COFIDE Compagnia Finanziaria De Benedetti

Transcription

1 COFIDE Compagnia Finanziaria De Benedetti Semi-annual Interim Financial Report as of June

2 COFIDE - Compagnia Finanziaria De Benedetti S.p.A. Share Capital 359,604,959 Register of Companies and Tax Code Company subject to management and coordination by CARLO DE BENEDETTI & FIGLI S.a.p.A. Registered and Administrative Operating Headquarters Office Torino, Via Valeggio Milano, Via Ciovassino 1 Tel. and Fax (011) Tel. (02) Fax (02)

3 Board of Directors CARLO DE BENEDETTI (*) (***) Chairman RODOLFO DE BENEDETTI (*) Chief Executive Officer ROGER ABRAVANEL (***) GIAMPAOLO BRUGNOLI (****) MASSIMO CREMONA (****) FRANCO DEBENEDETTI MARCO DE BENEDETTI PIERLUIGI FERRERO FRANCO GIRARD JOSEPH OUGHOURLIAN ROBERTO ROBOTTI (****) PAOLO RICCARDO ROCCA (***) (*****) MASSIMO SEGRE (**) Directors FRANCA SEGRE Secretary to the Board Board of Statutory Auditors VITTORIO BENNANI Chairman TIZIANO BRACCO RICCARDO ZINGALES Statutory Auditors RAFFAELE CATARINELLA LUIGI MACCHIORLATTI VIGNAT LUIGI NANI Alternate Auditors Independent Auditors Deloitte & Touche S.p.A. Notice in accordance with the recommendation of Consob as contained in Communiqué no. DAC/RM/ of February (*) Power to sign all documents relating to ordinary and extraordinary administration with single signature except for those reserved by law to the Board of Directors (**) Power to sign documents specified in mandate with single signature (***) Member of the Compensation Committee (****) Member of the Internal Control Committee (*****) Lead Independent Director

4 C O N T E N T S FINANCIAL REPORT SEMI-ANNUAL INTERIM MANAGEMENT REPORT PERFORMANCE OF THE GROUP PERFORMANCE OF THE PARENT COMPANY CHART RECONCILING THE ACCOUNTS OF THE PARENT COMPANY AND THE FIGURES OF THE CONSOLIDATED FINANCIAL STATEMENTS PERFORMANCE OF THE SUBSIDIARIES SIGNIFICANT EVENTS WHICH OCCURRED AFTER JUNE AND OUTLOOK FOR THE REST OF THE YEAR OTHER INFORMATION CONDENSED SEMI-ANNUAL INTERIM CONSOLIDATED FINANCIAL STATEMENTS 1. BALANCE SHEET INCOME STATEMENT CASH FLOW STATEMENT STATEMENT OF CHANGES IN SHAREHOLDERS EQUITY EXPLANATORY NOTES TO THE FINANCIAL STATEMENTS CERTIFICATION OF THE CONDENSED SEMI-ANNUAL INTERIM FINANCIAL STATEMENTS AS OF JUNE IN ACCORDANCE WITH ART. 81-TER OF CONSOB REGULATION NO OF MAY AND SUBSEQUENT AMENDMENTS AND ADDITIONS CONDENSED SEMI-ANNUAL INTERIM FINANCIAL STATEMENTS OF THE PARENT COMPANY 1. BALANCE SHEET INCOME STATEMENT CASH FLOW STATEMENT STATEMENT OF CHANGES IN SHAREHOLDERS EQUITY EXPLANATORY NOTES TO THE FINANCIAL STATEMENTS LIST OF EQUITY INVESTMENTS AS OF JUNE INDEPENDENT AUDITORS REVIEW REPORT This Semi-annual Interim Financial Statements as of June was prepared in accordance with Art. 154 ter of D. Lgs. 58/1998 and in conformity with applicable international accounting standards recognized in the European Union as per EU Regulation no. 1606/2002 of the European Parliament and the Council of July , and specifically with IAS 34 Interim Financial Reporting, and also with the measures issued in implementation of Art. 9 of D. Lgs no. 38/2005.

5 SEMI-ANNUAL INTERIM MANAGEMENT REPORT In the first half of financial year 2008: The consolidated net income of the Cofide group was 66 million, up from 33.3 million in the same period of 2007; The consolidated shareholders equity of the Cofide group rose from million at December to million at June The rise in net income was due to the change in the contribution of the subsidiary Cir, which went up from 32.7 million in the first six months of 2007 to 69.3 million. Cir s result in the first half of 2008 benefited from non-recurring income of approximately million resulting from the subscription by Verbund, a partner of Cir, of a capital increase of 200 million in Sorgenia and, by Morgan Stanley and Cir, of a capital increase of 40 million in HSS. The capital increase in Sorgenia was made on the basis of a valuation of 3.3 billion and that in Hss on the basis of a valuation of over 200 million. The two transactions were confirmation of the validity of the investment choices made by Cir, which have led to an important creation of value. The current configuration of the Cir Group includes five business sectors: utilities (electricity and gas), media (publishing, radio and television), automotive components (filters and suspension components), healthcare (residences for the elderly, rehabilitation and hospitals) and the financial services sector (non-performing loans and financial products for non-prime clients). In the financial services sector Cofide operates through the company Euvis, set up in 2005 to introduce lifetime mortgages for the third age into Italy. At June , Euvis was managing lifetime mortgages for a total of approximately 26.4 million. 1

6 With a view to providing further information on the financial and economic performance of the Cofide group during the first half of 2008, below are the key income statement and balance sheet figures, which show the contribution of Cir to the aggregate earnings and shareholders equity of Cofide S.p.A. and Cofide International S.A.. The income statement is as follows: (in millions of euro) 1st Half st Half 2007 Contributions to earnings of shareholdings in subsidiaries and associates: - Cir S.p.A Euvis S.p.A. (0.5) (0.5) - Other financial companies TOTAL CONTRIBUTIONS Dividends Net gains and losses from trading and valuing securities (0.5) 1.8 Net financial income and expense (3.9) (2.4) Net operating costs (1.9) (1.8) INCOME BEFORE TAXES Income taxes NET INCOME The balance sheet at June shows aggregate net financial debt of 20.4 million and a portfolio of equity investments of million against shareholders equity of million. (in millions of euro) Cir S.p.A Euvis S.p.A Others EQUITY INVESTMENTS CLASSIFIED AS FIXED ASSETS Other equity investments TOTAL EQUITY INVESTMENTS Tangible assets Net receivables and payables for the period (1.3) (7.6) NET INVESTED CAPITAL Funded by: Shareholders equity Aggregate net financial debt (20.4) (30.5) 2

7 1. PERFORMANCE OF THE GROUP Consolidated revenues totalled 2,363.8 million in first half 2008, up from 2,059.4 million in the same period of 2007, with a rise of million (+14.8%). Consolidated revenues can be broken down by business sector as follows: (in millions of euro) 1st Half 1st Half Change 2008 % 2007 % absolute % Utilities Sorgenia group 1, Media Espresso group (18.4) (3.3) Automotive components Sogefi group Healthcare HSS group Other sectors Total consolidated revenues 2, , of which: ITALY 1, , OTHER COUNTRIES The key figures of the consolidated income statement of the Cofide group are as follows: (in millions of euro) 1st Half 2008 % 1st Half 2007 Revenues 2, , Consolidated gross operating margin (EBITDA) Consolidated operating income (EBIT) Financial management result (9.6) (0.5) Income taxes (57.2) (2.4) (75.7) (3.7) Income (loss) from assets held for disposal (0.3) - Net income including minority interests Net income minority interests (114.9) (4.9) (96.5) (4.7) Net income of the Group % The consolidated gross operating margin (EBITDA) in first half 2008 was million (10.4% of revenues), down from 276 million in first half 2007 (13.4% of revenues), with a decline of 30.3 million (-11%). This result was due to a combination of the following factors: - A decline in revenues of the Espresso group, especially from advertising; - The application of the so-called Robin Hood tax to the company Tirreno Power in the Sorgenia group; - Restructuring costs incurred by the Sogefi group; - An improvement of the profitability of the HSS Group. 3

8 The consolidated operating margin (EBIT) in first half 2008 was million (7.6% of revenues) compared to million (10.5% of revenues) in the same period of 2007, with a decline of 35.8 (-16.6%). The further decline compared to EBITDA was due to higher amortization in the Sorgenia group. The financial management result, a positive 58.5 million versus net expense of 9.6 million in the first six months of 2007, was determined by the following: - Net financial expense of 62.9 million ( 40 million in first half 2007), - Net gains from trading and valuing securities of 3.6 million ( 22.6 million in first half 2007), - Non-recurring gains from capital increases of million ( 7.8 million in first half 2007). The key figures of the consolidated balance sheet of the Cofide Group at June , compared with the same situation at December , are as follows: (in millions of euro) Fixed assets 3, ,069.6 Other net non-current assets and liabilities Net working capital Net invested capital 3, ,462.8 Net financial position (1,486.5) (1,367.6) Total shareholders equity 2, ,095.2 Shareholders equity of the Group Minority Shareholders equity 1, ,402.5 The net capital invested at June amounted to 3,746 million, up from 3,462.8 million at December , with a rise of million, due mainly to a rise in net working capital and in fixed asset investments in the Sorgenia group. The net financial position at June showed net debt of 1,486.5 million (up from 1,367.6 million at December ) resulting from: - net debt of 20.4 million for Cofide and Cofide International, down from 30.5 million at December ; - a financial surplus for Cir and the financial holding companies of million which compares with million at December The net rise of 42.2 million during the first half was due mainly to the positive balance of 101 million between dividends received and those paid out and to the disbursement of approximately 42 million for investments in equity, private equity funds and own shares; - total net debt in the operating groups of 1,620.6 million, up from 1,449.4 million at December The rise of million was mainly due to the Sogefi group s higher level of debt after paying out ordinary and extraordinary dividends. 4

9 Capital gains accruing but not yet realized on the fair value treatment of available-for-sale securities, held mainly by the company Medinvest, totalled million at June and are included for this amount in the consolidated net financial position of the Cofide group. Of these gains the part attributable to Cofide (both directly and indirectly through the subsidiary Cir) of 75.3 million, was posted directly to the Fair value reserve in shareholders equity. The performance of Medinvest since it started (April 1994) up to the end of 2007 was particularly satisfactory, recording a weighted average annual return on the portfolio in dollar terms of 9.9%. In the first half of 2008 despite the crisis in the financial markets the performance was negative by only 0.15%. Total shareholders equity at June stood at 2.259,5 million, up from 2,095.2 million at December , with a rise of million after the distribution of 10.8 million of dividends by Cofide and a total of million by the subsidiaries to their minority shareholders. The shareholders equity of the Group rose from million at December to million at June , with a net rise of 44.4 million. Minority shareholders equity went up from 1,402.5 million at December to 1,522.4 million at June , with a rise of million. The evolution of consolidated shareholders equity is given in the Explanatory Notes to the Financial Statements. 5

10 The consolidated cash flow statement for the first half of 2008, prepared according to a managerial format which, unlike the format used for the financial statements, shows the changes in net financial position instead of the changes in cash and cash equivalents, can be broken down as follows: (in millions of euro) 1st Half st Half 2007 SOURCES OF FUNDING Net income for the year including minority interests Amortization, depreciation, write-downs and other non-monetary changes (51.8) 40.5 Self-financing Change in working capital (280.2) 26.3 CASH FLOW GENERATED BY OPERATIONS (79.1) Capital increases Repayment of loan by Tirreno Power TOTAL SOURCES OF FUNDING APPLICATIONS Net investments in fixed assets (199.1) (213.6) Buyback of own shares (13.8) (37.5) Dividend payouts (136.5) (85.1) Other changes (1.6) 16.3 TOTAL APPLICATIONS (351.0) FINANCIAL SURPLUS (DEFICIT) (118.9) 46.9 NET FINANCIAL POSITION AT START OF PERIOD (1,367.6) (833.0) NET FINANCIAL POSITION AT END OF PERIOD (1,486.5) (836.1) A breakdown of the net financial position is given in the Explanatory Notes to the Financial Statements. The cash flow from operations shows that liquidity was absorbed rather than generated. This was due to the absorption of million of liquidity by the increase in net working capital of the Sorgenia group. At June the group had 13,095 employees on its payrolls compared to 12,450 at December

11 2. PERFORMANCE OF THE PARENT COMPANY OF THE GROUP The parent company Cofide S.p.A. closed the first half of 2008 with net income of 16.9 million ( 17.4 million in first half 2007) and shareholders equity of million at June ( million at December ). The key figures of the income statement of Cofide for first half 2008, compared with those of the first six months of 2007, are as follows: (in millions of euro) 1st Half st Half 2007 Net operating costs (1.5) (1.3) Other operating costs, amortization and depreciation (0.3) (0.3) Financial management result Income before taxes Income taxes Net income The financial management result mainly refers to the dividends of subsidiaries and associates, which totalled 19.6 million in first half 2008 compared to 19.5 million in the first half of The key figures of the balance sheet of Cofide at June , compared with the position at December , are as follows: (in millions of euro) Fixed assets Other net non-current assets and liabilities (3.3) (8.2) Net working capital Net invested capital Net financial position (31.6) (37.8) Shareholders equity The change in shareholders equity from million at December to million at June was the result of a rise of 16.9 million, which was the net income for the period, and a decline from the distribution of dividends for 10.8 million and from the fair value adjustment, net of tax, of the investment in Banca Intermobiliare of 10.2 million. 7

12 3. CHART RECONCILING THE ACCOUNTS OF THE PARENT COMPANY AND THE FIGURES OF THE CONSOLIDATED FINANCIAL STATEMENTS The following chart reconciles the result for the year and the shareholders equity of the group with the same values of the financial statements of the parent company. (in thousands of euro) Shareholders Equity Result of 1st Half 2008 Financial statements of the parent company Cofide S.p.A. 570,569 16,857 - Dividends from companies included in the consolidation (19,611) (19,611) - Net contribution of consolidated companies 195,660 68,762 - Difference between carrying values of investee companies and the portions of consolidated shareholders equity (9,518) -- Consolidated financial statements, part attributable to the group 737,100 66,008 8

13 MAIN EQUITY INVESTMENTS OF THE GROUP (*) AT JUNE COFIDE 54.2% (**) SORGENIA Utilities 48.0% 54.5% ESPRESSO Media CIR 57.4% SOGEFI Automotive components 65.4% HSS Healthcare 98.8% JUPITER 47.5% OAKWOOD Financial services 54.6% EUVIS (*) the percentage is calculated net of own shares held as treasury stock (**) percentage of indirect control through Sorgenia Holding (formerly Energia Holding)

14 4. PERFORMANCE OF THE SUBSIDIARIES EUVIS Cofide was the first group in Italy to enter the lifetime mortgage market, introducing a new financial product aimed at the third age, through the company Euvis, which was set up in 2005 with the name Società Finanza Attiva. The lifetime mortgage is a loan aimed at older people who are at least 65 and who own their own homes and does not involve any repayments until the death of the borrower. Commissions and interest are capitalized and become due only at maturity. Repayment is due up to twelve months after the death of the borrower and is paid by the heirs to the estate. At June Euvis was managing lifetime mortgages for a total 26.4 million, of which 5.9 million were made in the first half of In the first six months of 2008 the company reported a net loss of 1 million, due to the start-up phase of the business. The company had 23 employees at June COFIDE INTERNATIONAL - This company was established in 1998 as a vehicle for raising medium/long term funding for the Cofide group and managing financial assets. With a view to optimizing the margin between funding costs and investment returns, the company invested part of its free cash flow in Medinvest Plc, the fund of funds authorized by the Bank of Ireland and listed on the Dublin Stock Exchange. In the first half of 2008 the company reported earnings of 0.5 million with shareholders equity of 16.5 million. The net financial position at June showed a positive balance of 16.6 million, resulting from free cash flow of 10.2 million, a loan of 35.3 million from Cofide and the investment in Medinvest, which had a fair value of 41.7 million. CIR GROUP - In the first half of 2008 the Cir group reported consolidated net earnings of million, up from 68.6 million in the same period of 2007 (+110.3%). 10

15 The following charts show the contributions of the main subsidiaries of Cir to its earnings and to its consolidated equity: (in millions of euro) 1st Half st Half 2007 CONTRIBUTIONS TO EARNINGS Sorgenia group Espresso group Sogefi group HSS group Other subsidiaries (0.6) (0.7) Total operating subsidiaries Financial subsidiaries CIR and CIR International (before non-recurring items) (24.6) (12.2) Non-recurring items Net result of the Cir Group The contribution of the operating groups to consolidated earnings, amounting to 45 million down from 65.6 million in first half 2007, was penalized for 7 million by non-recurring items in the Sorgenia group (Robin Hood Tax) and the Sogefi group (restructuring charges). The contribution of the financial subsidiaries was 4.9 million, down from 10.5 million in first half 2007, which had benefited from capital gains on the sale of shares in hedge funds by Medinvest. The item Non-recurring items refers to capital gains from capital dilution following the capital increases in Sorgenia and HSS. (in millions of euro) CONTRIBUTIONS TO SHAREHOLDERS EQUITY Sorgenia group Espresso group Sogefi group HSS group Other subsidiaries Total subsidiaries CIR and CIR International invested capital net financial position Shareholders equity of the Cir Group 1, ,319.9 Consolidated shareholders equity went up from 1,319.9 million at December to 1,419.9 million at June with a net increase of 100 million. 11

16 There now follows a more in-depth analysis of the business sectors of the Cir group. UTILITIES SECTOR In the first half of 2008 the Sorgenia group reported consolidated revenues of 1,145.7 million, up by 29.7% from million in first half In a domestic environment in which demand for electricity was unchanged, the Sorgenia group managed to increase its energy sales volumes (+7.9% on the same period of the previous year) by expanding its portfolio of micro-business clients. Revenues also benefited from the rise in unit revenues thanks to the economic scenario which saw price rises in benchmark oil products. In the first six months of 2008 the Sorgenia group posted consolidated net income of 25.4 million, down from 38.9 million in the same period of last year. This decline was due partly to higher financial expense because of the higher average debt over the period but even more to the effect of the Robin Hood Tax, which had an impact of 7.6 million on the result of the group, penalizing the result of the affiliated company Tirreno Power. The new tax rules introduced by Art. 81 of Decree Law no. 112 of June (the so-called Robin Hood Tax) involve a rise in the IRES tax rate from 27.5% to 33% with the application of a surtax of 5.5% for entities operating in the production or marketing of electricity that reported a volume of revenues of over 25 million in the previous tax year. Consolidated sales revenues can be broken down as follows: (in millions of euro) 1st Half st Half 2007 Change Values % Values % % Electricity Natural gas Other revenues TOTAL 1, In the first half of 2008 the group sold 5,062 GWh of electricity and 1,128 million cubic metres of natural gas. The consolidated gross operating margin (EBITDA) was 82 million (7.2% of revenues) compared with 87.3 million (9.9% of sales) in the first six months of The improved sales margins for both electricity (especially in the segment of clients with lower consumption but higher profitability) and natural gas would have led to a 5.4% rise in margin on first half 2007 to 92 million instead of the 82 million actually recorded, the decline being due to the lower contribution of the associated company Tirreno Power whose earnings were negatively affected by the Robin Hood Tax, as described above. Consolidated operating income (EBIT) for first half 2008 came in at 65.2 million, down from 76.2 million in the same period of last year. The consolidated net financial position of the Sorgenia group at June showed net debt of 897 million, with a slight improvement on million at December The change was substantially due to the financial disbursements made for investment in new production capacity for approximately 109 million (relating to the Modugno and Lodi power plants under construction, to the photovoltaic plants of Sorgenia Solar and to wind plants) and to the rise in net 12

17 working capital of approximately 139 million, largely offset by the subscription of the capital increase of 200 million in Sorgenia at the end of June 2008, by the repayment of the loans made to Tirreno Power and by dividends received for a total of 53.8 million. At June the group had 317 employees on its payrolls, up from 276 at December In the first half of 2008 the Sorgenia group continued with the rollout of its business plan , which involves reaching an installed capacity of 5.2 GW by 2012 with four greenfield CCGT plants (each with an output of approximately 770 MW), its share of the output of Tirreno Power post repowering, the development of 920 MW of wind generating capacity (of which 450 MW in Italy) and the installation of 50 MW of photovoltaic plants. Regarding wind generation, during the first half of the year construction work went ahead on the new plants situated in the local districts of Minervino Murge, Castelnuovo di Conza and San Gregorio Magno, for a totalled installed capacity of around 70 MW. The acquisition in France of Société Française d Eoliennes (SFE), which took place in December 2007, enabled the Sorgenia group to increase its wind generating portfolio by 100 MW installed, 71 MW authorized and soon to be built and 1,000 MW at various stages of development. Then at the end of March 2008 the company Sorgenia Romania was established based in Bucharest with the aim of building, managing and maintaining wind farms. In the field of solar energy, at the end of the first six months of 2008 there were 10 photovoltaic plants in operation, each with an output of approximately 1MW, all belonging to the subsidiary Sorgenia Solar. A further 5 plants should start operating by the end of Regarding the Sorgenia group s plan of investment in thermoelectric plants, in the first half of the year work continued on the construction of the combined cycle plant at Bertonico-Turano Lodigiano (Lombardy), a favourable ruling by the Council of State put an end to the dispute regarding the plan for the Aprilia power plant, and building work progressed on the Modugno plant (Puglia), which is scheduled to start operating by the end of this year. The repowering program of Tirreno Power is also going ahead according to plan. In the first half of the year building work continued on a new combined cycle module with an output of 380 MW at Napoli Levante, which is also expected to start operating by the end of The Sorgenia group is also engaged in important projects that aim to guarantee diversification of gas sourcing, thus enhancing the safety of the whole domestic network. LNG Med Gas Terminal, a company 69.77% controlled by Fin Gas Srl, an equal share joint venture between Sorgenia and Iride, completed successfully the investigatory process for obtaining the VIA (Evaluation of environmental impact) for the construction of a 12 billion cubic metre regasification terminal at Gioia Tauro (Calabria). In June the company Sorgenia E&P was set up. This company is 100% controlled by Sorgenia and is involved in the exploration and production of hydrocarbons. 13

18 MEDIA SECTOR The Espresso group closed the first half of 2008 with consolidated revenues of million, down by 3.3% from million in first half Consolidated net income was 36.4 million compared with 50.0 million in the first half of 2007, which had benefited from the positive effect of the different accounting treatment of TFR, amounting to 7.8 million in terms of net income. Net of this item, earnings would have been down by 5.8 million. The revenues of the group can be broken down as follows: (in millions of euro) 1st Half st Half 2007 Change Values % Values % % Circulation (0.9) Advertising (3.7) Other revenues (24.4) TOTAL (3.3) The result of the first half of 2008 was affected by negative factors on the revenue front (advertising and sales) only partly offset by other positive factors (optional products) and by the recovery of costs. This happened thanks to investments made in past years and to the first effects of a series of new initiatives undertaken in 2008 which, when fully implemented with corporate reorganizations that will involve a reduction of some 100 staff over the next three years, will lead to a decline in costs year on year of approximately 40 million. Should the negative trend of advertising become more pronounced, more action is being planned to cut operating costs, including personnel costs. Advertising, which has been negatively affected by the gradual worsening of the international and domestic economic downturn, declined significantly during the first half (-10% approximately) in terms of domestic commercial advertising in la Repubblica and the periodicals, while local advertising was up by more than the market average (+5.7%) as indeed was internet advertising (+30.3%). In the second quarter even the radio and television sector stalled, causing sales revenues for the first half to decline by 5.8% compared to the same period of the previous year. By contrast the margin on optional products was higher although revenues and volumes edged down slightly because of the unfavourable conditions of the market. A fact that was common to all the titles of the group was the growth in traffic of their respective internet websites and readership indices were also either stable or rising, showing a total of 8.4 million contacts with the media of the group. Sales on the news-stands were different for the various titles. The circulation of la Repubblica fell by 4.1%, clocking up 593 thousand average copies per issue, partly as a result of the choice made to change certain marketing initiatives, but it kept its total readership at around 3 million and on the internet, consolidating its leadership, it clocked up 10.9 million users in the month of June (over 1 million per day). The local newspapers substantially confirmed their sales figures with 462 thousand average copies per issue (467 thousand in first half 2007), kept their readership numbers at over 3 million, and reached 1.3 million unique users on their websites. Lastly L'espresso experienced a decline of 4.9% in circulation because of a downturn in the quantities of optional products sold and fewer copies sold on the news-stands, which were partly offset by a rise in subscriptions, confirming a readership figure of 2.4 million. 14

19 Radio Deejay, the number one commercial radio broadcaster with around 5.5 million listeners on an average day (13.5 million over the week), also benefited from new ways of accessing its programs: web streaming and podcast downloads, many of which are at the top of Italian rankings. Up slightly were also the listening figures of m2o (1.4 million on an average day and 3.7 million over the week), while the audience of Radio Capital stood at just over 1.6 million listeners on an average day (6 million over the week). Consolidated operating income in first half 2008 was 75.5 million versus million in the same period of last year. Consolidated net financial debt at June , which as usual was affected by the seasonal nature of the business, was million, up from million at December , because the payment of dividends ( 68.8 million), net disbursements for investment in fixed assets ( 30.7 million) and the buyback of own shares ( 5.6 million) absorbed more liquidity than that generated by operations. Consolidated shareholders equity went down from million at December to million at June At June , including temporary contracts, the group had 3,450 employees on its payrolls, compared to 3,414 at December Based on recent estimates, circulation of the titles of the group and sales of optional products should continue to be in line with the trend of the first half, and for advertising too there is not likely to be a change in trend in the second half of the year from that recorded in the first half to June 30. The economic scenario in the whole of the publishing sector continues to be critical. In this environment, the income figures for this year will be positive but will certainly be lower than those reported in 2007 even net of the extraordinary one-off items that boosted last year because of the new legislation on the TFR and the recalculation of deferred taxes. AUTOMOTIVE COMPONENTS SECTOR The consolidated revenues of the Sogefi group in the first half of 2008 totalled million, with a rise of 2.7% (+4.9% at the same exchange rates) from million in the first six months of last year, despite a vehicle market in difficulty because of the worsening of the economic situation in the mature markets and a significant rise in the prices of commodities and oil. The rise in revenues was due to the positive trend of the South American market and increased business in suspension components. Consolidated net income came in at 20.2 million, down from 28.9 million in the first half of 2007 (-30.1%). 15

20 The breakdown of the consolidated revenues of the Sogefi group by business sector is as follows: (in millions of euro) 1st Half st Half 2007 Change Values % Values % % Filters (2.4) Suspension components and precision springs Intercompany (1.2) (0.2) (0.4) TOTAL In spite of a generalized rise in the cost of raw materials, especially of steel and aluminium components, thanks to the substantial transfer of these higher costs on to selling prices, the group reported consolidated operating income of 53.8 million (9.7% of sales), which was substantially in line with the result of the corresponding period of 2007 of 56 million (10.3% of sales), which had benefited from positive adjustments of around 2 million. In the first half of 2008, EBITDA and EBIT were impacted to a significant degree by restructuring charges of 6.9 million (versus 1 million in 2007), while the first half of 2007 had benefited from positive non-recurring items of 6.5 million (the sale of a property and adjustments to liabilities). Consolidated EBITDA in first half 2008 came to 61 million (11% of revenues), down by 18.5% from 74.8 million (13.8% of sales) in the same period of last year. Consolidated EBIT was 38.7 million (7% of sales) down from 51.6 million in the first six months of 2007 (9.5% of sales) (-25%). In the first half of 2008 the result before taxes and before minority interests was 32.7 million, down from 47.1 million in the same period of 2007, both becausse of the rise in financial expense because of the higher level of debt after the distribution of the extraordinary dividend and because of the fall in EBIT. At June the consolidated net financial position showed net debt of 251 million, up from million at June and 92.4 million at December , following the payout of million in ordinary and extraordinary dividends. The group had 6,308 employees at June compared to 6,208 at December In the first half of 2008 the filter division reported revenues of million, down slightly (-2.4%) from 278 million in the first six months of 2007, due to the contraction in demand in the European after-market which was only partly offset by the higher sales in Latin America and in the original-market sector. EBITDA came in at 25 million (9.2% of sales), down from 41.1 million (14.8% of sales) in the first half of 2007, while EBIT was 15.9 million (5.9% of sales), down from 31.7 million (11.4% of sales). These results were penalized by restructuring costs, mainly for the Mantua works, of 6.5 million, while the first half of 2007 had benefited from positive items totalling 6.5 million, resulting from the above-mentioned sale of a property and from pension fund adjustments. 16

21 The suspension components division reported revenues in first half 2008 of million, up by 8.4% from million in the same period of 2007, thanks partly to the rise in selling prices. The higher sales volumes, especially in the industrial vehicle sector, and the transfer of the higher cost of steel on to prices made it possible to improve profitability. EBITDA rose to 38.6 million (13.5% of sales) from 36.8 million (13.9% of sales) and EBIT came in at 25.6 million (8.9% of sales) up from 23.3 million (8.8% of sales) in the first half of The economic scenario in which the group will have to operate in the second half of 2008 should involve a modest contraction in vehicle production in Europe and the continuation of good performance in South American markets. In order to keep operating profitability levels on a par with those reported in first half 2008, the further sizeable rises in the cost of steel will have to be transferred on to selling prices. HEALTHCARE SECTOR In the first half of 2008 the HSS group continued to strengthen its operating subsidiaries and to seek new development opportunities to consolidate its presence in the healthcare sector. In the first six months of 2008 the HSS group reported consolidated revenues of million, up from 72.3 million in the previous period (+64%), with a rise of 46.2 million, thanks to the development of all areas of the business. Consolidated EBITDA was 14.1 million (11.9% of sales revenues), up from 9.8 million in the first six months of 2007, having benefited from the contribution of the acquisitions made in the second half of Consolidated EBIT was 9 million (7.6% of sales) with a rise of 2.9 million from 6.1 million in the corresponding period of the previous year. Consolidated net income came in at 0.7 million compared to 0.5 million in the first six months of At June the HSS group had net financial debt of 124 million, down from million at December The improvement was the result of the subscription on June by Cir and the Morgan Stanley funds already shareholders of HSS, of a capital increase in HSS for a total amount of 40 million offsetting a rise in debt due to the acquisitions and investments made in the first six months of the year. At June consolidated shareholders equity stood at million, up from million at December The business of the HSS is currently focused on managing: 1) Residences and nursing homes (RSAs), with 35 residences under management and 4 under construction (approximately 3,500 beds operational and more than 450 under construction); 2) Hospitals and rehabilitation centres, with 5 rehabilitation hospitals, 8 psychiatric rehabilitation communities and 13 day hospitals for a total of 1,100 beds operational and 50 under construction; 3) One hospital and high tech activities within hospitals, with 7 diagnostic imaging departments. 17

22 The HSS group currently manages a total of around 4,700 beds plus a further 500 soon to be completed. The group had 2,940 employees at June compared to 2,472 at December FINANCIAL SERVICES SECTOR The Cir group operates in the financial services sector with the company Jupiter Finance and the investment made in the Oakwood group, as described in detail below. JUPITER FINANCE This company, which operates in the sector of non-performing loans, was set up at the end of 2005 with the aim of becoming an independent industrial partner of Italian banks and businesses in the management of non-performing loans. The company thus carries out a debt collection activity and collects payment in securitization deals as master servicer, and providing both operational services and carrying out a guarantee function makes sure that the procedures of the securitization process are followed correctly. At June the total number of loan receivables under the management of Jupiter Finance as master servicer amounted to million of gross book value purchased for a price of million. As of the same date the company had collected receivables for 37.3 million, which was in line with its collection programs. During 2008 Jupiter Finance continued in its role as master servicer in the program of securitization of portfolios of receivables through the vehicle company (as per law 130) Zeus Finance, which is included in the consolidated financial statements of Cir. This program involves the issue of securities for a maximum amount of 400 million, subdivided into two classes, a senior class for a maximum of 200 million and a class of junior securities for a maximum of 200 million, which are subordinate to the first class both for the capital and the interest. At June the securities issued, totalling 89 million, were underwritten by Cir International for the junior part amounting to 38 million and by a prime bank for the senior part amounting to 51 million as part of an underwriting agreement for all of the senior tranche for a total value of 200 million. In July 2007 Jupiter Finance started operating abroad, focusing on certain specific countries in central and southern Europe: as of June four acquisitions had been made for a total nominal value of 54 million at a purchase price of 13 million. OAKWOOD The investment made by Cir, in a joint venture with Merrill Lynch, in the Oakwood Global Finance group was worth 75 million at June after a write-down at December of approximately 65 million. During the first half of 2008 the two companies Ktesios and Pepper continued to do business. Ktesios, despite the well-known liquidity problems in the financial markets, is still operating in the loan business making loans secured on one fifth of workers salaries or pensions and has confirmed its ranking as leader in Italy in this segment of the market. During the first half it made loans of 315 million compared to 308 million in the first six months of Pepper, which operates in the Australian non-conforming mortgage sector, has reduced its loan originating business quite significantly, as was expected, and has instead expanded the scope of servicing in its business plan. CIR VENTURES At June the portfolio of Cir Ventures, the venture capital fund of the Group, contained investments in seven companies of which six in the United States and one in Is- 18

23 rael. These companies all operate in the sector of information and communications technology. The total fair value of these investments at June amounted to 18.5 million dollars. The management activity of the fund is still mainly directed towards supporting the companies in the portfolio and identifying opportunities for taking profit. The prospects for the evolution of the business of these companies remain cautiously optimistic within a scenario of a general improvement in the technology sector. INVESTMENT IN PRIVATE EQUITY FUNDS - Through its subsidiary Cir International the Cir group holds a diversified portfolio of funds and minority private equity holdings, the fair value of which determined on the basis of the NAV provided by the various funds was approximately 78 million at June During the first half of 2008 further investments were made for approximately 6 million and funds were redeemed for 1.5 million. Remaining commitments outstanding at June amounted to 38 million. 5. SIGNIFICANT EVENTS WHICH OCCURRED AFTER JUNE AND OUT- LOOK FOR THE REST OF THE YEAR Regarding the outlook for the year, taking into account the net non-recurring income already realized in the first half it is thought that the consolidated net result will be higher than that of last year. As far as the performance of the operating groups is concerned, reference should be made to the analysis of the various sectors. On July the Board of Directors of Cir approved a proportional partial demerger of the Company s non-media businesses: activities in the utilities sector (Sorgenia), automotive sector (Sogefi), healthcare (Holding Sanità e Servizi) and financial services (Jupiter, Oakwood, CIR International and Ciga/Medinvest) will be spun off into a new company, the beneficiary company, which will be listed on the MTA market. The controlling shareholding in the Editoriale L Espresso Group will remain in the demerged company. Each Cir shareholder will be assigned shares in the beneficiary company pro rata on the basis of a 1:1 assignment ratio. The demerger will take place at book value and will be based on the balance sheet of Cir at June Once the proposed demerger has been approved by the Board of Directors, it will be submitted to the approval of the Shareholders at a meeting to be convened in mid October, with the objective of implementing it in January Completion of the demerger is in any case conditional on the admission to listing on MTA of the shares of the beneficiary company. 6. OTHER INFORMATION Transactions with companies of the Group and related parties In accordance with the law and with the recommendations of CONSOB given in communiqués DAC/RM/ of February and DAC/ of February , we should point out that in the half-year ended June : - Transactions with subsidiaries consisted mainly of the following: Management support and communication services for 1,036 thousand supplied by Cofide S.p.A. to Cir S.p.A.; 19

24 Financial, legal and administrative assistance for 274 thousand supplied by Cir S.p.A. to Cofide S.p.A.; Receipt of dividends distributed by Cir S.p.A. for 17,973 thousand; Receipt of dividends distributed by Cofidefin Servicos de Consultoria Lda for 1,638 thousand; An interest-bearing loan made to Cofide International S.A. to cover temporary funding needs for 34,360 thousand plus accumulated interest for the period of 963 thousand; - No transaction involving own shares was carried out during the first half of the year. As can be seen from the balance sheet, there was no treasury stock on the books at June Relations during the first half of the year with the parent company Carlo De Benedetti & Figli S.a.p.A., which exercises a management and coordination role, were exclusively in relation to the distribution of dividends to the same for the amount of 4,902 thousand. It should be pointed out that the Cofide Group did not enter into any transactions with related parties, according to Consob s definition, of a non-typical or unusual nature beyond normal business administration or such as to have any significant impact on the economic, financial or equity situation of the Group. Other The company Cofide S.p.A. has its registered office in Via Valeggio, Turin (To), Italy. Cofide shares, which have been quoted on the Milan Stock Exchange since 1985, since 2004 have been traded on the Ordinary segment MTA (Reuter code: COFI.MI, Bloomberg code COF IM). This Financial Report for the period January 1 June was approved by the Board of Directors on July The company is subject to management and coordination by Carlo De Benedetti & Figli S.a.p.a.. 20

25 Cofide Group Condensed Semi-annual Interim Consolidated Financial Statements BALANCE SHEET INCOME STATEMENT CASH FLOW STATEMENT STATEMENT OF CHANGES IN SHAREHOLDERS EQUITY EXPLANATORY NOTES TO THE FINANCIAL STATEMENTS 21

26 1. CONSOLIDATED BALANCE SHEET (in thousands of euro) ASSETS Notes NON-CURRENT ASSETS 3,631,438 3,524,719 INTANGIBLE ASSETS (7.a) 1,339,190 1,283,133 TANGIBLE ASSETS (7.b) 1,594,214 1,473,973 INVESTMENT PROPERTY (7.c) 19,822 20,109 INVESTMENTS IN COMPANIES VALUED AT EQUITY (7.d) 240, ,554 OTHER EQUITY INVESTMENTS (7.e) 11,996 11,885 OTHER RECEIVABLES (7.f) 228, ,397 of which with related parties (*) (7.f) 75, ,614 SECURITIES (7.g) 96,121 97,037 DEFERRED TAXES (7.h) 101,456 94,631 CURRENT ASSETS 3,226,144 2,999,031 INVENTORIES (8.a) 207, ,967 CONTRACTED WORK IN PROGRESS 3,261 2,564 TRADE RECEIVABLES (8.b) 1,241,418 1,070,273 of which from related parties (*) (8.b) 1,759 3,404 OTHER RECEIVABLES (8.c) 270, ,128 of which from related parties (*) 34, FINANCIAL RECEIVABLES (8.d) 51,273 37,171 SECURITIES (8.e) 703, ,566 AVAILABLE-FOR-SALE FINANCIAL ASSETS (8.f) 370, ,374 CASH AND CASH EQUIVALENTS (8.g) 377, ,988 ASSETS HELD FOR DISPOSAL (2.c.) 6,692 6,756 TOTAL ASSETS 6,864,274 6,530,506 LIABILITIES AND SHAREHOLDERS' EQUITY SHAREHOLDERS' EQUITY 2,259,470 2,095,196 SHARE CAPITAL (9.a) 359, ,605 RESERVES (9.b) 154, ,337 RETAINED EARNINGS (LOSSES) (9.c) 157, ,397 NET INCOME FOR THE PERIOD 66,008 32,352 SHAREHOLDERS' EQUITY OF THE GROUP 737, ,691 MINORITY SHAREHOLDERS' EQUITY 1,522,370 1,402,505 NON-CURRENT LIABILITIES 2,559,836 2,970,547 BONDS AND NOTES (10.a) 774,796 1,189,672 OTHER BORROWINGS (10.b) 1,425,917 1,431,060 OTHER PAYABLES DEFERRED TAXES (7.h) 149, ,940 PERSONNEL PROVISIONS (10.c) 166, ,637 PROVISIONS FOR RISKS AND LOSSES (10.d) 43,121 41,918 CURRENT LIABILITIES 2,044,968 1,464,763 BANK OVERDRAFTS 213,540 96,102 BONDS AND NOTES (11.a) 382, OTHER BORROWINGS (11.b) 162, ,106 TRADE PAYABLES (11.c) 942, ,582 of which with related parties (*) (11.c) 18,014 13,712 OTHER PAYABLES (11.d) 276, ,145 PROVISIONS FOR RISKS AND LOSSES (10.d) 68,438 62,828 LIABILITIES HELD FOR DISPOSAL (2.c.) TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 6,864,274 6,530,506 (*) As per the terms of Consob resolution no of July

27 2. CONSOLIDATED INCOME STATEMENT (in thousands of euro) Notes 1st Half st Half 2007 SALES REVENUES (12) 2,363,808 2,059,548 of which from related parties (*) (12) 882 6,459 CHANGE IN INVENTORIES 7,412 1,693 COSTS FOR THE PURCHASE OF GOODS (13.a) (1,373,690) (1,127,340) of which from related parties (*) (13.a) (79,804) (53,815) COSTS FOR SERVICES (13.b) (397,497) (373,801) PERSONNEL COSTS (13.c) (351,559) (301,961) OTHER OPERATING INCOME (13.d) 42,322 41,444 OTHER OPERATING COSTS (13.e) (52,243) (40,711) ADJUSTMENTS TO THE VALUE OF INVESTMENTS VALUED AT EQUITY (9.d) 7,186 17,145 AMORTIZATION, DEPRECIATION AND WRITE-DOWNS (66,101) (60,613) INCOME BEFORE FINANCIAL ITEMS ( E B I T ) 179, ,404 FINANCIAL INCOME (14.a) 35,304 35,635 of which from related parties (*) (14.a) 6,131 8,041 FINANCIAL EXPENSE (14.b) (98,193) (75,599) DIVIDENDS 2,491 2,116 GAINS FROM TRADING SECURITIES (14.c) 133,476 55,296 LOSSES FROM TRADING SECURITIES (14.d) (10,438) (19,384) ADJUSTMENTS TO THE VALUE OF FINANCIAL ASSETS (4,185) (7,671) INCOME BEFORE TAXES 238, ,797 INCOME TAXES (15) (57,196) (75,677) INCOME AFTER TAXES FROM OPERATING ACTIVITY 180, ,120 INCOME (LOSS) FROM ASSETS HELD FOR DISPOSAL -- (297) NET INCOME FOR PERIOD INCLUDING MINORITY INTERESTS 180, ,823 - NET INCOME OF MINORITY SHAREHOLDERS (114,889) (96,529) - NET INCOME OF THE GROUP 66,008 33,294 BASIC EARNINGS PER SHARE (in euro) (16) DILUTED EARNINGS PER SHARE (in euro) (16) (*) As per Consob resolution no of July

28 3. CONSOLIDATED CASH FLOW STATEMENT (in thousands of euro) OPERATING ACTIVITY 1st Half st Half 2007 NET INCOME FOR THE PERIOD INCLUDING MINORITY INTERESTS: 180, ,823 ADJUSTMENTS: AMORTIZATION, DEPRECIATION AND WRITE-DOWNS 66,101 60,613 PORTION OF EARNINGS OF COMPANIES VALUED AT EQUITY (7,186) (17,145) ACTUARIAL VALUATION OF STOCK OPTION PLANS 1,144 4,416 CHANGE IN PERSONNEL PROVISIONS AND PROV. FOR RISKS AND LOSSES 12,325 (7,670) ADJUSTMENTS TO THE VALUE OF FINANCIAL ASSETS 4,185 7,671 CAPITAL GAIN ON SUBSCRIPTION OF SHARE CAPITAL BY MINORITY SHAREHOLDERS (117,810) -- INCREASE (REDUCTION) IN NON-CURRENT RECEIVABLES & PAYABLES (7,067) 148,675 (INCREASE) REDUCTION IN NET WORKING CAPITAL (208,175) 4,780 CASH FLOW FROM OPERATING ACTIVITY (75,586) 331,163 of which: - interest income (expense) (51,409) (24,139) - income tax payments (30,489) (43,467) INVESTMENT ACTIVITY (PURCHASE) SALE OF SECURITIES (302,182) (56,147) PURCHASE OF FIXED ASSETS (242,112) (116,280) CASH FLOW FROM INVESTMENT ACTIVITY (544,294) (172,427) FUNDING ACTIVITY INFLOWS FROM CAPITAL INCREASES 268,683 42,854 OTHER CHANGES IN SHAREHOLDERS' EQUITY (1,580) 16,350 DRAWDOWN/(REPAYMENT) OF OTHER BORROWINGS (5,868) 173,050 FINANCIAL RECEIVABLES FROM JOINT VENTURES 42, BUYBACK OF OWN SHARES (13,842) (37,451) DIVIDENDS PAID OUT (136,455) (85,080) CASH FLOW FROM FUNDING ACTIVITY 153, ,723 INCREASE (REDUCTION) IN NET CASH AND CASH EQUIVALENTS (466,443) 268,459 NET CASH AND CASH EQUIVALENTS AT START OF PERIOD 630, ,114 NET CASH AND CASH EQUIVALENTS AT CLOSE OF PERIOD 164, ,573

29 4. STATEMENT OF CHANGES IN CONSOLIDATED EQUITY (in thousands of euro) Attributable to the Shareholders of the parent company Minority Total Share Reserves Retained earnings Net income (losses) Total Interests Capital (losses) for period BALANCE AT DECEMBER , , ,195 43, ,055 1,366,515 2,033,570 Capital increases ,634 54,634 Dividends to Shareholders (10,788) (10,788) (74,353) (85,141) Retained earnings ,202 (32,958) Fair value measurement of hedging instruments Fair value measurement of securities -- 13, ,664 18,290 31,954 Securities fair value reserve to income statement -- (7,314) (7,314) (7,371) (14,685) Effects of equity changes in subsidiaries -- 14, ,045 (98,385) (84,340) Currency translation differences -- (16,501) (16,501) (13,990) (30,491) Result for the period ,352 32, , ,153 BALANCE AT DECEMBER , , ,397 32, ,691 1,402,505 2,095,196 Capital increases , ,683 Dividends to Shareholders (10,788) (10,788) (125,667) (136,455) Retained earnings ,927 (21,564) Fair value measurement of hedging instruments ,676 2,438 Fair value measurement of securities -- (12,671) (12,671) (3,510) (16,181) Securities fair value reserve to income statement -- (1,454) (1,454) (298) (1,752) Value of options on shares of subsidiaries (5,326) (5,326) Effects of equity changes in subsidiaries -- 4, ,044 (127,092) (123,048) Currency translation differences -- (1,492) (1,492) (3,490) (4,982) Result for the period ,008 66, , ,897 BALANCE AT JUNE , , ,324 66, ,100 1,522,370 2,259,470

30 EXPLANATORY NOTES TO THE FINANCIAL STATEMENTS 1. STRUCTURE AND CONTENT OF THE FINANCIAL REPORT Criteria used for the preparation of the consolidated semi-annual interim consolidated financial statements and accounting principles adopted The annual consolidated financial statements of the group are prepared in accordance with IFRS international accounting standards issued by the International Accounting Standards Board (IASB) and ratified by the European Union as per the terms of Regulation no. 1606/2002. This consolidated semi-annual interim financial report in shortened form was prepared in a condensed form in compliance with IAS 34 Interim Financial Reporting. This semi-annual interim report in shortened form does not therefore include all the information required for the annual report and must be read together with the annual report and financial statements for the year ended December The accounting principles adopted in the preparation of this consolidated semi-annual interim financial report are the same as those adopted in the preparation of the annual consolidated financial statements of the Group for the year ended December The full text of these principles is given below in order to facilitate consultation. The consolidated semi-annual interim financial statements in shortened form include the Parent Company of the Group Cofide S.p.A. (hereinafter Cofide ) and the companies over which it has control and were prepared using the statements of the individual companies included in the consolidation, either their individual interim financial reports ( separate in IAS/IFRS terminology), or their consolidations into subgroups, examined and approved by their administrative bodies and suitably modified and reclassified, where necessary, to bring them into line with the accounting standards listed below where compatible with Italian regulations. These financial statements were prepared in thousands of euro, which is the functional and presentation currency of the Group according to the terms of IAS 21, except where expressly indicated otherwise. 2. CONSOLIDATION PRINCIPLES 2.a. Consolidation methods Subsidiaries: All the companies over which the Group exercises control according to the terms of IAS 27, SIC 12 and IFRIC Interpretation 2 are considered as subsidiaries. In particular, companies and investment funds are considered as controlled companies when the Group has the power to make decisions regarding financial and operating policy. The existence of this power is presumed to exist when the Group possesses the majority of the voting rights of a company, including potential voting rights that are exercisable without any restrictions or when it has in any case effective control over Shareholders Meetings. 26

31 Subsidiaries are fully consolidated as from the date on which the Group takes control and are deconsolidated when such control ceases to exist. Consolidation is carried out using the full line-by-line consolidation method. The main criteria adopted for the application of this method are principally the following: - The book value of the holding is eliminated against the appropriate portion of shareholders equity and the difference between acquisition cost and the shareholders equity of investee companies is posted, where the conditions exist, to the items of assets and liabilities included in the consolidation. Any remaining part is recognized to the income statement when it is negative or to the Goodwill item of the assets when it is positive. Goodwill is subjected to an impairment test to determine its recoverable value; - Significant transactions between consolidated companies are eliminated as are payables, receivables and unrealized income resulting from transactions between companies of the Group, net of any tax; - Minority shareholders equity and their share of net income for the period are shown in special items of the consolidated balance sheet and income statement; - In the event of a reduction of the shareholding, not involving a loss of control, due to an increase in the capital held by minority shareholders, except for cases resulting from the subscription of stock option plans, any gains or losses from the dilution are recognized to the income statement in application of the Parent Company method. Associates All those companies in which the Group has a significant influence, without having control, in accordance with the terms of IAS 28, are considered as associated companies or associates. Significant influence is presumed to exist when the Group holds a percentage of the voting rights of between 20% and 50% (excluding cases where there is joint control). Associates are consolidated using the equity method as from the date on which the Group acquires significant influence in the associate and they are de-consolidated from the moment when significant influence ceases to exist. The criteria adopted for applying the equity method are principally the following: - The book value of the holding is eliminated against the appropriate portion of shareholders equity and any positive difference, identified at the time of the acquisition, net of any lasting loss of value resulting from an impairment test to establish its recoverable value; the corresponding share of the net income or loss for the period is recognized to the income statement. Whenever the part attributable to the Group of the losses of the associate exceeds the carrying value of the investment in the accounts, the value of the investment is written off and the share of any further losses are not recognized unless the Group has any contractual obligation to do so; - Any unrealized gains and losses generated by transactions between companies of the Group are netted out except in cases where losses represent a permanent loss of value of the assets of the associate; - The accounting principles of the associate are amended, where necessary, in order to make them compatible with the accounting principles adopted by the Group. Joint ventures: All companies in which the Group exercises control jointly with another company according to the terms of IAS 31 are considered as joint ventures. More specifically it is presumed that joint control exists when the Group owns half of the voting rights of a company. International accounting standards give two methods for consolidating investments in joint ventures: 27

32 . the reference method, which involves pro-rata consolidation:. the alternative method which involves consolidation using the equity method. The Group has adopted the equity method of consolidation. 2.b. Translation of foreign companies financial statements into euro The translation into euro of the financial statements of foreign subsidiaries not belonging to the single currency, none of which has an economy subject to hyperinflation according to the definition given in IAS 29, is carried out at the exchange rate prevailing at the reporting date for the balance sheet and at the period average exchange rate for the income statement. Any exchange rate differences resulting from the translation of shareholders equity at the close of period exchange rate and from the translation of the income statement at the average rate for the period are recorded in the item Other reserves under shareholders equity. The main exchange rates used are the following: 1st Half st Half 2007 Average rate Average rate US Dollar UK Pound Swedish Krona Brazilian Real Argentine Peso Chinese Renminbi c. Consolidation area The consolidated financial statements as of June and the consolidated financial statements for the previous year of the Group are the result of the consolidation at those dates of the Parent Company of the Cofide Group and of all the companies directly or indirectly controlled, jointly controlled or associated, with the exception of any companies being wound up. Assets and liabilities scheduled for disposal are reclassified in the items of assets and liabilities that show such an eventuality. The assets at June refer to properties of the Sogefi group which are scheduled to be sold during The main changes in the consolidation compared with the previous year have to do with the acquisition by Sorgenia of the company Société Francaise d Eolienne (SFE), the second largest wind energy operator in France and to the acquisition by HSS of the S.Stefano group. The principal figures of the acquired companies are shown in paragraph 21 of these Explanatory Notes. It should be noted that in application of Standing Interpretations Committee 12 (SIC 12), the securitization company (vehicle company) Zeus Finance S.r.l. has been consolidated. The list of equity investments included in the consolidation with an indication of the method used and of those not included is given in the appropriate section of this document. 28

33 3. ACCOUNTING PRINCIPLES APPLIED 3.a. Intangible assets (IAS 38) Intangible assets are recognized only if they can be separately identified, if it is probable that they will generate future economic benefits and if their cost can be measured reliably. Intangible assets with a finite useful life are valued at purchase or production cost net of any accumulated amortization and impairment. Intangible assets are initially recognized at purchase or production cost. Purchase cost is represented by the fair value of the means of payments used to purchase the asset and any additional direct cost incurred for preparing the asset for use. The purchase cost is the equivalent price in cash as of the date of recognition and, where payment is deferred beyond normal terms of credit, the difference compared with the cash price is recognized as interest for the whole period of deferment. Amortization is calculated on a straight-line basis following the expected useful life of the asset and starts when the asset is ready for use. The carrying value of intangible assets is maintained as long as there is evidence that this value can be recovered through use; to this end at least once a year an impairment test is carried out to check that the intangible asset is able to generate future cash flows. However, intangible assets with an indefinite useful life are not amortized but are constantly monitored for any permanent loss of value. It is mainly the newspaper and magazine titles and frequencies of the Espresso Group that are considered as intangible assets with an indefinite useful life. Development costs are recognized as intangible assets when their cost can be measured reliably, when there is a reasonable assumption that the asset can be made available for use or for sale and that it is able to generate future benefits. Once a year or any time there are reasons which justify it, capitalized costs are subjected to an impairment test. Research costs are charged to the income statement as and when they are incurred. Trademarks and licenses, which are initially recognized at cost, are subsequently accounted for net of amortization and any impairment. The period of amortization is defined as the lower of the contractual duration for use of the license and the useful life of the asset. Software licenses, including associated costs, are recognized at cost and are recorded net of amortization and of any impairment. Goodwill In the event of acquisitions of companies, the assets, liabilities and potential liabilities acquired and identifiable are recognized at their fair value on the date of the acquisition. The positive difference between the cost of the acquisition and the Group s share of the fair value of the assets and liabilities is classified as goodwill and recognized in the balance sheet as an intangible asset. Any negative difference ( negative goodwill ) is recognized to the income statement at the moment of the acquisition. After initial recognition, goodwill is valued at cost less any accumulated impairment. 29

34 Goodwill always refers to identified income-producing assets, the ability of which to generate income and cash flows is constantly monitored for any impairment. On the first adoption of IFRS, the Group opted not to apply IFRS 3 Business Combinations retrospectively to acquisitions made before January As a result of this, goodwill generated on acquisitions prior to the date of transition to IFRS was maintained at the value previously determined according to Italian accounting principles, subject to checking for and recognizing any impairment. Regarding transactions involving acquisition/disposal of holdings in companies that are already subsidiaries, including extraordinary deals involving a change in the stake held in the said subsidiaries, IFRS 3 is not applicable due to the fact that it governs only transactions involving the acquisition of control by the acquiring entity of the business activities of the acquired company. Thus the acquisition of further shares after having already obtained control of the acquired company is not specifically governed by IAS/IFRS. In the absence of a Principle or a specific Interpretation on this subject and in consideration of the instructions contained in IAS 8 (Accounting policies, changes in accounting estimates and errors), the Group opted to apply the accounting policies described below, identifying two different kinds of transaction: - acquisition/sale of shares in companies already controlled: in application of the Parent entity extension method which considers minority shareholders as third parties, the Group - in the event of acquisitions pays to third-party shareholders an amount in cash or in new shares thus resulting in the simultaneous elimination of their respective minority shares and recognition of goodwill for the amount of the difference between the acquisition cost and the carrying value of the assets and liabilities acquired; - in the event of a sale the difference between the selling price and the corresponding carrying value in the consolidated statements is recognized to the income statement; - intercompany transfer of shares in controlled companies which involves a change in the percentage of ownership: the shares transferred remain recorded at historical cost and the gain or loss resulting from the transfer is fully reversed out. The holdings of third-party shareholders, not directly taking part in the transaction, are adjusted to reflect the change in their respective portion of shareholders equity with an offsetting adjustment to the equity of the shareholders of the Parent Company without recognizing any goodwill and without of course having any effect on the total income situation or on total equity. 3.b. Tangible assets (IAS 16) Tangible assets are recognized at purchase price or at production cost net of accumulated depreciation. Cost includes associated expenses and any direct and indirect costs incurred at the moment of acquisition and necessary to make the asset ready for use. Financial expense relating to specific loans for long-term investments are capitalized until the date when the assets start operating. When there are contractual or compulsory obligations for decommissioning, removing or clearing sites where fixed assets are installed, the value recognized includes an estimate of costs that will be incurred on disposal of the same, discounted to present value. Fixed assets are depreciated on a straight-line basis for each year in relation to their remaining useful life. Land, assets under construction and advance payments are not subject to depreciation. 30

35 Real estate and land not used for corporate operating purposes are classified under a special item of assets and are accounted for on the basis of the terms of IAS 40 Investment properties (see paragraph 3.e. below). Should there be any events which one can assume will cause a lasting reduction in the value of an asset, its carrying value is checked against its recoverable value, which is the higher of its fair value and its value in use. Fair value is defined on the basis of values expressed by the active market, by recent transactions or from the best information available to determine the potential amount obtainable from the sale of the asset. Value in use is determined from the net present value of cash flows resulting from the use expected of the same asset, applying the best estimates of its residual useful life and a rate that also takes into account the implicit risk of the specific business sectors in which the Group operates. This valuation is carried out for each individual asset or for the smallest identifiable cash generating unit (CGU). Where there is a negative difference between the values stated above and the carrying value, the asset s carrying value is written down, while as soon as the reasons for such loss in value cease to exist the asset then undergoes an upward revaluation. Write-downs and revaluations are posted to the income statement. 3.c. Public entity grants Any grants from a public entity are recognized when there is a reasonable degree of certainty that the receiving company will comply with all the conditions stipulated for such a grant, independently of whether or not there is a formal resolution awarding the said grant, and the certainty that the grant will actually be received. Capital contributions are recognized in the balance sheet either as deferred income, which is posted to the income statement on the basis of the useful life of the asset for which it has been granted so that the depreciation can be reduced, or else they are deducted directly from the asset to which they refer. Any public entity grants obtained in the form of reimbursement of expenses and costs already incurred or with the purpose of providing immediate support for the beneficiary company without there being any future related costs, are recognized as income in the period in which they can be claimed. 3.d. Leasing contracts (IAS 17) Leasing contracts for assets where the lessee substantially assumes all the risks and rewards of ownership are classified as finance leases. Where there are such finance lease contracts outstanding the asset is recognized at the lower of its fair value and the present value of the minimum lease payments stipulated in the relevant contracts. The total lease payments are allocated between the liability and finance charges so as to achieve a constant rate on the finance balance outstanding. The residual lease payments, net of financial expense, are classified as borrowings. The interest expense is charged to the income statement over the lease period. Assets acquired with financial leasing contracts are depreciated to an extent consistent with the nature of the asset. Leasing contracts in which the lessor substantially retains the risks and rewards of ownership are, on the other hand, classified as operating leases and payments made under such leases are charged to the income statement on a straight-line basis over the period of the lease. In the event of a sale and lease-back agreement through a finance lease, any difference between the price of sale and the carrying value of the asset is not recognized to the income statement unless there is a loss representing an impairment of the asset itself. 31

36 3.e. Investment property (IAS 40) An investment property is a property, either land or building or part of a building or both, o- wned by the owner or by the lessee, through a financial leasing agreement, for the purpose of receiving lease payments or for obtaining a return on the capital invested or for both of these reasons, rather than for the purpose of directly using it for the production or supply of goods or services or for administration of the company or for sales, in ordinary business activities. The cost of an investment property is represented by its purchase price, any improvements made, any replacements and extraordinary maintenance. For self-constructed investment property an estimation is made of all costs incurred as of the date on which the construction or the development was finished. Until that date the conditions set forth in IAS 16 apply. In the event of an asset held through a finance lease contract, the initial cost is determined according to IAS 17 from the lower of the fair value of the property and the present value of the minimum lease payments due. The Group has opted for the cost method to be applied to all investment property held. According to the cost method, measurement is made net of any accumulated depreciation and any impairment. At the moment of disposal or in the event of permanent non-use of the assets, all related income and expenses will be charged to the income statement. 3.f. Impairment of assets (IAS 36) Periodically and whenever there are specific indications, tangible and intangible assets are subjected to an impairment test to see whether they have undergone any loss in value. The impairment test consists of an estimate of the recoverable value of the asset and a subsequent comparison with its net carrying amount. If the recoverable value is lower than the carrying amount, the latter is written down and the impairment loss is charged to the income statement. If at a later date the reasons for the write-down cease to exist, the original carrying amount is restored with the relative posting to the income statement. 3.g. Other equity investments Investments in companies where the Parent Company does not exercise a significant influence are accounted for in accordance with IAS 39 and are therefore classified as available-for-sale investments and are measured at fair value or at cost if the estimation of fair value or market price is not reliable (see paragraph 3.i. below). 3.h. Receivables and payables (IAS 32, 39 and 21) Receivables are recognized at amortized cost and measured at their presumed realization value, while payables are recognized at amortized cost. Receivables and payables in foreign currencies, which are originally recognized at the spot rates of the transaction date, are adjusted to period-end spot exchange rates and any exchange gains and losses are recognized to the income statement. 32

37 3.i. Securities (IAS 32 and 39) In accordance with IAS 32 and IAS 39 investments in companies other than subsidiaries and associates are classified as available-for-sale financial assets and are measured at fair value. Gains and losses resulting from fair value adjustments are recorded in a special equity reserve. When there are impairment losses or when the assets are sold, the gains and losses recognized previously to shareholders equity are then posted to the income statement. Purchases and sales are recognized on the date of the trade. This category also includes financial assets bought or issued that are classified as either held for trading or at fair value through profit and loss on adoption of the fair value option. For a more complete description of the principles regarding financial assets we would refer readers to the note specially prepared on the subject ( financial instruments ). 3.l. Income taxes (IAS 12) Current taxes are recorded and determined on the basis of a realistic estimate of taxable income following current tax regulations of the country in which the company is based and taking into account any exemptions that may apply and any tax credits that may be claimed. Deferred taxes are calculated on the basis of time differences, whether taxable or deductible, between the carrying values of assets and liabilities and their tax bases and are classified under noncurrent assets and liabilities. A deferred tax asset is recognized if it is likely that there will be sufficient taxable income against which the deductible temporary difference can be used. The carrying value of deferred tax assets is subject to periodic analysis and is reduced to the extent to which it is no longer likely that there will be sufficient taxable income to allow the benefit of this deferred asset to be utilized. 3.m. Inventories (IAS 2) Inventories are recorded at the lower of purchase or production cost, calculated using the weighted average cost method, and their presumed realizable value. 3.n. Cash and cash equivalents (IAS 32 and 39) Cash and cash equivalents include cash in hand, call deposits and short-term and high-liquidity financial assets, which are easily convertible into cash and have an insignificant risk of change in value. 3.o. Shareholders equity Ordinary shares are recorded at nominal value. Costs directly attributable to the issuance of new shares are deducted from the shareholders equity reserves, net of any related tax benefit. 33

38 Own shares are classified in a special item which is deducted from reserves; any subsequent transaction of sale, re-issuance or cancellation will have no impact on the income statement but will affect only shareholders equity. Unrealized gains and losses, net of tax, on financial assets classified as available for sale are recorded under shareholders equity in the fair value reserve. The reserve is reversed to the income statement when the asset is realized or when a impairment loss is recognized. The hedging reserve is formed from the fair value movements of derivatives which, under IAS 39, have been designated as cash flow hedges or as hedges of net investments in foreign operations. The portion of the profit and loss considered as effective is recognized to shareholders equity and is reversed to the income statement as and when the elements hedged are in turn recognized to the income statement, i.e. when the subsidiary is sold. When a subsidiary prepares its financial statements in a currency different from the Group s functional currency, the subsidiary s financial statements are translated accounting any differences resulting from such translation in a special reserve. When the subsidiary is sold the reserve is reversed to the income statement with a detail of any gains or losses resulting from the subsidiary s disposal. The item Retained earnings (losses) includes accumulated income and losses and the transfer of balances from other equity reserves when these become free of any restrictions to which they have been subject. This item also shows the cumulative effect of the changes in accounting principles and/or the correction of errors which are accounted for in accordance with IAS 8. 3.p. Borrowings (IAS 32 and 39) Loans are initially recognized at cost represented by their fair value net of ancillary costs incurred. Subsequently loans are measured at amortized cost calculated by applying the effective interest rate, taking into consideration any issuance costs incurred and any premium or discount applied at the time in which the instrument is settled. 3.q. Provisions for risks and losses (IAS 37) Provisions for risks and losses refer to liabilities which are extremely likely but where the amount and/or maturity are uncertain. They are the result of past events which will cause future cash outflows. Provisions are recognized exclusively in the presence of a current obligation, either legal or constructive, towards third parties which implies an outflow and when a reliable estimate of the amount involved can be made. The amount recognized as a provision is the best estimate of the disbursement required to fulfil the obligation as of the balance sheet date. The provisions recognized are re-examined at the close of each accounting period and are adjusted to represent the best current estimate. Changes in the estimates are recognized to the income statement. When the estimated disbursement relating to the obligation is expected in a time horizon longer than normal payment terms and the discount factor is significant, the provision represents the pre- 34

39 sent value, discounted at a risk-free interest rate, of the expected future outflows to discharge the obligation. Contingent assets and liabilities (possible assets and liabilities, or those not recognized because no reliable estimate can be made) are not recognized. However adequate disclosure on such items is given. 3.r. Revenue recognition (IAS 18) Revenues from the sale of goods are recognized at the moment when ownership and the risks of the goods are transferred. Revenues are recognized net of returns, discounts and rebates. Revenues for the rendering of services are recognized at the moment when the service is rendered, with reference to the state of completion of the activity as of the balance sheet date. Income from dividends, interest and royalties is recognized as follows: - Dividends, when the right to receive payment is established (with an offset in receivables when distribution is approved); - Interest, using the effective interest rate method (IAS 39); - Royalties, on an accruals basis, in accordance with the underlying contractual agreement. 3.s. Employee benefits (IAS 19) Benefits to be paid to employees after the termination of their employment and other long term benefits are subject to actuarial valuation. Following this methodology, liabilities recognized represent the present value of the obligation adjusted for any actuarial gains or losses which have not been accounted for. Financial Law no. 296/2006 (Budget) made important changes to severance and leaving indemnity (TFR) regulations, introducing the possibility for workers to transfer their TFR maturing after January to selected pension schemes. Thus the TFR accruing as of December for employees who exercised the above option, while remaining within the sphere of defined benefit plans, was determined using actuarial methods that exclude the actuarial / financial components relating to future salary dynamics. Given that this new method of calculation reduces the volatility of actuarial gains / losses the decision was taken to abandon the corridor method and recognize all the actuarial gains and losses to the Income Statement. Accounting principle IFRS 2 Share based payments issued in February 2005 but applicable as from January stated in its transition instructions that application would be retrospective for all transactions where stock options were awarded before November and where, as of the date of its taking effect, the vesting conditions contained in the various plans had not yet been satisfied. In compliance with this principle the Cofide Group measures the notional cost of stock options and recognizes it to the income statement under personnel costs during the vesting period of the benefit, with a corresponding posting to the appropriate reserve in shareholders equity. 35

40 The cost of the option is determined at the award date of the plan applying special models and multiplying by the number of options exercisable over the respective period, which is evaluated with the aid of appropriate actuarial variables. Similarly the cost resulting from the award of phantom stock options is determined in relation to the fair value of the options at the award date and is recognized to the income statement under personnel costs throughout the vesting period of the benefit. The offsetting entry, unlike for stock options, is made in the liabilities (other personnel provisions) and not in an equity reserve. Until this liability is extinguished its fair value is recalculated at each balance sheet date and on the date of actual disbursement and all the fair value changes are posted to the income statement. 3.t. Derivative instruments (IAS 32 and 39) Derivative instruments are measured at fair value. The Group uses derivatives mainly to hedge risks, in particular interest rate, foreign exchange and commodity price risks. The hedging purpose of the derivative is formally documented and the degree of effectiveness of the hedge is specified. For accounting purposes hedging transactions can be classified as: - fair value hedges where the effects of the hedge are recognized to the income statement. - cash flow hedges where the effective portion of the hedge is recognized directly to shareholders equity while the non-effective part is recognized to income statement. - hedges of net investments in foreign operations where the effective portion of the hedge is recognized directly to shareholders equity while the non-effective part is recognized to the income statement. 3.u. Foreign currency translation (IAS 21) The Group s functional currency is the euro, which is the currency in which its financial statements are prepared and published. The companies of the Group prepare their financial statements in the currencies that are used in their respective countries. Transactions carried out in foreign currencies are initially recognized at the spot exchange rate on the date of the transaction. At the balance sheet date monetary assets and liabilities denominated in foreign currencies are translated at the spot exchange rate prevailing on that date. Non-monetary items measured at historical cost in a foreign currency are translated using the historical exchange rate prevailing on the date of the transaction. Non-monetary items measured at fair value are translated using the spot exchange rate at the date on which the measurements are determined for the financial statements. The assets and liabilities of the companies within the Group whose functional currency is not the euro are valued using the following procedures: - assets and liabilities are translated using the spot exchange rate prevailing at the balance sheet date; - costs and revenues are translated using the average exchange rate for the period; Exchange rate differences are recognized directly to a special reserve in shareholders equity. 36

41 Should an investment in a foreign operation be sold, the accumulated exchange rate differences recognized in the equity reserve are reversed to the income statement. 3.v. Adoption of new accounting standards In the first six months of 2008 the Group adopted the following Principles, Interpretations and Updates to the standards already published: - IFRIC 7 The application of the restatement method as required by IAS 29 in hyperinflationary economies; - IFRIC 8 The scope of application of IFRS 2; - IFRIC 9 The revaluation of embedded derivatives; - IFRIC 10 Interim financial reporting and impairment; - IFRS 7 Financial instruments: new disclosures; - IAS 1 (Update) notes on capital. Moreover the Group did not opt for the early adoption of the following Principles, Interpretations and Updates: - IFRS 8 (Operating segments) - IFRIC 11 (Group and treasury share transactions IFRS 2) - IFRIC 12 (Service concession arrangements) - IFRIC 13 (Customer loyalty programmes) - IFRIC 14 (The limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction) - IAS 23 (Borrowing costs) revised - IAS 1 Presentation of Financial Statements (revised) - IFRS 3 Business combinations (revised) - IAS 27 Consolidated and separate Financial Statements (revised) - IFRS 2 Share-based payment vesting conditions and cancellations (revised) which will become obligatory in following years. 3.w. Earnings per share (IAS 33) Basic earnings per share are determined by dividing the net income attributable to the ordinary shareholders of the Parent Company by the weighted average number of ordinary shares in circulation during the period. Diluted earnings per share are calculated by adjusting the weighted average number of ordinary shares in circulation to take into account the effect of all potential ordinary shares, resulting for example from the possibility of the exercise of stock options assigned, which can have a dilutive effect. 4. FINANCIAL INSTRUMENTS Financial instruments take on a particular significance in the economic and financial structure of the Cofide Group and for this reason and in order to give a better and clearer understanding of the financial issues involved, it was considered useful to devote a special section to the accounting treatment of IAS 32 and IAS

42 According to IAS 32 financial instruments are classified into four categories: a) Financial instruments that are valued at fair value with an offsetting entry in the income statement ( fair value through profit and loss - FVTPL) in application of the fair value option, which are held for trading purposes; b) Investments held to maturity (HTM); c) Loans and receivables (L&R); d) Available-for-sale financial assets (AFS). Classification depends on Financial Management s intended use of the financial instrument in the business context and each involves a different measurement for accounting purposes. Financial transactions are recognized on the basis of their value date. Financial instruments at fair value through profit and loss Instruments are classified as such if they satisfy one of the following conditions: - they are held for trading purposes; - they are a financial asset designated on adoption of the fair value option, the fair value of which can be reliably determined. Trading generally means frequent buying and selling with the aim of generating profit on price movements in the short term. Derivatives are included in this category unless they are designated as hedging instruments. The initial designation of financial instruments, other than derivatives and those held for trading, as instruments at fair value through profit and loss in adoption of the fair value option is limited to those instruments that meet the following conditions: a) The fair value option designation eliminates or significantly reduces an accounting mismatch; b) A group of financial assets, financial liabilities, or both are managed and their performance is evaluated on a fair value basis, in accordance with a documented investment risk management strategy, and c) An instrument contains an implicit derivative which meets particular conditions. The designation of an individual instrument to this category is definitive, is made at the moment of initial recognition and cannot be modified. Investments held to maturity This category includes non-derivative instruments with fixed payments or payments that can be determined and that have a fixed maturity, and which it is intended and possible to hold until maturity. These instruments are measured at amortized cost and constitute an exception to the general principle of measurement at fair value. Amortized cost is determined by applying the effective interest rate of the financial instrument, taking into account any discounts or premiums received or paid at the moment of purchase, and recognizing them throughout the whole life of the instrument until its final maturity. Amortized cost represents the initial recognition value of a financial instrument, net of any capital repayments and of any impairment, plus or minus the cumulated amount of the differences between its initial net value and the nominal amount at maturity calculated using the effective interest rate method. The effective interest rate method is a calculation criterion used to assign financial expenses to their appropriate time period. The effective interest rate is the rate that gives a correct present value to expected future cash flows until maturity, so as to obtain the net present carrying value of the financial instrument. 38

43 If even one single instrument belonging to this category is sold before maturity, for a significant amount and where there is no special justification for this, the tainting rule is applicable and requires that the whole portfolio of securities classified as Held To Maturity be reclassified and measured at fair value, and this category cannot then be used in the following two years. Loans and receivables This refers to financial instruments which are not derivatives, have payments that are either fixed or can be determined, which are not quoted on an active market and which are not intended to be traded. This category includes trade receivables (and payables), which are classified as current assets or liabilities with the exception of the part due in over 12 months from the balance sheet date. The measurement of these instruments is made by applying the method of amortized cost, using the effective interest rate and taking into account any discounts or premiums obtained or paid at the moment of acquisition and recognizing them throughout the whole life of the instrument until its final maturity. Available-for-sale financial assets This is a residual category which includes non-derivative financial instruments that are designated as available for sale and are not included in any of the previous categories. Financial instruments held for trading are recognized at their fair value plus any transaction costs. Gains and losses are recognized to a special equity reserve until the financial instruments are sold or have been impaired. In such cases the profit or loss accrued under shareholders equity is released to the income statement. Fair value is the amount for which an asset can be exchanged or a liability can be settled, between knowledgeable, willing parties in a transaction at arm s length. In the case of securities listed on regulated markets, the fair value is the bid price at the close of trading on the last day of the accounting period. Where no market prices are available, fair value is determined either on the basis of the fair value of another financial instrument that is substantially similar or by using appropriate financial techniques (for example the discounted cash flow method). Investments in financial assets can be eliminated from the balance sheet, or derecognized, only when the contractual rights to receive their respective financial cash flows have expired or when the financial asset is transferred to third parties together with all its associated risks and rewards. 5. ACCOUNTING PRINCIPLES, CHANGES IN ACCOUNTING ESTIMATES AND ERRORS The criteria for making estimates and measurements are re-examined on a regular basis and are based on historical experience and on other factors such as expectations of possible future events that are reasonably likely to take place. If the initial application of a principle affects the current year or the previous one, its effect is recognized by indicating the change resulting from any transitional rules, the nature of the change, the description of the transitional rules, which may also affect future years, and the amount of any adjustments relating to years preceding those being presented. 39

44 If a voluntary change of a principle affects the current or previous year this effect is shown by indicating the nature of the change, the reasons for the adoption of the new principle, and the amount of any adjustments made for years preceding those being presented. In the event of a new principle/interpretation issued but not yet in force, an indication is given of the fact, of its potential impact, the reason for the principle/interpretation, the date on which it will take effect and the date on which it will first be applied. A change in accounting estimates involves an indication of the nature and the impact of the change. Estimates are used mainly to show impairment of assets recorded, provisions made for risks, employees benefits, taxes and other provisions and reserves. Estimates and assumptions are reviewed regularly and the effects of any changes are reflected in the income statement. The treatment of accounting errors involves an indication of the nature of the error, the amount of the adjustments and corrections to be made at the beginning of the first accounting period after it was recognized. 6. NON-CURRENT ASSETS HELD FOR SALE (IFRS 5) A non-current asset is held for sale if its carrying value will be recovered principally through a sale rather than through use. For this condition to be satisfied the asset must be immediately sellable in its present condition and the sale must be considered as highly likely. The assets or groups of assets for disposal that are classified as held for sale are valued at the lower of their carrying value and fair value less costs to sell. Individual assets or assets belonging to a group classified as held for sale are not amortized. The inclusion in the financial statements of these assets means showing their profits and losses in a single line of the income statement net of any taxes resulting from the sale. Similarly the assets and liabilities must be shown on a separate line of the Balance Sheet. Key balance sheet and income information relating to transactions carried out during the period are given in the note on the Consolidation area (2c). 40

45 NOTES ON THE BALANCE SHEET 7. NON-CURRENT ASSETS 7.a. INTANGIBLE ASSETS Opening position Changes in the period Closing position Historical Accum. amort. Net balance Acquisitions Business combinations Exchange Other Net Amort. & Historical Accum. amort. Balance cost & write-downs and sales rate changes disposals write-downs cost & write-downs (in thousands of euro) increases decreases differences cost Start-up and expansion costs 75 (69) (2) 75 (70) 5 Capitalized development costs - purchased produced internally 53,907 (32,672) 21,235 3, (267) (3,231) 54,415 (33,005) 21,410 Industrial patents and intellectual property rights 21,754 (19,187) 2, (3) (936) 18,529 (16,267) 2,262 Concessions, licenses, trademarks & other rig 61,155 (50,405) 10,750 2, (7) (2,663) 64,155 (52,950) 11,205 Titles and trademarks 400, , , ,245 Frequencies 211, ,620 7, (496) , ,508 Goodwill 1,018,511 (393,056) 625,455 47, (1,138) ,064,766 (393,097) 671,669 Assets in progress and advance payments -- - purchased 5, ,035 1, (795) (4) -- 6, ,125 - produced internally 2, ,111 1, (8) (113) , ,297 Others 11,507 (7,398) 4, (255) 11,097 (6,633) 4,464 Total 1,785,920 (502,787) 1,283,133 64, (956) (767) (7,087) 1,841,212 (502,022) 1,339,190 Intangible assets rose from 1,283,133 thousand at December to 1,339,190 thousand at June The item Goodwill rose in the period mainly due to the consolidation difference of approximately 35 million generated on the subscription of a capital increase by Sorgenia Holding S.p.A. in its subsidiary Sorgenia S.p.A. AMORTIZATION RATES Description % Capitalized development costs 20-33% Industrial patents and intellectual property rights 4-20% Concessions licenses, trademarks and similar rights 16-30% Other intangible assets 16-30%

46 A more detailed analysis of the main items making up the item intangible assets is given in the following charts. Titles and trademarks: (in thousands of euro) la Repubblica 229, ,952 Il Piccolo / Messaggero Veneto 104, ,527 Local newspapers 61,222 61,222 Other titles and trademarks 4,544 4,544 Total 400, ,245 Frequencies: (in thousands of euro) Radio frequencies 80,225 74,301 Television frequencies 138, ,319 Total 218, ,620 Goodwill: (in thousands of euro) Gruppo Editoriale L Espresso S.p.A. 139, ,779 Sogefi S.p.A. 92,391 91,293 Cir S.p.A. 33,206 32,937 Sorgenia Holding S.p.A. (formerly Energia Holding S.p.A.) 287, ,934 Holding Sanità e Servizi S.p.A. 119, ,512 Total 671, ,455 For the purposes of carrying out the Impairment test on goodwill, the estimate of the value recoverable for each cash generating unit, as defined by IAS 38, was carried out on the basis of the value in use calculated by discounting to net present value, at an appropriate discount rate, the future cash flows generated by the unit in its productive phase and at the moment of its disposal (discounted cash flow method). The cash flows of the single operating units were extrapolated from the budgets and forecasts made by management. These plans were then processed on the basis of economic trends recorded in previous years and using the forecasts made by leading analysts on the outlook for the respective markets and more in general on the evolution of each business sector. In order to determine the discount rate to use, an estimate was made of the weighted average cost of capital invested (WACC) net of inflation, gross of taxes and independently of the financial structure of the individual company/subgroup. The impairment tests carried out using the cash flow method and other methods of valuation showed that there had been no losses of value. It should also be noted that the impairment test carried out on publication titles and radio and television frequencies, considered as assets with an indefinite useful life, ascertained that there were no losses in value to be recorded in the balance sheet. 42

47 For estimating the recoverable value of each asset the higher of fair value less costs to sell and value in use was used. Calculating the value in use of Cash Generating Units To determine the value in use of Cash Generating Units, future financial cash inflows and outflows generated by the unit in its productive phase and at the moment of its final disposal were discounted to present value using an appropriate discount rate. In other words, value in use was calculated by applying the unlevered (or asset side) variation of the Discounted Cash Flow model, with the formula that includes discounting the expected flows analytically within the time horizon of forecast projection ( ) and determining terminal value. To estimate the value in use of a Cash Generating Unit correctly, it is necessary to assess the size of the expected cash flows of the unit; expectations regarding possible variations in the amount and timing of the flows; the discount rate to be used; any risk factors caused by the conditions under which the investment in that unit was made. Regarding the characteristics of the flows to be discounted, international accounting standards require explicitly that, for the purposes of checking value, no account should be taken of inflows and outflows generated by financing activities, or relating to income tax receipts or payments. The flows to be discounted are, therefore, operating cash flow, unlevered and differential (because they refer to the single unit). As the discount rate, the average cost of invested capital (WACC) was used. The calculation of fair value less costs to sell of Cash Generating Units IAS 36 states that the fair value less costs to sell of an asset or a group of assets (e.g. a Cash Generating Unit) is best expressed in the price made in a binding sale agreement between independent parties, net of any direct disposal costs. If this is not evident, the fair value net of costs to sell can be determined in relation to the following trading prices, in order of importance: the current price traded in an active market; the previous price for a similar transaction; the estimated price based on information obtained from the company. In this particular instance, fair value less costs to sell was calculated following a different methodological approach for each business sector. For the publishing business, for which there is no actively traded market, reference was made to direct valuation multipliers, while for the TV and radio business a price/users type multiple was used, observing the trading prices of similar frequencies based on the amount of population potentially reachable by the signal. In order to determine the possible price of the publishing Cash Generating Unit, entity-side multiples were used in the trailing version (or historical/point multiples) or in the leading version (expected/average multiples). The estimation of fair value less costs to sell of the radio and television operating units was carried out starting from the observation of trading prices of frequencies similar to those under examination in relation to the population potentially reachable by the signal. This valuation approach makes it possible to estimate the fair value of radio and TV frequencies considering the ratio of the price that the market is prepared to pay to purchase the frequency to the number of inhabitants that the signal can reach. 43

48 7.b. TANGIBLE ASSETS Opening position Changes in the period Closing position Historical Accum. deprec. Net balance Acquisitions Business combinations Capitalized Exchange Other Net Deprec. & Historical Accum. deprec. Balance cost & write-downs and sales financial rate changes disposals write-downs cost & write-downs (in thousands of euro) increases decreases expense differences cost Land 29, ,068 4,286 11, (324) -- 44, ,444 Buildings used for business 304,809 (92,623) 212,186 3,461 2, (642) 2, (4,957) 313,516 (98,771) 214,745 Plant and machinery 985,362 (692,439) 292,923 12, (1,318) 4,855 (2,694) (29,392) 981,745 (704,736) 277,009 Power plants 492,775 (27,794) 464,981 11, , (10,855) 507,404 (38,890) 468,514 Industrial & commercial equipment 102,004 (82,971) 19,033 2, (175) 1,205 (78) (2,756) 102,856 (83,253) 19,603 Other assets 219,814 (149,173) 70,641 5, (179) 1,026 (176) (8,656) 225,713 (157,104) 68,609 Assets under construction & advance pay 385,245 (104) 385, , , (10,752) (71) (2,112) 503,402 (2,112) 501,290 Total 2,519,077 (1,045,104) 1,473, ,466 14, ,868 (2,094) 2,041 (3,343) (58,728) 2,679,080 (1,084,866) 1,594,214 Tangible assets rose from 1,473,973 thousand at December to 1,594,214 thousand at June The increases in the period mainly refer to the capitalization of the costs of the building project for the Modugno thermoelectric power plant and investments in photovoltaic solar panels as part of the development of projects in the renewables business, both of which belong to the Sorgenia group. DEPRECIATION RATES Description % Buildings used for business 3.00% Plant and machinery % Other assets: - Electronic office equipment 20.00% - Furniture and fittings 12.00% - Motor vehicles 25.00%

49 7.c. INVESTMENT PROPERTY Opening position Changes in the period Closing position Historical Accum. deprec. Net balance Acquisitions Business combin- Capitalized Exchange Other Net Depreciation Historical Accum. deprec. Balance cost & write-downs ations and sales financial rate movements disposals & write-downs cost & write-downs (in thousands of euro) increases decreases charges differences cost Properties 21,151 (1,042) 20, (1) -- (286) 21,150 (1,328) 19,822 Total 21,151 (1,042) 20, (1) -- (286) 21,150 (1,328) 19,822 Investment properties declined from 20,109 thousand at December to 19,822 thousand at June This item refers to two buildings situated in the centre of Milan the carrying value of which in the accounts corresponds substantially to the market value of the properties DEPRECIATION RATES Description % Properties 3.00%

50 LEASING The position of assets under leasing as of June and of restrictions applied to tangible assets on account of guarantees and commitments is as follows: (in thousands of euro) Gross leasing amount Accumulated depreciation Restrictions for guarantees and commitments Land 1,279 2, ,039 1,039 Buildings 15,979 34,715 4,075 4,593 6,707 6,707 Plant and machinery 51,946 56,792 6,532 12, , ,650 Other assets 2,459 4, , Assets under construction and advance payments , ,779 The Restrictions for guarantees and commitments in the item Assets under construction and advance payments refer to collateralized loans made to Energia Modugno S.p.A.. 7.d. INVESTMENTS IN COMPANIES VALUED AT EQUITY (in thousands of euro) % Balance Increases Decreases Dividends Portion of result Other Balance Loss Income changes Aire/Tirreno Power , (50,121) -- 7,455 (3,804) 203,024 Le Scienze S.p.A (121) Editoriale La Libertà S.p.A , ,242 Corriere di Romagna S.p.A , (92) ,983 Altrimedia S.p.A (140) Allevard Ressorts Composites S.A Oakwood Global Finance S.C.A Resource Energy B.V , (530) ,577 GICA S.A (178) Fingas S.r.l ,830 5, (35) -- (6) 7,789 Epense S.a.s (10) Voie Sacrée S.a.s Total 280,554 6, (50,382) (845) (8,031) (3,694) 240,189 7.e. OTHER EQUITY INVESTMENTS (in thousands of euro) % Sanatrix S.r.l ,105 5,105 Fidia S.r.l Ansa S. Coop. A.R.L ,209 2,209 E-Ink Corporation ,481 1,481 Tecnoparco Valbasento Emittenti Titoli S.p.A Others -- 2,151 2,040 Total 11,996 11,885 46

51 The values recorded in the balance sheet correspond to cost, less any impairment, if applicable, and are considered to be substantially equivalent to the fair value of the same investments. 7.f. OTHER RECEIVABLES Other receivables totalled 228,450 thousand at June versus 263,397 thousand at December and refer for 75,013 thousand ( 69,115 thousand at December ) to the subscription of Preferred Equity Certificates (PECS) by Cir International S.A. and Cir Investment Affiliate S.A. in the company Oakwood Global Finance (a jointly controlled company). At June this item also included 81,485 thousand ( 85,768 thousand at December ) of receivables (unsecured and mortgage-based) of the securitization company Zeus Finance S.r.l., 16,184 thousand ( 16,138 thousand at December ) of Inland Revenue receivables for Iva rebates applied for by the Sorgenia group and 19,803 thousand ( 17,347 thousand at December 2007) of security deposits to suppliers of the Sorgenia group for the purchase of CIP 6 energy and for the purchase of wind turbines. It should be noted that the decline in the balance during the period was due mainly to the full repayment of the long-term loan made by Energia Italiana to Tirreno Power for an amount of 42,499 thousand. 7.g. SECURITIES Securities totalled 96,121 thousand at June down from 97,037 thousand at December and refer mainly to investments in private equity funds. These funds were valued at fair value with recognition to the fair value reserve of an amount of 8,311 thousand ( 10,236 thousand at December ). At June the remaining commitment for investment in private equity funds was for 38 million. 7.h. DEFERRED TAXES The amounts refer to taxes resulting from deductible temporary differences and from losses carried forward, which are deemed to be recoverable. 47

52 The breakdown of Deferred tax assets and liabilities by type of temporary difference, is as follows: (in thousands of euro) 1st Half Amount of temporary Amount of temporary differences Tax differences Temporary difference liabilities from: - write-down of current assets 55,899 19,045 54,714 15,966 - write-down of fixed assets 53,911 17,775 48,785 15,247 - revaluation of current liabilities 10,504 3,433 9,377 2,963 - revaluation of personnel provisions 40,582 12,642 39,803 12,158 - revaluation of provisions for risks and losses 61,659 19,187 55,061 15,748 - revaluation of long-term debt write-down of financial instruments 6,802 1,900 7,428 2,070 - tax losses from prior periods 98,720 27, ,801 30,473 Total deferred tax assets 328, , ,991 94,631 Tax Temporary difference assets from: - revaluation of current assets 4,225 1,193 3,992 1,085 - revaluation of fixed assets 420, , , ,755 - write-down of current liabilities 12,251 3,841 6,968 2,419 - valuation of personnel provisions 21,056 5,812 21,297 5,872 - write-down of provisions for risks and losses 3,553 1,148 3,620 1,166 - revaluation of financial instruments 12,179 3,805 26,842 8,643 Total deferred tax liabilities 473, , , ,940 Net deferred taxes (48,054) (52,309) The amount of deferred taxes credited directly to shareholders equity during the period was 4,747 thousand. Earlier losses not utilized for the calculation of deferred taxes refer to the Espresso group for 11.1 million, the company Cir International for million, which can be carried forward indefinitely, and the Sogefi group for 8.9 million. It should be pointed out that no deferred tax assets were calculated for these losses because at present conditions are such that there is no certainty that they can be recovered. 48

53 8. CURRENT ASSETS 8.a. INVENTORIES Inventories can be broken down as follows: (in thousands of euro) Raw materials, secondary materials and consumables 82,283 74,866 Work in progress and semi-finished goods 16,858 14,287 Finished goods and merchandise 107, ,775 Advance payments Total 207, ,967 The value of stocks is shown net of any write-down made either in past periods or in this current one and takes into account the degree of obsolescence of finished goods, merchandise and secondary materials. 8.b. TRADE RECEIVABLES (in thousands of euro) Receivables - clients 1,239,659 1,066,869 Receivables subsidiaries and joint ventures 1,310 2,644 Receivables associated companies Total 1,241,418 1,070,273 Receivables - clients are non-interest bearing and have an average maturity in line with market conditions. The net increase is mainly due to the increase in revenues. Trade receivables are shown net of any write-downs taking credit risk into account. During the first half of 2008 provisions were made to the reserve for the write-down of receivables for the sum of 10,498 thousand, and losses on receivables were recognized for 1,460 thousand. Receivables subsidiaries and joint ventures represent intercompany receivables not eliminated because they refer to companies not fully consolidated line by line. The balance at June refers mainly to receivables from Tirreno Power S.p.A.. 8.c. OTHER RECEIVABLES (in thousands of euro) Receivables associated companies 1, Receivables subsidiaries and joint ventures 33, Tax receivables 160, ,217 Receivables - others 75,852 60,196 Total 270, ,128 49

54 The item Receivables others amounted to 270,885 thousand, up from 209,128 thousand at December The item Receivables joint ventures refers to the dividends already approved but not yet received by Tirreno Power. The item Receivables subsidiaries and joint ventures refers to the dividend receivable from Tirreno Power which has already been approved but not yet received. 8.d. FINANCIAL RECEIVABLES Financial receivables rose from 37,171 thousand at December to 51,273 thousand at June and refer mainly for 6,151 thousand to interest accruing on the swap associated with the Cir International S.A. bond maturing in 2009 and for 37,336 thousand to the fair value of trades hedging energy purchases by the Sorgenia group. 8.e. SECURITIES This item contains the following categories of securities: (in thousands of euro) Italian Government securities or equivalent 365,022 19,961 Investments funds or similar funds 79,283 16,164 Bonds and notes 45,566 46,352 Certificates of deposit and miscellaneous securities 214, ,089 Total 703, ,566 The fair value measurement of the item Securities involved a negative adjustment to the income statement of 3.5 million. 8.f. AVAILABLE-FOR-SALE FINANCIAL ASSETS This item refers for 339,011 thousand to shares in hedge funds and redeemable shares in asset management companies held by Medinvest which collects the excess liquidity that the group has available on a regular basis. The degree of liquidity of the investment is a function of the time required for the redemption of the funds in which Medinvest invests, which normally varies from one to three months. Diversification between categories of funds give the performance of Medinvest a low level of volatility. Assigning a fair value to the funds held by Medinvest has over the years involved making adjustments to the value of these funds which at June amounted to 138,892 thousand ( 153,310 thousand at December ). The effects of this valuation on the shareholders equity of Cofide for the amount pertaining to the group came to 75,299 thousand ( 82,860 thousand at December ). The pertinent amount of fair value credited to the income statement after the sale of some of the funds came to 357 thousand. To cover the exchange rate risk resulting from the translation of the portion of the equity of Medinvest denominated in USD into the functional currency of the group, hedging contracts were 50

55 entered into, the effects of which are indicated under item 9.b. Reserves in the breakdown of the Translation reserve. The item Available-for-sale financial assets also includes the investment in shares and bonds of Banca Intermobiliare d Investimento e Gestioni S.p.A. for the amount of 30,989 thousand ( 47,752 thousand at December ). The fair value measurement of the investment meant making an adjustment to its value which at June amounted to 5,766 thousand ( 20,865 thousand at December ) and the sum of 3,899 thousand was recognized, net of tax, to the Fair value reserve ( 14,105 thousand at December ). 8.g. CASH AND CASH EQUIVALENTS Cash and cash equivalents declined from 726,988 thousand at December to 377,983 thousand at June The breakdown of the change in the period is given in the cash flow statement. 9. SHAREHOLDERS EQUITY 9.a. SHARE CAPITAL Share capital stood at 359,604,959 at June , unchanged from December , and consisted of 719,209,918 ordinary shares each with a nominal value of The share capital is fully subscribed and paid up. 9.b. RESERVES The breakdown of the item Reserves is shown below: (in thousands of euro) Share Legal Fair value Translation Other Total premium reserve reserve reserve reserves reserves reserve Balance at December ,044 19, ,371 (2,195) 29, ,509 Retained earnings Fair value measurement of hedging instruments Fair value measurement of securities , ,664 Securities fair value reserve recognized to income statement (7,314) (7,314) Effects of equity changes in subsidiaries ,045 14,045 Currency translation differences (6,451) (10,050) -- (16,501) Balance at December ,044 20, ,448 (12,245) 43, ,337 Retained earnings Fair value measurement of hedging instruments Fair value measurement of securities (12,671) (12,671) Securities fair value reserve recognized to income statement (1,454) (1,454) Effects of equity changes in subsidiaries ,044 4,044 Currency translation differences (5.565) (1.492) Balance at June ,004 21,382 88,520 (8,172) 47, ,163 51

56 The Fair value reserve stood at 88,520 at June and referred for 8,311 thousand to the valuation of Securities in items 7.g., for 79,198 thousand to the valuation of Availablefor-sale financial assets in item 8.f. and to the valuation of hedging instruments for an amount of 1,011 thousand. The Translation reserve at June had a negative balance of 8,172 thousand with the following breakdown: (in thousands of euro) Increases Decreases Sogefi Group 1, (634) 854 Sorgenia Group (86) -- (51) (137) CIR Ventures (1,711) -- (408) (2,119) Medinvest (19,121) -- (13,188) (32,309) Medinvest hedging effect 7,091 18, ,495 Others Total (12,245) 18,404 (14,331) (8,172) The item Other reserves had the following breakdown at June : (in thousands of euro) Merger surplus 43 Reserve for the difference between the carrying values of investee companies and the respective portions of consolidated shareholders equity 47,346 Total 47,389 9.c. RETAINED EARNINGS (LOSSES) The changes in Retained earnings (losses) are shown in the Statement of Changes in Shareholders Equity. 10. NON-CURRENT LIABILITIES 10.a. BONDS AND NOTES The detail of the item Bonds and notes, net of intercompany elimination, is as follows: (in thousands of euro) Effective rate CIR S.p.A. 5.75% Note 2004/ % 274, ,548 CIR International S.A % Note 2003/ % 181, ,175 CIR International S.A. 5.25% Note 1999/ % ,232 Gruppo Editoriale L Espresso S.p.A % Note 2004/ % 315, ,875 Société Française d Eoliennes (SFE) 6.5% Note 2006/ % 3,644 3,842 Total 774,796 1,189,672 52

57 In application of IAS 32 and 39, at January the original values of bond and note issues were written down to account for expenses incurred and bond issuance discounts. At June Cir International was holding a nominal 30,000 thousand (unchanged from December ) of the CIR 5.75% 2004/2024 bond issue. It should be noted that during the first half of 2008 Cir International S.A. bought back and then cancelled a nominal 10,000 thousand of the note issue maturing in The CIR International 5.25% 2009 issue has now been reclassified under current liabilities. 10.b. OTHER BORROWINGS (in thousands of euro) Collateralized bank loans 160, ,874 Other bank loans 990,099 1,055,474 Leasing 66,342 67,836 Other borrowings 209, ,876 Total 1,425,917 1,431,060 The item Other bank loans consists mainly of the following: - 44,000 thousand made in 2003 to Energia Italiana by Banca Monte dei Paschi di Siena at a floating rate, maturing in 2010, and with a current interest rate of 4.83%; - 149,500 thousand made to Sorgenia by Banca Intesa SanPaolo at a floating rate, maturity 2012, and with a current interest rate of 5.46%; - 50,000 thousand made to Sorgenia by Banca Intesa SanPaolo at a floating rate, maturity 2011, and a current interest rate of 5.73%; - 221,000 thousand made to Sorgenia by Banca Monte dei Paschi di Siena at a floating rate, maturity 2012, and a current interest rate of 4.88%; - 153,972 thousand made to Sorgenia Puglia S.p.A. by Banca Monte dei Paschi di Siena at a floating rate, maturity 2014, and a current interest rate of 5.79%; - 198,000 thousand made to Energia Molise S.p.A. by Banca Monte dei Paschi di Siena at a floating rate, maturity 2013, and a current interest rate of 5.72%; - 47,122 thousand, as partial drawdown of a loan facility of 50,000 thousand, signed by Sogefi S.p.A. with maturity September 2012 at a floating rate and a current interest rate of 5.18%; - 99,783 thousand, as partial drawdown of a facility of 100,000 thousand, signed by Sogefi S.p.A. with maturity in 2012 at a floating rate and a current interest rate of 5.18%. At June this item included a syndicated floating rate loan of 149,946 thousand made to the parent company of the Cofide Group by Banca Monte dei Paschi di Siena. This loan has a duration of five years and is set at Euribor three or six months plus a spread of one percentage point. At June the interest rate applied was 5.96%. 53

58 10.c. PERSONNEL PROVISIONS The breakdown of these provisions are as follows: (in thousands of euro) Employee severance and leaving indemnity (TFR) 119, ,203 Retirement and similar obligations 47,096 41,434 Total 166, ,637 (in thousands of euro) Opening balance 160, ,328 Provisions made for work done during the period 16,237 19,581 Increases for interest 3,135 5,966 Actuarial income or expense -- (2,975) Benefits paid out (13,994) (36,759) Increases or decreases due to changes in consolidation area -- 11,038 Other changes 134 (3,542) Closing balance 166, ,637 Incentive Plans (Phantom Stock Options) outstanding at June Options in circulation at start of period Number of Weighted options average strike price Options awarded during period Number of Weighted options average strike price Options exercised during period Number of Weighted options average strike price Options in circulation at end of period Number of options Average strike price Average duration (years) Options exercisable at end of period Number of Weighted options average strike price Phantom st tranche 790, , , Phantom nd tranche 790, , , Phantom st tranche , , Total 1,580, , ,370, , d. PROVISIONS FOR RISKS AND LOSSES The breakdown and changes in the non-current part of these provisions are as follows: (in thousands of euro) Provision for disputes in progress Provisions for restructuring charges Provisions for sundry risks Balance at December ,949 6,670 19,299 41,918 Sums set aside during the period 2,362 3, ,085 Withdrawals (27) (1,504) (999) (2,530) Exchange rate differences (16) 250 Other changes (1,729) (743) (130) (2,602) Balance at June ,821 7,489 18,811 43,121 Total 54

59 The breakdown and changes in the current part of these provisions are as follows: (in thousands of euro) Provision for disputes in progress Provisions for restructuring charges Provisions for sundry risks Balance at December ,441 3,653 51,734 62,828 Sums set aside during the period ,257 11,779 Withdrawals (2,080) (997) (5,805) (8,882) Exchange rate differences 1, ,713 Balance at June ,185 3,750 57,503 68,438 Total Apart from the libel disputes regarding the Espresso group, which are typical of all publishing businesses, the Provision for disputes in progress includes risks for disputes of a commercial nature and labour disputes. The Provision for restructuring charges includes sums set aside for restructuring action that has been announced to the parties concerned and in particular refers to the production reorganization programs of the Sogefi group. The Provisions for sundry risks is mainly to cover tax disputes outstanding with local tax authorities. 11. CURRENT LIABILITIES 11.a. BONDS AND NOTES This item refers to the CIR International S.A. 5.25% 1999/2009 issue. It should be noted that during the first half of the year a nominal 20,000 thousand of this issue were bought back and subsequently cancelled. Liabilities were also recognized for an amount of 3.8 million in relation to fixed/floating interest rate swaps entered into to hedge the loan. 11.b. OTHER BORROWINGS (in thousands of euro) Collateralized bank loans 30,028 23,079 Other bank loans 78,586 44,205 Finance leases 5,342 5,713 Other borrowings 48,215 43,109 Loans from subsidiaries 6 -- Total 162, ,106 55

60 11.c. TRADE PAYABLES (in thousands of euro) Payables subsidiaries and joint ventures 16,903 12,406 Payables associated companies 1,111 1,306 Payables - suppliers 921, ,534 Advance payments 2,399 1,286 Payables in the form of notes Total 942, ,582 The item Payables subsidiaries and joint ventures refers mainly to the trade payables of Sorgenia S.p.A. with Tirreno Power S.p.A.. 11.d. OTHER PAYABLES (in thousands of euro) Due to employees 84,699 69,655 Tax payables 96,003 70,583 Social security payables 37,549 44,754 Other payables 58,110 62,153 Total 276, ,145 56

61 NOTES ON THE INCOME STATEMENT 12. REVENUES BREAKDOWN BY BUSINESS SECTOR (in millions of euro) 1st Half st Half 2007 Change amount % amount % Utilities 1, Media (3.3) Automotive components Healthcare Other Total consolidated revenues 2, , BREAKDOWN BY GEOGRAPHICAL AREA (in millions of euro) 1st Half 2008 Total Italy Other European North South Asia Other revenues countries America America countries Utilities 1, , Media Automotive components Healthcare Others Total consolidated revenues 2, , Percentages 100.0% 78.2% 17.4% 0.4% 3.6% 0.3% 0.1% (in millions of euro) 1st Half 2007 Total Italy Other European North South Asia Other revenues countries America America countries Utilities Media Automotive components Healthcare Other Total consolidated revenues 2, , Percentages 100.0% 76.4% 19.3% 0.6% 3.3% 0.3% 0.1% The types of products marketed by the Group and the nature of the business sectors in which it operates mean that revenues flows are reasonably linear throughout the year and are not subject to any particular cyclical phenomena provided that the basis of consolidation remains unchanged. 57

62 13. OPERATING COSTS AND REVENUES 13.a. COSTS FOR THE PURCHASE OF GOODS Costs for the purchase of goods rose from 1,127,340 thousand in first half 2007 to 1,373,690 thousand in the corresponding period of The rise was mainly in the Sorgenia group. 13.b. COSTS FOR SERVICES This item rose from 373,801 thousand in first half 2007 to 397,497 thousand in first half 2008, as can be seen from the following breakdown: (in thousands of euro) 1st Half st Half 2007 Technical and professional consulting 42,534 37,441 Distribution and transportation costs 26,878 24,277 Outsourcing 55,343 61,883 Other expenses 272, ,200 Total 397, , c. PERSONNEL COSTS Personnel costs came to 351,559 thousand in the first half of 2008 ( 301,961 thousand in first half 2007) and have the following breakdown: (in thousands of euro) 1st Half st Half 2007 Salaries and wages 242, ,970 Social contributions 74,968 66,639 Severance and leaving indemnity 10,631 (7,067) Retirement and similar benefits 6,869 3,743 Valuation of stock option plans 1,144 4,416 Other costs 15,576 14,260 Total 351, ,961 The Group had an average of 12,855 employees on its payrolls in the first half of

63 13.d. OTHER OPERATING INCOME This item can be broken down as follows: (in thousands of euro) 1st Half st Half 2007 State grants and contributions 2,039 2,151 Capital gains on disposals 1,658 6,981 Non-recurring gains and other income 38,625 32,312 Total 42,322 41, e. OTHER OPERATING COSTS This item can be broken down as follows: (in thousands of euro) 1st Half st Half 2007 Write-downs and losses on receivables 11,958 7,835 Provisions made for risks and losses 8,144 6,851 Indirect taxes 11,151 12,074 Taxes relating to prior periods 1 7 Capital losses on disposal of assets 6, Non-recurring losses and other charges ,545 Total 52,243 40,711 The item Restructuring charges in first half 2008 refers to the costs of restructuring programs already being implemented in the Sogefi group. 14. FINANCIAL INCOME AND EXPENSE 14.a. FINANCIAL INCOME The item Other income has the following detail: (in thousands of euro) 1st Half st Half 2007 Interest income on bank accounts 10,219 6,571 Interest on securities 7,174 9,472 Other interest income 11,099 12,838 Interest rate derivatives Exchange rate gains 3,200 1,364 Other financial income 3,230 4,571 Total 35,304 35,635 The item Interest rate derivatives, amounting to 382 thousand, includes 236 thousand which refers to the net measurement at fair value of hedging transactions. 59

64 14.b. FINANCIAL EXPENSE This item has the following breakdown: (in thousands of euro) 1st Half st Half 2007 Interest expense on bank accounts 39,360 23,013 Interest expense on bonds 31,093 31,549 Other interest expense 7,828 10,428 Interest rate derivatives 3, Exchange rate losses 4,969 3,979 Other financial expense 11,031 6,451 Total 98,193 75,599 The item Other financial expense includes 3,525 thousand relating to the write-down of the investment in Oakwood Global Finance 14.c. GAINS FROM TRADING SECURITIES The breakdown of Gains from trading securities is the following: (in thousands of euro) 1st Half st Half 2007 Shares and options - subsidiaries 117,810 10,714 Shares and options - other companies 2,964 11,100 Other securities and other gains 12,702 33,482 Total 133,476 55,296 The item Shares and options - subsidiaries refers to the income from the subscription of capital increases by minority shareholders in the company Sorgenia Holding ( 114,935 thousand) and in HSS ( 2,875 thousand). 14.d LOSSES FROM TRADING SECURITIES The breakdown of Losses from trading securities is the following: (in thousands of euro) 1st Half st Half 2007 Shares and options - other companies 2,679 13,754 Other securities and other losses 7,759 5,630 Total 10,438 19,384 60

65 15. INCOME TAXES Income taxes can be broken down as follows: (in thousands of euro) 1st Half st Half 2007 Current taxes 57,473 54,468 Deferred taxes (277) 21,209 Total 57,196 75, EARNINGS PER SHARE The basic earnings per share is calculated by dividing the net income for the period attributable to ordinary Shareholders by the weighted average number of shares in circulation. The diluted earnings per share is calculated by dividing the net income for the period attributable to ordinary Shareholders by the weighted average number of ordinary shares in circulation during the period, adjusted for the capital dilution effects of any options outstanding. The calculation of the shares in circulation does not include own shares held as treasury stock. Since the company has no options outstanding or any treasury stock, its diluted earnings per share are equal to basic earnings per share. The following chart shows the information on the shares used to calculate the basic and diluted earnings per share. (in thousands of euro) 1st Half st Half 2007 Net income attributable to the Shareholders (in thousands of euro) 66,008 33,294 Weighted average number of ordinary shares in circulation 719,209, ,209,918 Basic earnings per share (euro) OTHER INFORMATION IFRS7 FINANCIAL RISK MANAGEMENT: ADDITIONAL DISCLOSURES The Cofide group operates in different sectors of industry and services both at national and international level and thus its business is exposed to various kinds of financial risk, including market risk (exchange rate risk and price risk), credit risk, liquidity risk and interest rate risk. To minimize these risks the group uses financial derivative instruments for hedging purposes. Risk management is carried out by the central finance and treasury function on the basis of policies approved by Management and transmitted to the subsidiaries on July

66 Market risk Foreign currency risk Some companies of the group (especially in the Sogefi group) are exposed to exchange rate risk resulting from the use of different currencies. Changes in foreign exchange rates can affect the fair value of assets and liabilities. This kind of risk is however limited because the companies operate in the local currency, they are active both in their own domestic markets and abroad and in the event of need financial resources are raised locally. With reference to the net capital invested in Medinvest Plc, which is denominated in USD, a special hedging strategy is followed which aims to protect the investment from the volatility of the spot EUR/USD exchange rate when translating the capital of the subsidiary into the functional currency of the group, i.e. the euro. Any rise or fall in the exchange rate would not have any significant effect on the equity or financial situation of the group. Price risk The group is exposed to price risk on various raw materials and commodities, such as for example, paper, cellulose products, steel, plastic products, aluminium, oil and gas. Risk is managed centrally by the individual groups by diversifying their sourcing and, where deemed necessary, using appropriate hedging derivatives. Regarding the Sorgenia group in particular, commodity risk is managed by entering into derivative contracts with prime financial institutions with a high credit rating. These instruments are generally fixed to floating interest rate swaps or vice versa. Although the commodity derivatives are traded for hedging purposes, they are not managed according to the rules of hedge accounting (IAS 39). Thus the income effects of the changes in their fair value are recognized directly to the Income Statement under the item Other operating income/losses. The fair value of these derivative contracts with a duration of no longer than 12 months is determined using market forward prices or, where these are not available, using valuation models developed internally based on data and information provided by third party sources that are recognized and reliable. Credit risk Credit risk can be valued both in commercial terms relating to client type, the terms of the contract and the concentration of sales, and in financial terms connected with the type of counterparty dealt with in financial transactions. Within the group there is no significant concentration of credit risk. Some time ago adequate policies were put in place to ensure that sales are made to clients with an appropriate credit history. Counterparties for derivative products and cash transactions are exclusively financial institutions with a high credit rating. The group has policies that limit credit exposure to individual financial institutions. Credit risk is different for the various sectors of business in which it occurs. In the energy sector, for example, the assessment of exposure to credit risk is made using internal processes and with the aid of companies with expertise both in the sector of assessment and granting credit lines and in credit recovery. The number of clients and their diversification make exposure to a concentration of credit risk irrelevant. In the Automotive components sector, there is no evidence of any excessive concentration of credit risk since the Original Equipment and After market distribution channels with which the group operates consist of car manufacturers or large purchasing groups. 62

67 The Media sector has no areas of risk for trade receivables of a significant entity and in any case the group adopts operating procedures that prevent the sale of products or services to clients without an adequate credit profile or a collateral guarantee. The healthcare sector does not present any concentration of credit risk because credit exposure is spread over a large number of clients and counterparties especially in the sector of residences for the elderly. The hospital sector, however, has a higher concentration of risk because the most significant counterparties are the local health authorities. In 2006 the Cofide group set up a business involving acquiring and managing non-performing loans and has put in place procedures for evaluating and establishing the fair value of its portfolios. Liquidity risk Prudent management of liquidity risk implies maintaining sufficient liquidity and short term securities and ensuring an adequate supply of credit lines to ensure that sufficient financial resources can be raised. The group meets its maturities and commitments systematically, and such conduct enables it to operate in the market with the necessary flexibility and reliability to maintain a correct balance between the sources and applications of its financial resources. The companies that head the four most significant business sectors manage their liquidity risk directly and independently. Tight control is exercised over the net financial position and its evolution in the short, medium and long term. In general the Cofide group follows an extremely prudent financial policy using funding structures mainly in the medium-long term. The operating groups manage their treasury functions in a centralized manner. Interest rate risk (fair value risk and cash flow risk) Interest rate risk depends on the movements in interest rates in the market which can cause changes in the fair value of the cash flows of financial assets and liabilities. Interest rate risk mainly concerns long-term bond and note borrowings which are issued at a fixed rate thus exposing the group to the risk of fair value changes on the loans themselves as interest rates move. Following risk management policies, the Parent Company and the subsidiaries have entered into various IRS contracts throughout the years in order to hedge the interest rate risk on their bond and note issues and on loan agreements. Derivative instruments Derivative instruments are recognized at their fair value. For accounting purposes hedging transactions are classified as: - fair value hedges if they are subject to price changes in the market value of the underlying asset or liability; - cash flow hedges if they are entered into to protect from the risk of changing cash flows from an existing asset and liability, or from a future transaction; - hedges of a net investment in a foreign operation if they are entered into to protect from the exchange rate risk in the conversion of the equity of subsidiaries denominated in a currency other than the functional currency of the group. 63

68 For derivative instruments classified as fair value hedges gains and losses resulting from both the determination of their market value and the adjustment to fair value of the element underlying the hedge are posted to the income statement. For instruments classified as cash flow hedges (for example interest rate swaps) gains and losses from marking them to market are posted directly to shareholders equity for the part which effectively covers the risk they are intended to cover, while any non-effective part is posted to the income statement. For instruments classified as hedges of net investments in foreign operations gains and losses obtained from marking them to market are posted directly to shareholders equity for the part which effectively hedges the risk they are intended to cover, while any non-effective part is posted to the income statement. Derivatives used for hedging purposes, when the hedge accounting is entered, are accompanied by a hedging relationship which designates the individual instrument as entered into for the purposes of hedging and gives the parameters of effectiveness of the hedge in relation to the financial instrument being hedged. The level of effectiveness of the hedge is evaluated at regular intervals and the effective part of the relationship is posted to shareholders equity while any non-effective part is charged to the income statement. More specifically, the hedge is considered to be effective when the change in fair value or in the financial flows of the instrument hedged is almost entirely compensated for by the change in the fair value or the financial flows of the hedging instrument and when the results achieved are in a range of between 80% and 125%. Derivative contracts At June the group had the following derivatives contracts booked as hedges, expressed at their notional value: (a) Interest rate swaps: Fixed to floating hedging interest ( 380 million) on Cir International bond issue maturing in 2009; Hedging bank loans to Sogefi, notional value 50 million maturity 2012; Hedging Sorgenia bank loans, notional value 119 million - maturity 2013; (b) Foreign currency hedges: forward sales for a total of USD 540 million hedging investments in Medinvest Plc and in private equity funds; Capital parameters Management of the subsidiary Cir regulates the use of leverage to guarantee solidity and flexibility in the asset and liability structure of Cir and its financial holding companies, measuring the ratio of funding sources to the asset invested in. Leverage is calculated as the ratio between net financial debt (represented by bond or notes issued net of free cash flow and investments in financial instruments considered as liquid, according to parameters agreed on with the rating agency) and the total investment assets measured at fair value (including equity investments and the remaining part of investments in financial instruments). Management s objective is to maintain a sold and flexible financial structure in order to maintain this ratio below 30%. Today it stands at 19%. 64

69 18. GUARANTEES AND COMMITMENTS At June the guarantee and commitment position was the following: Cofide S.p.A. Securities as collateral for financial transactions for 6,522 thousand. Cir and financial holding companies - Guarantees in favour of Inland Revenue for VAT credits totalling 6,781 thousand; - Commitments for investment in private equity funds by Cir International for 38 million; - An annual commitment to cover just the running costs of the company Oakwood Global Finance SCA, the holding company of the Oakwood group. Sorgenia group Within the group there are guarantees made to third parties for a total amount of 379,136 thousand. These are mainly bonds deposited as collateral for sums to be paid, relating to the purchase and transportation of electricity and gas and to commitments in favour of Inland Revenue for quarterly IVA for which a rebate has been applied for. Also in this category are guarantees requested for obtain the energy account grant. As collateral for loans obtained by the jointly controlled company Tirreno Power S.p.A., shares worth 123,577 thousand representing 50% of the capital of Tirreno Power S.p.A. have been pledged. It should also be noted that there is a commitment to make a financial contribution to the associated company GICA S.A. and to the subsidiary Noventi Ventures II LP of a maximum of 15,000 thousand and USD 30,000 thousand respectively (of the latter the sum of USD 11,745 thousand has already been paid in). Espresso group Guarantees issued totalled 3,022 thousand and referred to guarantees made by the parent company of the Group and the subsidiaries Elemedia and A. Manzoni & C. for the lease of their respective premises and by the subsidiary Ksolutions in favour of Public Administration clients with whom they have service contracts. Commitments outstanding, for a total of 7,055 thousand, referred to: - contracts for the purchase of plant and equipment ( 4,611 thousand) mainly for Repubblica and Finegil Editoriale for the full-colour project; - a contract for the purchase of a property as the new headquarters of the Mantua operating division of Finegil Editoriale for 2,394 thousand. Sogefi group Operating Leases For accounting purposes, leasing and hire contracts are classified as operating leases when the following conditions apply: 65

70 - a significant part of the risks and benefits of ownership are maintained by the lessor; - there are no options giving the right to buy the leased property at a price that does not represent the presumed market value of the same at the close of the period; - the duration of the contract does not extend over most of the useful life of the asset rented or hired. The rental payments for operating leases are recognized to the income statement in line with the underlying contracts. The main operating lease refers to a contract signed by the American subsidiary Allevard Spring U.S.A. Inc. for the lease of the production site situated in Prichard (West Virginia). The contract terminates on October and the remaining instalments total USD 4,181 thousand, of which USD 386 thousand by the end of the year. Against this contract Sogefi S.p.A. has issued a guarantee for approximately 50% of the remaining lease instalments which is renewed at the end of each year on the basis of the remaining amount. There are no restrictions of any kind connected with this kind of leasing and at the end of the contract the US company will have the right to buy the property at a market price. Commitments for investments At June there were commitments for investments for a total of 4,436 thousand. Guarantees issued The detail of these guarantees is as follows: (in thousands of euro) Guarantees in favour of third parties 2,825 2,744 Other guarantees in favour of third parties 9,714 9,714 Collateral security provided for debt shown in the balance sheet 5,681 5,681 Guarantees issued refer to borrowings and to guarantees given to certain clients and are recognized at the value of the commitment outstanding as of the balance sheet date. The item Other guarantees in favour of third parties refers to the commitment of LPDN GmbH towards the employee pension fund of the two business divisions at the time of the acquisition made in This commitment is covered by contractual obligations on the part of the vendor, a prime German economic operator. Collateral security refers to bonds or privileges granted to lenders against loans obtained for the purchase of assets. Other risks At June the Sogefi group had assets belonging to third parties on the premises of its companies for 6,337 thousand. 66

71 19. JOINT VENTURES The joint ventures at June were Tirreno Power and Oakwood. International accounting standards give two methods for consolidating holdings in joint ventures:. the usual method, which involves pro-rata consolidation;. the alternative method which involves use of the equity method. The Group has adopted the equity method for the sake of consistency with the way the accounts were presented previously. The chart below shows the key financial figures of the company Tirreno Power and of the Oakwood group: Tirreno Power (in millions of euro) 1st Half 1st Half Income statement Electricity sold (TWh) Revenues from sales and services Gross operating margin Net income Balance sheet Total assets 1, ,445.4 Net financial debt ,008.4 Shareholders equity Number of employees The pertinent part of the earnings of Tirreno Power, consolidated using the equity method on the basis of values determined by the application of IAS/IFRS accounting standards, totalled 7.5 million in the first half of 2008, down from 18 million in the first half of

72 Oakwood (in millions of euro) Assets - Current Non-current ,526.1 Total assets ,693.3 Liabilities and equity - Current liabilities , Non-current liabilities Shareholders equity (153.9) (140.4) Total liabilities and equity ,693.3 (in millions of euro) 1st Half 1st Half Income statement Interest income Commissions income Total income Interest expense (33.3) 48.1 Commissions expense (32.8) 52.0 Operating costs and other (20.2) 46.8 Taxes (1.0) 3.0 Total costs (87.3) Net income (loss) (13.0) (7.4) 20. INFORMATION ON THE BUSINESS SECTORS The business sectors coincide with the Groups of companies over which Cofide S.p.A. holds control through Cir. These are: - the Sorgenia group: utilities; - the Espresso group: media; - the Sogefi group: automotive components; - the HSS group: healthcare. From the geographical point of view, with the exception of the Sogefi group, the business is carried out almost exclusively in Italy. A chart showing the breakdown of income components and balance sheet information of the primary sector is shown in the Interim Management Report while details regarding revenues by geographical area (secondary sector) are given in the explanatory notes to the financial statements in the section regarding revenues (note 12). 68

73 21. NET FINANCIAL POSITION The net financial position can be broken down as follows: (in thousands of euro) A. Cash and bank deposits 377, ,988 B. Other free cash flow (*) 339, ,622 C. Securities held for trading 703, ,566 D. Cash and cash equivalents (A) + (B) + (C) 1,420,871 1,428,176 E. Current financial receivables 51,273 37,171 F. Current bank borrowings (322,154) (163,386) G. Bond and note issues (382,182) -- H. Current part of non-current debt (53,507) (48,822) IH. Other current borrowings (56) -- J. Current financial debt (F) + (G) + (H) + (I) (757,899) (212,208) K. Net current financial position (J) + (E) + (D) 714,245 1,253,139 L. Non-current bank borrowings (1,150,155) (1,204,348) M. Bond and notes issued (774,796) (1,189,672) N. Other non-current payables (275,762) (226,712) O. Non-current financial debt (L) + (M) + (N) (2,200,713) (2,620,732) P. Net financial position (K) + (O) (1,486,468) (1,367,593) (*) not including the investment in Banca Intermobiliare d Investimento e Gestioni S.p.A. 21. DIVIDENDS PAID OUT Dividends paid out in the first half of 2008 (referring to the distribution of earnings for the year 2007, as per AGM resolution adopted on April ) totalled 10,788 thousand, the equivalent of per share. 22. SUBSEQUENT EVENTS As far as subsequent events are concerned, reference should be made to the paragraph of the Management Report on this subject. 23. SIGNIFICANT NON-RECURRING EVENTS AND TRANSACTIONS AND NON- TYPICAL AND/OR UNUSUAL TRANSACTIONS During the first half there were no items of a non-recurring nature included in the operating result for the half. It should, however, be noted that the consolidated net income figure benefited from 69

74 the results of the capital increase reserved for the minority shareholders of Sorgenia Holding and HSS (see note 14.c). It should also be noted that there were no non-typical and/or unusual transactions during the period. 24. RELATED-PARTY TRANSACTIONS Information showing the impact of transactions with related parties on the financial, equity and income statements for the first half are shown in the comments on the individual items of the financial statements. The paragraph Other information of the Interim Management Report shows the types of transactions with related parties, the values of which are given in the Explanatory Notes. 70

75 CERTIFICATION OF THE CONDENSED SEMI-ANNUAL FINANCIAL STATEMENTS AS OF JUNE IN ACCORDANCE WITH ART. 81-TER OF CONSOB REGULATION NO OF MAY AND SUBSEQUENT AMENDMENTS AND ADDITIONS Consolidated Semi-annual Financial Statements as of June The undersigned: Rodolfo De Benedetti Chief Executive Officer of Cofide S.p.A. Oliviero Maria Brega Officer responsible for the preparation of the financial statements of the company Cofide S.p.A. Hereby certify, taking into account even the terms of art. 154-bis, paragraphs 3 and 4, of Legislative Decree no. 58 of February : that the administrative and accounting procedures for the preparation of the Semi-annual Financial Statements as of June , during the period January 1 June , were adequate in relation to the characteristics of the business and that they were effectively applied. 2. On this subject no aspects emerged that needed to be notified. 3. It is also certified that the Condensed Semi-annual Financial Statements as of June : a) correspond to the amount shown in the Company s accounts, books and records; b) have been prepared in accordance with International Financial Reporting Standards (IAS/IFRS) and, as far as we know, are adequate to give a true and fair representation of the financial conditions, results of operations and cash flows of the Company and its consolidated subsidiaries as of 30 June 2008 and for the six months then ended. Milan, August Signed by Rodolfo De Benedetti Chief Executive Officer Signed by Oliviero Maria Brega Officer Responsible

76 CONDENSED SEMI-ANNUAL INTERIM FINANCIAL STATEMENTS OF THE PARENT COMPANY BALANCE SHEET INCOME STATEMENT CASH FLOW STATEMENT CHANGES IN SHAREHOLDERS EQUITY EXPLANATORY NOTES TO THE FINANCIAL STATEMENTS 72

77 1. BALANCE SHEET (in thousands of euro) ASSETS Notes NON-CURRENT ASSETS 572, ,714 TANGIBLE ASSETS 6.a INVESTMENT PROPERTY 6.b INVESTMENTS IN SUBSIDIARIES 6.c. 571, ,111 OTHER EQUITY INVESTMENTS 6.d. 0 0 OTHER RECEIVABLES 6.e CURRENT ASSETS 156, ,186 RECEIVABLES WITH RELATED PARTIES 7.a. 36,359 34,360 OTHER RECEIVABLES 7.b. 3,298 2,672 SECURITIES 7.c. 105, ,314 CASH AND CASH EQUIVALENTS 7.d. 11,112 25,840 TOTAL ASSETS 729, ,900 LIABILITIES AND SHAREHOLDERS EQUITY SHAREHOLDERS EQUITY 570, ,707 SHARE CAPITAL 8.a. 359, ,605 RESERVES 8.b. 163, ,251 RETAINED EARNINGS (LOSSES) 8.c. 30,426 29,114 NET INCOME (LOSS) FOR THE PERIOD 16,857 12,737 NON-CURRENT LIABILITIES 153, ,282 OTHER BORROWINGS 9.a. 149, ,890 OTHER PAYABLES 9.b DEFERRED TAXES 9.c. 1,868 7,052 PERSONNEL PROVISIONS 9.d. 1,550 1,306 CURRENT LIABILITIES 5,268 2,911 BANK OVERDRAFTS 10.a OTHER BORROWINGS 10.b. 2, TRADE PAYABLES 10.c PAYABLES WITH RELATED PARTIES 10.d OTHER PAYABLES 10.e. 1,745 1,803 TOTAL LIABILITIES AND SHAREHOLDERS EQUITY 729, ,900 73

78 2. INCOME STATEMENT (in thousands of euro) Notes 1st Half st Half 2007 SUNDRY REVENUES AND INCOME 11 1, of which from related parties 1, COSTS FOR PURCHASE OF GOODS 12 (40) (41) COSTS FOR SERVICES 13 (1,598) (1,496) of which from related parties (274) (260) PERSONNEL COSTS 14 (865) (766) OTHER OPERATING COSTS 15 (294) (271) AMORTIZATION, DEPRECIATION & WRITE-DOWNS 16 (47) (49) OPERATING RESULT (1,787) (1,624) FINANCIAL INCOME 17 1,586 1,952 of which from related parties FINANCIAL EXPENSE 18 (6,763) (3,720) DIVIDENDS 19 21,810 21,009 of which from related parties 19,611 19,509 GAINS FROM TRADING SECURITIES LOSSES FROM TRADING SECURITIES 21 0 (226) ADJUSTMENTS TO VALUE OF FINANCIAL ASSETS (325) INCOME / LOSS BEFORE TAXES 16,565 17,185 INCOME TAXES NET INCOME (LOSS) FOR THE PERIOD 16,857 17,375 74

79 3. CASH FLOW STATEMENT (in thousands of euro) 1st Half st Half 2007 OPERATING ACTIVITY NET INCOME / (LOSS) FOR THE PERIOD 16,857 17,375 ADJUSTMENTS: AMORTIZATION, DEPRECIATION AND WRITE-DOWNS SUMS SET ASIDE TO PERSONNEL PROVISIONS NET OF WITHDRAWALS LOSSES / (GAINS) FROM SALE OF CURRENT SECURITIES ADJUSTMENTS TO THE VALUE OF FINANCIAL ASSETS ADJUSTMENTS TO THE VALUE OF NON-HEDGING DERIVATIVES DEFERRED AND ADVANCE TAXES ON FAIR VALUE CHANGES (RISE) REDUCTION IN NET WORKING CAPITAL -2,460-2,797 CASH FLOW FROM OPERATING ACTIVITY 12,677 14,896 INVESTMENT ACTIVITY CHANGE IN INVESTMENTS IN SUBSIDIARIES 0-2,334 CHANGE IN TANGIBLE ASSETS CHANGE IN OTHER FIXED ASSET RECEIVABLES -1-1 CASH FLOW FROM INVESTMENT ACTIVITY -22-2,364 FUNDING ACTIVITY CHANGE IN OTHER BORROWINGS 2, NET CHANGE IN CURRENT SECURITIES -18,843-16,936 DIVIDENDS PAID OUT -10,788-10,788 CASH FLOW FROM FUNDING ACTIVITY -27,336-27,497 RISE (REDUCTION) IN NET CASH AND CASH EQUIVALENTS -14,681-14,965 NET CASH AND CASH EQUIVALENTS AT START OF PERIOD 25,791 17,570 NET CASH AND CASH EQUIVALENTS AT END OF PERIOD 11,110 2,605 75

80 4. CHANGE IN SHAREHOLDERS EQUITY (in thousands of euro) Share Retained Net income (loss) capital Reserves earnings (losses) for the period Total BALANCE AT JANUARY , ,600 25,540 15, ,863 Allocation of earnings for the year ,574 (4,330) 0 Distribution to Shareholders (10,788) (10,788) Adjustment of securities to fair value: - Change in reserve 0 (8,625) 0 0 (8,625) - Deferred taxes on change in reserve 0 4, ,520 Net income for the year ,737 12,737 BALANCE AT DECEMBER , ,251 29,114 12, ,707 Allocation of earnings for the year ,312 (1,949) 0 Distribution to Shareholders (10,788) (10,788) Adjustment of securities to fair value: - Change in reserve 0 (15,099) 0 0 (15,099) - Deferred taxes on change in reserve 0 4, ,892 Net income for first half ,857 16,857 BALANCE AT JUNE , ,681 30,426 16, ,569 76

81 EXPLANATORY NOTES TO THE FINANCIAL STATEMENTS 5. ACCOUNTING PRINCIPLES Criteria for the preparation of the condensed interim financial statements and the accounting principles adopted The annual statutory financial statements of Cofide S.p.A. are prepared in conformity with IFRS international accounting standards issued by the International Accounting Standards Board (IASB) and ratified by the European Union in accordance with Regulation no. 1606/2002. This separate semiannual financial report has been prepared in a condensed form in compliance with IAS 34 "Interim Financial Reporting. This semi-annual financial report does not, therefore, include all the information required of the annual report and should be read together with the annual report and financial statements for the year ended December The accounting principles adopted in the preparation of this semi-annual condensed financial statements are the same as those adopted for the preparation of the annual report and statutory financial statements of the Group for the year ended December These semi-annual condensed financial statements are expressed in thousands of euro except where indicated otherwise. BALANCE SHEET 6. NON-CURRENT ASSETS 6.a. TANGIBLE ASSETS This item underwent the following changes: (in thousands of euro) Opening position Changes in the first half Closing position Historical Reval. Accum. Balance Acqui- Disposals Depreciation Historical Reval. Accum. Balance cost deprec sitions cost depr. cost deprec Buildings for business use 1, (662) (17) 1, (679) 468 Ind. and commercial equipment (544) (29) 8 (30) (566) 80 Total 1, (1,206) (29) 8 (47) 1, (1,245) 548 The following depreciation rates were used: Buildings for business use 3% Industrial and commercial equipment: - Electronic office equipment 20% - Furniture and fittings 15% - Motor vehicles 25% - Alarm systems 30% - Telephone systems 20% - Assets expendable during the year 100% 77

82 6.b. INVESTMENT PROPERTY This item has not changed since the beginning of the year and refers to a building situated in the centre of Milan the market value of which is significantly higher than its carrying value in the balance sheet. 6.c. INVESTMENTS IN SUBIDIARIES This item underwent the following changes: (in thousands of euro) Opening position Changes during the first half Closing position Write-downs/ revaluation Increases Decreases recoveries no. of shares amount no. of shares amount no. of shares amount amount no. of shares amount CIR S.p.A. 359,458, , ,458, ,595 COFIDE INTERNATIONAL S.A. 50,000 1, ,000 1,267 COFIDE SERVICOS DE CONSULTORIA LDA 32, , EUVIS S.P.A. (formerly SO.FI.A. S.p.A.) 2,469,500 5, ,469,500 5,217 Total 571, ,111 6.d. OTHER INVESTMENTS This item has the following breakdown: (in thousands of euro) Opening position Changes during the first half Closing position Write-downs revaluation Increases Decreases recoveries no. of shares amount no. of shares amount no. of shares amount amount no. of shares amount C IDC S.p.A. (in liquidation and settlement with creditors) 1,231, ,231, KIWI.COM SERVICOS DE CONSULTORIA S.A. 3,812, ,812, Total These investments were already fully written down at the end of the previous year. 6.e. OTHER RECEIVABLES This item has the following breakdown: (in thousands of euro) Inland Revenue receivables Receivables - others Total

83 7. CURRENT ASSETS 7.a. RECEIVABLES WITH RELATED PARTIES This item has the following breakdown: (in thousands of euro) Financial receivables 35,323 34,360 Other receivables 1,036 0 Total 36,359 34,360 The financial receivables refer essentially to an interest-bearing loan made in 2006 to the subsidiary Cofide International S.A. to cover temporary liquidity requirements. The interest rate was set in agreement with the counterparty based on normal market conditions. At June the interest rate applied was 5.797%. 7.b. OTHER RECEIVABLES This item has the following breakdown: (in thousands of euro) Inland Revenue receivables Receivables - others 3,218 2,622 Total 3,298 2,672 7.c. SECURITIES This item includes the following categories of securities: (in thousands of euro) Investments in other companies: - Banca Intermobiliare S.p.A. 25,828 41,653 Italian Government securities 15,869 15,949 Convertible bonds: - Banca Intermobiliare S.p.A. 5,116 6,009 Non-convertible bonds 4,026 4,077 Investment funds 54,636 32,271 Interest on securities Total 105, ,314 79

84 The shareholding in Banca Intermobiliare S.p.A. and its convertible bonds are classified as availablefor-sale securities. Their fair value measurement involved a negative adjustment for the period of 13,476 thousand which was posted directly to the appropriate equity reserve. The fair value measurement of other securities classified as held for trading in the short term (Fair Value Through Profit or Loss) led to a negative adjustment for the period of 872 thousand, which was recognized to the income statement. 7.d. CASH AND CASH EQUIVALENTS Cash and cash equivalents declined by 14,728 thousand from 25,840 thousand to 11,112 thousand. A breakdown of the changes is given in the cash flow statement together with that of current bank liabilities. 8. SHAREHOLDERS EQUITY 8.a. SHARE CAPITAL Share capital totalled 359,604,959, and consisted of 719,209,918 ordinary shares each with a nominal value of There have been no changes since the beginning of the year. All the ordinary shares are fully paid up. 8.b. RESERVES The changes in equity reserves are shown in the following chart: (in thousands of euro) Share Legal Merger Transition Fair premium reserve surplus to IAS value TOTAL reserve reserve reserve BALANCE AT JANUARY ,044 20, ,314 14, ,251 Allocation of earnings recognized to reserves Change in fair value reserve:. sale of available-for-sale securities (1,623) (1,623). fair value measurement of available-for-sale securities (13,476) (13,476) Deferred taxes on changes in fair value reserve:. deferred taxes on sale of securities deferred taxes on fair value measurements at year end ,366 4,366 BALANCE AT JUNE ,044 21, ,314 3, ,681 80

85 The fair value reserve reflects the valuation of the securities in current assets classified as available for sale. 8.c. RETAINED EARNINGS (LOSSES) This item contains the restatement, in application of international accounting standards, of the reserve for the revaluation of shareholdings used until December to value investments in subsidiaries using the equity method. The amount in question was 16,399 thousand. Compared to December , this item rose by 1,312 thousand after allocation of part of net income for NON-CURRENT LIABILITIES 9.a. OTHER BORROWINGS This item has the following breakdown: (in thousands of euro) Bank loan 149, ,890 Total 149, ,890 This item refers to an uncollateralized syndicated loan with a floating rate and a duration of five years, entered into in 2006 with a pool of prime banks. The loan is at Euribor three or six months plus a spread of one percentage point. At June the interest rate was 5.961%. The contractual covenants, under which the company undertakes to hold no less than 40% of the ordinary shares of CIR until the loan is repaid, are fully complied with. During the first half there was no failure to comply with the terms of the contract nor was there any breach of the same. 9.b. OTHER PAYABLES This item has the following breakdown: (in thousands of euro) Sundry payables due in over twelve months Total c. DEFERRED TAXES This item underwent the following changes: 81

86 (in thousands of euro) Amount of temporary differences Tax Amount of temporary differences Tax Valuation of available-for-sale securities 5,766 1,868 20,866 6,760 Valuation of securities held for trading 2,021 = 1, Valuation of trading derivatives (2,485) = (248) (80) Total deferred taxes 1,868 7,052 The deferred taxes on the valuation of available-for-sale securities are recognized by reducing the fair value reserve. In application of accounting principles no advance taxes were set aside on the measurement of securities held for trading and on trading derivatives. 9.d. PERSONNEL PROVISIONS The breakdown of the provisions is as follows: (in thousands of euro) Employee severance and leaving indemnity Other personnel provisions Total 1,550 1,306 (in thousands of euro) Balance at January ,306 Amount accrued during the period 245 Decreases (1) Balance at June ,550 The other personnel provisions refer to the fair value measurement, including the ancillary costs required by current legislation for employee income, of phantom stock option plans (for further details see paragraph 10.c. of the consolidated semi-annual financial statements). 82

87 10. CURRENT LIABILITIES 10.a. BANK OVERDRAFTS Bank liabilities were not significant. The breakdown of any changes is given in the cash flow statement together with than of cash and cash equivalents. 10.b. OTHER BORROWINGS This item consists of the following: (in thousands of euro) Non-hedging derivatives 2, Other borrowings 1 1 Total 2, The non-hedging derivatives reflect the fair value measurement of the premium received on the sale of a put option on 3,000,000 ordinary Cir shares, strike price 2.72, expiry on September Should the counterparty exercise the option, the disbursement for the purchase of the equities would amount to 8,160 thousand. 10.c. TRADE PAYABLES These refer to sums due to suppliers, which declined from 464 thousand to 413 thousand. 10.d. PAYABLES RELATED PARTIES This item includes the following: (in thousands of euro) Other payables Total e. OTHER PAYABLES This item includes the following: (in thousands of euro) Inland Revenue payables 1,438 1,464 Social security payables Other payables Total 1,745 1,803 83

88 INCOME STATEMENT 11. SUNDRY REVENUES AND INCOME This item has the following breakdown: (in thousands of euro) 1st Half 1st Half Services supplied to related parties 1, Real estate revenues Other revenues and recovery of costs 8 7 Total 1, The services supplied to related parties refer to management support and communication services supplied to Cir S.p.A. 12. COSTS FOR THE PURCHASE OF GOODS This item shows the value of purchases of consumable goods made by the company. The change was from 41 thousand to 40 thousand. 13. COSTS FOR SERVICES This item has the following breakdown: (in thousands of euro) 1st Half 1st Half Services supplied by related parties Administrative, fiscal, legal and corporate governance consulting fees Directors and Statutory Auditors emoluments Other operating expenses Total 1,598 1,496 The services supplied by related parties refer to the financial, legal and administrative assistance carried out by Cir S.p.A. 14. PERSONNEL COSTS Personnel costs rose from 766 thousand to 865 thousand, with a rise of 99 thousand. They include the amount of 215 thousand set aside to personnel provisions in relation to Phantom stock options. 84

89 15. OTHER OPERATING COSTS This item includes the following: (in thousands of euro) 1st Half 1st Half Taxes, duties and charges Obligatory charges and membership fees Donations to charity Other expenses and charges 14 2 Total AMORTIZATION, DEPRECIATION AND WRITE-DOWNS This item contains only the depreciation of tangible assets, which went down from 49 thousand to 47 thousand. 17. FINANCIAL INCOME This item includes the following: (in thousands of euro) 1st Half 1st Half Interest income from related parties Interest income on Italian Government securities Interest income on fixed income securities Interest income on deposits Other financial income Total 1,586 1, FINANCIAL EXPENSE This item includes the following: (in thousands of euro) 1st Half 1st Half Interest expense and charges on bank loan 4,478 3,669 Interest expense and commissions on bank accounts 6 8 Commissions on stock exchange trades Other financial expense 2,239 0 Total 6,763 3,720 85

90 19. DIVIDENDS This item includes the following: (in thousands of euro) 1stHalf 1st Half Dividends from related parties: Cir S.p.A. - Cofidefin Servicos de Consultoria Lda 17,973 1,638 17,973 1,536 Total 19,611 19,509 Dividends from other companies: - Banca Intermobiliare S.p.A. 2,199 1,500 Total 2,199 1,500 Total dividends 21,810 21, GAINS FROM TRADING SECURITIES This item includes the following: (in thousands of euro) 1st Half 1st Half Gains from trading available-for-sale equity investments Gains from trading fixed income securities 0 2 Gains from trading investment funds Total LOSSES FROM TRADING SECURITIES This item includes the following: (in thousands of euro) 1st Half 1st Half Losses from trading fixed income securities Total

91 22. ADJUSTMENTS TO THE VALUE OF FINANCIAL ASSETS This item includes the following: (in thousands of euro) 1st Half 1st Half Write-down of other fixed asset equity investments 0 (193) Write-down of fixed income securities (132) (641) Revaluation of fixed income securities 0 6 Revaluation of investment funds 1, Total 872 (325) 23. INCOME TAXES This item includes the following: (in thousands of euro) 1st Half 1st Half Current taxes 0 0 Deferred and advance taxes Total Against the positive earnings figure no current tax provisions were set aside mainly because dividends are no longer subject to income tax according to current Italian regulations. No deferred taxes were set aside on tax losses since they are not expected to be recovered. 24. RELATED PARTY TRANSACTIONS Information regarding the impact that related-party transactions had on the balance sheet and the income statement can be found in the comment on the individual items of the financial statements. The paragraph Other information of the Interim Management Report shows the effects of the above transactions. 25. DIVIDENDS PAID OUT The dividends paid out in first half 2008 (relating to the distribution of the earnings of 2007, as per the resolution adopted by the Shareholders Meeting held on April ) totalled 10,788 thousand, equal to per share. 87

92 26. SUBSEQUENT EVENTS For information on subsequent events reference should be made to the paragraph in the Management Report on this subject. 27. SIGNIFICANT NON-RECURRING EVENTS AND TRANSACTIONS AND NON- TYPICAL AND/OR UNUSUAL TRANSACTIONS During the first half of the year there were no items of a non-recurring nature nor were there any nontypical and/or unusual transactions. 28. NET FINANCIAL POSITION The net financial position has the following breakdown: (in thousands of euro) A. Cash and bank deposits 11,112 25,840 B. Other free cash flow 0 0 C. Securities held for trading 74,788 52,563 D. Cash and cash equivalents 85,900 78,403 E. Current financial receivables - Short term loans made to related parties 36,359 34,360 F. Current bank borrowings 2 49 G. Current part of non-current debt 0 0 H. Other current borrowings 2, I. Current financial debt (F) + (G) + (H) 2, J. Net current financial debt (surplus) (I) (E) (D) (119,423) (112,119) K. Non-current bank borrowings 149, ,890 L. Non-current financial debt 149, ,890 M. Net financial debt (surplus) (J) + (L) 30,523 37, OTHER INFORMATION The following commitments entered into by the company should be noted. (in thousands of euro) Securities as collateral for financial transactions 6,522 6,580 Total 6,522 6,548 FINANCIAL RISK MANAGEMENT Regarding business risks, the main financial risks identified, monitored and actively managed by the company were the following: 88

93 a) The interest rate risk from exposure to movement in interest rates; b) The credit risk from the possibility of a counterparty defaulting; c) The liquidity risk resulting from a lack of financial resources to meet short term commitments. Interest rate risk Fluctuation in interest rates affects the market value of financial assets and the level of net financial expense. The company continually monitors its exposure to interest rate risk and manages this risk by investing in financial instruments that are consistent with its medium-term funding through the syndicated loan at a floating rate which matures in Credit risk Credit risk means the exposure of the company to potential losses resulting from the failure of a counterparty to meet its obligations. In relation in particular to the financial counterparty risk resulting from the investment of liquidity and from derivatives positions, counterparties are selected according to guidelines which set out the characteristics of counterparties suitable for financial transactions. The list of possible counterparties includes both national and international companies with a high credit rating. The company has not had any cases of default of its counterparties. At June there were no significant concentrations of credit risk. Liquidity risk Liquidity risk is the risk that financial resources may not be available or may be available only at a monetary cost. As things stand today the company believes that it will be able to fulfil its expected financial needs on the basis of its free cash flow and expected future cash inflows. The objective of liquidity risk management is not only that of guaranteeing sufficient available financial resources to cover short term commitments, but also to ensure where necessary a sufficient level of operating flexibility for the development programs within the Group. Milan, July THE CHAIRMAN OF THE BOARD OF DIRECTORS - Ing. Carlo DE BENEDETTI - *********************** The officer responsible for the preparation of the accounting and corporate documents Oliviero Maria Brega hereby attests in accordance with the terms of paragraph 2 article 154 bis of the Finance Consolidation Act (TUF) that the accounting information contained in the Condendensed Semi-annual Interim Financial Statements of the Parent Company as of June corresponds to the results of the Company s books and general ledger. 89

94 LIST OF EQUITY INVESTMENTS AT JUNE in accordance with Art of D.Lgs. no. 127/91 90

95 SUBSIDIARIES CONSOLIDATED USING THE FULL INTEGRATION METHOD (in euro or foreign currency) Name of company Head Office Share capital Currency Investor companies % of ownership COFIDE GROUP CIR S.p.A. (*) Italy 395,465,333,50 COFIDE S.p.A COFIDE INTERNATIONAL S.A. Luxembourg 500, COFIDE S.p.A EUVIS S.p.A. Italy 2,750, COFIDE S.p.A CIR GROUP CIR INTERNATIONAL S.A. Luxembourg 1,000, CIR S.p.A INTERGEFI S.r.l. Italy 500, CIR S.p.A COFIDEFIN SERVICOS DE CONSULTORIA Lda Portugal 125, CIR S.p.A COFIDE S.p.A CIRINVEST S.p.A. Italy 121, CIR S.p.A JUPITER FINANCE S.p.A. Italy 600, CIR S.p.A JUPITER MARKETPLACE S.p.A. Italy 1,000, JUPITER FINANCE S.p.A CIGA LUXEMBOURG S.A.r.l. Luxembourg 318,200, CIR S.p.A SORGENIA GROUP SORGENIA HOLDING S.p.A. (formerly Energia Holding S.p.A.) Italy 129,668, CIR S.p.A SORGENIA S.p.A. Italy 8,676, SORGENIA HOLDING S.p.A ENERGIA ITALIANA S.p.A. Italy 26,050, SORGENIA S.p.A SORGENIA IDRO S.r.l. (formerly Energia Plassier S.r.l) Italy 50, SORGENIA S.p.A ENERGIA LUCANA S.p.A. Italy 750, SORGENIA S.p.A TECNOPARCO VALBASENTO S.p.A SORGENIA PROGETTI S.r.l. (formerly Energia Progetti S.r.l.) Italy 500, SORGENIA S.p.A ENERGIA MOLISE S.p.A. Italy 14,600, SORGENIA S.p.A ENERGIA APRILIA S.r.l. Italy 10, SORGENIA S.p.A SORGENIA MINERVINO S.p.A. (formerly Energia Minervino S.p.A.) Italy 1,700, SORGENIA S.p.A ENERGIA LOMBARDA S.p.A. Italy 120, SORGENIA S.p.A SORGENIA PUGLIA S.p.A. (formerly Energia Modugno S.p.A.) Italy 7,623, SORGENIA S.p.A SORGENIA SOLAR S.r.l. (formerly Soluxia S.r.l.) Italy 670, SORGENIA S.p.A SORGENIA VENTO S.p.A. (formerly Anemon S.p.A.) Italy 1,343, SORGENIA S.p.A SORGENIA MENOWATT S.r.l. (formerly Eligent S.r.l.) Italy 136, SORGENIA S.p.A NOVENTI VENTURES II LP United States 11,745, USD SORGENIA S.p.A SOLUXIA SARDA S.r.l. Italy 85, SORGENIA SOLAR S.p.A (formerly Soluxia S.r.l.) SORGENIA E&P S.p.A. Italy 2,500, SORGENIA S.p.A RACOON S.r.l. Italy 20, SORGENIA S.p.A (*) 47.85% of voting rights 91

96 Name of company Head Office Share capital Currency Investor companies % of ownership COMPAGNIE FINANCIERE DE SUROIT S.A. France 310, SORGENIA S.p.A SOCIÉTÉ FRANÇAISE D EOLIENNES S.A. France 9,808, SORGENIA S.p.A COMPAGNIE FINANCIERE DE SUROIT S.A SOCIÉTÉ FRANÇAISE DES ALIZÉS SARL France 580, SOCIÉTÉ FRANÇAISE D EOLIENNES S.A SAINT CRÉPIN S.a.s. France 1,657, SOCIÉTÉ FRANÇAISE D EOLIENNES S.A. 100,00 ARGONNE S.a.s. France 2,179, SOCIÉTÉ FRANÇAISE D EOLIENNES S.A CÔTE DE CHAMPAGNE SUD S.a.s. France 802, SOCIÉTÉ FRANÇAISE D EOLIENNES S.A CÔTE DE CHAMPAGNE S.a.s. France 2,179, SOCIÉTÉ FRANÇAISE D EOLIENNES S.A VALLÉE DE L'AUTHIE S.a.s. France 37, SOCIÉTÉ FRANÇAISE D EOLIENNES S.A BERNAY ST MARTIN S.a.s. France 37, SOCIÉTÉ FRANÇAISE D EOLIENNES S.A EOLE CONSTRUCTION ET MAINTENANCE S.a.s. France 37, SOCIÉTÉ FRANÇAISE D EOLIENNES S.A VALLE DE L EPTE S.a.s. France 37, SOCIÉTÉ FRANÇAISE D EOLIENNES S.A HOLDING DES PARCS EOLIENS DE LA BAUME SARL France 7, SOCIÉTÉ FRANÇAISE D EOLIENNES S.A HOLDING VOIE SACRÉE S.a.s. France 9,757, SOCIÉTÉ FRANÇAISE D EOLIENNES S.A LONGEVILLE S.a.s. France 37, SOCIÉTÉ FRANÇAISE D EOLIENNES S.A MAURECHAMPS S.a.s. France 1,117, SOCIÉTÉ FRANÇAISE D EOLIENNES S.A ORME CHAMPAGNE S.a.s. France 37, SOCIÉTÉ FRANÇAISE D EOLIENNES S.A EOLIENNES NORD PAS DE CALAIS S.a.s. France 1,973, SOCIÉTÉ FRANÇAISE D EOLIENNES S.A RAIVAL S.a.s. France 1,117, SOCIÉTÉ FRANÇAISE D EOLIENNES S.A VALETTE S.a.s. France 1,117, SOCIÉTÉ FRANÇAISE D EOLIENNES S.A VILLER S.a.s. France 577, SOCIÉTÉ FRANÇAISE D EOLIENNES S.A BOUILLANCOURT EN SÉRY S.a.s. France 37, SOCIÉTÉ FRANÇAISE D EOLIENNES S.A MESNIL REAUME S.a.s. France 37, SOCIÉTÉ FRANÇAISE D EOLIENNES S.A SAINT GERMAIN MARENCENNES S.a.s. France 37, SOCIÉTÉ FRANÇAISE D EOLIENNES S.A ECHELLE S.a.s. France 37, SOCIÉTÉ FRANÇAISE D EOLIENNES S.A BLOMBAY S.a.s. France 37, SOCIÉTÉ FRANÇAISE D EOLIENNES S.A CÔTE DE LA SAUSETTE S.a.s. France 37, SOCIÉTÉ FRANÇAISE D EOLIENNES S.A MACHAULT S.a.s. France 37, SOCIÉTÉ FRANÇAISE D EOLIENNES S.A SEMIDE CONTREUVE S.a.s. France 37, SOCIÉTÉ FRANÇAISE D EOLIENNES S.A LEFFINCOURT S.a.s. France 37, SOCIÉTÉ FRANÇAISE D EOLIENNES S.A LA RENARDIÈRE S.a.s. France 37, SOCIÉTÉ FRANÇAISE D EOLIENNES S.A PLAINCHAMP S.a.s. France 37, SOCIÉTÉ FRANÇAISE D EOLIENNES S.A FRESNOY FOLNY S.a.s. France 37, SOCIÉTÉ FRANÇAISE D EOLIENNES S.A JONQUIÈRES S.a.s. France 37, SOCIÉTÉ FRANÇAISE D EOLIENNES S.A SOCIÉTÉ FRANÇAISE DE PHOTOVOLTAIQUE France 37, SOCIÉTÉ FRANÇAISE D EOLIENNES S.A GRAND RHÔNE S.a.s. France 37, SOCIÉTÉ FRANÇAISE D EOLIENNES S.A HERBISSONNE S.a.s. France 37, SOCIÉTÉ FRANÇAISE D EOLIENNES S.A ESPRESSO GROUP GRUPPO EDITORIALE L ESPRESSO S.p.A. (**) Italy 65,167, CIR S.p.A FIN.E.GI.L. EDITORIALE S.p.A. Italy 18,161, GRUPPO EDITORIALE L ESPRESSO S.p.A S.E.T.A. S.p.A. Italy 774, GRUPPO EDITORIALE L ESPRESSO S.p.A (**) 54.54% of voting right 92

97 Name of company Head Office Share capital Currency Investor companies % of ownership A. MANZONI & C. S.p.A. Italy 15,000, GRUPPO EDITORIALE L ESPRESSO S.p.A CENTRO PREPARAZIONE STAMPA C.P.S. S.p.A. Italy 520, GRUPPO EDITORIALE L ESPRESSO S.p.A ROTOCOLOR S.p.A. Italy 23,000, GRUPPO EDITORIALE L ESPRESSO S.p.A SOMEDIA S.p.A. Italy 500, GRUPPO EDITORIALE L ESPRESSO S.p.A ROTOSUD S.p.A. Italy 2,860, GRUPPO EDITORIALE L ESPRESSO S.p.A ELEMEDIA S.p.A. Italy 25,000, GRUPPO EDITORIALE L ESPRESSO S.p.A EDITORIALE FVG S.p.A. Italy 87,959, GRUPPO EDITORIALE L ESPRESSO S.p.A EDITORIALE LA NUOVA SARDEGNA S.p.A. Italy 775, FIN.E.GI.L. EDITORIALE S.p.A E.A.G. S.p.A. Italy 815, FIN.E.GI.L. EDITORIALE S.p.A EDIZIONI NUOVA EUROPA S.p.A. Italy 104, FIN.E.GI.L. EDITORIALE S.p.A EDITORIALE LA CITTÀ S.p.A. Italy 332, FIN.E.GI.L. EDITORIALE S.p.A S.E.L.P.I. S.p.A. Italy 1,000, GRUPPO EDITORIALE L ESPRESSO S.p.A FIN.E.GI.L. EDITORIALE S.p.A EDIGRAF S.r.l. Italy 312, EDITORIALE FVG S.p.A KATAWEB NEWS S.r.l. Italy 10, ELEMEDIA S.p.A KSOLUTIONS S.p.A. Italy 1,000, ELEMEDIA S.p.A EDITORIALE METROPOLI S.p.A. Italy 500, ELEMEDIA S.p.A RETE A S.p.A. Italy 13,198, GRUPPO EDITORIALE L ESPRESSO S.p.A ALL MUSIC S.p.A. Italy 6,500, RETE A S.p.A SAIRE S.r.l. Italy 46, GRUPPO EDITORIALE L ESPRESSO S.p.A ROTONORD S.p.A. Italy 120, ROTOCOLOR S.p.A SOGEFI GROUP SOGEFI S.p.A. (***) Italy 60,397, CIR S.p.A REJNA S.p.A. Italy 5,200, SOGEFI S.p.A FILTRAUTO S.A. France 5,750, SOGEFI S.p.A SOGEFI FILTRATION Ltd United Kingdom 5,126,737 GBP SOGEFI S.p.A SOGEFI FILTRATION B.V. Netherlands 1,125, SOGEFI S.p.A SOGEFI FILTRATION A.B. Sweden 100,000 SEK SOGEFI S.p.A SOGEFI FILTRATION S.A. Spain 12,953, SOGEFI S.p.A FILTRAUTO S.A SOGEFI FILTRATION d.o.o. Slovenia 10,291, SOGEFI S.p.A ALLEVARD REJNA AUTOSUSPENSIONS S.A. France 36,000, SOGEFI S.p.A SOGEFI FILTRATION S.p.A. Italy 21,951, SOGEFI S.p.A FILTRAUTO GmbH (in liquidation) Germany 51, SOGEFI FILTRATION B.V SOGEFI FILTRATION DO BRASIL Ltda Brazil 29,857,374 Real SOGEFI FILTRATION S.A SOGEFI FILTRATION ARGENTINA S.A. Argentina 10,691,607 Pesos SOGEFI FILTRATION DO BRASIL Ltda FILTRAUTO S.A SOGEFI FILTRATION S.p.A (***) 57.74% of voting rights 93

98 Name of company Head Office Share Capital Currency Investor companies % of ownership SHANGHAI SOGEFI FILTRATION Co., Ltd China 3,600,000 USD SOGEFI FILTRATION S.p.A ALLEVARD SPRINGS Co. Ltd United Kingdom 4,000,002 GBP ALLEVARD REJNA AUTOSUSPENSIONS S.A ALLEVARD FEDERN GmbH Germany 50, ALLEVARD REJNA AUTOSUSPENSIONS S.A ALLEVARD REJNA ARGENTINA S.A. Argentina 600,000 Pesos ALLEVARD REJNA AUTOSUSPENSIONS S.A IBERICA DE SUSPENSIONES S.L. (ISSA) Spain 10,529, ALLEVARD REJNA AUTOSUSPENSIONS S.A ALLEVARD MOLAS DO BRAZIL Ltda Brazil 37,161,683 Real ALLEVARD REJNA AUTOSUSPENSIONS S.A ALLEVARD SPRINGS Co. Ltd UNITED SPRINGS Ltd United Kingdom 6,500,000 GBP ALLEVARD REJNA AUTOSUSPENSIONS S.A UNITED SPRINGS B.V. Netherlands 254, ALLEVARD REJNA AUTOSUSPENSIONS S.A SHANGHAI ALLEVARD SPRINGS Co. Ltd China 5,335, ALLEVARD REJNA AUTOSUSPENSIONS S.A UNITED SPRINGS S.A.S. France 10,218, ALLEVARD REJNA AUTOSUSPENSIONS S.A ALLEVARD SOGEFI U.S.A. Inc. ( formerly Allevard Springs U.S.A. Inc.) United States 20,055,000 USD SOGEFI S.p.A LUHN & PULVERMACHER DITTMANN & NEUHAUS GmbH Germany 50, ALLEVARD FEDERN GmbH FILTRAUTO DO BRASIL Ltda Brazil 354,600 Real SOGEFI FILTRATION DO BRASIL Ltda FILTRAUTO S.A HOLDING SANITÀ E SERVIZI GROUP HSS HOLDING SANITÀ E SERVIZI S.p.A. Italy 6,479, CIR S.p.A REDANCIA S.r.l. Italy 100, HOLDING SANITÀ E SERVIZI S.p.A REHAB S.r.l. Italy 120, HOLDING SANITÀ E SERVIZI S.p.A OSPEDALE DI SUZZARA S.p.A. Italy 1,000, HOLDING SANITÀ E SERVIZI S.p.A MEDIPASS S.p.A. Italy 700, HOLDING SANITÀ E SERVIZI S.p.A RESIDENZE ANNI AZZURRI S.r.l. Italy 27,079, HOLDING SANITÀ E SERVIZI S.p.A HSS REAL ESTATE S.p.A. (formerly Residenze Anni Azzurri Monza S.p.A.) Italy 2,064, RESIDENZE ANNI AZZURRI S.r.l TUGA S.r.l. Italy 50, REDANCIA S.r.l PARCO IMMOBILIARE S.r.l. Italy 100, HOLDING SANITÀ E SERVIZI S.p.A LE COLLINE DEL PO S.r.l. Italy 50, RESIDENZE ANNI AZZURRI S.r.l MEIA S.r.l. Italy 50, RESIDENZE ANNI AZZURRI S.r.l ISTITUTO DI RIABILITAZIONE S. STEFANO S.r.l. Italy 2,500, HOLDING SANITÀ E SERVIZI S.p.A ABITARE IL TEMPO S.r.l. Italy 99, ISTITUTO DI RIABILITAZIONE S. STEFANO S.r.l CASA ARGENTO S.r.l. Italy 1,096, ABITARE IL TEMPO S.r.l ARIEL TECHNOMEDICAL S.r.l. Italy 10, ISTITUTO DI RIABILITAZIONE S. STEFANO S.r.l SANITECH S.r.l. Italy 100, ISTITUTO DI RIABILITAZIONE S. STEFANO S.r.l HEALTH EQUITY S.r.l. Italy 100, ISTITUTO DI RIABILITAZIONE S. STEFANO S.r.l CYBER THERAPHY S.r.l. Italy 100, ISTITUTO DI RIABILITAZIONE S. STEFANO S.r.l HEALTH EQUITY S.r.l DRY PRODUCTS GROUP DRY PRODUCTS S.p.A. Italy 100, CIR S.p.A FOOD MACHINERY MEDIUM VOLUME S.p.A. (in liquidation) Italy 3,000, DRY PRODUCTS S.p.A

99 Name of company CIR INTERNATIONAL GROUP Head Office Share capital Currency Investor companies % of ownership CIR VENTURES L.P. United States 22,020,000 USD CIR INTERNATIONAL S.A CIR INVESTMENT AFFILIATE S.A. Luxembourg 277, CIR INTERNATIONAL S.A CIGA LUXEMBOURG GROUP CIRFUND CONSULTADORIA ECONOMICA E PARTECIPAÇOES, SOCIEDADE UNIPESSOAL LDA Portugal 318,000, CIGA LUXEMBOURG S.A.r.l MEDINVEST Plc Ireland 361, USD CIRFUND CONSULTADORIA ECONOMICA E PARTECIPAÇOES, SOCIEDADE UNIPESSOAL LDA

100 INVESTMENTS IN JOINT VENTURES AND ASSOCIATES VALUED USING THE EQUITY METHOD (in euro or foreign currency) Name of company Head Office Share capital Currency Investor companies % of ownership SORGENIA GROUP TIRRENO POWER S.p.A. Italy 91,130, ENERGIA ITALIANA S.p.A GICA S.A. Switzerland 3,500, CHF SORGENIA S.p.A LNG MED GAS TERMINAL S.r.l. Italy 18,440, FIN GAS S.r.l VOIE SACRÉE S.a.s. France 2,197, SOCIÉTÉ FRANÇAISE D EOLIENNES S.A EPENSE S.a.s. France 802, SOCIÉTÉ FRANÇAISE D EOLIENNES FIN GAS S.r.l. Italy 10, SORGENIA S.p.A ESPRESSO GROUP LE SCIENZE S.p.A. Italy 103, GRUPPO EDITORIALE L ESPRESSO S.p.A EDITORIALE CORRIERE ROMAGNA S.r.l. Italy 2,856, FIN.E.GI.L. EDITORIALE S.p.A EDITORIALE LIBERTÀ S.p.A. Italy 1,000, FIN.E.GI.L. EDITORIALE S.p.A ALTRIMEDIA S.p.A. Italy 517, FIN.E.GI.L. EDITORIALE S.p.A SOGEFI GROUP ALLEVARD RESSORTS COMPOSITES S.A.S. France 300, ALLEVARD REJNA AUTOSUSPENSIONS S.A CIR INTERNATIONAL GROUP OAKWOOD GLOBAL FINANCE S.C.A. Luxembourg 561, CIR INTERNATIONAL S.A CIR INVESTMENT AFFILIATE S.A RESOURCE ENERGY B.V. Netherlands 100,000 CIR INTERNATIONAL S.A

101 INVESTMENTS IN SUBSIDIARIES AND ASSOCIATES VALUED USING THE COST METHOD (*) (in euro or foreign currency) Name of company Head Office Share capital Currency Investor companies % o ownership CIR GROUP CIR VENTURE S.r.l. (non-operational) Italy 10, CIR S.p.A SORGENIA GROUP TECNOPARCO VALBASENTO S.p.A. Italy 945, SORGENIA S.p.A E-ENERGY S.r.l. Italy 15, SORGENIA S.p.A EOLICA BISACCIA S.r.l. Italy 10, SORGENIA S.p.A SORGENIA ROMANIA S.r.l. Romania Ron SORGENIA S.p.A TORRE MAGGIORE WIND POWER S.r.l. Italy 10, SORGENIA S.p.A ESPRESSO GROUP ENOTRYA S.r.l. (in liquidation) Italy 78, ELEMEDIA S.p.A ZIVAGO S.p.A. (in liquidation) Italy 3,096, ELEMEDIA S.p.A CELLULARMANIA.COM S.r.l. (in liquidation) Italy 10, ELEMEDIA S.p.A UHURU MULTIMEDIA S.r.l. (non-operational Italy 10, KSOLUTIONS S.p.A BENEDETTINE S.r.l. (in liquidation) Italy 255, FIN.E.GI.L. EDITORIALE S.p.A SOGEFI GROUP MAKKAWI CARS & LORRIES Co. Sudan 900,000 Ls.Pt. REJNA S.p.A HOLDING SANITÀ E SERVIZI GROUP OSIMO SALUTE S.p.A. Italy 750, ABITARE IL TEMPO S.r.l CONSORZIO OSPEDALE DI OSIMO Italy 20, ABITARE IL TEMPO S.r.l FIDIA S.r.l. Italy 10, HEALTH EQUITY S.r.l JESILAB S.r.l. Italy 80, HEALTH EQUITY S.r.l ISTITUTO DI RIABILITAZIONE S. STEFANO S.r.l SANATRIX S.r.l. Italy ISTITUTO DI RIABILITAZIONE S. STEFANO S.r.l CIR INTERNATIONAL GROUP BANQUE DUMENIL LEBLE S.A. (in liquidation) France 16,007, CIR INTERNATIONAL S.A DUMENIL LEBLE (SUISSE) S.A. Switzerland 102,850 CHF CIR INTERNATIONAL S.A PHA Participations Hotelieres Astor France ,00 CIR INTERNATIONAL S.A CIR VENTURES MANAGEMENT CO. L.L.C. United States 7,100 USD CIR INTERNATIONAL S.A OAKWOOD GLOBAL FINANCE MANAGEMENT S.A. Luxembourg 31,000,00 CIR INTERNATIONAL S.A CIR INVESTMENT AFFLILIATE S.A (*) Investments that are non-significant, non-operational or that have been recently acquired, unless stated otherwise 97

102 INVESTMENTS IN OTHER COMPANIES VALUED USING THE COST METHOD (*) (in euro o valuta) Name of company Head Office Share Capital Currency Investor companies % of ownership COFIDE GROUP KIWI.COM SERVICOS DE CONSULTORIA S.A. Portugal 45,739, COFIDE S.p.A C IDC S.p.A. Italy 4,000, COFIDE S.p.A (in liquidation and settlement with creditors) CIR S.p.A SORGENIA GROUP 8.2 ENERGIA S.r.l. Italy 100, ANEMON S.p.A ESPRESSO GROUP A.G.F. S.r.l. Italy 30, GRUPPO EDITORIALE L ESPRESSO S.p.A AGENZIA A.N.S.A. S. COOP. A.r.l. Italy 12,307, GRUPPO EDITORIALE L ESPRESSO S.p.A FIN.E.GI.L. EDITORIALE S.p.A EDITORIALE LA NUOVA SARDEGNA S.p.A EDITORIALE FVG S.p.A S.E.T.A. S.p.A E.A.G. S.p.A CONSULEDIT S. CONSORTILE a.r.l. Italy 20, GRUPPO EDITORIALE L ESPRESSO S.p.A FIN.E.GI.L. EDITORIALE S.p.A EDITORIALE LA NUOVA SARDEGNA S.p.A S.E.T.A. S.p.A EDITORIALE FVG S.p.A E.A.G. S.p.A E-INK CORPORATION United States 165,456,000 USD GRUPPO EDITORIALE L ESPRESSO S.p.A IMMOBILIARE EDITORI GIORNALI S.r.l. Italy 830, S.E.T.A. S.p.A EDITORIALE LA NUOVA SARDEGNA S.p.A TRENTO PRESS SERVICE S.r.l. Italy 260, S.E.T.A. S.p.A AGENZIA INFORMATIVA ADRIATICA d.o.o. Slovenia 12, Sit. EDITORIALE FVG S.p.A CLUB D.A.B. ITALIA CONSORZIO Italy 18, ELEMEDIA S.p.A AUDIRADIO S.r.l. Italy 258, A. MANZONI & C. S.p.A PRESTO TECHNOLOGIES Inc. (non- operational) United States 7,663,998.4 USD ELEMEDIA S.p.A CERT CONSORZIO EMITTENTI RADIO TELEVISIVE Italy 177, RETE A S.p.A CONSORZIO COLLE MADDALENA Italy 62, RETE A S.p.A TELELIBERTÀ S.p.A. Italy 500, FIN.E.GI.L. EDITORIALE S.p.A SOGEFI GROUP AFICO FILTERS S.A.E. Egypt 10,000,000 EGP SOGEFI FILTRATION S.p.A BRE-MA S.r.l. Italy 30, SOGEFI S.p.A (*) Holdings of less than 20% 98

103 INVESTMENTS IN OTHER COMPANIES VALUED AT FAIR VALUE (*) (in euro or foreign currency) Name of company Head Office Share capital Currency Investor companies % of ownership COFIDE GROUP BANCA INTERMOBILIARE DI INVESTIMENTI E GESTIONI S.p.A. Italy 155,640, COFIDE S.p.A (*) Holdings of less than 20% 99

104 INVESTMENTS IN SUBSIDIARIES AND ASSOCIATES AND IN OTHER COMPANIES NOT INCLUDED IN THE CONSOLIDATED FINANCIAL STATEMENTS (in euro or foreign currency) Name of company Head Office Share capital Currency Investor companies % of ownership CIR GROUP C.B.D.O. - COMPAGNIE BOURGUIGNONNE DES OENOPHILES EURL (in liquidation) France 9, CIGA LUXEMBOURG S.A.r.l SO.GE.LOC. S.a.r.l. (in liquidation) France 7, C.B.D.O. EURL VICTOR HUGO CENTRE D AFFAIRES S.A.r.l. (in liquidation) France 7, C.B.D.O. EURL FINAL S.A. (in liquidation) France 2,324, C.B.D.O. EURL SORGENIA GROUP OWP Parc Eolienne du Banc des Olives France 10, SOCIÉTÉ FRANÇAISE D EOLIENNES OTA France 37, SOCIÉTÉ FRANÇAISE D EOLIENNES SOGEFI GROUP INTEGRAL S.A. Argentina 2,515,600 Pesos FILTRAUTO S.A SOGEFI FILTRATION ARGENTINA S.A LES NOUVEAUX ATELIERS Belgium 2,880, SOGEFI S.p.A MECANIQUES S.A. (in liquidation) REJNA S.p.A AUTORUBBER S.r.l. Italy 50, REJNA S.p.A

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