Yoox Group Semestrale 2011

YOOX GROUP
CONSOLIDATED INTERIM FINANCIAL STATEMENTS AT JUNE 30, 2011
CONSOLIDATED INTERIM FINANCIAL STATEMENTS AT JUNE 30, 2011 | 1
YOOX GROUP
YOOX GROUP
INDEX
Management and control bodies ............................................................................................................................. 5 Directors interim report ........................................................................................................................................... 7 Condensed consolidated interim financial statements at June 30, 2011 YOOX Group ........................................ 37 Certification of the condensed consolidated interim financial statements pursuant to article 81-ter of CONSOB Regulation no. 11971 of May 14, 1999, as amended ........................................................................... 95 Independent auditors report on the limited audit of the condensed consolidated interim financial statements ............................................................................................................................................................. 96
YOOX GROUP
YOOX GROUP
MANAGEMENT AND CONTROL BODIES
BOARD OF DIRECTORS
Chairman and Chief Executive Officer Federico Marchetti
BOARD OF STATUTORY AUDITORS

Regular Auditors Filippo Tonolo Chairman David Reali Luca Sifo Alternate Auditors Nicola Bottecchia Edmondo Maria Granata
Directors Raffaello Napoleone1 Mark Evans Catherine Grardin1 2 3 Massimo Giaconia1 2 3 Elserino Piol2 Stefano Valerio3
INDEPENDENT AUDITORS
KPMG S.p.A.
SUPERVISORY BODY L.D. 231/01

Rossella Sciolti Chairwoman Gerardo Diamanti Pietro Tagliati
DIRECTOR IN CHARGE OF PREPARING CORPORATE ACCOUNTING DOCUMENTS

Francesco Guidotti
INTERNAL CONTROL MANAGER

Pietro Tagliati
1 2 3
Member of the Internal Control Committee. Member of the Remuneration Committee. Member of the Directors Appointments Committee.
YOOX GROUP
YOOX GROUP
DIRECTORS INTERIM REPORT
YOOX GROUP
YOOX GROUP
TABLE OF CONTENTS
INTRODUCTION................................................................................................................................................ 11 Multi-brand business line .................................................................................................................................. 12 Mono-brand business line ................................................................................................................................ 13 REVENUES AND PROFITABILITY ................................................................................................................... 15 Methodology note ............................................................................................................................................. 15 Accounting policies ........................................................................................................................................... 15 Reclassified consolidated income statement ................................................................................................... 16 Analysis of net revenues and operating profit by business line ....................................................................... 18 Consolidated net revenues by geographical area ............................................................................................ 19 MARKETING & COMMUNICATIONS ................................................................................................................ 20 INVESTMENTS.................................................................................................................................................. 22 FINANCIAL MANAGEMENT.............................................................................................................................. 22 Consolidated statement sheet and financial position ....................................................................................... 22 Debt/Consolidated net financial position .......................................................................................................... 23 INFORMATION FOR INVESTORS .................................................................................................................... 25 RISK FACTORS ................................................................................................................................................. 27 INFORMATION CONCERNING MEASURES TO PROTECT PRIVACY .......................................................... 28 PERSONAL DATA PROTECTION CODE.......................................................................................................... 28 TAX MATTERS................................................................................................................................................... 28 LEGAL MATTERS .............................................................................................................................................. 28 HUMAN RESOURCES ...................................................................................................................................... 29 THE ENVIRONMENT ........................................................................................................................................ 31 CORPORATE GOVERNANCE .......................................................................................................................... 32 SUBSEQUENT EVENTS ................................................................................................................................... 34 BUSINESS OUTLOOK ...................................................................................................................................... 35 ATTACHMENTS TO THE REPORT ON MANAGEMENT PERFORMANCE ................................................... 36
YOOX GROUP
YOOX GROUP
DIRECTORS REPORT
INTRODUCTION
Group revenues saw a sharp increase in the first half of 2011, both in the Multi-brand and Mono-brand business lines, in spite of the depreciation of the dollar, which in part influenced the growth of the North American market, which is now the Groups second market. In line with the Groups strategy, financial resources were mainly used for procurement and investments to deal with future growth. In the Mono-brand business line, three Online Stores were launched on June 30, 2011, y-3store.com, followed by the launch of the Online Store brunellocucinelli.com in the first quarter, both mainly active in Europe, the U.S. and Japan, and bikkembergs.com in June 2011, operating in Europe, taking the Groups active Online Stores to 26 at June 30, 2011. As highlighted in subsequent events, the Dolce & Gabbana Online Store was launched on July 13, 2011 following a contract signed by Dolce & Gabbana Industria S.p.A. and YOOX S.p.A. on July 12, 2011. The contract is for five years until June 30, 2016. At the time of writing, dolcegabbanastore.com Powered by YOOX Group is mainly active in Europe, the U.S. and Japan, and in August 2011 it will expand into the Chinese market. The new Online Store armani.com Powered by YOOX Group will be launched in the second half of 2011, following an agreement signed by Giorgio Armani S.p.A. and YOOX S.p.A. on June 30, 2011. The agreement will be for five years until August 31, 2016. armani.com will be mainly active in Europe, the U.S., Japan and China, and will host the Giorgio Armani, Armani Collezioni, Armani Junior, EA7, Emporio Armani and Armani Jeans brands. During the third quarter of 2011, the Online Store moncler.com will be launched in Europe and the U.S. following a contract signed by Industries S.p.A. and YOOX S.p.A. in May 2011. Several partnerships were also extended beyond their original duration in the first few months of 2011. In March 2011, Valentino S.p.A. and YOOX S.p.A. renewed their collaboration agreement for the management of the valentino.com Online Store in Europe, the United States and Japan for a further 5 years, until February 28, 2016. In May, Marni International S.A., Marni S.r.l. and YOOX S.p.A. also renewed their collaboration agreement for the management of the marni.com Online Store in Europe, the United States, China and Japan for a further 5 years. Lastly, in February 2011, the diesel.com Online Store expanded its desktop and mobile (Keitai) lines into the Japanese market and the Marni Online Store and the Bally Online Store expanded into the Chinese market in March and May respectively, taking the number of Online Stores Powered by YOOX Group in this country to three, including emporioarmani.cn. The Jil Sander Navy line was activated within the jilsander.com Online Store in January, and the Just Cavalli line was activated within the robertocavalli.com Online Store in February. The first half of 2011 saw the launch of a number of partnerships and initiatives for the Multi-brand business line, which continues its sustained growth. This year, thecorner.com will be the internet retailer for the prestigious CFDA/Vogue Fashion Fund (CVFF) initiative promoted by the Council of Fashion Designers of America and by Vogue America, aimed at rewarding talented American designers. Further information on yoox.com and thecorner.com partnerships and special projects can be found in the Marketing Communications section. The Group plans to continue its present strategy of steady growth on a global scale with the objective of expanding internationally, both by strengthening the markets in which it operates and by seizing new opportunities to expand its geographical reach. The Group launched the Chinese market at the end of 2010 with the opening of the first Online Store for the Mono-brand business line. This was followed by another two stores in the first half of the year and there are further launches planned for the second half of the year, including the expansion of thecorner.com.cn. Penetration in the North American market continues, recording sustained rates of growth and partly affected by the depreciation of the dollar; the Japanese market is also continuing to grow in spite of the earthquake and the tsunami in March 2011, which did not affect the Groups operating capacity. In April and May 2011, with the aim of supporting global growth and making their offering available to an increasing number of potential clients, the Group opened new geographic markets, taking the number of countries served to more than 100. In order to oversee the Asia-Pacific area countries with a more localised approach, a branch was set up in Hong Kong, 100% controlled by YOOX S.p.A. and with an office and local logistics centre. Later on, the logistics hub will be equipped with a digital production studio to provide photographic services and the cataloguing of locally
YOOX GROUP
procured products. China and Japan, on the other hand, will continue to be served by their respective local logistics centres. The Group intends to continue on the path to growth in the coming years, supporting the global development of its Mono-brand partners, yoox.com and thecorner.com, and continuing to improve the service offered to its customers. With this in mind, YOOX has launched an important project relating to the automation of the central logistics platform, which will also involve an increase in operational efficiency levels and a consequent improvement in expected profitability in the future. The new automated techno-logistics platform, designed ad hoc for the specific requirements of the e-commerce fashion sector within the current Logistics Centre structure (Bologna), will be capable of supporting the Groups forecast growth until 2016 thanks to the considerable increase in the capacity for moving and storing products, thereby avoiding onerous transfer costs. The unique nature of this project, which puts YOOX, once again, at the forefront of its sector, is that it combines the use of the most modern automation systems with RFid (Radio Frequency Identification) technology. The project has been developed within an eco-sustainable framework, in line with Group policies. All the containers used in the plant are made from recyclable material and are 100% recyclable. The technology used allows a considerable energy saving compared with the traditional process. As from January 2011, BSL Geodis, an SNCF Group company and one of the leading global suppliers of logistic services in Europe, became YOOXs partner in the development of this project. Automation of the technical and logistical platform is due to be completed ahead of schedule, at the end of August 2011. In fact since June the first orders have already been processed through the new automated system. With the aim of consolidating the Groups multi-channel strategy, the technology team will be focusing in the first half of 2011 on implementing new technical solutions for the development of web-applications for the Groups online stores. The web-application for the corner.com was launched in April for iPhone and Android, the first Group application to incorporate a fast checkout system on the mobile channel. The web-application for several Mono-brand Online Stores was also launched in the months that followed and the new yoox.com native application for Android was launched on May 9, 2011. The mobile solution (Keitai) launched in February for diesel.com, highly localisation sensitive to the commercial issues of Diesel Japan, is also significant. Attention has also been focused on new rapidly growing channels such as tablets, specifically the iPad, guaranteeing full compatibility with all new Mono-brand Online Stores launched in the period, in addition to completing work to ensure the compatibility of the existing major stores. The presentation structure and navigation of thecorner.com has also been revised in order to optimise the benefits from the iPad platform. Release 9.5 of yoox.com was launched on June 10, 2011 as part of the campaign to celebrate the 11th birthday of yoox.com, further reinforcing the integration between yoox.com and social networks. New functions were introduced within MYOOX, the area dedicated to registered users, which allow users to share their favourite products and styles with their Facebook friends, in order to improve the purchasing experience and attract potential new customers. Multi-brand business line The Groups Multi-brand activities are divided between the two Online Stores owned by the Company: (i) yoox.com, which to date generates the majority of revenues of the Multi-brand business line; (ii) thecorner.com, which was opened in the first half of 2008. The Group has based its own growth on yoox.com and, on the basis of the technological, operational and commercial expertise it has acquired over the years, it has subsequently developed the Mono-brand business line and thecorner.com. As an Online Store, yoox.com has been operational since June 2000, and offers a vast array of fashion and design products. The majority of products offered on yoox.com are clothing, footwear and fashion accessories drawn from the collections of well-known brands for the corresponding season of the previous year at reduced prices. To complete its select offerings, yoox.com offers collections made exclusively for sale through yoox.com from major designers, as well as vintage garments, special editions from fashionable designers and an original selection of design objects.
YOOX GROUP
thecorner.com is an Online Store launched in February 2008 to market the current seasons collections of established brands and exclusive and/or handcrafted brands, characterised by relatively limited distribution, and most of which are being made available online for the first time. The products sold on thecorner.com carry prices in line with those found in the traditional channel for the same clothing and accessories. Initially, thecorner.com offered mens clothing only but was extended to include womens clothing in September 2009. thecorner.com is a virtual space containing mini-stores dedicated to each brand, designed to recreate the style, the atmosphere and the world of ideas evoked by the brand. Customers can browse for clothes, shoes and accessories while immersed in exclusive multimedia content and images from advertising campaigns and fashion shows. In the first half of 2011, the Multi-brand business line recorded a monthly average of about 4.9 million unique visitors4. Mono-brand business line Since 2006 the Group has operated in the Mono-brand business line, which involves the design, setting up and exclusive management of Mono-brand Online Stores for some of the worlds leading fashion brands with which it works together closely. Products available in the Online Stores are sold and invoiced directly to end customers by YOOX. The Group offers its services as a key Strategic Partner for major fashion companies boasting internationally renowned brands. Thanks to its years of experience, the Group is able to manage the entire online shopping process for these companies. All Online Stores display the wording Powered by YOOX Group, which is recognised as the service quality guarantee offered by YOOX. Furthermore, the Group offers its Partners consulting and web marketing investment management services, both when new Online Stores are launched and when they are operational. In the first half of 2011, the Mono-brand business line recorded a monthly average of about 4.3 million unique visitors. At June 30, 2011, there were 26 operating Online Stores, three of them set up in 2006-2007, seven in 2008, six in 2009, seven in 2010 and three in the first half of 2011. Specifically: marni.com, the Online Store of the Marni brand, operational since September 2006 mostly active in Europe, the U.S. and Japan and operational in China since March 2011; emporiorarmani.com, the Online Store of the Emporio Armani and Armani Jeans brand, operational in the U.S. since August 2007; its operations were expanded, mainly to major markets in Europe, in June 2008, and to Japan in July 2009 and China in November 2010; diesel.com, the Online Store of Diesel and the Diesel Black Gold brand, operational mainly in Europe and the U.S. since November 2007 and in Japan since February 2011; cpcompany.com, the Online Store of the CP Company brand, operational since February 2008 mostly in the main European markets, the U.S. and Japan; stoneisland.com, the Online Store of the Stone Island brand, operational since March 2008 mostly in the main European markets, the U.S. and Japan; valentino.com, the Online Store of the Valentino and Red Valentino brands, operational since April 2008 in the U.S. and as of March 2009 in the main European markets and Japan; misssixty.com, the Online Store of the Miss Sixty brand, operational since September 2008, mainly in Europe and the U.S.; costumenational.com, the Online Store of the Costume National and CNC Costume national brands, operational since September 2008, mainly in Europe, the U.S. and Japan; extended to the CNC Costume National brand in September 2010;
Monthly unique visitor is defined as a visitor who opened at least one browser session to visit the online store during the month. The figure reported is calculated as the average of monthly unique visitors for the period concerned.
YOOX GROUP
energie.it, the Online Store of the Energie brand, operational since October 2008, mainly in Europe and the U.S.; emiliopucci.com, the Online Store of the Emilio Pucci brand, operational since November 2008, mostly in the main European markets, the U.S. and Japan; moschino.com, the Online Store of the Moschino, Love Moschino and MoschinoCheapAndChic brands, active since February 2009 mainly in Europe and the U.S.; bally.com, the Online Store of the Bally brand, operational since February 2009, mainly in Europe and the U.S. and operational in China since May 2011; dandgstore.com, the Online Store of the D&G brand, operational since June 2009, mainly in Europe, the U.S. and Japan; dsquared2.com, the Online Store of the Dsquared2 brand, operational since September 2009, mainly in Europe, the U.S. and Japan; jilsander.com, the Online Store of the Jil Sander and Jil Sander Navy brand, operational since September 2009 mainly in Europe, the U.S. and Japan; extended to the Jil Sander Navy brand in January 2011; robertocavalli.com, the Online Store of the Roberto Cavalli and Just Cavalli brands, operational since November 2009 mainly in Europe, the U.S. and Japan; extended to the Just Cavalli brand in February 2011; coccinelle.com, the Online Store of the Coccinelle brand, operational since February 2010, mainly in Europe, the U.S. and Japan; giuseppezanottidesign.com, the Online Store of the Giuseppe Zanotti brand, operational since February 2010, mainly in Europe, the U.S. and Japan; napapijri.com, the Online Store of the Napapijri brand, operational since March 2010, mainly in Europe and the U.S.; albertaferretti.com, the Online Store of Alberta Ferretti and Philosophy by the Alberta Ferretti brand, active since March 2010 mainly in Europe, the U.S. and Japan; zeishouse.com, the Online Store of Zeis Excelsa S.p.A for the sale of Merrell, Cult, Bikkembergs, Docksteps, Harley-Davidson Footwear, Samsonite Footwear, Sebago and Virtus Palestre footwear brands, operational since September 2010 in Europe; maisonmartinmargiela.com, the Online Store of the Maison Martin Margiela brand, operational since October 2010, mainly in Europe, the U.S. and Japan; zegna.com, the Online Store of the Ermenegildo Zegna and Zegna Sport brands, operational since December 2010 mainly in Europe, the U.S. and Japan; y-3store.com, the Online Store of the Y3 brand, operational since March 2011, mainly in Europe, the U.S. and Japan; brunellocucinelli.com, the Online Store of the Brunello Cucinelli brand, operational since March 2011, mainly in Europe, the U.S. and Japan; bikkembergs.com, the Online Store of the Dirk Bikkembergs Sport Couture and Bikkembergs brands, operational since June 2011, mainly in Europe.
As highlighted in subsequent events, the dolcegabbanastore.com Online Store was also launched in July. At the time of writing, agreements have also been signed for the launch of the moncler.com Online Store and the new armani.com Online Store and an agreement has also been signed to extend the dolcegabbanastore.com Online Store to the Chinese market. In addition, negotiations are in progress with several other renowned fashion brands that plan to offer their collections on the internet.
YOOX GROUP
REVENUES AND PROFITABILITY

Methodology note This Directors Report contains information relating to the consolidated revenue, the profitability, the statement sheets and financial position of the YOOX Group as of June 30, 2011. Unless otherwise indicated, all amounts are expressed in thousands of Euro. The comparisons between this report and the Condensed Consolidated Interim Financial Statements have been made with regard to the corresponding period of the previous financial year and/or the information at December 31, 2010. For reasons of clarity, it should be pointed out that the percentage differences and variations for the different entries indicated have been calculated at their precise value. It should also be noted that possible differences that may be found in some tables are due to rounding off amounts expressed in thousands of Euro. The Parent Company YOOX S.p.A. is referred to by its full name or simply as the Company; the Group reporting directly to it appears as YOOX Group or simply as the Group; when notes refer to subsidiaries, full company names are used. All subsidiaries of YOOX S.p.A. operate in the Groups business sector or, in any event, perform activities that are consistent with those of the Group. YOOX S.p.A. manages its subsidiaries with reference to geographical operating area. Therefore, for more accurate information on geographical areas, please refer to the information by business line and, in general, to information provided in the condensed consolidated interim financial statements for comments about the main events relating to subsidiaries. Accounting policies This Group interim financial report at June 30, 2011 has been drafted in compliance with the provisions of article 154-ter, paragraph 5 of Legislative Decree 58/98 T.U.F. and later amendments and additions, in compliance with article 2.2.3 of the Stock Exchange Regulations. The accounting standards, the consolidation standards and evaluation criteria used in preparing the interim financial report at June 30, 2011 for the Group are consistent with the standards used to draw up the consolidated financial statement at December 31, 2010; they are posted on the website www.yooxgroup.com under the Investor Relations section. The accounting policies used by the Group are consistent with those of the International Financial Reporting Standards (IFRS) endorsed by the European Union and the application of Legislative Decree 38/2005 and other CONSOB regulations governing financial statements. These financial statements were prepared on a cost basis (with the exception of derivative financial instruments, held-for-sale financial assets and available-for-sale financial instruments, which are stated at their current value) and on the assumption that the business is ongoing. The income statements for the Group, presented in the following pages of the current Directors Interim Report, have been reclassified in a way deemed by management to be useful for reporting interim indicators of profitability such as gross profit, EBITDA Pre Corporate Costs, EBITDA, EBITDA without incentive plans and operating profit. Some of the above interim profitability indicators are not recognised as accounting measures under the IFRS endorsed by the European Union, and their calculation may not be standard. Group management uses these indicators to monitor and measure the Groups performance. Management believes that these indicators are an important measure of operating performance in that they are not affected by the various criteria used to calculate taxes, the amount and characteristics of invested capital and the related amortisation and depreciation methods. The criterion used by the Group to calculate these indicators might not be consistent with that adopted by other groups or companies, and accordingly, the resulting figures may not be comparable.
YOOX GROUP
Reclassified consolidated income statement Reclassified consolidated income statement for the second quarter of 2011:
Thousand Euro Consolidated net revenues Cost of goods sold 5 Gross Profit % of consolidated net revenues Fulfilment costs Sales and marketing costs 6 EBITDA Pre Corporate Costs % of consolidated net revenues General & administrative expenses Other income and expenses 7 EBITDA % of consolidated net revenues Depreciation and amortisation Non-recurring expenses Operating profit % of consolidated net revenues Financial income Financial expenses Profit before tax % of consolidated net revenues Taxes Consolidated net income for the period % of consolidated net revenues EBITDA excluding Incentive Plan 10 Costs % of consolidated net revenues 2Q 2011 61,546 (37,481) 24,064 39.1% (7,303) (7,187) 9,574 15.6% (6,144) 164 3,594 5.8% (1,299) 2,295 3.7% 8 (27) 9 12 2,280 3.7% (1,020) 1,259 2.0% 2Q 2010 46,269 (27,853) 18,416 39.8% (5,045) (5,845) 7,525 16.3% (4,648) 50 2,928 6.3% (834) 2,093 4.5% 428 (321) 2,200 4.8% (839) 1,362 2.9% Change 15,277 (9,628) 5,649 (2,257) (1,342) 2,049 (1,497) 114 666 (465) 201 (455) 333 79 (182) (102) 33.0% 34.6% 30.7% 44.7% 23.0% 27.2% 32.2% >100% 22.8% 55.7% 9.6% >100% >100% 3.6% 21.7% -7.5%
4,527 7.4%
3,966 8.6%
561
14.1%
An increase of 33.0% in consolidated net revenues was recorded in the second quarter of 2011 compared with the second quarter of the previous year, with the fluctuation in foreign exchange rates having a negative effect on sales denominated in foreign currency (+36.9% at constant rates). Profitability, measured in terms of EBITDA (gross operating margin) was Euro 3,594 thousand, recording growth of 22.8% compared with the second quarter of 2010. EBITDA excluding Incentive Plans stood at Euro 4,527 thousand, equal to profitability of 7.4%. The consolidated net income for the second quarter of 2011 is Euro 1,259 thousand, with profitability on consolidated net revenues of 2.0%. Compared with the second quarter of the previous year it is affected by increased amortisation, by the performance of financial management and by the Groups increased tax burden.
8 9 10
Gross profit is profit before fulfilment costs, sales and marketing costs, general expenses, other operating income and expenses, depreciation and amortisation, non-recurring expenses, financial income and expenses and income taxes. Since gross profit is not recognised as an accounting measure under Italian GAAP or the IFRS endorsed by the European Union, its calculation might not be standard, and the measurement criterion adopted by the Group might not be consistent with that adopted by other groups, and accordingly, the resulting figures may not be comparable. EBITDA Pre Corporate Costs is defined as profit before general expenses, other operating income and expenses, depreciation and amortisation, nonrecurring expenses, financial income and expenses and income taxes. Since EBITDA Pre Corporate Costs is not recognised as an accounting measure under Italian GAAP or the IFRS endorsed by the European Union, its calculation might not be standard, and the measurement criterion adopted by the Group might not be consistent with that used by other groups. Accordingly, the resulting figures may not be comparable. EBITDA Pre corporate costs correspond to the sector operating result. EBITDA is profit before depreciation and amortisation, non-recurring expenses, financial income and expenses and income taxes. Since EBITDA is not recognised as an accounting measure under Italian GAAP or the IFRS endorsed by the European Union, its calculation might not be standard. Group management uses EBITDA to monitor and measure the Groups performance. Management believes that EBITDA is an important measure of operating performance in that it is not affected by the various criteria used to calculate taxes, the amount and characteristics of invested capital and the related amortisation and depreciation methods. The criterion used by the Group to calculate EBITDA might not be consistent with that adopted by other groups, and accordingly, the resulting figure may not be comparable with those calculated by such groups. Following the valuation of the balance sheet items in currencies other than Euro, the unrealised profit on foreign exchange decreased compared to the previous quarter. Following the valuation of the balance sheet items in currencies other than Euro, the unrealised losses on foreign exchange decreased compared to the previous quarter. The EBITDA excluding the Incentive Plans is defined as the EBITDA net of costs relating to the Stock Option Plans and Company Incentive Plans. For more details, refer to Annex 1 of this Report, which describes the impact of these costs on the reclassified consolidated income statement.
YOOX GROUP
Reclassified consolidated income statement for the first half 2011:

Thousand Euro Consolidated net revenues Cost of goods sold Gross Profit % of consolidated net revenues Fulfilment costs Sales and marketing costs EBITDA Pre Corporate Costs % of consolidated net revenues General & administrative expenses Other income and expenses EBITDA % of consolidated net revenues Depreciation and amortisation Non-recurring expenses Operating profit % of consolidated net revenues Financial income Financial expenses Profit before tax % of consolidated net revenues Taxes Consolidated net income for the period % of consolidated net revenues EBITDA excluding Incentive Plan Costs % of consolidated net revenues Period to June 30, 2011 131,237 (82,161) 49,076 37.4% (14,376) (14,660) 20,040 15.3% (12,016) (139) 7,885 6.0% (2,763) 5,122 3.9% 549 (742) 4.930 3.8% (2,014) 2,916 2.2% Period to June 30, 2010 96,554 (59,445) 37,108 38.4% (10,003) (11,409) 15,696 16.3% (8,623) (240) 6,834 7.1% (1,526) 5,308 5.5% 843 (539) 5.612 5.8% (2,273) 3,339 3.5% Change 34,683 (22,715) 11,968 (4,373) (3,251) 4,344 (3,394) 101 1,051 (1,237) (186) (293) (203) (682) 259 (423) 35.9% 38.2% 32.3% 43.7% 28.5% 27.7% 39.4% -42.0% 15.4% 81.1% -3.5% -34.8% 37.6% -12.2% -11.4% -12.7%
10,079 7.7%
8,153 8.4%
1,926
23.6%
Consolidated net revenue, after returned items and customer discounts, increased by 35.9% in the first half of 2011 compared to the first half of the previous year. Sales were negatively affected by the impact of fluctuations in foreign exchange values with respect to sales in US dollars, Japanese yen and British pounds. If average exchange rates for 2010 were applied to consolidated net revenue for the same period in 2011, the Groups revenue growth would be 37.0%. With an increase in revenues of 35.9%, profitability, measured in terms of EBITDA (gross operating income), went from Euro 6,834 thousand in 2010 to Euro 7,885 thousand in 2011, equal to 6.0% of consolidated revenue. The Groups profitability is affected by the increased notional charges relating to the Incentive Plans, equal to Euro 2,194 thousand, compared with Euro 1,319 thousand for the first half of 2010. After accounting for the effect of this, EBITDA excluding the Incentive Plans stands at Euro 10,079 thousand, equal to profitability of 7.7% of consolidated net revenues, compared with Euro 8,153 thousand at June 30, 2010. Note that in the halfyear in question the Groups profitability is affected by the start-up costs of operations in China. Consolidated net income was Euro 2,916 thousand, with profitability of 2.2% on the consolidated turnover. This result is affected by increased depreciation and amortisation costs relating to investments in innovation and in technological consolidation and the techno-logistics platform automation project, as well as by the opening of the new office in Milan, the expansion of the offices in Bologna and the start-up of activities in China. This result is also affected by increased financial costs from unfavourable exchange rate fluctuations.
YOOX GROUP
The table below provides several key indicators on the Groups operations for the first half of 2010 and the first half of 2011.
June 30, 2011 Number of Monthly Unique Visitors11 (millions) Number of orders (thousands) AOV12 (Euro) 13 Number of Active Customers (thousands) 9.2 961 173 698 June 30, 2010 8.1 717 174 532
In the first half of 2011, the Group recorded a monthly average of 9.2 million Unique Visitors compared with 8.1 million in 2010. The Multi-brand visitors for the 2011 half-year tend to be in line with the first half of 2010, because the Group, as already partly seen during the course of 2010, is directing its initiatives into high conversion rate channels with a view to improving and selecting qualified traffic to generate sales. The number of orders went from 717 thousand for the first half of 2010lable to 961 thousand in 2011, equal to 1 order processed every 16 seconds14, with a growth of 34.0% and an average order value (AOV) equal to Euro 173 (excluding VAT). In the period, more than 99% of orders were dispatched within the scheduled delivery times requested by the customer. The number of active customers totalled 698 thousand, rising by 31.3% compared with 532 thousand at June 30, 2010. Analysis of net revenues and operating profit by business line Below is key operating information by business line with a breakdown of the Groups net revenues and operating profit by business line for the first half of 2010 and the first half of 2011. Since the management information system used by management to assess corporate performance does not allocate certain accounting aggregates to business lines (depreciation and amortisation, non-monetary revenue and expenses, general expenses, other non-recurring income and expenses, financial income and expenses and taxes), these items remain the purview of the Corporate area since they are not related to the specific operating activities of the business lines. Thus, the business lines operating profit coincides with EBITDA Pre Corporate Costs in terms of the entries included and previously reported in this total. For further details on operating information by business line at June 30, 2011, with a reconciliation of entries with the Groups income statement, see the Groups condensed consolidated interim financial statements. Operating information by business line at June 30, 2011 is as follows:
Multi-brand Thousand Euro Consolidated net segment revenues % of consolidated net Group revenues % change Operating profit for segment % of consolidated net segment revenues % change
June 30, 2011 June 30, 2010
Mono-brand
June 30, 2011 June 30, 2010
Group total
June 30, 2011 June 30, 2010
97,830 74.5% 32.5% 14,159 14.5% 19.4%
73,831 76.5% 11,857 16.1%
33,407 25.5% 47.0% 5,882 17.6% 53.2%
22,723 23.5% 3,839 16.9%
131,237 100.0% 35.9% 20,040 15.3% 27.7%
96,554 100.0% 15,696 16.3%
In the first half of 2011, YOOXs consolidated net revenues, net of returned items from sales and discounts given to customers, was equal to Euro 131,237 thousand, a growth of 35.9% over June 30, 2010 with a contribution from both business lines.
11 12 13 14
Source: SiteCatalyst for yoox.com and Google Analytics for thecorner.com and Online Stores. Average Order Value or AOV indicates the average value of each purchase order, excluding VAT. An Active Customer is defined as a customer who placed at least one order during the 12 preceding months. Calculated by dividing the overall total relating to the first half of 2011 by the number of orders processed at Group level in the same period of time.
YOOX GROUP
Multi-brand business line The Multi-brand business line, which includes the activities on the online stores yoox.com and thecorner.com, recorded consolidated net revenues of Euro 97,830 thousand, an increase of 32.5% compared with June 30, 2010.5 This growth is attributable to both the outstanding performance of thecorner.com, which continues to record better results than forecast, and the sustained growth of yoox.com. It should be noted that the positive performance of yoox.com, which in the first quarter benefited from better product availability compared with the 2010-2011 Autumn/Winter season, continues in line with expectations in the second quarter of 2011. Overall, at June 30, 2011, the Multi-Brand business line accounted for 74.5% of the Groups consolidated net revenues. The growth in revenues is reflected in the 19.4% increase in the sector operating profit, with a margin of 14.5%. Mono-brand business line The Mono-brand business line recorded consolidated net revenues of Euro 33,407 thousand, an increase of 47.0% compared with June 30, 2010. The growth is attributable to both the good performance of the 23 Online Stores already operational before the half-year in question, and the three new Online Stores launched in the period, y-3store.com, bunellocucinelli.com and bikkembergs.com, plus the Marni and Bally Online Stores in China and Diesel in Japan. Overall, at June 30, 2011, the Mono-Brand business line accounted for 25.5% of the Groups consolidated net revenues and had 26 Online Stores. The sector operating profit increased by 53.2%, with a margin of 17.6%. The increase in revenues compared to the first half of 2010 is mainly due to the increased contribution of revenues from the setting-up and maintenance activities of the Online Stores. The sector operating profit, as shown for the EBITDA, suffered in 2011 from the greater impact of charges imputed to the Incentive Plans. Consolidated net revenues by geographical area Below is a breakdown of the Groups consolidated net revenue by geographical area for the first half of 2010 and 2011.
Thousand Euro Italy Europe (excluding Italy) North America Japan Other countries Not country related Total YOOX Group June 30, 2011 28,021 64,926 25,325 8,437 2,113 2,415 131,237 June 30, 2010 23,278 46,471 18,918 6,095 658 1,134 96,554 Change 4,743 18,455 6,407 2,342 1,455 1,281 34,683
21.4% 49.5% 19.3% 6.4% 1.6% 1.8% 100.0%
24.1% 48.1% 19.6% 6.3% 0.7% 1.2% 100.0%
20.4% 39.7% 33.9% 38.4% 221.1% 113.0% 35.9%
All the key markets in which the Group operates reported strong performances compared with the first half of 2010, confirming a balanced growth in turnover in the various geographic areas, with ever-increasing international development. More specifically, the Italian market remained the leading country with a turnover of Euro 28,021 thousand, a growth of 20.4% compared with the previous year, and the rest of Europe posted growth of 39.7%. The main countries that contributed to the Group revenues in Europe in the first half of 2011 were France, Germany and the United Kingdom, all showing growth over the first half of 2010, and Russia, which is benefitting from the localisation strategy implemented during the third quarter of 2010. North America continues to record sustained growth equal to 33.9% compared with the first half of 2010, in spite of the negative impact of the exchange rate (having recorded an increase of 41.6% at constant exchange rates and accounting for 20.3% of the Groups net revenues). Performance in Japan has also been positive, growing by 38.4% compared with the first half of 2010 (+31.2% at constant exchange rates) in spite of the impact which the earthquake and the tsunami had on the entire second quarter of 2011, unlike the first quarter where the effect was limited to the last days of the period.
YOOX GROUP
Other Countries also recorded sustained growth, equal to 221.1% compared with the first half of 2010. Lastly, the growth of the Not country related item (+113.0% compared with the first half of 2010) comprised the setting-up and maintenance activities for the Online Stores, media partnership projects in the Multi-brand business line, as well as web marketing and web design services in the Mono-brand business line, and other services offered by Yagency.
MARKETING AND COMMUNICATIONS

During the first half of 2011, marketing activity was developed in three main directions, acquiring new customers, increasing brand awareness and customer relationship management (CRM). In order to acquire new customers, activities were pursued in the major performance areas, in particular Search Engine Marketing activities (SEM, acquisition of sponsored links on the main search engines) and the management of the subsidiary networks and price comparison websites. Activities were also pursued for the purchase of online advertising space on websites devoted to fashion and online versions of the main daily papers, the negotiation and implementation of new marketing agreements and the development of new partnerships in general, activities which were directed, in the main, at increasing brand awareness. Online marketing activities were greatly developed and expanded in markets with good growth potential, especially Russia and Eastern Europe. In parallel, a process of revising and defining the Direct Marketing and CRM strategy was launched, aimed at increasing the retention rate of customers acquired and guaranteeing greater medium/long-term profitability for acquisition investments. These activities were carried out primarily for the Groups Multi-brand stores (yoox.com and thecorner.com), in addition to the constant commitment to agency activities carried out for the Mono-brand stores. In the first half of 2011, the Group designed and promoted web campaigns that allowed the Multi-brand business line to reach about 40 thousand sites in more than 50 countries. Around 90 million newsletters, translated into the languages managed by the Group, were sent to subscribed users for the Multi-brand line. In the management of the web marketing investment on behalf of Strategic Partners of the Mono-brand business line, the Group is offering support and consulting services to Online Stores, especially in the management of search engine marketing (SEM), but also in the field of affiliation marketing and Display Advertising campaigns. Special efforts were devoted to the development of online marketing activities in China for the partners of currently active Mono-brand business lines. At the same time, the organisation increased the number of media partnership projects on yoox.com, which consist of the creation of product areas, customised by fashion brand, design, beauty and lifestyle, promoted through the YOOX Group communication channels (yoox.com, thenewyooxer.com, newsletters, shopping sections in partner magazines and social network channels). In the first half of 2011, around 12 media partnership projects were set up with the same number of Italian and international brands. The Press Office followed the promotion of special projects on yoox.com and thecorner.com and also participated in PR activity for the Online Stores, in close collaboration with the Press Offices of the respective brands. With regard to yoox.com, key partnerships and initiatives in the first half of 2011 are as follows: in February, yoox.com exclusively presented the Waris loves you collection by the designer Waris Ahluwalia and an event to promote the project took place in New York, attended by a large number of celebrities and journalists; in February, EDUN LIVE collaborated with YOOXGEN to produce a limited edition t-shirt designed by MORCHEEBA and the renewal of the partnership with Estethica, a British Fashion Council show dedicated to ethical fashion and the sale of the new 2011 Spring/Summer collections featuring the work of the most important eco-sustainable designers: Lost of Property of London, Henrietta Ludgate, Goodone, MAXJENNY, Nina Dolcetti, Sonya Kashmiri and From Somewhere; in February, yoox.com collaborated with the famous British designer Vivienne Westwood, introducing three bags exclusively for the launch of the Westwood Ethical Fashion Africa Project, which are available in the YOOXYGEN section;
YOOX GROUP
yoox.com promoted a selection of rare vintage and contemporary pieces directly from the archives of the designer Kenneth Jay Lane, on sale exclusively, a project which was launched in March at an event in New York; to support the section dedicated to design, in April yoox.com gave the design press an online exclusive preview for the Milan design week of some of the new products launched at the show; in April, to support the Red Cross committed to helping the people who suffered in the Japanese earthquake, yoox.com collaborated with eight international fashion brands (Ann Demeulemeester, Antonio Marras, Dsquared2, Kitsun, Maison Martin Margiela, Marni, Moschino and Y-3) launching a special t-shirt collection on sale exclusively at yoox.com; on April 22, for World Earth Day, yoox.com introduced several new initiatives as part of the YOOXGEN project including the FROM SOMEWHERE with SPEEDO eco clothing capsule collection, online exclusively at yoox.com, produced using materials and fabrics leftover from the Speedo LZR Racer costume; in the PETS section of yoox.com, dedicated to our four-legged friends, the Moschino PETS collection was launched exclusively in May in conjunction with Moschino, with the profits going to the National Disaster Search Dog Foundation supporting relief activities for the earthquake in Japan; in May a press conference was held in New York during design week to launch the exclusive MULTIBONG product designed by Cappellini for yoox.com; following the success of the first online collaboration at yoox.com in February, Vivienne Westwood launched a new collection of bags and accessories in June for Autumn/Winter, for both men and women, on sale exclusively at yoox.com. The project was followed by an important event in Florence in the setting of the Corsini Garden as part of Pitti Uomo 80, involving the photographer Jurgen Teller and a large number of celebrities, socialites and journalists; in June yoox.com, took a further step into the world of m-commerce, launching its application dedicated to the Android world.
thecorner.com also launched a number of new collaborative efforts and special projects in the first half of the year, including: in January and June 2011, thecorner.com worked with Pitti Immagine as a web media and retail partner, presenting exclusive online content related to the main events of the show, video and interviews; thecorner.com has clinched several partnerships with international Vogue: on February 23, 2011, Vogue Italia and thecorner.com presented The Vogue Talents Corner at Palazzo Morando (Milan), an innovative scouting project with the aim of promoting the creativity of the emerging talents on the international fashion stage through e-commerce. A showcase event was created, featuring fourteen young designers chosen by Vogue Italia, Vogue US, Vogue China, Vogue Paris and Vogue UK. The clothing and accessories of the 2011 Spring/Summer collection, designed by talented young people, can be purchased at thecorner.com in an area devoted to the project. This year, thecorner.com will also be the internet retailer for the prestigious CFDA/Vogue Fashion Fund (CVFF) initiative, promoted by the Council of Fashion Designers of America and Vogue America, aimed at rewarding talented American designers; the launch of the new mini-stores of Dries Van Noten, Want Les Essentiels de la Vie, and Piombo took place between January and March; the corner.com conducted exclusive Unconventional Conversation interviews hosted by Maria Luisa Poumaillou between February and March with Rick Owens, Haider Ackermann and Pierre Hardy; the exclusive capsule collections of Damir Doma, Acne and Kitsun were launched between February and March; February saw the launch of the new Ferragamos Creations mini-store with a selection of exclusive online footwear and an interview with Ferruccio Ferragamo; in February, the corner.com launched the new womens collections of the designers of the London Show Rooms project, under the auspices of the British Fashion Council; in April, the corner.com launched the mens Styling Around The World project created by Fantastic Man and in May a new episode of the project dedicated to women created by Zoo Magazine was launched; in April and May the angle by Valeria Golino and Agyness Deyn was launched; in April, the corner.com gave online boutique customers a free exclusive limited edition t-shirt created by Jun Takahashi.
In close cooperation with the Press Offices of the respective brands, the Group took part in public relations activities for the Online Stores launched in the first half of 2011, as well as the extension to new markets for Online Stores already operating.
YOOX GROUP
The Groups editorial coverage in the first half of 2011 included important magazines in the industry with titles such as Harpers Bazaar (USA), Vogue (China), FT How to Spend it (UK), LUomo Vogue (Italy) and The Times Magazine (UK).
INVESTMENTS
The Group made investments totalling Euro 13,294 thousand in the first half of 2011, comprising Euro 4,207 thousand in intangible assets and Euro 9,086 thousand in property, plant and equipment. Increases in intangible assets were mainly for investments in multi-year development projects valued at Euro 3,684 thousand. These investments were made by YOOX S.p.A. for specific projects aimed at the on-going development of innovative solutions for the creation and management of Online Stores. Other investments in intangible assets refer mainly to software, licences and other Group intangible activities. Investments in intangible assets are mainly linked to investments in the highly automated techno-logistical platform, a project in which the Group has been investing since the fourth quarter of 2010. There have also been investments in technological infrastructures as well as the renewal/completion of the Zola Predosa premises and the new offices in Milan.
FINANCIAL MANAGEMENT
Consolidated statement sheet and financial position The tables below contain the figures taken from the Groups reclassified consolidated statement of financial position at June 30, 2011 and the Groups consolidated statement of cash flows for the same period. Reclassified consolidated statement of financial position at June 30, 2011:
Thousand Euro Net Working capital Non Current Assets Non Current Liabilities (excluding financial liabilities) Net invested capital Shareholders Equity Debt/(Net Financial Position) Total Sources of Financing
17 16 15
Balance at June Balance at 30, 2011 December 31, 2010
% Change
38,177 31,778 (310) 69,644 73,788 (4,143) 69,644
24,781 21,487 (397) 45,871 68,697 (22,826) 45,871
54.1% 47.9% -21.9% 51.8% 7.4% -81.8% 51.8%
15
16
17
Net working capital is current assets, net of current liabilities, with the exception of cash and cash equivalents, bank loans and borrowings and other financial payables due within one year and financial assets and liabilities included under other current assets and liabilities. Net working capital is not recognised as an accounting measure under Italian GAAP or the IFRS endorsed by the European Union. The measurement criterion adopted by the Company might not be consistent with that adopted by other groups, and accordingly, the balance obtained by the Company may not be comparable with those calculated by such groups. Net invested capital is the sum of working capital, non-current assets and non-current liabilities, net of non-current medium/long-term financial liabilities. Net invested capital is not recognised as an accounting measure under Italian GAAP or the IFRS endorsed by the European Union. The measurement criterion adopted by the Company might not be consistent with that adopted by other groups, and accordingly, the balance obtained by the Company may not be comparable with those calculated by such groups. Net financial debt (or net financial position) is the sum of cash and cash equivalents, other current financial assets, net of bank loans and borrowings and other financial payables falling due within one year, other current financial liabilities and non-current medium/long-term financial liabilities. Net financial debt (or net financial position) is not recognised as an accounting measure under Italian GAAP or the IFRS endorsed by the European Union. The measurement criterion adopted by the Company might not be consistent with that adopted by other groups, and accordingly, the balance obtained by the Company may not be comparable with those calculated by such groups. For details of the items that make up net financial debt (or net financial position), see the table below in the section Debt/Net financial position.
YOOX GROUP
Reclassified consolidated statement of cash flows at June 30, 2011:

Thousand Euro Cash flow generated by (absorbed) operating activities Cash flow generated by (absorbed) investing activities Sub-Total Cash flow generated by (absorbed) financing activities Total cash flow for the period
June 30, 2011 June 30, 2010 % Change
(6,674) (12,070) (18,743) 6,623 (12,120)
(4,806) (3,670) (8,476) (14,577) (23,052)
38.9% >100% >100% >100% -47.4%
The net capital invested by the Group went from Euro 45,871 thousand at December 31, 2010 to Euro 69,644 thousand at June 30, 2011, an increase of 51.8%. The Groups growth policies led to an increase in net working capital and non current assets that are reflected in the net financial position (equal to Euro 4,143 thousand at the end of the period). The cash flow absorbed by operating activities (Euro 6,674 thousand) is mainly linked to the increase in warehouse inventories (equal to Euro 10,215 thousand) necessary to sustain expected sales growth in the Multi-brand business line18. Financial resources, in line with Company forecasts, have been absorbed by investment activities to the tune of Euro 12,070 thousand, used mainly for investments in technology and investments linked to the new highly automated techno-logistics platform in the course of being implemented. Debt/Consolidated net financial position The table below gives details of the YOOX Groups net financial position at June 30, 2011.
Thousand Euro Cash and cash equivalents Other current financial assets Bank loans and other current financial liabilities Other current financial liabilities Short-term net financial position Medium-long term financial liabilities Consolidated net financial position
Balance at June 30, 2011 Balance at December 31, 2010 % Change
12,067 122 (1,807) (126) 10,257 (6,114) 4,143
24,188 5,111 (5,600) (26) 23,672 (846) 22,826
-50.1% -97.6% -67.7% >100% -56.7% >100% -81.8%
In accordance with the Groups organisational structure, treasury operations are centralised at the Parent, YOOX S.p.A., which manages all lines of credit provided to the Group. The Groups policy is to maintain an adequate margin of financial flexibility through available committed lines of credit, capable of supporting future development plans. Cash and cash equivalents totalled Euro 12,067 thousand at June 30, 2011, and are made up of cash, negotiable instruments and demand deposits or short-term deposits with banks, which are actually available and readily usable. Other current financial assets, equal to Euro 122 thousand, are mainly made up of the fair value of forward exchange rate contracts to hedge foreign exchange risk. At June 30, 2011, financial liabilities amounted to Euro 7,920 thousand and are mainly made up of the partial utilisation of Euro 5,125 of the medium to long-term credit line entered into with Banca Nazionale del Lavoro to finance investment in the techno-logistical platform. The remaining financial liabilities relate to financial leasing agreements with BNP Paribas Lease Group for a total of Euro 1,447 thousand (of which Euro 613 thousand is short-term) to finance investments in technology, to a short-term Hot Money credit line of Euro 1,039 thousand and to the residual concessional loan provided by Simest (Societ Italiana per le Imprese allEstero), of Euro 309 thousand (of which Euro 154 thousand is short-term).
18
At June 30, 2011, 81.3% of the carrying amount of goods inventories (2011 Spring/Summer and 2011-2012 Autumn/Winter), including the impairment allowance, consists of goods already for sale and goods purchased for sale in subsequent months (2012 Spring/Summer collection).
YOOX GROUP
Information on Significant non-EU Companies YOOX S.p.A. has taken note of the revision of CONSOB Regulations concerning markets, which was adopted in Resolution No. 16191 of October 29, 2007 and subsequent revisions concerning the listing of non-European parties. In this regard, since YOOX S.p.A. directly or indirectly controls five significant companies established and governed by laws of countries not belonging to the European Union (Significant Non-EU Companies), it has planned and taken the measures necessary to ensure full compliance with these regulations. In particular, it should be noted that: all Significant Non-EU Companies have already drawn up an accounting statement for the purposes of preparing the consolidated financial statement and the condensed interim consolidated financial statement; the balance sheet and income statement of these companies are available to shareholders of YOOX S.p.A. at the times and in the manner set forth in the applicable regulations; YOOX S.p.A. has obtained the bylaws and determined the composition and powers of the corporate bodies of the Significant Non-EU Companies; Significant Non-EU Companies provide the Parents auditors with all the information necessary to audit the annual and interim financial statements of the Parent; in addition, these companies have an administrative and accounting system capable of regularly providing the management and auditors of the YOOX Group with the commercial, balance sheet and financial data necessary for the preparation of the consolidated financial statement and the condensed interim financial statement.
In order to fulfil its regulatory obligations, the supervisory body of YOOX S.p.A. has verified that the administrative and accounting system is capable of regularly providing the management and auditors of YOOX S.p.A. with the commercial, balance sheet and financial data necessary for the preparation of the consolidated financial statement and the condensed interim financial statement, and has verified the effectiveness of the flow of information through meetings both with the auditors and the managers. Other information The Parent Company owns treasury shares, intended to create a supply of shares necessary for servicing the 2009-2014 Incentive Plan for employees of the Parent Company and the subsidiaries. The subsidiaries do not hold YOOX S.p.A. shares. The Parent does not have a holding company. Relations between Group companies can be summarised as follows: supply by the Parent of products to subsidiaries earmarked for sales on the U.S., Japanese and AsiaPacific area websites; maintenance and support services and services to update subsidiaries sites provided by the Parent; administrative, financial and legal services provided by the Parent to subsidiaries; customer services provided by the Parent in support of the customer services localised at the subsidiaries; consulting and support services in the area of fashion, marketing, advertising and professional training provided by the Parent to subsidiaries.
Relations among Group companies or by them with related parties cannot be defined as either atypical or unusual, as they come under the normal course of the Groups business and take place under normal market conditions and in the interest of the Group itself. In general, there were no atypical or unusual transactions. For greater detail, refer to the Summary Interim consolidated financial statement at June 30, 2011. These transactions were carried out at normal market conditions, i.e., on the same terms which would apply between two independent parties. All receivables, payables and related costs and revenues incurred between Group companies are reported in detail in the Condensed Consolidated Interim Financial Statement at June 30, 2011. For trade transactions between Group companies and parties included among shareholders and/or directors, refer to the Condensed Consolidated Interim Financial Statement at June 30, 2011. For the economic and financial impacts of Group transactions with related parties, refer to the Condensed Consolidated Interim Financial Statement at June 30, 2011.
YOOX GROUP
INFORMATION FOR INVESTORS

The Global Offering of shares of YOOX S.p.A. (ISIN no. IT0003540470) was successfully completed in December 2009. The Companys shares have been listed on the STAR segment of Borsa Italiana since December 3, 2009. From September 20, 2010, YOOX stock has been part of the FTSE Italia Mid-Cap Index, comprising the leading 60 shares by capitalisation and liquidity, outside the FTSE MIB Index. At June 30, 2011, the last day of trading of the first half of the year, the YOOX stock closed at Euro 12.7, corresponding to a market capitalisation of Euro 670.3 million. Between the time of the listing and June 30, 2011, the YOOX share price grew by 195.3% over the flotation price, while in the six months to June 30, 2011, the stock grew by 32.0% over its closing price at December 30, 2010 (the last day of trading in 2010). Performance of YOOX stock in the first half of 2011
13.40 13.20 13.00 12.80 12.60 12.40 12.20 12.00 11.80 11.60 11.40 11.20 11.00 10.80 10.60 10.40 10.20 10.00 9.80 9.60 9.40 9.20 9.00 8.80 8.60 8.40 8.20 8.00 7.80 7.60 1/1/11 10/1/11 19/1/11 28/1/11 4/2/11 15/2/11 24/2/11 4/3/11 14/3/11 23/3/11 1/4/11 8/4/11 19/4/11 28/4/11 6/5/11 16/5/11 25/5/11 3/6/11 10/6/11 21/6/11 3,000 2,800 2,600 2,400 2,200 2,000 1,800 1,600 1,400 1,200 1,000 800 600 400 200 0 30/6/11
Price YOOX S.p.A.
Volume (Thousands)
Source: Factset
The performance of the YOOX stock during the reference period was around 29.4% higher than the FTSE Italy STAR Index which recorded a gain of 2.6%.
YOOX GROUP
Performance of YOOX stock and FTSE Italy STAR Index in the first half of 2011
140
130
32.0%
120
110
2.6%
100
90
80 01/01/11 10/01/11 19/01/11 28/01/11 04/02/11 15/02/11 24/02/11 04/03/11 14/03/11 23/03/11 Yoox S.p.A. 01/04/11 08/04/11 19/04/11 28/04/11 06/05/11 16/05/11 25/05/11 03/06/11 10/06/11 21/06/11 30/06/11
Italy FTSE STAR
Source: Factset
The table below summarises key stock and stock exchange data for the first half of 2011.
Stock and stock exchange data Closing price at June 30, 2011 (Euro) Maximum closing price in the first half of 2011 (Euro) May 31, 2011 Minimum closing price in the first half of 2011 (Euro) March 16, 2011 Market capitalisation at June 30, 2011 (Euro million)
Source: Borsa Italiana
June 30, 2011 12.700 13.320 8.150 670.260
Stock analyst coverage Stock analyst coverage at August 1, 2011, in addition to the global distributors of the Sales and Subscription offering, Goldman Sachs International and Mediobanca, includes Equita, Intermonte, Gruppo24Ore, Bank of America Merrill Lynch, Centrobanca, Berenberg, Deutsche Bank, Citigroup, Whitman Howard, Cheuvreux and Singer Capital Markets, of which the latter set up coverage in July 2011, to make a total of 13 financial analysts. Shareholder structure At June 30, 2011, the share capital totalled Euro 527,763.60, corresponding to a total of 52,776,360 shares with no nominal value pursuant to article 2346 of the Italian Civil Code.
YOOX GROUP
At June 30, 2011, shareholders owning more than 2% of ordinary shares, as specified by CONSOB regulations, were as follows:
Shareholders Balderton Capital LLP Red Circle S.r.l. Federated Equity Management Company of Pennsylvania JP Morgan Asset Management Limited Federico Marchetti Baillie Gifford & Co. Wasatch Advisors Inc. Aviva Investors Global Services Limited Pictet Funds S.A. Capital Research and Management Company
Source: Shareholder Register at June 30, 2011
June 30, 2011 11.123% 6.864% 5.790% 4.675% 4.570% 3.652% 2.909% 2.442% 2.409% 2.132%
Investor Relations The Group places a particular emphasis on developing its relationships with analysts, shareholders and institutional investors. During the first half of the year the Groups activities were divided between participating in major conferences and organising numerous road shows in some of the main financial centres in Europe and the United States. Financial communication since the listing has taken place according to the rules on price-sensitive press releases laid down by Borsa Italiana, in keeping with the Groups wish to provide timely, transparent information to support its relations with the financial community.
RISK FACTORS
The main risk factors that could have a negative impact on the operations of the Group and the Parent include the following: the complexity associated with managing the international growth and expansion process; the difficulty in finding, training and retaining professionals with the skills necessary for the Groups development; the difficulties associated with maintaining the Groups market position, especially with regard to the risk that Online Store management contracts may not be renewed in a sector characterised by a high degree of change (especially in the area of technological development); the complexity associated with stock sizing with regard to the Multi-brand business line; this is connected with the accurate projection of the quantity and range of products to be marketed; risks relating to Legislative Decree 231/01.
In accordance with the requirements of IFRS 7, the Condensed Consolidated Interim Financial Statements at June 30, 2011 include an analysis of the nature and extent of risks associated with financial instruments to which the Group is exposed, as well as the methodologies used to manage such risks. Below is a summary of such financial risks; please see the notes for further information: market risk in the form of financial risk related to exchange rate fluctuations and financial risk related to interest rate fluctuations; liquidity risk; credit risk with financial counterparties; credit risk with trade counterparties.
YOOX GROUP
The Group and companies included in consolidation have taken all necessary precautions to ensure the proper monitoring and mitigation of the operational and financial risks noted above.
INFORMATION CONCERNING MEASURES TO PROTECT PRIVACY

In 2011, privacy-related/data security activities focused on the following issues: - activation of the Security Training Programme in application development teams; - appointment to the staff of an Information Security Manager, with a technical/organisational role; - activation of a first phase of security hardending activities in the context of the development of monobrand solutions from the perspective of managing myaccount and fast-checkout.
PERSONAL DATA PROTECTION CODE

The requirements set out in the data protection document on security have been implemented, in accordance with Annex B of Legislative Decree 196/03 Personal Data Protection Code, which establishes technical specifications regarding the processing of sensitive data by electronic means.
TAX MATTERS
The Group has sustained a lower tax burden in absolute terms compared with the situation at June 30, 2010. Current taxes have decreased from Euro 2,748 thousand to Euro 2,102 thousand. The Parents IRAP tax burden increased by 11% (IRAP at June 30, 2011 was equal to Euro 511 thousand compared with Euro 461 thousand at June 30, 2010). IRES taxes for the Parent Company amounted to Euro 839 thousand. Taxes for Group overseas companies for the period to June 30, 2011 amounted to approximately Euro 752 thousand. The Group also recognised deferred tax assets totalling Euro 4,689 thousand and deferred tax liabilities of Euro 60 thousand. Deferred tax assets of Euro 4,613 thousand and deferred tax liabilities of Euro 72 thousand that were recognised in 2010 were also reversed. It should also be pointed out that the amount in the income statement does not include the Euro 269 thousand of deferred taxes for the share premium reserve, in compliance with the provisions of IAS 32. The reversed deferred tax assets include deferred tax assets directly against the share premium reserve of Euro 537 thousand provided for in the financial year 2010.
LEGAL MATTERS
In the first half of 2011 the Group signed, among other things: four important e-commerce contracts for the setting-up and management of virtual stores for the sale of fashion clothing and accessories, two of which are already operational at the date of the document; an extension contract for a new market for an Online Store already in operation; two extensions of the duration of Online Stores already in operation; an important e-commerce renewal contract with a Strategic Partner, including the extension of the term and extension of new lines in relation to the Online Store already in operation; a line integration contract for an Online Store which is already in operation.
As highlighted in the important events after the end of the period, another important e-commerce contract was also signed.
YOOX GROUP
There are changes at June 30, 2011 compared with December 31, 2010 in litigation defence activities, whilst there are no changes in litigation prosecution activities. The litigation defence activities pending at June 30, 2011 relate to (i) an employment lawsuit brought against YOOX by a former manager which is pending before the Court of Bologna; (ii) a lawsuit brought against YOOX by a Monaco company for alleged violations in the area of unfair competition (currently pending before the Court of Paris); (iii) a lawsuit brought against YOOX and one of its Strategic Partners by a French company for alleged violations in the area of unfair competition (currently pending before the Court of Paris); (iv) a lawsuit brought against YOOX by a French company for alleged violations in the area of unfair competition (currently pending before the Court of Paris). At June 30, 2011, the Company was a plaintiff in the following pending matters: (i) a civil lawsuit brought by YOOX against the former tax representative for Greece (at the competent Greek court) aimed at recovering amounts illegally withheld by the above party; (ii) two actions to recover receivables brought by YOOX against counterparties that failed to fulfil their payment obligations; (iii) a criminal suit brought by YOOX against one of the defaulting counterparties.
HUMAN RESOURCES
The YOOX Group recognises the critical importance of Human Resources, convinced that the main success factor in any business is the professional contribution of the persons working there, in a framework of mutual trust and loyalty. It is aware that meeting corporate growth and business development goals depends on the enhancement of human capital, the development of the capabilities and skills of individual employees and the retention of key employees. Values Ethical principles, enthusiasm for ones work and the pursuit of excellence are considered fundamental values in the working environment. Induction Days for new employees include an introductory module, YOOXS 8 VALUES, on the importance of corporate values. The YOOXYGEN project, launched in 2009 and renewed year on year, and the guidelines it provides, is understood to have a well-established corporate value. Personnel At June 30, 2011 the Group employed 439 staff, an increase of 31% compared with June 30, 2010. The table below shows a breakdown of the headcount as of June 30, 2011 compared with that of June 30, 201019.
Number Managers Junior managers Employees and trainees Abroad Total staff June 30, 2011 22 33 342 42 439 June 30, 2010 16 29 269 20 334 Change 6 4 73 22 105
Around 90% of employees are located in the three Italian offices, and the remaining 10% are located in offices abroad. The working environment is dynamic, young and competitive with an average age of only 31 at June 30, 2011. Compared with December 31, 2010, the total staff of the Group grew in the first half of 2011 by 67, equal to an 18% increase.
19
The Chief Executive Officer of the S.p.A., interns and collaborators are not included under personnel.
YOOX GROUP
On April 6, 2011, an agreement was signed to renew the Collective National Labour Contract for the commercial sector which expired on December 31, 2010. Gender equality and working environment The management of labour relations at the YOOX Group is aimed at guaranteeing equal opportunities and encouraging the professional development of its entire staff, whilst respecting the rights of all workers. All the Groups policies encourage a sense of belonging and reward professionalism, integrity and willingness to take responsibility, in keeping with the principles of liberty, human dignity and respect for diversity. It rejects any form of discrimination based on age, gender, sexual orientation, race, language, personal and social conditions, religious or political beliefs. At June 30, 2011 the Groups workforce confirmed the high percentage of women (56%) and their representation in managerial positions, in line with the strategy of valuing talent. The company also values the inclination towards an international workforce with cultural diversity. Assessment and development of capital During the first half of the year the performance evaluation of around 230 people was conducted, with managers and co-workers discussing the evaluation of skills for 2010, the results of the MBO 2010 and the notification of the new objectives for 2011, relating to both qualitative indicators (skills) and quantitative indicators (MBO). The performance evaluation system is linked to company skills (managerial and technical), as well as behaviour and KPIs associated with employees according to the role or organisational unit. The evaluation is linked to achieving objectives that are agreed annually with managers and to expected skill levels for the role and it has a fundamental value in the improvement process for individual and corporate performance and in the professional development of YOOX personnel. Recruitment and Selection and Training Recruitment and selection activities continue to be of vital importance for the company, to ensure the levels of growth, with the Recruiting & Talent Management team strongly committed not only to searching for ideal candidates, but also to the effective use of company resources. Special attention was paid in the overseas branches to the creation and recruitment of new posts with a Human Resources Manager being appointed in the Shanghai branch and one in New York to deal more effectively with the specific requirements of the local market. Collaboration with the major Italian universities and institutes of higher education also continued in the first half of 2011. Numerous lectures have been given at the most important universities, including the partnership with one of the most important Italian business schools, MIP, involving students in work projects within the company. The most important initiative on this front has been the second edition of the Masters in E-fashion conceived by the Group in conjunction with the Marangoni Institute of Milan, which has been committed to the training of professionals in the world of fashion and design for 75 years. This new edition, which will conclude in 2011, is designed to prepare people who are hard to find in the job market, with high-level skills and specialist knowledge of e-commerce, with an in-depth focus on fashion and special attention to marketing and branding, as well as all the topics relating to online communication and digital creativity special projects. This Masters course also distinguishes itself by its in the field approach, thanks to numerous classroom-based teaching sessions and lectures by experts and personalities from the world of fashion and the YOOX Group. The most deserving students have been awarded bursaries by the Group and by several fashion brands who are partners in the course. At the end of the course they have also had the opportunity of taking up an internship in the company. Training has always played an important role in the Group, which in recent years has offered many talented young people opportunities to develop innovative professional skills. During the first half of 2011, the company created various training opportunities, even gaining access to public financing. Management training initiatives have included the creation of Human Resources Management and Motivation courses. As far as technical/operational training is concerned, in-house Digital Production, Privacy & Data Security, Health and Safety in the Workplace, and Organisational Model and Control courses have been held, pursuant to Legislative Decree 231/01. Language training is focused on Italian courses for foreigners. There are also ad hoc plans, in partnership with the University of Pisa, for courses for employees in Data Mining, Descriptive Statistics and Data Analysis. Special attention has also been devoted to the development and
YOOX GROUP
provision of modules for Induction Days, to welcome new employees, which is becoming increasingly important given the large number of entrants. Health and safety The Group considers the health and safety in the workplace to be of fundamental importance, in compliance with existing legislation. To ensure this, Group management, as well as having a Code of Ethics, continued in 2011 with the on-going improvement of the Health and Safety in the Workplace management system: adapted to the risks in the plants, with awareness and continuous updating being guaranteed by the correct management of the Risk assessment document in compliance with the legislation in force; aimed at the continuous improvement of services related to health and safety through the continuous updating of both technological and management elements; intended to create a corporate culture about hygiene and safety.
Non-competition agreement Some managers and several other key company resources connected with the unique nature of the Companys business have signed a non-competition agreement. Organisational structure During the past six months, the organisational structure was analysed and reviewed in order better to support the development of the business lines. All organisational changes are notified promptly and clearly, in compliance with the provisions of the Information flows of the Supervisory Body and its reporting from the Model of Organisation, Management and Control pursuant to Legislative Decree 231/01.
THE ENVIRONMENT
The environment is an important asset which YOOX is committed to protecting. Its activities are planned with a view to striking a balance between business operations and essential environmental requirements. In doing so the Group continues to believe in and devote itself to the YOOXYGEN strategy of environmental responsibility launched in 2009. On the occasion of Earth Day on April 22, 2011, YOOXYGEN celebrated its second birthday, presenting many new items online: a wide selection of eco-friendly products and limited edition collections exclusive to YOOXYGEN created by different designers. Through YOOXYGEN the Group continues to support Green Cross International promoting in particular the Smart Water for Green Schools project, which aims to institute systems for rainwater collection, ecological rehabilitation equipment and environmental awareness in schools located in cross-border water basins. During 2011, YOOX continues to pursue its commitments to the environment, namely: managing its activities in such a way as to minimise its environmental impact; taking environmental risks into consideration when making corporate decisions; improving internal eco-efficiency; raising employees awareness in order to strengthen the culture of sustainability; promoting the development and dissemination of eco-friendly projects and products; raising customers awareness regarding the choice of eco-friendly products.
YOOX GROUP
CORPORATE GOVERNANCE
The YOOX S.p.A. Parent Companys model of corporate governance is detailed in the Report on Corporate Governance and Ownership Arrangements in the Annual Report of December 31, 2010 available on the Company website www.yooxgroup.com, under the Investor Relations section and the Company website www.yooxgroup.com, under the Corporate Governance section which should be referred to. The significant corporate governance events which have taken place at the time of writing are listed below. Granting of shares following the exercise of stock options On January 17, February 28, February 14, March 14, April 14, and May 13, 2011, 104,000, 508,716, 104,000, 138,632, 63,856 and 93,600 YOOX S.p.A. ordinary shares, respectively, were granted following the exercise of options relating to the Stock Option Plan, at the strike prices described in the table below:
Stock Option Plans Grant date Strike price (in Euro) 106.50 15.91 59.17 Total Options Total Shares after share split
2007 - 2012 2001 - 2003 2003 - 2005 2006 - 2008 Sub total 2007 - 2012 2007 - 2012 2007 - 2012 2007 - 2012 Total
January 17, 2011 January 28, 2011 January 28, 2011 January 28, 2011 February 14, 2011 March 14, 2011 April 14, 2011 May 13, 2011 1,800 7,050 250 4,750 500 5,250 250
2,000
2,000 5,000 500 4,283 9,783 2,000 2,666 1,228 1,800 19,477
104,000 260,000 26,000 222,716 508,716 104,000 138,632 63,856 93,600 1,012,804
250
4,283 4,283 2,000 2,666 1,228 12,177
Given the above, prior to June 30, 2011, the share capital issued by YOOX S.p.A. was Euro 527,763.60, divided into 52,776,360 ordinary shares with no indication of par value. As stated in the important events after the end of the period, on July 14, 2011, 195,780 YOOX S.p.A. ordinary shares were granted, following the exercise of options relating to the Stock Option Plan at the strike prices listed in the table below:
2001 - 2003 2006 - 2008 2007 - 2012 Total
July 14, 2011 July 14, 2011 July 14, 2011
1,250 2,315 200 1,450 2,315
1,250 2,315 200 3,765
65,000 120,380 10,400 195,780
Given the above, the new share capital issued by YOOX S.p.A. at the time of writing is Euro 529,721.40, divided into 52,972,140 ordinary shares with no indication of par value. Stock option granting relating to the YOOX S.p.A. Company Incentive Stock Option Plan 2009-2014 On February 1, 2011, the condition precedent related to the granting, to one beneficiary, of 963 options valid for the subscription of 50,076 YOOX ordinary shares, relating to the YOOX S.p.A. 2009-2014 Stock Option Plan, occurred. On February 9, 2011, the Companys Board of Directors resolved to grant 1,926 options valid for the subscription of 100,152 YOOX ordinary shares to one beneficiary.
YOOX GROUP
On May 9, 2011, the Companys Board of Directors resolved to grant 4,338 options valid for the subscription of 225,576 YOOX ordinary shares in favour of five beneficiaries. Also on May 9, 2011, the Board of Directors, within the scope of the YOOX S.p.A. 2009-2014 Company Incentive Plan, approved the granting of 53,721 YOOX ordinary shares, free of charge, to 35 employees, 3,481 of which subsequently lapsed. Resolution for purchase of treasury shares On May 5, 2011, the Shareholders Meeting adopted the resolution to purchase and dispose of treasury shares, in compliance with articles 2357 and 2357-ter of the Italian Civil Code and article 132 of Legislative Decree 58/1998 and related updates. For more details, refer to the Press Release issued on that date which is available on the Company website www.yooxgroup.com, under the section Investor Relations. At the time of writing the Company holds 62,000 treasury shares in its portfolio equal to 0.12% of the share capital. Board of Directors: director appointment On May 5, 2011, the Shareholders Meeting appointed Raffaello Napoleone as Director, on the proposal of the partner Essegi S.r.l. (he was previously co-opted to the board on July 1, 2010). Approval of the consolidated financial statements at December 31, 2010 The Ordinary Shareholders Meeting of May 5, 2011, convened after a second call, approved the financial statements for the year ending December 31, 2010, resolving to carry forward YOOX S.p.A.s entire net profit for the year. Modifications to the Company bylaws At the Extraordinary Shareholders Meeting on May 5, 2011, several changes to the Company bylaws were approved, to comply with Legislative Decree 27/2010 (shareholders rights) and Legislative Decree146/2009 (public offers to purchase or to exchange). The main changes approved give the Board of Directors the right to: (i) convene an Ordinary and Extraordinary Shareholders Meeting in one sitting; (ii) convene the Shareholders Meeting to approve the Financial Statements within 180 days of the end of the financial year; (iii) designate, for each Shareholders Meeting, a representative for the Shareholders giving it notice of each announcement convening the meeting. The Board of Directors were also granted the right recognised by article 104, paragraph 1-ter of Legislative Decree 58/1998. For more details, refer to the Press Release issued on that date which is available on the Company website www.yooxgroup.com, under the section Investor Relations. Compensation Committee The Committee met on February 1, March 9, and May 9, 2011 and voted in favour of the following proposals: proposal to exercise options of the 2007-2012 Stock Option Plan; proposal to award a bonus to the Chief Executive Officer for 2011; proposal to award extraordinary remuneration to the Chairman/Chief Executive Officer; proposal for remuneration for 2011 for managers with strategic responsibility; proposal to grant stock options (2009-2014 Stock Option Plan); proposal to grant bonuses to employees under the 2009-2014 Incentive Plan.
YOOX GROUP
Internal Control Committee The Committee met on March 4, and May 4, 2011. Approval and implementation of the 2011 Internal Audit Plan In line with the activities carried out in the 2009 and 2010 financial years and as a continuation thereof, with special reference to the subject of compliance pursuant to Legislative Decree 231/01 and Law 262/05, the Internal Control Manager drafted the 2011 Internal Audit Plan which was presented and approved on March 3, 2011 by the Director responsible for supervising the internal control function and on March 4, 2011 it was adopted by the Internal Control Committee and the Manager himself is carrying out the activities in the plan, according to its deadlines and methods. The continuity of the activities already carried out, those being carried out and those that will be necessary in the future, and which will be promptly agreed, demonstrate, in a concrete manner, the suitability, effectiveness and efficiency of YOOX S.p.A.s Internal Control System.
SUBSEQUENT EVENTS
Contract and launch of the dolcegabbanastore.com Online Store The Dolce & Gabbana Online Store was launched on July 13, 2011 following a contract signed by Dolce & Gabbana Industria S.p.A. and YOOX S.p.A. on July 12, 2011. The contract is for five years until June 30, 2016. At the time of writing, dolcegabbanastore.com Powered by YOOX Group is mainly active in Europe, the U.S. and Japan, and in August 2011 it will expand into the Chinese market. Granting of shares following the exercise of stock options On July 14, 2011, 195,780 YOOX S.p.A. ordinary shares were granted following the exercise of options relating to the Stock Option Plans and at the strike prices described in the table below:
2001 - 2003 2006 - 2008 2007 - 2012 Total
July 14, 2011 July 14, 2011 July 14, 2011
1,250 2,315 200 1,450 2,315
1,250 2,315 200 3,765
65,000 120,380 10,400 195,780
Given the above, the new share capital issued by YOOX S.p.A. at the time of writing is Euro 529,721.40, divided into 52,972,140 ordinary shares with no indication of par value.
YOOX GROUP
BUSINESS OUTLOOK
On the basis of the positive performance of the online retail and luxury goods market and the Group results for the first half-year, it is reasonable to assume that the Group will be able to reconfirm a growth in net revenue and profitability in the second half of 2011. Both the Multi-brand and the Mono-brand business lines are expected to contribute to the growth, thanks to the new launches that have already taken place in the first months of 2011 and those which are planned for the rest of the year. The global techno-logistics platform automation project is due to be completed in August, ahead of schedule, and will be capable of supporting the Groups future growth and will bring about an increase in operational efficiency levels with a consequent increase in future profits from as early as this year. In line with expectations, the Group is therefore reconfirming its investment policy, linked both to the technologistics automation project and to innovation and the consolidation of the Groups multi-channel technology. Internal initiatives aimed at improving efficiency and carefully managing costs will also continue.
Zola Predosa (BO), August 4, 2011 For the Board of Directors Chairman of the Board of Directors Federico Marchetti (signed on the original)
YOOX GROUP
ATTACHMENTS TO THE REPORT ON MANAGEMENT PERFORMANCE

Annex 1: Incentive plans and impact on the reclassified consolidated income statement Impact of Incentive Plans in the second quarter of 2011:
Thousand Euro Fulfilment costs of which Incentive Plans Sales and marketing costs of which Incentive Plans General & administrative expenses of which Incentive Plans Incentive Plans total Q2-2011 (7,303) (54) (7,187) (302) (6,144) (576) (933) 61.8% 100.0% 32.4% 5.8% % Total Q2-2010 (5,045) (15) (5,845) (240) (4,648) (783) (1,039) 75.4% 100.0% 23.1% 1.5% % Total
Impact of Incentive Plans in the first half of 2011:

Thousand Euro Fulfilment costs of which Incentive Plans Sales and marketing costs of which Incentive Plans General & administrative expenses of which Incentive Plans Incentive Plans total June 30, 2011 (14,376) (92) (14,660) (671) (12,016) (1,431) (2,194) 65.2% 100.0% 30.6% 4.2% % Total June 30, 2010 (10,003) (31) (11,409) (344) (8,623) (944) (1,319) 71.6% 100.0% 26.1% 2.3% % Total
YOOX GROUP
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS AT JUNE 30, 2011 YOOX GROUP
YOOX GROUP
YOOX GROUP
INDEX
Consolidated financial statement at June 30, 2011 prepared in accordance with IFRS ..................................... 41 Consolidated income statement......................................................................................................................... 41 Consolidated comprehensive statement of income ........................................................................................... 42 Consolidated statement of financial position...................................................................................................... 43 Statement of changes in consolidated equity at June 30, 2011 and June 30, 2010 .......................................... 44 Consolidated statement of cash flows ............................................................................................................... 45 Notes to the condensed consolidated interim financial statements at June 30, 2011 ....................................... 46
YOOX GROUP
YOOX GROUP
CONSOLIDATED FINANCIAL STATEMENT AT JUNE 30, 2011 PREPARED IN ACCORDANCE WITH IFRS (1)
Consolidated income statement Thousand Euro: Net revenues Cost of goods sold Fulfilment costs Sales and marketing costs General expenses Other income and expenses Non-recurring expenses Operating profit Financial income Financial expenses Profit before tax Tax Consolidated profit for the period of which: Attributable to owners of the Parent Attributable to non-controlling interests Basic earnings per share Diluted earnings per share 9.12 9.12 2,916 0.06 0.05 3,339 0.07 0.06 9.11 Notes 9.1 9.2 9.3 9.4 9.5 9.6 9.7 9.8 9.9 9.10 June 30, 2011 June 30, 2010 131,237 (82,161) (14,908) (14,676) (14,232) (139) 5,122 549 (742) 4,930 (2,014) 2,916 96,554 (59,445) (10,220) (11,425) (9,916) (240) 5,308 843 (539) 5,612 (2,273) 3,339
(1) The financial statements, which were prepared in accordance with CONSOB Resolution 15519 of July 27, 2006 and CONSOB Communication DEM/6064293 of July 28, 2006, are annexed to the notes to the condensed consolidated interim financial statements at June 30, 2011.
YOOX GROUP
Consolidated comprehensive statement of income Thousand Euro: Consolidated profit for the period Other components of comprehensive income, net of tax effects Foreign currency translation differences for foreign operations Profit/(loss) from cash flow hedges Total other comprehensive income 9.21 9.21 (504) (87) (591) 525 525 Notes June 30, 2011 2,916 June 30, 2010 3,339
Total consolidated comprehensive income for the period of which: Attributable to owners of the Parent Attributable to non-controlling interests
2,325
3,864
2,325 -
3,864 -
YOOX GROUP
Consolidated statement of financial position Thousand Euro: Non-current assets Property, plant and equipment Intangible assets with finite useful life Deferred tax assets Other non-current financial assets Total non-current assets Current assets Inventories Trade receivables Other current assets Cash and cash equivalents Financial current assets Total current assets Total assets Equity Share capital Reserves Losses carried forward Consolidated profit for the period/year Equity attributable to equity holders of the Parent Equity attributable to non-controlling interests Total consolidated equity Non-current liabilities Medium-long term financial liabilities Employee benefits Provisions for risks and charges Deferred tax liabilities Total non-current liabilities Bank loans and other current financial liabilities Provisions for risks and charges Trade payables Tax liabilities Other payables Total current liabilities Total consolidated equity and liabilities 9.23 9.26 9.27 9.28 9.29 9.21 - 9.22 Notes June 30, 2011 June 30, 2010
9.13 9.14 9.15 9.16
16,326 9,728 5,142 581 31,777
8,395 7,129 5,456 507 21,487
9.17 9.18 9.19 9.20 9.20
86,527 8,963 7,216 12,067 114,772 146,550
76,311 9,384 7,318 24,188 5,082 122,283 143,770
528 66,592 3,752 2,916 73,788 73,788
518 64,426 (5,364) 9,117 68,697 68,697
9.23 9.24 9.26 9.25
6,114 211 42 57 6,424 1,807 560 48,410 1,552 14,009 66,338 146,550
846 213 116 69 1,244 5,600 877 48,943 2,441 15,968 73,829 143,770
YOOX GROUP
Statement of changes in consolidated equity at June 30, 2011 Paragraph 9.21
Thousand Euro
Share premium reserve and other Share capital equity-related reserves 518 10 528 56,325 552 56,877
December 31, 2010 Share capital increases Increases in reserves for share-based payments Total consolidated comprehensive income Other changes June 30, 2011
Stock Reserve for Retained earnings Option and Legal purchase of or losses carried cash flow Translation reserve reserve treasury hedge forward shares reserve 193 (362) 7,957 313 (5,365) 2,204 (87) (504) 9,117 193 (362) 10,074 (191) 3,752
Consolidated profit for the period 9,117 2,916 (9,117) 2,916
Equity attributable to non-controlling interests
Total
68,697 562 2,204 2,325 73,788
Statement of changes in consolidated equity at June 30, 2010 Paragraph 9.21
Thousand Euro
Share premium reserve and other Share capital equity-related reserves Legal reserve 193 193 504 7 511 54,542 85 54,627
December 31, 2009 Share capital increases Increases in reserves for share-based payments Total consolidated comprehensive income Other changes June 30, 2010
Stock Treasury Retained earnings Consolidated net Option shares or losses carried income for the reserve and Translation reserve purchase period cash flow forward reserve hedge 4,229 (27) (9,462) 4,098 1,319 525 3,339 4,098 (4,098) 5,549 498 (5,364) 3,339
Equity attributable to non-controlling interests
Total
- 54,077 92 - 1,319 - 3,864 - 59,353
YOOX GROUP
Consolidated statement of cash flows

Thousand Euro: Consolidated profit for the period Adjustments for: Taxes for the period Financial expenses for the period Financial income for the period Depreciation, amortisation and impairment losses for the period Fair value measurement of stock option plans Unrealised effect of changes in foreign exchange rates Employee benefits Provisions for risks and charges Payment of employee benefits Use of provisions for risks and charges Changes in inventories Changes in trade receivables Changes in trade payables Changes in other current assets and liabilities Cash flow generated from (used in) operating activities Income tax paid Interest and other financial expenses paid Interest and other financial income received CASH FLOW GENERATED FROM (USED IN) OPERATING ACTIVITIES Investing activities Acquisition of property, plant and equipment Acquisition of intangible assets Acquisition of other non-current financial assets CASH FLOW GENERATED FROM (USED IN) INVESTING ACTIVITIES Financing activities Increase in current financial liabilities Repayment of current liabilities Increase in medium-long term financial liabilities Repayment of medium-long term financial liabilities Increase in share capital and share premium reserve Investments/disinvestments in other financial current assets Variation through difference between cash effect and action of incentive plans Changes in the hedging reserve CASH FLOW GENERATED FROM (USED IN) FINANCING ACTIVITIES TOTAL CASH FLOW FOR THE PERIOD Cash and cash equivalents at the beginning of the period Cash and cash equivalents at the end of the period TOTAL CASH FLOW FOR THE PERIOD 9.20 9.20 9.39 9.39 9.38 9.38 9.37 9.40 9.22 (3,991) 5,047 562 5,082 10 (87) 6,623 (12,120) 24,188 12,067 (12,120) (3) (78) 92 (14,588) (14,577) (23,052) 35,007 11,955 (23,052) 9.34 9.35 9.36 (7,789) (4,207) (74) (12,070) (730) (2,841) (99) (3,670) 9.30 9.31 9.31 Notes 9.30 June 30, 2011 2,916 June 30, 2010 3,339
9.30 9.31 9.31 9.31 9.31 9.31 9.31 9.31 9.31 9.31 9.32 9.32 9.32 9.33
2,014 742 (549) 2,763 2,194 (504) 6 110 (8) (501) (10,215) 422 (1,413) (1,857) (3,881) (2,601) (743) 549 (6,674)
2,273 538 (843) 1,526 1,319 525 19 369 (30) (245) (11,471) 1,040 7,273 (4,905) 727 (5,838) (538) 843 (4,806)
YOOX GROUP
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS AT JUNE 30, 2011
1. Group structure and activities The YOOX Group (hereinafter the Group) includes, as well as the Parent YOOX S.p.A. (hereinafter the Company or the Parent), the companies YOOX Corporation and Y Services, which are subject to US law and which manage sales activities in North America, and YOOX Japan, which is subject to Japanese law and which manages sales activities in Japan, Mishang Trading (Shanghai) Co. Ltd., which manages sales activities in China, and YOOX Asia Limited, which manages sales activities in the Asia-Pacific area. The YOOX Group is active in electronic commerce and offers commercial services relating to clothing and fashion accessories, and more generally to anything that accessorises the person or the home, during free time, when relaxing or during leisure activities. Information on individual operating segments pursuant to IFRS 8 is presented in Note 7. 2. Statement of compliance with IAS/IFRS and general criteria used to prepare the condensed consolidated interim financial statements These condensed consolidated interim financial statements, drawn up in accordance with IAS 34 Interim Financial Statements, were prepared using the same accounting standards as were used to prepare the consolidated financial statements at December 31, 2010, please refer to it for further details. Comparative data is reported in presenting the statement of financial position and the statement of cash flows in addition to the requirements of IAS 34 (December 31, 2010 for the statement of financial position and June 30, 2010 for the income statement, the statement of comprehensive income, the statement of changes in equity and the statement of cash flows). The figures for the first half of 2011 and the first half of 2010 are reported in presenting the income statement, the Group having adopted the half year as the intermediate reference period. These condensed consolidated interim financial statements have been compiled in accordance with IFRS (International Financial Reporting Standards), IASB (International Accounting Standards Board) and are endorsed by the European Union. IFRS also refers to the International Accounting Standards (IAS) currently in force, in addition to all the interpretation documents issued by the International Financial Reporting Interpretations Committee (IFRIC) previously known as the Standing Interpretations Committee (SIC). These condensed consolidated interim financial statements, drawn up in compliance with IAS 34 and conforming with the provisions of article 154-ter of Legislative Decree 58 of February 24, 1998 (Consolidated Finance Act) and later amendments, do not include all the information required for the annual financial statements and should be read together with the consolidated financial statements as at December 31, 2010. Specifically, the income statement, the statement of comprehensive income, the statement of financial position, the statement of changes in equity and statement of cash flows are in an extended format and are those that have been adopted for the consolidated financial statements as at December 31, 2010. The explanatory notes below, on the other hand, are summarised and therefore do not include all the information required for annual financial statements. In line with the requirements of IAS 34, in order to avoid duplicating information which has already been published, the notes refer only to those components of the income statement, the statement of comprehensive income, the statement of financial position, the statement of changes in equity and the statement of cash flows which, owing to their composition, amount, nature or infrequency, are essential for understanding the financial position, operations and assets of the Group. The condensed consolidated interim financial statements at June 30, 2011 consist of the income statement, statement of comprehensive income, statement of financial position, statement of changes in equity and statement of cash flows, in addition to these explanatory notes. In presenting these statements, comparative data has been presented as required by IAS 34 supplemented as noted above. 2.1 Consolidated financial statements With reference to CONSOB Resolution 15519 of July 27, 2006 and Communication DEM/6064293 of July 28, 2006 relating to the layout of financial statements, it should be noted that specific layouts of income statements, statements of financial position and statements of cash flows have been included, showing significant contractual relationships with related parties in order to improve the readability of the information.
YOOX GROUP
As indicated above, the consolidated financial statements at June 30, 2011 were drawn up in accordance with the IFRS endorsed by the European Union, and comprise the following: Income statement The breakdown of the income statement is based on the allocation of costs since this is considered to provide more meaningful information than breakdown by type, in that it is more consistent with the reporting system used by management when evaluating the performance of the business. Statement of comprehensive income The structure of the statement of comprehensive income is based on the presentation, in a single statement, of the constituent components of profit (loss) for the period and the expenses and income recognised directly in shareholders equity for transactions not involving the shareholders. Statement of financial position Current and non-current assets and current and non-current liabilities are presented separately in the statement of financial position. For each item under assets and liabilities, a description is provided in the notes of the amounts expected to be settled or recovered within or after the 12-month period following the reporting date. Statement of changes in equity The statement of changes in equity reports the profit or loss for the year or the period, including each item of revenue or cost, income or expense which, as required by IAS/IFRS and their interpretations, is recognised directly in equity, and the total of these items; total comprehensive profit or loss for the year or period, with separate presentation of the portion pertaining to owners of the Parent and any portion pertaining to noncontrolling interests; the effect on each item of equity of changes to accounting standards and corrections of errors as required by the accounting treatment set out in IAS 8; and the balance of profit or loss carried forward at the start of the period and at the date of the financial statements, together with the changes during the period. The notes to the condensed consolidated interim financial statements also present the amounts deriving from transactions with owners of the Parent and a reconciliation between the book value of each share class, the share premium reserve and other reserves at the start and end of the period, showing each change separately. Statement of cash flows The statement of cash flows presents the cash flows from operating, investing and financing activities. Operating cash flows are presented using the indirect method, whereby profit or loss for the year or for the period is adjusted for non-monetary transactions, for all deferrals or provisions relating to previous or future operating receipts or payments and for revenue items relating to cash flows from investing or financing activity. 3. Accounting standards and measurement criteria 3.1 Basis of preparation The condensed consolidated interim financial statements are presented in Euro and balances in the financial statements and in the notes to the financial statements are expressed in Euro, unless specifically indicated otherwise. For reasons of clarity, it should be noted that variances in percentage terms and variations in the distinct items indicated have been calculated on precise values. It should also be noted that possible differences that may be found in some tables are due to rounding off amounts expressed in thousands of Euro. The consolidated financial statements were prepared on a historical cost basis (with the exception of derivative financial instruments, which are measured at fair value) and on the assumption that the business is on-going. Despite the difficult macroeconomic environment in which it is operating, the Group believes that there are no significant uncertainties over business continuity (as defined under IAS 1.25), particularly given the strength of the Groups financial situation.
YOOX GROUP
The accounting standards adopted for the preparation of the consolidated financial statements and notes at June 30, 2011 were applied in the same way for all periods presented for comparison. The accounting standards are applied in the same way across all Group companies. Financial transactions are recognised according to the trade date. The accounting standards used to prepare the condensed consolidated interim financial statements, as well as the recognition and measurement criteria and the consolidation principles applied, comply with those adopted for the consolidated financial statements at December 31, 2010. 3.2 Use of estimates In order to prepare the condensed consolidated interim financial statements, the management is required to use estimates and assumptions which affect the book value of assets and liabilities reported in the financial statements and the information regarding contingent assets and liabilities at the reporting date for the condensed consolidated interim financial statements. If, in the future, these estimates and assumptions, which are based on the managements best evaluation, should differ, they will be altered appropriately during the period in which the circumstances change and the effects of any changes will be immediately recognised in the income statement. For a more detailed description of the most important evaluation methods used for the Group, refer to the chapter on the Use of estimates in the consolidated financial statement at December 31, 2010. It should also be noted that these evaluation processes, especially the more complex ones, such as determining any losses for non-current assets, are usually only conducted in full during the compiling of the annual financial statement, when all the required information is available, except in cases where there are impairment indicators that require an immediate evaluation of any losses. 4. Approval of the interim financial statement at June 30, 2011 The interim financial statement at June 30, 2011 was approved by the Board of Directors on August 4, 2011. 5. Scope of consolidation The scope of consolidation at June 30, 2011 comprises the following subsidiaries of YOOX S.p.A.: YOOX Corporation, formed in 2002 to manage sales activities in North America; YOOX Japan, formed in 2004 to manage sales activities in Japan; Y Services, formed in 2007 to manage the U.S. sales of the Online Stores for the following brands: Diesel, Marni and D&G, Dolce & Gabbana and Moncler; Mishang Trading (Shanghai) Co. Ltd. established in the fourth quarter of 2010 to manage sales in China; YOOX Asia Limited established in the second quarter of 2011 to manage sales in the Asia-Pacific area.
YOOX GROUP
At June 30, 2011, the scope of consolidation included the following companies:
Company Offices Share capital at June 30, 2011 (Thousand Euro) 528 Percentage held at June 30, 2011 -
YOOX
Via Nannetti 1, 40069 Zola Predosa, Bologna, Italy 15 East North Street, Dover, Delaware 19901, United States of America 1220 Market St. Ste 806, Wilmington, Delaware 19801, United States of America Grande Maison Daikanyama No. 1001 150 0022 Shibuya-ku, Tokyo, Japan Floor 6, Donglong Building No.223 Xikang Road, Jingan District 200050 SHANGHAI 16 FL WESTERN PLAZA, 3 SAN ON STREET, TUEN MUN, N.T, 230, HONG KONG, CN
YOOX Corporation
248
100%
Y Services
125
100%
YOOX Japan
75
100%
Mishang Trading (Shanghai) Co. Ltd
1,500
100%
YOOX Asia Limited
91
100%
The scope of consolidation underwent changes in relation to December 31, 2010 through the establishment, in the second quarter of 2011, of YOOX Asia Limited in order to manage sales in the Asia-Pacific area, and in relation to June 30, 2010 when the Mishang Trading (Shanghai) Co. Ltd. was established subject to Chinese law, which involved, to date, the opening of an office in Shanghai and a local logistics centre. The logistics hub will be equipped later on with digital production studios for the creation of photographic services and cataloguing locally procured products. The exchange rates used for converting the financial statements and account balances into currencies other than the Euro at June 30, 2011, December 31, 2010 and June 30, 2010 are as follows (source www.uic.it):
Exchange rate at June 30, 2011 USD YEN CNY HKD GBP Average exchange rate for the half-year under review
1.4453 116.25 9.3416 11.2475 0.9026
1.4032 114.97 9.1755 10.9212 0.8682
Exchange rate at December 31, 2010 USD YEN CNY GBP
Average exchange rate for 2010
1.3362 108.65 8.8220 0.8608
1.3257 116.24 8.9712 0.8578
Exchange rate at June 30, 2010 USD YEN GBP
Average exchange rate for the half-year under review
1.2271 108.79 0.8175
1.3268 121.32 0.8700
The value of foreign currencies is quoted against one Euro.
YOOX GROUP
6. Changes to accounting standards, new accounting standards, changes to estimates and reclassifications Amendments and revised accounting standards applied by the Group for the first time The IASB, in the amendment to IAS 24 Information about related parties has simplified the information requirements regarding related parties where public bodies are involved and a new definition has been provided which involves a relation between related parties irrespective of the legal status for all direct relations linked by a relationship of control, joint control or considerable influence and the presence of control or joint control in just one leg of the relationship. The amendments of the IASB in May 2010 were implemented in (EU) Regulation 149/2011 of the European Commission. The principles involved and modifications are listed below. IAS 1 Presentation of financial statements: the modification included the principle with clarifications about completing the table for changes in equity and specifically introduced the requirement to present the reconciliation of the changes for each component of equity and an analysis of the other comprehensive economic statement components in the notes or in the financial statements.
IAS 34 Interim financial reporting: the improvement clarified, through a non-exhaustive list, the events and transactions for which information would have to be provided, if these events and transactions are considered to be significant; the modification introduced the need for clarification about the changes that took place during the period which affected the fair value of the financial instruments, the transfer of fair value levels between the hierarchies used in the evaluation of financial instruments, the modifications to the classification of financial instruments as a result of modifications in their use and their scope; the requirement to supply information surrounding changes in potential liabilities or assets at the closing date of the last financial year was also dispensed with.
IFRS 7 Financial instruments, supplementary information: the improvement introduced the obligation to report qualitative information in the context of quantitative information which allows users of the financial statements to link the related information and therefore represent a general framework of the nature and the extent of the risks derived from the financial instruments; a requirement to supply information about the interaction between qualitative and quantitative additional information surrounding the nature and the scope of financial instrument inherent risks was also introduced. the obligation to provide information concerning financial assets that have expired but been renegotiated or impaired has been dispensed with.
Amendments and interpretations that came into effect from January 1, 2011 not relevant to the Group The principles involved and modifications are listed below. IFRS 1 First-time adoption of international accounting standards: the amendment introduced exemption for anyone adopting the international accounting standards for providing information about changes in accounting standards in the year of adoption for the first time; the amendment provided clarification about the use of fair value in replacement of cost.
IFRS 3 Business combinations: The improvement clarifies that the possibility of measuring all components of minority interests at fair value or in proportion to the share of the minority interest in identifiable net assets of the acquiree is only limited to those components representing instruments that currently give minority shareholders rights equivalent to those of ordinary shares and specifically the right to a pro-rated share of net assets in the case of liquidation. All the other components relating to minority interests (such as, for example, privileged shares or warrants issued by
YOOX GROUP
the company acquired to minorities) must be valued at fair value unless the IFRS gives another evaluation criterion. The improvement also provides a guide for the accounting treatment relating to the replacement of incentives recognised in payments based on shares of an acquiree with those of the buyer. In addition, the updated version of IFRS 3 introduced changes regarding: the rules governing phased acquisitions of subsidiaries; the right to evaluate at fair value minority interests purchased during a partial acquisition; the allocation of all costs connected to the business combination to the income statement; the recognition of liabilities for payments subject to conditions at the purchase date.
IFRIC 13 Loyalty schemes: assessment at fair value has been introduced for reward points.
IAS 32 Financial instruments, presentation in the financial statements: the amendment establishes that, in certain conditions, rights in foreign currency are classified as equity regardless of the currency in which the strike price is denominated.
IFRIC 19 Termination of financial liabilities with capital instruments. The amendment has established that: the issuance of capital instruments should be commensurate with the price paid; capital instruments are valued at fair value on the termination date. If it cannot be reliably determined, the fair value of the terminated liability is adopted; the difference between the price paid and the book value of the terminated financial liability is recorded in the income statement; the principle cannot be applied to transactions under joint control or between shareholders and creditors; as far as partial terminations are concerned, the price paid should be allocated to the liabilities that remain in existence and to those which have been terminated, and the 10% test should be carried out to check the substantial modification of the liability whilst the transaction costs can only be deferred in the case of modifications that are not substantial.
New accounting principles and amendments not applicable in 2011 and not adopted in advance The principles involved and modifications are listed below. IAS 27 Consolidated and separate financial statements: the principle has been amended in the light of the introduction of IFRS 10. The amendment establishes that it is not compulsory to draw up separate financial statements but, if they are produced, they come under the scope of this rule. The amendment involves: the accounting of investments in subsidiaries, associated companies and joint ventures at cost or in compliance with IFRS 9; the payment of dividends; reorganisations within the Group structure and information to be presented. IFRS 10 Consolidation and IFRS 12 Disclosure of Interests in Other Entities The Board has: revised the definition of control and the related application guide so that all entities apply the same control model; and it has improved the information provided about consolidated and non-consolidated entities. The Board has provided the full guidelines for establishing in which circumstances a special purpose vehicle or an entity in which the majority of voting rights is not held (even potential rights) should or should not be consolidated. To sum up, control is held where it can be demonstrated that the investor has the power to decide about the assets of the business in which it has invested (investee) and is exposed to the variable nature of the business returns and therefore has to ability to use its own power to affect returns.
YOOX GROUP
On May 12, 2011, the IASB published IFRS 10 Consolidated Financial Statements and IFRS 12 Disclosure of Interests in Other Entities. For the section relating to Investment entities, the publication of the Exposure Draft is expected by June 2011. IFRS 11 Joint Arrangements The Board has improved: the accounting of joint venture agreements defining a principle-based approach in which the entity records the contractual rights and obligations of the agreement in its financial statements; and the quality of the information supplied to provide investors with a better understanding of the nature and the financial effects of the transaction that has taken place. The IASB has separated the joint arrangements into three categories: joint operations, joint assets and joint ventures. To establish under which category a joint arrangement comes, the substance of the agreement needs to be considered and one should not be limited to the formal aspect alone. In joint operations and joint assets, the investor contractually acquires a right to a given asset (or to a share of an asset) and/or assumes a given liability (or a share of a liability), while in joint ventures, the investor acquires the right to obtain a share of the results produced by the group of assets and liabilities controlled jointly by all the venturers. The contracting party in a joint operation or a joint asset records the assets (or a share of the assets) which they acquire, the liabilities (or a share of the liabilities) which they assume following the contract and the related costs and revenues (or a share of the related costs and revenues) directly in their financial statements, while the contracting party in a joint venture records their share of the investment in the joint venture in their consolidated financial statements, applying the equity method, and therefore the proportional consolidation of joint ventures is no longer permitted. It is assumed that a business that is subject to joint control is a joint venture, unless the circumstances (i.e. the contractual rights and obligations) demonstrate otherwise. On May 12, 2011, the IASB published IFRS 11 Joint Arrangements which replaces IAS 31 Investments in joint ventures. IFRS 13 Fair value measurement On May 12, 2011, the IASB published IFRS 13 Fair Value Measurement in which the Board has: clarified the definition of fair value; established a single reference framework for the measurement of fair value; provided clarifications and operating guides for determining fair value (in illiquid or inactive market situations as well). The entity must therefore provide information that allows the recipients of the financial statements to understand the evaluation methods and the inputs used to measure the fair value of an asset or a liability. 7. Segment reporting (business lines) The Groups operating segments were determined on the basis of the reporting information used by senior management when making strategic decisions. This reporting information, which also reflects the Groups current organisational structure, is based on the various products and services provided and is produced using the accounting standards described above (IAS/IFRS). The operating segments generate revenue from the specific production and sales activities described below: 1. Multi-brand, comprising the multi-brand online store activities of yoox.com and thecorner.com: a. as an Online Store, yoox.com has been operational since June 2000, and offers a vast array of fashion and design products. The majority of products offered on yoox.com are clothing, footwear and fashion accessories drawn from the collections of well-known brands for the corresponding season of the previous year at reduced prices. To complete its select offerings, yoox.com offers collections made exclusively for sale through yoox.com from leading designers, as well as vintage garments, special editions from on-trend designers and an original selection of design objects;
YOOX GROUP
b. thecorner.com is a virtual space launched in February 2008 to market the current season collections of established brands and niche and/or artisan brands with relatively limited distribution, many of which are being made available online for the first time. The products sold on thecorner.com carry prices in line with those found in the traditional channel for the same clothing and accessories. At its start, thecorner.com offered mens clothing only, and in September 2009 it launched a womens collection. thecorner.com is a virtual space containing mini-stores dedicated to each brand, designed to recreate the style, the atmosphere and the world of ideas evoked by the brand. Customers can browse for clothes, shoes and accessories while immersed in exclusive multimedia content and images from advertising campaigns and fashion shows. 2. Mono-brand, comprising the design, creation and management, on an exclusive basis, of the Online Stores of some of the leading global fashion brands. The Group is therefore the Strategic Partner for these brands in this specific sales channel. The goods available in the Online Stores are sold and invoiced directly to end customers by YOOX. The Group also has a Corporate and Central Services Area that directs and coordinates the Groups activities. This Area also plays a key role in facilitating the operational integration of the various Areas and in supporting the activities directly associated with the operating segments. This Area includes Group management and the administrative, finance and control, legal, general services, human resources, press office, technology, investor relations and internal audit functions. The Group evaluates the performance of its operating segments according to their operating results, these being the results generated by ordinary operations. The segment revenues shown are those directly generated by or attributable to the segment and derive from its core activity. They include solely the revenue earned from transactions with third parties, since no revenue is generated from transactions with other segments. Segment costs comprise the direct costs charged by third parties in relation to the operating activities of the segment or directly attributable to the segment. No costs are incurred in relation to other operating segments. The operational reporting system used by senior management to evaluate business performance does not envisage the allocation of amortisation, depreciation and non-monetary income and expenses to the operating segments, and the information presented here is consistent with this reporting system. General expenses and other non-recurring income and expenses, financial income and expenses and taxes incurred in Group operations remain the responsibility of the Corporate Area since they are not related to the operations of the segments, and are posted under Corporate. All the income components presented are measured using the same accounting criteria as those adopted to prepare the Groups condensed consolidated interim financial statements.
YOOX GROUP
Income statement figures for each operating segment at June 30, 2011, with a reconciliation of entries with the Groups income statement, are presented below:
Description Multi-brand Mono-brand Corporate Group total June 2010 96,554
June 2011 June 2010 June 2011 June 2010 June 2011 June 2010 June 2011 Segment net revenues 97,830 73,831 33,407 22,723 131,237
Segment operating profit
14,159
11,857
5,882
3,839
20,040
15,696
Reconciliation with Group results: General expenses Other depreciation and amortisation not attributable to operating segments Other income and expenses Non-recurring expenses Other items (14,232) (548) (139) (9,916) (232) (240) (14,232) (548) (139) (9,916) (232) (240) -
Group operating profit/(loss)
14,159
11,857
5,882
3,839
(14,918)
(10,388)
5,122
5,308
Financial income Financial expenses Profit before tax
549 (742)
843 (539) -
549 (742) 4,930
843 (539) 5,612
Taxes Profit for the period
(2,014) -
(2,273) -
(2,014) 2,916
(2,273) 3,339
8. Information by geographical area Revenues generated by the Group from transactions with third-party customers break down as follows:
Description Italy Europe (excluding Italy) North America Japan Other countries Not country related Total June 30, 2011 28,021 64,926 25,325 8,437 2,113 2,415 131,237 June 30, 2010 23,278 46,471 18,918 6,095 658 1,134 96,554
The Not country related item comprises the setting-up and maintenance activities for the Online Stores, media partnership projects in the Multi-brand business line as well as web marketing and web design services in the Mono-brand business line, and other services offered by Yagency. The table showing revenue by geographical area complies with the Group control model: only sales to online customers are included and are allocated by country in the actual control model. In the first six months of 2011 and in 2010, revenue generated from transactions with the largest third-party customer did not exceed 10% of the Groups total revenues.
YOOX GROUP
9. Notes to the statement of financial position, income statement and statement of cash flows Income statement 9.1 Net revenues The Groups total net revenues at June 30, 2011 and at June 30, 2010 break down as follows:
Description Net revenues from sales Net revenues from the provision of services Total June 30, 2011 123,793 7,444 131,237 June 30, 2010 91,809 4,745 96,554 Change 31,984 2,699 34,683
Total net revenues increased, going from Euro 96,554 thousand in the first half of 2010 to Euro 131,237 thousand in the first half of 2011, an increase of 35.9%. Total net revenues from sales include all revenues arising from the sale of goods, net of customer discounts and returns and revenues from the provision of services. The rise in net revenues from sales in the first half of 2011 is mainly due to the upward trend in sales volumes. The growth in volumes is largely due to the rise in the number of orders. For further details on the breakdown of revenue by geographical area and by operating segment, please see Note 7 Segment reporting and Note 8 Information by geographical area. Revenues from the sale of goods is reported net of sales returns, amounting to Euro 43,123 thousand in the first half of 2011, or 25.8% of gross revenues for the first half of 2011 (revenues from the sale of goods before customer returns in the first half of 2011) and Euro 33,251 thousand in the first half of 2010, or 26.6% of gross revenues in the first half of 2010 (revenues from the sale of goods before customer returns in the first half of 2010). Returns are an inherent part of the Groups business activities, as a result of the protection afforded to consumers under distance-selling and specifically e-commerce regulations in force in the countries where the Group operates. Net revenues from the provision of services rose by 56.9% from Euro 4,745 thousand in the first half of 2010 to Euro 7,444 thousand in the first half of 2011, mainly including: The recharging of transport services for sales to the end customer (in certain countries the customer also pays for return shipments), net of refunds made if the customer returns the goods sold; Revenue from the set-up fees charged to create the Online Stores and fees charged to Strategic Partners in the Mono-brand business line for assistance in maintaining the Online Stores; Revenue generated by the sale of media partnership projects and web marketing and web design services and other services offered by Yagency.
9.2 Cost of goods sold The cost of goods sold came to Euro 82,161 thousand (equal to 62.6% of net revenue) for the period ended at June 30, 2011 compared with Euro 59,445 thousand (equal to 61.6% of net revenue) for the first half of 2010. The item cost of goods sold includes both costs of the purchase of goods destined for sale and costs of services and other costs.
YOOX GROUP
The following table shows a breakdown of the cost of goods sold by nature:
Description Change in inventories of goods Purchase of goods Cost of services Other costs Total June 30, 2011 10,629 (80,206) (11,621) (963) (82,161) June 30, 2010 10,383 (61,190) (8,091) (547) (59,445) Change 246 (19,016) (3,530) (416) (22,715)
The cost of purchasing goods went from Euro 61,190 thousand in the first half of 2010 to Euro 80,206 thousand in the first half of 2011. It comprises the procurement costs of goods destined for resale and its absolute value is directly correlated with the performance of volumes sold. Service costs increased by 43.6%, from Euro 8,091 thousand in the first half of 2010 to Euro 11,621 thousand in the first half of 2011. This item includes transportation costs for sales and returns. A portion of the transportation costs is invoiced directly to the end customer and recognised as revenue from the provision of services, net of refunds on customer returns. Other costs increased by 76.1%, from Euro 547 thousand in the first half of 2010 to Euro 963 thousand in the first half of 2011. These costs mainly comprise transportation costs for purchases, and the internal personnel costs and external supplier costs incurred to set-up and maintain the websites of Mono-brand Strategic Partners. 9.3 Fulfilment costs Fulfilment costs came in at Euro 14,908 thousand (11.4% of net revenues) for the period ended June 30, 2011, compared with Euro 10,220 thousand (10.6% of net revenues) in the first six months of 2010, an increase of Euro 4,688 thousand. This cost comprises operational expenses incurred from digital production, cataloguing and quality control, from warehouse logistics, and from customer services, including call centre services and customer care. The following table shows the breakdown of fulfilment costs:
Description Service costs and other costs Personnel expenses Depreciation and amortisation Total June 30, 2011 (11,734) (2,642) (532) (14,908) June 30, 2010 (7,999) (2,004) (217) (10,220) Change (3,735) (638) (315) (4,688)
Service costs and other costs increased by 46.7%, from Euro 7,999 thousand in the first half of 2010 to Euro 11,734 thousand in the first half of 2011. They mainly comprise service costs for handling and packaging goods and costs relating to outsourced production processes. Personnel expenses went from Euro 2,004 thousand in the first half of 2010 to Euro 2,642 thousand in the first half of 2011, an increase of 31.8% due both to an increase in the number of staff employed in this division, which went from 92 at June 30, 2010 to 98 at June 30, 2011, of which seven members of staff at June 30, 2010 were located in offices overseas and this figure stood at 11 at June 30, 2011, and to the increase in the cost of stock option plans and the company incentive plan which went from Euro 31 thousand in the first half of 2010 to Euro 92 thousand in the first half of 2011. It should be noted that in addition to the cost of employees personnel expenses also include cost of interns, collaborators and consultants that comes under personnel expenses.
YOOX GROUP
9.4 Sales and marketing costs The cost for business expenses came to Euro 14,676 thousand (11.2% of net revenues) for the half-year ending June 30, 2011 compared with Euro 11,425 thousand (11.8% of net revenues) for the half-year ending June 30, 2010, an increase of 28.5% These expenses relate to departments operating in sales. A portion of the costs are for personnel working in sales and marketing. The item also contains web marketing costs (including costs for online affiliation activities, i.e. sales commission paid to commercial intermediaries, and for consultancy services for the creation and development of advertising campaigns and procurement). Sales and marketing expenditure also includes costs for charges on credit card transactions and other methods of payment made to intermediaries for payment collection services, as well as expenses relating to customs duties levied on the import and export of goods sold. The following table shows the breakdown of sales and marketing costs:
Description Cost of services Personnel expenses Depreciation and amortisation Other costs Total June 30, 2011 (9,198) (4,668) (16) (794) (14,676) June 30, 2010 (6,965) (3,550) (15) (895) (11,425) Change (2,233) (1,118) (1) 101 (3,251)
The cost of services rose by 32.1% from Euro 6,965 thousand in the first half of 2010 to Euro 9,198 thousand in the first half of 2011. The main components of service costs incurred in the first half of 2011 are mainly:
web marketing costs of Euro 3,242 thousand (Euro 3,071 thousand in the first half of 2010). These costs relate to the purchasing of online advertising, the negotiation and implementation of marketing agreements and the development of new partnerships and the commercial and technical management of existing partnerships, mainly for the Multi-brand business line; costs incurred for commissions on credit card transactions and other related means of payment to intermediaries for payment collection services of Euro 2,120 thousand (Euro 1,645 thousand in the first half of 2010); import and export duties totalling Euro 2,220 thousand (Euro 1,408 thousand in the first half of 2010).
Personnel expenses went from Euro 3,550 thousand in the first half of 2010 to Euro 4,668 thousand in the first half of 2011, an increase of 31.5% due both to an increase in the number of staff employed in this division, which went from 108 at June 30, 2010 to 148 at June 30, 2011, of which 11 members of staff at June 30, 2010 were located in offices overseas and this figure stood at 21 at June 30, 2011, and to the increase in the cost of stock option plans and the company incentive plan which went from Euro 344 thousand in the first half of 2010 to Euro 671 thousand in the first half of 2011. It should be noted that in addition to the cost of employees personnel expenses also include cost of interns, collaborators and consultants that comes under personnel expenses. Other costs increased by 11.3%, from Euro 895 thousand in the first half of 2010 to Euro 794 thousand in the first half of 2011. This item mainly comprises costs incurred for fraud relating to online sales, which decreased by 49.3%, from Euro 438 thousand in the first half of 2010 to Euro 222 thousand in the first half of 2011. 9.5 General expenses General expenses include all the overhead costs of the Groups various offices pertaining to personnel management, administration, finance and control, communications and image, general management, general services, investor relations, internal audit and technological services. General expenses were up 43.5% in the first half of 2011 at Euro 14,232 thousand, compared with Euro 9,916 thousand in the first half of 2010.
YOOX GROUP
General expenses can be broken down as follows:

Description Cost of services Personnel expenses Depreciation and amortisation Total June 30, 2011 (6,609) (5,407) (2,216) (14,232) June 30, 2010 (4,255) (4,368) (1,294) (9,916) Change (2,354) (1,039) (922) (4,316)
The cost of services rose by 55.3% from Euro 4,255 thousand in the first half of 2010 to Euro 6,609 thousand in the first half of 2011. Personnel expenses went from Euro 4,368 thousand in the first half of 2010 to Euro 5,407 thousand in the first half of 2011, an increase of 23.8% due both to an increase in the number of staff employed in this division, which went from 134 at June 30, 2010 to 193 at June 30, 2011, of which 2 members of staff at June 30, 2010 were located in offices overseas and this figure stood at 10 at June 30, 2011, and to the increase in the cost of stock option plans and the company incentive plan which went from Euro 944 thousand in the first half of 2010 to Euro 1,431 thousand in the first half of 2011. It should be noted that in addition to the cost of employees personnel expenses also include cost of interns, collaborators and consultants that comes under personnel expenses. Depreciation and amortisation increased by 71.3%, from Euro 1,294 thousand in the first half of 2010 to Euro 2,216 thousand in the first half of 2011. 9.6 Other income and expenses Other income and expenses came to a total of Euro 139 thousand for the period ending at June 30, 2011 over Euro 240 thousand for the period ending June 30, 2010, a decrease of Euro 101 thousand. Other income and expenses can be broken down as follows:
Description Extraordinary income/liabilities Theft and losses Other tax charges Other expenses Provisions for sundry risks Reimbursements Total June 30, 2011 307 (237) (120) (55) (66) 31 (139) June 30, 2010 154 (121) (142) (45) (113) 29 (240) Change 154 (115) 23 (10) 47 2 101
Extraordinary income/liabilities went from Euro 154 thousand in the first half of 2010 to Euro 307 thousand in the first half of 2011. This item includes charges and income from ordinary management activities. Theft and losses relates to the theft and losses of goods destined for final customers that have already occurred at the closing date of the period. Other financial expenses totalled Euro 142 thousand in the first half of 2010 and Euro 120 thousand in the first half of 2011. Provisions for sundry risks in the first half of 2011 relate to the estimated charge incurred due to theft and loss of goods not identified as missing at the closing date of the condensed consolidated interim financial statements. 9.7 Non-recurring expenses No non-recurring expenses were incurred in the first half of 2011 or the first half of 2010.
YOOX GROUP
9.8 Operating profit As required by IAS 1, the following is a breakdown of costs by nature used to determine the operating margin.
Description Net revenues Changes in inventories Purchase of goods Services Personnel expenses Depreciation, amortisation and impairment losses Other costs and revenues Total June 30, 2011 131,237 10,629 (80,206) (39,161) (12,717) (2,763) (1,896) 5,122 June 30, 2010 96,554 10,383 (61,190) (27,310) (9,922) (1,526) (1,682) 5,308 Change 34,683 246 (19,016) (11,852) (2,795) (1,238) (215) (186)
Operating profit totalled Euro 5,308 thousand at June 30, 2010 and Euro 5,122 thousand at June 30, 2011, representing 5.5% of net revenues in the first half of 2010 and 3.9% in the first half of 2011. Personnel expenses include all employment related expenses, such as merit pay rises, promotions, cost-ofliving adjustments, variable remuneration for the first half of 2011, unused leave and accruals to legal reserves required under collective agreement, as well as related social security contributions and the contributions to the post-employment benefits for Parent employees. These costs also include the fair value of stock options and the company incentive plan for employees, between the allocation and vesting dates, with a direct matching entry in equity. It should be noted that in addition to the cost of employees, personnel expenses also include the inherent costs of resources such as interns, associates and consultants, which come under personnel expenses and the remuneration for the Groups Chief Executive Officer. At June 30, 2011, the Group headcount was 31% higher than in the same period of the previous year, corresponding to a net increase of 105 employees. The table below shows a breakdown of the headcount as of June 30, 2011 compared with that of June 30, 201020.
Number Managers Junior managers Employees and trainees Abroad Total headcount June 30, 2011 22 33 342 42 439 June 30, 2010 16 29 269 20 334 Change 6 4 73 22 105
9.9 Financial income Financial income totalled Euro 549 thousand in the first half of 2011 and Euro 843 thousand in the first half of 2010. The following table shows the breakdown of financial income:
Description Exchange rate gains Other financial income Interest income on current account Total June 30, 2011 527 10 13 549 June 30, 2010 713 96 34 843 Change (186) (86) (21) (294)
Exchange rate gains totalled Euro 713 thousand in the first half of 2010 and Euro 527 thousand in the first half of 2011. They mainly relate to the conversion of items to US dollars and Japanese yen and are closely connected to the ordinary sale and purchase of goods.
20
The headcount does not include the Chief Executive Officer of YOOX S.p.A., interns or collaborators.
YOOX GROUP
Other financial income decreased from Euro 96 thousand in the first half of 2010 to Euro 10 thousand in the first half of 2011. 9.10 Financial expenses Financial expenses totalled Euro 539 thousand in the first half of 2010 and Euro 742 thousand in the first half of 2011. The following table shows the breakdown of financial expenses:
Description Exchange rate losses Other financial expenses Interest expenses Total June 30, 2011 (520) (162) (60) (742) June 30, 2010 (224) (233) (82) (539) Change (296) 71 22 (203)
Exchange rate losses totalled Euro 224 thousand in the first half of 2010 and Euro 520 thousand in the first half of 2011. They mainly relate to the conversion of items to US dollars and Japanese yen and are closely connected to the ordinary sale and purchase of goods. Other financial expenses totalled Euro 233 thousand in the first half of 2010 and Euro 162 thousand in the first half of 2011. 9.11 Tax Income tax for the period can be broken down as follows:
Description Current IRES income tax - Parent (1) Current IRAP income tax - Parent (2) Current income tax - foreign companies Deferred taxes Total taxes June 30, 2011 (839) (511) (752) 88 (2,014) June 30, 2010 (848) (461) (1,439) 475 (2,273) Change 9 (50) 687 (387) 259
(1) IRES: Imposta sul Reddito delle Societa (Corporate or Company Tax) (2) IRAP: Imposta Regionale sulle Attivita Produttive (Regional Tax on Production Activities)
The Group has incurred a lower tax burden in absolute terms compared with the situation at June 30, 2010. Current taxes have decreased from Euro 2,748 thousand to Euro 2,102 thousand. The Parents IRAP tax burden increased by 11% (IRAP at June 30, 2011 was equal to Euro 511 thousand compared with Euro 461 thousand at June 30, 2010). IRES taxes for the Parent amounted to Euro 839 thousand. Taxes for Group overseas companies for the period to June 30, 2011 amounted to approximately Euro 752 thousand. The Group also recognised deferred tax assets totalling Euro 4,689 thousand and deferred tax liabilities of Euro 60 thousand. Deferred tax assets of Euro 4,613 thousand and deferred tax liabilities of Euro 72 thousand that were recognised in 2010 were also reversed. It should also be pointed out that the amount in the income statement does not include the Euro 269 thousand of deferred taxes for the share premium reserve, in compliance with provisions of IAS 32. The deferred tax assets reversed include deferred tax assets directly against the share premium reserve of Euro 537 thousand set aside in the financial year 2010.
YOOX GROUP
9.12 Basic and diluted earnings per share The following table shows the calculation of the basic earnings per share (basic EPS) and diluted earnings per share (diluted EPS) reported in the consolidated income statement.
Calculation of basic EPS Basic earnings Average number of ordinary shares June 30, 2011 2,916 52,442,753 June 30, 2010 3,339 50,947,893
Basic EPS
0.06
0.07
Calculation of diluted EPS Basic earnings Average number of ordinary shares Average number of shares granted without consideration Total
June 30, 2011 2,916 52,442,753 1,096,576 53,539,329
June 30, 2010 3,339 50,947,893 1,623,994 52,571,887
Diluted EPS
0.05
0.06
The average number of shares granted without consideration at June 30, 2011 and June 30, 2010 and used to calculate diluted EPS relates to the effect of granting shares under existing stock option plans which, as stated in IFRS 2, can be converted on the basis of vesting conditions in the respective periods. Statement of financial position 9.13 Property, plant and equipment At June 30, 2011, property, plant and equipment totalled Euro 16,326 thousand. The following is a summary of changes therein in the first half of 2011:
YOOX GROUP
Historical cost Amort.
Increases
Utilisation
Description
at December 31, 2010 382 1,096 1,096 274 1,388 358 1,030 5,947 9,086 22,565 (3,526) 6,576 131 4,932 (1,869) (106) (5,084) 124 1,319 (567) 124 6,383 (2,543) 321 1,702 (657) (111) (476) (95) (377) (4) (1,155) 227 2,763 (844) (196) 227 2,763 (844) (196) 2,854 5,141 (1,040) (372) -
Decreases/ Historical Acc. Reclassifications cost amortisation at June 30, at December 31, 2011 2010 (1,412) (1,040) (1,040) (764) (3,019) (662) (2,246) (110) (6,235)
Acc. Net carrying Net carrying amortisation amount amount at June 30, at December 31, at June 30, 2011 2010 2011 865 596 596 451 2,328 270 2,033 25 4,156 8,395 3,729 1,723 1,723 935 3,364 657 2,686 21 6,576 16,326
Plant and equipment
1,905
Buildings
1,440
Leasehold improvements
1,440
Industrial and commercial equipment
1,107
Other assets
4,871
Furniture and furnishings
837
Electronic equipment
3,902
Other Tangible Assets
131
Assets under construction and payments on account
4,156
General Total
13,478
YOOX GROUP
The overall increase in tangible assets equal to Euro 9,086 thousand is mainly linked to investments in the highly automated techno-logistical platform, a project in which the Group has been investing since the fourth quarter of 2010. Within the scope of the above-mentioned project, the YOOX Group had, at June 30, 2011, obligations to purchase material assets for an amount equal to Euro 4,023 thousand which will be sustained overall in the years 2011 2016. The significant increase in assets under construction and payments on account for a net amount of Euro 2,421 thousand is due entirely to the above-mentioned investment in the techno-logistics platform, which only became fully operational at the beginning of the third quarter of 2011. There have also been investments in technological infrastructures as well as the renewal/completion of the Zola Predosa premises and the new offices in Milan. Depreciation in the period totalled Euro 1,155 thousand. Note that at June 30, 2011 there were no liens or mortgages on YOOX Group tangible assets. Moreover, no impairment losses or revaluations were carried out on items of property, plant and equipment in the first half of 2011. In the period under review, no borrowing costs were ascribed to asset entries in the statement of financial position. 9.14 Intangible assets with finite useful life Intangible assets amounted to Euro 9,728 thousand at June 30, 2011. The following is a summary of changes in intangible assets with finite useful life in the first half of 2011:
YOOX GROUP
Historical cost at June 30, 2011 317 112 112 3,684 94 94 4,207 18,101 1,613 1,613 3,684 (1,259) (1,259) (6,765) 309 (92) 309 (92) (15) (15) (89) (89) (1,608) 3,190 (2,264) (219) 9,305 (3,150) (1,285) (4,435) (2,483) (107) (107) (1,348) (1,348) (8,373) at December 31, 2010 at June 30, 2011
Increases
Decreases/Reclassified
Historical cost Acc. amortisation
Amort.
Acc. amortisation
Description
at December 31, 2010
Net carrying Net carrying amount amount at December 31, at June 30, 2010 2011 6,155 609 105 105 260 260 7,129 4,870 707 202 202 3,684 265 265 9,728
Development costs
9,305
Software and licences
2,873
Brands and other rights
197
Trademarks and patents
197
Assets under development
Other
1,519
Other intangible assets
1,519
General Total
13,894
The principal changes in these items during the period are described below.
YOOX GROUP
Development costs During the first half of 2011, the item assets under development increased by Euro 3,684 thousand due almost entirely to consistent investments made by the Group in long-term development projects. These are costs incurred by YOOX S.p.A. for specific projects aimed at the on-going development of innovative solutions for the creation and management of Online Stores. Development projects have been classified according to the area in which the various initiatives take place: development of e-commerce functions and development of tools to support productivity, security and performance. Expenses for research-related activities, which are carried out with a view to obtaining new scientific or technical knowledge and discoveries, are recognised in the income statement at the time they are incurred. Other investments in intangible assets refer mainly to software, licences and other Group intangible activities. Software and licences The increase of Euro 317 thousand in this item includes expenditure with long-term benefits, principally relating to the acquisition of software licences to build the infrastructure of the Online Stores. Brands and other rights The value of this item at June 30, 2011 stood at Euro 202 thousand, an increase of Euro 112 thousand during the period in question. It mainly comprises expenses incurred by the Parent Company in acquiring and registering national and international trademarks. Amortisation in the period totalled Euro 1,608 thousand. 9.15 Deferred tax assets
Description Deferred tax assets Total Balance at June 30, 2011 5,142 5,142 Balance at December 31, 2010 5,456 5,456 Change (314) (314)
Deferred tax assets fell by 5.7%, from Euro 5,456 thousand at December 31, 2010 to Euro 5,142 thousand at June 30, 2011. Deferred tax assets at June 30, 2010 were recognised mainly in relation to: the provisions for obsolete inventories; the provisions for risks and charges (provisions for disputes, provisions for fraud and provisions for theft and loss, respectively); directors fees unpaid at June 30, 2011; unissued and non-deductible credit notes;
Euro 4,613 thousand in deferred tax assets recognised in 2010 were also reversed. It should also be noted that the amount in the income statement does not include the Euro 269 thousand of deferred tax assets for the share premium reserve, in compliance with provisions of IAS 32. The deferred tax assets reversed include deferred tax assets directly against the share premium reserve of Euro 537 thousand set aside in the financial year 2009. Deferred tax assets posted to provisions, provisions for obsolete inventories and provisions for risks and charges also include the amount relating to the provisions recorded by the Groups foreign companies.
YOOX GROUP
9.16 Other non-current financial assets Other non-current financial assets at June 30, 2011 stood at Euro 581 thousand (Euro 507 thousand at December 31, 2010) and refer, in the main, to rental contracts and energy and gas service administration contracts and existing agreements with Paymentech relating to reserves to guarantee repayment of sales values, as well as the deposit paid during the fourth quarter of 2010 for the establishment of the company subject to Chinese law, Mishang Trading (Shanghai) Co. Ltd., 100% controlled by the Parent YOOX S.p.A. It should be noted that other non-current financial assets are payable in more than five years. 9.17 Inventories
Description Inventories Total Balance at June 30, 2011 86,527 86,527 Balance at December 31, 2010 76,311 76,311 Change 10,216 10,216
Inventories at June 30, 2011 and December 31, 2010 break down as follows:
Description Inventories of raw materials, consumables and supplies Total Finished products and goods Provision for obsolete finished products and goods Total Total net inventories Balance at June 30, 2011 599 599 93,365 (7,438) 85,927 86,527 Balance at December 31, 2010 376 376 81,980 (6,045) 75,935 76,311 Change 223 223 11,385 (1,393) 9,992 10,216
Inventories rose by 13.4% from Euro 76,311 thousand at December 31, 2010 to Euro 86,527 thousand at June 30, 2011, and relate to goods that have been purchased for subsequent resale online. The increase that can be observed is only partly connected to the growth in volumes in the first half of 2011. The Groups business model makes provision for the early procurement of the goods in relation to the sales season. At June 30, 2011, 81.3% of the carrying amount of goods inventories (2011 Spring/Summer and 2011-2012 Autumn/Winter), including the impairment allowance, consists of goods already for sale and goods purchased for sale in subsequent months (2012 Spring/Summer collection). Goods from previous collections and/or obsolete goods are written down with a provision for obsolete finished products and goods, calculated using the estimated realisable value of the goods. The reserve for obsolete finished products and goods has a carrying amount deemed appropriate for the actual quantities of obsolete or slow-moving goods on hand.
YOOX GROUP
9.18 Trade receivables The breakdown of trade receivables at June 30, 2011 is as follows:
Description Due from customers Other trade receivables Allowance for impairment Total Balance at June 30, 2011 Balance at December 31, 2010 4,147 4,896 (80) 8,963 3,963 5,501 (80) 9,384 Change 184 (606) (422)
The receivables due from customers are fully recoverable within 12 months and relate to trade receivables for the sale of goods to individuals. Other trade receivables mainly relate to receivables from Online Stores, chiefly for the provision of services. This item includes, among other things, services in progress which refer to set-up fees paid to the Group by Strategic Partners for whom the Group designs and creates Online Stores. They are measured according to fees accrued in the year based on the stage of service completion. The allowance for impairment covers specific risks relating to unpaid receivables and other receivables not considered recoverable. Provisions made during the periods adjust the receivables to their estimated realisable value. During the half-year in question, no further provision had to be made to the allowance for impairment which remained unchanged compared with December 31, 2010. Pursuant to IFRS 7, Note 10 provides information on the maximum credit risk classed according to due dates, gross of the allowance for impairment. 9.19 Other current assets
Description Other current assets Total Balance at June 30, 2011 Balance at December 31, 2010 7,216 7,216 7,318 7,318 Change (102) (102)
The following is a breakdown of other current assets at June 30, 2011:

Description Other receivables Allowance for impaired receivables from others Travel and payroll advances to employees Due from acquirers Prepayments Tax receivables Hedging derivatives Total Balance at June 30, 2011 Balance at December 31, 2010 818 (221) 1,578 1,380 3,539 123 7,216 3,893 (221) 4 1,724 988 901 29 7,318 Change (3,076) (4) (146) 392 2,638 94 (102)
The item Other receivables includes: mainly credit notes received from suppliers for which the latter must still refund money to the Company and from advance payments to the supplier for the purchase of goods for which the corresponding goods have not yet been received (e.g.: payments on order, pre-payments); Euro 216 thousand in receivables for sums paid to the Parents tax representative in Greece and fully impaired.
YOOX GROUP
The significant decrease at June 30, 2011 compared with December 31, 2010 is precisely due to the lower amount of advances to suppliers for the purchase of goods. The allowance for impairment receivables from others, as previously mentioned, relates to the loan to the Greek tax representative, which is deemed unrecoverable. The item Due from acquirers reflects customer payments already collected by Italian and foreign acquirers but not yet paid over to the Group at June 30, 2011. The Prepayments item mainly comprises costs relating to future periods but incurred in the first half of 2011. It mainly includes software licence fees, insurance costs and rental costs. Tax receivables, which are fully recoverable by the end of the following year, mainly comprise VAT receivables. 9.20 Cash and cash equivalents and financial current assets The breakdown of the item Cash and cash equivalents at June 30, 2011 is as follows:
Description Bank and postal accounts Cash and cash equivalents on hand Total cash Balance at June 30, 2011 12,058 9 12,067 Balance at December 31, 2010 24,180 8 24,188 Change (12,122) 1 (12,121)
The following is a breakdown of current financial assets at June 30, 2011:

Description Banca Pop. di Novara securities account Adjustment to the Amortised Cost of current financial assets Total current financial assets Balance at June 30, 2011 Balance at December 31, 2010 5,000 82 5,082 Change (5,000) (82) (5,082)
Cash and cash equivalents totalled Euro 12,067 thousand as of June 30, 2011, and are made up of cash, negotiable instruments and demand deposits or short-term deposits with banks, which are actually available and readily usable. Other current financial assets, equal to Euro 5,082 thousand at December 31, 2010, refer to Repurchase Agreements with a low risk short-term profile (less than twelve months) agreed with major national Credit Institutions with a high credit rating. 9.21 Equity attributable to owners of the Parent The breakdown of changes in equity at June 30, 2011 is presented in a separate table. The share capital of Euro 528 thousand at June 30, 2011 (Euro 518 thousand at December 31, 2010) increased over the course of the first half of 2011 following the exercise of the stock options on the part of the beneficiaries in question. In this regard it should be noted that on January 17, 2011, 104,000 ordinary shares were granted following the exercise of 2,000 options relating to the 2007-2012 stock option plan, on January 28, 2011, 508,716 ordinary shares were granted following the exercise, during the month of December 2010, of 9,783 options relating to the 2001-2003, 2003-2005 and 2006-2008 stock option plans, on February 14, 2011, 104,000 ordinary shares were granted following the exercise of 2,000 options relating to the 2007-2012 stock option plan, on March 14, 2011, 138,632 ordinary shares were granted following the exercise of 2,666 options relating to the 2007-2012 stock option plan, on April 14, 2011, 63,856 ordinary shares were granted following the exercise of 1,228 options relating to the 2007-2012 stock option plan, on May 13, 2011, 93,600 ordinary shares were granted following the exercise of 1,800 options relating to the 2007-2012 stock option plan, for a total sum of Euro 10 thousand.
YOOX GROUP
The reserves are composed as follows: the share premium reserve was Euro 56,586 thousand at June 30, 2011 (Euro 55,390 thousand at December 31, 2010); this reserve increased over the course of the first half of 2011 following the exercise of the stock options on the part of the beneficiaries in question. In this regard it should be noted that on January 17, 2011, 104,000 ordinary shares were granted following the exercise of 2,000 options relating to the 2007-2012 stock option plan, on January 28, 2011, 508,716 ordinary shares were granted following the exercise, during the month of December 2010, of 9,783 options relating to the 2001-2003, 2003-2005 and 2006-2008 stock option plans, on February 14, 2011, 104,000 ordinary shares were granted following the exercise of 2,000 options relating to the 2007-2012 stock option plan, on March 14, 2011, 138,632 ordinary shares were granted following the exercise of 2,666 options relating to the 2007-2012 stock option plan, on April 14, 2011, 63,856 ordinary shares were granted following the exercise of 1,228 options relating to the 2007-2012 stock option plan, on May 13, 2011, 93,600 ordinary shares were granted following the exercise of 1,800 options relating to the 2007-2012 stock option plan, for a total sum of Euro 1,465 thousand. The increase in the share premium reserve was recognised net of Euro 269 thousand in deferred tax assets accrued in 2009 and since released pursuant to IAS 32, and totalled Euro 1,196 thousand net of prepaid taxes; legal reserve, which totalled Euro 193 thousand at June 30, 2011 (Euro 193 thousand at December 31, 2010), consists of accruals of 5% of Parent profits every year. This reserve did not increase in the first half of 2011 since it had reached the limit imposed by article 2430 of the Italian Civil Code at December 31, 2009; translation reserve: this reserve, which has a negative balance of Euro 191 thousand as of June 30, 2011 (compared with a positive balance of Euro 313 thousand as of December 31, 2010), reflects exchange rate differences arising from the translation of financial statements in foreign currency. In the first half of 2011, this reserve decreased by Euro 504 thousand; reserve for future increases in share capital and share premium reserve, which amounted to Euro 291 thousand at June 30, 2011 (Euro 935 thousand at December 31, 2010), includes liabilities to individuals who had paid to exercise stock options at June 30, 2011, but to whom the Company had not made the corresponding ordinary shares available by the end of the year; reserve for purchasing treasury shares equal to a negative balance of Euro 362 thousand (negative balance of Euro 362 thousand at December 31, 2010). On July 13, 2010, the Company reported that it had started a programme to buy back its own shares, implementing the decisions taken by the Shareholders Meeting on October 7, 2009 and by the Board of Directors on July 1, 2010. The share buyback programme is aimed at obtaining the necessary shares for its 2009-2014 Incentive Plan for the employees at YOOX S.p.A. and its subsidiaries and approved by the Shareholders Meeting on September 8, 2009. Today, the Group has purchased 62,000 ordinary shares of YOOX S.p.A. equal to 0.1214% of the current share capital at an average unit price of Euro 5.836485 per share, including commissions, for a total value of Euro 361,862.06. The purchase of its own shares is accounted for as a direct decrease in equity in compliance with the provisions of IAS 32; other reserves, equal to Euro 10,074 thousand at June 30, 2011 (Euro 7,957 thousand at December 31, 2010) include the reserve for the evaluation of the stock options at fair value of Euro 10,160 thousand and the reserve for the hedge cash flow with a negative balance of Euro 87 thousand for the IRS with BNL financing; retained earnings (losses carried forward) amount to a loss carried forward of Euro 3,752 thousand at June 30, 2011 (Euro 5,364 thousand at December 31, 2010), an increase of Euro 9,117 thousand due to the allocation of profit for 2010.
9.22 Stock option plans and company incentive plans Granting of stock options Following approval of the share-split at the Extraordinary Shareholders Meeting of the Parent on September 8, 2009, beneficiaries of stock option plans exercising their options will be entitled to 52 ordinary shares of the Company for every option exercised.
YOOX GROUP
With reference to the stock option plans and company incentive plans involving a total of 16,914,664 shares reserved for employees, associates, consultants and directors of the Company and its subsidiaries, at June 30, 2011 the Board of Directors had granted the following options, outlined in the table below:
Total granted, not expired or Exercised (c) exercised (d = a-b-c) 39,174 11,247 4,938 11,998 20,666 0 88,023 9,841 22,513 14,731 19,105 78,284 64,302 208,776 Granted, vested, not exercisable 0 1,000 1,500 0 4,950 0 7,450
Stock option plans 2001 2003 2003 2005 2004 2006 2006 2008 2007 2012 2009 2014 Total
Granted (a)
Expired (b)
Granted, not vested 4,591 21,513 12,231 14,703 73,334 44,956 171,328
Granted, vested and exercisable 5,250 0 1,000 4,402 0 19,346 29,998
80,575 36,760 32,319 31,303 102,600 69,114 352,671
31,560 3,000 12,650 200 3,650 4,812 55,872
At June 30, 2011, 22,483 options may be granted under the above plans. The table below shows the exact prices for the options assigned that have not expired or been exercised.
Strike prices 15.91 46.48 59.17 106.50 131.78 277.68 305.24 360.88 407.16 489.32 578.24 2001-2003 2003-2005 2004-2006 2006-2008 2007-2012 2009-2014 1,250 0 0 0 0 0 5,091 20,673 10,531 0 0 0 0 0 0 19,105 73,334 0 3,500 1,840 2,500 0 4,950 0 12,790 0 0 1,700 0 0 0 1,700 0 0 0 0 0 42,318 42,318 0 0 0 0 0 13,002 13,002 0 0 0 0 0 963 963 0 0 0 0 0 1,755 1,755 0 0 0 0 0 1,926 1,926 0 0 0 0 0 4,338 4,338 Options Total 9,841 22,513 14,731 19,105 78,284 64,302 Share Total 511,732 1,170,676 766,012 993,460 4,070,768 3,343,704
Grand Total 1,250 36,295 92,439
208,776 10,856,352
It should be pointed out that: on February 9, 2011, the Board of Directors of the Parent granted 1,926 options valid for the subscription of 100,152 shares at a subscription price per share of Euro 9.41, which is calculated by taking the weighted average of the prices recorded by the shares on the Mercato Telematico Azionario (MTA), the electronic stock market organised and managed by Borsa Italiana S.p.A., during the 30 (thirty) trading days prior to the Grant Date; on May 9, 2011, the Board of Directors of the Parent granted 4,338 options valid for the subscription of 225,576 shares at a subscription price per share of Euro 11.12, which is calculated by taking the weighted average of the prices recorded by the shares on the Mercato Telematico Azionario (MTA), the electronic stock market organised and managed by Borsa Italiana S.p.A., during the 30 (thirty) trading days prior to the Grant Date.
Granting of shares On July 1, 2010, the Board of Directors of the Parent Company approved the 2009-2014 Incentive Plan in compliance with the approval of the Ordinary Shareholders Meeting on September 8, 2009. A share purchase programme was set up for this purpose in order to comply with the decision of the Shareholders Meeting on October 7, 2009 and the Board of Directors on July 1, 2010. The share purchase programme was aimed at acquiring sufficient shares for the 2009-2014 Incentive Plan for employees of the
YOOX GROUP
Parent Company and its subsidiaries. In particular and in compliance with the decision of the Board of Directors of July 1, 2010, the programme involves the purchase of YOOX S.p.A. ordinary shares, with no indication of the par value, up to a maximum of 312,000 ordinary shares, equal to 0.6107% of the share capital at the purchase date (period from July 2 to July 7, 2010). At June 30, 2011, the Parent Company has purchased, through Mediobanca Banca di Credito Finanziario S.p.A., in the period from July 2, 2010-July 7, 2010, a total of 62,000 YOOX S.p.A. ordinary shares, representing 0.1175% of the share capital at June 30, 2011, at an average price of Euro 5.836485 per share before fees, for a total of Euro 361,862.06. At June 30, 2011, a total of 168,696 ordinary shares were granted to 58 employees of the Group. Share capital increases to service stock option plans and company incentive plans At a meeting on January 31, 2005, the Board of Directors took full advantage of the powers conferred by the Extraordinary Shareholders Meeting of March 22, 2000 and subsequent amendments, pursuant to article 2443 of the Italian Civil Code, increasing the share capital to service the stock option plans via the issue of up to 1,116,076 shares with an implicit unit price of Euro 0.01, a premium of Euro 0.2960 on each new share and standard dividend rights. Pursuant to article 2439, paragraph 2 of the Italian Civil Code, the deadline for subscription was set at January 31, 2015, with the provision that, if the capital increase is not fully subscribed by this date, the share capital shall be deemed to have been increased by an amount equal to the subscriptions received. At the same meeting on January 31, 2005, the Board of Directors also took full advantage of the powers conferred by the Extraordinary Shareholders Meeting of July 31, 2000 and subsequent amendments, pursuant to article 2443 of the Italian Civil Code, increasing the share capital to service the stock option plans via the issue of up to 1,483,924 new shares with an implicit unit price of Euro 0.01, a premium of Euro 0.8839 on each new share and standard dividend rights. Pursuant to article 2439, paragraph 2 of the Italian Civil Code, the deadline for subscription was set at January 31, 2015, with the provision that, if the capital increase is not fully subscribed by this date, the share capital shall be deemed to have been increased by an amount equal to the subscriptions received. At a meeting on July 12, 2007, the Board of Directors took full advantage of the powers conferred by the Extraordinary Shareholders Meeting of July 18, 2002 and subsequently amended by resolution of the Extraordinary Shareholders Meeting of December 2, 2005, pursuant to article 2443 of the Italian Civil Code, increasing the share capital to service the stock option plans via the issue of up to 1,755,520 new shares with an implicit unit price of Euro 0.01, a premium of Euro 0.8839 on each new share and standard dividend rights, reserved for the Companys employees and directors. Pursuant to article 2439, paragraph 2 of the Italian Civil Code, the deadline for subscription was set at July 31, 2017, with the provision that, if the capital increase is not fully subscribed by this date, the share capital shall be deemed to have been increased by an amount equal to the subscriptions received. At a meeting on December 1, 2008, the Board of Directors took full advantage of the powers conferred by the Extraordinary Shareholders Meeting of December 10, 2003 and subsequently amended by resolution of the Extraordinary Shareholders Meeting of December 2, 2005, pursuant to article 2443 of the Italian Civil Code, increasing the share capital to service the stock option plans via the issue of up to 1,022,788 new shares with an implicit unit price of Euro 0.01, a premium of Euro 0.8839 on each new share and standard dividend rights, reserved for the Companys employees and directors. Pursuant to article 2439, paragraph 2 of the Italian Civil Code, the deadline for subscription was set at December 1, 2018, with the provision that, if the capital increase is not fully subscribed by this date, the share capital shall be deemed to have been increased by an amount equal to the subscriptions received. At a meeting on September 3, 2009, the Board of Directors took full advantage of the powers conferred by the Extraordinary Shareholders Meeting of December 2, 2005 and subsequently amended by resolution of the Extraordinary Shareholders Meeting of July 12, 2007, pursuant to article 2443 of the Italian Civil Code, increasing the share capital to service the stock option plans via the issue of up to 1,627,756 new shares with an implicit unit price of Euro 0.01, a premium of Euro 1.1279 on each new share and the same dividend rights as the other shares outstanding at the time of their subscription. Pursuant to article 2439, paragraph 2 of the Italian Civil Code, the deadline for subscription was set at September 3, 2019, with the provision that, if the capital increase is not fully subscribed by this date, the share capital shall be deemed to have been increased by an amount equal to the subscriptions received.
YOOX GROUP
At the same meeting of September 3, 2009, the Board of Directors also took partial advantage of the power conferred by the Extraordinary Shareholders Meeting of May 16, 2007, pursuant to article 2443 of the Italian Civil Code, increasing the share capital - excluding voting rights pursuant to article 2441, paragraphs 5 and 8 of the Italian Civil Code - to service the stock option plans via the issue of 5,176,600 new ordinary shares with the same characteristics as those outstanding and an implicit unit price of Euro 0.01. The price of the shares is Euro 1.1379 for each share up to 4,784,000 new shares and Euro 2.0481 for each share up to 392,600 new shares. Pursuant to article 2439, paragraph 2 of the Italian Civil Code, the deadline for subscription was set at September 3, 2019, with the provision that, if the capital increase is not fully subscribed by this date, the share capital shall be deemed to have been increased by an amount equal to the subscriptions received. The Extraordinary Shareholders Meeting of September 8, 2009 resolved on a share capital increase through payment in cash in one or more tranches, subject to commencement of trading in shares of the Company on the STAR segment of the Mercato Telematico Azionario, the electronic stock market organised and managed by Borsa Italiana S.p.A., excluding voting rights pursuant to article 2441, paragraphs 5 and 8 of the Italian Civil Code, this being the increase to service the incentive plan approved at the Ordinary Shareholders Meeting for directors, employees and consultants. The increase will take place via the issue of a total maximum number of 4,732,000 new ordinary shares (after implementation of the share-split as resolved at the same meeting) for a total nominal amount of Euro 47,320 in capital and with a unit price of Euro 0.01. The new shares will carry the same dividend rights as the other shares outstanding at the time of their subscription. The issue prices of the shares will be calculated using the weighted average market price of shares of the Company in the 30 trading days before the options are granted, without prejudice to any minimum prices established by law or the unit price as determined above. If it is not fully subscribed by the deadline of December 31, 2014, the capital increase will proceed according to the subscriptions received by that date. Institution of the stock option plans and Company incentive plans and subsequent changes With regard to stock option plans and company incentive plans involving a total of 17,162,652 shares reserved for the employees, collaborators, consultants and directors of the Company and its subsidiaries, the following options were approved as of June 30, 2011: 21,463 options, corresponding to 1,116,076 shares, by the Extraordinary Shareholders Meeting of March 22, 2000, as subsequently amended by the Extraordinary Shareholders Meetings of October 25, 2000, February 26, 2002 and May 7, 2003 (2001-2003 plan); 28,537 options, corresponding to 1,483,924 shares, by the Extraordinary Shareholders Meeting of July 31, 2000, as subsequently amended by the Extraordinary Shareholders Meetings of October 25, 2000, February 26, 2002 and May 7, 2003 (2001-2003 plan); 33,760 options, corresponding to 1,755,520 shares, by the Extraordinary Shareholders Meeting of July 18, 2002, as subsequently amended by the Extraordinary Shareholders Meeting of December 2, 2005 (20032005 plan); 19,669 options, corresponding to 1,022,788 shares, by the Extraordinary Shareholders Meeting of December 10, 2003, as subsequently amended by the Extraordinary Shareholders Meeting of December 2, 2005 (2004-2006 plan); 31,303 options, corresponding to 1,627,756 shares, by the Extraordinary Shareholders Meeting of December 2, 2005 (2006-2008 plan); 104,319 options, corresponding to 5,424,588 shares, by the Extraordinary Shareholders Meeting of May 16, 2007 (2007-2012 plan)21; 4,732,000 shares, of which up to 85,000 options (2009-2014 plan), by the Extraordinary Shareholders Meeting of September 8, 2009, are valid for subscription for 4,420,000 shares and up to 312,000 shares may be granted (2009-2014 incentive plan).
21
The Board of Directors took partial advantage of the powers conferred pursuant to article 2443 of the Italian Civil Code and increased the share capital to service the stock option plan by means of the issue of up to 5,176,600 new ordinary shares, which correspond to 99,550 options.
YOOX GROUP
9.23 Medium-long term financial liabilities - bank loans and other financial liabilities At June 30, 2011, financial liabilities amounted to Euro 7,921 thousand and mainly comprised the partial use of the medium/long-term credit line agreed with the Banca Nazionale del Lavoro for the financing of the investment in the techno-logistics platform to the tune of Euro 5,125 thousand. The remaining financial liabilities refer to leasing agreements with the BNP Paribas Lease Group for a total of Euro 1,447 thousand (of which Euro 613 thousand is short-term) to finance investments in technology, the short-term use of a Hot Money credit line equal to Euro 1,039 thousand and the residual debt of the loan provided by Simest (Societ Italiana per le Imprese allEstero) of Euro 309 thousand (of which Euro 154 thousand is short-term).
Description Medium-long term financial liabilities Bank loans and other current financial liabilities Total Balance at June 30, 2011 6,114 1,807 7,921 Balance at December 31, 2010 846 5,600 6,446 Change 5,268 (3,793) 1,475
It should be noted that at March 10, 2011 a loan contract was signed with the Banca Nazionale del Lavoro (the Bank) for Euro 15 million, intended to support investments planned by YOOX S.p.A. for the period 2010 2012 and specifically involving the creation of an automated warehouse in the Interporto zone in Bologna. The loan must be fully advanced within 15 months of the date of signing the contract. If this does not happen because YOOX S.p.A. has not made a request or for another reason attributable to it, it is understood that the undrawn balance of the loan will be permanently renounced. YOOX S.p.A. undertakes to pay the Bank interest on the loan quarterly in arrears, calculated according to the actual number of days elapsed divided by 365, at the nominal annual rate equal to the interbank rate for three month Euribor. This rate will be increased by an annual 1.20 point spread in favour of the Bank. Starting from checking in the consolidated financial statements at December 31, 2010, the spread can change automatically, on the basis of the accounting figures in the financial statements of YOOX S.p.A. and in the interim report, starting with the financial statements at December 31, 2010, in relation to the performance of the ratio between the Net Financial Position and EBITDA, excluding incentive plans (debt cover ratio) as calculated and notified by YOOX S.p.A. to the Bank and verified by it, under the terms indicated below. Parameter a) more than or equal to 2: b) less than 2: Spread 1.40% per year 1.20% per year
at the planned checking dates, should the Net Financial Position be positive at the same time as EBITDA, excluding incentive plans greater than zero, then the spread applied would be 1.00% per year. The change of the spread, under the above terms, runs from the first interest period immediately following each of the checks. The above-mentioned financial parameters will be checked half-yearly. Specifically, they should be calculated at the end of December each year, with reference to the data from the consolidated financial statements of YOOX S.p.A and at June 30 each year, on the basis of the directors reports, containing all the accounting data of YOOX S.p.A. for each half-year in relation to the financial position, income statement and cash flow position, including EBITDA, excluding incentive plans, calculated on a rolling basis, in other words from June 30 of the previous year to June 30 of the year in question. The previously mentioned financial parameters were determined and the Bank notified for the first time according to the financial statements at December 31, 2010. For this purpose YOOX S.p.A. is obliged to give the Bank the Groups consolidated annual financial statements within 10 working days following their approval by the YOOX Board of Directors. YOOX S.p.A. also undertakes to pay the Bank, at the same time as the contract is signed, a one-off fee of 0.7% of the amount of the loan including arrangement expenses. This amount should be considered final and therefore no other commission can be requested by way of fee or arrangement commission in connection with the granting of this loan. The loan will have a term of 60 months, must be utilised within 15 months from the date of signing the loan agreement and will be administered according to the terms and conditions set out in article 1 of the contract.
YOOX GROUP
The loan must be repaid by quarterly instalments, in arrears, on March 10/June 10/September 10 and December 10 every year. Repayment of the loan starts on June 10, 2012 and therefore the first instalment will be due on September 10, 2012 and the last on March 10, 2016. With regard to the above, YOOX S.p.A. is obliged to pay the Bank 15 quarterly instalments, made up of principal, plus interest calculated at the determined rate. Interest during the drawdown period will also be paid quarterly in arrears at the aforesaid due dates. Commitments of a financial nature (Covenants) The Company recognises, for the purposes of article 1461 of the Italian Civil Code, the importance of complying with the following financial indicators, as evaluated in the consolidated financial statements in the name of YOOX S.p.A., accepting that the Bank may terminate the contract if the financial situation recorded in the consolidated financial statements does not comply with the following parameters, or even with only one of them, at the dates listed below: 1) the ratio between the Net Financial Position and the EBITDA (excluding the incentive plans) should not be more than 2.5 times, until the whole loan has been repaid; 2) the ratio between the Net Financial Position and the Shareholders Equity should not be more than one time, until the whole loan has been repaid. YOOX S.p.A. will notify the Bank of the above financial parameters annually and, starting from the first half of 2011, half-yearly as well. Specifically, they should be calculated at the end of December each year, with reference to the data from the consolidated financial statements of YOOX S.p.A. and, starting from the first half of 2011, at June 30 of each year, on the basis of the directors reports, containing all the accounting data of YOOX S.p.A. for each half-year in relation to the financial position, income statement and cash flow position, including EBITDA (excluding incentive plans) calculated on a rolling basis, in other words from June 30 of this year to June 30 of the year in question. The above financial parameters will be checked for the first time according to the financial statements at December 31, 2010. For this purpose YOOX S.p.A. is obliged to give the Bank the YOOX annual consolidated financial statements within 10 working days following their approval by the Shareholders Meeting and the YOOX consolidated quarterly financial statements within 10 days following their approval by the Board of Directors. If even only one of the above parameters is not complied with, YOOX S.p.A., without prejudice to the right of the Bank to terminate the contract, undertakes to agree with the Bank, within 30 working days of its request the equity, financial and management operations, required to ensure that the parameters in question comply with the set terms, or, alternatively, to repay the loan in advance at the end of the then current interest period. In relation to the above-mentioned loan agreed with Banca Nazionale di Lavoro, it should be noted that at June 30, 2011, as at December 31, 2010, the above financing parameters were complied with by the Group. It should also be noted that the syndicated bank loan, with UniCredit Corporate Banking S.p.A. as lead bank, was fully repaid on December 15, 2009. It should also be noted that the financing line remained unused at June 30, 2011. The terms of the above loan were renegotiated by the signing of an agreement modifying the stand-by revolving syndicated loan contract on February 17, 2010, applicable from December 15, 2009. As far as the terms of the contract in force until December 31, 2009 are concerned, please refer to the notes to the consolidated financial statements at December 31, 2010. The changes resulting from the modifying supplemental stand-by revolving syndicated loan agreement of June 16, 2008 are described below. The modifying agreement is dated February 17, 2010 and is effective from December 15, 2009: a) in accordance with article 6-ter of the Contract (Definitive renunciation of the option to utilise and/or re-utilise the loan), at the maturity date of December 15, 2009 fixed in the reduction/repayment plan, the Company hereby declares that it waives, without the imposition of any penalty, its right to utilise Euro 5,250,000 of the loan amount, thereby definitively cancelling this amount from the loan amount. However, it is understood that, in a partial amendment to Article 2.B (Terms and methods of utilisation) of the Contract, as of December 15, 2009 (i) the credit line available to the company will amount to Euro 13,125,000 in total, and (ii) the amount of each drawdown will be no less than Euro 375,000, or a multiple of this amount;
YOOX GROUP
b) in view of point (a) above, and of article 9 (Amendments to the reduction plan), the banks and the Company hereby declare and recognise by mutual agreement that, as of December 15, 2009, the repayment/reduction plan described in article 3 (Modalities and terms of repayment) of the Contract is amended as follows:
Repayment plan Date December 15, 2009 June 15, 2010 December 15, 2010 June 15, 2011 December 15, 2011 June 15, 2012 December 15, 2012 June 15, 2013 1,875,000 1,875,000 1,875,000 1,875,000 1,875,000 1,875,000 1,875,000 Amount Remaining loan 13,125,000 11,250,000 9,375,000 7,500,000 5,625,000 3,750,000 1,875,000 -
c) in the light of the previous points (a) and (b) above, the parties hereby recognise and state that article 3-bis (Obligatory early repayment) of the Contract will no longer apply and shall be deemed to be annulled as of December 15, 2009. Any reference made in the Contract or its appendices to the aforementioned article 3bis or its content shall therefore be considered inapplicable; d) as a partial amendment to article 14 (Covenants) of the Contract, the banks and the Company recognise and agree that, as of December 31, 2009, the official consolidated financial statements of the Company, periodically approved, will be drawn up in accordance with International Financial Reporting Standards (IFRS). It is also understood that the indicators below, which are contained in the aforementioned article 14 of the Contract, will have the following new definitions: 1) IFN or PNF (Net Financial Debt or Net Financial Position): is the sum of cash and cash equivalents, other current financial assets, net of bank loans and borrowings and other financial liabilities falling due within one year, other current financial liabilities and non-current financial liabilities. Net financial debt is not recognised as an accounting item under Italian GAAP or the IFRS endorsed by the European Union; 2) EBITDA or MOL (gross operating margin): is profit before depreciation and amortisation, non-recurring expenses, financial income and expenses and income taxes. EBITDA is not recognised as an accounting item under Italian GAAP or the IFRS endorsed by the European Union. In the event that the net financial position and EBITDA, as defined above, are both positive, the company is considered to be in compliance with the covenants described in a), b) and c) of article 14 of the Contract by simply notifying the lead bank within 30 days after the approval date of each of the financial statements of the levels of the above indicators, without the Compliance Certificate described in the said article 14 of the Contract. At June 30, 2011 as at December 31, 2010, the above conditions (positive net financial position and positive EBITDA) have been met and the Group is therefore automatically deemed to have respected the covenants. e) The banks and the company hereby agree to eliminate from article 13 (Obligations) of the contract, provisions i) and m/3) and to replace them with the following provisions: i) the company undertakes to inform the lead bank in writing of the assumption of financial debt even if equal to or less than Euro 5,000,000.00 in principal, no later than five bank working days from the date the loan was contracted; m/3) the company will have the right to contract financial debt amounting to more than Euro 5,000,000.00 only with the written consent of the banking syndicate, granted via the lead bank, no later than five bank working days from receipt of the request for approval on the part of the company.
YOOX GROUP
Net financial position The table below gives a breakdown of net financial position at June 30, 2011:
Description Cash and cash equivalents Current financial assets Other current financial assets Bank loans and other borrowings Other current financial liabilities Net short-term financial position Medium-long term financial liabilities Net financial position(1) Balance at June 30, 2011 12,067 122 (1,807) (126) 10,257 (6,114) 4,143 Balance at December 31, 2010 24,188 5,082 29 (5,600) (26) 23,672 (846) 22,826 Change (12,120) (5,082) 93 3,794 (100) (13,415) (5,268) (18,683)
(1) As defined in CONSOB Communication DEM/6064293 of July 28, 2006 in accordance with CESR recommendations of February 10, 2005.
In accordance with the Groups organisational structure, treasury operations are centralised at the Parent, YOOX S.p.A., which manages all lines of credit provided to the Group. The Groups policy is to maintain an adequate margin of financial flexibility through available committed lines of credit, capable of supporting future development plans. Cash and cash equivalents totalled Euro 12,067 thousand at June 30, 2011, and are made up of cash, negotiable instruments and demand deposits or short-term deposits with banks, which are actually available and readily usable. Other current financial assets, equal to Euro 122 thousand, are mainly made up of the fair value of forward exchange rate contracts to hedge against foreign exchange risk. At June 30, 2011, financial liabilities amounted to Euro 7,921 thousand and mainly comprised the partial use of the medium/long-term credit line agreed with the Banca Nazionale del Lavoro for the financing of the investment in the techno-logistics platform to the tune of Euro 5,125 thousand. The remaining financial liabilities refer to leasing agreements with the BNP Paribas Lease Group for a total of Euro 1,447 thousand (of which Euro 613 thousand is short-term) to finance investments in technology, the short-term use of a Hot Money credit line equal to Euro 1,039 thousand and the residual debt of the loan provided by Simest (Societ Italiana per le Imprese allEstero) of Euro 309 thousand (of which Euro 154 thousand is short-term). 9.24 Employee benefits This item refers exclusively to the borrowings for post-employment benefits recorded by the Parent in accordance with current legislation. Changes in defined benefit plans for employees in the first half of 2011 are summarised below:
Description Employee benefits Balance at December 31, 2010 213 Provisions 6 Utilisation (8) Balance at June 30, 2011 211
The main demographic and economic technical principles taken into consideration for the actuarial calculation of liabilities for benefits to employees at June 30, 2011, are consistent with those highlighted for performing the actuarial calculation at December 31, 2010. 9.25 Deferred tax liabilities Deferred tax liabilities decreased by 17.4%, from Euro 69 thousand at December 31, 2010 to Euro 57 thousand at June 30, 2011. Deferred tax liabilities at June 30, 2011 were recognised in relation to: unrealised foreign exchange gains at June 30, 2011;
YOOX GROUP
financial instruments at fair value; the effect of IAS 17 (finance leases).
Euro 72 thousand in deferred tax liabilities accrued in 2010 was also reversed. 9.26 Provisions for current and non-current risks and charges This item reflects provisions for estimated current liabilities at June 30, 2011, the timing and extent of which cannot be determined. The following table shows the breakdown of the item and changes in the first half of 2011:
Description Provision for theft and loss Provision for fraud Other provisions for risks and charges Total provisions for current risks and charges Other provisions for risks and charges Total provisions for non-current risks and charges Total provisions for risks and charges Balance at December 31, 2010 95 615 167 877 116 116 993 Increases 108 2 110 110 Adjustments 74 74 (74) (74) Balance at Utilisation June 30, 2011 (161) (173) (167) (501) (501) 42 444 74 560 42 42 602
During the first half of the year, Euro 161 thousand was used from the provision for theft and loss. A further accrual of Euro 108 thousand was considered sufficient following a new estimate. During the first half of the year, Euro 173 thousand was used from the provision for fraud. A subsequent accrual of Euro 2 thousand to cover fraud linked with online sales paid for by credit card is considered adequate in line with the new estimate. This fraud coverage provision was calculated taking into account the historical incidence of the value of fraud in relation to the value of sales. The item Other provisions for current and non-current risks and charges includes provisions for risks for liabilities of a probable nature, in compliance with IAS 37. During the first half of 2011, Euro 167 thousand was used from the item Other provisions for current and non-current risks and charges and there have been no further increases. 9.27 Trade payables The following table shows a breakdown of trade payables at June 30, 2011:
Description Due to suppliers Credit notes to be received from suppliers Due to credit card operators Total Balance at June 30, 2011 49,152 (814) 73 48,410 Balance at December 31, 2010 49,576 (680) 47 48,943 Change (424) (134) 26 (533)
Trade payables went from Euro 48,943 thousand at December 31, 2010 to Euro 48,410 thousand at June 30, 2011, a decrease of 1.1%. Trade payables are all payables relating to purchases of goods and services from the Groups suppliers. Payables are recorded at their par value. Since all payables fall due within one year, none are subject to discounting. The Trade payables item includes all amounts due to suppliers, both for the supply of finished products and raw materials, and for the supply of intangible assets.
YOOX GROUP
9.28 Tax liabilities Current tax payables relate exclusively to the current income tax liability of the Parent and its foreign subsidiaries. During the course of the half-year there was a 36.4% fall of Euro 889 thousand going from Euro 2,441 thousand at December 31, 2010 to Euro 1,552 thousand at June 30, 2011 as a result of the effect of the payment of the 2010 balance and the first 2011 payment on account which was made in the first half of 2011 for subsidiaries. 9.29 Other payables The following table shows a breakdown of other payables at June 30:
Description Due to social security institutions Credit notes to be issued to customers Due to directors Due to employees Due to fiscal representatives Other payables Accrued expenses and deferred income Total Balance at June 30, 2011 1,580 3,809 264 2,011 2,858 3,335 153 14,009 Balance at December 31, 2010 1,435 5,367 543 1,756 3,300 3,477 88 15,968 Change 145 (1,558) (281) 255 (442) (142) 64 (1,960)
The item Due to social security institutions reflects contributions payable to social security institutions, mainly on the amounts recognised to employees at the end of the reporting period. The item Due to tax representatives reflects indirect tax liabilities. Sales carried out in European countries during 2010 and 2009 exceeded the threshold set in article 41, paragraph 1, letter b) of Legislative Decree 331/93, which requires payment of VAT in the destination country for goods sold. In order to comply with this requirement, the Company has opened VAT accounts in these countries. Other payables include credit notes to be issued to customers against certain payables for returns on sales made in the first half of 2011. Consolidated statement of cash flows 9.30 Profit for the period, taxes for the period, depreciation and amortisation, income taxes paid Details of profit for the period, taxes for the period, depreciation and amortisation and other non-monetary income statement items are provided in Notes 9.11, 9.10, 9.9, 9.5, 9.4 and 9.3 respectively. In relation to the tax charge in the first half of 2011 of Euro 2,014 thousand (Euro 2,273 thousand in the first half of 2010), tax payments amounting to Euro 2,601 thousand were made (Euro 5,838 thousand in the first half of 2010) relating to tax outstanding for the previous year and payments on account, calculated according to the respective tax regulations in force in the various countries in which the Group operates. 9.31 Other net non-monetary income and expenses Other net non-monetary income and expenses include non-monetary items on the income statement apart from income tax, depreciation and amortisation and provisions classified as a direct deduction from asset items (allowance for impairment and provisions for obsolescence). This includes provisions for defined benefit plans for employees (TFR), the measurement at fair value of stock option plans and company incentive plans, provisions for risks and charges, capital gains and capital losses, unrealised foreign exchange fluctuations and recognised interest income and expenses. In relation to these last items, interest received and interest paid are presented separately.
YOOX GROUP
9.32 Change in trade receivables, inventories and trade payables This item reports the use or generation of cash relative to net working capital, i.e. changes in trade receivables, inventories and trade payables. Changes in trade payables refer exclusively to supplies of raw materials, goods and services, excluding the change in payables to suppliers of investments, which are reported in the section of the statement of cash flows generated by or used in investing activities. 9.33 Change in other current assets and liabilities This item reflects the change in all other current assets and liabilities, net of the effects of recognising nonmonetary income and expenses, i.e. the change in the balances with a direct effect on the use or generation of cash. 9.34 Acquisition of property, plant and equipment Cash flow from the acquisition of property, plant and equipment reflects both expenditure to replace plant and expenditure on new plant. The amount reported also includes the change in investment payables. 9.35 Acquisition of other intangible assets Cash flow for acquisition of other intangible assets relates to investments in licences and software and the capitalisation of development costs (for a breakdown of these, see Note 9.14). Capitalisations are classified among cash flow generated from/used in investing activities since they involve a cash outflow associated with the internal costs incurred (mainly personnel expenses). These outflows were broadly in line with costs capitalised during the year. 9.36 Acquisition of other non-current financial assets Other non-current financial assets at June 30, 2011 stood at Euro 581 thousand (Euro 507 thousand at December 31, 2010) and refer, in the main, to rental contracts and energy and gas service administration contracts and existing agreements with Paymentech relating to reserves to guarantee repayment of sales values, as well as the deposit paid during the fourth quarter of 2010 for the establishment of the company subject to Chinese law, Mishang Trading (Shanghai) Co. Ltd., 100% controlled by the Parent YOOX S.p.A. It should be noted that other non-current financial assets are payable in more than five years. 9.37 Increase in share capital and share premium reserve The share capital of Euro 528 thousand at June 30, 2011 (Euro 518 thousand at December 31, 2010) increased over the course of the first half of 2011 following the exercise of stock options on the part of the beneficiaries in question. In this regard it should be noted that on January 17, 2011, 104,000 ordinary shares were granted following the exercise of 2,000 options relating to the 2007-2012 stock option plan, on January 28, 2011, 508,716 ordinary shares were granted following the exercise, during the month of December 2010, of 9,783 options relating to the 2001-2003, 2003-2005 and 2006-2008 stock option plans, on February 14, 2011, 104,000 ordinary shares were granted following the exercise of 2,000 options relating to the 2007-2012 stock option plan, on March 14, 2011, 138,632 ordinary shares were granted following the exercise of 2,666 options relating to the 2007-2012 stock option plan, on April 14, 2011, 63,856 ordinary shares were granted following the exercise of 1,228 options relating to the 2007-2012 stock option plan, on May 13, 2011, 93,600 ordinary shares were granted following the exercise of 1,800 options relating to the 2007-2012 stock option plan, for a total sum of Euro 10 thousand. The share premium reserve was Euro 56,586 thousand at June 30, 2011 (Euro 55,390 thousand at December 31, 2010); this reserve increased over the course of the first half of 2011 following the exercise of stock options on the part of the beneficiaries in question. In this regard it should be noted that on January 17, 2011, 104,000 ordinary shares were granted following the exercise of 2,000 options relating to the 2007-2012 stock option plan, on January 28, 2011, 508,716 ordinary shares were granted following the exercise, during the month of December 2010, of 9,783 options relating to the 2001-2003, 2003-2005 and 2006-2008 stock option plans, on February 14, 2011, 104,000 ordinary shares were granted following the exercise of 2,000 options relating to the
YOOX GROUP
2007-2012 stock option plan, on March 14, 2011, 138,632 ordinary shares were granted following the exercise of 2,666 options relating to the 2007-2012 stock option plan, on April 14, 2011, 63,856 ordinary shares were granted following the exercise of 1,228 options relating to the 2007-2012 stock option plan, on May 13, 2011, 93,600 ordinary shares were granted following the exercise of 1,800 options relating to the 2007-2012 stock option plan, for a total sum of Euro 1,465 thousand. The increase in the share premium reserve was recognised net of Euro 269 thousand in deferred tax assets accrued in 2009 and since released pursuant to IAS 32, and totalled Euro 1,196 thousand net of prepaid taxes. The reserve for future increases in share capital and share premium reserve, which amounted to Euro 291 thousand at June 30, 2011 (Euro 935 thousand at December 31, 2010), includes liabilities to individuals who had paid to exercise stock options at June 30, 2011 but to whom the Company had not made the corresponding ordinary shares available by the end of the year. 9.38. Arrangement and repayment of medium/long-term financial liabilities Arrangement of other medium/long-term financial payables relates to loans from banks and other lenders, as described in Note 9.23. 9.39 Arrangement and repayment of short-term financial liabilities The change in short-term bank exposure is included in the change in short-term financial payables, since these are forms of short-term borrowing, as described in Note 9.23. 9.40 Investments in financial assets The repayment of current financial assets, equal to Euro 5,082 thousand, refers to Repurchase Agreements with a low risk short-term profile (less than twelve months) agreed with major national Credit Institutions with a high credit rating. 10. Disclosure of financial risks During the first half of 2011, the nature and structure of the risk exposure detailed below and the associated policies applied by the Group did not change substantially from the previous year. Market risk Market risk arises from the probability of changes in the fair value of the future cash flows deriving from a financial instrument due to fluctuations in market prices. In the consolidated financial statements and notes at June 30, 2011, market risk takes the form of currency risk and interest rate risk. Financial risk deriving from currency fluctuations The Euro is the functional currency of the Group and is used in the presentation of its financial information. The YOOX Group operates internationally, and the sale of goods in countries whose currency is not the Euro exposes the Group to currency risk, in terms of both transactions and translation. Group policy is to concentrate all currency risk within the Parent, YOOX S.p.A. Since the YOOX Group is essentially an exporter, the main risk exposure consists in depreciation of foreign currencies against the Euro. The Group is principally exposed towards the US dollar, the Japanese yen and the UK pound. Currency transaction risks were hedged in the first half of 2011 by forward contracts arranged with the leading domestic and international banks used by YOOX on a daily basis. Outstanding contracts and those negotiated during the half-year period only hedge expected cash flows denominated in US dollars, for the equivalent of Euro 4,559 thousand at June 30, 2011, and in Japanese yen, for the equivalent of Euro 436 thousand. It was not
YOOX GROUP
considered necessary to hedge exposure to the UK pound, since the amount involved was not significant. No speculative derivative contracts were arranged in the first half of 2011 and in the preceding period. The subsidiaries and consolidated companies of the Parent YOOX S.p.A. are located in countries that do not belong to the European Monetary Union: United States, Japan, Peoples Republic of China and Hong Kong. Since, as mentioned above, the Groups functional currency is the Euro, the income statements of these companies are translated into Euro at the average exchange rate for the period. Holding revenue and profits constant in their local currencies, changes in the exchange rates concerned may have an effect on the Euro amount of their revenue, costs and financial results. The Euro value of assets and liabilities of consolidated companies whose accounting currency is not the Euro may vary depending on exchange rate movements. In accordance with IFRS, the effects of these changes are recognised directly in equity, under the item Translation reserve. Financial risk deriving from interest rate fluctuations Interest rate risk arises when a change in interest rates adversely affects performance for the year. Interest rate risk could occur when the Group needs to use the stand-by facility again or during the amortisation of the credit line of Euro 15,000 thousand agreed on March 10, 2011, to finance the new techno-logistics platform because the interest applied is indexed to the Euribor (Euro Interbank Offered Rate). An Interest Rate Swap (IRS) agreement was established in order to reduce this risk, at a fixed rate of 3.05%, for a nominal value of Euro 12,300 thousand with the same duration as the underlying loan signed with the Banca Nazionale del Lavoro. Liquidity risk The Group aims to maintain appropriate levels of liquidity and available funds to sustain the growth of the business and ensure the timely fulfilment of its obligations. YOOX has preferred to adopt a flexible approach, adapted to the dynamic nature of the business in which it operates, through recourse to credit lines which are committed on one side, in other words they do not include the possibility of the lenders asking for repayment before a pre-set date, and on the other side are revolving, in other words the Group has the possibility of repaying the individual uses rebuilding their availability. In addition, in order to finance the investment in the new techno-logistics platform, a credit line with a term of 60 months was supplied for a maximum amount of Euro 15,000 thousand which includes an amortisation schedule in 15 quarterly instalments starting from September 10, 2012 at the Euribor rate plus a spread of 120 bps. Net financial position at June 30, 2011 was positive at Euro 4,143 thousand. Credit risk with financial counterparties The YOOX Group has obtained lines of credit from leading Italian and international banks of high credit standing. Credit risk with commercial counterparties Given the nature of the Groups business, management of credit risk deriving from commercial operations is entrusted to the customer care department for online receivables generated by the individual Stores and to the finance department for all other receivables. Credit risk related to doubtful accounts subject to legal action or to overdue accounts is monitored centrally on a daily basis and reported each month. For information on the Groups exposure and measurement of the above-mentioned financial risks, please refer to the information contained in the consolidated financial statements at December 31, 2010, in respect of which no significant variations have occurred at the present date.
YOOX GROUP
Hedge accounting cash flow hedging The Group performs prospective and retrospective tests of the effectiveness of the derivative financial instruments recorded, using the rules of hedge accounting. Effectiveness is ensured if the ratio of the change in the fair value of the hedging instrument to the change in the fair value of the hedged instrument falls within the range of 80%-125%. Fair value The Group uses established assessment techniques, widely used in the market, to calculate the fair value of financial instruments when there is no regulated market for them. These techniques determine the carrying amount that the instruments would have had at the reference date in an arms-length transaction between knowledgeable and independent parties. Financial assets and liabilities measured at amortised cost The following are measured on an amortised cost basis: trade receivables and payables, time deposits, loans and other assets and liabilities measured at amortised cost (such as other receivables and payables). Pursuant to IFRS 7, the fair value of these items is re-measured by calculating the present value of the contractually-expected flows of principal and interest, with reference to the yield curve for government securities at the measurement date. The carrying amount of trade payables and receivables represents a reasonable approximation of their fair value. Financial assets and liabilities measured at fair value Hedging financial instruments and financial instruments held for trading (those not designated as hedges, in accordance with IAS 39) are measured at fair value. Transactions outstanding at the end of the period Transactions outstanding as of June 30, 2011 and the related fair values are shown in the following table, which also shows the variation in the value of the underlying assets (where applicable). Going forward, detailed information is provided on individual transactions:
FINANCIAL INSTRUMENT
Currency
Fair value derivatives
Other current Fair Other current 23 financial assets 22 Other loans value assets which do not form shift part of fixed assets (82) (82) June 30, 2011 June 30, 2011 -
MediumBanks and Long-term other financial financial borrowings loans
Repurchase agreements BNL loan Hot Money BPER Financial leasing Simest financing Total
Eur Eur Eur Eur Eur
June 30, 2011 December 31, 2010 82 82
June 30, 2011June 30, 2011 June 30, 2011 5,125 1,039 834 613 155 154 6,114 1,806
Hedging (126) 122 (4) 3 (7) 122 (126) 3 119 122 - (126) (126)
Nature of hedged risk 6,114 1,806
IRS
interest rate
Forward Contracts
currency
24
General Total
22
23
YOOX GROUP
24
The amount reported here represents the Fair Value of the forward contracts existing at June 30, 2011 and restated in the item Other current assets in the consolidated statement of financial position representing therefore one of these. The amount reported here represents the Fair Value of the IRS existing at June 30, 2011 and restated in the item Other loans in the consolidated statement of financial position representing therefore one of these. Transacted in USD and Japanese yen.
YOOX GROUP
11. Information pursuant to IAS 24 on management remuneration and on related parties Transactions with related parties, as defined under IAS 24 and by CONSOB Regulation 1722 of March 12, 2010, at June 30, 2011 and at June 30, 2010 were restricted to commercial, administrative and financial services relationships with subsidiaries and other related parties. The transactions form part of normal business operations, within the usual scope of activity of each of the interested parties, and are carried out under normal market conditions. In this sense, a party is related to an entity if: (a) directly or indirectly through one or more intermediaries, the party: (i) controls the entity, is controlled by it or is subject to joint control (including controlling or controlled entities and associated companies); (ii) has significant influence in the entity; or (iii) jointly controls the entity;
(b) the party is an associated company (according to the definition set out in IAS 28 Investments in Associates) of the entity; (c) the party is a joint venture in which the entity has a shareholding (see IAS 31 Investments in Joint Ventures); (d) the party is one of the managers with strategic responsibilities at the entity or its controlling company; (e) the party is a close family member of one of the subjects included in points (a) or (d); (f) the party is a controlled entity, jointly controlled or subject to the significant influence of one of the subjects set forth in points (d) or (e) or these subjects hold, directly or indirectly, a significant share of the voting rights; or (g) the party is a pension fund for employees of the entity or any other entity related to it. An operation with an affiliated party is a transfer of resources, services or obligations between affiliated parties, regardless of the fact that an amount is agreed on. 11.1 Intra-Group transactions In order to provide more information on the extent of relationships within the Group, the following tables present transactions taking place between Group companies and cancelled out in the financial statements at June 30, 2011 and June 30, 2010. The main relationships between the Parent and Group companies are chiefly commercial in nature and can be summarised as follows: 1. the Parent supplies the Group companies with products for sale on the US and Japanese Online Stores; 2. the Parent provides the Group companies with website maintenance, support services and updates; 3. the Parent provides the Group companies with administrative, financial and legal services; 4. the Parent provides the Group companies with customer service support (via a customer care service located at the Italian head office that interfaces with Japanese and US customers using dedicated staff); 5. consulting and support services in the area of fashion, marketing, advertising and professional training provided by the Parent to subsidiaries. None of the relationships between the Group companies or between Group companies and related parties are considered to be atypical or unusual, and form part of the Groups ordinary business operations. The transactions were carried out under normal market (i.e. arms-length) conditions.
YOOX GROUP
The following tables show the relationships in terms of receivables and payables between the Parent YOOX S.p.A. and Group subsidiaries at June 30, 2011, at December 31, 2010 and at June 30, 2010. Receivables from and payables to subsidiaries are expressed in USD, JPY, CNY and HKD and translated to Euro at the exchange rate in effect at the end of the period. Revenue and costs are expressed in USD, JPY, CNY and HKD and translated to Euro at the average exchange rate for the reference period. June 30, 2011
(Thousand Euro) Trade receivables YOOX Corporation Y Services YOOX Japan YOOX Mishang trading (Shanghai) Y ASIA Total subsidiaries 8,259 330 1,144 12 9,745 Financial receivables 1,392 1,392 Trade payables Financial payables (1,384) (27) (1,411) Revenues 12,113 629 5,007 12 17,760 Costs -
December 31, 2010

(Thousand Euro) Trade receivables YOOX Corporation Y Services YOOX Japan YOOX Mishang trading (Shanghai) Total subsidiaries 6,386 352 1,560 8,298 Trade payables Revenues 21,281 1,243 8,793 31,317 Costs -
June 30, 2010

(Thousand Euro) Trade receivables YOOX Corporation Y Services YOOX Japan Total subsidiaries 3,912 343 1,380 5,636 Trade payables Revenues 9,468 642 3,976 14,086 Costs -
11.2 Remuneration of senior managers and other key persons within the Group Senior managers and key figures with strategic responsibility for management, planning and control within the Group are singled out, as well as the Chief Financial Officer (CFO), the General Manager, the Chief Marketing Officer, the Operations Director, the User Experience Director, the Director of yoox.com and the Customer Operations Managers from the executive and non-executive directors.
YOOX GROUP
Gross compensation, for the periods in question, for the above persons, in addition to the Group Directors and Board of Statutory Auditors, including all remuneration components (gross salary, bonuses, fringe benefits, etc.) and bonuses accrued but not paid out, are listed in the table below: June 30, 2011
Description Directors Statutory Auditors Managers with strategic responsibilities Total Current benefits 442 27 737 1,206 Long-term benefits 44 44 Stock options 826 607 1,433
December 31, 2010

Description Directors Statutory Auditors Managers with strategic responsibilities Total Current benefits 1,044 73 1,481 2,598 Long-term benefits 82 82 Stock options 1,582 1,127 2,709
June 30, 2010

Description Directors Statutory Auditors Managers with strategic responsibilities Total Current benefits 418 36 1,086 1,540 Long-term benefits 58 58 Stock options 505 586 1,091
Finally, no close family members of any of the natural persons indicated above are related parties of the Issuer and/or the companies of the Group, as defined in IAS 24. 11.3 Transactions with other related parties The following tables list the main financial and commercial relationships between the companies of the Group and related parties other than Group companies, at June 30, 2011, at December 31, 2010, and at June 30, 2010, excluding intra-Group relationships, which are described above. Commercial transactions with these entities are carried out under normal market conditions, and all transactions are carried out in the interests of the Group. June 30, 2011
Description Studio legale dUrso Gatti e Associati Tarter - Krinsky and Drogin LLP KK TPI Nagamine Accounting Office Total other related parties Trade receivables Trade payables 53 6 5 64 Revenues Costs 184 38 27 7 256
YOOX GROUP
December 31, 2010

Description Sigma Gi S.p.A. Diesel S.p.A. Diesel Rags S.r.l. 55DSL S.r.l. - Unipersonale Staff International S.p.A. Diesel USA Inc. Staff USA Inc. Studio legale dUrso Gatti e Associati Ferrante, PLLC LAW FIRM KK TPI Nagamine Accounting Office Total other related parties Trade receivables 1,305 384 1,689 Trade payables 359 2,532 645 121 1,402 105 27 10 1 5,202 Revenues 9 1,314 103 1,426 Costs 3,360 6,137 2,262 19 1,150 3,275 201 334 60 42 7 16,846
June 30, 2010

Description Sigma Gi S.p.A. Diesel S.p.A. Diesel Rags S.r.l. 55DSL S.r.l. - Unipersonale Staff International S.p.A. Diesel USA Inc. Staff USA Inc. Studio legale DUrso Gatti e Associati Ferrante, PLLC LAW FIRM KK TPI Nagamine Accounting Office Total other related parties Trade receivables 860 243 1,103 Trade payables 700 1,742 442 2 458 977 159 10 7 1 4,498 Revenues 9 576 51 636 Costs 1,377 3,052 1,242 7 559 1,545 92 190 29 21 7 8,117
The above entities are regarded as related parties of the Group for the following reasons: Studio legale DUrso Gatti e Associati, since a partner in that law firm is a director of the Parent. Nagamine Accounting Office and KK TPI, since the owner of both these consultancy firms is a member of the Board of Directors of a Group company (YOOX Japan); Tarter Krinsky & Drogin LLP, since a partner in that law firm is a member of the Board of Directors of one of the Groups companies (YOOX Corporation).
It should be noted that compared with December 31, 2010 and June 30, 2010, Sigma G. S.r.l. and all Diesel Group companies (Diesel S.p.A., Diesel Rags S.r.l., 55DSL S.r.l. Unipersonale, Staff International S.p.A., Diesel USA Inc. and Staff USA Inc.) do not come under any of the related party theories listed in paragraph 11 of these explanatory notes, because there are no longer any control, connection or joint venture relations as in letters a), b) and c) of the aforementioned paragraph, nor are these companies identified as entities in which a strategic director of YOOX S.p.A. or a close family member exerts control, joint control or considerable influence or has a significant shareholding, directly or indirectly, of not less than 20% of the voting rights. For this reason, starting from January 1, 2011 there is not deemed to be any significant relationship between YOOX S.p.A. and the above companies pursuant to CONSOB Regulation 17221 of March 12, 2010 and IAS 24. In addition, from January 1, 2011 the member of the YOOX Corporation Board of Directors who, until December 31, 2011, was a partner in the Ferrante PLLC LAW FIRM, is a partner of Tarter Krinsky & Drogin LLP. For this
YOOX GROUP
reason Ferrante PLLC LAW FIRM is no longer a related party while Tarter Krinsky & Drogin LLP is pursuant to Consob Regulation no. 17221 of March 12, 2010 and IAS 24. Also note that none of the transactions that took place with related parties in the first half of 2011 and in the first half of 2010 were significant (except as mentioned above), atypical and/or unusual. 12 Commitments Commitments and guarantees
Description (in thousand Euro) Third-party assets held by the Group Sureties given to others Commitments under forward hedging contracts (nominal value) Balance at June 30, 2011 Balance at December 31, 2010 64,713 2,712 4,995 49,133 3,294 2,496
The warehouses of Group companies hold goods worth Euro 64,713 thousand received on a sale-or-return basis from YOOXs partners. The increase by comparison with the previous year reflects the opening of new Online Stores in the first half of 2011, including emporioarmani.cn, as well as an expansion of procurement on a sale-or-return basis during the first half of 2011 in the Multi-brand business line. The sureties, all given by the Parent, relate to the following contracts: the contract agreed by the Company with Sinv S.p.A., with effect from November 2, 2010, for a period of six years, for the rental of office premises in Via Morimondo, Milan. The surety amounts to Euro 120,000 and expires on December 31, 2012; the contract concluded with Diesel to guarantee payments by the subsidiary Y Services amounting to USD 635,000 (Euro 439,355) with effect from January 1, 2011 and expiring on December 31, 2011; the contract concluded with Diesel to guarantee payments by the subsidiary YOOX Japan for JPY 30,000,000 (Euro 258,065) with effect from March 3, 2011 and expiring on March 3, 2012; the contract agreed by the Company with Despina S.p.A. to guarantee compliance with obligations under a rental contract with effect from July 14, 2010, for a period of six years, relating to office premises at Via Nannetti 1 in Zola Predosa. The amount of the surety is Euro 58,500, expiring on February 1, 2012; the contract agreed by the Company with Despina S.p.A. to guarantee compliance with obligations under a rental contract with effect from April 1, 2007, for a period of six years, relating to office premises at Via Nannetti 1 in Zola Predosa. The amount of the surety is Euro 47,500, expiring on March 31, 2013; the contract agreed with SIMEST to guarantee the loan amounting to Euro 67,419 with effect from September 28, 2006 and expiring on March 16, 2014; the contract agreed with SIMEST to guarantee the loan amounting to Euro 299,168 with effect from January 17, 2008 and expiring on March 16, 2014; the contract agreed by the Company with New Winds Group to guarantee compliance with obligations under a rental contract for office premises in Madrid, with effect from August 1, 2008. The surety amounts to Euro 18,839 and expires on September 1, 2011; the contract agreed by the Company with MM. Kerr and MM.Naret to guarantee compliance with obligations under a rental contract for office premises in Paris, with effect from August 1, 2008. The surety amounts to Euro 50,000 and expires on July 31, 2011; the contract agreed by the Company with Oslavia, with effect from July 1, 2008, for a period of six years, for the rental of office premises in Via Lombardini, Milan. The surety amounts to Euro 19,200 and expires on July 31, 2014; the contract agreed by the Company to guarantee VAT compliance in Portugal, for Euro 5,000, issued to the Portuguese tax representative and expiring on November 27, 2011;
YOOX GROUP
the contract agreed by the Company following the repayment of the Global Collect guarantee deposit of Euro 800,000, after BNP Paribas issued a bank guarantee for the same amount, expiring on April 30, 2012; the surety for Iolanda Labisi with effect from May 1, 2010, for a period of four years, for the rental of premises for use as a guest house located in Via Toscanini, Milan. The surety amounts to Euro 12,000 and expires on April 30, 2014; the contract agreed with Logistica Bentivoglio S.r.l. with effect from June 27, 2011 and expiring on March 15, 2017 to guarantee compliance with obligations under the rental agreement for the warehouse at the Bentivoglio Blocco 9.5 Interporto for Euro 512,775; the surety agreed for Arangino Giovanni to guarantee the costs of restoring the external wall of the building in Via Lombardini, Milan, for a sum of Euro 4,000, with effect from August 19, 2010 and expiring on July 31, 2014.
The hedging contracts relate to forward sales set up by the Parent to cover the currency risk connected to intraGroup sales in US Dollar and Japanese Yen. The nominal amount of these commitments, translated to Euro at the exchange rate in effect at the reporting date, is Euro 4,995 thousand. 13 Non-recurring events and significant transactions The YOOX Group did not engage in significant non-recurring transactions during the first half of 2011. 14 Positions or changes resulting from atypical or unusual transactions There were no positions or changes resulting from atypical and/or unusual transactions during the first half of 2011. 15 Significant events after June 30, 2011 dolcegabbanastore.com Online Store contract and launch The Dolce & Gabbana Online Store was launched on July 13, 2011, following an agreement signed by Dolce & Gabbana Industria S.p.A. and YOOX S.p.A. on July 12, 2011. The agreement is for five years until June 30, 2016. At the time of writing, dolcegabbanastore.com Powered by YOOX Group is mainly active in Europe, the U.S. and Japan, and in August 2011 it will expand into the Chinese market. Granting of shares following the exercise of stock options On July 14, 2011 195,780 YOOX S.p.A. ordinary shares were granted following the exercise of the options relating to the stock option plans and at the strike prices described in the table below:
Stock option plans Grant date 106.50 Strike price (in Euro) 15.91 59.17 Options Total Total post-split shares
2001 - 2003 2006 - 2008 2007 - 2012 Total
July 14, 2011 July 14, 2011 July 14, 2011
1,250 2,315 200 1,450 2,315
1,250 2,315 200 3,765
65,000 120,380 10,400 195,780
Given the above, the new share capital issued by YOOX S.p.A. at the time of writing is Euro 529,721.40, divided into 52,972,140 ordinary shares with no indication of par value. Zola Predosa (BO), August 4, 2011 For the Board of Directors Chairman of the Board of Directors Federico Marchetti (signed on the original)
YOOX GROUP
Annex 1 Consolidated income statement at June 30, 2011, prepared in accordance with CONSOB Resolution 15519 of July 27, 2006 and CONSOB Communication DEM/6064293 of July 28, 2006 (in thousands of Euro).
June 30, 2011 Consolidated income statement Balances of which with related parties % Weighting June 30, 2010 Balances of which with % Weighting related parties
Thousand Euro:
25
Net revenues Cost of goods sold Fulfilment costs Sales and marketing costs General expenses Other income and expenses Non-recurring expenses
131,237 (82,161) (14,908) (14,676) (14,232) (139) -
96,554 (59,445) 1.91% 4.99% 13.50% (10,220) (11,425) (9,916) (240) -
636 (7,872) (223) (664) (2,047)
0.66% 13.24% 2.18% 5.81% 20.65%
25 25 25 25
(285) (733) (1,921)
Operating profit
5,122
5,308
Financial income Financial expenses
549 (742)
843 (539)
Profit before tax
4,930
5,612
Taxes Consolidated net income for the period
(2,014)
(2,273)
2,916
3,339
Basic earnings per share Diluted earnings per share

25
0.06 0.05
0.07 0.06
25
The significant variation in trade receivables from and trade payables to related parties is due to the fact that from January 1, 2011, Sigma G S.r.l. and the Diesel Group companies are no longer considered related parties in accordance with IAS 24 and Consob Regulation no. 1722 of March 12, 2010. The reasons are given in paragraph 11.3 of these explanatory notes.
YOOX GROUP
Annex 2 Consolidated statement of financial position at June 30, 2011, prepared in accordance with CONSOB Resolution 15519 of July 27, 2006 and CONSOB Communication DEM/6064293 of July 28, 2006 (in thousands of Euro).
June 30, 2011 Consolidated statement of financial position Amounts in thousands of Euro and percentage weighting on individual items Balances of which with related % Weighting parties December 31, 2010 Balances of which with related % Weighting parties
Non-current assets Property, plant and equipment Intangible assets with finite useful life Deferred tax assets Other non-current financial assets 16,326 9,728 5,142 581 8,395 7,129 5,456 507
Total non-current assets
31,777
21,487
Current assets Inventories Trade receivables Other current assets Cash and cash equivalents Current financial assets Total current assets Total assets 114,772 146,550 86,527 8,963 7,216 12,067 26
76,311 9,384 7,318 24,188 5,082 122,283 143,770 1,690 18.0%
26
YOOX GROUP
June 30, 2011 Consolidated statement of financial position Balances of which with related % Weighting parties
December 31, 2010 Balances of which with related % Weighting parties
Equity Share capital Reserves Losses carried forward Consolidated net income for the period/year 528 66,592 3,752 2,916 518 64,426 (5,364) 9,117
Equity attributable to owners of the Parent Equity attributable to non-controlling interests
73,788 -
68,697 -
Total consolidated equity
73,788
68,697
Non-current liabilities Medium-long term financial liabilities Employee benefits Provisions for risks and charges Deferred tax liabilities 6,114 211 42 57 846 213 116 69
Total non-current liabilities
6,424
1,244
Bank loans and other current financial liabilities Provisions for risks and charges Trade payables Tax liabilities Other payables
1,807 560 48,410 1,552 14,009 64

27
5,600 877 0.13% 48,943 2,441 15,968 5,202 10.6%
Total current liabilities
66,338
73,829
Total consolidated equity and liabilities
146,550
143,770
27
YOOX GROUP
Annex 3 Consolidated statement of cash flows at June 30, 2011, prepared in accordance with CONSOB Resolution 15519 of July 27, 2006 and CONSOB Communication DEM/6064293 of July 28, 2006 (in thousands of Euro).
June 30, 2011 Consolidated statement of cash flows Amounts in thousands of Euro and percentage weighting on individual items Consolidated net income for the period Adjustments for: Taxes for the period Financial expenses for the period Financial income for the period Depreciation, amortisation and impairment losses for the period Fair value measurement of stock option plans Unrealised effect of changes in foreign exchange rates Employee benefits Provisions for risks and charges Payment of employee benefits Use of provisions for risks and charges Changes in inventories Changes in trade receivables Changes in trade payables Changes in other current assets and liabilities Cash flow generated from (used in) operating activities Income tax paid Interest and other financial expenses paid Interest and other financial income received NET CASH FLOW GENERATED FROM (USED IN) OPERATING ACTIVITIES 2,014 742 (549) 2,763 2,194 (504) 6 110 (8) (501) (10,215) 422 (1,413) (1,857) (3,881) (2,601) (743) 549 (6,674) 1,689 (5,138)
28
June 30, 2010
of which of which % % Balances with related Balances with related Weighting Weighting parties parties
2,916
3,339 2,273 538 (843) 1,526 1,319 525 19 369 (30) (245) (11,471) >100% >100% 1,040 7,273 (4,905) 727 (5,838) (538) 843 (4,806) (52) (409) (5.00)% (5.62)%
28
28
YOOX GROUP
June 30, 2011 Consolidated statement of cash flows
June 30, 2010
of which of which % % Balances with related Balances with related Weighting Weighting parties parties
Investing activities Acquisition of property, plant and equipment Acquisition of intangible assets Acquisition of other non-current financial assets NET CASH FLOW GENERATED FROM (USED IN) INVESTING ACTIVITIES Financing activities New short-term liabilities Repayment of short-term liabilities New medium-long term financial liabilities Repayment of medium-long term financial liabilities Increase in share capital and share premium reserve Investments in other financial assets Variation through difference between cash effect and action of incentive plans Change in the hedging reserve NET CASH FLOW GENERATED FROM (USED IN) FINANCING ACTIVITIES TOTAL CASH FLOW FOR THE PERIOD Cash and cash equivalents at the beginning of the period Cash and cash equivalents at the end of the period TOTAL CASH FLOW FOR THE PERIOD (3,991) 5,047 562 5,082 10 (87) 6,623 (12,120) 24,188 12,067 (12,120) (3) (78) 92 (14,588) (14,577) (23,052) 35,007 11,955 (23,052) (7,789) (4,207) (74) (730) (2,841) (99)
(12,070)
(3,670)
YOOX GROUP
Certification of the condensed consolidated interim financial statements pursuant to article 81-ter of CONSOB Regulation 11971 of May 14, 1999, as amended
Certification of the Condensed Consolidated Interim Financial Statements pursuant to article 81-ter of CONSOB Regulation no. 11971 of May 14, 1999, as amended
1. We, the undersigned Federico Marchetti, Chief Executive Officer and Francesco Guidotti, Chief Financial Officer of YOOX S.p.A. hereby bear witness, having taken into account the provisions of article 154-bis, paragraphs 3 and 4, of Legislative Decree no. 58 of February 24, 1998, to: the suitability in relation to the characteristics of the business and the effective application of the administrative and accounting procedures for the compilation of the condensed consolidated interim financial statements, during the period from January 1, 2011 to June 30, 2011. 2. No significant aspects have emerged in this regard. 3. We also bear witness to the fact that: 3.1 The condensed consolidated interim financial statements: a) have been compiled in compliance with the International Financial Reporting Standards endorsed by the European Union in accordance with (EC) ruling no. 1606/2002 of the European Parliament and Council of July 19, 2002; b) correspond to the accounting results of the books of account and ledgers; c) are suitable to provide a truthful and correct representation of the financial position and results operations of the issuer and companies included in the consolidated accounts. 3.2 The Interim Directors Report includes a reliable analysis of the references to important events which have occurred during the first six months of the fiscal year and their influence on the condensed consolidated interim financial statements, together with a description of the main risks and uncertainties for the remaining six months of the fiscal year. The Interim Directors Report also includes a reliable analysis of disclosure of related party transactions.
Zola Predosa (BO), August 4, 2011
Chief Executive Officer
Director in charge of preparing corporate accounting documents
Federico Marchetti (signed on the original)
Francesco Guidotti (signed on the original)
YOOX GROUP
Independent auditors report on the limited audit of the condensed consolidated interim financial statements

Yoox Group Semestrale 2011

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YOOX GROUP

CONSOLIDATED INTERIM FINANCIAL STATEMENTS AT JUNE 30, 2011

CONSOLIDATED INTERIM FINANCIAL STATEMENTS AT JUNE 30, 2011 | 1

CONSOLIDATED INTERIM FINANCIAL STATEMENTS AT JUNE 30, 2011 | 3

MANAGEMENT AND CONTROL BODIES

BOARD OF STATUTORY AUDITORS

SUPERVISORY BODY L.D. 231/01

DIRECTOR IN CHARGE OF PREPARING CORPORATE ACCOUNTING DOCUMENTS

INTERNAL CONTROL MANAGER

CONSOLIDATED INTERIM FINANCIAL STATEMENTS AT JUNE 30, 2011 | 5

DIRECTORS INTERIM REPORT

CONSOLIDATED INTERIM FINANCIAL STATEMENTS AT JUNE 30, 2011 | 7

CONSOLIDATED INTERIM FINANCIAL STATEMENTS AT JUNE 30, 2011 | 9

CONSOLIDATED INTERIM FINANCIAL STATEMENTS AT JUNE 30, 2011 | 11

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REVENUES AND PROFITABILITY

CONSOLIDATED INTERIM FINANCIAL STATEMENTS AT JUNE 30, 2011 | 15

CONSOLIDATED INTERIM FINANCIAL STATEMENTS AT JUNE 30, 2011 | 16

Reclassified consolidated income statement for the first half 2011:

CONSOLIDATED INTERIM FINANCIAL STATEMENTS AT JUNE 30, 2011 | 17

97,830 74.5% 32.5% 14,159 14.5% 19.4%

73,831 76.5% 11,857 16.1%

33,407 25.5% 47.0% 5,882 17.6% 53.2%

22,723 23.5% 3,839 16.9%

131,237 100.0% 35.9% 20,040 15.3% 27.7%

96,554 100.0% 15,696 16.3%

CONSOLIDATED INTERIM FINANCIAL STATEMENTS AT JUNE 30, 2011 | 18

21.4% 49.5% 19.3% 6.4% 1.6% 1.8% 100.0%

24.1% 48.1% 19.6% 6.3% 0.7% 1.2% 100.0%

20.4% 39.7% 33.9% 38.4% 221.1% 113.0% 35.9%

CONSOLIDATED INTERIM FINANCIAL STATEMENTS AT JUNE 30, 2011 | 19

MARKETING AND COMMUNICATIONS

CONSOLIDATED INTERIM FINANCIAL STATEMENTS AT JUNE 30, 2011 | 20

CONSOLIDATED INTERIM FINANCIAL STATEMENTS AT JUNE 30, 2011 | 21

Balance at June Balance at 30, 2011 December 31, 2010

38,177 31,778 (310) 69,644 73,788 (4,143) 69,644

24,781 21,487 (397) 45,871 68,697 (22,826) 45,871

54.1% 47.9% -21.9% 51.8% 7.4% -81.8% 51.8%

CONSOLIDATED INTERIM FINANCIAL STATEMENTS AT JUNE 30, 2011 | 22

Reclassified consolidated statement of cash flows at June 30, 2011:

(6,674) (12,070) (18,743) 6,623 (12,120)

(4,806) (3,670) (8,476) (14,577) (23,052)

38.9% >100% >100% >100% -47.4%

12,067 122 (1,807) (126) 10,257 (6,114) 4,143

24,188 5,111 (5,600) (26) 23,672 (846) 22,826

-50.1% -97.6% -67.7% >100% -56.7% >100% -81.8%

CONSOLIDATED INTERIM FINANCIAL STATEMENTS AT JUNE 30, 2011 | 23

CONSOLIDATED INTERIM FINANCIAL STATEMENTS AT JUNE 30, 2011 | 24

INFORMATION FOR INVESTORS

Price YOOX S.p.A.

CONSOLIDATED INTERIM FINANCIAL STATEMENTS AT JUNE 30, 2011 | 25

Italy FTSE STAR

June 30, 2011 12.700 13.320 8.150 670.260

CONSOLIDATED INTERIM FINANCIAL STATEMENTS AT JUNE 30, 2011 | 26

CONSOLIDATED INTERIM FINANCIAL STATEMENTS AT JUNE 30, 2011 | 27

INFORMATION CONCERNING MEASURES TO PROTECT PRIVACY

PERSONAL DATA PROTECTION CODE

CONSOLIDATED INTERIM FINANCIAL STATEMENTS AT JUNE 30, 2011 | 28

CONSOLIDATED INTERIM FINANCIAL STATEMENTS AT JUNE 30, 2011 | 29

CONSOLIDATED INTERIM FINANCIAL STATEMENTS AT JUNE 30, 2011 | 30

CONSOLIDATED INTERIM FINANCIAL STATEMENTS AT JUNE 30, 2011 | 31