Added value

Added value means the wealth created over a given reporting period, calculated as the difference between the revenues generated and the external costs sustained in the period.

The distribution of added value between stakeholders enables the expression, in monetary terms, of the existing relations between Pirelli and the major stakeholders, thus shifting attention to the socio-economic system in which the Group operates (as shown in the diagram below).

GLOBAL ADDED VALUE

The added value created by Pirelli & C. Group in 2011, 2010 and 2009 is broken down as follows.

GROSS OVERALL ADDED VALUE*

€/000 €/000 €/000

2011 2010 2009
Total 1,918,054 1,495,881 1,293,255
Remuneration of personnel (1,123,507) (1,063,648) (949,217)

58.6% 71.2% 73.3%
Remuneration of Public Administration (34,457) (137,358) (90,350)

1.8% 9.2% 7.0%
Return on credit capital (89,440) (65,793) (70,112)

4.7% 4.4% 5.4%
Remuneration of venture capital (81,151) (81,151) (81,132)

4.2% 5.4% 6.3%
Remuneration of the company (584,435) (144,306) (99,144)

30.5% 9.6% 7.7%
Outside donations (5,064) (3,625) (3,300)

0.3% 0.2% 0.3%
* The figures for 2010 do not include the operations discontinued during the year that belonged to Pireli & C. Real Estate S.p.A. (now Prelios S.p.A) and Broadband Solutions. The figures for 2009 were consequently restated on a comparable basis.

The value generated by appreciation of Pirelli stock on the stock market must also be considered. Stock market performance in 2011 confirmed Pirelli as the best stock in the European sector, with a gain of +7.5% compared with –24% of DJ Stoxx Auto&Parts.

The trends of the items comprising gross overall added value as indicated hereinabove are adequately explained in the Volume A - Annual Financial Report at December 31, 2011, to which reference is made for further details.

With reference to outside donations, the table below shows the contributions and donations made by Pirelli in the three-year period 2011, 2010 and 2009, broken down by category:

OUTSIDE DONATIONS*

€/000 €/000 €/000

2011 2010 2009




Education 674 770 696
Culture 2,616 1,035 1,215
Research 703 1,119 629
Solidarity, Sport 1,071 701 760
 5,0643,6253,300
* The figures for 2010 do not include the operations discontinued during the year that belonged to Pirelli & C. Real Estate S.p.A. (now Prelios S.p.A) and Broadband Solutions. The figures for 2009 were consequently restated on a comparable basis.

In order to correctly measure and understand the proportion of money spent among the above categories, it must be remembered that the amounts shown are consolidated figures indicated in euro, although they were mainly spent in local currency in the various countries (often emerging markets / developing countries) – where Pirelli operates. This is particularly true for the categories “Education” and “Solidarity”. Paradoxically, although the reported figures shown are lower in absolute terms than what was spent on Culture and Research, they were used to finance a universe of development projects in the countries receiving the donation. Even more so, it should be emphasised that the item “Solidarity, Sport” grew sharply in 2011 from the previous years.

Reference is made to the Social Dimension section for a detailed description of the principal actions associated with these contributions and donations.

During FY 2011, no significant penalties were levied and paid on a final basis for violation of laws and regulations, including any penalties connected with the supply and use of Group products and/or services.

Finally, the Pirelli Group “The Pirelli Group does not provide contributions, advantages, or other benefits to political parties or trade union organizations, or to their representatives or candidates, this without prejudice to its compliance with any relevant legislation.” (The Values and Ethical Code – The Wider Community).