Annual Report
at December 31, 2005
SICC S.P.A.
Via Toscana 32 – 60030 MONSANO, ANCONA
Capital Stock €7,020,000 fully paid up
Telephone 0731 21881 – Facsimile 0731 218888
Internet www.sicccucine.com
E-mail sicc@sicccucine.com
Registered with the Registrar of Companies, Ancona
Tax Registration No.00388570426
Register of Businesses, Ancona, No.76548
BOARD MEMBERS, OFFICERS AND AUDITORS
Chairman and CEO
Alfiero Latini
Co-CEOs
Gianluca Latini
Oriana Draghetti
Directors
Costantino Branchesi
Sergio Corbi
Oriana Draghetti
Gianluca Latini
Enrico Muzi
Gianni Tombolesi
Powers of CEO and Co-CEOs :
Chairman and CEO Alfiero Latini is vested with the broadest powers without limits for
the management of the Company, excluding those powers that may only be lawfully
exercised by the Board exclusively, or as may be required in the Company’s Bylaws.
Co-CEOs/Executive Committee members Oriana Draghetti and Gianluca Latini are
individually vested with the powers for the Company’s management in the ordinary
course of business. Powers for the management of transactions outside the ordinary
course of business may only be exercised by Oriana Draghetti and Gianluca Latini
associatively.
BOARD OF STATUTORY AUDITORS
Chairman
Paolo Massinissa Magini
Auditors
Massimo Albonetti
Gaudenzio Beldomenico
Substitute Auditors
Claudio Beldomenico
Leandro Tiranti
INDEPENDENT ACCOUNTANTS
PKF Italia S.p.A.
NOTICE OF ANNUAL MEETING
The shareholders of SICC S.p.A. are invited to attend the Annual Meeting of
Shareholders on April 29, 2006 at 10.00 a.m. at the Company’s headquarters, Monsano,
Ancona, Via Toscana 32, first call or, if necessary, on May 16, 2006, second call, same
time and location, to discuss and vote upon the following agenda:
1. Financial Statements of SICC S.p.A. for the year ended December 31, 2005, report of
the Directors on the performance of the Company, report of the Statutory Auditors,
report of the Independent Accountants and related resolutions; communication of the
Consolidated Financial Statements of SICC S.p.A. and its subsidiaries for the year ended
December 31, 2005.
2. Renewal of stock repurchase authorization in compliance with the provisions of
Article 2357 ff of the Italian Civil Law and Article 132, Legislative Decree 58, February
24, 1998.
The Report of the Directors on the performance of the Company and their proposals,
related to matters to be voted upon at the Meeting, as established in the agenda, and
the Annual Report on the Company’s Corporate Governance, in accordance with
applicable legislation, shall be filed with the Company at the Company’s headquarters
and with Borsa Italiana S.p.A., to be made accessible upon request.
To attend the Meeting, the shareholders shall request a copy of a brokerage statement
from their respective brokers as under applicable legislation.
Upon commencement of procedures at the Meeting, the Shareholders shall vote to
admit experts, financial analysts and qualified journalists to the Meeting.
The persons as mentioned above are invited to the Meeting, pending approval by the
Shareholders as provided for above.
For the Board of Directors
The Chairman
(Alfiero Latini)
Notice of Annual Meeting published in the Official Journal of the Republic of Italy
Gazzetta Ufficiale Issue No. 69 of March 3, 2006. Contents No. S-2218
Table of Contents
Management discussion and analysis of financial condition and results of operations
for the year ended at December 31, 2005
Introduction………………………………………........…………………………………………… 1
Corporate structure…………...........…………………………………………………………… 2
Activity highlights………..........…………………………………………………………………. 3
Adoption of International Financial Reporting Standards – IAS/IFRS............... 4
‘’The SICC S.p.A Group’’......………………………………………………………….…………... 5
Analysis of operations............................................................................... 5
Analysis of financial condition on a IAS/IFRS basis.........................……………. 8
“Parent Company SICC S.p.A”………………………………………………………………. 11
Analysis of operations ………………………………………...................………………… 11
Analysis of financial condition .......................... …………………………….………. 14
Financial information for subsidiary companies………………………………………. 18
Research and development………………………………………………………………... 19
Shares or stakes of controlling entities............……………………………………… 20
Intragroup activities.....……………………………………………………………………... 20
Internal control...……………………………………………………………………………... 20
Privacy policy..................................................………………………………….. 21
Investor relations......................................……………………………………….. 21
Transactions with related parties……………………………………………………... 21
Intragroup activities..........………………………………………………………………... 22
Transactions with directors and shareholders……………….……………………. 23
Security ownership of directors, statutory auditors and general managers... 23
Stock repurchase programs and shares or stakes of controlling entities…… 24
Events subsequent to December 31, 2005 and outlook for fiscal 2006……. 25
Proposed allocation of net earnings for fiscal 2005……………………………… 26
Consolidated financial statements of SICC S.p.A. and subsidiaries at December 31,
2005 on a IAS/IFRS basis
Consolidated balance sheets..………………………………………………………….. 27
Consolidated statements of income...........……………………………………….. 29
Consolidated statements of cash flows………………………………………………… 30
Consolidated statements of shareholders’ equity...........…………………………… 31
Notes to consolidated financial statements …………….………………………… 32
Financial statements of SICC S.p.A. at December 31, 2005
Balance sheet..........………………………………………………………………………… 74
Statement of income………………………………………………………………………….. 76
Statement of cash flows……………………………………………………………………. 77
Notes to financial statements and annexes…………………….……………………... 78
Effects of transition to IAS/IFRS
Tables and notes....................................………………….………….………..… 123
Report of Independent Accountants
On the consolidated financial statements of SICC S.p.A. and subsidiaries..... 135
On the financial statements of SICC S.p.A............................................……. 137
Report of the Board of Statutory Auditors
On the financial statements of SICC S.p.A and on the consolidated financial statements of SICC
S.p.A. and subsidiaries...........................................…………………………… 139
MANAGEMENT
DISCUSSION
AND
ANALYSIS
OF
FINANCIAL
CONDITION AND RESULTS OF OPERATIONS FOR THE YEAR ENDED
DECEMBER 31, 2005
INTRODUCTION
Affecting 2005 were continued difficulties in the economic context, as made more acute
by persistent high oil price, export-hindering unfavorable Euro vs dollar exchange, and
expansion at a steady pace of China, that appears more and more as the originator
of the strategic shift in worldwide economy.
There are weak signs of an improvement in the economy in the short-term whose
intensity remains uncertain.
Exports pressures as a result of a stronger Euro vs dollar exchange continued to
adversely impact economies in the Euro area. Acceleration in 2006 may be less
intense than expected.
Italy marks time with a structurally weak industrial system. There was no growth of the
economy in 2005, GDP was flat at 0 per cent, in a deceleration as compared with a 1.1
per cent increase in 2004.
Additional to significantly lower competitiveness of domestic businesses, delocalization
of major industrial operations to Eastern Europe and a crisis of major industries
including the automotive, are severely impacting the industrial sector as a whole.
A weak demand remains determinant to a slower economy. Weakness reflects
primarily widespread persistent uncertain business and household future prospects.
In the Interiors industry 2005 was adversely impacted by difficulties in the economic
context. Businesses in this industry saw progressively deteriorating sales and margins
and declining market share globally.
If on the one hand exports would no longer drive the industry in 2005, on the other
hand a weakening real estate cycle resulted in a slower domestic demand as compared
with prior periods.
Continued adverse pricing pressures on raw materials adversely affected margins and
caused earnings to further deteriorate.
Business confidence improved progressively in the Interiors industry later in 2005.
Nevertheless, uncertainties remain both because a differentiated business climate
persists across diverse industries and businesses, and because foreign markets continue
to frustrate expectations.
In the Interiors industry, kitchen furniture was most dynamic in 2005. Driving this trend
was primarily steady growth of exports, that are beginning to represent a significant
share of industry sales.
Domestic sales remained positive, largely because kitchen furniture remains central to
interior décor spending decisions.
Businesses take actions to expand sales incentive programs in an uncertain economic
climate.
There are indications that an initial worldwide demand expansion is ahead for kitchen
furnishings, largely consumable-driven in US, Russia and Middle East markets. EU
growth is also expected to improve at a slower pace.
CORPORATE STRUCTURE
Entities forming the SICC Group, a maker of traditional and modern design kitchen
modules, are three companies, as follows:
� Monsano-based parent company SICC S.p.A., also Group’s largest facility;
� subsidiary “Martival Technologie S.A.” (“SICC France S.A.S.’’ effective subsequent to
March 2006) in Le Thillot, Southern Lorraine, France;
� subsidiary SICC USA Inc., incorporated February 2004, in Miami, Florida, USA.
SICC markets both own SICC and MARTIVAL Cuisines brands. A broad product range
is available under both brands, each identified in line with contemporary fashions
and design.
The SICC Group has solidly cohesive development strategies generating strong
manufacturing and marketing synergies. At the foundation of these strategies, SICC
has its prime competitive position with respect to quality and product innovation
based on continually new solutions that are fundamental for competitive advantage
and international expansion thanks to replicability of SICC’s domestic business
model. A broad product range, product quality at the core of activities and efforts on a
continued daily basis, strategic customer service and high quality at attractive prices in
the segment where the Company has its strategic focus contributed to grow sales as the
Group experienced through full fiscal 2005.
Contributing to this growth was potentiated distribution in such strategic markets as
France, Spain, Greece, Eastern Europe, Arab Emirates, China and USA.
SICC has plans for new investments under this market strategy to potentiate knowledge
of its brand and of the products it markets.
SICC has always had innovation and efficient manufacturing at the heart of its efforts.
Because it maintains strategic commitment to process quality enhancement, SICC has
launched major investments over the past few years.
SICC’s manufacturing system is aligned to pursue strategic goals that include continued
high quality standards, productivity improvement, cost control and continued improved
flexibility.
Flexibility of SICC’s business model ensures efficient manufacturing and logistics
operations, while parent supervision remains of value chain criticalities, to monitor
product quality and delivery time.
SICC has its principal manufacturing operations in Monsano, Italy. This facility
represents 80 per cent of capacity versus 20 per cent of France’s Martival Technologie
S.A.
In 2005 SICC continued to invest in technological improvements and to potentiate
capacity at its Italian and French manufacturing operations.
SICC will continue to invest in the USA where it seeks important growth opportunities
through subsidiary SICC USA Inc.
Parent Company SICC S.p.A. has been ISO 9001 certified for quality management since
April 2002. ISO’s management system promotes continued process and product
improvement to enhance customer satisfaction.
ACTIVITY HIGHLIGHTS
The SICC Group confirmed solidity of its competitive strength in fiscal 2005, while it
grew both production volumes and sales. This growth was achieved in a consumptionpenalizing context primarily in the Euro area, in which consumer-perceived lower
purchasing power and price-driven conservative spending behaviors remain unchanged.
Sales growth reflects SICC’s recent efforts to maintain a presence in the most interesting
markets, despite substantial diverse standard requirements as to product sizes, design
and materials.
In 2005 the Group continued to implement investment programs for strategic and
competitive development. Important were investments for a broader and updated
product range. In 2005 SICC launched three new kitchen models in 49 color variants.
Investment programs are with a focus on growth in foreign markets, in which
consumption growth rates are stronger.
Continued growth of sales and orders in most important Europe markets contributes to
expectations of a promising future.
No less important was opening of Miami’s showroom, which we believe may prove
effective a vehicle to develop Florida’s and the US markets and help build brand
promotion internationally.
ADOPTION OF INTERNATIONAL FINANCIAL REPORTING STANDARDS IAS/IFRS
The new guidance of the IFRS with respect to the consolidated financial statements
of publicly traded companies is effective for annual periods beginning on or after
January 1, 2005.
Italy’s publicly traded companies may elect to adopt IAS/IFRS for parent only
statements as early as from fiscal 2005 under Legislative Decree No. 38 of February
28, 2005. IAS/IFRS apply mandatorily effective as from January 1, 2006 for parent
only statements of publicly traded companies.
The consolidated financial statements of SICC S.p.A. and its subsidiaries for the year
ended December 31, 2005 have been prepared in accordance with IFRS, while
individual company accounts are presented on a national GAAP basis, as authorized
by the Board under applicable regulations as earlier discussed.
“THE SICC S.p.A. GROUP”
All amounts as follows are denominated in thousands of Euro. unless otherwise stated
Analysis of operations
An analysis of the results of operations of SICC S.p.A. and its subsidiaries follows
below for the years ended December 31, 2004 and 2005 on an IAS/IFRS basis for
comparative purposes:
12/31/2005
%
12/31/2004
Sales
Other revenue and income
Capitalized improvements
38,534
890
17
Value of production
39,441 100,00
Materials and supplies
(22,440) (56.90)
Services costs
(8,157) (20.68)
Other operating expenses
(916) (2.32)
Value added
7,928 20.10
Payroll and benefits expenses
(5,282) (13.39)
Gross Profit/Ebitda
2,646 6.71
Depreciation and amortization
(1,243) (3.15)
Other provisions
(242) (0.61)
Earnings from operations/Ebit
1,161 2.94
Financial income
10 0.03
Financial charges
(1,017) (2.58)
Exchange differences
11 0.03
Earnings before income taxes
165 0.42
Income taxes
(412) (1.04)
Earnings from continuing operations (247) (0.63)
Income (loss) from discontinued operations
Net earnings
(247) (0.63)
%
Change
34,654
1,231
119
36,004 100.00
(20,390) (56.63)
(7,014) (19.48)
(1,758) (4.88)
6,842 19.00
(4,945) (13.73)
1,897 5.27
(1,320) (3.67)
(340) (0.94)
237
0.66
323
0.90
(1,137) (3.16)
2
0.01
(575) (1.60)
(501) (1.39)
(1,076) (2.99)
860 2.39
(216) (0.60)
%
9.55
10.05
16.30
(47.90)
15.87
6.81
39.48
(5.83)
(28.82)
389.87
(96.90)
(10.55)
450.00
(128.70)
(17.76)
(77.04)
(100.00)
14.35
A geographic breakdown of consolidated sales follows in the table below:
12/31/2005
Italy
EU
Non-EU
TOTAL SALES
%
12/31/2004 %
24,837 64.45%
11,915
30.92%
1,782
4.62%
38,534 100.00%
22,220
10,676
1,758
34,654
64.12%
30.81%
5.07%
100.00%
Change %
11.78%
11.61%
1.37%
11.20%
Growth of kitchen module sales existed throughout the Company’s markets. Italy
remains core for the Company. Growing export sales indicate that there is significant
embedded potential in new markets for the Company. Important growth of companies
of the SICC Group was also based on the success of new kitchen modules, that are
largely contributing to stronger aggregate revenues, consistent with SICC’s strategic
focus.
Consolidated revenues grew 11.2 per cent in 2005. Revenues from sales increased to
Euro 38,534 thousand from Euro 34,654 thousand in the prior year.
Domestic sales, representing 64.45 per cent of revenues, increased 11.78 per cent.
Revenues from sales in EU markets were 30.92 per cent of aggregate revenues,
representing an increase of 11.61 per cent over the prior year.
Sales to non-EU regions increased 1.37 per cent as compared with 2004.
Export sales were largely in EU markets, where SICC has its strategic focus of the
past years and penetration further improved.
Future internationalization strategies envisage strong expansion in US and Canada
markets primarily.
The Group has always favored a streamlined, efficient structure, and is no excess
complexity or costly organization.
External costs were Euro 31,513 thousand, representing an increase of Euro 2,351
thousand as compared with year-end 2004. This increase is largely in connection
with stronger sales as experienced in the period.
Value added increased 15.87 per cent, to Euro 7,928 thousand from Euro 6,842
thousand in 2004.
At December 31, 2005 the Group employed 186 personnel, as follows:
Managers
Intermediate levels
Office staff
Factory workers
TOTAL
12/31/2005
3
9
59
115
186
12/31/2004
3
4
59
107
173
Corporate education is fundamental to develop the activity and the Group, in its focus
on those organizational principles that are the determinants of its success.
In 2005 the Group added new positions in support of key functions. Payroll and benefits
expenses were 13.39 per cent of consolidated revenues and increased 6.81 per cent as
compared with 2004.
Also contributing to higher payroll and benefits expenses as a percentage of revenues
were higher salaries and new positions added in the period in support of expanded
operations.
Ebitda increased 39.48 per cent in 2005, to Euro 2,646 thousand from Euro 1,897
thousand in 2004. Ebitda also increased to 6.71 from 5.27 per cent in 2004 as a
percentage of the value of production.
This earning growth pattern also reflects the Company’s cost reduction efforts.
Ebit was Euro 1,161 thousand or 2.94 per cent of the value of production. Ebit was
Euro 237 thousand, representing 0.66 per cent of the value of production in 2004.
A negative net financial position reflects major investments made over the last years.
Net financial charges were Euro 996 thousand, or 2.53 per cent of revenues in 2005
versus 2.26 per cent in 2004.
Consolidated net earnings were negative Euro 247 thousand after income taxes of Euro
412 thousand for the period presented.
ANALYSIS OF FINANCIAL CONDITION on a IAS/IFRS basis
An analysis of the financial condition of SICC S.p.A. and its subsidiaries follows
below for the years ended December 31, 2004 and 2005 on an IAS/IFRS basis for
comparative purposes.
The Company adopted IAS 39 effective for periods beginning on January 1, 2005, as
permitted under IFRS 1.
12/31/2005
Cash and cash equivalents
1.320
Inventories
6,956
Trade receivables, net
13,984
Investments other than noncurrent
1,015
Other current assets
1,417
Current assets (A)
24,692
Tangible assets
22,981
Intangible assets
772
Investments
247
Other assets after one year
885
Noncurrent assets (B)
24,885
Total assets (A)+(B)
49,577
Short-term bank borrowings
7,416
Trade payables
9,487
Other current liabilities
2,147
Current liabilities (C)
19,050
Net working capital (D)=(A)-(C) 5,642
Employees’ separation indemnities
950
Allowances for risks and charges
303
Deferred tax liabilities
4,307
Other medium to long-term liabilities
263
Bank borrowings due after one year
15,418
Medium to long-term liabilities (E) 21,241
Total liabilities (F)=(C)+(E)
40,291
Capital stock
6,403
Reserves
3,130
Net earnings
(247)
Shareholders’ equity (G)
9,286
Total equity and debt (H)=(F)+(G) 49,577
12/31/2004
1.421
5,911
11,433
0
553
19,318
22,066
962
245
806
24,079
43,397
5,664
8,089
2,439
16,192
3,126
782
310
4,291
111
11,503
16,997
33,189
6,420
4,004
(216)
10,208
43,397
Change
(101)
1,045
2,551
1,015
864
5,374
915
(190)
2
79
806
6,180
1,752
1,398
(292)
2,858
2,516
168
(7)
16
152
3,915
4,244
7,102
(17)
(874)
(31)
(922)
6,180
Current assets increased by Euro 5,374 thousand, primarily reflecting stronger sales as
experienced in the period presented. Also contributing to this increase were higher
inventories, the effect of a larger product range.
Noncurrent assets increased by Euro 806 thousand mainly attributable to higher
investments in the period of Euro 2,345 thousand, as partially offset by depreciation and
amortization of Euro 1,243 thousand.
The majority of the spending was to potentiate and update the company’s
manufacturing, logistics and organization.
Management believes that major investments, designed to develop revenues and
earnings, will positively affect earnings as early as in the short-term and enhance future
development potential for the Group.
Current liabilities increased by Euro 2,858 thousand in 2005 to Euro 19,050 thousand
from Euro 16,192 thousand in 2004.
Primarily used in support of expenditures to meet working capital requirements,
short-term bank borrowings increased from Euro 5,664 thousand at year-end 2004
to Euro 7,416 thousand at year-end 2005.
Higher trade payables of Euro 1,398 thousand are primarily in association with
higher purchases or raw materials reflecting stronger sales, higher inventory and
capital spending in the period.
Funds under medium to long-term bank schemes increased by Euro 4,244 thousand
in 2005 to Euro 21,241 thousand from Euro 16,997 thousand in 2004, reflecting
unsecured arrangements of SICC S.p.A. with major financial institutions to meet
temporary liquidity needs. A Euro 1,700 thousand mortgage loan of subsidiary
Martival Technologie S.A. with Monte Paschi Banque is also included.
Shareholders’ equity was Euro 9,286 thousand in 2005 from Euro 10,208 thousand in
2004, reflecting components as follows:
� a Euro 247 thousand consolidated loss in 2005;
� consolidation adjustments and adjustments to reflect transition to IAS/IFRS of
negative Euro 428 thousand in the aggregate;
� dividend payments of Euro 247 thousand, as authorized by the Shareholders of SICC
S.p.A. at their Annual Meeting of May 16, 2005.
The composition of the net financial position is illustrated in the table below:
12/31/2005
Financial assets with maturity
of less than 1 year
2,335
Financial liabilities with maturity
of less than 1 year
(7,416)
Net financial position, current
(5,081)
Financial assets after 1 year
129
Financial liabilities due after 1 year
(15,681)
Net financial position, noncurrent (15,552)
Net financial position
(20,633)
12/31/2004
Change
1,421
914
(5,664)
(4,243)
127
(11,614)
(11,487)
(15,730)
(1,752)
(838)
2
(4,067)
(4,065)
(4,903)
Group’s consolidated net financial position was negative Euro 20,633 thousand at
December 31, 2005 as compared with negative Euro 15,730 thousand at December 31,
2004.
In 2005 the Group continued to commit resources to modernize and update the
Company’s operations, logistics and administration, and to fund its expanded
distribution.
The statement of cash flows follows below:
Net income (loss) for the period
Depreciation, amortization and other provisions
Increase in employee benefits
12/31/05
(247)
1,485
168
12/31/04
(216)
1,320
71
(Benefit) provision for deferred income taxes
(7)
Net increase (decrease) in allowances for risks and charges
(63)
Cash provided by operating activities before working capital changes (a)
1,336
(Increase) Decrease in current assets
(4,702)
Increase (decrease) in current liabilities
1,106
Working capital changes (b)
(3,596)
Cash provided by (used in) operating activities (c)=(a) + (b)
(2,260)
(Increase) Decrease in noncurrent assets excluding investments
(1,968)
(Increase) Decrease in investments and other security holdings
(1,017)
Cash provided by (used in) investing activities (d)
(2,985)
Net increase (decrease) in medium to long-term borrowings
4,067
Net increase (decrease) in short-term borrowings
1,752
Dividends to shareholders
(247)
Other shareholders’ equity movements
(428)
Cash provided by (used in) financing activities (e)
5,144
Cash flow for the period (f) = (c) + (d) + ( e)
(101)
Cash and cash equivalents at beginning of year
1,421
Cash and cash equivalents at end of year
1,320
Net increase (decrease) in cash and cash equivalents
(101)
56
266
1,497
(609)
(1,569)
(2,178)
(681)
1,952
(110)
1,842
1,741
(2,533)
(249)
(419)
(1,460)
(299)
1,720
1,421
(299)
“PARENT COMPANY SICC S.p.A.”
All amounts are in thousands of Euro unless otherwise stated
ANALYSIS OF OPERATIONS
An analysis of the results of operations of SICC S.p.A. follows below:
12/31/2005 %
12/31/2004
%
31,930
28,201
1,016
1,198
Value of production
32,946 100
29,399 100
Materials and supplies
(19,942) (60.53)
(18,022) (61.30)
Services costs
(6,013) (18.25)
(5,123) (17.43)
Lease, rental and royalty expenses
(170) (0.52)
(87) (0.30)
Other operating expenses
(356) (1.08)
(471) (1.60)
Value added
6,465 19.62
5,696 19.37
Payroll and benefits expenses
(3,771)(11.45)
(3,201) 10.89
Ebitda
2,694 8.18
2,495 8.49
7.98
Depreciation and amortization
(1,469) (4.46)
(1,584) (5.39)
Other provisions
(120) (0.36)
(190) (0.65)
Ebit
1,105 3.35
721 2.45
53.26
Financial income
38 0.12
318 1.08
Financial charges
(834) (2.53)
(991) (3.37)
Exchange differences
11 0.03
2
0.01
Earnings before extraordinary items 320 0.97
50 0.17
Extraordinary income (charges)
61 0.19
2,299
7.82
Earnings before income taxes
381 1.16
2,349 7.99
Income taxes
(314) (0.95)
(1,118) (3.80)
Revenues form sales
Other revenue and income
Change %
12.07
10.65
17.37
95.40
(24.42)
13.50
17.81
(7.26)
(36.84)
(88.05)
(15.84)
450.00
540.00
(97.35)
(83.78)
(71.91)
Net earnings
Operating cash flow
67
1,464
0.20
*net of Euro 2,077 thousand gain on real property sale
1,231 4.19
2,016
(94.56)
(27.38)
In 2005 the Company posted revenues from sales of Euro 31,930 thousand,
representing an increase of 13.23 per cent from Euro 28,201 thousand in 2004.
Pricelist increases, effective as of September 2005, were 4 per cent of this growth.
A geographic breakdow of sales follows in the table below:
12/31/2005
Italy
France
Other EU
USA
Non-EU
%
24,838 77.79
2,240 7.02
3,070 9.62
209 0.65
1,573 4.93
12/31/2004
%
22,220 78.79
2,178
7.72
2,048
7.26
59
0.21
1,697
6.02
Change %
11.79
2.85
49.91
254.24
(7.31)
The increase in sales was comprised of increases of 12 per cent approximately in
domestic sales in an unfavorable economic climate, and of 20 per cent internationally,
where growth continues at a steady pace. Export sales were Euro 7,092 thousand in
2005.
Italy continued to represent the Company’s core market in 2005, with domestic sales of
Euro 24,838 thousand representing approximately 78 per cent of total sales.
Other revenue and income decreased to Euro 1,16 thousand at year-end 2005 from
Euro 3,275 thousand at year-end 2004. A Euro 2,077 thousand gain was reflected in
other revenue and income in 2004 as realized on a real property sale.
External costs were Euro 26,481 thousand from Euro 23,703 thousand in 2004. This
increase is largely in connection with stronger sales as experienced in the period.
Value added increased by approximately Euro 769 thousand as compared with 2004,
representing 19.62 per cent of the value of production as against 19.37 per cent in
2004.
Payroll and benefits expenses were Euro 3,771 thousand in 2005 from Euro 3,201
thousand in 2004. Contributing to this increase were statutory salary adjustments
and 14 new positions added in 2005.
In 2005 the Company continued to implement extensive corporate education to develop
and strenghthen employee knowledge, talents and skills.
Ebitda was Euro 2,694 thousand in 2005, or 8.18 per cent of the value of production,
as compared with Euro 2,495 thousand, or 8.49 per cent of the value of production in
2004.
Adversely impacting /Ebitda were research and development costs of new kitchen
modules and marketing costs of new products, which were charged to operations as
incurred in the period presented.
Depreciation, amortization and other provisions were Euro 1,589 thousand, also
adversely impacting Ebitda.
Earnings from operations were Euro 1,105 thousand, or 3.35 per cent of revenues at
December 31, 2005 as compared with Euro 721 thousand, or 2.45 per cent of
revenues at December 31, 2004.
At December 31, 2005 the allowance for potential credit losses adequately provided
for estimated credit losses, based on current assessments of potentially uncollectible
amounts.
Interest and debt expense was Euro 785 thousand in the period presented, mainly
reflecting higher debt funding major expenditures made in recent periods for capital
requirements and costs in connection with interest rate swap arrangements, as
further discussed in the Notes.
Earnings before income taxes were Euro 381 thousand after net extraordinary
income of Euro 61 thousand.
Net earnings were Euro 67 thousand in 2005, as compared with Euro 1,231 thousand
in 2004, after income taxes of Euro 314 thousand, or 0.95 per cent of the value of
production.
Excluding extraordinary gains on real property sales, and the related tax effect, net
earnings would have been negative Euro 48 thousand in fiscal 2004.
ANALYSIS OF FINANCIAL CONDITION
An analysis of the financial condition of the Group follows below:
12/31/2005 %
12/31/2004 %
Cash and cash equivalents
720 1.62
1,320
3.40
Inventories
5,629 12.68
4,619 11.89
Trade receivables, net
14,232 32.06
11,375 29.29
Other current assets
1,669 3.76
1,239
3.19
Current assets (A)
22,250 50.12
18,553 47.77
Intangible assets
1,332 3.00
1,365
3.51
Tangible assets
11,773 26.52
12,623
32.50
Investments
7,758 17.47
5,741
14.78
Long-term receivables
1,283 2.89
556
1.43
Noncurrent assets (B)
22,146 49.88
20,285 52.23
Total assets (A)+(B)
44,396 100
38,838
100
Short-term bank borrowings
6,445 14.52
4,556
11.73
Trade payables
8,354 18.82
7,196
18.53
Other current liabilities
2,293 5.16
1,898
4.89
Current liabilities (C)
17,092 38.50
13,650
35.15
Net working capital (D)=(A)-(C)
5,158 11.62
4,903
12.62
Employees’ separation indemnities 814 1.83
743
1.91
Allowances for risks and charges 1,065 2.40
1,170
3.01
Other medium to long-term liabilities 0
0.00
111
0.29
Bank borrowings due after one year
13,981 31.49
11,540
29.71
Medium to long-term liabilities (E)
15,860 35.72
13,564 34.92
Total liabilities (F)=(C)+(E) 32,952 74.22
27,214 70.07
Capital stock
7,020 15.81
7,020
18.08
Reserves
4,357
9.81
3,373
8.68
Net income (Loss) for the period
67
0.15
1,231
3.17
Shareholders’ equity (G)
11,444 25.78
11,624 29.93
Total equity and debt (H)=(F)+(G)
Change
(600)
1,010
2,857
430
3,697
(33)
(850)
2,017
727
1,861
5,558
1,889
1,158
395
3,442
255
71
(105)
(111)
2,441
2,296
5,738
0
984
(1,164)
(180)
44,396 100
38,838
100
5,558
Changes in the financial condition of SICC S.p.A. at December 31, 2005 relative to
the prior year are discussed below.
Current assets increased by Euro 3,697 thousand in 2005 on a year-over-year basis,
mainly attributable to the following:
� lower cash and cash equivalents of Euro 600 thousand;
� higher inventory levels of Euro 1,010 thousand reflecting higher new kitchen module
volumes in the factory and stronger sales;
� increase in trade receivables of Euro 2,857 thousand, largely reflecting stronger
sales as experienced in the period presented. Also contributing to higher receivable
balances were slower customer payment schemes that SICC offered under
agreements to have SICC kitchens showcased at customer retail locations;
Other current assets include treasury stock repurchased for Euro 1,083 thousand
under the Company’s programs at December 31, 2005, as compared with Euro 964
thousand at December 31, 2004.
Noncurrent assets increased by Euro 1,861 thousand, reflecting effects as follows:
� decrease in tangible assets of Euro 850 thousand, largely reflecting acquisitions of
Euro 461 thousand, divestitures of net Euro 199 thousand and depreciation for Euro
1,112 thousand in the period presented;
� increase in investments of Euro 2,017 thousand, primarily reflecting contributions
to French subsidiary “Martival Technologie S.A.” capital increase for Euro 1,000
thousand and new Euro 1,000 thousand investment under a capitalization scheme
with Monte Paschi Vita;
� higher long-term receivables of Euro 727 thousand.
Current liabilities increased by Euro 3,442 thousand.
Primarily used in support of expenditures to meet working capital requirements,
short-term bank borrowings increased by Euro 1,889 thousand.
Trade payables increased by Euro 1,158 thousand associated to stronger sales.
Funds under medium to long-term arrangements increased by Euro 2,296 thousand,
primarily reflecting unsecured arrangements of SICC S.p.A. with major financial
institutions on a floating-interest-rate basis.
The Company has its medium to long-term debt largely on a fixed-interest-rate basis, as
the Company manages its exposure to changes in interest rates with derivative financial
instruments. See further discussion in the Notes.
Shareholders’ equity decreased by Euro 180 thousand, after earnings of Euro 67
thousand and dividend payments of Euro 247 thousand, as authorized by the
shareholders at their Annual Meeting on May 16, 2005.
The composition of the net financial position follows below:
12/31/2005
Financial assets with maturity
of less than one year
Financial liabilities with maturity
of less than one year
Net financial position, current
Financial assets after one year
12/31/2004
720
1,320
(6,445)
(5,725)
1,127
(4,556)
(3,236)
111
Change
(600)
(1,889)
(2,489)
1,016
Financial liabilities after one year
Net financial position, noncurrent
Net financial position
(13,981)
(12,854)
(18,579)
(11,540)
(11,429)
(14,665)
(2,441)
(1,425)
(3,914)
The net current financial position, of negative Euro 5,725 thousand at year-end of
2005, represents the Company’s exposure with banks.
The current portion of medium to long-term debt was Euro 2,062 thousand, due
within one year.
The Group continued to commit resources to modernize and update the Company’s
operations, logistics and administration, and to fund its expanded distribution.
The statement of cash flows follows below
12/31/05
12/31/04
Net income (Loss) for the year
67
1,231
Depreciation, amortization and other provisions
1,589
1,774
(Benefit) Provision for deferred income taxes
(170)
1,009
Gains on sales of assets
(53)
(2,077)
Net increase (decrease) in allowances for risks and charges
and employees’ separation indemnities
31
79
Cash provided by operating activities before working capital changes (a)
1,464
2,016
(Increase) decrease in current assets
(5,037)
(952)
Increase (decrease) in current liabilities
1,478
(776)
Working capital changes (b)
(3,559)
(1,728)
Cash provided by (used in) operating activities (c)=(a) + (b)
(2,095)
288
(Increase) decrease in noncurrent assets excluding investments
(532)
2,718
(Increase) decrease in investments and other security holdings
(2,016)
(2,109)
Cash provided by (used in) investing activities (d)
(2,548)
609
Net increase (decrease) in medium to long-term borrowings
2,441
1,778
Net increase (decrease) in short-term borrowings
1,850
(2,670)
Dividends to shareholders
(248)
(249)
Cash provided by (used in) financing activities (e)
4,043
(1,141)
Cash Flow for the period (f) = (c) + (d) + ( e)
(600)
(244)
Cash and cash equivalents at beginning of period
1,320
1,564
Cash and cash equivalents at beginning of period
720
1,320
Net increase (decrease) in cash and cash equivalents
(600)
(244)
FINANCIAL INFORMATION FOR SUBSIDIARY COMPANIES
SICC S.p.A. has an investment with a 100 per cent controlling interest in French
subsidiary Martival Technologie S.A.
Parent sales to French subsidiary increased 2,87 per cent in 2005, and represent
approximately 7 per cent of SICC S.p.A. sales.
Martival sales increased 3.87 per cent to Euro 8,981 thousand in 2005, as compared
with Euro 8,646 thousand in 2004.
Excluding the impact of tradeshow sales, that were exited at end of 2004, sales to
speciality retailers were Euro 8,635 thousand in 2005, representing an increase of 17.98
per cent over the same period in 2004. New Martival retail stores helped drive this
growth.
Development based on new Martival retail stores is increasingly successful. This strategy
is successfully launching the Martival brand and the complete Martival range
associatively in the French market.
New 45 Martival retail stores were in place throughout France at year-end 2005.
Expectations are for 60 Martival retail stores by year-end 2006.
Martival closed fiscal 2005 with net earnings of negative Euro 52 thousand. Contributing
to net earnings were extraordinary charges of Euro 217 thousand.
Because net earnings of Martival in 2004 were a loss of Euro 2,580 thousand, reflecting
costs of tradeshow distribution, that the Company discontinued effective as of December
31, 2004, at their Special Meeting on July 5, 2005 the shareholders of Martival
authorized a decrease by Euro 2,718,650.00 of their company’s capital stock by means
of a decrease in the par value of shares from Euro 6.00 to Euro 0.50 per share to cover
this loss.
The capital stock of Martival Technologie S.A. was Euro 247,150.00 as a result of this
reduction.
On December 13, 2005 at their Special Meeting the Shareholders of French subsidiary
Martival Technologie S.A. authorized a capital increase of up to Euro 1,000,000.00,
consisting of 2,000,000 new shares with a par value of Euro 0.50 per share.
Also on December 13, 2005 the Board of Directors authorized this increase under the
terms as follows:
Euro 600,000.00 to be paid in cash upon subscription;
Euro 400,000.00 in cash, in one or partial payments, as may be required, over the next
five years, also in the form of a conversion of amounts receivable from Martival.
This new stock issuance was designed to support growth and a new commercial policy
of Martival.
The capital stock of Martival Technologie S.A. was Euro 1,247,150.00 as a result of this
increase, consisting of 2,494,300 shares with a par value of Euro 0,50 per share.
In December 2005 SICC subscribed and paid Euro 600 thousand under the terms of this
transaction.
SICC S.p.A. has an investment with a 51 per cent controlling interest in Miami-based
SICC USA Inc.
Miami’s SICC USA Inc. has finalized agreements with local retailers in various US
locations to launch SICC kitchen sales. Sales grew significantly with SICC’s two NY State
retailers. At Miami’s showroom SICC USA Inc. serves primarily a local market.
SICC USA Inc. is continuing contacts with Miami-based developers to have their
showroom delivered.
This effort is part of the Company’s long-term strategy to grow revenue and
earnings. SICC USA Inc. has also established prime contacts with local realtors.
Development of US business is in line with our strategy. This initiative will take time to
fully implement and adequately contribute to grow sales and earnings.
Presentations have met the favor of local buyers. Important developments are expected
in this market in fiscal 2006.
Because minority partners are solely held responsible for the startup and management
of SICC USA Inc., the consolidated financial statements of SICC S.p.A. and subsidiaries
at December 31, 2005 do not include the accounts of SICC USA Inc.
Effective as of the 2006 Annual Meeting SICC S.p.A. will exercise effective control on US
subsidiary. Personnel from SICC S.p.A. will relocate to Miami to enhance SICC S.p.A.’s
management of Us operations.
RESEARCH AND DEVELOPMENT
Research and development activities are primarily performed internally, under the
management of SICC S.p.A. and are pursued as a critical path to the success of the
Group’s fundamental business strategy in the face of intense industry competition.
The activity in 2005 was for new style models and innovative technical solutions.
Efforts continued to advance materials both for product customization and to meet
predictable future demands.
Exclusively of an ordinary nature, R&D expenditures are charged to operations in the
period in which they are incurred.
R&D expenditures are increasingly important, after projects are continually being
launched for category expansion to complement and expand existing offerings and
foster new consumption.
The activity in 2005 enabled the Company to successfully broaden its portfolio.
New kitchen modules are expected soon in an expanded offer into mid-to-high market
segments, to enhance new visibility for the SICC brand.
SHARES OR STAKES OF CONTROLLING ENTITIES
At December 31, 2005 subsidiary companies Martival Technologie S.A. and SICC
USA Inc. did not own shares of controlling owner SICC S.p.A.
INTRAGROUP ACTIVITIES
SICC S.p.A. has activities of a commercial and financial nature with its consolidated
subsidiares, in which it has investments with controlling ownership interests.
Activities with subsidiary companies relate to the exchange of goods, the provision
of services and finance; activities as such are in the ordinary course of business at
normal market terms, and are no different to the Company than under any
agreements with independent third parties.
See further discussion of the amounts of these transactions in the Notes to the
Financial Statements of SICC S.p.A.
INTERNAL CONTROLS
The Company’s internal control system is intended as a process involving all
corporate functions. The system is designed to provide assurance of the integrity of
financial disclosures and adequate monitoring with respect to the Company’s
activities, particularly where risks exist to the Company, such as in connection with
an effective and efficient management of the Company, reliability of financial
information, compliance with applicable regulations and safeguarding of company
assets.
Such internal controls prescribe that a report be issued on a monthly basis, to assist
management in fulfilling its oversight responsibilities.
Group’s parent SICC S.p.A. is actively involved in the management of both
subsidiaries, which it effectively governs and controls on an ongoing basis. No major
criticalities were diagnosed as a result of monitoring conducted in 2005 in this respect.
For information on Corporate Governance, see the Report of the Chairman of the Board
of Directors on the Company’s Corporate Governance, under the guidance of the Code
of Practice of Corporate Governance of Publicly Traded Companies, reviewed in July
2002, as per Article IA.2.12 of the Instructions accompanying the Rules for the Markets
Organized and Managed by Borsa Italiana S.p.A. This report will be lawfully filed with
Borsa Italiana S.p.A.
PRIVACY POLICY
The Company has completed the upgrading of its security guidelines to comport with
the provisions of Annex B, Legislative Decree No. 196/2003, ‘Privacy Act’ disciplining
systems for sensitive data treatment in electronical format.
INVESTOR RELATIONS
The Investor Relation section in SICC S.p.A. website www.sicccucine.com contains
extensive documentation and financial information on the Company, particularly in
respect of price sensitive information. This website tool is enabled by the function in
charge with Investor Relations at SICC S.p.A., under the guidance of Borsa Italiana
S.p.A. to promote access to accurate and transparent financial information of investors
on an equality basis.
TRANSACTIONS WITH RELATED PARTIES
Information is provided below pursuant to Consob recommendations in respect of
transactions with related parties.
In 2005 the Company had activities with ‘related parties’. Transactions with related
parties of SICC S.p.A. in 2005 were fair in all formal and material respects. The
Board of Directors observed all necessary procedures to provide assurance that
transactions were executed in a regular and transparent manner. Transactions with
related parties are conducted solely in the best interest of the Company, under
arrangements at terms that are no different to the Company than under any
arrangements with independent third parties.
A discussion follows below of transactions executed in 2005 with related parties.
Ambienti & Ambienti is a supplier of semifinished kitchen modules of SICC S.p.A. and
subsidiaries.
As from 2003 Ambienti & Ambienti has SICC’s manufacturing operations of
semifinished goods under an 11-year lease.
Transactions with Ambienti & Ambienti were under arrangements at terms that are
no different to the Company than under any arrangements with independent third
parties.
Management is unaware that transactions with related parties were consummated,
atypical or unusual to the ordinary conduct of business, or potentially in conflict of
interests in 2005.
Amounts of transactions with related parties as above identified are reported in the
table below:
Balance sheet
12/31/2005
Accounts receivable for:
Property sale
1.500
Rents receivable for activity under lease
150
Services
93
Sales of raw materials
0
Accounts payable for purchases of semifinished goods
731
12/31/2004
Statement of income
12/31/2005
Rental income from activity under lease 314
Revenues from sales of raw materials
1
Revenues from services rendered
78
Costs of semifinished goods
2.284
12/31/2004
222
15
86
1.850
Change
1.500
125
86
4
0
25
7
(4)
608
123
Change
92
(14)
(8)
434
Management is unaware that transactions with related parties were consummated,
atypical or unusual to the ordinary conduct of business, or potentially in conflict of
interests in 2005 and in the early part of 2006.
SICC had no material activities with related parties in 2005, as those activities are
defined under Article 2359 of the Italian Civil Law and IAS 24, other than those
discussed in Management’s Discussion and Analysis of Financial Condition and
Results of Operations of SICC S.p.A., in the Notes to the Financial Statements of
SICC S.p.A. and the Consolidated Financial Statements of SICC S.p.A. and its
subsidiaries and in the discussion of activities of the Group for the year ended
December 31, 2005.
Also to complete information as required in respect of transactions with related
parties, see further discussion in the table in the Notes, reporting compensation paid
for any and all purposes and form to Directors, Statutory Auditors and General
Managers of SICC S.p.A. and its subsidiaries.
The Company notes that compensation paid to Directors and Statutory Auditors of
SICC S.p.A. was Euro 272 thousand and Euro 35 thousand respectively in fiscal
2005.
INTRAGROUP ACTIVITIES
SICC had no material activities with related parties in 2005, as those activities are
defined under Article 2359 of the Italian Civil Law and in Recommendations by
Consob, other than in the ordinary course of business at market terms.
SICC S.p.A. is a supplier of kitchen modules to subsidiaries Martival Technologie S.A.
and SICC USA INC. for marketing to France and the USA respectively.
SICC S.p.A. has an investment with a 100 per cent controlling interest in French
subsidiary Martival Technologie S.A.
SICC S.p.A. has an investment with a 51 per cent controlling interest in Miami-based
SICC USA Inc., formed in February 2004.
See further discussion of the amounts of transactions with subsidiary companies in
the Notes to the Financial Statements of SICC S.p.A.
TRANSACTIONS WITH DIRECTORS AND SHAREHOLDERS
The Company has not engaged in any transactions, either of a commercial or
financial nature, to which any of the Company’s directors or shareholders were a
party, other than those reported in the paragraph as follows.
SECURITY OWNERSHIP OF DIRECTORS, STATUTORY AUDITORS AND
GENERAL MANAGERS
At December 31, 2005 Chairman of the Board of Directors Alfiero Latini directly
owned 68.94 per cent of of the Company’s stock.
As was certified to the Company as appropriate, in 2005 there were no shares of
SICC S.p.A. and its subsidiary companies owned by directors, statutory auditors and
general managers, neither directly nor indirectly through intermediaries, trustees or
companies under their control, other than those listed below:
Issuer: SICC S.p.A.
Name
Number of shares
owned acquired
12/31/2004
Alfiero Latini
9,307,500
Rita Glucini (1)
450,200
Gianluca Latini
450,200
Rossana Ronci (2)
40,000
Enrico Muzi
88,034
Rosina Orciani (3)
2,500
Oriana Draghetti
13,500
Gianni Tombolesi
10,000
Costantino Branchesi
10,000
Massimo Albonetti
2,500
1) spouse of Alfiero Latini
2) spouse of Gianluca Latini
3) spouse of Enrico Muzi
transferred
0
0
0
0
0
0
0
0
0
0
owned
title to shares
12/31/2005
0
0
0
0
0
0
0
0
0
0
9,307,500
450,200
450,200
40,000
88,034
2,500
13,500
10,000
10,000
2,500
ownership
ownership
ownership
ownership
ownership
ownership
ownership
ownership
ownership
ownership
owned
title to shares
Issuer: Subsidiary MARTIVAL TECHNOLOGIE S.A
Number of shares
owned
acquired
Name
Alfiero Latini
Gianluca Latini
Oriana Draghetti
Thierry Leduc
transferred
12/31/2004
1
1
1
1
12/31/2005
0
0
0
0
0
0
0
0
1
1
1
1
ownership
ownership
ownership
ownership
Issuer: Subsidiary SICC USA INC
Number of shares
owned
acquired
Name
Oriana Draghetti
Costantino Branchesi
Gregori Aizman
Beniamin Aizman
transferred
12/31/2004
2,000
2,000
46,000
44,000
owned
title to shares
12/31/2005
0
0
0
0
0
0
0
0
2,000
2,000
46,000
44,000
ownership
ownership
ownership
ownership
STOCK REPURCHASE PROGRAMS AND SHARES OR STAKES OF
CONTROLLING ENTITIES
At December 31, 2005 the Company had repurchased 1,187,417 of its shares under
existing programs, representing 8.80 per cent of the Company’s stock, at an average
purchase price of Euro 0.9118 for Euro 1,082,639.06 in the aggregate.
See further discussion in the Notes.
Subsidiary companies Martival Technologie S.A. and SICC USA Inc. do not own
shares of controlling owner SICC S.p.A.
EVENTS SUBSEQUENT TO DECEMBER 31, 2005
OUTLOOK FOR FISCAL 2006
Difficult worldwide economic and political conditions continue, while uncertainties
remain and general stagnating consumption.
In the early part of 2006 SICC’s business results showed a positive trend. The Group
continues its growth path. Favorable market acceptance of SICC’s new products
contributes to expectations of a promising future for the Group.
Plans of SICC S.p.A. for an expanded distribution, wider product range and grown sales
geography continue in the timeframe and with results as anticipated.
Results of expansion were largely partial only in 2005, as part of a focus on
initiatives to grow sales and earnings in the long-term.
The Company will maintain commitment to its growth path to drive greater sales and
earnings as appropriate in fiscal 2006.
Operational expansion of Martival Technologie S.A. is now complète, as required to
implement growth strategies and a new commercial policy. Warehouse operations began
at this facility in February 2006. Advanced technology for door-leaf varnishing operations
will be in place by August 2006.
On March 21, 2006 at their Special Meeting the shareholders of French Martival
Technologie S.A. voted to change their company’s corporate status from a Société
Anonyme to a Société par Actions Simplifiée under French corporate law, enabling a
simplified governance classification.
Provisions under French law require that shareholder contributions at least equal the
company’s stock capital upon status change. The shareholders of subsidiary Martival
Technologie S.A. authorized a Euro 447,150.00 decrease in their company’s stock by
means of a surrender and cancellation of 894,300 shares with a par value of Euro 0.50
per share, as follows:
� Euro 339,143.42 reflecting adjustments in connection with transition to IAS/IFRS;
� Euro 51,692.16 reflecting the loss for the year ended December 31, 2005;
� Euro 56,314.42 transferred to nondistributable earnings.
The capital stock of Martival Technologie S.A. was Euro 800,000.00, represented by
1,600,000 shares with a par value of Euro 0,50 per share as a result of this decrease.
Also at their Special Meeting the shareholders of Martival Technologie S.A. authorized a
change of their company’s corporate name to ‘SICC France SAS’ in association with the
change in corporate status as earlier discussed.
SICC France Sas will maintain the ‘’Martival Cuisine’’ brand.
PROPOSAL FOR ALLOCATION OF NET EARNINGS FOR FISCAL 2005
To Our Shareholders,
in regard to the above discussed, we hereby submit for your approval the following:
�
your Company’s financial statements for the year ended December 31,
2005, also based on your review of this report;
�
allocation of net earnings of Euro 67,030.89 as follows:
to legal reserve Euro 3,351.54, or 5 per cent of net earnings;
to currency translation adjustments Euro 11,075.74;
to the holders of common shares outstanding, gross dividends in the amount of
Euro 0.02 per share - plus dividends on treasury shares, payable on a prorata basis
in accordance with Article 2357 ter of Italian Civil Law, up to aggregate Euro
52,603.61. Dividends in excess of Euro 52,603.61 up to Euro 270,000.00 payable
will be paid using amounts reserved for under Extraordinary Reserve.
As authorized by the Shareholders of SICC S.p.A. at their Annual Meeting of April 28,
2004, shares repurchased of the Company’s common stock and held in treasury carry
dividend rights that will be paid to holders of common shares outstanding on a prorata
basis, in accordance with Article 2357 ter of Italian Civil Law;
�
authorization to the Board of Directors to appropriate to Extraordinary Reserve
incremental amounts that may result on the rounding up of dividends upon payment;
�
authorization to the Board of Directors to appropriate to retained earnings those
dividends on treasury stock that may be repurchased prior to detachment of the related
coupon;
� authorization to pay dividends effective as of June 8, 2006, coupon No. 9 strip, as of
record date June 5, 2006, as under Borsa Italiana S.p.A. calendar.
Monsano, March 30, 2006
The Chairman of the Board of Directors
(Alfiero Latini)