Bonfiglioli Worldwide · · 2015-11-02Jordan, Hong Kong, India, Indonesia, Iran, Israel, Kuwait,...
Transcript of Bonfiglioli Worldwide · · 2015-11-02Jordan, Hong Kong, India, Indonesia, Iran, Israel, Kuwait,...
Bonfiglioli Worldwide
EuropeAlbania, Austria, Belgium, Bielorussia,
Bulgaria, Cyprus, Croatia,
Czech Republic, Denmark, Estonia,
Finland, France, Holland, Hungary,
Germany, Great Britain, Greece, Ireland,
Italy, Lettonia, Lituania, Luxemburg,
Malta, Montenegro, Norway, Poland,
Portugal, Romania, Russia, Slovakian
Republic, Serbia, Slovenia, Spain,
Switzerland, Turkey, Ucraina
AfricaAlgeria, Egypt, Kenya, Morocco,
South Africa, Tunisia
AsiaBahrain, China, Emirates, Japan,
Jordan, Hong Kong, India, Indonesia,
Iran, Israel, Kuwait, Malaysia, Oman,
Pakistan, Philippine, Qatar, Saudi Arabia,
Singapore, South Korea, Syria, Thailand,
Taiwan, Vietnam
North AmericaCanada, United States
Latin AmericaArgentine, Bolivia, Brasil, Chile,
Colombia, Costa Rica, Ecuador,
Guatemala, Honduras, Mexico, Perù,
Uruguay, Venezuela
OceaniaAustralia, New Zealand
“At times when I think back on how much
our Group has grown in fifty years,
I realise that our future goals will always be within reach
as long as we continue to build on the same resources of hard work,
professional integrity and competence.”
The Chairman, Clementino Bonfiglioli
Bonfiglioli I Annual Report 2007 I Bonfiglioli I Annual Report 2007 I Contents I
5 Company Profile
23 Financial Highlights
31 Reclassified financial statementsand consolidated cash flow statements
37 Management Report
61 Consolidated financial statements as of December 31, 2007
69 Notes to consolidated financial statements
105 Independent Auditors’ Report
Contents
4 5
Bonfiglioli I Annual Report 2007 I Company Profile IBonfiglioli I Annual Report 2007 I
Company Profile
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Bonfiglioli I Annual Report 2007 I Company Profile IBonfiglioli I Annual Report 2007 I
Board of Directors
Clementino Bonfiglioli (Chairman)
Sonia Bonfiglioli (Vice Chairman and CEO)
Luisa Lusardi(CEO)
Marino Battini(CEO)
Luciano Bonfiglioli(Director)
Statutory Auditors
Giovanni Biagi
Monica Marisaldi
Giovanni Errico
Independent Auditors
PricewaterhouseCoopers
The increase in production and the positive returns achieved over this last year
are the result of Bonfiglioli’s penetration into new sectors, substantial
investments and expansion into global markets.
The challenges to be met and the corresponding choices to be made, today more
than ever require the effort and support of a real team. Only a unified and
motivated group of people can make the difference in implementing successful
strategies for innovation and development.
We design and manufacture solutions and components for power transmission and control
1956Bonfiglioli is founded in Bologna
by Clementino Bonfiglioli,the company’s current Chairman.
1964The RAE series dual-stage
planetary gear unitis designed and patented.
1975Acquisition of Trasmital,
a manufacturer of planetary gear unitsfor diggers, road pavers and
wind turbines.
1982Bonfiglioli starts its
internationalisation strategy,leading to the opening
of branch offices worldwide.
1995The innovative modular C-A-F series
are showcased at Hannover,which speeds up the program
to decentralise production to local branches.
1993Bonfiglioli obtains
both DNV and TÜVQuality System Certification.
1999The Bonfiglioli Transmission Pvt Ltd. factory is opened in Chennai, India.
2000Launch of Mosaico,
Bonfiglioli’s innovativee-commerce portal.
2001Through the acquisition of Vectron,
Bonfiglioli gains a foothold in the electronics sector
for motion control systems.
2002Bonfiglioli sets up a network
of qualified distributorsin Italy and abroad with the Best brand.
2003Acquisition of Tecnoingranaggi,
a manufacturer of low backlash gear units.
2005Construction of the first of three factories begins in the Slovak Republic.
2004Dun&Bradstreet award Rating 1in recognition of the high level
of reliability achieved by Bonfiglioli.
2006Bonfiglioli celebrates its 50th anniversary:confirmation of the company’s success.
2007Bonfiglioli Italia SpA assumes
direct control of the Italian market.
The milestones that have marked the continous growth of Bonfiglioli
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Bonfiglioli I Annual Report 2007 I Company Profile IBonfiglioli I Annual Report 2007 I
Three distinct product lines to meet the challenges of global markets and specific applications
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Bonfiglioli I Annual Report 2007 I Company Profile IBonfiglioli I Annual Report 2007 I
The Bonfiglioli Group offers the power transmission market
three distinct brands:
The strength of these brands lies in the high technology content of each product
and the careful integration of different technologies to provide an exclusive and
synergic solution. Quite uniquely, Bonfiglioli has the core capabilities to develop
systems which integrate electronic, hydraulic and mechanical engineering.
These solutions represent choices of excellence for industrial systems and mobile
machinery as well as innovative renewable energy applications in the wind
turbine, solar panel and bio fuel sectors.
Hi-tech industries and complex applications increasingly call for the ability to
provide solutions and not just products. This can only be achieved with the
appropriate expertise.
And we are convinced that this is our unique selling point which we must foster
and invest in our drive to promote innovation.
Bonfiglioli I Annual Report 2007 I Company Profile IBonfiglioli I Annual Report 2007 I
Bonfiglioli Riduttori and Bonfiglioli Vectroncreate innovative solutions for the industrial sector
BonfiglioliIndustrial Solutions
Main applications
- Air conditioning plants
- Aerospace plants
- Automation plants
- Bio fuel energy
- Bottling lines
- Ceramics industry
- Port machinery
- Conveyors
- Conveyor belts
- Chemical and Pharmaceutical
- Dosing systems
- Food industry
- Foundries and forgeries
- Packaging lines
- Painting plants
- Palletisers
- Plastic and rubber processing
- Printing industry
- Solar energy
- Textile industry
- Treatment plants
- Wood processing
Bonfiglioli Riduttori today is one of the top brands in the power
transmission industry. The company's success is the result of a business
strategy that relies on three fundamental factors: know-how, innovation and quality.
All the brand’s gearmotors offer excellent technical characteristics and guarantee the
highest performance. Substantial investment and technical expertise have enabled the
company to achieve an annual production output of 1600,000 units, using
completely automated processes. Certification of the company’s Quality System by
DNV and TÜV is proof of the high quality standards achieved.
With the acquisition of the Vectron brand, Bonfiglioli is now established
as leader of the industrial automation sector. Bonfiglioli Vectron
delivers products and services for completely integrated inverter solutions.
These solutions complement Bonfiglioli’s power transmission and control offering to
the industrial sector.
• Helical in-line gearboxes • Bevel gearmotors• Worm gears • Shaft mounted gearmotors
• Heavy duty gearboxes• Mechanical variators• Three phase asynchronous motors• Single phase motors
• Open loop inverters • Closed loop inverters • Servo motors and drives• Solar systems
Bonfiglioli Riduttori and Bonfiglioli Vectron’s offering to the industrial sector
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Bonfiglioli Trasmital: solutions and special productsfor the wind turbine and mobile machinery sector
Bonfiglioli I Annual Report 2007 I Company Profile IBonfiglioli I Annual Report 2007 I
BonfiglioliMobile Solutions
Main applications
- Agricultural machinery
- Hydraulic winches
- Cement mixers
- Cement mixer trucks
- Construction cranes
- Drilling machinery
- Excavators
- Extractive industry
- Hydrostatic machinery
- Lifting platforms
- Mini excavators
- Mobile cranes
- Port equipment
- Tyred wheel loaders
- Wind turbines
Since 1976, Bonfiglioli Trasmital’s know-how in the power
transmission industry has focused on special applications offering
100% reliability and in particular, on the manufacture of gearmotors for mobile
machinery translation, slew and wheel drive applications, and gearboxes for
wind turbine nacelle and blade rotation.
Today Bonfiglioli Trasmital stands at the forefront of the industry as a key
partner to top manufacturers worldwide. The 85,000 square metre production
facility in Forlì accommodates product development and all phases of
manufacture, including quality control and testing. An extensive sales network
ensures prompt customer care and works closely with customers to develop
tailored applications.
Bonfiglioli Trasmital uses its flexibility in development and production to deliver
competitive advantages and interacts with customers as a supplier of reliable,
superior performance components and solutions.
• General purpose gearboxes • Wheel hub gearboxes• Track drive gearboxes
• Slew gearboxes• Winch gearboxes• Gearboxes for cement mixer trucks
Bonfiglioli Trasmital’s offering to the industrial sector
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Bonfiglioli I Annual Report 2007 I Company Profile IBonfiglioli I Annual Report 2007 I
The sustained growth achieved by Bonfiglioli in the past few years is the result of
a strategic choice to self-finance major investments and initiatives aimed at
expanding and building new production facilities and automating industrial
processes.
In particular, investments have focused on major structural improvements, the
optimisation and rationalisation of production lines and the installation of next
generation robot-operated machines, capable of accelerating output and
working night and day without operator supervision.
This strategy has enhanced the Group's reputation both at home and abroad,
making Bonfiglioli an industry leader capable of adapting effectively to real
market conditions and the growing demand for superior quality solutions
and products.
Production always looks to the future in all Bonfiglioli plants
Chennai
Bonfiglioli Vectron GmbHInverter plant Krefeld - Germany
Bonfiglioli Slovakia SroLarge gearboxes manufacturing plantPovazska Bystrica - Slovak Republic
Tecnoingranaggi Riduttori Srl Precision gearbox manufacturing and assembly plantSan Giovanni in PersicetoBologna - Italy
Bonfiglioli Riduttori SpA Gearmotor assembly plant Vignola - Modena - Italy
Bonfiglioli Riduttori SpACasting and gear-cutting plantCalderara di Reno - Bologna - Italy
Bonfiglioli Riduttori SpAPlanetary gearbox manufacturing and assembly plant Forlì - Italy
Bonfiglioli Transmission Pvt LtdGearmotor manufacturing and assembly plant Chennai - India
Bonfiglioli Riduttori SpAElectric motor plantCalderara di Reno - Bologna - Italy
Bonfiglioli Riduttori SpAGearmotor assembly and shipment plantLippo di Calderara - Bologna Italy
Forlì
BolognaVignola
Krefeld
PovazskaBystrica
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Bonfiglioli I Annual Report 2007 I Company Profile IBonfiglioli I Annual Report 2007 I
The globalisation of sales activities has without doubt been one of the key factors
in determining Bonfiglioli's success.
A sales strategy focused on customer satisfaction has led to major growth in
market share through enhanced pre and post sales services and prompt deliveries
guaranteed by local assembly and warehouses.
Today Bonfiglioli sales branches operate in 13 countries outside Italy.
Sales and assistance centres in other countries are managed through authorised
resellers. All over the world, Bonfiglioli’s renowned know-how and customer care
is a calling card for customers who demand reliability from their partner.
Tecnotrans Bonfiglioli SABarcelona - Spain
Countries with Bonfiglioli branch offices
Bonfiglioli Power Transmissions & Automation Technologies Jsc Izmir -Turkey
Bonfiglioli Canada Inc. Toronto - Canada
Bonfiglioli USA Inc.Hebron - USA
Bonfiglioli Drives (Shanghai) Co. Ltd Shanghai - China
Bonfiglioli Power Transmission Pty LtdJohannesburg - South Africa
Bonfiglioli Transmission (Aust.) Pty LtdSidney - Australia
Bonfiglioli Transmission Pvt LtdChennai - India
Bonfiglioli Skandinavien ABMalmö - Sweden
Bonfiglioli Deutschland GmbH Neuss - Germany
Bonfiglioli I Annual Report 2007 I
Bonfiglioli Italia SpA Sole Shareholder companyCarpiano - Milan - Italy
Bonfiglioli Transmissions SA Paris - France
Bonfiglioli UK Ltd (Mobile equipment)Warrington - England
Bonfiglioli UK Ltd (Industrial equipment) Redditch - England
Customers can count on the presence of Bonfiglioli subsidiaries all over the world
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Bonfiglioli I Annual Report 2007 I Company Profile IBonfiglioli I Annual Report 2007 I
Sustainable progress: the driving force behind company strategy
VisionWe develop solutions, we disseminate knowledge, and share experience
on the world stage.
MissionWe focus our decision-making process on our customer’s requirements.
We foster the awareness that every action reflects our collective effort
and commitment.
We always seek to play an active role in the development of our industrial
environment, working in compliance with ethically sustainable values.
In our work we transform the drive to build value into a diffused catalyst for
wellbeing, with the company forming the hub around which families,
communities, and industry can grow.
We strive to ensure that each goal we achieve offers the opportunity
for future development, leading to renewed excellence in all our results.
ValueConsistency. Determination. Transparency. Team Spirit.
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Bonfiglioli I Annual Report 2007 I Bonfiglioli I Annual Report 2007 I Financial Highlights IBonfiglioli I Annual Report 2007 I
Financial Highlights
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Bonfiglioli I Annual Report 2007 I Financial Highlights IBonfiglioli I Annual Report 2007 I
0
6
12
18
24
30
36
42
48
54
2005 2006 200720042003
24,1
19,9
11,0
38,1
50,9
90
100
110
120
130
140
150
160
170
180
2005 2006 200720042003
138,5
128,3123,9
153,7
177,1
0
6
12
18
24
30
36
42
48
54
2005 2006 200720042003
37,8
11,2
24,7
37,3
54,0
Group sales
(Euro/Million)
Group share of shareholders’ equity
(Euro/Million)
EBIT
(Euro/Million)
Net investments
(Euro/Million)
200
250
300
350
400
450
500
550
600
650
2005 2006 200720042003
387,8
338,9
498,6
610,8
+14.4%
+14.7%
295,3+4.5%
+28.6%
+22.5%
Financial Highlights
460
690
920
1.150
1.380
1.610
1.840
2.070
2.300
2.530
2005 2006 200720042003
1.919
1.7121.606
2.226
2.501
1095
1406
860
1366
673
1246
600
1112
497
1109
N
150
160
170
180
190
200
210
220
230
240
2005 2006 200720042003
202198
184
224
244
Number of employees
Sales per employee
(Euro/Thousands)
Parent Company
Subsidiaries
26 27
Bonfiglioli I Annual Report 2007 I Financial Highlights IBonfiglioli I Annual Report 2007 I
162
144
126
108
90
72
54
36
18
0
2005 2006 200720042003
-36,1
-95,0
-140,3
-65,3
-29,6
0
30
60
90
120
150
180
210
240
270
2005 2006 200720042003
270,0
165,5
229,0
124,4
145,2
175,3
120,3
153,3
114,0
71,6
142,4
106,3
46,6
92,2
175,3
Sales by geographical area
(Euro/Million)
Net cash position
(Euro/Million)
Italy
Europe
Overseas
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Bonfiglioli I Annual Report 2007 I
Bonfiglioli Canada Inc.Canada
Bonfiglioli USA Inc.United States
Bonfiglioli Power Transmissions Pty LtdSouth Africa
Bonfiglioli Transmissions Pvt LtdIndia
100%
100%
67%
100%
100%
100%
100%
75%
100%
100%
100%100%
33,33%
100%
97%
67%
Bonfiglioli Riduttori SpA
Bonfiglioli Transmissions SAFrance
Bonfiglioli UK LtdUnited Kingdom
Bonfiglioli Skandinavien ABSweden
Tecnoingranaggi Riduttori Srl Sole Shareholder - Italy
Bonfiglioli Slovakia SroSlovak Republic
Bonfiglioli Italia SpASole Shareholder - Italy
Bonfiglioli Power Transmissions JSCTurkey
Tecnotrans Bonfiglioli SASpain
Bonfiglioli Deutschland GmbHGermany
Bonfiglioli Vectron GmbHGermany
Bonfiglioli Group as of December 31, 2007
Bonfiglioli Transmission (Aust.) Pty LtdAustralia
Bonfiglioli Drives (Shanghai) Co. LtdChina
Bonfiglioli I Annual Report 2007 I Reclassified financial statements and consolidated cash flow statements I
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Bonfiglioli I Annual Report 2007 I
Reclassified financial statementsand consolidated cash flow statements
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Bonfiglioli I Annual Report 2007 I Reclassified financial statements and consolidated cash flow statements IBonfiglioli I Annual Report 2007 I
Assets (Euro Thousand)
2007 2006 2005 2004 2003
Current assets
Cash and Banks 16,309 13,505 12,749 8,660 10,357
Inventory 173,065 154,505 122,669 96,388 82,655
Trade receivables 145,466 130,659 99,666 90,140 81,728
Receivables from associated companies 9,577 9,311 4,978 4,729 4,108
Deferred tax assets 7,105 6,433 4,616 3,057 3,073
Other current assets 16,804 11,054 5,939 5,970 6,181
Total current assets 368,326 325,467 250,617 208,944 188,102
Non current assets
Investments in associated and other companies 3,369 2,961 2,778 2,762 2,674
Intangible assets (net of cumulated depreciation) 7,602 9,340 10,465 9,612 11,955
Tangible assets (net of cumulated depreciation) 146,605 110,631 89,248 67,896 70,981
Deferred tax assets 5,513 3,970 2,941 3,036 2,217
Other long term assets 2,132 1,598 1,557 1,550 1,446
Total non current assets 165,221 128,500 106,989 84,856 89,273
Total assets 533,547 453,967 357,606 293,800 277,375
Reclassified consolidated balance sheet
Liabilities (Euro Thousand)
2007 2006 2005 2004 2003
Current liabilities
Banks, other financial institutions and bonds 65,575 34,543 17,260 19,606 17,890
Trade payables 136,202 128,780 87,509 75,600 62,677
Payables to associated companies 27 29 20 24 4
Other current liabilities 26,926 26,576 20,379 19,958 15,162
Total current liabilities 228,730 189,928 125,168 115,188 95,733
Non current liabilities
Banks, other financial institutions and bonds 90,989 74,002 60,741 18,658 28,566
Deferred taxes 7,215 6,523 5,793 5,330 4,315
Severance indemnity, other reserves for risks 24,572 22,987 21,070 19,464 18,733
Other long term liabilities 2,748 — 32 699 463
Total non current liabilities 125,524 103,512 87,636 44,151 52,077
Total liabilities 354,254 293,440 212,804 159,339 147,810
Shareholders’ equity2007 2006 2005 2004 2003
Share capital 30,000 15,000 15,000 15,000 15,000
Revaluation reserves 20,847 35,847 35.914 35,914 35,847
Other reserves 100,566 85,702 77,962 71,285 71,206
Net income of the Group 25,645 17,193 9,649 6,145 1,876
Group share of shareholders’ equity 177,058 153,742 138,525 128,344 123,929
Minority interest 2,235 6,785 6,277 6,117 5,636
Consolidated shareholders’ equity 179,293 160,527 144,802 134,461 129,565
Total liabilities and shareholders’ equity 533,547 453,967 357,606 293,800 277,375
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Bonfiglioli I Annual Report 2007 I Reclassified financial statements and consolidated cash flow statements IBonfiglioli I Annual Report 2007 I
(Euro Thousand)
2007 2006 2005 2004 2003
Sales 610,772 498,635 387,799 338,913 295,284
Other operating income 5,629 3,900 2,796 2,188 2,061
Consumption of materials and external operations (374,372) (298,209) (223,312) (191,152) (158,510)
Personnel costs (91,898) (83,596) (72,231) (64,846) (56,904)
Services and use of third party assets (71,482) (59,845) (50,905) (42,838) (47,255)
Other operating expenses (6,423) (4,738) (4,125) (5,735) (6,842)
EBITDA 72,226 56,147 40,022 36,530 27,834
Depreciation, amortisation and write-downs (21,321) (18,032) (15,891) (16,615) (16,841)
EBIT 50,905 38,115 24,131 19,915 10,993
Depreciation on revalued assets ex L. 342/2000 — (311) (777) (925) (2,378)
Financial income and (expenses) (7,348) (4,224) (2,060) (1,550) (1,408)
Exchange gains and (losses) (194) (318) (103) (202) 257
Share of results of associated companies 540 277 155 225 252
Extraordinary items 1,753 (284) 218 9 (580)
EBT 45,656 33,255 21,564 17,472 7,136
Current taxes (20,827) (17,178) (12,050) (10,150) (4,667)
Deferred taxes 1,513 2,156 996 (167) 171
Consolidated net income 26,342 18,233 10,510 7,155 2,640
Minority interest income (697) (1,040) (861) (1,010) (764)
Net income of the Group 25,645 17,193 9,649 6,145 1,876
(Euro Thousand)
2007 2006 2005 2004 2003
A. Opening Net Cash Position (95,040) (65,252) (29,604) (36,099) (25,364)
B. OPERATING ACTIVITIES
Net income of the group 25,645 17,193 9,649 6,145 1,876
Minority interest income 697 1,040 861 1,010 764
Depreciation and write-downs 21,321 18,343 16,668 17,540 19,219
Provisions for employee indemnity and other reserves 3,605 5,207 4,470 3,905 3,961
Share of results of associated companies (540) (277) (155) (225) (252)
First Level Cash Flow 50,728 41,506 31,493 28,375 25,568
Decrease (Increase) in trade receivables (16,600) (36,596) (10,832) (9,927) (2,404)
Decrease (Increase) in inventory (18,560) (31,836) (26,281) (13,733) (6,334)
Decrease (Increase) in other assets (8,499) (8,002) (1,440) (696) (1,806)
(Decrease) Increase in trade payables 7,420 41,280 11,905 12,943 361
(Decrease) Increase in other liabilities 232 6,795 217 6,047 2,881
(Payments) of employee indemnity and other reserves (2,020) (3,190) (2,864) (3,174) (1,613)
B. Cash flow from (for) operating activities 12,701 9,957 2,198 19,835 16,653
C. INVESTING ACTIVITIES
Net investments in tangible and intangible assets (54,030) (37,331) (37,816) (11,152) (24,704)
Decrease (Increase) in other long term assets 132 94 139 138 120
C. Cash flow from (for) investing activities (53,898) (37,237) (37,677) (11,014) (24,584)
D. FINANCING ACTIVITIES
Dividends (1,500) — (1,500) (1,500) (1,500)
Net effect of exchange rate change (829) (1,976) 2,032 (297) (779)
Change in minority interests (1,689) (532) (701) (529) (525)
D. Cash flow from (for) financing activities (4,018) (2,508) (169) (2,326) (2,804)
E. CASH FLOW FOR THE YEAR (B+C+D) (45,215) (29,788) (35,648) 6,495 (10,735)
F. Closing Net Cash Position (A+E) (140,255) (95,040) (65,252) (29,604) (36,099)
Reclassified consolidated income statement Statement of consolidated cash flow
Bonfiglioli I Annual Report 2007 I Bonfiglioli I Annual Report 2007 I Management Report I
Management Report(The Management Report has been translated into the English language
solely for the convenience of international readers)
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Bonfiglioli I Annual Report 2007 I
Management Report
ForewordThis management report, drawn up in compliance with the provisions of Legislative
Decree 127/1991, integrated and interpreted on the basis of CNDC (Italian National
Councils of Certified Public Accountants) and OIC (Italian Accounting Authority)
accounting principles, is submitted as a comment on the results recorded in the con-
solidated financial statement of the Bonfiglioli Group.
Unless otherwise indicated, data are shown in Euro/millions.
Reference economic situationDuring 2007, the world economy, while still expanding as a whole at a rapid pace
(4.9% compared to 5.1% in 2006), nevertheless felt the effects of the US sub-prime
mortgage crisis which started last summer and the implications this slump is having
on financial markets and economic growth.
These financial upheavals made themselves felt in a generally positive worldwide
economic climate. In the first half of 2007, expansion in fact proceeded at a steady rate
in all the major economies, recording a further acceleration in emerging nations. The
fact that 2007 saw the world’s economic engine slow down from the rate it had
reached in the recent past was no surprise to many: the signs of a slowdown were fair-
ly evident, not least of all the fact that the expansion stage – the strongest and longest
lasting recorded over the last thirty years – in actual fact, brought with it a series of
imbalances capable of compromising stability. What no one expected was that the cri-
sis would come with such lightening speed and hit the financial system as hard as it
did. Uncertainty surrounding the scope and distribution of individual broker’s expo-
sure to credit products linked, even indirectly, to United States mortgages has influ-
enced market trends and there is still a very real risk that the losses incurred by bank
brokers could result in a significant reduction in credit offered to families and busi-
nesses.
The sharp increase in the price of raw energy materials and foodstuffs represents
another key element in the international scenario. As regards the oil market, the price
of crude oil in 2007 recorded considerably higher average values than in 2006, rising
from 64.3 to 71.1 Dollars a barrel (+11%), reaching a peak of 92.5 Dollars per barrel
in November 2007, only to rise even further, well exceeding 130 Dollars a barrel, in
recent weeks.
The cause of these price rises, whose effects have been offset in the Euro nations by
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Bonfiglioli I Annual Report 2007 I Management Report I
tion of the Euro and the difficulties experienced by the United States’ economy, did
not materialise, probably in part due to the strength of the world cycle. Driving fac-
tors in growth were investments, strong employment recovery over the previous two
years, greater trust shown by families and further positive growth in financial and real
estate markets. Net exports made a positive contribution, notwithstanding the
strengthening of the Euro. Total growth for the year 2007 was 2.6%, dropping slight-
ly from the 2.8% recorded in 2006. Employment grew by around 1.5% (0.2% in 2006)
and the unemployment rate for 2007 fell to 7.4% (8.3% in 2006), the lowest rate
recorded over the last fifteen years.
Economic activities in Italy grew by approximately 1.5% (1.8% in 2006). Expan-
sion was sustained by domestic consumption and exports. Family consumption
rates rose notably, by approximately 2.5%. The growth of investments, on the other
hand, fell in line with the GDP. Employment resumed an upward trend and the
unemployment rate fell to 6.0%, as opposed to 6.8% in 2006. The increase in the
number of jobs affected mainly the Centre/North of the country where the
employment rate dropped to very low levels.
Price dynamics in 2007 remained at around 2%, limited by restricted develop-
ments in internal costs, by weak pressure from the demand side and by the apprecia-
tion of the Euro.
During the first few months of 2008 tension in the financial market sharpened and
the worldwide economic situation worsened as a whole. In the United States econom-
ic growth slowed down considerably: the effects of the housing market crisis have
been accompanied by those stemming from the increasingly restrictive financial con-
ditions in which families and business now find themselves. Share quotations in the
leading world markets fell by between 7% and 15%, and generally were felt most
strongly in the banking and finance sectors. Energy and foodstuff prices recorded
new, significant increases. These increases fuelled inflation in importing nations,
adversely affecting available income and consumption and determined the direction
of monetary policies. World trade is in any event growing at a steady rate thanks to
the continuous robust expansion of emerging economies.
In terms of the energy market, an increase in the worldwide consumption of oil is
also expected in 2008, at a rate of around 2 per cent, which can almost entirely be
attributed to emerging economies, whilst an increase in supply depends entirely on
the non-OPEC producers. This situation has left the oil market even more vulnerable
to geopolitical tension and the risk of temporary interruptions in supplies, thus
encouraging price fluctuations. Since the beginning of 2008 markets have posted
record figures, reaching 137 Dollars a barrel over the last few days. Estimates from the
International Monetary Fund offer some hope however of a moderate drop in prices
during the course of the year, with the average price set to fall to 100 Dollars a barrel
in 2008.
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Bonfiglioli I Annual Report 2007 I Management Report I
the corresponding devaluation of the US Dollar, is linked to the considerable growth
in world demand for oil, which in 2007 exceeded supply, thereby significantly reduc-
ing the private reserves of major nations (primarily the United States). Factors con-
tributing to this growth in demand consisted, firstly, in the role played by emerging
economies whose energy demand far exceeds that of more developed nations. A fur-
ther cause of tension is the limited flexibility characterising supply, caused, on the one
hand, by the production policies and objectives set by OPEC and, on the other, by the
difficulties experienced by non-cartel producers in increasing output, when faced
with extremely high research and development costs and lengthy periods of time
involved in constructing new plants.
The rise in international prices of raw foodstuffs (+14% since 2006), another
important economic factor affecting inflationary dynamics, started at the beginning
of this decade and is the result of structural factors such as growing consumption in
emerging nations and the incentive to produce biofuels to counter increases in the
price of oil.
An analysis based on individual geographical areas reveals that growth in the Unit-
ed States’ GDP almost came to a halt in the fourth quarter of 2007 (0.6% compared
to 4.9% in the third quarter), reflecting a drastic fall in housing investments, a drop
in reserves and a fall in family consumption and non-housing investments. The crisis
in the sub-prime lending sector and the subsequent impoverishment of bank assets
and liquidity have further contributed to the slowdown. In order to combat the
increased risk of recession, the Federal Reserve reacted by making further cuts in
interest rates. At the end of 2007, Fed Fund rates were recorded at 4.25%, falling by
one percentage point from 2006. The continuing depreciation of the Dollar compared
to the Euro has facilitated exports, allowing the United States to reduce the balance of
payments, although the deficit remains high. The year 2007 closed with an average
USA GDP expansion rate of 2.2%.
In the United Kingdom, economic business continued to grow at a fairly consis-
tent rate, propelled by strong growth in consumption and investments made by busi-
nesses. Despite the first signs of a slowdown in the last quarter of the year, the GDP
growth rate was 3.1% at the end of 2007 (2.9% at the end of 2006).
In Japan economic activities were characterised by an unexpected acceleration in
the fourth quarter of 2007, upheld by exports, particularly towards other Asian
economies, leading to a growth rate of 2.1% by the end of 2007 (2.4% at the end of
2006).
2007 also witnessed steady growth in emerging markets. The Chinese economy
grew by 11.4% (11.1% in 2006), India confirmed a positive trend with an expansion
rate of 9.2% (9.8% in 2006), while Brazil and Russia improved on 2006, recording
growth rates of 5.4% and 8.1% respectively.
Within the Euro zone, the fear of a slowdown caused by high oil prices, apprecia-
Bonfiglioli I Annual Report 2007 I
the company “Bonfiglioli Hellas S.A.” retaining a 10% minority interest. Following the
transfer, the company changed its business name to “BEST Hellas S.A.” continuing
nevertheless to distribute the Group’s products in its area.
Furthermore, in 2007 the Group completed the acquisition of a further 50% hold-
ing in the share capital of the subsidiary “Bonfiglioli Transmission France S.A.” and as
at December 31, 2007, possesses a 100% stake.
It is also pointed out that a new company was incorporated in South Africa named
“Bonfiglioli South Africa Pty Ltd” whose object is to develop business in this nation
with the inclusion of new local black partners in line with regulations regarding the
“Black Empowerment Equity Program” (BEE). At the end of 2007 the company “Bon-
figlioli South Africa Pty Ltd” was not in operation and has therefore been excluded
from the consolidation area.
In relation to consolidation area, at December 31, 2007 Group had a total of fif-
teen subsidiaries:
• four manufacturing companies (located in Italy, India, Germany and Slovakia),
which handle the various products in Bonfiglioli's extensive range;
• eleven commercial subsidiaries, engaged in promotion, sales, pre and after-sales
service, logistics, customisation and final assembly of Group products.
The only associated company of the Bonfiglioli Group is a commercial branch that
has been operating on the Spanish market for almost 40 years, Tecnotrans Bonfiglioli
S.A., in which the Group holds a 33.33% stake.
We also point out that, with effect from September 1st, 2007, the parent company
assigned to the subsidiary Bonfiglioli Italia SpA business branches set up to deal with
the “marketing of Bonfiglioli products on the Italian market” and “storage, logistics
and programming relating to sales in Italy”. This transaction, though not influencing
the consolidated profit/loss figure, is nevertheless important to the Group from a
strategic/managerial point of view, representing the conclusion of an initiative to
improve the service offered to the Italian market started at the end of 2005.
42 43
Bonfiglioli I Annual Report 2007 I Management Report I
Taking raw foodstuffs, the price of cereals has continued to rise over the last few
months, a result of high demand and dwindling reserves. At the end of the first quar-
ter, wheat and rice prices were around double the figures recorded the previous year,
whilst maize prices had increased by more than a third. Uncertainty surrounding the
ability to increase worldwide supply in order to satisfy growing demand in develop-
ing nations could contribute to the continuing tension felt in the market and force up
inflation rates.
In the exchange markets, the economic indications and consensus indices relating
to the American economy have worsened. In a particularly hostile climate the Dollar
continued to weaken reaching an all-time low of 1.59 to the Euro. The expected
improvement in the balance of trade, the moderate fall in the price of crude oil and
the results of the presidential elections should help the US economy to recover and
the Dollar to gain ground, estimated to reach 1.40 to the Euro by the end of the year.
Against the background described above, the International Monetary Fund recent-
ly estimated expansion to fall in 2008, setting the growth target for the world econo-
my at 3.7%. The emerging nations continue to make their contribution towards world
growth: the Chinese GDP should record an increase of 9.3%, with India’s GDP esti-
mated at around 7.9%, whilst Russia and Brazil should record levels of growth of
6.8% and 4.8% respectively.
Concern regarding recession in the USA is demonstrated by the approach taken by
the Federal Reserve, which since the beginning of the year has lowered Fed Fund rates
by two percentage points, bringing them down to the current 2.25%. Analysts and
international organisations have cut back growth forecasts for the US economy, esti-
mating expansion to barely 0.4% for 2008.
Economic indicators also point to a downturn for Japan and the United Kingdom
at the beginning of the year. Consequently, growth estimates have been revised down-
wards to 1.4% and 1.6% respectively.
The economy in the Euro zone is starting to suffer, as a result both of the slow-
down in overseas demand, heightened by the strong Euro exchange rate, and the
repercussions on domestic demand resulting from a rise in interest rates. Estimates
indicate growth for 2008 at 1.4%.
As regards estimates for Italy, analysts generally share the fear that 2008 will wit-
ness almost zero growth (IMF estimate 0.17%). A number of factors contribute to the
deceleration of our economy, such as the trend characterising international demand,
weighed down by the sudden American standstill, the appreciation of the Euro over
the Dollar which has a major effect on the capacity of businesses to export and the
rise in inflation, caused by increases in the prices of energy and foodstuffs.
Consolidation areaWe point out, first of all, that in 2007 the Group transferred a majority holding in
Bonfiglioli I Annual Report 2007 I
The consolidated turnover figure increased by 22.5% from the previous year, con-
firming the positive trend characterising the last five years, with sales more than dou-
bling since 2003.
Analysing the results according to geographical area, group sales continue to
record significant growth in overseas markets whose incidence on overall turnover
rose from 15.7% in 2003 to 28.7% in 2007, evidence of the effort made by the Group
over the last few years to penetrate overseas markets. Growth on the Asian markets
where the Group is taking more far-reaching action to tackle the enormous potential
for development in the local catchment area, was significant, as well as in North
America and Australia. Growth in the domestic and European markets was also con-
firmed, with improved figures compared to those recorded the previous year.
Turning to an analysis of the main figures in the Income Statement, on the consol-
idated level, group EBITDA stood at 72.2 million Euro, amounting to 11.8% of sales,
with an absolute increase exceeding 28.7%.
More precisely, we point out the following:
• the consumption area (including costs of external operations) recorded an
increase of 1.5 percentage points, rising from 59.8% to 61.3% in terms of inci-
dence on overall turnover. The higher incidence, though falling compared to 2006
when the impact on turnover recorded an increase of 2.2 percentage points, con-
tinues to be linked to the dynamics connected with the change in the mix of arti-
cles sold, with increasing emphasis on the “Mobile” sector, on the one hand, and
the negative trend characterising the principal foreign invoicing currencies, led by
the US Dollar, which continue to depreciate with respect to the Euro, on the other.
The tensions felt on the raw materials and oil markets also had considerable
impact on consumption figures, partly eased by the Group’s continuing efforts to
cut costs;
• costs for services and leased assets, after removing costs relating to external works,
maintained their incidence on turnover at almost the same level (11.7% compared
with 12.0% in 2006);
• payroll costs increased by 9.9%, rising from 83.6 to 91.9 million Euro;
• the overall incidence of depreciation, amortisation and provision for bad debts
remained almost constant (3.5% compared with 3.7% in 2006), even though in
absolute terms the figure rose by approximately 3.3 million Euro;
• the incidence of other operating costs and provisions to various funds, totalling
6.4 million Euro, remained fairly constant at around 1.0% of turnover;
• financial expenses and income increased in terms of incidence on turnover, rising
from 0.9% in 2006 to 1.2% in 2007, following the rise in group net indebtedness
required to sustain growth in Net Working Capital and the significant volume of
investments made over the last few years;
• extraordinary income and charges recorded a positive figure for 2007, with an
44 45
Bonfiglioli I Annual Report 2007 I Management Report I
Analysis of 2007 results
Economic results
A summary of the economic results recorded over the last five years is set out below.
2007 2006 2005 2004 2003
Values
Turnover 610.8 498.6 387.8 338.9 295.3
EBITDA 72.2 56.1 40.0 36.5 27.8
EBIT 50.9 38.1 24.1 19.9 11.0
Group Net Income 25.6 17.2 9.6 6.1 1.9
% of turnover
EBITDA 11.8% 11.3% 10.3% 10.8% 9.4%
EBIT 8.3% 7.6% 6.0% 5.6% 2.9%
Group Net Income 4.2% 3.4% 2.5% 1.8% 0.6%
Changes %
Turnover +22.5% +28.6% +14.4% +14.8% +4.5%
EBITDA +28.7% +40.3% +9.6% +31.3% -20.2%
EBIT +33.6% +58.1% +21.1% +80.9% -46.3%
Group Net Income +48.8% +79.2% +57.4% +221.1% -66.1%
Sales’ breakdown by geographical area:
2007 2006 2005 2004 2003
Values
Italy 165.5 145.2 120.3 114.0 106.3
Europe 270.0 229.0 175.3 153.3 142.4
Overseas 175.3 124.4 92.2 71.6 46.6
Total 610.8 498.6 387.8 338.9 295.3
% of total turnover
Italy 27.1% 29.1% 31.0% 33.7% 36.0%
Europe 44.2% 45.9% 45.2% 45.2% 48.2%
Overseas 28.7% 25.0% 23.8% 21.1% 15.8%
Changes %
Italy +14.0% +20.7% +5.5% +7.2% -1.4%
Europe +17.9% +30.6% +14.3% +7.6% +8.4%
Overseas +40.9% +34.9% +28.8% +53.6% +7.6%
Bonfiglioli I Annual Report 2007 I
The asset and liability structure of the Group, in terms of both absolute and per-
centage values also records in 2007, an increase in capital used to tackle the extensive
investments made in Italy and abroad, as evidenced below in this report, and the
increase in Net Working Capital (NWC) required to support the growth in sales.
NWC weighs less heavily however compared with 2006, both in terms of incidence on
turnover and on total lending, as demonstrated also by the improvement noted in the
average number of days’ rotation (dropping from 117 in 2006 to 114), and thereby
confirming the trend that started last year in response to efforts made to reduce stock
and Working Capital in general. The efforts made by the Group to maintain invest-
ments also contributed to further absorption of financial resources with the relative
effect on the net cash position, with a net consolidated debt of 95.0 million Euro
in 2006 rising to the figure of 140.3 million Euro in December 2007.
A breakdown of the Group’s net investments over the last five years is given below
(figures expressed in thousands of Euros):
Values in €/000 2007 2006 2005 2004 2003
Land and buildings 16,296 11,726 13,696 991 3,102
Plant and machinery 22,299 17,753 8,892 3,857 5,267
Trade and industrial fixtures 7,733 5,461 2,978 2,920 3,323
Other tangible assets 1,994 995 1,852 1,191 864
Construction in progress/advances 3,733 (471) 6,991 1,066 534
Tangible assets 52,055 35,464 34,409 10,025 13,090
Software, trademarks, patents 1,864 1,538 1,161 1,076 635
Consolidation differences 103 97 1,779 — 10,952
Other intangible assets 8 231 467 51 27
Intangible assets 1,975 1,867 3,407 1,127 11,614
Total Net Investments 54,030 37,331 37,816 11,152 24,704
As shown in the table above, the Group has concentrated its efforts continuously on
investment over the last five years resulting in a total outlay of 164.8 million Euro.
Most of the capital invested related to plants, machinery and equipment for produc-
tion, even though major investments were also made in land and buildings in Italy
and abroad, which were necessary to ensure that the companies in the Group bene-
fit from the most suitable structures for production and sales activities and con-
firmed the Group’s commitment to obtain a firm foothold in the areas in which it
operates.
46 47
Bonfiglioli I Annual Report 2007 I Management Report I
incidence of 0.3% on turnover, thanks to the extraordinary capital gains recorded
following the transfer of a 60% stake in Bonfiglioli Hellas and the sale of an Ital-
ian factory premises, which permitted extraordinary charges linked to the change
of registered office of the German and American subsidiaries to be off set, as dis-
cussed in further detail below.
Assets/liabilities and investments
A summary of the last five years is given in the table below.
2007 2006 2005 2004 2003
Values
Fixed assets 157.6 122.9 102.5 80.3 85.7
Net Working Capital 193.8 162.1 134.5 108.5 102.9
Severance indemnity and others (31.8) (29.5) (26.9) (24.8) (23.0)
Minority interests (2.2) (6.8) (6.3) (6.1) (5.6)
Capital employed 317.4 248.7 203.8 157.9 160.0
Group shareholders' equity 177.1 153.7 138.5 128.3 123.9
Net Cash Position 140.3 95.0 65.3 29.6 36.1
Funds 317.4 248.7 203.8 157.9 160.0
Changes %
Fixed assets +28.2% +19.9% +27.6% -6.3% +8.4%
Working capital +19.6% +20.5% +23.9% +5.4% +11.4%
Severance indemnity and others +7.8% +9.7% +8.5% +7.8% +40.4%
Minority interests -67.6% +7.9% +3.2% +8.9% +3.7%
Capital employed +27.6% +22.0% +29.1% -1.3% +6.9%
Group shareholders' equity +15.2% +10.9% +7.9% +3.5% -0.3%
Net Cash Position +47.7% +45.5% +120.6% -18.0% +42.6%
Funds +27.6% +22.0% +29.1% -1.3% +6.9%
Rotation (days average)
Fixed assets 93 89 95 85 104
Working capital 114 117 125 115 125
Severance indemnity and others -19 -21 -25 -26 -28
Minority interests -1 -5 -6 -6 -7
Capital employed 187 180 189 168 195
Group shareholders' equity 104 111 129 136 151
Net Cash Position 83 69 61 31 44
Funds 187 180 189 168 195
Bonfiglioli I Annual Report 2007 I
main sales branches which continued to expand their management structure in order
to penetrate overseas markets and tackle rising turnover volumes (USA, China and
Germany amongst others).
With regard more specifically to the parent company, the transfer to Bonfiglioli
Italia SpA of the sales structure covering the Italian market was completed during the
year. Since September 1st, 2007, as already mentioned, Bonfiglioli Italia has been fully
responsible for the Italian market from every point of view, with a sales, logistics and
assembly structure capable of performing this important function on the main his-
torical market, that is Italy.
Considerable emphasis on the central production structures led to the implemen-
tation of an improvement project and lean manufacturing practices with the assis-
tance of external consultants with whom a great number of training schemes were put
into effect, including that relating to the role of “kaizen engineer”
Investments in training in the sales area continued, an area in which the company
now operates using a “permanent training” method in order to guarantee a sales
structure that is capable of adapting to changing market demands. The participation
of Managers in a Business Administration Masters was also intensified as a means of
developing young Managers with high potential.
In order to guarantee training schemes geared to the structures it operates direct-
ly and indirectly throughout the world, Bonfiglioli set up a Tele-Training initiative via
an Internet e-learning portal which, by definition, grants controlled access to student
users, free of all geographical and time constraints. A number of on-line study paths
have been created, varying according to the training objectives identified. Some of
these courses include online intermediate and final examinations, specially designed
to more accurately map the levels of knowledge reached and identify any necessary
corrective measures.
Turning to the Italian factories, it is pointed out that the use of overtime played an
important role up to July 2007. In the second half of the year negotiations for the
renewal of the National Collective Labour Agreement did not allow the same levels of
overtime to be used and this unfortunately slowed down the company’s production
growth. The particularly complex nature of the agreement renewal also weighed heav-
ily in terms of strike hours, which accounted for an average of 44 hours for each fac-
tory. Commencing from the first quarter of 2008, following the renewal of the
National Collective Labour Agreement, the use of overtime was resumed and this is
proving a considerable help to the company in reducing some of the delivery delays
that have accumulated in previous months.
48 49
Bonfiglioli I Annual Report 2007 I Management Report I
With reference to the year 2007, the principle investments made by the Group are set
out below, involving an overall outlay of 54 million Euro:
• investments in intangible fixed assets were largely referred to the purchase and
implementation of application software in relation to the development of the SAP
project in Italy and in the main overseas sites;
• the sum of K€ 103, relating to the increase in goodwill arising upon consolidation,
stems from the acquisition of a further 50% stake in the company “Bonfiglioli
Transmission France S.A”;
• the investments in land and buildings relate mainly to the purchase of premises
under lease by the parent company intended as an extension of the factory in
Vignola for the total sum of 3.8 million Euro, the extension of the factory in Forlì
by the parent company for a total of 3.9 million Euro, the purchase of a new head
office for the subsidiary Bonfiglioli Deutschland GmbH in Neuss (8,500 square
metres) for a total of 6.4 million Euro, completion of the new head office by the
American subsidiary for the total sum of 2.6 million Euro and the purchase of a
parcel of land adjacent to the factory premises owned by the Indian company for
a total of 1.2 million Euro. As regards disinvestments, we draw attention to the dis-
posal of the factory owned by the parent company situated in San Lazzaro, whose
net book value at the date of sale was 1.5 million Euro and which produced a cap-
ital gain totalling 2.1 million Euro;
• the investments in plants, machinery and equipment related mainly to the produc-
tion companies; only the parent company strengthened production with purchas-
es amounting to 16.1 million Euro to which 6.4 million Euro of leasing
investments must be added; there were also considerable increases to the machine
inventory at the factories situated in Slovakia (2.0 M€), India (3.0 M€) and Italy
(Tecnoingranaggi 0.8 M€).
Together with concluded investments, a number of investments underway as at
December 31, 2007 should also be considered, making a total of 11.7 million Euro and
relating mainly to the completion of the second factory in Slovakia, a further exten-
sion to the factory in Forlì, as well as down payments for the purchase of new machin-
ery by the parent company.
Human resources2007 was characterised by a further substantial increase in the headcount at Group
level with the influx of 275 new employees (overall number including interim and
temporary staff), up from 2226 in December 2006 to 2501 at the end of 2007. This
increase was necessary to meet growing, challenging market demands, particularly in
the “Mobile Solutions” area and to cover consignments of orders already acquired up
to March 2009. Development also continued at an international level with increases
in the employed work force at the factories in Slovakia and India, as well as at the
Bonfiglioli I Annual Report 2007 I
the HDO series. Parallel with this, a number of important personalised features were
added to the product in order to meet certain specific applications requested by the
market.
The basic development of the range proceeded, involving the processing of feasi-
bility studies on the extruder model which was applied to all existing sizes. Prototypes
of a number of the sizes with extruder output were prototyped and tested in the
“Experience room”
Electric motors
During the year we continued to develop several special products for dedicated appli-
cations, in particular the wind turbine and goods handling sectors. Existing solutions
were optimised and new projects developed to adapt products to new specifications
(brakes with extensive voltage range, bus DC power supply, PWM modulation, etc.).
With a view to improving decentralised assemblies, various initiatives aimed at
optimising the management of configurable products and defining the rules for
transformation units were re-examined. Several schemes for the management of
products by means of multi-level configuration bills of materials were also developed.
A design research programme was initiated in collaboration with an important
designer with the aim of renovating the motor range. Various concepts have been
developed, product specifications defined and pre-feasibility studies completed.
With the aim of producing the entire range of basic components directly (lamina-
tions, die-castings, windings, etc.) drawings were issued for the construction of all the
dies, models and tools for the construction of parts and components currently pur-
chased to a large extent externally.
Tecnoingranaggi low backlash high-precision gearboxes
The development of Tecnoingranaggi products during 2007 completed the integra-
tion of the range with the larger sizes requested and all the documents containing
technical data for the catalogues.
Particular attention and emphasis were placed on development and validation,
through targeted testing, of a new range of low backlash right-angle shaft units (KR
series) developed both as an independent series and as an angular transmission
applied to the input in the LC range, already featured in the Tecnoingranaggi Cata-
logue.
All the new development operations were carried out jointly with the subsidiary
Bonfiglioli Vectron GmbH. In view of the launch of the new ranges estimated for
2008, extensive prototyping and experimental procedures have been put into oper-
ation at a preliminary stage.
Testing carried out relate to technical solutions and innovative technological
processes, which are to be applied to the new low backlash gearbox models
50 51
Bonfiglioli I Annual Report 2007 I Management Report I
Research and developmentResearch and development activities are performed for “Bonfiglioli Riduttori” brand
gearboxes and electric motors at the Lippo di Calderara (BO) site, for “Trasmital”
planetary gearboxes at the Forlì site and for “Vectron” electronic converters at the
Krefeld site in Düsseldorf of the subsidiary Bonfiglioli Vectron GmbH.
As confirmation of the importance assumed by R&D we draw your attention to the
fact that overall R&D expenditure in 2007 was in excess of 9 million Euro for the Bon-
figlioli Group.
The following section contains an overview of the main development projects in
relation to the three product brands (Bonfiglioli Riduttori, Bonfiglioli Trasmital and
Bonfiglioli Vectron).
Bonfiglioli RiduttoriSeries A upgrade (New sizes and variants for existing size range)
Work on the design of the Series A right angle shaft units Series A proceeded in 2007,
with the duel aim of completing the new larger sizes requested (sizes 05-35-55) and
introducing new variants and options to the existing size range (10-20-20-41-50-60).
The new sizes have been studied to guarantee the attainment of the design spec-
ifications but without losing the product’s modularity. The variants added to the
existing sizes also required a great deal of effort in terms of design, given the need to
respect the overall dimensions already established and also being designed for use in
the parallel shaft series (Series C, F and S).
Production of the pre-series was started in 2007, with the Design workgroup
directly involved in the technical support process for the resolution of initial prob-
lems (approval of models, new tools, dies and samples).
At the same time, technical data were released for the catalogues, as well as the
product designation control rules required for management of the Series utilising
the Product Configurator. At this time we also started processing the product config-
uration matrices needed to generate the assembly bill of materials automatically
(these operations will continue into 2008).
Operations relating to the three-dimensional drawings simplified for download-
ing via the Internet, with overall dimension parameters and completion of the data-
bases to check the working life of the new gearboxes, will continue in 2008.
Development of HDP heavy-duty range(Completion of range segment – development of extruder models)
Operations to complete the HDP-HDO Series continued in 2007, proceeding with the
development of all the variants to accompany the basic models, in both the HDP and
Bonfiglioli I Annual Report 2007 I
compliance with the standards laid down by quality certification bodies and guaran-
teeing the fitness of the units for use in environments characterised by low tempera-
tures: - 30/- 40 °C.
Development of products and components to meet new, changing demandscreated by industrialisation of production and external purchasing sources
Work focused on modifying and developing products to meet new production needs
proved demanding yet has continued uninterruptedly. Examples of these new
requirements is the need to adapt products for semi-automatic mounting on robot-
operated plants, or the need to standardise and unify gear teeth in the planetary
stages, basic elements characterising our products, in order to produce an increasing
number of toothed ring gears, by means of broaching rather than the traditional
method using a gear-cutting machine.
In addition to these operations, experiments have been carried out to standardise
components purchased from new suppliers and constructed with new materials. The
aim is to expand the supply base and thereby tackle increasing production volumes
and maintain and improve the competitive content of our products.
Bonfiglioli VectronActive Cube
During the first half of 2007, the R&D department at Bonfiglioli Vectron concentrat-
ed on the definition and subsequent development of a new series of drives known as:
Active Cube.
Active Cube, which was launched on the market in November 2007, extends Bon-
figlioli’s “technology” drives portfolio with its high functional content and superior
performance levels exceeding those of other products in the range.
Efforts focused, in particular, on improving the control unit’s response times
(through the design of a new control hardware platform) and on implementing soft-
ware dedicated to “servo” applications, such as the built-in positioner or homing pro-
cedure control.
With Active Cube, Bonfiglioli has set itself the objective of expanding Active’s
application range to satisfy the requirements of the most sophisticated plants and at
the same time exploring the “Motion Control” segment.
BTD/BCR Servomotors
Coinciding with the launch of Active Cube, Vectron made available two series of per-
manent magnet synchronous servomotors: BTD and BCR. The new servomotors
include 43 models with stall torque of between 0.2 Nm and 115 Nm, overload up to
400% of the rated torque and speed range from 3000 to 4500 rpm.
Research and Development at Vectron has worked on defining and implementing
52 53
Bonfiglioli I Annual Report 2007 I Management Report I
Bonfiglioli TrasmitalGearboxes and gear motor range for crawler and wheel drives
Operations involving redesigning medium sizes in the range continued through to
the final stages, on the basis of the goals initially set to improve the competitiveness
of the products while maintaining performance and reliability at their current levels.
The design initiatives involved the larger sizes in the product category under exami-
nation.
As well as design aspects, operations also included the development of prototypes
as part of a new project, with various tests carried out in the Experience Department.
Tests were carried out to check reliability with reference to the same established per-
formance standards already applying to the corresponding products in the current
range, which are to be gradually phased out by the newly designed models. Tests were
also carried out for the same reasons to provide a direct comparison between the cur-
rent products and the new models. Tests and experiments took more than 8,000 hours
of bench testing and involved around 300 units covering both prototypes and stan-
dard gearboxes.
Within the sphere of gearboxes for crawlers and wheel drives, other versions for
specific applications and for large machine manufacturers were also developed
including: compact crawler blades and forage and sugar beet harvesters for North and
South American manufacturers.
A new wheel gearbox was designed and developed for 1.5-2.0 ton electric lift truck
wheel drives.
Project for development of gearbox for offshore platform lift drive
A gearbox for this type of application was designed for an industry leader. The
gearbox with high transmission torque capacity and reducing ratio, is fitted, in out-
put integral to the shaft, with a pinion that is coupled directly to the rack mounted on
the leg structure of the platform.
Due to the special nature of the application sector, the project was tested and cer-
tified by the supervisory body monitoring the safety of marine vessels, the American
Shipping Bureau.
Development of gear units for wind turbines
The wind turbine sector has always been of vital importance, both in terms of the
number of units produced and their technical advancement. In order to keep up with
this development and tackle increasing competition, new gear unit models have been
developed to satisfy new requirements for new generator models, as well as for new
manufacturers, some operating in emerging markets (India and China) and therefore
offering new commercial openings. Particular emphasis was placed during the design
stage on the technical specifications regulating the definition of the gear units, such as
Bonfiglioli I Annual Report 2007 I
electrical energy from photovoltaic panels for a power network. Research was also car-
ried out on systemic aspects, which produced an electrical panel with MPP Tracker
control suitable for modular photovoltaic plants.
In the wind turbine sector, the Active series was used to control the rotation of the
nacelle (combined with planetary drives from the 300 Series).
Biofuels
The biofuel industry is increasingly becoming an important sector for planetary
drives in the 300 Series, which are used to transform primary or waste materials into
fuels for the production of energy in conjunction with converters from the Active
series. In particular, Active constantly controls the mass mixing process, to optimize
the energy balance between what is used for the transformation process and what is
generated in terms of energy-based power.
Training activities
The development of the drive and motor range into products and applications of
higher technological content, combined with the growth of the Drive Service Center
(DSC) at branch offices and BEST distributors, has led to an increasing need for train-
ing of resources responsible for providing local technical support for electronic prod-
ucts.
In response to these needs, the DSC at the Competence Centre has intensified the
standard product course programme and introduced a number of specialisation
courses, aimed at an in-depth analysis of important topics common to several prod-
ucts (e.g. field bus communication).
54 55
Bonfiglioli I Annual Report 2007 I Management Report I
the measures necessary to guarantee compatibility and harmonisation between the
Active Cube drive and the servomotors. The combination of the two series produce a
“servo package” comprising the BTD/BCR servomotor and Active Cube servo drive.
Expansion of the “Active 401" and "Active 201" series
The Active power range was increased further through two operations. The first, car-
ried out halfway through 2007, allowed 4 new power sizes to be introduced to the
Active 201 series: 4 kW, 5.5 kW, 7.5 kW and 9.2 kW. These are available with a 230 V
three-phase power supply and guarantee the normal 150% overload in rated operat-
ing conditions.
The second operation carried out on the range was the subsequent launch of 4
additional Active 401 models in a new size (“Size 7”). With the new power rates 75
kW, 90 kW, 110 kW and 132 kW, the 400 V three-phase Active series offers, amongst
other things, good cover and synergy with the Bonfiglioli gearboxes in the HDP and
HDO series for use in high torque applications.
Braking Resistors
Once analysis and selection operations had been completed by the DSC team at Bon-
figlioli Vectron, the new series of BR braking resistors was launched in June 2007. The
BR resistors are compatible with the most important drive series produced by Bon-
figlioli Vectron: Active, VCB, Synplus thereby simplifying and rationalising the range
of accessories available: the large number of braking resistors (each dedicated to a sin-
gle converter series) was replaced by 11 BR codes, applying to all the series mentioned.
The analysis also produced a number of tables illustrating drive-resistor combina-
tions, which are included in the catalogue and are of assistance when selecting the cor-
rect resistor size for most applications.
Product personalisation initiatives
Extensive research and development activities also focused on the customisation of
products in 2007, with the completion of around ten projects made to customer spec-
ifications. Amongst these, the diameter “servo” function for wrapping devices on
packaging machines is worthy of mention, as is the development of “Motion” control
blocks with position synchronisation, for the plastics industry.
Renewable energy
A special mention must go to activities focused on the configuration of products
for renewable energy plants, an area of business of particular interest, both in terms
of the excellent growth rates recorded and the strong position held by Bonfiglioli and
Vectron in this market. In 2007 various customisation initiatives were completed,
focused on the effective application of regeneration units in the VER series to convert
Bonfiglioli I Annual Report 2007 I
covering 94,000 square metres let for a 49-year term to the company by the Viet-
namese government. The first stage involves the construction of a factory covering
18,000 square metres with annexed offices and common parts occupying 1,400 square
metres.
The go-ahead has also been given for a feasibility study to be carried out to assess
the scope for expanding the Group’s business to South America through the creation
of a direct presence set to commence at the end of 2008.
Business outlookConsolidated turnover as at April 2008 was around 20% higher than that recorded in
the previous period, rising from 199 to approximately 240 million Euros. The strong
growth of the planetary drive market for the "mobile" sector (+32.6%) shows no signs
of letting up and the growth characterising the “industrial” sector (+21.9%) also
appears to be a continuing trend.
2008 will see the Group committed, as in the past, to consolidating investments it
has already made and expanding business. The completion of the second Povaska
Bystrica factory in Slovakia will allow production to expand and provide scope for the
direct handling of deliveries to the final customer, thereby improving current logistics
management. Investments in the Forlì factory will also be completed, further
strengthening the overall production output of planetary gearboxes for excavators
and road pavers, gearboxes for wind turbines and aerial platforms.
The new automation plant for the assembly of gearboxes in the C – A – F – S series
also started up at the factory in Vignola (MO). This major investment will allow daily
production output for these gearboxes to far exceed that recorded in 2007, at the same
time providing high production flexibility and anticipated reduction in production
costs.
2008 will also represent an important year for the production and sale of the
heavy-duty HDP – HDO ranges, as testified by the start-up phase for assembly
machines at the branches in South Africa and Australia and a new factory in Italy ded-
icated to these products, which will go into operation next September.
Work is as intense as ever in the information technology area with a number of
projects being implemented, the most important of which relating to: the creation of
new support structure for worldwide projects based in India (Business Process Ser-
vice – BPS) and the development of SAP implementation in all the foreign companies
according to a new standard model, in which various Bonfiglioli work groups have
been involved through the mixed participation of staff from various parts of the
world.
An important new strategic planning initiative has been set up in response to the
robust development and growth in turnover recorded by the Group over the last few
years. Under this initiative, the first task will be to review and implement a new organ-
56 57
Bonfiglioli I Annual Report 2007 I Management Report I
Quality (UNI EN ISO standards)With reference to the Quality area, certification to UNI EN ISO 9001:2000 continues
to constitute one of the most important standard references for the Bonfiglioli organ-
isation. The Quality Control system is applied at all the Bonfiglioli factories with the
aim of maintaining and implementing the quality standard improvement process in
order to rationalise and integrate internal processes continuously, thereby satisfying
the demands of both internal and external customers. This continuous improvement
process is supported by constant analysis of a series of KPI’s, which are fundamental
to maintaining set standards at high levels, in accordance with the strategic and mar-
ket requirements defined by top management.
Constantly committed to the maintenance of these quality standards, the compa-
ny has set itself the task of safeguarding the environment and obtained the
environmental certification UNI EN ISO 14001:2004, an important starting point for
maximising use of existing resources and minimising their impact on the environ-
ment. As part of this process dedicated to safeguarding the environment, in 2007
Bonfiglioli chose to comply with the “RoHS” EC Directive 2002/95 for the restriction-
elimination of hazardous substances contained in its products, which marked anoth-
er step towards better environmental quality standards.
Sustaining the results achieved in previous years and much to the company’s sat-
isfaction, in 2007 the three-year certification of our 94/9/EC (“ATEX”) system was
renewed. It was also decided, during the first few months of 2008, to take steps
towards the adoption of the new Machine Directive 2006/42 in order to be ready in
advance, by the beginning of 2009, for the coming into force of this Directive, envis-
aged for December 2009.
Significant events after year end As already mentioned in the section relating to the consolidation area, during the first
few months of 2008, the Group transferred business from the subsidiary “Bonfiglioli
Power Transmission Pty Ltd” to the indirect subsidiary “Bonfiglioli South Africa Pty
Ltd.” incorporated at the end of 2007 in order to comply with regulations laid down
by the “Black Empowerment Equity Program” (BEE). Agreements with our black
partners were formalised a few days ago, with the taking-up on their part of a 25%
stake in the share capital of the newly incorporated company.
It is also pointed out that, on January 3, 2008 the incorporation of the company
“Bonfiglioli Vietnam LLC” was completed, with an initial share capital of 10 million
USD and registered office in the province of Binh Duong (industrial area of Ho Chi
Minh). This investment, whereby the institutional partner SIMEST SpA gained a 20%
stake, is aimed at setting up a new factory premises. On the date on which this report
was drawn up, construction works on the factory had already commenced, on a site
Bonfiglioli I Annual Report 2007 I
rencies in question. A change in interest rates leads to an economic effect that is pro-
portional to the level of group indebtedness, which is still lower overall than own
equity and is well below average levels in the sector.
Financial risk management
The parent company normally draws up monthly treasury forecasts in order to ensure
constant monitoring of the level of utilisation of financial instruments, financial
exposure, and the short-term capacity to meet its commitments and make the most
appropriate decisions on that basis.
The company also engages in exchange risk hedging operations in relation to both
sales and purchases made in foreign currencies. Full disclosure of the foregoing oper-
ations is provided in the Explanatory Notes to the financial statements, which we
invite you to consult for further details.
May 28, 2008
Board of Directors’ Chairman
Clementino Bonfiglioli
58 59
Bonfiglioli I Annual Report 2007 I Management Report I
isational model more in keeping with the size of the business, followed by the estab-
lishment of guidelines and strategic plans for the next 3-5 years.
Further information
Equity shares
The parent company does not hold and has never held equity shares, nor does it hold
stakes or shares in controlling companies inasmuch as there is no legal entity that
holds a controlling stake in Bonfiglioli Riduttori SpA stock.
Financial risk management
The following information is provided pursuant to the provisions of art. 40, para-
graph 2, letter d-bis of Legislative Decree 127/91 concerning the financial risk faced
by the Group with reference to the particular sector in which it operates and to the
specific procedures it adopts to conduct its business activities.
Magnitude of financial risk
The Group is not unduly exposed to the financial risk that is present in all industrial
and commercial activities under the following captions of the financial statements:
a) Trade receivablesAppropriate internal control procedures for the management of bad debt risks have
been implemented. Amounts due in foreign currency are normally hedged utilising
adequate non-speculative hedging policies. As specified in the Explanatory Notes,
risks of insolvency are fully covered by the doubtful receivables provisions.
b) Trade payables denominated in currencies other than the EuroAlso for this type of risk the considerations of the previous heading are applicable
because the company and group apply systematic exchange risk hedging policies on
balance sheet items with matching offset entries without the use of speculative instru-
ments.
c) Loans obtained in Euro and/or other currenciesThe parent company has no outstanding medium-/long-term loans in currencies
other than the Euro. Temporary export advances may be made against exchange
hedging operations managed in accordance with the hedging policies indicated in
the above points.
Loans and indebtedness of foreign subsidiaries are normally denominated in the
local currency and/or anyway in the currency in which the main sales flows are gen-
erated in such a way as to minimise the risks associated with fluctuation of the cur-
Bonfiglioli I Annual Report 2007 I
41 41
Bonfiglioli I Annual Report 2007 I Bonfiglioli I Annual Report 2007 I Consolidated financial statements as of December 31, 2007 I
Consolidated financial statementsas of December 31, 2007
(The consolidated financial statements have been translated into the English language solely for the convenience of international readers)
60 61
(Euro Thousand)
2007 2006
II. Receivables
1) Trade receivables
- due within 12 months 145,466 130,659
3) Receivables from associated companies
- due within 12 months 9,577 9,311
4bis) Tax receivables
- due within 12 months 12,419 8,725
- due after 12 months 488 337
sub total 12,907 9,062
4ter) Deferred tax assets
- due within 12 months 7,105 6,433
- due after 12 months 5,513 3,970
sub total 12,618 10,403
5) Other receivables
- due within 12 months 3,744 1,809
- due after 12 months 1,644 1,261
sub total 5,388 3,070
Total Receivables 185,956 162,505
IV. Cash at bank and on hand
1) Banks 16,262 13,445
2) Cheques — 14
3) Cash on hand 47 46
Total Cash at bank and on hand 16,309 13,505
C) CASH AT BANK AND ON HAND 375,330 330,515
D) Prepaid expenses and accrued income
- Other prepaid expenses and accrued income 641 520
D) TOTAL PREPAID EXPENSES AND ACCRUED INCOME 641 520
TOTAL ASSETS 533,547 453,967
62 63
Bonfiglioli I Annual Report 2007 I Consolidated financial statements as of December 31, 2007 IBonfiglioli I Annual Report 2007 I
Consolidated financial statements as of December 31, 2007
Consolidated balance sheet
Assets (Euro Thousand)
2007 2006
B) Fixed assets (net of cumulated depreciation)
I. Intangible fixed assets
1) Start up costs 46 6
3) Patents and rights for the use of intellectual properties 1,179 1,281
4) Concession, licenses, trademarks and similar rights 78 106
5) Goodwill
5b) Consolidation differences 5,842 7,329
6) Assets in progress and advances 55 361
7) Other intangible fixed assets 402 257
Total Intangible fixed assets 7,602 9,340
II. Tangible fixed assets
1) Land and buildings 69,126 54,833
2) Plant and machinery 48,796 35,475
3) Trade and industrial fixtures 12,651 8,854
4) Other tangible fixed assets 4,266 3,436
5) Construction in progress and advances 11,766 8,033
Total Tangible fixed assets 146,605 110,631
III. Financial fixed assets
1) Investments
b) associated companies 3,341 2,951
d) other companies 28 10
sub total 3,369 2,961
Total Financial fixed assets 3,369 2,961
B) TOTAL FIXED ASSETS (NET OF CUMULATED DEPRECIATION) 157,576 122,932
C) Current assets
I. Inventory
1) Raw materials, supplies and consumables 32,543 27,654
2) Work in progress and semifinished goods 73,624 61,914
4) Finished goods and goods for resale 66,749 64,633
5) Advances 149 304
Total Inventory 173,065 154,505
64 65
Bonfiglioli I Annual Report 2007 I Consolidated financial statements as of December 31, 2007 IBonfiglioli I Annual Report 2007 I
Liabilities and shareholders’ equity (Euro Thousand)
2007 2006
A) Shareholders' equity
I. Share capital 30,000 15,000
III. Revaluation reserves 20,847 35,847
IV. Legal reserve 3,000 3,000
VII. Other reserves
-) Extraordinary reserve 66,112 52,425
-) Consolidation reserve 16,263 16,395
-) Foreign exchange currency conversion reserve (4,087) (3,314)
-) Other reserves 5,451 5,451
sub total 83,739 70,957
VIII. Retained earnings (losses) carried forward 13,827 11,745
IX. Net income (loss) of the Group 25,645 17,193
Group share of shareholders' equity 177,058 153,742
Minority interests share capital and reserves 1,538 5,745
Minority interests net income (loss) 697 1,040
Minority interests 2,235 6,785
A) CONSOLIDATED SHAREHOLDERS' EQUITY 179,293 160,527
B) Reserves for risks and charges
1) Termination indemnity and similar liabilities 1,787 1,563
2) Taxes and deferred taxes liabilities 7,215 6,523
3) Other reserves 5,594 3,390
B) TOTAL RESERVES FOR RISKS AND CHARGES 14,596 11,476
C) EMPLOYEE SEVERANCE INDEMNITY RESERVE 17,191 18,034
D) Payables
1) Bonds
- due within 12 months 440 459
- due after 12 months 6,020 6,837
sub total 6,460 7,296
4) Banks
- due within 12 months 61,839 31,806
- due after 12 months 65,878 54,152
sub total 127,717 85,958
(Euro Thousand)
2007 2006
5) Other financial institutions
- due within 12 months 3,296 2,278
- due after 12 months 19,091 13,013
sub total 22,387 15,291
6) Advances
- due within 12 months 2,526 798
7) Trade payables
- due within 12 months 136,202 128,780
10) Payables to associated companies
- due within 12 months 27 29
12) Tax payables
- due within 12 months 5,696 9,785
13) Social security
- due within 12 months 5,323 4,408
14) Other payables
- due within 12 months 12,406 11,057
- due after 12 months 2,748 —
sub total 15,154 11,057
D) TOTAL PAYABLES 321,492 263,402
E) Accrued expenses and deferred income
- Other accrued expenses and deferred income 975 528
E) TOTAL ACCRUED EXPENSES AND DEFERRED INCOME 975 528
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 533,547 453,967
Memorandum accounts
Guarantees given from third parties in own favour 6,168 4,652
TOTAL MEMORANDUM ACCOUNTS 6,168 4,652
66 67
Bonfiglioli I Annual Report 2007 I Consolidated financial statements as of December 31, 2007 IBonfiglioli I Annual Report 2007 I
(Euro Thousand)
2007 2006
A) Production value
1) Net revenue from sales and services 610,772 498,635
2) Change in work in progress, semi-finished and finished goods 16,228 27,998
5) Other revenues and incomes
- others 5,629 3,900
A) TOTAL PRODUCTION VALUE 632,629 530,533
B) Production costs
6) Raw materials, supplies, consumables & goods for resale 326,302 270,809
7) Services 137,667 117,751
8) Use of third party assets 4,052 3,893
9) Personnel
a) Wages and salaries 69,208 63,387
b) Social contributions 18,474 16,652
c) Severance indemnity 4,135 3,431
e) Other costs 81 126
sub total 91,898 83,596
10) Depreciation, amortization and write-downs
a) Amortization of intangible fixed assets 3,713 2,992
b) Depreciation of tangible fixed assets 16,081 14,081
d) Bad debt provision 1,527 1,270
sub total 21,321 18,343
11) Change in raw materials, supplies, consumables & goods for resale (5,939) (6,401)
13) Other provisions 2,041 649
14) Other operating expenses 4,382 4,089
B) TOTAL PRODUCTION COSTS 581,724 492,729
DIFFERENCE BETWEEN PRODUCTION VALUE AND COSTS (A–B) 50,905 37,804
C) Financial income and expenses
16) Other financial income
- other 453 296
(Euro Thousand)
2007 2006
17) Interest expenses and other financial charges
- other (7,801) (4,520)
17bis) Exchange rate gains and losses, net (194) (318)
C) TOTAL FINANCIAL INCOME AND EXPENSES (7,542) (4,542)
D) Adjustments to financial assets
18) Revaluations
a) investments 540 277
D) TOTAL ADJUSTMENTS TO FINANCIAL ASSETS 540 277
E) Extraordinary income and expenses
20) Income
- gains on disposal 2,450 —
- other 737 619
sub total 3,187 619
21) Expenses
- other (1,434) (903)
E) TOTAL EXTRAORDINARY ITEMS 1,753 (284)
INCOME BEFORE TAXES (A–B±C±D±E) 45,656 33,255
22) Income taxes
- current (20,827) (17,178)
- deferred 1,513 2,156
TOTAL INCOME TAXES (19,314) (15,022)
23) NET INCOME (LOSS) INCLUDING MINORITY INTEREST 26,342 18,233
Minority interest income (697) (1,040)
NET INCOME (LOSS) OF THE GROUP 25,645 17,193
Consolidated statement of income
68 69
Bonfiglioli I Annual Report 2007 I Notes to consolidated financial statements IBonfiglioli I Annual Report 2007 I
Notes to consolidated financial statements(The notes to the consolidated financial statements have been translated into the English language
solely for the convenience of international readers)
Notes to consolidated financial statements
Foreword
The consolidated financial statement was drafted in compliance with Legislative
Decree no.127/1991.
The Notes include the reconciliation statement between shareholders' equity and
the net income of the Parent company and the same items in the consolidated finan-
cial statements. In addition, the consolidated cash-flow statement has been annexed
to the Notes.
All figures in this financial statement and the relative Notes are expressed in thou-
sands of euro (K€).
Form and contents of the consolidated financial statements
The consolidated financial statement includes the financial statements of companies
within the Bonfiglioli Group, namely the parent company Bonfiglioli Riduttori Spa
and the Italian and foreign subsidiaries in which the company holds more than 50%
of the capital, either directly or indirectly, or exercises management control in rela-
tion to specific agreements to this effect.
The financial statements of the Group Companies utilised for the integral consol-
idation were approved by the shareholders' meetings of the individual companies
concerned, suitably modified wherever necessary to unify them with the accounting
principles adopted by the Group, which comply with the financial principles
imposed by law. If the relative financial statements had not yet been approved by the
respective shareholders' meetings at the time of preparation of the consolidated
financial statements, the draft financial statements prepared for approval by the
respective Boards of Directors were utilised.
If the financial year of companies closes on a date other than December 31, inter-
im financial statements were drawn up at December 31 utilising the Group account-
ing principles.
The Group companies operate exclusively in the industrial production and sale of
gearmotors, speed variators, and drive transmission components in general.
70 71
Bonfiglioli I Annual Report 2007 I Notes to consolidated financial statements IBonfiglioli I Annual Report 2007 I
means of cash payments by the parent company;
• on August 28, 2007, by operation of a deed drawn up by Notary Public Palmeri
Roll no. 4130/858 with effect from 1st September 2007, the parent company com-
pleted a transaction increasing the share capital of the subsidiary “Bonfiglioli Italia
S.r.l.” from 0.1 M€ to 16.0 M€, paid up by means of conferments in kind of busi-
ness branches set up to deal with the “marketing of Bonfiglioli products on the
Italian market” and “storage, logistics and programming relating to sales in Italy”.
On September 3, 2007, by operation of a deed drawn up by Notary Public Palmeri
Roll no. 4138/866 the company was transformed into a company limited by shares
(SpA);
• in October the share capital of the Canadian subsidiary “Bonfiglioli Canada Inc.”
was increased against payment from 2.3 MCAD to 4.0 MCAD, paid up by trans-
ferring payables due to the parent company to capital.
It is also pointed out that, following approval in South Africa of the law known as the
“Black Empowerment Equity Program” (BEE), the company “Bonfiglioli South
Africa Pty Ltd” (a 100% subsidiary of the South African branch) was incorporated
with a view to initiating negotiations with a number of important partners belong-
ing to the BEE categories and to helping them participate in business activities, as
laid down by local legislation. At the end of 2007 the company “Bonfiglioli South
Africa Pty Ltd.” was no longer in operation and was therefore excluded from the con-
solidation area.
Drafting principles
The structure of the balance sheet and the income statement are as required by
Italian Legislative Decree 127/91.
Items preceded by Arabic numerals having zero contents have been omitted both
in the current and in the previous financial statements.
The balance sheet provides separate indication of shareholders' equity and the
minority interests share of profits. No items of assets and liabilities are recorded
under more than one caption of the tables.
Consolidation principles
A. Consolidation is carried out on a line-by-line basis, consisting in recording all the
captions under assets and liabilities and in the income statement in their entirety.
B. The book value of consolidated equity investments was written off against the
related equity at the time of first consolidation and the resulting differences, if
negative, were recognised under a specific item of consolidated equity denomi-
nated "Consolidation Reserve". Any positive differences existing at the time of
first consolidation were recorded in the consolidated financial statements, where
The subsidiary companies included in the consolidation area at December 31, 2007
are as follows:
With reference to the parent company “Bonfiglioli Riduttori SpA” it is pointed out
that on August 28, 2007, by operation of a deed drawn up by Notary Public Palmeri
Roll no. 4132/860, the company passed a resolution in a general meeting to increase
the share capital without consideration from 15.0 M€ to 30.0 M€ paid up by trans-
ferring part of revaluation reserves recorded under shareholders equity to capital.
With reference to the area of consolidation and changes made from previous year,
we draw your attention to the following matters:
• in March, an agreement was entered into for the transfer of 60% of the share cap-
ital of the subsidiary “Bonfiglioli Hellas SA” to the minority. The transaction took
the company out of the consolidation area. The effects of this deconsolidation are
recorded under extraordinary income. The Group retained a 10% minority hold-
ing in the company, which became the Group’s distributor for the area and
changed its name to “BEST Hellas SA;
• in May the purchase of the remaining 50% of the share capital of the French sub-
sidiary “Bonfiglioli Transmission France Sa” was completed by paying the outgo-
ing Members the sum of 4.9 M€;
• in May the share capital of the Slovakian subsidiary “Bonfiglioli Slovakia S.r.o.”
was increased against payment from 150.0 MSKK to 350.0 MSKK, paid up by
72 73
Bonfiglioli I Annual Report 2007 I Notes to consolidated financial statements IBonfiglioli I Annual Report 2007 I
Denomination Country Currency Share Capital Shareholding
2007 2006
Bonfiglioli Riduttori SpA Italy € 30,000,000 Parent Company
Bonfiglioli Canada Inc. Canada CAD 4,000,000 100% 100%
Bonfiglioli USA Inc. USA USD 4,000,000 100% 100%
Bonfiglioli Deutschland GmbH Germany € 3,000,000 100% 100%
Bonfiglioli Skandinavien AB Sweden SEK 2,985,000 67% 67%
Bonfiglioli Transmissions Sa France € 1,900,000 100% 50%
Bonfiglioli Transmission (Aust) Pty Ltd Australia AUD 7,500,004 100% 100%
Bonfiglioli UK Ltd Great Britain GBP 200,000 100% 100%
Bonfiglioli Power Transmission Pty Ltd South Africa ZAR 64,000 75% 75%
Bonfiglioli Transmission Pvt Ltd India INR 400,000,000 100% 100%
Bonfiglioli Drives (Shanghai) Co. Ltd China USD 1,000,000 100% 100%
Bonfiglioli Vectron GmbH Germany € 500,000 97% 97%
Tecnoingranaggi Riduttori Srl (Sole Shareholder) Italy € 96,900 100% 100%
Bonfiglioli Italia Spa (Sole Shareholder) Italy € 16,000,000 100% 100%
Bonfiglioli Slovakia Sro Slovakia SKK 350,000,000 100% 100%
Bonfiglioli Power Trasmission Jsc Turkey TRY 500,000 67% 67%
possible, under the items of assets of the companies included in the consolidation
area, or under the assets caption "Consolidation differences" for differences that,
despite their characteristics of deferment affecting more than one year, could not
be allocated to specific items under assets. In contrast, if these items were not
considered to be deferred to more than one year, they were deducted from the
consolidation reserve. For companies that were already controlled at January 1st,
1994 this date was considered as the moment of initial consolidation, since 1994
was the year in which it became mandatory to draw up consolidated financial
statements.
C. The positive differences recorded were amortised in accordance with the rates
utilised for the assets to which they refer; the consolidation difference is amor-
tised throughout the estimated future working life of the assets in question.
D. The results achieved, following initial consolidation, were subsequently entered
under a specific caption of consolidated equity denominated "Retained earnings
and losses carried forward".
E. Any profits and losses that have yet to be realised in relation to third parties
deriving from transactions between Group companies were eliminated, as were
the items that give rise to payables, receivables, costs and revenues.
F. The dividends distributed by consolidated Companies within the Group were
properly eliminated.
G. The portions of shareholders' equity and profit due to minority shareholders of
the consolidated subsidiaries were deducted from the Group portions and
recorded separately under specific captions of consolidated equity and income
statement.
H. The financial statements of foreign companies were converted to euro, applying
the year-end exchange rate for all assets and liabilities and the average exchange
rate calculated over the full twelve months for captions in the income statement.
The items of equity, existing at the date of initial consolidation, are converted at
the exchange rates in force on said date, while subsequent changes are converted
at the historic exchange rates in force on the date of the relative transactions.
Conversion differences arising both from the conversion of equity captions to the
year-end rates with respect to the historic rates, and existing between the average
exchange rates and year-end exchange rates for the income statement, were
recorded under a specific caption of consolidated equity denominated "Currency
conversion reserve”.
The exchange rates utilised for companies operating outside the euro area are as
follows:
Bonfiglioli I Annual Report 2007 I
I. The following company is consolidated with the net equity method:
Denomination Location Share %Capital Stake
Tecnotrans Bonfiglioli Sa Barcelona (Spain) € 2,175,000 33.33%
Valuation criteria
The accounting principles and valuation criteria adopted in drafting the financial
statement are in compliance with the principles of the Italian Civil Code and the
accounting standards prescribed by the National Council of Chartered Accountants
(OIC). Where such principles are lacking or insufficient, the point of reference is
provided by international accounting standards (IAS/IFRS) where these latter are in
compliance with Italian legal requirements.
The annual financial statement was prepared in accordance with the general prin-
ciples of clarity, truthfulness and fairness; specifically:
• items in the financial statement were valued in accordance with the general prin-
ciple of prudence and on an accrual basis, applied in expectation that activities
will continue;
• account is taken of the risks and losses relating to the year, even when such risks
and losses became known after the end of that year;
• the statements refer exclusively to profits realised at the closing date of the finan-
cial year;
• income and expenses are considered to be relative to the year irrespective of the
effective collection or payment dates;
• dissimilar components covered by single captions have been valued separately;
74 75
Bonfiglioli I Annual Report 2007 I Notes to consolidated financial statements I
Company Currency B.S. exchange P.L. exchange B.S. exchange P.L. exchangerate 2007 rate 2007 rate 2006 rate 2006
Bonfiglioli UK Ltd Pound Sterling 0,733 0,684 0,672 0,682
Bonfiglioli Canada Inc. Canadian Dollar 1,445 1,468 1,528 1,424
Bonfiglioli Skandinavien Ab Swedish Kroner 9,441 9,250 9,040 9,254
Bonfiglioli USA Inc. US Dollar 1,472 1,370 1,317 1,256
Bonfiglioli Transmission (Aust) Pty Ltd Australian Dollar 1,676 1,635 1,669 1,667
Bonfiglioli Power Transmissions Pty Ltd South African Rand 10,030 9,660 9,212 8,531
Bonfiglioli Transmissions Pvt Ltd Indian Rupee 58,021 56,572 58,297 56,910
Bonfiglioli Drives (Shanghai) Co. Ltd Chinese Yuan 10,752 10,418 10,279 10,010
Bonfiglioli Slovakia Sro Slovakian Koruna 33,583 33,774 34,435 37,234
Bonfiglioli Power Transmissions Jsc Turkish Lira 1,7107 1,786 1,864 1,809
cost of the relative goods under assets, recording of the debt under liabilities, and
entry of the relative financial expenses and depreciation amounts in the income state-
ment.
Provisions made in lieu of depreciation are systematically allocated by the applica-
tion of rates that are considered to accurately reflect the residual useful working life
of the assets to which they refer.
Maintenance and repair costs of an ordinary nature are directly attributed to oper-
ating costs, while extraordinary costs that increase the useful life or production capac-
ity of the relative asset are added to the value of the asset.
The ordinary annual rates utilised for the depreciation of tangible assets are as fol-
lows:
Land and buildings 2% to 10%
Plant and machinery 10% to 25%
Industrial / trade fixtures 10% to 30%
Other 10% to 30%
Equity investments held as fixed assets
The equity investment in the associated company “Tecnotrans Bonfiglioli SA” is
entered on the basis of the net equity criterion, i.e. for an amount equivalent to the
corresponding portion of shareholders' equity resulting from the latest financial
statements of the company after deducting dividends and after recording any further
consolidation adjustments having a significant impact.
The other investments are recorded at their purchase cost.
Inventories
Inventories are valued in accordance with the general principle of the lower of pur-
chase cost and market cost:
• raw materials are valued adopting the FIFO method;
• work in progress is valued according to the stage of completion reached on the
basis of the cost of materials, labour, industrial depreciation and indirect produc-
tion costs;
• semi-finished and finished products are valued adopting the FIFO method, tak-
ing the cost of materials, labour, industrial depreciation and other production
costs;
• obsolete or slow-moving materials and products are valued according to their
estimated useful life or future market value, by means of an entry under write-
down provisions.
Infra-group profits present within the inventories of the consolidated companies are
eliminated.
• the valuation principles are unchanged with respect to those utilised in the pre-
vious year, unless specified below;
• no exceptional cases occurred the justified a departure from the provisions of leg-
islative enactments.
During the year dealt with in these Notes the cost of inventory is calculated adopt-
ing the FIFO method and not with reference to the mean weighted cost figure.
In keeping with principle no. 29 laid down by the National Council of Chartered
Accountants (OIC), it is pointed out that the effects of the alteration of the account-
ing principle may be considered as insignificant, given the size of the Group, and it
is not therefore considered necessary to record in the accounts the effects referred to
in the aforementioned principle no. 29.
Specifically, the valuation criteria adopted in drawing up the financial statement
are as specified below.
Intangible fixed assets
Intangible fixed assets are recorded at purchase cost increased by ancillary expenses
or, if the assets were internally constructed, on the basis of the costs sustained direct-
ly or indirectly, entered in respect of the attributable portion.
The cost, calculated as illustrated above, may be written back in certain cases if
this action is permitted by the relative laws.
Intangible fixed assets were systematically amortised on the basis of the following
rates:
Start-up and expansion costs 20%
Patent rights and utilisation of intellectual property rights 33.33% - 50%
Concessions, licences, trademarks and similar rights 33.33%
Consolidation differences 10 – 20%
Other 20%
Tangible fixed assets
Plant and equipment are recorded in the financial statements at purchase cost or con-
struction cost, inclusive of all directly connected ancillary expenses and adjusted in
the event that specific laws allow the write-back of assets in order to adjust them, even
only partially, to the changed purchasing power of the currency.
Assets acquired by means of leasing contracts are recorded in accordance with the
requirements of international accounting standard IAS no. 17 which is, in turn,
implemented by the accounting principle set down by the Italian Consiglio Nazionale
dei Dottori e dei Ragionieri Commercialisti (National Council of Chartered
Accountants) with reference to the consolidated financial statements.
The financial method is therefore applied, involving the attribution of the historic
76 77
Bonfiglioli I Annual Report 2007 I Notes to consolidated financial statements IBonfiglioli I Annual Report 2007 I
Receivables
Receivables are entered at their presumed realisation value through direct provision
for bad debts and entry of a provision for bad debts.
Cash at banks and on hand
Cash at banks and on hand is entered at nominal value, considered to represent the
presumed realisation value.
Accruals and deferments
Accruals and deferments are calculated in such a way as to attribute during the year
the competent portions of costs and revenues relative to two or more years, in accor-
dance with the pro tempore competence of the relative transactions.
Specifically, accrued income and accrued expenses refer to revenues and costs rel-
ative to the year, although formally recorded in the following year; prepaid expenses
and deferred income concern costs and revenues arising during the year despite the
fact that they relate to future years.
Reserves for risks and charges
Reserves for risks and charges consider the provisions allocated to cover losses, or
debts of a given nature and certain or probable existence, for which the exact amount
or contingency date was not known at year-end.
The allocations reflect the best possible estimate of the relative amounts on the
basis of the information available.
Risks for which a liability is only possible and not certain are illustrated in the
Notes to the financial statements, without allocating a specific risks and charges pro-
vision.
Employees severance indemnity
The severance indemnity reserve is commensurate with the amounts payable to the
employees in the workforce at the closing date of the year, in compliance with statu-
tory legislation and applicable collective labour contracts.
Payables
Payables are entered at their nominal value with regard to the principal, while inter-
est is entered under payables if already due, and under accruals, according to the
accrual principle if not yet due.
Recognition of costs and revenues
Sales revenues and purchase costs are recognised at the time of transfer of owner-
ship, which generally occurs respectively at the time of shipment or at the time of
Bonfiglioli I Annual Report 2007 I
reception, net of returns, discounts, allowances and premiums; the other revenues
and costs (supplies of services, financial, etc.) are recorded in accordance with the
accrual principle.
Costs and revenues arising between Group companies and infra-group dividends
are eliminated.
Taxes
Income taxes are recorded on the basis of a forecast of the tax burden for the year
with reference to statutory tax regulations and taking account of the applicable
exemptions and facilitations.
Deferred and pre-paid taxes are recorded to take account of the fiscal effects both
in relation to items of income or costs that concur in forming the profit for the year
other than the year in which they contribute to forming the taxable income and in
order to reflect the deferred fiscal effects relative to the consolidation adjustments.
Foreign currency
Transactions in foreign currency are converted into euro at the historic exchange
rates on the transaction dates. Exchange rate gains and losses incurred at the time of
collection of receivables and settlement of payables in foreign currency are recorded
in the income statement under financial income and expenses. Receivables and
payables existing at year-end expressed in the currency of non-euro countries were
converted at the exchange rates in force at year-end, taking account of the existing
hedging contracts.
The difference arising from this operation (gain or loss) was verified and reflect-
ed in the income statement for the year, with a matching entry of the relative receiv-
able or payable.
Specifically, with regard to captions in foreign currency for which forward con-
tracts in foreign currency were taken out to hedge against the relative exchange risk,
the following valuation principle was adopted:
• the difference generated between the value in euro determined by the adoption of
the historic exchange rate at the time of registration of the transaction and the
amount in euro determined on the basis of the contractual spot exchange rate
established was entered into the income statement with a matching entry of the
relative trade receivable or payable;
• the discount or premium of the transaction was recorded by competence with
respect to the relative duration.
Derivatives
Contracts taken out to hedge exchange risks are measured in relation to the receiv-
able or payable to which they refer.
78 79
Bonfiglioli I Annual Report 2007 I Notes to consolidated financial statements I
Exchange rate or interest rate swap contracts that are not correlated to the receiv-
ables and/or payables entered at the reference date of the financial statements are val-
ued separately. If, in relation to the separate valuation, losses are predicted, these are
recognised in the income statement and reflected in a specific risks reserve; if the val-
uation points to the likelihood of profits, these are deferred to the moment of their
effective realisation.
Derivative contracts are valued in the same manner as the hedged asset or liabil-
ity or as the contractual undertaking assumed at the date of the financial statements.
If the existence of a hedging relationship with the underlying financial transac-
tions is not proven or insufficiently documented, a fair value assessment is made of
said financial instruments and, also on the basis of this latter valuation, any possible
latent losses are estimated, making a commensurate allocation to the risks and
charges reserve.
Commitments and guarantees
Contractual commitments and guarantees are entered under commitments at the
value resulting from the contractual undertaking after deducting any liabilities that
have already been recorded.
Comments on the individual captions of the financial statementIn the following tables the "consolidation area changes" heading reflects the balances
as at December 31, 2006 of the Greek company leaving the consolidation area fol-
lowing the transfer of the majority shareholding.
Bonfiglioli I Annual Report 2007 I
Balance sheet
Fixed assets
Intangible fixed assets
The "other changes" column includes cancellations of the fully amortised items and
the effect of the exchange rate fluctuation.
Start-up and expansion costs
This caption refers to start-up costs and costs associated with amendments to the
80 81
Bonfiglioli I Annual Report 2007 I Notes to consolidated financial statements I
Description Opening Increases Decreases Consolidation Other Closing balance area changes changes balance
HISTORICAL COST
- Start-up and expansion costs 10 52 — — — 62
- Patent rights and intellect. property rights utilis. 13,213 1,542 — — 270 15,025
- Concessions, licences, trademarks, similar rights 1,283 48 (34) (19) 1 1,279
- Consolidation differences 19,718 103 — — — 19,821
- Assets under construction and advances 361 55 (92) — (269) 55
- Other 719 273 (82) — (71) 839
Total (A) 35,304 2,073 (208) (19) (69) 37,081
CUMULATED AMORTISATION
- Start-up and expansion costs 4 12 — — — 16
- Patent rights and intellect. property rights utilis. 11,932 1,917 — — (3) 13,846
- Concessions, licences, trademarks, similar rights 1,177 77 (34) (19) — 1,201
- Consolidation differences 12,389 1,590 — — — 13,979
- Other 462 117 (49) — (93) 437
Total (B) 25,964 3,713 (83) (19) (96) 29,479
NET VALUES
- Start-up and expansion costs 6 40 — — — 46
- Patent rights and intellect. property rights utilis. 1,281 (375) — — 273 1,179
- Concessions, licences, trademarks, similar rights 106 (29) — — 1 78
- Consolidation differences 7,329 (1,487) — — — 5,842
- Assets under construction and advances 361 55 (92) — (269) 55
- Other 257 156 (33) — 22 402
Total (A-B) 9,340 (1,640) (125) — 27 7,602
Commerce JSC”;
• K€ 82 referred to the acquisition of the equity investment in the company
“Bonfiglioli Transmission France SA”. The consolidation difference relative to the
foregoing investment was recognised for an original value of K€ 103.
Amortisation is executed, with the approval of the Statutory Auditors, in accordance
with a five-year plan for Bonfiglioli Vectron GmbH, Bonfiglioli Power Trasmission &
Automation Jsc and Bonfiglioli Transmission France SA and in accordance with a
ten-year plan for Tecnoingranaggi Riduttori Srl, in consideration of the
medium/long-term return on the investment plan.
Tangible fixed assets
articles of association of the company Bonfiglioli Italia SPA, which increased during
the year as a result of expenses incurred by the company in transferring business
branches and the subsequent transformation of the company into a company limit-
ed by shares (SpA), entered in the accounts with the approval of the Statutory
Auditors.
Industrial patent rights and utilisation of intellectual property rights
This caption includes deferred expenses sustained for the registration of industrial
patents and the costs sustained for application software purchased outright and/or
with open-term license.
The increase in the year is mainly due to the purchase and implementation of
software for IT resource planning of the companies.
Certain patent rights were revalued in compliance with L.342/00. Pursuant to the
provisions of art. 10 of L. 72/83 the value of the monetary revaluations applied is
indicated below:
Description Original Revaluation Net bookcost L. 342/2000 value
Start-up and expansion costs 62 — 62
Patent rights and intellectual property rights utilisation 9,478 5,547 15,025
Concessions, licences, trademarks and similar rights 1,279 — 1,279
Consolidation differences 19,821 — 19,821
Assets under construction and advances 55 — 55
Other 839 — 839
Total (A) 31,534 5,547 37,081
This revaluation had no effect on the income statement for the year since it had
already been fully amortised.
Concessions, licences, trademarks and similar rights
In the most part these costs are constituted by trademark registration charges.
Good will and consolidation differences
The value recorded arises from consolidation differences in the form of goodwill,
specifically:
• K€ 711 referred to the acquisition of the equity investments in Bonfiglioli
Vectron GmbH;
• K€ 4,990 referred to the acquisition of the equity investment in Tecnoingranaggi
Riduttori Srl Sole Shareholder;
• K€ 59 referred to the acquisition of the equity investment in the Turkish company
“Bonfiglioli Power Transmission and Automation Technologies Industry and
82 83
Bonfiglioli I Annual Report 2007 I Notes to consolidated financial statements IBonfiglioli I Annual Report 2007 I
Description Opening Increases Decreases Consolidation Other Closingbalance area change changes balance
HISTORICAL COST
- Land and buildings 75,788 17,230 (5,079) (639) 1,985 89,285
- Plant and machinery 152,701 20,193 (5,558) (3) 2,433 169,766
- Trade and industrial fixtures 47,489 8,422 (3,640) (7) 39 52,303
- Other tangible assets 12,375 2,034 (662) (220) 86 13,613
- Assets under construction and advances 8,033 8,362 (5) (5) (4,619) 11,766
Total (A) 296,386 56,241 (14,944) (874) (76) 336,733
CUMULATED DEPRECIATION
- Land and buildings 20,955 2,003 (2,767) (120) 88 20,159
- Plant and machinery 117,226 8,978 (5,198) (3) (33) 120,970
- Trade and industrial fixtures 38,635 3,936 (2,886) (7) (26) 39,652
- Other tangible assets 8,939 1,164 (547) (201) (8) 9,347
Total (B) 185,755 16,081 (11,398) (331) 21 190,128
NET VALUES
- Land and buildings 54,833 15,227 (2,312) (519) 1,897 69,126
- Plant and machinery 35,475 11,215 (360) — 2,466 48,796
- Trade and industrial fixtures 8,854 4,486 (754) — 65 12,651
- Other tangible assets 3,436 870 (115) (19) 94 4,266
- Assets under construction and advances 8,033 8,362 (5) (5) (4,619) 11,766
Total (A-B) 110,631 40,160 (3,546) (543) (97) 146,605
The "other changes" column includes exchange rate differences and reclassifications
of the individual items.
For an analysis of the investments in the year we refer you to the Management
report. Within the meaning and for the purposes envisaged in article 10 of Law
72/1983 and subsequent amendments and additions thereto, an indication is provid-
ed of assets still recognised in equity for which monetary revaluation has been car-
ried out, specifying the relative amounts:
The revaluations indicated in the table above had no effect on the income statement
for the year since they had already been fully amortised.
Financial fixed assets
Investments
The following table provides a breakdown of the "Equity investments" item and the
changes that occurred during the year:
The increases for the year refer to the 10% minority stake in the company “BEST
Hellas SA”, as referred to above. The decreases refer to shares in consortia no longer
held by the Group.
The "other changes" entry refers to the portion of profit for the year attributable to
the associated company Tecnotrans Bonfiglioli SA (K€ 540), net of dividends
received (K€ 150). The following table gives details of the associated company:
Bonfiglioli I Annual Report 2007 I
Company Tecnotrans Bonfiglioli SA
Location Barcelona (Spain)
Share Capital 2,175 K€
Share held 33.33%
Shareholders' equity at December 31, 2007 10,023 K€
Net Income at December 31, 2007 1,621 K€
Book value 3,341 K€
Current assets
Inventory
2007 2006 Changes
Raw materials, supplies and consumables 32,543 27,654 4,889
Work in progress and semi-finished goods 73,624 61,914 11,710
Finished goods and goods for resale 66,749 64,633 2,116
Advances 149 304 (155)
Total 173,065 154,505 18,560
The foregoing amounts are net of obsolescence reserve, made up as follows:
2007 2006 Changes
Raw materials and consumables 2,679 1,700 979
Semi-finished products 6,201 3,500 2,701
Finished goods 4,458 3,880 578
Total 13,338 9,080 4,258
Changes in the provision are shown below:
2007 2006
Opening value 9,080 7,233
Increases 4,527 2,190
Decreases (125) (111)
Other changes (144) (232)
Closing value 13,338 9,080
The increase in stock on hand is associated with the higher sales volumes and sales
forecasts for the first months of 2008.
84 85
Bonfiglioli I Annual Report 2007 I Notes to consolidated financial statements I
Description Original Rev. Rev. Rev. Other Netcost L. 72/83 L. 413/91 L. 342/2000 Rev. book
Land and buildings 85,929 406 2,264 — 686 89,285
Plant and machinery 144,039 357 — 25,061 309 169,766
Trade and industrial fixtures 51,895 408 — — — 52,303
Other tangible assets 13,580 33 — — — 13,613
Assets under construction and advances 11,766 — — — — 11,766
Total 307,209 1,204 2,264 25,061 995 336,733
Description Opening Increases Decreases Other Closingbalance changes balance
INVESTMENTS
- in associated companies 2,951 — — 390 3,341
- in other companies 10 19 (1) — 28
Total 2,961 19 (1) 390 3,369
Tax receivables can be broken down as follows:
2007 2006
Inland Revenue for VAT 12,404 8,449
Inland revenue for direct taxation — 276
Inland revenue for taxation subject to long-term refund 488 297
Other short-term receivables 15 —
Other long-term receivables — 40
Total 12,907 9,062
Changes in deferred tax assets were as follows:
2007 2006
Opening balance 10,403 7,557
Provisions 3,331 3,668
Utilizations (610) (817)
Change in consolidation area (463) —
Other changes (43) (5)
Closing balance 12,618 10,403
Other receivables can be broken down as follows:
2007 2006
Receivables from employees 114 56
Advances to suppliers 1,068 676
Deposits 1,102 37
Receivables for pensions fund insurance 1,419 1,106
Receivables for customs duties 334 587
Short-term receivables from social security institutions 106 42
Currency exchange gains 366 —
Guarantee deposits 193 152
Other short-term receivables 654 411
Other long-term receivables 32 3
Total 5,388 3,070
No receivables having a term exceeding five years were recorded.
Cash at banks and on hand
2007 2006 Changes
Bank and post office deposits 16,262 13,445 2,817
Cheques — 14 (14)
Cash and cash equivalents 47 46 1
Total 16,309 13,505 2,804
Receivables
Trade receivables
2007 2006 Changes
Trade receivables from customers 150,978 134,971 16,007
Receivables from associated companies 9,577 9,311 266
(minus) Bad debt reserve (5,512) (4,312) (1,200)
Total 155,043 139,970 15,073
The increase in receivables is mainly due to the increase in sales volumes, up by
22.5% with respect to the previous year.
Receivables from the associated company Tecnotrans Bonfiglioli SA are relative to
amounts due for the sale of goods and services, which was conducted at arm's length
conditions. Receivables from customers are recorded net of the bad debt reserve, a
breakdown of which is given below:
2007 2006
Opening value 4,312 3,566
Provisions 1,527 1,270
Utilizations (278) (458)
Change in consolidation area (34) 21
Other changes (15) (87)
Closing value 5,512 4,312
Breakdown of trade receivables by geographical area:
2007 2006
Italy 65,924 60,193
European Union 53,635 55,465
Other 35,484 24,312
Total 155,043 139,970
Other receivables
2007 2006 Changes
Tax receivables 12,907 9,062 3,845
Deferred tax assets 12,618 10,403 2,215
Receivables from others 5,388 3,070 2,318
Total 30,913 22,535 8,378
86 87
Bonfiglioli I Annual Report 2007 I Notes to consolidated financial statements IBonfiglioli I Annual Report 2007 I
For a comprehensive appraisal of the change in the Group net cash position we
invite you to refer to the section in which amounts due to banks are analysed, and
to the cash-flow statement.
Accrued income and prepaid expenses
2007 2006 Changes
Total 641 520 121
Breakdown:
2007 2006
Advertising 71 52
Insurance policies 66 106
Hire charges and rentals 294 171
Other 210 191
Total 641 520
Shareholders’ equity
At December 31, 2007 the overall share capital of € 30,000,000,00 was represented
by 30,000,000 ordinary shares with par value of € 1 each.
Reconciliation statement between net equity and income for the year atDecember 31, 2007 of Parent Company Bonfiglioli Riduttori SpA
Net income Shareholders' equity
Bonfiglioli Riduttori SpA statutory accounts 17,825 164,263
Accounting of the shareholders' equity and results of consolidated equity investments and associated companies instead of the book value in the financial statements of the Parent company, net of infra-group dividends 16,090 30,544
Bonfiglioli Hellas SA deconsolidation (301) —
Shareholders' equity and profit attributable to minority interests (697) (2,235)
Elimination of infra group transactions (4,493) (15,543)
Reversal of infra group contribution (3,459) (3,459)
Leasing agreement with financial method 671 3,518
Other minor items 9 (30)
Consolidated financial statements 25,645 177,058
88 89
Bonfiglioli I Annual Report 2007 I Notes to consolidated financial statements IBonfiglioli I Annual Report 2007 I
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the
Euro
.
2007 2006
Opening value 1,563 1,289
Provisions 269 441
Applications for payments to agents terminated during the year (45) (159)
Other changes — (8)
Closing value 1,787 1,563
Taxes and deferred taxes
2007 2006 Changes
Total 7,215 6,523 692
This caption can be broken down as follows:
Description 2007 2006 Changes
Deferred tax provision 7,115 6,423 692
Inland Revenue assessment risks provision 100 100 —
Total 7.215 6,523 692
With reference to the deferred taxation provision, changes in the year are broken
down as follows:
2007 2006
Opening value 6,423 5,793
Provisions for deferred taxation 2,483 1,708
Utilizations (1,100) (885)
Change in mean share (638) —
Change in consolidation area (47) —
Other changes (6) (193)
Closing value 7,115 6,423
The Inland Revenue assessment risks provision refers to the potential risk stemming
from a tax assessment of the parent company carried out at the end of 2006.
Minority interests
Minority Minority capital Minority profit/loss and reserves interests
Balance at December 31, 2006 1,040 5,745 6,785
2006 Net Income allocation (1,040) 1,040 —
Dividends’ distribution — (676) (676)
Currency conversion differences — (80) (80)
Acquisition of 50% in Bonfiglioli Transm. France SA — (4,336) (4,336)
Deconsolidation of Bonfiglioli Hellas SA — (155) (155)
Net income 2007 to minority interests 697 — 697
Balance at December 31, 2007 697 1,538 2,235
The caption originates from the attribution to minority shareholders of the portion
of shareholders' equity and net income deriving from the full consolidation of the
following companies:
Reserves for risks and charges
Pensions and similar liabilities
2007 2006 Change
Total 1,787 1,563 224
This item shows the sales agents' indemnity reserve, which saw the following
changes:
90 91
Bonfiglioli I Annual Report 2007 I Notes to consolidated financial statements IBonfiglioli I Annual Report 2007 I
Company 2007 2006
Income Capital Total Income Capital Totaland reserves and reserves
Bonfiglioli Vectron GmbH 39 133 172 36 97 133
Bonfiglioli Hellas SA — — — 27 128 155
Bonfiglioli Power Transmission Pty Ltd 584 998 1,582 399 874 1,273
Bonfiglioli Transmissions SA — — — 591 4,245 4,836
Bonfiglioli Skandinavien AB (1) 127 126 (7) 140 133
Bonfiglioli Power Transmission JSC 75 280 355 (6) 261 255
Total 697 1,538 2,235 1,040 5,745 6,785
and average data):
2007 2006 2007 2006 average average
Executives and managers 93 100 97 92
White collar and middle 948 722 835 701
Direct and indirect blue collar 1,358 1,253 1,306 1,136
Temporary staff 102 151 127 154
Total 2,501 2,226 2,364 2,083
Payables
Bonds
2007 2006 Changes
Bonds 6,460 7,296 835
This item shows the following payables:
• bond issued by the Parent Company on September 8, 2005 maturing on
December 31, 2020, which is liable to interest at an annual rate of 3.2%. The fore-
going loan, issued for a total of K€ 3,750, is recorded in the financial statements
at December 2007 for K€ 3,250 of which K€ 250 matures next year; the portion
of the debt maturing beyond the next year although within a period of five years
totals K€ 1,000, while the portion beyond five years totals K€ 2,000;
• bond issued by the subsidiary “Bonfiglioli USA Inc.” for a total of KUSD 5,000 to
back up the investment made in the construction of the new factory premises
completed during the year. At the end of 2007 the residual value recorded for the
loan is KUSD 4,725. The amount due next year totals KUSD 280 (K€ 109), the
debt falling due beyond next year but within a period of 5 years is KUSD 1,180
(K€ 802) while the portion due beyond five years totals KUSD 3,265 (K€ 2,218).
It is pointed out that the loan issued by “Bonfiglioli USA Inc.” is secured by the
company’s real estate.
Other reserves for risks and charges
2007 2006 Changes
Total 5,594 3,390 2,204
This caption can be broken down as follows:
Description Opening Provisions Utilizations Other Closingbalance changes balance
Product warranties 2,323 1,661 (95) (29) 3,860
Legal risks 200 373 — (5) 568
Other 867 576 (291) 14 1,166
Total 3,390 2,610 (386) (20) 5,594
The "Other" caption includes a "Company restructuring provision" allocated in the
amount of K€ 750 by the Parent Company at the end of 2007.
Employees severance indemnity reserve
2007 2006 Changes
Total 17,191 18,034 (843)
Changes in the severance indemnity fund in 2007 were as follows:
2007 2006
Opening balance 18,034 16,864
Provisions 725 3,431
Applications (1,555) (2,235)
Other changes (13) (26)
Closing balance 17,191 18,034
With reference to the parent company, in keeping with the provisions of Italian leg-
islation relating to companies with an employed work force exceeding fifty, with
effect from January 1st, 2007, sums allocated to the severance indemnity reserve are
paid by the company into the individual pension funds held by the organisations
indicated by each employee or by welfare bodies; the provisions caption therefore
reflects increases in the severance indemnity reserve relating to members of the
group for which a reserve of this kind is still held by the company.
The number of employees in the workforce during the year was as follows (spot
92 93
Bonfiglioli I Annual Report 2007 I Notes to consolidated financial statements IBonfiglioli I Annual Report 2007 I
Borrowings
2007 2006 Changes
Amounts due to banks - current account overdrafts and advances subject to collection 28,614 21,830 6,784
Amounts due to banks - loans 99,103 64,128 34,975
Total amounts due to banks 127,717 85,958 41,759
Due to other financial institutions 22,387 15,291 7,096
Total 150,104 101,249 48,855
(minus) Cash at banks and on hand (16,309) (13,505) (2,804)
Bonds 6,460 7,296 (836)
Net Cash Position 140,255 95,040 45,215
As shown also by the cash-flow statement, to which we invite you to refer, the
increase in short-term borrowings (Net Cash Position) is mainly attributable to the
liquidity absorbed by the significant investments made during the year (M€ 54) and
the increase in net working capital, both caused by the major increase in sales record-
ed in recent years.
Amounts due to banks include openings of credit regulated by current account
relationships, advances subject to collection, and import-export financing.
The caption Due to other financial institutions includes both the medium/long-
term loans received from institutions other than banks (Ministry of Industry pur-
suant to Law 46 – SIMEST Law 394) and also the residual portions of capital of leas-
ing contracts recorded in accordance with IAS no. 17.
The figure is recorded at face value with regard to the principal, whilst the inter-
est due at the end of the year is recorded on an accrual basis.
Changes occurring during the year with reference to bank loans and amounts due
to other financial institutions are detailed in the following table:
94 95
Bonfiglioli I Annual Report 2007 I Notes to consolidated financial statements IBonfiglioli I Annual Report 2007 I
Com
pany
Ope
ning
bala
nce
Dis
burs
alRe
paym
ents
Exch
ange
Clo
sing
With
inBe
yond
Beyo
ndG
uara
ntee
sra
tede
ltaba
lanc
e12
mon
ths
12m
onth
s5
mon
ths
DU
ETO
BAN
KS
Cur
rent
acco
unts
/adv
ance
s21
,830
25,9
57(1
9,31
2)13
928
,614
28,6
14—
—
Bonf
iglio
liRi
dutt
oriS
pA48
,443
32,0
00(9
,166
)—
72,2
7723
,765
42,0
826,
430
Tecn
oing
rana
ggiR
idut
tori
Srl
6579
0(1
07)
—74
886
385
277
(*)
Bonf
iglio
liTr
ans.
(Aus
t.)Pt
yLt
d4,
494
—(2
10)
(17)
4,26
71,
910
2,35
7—
(*)
Bonf
iglio
liU
SAIn
c.2,
239
——
(235
)2,
004
2,00
4—
—(*
)
Bonf
iglio
liD
euts
chla
ndG
mbH
1,25
05,
800
(42)
—7,
008
1,48
91,
531
3,98
8(*
)
Bonf
iglio
liVe
ctro
nG
mbH
175
—(1
40)
—35
35—
—
Bonf
iglio
liTr
ansm
issio
nPv
tLt
d2,
754
2,61
5(6
86)
114,
694
2,59
02,
104
—(*
)
Bonf
iglio
liD
rives
(Sha
ngha
i)C
o.Lt
d46
021
9(4
73)
—20
620
6—
—(*
)
Bonf
iglio
liSl
ovak
iaSr
o2,
510
3,70
5(5
58)
495,
706
501
4,77
243
3(*
)
Bonf
iglio
liPo
wer
Tran
smiss
ion
JSC
1,73
899
6(6
68)
922,
158
639
1,51
9—
(*)
Tota
ldue
toba
nks
85,9
5873
,082
(31,
362)
3912
7,71
761
,839
54,7
5011
,128
DU
ETO
OTH
ERFI
NA
NC
IAL
INST
ITU
TIO
NS
Bonf
iglio
liRi
dutt
oriS
pa13
,398
9,75
5(4
,314
)—
18,8
392,
940
12,4
713,
428
Bonf
iglio
liIta
liaSp
a—
1,33
3(1
43)
—1,
190
347
843
—
Bonf
iglio
liTr
ansm
issio
nPv
tLt
d1,
677
664
—8
2,34
9—
575
1,77
4
Bonf
iglio
liTr
ans.
(Aus
t.)Pt
yLt
d30
—(2
1)—
99
——
Bonf
iglio
liTr
ansm
issio
nSA
186
—(1
86)
——
——
—
Tota
ldue
toot
her
finan
cial
inst
itutio
ns15
,291
11,7
52(4
,664
)8
22,3
873,
296
13,8
895,
202
TOTA
L10
1,24
984
,834
(36,
026)
4715
0,10
465
,135
68,6
3916
,330
(*)
Pare
ntC
ompa
nygu
aran
tees
Deferred income and accrued liabilities
2007 2006 Changes
Total 975 528 447
This item can be broken down as follows:
2007 2006
Interest payable on loans 782 225
Insurance policies 64 128
Exchange rate fluctuations 83 73
Other 46 102
Total 975 528
Memorandum accountsThe following memorandum accounts of the consolidated companies are included
at the foot of the balance sheet:
2007 2006 Changes
Total 6,168 4,652 1,516
Guarantees granted by third parties refer to sureties issued on behalf of the Group
by banks for tax rebate applications, medium-/long-term guarantees in favour of
banks for the concession of loans, and in favour of third parties in relation to con-
tractual undertakings or debts.
Trade payables
2007 2006 Changes
Advances 2,526 798 1,728
Trade payables due to suppliers 136,202 128,780 7,422
Amounts due to associated companies 27 29 (2)
Total 138,755 129,607 9,148
Breakdown of trade payables by geographical area:
2007 2006
Italy 115,525 103,379
European Union 14,173 14,320
Other 9,057 11,908
Total 138,755 129,607
Other payables
2007 2006 Changes
Tax payables 5,696 9,785 (4,089)
Amounts due to welfare and social security 5,323 4,408 915
Other payables 15,154 11,057 4,097
Total 26,173 25,250 923
Tax payables include the following items:
2007 2006
Direct taxes 3,291 6,244
Withholding tax and other 2,405 3,541
Total 5,696 9,785
"Other payables" can be broken down as follows:
2007 2006
Amounts due to employees 10,693 9,372
Deposits — 500
Payables from acquisition shareholding France 3,559 —
Other 902 1,185
Total 15,154 11,057
96 97
Bonfiglioli I Annual Report 2007 I Notes to consolidated financial statements IBonfiglioli I Annual Report 2007 I
Services
2007 2006 Changes
Total 137,667 117,751 19,916
This caption includes outsourced processes in the amount of K€ 70,237 (K€ 61,799
in 2006), costs for commission, transport, advertising and other commercial servic-
es, remuneration of the Board of Directors and auditing bodies, insurance policies,
consultancy, bank charges, electrical power, external labour, logistics and security
services, travel expenses and other minor items.
Use of third party assets
2007 2006 Changes
Total 4,052 3,893 159
This item mainly concerns the lease of IT systems and motor vehicles, rentals for the
lease of industrial plants and external depots, and royalties paid to third parties.
Personnel
Personnel costs can be broken down as follows:
2007 2006 Changes
Salaries and wages 69,208 63,387 5,821
Social security contributions 18,474 16,652 1,822
Employees severance indemnity 4,135 3,431 704
Other costs 81 126 (45)
Total 91,898 83,596 8,302
The increase in personnel costs is linked both to the strengthening of the workforce,
with an increase of more than 300 staff during the year, and increases in the cost of
labour recorded following contractual renewals and the normal dynamics of compa-
ny salaries.
Income statement
Net revenues from sales and services
2007 2006 Changes
Total 610,772 498,635 112,137
Sales, which were up by 22.5% compared to the previous year, were made in the fol-
lowing geographical areas:
2007 % 2006 %
Italy 165,583 27.11 144,893 29.06
Europe 253,486 41.50 213,788 42.88
Overseas 191,703 31.39 139,954 28.06
Total 610,772 100.00 498,635 100.00
Other revenues and income
2007 2006 Changes
Total 5,629 3,900 1,729
This item can be broken down as follows::
2007 2006
Refund for packing and transport costs 2,249 1,798
Refunds for defective processing/material 894 62
Capital gains 470 213
Sale of machining swarf and scrap 1,321 790
Other 695 1,037
Total 5,629 3,900
Raw materials, supplies, consumables and goods for resale
2007 2006 Changes
Total 326,302 270,809 55,493
The increase in costs for purchases, when considered alongside the change in
inventories and the increase in outsourced processes, reflects the normal increase
in consumption associated with the significant rise in sales and changes in the mix
of products sold.
98 99
Bonfiglioli I Annual Report 2007 I Notes to consolidated financial statements IBonfiglioli I Annual Report 2007 I
This caption can be broken down as follows:
2007 2006
Interest on amounts due to banks 1,741 684
Interest payable on loans 4,518 2,885
Interest payable on leasing contracts 665 377
Interest payable on bonds 189 118
Discounts, premiums & expenses on derivatives (IRS & forward contracts) 527 444
Other 161 12
Total 7,801 4,520
The increase recorded during the year is mainly attributable to the following reasons:
• negative trend of market interest rates: 3M Euribor rate up from 3.7% in January
2007 to 4.8% in December 2007 (+29%);
• increase in average indebtedness (in terms of Net Financial Position).
Exchange rate gains/losses
2007 2006 Changes
Total (194) (318) 124
This amount can be broken down as follows:
2007 2006
Currency exchange gains 2,174 2,650
Currency exchange losses (2,368) (2,968)
Total (194) (318)
Adjustments of financial assets
2007 2006 Changes
Total 540 277 264
This caption concerns the portion of profit for the year attributable to the associat-
ed company "Tecnotrans Bonfiglioli SA".
Depreciation, amortisation and write-downs
2007 2006 Changes
Amortisation of intangible fixed assets 3,713 2,992 721
Depreciation of tangible fixed assets 16,081 14,081 2,000
Provision for bad debts 1,527 1,270 257
Total 21,321 18,343 2,978
Other provisions
2007 2006 Changes
Total 2,041 649 1,392
Mainly reflects allocations made in the year to product warranty and legal risk provi-
sions.
Other operating expenses
2007 2006 Changes
Total 4,382 4,089 293
This caption is a residual item and it includes expenses and charges that cannot be
classified under the previous headings. It relates to general production, commercial,
and minor administrative expenses, capital losses of an ordinary nature, and other
minor items.
Financial income
2007 2006 Changes
Total 453 296 157
This caption can be broken down as follows:
2007 2006
Bank interest receivable 435 287
Commercial and other interest receivable 18 9
Total 453 296
Interest payable and financial expenses
2007 2006 Changes
Total 7,801 4,520 3,281
100 101
Bonfiglioli I Annual Report 2007 I Notes to consolidated financial statements IBonfiglioli I Annual Report 2007 I
2007 2006
Directors 1,586 1,596
Statutory Auditors 355 263
Total 1,941 1,859
Derivative financial instruments
In the drive to hedge financial risks the Group has entered into the following deriv-
ative contracts:
Underlying Interest rates and debt securities Exchange rates
Notional value Fair value Notional value Fair valueType of transaction /000 /000
Pos. Neg. Pos. Neg.
Unlisted financial derivatives
Forward contracts
Sale of USD 21,000 n/a n/a
Sale of GBP 2,000 n/a n/a
Sale of AUD 3,250 n/a n/a
Purchase of Yen 500,000 n/a n/a
Interest rates swap (Euro) 26,000 63
Total 63 n/a n/a
Exchange risk hedging operations are exclusively related to ordinary non-speculative
hedge management in relation to receivables and payables stated in foreign curren-
cy, as described in the specific section of the Management Report to which we invite
you to refer for more information.
Likewise, interest rate swaps were performed in relation to medium-/long-term
floating rate loans in order to hedge partly against predicted increases in the market
lending interest rate.
May 28, 2008
Board of Directors’ Chairman
Clementino Bonfiglioli
Extraordinary income and expenses
2007 2006 Changes
Net Total 1,753 (284) 2,037
Extraordinary income and expenses includes, in particular, the following items:
2007 2006
Capital gains 2,450 —
Contingent assets 737 619
Contingent liabilities (872) (394)
Taxes from past years — (9)
Provision for tax risks — (100)
Provision to funds (562) (400)
Total 1,753 (284)
The extraordinary capital gains relate to the sale by the parent company of the fac-
tory premises situated in San Lazzaro (BO) for 2.1 M€ and the sale of the sharehold-
ing in the Greek company that left the consolidation area for 0.3 M€.
Contingent assets mainly concern insurance refunds and tax rebates.
Current, deferred and prepaid taxes
2007 2006 Changes
Current taxes (20,827) (17,178) (5,128)
Deferred taxes (745) (684) (280)
Prepaid taxes 2,258 2,840 1,440
Total (19,314) (15,022) (3,968)
Further information
Before closing this report, in completion of the information required by article 38 of
Legislative Decree 127/1991 and other provisions of the Italian Civil Code, we here-
by provide the following further information:
Remuneration paid to Directors and Statutory Auditors
During the year the following amounts were disbursed by way of remuneration for
the Group Directors and Statutory Auditors:
102 103
Bonfiglioli I Annual Report 2007 I Notes to consolidated financial statements IBonfiglioli I Annual Report 2007 I
Bonfiglioli I Annual Report 2007 I Independent Auditors’ Report I
Independent Auditors’ Report
104 105
Bonfiglioli I Annual Report 2007 I
Bonfiglioli I Annual Report 2007 I
106 107
Bonfiglioli I Annual Report 2007 I Independent Auditors’ Report I