2010 ANNUAL REPORT

(Translation of the 2010 Annual report approved in Italian, solely for the convenience of international readers)

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . TOD’S Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Segment reporting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2010 Annual Report TABLE OF CONTENTS Letter to our Shareholders . . . . . . . . . . . . . . . . Consolidated Statement of changes in equity. . . . . . . . . . . . . . . . . . . . . . . . . Consolidated comprehensive Income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Highlights of results . . . . . . . . . 17. . . . . . . . . . . . . . . . . . . . . . . . . . . . . Group’s activity . . . . . . . . Bank overdrafts and financing . 13. . . . . . . . . 8. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Organizational structure of the Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Consolidated Statement of Cash Flows . . . . . . . . . . . . . . . . . . . . . Group’s organizational chart . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Provisions and potential liabilities and assets . . . . . . . . . . . . . . . . . . . . Highlights of the accounting principles . . . . Investment property . . . . . . Deferred tax assets and liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Business outlook . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other current assets . . . Shareholders’ equity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Assets with indefinite useful life. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Impairment losses . . . . . . . . . . . . . . . . . . . 23. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Foreign currency markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 10 11 12 13 14 15 16 TOD'S Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7. . . . . . . . . . . . . . . . . . . . . . Distribution network as of December 31st 2010 . . . . . . Assets held for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Earnings per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . Significant events occurring after the end of the year . . . . . . . . . . . . . . Inventories . . . . . . . . . . . . . . . . . . . . . . . Key money and Other intangible assets with definite useful life. . . . . 21. . . . . . . . . . . . . . . . . . . . . Financial Statements Consolidated Profit & Loss . . . . . . . . . 12. . . . . . . . . . . . . . . . . . . . . . . . . . . . 20. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Corporate Governance bodies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Table of contents 29 29 29 30 30 31 31 32 39 39 39 40 41 41 44 45 46 48 49 52 52 53 60 62 62 63 63 64 64 65 66 66 68 69 69 71 72 73 76 76 77 78 79 82 82 83 . . . . . . . . . . . . . . . . . . . . . . . . . Group’s brands . . . . . . . . . . . . . . . . . . . . . . . Transactions with related parties. . . . . . . . . . . . . . . . . . . . . . . . . . 14. . . . . . . . . . . . . . . . . . . . . . . Key consolidated financial figures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24. . . . . . . . . . . . . . Corporate Governance . 6. . . . . . . . . . . . . . . . . . . General notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Financial income and expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reserves for employees. . . . . . . . . . . . . . . . . . . . Supplementary notes 1. . . . . . . . . . . . . . . . . . . . . 2. . . 27. . . . . . . . . . . . . . . . . . .IAS/IFRS Annual Report as of December 31st 2010 Report on operations Introduction . . . . . . . . . . . . . . . . . . . 16. . . . . . . . . . . . . . . . . . . . . . . . . . Research and development . . . . . . . 10. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Financial statements formats: choice of form and classification principles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Group’s results in 2010 . . . . . . . . . . . . . . . Personnel costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Derivative financial instruments. . . . . . . . . . . . . . . . . . . . . . . 4. . . . . . . . . . . . . . . . . . . . . . . 26. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Main events and operations during the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Approval of Financial Statements . . . . . . . . . . . . . . . . . . . . . . . Equity investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Alternative indicators of performances . . . . . . . . . . . . . . . . Tangible fixed assets . . . . . . . Reconciliation of the result for the period and net equity of the Group with the analogous values of the Parent Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11. . . . . . . . . . . . . . . . . . . . . . . . . . . Company’s data . . . . . . . . . . . . . . . . . . . . . . . . . . . Consolidated Statement of Financial position. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Hedging of financial risks (IFRS 7) . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . . . . . . . Financial statements format: choice of form and classification principles. . . . . . . . Financial Statements Profit & Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Provisions and potential liabilities and assets . 29. . . . . . . . . . . . . . . . . . . . . 91 91 91 95 96 97 97 98 98 98 99 102 103 104 106 107 110 110 110 117 117 118 118 119 119 120 120 122 122 123 123 125 126 126 129 130 131 132 132 137 137 137 138 139 139 Report of the Board of Statutory Auditors. . . . . . . . . . . . . . . . . . . . . . . . . . . . Deferred tax assets and liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Personnel costs . . . . . . . . . . . . . . . Statement of Cash flow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Information on Share Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Independent Auditors compensation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Motion for allocation of the profit for the year . . . . . . . . . . . . . . . . . . . . . Management and coordination activities. . . . . . . . . . . . . . . . . . . . . . Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inventories . . . . . . . . 8. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15. . . . . . . . . . . 142 Report of Independent Auditors . . . . . . . . . . Tangible fixed assets . . . . . . . . . . . . . . . . . . . . . . 3. . 6. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . and associated companies . . . . . . . . . . . . . . . . . . . 11. . . . . . . . . . . . . . Bank overdraft and financing . . . . . . . . . . . 25. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Corporate Governance . . . . . . . . . 145 5 Table of contents . . . . . . . . . . . . . . . . . . as amended . . 14. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Hedging of financial risks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . and the Consolidated Financial Statements of the TOD’S Group pursuant to Article 81-ter of Consob Regulation no. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24. . . . . . . . . . . . joint ventures. . . . . . . . . . . . . . . . . . . . . . Statement of changes in equity . . . . . . . . . . . . . . . . . . . . . . . . Comprehensive Income. . . . . 10. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .IAS/IFRS Annual Report as of December 31st 2010 Report on operations Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20. . . . . . Shareholders’ equity. 22. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Highlights of the accounting principles . . .p. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86 TOD'S S. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1999. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18. . . . . . . . . . 5. . . . . . . . . . . . 19. . . . . . . . 27. . . . . . . . . Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reserves for employees. . . . . . . . . . . . 2. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other current assets . 13. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Impairment losses . . . . . . . . . . . . . . 17. . . . . . . . . . . . . . . Other current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21. . 26. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Financial assets . . . . 11971 of May 14th. . . . . . . . . . . . . . . . . . . . . . . . . . . . 9. . . . . . . . . . . . . . . . . Certification of the Separate Financial Statements of TOD’S S. . . . . . . . . . . . . . . . . . . . Business outlook . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16. . Statement of Financial Position . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2010 Annual Report Report of Independent Auditors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Research and development . . . . . . . . . . . . . . . . . . . . . . . . . . . Derivative financial instruments. . . . . . . . . . . . Supplementary notes 1. . . . . . . . . . . . Earnings per share . . . . . . . . . . . . . . .A. . . . . . . . . . . . . . . . . . . . . . Alternative indicators of performances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Financial income and expenses . Assets with indefinite useful life. . . . . . . . . . . . . . Transactions with related parties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Investment property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .p. . . . . . . . Significant events occurring after the end of the fiscal year . . . . . . . . . . Operating performances . . . . . . . . . . 23. . . . . . . . . . General notes. . . . . . . . . . . . . . . . Income from equity investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Investments in subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Personal data processing disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

.

.

2010 Annual report Diego Della Valle Chairman and Chief Executive Officer .

2010 was an extremely important year. increasing the ordinary dividend by over thirty per cent. with excellent results in all our markets and product categories. Diego Della Valle Chairman of the Board of Directors 9 Letter to our Shareholders . for your confidence in our company and acceptance of our strategy. with targeted advertising campaigns and special events to promote our Group’s “made in Italy” products. Revenue growth sustained improved profitability. exclusive sponsor for financing restoration work on the Coliseum in Rome.These products are not related to fashion trends. while we continued to invest in advertising and marketing. we recall the collaboration with Teatro alla Scala and the agreement as sole. We decided on a very interesting dividend for shareholders once again this year. Cordially. in addition to the extraordinary dividend paid in October. In December. we maintained close attention and adequate investments in research. The strong and continuous generation of cash leaves the Group with all the resources necessary for continuing its solid growth and expansion on international markets. which is comprised of the 40 most representative stocks on the Italian stock exchange. our customers showed increasing appreciation for our products and their extremely high quality. our stock was included in the FTSE Mib index. Once again this year. instead representing timeless icons. Sales grew at double digit rates. and a solidly positive cash balance. but also due to the visibility that listing has given to our company. We introduced the new “Tod’s Home” concept at leading Tod’s brand boutiques: the stores are furnished like a real home. As always. and to you shareholders. whose commitment is the foundation for our success. further reinforcing our dedication to rigour. marking the tenth year of listing. From a strictly financial point of view. we invested the resources necessary both for opening new boutiques and for continuous updating of the image of existing shops. major recognition for the solidity of our Group.The overall result of this experience has been positive. In this regard.2010 Annual Report Letter to our Shareholders Dear Shareholders. not only due to the strong appreciation of our stock price from the listing price of 40 euros. In an operating context that had improved from 2009 but which had not yet returned to normal. I would like to express my sincere appreciation to all Group employees.We obviously extend our gratitude to all our supporters and loyal customers. customarily high quality receivables. To support brand development. where customers can feel like welcome guests in an extremely friendly environment that best expresses Tod’s values: quality. The company’s location in the renowned Italian high-quality shoe district helps us recruit highly qualified personnel. discipline and managerial skill. tradition and exclusivity. Our Group has an extremely solid financial situation: a well-balanced inventory management. Our Group achieved excellent results once again this year. through our customary focus on costs and a lean production organisation in a perfect marriage of artisanal culture and efficiency.

Maria.Italy Tel. Kangnam-ku Shanghai . 2 Hong Kong . 1 63811 Sant’Elpidio a Mare (Fermo) .Via Serbelloni 1-4 Milan . Loc. 5-1-5 Jingumae Comunanza (AP) .p. 20 Seoul 89-10.Via della Spiga.Vallina (FI) . 30 Milan . 2-4-6 Sant’Elpidio a Mare (FM) .Viale Montenero 63 New York . 7 Comunanza (AP) . 1 Queen’s Road East London .Via del Roseto.Via Savona.Corso Venezia. Cheongdam-dong.Kaistrasse.Via S. 114030 R. Offices and Showrooms Dusseldorf . 1 Bagno a Ripoli.Via Filippo Della Valle. 60 Bagno a Ripoli.2010 Annual Report Company’s data Registered office TOD’S S.E. Via Filippo Della Valle.Old Bond Street.Via Merloni.Three Pacific Place.A.802 Share Capital subscribed and paid euro 61. +39 0734 8661 Legal data Parent company Share Capital resolved euro 61.218.218.A. 56 Milan . 22 Milan . 50 Tolentino (MC) .Via del Roseto.450. Plaza 66 Tower 2 Tokyo Omotesando Building. 16 Milan .West 15th Street Paris Rue Royale. Loc.Via Sacharov 41/43 Production facilities 10 Company’s data .802 Fiscal Code and Registration Number on Company Register of Court of Fermo: 01113570442 Registered with the Chamber of Commerce of Fermo under n.Vallina (FI) .1366 Nanjing West Road.

A.2010 Annual Report Corporate Governance bodies Board of directors (1) Diego Della Valle Andrea Della Valle Luigi Abete Maurizio Boscarato Luigi Cambri Luca Cordero di Montezemolo Emanuele Della Valle Fabrizio Della Valle Emilio Macellari Pierfrancesco Saviotti Stefano Sincini Vito Varvaro Diego Della Valle Andrea Della Valle Fabrizio Della Valle Emilio Macellari Stefano Sincini Vito Varvaro Luigi Abete Luigi Cambri Pierfrancesco Saviotti Maurizio Boscarato Luigi Cambri Pierfrancesco Saviotti Luigi Abete Luigi Cambri Pierfrancesco Saviotti Enrico Colombo Gian Mario Perugini Fabrizio Redaelli Massimo Foschi Gilfredo Gaetani Deloitte & Touche S. auditor Substitute auditor Substitute auditor Indipendent Auditors (3) Manager charged with preparing a company’s financial report (1) (2) Rodolfo Ubaldi Term of the office: 2009-2011 (resolution of the Shareholders’ meeting as of April 20th 2009) Term of the office: 2010-2012 (resolution of the Shareholders’ meeting as of April 22nd 2010) (3) Term of the office: 2006-2011 (resolution of the Shareholders’ meeting as of April 28th 2006) 11 Corporate Governance bodies . auditor Acting stat.p.Chairman Executive Committee Chairman Compensation Committee Chairman Internal Control and Corporate Governance Committee Independent Directors Committee Chairman Chairman Board of statutory (2) Auditors Chairman Acting stat. Chairman Vice.

Usa Inc. and manages of DOS in New Jersey (USA). Company that operates DOS in Nevada (USA). Cal.r. TOD’S Deutschland Gmbh Company that distributes and promotes products in Germany and manages DOS in Germany. Colo. TOD’S UK Ltd Company that operates DOS in Great Britain. Inc. Company that operates DOS in California (USA). Del. Company that operates DOS in Italy. Company that operates DOS in Illinois (USA). TOD’S Singapore Pte Ltd Company that operates DOS in Singapore. Neva.Se. Parent Company. Company that distributes and promotes products in North America. TOD’S Korea Inc. Or. SA Company that operates DOS in Switzerland. Production company. Del.r. Del. TOD’S Belgique S.Del. Real estate company Sandel SA Not operating company. Not operating company. Usa Inc.k. TOD’S International B.l. Subholding for operation of subsidiaries in the United States. Subholding for operation of international subsidiaries and DOS in Italy. TOD’S Japan KK Company that operates DOS in Japan.l.A. Kft Production company.p. Webcover Ltd Company that distributes and promotes products in Great Britain and manages DOS in Great Britain.p. Usa Inc. HOGAN and FAY brands and licensee of the ROGER VIVIER brand. TOD’S Retail India Private Ltd Company that operates DOS in India. S. An. Deva Inc. Company that operates DOS in Italy. Company for services. 12 Composition of the Group . TOD’S Tex.Del.Pav S.r. Usa Inc. Company that operates DOS in Texas (USA). Il. Subholding for operation of international subsidiaries and DOS in The Netherlands. Gen. Usa Inc. TOD’S Macao Ltd Company that operates DOS in Macao. Re.A. Company that promotes products in Korea.r. Flor. Company that operates DOS in Belgium. owner of theTOD’S.l. TOD’S Saint Barth Sas Not operating company. Company that operates DOS in California (USA). Del.Com. Company that operates DOS in Florida (USA).l. TOD’S (Shanghai) Trading Co. Usa Inc.Del. Hono. TOD’S Espana SL Company that operates DOS in Spain. Del.V. Usa Inc. TOD’S Hong Kong Ltd Company that distributes and promotes products in Far East and South Pacific and manages DOS in Hong Kong. Del. Filangieri 29 S. S. Holpaf B. Del.r. Inc. Del. Company that operates DOS in Luxembourg.Del. Ltd Company that operates DOS in China. TOD’S France Sas Company that distributes and promotes products in France and manages DOS in France. Del.V.del. Alban.p.2010 Annual Report TOD’S Group TOD’S S.Del Sh. Company that operates DOS in Hawai (USA). Un.l. TOD’S Luxembourg S.

Inc. SA Zurich .Usd 10. Beverly Hills.Usd 10.000 Deva Inc. Carson City.Usd 500.S.India S.000 100% 100% 100% 100% 100% 100% 100% 100% Del.A. S.000 Cal. S.000.000 Flor.Del.Del Kft Tata .l. Honolulu.r.A.DEL Sh.000 100% 100% 100% 100% 90% 50% 1% 99% 100% An. Elpidio a Mare .000 Neva.C.C. S.C.200 100% 100% ALBAN.k Tirana . S.C. .000 TOD’S Belgique S.000 50% 100% TOD’S France Sas Paris . Inc.A. Ca U.S. Hi U.000 50% 99% 100% TOD’S (Shanghai)Trading Co. S.A.Great Britain S. Wilmington.539. .000 TOD’S UK Ltd London .900.C.C.C.C.C.000 100% 100% 13 Composition of the Group .Korea S.Switzerland S.Euro 5.C.Usd 10. Tallahassee.C. .Gbp 1.Euro 468. Epidio a Mare.000 1% TOD’S Hong Kong Ltd Hong Kong S.A.Usd 10. .Com S.000.Euro 2.000 100% 100% Colo.000 TOD’S Saint Barth Sas Saint Barthélemy S. DE U.r.56 Holpef B.000.200 50% 100% Re. USA Inc.C.600.Italy S. USA Inc.A S. .Euro 500. USA Inc.C.C. USA Inc Denver.Del.000.C.Del. .The Netherlands S.Usd 3.600.p. Epidio a Mare.S.000 100% TOD’S Espana SL Madrid . .Se. Nv U. S. Fl U. S. . . Chf 200.550. Ca U.Germany S.Hungary S. Del. S.p.A.C.p. .S.C.Del. S.C.Ltd TOD’S India Retail Private Ltd 100% 50% 1% Shanghai . .000 Il. .France S.C.000 TOD’S International BV Amsterdam .C.C.C.S. Euro 31.r.Gbp 350.000 Sandel SA San Marino S.A.Sgd 300.V.l. .Spain S.l.A.Italy S. .Great Britain S.000 100% 100% Webcover Ltd London .Euro 153. . Il U. Inc. USA Inc.Euro 100.C.000 TOD’S Luxembourg S.C.000 S. Mop 20. Bruxelles . Luxembourg S. . .A.China Mumbai . .000 TOD’S Singapore Ltd Singapore S.000 Hono. Amsterdam .900. Co U. S. Sacramento.C.Jpy 100.000.000 Filangieri 29 S.Won 1.Del.l. .A. . . New York U. INR 113.l. Springfield.Italy S.387.The Netherlands S. . 100% Gen.Usd 16.Del. .Del.Belgium S.Euro 50.Euro 258. USA Inc.A.Del.C. S.000 TOD’S Deutschland Gmbh Dusseldorf .r.S.000 TOD’S Tex.Del. S. S.Euro 780.000 TOD’S Macao Lda Macao S.Usd 10. .Italy S.Japan S.C.Euro 25.S.700. .Euro 31.C.Euro 720.000 10% Un.Usd 10.000 Or. Elpidio a Mare .Euro 300.Usd 10.C.77 TOD’S Korea Inc Seoul .Huf 42.C. S.S.C.Del.S. .Pav.Tx U. .S. S. USD 6.Albania S.C. .r.2010 Annual Report Group’s organizational chart TOD’S S.C.000 TOD’S Japan KK Tokio . Usd 10.000 Del.C.C. Dallas.

com 14 Distribution network .2010 Annual Report Distribution network as of December 31st 2010 EUROPE Italy Belgium France Germany Great Bretain Greece Luxembourg Netherlands Portugal Russia Spain Switzerland Turkey TOTAL (D) 40 1 11 9 5 1 1 1 2 1 1 17 (F) 6 1 5 USA USA (D) 14 (F) 1 3 72 RoW Saudi Arabia Baharain U. 2010 new openings Middle East Kaohsiung (Taiwan) For a complete list of retail outlets operated by the DOS and franchising network.todsgroup. 2010 new openings Europe Capri Milan Milan Rome Ingolstadt Far East Seoul Osaka Tokyo Tokyo Tokyo Chengdu Fuzhou Hangzhou Shangai Shenzhen (Italy) (Italy) (Italy) (Italy) (Germany) (Korea) (Japan) (Japan) (Japan) (Japan) (China) (China) (China) (China) (China) Franchised stores. Kuwait Lebanon Qatar TOTAL (D) = DOS (F) = FRANCHISED STORES (D) (F) 2 2 5 2 2 1 14 ASIA Japan China Korea Philippines Hong Kong India Indonesia Macau Malaysia Singapore Taiwan Thailandia Usa TOTAL (D) 30 22 8 8 2 1 2 (F) 1 4 7 2 1 3 1 2 1 14 3 1 40 73 DOS.A. reference should be made to the corporate web site: www.E.

8 122.0 Shose 71. 09 373.8% RoW 18.4 20.3 Dec. 12.7% 86.2 21.7 22.Current Liabilities 2010 Revenues .7% 126.2 Leather goods 15.0 17. 31st.0% 126.4 17.7% 110.4 17.7 363.8 169.7% 2010 Revenues .0% (*) Current Assets .8 298.6) 116.2% 126. 31st.8 154.4 297.4 96. 31st.2 618.5 96. 10 Net working capital Net fixed capital Shareholders’ equity Net financial position Capital expenditures (*) Dec.5 89.6 22.1 158.8% 125.8% Europe 20.1 12. 31st.% by brand Roger Vivier 2.1% FY 08 707. 31st.7 602.8 14.4 659.7% 15 Key consolidated financial figures .4% HOGAN 34.8 40.2 309.6 72.8% P&L key figures (Euro mn) FY 10 Revenues EBITDA EBIT PRE TAX PROFIT Net income 787. 08 (2. 08 308.2 Dec.5 193.7) 144.9 177. 09 102.3% 163.6 155.7% 83.6% Self financing Cash flow from operation (44.2010 Annual Report Key consolidated financial figures 2010 Revenues . 31st.1 24.9 20.5 17.9% FAY 11.1% TOD’S 51.% by product Financial key figures (Euro mn) Dec. 10 Dec.% by region North America 6.1% FY 09 713.1 Italy 54.4% Key Balance Sheet figures (Euro mn) Dec.5% 159.6% Free cash flow Appar.9 11.

up 28.7% from 2009 (158.4% and 8.The DOS network had sales of 403.8 Revenues (Euro mn) 787. rate basis FY 10 FY 09 FY 08 EBITDA (Euro mn) 186.6%).4 126. with growth of 33.7 million euros). FY 10 comp. 773. for growth of 10.1 158.9 126.8 Distribution network: a total of 15 new DOS were opened during the financial year: at December 31st 2010 the single brand distribution network comprised 149 DOS and 78 franchised stores.8 million euros on a comparable exchange rate basis. free cash flow (*) FY 10 FY 09 FY 08 (*) gross of dividends 16 Key consolidated financial figures .9 million euros (126.7 155. FY 10 comp. Net profit: consolidated net profit for FY 2010 was 110.1 million euros were spent in 2010.8 million euros.5%.6% from 2009.5 million euros.5%).4 159. rate basis FY 10 FY 09 FY 08 Capital expenditures: 96. ex.5 million euros (net of dividends paid for 153 million euros). NFP (Euro mn) 177. 773.7 million euros in liquid assets at December 31st 2010. ex.The ratio of EBITDA to sales rose to 24.5 million (+26.5%.2 108.1 million euros. ex.1 707.5 72. including 66.9 193. as compared with 2009 revenues.8 million euros (+15.The net financial position at the same date was 96.0 Net financial position (NFP): the Group had 171.3 million euros for the real estate purchased in Tokyo. FY 10 comp. rate basis FY 10 FY 09 FY 08 EBIT (Euro mn) 154.6 EBIT: this totalled 159.2010 Annual Report Highlights of results Revenues: 2010 revenues of 787.5 713.3 96. respectively.4 million euros in 2009).6 EBITDA: this totalled 193. up 21.

265.96 1.71 euro 75.2010 Official price at 12.00 65.2010 Minimum price in 2010 Maximum price in 2010 Market capitalization at 01.00 45.2010 Market capitalization at 12.626 2.2010 Annual Report Main Stock Market indicators (Euro) Official price at 01.421 BLC 34% EX 1% Year to date Average EX = executives WHC = white collar employees BLC = blue collar employees 3.2010 Extraordinary Dividend 2010 per share Dividend per share 2009 Dividend per share 2008 Number of outstanding shares 51.100.401 Earning per share (Euro) 3.11 84.00 55.698 FY 07 2.00 35.00 85.194 3.840 2.25 30.098 WHC 65% 17 Key consolidated financial figures .50 1.30.02 45.472 2.04.829 FY 08 2.567.04.30.80 Stock performance 95.50 1.00 2.00 January-December 2010 FY 10 FY 09 FY 08 2010 Group’s employees The Group’s employees FY 10 FY 09 2.675.609.56 2.814 2.20 74.722 3.

[THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK] 18 2010 Annual Report .

.

.

.

TIMEACTIVE .

HOGANWORLD.COM

FAY.COM

FAY.COM

.

TOD'S GROUP – IAS/IFRS ANNUAL REPORT AS OF DECEMBER 31ST 2010 .

REPORT ON OPERATIONS .

The firm’s mission is to offer global customers top-quality products that satisfy their functional requirements and aspirations. which enables it to exploit their respective specializations in crafting the individual products sold as part of the apparel line. It is also clear that. produces and distributes shoes. The Group’s strategy is focused on development of the DOS and franchising networks. Note that on the one hand. which are an integral part of the 2010 Consolidated Annual Report. given that these channels offer greater control and more faithful transmission of the individual brands. as well as all subsequent notices containing provisions regarding financial disclosures. from creation of the collections to production and then distribution of the products. IAS/IFRS refers also to all revised International Accounting Standards (IAS) and all interpretative documents issued by the IFRIC (International Financial Reporting Interpretations Committee). in particular 29 Report on operations .Group 2010 Annual Report Introduction The Report of the Board of Directors on Operations is based on the TOD’S Group Consolidated Financial Statements at December 31st 2010. Development of production. EBITDA and EBIT) have been recalculated by applying the average exchange rates for 2009. pursuant to the orders issued in implementation of Article 9 of Legislative Decree 38/2005 (Resolutions 15519 and 15520 of July 27th. must not be considered as substitutes for what is set out in those standards. financial or organisational indicators of material uncertainties. previously nominated Standing Interpretations Committee (SIC). and apparel. Distribution structure. Shoes and leather goods are produced in Group-owned plants. rendering them fully comparable with those for the previous reference period. and on the other hand. with a significantly high level of added value contributed to the final product by manual work. All of these outsourcers are located in areas with a strong tradition of shoe and leather good production. This approach is considered key to assuring the prestige of its brands. these principles for measurement of business performance represent a key to interpretation of results not envisaged in IFRSs. Group’s activity The TOD’S Group operates in the luxury sector under its proprietary brands (TOD’S. with partial outsourcing to specialized workshops. HOGAN and FAY) and licensed brands (ROGERVIVIER). prepared in accordance with IAS/IFRS (International Accounting Standards – IAS. The Report on Operations also includes the additional information required by CONSOB. The Report on Operations must be read together with the Financial Statements and Notes to the Financial Statements. Alternative indicators of performances In order to strip the effects of changes in exchange rates with respect to the average values for the previous year from the results for the 2010 financial year. franchised retail outlets. as defined in paragraph 25 of IAS 1 on business continuity. The Group’s production structure is based on complete control of the production process. liability. 2006 and memorandum DEM/6064293 of July 28th 2006). Accordingly. The Consolidated Financial Statements have been prepared on the assumption that the Group can operate as a going concern. and International Financial Reporting Standards –IFRS) issued by the IASB and approved by the European Union at the same date. the typical economic reference indicators (Revenues. leather goods and accessories. the Group relies principally on three channels: DOS (directly operated stores). The Group relies exclusively on selected specialized outsourcers. and a series of selected.The Group believes that there are no asset. This preference reflects the fact that an extremely high standard of professional quality is required to make these items. The prestige of the Group’s brands and the high degree of specialization necessary to offer the respective products to customers entails distribution through a network of similarly specialized stores. independent multibrand stores. It actively creates.

functional and never ostentatious. its parent company that owns the TOD’S. accessories and apparel whose design is exclusive. Some of its models are best sellers. TOD’S products embody the high quality of goods “Made in Italy” that are handcrafted for daily use while offering a sophisticated and elegant look. the Ballerina and the D-Bag. Certain of them. HOGAN and FAY brands. and public relations processes along the “value chain”. and from the city to the countryside. This channel is of key importance to the Group. leather goods. distribution through independent multibrand stores is more efficient. top quality and modernity. Organizational structure of the Group The Group’s organisational configuration rotates around TOD’S S. while simultaneously guaranteeing the uniform image that Group brands must have worldwide. such as its Interactive shoes. which are distinguished by their innovative character and high quality.Through a series of sub-holdings. holds the licenses to the ROGER VIVIER. Certain products. 30 Report on operations . obsession for detail and extreme functionality. In every season. This brand offers consumers a line of high-quality apparel that is distinguished by the technical treatment of fabrics. the FAY collection offers innovative. women and children. but also sporty and elegant product for everyday life. strategically located on international markets. recognisable products for men. accessories and apparel with an international vision. are assigned major roles in product distribution.Group 2010 Annual Report market situations. have created a unique style. It offers consumers shoes. FAY products can be worn everywhere: from the sports stadium to the office. the organisation is rounded out by a series of commercial companies that are delegated complete responsibility for retail distribution through the DOS network.A. marketing and promotion. Group’s brands The TOD’S brand is positioned on the luxury market and combines tradition.p. beloved by celebrities and leaders around the world. HOGAN products are trend-setters in defining an elegant and sporty look. HOGAN products. have become icons representing a unique and recognisably elegant style for men and women The HOGAN brand is positioned in the elegant luxury sportswear market. and manages the Group’s production and distribution. comfortable. leather goods. offering consumers contemporary style shoes. contributing to changes in the fashion habits of consumers who want a functional. such as the Gommino. combining style and quality with excellence. interpreting timeless elegance. that is at the heart of the Group’s organisation.

aside from the outlays indicated above.5 12. was indirectly controlled by Diego Della Valle & C. The building’s distinctive architecture represents an important tool for promoting the visibility of the TOD’S brand in Japan and on Asian markets.2 billion. Ten years after the first direct investment through its own operating organisation. as the headquarters for its administrative offices and location for the most important TOD’S flagship store in Japan. and controlled by Diego Della Valle. In financial terms. This building has been used entirely by Tod’s Japan K.7 million euros.A. with the positive effects (stemming from replacement of the lease instalments with depreciation of the building) being limited to just one month (December 2010). As compared with the average exchange rates with major currencies for FY 2009.The fair value of the land and building at December 31st 2010 was 41. FY 2010 was dominated by the steady weakening of the euro against other major global currencies. the Group decided to consolidate its presence in the Asia-Pacific region by purchasing the building.3 million euros at the year-end exchange rate).6 million euros for reimbursement by Holpaf B. approved by the Shareholders’ Meeting held on September 21st 2010. 31 Report on operations .0 9. the changes in the Korean won and Japanese yen were particularly significant.Group 2010 Annual Report Foreign currency markets Especially in the first half of the year.1 million euros for the transfer of shares and 20. at the rate of 3.V. The impact of the deal on the overall net financial position at December 31st 2010 was about 63.p.V.1 3. the two bonds issued in 2006 by Holpaf B. SAPA.7 12.7 4. the Group purchased the building in Tokyo (whose market value was appraised at JPY 7. since 2005. This mainly reflected. The impact on 2010 income was immaterial. of which about 2.9 CHF GBP HKD JPY KRW SGD USD Main events and operations during the period Purchase of Omotesando building.. the Japanese market now represents one of the drivers for the Group’s strategy to consolidate and develop its business throughout the Asian and South Pacific areas. paid out an extraordinary dividend.2 million euros. or about 66. the parent TOD’S S. the impact of acquisition of Holpaf B.1 million euros. to refinance the original purchase of the land and construction of the building that the Group has taken over. of a shareholder loan made by the previous owner.V. the holding company that constructed the building and owns it.8 4. on the Group’s cash position was about 22. Payment of extraordinary dividend.50 euros per share.V.0 million euros.K. a company belonging to Diego e Andrea Della Valle. Average exchange rate 2010 vs 2009 (change %) 18 16 14 12 10 8 6 4 2 - 15.V. for a total of 107.The decision was based on an assessment of the prospective purchase on the income and financial position of the company as compared with a property lease arrangement. This deal is classifiable as a related party transaction. In November 2010. On October 14th 2010. No longer needing the operating flexibility that characterised the start-up phase of the business. insofar as Holpaf B.The purchase was made through acquisition by the Group of the entire share capital of Holpaf B.

2 17.0 32.700) 773.7 31.1 million euros in 2009 to 787.704 28.9 60. but above all the Group’s consolidated capacity to manage and generate cash.These conditions allowed it to pay out surplus cash to the shareholders without compromising the Group’s equity. Development of Chinese market.500 186.205) 126.7 22.5 17.4 million euros.352 110.The excellent earnings results.786 (13. up 28.8 million euros.8 million euros on a comparable exchange rate basis).807 24.406 (910) 33.839 7. Adjusted EBIT EBITDA % EBIT % Adjusted EBITDA % Adjusted EBIT % Tax rate % Year 10 787. topped only by the Italian and Japanese networks..135 158. Revenues during the year grew by 74.5 29. Group’s results in 2010 The Group performed outstandingly in FY 2010. both by the Group and the entire luxury goods segment.444 24. the first store opened by this brand in China).5 20.& amort..4 21. EBIT 126.9 million euros.539 193.6 713.140 Change 74. or realisation of its growth targets and implementation of planned investments. EBITDA and EBIT totalled 193. With the five new DOS that opened (including the ROGER VIVIER boutique in Shanghai.996 8.4 million euros). amort. Net profit rose sharply: consolidated net profit was 110.5 million euros in 2010 (773.115) 159. were generated by development processes affecting all business segments and markets where the Group operates. the singlebrand network in China totalled 28 retail outlets at December 31st 2010.6% from the 86.135 158.206 27.1 million euros and 159.3 24. from 713.059 (33.545 86. respectively (FY 2009: EBITDA 158.448 22. in addition to the ordinary dividend totalling 45.8 22.496 36.646 % 10. FY 2010 was a very important year for consolidation of the Group’s presence in mainland China.7 2.8 26.448 126. all of which grew at double-digit rates.2 17.653 (32.1 20.653 126.Group 2010 Annual Report This payment.1 32 Report on operations . Growth as measured by operating margins was even stronger. was made in consequence of the large amount of cash on hand.7 million euros.9 million euros resolved by the Shareholders’ Meeting held to approve the 2009 annual report.1 28. financial position and income.944 163.404 34.1 million euros reported in FY 2009.write-downs and advances EBIT Pre-Tax Consolidated net profit Foreign exchange impact on revenues Adjusted Sales revenues Foreign exchange impact on operating costs Adjusted EBITDA Foreign exchange impact on deprec. which has recently confirmed its position as a strategic market for the development of business.859 700 154.2 Year 09 713. Euro 000’s Main economic indicators Sales revenues EBITDA Deprec.

0 54.5 million DOS 403.819 (19. HOGAN brand revenue totalled 268.786 (147.5 15. The TOD’S brand reported excellent results.5% in Q3 2010 and 700 +16. 33 Report on operations . Excellent results were reported for all product categories and in all markets where the Group operates.752) 482.441 96.8 51.492) 74.4% from the previous year.933 21.310 154.Group 2010 Annual Report Euro 000’s Main Balance Sheet Indicators Net working capital (*) Non current assets Other current assets/liabilities Net assets held for sale Invested capital Net financial position Shareholders’ equity Capital expenditures Cash flow from operations Free cash flow 12.9 5.7 363. or 12.7 million euros.928) 521.186 (33. Results were also positive in Italy.6%.1% in Q4 2010.5% 300 from the previous year.176) 39.3 million euros in FY 2010. On a comparable exchange rate basis. DOS 200 DOS In FY 2010.4 10. Growth during the year was 15.09 200. WS using the same average exchange 500 DOS rates for FY 2009.0 74.5 100. up 16. Growth was 27. or 51.688 363. up 4. i.495 618.70% 600 comparable exchange rate basis.837 Change (7.3 349.545) (*)Trade receivables + inventories . On a WS WS 48.2% in FY 2010.946 96. Excellent results were FY 10 FY 09 reported on the entire DOS network. the Group’s distribution network was comprised by 159 DOS and 71 franchised stores.129 297.4% from FY Third parties (WS) 383. Total revenue in the direct channel was 403.4% in 800 Q2 2010. calculated as the worldwide average of revenue growth rates reported at the DOS existing on January 1st 2009 with comparable data.067 168. was an outstanding 13% for all of FY 2010.3% in Q4 2010 alone.7% from FY 2009.441) 65.8 51.7 48. compared with 149 DOS and 78 franchised stores at December 31st 2009.8 million euros. Group consolidated (Euro mn) FY 10 % FY 09 % Change % revenues totalled 787.3% of Group sales.164 102.5 2009.3% total 773.3 49.6 euros in FY 2010.202 (80.0 19.2% on a comparable exchange rate basis.744 177. up 8.189 659.694) (41.708) 12. revenues would 400 51.367 (14.757 14.950 (44.1 100.4 continuously over the course of the 900 year: +3.31. At December 31st 2010.4% in Q1 2010.0 713.The Same Store Sales Growth (SSSG) figure. up 10.trade payables Revenues. Revenue growth accelerated Total 787.5% 0 from 2009. the brand posted growth of 13. +15. up 5.31.10 192.8 million euros. revenues to third parties 100 totalled 383. +7. with revenue of about 407 million euros in FY 2010.e.

6% from FY 2009.8 % 48.s. against 91.1 100.1 0. (Euro mn) TOD’S HOGAN FAY ROGER VIVIER Other Total FY 10 407.7 34. Finally. among other initiatives. apparel revenues totalled 99. Revenue totalled 564. confirming in Q4 2010 the positive results generated the start of winter collection sales.5 11.6 million euros.0 RV 2.8 % 51. +16% in Q3 2010).5 100. the Group confirmed its uncontested leadership in its core shoe business. up 4.4 95.5 100.0 12.1 11.1 100.6 million euros in FY 2009.8 256.7% 300 200 100 0 713.This category posted double-digit sales gains in FY 2010.2 million euros.7 0.2 99.0 74.1 0.6 12.4 2. The total revenues for leather goods and accessories in FY 2010 totalled 123.3% from the previous year.2) 6. the ROGER VIVIER brand reported revenue of 21.0 45. up 11. in view of reinforcing its image on foreign markets through.1 million euros in FY 2010.4 % 16.9) (2.3% from FY 2009. insofar as it is still in the phase of launching and consolidating its exclusive cachet and prestige. Finally.4% 900 800 700 600 500 400 TOD’S 51.6 4. up 10.9 36.8 4. collaboration with the renowned designer Karl Lagerfeld and the opening of the first DOS in Shanghai.1 FY 09 348.1 111.7 21.3 n. being propelled by the excellent results of the entire TOD’S brand collection of handbags and accessories.Group 2010 Annual Report The brand is reorganising its international presence.9 91.4 RV FAY RV FAY HOGAN HOGAN HOGAN 34.6 15. 787.6 % 71. Leather good revenues also accelerated dramatically (+35% in Q4 2010.6 0.1 Change 58.7 15.0 900 800 Apparel 12.7 0.6 10.1 Change 58.6 13.9 2.6% Shoes 71.0 % 11.3 89. analysis of the results generated by this brand is not yet entirely significant.0 74.0 268.6 123. The FAY brand reported revenue of 89.7 4.7% FAY 11. up 45.3 0.4 10.7 million euros in FY 2010.7 0.6% from the previous year.0 0. (Euro mn) Shoes Leather goods Apparel Other Total FY 10 564.7% 500 400 300 200 100 0 FY 10 Shoes Shoes FY 09 34 Report on operations .s.4 10.0 15.3 n.6% 700 600 713.1% TOD’S TOD’S FY 10 FY 09 At the level of individual merchandise categories.7 million euros in FY 2010.0 0.As has been said on numerous occasions before.4 (1.4 Apparel Leather goods Apparel Leather goods Leather goods 15. 787.1 0.6 % 71.1 FY 09 506.2 11.

2% of sales. Sales went into overdrive in this area as well during Q4 2010 (+65% in Q4 2010. On a comparable exchange rate basis.5% in Q3 2010).8% big jump in sales (+23% in Q4 2010. which guarantees higher profits than shoes. being tied to growth in the contribution made to overall sales by leather goods. resulting from the streamlining of industrial processes. Aside from the changes in foreign exchange rates compared with the previous year (less than approximately 2 million euros on a comparable exchange rate basis). the incremental costs were mainly due to the new opening of DOS in 2010 and the growth in the variable component of leases and rents tied to sales performance.4 193. Group EBIDTA leapt forward.0 from the previous year.8 30.6 33.1 million euros. EBITDA amounted to 24.6 million euros in FY 2010. On a comparable exchange rate basis. Hong Kong. with the 900 Group posting total sales of 163. ex.1 million euros in FY 2010. up 230 basis points from FY 2009.5% in 2010. The expense during the period for leases and rentals (leases for use of locations outside Italy.6% in FY 2010. Growing revenues had an especially significant impact on profit margins. 35 Report on operations .as well as a qualitative component that was more heavily impacted in 2010 than in 2009 by full-price sales rather than promotional sales.5 100.5% of consolidated 186.7 18.9 revenues.2% in 2009 to 7.1% of sales.7%. lease and rental expenses.0 74. from 158.4 million euros). Italy 425.5 The results reported for the rest of Total 787. with growth of 15% from 0 FY 10 FY 09 the previous year. +25% in Q3 2010). EBIDTA would be about 186. rising steadily during the year in support of continuous sales growth.5 7.The “Asia and Rest ofWorld” area reported excellent results. when it was 22.7 54.7 million euros.8% North Am. Italy 300 54. up 30. personnel expense. with revenue of 144.7 21. which experienced a Europe 20.4 6.1 with Italian revenues totalling 425.7 million EBITDA (Euro mn) euros in FY 2009 to 193. and royalties for use of licenses) totalled 58.1 100. 158.5% from 2009.7 million euros.0 8. or 24.The impact of comp.9 15.8 20. rates basis the product mix is also positive. and marketing and communication expenses were up slightly. Operating results. for a change of 34.0 405.8 150. Industrial margins were also positively impacted by high production efficiency. or +21.4 10. Taiwan and South Korea were particularly outstanding. Sales in FY 2010 were characterised by the significant weight of the like for like component. 400 +13. The percentage of these costs in terms of revenues thus rose from 7.2% in FY 2010. this market grew by 10. On the contrary.Group 2010 Annual Report The Group’s strength on the (Euro mn) FY 10 % FY 09 % Change % domestic market was confirmed. or with application of the average cross rates for the previous year.9 million euros.0 713. and by FY 10 FY 10 FY 09 the revenues realised on higher-profit markets (especially Asia).3 million euros from 2009 (when it was 51.7 Europe 163.7 On a comparable exchange rate basis.6 5.0% Aggregate Group revenue on this Italy Italy 200 market totalled 53.8 46. 600 North Am. the brand posted growth of 21.1 13. Excellent results 6.4 6.The results posted by China.7 RoW 800 North million euros. were also reported on the United Europe Europe 500 States market.0 15. up 5. up 8.1% North America 53. resulting from the steep rise in revenues in Asia.4 110. RoW 144.6% from the 18.4 Europe were also positive.7 20.1 56. for a change of 7.4% RoW America 700 RoW previous year.4 million euros in 100 FY 2010.

EBIT amounted to 159.1% of Group revenues.Wages and salaries totalled 117.194 employees. mainly due to the positive 2. By including the effect of foreign exchange risk hedging (negative 1.194 2. as compared with 31.5% increase. amortisation and depreciation equalled 4. rates basis FY 10 FY 09 Net financial income was a positive 3. GROUP’S EMPLOYEES 3. EBIT in 2010 was equal to 20. the total balance of foreign exchange gains and losses was still a positive 1.840 employees at that date). ex.5 million euros.4 million euros.5 1.4 million euros in 2009).3% of consolidated sales (FY 2009: 17.3 million euros in the previous year.1% in 2009. representing 20. EBIT (Euro mn) 154. compared with 107.4 159. FINANCIAL INC/EXP.814 2.At December 31st 2010. This cost is equal to 15.5 million euros. Depreciation costs were substantially the same as in the previous financial year. depreciation and impairment for FY 2010 totalled 32.4 Other Foreign exch. the Group had 3. Accruals for doubtful accounts and generic risks totalled 1. On a comparable exchange rate basis.5 36 Report on operations . greater than the increase in EBITDA. EBIT during the period would have been 154. gains & losses Net interests -0.4 million euros in 2010.1 million euros.9 million euros (126.5 million euros difference in net foreign exchange gains. At December 31st 2010. This represented a 26.9 million euros).4 FY 10 comp.0 million euros. 354 more than at December 31st 2009 (2. Amortisation.0% of Group revenues (15.8 million euros. Interest income accrued on cash and cash equivalents totalled 2.4% in the previous year.0 million euros in 2009.5 million euros in absolute terms. for an increase of 10.840 2.472 FY 10 FY 09 FY 08 FY 07 Benefiting from this recovery in marginal costs. as compared with 4.0% of consolidated sales. for growth of 33.7%). (Euro mn) 2. Most of the employees who were newly hired during 2010 were used to build up the Group’s production organisation and operate new retail outlets.1 million euros.Group 2010 Annual Report The change in personnel costs is related principally to the increase in headcount.9 126.

as compared with 21. which was bought in 2010.3 million euros in 2009.2 30.1% FY 10 FY 09 FY 08 FY 07 Capital expenditure.This figure includes 66.2% 31.The tax rate was 32. Net of this asset.3 million euros for the building in Tokyo that houses the head office of the subsidiary TOD’S Japan and the flagship store in Omotesando. Tax Rate 37. when it totalled 86. Tangible & Intangible assets Capital expenditures (Euro mn) 96.1% of consolidated revenues.9% 33. 69% 37 Report on operations . from 10. Capital expenditures totalled 96.Group 2010 Annual Report Income taxes owed for the period (including the effects of deferred taxes) totalled 52. This profit is equal to 14.8 21.1 million euros.5 FY 10 FY 09 FY 08 FY 07 FY 06 Capital expenditure on the DOS network rose sharply (to about 16. to set up the new stores opened during the year and renovation work on existing boutiques. for normal and periodic replacement and modernisation activities.9 million euros (5. amounting to 110. substantially the same as in 2009.7 million euros in the previous year).3 45. capital expenditure during the period totalled 29.6 million euros in 2009).8 million euros in 2010.8% 32.6 million euros). INVESTMENT BY ALLOCATION Other 7% DOS 17% Produc.6% from 2009.1 million euros in 2010. up 28.1 million euros (+24. 7% Real estate invest. Capital expenditure on industrial devices and equipment totalled 6. which is performed on a rotating basis.6 million euros. Net profit was outstanding.1% in the previous year.1 40.8 million euros. as compared with 12.2%.

280) (8. confirming the Group’s structural capacity to generate cash.837 81.This amount includes not only the financial assets and liabilities contributed by Holpaf.V.170 168.166 122.101) (115.7 million euros from December 31st 2009 (177.495 12.704 144.805) (42.5 million euros.31.V.6 million euros for full repayment to the former shareholders for the loan they had made prior to the acquisition.428) (44.8 million euros from the 154. due to the positive and growing contribution of cash flow.001) 184.2 million euros (about JPY 4. Cash and cash equivalents of 171. The Group’s net financial position at December 31st 2010 was 96.009 204.136) (31.10 171.8 million euros at December 31st 2009).480) (1.9 million euros paid upon approval of the 2009 annual report.171 184.191) 102.708) (35.09 204.2 million euros (26.834 31.008 102. reflecting a change of 80.7 million euros (which totalled 204 million euros at December 31st 2009) are set off against liabilities of 75.1 million euros.008 139. Euro 000’s Net financial position Current financial assets Cash and cash equivalents Cash Current financial liabilities Current account overdraft Current share of medium-long term financing Current financial liabilities Current net financial position Non-current financial liabilities Financing Non-current financial liabilities Net financial position 12.009 (18.729 (27.300 (44. to obtain the financial resources necessary for purchasing the property and remodelling the building.837 102.729 171.300 (42.330 154.950 (98.0 million euros in 2010.668 37.429) 139.521) (20.625) (12.708) 184.189 Change (32.008 (6.283) (5.805) 96.780 24.986) (80.31.5 billion for the face value of the bonds that were granted) as the aggregate fair value (short and long-term) of the non-convertible bonds that the Group took over through acquisition of the controlling interest in Holpaf B.819) (6.708) (44. cash was also heavily impacted by the previously mentioned payment by the parent company to stockholders of an extraordinary dividend of 107.280) (32. up 14.2 million).These liabilities include 41.819) 177. in addition to the 45. Euro 000’s Statement of cash flow Profit loss for the period Non-cash items Cash Flow Changes in operating net working capital Cash Flow from operations Cash Flow generated (used) in investment activity Cash Flow generated (used) in financing activity Cash Flow received (used) continuing operations Cash Flow from assets held for sale Cash Flow received (used) Net financial position at the beginning of the period Net financial position at the end of the period Change in current net financial position Year 10 109.1 million euros) and 20. by drawing on available equity reserves.694) Operating cash flow totalled 169.558) (44.837 38 Report on operations .Those bonds had been issued by Holpaf B.076 35.2 million euros generated in 2009.708) Year 09 85.986) (35.0 million euros.803) (3.146) (32. The overall impact of the acquisition on the Group’s net financial position at December 31st 2010 was about 63. In FY 2010.164 (20.Group 2010 Annual Report Net financial position and cash flow. but also the acquisition value of company shares (2.The latter company is owner of the Tokyo property where the Group’s Japanese subsidiary has its head office.

517) 5.786 337 472 86.5 million).3 million euros in 2009. as defined above. is based on the traditional system. Investments grew during FY 2010.499) 6. in accordance with CONSOB memorandum DEM/6064293 dated July 28th 2006.441 12. or “Latin model”.410 622. and thus recognised as normal production costs.747 (13.242) 11.equity 82.equity 71.The total net investment of short-term cash resources for purchase of the Tokyo property impacted FY 2010 cash flow by 25. Euro 000’s Parent Company Difference between book value of consolidated Companies and net equity method valuation Goodwill from Business combination Parent Company Goodwill from Business combination Group Others (*) Minority interest Group (*) Mainly dividends and intercompany profits.140 Corporate Governance The Corporate Governance system. net of the property asset acquired in Tokyo. research and development activity consists of continuous technical/stylistic revision of models and constant improvement of the materials used to realise the product.p. compared with 141.A. which is vested with full.09 Net Profit Share.789 (22. Since this activity is exclusively ordinary.853 82. the total amount of liquidity generated by cash flow in FY 2010 would be 133. have assumed major importance due to operating realisation of projects connected with expansion of the existing product line with new types of merchandise that complement current ones.933 (4.Group 2010 Annual Report Working capital generated a positive 24.31.8 million euros.4 million euros. the associated costs are charged entirely to income in the year that they are incurred.10 Net Profit Share.874 50. 39 Report on operations .100) 1. which has the prerogative of resolving at its ordinary and extraordinary meetings on the matters reserved to it by law or the articles of association.The corporate bodies are: – the Shareholders’ Meeting. Net of dividend payments (totalling 153 million euros) and the effects of the property deal on the short-term net financial position. excluding only those reserved by law to the Shareholders’ Meeting. Research and development Given the particular nature of the Group’s production.789 (17.8 million euros (with disinvestments totalling 0. Reconciliation of the result for the period and net equity of the Group with the analogous values of the Parent Company The following table illustrates the reconciliation of the result for the period and net equity of the Group with the analogous values of the Parent Company.2 million euros during the financial year.31.974 30. – the Board of Directors. 12.202 552. unlimited authority for ordinary and extraordinary management of the Company.903 618.710 110.637 (13. totalling 29.1 million euros in 2009 (gross of dividends paid that year). These will increase the number of brands offered and stimulate increased sales to end customers. with the right to perform all those acts that it deems appropriate to implement and realise the corporate purpose. Research and development costs. as compared with 19.242) 11.282 659.921 13. The corporate governance system of the parent company TOD’S S.

The reader is referred to the Annual Corporate Governance Report. which is delegated by law to monitor i) compliance with the law. as well as the reference models represented by international best practice.. examination and issuance of binding opinions on the most significant transactions. the Board of Directors of the parent company TOD’S S. the parent company TOD’S S. The adopted corporate governance model is substantially based on the Corporate Governance Code for Listed Companies. Legislative Decree 39/2010 delegates the Board of Statutory Auditors the task of monitoring the process of financial disclosure and the effectiveness of the risk control and management systems.p.A. approved the annual Report on Corporate Governance and Shareholdings. – the Manager in charge of preparing the company financial documents.A. in regard to the remuneration. At its meeting on March 14th 2011.F. the Internal Control and Corporate Governance Committee is instead delegated with responsibility for examination and issuance of non-binding opinions on less significant transactions). memorandum of association and compliance with the principles of proper management.com website. In implementation of the Related Party Transactions Regulation adopted by CONSOB with Resolution no. iv) the procedures for effective implementation of the corporate governance rules set out in the Corporate Governance Code adopted by the Group. whose principles have been implemented by TOD’S S.This committee is delegated the role and relevant duties assigned by the Regulation to the committee comprised only of independent directors (modifications to the procedure for related party transactions. It may be consulted in the corporate section of the www.p. modified (by extending them to all Group companies) its existing procedures governing the transparency and substantive fairness of related party transactions.Group 2010 Annual Report – the Board of Statutory Auditors.p.todsgroup. and it includes not only the information required under Article 123-bis (2) T.p. It consequently appointed an Independent Directors Committee. in its latest version as prepared by the Corporate Governance Committee for Listed Companies (sponsored by Borsa Italiana S. its internal control system and administrative and accounting system. and the independence of the accounting firm retained to do so.U. Significant events occurring after the end of the year On January 21st 2011.A.TOD’S S.p. self-evaluation and succession plans of the Board of Directors.A.F. iii) the adequacy of directives issued to TOD’S Group companies in regard to the information that they must provide in compliance with disclosure obligations.That report also analytically illustrates the corporate governance system of TOD’S S. with a series of Board of Directors resolutions since November 2006.U. as well as independent audits and certification of the annual accounts and consolidated accounts.). to bring them in line with the principles set out in the cited CONSOB Regulation. as amended by Resolution no.p. The Board of Directors has set up several internal committees: the Executive Committee. 17389 of June 23rd 2010. the Internal Control and Corporate Governance Committee.. which provides the disclosures mandated pursuant to Article 123-bis (1) of the Consolidated Law on Finance (T. Disclosure pursuant to Article 123-bis of Legislative Decree 58/1998 (“TUF”). which is available to the public together with this Report on Operations and accounting documentation.U. and comprised by representatives from several of the leading Italian companies and experts in this area). with notice DEM/11012984 of February 24th 2011. reached an agreement with the Italian Ministry of Cultural Affairs (“Ministero per i Beni e le attività culturali”) and the Rome Special Fine Arts Service for Archaeological 40 Report on operations . as well as the adequacy of the latter in fairly reporting operating performance. 17221 of March 12th 2010. the Compensation Committee and the Independent Directors Committee.A. The Report also satisfies the requirements imposed by CONSOB pursuant to Article 114(5) T.F.A. ii) the adequacy of the organisational structure for matters falling under its purview. but also a comprehensive examination of the status of implementation of the corporate governance principles recommended by the Corporate Governance Code in accordance with the “comply or explain” rule.

Group 2010 Annual Report Monuments (“Soprintendenza speciale per i beni archeologici di Roma”). Business outlook FY 2010 ended on a high note in terms of revenues. all-inclusive amount of 25 million euros. Approval of Financial Statements The consolidated financial statements of the TOD’S Group were approved by the Board of Directors on March 14th 2011. Milan. profit margins and profitability. In regard to business forecasts for the current year. Sales and financial figures have confirmed that consumers appreciate the high quality products offered by the Group’s brands. the Spring-Summer 2011 collection sales campaign results and the excellent sales trends suggested by distribution network figures for the beginning of the current season reasonably allow us to expect superb results again in 2011. The agreement calls for the sponsor to put up a total. for the purpose of financing restoration work on the Colosseum as sole and exclusive sponsor. with growth steadily accelerating over the course of the year. March 14th 2011 The Chairman of the Board of Directors Diego Della Valle 41 Report on operations . to be disbursed over several years according to the actual progress of restoration work approved by the delegated Commissioner and the Fine Arts Service. By being fairly unsusceptible to seasonal changes. they guarantee a status that goes beyond fashion.

[THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK] 42 2010 Annual Report .

FINANCIAL STATEMENTS .

56 3.653 (7.80 2.514) (58.56 Year 09 713.408 163.710) 109.075) (1. depreciation and write-downs Provisions EBIT Financial income and charges Financial income Financial charges Total financial income (charges) Income (losses) from equity investments Profit before taxes Income taxes Consolidated profit Minority interests Net Profit of the group EPS (in euro) EPS diluted (in euro) Year 10 787.159) 97 126.998) (201.566) 110.714) (117.041) (1.454 728.343) (51.963) 3.819 806.539 18.751) (20.076 3.340) (15.352 (52.237) (562) (31.140 (472) 85.829) (238.299) 193.164) 126.059 9 10 11 15-22 (7.786 (1.358 952 (178.599) (24.242) (23.668 2.448 14.Group 2010 Annual Report Consolidated Profit & Loss Euro 000’s Notes Revenues Sales revenues Other revenues and income Total revenues and income Operating Costs Change in inventories of work in process and finished goods Costs of raw materials.405) 86.80 22 25 26 26 20-27 6 6 44 Financial Statements .936) 158.256 (14.135 15.040) 159. supplies and materials for consumption Costs for services Costs of use of third party assets Costs of labour Other operating charges Total operating costs EBITDA Amortisation.545 (40.377) (107.371 (15. depreciation and write-downs Amortisation of intangible assets Depreciation of tangible assets Other adjustments Total amortisation.589 (48.767) (569.476) (32.111) (145.443) (613.944 19.

471 4.016 3.259 112.146 1.487 90. 45 Financial Statements .899 Year 09 86.786 (477) 1.115 512 (*) Income taxes of the period include tax effect.Group 2010 Annual Report Consolidated Comprehensive Income Euro 000’s Year 10 Profit (loss) for the period (A) Other profits/(losses): Derivative financial instruments (cash flow hedge) (*) Profit/(loss) from foreign subsidiaries F/S translation Total other profits/(losses) (B) Total profit/(loss ) (A)+(B) Shareholders of Parent company Minority interests 110.627 90.736 1.140 1.045 110.

550 105.823 10.09 8 9 9 149.024 31.3 million euros for the value of the building acquired in a related party transaction (notes 10.595 21.962 12.215 594 9.10 12.999 2.696 149.991 11.263 171.252 174.852 29.472 7. 13 and 24).024 27.794 18.573 30.120 327.460 40.31.679 12.068 203.882 403.027 7.907 49 20 22.720 4.31.874 847.084 12.487 196.361 to be continued 10 10 10 10 10 12 13 20 14 15 15 18 15 Note 1:This item includes 66.051 107.006 204.136 119.579 30. 46 Financial Statements .789 39.Group 2010 Annual Report Consolidated Statement of Financial position Euro 000’s Notes Non current assets Intangible fixed assets Assets with indefinite useful life Key money Others intangible assets Total Intangible fixed assets Tangible fixed assets Buildings and land (1) Plant and machinery Equipment Leasehold improvement Others Total Tangible fixed assets Other assets Real estate investments Equity investments Deferred tax assets Others Total other assets Total non current assets Current assets Inventories Trade receivables Tax receivables Derivative financial instruments Others Cash Total current assets Assets held for sale Total assets 12.380 189.613 191.009 519.721 3.083 105.729 512.628 915.103 46 20 32.856 2.560 3.

369 27.369 10.670 20.960 6.451 109.263) 231.09 61.722 11.455 847.315 130.055 (4.170 693 17.651 4.933 825 22.805 83.973 103.31.6 million euros for short-term debt) for the bonds that the Group took over following a related party transaction (notes 13.819 40. 17 and 24).361 21 21 18 21 17 Note 2:These items include 41.333 29.333) 299.940 915.710 6.055 (5.042 85.441 22 20 23 17 1.921 4.668 654.429 213.810 472 5. 47 Financial Statements .076 611.31.2 million euros (of which 37.219 214.193 1.064 2.903 618.419 42.Group 2010 Annual Report continuing Euro 000’s Notes Shareholders’ equity Share Capital Capital reserves Treasury stock Hedging and translation Retained earnings Accumulated earnings/losses Income for the period Group interest in Shareholders’ equity Minority interest Share Capital and reserves Income for the period Minority interest in Shareholders’ equity Total Shareholders’ equity Non-current liabilities Provisions for risks Deferred tax liabilities Reserve for employee Bank borrowings (2) Total non-current liabilities Current liabilities Trade payables Tax payables Derivative financial instruments Others Bank (2) Total current liabilities Liabilities held for sale Total Shareholders’ equity and liabilities 16 16 16 16 16 16 16 12.219 214.6 million euros for medium/long-term debt and 3.10 61.696 12.538 5.282 659.001 146.106 32.008 20.

668 37.557) 4.084) (11.238) (66.894 11.708) (44. revaluat.837 102.747) 26..008 139.610 354 (31.837 81.387) (20.330 154.578 858 1.V.928 1.008 102.957) 633 122.V.950 (29.121 (1.267) (2.136) (38. deprec.193) (1.708) 184.389) (207) (98.262) (2.) 10 Other changes in fixed assets 9-10 Reduction (increase) of other non-current assets Cash flow generated (used) in investment activities (d) Dividends paid 5 Changes in long term loans 17 Medium-long term part of bonded loans (Holpaf B.244) 31.621 (115.047) (2.Group 2010 Annual Report Consolidated Statement of Cash Flows Euro 000’s Notes Profit (loss) for the period Non-cash adjustments: Amortizat.558) (44.568) 37.737) (4.087 15.164 (19.076 37.834 40. and write-downs 9-10-11-14-15 Change in employee severance indemnity reserve 23 Change in deferred tax/liabilities 20 Other changes 22-23 Cash flow (a) Change in current assets and liabilities: Inventories 14 Trade receivables 15 Tax receivables 15 Other current assets 15 Trade payables 21 Tax payables 21 Other current liabilities 18-21 Change in operating working capital (b) Cash flow from operations (c) = (a)+(b) Net investments in intangible and tangible assets 9-10-12 Acquisition of Assets (Holpaf B.170 168.369 1.191) 102.171 184.202) 902 144.837 48 Financial Statements .576 24.077 (4.278 (195) (603) 7.664 4.708) Year 09 85.335) 586 (1.101) (153.300 (44.641) (4..024 (9..915) (1.) 17 Capital increase 16 Other changes in shareholders’ equity 16 Changes in minority interests Cash flow generated (used) in financing (e) Cash flow from continuing operations (f)=(c)+(d)+(e) Cash flow from assets held for sale (g) Cash flow generated (used) (h)=(e)+(g) Net Financial position at the beginning of the period Net Financial position at the end of the period Change in current net financial position Year 10 109.780 (11.

933 110.133) Minority interest 5.668 Group Interest 597.333) Retained earnings 384.903 Year 2009 In euro 000’s Share capital Capital reserves Reserve for translation (9.259 112. 49 Financial Statements .929 472 40 512 (159) Total 602.070 110.31.664 309 163 659.710 5.627 (38.076 Group Interest 654.262) 4.070 109.045 (46.933 Balances as of 01.10 61.538 560 6.133) (4.914) (107.786 1.070 1.219 214.421) 4. please refer to Note 16.282 1.076 1.487 90.497 85.219 214.441 Balances as of 01.09 61.651 109.914) (107.115 (38.668 4.527 (212) 611.055 Profit/(Loss) recognized in the period Profit & Loss account Directly in equity Total Profit/(Loss) Dividends (results of 2009) Extraordinary Dividends Capital increase Share based payments Other Balances as of 12.263) (212) 340.10 61.133) 348 618.807 384.644) Balances as of 12.407 Share based payments 309 Other (4.01.899 (838) Total 659.710 189 1.591 86.282 Note: for detailed information about each Reserve.651 Minority interest 4.962 213.262) (5.140 4.146 (45.055 1.31.668 (38.664 309 163 654.09 60.076 (45.055 4.333) 4.447 90.752) (107.780) Retained earnings 332.447 4.Group 2010 Annual Report Consolidated Statement of changes in equity Year 2010 In euro 000’s Share capital Capital reserves Reserve for translation (5.662 85.219 214.710 109.983 Profit/(Loss) recognized in the period Profit & Loss account Directly in equity Total Profit/(Loss) Dividends Capital increase 257 4.447 85.01.

[THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK] 50 2010 Annual Report .

SUPPLEMENTARY NOTES .

52 Supplementary notes .Business combinations.p. the EC document of November 2003 and.A. and its Italian and foreign subsidiaries. the Group opted in favor of complete continuity of the balance sheet and profit and loss account formats envisaged for disclosures prepared pursuant to Italian GAAP in the presentation of its financial position. IAS 27 (2008) . the option of fair value measurement of any third party interests acquired in a partial acquisition. if there was no board of directors. on March 14th 2011. The consolidated financial statements were approved by the Board of Directors ofTOD’S S. the Italian Civil Code. since they are considered representative indicators of company performance.p. principally in regard to: the regulations governing incremental acquisitions of subsidiaries. with the sole exception of derivative financial instruments. indicating the EBITDA and EBIT results as in the past. General notes The Notes to the Consolidated Financial Statements were prepared in accordance with IAS/IFRS and supplemented by the additional information required by CONSOB and the orders it issued in implementation of Article 9 of Legislative Decree 38/2005 (Resolutions 15519 and 15520 of July 27th 2006 and memorandum DEM/6064293 of July 28th 2006.The changes to IAS 27 principally concern the accounting treatment of transactions or events that modify equity interests in subsidiaries and the allocation of losses by the subsidiary to minority interests. The consolidated financial statements are prepared on the basis of draft Financial Statements at December 31st 2010 (January 1st .The “indirect” method is used for the statement of cash flows. when applicable. Furthermore. and International Financial Reporting Standards-IFRS) issued by the IASB. More specifically. which are jointly referred to as the TOD’S Group. Consistently with the financial statements for the previous year. The consolidated financial statements at December 31st 2010 include the balance sheet and profit and loss account of TOD’S S. Ltd was included on the basis of interim financial statements for twelve months. Because the closing date of its fiscal year does not coincide with the reference date of the consolidated financial statements. complemented as necessary by the Report of the Board of Directors on Operations and the notes to the financial statements.Group 2010 Annual Report 1. Article 78 of the Issuer Regulation. On the profit and loss account. which are measured at fair value.The updated version of IFRS 3 introduced major changes. Accounting principles. on the basis of the text published in the Official Journal of the European Union (OJEU). they are prepared on the basis of historic costs. pursuant to Article 114(5) of the Consolidated Law on Finance-TUF). assets and liabilities following transition to IFRS. are considered to be those that provide the best organized representation of the Group’s financial position and income. certain information is provided in the Report by the Board of Directors on Operations. interpretations applicable since January 1st 2010 and not relevant for the Group The following accounting standards are applicable since 1st January 2010 and refer to situations or cases that were not applied to TOD’S Group Financial Statements of the year ending at December 31st 2010: IFRS 3 (2008) . the balance sheet format shows current items separately from non-current items (both assets and liabilities). by the sole directors. 2. the charging to income of all costs connected with the business combination and recognition at the acquisition date of the liabilities for conditional payments. amendments. referring to the date of the consolidated financial statements.A.December 31st) approved by the respective boards of directors or. the format of representing revenues and costs by nature is followed.Consolidated and Separate Financial Statements. Highlights of the accounting principles The consolidated financial statements are prepared in accordance with IAS/IFRS (International Accounting Standards-IAS. Financial statements formats: choice of form and classification principles For presentation of its operating income.Tod’s India Retail Pte. These financial statements. 3.

of the fair values of the sold assets. IFRIC 18 . with the exception of non-current assets (or groups available to sale) that are classified as held for sale in accordance with IFRS 5. the liabilities incurred or assumed. IFRIC 17 . Minority interests in the capital and reserves of the subsidiaries are indicated under shareholders’ equity as “Minority interest”. They are deconsolidated starting on the date when such control ceases. When necessary. Acquisitions of subsidiaries are recognized according to the cost method. Likewise.Investments in Associates and to IAS 31 .2 Minority interests. the balance sheets and profit and loss accounts of the subsidiaries are adjusted in order to bring the applied accounting policies in line with those used by the Group. The financial statements of subsidiaries are included on the consolidated financial statements from the date when control is acquired until such control terminates. Subsidiaries are consolidated according to the line-by-line method from the date on which control is transferred to the Group. and the instruments representing capital issued in exchange for control of the acquired entity. as defined in IAS 27 – Consolidated and Separate Financial Statements. the foreign currency transactions of Group enterprises are translated into the functional currency (currency of the prevalent 53 Supplementary notes . The portion of the acquisition cost that exceeds the fair value of the acquired net assets is recognised as goodwill. i. Amendments to IAS 28 .e. the transactions where the controlling entity acquires or transfers additional non-controlling interests without altering control over the subsidiary are transactions with shareholders and are thus recognised in equity. the difference is recognised directly on the profit and loss account. If the acquisition cost is less than the fair value of the net assets of the acquired entity. Once control of an entity has been acquired. its functional currency). The financial statements of the individual Group entities are prepared in the functional currency of each individual enterprise. Improvements to IAS/IFRS (2009).Share based Payment: Group Cash-settled Share-based Payment Transactions.Distributions of Non-cash Assets to Owners. The Consolidated Financial Statements are stated in euro (rounded to the nearest thousand). Amendment to IFRS 2 . liabilities. Amendment to IAS 39 .Group 2010 Annual Report The following amendments. ii. interpretations are also applicable since January 1st 2010 and refer to situations or cases that were not applied to TOD’S Group Financial Statements of the year ending at December 31st 2010: Improvement to IFRS 5 . Intercompany transactions and the profits and losses generated by transactions between consolidated enterprises are eliminated from both the balance sheet and the profit and loss account.1 Subsidiaries. When the individual financial statements are prepared. Subsidiaries include all entities in which theTOD’S Group has direct or indirect control over the financial and operating policies of an entity in order to obtain benefits from its activity.Financial Instruments: Recognition and Measurement: Eligible Hedged items. 3.The cost of a business combination is represented by the aggregate sum.Interests in Joint Ventures consequential to the amendment to IAS 27. this account reflects the changes in minority interests and any losses allocable to them. All accounts recognised on the financial statements of the subsidiaries are measured by using the currency of the principal economic environment in which the entity operates (i. and potential liabilities of the acquired entity that satisfy the recognition criteria envisaged in IFRS 3 are recognised at their fair value on the date of purchase. 3.Transfers of Assets from Customers. Functional and reporting currency. The identifiable assets. since this is the currency in which most Group transactions are executed.3 Transactions in foreign currency.The minority interest in the acquired business is initially determined in an amount equal to their share of the fair value of the assets. at the acquisition date.Non-current Assets Held for Sale and Discontinued Operations. liabilities. Transactions in foreign currency. and potential liabilities recorded on the date of the original acquisition date and subsequently adjusted according to the changes in shareholders’ equity. 3.

e.662 8.674 0.2855 0. without any speculative or trading purposes.126 1. Subsequently. The TOD’S Group uses derivate financial instruments (mainly currency futures contracts) to hedge the risks stemming from foreign exchange exposure deriving from its operating activity.492 1. the changes are recognized in shareholders’ equity.018 10.726 Year 2009 Exch.755 1. iii. compared with those used in the previous year. The difference between the result for the period resulting from translation at the average exchange rates and the result of translation at the end of period rates.653 0.694 0.Group 2010 Annual Report economic area in which each entity operates) by applying the exchange rate in effect at the date of the transaction. the balance sheet items are translated using the exchange rates in effect at the end of the period. In order to present the financial statements of consolidated entities that are expressed in a functional currency different from the consolidation currency. Posting of the changes in fair value varies according to the type of hedging at the valuation date: • for derivatives that hedge forecast transactions (i.S. are recognized under shareholders’ equity in a special “Translation reserve. Monetary assets and liabilities denominated in foreign currencies at the date of the financial statements are translated by using the exchange rate in effect at the closing date. are indicated in the following table: Year 2010 Exch.345 9.” The translation differences recognized under shareholders’ equity are transferred to the profit and loss account at the time of disposal or liquidation of the controlled entity.335 11.725 9.770 3.749 U.9518 9.571 0.748 0.673 1.536 1.158 1.920 0. This method envisages posting derivatives on the balance sheet at their fair value. insofar as they can be qualified as instruments for hedging changes in the value of assets or liabilities carried on the balance sheet. cash flow hedge).444 11. and consistently with the strategic policies of centralized cash management dictated by the Board of Directors.720 0. rate 0.000 1 10.6471 8.4 Derivative financial instruments. The foreign exchange differences arising upon settlement of these transactions or translation of cash assets and liabilities are recognized on the profit and loss account. The hedge accounting method is used at every financial statement closing date.000 100 100 100 100 3. and the impact on assets and liabilities of changes in the exchange rate relationships between the beginning and end of the period. the derivatives are treated in accordance with fair value hedge rules.168 10.531 9.697 9. When derivative transactions refer to a risk connected with the variability of forecast transaction cash flow. In fact.634 0. with the exception of those deriving from derivative financial instruments qualified as hedging of financial flows. under financial income and expenses. rates as Average of year end exch. rate 0. dollar UK pound sterling Swiss franc Hong Kong dollar Japanese yen Hungarian forint Singapor dollar Korean WON Macao Pataca Chinese Renmimbi Indian Rupia Albanian Lek Base 1 1 1 100 100 1. Non-monetary assets and liabilities are valued at their historic cost in foreign currency and translated by using the exchange rate in effect at the transaction date. 54 Supplementary notes .800 0.724 0. on the one hand.554 6.629 9.671 6. while items on the profit and loss account are translated using the average exchange rate for the period. rates as Average of year end exch.162 1. these differences are recognized as a separate component of shareholders’ equity or on the profit and loss account.495 5. Presentation of financial statements drafted in foreign currency.123 0.751 0.166 0. on the other hand. they are recognized according to the rules for cash flow hedge until the transaction is recorded on the books.721 0.720 1.495 0.487 0.862 3.598 3.583 0.698 3. The rates applied to translation.9989 5. while the portion for the ineffective amount is recognized on the profit and loss account.

in accordance with the rules set forth in the section Impairment losses. i. and without external impediments. it can be affirmed that the investments made for maintenance of the trademarks are proportionately modest with respect to the large forecast cash flows. The capitalized costs include the costs for materials. Goodwill is recognized on the financial statements at its cost adjusted for impairment losses. with options for renewal of legal protection. iii. liabilities. they are distinguished by market positioning and notoriety that ensures their dominance of the respective market segments. Trademarks. they are consistently perceived by the market as being innovative in the national and/or international context characteristic of each trademark. 55 Supplementary notes . These are identifiable non-monetary intangible assets under the control of the company and capable of causing the Group to realize future economic benefits. fair value hedge). and an adequate portion of overhead costs. Goodwill represents the portion of the cost paid for the acquisition that exceeds the Group’s interest in the fair value of the assets. The development costs of an activity are instead capitalized if the technical and commercial feasibility of the relative activity and economic return on the investment are certain and definite. goodwill retained the values recognized on the basis of the previous Italian GAAP. All business combinations are recognized by applying the acquisition method. net of accumulated amortization and depreciation (see below) and impairment losses. • the products sold by the Group with these trademarks are not subject to particular technological obsolescence. net of accumulated amortization at the date of transition to IAS/IFRS. The adequacy of the values is annually subjected to the impairment test. the excess is immediately recognized on the profit and loss account. and constantly protected pursuant to law. but the adequacy of the values is annually subjected to the impairment test. • the corporate structure. the fair value differences are recognized entirely on the profit and loss account. in accordance with the rules set forth in the section Impairment losses.TOD’S. HOGAN and FAY trademarks are classified as intangible fixed assets with an indefinite useful life and thus are not amortized. properly registered. They are recognized at cost. It is not subject to amortization. • the trademarks are proprietary. adjusting operating margins. The research costs for a project are charged fully to the profit and loss account of the period in which they are incurred. labor. which is characteristic of the luxury market in which the Group operates. liabilities. the value of the hedged item (receivables/payables) is adjusted for the change in value attributable to the hedged risk. and organization itself in a figurative sense. insofar as: • they play a primary role in the Group’s strategy and are an essential driver thereof. on the contrary. Other intangible fixed assets. net of accumulated amortization up to the transition date. ii. construed as organized property. that are not burdensome. upon expiration of the registration periods. • in the relative competitive context. Furthermore. iv. plant. using the item financial income and expenses as a contra-entry.Group 2010 Annual Report • for derivatives that hedge receivables and payables recognized on the balance sheet (i.5 Intangible fixed assets Goodwill. being constantly associated and compared with benchmark brands. the date of transition to IAS/IFRS. These are recognized according to the value of their cost and/or acquisition. 3.e. is closely correlated with and dependent on dissemination and development of the trademarks on the markets. easily implemented. and identifiable potential liabilities of the subsidiary or jointly controlled entity at the acquisition date. and equipment. and the Group has the intention and resources necessary to complete the development. Research and development costs. and identifiable potential liabilities exceeds the cost of the acquisition (negative goodwill) after redetermination of these values. For acquisitions prior to January 1st 2004. If the Group’s interest in the fair value of assets.

iv. iii.5-3% 12. including expenses that are directly attributable to them during preparation of the asset for its intended purpose or production. A financial payable for the same amount is recognized instead under liabilities. The cost method is used for determining the value reported on subsequent statements. and the current value of the minimum payments owed for leasing. net of accumulated depreciation and any impairment losses (according to the rules described in the section Impairment losses). Lease agreements in which the Group assumes all the risks and benefits deriving from ownership of the asset are classified as finance leasing. Subsequent capitalizations. v. and equipment owned by the company. and equipment after purchase are capitalized only to the extent that they increase the future economic benefits of the asset. Real estate investments. molds and stamp Furniture and furnishings Office machines Cars and transport vehicles 56 Supplementary notes . The principal depreciation rates applied are as follows: % depreciation 2. The costs incurred for property. All the other costs are charged to the profit and loss account in the fiscal year in which they are incurred.The assets (real estate.e. plant. plant.5% 25% 25% 12% 20% 20%-25% Industrial buildings Machinery and plant Equipments Forms and punches. Property. straight-line basis according to the estimated useful life of the buildings. if the conditions for capitalization of expenses incurred for internally generated expenses are satisfied. which entails posting the asset at its cost net of accumulated amortization and write-downs for impairment losses. v. clichés. All the other costs are charged to the profit and loss account in the fiscal year in which they are incurred. Amortization. plant. vi. with only buildings being depreciated. the value of land and buildings is kept separate. and equipment were systematically depreciated at a steady rate according to the depreciation schedules defined on the basis of their estimated useful life. these assets are reported net of their accumulated depreciation and impairment losses (i.Group 2010 Annual Report They are initially recognized at their purchase cost. in accordance with the cost model). Depreciation is calculated on a systematic. plant. and equipment at the lesser of their fair value on the date the agreement was made. plant. while the component of interest expenses for finance leasing payments is reported on the profit and loss account according to the effective interest method. and then recognized at their cost as adjusted for accumulated depreciation and impairment losses. starting from the time the assets are available for use. Leasing. Intangible fixed assets (excluding those with an indefinite useful life) are amortized on a straightline basis over the period of their estimated useful life. Subsequent capitalization. Following first-time recognition. including any directly attributable ancillary expenses. Real estate investments are originally recognized at cost. In this case. They are first recognized at their purchase cost or at the cost recalculated at the date of transition to IFRS. the portions of cost allocable to the individual significant components characterized by a different useful life are determined. 3. i. The costs incurred for these intangible fixed assets after purchase are capitalized only to the extent that they increase the future economic benefits of the specific asset they refer to. ii. For those assets whose depreciation must be calculated using the component approach. Property.6 Tangible assets. Land is not depreciated. and machinery) possessed pursuant to these agreements are recorded under property. Depreciation.

At that time. 3.This test is performed at least once annually for non-current assets with an indefinite life in the same way as that used for non-current assets that have not yet been placed in service. The cost of inventories is based on the weighted average cost method. its book value is reduced to the recoverable value by posting a charge on the profit and loss account. The production cost is determined by including all costs that are directly allocable to the products. which reflects the current market value of the current value of the cash and risks related to Group’s activity. if this is shorter. The usage value of a tangible or intangible fixed asset is determined according to the estimated future financial flows expected from the asset. plant and equipment to the impairment test in order to assure that assets with a value higher than the recoverable value are not recognized on the financial statements. which mainly include the costs incurred for set up and modernization of the DOS network and all the other real estate that is not owned but used by the Group (and thus instrumental to its activity) are depreciated according to the term of the lease agreement or the useful life of the asset. The restored value is recognized immediately on the profit and loss account. the write-down is recognized in the revaluation reserve. 57 Supplementary notes . including costs directly connected with the purchase. In the presence of indicators. At the subsequent financial statement dates. 3. the profits and losses deriving from changes in the fair value are recognized on the profit and loss account for the period. and are recognized at their fair value at the end of each period. These are recognized at the lower of purchase cost and their assumed disposal value. but not beyond the net book value that the asset would have had if the impairment loss had not been charged. as actualized through use of a discount rate net of taxes. i. When the financial assets are held for trading. net of impairment losses. When the reasons for a write-down cease to exist.The net disposal value represents the best estimate of the net sales price that can be realized through ordinary business processes. These are recognized and cancelled on the balance sheet according to the trading date and are initially valued at cost. net of any production costs not yet incurred and direct sales costs. is increased to the new value resulting from the estimate of its recoverable value. the book value of the asset (or the cash generating unit). ii. If the impairment test reveals an impairment loss for an asset. Inventories. or changes in circumstances that presume the existence of impairment losses. Financial assets other than those held until maturity are classified as held for trading or available for sale. In the case of financial assets available for sale. as well as the cash flows deriving from disposal of the asset at the end of its useful life. Identification of the cash generating units was carried out consistently with the organizational and operating architecture of the Group.Group 2010 Annual Report The costs for leasehold improvements. IAS 36 envisages subjecting intangible fixed assets and property.8 Current assets. unless the asset is revalued.7 Impairment losses. with the exception of goodwill. events. Financial assets. the aggregate profits or losses that were previously recognized in shareholders’ equity are recognized on the profit and loss account of the period. in which case the restored value is recognized in the revaluation reserve. If it is not possible to estimate an independent financial flow for an individual asset. Confirmation of the recoverability of the values recognized on the balance sheet is obtained by comparing the book value at the reference date and the fair value net of sale costs (if available) or usage value. In that case. the cash generating unit to which the asset belongs and with which it is possible to associate future cash flows that can be objectively determined and independent from those generated by other operating units is identified. the profits and losses deriving from changes in the fair value are recognized directly in shareholders’ equity until they are sold or have sustained a loss in value. the financial assets that the Group intends and is able to hold until maturity (securities held until maturity) are recognized at the cost amortized according to the effective interest method. The values that are thus obtained do not differ appreciably from the current production costs referring to the same classes of assets. regarding – for work in progress and/or semi-finished products – the specific stage of the process that has been reached. unless the asset is revalued.

This includes cash on hand. with certain and precise evidence documenting the impossibility of collecting them. net of transaction costs. easily convertible into cash. The payments based on shares are assessed at their fair value on the assignment date. and the assumed behavior of individuals. ii. v.9 Benefits for employees. For defined benefit plans. iv. Defined benefit plans. 3. Any net assets resulting from this calculation are limited to the value of the unreported actuarial losses and the cost for the past work services that were not recognized. plus the current value of any reimbursements and reductions in the future contributions to the plan. Defined contribution plans. net of sales costs. The useful life utilized in the model has been adjusted according to an estimate by management in order to take into account the effects of non-transferability of the options. Interest-bearing financing and bank overdrafts are recognized on the basis of the amounts collected. Cash. Assets held for sale. by means of adjusting the face value with a specific allowance for doubtful accounts determined as follows: • receivables under litigation. estimated on the basis of information updated at the date of this document. Non-current assets are classified as held for sale when their carrying value will be recovered through disposal rather than through continuous use thereof. i. Trade payables and other payables. • for other bad debts. They are not amortised or depreciated and are recognised at the lesser of their carrying and fair value. The cost of past work services is recognized immediately in the amount in which the benefits have already accrued or is otherwise amortized at a constant rate by the average period in which it is expected that the benefits will accrue. or with a presumed disposal value that is less than the cost recognized on the financial statements. prudent allowances for write-downs have been set aside. and financial investments with a maturity of no more than three months. the cost of the provided benefits is determined by using the projected unit credit method. The fair value is determined by using the binomial method. iii. These are valued and recognized on a prudent basis according to their presumed disposal value. have been analytically identified and then written down. The liabilities for benefits paid out after termination of the employment relationship reported on the financial statements represent the current value of liabilities for defined benefit plans adjusted to take into account the actuarial profits and losses that were not recognized and the costs for past work services that were not recognized. carrying out actuarial valuations at the end of every fiscal year. 3.Group 2010 Annual Report A special depreciation reserve is set aside for the portion of inventories that are no longer considered economically useable.10 Payables. The accumulated actuarial profits and losses not recognized at the beginning of the fiscal year are recognized only to the extent that they exceed 10% of the greater between the current volume of defined benefit plan liabilities of the Group and the fair value of the assets of the program at that date. Bank overdrafts and financing. ii. These are their face value. restrictions on exercise thereof. These assets are highly liquid. bank demand deposits. using the effective interest method. This value is recognized on the profit and loss account on a straight-line basis throughout the period of accrual of the rights. considering the conditions for use thereof not based on their market value. Trade receivables and other receivables. 58 Supplementary notes . Share based payments. and reduced by the fair value of the program assets. iii. This allocation is made on the basis of a management estimate of the stock options that will actually accrue in favor of vested employees. The payments for eventual defined contribution plans are charged to the profit and loss account in the period that they are owed. and subsequently valued at the amortized cost. i. and subject to a negligible risk of change in value.

The tax liability of all temporary taxable differences.13 Income taxes. does not influence either the income (loss) reported on the financial statements or taxable income (tax loss). No allocation is envisaged if the deferred tax asset derives from business combinations. 59 Supplementary notes . Revenues are recognised when the goods are delivered to customers. and any adjustments to the tax payables calculated during previous periods. The income taxes for the period include determination both of current taxes and deferred taxes. They are recognized entirely on the profit and loss account and included in the result for the period. Sales of goods . Royalties. iii. Dividend income contributes to the result for the period in which the Group accrues the right to receive the payment.11 Revenues recognition. including interest expenses accrued on financial payables calculated by using the effective interest method (mainly current account overdrafts. Current taxes on taxable income for the period represent the tax burden determined by using the tax rates in effect at the reference date. Sales of goods . The Group distributes products on the wholesale market. The Group operates in the retail channel through its DOS network. Interest income and expenses are recognized on the profit and loss account for the period in which they are realized/incurred. In this case. This income is recognised in proportion to the percentage of completion for the service provided on the reference date. the portion of interest expenses deriving from accounting treatment of assets held under finance leasing (IAS 17) and employee reserves (IAS 19). These include all financial items recognized on the profit and loss account for the period. Deferred tax liabilities refer to the temporary differences between the book values of assets and liabilities on the balance sheets of consolidated companies and the associated values relevant for determination of taxable income.retail. at the time of the transaction.The taxes in question (deferred tax assets and liabilities) are determined on the basis of a forecast of the assumed percentage weight of the taxes on the income of the fiscal years in which the taxes will occur. 3. with the exception of liabilities deriving from initial recognition of an asset or liability in a transaction other than a business combination that. These revenues are recognised when the goods are shipped and considering the estimated effects of returns at the end of the year. Sales are usually collected in the form of cash or through credit cards. Revenues are recognized on the profit and loss account when the significant risks and benefits connected with ownership of the transferred assets are transferred to the buyer. taking into account the specific nature of taxability and deductibility. with the exception of capitalized expenses. gains and losses on derivative financial instruments (according to the previously defined accounting principles). or from the initial posting of an asset or liability in a transaction other than a business combination that. revenues are recognized on the basis of the following principles: i. Deferred tax assets that derive from temporary deductible differences are recognized on the financial statements only to the extent that it is likely taxable income will be realized for which the temporary deductible difference can be used. 3. iv.Group 2010 Annual Report 3. the relative deferred tax liabilities are also recognized under shareholders’ equity. The tax benefits resulting from tax losses are recognised on the financial statements in the period when those benefits are accrued. The effect of change in tax rates is recognized on the profit and loss account of the fiscal year in which this change takes place. ii. foreign exchange gains and losses.12 Financial income and expenses. if it is likely that the Group’s entity which recognised the tax loss will have sufficient taxable income before the right to use that benefit expires. received dividends. In reference to the principal types realized by the Group. medium-long term financing). These are recognised on the financial statements according to the principle of period allocation. at the time of the transaction.wholesale. unless they are generated by transactions recognized directly to shareholders’ equity during the current or another period. does not influence either the income (loss) reported on the financial statements or taxable income (tax loss). Provision of services.

but which can nonetheless be reliably estimated. The statement of cash flows is drafted using the indirect method. is subtracted from shareholders’ equity. The Report of the Board of Directors includes operating information. while the excess value is recognized as an adjustment to additional paid-in capital. 4. and all the other effects connected with investment and financing activities. At the operating level. including the expenses directly related to the transaction. 3. The total value of shares issued by the parent company is recognized entirely under shareholders’ equity. product. This type of organisation is reflected in the ways in which management monitors and strategically focuses the Group’s activities. and it is likely that the Group will be asked to satisfy the obligation. on the contrary. non-monetary items. The allocation of dividends to persons possessing instruments representing share capital after the reference date of the financial statement is not recognized under financial liabilities on the same reference date. If the effect is significant. under current circumstances. The consideration paid for buy-back of share capital (treasury stock). The provisions that can be reasonably expected to be discharged twelve months after the reference date are classified on the financial statements under non-current liabilities.Group 2010 Annual Report 3.The overall organisation envisages a unified strategic vision of the business. In particular. including a breakdown of consolidated revenues by BRAND. the provisions are recognized on the balance sheet by actualizing future financial flows. channel and geographical area. Share capital. PRODUCT and REGION. and INCOME STATEMENT for the business. Complete information is provided as follows. 60 Supplementary notes . both at the central and peripheral levels. Treasury stock. the Group’s organisation is based on an articulated matrix structure according to the different functions/activities in the value chain. CHANNEL. ii. These are certain or probable liabilities that have not been determined at the date they occurred and in the amount of the economic resources to be used for fulfilling the obligation. The net financial flows of operating activity are determined by adjusting the result for the period of the effects deriving from change to net operating working capital.15 Share capital. iii. as they are the instruments representing its capital. the provisions for which the use of resources capable of generating economic benefits is expected to take place in less than twelve months after the reference date are recognized as current liabilities. Segment reporting The search for higher levels of operating efficiency has identified as key element for maximising profitability via the condivision of a significant portion of service activities (first and foremost production). i.14 Provisions. Dividends. the par value of the shares reduces the share capital. Instead. Cash at the beginning and end of the period represents the net-short-term financial position of the Group. alternatively according to brand.16 Statement of cash flow. and the date of the presumed discharge of the obligation can be estimated with sufficient reliability. aggressive segmentation of the business appears uneconomical. 3. They are recognized on the balance sheet in the event of an existing obligation resulting from a past event.

0 0.0 4.31.3 1.0 FY 2010 FY 2009 10.31.1 15.Distribution channel Italy Europe USA RoW DOS FRANCHISED STORES DOS FRANCHISED STORES DOS FRANCHISED STORES DOS FRANCHISED STORES 12. Am.3 12.1 Key money DOS Prod. The amounts are shown net of the property investment (the value of the asset was 66.3 million euros at December 31st 2010) made by the Group in Japan (note 10).2 3.6 6. Altro Italy Europe North.10 40 6 32 11 14 73 54 159 71 12.8 4.Group 2010 Annual Report 2010 Capital expenditures By investment allocation (Euro mn) FY 2010 FY 2009 By region (Euro mn) 16.5 1.9 5.7 6. Distribution channel TOD’S Group .8 5.9 8. RoW Not local.09 36 8 31 13 14 68 57 149 78 Total DOS Total FRANCHISED STORES 106 99 12 12 12 TOD'S 59 62 HOGAN 10 DOS FY 2010 Franchised stores FY 2009 DOS FY 2010 Franchised stores FY 2009 61 Supplementary notes .

is payable to all shareholders entered on the register of shareholders at the coupon detachment date. Earnings per share The calculation of base and diluted earnings per share is based on the following: i. at the rate of 1.076 109.50 euros. in favour of the owners of the 30. respectively).101.A. to be charged to the extraordinary reserve (Shareholders’ Meeting of September 21st 2010).903.076 109.668 85.50 euros per share.p.401 outstanding ordinary shares comprising the share capital.00 euros on the basis of the currently outstanding shares (Note 16). totalling 61.132.076 109.Group 2010 Annual Report 3 3 2 2 7 6 FAY ROGER VIVIER 1 1 DOS FY 2010 Franchised stores FY 2009 DOS FY 2010 Franchised stores FY 2009 5. Regarding the net profit for FY 2010 the parent company has proposed to distribute a dividend for two euros per share. approved payment of a total 153 million euros.914. ii) extraordinary dividends.076 Year 09 85.668 85. Reference Profit Year 10 109. and was not included among the liabilities reported on this balance sheet. at the rate of 3.668 62 Supplementary notes . the Shareholders’ Meeting of the parent company TOD’S S.668 85.The dividend is subject to approval by the annual Shareholders’ Meeting.50 euros per share. Dividends In FY 2010.218. for 107.802.The dividend proposed for FY 2010.076 Year 09 85.609. entitled to participate in profits on the coupon detachment date (May 24th 2010 and October 11th 2010. 6.50 euros. broken down as follows: i) ordinary dividends to be charged against the net profit for FY 2009 (Shareholders’ Meeting of April 22nd 2010). totalling 45.668 Euro 000’s For continuing and discontinued operations Profit used to determine basic earning per share Dilution effects Profit used to determine diluted earning per share Euro 000’s For continuing operations Profit attributable to equity holders of the Company Income (Loss) from discontinued operations Profit used to determine basic earning per share Dilution effects Profit used to determine diluted earning per share Year 10 109.

7.741 80.401 (unchanged respect to year 2009).668 thousand euros in 2009).09 3.31.024 thousand euros.401 30.185 137. there were no dilutions of net consolidated earnings.10 3.. Base earnings per share.235 12.309 53.p.689 2.609.31.10 137. HOGAN and FAY).609.185 137. insofar as conclusion of the Stock Options Plan in year 2009.31.235 Goodwill and consolidation differences. Diluted earnings per share.024 12. These accounts reflect the differences between the amount paid to acquire the equity investments in subsidiaries. and on the average number of ordinary shares outstanding during the same period.100 149.09 137.609.401 Weighted average number of shares to determine basic earning per share Share options Weighted average number of shares to determine diluted earning per share iii.Group 2010 Annual Report In both fiscal 2010 and 2009. This item includes the values of the three proprietary brands of the Group (TOD’S. iv. 63 Supplementary notes .609.609. 8. totalling 30.024 Trademarks. Assets with indefinite useful life Assets with indefinite useful life amount to 149.235 9. and are constituted as follows: Euro 000’s Trademarks Goodwill Consolidation differences Total 12.689 2. Euro 000’s Tod’s Hogan Fay Total 12. associated companies.741 80.401 Year 09 30.076 thousand euros (85. partly as a result of activities that were discontinued during the periods in question.A.309 53.31. Calculation of the base earning per share for fiscal year 2010 is based on the net consolidated income allocable to holders of ordinary shares of the parent company TOD’S S. and the corresponding interest in the shareholders’ equity of the entities at the acquisition date. which is eliminated.401 30. Calculation of the diluted earnings per share for the period January-December 2010 coincides with calculation of earnings per share. Reference number of shares Year 10 30. and joint ventures. totalling 109.235 9. ii.100 149. Assets held for sale The Group did not have any available for sale assets at December 31st 2010.

794 1.412 (90) (567) 5.31.780) 4.869 18.09 Translation differences Increases Decreases Impairment losses (Note 11) Other changes Amortization for the period Balance as of 12. Tangible fixed assets At December 31st 2010 the net residual value of Group’s tangible fixed assets was a 174.287) 105.022) 10. classified as assets with an indefinite useful life.103 64 Supplementary notes .382) (315) (562) (5.595 19.10 36.252 Equip.216 113.220) 31.541 8.823 15 5 (198) 1.380 (4.679 (242) 1.573 (9.803) 12.450 (34) (4.31.649 (470) 5.025 1.09 Translation differences Increases Decreases Impairment losses (Note 11) Other changes Depreciation for the period Balance as of 12.435) 12.09 Translation differences Increases Decreases Impairment losses (Note 11) Other changes Depreciation for the period Balance as of 12.991 (1) 859 (121) (1. 12.901) 29.243 (312) (1.408 24 (115) Total 11.01. Key money and Other intangible assets with definite useful life The following table details the movements of these assets in the current and previous fiscal year: Euro 000’s Key money Balance as of 01.283 5 2. 10.480) 11.305) (24.448 (858) (2) (5.721 (1.818) (23.526 90.925 (2) (320) 997 1.949 (2.121 (19) 419 (478) Other Intangible assets Other trademarks Software 669 862 9.01.102 2.31.648 (115) (3.131 Goodwill represents the amounts paid for this purpose by the Group to take over certain leases of commercial spaces where some DOS operate (key money).Group 2010 Annual Report 9.1 millions euros (FY 2009: 105.744 17 (245) (8.9 millions euros).164) 27. Euro 000’s Land and buildings 41.845 1.258) 40. 5.315) 30.550 105.155 (229) Leasehold improve 33.911) 8.613 5 5.252 174.237) 18.952 (1) 27 Plant and machin.476) 21.750 (6) 5.287 (1.720 1 66.300 (282) 2.903 (420) Others Total Balance as of 01.962 (5.233 (36) (3.504) 8.766) 3.333 858 (2.827 (155) (696) (6.31.852 41 6. The changes in “Brands” are comprised by long-term charges with a defined useful life incurred to protect the brands owned by the Group.762 Other assets 1.09 Translation differences Increases Decreases Impairment losses (Note 11) Other changes Amortization for the period Balance as of 12.10 (1.864 8.907 636 2.

V. (note 13).84% was used (the WACC rate used at December 31st 2009 was 8.Group 2010 Annual Report The item “land and buildings” consists primarily of the values of the buildings and land on which the parent company operating headquarters stand. The terminal value was determined as disposal value.6%). In application of the method prescribed by IAS 36. 11. The value in use is represented by the discounted value of future cash flows that are expected from continuous use of the assets associated with the cash generating unit and by the terminal value attributable to them (the latter is applied only to the second level CGU).The CGU identified at this level are represented by the individual DOS. iii. which is used by the parent company TOD’S Japan K. The recoverability of the amounts recognised on the financial statements was verified by comparing the net book value attributed to the CGU with the recoverable value (value in use). identifiable group of assets that can generate cash flows and which are fully independent on the consolidated financial statements. of 8. organised as a matrix structure. as well as property.267 thousand euros increase during the year is attributable). Second level.The assets that may be exactly allocated to each DOS were tested. the Omotesando building in Tokyo (to which the 66. human resources and information technology). the budget projections comply with the prescriptions of IAS 36. finance and administration.” The criterion used to determine “value in use” is based on the provisions of IAS 36. net of taxes. and is based on the current value of expected future cash flows (Discounted cash-flow analysis . a constant EBITDA margin and a constant tax rate of 33%. In particular: i. according to the different functions/activities on the value chain. discounted at a net interest rate that reflects current market rates for borrowing money and the specific risk associated with the individual cash generating unit.A. To determine the “value in use. The TOD’S Group subsequently identified the directly operated stores (DOS) as CGU.2 million euros represented by proprietary brands and 11. The analyses performed on the recoverability of Group’s assets (including 137.The Board of Directors first assessed the methods and assumptions used in developing the model. The medium term projection of budget figures for FY 2011 was carried out on a time horizon limited to the foreseeable future. Impairment losses The recoverability of the residual value of assets with an indefinite and definite useful life.8 million euros in goodwill from business combinations) showed that there was a 65 Supplementary notes .These prudent assumptions represent trends that are lower than the historic (including recent) trend of the Group. using an average rate of sales growth of 5%. which refers to their “value in use.The Group purchased the building in November 2010 through acquisition of the entire share capital of Holpaf B.” a WACC. That budget was prepared and approved by the Board of Directors of the parent company TOD’S S. it was prepared according to the royalties method. The organisational structure and type of business was considered in determining the CGU.DCF). as well as the rates of return on brand positioned at the lower end of the market for licenses. sales and distribution.K. which is presumed to derive from the continual use and disposal of an asset at the end of its useful life.Operating Segments. ensure maximisation of the levels of profitability. on the assumption that the Group would be a going concern for the foreseeable future.A single CGU at the level of the TOD’S Group was identified at this level. Consequently. which may be alternatively broken down by brand. channel and region.This approach is based on the unified view of the business (also see IFRS 8 . and the Group’s assets as a whole were tested.The impairment test was then carried out at the following levels: First level. paragraph 4). product. the TOD’S Group has identified the cash generating units (CGU) that represent the smallest. where the transverse nature of many central and peripheral service activities (especially the supply chain. legal.p. using the same prudent growth rate used to extrapolate budget data (5%) for future projections. ii. determined by referring to the discounting rates used by a series of international analysts in financial reports on the Group. The discounted cash flow analysis was carried out by using the FY 2011 budget as its basis. In regard to strategic assets (brands). plant and equipment. as its administrative head office and as the location for the most important TOD’S flagship store in Japan. was determined to ensure that assets with a value higher than the recoverable value were not recognised on the financial statements.

V. growth rates. 12.31.V..This figure was based on the value of the pro-forma net equity of Holpaf B. pursuant to a lease agreement made on February 22nd 2005 with Holpaf B.92/EUR 1). and adjustment of the price according to the differences between the net financial position of the acquired company at the closing date and the pro-forma net financial position at September 30th 2010. insofar as Holpaf B. exceeding 1 billion euros. Moreover.Group 2010 Annual Report positive difference between the value of forecast cash flows and the aggregate amount of assets (cover).. This deal is classifiable as a related party transaction. the analysis carried out at the level of individual cash generating units (DOS) did nt revealed indicators of impairment for each of the cash generating units (DOS).K. 13. it would be necessary to make unrealistic base assumptions to render the “value in use” equal to the book value of Group assets (the breakeven hypothesis). EBITDA margin) and determination of the terminal value (perpetual annuity). a company belonging to Diego and Andrea Della Valle. in order to reveal the effects produced on the “value in use” by a reasonable change in the basic assumptions (WACC. and controlled by Diego Della Valle (also see note 24).01. have been recognised since this previous financial year. a Dutch company with head office in Amsterdam.V. The sensitivity analysis performed on the impairment test in accordance with IAS 36. Investment property This account refers to a property owned by the Group as a real estate investment and leased to third parties.This estimate is based on the market prices for similar properties in terms of location and condition.V.V. in accordance with the reference accounting standards (IAS 16. the individual assets (principally comprised by the real property) and the individual liabilities that were acquired (substantially represented by bonds) have initially been recognised at their fair value. The transaction does not represent a business combination for accounting purposes. by Diego DellaValle & C. through Goral Investment Holding B.1 million at the exchange rate in effect on the closing date (JPY 110. was indirectly controlled. Holpaf B. while also considering the Japanese tax liability for the higher market value of the property as opposed to its cost recognised for tax purposes. Equity investments On November 26th 2010 (the closing date) the Group acquired 100% of the shares of Holpaf B. SAPA.The building houses the administrative offices of TOD’S Japan and also serves as the location for the most important TOD’S flagship store in Japan. The price for sale of the company shares was agreed in the total amount of JPY 230 million. as indicated in IFRS 3.10 Increases Decreases Depreciation for the period Balance as of 12. owns a property (land and building) in the Shibuya district of Tokyo.TOD’S Japan K. 66 Supplementary notes . IAS 32 and IAS 39).Therefore. has used this building on an exclusive basis since 2005. Euro 000’s Historic cost Accumulated depreciation Balance as of 01.10 115 (66) 49 (3) 46 No changes in the fair value of this investment. Given the significant value assumed by the cover. about 250 thousand euros. did not reveal an appreciable impact on determination of the “value in use” and cover. on one of the most prestigious and heavily trafficked streets of the quarter popularly known as Omotesando. about Euros 2. at September 30th 2010.V.

Del.Del.U. .6 million euros. USA Inc.802 Direct subsidiaries TOD’S Deutsch.A.600. S. S. Elpidio a Mare .Del.l. .long term Net used cash flow Cash Bonded loan .A.U.todsgroup.Com S. . Co .Del.A S.C.218.700.Euro 31.6) 63.Usd 10. S. .euro 61.) .4) 24.S. Hi .C. the Group fully repaid a shareholder loan for 20.U. Ca . S.Usd 10.56 % held: 100% Del. New York .V.S.euro 780.000 % held: 100% Il. USA Inc.200 % held: 100% Indirect subsidiaries Cal. please see the Disclosure drafted in compliance with the rules set out in the new Annex 3 of the Related Parties Regulation no. Elpidio a Mare .short term Cash Impact on Equity (0.2 (3.U.S.Usd 10.A. Sacramento. Wilmington. Ca .Usd 10.C. DE . . USA Inc. .000 % held: 100% Holpaf B.000 % held: 100% Deva Inc.Usd 10.r.0 There was no material impact on income for the year. .A. At the same time it acquired the share capital.C.U.200 % held: 100% 67 Supplementary notes .Del.000. Nv . S.Italy Share Capital (S.000 % held: 100% Or.U. S.Usd 10. Inc.000 % held: 100% An.C.C. Il . .C.387.A.C.S.Del.C. S. Beverly Hills.S. USA Inc.Netherlands S.Usd 500. Denver.Italy S. which is also available on the corporate website www.U. Tallahassee. Fl .000 % held: 100% Neva.S. Springfield. The scope of consolidation at December 31st 2010 is fully illustrated as follows: Parent Company TOD’S S.Euro 5. Inc. USA Inc.C.U.S.A. in accordance with the sale and purchase agreement signed by the parties. S.Germany S. S. .6) 66.000 % held: 100% Hono.Del.000 % held: 100% Colo.C. which had been granted by the previous owner before the acquisition.A.4 2.C.C.3 (2.euro 153.S. Honolulu. on the Group’s consolidated assets and liabilities at December 31st 2010: Euro mn Operating working capital Tangible fixed assets (Land and Building) Other non-current assets (liabilities) Capital invested Bonded loan . S.S.France S. . .U. For a complete analysis of the transaction.A.C. Amsterdam .euro 2.com.p.C. .Netherlands S.Del.000 % held: 100% to be continued TOD’S France Sas Paris . Carson City.Usd 10.0 (37.Usd 3.000 % held: 100% Flor. 17221/2010.V. USA Inc. Gmbh Dusseldorf ..000 % held: 100% TOD’S International BV Amsterdam . insofar as the acquisition was completed only on November 26th 2010. .A.Group 2010 Annual Report The following table illustrates the principal effects of the financial position of Holpaf B.6) (1.6) 25.

C.00 % held: 100% Sandel SA San Marino S. .k.C. .000 % held: 100% Re.464) 203. 14.Del.C.900.euro 500. .09 47.r.601 21 (8.C.000 % held: 100% Filangieri 29 S. .A S.Huf 42. Bruxelles .819 6. . S.The impairment charged to income for FY 2010 totalled 5.000.C.000 % held: 50% TOD’S Belgique S.239 150. .C.Gbp 350. Elpidio a Mare . . .l. Inventories They totaled 203.Switzerland S. . where the Group has the power to exercise direct or indirect control of those companies’ financial and operating policies in view of realizing benefits from their activities.000 % held: 100% TOD’S Saint Barth Sas Saint Barthélemy S.77 % held: 100% TOD’S Singapore Pte Ltd Singapore S.412 1 (12.euro 300.C.USD 6. .000 % held: 100% TOD’S Hong Kong Ltd Hong Kong S.C.811 (20) (3.Albania S.666 (537) 7. S. and thus disposes of the same percentage of voting power at the Shareholders’ Meeting.euro 25.Italy S.euro 100.Chf 200.C.r.Great Britain S.000 % held: 50% It is assumed that the Group controls those companies in which it does not own more than 50% of the capital.INR 113.485 5.Italy S.l.000 % held: 100% TOD’S Korea Inc.136 12.000.r. Napoli .Del SA Geneva . .000 % held: 100% TOD’S UK Ltd London . . .Spain S.10 51..00 % held: 50% TOD’S India Retail Pte Ltd Mumbai ..p.Jpy 100. Co Ltd Shanghai .C.euro 50.Sgd 300.p.00 % held: 50% TOD’S (Shanghai) Tr.C.Japan S.539.000.C.China S.000 % held: 100% TOD’S Luxembourg SA Luxembourg S.600.Great Britain S.000 % held: 100% Webcover Ltd London .000 % held: 51% Alban.C.000 % held: 100% Gen.Belgium S. . Tirana .Se.629) 196. and include: Euro 000’s Raw materials Semi-finished products Finished products Advances Write-down Total 12.702 158.C. .euro 720.000.India S.euro 468. Seoul . S.136 thousand euros at December 31st 2010.U.MOP 20.Korea S.Usd 16.7 million euros.Del Sh. .S.Tx .000.000 % held: 100% Del. 68 Supplementary notes .Gbp 1.Italy S.Pav. Elpidio a Mare .31. S.C.r.C.Won 1.000.00 % held: 100% TOD’S Macao ltd Macao S.31.000.euro 258.Usd 10.C.000 % held: 100% TOD’S Espana SL Madrid .Del Kft Tata .C.C.085 The allowance for inventory write-downs reasonably reflects the technical and stylistic obsolescence of the Group’s inventories at December 31st 2010.C.000 % held: 100% TOD’S Japan KK Tokio .835) 7.000.C.051 Change 3.000 % held: 100% Un.euro 31. . .550.900. Dallas.l. .Ungary S.Group 2010 Annual Report continuing Indirect subsidiaries TOD’S Tex Del USA Inc.l.

348 (3.633 4. Shareholders’ equity 16.2 Tax receivables.257 The other current assets are shown net of impairment for 310 thousand euros.10 122.802 euros.A.31.Group 2010 Annual Report 15.628 1. 15. 16.561 The allowances for doubtful accounts represent the reasonable estimate of impairment due to the specific and generic risk of not being able to collect the trade receivables recognised on the financial statements. Euro 000’s Deferred costs Others Total other current assets 12. All shares have equal voting rights at the general meeting and participation in profits.31.p. At December 31st 2010.31.10 Increases Used during year Balance as of 12. They represent Group’s exposure in consequence of its wholesale distribution activity.999 Change 11. and was divided into 30.1 Trade receivables. Capital reserves are exclusively related to share premium reserve.10 3.3 Other current assets.006 Change 1.01.630 12.263 12.401 shares having a par value of 2 euros each.156 15.349) 107.368 193 11. 69 Supplementary notes .215 thousand euros) and are mainly comprised of receivables for Value Added Tax claimed by the Group from the tax authorities of the countries where it operates. Other current assets 15.The following schedule shows the changes during the year in the allowances for doubtful accounts: Euro 000’s Balance as of 01. 16. fully subscribed and paid in.2 Capital reserves.005 3.001 9. Euro 000’s Trade receivables Impairment losses Net Trade receivables 12.055 thousand of euros as of 31 December 2010. Such reserve has not changed in respect of last year.856 thousand euros (FY 2009: 2.31. amounting to 214. These total 3.609.31.10 7.349 366 (559) 3. the company share capital totalled 61.560 12. and it did not execute any transactions on those shares during the year.156) 119.09 6.716 (3. At December 31st 2010 the Group did not own treasury shares in the parent TOD’S S.09 111.1 Share capital.218.629 3.The amount accrued for FY 2010 totalled 366 thousand euros..

267) 1.01.431 884 (5.042 39. for currency futures contracts (see Note 18).668 (39.31.3 Hedging and translation reserves.10 Retained earnings 249.754) (45.743 44.407 (4.A.492) (38.133) (212) 231.547 2.076 109.076 Total 332.01.055 Balance as of 01.e.212 214.01.497 (38.09 Share based payments Options exercised/expired Others Balance as of 01.047) 109.. The following schedule illustrates the changes in fiscal 2010: Euro 000’s Balance as of 01.667) 1. Euro 000’s Balance as of 01. the difference between the shareholders’ equity of the subsidiaries. that hedge expected transactions (i.807 384.055 - 16. 16.698) 3.547 2.262) 85.263) The hedging reserve includes the measured value of derivatives.262) 85.780) 132 3.31. as well as the effects of consolidation adjustments on shareholders’ equity. These reserves include the equity reserves of the parent company TOD’S S.Group 2010 Annual Report Euro 000’s Additional Paid-in capital reserve 208.01.190 (4.710 (153. and the carrying values of the equity investments.644) 214.527 4.4 Earnings reserves.688 85.451 70 Supplementary notes . cash flow hedges).492 Profit(loss) of period 82.333) (2.055 Stock options reserve 5.140 309 (805) (4.983 309 4.843 5.082) 132 Total (9.10 Translation reserve (8.01.09 Increase in fair value of hedging derivatives Exchange differences Transfer to P&L Account of hedging derivatives Others Balance as of 01.688 4.p.10 Increase in fair value of hedging derivatives Exchange differences Transfer to P&L Account of hedging derivatives Others Balance as of 12.431 884 (5.754 (44.807 299.076 (212) 340.10 Allocation of 2009 result Extraordinary Dividends Profit for the period Other changes Balance as 12.10 214.10 Share based payments Options exercised/expired Others Balance as of 12.754 (107.01.644) - Total 213.667) Hedging reserve (1.914) 109.055 214.190 (3.31.09 Allocation of 2008 result Dividends Profit for the period Other changes Balance as of 01.720) (543) (66) (2.

50 euros per share) approved by Shareholders’ Meeting of the parent company at September 21st 2010 (Note 5).V. 80 thousand euros and 914 thousand euros.086 2. please see the section Provisions.805 2. for 75 thousand euros and 1. issued in 2006 by the subsidiary Holpaf B.803 3. Euro 000’s 2011 2012 2013 2014 2015 over 5 years Total Loan 1.The financial liabilities indicated as Notes A-1 and A-2 represent two amortised.821 Notes A-1 755 838 911 1.480 1. For an analysis of the guarantees securing the two bonds. The following table illustrates the repayment schedule of principal (face value) for the aggregate amount of loans.429 42.001 6.233 33.060 thousand euros. and the effect of fair value measurement upon initial recognition. being used to pay out the extraordinary dividend (at a rate of 3.234 47.074 Res.078 Notes A-2 1.986 48.899 47.V.521 20. The debt referred to at Notes A-1 and A-2 includes the residual debt for principal (Note A-1: 7. contingent liabilities and assets (note 22).414 39. Debt in Euro 6.Group 2010 Annual Report The profits reserve was drawn down by 107. respectively.146 32. to refinance the debt assumed for purchase of the land and construction of the building in Omotesando.592 1.665 1. respectively.611 Financing. (also see notes 13 and 24).683.667 19.951 The mortgage loan is a long-term floating rate loan contracted by the parent TOD’S S.078 thousand euros.31.819 785.428 35.long term Total Total Financing (short/long term) 12.819 7.818 71 Supplementary notes .819 26.497 2.10 27.485 7.31.p.805 75. Debt in currency 6. non-convertible fixed-rate bonds denominated in yen. 17. and Note A-2: 31.625 12. and specifically by Intesa San Paolo (Notes A-1) and Société Européenne de Banque (Notes A-2). which the Group took over following acquisition of the entire share capital of Holpaf B.741 1.09 18.820 8.283 5. Bank overdrafts and financing The Group’s bank borrowings at December 31st 2010 are broken down as follows: Euro 000’s Current account overdraft Financing .415 2.short term Total financing short-term Financing .The two bonds were fully subscribed by banks.A.340 Change 8.925 6.892 3.965 31.951 12.1 million euros.003 2.925 thousand euros) and the interest accrued for the year. At December 31st 2010 they were represented by three position to medium-long term: (Currency 000’s) Type Mortgage loan Notes A-1 Notes A-2 Total Counterpart Currency Unicredit Bank Euro Intesa San Paolo Jpy Société Européenne de Banque Jpy Maturity 2014 2017 2021 Res.575 2.

At the closing date of the financial statements.234 12. This requires recognition of the derivatives in equity at their fair value and recognition of the changes in fair value. the net fair value of foreign currency hedges was negative for 249 thousand euros.31.072 Jpy 25. is exposed to exchange rate risk principally for revenues denominated in currencies other than the euro (see Note 19). characterised by its major presence on international markets.951 75.283 47.333 thousand euros (FY 2009: 693 thousand euros).340 8.480 8.961 39. At each reporting date.072 2. derivative contracts were made for every single foreign currency to hedge a specific percentage of revenue (and cost) volumes expected in the individual currencies other than the functional currency.388 6.189 14.The net fair value of foreign currency hedges that were earmarked for cash flow hedges was 469 thousand euros (liability) at December 31st 2010.000 Purchase Notional in euro 13.779 17.150 13.637 6.779 Total 18.818 Inr 2.000 407. which were closed between January and December 2010.011 12.340 26. 2.000 6.145 10.31.284 7. 72 Supplementary notes .388 19.09 Euro 000’s Bank overdraft Financing Total Euro 8.818 6. the hedge accounting method is applied.964 At the same date. see Note 19. which varies according to the type of hedge at the valuation date.343 Total 27. Derivative financial instruments The TOD’S Group.336 108.576 US dollar Hong Kong dollar Japanese Yen British pound Swiss franc Singapor dollar Euro Canadian dollar Total 6.Against the contracts for these last hedges.050 1.300 12.340 Inr 701 701 Jpy 17.820 For interest rate sensitivity analysis (IFRS 7).935 thousand euros recognised as a reduction in revenues and 255 thousand as an increase in costs.190 thousand euros in hedge derivatives were transferred to the profit and loss account.050 1. the notional amount of the currency futures agreements (sale and purchase) entered into by the Group are summarized as follows: (Currency 000’s) Notional in currency 24. 18.613 Notional in currency 141. including 1.000 1. including assets for 2. In order to realise the objectives envisaged in the risk management policy adopted by the Group.10 Euro 000’s Bank overdraft Financing Total Euro 6.Group 2010 Annual Report The breakdown by currency of the balance of bank overdrafts and financing at the reporting date is as follows: 12.552.084 thousand euros (FY 2009: 594 thousand euros) and liabilities for 2.132 66.780 Sale Notional in euro 17.211 41.300 10.

73 Supplementary notes . (notes 13 and 24).The Group subjects these revenues to a hedging policy designed to streamline credit management and reduction in the associated risk. As part of this policy.V. and dividing the deposits amongst a reasonable number of bank counterparties.510 Total 122. i. In the specific case. Moreover. ii.125 Overdue 60>120 6. – interest rate risk. the Group’s profitability. in order to monitor and prevent possible solvency crises.5 million euros. the due dates or renewal dates of its payables or the liquidity of its financial investments and market conditions. the Group constantly monitors the financial risks connected with its operations. Liquidity risk Liquidity risk is the risk that the Group will not dispose of the funds necessary to meet its short-term commitments and financial requirements. Market risk IFRS 7 includes in this category all risks that are directly or indirectly connected with the fluctuation in prices on physical and financial markets to which the company is exposed: – exchange rate risk.2 million euros in liabilities. Also at December 31st 2010 financial resources were far higher than the Group’s debt exposure: net financial position was 96. The Group’s policy for financial assets is to keep all of its available liquidity invested in demand bank deposits without recourse to financial instruments. on the other hand. The following analysis of risks faced by the TOD’S Group highlights the Group’s level of exposure.The principal factors that determine the Group’s degree of liquidity are the resources generated or used by operating and investment activities and. in order to assess their potential negative impact and undertake appropriate action to mitigate them.2 million euros.254 0>60 29. including 42. and its current and historic capacity to generate cash and its relatively insignificant exposure to the banking system are factors that lead to the conclusion that it faces no liquidity risk over the foreseeable future.827 Over 3.8 million euros in medium-long term liabilities. Group’s revenues are fairly broken down between revenues generated by the directly operated store network (51%) and non-captive sales to third parties (49%). In particular. Hedging of financial risks (IFRS 7) The TOD’S Group has implemented a system for monitoring its financial risks in accordance with the guidelines set out in the Corporate Governance Code of Listed Companies. prudently selecting them according to the return on deposits and their solidity. The following table illustrates the ageing of trade receivables outstanding at December 31st 2010: In euro 000’s From third parties Current 83.716 The prudent estimate of losses on the entire credit mass existing at December 31st 2010 was 3.Group 2010 Annual Report 19. Credit risk Credit risk represents the exposure of the TOD’S Group to potential losses stemming from failure to discharge its obligations towards trading counterparties. with periodic analyses of the creditworthiness of all customers. the outstanding debt exposure at December 31st 2010 was heavily impacted by the payment of an extraordinary dividend of 107. – commodity risk. even on the money market. both long-standing and potential ones. comprised by 171.1 million euros (note 5) and the previously mentioned acquisition of Holpaf B. iii. connected with the volatility of prices for the raw materials used in the production process. It also includes a sensitivity analysis designed to quantify the potential impact of hypothetical fluctuations in benchmark parameters on final results. the Group’s policy does not envisage granting credit to customers.7 million euros in assets and 75.

these analyses are based on simplified scenarios applied to the final results for the periods referred to.The residual component of this risk is connected principally with “translation risk”. The Group monitors the changes in the exposure. the potential affects of fluctuations in the exchange rate for the euro against the principal currencies to which the Group is exposed were analysed. The breakdown of forward currency contracts (for sale and purchase) made by the Group is illustrated in Note 18.The TOD’S Group realises greater revenues than costs in all these currencies. but it avoids running the risks of speculation.The following table illustrates the sensitivity to reasonably likely changes in exchange rates on pre-tax profit (due to changes in the value of current assets and liabilities denominated in foreign currency) and Group equity (due to changes in the fair value of foreign exchange risk hedge instruments) while holding all other variables constant: 74 Supplementary notes . in the amount according to which they correspond to budget forecasts.The Group pursues these aims by entering into forward contracts for each individual currency to hedge a specific percentage of the expected revenue (and cost) volumes in the individual currencies other than the functional currency. The measured amount of this risk is recognised in the “translation reserve” in equity. The Group’s risk management policy aims to ensure that the average countervalue in euros of receipts on wholesale transactions denominated in foreign currencies for each collection (Spring/Summer and Fall/Winter) is equal to or greater than what would be obtained by applying the pre-set target exchange rates. CHF and those of certain countries in the Far East). GBP. These positions are not hedged for speculative or trading purposes. they cannot be considered indicators of the actual effects of future changes in benchmark parameters of a different asset and liability structure and financial position different market conditions. Due to its commercial operations. No hedges of this risk existed at the reporting date. • monitoring of positions and alert procedures. since there is no physical market subject to actual fluctuations in the purchase prices for raw materials used in the production process. changes in the exchange rate between the euro and the aforementioned currencies can impact the Group’s results. • implementation of hedges.As envisaged by IFRS 7. against a cost structure that is concentrated principally in the eurozone. the Group might forego opportunities to realise certain gains. Consequently. consistently with the strategic policies adopted for prudent management of cash flows. nor can they reflect the interrelations and complexity of the reference markets. The Group defines its exchange risk a priori according to the reference period budget for the reference period and then gradually hedges this risk upon acquisition of orders. the Group is exposed to fluctuations in the exchange rates for currencies in which some of its commercial transactions are denominated (particularly USD. With the exception of the foregoing. Exchange rate risk. The following paragraphs analyse the individual risks. therefore. The process of hedging exchange rate risk inside the Group is broken down into a series of activities that can be grouped into the following distinct phases: • definition of operating limits. In order to determine the potential impact on final results. using sensitivity analysis as necessary to highlight the potential risk on final results stemming from hypothetical fluctuations in benchmark parameters. the Group is not particularly exposed to foreign exchange risk. • identification and quantification of exposure. Governance of individual foreign currency operations by the Group’s subsidiaries is highly simplified by the fact that they are wholly owned by the parent company. The balance sheet accounts denominated in foreign currency were identified for the sensitivity analysis.Group 2010 Annual Report The TOD’S Group is exposed to exchange rate and interest rate risk. By their very nature.This risk stems from the fact that the assets and liabilities of consolidated companies whose functional currency is different from the euro can have different countervalues in euros according to changes in foreign exchange rates.

823.0 (27.2) (6. respectively.379.226. since fluctuations in exchange rates impact income in an amount equal to what is recognised in the fair value of adopted hedge instruments.859.9 57.8 (391.1) (9.6 (4.9) (5.416. issued in the eurozone. (notes 13 and 24) are subject to a fixed rate of 2.797.127.7) (63.110. Level 2 – inputs other than the quoted prices indicated hereinabove.5 43.6) (7. Level 3 – inputs that are not based on observable market data.The following levels have been defined: Level 1 – quoted prices obtained on an active market for the measured assets or liabilities.2 (12. which were consistent with applicable market rates.640.220. there were no current interest rate hedges current at December 31st.718.5 (6.4) 4.a.7) (1. Impact on pre-tax profit 5% writedown of the foreign currency FY 2010 FY 2009 (7.482. liabilities and future commercial flows that were not hedged.3) 5.2 (3.8 23.645.9 342.478.2) (21.475. 75 Supplementary notes .V.750.407.600.2 (3.8) 2.3 (391.743.425.563.146.894. the financial instruments carried at fair value have been classified according to a hierarchy of levels that reflects the materiality of the inputs used to estimate their fair value. which are observable either directly (prices) or indirectly (derived from prices) on the market.787.6) Impact on Shareholders’ equity (4.3 2.185.268.421. The sensitivity analysis carried out on interest rates has shown that a hypothetically unfavourable change of 10% in short-term interest rates applicable to the adjustable rate financial liabilities existing at December 31st 2010 would have a net pre-tax impact of about 56 thousand euros in additional expenses (FY 2009: 58 thousand euros).1) 22.9) 30.237.8) (339. Interest rate risk is hedged consistently with consolidated practice.7 38.143.940.601.712.861.4 6.629.484. Finally.9) 13.167.012.241.6) (309.5 16. The exposure of the TOD’S Group to interest rate risk is limited to its own adjustable rate debt instruments.6 384. iv.887.5 (20.580.6) (347.877.667.239.3 10.9 5.004. which is designed to reduce the risks of interest rate volatility by simultaneously pursuing the aim of minimising associated financial expenses.1) (27.5 24.2) (2.0 375.6) 2.8 Impact on pre-tax profit 432. the financial liabilities (Notes A1 and A2) assumed in 2010 following the acquisition of Holpaf B.564.8) 432.5) (14. The fair value of derivative financial instruments existing at December 31st 2010 (Note 18) has been classified as Level 2.477.7 1. 2010. Considering the insignificant amounts involved (Note 17). Interest rate risk.94% and 3.191.9 The analysis did not include assets.0) 3.3) Revaluation/Writedown foreign currency 5% -5% Impact on pre-tax profit 5% revaluation of the foreign currency FY 2010 FY 2009 7.241.123.570.9 6.9) (34.239%.5) (39. Categories of measurement at fair value In accordance with IFRS 7.Group 2010 Annual Report Euro Currency CAD CHF GBP HKD JPY KRW RMB SGD USD EUR Other Total Euro 000’s FY 2010 Country Canada Switzerland UK Hong Kong Japan South Korea China Singapore USA Europe n.

659 5.31.064 12.997 710 9.9 million euros were recognised on the 2010 financial statements for losses that can be carried forward.31.09 Assets Liabilities 5.634 thousand euros). reference was made to the presumed percentage weight of the taxes that will be imposed on income in the years when those taxes will be charged.008 20. Other current liabilities Euro 000’s Trade payables Tax payables Other liabilities Payables to employee Social security istitutions Other Total other liabilities 12.072 516 7.555 (5.099 7.472 (22.817 29. Following is reported the composition of the amount of deferred tax assets and liabilities at year end.31.501 5.31. and that will be applicable starting from FY 2011. depreciation and write-downs Provisions Property.694 17.10 32.369 Deferred tax assets. totalled 7.999 thousand euros (FY 2009: 5.027 246 1.202 When determining future tax impact (IAS 12).969 17.409 27. and not yet used by the Group at December 31st 2010.170 Change 26.369) 103 Change 9.731 5. recognised by certain subsidiaries as losses that can be carried forward pursuant to local tax laws.042 7.746 14.472 1.670 3.31.436 76 Supplementary notes .425 32.921 4.10 130.027 (27.894 7.31.848 11.10 Assets Liabilities 6. according to current tax laws in the various countries involved and any changes in tax rates following currently known tax reforms.Group 2010 Annual Report 20.305 12.087 15. highlighting items that mainly contributed to its determination: Euro 000’s Amortization.182 3.722) 4.558 15.291 3.999 343 1. lead to the following tax assets and liabilities: Euro 000’s Deferred tax assets Deferred tax liabilities Net balance 12. Deferred tax assets and liabilities At the reporting date. 21. determined on the basis of temporary differences between the pre-tax result on the financial statements and taxable income of consolidated subsidiaries.634 187 746 22. In this regard.09 22. New deferred tax assets of 1. recognition of the effects of deferred tax assets.841 44 12.415 22.353) 4.09 103.722 93 988 22.106 4. no significant changes have been reported as at today by the tax departments in the countries where the Group operates. plant and equipment (leasing) Cost deductible over several years Inventory (internal profits and write-downs) Tax losses that can be carried forward Derivative financial instruments Other Total 12.

p. has undertaken to hold harmless the rights to repayment of the bonds held by Intesa San Paolo and Société Européenne de Banque even in the event of damage or destruction of the property due to any event.652. During the year.TOD’S S.2 million euros.V. At December 31st 2010.TOD’S S. Production plant at Sant’Elpidio a Mare – Referring to the loan obtained by the parent company (note 17). 77 Supplementary notes . the parent company TOD’S S.Group 2010 Annual Report Tax payables at December 31st 2010 include 16. and a first mortgage in favour of Société Européenne de Banque for JPY 5.5 million euros for the payable (net of prepayments and of receivables that can be offset upon payment) to institutions in the various countries where the Group operates and accrued on FY 2010 income (FY 2009: 0. Holpaf B.V.2 Potential liabilities and other commitments. which may be exercised only if Holpaf B. TOD’S S. “Other” includes advances from customers of 4. As additional security for repayment of the bonds indicated at sub-indent iii.3 Derivative financial instruments. 22. (when taking over the contractual obligations assumed by the previous guarantor. as collateral for the lent principal and all expenses resulting from the loan agreement. Guarantees granted to third parties.000 million (9.A. both as collateral for the principal and all expenses resulting from the loan agreement.4 million euros). 22.2 million euros). defaults during the term of the bonds and the creditor demands payment of the mortgage.A. At December 31st 2010.p. (note 17). Provisions and potential liabilities and assets 22. first mortgage in favour of the lending bank Unicredit. Mortgages.1 Provisions. Group real estate has been encumbered by the following mortgages: iii.V. see Note 18.843 thousand euros in 2009). In this scenario. recognised for 30 million euros. a first mortgage in favour of Intesa San Paolo for JPY 1.925 thousand euros) to secure the contractual commitments of certain subsidiaries. 22. Guarantees received from third parties. b) hereinabove. c) All Risks Indemnity Letter.p. iv.369 thousand euros (825 thousand euros in 2009) as the prudent estimate of liabilities that the Group might incur if it loses a series of pending lawsuits.A. ii. and 3.706 thousand euros (11.0 million euros).0 million euros). All derivative contracts made with leading financial institutions will expire in 2011.p. For an analysis of this detail.A. the Group used derivative financial instruments to hedge transactions in currencies other than the euro.5 million euros for the variable portion of the compensation of parent company directors accrued in 2010 (note 24). Guarantees received by the TOD’S Group from banks as security for contractual commitments totalled 12.238 million (39. issued the following additional guarantees: a) Property Purchase Option: a put option granted to Intesa San Paolo on the Omotesando property. b) Earthquake Indemnity Letter. at the time of default). equal to the amount of the residual debt of the two bonds not repaid by Holpaf B.. They include 1. vis-à-vis the subscribing banks).295 thousand euros in guarantees (FY 2009: 1.V. Accruals for the year totalled 673 thousand euros. Tokyo building – As collateral for two bonds issued by the subsidiary Holpaf B. the Group granted a total of 2. has undertaken to hold harmless the rights to repayment of the bonds held by Intesa San Paolo and Société Européenne de Banque even in the event of damage or destruction of the property in an earthquake.8 million (52. the residual face value of the principal for the two bonds amounted to JPY 4. Other guarantees. must purchase the property at a specific price that varies over the term of the option (decreasing price. i.

with an actuarial assessment that accounts for the rate of rotation of employees.5 45. the employee severance indemnities accrued from January 1st 2007 had to be allocated to supplemental retirement plans (pension funds) or.7 28.562 173 440 (692) 9.3 38. were classified as a defined benefits plan (IAS 19) only for firms with less than 50 employees.1 Defined contribution plans. Following the statutory amendments introduced beginning January 1st 2007.9 280.0 317. the liability accrued vis-à-vis employees was 2. 23.2 Defined benefit plans.483 (1) The statutory amendment envisaged that for firms with more than 50 employees.9 2009 47. the principle requires that the accrued amount be projected into the future in order to determine the amount to be paid upon termination of the employment relationship.Group 2010 Annual Report 22.6 111. alternatively.483 119 372 (750) 9. and DOS. and relating only to the two Asian companies.6 35. for which the Group’s obligation does not terminate with payment of the contributions accrued on the paid compensation. to aTreasury Fund set up at the INPS (Italian National Social Security Institute).9 38. The leases entered into by the Group are for rental of spaces used as offices. a deferred payment plan in favour of all employees of the Group’s Italian companies. 23. For these types of plans.477 thousand euros). production plants. and other factors: Euro 000’s Year 10 Initial balance Current benefits Financial expenses Benefits paid Final balance 9. Since all obligations of firms towards their employees ceased starting on January 1st 2007 .The amount charged to profit and loss for the period totals 586 thousand euros.1 million in fiscal 2010. 78 Supplementary notes . Reserves for employees 23. since the amounts accrued in favour of Italian employees have all been transferred to funds outside the Group. At the reporting date.195 thousand euros (December 31st 2009: 1. the rents still owed by the Group under current agreements were as follows: Euro mn 2010 2010 2011 2012 2013 2014 2015 Over 5 years Total 56.4 Lease agreements. The Group has a defined contribution retirement plan (employee severance indemnities – TFR) in favour of employees at Group’s Italian companies with more than 50 employees (see the following section in this regard) and the Japanese and Korean subsidiaries.1 29.7 46. all accrued employee severance indemnities are covered by the rules governing defined contribution plans. At December 31st 2010. but extends until the end of the employment relationship (1).7 Operating lease instalments totalled euros 55.7 25. expected evolution of compensation.6 94. employee severance indemnities.224 Year 09 9.

no unusual related party transactions.V. the TOD’S Group modified its existing procedures governing the transparency and substantive fairness of related party transactions.p. if appropriate.V. as the seat for administrative offices and location for the most important flagship store of the TOD’S Group in Japan. and the adjustment for differences between the net financial position of the acquired company at the closing date and its pro-forma net financial position at September 30th 2010. For complete information about the transaction. prompt transmission of material information to the delegated Board of Directors committees (the Internal Control and Corporate Governance Committee and – beginning January 1st 2011 – the Independent Directors Committee. as applicable) before approval of the transaction by the Board of Directors (or. (The complete text of the “Related Party Transactions Procedure of TOD’S S. However. SAPA (a company owned by Diego and Andrea Della Valle.V.Pursuant to the agreement. (ii) the issuance of an opinion (either binding or non-binding.TOD’S S. considering the value of the pro-forma equity of the target company at September 30th 2010.This building has been used entirely by the Group since 2005 under a lease agreement made on February 22nd 2005 by Tod’s Japan K. in the amount of 20. or other related party transactions that might compromise corporate assets or the completeness and fairness of Group accounting and other information were executed during the financial year. as previously mentioned).All transactions – which are connected with the normal operations of TOD’S Group companies – were executed solely on behalf of the Group by applying contractual conditions consistent with those that can theoretically be obtained on an arm’s length basis.. The new related parties procedure was approved – after receiving the favourable opinion of independent directors – by the Board of Directors of the parent company on November 11th 2010 and came into force on January 1st 2011. after approval by the Board of Directors of TOD’S S.V. the Japanese tax liability for the higher market value of the property as compared with its recognised tax cost. the Group also fully repaid Goral Investment Holding B. 17389 of June 23rd 2010. a Dutch company fully owned by Diego Della Valle & C. and shall continue to be subjected in future.” can be found at www.A.V. as amended by Resolution no. Transactions with related parties In implementation of the Related Party Transactions Regulation adopted by CONSOB with Resolution no. Most significant transactions concluded during the period As previously described in note 13. and after issuance of a favourable opinion by the Internal Control and Corporate Governance Committee (already in line with the CONSOB regulation that would enter into force on January 1st 2011. where the majority or all members of these committees are independent directors). significant related party transactions were previously subjected. 79 Supplementary notes . to a detailed investigation involving.A. the a priori favourable opinion of the Internal Control and Corporate Governance Committee (the committee that performed the relevant functions before the new regulation came into force)..6 million euros (principal and interest accrued at the share transfer date). 17221/2010. each within the ambit of their delegated responsibilities.todsgroup.V. by the body delegated to resolve on the transaction). from Goral Investment Holding B. which is also available on the corporate website www. for the shareholder loan previously made to HOLPAF B. please see the Disclosure drafted in compliance with the rules set out in the new Annex 3 of the Related Parties Regulation no.. inter alia. with HOLPAF B. the Group always subjected significant related party transactions to detailed investigation and.p. Consequently. to bring them in line with the principles set out in the cited CONSOB Regulation. 17221 of March 12th 2010. the TOD’S Group acquired ownership of the Omotesando building (the company’s sole asset). acquired the entire share capital of HOLPAF B.1 million euros).com. inter alia: (i) a complete. The total price paid for acquisition of 100% of the shares of HOLPAF B.todsgroup.K.Group 2010 Annual Report 24.p.A. and controlled by Diego Della Valle) on November 25th 2010. in accordance with its own tradition of applying best practices on the market. was JPY 230 million (equal to 2.com). Through acquisition of the shareholding. before the new regulation issued by CONSOB came into force.. Without prejudice to the principles of procedural fairness cited hereinabove. who in the performance of their functions also avail themselves of the assistance of independent experts.

062 3.Costs Sales of products Rendering of services 89 3.881 1.047 8.716 1. lease of sales spaces.716 635 121 13 21 88 32 1.193 726 12 1. The principal object of the transactions was the sale of products.251 - 1. 80 Supplementary notes .125 6.125 7. respons.881 1.406 8.10 Receivables Payables 8. with strat.874 6.162 Sales of assets Operating lease 7. i. respons.884 Year 2010 Parent company (*) Directors Exec.062 3. Commercial transactions with related parties . with strat.519 1. with strat. with strat.474 1. Other related parties Total 1.884 1.262 612 Other operations 10 Euro 000’s Royalties 1. respons.132 (*) Companies directly or indirectly controlled by Chairman of the Board of Directors Diego Della Valle.995 4 Rendering of services 11.31. respons. with strat. Commercial transactions with related parties .474 - 1. use of the ROGER VIVIER brand license and the provision of advertising services.372 12 11.551 16 iii.111 Sales of assets Operating lease 53 68 Other operations Euro 000’s Royalties 1.141 - 635 34 120 ii.551 10 16 3.09 Receivables Payables 8. Other related parties Total 12.111 9.Revenues Sales of products Year 2010 Parent company (*) Directors Exec. Other related parties Total Year 2009 Parent company (*) Directors Exec.999 1. Commercial transactions with related parties . Other related parties Total 1. respons. show rooms and offices.Group 2010 Annual Report Developments of related party transactions pending at December 31st 2009 In continuation of contractual relationships already existing in 2009.384 9.Receivables and payables Receivables and payables Euro 000’s Parent company (*) Directors Exec.523 3.205 2.141 - 1.682 4 1. Other related parties Total Year 2009 Parent company (*) Directors Exec.365 12.31. the TOD’S Group continued to maintain a series of contractual relationship with related parties (directors/controlling or significant shareholders) in 2010.

Statutory Auditors. (including for the activities that they performed at subsidiaries) for any reason and in any form: Euro 000’s Compensation for office Directors Diego Della Valle (*) Andrea Della Valle (**) Luigi Abete Maurizio Boscarato Luigi Cambri Luca C. The following table illustrates the compensation accrued in fiscal 2010 by each of the Directors.0 1.7 24.4 6.3 2. Statutory Auditors.0 (1) 3. they have not been separately listed in the accounts.Group 2010 Annual Report iv.7 24.5 12.5 606.5 225.9 0.7 25.050 3 1.0 (2) Compens.p. they have not been highlighted in these notes. per part. 81 Supplementary notes .09 Receivables Payables 1.0 Total Statutory Auditors 210. as employ.7 25.2 11. 6.050 3 (*) Financial balances referred to the period prior to acquisition of the activities.2 6. 148. Given the insignificance of these amounts.0 309. Statutory Auditor of subsidiary Member of the Compliance Program Supervisory Body (**** No severance indemnity is provided for Directors and Executives with Strategic Responsibilities.7 78.31. di Montezemolo Emanuele Della Valle Fabrizio Della Valle (****) Emilio Macellari (****) Pierfrancesco Saviotti Stefano Sincini (***) Vito Varvaro Total Directors 925.7 6. Other compens.500.7 7. Transactions between Group companies included in the scope of consolidation have been eliminated from the consolidated financial statements.3 Legend (*) (**) (*** Chairman of Board of Directors Vice Chairman of Board of Directors ) Member of Executive Committee ) Chairman of the Statutory Board (1) (2) (3) (4) Director of subsidiary Consultant of TOD’S S. Commercial transactions with unconsolidated subsidiaries Receivables and payables Euro 000’s Special Purpose Entities (**) Total 12.7 25.7 5.5 423.8 24.A.7 6.p. in Commit.A.4 Statutory Auditors Enrico Colombo (*****) 90.400. Executives with Strategic Responsibilities of TOD’S S.100.7 6.31.7 625. Compensation of Directors.7 12. Consequently.7 2.2 (4) 6.1 Compensat.0 Executives with strategic responsibilities (3) (4) (3) 33.0 111.9 Non cash benefits Bonus and other incentives 2.7 25. and General Managers.10 Receivables Payables 12.0 745.1 44.2 225.0 Gian Mario Perugini 60.0 Fabrizio Redaelli 60.488.2 (2) 480.

811 4. Personnel costs The personnel costs incurred by the Group in FY 2010 as compared with those for FY 2009 are illustrated as follows: Euro 000’s Wages and salaries Social security contributions Employee sev.791 3.922 23.829 Executives White-collar employees Blue-collar employees Total 26.09 43 1.5 n.131 17.s 15.046 Average 09 42 1.0 0.311 82 Supplementary notes .018 117.5 n.932) 146 (1.31.937 860 2.327 21. (service cost) Stock options Total Year 2010 89.1 0.340 Change 8.359 12.595 2.s 15.913 309 107.020 105 (309) 10.573) (936) (14. Financial income and expenses The breakdown of financial income and expenses in fiscal 2010 is as follows: Euro 000’s Year 10 Income Interest income on current account Foreign exchange gains Other Total income Expenses Interest on medium-long term financing Interest on short term borrowings Foreign exchange losses Other Total expenses Total net income and expenses 2.1 The following table illustrates the breakdown of Group’s employees by category: 12.408 Year 09 1.261 82 5.069 1.5 3.774 123 14.035 205 19.079 3.4 3.804) 3.194 12.31. indem.159) 97 Change 772 4.840 Average 10 46 1.505) (790) (15.411 2010 11.256 (260) (390) (12.10 46 2.Group 2010 Annual Report 25.751 Year 2009 81.115 45 (63) (1.0 % on sales 2009 11.997 1.893 904 2.003 3.371 (215) (453) (14.963) 3.

calculated by using the theoretical tax rate of the parent company.6 0.405 31.9 0.566 32. totalled 52.2 83 Supplementary notes .2 (1.442) 52. while the theoretical tax rate for FY 2010 of other Group companies operating outside Italy varies from country to country according to local law. and are broken down into current and deferred taxes as follows: Euro 000’s Current taxes Deferred taxes Total Tax rate Year 10 57.008 (4.6) 32.6 million euros. determined by applying the IRES and IRAP tax rates applicable to 2010 taxable income as reported on the financial statements.3 (2.6%.Group 2010 Annual Report 27. including deferred taxes.180) 40.9% The parent company’s theoretical tax rate for FY 2010 (impact of theoretical tax on pre-tax profit) was 33. The following schedule reconciles theoretical taxes. Income taxes Tax expenses allocable to FY 2010.6 Rate % 33.6) 52.2% Year 09 41.585 (1. and the taxes actually charged to income: Euro mn Taxes Theoretical income taxes at the rate of parent company Tax effect of non-deductible or partially deductible costs Effect connected with the different rates of the foreign subsidiaries Effective income taxes 54.

[THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK] 84 2010 Annual Report .

REPORT OF INDEPENDENT AUDITORS .

86 Report of Independent Auditors .

87 Report of Independent Auditors

[THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK]

88 2010 Annual Report

TOD'S S.p.A. - IAS/IFRS ANNUAL REPORT AS OF DECEMBER 31ST 2010

REPORT ON OPERATIONS .

Alternative indicators of performances In order to strip the effects of changes in exchange rates with respect to the average values for the previous year from the results for the 2010 financial year.S.5 million in FY 2009. Separate Financial Statements is approved by the Board of Directors of TOD’S S.A. the typical economic reference indicators (Revenues.4%) in respect of FY 2009.p. Operating performances In line with expectations.These documents include the additional information required by CONSOB.A. and International Financial Reporting Standards . 91 Report on operations . and on the other hand.5 million euro in FY 2009. for an increase of 50. EBITDA and EBIT) have been recalculated by applying the average exchange rates for 2009.IFRSs) issued by the IASB and approved by the European Union at the same date. which are integral parts of the 2010 separate annual report.p. Note that on the one hand. both in sales and margins results. Sales revenues are equal to 577. in March 14th 2011. must not be considered as substitutes for what is set out in those standards. on the assumption of the company’s status as a going concern. as well as all subsequent notices containing provisions regarding financial disclosures. against 106.The Report on Operations must be read together with the Financial Statements and Notes to the Financial Statements.A. rendering them fully comparable with those for the previous reference period. the company performed outstandingly in FY 2010. these principles for measurement of business performance represent a key to interpretation of results not envisaged in IFRSs.1 million euros (+15. with the measures issued in implementation of Article 9 of Legislative Decree 38/2005 (resolutions 15519 and 15520 of July 27th 2006 and DEM/6064293 memorandum of July 28th 2006).0 million euros which increases by 11.2 million euros in FY 2010. EBIT is equal to 124. at December 31st 2010. Net profit for the year amounts to 83.5 million euros. 2010 Annual Report Introduction The Report by the Board of Directors on Operations is based on the Separate Financial Statements of TOD’S S.0 million euros in FY 2010 against 526.p. prepared in accordance with IAS/IFRS (International Accounting Standards – IAS.

p.600 141.856 71.100 136.509) (477) 21.9 2.121) (70.323 Change (27.402 221.592 106..431 3..050 622.227 96.540 17.2 44.824 120.713) 12.020) 4.544 (14.5 12.3 Year 09 526.654 24.9 20.899) (63.209 502.519 22.592 (14.436 20.491 120.6 17.9 20.929 552.940 15.491 120.087 (6.296 495.854 13.925 56.trade payables.053 % 9.5 23.155 79.2 22.915 (64.952 (317) 17.635 18.390) 124. 92 Report on operations .31.31.4 526.974 (5.10 178.519 106.2 Euro 000’s Main Balance Sheet Indicators Net working capital (*) Non current assets Other current assets/liabilities Invested capital Net financial position Shareholders’ equity Capital expenditures Cash flow from operations Free cash flow 12.704 75.A. amort.6 14.154 125.3 16.760 (144. 2010 Annual Report Euro 000’s Main economic indicators Sales revenues EBITDA Deprec.036) (*) Trade receivables + inventories .031 138.8 21.911 221.044 121.841 82.S.0 21.073) 106.600) 571.135 8.09 205.164 121.8 15.874 9.452 15.write-downs and advances EBIT Pre-Tax Consolidated net income Foreign exchange impact on revenues Adjusted Sales revenues Impact on operating cost Adjusted EBITDA Adjusted EBIT EBITDA % EBIT % Adjusted EBITDA % Adjusted EBIT % Year 10 577.985 11.921 Change 50.8 14.

506 19.The brand is reorganising its presence at the international level in order to reinforce its image both the domestic and foreign markets.4% from the previous year.939 2.2 9.2 111.431 15.S. where revenues grew by 16. The geographical breakdown of revenues shows the strength of the company on the domestic market.6 million euros in 2010.2 577.5 577.072 42. it grew by 15.8 5.6 6. up 5.9% from 2009.134 73.e.0 2.65 526.2 24. insofar as it is still in the phase of launching and consolidating its exclusive cachet and prestige.766 5.2 17.7 million euros.108 11.676 40.491 100.1 114.2% in FY 2010 to 419.5 84.782 0.9% to 28.0 211.p.8 82. 93 Report on operations . up 2.476 248 50.463 1.9 7.461 0.096 22.4 million euros in FY 2010.5 million euros.8 3.6 9.4 million euros in FY 2010.5 3.830 41.7) 57.7 9.5% from the previous year. Hong Kong.548 40.233 16.0 The TOD’S brand reported excellent results: with revenues of 245.5 million euros.7 9.540 % 15.0 419.1% from 2009.573 64.201 4.491 100.A.031 100. The ROGER VIVIER brand leapt upwards by 57. However.9 million euros. Sales during the period totalled 577.5 526. While the company confirms its unchallenged leadership in its core shoe business.2 14.3 89.5 million euros from 2009.6 245.213 0.0 384.031 100.031 100.198 287 50.437 15.297 4. up 53.435 66.491 100. Sales reached 64.289 9.7 65. On a comparable exchange rate basis.843 4. up 6.6%).069 0.540 35.Taiwan and South Korea were particularly brilliant.4 million euros.The sales results for the rest of Europe were positive as well: revenues totalled 114.The results posted in China.0 million euros. reflecting the excellent results of the entire collection of TOD’S brand handbags and accessories.192 8.6 42.0 369.4 million euros). up 50. Euro 000’s FY 10 Brand TOD’S HOGAN FAY ROGER VIVIER Other Total Product Shoes Leather goods Apparel Other Total Region Italy Europe North America RoW Total % FY 09 % Change 33.663 21.3 million euros in FY 2010.4 (0.846 (555) 5.5 231. i. FAY brand revenues were substantially unchanged at 81.882 14. with sales totalling 14. when revenues were 526.1 million euros in FY 2010.1 2.654 11.7 million euros in FY 2010. HOGAN brand revenue totalled 231. The United States market reported outstanding results.6 577.2% from 2009.9% from FY 2009.423 72. revenues would have been 571. up 6. the strong growth in leather goods sales was particularly significant in comparison with FY 2009 (+17.5 16.8% compared with 2009.6 3. Aggregate leather good and accessory revenues totalled 65. apparel revenues totalled 89.The “Asia and Rest of World” area also reported fantastic growth. Growth was very strong in all product categories and in all markets.2 10.As has been remarked repeatedly.0 348.3 9.342 10.462 50.0 526.524 11.138 2.2 219. 2010 Annual Report Revenues. using the average exchange rates for FY 2009.9 64.9 53. it has established a collaborative relationship with the famous designer Karl Lagerfeld.6 6. For this purpose. where revenues grew by 9. where revenues totalled 369. the best performance was reported on the American and Asian markets.0 55.1 million euros.9 million euros in FY 2010 (FY 2009: 82. Finally.8 28.1 81.540 21. analysis of the results generated by this brand is not yet entirely significant.

Net liquid assets at December 31st 2010 totalled 56.A.0 million euros. and Goral Investment Holding B. using the average exchange rates for 2009.3% of revenues.A. A major share of capex (2.1 million euros. 94 Report on operations . Net profit grew significantly: at December 31st 2010.2 million euros in 2009. representing 20.9 million euros.7 million euros.1 million euros were used for procurement of the accessory industrial equipment used to create its collections (lasts.At December 31st 2010 EBITDA amounted to 24. compared with 106.5% of company sales.2% of revenues.).e. down 63. The impact of improved production efficiency also had a positive impact on profitability.1 million euros for the transfer of company shares and 22 million euros for a capital grant to Holpaf B.V.1 million euros compared with FY 2009. which represent a strategic asset. up from 9. net profit for the year totalled 83. up 17. Second of all. The breakdown of 2010 revenues compared with the previous year is characterised by the greater contribution made by certain product categories (especially leather goods) that guarantee a higher sales margin for the company. First of all. EBITDA totalled 138.1 million euros in FY 2009). Net financial income amounted to 1.7% in FY 2009. EBIT represented 21.V.p. or 21. On a comparable exchange rate basis. EBIT in FY 2010 totalled 124.9 million euros in 2009.9 million euros resolved upon approval of the 2009 annual report.This is the Dutch company that owns the building that has housed the head office and flagship store of the subsidiary TOD’S Japan KK in Tokyo since 2005.9 million euros (FY 2009: 34.9% of revenues. Net of accruals for contingent liabilities and charges totalling 0.5 million euros. in addition to the ordinary dividend of 45. EBITDA would have been 136. when it hit 22.8 million euros.0 million euros. Financial balances were heavily impacted by three transactions during the year. the only financial exposure to the banking system remains the long-term loan obtained in 2003 and due in 2014. EBIT would have been 121. with these costs totalling 13. net profit was 14. was acquired in November 2010. rising by 18.6 million euros) granted by them before the sale of shares pursuant to the Sale & Purchase Agreement signed by the parties (TOD’S S. compared with 13. On a comparable exchange rate basis (average for 2009). Finally. while 0. so that it could repay the previous shareholders for a loan (for 20.1 million euros.5 million euros in FY 2010 (13.9 million euros was spent on protecting company brands.7% in the previous year). up 11.9 million euros).9 million euros) targeted development of corporate information systems. Net of income taxes (including deferred taxes) for a total of 42.8% of revenues. with the gross profit margin rising 110 basis points from FY 2009.p. due to net foreign exchange gains and the major contribution made by interest accrued on cash.About 6.6 million euros in FY 2010.9 million euros. At December 31st 2010. On the liabilities side.9 million euros.1%.0% of sales. In FY 2009 EBIT was 106.The impact of the acquisition on the company’s net financial position was about 24. which translated into a tax rate of 34.1 million euros). the company contributed 16. the entire share capital of Holpaf B.S. at the rate of 3. in order to assure a balanced financial structure for certain indirect subsidiaries in the Far East. (32. The percentage impact of amortisation and depreciation did not change significantly. with which the cash exceeding business requirements was distributed.2 million euros.4% of revenues.V. i. 2010 Annual Report Operating results. Capex totalled 13.V. and it would have been equal to 23.2 million euros to recapitalisation of the sub-holding TOD’S International B. when it totalled 71. Net financial position (NFP). Capital expenditures. Gross operating profit in FY 2010 also benefited from the vigorous growth in sales volumes in terms of quality.5 million euros in FY 2010. hollow punches and moulds).50 euros per share. shareholders were paid an extraordinary dividend (Shareholders’ Meeting resolution of September 21st 2010) totalling 107.1 million euros from December 31st 2009 (120.6 million euros from EBIT in 2009. of which 2.9%).0 million euros in absolute terms from the previous year (+14. This was the result of continuous streamlining of industrial processes.7 million euros. Pre-tax profit for 2010 totalled 125.

819) 120.929 12.155 (7.974 23.856 141.747 63.1 million euros. Working capital made a positive contribution of 35. confirming the structural capacity of the company to generate cash with its own industrial activity.227) 56.V.10 63.593) 79.390 128.713) 1.591) 62. Research and development Given the particular nature of the production. (24.156 (5.S. as previously mentioned. research and development activity consists of continuous technical/stylistic revision of models and constant improvement of the materials used to realise the product.09 128.323 Operating cash flow continued to grow to 141.643) (64.31.These investments were made in financial assets.091 28. A total of 13. Euro 000’s Statement of cash flow Profit (loss) for the period of the Company Non-cash items Cash Flow (A) Changes in operating net working capital (B) Cash Flow from operations (C) = (A)+(B) Cash Flow generated (used) in investment activity (D) Cash Flow generated (used) in financing activity (E) Cash Flow received (used) (C+D+E) Net financial position at the beginning of the period Net financial position at the end of the period Change in current net financial position Year 10 82.156 (64.1 million euros in 2009.059 35. when it totalled 121.1 million euros).064 121. 2010 Annual Report Euro 000’s Net financial position Current financial assets Cash and cash equivalents Cash Current financial liabilities Current account overdraft Current share of medium-long term financing Current financial liabilities Current net financial position Non-current financial liabilities Financing Non-current financial liabilities Net financial position 12.2 million euros.9 million euros during the year.6 million euros).915 (51.121) When stripped of the flows resulting from the transactions described above.2 million euros.170 93. comprised principally.713) Year 09 71. Since this activity is exclusively ordinary.p.521) 126.A.592 (63.869 62.9 million euros in dividends.869 79. of the payment of 153.050 Change (64.085 106.521) (1. and thus recognised as normal production costs.591) (1.31.592 1. the associated costs are charged entirely to income in the year that they are incurred.819) (6.6 million euros were used for investments (gross of disposals of 0.921 21. the net financial position at December 31st 2010 would be 250.227) (5.9 million euros from the previous year. the recapitalisation of subsidiaries for 16.546 126. Cash flow contributed 106.535) (155. and the acquisition of the entire share capital of Holpaf B.643) (70) (70) (64.747 (1.323 47.713) 126.093) (64.869 (6.2 million. 95 Report on operations .239) (34. compared with 93.390 (1.

Tod’s S.A.09 N° of share held 19. and consequently facilitate investments by major institutional investors.p.p.. placing 3.200 750 - Diego Della Valle Andrea Della Valle Luigi Abete Maurizio Boscarato Luigi Cambri Emanuele Della Valle Fabrizio Della Valle Emilio Macellari Luca C.p.A.p. General Managers.p. directly or indirectly.p.A.762% at December 31st 2010.p. Tod’s S.All these shares were sold at a price of 76 euros.A.10 N° of shares held 17. In response to market suggestions to increase the liquidity of the shares of the parent company TOD’S S.p. consists of 30. Tod’s S. Tod’s S. and Executives with strategic responsibilities. Tod’s S. Tod’s S.p.p.31. 2010 Annual Report Research and development costs. 1.000 273. 6.p.p.200 3.A. These will increase the number of brands offered and stimulate increased sales to end customers.624 268. Information on Share Capital As of December 31st 2010.779%.060. the direct and indirect participation in the share capital of the company owned by Mr Diego DellaValle. Company Owned Tod’s S.000) 12.A. with a par value of euro 2 euro each.A. held.31. by Directors. neither Since the date on which the shares of the Company were listed on the Milan Stock Exchange. Chairman of the Board of Directors.A.716 435 5. compared with his previous shareholding of 64.460. Tod’s S.P.A.000 shares with institutional investors on December 15th 2010. Shares owned by Directors. Tod’s S.609. As of December 31st 2010 the Company did not possess any of its own share nor did it possess any shares or quotas of the controlling companies.374. Following this sale.200 3.96% by Diego Della Valle and 1.834.A.S.08% were offered by Diego Della Valle & C.624 868.A.p. Statutory Auditors.A. S. di Montezemolo Pierfrancesco Saviotti Stefano Sincini Enrico Colombo Gianmario Perugini Fabrizio Redaelli Rodolfo Ubaldi Own shares and shares or quotas of controlling companies.A. Tod’s S.A.000 5. 12.p.716 435 5. as contained in the declarations given to the company. Statutory Auditors.p. 96 Report on operations .p.A. fell to 56. The following table shows all the shareholdings in Tod’s S.401 shares. Tod’s S.p.p.000 273.A.p. and in the companies controlled by it. the Company has not been a party to any transactions with reference to its own shares. Tod’s S. Tod’s S.A.200 750 N° of shares buy N° of shares sell (2. have assumed major importance due to operating realisation of projects connected with expansion of the existing product line with new types of merchandise that complement current ones.A. Tod’s S.000 5.A. Of these shares.000) (600.A.96% by Andrea Della Valle. Generals Managers and Executives with strategic responsibilities. the share capital of TOD’S S. Tod’s S.A. the Della Valle family floated an “Accelerated Bookbuilt Offer” coordinated by Mediobanca.. as defined above.

.. memorandum of association and compliance with the principles of proper management.A. and it includes not only the information required under Article 123-bis (2) T. In implementation of the Related Party Transactions Regulation adopted by CONSOB with Resolution no. modified (by extending them to all Group companies) its existing procedures governing the transparency and substantive fairness of related party transactions. Disclosure pursuant to Article 123-bis of Legislative Decree 58/1998 (“TUF”). The corporate governance system of the parent company TOD’S S. – the Board of Directors.A.A. examination and issuance of binding opinions on the most significant transactions. ii) the adequacy of the organisational structure for matters falling under its purview.p.F. as well as independent audits and certification of the annual accounts and consolidated accounts. – the Board of Statutory Auditors. unlimited authority for ordinary and extraordinary management of the Company. which provides the disclosures mandated pursuant to Article 123-bis (1) of the Consolidated Law on Finance (T. is based on the traditional system.A.TOD’S S. as amended by Resolution no. which is delegated by law to monitor i) compliance with the law. the Internal Control and Corporate Governance Committee.A.A.U. The Board of Directors has set up several internal committees: the Executive Committee. its internal control system and administrative and accounting system.This committee is delegated the role and relevant duties assigned by the Regulation to the committee comprised only of independent directors (modifications to the procedure for related party transactions. the Compensation Committee and the Independent Directors Committee.” The corporate bodies are: – the Shareholders’ Meeting. and the independence of the accounting firm retained to do so. excluding only those reserved by law to the Shareholders’ Meeting.p.p. Legislative Decree 39/2010 delegates the Board of Statutory Auditors the task of monitoring the process of financial disclosure and the effectiveness of the risk control and management systems.U.p.F. iv) the procedures for effective implementation of the corporate governance rules set out in the Corporate Governance Code adopted by the Group. and comprised by representatives from several of the leading Italian companies and experts in this area). which is vested with full. Corporate Governance The Corporate Governance system. as well as the reference models represented by international best practice. the Internal Control and Corporate Governance Committee is instead delegated with responsibility for examination and issuance of non-binding opinions on less significant transactions). as well as the adequacy of the latter in fairly reporting operating performance. which has the prerogative of resolving at its ordinary and extraordinary meetings on the matters reserved to it by law or the articles of association. or “Latin model. iii) the adequacy of directives issued to TOD’S Group companies in regard to the information that they must provide in compliance with disclosure obligations. 17221 of March 12th 2010.p. 17389 of June 23rd 2010. At its meeting on March 14th 2011. approved the annual Report on Corporate Governance and Shareholdings.S. 2010 Annual Report Personal data processing disclosure The Company implemented and updated its Security Policy Document (SPD) in accordance with the Personal Data Protection Code. in its latest version as prepared by the Corporate Governance Committee for Listed Companies (sponsored by Borsa Italiana S. but also a comprehensive examination 97 Report on operations .p. with the right to perform all those acts that it deems appropriate to implement and realise the corporate purpose. with a series of Board of Directors resolutions since November 2006. – the Manager in charge of preparing the company financial documents.). the Board of Directors of TOD’S S.A.That report also analytically illustrates the corporate governance system of TOD’S S. to bring them in line with the principles set out in the cited CONSOB Regulation.p. The adopted corporate governance model is substantially based on the Corporate Governance Code for Listed Companies. whose principles have been implemented by Tod’s S. It consequently appointed an Independent Directors Committee.

p. Pursuant to the Corporate Governance Code.todsgroup.p.p.p.. Its members include independent directors without executive responsibilities at the company.A. The reader is referred to the Annual Corporate Governance Report.p.U. liabilities. reached an agreement with the Italian Ministry of Cultural Affairs (“Ministero per i Beni e le attività culturali”) and the Rome Special Fine Arts Service for Archaeological Monuments (“Soprintendenza speciale per i beni archeologici di Roma”). In regard to business forecasts for the current year.p. It may be consulted in the corporate section of the www. By being fairly unsusceptible to seasonal changes. Finanziaria SapA or any other party pursuant to Sections 2497 et seq. Indeed.S. self-evaluation and succession plans of the Board of Directors.F.A. neither this latter company or any other party has dictated policy or interferred in the management of TOD’S S.com website. Italian Civil Code. in regard to the remuneration.A.p. in accordance with the rules set out in Article 3 of the Corporate Governance Code.p. which is available to the public together with this Report on Operations and accounting documentation. operations. for the purpose of financing restoration work on the Colosseum as sole and exclusive sponsor. is subject to the control (pursuant to Article 93 of Legislative Decree 58/1998) of DI. assets. All subsidiaries of TOD’S S.A.A. The expertise and authority of the independent directors without executive responsibilities and their material impact on decisions taken by the Board of Directors represent a further guarantee that all decisions by the Board of Directors are taken exclusively on behalf of TOD’S S. is not subject to management and coordination by the parent company DI. with growth steadily accelerating over the course of the year.A.A.p. Business outlook FY 2010 ended on a high note in terms of revenues.A. strategy. they guarantee a status that goes beyond fashion. 98 Report on operations . profit margins and profitability. management of the issuer and its subsidiaries was not subject to any influence by third parties outside the TOD’s Group.A. The agreement calls for the sponsor to put up a total.p. Significant events occurring after the end of the fiscal year On January 21st 2011. The Report also satisfies the requirements imposed by CONSOB pursuant to Article 114(5) T.A.).VI.VI.p. Finanziaria S. Management and coordination activities Although TOD’S S. without being influenced by instructions or interference by third parties representing interests opposed to the Company’s.A.A. are subject to management and coordination by the issuer. and financial position are subject to exclusive review and approval by the Board of Directors of the issuer TOD’S S. the Spring-Summer 2011 collection sales campaign results and the excellent sales trends suggested by distribution network figures for the beginning of the current season reasonably allow us to expect superb results again in 2011.TOD’S S. to be disbursed over several years according to the actual progress of restoration work approved by the delegated Commissioner and the Fine Arts Service. TOD’S S. Sales and financial figures have confirmed that consumers appreciate the high quality products offered by the Group’s brands. (or any of the subsidiaries of TOD’S S. 2010 Annual Report of the status of implementation of the corporate governance principles recommended by the Corporate Governance Code in accordance with the “comply or explain” rule. all-inclusive amount of 25 million euros. with notice DEM/11012984 of February 24th 2011. transactions that have a particularly significant impact on TOD’s S.

974.A.p.609. Milan. ii.62 euros.00 euros per share for each of the outstanding 30.255. be allocated as follows: i.453.755.802. 82. 21. 61. 2010 Annual Report Motion for allocation of the profit for the year It is proposed that the net profit for FY 2010.62 euros to the extraordinary reserve. to be distributed to shareholders in the form of a dividend of 2.218.S.00 euros.801 shares. March 14th 2011 The Chairman of the Bord of Directors Diego Della Valle 99 Report on operations .

[THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK] 100 2010 Annual Report .

FINANCIAL STATEMENTS .

000) 106.422 (9.189) (173.463) (927) 124.456) (58.856 (34.437) (453.974 Year 09 526.154 11.676) (7.3 million euros.023 (10.592 (3.723) (8.419) (10.063) (13.511) (6.935) 71.739 (170.687 125.921 24 7 7-10 21 25 25 19-27 EPS (Euro) EPS diluted (Euro) 2.742 538. depreciation and write-downs Amortisation of intangible assets Depreciation of tangible assets Other adjustments Total amortisation.71 2.35 Note 1: Sales revenues includes transactions with the Group’s entities for 183.p.233 (29.010) (10. 102 Financial Statements .867) 82. 2010 Annual Report Profit & Loss Euro 000’s Notes Revenues Sales revenues (1) Other revenues and income Total revenues and income Operating Costs Change in inventories of work in process and finished goods Cost of raw materials.depreciation and write-downs Provisions EBIT Financial income and charges Financial income Financial charges Total financial income (charges) Income (losses) from equity investments Profit before taxes Income taxes Profit for the year Year 10 577.641) 120. respectively.012 592.841 (42.5 and 134.491 11.073) (1.544 (3.35 2. in the fiscal year 2010 and 2009.519 11.638) (208.224) (11.686) 337 106.735) 1.499) 138.A.820) (140.031 15.71 2.263) (62.S. supplies and material for consumption Costs for services Costs of use of third party assets Costs of labour Other operating charges Total operating costs EBITDA Amortisation.043 6.942) (417.044) (13.

2010 Annual Report Comprehensive Income Euro 000’s Year 10 Profit/(loss) for the period (A) Other profit/(loss): Derivative financial instruments (cash flow hedge) (*) Total Other Comprehensive Income/(Losses) (B) Total profit/(loss) (A)+(B) 82.921 819 819 72.p.740 (*) Income taxes of the period include tax effect.027 Year 09 71. 103 Financial Statements .974 53 53 83.S.A.

119 1.339 162.075 to be continued 8 8 8 8 8 10 11 19 12 13 13 17 13 Note 1:The balance includes for 2.476 10.0 and 68.412 46 143.836 356 7.701 372.654 49 102.815 38. investment which is a transaction with a related party (Note 11 and 23). Note 2:Trade receivables includes receivables from Group’s entities for 60.508 167.A.452 6.31.390 448.747 385.10 12.251 1.773 3.460 8.289 11.208 151. 104 Financial Statements .187 107.252 10.701 128.928 137.V.041 757.442 1.992 7.S.050 40.3 million euros.991 4.574 161.993 165.070 981 4.243 777. at December 31st 2010 and December 31st 2009.832 137. 2010 Annual Report Statement of Financial Position Euro 000’s Notes Non-current assets Intangible fixed assets Assets with indefinite useful life Others Total Intangible fixed assets Tangible fixed assets Buildings and land Leasehold improvement Plant and machinery Equipment Others Total Tangible fixed assets Other assets Real estate investments Equity investments (1) Deferred tax assets Others Total other assets Total non current assets Current assets Inventories Trade receivables (2) Tax receivables Derivative financial instruments Others Cash Total current assets Total assets 12.137 58.31. respectively.1 million euros the acquisition cost of Holpaf B.128 328.845 666 3.p.407 63.476 12.969 150.196 7.09 6 7 150.360 60.475 4.

31.975 21 275.738 71.p.075 21 19 22 16 20 20 17 20 16 Note 3: Trade payables includes payables to Group’s entities for 6.788 595 24. at December 31st 2010 and December 31st 2009.31.524 757.591 166.A. 105 Financial Statements .308 99.819 37.854 1.644 1.219 213.521 116.227 38.S.972 5.158 6.219 213.893 777.969 12.051 14.874 665 21. 2010 Annual Report continuing Euro 000’s Notes Shareholders’ equity Share Capital Capital reserves Treasury stock Hedging and translation Retained earnings Income for the period Shareholders’ equity Non-current liabilities Provisions for risks Deferred tax liabilities Reserve for employee severance indemnity Bank borrowings Total non-current liabilities Current liabilities Trade payables (3) Tax payables Derivative financial instruments Other Bank Total current liabilities Total Shareholders’ equity and liabilities 15 15 15 15 15 12.192 7.1 and 4.499 1.974 552.326 353 12.975 74 194.0 million euros.049 3.666 8.09 61.921 622.200 24.612 82.591 125. respectively.10 61.

535) (153. and write-downs 7-8-10-12-13 Change in employee severance indemnity reserve 22 Change in deferred tax/liabilities 19 Other changes Cash flow (A) Change in current assets and liabilities: Inventories 12 Trade receivables 13 Tax receivables 13 Other current assets 13 Trade payables 20 Tax payables 20 Other current liabilities 20 Change in operating working capital (B) Cash flow from operations (C) = (A)+(B) Net investments in intangible and tangible assets 7-8 (1) (Increase) decrease of equity investments 11 Other changes in fixed assets 14 Reduction (increase) of other non-current assets Cash flow generated (used) in investment activities (D) Dividend paid 4 Changes in long term loans 16-22 Capital increase 15 Other changes in shareholders’ equity 15 Cash flow generated (used) in financing (E) Cash flow generated (used) (C+D+E) Year 10 82.974 23. deprec.462 5.713) 47.606) (3.A.155 (7.879 8.546 126.921 19. investment which is a transaction with a related party (Note 11 and 23).998 (3.939) 1.p.577) 1.047) (2. 2010 Annual Report Statement of Cash flow Euro 000’s Notes Profit (loss) for the period Non-cash adjustments: Amortizat.059 (3..664 1.152 290 93.606) 535 106.234) 26.262) (2.167) 28..1 million euros the acquisition cost of Holpaf B.915 (12.856 141.986) (40..064 121.835 321 (1.123) 4.713) Year 09 71.593) 79.222) 3.892 (18) (51.436 (736) (7.156 (64. revaluat.642 (1.329 (3.128 (34.002 11.323 Net Financial position at the beginning of the period Net Financial position at the end of the period Change in current net financial position 126. 106 Financial Statements .869 79.869 62.S.323 Nota 1:The balance includes for 2.V.349 379 1.423) 1.413) (340) (3.167 35.093) (64.091 25.239) (38.099) 53 (155.

262) Total 583.09 Profit/(Loss) recognized in the period Profit & Loss account Directly in equity Total Profit/(Loss) Dividends Capital increase Share based payments Other Balances as of 12.10 Profit/(Loss) recognized in the period Profit & Loss account Directly in equity Total Profit/(Loss) Dividends (distribution Income of year 2009) Extraordinary dividends Capital increase Share based payments Other Balances as of 12.133) Total 622.854 61.975 74 277.262) 4.01.874 82.740 (38.p.975 819 819 71.09 60.644) 213.407 309 (4.921 (38.659 82.31.219 Capital reserves 213.974 53 83.975 Reserve for translation 21 Retained earnings 347.903 Reserve for translation (798) Retained earnings 309.659 Note: For detailed information on Reserves see also Note 15.644 347.921 257 4.874 61. 107 Financial Statements .962 Capital reserves 213.10 61.586 Year 2009 Euro 000’s Share capital Balances as of 01.921 819 72.914) (107.A.219 213.423 71.914) (107.31.219 21 4.356 71.133) 552.027 (45.S.974 (45.664 309 622.974 53 53 82.01. 2010 Annual Report Statement of changes in equity Year 2010 Euro 000’s Share capital Balances as of 01.

[THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK] 108 2010 Annual Report .

SUPPLEMENTARY NOTES .

2.Interests in Joint Ventures consequential to the amendment to IAS 27.Share based Payment: Group Cash-settled Share-based Payment Transactions. IAS 27 (2008) . On the profit and loss account. Amendments to IAS 28 . with the sole exception of derivative financial instruments. interpretations applicable since January 1st 2010 and not relevant for the Group The following accounting standards are applicable since 1st January 2010 and refer to situations or cases that were not applied to TOD’S Group Financial Statements of the year ending at December 31st 2010: IFRS 3 (2008) . the charging to income of all costs connected with the business combination and recognition at the acquisition date of the liabilities for conditional payments. Financial statements format: choice of form and classification principles On transition to IFRSs.TOD’S S. indicating the EBITDA and EBIT results as in the past. The following amendments.The updated version of IFRS 3 introduced major changes. on the basis of the text published in the Official Journal of the European Union (OJEU). More specifically. pursuant to Article 114(5) of the Consolidated Law on Finance-TUF). the format of representing revenues and costs by nature is followed.p. amendments. the option of fair value measurement of any third party interests acquired in a partial acquisition.S.A. The Separate financial statements were approved by the Board of Directors of TOD’S S. certain information is provided in the Report by the Board of Directors on Operations. Consistently with the financial statements for the previous year. the EC document of November 2003 and. Furthermore. opted to continue using the same balance sheet and income statement formats used in its disclosures pursuant to Italian GAAP for presentation of its financial position and operating results. and International Financial Reporting Standards-IFRS) issued by the IASB. Amendment to IFRS 2 .The changes to IAS 27 principally concern the accounting treatment of transactions or events that modify equity interests in subsidiaries and the allocation of losses by the subsidiary to minority interests.The “indirect” method is used for the statement of cash flows. interpretations are also applicable since 1st January 2010 and refer to situations or cases that were not applied to TOD’S Group Financial Statements of the year ending at December 31st 2010: Improvement to IFRS 5 .These financial statements. Improvements to IAS/IFRS (2009).Business combinations. they are prepared on the basis of historic costs. the balance sheet format shows current items separately from non-current items (both assets and liabilities). 110 Supplementary Notes .A. when applicable.A. on March 14th 2011. since they are considered representative indicators of company performance. Accounting principles. which are measured at fair value. 2010 Annual Report 1.Consolidated and Separate Financial Statements. Article 78 of the Issuer Regulation.Non-current Assets Held for Sale and Discontinued Operations. complemented as necessary by the Report of the Board of Directors on Operations and the notes to the financial statements.Investments in Associates and to IAS 31 .p. General notes The Notes to the Separate Financial Statements were prepared in accordance with IAS/IFRS and supplemented by the additional information required by CONSOB and the orders it issued in implementation of Article 9 of Legislative Decree 38/2005 (Resolutions 15519 and 15520 of July 27th 2006 and memorandum DEM/6064293 of July 28th 2006. principally in regard to: the regulations governing incremental acquisitions of subsidiaries. the Italian Civil Code. are considered to be those that provide the best organized representation of the company financial position and income.p. Highlights of the accounting principles The consolidated financial statements are prepared in accordance with IAS/IFRS (International Accounting Standards-IAS. 3.

the derivatives are treated in accordance with fair value hedge rules.A. and consistently with the strategic policies of centralized cash management dictated by the Board of Directors. Subsequently. Non-monetary assets and liabilities are valued at their historic cost in foreign currency and translated by using the exchange rate in effect at the transaction date.Transfers of Assets from Customers. Amendment to IAS 39 . the fair value differences are recognized entirely on the profit and loss account. All business combinations are recognized by applying the acquisition method. The hedge accounting method is used at every financial statement closing date. This method envisages posting derivatives on the balance sheet at their fair value. the value of the hedged item (receivables/payables) is adjusted for the change in value attributable to the hedged risk. Furthermore.Distributions of Non-cash Assets to Owners. without any speculative or trading purposes. The foreign exchange differences arising upon settlement of these transactions or translation of cash assets and liabilities are recognized on the profit and loss account. insofar as: 111 Supplementary Notes . adjusting operating margins. In fact.1 Transactions in foreign currency. The company uses derivate financial instruments (mainly currency futures contracts) to hedge the risks stemming from foreign exchange exposure deriving from its operating activity.p. IFRIC 18 . liabilities. the changes are recognized in shareholders’ equity. When derivative transactions refer to a risk connected with the variability of forecast transaction cash flow. 3.Financial Instruments: Recognition and Measurement: Eligible Hedged items. i. 3. Goodwill represents the portion of the cost paid for the acquisition that exceeds the company’s interest in the fair value of the assets. Goodwill is recognized on the financial statements at its cost adjusted for impairment losses. and identifiable potential liabilities exceeds the cost of the acquisition (negative goodwill) after redetermination of these values. Posting of the changes in fair value varies according to the type of hedging at the valuation date: • for derivatives that hedge forecast transactions (i. the date of transition to IAS/IFRS. liabilities. but the adequacy of the values is annually subjected to the impairment test. Monetary assets and liabilities denominated in foreign currencies at the date of the financial statements are translated by using the exchange rate in effect at the closing date. cash flow hedge). For acquisitions prior to January 1st 2004. using the item financial income and expenses as a contra-entry. fair value hedge). Goodwill.S.e. ii. If the company’s interest in the fair value of assets. they are recognized according to the rules for cash flow hedge until the transaction is recorded on the books. These are recognized according to the value of their cost and/or acquisition. and identifiable potential liabilities of the subsidiary or jointly controlled entity at the acquisition date. It is not subject to amortization. HOGAN e FAY are classified as intangible fixed assets with an indefinite useful life and thus are not amortized. insofar as they can be qualified as instruments for hedging changes in the value of assets or liabilities carried on the balance sheet.Trademarks TOD’S. The functional currency (the currency used in the principal economic area where the company operates) used to present the financial statements is the Euro. net of accumulated amortization at the date of transition to IAS/IFRS. in accordance with the rules set forth in the section Impairment losses. 2010 Annual Report IFRIC 17 . net of accumulated amortization up to the transition date.e. goodwill retained the values recognized on the basis of the previous Italian GAAP. these differences are recognized as a separate component of shareholders’ equity or on the profit and loss account. Foreign currency transactions are translated into the functional currency by applying the exchange rate in effect at the date of the transaction. with the exception of those deriving from derivative financial instruments qualified as hedging of financial flows. Trademarks. while the portion for the ineffective amount is recognized on the profit and loss account. the excess is immediately recognized on the profit and loss account. • for derivatives that hedge receivables and payables recognized on the balance sheet (i.3 Intangible fixed assets.2 Derivative financial instruments. 3. under financial income and expenses.

They are first recognized at their purchase cost or at the cost recalculated at the date of transition to IFRS. Property. these assets are reported net of their accumulated depreciation and impairment losses (i. on the contrary. Research and development costs. and without external impediments.A. the corporate structure. plant. • the trademarks are proprietary. and the company has the intention and resources necessary to complete the development. • in the relative competitive context.p. being constantly associated and compared with benchmark brands. v. and constantly protected pursuant to law. construed as organized property. i. The research costs for a project are charged fully to the profit and loss account of the period in which they are incurred. the value of land and buildings is kept separate. • in the national and/or international context characteristic of each trademark. they are distinguished by market positioning and notoriety that ensures their dominance of the respective market segments. Other intangible fixed assets. and equipment. Intangible fixed assets (excluding those with an indefinite useful life) are amortized on a straightline basis over the period of their estimated useful life. In this case. For those assets whose depreciation must be calculated using the component approach. The development costs of an activity are instead capitalized if the technical and commercial feasibility of the relative activity and economic return on the investment are certain and definite. upon expiration of the registration periods. The capitalized costs include the costs for materials. is closely correlated with and dependent on dissemination and development of the trademarks on the markets. and organization itself in a figurative sense. it can be affirmed that the investments made for maintenance of the trademarks are proportionately modest with respect to the large forecast cash flows.S.4 Tangible fixed assets. • the products sold by the company with these trademarks are not subject to particular technological obsolescence. iv.e. in accordance with the cost model). The costs incurred for these intangible fixed assets after purchase are capitalized only to the extent that they increase the future economic benefits of the specific asset they refer to. to the point of being models for imitation or inspiration. the portions of cost allocable to the individual significant components characterized by a different useful life are determined. with options for renewal of legal protection. The adequacy of the values is annually subjected to the impairment test. 3.All the other costs are charged to the profit and loss account in the fiscal year in which they are incurred. The cost method is used for determining the value reported on subsequent statements. iii. easily implemented. which entails posting the asset at its cost net of accumulated amortization and write-downs for impairment losses. with only buildings being depreciated. they are consistently perceived by the market as being innovative and trendy.They are recognized at cost. Following first-time recognition. in accordance with the rules set forth in the section Impairment losses. 112 Supplementary Notes . They are initially recognized at their purchase cost. 2010 Annual Report • • they play a primary role in company strategy and are an essential driver thereof. if the conditions for capitalization of expenses incurred for internally generated expenses are satisfied. vi. Amortization. which is characteristic of the luxury market in which the company operates. net of accumulated amortization and depreciation (see below) and impairment losses. including expenses that are directly attributable to them during preparation of the asset for its intended purpose or production. and equipment owned by the company. plant. Subsequent capitalization. including any directly attributable ancillary expenses. starting from the time the assets are available for use. that are not burdensome. labor. These are identifiable non-monetary intangible assets under the control of the company and capable of causing the company to realize future economic benefits. and an adequate portion of overhead costs. properly registered.

The assets (real estate. If it is not possible to estimate an independent financial flow for an individual asset. straight-line basis according to the estimated useful life of the buildings. As previously mentioned. while the component of interest expenses for finance leasing payments is reported on the profit and loss account according to the effective interest method. net of accumulated depreciation and any impairment losses (according to the rules described in the section Impairment losses). events. Real estate investments. plant.5 Impairment losses. Property. and equipment at the lesser of their fair value on the date the agreement was made. 2010 Annual Report Leasing. Depreciation is calculated on a systematic. In the presence of indicators. plant.p. IAS 36 envisages subjecting intangible fixed assets and property.All the other costs are charged to the profit and loss account in the fiscal year in which they are incurred. the cash generating unit to which the asset belongs and with which it is possible to associate future cash flows that can be objectively determined and independent from those generated by other operating units is identified. 3. and likewise for fixed assets that are not yet in use.5% 25% 25% 12% 20% 20%-25% Industrial buildings Machinery and plant Equipments Forms and punches. this test is performed at least once annually for fixed assets with an indefinite useful life.The principal depreciation rates applied are as follows: % depreciation 3% 12. and equipment after purchase are capitalized only to the extent that they increase the future economic benefits of the asset. iii. and machinery) possessed pursuant to these agreements are recorded under property.The usage value of a tangible or intangible fixed asset is determined according to the estimated future financial flows expected from the asset. Identification of the cash generating units was carried out consistently with the organizational and operating architecture of the Company. or changes in circumstances that presume the existence of impairment losses. Lease agreements in which the Company assumes all the risks and benefits deriving from ownership of the asset are classified as finance leasing. Land is not depreciated. clichés.A.S. Real estate investments are originally recognized at cost. plant and equipment to the impairment test in order to assure that assets with a value higher than the recoverable value are not recognized on the financial statements. The costs incurred for property. and then recognized at their cost as adjusted for accumulated depreciation and impairment losses. ii. which reflects the current market value of the current value of the cash and risks related to the Group activity. if this is shorter. and the current value of the minimum payments owed for leasing. as actualized through use of a discount rate net of taxes. Confirmation of the recoverability of the values recognized on the balance sheet is obtained by comparing the book value at the reference date and the fair value net of sale costs (if available) or usage value.A financial payable for the same amount is recognized instead under liabilities. which mainly include the costs incurred for set up and modernization of the DOS network and all the other real estate that is not owned but used by the company (and thus instrumental to its activity) are depreciated according to the term of the lease agreement or the useful life of the asset. plant. molds and stamp Furniture and furnishings Office machines Car and transport vehicles The costs for leasehold improvements. as well as the cash flows deriving from disposal of the asset at the end of its useful life. Subsequent capitalizations. Depreciation. iv. and equipment were systematically depreciated at a steady rate according to the depreciation schedules defined on the basis of their estimated useful life. 113 Supplementary Notes . v. plant.

in which case the restored value is recognized in the revaluation reserve. 3. have been analytically identified and then written down.The values that are thus obtained do not differ appreciably from the current production costs referring to the same classes of assets. is increased to the new value resulting from the estimate of its recoverable value. easily convertible into cash.6 Investments in subsidiaries and associated companies. the book value of the asset (or the cash generating unit). In the case of financial assets available for sale.The net disposal value represents the best estimate of the net sales price that can be realized through ordinary business processes.When the financial assets are held for trading. 3. or with a presumed disposal value that is less than the cost recognized on the financial statements. These assets are highly liquid. These are recognized at the lower of purchase cost and their assumed disposal value. with certain and precise evidence documenting the impossibility of collecting them. with the exception of goodwill. 2010 Annual Report If the impairment test reveals an impairment loss for an asset. and are recognized at their fair value at the end of each period. ii. Trade receivables and other receivables. iii. estimated on the basis of information updated at the date of this document. unless the asset is revalued. the profits and losses deriving from changes in the fair value are recognized directly in shareholders’ equity until they are sold or have sustained a loss in value. bank demand deposits. This includes cash on hand. joint ventures. prudent allowances for write-downs have been set aside. the profits and losses deriving from changes in the fair value are recognized on the profit and loss account for the period. The production cost is determined by including all costs that are directly allocable to the products. At the subsequent financial statement dates. These are valued and recognized on a prudent basis according to their presumed disposal value. A special depreciation reserve is set aside for the portion of inventories that are no longer considered economically useable. the aggregate profits or losses that were previously recognized in shareholders’ equity are recognized on the profit and loss account of the period. including costs directly connected with the purchase. In that case. At that time.7 Current assets. but not beyond the net book value that the asset would have had if the impairment loss had not been charged. Financial assets other than those held until maturity are classified as held for trading or available for sale. net of any production costs not yet incurred and direct sales costs.p.The restored value is recognized immediately on the profit and loss account. Inventories. iv. the write-down is recognized in the revaluation reserve. and adjusted for any impairment losses. When the reasons for a write-down cease to exist. unless the asset is revalued. and financial investments with a maturity of no more than three months.S. net of impairment losses. • for other bad debts. the financial assets that the company intends and is able to hold until maturity (securities held until maturity) are recognized at the cost amortized according to the effective interest method. regarding – for work in progress and/or semi-finished products – the specific stage of the process that has been reached. Financial assets. its book value is reduced to the recoverable value by posting a charge on the profit and loss account. as envisaged by IAS 36.The value recognised on the financial statements is periodically subjected to the impairment test. and subject to a negligible risk of change in value.A. Cash. These are recognized and cancelled on the balance sheet according to the trading date and are initially valued at cost. i. and associated companies that are not classified as held for sale in compliance with IFRS 5 are recognised at their historic cost. by means of adjusting the face value with a specific allowance for doubtful accounts determined as follows: • receivables under litigation. 114 Supplementary Notes . The cost of inventories is based on the weighted average cost method. The investments in subsidiaries.

These are their face value. and the assumed behavior of individuals. revenues are recognized on the basis of the following principles: a. ii.p. foreign exchange gains and losses. 3. Defined benefit plans. Bank overdrafts and financing. d.11 Financial income and expenses. b. These revenues are recognised when the goods are shipped and considering the estimated effects of returns at the end of the year. For defined benefit plans. plus the current value of any reimbursements and reductions in the future contributions to the plan.retail. the cost is determined by using the projected unit credit method. In reference to the principal types realized by the company. considering the conditions for use thereof not based on their market value. iii. using the effective interest method.These are recognised on the financial statements according to the principle of period allocation. carrying out actuarial valuations at the end of every fiscal year.This allocation is made on the basis of a management estimate of the stock options that will actually accrue in favor of vested employees.8 Employee benefits. including interest expenses accrued on financial payables calculated by using the effective interest method (mainly current account overdrafts.9 Payables. gains and losses on derivative financial instruments (according to the previously defined accounting 115 Supplementary Notes . 2010 Annual Report 3. Interest-bearing financing and bank overdrafts are recognized on the basis of the amounts collected. net of transaction costs. These include all financial items recognized on the profit and loss account for the period. Revenues are recognised when the goods are delivered to customers. The company operates in the retail channel through its DOS network. This value is recognized on the profit and loss account on a straight-line basis throughout the period of accrual of the rights. Sales are usually collected in the form of cash or through credit cards. medium-long term financing). i Defined contribution plans. Sales of goods . 3. The accumulated actuarial profits and losses not recognized at the beginning of the fiscal year are recognized only to the extent that they exceed 10% of the greater between the current volume of defined benefit plan liabilities and the fair value of the assets of the program at that date. Revenues are recognized on the profit and loss account when the significant risks and benefits connected with ownership of the transferred assets are transferred to the buyer.A.10 Revenues recognition. The payments based on shares are assessed at their fair value on the assignment date. Sales of goods . c. Provision of services. ii. Trade payables and other payables. i.The useful life utilized in the model has been adjusted according to an estimate by management in order to take into account the effects of non-transferability of the options.The cost of past work services is recognized immediately in the amount in which the benefits have already accrued or is otherwise amortized at a constant rate by the average period in which it is expected that the benefits will accrue. Royalties. The payments for eventual defined contribution plans are charged to the profit and loss account in the period that they are owed. The liabilities for benefits paid out after termination of the employment relationship reported on the financial statements represent the current value of liabilities for defined benefit plans adjusted to take into account the actuarial profits and losses that were not recognized and the costs for past work services that were not recognized. The company distributes products on the wholesale market. and subsequently valued at the amortized cost. Share based payments.S. and reduced by the fair value of the program assets.This income is recognised in proportion to the percentage of completion for the service provided on the reference date. restrictions on exercise thereof. 3.wholesale. Any net assets resulting from this calculation are limited to the value of the unreported actuarial losses and the cost for the past work services that were not recognized. The fair value is determined by using the binomial method.

Deferred tax assets that derive from temporary deductible differences are recognized on the financial statements only to the extent that it is likely taxable income will be realized for which the temporary deductible difference can be used.13 Provisions. as they are the instruments representing its capital. In particular. received dividends. with the exception of liabilities deriving from initial recognition of an asset or liability in a transaction other than a business combination that.A. and any adjustments to the tax payables calculated during previous periods.S. Treasury stock. including the expenses directly related to the transaction. does not influence either the income (loss) reported on the financial statements or taxable income (tax loss). The total value of shares issued by the parent company is recognized entirely under shareholders’ equity. the relative deferred tax liabilities are also recognized under shareholders’ equity. 3. 3. The income taxes for the period include determination both of current taxes and deferred taxes. 2010 Annual Report principles). The consideration paid for buy-back of share capital (treasury stock). while the excess value is recognized as an adjustment to additional paidin capital. the par value of the shares reduces the share capital. The provisions that can be reasonably expected to be discharged twelve months after the reference date are classified on the financial statements under non-current liabilities. is subtracted from shareholders’ equity. Instead. Interest income and expenses are recognized on the profit and loss account for the period in which they are realized/incurred. the portion of interest expenses deriving from accounting treatment of assets held under finance leasing (IAS 17) and employee reserves (IAS 19). and it is likely that the company will be asked to satisfy the obligation. Dividend income contributes to the result for the period in which the company accrues the right to receive the payment. The taxes in question (deferred tax assets and liabilities) are determined on the basis of a forecast of the assumed percentage weight of the taxes on the income of the fiscal years in which the taxes will occur. In this case. The tax benefits resulting from tax losses are recognized on the financial statements of the period in which the benefits accrued. does not influence either the income (loss) reported on the financial statements or taxable income (tax loss). but which can nonetheless be reliably estimated.They are recognized on the balance sheet in the event of an existing obligation resulting from a past event. the provisions are recognized on the balance sheet by actualizing future financial flows.They are recognized entirely on the profit and loss account and included in the result for the period.The tax liability of all temporary taxable differences. Deferred tax liabilities refer to the temporary differences between the book values of assets and liabilities on the balance and the associated values relevant for determination of taxable income. These are certain or probable liabilities that have not been determined at the date they occurred and in the amount of the economic resources to be used for fulfilling the obligation. taking into account the specific nature of taxability and deductibility. If the effect is significant.The effect of change in tax rates is recognized on the profit and loss account of the fiscal year in which this change takes place. No allocation is envisaged if the deferred tax asset derives from business combinations.14 Share capital. at the time of the transaction. if it is likely that taxable income will be realized and for which the tax loss can be used. i. 3. the provisions for which the use of resources capable of generating economic benefits is expected to take place in less than twelve months after the reference date are recognized as current liabilities. unless they are generated by transactions recognized directly to shareholders’ equity during the current or another period. at the time of the transaction. 116 Supplementary Notes . with the exception of capitalized expenses.12 Income taxes. Current taxes on taxable income for the period represent the tax burden determined by using the tax rates in effect at the reference date. Share capital.p. or from the initial posting of an asset or liability in a transaction other than a business combination that. ii. and the date of the presumed discharge of the obligation can be estimated with sufficient reliability.

S. Dividends In FY 2010. The statement of cash flows is drafted using the indirect method.101. totalling 82. at the rate of 3.p. the Board of Directors has proposed to distribute a dividend for two euro per share.A. for 107. respectively).974 Year 09 71. 2010 Annual Report iii.921 In both fiscal 2010 and 2009.974 82. in favour of the owners of the 30. Cash at the beginning and end of the period represents the net-short-term financial position.921 71. at the rate of 1. ii) extraordinary dividends.921 71. totalling 45.401 outstanding ordinary shares comprising the share capital. Reference profit Euro 000’s For continuing and discontinued operations Profit used to determine basic earning per share Dilution effects Profit used to determine basic earning per share Year 10 82.974.15 Statement of cash flows.921 71. The allocation of dividends to persons possessing instruments representing share capital after the reference date of the financial statement is not recognized under financial liabilities on the same reference date.974 82.802.218.921 Euro 000’s For continuing operations Net profit of the year Income (loss) from discontinued operations Profit used to determine basic earning per share Dilution effects Profit used to determine diluted earning per share Year 10 82. 5. and all the other effects connected with investment and financing activities. the Shareholders’ Meeting of the parent company TOD’S S.903. 3.p. Regarding the net profit for FY 2010. approved payment of a total 153 million euros.255.914. 117 Supplementary Notes .The dividend is subject to approval by the annual Shareholders’ Meeting.A.62.50 euros per share. and was not included among the liabilities reported on this balance sheet.50 euros per share.50 euros. entitled to participate in profits on the coupon detachment date (May 24th 2010 and October 11th 2010. totalling 61. The net financial flows of operating activity are determined by adjusting the result for the period of the effects deriving from change to net operating working capital.00 euros.50 euros. to be charged to the extraordinary reserve (Shareholders’ Meeting of September 21st 2010).609. there were no dilutions of net consolidated earnings.974 Year 09 71. partly as a result of activities that were discontinued during the periods in question.132.974 82. Dividends. broken down as follows: i) ordinary dividends to be charged against the net profit for FY 2009 (Shareholders’ Meeting of April 22nd 2010). Earnings per share The calculation of base and diluted earnings per share is based on the following: i. 4. non-monetary items.

01. Other assets The following table details the movements of these assets in the current and previous fiscal year: Euro 000’s Balance as of 01. Calculation of the base earning per share for fiscal year 2010 is based on the net income allocable to holders of ordinary shares of TOD’S S.401 (unchanged respect to year 2009). and on the average number of ordinary shares outstanding during the same period.135 118 Supplementary Notes . Reference number of shares Year 10 30.31.974 thousand (71. Base earnings per share. 2010 Annual Report ii.10 Other trademarks 668 862 Software 8.010) 10.948 (2.09 Increases Decreases Impairment losses Other changes Amortization of the period Balance as of 01.184 (3.339 (198) 1.235 The balance of assets with an indefinite useful life did not change from its value at December 31st 2009.S. HOGAN and FAY): Euro 000’s TOD’S brand HOGAN brand FAY brand Total 12. Calculation of the diluted earnings per share for the period January-December 2010 coincides with calculation of earnings per share.296 24 Total 10.000 1.256 (282) 2.945 2.309 53. totalling euro 82.753 Other assets 1.235 12.10 Increases Decreases Impairment losses Other changes Amortization of the period Balance as of 12.401 30. 6. Assets with indefinite useful life These include 137.A.492) 8.909 (320) 1.574 5.609.p.31.09 3. totalling 30.419) 12.639 (3.609.417 (242) 1.241 thousand euros arisen before First Time Adoption of IAS/IFRS.309 53..185 137.981 1.01.401 Weighted average number of shares to determine basic earning per share Share options Weighted average number of shares to determine diluted earning per share iii. The value of Brands is broken down amongst the various brands owned by the Company (TOD’S.235 thousand euros for the value of Group owned brands and goodwill from business combinations for 13. Diluted earnings per share.p. iv.609.609. insofar as conclusion of the Stock Options Plan in year 2009.10 3.185 137.921 thousand euros in 2009).401 30.A. 7.242 2.401 Year 09 30.332 858 (2.895) 8.609.31.741 80.741 80.

S.p.A. 2010 Annual Report

8.

Tangible fixed assets

The following table illustrates the changes during the current and previous fiscal year.

Euro 000’s

Land and buildings 41,282 19

Plant and machin. 5,381 694 (200)

Equip. 11,830 5,145 853

Leasehold improve 1,409 162 (15)

Others 5,512 505 (154)

Total 65,414 6,525 (1,222) (10,063) 60,654 8,418 (616) (10,044) 58,412

Balance as of 01.01.09 Increases Decreases Impairment losses Other changes Depreciation of the period Balance as of 01.01.10 Increases Decreases Impairment losses Other changes Depreciation of the period Balance as of 12.31.10

(1,231) 40,070 9

(1,623) 4,252 712 (97)

(5,131) 10,991 6,281 (360)

(575) 981 108

(1,503) 4,360 1,308 (159)

(1,234) 38,845

(1,578) 3,289

(5,437) 11,475

(423) 666

(1,372) 4,137

9.

Impairment losses

The recoverability of the residual value of assets with an indefinite and definite useful life, as of property, plant and equipment and Equity Investments in subsidiaries (“Assets”) was determined to ensure that assets with a value higher than the recoverable value were not recognised on the financial statements, which refers to their “value in use.” The criterion used to determine “value in use” is based on the provisions of IAS 36, and is based on the current value of expected future cash flows (discounted cash-flow analysis - DCF), which is presumed to derive from the continual use and disposal of an asset at the end of its useful life, discounted at an interest rate (net of taxes) that reflects current market rates for borrowing money and the specific risk associated with the individual cash generating unit. The recoverability of Assets was verified by comparing the net book value with the recoverable value (value in use). The value in use is represented by the discounted value of future cash flows that are expected from Assets and by the terminal value attributable to them. The discounted cash flow analysis was carried out by using the FY 2010 budget as its basis.That budget was prepared and approved by the Board of Directors on the assumption that the Company would be a going concern for the foreseeable future: the Board of Directors first assessed the methods and assumptions used in developing the model. In particular: i. The medium-term projection of budget figures for FY 2011 was carried out on a time horizon limited to the foreseeable future, using an average rate of sales growth of 5%, a constant EBITDA margin and a constant tax rate of 32%.These prudent assumptions represent trends that are lower than the historic (including recent) trend of the Group. Consequently, the budget projections comply with the prescriptions of IAS 36. ii. The terminal value of strategic assets (brands), was determined by using the same prudent growth rate used to extrapolate budget data (5%) for future projections, as well as the rates of return on brands positioned at the lower end of the market for licenses. iii. To determine the “value in use,” a WACC, net of taxes, of 8.84% was used (the WACC rate used at December 31st 2009 was 8.6%), determined by referring to the discounting rates used by a series of international analysts in financial reports on the TOD’S Group.
119 Supplementary Notes

S.p.A. 2010 Annual Report

The analyses carried out on the recoverability of Company assets (including 137.2 million euros represented by proprietary brands and 13.2 million by goodwill from business combinations) and equity investments in subsidiaries (worth 143.2 million euros at December 31st 2010) did not show any sign of impairment. The sensitivity analysis performed on the impairment test in accordance with IAS 36, in order to reveal the effects produced on the “value in use” by a reasonable change in the basic assumptions (WACC, growth rates, EBITDA margin) and determination of the terminal value (perpetual annuity), did not reveal an appreciable impact on determination of the “value in use” and its coverage. Given the significant value assumed by the cover, it would be necessary to make unrealistic base assumptions to render the “value in use” equal to the book value of Group assets (the break-even hypothesis).

10. Investment property
The residual value of investment property at December 31st 2010 was euro 46 thousand. It consisted exclusively of real estate leased to third parties.The fair value of these investments is estimated to be euro 250 thousand, according to the market prices for similar properties available for rent at similar conditions.
Euro 000’s Historic cost Accumulated depreciation Balance as of 01.01.10 Increases (decrease) Amortization of the period Balance as of 12.31.10

115 (66) 49 (3) 46

11. Investments in subsidiaries, joint ventures, and associated companies
The value of equity investments owned by the Company at December 31st 2010 totalled 143,196 thousand euros. On November 26th 2010 (the closing date) the Group acquired 100% of the shares of Holpaf B.V., a Dutch company with head office in Amsterdam. This deal is classifiable as a related party transaction, insofar as Holpaf B.V. was indirectly controlled, through Goral Investment Holding B.V., by Diego DellaValle & C. SAPA, a company belonging to Diego and Andrea Della Valle, and controlled by Diego Della Valle (also see note 23). Holpaf B.V. owns a property (land and building) in the Shibuya district of Tokyo, on one of the most prestigious and heavily trafficked streets of the quarter popularly known as Omotesando.TOD’S Japan K.K. has used this building on an exclusive basis since 2005, pursuant to a lease agreement made on February 22nd 2005 with Holpaf B.V.The building houses the administrative offices of TOD’S Japan and also serves as the location for the most important TOD’S flagship store in Japan.The price for sale of the company shares was agreed in the total amount of JPY 230 million, about euro 2.1 million at the exchange rate in effect on the closing date (JPY 110.92/EUR 1).This figure was based on the value of the pro-forma net equity of Holpaf B.V. at September 30th 2010, while also considering the Japanese tax liability for the higher market value of the property as opposed to its cost recognised for tax purposes, and adjustment of the price according to the differences between the net financial position of the acquired company at the closing date and the pro-forma net financial position at September 30th 2010. At the same time it acquired the shares, the company recapitalised Holpaf B.V. for 22 million euros (share premium), to provide it with the financial resources necessary for full repayment of a shareholder loan of 20.6 million euros, granted by the previous owners prior to the acquisition, pursuant to the Sale & Purchase Agreement signed by the parties (TOD’S S.p.A. and Goral Investment Holding B.V.). For a complete analysis of the transaction, please see the Disclosure drafted in compliance with the rules set out in the new Annex 3 of the Related Parties Regulation no. 17221/2010, which is also available on the corporate website www.todsgroup.com.

120 Supplementary Notes

S.p.A. 2010 Annual Report

Finally, in order to assure a balanced financial structure for certain indirect subsidiaries in the Far East, the company contributed 16.2 million euros to recapitalisation of the sub-holding TOD’S International B.V., consequently increasing the value of the shareholding by this amount. Finally, the value of the shareholdings in the indirect subsidiaries TOD’S Hong Kong Ltd and TOD’S Macao Lda increased by 121 thousand euros and 18 thousand euros, respectively, following the capital increases carried out by these companies, for the 1% share owned directly by TOD’S S.p.A The impairment tests performed at the reporting date showed no impairment (also see note 9). Information about the subsidiaries follows below:
Company TOD’S Deutsch, Gmbh Dusseldorf - Germany S.C - euro 153,387.56 % direct held: 100% TOD’S France Sas Paris - France S.C. - euro 780,000 % direct held: 100% An.Del, USA Inc, (*) New York - U.S.A. S.C. - Usd 3,700,000 % direct held: 100% TOD’S Internat, BV (*) Amsterdam - Netherlands S.C. - euro 2,600,200 % direct held: 100% Del.Com S.r.l. (*) S. Elpidio a Mare - Italy S.C. - euro 31,200 % direct held: 100% TOD’S Hong Kong Ltd Hong Kong S.C. - Usd 16,550,000 % direct held: 1% Holpaf BV Amsterdam - Netherlands S.C. - euro 5,000,000 % direct held: 100% Un.Del Kft Tata - Hungary S.C. - Huf 42,900,000 % direct held: 10% TOD’S Macao Lda Macao S.C. - Mop 20,000,000 % direct held: 1% Currency Shareholders’ equity Net profit (loss) Book value (Euro)

euro

10,340,840.89

1,596,178.86

3,153,387.56

euro

11,885,732.88

2,197,022.09

5,707,622.45

usd

34,691,339.67

(80,221.43)

34,656,431.69

euro

76,647,914.85

14,901,525.86

24,170,662.59

euro

80,005,331.49

8,416,077.65

51,107,501.41

hkd

447,986,898.33

101,345,198.23

129,046.56

jpy

3,040,015,876

(294,163,434)

24,083,377.88

huf

138,862,448.00

59,618,685.00

18,054.44

mop

15,933,272.21

2,770,880.86

18,551.07

(*) The figures for the companies that are directly controlled through sub holdings are reported on the Consolidated Financial Statement of TOD’S S.p.A.

121 Supplementary Notes

10 3.31.225) 167.608 59.31. Allowances for bad debts.31.10 12.319 (3.The amount accrued during FY 2010 totalled 4.31.452 Change 6.09 102. Euro 000’s Third parties Group’s entities Impairment loss Net trade receivables 12.31.836 thousand euros). Other current assets 13.298 5. provision of services.5 million euros in receivables from the Italian subsidiaries that participated in the tax consolidation programme (see Note 27) and VAT receivables for 4.250 (8.225 13. They include the Company’s receivables from Group entities and stem primarily from commercial transactions and. 122 Supplementary Notes . Of the amount of allowances existing at December 31st 2009.993 12. The changes in the allowances for bad debts are illustrated as follows: Euro 000’s Balance as of 01.A. These represent the credit exposure stemming from sales made through the wholesale channel.992) Receivables from third parties.225 350 (465) 3.31.01. they are largely represented by 3.400) 137.S.997 21 (8.508 Change 3.442 thousand euros (FY 2009: 6. Inventories Euro 000’s Raw materials Semi-finished goods Finished products Advances Write-downs Total 12. 2010 Annual Report 12. 1. 13.8 million euros.551 1 (11.5 million euros. to a lesser extent.460 12.2 Tax receivables. Totalling 8.p.357) 115 (1. Receivables from subsidiaries.543 92.09 2. The amount of the adjustment to the face value of the receivables represents the best estimate of the impairment loss determined against the specific and generic risk of inability to collect identified in the receivables recognised on the balance sheet.110) 165.143 91.358 68.9 million euros were used during FY 2010.486 (600) 554 (20) (2.962 (3.935) 485 The recognised allowance for inventory write-downs reasonably reflects the technical and stylistic obsolescence of Group inventories at December 31st 2010.09 47.10 Increase Decrease Balance as of 12.110 12.693 600 (68) 3.31.1 Trade receivables.465) 137.812 6.10 51.10 108.

fully subscribed and paid in.The balance at December 31st 2010 is denominated in the following currencies: Euro 000’s Current account overdraft Financing Total Euro 925 925 Jpy 3.01.146 4.146 1.410 2. 15.485) 593 (1.407 (4.S.221 4.09 3.609.038 6.407 12. 2010 Annual Report 13.10 925 3.975 Stock options reserve 5. All shares have equal voting rights at the general meeting and participation in profits.425 7. The following schedule illustrates the changes in fiscal 2010: Euro 000’s Additional Paid-in capital reserve 208.2 Capital reserves.212 213.892) The amount of 3.038 Change (2.221 4.892) 354 (294) 14.10 1.244 (1.146 12.221 thousand euros refers a loan denominated in JPY granted to the subsidiary TOD’S Japan KK.1 Share Capital. Shareholders’ equity 15.763 5.3 Other. At December 31st 2010.892) (1.038 1. Euro 000’s Prepaid expenses Financial assets (Note 14) Other Total 12.140 309 (805) (4. the company share capital totalled 61.903 309 4. and was divided into 30.975 to be continued Balance as of 01.802 euros.628 6.701 Change 1.321 Total 925 3.09 Share based payments Options exercised Other Balance as of 01.221 3.146 15.836 4.09 592 6.31.644) 213.01.071 7.218.401 shares having a par value of 2 euros each.644) - Total 213. Repayment of the last instalment is scheduled for 2011.10 123 Supplementary Notes .31.A. Financial assets Financial assets are comprised exclusively by loans granted to the Group’s companies: Euro 000’s Current account overdraft Financing within 12 month Total current assets Financing beyond 12 months Total financial assets 12.p.31.31.

644 347.047) 82.003) 2.644 275.1 million euros.A. 2010 Annual Report continuing Euro 000’s Additional Paid-in capital reserve Stock options reserve Total Share based payments Options exercised Other Balance as of 12.511 31.356 (38.10 239. The derivatives resulting from forward currency contracts (see Note 17) used to hedge expected transactions (i.31.583 Profit (loss) of the period 69.914) 82.09 Allocation of 2008 result Dividends Profit for the period Other changes Balance as of 01.3 Hedging reserve.31.007) (45.974 277.056 74 15.974 82. The following schedule illustrates the changes in fiscal 2010: Euro 000’s Retained earnings Balance as of 01.975 - 213.262) 71.01.738 26.612 The profits reserve was drawn down by 107.845 (31. cash flow hedges) were recognised in the reserve for derivative financial instruments.586 4.583) (38.10 Change in fair value of hedging derivates Transfer to Profit and Loss Account of hedging derivates Other Balance as of 12.01.10 (798) 529 290 21 (2.133) 194.10 Allocation of 2009 result Extraordinary dividends Profit for the period Other changes Balance as of 12. 124 Supplementary Notes .659 (153.09 Change in fair value of hedging derivates Transfer to Profit and Loss Account of hedging derivates Other Balance as of 01.S. Euro 000’s Hedging reserve Balance as of 01.31.4 Earning reserves.p.921 4.007 (107.01.975 15.974 Total 309.01.10 213.921 71.262) 71.921 (26.e. being used to pay out the previously mentioned extraordinary dividend.

09 1.The loan amortisation schedule is as follows: Euro 000’s 12. Bank overdraft and financing Euro 000’s Current account overdraft Financing Total 12.665 1. The following table provides information on the possible use and distribution of each specific account under shareholders’ equity and their possible use during the past three years: In euro 000’s Description Capital reserves Share capital Share premium Stock options reserve Hedging reserve Hedging reserve Retained earnings Legal Extraordinary (1) Possibility of use --A. since the difference between the nominal and effective interest rates for the transaction are insignificant.369 - 107. the entire amount of the reserve may be distributed only when the legal reserve has reached the limits set forth in Section 2430 Italian Civil Code A .340 The loan is recognised at cost.for distribution to shareholders 16.819 12.5 Information on distributable reserves.592 1. 125 Supplementary Notes .10 2010 2011 2012 2013 2014 Total 1.31.340 8.340 Change (1.819 12.665 1.p.31.741 1.592 1.The portion payable after twelve months totals 5.521) (1.521 1.A.for coverage of losses C .09 8.B.821 6. a value that approximates its fair value.S.133 Pursuant to section 2431 Italian Civil Code.821 8.31.B.10 6. 2010 Annual Report 15.227 thousand euros.for capital increase B .C Available amount --213.521) The entire exposure to the bank system is comprised a long-term mortgage loan (see Note 21) denominated in euro.975 - Uses in the preceding 3 years Coverage of losses Others - (1) B A.31.819 6.741 1.244 182.C 12.

056 thousand euros in hedge derivatives were transferred to the profit and loss account.As part of this policy. Against the contracts for these last hedges.000 6. franchisees and customers (multi-brand).780 Sale Notional Euro 17.The net fair value of foreign currency hedges that were earmarked for cash flow hedges was 118 thousand euros (asset) at December 31st 2010. The company generates its revenues through three main channels: Group companies (directly operated store network).145 4. This requires recognition of the derivatives in equity at their fair value and recognition of the changes in fair value. In particular. and British pound. the net fair value of foreign currency hedges was 1. It also includes a sensitivity analysis designed to quantify the potential impact of hypothetical fluctuations in benchmark parameters on final results. the hedge accounting method is applied. which were closed between January and December 2010.S. which varies according to the type of hedge at the valuation date. Hedging of financial risks The company has implemented a system for monitoring its financial risks in accordance with the guidelines set out in the Corporate Governance Code of Listed Companies.p. highlighting the company’s level of exposure. including assets for 1. recognised as a reduction in revenues.800 1.491 Purchase Notional Notional currency Euro - US dollar Hong Kong dollar Japanese Yen British pound Swiss Franc Canadian dollar Total At the same date.000 407. i. At the closing date. are subject to a hedging policy designed to streamline credit management and reduce the associated risk. both long-standing and potential ones.818 3.221 7. Derivative financial instruments Given the Company’s major presence on international markets. Swiss franc. 2010 Annual Report 17.992 thousand euros (FY 2009: 356 thousand euros) and liabilities for 595 thousand euros (FY 2009: 353 thousand euros).The receivables from independent customers (franchisee e wholesale). These risks are analysed as follows. Hong Kong dollar. Credit risk Credit risk represents the exposure to potential losses stemming from failure to discharge obligations towards trading counterparties. 2.639 1. dollar. the financial risks connected with its operations are constantly monitored in order to assess their potential negative impact and undertake appropriate action to mitigate them. while the creditworthiness of all customers. the notional amount of the currency futures sales agreements are summarized as follows: Currency/000 Notional currency 24. since almost all the entities belonging to the TOD’S Group are wholly owned by the Group. 126 Supplementary Notes .150 5.There is practically no credit risk on receivables from the Company. principally for revenues denominated in currencies other than the euro (see Note 18). At each reporting date. is periodically analysed in order to monitor and prevent possible solvency crises.The principal currencies that pose this risk are the U.961 48.A.636 73. it is exposed to exchange rate risk.397 thousand euros. derivative contracts were made for every single foreign currency to hedge a specific percentage of revenue (and cost) volumes expected in the individual currencies other than the functional currency. company policy does not envisage granting credit to customers. 18.S.000 350. In order to realise the objectives envisaged in the risk management policy.

As envisaged by IFRS 7. The measured amount of this risk is recognised in the “translation reserve” in equity.625 Expired 60>120 6. In the specific case. Governance of individual foreign currency operations by Group subsidiaries is highly simplified by the fact that they are wholly owned by the parent company. even on the money market. The following paragraphs analyse the individual risks.A. against a cost structure that is concentrated principally in the eurozone.S. ii.This risk stems from the fact that the assets and liabilities of consolidated companies whose functional currency is different from the euro can have different countervalues in euros according to changes in foreign exchange rates. using sensitivity analysis as necessary to highlight the potential risk on final results stemming from hypothetical fluctuations in benchmark parameters. By their very nature. – commodity risk. Due to its commercial operations. nor can they reflect the interelations and complexity of the reference markets. The company realises greater revenues than costs in all these currencies. its debt exposure was 6. No hedges of this risk existed at the reporting date. therefore. the company is not particularly exposed to foreign exchange risk.1 million euros. At December 31st 2010 the company’s cash and cash equivalents totalled 63. since there is no physical market subject to actual fluctuations in the purchase prices for raw materials used in the production process. and its limited exposure to the banking system. changes in the exchange rate between the euro and the aforementioned currencies can impact the company’s results. on the other hand. the company is exposed to fluctuations in the exchange rates for currencies in which some of its commercial transactions are denominated (particularly USD. they cannot be considered indicators of the actual effects of future changes in benchmark parameters of a different asset and liability structure and financial position different market conditions. 127 Supplementary Notes . prudently selecting them according to the return on deposits and their solidity. The company is exposed to exchange rate and interest rate risk. Liquidity risk Liquidity risk is the risk that the company will not dispose of the funds necessary to meet its short-term commitments and financial requirements.780 0>60 23. and dividing the deposits amongst a reasonable number of bank counterparties.816 Over 3.p. the due dates or renewal dates of its payables or the liquidity of its financial investments and market conditions. Exchange rate risk. these analyses are based on simplified scenarios applied to the final results for the periods referred to. current and historic capacity to generate cash.8 million euros. and was represented by a medium-long term loan (see Note 16). CHF and those of certain countries in the Far East). – interest rate risk. Market risk IFRS 7 includes in this category all risks that are directly or indirectly connected with the fluctuation in prices on physical and financial markets to which the company is exposed: – exchange rate risk.7 million euros. the company faces no liquidity risk due to its profitability.The principal factors that determine the company’s degree of liquidity are the resources generated or used by operating and investment activities and. With the exception of the foregoing.609 The prudent estimate of losses on the entire credit mass existing at December 31st 2010 was 3. iii. The company monitors the changes in the exposure.388 Total 108. connected with the volatility of prices for the raw materials used in the production process. 2010 Annual Report The following table shows the ageing of trade receivables to third parties (and thus excluding intercompany positions) outstanding at December 31st 2010: Euro 000’s Third parties Current 74. GBP.The residual component of this risk is connected principally with “translation risk”. The Company’s policy for financial assets is to keep all of its available liquidity invested in demand bank deposits without recourse to financial instruments.

477.p.5) 2. consistently with the strategic policies adopted for prudent management of cash flows.0) (7.550.4 1.319.012.8) 24.2 Impact on pre-tax profit 5% revaluation of the foreign currency FY 2010 FY 2009 7.784.1 (27.4 16.9) (10.7 976. the potential effects of fluctuations in the cross rates for the euro and major non-EU currencies have been analysed.413.1 23.6) (60.040.678.8 11.7 Impact on Shareholders’ equity (2. in the amount according to which they correspond to budget forecasts.3) 126.314. liabilities and future commercial flows that were not hedged.974.044.5) (39.8) (21. In order to determine the potential impact on final results. the company might forego opportunities to realise certain gains. • implementation of hedges. Impact on pre-tax profit 5% writedown of the foreign currency FY 2010 FY 2009 (7.878.398.314.5) 1.657.2) Euro 000’s FY 2010 Revaluation/Writedown foreign currency 5% -5% Impact on pre-tax profit (140.The process of hedging exchange rate risk is broken down into a series of activities that can be grouped into the following distinct phases: • definition of operating limits. 2010 Annual Report The company’s risk management policy aims to ensure that the average countervalue in euros of receipts on wholesale transactions denominated in foreign currencies for each collection (Spring/Summer and Fall/Winter) is equal to or greater than what would be obtained by applying the pre-set target exchange rates.562.252.a.The following table illustrates the sensitivity to reasonably likely changes in exchange rates on pre-tax profit (due to changes in the value of current assets and liabilities denominated in foreign currency) while holding all other variables constant: Euro Currency CAD CHF GBP HKD JPY KRW RMB SGD USD Other Total Country Canada Switzerland UK Hong Kong Japan South Korea China Singapore USA n.3 19.217.7) (883.167.875.9 (2.1) 72.2 (80.7 (140.6 12.037.1) (1.077.628.S.6 (1. The breakdown of forward currency contracts (for sale and purchase) outstanding at December 31st 2010 is illustrated in Note 17.2) (21.377.9 19.972.0) (54.7) (17.502.2) (2.779.0) (18.332. The company pursues these aims by entering into forward contracts for each individual currency to hedge a specific percentage of the expected revenue (and cost) volumes in the individual currencies other than the functional currency.0 36.1 The analysis did not include assets.3 55.5 49.491.5 2.2 12.241.3 2.1 8.5 36.012. • monitoring of positions and alert procedures.2) 1. but it avoids running the risks of speculation.A.4) (11.0) (2.7) (33.278.750. since fluctuations in exchange rates impact income in an amount equal to what is recognised in the fair value of adopted hedge instruments. • identification and quantification of exposure.094. The assets and liabilities that are denominated in foreign currency are identified as part of the sensitivity analysis of exchange rates.0) 126.311. 128 Supplementary Notes . Consequently. The company defines its exchange risk a priori according to the reference period budget for the reference period and then gradually hedges this risk upon acquisition of orders.4) (11.548.These positions are not hedged for speculative or trading purposes.

The company’s exposure to changes in interest rates is limited to an adjustable rate loan denominated in euros.09 3.119 (47) (24.The balance of deferred tax assets and liabilities at December 31st 2010 is shown in the following table.The sensitivity analysis carried out on interest rates has shown that a hypothetically unfavourable change of 10% in short-term interest rates applicable to the adjustable rate financial liabilities existing at December 31st 2010 would have a net pre-tax impact of about 10 thousand euros in additional expenses (FY 2009: 26 thousand euros). Level 2 – inputs other than the quoted prices indicated hereinabove. depr.997) 210 2. the financial instruments carried at fair value have been classified according to a hierarchy of levels that reflects the materiality of the inputs used to estimate their fair value.251 12.526) 1.029 5.941) 12.10 Assets Liabilities 82 (19. shows a net balance (liability) of 16. determined on the basis of temporary differences between the pre-tax result on the financial statements and taxable income.31.941 thousand euros (FY 2009: liability for 18.192) (16. Interest rate risk is hedged consistently with consolidated practice. Level 3 – inputs that are not based on observable market data.192) (68) (21. Deferred tax assets and liabilities At the reporting date.666) (18.31.251 (24.31.673 6 11 3. there were no current interest rate hedges current at December 31st 2010.10 7. and write-downs Provisions Property. recognition of the effects of deferred tax assets. Considering the insignificant amounts involved (Note 16). reference was made to the presumed percentage weight of the taxes that will be imposed on income in the years when those taxes will be charged.09 Assets Liabilities 48 (17.057) 171 (544) (3. The fair value of derivative financial instruments existing at December 31st 2010 (Note 17) has been classified as Level 2.547) Change 4.S.666) 129 Supplementary Notes .A. highlighting those components that contributed to their formation: Euro 000’s Amortization.547 thousand euros): Euro 000’s Deferred tax assets Deferred tax liabilities Total 12. 19. plants and equipment (leasing) Costs deductible over several years Partially deductible costs Inventory (write-downs) Derivative financial instruments Other Total 12. which are observable either directly (prices) or indirectly (derived from prices) on the market.The following levels have been defined: Level 1 – quoted prices obtained on an active market for the measured assets or liabilities.789 20 17 7.31.p.606 When determining future tax impact (IAS 12).746) 1. Categories of measurement at fair value In accordance with IFRS 7. 2010 Annual Report Interest rate risk.119 (21. iv.132 (2. which is designed to reduce the risks of interest rate volatility by simultaneously pursuing the aim of minimising associated financial expenses.855) 314 (544) (3.

31.788 thousand euros (FY 2009: 3.330 thousand euros.31. 20.09 3. Other liabilities is comprised principally of the variable portion of Directors’ compensation.850 2.04 508.10 5. if distributed. 20.664 24.80.051 12.087 3. 64/’86 149.855 Payables to employees reflected amounts accrued in their favour (including unused holiday leave) that had not yet been paid at the reporting date.454 thousand euros in payables for tax withholding on compensation paid to employees and independent contractors. which. if distributed.385. Totalling 14. Euro 000’s Payable to employees Social security institutions Others Total 12.09 95. for the reserves in equity. mainly include.Law n.80 for a total of euro 237.5 million euros (note 23) and the estimate of returns at the end of the financial year. 20.002 ToThird parties. it would not constitute taxable income for the company were it to be distributed. These represent payables to Group entities. the IRES (corporate income tax) and IRAP (regional tax on production activity) payables resulting from calculation of the tax liability for the financial year.499 12.775 15. will constitute taxable income for the company. would represent taxable income for the company.489 6. for 11.963 99.19 81. 2010 Annual Report Tax suspension reserves.973 286 9. 3 .049 Change 23.10 118. 14 c.A. 130 Supplementary Notes .1 Trade payables Euro 000’s Third parties Subsidiaries Total 12. net of prepayments and credits that may be offset upon payment (tax withholding charged to the company).p.115 125.31.596 11.326 thousand euros).S.936 6.644 Change 1.2 Tax payable. Other current liabilities 20. 15 paragraph 10 DL 429/82 Reserve for greater deduction of VAT Reserve for inflation adjustments pursuant to Law n. To subsidiaries. formed with income that was regularly subjected to taxation. totalling 3. 72/’83 Reserve for deduction art.3 Other.152 26.068 12. previously defined reserves have been converted into the form of share capital.76 5.31.060 3. These stem exclusively from commercial transactions as part of ordinary processes for purchase of goods and services. The balance also includes 3. as follows: Euro Reserve for adjustments art.783.086 3. b. only the extraordinary reserve remains.256. in connection with the situation following the capital transactions carried out pursuant to the August 5th 2000 resolution of the extraordinary Shareholders’ Meeting: a. principally for provision of services.837. The following information is provided on reserves in shareholders’ equity that.

which may be exercised only if Holpaf B. please see Note 17.V.Tokyo. For a detailed analysis of derivative financial instruments.3 Derivative financial instruments. 2010 Annual Report 21. must purchase the property at a specific price that varies over the term of the option (decreasing price.p.2 Potential liabilities and other commitments Guarantees granted to others. 131 Supplementary Notes .A. defaults during the term of the bonds and the creditor demands payment of the mortgage. for which the company acts as guarantor (FY 2009: 44.TOD’S S.348 thousand in suretyships had been granted to others at December 31st 2010 (euro 46.p. All derivative contracts made with leading financial institutions will expire in 2011.752 thousand in 2009) to secure the contractual commitments of subsidiaries. these covenants concern: a) Property Purchase Option: a put option granted to Intesa San Paolo on the Omotesando property. has undertaken to hold harmless the rights to repayment of the bonds held by Intesa San Paolo and Société Européenne de Banque even in the event of damage or destruction of the property due to any event. issued in 2006 by the subsidiary Holpaf B.V.053 thousand euros is comprised by bank credit lines provided to the subsidiaries. became guarantor (by taking over from the previous guarantor for the contractual obligations assumed by Holpaf B. to refinance the debt assumed to purchase the land and construction of the building in Omotesando. 21.TOD’S S. (note 11). 21. Guarantees received from others.p.200 thousand (euro 665 thousand in 2009) as the prudent estimate of liabilities that the Group might incur if it loses a series of pending lawsuits.V. The guarantees received from banks to cover their own contractual commitments totalled euro 7.The amount of 55. equal to the amount of the residual debt of the two bonds not repaid by Holpaf B. has undertaken to hold harmless the rights to repayment of the bonds held by Intesa San Paolo and Société Européenne de Banque even in the event of damage or destruction of the property in an earthquake.p.171 thousand (euro 6. of which 42 thousand euros for use of the provisions existing at December 31st 2009.A. Mortgages. Provisions and potential liabilities and assets 21. Other guarantees. used for the coverage of transaction in foreign currency.A.p. They include euro 1. b) Earthquake Indemnity Letter. amortised and fixed-rate bond loans (Intesa San Paolo and Société Européenne de Banque). In detail.A. c) All Risks Indemnity Letter. A total of euro 57.) in favour of the banks that subscribed the two non-convertible.571 thousand in 2009).V.1 Provisions. the residual face value of the principal for the two bonds amounted to JPY 4. TOD’S S. This mortgage secures the lent capital and all expenses deriving from the agreement.238 million. at the time of default).V.A. A first mortgage on a owned building (production plant in Sant’Elpidio a Mare) for euro 30 million was granted to the lender for a loan received by the company (see Note 16). Following the acquisition of Holpaf B.827 thousand euros).S. In this scenario.Accruals for the year are equal to 577 thousand euros.TOD’S S. At December 31st 2010.

6 2. 17389 of June 23rd 2010. in accordance with its own tradition of applying best practices on the market. 22. alternatively.1 3.com).” a deferred benefits plan in favour of company employees) accrued after that date are covered by the rules applicable to defined contribution plans.3 2.A. Reserves for employees Following changes in the law.” can be found at www. 132 Supplementary Notes .0 17. Transactions with related parties In implementation of the Related Party Transactions Regulation adopted by CONSOB with Resolution no.p. The amount of lease instalments payable after the reporting date pursuant to these agreements is as follows: (Euro millions) 2010 2010 2011 2012 2013 2014 2015 Over 5 years Total 4.8 The operating lease instalments allocable to fiscal 2010 totalled 4.1 2. before the new regulation issued by CONSOB came into force. The operating leases entered into by the Company are for use of properties used to conduct its operating activities (offices.7 million euros (Fiscal 2009 4.4 2.8 1.3 2009 4. However.A. (The complete text of the “Related Party Transactions Procedure of TOD’S S.8 millions euros).4 0. 17221 of March 12th 2010.4 Operating lease agreements.381 379 (602) 8.158 321 (507) 7.These no longer require actuarial calculation and discounting processes.7 2. production plants).158 23.8 13. the TOD’S Group modified its existing procedures governing the transparency and substantive fairness of related party transactions.3 3. the employee severance indemnities accrued from January 1st 2007 had to be allocated to supplemental retirement plans (pension funds) or. the a priori favourable opinion of the Internal Control and Corporate (1) The statutory amendment envisaged that for firms with more than 50 employees. inter alia.6 1.todsgroup.The following table illustrates the changes in liabilities during year 2010: (Euro millions) Year 10 Initial Balance Financial expenses Benefits paid Final Balance 8. beginning January 1st 2007 all amounts for employee severance indemnities (“TFR.S. the Group always subjected significant related party transactions to detailed investigation and.972 Year 09 8. since all of the business’s obligations to employees have ceased (1). 2010 Annual Report 21. as amended by Resolution no. The new related parties procedure was approved – after receiving the favourable opinion of independent directors – by the Board of Directors of the parent company on November 11th 2010 and came into force on January 1st 2011. to a Treasury Fund set up at the Istituto Nazionale di Previdenza Sociale (Italian National Social Security Institute).p. to bring them in line with the principles set out in the cited CONSOB Regulation.

and after issuance of a favourable opinion by the Internal Control and Corporate Governance Committee (already in line with the CONSOB regulation that would enter into force on January 1st 2011.V. The total price paid for acquisition of 100% of the shares of HOLPAF B. was JPY 230 million (equal to 2. 2010 Annual Report Governance Committee (the committee that performed the relevant functions before the new regulation came into force). (ii) the issuance of an opinion (either binding or non-binding. where the majority or all members of these committees are independent directors). lease of sales spaces. Most significant transactions concluded during the period As previously described in note 11.V. significant related party transactions were previously subjected. Consequently.p. from Goral Investment Holding B. Pursuant to the agreement. please see the Disclosure drafted in compliance with the rules set out in the new Annex 3 of the Related Parties Regulation no. a Dutch company fully owned by Diego Della Valle & C. Through acquisition of the shareholding. use of the ROGER VIVIER brand license and the provision of advertising services.A. who in the performance of their functions also avail themselves of the assistance of independent experts. 17221/2010. the Group also fully repaid Goral Investment Holding B. as the seat for administrative offices and location for the most important flagship store of the TOD’S Group in Japan.p. by the body delegated to resolve on the transaction).com.. the Japanese tax liability for the higher market value of the property as compared with its recognised tax cost. and controlled by Diego Della Valle) on November 25th 2010.V.V.6 million euros (principal and interest accrued at the share transfer date). considering the value of the pro-forma equity of the target company at September 30th 2010.K. with HOLPAF B. prompt transmission of material information to the delegated Board of Directors committees (the Internal Control and Corporate Governance Committee and – beginning January 1st 2011 – the Independent Directors Committee. All transactions – which are connected with the normal operations of TOD’S Group companies – were executed solely on behalf of the Group by applying contractual conditions consistent with those that can theoretically be obtained on an arm’s length basis.. no unusual related party transactions.S. which is also available on the corporate website www. For complete information about the transaction. show rooms and offices.V.1 million euros). after approval by the Board of Directors of TOD’S S... as applicable) before approval of the transaction by the Board of Directors (or. Developments of related party transactions pending at December 31st 2009 In continuation of contractual relationships already existing in 2009.V. Without prejudice to the principles of procedural fairness cited hereinabove.This building has been used entirely by the Group since 2005 under a lease agreement made on February 22nd 2005 by Tod’s Japan K. acquired the entire share capital of HOLPAF B. 133 Supplementary Notes . The principal object of the transactions was the sale of products. inter alia: (i) a complete. the TOD’S Group continued to maintain a series of contractual relationship with related parties (directors/controlling or significant shareholders) in 2010. for the shareholder loan previously made to HOLPAF B. and shall continue to be subjected in future.p.todsgroup.TOD’S S. the TOD’S Group acquired ownership of the Omotesando building (the company’s sole asset).A. SAPA (a company owned by Diego and Andrea Della Valle. as previously mentioned). and the adjustment for differences between the net financial position of the acquired company at the closing date and its pro-forma net financial position at September 30th 2010. or other related party transactions that might compromise corporate assets or the completeness and fairness of Group accounting and other information were executed during the financial year. to a detailed investigation involving. in the amount of 20. each within the ambit of their delegated responsibilities.A. if appropriate.

Other related parties Total 12.305 9.125 2.716 635 - 22 1.094 (*) Companies directly or indirectly controlled by Chairman of the Board of Directors Diego Della Valle. Commercial transactions with related parties . 134 Supplementary Notes .909 612 Other operations 1.474 848 3.722 3.10 Receivables Payables 7.162 Purchases of assets Royalties 1.499 1. Commercial transactions with related parties .305 7.p.864 7. 2010 Annual Report i.474 - 1.249 1.984 - 1.Receivables and payables Receivables and payables Euro 000’s Parent company (*) Board Directors Executives with strat resp. Other related parties Total Year 2009 Parent company (*) Board Directors Executives with strat resp. Other related parties Total Year 2009 Parent company (*) Board Directors Executives with strat resp.884 1.365 12.S.Costs Euro 000’s Purchases of products Year 2010 Parent company (*) Board Directors Executives with strat resp.984 - 635 - 22 ii.A.31.598 848 3.716 Operating leases Other operations 1.Revenues Euro 000’s Sales of products Year 2010 Parent company (*) Board Directors Executives with strat resp.09 Receivables Payables 7.31.931 Rendering of services 9.884 Operating leases 2.931 1.598 Rendering of services 87 3. Other related parties Total 1.033 688 1 1.282 2.520 2.722 - iii. Commercial transactions with related parties . Other related parties Total 1.282 1.034 2.406 7.845 Sales of assets Royalties 1.125 3.845 7.

and General Managers.5 12.7 6.7 24.0 309.400.8 24.1 90. (including for the activities that they performed at subsidiaries) for any reason and in any form: Euro 000’s Compensat.5 423.A.7 78.0 1.5 606.0 210. 6.4 (3) (4) (3) 33.S. for part.0 60.0 (2) Compens.3 44.9 Non cash benefits Bonus and other incentives 2.p.7 6.7 25.2 (4) 6. Statutory Auditor of subsidiary Member of the Compliance Program Supervisory Body (***) (****) Directors and Key Executives do not receive severance indemnities. Other compens.2 225. The following table illustrates the compensation accrued in fiscal 2010 by each of the Directors.7 25.0 111.7 6.7 7.0 (1) 3. as emplo.5 225. 148.7 625.7 2.488. Statutory Auditors. in Commit. 135 Supplementary Notes .0 2.7 5. 2010 Annual Report Compensation of Directors.7 25.A.2 6.7 24. Statutory Auditors.2 (2) 480. For office Directors Diego Della Valle (*) Andrea Della Valle (**) Luigi Abete Maurizio Boscarato Luigi Cambri Luca C.p.3 Executives with strategic responsibilities Legend (*) (**) Chairman of Board of Directors Vice Chairman of Board of Directors Member of Executive Committee Chairman of the Statutory Board (1) (2) (3) (4) Director of subsidiary Consultant of TOD’S S.0 745.0 60.100.A.7 25.500.7 12.1 Compensat.p. Executives with strategic responsibilities of TOD’S S.4 6. di Montezemolo Emanuele Della Valle Fabrizio Della Valle (****) Emilio Macellari (****) Pierfrancesco Saviotti Stefano Sincini (***) Vito Varvaro Total Statutory auditors Enrico Colombo (*****) Gian Mario Perugini Fabrizio Redaelli Total 925.9 0.2 11.

They involve ordinary operations and are settled on an arm’s length basis.31. respectively.31.The following table shows the country breakdown of the value of commercial relationships with subsidiaries in 2010: Euro 000’s N° Companies Italy 4 Albania 1 France 1 Germany 1 Great Britain 2 Luxembourg 1 Netherlands 2 Switzerland 1 Spain 1 Hungary 1 Belgium 1 Usa 10 Japan 1 Hong Kong 1 Singapore 1 Korea 1 Macao 1 China 1 Indian 1 Total 34 Receivables 23. 2010 Annual Report Intercompany transactions.000 38.348) (140) (1.784 (760) 10.246 96 339 1.646 566 6.S.779 1.578 180 17.033 6. Total Year 2010 Capitalizations 16.200 121 18 Financing 12.038 136 Supplementary Notes .819 621 1.387 (1.040 5.p.31.327) Revenues/ (cost) net 66. Following below are the details of the financial and capital transactions executed in 2010: Euro 000’s TOD’S International B.10 12.V. DEL.567 1.379 2.290 79 101 13 148 27 121.234 3. The transactions executed with them substantially involve the exchange of goods. provision of services and the provision of financial resources.249 360 31.727 1.631 619 1. totalling 3.146 2.028 Receivables 24.A.k.489 273 419 300 7. Holpaf B.31.092 12.200 210 6. Sh. TOD’S S.817 (59) 7.498 2.736 26 4.V.040 18 12 3 124 109 63.036) (476) (438) (4) (611) (1.819 246 602 119 8.158) 1.004 (685) 972 12.p. TOD’S Hong Kong Ltd TOD’S Macao Ltd TOD’S Japan KK TOD’S France Sas ALBAN.628 3.594 78 90 16 338 22 171.p.525 2.996) Revenues/ (cost) net 53.185 6.682) (3) (7) (6.988 12 18 58 121 82 75.796 150 375 1.562 7.09 3.A.702 thousand euros and 212 thousand euros.507 14.09 Payable (528) (49) (717) (329) (327) (2) (374) (882) (106) (676) (6) (3.876 255 54.221 700 225 22.664 12. has commercial and financial relationships with the companies in which it directly or indirectly owns a controlling equity interest.248 5.799 The receivables and payables recognised by the Italian companies include the receivables and payables resulting from the tax consolidation programme.748 25.439 2.10 Payable (474) (109) (1.339 4.

5 0.925) (710) (9.9 8.A.8 11.771 58.687 Year 09 941 9.061 1.723 Change 2.560 9.414 Executives White-collar employees Blue-collar employees Total 25.1 2.S.2 The following table illustrates the breakdown of the Group’s employees by category: 12. Income from equity investments Just as in the previous financial year. 137 Supplementary Notes .31.501 % on revenues 2010 2009 7.735) 1. Personnel costs The personnel costs incurred by the Group in FY 2010 as compared with those for FY 2009 are illustrated as follows: Euro 000’s Wages and salaries Social security contribution Employee sev.224 Year 09 42. Indem.021 11.350 26. 09 42 632 740 1.422 (100) (8. the Company did not receive dividends from its subsidiaries.4 2.371 Aver.384 14.727 13.5 0. 10 44 632 734 1.468 394 11.686) 337 Change 619 407 (627) 399 158 706 87 951 1.839 62.425 12.5 10. Total Year 10 45.023 (258) (9. Financial income and expenses The breakdown of financial income and expenses in fiscal 2010 is as follows: Euro 000’s Year 10 Income Interest income on current account Foreign exchange gains Other Total income Expenses Interest on medium-long term financing Foreign exchange losses Other Total expenses Total net income and expenses 1.225 2.410 Aver.p.657 776 68 3.631) (797) (10.09 43 601 727 1.10 44 635 746 1. 2010 Annual Report 24.001 2.31.

together with the Italian subsidiaries that are presumably subject to a controlling relationship pursuant to Article 120 TUIR. TOD’S S. it recognizes liabilities or credits vis-à-vis those subsidiaries that produced tax losses and those that.385 40 (252) (441) (116) 42.723 2. and the taxes actually charged to income: Euro 000’s Taxes Theoretical income taxes Tax effect of non-deductible of partially deductible costs Non-deductible taxes Non taxable income Other Previous year taxes Effective income taxes 42.At the same time.866 Rate % 33.6%.1% 0.3%) (0.750 (3.819) 7.A.931 The theoretical tax rate for FY 2010 (the impact of theoretical taxes on pre-tax profit) was 33. 2010 Annual Report 27. on the contrary.2%) (0. According to this law. Income taxes for the period are broken down into current and deferred taxes.250 1. exercising the option envisaged by the new version of the TUIR and the implementing decree pursuant to Article 129. as well as financial relationships with revenue agency offices.1% (FY 2009: 32. transferred taxable income. The company. as controlling company. has aggregated its income with that of the subsidiaries participating in the national tax consolidation program since fiscal 2004. the company’s net result is impacted exclusively by the income taxes accrued on its own taxable income. Independently of the taxes that are paid.607) 42. as follows: Euro 000’s Current taxes Deferred taxes Total Year 10 44.474 (1.A. 138 Supplementary Notes . calculated by using the theoretical tax rate of the parent company.1% Tax consolidation program.935 Change 11.867 Year 09 32.1%) 34.p.0% (0. It does so by fully offsetting all the positive and negative taxable amounts. giving a tax rate of 34..TOD’S S.The following schedule reconciles theoretical taxes.p.7%). determined by applying the applicable tax rates for IRES (corporate income tax) and IRAP (regional tax on production activity) to the respective taxable bases as documented by the annual report at December 31st 2010. essentially acts as a “clearing house” for taxable income (profits and losses) of all Group companies participating in the tax consolidation program.p.S.6% 1.212 34.A. Income taxes The tax liability for fiscal 2010 (current and deferred) was 42.9 million euros. thereby benefiting from any losses contributed by the subsidiaries and assuming the expenses transferred from those subsidiaries with positive taxable income. decided to have the Group participate in the national tax consolidation program for IRES.

and the companies belonging to its network are illustrated below. Chief Executive Officer of TOD’S S. in accordance with the provisions of Article 154-bis.A Deloitte & Touche (network) Receiver TOD’S S. the compensation received in FY 2010 by the independent auditor Deloitte & Touche S. together with a description of the principal risks and uncertainties to which they are exposed.p.p.A Deloitte & Touche S. subsections 3 and 4. 11971 of May 14th 1999. give a true and fair view of the assets. certify.A Deloitte & Touche S. report on operations provides a reliable analysis of the issuer’s operating performance and income.p.. income and financial position of the issuer and entities included in the scope of consolidation. and the Consolidated Financial Statements of the TOD’S Group pursuant to Article 81-ter of Consob Regulation no. as amended 1.p. 2.A.p.p.p.A. liabilities.A. as broken down into auditing services and the provision of other services: Type of service Auditing services Other services Auditing services Total Deloitte & Touche S.. correspond with the account books and ledger entries.A Auditing services Total Deloitte & Touche Company Deloitte & Touche S.S. b) c) 3.A. Independent Auditors compensation Pursuant to Article 149-duodecies of the Issuers Regulation.A. a) They also certify that the Separate Financial Statements and Consolidated Financial Statements: have been prepared in compliance with the International Financial Reporting Standards recognised in the European Union pursuant to Regulation EC 1606/2002 of the European Parliament and Council of July 19th 2002.p.p.A.p. Certification of the Separate Financial Statements of TOD’S S. and Rodolfo Ubaldi. March 14th 2011 Stefano Sincini Chief Executive Officer Rodolfo Ubaldi Manager responsible for the drawing up of the financial reports 139 Supplementary Notes . Subsidiaries Subsidiaries Fees 175 123 298 73 371 29.p. The undersigned Stefano Sincini. Milan. TOD’S S. as well as the financial position of the issuer and all the businesses included in the scope of consolidation. 2010 Annual Report 28. manager responsible for the drawing up of the financial reports of TOD’S S. 58 of February 24th 1998: • the adequacy in terms of the company’s characteristics and • effective application of administrative and accounting procedures for preparation of the Separate Financial Statements and Consolidated Financial Statements during the period January 1st 2010 to December 31st 2010.A. of Legislative Decree no.

[THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK] 140 2010 Annual Report .

REPORT OF THE BOARD OF STATUTORY AUDITORS .

• since the conditions therefore have not been met.p. • the independent auditors have expressed an opinion without comment on the financial statements. and entailing the acquisition of the entire share capital of Holpaf B.A. and to assess the timetable of scheduled internal control operations. • neither complaints . as well as taking into account the indications provided by CONSOB. Reference is here made to the aforesaid documents with regard to matters falling within our purview. in potential conflict of interest.V. • we have not found nor received information from the Board of Directors. and “Transactions with related parties” in the explanatory notes to the separate IAS/IFRS financial statements of Tod’s S. 2010 Annual Report REPORT BY THE BOARD OF AUDITORS TO THE GENERAL MEETING OF SHAREHOLDERS OF TOD’S S.A. to exchange information on the activities undertaken by them. the Related-Party Transaction Procedure approved by the Board of Directors of Tod’s S. the directors have provided an account of the transactions undertaken with other group companies and/or related parties during the course of the financial year. related parties or between group companies. with the required periodicity. are adequate in light of the Company’s size and structure. in the paragraphs “Transactions with related entities” in the explanatory notes attached to the IAS/IFRS consolidated financial statements of the Tod’s Group.pursuant to article 2408 of the Italian Civil Code . carrying out periodic checks and meeting with the Independent Auditors’ managers. the said explanatory notes contained a detailed description of the highly significant related-party transaction effected during the accounting.p. contained..p.. we report the following: • we have supervised and checked compliance with the law and the instruments of incorporation. the Company’s Internal Control managers and the Executive in charge of drawing up of the Company’s accounting documents. with the help of the Board of Directors and the Internal Control and Corporate Governance Committee.p. PURSUANT TO ARTICLE 153 OF LEGISLATIVE DECREE N° 58/1998 AND ARTICLE 2429 OF THE ITALIAN CIVIL CODE (Translation of the document issued in Italian solely for the convenience of international readers) Dear Shareholders. More specifically. we discharged the supervisory tasks imposed under law. thereby attesting that the same are in accordance with the rules governing financial statements.. 17221 of 12 March 2010 (and subsequently amended by CONSOB Resolution no. the Board of Auditors.A. checked for the imposition of and compliance with procedures aimed at ensuring that the said transactions are concluded at suitable terms and in the Company’s interest. 2010. • the information received indicates that in 2010. as well as in the explanatory notes attached to the separate financial statements of Tod’s S.A. financial and capital transactions effected by the Company and its subsidiaries.S. 58/1998 and section 2429 of the Italian Civil Code. no mention has been made of atypical and/or unusual transactions. • the directors provided us. was found to be fully compliant with the principles entrenched in the Regulations adopted pursuant to CONSOB Resolution no. and on the most significant economic. in accordance with the rules of conduct for the Board of Auditors as provided for by the Italian Board of Professional Accountants and Auditors. ensuring us that the same were in accordance with law and the articles of association and were not manifestly imprudent or risky. and especially in respect of the features and economic effects of the transactions undertaken with other group companies and/or related parties. which owns the Omotesando building in Tokyo that houses not only the registered offices of the Japanese operations of the Tod’s Group but also the latter’s largest flagship store in Japan. did not entrust the Independent Auditors nor any other subjects belonging to the “network” other tasks in addition to those pertaining to the auditing of the 142 Report of Statutory Auditors . Tod’s S. • the information pertaining to transactions with group companies and/or related parties. in particular. on 11 November 2010. information on the activities undertaken by them. Following due assessment. in breach of the resolutions passed by the General Meeting of Shareholders or susceptible of compromising the integrity of the Company’s assets. With regard to such transactions.A. • in the explanatory notes attached to the consolidated financial statements of the Tod’s Group. attending the meetings of corporate organs. Pursuant to article 153 of legislative decree no. 17389 of 23 June 2010).nor reports were received during the course of the financial year.A.p.p. In the year ended on December 31st. the Independent Auditors or the Internal Control and Corporate Governance Committee regarding the existence of atypical and/or unusual transactions effected with third parties.

Chairman Dr. we oversaw and checked. Deva Inc. through direct observation.Auditor in office 143 Report of Statutory Auditors .A. In light of the above.p. The company adopted an Organizational and Managerial Model pursuant to Legislative Decree no. attending Internal Control and Corporate Governance Committee meetings and meetings with the Executive Director in charge with the supervision of Internal Control as well as with the Executive in charge of drawing up of the Company’s accounting documents. • the financial reporting processed was monitored as required pursuant to article 19 of Legislative Decree no. the appropriateness and efficacy of the internal control and risk management system. and the related reports. adopted by the Board of Directors on November 13th. we have not found any reasons hindering the approval of the financial statements as at December 31st. by obtaining information from the company officers in charge of the relevant corporate departments.Auditor in office Dr. 2010 Annual Report financial statements of the Company and its subsidiaries. Milan. March 22nd. 2006. Fabrizio Redaelli .p.A. Furthermore. we oversaw and checked for compliance with the principles of good corporate governance and the appropriateness of the organisational structure and the instructions imparted by the Company to subsidiaries pursuant to article 114. • during the course of the financial year we attended 7 meetings of the Board of Directors and 6 meetings of the Executive Committee.A’s Board of Directors identified Tod’s (Shanghai) Trading Co.. 58/1998.namely those companies which were identified in the meeting held on November 12th 2008. revealed no critical aspects worthy of mention. • through direct checks and information obtained from the Independent Auditors and the Executive in charge of Drawing up of the Company’s accounting documents. the separate financial statements of Tod’s S. • following the contacts with the corresponding bodies of the subsidiaries. 2010 and we have no comments to make on the proposed distribution of dividends as recommended in the directors’ report to the separate IAS/IFRS financial statements of Tod’s S. and exchanges of significant information during meetings with the Independent Auditors and with the Executive in charge of drawing up of the Company’s accounting documents. information gathered during meetings with company officers in charge of corporate organisation.Tod’s Japan KK. Enrico Colombo . Gian Mario Perugini . 231/2001. • to the extent of our powers and purview. 6 meetings of the Board of Auditors were held. examining corporate documents and analysing the results of the work undertaken by the Independent Auditors. 39/2010. • pursuant to article 19 of Legislative Decree no.A. At the meeting of November 11th 2009. • no significant aspects or issues worthy of mention arose during the meetings held with the Independent Auditors pursuant to article 150(3) of Legislative Decree no. no material aspects have emerged. • to the extent of our powers and purview. .. pursuant to article 19 of Legislative Decree no. • we checked the procedures for the proper implementation of the rules of corporate governance entrenched in the Self-Regulatory Code of the Corporate Governance Committee of listed companies. and Tod’s Hong Kong Ltd. • during the course of the year we have issued our opinions as provided for by the law. 58/1998.S. 39/2010. Our oversight activities did not reveal any facts warranting a report to internal control organs or worthy of mention in this report. nor have any significant shortfalls been found in the internal control system as far as the financial reporting process is concerned. 2011 The Board of Auditors Dr.p. 39/2010. and with regard to matters falling within our purview. 39/2010.p. the statutory auditing of the annual accounts and the consolidated accounts was duly monitored. paragraph 2 of Legislative Decree no. where no members of the board of auditors were already present. as well as the activities undertaken by staff in charge of internal control and the administrative/accounting system and the reliability of the latter to faithfully reflect corporate management. we oversaw compliance with statutory provisions pertaining to the preparation and layout of the consolidated financial statements of the Tod’s Group. as well as Tod’s France Sas. as “strategically significant subsidiaries”. Ltd.The assessment carried out by the board of auditors in respect of independence of the auditing firm pursuant to article 19 of Legislative Decree no. Tod’s S.

REPORT OF INDEPENDENT AUDITORS .

145 Report of Independent Auditors .

146 Report of Independent Auditors .

[THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK] 147 2010 Annual Report .

[THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK] 148 2010 Annual Report .