2008 Financial Statements

Transcription

1 2008 Financial Statements

2 Grandi Stazioni S.p.A. Financial Statements at 31 December 2008

3 Grandi Stazioni S.p.A. A company under the management and coordination of Ferrovie dello Stato S.p.A. Share capital 4,304, fully paid up Headquarters: Via G. Giolitti n ROME Chamber of Commerce registration Roma Tax Code and VAT Registration No Financial Statements at 31 December

4 COMPANY MISSION AND PROFILE Grandi Stazioni S.p.A. is the services company of the Ferrovie dello Stato Group, whose task is to refurbish and manage Italy s 13 main railway stations: Roma Termini, Milano Centrale, Torino Porta Nuova, Firenze Santa Maria Novella, Bologna Central, Napoli Centrale, Venezia Mestre and Santa Lucia, Verona Porta Nuova, Genova Piazza Principe and Brignole, Palermo Centrale and Bari Centrale. The company s guiding goal is to disseminate a new concept of railway station among the general public - an enterprise with high business potential, a venue for city life and a lively and welcoming place, capable of offering quality services and opportunities for enjoying the time waiting for a train or spending one s spare time. According to this new concept, stations fulfil a new urban function. Briefly, the aims of the company s mission are: to increase property values through refurbishing of and the leasing and direct management of advertising of premises and services; to improve the quality and diversify passenger services by enhancing the existing offering and constantly striving to improve customer satisfaction; to promote new ways of using spaces, by introducing innovative services in the Network stations; Roma Termini, for example, now features a services centre with a wide range of shops, a multi-specialist medical centre, a gym and a number of leisure activities; to harmonise the building complexes with the surrounding urban fabric, with a view to integrating stations in the living city; to develop social projects and initiatives in favour of the disadvantaged people present in stations; in cooperation with volunteer organisations and bodies; to spread a new concept of station through communication strategies and cultural initiatives. The terms and conditions of the 40-year station complexes lease, from 2000, provide for the unitary management and functional upgrading of the main station property complexes. Grandi Stazioni S.p.A. is also responsible for managing ordinary maintenance and for providing services not related to train operations, along with developing, funding and implementing a functional upgrading programme. Financial Statements at 31 December

5 GOVERNING BODIES AND INDEPENDENT AUDITING FIRM Board of Directors: President: Ing. Mauro MORETTI (from 7 February 2008) CEO: Dr. Fabio BATTAGGIA (from 7 February 2008) Directors: Ing. Enrico ALIOTTI (up to 21 July 2008) Ing. Massimiliano CAPECE MINUTOLO (from 13 March 2009) Dr. Gaetano CASERTANO Dr. Fabio CORSICO Dr. Vittorio DE SILVIO Avv. Maurizio MARCHETTI Dr. Francesco ROSSI Dr. Carlo VERGARA Board of Auditors: President: Acting Auditors: Alternate Auditors: Prof. Carlo CONTE Prof. Claudio BIANCHI Dr. Paolo BUZZONETTI Dr. Francesco ROSSI RAGAZZI Dr. Giampiero TASCO Independent Auditing Firm: PRICEWATERHOUSECOOPERS S.p.A. Financial Statements at 31 December

6 Contents COMPANY MISSION... 3 GOVERNING BODIES AND INDEPENDENT AUDITING FIRM... 4 LETTER FROM THE PRESIDENT... 6 REPORT ON OPERATIONS... 8 MAIN PERFORMANCE INDICATORS FOR PRINCIPAL EVENTS IN THE YEAR HUMAN RESOURCES ENVIRONMENTAL POLICY CUSTOMER RELATIONS MACROECONOMIC BACKGROUND MARKET TRENDS IN RELEVANT SECTORS ECONOMIC PERFORMANCE AND FINANCIAL POSITION RISK FACTORS INVESTMENTS RESEARCH AND DEVELOPMENT ACTIVITIES RELATED PARTY TRANSACTIONS PERFORMANCE OF SUBSIDIARY UNDERTAKINGS OWN EQUITY OTHER INFORMATION SIGNIFICANT EVENTS AFTER THE REPORTING PERIOD FORESEEABLE MANAGEMENT TRENDS PROPOSED ALLOCATION OF THE OPERATING RESULT SCHEDULES OF ACCOUNTS ASSETS LIABILITIES MEMORANDUM ACCOUNTS PROFIT AND LOSS ACCOUNT NOTES TO THE FINANCIAL STATEMENTS SECTION 1: Form and content of the financial statements SEZIONE 2: Accounting principles and valuation criteria SECTION 3: Analysis of the financial statement items and their changes SECTION 4: Other information APPENDIX - FINANCIAL REPORT Financial Statements at 31 December

7 LETTER FROM THE PRESIDENT Shareholders, during this financial year, investments for the refurbishment of stations managed by the company have continued at a considerable pace. Contract works for the upgrading of Milano Centrale and Torino Porta Nuova stations are well on their way to completion. In particular, progress at 31/12/08 for the Milan station is approximately at 75% of the contract value and most of the areas open to the public have virtually been completed, making it possible to open the ticket office in September and to inaugurate the station last December. Regarding the contract works for the upgrading of Torino Porta Nuova station, progress at 31/12/08 has exceeded 80% of the contract value; the areas of the pedestrian concourse open to the public were handed over in December and inaugurated in February Ongoing activities in Napoli Centrale station have reached approximately 70% of the contract value and upgrading is expected to be complete by the end of The FS Group has continued vacating spaces during the year and refurbished premises have been leased to third parties, yielding a net 8% increase in income from lease contracts. Owing to the recession which appeared in the second half of the year and to an overhaul of sales and management processes, the income from advertising sales, on the other hand, has dropped by 18%. Management of common services related to the building complexes has reported an approximately 5% increase in turnover. After Grandi Stazioni Servizi srl was wound up, Grandi Stazioni SpA has continued providing services to customers (parking, luggage deposits and toilet facilities). In the reporting period ending 31 December 2008, the company posted a production value of 180,475 keuros, up by 2,437 keuros, an EBITDA of 39,013 keuros, down by 3,360 keuros, and a net profit of 15,020 keuros, up by 1,604 keuros over the previous year, primarily as a result of the lower tax burden in the year. Investments totalled 54,145, up by 2,442 keuros compared to Net financial indebtedness at 31/12/08 was 164,083 keuros, with a ratio of financial debt / shareholders equity of Increasing attention was dedicated during the year to the development of overseas activities, which can foster the development of the company over time, once refurbishment works have brought Italian stations to their full commercial potential. Grandi Stazioni Ceska Republika (in which the company holds a 51% controlling stake) posted a net profit of 243 keuros, made investments worth 13,996 keuros and reports a financial indebtedness of 2,758 keuros. Financial Statements at 31 December

8 We can look back on 2008 as the year in which the company began its re-launching, the station refurbishment and upgrading projects were boosted and, in part, put to the test and placed into operation. Mauro Moretti Financial Statements at 31 December

9 REPORT ON OPERATIONS Financial Statements at 31 December

10 MAIN PERFORMANCE INDICATORS FOR Redditività ROE RN/MP* 17,30% 18,63% ROI RO/CI* 16,24% 12,84% ROS RO/RIC 16,82% 15,09% MOL/RICAVI OPERATIVI MOL/RIC 24,31% 21,62% ROTAZIONE DEL CAPITALE INVESTITO RIC/CI* 0,97 0,85 COSTO DEL LAVORO/RICAVI OPERATIVI 0,08 0,09 Solidità QUOZIENTE DI COPERTURA (MP+Pcons)/AF 1,05 1,13 GRADO DI INDEBITAMENTO FINANZIARIO DF/MP 1,44 1,69 Liquidità QUOZIENTE DI DISPONIBILITA' AC/Pcorr 1,25 1,35 QUOZIENTE DI LIQUIDITA' (AC-RIM)/Pcorr 1,14 1,25 Rotazione del circolante GIACENZA MEDIA DELLE SCORTE (giorni) (RIM*/RIC)x360 22,0 28,5 INCASSO MEDIO CREDITI (giorni) (CRED*/RIC)x ,0 205,6 PAGAMENTO MEDIO DEBITI (giorni) (DEB*/A)x ,5 305,6 TOTALE CICLO DEL CIRCOLANTE (giorni) (45,5) (71,6) Profitability ROE ROI ROS MOL/Operating income Circulation of invested capital Labour costs / operating income Solidity Hedge ratio Degree of Financial indebtedness Liquid assets Cash ratio Liquid asset ratio Circulation of working capital Inventory holding period (days) Average credit collection time (days) Average debt payment time (days) Total circulating capital cycle (days) LEGEND A: Purchases during the year (materials, services, use of third-party assets) AC: Current assets AF: Fixed assets CI*: Average net invested capital (between the start and end of the financial year) before equity investments CRED*: Average trade receivables (between the start and end of the financial year) before revaluation reserve DEB*: Average trade payables (between the start and end of the financial year) DF: Financial indebtedness MOL: EBITDA MP*: Average equity (between the start and end of the financial year) after the result at the end of the financial year MP: Equity Pcons: Consolidated liabilities (long-term debt + staff severance indemnity + Reserves) Pcorr: Current liabilities (Short-term debt) RIC: Operating income RIM: Inventories RIM*: Average inventories (between the start and end of the financial year) RN: Net result RO: Operating result Financial Statements at 31 December

11 PRINCIPAL EVENTS IN THE YEAR January Following the expiry, on 31/12/07, of the so-called Lodo Barbieri (Barbieri Arbitration), which laid down the financial terms and conditions for premises occupied without a lease by Gruppo FS companies in station complexes, RFI, Trenitalia and Ferservizi made known the reference contractual amounts for these premises. These values, in accordance with the terms and conditions provided for in the contract of between Ferrovie dello Stato and Grandi Stazioni, were determined on the basis of the values of contracts in force in station areas having similar characteristics or, where a contract benchmark was not available, of values taken from Scenari Immobiliari, relating to the urban area in which the station is located. In early 2009, a financial agreement was entered into with the Gruppo FS companies and the new contracts are currently being formalised. GS Ceska Republika: the first of the new commercial areas of Prague Central Station was opened. February The new President, Mauro Moretti, and the new Chief Executive Officer, Fabio Battaggia, were appointed, the former by co-optation. The present Board of Directors will remain in office until the approval of the balance sheet at 31/12/2008. March After completion of managerial staff assessment, a new company organisational structure was launched, whereby key positions were filled with internally and externally sourced management staff. In particular, persons in charge of Infrastructure Development (from 25 February), Human Resources and Systems (from 14 April), Sales and Advertising (from 1 June), Administration, Finance, Planning and Control (from 1 July) and Business Development and Institutional Relations (from 1 January 2009) joined the organisation. April A new, 150 M contract was entered into with the EIB (European Investment Bank) for the funding of refurbishment and upgrading works in stations, with Banca Calyon acting as Guarantor. At the same time, the loan contract originally stipulated with Monte dei Paschi di Siena was terminated and the debt taken up until that time was fully paid back at 30/06/08 with the liquidity resulting from activation of the EIB loan. May A discussion is now under way among the parties who co-operate with Grandi Stazioni in developing the advertising business, the agents and partner producer companies, whose aim is to overhaul the sales and management process. A new commercial strategy also was developed and made known to agents. Consistently with these changes, a new Financial Statements at 31 December

12 internal procedure addressing end customers was developed. These actions, on the one hand, aim at improved governance of the end-customer selection process carried out by Grandi Stazioni and, on the other, at increasing advertising sales margins. The agents challenged these indications and the agency contracts were therefore terminated at 25/06/08. The state of the dispute at this time may indeed lead to expect a negative impact on advertising sales in the short term; this will be offset, however, by more profitable management in the medium and long term. A discussion was initiated with the associate responsible for production, whose purpose is to rethink some contract provisions which are especially detrimental to the company. Following this, Grandi Stazioni received an appraisal of property resulting from the contribution of the associate and has completed an inventory, with a further appraisal carried out by a consulting company to ascertain whether the contribution is consistent with the contract. In early 2009, this discussion led the Associate to request an arbitration with respect to the interpretation of the contract. June In June, the advertising investments market began to show signs of a slowdown. July GS Ceska Republika: the long-term funding was activated, with a first payment of 90 million Czech Korunas (approximately 3.7 million Euros); August The company submitted a qualification request, together with an Indian partner, with respect to the tender for the regeneration of New Delhi station. The steps for admission to the procedure have not yet been completed and the related qualification has not been formally notified; Approximately 9,000 sqm of building E at Roma Termini were vacated by Trenitalia SpA and a lease contract without vacancy was stipulated with ANAS SpA.. September The contract for the Parking Area and Services Area of Roma Termini was entered into. The works have not yet been assigned, as final agreement with RFI has still to be reached with regard to the construction site set-up plan for these works. On the other hand, a series of changes to the original design are being considered, to limit the impact of ongoing works on station operation; these, after agreement with RFI, will require that the contractor implement changes during the execution phase, within the limits, therefore, permitted by the contract in accordance with legislation in force. Regarding the contract for the North-West (Genoa) allotment, GS and RFI will soon be concluding the verification and validation of the executive project design drawn up by the temporary consortium of contractors which was awarded the contract. The handing over of a part of the works, which were carried out separately, took place during the last four-month period; the works are expected to continue throughout Financial Statements at 31 December

13 A process of revision of the commercial offering and competitive selection regarding commercial leases was initiated, which gave rise to an increase of the average rental fee per square meter. An application for prequalification was submitted, whereby an assessment was initiated with respect to the opportunity to regenerate and manage the eight main Egyptian stations, within the framework of the strategic consultancy services provided by the FS group to Egyptian Railways. October Cassa Depositi e Prestiti joined Calyon, taking on an equal share, as Guarantor in relation to the loan contract with the EIB; The range of retail outlets at Roma Termini was enhanced, as more than 3,000 sqm of new commercial premises were opened. November Regarding the contract for the North-East Allotment (Venice and Verona), following disputes that arose between the Temporary Consortium of Enterprises which was awarded the contract and Grandi Stazioni, the contract will be terminated owing to nonperformance by the contractor; it is now being verified whether the contender who ranked second in the tender will accept to replace the previously successful tenderer, whilst GS and RFI are completing the verification and validation of the executive project design drawn up by the contractor. Since the project design has also undergone some changes, it must be ascertained whether any administrative authorisations are required; on the contractor s side, moreover, an assessment must be made of how variations under way are to be transposed into the contract and, consequently, of the limits allowed by the contract in accordance with legislation in force; The slowdown in consumption has affected the retail trade, and one operator connected with the Network project has withdrawn, taking the opportunity offered by a withdrawal clause in the preliminary lease contracts. December For ongoing contracts concerning the Milan, Turin and Naples stations, works are 76% complete, thus ensuring that the areas open to the public and to staff are fully operational and functional, while the remaining 24%, primarily relating to the commercial areas, will be complete by June 2009 (Turin and Naples) and October 2009 (Milan). As far as the Turin contract is concerned, Supplementary Act no. 2 was executed in July For the Central Allotment (Florence and Bologna) and the Southern Allotment (Bari, Palermo and Naples external works) contracts, the sale of the business branch is under way, including the abovesaid contracts, by the agent of the Temporary Consortium of Enterprises which was awarded the works. Once effective, this sale will entail a waiver of any claims against Grandi Stazioni. Since the project design has also undergone some changes, it must be ascertained whether any administrative authorisations are required; Financial Statements at 31 December

14 on the contractor s side, moreover, an assessment must be made of how variations that are under way are to be transposed into the contract and, consequently, of the limits allowed by the contract in accordance with legislation in force. The supplementary works requested by the Veneto Region are nearing completion, within the framework of the contract providing for works strictly necessary to hand over the Venice building to the Region in a condition that makes it suitable for use, as provided for in the preliminary sale contract; the acceptance testing and final contract are to be concluded in the early months of By way of implementation of the resolutions of the GS Board of Directors aiming to readjust equity interests, GS Immobiliare and GS Servizi were wound up. GS Pubblicità is expected to be wound up in the early months of A competition procedure was launched for the divestment of GS Edicole assets; GS Ingegneria operations have also been planned for the project designs and works management relating to the GS holding company s plans for growth in Italy and abroad. This company, which will start operations in 2009, is intended to provide for all the engineering services needs and requirements of Grandi Stazioni through appropriately qualified professional staff. Furthermore, the steady decline in engineering activities closely connected to the refurbishing and upgrading of managed station complexes in Italy and the company's growing commitment to international markets, have contributed to GS s intention of using GSI as a tool for market penetration, considering that the greater part of foreign tenders originally stem from needs arising from the functional upgrading and renovation of station premises. The handing over of the first three concepts of station has marked the beginning of consulting activities for the refurbishing, with Russian Railways, of eight small stations in outlying urban areas around St. Petersburg. Financial Statements at 31 December

15 HUMAN RESOURCES Composition of and changes to staffing level Number of employees at 31/12/2008 At 31 December 2008 the registered number of employees was 227. A reduction of 6 units is highlighted, compared to 31 December 2007, with the following increases and reductions: Registered employees at 31 December In 9 Out 15 Employees at 31 December Changes in the workforce, in detail PERSONNEL 31 December December 2007 Differences ** Executives (1) Middle management Non-management personnel (6) TOTAL (6) **As a result of the reported changes, the workforce: - was reduced by 15 employees, following the termination of employment of: o 4 executives o 3 managers o 8 non-management employees - increased, following the hiring of 9 new employees: o 2 executives o 4 managers (2 of which on a temporary basis) o 3 non-management employees - saw a reduction in the number of non-management employees: o 1 unit promoted to manager - saw an increase in the number of executives o 1 unit promoted from manager (as of 1/2/08) Financial Statements at 31 December

16 Average number of employees 2008 The average number of registered employees totalled , with a breakdown by category as shown below: REGISTERED PERSONNEL 2008 Average 2007 Average Differences Executives Middle management Non-management personnel (7.33) TOTAL (3.17) The average number of full time equivalent (FTE) employees totalled , with a breakdown by category as shown below: FTE PERSONNEL 2008 Average 2007 Average Differences Executives Middle management Non-management personnel (8.00) TOTAL (4.13) Labour Relations The year was characterised by the renewal of the National Collective Labour Agreement for Commerce and Trade. The impact of this renewal on Grandi Stazioni in terms of costs amounts to approximately 370,000. As regards labour relations within the company, these were characterised by the management seeking a structured and constructive dialogue with the Labour Unions, in order to foster governance of the important changes under way. A significant result obtained in 2008 was the unified dialogue with the 2 labour organisations represented within the company; they will therefore no longer be holding separate union meetings. In this field, too, the company has striven to lay the foundations for unified dialogue with the Labour Unions, an absolute necessity in view of upcoming contract negotiations and other initiatives, by avoiding as far as possible the risk of fragmentation which separate negotiations entail. Training 2008 witnessed the further development of training activities within Grandi Stazioni. Financial Statements at 31 December

17 The training projects were structured with a view to the following topics: 1. Updates on Information Technology 2. Languages 3. Updates on technical and legal matters New information technologies were introduced into the company to improve work process management; this has made it necessary to implement specific training courses on the use of the new IT applications. Firstly, specific training sessions were organised on Project Accounting software, for the planning of station refurbishment works; these courses primarily targeted the Project Managers. A second set of training courses concerned Budget Plus software, for budget and reforecast data entry and for the verification of final accounts, in order to ensure consistent data. Thirdly, lectures on purchasing cycle management were organised, regarding computerised management of requests for purchases of goods and services; these addressed those in charge of Responsibility Centres and Cost Centres. Fourthly, training was conducted on Bentley Microstation software for architectural design. As regards Languages, an English Language course for the overseas department was held. Finally, turning to Updates on technical and legal matters, priority was given to the subject of Safety, with training sessions on First Aid for the handling of emergencies, and on the Representative of Workers for Safety and Health in the Workplace. Overall, during the year, 90 employees at every company level (non-management employees, managers, executives) and from every type of company position (operations, technical specialists, organisational management), were involved in the training process, for a total of 1,272 hours (an average of approximately 14.5 hours per capita) and an overall cost of 14,433,74 keuros. Management Policy From a strategy standpoint, 2008 marked a turning point for Grandi Stazioni; this also applies to Human Resources-related affairs. As regards organisational matters, the company set up a new structure for itself, enabling the start of efforts to optimise processes, bring them to full efficiency and develop them in a linear fashion. In parallel with this, a sweeping overhaul of delegated powers was carried out, with a view to achieving continuity in responsibility processes. Consistently with the above, staff reporting to the Chief Executive Officer were reduced from 9 to 5, while the operational lines were identified and characterised, on the basis of the 3 most significant processes. Finally, a more rational employment of workforce resources is now under way, based on making the most of skills and capabilities available within the company. The first step taken in this direction was the introduction of an MBO system focusing on key positions, with a view to extending this performance reporting system to the second tiers of responsibility. Financial Statements at 31 December

18 Finally, it is important to point out that a turnaround in the size of the Paid Leave Reserve was reported in For the first time in the past three years, the incidence of this Reserve on labour costs turned negative, thus favourably affecting labour costs. Safety in the Workplace Activities connected with safety and health on the workplace, also in compliance with newlyintroduced rules provided for under Legislative Decree no. 81 of 9 April 2008, mainly concerned updates to the Risk Assessment Documents, the complete re-drafting of the Interference Risk Assessment Documents, the completion of instrumental and environmental inspections (noise, microclimate, lighting, non-ionising radiation, radon, dust, etc.) in offices and common areas in stations, updating of emergency plans of railway complexes, the performance of health surveillance and the planning and implementation of company training programmes. Powers of attorney were assigned regarding safety and health in the workplace. Financial Statements at 31 December

19 ENVIRONMENTAL POLICY As regards environmental protection, measures under way essentially concern the regeneration of existing buildings and structures whose town-planning and environmental impact is not particularly significant. It is highlighted that, in the performance of the works, every precautionary measure is adopted to minimise any form of environmental pollution and to dispose of waste materials by carrying out the necessary town-planning works. Grandi Stazioni, throughout 2008, continued implementing its project for separate waste collection in public spaces in stations. Launched in 2007, this project has seen the installation of more than 1,000 three-way and fourway bins in all network stations. CUSTOMER RELATIONS Marketing 2008 was characterised by the rationalisation of marketing activities, aiming to: a. Improve knowledge of the Travellers and Station Frequenters target, through a survey conducted by the GFK Eurisko Institute on the volume and quality of this target; b. Initiate, in cooperation with RFI, the Customer Satisfaction monitoring process, which is key to assessing the effectiveness of Customer service-related initiatives and to stimulating plans for improvement; c. Relaunch the Web site in a renewed form and with enhanced content; d. Launch a study process preparatory to finalisation of the Strategic Plan; e. Initiate a series of innovative initiatives for communication with customers, by experimenting Bluetooth technology in the Stazione Termini, f. Provide trade partners with support for their sales (Station retail outlets) during the bargain sales and Christmas seasons, through advertising on Grandi Stazioni SpA transportation and promotional activities in stations. It was also decided to suspend publication of the magazine In Altri Termini, considering how it appears to have been received by customers and the growing difficulties in advertising sales. Foreign developments Increasing attention was dedicated to the development of overseas activities which can, in time, offer GS potential for development, once refurbishing and upgrading works in Italian stations have maximised their commercial potential. The choice of markets in which to expand, out of a host of viable markets, is based on the following driving principles: - high growth rates in countries having considerable potential for multifunctional structures, such as large stations Financial Statements at 31 December

20 - markets located in areas targeted by development plans for the EU and international highspeed railway axes - yields per sqm that can ensure rapid returns on investments - return on investments comparable to that of GS. After the Joint Venture in the Czech Republic was launched, as a first test of GS ability to win and to manage projects outside of Italy, GS continued its search for possible new initiatives. In particular, amongst others, in Russia (where GS entered into a partnership with Russian Railways for the regeneration of eight stations on the Moscow-Saint Petersburg line), in India (with the prequalification application for the tender concerning the refurbishing of New Delhi station, in partnership with TRIF, a company that is part of the Indian group TATA) and in Egypt (project for the regeneration of eight major Egyptian stations). MACROECONOMIC BACKGROUND The credit, banking and financial markets crisis brought expectations for economic growth to a simultaneous halt throughout the world in 2008, triggering a period of recession whose features and duration still defy forecasting. During 2008, the Central Banks intensified support of the financial system, preventing a liquidity risk by substantially increasing availability of money and cutting interest rates. Such monetary expansion measures were made possible by the fall in inflation rates, following on from the steady decline in commodity prices, especially oil. At the same time, the governments of the chief industrialised countries and emerging economies adopted measures to nationalise credit risk, in order to save major banks from bankruptcy (default risk in derivatives contracts), besides real economy support measures whose effects will be felt in the second half of The negative wealth effects linked to the drops in securities exchange indices, the fall in real estate prices and worsening labour market conditions adversely affected the confidence of households and businesses, generating a sharp fall in consumption and investment. The world GDP growth rate fell, compared to 2007, by approximately 1.5 per cent (+3.9 per cent in 2008 as opposed to +5.4 per cent in the previous year). The downturn in domestic demand in industrialised countries was no longer offset by overseas demand from emerging economies; indeed, investments in these countries fell. Similarly, the sharp slowdown of the economic cycle also affected Euro zone economies; in 2008, household consumption dropped, and investments slowed down considerably. The average annual GDP growth rate, despite the implementation of budget policies to support the economy, was a mere +0.8 per cent, down by approximately two percentage points compared to Indicators concerning the Italian economy all point to a drastic worsening of economic activity; confidence and consumption indices relating to households and to businesses have clearly dropped and industrial production has fallen significantly. Financial Statements at 31 December

21 GDP especially has fallen by -1.0 per cent, posting a clear slowdown compared to the +1.4 per cent growth in 2007, mainly owing to the drop in domestic consumption (-0.9 per cent), largely attributable to declines in household expenditure (-0.5 per cent, of which: Foods per cent, Durable goods -6.2 per cent and Services - including transportation per cent) and investments (-2.7 per cent, of which: -3.2 per cent in Machinery and Means of transport, -0.6 per cent in Construction). The downward trend in new automobile registrations also continued (-20 per cent in the fourth quarter, per cent year-on-year in 2008). Consumer price trends helped to mitigate the effects of the purchasing power squeeze experienced by households and businesses. The fall in the price of oil, from 147 to 40 dollars per barrel in four months, quickly put a damper on the risk of inflation. The growth rate of producer prices went from 8.7 per cent in July to 2.3 per cent in November; similarly, consumer prices posted an overall year-on-year change of 3.3 per cent, down from 4.1 per cent in July. Furthermore, early indicators for 2009 clearly highlight that the extent of this recession will probably make it Italy s deepest since the post-war period, in terms of both intensity and duration. MARKET TRENDS IN RELEVANT SECTORS Property markets Scenari Immobiliari describes the general trend in the property market as being rather calm, though the complex external picture makes it difficult to make any clear forecasts was a critical year for the real estate sector in most European countries. The general economic situation generated a lack of confidence among institutional investors and households alike. Greater investments in infrastructure and constant migration flows did not serve to allay this feeling. Indeed, 2008 is definitely a year in which property markets stood at a standstill, making it difficult for all businesses to find their bearings. Phenomena witnessed in the year include: The residential market underwent a slowdown in all mature markets. Prices for medium-tolower-end properties slumped, while remaining stable for high-end properties. Only the luxury end witnessed slight increases. Emerging markets experienced ongoing growth, especially Bulgaria, followed by Romania The office property sector also felt the crunch of the economic situation, with a slump in demand and number of transactions. The industrial sector showed signs of stabilisation and there was increased demand for lower-priced spaces. The retail trade experienced difficulties and this had an impact on prices, while it expanded in Eastern European countries Tighter credit entailed a stricter selection of urban development and transformation projects, to the advantage of the more innovative ones. Financial Statements at 31 December

22 A deep transformation has just begun, which is affecting all markets. A generation of products is coming into being (from residential areas to tertiary or production clusters) which combine knowledge and financial resources to generate new energy. The coming decade will offer scenarios in which the winning products will be different from those of today, owing to the great social and economic changes in store. If trends are in this direction, then the current phase takes on a decidedly secondary role, as just a step along the road to change. Focus on Italy Services/Office Market In the first half of 2008, the services/office sector established itself as the most dynamic market segment nationwide. At the end of the year, total sales in the country are expected to be just under 7.7 billion Euros. This is also the second best performance in the entire continent. This "success" is to be interpreted in the light of the slump in other sectors (especially the residential sector) but is also the result of a far-reaching ongoing reconversion process. There is an everwidening gap between class A products (new, technologically equipped buildings which exploit spaces to a high degree) and other products, generally the result of reconversions. Demand from the tertiary sector is steadily shifting towards functional, modern properties with convenient transport facilities. The growth of the market, expected not before mid-2010, is conditional to the availability of a suitable range of products. With the slowdown in larger-scale operations because of the credit crunch and the closer watch kept by investors, new products are more difficult to come by on the market. Commercial property market The commerce and trade sector is currently going through a transitional phase, reflected in the changes in demographics and social patterns (population ageing, increase in the number of singlemember households) and in economics (slump in consumption). A slowdown in this sector is being witnessed in Italy. In 2007, the value of traded goods amounted to 7.6 billion Euros, but the trend for 2008 was plus 2.6%, with a slowdown expected in The driving thrust chiefly came from the large-scale retail trade, which accounted for 45% of overall volumes and is increasing its share year by year. Indeed, during 2007, the number of large-scale retail trade outlets had increased considerably, especially in Southern Italy. In particular, these increased by 7.4% compared to 2006, totalling 13,057 (amounting to an overall surface area of 20.6 million sqm). The total number of retail trade outlets is 981,922, equal to a total sales surface area of approximately 99.8 million sqm. Small retailers account for approximately 55% of sales. Average prices increased in line with inflation; although the gap between urban outlets and suburban large-scale retail outlets is widening, price and lease indicators fell in both sectors. Advertising Market In the early months of 2008, the advertising market posted positive variations compared to the negative figures for the corresponding months in The second half-year of 2008 was difficult, also because of the comparison with the autumn of 07, which, on the contrary, was Financial Statements at 31 December

23 highly positive. To this one must add the highly negative impact of the stock market crash and the economic recession. Based on widespread expectations that the economic crisis will expand throughout 2009, the outlook for investments, too, is that the year ahead will be difficult. Estimates made before markets crashed highlighted a decline in the advertising sector (-3% over 2008 and -6% over 2007). Financial Statements at 31 December

24 ECONOMIC PERFORMANCE AND FINANCIAL POSITION Reclassified Profit and Loss Account in migliai di euro Differenze - Ricavi delle prestazioni di servizi Altri ricavi e proventi (8.006) - Variazione lavori in corso su ordinazione (1.005) - Altri contributi dello Stato Ricavi operativi Costo del lavoro (15.512) (14.775) (737) Altri costi ( ) ( ) (13.207) Capitalizzazioni - variazione rimanenze Costi operativi ( ) ( ) (5.797) in keuros Differences Receipts from provision of services Other receipts and revenues Changes in contracted work in progress Other State funding Production value Labour costs Other costs Capitalization and inventory changes Operating costs EBITDA MARGINE OPERATIVO LORDO (3.360) Ammortamenti e svalutazioni cespiti (7.193) (7.838) 645 Accantonamenti netti e svalutazioni (5.414) (4.666) (748) Saldo proventi/oneri diversi 825 (552) RISULTATO OPERATIVO (2.086) Depreciations and write-downs on assets Net provisions and write-downs Balance of revenues / sundry charges OPERATING RESULT Saldo gestione finanziaria (3.469) (3.321) (148) Componenti straordinarie nette (196) (818) 622 Balance of financial management Net extraordinary items RESULT BEFORE TAX RISULTATO ANTE IMPOSTE (1.612) Imposte sul reddito (8.546) (11.762) Income tax RESULT FOR THE YEAR RISULTATO DELL'ESERCIZIO The production value in 2008 totalled million Euros, up by 2.4 million Euros compared to 2007 due to increased proceeds from services to customers, leases and refunds of condominium charges; operating costs totalled million Euros, up by 5.8 million Euros compared to 2007, primarily with respect to costs for services to customers and condominium charges; the overall EBIDTA decreased by 3.4 million Euros compared to It must be highlighted, however, that the Other receipts and revenues item comprises the Reimbursement of works charges, which amounted to 9.5 million Euros in 2007 and amounted to 0.5 million Euros in Financial Statements at 31 December

25 The operating result for 2008 closed with a net profit of 15.0 million Euros, up by approximately 12% compared to the previous year. This improvement can primarily be attributed to the positive balance of revenues / sundry charges and to a lower tax burden. Below is an analysis of the company s economic performance. The Receipts from provision of services totalled million Euros and can be broken down as follows: Amounts in M VAR Property lease income 80,2 74,3 5,9 Reimbursement of condominium charges 65,2 61,9 3,3 Advertising 20,7 25,3-4,6 Services to customers 7,3 0 7,3 Miscellaneous 0,7 1,2-0,5 174,1 162,7 11,4 Property lease income was up by 5.9 million Euros, due: million Euros to the vacating of the group of spaces in property owned by the company; million Euros from property leases within the areas under the company s management. Receipts from the reimbursement of condominium charges were up by 3.3 million Euros, due to an increase in managed assets/costs compared to the previous year, especially for utilities and maintenance. Advertising income was down by 4.6 million Euros compared to the previous year, owing to the recession in the second half-year and to a rethinking of the sale and management process. Income from services to customers, which stood at 7.3 million Euros in 2007, was reported as 7.9 million Euros in the financial statement of the subsidiary GS Servizi Srl, which was wound up in 2008 after its assets were transferred to Grandi Stazioni SpA. Other receipts and revenues amounted to 2.4 million Euros and can be broken down as follows: Importi in M VAR Rimborso oneri lavori 0,5 9,5-9,0 Rimborsi diversi 1,5 0,7 +0,8 Altri ricavi e proventi 0,4 0,2 +0,2 Totali 2,4 10,4-8,0 Amounts in M Reimbursement of works charges Sundry reimbursements Other income and revenues Totals Financial Statements at 31 December

26 Other receipts and revenues dropped by 8.0 million Euros compared to the previous year. This decrease is due to the -9,0 million Euro drop in the Reimbursement of works charges following the rethinking of their accounting criteria in order to bring them more closely in line with the nature of the relevant contract provisions and to the +1 million Euros for various reimbursements and revenues. The Changes in contract work in progress item totalled 2.8 million Euros and refers to engineering services provided but as yet not complete, and which have therefore not been posted at this time as revenues. They are less than in the previous year owing to fewer activities having been carried out under the "disposal of harmful materials contract. Labour costs, which stood at 15.5 million Euros (14.8 million Euros in 2007), were up in absolute value terms by approximately 0.7 million Euros, owing primarily to approximately 0.6 million Euros in exit incentives to executive staff. Other costs totalled million Euros and comprise the following: Purchases of raw materials and supplies totalling 0.4 million Euros, in line with the previous year. Services totalling 95.2 million Euros, up by 10.4 million Euros compared to The principal changes were as follows: Importi in M VAR Pulizie 22,8 23,2-0,4 Manutenzioni 17,9 16,0 +1,9 Utenze 12,6 11,1 +1,5 Altri servizi condominio 8,9 9,5-0,6 Miglioria su beni propri 8,1 0 +8,1 Corrispettivi ass. in partec. 4,3 5,5-1,2 Costi servizi ai clienti 4,1 0 +4,1 Provvigioni 3,5 5,2-1,7 Prestazioni Professionali 3,1 3,0 +0,1 Premi assicurativi 1,2 1,2 - Compensi amministratori 0,9 0,7 +0,2 Altri 7,8 9,4-1,6 Totali 95,2 84,8 +10,4 Amounts in M Cleaning Maintenance Utilities Other condominium services Improvements of own property Fees for associazione in partecipazione contracts (silent partnership agreements) Costs of services to customers Commissions Professional Services Insurance premiums Directors remuneration Other Totals The increase in services is essentially due to the following: million Euros for works carried out in 2008 on the Venice property, which have been posted, for an equal amount, under the capitalization and inventory changes item; million Euros for costs of services to customers, which in previous years were borne by the subsidiary GS Servizi, which was wound up in Financial Statements at 31 December

27 The related revenues, totalling 7.3 million Euros, are also posted under the profit and loss account; million Euros as a result of increased cleaning, maintenance and condominium utility costs. The related revenues from reimbursement of condominium charges are posted in the profit and loss account million Euros as a result of lower advertising costs, related to the lower revenues and lower incidence of intermediation costs in the year compared to the previous year. Enjoyment of goods belonging to Third Parties totalled 35.2 million Euros, up 2.2 million Euros compared to the previous year. This increase was due to the increase in the transfer back rental owed to RFI in relation to the increase in property lease income. Sundry management charges totalled 5.4 million Euros, up by 0.5 million Euros compared to the previous year, and can be broken down as follows: Importi in M VAR Imposte indirette 5,0 4,6 +0,4 Altro 0,4 0,3 +0,1 Totali 5,4 4,9 +0,5 Amounts in M Indirect taxation Other Totals Capitalization totalled 10.3 million Euros, up by 8.1 million Euros, and can be broken down as follows: Changes to works in progress on properties totalled 8.0 million Euros and are related to works carried out in 2008 on the Venice property intended for sale with a preliminary sale contract executed with the Veneto Region. The cost of the works is reported under the services costs item for an equal amount. The Increase in Fixed Assets totalled 2.3 million Euros and results from function costs for the Development of Infrastructure capitalized on investments. These are in line with the previous year. Depreciation and write-downs on assets totalled 7.2 million Euros, down by 0.6 million Euros compared to the previous year; the drop was essentially due to the reclassification of the Venice property under inventory changes thus making it no longer eligible for depreciation. Provisions and write-downs totalled 5.4 million Euros, up by 0.7 million Euros compared to the previous year, and are composed of 2.0 million Euros reported under provision for risks and 3.4 million Euros reported under bad debts provision. The provision for risks, increased to 4.1 million Euros, comprises: 3.5 million Euros for civil and labour litigation; 0.6 million Euros for tax litigation. Financial Statements at 31 December

28 The bad debts provision, increased to 5.6 million Euros, provides for: 2.2 million Euros receivables from leases, reimbursement of ancillary charges; 3.4 million Euros receivables from reimbursements of works charges reported in previous financial years, totalling 9.0 million Euros. The Balance of revenues/sundry charges totalled 0.8 million Euros, marking a 1.4 million Euro improvement compared to 2007, and can be broken down as follows: Importi in M VAR Rilascio fondi esuberanti 1,0 - +1,0 Sopravvenienze attive 1,0 2,2-1,2 Sopravvenienze passive (1,2) (2,8) +1,6 Totali 0,8 (0,6) +1,4 Amounts in M Release of excess provisions Non-operating profits Non-operating losses Totals The Balance of financial management totalled -3.5 million Euros, up by 0.2 million Euros compared to the previous year, and can be broken down as follows: Importi in M VAR Interessi passivi (8,3) (6,0) -2,3 Ineressi attivi 2,0 2,2-0,2 Proventi da controllate (GSS) 2,6 0,5 +2,1 Altri proventi (IRS) 0,2 - +0,2 Totali (3,5) (3,3) -0,2 Amounts in M Interest payable Interest receivable Revenues from subsidiaries (GSS) Other revenues (IRS) Totals The revenues from subsidiaries comprise the dividend (1.5 million Euros) distributed by GSS in 2008 and by the repayment (1.1 million Euros) of capital and provisions following the windingup which took place in The Extraordinary management balance totalled -0.2 million Euros, down by 0.6 million Euros compared to the previous year, due to fewer settlement agreements in labour litigation. Income tax totalled 8.5 million Euros, down by 3.2 million Euros compared to the previous year, due to lower taxable income and lower tax rates applicable as of the 2008 financial year. Financial Statements at 31 December

29 Reclassified Assets and Liabilities Statement Variazione ATTIVITA' Capitale circolante netto gestionale Altre attività nette (20.719) (29.817) Capitale circolante (18.269) Immobilizzazioni immateriali nette Immobilizzazioni materiali nette (30.047) Partecipazioni (121) Capitale immobilizzato netto TFR (-) (2.452) (2.743) 291 Altri fondi (-) (4.103) (2.390) (1.713) Altri fondi (6.555) (5.133) (1.422) CAPITALE INVESTITO NETTO COPERTURE ASSETS Net working capital Other net assets Operating capital Net intangible assets Net tangible assets Shareholdings Net capital equipment Variation Staff severance indemnity Other provisions Staff severance indemnity and other provisions TOTAL NET INVESTED CAPITAL HEDGING Posizione finanziaria netta a breve (19.708) (29.322) Posizione finanziaria netta a medio/lungo Posizione finanziaria netta Mezzi propri COPERTURE Net short-term financial position Net medium/long-term financial position Net financial position Equity HEDGING Total net invested capital, posted at million Euros at 31 December 2008, was up 40.6 million Euros compared to end 2007, due to changes posted under the net capital equipment and net working capital items, while hedging has increased chiefly as a result of changes in the net financial position. The reclassified assets and liabilities statement highlights in particular: a 28.1 million Euro increase in working capital and a 30.0 million Euro drop in fixed tangible assets, essentially resulting from the reclassification of the Venice property under the inventory changes item; a 44.0 million Euro increase in fixed intangible assets resulting from refurbishing works in progress carried out during the financial year; Financial Statements at 31 December

30 an increase of 36.3 million Euros in the net financial position due to the 26.7 million Euro increase in medium/long-term debts taken out for the funding of refurbishing works and to the 9.6 million Euro reduction in short-term net funds; an increase of 4.3 million Euros in equity resulting from the 2007 profit carried forward and from increased profits in RISK FACTORS Through its activities, the company is exposed to a number of financial risks: environment/context risk, strategic/operational risk, compliance risk. The company s operating and financial policies aim, among other things, to minimise the adverse impact of such risks on its financial performance. The company hedges certain risks by means of derivative financial instruments. Financial Risks Market risks Property risks Owned properties are valued at their purchasing cost plus the cost of refurbishing and upgrading work. For properties with right of exploitation, refurbishing works are valued at cost. Should a property value, at the close of the financial year, prove to be lower in the long term than that established on a cost basis, it should be posted at the lower cost. Property market fluctuations can therefore influence the company s economic performance, not only in connection with rents but with possible devaluations. Part of the company s economic performance is the result of property selling and purchasing activity; this, too, is significantly affected over time by property value trends and by the volume of possible transactions. The property market is subject to the cyclical pattern of rent values and property prices, and company policy is oriented towards minimising the effects of the cycle by: Keeping to refurbishing deadlines and costs, to avoid the cost value of property overshooting the market; Entering into long-term agreements with tenants of high standing, in order to mitigate the effects of a drop in rent market values and of ensuing falls in property prices; Containing vacancies in such a way as to avoid re-rental risk in times of sluggish demand for rented spaces. Financial Statements at 31 December

31 Advertising risks The advertising business is cyclical, meaning that it is significantly affected by the overall performance of the economy. In times of recession, major investors in advertising reduce their advertising investments considerably and the company s policy is directed towards reducing adverse economic effects by: Reducing advertising production and sales costs; Shortening the distribution chain by establishing direct relations with customers and Media Centres; Repositioning GS media on the advertising market in order to expand market share. Interest rate risks The loans taken out by the company are normally at a variable interest rate plus a spread. The company s economic performance are therefore significantly affected by interest rate trends. The company s policy is to minimise as much as possible, in the medium term, the risk connected to interest rates, in order to limit its actual exposure to risks connected to its real estate activities; this is done by adopting a dynamic approach, which seeks to exploit favourable market patterns. It should be pointed out, in any case, that the company does not carry out transactions of a purely speculative nature or not in connection to its indebtedness. Interest rate risks can be managed through the use of derivative contracts, especially swaps, caps and collars. The effect of interest-rate swaps is to convert a variable rate into a fixed rate for a part of or for the entire duration of the loan. The effect of cap and collar contracts is to set a ceiling and, in case of collars, a minimum level for interest rate fluctuations in different loans, for a part of or for their entire duration. At 31 December 2008 a 30 million Euro hedge on variable-rate loans was in place, to ensure a differential of 245 b.p. with respect to the 6-monthly EURIBOR and a minimum rate of 4.30%. Currency risk The company operates primarily in Italy and in Euros and is therefore not exposed to currency risk to any significant extent. Inflationary risk Rental fees in lease contracts are partly fixed and partly variable. The fixed portion is indexed to inflation. The fee increase/price increase indexing ratio lies between 75% and 100%, though no fee reduction will ensue in the case of a drop in the rate of inflation. The variable portion is tied to the tenant s income. Lease contracts also provide for a guaranteed minimum. The company does not conduct operations (swap contracts) directed towards minimising this risk. Financial Statements at 31 December

32 Credit risk The outlook for credit recovery is assessed on a case-by-case basis, taking into account the opinions of department managers and of in-house and external legal services involved in any debt collection action. Any credits which, at the time of closing of the accounts, might entail a loss have consequently been written down. Attention is also drawn to the fact that the company has received guarantees covering approximately a quarter of the yearly rental fees due. Liquidity risks Loans taken out to finance property refurbishing works have been structured in accordance with cash flows generated by the lease contracts. At the end of 2008, the company s financial debts/equity ratio was 1.69, which attests to a low liquidity risk. INVESTMENTS Works Contracts Situation Completed contract works Roma Termini: Completion of phase 2 works. The second phase of works in Roma Termini station has virtually been completed. In particular, the drafting of the final accounts and acceptance testing activities in connection with the refurbishing of Building D are approaching completion. Ongoing contract works (Internal works Milano Centrale, Torino Porta Nuova, Napoli Centrale stations). The contract works for the refurbishing of Milano Centrale and Torino Porta Nuova stations are at an advanced stage of completion. Two additional deeds have been issued for both contracts. In particular, progress with refurbishment works for Milano Centrale station at 31/12/08 had reached approximately 75% of the contract value. Most of the spaces open to the public were substantially completed during 2008, with the opening of the ticket office in September and the inauguration of the station last 13 December. As regards the Torino Porta Nuova station contract, progress with refurbishment works at 31/12/08 reached more than 80% of the contract value. In particular, during the month of December 2008, the pedestrian concourse areas open to the public were handed over and are expected to be inaugurated on 4 February All works in connection with both these contracts should be concluded during Regarding Napoli Centrale Station, a supplementary act to the works contract was issued. Activities in connection with the refurbishment and upgrading of the property complex are still under way. Specifically, progress with completed works at 31/12/08 was approximately 70% of the contract value. A further supplementary act will be issued (the expert opinion concerning Financial Statements at 31 December

33 variation no. 2 is currently being drafted by the Site Management), whose value totals approximately 10 MEuros. This deed is directed towards settling various issues affecting the contract works, through the elaboration of a new time schedule enabling the refurbishment and upgrading works to be completed by the end of Other contract works: (Internal works: Verona, Venezia SL, Venezia Mestre, Bologna, Florence, Genova Principe, Genova Brignole, Bari, Palermo stations; External works: Complementary infrastructures in 13 stations and Integrated Video-surveillance system) As regards contract works related to the refurbishment of Verona, Venezia SL, Venezia Mestre, Bologna, Florence, Genova Principe, Genova Brignole, Bari, Palermo stations and to the complementary infrastructures in 12 stations (not including Rome), the works put out on tender were assigned to the companies which had successfully participated in the tendering procedures. These companies have begun drafting the executive project designs provided for in the works contracts. Regarding the North-West works contract, the analysis procedures oriented towards approving the executive design projects drawn up by the Contractor (DEC Sacaim Guerrato Temporary Consortium of Enterprises) and the variation project designs requested by Grandi Stazioni, and towards establishing a special supplementary act, will be completed by the early months of With regard to this works contract, certain areas were handed over by separate procedure during the second half of 2008 (Genova Piazza Principe: clearing explosive devices left over from the war, construction of a fire tank and structural upgrading of the hexagonal roof on the Piazza Acqua Verde side and installation works for variable message signs; Genova Brignole: replacement of escalators at tracks 2/3 and 5/6 and supply and installation of variable message signs). These separate works were begun during December All the areas with works under way (at least as far as the internal works are concerned) are planned to be handed over by the first half of For the North-East allotment contract (Venice and Verona), disputes that arose between the Temporary Consortium of Enterprises which had been awarded the contract and Grandi Stazioni are causing this contract to be terminated owing to non-performance by the contractor; it is now being verified whether the contender who ranked second in the tendering procedures will replace the first, whilst GS and RFI are completing the verification and validation of the executive project design drawn up by the contractor. Since the project design also underwent some changes, the relevant administrative authorisations must be obtained; on the contractor s side, moreover, should the replacement be carried out, it must be assessed how variations that are under way are to be transposed into the contract terms and conditions. In connection with the Centre and South contracts (BTP Satrel Mugnai Temporary Consortium of Enterprises), the Contracting Party did not deem the solutions proposed by the contractors during the executive project design development phase to be acceptable, and was formalizing the termination of the contracts. The moving in system could then be adopted, whereby the contract could be assigned directly to the second-ranked tenderer, subject to agreement obviously. As an alternative solution, the in-house development of an executive project design would identify the works strictly necessary for the technical and functional upgrading of the Financial Statements at 31 December

34 stations in question, requiring only works contracts to be awarded. In March 2009, the agent company of the Temporary Consortium of Enterprises which had been awarded the Centre and South allotments works notified the sale of the business branch, inclusive of the existing contract relations with Claudio Salini Grandi Lavori SpA. At the same time, during 2007, the carrying out of preparatory activities not provided for in the contracts for the refurbishment works was assigned to external companies, through framework agreements which were organised on the same geographical basis as the main contracts. Furthermore, in some of these stations the supply and installation of variable message signalling equipment were contracted out directly, in order to minimise the impact on railway operations of events connected with the main contracts. The works in question are expected to be completed by the end of Lastly, with the same purpose in mind, a specialised company was assigned the task during 2007 of carrying out the surveying, mapping, safety measures implementation works and removal of materials containing asbestos and artificial glass fibres in all the refurbished stations (not including Rome); these activities are expected to be concluded by the first half of Regarding the complementary infrastructures of Roma Termini station, a Contract was stipulated on 10/09/2008 between GS and the Temporary Consortium of Enterprises Salini Locatelli S.r.l. Castelli Lavori S.r.l. Ircop S.r.l. for the amount of 82.7 MEuros (bidding discount 10.85% from the basic price of 92 MEuros). After stipulation of the contract with the contractor, the works have not yet been handed over, as a final agreement has to be reached with RFI as to the construction set-up plan, an especially complex operation owing to the possibility of the works interfering with railway operations. Various changes are being planned, on the other hand, to the original project on which the tender was based; these are expected to rationalise the organisation of the works and reduce the impact on railway operations. As regards these changes, once the required agreement with RFI has been reached, the procedures for administrative authorisations will have to be checked in the early months of 2009, since the original final project had been approved by the Conferenza dei Servizi (local authorities planning body) and of an ensuing resolution of the CIPE (inter-ministerial economic planning committee), relating to the so-called Programma Grandi Stazioni (major stations programme). As regards relations with the contractor, it will be possible to make changes through the executive-phase variations mechanism, which is compliant with the limits provided for in the contract in accordance with the laws in force on the matter. In conclusion, in relation to the supply and installation of the new Integrated Video-surveillance system, the contract between GS and the Temporary Consortium of Enterprises Sielte S.p.A. / Honeywell S.r.l. Div. H.B.S., was stipulated on 31/05/06, for the amount of 31.4 MEuros, financed under the Objective Law. The contract is in an advanced stage of execution and the progress of completed works at 31/12/08 has reached approximately 64% of the contract value. During the works, at the special request of Polfer (Railway Police), the videosurveillance system was improved, as was the structure of the so-called "Trave Multifunzionale" (multifunction beam) planned in Milano Centrale station. These works, which have been included in the Expert Opinion on Variation no. 1 (but which has not been formalized) and in Financial Statements at 31 December

35 the Expert Opinion, still to be drafted, on Variation no. 2, have been formalized for an overall value of approximately 12.0 MEuros. Activities carried out during Internal Works plan (Refurbishments + Preparatory Works + Interventions in Railway Areas) In connection with the overall expenditure situation totalling million Euros (financed by GS) and million Euros (financed by RFI) for refurbishment and upgrading works during 2008, investments were increased by approximately 38.7 million Euros (GS) and by 39.3 million Euros (RFI), for a total of 78.0 million Euros. Activities carried out The activities carried out are primarily in connection with refurbishments (by the contractors) and engineering for the implementation phase by GS (DL, Executive phase safety and Acceptance tests) relating to Naples, Milan and Turin stations (GS-RFI funds). With the development and verification of the executive project designs of the companies which were awarded contracts for the other stations (GS-RFI funds), with the carrying out of the preparatory activities for the refurbishment works (GS funds), with sundry works in the railway areas (upgrading of platform terminus canopies in Naples, of façades in Bologna and canopies at Venezia S.L. RFI funds), along with the surveying, mapping, carrying out of safety implementation works and removal of the materials containing asbestos and artificial glass fibres carried out by Teseco (RFI funds). Objective Law complementary works (Infrastructure + CCTV) In connection with the overall expenditure situation totalling million Euros, of which million Euros (Infrastructure) and 51.0 million Euros (CCTV) paid by the State and 36.8 million Euros (Infrastructure) paid by GS, with regard to Complementary Infrastructures, investments increased in 2008 by 3.1 million Euros, related primarily to the carrying out of activities in connection with the development and ensuing verification of the executive project designs of the companies to which the allotments were awarded, upon completion of the activities for the development of the Piastre (platform) project design of Roma Termini station (Complementary infrastructures) and to the carrying out of refurbishment and upgrading activities in Via Marsala. In connection with the Ministry loan for the installation of CCTV systems, investments during 2008 increased by 11.8 million Euros, related primarily to the activities carried out by the company performing the supply of the new integrated video-surveillance system for the 13 Major Stations. The overall total in 2008 was 14.9 million Euros. Activities carried out During 2008, the engineering activities in connection with the development of the executive project design for the Roma Termini piastre (platforms) were concluded; the executive project design for the complementary works of the North-West allotment is still being carried Financial Statements at 31 December

36 out and verified by the contractor and the activities for the supply of a new integrated videosurveillance system are at an advanced state of progress, the related engineering activities for the implementation phase (Site supervision, Safety in the execution phase) being carried out by GS. Financial Statements at 31 December

37 Other works (financed by GS and RFI) Investments in company-owned properties increased by 12.1 million Euros (financed by GS), for the completion activities carried out on the properties in Bologna (the technical and administrative acceptance test procedures are nearing conclusion), Napoli Palazzo Alto (though the works at the moment are suspended) and Venice. Other investments, paid by GS, totalling 1.1 million Euros, are also highlighted in 2008, with regard to various types of projects primarily related to the GS commercial development (e.g. upgrading of offices and storerooms in building B at Roma Termini). Lastly, the progress of other investments paid by RFI, totalling 8.8 million Euros, assigned to GS in a technical capacity, for various types of activities related to the following are highlighted: upgrading of fixed and variable message signs (Milano Centrale, Napoli Centrale, Bologna Centrale stations), for approximately 4.6 million Euros; works paid by RFI, as part of the contract for Milano Centrale, due to activities in connection with the relocation of railway facilities, for approximately 0.5 million Euros; various types of works financed by RFI s different area divisions (Milan, Venice, Genoa), concerning raising the platforms to a height of +55 for the canopies intended for HS train stops, and for the Genova P.P. station to the construction of a ramp for cars taken on board, for 2.5 million Euros; activities related to the registration with the land register of the Real Estate Units of the station complexes, for approximately 1.2 million Euros. Activities carried out The following activities were therefore carried out during 2008: Functional upgrading works on the Naples (Palazzo Alto), Bologna (ex-post office virtually completed) and Venezia Santa Lucia (GS funds) Properties. Various types of projects in connection with the GS commercial development (GS funds) (including the upgrading of offices and storerooms in building B at Roma Termini still under way); Installation of new variable message signal equipment in the Milan, Naples and Bologna stations; A part of the contract for Milano Centrale, works paid by RFI due to activities related to the relocation of railway facilities (RFI funds still under way); Various types of activities financed by RFI, (raising of platforms, ramp for cars on board GEP, registration in the land register of the Real Estate Units of the station complexes (RFI funds still under way). Besides the actual works, the activities carried out specifically concern engineering activities for the implementation phase (Site supervision, Safety in the execution phase, Acceptance testing). Financial Statements at 31 December

38 Other works by RFI Assignments in a technical capacity Lastly, RFI investments managed by GS in a technical capacity increased by 3.7 million Euros in 2008, broken down as follows: Progress at 31/12/07 Progress 2008 Progress at 31/12/08 Whole-life cost Progress at 31/12/08 Amounts in M Other RFI works - Assignments in technical capacity % Genova Brignole % Genova Principe % Milano Centrale % Napoli Centrale % Venezia Mestre % Venezia S. Lucia % All stations % Financial Statements at 31 December

39 Grandi Stazioni SpA Investments Situation Progress Progress Progress Whole-life Progress at 31/12/ at 31/12/08 cost at 31/12/08 M M M M % Internal refurbishing and upgrading works 88,4 38,7 127,1 183,9 69% Bari Centrale 0,5 0,3 0,8 4,9 16% Bologna Centrale 1,5 0,1 1,6 7,7 21% Firenze S. M. Novella 1,3 0,3 1,6 5,3 30% Genova Brignole 0,6 0,1 0,7 4,2 17% Genova Principe 1,2 0,3 1,5 6,6 23% Milano Centrale 30,6 12,9 43,5 53,1 82% Napoli Centrale 12,1 7,0 19,1 29,9 64% Palermo Centrale 0,7 0,3 1,0 5,1 20% Roma Termini 26,5 0,9 27,4 28,3 97% Torino Porta Nuova 10,6 15,6 26,2 27,9 94% Venezia Mestre 0,3 0,4 0,7 2,6 27% Venezia S. Lucia 1,5 0,4 1,9 5,8 33% Verona Porta Nuova 1,0 0,1 1,1 2,5 44% Compl. infrastructures and videosurveillance (L.O 28,8 14,9 43,7 297,5 15% Bari Centrale 0,9 0,9 1,8 16,4 11% Bologna Centrale 2,6 1,3 3,9 33,6 12% Firenze S. M. Novella 1,3 0,4 1,7 10,0 17% Genova Brignole 0,7 0,2 0,9 5,9 15% Genova Principe 1,3 1,2 2,5 14,1 18% Milano Centrale 4,5 3,7 8,2 22,9 36% Napoli Centrale 1,4 0,4 1,8 26,2 7% Palermo Centrale 0,3 0,8 1,1 6,6 17% Roma Termini 3,0 3,4 6,4 106,0 6% Torino Porta Nuova 2,7 0,7 3,4 15,5 22% Venezia Mestre 1,3 0,3 1,6 8,7 18% Venezia S. Lucia 2,0 0,5 2,5 6,9 36% Verona Porta Nuova 1,6 0,9 2,5 19,2 13% Tutte le stazioni 5,2 0,2 5,4 5,5 98% Properties owned by GS 31,6 12,1 43,7 59,7 73% Bologna Centrale 7,8-7,8 8,0 98% Firenze S. M. Novella - - 1,4 0% Genova Piazza Principe - - 1,0 0% Napoli Centrale 13,3 3,2 16,5 25,2 65% Roma Termini Venezia S. Lucia 10,5 8,9 19,4 24,1 80% Other GS works 4,9 1,1 6,0 13,5 44% OVERALL TOTALS 153,7 66,8 220,5 554,6 40% Financial Statements at 31 December

40 RESEARCH AND DEVELOPMENT ACTIVITIES As in previous financial years, the company did not carry out any research and development activities in Financial Statements at 31 December

41 RELATED PARTY TRANSACTIONS The following table gives an overview of the key credit and debit transactions between the company and its subsidiary companies, parent companies and other associates. The table also highlights the transactions with the company exercising management and coordination activities and with the companies subject to the same management and coordination activities. Name Credit transactions Debit transactions GS Ceska Subsidiary companies Commercial and other: assignment fees seconded personnel Parent companies Ferrovie dello Stato (a) Associates Trenitalia (b) Rete Ferroviaria Italiana (b) Ferservizi (b) TAV (b) Fercredit (b) Cisalpino (b) Italferr (b) Metropark Commercial and other: rental charges occupation of premises occupation allowances reimbursements Financial: pooled bank account Commercial and other: rental charges occupation allowance occupation of premises leases reimbursements Commercial and other: rental charges occupation allowance occupation of premises engineering fees reimbursements leases Commercial and other: rental charges occupation allowance occupation of premises reimbursements Commercial and other: rental charges leases reimbursements Commercial and other: rental charges leases Commercial and other: rental charges reimbursements leases Commercial and other: reimbursements leases facilities Commercial and other: service officer remuneration debts for tax credit transfer Financial: bank account interest Commercial and other: down payments on engineering works reimbursements Commercial and other: transfer back rental maintenance down payments on engineering works utilities services Commercial and other: officer remuneration travel agency account statement fees Commercial and other: credit transfer rental charges Commercial and other: seconded personnel Commercial and other: advance rental charge payments Financial Statements at 31 December

42 (a) Company exercising management and coordination functions (direct parent company) (b) Company subject to management and coordination by (a) The assets/liabilities and profit/loss values arising from the above transactions are also shown below. Related party transactions with the Group companies were essentially of a commercial nature and the related costs and revenues, payables and receivables, are therefore related to: the leasing of station premises, the reimbursement of ancillary charges, the recovery of costs incurred for seconded personnel, general group services and business travel services provided. Lastly, it must be highlighted that Ferrovie dello Stato S.p.A. and Grandi Stazioni S.p.A. have opened a pooled bank account used for all collections and payments relating to the business transactions with FS Holding, Ferservizi, RFI and Trenitalia. At 31 December 2008, the balance of this intercompany bank account was 17,807,544 Euros. Below is an overview of the financial and economic transactions carried out in connection with the above-mentioned relations (the figures are in keuros). Commercial and other transactions (in keuros) Costs Revenues Name Receivables Prepaid expenses Payables Accrued liabilities Production costs Extraordinary charges Production value Extraordinary income Subsidiary companies GS Ceska Parent companies Ferrovie dello Stato 8,386 3, Other associates Trenitalia 7, ,412 Rete Ferroviaria Italiana 18,119 12,248 36,005 54,520 Ferservizi 5, ,851 TAV Fercredit Cisalpino Italferr 4, , ,827 Metropark TOTAL 44,598 16,971 2,908 36, ,866 Financial Statements at 31 December

43 Financial transactions Name Subsidiary companies Financial assets (in keuros) Receivables Payables Guarantees Commitments Costs Income GS Servizi 2,596 GS Immobiliare 26 GS Ceska Parent companies Ferrovie dello Stato 17,808 1,610 TOTAL 17, ,206 All transactions with the Group companies have been made at normal market prices. PERFORMANCE OF SUBSIDIARY UNDERTAKINGS Grandi Stazioni holds several special-purpose companies for the purpose of directly handling certain business operations closely linked and complementary to its own activities. These have been set up for the purpose of directly managing certain specific business activities exercised within the framework of the reorganised business units and the company s real estate. Grandi Stazioni Ceska Republika Grandi Stazioni Ceská Republika s.r.o. (GSCR), is the vehicle company set up for the purpose of refurbishing and managing the Prague Central, Marianske Lazne and Karlovy Vary stations. The company has now achieved its definitive shareholder structure and final capitalisation through an increase in its share capital, up to 240 million Czech Korunas, with the entry of the EBRD which subscribed to the increase acquiring a final 39% stake, while the 10% stake of SIMEST remained unchanged. The share capital - fully subscribed to and paid up - totalling 240,000,000 Czech Korunas (equal to approximately 8 million Euros), is held as follows: Grandi Stazioni S.p.A.: 122,400,000 Czech Korunas (51%), EBRD: 93,600,000 Korunas (39%) and SIMEST S.p.A.: 24,000,000 Korunas (10%). The results for 2008 highlight a profit of 5,952 thousand Czech Korunas (equal to approximately 243 keuros). The following table gives the key economic and financial highlights of the company for the last two years. Financial Statements at 31 December

44 Economic and financial data (keuros) Income Gross operating margin (119) (541) Net profit 243 (421) (keuros) Net invested capital (10,846) (5,380) Shareholders equity 8,088 7,935 Net financial position 2,758 (2,555) Grandi Stazioni Edicole S.r.l. Grandi Stazioni Edicole S.r.l., with a share capital of 20,000 Euros, posted a loss of 8,149 Euros in 2008; this is the company that, under the bylaws, is responsible for running the newsagents inside the Grandi Stazioni station network. A number of silent partnership agreements were entered into in 2008, with a view to carrying out the activity of selling publications and complementary products with the businesses currently selling daily newspapers and periodicals in the station complexes; the effects of these agreements have been deferred until completion of the refurbishing and upgrading works in the stations involved. The purpose is to set up a nationwide sales network with a new standard store format, consisting of a step-in architectural structure, providing direct access to the display and sales area; the broadening of the range of marketed products, including different products from publications, for increasing profits (food & beverage, confectionery and sundry items); economies of scale from supplies and storage, etc. Grandi Stazioni Ingegneria S.r.l. The mission of Grandi Stazioni Ingegneria is to conduct feasibility studies, research, consulting, design and/or site supervision works, technical and financial consistency assessments and environmental impact reports; it also serves the purpose of providing coordination services with respect to construction activities and performing, also as part of the framework of a concession agreement, civil and hydraulic works, road works, works relating to industrial plants, cultural, sports and leisure facilities, agro-food plants, land management and reclamation works, including the operation thereof. The company, which is currently inoperative, has a share capital of 20,000 Euros and in 2008 posted a loss of 1,077 Euros. Grandi Stazioni Pubblicità S.r.l., in liquidation Grandi Stazioni Pubblicità was placed in liquidation during 2008 and should be wound up during the first quarter of With a share capital of 20,000 Euros, it posted a loss of 4,746 Euros. Financial Statements at 31 December

45 OWN EQUITY At 31 December 2008, Grandi Stazioni S.p.A. did not hold own shares and/or shares in its parent company, either directly or through a trust company or intermediary. In 2008, it did not purchase or sell any own shares and/or shares in its parent company, either directly or through a trust company or intermediary. OTHER INFORMATION Other offices The company established a secondary office in Milan, pursuant to article 2197 of the Italian Civil Code. There are also operational offices in Bari, Bologna, Florence, Genoa, Milan, Naples, Palermo, Turin, Venice and Verona. Inquiries and legal proceedings under way In October 2008, the company filed, through its attorney, a criminal complaint with the Public Prosecutor s Office at the Rome Law Courts for the offences provided for under articles 56, 640 (2) point 1, 61 point 7 of the Italian Penal Code, 56, 60 bis of the Italian Penal Code, 319 of the Italian Penal Code and of all the other offences which the judicial Authority may deem having been committed as a result of the conduct described in the same act or which might emerge following further inquiries conducted by the judicial Authority itself. The matter concerns invoices issued by a supplier for services provided, and the Company records did not yield any documentary evidence of the effective and satisfactory performance of these services; there is a suspicion of criminal conduct entailing damage to the Company. Inquiries by the judicial Authority are under way and the proceedings are being conducted, as matters stand, against unidentified parties. In December 2008, during the refurbishment works in the Napoli Centrale Station, a fatal accident occurred to an employee of a subcontractor of the Temporary Consortium of Enterprises which is a party to the contract. Criminal investigations by the competent judicial Authority are under way to establish responsibility for the accident. It is pointed out, in any case, that any parties in the employment of Grandi Stazioni who might be involved in this matter have suitable insurance coverage, including for legal expenses. Information concerning civil disputes and any financial losses that these might entail are provided under the Information on Assets/Liabilities and Profits/Losses Accounts section in the comments to the Provision for risks and charges item. Financial Statements at 31 December

46 Legislative Decree 231/2001 During the year, the necessary activities were carried out to ensure the adequacy and effective ability of the Organisational and Management Model to prevent the occurrence of the offences referred to in Legislative Decree 231/2001. The same Model is being updated in order to bring it in line with changes in the law and the decisions by the law courts. Legislative Decree 196/2003 Grandi Stazioni S.p.A. updated the Documento Programmatico sulla Sicurezza (D.P.S.), the Security Planning Document, in accordance with the provisions set out in Legislative Decree no. 196 dated 30 June 2003, called Code relating to the protection of personal data. Information relating to the parent company s activities pursuant to article 2497 ter. The parent company Ferrovie dello Stato S.p.A. did not exercise significant influence over the management decisions taken by the company in SIGNIFICANT EVENTS AFTER THE REPORTING PERIOD A financial agreement was entered into with the companies belonging to the Gruppo FS for the purpose of finding a permanent solution after the so-called Lodo Barbieri (Barbieri arbitration) and the new lease contracts are being formalised. These agreements have been taken into account in the income for the year. The party to the silent partnership agreement for advertising activities filed a request for arbitration in order to claim non-fulfilment by Grandi Stazioni S.p.A. with respect to the meeting of the sales objectives for 2008, the installation of part of the video communication systems, the procedures for adjusting payment of profits due for 2007 and for sales accounting procedures, and to order that the same company pay 2.3 million Euros in charges, lost income and accrued interest thereon. As matters stand in this dispute, there is a possibility of a negative outcome and therefore no provision has been made in the risk reserve. The Board meeting held on 2 March 2009 appointed Massimiliano Capece Minutolo del Sasso as Director, replacing Enrico Aliotti. A competitive procedure was launched for the sale of the 100% stake in GS Edicole S.r.l.. A settlement agreement was reached with the Temporary Consortium of Enterprises which had been awarded the services performed by Global Service for the Roma Termini property complex, thus ending a dispute which had arisen at the end of This act has been taken into account in the operating costs. Financial Statements at 31 December

47 The agent company of the Temporary Consortium of Enterprises which was awarded the works for the Centre and South allotments notified the sale of the business branch, including existing contractual relations with the company. Once the sale has become effective, the waiver of any claim against GS will apply. FORESEEABLE MANAGEMENT TRENDS Based on planned company activities and management strategies, the approved Budget foresees that the value of production in 2009, despite the ongoing acute recession, will confirm Company income, with a gross operating margin and operating results in line with those for the 2008 financial year. As regards the net results, a markedly better result than in 2008 is expected, bearing in mind the planned extraordinary transaction (sale of a portion of the Venice property). On the financial and equity side, the following events are expected: an improvement in the net working capital; an increase in the net fixed capital resulting from new investments; a fall in the net financial position resulting from the improvement in the short-term financial position following the extraordinary transaction; an increase in own equity as a result of the improved result for the financial year. Financial Statements at 31 December

48 PROPOSED ALLOCATION OF THE BUSINESS YEAR RESULT Shareholders, you are hereby asked to approve the financial statements at 31 December 2008 of Grandi Stazioni S.p.A., as submitted to you by the Board of Directors and which are currently being audited, pursuant to article 2409 of the Italian Civil Code, by PricewaterhouseCoopers SpA; they feature a net profit of 15,019,576 Euros, and a legal reserve that has reached the limit referred to in article 2430 of the Italian Civil Code. Therefore, we propose to allocate the profits for the 2008 business year as follows: 12,000,096 Euros, equal to approximately 80% of the profits for the business year, to the shareholders, with the payment of a dividend of Euros for each of the 83,334 shares; The remaining 20%, amounting to 3,019,480 Euros, to the extraordinary reserve. We would remind you that, with the approval of the financial statements for 2008, the Board of Directors term of office will expire. We therefore ask you to proceed as required. Thank you for the trust and confidence placed in us. On behalf of the Board of Directors The Chairman Mauro Moretti Financial Statements at 31 December

49 SCHEDULES OF ACCOUNTS Financial Statements at 31 December

50 Financial Statements as at Dec Dec-2007 diff Assets and Liabilities Statement: Assets A) Owed by shareholders for payments due B) Fixed assets I intangible assets 1)set-up and expansion costs )research & development and advertising costs )industrial patent rights and use of original works )concessions, licences, trademarks &similar rights 101, ,838 (537,342) 5)goodwill )assets under construction and down payments 121,944,525 75,508,115 46,436,410 7)other intangible assets 27,230,182 29,086,716 (1,856,534) total intangible assets 149,276, ,233,669 44,042,534 II tangible assets 1)land and buildings 51,446,425 76,813,769 (25,367,344) 2)plant and machinery )industrial and commercial equipment 208,653 79, ,206 4)other assets 1,606, , ,781 5)assets under construction and down payments 26,581,508 32,053,550 (5,472,042) total tangible assets 79,842, ,890,308 (30,047,399) III financial assets 1)financial assets - shareholdings a) stakes in subsidiary companies 4,080,176 4,194,584 (114,408) b) stakes in affiliate companies c) stakes in parent companies d) stakes in other companies total financial assets - shareholdings 4,080,176 4,194,584 (114,408) 2) financial assets - receivables a) receivables from subsidiary companies - within next year after next year total receivables from subsidiary companies b) receivable from associate companies - within next year after next year total receivables from associate companies c) receivable from parent company - within next year after next year total receivables from parent company d) receivable from others - within next year after next year - 22,129 (22,129) total receivables from others - 22,129 (22,129) total financial assets - receivables - 22,129 (22,129) 3) financial assets - other securities ) financial assets - own shares total financial assets 4,080,176 4,216,713 (136,537) total fixed assets 233,199, ,340,690 13,858,598

51 C) current assets I inventories 1)raw and subsidiarymaterials and consumables )products being processed and semi-finished goods )work in progress to order 15,644,796 12,893,071 2,751,725 4)finished products on goods )down payments )written-off assets for disposal )property inventories for sale 40,631,083-40,631,083 total inventories 56,275,879 12,893,071 43,382,808 II receivables 1)receivables: from customers - within next year 47,305,207 51,692,986 (4,387,779) - after next year 9,255,479 5,013,461 4,242,018 total receivables from customers 56,560,686 56,706,447 (145,761) 2)receivables: from subsidiary companies - within next year 235, ,907 (207,148) - after next year total receivables from subsidiary companies 235, ,907 (207,148) 3)receivables: from associate companies - within next year after next year total receivables from associate companies )receivables: from parent company - within next year 26,193,128 23,832,785 2,360,343 - after next year total receivables from parent company 26,193,128 23,832,785 2,360,343 4-bis) tax receivables - within next year 639, , ,745 - after next year 3,354,076 3,869,960 (515,884) total tax receivables 3,993,323 4,314,462 (321,139) 4-ter) pre-paid taxes - within next year 2,549,264 2,201, ,522 - after next year 1,548,501 1,366, ,647 total pre-paid taxes 4,097,765 3,568, ,169 5)receivables: from others a) other affiliated companies - within next year 35,975,523 30,518,250 5,457,273 - after next year total receivables from other affiliated companies 35,975,523 30,518,250 5,457,273 b) others - within next year 9,647,469 8,539,370 1,108,099 - after next year 7,660 6,540 1,120 total receivables from other parties 9,655,129 8,545,910 1,109,219 total receivables: from others 45,630,652 39,064,160 6,566,492 total receivables 136,711, ,929,357 8,781,956

52 III current financial assets 1)stakes in subsidiary companies 5,791-5,791 2)stakes in associate companies )stakes in parent company )other stakes )own shares )other securities total current financial assets 5,791-5,791 IV cash funds 1)bank and post-office deposits 6,617,174 6,800,224 (183,050) 2)cheques 5,656-5,656 3)cash and cash equivalents at hand 6,286 6,293 (7) total cash funds 6,629,116 6,806,517 (177,401) total current assets 199,622, ,628,945 51,993,154 D)prepaid expenses and accrued income - disagio on loans other accruals and deferrals 829, ,461 (8,428) total prepaid expenses and accrued income 829, ,461 (8,428) total assets 433,650, ,807,096 65,843,324

53 31-Dec Dec-2007 diff assets and liabilities: liabilities A)shareholders' equity I share capital 4,304,201 4,304,201 - II share premium reserve 58,308,624 58,308,624 - III revaluation reserve IV legal reserve 860, ,840 - V reserve for own shares held VI statutory reserves VII other reserves 18,331,647 15,648,523 2,683,124 VIII profits (losses) carried forward IX profits (losses) for the business year 15,019,576 13,415,620 1,603,956 B)provision for risks and charges total shareholders' equity 96,824,888 92,537,808 4,287,080 1) retirement entitlements funds and suchlike ) provision for taxes incl. deferred taxes ) other funds 4,103,007 2,389,921 1,713,086 total provision for risks and charges 4,103,007 2,389,921 1,713,086 C)staff severance indemnity 2,452,318 2,742,680 (290,362) D)payables 1) payables: debentures - within next year after next year total debentures ) payables: convertible debentures - within next year after next year total convertible debentures ) payables to shareholders for loans - within next year after next year total payables to shareholders for loans ) payables to banks - within next year 4,728, ,310 4,556,881 - after next year 159,354, ,701,399 26,653,261 total payables to banks 164,082, ,872,709 31,210,142 5) payables to other financers - within next year after next year total payables to other financers ) payables: down payments - within next year 11,777,944 8,076,104 3,701,840 - after next year total down payments 11,777,944 8,076,104 3,701,840

54 7) payables: to suppliers - within next year 101,421,780 76,816,795 24,604,985 - after next year total payables to suppliers 101,421,780 76,816,795 24,604,985 8) payables consisting of credit instruments - within next year after next year total payables consisting of credit instruments ) payables to subsidiary undertakings - within next year - 37,325 (37,325) - after next year total payables to subsidiary undertakings - 37,325 (37,325) 10) payables to associate companies - within next year after next year total payables to associate companies ) payables to parent company - within next year 3,641,250 5,493,340 (1,852,090) - after next year total payables to parent company 3,641,250 5,493,340 (1,852,090) 12) tax payables - within next year 1,834,867 2,110,398 (275,531) - after next period total tax payables 1,834,867 2,110,398 (275,531) 13) payables to social insurance agencies - within next year 1,039,289 1,141,040 (101,751) - after next year total payables to social insurance agencies 1,039,289 1,141,040 (101,751) 14) other payables a)to other affiliated companies - within next year 13,331,573 10,578,245 2,753,328 - after next year total payables to other affiliated companies 13,331,573 10,578,245 2,753,328 b) to other parties - within next year 14,269,962 13,483, ,720 - after next year 166, ,784 (9,827) Total payables to other parties 14,436,919 13,660, ,893 E)accrued expenses and deferred income Total other payables 27,768,492 24,238,271 3,530,221 total debts 311,566, ,785,982 60,780,491 other accrued expenses and deferred income 18,703,734 19,350,705 (646,971) agio on loans total accrued expenses and deferred income 18,703,734 19,350,705 (646,971) total liabilities 433,650, ,807,096 65,843,324

55 31-dic dic-2007 diff memorandum accounts 1) accrued liabilities for leased property ) accrued liabilities for commitments ) sistema improprio dei rischi 500, , total memorandum accounts 500, ,

56 31-Dec dic-2007 diff profit and loss account A) production value 1. income from sales and services 174,149, ,701,169 11,447, var. in inventories for work in progr.on properties intended for sale 8,050,959-8,050, var. in work in progress 2,751,725 3,756,687 (1,004,962) 4. fixed-asset increases for in-house works 2,267,686 2,172,716 94, other income and revenue a) other misc. income and revenue 4,385,610 12,613,564 (8,227,954) b) grants for current expenses 1,188,286 1,188,286 - total other income and revenue 5,573,896 13,801,850 (8,227,954) B)production costs total production value 192,793, ,432,422 10,360, raw & subsid. mater. consumables & goods 444, , , services costs 95,174,254 84,761,061 10,413, use of third-party assets 35,236,933 33,067,400 2,169, personnel costs a) wages and salaries 10,713,760 10,609, ,272 b) social security contributions 3,290,409 3,259,210 31,199 c) staff severance indemnity 818, ,092 16,270 d) retirement entitlements and similar costs e) other costs 689, , ,734 total personnel costs 15,512,480 14,775, , depreciation and write-downs a) amortisation of intangibles 4,222,456 4,368,398 (145,942) b) depreciation of tangibles 2,553,023 3,465,271 (912,248) c) other write-downs of fixed assets 417,869 3, ,875 d) write-downs of current receiv. & cash funds 3,380,375 3,353,332 27,043 total depreciation and writedowns 10,573,723 11,190,995 (617,272) 11. var. in raw&subs.mats,consum.&goods inv provision for risks 2,034,219 1,313, , other provision and allocations sundry management costs 6,587,459 7,668,741 (1,081,282) total production costs 165,563, ,115,580 12,447,943 Difference between production value and costs(a-b) 27,229,851 29,316,842 (2,086,991)

57 C) Financial revenues and expenses 15. revenues from shareholdings from subsidiary companies 2,595, ,000 2,095,861 from associate companies from parent company others total revenues from shareholdings 2,595, ,000 2,095, other financial revenues a) from fixed-asset receivables from subsidiary companies from associate companies from parent company others total financial revenues from fixed-asset receivables b) from securities entered as fixed assets c) from securities entered as current assets d) financial revenues other than the above from subsidiary companies from associate companies from parent companies 1,609,967 1,747,926 (137,959) others 620, , ,262 total financial revenues other than the above 2,229,994 2,156,691 73,303 total other financial revenues 2,229,994 2,156,691 73,303 total financial revenues 4,825,855 2,656,691 2,169, interest payable and other financial expenses to subsidiary companies 25,581-25,581 from associate cmpanies from parent company others 8,249,894 5,957,712 2,292,182 total interest and other financial expenses 8,275,475 5,957,712 2,317, bis profits (losses) on exchange rates total interest and other financial expenses 8,275,475 5,957,712 2,317,763 D) Value adjustments on financial assets total financial revenues and expenses (3,449,620) (3,301,021) (148,599) 18. upward adjustments a) on shareholdings b) on financial fixed assets c) on securities entered as current assets total upward adjustments downward adjustments a) on shareholdings 14,195 19,787 (5,592) b) on financial fixed assets c) on securities entered as current assets 4,746-4,746 total downward adjustments 18,941 19,787 (846) total value adjustments on financial assets (18,941) (19,787) 846

58 E) extraordinary income and expenses 20. extraordinary income capital gains from sales others 2,019 3,653 (1,634) total extraordinary income 2,019 3,653 (1,634) 21. extraordinary expenses capital losses from sales previous years' taxes 113,266 36,495 76,771 others 84, ,456 (701,110) total extraordinary expenses 197, ,951 (624,339) total extraordinary income and expenses (195,593) (818,298) 622,705 Pre-tax result (A-B)+C+D+E 23,565,697 25,177,736 (1,612,039) 22. income tax for the year current taxes 9,075,290 12,307,784 (3,232,494) deferred and pre-paid taxes (529,169) (529,168) (1) income from tax consolidation - (16,500) 16,500 total income tax 8,546,121 11,762,116 (3,215,995) 23. profit (loss) for the year 15,019,576 13,415,620 1,603,956

59 NOTES TO THE FINANCIAL STATEMENTS Financial Statements at 31 December

60 SECTION 1: Form and content of the financial statements The financial statements at 31 December 2008 comprise the Assets and Liabilities Statement, the Profit and Loss Account and the Notes to the Financial Statements; attached to the Notes is the Financial Analysis. As regards the company s activities and significant events after the reporting period, reference should be made to the Report on Operations, which also contains detailed information on related party transactions with its subsidiary companies and parent company, and with companies controlled by the latter, and with other affiliated and associated parties of controlled companies, besides the transactions with the company exercising management and coordination activities and the other companies subject to it. The tables are stated in Euros, as are the amounts included in the notes to the financial statements, unless otherwise specified. The Assets and Liabilities Statement and the Profit and Loss Account feature a comparison with the figures posted at 31 December The auditing provided for under article 2409-bis of the Italian Civil Code is carried out by PricewaterhouseCoopers S.p.A.. The company has not prepared consolidated financial statements, despite the fact that it holds a controlling stake in other companies, on the basis of the exemption under paragraph 3 of article 27 of Legislative Decree 127/1991, as the consolidated statements are prepared by the parent company Ferrovie dello Stato S.p.A., with registered office in Rome, Piazza della Croce Rossa 1. Lastly, the company is subject to the management and coordination activities of the parent company, Ferrovie dello Stato S.p.A.. Financial Statements at 31 December

61 SEZIONE 2: Accounting principles and valuation criteria These financial statements have been prepared in accordance with the applicable statutory regulations, supplemented by the national accounting standards and, if applicable, by the International Financial Reporting Standards (IFRS). The evaluation criteria are consistent with those applied for the previous year's financial reporting and with those applied by the Parent Company, with the sole exception of the criteria used for capital account contributions, for which the accrued-expenses method has been adopted. The different classifications made at 31 December 2008, in respect of certain items, with a view to better representing the asset-related, financial and economic situation of the company, have also been adopted for the corresponding comparison figures, in accordance with article 2423ter(5) of the Italian Civil Code. The comments on the single items regularly contain the value of the single reclassifications made with respect to the closing balances of the comparison years. Intangible assets These are recorded at purchase or internal creation cost, including any direct ancillary charges and minus the depreciation charges, calculated on a straight-line basis according to the remaining useful life of each asset. Any intangible assets whose value, at the end of the year, was durably lower than their book value have been recorded at the lower value. Should the reason for the write-down cease to apply, the value of each asset is reinstated, within the limits of the write-downs made. Any write-ups are made in accordance with the applicable special, general or sectoral regulations. Licences, concessions, trademarks and similar rights have been depreciated in accordance with their useful life as provided by the related agreements. Intangible assets under construction and down-payments are recorded at their historical cost and not depreciated until full title to them has been acquired or the relevant project completed and their economic utilization started. At that moment the values are reclassified under the respective intangibles items. Other intangible assets refers to costs for improvements to and increasing the value of thirdparty property and are recorded at their historical cost and depreciated over the shorter of either the future useful life of the expenses incurred or the remaining term of the lease, taking account of any renewals, if this depends on the tenant. Tangible assets These are recorded at purchase or internal creation cost, including any direct ancillary charges, minus any depreciations. Any tangible assets whose value, at the end of the year, was durably lower than their book value have been recorded at the lower value. If the causes determining the write-downs cease, the values of the assets are restored within the limits of the write-downs made. Financial Statements at 31 December

62 Any write-ups are made in accordance with the applicable special, general or sectoral regulations. Maintenance costs are charged to the profit and loss account, while any expenses increasing the value of the assets are capitalized with respect to the relevant asset. Depreciations are calculated systematically and on a straight-line basis, applying the rates deemed representative of the estimated useful economic and technical life of the asset. In the year of purchase or production a rate equal to 50% of the ordinary rate is applied. The following table gives the depreciation rates applied: Rate Buildings 3% Plant and machinery 15% Industrial/commercial equipment 20% Other assets: - Furniture and fittings 12% - Electronic machines 20% - Office equipment 40% - Vehicles 25% Tangible assets that are no longer uses and are set aside for sale, transfer or destruction, are reclassified among the working assets, under inventories, and reported at the lower of the net accounting value or the net realisable value. Financial assets Shareholdings These are valued at purchase or subscription cost, including any direct ancillary charges, adjusted, if necessary, for any lasting impairment in value. Any impairment in value in excess of the corresponding book values is recorded under the provisions for risks and charges. Should the reason for the write-downs cease to apply, the value of the shareholding is reinstated to no more than its original cost. Shareholdings in respect of which strategic disposal decisions have been made, have been transferred to the current assets and are stated at the lower of the book value or the expected realisable value. Receivables Receivables are stated at their nominal value, corresponding to the expected realisable value. Financial Statements at 31 December

63 Inventories Inventories are stated at the lower of the purchase/creation cost or the expected realisable value. Works in progress against order book are recorded on the basis of the consideration agreed to, according to the progress achieved and based on the costs incurred ( cost to cost method). In the event a loss is forecasted on completion of the works, this shall be entirely recorded in the period in which it becomes known. Inventories of properties intended for sale are recorded at the purchase cost, including charges at 31 December for improvements made. Receivables and payables Any receivables are recorded at their expected realisable value, by reporting them in an offsetting reserve for bad debts. Payables are recorded at their nominal value. Payables relating to any holidays accrued but not taken by employees at the end of the year consist of an estimate of amounts to be paid out as allowances and charges reflected in the period of use of the holidays. Liquid assets Are recorded at nominal value. Accruals and deferrals These items included proportions of expenses and revenues, shared by two or more periods, for accruals accounting purposes. Provisions for risks and charges These include amounts set aside in order to take account of losses of a well-defined nature and whose existence is either certain or probable. Risks and charges are also assessed including any liabilities that have become known after the accounting period and until the date of these financial statements. The provisions are deemed sufficient to address any impairments in value and related charges. Employee severance fund The employee severance fund expresses the amount accrued and payable to employees, calculated in accordance with the applicable statutory regulations and employment contracts in force, and is re-valued every year in accordance with the provisions of article 2120 of the Italian Civil Code. Memorandum accounts Surety is recorded at the amount corresponding to the secured debt. Foreign-currency items Shareholdings Financial Statements at 31 December

64 Shareholdings are recorded at the exchange rate current at the time they were purchased, or at the lower rate at the end of the period, if the drop in value is deemed to be lasting. When the reduction consequent to the write-down made as a result of the drop in the exchange rate is no longer deemed to be lasting, the original value is reinstated at no more than the historical cost. Any net profit made is allocated to a reserve that cannot be distributed until the profit is actually realised, while a lasting impairment in value unrelated to the exchange rate may be increased or offset by the exchange effects. Payables Payables are recorded at the spot exchange rate current at the end of the period. Any profit or loss resulting from collections or payments before the end of the period, or arising from the assessment of any receivables or payables collected or paid after the period, are recorded separately in the profit and loss account. Revenues and costs Revenues and costs are recorded in the financial statements in accordance with the principles of prudence and competence. Revenues are recorded minus any returns, discounts, allowances and rewards, and also minus any taxes on the sale of goods and the supply of services. Costs are also recorded minus any returns, discounts, allowances and rewards. Contributions Into the trading account These are recorded on an accruals basis in the period in which they become due and payable, regardless of when they are collected. Into the capital account Capital account contributions received from the State are recorded when they accrue in the accrued expenses and deferred income and subsequently transferred to the profit and loss account, in accordance with the depreciation of the fixed assets to which they are related. Into the property, plant and equipment account These are used directly to reduce the cost incurred in respect of the assets. They are recorded on an accruals basis from the moment in which they become due and payable. Dividends Dividends are recorded in the period in which their distribution is decided. Income tax Income taxes are recorded on an accruals basis on the basis of a realistic forecast of the tax charges to be paid in accordance with the applicable tax regulations. Deferred taxes are recorded based on the temporary taxable differences, and also, if the necessary requirements of certainty are complied with, the future tax benefits arising in Financial Statements at 31 December

65 connection with either deductible temporary differences or tax losses that can be carried forward. Financial Statements at 31 December

66 SECTION 3: Analysis of the financial statement items and changes Financial Statements at 31 December

67 ASSETS AND LIABILITIES STATEMENT: ASSETS FIXED ASSETS Intangible assets This item minus the provisions for depreciation - totals 149,276,203, up by 44,042,534 - minus depreciation - compared to 31 December The following pages feature, respectively, an analysis of the changes relating to Original cost (Table 1), Depreciation and write-downs (Table2) and Net values (Table 3). INTANGIBLE ASSETS ORIGINAL COST* Table 1 Value at Increases* Decreases for disposals Writeups Transfers from WIP and reclassification Other changes Value at Set-up and expansion costs - Set-up and capital increase costs 34,603 34,603 34,603 34,603 Research & Development and Advertising costs - Advertising expenses 848, , , ,244 Concessions, licences, trademarks and similar 4,275,255 43,064 4,318,319 rights Assets under construction and down payments - Assets under construction and down payments 98,534,907 54,345,153 (359,732) (419,977) 152,100,351 - Contributions into property plant & equipment account (23,026,792) (7,129,034) (30,155,826) 75,508,115 47,216,118 (359,732) (419,977) 0 121,944,525 Other 48,977,766 1,393, ,933 50,763,281 TOTAL 129,643,983 48,652,765 (359,732) (28,044) 0 177,908,972 * including capitalizations Financial Statements at 31 December

68 Table 2 INTANGIBLE ASSETS Value at PROVISION FOR DEPRECIATION AND WRITE-DOWNS Increases Decreases for disposals Reinstatement of value Reclassifications Other changes* Values at Set-up and expansion costs - Set-up and capital increase costs ,603 - depreciation 34,603 34,603 34,603 34,603 Research & development and advertising costs - Advertising expenses 848, ,244 - depreciation 848, , , ,244 Concessions, licences, trademarks and similar rights - depreciation 3,636, ,406 4,216,823 3,636, ,406 4,216,823 Other - depreciation 19,891,050 3,642,050 23,533,100 19,891,050 3,642,050 23,533,100 TOTAL 24,410,314 4,222,456 28,632,770 Table 3 INTANGIBLE ASSETS Original cost NET VALUES Provision Provision for for Original depreciation Net values depreciation cost and writedowns and writedowns Net values Set-up and expansion costs - Set-up and capital increase costs 34,603 34,603-34,603 34,603-34,603 34,603-34,603 34,603 - Research & development and advertising costs - Advertising expenses 848, , , , , , , ,244 - Concessions, licences, trademarks and similar rights 4,275,255 3,636, ,838 4,318,319 4,216, ,496 Assets under construction and down payments 98,534,907-98,534, ,100, ,100,351 - Contributions into property plan & equipment account (23,026,792) - (23,026,792) (30,155,826) (30,155,826) 75,508,115-75,508, ,944, ,944,525 Other 48,977,766 19,891,050 29,086,716 50,763,281 23,533,100 27,230,182 TOTAL 129,643,983 24,410, ,233, ,908,972 28,632, ,276,203 Financial Statements at 31 December

69 The concessions, licences, trademarks and similar rights item is up by 43,064, as a result of costs incurred for purchasing user licences for a fixed term and the updating and development of the company management IT system. The Assets under construction and down payments item, up by 53,565,444 - including contributions paid into the accounts - comprises: 52,343,497 for the capitalization of external costs and 1,221,946 of internal costs. The external costs are related to the designs and redevelopment works under way in stations, primarily the Milan, Turin and Naples stations; the decreases concern the transfers and reclassifications made, primarily with respect to "other fixed assets", for completed and commissioned works, totalling 419,977, and down payment reversals, posted in previous years, which have been reduced against invoices to be received following the adjustment/termination of contracts, totalling 359,732. The contribution of is related to the contributions into the property plant and equipment account, accruing with respect to the complementary station complex works under way, as approved within the framework of the strategic infrastructure programme (Law 443/2001 the so-called Objective Law). The Other intangible assets item is up by 1,393,583, primarily as a result of the capitalization of the proportion of costs relating to the technical structure of Grandi Stazioni (1,025 thousand Euros), employed in connection with the station complex redevelopment projects (the costs are depreciated over three years). The reclassifications for 391,933 are due to the expenses incurred for overseas contracts which have been concluded and posted under depreciation. Lastly, no write-ups of any kind were made and there are no intangibles acquired under financial leases. Financial Statements at 31 December

70 Tangible assets This item - minus the provisions for depreciation - totals 79,842,909, down by 30,047,399 - minus depreciation - compared to 31 December The following pages feature, respectively, an analysis of the changes relating to Original cost (Table 1), Provisions for depreciation and write-downs (Table 2) and Net values (Table 3). Table 1 TANGIBLE ASSETS Value at Increases* Decreases for disposals ORIGINAL COST Writeups Transfers from WIP and reclassifications Other changes** Value at Land and buildings - historical cost 95,001,398 (28,973,468) 66,027,930 95,001,398 (28,973,468) 66,027,930 Plant & machinery - historical cost 59,184 59,184 59,184 59,184 Industrial/commercial equipment - historical cost 807, , , , , ,044 Other assets - historical cost 4,323,315 1,162,546 (63,962) 28,044 5,449,943 4,323,315 1,162,546 (63,962) 28,044 5,449,943 Assets under construction and down payments - historical cost 32,053,550 4,139,445 (9,193,618) 26,999,377 32,053,550 4,139,445 0 (9,193,618) 26,999,377 TOTAL 132,244,691 5,492,791 (63,962) (38,139,041) 99,534,479 Financial Statements at 31 December

71 Table 2 TANGIBLE ASSETS Value at PROVISION FOR DEPRECIATION AND WRITE-DOWNS Increases Decreases Reinstatement Reclassifications Other for of value changes* disposals Values at Land and buildings - depreciation 18,187,629 1,980,838 (5,586,962) 14,581,505 18,187,629 1,980,838 (5,586,962) 14,581,505 Plant & machinery - depreciation 59,184 59,184 59,184 59,184 Industrial/commercial equipment - depreciation 727,797 61, , ,797 61, ,391 Other assets - depreciation 3,379, ,591 (46,744) 3,843,620 3,379, ,591 (46,744) 3,843,620 Assets under construction and down payments - write-downs 417, ,869 TOTAL 22,354,383 2,553,023 (46,744) (5,586,962) 417,869 19,691,569 Tabella 3 TANGIBLE ASSETS Original cost NET VALUES Provision Net values Original Provision for cost for depreciation depreciation and writedowns and writedowns Net values Land and buildings 95,001,398 18,187,629 76,813,769 66,027,930 14,581,505 51,446,425 Plant & machinery 59,184 59,184-59,184 59,184 - Industrial/commercial equipment 807, ,797 79, , , ,653 Other assets 4,323,315 3,379, ,543 5,449,943 3,843,620 1,606,323 Assets under construction and down payments 32,053,550-32,053,550 26,999, ,869 26,581,508 TOTAL 132,244,691 22,354, ,890,308 99,534,479 19,691,569 79,842,909 Land and Buildings refers to the buildings adjacent to the stations of Roma Termini, Napoli Centrale, Venezia Santa Lucia and Genova Porta Principe (purchased on 29 March 2001 by the Parent Company) and to the property complexes located in Bologna and Florence (purchased on 20 December 2001 from Poste Italiane S.p.A.). Regarding the building located in the vicinity of Venezia Santa Lucia station, intended for sale to the Veneto Region at the end of the year, Financial Statements at 31 December

72 was reclassified among the property inventories intended for sale, with respect to the original purchase value (for 28,973 keuros), to the improvements carried out in previous reporting periods (for 9,194 keuros) and to the related provision for accumulated depreciation (for 5,587 keuros). The Rome, Venice and Naples properties are encumbered by mortgages totalling 80 million Euros. Industrial/commercial equipment concerns the telephone systems; the 190,800 is primarily due to the purchase of new network equipment. Other assets refers to office equipment, electronic machines, furnishings and fittings, vehicles and other general goods. The 1,162,546 increase is primarily due to the purchase of: office equipment ( 239,018), office furniture and fittings ( 836,620). The increase in assets under construction and down payments of 4,139,445 was the result of the improvements under way on the company-owned real estate, including the proportion of the capitalization of internal costs for 20,080. Tangible assets in the period underwent depreciation as a result of the application of the representative rates of the economic and technical life of the assets. No write-ups of any kind were carried out in connection with the tangible assets. Regarding the financial leased equipment (1,200 self-service luggage trolleys for each - terms of the lease: 60 instalments of 6,809 Euros totalling 408,559), and the office furniture and fittings acquired through the transfer of a Fercredit financial lease contract from Trenitalia to Grandi Stazioni, the table below gives a detailed overview of the effects on the company s financial statements if the financial method rather than the equity method were used. In particular: effects on the assets: Financial leased assets Gross value MOVEMENTS IN THE YEAR Use of Value Value Accumulated Net Buybacks for prov. adj./ Acquisitions Depreciations adj./ depreciation value reinst. reinst. buybacks Net value Group: - Industrial/commercial equipment Third parties: - Industrial/commercial equipment 786,792 (185,127) 601, , , ,300 ( 76,200) 38,100 TOTAL (a) 381, , , ,792 - (261,327) - 639,765 Financial Statements at 31 December

73 Effects on the liabilities: Implicit debts resulting from financial leasing transactions Value at MOVEMENTS IN THE YEAR Increases Reimbursement of capital shares Buy-backs Reclassifications Value at Group: - falling due between 1 and 5 yrs 599,476 (109,195) 490,281 - falling due beyond 5 yrs Third parties - falling due between 1 and 5 yrs 129,125 (78,891) 50,234 - falling due beyond 5 yrs TOTAL (b) 129, ,476 (188,086) 540,515 Effects on the shareholders equity: Description Gross overall effects (a - b) 73,241 Tax effects (23,591) EFFECTS ON THE SHAREHOLDERS EQUITY 49,650 Effects on the profit and loss account: Description 2008 Group: Reversal of instalments on financial leasing transactions 122,685 Financial charges recorded on financial leasing transactions (13,490) Recording of: - depreciations: (185,127) - value adjustments/reinstatements of financial leased assets (75,932) Third parties: Reversal of instalments on financial leasing transactions 81,712 Financial charges recorded on financial leasing transactions (2,821) Recording of: - depreciations: (76,200) - value adjustments/reinstatements of financial leased assets 2,691 EFFECTS ON RESULTS BEFORE TAX (73,241) Tax effects 23,591 EFFECTS ON OPERATING RESULTS (49,650) Financial Statements at 31 December

74 Financial assets Financial assets: Stakes in subsidiary companies This item totals 4,074,244, and is down by 120,340 compared to 31 December Below is a detailed table of the movements of this item during the period: Stakes in subsidiary companies Value at MOVEMENTS IN THE YEAR Increases Decreases Writeups Reinstatement of value Reclassifications Value at Original cost Grandi Stazioni Servizi Srl 10,000 (10,000) - Grandi Stazioni Immobiliare 90,000 (90,000) - Srl Grandi Stazioni Edicole Srl 20,000 (20,000) - Grandi Stazioni Pubblicità Srl 20,000 20,000 Grandi Stazioni Ingegneria 20,000 20,000 Srl Grandi Stazioni Ceska 4,054,371 4,054,371 Republika Sro Total (a) 4,214,371 - (100,000) - - (20,000) 4,094,371 Direct write-downs Grandi Stazioni Ingegneria - 5,918 5,918 Srl Grandi Stazioni Edicole Srl 10,324 8,277 (10,324) (8,277) - Grandi Stazioni Pubblicità Srl 9,463 4,746 14,209 Total (b) 19,787 18, (10,324) (8,277) 20,127 Provision for bad debts Total (c) Net value Grandi Stazioni Servizi Srl 10,000 (10,000) - Grandi Stazioni Immobiliare 90,000 (90,000) - Srl Grandi Stazioni Edicole Srl 9,676 (8,277) 10,324 (11,723) - Grandi Stazioni Pubblicità Srl 10,537 (4,746) 5,791 Grandi Stazioni Ingegneria 20,000 (5,918) 14,082 Srl Grandi Stazioni Ceska 4,054,371 4,054,371 Republika Sro TOTAL (a - b - c) 4,194,584 (18,941) (100,000) - 10,324 (11,723) 4,074,244 The stakes held by the company in Grandi Stazioni Servizi S.r.l. and Grandi Stazioni Immobiliare S.r.l., were written off after the closing of the liquidation procedure in December Grandi Stazioni Ingegneria Srl and Grandi Stazioni Pubblicità Srl in liquidation were written down following the final results reported for the period; Grandi Stazioni Edicole Srl was reclassified among the current financial assets, as it was intended for sale. The stake in Grandi Stazioni Česká Republika s.r.o. was not written down as the losses posted in previous years were not deemed to be lasting. The entire Financial Assets item refers to shareholdings in subsidiary companies, valued at purchase cost, and the book value of which was not re-valued during the period. Financial Statements at 31 December

75 The table below features a comparison between the book values of the shareholdings and the corresponding portion of equity owned. Part-owned companies Share capital Profit (loss) for the year Shareholders equity at % of stake Equity owned by company (a) Book value at (b) Difference (b) - (a) Subsidiary companies: Grandi Stazioni Pubblicità in liq. Srl 20,000 (4,746) 5, % 5,791 5,791 0 Grandi Stazioni Ingegneria Srl 20,000 (1,077) 14, % 14,216 14, Grandi Stazioni Ceska Republika Sro 4,054, ,000 8,088,000 51% 4,124,880 4,054,371 70,509 TOTAL 4,094, ,177 8,108,007 4,144,887 4,074,244 70,643 The following table gives the list of the registered offices of the subsidiary companies: Name of company Registered office Subsidiary companies Grandi Stazioni Pubblicità in liq. S.r.l. Roma Via G. Giolitti, 34 Grandi Stazioni Ingegneria S.r.l. Roma Via G. Giolitti, 34 Grandi Stazioni Ceska Republika Sro Praga (CZ) Narodni 6/1435 Financial assets: Receivables This item posted a balance amounting to zero, down 22,129, owing to the taking out of the EIB (European Investment Bank) loan replacing the one with the Monte dei Paschi di Siena bank, as a result of which the requirement that the liquid assets be tied up to guarantee the loan ceased to apply. Financial Statements at 31 December

76 CURRENT ASSETS Inventories The inventories, minus the provision for inventory write-downs, totalled 56,275,878, up by 43,382,808 compared to 31 December This item may be broken down as follows: Description Difference Work in progress 15,989,215 13,175,450 2,813,765 Provision for inventory write-downs (344,419) (282,379) (62,040) Net value 15,644,796 12,893,071 2,751,725 Property inventories intended for sale 40,631,083 40,631,083 Net value 40,631, ,631,083 TOTAL 56,275,878 12,893,071 43,382,808 The work in progress, relating to contract works not yet completed at , were recorded among the inventories, based on the contract prices set out in the agreements entered into with the parent company, which was then called Ferrovie dello Stato Società di Trasporti e Servizi per Azioni, now RFI S.p.A., on 21 February 1997 and 26 April 2000, and on the agreement of , which was extended to 31 December The increase recorded in the year, totalling 43,382,808, including the provision for contract risks, was the result of: 2,594 thousand: revenues from the Contract of , 12 Stations, of which 1,562 thousand relating to revenues from the activities for surveying, mapping, upgrading to safety standards and removal of the materials containing asbestos and artificial glass fibres in the stations referred to in the contract of (not including Roma Termini), carried out by the company on behalf of Rete Ferroviaria Italiana; 220 thousand: revenues from activities not included in the Contract of , 12 Stations, and not included in the Three-year Programme; 40,631 thousand: relating to the value of the District Headquarters building in Venice, intended for sale, including the works carried out during the period. The following table shows the movements in the year of the provision for inventory writedowns, highlighting the appropriations and releases relating to the expected losses. Financial Statements at 31 December

77 Provision for inventory write-downs Balance at Appropriations Use Release of excess funds Reclassifications Balance at Work in progress 282, ,229 (194,189) 344,419 TOTAL 282, ,229 (194,189) 344,419 Receivables This item totalled 136,711,313, up by 8,781,956 compared to 31 December All the receivables in question accrued in Italy, with the sole exception of the receivables from the subsidiary company Grandi Stazioni Céscka (see the paragraph on subsidiary companies ), a company incorporated under Czech law and belonging to the group other EU countries. Receivables: from customers Receivables from customers, minus the provision for bad debts, totalled 56,560,686, down by 145,761 compared to 31 December 2007 and may be broken down as follows: Description Variation Ordinary customers 62,191,714 61,095,933 1,095,781 Provision for bad debts (5,631,028) (4,389,486) (1,241,542) Net value 56,560,686 56,706,447 (145,761) TOTAL 56,560,686 56,706,447 (145,761) The value of receivables from customers is related to invoices issued for 32,994,213, to invoices that will be issued in the next 12 months for 19,942,022 and to invoices that will be issued beyond 12 months for 9,255,479. The change compared to 31 December 2007 is primarily the result of the increased turnover due to lease contracts, to the slowdown in credit collection relating to advertising and to the increase in bad debts handled by the legal department (+144 thousand Euros). The following table shows the movements in the year of the provision for bad debts, in respect of receivables from customers. Financial Statements at 31 December

78 Provision for bad debts from customers Balance at Appropriations Use Release of excess funds Reclassifications Balance at Ordinary customers 4,389,486 3,380,375 (2,138,833) 5,631,028 TOTAL 4,389,486 3,380,375 (2,138,833) 0 0 5,631,028 At 31 December 2008 the Provision for bad debts from customers was adjusted on the basis of the their expected collection. The use section concerns the amounts previously appropriated and written off, as a result of bankruptcies or final settlements. Receivables: from subsidiary companies This item totalled 235,759, down by 207,148 compared to 31 December Description Difference Commercial 31, ,684 (411,196) Financial: 223 (223) Other - miscellaneous 204, ,271 TOTAL 235, ,907 (207,148) This item refers to invoices issued for and not yet issued for 56,150. The credits for 204,271 concern the partial recovery of the sole directorship costs of the foreign subsidiary company, the sole director being currently employed by Grandi Stazioni S.p.A.. The entire amount of receivables from subsidiary companies is payable within 12 months. Financial Statements at 31 December

79 Receivables: from the parent company This item totalled 26,193,128, up by 2,360,343 compared to 31 December 2008, and may be broken down as follows: Description Difference Commercial 449, , ,736 Financial: - intra-group bank account 17,807,544 22,686,733 (4,879,189) Other - VAT transfers 5,259,399-5,259,399 - corporate income tax (consolidated tax) 2,677, ,675 1,807,376 - miscellaneous TOTAL 26,193,128 23,832,785 2,360,343 The decrease in the balance of the intra-group bank account is the result of the delays in the creditor and debtor flows with the group companies during the year. The increases concern: the corporate income tax credit - mainly due to the difference between the down payments made (9,472 thousand Euros) and the overall debt accrued at the end of the year (6,962 thousand Euros) - and the VAT credit transferred within the group consolidated accounts, resulting from payments made in the last quarter, including 174 thousand Euros in connection with Grandi Stazioni Servizi, which was wound up in December Receivables : Tax receivables Tax receivables totalled 3,993,323, down by 321,139 compared to 31 December This item refers (i) 3,354,076 to the remaining company tax credit (due beyond 12 months) assigned by Ferrovie dello Stato S.p.A. in 2004, used within the maximum limit provided for by the applicable statutory regulations (Legislative Decree 241/97), and (ii) 639,247 primarily for prepaid taxes paid to the internal revenue service with respect to tax disputes under way (amounting to 380 thousand Euros), the relevant risks having been accounted for in the related provisions and with respect to which petitions have been filed with the competent Tax Boards by the company; and an increase in prepaid corporate taxes paid during the year (totalling 256 thousand Euros). Financial Statements at 31 December

80 Receivables: Prepaid taxes This item totalled 4,097,765, a net increase of 529,169 compared to 31 December 2007, and may be broken down as follows: Description Balance at Increases Decreases Balance at IRES (corporate income tax) 3,242, , ,960 3,773,822 IRAP (regional tax on production activities) 325,614 91,996 93, ,943 TOTAL 3,568, , ,627 4,097,765 The amount of receivables collectible beyond 12 months totalled 1,548,501 and primarily relates to the recovery of contributions into the capital account, for 403,580, to the recovery of representation expenses, for 8,229, and to the recovery of the appropriations to the provision for risks, for 1,136,194. As regards the analysis of the temporary differences entailing the determination of advance taxes, and for other information relating to deferred taxation, reference should be made to the section on income taxes in these notes to the financial statements. Receivables: From others Receivables from others totalled 45,630,652, up by 6,566,492 - minus the valuation reserve - compared to 31 December 2007, and may be broken down as follows: Description Difference Other affiliated companies 35,975,523 31,528,788 4,446,735 Others - Personnel 23,144 33,518 (10,374) - Caution money received 171, ,395 46,515 - Down payments to suppliers 7,786,461 6,395,224 1,391,237 - Others 1,673,615 1,991,773 (318,158) Total receivables from others 9,655,129 8,545,910 1,109,219 Gross value 45,630,652 40,074,698 5,555,954 Provision for bad debts (1,010,538) 1,010,538 TOTAL 45,630,652 39,064,160 6,566,492 Financial Statements at 31 December

81 The most significant changes in this item are primarily the result of: the increased receivables from affiliated companies, which will be detailed below, and the increase in down payments to suppliers in connection with contractual obligations. The amount of receivables collectible beyond the next period totalled 7,660, and refers entirely to receivable caution monies deposited with respect to lease contracts in which the company is the lessee. The other receivables from affiliated companies are primarily of a commercial nature and may be broken down as follows (including the bad debts provision): Description Difference RFI S.p.A. for issued invoices 10,451,074 12,652,759 (2,201,685) RFI S.p.A. for invoices still to be issued 7,655,763 2,620,648 5,035,115 Other receviables from RFI S.p.A. 12,216 12,216 Trenitalia S.p.A. for issued invoices 1,004,433 10,406,441 (9,402,008) Trenitalia S.p.A. for invoices still to be issued 5,995, ,665 5,502,843 Ferservizi S.p.A. for issued invoices 428,496 1,158,178 (729,682) Ferservizi S.p.A. for invoices still to be issued 5,467, ,037 4,790,002 Metropark S.p.A. for issued invoices 99, ,751 (37,323) Metropark S.p.A. for invoices still to be issued 148,173 40, ,160 Italferr S.p.A. for issued invoices 4,150,631 3,300, ,058 Italferr S.p.A. for invoices still to be issued 493,969 21, ,699 T.a.v. treno alta velocità S.p.A. for issued invoices T.a.v. treno alta velocità S.p.A, for invoices still to be issued 10,969 5,746 5,223 16,394 4,493 11,901 Cisalpino Ag. for issued invoices 33, ,075 Cisalpino Ag. for invoices still to be issued 8, ,355 TOTAL 35,975,523 31,528,790 4,446,733 The upward change in this item is primarily the result of the combined effect of the significant drop in receivables for invoices issued to RFI and Trenitalia and to the increase in receivables from invoices still to be issued to RFI, Trenitalia and Ferservizi. Collections from RFI and Financial Statements at 31 December

82 Trenitalia were constant during the entire year, while there were considerable delays from Ferservizi. As regards receivables from RFI S.p.A., the release of the provision for bad debts from others appropriated in the previous year for should be highlighted, following the settlement of the dispute between the two companies in respect of the charging as regards condominium charges - of certain access surveillance and control services. The following table features the movements relating to the provision for bad debts, relating to receivables from others. Provision for bad debts from others Balance at Appropriations Use Release of excess funds Reclassifications Balance at RFI S.p.A. 1,010,538 (1,010,538) 0 TOTAL 1,010, (1,010,538) 0 0 Following is a detailed overview of the receivables from affiliated undertakings. Receivables from RFI S.p.A. : 18,119,053 Receivables from RFI S.p.A. consist of reimbursements for charges relating to operation/leasing and maintenance of station premises (10,938 keuros), fines paid for the failure to vacate premises located inside stations and in the buildings acquired by the company in 2001 (3,605 keuros), the completion of activities relating to the Site Supervision of works carried out in the stations (3,379 keuros), the receivables from the reverse-charging of costs in relation to the property in viale Castrense (185 keuros) and other receivables (12 keuros). Receivablels from Trenitalia S.p.A. : 6,999,941 Receivables from Trenitalia S.p.A. consist of reimbursements for charges relating to the operation/leasing and maintenance of station premises (1,812 keuros), fines for the failure to vacate premises inside the stations and in the buildings (4,821 keuros), invoices issued for rental fees in the Rome (106 keuros) and Bologna (3 keuros) stations and for real estate property owned by the company in the Rome station (192 keuros), the reimbursement of 50% of the registration tax (63 keuros) and reimbursements in connection with works carried out in the Rome station (2 keuros). Receivables from Ferservizi S.p.A.: 5,895,535 Receivables from Ferservizi S.p.A. consist of the reimbursement for charges relating to the operation/leasing and maintenance of station premises (2,580 keuros), the fines paid for the failure to vacate spaces located in the stations and in the buildings (3,285 keuros) and the fees for occupation of station premises (30 keuros). Financial Statements at 31 December

83 Receivables from Metropark S.p.A.: 247,601 Receivables from Metropark S.p.A. refer to invoices issued for leases relating to premises in Napoli Centrale (14 keuros) station and for the management of parking lots in the station of Verona Porta Nuova (85 keuros), and to invoices still to be issued for leases relating to premises in Roma Termini station (148 keuros). Receivables from Italferr S.p.A.: 4,644,600 Receivables from Italferr S.p.A. refer to leases relating to premises owned by the company and let out in the station of Florence (334 keuros), leases in the station of Roma Termini (3,791 keuros) and the reimbursement for operating/leasing and maintenance costs relating to premises in Roma Termini (389 keuros) and Florence (131 keuros) stations. Receivables from TAV S.p.A.: 27,363 These are related to leases (5 keuros) and operating/leasing and maintenance charges relating to premises (22 keuros) in Napoli Centrale station. Receivables from Cisalpino Ag..: 41,430 These are related to leases (26 keuros) and operating/leasing and maintenance charges relating to premises (15 keuros) in Milano Centrale station. Current financial assets This item, totalling approximately 12 keuros, concerns the reclassification, from financial fixed assets, of the subsidiary company Grandi Stazioni Edicole, which was transferred under working capital pending its sale, expected in Cash funds This item totalled 6,629,116, down by 177,401 compared to 31 December 2007, and may be broken down as follows: Description Difference Bank and post office deposits 6,617,174 6,800,224 (183,050) Cheques 5, ,656 Cash and cash equivalents at hand 6,286 6,293 (7) TOTAL 6,629,116 6,806,517 (177,401) The balance represents the liquid assets and cash and cash equivalents available at Financial Statements at 31 December

84 Changes to bank deposits are related to the ordinary management of liquid assets during the year; the decrease is due to the payments provided for in the last few days of December Prepaid expenses and accrued income This item totalled 829,033, down by 8,428 compared to 31 December Description Variation Deferrals - Rents payable Lease instalments 6,143 6, Subscriptions 9,301 3,248 6,053 - Insurance premiums 237, ,344 (12,934) - Software maintenance fees 73,048 76,815 (3,767) - City Advertising Tax 502, ,911 1,876 TOTAL 829, ,461 (8,428) This item refers primarily to deferrals of costs: insurance (237 keuros), city advertising tax (503 keuros), subscriptions (9 keuros) and software maintenance fees (73 keuros). At 31 December 2008, there were no accruals and deferrals relating to periods in excess of five years. Financial Statements at 31 December

85 ASSETS AND LIABILITIES STATEMENT: LIABILITIES Shareholders Equity This item totalled 96,824,888, up by 4,287,080 compared to 31 December The following table features the movements in shareholders equity in Composition of shareholders equity Balance at Appropriation of year s results Distribution of dividends Other changes Other Increases Decreases Reclassifications Result for the year Balance at Share capital 4,304,201 4,304,201 Share premium 58,308,624 58,308,624 reserve Legal reserve 860, ,840 Other reserves: - - Extraordinary reserve 15,648,523 2,683,124 18,331,647 Result for the year 13,415,620 (10,732,496) (2,683,124) 15,019,576 15,019,576 TOTAL 92,537,808 (10,732,496) ,019,576 96,824,888 The change in this item was due to the effects of the partial distribution of the profits from 2007 (80% of the result at ) and the allocation to the extraordinary reserve of the remaining 20%, plus the increase in the result for the year at 31 December Composition of the share capital The Share Capital, totalling 4,304,201.10, consists of 83,334 shares at each. At 31 December 2007 it was held as follows: - 60% of the share capital: Ferrovie dello Stato S.p.A. - 40% of the share capital: Eurostazioni S.p.A. Financial Statements at 31 December

86 The following table shows the origin, availability and distribution of the shareholders' equity items, and their use in the three previous years. Origin* Amounts at (a+b) Unavailable portion (a) Available portion (b) Distributable portion (b) Summary of use over previous three years Share capital increase Cover of losses Distribution to shareholders Other (specify) Share capital 4,304,201 Equity reserves: Share premium 58,308,624 58,308,624 58,308,624 reserve Profit reserves: Legal reserve 860, ,840 Extraordinary reserve 18,331,647 18,331,647 18,331,647 TOTAL 81,805, ,840 76,640,271 76,640,271 The company s bylaws feature no special limitations as regards the availability of the items shown in table (b). Provisions for risks and charges This item totalled 4,103,007, up by 1,713,086 compared to 31 December 2007, and may be broken down as follows: Description Balance at Appropriations Use Release of excess funds Reclassifications Balance at Other 2,389,921 2,034,219 (321,133) 4,103,007 TOTAL 2,389,921 2,034,219 (321,133) 4,103,007 The amount may be broken down as follows: 575,549 for tax-related disputes and 3,527,458 for civil-law disputes. The use of the provision, for 265,200, concerns to the closing of civillaw disputes to which allocations had been made in previous years. Financial Statements at 31 December

87 Civil-law disputes arisen in previous periods CBS Outdoor Holding SRL (ex Viacom Express) Viacom Express, the previous advertising contractor, in a writ of summons issued in 2004, requested the termination of alleged illegal behaviour attributed to Grandi Stazioni SpA, claiming the payment of damages in connection therewith, and to hold it harmless from any claims lodged by third parties against it in connection with the violations allegedly committed by Grandi Stazioni SpA. The company entered an appearance, requesting that all the plaintiff s claims be disallowed and, by way of counterclaim, to assess the damage caused to its honour and to its business reputation by the former advertising contractor, as a result of its own illegal conduct. In 2007, CBS Outdoor Holding SRL (the new name adopted by Viacom Express in the meantime) served a further summons to Grandi Stazioni SpA featuring a large number of petitions and applications, which in part had already been brought in 2004 and in part were new, totalling approximately 4,6 million Euros. The joinder of the proceedings was decided in 2008 and the case is due to be examined in the hearing in April 2009, when the conclusions of the proceedings are to be heard. The dispute is deemed likely to have a negative outcome and the provision for risks appropriated in previous years, for 1.3 million Euros, has been maintained. Various network users and customers Numerous suits brought against Grandi Stazioni S.p.A. are pending before various courts, relating to claims for damages between 2 and 100 keuros, for accidents that occurred inside the stations to network users and customers. Also, an individual user served a summons in 2007 on Grandi Stazioni SpA and Ferrovie dello Stato SpA with the request that they be ordered to pay the sum of 3 million Euros by way of damages for the accident which occurred to him in 2004 in the vicinity of Roma Termini station. Considering that suitable third-party liability insurance policies have been taken out, it is deemed that, in the event that it loses the cases, Grandi Stazioni will not incur significant costs. Newsstands of the ex Co.ve.s.circuit Many managers of the newsstands in stations and who belonged to the ex Co.ve.s (Cooperativa Vendita e Stampa) circuit, which was wound up in 1998, filed a number of petitions under article 447 bis of the Italian Civil Procedures Code, requesting Grandi Stazioni to acknowledge the existence of a commercial lease since 1 January Grandi Stazioni SpA, consistently with the view it had always held in its relations with the managers, filed an application claiming that there never was a valid lease and re-iterating that the premises were illegally occupied. For some of the suits, the defendants were both ordered to pay the company a fine for their protracted occupation without a lease, for the entire period until the premises were actually vacated. Financial Statements at 31 December

88 During 2008, the company reached settlement agreements with most of the newsagents; the object of these agreements was a new management model for this activity (so-called Associazione in partecipazione, or silent partnership agreement Project), to which the newsagents could adhere. The result was that, in the cases in which court proceedings were pending, the parties abandoned the court proceedings after ending the disputes by means of settlement agreements. The dispute in question cannot give rise to liabilities; rather, it can generate potential assets and risks in the realisation of receivables already posted, which have been taken into account in the valuation of these credits, to the extent of 0.6 million Euros. Romartificio SRL Grandi Stazioni SpA filed proceedings in 2007 against Romartificio SRL, requesting the Court to order the termination of the silent partnership contract dated 2002, which had meanwhile been terminated de jure, and the vacating of the premises occupied in the Roma Termini station, as well as the payment of credits due to it amounting to 0.1 million Euros. Romartificio SRL, which appeared at the hearing, requested damages totalling 16 million Euros by way of counterclaim. In 2008, the Magistrate deemed the case ready for a decision, and disallowed the Parties request to provide evidence, settling the date for the specification of the conclusions in October The decision has not yet been lodged. A negative outcome to this dispute is deemed highly unlikely; no allocation has therefore been made to the provision for risk, as in previous years. Consorzio Alberghi del Territorio Veneto The Consorzio Alberghi del Territorio Veneto (Veneto consortium of hotels), filed a petition, served in 2007, under article 447 bis of the Italian Civil Procedures Code, requesting repayment of the alleged excess amount unduly paid by way of rental fee. The company appeared at the hearing. challenging all of the opposing party s requests as unfounded. Since the company is a creditor as regards the consortium for the latter s failure to pay its rental fees, the risk to the realisation of the posted credits has been taken into account in the valuation of these credits. Civil-law suits that arose during the year Suppliers One supplier initiated proceedings with a petition and injunction against Grandi Stazioni SpA ordering the acknowledgement of a consideration for the rental of advertising space, for 0.1 million Euros. The company challenged the request in its entirely. The case is postponed to October 2009 for the questioning and formal examination of witnesses. Financial Statements at 31 December

89 As matters stand, a negative outcome appears likely and an allocation to the provision for risks has been made. Advertising agents Grandi Stazioni SpA has initiated court proceedings to assess the termination of the agency contracts and requesting that the company s former advertising agents be ordered to pay damages resulting from contractual non-fulfilment, for an amount to be established during the court proceedings, and not less than 6 million Euros. The former agents appeared at the hearing, requesting, by way of counterclaim, that the court establish that the contract had been terminated owing to non-fulfilment by Grandi Stazioni SpA and that the company be ordered to pay the commissions, over commissions and premiums on concluded business transactions for 3.8 million Euros, damages due to non-performance and earlier termination of contract for 42.3 million Euros, and agency fees, as provided for in article 1751 of the Italian Civil Code, for 8.3 million Euros, for a total of 54.4 million Euros. As matters stand, a negative outcome appears likely with respect to commissions and agency fees and possible with respect to the payment of damages; therefore, the commissions deemed payable were posted as debts, and the disputed commissions and fines for termination of the agency contract were allocated to the provision for risks. Works contractors The Temporary Consortium of Enterprises which was awarded the works contract for the North-West allotment brought court proceedings requesting the termination of the contract for the executive project design and the functional upgrading works of the station buildings and complementary infrastructural works relating to the railway stations of Venezia Mestre, Venezia S. Lucia and Verona Porta Nuova, and an order that Grandi Stazioni SpA pay 3.3 million Euros for lost profit, 0.1 million Euros for services performed but not accounted for, 0.3 million Euros for incomplete accounting of works carried out, 3.6 million Euros for unpaid project design services and 8.6 million Euros for damages. Subordinately, the Temporary Consortium of Enterprises requested that the company be ordered to allow contract performance, besides paying the same TCE 17.6 million Euros in connection with the provisions posted in the accounts with respect to the contracted works. As matters stand, a negative outcome appears possible but cannot be foreseen, and no allocation has been made to the provision for risks. Tax disputes arisen in previous periods In 2001, the Guardia di Finanza (Italian finance police) served a Processo Verbale di Constatazione (official Notice of Assessment) charging the company with failure to withhold tax on employee incomes for the years for 1.2 million Euros, and imposing fines. The decisions by which the Tax Board of the Province of Rome upheld the appeals filed by the company against the notices of assessment relating to 1997 and 1998 for 0.3 million Euros, served by the Inland Revenue Service in 2005, were lodged with the Registry in Financial Statements at 31 December

90 Regarding the appeals filed by the company against the notices of assessment relating to 1999 and 2000, for 1.2 million Euros, served by the Inland Revenue Service in 2006, the outcome of the hearings in which the matters were discussed, held in January 2009, is not yet known. As matters stand, the risk of a negative outcome still appears probable, and the provision for risks appropriated in previous periods has been maintained. In 2006, the Guardia di Finanza served an official Notice of Assessment notifying the inclusion in the company s taxable income certain revenues relating to the 2004 fiscal year, with respect to IRAP/IRES (tax on production activities and corporate income tax), along with an increase in VAT due. As matters stand, the risk of a negative outcome still appears probable, and the provision for risks allocated in previous periods has been maintained. Staff severance indemnity This item totalled 2,452,318, with a net decrease of 290,362 compared to 31 December The fund set aside accounts for the entire amount of payables due by the company to its employees at , and it may be detailed as follows: Staff severance indemnity Provision at ,742,680 Increases: Write-ups 76,389 76,389 Decreases: Termination of employment 354,329 Advance payments made/recovered Transfers to supplementary funds Advance payments made to the internal revenue service for revaluation tax 13,193 Transfers to other Group undertakings Other (771) 366,752 Provision at ,452,318 Financial Statements at 31 December

91 PAYABLES This item totalled 311,566,473, up by 60,780,491 compared to 31 December All the payables were accrued in Italy. Payables: Payables to banks This item amounted to 164,082,851, up by 31,210,142 compared to 31 December 2007, and may be broken down as follows: Description Differences Loans: - Mutuo Banca OPI Immobile Roma Principal 17,250,610 18,200,367 (949,756) - Mutuo Banca OPI Immobile Venezia Principal 51,751,830 54,601,100 (2,849,269) - Mutuo Banca OPI Immobile Roma Interest 33,481 37,046 (3,565) - Mutuo Banca OPI Immobile Venezia Interest 100, ,138 (10,693) - Bipop Carire Principal 2,925,000 3,250,000 (325,000) - M.P.S. Principal 37,766,622 (37,766,622) - Calyon Principal 18,883,311 (18,883,311) - Bipop Carire Interest 21,001 23,127 (2,126) EIB Loan Principal 92,000,000-92,000,000 Other payables towards banks This item refers to the following: TOTAL 164,082, ,872,709 31,210,142 the account payable to BIIS (Banca Infrastrutture Innovazione e Sviluppo), in respect of the taking out of two mortgage loans secured by real estate owned by the company in Rome, Venice and Naples totalling 80 million Euros. Both contracts were entered into on 6 March 2003, for a 20-year term, and both provide for the repayment in the first three years of the interest alone and the repayment of the principal in the following 17 years, at a variable interest rate equal to the 6-month Euribor plus a 0.95% spread. In the course of the year, changes were recorded due to the repayment of the related principal instalments; the loan granted by Bipop Carire in May 2005, totalling 3.25 million, for supporting the investment in shareholdings of Italian companies abroad (Law 100/90 - SIMEST). The term of this loan is 8 years, and provides for the repayment of interest alone for the first three years and the repayment of the principal in the following five years at a variable interest rate equal to the 6-month Euribor plus a 0.8% spread. the loan taken out with the EIB (European Investment Bank) in April 2008, totalling 150 million for the carrying out of internal refurbishing and upgrading works in stations; Banca Financial Statements at 31 December

92 Calyon acts as Guarantor in this transaction. At the same time, the loan contract which had been previously entered into with Monte dei Paschi di Siena was terminated and the entire debt taken up until that time was fully paid back at 30/06/08 with the liquidity resulting from activation of the EIB funding. The term is 15 years from the first disbursement (30/6/2008); the loan is to be repaid in 6-monthly fixed-principal instalments starting 30 June 2010 and at an interest rate equal to the 6-month Euribor offered for a 6-month term, increased or decreased by the number of base points notified by the Bank to the Company. In June and October 2008, two supplementary guarantees were executed, with Banca Calyon S.A. and Cassa Depositi e Prestiti S.p.A. respectively, which shall receive a 6-monthly commission, equal to 45 base points, to be calculated on the amount of principal relating to each disbursement. In respect of this loan, the IRS hedging contract is kept in place, details of which can be found in the relevant paragraph in the other information section. The amount of the item payable beyond 5 years is 101,512,482. Payables: Down payments This item totalled 11,777,944, up by 3,701,840 compared to and represents the value of the sums invoiced for project design an site supervision services provided, in respect of projects that have not yet been completed, to RFI S.p.A. totalling 11,673,320, to Trenitalia for 18,528, and down payments to customers for commercial credits totalling 86,096. Payables: Payables to suppliers This item totalled 101,421,780, up by 24,604,985 compared to 31 December Description Differences Ordinary suppliers 101,421,780 76,816,795 24,604,985 TOTAL 101,421,780 76,816,795 24, This item relates to the debt for invoices received, totalling 48,819,817, and to debts for invoices yet to be received, totalling 52,601,963. The significant change compared to is due to increased investments in progress and to the extension of the supplier payment schedules. Payables: Payables to subsidiary undertakings This balance for this item is zero, down by 37,325 compared to 31 December 2007, and relates to the complete repayment of debts to the subsidiary Grandi Stazioni Servizi S.r.l., in liquidation. Financial Statements at 31 December

93 Payables: Payables to the parent company This item totalled 3,641,250, down by 1,852,090 compared to 31 December 2007, and may be broken down by type as follows: Type Difference Commercial 148, ,403 (15,033) Other: - debts relating to transferred tax credits 3,354,077 3,869,960 (515,883) - insurance reimbursements 12,220 (12,220) - reimbursements for directors remuneration 138,803 94,564 44,239 - to Fs for VAT account 1,353,193 (1,353,193) TOTAL 3,641,250 5,493,340 (1,852,090) The principal changes concern: the reduction of the debt for transferred taxation (by 515,883), by means of the offsetting operations carried out in the early months of the year, with the debts for direct taxation (IRAP), within the maximum limit provided by the applicable tax regulations, and to the cancellation, with respect to the previous year, of the VAT debt. During the year, the company posted no accounts payable with respect to IRES corporate income tax direct taxation, because the down payments made were higher than the relevant payments determined at the end of the year. Payables: Tax payables This item totalled 1,834,867, down by 275,531 compared to 31 December 2007, and may be broken down as follows: Description Difference Withholding tax ,341 (130,182) Other debts for local taxes (TARSU - ICI - ICP) 1,359,708 1,505,057 (145,349) - TOTAL 1,834,867 2,110,398 ( ) The principal changes concern: the decrease in withholding tax, representing the amounts withheld by the Company from employees in its capacity as withholding agent and which are to be paid after the end of the period; the decrease in other debts for local taxes, payable with respect to the ICP (city advertising tax), TARSU (waste disposal tax) and ICI (city property tax). Financial Statements at 31 December

94 Payables: Payables to social insurance agencies This item totalled 1,039,289, down by 101,751 compared to 31 December 2007, and may be broken down as follows: Description Difference To Inps 484, ,580 (75,391) To Inps for collaborators 7,059 10,960 (3,901) To Mario Negri pension scheme 60,499 54,780 5,719 To Fasdac 11,673 12,646 (973) To Ass, Antonio Pastore 15,803 17,120 (1,317) To Inail 4,352 9,773 (5,421) Payables for contributions relating to accrued amounts to be settled 192, ,583 (6.821) To Fon.Te. 20,346 24,785 (4,439) To Inps for previous years contributions 135, ,783 (24,300) To other supplementary pension schemes 107,123 92,030 15,093 TOTAL 1,039,289 1,141,040 ( ) It is especially highlighted that the payables to other supplementary pension schemes includes approximately 106 keuros of the debt towards the INPS treasury fund and 1,012 Euros of the debt towards other supplementary pension scheme funds. Financial Statements at 31 December

95 Payables: Other payables This item totalled 27,768,492, up by 3,530,221 compared to 31 December 2007, and can be broken down as follows: Description Difference Other affiliated undertakings 13,331,573 10,578,245 2,753,328 Other - - to employees for holidays not taken 219, ,096 (45,123) - interest payable to customers 16,711 15,207 1,504 - remuneration of company officers 65,046 25,366 39,680 - payables for deferred wages 1,179,452 1,078, ,743 - payables to customers 12,684,033 12,007, ,160 - travel expense reimbursements 2,876 14,120 (11,244) - other payables 101,871 76,870 25,001 - caution monies beyond 12 months 166, ,784 (9,827) 14,436,919 13,660, ,893 TOTAL 27,768,492 24,238,271 3,530,221 The most significant changes in the other payables item, compared to the value at 31 December 2007, are the result of the differences relating to: payables to other affiliated undertakings, which will be analysed in detail below; payables for deferred wages, as a result of the lower apportionments at the end of the year, and to payables to customers ; the latter, in particular, refer to the down payment of 12 million Euros received from the Veneto Region at the conclusion of the preliminary sale agreement on 20 March 2007, for the sale of the former District Headquarters building. The amount of the item other debts payable beyond 12 months totalled 166,957 and refers to the value of the caution monies in cash paid by the tenants who are parties to lease contracts, as performance bonds with respect to these contracts. Financial Statements at 31 December

96 Following is a detailed overview of the payables to affiliated companies: Description Diff. RFI S.p.A. for invoices received 9,000,000 10,152,000 (1,152,000) RFI S.p.A. for invoices yet to be received 3,248,084 (152,807) 3,400,891 Trenitalia S.p.A. for invoices received 556, ,431 Ferservizi S.p.A. for invoices received 157, ,023 52,463 Ferservizi S.p.A. for invoices yet to be received 15,976 16,833 (857) Italferr S.p.A. for invoices received 35, ,261 Italferr S.p.A. for invoices yet to be received 42, ,973 Metropark S.p.A. 165, ,266 Fercredit S.p.A. 110, ,196 (347,101) TOTAL 13,331,573 10,578,245 2,753,328 Payables to RFI S.p.A. : 12,248,084 These are related to the 4th instalment for 2008 of the transfer back rental, in respect of the management of the station complexes (10,791 keuros), and to reimbursement of costs incurred for services and utilities in the stations of Genova Porta Principe (56 keuros), Roma Termini (78 keuros) and Milano Centrale (1,323 keuros) Payables to Ferservizi S.p.A.: 173,462 These consist of reimbursements paid for tickets issued (158 keuros) and the remuneration of company officers (15 keuros). Payables to Fercredit S.p.A.: 110,095 These refer to payables for leases (8 keuros) and to payables for credit transfers to third-party suppliers, and are of an entirely commercial nature (102 keuros). Payables to Metropark S.p.A.: 165,266 These concern advances on accrued amounts relating to the direct management of the parking lot in piazza di Cinquecento, taken over by the company, following the expiry of the lease contract, from May Payables to Italferr S.p.A.: 78,234 These are related to the reimbursement of costs for seconded personnel. Payables to Trenitalia S.p.A.: 556,431 These are related to the reimbursement of works on the Roma Termini building. Financial Statements at 31 December

97 Accrued expenses and deferred income This item totalled 18,703,733, down by 646,972 compared to 31 December 2007, and may be broken down as follows: Description Difference - Rents receivable 11,262,778 10,721, ,315 - Deferred income: Jubilee Year 7,440,956 8,629,242 (1,188,286) TOTAL 18,703,734 19,350,705 (646,971) This item relates to: rents relating to the first quarter of 2009, invoiced in December; the remaining proportion of the contributions into the capital account for the implementation of the projects at the station of Roma Termini on occasion of the Jubilee Year 2000, which will be recorded in the profit and loss account in the following years, in relation to the remaining useful life of the individual works carried out. The negative change for 1,188,286 concerns the proportion released among the other revenues and income as a function of the depreciation of the fixed assets to which it refers. The following table highlights the breakdown of the item relating to the group companies, amounting to 2,907,549: Accrued expenses / Deferred income Diff. In respect of Ferrovie dello Stato S.p.A. 14,782 37,263 (22,481) In respect of Ferservizi S.p.A. 264, ,374 6,517 In respect of Trenitalia S.p.A. 246, ,205 (466,505) In respect of Italferr S.p.A. 2,343,348 2,267,862 75,486 In respect of Metropark S.p.A. 11, ,958 (102,236) In respect of Cisalpino Ag. 21, ,409 In respect of TAV S.p.A. 4,697 4, TOTAL 2,907,549 3,395,212 (487,663) Financial Statements at 31 December

98 The most significant changes concern: Trenitalia, for the early termination of the lease contract relating to building E of the Stazione Termini from August 2008, and Metropark, for termination of the contract relating to the piazza dei 500 parking lot, from April MEMORANDUM ACCOUNTS Description Difference RISKS Surety - to third parties 500, , TOTAL 500, , TOTAL MEMORANDUM ACCOUNTS 500, , These concern surety issued by Intesa-San Paolo bank: to the Municipality of Venice (Direzione Centrale Sportello Unico), expiring on 10 September 2008, as guarantee for the redevelopment works under way on the former District Headquarters building of Venice (500 keuros), with automatic renewal until their release is notified by the municipality; to the Ministry of Internal Affairs (Dipartimento della Pubblica Sicurezza Direzione Centrale per la Polizia Stradale, Ferroviaria, delle Comunicazioni), expiring on 31 December 2008, as guarantee for projects to be carried out in the Railway Police operations rooms in certain stations in Southern Italy (703 Euros). Financial Statements at 31 December

99 PROFIT AND LOSS ACCOUNT The following pages contain an analysis of the revenues and costs in 2008, compared with the previous year. PRODUCTION VALUE Production value totalled 192,793,374, up by 10,360,952 compared to 2007, and may be broken down as follows: Description Difference Income from sales and services 174,149, ,701,169 11,447,939 Variations in stock of products in progress and semifinished and finished goods 8,050,959 8,050,959 Variation in work in progress 2,751,725 3,756,687 (1,004,962) Fixed-asset increases for in-house works 2,267,686 2,172,716 94,970 Other income and revenue 5,573,896 13,801,850 (8,227,954) TOTAL 192,793, ,432,422 10,360,952 The following tables and comments are a detailed overview of the production value items. Income from sales and services This item totalled 174,149,108 and can be broken down as follows: Description Differences Income from long-term rents 47,845,659 45,022,442 2,823,217 Occupation of property compensation / Failure to vacate premises 32,391,294 29,283,329 3,107,965 Income from property management charges 65,120,002 61,928,998 3,191,004 Income from project design / site supervision activities 79,064 69,422 9,642 Income advertising space management 20,669,544 25,304,993 (4,635,449) Income from services to customers 7,323,503 7,323,503 Other income from sales and services 720,042 1,091,983 (371,941) TOTAL 174,149, ,701,169 11,447,939 Financial Statements at 31 December

100 The increased income from the leasing of premises is the consequence of works carried out in the year with respect to certain station spaces, which have determined both an increase in the amount of leased space and increase in rents. The increase in occupation of property compensation / failure to vacate premises (92% of which concerns Group companies) is due to the valorisation of these premises - based on differentiated rental fees, according to the type and location of the properties - at higher amounts than the one previously established by the so-called Lodo Barbieri, which expired on 31 December 2007; the relevant information has been provided in the Report on Operations. The income from property management charges (95% of which concerns Group companies), increased as a result of increased utility costs, due to tariff increases and to new contract transfers formalized at the beginning of the year, and to increased tax charges, following tariff changes to the TARSU (waste disposal taxes). The decrease in income from management of advertising spaces item, which reflects the contraction in the sector brought about by the unfavourable economic situation, which was especially acute in the second half of Income from services to customers concerns activities previously carried out by the subsidiary Grandi Stazioni Servizi and which was taken over by our company as of 1 January All the above-mentioned items refer to income and revenue produced in Italy. Variation in inventories for work in progress on properties intended for sale This item totalled 8,050,959, and concerns expenses incurred in the year for the redevelopment of the former Venice District Headquarters building owned by the company. The increase compared to the previous year is related to the reclassification of the building from fixed tangible assets to inventories. Variation in work in progress This item totalled 2,751,725, down by 1,004,962 compared to 2007, and can be broken down as follows: Description Differences - Increase in theyear 2,813,765 3,754,940 (941,175) - Recovery of previous years losses 194,189 63, ,255 - Write-down of future losses (256,229) (62,188) (194,041) TOTAL 2,751,725 3,756,687 (1,004,962) The change in work in progress in 2008, recorded according to the principle of the percentage of completion ( cost to cost method), highlights a positive value of 2,813,765, and refers to the assessment of the progress of the payments accruing in the year, in respect of the performance of the technical activities required for the carrying out of the upgrading and Financial Statements at 31 December

101 refurbishment, redevelopment, maintenance and improvement of the property complex of Roma Termini station and of the other 12 stations under integrated management, on account of RFI. The above mentioned variation is highlighted minus the losses forecasted in future years, analysed individually for their completion. Fixed-asset increases for in-house works The increase in fixed assets for in-house works totalled 2,267,686, and relates to the capitalization of the proportion of costs of the technical organisation of Grandi Stazioni engaged in the redevelopment works described in the Notes to the Financial Statements under the direct charging items: Intangible assets in progress ( 1,221,946); Other intangible assets ( 1,025,245) and Tangible assets in progress ( 20,080). The 94,970 increase, compared to the previous year, is the result of the larger commitments by the Technical Organisation with regard to new construction sites set up in the stations of Milan, Turin and Naples. Other income and revenue This item totalled 5,573,896, down by 8,227,954 compared to 2007, and can be broken down as follows: Description Differences Contributions paid into the trading account Contributions from the State / local Public Bodies 1,188,286 1,188,286 - Other income and revenue Non-operating profit from routine estimate updates 988,937 2,222,512 (1,233,575) Capital gains from typical operations 150 (150) Release of excess funds from the provision for bad debts 1,010,538 1,010,538 Sundry proceeds 2,386,135 10,390,902 (8,004,767) TOTAL 5,573,896 13,801,850 (8,227,954) This item primarily relates to: non-operating profit from the routine updating of estimates (981 keuros with respect to third parties and 7 keuros with respect to the group), the release of excess funds from the provision for bad debt with respect to appropriations made in the previous years, and to sundry proceeds due primarily to sums acknowledged by customers for promotional activities carried out inside the stations (791 keuros), recovery of expenses advanced on behalf of third parties (981 keuros) and recovery of expenses incurred, as reimbursement of charges borne by Grandi Stazioni to enhance the quality standards offered and instrumental for the best commercial exploitation of the leased premises (530 keuros). This item, in particular, decreased significantly compared to the previous year, because the relevant Financial Statements at 31 December

102 accounting criteria underwent significant changes, for the purpose of bringing them more closely in line with the nature of the related contract provisions. The sub-item contributions paid into the trading account refers to the proportion of contributions for the period paid out by the Ufficio per Roma Capitale, in respect of the refurbishment and development works carried out in connection with the Jubilee Year events, calculated in relation to the duration of these works. PRODUCTION COSTS Production costs totalled 165,563,523, up by 12,447,943 compared to 2007, and can be broken down as follows: Description Differences Raw, ancillary, consumer materials and goods 444, , ,106 Services 95,174,254 84,761,061 10,413,193 Use of third-party assets 35,236,933 33,067,400 2,169,533 Personnel costs 15,512,480 14,775, ,475 Depreciation and write-downs 10,573,723 11,190,995 (617,272) Allocations for risks 2,034,219 1,313, ,190 Sundry management costs 6,587,459 7,668,741 (1,081,282) TOTAL 165,563, ,115,580 12,447,943 The following tables and comments provide a detailed overview of the production costs item. Raw, ancillary, consumer materials and goods This item totalled 444,455, up by 105,106 compared to 2007, and can be broken down as follows. Description Differences Purchase of materials 442, , ,209 Transport costs for purchases 781 6,142 (5,361) Fuel and lubricants 969 3,711 (2,742) TOTAL 444, , ,106 Financial Statements at 31 December

103 The increase compared to the previous year is mainly the result of greater purchases of office consumables and other material, primarily for construction site and promotional activities. Services This item totalled 95,174,254, up by 10,413,193 compared to 2007, and can be broken down as follows: Description Differences Services / works contracted out: 70,145,743 59,729,836 10,415,907 - Services Security 8,884,486 9,496,086 (611,600) - Cleaning 22,765,374 23,201,233 (435,859) - Maintenance 17,869,235 15,967,013 1,902,222 - Utilities 12,575,688 11,065,504 1,510,184 - Improvement of property owned by the company 8,050, ,050,959 Sundry services: 25,028,511 25,031,225 (2,714) - Consulting 209, ,482 65,453 - Engineering services 2,793,135 3,518,429 (725,294) - Professional services 2,733,197 2,955,647 (222,450) - Temporary employment 527, ,112 59,281 - Seconded employees 133, ,260 - Utilities 420, ,045 (34,979) - Insurance premiums 1,215,013 1,216,698 (1,685) - IT services 605, ,292 (16,172) - Commissions 3,477,724 5,214,355 (1,736,631) - Directors remuneration 898, , ,851 - Auditors remuneration 57,360 74,006 (16,646) - Travel and hotel expenses 728, , ,793 - Advertising and promotional expenses 329,751 61, ,951 - Remuneration for associazioni in partecipazione (silent partnership agreements) 4,264,500 5,510,750 (1,246,250) - Costs for services to customers 4,095, ,095,556 - Other services 2,539,362 3,472,115 (932,753) TOTAL 95,174,254 84,761,061 10,413,193 Financial Statements at 31 December

104 Variations with respect to services and works contracted out, compared to the previous year, are the result of: a decrease in costs for services, security and cleaning, the former due to the application of the fines provided by the existing contract, the second mainly due to the setting up of construction sites in the areas intended to be upgraded and refurbished. The recorded increase in maintenance activities is due to the significant rise in on demand services, provided by the company following formal requests and approval by the requesting parties. The increase in costs with respect to Utilities is due to: tariff increases, which averaged, during the year, 15% for energy, 10% for gas and approximately 4 % for water supplies, and the taking over of new electricity contracts, as provided for by the plan to separate existing utility contracts between RFI and Grandi Stazioni. It must be underlined, on the other hand, that the increase has in any case been mitigated by the changes to contracts with respect to the minimum consumption charges relating to the water supply contracts in the stations of Firenze Santa Maria Novella and Torino Porta Nuova. Variations also include an increase in costs for improvements to properties owned by the company, which concern expenses incurred in 2008 for the Venice building, whose sale is under way. The variations relating to sundry services concern: the higher costs for services to clients due primarily to costs relating to the management of toilet, luggage deposit and parking facilities, an activity previously operated through the subsidiary Grandi Stazioni Servizi and which starting from 1 January was sold by the former to the parent company; directors remuneration, including the advance on the end-of-service allowance paid to the retiring CEO; consulting services, primarily in connection with the company re-organisational process under way; travel costs, related to increased operational activities at the stations undergoing upgrading and refurbishment; advertising and promotional expenses, required for the re-launching of the company s image. The decreases are due to greater efficiency with respect to certain cost headings and, with special reference to commissions and to the remuneration of the silent partner, to the decrease in advertising revenues to which these cost items are closely connected. User of third-party assets This item totalled 35,236,933, up by 2,169,533 compared to 2007, and can be broken down as follows: Description Differences Back transfer rent relating to RFI Sp.A ,073 32,002,792 2,288,281 Property leases 702, ,521 (240,302) Leasing rentals 243, , ,554 TOTAL 35,236,933 33,067,400 2,169,533 The increase of this item is primarily the result of the increased back transfer rent relating to RFI, which is a natural consequence of the increased revenue from property leasing in 2008, Financial Statements at 31 December

105 while the increase in rental leases concerns the taking over (starting from August) of a contract previously stipulated between Trenitalia and Fercredit to finance the purchase of furniture and fittings in use in building E of the Stazione Termini. The decrease relating to property leases is due to the vacating during the year of occupied spaces in rented properties, to allow Ferrovie group personnel to move temporarily from buildings undergoing refurbishment and upgrading. Personnel costs This item totalled 15,512,480, up by 737,475 compared to 2007, and can be broken down as follows: Description Differences Wages and salaries 10,713,760 10,609, ,272 Social security contributions 3,290,409 3,259,210 31,199 Staff severance indemnity 818, ,092 16,270 Other costs 689, , ,734 TOTAL 15,512,480 14,775, ,475 This item includes all employee costs, including promotions, transfers from one category to another, statutory appropriations and allocations for bonuses and incentives accrued, in respect of the merit-based policies implemented by the company vis-à-vis its employees. The labour costs increased in absolute value by approximately 104 keuros, in relation to increases deriving from the renewal of the National Collective Labour Agreement for Commerce and Trade, wage increases and transfers from one category to another applicable from the new year, and by 586 keuros as a result of an increase in retirement incentives paid during the year and of the payment of the annual fee for the employee health insurance policy taken out following the signing of the second-level corporate agreement on 11 September See the Report on Operations for information relating to the composition of and changes to the company s staffing level. Financial Statements at 31 December

106 Depreciation and write-downs This item totalled 10,573,723, down by 617,272 compared to 2007, and can be broken down as follows: Description Differences Depreciation of intangibles 4,222,456 4,368,398 (145,942) Depreciation of tangibles 2,553,023 3,465,271 (912,248) Other write-downs of fixed assets 417,869 3, ,875 Write-down of receivables included among the current assets and of cash funds 3,380,375 3,353,332 27,043 TOTAL 10,573,723 11,190,995 (617,272) The decrease in depreciation, especially with regard to tangibles, is due to the reclassification under inventories of the greater part of the value of the former District Headquarters building of Venice, as described above. The other write-downs relating to fixed assets concern the disposal of previously frozen assets, the residual value of which has ceased. The write-down of receivables included among the current assets is based on a punctual analysis thereof and of their degree of solvency. Provisions for risks and other allocations This item totalled 2,034,219 and can be broken down as follows: Description Differences Provisions for risks - Legal disputes 2,034,219 1,257, ,124 - Other risks - Tax-related disputes 55,933 (55,933) TOTAL 2,034,219 1,313, ,190 The allocations made in respect of 2008 are due to the further increase of allocations to the provision for risks, in connection with the improved forecast relating to the outcome of disputes with suppliers and claims filed by former employees of the company. For a more indepth analysis, see the paragraph on provisions for risks and charges in the liabilities section. Financial Statements at 31 December

107 Sundry management costs This item totalled 6,587,459, down by 1,081,282 compared to 2007, and can be broken down as follows: Description Differences Sundry costs - Capital losses from sale of production cycle goods 2,970 (2,970) - Representation expenses 22,530 99,511 (76,981) - Membership fees and other contributions 42,076 42,290 (214) - Non-operating losses from the routine updating of estimates 1,174,155 2,771,105 (1,596,950) - Other 395, , ,847 Tax charges 1,634,275 3,142,544 (1,508,269) - ICI (local property tax) 473, ,079 20,980 - Local tax on advertising 502, ,462 (30,674) - Local taxation (Tarsu - Tosap - Cosap) 3,235,754 2,607, ,434 - Other taxes - Registry tax 741, ,335 (191,752) 4,953,184 4,526, ,987 TOTAL 6,587,459 7,668,741 (1,081,282) The main variations are the result of: a drop in sundry costs, as a result of lower representation expenses and lower non-operating losses due to the routine updating of estimates; the increased tax charges are due to the higher local property tax (ICI) paid with respect to certain company-owned properties and to the tariff increases relating to the waste disposal tax (TARSU) paid with respect to the network stations. Financial Statements at 31 December

108 FINANCIAL REVENUES AND EXPENSES This item features an overall negative value of 3,449,620, down by 148,599, and can be broken down as follows: Description Differences FINANCIAL REVENUES Revenues from shareholdings - in subsidiary undertakings 2,595, ,000 2,095,861 2,595, ,000 2,095,861 Other financial revenues - from subsidiary undertakings from parent 1,609,967 1,747,926 (137,959) - from others - interest receivable from bank and post office accounts 588, , ,138 - other 31,222 11,098 20,124 Total other financial revenues 2,229,994 2,156,691 73,303 Total other financial revenues 2,229,994 2,156,691 73,303 Total financial revenues 4,825,855 2,656,691 2,169,164 FINANCIAL EXPENSES Interest payable and other financial expenses - to subsidiary undertakings 25, ,581 - to others - for loans from banks 8,316,104 6,028,406 2,287,698 - contributions into the interest account (-) (69,946) (70,694) 748 8,246,158 5,957,712 2,288,446 Total financial expenses 8,271,739 5,957,712 2,314,027 PROFITS (LOSSES) ON EXCHANGE RATES - realises (3,736) (3,736) Total profits (losses) on exchange rates (3,736) 0 (3,736) BALANCE Financial revenues and (Expenses) (3,449,620) (3,301,021) (148,599) Financial revenues from subsidiary undertakings concern: as to 1,555 keuros, the dividend determined by Grandi Stazioni Servizi with respect to a part of the profit made in the previous year and 1,041 keuros to the result of the final allotment following wind up. Income from parent refers to interest receivable accruing on the pooled bank account with Ferrovie dello Stato S.p.A., while the other financial revenues are related to interest receivable accruing in the year on bank funds. Compared to the previous year, there was a decrease in the average deposited funds and an increase in interest rates. The financial expenses to others relate to the interest payable accruing on the BIIS (Banca Infrastrutture Innovazione e Sviluppo formerly OPI) mortgage loans and the long-term loans taken out with Bipop Carire and the EIB (European Investment Bank), as described in the financial management section. Their significant increase compared to 2007 is due to the increased indebtedness recorded in the year, as a result of the drafts from the EIB loan to Financial Statements at 31 December

109 finance the investments under way, and to the significant increase in the 6-month Euribor rate (which serves as the basis for calculating the cost of the financial funds), especially in the first nine months of The contribution into the interest accounts concerns the sums received in the year from SIMEST, in pursuance of article 4 of Law 100/90 as subsequently amended, for the partial reduction of the financial charges relating to the above mentioned Bipop Carire loan. VALUE ADJUSTMENTS OF FINANCIAL ASSETS This item, featuring a negative balance of 18,941, concerns the writing down of the shareholdings in Grandi Stazioni Edicole (8 keuros), Grandi Stazioni Ingegneria (6 keuros) and Grandi Stazioni Pubblicità (5 keuros) to adjust the value of the losses reported in the previous years. EXTRAORDINARY INCOME AND EXPENSES The balance of the extraordinary income and expenses features a total negative value of 195,593, up by 622,705 compared to 2007, and can be broken down as follows: Description Differences EXTRAORDINARY INCOME - Other income - Non-operating profit 2,019 3,653 (1,634) 2,019 3,653 (1,634) TOTAL EXTRAORDINARY INCOME 2,019 3,653 (1,634) EXTRAORDINARY EXPENSES - Non-operating losses from sales Taxes relating to previous reporting periods Expenses for early retirement Other - Taxes relating to previous reporting periods 113,266 36,495 76,771 - Terminations by mutual agreement 42, ,456 (742,458) - Non-operating losses 41,347 41,347 TOTAL EXTRAORDINARY EXPENSES 197, ,951 (624,339) TOTAL (195,593) (818,298) 622,705 The extraordinary income item refers to non-operating profits resulting primarily from insurance reimbursements. The extraordinary expenses item concerns: taxes relating to previous years, mainly due to Local Advertising Taxes and to the adjustment of the Ires and Irap direct Financial Statements at 31 December

110 taxes paid in 2008 (with respect to 2007), to a higher extent than had been determined in the budget; terminations by mutual agreement paid in the year with respect to transactions with customers (for 43 keuros); non-operating losses (for 41 keuros). Income tax for the year and deferred and prepaid taxes Income tax totalled 8,546,121, down by 3,215,995 compared to 2007, and can be broken down as follows: Description Differences Current taxes -IRES (corporate income tax) 6,961,597 9,864,466 (2,902,869) -IRAP (regional tax on production activities) 2,113,693 2,443,318 (329,625) 9,075,290 12,307,784 (3,232,494) Prepaid taxes - Reabsorptions -IRES 362, ,253 (320,293) -IRAP 93,667 89,893 3, , ,146 (316,519) - Rate adjustment 0 357,186 (357,186) - Allocations -IRES (893,800) (1,546,496) 652,696 -IRAP (91,997) (113,004) 21,007 (985,797) (1,659,500) 673,703 (529,169) (529,168) (2) Income from tax consolidation (16,500) 16,500 TOTAL 8,546,121 11,762,116 (3,215,995) The changes compared to the previous year are due to: the drop in the operating result before tax and the reduction in the Ires and Irap rates, set to apply starting from The IRAP tax benefits - due to the application of the measures concerning the so-called tax wedge - stood at approximately 184 keuros. The recording of a higher allocation for prepaid taxes, compared to the re-absorption, is due to the increases recorded in the year from the bad debts fund and the provision for risks and charges. Financial Statements at 31 December

111 Following is a detailed overview of the temporary differences generating the prepaid and deferred taxes Total temporary differences (rate %) tax effects Total temporary differences (rate %) tax effects Prepaid taxes: - Write-downs for lasting losses of intangible assets - Write-downs for lasting losses of tangible assets 344, % 110, , % 90,921 4, % 1,497 7, % 2,494 - Contributions 2,429, % 782,571 3,617, % 1,164,888 - Representation expenses 52, % 16,897 87, % 28,307 - Provision for bad debts 5,079, % 1,396,736 4,169, % 1,146,561 - Directors remuneration 165, % 45, , % 32,381 - Provisions for risks and charges - Taxes and tax-related charges (Tarsu-Cosap) 3,527, % 1,136,194 1,758, % 566, , % 251, , % 249,073 - ICI 59, % 19,135 - Allocations for personnel costs 666, % 183, , % 158,081 - Land depreciation 342, % 110, , % 129,706 - Professional services not completed in the year 19, % 5,486 - Other costs 117, % 37,688 NET TOTAL 4,097,765 3,568,596 Financial Statements at 31 December

112 The following table features the reconciliation between actual and theoretical corporate income taxation (IRES): Reconciliation between actual posted taxation and theoretical taxation Result before taxes 23,565,697 Theoretical taxation (27.5% rate) 6,480,567 Temporary differences deductible in future years: - Directors remuneration 158,160 - Bad debts fund 2,878,107 - Personnel cost allocations 586,559 - Taxes 914,333 - Appropriation to provision for risks and charges 2,034,219 - Write-down for lasting losses of intangible assets 256,229 - Other upward changes 136,959 Total 6,964,565 Reversal of temporary differences from previous years: - Representation expenses 35,456 - Directors remuneration 110,063 - Bad debts fund 1,968,381 - Personnel cost allocations 495,381 - Taxes 714,157 - Appropriation to provision for risks and charges 265,200 - Write-down for lasting losses of intangible assets 194,189 - Write-down for lasting losses of tangible assets 3,099 - Contributions collected minus the proportion recorded in the profit and loss account and the differences taxable in future years 1,188,286 Total 4,974,211 Differences that will not be carried forward to future years: - exempt dividends (1,476,809) - other downward changes (1,288,196) - other upward changes 2,523,853 Total (241,153) Taxable amount 25,314,898 Current corporate income tax (IRES) for the year 6,961,597 Financial Statements at 31 December

113 Also with regard to corporate income tax IRES, the table below provides an overview of the reconciliation between the ordinary and the actual rates: APPLICABLE ORDINARY RATE 27.5% 33% Effect of the upward (downward) changes, with respect to the ordinary rate: - Dividends -3.23% -1.64% - Non-deductible costs 5.27% 7.82% ACTUAL RATE 29.54% 39.18% The following table features the determination of the taxable amount for IRAP purposes: Determination of the taxable amount for IRAP purposes Difference between production value and costs 27,229,851 Costs not included for IRAP purposes 17,606,244 Total 44,836,095 Theoretical taxation (5.12% rate) 2,295,608 Temporary differences deductible in future years: - Write-downs for lasting losses of intangible assets 256,229 - Appropriation to provision for risks and charges 2,034,219 Non-operating loss deductible in ,009 Total 2,407,456 Reversal of temporary differences from previous years: - Representation expenses 35,456 - Taxes 714,157 - Appropriation to provision for risks and charges 265,200 - Write-down for lasting losses of tangible assets 3,099 - Write-down for lasting losses of intangible assets 194,189 - Contributions collected minus the proportion recorded in the profit and loss account and the differences taxable in future years 1,188,286 Total 2,400,386 Taxable amount for IRAP purposes 44,843,165 Current corporate income tax (IRAP) for the year 2,113,693 Financial Statements at 31 December

114 SECTION 4: Other information Financial Statements at 31 December

115 Average number of employees The average number of employees is 232, as follows: PERSONALE Differences Executives Middle-management Non-management staff ( 8) TOTAL ( 3) Directors and Statutory Auditors remuneration The following table highlights the total remuneration paid out to the Directors and Statutory Auditors in connection with their position. RECIPIENTS Differences Directors 898, , ,851 Statutory Auditors 57,360 74,006 (16,646) TOTAL 955, , ,205 The Directors remuneration includes the advance on the end-of-service allowance paid to the retiring CEO, while the remuneration of the current director was allocated on the basis of the limitations provided for in article 3 (4) of the 2008 budget law. The remunerations of the Statutory Auditors relate to the proportion accrued for the year, adjusted with respect to the annual fixed amount established by the shareholders meeting, effective from the second half of Exchange rate trends after 31 December 2008 The company with the sole exception of its stake in Grandi Stazioni Ceska features no significant foreign currency transactions, and therefore the exchange rate trends after 31 December 2008 are of no significance. Financial derivatives As from June , expiring on 30 June 2011, the company concluded with Mediobanca Banca di Credito Finanziario S.p.A. an interest-rate risk hedging contract (IRS), relating to a notional principal of 30 million Euros, based on which Grandi Stazioni receives - on a halfyearly basis - remuneration equal to 6-month Euribor and pays a charge equal to 6-month Euribor with a 0.245% spread, up to no more than 4.30%. At 31 December 2008, the fair value of the derivative was negative for the company and totalled 69, Financial Statements at 31 December

116 Information on the direction and coordination activities The following tables feature the key figures relating to the latest financial statements of the consolidating company Ferrovie dello Stato S.p.A., which carries out the direction and coordination activities pursuant to article 2497 bis of the Italian Civil Code. The key highlights of the parent company Ferrovie dello Stato S.p.A. have been taken from the related financial statements at 31 Decemeber For an adequate and full understanding of the asset-related and financial situation of Ferrovie dello Stato S.p.A. (the holding company) at 31 December 2007, and of the economic results achieved by the company in the year ending at that date, reference should be made to the financial statements which, together with the report by the independent auditors, is available in the form and according to the procedure provided for by the law... (amounts in keuros) ASSETS: ASSETS AND LIABILITIES STATEMENT A) Receivables from shareholders for outstanding payments B) Fixed assets 41,267,070 37,752,555 C) Current assets 6,113,053 7,224,354 D) Prepaid expenses and accrued income 30,335 9,365 TOTAL 47,410,458 44,986,274 LIABILITIES: A) Shareholders equity: 35,968,996 36,172,291 Capital 38,790,425 38,790,425 Reserves 292,920 38,321 Profit (loss) carried forward (2,656,456) (718,974) Profit (loss) for the year (457,893) (1,937,481) B) Provisions for risks and charges 846, ,288 C) Staff severance indemnity 23,796 24,721 D) Payables 10,538,321 8,498,086 E) Accrued expenses and deferred income 32,753 12,888 TOTAL 47,410,458 44,986,274 GUARANTEES, COMMITMENTS AND OTHER RISKS PROFIT AND LOSS ACCOUNT A) Producton value 224, ,920 B) Production costs 296, ,438 C) Financial revenues and expenses 41, ,072 D) Value adjustments of financial assets (402,659) (1,989,616) E) Extraordinary income and expenses 7,751 4,480 Income tax for the year (32,586) (1,900) Profit (loss) for the year (457,893) (1,937,482) Financial Statements at 31 December

117 APPENDIX - FINANCIAL REPORT (in keuros) Opening net cash funds 29,493 22,658 Cash flow generated by operations in the year Profit (loss) for the year 15,020 13,416 Depreciation 6,775 7,834 Write-down of fixed assets / value recovery of financial assets (-) Net changes to staff severance indemnity fund (290) (99) Capital gains (-) / losses from the disposal of fixed assets 3 Changes to inventories (10,803) (3,757) Variation of commercial credits and other receivables (13,661) 3,704 Variation of prepaid expenses and accrued income 8 (530) Variation of provisions for risks and charges 1,713 1,072 Variation of commercial debts and other payables 29,570 20,854 Variation of accrued expenses and deferred income (647) (1,021) Total 28,122 41,499 Cash flow generated by investments Investments in: - intangible assets (1) (55,782) (51,984) - tangible assets (1) (5,473) (11,494) - shareholdings (10) - Realisable value of disposed assets Variation of other fixed assets (2) Total (60,794) (62,310) Cash flow generated by financing activities Loans received / paid back (-) 31,210 29,536 Contributions paid into property, plant and equipment account 7,129 11,774 Total 38,339 41,309 Dividends paid out (10,732) (13,663) Total cash flow for the year (5,065) 6,835 Closing net cash funds 24,437 29,493 of which: balance of the intra-group bank account 17,808 22,687 Explanatory notes (1) includes the profit and loss account item "fixed-asset increase for in-house work" (2) corresponds to the changes in the residual financial assets items (securities not included among the liquid funds, caution monies, etc.) Financial Statements at 31 December

118 STATEMENT BY THE CHIEF EXECUTIVE OFFICER AND THE EXECUTIVE IN CHARGE OF THE DRAFTING OF THE COMPANY ACCOUNTING RECORDS OF GRANDI STAZIONI SpA, REGARDING THE FINANCIAL STATEMENTS FOR We, the undersigned Fabio Battaggia and Giovanni Raddi, respectively Chief Executive Officer and Executive in charge of the drafting of the company accounting records of Grandi Stazioni SpA, having regard for: the provisions of article 27 of the company by-laws of Grandi Stazioni SpA; the specifications under point 2 below; hereby attest: that the administrative and accounting procedures for the drafting of the financial statements during the 2008 financial year are adequate in relation to the characteristics of the company, and have actually been applied. 2. The following elements of note have emerged in this respect: Considering the brief time between the date of appointment of the Executive in charge, on 16/9/08, and the end of the reporting period, and that no supporting staff and facilities have yet been provided for him, it has not been possible to complete the process of revision of the existing organisational procedures, whose purpose is better to highlight and, in some cases, implement internal controls aiming to ensure that information on the accounts is properly provided, as envisaged by Law 262/05. The actual application of existing procedures, with respect to the part affecting the information on the 2008 financial statements, still appears lacking, especially with regard to the time and procedures for the supply of data. The company functions involved are in the process of acquiring the professional supporting staff required for this purpose.

119 It appears necessary, therefore, in order to develop and integrate the business and financial information support systems, that the Information Systems organisational structure be reinforced without delay. However, the anomalies found have affected the quality of the information in the 2008 accounts to a very limited extent. 3. We also attest that the financial statements: a. are consistent with the results in the accounting books and records; b. have been drafted in compliance with statutory provisions, interpreted and supplemented by the accounting standards issued by the Organismo Italiano di Contabilità and, to the best of our knowledge, are suitable for providing a true and accurate representation of the economic, financial and asset-related situation of Grandi Stazioni SpA. Rome, 19 March 2009 Chief Executive Officer Executive in charge

120 GRANDI STAZIONI S.P.A. Share capital 4,304,201 Euros fully paid up Registered office: Via G. Giolitti, Rome Chamber of Commerce Company Registry no /96 STATUTORY AUDITORS REPORT TO THE SHAREHOLDERS MEETING Shareholders, we have performed the management audit, while the task of auditing the accounts has been assigned to PricewaterhouseCoopers S.p.A.. We attended the four meetings of the Board of Directors and acquired from the company s CEO and top managers the necessary information on management and the related outlook. We also inform you that, at its meeting held on 7 February 2008, the Board of Directors availed itself of the co-optation procedure, pursuant to article 2386 (1) of the Civil Code, in order to replace the Member of the Board, Nicola Mandarino, who passed away prematurely. In this case, the Board co-opted as Member of the Board Mauro Moretti, who was also appointed Chairman. In the same meeting, the Chief Executive Officer, Enrico Aliotti, relinquished his powers to the Board, which conferred them on Fabio Battaggia. The latter then assumed the office of Chief Executive Officer. In its meeting of 2 March 2009, the Board of Directors replaced Enrico Aliotti, who had tendered his resignation on 21 July 2008, and appointed Director by co-optation Massimiliano Capece Minutolo. During the 2008 financial year, we kept up an ongoing exchange of views and information with the Manager in charge of Internal Auditing and with the Surveillance Body, set up in pursuance of Legislative Decree 231/2001. In this respect, the periodic reports of the above mentioned Manager were analysed in depth with her; she had been 1

121 especially invited to attend all of our meetings. In particular, at the meeting of 25 March 2009, the dispute with the supplier FIDA was put into focus and the adequacy of the procedures provided for by Legislative Decree 231/2001 was verified. The punctual attendance, by the Chairman of the Board of Statutory Auditors, of the meetings of the Surveillance Body permitted a constant exchange of information on the activities carried out by the latter and effective operational coordination, as mentioned above, between the two Controlling Bodies. We point out that related party transactions are usual and that the Board of Directors provides punctual information on these in the relevant paragraph in the Report on Operations. We remind you that Grandi Stazioni S.p.A. is subject to direction and coordination activities by the parent company Ferrovie dello Stato S.p.A. and that the transactions conducted with it are similarly reported in the above mentioned section of the Report on Operations. We have also been in constant contact with the Auditing Firm PricewaterhouseCoopers S.p.A.; their partner and the managers responsible for auditing the accounts of Grandi Stazioni S.p.A. have always attended the Board of Statutory Auditors meetings. The Board of Statutory Auditors has therefore been in a position to take note that the controls on the accounts, along with the verifications with respect to social contributions and tax payments, have never highlighted omissions, irregularities or instances of unethical conduct; nor do they warrant in any way that a request for notification to the controlling bodies be made or that they be mentioned in this report. 2

122 In this respect, the partner of PricewaterhouseCoopers S.p.A., Ms Ciavarella, confirmed today that she will issue her opinion, confirming that the values reported in the financial statements for 2008 are true and fair and that they are consistent with the Report on Operations. We discussed these matters with the Auditing Firm in our meeting of 25 March last, debating and analysing in depth the more doubtful valuation issues. Having regard to the above and acting within our remit, therefore, we deem the above mentioned document worthy of approval, as well as the proposal regarding the apportionment of the profit of 15,019,576, set out by the Board of Directors at the end of the Report on Operations. Lastly, we remind you that the term of the Board of Directors ends with the 2008 financial year; you must therefore proceed to appoint this body. Rome, 15 April 2009 THE BOARD OF STATUTORY AUDITORS Carlo Conte CHAIRMAN Claudio Bianchi PERMANENT AUDITOR Paolo Buzzonetti PERMANENT AUDITOR>> 3

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