Financial Statements INglass S.p.A. Consolidated Financial Statements INglass Group 2012

Transcription

1 Financial Statements INglass S.p.A. Consolidated Financial Statements INglass Group 2012 Financial Statements INglass S.p.A. Consolidated Financial Statements INglass Group 2012 Via Piave, 4, S.Polo di Piave (TV) I Tel Fax info@inglass.it info@hrsflow.com

2 1 Index 1. Financial Statements as at 31 December 2012 INglass S.p.A. 1.1 Balance sheet 1.2 Profit and loss account 1.3 Explanatory notes 1.4 Annexes Report on operations 2012 INglass S.p.A. 2.1 Company s general situation 2.2 Other information 2.3 Proposal to the Meeting Board of Statutory Auditors Report INglass S.p.A Report by Independent Auditors INglass S.p.A Minutes of an Ordinary General Meeting INglass S.p.A Consolidated Financial Statements as at 31 December 2012 Group INglass 6.1 Balance sheet 6.2 Profit and loss account 6.3 Explanatory notes 6.4 Annexes Report by Independent Auditors on the Consolidated Financial Statements Group INglass 77 Company: INglass S.p.A. Registered Office: San Polo di Piave (TV) - Via Piave 4 Shareholders Capital: Euro ,00 i.v. Treviso Register of Companies Reg. No.: Treviso Economic and Administrative Register (R.E.A.) Reg. No.: VAT No.:

3 2 Board of Directors President of the Board of Directors, CEO, Board member Mr. Bazzo Maurizio CEO, Board member Mr. Boscariol Tiziano Board member Mrs. Berto Daniela Authorised representative Mr. Vidotto Ruben Board of Statutory Auditors President of the Board of Statutory Auditors Mrs. Biscaro Antonietta Active auditor Mrs. Callegari Annamaria Mr. Parolin Manfred Substitute auditor Mr. Canevese Dino Mrs. Filippin Laura Independent Auditors Reconta Ernst & Young S.p.A. Viale Appiani 20/b Treviso

4 3 Financial Statements as at 31 December 2012 INglass S.p.A.

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6 Balance sheet INglass S.p.A Balance sheet ASSETS A) RECEIVABLES FROM SHAREHOLDERS FOR CAPITAL CONTRIBUTIONS 0 0 B) FIXED ASSETS I) INTANGIBLE ASSETS ) Research, development and advertising costs ) Industrial patents and intellectual property rights 0 0 4) Concessions, licenses, trademarks and similar rights ) Other intangible assets II) TANGIBLE ASSETS ) Land and buildings ) Plant and machinery ) Industrial and commercial equipment ) Other assets ) Assets under construction and advances III) FINANCIAL ASSETS ) Equity investments in: a) Subsidiaries b) Associated and affiliated companies d) Other companies ) Receivables a) from subsidiaries b) from associated and affiliated companies d) from other parties ) Other securities C) CURRENT ASSETS I) INVENTORY ) Raw, ancillary and consumable materials ) Work in progress and semi-finished products ) Finished products and goods II) RECEIVABLES ) Trade receivables due within one year ) From subsidiaries due within one year ) From associated and affiliated companies within due one year bis) Tax receivables due within one year ter) Prepaid taxes

7 6 Balance sheet INglass S.p.A ) From others due within one year From others due beyond one year IV) CASH AND CASH EQUIVALENTS ) Bank and post office deposits ) Cash and valuables on hand D) PREPAYMENTS AND ACCRUED INCOME Accrued income Prepayments LIABILITIES AND SHAREHOLDERS EQUITY A) SHAREHOLDERS EQUITY I) SHARE CAPITAL III) REVALUATION RESERVE IV) LEGAL RESERVE VII) OTHER RESERVES b) Other (merger reserve) c) Other (exchange rate gains) VIII) PROFIT (LOSS) CARRIED FORWARD IX) PROFIT (LOSS) FOR THE PERIOD B) PROVISIONS FOR RISKS AND CHARGES ) Provisions for retirement pensions and similar obligations ) Provisions for taxes, including deferred taxes ) Other provisions C) EMPLOYEE SEVERANCE INDEMNITY PROVISIONS D) PAYABLES ) Due to banks within one year Due to banks beyond one year ) Due to other lenders within one year Due to other lenders beyond one year ) Advance payments ) Trade payables due within one year ) Payables to subsidiaries due within one year ) Payables to assoc. companies due within one year ) Taxes payable due within one year ) Payables to social security inst. due within one year ) Other payables due within one year

8 Balance sheet INglass S.p.A E) ACCRUED LIABILITIES AND DEFERRED INCOME Accrued liabilities Deferred income MEMORANDUM ACCOUNTS Leasing fees Risk linked to receivables sold with recourse Sureties and guarantees provided Derivative financial instruments

9 8 Profit and loss account INglass S.p.A. 1.2 Profit and loss account A) VALUE OF PRODUCTION ) Revenue from sales and services ) Changes in inventories for WIP, semi-finished and finished products ) Increase in fixed assets for internal work ) Other revenue and income - Other income B) PRODUCTION COSTS ) Raw, ancillary, consumables and goods ) Services ) Use of third party assets ) Personnel a) Wages and salaries b) Social security contributions c) Employee severance indemnity ) Depreciation, amortization and write-downs a) amortization intangible assets b) depreciation tangible assets d) write-down of receivables included in current assets ) Changes in inventories of raw and consumable materials and goods ) Provisions for risks ) Other accruals ) Misc. operating expenses DIFF. BETWEEN VALUE OF PRODUCTION AND PRODUCTION COSTS (OPERATING INCOME) C) FINANCIAL INCOME AND EXPENSES ) Other financial income d) from others From others (associated and affiliated companies) ) Interest and other financial expenses - to others bis) Profit and loss on exchange rates D) VALUE ADJUSTMENTS TO FINANCIAL ASSETS ) Write-downs a) of equity investments

10 Profit and loss account INglass S.p.A E) EXTRAORDINARY INCOME AND EXPENSES ) Income - other extraordinary income ) Expenses - transfer difference 0-1 PROFIT (LOSS) BEFORE TAXES ) Income tax for the period Current taxes Deferred taxes Prepaid taxes ) PROFIT (LOSS) FOR THE PERIOD

11 10 Explanatory notes INglass S.p.A. 1.3 Explanatory notes to the Financial Statements for the year ended 31 December Field of activities The Company manufactures and sells moulds and injection systems (hot runners) primarily for the automotive sector Group structure INglass S.p.A. is the holding company of the industrial group bearing the same name, with registered office in Via Piave 4, San Polo di Piave (TV), Italy. To develop its sales on the Asian continent, since April 2012 the company has had a branch (permanent organization) in India. The management of this permanent organization is shown separately in the company s accounting and profits for the period are distinct, as per current legislation. However, such profits are combined with the others in the Financial Statements prepared by INglass S.p.A. Tax and accounting books are kept according to local legislation in India. Relationships with subsidiaries, associates, affiliated companies, the parent company and the companies controlled by the latter are described later in these notes Layout and contents of these Financial Statements These Financial Statements for the year ended 31 December 2012 have been drawn up pursuant to the laws in force and comprise: - The Balance sheet, prepared as envisaged by arts 2424 and 2424 bis of the Italian Civil Code; - The Profit and loss account, prepared as envisaged by arts 2425 and 2425 bis of the Italian Civil Code; - These Explanatory notes which provide the information required pursuant to art of the Italian Civil Code, Italian Legislative Decree No. 127/1991 and other relevant laws, in addition to the information from any other source that was considered essential for a truthful and accurate report on the company s performance, even if not explicitly required by any legal provision in force. The above-mentioned documents were prepared pursuant to the rules and regulations applicable to the preparation of Financial statements. Such rules and regulations have been construed according to and integrated with the applicable accounting principles defined by Italy s National Board of Chartered Accountants (Consigli Nazionali dei Dottori Commercialisti e dei Ragionieri) and the Italian Accounting Body (Organismo Italiano di Contabilità - O.I.C.). The assessment criteria used to prepare the Financial Statements as at 31 December 2012 are in line with those used to draw up the previous period s Financial statements. For comparative purposes the Balance sheet and Profit and loss account also provide data for the financial year ended on 31 December The annexed documents give an overview of the company s financial, equity and economic situation. A Cash flow statement is also included (Annex 1). Please note that under the terms of art ter of the Italian Civil Code, no Balance sheet or Profit and loss account items were compounded Assessment criteria and accounting principles These Financial statements have been drawn up pursuant to the principles of art bis of the Italian Civil Code; details below: - Individual items were valued on a prudential basis in view of the continuation of business activities in the future, bearing in mind the economic value of the asset or liability under consideration; - Valuation considered risks and losses incurred in the year, including those emerging after year s end. The following assessment criteria were implemented pursuant to Art of the Italian Civil Code, in addition to the accounting principles provided by the Italian Board of Chartered Accountants and the Italian Accounting Body (O.I.C.): 1. Intangible assets Intangible assets are entered at purchase or manufacturing cost, including any additional charges, and systematically amortized on a straight-line basis taking into account their residual useful life. Assets were entered with the prior consent of the Board of Statutory Auditors, if so required by law. Amortization periods adopted for the items included in intangible assets are shown below:

12 Explanatory notes INglass S.p.A. 11 Research and development costs Patent rights End-user licences for SW applications Trademarks Improvements to third-party assets 4 years 3 years 3 years 10 years 5 years Research costs were entered in the Profit and loss account when they were incurred. With the prior consent of the Board of Statutory Auditors, development costs with long-term utility incurred in connection with a specific project are handled as capital costs when their future recovery is considered reasonably certain. After initial recognition, these costs are taken into account to determine the operating results; amortization rates are calculated relative to the period in which expected revenues from the project will occur. According to the amortization schedule, costs will be amortized over a period of up to four financial years at the latest. Capitalized costs are directly incurred costs (employees wages and salaries, raw materials and consumables used, and external consultancy). Industrial patents and intellectual property rights refer to clearly identifiable assets able to generate profits in the future; such rights are amortized over three years according to the expected residual useful life of the asset concerned. Direct costs for the creation of software applications for in-house use are capitalized when the company is reasonably certain the new software can be completed and used, and only if the programs created have a useful multi-year life within the company; amortization takes place in a period correlated to the expected use of the software, if it is reasonable to determine this, otherwise over three years calculated from that in which costs were incurred. Intangible assets are written down in the event of any long-lasting loss in value; should the reasons for write-down cease to exist in subsequent financial periods, the original value of the asset is restored. 2. Tangible assets Tangible assets are entered at purchase or construction cost, including any reasonably ascribable additional charges. Tangible assets are systematically depreciated on a straight-line basis in each period according to economic and technical depreciation rates that take into account the asset s residual useful life; rates are halved in value for assets that became available for use during the period. The following are the depreciation rates applied and deemed to be representative of the estimated residual useful life of the assets concerned: Buildings 3% Light constructions 10% Machinery 15,5% General systems 10% Equipment 25% Electronic office machines 20% Office furniture and equipment 12% Transport vehicles 20% Cars 25% Notwithstanding depreciation already calculated, tangible assets are written down when they suffer a long-lasting loss in value; should the reasons for the write-down cease to exist in the following financial periods, the original value of the asset would be restored. Please note that depreciable real property used in the business (Buildings) was written up pursuant to Italian Legislative Decree 185/2008; no financial charges for items entered under assets were capitalized. 3. Financial assets Equity investments in associated and affiliated companies included in the financial assets were entered at their acquisition or subscription price plus any directly attributable cost, using the cost method. The book value of stakes held in participated companies was assessed to determine whether it was lower or higher than the portion of shareholders equity resulting from the last available Financial statements of the company concerned. If the book value exceeded the shareholders equity and the decision was made to maintain such higher value, reasons were provided to justify said decision. If the analysis revealed a misalignment of a

13 12 Explanatory notes INglass S.p.A. long-lasting nature between the carrying value of the equity investment and the corresponding portion of the shareholders equity, the carrying value of the investment was written down and provisions were made to cover losses resulting from any negative equity of the company concerned. Should the reasons for the write-down cease to exist in the following financial periods, the original value of the asset would be restored. Stakes in other companies are assessed at purchase cost. Financial receivables are stated at their nominal value. 4. Other securities Securities are entered at purchase cost and kept in the company equity as stable investments. If such securities undergo long-lasting loss of value they are entered at the lesser value; should the reasons for the write-down cease to exist in the following financial periods, the original value of the asset would be restored. 5. Inventory Inventories were entered at the lesser of either purchase or manufacturing cost and their estimated salvage or replacement value. Raw, ancillary, consumable materials and goods are entered at the lesser of their purchase cost (calculated according to the average cost method) and their expected replacement value estimated on market trends at year s end. Contract work in progress was valued on the basis of the product costs incurred, obtained as a summation of direct production costs borne in the period and a percentage of other indirect production costs that can be reasonably ascribed thereto. Should this value, which also includes costs incurred to finish the goods, exceed the agreed contractual value, the latter is considered. 6. Receivables Receivables are entered at their expected salvage value, net of any prudential write-downs and considering any single event that has occurred or is expected to occur, based on certain and exact evidence, that may lead to a loss. Receivables sold with recourse are removed from the Balance sheet and replaced with the amount of the advance received. The corresponding recourse risk is highlighted in the Memorandum Accounts and any additional information required is provided in the Notes to the Financial statements. 7. Cash and cash equivalents Cash and cash equivalents consist of bank deposit and cash balances and were entered at the nominal value of the sums available for the company at the end of the accounting period. 8. Accruals and deferrals These items include expenses or revenue common to two or more accounting periods and were entered based on actual accrual during the period: expense or revenue items were assessed from an accounting standpoint and matched to the periods in which they were incurred. 9. Provisions for risks and charges In application of the prudence and accrual basis accounting principles, provisions for risks and charges include the provisions made to hedge losses or debts of a specific nature which are known to exist or are likely to arise, but in connection to which the amount or date of occurrence are still unknown at the end of the financial year. Provisions for risks and charges were made on the basis of the best possible estimate at the time of drawing up these Financial statements, using all information available. Risks giving rise to potential liabilities of no reasonably assessable amount were listed in a Supplementary Note, but no specific provision was made for them. 10. Employee severance indemnity Provisions for employee severance indemnity include all payables owed by the company as severance indemnity to its employees. The value of the item is determined in accordance with labour legislation and labour contracts in force and is subject to re-assessment on the basis of indices established by current legislation. As of 1 January 2007, following Italian Legislative Decree 252/2005 and implementation decrees, the rules governing employee severance indemnity provisions have changed considerably. In particular, employees may now choose whether to have severance indemnity payments made into an independent pension scheme of their choice or whether to let the company run a scheme for them (in this case the company makes severance indemnity payments into a treasury account held by Italy s Social Security Institute INPS). ESI payables are entered at nominal value. 11. Payables Payables are entered at nominal value based on prudential economic and legal criteria.

14 Explanatory notes INglass S.p.A Acknowledgement of revenue Revenue is shown net of returned goods, discounts, allowances and bonuses as well as net of taxes directly related to the sale of goods and the provision of services. Typical revenue derives from the manufacturing of goods according to a specific contract to be performed within less than one year. Revenue from sales is stated at the time title is transferred, typically after completion or delivery of the finished goods. Revenue from provision of services is acknowledged as of the date when services are delivered, or as of the date when payment for the services is collected. Financial revenues and revenues from regular lease fees are acknowledged on an accrual basis. 13. Book entry of costs and expenses Costs and expenses were recorded on an accrual basis. 14. Contributions For contributions proportional to the purchasing of tangible or intangible assets, the recognised value will be suspended later and entered under the item Deferred income in order to ensure the correct correlation with depreciation or amortization values related to the assets for which contributions have been granted. 15. Income taxes for the financial year Taxes were entered on the basis of an estimate of taxable income pursuant to the applicable legislation in force. They are stated net of advances paid, deductions for taxes withheld and tax credit and are charged either to the item Taxes payable or Tax receivables in the current assets according to their nature. 16. Deferred and prepaid taxes Deferred or prepaid taxes are calculated on the basis of the temporary differences between the value of assets and liabilities entered in the statutory Financial statements and their corresponding tax value according to the tax rates likely to be applied in the periods in which the temporary differences that have generated them will fall due. In particular for the evaluation of this effect, current IRES (Corporate income tax) and IRAP (Regional tax on production activities) tax rates of 27.5% and 3.9% respectively were applied. Prepaid taxes, including tax concessions for fiscal losses carried over, were booked provided there was reasonable certainty about their future reimbursement. Liabilities for deferred taxes and receivable for prepaid taxes were entered under Provision for taxes and Receivables for prepaid taxes respectively. 17. Risks, commitments and guarantees Risks, commitments and guarantees are listed in the memorandum accounts, stating their amount at the end of the period. 18. Conversion criteria for items listed in foreign currencies Any receivables and payables originally stated in a foreign currency have been converted into euro at the exchange rate applicable on the date in which the associated operations were performed and updated to the exchange rate applicable at the end of the period. Any exchange rate differences arising from updates, accrued and not collected in the period, are entered in the Profit and loss account under item C17 bis and any net income is appropriated to the dedicated reserve that will not be distributed until collection. Exchange rate differences arising from receivables and payables in foreign currency are also entered in the Profit and loss account under item C17 bis. 19. Exceptions pursuant to art. 2423, clause 4 of the Italian Civil Code No use was made of the exceptions envisaged by art. 2423, clause 4 of the Italian Civil Code because the evaluation criteria laid down by the legislator were deemed fit to provide a true and correct representation of the company s assets and liabilities, financial and economic performance. 20. Derivative financial instruments The company uses financial instruments to protect profits from unfavourable fluctuations in interest rates and foreign currency exchange rates. Interest rate risk Derivative contracts on interest rates and foreign currency exchange rates entered into for the purpose of hedging exposure are entered differently according to whether they fulfil the requirements of current regulations for the purpose of qualifying a derivative hedged debt instrument.

15 14 Explanatory notes INglass S.p.A. If a contract is defined as a derivative hedged debt instrument it is assessed as a hedged liability. Interest differentials paid during the year are shown under financial income and charges on an accrual basis. The fair value of derivative contracts was determined according to generally accepted evaluation models and methods and is stated in the Notes. If a contract cannot be defined as a derivative hedged debt instrument and its fair value is negative, the relative value is entered into provisions for risks and charges. If the fair value is positive it is merely mentioned in the Explanatory notes. Foreign exchange risk In order to hedge the risk of variations in exchange rates regarding sales made in foreign currency (USD and CAD) the company enters into currency forward sales contracts and futures. If such contracts cannot be qualified as hedging instruments provisions are made for a risk and charges fund or a financial asset is acquired, according to whether their fair value is negative or positive at the end of the period. The notional value of outstanding contracts at year s end is stated in the memorandum accounts in their equivalent value in euro. 21. Leasing operations Operating assets acquired through leasing contracts are entered in the Financial statements in accordance with the accounting principles laid down by the applicable legislation in force requiring lease fees to be considered as operating costs. Had the leasing operations been considered equivalent to goods purchased by means of a credit line provided by leasing institutes, and had depreciation been carried out as for other technical fixed assets, then the shareholders equity would have been higher by approximately thousand Euro and lower by approximately 31.- thousand Euro, net of the associated tax effect. The information required pursuant to item 22 of art of the Italian Civil Code (amounts are expressed in thousands of Euro): ASSETS: a) Current contracts: Leased assets at the end of the previous year, net of total depreciation and amortization at the end of the previous year Leased assets acquired during the year Net value of leased assets redeemed and transferred during the year 0 - Amortization and depreciation for the year (978) LEASED ASSETS AT YEAR S END b) Redeemed assets 0 Overall higher value of the redeemed assets, as determined by the financial method, compared to book value at year s end LIABILITIES: Implicit debt for leasing operations at the end of the previous year Implicit debt incurred during the year Reimbursement of capital shares and redemptions during the year (930) - Reimbursement of advance fees (232) c) Current value of leasing fees not due at year s end of which due in the next period of which due beyond next year within 5 years of which due beyond 5 years 495 d) Total gross effect at year s end (a+b-c) 402

16 Explanatory notes INglass S.p.A. 15 e) Tax effect (127) f) Effect on shareholders equity at year s end (d-e) 275 EFFECTS ON THE PROFIT AND LOSS ACCOUNT Write-off of fees related to leased goods Interest payable for the period (114) Depreciation and amortization in the period (978) Effect on the results before taxes (45) Assessment of the tax effect 14 Effect on the net profit for the period (31) 22. Relations with related parties and off Balance sheet agreements The company s transactions with related parties in financial year 2012 involved primarily the transfer of goods and provision of services at normal market conditions. Below is an overview of the main equity, financial and economic relationships with subsidiaries and associated companies: Object Receivables from customers Finance receivables Payables to suppliers Revenue Costs HRS Flow do Brasil HRS France HRS GmbH HRS Hot Runner Systems NA Inc HRS Hong Kong Ltd INglass HRS Makine Kalip INglass Tooling & HR Man. China Total subsidiaries Sistemas de Canal Caliente Iberica Key Automation S.r.l Solar4Life S.r.l Total associated companies Under the terms of clause 1, point 22-ter of art of the Italian Civil Code, it is pointed out that the company has not entered into any off Balance sheet agreements whose mention is required to ass the equity, financial and economic performance of the company. 23. Other disclosures Consolidated financial statements As the company holds majority stakes in a number of subsidiaries, it has prepared Consolidated financial statements under the terms of art. 25 ff of Italian Legislative Decree 127/1991.

17 16 Explanatory notes INglass S.p.A Notes on the main items of the Balance sheet A S S E T S ITEM B-I) INTANGIBLE ASSETS The amount of intangible assets at year s end was Euro 1,957,352.- (Euro 1,190,255.- in the previous year). Changes recorded by this item during the year are illustrated in Annex 2. The most remarkable increases in this item are linked to research and development costs, capitalization of which for the year amounted to Euro 656,721.- as a result of the decision to capitalize costs connected to the development of specific projects, and the capitalization of software costs for Euro 830,866.-, as well as the purchase of know-how for the development of an electric jack for Euro 300, VOCE B-II) TANGIBLE ASSETS The total net value of tangible assets at the end of the year was Euro 6,482,088.- (Euro 7,329,293.- in 2011). Changes during the accounting period are shown in Annex 3 to these Financial statements. The most significant increases are the result of the purchase of building land adjacent to our production facilities and replacement of machinery. VOCE B-III) FINANCIAL ASSETS At the end of the year financial assets amounted to Euro 10,890,106.- (Euro 8,954,899.- in 2011) and included: (in Euro units) 31/12/ /12/2012 Equity investments in subsidiaries: HRS France HRS Hot Runner Systems NA Inc INglass Tooling & HR Man. China HRS Flow do Brasil HRS GmbH HRS Hong Kong Ltd INglass HRS Makine Kalip Equity investments in associated companies: Sistemas de Canal Caliente Iberica Solar4life S.r.l Key Automation S.r.l Equity investments in other companies: Banca Credito Cooperativo Prealpi Banca Popolare di Vicenza Veneto Banca BPAA Volksbank Receivables From subsidiaries From associated and affiliated companies Other receivables Other securities Details and changes in equity investments are listed in Annex 4 to these Financial statements. The carrying value of the stake in the company governed by Chinese law (Inglass Tooling & Hot Runner Manufacturing China Co. Ltd) was increased due to the effect of an increase in the subsidiary s share capital for approximately Euro 1,000,000.- made solely by INglass S.p.A., and the purchase of part of the shares held by SIMEST

18 Explanatory notes INglass S.p.A. 17 S.p.A.. At year end the share capital authorized by the Chinese subsidiary authorities was therefore totally freed up in the amount of Euro 8,606,355.- of which INglass S.p.A. holds 77.34%, whereas the overall contribution of SIMEST S.p.A. (pursuant to Italian Law 100/90) directly and indirectly accounts for the remaining 22.66% of the Chinese company s share capital. The value of the equity investment in our French subsidiary HRS France was partially restored to Euro 56, This involved an overall increase in share capital of Euro 200, The carrying value of the stake in our Brazilian subsidiary (HRS Flow do Brasil) was fully written down and risk provisions to cover negative equity associated with it were made. The same was done for our Turkish subsidiary. Equity investments in the Canadian, German and Hong Kong subsidiaries remained unchanged; any other information is given in the annexed table. With reference to associated and affiliated companies, the carrying cost of the stakes held in Key Automation S.r.l. was partially written down so as to bring it in line with the subsidiary s net accounting equity at the end of the year. The equity investments in the Banca di Credito Cooperativo Prealpi, Banca Popolare di Vicenza and Veneto Banca remain unchanged, while a stake was acquired in BPAA Volksbank. Receivables from subsidiaries and associated and affiliated companies are interest-bearing and non-interestbearing loans. Please refer to the table Relationships with related parties of these Notes for details. Long-term receivables from others refer to receivables from an insurance company for directors severance indemnities (Euro 615,895.-) and a current account deposit pledged to back a bank guarantee of Euro 400, Other securities amount to Euro 500,000.- and comprise bonds (fixed income zero coupon bonds) to guarantee the bank loans involved. VOCE C-I) INVENTORY This item includes inventories of raw, ancillary, consumable materials and goods (control units, entered separately) in addition to work in progress and semi-finished products and amount to Euro 8,073,861.- (Euro 8,466,053.- in 2011), broken down as follows: (in Euro units) 31/12/ /12/2012 Raw materials and consumables Work in progress and semi-finished products Finished products and goods Total VOCE C-II) RECEIVABLES C-II-1) Trade receivables : amounted to Euro 19,565,764.- (Euro 13,104,562.- in the previous year). These are all receivables due within the next financial year and are broken down as follows: (in Euro units) 31/12/ /12/2012 Trade receivables Exchange rate adjustments (1.053) Provisions for bad and doubtful accounts ( ) ( ) Net value Trade receivables are broken down as follows (amounts in thousands of Euro): - Italian customers: Euro 5,164.-; - European Union customers: Euro 12,548.-; - Non-EU customers: Euro 2, This item is net of invoices issued for customer advances not yet collected at year s end for Euro 2,147, Please note that at 31 December 2012, due to sales made with recourse procedures trade receivables. The corresponding recourse risk is shown separately in the Memorandum Accounts. Provisions for bad and doubtful accounts changed as follows during the year:

19 18 Explanatory notes INglass S.p.A. (in Euro units) 31/12/2012 Opening balance at Use during the year ( ) Provisions for the period Balance During the year losses on receivables referred mainly to previous non-performing receivables which were fully offset by provisions for bad debts. Directors also decided to appropriate Euro 329,211.- to the provisions for bad and doubtful accounts after specifically assessing doubtful accounts receivable, taking into account the risk of insolvency and past experience with losses on receivables, as well as the current economic and financial situation. C-II-2) Receivables from subsidiaries : came to Euro 3,754,251.- (Euro 3,655,834.- in financial year 2011). Please refer to the table illustrating relationships with related parties contained in these Notes for details. C-II-3) Receivables from associated companies : totalled Euro 777,646.- (Euro 3,777,304.- in the previous year). The significant reduction in this item is due to the change in our relationship with the Spanish subsidiary in 2012 as the company changed from distributor to sales agency. Details can be seen in the table illustrating relationships with related parties contained in these Notes. C-II-4-bis) Tax receivables : this item amounted to Euro 612,478.- (Euro 254,077.- in 2011) and refers to sundry taxes receivable. The largest component is represented by VAT receivables for Euro 180,109.- and IRES refund arising from the new terms of art. 2 of Italian Legislative Decree 201/2011 (known as the Monti Decree), as amended by Legislative Decree 16/2012, which allows corporate income tax and regional corporate tax to be analytically deducted from IRAP relating to labour costs and incorporated also for past trading years not yet prescribed ( ). Total receivables accrued amount to Euro 423, C-II-4-ter) Prepaid taxes : this item was booked under tax assets pursuant to the national accounting principle No. 25, for Euro 524, PREPAID TAXES (IRES CORPORATE INCOME TAX AND IRAP REGIONAL CORPORATE TAX) AND ASSOCIATED TAX EFFECTS (in Euro units) Prepaid taxes Temporary differences Tax effect (31.4% or 27.5% rate) Temporary differences Tax effect (31.4% or 27.5% rate) Product warranty fund Provisions for doubtful accounts Goodwill amortization Trademark amortization Depreciation of building Provisions for risks Total prepaid taxes This item remains the same, but with a different composition due to the elimination of certain items that did not cause temporary differences. Please note that the directors decided not to make any allocation of deferred tax assets on temporary differences which have arisen in the current year. C-II-5) Other receivables : amounted to Euro 404,504.- (Euro 127,154.- in the previous year). The increase is mainly due to advance payments made to suppliers and caution money paid to guarantee orders for machinery. At 31 December 2012 the item included receivables within the following account period for Euro

20 Explanatory notes INglass S.p.A ,861.-, whereas the amount due after the following financial year is Euro 128,643.- (securities). ITEM C-IV) CASH AND CASH EQUIVALENTS (AVAILABILITIES) This item totalled Euro 3,509,345.- (Euro 697,723.- in 2011) and represents a temporary cash surplus at year s end, available in bank deposits or as cash in hand. ITEM D) PREPAYMENTS AND ACCRUED INCOME Accruals amount to Euro 14,059.- (Euro 8,182.- in 2011) and refer to prepaid expenses. Prepayments amount to Euro 994,913.- (Euro 674,912.- in 2011); this consists primarily of costs for lease agreements that will be charged to future financial periods, in addition to insurance policies and customer service and maintenance agreements. No significant amounts fall due after the following year s end. L I A B I L I T I E S ITEM A) SHAREHOLDERS EQUITY Changes in this item s sections and the overview required by Art. 2427, 7-bis of the Italian Civil Code are detailed in Annex 5 to these Notes. Below is a detailed overview of the item: I. Share capital: Euro 2,750,000.-, consisting of 2,750,000.- shares for a nominal unit value of Euro ; this item remained unchanged over the previous period; III. Revaluation reserve: Euro 4,550,934.-, unchanged from the previous year; the reserve, which complies with Italian Legislative Decree 185/2008, resulted from the write-up of an industrial building; the higher values booked were considered for tax purposes; IV. Legal reserve: Euro 168,605.-, increased by Euro 108,500.- due to profit allocation for 2011; VII. Other reserves: Euro 793,217.- This includes Euro 638,531.- for the merger reserve created during FY 2009 and Euro 154,686.- for the reserve pursuant to art. 2426, clause 1, No. 8-bis of the Italian Civil Code; VIII. Profit (loss) carried forward: - Net profit carried forward amounted to Euro 1,629,652.-; IX. Profit for the year: Euro 5,522, ITEM B) PROVISIONS FOR RISKS AND CHARGES 1. Provisions for retirements pensions and similar obligations: this item totalled Euro 675,405.- and consists of the provisions for supplementary clientele indemnity related to agency agreements that were ongoing at the end of the year (Euro 59,510.-) and the provisions for executives severance indemnity (Euro 615,895.-). Description Initial value Uses Provisions Final balance FISC (S.C.I.) TFM provisions (77.500) TOTAL (77.500) Provisions for supplementary clientele indemnity (F.I.S.C.) derive from the giro transfer of the quota of provisions for risks set aside for litigation with the Financial Authorities, deemed to be in excess, whereas the amount for retirement pensions (TFM) amounts to Euro 45,000.- from annual provisions and Euro 27,933.- from provisions made previously. 2. Provisions for taxes, including deferred taxes: this item has been taken to zero due to recovery of the provisions for net profits on assumed exchange rates. 3. Other provisions for risks: amounted to Euro 1,010,000.-, and included: - Product warrant fund: Euro 700,000.-, unchanged from the previous period. In accordance with the prudence concept, notwithstanding continuous improvements in quality standards, the company decided not to change the value of previously appropriated funds. - Provisions to cover shortfall in own funds: this item amounted to Euro 160,000.- and comprises provisions made to meet the shortfall in own funds of the Brazilian and Turkish subsidiaries resulting from the losses incurred by them. - Provisions for risks: Euro 150,000.-, this item fell by Euro 50,000.-, from the previous period as described above as a result of the need to deal with some potential charges deriving from observations put forward by the Tax Authorities following tax inspections made in previous periods concerning 2005,

21 20 Explanatory notes INglass S.p.A and 2008; at this time the first sentences of the judges have fully confirmed the company s operations. ITEM C) EMPLOYEE SEVERANCE INDEMNITY PROVISIONS (TFR FUND) At the end of the year this item amounted to Euro 543, The following changes were recorded during the year: (in Euro units) 31/12/2012 Opening balance of TFR fund Use for payment of employee severance indemnity or transfer to schemes (78.833) Increase due to appropriations and/or write-ups TFR fund balance The average number of company employees was as follows: White-collar workers Blue-collar workers Managers 4 Total ITEM D) ACCOUNTS PAYABLE D-4) Due to banks : this item amounts to Euro 13,517,045.- (Euro 14,221,321.- in FY 2011) and are predominantly variable rate loans. The company decided to hedge part of the risk resulting from interest rate variations through derivative contracts described in the Memorandum Accounts below. Short-term items for Euro 4,174,884.- comprise exclusively amounts due for mortgage loans falling due during FY 2013, whereas the amount due beyond the next period is Euro 9,342, Debts due beyond five years totalled Euro 899,474.- and are secured by a mortgage on the industrial building owned by the company (residual mortgage at year s end amounted to Euro 2,396,133). Three medium-long term loan agreements, two of which were signed in the previous period, include contract clauses that require compliance with certain economic/financial parameters (covenants) based on the results of the Financial statements as at 31 December of each year. The Financial statements at 31/12/2012 show that the equity and economic ratios defined in the loan agreement were met. D-5) Due to other lenders : this item totalled Euro 1,981,870.- (Euro 1,976,664.- in FY 2011) and is ascribable for Euro 1,540,084.- to a subsidised loan received from MIUR (Italian Ministry for University and Research) for a research project which expires in 2016 and for Euro 441,787.- to a loan from SIMEST S.p.A. for a special development project abroad. The amount due beyond the next financial year is Euro 1,766, D-6) Advance payments : these are down payments received from customers; at year s end they amounted to Euro 3,129,949.- (Euro 1,234,980.- in FY 2011). The geographical breakdown of this item is as follows (amounts in thousands of euro): - EU down payments: Euro 1,535.-; - Non-EU down payments: Euro 1, D-7) Trade payables : trade payables amount to Euro 14,524,905.- (Euro 12,559,697.- in FY 2011) and include debts arising from the purchase of goods and services to be used in the manufacturing process. These items fall due during the next financial year. The geographical breakdown of trade payables is shown below (amounts in thousands of Euro): - Italian suppliers: Euro 13,257.-; - Foreign suppliers: Euro 1, D-9) Payables to subsidiaries : this item amounted to Euro 2,268,115.- (Euro 342,364.- in FY 2011) and refers

22 Explanatory notes INglass S.p.A. 21 primarily to services provided by subsidiaries. For a detailed overview of the item, see the table illustrating relationships with related parties in these Notes. D-10) Payables to associated companies : these are amounts due for marketing services received and totalled Euro 50,306.- (Euro 229,667.- in FY 2011). For a detailed overview of this item, see the table illustrating relationships with related parties in these Notes. D-12) Taxes payable : total taxes payable amounted to Euro 2,007,387.- (Euro 1,988,265.- in FY 2011), entirely due by the end of the next financial year. This item comprises mainly taxes due for the period, net of advances paid, of which Euro 1,163.- thousand for IRES, Euro thousand for IRAP and withholding tax. D-13) Payables to pension and social security institutions : amounting to Euro (Euro in FY 2011) these payables include mainly amounts payable to INPS (Italy s National Institute for Work Insurance) for the December contributions and amounts due to INAIL (Italian National Institute for Work Insurance) that will be paid in the first months of the next period. There are no pending disputes with any social security or insurance institutions. D-14) Other payables : other payables amount to Euro 1,447,358.- (Euro 1,050,637.- in FY 2011). The difference in the item is mainly due to gross bonuses for Euro 514,465.- payable to employees regarding the objectives and economic results achieved in financial year The rest of the item refers to payables to employees for December 2012 salaries and wages settled in January 2013 and to payables for accrued but untaken holiday as of December ITEM E) ACCRUED LIABILITIES AND DEFERRED INCOME Accrued liabilities amount to Euro 100,462.- (Euro 158,930.- in FY 2011) and refer to interest payable on financing and insurance policy adjustments. Deferred income for a total of Euro 58,161.- (Euro 155,817.- in FY 2011) refers to the deferral of part of the research contribution in order to establish a correlation with the depreciation or amortization of assets for which the contribution was granted. ACCOUNTS, COMMITMENTS, RISKS AND OTHER MEMORANDUM ACCOUNTS MEMORANDUM ACCOUNTS These are liabilities arising from financial leasing agreements which were valued taking into account the value of residual fees at year s end, including the agreed redemption price at maturity. Liabilities for sureties and bank guarantees in favour of the company are included. Please note that some of the bank guarantees were issued in favour of the company s customers to guarantee the deposits received from them and their guaranteed performance for a total of Euro 874, As a counter measure to highly variable financial charges, in recent years the company has signed derivative contracts, as follows: - Hedging contracts (interest rate swap - IRS) directly linked to unsecured loan contracts and/or lease contracts in place, whereby the company can take a variable rate and pay a fixed rate; - Contracts to hedge the risk of exchange rate fluctuations regarding specific future supplies. Pursuant to Art bis of the Italian Civil Code, the table below indicates the main elements of the contracts and the fair value of interest rate swaps and currencies, as calculated by the issuer.

23 22 Explanatory notes INglass S.p.A. Type of contract Notional amount as at Difference against market value as at al 31/12/2012 Date of signature Maturity IRS (1.588) 03/07/ /07/2013 IRS (1.980) 05/02/ /10/2013 IRS /02/ /02/2016 IRS (81.317) 27/06/ /06/2016 IRS /10/ /12/2013 IRS (9.201) 15/05/ /05/2019 IRS (13.214) 29/10/ /11/2019 Forward purchases in USD Forward sales in USD Put&Call Options in USD Put&Call Options in CAD /11/ /09/ (21.591) 14/11/ /09/ /07/ /12/ /07/ /09/ Explanatory notes on the main items of the Profit and loss account ITEM A 1 REVENUE FROM SALES AND SERVICES Revenue from sales and services, net of discounts, allowances and bonuses, amount to Euro 66,236, This item can be broken down as follows (amounts in thousands of Euro): - Sales and services Italy: Euro 17,277.-; - Sales and services EU: Euro 31,203.-; - Sales and services non-eu: Euro 17, ITEM A 4 INCREASE IN FIXED ASSETS FOR INTERNAL WORK This item amounted to Euro 1,353,502.- and results, for Euro 656,721.- from the capitalization of costs relative to expenditure on research and development for several new product projects and for Euro 696,781.- from software development costs. ITEM A 5 OTHER REVENUE AND INCOME Other revenue and income amounts to Euro 302, It includes capital gains for Euro 67.- thousand, contingent assets for Euro thousand and Euro 98.- thousand for study and research grants (namely for the MIUR project pursuant to Italian Ministerial Decree 11/07/2006) in the amount of amortization accrued in the period.. ITEM B 6 RAW, ANCILLARY AND CONSUMABLE MATERIALS AND GOODS This item is broken down as follows: