marzotto, Fossalta di Portogruaro (VE) tel r.celot@zignagovetro.com 192

195

196 ZIGNAGO VETRO S.p.A. Registered office: Fossalta di Portogruaro (VE), Via Ita Marzotto n. 8