annual report 2009

C I R

ANNUAL REPORT CONSOLIDATED AND STATUTORY

FINANCIAL STATEMENTS

GGianoglio

Text Box

FINANCIAL YEAR 2009

C O N T E N T S

ADMINISTRATIVE BODIES ................................................................................................................................ 4 LETTER TO THE SHAREHOLDERS ..................................................................................................................... 7 ANNUAL REPORT

REPORT ON OPERATIONS ............................................................................................................................. 9 1. PERFORMANCE OF THE GROUP...........................................................................................................................14 2. PERFORMANCE OF THE PARENT COMPANY…………. ..........................................................................................18 3. CHART RECONCILING THE FIGURES OF THE PARENT COMPANY WITH THOSE OF THE

CONSOLIDATED FINANCIAL STATEMENTS .........................................................................................................19 4. PERFORMANCE OF THE BUSINESS SECTORS………………….................................................................................21 5. OTHER ACTIVITIES ..............................................................................................................................................28 6. SIGNIFICANT EVENTS WHICH OCCURRED AFTER THE CLOSE OF THE YEAR.......................................................29 7. MAIN RISKS AND UNCERTAINTIES TO WHICH CIR S.p.A. AND ITS GROUP ARE EXPOSED.................................29 8. OTHER INFORMATION .........................................................................................................................................31 9. PROPOSED ALLOCATION OF NET INCOME FOR THE YEAR ..................................................................................37

CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31 2009 1. STATEMENT OF FINANCIAL POSITION ................................................................................................................40

2. INCOME STATEMENT..........................................................................................................................................41 3. STATEMENT OF COMPREHENSIVE INCOME……………………….. ...........................................................................42 4. STATEMENT OF CASH FLOW...............................................................................................................................43 5. STATEMENT OF CHANGES IN EQUITY.................................................................................................................44 6. EXPLANATORY NOTES ........................................................................................................................................45

CONSOLIDATED FINANCIAL STATEMENTS OF DIRECTLY CONTROLLED SUBSIDIARIES .............................................131

CERTIFICATION OF THE CONSOLIDATED FINANCIAL STATEMENTS IN ACCORDANCE WITH ART. 154 BIS OF D.LGS. 58/98 ..........................................................................................................................141

STATUTORY FINANCIAL STATEMENTS OF THE PARENT COMPANY AS OF DECEMBER 31 2009

1. STATEMENT OF FINANCIAL POSITION ................................................................................................................144 2. INCOME STATEMENT..........................................................................................................................................145 3. STATEMENT OF COMPREHENSIVE INCOME ........................................................................................................146 4. STATEMENT OF CASH FLOW...............................................................................................................................147 5. STATEMENT OF CHANGES IN EQUITY.................................................................................................................148 6. EXPLANATORY NOTES ........................................................................................................................................149

STATUTORY FINANCIAL STATEMENTS OF DIRECTLY CONTROLLED SUBSIDIARIES...................................................195

CERTICATION OF THE STATUTORY FINANCIAL STATEMENTS IN ACCORDANCE WITH ART. 154 BIS OF D.LGS 58/98 ...........................................................................................................................221

LIST OF EQUITY INVESTMENTS AT DECEMBER 31 2009 .............................................................................. 223 REPORT OF THE BOARD OF STATUTORY AUDITORS . ................................................................................... 233 REPORT OF THE INDEPENDENT AUDITORS..................................................................................................... 245 This Annual Report and Financial Statements as of December 31 2009 were prepared as per the terms of Art. 154 ter of D.Lgs. 58/98 and were drawn up in accordance with international accounting standards applicable as recognized by the European Union in Regulation (EC) no. 1606/2002 of the European Parliament and the Council, of July 19 2002, as well as with the measures issued in implementation of Art. 9 of D. Lgs. No 38/2005.

COMPAGNIE INDUSTRIALI RIUNITE

Limited-liability corporation - Share capital € 396,058,633.50 - Registered Office: Via Valeggio, 41 – 10129 Turin - www.cirgroup.it

R.E.A. n. 3933 – Turin Company Register / Fiscal Code / VAT no. 00519120018 Company subject to management and coordination by COFIDE S.p.A.

Head Office: Via Ciovassino, 1 – 20121 Milan – Tel. +39 02 72270.1

Office in Rome: Via del Tritone, 169 – 00187 Rome – Tel. +39 06 692055.1

BOARD OF DIRECTORS Honorary Chairman and Director CARLO DE BENEDETTI (3) Chairman STEFANO MICOSSI (1) Chief Executive Officer RODOLFO DE BENEDETTI (2) and General Manager Directors GIAMPIO BRACCHI (4) FRANCO DEBENEDETTI PIERLUIGI FERRERO GIOVANNI GERMANO (3) (4) FRANCO GIRARD (5) PAOLO MANCINELLI (5) LUCA PARAVICINI CRESPI (4) CLAUDIO RECCHI MASSIMO SEGRE GUIDO TABELLINI (3) (5) (6) UMBERTO ZANNI (3) Secretary to the Board FRANCA SEGRE

BOARD OF STATUTORY AUDITORS Chairman PIETRO MANZONETTO Statutory Auditors LUIGI NANI RICCARDO ZINGALES Alternate Auditors MARCO REBOA GIANLUCA PONZELLINI LUIGI MACCHIORLATTI VIGNAT

INDEPENDENT AUDITORS

DELOITTE & TOUCHE S.p.A.

Notice in accordance with the recommendation of Consob contained in its Communiqué no. DAC/RM/97001574 of February 20 1997:

(1) Legal representative (2) Power to sign all documents relating to ordinary and extraordinary administration with single signature except for those reserved by law to the Board of Directors (3) Member of the Compensation Committee (4) Member of the Internal Control Committee (5) Member of the Appointments Committee (6) Lead Independent Director

CIR S.p.A. 104th Year of Business

ANNUAL GENERAL MEETING OF THE

SHAREHOLDERS Turin, April 29 2010, 1st call Turin, April 30 2010, 2nd call

NOTICE OF ORDINARY AND EXTRAORDINARY ANNUAL GENERAL MEETING

Shareholders are invited to attend the Ordinary and Extraordinary Sessions of the Annual General Meeting of the Shareholders of the Company to he held in the Congress Centre of the Unione Industriale di Torino in Turin - Via Fanti 17, on April 29 2010 at 10.30 a.m. at the first call and on April 30 2010 at the same time and the same place, if a second call is necessary, in order to discuss and pass resolution on the following

AGENDA Ordinary part

1. Annual Report and Financial Statements for the year ended December 31 2009.

Report of the Board of Statutory Auditors. Resolutions pertaining to the above.

2. Proposal to revoke the resolution adopted on April 30 2009 authorizing the buy-back of the Company’s own

shares and the disposal of the same and proposal for a new authorization. 3. Proposal regarding the approval of stock option plan 2010. Extraordinary part 4. Proposal to supplement the power to issue convertible bonds or bonds with warrants attached assigned to the

Board of Directors by the Extraordinary Meeting of the Shareholders held on April 30 2009 as per Art. 2420-ter of the Civil Code. Consequent amendment of Art. 4 of the Company Bylaws.

The share capital consists of 792,117,267 ordinary shares with a nominal value of € 0.5 each with voting rights of which 43,074,000 own shares without voting rights. Shareholders are entitled to attend the Meeting of Shareholders provided that their intermediaries have sent in the notification required by Article 23 of Consob / Bank of Italy Measure of February 22 2008 at least two working days before the meeting. Any holders of shares that have not yet been dematerialized should present their share certificates to an authorized intermediary for input into the centralized clearing system in electronic form, in accordance with the provisions of Article 38 of Consob / Bank of Italy Measure of February 22 2008, and should request that the notification as above be sent in within the time limit mentioned above. To facilitate the checking process, shareholders are requested to show their copy of the notification made to the Company which the intermediary, in accordance with current regulations, is required to make available to them. This same copy of the notification should be used for delegating a proxy to represent them by signing the proxy form at the bottom of the document in question. Shareholders may obtain a copy of the documentation regarding the items on the Agenda, as per the provisions of the law, from the Company offices or from Borsa Italiana S.p.A.

THE BOARD OF DIRECTORS Notice of this meeting was published in the newspaper “la Repubblica” on March 26 2010

LETTER TO THE SHAREHOLDERS

Dear Shareholders, In 2009 the international financial crisis that had originated in 2007 spread to the real economy, causing a deep global recession. In Europe and in Italy, in particular, the Gross Domestic Product shrank to an extent without precedent in the last ten years. The sharp reduction in production and trade flows put stability at risk and in some cases jeopardized the survival of many businesses throughout the world. This economic scenario had a negative impact on almost all business sectors, including the ones in which our group operates, with the exception of healthcare. The energy sector recorded the first drop in world energy consumption since World War 2. In Italy, the decline on 2008 was almost 7% for electricity and over 8% for gas. Publishing felt the effect of the sharp contraction in advertising, which in our country suffered a double-digit decline (approximately -13% the overall reduction, -22% approximately for the print media), and also of a structural factor that has been affecting the sector for some time, the development of new technology platforms in the market. Last but not least, the automotive component business was hit significantly by the sharp decline in the production of new vehicles in Europe (-18% for cars, -60% for industrial vehicles). By contrast, the healthcare sector was in no way affected by the downturn, thanks to its historically non-cyclical demand, which is influenced by social and health factors such as the gradual aging of the popuation and the rise in the number of elderly people who are not self-sufficient. One of the few positive factors of the year was the return to normality of the international financial markets, especially in the second half of the year. Today many people expect 2010 to be a year of economic recovery, although there is still plenty of uncertainty, especially in Europe. In such a complex environment the CIR Group closed 2009 with a significant increase in its consolidated net income compared to last year. This was due mainly to the improvement in the result of our financial activities, linked to the recovery of the markets. In terms of revenue and margins, however, despite the higher results obtained by the healthcare business, the group was negatively affected by the effects of the recession on its other main business sectors. In 2009 we focused on the current portfolio of the group, which consists of the energy sector (Sorgenia), media (Espresso Group), automotive components (Sogefi), healthcare (KOS, the new name for the former Holding Sanità e Servizi) and financial services (Jupiter Finance and other minor businesses). To counter the severe economic recession, we supported the management of all the operating companies in designing and implementing plans able to adjust costs to the changed levels of activity, without sacrificing business development initiatives. The measures put in place as from the second half of 2008 which continued throughout last year enabled us to obtain some important results during the year, especially in the media and automotive components sectors, which were the hardest hit by the crisis. At the holding level, CIR further strengthened its financial structure, ending the year with an aggregate net financial surplus which was almost treble that at the end of 2008. Our commitment to keeping a sound financial structure will continue in 2010 too. For this reason, and also because of the absence of earnings at parent company level, the Board of Directors will put forward the proposal to the Shareholders’ Meeting that no dividend be distributed for the year 2009. This is a difficult choice to make but in such a long phase of uncertainty as the present one we feel that a solid capital structure for the group must be the top priority. Our share price performed strongly in 2009 , after a somewhat lacklustre 2008 for the whole market. During the year our company entered the FTSE/MIB index of the Milan Exchange, which includes stocks with the highest capitalization. The significant increase in the value of our stock does give us satisfaction, but our time horizon remains as always the medium-long term.

In summing up the year that recently ended, we should also mention the first degree civil verdict of the Milan Court which ruled that CIR should receive compensation from Fininvest for the “Lodo Mondadori” case, which took place at the beginning of the 1990s. The basis for this compensation was an episode of corruption that took place at that time, which the judges of the Criminal Court have established definitively to have been the case. The civil proceedings are continuing in the Court of Appeal. CIR is awaiting the coming stages of the judicial process convinced that its good reasons will prevail and is strongly determined to uphold these reasons in the interest of the company and of all its shareholders. The results obtained by our group in the difficult year 2009, not only in economic and financial terms but also in relation to the measures put in place to counter the crisis, are in our view confirmation of the quality of the management team of the operating companies and of the validity of the strategy of focusing on a balanced portfolio of business activities, which we have been following in recent years. 2010 is proving to be another challenging year. Despite signs of stabilization and forecasts of a tentative economic recovery in Europe, the economic environment still has numerous factors of uncertainty and risk. Furthermore, in several of the sectors in which we operate the difficulties of the recession are accompanied by structural factors such as excess supply in some segments of the energy market, the development of new technologies in publishing and excess production capacity in Europe in the automotive industry. The actions that we have taken in the last 18 months have made our group more efficient and competitive in all its sectors of activity. In this way the difficult environment has been an opportunity. The macroeconomic scenario is now posing new challenges. We will continue to work, with commitment and responsibility, to foster the sustainable development of the CIR group in the long term.

Signed by The Chief Executive Officer Rodolfo De Benedetti

REPORT ON OPERATIONS Dear Shareholders, In 2009 the CIR Group reported consolidated net income of € 143.4 million, up from € 95.5 mil-lion in 2008, posting a rise of € 47.9 million (+ 50.2%). Consolidated revenues totalled € 4,266.8 million compared to € 4,727 million in the previous year (-9.7%). The rise in net income was due above all to the significant improvement in the result of financial activities, which came to a positive € 47.3 million (compared to a negative figure of € 32.3 million in 2008), and to the realization of net non-recurring gains of € 63.4 million (€ 64.2 million in 2008). The contribution of the financial companies benefited both from the recovery of the financial markets, which determined a rise in the value of securities in the portfolio for approximately € 42 million, and from the further disinvestment from Medinvest which led to the realization of capital gains of approximately € 44 million. The non-recurring gains came for approximately € 77 million from the subscription by Verbund of the capital increase of € 150 million in Sorgenia, which was made on the basis of a valuation of the company of € 3.9 billion. The net result of the Group benefited from the positive contribution of the operating companies of € 32.7 million, down from € 63.6 million in 2008, due to the decline in profitability resulting from lower revenues and to the restructuring costs incurred. This result reflects the repercussions of the negative economic environment on the main operating subsidiaries, with the exception of health-care. The CIR Group includes five business sectors: utilities (electricity and gas), media (publishing, radio and television), automotive components (filters and suspension components), healthcare (nursing homes, rehabilitation and hospitals) and financial services (non-performing loans and loans secured on one fifth of workers’ salaries). In 2009 the Group continued and strengthened the management action taken in the last few months of 2008 to counter the impact of the global crisis. Specifically, in the media and automo-tive components sectors, the hardest hit by the current recession, important measures were taken to increase efficiency and cut costs which during the year led to a gradual, albeit partial, recovery

Report on Operations 9

of profitability. The aim of this strategy, which involves maintaining investments in new initia-tives, is to enable all the companies of the Group to counter the coming economic cycles with a more solid, efficient and competitive structure. In the utilities sector in an extremely difficult market environment characterized by a sharp fall both in demand for energy and in prices in the sector, the Sorgenia group reported revenues of € 2,325.8 million, down by 4.4% from € 2,432 million in 2008, an EBITDA of € 117.8 million (-37.8% compared to € 189.6 million in 2008) and net income of € 66.9 million, in line with the previous year, partly thanks to tax benefits on important investments in greater production capac-ity. During the year the group continued to roll out its business plan, with investments in new production capacity from both conventional and renewable sources. In the media sector in 2009 the Espresso group suffered the effects of the crisis which affected publishing with a significant contraction in advertising investment. This trend had a significant impact on the results of the group: revenues fell by 13.5% to € 886.6 million and the gross operat-ing margin went down to € 106.7 million (-25.2%). Despite the general scenario, however, the Espresso group recorded a positive result of € 5.8 million, after having posted extraordinary pro-visions of a fiscal nature of € 11.4 million and having incurred restructuring costs of approxi-mately € 31 million. In 2009 the Sogefi group, suffering the effects of the sharp contraction in vehicle production worldwide, reported a net loss of € 7.6 million (net income of € 28.5 million in 2008) with reve-nues of € 781 million (-23.2% from € 1,017.5 million in 2008) and an EBITDA of € 47.2 million, down from € 104.9 million in 2008, after restructuring costs of € 17.2 million. The action taken rapidly and effectively to counter the crisis in the sector enabled the group to recoup profitability and return to profit as from the third quarter of 2009. The KOS group (formerly HSS – Holding Sanità e Servizi) continued in 2009 to follow its growth trend which has enabled it in just a few years of business to become one of the main operators in private healthcare in Italy. The group reported consolidated revenues of € 273.4 million (+11%) and an EBITDA of € 33 million which was up by 14.9% on the figure of € 28.7 million in 2008. The consolidated net result was a loss of € 0.4 million compared to a net loss of € 1.5 million in 2008, affected by non-recurring costs of € 3.3 million, partly due to a corporate reorganization that will in future make it possible to further improve the efficiency of the company. In the financial services sector Jupiter Finance operates in the non-performing loan segment. At December 31 2009 the portfolio of loans under management amounted to approximately € 2.2 bil-lion of nominal value, of which approximately 60% acquired through securitization vehicles and the remaining 40% managed on behalf of other investors. During 2009 CIR simplifed its international activities at the holding level, concentrating the assets held by Cirfund (through a merger by incorporation) and by Medinvest (through a redemption in kind) in the Luxembourg company CIR International. In November, therefore, CIR International took on the assets of Medinvest, which consisted mainly of shares in various hedge funds, for a total value of US$ 117 million (€ 79.8 million).

10 Report on Operations

On October 3 2009 the first degree ruling of the Court of Milan upheld the right of CIR to com-pensation from Fininvest, for patrimonial damages caused by so-called “Lodo Mondadori” case, for the sum of approximately € 750 million. Following this ruling, Fininvest delivered to CIR a guarantee at the first request for an amount of € 806 million issued by a prime bank to cover this amount should the sentence be confirmed in the Court of Appeal. The charts on the following pages show a breakdown by business sector of the economic and fi-nancial results of the Group, a breakdown of the contribution of the main subsidiaries and the ag-gregate results of the CIR holding and its financial holding company subsidiaries (CIR Interna-tional, CIGA Luxembourg , CIR Investment Affiliate and Dry Products).


INCOME STATEMENT BY BUSINESS SECTOR AND CONTRIBUTIONS TO THE RESULT OF THE GROUP

(in millions of euro) 2008

CONSOLIDATED Revenues Costs of Other Adjustments Amortization Net Dividends, Income Net income Net result Net resultproduction operating to value of depreciation financial gains & taxes minority of the of the

income/costs investments & writedowns income & losses from Shareholders Group Groupvalued at expense trading &

equity valuingsecurities

AGGREGATE (1) (2) (3) (4)Sorgenia Group 2,325.8 (2,221.2) (26.5) 39.5 (46.9) (37.6) -- 46.9 (45.5) 34.5 37.1 Espresso Group 886.6 (777.8) (3.2) 1.0 (42.7) (21.3) 1.7 (38.8) (2.3) 3.2 11.3 Sogefi Group 781.0 (708.2) (23.9) -- (43.0) (11.6) 0.1 (0.7) 1.9 (4.4) 16.4 Kos Group (formerly HSS) 273.4 (231.2) (12.7) -- (13.0) (8.3) -- (8.2) (0.2) (0.2) (0.9)Other subsidiaries -- (29.3) 34.2 -- (0.1) (5.0) -- (0.2) -- (0.4) (0.3)

Total operating subsidiaries 4,266.8 (3,967.7) (32.1) 40.5 (145.7) (83.8) 1.8 (1.0) (46.1) 32.7 63.6

Financial subsidiaries -- (0.9) (0.1) -- -- (0.2) 44.7 -- (0.2) 43.3 48.5

Total subsidiaries 4,266.8 (3,968.6) (32.2) 40.5 (145.7) (84.0) 46.5 (1.0) (46.3) 76.0 112.1

CIR & financial holdings

Revenues -- -- -- -- Operating costs (18.7) -- (18.7) (18.0)Other operating income & costs 4.9 -- 4.9 5.8

Adjustments to the value of investmentsvalued at equity (0.8) -- (0.8) (1.1)Amortization, depreciation & writedowns (0.9) -- (0.9) (0.9)Net financial income & expense (20.1) 0.1 (20.0) (30.6)Dividends, gains & losses from trading securities 34.2 -- 34.2 (43.9)Income taxes 5.3 -- 5.3 7.9

Totale CIR & financial holdingsbefore non-recurring items -- (18.7) 4.9 (0.8) (0.9) (20.1) 34.2 5.3 0.1 4.0 (80.8)

Non-recurring items -- (7.4) 10.1 -- -- -- 60.5 -- 0.2 63.4 64.2

Total consolidated of Group 4,266.8 (3,994.7) (17.2) 39.7 (146.6) (104.1) 141.2 4.3 (46.0) 143.4 95.5

(1) This items is the sum of "change in inventories", "costs for purchase of goods, "costs for services", "personnel costs" of the consolidated income statement. The item does not consider the effect of € (17.6) million of intercompany elimination.(2) This item is the sum of "other operating income" and "other operating costs" in the consolidated income statement. The item does not consider the effect of € 17.6 million of intercompany elisions.(3) This item is the sum of "financial income" and "financial expense" in the consolidated income statement.(4) This item is the sum of "dividends", "gains from trading securities", "losses from trading securities" and "adjustments to the value of financial assets" in the consolidated income statement.

2009

CONSOLIDATED BALANCE SHEET BY BUSINESS SECTOR

(in millions of euro)31.12.2008

CONSOLIDATED Fixed assets Other net Net Net financial Total equity Minority Equity of the Equity of thenon-current working position of which: Shareholders' Group Group

assets&liabilities capital equityAGGREGATE (1) (2) (3) (4)Sorgenia Group 2,117.6 108.8 225.0 (1,321.1) (*) 1,130.3 572.5 557.8 450.5

Espresso Group 894.0 (185.5) (4.9) (208.2) 495.4 228.5 266.9 262.4

Sogefi Group 363.4 (37.5) 26.5 (170.2) 182.2 86.2 96.0 92.6

Kos Group (formerly HSS) 303.8 (21.5) 20.9 (163.5) 139.7 49.7 90.0 90.6

Other subsidiaries 0.5 81.7 (6.4) (59.7) 16.1 0.1 16.0 21.6

Total subsidiaries 3,679.3 (54.0) 261.1 (1,922.7) 1,963.7 937.0 1,026.7 917.7

CIR & financial holdings

Fixed assets 128.6 128.6 -- 128.6 129.9

Other net non-current assets & liabilities 137.7 137.7 (1.4) 139.1 160.8

Net working capital (19.3) (19.3) -- (19.3) 12.3

Net financial position 121.6 121.6 121.6 44.2

Total consolidated of Group 3,807.9 83.7 241.8 (1,801.1) 2,332.3 935.6 1,396.7 1,264.9

(*) The financial position includes the free cash flow of Sorgenia Holding S.p.A.

(1) This item is the algebraic sum of "intangible assets", "tangible assets", "investment property", "investments in companies valued at equity" and "other equity investments" in the consolidated balance sheet.(2) This item is the algebraic sum of "other receivables", "securities" and "deferred taxes" in non-current assets and of "other payables", "deferred taxes", "personnel provisions" and "provisions for risks and losses of non-current liabilities of the consolidated balance sheet.(3) This item is the algebraic sum of "inventories", "contracted work in progress", "trade receivables" and "other receivables" in current assets and of "trade payables", "other payables" and "provisions for risks and losses" in current liabilities of the consolidated balance sheet(4) This item is the algebraic sum of "financial receivables", " securities", "available-for-sale financial assets" and "cash and cash equivalents" in current assets, "bonds and notes" and "other borrowings" in non-current liabilities and of "bank overdrafts", "bonds and notes" and "other borrowings" in current liabilities of the consolidated balance sheet.

31.12.2009

1. PERFORMANCE OF THE GROUP Consolidated revenues for 2009 came in at € 4,266.8 million, down from € 4,727 million in 2008, with a decline of € 460.2 million (-9.7%). Consolidated revenues can be broken down by business sector as follows: (in millions of euro) Change 2009 % 2008 % absolute %

Utilities

Sorgenia Group 2,325.8 54.5 2,432.0 51.5 (106.2) (4.4)

Media Espresso Group 886.6 20.8 1,025.5 21.7 (138.9) (13.5)

Automotive components

Sogefi Group 781.0 18.3 1,017.5 21.5 (236.5) (23.2)

Healthcare

KOS Group (formerly HSS) 273.4 6.4 246.3 5.2 27.1 11.0

Other sectors 5.7 0.1 (5.7)

Total consolidated revenues 4,266.8 100.0 4,727.0 100.0 (460.2) (9.7)

of which: ITALY 3,525.6 82.6 3,784.6 80.1 (259.0) (6.8)

FOREIGN COUNTRIES 741.2 17.4 942.4 19.9 (201.2) (21.3)

The key figures of the consolidated income statement are as follows: (in millions of euro) 2009 % 2008 %

Revenues 4,266.8 100.0 4,727.0 100.0

Consolidated gross operating margin (EBITDA) (1) 294.6 6.9 461.5 9.8

Consolidated operating income (EBIT) 148.0 3.5 320.1 6.8

Financial management result (2) 37.1 0.9 (44.2) (0.9)

Income taxes 4.3 0.1 (98.8) (2.1)

Net income including minority interests 189.4 4.5 177.1 3.7

Net income attributable to minority interests (46.0) (1.1) (81.6) (1.7)

Net income of the Group 143.4 3.4 95.5 2.0

1) This balance is the sum of the items “earnings before interest and taxes (EBIT)” and “amortization, depreciation and write-downs” in the consolidated

income statement 2) This balance is the sum of the items “financial income”, “financial expense”, “dividends”, “gains from trading securities”, “ losses from trading securities”

and “adjustments to the value of financial assets” in the consolidated income statement

The consolidated gross operating margin (EBITDA) was € 294.6 million in 2009 (6.9% of rev-enues) and was down from € 461.5 million in 2008 (9.8% of revenues) with a decline of € 166.9 million (-36.2%), mainly due to lower revenues and to the restructuring costs incurred by the Es-presso and Sogefi groups and to the lower profitability of the Sorgenia group.


The consolidated operating margin (EBIT) for 2009 was € 148.0 million (3.5% of revenues), down from € 320.1 million (6.8% of revenues) in 2008, with a decline of € 172.1 million. The financial management result was a positive € 37.1 million compared to net expense of € 44.2 million in 2008 and was determined by the following: – Net financial expense of € 104.1 million (€ 129.7 million in 2008) – Net gains from trading securities of € 68.5 million (net gains of € 79.8 million in 2008) – Adjustments to the value of financial assets, a positive € 12.2 million (negative for € 58 mil-

lion in 2008) – Net non-recurring gains of € 60.5 million (€ 63.7 million in 2008). The key figures of the consolidated balance sheet of the CIR Group at December 31 2009, compared with the same figures at December 31 2008, are as follows: (in millions of euro) (1) 31.12.2009 31.12.2008

Fixed assets 3,807.9 3,365.7

Other net non-current assets and liabilities 83.7 57.1

Net working capital 241.8 341.5

Net invested capital 4,133.4 3,764.3

Net financial debt (1,801.1) (1,685.4)

Total shareholders’ equity 2,332.3 2,078.9

Group equity 1,396.7 1,264.9

Minority Shareholders’ equity 935.6 814.0

(1) These figures are the result of a different organization of the balance sheet items. For a definition of the same, reference should be made to the notes

referring to the chart “consolidated balance sheet by business sector” shown earlier .

Net invested capital stood at € 4,133.4 million at December 31 2009 compared to € 3,764.3 mil-lion at December 31 2008, with an increase of € 369.1 million, due essentially to the fixed asset investments of the Sorgenia group. The consolidated net financial position at December 31 2009 showed net debt of € 1,801.1 mil-lion (up by 115.7 million from € 1,685.4 million at December 31 2008) caused by: - a financial surplus for CIR and its financial holding subsidiaries of € 121.6 million which

compares with € 44.2 million at December 31 2008. The rise was due mainly for € 29.9 million to tax credits for previous periods paid by the Inland Revenue, to the receipt of dividends for € 9.3 million and to the positive fair value adjustment of securities in the portfolio for € 44 mil-lion;

- total net debt for the operating groups of € 1,922.7 million, up from € 1,729.6 million at De-

cember 31 2008. The rise of € 193.1 million was determined essentially by the investments in new production capacity made by the Sorgenia group partly offset by the reduction in the debt of the Sogefi group (€ 87 million) and of the Espresso group (€ 70.7 million).


The net financial position includes the shares of hedge funds previously held by Medinvest, amounting at December 31 2009 to € 79.8 million. The accounting treatment of these investments involves recognizing changes in the fair value of the funds directly to shareholders’ equity. The fair value reserve relating to these investments amounted € 13.2 million at December 31 2009 (€ 36.8 million at December 31 2008). In financial year 2009 the sale of shares in hedge funds led to the realization of gains, net of writedowns, of € 44.5 million (€ 50.3 million in 2008). The performance of these investments since inception (April 1994) up to and including 2009 gave a weighted average return of the portfolio in dollar terms of 7.8%. In 2009 performance was a po-sitive 9.8%. In the first two months of 2010 it was a negative 0.4%. Total shareholders’ equity stood at € 2,332.3 million at December 31 2009, up from € 2,078.9 million at December 31 2008, with a rise of € 253.4 million. The shareholders’ equity of the Group went up from € 1,264.9 million at December 31 2008 to € 1,396.7 million at December 31 2009, with a net rise of € 131.8 million. Minority shareholders’ equity rose from € 814 million at December 31 2008 to € 935.6 million at December 31 2009, with a rise of € 121.6 million mainly due to the capital increases, net of div-idends and the earnings for the year. The evolution of consolidated shareholders’ equity is given in the Explanatory Notes.


The consolidated cash flow statement for 2009, prepared according to a “managerial” format which, unlike the format used in the statements attached, shows the changes in net financial posi-tion instead of the changes in cash and cash equivalents, can be broken down as follows: (in millions of euro) 2009 2008

SOURCES OF FUNDS

Net income for the period including minority interests 189.4 177.1

Amortization, depreciation and write-downs and other non-monetary changes

76.1 36.4

Self-financing 265.5 213.5

Change in working capital 45.8 (127.0)

CASH FLOW GENERATED BY CURRENT OPERATIONS 311.3 86.5

Capital increases 187.9 274.0

Repayment of loan by Tirreno Power -- 42.5

TOTAL SOURCES OF FUNDS 499.2 403.0

APPLICATIONS

Net investment in fixed assets (625.0) (526.2)

Buy-back of own shares (1.2) (16.8)

Payment of dividends (21.4) (155.8)

Other changes 32.7 (56.1)

TOTAL APPLICATIONS OF FUNDS (614.9) (754.9)

FINANCIAL SURPLUS (DEFICIT) (115.7) (351.9)

NET FINANCIAL POSITION AT THE BEGINNING OF THE PERIOD (1,685.4) (1,333.5)

NET FINANCIAL POSITION AT THE END OF THE PERIOD (1,801.1) (1,685.4)

The composition of the net financial position is given in the Explanatory Notes. During 2009 the net debt figure rose from € 1,685.4 million to € 1,801.1 million. The cash flow generated by operations, a positive € 311.3 million, showed an improvement on the previous year because of the higher level of self-financing and lower absorption of working capital, especially in the Sorgenia group. Applications refer mainly to net investment made in the utilities sector by the Sorgenia group. At December 31 2009 the CIR Group had 12,746 employees, down from 12,969 at December 31 2008.


2. PERFORMANCE OF THE PARENT COMPANY The parent company CIR S.p.A. closed financial year 2009 with a net loss of € 2.0 million com-pared to net income of € 33.3 million in 2008. Shareholders’ equity stood at € 978.9 million at December 31 2009, up from € 974.5 million at December 31 2008. The key income statement figures of CIR S.p.A. for 2009, with a comparison with those of 2008, are as follows: (in millions of euro) 2009 2008 Net operating costs (1) (16.9) (9.1) Other operating costs and amortization (2) (3.0) (38.8) Financial management result (3) 12.6 73.3 Income before taxes (7.3) 25.4 Income taxes 5.3 7.9 Net result (2.0) 33.3

(1) This item is the algebraic sum of “sundry income and expense”, “costs for services” and “personnel costs” in the income statement of the Parent Com-pany CIR S.p.A.

2) This item is the sum of “other operating costs” and “amortization, depreciation and write-downs” in the income statement of the Parent Company CIR S.p.A.

3) This item is the algebraic sum of “financial income”, “financial expense”, “dividends”, “gains from trading securities”, “losses from trading securities” and “adjustments to the value of financial assets” in the income statement of the Parent Company CIR S.p.A.

Net operating costs for 2009 of € 16.9 million (compared to € 9.1 million in 2008) include provi-sions for € 7 million and net expense resulting from the IAS/IFRS treatment of stock option plans for € 4.3 million, which compares with € 0.4 million in 2008. The higher charge for the stock op-tion plans was due to the substantial rise in the value of CIR stock during 2009. The financial management result includes the dividends of subsidiaries, which totalled € 11.4 mil-lion in 2009 compared to € 138.7 million in 2008, net financial expense of € 7.3 million (€ 8.6 million in 2008) and gains from trading and valuing securities of € 8.5 million (net losses of € 56.8 million in 2008). Lastly 2009 benefited from a positive net tax position of € 5.3 million, versus € 7.9 million in 2008. The key balance sheet figures of CIR S.p.A. at December 31 2009, compared with the position at December 31 2008, are as follows:

(in millions of euro) 31.12.2009 31.12.2008 Fixed assets (1) 878.0 1,040.0 Other net non-current assets and liabilities (2) 132.2 (1.5) Net working capital (3) (10.7) (6.9) Net invested capital 999.5 1,031.6 Net financial position (4) (20.6) (57.1) Shareholders’ equity 978.9 974.5

1) This item is the sum of “intangible assets”, “ tangible assets”, “investment property” and “equity investments” in the balance sheet of the Parent Com-pany CIR S.p.A..

2) This item is the algebraic sum of “sundry receivables” and “deferred taxes” in the non-current assets and “personnel provisions” in the non-current liabili-ties of the balance sheet of the Parent Company CIR S.p.A..

3) This item is the algebraic sum of “sundry receivables” in current assets and “other payables” and “provisions for risks and losses” in the current liabilities of the balance sheet of the Parent Company CIR S.p.A.

4) This item is the algebraic sum of “securities”, “available for sale financial assets” and “cash and cash equivalents” in the current assets and “bonds and notes” in the non-current liabilities of the Parent Company CIR S.p.A..


The net financial position at December 31 2009 was one of net debt for € 20.6 million which compares with € 57.1 million at December 31 2008. The improvement of € 36.5 million was mainly due to the receipt of tax rebates of € 29.9 million relating to previous periods. The rise in shareholders’ equity which went up from € 974.5 million at December 31 2008 to € 978.9 million at December 31 2009 was mainly due to the effects of the IAS/IFRS treatment of the stock options. At December 31 2009 there were 43,074,000 own shares held as treasury stock, equal to 5.44% of capital, for a total value of € 98.6 million, compared to 42,974,000 shares at December 31 2008. 3. CHART RECONCILING THE BALANCE SHEET FIGURES OF THE PARENT COM-

PANY WITH THOSE OF THE CONSOLIDATED FINANCIAL STATEMENTS The following chart shows the reconciliation of the results for the year and the shareholders’ eq-uity of the Group with the figures of the parent company. (in thousands of euro) Shareholders’ equity

31.12.2009 Net result

2009

Figures of the parent company CIR S.p.A. 978,905 (1,990)

- Dividends from companies included in consolidation (11,362) (11,362) - Reversal of valuations and cover of losses on investments in companies included in the consolidation (2,750) (2,750)

- Net contribution of consolidated companies 411,276 82,799 - Difference between carrying value of subsidiaries and portion of consolidated shareholders’ equity, net of contributions (56,049) --

- Other consolidation adjustments 76,735 76,735

Consolidated figures, the Group’s share 1,396,755 143,432


MAIN EQUITY INVESTMENTS OF THE GROUP (*)AT DECEMBER 31 2009

Media

Utilities

Healthcare

SORGENIASORGENIA

CIRCIR

51.9% (**)

57.6% (*)

65.4%

ESPRESSOESPRESSO55% (*)

Automotive ComponentsSOGEFISOGEFI

KOS(formerly HSS)

KOS(formerly HSS)

(*) The percentage is calculated net of own shares held as treasury stock(**) Percentage of indirect control through Sorgenia Holding

JUPITERJUPITER

KTPKTP

Financial Services

47.5%

98.8%

4. PERFORMANCE OF THE BUSINESS SECTORS UTILITIES SECTOR In 2009, in an extremely difficult market environment due to the economic recession and the re-sulting sharp fall both in demand for energy and in prices in the sector, the Sorgenia group re-ported consolidated revenues of € 2,325.8 million, down by 4.4% from € 2,432 million in 2008. Sales volumes of electricity rose by 2.6% compared to the previous year. There was, however, a decline, albeit less than the market, in the volumes of natural gas sold (-6.6% versus 2008). In 2009 the Sorgenia group reported consolidated net income of € 66.9 million, which was up slightly (+0.3%) on the previous year (€ 66.7 million), partly thanks to a tax credit linked to in-vestment in new production capacity. Consolidated revenues can be broken down as follows: (in millions of euro) 2009 2008 Change Values % Values % %Electricity 1,656.3 71.2 1,615.1 66.4 2.6Natural gas 573.7 24.7 756.7 31.1 (24.2)Other revenues 95.8 4.1 60.2 2.5 59.1TOTAL 2,325.8 100.0 2,432.0 100.0 (4.4)

The consolidated gross operating margin was € 117.8 million, substantially unchanged on the pre-vious year net of non-recurring items. The decline from € 189.6 million in 2008 was in fact main-ly due to the following extraordinary items present in the previous year: the receipt of penalty payments for the late delivery of the Modugno power plant (€ 27 million) and contingent gains from prior periods (€ 15 million). Compared to the previous year, 2009 was also impacted by a negative differential of approximately € 21 million from the fair value adjustment of “differential contracts” with the Sole Purchaser (Acquirente Unico). In 2009 EBITDA was affected by the following factors: – The contraction of sales margins on natural gas caused by the lower volumes sold and lower

unit margins, in relation to existing contracts which are being renegotiated as per the terms of the contracts;

– Higher provisions set aside on sums receivable from clients, due to the worsening of the eco-nomic situation, which became evident during the year;

– The unscheduled shutdown of the Termoli power plant for extraordinary maintenance as from November 2009 and the high charges due to congestion on the National Electricity Grid.

These factors were partially offset by higher production by plants using renewable sources and by the positive fair value adjustment of commodity hedging transactions. Consolidated EBIT was € 70.9 milioni in 2009 (3% of revenues), down from € 154.7 million (6.4% of revenues) in 2008. Consolidated net debt stood at € 1,341 million at December 31 2009, up by € 327.1 million from € 1,013.9 million at December 31 2008. The change during the year was due to the substantial in-vestment made in new production capacity, especially in the field of thermoelectric generation.


Some of the investments made by Sorgenia in the last two years, the Modugno (BA) and Ber-tonico-Turano Lodigiano (LO) power plants in particular, will start contributing to the company’s income in 2010. In July 2009 Sorgenia signed a € 600 million ten-year loan agreement with a pool of prime banks to finance the investment in the construction of the Bertonico-Turano Lodigiano and Aprilia CCGT power plants. The group had 380 employees on the payroll at December 31 2009, up from 339 at December 31 2008. The Board of Directors of Sorgenia S.p.A., which met on March 2 2010, proposed distributing dividends for a total of € 10.2 million, compared to € 14.4 million for the previous year, corre-sponding to a dividend of € 0.0112 per share, compared to € 0.0165 in 2008. In 2009 the rollout of the Sorgenia group’s business plan continued. In thermoelectric generation, the new 800 MW Combined Cycle Gas Turbine (CCGT) power plant at Modugno (BA) started operating. Construction work is continuing on the Bertonico-Turano Lodigiano CCGT plant (LO), which is scheduled to start operating in the second half of this year. Moreover, in July 2009 notice to proceed was given to the contractor Ansaldo Energia for construction of the Aprilia plant (LT). As far as the development of wind generation is concerned, in 2009 the 39 MW wind park at San Gregorio Magno (SA) started operating while construction work continued on the 12 MW park at San Martino in Pensilis (CB), which is scheduled to start operating by the end of the first half of 2010. In France, the subsidiary Société Française d’Eoliennes started operating the 12 MW wind park at Plainchamp (Meuse). The development activities of Sorgenia Romania are proceeding ac-cording to plan with the aim of building, managing and maintaining wind parks. In the field of renewable energy from biomass, the company Sorgenia Bioenergy finished con-struction work in 2009 on a biomass plant of approximately 1 MW in the local district of Gallina (SI) which is expected to start operating by the end of the first half of this year. In February 2010 the Sorgenia group signed a loan agreement for € 70 million with prime banks which will enable its subsidiary Sorgenia Solar to develop new plants in the photovoltaic sector in Italy for over 15 MW. MEDIA SECTOR The Espresso group closed 2009 with consolidated revenues of € 886.6 million, down by 13.5% from € 1,025.5 million in 2008. Consolidated net income came in at € 5.8 million compared to € 20.6 million in 2008, due to the effect of extraordinary tax-related provisions of € 11.4 million.


The revenues of the group can be broken down as follows: (in millions of euro) 2009 2008 Change Values % Values % %Circulation 274.2 30.9 276.3 26.9 (0.8)Advertising 496.9 56.1 608.2 59.3 (18.3)Add-ons 100.6 11.3 114.9 11.2 (12.4)Other revenues 14.9 1.7 26.1 2.6 (42.9)TOTAL 886.6 100.0 1,025.5 100.0 (13.5)

The results reported by the group in 2009 should be seen in the context of the severe crisis that has affected the economy and the market in which the group operates. The economic recession caused a significant contraction in advertising collected: according to Nielsen Media Research figures, advertising investment declined by 13.4% and the decline affected practically all media, albeit to varying degrees. The press fell by an overall 21.6% and was one of the hardest hit sectors: paid-for newspapers fell slightly less (-16%), while the sharpest decline was that of periodicals (-28.7%) and free newspa-pers (-26.6%). Radio, with a decline of -7.7%, of the traditional media was the one that held up best while the internet maintained a positive trend (+5.1%), although the rise was lower than in previous years. At the same time, in a scenario of declining consumption, even the circulation of daily and peri-odical titles posted negative growth, with a decline of 6.2% for the daily newspapers, 6.8% for weeklies and 8.5% for monthlies (source ADS October 2009). Circulation revenues, excluding add-ons, came in at € 274.2 million, holding up well (-0.8% compared to 2008), in a declining market. Advertising revenues, totalling € 496.9 million, posted a decline of 18.3% compared to the previ-ous year, basically reflecting the general trend of the markets in which the group operates. Lastly, revenues from add-on products fell by 12.4% to € 100.6 million, which can be considered positive because it was achieved in a market environment which continues to record a signifi-cantly negative trend. The consolidated gross operating margin was € 106.7 million, down from € 142.5 million in 2008, with a decline of 25.2%. The impact of the drastic reduction in advertising collected was offset to a significant degree by the reduction in costs. Operating costs were cut by 11.9% compared to 2008, savings of € 97.6 million having already been made in 2009 thanks to the company reor-ganization plan which when fully implemented should give a reduction of € 140 milion. Extraor-dinary expense connected with implementing the plan were totally expensed in the year, for an amount of € 31.7 million. Consolidated operating income was € 63.9 million, down from € 95.3 million in 2008. Consolidated net financial debt stood at € 208.2 million at December 31 2009, down by € 70.7 million from € 278.9 million at the end of 2008, thanks to the liquidity of € 98.1 million generated by current operations only partly offset by investments of € 25.6 million. Consolidated shareholders’ equity rose from € 478.4 million at December 31 2008 to € 485.6 mil-lion at December 31 2009.


The group had 3,116 employees on its books at December 31 2009, with 228 less than at Decem-ber 31 2008, when the figure stood at 3,344. This reflects, as yet only partially however, the ef-fects of the reorganization plans put in place. The Board of Directors of the parent company Gruppo Editoriale L’Espresso, which met on Feb-ruary 24 2010, proposed that no dividend be distributed for financial year 2009 and that the net income for the year be allocated to the retained earnings reserve (as was the case last year). The evolution of the macroeconomic scenario in 2010 is still unclear. In any case expectations of weak growth for the Italian economy, and therefore of domestic consumption, make it impossible to forecast a sharp recovery in advertising investments. Therefore, despite the positive trend in advertising recorded by the group in the first few months of 2010, the prospects for the year remain uncertain. In this environment, however, the group will reap further significant benefits from its cost-cutting plan and from the new impetus given to the business of the advertising concessionaire, which is making it possible to recover competitiveness in the advertising market. Lastly, the group is engaged in the rollout of an intense publishing development plan for the new media, which will lead to an ever greater distribution of its content over all the new platforms. AUTOMOTIVE COMPONENTS SECTOR In 2009 the Sogefi group reported revenues of € 781 million, which were down by 23.2% from € 1,017.5 million in the previous year. Revenues were affected by the unprecedented contraction in the production levels of the car industry in mature markets, especially in Europe. The crisis in the financial markets and the resulting slowdown of the world economy particularly dampened demand for new vehicles. In the car sector, although the decline in demand was limited by the in-centive plans put in place by the various countries, production levels declined significantly be-cause manufacturers needed to reduce their stocks of unsold vehicles. In Europe the decline in production was 18% for cars and over 60% for industrial vehicles, which did not benefit from incentives. North America reported the lowest production levels for the last 50 years (-30% on 2008) with important manufacturers in crisis. As far as emerging markets are concerned, Brazil substantially confirmed its 2008 production volumes thanks to a cut in taxes. In China new car sales rose by over 40%, partly as a result of its public support plan. Lastly, India confirmed its growth trend of the last few years. The difficulties of the market had a negative impact on the results of the Sogefi group, which in 2009 reported a net loss of € 7.6 million which compares with net income of € 28.5 million in 2008. Without the restructuring costs incurred in 2009, the company would have closed the most difficult year in its history with a profit.


The breakdown of consolidated sales of the Sogefi group by business sector is as follows: (in millions of euro) 2009 2008 Change Values % Values % %Filters 414.8 53.1 497.5 48.9 (16.6)

Suspension components and precision springs 368.0 47.1 521.9 51.3 (29.5)

Intercompany elimination (1.8) (0.2) (1.9) (0.2) n.a.

TOTAL 781.0 100.0 1,017.5 100.0 (23.1)

Since the beginning of the crisis in the sector, Sogefi has acted rapidly and effectively to limit its impact, starting during the year a series of actions which enabled the company to recover profit-ability and post a positive net income figure already in the third quarter. The actions undertaken were a structural reduction of cost factors, (structure costs went down by € 30.7 million and total labour costs by € 37.4 million compared to 2008), the reorganization of production facilities, the enhancement of centres of competence and service (research and development and purchasing), product and process innovation and the generation of cash flow by managing working capital and focusing investments. EBITDA and EBIT were also impacted by restructuring costs of € 17.2 million (€ 11.5 million in 2008). In 2009 consolidated EBITDA was € 47.2 million (6% of revenues), down by 55% from € 104.9 million (10.3% of revenues) in 2008. Consolidated EBIT came in at € 5.1 million euro (0.6% of revenues) down from € 62.4 million (6.1% of revenues) in 2008. At December 31 2009 the net financial debt of the group stood at € 170.2 million and was down by € 87 million from € 257.2 million at December 31 2008. The group had 5,770 employees at December 31 2009, down from 6,100 at December 31 2008. The Board of Directors of Sogefi, which met on February 23 2010, proposed not distributing divi-dends for financial year 2009, as in the previous year. The filter division limited its decline in revenues to 16.6% (€ 414.8 million compared to € 497.5 million in 2008), with a larger downturn in Europe (-20.8%) compared to South America (-8.7%) and mainly in the origianal equipment market. The group’s presence in the industrial vehicle sector and the absence of any significant activity in the after market caused a decline in the consolidated revenues of the suspension components divi-sion of 29.5% (€ 368 million versus € 521.9 million in 2008). The highest decline was in Europe (-23.1%), in industrial vehicles (-51.6%) and in precision springs (-37.3%). The evolution of demand for vehicles in 2010 will depend on whether government incentives are renewed for 2010 in the various markets and if they are renewed how long they are renewed for and the amounts involved. Production levels should benefit from the end of destocking by manu-facturers and the distribution network. The drastic reduction in the structure costs of the group in 2009 and the forecast growth of business in emerging markets should in any case improve profit-ability and enable the group to return to profit.


HEALTHCARE SECTOR At the end of 2009 the company HSS changed its name to KOS. In 2009 the KOS group conti-nued in its strategy of strengthening its operating subsidiaries and seeking new development op-portunities to consolidate the presence of the group in the private healthcare sector in Italy. In financial year 2009 the KOS group reported revenues of € 273.4 million, up from € 246.3 mil-lion in the previous year, posting a rise of 11%, thanks to the development of all areas of the busi-ness and to the acquisitions made during the year. Revenues of the group can be broken down as follows: (in millions of euro) 2009 2008 Change Values % Values % %Elderly 117.7 43.0 110.0 44.7 7.0 Rehabilitation 111.5 40.8 94.3 38.3 18.2 Acute/Hi-tech 44.2 16.2 42.0 17.0 0.5 TOTAL 273.4 100.0 246.3 100.0 11.0

Consolidated EBITDA was € 33 million, up by 14.9% from € 28.7 million in 2008 and consoli-dated EBIT was € 16.5 million, up from € 14.7 million in the previous year. The consolidated net result was a loss of € 0.4 million compared to a net loss of € 1.5 million in the previous year, resulting from non-recurring costs of € 3.3 million due, apart from risk provi-sions and write-downs, to a corporate reorganization that in the future will make it possible to fur-ther improve the efficiency of the company. At December 31 2009 the KOS group had net debt of € 163.5 million offsetting real estate proper-ties with a carrying value of approximately € 120 million. The increase from € 149.1 million at December 31 2008 was due mainly to the acquisitions made. At December 31 2009 consolidated shareholders’ equity stood at € 139.7 million compared to € 138.5 million at December 31 2008. The employees of the group totalled 3,421 at December 31 2009, up from 3,130 at December 31 2008. During 2009 management was acquired of two nursing homes for the elderly in Ancona and in the province of Cuneo. In January 2010, the KOS group finalized, through its subsidiary Istituto di Riabilitazione S.Stefano, the acquisition of control of the Marche group Sanatrix, which owns a nursing home with 205 beds at Civitanova Marche (Macerata). The deal involved a disbursement of approxi-mately € 18 million. KOS, which was already a minority shareholder of Sanatrix, now holds a 76.9% interest in the company.


The healthcare and care-home business acquired consists of 90 beds devoted to hospital care, 50 to long-term care and rehabilitation and 65 to residential care for the non self-sufficient elderly (RSA). The revenues reported by the Sanatrix group in 2009 were over 23 million euro. The activities carried out by Sanatrix have a high potential for integration with the reha-bilitation services offered by Istituto di Riabilitazione S.Stefano, the subsidiary of KOS which is based in nearby Porto Potenza Picena (Ancona). At the beginning of March 2010 the KOS group, through its subsidiary Residenze Anni Azzurri, finalized the acquisition of two care homes for the non self-sufficient elderly (RSAs) in the prov-ince of Milan, with a total of 297 beds. The deal took place on the basis of enterprise value of ap-proximately € 23 million, inclusive of € 12 million relating to the purchae of the property which houses one of the two homes. After these latest acquisitions, KOS is now managing a total of 5,555 beds plus another 388 under construction. The KOS group is active in three sectors: 1) Nursing homes (RSAs for the non self-sufficient elderly), with 40 care homes under manage-

ment (4,133 beds operational and 336 under construction); 2) Rehabilitation (management of hospitals and rehabilitation centres), with 10 rehabilitation fa-

cilities (in Lombardy, Emilia Romagna, Trentino and Marche), 9 psychiatric rehabilitation communities (in Liguria, Piedmont and Lombardy) and 13 day hospitals, for a total of 1,287 beds in operation and 52 beds under construction;

3) Hospital management (management of a hospital and of hi-tech services in hospitals), with 7 diagnostic imaging units.

FINANCIAL SERVICES SECTOR The CIR Group operates in the financial services sector through the company Jupiter Finance and through its investment in the KTP group, as described below. JUPITER FINANCE – This company, which operates in the sector of non-performing loans, was set up at the end of 2005 with the aim of becoming an independent industrial partner of Italian banks and businesses in the management of their non-performing loans. As is known, 2009 was a particularly difficult year for credit quality: the non-performing loans of the Italian banking system grew by approximately 43%, from € 41 billion at the end of 2008 to € 59 billion at the end of 2009. This fact enlarged the market in which Jupiter Finance operates considerably, enabling the company to extend its services from the pure purchase of non-performing loans on a non-recourse basis to taking over third party portfolios and structuring refi-nancing deals. During the year, in fact, the company signed a mandate with a prime international investor to manage a portfolio of non-performing loans with a value of approximately € 1 billion. At December 31 2009 the non-performing loans managed by Jupiter Finance amounted to € 2,218 million (nominal value), subdivided into captive loans (i.e. acquired through the securitization ve-hicles Zeus Finance and Urania Finance), totalling € 1,299 million, and non-captive loans the (i.e. managed on behalf of other investors) for € 919 million.


The following charg shows the breakdown of the portfolio under management at the end of 2009 by type of loan.

Types of loan Amount

(€/million) %Corporate loans 1,611 73%Mortgage loans 294 13%Consumer credit 209 9%Finance leases 104 5%Total 2,218 100%

The portfolio under management by the company has a high degree of diversification, from sev-eral viewpoints: - Approximately 10,000 loans are corporate and mortgage loans with an average credit exposure

of approximately € 200,000; - The portfolio consists of 100 deals with 75 different vendors (banks, financial companies, leas-

ing companies); - Mixed geographical distribution: no region in Italy accounts for more than 10% of the total

portfolio. KTP - The KTP Global Finance group operates in the financial services sector through the com-panies Ktesios and Pepper. There has been continuing volatility in the financial markets with a generalized contraction in consumer credit availability and the introduction of regulatory restric-tions in the sector of loans secured on one fifth of salaries or pensions which could have a nega-tive impact on loan volumes and on margins. In view of these factors the development plans of the two companies were revised and CIR’s investment was written down (by a total of € 16 million inclusive of minority interests) at December 31 2009. Ktesios, the main investee of KTP, operates in Italy in the market of loans secured on one fifth of workers’ salaries or pensions, confirming its position as one of the leaders in this segment. In 2009 the company made loans for approximately € 600 million, down from € 660 million in 2008. Pepper has gradually reduced its lending volumes, consolidating its business in servicing portfo-lios of specialty mortgages originated by other lenders, in which it has reached a position of lead-ership in the Australian market. 5. OTHER ACTIVITIES CIR VENTURES – At the end of 2009 the portfolio fo CIR Ventures, the venture capital fund of the Group, contained investments in six companies, of which five in the United States and one in Is-rael. These companies all operate in the sector of information and communications technology. The total fair value of these investments at December 31 2009 was € 14.5 million dollars (€ 10.0 million). INVESTMENTS IN “PRIVATE EQUITY FUNDS” – The CIR Group, through its subsidiary CIR Inter-national, manages a diversified portfolio of funds and minority private equity holdings, the fair value of which determined on the basis of the NAV provided by the various funds at December 31 2009 was approximately € 62.1 million. Remaining commitments outstanding at December 31 2009 amounted to € 25.3 million.


6. SIGNIFICANT EVENTS WHICH OCCURRED AFTER THE CLOSE OF THE YEAR Information has already been given of the main events which occurred after December 31 2009 in the part of the Report dealing with the performance of the business sectors. The performance of operations of the CIR group in 2010 will be affected by the evolution of the economic scenario during the year. Despite expectations of a weak recovery in Europe, the mac-roeconomic scenario is still somewhat uncertain. The automotive components sector and health-care should see an improvement on 2009 whereas the performance of the energy and media sec-tors will depend on variables that cannot easily be forecast yet such as energy consumption and the advertising market. Moreover, for 2010 at present no non-recurring income like that of the previous two years can be predicted. 7. MAIN RISKS AND UNCERTAINTIES TO WHICH CIR S.p.A. AND THE GROUP

ARE EXPOSED Risks connected with the general conditions of the economy During 2008 the world economy entered a period of recession which had a strong impact on the first half of 2009, becoming less accentuated in the second half of the year partly as a result of the significant measures put in place by the main governments and monetary authorities to support the economy. In this scenario of general weakness of the economy, in the first half of 2009 demand in the sec-tors and markets in which the Group operates, with the exception of healthcare, showed a contrac-tion compared to the levels of the previous year. The decline in volumes was less marked in the second half of the year when there was an inversion in the trend especially in the automotive components sector. Should the situation of global economic weakness continue in the future, the evolution of demand will be affected and the business, strategies and prospects of the Group could suffer the conse-quences with a negative impact on the income, equity and financial situation of the Group. Risks connected with the results of the Group The CIR Group operates, among other things, in the automotive components sector, which is sub-ject to cyclical factors, and in the media sector which is highly sensitive to the trend of the eco-nomic cycle. It is difficult to forecast how far-reaching the economic cycles will be and how long they will last. However any macro-economic event, such as a significant decline in a particular market, volatility in the financial markets, a rise in energy prices, the fluctuation of commodity prices etc. could have an effect on the prospects and the activities of the Group, as well as on its economic results and its financial position. Risks connected with borrowing requirements The CIR Group expects to be able to meet its borrowing requirements in terms of maturing loans and investment needs with its operating cash flows, available liquidity and by renewing or refi-nancing its loans and/or bonds and notes. Even in the current market context, the Group aims to maintain a sufficient capacity to generate funds from ordinary operations. The Group invests any free cashflow, sharing out its investments over a suitable number of prime counterparties, mainly banks, matching the remaining life of the investments with the maturity of obligations on the funding side. However, in light of the current financial crisis, it cannot be ruled


out that there may be banking and money market situations that could prevent normal financial transactions from being carried out. Risks connected with the fluctuation of exchange rates and interest rates A significant part of the financial debt of the Group involves the payment of financial expense calculated at floating interest rates, mainly linked to Euribor rates. Any rise in interest rates could, therefore, cause a rise in funding costs or a rise in the cost of refinancing debt entered into by the companies of the Group. In order to limit the risk resulting from interest rate movements, the Group uses interest rate de-rivatives to keep rates within a predetermined range. Some companies of the Group, particularly in the Sogefi group, do business in European countries not belonging to the euro area and in countries outside the European market and, therefore, oper-ate in different currencies, which exposes them to foreign exchange risk against the euro. In line with its risk management policies, in order to limit this exchange rate risk the Group enters into transactions to hedge these risks. Despite the hedging carried out by the Group in the financial markets, sharp movements in ex-change rates or interest rates could have a negative impact on the economic and financial results of the Group. Risks connected with relations with clients and suppliers In relations with its clients, the Group manages the risk of concentration of demand by diversify-ing its client portfolio in a suitable way, both geographically and in terms of distribution channels. Regarding relations with suppliers the approaches are different in the different business sectors. The Sogefi Group, for example, diversifies its sourcing significantly by using several suppliers operating in different parts of the world, which enables the group to reduce its risk of commodity price fluctuation and avoid relying too heavily on key suppliers. The utilities sector is an exception to this policy because especially in the construction of produc-tion plants the Group is exposed to risks of this kind, which it manages by requiring collateral guarantees from third parties. Risks connected with competitiveness in the sectors in which the Group operates The Group operates in markets which do objectively have barriers in place against the entry of new competitors due to the existence of technological or qualitative gaps, to the need to make substantial initial investments and to the fact that it operates in sectors that are highly regulated requiring special authorizations from the competent authorities. However, particularly in relation to the automotive components sector, should the group in the fu-ture not be able to develop and offer innovative and competitive products, then its economic and financial results could be negatively impacted. Risks connected with environmental policies The Group operates in sectors that are subject to a host of rules and regulations (local, national and supranational) on the subject of the environment, and this regulatory aspect is then often re-vised in a more restrictive way. The evolution of these regulations and compliance with the same could lead to very high costs with a potential impact on the profitability of the Group.

************** CIR S.p.A., in its role as Parent Company of the Group, is substantially exposed to the same risks and uncertainties described above in relation to the Group.


8. OTHER INFORMATION Information on shares held by Directors, General Managers and Statutory Auditors The chart below gives the information required by Art. 79 of Consob Resolution no. 11971 of May 14 1999 and subsequent amendments and additions. SHARES HELD BY DIRECTORS, STATUTORY AUDITORS AND GENERAL MANAGERS

Last name and first name Investee Number of shares Number of Number of Number of shares Notes company owned at end of shares shares owned at end of previous year purchased sold this year

DE BENEDETTI CARLO CIR S.p.A. 363,028,621 -- -- 363,028,621 (1)

DE BENEDETTI CARLO GRUPPO EDITORIALE L’ESPRESSO S.p.A. 220,776,235 -- -- 220,776,235 (2)

DE BENEDETTI CARLO SOGEFI S.p.A. 65,739,962 -- -- 65,739,962 (3)

DE BENEDETTI RODOLFO CIR S.p.A. 15,312,500 -- 2,250,000 13,062,500

DEBENEDETTI FRANCO CIR S.p.A. 375,000 -- -- 375,000

FERRERO PIERLUIGI CIR S.p.A. 300,000 -- -- 300,000

FERRERO PIERLUIGI GRUPPO EDITORIALE L’ESPRESSO S.p.A. 20,000 -- -- 20,000

FERRERO PIERLUIGI SOGEFI S.p.A. 15,000 -- -- 15,000

GERMANO GIOVANNI CIR S.p.A. 300,000 -- -- 300,000

GERMANO GIOVANNI SOGEFI S.p.A. 2,012,000 -- -- 2,012,000

GERMANO GIOVANNI SOGEFI S.p.A. 1,004,312 -- -- 1,004,312 (4)

GIRARD FRANCO CIR S.p.A. 128,000 -- -- 128,000

GIRARD FRANCO SOGEFI S.p.A. 10,000 -- -- 10,000

GIRARD FRANCO GRUPPO EDITORIALE L’ESPRESSO S.p.A. 10,000 -- -- 10,000

PARAVICINI CRESPI LUCA CIR S.p.A. 333,333 -- -- 333,333 (5)

PARAVICINI CRESPI LUCA GRUPPO EDITORIALE L’ESPRESSO S.p.A. 4,827,212 -- -- 4,827,212 (5)

SEGRE MASSIMO GRUPPO EDITORIALE L’ESPRESSO S.p.A. 3,000 -- -- 3,000

PIASER ALBERTO CIR S.p.A. 698,000 201,600 355,000 544,600 (1) Owned indirectly through COFIDE S.p.A. (2) At December 31 2009 the shares were held through the following subsidiaries:

CIR S.p.A. 220,775,235 ROMED S.p.A. 1,000

(3) Owned indirectly through CIR S.p.A. (4) Owned indirectly through Siria S.r.l. (5) Owned indirectly through Alpa S.r.l. and Fiduciaria Biennebi S.p.A. Incentive plans based on financial instruments The CIR Group has put in place various share-based incentive plans for the management teams of the companies of the Group. Reference should be made to the Explanatory Notes for further in-formation on these plans.


Own shares At December 31 2009 the Parent Company owned 43,074,000 of its own shares (equal to 5.44% of its capital). The Group does not own any other of its own shares in addition to those indicated above. For further details on the subject of own shares held as treasury stock, reference should be made to the comment on shareholders’ equity in the Explanatory Notes. At December 31 2009 the Group did not possess any shares of its controlling company nor did it buy or sell any shares of the latter either directly or through a fiduciary or intermediary. Transactions with companies of the Group and related parties During the year CIR S.p.A. provided management and strategic support services to its subsidiaries and affiliates which involved, among other things, supplying administrative and financial services, making loans, and issuing guarantees. Transactions with the controlling parent company consisted of providing services of an adminis-trative and financial nature and being supplied with management support and communication ser-vices. The main concern of CIR and its counterparties in relation to these services is to ensure quality and a high level of efficiency of the services rendered, which derive from CIR’s specific knowledge of the businesses of the Group. Transactions between companies of the Group are settled at normal market conditions on the basis of the quality and the specific nature of the services rendered. The most significant financial transactions between CIR and its subsidiaries are analysed in detail in the explanatory Notes to the separate financial statements, particularly under the item Miscella-neous receivables, Other payables and Borrowings from subsidiaries in the Statement of Finan-cial Position and under the items Miscellaneous revenues and income, Financial expense and Dividends in the Income Statement. Regarding the main equity transactions reference should be made to the appropriate sections of the Explanatory Notes. It should be pointed out that the CIR Group did not enter into any transactions with related par-ties, according to Consob’s definition, or with entities other than related parties of a non-typical or unusual nature beyond normal business administration or such as to have any significant impact on the economic, financial or equity situation of the Group. The code of conduct governing transactions with related parties was defined by the Board of Di-rectors of the Company in September 2002. National Tax Consolidation The Income Tax Consolidation Act (TUIR) gives the possibility for companies belonging to the same group to determine a single total income figure corresponding in principle to the algebraic sum of the taxable incomes of the various companies (parent company and subsidiaries controlled directly and/or indirectly by more than 50% according to certain requisites) and thus to calculate a single tax figure for the income of the companies of the group. In 2004 the Boards of Directors of 28 companies belonging to the Espresso, Sorgenia, Sogefi and KOS (formerly HSS) subgroups voted to take part in the “CIR Tax Consolidation” for the three years 2004-2006, signing a general


agreement (“General Rules of the CIR Tax Consolidation”), which set out the rights and obliga-tions of CIR and its subsidiaries, resulting from their taking part in the tax consolidation. In 2007 CIR and companies belonging to the Espresso, Sorgenia, Sogefi, KOS (formerly HSS) and Jupiter sub-groups renewed their participation in the “CIR Tax Consolidation” for the three years 2007-2009. At December 31 2009 there were 27 companies taking part in the CIR Tax Con-solidation. It should be noted that the Group intends to renew its participation in the “CIR tax consolidation” for the next three years. Annual Report on Corporate Governance The CIR Group‘s model of corporate governance is based on the guidelines contained in the Code of Conduct prepared by the Corporate Governance Committee of the Italian Stock Exchange (Borsa Italiana) and published in March 2006 with the additions and adjustments made necessary by the nature of the Group. In compliance with regulatory requirements, every year an “Annual Report on Corporate Govern-ance” is prepared, which contains a general description of the system of corporate governance adopted by the Group and gives information on the ownership structure and on compliance with the Code of Conduct, including the main governance practices applied and the characteristics of the system of risk management and internal control in relation to the financial disclosure process. It should be noted that the full text of the “Annual Report on Corporate Governance” for the year 2009 was approved – in its entirety – by the Board of Directors’ Meeting convened to approve the Financial Statements for the year ended December 31 2009. The Annual Report on Corporate Governance will be available to anybody who requests it, ac-cording to the conditions stipulated by Borsa Italiana for publishing the same. The Report will also be available on the website of the Company (www.cirgroup.it) in the section "Governance”. In relation to D.Lgs. 231/01, issued with the aim of bringing regulations on the subject of the ad-ministrative liability of entities into line with international agreements signed by Italy, on March 7 2003 the Board of Directors of the Company approved the adoption of a Code of Ethics of the CIR Group, published as an attachment to the “Annual Report on Corporate Governance”, which defines the values which the Group follows in the achievement of its objectives and establishes binding principles of conduct for its Directors, employees and those who have a relationship with the Group. Moreover, on September 5 2003, the Board of Directors of the company approved the “Organization Model – Organizational and Management Model as defined by D.Lgs. no. 231/01”, in line with the instructions laid down in the decree which aimed to ensure correctness and trans-parency in the conduct of business and corporate activities. The Organizational and Management Model as per dlgs 231/01 is continually updated by the Board of Directors to take into account the broadening of the scope of the rules on the subject. With particular reference to the introduction of Articles 24 ter, 25 bis 1 and 25 novies, studies and assessments are currently in progress for the preparation of special protocols on the subject. In relation to the obligations set out in Art. 2.6.2, paragraph 15 of the Rules of Borsa Italiana, tak-ing into account the provisions of Articles 36 and 37 of Consob Resolution 16191, it is hereby confirmed that there are no conditions that could prevent the listing of CIR shares on the MTA market organized and managed by Borsa Italiana S.p.A. since the foreign subsidiaries not belong-ing to the European Union, which have particular significance for CIR, publish their own com-


pany bylaws and the composition and powers of their administrative bodies according to the legis-lation applicable to them or voluntarily, they provide the Company’s auditors with the informa-tion necessary to carry out the audit activity on the annual and interim accounts of CIR, and they have a suitable administrative and accounting system to provide the Company’s Management and its auditors with the economic, patrimonial and financial figures necessary for the preparation of the consolidated financial statements. Furthermore, in relation to the fact that the company is sub-ject to management and coordination by its controlling company COFIDE - Compagnia Finan-ziaria De Benedetti S.p.A., the Company has fulfillled all the disclosure obligations required by Article 2497-bis of the Civil Code, it has the power to negotiate relationships with clients and suppliers independently, it has no centralized treasury function in common with COFIDE and the Board of Directors of the Company, out of a total of 14 members, has 7 who possess the requisites of independence and are thus sufficient to guarantee that their judgment has a significant weight in the the decision-making process of the Board. Lastly it should be noted that the companies of the Group have complied with the provisions of Art. 2497-bis of the Civil Code. Preparation of the “Security Policy Document (DPS)” D.Lgs. no. 196/03, the Code on the subject on the protection of personal information, stipulates that by March 31 of each year the organization responsible for the treatment of personal informa-tion should draw up a formal security policy document containing, among other things, appropri-ate information regarding the following: - the list of the types of use of personal information made by the organization; - the distribution of responsibilities and tasks relating to the use of such information; - a description of the measures to be taken to guarantee the integrity and the availability of the

information and the protection of the areas set aside for storing it and making it accessible; - the description of the criteria and the procedures for restoring access to the said information in

the event of it being destroyed or damaged; - the description of the criteria to be adopted in order to guarantee that the minimum measures of

security are followed when the treatment of personal information is entrusted, in conformity with the Code, to someone outside the organization of the Officer Responsible.

Article 26 of the Technical Rules states that the preparation or amendment of the Security Policy Document must be mentioned in the Report on Operations accompanying the Financial State-ments when appropriate. The Security Policy Document was updated in conjunction with specialist consultants in this field who have been certified as BS7799 lead auditors by the British Standards Institute. Research and development During 2009, research and development activity at Group level was mainly focused on the utilities sector. In compliance with accounting standards, research costs are recognized to the income statement when they are incurred while development costs relating to specific projects are capital-ized, when their future benefits are considered reasonably certain, and are amortized for the whole period during which the expected future benefits from the project will be generated. The activities of Noventi Ventures II LP, the venture capital fund set up by Sorgenia in Silicon Valley (California), continued with the primary objective of identifying and investing in new in-dustrial initiatives that develop and use innovative technologies in the fields of electricity genera-tion from renewable and alternative sources, safeguarding the environment, and saving resources and using them intelligently. During 2009 the fund made further investments in the companies al-ready present in its portfolio to support their development. In particular the fund took part in a


bridging loan to HelioVolt (producer of thin-film photovoltaic panels using CIGS technology); Lumenergi (supplier of an energy efficiency technology in the field of lighting for commercial buildings) and Mariah Power (producer of vertical axis micro wind turbines for commercial and residential use). In the solar energy sector the Sorgenia Group has pursued certain research projects in conjunction with the Sardinian CRS4 research centre to study topics relating to the use of concentrated solar power technologies in Italy. As far as energy efficiency is concerned, this activity is being developed by the special Division set up in 2005 with the aim of building products and services able to give Sorgenia clients con-crete energy savings. At present the activity is concentrated on the subject of Energy Monitoring Systems for domestic use because it is felt that the possibility of first sensitizing customers to the problem and then enabling them to do something about it is a strong point in Sorgenia’s favour and will attract the attention of its customers. In practice, the Division is developing a device for saving energy in the household, which customers can use to monitor household consumption, set equipment to switch on and off (appliances, lamps, etc.), both on the spot and remotely, using smart phones for example. In relation to the total investments of € 18.5 million made in 2009 in the automotive components sector, research and development of new products and processes were focused on the strategic is-sue of innovative materials to offer clients solutions for building vehicles that are ever lighter and more ecological. Other The company CIR S.p.A. – Compagnie Industriali Riunite has its registered office in Via Valeg-gio 41, Turin, Italy and its operating headquarters in Via Ciovassino 1, Milan, Italy. CIR shares, which have been quoted on the Italian Stock Exchange since 1973, since 2004 have been traded on the Blue-chip segment (Reuter code: CIRX.MI, Bloomberg code CIR IM). Since March 2009 the CIR stock has been part of the FTSE MIB index. This Financial Report for the period January 1 – December 31 2009 was approved by the Board of Directors on March 11 2010. CIR S.p.A. is subject to management and coordination by Cofide S.p.A..


PROPOSED ALLOCATION OF THE RESULT FOR THE YEAR Dear Shareholders, The Financial Statements for the year ended December 31 2009 that we are sub-mitting to your approval closed with a net loss of € 1,989,780.44 which we pro-pose be covered entirely by drawing on the credit balance existing under the item “Retained earnings”.

THE BOARD OF DIRECTORS Milan, March 11 2010


CIR Group

Consolidated Financial Statements as of December 31 2009

STATEMENT OF FINANCIAL POSITION

INCOME STATEMENT

STATEMENT OF COMPREHENSIVE INCOME

STATEMENT OF CASH FLOW

STATEMENT OF CHANGES IN EQUITY

EXPLANATORY NOTES

Consolidated Financial Statements 39

1. STATEMENT OF FINANCIAL POSITION

(in thousands of euro)

ASSETS Note 31.12.2009 31.12.2008

NON-CURRENT ASSETS 4,287,814 3,804,558 INTANGIBLE ASSETS (7.a) 1,316,903 1,264,499 TANGIBLE ASSETS (7.b) 2,187,369 1,789,985 INVESTMENT PROPERTY (7.c) 18,115 18,687 INVESTMENTS IN COMPANIES CONSOLIDATED AT EQUITY (7.d) 275,899 282,824 OTHER EQUITY INVESTMENTS (7.e) 9,629 9,682 OTHER RECEIVABLES (7.f) 207,899 236,147 of which with related parties (*) (7.f) 4,480 20,734 SECURITIES (7.g) 83,051 84,633 DEFERRED TAXES (7.h) 188,949 118,101

CURRENT ASSETS 2,362,336 3,168,534 INVENTORIES (8.a) 156,150 195,311 CONTRACTED WORK IN PROGRESS 3,464 2,915 TRADE RECEIVABLES (8.b) 1,042,030 1,233,689 of which with related parties (*) (8.b) 18,032 24,661 OTHER RECEIVABLES (8.c) 200,627 363,753 of which with related parties (*) 1,727 151,288 FINANCIAL RECEIVABLES (8.d) 27,229 25,721 SECURITIES (8.e) 278,548 513,362 AVAILABLE-FOR-SALE FINANCIAL ASSETS (8.f) 104,967 217,420 CASH AND CASH EQUIVALENTS (8.g) 549,321 616,363

ASSETS HELD FOR DISPOSAL (8.h) 700 653

TOTAL ASSETS 6,650,850 6,973,745

LIABILITIES AND SHAREHOLDERS' EQUITY 31.12.2009 31.12.2008

SHAREHOLDERS' EQUITY 2,332,335 2,078,888 ISSUED CAPITAL 396,059 395,588

less OWN SHARES (21,537) (21,487)SHARE CAPITAL (9.a) 374,522 374,101 RESERVES (9.b) 295,983 307,856 RETAINED EARNINGS (LOSSES) (9.c) 582,818 487,448 NET INCOME FOR THE YEAR 143,432 95,444 SHAREHOLDERS' EQUITY OF THE GROUP 1,396,755 1,264,849 MINORITY SHAREHOLDERS' EQUITY 935,580 814,039

NON-CURRENT LIABILITIES 2,958,552 2,931,482 BONDS AND NOTES (10.a) 718,262 895,458 OTHER BORROWINGS (10.b) 1,843,359 1,653,615 OTHER PAYABLES 1,177 3,333 of which with related parties (*) 69 69 DEFERRED TAXES (7.h) 181,489 174,903 PERSONNEL PROVISIONS (10.c) 137,346 147,482 PROVISIONS FOR RISKS AND LOSSES (10.d) 76,919 56,691

CURRENT LIABILITIES 1,359,963 1,963,375 BANK OVERDRAFTS 66,290 164,801 BONDS AND NOTES (11.a) 731 347,445 OTHER BORROWINGS (11.b) 132,499 146,987 of which from related parties (*) (11.b) 2 71 TRADE PAYABLES (11.c) 836,587 946,989 of which to related parties (*) (11.c) 28,649 22,089 OTHER PAYABLES (11.d) 228,178 277,153 PROVISIONS FOR RISKS AND LOSSES (11.e) 95,678 80,000

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 6,650,850 6,973,745

(*) As per Consob resolution no. 6064293 of July 28 2006

40

2. INCOME STATEMENT


Note 2009 2008

SALES REVENUES (12) 4,266,865 4,726,999

of which from related parties (*) (12) 490

CHANGE IN INVENTORIES (14,150) 953

COSTS FOR THE PURCHASE OF GOODS (13.a) (2,554,020) (2,852,871)

of which from related parties (*) (13.a) --

COSTS FOR SERVICES (13.b) (744,104) (782,395)

of which from related parties (*) (13.b) (1,531) (2,094)

PERSONNEL COSTS (13.c) (664,835) (687,664)

OTHER OPERATING INCOME (13.d) 104,317 137,679

of which from related parties (*) (13.d) 1,295 548

OTHER OPERATING COSTS (13.e) (139,110) (130,475)

ADJUSTMENTS TO THE VALUE OF INVESTMENTS VALUED

AT EQUITY (7.d) 39,679 49,286

AMORTIZATION, DEPRECIATION AND WRITEDOWNS (146,651) (141,373)

INCOME BEFORE FINANCIAL ITEMS AND TAXES ( E B I T ) 147,991 320,139

FINANCIAL INCOME (14.a) 53,823 69,104

of which from related parties (*) (14.a) 10,426 11,244

FINANCIAL EXPENSE (14.b) (157,896) (198,829)

of which with related parties (*) (14.b) (10,201) (10,112)

DIVIDENDS 587 310

GAINS FROM TRADING SECURITIES (14.c) 151,518 218,589

LOSSES FROM TRADING SECURITIES (14.d) (6,936) (21,343)

ADJUSTMENTS TO THE VALUE OF FINANCIAL ASSETS (14.e) (4,008) (112,093)

INCOME BEFORE TAXES 185,079 275,877

INCOME TAXES (15) 4,334 (98,808)

INCOME BEFORE TAXES FROM OPERATING ACTIVITY 189,413 177,069

INCOME/(LOSS) FROM ASSETS HELD FOR DISPOSAL -- --

NET INCOME FOR THE YEAR INCLUDING MINORITY INTERESTS 189,413 177,069

- NET INCOME OF MINORITY SHAREHOLDERS (45,981) (81,625)

- NET INCOME OF THE GROUP 143,432 95,444

BASIC EARNINGS PER SHARE (in euro) (16) 0.1917 0.1275

DILUTED EARNINGS PER SHARE (in euro) (16) 0.1917 0.1275

(*) As per Consob resolution no. 6064293 of July 28 2006

41

3. STATEMENT OF COMPREHENSIVE INCOME


2009 2008

Net income for the period 189,413 177,069

Other items of comprehensive income statement

Currency translation differences from foreign operations 17,571 (875)

Net fair value change in available-for-sale financial assets (32,017) (130,198)

Net change in cash flow hedge reserve 85 (15,518)

Other items of comprehensive income statement 4,593 (7,274)

Taxes on other items of comprehensive income statement (1,167) 4,177 Other items of comprehensive income statement for theperiod, net of tax (10,935) (149,688)

TOTAL COMPREHENSIVE INCOME STATEMENT FOR THE PERIOD 178,478 27,381

Total comprehensive income statement attributable to:Shareholders of the controlling company 126,407 (4,195)Minority shareholders 52,071 31,576

42

4. STATEMENT OF CASH FLOW


2009 2008

OPERATING ACTIVITY

NET INCOME FOR THE YEAR INCLUDING MINORITY INTERESTS 189,413 177,069

ADJUSTMENTS:

AMORTIZATION, DEPRECIATION & WRITEDOWNS 146,651 141,373

SHARE OF THE RESULT OF COMPANIES CONSOLIDATED AT EQUITY (39,679) (49,286)

ACTUARIAL VALUATION OF STOCK OPTION PLANS 10,598 8,344

CHANGE IN PERSONNEL PROVISIONS & PROVISIONS FOR RISKS & LOSSES 25,770 20,149

ADJUSTMENTS TO THE VALUE OF FINANCIAL ASSETS 4,008 112,093

CAPITAL GAIN ON SUBSCRIPTION OF CAPITAL INCREASES BYMINORITY SHAREHOLDERS (76,735) (117,810)

CAPITAL GAINS ON SALE OF SECURITIES (67,847) (75,803)

INCREASE (REDUCTION) IN NON-CURRENT RECEIVABLES AND PAYABLES (37,226) (1,895)

(INCREASE) REDUCTION IN NET WORKING CAPITAL 83,029 (275,080)

OTHER CHANGES 51,601 50,382

CASH FLOW FROM OPERATING ACTIVITY 289,583 (10,464)

of which:

- interest received (paid out) (62,518) (124,900)

- income tax payments (70,756) (75,761)

INVESTMENT ACTIVITY

(PURCHASE) SALE OF SECURITIES 369,039 (189,782)

PURCHASE OF FIXED ASSETS (625,009) (471,769)

CASH FLOW FROM INVESTMENT ACTIVITY (255,970) (661,551)

FUNDING ACTIVITY

INFLOWS FROM CAPITAL INCREASES 187,851 274,006

OTHER CHANGES IN SHAREHOLDERS' EQUITY 32,713 (56,145)

DRAWDOWN/(REPAYMENT) OF OTHER BORROWINGS (200,162) 433,688

FINANCIAL RECEIVABLES WITH JOINTLY CONTROLLED COMPANIES -- 42,499

BUYBACK OF OWN SHARES (1,160) (16,770)

DIVIDENDS PAID OUT (21,386) (155,796)

CASH FLOW FROM FUNDING ACTIVITY (2,144) 521,482

INCREASE (REDUCTION) IN NET CASH AND CASH EQUIVALENTS 31,469 (150,533)

NET CASH AND CASH EQUIVALENTS AT START OF PERIOD 451,562 602,095

NET CASH AND CASH EQUIVALENTS AT END OF PERIOD 483,031 451,562

43

5. STATEMENT OF CHANGES IN CONSOLIDATED EQUITY

(in thousands of euro) Minority Total

Issued less Share Reserves Retained Net income Total interestscapital own shares capital earnings(losses) (losses) for year

BALANCE AT DECEMBER 31 2007 395,466 (19,822) 375,644 412,983 448,674 82,580 1,319,881 721,912 2,041,793

Capital increases 122 -- 122 243 -- -- 365 273,641 274,006

Dividends to Shareholders -- -- -- -- -- (37,410) (37,410) (118,386) (155,796)

Retained earnings -- -- -- -- 45,170 (45,170) -- -- --

Unclaimed dividends as per Art. 23 of Bylaws -- -- -- 13 -- -- 13 -- 13

Adjustment for own share transactions -- (1,665) (1,665) 1,665 (6,396) -- (6,396) -- (6,396)

Notional recognition of stock options -- -- -- 905 -- -- 905 -- 905

Effects of equity changes in subsidiaries -- -- -- (8,314) -- -- (8,314) (94,704) (103,018)

Net comprehensive income for the year

Fair value measurement of hedging instruments -- -- -- (6,169) -- -- (6,169) (5,172) (11,341)

Fair value measurement of securities -- -- -- (54,525) -- -- (54,525) (10,371) (64,896)

Securities fair value reserve recognized to income statement -- -- -- (53,073) -- -- (53,073) (12,229) (65,302)

Effects of equity changes in subsidiaries -- -- -- 7,449 -- -- 7,449 (14,723) (7,274)

Currency translation differences -- -- -- 6,679 -- -- 6,679 (7,554) (875)

Net income for the year -- -- -- -- -- 95,444 95,444 81,625 177,069

Total net comprehensive income for the year -- -- -- (99,639) -- 95,444 (4,195) 31,576 27,381


Capital increases 471 -- 471 528 -- -- 999 186,852 187,851

Dividends to Shareholders -- -- -- -- -- -- -- (21,386) (21,386)

Retained earnings -- -- -- -- 95,444 (95,444) -- -- --

Unclaimed dividends as per Art. 23 of Bylaws -- -- -- 14 -- -- 14 -- 14

Adjustment for own share transactions -- (50) (50) 50 (74) -- (74) -- (74)

Notional recognition of stock options -- -- -- 5,455 -- -- 5,455 -- 5,455

Effects of equity changes in subsidiaries -- -- -- (895) -- -- (895) (95,996) (96,891)

Net comprehensive income for the year

Fair value measurement of hedging instruments -- -- -- (285) -- -- (285) (800) (1,085)

Fair value measurement of securities -- -- -- 7,668 -- -- 7,668 (764) 6,904

Securities fair value reserve recognized to income statement -- -- -- (38,918) -- -- (38,918) -- (38,918)

Effects of equity changes in subsidiaries -- -- -- 2,257 -- -- 2,257 2,336 4,593

Currency translation differences -- -- -- 12,253 -- -- 12,253 5,318 17,571

Net income for the year -- -- -- -- -- 143,432 143,432 45,981 189,413

Total net comprehensive income for the year -- -- -- (17,025) -- 143,432 126,407 52,071 178,478


Attributable to Shareholders of the parent company

44

EXPLANATORY NOTES 1. STRUCTURE AND CONTENT OF THE FINANCIAL STATEMENTS These consolidated financial statements have been prepared in accordance with international ac-counting standards (IAS/IFRS) issued by the International Accounting Standards Board (“IASB”) and ratified by the European Union, as well as with the measures issued in implementation of Art. 9 of D. Lgs. no. 38/2005, including all the interpretations of the International Financial Re-porting Interpretations Committee (“IFRIC”), previous known as the Standing Interpretations Committee (“SIC”). The financial statements are prepared on the basis of the principle of historical cost, modified as required for the valuation of certain financial instruments, in compliance with the matching and revenue recognition principles and on the assumption that the enterprise is a going concern. In fact, in spite of the presence of a difficult economic and financial environment, the Group has evaluated that there are no significant uncertainties, as defined in paragraph 24 of IAS 1, relating to the ongoing nature of the concern. The Consolidated Financial Statements for the year ended December 31 2009, which include the Parent Company of the Group CIR S.p.A. (hereinafter “CIR”) and the companies directly or indi-rectly controlled by CIR, were prepared using the statements of the individual companies included in the consolidation, i.e. their statutory financial statements (known as “individual” or “separate” in IAS/IFRS terminology), or the consolidated statements of the sub-groups, examined and ap-proved by their respective boards and amended and re-stated where necessary to bring them into line with the accounting principles listed below and, where there is compatibility, with Italian regulations. The various statements adopted are as follows: - The Statement of Financial Position is organized in offsetting items classified as current and

non-current assets and liabilities; - The Income Statement shows a breakdown according to type of expense; - The Statement of Comprehensive Income shows items of income suspended in shareholders’

equity. - The Statement of Cash Flow was prepared using the indirect method; - The Statement of Changes in Equity gives a breakdown of the changes which took place dur-

ing the year and in the previous year. These financial statements were prepared in thousands of euro, which is the “functional” and “presentation” currency of the Group according to the terms of IAS 21, except where expressly indicated otherwise. Events which occurred after the balance sheet date After the close of the year there were no important events that could have affected the financial, equity and economic situation of the company in any significant way. See point 6 of the Report on Operations for a description of the significant events which occurred after the close of the year. In accordance with paragraph 17 of IAS 10, it should be noted that publication of these financial statements was authorized by the Board of Directors of the Company on March 11 2010.


2. CONSOLIDATATION PRINCIPLES 2.a. Consolidation methods All the companies in which the Group exercises control according to the terms of IAS 27, SIC 12 and IFRIC Interpretation 2 are considered as controlled companies or subsidiaries. In particular, companies and investment funds are considered as subsidiaries when the Group has the power to make decisions regarding financial and operating policy. The existence of this power is presumed to exist when the Group possesses the majority of the voting rights of a company, including po-tential voting rights that are exercisable without any restrictions or when it has in any case effec-tive control over Shareholders’ Meetings despite not having a majority of the voting rights. Subsidiaries are fully consolidated as from the date on which the Group takes control and are de-consolidated when such control ceases to exist. Consolidation is carried out using the full line-by-line consolidation method. The main criteria adopted for the application of this method are generally the following: - The book value of the holding is eliminated against the appropriate portion of shareholders’ eq-uity and the difference between acquisition cost and the shareholders’ equity of investee compa-nies is posted, where the conditions exist, to the items of assets and liabilities included in the con-solidation. Any remaining part is recognized to the income statement when it is negative or to the “Goodwill” item of the assets when it is positive. Goodwill is subjected to an impairment test to determine its recoverable value; - Significant transactions between consolidated companies are eliminated as are payables, receiv-ables and unrealized income resulting from transactions between companies of the Group, net of any tax; - Minority shareholders’ equity and their share of net income for the period are shown in special items of the consolidated statement of financial position and income statement; - In the event of a reduction of the shareholding, not involving a loss of control, due to an increase in the capital held by minority shareholders, except for cases resulting from the subscription of stock option plans, any gains or losses from the dilution are recognized to the income statement in application of the Parent Company method. Associates All those companies in which the Group has a significant influence, without having control, in ac-cordance with the terms of IAS 28, are considered as associated companies or associates. Signifi-cant influence is presumed to exist when the Group holds a percentage of the voting rights of be-tween 20% and 50% (excluding cases where there is joint control). Associates are consolidated using the equity method as from the date on which the Group acquires significant influence in the associate and they are de-consolidated from the moment when significant influence ceases to ex-ist. The criteria adopted for applying the equity method are mainly the following: - The book value of the holding is eliminated against the appropriate portion of shareholders’ eq-uity and any positive difference, identified at the time of the acquisition, net of any lasting loss of value resulting from an impairment test to establish its recoverable value (impairment test); the corresponding share of the net income or loss for the period is recognized to the income state-ment. Whenever the part attributable to the Group of the losses of the associate exceeds the carry-ing value of the investment in the accounts, the value of the investment is written off and the share of any further losses are not recognized unless the Group has any contractual obligation to do so; - Any unrealized gains and losses generated by transactions between companies of the Group are netted out except in cases where losses represent a permanent loss of value of the assets of the as-sociate;

46 Consolidated Financial Statements

- The accounting principles of the associate are amended, where necessary, in order to make them compatible with the accounting principles adopted by the Group. Joint ventures: All companies in which the Group exercises control jointly with another company according to the terms of IAS 31 are considered as joint ventures. In particular it is presumed that joint control exists when the Group owns half of the voting rights of a company. International accounting standards give two methods for consolidating investments in joint ven-tures: . the usual method, which involves proportional consolidation: . the alternative method which involves consolidation using the equity method. The Group has adopted the equity method of consolidation. 2.b. Translation of foreign companies’ financial statements into euro The translation into euro of the financial statements of foreign subsidiaries not belonging to the single currency, none of which has an economy subject to hyperinflation according to the defini-tion given in IAS 29, is carried out at the year-end exchange rate for the statement of financial po-sition and at the period average exchange rate for the income statement. Any exchange rate differ-ences resulting from the translation of shareholders’ equity at the year-end exchange rate and from the translation of the income statement at the average rate for the period are recorded in the item “Other reserves” under shareholders’ equity. The main exchange rates used are the following: 31.12.2009 31.12.2008

Average rate 31.12.2009 Average rate 31.12.2008

US Dollar 1.39478 1.4406 1.47076 1.3917

UK Sterling 0.8906 0.8881 0.7948 0.9525

Swedish Krona 10.6112 10.2522 9.6006 10.8696

Brazilian Real 2.7598 2.5113 2.6583 3.2436

Argentine Peso 5.1677 5.4618 4.6296 4.8045

Chinese Renminbi 9.4931 9.8348 10.1616 9.4958

Indian Rupee 67.2495 67.0241 63.7349 67.6133

2.c. Consolidation area The consolidated financial statements as of December 31 2009 and the consolidated financial statements for the previous year of the Group are the result of the consolidation at those dates of the Parent Company CIR and of all the companies directly or indirectly controlled, jointly con-trolled or associated, with the exception of any companies being wound up. Assets and liabilities scheduled for disposal are reclassified in the items of assets and liabilities that show such an even-tuality. Specifically in 2009 the assets refer to properties of the Sogefi group that are scheduled for dis-posal in 2010. The list of equity investments included in the consolidation area, with an indication of the con-solidation method used, and of those not included is given in the appropriate section of this book-let.


It should be noted that in application of Standing Interpretations Committee 12 (SIC 12), the secu-ritization company Zeus Finance S.r.l. (vehicle company) and the vehicle Urania Finance S.A. have now been consolidated. 2.d. Changes in the consolidation area The main changes in the consolidation area compared with the previous year concern the follow-ing: Utilities sector Since last year the following companies have now joined the consolidation: - Azzurro LNG S.p.A. - MPX Energy Ltd. - MPX (Oil & Gas) Limited - MPX Resources Limited - MPX North Sea Limited - Hannu North Sea Limited - Hannu Exploration Limited - Saponis Investments Sp ZOO - Soluxia Sarda II S.r.l. - Sorgenia Solar Power S.r.l. - Sorgenia E&P Bulgaria EOOD - Sorgenia E&P Colombia BV - Sorgenia E&P UK Ltd. - Sorgenia Trading S.p.A. - Sorgenia USA LLC - Sunnext S.r.l. The recognition of the MPX group, of which control was acquired during the year, was effected using the purchase method, in compliance with the terms of IFRS3, opting for provisional alloca-tion of the price paid to the assets and liabilities acquired at the date on which the deal was final-ized. Automotive sector In 2009 the following changes took place: - In September the subsidiary Allevard Rejna Autosuspensions S.A. increased its stake in the

subsidiary S. ARA Composite S.a.s. from 50% to 64.29%, through a capital increase of € 800 thousand.

It should also be noted that the consolidated income statement at December 31 2009 includs for the first time the figures of the Indian subsidiaries Sogefi M.N.R. Filtration India Pvt Ltd and EMW Environmental Technologies Pvt Ltd, while their asset and liability items were already inc-luded in the consolidation at December 31 2008. Healthcare sector In 2009 the following changes took place: - The acquisition of an interest in the company Iniziative Territoriali Integrate S.r.l.;


- The controlling stake in Ospedale di Suzzara S.p.A. was increased from 65% to 99.9%; - The establishment of the company Consorzio (HSS Servizi Società Consortile a r.l.) 99.6%

owned by the Kos group. The business arm “Residenza Dorica” was also acquired. Media sector There were some changes in the consolidation area compared to 2008 following the incorporation of some companies of the group that previously were fully consolidated. These were as follows: • On July 21 2009 EAG S.p.A., Edizioni Nuova Europa S.p.A., Editoriale la Città di Salerno

S.p.A. were merged by incorporation into Finegil Editoriale S.p.A. and the companies Roto-nord S.p.A. and Saire S.r.l. were merged by incorporation into Rotocolor S.p.A.;

• On September 21 2009 the company CPS S.p.A. was merged by incorporation into Gruppo Editoriale L’Espresso S.p.A.;

• On December 1 2009 Kataweb News was merged by incorporation into Elemedia S.p.A.. It should also be noted that as from December 31 2009 the company Edigraf S.r.l. left the consoli-dation because it was sold to third parties in October 2009, while the subsidiary Ksolutions S.p.A., currently being wound up and not longer operational, was consolidated at cost instead of being fully consolidated as was the case at December 31 2008. Lastly, regarding other companies consolidated at cost, it should be noted that the investment in E-Ink Corporation has been sold and Uhuru Multimedia S.r.l. has been wound up, having already been non-operational at December 31 2008. Other companies As from financial year 2009 the company Food Concepts Holding S.A. and the company Food Concepts Germany GmbH have joined the consolidation. 3. ACCOUNTING PRINCIPLES APPLIED 3.a. Intangible assets (IAS 38) Intangible assets are recognized only if they can be separately identified, if it is probable that they will generate future economic benefits and if their cost can be measured reliably. Intangible assets with a finite useful life are valued at purchase or production cost net of amortiza-tion and accumulated impairment. Intangible assets are initially recognized at purchase or production cost. Purchase cost is repre-sented by the fair value of the means of payment used to purchase the asset and any additional di-rect cost incurred for preparing the asset for use. The purchase cost is the equivalent price in cash as of the date of recognition and, where payment is deferred beyond normal terms of credit, the difference compared with the cash price is recognized as interest for the whole period of defer-ment. Amortization is calculated on a straight-line basis following the expected useful life of the asset and starts when the asset is ready for use. The carrying value of intangible assets is maintained as long as there is evidence that this value


can be recovered through use; to this end at least once a year an impairment test is carried out to check that the intangible asset is able to generate future cash flows. However, intangible assets with an indefinite useful life are not amortized but are constantly moni-tored for any permanent loss of value. It is mainly the newspaper and magazine titles and frequen-cies of the Espresso Group that are considered as intangible assets with an indefinite useful life. Development costs are recognized as intangible assets when their cost can be measured reliably, when there is a reasonable assumption that the asset can be made available for use or for sale and that it is able to generate future benefits. Once a year or any time there are reasons which justify it, capitalized costs are subjected to an impairment test. Research costs are charged to the income statement as and when they are incurred. Trademarks and licenses, which are initially recognized at cost, are subsequently accounted for net of amortization and any impairment. The period of amortization is defined as the lower of the contractual duration for use of the license and the useful life of the asset. Software licenses, including associated costs, are recognized at cost and are recorded net of accu-mulated amortization and any impairment. Goodwill In the event of the acquisition of companies, the identifiable assets, liabilities and potential liabili-ties acquired are recognized at their fair value on the acquisition date. The positive difference be-tween the acquisition cost and the Group’s pro-rata share of the fair value of these assets and li-abilities is classified as goodwill and is recorded in the balance sheet as an intangible asset. Any negative difference (“negative goodwill”) is however posted to the income statement at the mo-ment of acquisition. After initial recognition, goodwill is valued at cost less any accumulated impairment. Goodwill always refers to identified income-producing assets, the ability of which to generate in-come and cash flows is constantly monitored for any impairment. On the first adoption of IFRS, the Group opted not to apply IFRS 3 – Business combinations -retrospectively to acquisitions made prior to January 1 2004. As a result, the goodwill generated on acquisitions prior to the date of transition to IFRS was maintained at the previous value deter-mined according to Italian Accounting Principles, subject to monitoring for any losses in value. In relation to acquisitions/sales of holdings in companies that are already controlled, including ex-traordinary transactions involving a change of the stake in the capital of the said subsidiaries, IFRS 3 is not applicable because it only applies to transactions involving the acquisition of control by an acquiring entity of the business activity of the enterprise acquired. Thus, acquisitions of fur-ther shares in a holding, once control has been obtained, are not specifically regulated by IAS/IFRS. In the absence of a specific Principle or Interpretation on the subject and with reference to the in-structions contained in IAS 8 (Accounting Policies, Changes in Accounting Estimates and Er-rors), the Group decided to apply the accounting treatment given below, identifying two different types of transaction:


- acquisitions/sales of holdings in companies already controlled: in application of the parent en-tity extension method which considers minority shareholders as third parties, the Group - in the event of an acquisition pays third party shareholders an amount in cash or in new shares,

thus eliminating their minority holdings and recognizing goodwill equal to the difference be-tween the acquisition cost and the carrying value of the assets and liabilities acquired;

- in the event of a sale, the difference between the price of the sale and the corresponding carry-ing value in the consolidated statement of financial position is recognized to the income state-ment;

- intercompany transfer of holdings in subsidiaries which cause a change in the percentage of

ownership: the shares transferred remain recorded at historical cost and the whole gain or loss on the transfer is reversed out. The stakes of third party shareholders, who do not take part in the transaction directly, are adjusted to reflect the change in the percentage of their equity holding with an offsetting effect on the equity attributable to the shareholders of the Parent Company without recognizing any goodwill or causing any other effect on earnings or on total equity.

3.b. Tangible assets (IAS 16) Tangible assets are recognized at purchase price or at production cost net of accumulated depre-ciation. Cost includes associated expenses and any direct and indirect costs incurred at the moment of ac-quisition and necessary to make the asset ready for use. Financial expense relating to specific loans for long-term investments are capitalized until the date when the assets start operating. When there are contractual or compulsory obligations for decommissioning, removing or clearing sites where fixed assets are installed, the value recognized includes an estimate of costs that will be incurred on disposal of the same, discounted to present value. Fixed assets are depreciated on a straight-line basis for each year in relation to their remaining useful life. Land, assets under construction and advance payments are not subject to depreciation. Real estate and land not used for corporate operating purposes are classified under a special item of assets and are accounted for on the basis of the terms of IAS 40 “Investment properties” (see paragraph 3.e. below). Should there be any events which one can assume will cause a lasting reduction in the value of an asset, its carrying value is checked against its recoverable value, which is the higher of its fair value and its value in use. Fair value is defined on the basis of values expressed by the active market, by recent transactions or from the best information available to determine the potential amount obtainable from the sale of the asset. Value in use is determined from the net present value of cash flows resulting from the use expected of the same asset, applying the best estimates of its residual useful life and a rate that also takes into account the implicit risk of the specific business sectors in which the Group operates. This valuation is carried out for each individual as-set or for the smallest identifiable cash generating unit (CGU).


Where there is a negative difference between the values stated above and the carrying value, the asset’s carrying value is written down, while as soon as the reasons for such loss in value cease to exist the asset then undergoes an upward revaluation. Write-downs and revaluations are posted to the income statement. 3.c. Public entity grants Any grants from a public entity are recognized when there is a reasonable degree of certainty that the receiving company will comply with all the conditions stipulated for such a grant, independ-ently of whether or not there is a formal resolution awarding the said grant, and the certainty that the grant will actually be received. Capital contributions are recognized in the balance sheet either as deferred income, which is posted to the income statement on the basis of the useful life of the asset for which it has been granted so that the depreciation can be reduced, or else they are deducted directly from the asset to which they refer. Any public entity grants obtained in the form of reimbursement of expenses and costs already in-curred or with the purpose of providing immediate support for the beneficiary company without there being any future related costs, are recognized as income in the period in which they can be claimed. 3.d. Leasing contracts (IAS 17) Leasing contracts for assets where the lessee substantially assumes all the risks and rewards of ownership are classified as finance leases. Where there are such finance lease contracts out-standing the asset is recognized at the lower of its fair value and the present value of the minimum lease payments stipulated in the relevant contracts. The total lease payments are allocated between the liability and finance charges so as to achieve a constant rate on the finance balance out-standing. The residual lease payments, net of financial expense, are classified as borrowings. The interest expense is charged to the income statement over the lease period. Assets acquired with fi-nancial leasing contracts are depreciated to an extent consistent with the nature of the asset. Leasing contracts in which the lessor substantially retains the risks and rewards of ownership are, on the other hand, classified as operating leases and payments made under such leases are charged to the income statement on a straight-line basis over the period of the lease. In the event of a sale and lease-back agreement, any difference between the price of sale and the carrying value of the asset is not recognized to the income statement unless there is a loss repre-senting an impairment of the asset itself. 3.e. Investment property (IAS 40) An investment property is a property, either land or building – or part of a building – or both, owned by the owner or by the lessee, through a financial leasing agreement, for the purpose of re-ceiving lease payments or for obtaining a return on the capital invested or for both of these rea-sons, rather than for the purpose of directly using it for the production or supply of goods or ser-vices or for administration of the company or for sales, in ordinary business activities. The cost of an investment property is represented by its purchase price, any improvements made, any replacements and extraordinary maintenance. For self-constructed investment property an estimation is made of all costs incurred as of the date on which the construction or the development was finished. Until that date the conditions set forth in IAS 16 apply.


In the event of an asset held through a finance lease contract, the initial cost is determined accord-ing to IAS 17 from the lower of the fair value of the property and the present value of the mini-mum lease payments due. The Group has opted for the cost method to be applied to all investment property held. According to the cost method, measurement is made net of depreciation and any impairment. At the moment of disposal or in the event of permanent non-use of the assets, all related income and expenses will be charged to the income statement. 3.f. Impairment of intangible and tangible assets (IAS 36) At least once a year the Group verifies whether the carrying value of intangible and tangible assets (including capitalized development costs) are recoverable, in order to determine whether there is any indication that the assets may have lost value. If there is such an indication, the carrying value of the assets is written down to the relative recoverable value. An intangible asset with an indefinite useful life is subjected to an impairment test every year or more frequently any time that there is an indication that it may have undergone a loss in value. When it is not possible to estimate the recoverable value of an individual asset, the Group esti-mates the recoverable value of the cash generating unit to which the asset belongs. The recoverable value of an asset is the higher of fair value net of costs to sell and its value in use. To determine the value in use of an asset the Group calculates the present value of estimated fu-ture cash flows, gross of taxes, using a discount rate, before tax, which reflects the current market estimate of the time value of money and the specific risks of the business sector. An impairment loss is recognized if the recoverable value is lower than the carrying value. If at a later date the loss on an asset other than goodwill ceases to exist or is less, the carrying value of the asset or of the cash generating unit is revalued to the extent of the new estimate of its recoverable value but cannot exceed the value that would have been determined if there had not been any impairment loss. The recovery of an impairment loss is recognized to the income state-ment immediately. 3.g. Other equity investments Investments in companies where the Parent Company does not exercise a significant influence are accounted for in accordance with IAS 39 and are therefore classified as available-for-sale invest-ments and are measured at fair value or at cost if the estimation of fair value or market price is not reliable. 3.h. Receivables and payables (IAS 32, 39 and 21) Receivables are recognized at amortized cost and measured at their presumed realization value, while payables are recognized at amortized cost. Receivables and payables in foreign currencies, which are originally recognized at the spot rates on the transaction date, are adjusted to period-end spot exchange rates and any exchange gains and losses are recognized to the income statement.


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


The hedging reserve is formed when fair value changes are recognized on derivatives which, for the purposes of IAS 39, have been designated as “cash flow hedges” or as “hedges of net invest-ments in foreign operations”. The portion of gains and losses considered as “effective” is recognized to shareholders’ equity and is reversed to the income statement as and when the elements hedged are in turn recognized to the income statement, i.e. when the subsidiary is sold. When a subsidiary prepares its financial statements in a currency different from the Group’s func-tional currency, the subsidiary’s financial statements are translated accounting any differences re-sulting from such translation in a special reserve. When the subsidiary is sold the reserve is re-versed to the income statement with a detail of any gains or losses resulting from its disposal. The item “Retained earnings (losses)” includes accumulated income and losses and the transfer of balances from other equity reserves when these become free of any restrictions to which they have been subject. This item also shows the cumulative effect of the changes in accounting principles and/or the cor-rection of errors which are accounted for in accordance with IAS 8. 3.p. Borrowings (IAS 32 and 39) Loans are initially recognized at cost represented by their fair value net of ancillary costs incurred. Subsequently loans are measured at amortized cost calculated by applying the effective interest rate, taking into consideration any issuance costs incurred and any premium or discount applied at the time in which the instrument is settled. 3.q. Provisions for risks and losses (IAS 37) Provisions for risks and losses refer to liabilities which are extremely likely but where the amount and/or maturity are uncertain. They are the result of past events which will cause a future cash outflow. Provisions are recognized exclusively in the presence of a current obligation, either legal or constructive, towards third parties which implies an outflow and when a reliable estimate of the amount involved can be made. The amount recognized as a provision is the best estimate of the disbursement required to fulfil the obligation as of the balance sheet date. The provisions recog-nized are re-examined at the close of each accounting period and are adjusted to represent the best current estimate. Changes in the estimate are recognized to the income statement. When the estimated disbursement relating to the obligation is expected in a time horizon longer than normal payment terms and the discount factor is significant, the provision represents the pre-sent value, discounted at a risk-free interest rate, of the expected future outflows to discharge the obligation. Contingent assets and liabilities (possible assets and liabilities, or those not recognized because no reliable estimate can be made) are not recognized. However adequate disclosure on such items is given.


3.r. Revenue recognition (IAS 18) Revenues from the sale of goods are recognized at the moment when ownership and the risks of the goods are transferred. Revenues are recognized net of returns, discounts and rebates. Revenues for the rendering of services are recognized at the moment when the service is rendered, with ref-erence to the state of completion of the activity as of the balance sheet date. Income from dividends, interest and royalties is recognized as follows: - Dividends, when the right to receive payment is established (with an offset in receivables when

distribution is approved); - Interest, using the effective interest rate method (IAS 39); - Royalties, on an accruals basis, in accordance with the underlying contractual agreement. 3.s. Employee benefits (IAS 19) Benefits to be paid to employees after the termination of their employment and other long term benefits are subject to actuarial valuation. Following this methodology, liabilities recognized represent the present value of the obligation adjusted for any actuarial gains or losses which have not been accounted for. Financial Law no. 296/2006 (Budget) made important changes to severance and leaving indem-nity (TFR) regulations, introducing the possibility for workers to transfer their TFR maturing after January 1 2007 to selected pension schemes. Thus the TFR accruing as of December 31 2006 for employees who exercised the above option, while remaining within the sphere of defined benefit plans, was determined using actuarial methods that exclude the actuarial / financial components relating to future salary dynamics. Given that this new method of calculation reduces the volatility of actuarial gains / losses, the decision was taken to abandon the corridor method and recognize all the actuarial gains and losses to the income statement. Accounting principle IFRS 2 “Share based payments” issued in February 2005 but applicable as from January 1 2005 stated in its transition instructions that application would be retrospective for all transactions where stock options were awarded before November 7 2002 and where, as of the date of its taking effect, the vesting conditions contained in the various plans had not yet been sat-isfied. In compliance with this principle the CIR Group measures the notional cost of stock options and recognizes it to the income statement under personnel costs during the vesting period of the bene-fit, with a corresponding posting to the appropriate reserve in shareholders’ equity. The cost of the option is determined at the award date of the plan applying special models and multiplying by the number of options exercisable over the respective period, which is evaluated with the aid of appropriate actuarial variables. Similarly the cost resulting from the award of phantom stock options is determined in relation to the fair value of the options at the award date and is recognized to the income statement under personnel costs throughout the vesting period of the benefit; the offsetting entry, unlike for stock options, is made in the liabilities (miscellaneous personnel provisions) and not in an equity re-serve. Until this liability is extinguished its fair value is recalculated at each balance sheet date and on the date of actual disbursement and all the fair value changes are posted to the income statement.


3.t. Derivative instruments (IAS 32 and 39) Derivative instruments are measured at fair value. The Group uses derivatives mainly to hedge risks, in particular interest rate, foreign exchange and commodity price risks. The hedging purpose of the derivative is formally documented and the de-gree of “effectiveness” of the hedge is specified. For accounting purposes hedging transactions can be classified as: - fair value hedges – where the effects of the hedge are recognized to the income statement. - cash flow hedges – where the effective portion of the hedge is recognized directly to share-

holders’ equity while the non-effective part is recognized to income statement. - hedges of a net investment in a foreign operation – where the effective portion of the hedge is

recognized directly to shareholders’ equity while the non-effective part is recognized to the in-come statement.

3.u. Foreign currency translation (IAS 21) The Group’s functional currency is the euro, which is the currency in which its financial state-ments are prepared and published. The companies of the Group prepare their financial statements in the currencies that are used in their respective countries. Transactions carried out in foreign currencies are initially recognized at the spot exchange rate on the date of the transaction. At the balance sheet date monetary assets and liabilities denominated in foreign currencies are translated at the spot exchange rate prevailing on that date. Non-monetary items measured at historical cost in a foreign currency are translated using the his-torical exchange rate prevailing on the date of the transaction. Non-monetary items measured at fair value are translated using the spot exchange rate at the date on which the measurements are determined for the financial statements. The assets and liabilities of the companies within the Group whose functional currency is not the euro are valued using the following procedures: - assets and liabilities are translated using the spot exchange rate prevailing at the balance sheet

date; - costs and revenues are translated using the average exchange rate for the period; Exchange rate differences are recognized directly to a special reserve under shareholders’ equity. Should an investment in a foreign operation be sold, the accumulated exchange rate differences recognized in the equity reserve are reversed to the income statement. 3.v. Non-current assets held for sale (IFRS 5) A non-current asset is held for sale if its carrying value will be recovered principally through a sale rather than through its use. For this condition to be satisfied the asset must be immediately sellable in its present condition and a sale must be considered as highly likely. Assets or groups that are classified as held for sale are valued at the lower of their carrying value and expected realization value less costs to sell.


The individual assets or those which are part of a group classified as held for sale are not amor-tized. These assets are shown in the financial statements on a separate line in the income statement giv-ing income and losses net of taxes resulting from the sale. Similarly the assets and liabilities must be shown on a separate line of the Statement of Financial Position. 3.w. Earnings per share (IAS 33) Basic earnings per share are determined by dividing the net income attributable to the ordinary shareholders of the Parent Company by the weighted average number of ordinary shares in circu-lation during the period. Diluted earnings per share are calculated by adjusting the weighted average number of ordinary shares in circulation to take into account the effect of all potential ordinary shares, resulting for example from the possibility of the exercise of stock options assigned, which can have a dilutive effect. 3.x. Business combinations Acquisitions of businesses are recognized using the acquisition or purchase method in compliance with the terms of IFRS 3, on the basis of which the acquisition cost is equal to the fair value on the date of exchange of the assets transferred, the liabilities incurred or assumed, plus any directly attributable acquisition costs. The assets, the potential identifiable liabilities of the acquiree which respect the conditions for recognition are accounted for at their fair value as of the acquisition date. Any positive difference between the acquisition cost and the fair value of the share of net assets acquired attributable to the Group is recognized as goodwill or, if negative, is recognized to the income statement. Initial allocation to the assets and liabilities as above, using the option given in IFRS 3, can be de-termined provisionally by the end of the year in which the deal is completed, and it is possible to recognize the adjustment to the values provisionally assigned in the initial accounting within twelve months of the date of acquisition of control. 3.y. Use of estimates The preparation of the financial statements and the explanatory notes in application of IFRS re-quires the use by management of estimates and assumptions which affect the values of the assets and liabilities in the balance sheet and the information regarding potential assets and liabilities as of the balance sheet date The estimates and assumptions used are based on experience and on other factors considered rele-vant. The actual results could therefore differ from these estimates. Estimates and assumptions are revised periodically and the effects of such revision are reflected in the income statement in the period in which the revision is made if the revision has effect only in that period, or even in sub-sequent periods if the revision has an effect both on the current financial year and on future years.


The items of the financial statements principally affected by this use of estimates are goodwill, de-ferred taxes and the fair value of financial instruments, stock options and phantom stock options. It should also be noted that the situation caused by the current economic and financial crisis made it necessary to make assumptions about future trends involving greater uncertainty, which means that it cannot be ruled out that next year results may be different from those estimated with the need for adjustments to the carrying value of items, which could even be quite substantial and which today obviously cannot be either estimated or predicted. See the specific business areas for further details. 4. FINANCIAL INSTRUMENTS Financial instruments take on a particular significance in the economic and financial structure of the CIR Group and for this reason, in order to give a better and clearer understanding of the finan-cial issues involved, it was considered useful to devote a special section to the accounting treat-ment of IAS 32 and IAS 39. According to IAS 32 financial instruments are classified into four categories:

a) Financial instruments that are valued at fair value with an offsetting entry in the income statement (“fair value through profit and loss” - FVTPL) in application of the fair value option, which are held for trading purposes;

b) Investments held to maturity (HTM); c) Loans and receivables (L&R); d) Available-for-sale financial assets (AFS).

Classification depends on Financial Management’s intended use of the financial instrument in the business context and each involves a different measurement for accounting purposes. Financial transactions are recognized on the basis of their value date. Financial instruments at fair value through profit and loss Instruments are classified as such if they satisfy one of the following conditions: - they are held for trading purposes; - they are a financial asset designated on adoption of the fair value option, the fair value of

which can be reliably determined. Trading generally means frequent buying and selling with the aim of generating profit on price movements in the short term. Derivatives are included in this category unless they are designated as hedging instruments. The initial designation of financial instruments, other than derivatives and those held for trading, as instruments at fair value through profit and loss in adoption of the fair value option is limited to those instruments that meet the following conditions:

a) The fair value option designation eliminates or significantly reduces an accounting mismatch;

b) A group of financial assets, financial liabilities, or both are managed and their per-formance is evaluated on a fair value basis, in accordance with a documented invest-ment risk management strategy, and

c) An instrument contains an implicit derivative which meets particular conditions.

The designation of an individual instrument to this category is definitive, is made at the moment of initial recognition and cannot be modified.


Investments held to maturity This category includes non-derivative instruments with fixed payments or payments that can be determined and that have a fixed maturity, and which it is intended and possible to hold until ma-turity. These instruments are measured at amortized cost and constitute an exception to the general prin-ciple of measurement at fair value. Amortized cost is determined by applying the effective interest rate of the financial instrument, taking into account any discounts or premiums received or paid at the moment of purchase, and recognizing them throughout the whole life of the instrument until its final maturity. Amortized cost represents the initial recognition value of a financial instrument, net of any capital repayments and of any impairment, plus or minus the cumulated amount of the differences be-tween its initial net value and the nominal amount at maturity calculated using the effective inter-est rate method. The effective interest rate method is a calculation criterion used to assign financial expenses to their appropriate time period. The effective interest rate is the rate that gives a correct present value to expected future cash flows until maturity, so as to obtain the net present carrying value of the financial instrument. If even one single instrument belonging to this category is sold before maturity, for a significant amount and where there is no special justification for this, the tainting rule is applicable and re-quires that the whole portfolio of securities classified as Held To Maturity be reclassified and measured at fair value, and this category cannot then be used in the following two years. Loans and receivables This refers to financial instruments which are not derivatives, have payments that are either fixed or can be determined, which are not quoted on an active market and which are not intended to be traded. This category includes trade receivables (and payables), which are classified as current assets or liabilities with the exception of the part due in over 12 months from the balance sheet date. The measurement of these instruments is made by applying the method of amortized cost, using the effective interest rate and taking into account any discounts or premiums obtained or paid at the moment of acquisition and recognizing them throughout the whole life of the instrument until its final maturity. Available-for-sale financial assets This is a “residual” category which includes non-derivative financial instruments that are desig-nated as available for sale and are not included in any of the previous categories. Financial instruments held as available for sale are recognized at their fair value plus any transac-tion costs. Gains and losses are recognized to a special equity reserve until the financial instruments are sold or have been impaired. In such cases the profit or loss accrued under shareholders’ equity is re-leased to the income statement. Fair value is the amount for which an asset can be exchanged or a liability can be settled, between knowledgeable, willing parties in a transaction at arm’s length. In the case of securities listed on regulated markets, the fair value is the bid price at the close of trading on the last day of the accounting period.


When no market prices are available, fair value is determined either on the basis of the fair value of another financial instrument that is substantially similar or by using appropriate financial tech-niques (for example the discounted cash flow method). Investments in financial assets can be eliminated from the statement of financial position, or de-recognized, only when the contractual rights to receive their respective financial cash flows have expired or when the financial asset is transferred to third parties together with all its associated risks and rewards. 5. ACCOUNTING PRINCIPLES, CHANGES IN ACCOUNTING ESTIMATES AND ERRORS The criteria for making estimates and measurements are re-examined on a regular basis and are based on historical experience and on other factors such as expectations of possible future events that are reasonably likely to take place. If the initial application of a principle affects the current year or the previous one, its effect is rec-ognized by indicating the change resulting from any transitional rules, the nature of the change, the description of the transitional rules, which may also affect future years, and the amount of any adjustments relating to years preceding those being presented. If a voluntary change of a principle affects the current or previous year this effect is shown by in-dicating the nature of the change, the reasons for the adoption of the new principle, and the amount of any adjustments made for years preceding those being presented. In the event of a new principle/interpretation issued but not yet in force, an indication is given of the fact, of its potential impact, the reason for the principle/interpretation, the date on which it will take effect and the date on which it will first be applied. A change in accounting estimates involves an indication of the nature and the impact of the change. Estimates are used mainly to show impairment of assets recorded, provisions made for risks, employees benefits, taxes and other provisions. Estimates and assumptions are reviewed regularly and the effects of any changes are reflected in the income statement. The treatment of accounting errors involves an indication of the nature of the error, the amount of the adjustments and corrections to be made at the beginning of the first accounting period after it was recognized. 6. ADOPTION OF NEW ACCOUNTING STANDARDS, INTERPRETATIONS AND

AMENDMENTS Accounting standards, Interpretations and Amendments applied in 2009 The following accounting standards, amendments and interpretations, revised as part of the An-nual Improvement for 2008 carried out by the IASB, were applied for the first time by the Group as from January 1 2009. • IAS 1 Revised – Presentation of Financial Statements: the revised version of IAS 1 no longer

allows the presentation of income items such as income and expense (defined as “changes generated by non-shareholder transactions) in the Statement of Changes in Equity, requiring a separate indication from the changes generated by transactions with shareholders. According to the revised version of IAS 1, in fact, all changes generated by transactions with non-shareholders must be shown in a single separate statement showing the performance for the


period (statement of comprehensive income) or in two separate statements (an income state-ment and a statement of comprehensive income). These changes must be shown separately even in the Statement of Changes in Equity. The Group applied the revised version of this standard retrospectively as from January 1 2009, opting to show all changes generated by transactions with non-shareholders in two statements showing performance for the period, en-titled “Income Statement” and “Statement of Comprehensive Income” respectively. Thus the Group has changed the presentation of its Statement of Changes in Equity. Moreover, as part of the Annual Improvement process for 2008 conducted by the IASB, an amendment was published to IAS 1 Revised stipulating that assets and liabilities resulting from derivatives fi-nancial instruments designated as hedges must be classified, in the Statement of Financial Po-sition, with a distinction between current and non-current assets and liabilities. On this subject it should be noted that the adoption of this amendment made no difference to the presentation of the asset and liability items from derivative instruments because of the mixed form of pres-entation of the distinction between current and non-current items adopted by the Group as al-lowed by IAS 1.

• IFRS 8 – Operating segments: this standard requires disclosure to be given on the operating

sectors of the Group and replaces the need to determine the primary reporting segment (busi-ness) and the secondary reporting segment (geographical) of the Group. It specifically re-quires that information given in the segment disclosures be based on the figures that manage-ment uses to make its operating decisions, ensuring that the operating segments are identified on the basis of internal reporting regularly revised by management for the allocation of re-sources to the various segments and for analysing performance. The adoption of this amendment did not affect the financial position or the performance of the Group. The Group established that the operating sectors were the same as those established previ-ously in accordance with IAS 14 Segment reporting. The information on this subject is given in Note 20.

• IAS 23 Revised – Borrowing costs: the revised version of this standard no longer has the op-tion allowing borrowing costs to be recognized immediately to the income statement when in-curred for an investment in assets which normally require a certain period of time to be pre-pared for use or for sale (qualifying assets). Moreover this version of the standard was amended as part of the Improvement 2008 process conducted by the IASB, with the aim of re-vising the definition of borrowing costs to be considered for capitalization. In accordance with what was set out in the transition rules under this standard, the Group applied the new ac-counting standard from January 1 2009 prospectively, capitalizing borrowing costs directly at-tributable to the acquisition, construction or production of the qualifying assets for which the Group started the investment, incurred the borrowing costs or for which the action needed to prepare the asset for its specific use or for sale starting from January 1 2009. No significant accounting effects were picked up in 2009 as a result of the adoption of this principle.

• Amendment to IFRS 2 – Vesting conditions and cancellation: the amendment to IFRS 2 –

Vesting conditions and cancellation establishes that for the purposes of measuring share-based payments, only the servicing and performance conditions can be considered as vesting condi-tions of the plans. Any other clauses must be considered as non-vesting conditions and incor-porated into the fair value calculation at the award date of the plan. The amendment also clari-fies that, in the event of cancellation of the plan, the same accounting treatment should be ap-plied whether the cancellation originates from the company or from the counterparty.


This principle was applied retrospectively by the Group from January 1 2009. However from its application no accounting effects have emerged for the Group.

• Improvement to IAS 19 – Employee benefits: the improvement clarifies the defintion of cost/income in relation to past period of service and establishes that in the event of the reduc-tion of a plan, the effect immediately recognizable to the income statement must include only the reduction of the benefits for future periods, while the result of any reductions relating to past period of service must be considered as a negative cost in relation to past service. This amendment is applicable prospectively to changes in plans that take place as from January 1 2009. The improvement also changed the definition of the yield on an asset servicing the plan, es-tablishing that this item must be shown net of any administration charges that are not already included in the value of the bond, and it also clarified that the definition of short-term benefits and long-term benefits. It should also be noted that no significant accounting effects were noted at December 31 2009 following the adoption of this amendment.

• Improvement to IAS 20 – Accounting for Government Grants and Disclosure of Government Assistance: the improvement establishes that the benefits deriving from public entity loans at below-market interest rates must be treated as government grants and the rules for recognition set out in IAS 20 must be followed. The previous version of IAS 20 established that in the event of loans at below-market interest rates received as public entity assistance, the company did not have to recognize any benefit and so the Group recognized the loan at the value of the inflow received and the lower interest expense resulting from the same was posted directly to the income statement in the item Financial income (expense). In accordance with the provisions of the transition rules of the amendment , the Group applied the new accounting standard from January 1 2009 to loans received at a below-market interest rates as from that date. At December 31 2009 there were no significant accounting effects resulting from the applica-tion of this improvement.

• Improvement to IAS 28 – Investments in associates: the improvement to IAS 28 establishes that for investments consolidated using the equity method any impairment is not allocated to the individual asset (and in particular to goodwill) constituting the carrying value of the in-vestment, but to the value of the investment as a whole. Thus if the conditions exist for a sub-sequent recovery of value, this must be recognized in full. In accordance with the transition rules that apply, the Group opted to apply this amendment prospectively to revaluations made from January 1 2009 but there were no accounting effects resulting from the adoption of this new principle because during 2009 the Group did not mark up the value of any goodwill included in the carrying value of its investments. It should also be noted that the improvement also changed some of the information required for investments in associates and joint-ventures measured at fair value in accordance with IAS 39, making changes at the same time to IAS 31 – Interests in joint ventures and amending IFRS 7 – Financial instruments: Disclosures and to IAS 32 – Financial instruments: presen-tation. These changes, however, referred to situations not present in the Group as of the date of these Financial Statements.


• Improvement to IAS 38 – Intangible assets: the improvement states that promotional and advertising costs be recognized to the income statement. It also establishes that if the en-tity incurs costs giving future economic benefits without the recognition of intangible as-sets, these costs must be recognized to the income statement when the company has the right to access the asset, when there is a purchase of assets, or when the service is ren-dered, if it refers to a purchase of services. The standard was also amended to allow enti-ties to adopt the unit of production method to determine the amortization of intangible as-sets with a finite useful life. This amendment was applied by the Group retrospectively as from January 1 2009 but its adoption did not have any effect on the accounts.

• Amendment to IFRS 7 – Financial instruments: Additional disclosures: the improvement, ap-plicable as from January 1 2009, was issued with a view to increasing the level of disclosure when measuring instruments at fair value and to boosting the effect of the existing principles on the subject of disclosures regarding the liquidity risk of financial instruments. In particular, the amendment requires disclosure to be given of the way the fair value measurement of fi-nancial instruments is carried out on the basis of a ranking. The adoption of this standard did not have any effect on the measurement and recognition of items in the accounts, but only the type of information given in the Notes.

Amendments and interpretations applied as from January 1 2009 but not relevant for the Group The following amendments and interpretations, applicable as from January 1 2009, regulate situa-tions not present at this balance sheet date: • Improvement to IAS 16 – Property, Plant and Equipment • Improvement to IAS 29 – Financial Reporting in Hyperinflationary Economies. • Amendment to IAS 32 – Financial Instruments: Presentation and to IAS 1 – Presentation of

Financial Statements – Financial Instruments. • Improvement to IAS 36 – Impairment of assets. • Improvement to IAS 39 – Financial Instruments: Recognition and Measurement. • Improvement to IAS 40 – Investment Property. • IFRIC 13 – Customer Loyalty Programs. • IFRIC 15 – Agreements for the Construction of Real Estate. • IFRIC 16 – Hedges of a Net Investment in a Foreign Operation. It should also be noted that on March 12 2009 the IASB issued an amendment to IFRIC 9 – Reas-sessment of Embedded Derivatives and to IAS 39 – Financial Instruments: Recognition and Mea-surement which allows entities to reclassify particular financial instruments out of the 'fair value through profit or loss' category in specific circumstances. These amendments clarify that on re-classification of a financial asset out of the 'fair value through profit or loss' category, all embed-ded derivatives have to be assessed and, if necessary, separately accounted for in the financial statements. The amendments apply retrospectively and must be applied as from December 31 2009 but their adoption had no accounting effect on the financial statements of the Group. Accounting standards, amendments and interpretations not yet applicable and not adopted early by the Group Below are the main amendments and changes to accounting standards which are not yet applica-ble and which have not been adopted early by the Group. The Group is currently examining the


standards and interpretations indicated and assessing whether their adoption will have a signifi-cant impact on the financial statements. On January 10 2008 the IASB issued an updated version of IFRS 3 – Business Combinations, and amended IAS 27 – Consolidated and Separate Financial Statements. The main changes made to IFRS 3 concern the elimination of the obligation to value the individual assets and liabilities of the subsidiary at fair value in each subsequent acquisition, in the event of step acquisitions of sub-sidiaries. The goodwill will be determined only at the acquisition stage and will be equal to the difference between the value of the investments immediately before the acquisition, the transac-tion consideration and the value of the net assets acquired. Moreover in cases where the company does not acquire a stake of 100%, minority interests can be measured either at fair value or using the method previously given in IFRS 3. The revised version of this standard also states that all costs relating to the business combination must be charged to the income statement and that liabilities for contingent consideration should be recognized on the acquisition date. In the amendment to IAS 27 the IASB established that any changes to the percentage of the stake non constituting loss of control must be treated as equity transactions and thus have an offset in shareholders’ equity. It was also established that when a parent company cedes control of one of its investees but still continues to hold an investment in the company, it must measure the investment kept on its books at fair value and recognize any profit or loss resulting from the loss of control to the income statement. Lastly, the amendment to IAS 27 requires that all losses attributable to minority shareholders be allocated to minority interests even when these losses are greater than portion of the capital of the investee. These new rules must be applied prospectively as from January 1 2010. As part of the Improvement 2008 process conducted by the IASB, the amendment made to IFRS 5 – Non-current Assets Held for Sale and Discontinued Operations establishes that if a business is engaged in a plan of disposal involving the loss of control of a subsidiary, all the assets and liabilities of the subsidiary must be reclassified under assets held for sale, even if the business will still hold a minority shareholding in that subsidiary after the sale. This amendment must be applied prospectively as from January 1 2010. On July 31 2008 the IASB issued an amendment to IAS 39 – Financial Instruments: Recognition and Measurement, which must be applied retrospectively as from January 1 2010. The amend-ment clarifies the application of the standard for the definition of the underlying being hedged in particular situations. As of the date of these Financial Statements the competent authorities of the European Union have not yet completed the ratification process necessary for it to be applied. On November 27 2008 the IFRIC issued Interpretation IFRIC 17 – Distributions of Non-cash As-sets to Owners in order to harmonize the accounting treatment of distributions of non-cash assets to shareholders. The interpretation specifically clarifies that a dividend payable must be recog-nized when the dividends have been authorized appropriately and that the payable must be meas-ured at the fair value of the equity that will be used for the dividend payout. Lastly, the company must recognize to the income statement the difference between the dividend paid out and the net book value of the assets used for the payment.


The interpretation is applicable prospectively from January 1 2010. As of the date of these Finan-cial Statements the competent authorities of the European Union have not yet completed the rati-fication process necessary for it to be applied. On January 29 2009 the IFRIC issued Interpretation IFRIC 18 – Transfers of Assets from Cus-tomers which specifies the accounting treatment to be adopted if a company signs an agree-ment with a customer to receive from the customer a tangible asset to be used to connect the customer up to a network or provide him with goods and services (e.g. the supply of electricity, gas, water). In some cases the company actually receives cash from the client in order to build or acquire the tangible asset that will be used to fulfil the terms of the contract. This interpretation is applicable prospectively from January 1 2010. As of the date of these Finan-cial Statements the competent authorities of the European Union have not yet completed the rati-fication process necessary for it to be applied. On April 16 2009 the IASB issued a set of improvements to IFRS. Below are those indicated by the IASB as changes which involve a change in presentation, recognition and measurement of the items in the financial statements, omitting those which will only involve a change in terminology or styling with minimum effects from the accounting viewpoint, or those which affect standards or interpretations not applicable to the Group.

• IFRS 2 – Share-based payments: the amendment, which must be applied as from January 1 2010 (earlier application is permitted) clarified that since IFRS 3 has amended the defi-nition of a business combination, the spin-off of a business arm for the formation of a joint venture or a combination of businesses or business arms into jointly controlled entities is no longer subject to the terms of IFRS 2.

• IFRS 5 – Non-current Assets Held for Sale and Discontinued Operations: the amendment, applicable prospectively as from January 1 2010, clarified that IFRS 5 and other IFRS that refer specifically to non-current assets (or groups of assets) classified as available for sale or as discontinued operations contain all the information needed for this kind of asset or operation.

• IFRS 8 – Operating Segments: this amendment, which must be applied as from January 1 2010, requires that businesses give the total value of their assets for each reportable seg-ment, if this value is provided periodically at top management level. This information was previously required even in the absence of this condition.

• IAS 1 – Presentation of Financial Statements: this amendment, which must be applied as from January 1 2010 changes the definition of current liabilities contained in IAS 1. The previous definition required all convertible liabilities that could be cancelled at any mo-ment by the issue of equity instruments to be classified as current liabilities. This meant that liabilities relating to bonds convertible at any time by the issuer into equity had to be recorded as current liabilities. Following this amendment, for current/non-current classifi-cation it is now irrelevant whether a liability has a currently exercisable option for conver-sion into equity instruments.

• IAS 7 – Cash Flow Statement: The amendment, which must be applied as from January 1 2010, requires that only cash flows from expenditure that leads to the recognition of an as-set in the Balance Sheet can be classified in the Cash Flow Statement as from investment activity, while cash flows from expenditure which does not give rise to the recognition of a tangible asset (as may be the case for promotional and advertising expense or personnel training costs) must be classified as resulting from operating activity.


• IAS 17 – Leasing: following changes made, the general conditions of IAS 17 for the clas-sification of a contract as a finance lease or an operating lease will now apply to leased land independently of whether title of ownership is obtained on expiry of the contract. Be-fore the changes, the accounting standard stated that when ownership title of the land be-ing leased was not transferred on expiry of the lease agreement, then the same was classi-fied as an operating lease as it had an indefinite useful life. This amendment applies as from January 1 2010. As of the adoption date all land with a lease contract already in place which has not yet expired will have to be valued separately, with retrospective rec-ognition of a new leasing agreement accounted for as if the contract was a finance lease.

• IAS 36 – Impairment of assets: this amendment, which will apply prospectively from January 1 2010, requires that each operating unit or group of operating units to which goodwill is allocated for the purposes of the impairment test should not be larger than an operating segment as defined in paragraph 5 of IFRS 8, before the combination permitted by paragraph 12 of the same IFRS on the basis of similar economic characteristics or other elements of similarity.

• IAS 38 – Intangible assets: the revision of IFRS 3 carried out in 2008 established that there is sufficient information to measure the fair value of an intangible asset acquired during a business combination if the asset is separable or if it derives from contractual or legal rights. IAS 38 was therefore amended to reflect this change to IFRS 3. The amend-ment also clarified the measurement techniques to be commonly used to measure the fair value of intangible assets for which there is no active market. Specifically these tech-niques include either an estimate of net cash flows generated by the asset discounted to present value, or an estimate of the costs that the company has avoided by owning the as-set and not having to use it under lease from a third party, or an estimate of the costs nec-essary to recreate or replace it (as in the so-called cost method). This amendment should be applied prospectively from January 1 2010.

• IAS 39 – Financial Instruments: Recognition and Measurement: this amendment limits the scope of exemption contained in paragraph 2g of IAS 39 to forward contracts between a purchaser and a shareholder seller for the purposes of the sale of a business into a busi-ness combination at a future acquisition date, when the completion of the business combi-nation does not depend on further shares of one or the other of the parties, but only on the passing of an appropriate period of time. The amendment clarifies on the other hand that IAS 39 is applicable to option contracts (whether or not they are currently exercisable) that give one of the two parties control over whether or not future events take place and exercise of which would lead to control of a business. The amendment also clarifies that the implied penalties for the prepayment of loans, the price of which compensates the lender for the loss of any further interest, must be considered as strictly correlated with the loan agreement of which they are a provision, and thus shall not be accounted for separately. Lastly, the amendment clarifies that gains and losses on a hedged financial instrument must be reclassified from shareholders’ equity to the income statement in the period in which the expected cash flow affects the income statement. This amendment applies pro-spectively from January 1 2010.


• IFRIC 9 – Reassessment of Embedded Derivatives: the amendment, which applies pro-spectively as from January 1 2010, excludes from the scope of application of IFRIC 9 any derivatives embedded in contracts acquired during business combinations at the moment that jointly controlled companies or joint ventures are formed.

As of the date of these Financial Statements the competent authorities of the European Union have not yet completed the ratification process necessary for the above improvements to be applied.

In June 2009, the IASB issued an amendment to IFRS 2 – Share-based Payments. The amend-ment clarifies the scope of application of IFRS 2 and the relationships existing between this and other accounting standards. In particular it clarifies that a company receiving goods or services under share-based payment plans must account for these goods or services independently of which company of the group actually settles the transaction, and independently of whether settle-ment takes place in cash or in shares. It also establishes that the term “group” should have the same meaning that it has in IAS 27 – Consolidated and Separate Financial Statements, i.e. it should include the parent company of the group and its subsidiaries. The amendment also speci-fies that a company must measure the goods or services received within the scope of a transaction settled in cash or in shares from its own viewpoint, which might not coincide with that of the group or with the amount recognized in the consolidated financial statements. The amendment in-corporates the guidelines previously included in IFRIC 8 – Scope of IFRS 2 and in IFRIC 11 – IFRS 2 – Group and Treasury Share Transactions. As a result of this, the IASB has withdrawn IFRIC 8 and IFRIC 11. This amendment applies from January 1 2010. As of the date of these Financial Statements the competent authorities of the European Union have not yet completed the ratification process nec-essary for its application. On October 8 2009, the IASB issued an amendment to IAS 32 – Financial Instruments: Presenta-tion: Classification of Rights Issues in order to regulate accounting for rights issues (rights, op-tions or warrants) denominated in a different currency from the functional currency of the issuer. Previously these rights were accounted for as liabilities from derivative financial instruments. The amendment requires that, under certain conditions, these rights be classified in shareholders’ eq-uity, whatever currency the strike price is denominated in. This amendment is applicable retrospectively as from January 1 2011. As of the date of these Fi-nancial Statements the Group does not consider it likely to have any effect. On November 4 2009 the IASB issued a revised version of IAS 24 – Disclosure of Related Party Transactions which simplifies the type of disclosures required in the event of transaction with re-lated parties controlled by the State and clarifies the definition of related parties. This standard is applicable as from January 1 2011. As of the date of these Financial Statements the competent au-thorities of the European Union have not yet completed the ratification process necessary for its application. On November 12 2009 the IASB published IFRS 9 – Financial Instruments covering the classifi-cation and measurement of financial assets and applicable as from January 1 2013. This publica-tion is the first step of a process that will entirely replace IAS 39. The new standard uses a single approach based on ways of managing financial instruments and on the characteristics of the cash flows involved in financial asset contracts to determine the measurement criterion, replacing the different rules set out in IAS 39. Furthermore, the new standard will involve a single method for calculating impairment of financial assets. As of the date of these Financial Statements the com-


petent authorities of the European Union have not yet completed the ratification process necessary for its application. On November 26 2009 the IASB published a minor amendment to IFRIC 14 – Prepayments of a Minimum Funding Requirement which allows companies prepaying a minimum funding require-ment to recognize it as an asset. The amendment is applicable as from January 1 2011. As of the date of these Financial Statements the competent authorities of the European Union have not yet completed the ratification process necessary for its application. On November 26 2009 the IFRIC published IFRIC 19 – Extinguishing Financial Liabilities with Equity Instruments, which provides guidelines for recognizing the extinguishment of a financial liability through the issue of equity instruments. The interpretation establishes that if a company renegotiates the conditions for extinguishing a financial liability and its creditor accepts extin-guishment through the issue of shares in the company, then the shares issued in that company be-come part of the price paid to extinguish the financial liability and must be measured at fair value. The difference between the carrying value of the finanical liability extinguished and the initial value of the shares issued must be recognized to the income statement in the period. The amendment is applicable as from January 1 2011. As of the date of these Financial State-ments the competent authorities of the European Union have not yet completed the ratification process necessary for its application.


NOTES ON THE BALANCE SHEET

7. NON-CURRENT ASSETS

7.a. INTANGIBLE ASSETS

2008Historical Accum. amort. Balance Acquisitions Exchange Other Net Amort. & Historical Accum. amort. Balance

cost & writedowns 31.12.2007 rate changes disposals writedowns cost & writedowns 31.12.2008(in thousands of euro) increases decreases differences costStart-up and expansion costs 75 (69) 6 -- -- -- -- (3) 75 (72) 3 Capitalized development costs - purchased -- -- -- -- -- -- -- -- -- -- -- -- -- - produced internally 53,907 (32,672) 21,235 6,912 -- -- (1,140) 1,361 (4) (6,387) 56,044 (34,067) 21,977 Industrial patents & intellectualproperty rights 21,754 (19,187) 2,567 1,622 -- -- (9) (1,573) -- (400) 11,084 (8,877) 2,207 Concessions, licenses, trademarks & other rig 61,155 (50,405) 10,750 5,198 350 18 6,676 (145) (6,835) 79,484 (63,472) 16,012 Titles and trademarks 400,245 -- 400,245 -- -- -- -- -- -- -- 400,245 -- 400,245 Frequencies 211,620 -- 211,620 7,401 -- -- -- -- (519) -- 218,502 -- 218,502 Goodwill 647,170 (54,652) 592,518 45,504 -- -- -- (53,992) -- -- 643,627 (54,693) 588,934 Assets in process & advance payments - purchased 5,035 -- 5,035 8,789 4,904 -- (37) (6,125) (4) -- 7,658 -- 7,658 - produced internally 2,111 -- 2,111 3,103 -- -- (29) (680) -- (176) 4,336 (7) 4,329 Others 11,507 (7,398) 4,109 1,114 -- -- (45) (10) (14) (522) 11,755 (7,123) 4,632 Total 1,414,579 (164,383) 1,250,196 79,643 5,254 -- (1,242) (54,343) (686) (14,323) 1,432,810 (168,311) 1,264,499

2009Historical Accum. amort. Balance Acquisitions Exchange Other Net Amort. & Historical Accum. amort. Balance

cost & writedowns 31.12.2008 rate changes disposals writedowns cost & writedowns 31.12.2009(in thousands of euro) increases decreases differences costStart-up and expansion costs 75 (72) 3 2 -- -- -- (2) -- (3) 72 (72) -- Capitalized development costs - purchased -- -- -- -- -- -- -- -- -- -- -- -- -- - produced internally 56,044 (34,067) 21,977 6,576 -- -- 1,150 2,787 (11) (7,280) 67,667 (42,468) 25,199 Industrial patents & intellectualproperty rights 11,084 (8,877) 2,207 27 -- (2) (3) 192 (10) (443) 11,608 (9,640) 1,968 Concessions, licenses, trademarks & other rig 79,484 (63,472) 16,012 12,131 52 (47) (18) 7,972 (7) (9,188) 86,761 (59,854) 26,907 Titles and trademarks 400,245 -- 400,245 -- -- -- -- -- -- -- 400,245 -- 400,245 Frequencies 218,502 -- 218,502 399 -- -- -- -- -- 218,901 -- 218,901 Goodwill 643,627 (54,693) 588,934 29,307 1,537 -- -- 7 (73) -- 674,405 (54,693) 619,712 Assets in process & advance payments - purchased 7,658 -- 7,658 7,270 13,477 -- 13 (7,497) (323) (5,312) 20,598 (5,312) 15,286 - produced internally 4,336 (7) 4,329 2,403 -- -- (31) (3,387) -- -- 3,321 (7) 3,314 Others 11,755 (7,123) 4,632 1,011 562 (11) 81 (117) -- (787) 13,820 (8,449) 5,371 Total 1,432,810 (168,311) 1,264,499 59,126 15,628 (60) 1,192 (45) (424) (23,013) 1,497,398 (180,495) 1,316,903

sales of businesses

sales of businesses

Starting position

Changes in the period

Changes in the periodCombinations

Closing positionCombinations

Closing position

Starting position

Intangible assets rose from € 1,264,499 thousand at December 31 2008 to € 1,316,903 thousand at December 31 2009.

AMORTIZATION RATES Description % Capitalized development costs 20-33% Industrial patents and intellectual property rights 4-20% Concessions, licenses, trademarks and similar rights 16-30% Other intangible assets 16-30% GOODWILL, TRADEMARKS AND OTHER ASSETS WITH AN INDEFINITE USEFUL LIFE A more detailed analysis of the main items making up the item intangible assets with an indefi-nite useful life is given in the following charts. Titles and trademarks: (in thousands of euro) 31.12.2009 31.12.2008

la Repubblica 229,952 229,952 Il Piccolo / Messaggero Veneto 104,527 104,527 Local newspapers 61,222 61,222 Other titles and trademarks 4,544 4,544 Total 400,245 400,245

Frequencies: (in thousands of euro) 31.12.2009 31.12.2008

Radio frequencies 80,618 80,219 Television frequencies 138,283 138,283 Total 218,901 218,502

Goodwill: (in thousands of euro) 31.12.2009 31.12.2008

Utilities sector (Sorgenia Group) 261,990 232,964 Media sector (Espresso Group) 140,038 139,830 Healthcare sector (KOS group formerly HSS) 121,607 120,070 Automotive sector (Sogefi Group) 96,077 96,070 Total 619,712 588,934

In detail, goodwill was allocated to the cash-generating units (“CGUs”) identified according to the operating sectors of the Group. The chart above shows the allocation of goodwill by operating sector of the Group. For the purposes of testing for impairment goodwill and other intangible assets with an indefinite useful life, the estimated recoverable value of each cash generating unit, defined in accordance with the terms of IAS 36, was based on value in use, i.e. fair value less costs to sell. Value in use was calculated by discounting to present value future cash flows generated by the unit in the production phase and at the time of its decommissioning at an appropriate discount rate (discounted cash flow method). More specifically, in accordance with what is required by in-ternational accounting standards, for checking the value cash flows were considered without tak-ing into account the inflows and outflows generated by financial management or any cash flows


relating to tax management. The cash flows to be discounted are, therefore, operating cash flows, which are unlevered and differential (because they refer to the individual units). The cash flows of the single operating units were extrapolated from the budgets and forecasts made by management. These plans were then processed on the basis of economic trends recorded in previous years and using the forecasts made by leading analysts on the outlook for the respec-tive markets and more in general on the evolution of each business sector. To give a correct estimate of the value in use of a Cash Generating Unit, it was necessary to value the amount of expected future cash flows of the unit, expectations of any changes in the amount and timing of the flows, the discount rate to be used and any other risk factors affecting the spe-cific unit. In order to determine the discount rate to use, an estimate was made of the weighted average cost of capital invested (WACC) net of inflation, gross of taxes at sector level and independently of the financial structure of the individual company/subgroup. The fair value less costs to sell of an asset or a group of assets (e.g. a Cash Generating Unit) is best expressed in the price “made” in a binding sale agreement between independent parties, net of any direct disposal costs. If this information was not available, the fair value net of costs to sell was determined in relation to the following trading prices, in order of importance: • the current price traded in an active market; the previous price for a similar transaction; • the estimated price based on information obtained by the company. For estimating the recoverable value of each asset the higher of fair value less costs to sell and value in use was used. The impairment tests carried out on goodwill and other tangible assets with an indefinite useful life using the cash flow method and other valuation methods ascertained that there were no losses in value. However considering that recoverable value is determined on the basis of estimates, the Group cannot guarantee that goodwill will not be impaired in future periods. Given the current context of market crisis, the various factors used to make the estimates could be revised if conditions prove not to be in line with those on which the forecasts were based. Below is a description of the tests carried out. Media sector The impairment test on the media sector, which coincides with the Espresso Group consolidation area, was applied to intangible assets with an indefinite useful life, i.e. the titles and trademarks, the balance sheet value of which is approximately € 400.2 million, the radio and television fre-quencies, recognized in the balance sheet at approximately € 218.9 million, and the goodwill al-located to the sector for a total of approximately € 140.0 million. This goodwill represents the higher value of the acquisition cost compared to the Group’s share of its assets and liabilities, measured at fair value. Below are the main criteria used to prepare the impairment test for each cash generating unit or group of such units which have a significant value: • For the national (La Repubblica) and local newspapers (Il Piccolo/Messagero Veneto and the

other local dailies) both the criterion of fair value and that of value in use were used; • For radio frequencies and the Deejay brand both fair value and value in use were used;


• For frequencies and goodwill relating to the television sector both fair value and value in use were used.

More specifically, to determine the value in use of the CGUs, the procedure involved application of: - The Discounted Cash Flow model, discounting the breakdown of the expected cash flows

over the time frame of the business plans (2010-2014) and determining terminal value. The discount rate used was the average cost of invested capital (WACC pre-tax) of the Es-presso Group which was 9.1%.

- Fair value less costs to sell determined using a different methodological approach for the var-ious publishing businesses, for which, because there is no active trading market, reference was made to direct multipliers for estimating value (Enterprise value/Sales, Enterprise val-ue/EBITD A, Enterprise value/EBIT), and for the radio-television businesses for which a price/users multiple (Enterprise value/population reachable by the signal), observing the prices used in the transfer of similar frequencies in terms of the population potentially reach-able by the signal. In order to determine the possible “price” of the publishing Cash Generating Unit, entity side multipliers were used, either in the trailing version (historical/precise multipliers) or in the leading version (expected/average multipliers). The estimate of fair value less costs to sell of the radio and television operating units was made starting from an observation of the prices for the transfer of frequencies similar to those being tested in relation to the population potentially reachable by the signal. The use of this valuation approach makes it possible to estimate the fair value of radio and television fre-quencies, correlating the price that the market is prepared to pay for the acquisition of the fre-quency with the number of inhabitants reachable by the signal.

To determine economic results and operating cash flows of the individual CGUs of the Group, reference was made to the business plans for the period 2010-2014 prepared by management on the basis of reasonable hypotheses in line with past evidence. These plans represent the best esti-mate of the economic conditions likely to exist in the period under consideration. The first year of the plans corresponds to the latest budget prepared for 2010, approved by the Board of Directors on January 10 2010. Moreover, the current situation of uncertainty in the short and medium term scenario led man-agement to reconsider carefully the expected growth rate of revenues and margins. Regarding advertising revenues in particular, overall stability was assumed for 2010 in the amount of advertising in a market for which the main operators in the sector are still forecasting a slight decline. This is because of the improvement of commercial efficiency. As from the second year of the plan (2011), a gradual recovery in advertising is being assumed which should lead to advertising revenues in 2014 on a par with those of the year 2008. As for circulation revenues, the business plan 2010-2014 assumes a trend for sales of the various titles in line with the trend seen over the last two years, bearing in mind the specific market con-ditions in which each newspaper operates, especially at local level. It should also be noted that to determine terminal value a growth rate of zero was used pruden-tially. For those cash generating units which show a value of the titles and/or frequencies and/or good-will that is significant for the purposes of the consolidated financial statements of the Group and for which the results of the impairment test indicate a positive difference between fair value less


costs to sell and/or value in use compared to carrying value that is below 50%, a sensitivity anal-ysis was also carried out on the results with changes in the basic assumptions, showing which combination of variables would make the recoverable value of the CGUs equal to their carrying amount. In particular, for the publishing CGUs this analysis for the “Messaggero Veneto” and “Il Piccolo” CGUs gave the following results: • For the “Messaggero Veneto” CGU, value in use would be equal to the carrying amount as-

suming a decline in advertising of 6% as from 2011 and a decline of 4.5% in the number of copies sold. Alternatively, assuming that the projected circulation and advertising revenues contained in the plan 2010-2014 are correct, value in use would be equal to the carrying amount if the discount rate (WACC pre-tax) were 13.8% instead of the 9.1% currently used;

• For the “Il Piccolo” CGU, value in use would be equal to the carrying amount assuming a growth rate for advertising of 2% starting from 2011 and a decline of 2% in the number of copies sold. Alternatively, assuming that the assumptions about the trend of circulation and advertising revenues contained in the plan for 2010-2014 are valid, value in use would be equal to the carrying amount if we assume a discount rate for the expected cash flows (WACC pre-tax) of 10.8% instead of the 9.1% currently used.

Furthermore, for the radio and television cash generating units it should be noted that in the de-termination of fair value less costs to sell for the radio frequencies the price range used was be-tween 1.5 and 3 times the number of inhabitants reachable by the FM signals of the Radio Dee-jay, Radio Capital and m2o CGUs, while for the television frequencies a price range of between 3.4 and 3.8 times was used. In the latter case, the fair value of the “Rete A-All Music” CGU would be equal to its carrying amount with an average price multiplier 2.3 times the number of inhabitants reachable by the signal. Given the scarcity of recent transactions in Italy involving television frequencies, the value in use of the television frequencies was also calculated and this confirmed the recoverability of the values recognized in the balance sheet. To do this a rise in revenues was assumed from the rent of bandwidth relating to the changeover from analogue to digital terrestrial technology in line with the national switch-over plan. The impairment test carried out at the close of 2009 on the titles, radio and television frequencies, trademarks and goodwill, which are all considered as assets with an indefinite useful life, showed that there were no impairment losses needing recognition in the financial statements. A comparison between the values determined from the procedures described and the carrying value in the accounts at December 31 2009 showed that there had been no loss in value. To complete the tests described above, which confirmed that there were no impairment losses at December 31 2009 needing recognition in the accounts, the fair value – expressed in the stock prices of Gruppo Editoriale L’Espresso at December 31 2009 – was compared with the carrying value of the assets held by the Group in the media sector. This comparison further validated the carrying value in the accounts of such assets. Automotive sector Goodwill allocated to the automotive sector, which coincides with the consolidation of the Sogefi Group, is equal to approximately € 96.1 million. For the purposes of the impairment test the group identified four CGUs to which the goodwill from acquisitions was allocated: - filters - car suspension components


- industrial vehicle suspension components - precision springs. In particular, the goodwill of the Filter Division totals approximately 77 million euro, while that of the Car Suspension Components Division is approximately 17 million euro. A test was carried out to check for any impairment of goodwill by comparing the carrying value of the individual CGUs with their respective value in use. The Unlevered Discounted Cash Flow method was used, based on projections made in the budg-ets/multiyear business plans for the period 2010-2013, approved by management and on a dis-count rate of 8% based on the weighted average cost of capital. Lastly, terminal value was calculated using the perpetuity formula, assuming a growth rate of 2% and an operating cash flow based on the last year of the multiyear business plan (2013), adjusted to project a stable situation into perpetuity, using the following main assumptions: - an overall balance between investments and amortization (with a view to considering a level

of investment necessary to “maintain” the business); - a zero change in working capital (assuming the improvements obtainable from the program of

reducing working capital in which the group is engaged as substantially finished in the me-dium term).

The average cost of capital is the result of the weighted cost of debt (calculated as the benchmark rate plus a spread) and of the cost of the company’s own capital, calculated on the basis of pa-rameters for a group of companies operating in the European automotive components sector con-sidered to be the peers of Sogefi by the main financial analysts who follow this business sector. The values used in the calculation of the average cost of capital (extrapolated from the main sources of funding) are the following: - Financial structure of the sector: 38.8% - Unlevered beta of the sector: 0.79 - Risk free interest rate: 4.41% - Risk premium: 5% - Spread: 1% Sensitivity analyses were then carried out on two of the above variables assuming a zero growth rate and rise of two percentage points in the calculation of the average cost of capital. In none of the projected scenarios did the need for any writedown emerge. The test carried out on the present value of projected cash flows would justify a higher level of goodwill than that recorded in this balance sheet and therefore no writedown was contemplated. The results obtained from the analyses carried out through the determination of value in use were amply confirmed by the fair value – expressed in Sogefi’s stock prices at December 31 2009 – of the assets held by the Group in the automotive sector. These values are in fact much higher than the carrying amounts in the financial statements. Utilities sector The goodwill allocated to the utilities sector, amounting to approximately € 261.9 million, of which € 178.4 million generated by the acquisitions made by the Sorgenia Group (€175.4 million refers to Société Française d’Eolienne-SFE, acquired in December 2007 and the remaining part refers to acquisitions made in 2009). This goodwill represents the higher value of the acquisition cost compared to the Group’s share of the assets and liabilities acquired, measured at fair value. The change recorded in the year was mainly related to the effects of share capital increases sub-scribed during the period.


The measurement of the goodwill allocated on the acquisitions made by the Sorgenia Group, for the purposes of the impairment test, is based on the cash flows of the cash generating units. In de-tail, the recoverable value of the cash generating unit was verified by determining the value in use meaning the current value of cash flows expected by the CGU representing the SFE Group, re-sulting from the economic projections included in the Business Plan approved by the Board of Directors of Société Française d’Eoliennes. These flows were discounted to present value at the current weighted average cost of SFE’s capital. SFE’s business plan was drawn up based on a detailed analysis of the existing plants and forecas-ing a time frame for the construction of new plants based on the state of advancement of projects currently under construction and, more in general, on the time needed to complete the authoriza-tion processes, considering the scenario estimated for an installed capacity of approximately 650 MW. The main assumptions used to calculate value in use are the discount rate, the expected useful life of the plants, expectations regarding the performance of investments, revenues and operating costs during the period taken for the calculation and the terminal value of the plants after their initial useful life. The weighted average cost of capital, gross of taxes, was estimated at 6.2% (6.2% in 2008), which reflects current valuations of the cost of money in the market and the specific risk of the particular cash generating unit. Projected operating cash flows were taken from the Business Plan of SFE, considering the time horizon of the remaining useful life of the wind parks (estimated at 25 years). Investments for the construction of new wind parks were in line with those of the Business Plan. The trend of revenues and direct costs was based on specific assumptions regarding the amount of electricity produceable by existing plants and plants to be built as per the same Plan and were based on reasonable assumptions about electricity prices in line with the French regulatory envi-ronment and the energy scenario of the Sorgenia Group. The comparison between value in use calculated as described above and the carrying amount in the balance sheet at December 31 2009 did not reveal any loss of value. The part of goodwill not resulting from acquisitions made by Sorgenia but rather from the con-solidation of the sub-group into CIR, was allocated to the Italian businesses of the Sorgenia Group. In this case the valuations for the impairment test were not based on estimated cash flows from the various inititatives of the Group but rather were based on the values of Sorgenia ex-pressed in relation to agreements signed during the year with its partner Verbund regarding mi-nority interests. The comparison between the values calculated as described above and the carrying amount in the balance sheet at December 31 2009 did not reveal any loss of value but rather showed significant capital gains on the investments made by the group in the sector. Healthcare sector The goodwill allocated to the healthcare sector, which corresponds to the consolidation area of the KOS Group, amounts to approximately € 121.6 million. In order to check for any impairment of the value of goodwill and other fixed assets recorded in the balance sheet, the value in use was calculated of the cash generating units to which the goodwill was allocated. In particular, the impairment model of the KOS Group is based on the following levels: • First level: individual nursing homes for which the values of the tangible and intangible as-

sets proved to be recoverable (which includes the goodwill directly allocable but excludes that which is not directly allocable to the individual CGUs), taking into account values given by real estate valuations.


• Second level: regions representing combinations of nursing homes for checking recoverability of the values allocated at the first level, and also of the regional goodwill and the pro-rata portion of unallocated goodwill. This goodwill was attributed to each group of CGUs that benefit from synergies linked to their respective business combination (in line with the provi-sions of paragraph 80 of IAS 36).

• Third level: operating sector to verify the recoverability of the values tested as above consid-ering also the cash flows generated by the central holding company.

To sum up, the group has identified four operating sectors which group together the CGUs and to which the goodwill is allocated:

- Elderly (Lombardy, Piedmont, Liguria, Emilia, Veneto, Marche); this sector includes a total of 33 CGUs/care homes (first level);

- Hi-tech Services (Medipass); - Acute (Suzzara Hospital); - Rehabilitation (Lombardy, Piedmont, Liguria, Trentino, Emilia, Marche); this sector in-

cludes a total of 13 CGUs/rehab centres (first level). In more detail, the goodwill values allocated specifically to the Elderly Division amounts to ap-proximately € 68 million, while that allocated to the Rehabilitation Division amounts to approxi-mately € 48 million. These CGUs/groups of CGUs were identified, following the organizational and business structure of the Group, as homogeneous combinations able to generate cash flows independently through the continuing use of the assets assigned to them. Then for the second level test the structures were organized into groups at regional level to identify the benefits deriving from synergies. The development of the impairment test used the latest budget forecasts relating to the economic and financial trend forecast for the period 2010-2014. To calculate terminal value a growth rate (g rate) of 1% was used (2% in 2008) which is close to the inflation rate even though there are some estimates of a growth rate for the sector that are above inflation. The discount rate used (WACC) reflects the current market valuations of the cost of money and takes into account the specific risks of the business. This rate, net of taxes, was 6.8% (in line with the rate used for the same purpose in 2008). The Business Plan for 2010-2014 approved by the Board of Directors of KOS S.p.A. – on which the impairment test was based – is based both on variables controllable by management of the Group and on assumptions about the evolution of exogenous variables that are not directly con-trollable or manageable by the Management of the Group. This Plan was built starting from Budget 2010, and was developed on the basis of precise estimates made for the individual facili-ties of the group and for the remaining period using specific key value drivers. The main estimates adopted in the preparation of the Business Plan for 2010-2014 in general in-volved the hypothesis that, while taking into consideration the current financial crisis and the possible effect that it may have on public and healthcare spending dynamics, there is not likely to be any significant contraction in this spending in the medium term in the segments in which the individual Operating Sectors operate, since these are essential services and complement those of-fered by the National Health Service. In particular, even considering demographic variables due to the gradual aging of the population, the previous dynamics of healthcare spending and plans for the development of the business involving specific geographical areas, the bed occupation rate per specific initiative is expected to reach saturation point and/or to remain in line with the results


of previous years. Moreover, the growth rate in charges deemed reasonable for projection purposes was considered both as in line with inflation and in some cases higher than inflation to take into account any dis-continuity and/or specific assumptions-changes to the plan, for example due to a change in the mix of services offered by the various facilities – even perhaps to improve the overall profitabil-ity profile and that of the individual facilities which, either because of the type of charge reim-bursement given by the Regions in which they operate, or because of their high operating costs, are not very profitable or need to be streamlined in terms of saturation and profit margins. In this context it was also assumed that in the medium term the payment terms for the services accredited by the Regions remain substantially unchanged. Similar assumptions were made for the part of the fees that are paid by the individual concerned in the Elderly business sector. Regarding the Suzzara Hospital (Acute sector), which made losses in this and past years and which had net fixed assets at December 31 2009 of € 8,323 thousand, but for which no goodwill had been recognized, the Kos Group has started and will continue for the duration of the Plan to take a series of actions to reorganize and rationalize the business, making a clean break with the past. This action will involve hiring a new management team and aims to increase volumes in the in-patient sector and in diagnostic and out-patient services, and to increase revenues by reducing the length of hospital stays. A series of actions have also been envisaged to improve operating ef-ficiency. Lastly, it has also been decided that there will be a gradual normalization in relations re-garding the charge-backs for staff seconded to the Carlo Poma Hospital and that the rules govern-ing experimentation be made much clearer and the conditions more economical. In spite of hav-ing considered the uncertainties of this situation and identified the risks inherent in pursuing the objectives of the plan, it was nonetheless considered that the plan is realizable and that there should not be any impairment of the assets recorded as of the balance sheet date. From the test carried out no siutations emerged, at the first level tested, involving significant losses of value while at the second level, for which goodwill has been allocated, a comparison be-tween value in use determined according to the procedures described and the carrying amount in the balance sheet at December 31 2009 did not show any impairment. Moreover, the Group also set up sensitivity analyses considering changes in the basic assump-tions of the impairment test and particularly in the variables which have most impact on recover-able value (discount rate, growth rate, terminal value). This analysis, conducted on the test levels shown above (regions and operating sectors) did not reveal any problematic situations or in-stances where the carrying value was higher than the recoverable value.


2008Historical Accum. deprec. Balance Acquisitions Capitalized Exchange Other Net Depreciation Historical Accum. deprec. Balance

cost & writedowns 31.12.2007 financial rate changes disposals & writedowns cost & writedowns 31.12.2008(in thousands of euro) increases decreases expense differences costLand 29,068 -- 29,068 11,171 12,222 -- -- (295) 2,659 (330) -- 54,495 -- 54,495 Buildings used for business 303,662 (91,961) 211,701 11,906 18,621 -- -- (3,454) 7,601 (3) (12,400) 343,792 (109,820) 233,972 Plant and machinery 985,289 (692,424) 292,865 47,628 1,403 -- 16,292 (5,524) 530,707 (3,382) (88,625) 1,564,354 (772,990) 791,364 Power plants 492,775 (27,794) 464,981 -- -- -- (16,292) -- (448,689) -- -- -- -- -- Industrial & commercial equipment 101,370 (82,426) 18,944 5,149 93 -- -- (798) 8,144 (128) (5,408) 106,603 (80,607) 25,996 Other assets 219,791 (149,171) 70,620 12,590 674 (1) -- (235) 1,941 (62) (17,910) 231,874 (164,257) 67,617 Assets under construction & advance payments 385,245 (104) 385,141 247,817 107 -- 11,922 (1,906) (24,181) (48) (2,311) 618,852 (2,311) 616,541 Total 2,517,200 (1,043,880) 1,473,320 336,261 33,120 (1) 11,922 (12,212) 78,182 (3,953) (126,654) 2,919,970 (1,129,985) 1,789,985

2009Historical Accum. deprec. Balance Acquisitions Capitalized Exchange Other Net Depreciation Historical Accum. deprec. Balance

cost & writedowns 31.12.2008 financial rate changes disposals & writedowns cost & writedowns 31.12.2009(in thousands of euro) increases decreases expense differences costLand 54,495 -- 54,495 1,618 -- (16) -- 246 3,245 (2,690) -- 56,898 -- 56,898 Buildings used for business 343,792 (109,820) 233,972 6,714 8,213 (347) 560 2,035 23,219 (923) (11,403) 384,242 (122,202) 262,040 Plant and machinery 1,564,354 (772,990) 791,364 43,735 286 (351) 26,133 4,567 490,387 (3,391) (86,137) 2,071,740 (805,147) 1,266,593 Industrial & commercial equipment 106,603 (80,607) 25,996 2,568 48 (3) -- 246 2,077 (193) (6,106) 110,861 (86,228) 24,633 Other assets 231,874 (164,257) 67,617 10,232 167 (249) -- 32 4,451 (299) (16,719) 237,444 (172,212) 65,232 Assets under construction & advance payments 618,852 (2,311) 616,541 446,439 168 (2) (12,344) 1,019 (535,942) (1,205) (2,701) 516,985 (5,012) 511,973 Total 2,919,970 (1,129,985) 1,789,985 511,306 8,882 (968) 14,349 8,145 (12,563) (8,701) (123,066) 3,378,170 (1,190,801) 2,187,369

DEPRECIATION RATES

Description %

Buildings used for business 3.00%Plant and machinery 10.00-25.00%

Other assets:

- Electronic office equipment 20.00%- Furniture and fittings 12.00%- Motor vehicles 25.00%


sales of businesses

Combinations

Changes in the period

Closing position

sales of businesses

Starting position Changes in the period

7.b. TANGIBLE ASSETS

Starting position

2008Historical Accum. deprec. Net balance Acquisitions Capitalized Exchange Other Net Depreciation Historical Accum. deprec. Balance

cost & writedowns 31.12.2007 financial rate changes disposals & writedowns cost & writedowns 31.12.2008(in thousands of euro) increases decreases expense differences costProperties 20,299 (1,040) 19,259 -- -- -- -- -- -- (572) 20,299 (1,612) 18,687 Total 20,299 (1,040) 19,259 -- -- -- -- -- -- -- (572) 20,299 (1,612) 18,687

2009Historical Accum. deprec. Net balance Acquisitions Capitalized Exchange Other Net Depreciation Historical Accum. deprec. Balance

cost & writedowns 31.12.2008 financial rate changes disposals & writedowns cost & writedowns 31.12.2009(in thousands of euro) increases decreases expense differences costProperties 20,299 (1,612) 18,687 -- -- -- -- -- -- -- (572) 20,299 (2,184) 18,115 Total 20,299 (1,612) 18,687 -- -- -- -- -- -- -- (572) 20,299 (2,184) 18,115

DEPRECIATION RATES

Description %

Buildings 3.00%

sales of businesses


7.c. INVESTMENT PROPERTY

Starting position Changes in the period

Combinationssales of businesses

Starting position Closing positionChanges in the period

Investment property declined from € 18,687 thousand at December 31 2008 to € 18,115 thousand at December 31 2009. The value in the balance sheet corresponds substantially to market value.

LEASING The position of assets under leasing as of December 31 2009 and of restrictions applied to tangi-ble assets on account of guarantees and commitments is as follows: (in thousands of euro) Gross leasing amount Accrued depreciation Restrictions for

guarantees and commitments 2009 2008 2009 2008 2009 2008 Land 2,515 2,515 -- -- 3,139 3,139

Buildings 58,901 49,820 7,475 5,569 68,471 76,598 Plant and machinery 34,992 33,272 21,234 18,901 584,601 211,649

Other assets 2,521 2,047 1,652 1,258 1,132 287

Assets under construction and advance payments -- -- -- -- 10,851 322,560

7.d. INVESTMENTS IN COMPANIES VALUED AT EQUITY (in thousands of euro)

2008 % Balance Increases Decreases Dividends Pro-rata share of result Other Balance 31.12.2007 Loss Income changes 31.12.2008

Tirreno Power S.p.A. 50.00 249,494 -- -- (50,121) -- 49,931 (5,692) 243,612

Le Scienze S.p.A. 50.00 197 -- -- (121) -- 309 -- 385

Editoriale Libertà S.p.A. 35.00 22,845 -- -- -- -- 715 -- 23,560

Editoriale Corriere di Romagna S.r.l. 49.00 3,075 -- -- -- (40) -- -- 3,035

Altrimedia S.p.A. 35.00 749 -- -- (140) -- 161 -- 770

Allevard Ressorts Composites S.a.s. 50.00 101 346 -- -- (346) -- -- 101

KTP Global Finance S.C.A. 47.54 -- 10 -- -- (10) -- -- --

Resource Energy B.V. 47.50 590 1,517 -- -- (1,060) -- -- 1,047

GICA S.A. 25.00 494 -- -- (328) -- 48 214

Fin Gas S.r.l. 50.00 2,830 5,000 -- -- (46) -- (6) 7,778

Parc Éolien d’Epense S.a.s. 25.00 72 -- -- -- -- 2,189 2,261

Voie Sacrée S.a.s. 24.86 107 -- -- (46) 61

Total 280,554 6,873 -- (50,382) (1,830) 51,116 (3,507) 282,824


2009 % Balance Increases Decreases Dividends Pro-rata share of result Other Balance 31.12.2008 Loss Income changes 31.12.2009

Tirreno Power S.p.A. 50.00 243,612 3,482 -- (51,152) -- 39,902 -- 235,844

Le Scienze S.p.A. 50.00 385 -- -- (309) -- 282 -- 358

Editoriale Libertà S.p.A. 35.00 23,560 -- -- -- -- 647 -- 24,207

Editoriale Corriere di Romagna S.r.l. 49.00 3,035 -- -- -- (43) -- -- 2,992

Altrimedia S.p.A. 35.00 770 -- -- (140) -- 127 -- 757

Premium Publisher Network Consorzio 29.63 -- 20 -- -- -- -- -- 20

Allevard Ressorts Composites S.a.s. 50.00 101 -- -- -- -- -- -- 101

KTP Global Finance S.C.A. 47.54 -- -- -- -- -- -- -- --

Resource Energy B.V. 47.50 1,047 -- (95) -- (796) -- -- 156

GICA S.A. 25.00 214 578 -- -- (315) -- 7 484

Fin Gas S.r.l. 50.00 7,778 -- -- (132) -- (2) 7,644

Parc Éolien d’Epense S.a.s. 25.00 2,261 -- -- -- 23 (5) 2,279

Parc Éolien de la Voie Sacrée S.a.s. 24.86 61 (5) -- (13) 43

Saponis Investments SP Zoo 26.76 -- 1,025 -- -- (11) -- -- 1,014

Total 282,824 5,105 (95) (51,601) (1,302) 40,981 (13) 275,899


7.e. OTHER EQUITY INVESTMENTS (in thousands of euro) % 31.12.2009 31.12.2008

Sanatrix S.r.l. 26.0 5,105 5,105

Ansa S. Coop. A.R.L. 18.0 2,209 2,209

Tecnoparco Valbasento 20.0 516 516

Fidia S.r.l. 30.0 104 402

Emittenti Titoli S.p.A. 5.44 132 132

E-Ink Corporation -- -- 81

Others -- 1,563 1,237

Total 9,629 9,682

The values recorded in the balance sheet correspond to cost, less any impairment, if applicable, and are considered to be substantially equivalent to the fair value of the same investments. With reference to the company Sanatrix S.r.l the carrying value of this investment was estimated with the aid of expert valuations of its real estate assets as well as of the value attributable to the company Sanatrix Gestioni S.p.A, which manages an important nursing home. This value was de-termined on the basis of expected cash flows. The uncertainty of this measurement process was due to the fact that it is difficult to value properties of this kind in view of the weakness of the real estate sector, to the difficulty in putting a value on the business in the light of the disecono-mies of scale encountered in the past by Sanatrix Gestioni S.p.A. e and to the fact that ownership of a minority interest in a non-listed company does not necessarily mean that the investment is illiquid. The results of the test gave a variable range of estimates. This led to the decision that the criteria of IAS 39 AG 81 were applicable and the investments was therefore maintained at cost. It should also be noted that in January 2010 control was acquired of 100% of the company Due-miladue S.r.l., the company that has 50.53% control of the Sanatrix group, for a price of € 18.1 million including the majority premium. 7.f. OTHER RECEIVABLES The item “Other receivables” at December 31 2009 had a balance of € 207,899 thousand com-pared to € 236,147 thousand at December 31 2008 e and refers for € 4,000 thousand (€ 20,191 thousand at December 31 2008) to the subscription of Preferred Equity Certificates (PECS) by CIR International S.A. and CIR Investment Affiliate S.A. in the company KTP Global Finance (a jointly controlled entity). The lower balance is due to the write-down of approximately € 16 mil-lion made during the period. At December 31 2009 this item also included € 126,660 thousand (€ 126,506 thousand at De-cember 31 2008) of receivables (unsecured and mortgage-based) of the securitization companies Zeus Finance S.r.l. and Urania Finance S.A., € 12,892 thousand (€ 20,800 thousand at December 31 2008) of tax credits for investments in depressed areas (“Visco Sud”) for the construction of two wind parks and € 16,787 thousand (€ 22,958 thousand at December 31 2008) of security de-posits made as guarantees to suppliers of the wind plant equipment and as deposits paid to the GSE and electricity and natural gas distributors. 7.g. SECURITIES “Securities” amounted to € 83,051 thousand at December 31 2009, down from € 84,633 thousand at December 31 2008 and refer mainly to investments in private equity funds. These funds were


measured at fair value recognizing to the fair value reserve an amount of € 6,622 thousand (€ 6,351 thousand at December 31 2008). During the year the part of the fair value reserve relat-ing to these funds released to the income statement was € 993 thouand. At December 31 2009 the remaining commitment for investment in private equity funds stood at € 25.3 million. 7.h. DEFERRED TAXES The amounts refer to taxes resulting from deductible temporary differences and from losses car-ried forward, which are deemed to be recoverable. The breakdown of “Deferred tax assets and liabilities” by type of temporary difference, is as fol-lows: (in thousands of euro) 2009 2008

Amount of temporary differences

Tax effect

Amount of temporary differences

Tax effect

Temporary difference liabilities from: - write-down of current assets 126,013 38,629 86,713 26,743 - write-down of fixed assets 56,511 18,289 60,913 20,450

- revaluation of current liabilities 27,127 8,730 12,319 4,041

- revaluation of personnel provisions 31,510 9,837 33,909 10,600

- revaluation of provisions for risks and losses 82,948 24,933 66,822 19,740

- revaluation of long-term debt 406 130 205 66

- write-down of financial instruments 35,851 11,625 24,862 7,617

- tax losses from prior periods 235,621 75,776 99,428 28,844

Total deferred tax assets 595,987 188,949 385,171 118,101

Temporary difference assets from: - revaluation of current assets 3,500 1,115 14,812 6,571 - revaluation of fixed assets 518,739 163,586 506,513 158,491

- write-down of current liabilities 3,646 1,171 5,259 2,733

- valuation of personnel provisions 23,815 6,846 19,245 5,283

- write-down of provisions for risks and losses 895 774 1,931 605

- revaluation of financial instruments 25,476 8,497 3,886 1,220

Total deferred tax liabilities 576,071 181,489 555,646 174,903

Net deferred taxes 7,460 (56,802)

The deferred taxes credited directly to shareholders’ equity during the period amounted to € 200 thousand and the amount of deferred taxes debited directly to shareholders’ equity during the year was € 298 thousand. Earlier losses not utilized for the calculation of deferred taxes refer to CIR International for € 431 million, which can be carried forward without any limit, and to the Sogefi group for € 15.7 mil-lion. It should be pointed out that no deferred tax assets were calculated for these losses because present conditions are such that there is no certainty that they can be recovered.


The changes in “Deferred tax assets and liabilities” during the year was as follows:

Balance Use of deferred taxes Deferred taxes Exch. rate Balance (in thousands of euro) at 31.12.2008 from prior periods arising in period differences at 31.12.2009 Deferred tax assets: - income statement 114,310 (13,457) 82,501 668 184,022 - shareholders’ equity 3,791 (2,113) 3,249 -- 4,927

Deferred tax liabilities: - income statement (174,916) 11,621 (16,286) (1,301) (180,882) - shareholders’ equity 13 (13) (607) -- (607)

Net deferred taxes (56,802) (3,962) 68,857 (633) 7,460

8. CURRENT ASSETS 8.a. INVENTORIES Inventories can be broken down as follows: (in thousands of euro) 31.12.2009 31.12.2008

Raw materials, secondary materials and consumables 56,611 73,668

Work in progress and semi-finished goods 16,828 15,979

Finished goods and merchandise 82,539 105,537

Advance payments 172 127

Total 156,150 195,311

The value of stocks is shown net of any write-down made either in past periods or in this current one and takes into account the degree of obsolescence of finished goods, merchandise and secon-dary materials. 8.b. TRADE RECEIVABLES (in thousands of euro) 31.12.2009 31.12.2008

Receivables - clients 1,023,998 1,209,028

Receivables – subsidiaries and joint ventures 16,568 24,091

Receivables – associated companies 1,464 570

Total 1,042,030 1,233,689

“Receivables - clients” are non-interest bearing and have an average maturity in line with market conditions. The net increase is mainly due to the increase in revenues. Trade receivables are shown net of any write-downs taking credit risk into account. During 2009 provisions were made for the write-down of receivables for the sum of € 37,717 thousand com-pare with € 34,542 thousand in 2008.


“Receivables – subsidiaries and joint ventures” represent intercompany receivables not elimi-nated because they refer to companies not fully consolidated line by line. The balance at Decem-ber 31 2009 refers mainly to receivables from Tirreno Power S.p.A.. 8.c. OTHER RECEIVABLES (in thousands of euro) 31.12.2009 31.12.2008

Receivables – associated companies 1,727 1,288

Tax receivables 139,550 111,875

Receivables - others 59,350 250,590

Total 200,627 363,753

The item “Receivables - others” at December 31 2009 includes the receivable of € 150 million with Verbund following the subscription of a Bond issued by Sorgenia Holding S.p.A., converted into equity on June 17 2009. The increase in the item “Tax receivables” is mainly due to the rise in the IVA receivables with Inland Revenue of the Sorgenia group. 8.d. FINANCIAL RECEIVABLES “Financial receivables” rose from € 25,721 thousand at December 31 December 2008 to € 27,229 thousand at December 31 2009 and refer mainly for € 1,445 thousand to the accrued interest on the swaps relating to the CIR International S.A. bond maturing in 2011 and the CIR S.p.A. bond maturing in 2024 and for € 24,296 thousand to the fair value measurement of differential con-tracts entered into by the Sorgenia group to hedge electricity purchases. 8.e. SECURITIES This item consists of the following categories of securities: (in thousands of euro) 31.12.2009 31.12.2008

Italian Government securities or equivalent securities 4,010 345,223

Investments funds or similar funds 20,218 38,253

Bonds and notes 131,578 36,130

Certificates of deposit and miscellaneous securities 122,742 93,756

Total 278,548 513,362

The measurement at fair value of the item “Securities” involved a positive adjustment to the in-come statement of € 21.8 million. 8.f. AVAILABLE-FOR-SALE FINANCIAL ASSETS This item totals € 104,967 thousand and refers for € 79,788 thousand to shares in hedge funds and redeemable shares in asset management companies held by CIR International S.A.. The degree of liquidity of the investment is a function of the time required for the redemption of the funds, which normally varies from one to three months. The fair value measurement of these funds involved a value adjustment of € 13,256 thousand (€ 45,791 thousand at December 31 2008). The effects of this valuation on CIR’s equity for the amount pertaining to the Group came to € 13,256 thousand (€ 36,768 thousand at December 31


2008). The item also includes € 25,179 thousand of bonds held by the Espresso group which ma-ture between July 30 2010 and February 29 2012. The effects of the change in these bonds on the CIR’s equity for the part pertaining to the group amounted to a negative € 8 million. 8.g. CASH AND CASH EQUIVALENTS Cash and cash equivalents fell from € 616,363 thousand at December 31 2008 to € 549,321 mil-lion at December 31 2009. A breakdown of the change during the period is given in the cash flow statement. 8.h. ASSETS HELD FOR DISPOSAL This item includes the net value of € 700 thousand of the real estate property of the British sub-sidiary United Springs Ltd which is scheduled to be sold in 2010. 9. SHAREHOLDERS’ EQUITY 9.a. SHARE CAPITAL Share capital rose from € 395,587,633.50 at December 31 2008 (comprising 791,175,267 shares each with a nominal value of € 0.50) to € 396,058,633.50 (792,117,267 shares) at December 31 2009 after the issuance of 942,000 shares following the exercise of stock options. At December 31 2009 the Company owned 43,074,000 of its own shares (5.44% of capital) for a total value of € 98,657 thousand, up from 42,974,000 shares with a total value of € 98,583 mil-lion at December 31 2008. In application of IAS 32, as from January 1 2005 the treasury stock held by the Parent Company is being deducted from shareholders’ equity. The share capital is fully subscribed and paid up. No shares carry any rights, privileges or restric-tions on the distribution of dividends, except for the own shares held a treasury stock. It should be noted that Board of Directors was given the power for a period of five years starting from April 30 2009 to increase the share capital either in one or several tranches up to a maxi-mum of € 500 million (nominal value) and for a further maximum of € 20 million (nominal value) in favour of employees of the Company and its subsidiaries and parent companies. Regarding stock option plans, at December 31 2009 there were 52,152,400 options in circulation, corresponding to the same number of shares. The total notional cost of the stock options assigned to employees, which was posted to a special equity reserve, totalled € 5,455 thousand at December 31 2009.


9.b. RESERVES The evolution and breakdown of the item “Reserves” is given below:

(in thousands of euro) Share Legal Fair value Translation Reserve for Stock option Other Total premium reserve reserve reserve treasury reserve reserves reserves reserve stock held

Balance at December 31 2007 33,359 115,969 154,860 (17,261) 19,822 11,794 94,440 412,983

Capital increases 243 -- -- -- -- -- -- 243 Dividends unclaimed as per Art. 23 of the Bylaws -- -- -- -- -- -- 13 13 Fair value measurement of hedging instruments -- -- (6,169) -- -- -- -- (6,169)

Fair value measurement of securities -- -- (54,525) -- -- -- -- (54,525) Securities fair value reserve recognized to income statement -- -- (53,073) -- -- -- -- (53,073)

Adjustment for own share transactions -- -- -- -- 1,665 -- -- 1,665

Recognition of notional cost of stock options -- -- -- -- -- 905 -- 905

Effects of equity changes in subsidiaries -- -- (10,921) 4 -- -- 10,052 (865)

Currency translation differences -- -- 7,831 (1,152) -- -- -- 6,679


Capital increases 528 -- -- -- -- -- -- 528

Dividends unclaimed as per Art. 23 of the Bylaws -- -- -- -- -- -- 14 14 Fair value measurement of hedging instruments -- -- (285) -- -- -- -- (285)

Fair value measurement of securities -- -- 7,668 -- -- -- -- 7,668

Securities fair value reserve recognized to income statement -- -- (38,918) -- -- -- -- (38,918)

Adjustment for own share transactions -- -- -- -- 50 -- -- 50

Recognition of notional cost of stock options -- -- -- -- -- 5,455 -- 5,455

Effects of equity changes in subsidiaries -- -- 9,204 3 -- -- (7,845) 1,362

Currency translation differences -- -- (1,248) 13,501 -- -- -- 12,253


The “Share premium reserve” totalled € 34,130 thousand at December 31 2009, up from € 33,602 thousand at December 31 2008. The change was due to the subscription of stock options for € 528 thousand. The “Fair value reserve” stood at € 14,424 thousand at December 31 2009 and referred for the positive amounts of € 6,622 thousand to the valuation of “Securities” in item 7.g. and for € 13,248 thousand to the valuation of “Available-for-sale financial assets” in item 8.f. and to the negative change of € 5,446 thousand from the valuation of hedging instruments.


The “Translation reserve” had a negative balance of € 4,905 thousand at December 31 2009 with the following breakdown:

(in thousands of euro) 31.12.2008 Increases Decreases 31.12.2009

Sogefi group (9,110) 7,648 -- (1,462) CIR Ventures (2,783) (383) (3,166) Medinvest (5,548) 5,548 -- -- Medinvest hedging effect (1,006) 1,006 -- Sorgenia (54) -- (315) (369) Others 92 -- -- 92 Total (18,409) 14,202 (698) (4,905)

The item “Other reserves” had the following breakdown at December 31 2009: (in thousands of euro)

Reserve for capital increases 3

Extraordinary reserve 103

Reserve as per Art. 6 of D.Lgs no. 38 of 28/02/2005 (74) Reserve for the difference between the carrying values of investee companies and the respective portions of consolidated shareholders’ equity 96,642 Total 96,674

The changes in treasury stock during the year were as follows: (in thousands of euro) Number of shares Value

Balance at December 31 2008 42,974,000 98,583

Increases 100,000 74

Balance at December 31 2009 43,074,000 98,657

9.c. RETAINED EARNINGS (LOSSES) The changes in Retained earnings (losses) are shown in the “Statement of Changes in Sharehold-ers’ Equity”.


10. NON-CURRENT LIABILITIES 10.a. BONDS AND NOTES The detail of the item “Bonds and Notes”, net of intercompany elimination, is as follows: (in thousands of euro) Effective rate 31.12.2009 31.12.2008

CIR S.p.A. 5.75% Note 2004/2024 5.90% 266,911 266,724

CIR International S.A. 6.375% Note 2003/2011 6.03% 157,561 170,935

Gruppo Editoriale L’Espresso S.p.A. 5.125% Note 2004/2014 4.82% 291,720 307,221

Sorgenia Holding S.p.A. Bond -- 150,000

Société Française d’Eoliennes (SFE) 6.5% Note 2006/2016 6.50% 2,070 578

Total 718,262 895,458

In application of IAS 32 and 39, at January 1 2005 the original values of bond and note issues were written down to account for expenses incurred and bond issuance discounts. At December 31 2008 CIR International was holding a nominal € 30,000 thousand (unchanged from December 31 2008) of the CIR 5.75% Note issue 2004/2024. It should be noted that during the year 2008 CIR International S.A. bought back and then can-celled a nominal € 12,000 thousand of the Note maturing in 2011. It should also be noted that the Sorgenia Holding S.p.A. bond was converted into equity on June 17 2009. 10.b. OTHER BORROWINGS (in thousands of euro) 31.12.2009 31.12.2008

Collateralized bank loans 128,316 154,194

Other bank loans 1,547,810 1,344,104

Leasing 80,210 67,067

Other borrowings 87,023 88,250

Total 1,843,359 1,653,615

The item “Other bank loans” consists mainly of the following: - € 307,500 thousand lent to Sorgenia Power by Banca Monte dei Paschi di Siena at a floating rate and maturity 2019, the interest rate being Euribor 3/6M + spread;

- € 149,500 thousand lent to Sorgenia by Banca Intesa SanPaolo at a floating rate and maturity 2012, the interest rate being Euribor 3/6M + spread;

- € 100,000 thousand lent to Sorgenia by Banca Intesa SanPaolo at a floating rate and maturity 2014, the interest rate being Euribor 3/6M + spread;

- € 320,700 thousand lent to Sorgenia by Banca Monte dei Paschi di Siena at a floating rate and maturity 2012, the interest rate being Euribor 3/6M + spread;


- € 162,000 thousand lent to Sorgenia Power (formery Energia Molise S.p.A.) by Banca Monte dei Paschi di Siena at a floating rate and maturity 2019, the interest rate being Euribor 3/6M + spread;

- € 231,478 thousand lent to Sorgenia Puglia S.p.A. by Banca Monte dei Paschi di Siena at a floating rate and maturity 2015, the interest rate being Euribor 3/6M + spread;

- € 11,000 thousand lent to Sorgenia Idro S.r.l. by Banca Popolare di Milano at a floating rate and maturity 2015, the interest rate being Euribor 3/6M + spread;

- € 42,479 thousand lent to Société Française d’Eoliennes by Banco Sabadell at a floating rate and maturity 2021, the interest rate being Euribor 3/6M + spread;

- € 30,364 thousand as partial drawdown of a loan agreement of € 50,000 thousand, signed by Sogefi S.p.A. with maturity 2013 at a floating rate, the interest rate being Euribor 3/6M + spread;

- € 66,078 thousand as partial drawdown of a loan agreement of € 100,000 thousand, signed by Sogefi S.p.A. with maturity 2013 and a floating rate, the interest rate being Euribor 3/6M + spread;

- € 99,579 thousand as partial drawdown of a new syndicated loan agreement signed in June 2008 by Sogefi S.p.A. with maturity 2013, for a total of € 160,000 thousand with banks lead-managed by ING Bank N.V. and Intesa Sanpaolo S.p.A., the interest rate being Euribor 3/6M + spread; 10.c. PERSONNEL PROVISIONS The detail of this item is the following: (in thousands of euro) 31.12.2009 31.12.2008

Employee leaving indemnity (TFR) 105,494 112,682

Retirement funds and similar obligations 31,852 34,800

Total 137,346 147,482

(in thousands of euro) 31.12.2009 31.12.2008

Opening balance 147,482 159,278

Provisions made for work done during the period 21,705 24,820

Increases for interest 6,230 5,480

Actuarial income or expense (111) (289)

Benefits paid out (19,582) (20,866)

Increases or decreases due to changes in consolidation area (237) 2,088

Other changes (18,141) (23,029)

Closing balance 137,346 147,482


TFR and Definited Benefit Provision

Annual technical discount rate 4.0% - 4.25%

Annual inflation rate 2%

Annual rate of pay increases 2% - 3%

Annual rate of TFR increase 3%

Annual probability of making advance payouts 4%

Voluntary resignation rate 2% - 5% of staff

Pension funds

Annual technical discount rate 4.8%

Annual inflation rate 2.8%

Annual rate of pay increases 3.25% - 4%

Return on assets servicing the plan 3.25% - 6%

Retirement age 63

10.d. PROVISIONS FOR RISKS AND LOSSES The breakdown and changes in the non-current part of these provisions are as follows: (in thousands of euro)

Provision for disputes in progress

Provision for restructuring charges

Provision for miscellaneous risks

Total

Balance at December 31 2008 15,304 4,734 36,653 56,691

Sums set aside during the year 2,610 8,187 22,368 33,165

Withdrawals (1,105) (1,591) (9,541) (12,237)

Exchange rate differences 877 -- 66 943

Other changes (6,539) (274) 5,170 (1,643)


The breakdown and changes in the current part of these provisions is as follows: (in thousands of euro)

Provision for disputes in progress

Provision for restructuring charges

Provision for miscellaneous risks

Total

Balance at December 31 2008 8,122 19,113 52,765 80,000 Sums set aside during the year 334 25,604 10,572 36,510 Withdrawals (3,114) (9,303) (10,004) (22,421) Other changes 913 (1,811) 2,487 1,589


Apart from the libel disputes regarding the Espresso group, which are typical of all publishing businesses, the Provision for disputes in progress includes risks for disputes of a commercial na-ture and labour disputes. The Provision for restructuring charges includes sums set aside for restructuring action that has been announced to the parties concerned and in particular refers to the production reorganization programs of the Sogefi group and the Espresso group. The Provision for miscellaneous risks is mainly to cover tax disputes outstanding with local tax authorities.


11. CURRENT LIABILITIES 11.a. BONDS AND NOTES The balance of € 731 thousand refers to the Bond issue made by a company of the French group SFE. At December 31 2008 it referred to the CIR International S.A. 5.25% Bond 1999/2009 repaid on March 10 2009. 11.b. OTHER BORROWINGS (in thousands of euro) 31.12.2009 31.12.2008

Collateralized bank loans 22,481 24,076

Other bank loans 68,735 34,877

Finance leases 10,127 6,034

Other borrowings 31,156 81,929

Loans from subsidiaries and associates -- 71

Total 132,499 146,987

11.c. TRADE PAYABLES (in thousands of euro) 31.12.2009 31.12.2008

Payables – subsidiaries and joint ventures 27,266 20,892

Payables – associated companies 1,383 1,197

Payables - suppliers 796,591 917,164

Advance payments 11,343 7,713

Payables in the form of notes 4 23

Totale 836,587 946,989

The item “Payables – subsidiaries and joint ventures” refers mainly to the trade payables of Sorgenia S.p.A. to Tirreno Power S.p.A.. 11.d. OTHER PAYABLES (in thousands of euro) 31.12.2009 31.12.2008

Due to employees 66,964 72,571

Tax payables 57,891 104,258

Social security payables 47,302 47,705

Other payables 56,021 52,619

Total 228,178 277,153

The reduction in the item “Tax payables” compared to last year refers to a reduction in the item in the Sorgenia group for an amount of € 51,386 thousand.


NOTES ON THE INCOME STATEMENT 12. REVENUES BREAKDOWN BY BUSINESS SECTOR (in millions of euro) 2009 2008 Change

amount % amount % %

Utilities 2,325.8 54.5 2,432.0 51.5 (4.4)

Media 886.6 20.8 1,025.5 21.7 (13.5)

Automotive components 781.0 18.3 1,017.5 21.5 (23.2)

Healthcare 273.4 6.4 246.3 5.2 11.0

Others -- -- 5.7 0.1 --

Total consolidated revenues 4,266.8 100.0 4,727.0 100.0 (9.7)

BREAKDOWN BY GEOGRAPHICAL AREA (in millions of euro) 2009 Total Italy Rest of North South Asia Other revenues Europe America America countries Utilities 2,325.8 2,297.1 28.7 -- -- -- --

Media 886.6 886.6 -- -- -- -- --

Automotive components 781.0 68.5 527.6 15.0 153.0 15.1 1.8

Healthcare 273.4 273.4 -- -- -- -- --

Others -- -- -- -- -- -- --

Total consolidated revenues 4,266.8 3,525.6 556.3 15.0 153.0 15.1 1.8

Percentages 100.0% 82.6% 13.0% 0.4% 3.6% 0.4% 0%

(in millions of euro) 2008 Total Italy Rest of North South Asia Other revenues Europe America America countries Utilities 2,432.0 2,416.1 15.9 -- -- -- --

Media 1,025.5 1,025.5 -- -- -- -- --

Automotive components 1,017.5 91.0 716.9 19.4 175.1 11.4 3.7

Healthcare 246.3 246.3 -- -- -- -- --

Others 5.7 5.7 -- -- -- -- --

Total consolidated revenues 4,727.0 3,784.6 732.8 19.4 175.1 11.4 3.7

Percentages 100.0% 80.1% 15.5% 0.4% 3.7% 0.2% 0.1%

The types of products marketed by the Group and the nature of the business sectors in which it operates mean that revenue flows are reasonably linear throughout the year and are not subject to any particular cyclical phenomena provided that the basis of consolidation remains unchanged.


13. OPERATING COSTS AND REVENUES 13.a. COSTS FOR THE PURCHASE OF GOODS This item declined from € 2,852,871 thousand in 2008 to € 2,554,020 thousand in 2009. The lower balance of “Costs for the purchase of goods” reflects the contraction in sales. 13.b. COSTS FOR SERVICES This item went down from € 782,395 thousand in 2008 to € 744,139 thousand in 2009, as can be seen from the following breakdown: (in thousands of euro) 2009 2009

Technical and professional consulting 139,973 138,586

Distribution and transportation costs 41,576 53,387

Outsourcing 56,385 68,635

Other expenses 506,170 521,787

Total 744,104 782,395

The reduction in this item is evidence of how the Group has adjusted its structure costs. 13.c. PERSONNEL COSTS Personnel costs totalled € 664,835 thousand in 2009 (€ 687,664 thousand in 2008). The Group had an average of 12,659 employees in 2009. (in thousands of euro) 2009 2008

Salaries and wages 442,504 460,442

Social security contributions 142,239 144,024

Employee leaving indemnity 21,924 22,004

Retirement and similar benefits (187) 2,527

Valuation of stock option plans 10,598 8,344

Other costs 47,757 50,323

Total 664,835 687,664

13.d. OTHER OPERATING INCOME This item can be broken down as follows: (in thousands of euro) 2009 2008 State grants and contributions 4,776 5,633 Capital gains on disposals 1,103 1,740 Non-recurring gains and other income 98,438 130,306 Total 104,317 137,679

The item “Non-recurring gains and other income” last year contained € 35,514 of penalties for the late delivery of the Modugno power plant.


13.e. OTHER OPERATING COSTS This item can be broken down as follows: (in thousands euro) 2009 2008

Writedowns and losses on receivables 43,467 36,202

Provisions made for risks and losses 20,167 18,928

Indirect taxes 22,757 26,601

Restructuring charges 17,162 11,474

Capital losses on disposal of assets 3,980 1,108

Non-recurring losses and other charges 31,577 36,162

Total 139,110 130,475

The increase in this item was mainly due to the rise in “writedowns and losses on receivables” and “Restructuring charges”. 14. FINANCIAL INCOME AND EXPENSE 14.a. FINANCIAL INCOME This item has the following breakdown: (in thousands of euro) 2009 2008

Interest income on bank accounts 3,698 19,788

Interest on securities 8,539 14,000

Other interest income 22,160 22,227

Interest rate derivatives 2,357 968

Exchange rate gains 16,468 10,763

Other financial income 601 1,358

Total 53,823 69,104

The item “Interest rate derivatives” for an amount of € 2,357 thousand includes € 848 relating to the net fair value measurement of hedging transactions. 14.b. FINANCIAL EXPENSE This item includes the following: (in thousands of euro) 2009 2008

Interest expense on bank accounts 42,880 71,877

Interest expense on bonds 43,116 59,610

Other interest expense 21,405 21,415

Interest rate derivatives 1,829 7,340

Exchange rate losses 26,442 18,507

Other financial expenses 22,224 20,080

Total 157,896 198,829


The item “Other financial expenses” includes € 10,201 thousand that refers to the writedown of the interest accrued on the PECs issued by KTP Global Finance. 14.c. GAINS FROM TRADING SECURITIES The breakdown of “Gains from trading securities” is the following: (in thousands of euro) 2009 2008

Shares and options - subsidiaries 76,735 117,810 Shares and options - other companies 7 7,815 Other securities and other gains 74,776 92,964 Total 151,518 218,589

The item “Shares and options - subsidiaries” refers to gains on the subscription of capital increa-ses by Minority Shareholders in the company Sorgenia Holding. The balance for last year referred to the subscriptions made in the companies Sorgenia Holding (€ 114,935 thousand) and KOS (€ 2,875 thousand). 14.d. LOSSES FROM TRADING SECURITIES The breakdown of “Losses from trading securities” is the following: (in thousands of euro) 2009 2008

Shares and options - subsidiaries 360 -- Shares and options - other companies 1,436 8,190 Other securities and other losses 5,140 13,153 Total 6,936 21,343

14.e. ADJUSTMENTS TO THE VALUE OF FINANCIAL ASSETS This item, amounting to € 4,008 thousand, refers essentially for € 16,191 thousand (€ 54,063 thousand in 2008) to the writedown of the investment in KTP Global Finance, for € 8,475 to the writedown of investments in private equity and to the measurement, a positive € 21,772 thousand (a negative € 53,068 thousand in 2008) of the fair value of the “Securities” recorded in Current Assets. 15. INCOME TAXES Income taxes can be broken down as follows: (in thousands of euro) 2009 2008

Current taxes 50,752 87,809 Deferred taxes (66,441) (2,343) Tax expense from prior periods 11,355 13,342 Total (4,334) 98,808

The item “Tax expense from prior periods” refers to the extraordinary provisions for taxes set aside by the Espresso group, for the likely risk of disputes still pending on options for the use of shares.


The item Deferred taxes is largely attributable to the tax receivables accruing in the year for the Sorgenia group in relation to its new investment in production capacity. The following chart shows the reconciliation of the ordinary tax rate and the effective tax rate for financial year 2009:

(in thousands of euro) 2009

Pre-tax income resulting from financial statements 185,079

Theoretical income taxes 50,897

Tax effect of non-deductible costs 10,912

Tax effect of losses of prior periods which generate deferred tax assets in the period (54,675)

Tax effect of losses of prior periods which did not generate deferred tax assets (226)

Tax effect on interest rate differentials of foreign companies (8,595)

Non-taxable grants (1,431)

Other (29,886)

Income taxes (33,004)

Average effective tax rate (17,8)

Theoretical tax rate 27.5

IRAP and other taxes 17,315

Tax charges from prior periods 11,355

Total taxes from financial statements (4,334)

16. EARNINGS PER SHARE The basic earnings per share is calculated by dividing the net income for the period attributable to ordinary Shareholders by the weighted average number of shares in circulation. The diluted earn-ings per share is calculated by dividing the net income for the period attributable to ordinary Shareholders by the weighted average number of ordinary shares in circulation during the period, adjusted for the capital dilution effects of any options outstanding. The calculation of the shares in circulation does not include own shares held as treasury stock. The company has only one category of potential ordinary shares, which are those shares resulting from the stock options assigned to employees. The dilutive effect of the ordinary shares to be issued or assigned in favour of stock options plans on earnings per share is not significant. To determine the average number of options, the average fair value of the shares for the period under examination (the financial year) was used. The average fair value of CIR ordinary shares in 2009 was € 1.2073 compared to an average fair value of € 1.5684 in 2008.


The following chart shows the information on the shares used to calculate the basic and diluted earnings per share. 2009 2008

Net income attributable to the Shareholders (in thousands of euro) 143,432 95,444

Weighted average number of ordinary shares in circulation 748,117,934 748,707,234

Earnings per share (euro) 0.1917 0.1275

2009 2009

Net income attributable to the Shareholders (in thousands of euro) 143,432 95,444


Weighted average number of options 41,658,983 30,624,267

Fair value of weighted average number of options -- --

Adjusted weighted average number of shares circulation 748,117,934 748,707,234

Diluted earnings per share (euro) 0.1917 0.1275

17. DIVIDENDS PAID OUT The Company did not distribute any dividends during the year. In the previous year the dividend payout totalled € 37,410 thousand, equal to € 0.050 per share. 18. FINANCIAL RISK MANAGEMENT: ADDITIONAL DISCLOSURES (IFRS 7) The CIR Group operates in different sectors of industry and services both at national and at inter-national level and thus its business is exposed to various kinds of financial risk, including market risk (exchange rate risk and price risk), credit risk, liquidity risk and interest rate risk. To minimize these risks the Group uses financial derivative instruments for hedging purposes. Risk management is carried out by the central finance and treasury function on the basis of poli-cies approved by the Management of CIR and transmitted to the subsidiaries on July 25 2003. Market risk

Foreign currency risk Operating internationally and buying commodities denominated in USD the Group is subject to the risk that fluctuations in foreign exchange rates may affect the fair value of some of its assets and liabilities. Although the Group produces and sells mainly in the euro area it is subject to ex-change rate risk especially in relation to the British pound, the Brazilian real, the US dollar, the Argentine peso, the Chinese renminbi and the Indian rupee. The Group uses forward contracts to reduce the risk of fluctuations in the EUR/USD exchange rate. As described in the paragraph on Price risk, in some cases it covers its purchase and sales formulae directly and the price of this cover depends on the EUR/USD exchange rate. By fixing its formulae in euro, the exchange rate is indirectly hedged too. Regarding the exchange rate risk of translating the financial statements of foreign operations, the operating companies generally have a degree of convergence between their sourcing costs and


their sales revenues and this kind of risk is also limited by the fact that the companies operate in their local currencies, are active in their own domestic markets and abroad and, in the event of need, can raise funding locally. In order to show the potential effect in the financial statements of the exposure to exchange rate risk, a sensitivity analysis was carried out, assuming shifts in the exchange rate. For the purposes of comparison, the results of the analysis at December 31 2008 are also shown.

Sensitivity Analysis EUR/USD exchange rate 31.12.2009 31.12.2008

Shift in EUR/USD exchange rate -5% +5% -5% +5%

Effect on income statement (EUR/thousands) 7,306 (6,970) (9,322) 8,364

Effect on Equity (EUR/thousands) (5,787) 5,234 3,765 (3,408)

Price risk Through the activity in the utilities sector of the Sorgenia group, the Group is exposed to the risk of fluctuations in energy commodity prices on the purchase of fuels for its power production plants and on its purchases and sales of gas and electricity (where contracts stipulate specific in-dexing to baskets of fuels). Moreover since almost all of the commodities in question are priced in US dollars, the Group is also exposed to fluctuations in the EUR/USD exchange rate. Sorgenia continually monitors this exposure by breaking its contractual formulae down into the underlying risk factors and managing the exposure using a two-stage procedure. First, taking part in the negotiation of contracts for the purchase of electricity and gas and in the definition of pricing policies enables the Group to verify rates used and thus achieve a high level of natural hedging, minimizing the impact on margins of the factors of uncertainty mentioned above not only at business line level but also at consolidated portfolio level. Secondly, monitoring net remaining exposure after the action described above. Sorgenia trades derivative instruments with prime financial institutions in order to minimize coun-terparty risk. The derivatives in question are traded over the counter (OTC), directly with the counterparties, and are mainly fixed to floating swaps or vice versa for commodity price hedges, and outright forwards for exchange rate hedges. Since 2008, in view of the greater liquidity in the derivatives markets, in order to reduce basis risk on the hedges as far as possible, the group has started negotiating with its financial counterparties contracts where the underlying is the whole formula for the purchase or sale of natural gas or elec-tricity. These hedges make it possible to eliminate the change in costs and revenues due to the commodity risk factor and the exchange rate risk factor by entering into just one contract. Although these commodity derivative contracts are entered into exclusively for hedging purposes, they are not accounted for according to the rules of hedge accounting as set out in IAS 39. There-fore the effects in terms of profit and loss of the changes in their fair value are recognized directly to the Income Statement in the item “Other operating income (losses)” as they relate to the typical operations of the Group. The fair value of derivatives contracts is calculated using market forward prices as of the balance sheet date, when the underlying commodities are traded in markets where there is a forward price structure. Otherwise the fair value is calculated using internal models based on data and informa-tion available in the market, supplied by recognized and reliable third party sources.


Regarding the hierarchical form of classification introduced by the recent Amendment to IFRS 7 which is based on three levels according to the method and the input used to determine fair value, it should be pointed out that the financial instruments used for managing commodity risk belong to level 1 and level 2. The valuation techniques for derivatives outstanding at the end of the year were the same as those adopted last year. For commodities the maturity of the swap contracts is generally no longer than 18 months. At December 31 there were no open positions in liquid fuel derivatives; the fair value for this kind of instrument was therefore zero. There were however open positions in derivatives on price formulae maturing in 2010 and 2011. In order to measure the exposure to the group to the risk of changes in the prices of commodities and gas and electricity price formulae, a sensitivity analysis was carried out based on the revalua-tion of the fair value of derivative contracts outstanding at December 31 2009 in the event of shifts in commodity prices. In order to revalue these financial instruments and quantify the effect on the accounts of shifts in the price curve of liquid fuels, guaranteeing the highest possible degree of accuracy of measure-ment, the same financial models were used as those used to produce the reports for management showing how exposure is constantly monitored. The following chart shows the sensitivity analysis results for commodities:

(amounts in thousands of euro) 31.12.2009 31.12.2008 Shifts -5% +5% -5% +5% Effect on the income statement (5,660) 5,988 (448) 448 Effect on shareholders’ equity (5,660) 5,988 (448) 448

The higher exposure to the risk of changes in commodity prices, which is however offset by phy-sica purchases and sales of fuels on the spot markets, is due to the fact that hedges were put in place using financial contracts over a longer time horizon than in the previous year and that there were more contracts outstanding at December 31 2009 compared to December 31 2008. In fact at that date all the positions were closed. As in 2008, in 2009 too the Sorgenia group minimized its exposure to the changes in commodity prices thanks to greater opportunities for defining sales formulae consistent with its sourcing for-mulae and thanks also to having established hedging strategies using financial instruments. Even though the derivatives contracts in commodities do not meet the formal requisites required by IAS 39 to be accounted for as hedges of specific commitments or future transactions, they are in fact entered into by the Group for the exclusive purpose of hedging. Therefore the changes in the results of commodity derivative positions are offset by changes in the physical underlying positions, with the impact on the Income Statements essentially reduced to the basis risk on all deals where there is a discrepancy between the underlying physical com-modity and the commodities settled and traded on the regulated at OTC markets on which the de-rivatives are based. During 2009 the Sorgenia group managed to reduce this remaining risk factor thanks to its ability to negotiate with its financial counterparties both hedges of its sales formulae and less liquid commodities with which the values of the underlying physical contracts are directly correlated.


During the second half of the year 2009 the Sorgenia group also began a market intelligence activ-ity aimed at finding market opportunties generated by actual or expected differences in commod-ity prices. This activity is separated out in a special portfolio and is monitored using appropriate stop loss limits. At December 31 2009 the fair value of contracts traded for market intelligence purposes was a positive € 68 thousand. The exposure to the risk of changes in commodity prices is zero because each position is offset by an equal opposite one. Credit riskCredit risk can be valued both in commercial terms relating to client type, the terms of the con-tract and the concentration of sales, and in financial terms connected with the type of counterparty dealt with in financial transactions. Within the Group there is no significant concentration of credit risk. Some time ago adequate policies were put in place to ensure that sales are made to clients with an appropriate credit history. Counterparties for derivative products and cash transactions are exclu-sively financial institutions with a high credit rating. The Group has policies that limit credit ex-posure to individual financial institutions. Credit risk is different for the various sectors of business in which it occurs. In the energy sector, for example, the assessment of exposure to credit risk is made using internal processes and with the aid of companies with expertise both in the sector of assessment and granting credit lines and in credit recovery. The number of clients and their diversification make exposure to a concentra-tion of credit risk irrelevant. In the “Automotive components” sector there is no excessive concentration of risk since the Original Equipment and After-market distribution channels through which it operates are car manufacturers or large purchasing groups. The “Media” sector has no areas of risk for trade receivables of a significant entity and in any case the Group adopts operating procedures that prevent the sale of products or services to clients without an adequate credit profile or a collateral guarantee. The healthcare sector does not present any concentration of credit risk because credit exposure is spread over a large number of clients and counterparties especially in the sector of residences for the elderly. The hospital sector, however, has a higher concentration of risk because the most sig-nificant counterparties are the local health authorities. Since 2006 the CIR Group has been acquiring and managing non-performing loans and has put in place procedures for evaluating and establishing the fair value of its portfolios. On one of the fol-lowing pages there is a chart showing the breakdown of credit risk and the changes in the provi-sion for the write-down of receivables. Liquidity risk Prudent management of liquidity risk implies maintaining sufficient liquidity and short term secu-rities and ensuring an adequate supply of credit lines to ensure that sufficient financial resources can be raised. The Group meets its maturities and commitments systematically, and such conduct enables it to operate in the market with the necessary flexibility and reliability to maintain a correct balance between funding and the application of its financial resources. The companies that head the four most significant business sectors manage their liquidity risk di-rectly and independently. Tight control is exercised over the net financial position and its evolu-tion in the short, medium and long term. In general the CIR Group follows an extremely prudent financial policy using funding structures mainly in the medium long term. The operating Groups manage their treasury functions in a centralized manner.


In the following pages there is a chart showing a breakdown of liquidity risk for the operating groups. Interest rate risk (fair value risk and cash flow risk) Interest rate risk depends on the movements in interest rates in the market which can cause changes in the fair value of the cash flows of financial assets and liabilities. Interest rate risk mainly concerns long-term bond and note borrowings which are issued at a fixed rate thus exposing the Group to the risk of fair value changes on the loans themselves as interest rates move. Following risk management policies, the Parent Company and the subsidiaries have entered into various IRS contracts over the years in order to hedge the interest rate risk on their bond and note issues and on loan agreements. Sensitivity analysis A parallel shift of one percentage point in the 3 months Euribor curve would have the following effect on the floating rate assets and liabilities of the Group:

(amounts in thousands of euro) 31.12.2009 31.12.2008 Percentage shifts -1% +1% -1% +1% Change in Income Statement 1,656 (5,485) 7,752 (8,416) Change in Shareholders’ Equity (13,941) 20,128 (2,483) 838

Derivative instruments Derivative instruments are recognized at their fair value. For accounting purposes hedging transactions are classified as: - fair value hedges if they are subject to price changes in the market value of the underlying as-

set or liability; - cash flow hedges if they are entered into to protect from the risk of changing cash flows from

an existing asset and liability, or from a future transaction. - hedges of net investments in foreign operations if they are entered into to protect from the ex-

change rate risk in the conversion of the equity of subsidiaries denominated in a currency other than the functional currency of the Group.

For derivative instruments classified as fair value hedges gains and losses resulting from both the determination of their market value and the adjustment to fair value of the element underlying the hedge are posted to the income statement. For instruments classified as cash flow hedges (for example interest rate swaps) gains and losses from marking them to market are posted directly to shareholders’ equity for the part which “effec-tively” covers the risk they are intended to cover, while any “non-effective” part is posted to the income statement. For instruments classified as hedges of net investments in foreign operations gains and losses ob-tained from marking them to market are posted directly to shareholders’ equity for the part which “effectively” hedges the risk they are intended to cover, while any “non-effective” part is posted to the income statement.


Derivatives used for hedging purposes, when the hedge accounting is entered, are accompanied by a hedging relationship which designates the individual instrument as entered into for the purposes of hedging and gives the parameters of effectiveness of the hedge in relation to the financial in-strument being hedged. The level of effectiveness of the hedge is evaluated at regular intervals and the effective part of the relationship is posted to shareholders’ equity while any non-effective part is charged to the in-come statement. More specifically, the hedge is considered to be effective when the change in fair value or in the financial flows of the instrument hedged is almost entirely compensated for by the change in the fair value or the financial flows of the hedging instrument and when the results achieved are in a range of between 80% and 125%. At December 31 2009, the Group had the following derivatives contracts booked as hedges at their notional value: (a) Interest hedges:

Hedging interest on the CIR International fixed to floating bond issue (€ 148 million) matur-ing in 2011;

Hedging interest on the fixed to floating CIR S.p.A. bond issue (270 million) maturing in 2024;

Hedging Sogefi bank loans, notional value € 90 million maturing in 2010 (€ 35 million), in 2011 (€ 5 million), in 2012 (€ 30 million) and in 2013 (€ 20 million);

Hedging bank loans to the Sorgenia group, notional value € 891.7 million; Hedging bank loans to the Kos group, notional value € 71.6 million;

(b) Foreign currency hedges: Forward sales of a total of USD 193 million hedging investments in hedge funds and in pri-

vate equity funds; Forward sale of USD 8.5 million against EUR maturing in 2010; Forward purchase of € 2.3 million agaisnt GBP maturing in 2010; Forward sale of ARP 1.9 million against BRL maturing in 2010; Forward purchase of USD 1.9 million against Brazilian Reals maturing in 2010;

Forward purchase of USD 75.5 million against EUR. Capital parameters Management regulates the use of leverage to guarantee solidity and flexibility in the asset and li-ability structure of CIR and its financial holding companies, measuring the ratio of funding sources to investment activity. Leverage is calculated as the ratio between net financial debt (represented by bond or notes issued net of free cash flow and investments in financial instruments considered as liquid, according to parameters agreed on with the rating agency) and the total investment assets measured at fair value (including equity investments and the remaining part of investments in financial instru-ments). Management’s objective is to maintain a sold and flexible financial structure in order to maintain this ratio below 30%. Today it stands at 8%.


Contractual clauses of loan agreements Some of the loan agreements in favour of the Group contain special clauses which envisage, in the event of failure to comply with certain economic and financial covenants, the possibility that the lending banks may require the loans to be repaid if the company involved does not immediately remedy the infringement of the said covenants as per the terms and conditions of the loan agree-ments. At December 31 2009 all the contractual clauses relating to medium and long term financial li-abilities were fully complied with by the Group. It should be noted that during the year the Sogefi Group revised some of the clauses previously agreed upon. These were specifially as follows: - On June 30 2009 an amendment was agreed upon with Intesa Sanpaolo of the conditions set

out in the loan agreement for € 50 million signed with the said bank on September 8 2006. Against payment of a commission of € 125 thousand and an increased spread, with reference to the measurements of the covenants of June 30 2009 and December 31 2009, the maximum ratio was raised between the consolidated net financial position and consolidated EBITDA and for the whole duration of the loan costs resulting from non-ordinary activities were ex-cluded from the calculation of EBITDA;

- On November 11 2009 an agreement was reached with Unicredit to amend the calculation of the covenants included in the loan agreement for € 100 million. Against payment of a com-mission of € 445 thousand and a higher spread, it was agreed that for the purposes of calculat-ing EBITDA costs resulting from non-ordinary activities (up to a maximum of € 25 million per annum) would be excluded from the calculation of EBITDA for the whole duration of the loan; a period of six months was also given to remedy the situation in the event of the NFP/EBITDA=4 ratio being exceeded.

Following these amendments the covenants relating to the debt of the Sogefi Group outstanding at the end of the year were the following:

- Syndicated loan of € 160 million obtained by the Parent Company Sogefi S.p.A.: ratio of consolidated net financial position to consolidated EBITDA lower than or equal to 3.5; ra-tio of EBITDA to net interest expense no lower than 4;

- Loan of € 100 million obtained by the Parent Company Sogefi S.p.A.: ratio of consoli-dated net financial position to consolidated EBITDA below 4;

- Loan of € 50 million obtained by the Parent Company Sogefi S.p.A: in relation to the cov-erant measurements at June 30 2009 and at December 31 2009 the maximum ratio of con-solidated net financial position to EBITDA has been raised from 3.5 to 4.

For all the loan agreements indicated above the income and expense from non-ordinary operations are excluded from the EBITDA calculation. Measurement of financial assets and liabilities and fair value hierarchy The fair value of financial assets and liabilities is calculated as follows: • The fair value of financial assets with standard terms and conditions listed on an active

market is measured on the basis of prices published on the active market; • The fair value of other financial assets and liabilities (with the exception of derivatives) is

measured using commonly accepted valuation techniques and based on analytical models using discounted cash flows, which use as variables the prices observable on recent market transactions and from broker quotes for similar instruments;


• For derivatives listed on an active market the fair value is calculated on the basis of market prices; if these prices are not published, different valuation techniques are used for the vari-ous types of instruments.

In particular, for the measurement of certain investments in bond instruments where there is no regular market for them, i.e. where there is not a sufficient number of transactions on an ongoing basis with a bid-offer spread and a sufficiently limited volatility, then the fair value of these in-struments is mainly calculated using quotes provided by prime international brokerage houses at the request of the Company, which are then validated through a comparison with the prices pre-sent in the market, albeit of a limited number of deals, or with those observable for other instru-ments with similar characteristics. In measuring investments in private equity funds, the fair value is determined on the basis of the NAV communicated by the respective fund administrators at the balance sheet date. In cases where this information is not available at the balance sheet date, the last official communication available is used, which must not however be more than three months old at the balance sheet date and should be validated with subsequent information made available to investors by the fund managers. As from the balance sheet date December 31 2009 the company must indicated whether fair value is determined, totally or partly, from price quotations published in an active market (“Level 1”) or whether it is estimated using prices that can be inferred from market quotes for similar assets or through valuation techniques for which all significant factors are inferred from data observable in the market (“Level 2”) or from valuation techniques based mostly on input not observable in the market which therefore involve estimates and assumptions being made by management (“Level 3”).


The chart below shows the breakdown of financial assets and liabilities measured at fair value:

Balance sheet items Level 1 Level 2 Level 3 Total in (in thousands of euro) Balance Sheet NON-CURRENT ASSETS Financial assets (at fair value through profit and loss) - Other equity investments (item 7.e.) -- -- -- -- - Other receivables (item 7.f.) -- 10,430 -- 10,430 - Non-current securities (item 7.g.) -- 62,098 20,803 82,901 Financial assets (at fair value through profit and loss) - Other equity investments (item 7.e.) -- -- -- -- - Non-current securities (item 7.g.) 150 -- -- 150 CURRENT ASSETS Financial assets (at fair value through profit and loss) Financial receivables (item 8.d.) - derivatives -- 18,397 -- 18,397 Current securities (item 8.f.) - Equity investments 88 140 -- 228 - Italian Government securities and similar instruments 4,010 -- -- 4,010 - Investment funds and similar instruments 5,843 14,375 -- 20,218 - Bonds and notes 129,403 2,175 -- 131,578 - Certificates of deposit and sundry securities 21 122,493 -- 122,514 Total current securities (item 8.f.) 139,365 139,183 -- 278,548 Financial assets (at fair value with offset in shareholders’ equity) Financial receivables (item 8.d.) - derivatives 5,217 3,615 -- 8,832 Available-for-sale financial assets (item 8.f.) - Equity investments -- -- -- -- - Italian Government securities and similar instruments 25,179 -- -- 25,179 - Investment funds and similar instruments -- 79,788 -- 79,788 - Bonds and notes -- -- -- -- - Certificates of deposit and sundry securities -- -- -- -- Total available-for-sale financial assets (item 8.f.) 25,179 79,788 -- 104,967 NON-CURRENT LIABILITIES Financial liabilities (at fair value with offset in shareholders’ equity) Other borrowings (item 10.b.) - derivatives -- (4,493) -- (4,493) Financial liabilities (at fair value through profit and loss) Other borrowings (item 10.b.) - derivatives -- (6,174) -- (6,174) CURRENT LIABILITIES Financial liabilities (at fair value with offset in shareholders’ equity) Other borrowings (item 10.b.) - derivatives (5,722) (12,878) -- (18,600) Financial liabilities (at fair value through profit and loss) Other borrowings (item 11b.) - derivatives -- (489) -- (489)


During 2009 no transfers were made between the different levels of fair value in the hierarchy. As far as the financial assets classified as level 3 are concerned, these are investments in venture capital which are measured using some market information that is not observable. They are held by the Group through CIR Ventures and where they refer to investments in companies operating in the information technology and communication sector (for a total amount of approximately € 10 million), and through Noventi Ventures, where they are investments in companies operating in the sector of innovative generation technologies and energy efficiency (for a total amount of ap-proximately € 10.8 million). Changes in the year of financial assets at fair value (livello 3)

FINANCIAL ASSETS

Held for Valued at Available for Hedges trading fair value sale Opening position -- -- 21,853 --

Increases

- Purchases -- -- 1,097 --

- Gains recognized to:

Income Statement -- -- -- --

- of which capital gains -- -- -- --

Shareholders’ equity -- -- 2,454 --

Trasferred from other levels -- -- -- --

Other increases -- -- -- --

Decreases

- Sales -- -- -- --

- Repayments

- Losses recognized to: -- -- -- --

Income Statement -- -- -- --

- of which capital losses -- -- -- --

Shareholders’ equity -- -- (3,860) --

Transferred from other levels -- -- -- --

Other decreases -- -- (741) --

Closing position -- -- 20,803 --


CATEGORIES OF FINANCIAL ASSETS AND LIABILITIES SHOWN IN THE BALANCE SHEETFINANCIAL YEAR 2009

(in thousands of euro)Bal. Sheet Value in Assets at FV Assets at FV Loans Investments Available Liabilities at FV Liabilities at FV Liabilities Fair value Effect Effect

items Bal. Sheet through P&L through P&L and held to for sale through P&L through P&L at amortized on income on equitydesignated as classified as receivables maturity assets designated as classified as cost statement

such from initial held for such from initial held forrecognition trading recognition trading

NON-CURRENT ASSETS

Other equity investments 7.e 9,629 -- -- 1,091 10 8,528 -- -- -- 9,629 85 --

Other receivables (*) 7.f 193,469 -- -- 193,469 -- -- -- -- -- 193,469 15,128 --

Securities 7.g 83,051 -- -- -- 10,914 72,137 -- -- -- 83,051 (6,859) 555

CURRENT ASSETS

Trade receivables 8.b 1,042,030 -- -- 1,042,030 -- -- -- -- -- 1,042,030 31,256 --

Other receivables (**) 8.c 61,077 -- -- 61,077 -- -- -- -- -- 61,077 4,180 --

Financial receivables 8.d 27,229 1,503 -- 25,726 -- -- -- -- -- 27,229 4,145 1,085

Securities 8.e 278,548 278,548 -- -- -- -- -- -- 278,548 45,757 --

Available-for-sale financial assets 8.f 104,967 -- -- -- -- 104,967 -- -- -- 104,967 44,864 (23,527)

Cash & cash equivalents 8.g 549,321 -- -- 549,321 -- -- -- -- -- 549,321 5,732 --

NON-CURRENT LIABILITIES

Bonds and notes 10.a (718,262) -- -- -- -- -- -- -- (718,262) (638,703) (28,786) --

Other borrowings 10.b (1,843,359) -- -- -- -- -- -- -- (1,843,359) (1,936,011) (38,404) (3,720)

Trade payables (703) -- -- -- -- -- -- -- (703) (703) --

CURRENT LIABILITIES

Bank overdrafts (66,290) -- -- -- -- -- -- -- (66,290) (66,290) (4,134) --

Bonds and notes 11.a (731) -- -- -- -- -- -- -- (731) (731) (14,396) --

Other borrowings 11.b (132,499) -- -- -- -- -- (4,768) -- (127,731) (168,285) (9,628)

Trade payables 11.c (836,587) -- -- -- -- -- -- -- (836,587) (836,587) (5,187) --

(*) Not including € 14,430 thousand of tax receivables(**) Not including € 139,550 thousand of tax receivables


(in thousands of euro)Bal. Sheet Value in Assets at FV Assets at FV Loans Investments Available Liabilities at FV Liabilities at FV Liabilities Fair value Effect on Effect

items Bal. Sheet through P&L through P&L and held to for sale through P&L through P&L at amortized income on equitydesignated as classified as receivables maturity assets designated as classified as cost statementsuch on initial held for such on initial held for

recognition trading recognition trading

NON-CURRENT ASSETS

Other equity investments 7.e 9,682 -- -- -- -- 9,682 -- -- -- 9,682 (462) --

Other receivables (*) 7.f 198,025 -- -- 198,025 -- -- -- -- -- 198,025 (36,428) --

Securities 7.g 84,633 -- -- -- 153 84,480 -- -- -- 84,633 (547) (15,144)

CURRENT ASSETS

Trade receivables 8.b 1,233,689 -- -- 1,233,689 -- -- -- -- -- 1,233,689 (33,161) --

Other receivables (**) 8.c 251,878 -- -- 251,878 -- -- -- -- -- 251,878 13 --

Financial receivables 8.d 25,721 14,784 -- 10,937 -- -- -- -- 25,699 (4,032) --

Securities 8.e 513,362 511,436 17 1,909 -- -- -- -- -- 513,362 (38,886) --

Available-for-sale financial assets 8.f 217,420 -- -- -- -- 217,420 -- -- -- 217,420 68,597 (106,709)

Cash & cash equivalents 8.g 616,363 -- -- 616,363 -- -- -- -- -- 616,363 19,915 --


Bonds and notes 10.a (895,458) -- -- -- -- -- -- -- (895,458) (747,146) (40,902) --

Other borrowings 10.b (1,653,615) -- -- -- -- -- -- -- (1,653,615) (1,718,651) (55,338) (5,563)

CURRENT LIABILITIES

Bank overdrafts (164,801) -- -- -- -- -- -- -- (164,801) (164,801) (11,109) --

Bonds and notes 11.a (347,445) -- -- -- -- -- -- -- (347,445) (345,278) (18,799) --

Other borrowings 11.b (146,987) -- -- -- -- -- (17,649) -- (129,338) (129,558) (14,796) (14,263)

Trade payables 11.c (946,989) -- -- -- -- -- -- -- (946,989) (946,989) (1,844) --

(*) Not including € 38,122 thousand of tax receivables(**) Not including € 111,875 thousand of tax receivables

CLASSES OF RISK - FINANCIAL YEAR 2009

(in thousands of euro)Bal. Sheet Value in Liquidity Int. Rate Exch. Rate Credit

items Bal. Sheet risk risk risk risk

NON-CURRENT ASSETS

Other equity investments 7.e 9,629 -- -- -- 9,629

Other receivables 7.f 193,469 -- -- -- 193,469

Securities 7.g 83,051 -- -- -- 83,051

CURRENT ASSETS

Trade receivables 8.b 1,042,030 -- -- -- 1,042,030

Other receivables 8.c 61,077 -- -- -- 61,077

Financial receivables 8.d 27,229 -- -- -- 27,229

Securities 8.e 278,548 -- -- -- 278,548

Available-for-sale financial assets 8.f 104,967 -- -- -- 104,967 Cash & cash equivalents 8.g 549,321 -- 549,321 -- --


Bonds and notes 10.a (718,262) (718,262) -- -- --

Other borrowings 10.b (1,843,359) (1,843,359) -- -- --

Trade payables (703) (703) -- -- --

CURRENT LIABILITIES

Bank overdrafts (66,290) (66,290) -- -- --

Bonds and notes 11.a (731) (731)

Other borrowings 11.b (132,499) (132,499) -- -- --

Trade payables 11.c (836,587) (836,587) -- -- --


(in thousands of euro)Bal. Sheet Value in Liquidity Int. Rate Exch. rate Credit


NON-CURRENT ASSETS

Other equity investments 7.e 9,682 -- -- -- 9,682

Other receivables 7.f 198,025 -- -- -- 198,025

Securities 7.g 84,633 -- -- -- 84,633

CURRENT ASSETS

Trade receivables 8.b 1,233,689 -- -- -- 1,233,689

Other receivables 8.c 251,878 -- -- -- 251,878

Financial receivables 8.d 25,721 -- -- -- 25,721

Securities 8.e 513,362 -- -- -- 513,362

Available-for-sale financial assets 8.f 217,420 -- -- -- 217,420 Cash & cash equivalents 8.g 616,363 -- 616,363 -- --


Bonds and notes 10.a (895,458) (895,458) -- -- --

Other borrowings 10.b (1,653,615) (1,653,615) -- -- --

CURRENT LIABILITIES

Bank overdrafts (164,801) (164,801) -- -- --

Bonds and notes 11.a (347,445) (347,445)

Other borrowings 11.b (146,987) (146,987) -- -- --

Trade payables 11.c (946,989) (946,989) -- -- --

CREDIT RISK


Position at December 31 2009 Bal. Sheet Total Not yet Overdue 0 - 30 days 30 - 60 60 - 90 over 90 Amt. due Writedownsitems receivable due by > settled

Other receivables (non-current assets) 7.f 193,469 61,462 132,007 -- -- -- 132,007 --

Gross receivable 346,008 214,001 132,007 -- -- -- 132,007 --

Provision for writedown (152,539) (152,539) -- -- -- -- -- -- (26,392)

Trade receivables 8.b 1,042,030 706,937 335,093 87,502 29,939 29,604 188,048 --

Gross receivable 1,141,116 716,573 424,543 89,708 32,303 31,754 270,778 --

Provision for writedown (99,086) (9,636) (89,450) (2,206) (2,364) (2,150) (82,730) -- (37,717)

Other receivables (current assets) 8.c 61,077 59,792 1,285 -- 989 296 -- --

Gross receivable 61,612 60,276 1,336 -- 1,040 296 -- --

Provision for writedown (535) (484) (51) -- (51) -- -- -- (171)

Total 1,296,576 828,191 468,385 87,502 30,928 29,900 320,055 -- (64,280)


Position at December 31 2008 Bal. Sheet Total Not yet Overdue 0 - 30 days 30 - 60 60 - 90 over 90 Amt. due Writedownsitems receivable due by > settled

Other receivables (non-current assets) 7.f 198,025 61,403 136,622 -- -- -- 136,622 --

Gross receivable 324,172 187,550 136,622 -- -- -- 136,622 --

Provision for writedown (126,147) (126,147) -- -- -- -- -- -- (64,151)

Trade receivables 8.b 1,233,689 760,571 473,118 175,811 38,701 41,739 203,356 13,511

Gross receivable 1,304,686 769,840 534,846 191,731 41,892 46,036 240,877 14,310

Provision for writedown (70,997) (9,269) (61,728) (15,920) (3,191) (4,297) (37,521) (799) (34,542)

Other receivables (current assets) 8.c 251,878 251,852 26 -- -- -- 26 --

Gross receivable 252,303 252,236 67 -- -- -- 67 --

Provision for writedown (425) (384) (41) -- -- -- (41) -- (58)

Total 1,683,592 1,073,826 609,766 175,811 38,701 41,739 340,004 13,511 (98,751)

PROVISION FOR WRITEDOWN OF RECEIVABLES


Position at December 31 2009 Starting Writedowns Withdrawals Exch. rate Business Closingbalance diff. +/- comb. +/- balance

Provision for writedown of receivables (197,569) (64,280) 8,270 (107) 1,526 (252,160)


Position at December 31 2008 Starting Writedowns Withdrawals Exch. Rate Business Closingbalance diff. +/- comb. +/- balance

Provision for writedown of receivables (105,556) (98,751) 6,940 301 (503) (197,569)

LIQUIDITY RISK - FINANCIAL YEAR 2009

(in thousands of euro)<1 >1 <2 >2 <3 >3 <4 >4 <5 >5 Totalyear years years years years years

Non-derivative financial liabilities

Bonds and notes 40,517 188,498 31,063 30,480 315,786 425,282 1,031,626

Other borrowings:- Loans from banks 166,687 146,137 630,468 286,960 211,188 439,791 1,881,231 - From leasing companies 8,294 8,154 8,010 6,176 5,180 46,610 82,424 - From other lenders 6,053 8,273 80,845 1,031 620 4,396 101,218

Bank overdrafts 66,290 -- -- -- -- -- 66,290

Trade payables 837,221 -- -- -- -- -- 837,221

Derivative financial liabilities

Hedging derivatives 8,898 776 472 274 113 (71) 10,462

Non-hedging derivatives 1,140 527 290 92 4 -- 2,053

TOTAL 1,135,100 352,365 751,148 325,013 532,891 916,008 4,012,525




Bonds and notes 373,972 191,203 201,200 31,007 31,014 756,303 1,584,699

Other borrowings:- Loans from banks 79,647 244,491 246,704 835,015 259,558 162,947 1,828,362 - From leasing companies 21,661 8,965 8,191 7,928 6,106 34,442 87,293 - From other lenders 40,384 46,919 866 971 1,076 4,500 94,716

Bank overdrafts 165,807 -- -- -- -- -- 165,807

Trade payables 946,900 -- -- -- -- -- 946,900

Derivative financial liabilities

Hedging derivatives 27,033 1,502 800 1,563 252 206 31,356

Non-hedging derivatives 3,337 -- -- -- -- -- 3,337

TOTAL 1,658,741 493,080 457,761 876,484 298,006 958,398 4,742,470

19. GUARANTEES AND COMMITMENTS At December 31 2009 the position of guarantees and commitments was the following: CIR and financial holding companies In relation to the incentive plans for directors and employees, CIR, jointly with Verbund, has made the undertaking to buy back the shares of Sorgenia S.p.A. resulting from the exercise of op-tions by employees who are beneficiaries of the stock option plans outstanding at December 31 2009. The Parent Company of the CIR Group has signed a series of shareholder agreements with the minority shareholders of HSS. Under these agreements, CIR sold a put option on part or all of the holdings of other shareholders exercisable, according to the terms of the agreement, on or before October 31 2009 or on or before February 10 2012 if the shares of HSS have not been listed on MTA by September 30 2009 or by January 31 2012 respectively. This option will be exercisable at the market price on the date of exercise. Other guarantees and commitments of CIR are as follows: - Commitments for investment in private equity funds by CIR International for € 25.3 million; - An annual commitment to cover just the running costs of the company KTP Global Finance

SCA, the holding company of the KTP group. Sorgenia group Within the group there are guarantees made to third parties for a total amount of € 507,673 thou-sand. These are mainly bonds deposited as collateral for sums to be paid. These relate to the purchase and transportation of electricity and gas and to commitments in favour of Inland Revenue for IVA for which a rebate has been applied. Also in this category are guarantees requested for the construction of wind parks and for the pur-chase of land where photovoltaic plants will be built and for the Modugno thermoelectric power plant. As collateral for loans obtained by the subsidiaries Sorgenia Puglia S.p.A. and Sorgenia Power S.p.A., the shares of the two companies (for an amount of € 256,294 thousand) have been pledged. The commitments outstanding at the reporting date of these financial statements refer mainly to guarantees issued by Sorgenia S.p.A. in favour of in favour of banks lending funds to Sorgenia Power S.p.A. for € 195,800 thousand for the Termoli power plant and € 660 thousand for the Aprilia and Bertonico-Lodigiano sites. Sorgenia S.p.A. has signed an undertaking to capitalize Sorgenia Power for up to € 200,000 thou-sand and to finance the same company for up to a maximum of € 50,000 thousand. There are also commitments to make a financial contribution to the associate GICA S.A. and to the subsidiary Noventi Ventures II LP of up to a maximum of € 15,000 thousand and USD 30,000 thousand, of which USD 14,900 thousand have already been paid, respectively. The remaining commitment is for € 10,482 thousand. There is also a commitment of € 6,462 thousand in relation to the tender published for the urbani-zation works to be carried out on the industrial estate where the Bertonico-Turano Lodigiano power plant is being built (LO).


Lastly, it should be noted that just for the natural gas business, the supply contract includes a take or pay clause which makes it obligatory for the purchaser to pay for any shortfall in the amount withdrawn compared to the minimum stipulated in the contract. This clause was not applicable during the year. Espresso group Guarantees issued totalled € 1,538 thousand and referred to guarantees made by the parent com-pany of the Group and the subsidiaries Elemedia and A. Manzoni & C. for the lease of their re-spective premises. Commitments outstanding, for a total of € 4,166 thousand, referred to: - contracts for the purchase of plant and equipment (€ 1,493 thousand) mainly for Repubblica,

Finegil Editoriale and l’Editoriale La Nuova Sardegna for the full-colour project; - a contract for the purchase mainly of the colour printing press for the Printing Centre of the

Padua division of Finegil Editoriale (€ 1,135 thousand). Sogefi group Operating leases For accounting purposes, leasing and hire contracts are classified as operating leases when the fol-lowing conditions apply: - a significant part of the risks and benefits of ownership are maintained by the lessor; - there are no options giving the right to buy the leased property at a price that does not represent

the presumed market value of the same at the close of the period; - the duration of the contract does not extend over most of the useful life of the property rented

or hired. The rental payments for operating leases are recognized to the income statement in line with the underlying contracts.

The main operating lease refers to a contract signed by the American subsidiary Allevard Spring U.S.A. Inc. for the lease of the production site situated in Prichard (West Virginia). The contract terminates on December 10 2018 and the remaining instalments total USD 3,249 thousand, of which USD 442 thousand in up to one year. Against this contract Sogefi S.p.A. has issued a guarantee for approximately 50% of the remain-ing lease instalments which is renewed at the end of each year on the basis of the remaining amount. There are no restrictions of any kind connected with this kind of leasing and at the end of the contract the US company will have the right to buy the property at a market price. Future lease payments in relation to the operating lease contracts of the Sogefi group at December 31 2009 are as follows:

(in thousands of euro) 2009 2008

Up to 1 year 4,774 4,480

Over 1 year but up to 5 9,388 11,211

Over 5 years 1,250 1,729

Total 15,412 17,420


Commitments for investments At December 31 2009 there were commitments for investments for a total of € 746 thousand. Guarantees issued The detail of these guarantees is as follows:

(in thousands of euro) 2009 2008

Guarantees in favour of third parties 987 974

Other guarantees in favour of third parties 9,714 9,714

Collateral security provided for debt shown in the balance sheet 1,557 1,587

Guarantees issued refer to borrowings and to guarantees given to certain clients and are recog-nized at the value of the commitment outstanding as of the balance sheet date. The item “Other guarantees in favour of third parties” refers to the commitment of LPDN GmbH towards the employee pension fund of the two business divisions at the time of the acquisition made in 1996. This commitment is covered by contractual obligations on the part of the vendor, a prime German economic operator. Collateral security refers to bonds or privileges granted to lenders against loans obtained for the purchase of assets. Other risks At December 31 2009 the Sogefi group had assets belonging to third parties on the premises of its companies for a value of € 6,302 thousand. Kos group At December 31 2009 guarantees issued amounted to € 13,832 thousand. At December 31 2009 there were commitments for investments for an amount of € 3,907 thou-sand and and loaned equipment for an amount of € 2,030 thousand. 20. INFORMATION ON THE BUSINESS SECTORS The business sectors coincide with the Groups of companies over which CIR S.p.A. has control. These are specifically:

- the Sorgenia group: utilities; - the Espresso group: media; - the Sogefi group: automotive components; - the KOS group: healthcare.

Geographically, with the exception of the Sogefi group, the business is carried out almost exclu-sively in Italy. A chart showing the breakdown of income components and balance sheet information of the pri-mary sector is shown in the Management Report while details regarding revenues by geographical area (secondary sector) are given in the Notes to the Financial Statements in the section regarding revenues (note 12).


The breakdown by geographical area of assets, investments and amortization and write-downs as required by IAS 14 is shown in the following chart. (in thousands of euro) Assets Investments Depreciation/

writedowns Italy 8,609,990 472,932 92,133

Other European countries 1,172,758 41,933 38,318

North America 47,266 2,306 1,148

South America 99,287 5,852 5,205

Asia 23,373 2,840 609

Consolidation adjustments (3,301,824) (3,361) 9,238

Total assets 6,650,850 522,502 146,651

21. JOINTLY CONTROLLED COMPANIES As of December 31 2009 the joint ventures were Tirreno Power and KTP. International accounting standards give two methods for consolidating holdings in joint ventures: . the usual method, which involves pro-rata consolidation; . the alternative method which involves use of the equity method. The Group has adopted the equity method for the sake of consistency with the way the accounts were presented previously. The chart below shows the key financial figures of the company Tirreno Power and of the KTP group: Tirreno Power

(in millions of euro) Financial year Financial year Change in Change 2009 2008 absolute terms % Income statement

Electricity sold (TWh) 14.4 14.8 (0.4) (2.7)

Revenues from sales and services 1,240.9 1,466.8 (225.9) (15.4)

Gross operating margin 261.4 323.0 (61.6) (19.1)

Net income 79.8 99.9 (20.1) (20.1)

31.12.2009 31.12.2008 Change in absolute terms Balance sheet

Net invested capital 1,451.6 1,322.8 128.8

Net financial debt 1,042.0 897.7 144.3

Shareholders’ equity 409.6 425.1 (15.5)

No. of employees 591 617 (26)


The pertinent part of the earnings of Tirreno Power, consolidated using the equity method on the basis of values determined by the application of IAS/IFRS accounting standards, totalled € 39.9 million in 2009, down from € 49.9 million in 2008. KTP

(in millions of euro) 31.12.2009 31.12.2008 Assets - Current 140,900 131,832 - Non-current 441,729 482,303

Total assets 582,629 614,135 Liabilities and equity - Current 559,641 566,791 - Non-current 262,115 267,667

Shareholders’ equity (239,127) (220,263)

Total liabilities and equity 582,629 614,135 Income statement Interest income 33,732 47,425 Commission income 98,493 107,241

Total income 132,225 154,666

Interest expense (43,132) (63,542)

Commission expense (45,470) (58,334)

Operating costs and other (59,665) (100,862)

Taxes (5,087) (5,894)

Total costs (153,354) (228,632)

Net result (21,129) (73,966)

In accordance with the terms of IAS/IFRS international accounting standards, the value of the in-vestments in Tirreno Power and KTP was subjected to an impairment test at December 31 2009.


22. NET FINANCIAL POSITION The net financial position, in accordance with the terms of Consob resolution no. 6064293 of July 28 2006, can be broken down as follows: (in thousands of euro) 31.12.2009 31.12.2008

A. Cash and bank deposits 549,321 616,363

B. Other free cash flow 104,967 217,420

C. Securities held for trading 278,548 513,362

D. Cash and cash equivalents (A) + (B) + (C) 932,836 1,347,145

E. Current financial receivables 27,229 (*) 175,721

F. Current bank borrowings (**) (157,506) (223,754)

G. Bonds and notes issued (731) (347,445)

H. Current part of non-current debt (41,281) (87,963)

I. Other current borrowings (2) (71)

J. Current financial debt (F) + (G) + (H) + (I) (199,520) (659,233)

K. Net current financial position (J) + (E) + (D) 760,545 863,233

L. Non-current bank borrowings (***) (1,676,126) (1,498,298)

M. Bonds and notes issued (718,262) (895,458)

N. Other non-current borrowings (***) (167,233) (155,317)

O. Non-current financial debt (L) + (M) + (N) (2,561,621) (2,549,073)

P. Net financial position (K) + (O) (1,801,076) (1,685,440)

(*) Including € 150,000 thousand (classified in the Balance Sheet in the item “Other receivables”) (**) The amount of € 91,216 thousand (€ 157,506 - € 66,290) is classified in the Balance Sheet in the item “Other borrowings”. (***) Classified under the item “Other borrowings” – Non-current liabilities

23. DISCLOSURES REGARDING SHARE-BASED INCENTIVE PLANS CIR In 2009, the CIR Group revised the phantom stock option plans previously approved. More spe-cifically, extraordinary stock option plans were approved by the companies of the Group affected, reserved for individuals who were already beneficiaries of phantom stock option plans 2007 and 2008, who are still employed by the Group, provided that they give up the rights deriving from the said phantom stock option plans. The chart below shows the incentive plans of the Parent Company of the CIR Group:


STOCK OPTION PLANS OUTSTANDING AT DECEMBER 31 2009

The following chart shows the stock option plans of the Parent Company CIR S.p.A..

No. of Weighted No. of Weighted No. of Weighted No. of Weighted No. of Average Average No.of Weightedoptions average options average options average options average options strike duration options average

strike strike strike strike price (years) strikeprice price price price price

Stock Option Plan March 7 2000 2,631,000 3.70 -- -- -- -- -- -- 2,631,000 3.70 1.75 2,631,000 3.70

Stock Option Plan September 13 2000 29,000 4.06 -- -- -- -- -- -- 29,000 4.06 2.25 29,000 4.06

Stock Option Plan January 30 2001 1,488,000 2.62 -- -- -- -- -- -- 1,488,000 2.62 2.75 1,488,000 2.62

Stock Option Plan September 7 2001 21,400 1.28 -- -- -- -- -- -- 21,400 1.28 3.00 21,400 1.28

Stock Option Plan March 7 2003 2,200 0.84 -- -- 2,200 0.84 -- -- -- -- -- -- --

Stock Option Plan September 5 2003 121,300 1.13 -- -- 8,800 1.13 -- -- 112,500 1.13 4.16 112,500 1.13

Stock Option Plan March 12 2004 411,000 1.60 -- -- 15,400 1.60 -- -- 395,600 1.60 4.75 395,600 1.60

Stock Option Plan September 6 2004 1,540,700 1.56 -- -- 22,000 1.56 -- -- 1,518,700 1.56 6.16 1,518,700 1.56

Stock Option Plan March 11 2005 4,009,800 2.34 -- -- -- -- -- -- 4,009,800 2.34 5.75 4,009,800 2.34

Stock Option Plan September 6 2005 2,705,000 2.49 -- -- -- -- -- -- 2,705,000 2.49 6.17 2,688,300 2.49

Stock Option Plan 2006 1st tranche 2,765,000 2.50 -- -- -- -- -- -- 2,765,000 2.50 7.01 2,302,500 2.50

Stock Option Plan 2006 2nd tranche 2,765,000 2.47 -- -- -- -- -- -- 2,765,000 2.47 7.50 1,970,700 2.47

Extraordinary Stock Option Plan 1st tranche -- -- 3,852,500 3.0877 -- -- -- -- 3,852,500 3.0877 7.75 2,535,150 3.09

Extraordinary Stock Option Plan 2nd tranche -- -- 3,852,500 2.7344 -- -- -- -- 3,852,500 2.7344 8.25 2,072,850 2.73

Extraordinary Stock Option Plan 3rd tranche -- -- 3,935,000 1.6806 -- -- -- -- 3,935,000 1.6806 8.75 1,645,200 1.66

Extraordinary Stock Option Plan 4th tranche -- -- 3,935,000 1.0718 534,500 1.0718 -- -- 3,400,500 1.0718 9.25 638,500 1.07

Stock Option Plan 2009 1st tranche -- -- 4,090,000 0.9907 359,100 0.9907 -- -- 3,730,900 0.9907 9.75 377,100 0.99

Stock Option Plan 2009 2nd tranche -- -- 3,890,000 1.5449 -- -- -- -- 3,890,000 1.5449 10.17 -- --

Total 18,489,400 2.5333 23,555,000 1.8392 942,000 1.0609 -- -- 41,102,400 2.1693 7.25 24,436,300 2.4933

SHARES HELD

Stock Option Plan January 11 2005 11,050,000 2.15 -- -- -- -- -- -- 11,050,000 2.15 0.33 11,050,000 2.15

Total 11,050,000 2.15 -- -- -- -- -- -- 11,050,000 2.15 0.33 11,050,000 2.15

Grand total 29,539,400 2.3899 23,555,000 1.8392 942,000 1.0609 -- -- 52,152,400 2.1652 5.79 35,486,300 2.3864

No. of Weighted No. of Weighted No. of Weighted No. of Weighted No. of Average Average No. of Weightedoptions average options average options average options average options strike duration Options average

strike strike strike strike price (years) strikeprice price price price price

Phantom 2007 - 1st tranche 3,052,500 3.0877 -- -- -- -- 3,052,500 3.0877 -- -- -- -- --

Phantom 2007 - 2nd tranche 3,052,500 2.7344 -- -- -- -- 3,052,500 2.7344 -- -- -- -- --

Phantom 2008 - 1st tranche 3,125,000 1.6806 -- -- -- -- 3,125,000 1.6806 -- -- -- -- --

Phantom 2008 - 2nd tranche 3,125,000 1.0718 -- -- -- -- 3,125,000 1.0718 -- -- -- -- --

Total 12,355,000 2.1348 -- -- -- -- 12,355,000 2.1348 -- -- -- -- --

during the yearOptions converted

Options converted

Options awardedduring the year

Options in circulationat start of year

Options exercised

during the yearOptions exercised

during the yearOptions awardedOptions in circulation

at start of year during the year

Options in circulationat end of yearduring the year

Options in circulationat end of year

Options exercisableat end of year

Options exercisableat end of year

SORGENIA The following charts show the incentive plans of the Sorgenia group: Stock Option Plans

Stock options exercised as of December 31 2008

Stock options exercised in 2009

Stock options exercised as of December 31 2009

Stock Option Plans Stock options assigned

December 22 1999 16,900,000 16,848,000 -- 52,000 June 27 2000 1,300,000 1,300,000 -- -- September 6 2000 18,070,000 18,070,000 -- -- October 24 2000 2,964,000 2,756,000 -- 208,000 November 28 2000 2,496,000 2,496,000 -- -- September 28 2001 2,004,000 1,714,000 -- 290,000 March 11 2002 1,785,000 1,718,000 67,000 -- April 15 2003 9,215,000 7,135,000 300,000 1,780,000 February 25 2005 8,236,300 408,000 -- 7,828,300 July 29 2005 22,120,565 -- -- 22,120,565 October 24 2005 200,000 -- -- 200,000 April 18 2006 9,515,300 228,000 -- 9,287,300

2009-2012 I Tranche 21,723,005 -- 305,064 21,417,941

2009-2012 II Tranche 15,122,800 -- 16,800 15,106,000

May 18 2009 15,300,000 -- -- 15,300,000

Total 146,951,970 52,673,000 688,864 93,590,106 In the period January 1 – December 31 2009 688,864 options were exercised. ESPRESSO The following chart shows the Stock Option Plans of the Espresso group:


STOCK OPTION PLANS FOR EMPLOYEES AT DECEMBER 31 2009

No. of options Weighted average strike

price


price


price


price

Average market price on exercise date


price

No. of options Average strike price

Average duration (years)


price

Stock Option Plan 2000 1,285,000 25.60 140,000 25.60 1,145,000 25.60 0.75 1,145,000 25.60

Stock Option Plan April 24 2001 577,500 6.25 97,500 6.25 480,000 6.25 1.75 480,000 6.25

Stock Option Plan October 24 2001 113,200 2.51 12,600 2.51 100,600 2.51 2.25 100,600 2.51

Stock Option Plan March 6 2002 307,125 3.30 48,925 3.30 258,200 3.30 2.75 258,200 3.30

Stock Option Plan July 24 2002 368,050 3.36 79,100 3.36 288,950 3.36 3.00 288,950 3.36

Stock Option Plan February 26 2003 435,725 2.86 43,225 2.86 392,500 2.86 3.75 392,500 2.86

Stock Option Plan July 23 2003 599,450 3.54 97,900 3.54 501,550 3.54 4.00 501,550 3.54

Stock Option Plan February 25 2004 1,218,500 4.95 171,000 4.95 1,047,500 4.95 4.75 1,047,500 4.95

Stock Option Plan July 28 2004 1,225,500 4.80 168,000 4.80 1,057,500 4.80 5.00 1,057,500 4.80

Stock Option Plan February 23 2005 1,247,900 4.75 115,800 4.75 1,132,100 4.75 5.75 1,132,100 4.75

Stock Option Plan July 27 2005 1,265,700 4.65 110,800 4.65 1,154,900 4.65 6.00 1,154,900 4.65

Stock Option Plan 2006 - I tranche 1,271,200 4.33 91,400 4.33 1,179,800 4.33 7.00 999,000 4.33

Stock Option Plan 2006 - II tranche 1,253,200 3.96 81,800 3.96 1,171,400 3.96 7.50 855,000 3.96

Ord. Stock Option Plan 2009 - I tranche 1,520,000 3.84 24,400 3.84 1,495,600 3.84 7.75 997,500 3.84

Ord. Stock Option Plan 2009 - II tranche 1,520,000 3.60 31,000 3.60 1,489,000 3.60 8.25 815,100 3.60

Ord. Stock Option Plan 2009 - III tranche 1,790,000 2.22 37,600 2.22 1,752,400 2.22 8.75 746,100 2.22

Ord. Stock Option Plan 2009 - IV tranche 1,840,000 1.37 85,200 1.37 201,300 1.37 1,553,500 1.37 9.25 339,000 1.37

Extraord. Stock Option Plan 2009 - I tranche 2,500,000 1.00 158,500 1.00 2,341,500 1.00 9.75 291,500 1.00

Extraord. Stock Option Plan 2009 - II tranche 2,500,000 1.86 2,500,000 1.86 10.25

Total 11,168,050 6.86 11,670,000 2.14 1,436,250 6.24 359,800 1.21 21,042,000 4.38 7.12 12,602,000 5.97

Options cancelled during the year Options exercised during the year Options which expired

during the year Options in circulation at end of year Options exercisable at end of year

Options in circulation at start of year

Options awarded during the year

SOGEFI Below is information on the stock option and phantom stock option plans outstanding in the Sogefi group: In 2009 the Board of Directors approved the following stock option plans: • Stock Option Plan 2009 for executives of the Company and its subsidiaries for a maximum of 2,335,000 shares (2.01% of share capital at December 31 2009) with a subscription price of 1.0371, exercisable between September 30 2009 and September 30 2019; • Extraordinary Stock Option Plan 2009 for people who were already beneficiaries of Phantom Stock Option Plans 2007 and 2008, who are still employed by the Company and its subsidiaries, provided that they give up the their rights under the above-mentioned phantom stock option plans. Extraordinary Stock Option Plan 2009 involves the award, at the same conditions as the options being replaced, of 1,015,000 options (corresponding to a maximum of 1,015,000 shares equal to 0.87% of share capital at December 31 2009), of which 475,000 (First Tranche options) replacing the options of Phantom Stock Option Plan 2007 and 540,000 (Second Tranche Options) in re-placement of the options of Phantom Stock Option Plan 2008. The First Tranche options are exer-cisable until September 30 2017; the Second Tranche options are exercisable until September 30 2018. Apart from what is indicated above and what is shown in the following paragraph “Phantom Stock Option Plans”, the Group did not effect any other transaction involving the purchase of goods or services with share-based payments or any other equity instrument and thus it is not necessary to give the fair value of such goods or services. According to the terms of accounting standard IFRS 2 only plans awarded after November 7 2002 should be considered (it should be pointed out that the Company has no plans put in place before that date) which therefore means that, as well as those issued in 2009, the plans issued in 2004, 2005, 2006, 2007 and 2008 should also be considered. The main features of these plans are given below: • Stock Option Plan 2004 for a maximum of 1,880,000 ordinary shares (1.62% of share capital at December 31 2009) at € 2.64 per share and exercisable at the end of each four-month period from September 30 2004 to September 30 2014; • Stock Option Plan 2005 reserved for executives of the Company and its subsidiaries for a maxi-mum of 1,930,000 shares (1.66% of share capital at December 31 2009) with strike price of € 3.87 and exercisable from September 30 2005 to September 30 2015; • Extraordinary Stock Option Plan 2005 reserved for employees of the Group with over 10 years’ service at December 31 2004 for a maximum of 1,445,000 share (1.24% of share capital at De-cember 31 2009) with a strike price of € 4.50 and exercisable from October 1 to December 7 2008 and from May 1 to July 7 2009; • Stock Option Plan 2006 reserved for executives of the Company and its subsidiaries for a maxi-mum of 1,770,000 shares (1.52% of share capital at December 31 2009) with a strike price of € 5.87, exercisable from September 30 2006 to September 30 2016; • Stock Option Plan 2007 reserved for executives of the foreign subsidiaries for a maximum of 715,000 shares (0.62% of share capital at December 31 2009) with an initial strike price of € 6.96, exercisable from September 30 2007 to September 30 2017. On April 22 2008 the Board of Direc-tors, on the basis of the powers delegated by the Shareholders’ Meeting, adjusted the strike price from € 6.96 to € 5.78 in order to take into account the extraordinary part of the dividend distrib-uted by the Shareholders’ at the AGM held on that date;


• Stock Option Plan 2008 reserved for executives of the foreign subsidiaries for a maximum of 875,000 shares (0.75% of share capital at December 31 2009) with a strike price of € 2.1045, ex-ercisable from September 30 2008 to September 30 2018. The following chart shows the total number of options outstanding in relation to the plans for the period 2004-2009 and their average strike prices: 2009 2008 Investments Average strike

price Investments Average strike

price Not exercised/not exercisable at the beginning of the year 3,947,600 4.55 4,835,800 4.82 Granted in the year 3,350,000 1.90 875,000 2.10 Cancelled in the year (778,200) 4.58 (376,000) 4.87 Exercised in the year -- -- (1,387,200) 3.30 Not exercised/not exercisable at the end of the year 6,509,400 3.18 3,947,600 4.55 Exercisable at the end of the year 2,884,300 4.48 1,953,400 4.92

The line “Non exercised/not exercisable at the end of the year” refers to the total amount of the options net of those exercised or cancelled during the period or in previous periods. The line “Exercisable at the end of the year” refers to the total amount of the options vested at the close of the year and not yet subscribed. The chart below shows the breakdown of the number of options exercisable at December 31 2009:

Plans 2004 - 2009

No. of options remaining and exercisable at December 31 2008 1,953,400

Options which vested in the year 1,919,500

Options exercised in the year --

Options cancelled in the year (988,600)

No. of options remaining and exercisable at December 31 2009 2,884,300

Phantom Stock Option Plans Phantom stock options, unlike traditional stock option plans, do not grant the right to subscribe or purchase a share but involve payment to the beneficiaries of an extraordinary cash bonus that is variable and is equal to the difference between the value of a Sogefi share in the exercise period of the option and the value of the Sogefi share at the option award date. As described in the paragraph “Stock Option Plans”, in 2009 the Parent company gave the benefi-ciaries of Phantom stock option plans 2007 and 2008 the right to renounce the options of the afo-resaid plans and take part in Extraordinary Stock Option Plan 2009. Below are the main features of the plans outstanding: • Phantom Stock Option Plan 2007 reserved for the Chief Executive, executives and staff of the Parent Company, as well as executives of the Italian subsidiaries, for a maximum of 1,760,000 options with an initial award value of € 7.0854 adjusted during the year 2008 to € 5.9054, exercis-able from September 30 2007 to September 30 2017. Following the reorganization of the plan as described above, 475,000 options were given up;


• Phantom Stock Option Plan 2008 reserved for the Chief Executive and executives of the Parent Company, as well as executives of the Italian subsidiaries, for a maximum of 1,700,000 options with an award value of € 2.1045, exercisable from September 30 2008 and September 30 2018. Following the reorganization of the plan as described above, 540,000 options were given up. The chart below shows the breakdown of the number of stock options at December 31 2009: 2009 Not exercised/not exercisable at the start of the year 2,966,800 Awarded during the year -- Cancelled during the year (1,136,800) Exercised during the year -- Not exercised/not exercisable at the end of the year 1,830,000 Exercisable at the end of the year 970,200

KOS Below is information on the Stock Option Plans outstanding in the KOS group:


STOCK OPTION PLANS AT DECEMBER 31 2009

No. of Weighted No. of Weighted No. of Weighted No. of Weighted No. of Average Average No. of Weighted Vesting Expiryoptions average options average options average options average options strike duration options average date date

strike strike strike strike price (years) strike (100%)price price price price price

Stock Option Plan '02 2,400 4.925 -- -- -- -- -- -- 2,400 4.925 3.25 2,400 4.925 31/12/2006 31/03/2013



Investment and Stock Option Plan '05 88,406 17.0 -- -- -- -- -- -- 88,406 17.0 5.75 88,406 17.0 30/06/2009 30/09/2015

Stock Option Plan '06 132,020 22.0 -- -- -- -- 13,340 22.0 118,680 22.0 6.75 111,780 22.0 30/06/2010 30/09/2016

Investment and Stock Option Plan '06 7,884 22.0 -- -- -- -- -- -- 7,884 22.0 6.75 7,096 22.0 30/06/2010 30/09/2016

Stock Option Plan June '06 196,700 22.0 -- -- -- -- 30,480 22.0 166,220 22.0 7.25 142,680 22.0 31/12/2010 31/03/2017

Stock Option Plan '07 74,000 34.0 -- -- -- -- 13,000 34.0 61,000 34.0 10.76 -- 34.0 30/09/2010 30/09/2020

Total 804,342 19.68 -- -- -- -- 56,820 24.7 747,522 19.292 6.53 655,294 17.8

Optionmaturitiesat start of year during the year

Options terminatedduring the yearduring the year at end of year at end of year

Options exercisable Options exercised Options in circulationOptions in circulation Options awarded

24. LEGAL DISPUTES It should be remembered that certain companies of the Group have legal proceedings outstanding against which their respective Boards have set aside risk provisions for amounts considered to be appropriate, taking into account the opinion of their consultants and based on the degree of likeli-hood that significant liabilities will actually occur. With reference to disputes in CIR’s favour, it should be mentioned that on October 3 2009 the Mi-lan Law Court isused a first degree ruling which upheld CIR’s right to compensation from Finin-vest for patrimonial damages in the so-called “lodo Mondadori” case, for an amount of approxi-mately € 750 million. Following this ruling, Fininvest delivered to CIR a guarantee at the first re-quest for an amount of 806 million euro issued by a prime bank should it be sentenced to pay the amount by the Court of Appeal. 25. COMPANY ACQUISITIONS During 2009 the Kos group made the following acquisitions: • Acquisition of 100% of the shares of the company Iniziative Territoriali Integrate S.r.l. (I.T.I.)

for a total price of approximately € 436 thousand which involved recognition of a difference betwween the price paid and the fair vallue of the assets acquired of € 393 thousand, which was allocated to goodwill;

• Acquisition by the company Istituti di Riabilitazione Santo Stefano S.r.l. of the “Residenza Dorica” business arm for a price of approximately € 966 thousand which involved the recog-nition of a difference between the price paid and the fair value of the assets acquired of € 1,002 thousand, which was allocated to goodwill. Acquisition of up to 80% control of the company Jesilab S.r.l. (previously valued at cost) for € 64 thousand. Liquidation of the com-pany Cyber Therapy S.r.l..

The companies and business arms acquired were included in the consolidated accounts as from the date on which the risks and benefits of ownership were transferred to the group. This generally coincides with the acquisition date. The revenue impact of these acquisitions amounted to € 2,438 thousand. The total effect on the assets and liabilities of the group and on the net financial position of these acquisitions can be summed up in the following chart:

(euro/’000) 31.12.2009

Fixed assets 842

Working capital (62)

Net non-current assets / (liabilities) 129

Financial assets 2

Borrowings (523)

Cash and cash equivalents (378)

Goodwill 1,544

Acquisition price 1,553


26. OTHER INFORMATION FEES FOR AUDIT AND AUDIT-RELATED SERVICES (Consob Resolution no. 11971/99) As required by CONSOB Resolution no. 11971/99, the following chart shows the fees charged for services provided by the independent auditors, Deloitte & Touche S.p.A. and by other entities be-longing to the same network:

(in thousands of euro) 2009

Fees charged to the Parent Company of the Group:

a) by the firm of auditors, for auditing services 130

b) by the firm of auditors:

- for auditing services for the purposes of certification 2

- for other services 3

c) by entities belonging to the network of the firm of auditors, for providing other services --

Fees charged to the subsidiaries:

a) by the firm of auditors, for auditing services 1,339

b) by the firm of auditors:

- for auditing services for the purposes of certification 203

- for other services 66

c) by entities belonging to the network of the firm of auditors, for providing other services 54


27. CHART SHOWING THE KEY FIGURES OF THE FINANCIAL STATEMENTS FOR 2008 OF THE PARENT COMPANY COFIDE S.p.A.(Art. 2497-bis paragraph 4 Civil Code)

BALANCE SHEET (in euro)

ASSETS 31.12.2008

NON-CURRENT ASSETS 580.814.405

CURRENT ASSETS 133.454.484

TOTAL ASSETS 714.268.889

LIABILITIES AND SHAREHOLDERS’ EQUITY 31.12.2008

SHAREHOLDERS’ EQUITY 561.087.376

NON-CURRENT LIABILITIES 151.142.351

CURRENT LIABILITIES 2.039.162

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY 714.268.889 INCOME STATEMENT (in euro)

%(**) 2008 SUNDRY REVENUES AND INCOME 2,158,394 of which from related parties (*) 2,118,695 98.2 COSTS FOR PURCHASE OF GOODS (69,097) COSTS FOR SERVICES (3,222,102) of which from related parties (*) (657,600) 20.4 PERSONNEL COSTS (1,132,549) OTHER OPERATING COSTS (609,133) AMORTIZATION, DEPRECIATION AND WRITE-DOWNS (94,102)

OPERATING RESULT (2,968,589) FINANCIAL INCOME 3,588,930 of which from related parties (*) 2,066,134 67.6 FINANCIAL EXPENSE (9,100,133) DIVIDENDS 21,810,291 of which from related parties (*) 19,611,331 89.9 GAINS FROM TRADING SECURITIES 834,489 LOSSES FROM TRADING SECURITIES (22) ADJUSTMENTS TO THE VALUE OF FINANCIAL ASSETS 1.769,212 INCOME / LOSS BEFORE TAXES 15,934,178 INCOME TAXES 291,872 NET INCOME (LOSS) FOR THE YEAR 16,226,050

(*) As per Consob resolution no. 6064293 of July 28 2006 (**) Percentage of the whole The financial highlights of the parent company COFIDE S.p.A. are shown in the chart above, which is required by article 2497-bis of the Civil Code. The figures were extrapolated from the financial statements of that company for the year ended December 31 2008. For a correct and full understanding of the equity and financial situation of COFIDE S.p.A. at December 31 2008, and of the results the company obtained in the year ended as of that date, we would refer readers to the financial statements in question which of course include the Report of the Statutory Auditors and that of the Independent Auditors and are available at the Company offices or from Borsa Italiana.


CIR Group

Consolidated Financial Statements of Directly Controlled Subsidiaries as of December 31 2009

SORGENIA GROUP

ESPRESSO GROUP

SOGEFI GROUP

KOS GROUP

131

SORGENIA GROUP

STATEMENT OF FINANCIAL POSITION(in euro)

ASSETS 31.12.2009 31.12.2008

NON-CURRENT ASSETSIntangible assets 213,653,830 192,928,949 Tangible assets 1,573,078,168 1,162,866,915 Investments in companies valued at equity 247,307,789 253,925,737 Other equity investments 1,091,000 588,500 Non-current financial assets 19,444,127 15,803,900 Other non-current assets 40,223,718 53,050,551 Deferred tax assets 99,356,389 37,879,976

TOTAL NON-CURRENT ASSETS 2,194,155,021 1,717,044,528

CURRENT ASSETSInventories 48,225,770 53,975,196 Current trade assets 612,332,051 707,482,327 Current financial assets 9,470,294 1,513,028 Other current assets 108,277,572 108,581,493 Cash and cash equivalents 62,365,567 235,279,246

TOTAL CURRENT ASSETS 840,671,254 1,106,831,290

TOTAL ASSETS 3,034,826,275 2,823,875,818


SHAREHOLDERS' EQUITYShare capital 9,080,053 8,738,843 Other reserves, Capital & minority reserve 724,532,639 564,274,099 Retained earnings/losses of group 230,084,910 174,046,198 Dividend payments on account (10,029,250) (8,596,500)Net income/loss for year of the group, Net income/loss for year Minority interests 80,149,488 79,477,986

TOTAL EQUITY 1,033,817,840 817,940,626 of which:GROUP EQUITY 954,608,166 746,948,416 MINORITY SHAREHOLDERS' EQUITY 79,209,674 70,992,210

NON-CURRENT LIABILITIESNon-current bonds 2,069,858 578,339 Non-current financial liabilities 1,365,394,330 1,124,163,504 Non-current trade liabilities 634,220 -- Other non-current liabilities 36,000 2,842,331 Deferred taxes 31,639,335 30,978,608 Personnel provisions 1,985,562 1,762,258 Non-current provisions for risks & losses 15,965,699 17,294,204

TOTAL NON-CURRENT LIABILITIES 1,417,725,004 1,177,619,244

CURRENT LIABILITIESCurrent financial liabilities 50,664,409 133,693,225 Current bonds 730,844 2,872,841 Current trade liabilities 489,186,046 591,182,094 Other current liabilities 31,571,200 91,186,194 Current provisions for risks and losses 11,130,931 9,381,594

TOTAL CURRENT LIABILITIES 583,283,430 828,315,948

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 3,034,826,274 2,823,875,818

SORGENIA GROUP

INCOME STATEMENT(in euro)

2009 2008

TRADE REVENUES 2,325,825,476 2,431,967,510

Inventories (10,599,759) 7,745,585

Costs for the purchase of goods (2,036,435,897) (2,175,893,753)

Costs for services (136,912,133) (119,493,042)

Personnel costs (38,845,916) (33,570,754)

Other operating income 57,651,886 74,613,113

Other operating costs (82,328,251) (45,246,844)

Adjustments to value of investments consolidated at equity 39,462,031 49,556,502

Amortization, depreciation & writedowns of intangible & tangible assets (46,896,929) (35,009,216)

OPERATING INCOME 70,920,508 154,669,101

Financial income 10,954,016 9,165,348

Financial expense (48,921,874) (52,829,151)

Dividends 22,000 36,000

Adjustments to value of financial assets 13,718 (352,859)

INCOME (LOSS) BEFORE TAXES FROMOPERATING ACTIVITY 32,988,368 110,688,439

Income taxes 47,161,120 (31,210,453)

NET INCOME (LOSS) AFTER TAXES FROMOPERATING ACTIVITY 80,149,488 79,477,986

Income (Loss) from discontinued businesses -- --

NET INCOME (LOSS) FOR THE YEAR 80,149,488 79,477,986

of which:

- NET INCOME/LOSS OF THE GROUP 66,850,378 66,671,488

- NET INCOME/LOSS OF MINORITY INTERESTS 13,299,110 12,806,498

ESPRESSO GROUP

STATEMENT OF FINANCIAL POSITION(in thousands of euro)

ASSETS 31.12.2009 31.12.2008

Intangible assets with an indefinite useful life 656,419 656,093 Other intangible assets 3,119 4,311 Intangible assets 659,538 660,404

Tangible assets 203,617 220,980 Investments consolidated at equity 28,334 27,750 Other equity investments 2,486 2,568 Non-current receivables 1,272 1,486 Deferred tax assets 48,561 47,633

NON-CURRENT ASSETS 943,808 960,821

Inventories 23,243 27,703 Trade receivables 229,945 258,309 Securities 25,179 50 Tax receivables 20,630 20,848 Other receivables 17,368 23,507 Cash & cash equivalents 135,012 120,693

CURRENT ASSETS 451,377 451,110

TOTAL ASSETS 1,395,185 1,411,931


Share capital 61,439 61,385 Reserves 217,096 245,853 Retained earnings (losses) 201,245 150,583 Net income (loss) for the year 5,825 20,624

Shareholders' equity of the Group 485,605 478,445

Minority Shareholders' equity 9,824 10,813

SHAREHOLDERS' EQUITY 495,429 489,258

Borrowings 348,582 379,768 Provisions for risks and losses 40,407 24,123 TFR and other personnel provisions 83,907 90,946 Deferred tax liabilities 110,999 108,032

NON-CURRENT LIABILITIES 583,895 602,869

Borrowings 19,804 19,923 Provisions for risks and losses 48,844 34,739 Trade payables 147,553 147,595 Tax payables 12,735 19,263 Other payables 86,925 98,284

CURRENT LIABILITIES 315,861 319,804

TOTAL LIABILITIES 899,756 922,673


ESPRESSO GROUP

INCOME STATEMENT(in thousands of euro)

2009 2008

Revenues 886,649 1,025,548

Change in product inventories (771) (2,618)

Other operating income 19,829 17,689

Costs for purchases (120,165) (150,075)

Costs for services (340,818) (388,008)

Other operating costs (23,056) (30,453)

Valuation of investments consolidated at equity 1,013 1,145

Personnel costs (316,018) (330,701)

Amortization, depreciation and writedowns (42,728) (47,205)

Operating result 63,935 95,322

Net financial income/(expense) (19,621) (19,606)

Result before taxes 44,314 75,716

Taxes (38,826) (54,489)

NET RESULT 5,488 21,227

Result pertaining to Minority Shareholders 337 (603)Result pertaining to the Group 5,825 20,624

Basic earnings per share 0.015 0.051

Diluted earnings per share 0.014 0.049

SOGEFI GROUP


ASSETS 31.12.2009 31.12.2008

CURRENT ASSETSCash and cash equivalents 111,583 49,456 Other financial assets 46 841 Working capitalInventories 85,915 114,492 Trade receivables 126,549 169,973 Other receivables 5,545 19,019 Tax receivables 9,911 14,934 Other assets 3,055 3,801 TOTAL WORKING CAPITAL 230,975 322,219

TOTAL CURRENT ASSETS 342,604 372,516 NON-CURRENT ASSETSFIXED ASSETS

Land 14,175 13,929 Buildings, plant and machinery 211,623 218,069 Other tangible assets 5,731 4,583 of which finance leases 13,723 11,779 Intangible assets 131,372 127,255

TOTAL FIXED ASSETS 362,901 363,836 OTHER NON-CURRENT ASSETS

Investments in associated companies 101 101 Other available-for-sale financial assets 472 464 Financial receivables 68 -- Other receivables 9,029 8,772 Deferred tax assets 35,001 26,688

TOTAL OTHER NON-CURRENT ASSETS 44,671 36,025 TOTAL NON-CURRENT ASSETS 407,572 399,861 NON-CURRENT ASSETS HELD FOR SALE 700 653 TOTAL ASSETS 750,876 773,030


CURRENT LIABILITIESCurrent bank borrowings 4,327 19,750 Current part of long-term debt and other borrowings 67,378 35,733 of which finance leases 1,679 1,385 TOTAL SHORT-TERM BORROWINGS 71,705 55,483 Other short-term financial liabilities - derivatives 1,023 473 TOTAL SHORT-TERM BORROWINGS AND DERIVATIVES 72,728 55,956 Trade payables and other payables 199,818 204,094 Tax payables 2,727 4,181 Other current liabilities 1,971 1,770

TOTAL CURRENT LIABILITIES 277,244 266,001 NON-CURRENT LIABILITIESMEDIUM-LONG TERM BORROWINGS AND DERIVATIVES

Bank borrowings 196,169 238,612 Other medium-long term borrowings 10,902 10,723 of which finance leases 8,034 7,206 TOTAL MEDIUM-LONG TERM BORROWINGS 207,071 249,335 Other medium-long term financial liabilities - derivatives 2,124 2,263

TOTAL MEDIUM-LONG TERM BORROWINGS AND DERIVATIVES 209,195 251,598 OTHER LONG-TERM LIABILITIES

Long-term provisions 51,033 48,883 Other payables 382 384 Deferred taxes 30,847 27,849

TOTAL OTHER LONG-TERM LIABILITIES 82,262 77,116 TOTAL NON-CURRENT LIABILITIES 291,457 328,714 SHAREHOLDERS' EQUITY

Share capital 60,397 60,397 Reserves and retained earnings (losses) 114,053 72,013 Net income (loss) for the year of the group (7,639) 28,495

TOTAL EQUITY ATTRIBUTABLE TO SHAREHOLDERS OF PARENT COMPANY 166,811 160,905 Minority interests 15,364 17,410

TOTAL SHAREHOLDERS' EQUITY 182,175 178,315 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 750,876 773,030

SOGEFI GROUP


2009 2008

Sales revenues 780,987 1,017,458

Variable costs of production 529,832 681,673

CONTRIBUTION MARGIN 251,155 335,785

Fixed production, research and development costs 90,370 107,299

Amortization and depreciation 42,150 42,484

Fixed sales and distribution costs 31,059 35,935

Administrative and general overheads 53,891 62,430

OPERATING INCOME 33,685 87,637

Restructuring costs 17,162 11,473

Capital losses (gains) on disposals 1,222 (15)

Foreign currency (gains) losses 781 2,238

Other non-operating expense (income) 9,445 11,502

- of which non-recurring (11) 1,020

EBIT 5,075 62,439

Net financial expense (income) 10,783 13,988

Losses (income) from equity investments (75) 218

INCOME BEFORE TAXES AND MINORITY INTERESTS (5,633) 48,233

Income taxes 700 16,793

NET INCOME BEFORE MINORITY INTERESTS (6,333) 31,440

(1,306) (2,945)

NET INCOME OF THE GROUP (7,639) 28,495

Earnings per share (Euro):

Basic (0.067) 0.250

Diluted (0.067) 0.250

KOS GROUP


ASSETS 31.12.2009 31.12.2008

NON-CURRENT ASSETS 309,328 297,379 INTANGIBLE ASSETS 122,494 120,371 TANGIBLE ASSETS 175,898 166,237 OTHER EQUITY INVESTMENTS 5,413 5,883 TRADE RECEIVABLES -- 130 OTHER RECEIVABLES 441 192 SECURITIES 150 153 DEFERRED TAXES 4,932 4,413

CURRENT ASSETS 111,370 110,972 INVENTORIES 1,885 1,732 RECEIVABLES - PARENT COMPANY 1,578 1,299 TRADE RECEIVABLES 80,762 80,631 OTHER RECEIVABLES 10,749 7,930 FINANCIAL RECEIVABLES 318 -- CASH AND CASH EQUIVALENTS 16,078 19,380

NON-CURRENT ASSETS HELD FOR DISPOSAL -- --

TOTAL ASSETS 420,698 408,351


SHAREHOLDERS' EQUITY 139,730 140,698 SHARE CAPITAL 6,480 6,480 RESERVES 143,804 144,324 RETAINED EARNINGS (LOSSES) (12,723) (12,286)

SHAREHOLDERS' EQUITY OF THE GROUP 137,561 138,518

MINORITY SHAREHOLDERS' EQUITY 2,169 2,180

NON-CURRENT LIABILITIES 156,311 149,131 OTHER BORROWINGS 129,306 122,672 TRADE PAYABLES 69 69 OTHER PAYABLES 56 38 DEFERRED TAXES 7,678 8,015 PERSONNEL PROVISIONS 17,477 17,939 PROVISIONS FOR RISKS AND LOSSES 1,725 398

CURRENT LIABILITIES 124,657 118,522 BANK OVERDRAFTS 28,128 26,332 PAYABLES - PARENT COMPANY 1,924 1,072 OTHER BORROWINGS 22,499 19,473 TRADE PAYABLES 42,991 42,383 OTHER PAYABLES 23,038 23,037 PROVISIONS FOR RISKS AND LOSSES 6,077 6,225

LIABILITIES DIRECTLY ASSOCIATED WITH NON-CURRENT ASSETS HELD FOR DISPOSAL -- --

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 420,698 408,351

KOS GROUP


2009 2008

SALES REVENUES 273,404 246,345

CHANGE IN INVENTORIES -- --

COSTS FOR PURCHASE OF GOODS (19,621) (17,660)

COSTS FOR SERVICES (107,637) (105,083)

PERSONNEL COSTS (103,973) (87,527)

OTHER OPERATING INCOME 2,413 4,564

OTHER OPERATING COSTS (11,560) (11,889)

ADJUSTMENTS TO THE VALUE OF INVESTMENTSVALUED AT EQUITY -- --

AMORTIZATION, DEPRECIATION & WRITEDOWNS (16,505) (14,083)

OPERATING INCOME (EBIT) 16,521 14,667

FINANCIAL INCOME 512 928

FINANCIAL EXPENSE (8,789) (11,277)

DIVIDENDS 301 --

GAINS FROM TRADING SECURITIES -- --

LOSSES FROM TRADING SECURITIES -- --

ADJUSTMENTS TO THE VALUE OF FINANCIAL ASSETS (331) --

INCOME/(LOSS) BEFORE TAXES 8,214 4,318

INCOME TAXES (8,210) (5,507)

INCOME/(LOSS) FROM DISCONTINUED OPERATIONSAND ASSETS HELD FOR DISPOSAL -- --

NET INCOME/(LOSS) FOR THE PERIOD INCLUDING MINORITY INTERESTS 4 (1,189)

- NET INCOME/LOSS OF MINORITY SHAREHOLDERS 358 292

- NET INCOME/LOSS OF THE GROUP (354) (1,481)

CERTIFICATION OF THE CONSOLIDATED FINANCIAL STATEMENTS IN ACCORDANCE WITH ART. 154 BIS OF D.LGS 58/98

1. The undersigned Rodolfo De Benedetti, as Chief Executive Officer, and Alberto Piaser, as Officer responsible for the preparation of the accounting and corporate documents of CIR S.p.A., do hereby certify, taking into account even the terms of Art. 154-bis, paragraphs 3 and 4, of Legislative Decree no. 58 of February 24 1998:

- that the administrative and accounting procedures for the preparation of the Financial State-

ments during financial year 2009 were adequate in relation to the size and nature of the business and

- that they were effectively applied 2. On this subject no aspects emerged that needed to be notified. 3. It is also certified that the Consolidated Financial Statements:

- Were prepared in conformity with the international accounting standards recognized by the European Union according to the terms of Regulation (EC) No. 1606/2002 of the European Parliament and of the Council, of July 19 2002;

- Correspond to the results of the books and the general ledger; - Are suitable to give a true and fair representation of the equity, economic and financial posi-

tion of the issuer and of all the companies included in the consolidation. The Report on Operations includes a reliable analysis of performance and of the result of operations as well as the position of the issuer and of all the companies included in the consolidation, together with a description of the principal risks and uncertainties to which they are exposed. Milan, April 2 2010 Signed by Signed by Rodolfo De Benedetti Alberto Piaser Chief Executive Officer Officer Responsible

141

CIR S.p.A.

Financial Statements as of December 31 2009

STATEMENT OF FINANCIAL POSITION

INCOME STATEMENT

STATEMENT OF COMPREHENSIVE INCOME

STATEMENT OF CASH FLOW

STATEMENT OF CHANGES IN EQUITY

EXPLANATORY NOTES

CIR S.p.A. 143

1. STATEMENT OF FINANCIAL POSITION

(in euro)

ASSETS Notes %(**) 31.12.2009 %(**) 31.12.2008

NON-CURRENT ASSETS 1,012,090,877 1,041,152,254

INTANGIBLE ASSETS (4.a) 213,639 191,477

TANGIBLE ASSETS (4.b) 3,018,487 3,176,710

INVESTMENT PROPERTY (4.c) 18,114,599 18,686,421

EQUITY INVESTMENTS (4.d) 856,680,271 1,017,990,864

SUNDRY RECEIVABLES (4.e) 133,296,990 24,200

of which with related parties (*) 133,272,790 100.0 -- --

DEFERRED TAXES (4.f) 766,891 1,082,582

CURRENT ASSETS 307,202,505 293,334,311

SUNDRY RECEIVABLES (5.a) 31,587,092 54,469,830 of which with related parties (*) (5.a) 1,155,601 3.7 -- 7,827,661 14.4

FINANCIAL RECEIVABLES (5.b) 1,418,000 --

SECURITIES (5.c) 101,584,046 226,547,842

CASH AND CASH EQUIVALENTS (5.d) 172,613,367 12,316,639

TOTAL ASSETS 1,319,293,382 1,334,486,565

LIABILITIES AND SHAREHOLDERS' EQUITY %(**) 31.12.2009 %(**) 31.12.2008

SHAREHOLDERS' EQUITY 978,905,531 974,501,436

ISSUED CAPITAL 396,058,634 395,587,634

less OWN SHARES (21,537,000) (21,487,000)

SHARE CAPITAL (6.a) 374,521,634 374,100,634

RESERVES (6.b) 352,032,278 345,985,148

RETAINED EARNINGS / (LOSSES) (6.c) 254,341,399 221,164,387

NET INCOME (LOSS) FOR THE YEAR (1,989,780) 33,251,267

NON-CURRENT LIABILITIES 297,733,880 298,631,544

BONDS AND NOTES (7.a) 296,168,462 295,982,153

PERSONNEL PROVISIONS (7.b) 1,565,418 2,649,391

CURRENT LIABILITIES 42,653,971 61,353,585

OTHER PAYABLES (8.a) 28,513,339 11,306,639

of which with related parties (*) (8.a) 12,961,083 45.5 5,456,508 48.3

PROVISIONS FOR RISKS AND LOSSES (8.b) 14,140,632 50,046,946


(*) As per Consob Resolution no. 6064293 of July 28 2006(**) Percentage of the whole

144

2. INCOME STATEMENT

(in euro)

Notes %(**) 2009 %(**) 2008

SUNDRY REVENUES AND INCOME (9) 7,139,502 7,053,387

of which from related parties (*) (9) 5,729,000 80.2 5,916,115 83.9

COSTS FOR SERVICES (10) (14,771,383) (11,036,154)

of which from related parties (*) (10) (1,805,000) 12.2 (2,280,000) 20.7

PERSONNEL COSTS (11) (9,202,151) (5,086,680)

OTHER OPERATING COSTS (12) (2,138,073) (37,921,421)

AMORTIZATION, DEPRECIATION & WRITEDOWNS (865,553) (866,662)

INCOME BEFORE FINANCIAL ITEMS AND TAXES ( E B I T ) (19,837,658) (47,857,530)

FINANCIAL INCOME (13) 10,207,930 9,252,266

of which from related parties (*) 3,302,156 32.3 266,261 2.9

FINANCIAL EXPENSE (14) (17,533,720) (17,871,672)

of which with related parties (*) -- (208,591) 1.2

DIVIDENDS (15) 11,392,025 138,738,023

of which from related parties (*) 11,361,610 99.7 138,689,930 99.9

GAINS FROM TRADING SECURITIES (16) 6,910,176 253,220

LOSSES FROM TRADING SECURITIES (17) (942,498) (2,396,079)

ADJUSTMENTS TO VALUE OF FINANCIAL ASSETS (18) 2,527,965 (54,721,218)

INCOME / (LOSS) BEFORE TAXES (7,275,780) 25,397,010

INCOME TAXES (19) 5,286,000 7,854,257

NET INCOME (LOSS) FOR THE YEAR (1,989,780) 33,251,267

BASIC EARNINGS PER SHARE (in euro) (20) (0.0027) 0.0444 DILUTED EARNINGS PER SHARE (in euro) (20) (0.0027) 0.0444

(*) As per Consob Resolution no. 6064293 of July 28 2006(**) Percentage of the whole

145

3. STATEMENT OF COMPREHENSIVE INCOME


2009 2008

Net income (loss) for the year (1,989,780) 33,251,267

Other items of the comprehensive income statement -- --

TOTAL COMPREHENSIVE INCOME STATEMENT FOR THE YEAR (1,989,780) 33,251,267

146

4. STATEMENT OF CASH FLOW

(in euro)

OPERATING ACTIVITY

NET INCOME FOR THE YEAR (1,989,780) 33,251,267

ADJUSTMENTS:

AMORTIZATION, DEPRECIATION & WRITEDOWNS 865,553 866,662

LOSSES/(GAINS) FROM SALE OF EQUITY INVESTMENTS & CURRENT SECURITIES (4,630,177) 2,142,858

ACTUARIAL VALUATION OF STOCK OPTION PLANS 4,324,835 354,229

PROVISIONS MADE FOR LEAVING INDEMNITY (TFR) 287,329 263,683

ADJUSTMENTS TO THE VALUE OF FINANCIAL ASSETS (2,527,965) 54,721,218

(INCREASE) REDUCTION IN NET WORKING CAPITAL 35,896,586 41,893,107 of which with related parties 10,903,845 (7,328,471)

CASH FLOW FROM OPERATING ACTIVITY 32,226,381 133,493,024

of which:- interest inflows (outflows) 4,677,352 (15,368,371)- dividend inflows 10,582,025 138,738,023 - income tax inflows (outflows) * 8,342,358 24,849,027

INVESTMENT ACTIVITY

(PURCHASE)/SALE OF CURRENT SECURITIES 128,061,387 (126,925,421)

(PURCHASE)/SALE OF FIXED ASSETS 129,325,474 (28,373,837)

CASH FLOW FROM INVESTMENT ACTIVITY 257,386,861 (155,299,258)

FUNDING ACTIVITY

INFLOWS FROM CAPITAL INCREASES 999,389 365,308

PAYOUT OF LEAVING INDEMNITY (241,648) (274,943)

BUYBACK OF OWN SHARES (74,255) (6,396,015)

LOANS MADE TO SUBSIDIARIES (130,000,000) --

DIVIDENDS PAID OUT -- (37,410,570)

CASH FLOW FROM FUNDING ACTIVITY (129,316,514) (43,716,220)

INCREASE (REDUCTION) IN NET CASH & CASH EQUIVALENTS 160,296,728 (65,522,454)

NET CASH & CASH EQUIVALENTS AT START OF YEAR 12,316,639 77,839,093

NET CASH & CASH EQUIVALENTS AT END OF YEAR 172,613,367 12,316,639

* The amounts refer to current tax inflows resulting from participation in tax consolidation

2009 2008

147

5. STATEMENT OF CHANGES IN EQUITY

(in euro) Issued less Share Reserves Retained Net income Totalcapital own shares capital earnings (losses) for year

BALANCE AT DECEMBER 31 2007 395,465,334 (19,822,000) 375,643,334 343,159,102 185,051,374 79,919,598 983,773,408

Capital increases 122,300 -- 122,300 243,008 -- -- 365,308

Dividends to Shareholders -- -- -- -- -- (37,410,570) (37,410,570)

Net income allocated to reserve -- -- -- -- 42,509,028 (42,509,028) --

Unclaimed dividends as per Art. 23 of Bylaws -- -- -- 12,451 -- -- 12,451

Adjustment for own share transactions -- (1,665,000) (1,665,000) 1,665,000 (6,396,015) -- (6,396,015)

Notional recognition of stock options -- -- -- 905,587 -- -- 905,587

Result for the year -- -- -- -- -- 33,251,267 33,251,267

BALANCE AT DECEMBER 31 2008 395,587,634 (21,487,000) 374,100,634 345,985,148 221,164,387 33,251,267 974,501,436

Capital increases 471,000 -- 471,000 528,389 -- -- 999,389

Dividends to Shareholders -- -- -- -- -- --

Net income allocated to reserve -- -- -- -- 33,251,267 (33,251,267) --

Unclaimed dividends as per Art. 23 of Bylaws -- -- -- 14,253 -- -- 14,253

Adjustment for own share transactions -- (50,000) (50,000) 50,000 (74,255) -- (74,255)

Notional recognition of stock options -- -- -- 5,454,488 -- -- 5,454,488

Result for the year -- -- -- -- -- (1,989,780) (1,989,780)

BALANCE AT DECEMBER 31 2009 396,058,634 (21,537,000) 374,521,634 352,032,278 254,341,399 (1,989,780) 978,905,531

148

CIR S.p.A. 149

EXPLANATORY NOTES 1. STRUCTURE OF THE FINANCIAL STATEMENTS AND ACCOUNTING PRINCIP-PLES APPLIED These financial statements have been prepared in accordance with international accounting stan-dards (IAS/IFRS) published by the International Accounting Standards Board (“IASB”) and rati-fied by the European Union, together with all the measures issued in implementation of Art. 9 of D. Lgs. no. 38/2005, including all the interpretations of the International Financial Reporting In-terpretations Committee (“IFRIC”), previously known as the Standing Interpretations Committee (“SIC”). The balance sheet is based on the principle of historical cost, modified as required for the meas-urement of certain financial instruments, in compliance with the time principle and matching prin-ciples and the assumption that the business is an ongoing concern. In spite of the difficult eco-nomic and financial context, the Company has established that there are no significant uncertain-ties, as defined in paragraph 24 of IAS 1, regarding the fact that the business is an ongoing con-cern. The classification criteria adopted are as follows: - The Statement of Financial Position is organized in offsetting items classified as current and

non-current assets and liabilities; - The Income Statement shows a breakdown according to type of expense; - The Statement of Comprehensive Income shows items of income suspended in shareholders’

equity. - The Statement of Cash Flow was prepared using the indirect method; - The Statement of Changes in Equity gives a breakdown of the changes which took place dur-

ing the year and in the previous year. These financial statements are expressed in thousands of euro, which is the functional and presen-tation currency of CIR S.p.A. according to the terms of IAS 21, except where stated otherwise. Events which occurred after the balance sheet date After the close of the year no important events took place which could have had a significant ef-fect on the financial, equity and economic situation of the Company. See point 6 of the Report on Operations for a description of events which took place after the close of the year. In accordance with the terms of paragraph 17 of IAS 10, it should be noted that publication of the financial statements was authorized by the Board of Directors of the Company on March 11 2010. Below is a description of the accounting principles adopted in the preparation of these Financial Statements as of December 31 2009 in relation to the main items of the balance sheet and income statement included in the statements. 1.a. Intangible assets (IAS 38) Intangible assets are recognized only if they can be separately identified, if it is likely that they will generate future economic benefits and if the cost can be measured reliably.

Intangible assets with a finite useful life are valued at purchase or production cost net of accumu-lated amortization and impairment. Intangible assets are initially recognized at purchase or production cost. Purchase cost is repre-sented by the fair value of payments and any additional cost directly incurred for preparing the as-set for use. The purchase cost is the equivalent price in cash as of the date of recognition and therefore, where payment is deferred beyond normal terms of credit, the difference compared with the cash price is recognized as interest for the whole period of deferment. Amortization is calculated on a straight-line basis following the expected useful life of the asset and starts when the asset is ready for use. The carrying value of intangible assets is maintained as long as there is evidence that this value can be recovered through use; to this end at least once a year an impairment test is carried out to check that the intangible asset is able to generate future cash flows. Intangible assets with an indefinite useful life are not amortized but are constantly monitored for any permanent loss of value. Development costs are recognized as intangible assets when their cost can be measured reliably, when there is a reasonable assumption that the asset can be made available for use or for sale and that it is able to generate future benefits. Once a year or any time there are reasons which justify it, capitalized costs are subjected to an impairment test. Research costs are charged to the income statement as and when they are incurred. Trademarks and licenses, which are initially recognized at cost, are subsequently accounted for net of amortization and any impairment. The period of amortization is defined as the lower of the contractual duration for use of the license and the useful life of the asset. Software licenses, including associated costs, are recognized at cost and are recorded net of amor-tization and of any impairment. 1.b. Tangible assets (IAS 16) Tangible assets are recognized at purchase price or at production cost and are recognized net of any accumulated depreciation. Cost includes associated expenses and any direct and indirect costs incurred at the moment of ac-quisition and necessary to make the asset ready for use. Fixed assets are depreciated on a straight-line basis each year in relation to the remaining useful life of the various assets. Real estate not held for corporate or operating purposes is classified under a special item of assets and is accounted for on the basis of the terms of IAS 40 “Investment properties”. Should there be any events which one can assume will cause a lasting reduction in the value of an asset, its carrying value is checked against its recoverable value, which is the higher of fair value and value in use.

150 CIR S.p.A.

Fair value is defined on the basis of values expressed by the active market, by recent transactions or from the best information available to determine the potential amount obtainable from the sale of the asset. Value in use is determined from the net present value of cash flows resulting from the use ex-pected of the same asset, applying the best estimate of its residual useful life and a rate that also takes into account the implicit risk of the specific business sectors in which the company operates. This valuation is carried out for each individual asset or for the smallest identifiable independent cash generating unit (CGU). Where there is a negative difference between the values stated above and the carrying value then the asset is written down, while as soon as the reasons for such loss in value cease to exist then the asset is revaluated. Write-downs and revaluations are posted to the income statement. 1.c. Investment property (IAS 40) An investment property is a property, either land or building – or part of a building – or both, owned by the owner or by the lessee, with a financial leasing agreement, for the purpose of re-ceiving lease payments or for obtaining a gain on the capital invested or for both of these reasons, rather than for the purpose of directly using it for the production or supply of goods or services or for the administration of the company or for sales, in ordinary business activities. The cost of an investment property is represented by its purchase price, any improvements made, and any replacement or extraordinary maintenance. According to the cost method, estimation is made net of depreciation and of any accumulated impairment. At the moment of disposal or in the event of permanent non-use of the asset, all related income and expense will be charged to the income statement. 1.d. Impairment of assets (IAS 36) At least once a year the Company verifies the recoverability of the carrying value of intangible as-sets, tangible assets and investments in subsidiaries and associates in order to determine whether these assets have suffered any loss of value. If there is evidence of such a loss, the carrying value of the asset is reduced to its recoverable value. The recoverable value of an asset is the higher of fair value less costs to sell and its value in use. In detail, in valuing the presence of any losses in the value of investments in subsidiaries and as-sociates, since these are investments for which a market value (i.e. fair value less costs to sell) is in some cases unreliable, the recoverable value was defined as its value in use, meaning the pre-sent value of estimated cash flows in relation to the expected results of investee companies and to the estimated value of a hypothetical ultimate disposal in line with the terms set out in IAS 28 (paragraph 33). When at a later date the loss of value ceases to exist or is reduced, the carrying value of the assets is revalued to the extent of the new estimate of recoverable value but cannot exceed the value which would have been determined if no impairment loss had been recognized. The recovery of an impairment loss is immediately posted to the income statement.

CIR S.p.A. 151

1.e. Investments in subsidiaries and associates (IAS 27 and IAS 28) Investments in subsidiaries and associates are recognized at cost adjusted for any impairment. Any positive difference, arising on acquisition, between the acquisition cost and the acquirer’s share of the shareholders’ equity of the investee company at current values is therefore included in the carrying value of the shareholding. Investments in subsidiaries and associates are subjected to an impairment test every year, or if necessary even more frequently, to check for any losses in value. Where there is evidence that the investments have lost value, the impairment loss is recognized in the income statement as a write-down. In the event of the company’s share of the losses of the investee company exceeding the carrying value of the investment, and when the company is obliged to or wishes to respond, then the value of the investment is reduced to zero and the company’s share of any further losses is recognized as a provision in the liabilities. Should the loss in value subsequently cease to exist or become re-duced, the value is restored with the amount recognized to the income statement within the limit of its cost. 1.f. Other equity investments Investments in other companies, classified as non-current financial assets which are not intended for trading, are initially classified as available-for-sale financial assets and are recognized at fair value. Subsequently, gains and losses from changes in fair value from their market prices are posted di-rectly to shareholders’ equity until the assets are sold or undergo an impairment loss. When the asset is sold, all of the gains and losses previously recognized to shareholders’ equity are posted to the income statement in the period. When an asset is written down, the accumulated losses are included in the Income Statement. Holdings in other minor companies, which do not have a market price, are recognized at cost which may be written down on impairment. 1.g. Receivables and payables (IAS 32 and 39) Receivables are recognized at amortized cost and measured at their presumed realization value, while payables are recognized at amortized cost. Receivables and payables in foreign currencies, which are originally recognized at the spot rates of the transaction date, are adjusted to the year-end spot exchange rates and any exchange gains and losses are recognized to the income statement. 1.h. Securities (IAS 32 and 39) In accordance with IAS 32 and IAS 39 investments in companies other than subsidiaries and as-sociates are classified as available-for-sale financial assets and are measured at fair value. Gains and losses resulting from fair value adjustments are recorded in a special equity reserve. In the event of permanent losses of value or of disposal, the gains and losses recognized previously to shareholders’ equity are then posted to the income statement. It should be noted that purchases and sales are recognized on the trading date of the transaction. This category also includes financial assets either bought or issued and then held for trading purposes or classified at fair value through profit and loss in application of the fair value op-tion.

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For a more complete description of the treatment of financial instruments we would refer readers to the note specially prepared on the subject. 1.i. Income taxes (IAS 12) Current taxes are recorded and determined on the basis of a realistic estimate of taxable income according to current tax regulations and taking into account any exemptions that may apply. Deferred taxes are calculated on the basis of time differences, which are taxable or deductible, be-tween the carrying values of assets and liabilities and their tax bases and are classified under non-current assets and liabilities. A deferred tax asset is recognized to the extent that it is probable that future taxable profit will be available against which the deductible temporary differences can be utilized. The carrying value of deferred tax assets is subject to periodic analysis and is reduced to the ex-tent to which it is no longer probable that there will be sufficient taxable income to allow the benefit of this deferred asset to be utilized. 1.l. Cash and cash equivalents (IAS 32 and 39) Cash and cash equivalents include cash in hand, call deposits and short-term and high-liquidity financial assets, which are easily convertible into cash and which have an irrelevant risk of change in value. 1.m. Shareholders’ equity Ordinary shares are recorded at nominal value. Costs directly attributable to the issuance of new shares are deducted from the shareholders’ equity reserves, net of any related tax benefit. Own shares are classified in a special item and are deducted from reserves; any subsequent trans-action of sale, re-issuance or cancellation will have no impact on the income statement but will affect only shareholders’ equity. Unrealized gains and losses, net of tax, on financial assets classified as “available for sale” are re-corded in shareholders’ equity in the fair value reserve. The reserve is reversed to the income statement when the asset is realized or when a permanent impairment loss to the said asset is recognized. The item “Retained earnings (losses)” includes accumulated earnings and balances transferred from other reserves when these become free of any limitations to which they have been subject. This item also shows the cumulative effect of the changes in accounting principles and/or the cor-rection of errors which are accounted for in accordance with IAS 8. 1.n. Borrowings (IAS 32 and 39) Loans are initially recognized at cost, represented by their fair value net of any transaction costs incurred. Subsequently loans are measured at amortized cost calculated by applying the effective interest rate, taking into consideration any issuance costs incurred and any premium or discount applied at the time when the instrument is settled.

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1.o. Provisions for risks and losses (IAS 37) Provisions for risks and losses refer to liabilities which are extremely likely but where the amount and/or maturity is uncertain. These are the result of past events which will cause a future dis-bursement. Provisions are recognized exclusively in the presence of a current obligation, either legal or constructive, towards third parties which implies an outflow and when a reliable estimate of the amount involved can be made. The amount recognized as a provision is the best estimate of the disbursement required to fulfil the obligation as of the balance sheet date. The provisions rec-ognized are re-examined at the closing date of each accounting period and are adjusted to repre-sent the best current estimate. Changes in the estimate are recognized to the income statement. When the estimated disbursement relating to the obligation is expected in a time horizon longer than normal payment terms and the discount factor is significant, the provision represents the pre-sent value, discounted at a risk-free interest rate, of the expected future payments necessary to discharge the obligation. Contingent assets and liabilities (possible assets and liabilities, or those not recognized because no reliable estimate can be made) are not recognized. However specific disclosure on such items is given. 1.p. Revenue recognition (IAS 18) Revenues for the rendering of services are recognized at the moment when the service is rendered, with reference to the state of completion of the activity as of the balance sheet date. Dividend and interest income are recognized as follows: - Dividends, in the year in which they are received; - Interest, using the effective interest rate method (IAS 39). 1.q. Employee benefits (IAS 19) Benefits to be paid to employees after the termination of their employment and other long term benefits are subject to actuarial valuation. Following this methodology, liabilities recognized represent the present value of the obligation adjusted for any actuarial gains or losses which have not been accounted for. Financial Law no. 296/2006 (Budget 2007) introduced some important changes to the way the TFR is regulated and introduced the possibility for workers to transfer their TFR maturing as from January 1 2007 to pension schemes of their choice. All TFR that had accumulated as of December 31 2006 for employees who exercised this choice, while still remaining as a defined benefit plan, was determined using actuarial methods which, however, excluded the actuarial/financial ele-ments that refer to future salaries. In view of the fact that this new calculation method reduces the fluctuation of actuarial gains/losses, the decision was made to abandon the so-called corridor method and to recognize all actuarial gains and losses to the Income Statement. Accounting standard IFRS 2 “Share-based payments” issued in February 2005 with validity as form January 1 2005 requires in its transitional instructions that application should be retrospec-tive in all cases where stock options were assigned after November 7 2002 and for which on the date on which this condition took effect the vesting conditions of the plans had not yet matured.

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In accordance with this principle the CIR Group now measures and recognizes the notional cost of stock options to the income statement under personnel costs and apportions them throughout the vesting period of the benefit, with an offset in the appropriate reserve of shareholders’ equity. The cost of the option is determined at the moment when the plan is awarded using special models and multiplying by the number of options exercisable in the reporting period, which are deter-mined using the aid of appropriate actuarial variables. 1.r. Derivative instruments (IAS 32 and 39) Derivative instruments are measured at fair value. Derivatives not for hedging purposes are classified as financial instruments at fair value through profit and loss (FVTPL). The classification of a derivative as a hedge must be formally documented and the degree of “ef-fectiveness” of the hedge must be specified. For accounting purposes hedging transactions are classified as: - Fair value hedges – where the effects of the hedge are recognized to the income statement; - Cash flow hedges – where the effective portion of the hedge is recognized directly to share-

holders’ equity while the non-effective part is recognized to income statement; - Hedges of a net investment in a foreign operation – where the effective portion of the hedge is

recognized directly to shareholders’ equity while the non-effective part is recognized to the income statement.

Specifically, for instruments classified as cash flow hedges (interest rate swaps), gains and losses from marking them to market are posted directly to shareholders’ equity for the part which “effec-tively” hedges the risk for which it was entered into, while any “non-effective” part is recognized to the income statement. At December 31 2009 the company had a fixed to floating swap outstanding, hedging interest on the CIR Bond maturing in 2024 for a nominal amount of € 270 million. 1.s. Foreign currency translation (IAS 21) The Company’s functional currency is the euro, which is the currency in which its financial statements are prepared and published. Transactions carried out in foreign currencies are initially recognized at the spot exchange rate on the date of the transaction. At the balance sheet date monetary assets and liabilities denominated in foreign currencies are translated at the spot exchange rate prevailing on that date. Non-monetary items measured at historical cost in a foreign currency are translated using the his-torical exchange rate prevailing on the date of the transaction. Non-monetary items measured at fair value are translated using the spot exchange rate at the date on which the measurements are determined for the financial statements.

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There were no assets or liabilities in foreign currencies recorded in the financial statements as of December 31 2009. 1.t. Use of estimates The preparation of the financial statements and the explanatory notes in application of IFRS re-quires management to make estimates and assumptions which affect the values of the assets and liabilities in the balance sheet and the disclosures regarding potential assets and liabilities as of the balance sheet date. The estimates and assumptions used are based on experience and on other factors considered relevant. The actual results could therefore be different from these estimates. Estimates and assumptions are revised periodically and the effects of any changes made to them are re-flected in the income statement in the period in which the amendment is made if the revision affects only that period, or even in subsequent periods if the amendment affects both the cur-rent year and future periods. The items of the financial statements mainly affected by the estimation process are the valuation of subsidiaries and associates, deferred taxes and the fair value of financial instruments, stock op-tions and phantom stock options. It should also be noted that the situation brought about by the current economic and financial cri-sis has made it necessary to make assumptions regarding performance in the future which is likely to be characterized by greater uncertainty. It cannot therefore be ruled out that the results of next year may be different from what has been estimated and could need adjustments to the carrying value of the various items. Obviously today it is impossible to foresee or make any estimates but the adjustments could be substantial. See the specific areas for further details. 1.u. Earnings per share (IAS 33) Basic earnings per share are determined by dividing the net income attributable to ordinary share-holders by the weighted average number of ordinary shares in circulation during the period. Diluted earnings per share are calculated by adjusting the weighted average number of ordinary shares in circulation to take into account the effect of all potential ordinary shares. Adoption of new Accounting Standards, Interpretations and Amendments Accounting standards, interpretations and amendments applied in 2009 The following accounting standards, amendments and interpretations, revised also following the Annual Improvements process for 2008 conducted by the IASB, were applied by the Company for the first time as from January 1 2009. • IAS 1 Revised – Presentation of Financial Statements: the revised version of IAS 1 no longer

allows the presentation of income items such as income and expense (defined as “changes generated by non-shareholder transactions) in the Statement of Changes in Shareholders’ Eq-uity, requiring a separate indication from the changes generated by transactions with share-holders. According to the revised version of IAS 1, in fact, all changes generated by transac-tions with non-shareholders must be shown in a single separate statement showing the per-formance for the period (comprehensive income statement) or in two separate statements (an income statement and and a comprehensive income statement). These changes must be shown separately even in the Statement of Changes in Shareholders’ Equity. The Company applied the revised version of this standard retrospectively as from January 1 2009, opting to show all

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changes generated by transaction with non-shareholders in two charts showing performance for the period, entitled “Income Statement” and “Comprehensive Income Statement” respec-tively. Thus the Company has also changed the presentation of its Statement of Changes in Shareholders’ Equity. Moreover, as part of the Annual Improvement process for 2008 con-ducted by the IASB, an amendment was published to IAS 1 Revised stipulating that assets and liabilities resulting from financial instruments designated as hedges must be classified, in the Statement of Financial Position, with a distinction between current and non-current assets and liabilities. On this subject it should be noted that the adoption of this amendment made no dif-ference to the presentation of the asset and liability items from derivative instruments because of the mixed form of presentation of the distinction between current and non-current items adopted by the Company as allowed by IAS 1.

• Amendment to IFRS 2 – Vesting conditions and cancellation: the amendment to IFRS 2 – Vesting conditions and cancellation establishes that for the purposes of measuring share-based payments, only the servicing and performance conditions can be considered as vesting condi-tions of the plans. Any other clauses must be considered as non-vesting conditions and incor-porated into the fair value calculation at the award date of the plan. The amendment also clari-fies that, in the event of cancellation of the plan, the same accounting treatment should be ap-plied whether the cancellation originates from the company or from the counterparty. This principle was applied retrospectively from January 1 2009. However from its application no accounting effects have emerged.

• Improvement to IAS 19 – Employee benefits: the improvement clarifies the defintion of cost/income in relation to past service and establishes that in the event of the reduction of a plan, the effect immediately recognizable to the income statement must include only the re-duction of the benefits for future periods, while the result of any reductions relating to past service must be considered as a negative cost in relation to past service. This amendment is applicable prospectively to changes in plans that take place as from January 1 2009. The improvment also changed the definition of the yield on an asset servicing the plan, estab-lishing that this item must be shown net of any administration charges that are not already in-cluded in the value of the bond, and it also clarified that the definition of short-term benefits and long-term benefits. It should also be noted that no significant accounting effects were noted at December 31 2009 following the adoption of this amendment.

• Amendment to IFRS 1 – First-time adoption of International Financial Reporting Standards and to IAS 27 – Consolidated and Separate Financial Statements: the improvement allows companies adopting IFRS for the first time as of January 1 2009 who decide to measure in-vestments in subsidiaries, associates or jointly controlled entities at cost, to adopt one of the following values in their separate financial statements: - Cost determined in accordance with IAS 27; - Revalued cost, which may be determined either as fair value at the date of transition to

IFRS or as the carrying amount under previous accounting practice. Moreover, the amendment to IAS 27 – Consolidated and Separate Financial Statements, es-tablishes that all dividends received from subsidiaries, joint ventures and associates must be recognized in the income statement of the separate financial statements as and when the right to receive such dividends is established without distinguishing between whether they come from profits before or after the acquisition of the shareholding. In relation to this point, there has also been a revision to IAS 36 – Impairment of assets, to the effect that, when assessing whether or not there is evidence of impairment in cases where an investee has distributed div-idends, it is necessary to consider the following aspects:

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- The book value of the investment in the separate financial statements exceeds the carrying value of the equity of the investee (including any associated goodwill) as shown in the consolidated financial statements;

- The dividend is more than the total comprehensive income of the investee in the period to which the dividend refers.

The Company adopted the amendment to IAS 27 prospectively as from January 1 2009. How-ever, from its application no accounting effects were produced because the dividends shown in the income statement of 2009 were distributed by subsidiaries on earnings reported after the acquisition. In accordance with the amendment introduced to IAS 36, for the purposes of recognizing any impairment of investees, the new impairment indicators were considered.

• Amendment to IFRS 7 – Financial instruments: additional disclosures: the improvement, ap-plicable as from January 1 2009, was issued with a view to increasing the level of disclosure when measuring instruments at fair value and to boosting the effect of the existing principles on the subject of disclosures regarding the liquidity risk of financial instruments. In particular, the amendment requires disclosure to be given of the way the fair value measurement of fi-nancial instruments is carried out on the basis of a ranking. The adoption of this standard did not have any effect on the measurement and recognition of items in the accounts, but only on-ly the type of information given in the Notes.

Amendments and interpretations applied as from January 1 2009 but not relevant for the Company The following amendments and interpretations, applicable as from January 1 2009, regulate situa-tions not present at this balance sheet date: • Improvement to IAS 16 – Property, Plant and Equipment • Improvement to IAS 20 – Accounting for Government Grants and Disclosure of Government

Assistance • IAS 23 Revised – Borrowing Costs • Improvement to IAS 28 – Investments in Associates • Improvement to IAS 29 – Financial Reporting in Hyperinflationary Economies. • Amendment to IAS 32 – Financial Instruments: Presentation and to IAS 1 – Presentation of

Financial Statements – Financial Instruments • Improvement to IAS 36 – Impairment of Assets • Improvement to IAS 38 – Intangible Assets • Improvement to IAS 39 – Financial Instruments: Recognition and Measurement • Improvement to IAS 40 – Investment Property • IFRIC 13 – Customer Loyalty Programmes • IFRIC 15 – Agreements for the Construction of Real Estate • IFRIC 16 – Hedges of a Net Investment in a Foreign Operation It should also be noted that on March 12 2009 the IASB issued an amendment to IFRIC 9 – Reas-sessment of Embedded Derivatives and to IAS 39 – Financial Instruments: Recognition and Mea-surement which allows entities to reclassify particular financial instruments out of the 'fair value through profit or loss' category in specific circumstances. These amendments clarify that on re-classification of a financial asset out of the 'fair value through profit or loss' category, all embed-ded derivatives have to be assessed and, if necessary, separately accounted for in the financial statements. The amendments apply retrospectively and must be applied as from December 31 2009 but their adoption had no accounting effect on the financial statements for the year.

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Accounting standards, amendments and interpretations not yet applicable and not adopted early Below are the main amendments and changes to accounting standards which are not yet applica-ble and which have not been adopted early. The company is currently examining the standards and interpretations indicated and assessing whether their adoption will have a significant impact on the financial statements. On January 10 2008 the IASB issued an updated version of IFRS 3 – Business Combinations, and amended IAS 27 – Consolidated and Separate Financial Statements. The main changes made to IFRS 3 concern the elimination of the obligation to value the individual assets and liabilities of the subsidiary at fair value in each subsequent acquisition, in the event of step acquisitions of sub-sidiaries. The goodwill will be determined only at the acquisition stage and will be equal to the difference between the value of the investments immediately before the acquisition, the transac-tion consideration and the value of the net assets acquired. Moreover in cases where the company does not acquire a stake of 100%, minority interests can be measured either at fair value or using the method previously given in IFRS 3. The revised version of this standard also states that all costs relating to the business combination must be charged to the income statement and that liabilities for contingent consideration should be recognized on the acquisition date. In the amendment to IAS 27 the IASB established that any changes to the percentage of the stake non constituting loss of control must be treated as equity transactions and thus have an offset in shareholders’ equity. It was also established that when a parent company cedes control of one of its investees but still continues to hold an investment in the company, it must measure the investment kept on its books at fair value and recognize any profit or loss resulting from the loss of control to the income statement. Lastly, the amendment to IAS 27 requires that all losses attributable to minority shareholders be allocated to minority interests even when these losses are greater than portion of the capital of the investee. These new rules must be applied prospectively as from January 1 2010. As part of the Improvement 2008 process conducted by the IASB, the amendment made to IFRS 5 – Non-current Assets Held for Sale and Discontinued Operations establishes that if a busi-nesses is engaged in a plan of disposal involving the loss of control of a subsidiary, all the as-sets and liabilities of the subsidiary must be reclassified under assets held for sale, even if the business will still hold a minority shareholding in that subsidiary after the sale. This amendment must be applied prospectively as from January 1 2010. On July 31 2008 the IASB issued an amendment to IAS 39 – Financial Instruments: Recognition and Measurement, which must be applied retrospectively as from January 1 2010. The amend-ment clarifies the application of the standard for the definition of the underlying being hedged in particular situations. As of the date of these Financial Statements the the competent authorities of the European Union have not yet completed the ratification process necessary for it to be applied.

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On November 27 2008 the IFRIC issued Interpretation IFRIC 17 – Distributions of Non-cash As-sets to Owners in order to harmonize the accounting treatment of distributions of non-cash assets to shareholders. The interpretation specifically clarifies that a dividend payable must be recog-nized when the dividends have been authorized appropriately and that the payable must be meas-ured at the fair value of the equity that will be used for the dividend payout. Lastly, the company must recognize to the income statement the difference between the dividend paid out and the net book value of the assets used for the payment. The interpretation is applicable prospectively from January 1 2010. As of the date of these Finan-cial Statements the competent authorities of the European Union have not yet completed the rati-fication process necessary for it to be applied. On January 29 2009 the IFRIC issued Interpretation IFRIC 18 – Transfers of Assets from Cus-tomers which specifies the accounting treatment to be adopted if a company signs an agree-ment with a customer to receive from the customer a tangible asset to be used to connect the customer up to a network or provide him with goods and services (e.g. the supply of electricity, gas, water). In some cases the company actually receives cash from the client in order to build or acquire the tangible asset that will be used to fulfil the terms of the contract. This interpretation is applicable prospectively from January 1 2010. As of the date of these Finan-cial Statements the competent authorities of the European Union have not yet completed the rati-fication process necessary for it to be applied. On April 16 2009 the IASB issued a set of improvements to IFRS. Below are those indicated by the IASB as changes which involve a change in presentation, recognition and measurement of the items in the financial statements, omitting those which will only involve a change in terminology or styling with minimum effects from the accounting viewpoint, or those which affect standards or interpretations not applicable to the Company.

• IFRS 2 – Share-based payments: the amendment, which must be applied as from January 1 2010 (earlier application is permitted) clarified that since IFRS 3 has amended the defi-nition of a business combination, the spin-off of a business arm for the formation of a joint venture or a combination of businesses or business arms into jointly controlled entities is no longer subject to the terms of IFRS 2.

• IFRS 5 – Non-current Assets Held for Sale and Discontinued Operations: the amendment, applicable prospectively as from January 1 2010, clarified that IFRS 5 and other IFRS that refer specifically to non-current assets (or groups of assets) classified as available for sale or as discontinued operations contain all the information needed for this kind of asset or operation.

• IAS 1 – Presentation of Financial Statements: this amendment, which must be applied as from January 1 2010 changes the definition of current liabilities contained in IAS 1. The previous definition required all convertible liabilities that could be cancelled at any mo-ment by the issue of equity instruments to be classified as current liabilities. This meant that liabilities relating to bonds convertible at any time by the issuer into equity had to be recorded as current liabilities. Following this amendment, for current/non-current classifi-cation it is now irrelevant whether a liability has a currently exercisable option for conver-sion into equity instruments.

• IAS 7 – Cash Flow Statement: The amendment, which must be applied as from January 1 2010, requires that only cash flows from expenditure that leads to the recognition of an as-set in the Balance Sheet can be classified in the Cash Flow Statement as from investment activity, while cash flows from expenditure which does not give rise to the recognition of a tangible asset (as may be the case for promotional and advertising expense or personnel training costs) must be classified as resulting from operating activity.

160 CIR S.p.A.

• IAS 17 – Leasing: following changes made, the general conditions of IAS 17 for the clas-sification of a contract as a finance lease or an operating lease will now apply to leased land independently of whether title of ownership is obtained on expiry of the contract. Be-fore the changes, the accounting standard stated that when ownership title of the land be-ing leased was not transferred on expiry of the lease agreement, then the same was classi-fied as an operating lease as it had an indefinite useful life. This amendment applies as from January 1 2010. As of the adoption date all land with a lease contract already in place which has not yet expired will have to be valued separately, with retrospective rec-ognition of a new leasing agreement accounted for as if the contract was a finance lease.

• IAS 36 – Impairment of assets: this amendment, which will apply prospectively from January 1 2010, requires that each operating unit or group of operating units to which goodwill is allocated for the purposes of the impairment test should not be larger than an operating segment as defined in paragraph 5 of IFRS 8, before the combination permitted by paragraph 12 of the same IFRS on the basis of similar economic characteristics or other elements of similarity.

• IAS 38 – Intangible assets: the revision of IFRS 3 carried out in 2008 established that there is sufficient information to measure the fair value of an intangible asset acquired during a business combination if the asset is separable or if it derives from contractual or legal rights. IAS 38 was therefore amended to reflect this change to IFRS 3. The amend-ment also clarified the measurement techniques to be commonly used to measure the fair value of intangible assets for which there is no active market. Specifically these tech-niques include either an estimate of net cash flows generated by the asset discounted to present value, or an estimate of the costs that the company has avoided by owning the as-set and not having to use it under lease from a third party, or an estimate of the costs nec-essary to recreate or replace it (as in the so-called cost method). This amendment should be applied prospectively from January 1 2010.

• IAS 39 – Financial Instruments: Recognition and Measurement: this amendment limits the scope of exemption contained in paragraph 2g of IAS 39 to forward contracts between a purchaser and a shareholder seller for the purposes of the sale of a business into a busi-ness combination at a future acquisition date, when the completion of the business combi-nation does not depend on further shares of one or the other of the parties, but only on the passing of an appropriate period of time. The amendment clarifies on the other hand that IAS 39 is applicable to option contracts (whether or not they are currently exercisable) that give one of the two parties control over whether or not future events take place and exercise of which would lead to control of a business. The amendment also clarifies that the implied penalties for the prepayment of loans, the price of which compensates the lender for the loss of any further interest, must be considered as strictly correlated with the loan agreement of which they are a provision, and thus shall not be accounted for separately. Lastly, the amendment clarifies that gains and losses on a hedged financial instrument must be reclassified from shareholders’ equity to the income statement in the period in which the expected cash flow affects the income statement. This amendment applies pro-spectively from January 1 2010.

• IFRIC 9 – Reassessment of Embedded Derivatives: the amendment, which applies pro-spectively as from January 1 2010, excludes from the scope of application of IFRIC 9 any derivatives embedded in contracts acquired during business combinations at the moment that jointly controlled companies or joint ventures are formed.

As of the date of these Financial Statements the competent authorities of the European Union have not yet completed the ratification process necessary for the above improvements to be applied.

CIR S.p.A. 161

In June 2009, the IASB issued an amendment to IFRS 2 – Share-based Payments. The amend-ment clarifies the scope of application of IFRS 2 and the relationships existing between this and other accounting standards. In particular it clarifies that a company receiving goods or services under share-based payment plans must account for these goods or services independently of which company of the group actually settles the transaction, and independently of whether settle-ment takes place in cash or in shares. It also establishes that the term “group” should have the same meaning that it has in IAS 27 – Consolidated and Separate Financial Statements, i.e. it should include the parent company of the group and its subsidiaries. The amendment also speci-fies that a company must measure the goods or services received within the scope of a transaction settled in cash or in shares from its own viewpoint, which might not coincide with that of the group or with the amount recognized in the consolidated financial statements. The amendment in-corporates the guidelines previously included in IFRIC 8 – Scope of IFRS 2 and in IFRIC 11 – IFRS 2 – Group and Treasury Share Transactions. As a result of this, the IASB has withdrawn IFRIC 8 and IFRIC 11. This amendment applies from January 1 2010. As of the date of these Financial Statements the competent authorities of the European Union have not yet completed the ratification process nec-essary for its application. On October 8 2009, the IASB issued an amendment to IAS 32 – Financial Instruments: Presenta-tion: Classification of Rights Issues in order to regulate accounting for rights issues (rights, op-tions or warrants) denominated in a different currency from the functional currency of the issuer. Previously these rights were accounted for as liabilities from derivative financial instruments. The amendment requires that, under certain conditions, these rights be classified in shareholders’ eq-uity, whatever currency the strike price is denominated in. This amendment is applicable retrospectively as from January 1 2011. As of the date of these Fi-nancial Statements it is not considered likely that this will have any effect. On November 4 2009 the IASB issued a revised version of IAS 24 – Disclosure of Related Party Transactions which simplifies the type of disclosures required in the event of transaction with re-lated parties controlled by the State and clarifies the definition of related parties. This standard is applicable as from January 1 2011. As of the date of these Financial Statements the competent au-thorities of the European Union have not yet completed the ratification process necessary for its application. On November 12 2009 the IASB published IFRS 9 – Financial Instruments covering the classifi-cation and measurement of financial assets and applicable as from January 1 2013. This publica-tion is the first step of a process that will entirely replace IAS 39. The new standard uses a single approach based on ways of managing financial instruments and on the characteristics of the cash flows involved in financial asset contracts to determine the measurement criterion, replacing the different rules set out in IAS 39. Furthermore, the new standard will involve a single method for calculating impairment of financial assets. As of the date of these Financial Statements the com-petent authorities of the European Union have not yet completed the ratification process necessary for its application. On November 26 2009 the IASB published a minor amendment to IFRIC 14 – Prepayments of a Minimum Funding Requirement which allows companies prepaying a minimum funding require-ment to recognize it as an asset. The amendment is applicable as from January 1 2011. As of the date of these Financial Statements the competent authorities of the European Union have not yet completed the ratification process necessary for its application.

162 CIR S.p.A.

On November 26 2009 the IFRIC published IFRIC 19 – Extinguishing Financial Liabilities with Equity Instruments, which provides guidelines for recognizing the extinguishment of a financial liability through the issue of equity instruments. The interpretation establishes that if a company renegotiates the conditions for extinguishing a financial liability and its creditor accepts extin-guishment through the issue of shares in the company, then the shares issued in that company be-come part of the price paid to extinguish the financial liability and must be measured at fair value. The difference between the carrying value of the finanical liability extinguished and the initial value of the shares issued must be recognized to the income statement in the period. The amendment is applicable as from January 1 2011. As of the date of these Financial State-ments the competent authorities of the European Union have not yet completed the ratification process necessary for its application. 2. FINANCIAL INSTRUMENTS Financial instruments take on a particular significance in the economic and financial structure of the CIR Group and for this reason, in order to give a better and clearer understanding of financial issues, it was considered useful to devote a special section to the accounting treatment of IAS 32, IAS 39 and IFRS 7. According to IAS 32 financial instruments are classified into four categories:

a) Financial instruments that are valued at fair value through profit and loss (FVTPL) in ap-plication of the fair value option, which are held for trading purposes;

b) Investments held to maturity (HTM); c) Loans and receivables (L&R); d) Available-for-sale financial assets (AFS).

Classification depends on Financial Management’s intended use of the financial instrument in the business context and each involves a different measurement for accounting purposes. Financial transactions are recognized on the basis of their value date. Financial instruments at fair value through profit and loss Instruments are classified as such if they satisfy one of the following conditions: - They are held for trading purposes; - They are a financial asset designated on adoption of the fair value option, the fair value of

which can be reliably determined. Trading generally means frequent buying and selling with the aim of generating profit on price movements in the short term. Derivatives are included in this category unless they are designated as hedge instruments. The initial designation of financial instruments, other than derivatives and those held for trading, as instruments at fair value through profit and loss in adoption of the fair value option is limited to those instruments that meet the following conditions:

a) Designation according to the fair value option eliminates or significantly reduces ac-counting mismatches;

b) A group of financial assets, financial liabilities or both are managed and their performance is measured on the basis of their fair value following a documented investment risk strat-egy, and

c) An instrument contains an implicit derivative which meets particular conditions. The designation of an individual instrument to this category is definitive, is made at the moment of initial recognition and cannot be modified.

CIR S.p.A. 163

Investments held to maturity This category includes non-derivative instruments with fixed payments or payments that can be determined and that have a fixed maturity, and which it is intended and possible to hold until ma-turity. These instruments are measured at amortized cost and constitute an exception to the general measurement principle of fair value. Amortized cost is determined by applying the effective interest rate of the financial instrument, taking into account any discounts or premiums received or paid at the moment of purchase, and recognizing them throughout the whole life of the instrument until its final maturity. Amortized cost represents the initial recognition value of a financial instrument, net of any capital repayments and of any impairment, plus or minus the cumulated amount of the differences be-tween its initial value and its value at maturity calculated using the effective interest rate method. The effective interest rate method is a calculation criterion used to assign financial expenses to their appropriate time period. The effective interest rate is the rate that gives a correct present value to expected future cash flows until maturity, so as to obtain the net present carrying value of the financial instrument. If even one single instrument belonging to this category is sold before maturity, for a significant amount and where there is no special justification for this, the tainting rule is applicable and re-quires that the whole portfolio of securities classified as Held To Maturity be reclassified and measured at fair value, and this category cannot then be used in the two following years. Loans and receivables This refers to financial instruments which are not derivatives, have payments that are either fixed or can be determined, which are not quoted on an active market and which are not intended to be traded. This category includes trade receivables (and payables), which are classified as current assets with the exception of the part due in over 12 months from the balance sheet date. The measurement of these instruments is made by applying the method of amortized cost, using the effective interest rate and taking into account any discounts or premiums obtained or paid at the moment of acquisition and recognizing them throughout the whole life of the instrument until its final maturity. Available-for-sale financial assets This is a “residual” category which includes non-derivative financial instruments that are desig-nated as available for sale and are not included in any of the previous categories. Financial instruments held for trading are recognized at their fair value plus any transaction costs. Gains and losses are recognized to a separate item of equity until the financial instruments are sold or have been impaired. In such cases the profit or loss accumulated under shareholders’ eq-uity is released to the income statement. Fair value is the price at which an asset can be traded, or a liability may be extinguished in a free transaction between independent parties at arm’s length. In the case of securities listed on regulated markets, the fair value is the bid price at the close of trading on the last day of the accounting period. Where no market prices are available, fair value is determined either on the basis of the fair value of another financial instrument that is substantially similar or by using appropriate financial tech-niques (for example the discounted cash flow method).

164 CIR S.p.A.

Investments in financial assets can be eliminated from the balance sheet, or derecognized, only when the contractual rights to receive their respective financial cash flows have expired or when the financial asset is transferred to third parties together with all its associated risks and rewards. 3. ACCOUNTING PRINCIPLES, CHANGES IN ACCOUNTING ESTIMATES AND ERRORS The criteria for making estimates and measurements are re-examined on a regular basis and are based on historical experience and on other factors such as expectations of possible future events that are reasonably likely to take place. If the initial application of a principle affects the current year or the previous one, its effect is rec-ognized by indicating the change resulting from any transitional rules, the nature of the change, the description of the transitional rules, which may also affect future years, and the amount of any adjustments relating to years preceding those being presented. If a voluntary change of a principle affects the current or previous year this effect is shown by in-dicating the nature of the change, the reasons for the adoption of the new principle, and the amount of any adjustments made for years preceding those being presented. In the event of a new principle/interpretation issued but not yet in force, an indication is given of the fact, of its potential impact, the reason for the principle/interpretation, the date on which it will take effect and the date on which it will first be applied. A change in accounting estimates involves an indication of the nature and the impact of the change. Estimates are used mainly to show impairment of assets recorded, provisions made for risks, employees benefits, taxes and other provisions and reserves. Estimates and assumptions are reviewed regularly and the effects of any such changes are reflected in the income statement. Lastly, the treatment of accounting errors involves an indication of the nature of the error, the amount of the adjustments to be made at the beginning of the first accounting period after it was discovered.

CIR S.p.A. 165

4. NON-CURRENT ASSETS

4.a INTANGIBLE ASSETS

2008Historical Accum. amort. Balance Acquisitions Reclassified Amort. & Historical Accum. amort. Balance

(in thousands of euro) cost & writedowns 31.12.2007 cost acc. amort. writedowns cost & writedowns 31.12.2008

Concessions, licenses, trademarks & similar rights 506 (427) 79 43 80 -- -- (59) 629 (486) 143 Assets in process & advance payments 128 -- 128 -- (80) -- -- -- 48 -- 48 Total 634 (427) 207 43 -- -- -- (59) 677 (486) 191

2009Historical Accum. amort. Balance Acquisitions Reclassified Amort. & Historical Accum. amort. Balance

(in thousands of euro) cost & writedowns 31.12.2008 cost acc. amort. writedowns cost & writedowns 31.12.2009

Concessions, licenses, trademarks & similar rights 629 (486) 143 85 -- -- (62) 714 (548) 166 Assets in process & advance payments 48 -- 48 -- -- -- -- 48 -- 48 Total 677 (486) 191 85 -- -- -- (62) 762 (548) 214

Description %

Concessions, licenses, trademarks & similar rights 5-30%

AMORTIZATION RATES

BALANCE SHEET

Starting position Closing position

Disposals

Changes in the year

Starting position Changes in the year Closing position

Disposals

4.b. TANGIBLE ASSETS

2008Historical Accum. deprec. Balance Acquisitions Reclassified Deprec. & Historical Accum. deprec. Balance

(in thousands of euro) cost & writedowns 31.12.2007 cost acc. depr. writedowns cost & writedowns 31.12.2008Land 723 -- 723 -- -- -- -- -- 723 -- 723 Buildings 4,251 (4,111) 140 -- 1 -- -- (6) 4,251 (4,116) 135 Plant and machinery 983 (821) 162 12 -- -- -- (71) 995 (892) 103 Other assets 4,533 (2,177) 2,356 30 -- (86) 75 (159) 4,477 (2,261) 2,216 Assets under construction & advance payments -- -- -- -- -- -- -- -- -- -- -- Total 10,490 (7,109) 3,381 42 1 (86) 75 (236) 10,446 (7,269) 3,177


(in thousands of euro) cost & writedowns 31.12.2008 cost acc. depr. writedowns cost & writedowns 31.12.2009Land 723 -- 723 -- -- -- -- -- 723 -- 723 Buildings 4,251 (4,116) 135 -- -- -- -- (6) 4,251 (4,122) 129 Plant and machinery 995 (892) 103 11 -- -- -- (66) 1,006 (958) 48 Other assets 4,477 (2,261) 2,216 62 -- -- -- (160) 4,539 (2,421) 2,118 Assets under construction & advance payments -- -- -- -- -- -- -- -- -- -- -- Total 10,446 (7,269) 3,177 73 -- -- -- (232) 10,519 (7,501) 3,018

Description %

Buildings and investment properties 3.00%Plant and machinery

Other assets:- Electronic office equipment 20.00%- Furniture and fittings 12.00%- Motor vehicles 25.00%

Starting position

Starting position

Closing positionDisposals

Closing position

Changes in the year

Changes in the yearDisposals

DEPRECIATION RATES

10.00-25.00%

Tangible assets declined from € 3,177 thousand at December 31 2008 to € 3,018 thousand at December 31 2009.


(in thousands of euro) cost & writedowns 31.12.2007 cost acc. depr. writedowns cost & writedowns 31.12.2008Properties 20,299 (1,040) 19,259 -- -- -- -- (572) 20,299 (1,612) 18,687 Total 20,299 (1,040) 19,259 -- -- -- -- (572) 20,299 (1,612) 18,687


(in thousands of euro) cost & writedowns 31.12.2008 cost acc. depr. writedowns cost & writedowns 31.12.2009Properties 20,299 (1,612) 18,687 -- -- -- -- (572) 20,299 (2,184) 18,115 Total 20,299 (1,612) 18,687 -- -- -- -- (572) 20,299 (2,184) 18,115

4.c. INVESTMENT PROPERTY

Starting position Closing positionDisposals

Starting position Closing positionDisposals

Changes in the year

Changes in the year

Investment property declined from € 18,687 thousand at December 31 2008 to € 18,115 thousand at December 31 2009. The value in the balance sheet corresponds substantially to market value.

4.d. EQUITY INVESTMENTS 2008

(in thousands of euro) Starting position Changes in the year Closing position

Writedowns/

Revaluations

31.12.2007 Reclassified Increases Decreases Val. restored 31.12.2008

no. shares amount no. shares amount no. shares amount no. shares amount amount no. shares amount

Subsidiaries

SORGENIA HOLDING S.p.A. 88,337,809 184,858 -- -- 217,500 4,669 -- -- -- 88,555,309 189,527

GRUPPO EDITORIALEL’ESPRESSO S.p.A. 220,775,235 341,680 -- -- -- -- -- -- -- 220,775,235 341,680

SOGEFI S.p.A. 65,194,962 105,193 -- -- 545,000 1,591 -- -- -- 65,739,962 106,784

HOLDING SANITÀ E SERVIZI S.p.A. 3,654,745 71,628 -- -- 584,394 21,915 -- -- -- 4,239,139 93,543

DRY PRODUCTS S.p.A. 55,000 -- -- -- -- -- -- -- -- 55,000 --

CIR INTERNATIONAL S.A. 100,000 1,000 -- -- -- -- -- -- (1,000) 100,000 --

COFIDEFIN SERVICOS LDA 93,000 180 -- -- -- -- -- -- -- 93,000 180

INTERGEFI S.r.l. 500,000 512 -- -- -- -- -- -- -- 500,000 512

CIR VENTURE S.r.l. 10,000 10 -- -- -- 4 -- -- (13) 10,000 1

CIRINVEST S.p.A. 121,750 122 -- -- -- -- -- -- -- 121,750 122

JUPITER FINANCE S.p.A. 592,800 6,482 -- -- -- -- -- -- -- 592,800 6,482

CIGA LUXEMBOURG S.A.R.L. 318,200 318,000 -- -- -- -- -- -- (39,019) 318,200 278,981

NEXENTI S.r.l. -- -- -- -- 120,000 120 (70,000) -- (73) 50,000 47

Total subsidiaries 1,029,665 -- 28,299 -- (40,105) 1,017,859

Other companies

C IDC S.p.A.

(in liquidation and settlementwith creditors) 1,231,319 -- -- -- -- -- -- -- -- 1,231,319 --

EMITTENTI TITOLI S.p.A. 232,000 132 -- -- -- -- -- -- -- 232,000 132

FILIPPO FOCHI S.p.A.(in administration) 409,520 -- -- -- -- -- -- -- -- 409,520 --

IST. EDIL. ECONOM.POPOLARE S.r.l. 1,350 1 -- -- -- -- -- -- (1) 1,350 --

Total other companies 133 -- -- -- (1) 132

TOTAL EQUITY INVESTMENTS 1,029,798 -- 28,299 -- (40,106) 1,017,991

The increase in the period refers mainly to the capital increase in the company Holding Sanità e Servizi S.p.A..

IFRS7 - Additional disclosures: it should be noted that the information required is given only for investments in other companies.

4.d. EQUITY INVESTMENTS 2009

(in thousands of euro) Starting position Changes in the year Closing position

Writedowns/

Revaluations

31.12.2008 Reclassified Increases Decreases Val. restored 31.12.2009

no. shares amount no. Shares amount no. Shares amount no. Shares amount amount no. Shares amount

Subsidiaries

SORGENIA HOLDING S.p.A. 88,555,309 189,527 -- -- -- -- -- -- -- 88,555,309 189,527

GRUPPO EDITORIALEL’ESPRESSO S.p.A. 220,775,235 341,680 -- -- -- -- -- -- -- 220,775,235 341,680

SOGEFI S.p.A. 65,739,962 106,784 -- -- -- -- -- -- -- 65,739,962 106,784

KOS S.p.A.

(formerly Holding Sanità e Servizi S.p 4,239,139 93,543 -- -- -- -- -- -- -- 4,239,139 93,543

DRY PRODUCTS S.p.A. 55,000 -- -- -- 4,945,000 109,380 -- -- -- 5,000,000 109,380

CIR INTERNATIONAL S.A. 100,000 -- -- -- 900,000 47,000 -- -- (35,888) (*) 1,000,000 11,112

COFIDEFIN SERVICOS LDA 93,000 180 -- -- 32,000 204 (125,000) (384) -- -- --

INTERGEFI S.r.l. 500,000 512 -- -- -- -- -- (300) -- 500,000 212

CIR VENTURE S.r.l. 10,000 1 -- -- -- (10,000) (1) -- --

CIRINVEST S.p.A. 121,750 122 -- -- -- -- -- -- (14) 121,750 108

JUPITER FINANCE S.p.A. 592,800 6,482 -- -- 1,482,000 -- -- (3,071) (429) 2,074,800 2,982

CIGA LUXEMBOURG S.A.R.L. 318,200 278,981 -- -- -- -- (317,200) (281,000) 3,193 1,000 1,174

NEXENTI S.r.l. 50,000 47 -- -- -- -- 50,000 47

Total subsidiaries 1,017,859 -- 156,584 (284,756) (33,138) 856,549

Other companies

C IDC S.p.A.

(in liquidation and settlementwith creditors) 1,231,319 -- -- -- -- -- -- -- -- 1,231,319 --

EMITTENTI TITOLI S.p.A. 232,000 132 -- -- -- -- -- -- -- 232,000 132

FILIPPO FOCHI S.p.A.(in administration) 409,520 -- -- -- -- -- -- -- -- 409,520 --

IST. EDIL. ECONOM.POPOLARE S.r.l. 1,350 -- -- -- -- -- -- -- -- 1,350 --

Total other companies 132 -- -- -- -- 132

TOTAL EQUITY INVESTMENTS 1,017,991 -- 156,584 (284,756) (33,138) 856,681

(*) By drawing on the provision for the cover of equity investments, set aside in the previous year.

IFRS7 - Additional disclosures: it should be noted that the information required is given only for investments in other companies.

LIST OF INVESTMENTS IN SUBSIDIARIES AS OF DECEMBER 31 2009 (ART. 2427 no. 5 Civil Code) (in thousands of euro) Head Share Total Result for Percentage Carrying Office Capital Equity the year owned value Name GRUPPO EDITORIALE L’ESPRESSO S.p.A. Rome 61,439 379,924 30,387 53.90 (*) 341,680

SORGENIA HOLDING S.p.A. Turin 136,177 620,926 11,315 65.03 189,527

SOGEFI S.p.A. Mantua 60,397 163,686 33,401 56.60 (**) 106,784

DRY PRODUCTS S.p.A. Milan 5,000 110,448 890 100.00 109,380

CIR INTERNATIONAL S.A. Luxembourg 10,000 (427) (11,539) 100.00 11,112

INTERGEFI S.r.l. Milan 500 255 (***) (23) 100.00 212

KOS S.p.A. (formerly HSS - Holding Sanità e Servizi S.p.A.) Milan 6,480 133,616 (6,465) 65.42 93,543

JUPITER FINANCE S.p.A. Milan 2,100 3,084 43 99.14 2,982

CIRINVEST S.p.A. Milan 120 108 (12) 100.00 108

CIGA LUXEMBOURG S.A.r.l. Luxembourg 1,000 6,129 8,148 100.00 1,174

NEXENTI S.r.l. Milan 50 58 11 100.00 47 (*) 54.97% of voting rights (**) 57.57% of voting rights (***) net of liquidation payment on account of € 300 thousand

As required by IFRS the investments were subjected to an impairment test to see whether there was objective evidence that their carrying value could not be fully recovered. For the purposes of carrying out the impairment test for the separate financial statements, the in-dividual investments held by CIR were divided into those which have the role of holding com-pany for their sector, which given the nature of the sub-group are not significant individually but are part of the impairment test of CGUs carried out at consolidated level, and the other invest-ments. Regarding the controlling investments in the holdings of the sectors, the impairment tests carried out at consolidated level did not result in the need to make any adjustments to the value of the as-sets. As for the other investments, the impairment tests showed that there was the need to make ad-justments to the value of some of the investee companies. 4.e. MISCELLANEOUS RECEIVABLES The balance at December 31 2009 of € 133,297 thousand refers mainly to the loan of € 130,000 made to the subsidiary CIR International S.A. in March. The balance also includes the interest ac-crued in the period for an amount of € 3,273 thousand. The interest rate on this loan is 3.011%.

CIR S.p.A. 171

4.f. DEFERRED TAXES The breakdown of “Deferred tax assets and liabilities” by type of temporary difference, is as fol-lows:

(in thousands of euro) 31.12.2009 31.12.2008 Amount of Tax Amount of Tax

temporary effect temporary effect differences differences

Deferred tax assets: Risk provisions and other 2,789 767 3,937 1,082

Total deferred tax assets: 767 1,082

The changes in “Deferred tax assets and liabilities” during the year were as follows:

Balance Utilization of deferred Deferred taxes Balance (in thousands of euro) at 31.12.2008 taxes from prior periods arising in period at 31.12.2009 Deferred tax assets: - in income statement 1,082 (315) -- 767 - in shareholders’ equity -- -- -- --

There are no prior losses for which the company has set aside deferred taxes. 5. CURRENT ASSETS 5.a. MISCELLANEOUS RECEIVABLES (in thousands of euro) 31.12.2009 31.12.2008

Tax receivables 27,159 43,331

Financial receivables with related parties -- 1,221

Other receivables with related parties 1,156 6,607

Receivables with others 3,272 3,311

Total 31,587 54,470

The item “Tax receivables” declined from € 43,331 thousand at December 31 2008 to € 27,159 thousand mainly because of the receipt of tax credits from prior periods for € 29,877 thousand in April 2009. The decline in the balance of the item “Financial receivables with related parties” refers to repay-ments made during the year by CIGA Luxembourg S.A.R.L. and Nexenti S.p.A..

172 CIR S.p.A.

The item “Other receivables with related parties” refers for € 346 thousand to the receivable with the companies of the Kos Group from their participation in the tax consolidation and for € 810 thousand to the receivable with Dry Products S.p.A. for dividends approved and not yet received. IFRS7 – Additional disclosures: it should be noted that the information required does not include the item “Tax expense”. 5.b. FINANCIAL RECEIVABLES The balance at December 31 2009 of € 1,418 thousand refers to the net interest accrued (€ 333 thousand) and to the fair value measurement (€ 1,085 thousand) of the interest rate swap hedging the interest on the CIR Bond maturing in 2024. 5.c. SECURITIES The item “Securities” includes the following categories of securities:

(in thousands of euro) 31.12.2009 31.12.2008 Bonds 101,584 -- Italian Government securities or similar securities -- 186,093 Sundry securities -- 31,319 Investment funds and similar funds -- 9,136 Total 101,584 226,548

The measurement at fair value of the item “securities” involved a negative adjustment to the in-come statement of € 222 thousand. Starting from the financial statements as of December 31 2009 the company must indicate wheth-er fair values are determined, entirely or partly, with reference to prices quoted by an active mar-ket (“Level 1”), whether they are estimated using prices quoted in a market for similar instruments or using directly observable market inputs (“Level 2”) or whether valuation methods based sub-stantially on significant data not directly observable in the market are used, which thus involve es-timates and assumptions being made by management (“Level 3”). The following chart shows the breakdown of the item “Securities” and “Other financial assets” valued at fair value:

Balance sheet items Level 1 Level 2 Level 3 Total in balance sheet Securities – 5.c. (measured at fair value through profit and loss) - Bonds 99,581 2,003 -- 101,584 - Italian Government securities and similar securities -- -- -- -- Sundry securities -- -- -- -- Investment funds and similar funds -- -- -- -- Total securities 99,581 2,003 -- 101,584 Financial receivables – 5.b. (valued at fair value with offset in income statement) - Derivatives -- 1,085 -- 1,085 Total financial receivables -- 1,085 -- 1,085 Total assets 99,581 3,088 -- 102,669

CIR S.p.A. 173

174 CIR S.p.A.

5.d. CASH AND CASH EQUIVALENTS Cash and cash equivalents rose by € 160,296 thousand from € 12,317 thousand to € 172,613 thou-sand. A breakdown of the changes is shown in the cash flow statement. 6. SHAREHOLDERS’ EQUITY 6.a. SHARE CAPITAL Share capital rose from € 395,587,633.50 at December 31 2008 (comprising 791,175,267 shares each with a nominal value of € 0.50) to € 396,058,633.50 (792,117,267 shares) at December 31 2009 as a result of the issuance of 942,000 shares following the exercise of stock options. At December 31 2009 the Company owned 43,074,000 of its own shares (5.44% of capital) for a value of € 98,657 thousand, up from 42,974,000 shares for a value of € 98,583 thousand at De-cember 31 2008. In application of IAS 32, the own shares held by the Parent Company of the Group are deducted from shareholders’ equity. The share capital is fully subscribed and paid up. No shares have any rights, privileges or limita-tions on the distribution of dividends with the exception of the own shares held as treasury stock. It should be noted that the Board of Directors was authorized for a period of five years starting from April 30 2009 to increase, once or more than once, the share capital up to a maximum of € 500 million (nominal value) and by a further maximum of € 20 million (nominal value) in favour of employees of the Company, its subsidiaries and parent companies. The Board of Directors also has the right for a period of five years from April 30 2009 to issue, once or more than once, convertible bonds or bonds with warrants attached, up to an amount which, taking into account the bonds in circulation at the date on which the issuance is approved, shall not exceed the maximum limits set out in current regulations at the moment when the resolu-tion is adopted by the Board.

CIR S.p.A. 175

6.b. RESERVES The breakdown of the item “Reserves” is as follows:

(in thousands of euro) Share Legal Statutory Reserve for Reserve Art. 6 Fair value First Stock Reserve for Total premium reserve reserves own shares D.Lgs. no. 38 of reserve adoption option future reserves reserve held 28/02/2005 of IFRS reserve capital reserve increases

Balance at December 31 2007 33,359 115,969 76 19,822 (74) -- 162,210 11,794 3 343,159

Capital increases 243 -- -- -- -- -- -- -- -- 243

Unclaimed dividends as per Art. 23 of Company Bylaws -- -- 13 -- -- -- -- -- -- 13

Adjustment for own share transactions -- -- -- 1,665 -- -- -- -- 1,665

Notional cost of stock options credited -- -- -- -- -- -- -- 905 -- 905

Balance at December 31 2008 33,602 115,969 89 21,487 (74) -- 162,210 12,699 3 345,985 Capital increases 528 -- -- -- -- -- -- -- -- 528 Unclaimed dividends as per Art. 23 of Company Bylaws -- -- 14 -- -- -- -- -- -- 14

Adjustment for own share transactions -- -- -- 50 -- -- -- -- 50

Notional cost of stock options credited -- -- -- -- -- -- -- 5,455 -- 5,455

Balance at December 31 2009 34,130 115,969 103 21,537 (74) -- 162,210 18,154 3 352,819

It should be remembered that on April 30 2009 the Ordinary General Meeting of the Shareholders voted to cancel the previous resolution of April 29 2008 to buy back own shares and to give a new authorization for eighteen months from that date to buy back a maximum of 35,000,000 own shares for a nominal value of € 17,500,000, which shall not in any case exceed one tenth of the share capital of CIR and with a maximum disbursement limit of € 100,000,000. The “Stock option reserve” refers to the value of the notional cost of the stock options assigned to employees, which were approved after November 7 2002. 6.c. RETAINED EARNINGS (LOSSES) The changes in Retained earnings (losses) are shown in the “Statement of Changes in Sharehold-ers’ Equity”. INFORMATION AS PER ART. 2427 – 7BIS – CIVIL CODE The following chart gives a breakdown of the items of shareholders’ equity and shows how they can be utilized: (in thousands of euro) Amount at Possible Part Summary of uses made December 31 2009 uses available in the last three periods (*) For covering For distributing Other losses as dividends

CAPITAL 396,059 -- -- -- -- --

Capital reserves: Share premium reserve 34,130 ABC 34,130 -- -- --

Legal reserve 12,678 B -- -- -- --

Capital reserve 3 A 3 -- -- --

Earnings reserves: Legal reserve 103,291 B 36,757 -- -- --

Statutory reserve 103 ABC 103 -- -- --

Art. 6 D.Lgs no. 38 reserve (74) ABC (74) -- -- --

First adoption of IFRS reserve 162,210 ABC 162,210 -- -- --

Stock Option reserve 18,154 ABC 18,154 -- --

Retained earnings 254,341 ABC 254,341 -- (34,185) (37,337)

TOTAL 981,682 505,624 -- (34,185) (37,337) Key = A: for capital increases; B: for covering losses; C: for distribution to shareholders

(*)The uses shown are those that caused a reduction in total equity

176 CIR S.p.A.

7. NON CURRENT LIABILITIES 7.a. BONDS AND NOTES The item “Bonds and notes” had a balance of € 296,169 thousand at December 31 2009, com-pared to € 295,982 thousand at December 31 2008 and referred to the Bond issued by the Com-pany in December 2004 for a nominal principal of € 300 million with maturity in 2024 at a fixed interest rate of 5.75%. Using the amortized cost method this loan was recognized including the accrued interest for the period and deducting the issuance discount and transaction costs. The ef-fective interest rate is 5.90%. The bonds are listed on the Luxembourg Bourse. 7.b. PERSONNEL PROVISIONS Changes in the provision “Employee Leaving Indemnity (TFR)” are shown in the chart below: (in thousands of euro) 31.12.2009 31.12.2008

Starting balance 1,520 1,531

Amount accrued 287 264

Sums paid out (242) (275)

Total 1,565 1,520

The item “Personnel provisions” at December 31 2008 included € 1,129 thousand relating to the fair value measurement, including ancillary costs stipulated in current legislation for employee in-come, of the Phantom Stock Option Plans awarded on May 15 2007, October 15 2007, May 16 2008 and October 16 2008. Following the transformation of the Phantom Stock Option Plans into stock option plans in April 2009, these provisions were reversed out. 8. CURRENT LIABILITIES 8.a. OTHER PAYABLES (in thousands of euro) 31.12.2009 31.12.2008

Tax payables 2,362 1,639

Payables related parties 12,961 5,456

Payables suppliers 604 767

Other payables 12,586 3,445

Total 28,513 11,307

The item “Payables related parties” refers to payables to companies which took part in the tax consolidation (€ 4,307 thousand to companies of the Sogefi group, € 4,515 thousand to companies of the Sorgenia group and € 4,139 thousand to companies of the Espresso group).

CIR S.p.A. 177

IFRS7 - Additional disclosures: it should be noted that the information required refers to the items “Payables related parties” and “Payables suppliers”. 8.b. PROVISIONS FOR RISKS AND LOSSES The breakdown of these provisions and the changes during the year are as follows: (in thousands of euro) Balance at Paid in Withdrawn Balance at 31.12.2008 31.12.2009

Cover of losses of investee companies 35,888 -- (35,888) --

Other 14,159 -- (18) 14,141

Total 50,047 -- (35,906) 14,141

The withdrawal of € 35,888 thousand set aside for the cover of losses of investee companies refers to the reversal out of the provision made in the previous year for the cover of further losses of the subsidiary CIR International S.A., after having written off the carrying value of the investment. There are various disputes outstanding for which CIR has set aside specific risk provisions for an amount deemed appropriate, in agreement with its legal counsel, to cover the likely emergence of significant potential liabilities. With reference to disputes in CIR’s favour, it should be mentioned that on October 3 2009 the Mi-lan Law Court isused a first degree ruling which upheld CIR’s right to compensation from Finin-vest for patrimonial damages in the so-called “lodo Mondadori” case, for an amount of approxi-mately € 750 million. Following this ruling, Fininvest delivered to CIR a guarantee at the first re-quest for an amount of 806 million euro issued by a prime bank should it be sentenced to pay the amount by the Court of Appeal.

178 CIR S.p.A.

INCOME STATEMENT 9. MISCELLANEOUS REVENUES AND INCOME This item contains the following: (in thousands of euro) 2009 2008

Services to subsidiaries 5,180 5,348

Services to parent company 529 548

Services to affiliated companies 20 20

Income from real estate 973 1,031

Other income and recovery of costs 362 106

Other non-recurring revenues 75 --

Total 7,139 7,053

Revenues from services provided to subsidiaries and affiliated companies are the chargeback of fees for strategic and management support and special administrative, financial and tax assistance supplied to them. The services provided to the parent company were mainly of an administrative and financial nature. Income from services to companies of the Group in 2009 can be broken down as follows: (in thousands of euro) 31.12.2009 31.12.2008

COFIDE S.p.A. 529 548

Gruppo Editoriale L'Espresso S.p.A. 2,300 2,475

Sorgenia S.p.A. 900 900

Sogefi S.p.A. 1,850 1,850

KOS S.p.A. (formerly Holding Sanità e Servizi S.p.A.) 110 100

Jupiter Finance S.p.A. 20 23

Euvis A.p.A. 20 20

Total 5,729 5,916

10. COSTS FOR SERVICES This item can be broken down as follows: (in thousands of euro) 2009 2008

Administrative, fiscal, legal and corporate governance consulting fees 9,223 4,354

Services provided by the parent company COFIDE S.p.A. 1,495 1,965

Services provided by the subsidiary Dry S.p.A. 310 315

Directors’ and Statutory Auditors’ fees 1,721 1,833

Other expenses 2,022 2,569

Total 14,771 11,036

CIR S.p.A. 179

11. PERSONNEL COSTS Personnel costs rose from € 5,087 thousand in 2008 to € 9,202 thousand in 2009 with a rise of € 4,115 thousand. The item includes the notional cost of € 5,455 thousand (€ 905 thousand in 2008) of the valuation of stock options of the plans currently in existence approved after Novem-ber 7 2002. It also includes the gain of € 1,130 thousand (a charge of € 551 thousand in 2008) from the release of the provision set aside at December 31 2008 after from the conversion of the Phantom Stock Option plans awarded on May 15 2007, October 15 2007, May 16 2008 and Octo-ber 16 2008 into Stock Option Plans as per the AGM resolution adopted on April 30 2009. The chart below shows the changes in the number of employees in the different categories during the year:

31.12.2008 Hires Departures 31.12.2009 Average for the year Executives 11 1 -- 12 12

Managers and Office Staff 17 -- - 17 17

Total 28 1 - 29 29 12. OTHER OPERATING COSTS (in thousands of euro) 2009 2008

Non-deductible IVA and other taxes 1,259 894

Other charges and non-operating expense 879 924

Sum set aside to provision for cover of losses in investee companies -- 35,888

Other non-recurring expense -- 215

Total 2,138 37,921 13. FINANCIAL INCOME This item consists of the following: (in thousands of euro) 2009 2008

Interest income from securities 1,626 7,141 Interest income from deposits 389 1,047 Interest income from subsidiaries 3,302 266 Interest rate derivatives 3,487 -- Other interest income 1,404 798 Total 10,208 9,252

The breakdown of the interest income from subsidiaries is as follows: (in thousands of euro) 2009 2008

CIR International S.A. 3,273 --

CIGA Luxembourg S.A.R.L. 29 65

Intergefi S.r.l. 200

Nexenti S.p.A. -- 1

Total 3,302 266

180 CIR S.p.A.

14. FINANCIAL EXPENSE This item consists of the following: (in thousands of euro) 2009 2008

Interest expense on bonds and notes 17,374 17,367

Interest expense on borrowings from subsidiaries -- 209

Other interest expense and bank charges 160 296

Total 17,534 17,872

The item “Interest expense on borrowings from subsidiaries” in 2008 referred to interest accrued on the loan from CIR International S.A. which was repaid in April 2008. 15. DIVIDENDS This item consists of the following: (in thousands of euro) 2009 2008

Dividends from related parties:

Sorgenia Holding S.p.A. 5,491 5,123

Cofidefin Serviços de Consultoria 4,137 4,762

Intergefi S.r.l. 924 --

Dry Products S.p.A. 810 --

Sogefi S.p.A. -- 91,273

Gruppo Editoriale L’Espresso S.p.A. -- 37,532

Total dividends from related parties 11,362 138,690

Dividends from other companies 30 48

Total dividends 11,392 138,738

16. GAINS FROM TRADING SECURITIES These amounted to € 6,910 thousand (€ 253 thousand in 2008) and refer for € 4,239 thousand to bond trading, for € 24 thousand to trading investment funds and similar instruments and for € 2,647 thousand to trading (€ 1,275 thousand) and valuing (€ 1,372 thousand) derivatives. 17. LOSSES FROM TRADING SECURITIES These amounted to € 942 thousand (€ 2,396 thousand in 2008) and refer to bond trading.

CIR S.p.A. 181

18. ADJUSTMENTS TO FINANCIAL ASSETS This item consists of the following: (in thousands of euro) 2009 2008

Write-down of bonds (802) (15,176)

Write-down of investments in subsidiaries (443) (40,105)

Write-down of investments in other companies -- (1)

Revaluation of bonds and notes 580 285

Revaluation of investments in subsidiaries 3,193 --

Revaluation of investment funds and similar funds -- 276

Total 2,528 (54,721)

The item revaluation of investments in subsidiaries refers to a recovery of the value of the com-pany CIGA Luxembourg after a surplus compared to its carrying value emerged following the re-payment during the year of almost all of its capital. 19. INCOME TAXES This item consists of the following: (in thousands of euro) 2009 2008

Current taxes 5,602 8,006

Deferred taxes (316) (152)

Total 5,286 7,854

RECONCILIATION OF THE THEORETICAL AND EFFECTIVE TAX LIABILITY Taxable income Tax rate % Amount of tax

RESULT BEFORE TAXES (7,276) 27.5 (2,001)

Effect of increases (decreases) compared to ordinary tax rate

- Dividends (10,822) 27.5 (2,976)

- Temporary differences deductible in subsequent periods 321 27.5 88

- Deductible temporary differences from prior periods (1,532) 27.5 (421)

- Non-deductible costs 9,515 27.5 2,616

Other sundry permanent differences (3,254) 27.5 (895)

SUB-TOTAL (13,048) 27.5 (3,589)

Adjustments to taxable income for participation in national tax consolidation (7,321) 27.5 (2,013)

Taxable income / Income tax for the year (20,369) 27.5 (5,602) Note: Because of its specific characteristics, IRAP was not considered for the purposes of this chart, which refers just to IRES

182 CIR S.p.A.

20. EARNINGS PER SHARE The basic earnings per share is calculated by dividing the net income for the period attributable to the ordinary Shareholders by the weighted average number of shares in circulation. The diluted earnings per share is calculated by dividing the net income for the period attributable to the ordi-nary Shareholders by the weighted average number of ordinary shares in circulation during the pe-riod, adjusted for the dilutive effects of outstanding options. Own shares held as treasury stock are not included in the shares in circulation. The company has only one category of potential ordinary shares, those deriving from stock op-tions awarded to employees. The dilutive effect that these ordinary shares to be issued or assigned to stock option plans will have on earnings per share is not significant. In calculating the average number of options the average fair value of the shares for each financial year was used. The average fair value of each CIR ordinary share in financial year 2009 was € 1.2073 compared with an average fair value of € 1.5684 in 2008. The chart below shows the information on the shares used to calculate the basic and diluted earn-ings per share. 2009 2008

Net income attributable to the Shareholders (in thousands of euro) (1,989,780) 33,251,267


Earnings per share (euro) (0.0027) 0.0444

2009 2008

Net income attributable to the Shareholders (in thousands of euro) -- 33,251,267


Weighted average number of options 41,658,983 30,624,267

Weighted average number of options at fair value -- --

Adjusted weighted average number of shares in circulation 748,117,934 748,707,234

Diluted earnings per share (euro) (0.0027) 0.0444

21. GUARANTEES AND COMMITMENTS At December 31 2009 the position of guarantees and commitments was the following: - A guarantee of € 157,561 million issued to banks on behalf of CIR International to cover note

issues. 22. RELATED PARTY TRANSACTIONS Information regarding the impact that related party transactions have on the financial and equity situation and on the result for the year are given in the comment on the individual items of the fi-nancial statements.

CIR S.p.A. 183

The paragraph “Other information” in the Report on Operations shows the different types of re-lated party transactions, the amounts of which are given in the explanatory Notes to the Financial Statements. 23. NET FINANCIAL POSITION The net financial position, in accordance with the terms of Consob resolution no. 6064293 of July 28 2006, can be broken down as follows: (in thousands of euro) 31.12.2009 31.12.2008

A. Cash and bank deposits 172,613 12,317

B. Other cash equivalents -- --

C. Securities held for trading 101,584 226,548

D. Cash and cash equivalents (A) + (B) + (C) 274,197 238,865

E. Current financial receivables 1,418 --

F. Current bank borrowings -- --

G. Current part of non-current borrowings -- --

H. Other current borrowings from related parties -- --

I. Current financial debt (F) + (G) + (H) -- --

J. Net current financial position (I) + (E) + (D) 275,615 238,865

K. Non-current bank borrowings -- --

L. Bonds and notes issued (296,169) (295,982)

M. Other non-current payables -- --

N. Non-current financial debt (K) + (L) + (M) (296,169) (295,982)

O. Net financial position (J) + (N) (20,554) (57,117)

24. OTHER INFORMATION IFRS7 – FINANCIAL RISK MANAGEMENT: ADDITIONAL INFORMATION Regarding the risks of the business, the main financial risks identified, monitored and actively managed by the company are the following: a) The interest rate risk from exposure to movement in interest rates; b) The credit risk from the possibility of a counterparty defaulting; c) The liquidity risk resulting from a lack of financial resources to meet short term commit-

ments.

Interest rate risk Fluctuation in interest rates affects the market value of financial assets and the level of net finan-cial expense.

184 CIR S.p.A.

The company continuously monitors its exposure to interest rate risk and manages this risk by in-vesting in financial instruments that are consistent with its long-term funding through the CIR bond 5.75%/2024. In accordance with its financial risk management policies in 2009 the Parent Company entered into an IRS contract to cover the interest rate risk on its bonds and notes. Sensitivity analysis A parallel shift of one percentage point up or down of the 3 month Euribor rate would have the following effects on floating rate assets and liabilities:

(amounts in thousands of euro) 31.12.2009 Shifts -1% +1% Change in Income Statement 2,115 (2,115) Change in Shareholders’ Equity 2,115 (2,115)

Credit risk Credit risk means the exposure of the company to potential losses resulting from the failure of a counterparty to meet its obligations. In relation in particular to the financial counterparty risk re-sulting from the investment of liquidity and from derivatives positions, counterparties are selected according to guidelines which set out the characteristics of the counterparties suitable for financial transactions. The list of possible counterparties includes both national and international companies with a high credit rating. The company has not had any cases of default of its counterparties. At December 31 2009 there were no significant concentrations of credit risk. Valuation of financial assets and liabilities The fair value of financial assets and liabilities is determined as follows: • The fair value of financial assets and liabilities with standard terms and conditions listed on

an active market is measured based on prices quoted in the active market; • The fair value of other financial assets and liabilities (excluding derivative instruments) is

measured using generally accepted valuation techniques based on discounted cash flows and using variables such as prices seen in recent market transactions and broker quotes for similar instruments.

More specifically, for valuing certain investments in bond instruments in the absence of a regu-larly functioning market, i.e. a sufficient ongoing number of deals, a bid-offer spread and a re-duced level of volatility, the determination of the fair value of these instruments is mainly based on quotations supplied by prime international brokers at the request of the Company, which are validated by comparing them with prices in the market, albeit for a modest number of deals, or prices observable for instruments with similar characteristics.

CIR S.p.A. 185

Liquidity risk Liquidity risk is the risk that financial resources may not be available or may be available only at a monetary cost. The company’s long-term debt, which refers to the note issued in December 2004 for a nominal 300 million with maturity in 2024, was given a rating of BBB- by Standard & Poor’s. As things stand today the company believes that it will be able to fulfil its expected finan-cial needs on the basis of its free cash flow and expected future cash inflows. The objective of li-quidity risk management is not only that of guaranteeing sufficient available financial resources to cover short term commitments, but also to ensure where necessary a sufficient level of operating flexibility for the development programs within the Group. In compliance with the requirements of accounting principle IFRS 7, the following charts give in-formation regarding the various categories of financial assets and liabilities and the classes of risk of financial instruments.

186 CIR S.p.A.

CATEGORIES OF FINANCIAL ASSETS AND LIABILITIES SHOWN IN THE BALANCE SHEET FINANCIAL YEAR 2009

(in thousands of euro)Bal. Sheet Value in Assets at FV Assets at FV Loans Investments Available Liabilities at FV Liabilities at FV Liabilities at Fair value Effect on Effect on

items Bal. Sheet through P&L through P&L and held to for sale through P&L through P&L amortized income equitydesignated as classified as receivables maturity financial designated as classified as cost statementsuch on initial held for assets such on initial held for

recognition trading recognition tradingNON-CURRENT ASSETSOther equity investments 4.d 132 -- -- -- -- 132 -- -- -- 132 30 -- Other receivables 4.e 133,297 -- -- 133,297 -- -- -- -- -- 133,297 3,273 -- CURRENT ASSETSSundry receivables 5.a 4,428 -- -- 4,428 -- -- -- -- -- 4,428 48 -- Financial receivables 5.b 1,418 1,418 1,418 3,487 1,085 Securities 5.c 101,584 101,584 -- -- -- -- -- -- -- 101,584 5,667 -- Available-for-sale financial assets 5.c -- -- -- -- -- -- -- -- -- -- -- -- Cash & cash equivalents 5.d 172,613 -- -- 172,613 -- -- -- -- -- 172,613 389 -- NON-CURRENTE LIABILITIESBonds and notes 7.a (296,169) -- -- -- -- -- -- -- (296,169) (228,991) (17,440) -- CURRENT LIABILITIESTrade payables 8.a (13,565) -- -- -- -- -- -- -- (13,565) (13,565) -- --


(in thousands of euro)Bal. Sheet Value in Assets at FV Assets at FV Loans and Investments Available Liabilities at FV Liabilities at FV Liabilities at Fair value Effect on Effect

items Bal. Sheet through P&L through P&L receivables held to for sale through P&L through P&L amortized income on equitydesignated as classified as maturity financial designated as classified as cost statementsuch on initial held for assets such on initial held for

recognition trading recognition tradingNON- CURRENT ASSETSOther equity investments 4.d 133 -- -- -- -- 133 -- -- -- 133 34 -- Other receivables 4.e 24 -- -- 24 -- -- -- -- -- 24 -- -- CURRENT ASSETSSundry receivables 5.a 11,139 -- -- 11,139 -- -- -- -- -- 11,139 337 -- Securities 5.c 226,548 226,548 -- -- -- -- -- -- -- 226,548 (9,515) -- Available-for-sale financial assets 5.c -- -- -- -- -- -- -- -- -- -- -- -- Cash & cash equivalents 5.d 12,317 -- -- 12,317 -- -- -- -- -- 12,317 955 -- NON- CURRENT LIABILITIESBonds and notes 7.a (295,982) -- -- -- -- -- -- -- (295,982) (203,209) (17,458) -- CURRENT LIABILITIESOther borrowings -- -- -- -- -- -- -- -- -- -- (209) -- Trade payables 8.a (6,223) -- -- -- -- -- -- -- (6,223) (6,223) -- --




NON-CURRENT ASSETS

Other equity investments 4.d 132 -- -- -- 132

Other receivables 4.e 133,297 -- -- -- 133,297

CURRENT ASSETS

Sundry receivables 5.a 4,428 -- -- -- 4,428

Financial receivables 5.b 1,418 -- 1,418 -- --

Securities 5.c 101,584 -- -- -- 101,584

Available-for-sale financial assets 5.c -- -- -- -- --

Cash & cash equivalents 5.d 172,613 -- 172,613 -- --


Bonds and notes 7.a (296,169) (296,169) -- -- --

CURRENT LIABILITIES

Trade payables 8.a (13,565) (13,565) -- -- --




NON-CURRENT ASSETS

Other equity investments 4.d 133 -- -- -- 133

Other receivables 4.e 24 -- -- -- 24

CURRENT ASSETS

Sundry receivables 5.a 11,139 -- -- -- 11,139

Securities 5.c 226,548 -- -- -- 226,548

Available-for-sale financial assets 5.c -- -- -- -- --

Cash & cash equivalents 5.d 12,317 -- 12,317 -- --


Bonds and notes 7.a (295,982) (295,982) -- -- --

CURRENT LIABILITIES

Trade payables 8.a (6,223) (6,223) -- -- --

CREDIT RISK

(in thousands of euro)Position at December 31 2009 Bal. Sheet Total Not yet Overdue 0 - 30 days 30 - 60 60 - 90 over 90 Amt. due Writedowns

items receivable due by > settled

Other receivables 4.c 133,297 133,297 -- -- -- -- -- -- Gross receivable 133,297 133,297 -- -- -- -- -- -- Provision for writedown -- -- -- -- -- -- -- -- --

Sundry receivables 5.a 4,428 4,422 6 6 -- -- -- -- Gross receivable 4,428 4,422 6 6 -- -- -- -- Provision for writedown -- -- -- -- -- -- -- -- -- Total 137,725 137,719 6 6 -- -- -- -- --

(in thousands of euro)Position at December 31 2008 Bal. Sheet Total Not yet Overdue 0 - 30 days 30 - 60 60 - 90 over 90 Amt. due Writedowns

items receivable due by > settled

Other receivables 4.c 24 24 -- -- -- -- -- -- Gross receivable 24 24 -- -- -- -- -- -- Provision for writedown -- -- -- -- -- -- -- -- --

Sundry receivables 5.a 11,139 11,056 83 83 -- -- -- -- Gross receivable 11,139 11,056 83 83 -- -- -- -- Provision for writedown -- -- -- -- -- -- -- -- -- Total 11,163 11,080 83 83 -- -- -- -- --




Bonds and notes 17,250 17,250 17,250 17,250 17,250 472,500 558,750

Trade payables 13,565 -- -- -- -- -- 13,565

TOTAL 30,815 17,250 17,250 17,250 17,250 472,500 572,315




Bonds and notes 17,250 17,250 17,250 17,250 17,250 489,750 576,000

Trade payables 6,223 -- -- -- -- -- 6,223

TOTAL 23,473 17,250 17,250 17,250 17,250 489,750 582,223

EMOLUMENTS PAID TO DIRECTORS, STATUTORY AUDITORS AND GENERAL MAN-AGERS The chart below shows the information required by Article 78 of Consob Resolution no. 11971 of May 14 1999 and subsequent amendments and additions. (in thousands of euro) Last name and first name Position Dates position Expiry of Emoluments Non- Bonuses Other Notes held mandate for the position monetary and other fees in company benefits incentives preparing Financial Statements

DE BENEDETTI CARLO Honorary Chairman 1.1.09-31-12-09 Appr. F. Stat. 2011 -- 52 -- -- (1)

MICOSSI STEFANO Chairman 1.5.09-31.12.09 Appr. F. Stat. 2011 147 -- -- -- --

DE BENEDETTI RODOLFO Chief Executive and General Manager 1.1.09-31-12-09 Appr. F. Stat. 2011 720 -- -- 771 (2)

PIASER ALBERTO General Manager 1.1.09-31-12-09 -- -- -- -- 368 (2)

BRACCHI GIAMPIO Director 1.1.09-31-12-09 Appr. F. Stat. 2011 30 -- -- --

DEBENEDETTI FRANCO Director 1.1.09-31-12-09 Appr. F. Stat. 2011 20 -- -- --

FERRERO PIERLUIGI Director 1.1.09-31-12-09 Appr. F. Stat. 2011 70 -- 50 (3)

GERMANO GIOVANNI Director 1.1.09-31-12-09 Appr. F. Stat. 2011 45 -- -- 20 (3)

GIRARD FRANCO Director 1.1.09-31-12-09 Appr. F. Stat. 2011 27 -- -- 20 (3)

MANCINELLI PAOLO Director 1.1.09-31-12-09 Appr. F. Stat. 2011 32 -- -- -- (3)

PARAVICINI CRESPI LUCA Director 1.1.09-31-12-09 Appr. F. Stat. 2011 35 -- -- 40 (3)

RECCHI CLAUDIO Director 1.1.09-31-12-09 Appr. F. Stat. 2011 25 -- -- --

SEGRE MASSIMO Director 1.1.09-31-12-09 Appr. F. Stat. 2011 27 -- -- 536 (4)

TABELLINI GUIDO Director 1.1.09-31-12-09 Appr. F. Stat. 2011 42 -- -- --

ZANNI UMBERTO Director 1.1.09-31-12-09 Appr. F. Stat. 2011 35 -- -- --

MANZONETTO PIETRO Chairman of Board of Statutory Auditors

1.1.09-31-12-09 Appr. F. Stat. 2011 62 -- -- --

NANI LUIGI Statutory Auditor 1.1.09-31-12-09 Appr. F. Stat. 2011 42 -- -- --

ZINGALES RICCARDO Statutory Auditor 1.1.09-31-12-09 Appr. F. Stat. 2011 42 -- -- 244 (5)

(1) Fees of € 268 thousand as Chairman of CIR S.p.A., € 30 thousand as Chairman of the subsidiary Sogefi S.p.A. and € 463 thousand as Chairman of the subsidiary Gruppo Editoriale L’Espresso S.p.A. are paid to ROMED S.p.A.

(2) Other fees include emoluments for the position of Director in other companies of the Group and employee salary

(3) Other fees include emoluments for the position of Director in other companies of the Group

(4) Other fees refer to fees for professional services

(5) Other fees include emoluments for the position of Statutory Auditor in other companies of the Group

Stock Option Plans As required by Consob Resolution no. 11971 of May 14 1999 and subsequent amendments and additions, it should be stated that CIR has set up stock option plans for employees of the Group. At December 31 2009 stock option plans issued as from the year 2000 were still valid for a total of 52,152,400 options, as can be seen from the chart in note 23 of the explanatory Notes to the Consolidated Financial Statements. With reference to the plans issued in the last three years, it should be said that: - On April 27 2007 the Shareholders Meeting voted to assign to the Chief Executive Officer and

executives of the Company options, each of which will give the right to receive a gross sum equal to the difference between the market value of the share in the vesting period and the market value of the share at time the option was assigned, according to terms and conditions

CIR S.p.A. 191

set out in the Regulations of “Incentive Plan (phantom stock options) 2007”, which was ap-proved at the same time. These options were assigned in 2 equal tranches for a total of 6,105,000 options.

The Regulations also stipulate that the essential condition for exercise of the options is that the assignee must be permanently employed by the Company as of the date of exercise of the op-tions, except in cases of retirement, permanent invalidity or death.

The subscription price was set at € 3.0877 per share for the first tranche options and at € 2.7344 per share for the second tranche options.

The first tranche options can be exercised by each beneficiary as from September 30 2007, every three months, up to the final maturity of September 30 2017, while the second tranche options can be exercised by each beneficiary from March 31 2008, every three months, until the final maturity of March 31 2018.

- On April 29 2008 the Shareholders Meeting voted to assign to the Chief Executive Officer and

executives of the Company options, each of which will give the right to receive a gross sum equal to the difference between the market value of the share in the vesting period and the market value of the share at time the option was assigned, according to terms and conditions set out in the Regulations of “Incentive Plan (phantom stock options) 2008”, which was ap-proved at the same time.

These options were assigned in 2 equal tranches for a total of 6,250,000 options. The Regulations also stipulate that the essential condition for exercise of the options is that the

assignee must be permanently employed by the Company as of the date of exercise of the op-tions, except in cases of retirement, permanent invalidity or death.

The subscription price was set at € 1.6806 per share for the first tranche options and at € 1.0718 per share for the second tranche options.

The first tranche options can be exercised by each beneficiary as from September 30 2008, every three months, up to the final maturity of September 30 2018, while the second tranche options can be exercised by each beneficiary from March 31 2009, every three months, up to the final maturity of March 31 2019.


executives of the Company, of its parent company and of its subsidiaries options for the sub-sciption of shares according to the terms and conditions set out in the Regulations of “Extraor-dinary Stock Option Plan 2009”, which were approved at the same time. The plan gives the beneficiaries the right to exercise the options at a set price and within a predefined time frame to subscribe a total of 15,575,000 newly issued shares. The Regulations also stipulate that the essential condition for exercise of the options is that the assignee must be permanently em-ployed by the Company as of the date of exercise of the options, except in cases of retirement, permanent invalidity or death. It should be noted that the approval of this plan had the purpose of reorganizing the “Phantom stock option” plans approved by the Shareholders on April 27 2007 and April 29 2008. Therefore the subscription price corresponds to the so-called “initial value” of the options awarded to beneficiaries under the “Phantom stock option” plans, as de-fined in their respective Regulations. The options may be exercised by each beneficiary as from June 30 2009, every three months, until the final maturity previously established in the regulations of the “Phantom stock option” plans.


executives of the Company, of its parent company and of its subsidiaries options for the sub-sciption of shares according to the terms and conditions set out in the Regulations of “Stock Option Plan 2009”, which were approved at the same time. The plan gives the beneficiaries the

192 CIR S.p.A.

right to exercise the options at a set price and within a predefined time frame to subscribe a to-tal of 7,980,000 newly issued shares subdivided into different tranches - the first tranche of 4,090,000 options and the second of 3,890,000 options. The Regulations also stipulate that the essential condition for exercise of the options is that the assignee must be permanently em-ployed by the Company, its parent company or a subsidiary as of the date of exercise of the op-tions, except in cases of retirement, permanent invalidity or death. The subscription price was set at € 0.9907 per share for the first tranche options and at € 1.5449 per share for the second tranche options. The first tranche options may be exercised by each beneficiary as from Sep-tember 30 2009, every three months, until the final maturity of September 30 2019, while the second tranche options may be exercised by each beneficiary as from February 28 2010, every three months, until the final maturity of February 28 2020.

The following chart shows information regarding stock options assigned to Directors and General Managers.

CIR S.p.A. 193

STOCK OPTIONS AWARDED TO DIRECTORS AND GENERAL MANAGERS

Options Optionsexpired in year cancelled in year

Position held

Average expiry

Average expiry

Average expiry

(years) (years) (years)

CEO & GM

Stock Option Plan 7/3/2000 1,500,000 3.70 1,500,000 3.70


Stock Option Plan 5/9/2003 112,500 1.13 112,500 1.13






Stock Option Plan 2006 1st tranche 1,250,000 2.50 1,250,000 2.50

Stock Option Plan 2006 2nd tranche 1,250,000 2.47 1,250,000 2.47

Extraord. S. O. Plan 2009 1st tranche (*) 1,750,000 3.0877 1,750,000 3.0877

Extraord. S. O. Plan 2009 2nd tranche (*) 1,750,000 2.7344 1,750,000 2.7344

Extraord. S. O. Plan 2009 3rd tranche (*) 1,750,000 1.6806 1,750,000 1.6806

Extraord. S. O. Plan 2009 4th tranche (*) 1,750,000 1.0718 1,750,000 1.0718

Stock option plan 2009 1st tranche 1,750,000 0.9907 1,750,000 0.9907

Stock option plan 2009 2nd tranche 1,750,000 1.5449 1,750,000 1.5449

TOTAL 19,237,500 2.32 5.33 10,500,000 1.8517 8.99 29,737,500 2.1560 6.08

PIASER ALBERTO GM





Stock Option Plan 2006 1st tranche 300,000 2.50 300,000 2.50

Stock Option Plan 2006 2nd tranche 300,000 2.47 300,000 2.47

Extraord. S. O. Plan 2009 1st tranche (*) 420,000 3.0877 420,000 3.0877

Extraord. S. O. Plan 2009 2nd tranche (*) 420,000 2.7344 420,000 2.7344

Extraord. S. O. Plan 2009 3rd tranche (*) 420,000 1.6806 420,000 1.6806

Extraord. S. O. Plan 2009 4th tranche (*) 420,000 1.0718 126,000 1.0718 294,000 1.0718

Stock option plan 2009 1st tranche 420,000 0.9907 75,600 0.9907 344,400 0.9907

Stock option plan 2009 2nd tranche 420,000 1.5449 420,000 1.5449

TOTAL 1,360,000 2.38 7.05 2,520,000 1.8517 8.99 201,600 1.04 1.808 3,678,400 2.0999 7.52

(*) Plans resulting in part from the conversion of Phantom stock option plans

Number of options

Average strike price

Number of options

Number ofoptions

Number of options

Last name and first name Average strike price

DE BENEDETTI RODOLFO

Average market price on exercise

all'esercizio

Options awarded duringthe year

Options exercised duringthe year


Number of options

Options held at the startof the year

Options held at the closeof the year

Number of options


Financial Statements of Directly Controlled Subsidiaries as of December 31 2009

SORGENIA HOLDING S.p.A.

GRUPPO EDITORIALE L’ESPRESSO S.p.A.

SOGEFI S.p.A.

KOS S.p.A. (già HSS – Holding Sanità e Servizi S.p.A.)

DRY PRODUCTS S.p.A.

CIR INTERNATIONAL S.A.

INTERGEFI S.r.l.

JUPITER FINANCE S.p.A.

CIRINVEST S.p.A.

CIGA LUXEMBOURG S.A.

NEXENTI S.r.l.

195

SORGENIA HOLDING S.p.A.Registered Office : TURINShare Capital at 31.12.2009: € 136,176,747.00


ASSETS 31.12.2009 31.12.2008

A - RECEIVABLES FROM SHAREHOLDERS FOR PAYMENTS STILL DUE -- --

B - FIXED ASSETSI Intangible assets

Concessions, licenses and trademarks 15,289,512 6,088,290 Assets in process & advance payments 4,306,709 4,718,488 Other intangible assets 3,680,151 4,097,582

Total intangible assets 23,276,372 14,904,360

II Tangible assetsLand and buildings 16,417,629 2,842,706 Plant and machinery 76,244,523 347,801 Industrial and commercial equipment 593,813 712,716 Other assets 3,650,548 3,753,185 Assets under construction & advance payments 29,671,371 177,562,927

Total tangible assets 126,577,884 185,219,335

III Financial assetsInvestments in:

Subsidiaries 703,314,469 607,018,156 Associates 1,005,332 1,046,210 Other companies 50,000 50,000

Accounts receivable:Subsidiaries 166,754,097 142,621,413 Associates 479,900 408,900 Others 6,607,994 8,265,506

Total financial assets 878,211,792 759,410,185

TOTAL FIXED ASSETS 1,028,066,048 959,533,880

C - CURRENT ASSETSI Inventories

Raw materials, secondary materials & consumables 10,396,942 15,155,412 Finished goods 22,768,454 28,547,047

Total inventories 33,165,396 43,702,459 II Accounts receivable:

Clients - up to one year 573,112,850 678,509,225 Subsidiaries - up to one year 48,987,255 23,247,132 Associates - up to one year 168,193 103,576 Parent companies - up to one year 1,613,571 4,985,926 Tax receivables - up to one year 38,918,832 14,826,140 Tax receivables - over one year 3,569,229 3,810,000 Tax payments on account - up to one year 25,810,897 14,599,103 Others - up to one year 2,495,709 2,640,077

Total receivables 694,676,536 742,721,179 III Financial assets not classified as fixed assets -- --

IV Cash & cash equivalentsBank and Post Office deposits 28,859,987 212,221,161 Cash and valuables on hand 8,106 10,340

Total cash & cash equivalents 28,868,093 212,231,501

TOTAL CURRENT ASSETS 756,710,025 998,655,139

D - ACCRUED INCOME AND PREPAID EXPENSE 2,875,192 1,890,355

TOTAL ASSETS 1,787,651,265 1,960,079,374


A - SHAREHOLDERS' EQUITYI Capital 9,080,053 8,738,843 II Share premium reserve 639,624,684 489,371,961 III Revaluation reserves -- -- IV Legal reserve 1,747,769 1,635,908 V Statutory reserves -- -- VI Reserve for own shares held -- -- VII Other reserves 581,028 -- VIII Retained earnings (losses) 66,975,031 65,524,261 IX Net income (loss) for the year 16,429,230 15,988,138

TOTAL EQUITY 734,437,795 581,259,111

B - PROVISIONS FOR RISKS AND LOSSESRetirement provisions 992,214 1,927,097 Provisions for taxes including deferred taxes 331,826 293,303 Other provisions 5,864,383 4,429,768

TOTAL PROVISIONS FOR RISKS AND LOSSES 7,188,423 6,650,168

C - EMPLOYEE LEAVING INDEMNITY (TFR) 1,719,112 1,547,710 D - ACCOUNTS PAYABLE

Shareholders - loans due in up to one year 13,417,908 112,752 Bank borrowings due in up to one year 34,389,579 8,652,717 Bank borrowings due in over one year 570,200,000 699,500,000 Suppliers - due in up to one year 292,990,654 451,350,915 Subsidiaries - due in up to one year 110,768,766 174,894,044 Associates 517,402 4,857 Tax payables 15,381,599 30,362,665 Social Security payables 2,254,325 1,990,882 Other payables due in up to one year 4,385,702 3,753,553

TOTAL PAYABLES 1,044,305,935 1,370,622,385

E - ACCRUED EXPENSE AND DEFERRED INCOME -- --

TOTAL LIABILITIES 1,787,651,265 1,960,079,374

SORGENIA HOLDING S.p.A.Registered Office : TURINShare Capital at 31.12.2009: € 136,176,747.00


2009 2008

A - VALUE OF PRODUCTIONRevenues from sales and services 2,286,029,755 2,373,067,766 Increases from internally produced fixed assets 2,186,352 2,622,148 Other revenues and income 36,082,183 36,187,994

TOTAL VALUE OF PRODUCTION 2,324,298,290 2,411,877,908

B - COSTS OF PRODUCTIONPurchase of raw materials, secondary materials, consumables & goods 1,605,072,019 1,790,288,217 Costs for services 623,713,064 570,180,428 Lease and rental costs 2,983,638 2,120,904 Personnel costs

Salaries and wages 13,900,448 11,376,668 Social contributions 4,374,415 3,572,978 Leaving indemnity 979,461 793,350 Retirement and similar benefits 992,955 905,603

Amortization, depreciation & writedownsAmortization of intangible assets 5,877,012 3,878,579 Depreciation of tangible assets 2,937,124 1,275,007 Writedown of receivables in current assets and cash & cash equivalents 31,431,728 21,766,850

Change in inventories of raw & secondary materials, consumables & goods 10,537,063 (13,303,218)Risk provisions 788,244 1,499,208 Other provisions 3,309,307 1,812,243 Miscellaneous operating costs 17,531,659 10,585,962

TOTAL COSTS OF PRODUCTION 2,324,428,137 2,406,752,779 OPERATING INCOME (LOSS) (129,847) 5,125,129

C - FINANCIAL INCOME AND EXPENSEIncome from equity investments

Subsidiaries 35,580,250 30,514,500 Other financial income

Receivables included in fixed assetsSubsidiaries 4,237,003 9,891,627

Income other than the aboveOthers 1,316,653 3,527,832

Interest and other financial expenseSubsidiaries 1,777,749 2,506,814 Parent companies 331,261 369,715 Others 18,438,835 30,693,294

Total financial expense 20,547,845 33,569,823 Foreign exchange gains and losses (1,113,583) 1,723,202

TOTAL FINANCIAL INCOME AND EXPENSE 21,699,644 8,640,934

D - ADJUSTMENTS TO THE VALUE OF FINANCIAL ASSETSRevaluations -- -- Writedowns

of equity investments 15,779,588 (12,256)Total adjustments (15,779,588) 12,256

E - EXTRAORDINARY INCOME AND EXPENSEIncome 1,959,885 57,162 Expense -- --

Taxes from prior periods 19,523 38,379 EXTRAORDINARY ITEMS 1,940,362 18,783 RESULT BEFORE TAXES 7,730,571 13,797,102

Income taxes for the year 8,698,659 2,191,036 NET INCOME (LOSS) FOR THE YEAR 16,429,230 15,988,138

GRUPPO EDITORIALE L’ESPRESSO S.p.A.Registered Office: ROMEShare Capital at 31.12.2009: € 61,438,738.20


ASSETS 31.12.2009 31.12.2008

Intangible assets with an indefinite useful life 220,660,859 220,660,858 Other intangible assets 1,760,161 2,525,892 Intangible assets 222,421,020 223,186,750

Tangible assets 50,965,058 60,103,827 Equity investments 408,443,617 400,452,524 Non-current receivables 425,136 373,424 Deferred tax assets 21,515,014 14,886,308

NON-CURRENT ASSETS 703,769,845 699,002,833

Inventories 19,226,238 22,635,642 Trade receivables 101,319,094 101,403,549 Securities 25,127,285 -- Tax receivables 14,700,529 14,848,005 Other receivables 9,775,554 10,897,683 Cash & cash equivalents 182,438,739 196,168,010

CURRENT ASSETS 352,587,439 345,952,889

TOTAL ASSETS 1,056,357,284 1,044,955,722


Share capital 61,438,738 61,384,768 Reserves 86,854,917 86,083,501 Retained earnings (losses) 201,243,666 150,582,252 Net income (loss) for the year 30,386,900 49,668,766

SHAREHOLDERS' EQUITY 379,924,221 347,719,287

Borrowings 307,331,958 327,311,407 Provisions for risks and losses 34,452,040 18,531,528 TFR and other personnel provisions 36,592,580 40,185,313 Deferred tax liabilities 45,600,769 43,045,147


Borrowings 86,139,303 107,474,683 Provisions for risks and losses 25,993,927 11,637,553 Trade payables 91,486,396 90,176,178 Tax payables 7,317,326 11,821,294 Other payables 41,518,764 47,053,332

CURRENT LIABILITIES 252,455,716 268,163,040

TOTAL LIABILITIES 676,433,063 697,236,435


GRUPPO EDITORIALE L’ESPRESSO S.p.A.Registered Office : ROMEShare Capital at 31.12.2009: € 61,438,738.20


2009 2008

Revenues 494,150,812 573,735,173

Change in product inventories (651,934) (1,743,550)

Other operating income 9,952,982 8,655,729

Costs for purchases (79,772,541) (100,451,313)

Costs for services (248,335,407) (288,588,543)

Other operating expense (9,248,086) (12,038,052)

Personnel costs (129,927,169) (129,049,931)

Amortization, depreciation & writedowns (14,027,059) (13,973,310)

Operating result 22,141,598 36,546,203

Net financial income/(expense) (12,772,311) (13,978,344)

Dividends 41,982,641 55,279,351

Result before taxes 51,351,928 77,847,210

Taxes (20,965,028) (28,178,444)

NET RESULT 30,386,900 49,668,766

SOGEFI S.p.A.Registered Office : MANTUAShare Capital at 31.12.2009: € 60,397,475.84


ASSETS 31.12.2009 31.12.2008CURRENT ASSETS

Cash and cash equivalents 62,703,224 6,871,537 Centralized treasury accounts with subsidiaries 8,770,246 24,287,987 Other financial assets 12,519 2,374 Loans and financial receivables classifiable as loans to subsidiaries 2,300,000 -- WORKING CAPITALTrade receivables 3,746,442 4,917,838 of which with subsidiaries 1,915,019 2,986,590 of which with parent company 1,831,423 1,931,248 Other receivables 60,871 227,506 Tax receivables 240,025 383,516 Other assets 837,603 791,697 of which with subsidiaries 97,214 109,076

TOTAL WORKING CAPITAL ASSETS 4,884,941 6,320,557 TOTAL CURRENT ASSETS 78,670,930 37,482,455 NON-CURRENT ASSETSFIXED ASSETS

Investment property: land 12,154,000 12,154,000 Investment property: other properties 14,865,000 14,765,000 Other tangible assets 48,966 65,409 Intangible assets 108,937 66,198

TOTAL FIXED ASSETS 27,176,903 27,050,607 OTHER NON-CURRENT ASSETS

Investments in subsidiaries 271,865,092 264,296,016 Other available-for-sale financial assets 2,553 3,166 Loans and financial receivables classifiable as loans 108,551,466 101,203,167 of which to subsidiaries 108,491,425 101,203,167 of which other medium long term assets - derivatives 60,041 -- Other receivables 19,918 21,684 Deferred tax assets 1,419,383 1,145,516

TOTAL OTHER NON-CURRENT ASSETS 381,858,412 366,669,549 TOTAL NON-CURRENT ASSETS 409,035,315 393,720,156 TOTAL ASSETS 487,706,245 431,202,611

LIABILITIES AND SHAREHOLDERS' EQUITY 31.12.2009 31.12.2008CURRENT LIABILITIES

Current bank borrowings 1,904 10,223,628 Centralized treasury accounts with subsidiaries 63,757,056 29,290,435 Current part of long term loans and other loans 55,543,919 22,815,903 of which with subsidiaries 21,050 24,222 TOTAL SHORT-TERM BORROWINGS 119,302,879 62,329,966 Other financial liabilities - derivatives 1,000,039 -- TOTAL SHORT-TERM BORROWINGS AND DERIVATIVES 120,302,918 62,329,966 Trade payables and other payables 3,748,089 3,878,319 of which to subsidiaries 44,383 518,480 Tax payables 182,139 154,996 Other current liabilities 37,885 60,991

TOTAL CURRENT LIABILITIES 124,271,031 66,424,272 NON-CURRENT LIABILITIESMEDIUM LONG TERM BORROWINGS AND DERIVATIVES

Bank borrowings 196,020,895 230,716,872 TOTAL MEDIUM LONG TERM BORROWINGS 196,020,895 230,716,872 Other medium long term financial liabilities - derivatives 2,123,891 2,262,669

TOTAL MEDIUM LONG TERM BORROWINGS AND DERIVATIVES 198,144,786 232,979,541 OTHER LONG TERM LIABILITIES

Long term provisions 1,094,761 1,053,432 Deferred taxes 510,089 458,934

TOTAL OTHER LONG TERM LIABILITIES 1,604,850 1,512,366 TOTAL NON-CURRENT LIABILITIES 199,749,636 234,491,907 SHAREHOLDERS' EQUITY

Share capital 60,397,476 60,397,476 Reserves and retained earnings (losses) 69,886,976 40,666,495 Net income (loss) for the year 33,401,126 29,222,461

TOTAL SHAREHOLDERS' EQUITY 163,685,578 130,286,432 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 487,706,245 431,202,611

SOGEFI S.p.A.Registered Office : MANTUAShare Capital at 31.12.2009: € 60,397,475.84


2009 2008

FINANCIAL INCOME AND EXPENSE1) Income from equity investments - dividends and other income from subsidiaries 40,013,682 40,824,227 - dividends and other income from other companies 27 1,266 TOTAL 40,013,709 40,825,493 2) Other financial income - from securities recorded in current assets as available for trading -- -- - income other than the above interest and commissions from subsidiaries 3,941,743 7,270,894 interest and commissions from others and sundry income 121,400 684,099 foreign exchange gains 1,682,693 3,520,976 TOTAL 5,745,836 11,475,969 3) Interest expense and other financial expense - with subsidiaries 369,151 1,752,809 - with others 8,132,466 11,849,640 - foreign exchange losses 1,707,963 3,188,793 TOTAL 10,209,580 16,791,242 ADJUSTMENTS TO THE VALUE OF FINANCIAL ASSETS4) Revaluations -- -- 5) Writedowns -- 4,593,713 TOTAL VALUE ADJUSTMENTS -- (4,593,713)6) OTHER OPERATING INCOME 9,764,019 10,385,944 of which from subsidiaries 9,699,875 10,276,653 OTHER OPERATING COSTS7) Non-financial services 4,151,548 5,183,703 of which from subsidiaries 66,935 508,187 of which from parent company 1,850,000 1,850,000 8) Lease and rental costs 3,811,286 1,929,610 9) Personnel costs 4,741,075 4,998,933 10) Amortization, depreciation and writedowns 34,017 40,266 11) Risk provisions -- -- 12) Other provisions -- -- 13) Miscellaneous operating costs 892,383 1,293,392 TOTAL OTHER OPERATING COSTS 13,630,309 13,445,904 INCOME FROM OPERATING ACTIVITIES 31,683,675 27,856,547 NON-OPERATING INCOME AND EXPENSE14) Income 100,000 240,000 15) Expense -- 597,556 of which non-recurring expense with third parties -- 408,802 of which non-recurring expense with parent company -- -- NON-OPERATING INCOME (LOSS) 100,000 (357,556)RESULT BEFORE TAXES 31,783,675 27,498,991 16) Income taxes for the year (1,617,451) (1,723,470)NET INCOME FOR THE YEAR 33,401,126 29,222,461

KOS S.p.A. (formerly HSS - Holding Società e Servizi S.p.A.)Registered Office : MILANShare Capital at 31.12.2009: € 6,479,972.00


ASSETS 31.12.2009 31.12.2008

NON-CURRENT ASSETS 116,066,903 117,626,276 INTANGIBLE ASSETS 212,928 289,655 TANGIBLE ASSETS 13,605,651 14,988,348 EQUITY INVESTMENTS 102,127,082 102,272,659 OTHER RECEIVABLES 14,936 15,261 DEFERRED TAXES 106,306 60,353

CURRENT ASSETS 42,599,458 35,625,549

RECEIVABLES WITH PARENT COMPANY 1,567,684 1,220,126 TRADE RECEIVABLES 21,000 6,181 TRADE RECEIVABLES - PARENT COMPANY 3,101,670 2,952,656 OTHER RECEIVABLES 4,857,120 1,331,810 OTHER FINANCIAL RECEIVABLES (FROM VALUING DERIVATIVES) 3,268,787 2,527,973 FINANCIAL RECEIVABLES - PARENT COMPANY 27,208,190 18,745,631 CASH & CASH EQUIVALENTS 2,575,007 8,841,172

TOTAL ASSETS 158,666,361 153,251,825


SHAREHOLDERS' EQUITY 133,616,563 140,024,586 SHARE CAPITAL 6,479,972 6,479,972 RESERVES 146,213,487 146,156,618 RETAINED EARNINGS / (LOSSES) (12,612,005) (8,660,074)RESULT FOR THE YEAR NET INCOME/(LOSS) (6,464,891) (3,951,930)


OTHER BORROWINGS 19,431,917 7,996,066 PERSONNEL PROVISIONS 125,596 154,687

CURRENT LIABILITIES 5,492,285 5,076,486 OTHER BORROWINGS 3,990,968 3,153,490 PAYABLES - PARENT COMPANY -- 283 PAYABLES - SUBSIDIARIES 91,392 122,126 TRADE PAYABLES 701,064 885,988 OTHER PAYABLES 708,861 914,599


KOS S.p.A. (formerly HSS - Holding Società e Servizi S.p.A.)Registered Office : MILANShare Capital at 31.12.2009: € 6,479,972.00


2009 2008

REVENUES 817,286 2,212,300

COSTS FOR PURCHASE OF GOODS (25,528) (36,923)

COSTS FOR SERVICES (2,177,698) (2,317,405)

PERSONNEL COSTS (3,209,374) (2,659,030)

OTHER OPERATING INCOME 47,711 15,513

OTHER OPERATING COSTS (216,833) (585,297)

AMORTIZATION, DEPRECIATION & WRITEDOWNS OFFIXED ASSETS AND OTHER WRITEDOWNS (1,056,825) (847,675)

OPERATING RESULT (EBIT) (5,821,261) (4,218,517)

FINANCIAL INCOME 5,445,286 4,583,554

FINANCIAL EXPENSE (5,328,899) (4,483,378)

DIVIDENDS 287,662 --

ADJUSTMENTS TO THE VALUE OF FINANCIAL ASSETS (2,638,825) (1,000,000)

NET INCOME / (LOSS) BEFORE TAXES (8,056,037) (5,118,341)

INCOME TAXES 1,591,146 1,166,411

NET INCOME/(LOSS) FOR THE YEAR (6,464,891) (3,951,930)

DRY PRODUCTS S.p.A.Registered Office in Milan: Via Ciovassino 1Share Capital at December 31 2009: € 5,000,000.00


ASSETS 31.12.2009 31.03.2009 *A) RECEIVABLES FROM SHAREHOLDERS FOR PAYMENTS STILL DUE -- -- B) FIXED ASSETS

I Intangible assets -- -- II Tangible assets

Plant and machinery 225 324 Total tangible assets 225 324 III Financial assets

Investments in subsidiaries -- -- Total financial assets -- --

TOTAL FIXED ASSETS 225 324

C) CURRENT ASSETSI Inventories -- -- II Receivables ** **

Subsidiaries -- -- -- -- Shareholders -- -- -- 458,000 Others -- 48,550 -- 41,020

Total receivables -- 48,550 -- 499,020 III Financial assets not classified as fixed assets

Other securities 109,647,851 -- Total financial assets 109,647,851 -- IV Cash & cash equivalents

Bank and Post Office deposits 965,945 820,597 Cash and valuables on hand 135 129

Total cash & cash equivalents 966,080 820,726 TOTAL CURRENT ASSETS 110,662,481 1,319,746 D) ACCRUED INCOME AND PREPAID EXPENSE

Other accrued income and prepaid expense 1,905 4,348 TOTAL ACCRUED INCOME AND PREPAID EXPENSE 1,905 4,348 TOTAL ASSETS 110,664,611 1,324,418

LIABILITIES AND SHAREHOLDERS' EQUITY 31.12.2009 31.03.2009 *A) SHAREHOLDERS' EQUITY

I Capital 5,000,000 100,000 II Share premium reserve 103,480,000 --III Revaluation reserves -- --IV Legal reserve 102,576 102,576 V Reserve for own shares held -- --VI Statutory reserves -- --VII Other reserves -- --VIII Retained earnings (losses) 165,642 1,000,476 IX Net income (loss) for the year 886,651 (24,834)

TOTAL SHAREHOLDERS' EQUITY 109,634,869 1,178,218 B) PROVISIONS FOR RISKS AND LOSSES

Other 44,644 -- TOTAL PROVISIONS FOR RISKS AND LOSSES 44,644 -- C) EMPLOYEE LEAVING INDEMNITY 26,679 20,208 D) ACCOUNTS PAYABLE ** **

Suppliers -- 1,159 -- 9,426 Parent companies -- 810,000 -- -- Tax payables -- 85,877 -- 72,436 Social Security payables -- 15,745 -- 9,395 Other payables -- 45,638 -- 34,735

TOTAL PAYABLES -- 958,419 -- 125,992 E) ACCRUED EXPENSE AND DEFERRED INCOME -- -- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 110,664,611 1,324,418

* Financial year ended March 31 2009* * of which amounts due in over one year

DRY PRODUCTS S.p.A.Registered Office in Milan: Via Ciovassino 1Share Capital at December 31 2009 : € 5,000,000.00


1/4/2009-31/12/2009 1/4/2008-31/3/2009

A) VALUE OF PRODUCTIONOther revenues and income 234,464 340,139

TOTAL VALUE OF PRODUCTION 234,464 340,139

B) COSTS OF PRODUCTIONServices 56,968 34,829 Lease and rental 11,218 22,341 Personnel:

Salaries and wages 144,925 199,453 Social contributions 46,849 63,790 Leaving indemnity 12,348 13,202

Amortization, depreciation & writedowns 99 168 Risk provisions 44,644 -- Miscellaneous operating costs 24,882 46,230

TOTAL COSTS OF PRODUCTION 341,933 380,013

OPERATING INCOME (LOSS) (107,469) (39,874)

C) FINANCIAL INCOME AND EXPENSEOther financial income:

From securities recorded in current assets whichare not classified as equity investments 1,364,679 --

Income other than the aboveInterest & commissions from others & other sundry income 12,731 32,545

Total other financial income 1,377,410 32,545 Interest and other financial expense:

Parent companies -- --

OthersTotal interest and other financial expense 739 682 Foreign exchange gains and losses 6 (73)

TOTAL FINANCIAL INCOME AND EXPENSE 1,376,677 31,790

D) ADJUSTMENTS TO THE VALUE OF FINANCIAL ASSETSRevaluations:

of equity investments -- -- Writedowns:

of equity investments -- 4,032 of securities recorded in current assets whichare not classified as equity investments 358,489 --

TOTAL ADJUSTMENTS TO THE VALUE OF FINANCIAL ASSETS (358,489) (4,032)

E) EXTRAORDINARY INCOME AND EXPENSE

Income:Other income

Expense:Capital losses on disposals -- -- Other expenses 18,557 --

TOTAL EXTRAORDINARY INCOME AND EXPENSE (18,557) --

RESULT BEFORE TAXES 892,162 (12,116)

Income taxes for the year (5,511) (12,718)

Net income (loss) for the year 886,651 (24,834)

CIR INTERNATIONAL S.A.Registered Office : LUXEMBOURGShare Capital at 31.12.2009 : € 10,000,000.00


ASSETS 31.12.2009 31.12.2008

Fixed assets

- tangible assets 8,272 6,329 - financial assets 136,646,947 165,093,725

136,655,219 165,100,054 Current assets

- receivables 15,649,183 5,344,526 - marketable securities 144,960,429 283,134,055 - cash at banks and on hand 17,541,775 31,215,628

178,151,387 319,694,209 Prepayments and accrued income 1,462,418 20,288,473

Total assets 316,269,024 505,082,736

LIABILITIES AND SHAREHOLDERS’ EQUITY 31.12.2009 31.12.2008

Share capital 10,000,000 1,000,000 Legal reserve 1,000,000 3,718,741 Profit brought forward 112,094 61,078,951 (Loss) for the year (11,538,993) (101,685,598)

Total shareholders’ equity (426,899) (35,887,906)

Provisions for risks and charges 15,389,822 15,389,822

Long term debt 278,000,000 160,000,000

CURRENT LIABILITIES- short term debt -- 330,000,000 - other payables 9,355,817 10,583,796

9,355,817 340,583,796

Accruals and deferred income 13,950,284 24,997,024

Total liabilities 316,695,923 540,970,642

Total liabilities and shareholders' equity 316,269,024 505,082,736

CIR INTERNATIONAL S.A.Registered Office : LUXEMBOURGShare Capital at 31.12.2009: € 10,000,000.00


2009 2008

INCOME

Income from fixed assets 12,082,116 14,188,079

Income from current assets 77,416,117 75,304,104

Value adjustments on marketable securities 29,280,221 --

Operating income 77,775 1,270,155

Loss for the year 11,538,993 101,685,598

Total income 130,395,222 192,447,936

EXPENSES

Value adjustment on- tangible assets 4,221 5,124 - financial assets 36,442,769 72,330,816 - marketable securities -- 20,926,184

36,446,990 93,262,124

Interest payable and similar charges 92,308,243 97,146,865

Operating charges 1,639,989 2,038,947

Total expenses 130,395,222 192,447,936

INTERGEFI S.r.l.Registered Office : MILANShare Capital at 31.12.2008 : € 500,000.00


ASSETS 31.12.2008 31.12.2007

A - RECEIVABLES FROM SHAREHOLDERS FOR PAYMENTS STILL DUE -- --B - FIXED ASSETS

I Intangible assets -- --II Tangible assets -- --III Financial assets -- --

TOTAL FIXED ASSETS -- --C - CURRENT ASSETS

I InventoriesFinished properties -- 4,239,358 Advance payments -- 6,090

Total inventories -- 4,245,448 II Accounts receivable

Clients up to 12 months 3,291 29,542 Tax receivables up to 12 months 115,953 13,859 Tax receivables over 12 months 364 364 Others 125 463

Total receivables 119,733 44,228 III Financial assets not classified as fixed assets -- --IV Cash and cash equivalents

Bank and Post Office deposits 1,563,675 3,001 Cash and valuables on hand 383 455

Total cash and cash equivalents 1,564,058 3,456 TOTAL CURRENT ASSETS 1,683,791 4,293,132 D - ACCRUED INCOME AND PREPAID EXPENSE

Other accrued income and prepaid expense -- --TOTAL ACCRUED INCOME AND PREPAID EXPENSE -- --

TOTAL ASSETS 1,683,791 4,293,132


A - SHAREHOLDERS' EQUITYI Capital 500,000 500,000 II Share premium reserve -- --III Revaluation reserves -- --IV Legal reserve 27,306 27,306 V Statutory reserves -- --VI Reserve for own shares held -- --VII Other reserves

Extraordinary reserve -- 262,545 Reserve for translation and rounding up into Euro (1) 1

VIII Retained earnings (losses) (35,212) --IX Net income (loss) for the year 1,009,610 (297,756)

TOTAL SHAREHOLDERS' EQUITY 1,501,703 492,096 B - PROVISIONS FOR RISKS AND LOSSES -- --C - EMPLOYEE LEAVING INDEMNITY -- --D - ACCOUNTS PAYABLE

Bank borrowings up to 12 months -- 249,541 Borrowings from other lenders up to 12 months -- 91 Payables to suppliers up to 12 months 9,011 21,032 Payables to parent companies up to 12 months -- 3,515,409 Tax payables up to 12 months 9,723 14,436 Other payables up to 12 months 163,354 --

TOTAL PAYABLES 182,088 3,800,509 E - ACCRUED EXPENSE AND DEFERRED INCOME -- 527


INTERGEFI S.r.l.Registered Office : MILANShare Capital at 31.12.2008: € 500,000.00


2008 2007

A - VALUE OF PRODUCTIONRevenues from sales and services 5,681,226 354,534 Other revenues and income 50,700 41,119

TOTAL VALUE OF PRODUCTION 5,731,926 395,653 B - COSTS OF PRODUCTION

Raw materials, secondary materials, consumables & goods 171 -- Services 232,823 27,503 Personnel

Salaries and wages -- --Social contributions -- --Employee leaving indemnity -- --

Changes in inventories of raw materials, secondarymaterials, consumables & goods 4,239,358 -- Miscellaneous operating costs 30,505 474,485

TOTAL COSTS OF PRODUCTION 4,502,857 501,988 OPERATING INCOME (LOSS) 1,229,069 (106,335)C - FINANCIAL INCOME AND EXPENSE

Income from equity investments -- --

Other financial incomeIncome other than the above

Other 14 4,051 Total other financial income 14 4,051

Interest and other financial expenseParent companies 200,559 159,848 Others 9,725 21,188

Total interest and other financial expense 210,284 181,036 TOTAL FINANCIAL INCOME AND EXPENSE (210,270) (176,985)D - ADJUSTMENTS TO THE VALUE OF FINANCIAL ASSETS -- -- E - EXTRAORDINARY INCOME AND EXPENSE

IncomeMiscellaneous 2 --

ExpenseMiscellaneous -- --

TOTAL EXTRAORDINARY INCOME AND EXPENSE 2 -- RESULT BEFORE TAXES 1,018,801 (283,320)

Income taxes for the year (9,191) (14,436)NET INCOME (LOSS) FOR THE YEAR 1,009,610 (297,756)

JUPITER FINANCE S.p.A.Registered Office : MILANShare Capital at 31.12.2009: € 2,100,000.00


ASSETS 31.12.2009 31.12.2008

Cash and cash equivalents 1,424 1,494

Receivables 9,432,029 9,014,537

Equity investments 915,243 915,243

Tangible assets 138,920 155,357

Intangible assets 326,604 310,024

Tax assets 682,495 814,092 a) current 357,126 409,328 b)deferred 325,369 404,764

Other assets 55,929 60,599

TOTAL ASSETS 11,552,644 11,271,346


Payables 5,395,759 2,690,019

Tax liabilities 185,010 233,373 a) current 173,636 205,030 b) deferred 11,374 28,343

Other liabilities 2,758,025 2,139,339

Employee leaving indemnity 158,511 119,462

Capital 2,100,000 600,000

Issuance premiums 900,000 900,000

Reserves 40,772 4,748,149

Net income (loss) for the year 14,569 (158,996)


JUPITER FINANCE S.p.A.Registered Office : MILANShare Capital at 31.12.2009: € 2,100,000.00


2009 2008

Interest income and similar income 1,124 62,805

Interest expense and similar expense (127,953) (263,390)

INTEREST MARGIN (126,829) (200,585)

Commission income 4,188,783 3,974,777

Commission expense -- --

NET COMMISSIONS 4,188,783 3,974,777

BROKERAGE MARGIN 4,061,954 3,774,192

Net adjustments to value for impairment of : (10,113) (40,454)a) receivables (10,113) (40,454)

Administrative costs: (3,763,735) (3,653,250)a) personnel costs (1,970,097) (1,967,214)b) other administrative costs (1,793,637) (1,686,036)

Net adjustments to value of tangible assets (38,613) (34,207)

Net adjustments to value of intangible assets (170,797) (94,096)

Other operating income 80,824 1,463

RESULT OF OPERATING ACTIVITY 159,520 (46,352)

Net income (loss) from equity investments -- --

Net income (loss) from sale of investments 571 --

INCOME (LOSS) FROM CURRENT ACTIVITY GROSS OF TAXES 160,091 (46,352)

Income taxes for the year on current operations (145,522) (112,644)

INCOME (LOSS) FROM CURRENT ACTIVITY NET OF TAXES 14,569 (158,996)

NET INCOME (LOSS) FOR THE YEAR 14,569 (158,996)

CIRINVEST S.p.A.Registered Office : MILANShare Capital at 31.12.2008: € 121,750.00


ASSETS 31.12.2008 31.12.2007

A - RECEIVABLES FROM SHAREHOLDERS FOR PAYMENTS STILL DUE

B - FIXED ASSETS 2,339 4,678 I INTANGIBLE ASSETS 2,339 4,678

Start-up and expansion costs 2,339 4,678 Historical cost 11,694 11,694

- Accumulated amortization (9,355) (7,016)Concessions, licenses, trademarks & similar rights -- -- Historical cost -- 13,800

- Accumulated amortization -- (13,800)

II TANGIBLE ASSETS -- --

III FINANCIAL ASSETS -- --

Receivables from others -- --

C - CURRENT ASSETS 126,284 138,413

I INVENTORIES -- --

II RECEIVABLES 4,215 3,602 Tax receivables due in over one year 4,215 3,602 Other receivables due in over one year -- --

III FINANCIAL ASSETS NOT CLASSIFIED AS FIXED ASSETS -- --

IV CASH AND CASH EQUIVALENTS 122,069 134,811

D - ACCRUED INCOME AND PREPAID EXPENSE -- --

TOTAL ASSETS 128,623 143,091


A - SHAREHOLDERS' EQUITY 119,764 130,260 I Capital 121,750 121,750 II Share premium reserve -- -- III Revaluation reserves -- -- IV Legal reserve -- -- V Statutory reserves -- -- VI Reserves for own shares held -- -- VII Other reserves 8,510 45,201 VIII Retained earnings (losses) -- -- IX Net income (loss) for the year (10,496) (36,691)

B - PROVISIONS FOR RISKS AND LOSSES -- --

C - EMPLOYEE LEAVING INDEMNITY (TFR) -- --

D - ACCOUNTS PAYABLE 8,859 12,831 Payables - suppliers in up to one year 3,139 4,615 Tax payables due in up to one year -- -- Social Security payables up to one year -- 4,716 Other payables due in up to one year 5,720 3,500

E - ACCRUED EXPENSE AND DEFERRED INCOME -- --

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 128,623 143,091

CIRINVEST S.p.A.Registered Office: MILANShare Capital at 31.12.2008: € 121,750.00


2008 2007

A - VALUE OF PRODUCTION -- 8,806 Other revenues and income -- 8,806

B - COSTS OF PRODUCTION (10,480) (45,106)

Services (6,852) (21,036)- Consulting (2,184) (15,253)- Directors' and Statutory Auditors' fees (3,640) (3,500)- Other (1,028) (2,283)Lease and rental costs (17,204)Personnel costs -- -- a) Salaries and wages -- -- b) Social contributions -- -- c) Empoyee leaving indemnity -- -- e) Other costs -- -- Amortization, depreciation & writedowns (2,339) (2,339)a) Amort. of intangible assets (2,339) (2,339)b) Deprec. of tangible assets -- -- c) Other writedowns of fixed assets -- -- Miscellaneous operating costs (1,289) (4,527)

OPERATING INCOME (LOSS) (10,480) (36,300)

C - FINANCIAL INCOME AND EXPENSE (16) (391)Other financial income 332 31 Interest and other financial expense (348) (422)

D - ADJUSTMENTS TO THE VALUE OF FINANCIAL ASSETS -- --

E - EXTRAORDINARY INCOME AND EXPENSE -- -- Income -- --

RESULT BEFORE TAXES (10,496) (36,691)

Income taxes for the year -- --

NET INCOME (LOSS) FOR THE YEAR (10,496) (36,691)

CIGA LUXEMBOURG S.A.r.l.Registered Office : LUXEMBOURGShare Capital at 31.12.2009: € 1,000,000.00


ASSETS 31.12.2009 31.12.2008

Fixed assets- tangible assets 238 3,445 - financial assets 5,352,067 279,755,744

5,352,305 279,759,189

Current assets- receivables 17,103 13,828 - marketable securities 730,921 307,416 - cash and bank and in hand 107,737 72,933

855,761 394,177

GRAND TOTAL 6,208,066 280,153,366


Share capital 1,000,000 318,200,000 Legal reserve 173,717 -- Profit (loss) brought forward (3,192,764) (188,302)Profit (loss) for the year 8,148,028 (39,030,746)Total shareholders' equity 6,128,981 278,980,952

Current liabilities- short term debt -- 1,119,648 Trade payables & other payables 79,085 52,766 Total liabilities 79,085 1,172,414

GRAND TOTAL 6,208,066 280,153,366

CIGA LUXEMBOURG S.A.r.l.Registered Office: LUXEMBOURGShare capital at 31.12.2009: € 1,000,000.00


2009 2008

INCOMEValue adjustments on marketable securities 8,403,738 467,975 Current asset income 12,550 31,723 Extraordinary income 555,421 27,403 Loss for the year -- 39,030,746 Total income 8,971,709 39,557,847

EXPENSES

Value adjustment on

- tangible assets 3,207 2,969 - financial assets 189,228 38,724,390

192,435 38,727,359

Interest payable and similar charges 30,374 550,860 Operating charges 600,871 279,628 Profit for the year 8,148,028 --

Total expenses 8,971,709 39,557,847

NEXENTI S.r.l.Registered Office : MILANShare Capital at 31.12.2009: € 50,000.00


ASSETS 31.12.2009 31.12.2008

A - RECEIVABLES FROM SHAREHOLDERS FOR PAYMENTS STILL DUE -- --

B - FIXED ASSETSI Intangible assets -- -- II Tangible assets -- -- III Financial assets -- --

TOTAL FIXED ASSETS -- --

C - CURRENT ASSETSI Inventories -- -- II Receivables

Tax receivables up to one year 218 96 Total receivables 218 96

III Financial assets not classified as fixed assets -- -- IV Cash and cash equivalents 62,823 172,150

TOTAL CURRENT ASSETS 63,041 172,246

D - ACCRUED INCOME AND PREPAID EXPENSE -- --

TOTAL ASSETS 63,041 172,246


A - SHAREHOLDERS' EQUITY

I Capital 50,000 50,000 II Share premium reserve -- -- III Revaluation reserves -- -- IV Legal reserve -- -- V Statutory reserves -- -- VI Reserve for own shares held -- -- VII Other reserves - Cover of losses -- 70,000 VIII Retained earnings (losses) (3,260) -- IX Net income (loss) for the year 10,824 (73,260)

TOTAL SHAREHOLDERS' EQUITY 57,564 46,740

B - PROVISIONS FOR RISKS AND LOSSES -- --

C - EMPLOYEE LEAVING INDEMNITY (TFR) -- --

D - ACCOUNTS PAYABLE

Trade payables due in over one year -- 20,000 Payables to parent companies due in over one year -- 101,175 Tax payables due in over one year 117 --

Other payables due in over one year 5,360 4,331

TOTAL PAYABLES 5,477 125,506

ACCRUED EXPENSE AND DEFERRED INCOME -- -- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 63,041 172,246

NEXENTI S.r.l.Registered Office: MILANShare Capital at 31.12.2009: € 50,000.00


2009 2008

A - VALUE OF PRODUCTION 18,671 --

B - COSTS OF PRODUCTIONServices

Consulting (6,660) (19,163)Other -- (43,135)

Miscellaneous operating costs (1,583) (10,100)TOTAL COSTS OF PRODUCTION (8,243) (72,398)

OPERATING INCOME (LOSS) 10,428 (72,398)

C - FINANCIAL INCOME AND EXPENSEOther financial income 807 355 Interest and other financial expense -- (41)

With parent companies (220) (1,176)With others (74) --

TOTAL FINANCIAL INCOME AND EXPENSE 513 (862)

D - ADJUSTMENTS TO THE VALUE OF FINANCIAL ASSETS -- --

E - EXTRAORDINARY INCOME AND EXPENSEExtraordinary income -- -- Extraordinary expense -- --

TOTAL EXTRAORDINARY INCOME AND EXPENSE -- --

RESULT BEFORE TAXES 10,941 (73,260)

Income taxes for the year (117) -- NET INCOME (LOSS) FOR THE YEAR 10,824 (73,260)

CERTIFICATION OF THE STATUTORY FINANCIAL STATEMENTS IN ACCORDANCE WITH ART. 154 BIS OF D.LGS 58/98

1. The undersigned Rodolfo De Benedetti, as Chief Executive Officer, and Alberto Piaser, as Officer responsible for the preparation of the accounting and corporate documents of CIR S.p.A., do hereby certify, taking into account even the terms of Art. 154-bis, paragraphs 3 and 4, of Legislative Decree no. 58 of February 24 1998:

- that the administrative and accounting procedures for the preparation of the Statutory Finan-

cial Statements during financial year 2009 were adequate in relation to the size and nature of the business and

- that they were effectively applied 2. On this subject no aspects emerged that needed to be notified. 3. It is also certified that the Statutory Financial Statements:

- Were prepared in conformity with the international accounting standards recognized by the European Union according to the terms of Regulation (EC) No. 1606/2002 of the European Parliament and of the Council, of July 19 2002;

- Correspond to the results of the books and the general ledger; - Are suitable to give a true and fair representation of the equity, economic and financial posi-

tion of the issuer and of all the companies included in the consolidation. The Report on Operations includes a reliable analysis of performance and of the result of operations as well as the position of the issuer together with a description of the principal risks and uncertainties to which it is exposed. Milan, April 2 2010 Signed by Signed by Rodolfo De Benedetti Alberto Piaser Chief Executive Officer Officer Responsible

221

LIST OF EQUITY INVESTMENTS AT DECEMBER 31 2009

in accordance with Art. 38.2 of D.Lgs. no. 127/91

and Art. 126 of Consob Resolution 11971 of May 14 1999

223

SUBSIDIARIES CONSOLIDATED USING THE FULL INTEGRATION METHOD

(in euro or foreign currency)

Name of company Registered Office

Share Capital

Currency Parent Companies % of ownership

CIR GROUP

CIR INTERNATIONAL S.A. Luxembourg 10,000,000.00 € CIR S.p.A. 100.00

INTERGEFI S.r.l. Italy 500,000.00 € CIR S.p.A. 100.00

CIRINVEST S.p.A. Italy 121,750.00 € CIR S.p.A. 100.00

JUPITER FINANCE S.p.A. Italy 2,100,000.00 € CIR S.p.A. 98.80

JUPITER MARKETPLACE S.p.A. Italy 1,000,000.00 € JUPITER FINANCE S.p.A. 100.00

JUPITER ASSET MANAGEMENT S.r.l. Italy 10,000.00 € JUPITER FINANCE S.p.A. 100.00

CIGA LUXEMBOURG S.A.r.l. Luxembourg 1,000,000.00 € CIR S.p.A. 100.00

NEXENTI S.r.l. Italy 50,000.00 € CIR S.p.A. 100.00

SORGENIA GROUP

SORGENIA HOLDING S.p.A. Italy 136,176,747.00 € CIR S.p.A. 65.03

SORGENIA S.p.A. Italy 9,080,053.21 € SORGENIA HOLDING S.p.A. 79.77

ENERGIA ITALIANA S.p.A. Italy 26,050,000.00 € SORGENIA S.p.A. 78.00

SORGENIA IDRO S.r.l. Italy 50,000.00 € SORGENIA S.p.A. 100.00

ENERGIA LUCANA S.p.A. Italy 750,000.00 € SORGENIA S.p.A. 80.00

SORGENIA POWER S.p.A. Italy 20,100,000.00 € SORGENIA S.p.A. 100.00

ENERGIA APRILIA S.r.l. Italy 10,000.00 € SORGENIA S.p.A. 100.00

SORGENIA MINERVINO S.p.A. Italy 1,700,000.00 € SORGENIA S.p.A. 75.00

ENERGIA LOMBARDA S.p.A. Italy 120,000.00 € SORGENIA S.p.A. 100.00

SORGENIA PUGLIA S.p.A. Italy 9,275,692.00 € SORGENIA S.p.A. 90.67

SORGENIA BIOENERGY Italy 500,000.00 € SORGENIA S.p.A. 100.00

SORGENIA ROMANIA S.r.l. Romania 12,098,759.00 Ron SORGENIA S.p.A. 100.00

SORGENIA VENTO S.p.A. Italy 1,343,156.00 € SORGENIA S.p.A. 100.00

SORGENIA MENOWATT S.r.l. Italy 136,050.00 € SORGENIA S.p.A. 70.00

RACOON S.r.l. Italy 20,000.00 € SORGENIA S.p.A. 100.00

SORGENIA TRADING S.p.A. Italy 5,000,000 € SORGENIA S.p.A. 100.00

SORGENIA SOLAR S.r.l. Italy 670,000.00 € SORGENIA S.p.A. 100.00

SOLUXIA SARDA S.r.l. Italy 85,200.00 € SORGENIA SOLAR S.r.l. 90.00

SOLUXIA SARDA II S.r.l. Italy 60,000 € SORGENIA SOLAR S.r.l. 90.00

SORGENIA SOLAR POWER S.r.l. Italy 95,000 € SORGENIA SOLAR S.r.l. 100.00

SORGENIA E&P S.p.A. Italy 2,500,000.00 € SORGENIA S.p.A. 100.00

SORGENIA INTERNATIONAL B.V. Netherlands 2,000,000.00 € SORGENIA E&P S.p.A. 100.00

SORGENIA E&P COLOMBIA B.V. Netherlands 18,000 € SORGENIA INTERNATIONAL B.V. 100.00

SORGENIA E&P UK LTD UK 2,487,761 GBP SORGENIA E&P S.p.A. 100.00

SORGENIA E&P BULGARIA EOOD Bulgaria 3,525,400 BGN SORGENIA E&P S.p.A. 100.00

SORGENIA USA LLC USA 14,910,000.00 USD SORGENIA S.p.A. 100.00

NOVENTI VENTURES II LP USA 20,950,399.00 USD SORGENIA USA LLC 69.47

MPX ENERGY LTD UK 364,632.7 GBP SORGENIA INTERNATIONAL B.V 53.37

MPX (Oil & Gas) Limited UK 100 GBP MPX ENERGY LTD 100.00

MPX RESOURCES Limited UK 10 GBP MPX ENERGY LTD 100.00

MPX NORTH SEA Limited UK 10 GBP MPX ENERGY LTD 100.00

HANNU NORTH SEA Limited UK 10 GBP MPX ENERGY LTD 100.00

HANNU EXPLORATION Limited UK 10 GBP MPX ENERGY LTD 100.00

224

Name of Company Registered Office

Share Capital

Currency Parent Companies

% of ownership

SOCIÉTÉ FRANÇAISE D’EOLIENNES S.A. France 10,602,360.00 € SORGENIA S.p.A. 99.99

SOCIÉTÉ FRANÇAISE DES ALIZÉS SARL France 580,125.00 € SOC. FRANÇAISE D’EOLIENNES S.A. 100.00

PARC ÉOLIEN DE SAINT CRÉPIN S.a.s. France 1,657,000.00 € SOC. FRANÇAISE D’EOLIENNES S.A. 100.00

PARC ÉOLIEN DE L’ARGONNE S.a.s. France 2,179,000.00 € SOC. FRANÇAISE D’EOLIENNES S.A. 100.00

PARC ÉOLIEN DE CÔTE DE CHAMPAGNE SUD S.a.s. France 802,000.00 € SOC. FRANÇAISE D’EOLIENNES S.A. 100.00

PARC ÉOLIEN DE CÔTE DE CHAMPAGNE S.a.s. France 2,179,000.00 € SOC. FRANÇAISE D’EOLIENNES S.A. 100.00

PARC ÉOLIEN DE BERNAY ST MARTIN S.a.s. France 987,400.00 € SOC. FRANÇAISE D’EOLIENNES S.A. 100.00

HOLDING DES PARCS ÉOLIENS DE LA VOIE SACRÉE S.a.s. France 9,757,000.00 € SOCIÉTÉ FRANÇAISE D’EOLIENNES S.A. 100.00

PARC ÉOLIEN DE LONGEVILLE SUR MER S.a.s. France 37,000.00 € SOC. FRANÇAISE D’EOLIENNES S.A. 100.00

PARC ÉOLIEN DE MAURECHAMPS S.a.s. France 1,117,000.00 € HOLDING DES PARCS ÉOLIENS DE LA VOIE SACRÉE S.a.s. 100.00

PARC ÉOLIEN DE L’ORME CHAMPAGNE S.a.s. France 37,000.00 € SOC. FRANÇAISE D’EOLIENNES S.A. 100.00

PARC ÉOLIENS DU NORD PAS-DE-CALAIS S.a.s. France 400,000.00 € SOC. FRANÇAISE D’EOLIENNES S.A. 100.00

PARC ÉOLIEN DE RAIVAL S.a.s. France 1,117,000.00 € HOLDING DES PARCS ÉOLIENS DE LA VOIE SACRÉE S.a.s. 100.00

PARC ÉOLIEN DE LA VALETTE S.a.s. France 1,117,000.00 € HOLDING DES PARCS ÉOLIENS DE LA VOIE SACRÉE S.a.s. 100.00

PARC ÉOLIEN DE VILLER S.a.s. France 577,000.00 € HOLDING DES PARCS ÉOLIENS DE LA VOIE SACRÉE S.a.s. 100.00

PARC ÉOLIEN DE BOUILLANCOURT EN SÉRY S.a.s. France 37,000.00 € SOC. FRANÇAISE D’EOLIENNES S.A. 100.00

PARC ÉOLIEN DE SAINT GERMAIN MARENCENNES S.a.s. France 37,000.00 € SOC. FRANÇAISE D’EOLIENNES S.A. 100.00

PARC ÉOLIEN DE LEFFINCOURT S.a.s. France 37,000.00 € SOC. FRANÇAISE D’EOLIENNES S.A. 100.00

PARC ÉOLIEN DE LA RENARDIÈRE S.a.s. France 37,000,00 € SOC. FRANÇAISE D’EOLIENNES S.A. 100.00

PARC ÉOLIEN DE PLAINCHAMP S.a.s. France 37,000.00 € SOC. FRANÇAISE D’EOLIENNES S.A. 100.00

SUNNEXT S.r.l. Italy 10,000.00 € SORGENIA S.p.A. 100.00

TORRE MAGGIORE WIND POWER S.r.l. Italy 10,000.00 € SORGENIA S.p.A. 75.00

AZZURRO S.p.A. Italy 1,100,000.00 € SORGENIA S.p.A. 90.00

ESPRESSO GROUP

GRUPPO EDITORIALE L’ESPRESSO S.p.A. (*) Italy 61,438,738.20 € CIR S.p.A. 53.90

FIN.E.GI.L. EDITORIALE S.p.A. Italy 18,161,000.00 € GRUPPO EDITORIALE L’ESPRESSO SpA 100.00

EDITORIALE LA NUOVA SARDEGNA S.p.A. Italy 775,500.00 € FIN.E.GI.L. EDITORIALE S.p.A. 100.00

S.E.T.A. S.p.A. Italy 774,750.00 € GRUPPO EDITORIALE L’ESPRESSO SpA 71.00

A. MANZONI & C. S.p.A. Italy 15,000,000.00 € GRUPPO EDITORIALE L’ESPRESSO SpA 100.00

ROTOCOLOR S.p.A. Italy 23,000,000.00 € GRUPPO EDITORIALE L’ESPRESSO SpA 100.00

SOMEDIA S.p.A. Italy 500,000.00 € GRUPPO EDITORIALE L’ESPRESSO SpA 100.00

ELEMEDIA S.p.A. Italy 25,000,000.00 € GRUPPO EDITORIALE L’ESPRESSO S.p.A. 100.00

EDITORIALE FVG S.p.A. Italy 87,959,976.00 € GRUPPO EDITORIALE L’ESPRESSO SpA 92.12

EDITORIALE METROPOLI S.p.A. Italy 500,000.00 € GRUPPO EDITORIALE L’ESPRESSO SpA 100.00

ROTOSUD S.p.A. Italy 2,860,000.00 € GRUPPO EDITORIALE L’ESPRESSO SpA 100.00

RETE A S.p.A. Italy 13,198,000.00 € GRUPPO EDITORIALE L’ESPRESSO SpA 100.00

ALL MUSIC S.p.A. Italy 6,500,000.00 € RETE A S.p.A. 100.00 (*) 54.97% of voting rights

225


Share Capital


% of ownership

SOGEFI GROUP

SOGEFI S.p.A. (**) Italy 60,397,475.84 € CIR S.p.A. 56.60

REJNA S.p.A. Italy 5,200,000.00 € SOGEFI S.p.A. 99.84

FILTRAUTO S.A. France 5,750,000.00 € SOGEFI S.p.A. 99.99

SOGEFI FILTRATION Ltd UK 5,126,737 GBP SOGEFI S.p.A. 100.00

SOGEFI FILTRATION B.V. Netherlands 1,125,000.00 € SOGEFI S.p.A. 100.00

SOGEFI FILTRATION A.B. Sweden 100,000 SEK SOGEFI S.p.A. 100.00

SOGEFI FILTRATION S.A. Spain 12,953,713.60 € SOGEFI S.p.A. 86.08 FILTRAUTO S.A. 13.92 100.00

SOGEFI FILTRATION d.o.o. Slovenia 10,291,798.00 € SOGEFI S.p.A. 100.00

ALLEVARD REJNA AUTOSUSPENSIONS S.A. France 36,000,000.00 € SOGEFI S.p.A. 99.98

SOGEFI FILTRATION S.p.A. Italy 21,951,000.00 € SOGEFI S.p.A. 100.00

SOGEFI PURCHASING S.a.s. France 100,000.00 € SOGEFI S.p.A. 100.00

ALLEVARD SOGEFI U.S.A. Inc. USA 20,055,000 USD SOGEFI S.p.A. 100.00

FILTRAUTO GmbH (in liquidation) Germany 51,130.00 € SOGEFI FILTRATION B.V. 100.00

SOGEFI FILTRATION DO BRASIL Ltda Brazil 29,857,374 Real SOGEFI FILTRATION S.A. 99.99 SOGEFI FILTRATION ARGENTINA S.A. Argentina 10,691,607 Pesos SOGEFI FILTRATION DO BRASIL Ltda 91.90 FILTRAUTO S.A. 7.28 SOGEFI FILTRATION S.p.A. 0.81 99.99

SHANGHAI SOGEFI AUTO PARTS Co., Ltd China 9,979,914.5 USD SOGEFI FILTRATION S.p.A. 100.00

ALLEVARD SPRINGS Co. Ltd UK 4,000,002 GBP ALLEVARD REJNA AUTOSUSPENSIONS S.A. 99.99

ALLEVARD FEDERN GmbH Germany 50,000.00 € ALLEVARD REJNA AUTOSUSPENSIONS S.A. 100.00

ALLEVARD REJNA ARGENTINA S.A. Argentina 600,000 Pesos ALLEVARD REJNA AUTOSUSPENSIONS S.A. 99.97

IBERICA DE SUSPENSIONES S.L. (ISSA) Spain 10,529,668.00 € ALLEVARD REJNA AUTOSUSPENSIONS S.A. 50.00

ALLEVARD MOLAS DO BRAZIL Ltda Brazil 37,161,683 Real ALLEVARD REJNA AUTOSUSPENSIONS S.A. 99.99 ALLEVARD SPRINGS Co. Ltd 0.01 100.00

UNITED SPRINGS Ltd UK 6,500,000 GBP ALLEVARD REJNA AUTOSUSPENSIONS S.A. 100.00

UNITED SPRINGS B.V. Netherlands 254,979.00 € ALLEVARD REJNA AUTOSUSPENSIONS S.A. 100.00

SHANGHAI ALLEVARD SPRINGS Co. Ltd China 5,335,308.00 € ALLEVARD REJNA AUTOSUSPENSIONS S.A. 60.58

UNITED SPRINGS S.A.S. France 10,218,000.00 € ALLEVARD REJNA AUTOSUSPENSIONS S.A. 99.99

LUHN & PULVERMACHER – DITTMANN & NEUHAUS GmbH Germany 50,000.00 € ALLEVARD FEDERN GmbH 100.00

FILTRAUTO DO BRASIL Ltda Brazil 354,600 Real SOGEFI FILTRATION DO BRASIL Ltda 99.00 FILTRAUTO S.A. 1.00

100.00

S.ARA COMPOSITE S.a.S. France 2,800,000.00 € ALLEVARD REJNA AUTOSUSPENSIONS S.A. 64.29

SOGEFI M.N.R. FILTRATION INDIA Pvt Ltd India 15,893,480 INR FILTRAUTO S.A. 60.00

EMW ENVIRONMENTAL TECHNOLOGIES Pvt Ltd India 475,000 INR FILTRAUTO S.A. 60.00 (**) 57.57% of voting rights

226


Share Capital

Currency

Parent Companies

% of ownership

KOS GROUP (formerly Holding Sanità e Servizi)

KOS S.p.A. – (formerly Holding Sanità e Servizi S.p.A.) Italy 6,479,972.00 € CIR S.p.A. 65.42

REDANCIA S.r.l. Italy 100,000.00 € KOS S.p.A. 100.00

OSPEDALE DI SUZZARA S.p.A. Italy 120,000.00 € KOS S.p.A 99.90

MEDIPASS S.p.A. Italy 700,000.00 € KOS S.p.A 100.00

RESIDENZA ANNI AZZURRI S.r.l. Italy 27,079,034.00 € KOS S.p.A 100.00

HSS REAL ESTATE S.p.A. Italy 2,064,000.00 € KOS S.p.A 100.00

PARCO IMMOBILIARE S.r.l. Italy 100,000.00 € KOS S.p.A 100.00

ISTITUTO DI RIABILITAZIONE S. STEFANO S.r.l. Italy 2,550,000.00 € KOS S.p.A 100.00

TUGA S.r.l. Italy 50,000.00 € REDANCIA S.r.l. 90.00

ABITARE IL TEMPO S.r.l. Italy 99,000.00 € ISTITUTO DI RIABILITAZIONE S. STEFANO S.r.l. 55.00

CASA ARGENTO S.r.l. Italy 1,096,500.00 € ABITARE IL TEMPO S.r.l. 51.00

ARIEL TECHNOMEDICAL S.r.l. Italy 10,000.00 € ISTITUTO DI RIABILITAZIONE S. STEFANO S.r.l. 51.00

SANITECH SOCIETÀ CONSORTILE S.r.l. Italy 100,000.00 € ISTITUTO DI RIABILITAZIONE S. STEFANO S.r.l. 87.00 ABITARE IL TEMPO S.r.l. 7.00 RESIDENZA ANNI AZZURRI S.r.l. 3.00 OSPEDALE DI SUZZARA S.p.A. 3.00

100.00

HEALTH EQUITY S.r.l. Italy 100,000.00 € ISTITUTO DI RIABILITAZIONE S. STEFANO S.r.l. 60.00

JESILAB S.r.l. Italy 80,000.00 ISTITUTO DI RIABILITAZIONE S. STEFANO S.r.l. 80.00

HSS SERVIZI SOCIETÀ CONSORTILE a r.l. Italy 50,000.00 € KOS S.p.A 56.00 RESIDENZA ANNI AZZURRI S.r.l. 15.00 ISTITUTO DI RIABILITAZIONE S. STEFANO S.r.l. 15.00 MEDIPASS S.p.A. 10.00 OSPEDALE DI SUZZARA S.p.A. 1.00 ABITARE IL TEMPO S.r.l. 1.00 SANITECH SOCIETÀ CONSORTILE S.r.l. 1.00 REDANCIA S.r.l. 1.00

100.00

DRY PRODUCTS GROUP

DRY PRODUCTS S.p.A. Italy 5,000,000.00 € CIR S.p.A. 100.00 FOOD MACHINERY MEDIUM VOLUME S.p.A. (in liquidation) Italy 3,000,000.00 € DRY PRODUCTS S.p.A. 100.00

CIR INTERNATIONAL GROUP

CIR VENTURES L.P. USA 23,555,555.00 USD CIR INTERNATIONAL S.A. 99.00

CIR INVESTMENT AFFILIATE S.A. Luxembourg 278,588.00 € CIR INTERNATIONAL S.A. 96.00

FOOD CONCEPTS HOLDING S.A. Luxembourg 1,563,307.00 € CIR INTERNATIONAL S.A. 89.44

FOOD CONCEPTS GERMANY GmbH Germany 100,000 € FOOD CONCEPTS HOLDING S.A. 100.00

227

INVESTMENTS IN JOINT VENTURES AND ASSOCIATES CONSOLIDATED USING THE EQUITY METHOD



Share Capital


% of ownership

SORGENIA GROUP

TIRRENO POWER S.p.A. Italy 91,130,000.00 € ENERGIA ITALIANA S.p.A. 50.00

GICA S.A. Switzerland 7,000,000.00 CHF SORGENIA S.p.A. 25.00

LNG MED GAS TERMINAL S.r.l. Italy 20,440,655.00 € FIN GAS S.r.l 70.00

PARC ÉOLIEN DE LA VOIE SACRÉE S.a.s. France 2,197,000.00 € SOCIÉTÉ FRANÇAISE D’EOLIENNES S.A. 24.86

PARC ÉOLIEN D’EPENSE S.a.s. France 802,000.00 € SOCIÉTÉ FRANÇAISE D’EOLIENNES S.A. 25.00

FIN GAS S.r.l. Italy 10,000.00 € SORGENIA S.p.A. 50.00

OTA S.a.s. France 37,000.00 € SOCIÉTÉ FRANÇAISE D’EOLIENNES S.A. 50.00

PARC ÉOLIEN DE HERBISSONNE S.a.s. France 37,000.00 € SOCIÉTÉ FRANÇAISE D’EOLIENNES S.A. 50.00

SAPONIS INVESTMENTS SP ZOO Poland 106,500 PLN SORGENIA E&P S.p.A. 26.76

ESPRESSO GROUP

LE SCIENZE S.p.A. Italy 103,400.00 € GRUPPO EDITORIALE L’ESPRESSO S.p.A. 50.00

EDITORIALE CORRIERE ROMAGNA S.r.l. Italy 2,856,000.00 € FIN.E.GI.L. EDITORIALE S.p.A. 49.00

EDITORIALE LIBERTÀ S.p.A. Italy 1,000,000.00 € FIN.E.GI.L. EDITORIALE S.p.A. 35.00

ALTRIMEDIA S.p.A. Italy 517,000.00 € FIN.E.GI.L. EDITORIALE S.p.A. 35.00

PREMIUN PUBLISHER NETWORK CONSORZIO Italy 67,500.00 € GRUPPO EDITORIALE L’ESPRESSO S.p.A. 29.63

SOGEFI GROUP

ALLEVARD RESSORTS COMPOSITES S.A.S. France 300,000.00 € ALLEVARD REJNA AUTOSUSPENSIONS S.A. 50.00


KTP GLOBAL FINANCE S.C.A. Luxembourg 566,573.75 € CIR INTERNATIONAL S.A. 35.86 CIR INVESTMENT AFFILIATE S.A. 11.59 47.45

RESOURCE ENERGY B.V. (in liquidation) Netherlands 200,000.00 € CIR INTERNATIONAL S.A. 47.50

228

INVESTMENTS IN SUBSIDIARIES AND ASSOCIATES CONSOLIDATED AT COST (*)



Share Capital


% of ownership

SORGENIA GROUP

TECNOPARCO VALBASENTO S.p.A. Italy 945,000.00 € SORGENIA S.p.A. 20.00

E-ENERGY S.r.l. Italy 15,000.00 € SORGENIA S.p.A. 20.00

EOLICA BISACCIA S.r.l. Italy 10,000.00 € SORGENIA S.p.A. 20.00

OSIMO BIOENERGY SOCIETÀ AGRICOLA S.r.l. Italy 10,000.00 € SORGENIA BIOENERGY S.p.A. 50.00

ESPRESSO GROUP

ENOTRYA S.r.l. (in liquidation) Italy 78,000.00 € ELEMEDIA S.p.A. 70.00

CELLULARMANIA.COM S.r.l. (in liquidation) Italy 10,400.00 € ELEMEDIA S.p.A. 100.00

KSOLUTIONS S.p.A. (in liquidation) Italy 1,000,000.00 € ELEMEDIA S.p.A. 100.00

BENEDETTINE S.r.l. (in liquidation) Italy 255,000.00 € FIN.E.GI.L. EDITORIALE S.p.A. 35.00

SOGEFI GROUP

UMC & MAKKAWI SPRING MANUFACTURING Co., Ltd Sudan 900,000 Ls.Pt. REJNA S.p.A. 25.00

KOS GROUP (formerly Holding Sanità e Servizi)

OSIMO SALUTE S.p.A. Italy 750,000.00 € ABITARE IL TEMPO S.r.l. 25.50

CONSORZIO OSPEDALE DI OSIMO Italy 20,000.00 € ABITARE IL TEMPO S.r.l. 24.70

FIDIA S.r.l. Italy 10,200.00 € HEALTH EQUITY S.r.l. 50.00 SANATRIX S.r.l. Italy 843,700.00 € ISTITUTO DI RIABILITAZIONE S. STEFANO S.r.l. 26.44


BANQUE DUMENIL LEBLE S.A. (in liquidation) France 16,007,146.81 € CIR INTERNATIONAL S.A. 100.00

DUMENIL LEBLE (SUISSE) S.A. Switzerland 102,850 CHF CIR INTERNATIONAL S.A. 100.00

PHA – Participations Hotelières Astor France 12,150.00 € CIR INTERNATIONAL S.A. 99.99

CIR VENTURES MANAGEMENT CO. L.L.C. USA 7,100 USD CIR INTERNATIONAL S.A. 20.00

KTP GLOBAL FINANCE MANAGEMENT S.A. Luxembourg 31,000.00 € CIR INTERNATIONAL S.A. 34.69 CIR INVESTMENT AFFILIATE S.A. 11.31

46.00

(*) Investments that are non-significant, non-operational or recently acquired, unless specified otherwise

229

INVESTMENTS IN OTHER COMPANIES CONSOLIDATED AT COST (*)



Share Capital


% of ownership

ESPRESSO GROUP

A.G.F. S.r.l. Italy 30,000.00 € GRUPPO EDITORIALE L’ESPRESSO S.p.A. 10.00

AGENZIA A.N.S.A. S. COOP. A.r.l. Italy 11,921,162.64 € GRUPPO EDITORIALE L’ESPRESSO S.p.A. 3,81 FIN.E.GI.L. EDITORIALE S.p.A. 5.69 EDITORIALE LA NUOVA SARDEGNA S.p.A. 3.17 EDITORIALE FVG S.p.A. 3.28 S.E.T.A. S.p.A. 2.53 18.48

CONSULEDIT S. CONSORTILE a.r.l. Italy 20,000.00 € GRUPPO EDITORIALE L’ESPRESSO S.p.A. 6.62 FIN.E.GI.L. EDITORIALE S.p.A. 4.38 EDITORIALE LA NUOVA SARDEGNA S.p.A. 0.62 S.E.T.A. S.p.A. 0.49 EDITORIALE FVG S.p.A. 0.47 12.58

IMMOBILIARE EDITORI GIORNALI S.r.l. Italy 830,462.00 € S.E.T.A. S.p.A. 0.17 EDITORIALE LA NUOVA SARDEGNA S.p.A. 0.12 0.29

TRENTO PRESS SERVICE S.r.l. Italy 260,000.00 € S.E.T.A. S.p.A. 14.40

AGENZIA INFORMATIVA ADRIATICA d.o.o. Slovenia 12,767.75 Sit. EDITORIALE FVG S.p.A. 19.00

CLUB D.A.B. ITALIA – CONSORZIO Italy 15,493.68 € ELEMEDIA S.p.A. 16.67

AUDIRADIO S.r.l. Italy 258,000.00 € A. MANZONI & C. S.p.A. 3.63

PRESTO TECHNOLOGIES Inc. (non-operational) USA 7,663,998.4 USD ELEMEDIA S.p.A. 7.83

CERT – CONSORZIO EMITTENTI RADIO TELEVISIVE Italy 177,531.00 € RETE A S.p.A. 6.67

CONSORZIO COLLE MADDALENA Italy 62,224.08 € RETE A S.p.A. 4.17

TELELIBERTÀ S.p.A. Italy 500,000.00 € FIN.E.GI.L. EDITORIALE S.p.A. 19.00

SOGEFI GROUP

AFICO FILTERS S.A.E. Egypt 10,000,000 EGP SOGEFI FILTRATION S.p.A. 19.00

(*) Investments of less than 20%

230

INVESTMENTS IN SUBSIDIARIES AND ASSOCIATES AND IN OTHER COMPANIES NOT INCLUDED IN THE CONSOLIDATED FINANCIAL STATEMENTS



Share Capital

Currency Parent Company

% of ownership

CIR GROUP

C.B.D.O. - COMPAGNIE BOURGUIGNONNE DES OENOPHILES SARL France 9,000.00 € CIGA LUXEMBOURG S.A.r.l. 100.00

SO.GE.LOC. S.a.r.l. (in liquidation) France 7,622.45 € C.B.D.O. SARL 99.80

VICTOR HUGO CENTRE D’AFFAIRES S.A.r.l.

(in liquidation) France 7,622.45 € C.B.D.O. SARL 76.00

FINAL S.A. (in liquidation) France 2,324,847.00 € C.B.D.O. SARL 47.73

SORGENIA GROUP

OWP Parc Eolienne du Banc des Olives SARL France 10,000.00 € SOCIÉTÉ FRANÇAISE D’EOLIENNES S.A. 20.00

EAL COMPOST S.r.l. Italy 3,470,261.00 € SORGENIA BIOENERGY S.p.A. 8.99

SOGEFI GROUP INTEGRAL S.A. Argentina 2,515,600 Pesos FILTRAUTO S.A. 93.50 SOGEFI FILTRATION ARGENTINA S.A. 6.50 100.00

231

Report of the Board of Statutory Auditors

233

C.I.R. S.p.A.

REPORT OF THE BOARD OF STATUTORY AUDITORS IN ACCORDANCE WITH

THE TERMS OF ARTICLE 153 D. LGS. NO. 58/1998

(TRANSLATION FROM THE ORIGINAL ISSUED IN ITALIAN)

To the Meeting of the Shareholders of C.I.R. S.p.A.

During financial year ended December 31 2009 we performed the surveillance activities

required of us by law, according to the Principles of Conduct for Statutory Auditors

recommended by the National Councils of Business Consultants and Accountants. In the

preparation of this report we took into account both the aforesaid principles and the

indications given by Consob in its Communiqué no. 1025564 of April 6 2001 and subsequent

updates.

In relation to the way in which the duties contained in our mandate were carried out, we

hereby attest that:

– We attended the Shareholders’ Meetings, the Meetings of the Board of Directors that were

held during the year under examination and obtained from the Directors timely and

suitable information on the activity carried out by the Company and the Group of

companies which it controls, with particular regard to the most significant transactions

from the economic, financial and equity points of view entered into by the Company and

by the Group of companies that the latter controls, in accordance with the Law and the

Bylaws; we also acknowledge that the Board of Statutory Auditors took part, through the

presence of one or more of its members, in the meetings of the Internal Control

Committee and read the minutes of the meetings of the Compensation Committee;

– We obtained a degree of knowledge necessary to carry out the duties contained in our

mandate regarding compliance with the law and with the Bylaws, with the principles of

sound administration and on the degree of adequacy of the organizational structure of the

Company through direct investigation, collecting data and information from the heads of

the departments involved and from an exchange of data and significant information with

the firm of auditors;

– We monitored the adequacy of the internal control system and the administrative

accounting system, in particular to see how reliable the latter was in its representation of

235

operating events, through direct investigation, obtaining information from the heads of the

respective departments and analysing the results of the work carried out by the firm of

auditors;

– We monitored the functionality of the system of control for investee companies and the

adequacy of the instructions given to them, even according to the terms of Article 114.2 of

D.Lgs. 58/98;

– We checked that the rules of corporate governance as set out in the Code of Conduct for

Listed Companies promoted by Borsa Italiana S.p.A. had been adopted by the Company

and were being put into practice ;

– We checked that there were no significant aspects that the control functions of the

companies controlled by CIRS.p.A. needed to notify;

– We verified that the provisions of the law and of regulations were being complied with in

relation to the preparation, the organization and the layout of the Statutory Financial

Statements and the Consolidated Financial Statements and the documents accompanying

them, which contain among other things the information as per Document no. 2 of

February 6 2009 issued jointly by Bank of Italy, Consob and Isvap;

– We checked that the Report on Operations for financial year 2009 conformed to current

laws and regulations and was consistent with the resolutions adopted by the Board of

Directors.

In the course of our surveillance activity, carried out as above, no significant facts emerged

requiring notification to Surveillance Bodies nor do we have any proposals to make regarding

the financial statements, the approval thereof or any other matter relating to our mandate.

* * *

The specific indications that this report must provide are listed below, in accordance with the

above-cited Consob Communiqué of April 6 2001 and subsequent updates.

1. We obtained sufficient information on the most significant transactions from the

economic, financial and equity viewpoint which were entered into by C.I.R. S.p.A.

and its subsidiaries, checking that they were in accordance with the law and the

company Bylaws; the Directors have given adequate information on these

transactions in the Report on Operations; we also obtained information and ensured

that the transactions approved and/or put in place were not clearly imprudent, rash, in

236

contrast with resolutions adopted or in potential conflict of interest or in any way

such as to compromise the integrity of the Company’s capital and assets.

2. Adequate information was given to us regarding intercompany and related-party

transactions. Based on the information gathered, we ascertained that these

transactions complied with the law and with the Company Bylaws, were in the

interests of the Company and did not give rise to any doubts as to the correctness and

completeness of the information given in the financial statements, the existence of

situations of conflict of interest, the protection of the company capital and assets and

safeguarding minority shareholders; the periodic checks and controls carried out in

the Company offices did not reveal that any atypical and/or unusual transactions had

been carried out;

3. In the Report on Operations the Directors have given adequate information on the

main transactions entered into between CIR S.p.A., the companies belonging to the

group and/or related parties, stating that these transactions took place at normal

market conditions, considering also the quality and type of services provided; the

transactions in question were mainly loans, guarantees and administrative and

financial services; suitable financial and economic details of these deals were given

in the documents which accompany the financial statements;

4. On April 1 2010 the firm of auditors Deloitte & Touche S.p.A. issued the audit

reports for the Statutory Financial Statements and the Consolidated Financial

Statements for the year ended December 31 2009, which included their opinion

regarding the consistency of the same as required by Art. 123-bis, paragraph 4 of D.

Lgs. No. 58/1998, without any objections or requests for further information;

5.-6. We did not receive any complaints as per Article 2408 of the Civil Code or any

petitions, neither did we hear of any such complaints being made to others;

7.-8. During financial year 2009, C.I.R. S.p.A. gave further mandates to the firm of

auditors, in addition to the obligatory audit mandate, for other services for the

purposes of certification for fees of euro 2,000 and for other services for euro 3,000.

In the same year the subsidiaries gave further mandates to the firm of auditors, apart

from the audit mandate, for the issue of certification for an amount of euro 203,000

and mandates for other services for euro 66,000. The subsidiaries of C.I.R. S.p.A.

237

also gave mandates to companies belonging to the network of the firm of auditors for

services totalling euro 54,000.

9. During the year under examination we issued opinions as per the terms of Art. 2389

of the Civil Code;

10. During financial year 2009, the Board of Directors met 8 times, the Internal Control

Committee met twice as did the Compensation Committee. During the year the

Board of Statutory Auditors also held 8 meetings;

11.-12. We have no particular observations to make either concerning compliance with the

principles of correct administration, because these appear to have been constantly

observed, or concerning the adequacy of the organizational structure, which we

found to be suitable to meet the operating, managerial and control needs of the

Company;

13. The system of internal control appeared to be adequate for the size and type of

operations of the Company as we also ascertained at the meetings of the Internal

Control Committee which, on the basis of the rules of governance adopted, are

attended by the Chairman of the Board of Statutory Auditors (or another Statutory

Auditor designated by the latter). Moreover, the Internal Audit Manager of the Group

and the Officers responsible for Internal Control, as per the terms of the Code of

Conduct for Listed Companies, made sure that there was the necessary functional

and information link regarding the way in which their institutional control duties

were carried out and the outcome of the checks carried out, even by attending the

meetings of the Board of Statutory Auditors.

14. We have no observations to make regarding the adequacy of the administrative and

accounting system or its reliability to represent operating events correctly. Regarding

the accounting details contained in the statutory and consolidated financial

statements as of December 31 2009, these were certified by the Chief Executive

Officer and by the Executive responsible for the preparation of the company’s

financial statements in accordance with Art. 154-bis, paragraph 5 of D.Lgs. 58/1998

and Art. 81-ter of Consob Regulation no. 11971 of May 14 1999 and subsequent

amendments and additions.

238

15. We have no observations to make regarding the adequacy of information flows from

the subsidiaries to the Parent Company to ensure the timely fulfilment of

communication obligations required by law.

16. During the regular exchanges of information and data between the Board of Statutory

Auditors and the external auditors, in accordance also with Art. 150, paragraph 3, of

D.Lgs. 58/1998, no aspects emerged that needed to be highlighted in this report.

17. The Company has substantially adhered to the recommendations contained in the

Code of Conduct prepared by the Committee for the Corporate Governance of Listed

Companies, and has illustrated its corporate governance model in the Report on this

subject, prepared also in accordance with Art. 123-bis of D.Lgs. no. 58/1998. To the

extent of our responsibility we have monitored the way in which the rules of

corporate governance required by the above-mentioned Code of Conduct, as adopted

by the Company, are actually being implemented, ensuring among other things that

the Corporate Governance Report of CIR S.p.A. contained the results of the regular

check that the Board of Statutory Auditors has the necessary requisites of

independence, which are determined on the same basis as those for the Members of

the Board of Directors. We should point out that on April 30 2009 the Board of

Directors set up the Appointments Committee, comprising 3 board members, two of

whom are Independent, which can make proposals for the appointment and/or

replacement of Independent Directors and has a consulting role on the subject of the

size and composition of the Board of Directors. It should also be noted that as from

September 30 2009, the position of Officer responsible for Internal Control, which

was previously assigned for C.I.R. S.p.A. to the Central Manager for Planning and

Control and for the subsidiaries to the Manager of Internal Auditing and

Administration of the Group, has now been totally assigned to the latter. As per the

terms of D.Lgs. 231/2001, the Company has adopted and implemented an

“Organizational Model” for conducting and regulating the business and has set up a

Surveillance Body as required by regulations. The Company has also adopted a Code

of Ethics regulating conduct;

18. Our surveillance activity was carried out on a routine basis during 2009 and did not

reveal any omissions, facts that could be censured or any irregularities worthy of

note;

239

19. As a result of the surveillance activity we carried out during the year we have no

proposals to make as per Art. 153, paragraph 2. of D.Lgs. 58/1998 regarding the

separate financial statements of C.I.R. S.p.A. as of December 31 2009, on the

approval thereof or on any other matter within our jurisdiction, just as we have no

observations to make on the proposed cover of the net loss for the year contained in

them.

Milan, April 8 2010

THE BOARD OF STATUTORY AUDITORS

Prof. Pietro Manzonetto – Chairman of the Board of Statutory Auditors

Dott. Riccardo Zingales – Statutory Auditor

Dott. Luigi Nani – Statutory Auditor

240

In accordance with the terms of Art. 144 quinquiesdecies of Consob’s Rules for Issuers,

below is the list of positions held by the members of the Board of Statutory Auditors of C.I.R.

S.p.A. at the date on which the this Report was presented to the Meeting of the Shareholders

in accordance with the terms of Art. 153 of D.Lgs. no. 58 of February 24 1998 of companies

as per Book V, Chapter V, Paragraphs V, VI and VII of the Civil Code.

In brackets is the date of the close of the financial year, the approval of the financial

statements of which marks the end of each period of office.

• Pietro Manzonetto: Member of the Supervisory Board of Banco Popolare Soc. Coop.

(31.12.2009); Chairman of the Board of Statutory Auditors of CIR – Compagnie

Industriali Riunite SpA (31.12.2010); Gruppo Banca Leonardo SpA (31.12.2011), Allianz

SpA (31.12.2010), Allianz Bank Financial Advisors SpA (31.12.2009), Humanitas

Mirasole SpA (31.12.2010), Otis SpA (30.11.2011), Otis Srl (30.11.2009); Statutory

Auditor of RCS MediaGroup SpA (31.12.2011).

Number of positions held in issuing companies: 3 (Banco Popolare Soc. Coop., RCS

MediaGroup SpA and CIR SpA).

Total number of positions held: 9.

241

C.I.R. S.p.A.

Disclosure to the public as per Art. 144-quinquiesdecies of the Rules for Issuers regarding Statutory Auditor in office Riccardo Zingales List of positions held as of the date of presentation of the Report as per Art. 153 of the TUF Prepared in accordance with the terms of Art. 5-bis of the Rules for Issuers ____________________________

Name of company Position End of mandate

Azzurro LNG SpA Chairman of Board of Statutory Auditors Approval Fin. Stat. 31/12/2011

Banca Albertini Syz & C. Spa Director Approval Fin. Stat. 31/12/2009 Beta Mobiliare Srl in liq. Liquidator Indefinite CIR SpA Statutory Auditor Approval Fin. Stat. 31/12/2010 Cofide SpA Statutory Auditor Approval Fin. Stat. 31/12/2010 Dry Products SpA Statutory Auditor Approval Fin. Stat. 31/12/2012 Energia Italiana SpA Statutory Auditor Approval Fin. Stat. 31/12/2012 Energia Lombarda SpA Chairman of Board of Statutory Auditors Approval Fin. Stat. 31/12/2010 Energia Lucana SpA Chairman of Board of Statutory Auditors Approval Fin. Stat. 31/12/2010 F Srl Sole Director Indefinite Faremuro Srl Sole Director Indefinite G Srl Sole Director Indefinite Immobiliare Bonaparte Ventidue Srl Sole Director Indefinite Immobiliare Palman Srl Statutory Auditor Approval Fin. Stat. 31/12/2009 Jupiter Marketplace SpA Chairman of Board of Statutory Auditors Approval Fin. Stat. 31/12/2011 Lng Med Gas Terminal Srl Chairman of Board of Statutory Auditors Approval Fin. Stat. 31/12/2012 Loft Colonna Srl Sole Director Indefinite Loft Tartaglia Srl Sole Director Indefinite Manzonimmobiliare Srl Sole Director Indefinite P Srl Sole Director Indefinite Quintiliana Srl Sole Director Indefinite Rejna SpA Chairman of Board of Statutory Auditors Approval Fin. Stat. 31/12/2009 Sabiana SpA Statutory Auditor Approval Fin. Stat. 31/12/2011 Sogefi SpA Statutory Auditor Approval Fin. Stat. 31/12/2011 Sorgenia Bioenergy SpA Chairman of Board of Statutory Auditors Approval Fin. Stat. 31/12/2010 Sorgenia Holding SpA Statutory Auditor Approval Fin. Stat. 31/12/2012 Sorgenia Menowatt Srl Chairman of Board of Statutory Auditors Approval Fin. Stat. 31/12/2012 Sorgenia Minervino SpA Statutory Auditor Approval Fin. Stat. 31/12/2012 Sorgenia Power SpA Chairman of Board of Statutory Auditors Approval Fin. Stat. 31/12/2011 Sorgenia Puglia SpA Chairman of Board of Statutory Auditors Approval Fin. Stat. 31/12/2010 Sorgenia SpA Statutory Auditor Approval Fin. Stat. 31/12/2010 Sorgenia Trading SpA Chairman of Board of Statutory Auditors Approval Fin. Stat. 31/12/2011 Sterngen SpA Statutory Auditor Approval Fin. Stat. 31/12/2011 Tirreno Power SpA Statutory Auditor Approval Fin. Stat. 31/12/2010 Valora SpA Director Approval Fin. Stat. 31/12/2009 Veolia Servizi Ambientali SpA Chairman of Board of Statutory Auditors Approval Fin. Stat. 31/12/2009 Verbena Srl in Liq. Liquidator Indefinite Voluta Srl Sole Director Indefinite Wellboat Real Estate Italy Srl Sole Director Indefinite Number of positions in issuing companies : 3

Total number of positions held : 39

242

C.I.R. S.p.A.

Disclosure to the public as per Art. 144-quinquiesdecies of the Rules for Issuers regarding

Statutory Auditor in office Luigi Nani

List of positions held as of the date of presentation of the Report as per Art. 153 of the TUF

Prepared in accordance with the terms of Art. 5-bis of the Rules for Issuers

____________________________

Name of company Position End of mandate BIM Fiduciaria SpA Statutory Auditor Approval Fin. Stat. 31/12/2011

BIM Vita SpA Statutory Auditor Approval Fin. Stat. 31/12/2009

Ca’ Immobiliare SpA Chairman of the Board of Statutory Auditors Approval Fin. Stat. 31/12/2010

Carlo De Benedetti & Figli SapA Statutory Auditor Approval Fin. Stat. 31/12/2010

CIR SpA Statutory Auditor Approval Fin. Stat. 31/12/2010

CO.FI.TO SpA Statutory Auditor Approval Fin. Stat. 31/12/2010

Directa SIMpA Statutory Auditor Approval Fin. Stat. 31/12/2011

Farfalletta SpA Chairman of the Board of Statutory Auditors Approval Fin. Stat. 31/12/2010

Finagro SpA Statutory Auditor Approval Fin. Stat. 31/12/2011

Invind SpA Chairman of the Board of Statutory Auditors Approval Fin. Stat. 31/12/2010

Mimose SpA Director Approval Fin. Stat. 31/12/2010

Romed SpA Statutory Auditor Approval Fin. Stat. 31/12/2009

Romed International SpA Statutory Auditor Approval Fin. Stat. 31/12/2009

Savio SpA Statutory Auditor Approval Fin. Stat. 31/12/2009

Studio Segre Srl Director Approval Fin. Stat. 31/12/2011 Number of positions in issuing companies : 1

Total number of positions held : 15

243

Reports of the Independent Auditors

245

annual report 2009

Documents

income statement

statement of changes

annual report report

statement of cash flow

parent company

c i r annual report

main risks

significant events