Consolidated Interim Management Statement as at 30 September 2008

Transcription

1 Consolidated Interim Management Statement as at 30 September 2008 (3 rd Quarter of FY2008) The file is available on the Company s web site at the address in the Investor Relations section This document contains a true translation in English of the report in Italian Resoconto intermedio di gestione consolidato al 30 settembre 2008 (3 Trimestre Esercizio 2008). However, for information about the Fiera Milano Group reference should be made exclusively to the original report in Italian. The Italian version of the Resoconto intermedio di gestione consolidato al 30 settembre 2008 (3 Trimestre Esercizio 2008) shall prevail upon the English version. Fiera Milano SpA Registered office: Piazzale Carlo Magno, Milan - Italy Operating and administrative office: SS del Sempione, Rho (Milan) Share capital: EUR 42,147, fully paid in Companies Register, Tax Code and VAT no R.E.A Milan, 13 November 2008

2 Table of contents Corporate Bodies and Independent Auditor 3 Group Structure 4 Notes illustrating the Interim Management Statement Performance overview and main events in the quarter 6 Net financial position 9 Segment reporting by business and geographical segment 10 Group employee headcount 13 Significant events after 30 September Future estimated business trend 14 Report preparation policies 15 Financial statements Consolidated Income Statement 18 Reclassified Consolidated Balance Sheet 19 Notes on balance sheet and financial performance 20 Attestation of the Manager charged with preparing the Company s financial reports 21 Appendix 1 List of consolidated companies and other equity investments as at 30 September

3 Corporate Bodies and Independent Auditor BOARD OF DIRECTORS Michele Perini Chairman Carlo Edoardo Valli Senior Vice President * Carlo Sangalli Vice President Claudio Artusi Chief Executive Officer Renato Borghi Director * Giovanni Deodato Director * Francesco Milone Director Romeo Robiglio Director * Fabrizio Viola Director * Independent director INTERNAL CONTROL & AUDIT COMMITTEE Carlo Edoardo Valli Giovanni Deodato Romeo Robiglio Fabrizio Viola COMPENSATION COMMITTEE Carlo Sangalli Renato Borghi Giovanni Deodato Carlo Edoardo Valli STATUTORY AUDITORS' COMMITTEE SUPERVISORY BOARD (Italian Legislative Decree 231/01) Damiano Zazzeron Chairman Michele Perini Romeo Robiglio Pier Andrea Chevallard Statutory auditor Renato Borghi Andrea Pizzoli Alfredo Mariotti Statutory auditor Francesco Milone Gianpaolo Del Sasso Francesco Arancio Substitute auditor MANAGER CHARGED WITH PREPARING THE COMPANY S FINANCIAL REPORTS (Italian Law 262/2005) Pietro Pensato Substitute auditor Bruno Boffo **** The mandate of the Board of Directors and of the Statutory Auditors Committee will expire on the date of the Shareholders Meeting called to approve the financial statements for the year ending on 31 December The Board of Directors is vested with the widest possible powers for ordinary and extraordinary management of the Company, with the sole exception of those deeds that, by law, are the prerogative of the Shareholders Meeting. The Chairman is responsible for supervising national and international institutional relationships, institutional communication, strategy co-ordination, and internal control activities (auditing); for checking implementation of the Board of Directors resolutions; and for assisting the Chief Executive Officer (CEO) in the Group s internationalisation activities. The CEO holds the powers of ordinary management with the exception of certain specific activities; i.e., the purchase or sale of equity investments, the taking out of loans exceeding 30% of the Company's equity, stipulation of contracts concerning property assets, with the exception of rental contracts for the performance of corporate business and of less than 6-year duration, approval of the operating budget, and the granting of guarantees to third parties. INDEPENDENT AUDITOR PricewaterhouseCoopers SpA The assignment was conferred by the Shareholders' Meeting of 28 October It was reorganised by the Shareholders' Meeting of 10 January 2007 following the change in financial year-end date. It was extended for a further six financial years (FYs) by the Shareholders' Meeting of 27 April It refers to the FY ended on 30 June 2006 and to the FYs ending on 31 December

4 Group Structure The Fiera Milano Group s Interim Management Statement (hereinafter Statement ) has been prepared pursuant to Article 154-ter of Italian Legislative Decree 58/1998 as well as in observance of the Italian Regulation for Issuers as per CONSOB (Italian securities & exchange commission) resolution no of 14 May 1999 as subsequently amended and supplemented. For the purposes of IAS 14, for segment reporting the Fiera Milano Group uses business segments as its primary segmentation. The segments concerned are as follows: - Venues & Related Services (VRS): this business consists of hosting exhibitions and other events, promoting and providing equipped exhibition spaces, and also offering design support and related services. This business segment includes the direct Parent Company Fiera Milano. - Value-Added Services (VAS): this business includes the supply of services mainly for the exhibition and congress segment. The following companies form part of this segment: Nolostand operates in the stand-fitting segment; Fiera Food System operates in the catering and banqueting sector; Edizioni Fiera Milano, Edizioni Specializzate and Media Management Holding operate in the trade publishing and advertising sector; Expopage operates in the Internet field. Eurofairs International Consultoria and Participações Ltda, headquartered in Sao Paulo in Brazil, will supervise the activities that the Fiera Milano Group may initiate in that country. It is currently not operational. - Exhibition & Congress Organisation (ECO): this business consists of organisation and management of exhibitions, conferences, and congresses. The following companies form part of this segment: Fiera Milano International, ExpoCTS, Fiera Milano Tech, and TL.TI Expo, which provide exhibition organisation services (the Rassegne subsidiary is currently not operational); Fiera Milano Congressi and Business International, which handle organisation of conferences and congresses; HM Global Germany GmbH, which is the joint venture with Deutsche Messe AG of Hanover, active via the two subsidiaries Hannover Fairs Shanghai Ltd. and Hannover Fairs China Ltd. in the organisation of exhibitions in China. Following acquisition of the equity interest in HM Global Germany GmbH, the Fiera Milano Group has started to perform significant activities abroad. Given this, as from FY2008 some information will also be provided by geographical segment. The chart on the following page shows the Fiera Milano Group s structure as at 30 September 2008, based on its primary segmentation by business segment. 4

5 Group Structure (cont.) 5

6 Notes illustrating the Interim Management Statement Performance overview and main events in the quarter The following table shows the Group s main figures for the 3 rd quarter (3Q08) and for the cumulative nine-month period as at 30 September 2008 (9M08), compared with data for the same periods in the previous FY (3Q07 and 9M07), as well as data for the whole FY2007. Fiera Milano Group FY Summary of key figures 3 rd Quarter 3 rd Quarter 9 months 9 months at 31/12/07 (Amounts in '000) at 30/09/08 at 30/09/07 at 30/09/08 at 30/09/07 302,536 Revenues from sales and services 53,500 55, , ,505 7,131 Gross operating margin (GOM) ( 1,219) ( 4,315) 37,046 7,375 ( 10,985) Net operating margin (NOM) ( 6,874) ( 6,939) 25,003 ( 1,238) ( 10,824) Profit/(loss) before income tax from continuing operations ( 7,973) ( 7,584) 23,412 ( 1,840) 1,396 Profit/(loss) before income tax from discontinued operations ,396 ( 9,428) Total profit/(loss) before income tax: ( 7,973) ( 7,584) 23,412 ( 444) ( 11,630) - Attributable to Group ( 7,478) ( 6,840) 22,886 ( 579) 2,202 - Attributable to Minority Interest ( 495) ( 744) ,688 Cash flow before income tax - Group and Minority Interest ( 2,318) ( 4,960) 35,455 8,169 78,259 Net capital employed 129,406 94, ,406 94,598 covered by: 65,239 - Equity attributable to Group 86,990 * 81,878 * 86,990 * 81,878 * 8,866 - Equity attributable to Minority Interest 7,927 * 7,372 * 7,927 * 7,372 * 4,154 Net financial position (cash) 34,489 5,348 34,489 5,348 13, Investments (continuing operations and discontinued operations) 17,169 6,771 40,043 11,273 Employees (no. of permanent employees at end of period) * Includes period result before income tax For the Fiera Milano Group, the 3 rd quarter of the FY structurally shows a loss because it includes the months of July and August, which in the exhibition industry are devoid of activity. We recall the fact that the Group's business features dual seasonality, i.e. (i) a greater concentration of exhibitions in the 6-month period from January to June, particularly in the 1 st quarter of the year, and (ii) exhibitions featuring multiannual frequency. In addition, as stated, the absence of exhibitions in the months of July and August and the presence of activity only in the first part of December significantly affects results of the July-December period. Given the seasonality of the business, revenues and results achieved in individual quarters cannot be projected over the full year and feature variations sometimes significant - from one quarter to another. As regards sale of the Eurostands subsidiary, completed on 22 March 2007, the comparative 9M07 result has been split, as required by IFRS 5, into results from continuing operations and from discontinued operations. 3Q08 featured completion of two important courses of action included in the Plan: Contribution by the ultimate parent entity, the Fiera Milano Foundation, of a company branch consisting of important exhibitions; Early release, as from 1 July 2008, of a portion of the downtown site fieramilanocity. 6

7 Contribution of the company branch involved major exhibitions, including the especially important exhibitions MACEF (homeware products sector), Miart (art sector), Tuttofood (agrifood sector), and LIFT (lifts sector). The main trademarks contributed had already been granted for use by the Fiera Milano Foundation to Fiera Milano Group Companies and, in one case, to Padova Fiere, via various contractual approaches, of which the most frequently used approach was company branch rental. On 14 July 2008 Fiera Milano SpA s Extraordinary Shareholders Meeting took place, and resolved the capital increase of 62,000 reserved for the Fiera Milano Foundation. The capital increase was subsequently released to service the contribution by the Fiera Milano Foundation of the exhibition trademarks branch, as stipulated in a public deed on 30 July On 8 August 2008, Fiera Milano s Board of Directors proceeded with checks of the valuations contained in the related appraisal report prepared by the expert appointed by the courts, pursuant to Article 2343, third paragraph, of the Italian Civil Code. These checks did not reveal any well-founded reason to revise the appraisal estimate. The shares issued as a consequence of the capital increase were admitted to trading on the STAR segment of the Electronic Share Market organised and managed by Borsa Italiana SpA, after publication of the prospectus on 14 October following the go-ahead given by the CONSOB (the Italian securities & exchange commission) for publication. Fiera Milano SpA prepared the prospectus due to the fact that the shares issued for the capital increase amounted to more than 10% of the Fiera Milano ordinary shares already admitted to trading. Following the reserved capital increase, the equity interest owned by the Foundation in Fiera Milano SpA increased from 52.82% to 62.06%. July featured the signature of an agreement between the Fiera Milano Foundation and Fiera Milano SpA for early release of the downtown exhibition site. This agreement envisages the following points: Use by Fiera Milano SpA of Pavilions 3 and 4 as exhibition space instead of the Pavilions 5 and 6 indicated in the Industrial Plan (which are set to be integrated with the MIC - Milano Convention Center, to become the largest European congress centre as part of the expansion project for the Congress Center of fieramilanocity), as well as free loan for use of Pavilions 1 and 2 until the Foundation identifies alternative uses for them; 1 July 2008 as the start date of the new arrangement; Confirmation of the same annual rental fee of 2,600, as envisaged in the Industrial Plan. In the quarter in question, Fiera Milano further developed its project for growth as a technical publisher. The objective is to supplement the communication developed by companies via exhibitions with specialist publications targeting sector operators. As regards this, on 31 July 2008 Fiera Milano SpA completed acquisition of the entire share capital of the company Media Management Holding (MMH), which is specialised in the publication of yearbooks and magazines for the real estate sector. MMH is owner of the publications RE Real Estate, RE Real Estate Europe, and Guida Medhit. The company also promotes important events that gather together the main players of the real estate sector, i.e.: Wine RE Business Club and Real Estate Awards - Ballo del Mattone. Fiera Milano is present in the real estate sector, hosting the exhibitions Expo Italia Real Estate and MADE Expo. The MMH acquisition has also enabled Fiera Milano to strengthen its position in an area of priority interest in view of the 2015 Expo. As done for the most recent deals, for this acquisition too the price was divided into an immediate cash payment of 6,000 and into two earn-out amounts, to be calculated on the basis of GOM (gross operating margin) achieved in FYs 2008 and In order to apply the earn-out mechanism, it is established that GOM in the two years indicated must not be lower than 1,350, and that below this minimum amount no earnout sum will be paid. At the end of July, Fiera Milano completed a deal enabling the Group to strengthen its position in the Meetings-Incentives-Conferences-Events (MICE) sector, which is one of the Group s most dynamic growth areas. Fiera Milano in fact completed acquisition of a company that had become the owner of the assets of Business International, a company specialised in management education and in the organisation of conferences and workshops, whose name has been taken by 7

8 the company acquired. Business International boasts consolidated experience in the planning and execution of institutional and management events. In addition, Business International also owns and manages the Who s Who portal a database of private companies and of the public administration that is constantly updated and made available to customers for consultation and direct marketing initiatives. The acquisition price was divided into an immediate cash amount of 2,300 and a forward earn-out amount, to be calculated on average GOM achieved in 2008 and It has been agreed that this sum cannot in any case exceed 2,400. For application of the earn-out mechanism, it is established that GOM in the two years indicated must not be less than 500. If average GOM achieved is instead lower than this amount, no sum will be paid. Moving on to examine 3Q08 figures in greater detail, we highlight the following main trends: Revenues from sales and services amounted to 53,500 and featured a decrease of -4.2% vs. 3Q07 ( 55,866). Lower revenues were the net result of negative differences mainly due to (a) the decrease of MACEF Autumn edition exhibition space, (b) cancellation/suspension of the Plusize Autumn edition and Meet Milano exhibitions, and (c) the different number of congress and meeting events held in the period and positive changes connected with acquisitions made during In 9M08 revenues from sales and services reached 244,693 and featured an increase of over 11% vs. the 9M07 figures. As already highlighted in the Half-Yearly Financial Report, this significant increase was largely due to the different exhibition calendar, as well as to first-time consolidation in 2008 of new acquisitions; GOM (Gross Operating Margin) in 3Q08 was -1,219 with improvement by 3,096 vs. -4,315 reported in 3Q07. The improvement was primarily due to limitation of direct costs also relating to elimination of the cost payable to the ultimate parent entity, the Foundation, for rental of the MACEF company branch following the asset contribution completed at the end of July. In addition, the Foundation in its capacity as owner of the MACEF trademark participated with the sum of about 2,000 in promotional expenses to strengthen the exhibition s autumn edition. The quarter also featured reduction of rental fee for the downtown site, following the partial release completed effective 1 July These improvements more than offset the lower margins associated with the decrease in revenues and the increase in energy and payroll costs. In the case of the latter, the increase was due to the actions taken to upgrade and develop Group management and employees via new hires, exit incentives, and an intensive training programme. In 9M08 GOM rose to 37,046, with a very significant increase vs. the 9M07 figure of 7,375; NOM (Net Operating Margin) was -6,874 and was substantially in line with the 3Q07 figure of -6,939. Provisions included 1,000 against the conclusion which took place in mid October of the agreement with the owner of the building rented in Berlin (the so-called Palazzo Italia), which has enabled the Group to return the second floor of the building to the owner with simultaneous termination of the rental contract for that portion of the building. A similar solution is pursued also for the two other floors of the building. In 9M08 NOM totalled 25,003 (vs. -1,238 in 9M07); The loss before income tax was -7,973 as compared with -7,584 in 3Q07. Of this, -7,478 was attributable to the Group (i.e. to the direct Parent Company s shareholders) (vs. -6,840 in 3Q07) and -495 was attributable to Minority Interest (vs in 3Q07); Lastly, total cash flow (calculated as total result before income tax plus depreciation & amortisation and provisions) in the quarter amounted to -2,318 vs. -4,960 in 3Q07. 8

9 Net financial position The Group s net financial position and its breakdown are shown in the following table. Consolidated Net Financial Position FY (Amounts in '000) 3 rd Quarter 1 st Half at 31/12/07 at 30/09/08 at 30/06/08 17,378 A. Cash (including bank balances) 18,226 12,699 - B. Other cash equivalents C. Securities held for trading ,378 D. Cash & cash equivalents (A+B+C) 18,226 12,699 62,301 E. Current financial assets 35,676 63,659 66,316 F. Current bank borrowings 71,850 88,650 6,673 G. Current portion of non-current debt 6,259 6,094 (1,076) H. Other current financial liabilities ,913 I. Current financial debt (F+G+H) 78,867 95,661 (7,766) J. Current net financial debt (cash) (I-E-D) 24,965 19,303 11,916 K. Non-current bank borrowings 9,524 9,670 - L. Debt securities on issue M. Other non-current (receivables)/liabilities ,920 N. Non-current net financial debt (cash) (K+L+M) 9,524 9,670 4,154 Net financial debt (cash) of continuing operations (J+N) 34,489 28,973 - Net financial debt (cash) of discontinued operations - - 4,154 O.Total net financial debt (cash) 34,489 28,973 As at 30 September 2008 the net financial position featured net debt of 34,489 vs. 28,973 as at 30 June Higher debt was due both to the flow of investments for acquisitions made during the period and to structural factors typical of the quarter i.e. negative cash flow due to the absence of activity in July and August. The quarter featured a growing increase in interest rates, which made it advisable to initiate extinction of short-term cash investments in capital redemption policies to cover the period s financial requirements directly. This operation was easy to implement thanks to this instrument s low risk profile and also because, when it had been subscribed, we had contractually negotiated the possibility of early termination, either total or partial, without paying any penalties. As up to 30 September, the policies released, liquidated and collected amounted to 28,400 (of which 57 for interest accruing during the quarter). The Group s cash is currently invested in short-term money market deposits. Following liquidation and collection of policies, current financial receivables decreased from 63,659 as at 30 June 2008 to 35,676 as at 30 September 2008 (inclusive of interest of 360). The change in the period was therefore ascribable to the portion of surrendered policies cashed in by 30 September 2008, net of interest accruing in the quarter. We point out that the remainder of the investments in policies amounting to 35,676 (including interest) were released and extinguished during October. Current financial debt, which amounted to 78,867 (vs. 95,661 as at 30 June 2008), showed a significant decrease due to the effect of release of the policies, partly absorbed by higher debt due to reclassification of the current portion of medium-/long-term debt. 9

10 Segment reporting by business and geographical segment The Group s main summary figures by business and geographical segment are detailed in the table on the next page. Revenues from sales and services, before adjustments for transactions between the Group s three business segments, amounted to 72,990 in 3Q08 and were almost aligned with those of 3Q07 ( 72,787). Revenues for VRS (Venues & Related Services), which refer to the direct Parent Company Fiera Milano SpA, amounted to 31,946 and featured an increase of 11.3% vs. 3Q07 ( 28,683). As from the quarter in question, the Parent Company s revenues include the fee relating to the MACEF exhibition following acquisition of the relevant company branch from the Foundation. More specifically, this fee related to the exhibition s autumn edition and amounted to 4,893. This revenue more than offset the decrease in revenues caused by less exhibition space sold and consequently lower revenues for services to Organisers and Exhibitors. Revenues for VAS (Value-Added Services) amounted to 14,556, some 7% higher than in 3Q07. The increase was mainly due to higher revenues in the technical publishing area (+35.2%) also due to the acquisition of the Edizioni Specializzate and MMH companies and in the stand-fitting area (+9.3%). Revenues for the ECO (Exhibition & Congress Organisation) segment amounted to 26,488, of which approximately 80% relating to organisation of exhibitions, whilst the remainder was attributable to the congress and meeting business. The latter s revenues were down by -13.1% because of the different number of congress events, as already highlighted in the comment on revenues linked also to the non-availability of some space in the Congress Centre due to work to comply with fire prevention regulations. Revenues for the organisation of exhibitions were down by some -16% YoY due, as already stated, to the lower number of sqm for MACEF Autumn edition and to the cancellation/suspension of the Plusize Autumn edition and Meet Milano exhibitions. Total Group GOM of -1,219 was attributable by business segment as follows: - VRS (Venues & Related Services): it posted GOM of -2,396 vs. -4,839 in 3Q07. This improvement was due to the factors already illustrated earlier; - VAS (Value-Added Services): GOM amounted to 1,763 vs. 1,317 in 3Q07. Improvement was mainly due to consolidation of companies in the publishing sector and to the stand-fitting area, by virtue of higher revenues in the period; - ECO (Exhibition & Congress Organisation): GOM totalled -586 vs in 3Q07. This segment benefited from the support provided by the Foundation for MACEF Autumn edition, which offset the deterioration reported by some companies belonging to this business area. Specifically, the Fiera Milano Congressi s revenue performance impacted its GOM. NOM (net operating margin) for the three business segments, which totalled -6,874 vs. -6,939 in 3Q07, only partly reflected the improvement reported in GOM as, in particular, it felt the effects of provisioning for the Berlin building and for write-down of some receivables relating to the VRS segment. 10

11 Summary figures by business and geographical segment (Amounts in '000) 3 rd Quarter 3 rd Quarter 9 Months 9 Months at 30/09/08 at 30/09/07 at 30/09/08 at 30/09/07 REVENUES FROM SALES & SERVICES comp. comp. comp. comp. - By business segment: % % % %. Venues & Related Services (VRS) 31, , , , Value-Added Services (VAS) 14, , , , Exhibition & Congress Organisation (ECO) 26, , , , Total revenues gross of adjustments for inter-segment transactions 72, , , , Adjustments for inter-segment transactions (19,490) (16,921) (60,345) (66,510) Total revenues net of adjustments for inter-segment transactions 53,500 55, , ,505 - By geographical segment:. Italy 52, , , , Foreign countries , Total revenues net of adjustments for geographical segment transactions 53, , , , GROSS OPERATING MARGIN (GOM) % on % on % on % on - By business segment: revenues revenues revenues revenues. Venues & Related Services (VRS) (2,396) (7.5%) (4,839) (16.9%) 26, % 4, %. Value-Added Services (VAS) 1, % 1, % 5, % 4, %. Exhibition & Congress Organisation (ECO) (586) (2.2%) (793) (2.6%) 5, % (1,164) (1.0%). Adjustments for inter-segment transactions Total (1,219) (2.3%) (4,315) (7.7%) 37, % 7, % - By geographical segment:. Italy (1,162) (2.2%) (4,315) (7.7%) 35, % 7, %. Foreign countries (57) (8.3%) - - 1, % - - Total (1,219) (2.3%) (4,315) (7.7%) 37, % 7, % NET OPERATING MARGIN (NOM) % on % on % on % on - By business segment: revenues revenues revenues revenues. Venues & Related Services (VRS) (6,007) (18.8%) (6,563) (22.9%) 18, % (873) (0.7%). Value-Added Services (VAS) % % 3, % 2, %. Exhibition & Congress Organisation (ECO) (1,519) (5.7%) (1,481) (4.9%) 3, % %. Adjustments for inter-segment transactions (237) (3,158) Total (6,874) (12.8%) (6,939) (12.4%) 25, % (1,238) (0.6%) - By geographical segment:. Italy (6,810) (12.9%) (6,939) (12.4%) 23, % (1,238) (0.6%). Foreign countries (64) (9.3%) - - 1, % - - Total (6,874) (12.8%) (6,939) (12.4%) 25, % (1,238) (0.6%) EMPLOYEES comp. comp. comp. comp. (no. of permanent employees at end of period) % % % % - By business segment:. Venues & Related Services (VRS) Value-Added Services (VAS) Exhibition & Congress Organisation (ECO) Total By geographical segment:. Italy Foreign countries Total As regards the breakdown by geographical segment, in 3Q08 the joint venture with Deutsche Messe of Hanover made a contribution in terms of revenues equal to 686 and the impact in terms of MOL and NOM was equal respectively to -57 and -64. In 3Q08, 7 exhibitions and 4 congresses with related exhibition area took place at the two exhibition sites, fieramilano and fieramilanocity. Exhibition space occupied totalled 237,540 net sqm, vs. 280,590 net sqm in 3Q07, while the number of exhibitors decreased from 5,800 in 3Q07 to 4,730 in 3Q08. Exhibitions organised by the Group occupied 105,040 net sqm of exhibition space, accounting for 44% of total space occupied. The detail by exhibition is shown overleaf. 11

12 Net sqm of exhibition space No. of exhibitors 3 rd quarter 3 rd quarter 3 rd quarter 3 rd quarter 3 rd quarter 3 rd quarter at 30/09/08 at 30/09/07 at 30/09/06 at 30/09/08 at 30/09/07 at 30/09/06 Annual exhibitions: Directly organised - Macef Autunno 96, , ,000 1,610 1,870 2,020 - Milanovendemoda (Autumn) 8,130 7,070 7, Plusize (Autumn) a) 1,800 1,350 a) Meet Milano a) 10,150 - a) Total directly organised 105, , ,850 1,820 2,270 2,290 Hosted - Micam (Autumn) 74,050 73,900 73,000 1,580 1,560 1,580 - Mifur Small Ville (1) 1, Mipel (Autumn) 19,510 19,100 18, Eicma Bici b) b) 29,200 b) b) Milano unica (Autumn) 31,430 33,200 32, Milano Moda Donna (Autumn) 1,750 2,200 3, Congresses with related exhibition area 3,810 18,300 3, Total hosted 132, , ,480 2,910 3,460 3,165 Total annual exhibitions 237, , ,330 4,730 5,730 5,455 Biennial exhibitions: Hosted - Bias c) d) 17,670 c) d) Fluidtrans c) d) 17,400 c) d) 340 Total hosted , Total biennial exhibitions , Multiannual exhibitions: Hosted - Samab e) 6,520 - e) 70 - Total multiannual hosted exhibitions - 6, Total multiannual exhibitions - 6, TOTAL EXHIBITIONS 237, , ,400 4,730 5,800 6,235 1) First time edition of the exhibition a) The exhibition did not take place b) Since 2007 the exhibition takes place in November c) In 2008 the exhibition took place in May d) Biennial exhibition e) Multiannual exhibition 12

13 Group employee headcount As at 30 September 2008 the Group had 770 employees, compared as follows with headcount as at 30 June 2008: Permanent employees at end of period FY (headcount) 3 rd Quarter 1 st Half at 31/12/07 at 30/09/08 at 30/06/08 Fully consolidated companies: 50 Managers Middle managers and white-collar workers (journalists included) Blue-collar workers Total Consolidated proportionally companies (a): - Managers and white-collar workers Total TOTAL (a) the indicated data corresponds to 49% of total employees Compared with 30 September 2008, the number of permanent employees featured a net increase of 44 heads. This was almost entirely due (35 heads) to the consolidation of the companies Media Management Holding and Business International. With regard to existing activities, there were 9 net hires. Following the acquisitions in the publishing segment, the number of Group employees employed according to journalist contracts increased and numbered 14 heads as at 30 September. 13

14 Significant events after 30 September 2008 At the beginning of November, the Fiera Milano Foundation and Fiera Milano SpA formalised an agreement via which the ultimate parent entity has committed to participating in development initiatives, taking on a portion of costs relating to initiatives and projects that have been started, or will be started, and will be completed by 30 June More specifically, the projects in question relate to the following corporate areas: human resources, web and information and communication technology, marketing and innovation, promotion and communication, internationalisation, reinforcement of relationship with the local community, and extraordinary operations mainly to support externally driven growth. The maximum amount accrued by the Foundation is 12,000 (of which 10,000 reflected in the FY2008 budget) and will be paid to Fiera Milano SpA based on the various initiatives progress status. Via this action, the Fiera Milano Foundation means to contribute in reinforcing the Group, so that it is better able to address the challenges of the internationalisation process, also in view of the 2015 Expo. The amount of the Foundation participation related to said projects for the activities performed in the 1 st half of the year totalled 6,062. At its meeting on 13 November, the Board of Directors decided to acquire the 49% minority interest in the ExpoCTS subsidiary. This deal once again goes in the direction of corporate rationalisation and enables the Group to achieve further reduction of minority interests. The 49% of shares at present is split as follows: 25% owned by ConfCommercio and 24% by the Unione del Commercio di Milano. The total price agreed is 9,128 and share transfer is scheduled to take place by the end of the current FY. In 2007 ExpoCTS achieved sales of 46,484, GOM of 4,518 and net profit of 1,467. As already planned at the time of acquisition, on 8 October the decision was taken to merge the two companies Edizioni Fiera Milano and Media Management Holding, in order to concentrate the Group s publishing activities in a single legal entity. The merger deed is expected to be stipulated by the end of the current FY, with the operation taking effect as from 1 January On 10 October, in relation to the singular situation of financial markets, Fiera Milano SpA decided to launch a programme to purchase treasury shares and, at the same time, suspended the plan for disposal of treasury shares initiated on 27 May 2008 to aid greater liquidity of the stock following the capital increase reserved for the ultimate parent entity, the Foundation. In implementing a programme to purchase treasury shares, the Company intended to stabilise the stock s price trend and, at the same time, send the market a signal of confidence in the Group. As at the date of this Statement, Fiera Milano has purchased no. 65,712 treasury shares at an average per-share price of 4.86 for a total of 319. At the present date Fiera Milano SpA, directly and indirectly, owns 713,605 treasury shares, accounting for 1.69% of share capital. Future estimated business trend For the time being the serious deterioration of the global macroeconomic picture has not had repercussions on the Group s performance. Given this, saving exceptional situations possibly involving immediate and strongly negative effects beyond the Group s control, we expect FY2008 to end with achievement of the GOM target of about 28,000 originally communicated to the market. It is instead more difficult to make medium-term forecasts (in particular for 2009 and the first part of 2010). As regards this, the Group has deemed it appropriate to postpone definitive finalisation of the Plan pending the emergence of more reliable indications on the economic outlook for nearer years. In effect, while long-term targets still look achievable, projections for the intermediate years are more uncertain. A more thought-out update of the Industrial Plan will also provide a better basis for measurement, when closing 2008 accounts, of the fair value attributable to the Group s intangible assets with an indefinite life. 14

15 Report preparation policies The Interim Management Statement (hereinafter Statement ) has been prepared pursuant to Article 154-ter of Italian Legislative Decree 58/1998 as well as in observance of the Italian Regulation for Issuers as per CONSOB (Italian securities & exchange commission) resolution no of 14 May 1999 as subsequently amended and supplemented. Income statement, balance sheet and financial disclosures have been prepared in compliance with the recognition and measurement criteria established by the International Financial Reporting Standards (IFRSs) issued by the International Accounting Standards Board (IASB) and adopted by the European Commission according to the procedure indicated in Article 6 of Regulation (EC) no. 1606/2002 of the European Parliament and Council dated 19 July The recognition and measurement criteria used to prepare 3Q08 financial statements are the same as those used to prepare the 2007 Consolidated Annual Report, to which reference should be made for their description. The amendments made to IAS 39 and IFRS 7 (endorsed by the European Commission with Regulation (EC) no. 1004/2008 of 15 October 2008), which authorise in rare circumstances reclassification of certain financial instruments from the held-for-trading category, changing their measurement criterion, did not produce any effects. The consolidated financial statements have been prepared based on the financial statements as at 30 September 2008 prepared by the Group s consolidated companies. As regards comparison of financial statements, we point out that, in contrast with the Half-Yearly Financial Report as at 30 June 2008, for the purposes of this Interim Management Statement as at 30 September 2008, income taxes have not been calculated, as permitted by the relevant CONSOB regulation. We also point out that the estimation procedures used in preparing the Interim Management Statement as at 30 September 2008 are substantially the same as those normally used for the preparation of annual consolidated financial statements. The list of companies consolidated as at 30 September 2008 is shown in Appendix 1. The area of consolidation compared with 30 June 2008 has changed as follows: entry of the companies Business International SpA and Media Management Holding SpA, both 100% owned by the Parent Company Fiera Milano SpA. We point out that this Interim Management Statement includes the effects of the share capital increase of the Parent Company Fiera Milano SpA, reserved for the ultimate parent entity, the Foundation, against contribution of the exhibition trademarks branch. Contribution of a company branch is considered a business combination if the definition of business as per IFRSs is met. However, business combinations of entities under common control are excluded from the scope of application of IFRS 3, which governs accounting treatment of business combinations. Given the peculiarity of these deals and the fact that IFRSs do not treat them specifically, it is believed that choice of the most appropriate accounting standard must be guided by the general objective envisaged by IAS 8, i.e. reliable and faithful representation of the deal. Furthermore, the accounting policy chosen to represent combinations of entities under common control must reflect their economic substance, regardless of the legal form. Also in the rules indicated in OPI 1 (OPI = Italian acronym for the Italian association of auditors preliminary orientations concerning IFRSs) Accounting treatment of business combinations of entities under common control in separate and consolidated financial statements the concept of economic substance is the key element guiding the method to be applied for accounting recognition and treatment of the deals in question. Economic substance must refer to generation of value added, which takes the material form of significant changes in the cash flows, before and after the deal, of the net assets transferred and 15

16 must be demonstrated by the directors of the entity that has executed the deal. Given all this, selection of the accounting policy for the deals in question which do not lead to a foreseeably significant effect on future cash flows must be guided by the prudential principle. This in turn suggests application of the criterion of continuity of the values of the net assets transferred. The value-continuity principle gives rise to recognition in the asset recipient s accounts of values equal to those that would emerge if the net assets involved in the combination had always been united. The net assets must therefore be recognised at the book values shown in the asset contributor s accounting records before the deal or, if available, at the values shown in the asset contributor s consolidated balance sheet. When transfer values are higher than historical values, the surplus must be eliminated by adjusting the asset recipient s equity downwards. To be noticed that this Interim Management Statement is unaudited. 16

17 Financial Statements 17

18 Consolidated Income Statement (Amounts in '000) FY 3 rd Quarter 3 rd Quarter 9 Months 9 Months at 31/12/07 at 30/09/08 at 30/09/07 at 30/09/08 at 30/09/07 % % % % % 302, Revenues from sales and services 53, , , , , Costs for materials 1, , , , , Costs for services 28, , , , , Costs for use of third-party assets 13, , , , , Payroll and employee benefit costs 12, , , , , Other operating expenses 1, , , , , Total operating costs 57, , , , , Other revenues 3, , , , , Gross operating margin (1,219) (2.3) (4,315) (7.7) 37, , , Depreciation & amortisation 3, , , , Allowance for doubtful accounts & other 2, provisions - (uses) 1, (847) (1.5) 1, (1,448) (0.7) 1, Adjustments to asset value (10,985) (3.6) Net operating margin (6,874) (12.8) (6,939) (12.4) 25, (1,238) (0.6) Finance income/(expense) (1,099) (2.1) (645) (1.2) (1,591) (0.7) (602) (0.3) Results of companies booked at equity (10,824) (3.6) 1, Profit/(loss) before income tax (from continuing operations) (7,973) (14.9) (7,584) (13.6) 23, (1,840) (0.8) Profit/(loss) before income tax (from discontinued operations) , (9,428) (3.1) Profit/(loss) before income tax: (7,973) (14.9) (7,584) (13.6) 23, (444) (0.2) (11,630) (3.8) - Attributable to the Group (7,478) (14.0) (6,840) (12.2) 22, (579) (0.3) 2, Attributable to Minority Interest (495) (0.9) (744) (1.3) Cash flow before income tax - Group 8, and Minority Interest (2,318) (4.3) (4,960) (8.9) 35, ,

19 Reclassified Consolidated Balance Sheet FY (Amounts in '000) 3 rd Quarter 1 st Half at 31/12/07 at 30/09/08 at 30/06/08 113,090 Goodwill and other intangible assets with indefinite life 146, ,693 10,315 Other intangible assets 9,733 9,497 43,487 Tangible Assets 39,849 40,578 30,729 Other non-current assets 29,868 21, ,621 Non-current assets 225, ,986 5,999 Inventories and work in progress 4,705 3,593 77,825 Trade and other receivables 73,694 77,189 - Other current assets ,824 Current assets 78,399 80,782 50,889 Trade payables 43,099 49,409 77,432 Payments received on account 34,045 33,304 4,177 Tax liabilities 1,739 6,336 36,942 Provisions for risks and charges and other current liabilities 57,281 39, ,440 Current liabilities 136, ,512 (85,616) Net working capital (57,765) (47,730) 112,005 Gross capital employed 168, ,256 9,641 Employee benefit provisions 9,461 9,093 24,105 Provisions for risks and charges and other non-current liabilities 29,330 28,613 33,746 Non-current liabilities 38,791 37,706 78,259 NET CAPITAL EMPLOYED (continuing operations) 129, ,550 - NET CAPITAL EMPLOYED (discontinued operations) ,259 TOTAL NET CAPITAL EMPLOYED 129, ,550 covered by: 65,239 Equity attributable to the Group 86,990 * 81,532 8,866 Equity attributable to Minority Interest 7,927 * 8,045 74,105 Total equity 94,917 89,577 (17,378) Cash & cash equivalents (18,226) (12,699) 9,612 Current financial (assets)/liabilities 43,191 32,002 11,920 Non-current financial (assets)/liabilities 9,524 9,670 4,154 Net financial position (continuing operations) 34,489 28,973 - Net financial position (discontinued operations) - - 4,154 Total net financial position 34,489 28,973 78,259 EQUITY AND NET FINANCIAL POSITION 129, ,550 *) Includes period result before income tax 19

20 Notes on balance sheet and financial performance As at 30 September 2008, non-current assets amounted to 225,962 vs. 203,986 as at 30 June The increase of 21,976 related to the balance between investments of 17,186 and depreciation & amortisation of 3,815. The rest of the change, amounting to 8,605, was due to the fact that this Interim Management Statement is presented on a pre-tax basis, thus generating a positive effect of the amount booked as deferred tax assets vs. the Half-Yearly Financial Report. Of investments, 12,294 referred to goodwill related to the acquisitions closed in 3Q08 of Media Management Holding and Business International. It includes the forward earn-out portion of the price, calculated at 5,244 based on the most likely assumption today concerning materialisation of contractually established conditions. Net working capital went from -47,730 as at 30 June 2008 to -57,765 as at 30 September The change of -10,035 was due to the following items: (a) (b) A decrease of 2,383 in Current assets due to: A net decrease of 3,495 in Trade and other receivables, ascribable to the decrease in trade receivables because of the lesser presence of exhibitions in 3Q08, partly offset by the increase in the Parent Company s prepaid expense due to the 3Q08 portion of the rental fee for the two exhibition sites paid in advance in July; An increase of 1,112 in Inventories and work in progress as net effect of the reduction of suspended costs in previous quarters relating to exhibitions that took place in 3Q08 (in particular MACEF Autumn edition) and the increase of suspended costs in 3Q08 relating to exhibitions pertaining to subsequent periods (in particular Wellness and MADE Expo); A net increase of 7,652 in Current liabilities, mainly due to: An increase of 17,818 in the items Provisions for risks & charges and Other current liabilities referring mainly to the (i) increase of 11,494 in the Parent Company s payables vs. exhibition Organisers relating to down payments received from exhibitors for future exhibitions (Micam, Mipel, Bimu, MADE Expo, Viscom, and Mostra Convegno Expocomfort); (ii) increase of 1,528 in Deferred income; and (iii) increase of 1,874 in Provisions for risks & charges, of which 1,000 relating to provisioning concerning Palazzo Italia in Berlin, with the remainder due to charges for legal disputes underway; A decrease of 6,310 in Trade payables due to the lower level of activity in 3Q08; A decrease of 4,597 in Tax liabilities, due to the fact that current tax liabilities posted as at 30 June 2008 included provision of 4,297 not included in this Interim Management Statement because it is prepared on a pre-tax basis. Equity attributable to the Group (i.e. to the direct Parent Company s shareholders), including the period s pre-tax loss, amounted to 86,990 as at 30 September 2008 vs. 94,925 as at 30 June 2008 ( 81,532 after income taxes), with a decrease of 7,935 attributable to the following changes, i.e. to the: Increase of share capital by 8,256 in par value, against contribution of the exhibition trademarks branch; Increase of 53,744 in the share premium reserve connected with the above share capital increase; Reduction of Equity of 61,785, due to the accounting treatment of the contribution of the trademark company branch, taking into account that the deal is a business combination of 20

21 entities under common control, as described in the section on Report Preparation Policies; Costs relating to the share capital increase operation, amounting to 802, booked as a deduction from equity; Positive change of 122 in the Foreign currency translation reserve ; Period s loss attributable to the Group of -7,478; Other minor positive changes totalling 8. Equity attributable to Minority Interest, including the period s pre-tax loss, amounted to 7,927 as at 30 September 2008 vs. 8,422 as at 30 June 2008 ( 8,045 after income taxes), with a decrease of 495 due to the loss attributable to Minority Interest reported in the quarter. ***** Attestation of the Manager charged with preparing the Company s financial reports The Manager charged with preparing the Company s financial reports, Bruno Boffo, in compliance with the requirements of paragraph 2 of Article 154-bis of the Italian Consolidated Finance Act (Testo Unico della Finanza), herewith declares that the financial disclosure contained in this Interim Management Statement matches documentary evidence, corporate books, and accounting records. 21

22 List of consolidated companies and other equity investments as at 30 September 2008 APPENDIX 1 A) List of consolidated companies Share held (%) Share held by Group companies Company name and headquarters Share capital ( '000) (*) Group Total Direct Fiera Milano Indirect other Group Companies % Parent company Fiera Milano SpA Milan, p.le Carlo Magno 1 42,147 List of fully consolidated companies Edizioni Fiera Milano SpA Milan, via Salvator Rosa 14 2, Fiera Milano SpA Fiera Milano Congressi Spa Milan, p.le Carlo Magno Fiera Milano SpA Fiera Milano International SpA Milan, via Varesina Fiera Milano SpA Expo CTS SpA Milan, via Generale G. Govone 66 1, Fiera Milano SpA Expopage SpA Milan, p.le Carlo Magno 1 2, Fiera Milano SpA Fiera Food System SpA Milan, p.le Carlo Magno Fiera Milano SpA Nolostand SpA Milan, via Mecenate 84 7, Fiera Milano SpA Business International SpA Rome, via Isonzo 42/C Fiera Milano SpA Media Management Holding Rome, Via Muzio Clementi, Fiera Milano SpA Edizioni Specializzate SpA Milan, via Ariberto Fiera Milano SpA Fiera Milano Tech SpA Milan, via Gattamelata 34 3, Fiera Milano SpA TL.TI. Expo SpA 9 Fiera Milano SpA Padua, via Guizza 53 1, Fiera MilanoTech SpA Rassegne SpA Milan, p.le Carlo Magno Fiera Milano SpA Eurofairs International Ltda São Paulo - SP - Brasil 99 Fiera Milano SpA Rua Padre João Manoel 755 R $ Rassegne SpA List of jointly controlled companies consolidated proportionally HM Global Germany GmbH Hannover Germany, Messegelaende Fiera Milano SpA Hannover Fairs Shanghai Co. Ltd Shanghai China, Pudong Office Tower USD HM Global Germany GmbH Hannover Fairs China Ltd Hong Kong China, Golden Gate Building HKD HM Global Germany GmbH B) List of companies accounted for at cost Share held (%) Share held by Group companies Company name and headquarters Share capital ( '000) (*) Group Total Direct Fiera Milano Indirect other Group Companies % Sviluppo Sistema Fiera SpA Milan, largo Domodossola 1 5, Fiera Milano Congressi Spa Obiettivo Lavoro Scrl Milan variable n.m. n.m. Fiera Milano SpA (*) or other currency as specifically indicated 22