Balance sheet and financial position highlights

(A) Other receivables/(payables) include VAT receivables and payables, sundry receivables and payables, trade receivables and payables from/to Group companies, accruals and deferrals, payables to social security institutions and employees, receivables and payables for fixed asset purchases etc.

(B)Property, plant and equipment and intangible assets include all categories of assets net of the related accumulated depreciation, amortization, and impairment losses.

(C)Non-current financial assets include unconsolidated investments and guarantee deposits paid and received.

(D)Other assets/(liabilities) include retirement benefit obligations, provisions for legal and tax risks, the provision for sales agent indemnities, other provisions, current tax receivables and liabilities, receivables and payables due from/to holding companies in relation to the group tax election, deferred tax assets also in relation to the company reorganization carried out in 2003, deferred tax liabilities and payables for put options.

(E)Net debt includes cash and cash equivalents and all short and medium/long-term financial assets and liabilities, as reported in the detailed statement discussed in the explanatory notes.

Working capital was 57 million lower than at December 31, 2008, reflecting the combined effect of:

-an increase of 4 million in net trade receivables despite slightly lower revenues, due to the growth in business in emerging countries, combined with a slight worsening of receivables turnover for current collections and an increase of around 8 million in receivables for the new commercial initiatives in the textile segment;

-a reduction of 58 million in inventories, thanks to actions under the reorganization plan in terms of production sources and supply chain efficiency;

-a decrease of 10 million in trade payables which, despite fewer purchases in fourth quarter 2009, benefited from the actions taken to extend average payment terms;

-an increase in net other payables, mainly because of higher balances owed by Italian subsidiaries to the tax authorities for VAT.

Apart from the changes in working capital discussed above, capital employed decreased by an additional 12 million, mainly reflecting:

-a net reduction in property, plant and equipment and intangible assets due to:

-117 million in gross operating investments during the year;

-21 million in acquisitions of commercial operations;

-17 million in divestments at net book value;

-103 million in depreciation and amortization;

-21 million in impairment of property, plant and equipment and intangible assets;

-an increase in net other assets because of lower tax payables owed by the Group's Italian subsidiaries that file for tax on a group basis.

The Group's net debt (discussed in detail in the explanatory notes) came to 556 million compared with 689 million at December 31, 2008, thanks to very strong cash generation.

2009 and 2008 balance sheet structure (millions of Euro) – Assets