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IMPREGILO S.p.A.ANNUAL REPORT AT 31 DECEMBER 2005

The value of any business organisation stems inpart from its history and its origins.

Although the Impregilo Group was created in theearly 1990s, its origins date much further back, tothe earliest years of the twentieth century.Impregilo is in fact the heir to the Girola, Lodigiani,Impresit and Cogefar companies, four Italianplayers whose work set the standards for the civilengineering industry all over the world.

Active in five continents, the companies thatcreated the Impregilo Group were involved in theroad, rail and hydroelectric construction projectsthat marked the development of Italy and manyother countries, and helped to strengthen andconsolidate Italy’s international profile.

This great history of success and traditions is thelegacy of the Impregilo Group today: listed on theItalian stock exchange, Impregilo is Italy’s leadingGeneral Contractor and one of the top construc-tion groups worldwide.

With more than 10,000 employees, the Group isactive in infrastructure construction, environmentalplant and motorway concessions, funded throughcomplex project financing operations.

Motorways, railways, underground railways,dams, hydroelectric stations, desalination, smoketreatment and waste disposal plants: years of solidexperience combined with an on-going commit-ment to maintaining project schedules, respectingthe environment and developing technologicalinnovation.

With its entrepreneurial and organisationalcompetencies, technical and financial knowhow,risk management expertise and time/cost op-timisation skills, Impregilo boasts outstandingprofessional resources that make it a role model ininnovation for civil engineering, infrastructure andplant construction projects, a leading player at thecutting edge of Italian and international growth.

IMPREGILO S.p.A.FINANCIAL STATEMENTS FOR THE YEAR ENDING 31 DECEMBER 2005

46th OPERATING YEAR

Impregilo S.p.A.Share capital: Euro 708,996,096 (fully paid-in) - Registered office: Viale Italia 1, Sesto San Giovanni (Milan)

Tax number and Milan Companies' Register reg. No. 00830660155Listed in the Business and Administration Directory under entry no. 525502 - VAT number: 02895590962

Index of contents

2

General informationCurrent composition of Executive Bodies 3

Impregilo Group structure 5

Group summary 12

Report on Operations 19Introduction 20

Financial restructuring exercises 22

Strategic guidelines for the three-year period 2005-2007 24

Analysis of the economic performance, balance-sheet situation and financial position of the Impregilo Group and Impregilo S.p.A. 28Impregilo Group business performance 30

Balance-sheet situation and financial position of the Impregilo Group 34

Business performance of Impregilo S.p.A. 36

Balance-sheet situation and financial position of Impregilo S.p.A. 38

Performance by business area 40Engineering & Constructions Division: Constructions - Engineering & Plant Construction 46

Concession & Services Business Division: Concession - Building and Services - Imprepar S.p.A. in liquidation 62

Campania USW Project: Fibe and Fibe Campania S.p.A. 84

Human resources, organisation and information systems 91

Safety, environment and quality 95

Privacy and data protection 97

Corporate governance 98

Other information 115Equity interests held by Directors, Statutory Auditors and General Managers 116

Stock option plan 116

Relationships with Group companies and related parties 117

Independent auditing firm 120

Investigations conducted by the judiciary 121

Significant events taking place after the end of the year 122

Foreseeable business developments 124

Recent developments relating to the Campania USW Project (*) 124

Consolidated financial statements of the Group as at 31 December 2005 and supplementary notes to the financial statements 125Balance Sheet, Income Statement and Cashflow Statement 126

Explanatory Notes for the Group 134

Effects of the transition to IAS/IFRS standards 193

Consolidation structure 208

Relationships with Group companies 216

Statutory financial statements of Impregilo S.p.A. as at 31 December 2005 and supplementary notes to the financial statements 230Balance Sheet and Income Statement 232

Supplementary notes to the individual financial statements 240

Information by geographical area 288

Proposals of the Board of Directors to the Meeting of Shareholders 289

Shareholdings of Impregilo S.p.A. as at 31 December 2005 290

Relationships of Impregilo S.p.A. with Group companies 306

Audit Report by Reconta Ernst & Young S.p.A. and Report of the Board of Statutory Auditors on the Consolidated Financial Statements of Impregilo S.p.A. as at 31 December 2005 316

Audit Report by Reconta Ernst & Young S.p.A. and Report of the Board of Statutory Auditors on the Financial Statements as at 31 December 2005 322

Resolutions of the annual general meeting of May 3, 2006 332

(*) Integration to the Report on Operations, due to events occurring after the approval of the Draft Financial Statements by the Board of Directors of Impregilo S.p.A. onMarch, 24 2006.

3

FINANCIAL STATEMENTSFOR 2005

CURRENT COMPOSITION OF EXECUTIVE BODIES

CURRENT COMPOSITION OF EXECUTIVE BODIES

General information

4

Board of Directors (°)

Chairman Cesare Romiti

Managing Director Alberto Lina

Directors Enrico Bonatti

Alfredo Cavanenghi

Gianni Maria Chiarva

Vito Gamberale

Ezio Gandini

Gian Luigi Garrino

Carlo Gatto

Beniamino Gavio

Carlo Lotti

Andrea Novarese

Giorgio Robba

Pier Giorgio Romiti

Alberto Sacchi

Executive Committee

Chairman Alberto Lina

Enrico Bonatti

Ezio Gandini

Beniamino Gavio

Pier Giorgio Romiti

Internal Audit Committee

Chairman Pier Giorgio Romiti

Gian Luigi Garrino

Giorgio Robba

Remuneration Committee

Chairman Cesare Romiti

Vito Gamberale

Ezio Gandini

Board of Statutory Auditors (°)

Chairman Roberto Ascoli

Permanent Auditors Vittorio Amadio

Giuseppe Angiolini

Stand-in Auditors Guido Zavadini

Giuseppe Piaggio

Independent Auditors (•)

Reconta Ernst & Young S.p.A.

(°) In office until approval of the financial statements for the year ending 31 December 2007.(•) In office for the three-year period 2003-2004-2005.

5

FINANCIAL STATEMENTS FOR 2005

IMPREGILO GROUP STRUCTURE

IMPREGILO GROUP STRUCTURE

General information

6

CIGLA S.A. 100

CSC Impresa Costruzioni S.A. 100

Impregilo Healy Joint Venture 100

- Impregilo S.p.A. 15

- Healy S.A. 85

S.A. Healy Company 100

S.G.F. - I.N.C. S.p.A. 100

S.I.P.E.M. S.p.A. 100

Suropca C.A. 100


- Imprepar S.p.A. in liquid. 1

TESCO S.r.l. 100

Consorzio Frana di Spriana S.c.r.l. 100

Consorzio Cociv 94.5

Em. Const. Costanera Norte Ltda 77.78

Consorzio C.A.V.E.T. 75.98

Consorzio C.A.V.TO.MI. 74.69

Consorcio Impregilo - Ingco 70

Constructora Mazar 70

Consorcio Acueducto Oriental 67

Joint Venture Igl. S.p.A. - Empedos 60

Nathpa Jhakri J.V. 60

PGH Ltd 60

Ghazi-Barotha Contractors J.V. 57.8

Consorzio Scilla 51

Reggio Calabria - Scilla S.c.p.a. 51

Salerno-Reggio Calabria S.c.p.a. 51

Impresit Bakolori Plc 50.71

Consorzio Venice Link 42

Passante di Mestre S.c.p.a. 42

IMPREGILO S.p.A.100%

91 other companies

Igl. Italia Concessioni S.p.A. 100

Igl. Parking Glasgow Ltd 100

Caminos de las Sierras S.A. 90.52

Fibe Campania S.p.A. 99.5

- Igl. Intern. Infrastruc. N.V. 93.67

- Fisia Babcock Gmbh 3.01

- Igl. Edilizia e Servizi S.p.A. 2.1

- Fisia Italimpianti S.p.A. 0.72

Fibe S.p.A. 95

- Igl. Intern. Infrastruc. N.V. 77,5

- Fisia Babcock Gmbh 10,5

- Fisia Italimpianti S.p.A. 5

- Igl. Edilizia e Servizi S.p.A. 1

- Igl. Italia Concessioni S.p.A. 1

Soc. Conc. Costanera Norte S.A. 77.89

Mercovia S.A. 60

Ponte de Pedra Energetica S.A. 50

Shangai Pucheng T.P.E. Co. L.t.d. 50

Contarina S.p.A. 49

Consorcio Agua Azul S.A. 45

Aguas del Gran B. Aires S.A. 42.58

- Igl. Intern. Infrastruc. N.V. 23.73

- Impregilo S.p.A. 16.5

- Iglys S.A. 2.35

Primav Ecorodovias S.A. 35

Puentes del Litoral S.A. 26


- Iglys S.A. 4

Yacylec S.A. 18.67

IMPREGILOINTERNATATIONAL

INFRASTRUCTURE N.V. 100%

12 other companies

Eco Raccolta S.r.l. 100

Fisia Babcock Environment Gmbh 100

Gestione Napoli S.p.A. 99

- Fisia Italimpianti S.p.A. 54

- Igl. Italia Concessioni S.p.A. 24

Fisia Babcock Gmbh 21

Ecolmar S.c.p.a. 51.88

Villagest S.c.r.l. 50

Consorzio Macopsissa Ambiente 45.12

Nautilus S.c.p.a. 34.39

Consorzio Marmeco 34

FISIA ITALIMPIANTI S.p.A.100%

4 other companies

7

Bocoge S.p.A. 100

Impregilo Engineering CO. Ltd 100

Impregilo New Cross Ltd 100

Iniziative Lombarde Imm. S.r.l. 100

PREMED S.r.l. 100

Campione S.c.r.l. 99.9

Consorzio Caserma Donati 80

Lavori Lingotto S.c.r.l. 65

Castello 99 S.c.r.l. 60

Cernusco S.c.r.l. 60

Gricignano 3 S.r.l. 60

Consorzio Camaiore Impianti 55

Hospital Lecco S.c.r.l. 55

IMPREGILO EDILIZIA ESERVIZI S.p.A. 100%

36 other companies

Alia S.c.r.l. 100

Consorzio Pielle 100- Imprepar S.p.A. in liquid. 33.33- Incave S.r.l. 66.67

C.F.T. Duemila S.c.r.l. 100- Incave S.r.l. 100

Edilizia Militare R.C. S.c.r.l. 100- Imprepar S.p.A. in liquid. 85- Sapin S.r.l. 15

Engeco France S.a.r.l. 100- Imprepar S.p.A. in liquid. 99,67- Incave S.r.l. 0,33

Entreprises et Travaux de Co. S.A. 100

Eurotechno S.r.l. 100

IGLYS S.A. 100- Imprepar S.p.A. in liquid. 98- Incave S.r.l. 2

Imprefeal S.p.A. 100

Impregilo Argentina S.A. 100- Impregilo S.p.A. 77.74- Iglys S.p.A. 22.03- Incave S.r.l. 0.23

Impregilo U.K. Ltd 100

Impresa Castelli S.p.A. 100

Impresit del Pacifico S.A. 100

INCAVE S.r.l. 100

San Martino Prefabbricati S.p.A. 100

Savico S.c.r.l. 100- Imprepar S.p.A. in liquid. 81- Sapin S.r.l. 19

SAPIN S.r.l. 100

Watis Bau GmbH 100

S. Leonardo S.c.r.l. 99.99

Cogefar Cameroun S.A. 99.97

BATA S.r.l. 50.69

IMPREPAR S.p.A. (in liquidation)

100%

178 other companies

CameroonChadChileColombiaCote d'IvoireCretaCyprusCzech Republic

DenmarkDominican RepublicDubai

FinlandFrance French Guiana

BahrainBelgiumBoliviaBotswanaBrazilBurkina FasoBurundi

EgyptEl SalvadorEthiopia

GabonGermanyGhanaGreat BritainGreeceGuatemala

IcelandIndia IndonesiaIranIraqItaly

JugoslaviaHondurasAbu DhabiAlgeriaArgentinaAustraliaAustria

Kenya

IMPREGILO 1906-2006 A CENTURY OF INFRASTRUCTURESALL OVER THE WORLD

8

UgandaUnited Arab EmiratesUruguayUSA

ZambiaZimbabwe

NepalNetherlandsNigerNigeria

Republic of the CongoRomaniaRussiaRwanda

Saudi ArabiaScotlandSenegalSingaporeSomaliaSouth AfricaSpainSudanSwazilandSwedenSwitzerlandSyria

TanzaniaThailandTunisiaTurkey

LesothoLiberiaLuxembourgLybia

MalawiMalaysiaMaliMaltaMauritiusMexicoMonacoMoroccoMozambique

PakistanPanamaParaguayPeruPortugal

Qatar Venezuela Yemen

9

Venezuela

Brazil

Argentina Chile

Peru

Ecuador

USA

Dominican Republic

Sweden

Iceland

Great Britain

Netherlands

Spain

Algeria

Lybia

Work site (Construction/Engineering & Plant Construction)ConcessionBranch

Nigeria

10

IMPREGILO IN THE WORLD

Finland

China

Hong Kong

Denmark

Germany

Pakistan

Saudi Arabia

Greece

Switzerland

Italy

Qatar

Dubai

Abu Dhabi

United Arab Emirates

11


GROUP SUMMARY

12

FINANCIAL HIGHLIGHTS

General information

14

Net non-current assets Working capital Net invested capital

(500)

0

500

1,000

1,500

2,000

2004 2005

IMPREGILO GROUP

BALANCE-SHEET DATAAND FINANCIAL INFORMATION

(amounts expressed in millions of Euros) 2005 2004

Net non-current assets 1,145.8 1,561.7

Working capital - (35.7)

Other items (139,8) (152.9)

Net invested capital (*) 1,006.0 1,373.1

Shareholders' equity 516.7 211,7

Net financial position from ongoing business activities (489.3) (1,161.4)

Debt/Equity (ongoing business activities) 0.9 5.5

(*) The figure reported for 2005, in accordance with accounting standards, includes assetsdue to be sold, and specifically the Group's net financial position of Euro 249.86 million.The Group's net financial position, inclusive of financial items pertaining to companies dueto be sold, amounts to Euro 739.2 million. The debt/equity ratio including this entryamounts to 1.4.

NET INVESTED CAPITAL

Net borrowing85%

Equity15%

FINANCIAL RESOURCES 2004

Net borrowing48%

Equity52%

FINANCIAL RESOURCES 2005

15

Constructions74%

Concession7%

Engineering& Plant

Construction14%

Building 4%

Imprepar 1%

BREAKDOWN OF REVENUES BY DIVISION

Constructions 73%

Engineering& Plant

Construction21%

Building & Services

6%

2005 ORDERS BOOK - BROKEN DOWN BY DIVISION(total Euro 6,199 bn)

Italy59%

Abroad41%

2005 ORDERS BOOK - DISTRIBUTION BETWEEN ITALY AND ABROAD (total Euro 6,199 bn)

INCOME-STATEMENT FIGURES


Revenues 2,443.0 2,999.7

Operating costs (2,697.4) (2,857.9)

Operating result (254.4) 141.8

Pre-tax result (303.0) (9.4)

Net result for the year (358.2) (88.6)

For the Impregilo Group 2005 was a year of sharp discontinuity

that led to a consolidated net loss of Euro 358.2 million.

This result was heavily influenced by the losses (Euro 295

million) stemming from non-core businesses (Impregilo Edilizia e

Servizi, Campania USW Project, and Imprepar in liquidation) and

from restructuring efforts. The latter led to provisioning and

write-downs of a non-recurring nature in core businesses (Euro

125 million net of positive non-recurring items).

The result was therefore significantly due to items with no cash

impact and/or of a non-recurring nature. On the one hand this is

amply covered by the Group's new equity structure following the

capital increase completed during the year and well received by

the market. On the other hand it was associated with tangible

improvement of balance sheet and financial indicators, headed

by the debt/equity ratio which went from some 5.5 reported as

at December 31st 2004 to the ratio of some 0.9 (net of busines-

ses due for disposal) reported as at December 31st 2005.

In the light of business performance and of the jobs book, and

also of operating action underway, the Group believes that, in the

absence of extraordinary events, above all in non-core

businesses, not foreseeable today, the restructuring and relaunch

plan for the 3-year period 2005-2007 should achieve its

objectives faster than projected - and therefore make it possible

to report a positive result already as from the next financial year.


General information

16

IMPREGILO S.p.A.



Production value 1,676.9 2,054.3

Operating result 52.1 87.7

Pre-tax result (252.4) (104.4)

Net result for the year (257.4) (142.7)

Net non-current assets 568.1 636.9

Working capital 684,6 (67.1)

Net invested capital 1,252.7 569.8

Shareholders' equity 740.5 346.0

Net financial position (512.2) (223.8)

17

Impregilo Ordinary Shares

Impregilo Savings Shares

Source: Bloomberg

IMPREGILO STOCK PERFORMANCE

10,000,000

0

20,000,000

30,000,000

40,000,000

50,000,000

60,000,000

70,000,000

80,000,000

90,000,000

0.500

0

1.000

1.500

2.000

2.500

3.000

3.500

4.000

Total volumes traded Price (closing)

Volu

mes

trad

ed

January February March April May June July August September October November December January2006

February2006

15 March2006

Aver

age

pric

e pe

r sha

re

Total volumes traded Price (closing)

Volu

mes

trad

ed

January February March April May June July August September October November December January2006

February2006

15 March2006

Aver

age

pric

e pe

r sha

re

200,000

0

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000

0,500

0

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

January February Marzo April May June July August September October November December January February 15 March2006 2006 2006

Total volumes traded 36,489,708 45,976,520 30,476,420 38,677,836 46,255,124 77,291,688 65,881,768 47,265,136 68,667,056 69,082,048 53,023,632 38,554,528 62,788,540 70,651,352 -

Price (closing) 1.747 1.927 1.787 2.157 2.741 3.165 3.301 3.375 3.368 2.845 2.765 2.773 3.244 3.594 3.723

January February Marzo April May June July August September October November December January February 15 March2006 2006 2006

Total volumes traded 511,461 506,440 312,804 190,216 630,096 1,421,523 439,424 189,194 169,860 464,643 196,730 86,807 243,404 305,423 -

Price (closing) 2.132 2.260 2.209 2.201 2.549 3.687 3.513 3.623 3.585 3.400 3.120 3.250 3.839 3.927 4.057

THE GROUP'S HUMAN RESOURCES

General information

18

As at 31 December 2005, the Group was composed of 10,138

employees operating at different levels within the Group's

various divisions and in different countries across the world.

Construction 68%

Building & Services 3%

Corporate 1%

Imprepar 0%

Engineering &Plant Construction

9%Fibe and Fibe

Campania0%

Concession19%

DISTRIBUTION OF IMPREGILO GROUP EMPLOYEES BY BUSINESS

Italy41%

Europe19%

Asia0%

Africa2%

Americas38%

GEOGRAPHICAL DISTRIBUTION OF IMPREGILO GROUP EMPLOYEES


REPORT ON OPERATIONS

19

DIRECTORS' REPORT ON THE OPERATIONS OF THE IMPREGILO GROUP

Report on operations

20

INTRODUCTION

Shareholders,

as already described extensively on previous occasions -

specifically in the interim report for the six months to 30 June -

over the course of financial year 2005, the Impregilo Group

experienced a number of extremely important events and

changes that enabled it, after starting out in extremely critical

circumstances, to register sound achievements across all areas

involved, even though its economic result was clearly in the red.

To be more specific, we wish to bring your attention to the

following factors, which are summarised below:

• the significant financial restructuring exercise, which was

wrapped up in June and July 2005, further to a Euro 500

million medium/long-term loan facility being obtained

(following an initial bridging facility), short-term borrowing of

more than Euro 200 million being rescheduled and

transformed into medium/long-term borrowing and a Euro

650 million capital increase being accomplished. These

events consequently brought substantial improvements to the

Group's balance-sheet and financial structure and cashflow

situation, which allowed bond loans amounting to Euro 550

million (excluding interest) and maturing in May and June

2005 to be repaid in full;

• the arrival of new shareholders in Impregilo's shareholder

structure, which - by way of the vehicle IGLI S.p.A. - now hold

the largest stake in the share capital of Impregilo;

• the changes to Impregilo's executive management, which

took place in May 2005;

• the introduction and rapid implementation of new business

guidelines under the plan established for the three-year

period 2005-2007, which focused on operations no longer of

strategic significance and was directed, among other things,

at managing the critical issues highlighted during last June's

launch of the previously mentioned capital increase.

It is worth pointing out here that the above plan guidelines

involve directing the Impregilo Group's focus towards the

following activities, defined hereafter as "core business

activities": "Constructions" (the realisation of large-scale

infrastructure projects, controlled by Impregilo S.p.A. together

with the functions and costs of central corporate functions

performing the duties of parent company - referred to hereinafter

as "Corporate"), "Engineering & Plant Construction" (controlled

by the investee companies Fisia S.p.A. and Fisia Babcock Gmbh)

and "Concession" (controlled by the investee company Impregilo

International Infrastructure N.V.), although in the case of the latter

the focus is solely on activities for which no disposal plans are in

the process of being implemented. A collection of activities/

companies - defined hereafter as "non-core business activities" -

has also been identified, however, in respect of which

disposal/divestment programmes (Edilizia e Servizi S.p.A. and the

Campania USW Project, controlled by the subsidiary companies

Fibe S.p.A. and Fibe Campania S.p.A.) or winding-up

programmes (Imprepar) are in the process of being implemented.

A strong emphasis was also placed on managing a whole series

of critical issues relating largely to the previously mentioned non-

core business activities, such as the Campania USW Project.

Further to this strategic stance being taken and in view of the

developments and new events occurring after the approval of

the Group's 2004 financial statements, the consolidated net

loss of Euro 358.2 million posted by the Group for financial year

2005 was strongly influenced by the losses arising from non-

core business activities (Euro 295 million) and restructuring

exercises that led to allocations and write-downs of a non-

recurring nature being made in respect of core activities (Euro

125 million, net of non-recurring income).

However, the total consolidated loss referred to above does not

incorporate the capital gain (estimated to be around Euro 100

million, after transaction costs and local taxes) arising from the

sale of the Chilean franchise Costanera Norte, in respect of

which a binding agreement was reached on 23 December 2005

21

with its buyers. This transaction was conditional, however, upon a number of suspensive conditions

being met (approval by the Chilean institution granting, and the institutions guaranteeing, the bond

loan issued in the last few years by the franchisee for the financing of projects). They are expected

to be realised shortly, so that the deal can be successfully wrapped up.

Much of this loss was also attributable - due to its very nature - to items without financial impact

and/or non-recurring items. By virtue of this fact and in view of the capital increase

accomplished during the year under review, the loss was on the one hand amply covered in the

Group's new equity structure, while on the other hand being associated with a noticeable

improvement in the Group's balance-sheet and financial ratios: before all else the ratio between

minority interests and equity, which decreased from the 5.5 recorded on 31 December 2004 to

0.9 (net of assets held for sale) by 31 December 2005.

That having been said, while the risk elements typical of the business activities undertaken by

Impregilo remain - as do those originating from the ongoing, complex procedures followed for

the awarding of the service contracts that were rescinded ope legis and tied the subsidiary

companies Fibe and Fibe Campania to the Government - appointed receiver and those that

linked the winding-up of Imprepar to new parties - objectives focusing on regaining financial

equilibrium, developing core business and making the Impregilo Group a profitable concern, as

announced to the market in recent months, have all been reiterated.

The paragraphs that follow below present in greater detail what the financial restructuring

exercise involves, the strategic guidelines adopted for the three-year period 2005-2007 and the

disposal/corporate restructuring operations accomplished in keeping with the new strategy and

the commitments assumed with lenders and the market. For information regarding the other

measures adopted (specifically those for the management of criticalities underlying the

Campania USW Project and Imprepar), please refer to later chapters in this report.

In light of the above considerations, the Impregilo Group's key financial highlights for 2005,

which are presented in greater detail in the pages that follow, may be summarised as follows:

• Revenues of Euro 2.443 million;

• Operating loss of Euro 254.4 million;

• Operating loss attributable to the Group of Euro 358.2 million;

• Debt/equity ratio of 0.9 (relating to ongoing business activities);

• Negative net financial position of Euro 489.3 million (net of activities in the process of

being sold); and

• Shareholders' equity attributable to the Group of Euro 516.7 million.

FINANCIAL RESTRUCTURING EXERCISES


22

CAPITAL INCREASE

July saw the wrapping up of a capital increase - approved by the

Special Meeting of Shareholders held on 20 May 2005 and

offered to the market on 13 June - for the total sum of Euro

651.9 million, which included a premium and residual rights not

taken up (Euro 2.0 million). From a consolidated equity

perspective, this total amount was reduced by transaction costs

of around Euro 37 million, gross of the related fiscal effect of

around Euro 12.3 million.

As a result of the above increase, the shareholder structure of

Impregilo changed significantly. This was also partly due to the

agreements previously reached between Gemina and IGLI (a

company controlled by Argo Finanziaria S.p.A., Autostrade per

l'Italia S.p.A., Tesir S.r.l. (Techint - Sirti) and Efibanca S.p.A.),

which involved the latter taking an interest in Impregilo's share

capital by subscribing a share of the capital increase (ordinary

shares). Gemina exercised its option rights in such a way that after

the capital increase, it would hold an 11.82% stake in Impregilo,

while selling its remaining option rights to IGLI, which after

exercising them, and following the capital increase, acquired a

12.59% stake in Impregilo. (The latter interest was later raised, as

per the information disclosed by IGLI, to 18.037%).

BORROWING ACTIVITIESWe wish to inform you of the following borrowing activities:

Bridging loan and medium-term loan After an initial Euro 120 million bridging loan was granted by

banks (Euro 90 million) and Gemina S.p.A. (Euro 30 million), on

16 May 2005 Impregilo entered into a further bridging loan

agreement with a group of banks, maturing on 31 July 2005

and for Euro 680 million maximum, in order to meet the Group's

cashflow requirements (repayment of maturing bond loans and

operating needs) until the aforementioned capital increase had

been accomplished.

Around Euro 660 million of this second bridging loan was

actually utilised and - in keeping with what was contractually

agreed - Euro 500 million was transformed into medium-term

borrowing, while the remaining Euro 160 million was repaid. To

be more precise, on 7 June 2005, Impregilo entered into

another agreement with the banks that had provided its bridging

loan, in order to transform Euro 500 million of said facility into a

medium/long-term loan with a seven-year term and an 18-

month grace period. This agreement came into effect on 29 July

2005, after the capital increase had been realised in full and the

Euro 160 million outstanding on the bridging loan had been

repaid.

Rescheduling of the Group's short-term borrowingIn accordance with the commitments assumed on 7 June 2005

and following the full realisation of the previously mentioned

capital increase, on 28 July 2005 a number of agreements were

entered into with various banks for the rescheduling of Euro

206.9 million of the Group's short-term borrowing. (This amount

included the Euro equivalent, as of the date on which the

agreements were rescheduled, of a US$ 25.4 million facility).

The new borrowing, transformed into medium/long-term debt,

has a term of five years, with a 24-month grace period.

Restructuring of the medium-termborrowing of Fisia ItalimpiantiOn 7 June 2005, Fisia Italimpianti entered into an agreement

with a group of banks for the restructuring - subject to the

capital increase being realised in full and Euro 500 million of the

bridging loan being transformed into a medium-term facility - of

the Euro 76 million remaining in respect of the medium-term

loan that had originally been taken out when Fisia was acquired

by Hiatus S.p.A. (The latter subsequently incorporated Fisia and

23

changed its name to "Fisia Italimpianti S.p.A.", as it is known at

present.) This restructuring led to the loan's repayment terms

being amended, with a two-year extension being granted for

every instalment with effect from the instalment falling due on

30 June 2005.

The purpose of the entire financial restructuring exercise

described above was to enable the Group to meet its funding

requirements,(1) with regard to both its short-term needs

(specifically for the complete repayment of the bond loans and

associated interest totalling around Euro 571 million and

maturing in May and June 2005) and its medium/long-term

needs (supporting the Group's development by growing and

boosting its orders books), as well as to strengthen its balance-

sheet structure, by focusing, among other things, on lengthening

the average term of borrowing.

As at 31 December 2005, the company had however prepaid

Euro 44.3 million of the principal outstanding on new loans after

disposing of assets, and prepaid a further US$ 25.4 million after

receiving funds for a claim made in respect of a foreign contract.

(1) Excluding, of course, the need to finance specific projects and initiatives in respectof which special ventures are established that raise their own resources.

24

STRATEGIC GUIDELINES FOR THE THREE-YEAR PERIOD 2005-2007

During the reporting period, the composition of Impregilo's Board of Directors was renewed in

accordance with the agreements reached by Gemina and IGLI. On 2 May 2005, the position of

Managing Director was assumed by Mr Alberto Lina.

The Group's new executive team came up with a set of strategic guidelines for the three-year

period 2005-2007, which were subsequently submitted to the Board for approval before

forming the topic of discussion at a presentation to the financial community and the market.

The aims of these strategic guidelines may be summarised as follows:

• Focusing the Group's attention on core business activities (Constructions, Engineering & Plant

Construction and "strategic" Concession);

• Reducing invested capital by way of a sizeable disposals programme, in order to free up the

financial resources needed to support core business development, constantly improve the

Group equity/minority interests ratio and maximise the return for shareholders;

• Actively managing the key critical areas identified within the Campania USW Project, the

motorway concession sector in Argentina, the "Building & Services Division", Imprepar (in

liquidation) and the business unit of Fisia Italimpianti;

• Making the most of the industrial synergies that can be achieved with Impregilo's new

industrial partners;

• Developing a new "corporate culture" based on the active risk management and the creation

of value;

• Redesigning the Group's organisational set-up, realised as a means of enabling the goals

presented in the previous points to be achieved.

In accordance with the strategic guidelines outlined above, Impregilo embarked on a detailed

and complex plan of measures, a significant number of which have already been accomplished.

These measures, together with the financial restructuring exercise wrapped up in recent

months, are - in keeping with the wishes of the Board - set to get underway as early as financial

year 2006. They are expected to bring about a notable improvement to profit figures and ratios

and strengthen the Group's balance-sheet and financial structure further in relation to the

considerable results already achieved on this front in financial year 2005.

Specifically, as part of plans to reduce invested capital, in addition to the Chilean franchise

Costanera Norte being in the process of being sold, the year 2005 also saw disposals totalling

25

around Euro 140 million in respect of operations no longer

considered to be strategic. Such disposals, which generated net

capital gains of around Euro 24 million, concerned both property

investments and a number of equity interests relating to the

running of the Concession & Services Division as detailed below.

Sale of Anita S.r.l. (land situated in Via Melchiorre Gioia, Milan)

July saw the finalisation of the contract for the sale to Hines of

the interest held in Anita S.r.l., the owner of land, constituting a

part of the so-called "Garibaldi Repubblica Project", for Euro 42

million, which generated a consolidated capital gain of around

Euro 5 million after taxes.

This deal involved the subsidiary company I.L.IM. (Iniziative

Lombarde Immobiliari) selling 100% of the quotas of Anita S.r.l.

(a special-purpose company controlling a portion of the property

pertaining to the aforementioned "Garibaldi Repubblica

Project"), in keeping with a contractual arrangement entered

into with the fund "Hines" over two years ago.

Sale of Wolverhampton Ltd (concession in England)

21 July saw the subsidiary company Impregilo International

Infrastructures N.V. finalise an agreement for the sale of 80% of

the shares of Impregilo Wolverhampton Ltd, and the

corresponding share of the company's subordinate loan, to the

fund "Secondary Market Infrastructure Fund" for the total sum

of £ 3.9 million.

Wolverhampton Ltd is the franchisee of a contract for the

design, construction, financing, supply, maintenance and

replacement of medical equipment used on the radiology and

diagnostics ward of the hospital in Wolverhampton.

This sale realised a net capital gain of Euro 2.1 million, as well

as enabling the repayment of a Euro 2.7 million subordinated

loan.

Sale of Leonardo S.r.l.

21 September 2005 saw the perfection of the sale to Gemina -

under a put and call agreement entered into beforehand - of

Impregilo's interest in the capital of Leonardo S.r.l. (in turn the

majority shareholder of Aeroporti di Roma S.p.A.), for around

Euro 62 million. This amount was paid by setting it off against a

similar amount due to Gemina by Impregilo. More information

may be found in the section regarding relationships with related

parties.

Sale of Nuova Iniziative Coimpresa S.r.l.

On 5 December 2005, quotas held in Nuova Iniziative

Coimpresa S.r.l., a company 75.525%-owned by Impregilo

Edilizia e Servizi S.p.A., were sold to Mi.no.ter. S.p.A. The

agreed sale price of Euro 12.5 million produced a capital loss

of around Euro 2.2 million, while also discounting it to Euro 1.2

million.

At the same time as this interest was sold, Mi.no.ter S.p.A.

acquired around Euro 12 million in accounts receivable by the

above investee company from Impregilo Edilizia e Servizi S.p.A.

on a non-recourse basis, while Nuove Iniziative Coimpresa S.r.l.

repaid bank loans of around Euro 1.3 million.

The collection of proceeds from the above sale was guaranteed

by way of bank guarantees.

The deal released the Impregilo Group from guarantees

amounting to approximately Euro 10 million.


26

Sale of Costanera Norte (motorway franchise in Chile)

In December 2005, the subsidiary company Impregilo

International Infrastructures N.V. finalised a binding agreement

for the sale of its interest in the motorway franchise Costanera

Norte S.A. to Autostrade S.p.A. and Sias S.p.A. (which as

necessary set up the special-purpose company, ASA).

This deal, taking as its cue the prospects of infrastructural

projects being successfully implemented and developed in

Chile, also includes a cooperation agreement between the

Impregilo Group, Autostrade and Sias for the joint development

of new motorway projects in the country, as well as an option

contract allowing Impregilo International Infrastructures to buy

back up to 10% of the share capital of the Chilean holding

company through which Autostrade and Sias will acquire

Costanera Norte.

To be more precise, the agreement entered into by the parties

involves an initial sale price being set, in relation to 100% of the

capital of the Chilean franchise company, at US$ 282 million,

with US$ 277 to be paid on the date on which the deal is

perfected (which, as already indicated, is expected to take place

soon) and the remaining US$ 5 million (representing the

minimum share guaranteed by an earn-out of up to US$ 33

million) to be paid to the vendor over four years, in relation to the

increased toll revenues actually received during the period in

comparison with the forecasts used to determine the initial

price.

Autostrade and Sias will also acquire the entire subordinated

loan made by shareholders to Costanera of UF 604,000

(approximately US$ 21 million).

With regard to Impregilo's share (77.9%), the deal will generate

a gross capital gain (converted into Euros) of around Euro 130

million that, after local taxes and transaction costs, will translate

into a net economic benefit of approximately Euro 100 million,

in addition to net proceeds of more than Euro 165 million.

In financial year 2005, in accordance with prevailing accounting

standards, around Euro 250 million of net debt relating to

Costanera Norte was deducted from the Impregilo Group's net

borrowing, while benefits in terms of net capital gains (Euro 100

million roughly) and a further reduction in the Group's net

borrowing (as a result of the above price - around Euro 165

million - being netted) will be recorded in financial year 2006.

The share capital of Costanera Norte is presently divided among

Impregilo International Infrastructures N.V. - Impregilo Group

(77.9%), Empresa Constructora Tecsa S.A. (10.0%), Empresa

27

Constructora Fe Grande S.A. (10.0%) and Simest S.p.A. (2.1%).

The operation's Chilean minority shareholders accepted the

terms of the deal.

The Group is however party to an agreement with Simest S.p.A.

in respect of the 2.1% stake held in Costanera Norte, whereby

Simest is required to sell said interest to the Impregilo Group by

31 December 2007. The Group is in turn required to sell its

share at the same time to Autostrade and Sias.

The transfer of the above investment is subject to approval from

the two guarantors of the bond loan (Banco Interamericano di

Sviluppo and AMBAC Assurance Corporation) issued by the

franchise company and the agreement of the Chilean Public

Works Ministry. The above conditions are expected to be fulfilled

soon, meaning that the transaction will be definitively perfected.

Acquisition of a 49%

stake in Fisia Italimpianti from Equinox

While not a disposal but rather a corporate restructuring

transaction, in view of the deal's importance, we should mention

that on 21 December 2005 Impregilo acquired 49% of the

capital of Fisia Italimpianti S.p.A., previously owned by Equinox

Investment Company S.c.p.a., for Euro 68.5 million. This price,

which resulted from negotiations with the counterparty, led to

the agreements in place between the parties being superseded

and as a result completely rescinded.

The deal, as a consequence of which the Impregilo become the

outright owner of the share capital of Fisia Italimpianti, came

about as a result of the non-fulfilment of the requirements

underlying the agreements reached when Equinox assumed an

interest in the company's capital. Specifically, this came about

after the unexpected developments in the Campania USW

Project and the promulgation of Legislative Decree 245/2005,

which - in rescinding ope legis the service contracts that tied

Fibe and Fibe Campania to the Government-appointed receiver -

made it necessary to define a new unitary industrial plan

covering all Impregilo Group companies involved in the plan,

with the consequent abandonment (with regard to Fisia

Italimpianti) of the original plan agreed with the shareholder

Equinox.

The acquisition of Fisia's entire capital also meets strategic

objectives targeting the dynamic development of core business

activities and increasingly presents the Group as an integrated

general contractor, which is active in both the large-scale

projects sector and plant-engineering and integrated

environmental services sector.


ANALYSIS OF THE ECONOMIC PERFORMANCE, BALANCE-SHEET SITUATION AND FINANCIAL POSITION

OF THE IMPREGILO GROUP AND IMPREGILO S.p.A.

28


30

Since the 2005 interim report, the Group's consolidated

financial statements have been prepared in accordance with the

new International Accounting Standards (IAS) and International

Financial Reporting Standards (IFRS).

The supplementary notes to the consolidated financial

statements deal extensively with the new standards applied to

the Group's consolidated accounts, while the appendix to the

consolidated financial statements provides the reconciliations

provided for by IFRS 1: First-time Adoption of International

Financial Reporting Standards.

By virtue of the options offered by Legislative Decree 38/2005,

the parent company Impregilo S.p.A. opted not to adopt the

international accounting standards IFRS for the purpose of

preparing its individual financial statements for the year ending

31 December 2005. The accounts and financial highlights set

out below for the parent company have therefore been prepared

in accordance with Italian accounting standards. The parent

company will adopt IFRS for the purpose of preparing its

individual financial statements from 1 January 2006.

IMPREGILO GROUP

BUSINESS PERFORMANCE

As a result of the new strategic guidelines being adopted,

Impregilo's new Board of Directors, which was established on 2

May 2005, carried out an in-depth examination of the various

aspects of the consolidated financial statements, and after

taking into account the significant events that took place during

the period, made a number of allocations and effected write-

downs against shareholdings, receivables and other balance-

sheet items. This led to a result for the year of Euro 359 million,

after non-recurring items of income totalling Euro 61 million.

These allocations, write-downs and charges, net of the above

credit entries, concerned the entire Group.

In particular, net non-recurring items are attributable to non-

core business activities as follows:

• Fibe and Fibe Campania reduced the net result by Euro 104.7

million (and the operating result by Euro 86.7 million);

• Edilizia e Servizi reduced the net result by Euro 54.8 million

(and the operating result by Euro 47.8 million); and

• Imprepar reduced both the net result and operating result by

Euro 74.9 million.

Taken together, these "contributions" produced a net loss of

Euro 234.4 million (and an operating loss of Euro 209.4 million),

although it should be pointed out, given the special status of

these operations (which Impregilo is in the process of disposing

of/divesting from or winding up), the distinction between "non-

recurring items" and other income-statement items is rather

"labile", making the collective operating and net losses posted

by these companies in 2005 (around Euro 260 million and Euro

295 million respectively) more significant for the purposes of

analysis.

Net non-recurring items are instead attributable to core

business activities as follows:

• Constructions (including the units and costs of the Corporate

Division) reduced the net result by Euro 57.5 million (and the

operating result by Euro 62.4 million), with said entries

largely imputable to the measurement of contracts in the

process of being carried out and risks relating to completed

jobs, as well as to the staff restructuring costs incurred during

the period; and

• Concession reduced the net result by Euro 67.5 million (and

the operating result by Euro 57.8 million), with said entries

being almost entirely imputable to the critical conditions in

which the Group's Argentinean franchisees have found

themselves operating as a result of tariffs not being increased)

due to the country's well-noted situation, even though

negotiations with the local authorities went ahead, with a view

to obtaining these rises, while activities continued.

Taken together, these "contributions" produced a net loss of

Euro 125.0 million (and an operating loss of Euro 120.2 million).

31

The table below provides a summary of the Group's business performance in financial year

2005 and the previous year. In this regard, we should point out that a comparison between

figures for the two years is therefore to be made by taking significant items of a non-recurring

nature registered in 2005 into account.

Net revenuesConsolidated net revenues amounted to Euro 2,443 million, decreasing by 19% on the same

period of the previous year. This decrease was due to the general downturn in volumes that has

affected all sectors in which the Group is active, the revenues generated by certain operations

(specifically the Chilean motorway franchise Costanera Norte) being allocated to the item "Net

result from assets held for sale", and the absence of the extraordinary items computed the

previous year. The decline in production recorded by the Constructions Division was essentially

due to two concomitant factors: a falloff in worksite activities, with projects having now entered

the final phase (specifically the Turin-Novara sub-section of the Turin-Milan high-speed railway

line) and the delays encountered in getting new worksites up and running, including the two

sections of the Salerno-Reggio Calabria motorway (Gioia Tauro-Scilla and Scilla-Reggio Calabria)

and the Mestre Loop Road, for reasons not imputable to the construction company involved.

31 December 31 December Change(amounts expressed in thousands of Euros) 2005 2004

Revenues 2,318,499 2,714,125 (395,626)

Other revenues 124,481 285,542 (161,061)

Total revenues 2,442,980 2,999,667 (556,687)

Operating costs (2,271,592) (2,692,878) 421,286

Amortisation, depreciation and write-downs (425,789) (164,991) (260,798)

Total operating costs (2,697,381) (2,857,869) 160,488

Operating profit/(loss) (254,401) 141,798 (396,199)

Financial income/(charges) (94,290) (199,934) 105,644

Foreign exchange gains/(losses) 6,354 (19,065) 25,419

Profit/(Loss) from shareholdings 39,374 67,800 (28,426)

Total financial income and charges (48,562) (151,199) 102,637

Pre-tax result (302,963) (9,401) (293,562)

Taxes (51,698) (83,985) 32,287

Result from ongoing business activities (354,661) (93,386) (261,275)

Net result from assets held for sale (11,685) - (11,685)

Group's net result before taxes and minority interests (366,346) (93,386) (272,960)

Minority interests 8,102 4,825 3,277

Net result attributable to the Group (358,244) (88,561) (269,683)


32

To be more specific and with regard to the Salerno-Reggio

Calabria motorway, the delays are due - in the case of the stretch

from Gioia Tauro to Scilla - to the necessary authorisation

enabling the client (ANAS, the Italian national motorway authority)

to get work underway not being forthcoming, and - in the case of

the stretch from Scilla to Reggio Calabria - to the same client's

examination of the project becoming a lengthy process. Delays

arose with the Mestre Loop Road when buying the areas due to

compulsory purchases, when sorting out the issue of interference

on the land involved and when getting the client to approve the

changes made to the projects themselves.

The falloff in production volumes recorded in 2005 would not

appear to be a cause for concern, however, since important new

contracts are expected to be awarded to the Constructions

Division, further details of which may be found in the relevant

section of this report. These will have a positive impact on the

Group's results in the years ahead.

The Engineering & Plant Construction Division, which heads up

the subsidiary companies Fisia Italimpianti and Fisia Babcock

GmbH, saw a decline in turnover due to well-known issues

relating to the Campania USW Project, as well as to new

contracts already in the Division's jobs book getting off the

ground later than originally planned. These issues are however in

the process of being dealt with.

To end this section, we wish to point out that in financial year

2004 the Concession Division also benefited from the revenues

that came from capitalising the cost of realising the motorway in

Santiago (Euro 154.7 million as at 31 December 2004).

In financial year 2005, this amount was considerably lower (Euro

68.4 million), as a result of the advance stage of completion

reached by the project. It has been carried under the item "Net

result from assets held for sale".

Operating lossIn the year ending 31 December 2005, the Group reported a

consolidated operating loss of Euro 254.4 million. In this case

too, it should be noted before all else that this global figure was

heavily influenced by the operating losses of around Euro 260

million posted by non-core business activities/companies that

are in the process of being disposed of/divested from or wound-

up. Furthermore, the year under review saw significant provisions

and write-downs effected in respect of the Group's core business

activities (around Euro 120.2 million in terms of operating

income, after non-recurring items of income). In order for year

2005's results to be evaluated more accurately, it is worth noting

that had such provisions and write-downs not been effected and

disregarding the operating losses posted by non-core business

activities, the Group's core business activities (after also taking

elisions from consolidation procedures into account) would have

produced an operating profit of around Euro 125.7 million. This

in turn produces a ROS (Return On Sales: EBIT/sales) of more

than 5%, with this indicator increasing to around 6.4% in the

case of the Constructions Division (controlled by Impregilo S.p.A.)

together with the corporate unit functions and costs. Further

information regarding individual business areas may be found in

the chapter "Performance by Business Area".

Financial income and chargesThe year under review witnessed a notable improvement in the

item "Financial income and charges", which was mainly due to

the financial restructuring, which enabled around Euro 32.4

million of loans from banks, bondholders and other lenders to be

repaid. Moreover, the year 2004 income statement had been

influenced by a loan granted by the subsidiary company

Imprepar (in liquidation) to the Iraqi Government being written

down to the order of Euro 58.6 million.

Financial operations also improved due to capital gains realised

from the sale of Venezuelan securities (Euro 9.7 million), against

2004's capital losses (again from the sale of securities) of Euro

12.5 million.

The trends followed by the foreign currencies of the countries in

which the Impregilo Group operates enabled it to post a profit of

Euro 6.4 million, compared with a loss of Euro 19.1 million the

previous year.

33

The result from shareholdings was worse than in 2004, the

previous year having benefited from a capital gain on the sale of

the Consorzio Venezia Nuova (which had been awarded the

"Mose" projects). In this regard, we should also add that the

result from shareholdings posted for 2005 was also affected by

the capital gain on the sale of the stake in Leonardo S.r.l. to

Gemina (Euro 15.6 million) and from the sale of the stake in

Wolverhampton Ltd as regards the "Concession & Services"

business (Euro 2.1 million).

Result from assets due to be sold Assets due to be sold were essentially made up of "Costanera

Norte S.A.", the Chilean motorway franchise controlled by

Impregilo International N.V., Gricignano 3 S.r.l., Sipem S.p.A. (in

liquidation) and the company Borini e Prono & Co (Nigeria) Ltd.

Furthermore, the result from assets due to be sold was affected

by the capital loss incurred on the sale of the equity interest in

Nuova Iniziative Compresa S.r.l. to Mi.no.ter. S.p.A. for around

Euro 3.4 million, which was split between the value of the capital

loss (around Euro 2.2 million) and the discount effect arising as

a result of payment being deferred (around Euro 1.2 million).

Pre-tax resultThe Group reported a loss of Euro 303 million.

Net result (EBITDA)The Group reported a net loss of Euro 358.2 million. As already

highlighted in the introductory paragraph, this result was

severely affected by the losses registered by non-core business

activities (Euro 295 million), in respect of which

disposal/divestment programmes (Edilizia e Servizi S.p.A. and

the Campania USW Project) or winding-up programmes

(Imprepar) are now underway and sizeable provisions and write-

downs have been effected with regard to the core business

activities Constructions and Concession (Euro 125 million, after

non-recurring items of income).


34

BALANCE-SHEET SITUATION AND FINANCIAL POSITIONOF THE IMPREGILO GROUP

The Impregilo Group's balance sheet and financial performance

are summarised in the table below.

Net invested capitalIn keeping with management's business guidelines for the

three-year period 2005-2007, during the year under review

action was taken to progressively dispose of various assets no

longer considered strategic (both property assets and assets

pertaining to the "Concession" business) that, together with the

contribution from non-recurring items, generated a cashflow

while reducing invested capital.


Non-current assets 1,145,817 1,561,749 (415,932)

Provisions for risks and liabilities (174,860) (67,959) (106,901)

Other non-current liabilities (54,400) (84,943) 30,543

Non-current liabilities (229,260) (152,902) (76,358)

Inventories 324,035 373,574 (49,539)

Down payments received for goods being made to order (588,705) (600,220) 11,515

Receivables 1,125,947 1,149,566 (23,619)

Payables (931,913) (1,010,750) 78,837

Other assets/(liabilities 70,861 52,106 18,755

Working capital 225 (35,724) 35,949

Assets/(Liabilities) held for sale 89,217 89,217

Net invested capital 1,005,999 1,373,123 (367,124)

Total equity attributable to Group 512,676 198,735 313,941

Minority interests 4,002 12,922 (8,920)

Total equity 516,678 211,657 305,021

Net borrowing 489,321 1,161,466 (672,145)

Total financial resources 1,005,999 1,373,123 (367,124)

(*) Net borrowing including entries of a financial nature pertaining to companies held for sale amounts to Euro 739.2 million.

35

Shareholders' equityAs at 31 December 2005, shareholders' equity amounted to

Euro 516.7 million, representing an increase of Euro 305 million

on 31 December 2004 due to the following:

• an increase in capital and the share premium reserve to the

order of Euro 626.9 million (after the additional expenses

incurred in connection with the transaction);

• the loss for the period of Euro 358.2 million;

• an increase in the exchange-rate fluctuation reserve of Euro

42.5 million;

• the creation of a stock option reserve amounting to Euro 2.8

million;

• the result attributable to minorities, to the order of Euro 8.9

million and other changes in equity attributable to minorities,

to the order of Euro 0.8 million.

Net financial positionAs at 31 December 2005, the Group's net borrowing amounted

to Euro 489.3 million, around Euro 672 million lower than at the

end of the previous year. This decrease was the result of the

Euro 651.9 million capital increase, gross of costs relating to the

capital increase and debt rescheduling, as perfected in July, the

generation of cashflow from disposals and management and

investment activities.

Please note that Impregilo provided guarantees in favour of

unconsolidated investee companies totalling Euro 26.2 million in

respect of loans provided by banks and other financial

institutions.

The table below summarises the composition of the Group's net

financial position.


Non-current financial assets 70,364 68,022 2,342

Derivatives and other current financial assets 22,258 43,373 (21,115)

Liquid assets (*) 566,703 467,665 99,038

Total cashflow and other financial assets 659,325 579,060 80,265

Loans from banks and other lenders (750,566) (102,016) (648,550)

Bonds - (225,581) 225,581

Finance lease liabilities (8,226) (16,356) 8,130

Total medium and long-term borrowing (758,792) (343,953) (414,839)

Current portion of loans and bank overdrafts (378,273) (821,586) 443,313

Current portion of bonds - (549,290) 549,290

Current portion of finance lease liabilities (7,566) (19,282) 11,716

Derivatives and other current financial liabilities (4,015) (6,415) 2,400

Total short-term borrowing (389,854) (1,396,573) 1,006,719

Total net borrowing relating to ongoing business activities (489,321) (1,161,466) 672,145

Total net borrowing relating to assets held for sale (249,857) (249,857)

Total net borrowing including assets held for sale (739,178) (1,161,466) 422,288

(*) Most of these amounts are tied-up with consortiums and are to be employed in contract-oriented activities.


36

IMPREGILO S.p.A.

The parent company Impregilo S.p.A. ended financial year 2005 with a net loss of Euro 257.4

million, an increase of Euro 114.7 million on the loss reported as at 31 December 2004.

It should be noted that the figures presented are taken from the financial statements prepared

in accordance with national accounting standards.

BUSINESS PERFORMANCE OF IMPREGILO S.p.A.

The parent company's business performance is summarised in the table below.


Revenues 1,628,547 2,021,281 (392,734)

Other reviews 48,362 33,065 15,297

Total revenues 1,676,909 2,054,346 (377,437)

Operating costs (1,534,060) (1,924,422) 390,362

Amortisation, depreciation and write-downs (90,781) (42,197) (48,584)

Total operating costs (1,624,841) (1,966,619) 341,778

Operating result 52,068 87,727 (35,659)

Financial income and charges (4,001) 10,146 (14,147)

Value adjustments to financial assets (297,182) (201,891) (95,291)

Extraordinary income and charges (3,260) (393) (2,867)

Pre-tax result (252,375) (104,411) (147,964)

Taxes (4,977) (38,248) 33,271

Net result for the year (257,352) (142,659) (114,693)

37

Net revenuesNet revenues amounted to Euro 1,676.9 million, representing a

decrease of Euro 377.4 million on 31 December 2004 due

above all to the Novara-Torino sub-section of the Milan-Turin

high-speed railway line being completed and the delay

encountered in new contracts such as the Salerno-Reggio

Calabria motorway and the Mestre Loop Road.

Operating result (EBIT)EBIT for the year ending 31 December 2005 amounted to Euro

52.1 million, down Euro 35.7 million on the result for the year

ending 31 December 2004 due to higher allocations to the

provision for risks and charges, the most significant of which

were effected (as already mentioned) to cover definitive losses

relating to the Tunnel Alp Transit Consortium in Switzerland (Euro

26.1 million) and definitive costs relating to the Ghazi Barotha

contract in Pakistan (Euro 19.1 million).

Financial income and chargesFinancial income and charges produced a net charge of Euro 4

million, compared with net income of Euro 10.1 million the

previous year, including 54.3 million Euros of capital gains from

the sale of shareholdings.

This change was made up for, however, by lower financial

charges and lower losses on exchange-rate differences being

incurred during 2005.

Net resultA year-end loss of Euro 257.4 million was recorded as at 31

December 2005. This loss incorporates the negative effect of

the non-recurring items referred to in the section dealing with

the consolidated financial statements.

It should be pointed out, however, that in incorporating the

result highlighted above, the loss posted by the subsidiary

company Impregilo International Infrastructures N.V. (III) in

terms of writing down the value of the interest held, the fact

that a share of said loss is of a non-permanent nature (and

therefore does not need to be computed for write-down

purposes) was taken into account. This is because the loss is

recoverable in 2006 following the capital gain arising from the

disposal of Costanera Norte, which is controlled by the same

company (III). (A description of this transaction is contained in

the chapter dealing with "Significant events taking place after

the end of the year").


38

BALANCE-SHEET SITUATION AND FINANCIAL POSITION OF IMPREGILO S.p.A.

The parent company's balance sheet is summarised in the table below.

Non-current assetsNon-current assets decreased by Euro 68.7 million mainly due to the write-down of amounts

receivable from Imprepar S.p.A. (in liquidation).

Working capitalWorking capital increased by Euro 751.7 million, which was due essentially (Euro 692.1 million)

to loans made in favour of the subsidiary company Impregilo International Infrastructures N.V.,

which was provided with the liquidity needed to repay its bond loans and meet additional

operating requirements.

Shareholders' equityShareholders' equity increased from Euro 346.0 million to Euro 740.5 million due to the

increase in capital and the share premium reserve (Euro 651.9 million) and the Euro 257.4

million corresponding decrease in the year's result.


Non-current assets 568,076 636,824 (68,748)

Working capital 684,671 (67,066) 751,737

Net invested capital 1,252,747 569,758 682,989

Total shareholders' equity 740,546 345,990 394,556

Net financial position (512,201) (223,768) (288,433)

Total 1,252,747 569,758 682,989

39

Net financial positionNet financial indebtedness increased by Euro 288.4 million, which was largely due to the

transactions carried out to restructure the Group's borrowing, which as mentioned previously

channelled the majority of this borrowing into the parent company Impregilo S.p.A.

The Group's net financial position, presented in the table below, is reported according to the

criterion adopted by the Impregilo Group for the year ending 31 December 2004 and includes,

in addition to amounts due to banks, bondholders and other lenders and liquid assets, other

payables and receivables of a financial and fiscal nature.

Unlike in 2004, the Group's net financial indebtedness does not include fiscal assets and

liabilities that have instead been included as part of invested capital. (2004 figures shown in the

table below have been reclassified by adopting the same criterion).


Liquid assets 202,593 81,102 121,491

Marketable securities 987 86 901

Loans granted 5,675 17,666 (11,991)

Due to banks (30,662) (193,246) 162,584

Loans from shareholders (100,000) 100,000

Loans from other lenders (19,704) (24,803) 5,099

Financial liabilities (32,593) (26,683) (5,910)

Bond loans

Current situation, net 126,296 (245,878) 372,174

Receivables of a financial nature 22,110 (22,110)

Due to banks (638,497) (638,497)

Medium/long-term situation, net (638,497) 22,110 (660,607)

Total net financial position (512,201) (223,768) (288,433)


PERFORMANCE BY BUSINESS AREA

40


42

Performance by business area in the year ending 31 december 2005The table below summarises the key performance figures for each business individually. Similarly to what was reported when the Group's

2005 interim report was published, following the Group's organisation restructuring, no figures are being shown for each business area in

respect of financial year 2004, since they are not comparable.

Constructions Engineering Concession Total Building Imprepar Campania Total Elisions Total& Plant excl. Fibe core and USW non-core group

Construction and Fibe business Services business(*) Campania activities activities

Impregilo of which: Fisia I.I.I. N.V.(Euro/millions) division Corporate

Revenues from third parties 1,853.5 - 299.7 31.2 2.184.4 106.2 16.7 135.6 258.5 - 2,442.9

Inter-group revenues 3.1 - 40.5 4.6 48.2 6.4 0.4 3.6 10.4 (58.6) -

Total revenues 1,856.6 - 340.2 35.8 2.232.6 112.6 17.1 139.2 268.9 (58.6) 2,442.9

EBIT realised by business division (**) 57.1 (67.8) 13.1 (64.7) 5.5 (60.1) (77.6) (122.2) (259.9) - (254.4)

Portion of profits from affiliates 16.2 16.2 16.2

Other financial income/(charges) (71.1)

Foreign exchange gains/(losses) 6.3

Pre-tax result (303.0)

Taxes (51.7)

Result from ongoing business activities (354.7)

Net result from assets held for sale (11.6)

Group's net result before taxes and minority interests (366.3)

Minority interests (8.1)

Net result attributable to Group (358.2)

Non-recurring charges (110.6) (18.6) (57.8) (168.4) (56.5) (74.9) (86.7) (218.1) (386.5)

Non-recurring items of income 48.2 - 48.2 8.7 8.7 56.9

Net non-recurring items (62.4) (18.6) - (57.8) (120.2) (47.8) (74.9) (86.7) (209.4) (329.6)

EBIT before non-recurring items 119.5 (49.2) 13.1 (6.9) 125.7 (12.3) (2.7) (35.5) (50.5) - 75.2

(*) The amortisation of goodwill (Euro 23.5 million) has been removed from the business division's operating result, since it is elided during the consolidation process.(**) Operating result without non-recurring items.

43

The next table summarises the key balance-sheet figures for each business individually.

Constructions Engineering Concession Total Building Imprepar Campania Total Elisions Total& Plant excl. Fibe core and USW non-core group

Construction and Fibe business Services businessCampania activities activities

Impregilo of which: Fisia I.I.I. N.V.(Euro/millions) division Corporate

Fixed and other non-current assets 332.9 100.3 23.4 273.4 629.7 25.1 153.1 369.3 547.5 (102.1) 1,075.1

Goodwill (eliminated forconsolidation purposes) 164.4 164.4 (164.4) -

Non-current liabilities (120.8) (15.0) (4.5) (140.3) (31.9) (26.8) (31.5) (90.2) 1.2 (229.3)

Net assets (liabilites) held for sale 5.9 - 83.0 88.9 0.3 - - 0.3 - 89.2

Working capital (126.5) (160.1) (5.5) (292.1) 40.5 27.1 (19.8) 47.8 19.8 (224.5)

Intersector trade balances 5.2 103.6 1.2 110.0 26.7 - (139.5) (112.8) 2.8 -

Unallocated current and deferred net tax assets 295.5

Net capital employed 96.7 100.3 116.3 347.6 560.6 60.7 153.4 178.5 392.6 (242.7) 1,006.0

Shareholders' equity 516.7

Net financial position 489.3

Total financial resources 1,006.0

Other information:

Fixed assets increased 62.5 14.0 7.1 83.6 0.5 0.7 43.1 44.3 127.9

Amortization and depreciation 58.9 2.4 5.3 66.6 13.1 0.5 34.1 47.7 114.3

Write-downs chargedto income statement 128.8 6.5 45.2 180.5 46.5 57.3 27.0 130.8 311.3

45

Business performance by geographical area in the year ending 31 december 2005The table below summarises the key performance figures for each geographical area individually.

Nella tabella che segue vengono riepilogati i principali dati patrimoniali di ciascuna area geografica:

Italy Other EU Other North Central Asia Rest of Intersector Consolidatedcountries european America and South the world elisions

countries America(Euro/millions) (outside EU)

Revenues by sector 1,538.6 159.1 296.6 68.6 211.4 177.7 21.0 (30.0) 2,443.0

The next table summarises the key balance-sheet figures for each geographical area individually.

Italy Other EU Other North Central Asia Rest of Intersector Consolidatedcountries european America and South the world elisions

countries America(Euro/millions) (outside EU)

Other tangible assets 464.0 4.2 18.5 6.2 22.4 1.2 3.1 519.6

Freely transferable goods 6.5 - 14.6 - 34.7 - - 55.8

Goodwill and other intangible assets with indefinite useful life 14.2 11.9 - - - - - 26.1

Intangible assets with indefinite useful life 63.0 0.3 - - 0.1 - - 63.4

Shareholdings 89.9 408.9 - - 4.6 - 0.1 (259.1) 244.4

Non-current receivables from Group companies 17.5 27.7 - - 13.2 - - (27.8) 30.6

Other non-current assets 127.0 0.1 2.5 4.1 0.1 0.2 0.1 134.1

Total non-current assets 782.1 453.1 35.6 10.3 75.1 1.4 3.3 (286.9) 1,074.0

Curernt assets (total) 1,867.6 337.4 122.0 26.7 243.1 14.4 48.7 (996.4) 1,663.5

Total ongoing business activities 2,649.7 790.5 157.6 37.0 318.2 15.8 52.0 (1,283.3) 2,737.5

ENGINEERING &CONSTRUCTIONS DIVISION


46

CONSTRUCTIONS

The Constructions Division, which covers the costs of Corporate

among other things, includes all projects involving the realisation

of large-scale infrastructure projects, such as dams and

hydroelectric power stations, motorways, railway lines,

underground transport systems, underground projects, bridges

and similar structures.

OPERATING RESULT (EBIT)In financial year 2005, the Group's operating profit (including

Corporate Division costs of Euro 67.8 million) totalled Euro 57.1

million. This result includes non-recurring items of Euro 62.4

million, which were made up of the following: (i) non-recurring

charges of Euro 110.6 million, relating predominantly to

provisions and write-downs (Euro 62.9 million), other non-

recurring operating costs (Euro 37.8 million) and personnel

restructuring costs (Euro 9.9 million); and (ii) non-recurring

items of income amounting to Euro 48.2 million.

PRINCIPAL CONTRACTS During the year under review, the Constructions Division

continued to manage several contracts concerning the

realisation of large-scale infrastructure projects.

The next section deals with the principal contracts managed

during financial year 2005.

Italy

Turin-Milan high-speed/capacity railway line (C.A.V.TO.MI.)The above project is split into two high-capacity sub-sections:

Turin-Novara and Novara-Milan. The work involved has been

entrusted to the C.A.V.TO.MI. consortium as sub-general contractor,

while the project's client is TAV.

Work on the Turin-Novara sub-section was carried out in

accordance with contractual timeframes. In October 2005,

ongoing projects underwent a partial testing process, the outcome

of which was positive. On 24 January 2006, a statement

confirming the completion of work was produced by the Project

Management Team and signed by the General Contractor (FIAT),

while on 7 February 2006, the client advised that the Turin-Novara

sub-section had commenced commercial operations, reflecting

the positive outcome of the work undertaken. Considered in its

entirety (Turin-Novara section and Novara-Milan section), over the

course of financial year 2005, around Euro 4,790 million of this

project was completed. This may be broken down as follows: Euro

4,173 million (equal to around 96% of the supplementary

agreement stipulated in this regard, including modifications) in

respect of the Turin-Novara section, and Euro 617 million (equal

to around 30% of the aforementioned supplementary agreement)

in respect of the Novara-Milan section.

Bologna-Florence high-speed/capacityrailway line (C.A.V.E.T.)This project concerns the high-capacity section of the Bologna-

Florence railway line, the realisation of which involves around 100

kilometres of tunnel being bored.

Over the course of financial year 2005, 5,907 metres of tunnel

were bored, with 97,469 metres (or 97.90% of the entire project)

have been accomplished by 31 December 2005. The stage of

completion reached by work during the year under review was

lower than that seen in 2004, with tunnel-boring work in the

process of being wrapped up. A number of worksites were

therefore closed due to activities being fully accomplished, with

measures taken to cut back on staff pursuant to the provisions of

Law 223/91 in relation to changes in the Consortium's technical

and organisational requirements.

The year also saw meetings take place to get an out-of-court

settlement of reservations recorded in worksite ledgers underway.

Mestre Loop RoadImpregilo, operating as part of a consortium with other Italian

companies, holds a 42% interest in the contract for the planning,

management and realisation of the Mestre Loop Road, its share

being worth more than Euro 500 million.

47

During the year under review, work got underway in connection

with the Loop Road's fundamental structure, crossings and

plumbing systems and the structure connecting the Loop Road to

the A27 Motorway. Pre-project environmental monitoring activities

are also in the process of being completed.

In December 2005, the Chief Commissioner for Mestre's Socio-

Economic-Environmental Committee for Roads and Traffic asked

the consortium to prepare a new Definitive Plan for the stretch of

Loop Road (around four kilometres long) that runs by what were

the Salzano Caves, as well as a new Preliminary Plan for the

Martellago toll. At the request of the Head of Planning

Procedures, activities relating to the works included in the

stretch of road being modified following the new plans have

therefore been suspended.

Salerno-Reggio Calabria motorwayLot 5 - The work consists of upgrading and modernising a stretch

of around 30 kilometres of the current A3 Motorway running

between the Municipalities of Gioia Tauro and Scilla in Reggio

Calabria Province. Some of this work will involve widening the

current road, while some will involve constructing a new stretch of

road, and will affect a section that includes (among other things)

three junctions, 17 bridges/viaducts and 12 long natural tunnels

around 14 kilometres in length. The contract for this work is worth

Euro 754 million.

Impregilo has a 51% interest in the consortium company Salerno-

Reggio Calabria S.c.p.a. with other Italian companies. The client in

this case is ANAS, while the contract is of the general contractor

type. Preliminary work is currently being carried out on the South

Entrance of the San Giovanni Tunnel.

On 17 February 2006, the client advised those concerned that

the Executive Plan for the project had been approved, with the

value of the contract consequently increased to around Euro 780

million and the deadline by which the work is to be completed

being extended to September 2008.


Lot 6 - Impregilo has a 51% interest in another consortium

company, Reggio Calabria-Scilla S.c.p.a., with other Italian

companies. The purpose of this company is to upgrade and

modernise a further section of the Salerno-Reggio Calabria

covering some 19 kilometres between the Municipalities of

Scilla and Reggio Calabria.

The contract awarded by the client, ANAS, is of the general

contractor type.

The contract in this case is worth around Euro 446 million, while

work consists of realising six junctions, 28 bridges/viaducts and

five natural tunnels.

Logistic infrastructure is in the process of being realised, while

activities directed at acquiring areas, removing war surplus and

resolving interference issues are already at an advanced stage.

Around 50% of the entire section, completed according to plan,

was delivered to ANAS on 20 September 2005, with the

remaining part of the project concerning the issue of

interference with future land-based infrastructure caused by the

Messina Strait Bridge, the need for a planimetric/altimetric

variant to minimise the impact on an existing inhabited area, and

further geognostic surveys, which need to be carried out on a

part of the section. This project will be completed during the first

half of 2006, while an official statement from ANAS regarding

the Project already delivered is awaited.

48

49

S.S.36 link road/Milan motorway systemThe objective of this particular project is to realise a link road

between the national highway S.S. 36 (to Lake Como and

Spluga Valley) and Milan's motorway system in the

Municipalities of Monza and Cinisello Balsamo, on behalf of

ANAS as client.

The collection of roads targeted by the modernisation and

upgrading work covers a distance of around 16.5 kilometres.

The work being carried out involves, among other things, land

filling around two kilometres of the section that crosses the City

of Monza and resurfacing the Cinisello Balsamo junction.

The jobs entrusted to Impregilo S.p.A. amount to around Euro 93

million. July 2005 saw the client start to deliver some of the

areas involved.

Venezuela

Caracas - Tuy Medio railway lineThe job in this case consists of realising civil and

electromechanical projects in respect of around 42 kilometres of

railway line linking Caracas to the industrial area of Tuy. The

project is worth Euro 2,100 million in total, which includes Euro

950 million in respect of the civil projects awarded to the Contuy

A consortium (in which Impregilo holds a 36.4% stake) and Euro

150 million in respect of the supply of tracks and rolling stock

and the supply and installation of the electrification system and

control system, as entrusted to Contuy (100%-controlled by

Impregilo). As at 31 December 2005, 93% of these civil projects

had been completed. Work is expected to be completed in two

stages, with 15 August 2006 and 15 October 2006 having been

set as completion dates.

Puerto Cabello - La Encrucijada The job in this case consists of realising civil projects in respect

of around 110 kilometres of railway line linking Puerto Cabello

to La Encrucijada. As of December 2005, the jobs awarded to

the Consortium were worth Euro 1,600 million in total, with

Impregilo holding a 33% stake in the venture. The activities

being carried out involve preparing an executive plan,

undertaking underground activities and realising viaduct

foundations. As of 31 December 2005, 17% of the job had been

completed. Work is scheduled to wrap in March 2010.

The client is awaiting the approval needed before it can sign the

additional contract for the undertaking of jobs relating to the

railway superstructure, the realisation of seven stations, two

landports and two parking areas, and the maintenance of rolling

stock. This contract is worth around Euro 750 million. In the

meantime, instructions have been issued to implement the

project's executive plan, worth around Euro 22 million.

Santo Domingo

Consorcio Acueducto OrientalThis contract, which got off the ground back in June 1999,

involves building a water-sourcing facility along the Ozama

River, a distribution network for drinking water spanning around

14 kilometres, pumping stations, a facility to make water

suitable for drinking and power supply installations. These

projects collectively amount to Euro 145 million, with 20% of

this total funded by an Italian export credit facility and the other

80% funded by the Dominican Republic Government. Work has

suffered a series of interruptions since October 2003 due to the

client failing to pay for the necessary certificates. However, a

first phase of the project (the supply of water at 1 m3/sec,

against 4 m3/sec for the entire project) was delivered in April

2004, and operations are nevertheless continuing on behalf of

the client, while the rest of the job has been suspended since

February 2005, with 96% of the project completed.

Negotiations are also underway with various Dominican

government agencies with the validity of amounts due to the

Group having been acknowledged. Following this

acknowledgement the Group has decided to continue to operate

in the country, winning new contracts among other things.


50

United States of America

West Side CSO Tunnel - PortlandThe contract signed in September 2002 involves the

construction of a sewer by the Willamette River, on the west side

of the city of Portland, Oregon, USA, the realisation of an

underground pumping station, and the construction of six

service wells that will be around 50 metres deep and a detailed

and complex tunnel network.

This contract is worth around US$ 300 million, with 88% of the

project having been completed by 31 December 2005. The joint

venture accomplishing this project consists of Impregilo S.p.A.

and S.A. Healy (100% controlled by Impregilo S.p.A.). The type

of contract stipulated - on the basis of reimbursable cost plus

fixed fee - is especially innovative and mark's Impregilo's first

venture in this particular field. The project's direct costs

(materials, equipment, sub-contracts, labour, etc.) are

reimbursed at cost by the client (the Municipality of Portland),

while a lump sum including profits and indirect costs is paid

based on the stage of completion reached.

Iceland

Karahnjukar hydroelectric power projectA Euro 526 million contract has been entered into with

Landsvirkjun, Iceland's national electricity board. The job

assigned in this case involves realising a dam over rocky terrain

that will be up to 190 metres high and 800 metres long, and two

tunnels - of 750 metres and 850 metres in length respectively -

through which water will be channelled. The project also

involves realising water conduction tunnels of around 60

kilometres in length collectively.

65% of this project had been completed by 31 December 2005.

Work is expected to be wrapped up by the first half of 2007.

Greece

Athens UndergroundThe extension of Line 3 of the city's Metro system, from

Assomaton to Egaleo, is 4.4 kilometres long and completely

underground and has a bored diameter of 9.5 metres.

This project includes building six air wells with access and three

stations that will be partly cut-and-cover and partly underground.

The contract, awarded to the joint venture Aktor-Impregilo in which

Impregilo holds a 50% stake, is worth Euro 214 million. As at 31

December 2005, Euro 167.8 million of the contract had been

carried out, meaning that 78.4% of the project had been completed.

Work is expected to be wrapped up by December 2007.

River Acheloos diversion tunnelThis project consists of designing and realising a hydraulic

tunnel that is 17.4 kilometres long and has a bored diameter of

7.1 metres. The tunnel is being excavated with the use of a

tunnel boring machine ("TBM"), while the inside is being lined

with reinforced concrete. The work being carried out includes

minor projects such as access roads and tunnels, a well,

floodgates and a piezometric well.

The work involved, expected to amount to Euro 139 million in

total, is being carried out by the joint venture Impregilo-

Empedos, in which Impregilo has a 60% stake.

The boring process was severely slowed down by a difficult

geological situation making it necessary to carry out a series of

arduous and expensive reclamation and consolidation processes

before the head of the TBM, which consequently had a negative

impact on production levels.

Work, which was temporarily suspended in February 2005, was

resumed at the end of June after the client formalised the new

technical and business procedures agreed in order for the job to

be completed.

As at 31 December 2005, Euro 83.4 million (or 67%) of the

project had been completed.


52

Switzerland

Transalp TunnelThis project relates to the new railway crossing for the San

Gottardo Massif (Ticino canton). The Impregilo Group has a 25%

interest in the Transalp Tunnel consortium.

The contract is worth more than Euro 1,300 million.

In financial year 2005, the boring of the Bodio-Faido section

continued with the use of two 8.9-metre cutters, with 79% of

the job completed overall. The boring of the section concerned

is scheduled to wrap by July 2006, which is two months earlier

than predicted previously.

At the same time as this was going ahead, work was also being

carried out to line the tunnel in concrete, with 47% of this job

completed by the end of 2005. Approximately 53% of the work

being carried out at the Bodio worksite was completed overall.

As regards the multi-function station also being realised, around

80% of boring was completed. 29.3% of the work being carried

out at the Faido worksite was completed.

From a contractual perspective, the client paid SwFr 30 million

for an initial evaluation of the increased costs arising as a result

of the geological problem encountered when digging the tunnel

with cutters.

Euro 26 million (based on current estimates) has been set aside

in respect of this contract to cover in full the loss expected to be

incurred by the time the project is completed.

53

BUSINESS PERFORMANCE During the year under review, the Constructions Division's

technical team handled the preparation of important bids in Italy

(12 in total) and overseas (15 in total), a number of which are

listed below as examples:

• Awarding of a contract, worth around Euro 3.9 billion, for a

stable crossing over the Messina Strait and rail and road links

on the Calabrian as well as on the Sicilian side. Impregilo will

therefore be the General Contractor, as the mandatee, with a

45% interest in the temporary business partnership set up for

this purpose. A syndicate of banks signed financial

documentation (as required in the deal's specifications after

the contract was awarded) for the granting of a Euro 250

million credit facilities that will be used to fund the activities

entrusted to the General Contractor in order for the bridge

over the Messina Strait and the annexed road and rail links to

be realised. Only the engineering component of this contract

has been considered in the jobs book.

• Thessaloniki Metro (Greece), with Impregilo being part of the

group of companies that was the successful bidder in August

2005. The contract is worth around Euro 798 million in total.

The formal mandate letter was received in March 2006. The

portion of work relating to civil projects amounts to around

Euro 499 million, with around Euro 200 million of this

assigned to Impregilo. The group of companies includes, in

addition to Impregilo, AEGEK (Greece), Seli, Ansaldo ATSF and

Ansaldo-Breda.

• Guaïguí Dam in the Dominican Republic. Impregilo, as

contract leader with a 70% interest in the consortium formed

with a local firm, was awarded the contract (worth around

US$ 60 million) for the realisation of a water facility along the

Camu' River, to be achieved by building a 75-metre high dam

that will provide drinking water to the city of La Vega

(300,000 inhabitants), the end purpose being to control

flooding, provide water suitable for irrigation and establish an

electricity generating station. By winning this contract,

Impregilo has boosted its presence in Latin America, where

the Group boasts a well-established foothold. It will take 29

months to realise the facility in question.

To realise this contract, an insured loan is already in place

under a loan agreement between the Dominican Government

and a leading international bank.

Since the last two contracts referred to above had not been

perfected as of 31 December 2005, for prudence they have not

been included in the value of the jobs book presented below.


54

JOBS BOOKThe jobs book held by the Constructions Division as at 31 December 2005 is presented in the table below.

(amounts expressed as IGL quota in thousands of Euros) Residual jobs book Stage ofArea/Country as at 31 December 2005 completion (%)

High-speed 2,201.8 74%

Italy Messina Strait Bridge 25.2 18%

Italy Mestre Loop Road 209.4 6%

Italy Salerno-Reggio Calabria motorway, lot 5 382.3 4%

Italy Salerno-Reggio Calabria motorway, lot 6 223.7 2%

General Contractor 840.6 4%

Italy Ravedis reservoir 0.6 99%

Italy GTB 22.0 33%

Italy Genoa Underground (metro) 32.4 53%

Italy Nuovo Dolonne 9.9 91%

Italy Quattro Venti 3.2 87%

Italy S.S. 36 connection to Milan motorways 92.0 1%

Italy SGF Inc 26.9 89%

Italy Other works 22.6 2%

Other works - Italy 209.7 50%

Total works - Italy 3,252.2 67%

Greece Agios 47.7 24%

Greece Athens Underground (metro) 23.0 78%

Greece Deviation tunnel for the River Acheloos 27.4 67%

Switzerland Transalp Tunnel 137.4 41%

Iceland Karahnjukar hydropower project 209.2 65%

Switzerland CSC 94.5 81%

Works - Europe 539.3 66%

Dominican Republic Consorzio Acquedotto Oriental 6.1 96%

Venezuela Puerto Cabello - La Encrucijada 502.5 17%

Venezuela Ferrovia Caracas - Tuy Medio 23.5 93%

Venezuela Contuy C 52.7 49%

USA West side CSO Tunnel - Portland 31.8 88%

Ecuador Mazar 99.3 11%

Works - Americas 715.8 62%

Total works overseas 1,255.0 64%

Others 9.3

Total works outside of Europe 9.3

Total active contracts (*) 4,516.5 67%

(*) With regard to 2005, if we were to consider among other things the "Messina Strait Bridge" at the global value at which the contract was awarded, the contracts awarded forthe "Thessaloniki Underground" and "Guaïguí Dam" projects, which were perfected in the first quarter of 2006, CIPE's recent approval of the "Terzo Valico MI-GE" high-capacityrail link and the railway project in Venezuela, then the global value of the jobs book would increase to more than Euro 10 billion.

55

AREAS OF RISK WITHIN THE CONSTRUCTIONS DIVISIONThe Division's key criticalities are described in detail below.

Amounts due from the Nepal Electricity Authority in connection with the realisation of the hydroelectric plant at Kali Gandaki-Nepal

Arbitration proceedings with the clientIn July 2004, Impregilo initiated arbitration proceedings before the International Court of

Arbitration (I.C.C.) against its client, the Nepal Electricity Authority (N.E.A.), and the Kingdom of

Nepal. The aim of these arbitration proceedings is to obtain - with regard to the realisation of

the Kali Gandaki hydropower plant - payment of a claim of around US$ 24 million, said amount

including interest and monetary revaluation. As part of the case, the counterparty proposed a

counterclaim of around US$ 14 million against Impregilo.

We should also mention that in December 2004, the N.E.A. initiated various legal actions

against Impregilo and the I.C.C. before the Nepalese courts with a view to getting the

aforementioned arbitration proceedings halted. In February 2005, Impregilo commenced various

actions to oppose the above actions.

During the hearing at the I.C.C. that took place between 20 and 23 February 2006, the N.E.A.

increased its claim to around US$ 33 million plus interest.

The sum claimed by Impregilo relates, for the most part, to work carried out that was duly

certified but has yet to be paid for, in addition to revised pricing, interest and damages.

Impregilo also asked for an extension to the contractual period to be allowed, this having already

been granted by the Executive Works Team but disputed by the N.E.A.

In February 2005, the N.E.A. obtained an injunction against an Italian bank that issued the

guarantee to levy execution on the contractual guarantees (in the form of a performance bond

and retention money totalling Euro 19.3 million). The bank contested this ruling, which it asked

to be revoked. To this end, Impregilo, supporting the reasons put forward by the bank, initiated

legal action.

As part of the same arbitration process, Impregilo asked for the claim on the guarantees issued

by the bank to be prevented. In November 2005, the I.C.C. issued a partial award, thereby

preventing the N.E.A. from claiming under said guarantees.

At the hearing held on 7 March 2006, the judge adjourned the case to rule on the petition filed

for the temporary enforceability of the injunction to the end of November 2006, until an

arbitration award is determined.

56

In view of the problems encountered in these dealings and since

it has been difficult to assess how long it will be before any

amounts are received, the only way that anything may be

collected will be through legal action, and in consideration of the

above points, during the year under review Impregilo deemed it

appropriate to allocate provisions for risks and future charges to

the order of Euro 1.6 million (to be added to the Euro 0.9 million

already in place) as well as bad debt provisions to the order of

around Euro 12.2 million.

Lawsuit with the Nepalese Tax AuthoritiesSince June 2005, the Nepalese Finance Ministry has been asking

Impregilo to pay Euro 7.3 million in respect of local taxes. The sum

requested does not take the counter-deductions made by

Impregilo since July 2005 into consideration. This fiscal issue is

also the subject of the ongoing arbitration proceedings, given that

fiscal legislation changed during the execution of the contract.

Receivables relating to the realisationof the hydropower plant at Nathpa Jhakri(India) and lawsuits initiated in this regard This case relates to the realisation of the Nathpa Jhakri

hydropower plant in the Indian state of Himachal Pradesh. The

joint venture established for this particular purpose is 60%-

controlled by Impregilo and 40%-controlled by the Indian

company Hindustan Construction Company.

This project is the subject of a number of lawsuits initiated by

and against Impregilo. The hydropower plant in question was

completed and delivered to the client and is now operating.

Lawsuits initiated by ImpregiloThe DRB (Dispute Review Board) issued awards in favour of the

joint venture, said awards including interest and pricing revision

and totalling 548 million rupees (around Euro 10.3 million), with

262 million rupees (around Euro 4.9 million) having already

been received. Furthermore, the CRP (Claim Review Panel)

agreed to the initial extension of the contractual term for the

sum of 498 million rupees (around Euro 9.4 million), with 359

million rupees (around Euro 6.8 million) of this having been paid.

Furthermore, the ADRB (Additional Dispute Review Board)

issued an award in favour of the joint venture for a further

extension of the contractual term without any penalty being

imposed, to the order of 457 million rupees (around Euro 8.6

million). This constitutes a predominant portion of the arbitration

proceedings underway. We should mention that, in addition to

these amounts, as things presently stand a further Euro 5.5

million is the subject of various arbitration processes. Total

claims amount to approximately Euro 28.3 million, with around

Euro 11.7 million having already been received.

Lawsuits initiated against ImpregiloThe client has contested some of the decisions carried in favour of

the joint venture and has asked to be paid Euro 26.7 million, made

up as follows: Euro 11.2 million for amounts already paid to the

joint venture, Euro 13.9 million as penalties and interest for works

being delivered late and Euro 1.6 million as Customs refunds.

In July 2003, the client commenced proceedings to claim Euro

23.5 million under the contractual guarantees in place. These

proceedings were suspended, however following a ruling carried

by the local court, which suggested that the client suspend its

claim until the final outcome of arbitration emerged. The client

thus agreed to the validity of these guarantees being extended to

March 2006, and more recently applied for a further extension.

In view of what is outlined above, it was deemed appropriate to

effect a write-down for the same amount as the receivables

carried in the balance sheet (Euro 3.1 million) and to make a

provision to cover the costs involved in handling arbitration

proceedings (Euro 1.1 million).

Figuring among potential risk factors is the possibility of the

aforementioned contractual guarantees being examined. While

deemed reasonable to believe that the claims filed by these

opposing counterparties are unfounded, it should be pointed out

that these guarantees are "performance bonds".

57

Amounts receivable in relation to theprojects being carried out in theDominican RepublicThe amounts receivable from the Dominican Republic originate

from two contracts stipulated with Government agencies

(Acquedotto Orientale - "CAO" (agency: CAASD) for Euro 34.3

million and AGLIPO II (agency: INDRHI) for Euro 8.4 million.

During the execution of the CAO contract, works were

interrupted on various occasions due to the client failing to make

payments as required.

Following the payment of 100 million Dominican pesos (equal to

Euro 2.8 million) on 21 December 2004, the works were

resumed before being suspended again, following further

breaches on the part of the client, on 4 February 2005. To date,

the works in question have yet to be resumed.

In December 2005, the client paid 300 million Dominican pesos

(equal to around Euro 7.5 million). By December 2005, the

residual amounts due from CAO totalled eq. Euro 34.3 million,

net of a provision of 177.7 million Dominican pesos (equal to

Euro 4.4 million).

Addendum 2 to the contract is in the process of being signed,

as is the "debt payment agreement". These agreements not only

provide for the rescheduling of debts and the contractual

interest associated with them (possibly with a guarantee from

the Government) but also define the works needing to be

undertaken in order for the project to be completed.

Port of Zanzibar contractThe dispute with the Government of Zanzibar, recorded as an

area of risk during the year, was definitively settled after an

agreement was reached on 10 November 2005. This led to

Impregilo paying US$ 10.3 million (equal to around Euro 9.3

million) in addition to legal costs. A provision of Euro 3 million

had already been made to cover some of this amount the

previous year.

C.A.V.TO.MI.On 24 May 2001, Impregilo S.p.A. entered into a contract with

the firm F.lli Costanzo S.p.A. (under special management) for the

sale of the "Major Works" business (including among other

things the stake held by F.lli Costanzo in the C.A.V.TO.MI.

consortium).

The contract involved the aforementioned business being sold at

a price of Euro 2.6 million, this being the value of goodwill plus

a price equalisation mechanism, as further goodwill, to be

calculated on the basis of the effective value of the

Supplementary Agreement to be stipulated between Fiat S.p.A.

and C.A.V.TO.MI. After the Supplementary Agreement was

stipulated between Fiat and C.A.V.TO.MI. in respect of the Turin-

Novara sub-section on 14 February 2002, Impregilo paid Euro

16.7 million to F.lli Costanzo, as settlement of the amount due

for the sub-section in question. Said amount was calculated by

applying the above equalisation mechanism to the effective

amount specified in the Supplementary Agreement, net of

certain items of expenditure not attributable to F.lli Costanzo.

Since it did not feel that the amount paid by Impregilo was

adequate, the counterparty decided to embark on arbitration

proceedings against Impregilo, asking for it to be ordered to pay

an additional Euro 20.2 million as settlement for both the Turin-

Novara sub-section and the Novara-Milan sub-section, the

Supplementary Agreement for which had in the meantime been

stipulated between Fiat and C.A.V.TO.MI. in July 2004. Impregilo

initiated legal action, asking for the counterparty's claims to be

rejected. The Arbitration Committee, by way of an award carried

on 19 January 2005, ruled that Impregilo should pay to F.lli

Costanzo S.p.A. the total amount outstanding of Euro 13.4

million, in addition to legal interest accrued from the time the

latter's entitlement emerged until settlement (around Euro 0.6

million). These amounts have been considered in the accounts.


58

ENGINEERING& PLANT CONSTRUCTION

The Engineering & Plant Construction Division, which is headed

up by the subsidiary companies Fisia Italimpianti and Fisia

Babcock GmbH, includes projects relating to the realisation of

water desalinisation plants, waste-to-energy plants and facilities

for the treatment of fumes emitted by industrial processes and

environmental reclamation activities.

OPERATING RESULT (EBIT)In financial year 2005, the Engineering & Plant Construction

Division posted an operating profit of Euro 13.1 million.

This result was, however, affected by the following:

• huge charges, incurred in connection with the Campania

USW Project;

• the Italian market's continuing inability to get incineration,

waste and reclamation projects off the ground;

• the penalisation of desalination contracts secured between

2002 and the first half of 2005 due to the Euro/dollar

exchange rate, which in just a few years increased from 0.88

at the end of 2001 to 1.36 by the end of 2004, as well as to

the abnormal trend followed by prices for the raw materials

used in the production process.

PRINCIPAL CONTRACTSDuring the year under review, the Engineering & Plant Construction

Division's most significant contracts progressed as follows:

Shuweihat desalinisation plant (Abu Dhabi - U.A.E.)This is a turnkey contract for a desalination plant comprising six

16.7 million gallon/day units, which together process a total of

100 million gallons/day. During the year under review, definitive

acceptance certificates were issued in respect of all six units.

Jebel Ali Station L1 desalinisation plant(Dubai - U.A.E.)This desalinisation plant comprises five 14 million gallon/day

units, which together process a total of 70 million gallons/day.

This particular contract, which commenced on 7 May 2003, is

the third in a row to have been awarded by the client DEWA.

Four of the units were completed during the year under review,

with work continuing on the fifth unit.

Ras Laffan desalinisation plant (Qatar)This contract was awarded by the company RLPC (Ras Laffan

Power Company) to the Enelpower/Fisia Italimpianti consortium

and involves - with regard to the part for which Fisia Italimpianti

is responsible - the on-site supply of four desalinisation plants

that collectively process 40 million gallons/day, as well as a

remineralisation plant.

During the year under review, provisional acceptance certificates

were issued in respect of the above plant.

Jebel Ali Station K Phase 2 desalinisationplant (Dubai - U.A.E.)This contract involves - with regard to the part for which Fisia

Italimpianti is responsible - supplying three desalinisation plants

that collectively process 40 million gallons/day, which are to be

delivered in 27 months. During the year under review, work

under warranty continued and a definitive acceptance certificate

in respect of the plant is now awaited.

Heat regeneration plan at Acerra(Naples) During the year under review, civil works continued, with

assembly activities getting underway for the incineration plant at

Acerra. The principal elements of the contract (turbines,

condensers, boilers) were also acquired.

60

Urban water depuration plantfor Florence RegionDuring the year, as foreseen, work was suspended by the client

until a special building permit was granted for the final filtration

process.

The Management Division continued to manage the integrated

cycle for waste, which included the management - on behalf of

Fibe S.p.A. and Fibe Campania S.p.A. - of seven WDF production

facilities in Campania (during the year, around 1.5 million tons of

USW were processed in the province of Naples, while 1 million

tons were processed in the provinces of Caserta, Salerno,

Benevento and Avellino, thereby giving a total of 2.5 million

tons), as well as completing its management of the waste

disposal site at Fossano.

Please also note that the operating contracts for the Campania

USW Project were rescinded ope legis under Legislative Decree

245/2005 (converted into Law 21/2006) as described in the

pages that follow.

During the year under review, the following activities were

undertaken as part of Reclamation Division operations:

• coastal monitoring and environmental clean-up activities in

accordance with the Treaty stipulated by the subsidiary

Castalia Ecolmar with the Environment Ministry;

• preliminary activities in respect of the contract for the

undertaking of environmental protection measures at Porto

Marghera; and

• mobilisation at the Pertusola site (Reggio Calabria), as part of

an agreement entered into with the Chief Commissioner of

Calabria Region.

COMMERCIAL OPERATIONS Figuring among the key contracts won during the year were a

Euro 206 million contract for the construction of a 55-million

gallon desalinisation plant at Jebel Ali Station L Phase 2 (Dubai);

a Euro 329 million contract for the construction of a 70-million

gallon desalinisation plant at Taweelah (Abu Dhabi); a Euro 216

million contract for the construction of a 30-million gallon

desalinisation plant at Ras Abu Fontas (Qatar).

Figuring among the key contracts won during the year by the

subsidiary company Fisia Babcock Environment GmbH were a

Euro 37 million contract for the construction of an emissions

treatment plant in Alcudia, Spain; a Euro 28 million contract for

the construction of an emissions treatment plant in Hemweg in

the Netherlands; and a Euro 30 million contract for the

construction of an emissions treatment plant in Maasvlakte in

the Netherlands.

JOBS BOOKIn value terms, desalination plant construction contracts account

for 54% of the jobs book, waste incineration plant construction

contracts for 18%, emissions treatment contracts for 10%,

reclamation activities for 16% and various activities for the

remaining 2%.

From a geographical standpoint, contracts in the Middle East

account for 55% of the jobs book, contracts in Europe (excluding

Italy) for 12% and contracts in Italy for the remaining 33%.

During the year under review, after contracts relating to the

Campania USW Project were rescinded ope legis, adjustments

and write-downs were effected against the jobs book for plant

management contracts awarded to the company to the order of

Euro 330 million.

61

The table below provides details of the various contracts making up the jobs book are detailed below, including an indication of the stage

of completion reached at the end of financial year 2005.

AREAS OF RISK WITHIN THE ENGINEERING & PLANT CONSTRUCTION DIVISIONRisks relating to the construction and management of WDF production facilities in Campania, as undertaken on behalf of Fibe and Fibe

Campania, have been dealt with in the relevant section of this report. There are no other specific risks to report.

(amounts expressed as IGL quota in thousands of Euros) Residual jobs book Stage ofArea/Country as at 31 December 2005 completion (%)

Dubai (U.A.E.) Jebel Ali L2 165.1 21%

(U.A.E.) Taweelah B 315.7 4%

Qatar Ras Abu Fontas B 213.7 1%

(U.A.E.) Shuweihat 23.9 96%

Other minor projects 37.1

Desalinisation 755.5

Italy Desox Fusina 4.3 3%

Italy Acerra 72.6 36%


Treatment of solid waste and fumes 77.1

Italy Porto Marghera 217.8 4%

Other minor projects 19

Reclamation 236.8

Fisia Italimpianti 1,069.40

Spain Alcudia 31.5 15%

Netherlands Hemweg 25.8 8%

Italy Fusina 9.8 28%

Italy Torrevaldaliga 11.6 4%

Netherlands Maasvlakte 51.5 23%


Flue Gas Treatment 138.8

Germany Rudersdorf 12.3 2%

Sweden Jonkoping 13.4 58%

Italy Naples 38.7 38%


Waste to energy 96.5

Fisia Babcock Envir. GmbH 235.3

Total jobs book 1,304.70

CONCESSION & SERVICES BUSINESS DIVISION


62

CONCESSION

Impregilo is active in the area of franchising - mainly though its

subsidiary Impregilo International Infrastructures N.V. and the

companies controlled by the latter - with regard to the

motorways sector, the energy generation sector (hydropower

and energy from renewable sources), the integrated-cycle water

business and hospital services management.

Activities relating to the Campania USW Project, while not

pertinent to the generation of energy from renewal sources, are

not dealt with in this section but are instead presented in their

own specific chapter.

During the year under review, the concession book showed

different trends among the various business areas and among

the various countries in which the Group operates.

• in Brazil - in the motorway franchise business above all - the

impressive economic results registered for the year, available

projections and the studying of the new ventures of agreed

concerns are all promising as far as the possibility of future

developments are concerned;

• in Argentina, although economic recovery led to a significant

increase in volumes within the motorway franchise business,

an extremely uncertain situation that caused nearly all

franchisees to suffer massive economic/financial imbalances,

continued to prevail. This situation led management to write

off Impregilo's main shareholdings in 2005. In the opening

months of 2006, however, two positive elements emerged:

the Argentinean Government's repaid the amount due to

Mercovia and President Kirschner signed an agreement to

adjust some of the charges applied by Autopistas del Sol

(Ausol), which should come into effect fairly soon;

• in Italy, developments in the Campania USW Project have

already been mentioned, while other investee companies did

not perform a lot differently from historical trends;

• in China, the Group's waste collection and incineration project

in Shanghai continued to make solid progress in line with

previous years, reporting impressive margins and providing

hope for interesting development opportunities in the future.

The year witnessed a number of events referred to already in

other sections of this report and analysed in greater detail later

on. Worthy of mention among such events were the following:

• on 13 April, eight of the 10 sections foreseen in the Chilean

motorway franchise project, Costanera Norte, commenced

operations;

• on 21 July, 80% of Impregilo Wolverhampton Ltd - a company

mandated to provide and maintain medical equipment to

Wolverhampton Hospital - was sold to the fund SMIF;

• 5 August, further to a disposal programme first embarked on

in the closing months of 2004, an agreement was signed

with the groups Gavio and Autostrade in respect of the sale

of the stake (approximately 80%) held by Impregilo

International Infrastructures N.V. in Costanera Norte; in

December, the deal's pricing was finalised, with the minimum

price set at US$ 282 million for 100%. This deal is subject to

authorisation being granted by the company selling its

interest and the companies that have guaranteed the bond

issue connected to the project. Such authorisation is

expected to be received shortly;

• on 9 September, the last production unit pertaining to the

Ponte de Pedra hydropower plant in Brazil commenced

operations.

On 13 December, a contract for the construction (and

subsequent management) of the oncology ward of Oxford

Hospital was finalised. Impregilo International Infrastructures

N.V. is participating in this contract (which involves Impregilo

Edilizia e Servizi during the construction phase and medical

equipment supply phase) through the special-purpose company

Ochre Solutions Ltd, in which it holds a 40% stake and which

has been awarded a 33-year concession bearing an annual rent

of approximately Euro 22 million.

63

OPERATING RESULT (EBIT)The business posted an operating loss for financial year 2005 of

Euro 64.7 million, which excluded the results of Fibe S.p.A. and

Fibe Campania S.p.A. This result was affected by non-recurring

charges of Euro 57.8 million, as well as operating losses

attributable principally to the subsidiary company Caminos de

las Sierras. Said non-recurring charges stemmed principally

from write-downs relating to the business's Argentinean

franchisees, which proved necessary given the uncertainty as to

their ability to recover the capital invested in various projects,

with the ongoing difficulty of obtaining increases in tariffs.

The above operating loss does not include, however, the results

of affiliated concession that have been consolidated by the

equity method and whose global operating profit - amounting to

approximately Euro 16.2 million - has been included as part of

the result from financial operations.

Therefore, after deducting non-recurring charges and taking the

contribution of affiliated concession into account, the overall

result posted by the business was actually positive.

INVESTED CAPITALInvested capital as at 31 December 2005 amounted to Euro

347.6 million, including Euro 82.9 million pertaining to

Costanera Norte that, as mentioned previously, will be disposed

of during 2006, generating a sizeable capital gain.

PERFORMANCE OF PRINCIPAL CONCESSIONThe performances recorded during the year under review by the

Group's principal franchisees, subdivided by area of activity are

described below.


64

Motorways

The activities included in this business area focus on the development, subsequent design and

construction - usually accomplished through Impregilo's own units - and operating of franchised

motorway networks. The motorway network involved spans around 1,500 kilometres in total (see

table below).

Autopistas del Sol S.A. - Argentina

Location North Buenos Aires

Purpose Realisation, management and maintenance of 120 km of urban motorway

Shareholders Abertis 32%, Impregilo 20%, Dragados 6%, other minor shareholders 12%, market 30%

Autopistas del Sol S.A. ("Ausol"), Argentina's largest toll motorway, manages a franchised

stretch of motorway covering around 120 kilometres that controls access to the city of Buenos

Aires from the north. Over the course of the year 2005, paying traffic (expressed in vehicles

equivalent) amounted to 115 million units, which works out to approximately 320,000 vehicles

per day, representing an increase of 10% on 2004 and continuing with the upward trend seen

the previous year.

In February 2005, a protocol of intent was entered into with UNIREN (the franchisor's technical

unit dealing with renegotiations), whose approval by the Argentine Government experienced

severe delays however. Only in March 2006, after it had been approved by the ministers

responsible for such matters, was the agreement ratified by the President's Office. Before it can

come into effect, it still needs to be verified by the previous organisation's technical bodies. The

Product Franchisee Interest (%) Total Phase Operations Durationline km commenced

Motorways

Argentina Autopistas del Sol S.A. 19.8 120 operating 1994 2020

Caminos de las Sierra S.A. 90.5 395 operating 2000 2023

Mercovia S.A. 60.0 18 operating 1998 2021

Puentes del litoral S.A. 26.0 60 operating 2003 2023

Chile Costanera Norte S.A. 77.9 42 operating 2005 2033

Brazil Ecovia Caminho Do Mar S.A. 35.0 137 operating 2000 2021

Ecosul S.A. 25.7 623 operating 2001 2026

Ecovias Dos Imigrantes S.A. 35.0 176 operating 1998 2018

Primav EcoRodovias S.A. 35.0 holding unlimited

65

protocol provides for an initial tariff increase of 15% and the complete renegotiation of the

contract by June 2006. Should the tariff-increase application process suffer further delays,

some of the terms of the finance facilities negotiated by the franchisee could need to be

reviewed, independently of shareholders, for the realisation of infrastructure.

We should point out, however, that the value of the Group's investment in Ausol had been

prudently written off in full in previous years.

Caminos de las Sierras S.A. - Argentina

Franchisor Cordoba Province

Duration Until 2023

Location Cordoba

Purpose Realisation, management and maintenance of Cordoba's motorway network

Shareholders Impregilo International Infrastructures 90.52%, Other minor shareholders 9.48%

Caminos de las Sierras S.A. ("Casisa") manages a series of franchised stretches of road and

motorway (covering approximately 395 kilometres) that provide access to, and a part of the ring-

road around, the city of Cordoba. The franchise commenced operation in the year 2000. In

2005, approximately 41.3 million vehicles equivalent passed through said roads (equating to

more than 110,000 vehicles per day), representing an increase of 10% on 2004.

Over the course of 2005, talks continued - without any tangible outcome for the time being -

with the franchisor for the renegotiation of contractual terms, the adjustment of applicable

tariffs, and the possible return of the special allowance - granted in the past to make up for

tariffs not being increased - and for the payment of quotas of said allowance that are in arrears.

During the last few months of the year, the Province expressed its willingness to consider

alternative contractual structures that would allow for implicit or explicit adjustments to tariffs,

as well as reviewing the presumed obligations of the franchisee in terms of an investment

programme and the level of services provided.

During the year under review, discussions continued with Banco Galicia regarding the

rescheduling of borrowing previously taken out by the franchisee to realise infrastructure that,

following a number of minor transactions effected to reduce said borrowing in 2005, amounts to

around 180 million pesos (equal to around Euro 50 million).

The transaction is supported by a guarantee from Impregilo for the 50% of the loan outstanding

that, net of the funds deposited with the above bank as a guarantee deposit, involves a maximum

risk for the parent company of approximately 70 million pesos (equal to around Euro 21 million).


66

The discussions with Banco Galicia are however still underway,

on the basis of a proposal made by the latter January 2006 and

followed up by Casisa with its own counterproposal, which is

currently being examined by the bank.

An agreement, which will in any event depend on the outcome

of the renegotiations with the franchisor, is expected to be

reached during the first half of 2006.

For the purposes of preparing the individual financial

statements, an impairment test was carried out, based on the

business plan produced by Casisa's management and in

consideration of the possible agreement informally discussed

with Province executives. Carrying out said test led to the net

invested assets relating to Casisa being written down to the

order of Euro 35.6 million.

Following the above write-down, risk factors, which are still

present but are expected to be successfully resolved as part of

the previously mentioned negotiations, are related to the

aforementioned guarantee issued in favour of Banco Galicia, to

a similar guarantee in favour of Banco Rio (the upshot of

renegotiations successfully completed in previous years) for

around Euro 3.5 million (reduced after the end of the year to

approximately Euro 2.4 million) and to a performance bond to

the franchisor for 10 million pesos (equal to approximately Euro

2.8 million).

67

Mercovia S.A. - Argentina

Franchisor COMAB (organisation of dual nationality - Argentine/Brazilian)

Duration Until 2021

Location Argentine-Brazilian border

Purpose The realisation, management and maintenance of a stretch of road and the provision of related customs services

Shareholders Impregilo International Infrastructures N.V. 60%, Necon 20%, Chediak 20%

Mercovia S.A. manages a franchised link road that is around 18 kilometres long and links the

cities of Santo Tomè (Argentina) and Sao Borja (Brazil). The franchise includes not only the

management of the link road but also the provision of certain customs services, the depositing

of goods and the parking of transport means in transit.

This project, which was completed in 1998, includes the bridge over the Rio Uruguay, related

road access and the unified frontier centre situated on the Argentine side of the river. During

2005, paying traffic amounted to around 200,000 vehicles equivalent (equal to approximately

550 vehicles per day), representing an increase of more than 40% on 2004. During the year

under review, the franchise achieved economic and financial equilibrium.

During the period between December 2005 and March 2006, the franchisee collected claims

from both the Brazilian Government (it should be noted that the franchisor is in this case an

organisation of dual nationality) and the Argentine Government, which totalled approximately

Euro 12.5 million. The amount still due from the Brazilian party (approximately Euro 3.1 million)

is expected to be received over the course of 2006.

Puentes del Litoral S.A. - Argentina

Franchisor Federal Government

Duration Until 2023

Location Link between Santa Fè Province and Entre Rios Province

Purpose Realisation, management and maintenance of a 60-km stretch of road,including bridges and viaducts

Shareholders Impregilo, Iglys 26%, Hochtief 26%, Roggio 20%, Sideco/ Iecsa 20%,Techint 8%

Puentes del Litoral S.A. manages a franchised road of around 60 kilometres that links the cities

of Rosario (Santa Fè Province) and Victoria (Entre Rios Province).

This project, which was completed in 2003, includes among other things a 608-metre long

bridge reinforced with stays and built over the Rio Paranà, 12 minor bridges of more than 8

kilometres in total and 3.5 kilometres of viaducts. The franchise has been operating since 2003.


68

During 2005, around 2,200,000 vehicles equivalent passed

through this stretch of road, producing a daily average of

approximately 6,000 vehicles equivalent (up by approximately

11% on 2004).

In this case as well, the year 2005 saw negotiations continue

with the various organisations charged with the renegotiation of

the franchise, as well as with the Ministry of the Economy (which

financially supported the project in order for its completion

during the 2001 crisis to be guaranteed), the objective being for

the franchise to achieve economic and financial stability.

During January 2006, these organisations provided the

franchisee with an agreement proposition that would enable

some equilibrium to be regained and that is presently in the

process of being discussed.

A further criticality is represented by the sum receivable by the

Dutch subcontractor Boskalis - Ballast Nedam, which amounts

to approximately US$ 30 million and was the subject of an

international arbitral award carried against the franchisee.

Indeed, it would seem that, in the absence of an agreement with

the franchisor enabling the franchisee to repay its debt (albeit

over an extended term), Boskalis intends to enforce its rights

during judicial proceedings. Should this happen, the franchisee

will be forced to resort to an arrangement with creditors

enabling the debtor to renegotiate the amounts and terms of its

debts with all creditors, and therefore with Boskalis.

As a result of the criticalities referred to above, during the year

under review the total value of the interest held and related

subordinated loan were written down, which consequently

involved an allocation of Euro 24.4 million being made.

It should also be noted that the contractual guarantees originally

provided in favour of the franchisor were not renewed once they

expired.

Concessionaria Costanera Norte S.A. - Chile

Franchisor Chile's Ministry of Public Works

Duration Until 2033

Location Santiago del Chile

Purpose Design, realisation and operation of urban motorwayin Santiago del Chile

Shareholders Impregilo International Infrastructures N.V. 77.89%Simest S.p.A. 2.11% (being transferred to I.I.I.)Empresa Construtora Tecsa S.A. 10%Empresa Construtora Fe Grande S.A. 10%

On 13 April 2005, the Costanera Norte franchise commenced

operations, with eight of the 10 stretches of road foreseen by

the project opened.

For the time being, the Kennedy-Enlace Estoril has yet to open,

although it is expected to be completed by the first half of

2006, as has an initial 3-km long stretch in respect of which

works were delayed due to the land needed not being delivered

69

by the franchisor. The latter stretch of road is expected to be

opened by the first half of 2007.

Under the franchise agreement, the franchisor is required to pay

compensation for these delays in the delivery of the necessary

land and for the lower revenues realised as a result of

operations being delayed.

As already mentioned in the introduction to this report, during

the year under review the subsidiary company Impregilo

International Infrastructures N.V. followed up its decision to sell

its interest in Costanera Norte. On 5 August, following a private

tender that involved five international counterparties, the groups

Gavio and Autostrade were awarded the right to participate in an

exclusive due diligence process that was completed in October.

On 23 December, the Board of Directors of Impregilo

International Infrastructures N.V. approved the proposed sale of

the company's interest in Costanera Norte to ASA S.p.A., a

special-purpose company in the process of being formed and

controlled by SIAS, Autostrade and Mediobanca, for the sum

(representing a 100% stake) of US$ 282 million, made up of

US$ 277 million, to be paid upon the deal's closing (expected to

take place shortly) and US$ 5 million as the minimum

guaranteed share of an earn-out amounting to US$ 33 million

maximum. The agreements with the counterparty include a dual

option contract in favour of Impregilo International Infrastructures

N.V. enabling it to repurchase up to 10% maximum of the share

capital of the Chilean holding through which Autostrade and SIAS

will acquire Costanera Norte.

Primav Ecorodovias S.A. - Brazil

Franchisor Ecovias (Sao Paulo State) - Ecovia (Paranà State) -Ecosul (Federal Government)

Location Sao Paulo (Brazil)

Purpose Stakeholding company holding interests in companies charged with the design,realisation and management of motorways in Brazil

Shareholders Impregilo International Infrastructures N.V. 35%Primav Construcoes e Comercio Ltda 65%

The above company holds controlling stakes in the following

three franchisees, which manage stretches of motorway

totalling 936 kilometres in length:

• Ecovia Camino do Mar (100%), which connects the capital of

Paranà, Curitiba, with the port of Paranaguà (137 kilometres);

• Ecosul (73,50%) in the State of Rio Grande do Sul (623

kilometres); and

• Ecovias dos Imigrantes (100%), the company awarded the

franchise for the 176-kilometre stretch of motorway that links

Sao Paulo to the port of Santos.

Primav Ecorodovias also holds a 12.75% interest in the

company STP, which manages and develops automated toll-

road payment systems throughout Brazil and now boasts more

than 500,000 toll cardholders.


70

The table below provides financial highlights for the three franchisees during the two-year period

2004-2005.

Franchisee Traffic equivalent 2005 Traffic equivalent 2004(millions of vehicles/year) (millions of vehicles/year)

Ecovia Caminho do Mar S.A. 9.4 (*) 10.5

Ecosul S.A. 11.1 (*) 12

Ecovias dos Emigrantes S.A. 43.4 42

Total 63.9 64.5

(*) The decrease in traffic in 2005 stemmed from the downturn in cereal production in the states of Paranà and Rio Grandedo Sul.

Franchisee Turnover 2005 Turnover 2004(Euro millions) (Euro millions)

Ecovia Caminho do Mar S.A. 27.3 18.2

Ecosul S.A. 16.6 12.6

Ecovias dos Emigrantes S.A. 142.1 104.8

Total 186.0 135.6

Franchisee Net result 2005 Net result 2004(Euro millions) (Euro millions)

Ecovia Caminho do Mar S.A. 4 3,9

Ecosul S.A. 2.5 2

Ecovias dos Emigrantes S.A. 44.1 27.1

Total 50.6 33

Over the last few years, a series of exercises that have restructured organisational set-ups and

reorganised processes, while also guaranteeing improved governance and paying constant attention

to efficiency and the creation of value, has brought about a notable improvement to consolidated

performance results, with EBITDA equating to around 70% of sales: the highest level witnessed in

the Brazilian sector and one of the best seen among international motorway franchisees.

The business performance results of Ecorodovias mean that an interesting policy for the

distribution of dividends to shareholders is envisaged (an initial tranche will be distributed when

these financial statements are approved) while providing for the analysis of new business

opportunities that would be financed by Ecorodovias independently.

Of these opportunities, the company is currently evaluating the possibility of raising its interest

in Ecosul, acquiring a franchise for the development of a logistics set-up around the area of the

port of Santos (creating consequent synergies with the franchisee Ecovias dos Imigrantes) and

acquiring a number of minor franchisees that are already operating.

71

Following the agreements stipulated when Impregilo International Infrastructures N.V. acquired

a share of the capital of Ecorodovias and in view also of the Brazilian equity market's sound state

of health, the possibility of getting Ecorodovias listed on Sao Paulo's Bovespa market (through a

combined transaction comprising a public offering for sale and a public share-swap offer) is also

being evaluated at the moment. This deal, were it to be finalised, would not require a substantial

outlay from Impregilo, but would balance out the respective equity interests of the two

shareholders (with the company jointly controlled as a result), and would be accomplished by

selling mainly a portion of the Brazilian shareholder's interest to the market.

Any such decision to give the company greater market exposure assumes particular importance

in view of the upcoming tenders foreseen by the Federal Government and by a number of

Regional (State) Governments. Precisely as a means of preparing themselves for these bidding

procedures, the main rivals of Ecorodovias (namely OHL and CCR) have already set about getting

themselves listed on the Stock Exchange.

Activities in the energy sector

Impregilo International Infrastructures N.V. is active in various segments of the electricity

business and, to be more precise:

• through the investee companies Fibe S.p.A., Fibe Campania S.p.A., Shanghai Pucheng Co.

Ltd, Contarina and Ecomont, it is involved in the treatment and incineration if waste from

which energy is subsequently produced ("waste to energy"). As already mentioned, following

the rescission of the contracts of Fibe and Fibe Campania ope legis, the Impregilo Group is

in the process of withdrawing from the Campania USW Project;

• through the investee companies Yacylec and Enecor, it is involved in Argentina's electricity

transmission sector;

• through the investee company Ponte de Pedra, it is involved in hydroelectric power generation

and transmission in Brazil.

The principal activities underway within the energy sector as at 31 December 2005 are

summarised and commented upon below.

Location Franchisee Interest (%) Installed Population Phase Operations Durationpower served commenced

Argentina Yacylec S.A. 22,07 Transmission line operating 1994 2088Enecor S.A. 30 Transmission line operating 1992 2088

Brazil Ponte de Pedra Energetica S.A. 50 176 MW operating 1999 2033

Italy Contarina S.p.A. 49 450,000 operating 1992 2011Ecomont S.p.A. 49 50,000 operating 2000 2050

China Shanghai Pucheng Thermal 50 17 MW 1,600,000 operating 2004 2034Power Energy Co. Ltd.


72

Ponte de Pedra Energetica S.A. - Brazil

Franchisee ANEEL (Agencia Nacional Energia Electrica - Brazil's national electricity board)

Duration Until 2034

Location Mato Groso, Brazil

Purpose Utilisation of a public utility (water) to generateand sell electricity

Shareholders Impregilo International Infrastructures N.V. 50% Skanska BOT Ltda (Brasil) 50%

As mentioned previously, in 2005 the franchisee Ponte de

Pedra, which comprises a 176-MW hydroelectric power station

and a 230-KV transmission line of 130 kilometres in length,

commenced operations during the course of the year, selling by

way of a twenty-year contract the energy thus generated to

CEMIG, a public electricity distribution company located in the

State of Minas Gerais. Further to its engaging in generation

activities, the franchisee reported a cashflow surplus and, as

early as 2006, its economic results should be positive. Over the

course of financial year 2006, the company is therefore

expected to be in a position to distribute its first dividend.

Shanghai Pucheng Thermal Power Energy Co. Ltd - China

Franchisor Municipality of Pudong

Duration Until 2033

Location Shanghai - Pudong district

Purpose Transportation and conversion of solid urban waste into energy

Shareholders Pudong Development Group Ltd. (stakeholdingcompany for interests controlled by the Municipalityof Pudong) 50%Impregilo International Infrastructures N.V. 50%

In 2005, Shanghai Pucheng Thermal Power Energy Co. Ltd, in

which Impregilo International Infrastructures N.V. holds a 50%

interest (the rest is held by the City's public holding company,

PDG) and that manages a 17-MW waste-to-energy transformer

with the capacity to dispose of approximately 1,100 tons of

waste a day, registered a profit of more than Euro 6 million.

Positive economic results and the prospects of these being

improved upon further, lead the company to agree to distribute

an extraordinary dividend, which will be effected by reducing

share capital by approximately Euro 15 million (Euro 7.5 million

being the share of Impregilo International Infrastructures N.V.)

during the course of 2006. Furthermore, the company - holding

cash that may not be distributed and with a view to taking on a

more important role in a rapidly expanding market like China

and realising a number of operational synergies - signed a letter

of intent for the acquisition of a further incineration plant (once

completed) in the nearby city of Changshu, which will have the

capacity to dispose of approximately 600 tons of waste a day

and to generate 9.2 MW of power.

73

Integrated water cycle activities

Impregilo makes water suitable for drinking and supplies water, principally in South America.

This section describes the principal concession operating in this particular sector.

Country Franchisee Share Population Phase Operations Duration (%) served commenced

Argentina Aguas del G. Buenos Aires S.A. 42 210,000 Operating 2000 2029

Italy Acqua Italia S.p.A. (holding) 33 Operating Unlimited

Peru Consorcio Agua Azul S.A. 45 740,000 Operating 2002 2027

Consorcio Agua Azul S.A. - Peru

Franchisor Peru's Minister of Public Works

Duration Until 2027

Location Lima (Peru)

Purpose Construction and management, via a franchise, of a system for the utilisation of surfaceand underground water from the Rio Chillon, to enable the supply of drinking water to thecity of Lima

Shareholders Impregilo International Infrastructures N.V. 45%,Acea S.p.A. 45%, Inversiones Liquidas S.A. 10%

The company, by way of adduction lines, fields, wells and drinking-water facilities, guarantees

some of the primary water supply to the city of Lima. Water is sold to the public distributor

Sedapal under a long-term contract. 40.5 million cubic metres of water were sold in 2005,

compared with 37.9 cubic metres in 2004. The company maintained a sound level of economic

and financial equilibrium while continuing to repay the bonds issued to fund construction works

(US$ 27.7 million was outstanding in December 2005). During the year under review, it also

distributed dividends, with the quota attributable to Impregilo amounting to around Euro 0.5

million.

In January 2005, the company's founding shareholder Cosapi sold its interest (10%) to the

Peruvian finance company Inversiones Liquidas S.A. In the opening months of 2006, Impregilo

International Infrastructures N.V. and ACEA were approached by Peruvian investment funds

expressing an interest in acquiring their respective interests for amounts higher than book value.

The proposals thus received are in the process of being analysed and discussed.


74

Aguas del Gran Buenos Aires - Argentina

Franchisor Government of Buenos Aires Province

Duration Until December 2029

Location Buenos Aires

Purpose Construction, maintenance and management, via a franchise, of a system for the distribution of drinkingwater and collectionand treatment of wastewater, inseven councils falling under the Buenos Aires area.

Shareholders Impregilo Group 42.58%Consorzio Aguas de Bilbao 20%Gruppo Urbaser 27.42%, Sosba EDP 10%

Aguas del Gran Buenos Aires (AGBA) encountered tariff-related

problems - possibly to a greater extent than reported for the

other Argentine franchisees - common to all concession

operating in the country. In January 2006, given that it was

impossible for the franchise agreement to regain any economic

and financial equilibrium from the franchisor, AGBA's

shareholders, after considering what had already been done by

other leading international investors, decided to ask the

International Arbitration Committee for the Protection of Foreign

Investments (ICSID or CIADI) to intervene, denouncing the

situation of inactivity reached on the tariff adjustment front while

operating costs have continued to increase progressively and

sharply, so as to meet the deadlines required.

As a result of this action, which involves a six-month settlement

period, and after this very same measure was applied to a

French franchisee in March 2006, the possibility of the franchise

agreement being rescinded is not being ruled out, with several

legal cases between the franchisee and franchisor having

accumulated and being in need of a solution.

In this case as well, 2005 saw Impregilo completely write off its

interest.

Acqua Italia S.p.A. - Italy

Location Italy

Purpose Stakeholding company for interests controlled byAcquedotto De Ferrari Galliera

Shareholders Impregilo Group 33.33%,Genova Acqua (AMGA) 66.66%

In summer 2005, ACEA sold 66.66% of Acqua Italia, a

stakeholding company that is 33.33%-owned by Impregilo

International Infrastructures N.V. and whose principal assets are

a 67% interest in Acquedotto De Ferrari Galliera, and - via its

stake in the latter - a 53% interest in Acquedotto Nicolay (both

of which are listed companies) to Genova Acque, which is in turn

controlled by the council-owned entity AMGA.

In December 2005, the Board of Acqua Italia approved, by way

of a majority decision, a proposal to merge the company with

Acquedotto Nicolay as part of a broader plan to merge Genova

Acque and Acquedotto De Ferrari Galliera with the same

operation.

Once the merger has been accomplished, the "new" Nicolay will

change its name to "Mediterranea delle Acque S.p.A." and will

be controlled by AMGA.

Further to the merger and in keeping with the share-swap ratios

foreseen by the financial adviser appointed, Impregilo

International Infrastructures N.V. will own 5.11% of the new

listed concern.

The new concern should be able to optimise the way in which

the water cycle is managed in the Genoa area thanks to the

operational synergies expected to be achieved.

75

Activities undertaken in the areas of hospital services and parking facilities

Impregilo International Infrastructures N.V., through its own

investee companies and associate company New Cross Inc., is

involved in the management of franchised parking facilities and

provision of hospital services in the United Kingdom.

During the year under review, in addition to the other events

already mentioned regarding the hospital services sector -

where winning a franchise for the oncology ward of Oxford

Hospital is an extremely important feature for any other public-

private partnership ventures that may be embarked upon in the

country - a multi-storey car park serving Glasgow Hospital

(which also came into operation) was also completed.

AREAS OF RISK STEMMING FROM THECONCESSION DIVISION'S SHAREHOLDINGSThe sector's main areas of risk are concentrated around

Argentine concession. As underlined several times already,

following the so-called "Ley de Emergencia Economica"

("Economic Emergency Law") introduced by the Government in

January 2002, the respective franchisors failed to fulfil the

franchise agreements of Casisa, Puentes del Litoral, Ausol and

AGBA. Notwithstanding the requests made constantly by the

companies to reinstate the economic and financial equilibrium

of their agreements, like the sector's other operators, the

Group's franchise companies - with the limited exceptions

described for Ausol and Mercovia - have yet to obtain any

satisfaction in this regard.

Following the write-downs (outlined in detail in the sections

dealing with individual companies, other than for the case of

Casisa regarding the guarantees in place with the banks

involved in the project concerned), no more significant risks in

connection with the Group's Argentine concession are foreseen.

With regard to the guarantees relating to Casisa (totalling Euro

27.3 million as at 31 December 2005 and reduced to Euro 26.2

million in early 2006), it was not deemed necessary to effect

further allocations in view of current negotiations, based on which

an agreement is expected to be reached reasonably quickly.

Although concerning factors of a "non-equity" nature, mention

should also be made, however, of - on the one hand - the

absorption of managerial resources and the management of a

situation as complex as the Argentine situation and - on the

other hand - the possible negative effects that the speeding-up

of certain legal cases (specifically AGBA and Puentes del Litoral)

might have on relations with the local authorities.

OPPORTUNITIESFOR THE CONCESSION DIVISIONThe Group's Concession Division, with the exception of its

Argentine concession, should be able to make the most of the

favourable conditions prevailing in their key target markets

(Brazil, China, UK), as well as seize the opportunities that are

emerging in these countries.

New opportunities would also seem to be well on the way to

becoming a reality in Brazil's motorway sector, in China's waste-

to-energy sector, in the UK's PFI hospital sector (public-private

partnerships) and, it would seem, in Italy in the various sectors

in which the Group is present.

Although its attention will be duly focused on new opportunities,

in 2006 the Group will continue with the divestment programme

that in 2005 saw the disposal of Costanera (whose results will

be incorporated into financial year 2006) and Wolverhampton.

This programme is concentrating on a number of assets no

longer considered strategic as well as on a number of sectors

whose development does not appear to be in keeping with plans

for economically and financially balanced operations. The

attainment by all franchisees, excluding Argentine operations, of

economic and financial equilibrium will, however, enable

divestment programmes to be embarked upon with the value of

the assets thus sold maximised.

As part of the activities that the Group intends to develop, a

number of opportunities heralding encouraging economic

results (e.g. listing of Ecorodovias) are also worthy of mention.


76

BUILDING AND SERVICES

This division comprises the activities of the subsidiary company

Edilizia e Servizi S.p.A. (IGLES) that engages in advanced civil

and industrial building operations, property development

projects and facility management activities.

During 2005, the Impregilo Group decided to withdraw from this

business sector and, as a result, IGLES has not pursued any

promotional and development policy with the exception of a

venture for the realisation of the oncology ward of Oxford

Hospital, where - together with its established British partners, it

was nominated preferred bidder in 2004 and officially mandated

in December 2005.

In order to go ahead with the withdrawal foreseen, during 2006

measures will be taken to dispose of the property assets that

have yet to be sold. The title to contracts, business units or

residual shareholdings will also be transferred to other Group

companies, in order to complete contracts that require

operations to continue and to protect the expertise and know-

how acquired, especially in the PFI sector (public-private

ventures) in the UK.

OPERATING RESULT AND NET INVESTED CAPITALThe division posted an operating loss of Euro 60.2 million, which

was significantly affected by net non-recurring charges of Euro

47.8 million, which include in particular provisions and write-

downs relating to the Campania USW Project, write-downs

effected against assets and trade receivables pertaining to

contracts already completed and the operating loss posted by

the investee company Bocoge S.p.A.

As at 31 December 2005, net invested capital amounted to Euro

60.7 million, with around Euro 42 million made up of property-

sector assets (disposals to be made and loans receivables as a

result of disposals already made) and the rest composed of

capital invested in worksites still in operation.

77

The trends seen in the principal sectors in which IGLES operates

are described below.

PROPERTY SECTOR As already mentioned, during the year under review the

necessary measures were taken to progressively dispose of a

number of property assets.

In this regard, we wish to mention the following:

• in July, the finalisation of the contract to sell to Hines land

owned by the subsidiary Anita S.r.l. as part of the so-called

"Garibaldi Repubblica project";

• in December, the sale of the 75.525% stake held in Nuova

Iniziative Coimpresa S.r.l., a company involved in developing

property in an area of Cagliari, to shareholder Mi.no.ter.

S.p.A.; and

• various minor property disposals, including a garage facility

situated in Milan, the Cascina Granzetta property development

in Siziano (PV) and Hotel Corallo located in Leghorn.

These transactions collectively generated a capital gain gross of

taxes and time discounting of Euro 7.2 million in the

consolidated accounts.

As at 31 December 2005, the main principal real estate ventures

that, directly or through interests in special purpose companies,

fell under the responsibility of IGLES were as follows:

• Malpensa Business Park;

• US Navy Village at La Maddalena;

• Land in San Martino Siccomario.

The total net value of these real estate ventures recognised in the

balance sheet is adjusted to reflect presumed realisable value.

BUILDING SECTORWithin this sector's operations, activities relating to the

completion of jobs already underway continued, the main jobs in

this case being as follows:

• Campione Casino;

• Serviced apartments at the Donati Barracks in Sesto Fiorentino;

• Tsing Hua University in Beijing;

• Parking facilities at Glasgow Hospital;

• The new headquarters for the Guardia di Finanza (tax police)in Palermo.

The last two jobs were completed physically during the year,

while the first three are expected to be wrapped up during year

2006.

The year 2005 also saw the finalisation of a contract awarded

for the design, construction and supply of medical equipment for

the oncology ward of Oxford Hospital (UK). The sector's share of

the contract is worth Euro 82 million, with an expected margin

in keeping with the return-on-sales targets announced at the

time of the capital increase.

The result posted for the year incorporates a limited share of

contract profits expected in respect of the activities already

completed that will prepare the worksite for future operations.

The accounts as at 31 December 2005 also incorporated, based

on the information available as at said date, prudent provisions

of around Euro 11.5 million. These were set aside in respect of

other jobs and were such to mean that the economic effects of

these jobs upon completion will presumably be neutral.

Campania USW projectThe subsidiary company Edilizia e Servizi is partaking in the

Campania USW Project by realising the civil works pertaining to

the Acerra waste-to-energy transformer, which is expected to be

completed during 2007.

A provision of Euro 10.3 million was made in respect of this job

to cover the losses foreseen under the prevailing contract, which

is however in the process of being renegotiated.

Bocoge S.p.A. Bocoge S.p.A. is the company awarded the franchise to realise

the University centre of Cosenza. During 2005, in accordance

with the agreements signed in previous years, the Banking

Agreement of 1997 was rescinded with the full settlement and


78

cancellation of residual bank borrowing amounting to

approximately Euro 10.6 million, and at the same time the

acquisition of 18.882% of the shares of Bocoge S.p.A.

Costruzioni Generali from the syndicate of banks and the

Bonifati family for the total sum of Euro 5.6 million.

During the year under review, the company, which being wholly-

owned has been consolidated on a line-by-line basis, posted an

operating loss of Euro 21 million, including Euro 17 million in

respect of non-recurring items (write-down of goodwill and

receivables).

At the end of the year, the jobs book of Bocoge S.p.A. was

largely focused on its Cosenza University contract, which is

suffering as a result of funding from the authorities not being

forthcoming.

The company's management has took the necessary measures

in this regard, in keeping with alternative lines of action that

make it reasonable to believe that adequate solutions to the

problem encountered with Bocoge S.p.A. will be found through

the following:

• the use of social absorbers (CIGS - unemployment fund),

which are based on the funding prospects indicated by the

head of the General Office of the Unit for the Development of

Territorial Economies within the Chairman's Office of the

Board of Ministers; and

• the possible sale of the investee company to concerns that

have expressed an interest in acquiring a stake.

SIGNIFICANT EVENTS TAKING PLACEAFTER THE END OF THE YEAR On 8 March 2006, the sale of the 60% interest held in

Gricignano 3 S.r.l., a company that provides facility management

services to the US Navy hospital of the same name, was

completed, registering a capital gain of around Euro 0.2 million.

Similarly, on 24 March 2006, an agreement for the sale of the

34.99% stake held in the consortium Simagest 3 to the majority

shareholder Manutencoop was also signed. Simagest 3 provides

facility management services for the properties of the Public

Administration of Tuscany, Umbria, Lazio (excluding Rome) and

Abruzzo, pursuant to the provisions of the special agreement

entered into with CONSIP (a company owned by the Economy

and Finance Ministry whose institutional responsibility is to call

tenders to meet the goods and services requirements of the

Public Administration) in May 2002. This sale will be finalised

further to CONSIP providing its consent, which is expected to be

forthcoming by May 2006 and will enable a capital gain of Euro

0.3 million to be computed.

These disposals mark the end of the sale of all Group activities

within the area of services, the only exception being projects

relating to hospital services in England (Oxford and

Wolverhampton).

79

IMPREPAR S.p.A. IN LIQUIDATION

Over the course of 2005, the company continued to liquidate

and sell its assets, despite the emergence of a number of

problems, among which mention must be made of the passing

of the company's previous receiver Mr Renzo Grassi Catapano.

On 30 May 2005, a meeting of shareholders nominated Mr

Renato Conti as the company's new receiver.

As soon as he assumed this role, the new receiver lent his

attention, on the one hand, to actively executing the liquidation

programme devised by the previous receiver and, on the other

hand, to promptly examining the credit and debit positions

making up Imprepar's statement of liquidation.

The receiver applied a method that identified, in quantitative and

qualitative terms, the main credit and debit entries making up

the balance sheet, to ensure that the utmost attention would be

paid to those entries representing more than 90% of balance-

sheet assets.

Where the structure of problems proved particularly complex,

the receiver made use not only of internal expertise but also of

outside professionals in both the legal and contractual field, so

as to gain help for the assessment of ongoing legal proceedings.

The receiver, in analysing the liabilities arising from lawsuits

initiated both by and against the company, adopted a particular

criterion whereby, for those proceedings having a negative

outcome before a lower court (regardless of the judicial authority

carrying the ruling), a reserve was created that would

adequately cover the amount established by the ruling.

At present, the company is involved in approximately 429 legal

cases and out-of-court legal cases for which the total value of

petitions filed by the company (regarding actions initiated by it

and against it) amounts to Euro 543 million and the nominal

total of petitions filed by counterparties (regarding actions

initiated against them) amounts to Euro 217 million.

Approximately 56% of the latter petitions are made up of

counterclaims.

The previous liquidation plan was reviewed downstream from

this evaluation process. The reviewed plan thus reflects the

updated values of risks detected, based on significant events

that have taken place to date and facts known as at the

presentation date of the financial statements.

It should be noted, however, that this plan may undergo further

changes and may need to be amended due to the risks

associated with the emergence of future events, which are not

reasonably foreseeable at present, in terms of both impact and

timing.

After duly taking the above into consideration, liquidation

procedures are currently expected to be substantially concluded

by 2008.

The effects of liquidation procedures on the company's balance sheet and financial position The table below presents a summarised version of the reclassified

balance sheet of Imprepar as at 31 December 2005, compared

with that for the year ending 31 December 2004.


80

According to the reclassified balance sheet presented above, net invested capital - which the

liquidation is still to realise - amounted to Euro 157.2 million as at 31 December 2005, down

by Euro 105.1 million on the level reported as at 31 December 2004.

During the year under review, the company also reported an improvement in the amount

outstanding to banks, which was transformed from a debt of Euro 18.2 million as at 31

December 2004 into a net cash balance of Euro 14.9 million as at 31 December 2005, which

was partly achieved as a result of bank borrowing totalling around Euro 28 million being

transferred to the parent company Impregilo S.p.A.

During the year, guarantees issued to third parties also decreased, from Euro 304.9 million as

at 31 December 2004 to Euro 245.3 million as at 31 December 2005, consequently lowering

the company's level of risk.

During the year, the net amount receivable by parent company Impregilo from Imprepar,

decreased by Euro 72.9 million, from Euro 230.0 million to Euro 157.1 million.

31 December 31 December Change(amounts expressed in millions of Euros) 2005 2004

Non-current assets 29.2 50.6 (21.4)

Current assets 206.4 300.1 (93.7)

Current liabilities (50.9) (70.5) 19.6

Net working capital 155.5 229.6 (74.1)

Provisions for risks and liabilities (27.5) (17.9) (9.6)

Net invested capital 157.2 262.3 (105.1)

Cash 20.3 19.4 0.9

Due to banks (5.4) (37.6) 32.2

Net cash 14.9 (18.2) 33.1

Amount receivable by Impregilo 6.8 - 6.8

Amount payable by Impregilo (321.4) (300.5) (20.9)

Amounts payable by Impregilo, net (314.6) (300.5) (14.1)

Amount payable by Impregilo Edilizia e Servizi (15.0) (14.1) (0.9)

Total net financial position (314.7) (332.8) 18.1

Negative equity 157.5 70.5 87.0

Total net financial position and equity (157.2) (262.3) 105.1

81

Also worthy of a brief mention are the events that led the receiver to revise significantly the value

of amounts due from Iraq recognised in the accounts.

Trade receivables These assets originate from a series of arbitral awards recognised in the balance sheet as at 31

December 2004 for the sum of Euro 54.0 million. During the opening months of 2005, Euro 2.1

million was received following the garnishment of assets belonging to the Iraqi Government.

Also in 2005, the Iraqi Government took steps to reconcile its commercial debt with a view to

reaching an agreement with creditors that would enable it to be repurchased.

Once these reconciliation operations were completed, the Reconciliation Agent acknowledged

that Imprepar - through the joint venture Gimod - was due capital and interest of around Euro

70 million, in respect of which the Settlement Agent, appointed by the Iraqi Government,

forwarded a cash offer equal to 10.25% of the amount determined to be payable (or Euro 7.2

million) in the period immediately after the year-end. Acting on the legal opinions obtained, the

receiver deemed it appropriate to follow the buyback process and, while waiting for said process

to be completed, established a write-down provision of Euro 44.7 million, such to align the

amount recognised in the financial statements for the year ending 31 December 2004 to the

amount involved in the cash offer.

Loans receivableThis entry involves the portion of a receivable not indemnified by SACE (Italy's export credit

insurance agency) amounting to Euro 65.6 million, in respect of which a write-down provision of

Euro 58.6 million was carried at the time the financial statements were produced for 2004, in

order to incorporate the terms of the agreement with which the member states of the Paris Club

of sovereign creditors undertook to remit 80% of amounts payable by Iraq to said parties and to

reschedule the remaining 20% by way of a repayment schedule structured into 23 annuities.

These receivables, discounted as at 31 December 2005, bear a net value of Euro 7.1 million.

Economic outcome of liquidation proceedingsA Euro 87.0 million loss was posted for the year, which was mainly the result of write-downs

effected against current assets and fixed assets and the allocations made to the provisions for

risks and charges. The table below provides a summary of the key factors contributing to the

loss registered in 2005.


82

Financial year (amounts expressed in millions of Euros) 2005

Adjustment of Iraq debt to reflect realisable value (44.7)

Legal case with Confemi (8.7)

Legal case with Rimazzano (4.6)

Legal case with Passante Garibaldi Bovisa (4.3)

Sace settlement (3.8)

Fidia credit losses (2.7)

Giraglia credit losses (2.4)

Legal case with Sep Eole (France) (2.2)

Legal case with Stfa (Turkey) (2.1)

Legal case with Mar Grande (1.2)

Higher staff costs (incentives) (1.2)

Legal case with Engeco (France) (1.0)

Settlement with Bergamo Hospital (1.0)

Adjustment of Suropca to reflect book value (1.3)

Adjustment of Gropmente Cir to reflect book value (1.0)

Coop Caminetto credit losses (1.0)

Unforeseen sundry consortium costs (0.9)

Cost of Turkey arbitration proceedings (0.9)

Sundry losses net of capital gain (2.0)

Net result for the (87)

Mention has already been made of the loss originating as a result of the commercial debt

payable by Iraq being adjusted to reflect its realisable value.

Further allocations were also made. Of the various rulings carried by the lower court against the

companies that initiated actions during the year, the following should be highlighted:

• legal case with Fidia for Euro 2.7 million;

• legal case with Passante Garibaldi-Bovisa for Euro 4.3 million;

• legal case with Rimazzano for Euro 4.6 million;

• legal case with CONFEMI for Euro 8.7 million;

• legal case with the Turkish client SFTA for Euro 2.1 million;

• legal case with Mar Grande for Euro 1.2 million;

• legal case with Engeco (France) for Euro 1.0 million.

During the year, the receiver also set about closing a number of legal cases during settlement

proceedings, including the following:

• a settlement arrangement with SACE, which led to Euro 1.6 million being received in 2005

and Euro 6 million due to be received in the first quarter of 2006. This settlement arranged,

which terminated a long-running dispute, produced a loss of approximately Euro 4 million;

83

• a settlement arrangement for Bergamo Hospital, thus putting

an end to difficult litigation proceedings whose effects were

covered in full in 2005 with an allocation of approximately

Euro 1.0 million;

• a settlement arrangement for a bad debt undergoing legal

proceedings in Bolivia, with the allocation of a provision of

Euro 0.5 million;

• settlement arrangements with a number of co-operatives

(Malafede, Casalmonastero and Fausta Pineta), which

resulted in Euro 0.8 million being received and no effect

being endured by the income statement;

• the cancellation of Euro 2.4 million receivable from Giraglia,

which proved to be uncollectible further to new

documentation being presented by the debtor;

• a settlement arrangement and related debt collections,

following the sale of various assets to third parties (CR8, Ifc,

Coreb, Corbea, etc). This agreement did not have a significant

impact on the income statement and enabled assets of more

than Euro 5.0 million to be liquidated.

Legal investigationInformation regarding the investigation carried out in respect of

Imprepar - pursuant to Law 231 - is provided in the chapter

dedicated to this particular matter.

Relationships with the parent companyand other Impregilo Group companiesAs at 31 December 2005, Euro 314.6 million was payable to

Impregilo S.p.A., said amount being Euro 14.1 million higher

than the Euro 300.5 million reported as at 31 December 2004.

This increase was made up as follows:

Euro/million

Balance as at 31 December 2004 300.5

Transfer of bank debt to Impregilo 28.4

Sale of investee company Suropca to Impregilo (13.5)

Transfer to Impregilo of the amount payable to Iglys by the Argentine branch of Impregilo (0.8)

Debit balance as at 31 December 2005 314.6

The table above highlights how the increase recorded in 2005

was due substantially to the combined effect of most of the

company's bank borrowing (Euro 28.4 million) being transferred

to the parent company, as discussed previously, which was

partially offset by the sale of the Venezuelan investee company

Suropca to the parent company for around Euro 13.5 million in

total, as a result of the new strategic stance assumed by the

Impregilo Group with regard to the Venezuelan market. This sale

took place at book value, as sustained by a survey. The price

agreed was Euro 3.3 million for the shares and approximately

Euro 10.2 million for the loan.

The amount due to Impregilo Edilizia e Servizi S.p.A., of Euro

15.6 million, remained unchanged on the previous year and was

made up of financial debt originating from a business acquisition

(Euro 15.0 million) and debt of a commercial nature (Euro 0.6

million).

During the year under review IGLYS S.A., a company controlled by

Imprepar, reduced its excess share capital. This was accomplished

through the transfer to Imprepar of the assets of IGLYS, consisting

of a loan made to Impregilo International Infrastructures N.V. (Euro

1.7 million) and Euro 0.8 million receivable from Impregilo's

Argentine branch.

Dealings with the parent company and other Impregilo Group

companies during the year under review were effected in

accordance with standard market conditions.


84

CAMPANIA USW PROJECT:FIBE AND FIBE CAMPANIA S.p.A.

In financial year 2005, the urban solid waste management

project devised for Campania Region, which is handled by the

companies Fibe and Fibe Campania, recorded a heavy operating

loss of Euro 122.2.

This result is to be analysed alongside the developments achieved

by the project in years 2004 and 2005, as well as those seen after

31 December 2005, which are described below.

In 2004, this project started to encounter increasing criticalities,

the principal ones being as follows:

• the failure in Campania Region to activate the planned

volumes of separated waste collection, which was an

essential condition for the project's set-up and the service

contracts stipulated between Fibe and Fibe Campania and

the Government-appointed receiver;

• the inadequacy of the waste disposal volumes made available

by the Government-appointed receiver;

• on 12 May 2004, the Naples Public Prosecutor's Office, as

part of a process that saw the directors of Group companies

involved in the project (Fibe, Fibe Campania and Fisia

Italimpianti), as well as the executives of the previous

receivership structure under investigation, ordered the

sequestration of plants while at the same time arranging for

their return against a deposit;

• a growing number of municipalities, companies and inter-

borough consortiums started not making payments relating

to the tariff due to Fibe and Fibe Campania for the disposal of

waste transferred, creating growing credit exposure within

the companies concerned and, as a consequence, financial

pressure;

• in the light of this critical situation, the banks that had

provided Fibe with a project finance facility enabling it to

realise waste treatment plants (WDF) and the waste-to-

energy transformer in Acerra, suspended all funding beyond

the 173.5 million Euros already advanced. Against this

backdrop, talks geared to organise a similar funding structure

for the WDF plants and waste-to-energy transformer (Santa

Maria La Fossa) of Fibe Campania were also interrupted.

Such circumstances put the economic and financial situation

of Fibe and Fibe Campania as well as of the entire Impregilo

Group under further pressure. (It should be remembered that

the construction of the WDF plants and waste-to-energy

transformers was entrusted to two Group companies - Fisia

and Impregilo Edilizia e Servizi - and that Fisia itself provides

management services in respect of the plants themselves).

Despite the above backdrop to operations, in the opening

months of 2005 it was felt that the chances of overcoming of

the criticalities being witnessed were reasonable. This was

because the necessary actions and measures were being

85

adopted with a view to steering the project back to its original

balance and regaining operational normality - including at the

utmost institutional level, following the Central Government's

taking a direct interest in the matter. Specifically:

• receivables that had reached maturity due to the transfer of

waste to 31 December 2004 were to be recovered following

the promulgation of Legislative Decree 14 of 17 February

2005 (converted into Law 53 of 15 April 2005), whereby the

Deposits and Loans Fund was to effect payments further to

the outcome of special procedures lasting around 60 days;

• receivables reaching maturity after the above date were to be

recovered through the appointment - by the Government-

appointed receiver - of special receivers in keeping with the

powers bestowed upon them by the Ruling of the President of

the Council of Ministers ("OPCM") 3397 of 28 January 2005;

• the problems presented by the sequestration of plants were

to be overcome through the implementation of a "Programme

for structural and operational measures carried out on WDF

plants", as drawn up by the Government-appointed receiver

and submitted for the approval (with regard to certain

aspects) of the Naples Public Prosecutor's Office, which over

a period of six months was to agree to the removal of the

sequestration order thus imposed, in accordance with the

provisions of the "Compliance Deed"; (2)

• with regard to the availability of the waste disposal sites, the

Government-appointed receiver had issued an order for the

"Monte Sarchio" site on 7 December 2004 and an order for

the "Campania" site on 1 April 2005; in substance, these

orders, which are fully valid and effective, require, upon the

closure of the waste disposal sites currently in use, two new

sites to be set up and used in Campania Region that are able

to guarantee the proper running of the project for more than

one year, making it reasonable to believe at the same time

that the issue of the waste disposal sites would be

approached and handled successfully, including beyond the

time horizon stated above.

In keeping with the powers and responsibilities assigned above,

Fibe and Fibe Campania approved, via their respective Boards,

an economic and financial plan for the period during which the

service would be operating. This plan foresaw the continuity of

operations and profitability. It also formed the basis for the

valuations produced in respect of Impregilo's individual and

consolidated financial statements for financial year 2004.

During the months that followed, however, a series of events took

place that significantly changed the powers and responsibilities

stemming from the aforementioned legislative and administrative

rulings for the worse. This consequently changed, within the

various Impregilo Group companies involved and the parent

company itself, both the strategic positions assumed with regard

to the previously mentioned contracts and the approach adopted

when measuring the various entries making up the financial

statements with the interim report for the period ending 30 June

2005 already in the process of being prepared.

Specifically:

• some months after the promulgation of the aforementioned

Legislative Decree 14/2005 (converted into Law 53/2005),

the Deposits and Loans Fund had yet to implement, with any

effort worthy of note, the requirements contained therein. As

a result, the receivables reported at as 31 December 2004

remained substantially frozen while further criticalities prevailed

when attempting to collect debts that had matured during

2005, while (among other things) special receivers to collect

current debts had yet to be nominated by the Government-

(2) On 2 February 2005, the Naples Public Prosecutor's office revoked the return ofthe plants involved, setting 20 February as the date on which they would bedefinitively closed. Further to a new petition being filed by the Government-appointed receiver and after a compliance deed had been signed by Fibe and FibeCampania, the plants were returned to the companies for the period needed tocarry out a programme of measures of an engineering/structural and managementnature, the definition of which was provided to the Government-appointed receiver.These measures were estimated to cost around Euro 20 million, which would bepaid by the Government-appointed receiver, unless any subsequent compensationclaim was made. The compliance deed also required Fibe and Fibe Campania topay 21% of the waste transfer charge to the Government-appointed receiver whilethe above programme was being accomplished.


86

appointed receiver, even though the necessary powers had been assigned by way of the

previously mentioned OPCM 3397 of 28 January 2005. As a result, the amount of debts

remaining uncollected continued to build up and the financial situation of Fibe and Fibe Campania

deteriorated further, the impact of which was felt across the entire Impregilo Group;

• the Government-appointed receiver had still not managed to obtain the approval needed from

the Naples Public Prosecutor's Office in order to start up the "Programme for structural and

operational measures carried out on WDF plants", meaning that the work needing to be carried

out on the plants concerned could not proceed; after a number of socio-political agreements

were reached, the receiver also delayed the ability to use one of the two previously authorised

waste disposal sites by more than three months and did not allow the second site to be

realised. As a consequence of this, and so as not to interrupt operations, Fibe and Fibe

Campania had to start using private waste disposal sites outside the region, incurring all the

extremely high and unforeseen disposal and transport costs associated with this from April and

asking (to no avail) the Government-appointed receiver to refund these costs;

• however, by way of a summons served in May 2005, the Government-appointed receiver

initiated a claim against Fibe, Fibe Campania and Fisia for alleged damages totalling around

43 million Euros in respect of costs previously borne by the receiver for the transportation of

waste outside the region; the companies embarked on a lawsuit to contest the claims filed by

the Government-appointed receiver and also filed a counterclaim for the payment of damages

and charges of various kinds for an amount far higher than that claimed by the receiver in his

own suit. As part of these proceedings, San Paolo Banco di Napoli and Zurich International

S.p.A., as guarantors to the Government-appointed receiver for the contractual obligations of

Fibe and Fibe Campania, summonsed Impregilo among others, so that - unless further

exceptions rejecting the claim of the plaintiff arose - they would in any event ensure that the

companies were protected and unharmed by the demand made by the receiver himself.

• the banks that had advanced the first 173.5 million Euros tranche of project finance granted

to Fibe not only confirmed that every further advance was frozen, but also formally asked for

the project finance structure to be superseded since it was no longer deemed compatible, in

view of the crisis (from a structural perspective at this point) in which the Campania USW

Project now found itself.

In such circumstances, apart from any financial impact, Fibe and Fibe Campania thus found

themselves having to take cognizance of these serious negative events and of the sizeable

economic losses that ensued as a result.

In July 2005, after acknowledging the ongoing nature of the unsustainable state of crisis reached

in running the Campania operation and realising that the economic and operational prerequisites

that at the time had formed the essential condition in order for the contracts in place between

Fibe and Fibe Campania, as one party, and the Government-appointed receiver, as the other party,

to continue could not consequently be fulfilled, the Impregilo Group entered into discussions with

the public counterparty with a view to overcoming this situation as quickly as possible.

87

The aim of the measures taken was to rescind the above service contracts as quickly as

possible, in order to put an end to the sizeable losses registered by the two project companies,

and at the same time recover the value of the receivables and investments made, so as to repay

the loans and commercial debts accumulated with third parties and other group companies.

The lawful and reasonable position thus assumed by the Group was agreed and incorporated at

the highest institutional level: so much so that on 30 November 2005, a specific Decree Law

was promulgated (Decree Law 245/2005, later converted into Law 21 of 27 January 2006)

before coming into effect on 15 December 2005.

In short, this law does indeed state that:

• the contracts stipulated with the Government-appointed receiver were rescinded from the

fifteenth day of the Decree Law itself coming into effect, and therefore with effect from 15

December 2005, other than for any rights accrued;

• the new mandate-holders for the waste disposal service must be identified via fast-track

Community-approved procedures, once the relevant regional plan has been adapted to

identify solutions for treated waste that has accumulated at the storage sites, unless there is

an objective in place to implement a separated waste collection scheme;

• the state of emergency affecting the waste disposal sector in Campania Region is to be

considered extended until 31 May 2006;

• until the contract is awarded in this regard - and in any event until 31 May 2006 - the current

mandate-holders, Fibe and Fibe Campania, are required to ensure that the service is

performed properly, by managing the companies and using the assets available to them, and

to provide, in accordance with the same procedures and the conditions defined in the

rescinded contracts, every service needed in order to prevent the service from suffering

interruptions and disruptions and to enable projects devised for this purpose, including the

realisation of waste-to-energy transformers, to be properly accomplished;

• timely initiatives are to be adopted by the Government-appointed receiver in order to speed

up the recovery of waste disposal charges within the various municipalities and consortiums;

where these payments are not made, the Home Affairs Ministry shall take the appropriate

action by reducing the tax transfers pertaining to the municipalities concerned;

• the mandate-holders are to be recognised for the services they provide during the transitory

period by being paid out of the resources set aside in favour of the Civil Protection Authority,

further to their presenting a suitable invoice or statement of account;

• steps are to be taken to nominate a "Functional Area Co-ordinator", indicated by the Civil

Protection Authority and operating within the receivership structure, who shall be vested with

the co-ordination duties and powers relating to the service management activities undertaken

on a transitory basis by Fibe and Fibe Campania, with the appropriateness of the expenses

and costs borne by them to be duly assessed and the necessary payments effected.

From 15 December last, therefore, the contracts that bound Fibe and Fibe Campania to the

receivership structure were rescinded ope legis. This marked the start of the so-called


88

"transitory period", which will last until the arrangement is taken

over by the new mandate-holders (3) for the service, to be

selected through Community-approved tender procedures that

are to be adopted by the same receivership structure, by the 31

May 2006 deadline established by the law.

During this period, the responsibility for, and the charges relating to,

the management of the Campania USW Project are borne by the

receivership structure. Therefore, although Fibe and Fibe Campania

will still be required to provide the service during said period, they

will be entitled to a reimbursement of the expenses and costs that

they incur in this regard (while the property of revenues from

waste disposal charges will be transferred to the receiver).

As regards the crucial issue of making the most of fixed assets,

it should be pointed out before all else that the law summarised

above, which does however leave the rights previously acquired

under the rescinded contracts intact, reiterates - as already

mentioned - the objective of developing a separated waste

collection scheme, thus reconfirming the validity of the

technical/planning decisions underlying the WDF plants.

Furthermore, a report by a leading independent international

company that is an expert in plants used in the entire waste

treatment and waste-to-energy transformation cycle was recently

acquired. Said report confirms that the book value of the entire

collection of fixed assets of Fibe and Fibe Campania is in line with

an adequate present value that may be attributed to them.

Contact was also recently made with the public counterparty for

the in-depth definition of details regarding the sale of the assets

of Fibe and Fibe Campania. These details were formalised on 24

March 2006 in a proposal that will be irrevocable until 30

September 2006 (the so-called "promise of sale agreements") by

the above companies towards the receiver or the parties indicated

by him further to the outcome of the tenders being revealed.

The above documents therefore constitute the essential

components of the tenders to be launched and, in substance,

contain the following:

• the promise to sell the following to the receiver, or to the

parties indicated by him further to the outcome of the tenders

being revealed:

• the waste-to-energy transformer at Acerra, for the book

value as at 15 December 2005 of around Euro 100 million,

increased by further amounts that are to be calculated by

the current owner of Fibe for the stage of completion

reached by works and the capitalisation of financial

charges and technical expenditure borne during the period

between 16 December 2005 and the date of payment;

• the waste-to-energy transformer at Santa Maria La Fossa,

which is owned by Fibe Campania, based on the quantity

and the book value as at 15 December 2005 of around

Euro 6 million in total;

• various items of equipment used in the management of the

WDF waste treatment plants and storage sites, owned by

Fibe, Fibe Campania and Fisia Italimpianti, for the book value

as at 15 December 2005 of around Euro 4 million in total;

• the WDF storage sites and the materials stored at them,

owned by Fibe and Fibe Campania, for the book value as at

15 December 2005 of around Euro 56 million in total; with

regard to this category of assets, it should be pointed out

however that, on the one hand, the above book value does

not include two storage sites not recognised by the

counterparty (book value as at 15 December 2005: around

Euro 4 million) and, on the other hand, the preliminary sale

agreement states that a portion of said book value (equal

to around Euro 46 million) may be reduced to 15%

maximum;

• the agreement that the receiver, or the parties indicated by

him further to the outcome of the tenders being revealed,

take over a collection of agreements and relationships

currently controlled by Fibe and Fibe Campania, such as the

contract for the construction of the Acerra waste-to-energy

transformer and those for connections to the high-tension

network of the above waste-to-energy transformer and that

at Santa Maria La Fossa, as well as the ownership of the eco-

(3) It appears that the receivership structure is proceeding with three separatetenders, subdividing the project into three "lots", each of which is composed ofa number of WDF plants and one waste-to-energy transformer (therefore, inaddition to the waste-to-energy transformers at Acerra and Santa Maria LaFossa, the new regional waste plan - recently presented to the Provinces by theRegional Councillor responsible for such issues, while still not definitivelyapproved - involve the construction of a further plant, at a location to bedetermined).

89

fuel blocks stored at the aforementioned storage sites as at

15 December 2005 and those accumulated further during

the period between 16 December 2005 and the transfer

date, "becoming owner to all intents and purposes of the

utilities and charges consequently arising from them".

To be more precise, the essential elements relating to transfers

referred to in the aforementioned "promise of sale agreements"

are as follows:

• the acceptance, in the conditions in which they are found, of

the assets mentioned above and of the waste treatment

plants (otherwise referred to as "WDF Plants") that, it should

be remembered, were realised by Fibe and Fibe Campania on

publicly owned land and in respect of which a long-term right

of use (but not right of ownership) was held by said

companies;

• the solving of problems concerning staff involved in the

management of the plants;

• the payment to Fibe and Fibe Campania of the fees due for the

transfer of the property of the assets listed above and of the

compensation due for the above WDF plants, represented by

their book value as at 15 December 2005, which amounted

to around Euro 205 million in total;

• the effective taking-over by the receiver (or the parties

indicated by him) of the agreements, relationships and

obligations referred to above.

As regards the amounts receivable in connection with the waste

disposal charge (around Euro 140 million) and the royalties

(around Euro 88 million, which do not actually constitute actual

exposure, though, as they are only due to the end assignees

where received) accrued by Fibe and Fibe Campania up until 15

December 2005 (as already reported, after said date, the waste

disposal charge and royalties are directly attributable to the

receiver), it should specifically be noted, on the one hand, that

these entitlements relate to services rendered as required (such

a credit arises upon the transfer of waste) and, on the other hand,

that Legislative Decree 245/2005 and the later Ruling of the

President of the Council of Ministers (OPCM 3479/05) require

the receiver to see to the recovery of these debts promptly, which

may involve the use of "extraordinary" measures.

It has therefore been officially recognised that the receiver is the

only party that is lawfully authorised to take action against

debtors and is at the same time the party appointed to satisfy

the amounts receivable by Fibe and Fibe Campania, in keeping

with the contractual requirements rescinded by way of the

aforementioned Legislative Decree, as nevertheless confirmed

extensively in the reliable legal opinions obtained by the

Impregilo Group. Confirmation that the receiver is designated by

law as the State Authority appointed to recover accounts

receivable and pay the debts concerned constitutes a further

important factor supporting the prospects of the amounts

receivable by the Group in this regard actually being collected,

and possibly attracting arrears interest.

Finally, in view of the importance of this particular matter, a

number of considerations also need to be made with regard to

the sizeable (more than three million tons) and growing volumes

of WDF produced and stored at the facilities created for this

purpose, since no waste-to-energy transformation plant is yet to

become available as a result of the delays that built up during the

commencement of works (due to reasons outside the Impregilo

Group). In this regard, it should be pointed out before all else that

the two waste-to-energy transformers that have already been

planned (Acerra and Santa Maria La Fossa) will have an installed

power - in terms of electricity generation capacity (175 MW) that

is below the total actually authorised (250 MW) and will benefit

from the special "CIP 6" tariff, provided that waste originating

from Campania Region is used. Furthermore, the new waste plan

in the process of being drawn up further to the provisions of

Legislative Decree 245/2005 (already outlined in the guidelines

issued to the Provinces by the Regional Councillor in charge of

such matters) considers the construction of a third waste-to-

energy transformer. The factors referred to above therefore make

it necessary to use not only current WDF production but also the

amounts stored (current WDF production alone is not indeed

sufficient to satisfy the electricity generation capacity of the three

waste-to-energy transformers foreseen). Associated with such a

situation is, however, a sizeable economic saving - which is

therefore particularly appealing - for the new operators

appointed, who may via such procedures benefit from all


90

potential electricity output at the special rate. Furthermore, as

pointed out previously, the agreements promising to sell the

assets of Fibe and Fibe Campania require the ownership of the

WDF stored at facilities to be acquired by the receiver/by the

newly appointed service providers, which shall therefore assume

responsibility for waste disposal as well.

To conclude, the legislation that came into force on 15

December last and its consequent implementation for

relationships with the public counterparty have enabled the

heavy losses borne by Fibe and Fibe Campania in connection

with the agreements being examined to be substantially halted.

Furthermore, the procedures and conditions of the contractual

rescission thus imposed by law and the later developments

undergone by the said relationships with the public counterparty

provide founded prospects - based on the counterparty's

reliability - of both the amounts receivable and the value of the

two companies' fixed assets being recovered, despite the

continuing uncertainty as to the actual timeframe and the

adequacy of the resources that may be used to this end.

Nevertheless, these elements are in turn essential if loans and

commercial debts payable to third parties and other Group

companies are to be successfully cleared. Furthermore, thanks

to the information that is available regarding the new regional

waste plan in the process of being drawn up, together with

technical and economic considerations and the more recent

developments regarding the formalisation of promise of sale

agreements, the problems concerning stored WDF, which has

even been the subject of litigation proceedings with local

councils, now appear to be positively manageable.

Impregilo's financial statements for 2005 therefore incorporate,

whilst within the limits thus established and in accordance with

the conditions outlined, the reasonably founded prospects of the

balance-sheet values assumed by Fibe and Fibe Campania (in

respect of which the two companies have drawn up an analytical

disinvestment plan), and thus the values of the amounts

receivable by them from the other Group companies involved,

being completely recoverable, other than for minor items that

the companies have written down and the write-down and

allocation arising as a result respectively of the two storage sites

not being accepted and the ability to reduce a portion of their

value, as referred to previously.

We should, however, stress once more the continued presence of

significant and unquantifiable risk margins that are linked

specifically to the following: the complexity of the matter at hand;

the need to draw up detailed procedures for both the recovery of

debt and the selection of new operators to take over the

management of the project definitively and pay to the companies

the value of their fixed assets (although, as things currently

stand, the possibility of the tender called being unsuccessful

cannot be ruled out completely, with in such an instance new

solutions needing to be found, including the notion of activities

being continued by Fibe and Fibe Campania, assuming that the

new regional waste plan being drawn up contains prerequisites

that overcome the criticalities inherent in the previous plan); the

political and social opposition and resistance that the project has

had to face ever since it was embarked upon; the existence of

legal proceedings with the receiver; the investigations being

conducted by the Naples Public Prosecutor's Office; the fact that

the 31 May 2006 deadline by which the new service providers

are to be selected would appear to be challenging while the

financial coverage provided for by the legal requirement

described is commensurate to this timeframe and, furthermore,

delays/difficulties have been encountered when attempting to

raise and transfer the financial resources provided for by said

legal requirement; and the fact that - further to the initial

statements being produced for the costs borne by Fibe and Fibe

Campania during the transitory period - the Functional Area Co-

ordinator has refused to recognise certain categories of cost (e.g.

financial charges and running costs relating to the storage sites),

requesting that they be covered by way of the tenders called to

appoint new service providers.

Please note that the previously mentioned problems relating to

relationships with the banks providing project finance facilities

were overcome during January 2006 by Impregilo's acquiring

the amount due to said banks by Fibe on a non-recourse basis.

As a result, both the underlying project finance agreement and

the related security package attributable to Fibe were annulled.

Impregilo also entered into a Euro 173.5 million medium/long-

term corporate loan agreement with the same banks.


HUMAN RESOURCES, ORGANISATION AND INFORMATION SYSTEMS

91


92

In keeping with the industrial plan's guidelines, activities within

the field of human resources focused on devising a new

organisational model based on the simplification, operational

decentralisation and containment of costs.

This project, which was embarked upon in the opening months

of 2005, progressed to involve all levels of the relevant union

organisations with which, after discussions that were as dogging

as they were constructive, two written agreements were signed -

the first on 12 July 2005 and the second on 29 September

2005. Said agreements established the guidelines and tools to

be used in order to support the adoption of the new

organisational model. Such tools include the externalisation

and/or transfer to outside parties of activities no longer

considered core business activities, the allocation of head office

staff to the relevant business divisions and/or business units,

and a plan to accompany the company's voluntary redundancy

scheme with special benefits for personnel close to fulfilling the

requirements that would entitle them to a pension.

The measures introduced enabled the number of staff working

at the Sesto San Giovanni site to be reduced by 169 (127

departures and 42 transfers to operational projects), which

equates to a reduction of almost 37% on the numbers

registered on 31 December 2004. Please note that during the

year under review, agreements for the termination of

employment were entered into with a further 19 employees. The

effectiveness of these agreements has, however, been

postponed until the opening months of 2006. (If we include

these terminations, then the reduction of staff numbers

increases to approximately 41% on 31 December 2004.)

On the organisational front, the year saw the establishment of

two Business Divisions (Engineering & Constructions and

Concession & Services) as well as a Central Corporate Unit.

These Business Divisions were organised in a way to ensure that

technical/design, commercial, legal and management control

activities associated with the various projects are managed

efficiently, in order to shorten the time taken to response to the

market and guarantee more effective supervision of the various

operating units.

The Central Corporate Unit was instead structured in such a way

to offer services for business operations and to ensure that a

Group strategy was properly defined, that industrial relations

were engaged in correctly and that legal, administrative,

financial, and management control activities were co-ordinated

properly, including those relating to human resources, in close

co-operation with the Business Divisions.

Organisational procedures and information systems are

currently undergoing a precise review, the aim being to

consolidate the internal processes of Business Divisions and to

optimise interaction between Business Divisions and the

Corporate Unit.

The new organisational model also involved defining new roles

and made it necessary to introduce new resources bearing

specific professional qualities (16 members of staff, made up of

4 executives and 12 clerical officers). This was done to improve

the skills mix adopted to achieve business objectives.

In keeping with the requirements that emerged and with a view

to making the most of the organisation's human capital, a

preference was shown (wherever possible) for recruiting

resources originating from Contracts and Group companies. As

maybe seen from the table below, after taking into account these

new additions, the number of staff working at the Sesto San

Giovanni site was reduced by 153, which work out to a decrease

of approximately 33% on the staffing levels reported on 1

January 2005. This percentage increases to 37% if we also

consider the additional 19 employees whose contracts were

already terminated but with effect from financial year 2006.

93

Staff training and development activities, in keeping with the

projects promoted in 2004, focused on project management

issues, as part of plans to develop skills in support of career

programmes for critical job-oriented staff.

Furthermore, as part of plans to shift the strategic focus of

operations to its core business represented by large-scale

projects, in order to boost and stabilise the creation of value for

all stakeholders, Impregilo embarked on a project to define an

integrated jobs planning, management and control model, which

is expected to be developed over three successive stages as

follows:

• a first stage involving the rationalisation and implementation

of a jobs planning, management and control model to

commence from when the bidding process gets underway;

• a second stage involving the introduction and approval of a

project-control method based on earned value as well as on

an advanced risk analysis, monitoring and management

system; and

• a third stage involving the customisation of a contract

performance management and control model to verify the

creation of value by an individual job over its entire life cycle.

These three stages will give rise to an integrated management

model that can be used for all Group contracts in support of the

management and control of contract-related activities.

Implementing this project includes simplifying and rationalising

information systems in keeping with the new process model

described above.

The aim of the team appointed to manage the project is also to

define procedures that will ensure that processes proceed

properly and to structure an adequate training programme

geared to raise the skills of the staff who will be working on the

process to the level required.

Turning now to industrial relations, 2005 once again saw the

company strongly committed to reaching programmatic accords

with the unions, at all levels, in accordance with a consolidated

scheme for preventive pay conducting that allowed the company

to successfully tackle completely current issues such as safety

in the workplace, mobility and staff planning, above all as part of

the management of large-scale infrastructure projects.

As far as projects at the start-up stage of procedures are

concerned, as is the longstanding practice adopted, special

protocols of intent were also entered into with the relevant union

bodies for the "Salerno-Reggio Calabria motorway" (section

from Gioia Tauro to Scilla) and the "Mestre Loop Road". Said

accords are founded on an intricate system of industrial

relations, structured at both a national and regional level and

geared to prevent situations of conflict that will end up having a

negative impact on operations that focus on the realisation of

projects.

Staff operating at Sesto San Giovanni siteExecutives Junior Clerical Blue-collar Total

managers workers workers

Total headcount as at 1 January 2005 113 88 249 9 459

Impregilo S.p.A. 76 58 147 3 284

of which: Corporate Division 20 28 71 - 119

Engineering & Constructions Division 37 20 57 3 117

Franchises & Services Division 19 10 19 - 48

Other Group companies:

Impregilo Edilizia e Servizi S.p.A. 7 - 15 - 22

Total headcount as at 31 December 2005 83 58 162 3 306


94

Ordinary union discussions proceeded with a view to managing surplus contract-oriented staff,

to be regarded as physiological for the activities undertaken by Impregilo.

As part of this process, we must mention that various procedures to release staff working on

infrastructural projects (C.A.V.TO.MI., C.A.V.E.T. and Nuovo Dolonne) and on civil building

projects (Palermo, Aviano and the Donati Barracks consortium) were successfully completed. An

agreement was also signed with the provincial unions of Sondrio in respect of the redundancy

fund for the "Spriana landslide" project.

Specifically, with regard to the Turin-Novara stretch of the C.A.V.TO.MI. project, it should be

noted that the collective dismissal procedures embarked upon the previous year were

completed, involving the termination of 687 workers' employment contracts. On 1 December

2005, a further union agreement was entered into for a second collective dismissal procedure

involving 404 employees, made up of 104 clerical workers and 300 blue-collar workers.

As at 31 December 2005, the entire Impregilo Group had 10,138 employees on its books in

total, as specified in further detail in the table below:

Corporate Constructions Concession Fibe and Fibe Engineering Building TotalCampania & Plant and

Construction Services

Dirigenti 20 159 55 3 30 17 284

Managers 20 159 55 3 30 17 284

Clerical workers 99 1.838 1.531 27 539 82 4,116

Blue-collar workers - 4.827 423 15 297 176 5,738

Total 119 6.824 2,009 45 866 275 10,138

Italy 4,093

Abroad 6,045

Total 10,138

The table below presents the various headcount averages for the year 2005 for each business

division:

Corporate Constructions Concession Fibe and Fibe Engineering Building TotalCampania & Plant and

Construction Services

Dirigenti 20 159 55 3 30 17 284

Managers 43 155 49 3 31 20 301

Clerical workers 162 1,928 1,451 27 531 114 4,213

Blue-collar workers - 5,449 446 30 268 206 6,399

Total 205 7,532 1,946 60 830 340 10,913

Italy 4,640

Abroad 6,273

Total 10,913


SAFETY, ENVIRONMENT AND QUALITYPRIVACY AND DATA PROTECTION

95

SAFETY, ENVIRONMENTAND QUALITY


96

In keeping with Impregilo's "quality, environment and safety

policy" by way of which its Executive Management Team has

undertaken to improve the quality of the products and services

offered, by protecting the environment and preventing pollution

and guaranteeing the health and safety of workers, the year

2005 saw further consolidation of the application, across the

entire Impregilo Group, of the integrated quality, environment

and safety system in accordance with the laws of reference ISO

9001:2000, ISO 14001:1996 and OHSAS 18001:1999.

A standard quality, environment and safety plan was also

completed, which is based on the experience amassed during

the realisation of current contracts. The plan incorporates all

management procedures adopted by the quality, environment

and safety system, in keeping with the requirements of the above

laws of reference, the operational guidelines used to manage

contracts, the organisational procedures that provide an interface

with head office and customer satisfaction questionnaires.

In order for information regarding integrated system

documentation to be more widely circulated, a database

including all documentation currently available within the

company was set up within Impregilo's Intranet system. At the

same time, activities to develop a company portal that will be

made available to all Impregilo employees as well as system

documentation, including obligatory acts such as laws, decrees,

and regulations, to ensure that jobs are managed more

efficiently and more effectively, also got underway.

In accordance with management system requirements, the year

2005 saw a number of internal inspections carried out at both a

site and contract level, as provided for in Impregilo's annual

audit plan. Specifically, contracts that were the subject of

inspection procedures included, in the case of foreign jobs,

those relating to Ponte de Pedra (Brazil), Karahnjukar (Iceland)

and Mazar (Ecuador) and, in the case of Italian jobs, those

relating to the Mestre Loop Road, the Spriana Landslide project,

the Acerra waste-to-energy transformer and Calabra di Rende

University (Cosenza province).

Over the course of financial year 2005, support activities

continued in order to get integrated systems off the ground for

new general contracting jobs relating to the realisation of the

Mestre Loop Road and two lots included as part of the Salerno-

Reggio Calabria Motorway Project.

Fully aware of the fact that the Group's growth within both the

Italian and international construction industry means that

serious, voluntary and scrupulous responsibility for

environmental issues must be taken, over the course of 2005

Impregilo produced its third Environmental Report, which

recounts the key projects and principal worksites up and

running in 2004. This Environmental Report, which draws on

the "Forum Guidelines for Environmental Reporting" drawn up

by the ENI Enrico Mattei Foundation, provides evidence of the

company's commitment to continuous innovation within its

activities, for the purpose of caring for and respecting the

environment when projects are being accomplished, as well as

the protection of the health and safety of its workers. The hard

work put in while drawing up the Environmental Report enabled,

and continues to enable, Impregilo to make local and national

executive bodies aware of the systems that the Group is

adopting in its efforts to protect and safeguard the environment

while going about its activities.

By way of this Report, Impregilo is also looking to affirm its

commitment to minimising the environmental impact of its

operations and to safeguarding the health and safety of its

workers, while showing that it is aware that adopting measures

aimed at safeguarding the environment and the safety of its

workers to the full is fundamental when it comes to making

progress along the growth and development path embarked upon.

PRIVACY AND DATA PROTECTION

97

In accordance with Legislative Decree 626/94 regarding health

and safety in the workplace, the appropriate preventive

measures were implemented, under the care and responsibility

of the employers of Impregilo Group companies, to protect

workers during all stages of their work activities, through the

careful preliminary assessment of risks, geared to minimise the

accidents and professional illnesses suffered by workers as

much as possible and to safeguard the wellbeing of the

environment.

The operational procedures implemented by the Group, in

addition to the new technologies also introduced, once again in

2005 helped reduce the likelihood of risky events, through

Prevention, and to contain the extent of risk, through Protection.

From the centralised gathering of the most used accident

indicators (accident frequency indicator = number of

accidents/number of hours worked x 100,000; accident

seriousness indicator = number of days of absenteeism/number

of hours worked x 1,000), at a Group level and based on the

partial figures available up to 30 December 2005, it may be

affirmed that these indicators - equal to 7.33 and 2.68

respectively - are in keeping with those reported for the previous

twelve months and, once again this year are better than the

national average seen for the sector.

In conformity to the requirements needing to be fulfilled by

employers, an interactive information and training course

regarding the use of equipment with video terminals, and

extended to all users of said equipment, continued to be held.

This course covers all current legal requirements relating to the

use of equipment with video terminals, referring specifically to

Appendix VII (Minimum Requirements) of Legislative Decree

626/94 and to the Ministerial Decree of 2 October 2000

(Guidelines for the Use of Video Terminals).

In 2005, the Group remained solidly committed to guaranteeing

compliance with current laws for the protection of personal data

(Legislative Decree 196/03 - otherwise known as the "Data

Protection Act").

Specifically, the parent company realised, and subsequently

circulated to the Group's subsidiary companies, a set of guidelines

and regulations to ensure that the new requirements introduced by

the Data Protection Act are consistently and correctly applied.

Figuring among the principal measures adopted were the following:

1. various operational procedures were devised to regulate the

fulfilment of legal requirements, said procedures being

specifically:

a. the preparation of compulsory guidelines for "Managers"

responsible for processing the personal data of the

Impregilo Group:self-assessment of the minimum security

measures adopted pursuant to the provisions of Legislative

Decree 196/03;

b. the classification of information for industrial protection and

personal data protection - (LG_IGL_03_05R00);

c. the preparation of regulations for the use of company

computer systems, pursuant to (among other things) the

provisions of Legislative Decree 196/2003 regarding the

processing of personal data;

2. information regarding the processing of personal data was also

produced, in conformity to principles defined by the Service

Controller;

3. awareness of the culture of privacy was circulated, by making

information regarding privacy laws available online to all Group

employees, specifically information regarding security

measures that is accessible via the Group's Intranet;

4. pursuant to the provisions of Regulation 26 of Appendix B

(Technical Requirements for Minimum Security Measures) of

the Data Protection Act, Impregilo has also produced a Security

Planning Paper ("SPP") since 2004, adopting criteria for the

protection of sensitive and legal personal data processed by

computer and analysing the risk associated with these

procedures accordingly.


CORPORATE GOVERNANCE

98

CORPORATE GOVERNANCE


100

The Corporate Governance structure adopted by Impregilo is

founded upon the requirements set out in the "Self-discipline

Code" adopted by the Corporate Governance Committee for

Listed Companies, with the firm belief, on the one hand, that

adopting a structure system of corporate governance rules

enables the company to operate with the utmost efficiency and,

on the other hand, that ensuring increasingly higher standards

of transparency helps to boost the company's reliability as

perceived by investors.

The two sections that follow below describe respectively the

structure adopted for the Corporate Governance of Impregilo

and the company's actual implementation of the requirements

set out in the Self-discipline Code.

FIRST SECTION

THE GOVERNANCE STRUCTURE OF IMPREGILOA description of the governance structure of Impregilo S.p.A. is

provided below, and refers in particular to the measures

introduced over the course of financial year 2005. The company,

in pursuing its primary objective of creating value for its

shareholders, has paid special attention to environmental issues

related to the activities undertaken by the Group and has

supported and assumed a commitment to base the way in which

it conducts its affairs on the principles sanctioned by the

Group's Code of Ethics.

Board of DirectorsThe Board of Directors, which is responsible for running the

company and is vested with strategic and organisational

guidance duties - assumes a central role within the organisation

of Impregilo.

Pursuant to the provisions of Article 24 of the company's Articles

of Incorporation (available at the website www.impregilo.it), the

Board of Directors is vested with the widest possible powers for

the ordinary and extraordinary running of the company, without

exceptions of any kind, and has the ability to carry out all the

measures it deems appropriate in order for the company to

undertake the activities that form its corporate purpose or are

instrumental to the attainment of said purpose, excluding only

those that are strictly reserved for the shareholders by law.

The Board of Directors may therefore decide to create or abandon

secondary offices that are permanent establishments in Italy and

abroad, to reduce share capital in the event of shareholders

withdrawing from the company, to amend the company's Articles

of Incorporation in order to bring them into line with ineluctable

legal requirements, to relocate the company's legal headquarters

to elsewhere within the country, to merge by incorporation any

company that is wholly owned or in which at least 90% of capital

is owned, while complying at all times with the provisions of Articles

2505 and 2505 (ii) of the Italian Civil Code.

The Board of Directors, pursuant to Article 21 of the company's

Articles of Incorporation, appoints a Chairman from among its

members and possibly one or two Deputy Chairmen to replace the

Chairman in the event of his absence or impediment as well.

The Board of Directors of Impregilo is currently composed or no

fewer than seven and of no more than fifteen members (as per

Article 20 of the company's Articles of Incorporation, amended by

the Special Meeting of Shareholders of Impregilo held on 20 May

2005). Pursuant to legal requirements, the Directors may not

remain in office for a period of more than three financial years.Their

term in office expires on the date of the shareholders' meeting

called to approve the financial statements for the last financial year.

Since the Articles of Incorporation of Impregilo do not contain

provisions to the contrary, all Directors may be re-elected.

The current Board of Directors, nominated by the meetings of

shareholders held on 2 and 20 May 2005, is composed as

follows:

101

Enrico Bonatti

Alfredo Cavanenghi (Independent Director)

Gianni Maria Chiarva

Vito Gamberale

Ezio Gandini (Independent Director)

Gian Luigi Garrino (Independent Director)

Carlo Gatto

Beniamino Gavio

Alberto Lina

Carlo Lotti (Independent Director)

Andrea Novarese

Giorgio Robba (Independent Director)

Cesare Romiti

Pier Giorgio Romiti

Alberto Sacchi

The Chairman of the Board of Directors is Cesare Romiti and the

Managing Director is Alberto Lina, with both having been

nominated by the Board of Directors at its meeting of 2 May 2005.

The Board of Directors may delegate some of its powers to one or

more Directors, defining the limits within which and the

procedures by which the powers thus delegated are to be

exercised. It may also nominate Managers and Proxies, who need

not be Board members, determining the powers bestowed upon

said individuals (as per Article 25 of the Articles of Incorporation).

As resolved upon by the Special Meeting of Shareholders held

on 26 September 2005, and pursuant to the provisions of Article

27 of the company's Articles of Incorporation, the duty of legally

representing the company and signing on its behalf with third

parties and before a court of law lies with the Chairman and the

Managing Director separately, or alternatively - in the event of

the Chairman's absence or impediment - with each of the

Deputy Chairmen, where nominated. While the above provisions

shall continue to be observed, the duty of legally representing

the company and signing on its behalf may be bestowed by the

Board to other Board members as well.

The Board of Directors meets at least quarterly. At said Board

meetings, and in any event as soon as possible whenever

special needs arise to require it, the units appointed to do so

report to the Board and to the Board of Statutory Auditors on the

activities carried out when exercising delegated powers and on

the most significant transactions effected by the company or

subsidiary companies.

Board resolutions are valid, pursuant to the provisions of Article

23 of the Articles of Incorporation, where the majority of

Directors in office are present. Resolutions are carried by the

absolute majority of votes cast by those in attendance.

Executive CommitteePursuant to Article 25 of the company's Articles of Incorporation,

the Board may also delegate some or all of its powers and duties

that are not allocated exclusively to it by law, to an Executive

Committee - of which by law the Managing Director is a part and

performs the role of Chairman - composed of a number of

members equal to less than half of the number of members

making up the Board of Directors. The Board of Directors may

also establish other committees vested with special functions,

determining their powers and duties and the rules by which they

are to operate.

On 20 May 2005, the current Board of Directors established an

Executive Committee, composed of five members.

The Executive Committee is currently composed of the following

individuals:

Enrico Bonatti

Ezio Gandini

Beniamino Gavio

Alberto Lina (Presidente)

Pier Giorgio Romiti

The Board of Directors have delegated to the Executive

Committee all the powers of ordinary and extraordinary

administration with which the Board is vested, except for those

powers reserved ineluctably by law to the Board of Directors and

those powers relating to the execution of specific transactions

defined as "Significant Transactions". In accordance with what

has been established by the Board of Directors itself, the term


102

"Special Transactions" refers to: (i) financial transactions of an

extraordinary nature (in other words, in addition to mergers and

spin-offs, any other proposal that has to be submitted by the

Board of Directors to a Special Meeting of Shareholders; (ii)

asset disposals amounting to more than Euro 25 million for each

individual transaction; (iii) Significant Transactions with related

parties, such as those identified in the Guidelines produced by

the company and summarised below.

Internal Audit Committee andRemuneration CommitteeOn 2 May 2005, an Internal Audit Committee and Remuneration

Committee were also established. These Committees are

composed as follows:

Internal Audit Committee

Gian Luigi Garrino

Giorgio Robba

Pier Giorgio Romiti (Chairman)

Remuneration Committee

Vito Gamberale

Ezio Gandini

Cesare Romiti (Chairman)

The above Committees are an internal subdivision within the

Board of Directors and assume a consulting and proposal-

making function. They have been established with a view to

improving the functionality and strategic steering capabilities of

the Board of Directors.

The Board, considering how things currently stand, decided that

it was appropriate to adjourn the formation of a Committee for

Appointment Proposals, in that no difficulties have been

encountered to date by the shareholders when proposing

suitable candidates such to ensure that the composition of the

Board of Directors duly conforms to that laid down by the Self-

discipline Code, specifically with regard to the presence of

independent and non-executive directors. Any appointment

proposals received from shareholders before a shareholders'

meeting are deposited at the company's registered office.

Board of Statutory AuditorsIt is the duty of the Board of Statutory Auditors to ensure that the

provisions of law and the Articles of Incorporation are duly

observed, in accordance with the principles for correct business

administration and specifically as regards the adequacy of the

company's organisational, administrative and accounting set-up

and its actual and proper functioning.

The Board of Statutory Auditors, pursuant to Article 28 of the

Articles of Incorporation, is composed of three permanent

auditors and two stand-in auditors, and is nominated by way of

a list-voting mechanism. The company's Articles of

Incorporation ensure that any minority shareholders that are

properly organised are able to nominate a statutory auditor. The

stake equal to 2% of capital represented by ordinary shares is

needed in order to submit a list.

The Board of Statutory Auditors is therefore nominated by way

of lists submitted by the shareholders, which - pursuant to the

provisions of Article 28 of the Articles of Incorporation - are to

be deposited at the company's registered office at least ten days

before the date on which the shareholders are due to meet in

first call.

The lists of candidates must be accompanied, or shall otherwise

be deemed unacceptable, by the professional curriculum of

each candidate and by representations with which individual

candidates accept their nominations and attest, under their own

responsibility, that no situations prevail that would render them

unelectable or incompatible, and that they fulfil the requirements

prescribed for the role concerned by all applicable legislation

including regulatory requirements.

Those already holding the position of permanent auditor in more

than five listed companies may not be nominated as statutory

auditors.

Since the Articles of Incorporation of Impregilo do not contain

provisions to the contrary, all statutory auditors may be re-elected.

The Board of Statutory Auditors currently in office was appointed

by the general meeting of shareholders held on 2 May 2005 for

103

the three-year period 2005-2007. Its term in office shall therefore

expire with the meeting called to approve the company's financial

statements for the year ending 31 December 2007.

The company's Board of Statutory Auditors is currently

composed as follows: Roberto Ascoli (Chairman), Vittorio Amadio

and Giuseppe Angiolini (permanent auditors), and Guido

Zavadini and Giuseppe Piaggio (stand-in auditors).

Shareholders' meetingsThe general meeting of shareholders held on 8 May 2001

approved the "Regulations for Shareholders' Meetings" (available

at the website www.impregilo.it), which were drawn up as per the

scheme proposed by Assonime and devised to ensure that

shareholders' meetings proceeded in an orderly fashion, in

accordance with the fundamental right of each shareholder to

request clarification regarding the various matters being

discussed, express his own opinion and formulate proposals.

Article 16 of the Articles of Incorporation requires shareholders'

meetings to be called with at least 30 days' notice prior to the

date on which the meetings themselves are scheduled to take

place, through the publication of a notice containing the Agenda

in the Gazzetta Ufficiale or the newspaper "Corriere della Sera",

an alternative means that in addition to simplifying formalities

and allowing greater flexibility, also ensures that shareholders

are more aware that a meeting has been called.

Independent auditing firmImpregilo and its principal subsidiaries have appointed a firm to

engage in compulsory auditing duties and to verify that the

company's ledger is properly maintained in conformity to the

provisions of Legislative Decree 58 of 24 February 1998, as well

as to verify its interim reports.

The auditing firm thus appointed audits Impregilo, pursuant to

the provisions of Article 2409 (ii) and successive Articles of the

Italian Civil Code and Article 30 of the company's Articles of

Incorporation, which refers to the relevant legal requirements

governing such issues.

Within the Group's general auditing plan, the auditing duties

conferred ex lege are joined by duties conferred voluntarily by

those subsidiaries that do not fall within the thresholds of

"significance" indicated by CONSOB.

Share capital and shareholder structure Share capital, which amounts to Euro 708,996,096, is divided

into 397,194,813 ordinary shares and 1,615,491 non-

convertible savings shares.

The features and rights of savings shares are regulated by

Articles 8 and 32 of the Articles of Incorporation.

The Special Meeting of Shareholders held on 12 October 2004

eliminated the nominal value of the company's ordinary shares

and savings shares.

The company does not hold any of its own shares.

Based on the information available to the company, as at 15 March

2006, the following shareholders had a stake exceeding 2% of

share capital represented by the company's ordinary shares:

• Igli S.p.A. 18.037%;

• Gemina S.p.A. 11.829%;

• HBK Investments Ltd Partnership 2.286%;

• Assicurazioni Generali S.p.A. 2.136%.

The company is party to the following para-corporate

agreements, pursuant to the provisions of Article 122 of

Legislative Decree 58 of 24 February 1998:

a) a core shareholder agreement regarding the shares of Impregilo

S.p.A., which at the time the agreement was signed grouped

together 24.42% of the ordinary capital of Impregilo S.p.A. and

lays down, among other things, specific provisions relating to the

composition of the company's executive bodies.

The companies party to said agreement are indicated below,

along with their respective stakes in the company's capital as at

the stipulation date of the agreement itself.

Investor Number of % of tied-up % of ordinarytied-up ordinary shares held shares held

shares held

Igli S.p.A. 50,010,796 51.56 12.591

Gemina S.p.A. 46,989,191 (*) 48.44 11.829

(*) Including 46,984,191 ordinary shares and 5,000 savings shares.


104

The above parties have stated that, further to their signing the

agreement, no party exerts control over Impregilo S.p.A. pursuant

to the provisions of Article 93 of Legislative Decree 58 of 24

February 1998;

b) Since they involve one of the companies party to the

aforementioned agreement, the following must also be

mentioned:

• a para-corporate agreement between TeSir S.r.l., Argo

Finanziaria S.p.A., Autostrade per l'Italia S.p.A. and Efibanca

S.p.A. concerning Igli S.p.A. and Impregilo S.p.A.; and

• a para-corporate agreement between Techint European

Holding (Netherlands) BV and Sirti S.p.A. concerning TeSir

S.r.l., Igli S.p.A. and Impregilo S.p.A.

On 7 July 2005, the Board of Directors of Impregilo S.p.A.

approved a stock option plan earmarked for the Managing

Director and a number of executives of Impregilo and subsidiary

companies, for a total amount equal to 1.5% of share capital. This

plan, which came about due to Impregilo being interested in

having a special tool to incentivise, and boost the loyalty of, the

executives and senior management both of its own organisation

and of subsidiary companies, was also approved by a special

meeting of the shareholders of Impregilo, which met on 26

September 2005 and approved proposals to:

1. increase share capital for a fee, possibly by way of more than

one transaction, with the exclusion of the option right provided

for by the last paragraph of Article 2441 of the Italian Civil Code

and the second paragraph of Article 134 of Legislative Decree

58 of 24 February 1998, by up to Euro 3,043,800 maximum.

Capital will thus be increased by issuing up to 1,710,000

ordinary shares, bearing standard dividend entitlements and

offered exclusively to the employees of Impregilo S.p.A. and/or

companies controlled by it, pursuant to the provisions of the

first paragraph (point 1) of Article 2359 of the Italian Civil Code.

Said employees will be identified individually by name by the

Board of Directors, with the shares offered to them being

issued for a global unit price of Euro 3.023 (including a Euro

1.243 premium). This price equates to the arithmetic mean of

the official price recorded for the ordinary shares of Impregilo

S.p.A. on each day on which the Stock Exchange is open for

business during the period running from the date on which the

options are allocated - this therefore being the date on which the

Plan is approved by the Board of Directors, i.e. 7 July 2005 - to

the same day of the previous calendar month, as per the way in

which the official price is determined by Borsa Italiana S.p.A.;

2. to vest the Board of Directors with the ability - pursuant to the

provisions of the first and second paragraph of Article 2443 of

the Italian Civil Code - to increase share capital further for a fee,

by up to Euro 501,180.36, in one or more tranches, and within

36 months of the date on which Impregilo publishes its interim

accounts for the first half of 2006. Capital will thus be

increased by issuing a number of ordinary shares equal to no

more than 1% of shares in circulation (excluding for this

purpose the shares issued as part of the procedures described

in point 1) above). These shares, bearing standard dividend

entitlements and to be offered for subscription, with the

exclusion of options in favour of shareholders (pursuant to the

combined provisions of the last paragraph of Article 2441 of

the Italian Civil Code and the second paragraph of Article 134

of Legislative Decree 58 of 24 February 1998, will be offered

to employees of the company and of subsidiaries pursuant to

the provisions of the first paragraph (point 1) of Article 2359 of

the Italian Civil Code, with the beneficiaries of the stock option

plan to be identified from time to time by the Board of Directors

on the basis of objective evaluations and in any event in the

company's interest. At the same time, the Board of Directors

will be vested with the widest possible powers to determine

also the number of options to be allocated and the timeframe

for this allocation procedure, as well as the procedures for the

allocation and exercising of the options themselves, and the

setting - within the limits of the powers thus assigned and in

accordance with legal provisions - of the issue price and the

maximum number of new shares to be allocated to the

beneficiaries of the Plan. Shares will be offered for subscription

at a global unit price equal to their normal market value - as

defined by fiscal legislation - as of the date on which the

respective Board resolutions are carried approving the capital

increase;

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3. to vest the Board of Directors (pursuant to the combined

provisions of the first and second paragraph of Article 2443,

and the second section, fourth paragraph of Article 2441 of the

Italian Civil Code) with the ability to increase share capital in

one transaction - by 31 December 2008 - with the exclusion of

option rights, by up to Euro 7,089,960.72 maximum. Capital

will thus be increased by issuing up to 3,983,124 ordinary

shares, bearing standard dividend entitlements and to be

offered against payment of a fee to the current Managing

Director of Impregilo S.p.A., Alberto Lina, at a global unit price

of Euro 3.023 (including a Euro 1.243 premium), determined

as indicated in point 1 above.

On 11 November 2005, the Board of Directors carried a resolution

permitting the aforementioned stock option plan to be offered

exclusively to the Managing Director Alberto Lina, by exercising

the delegated powers referred to in point 3 above.

For a quantitative breakdown of this stock option plan, please refer

to the chapter entitled "Stock option plans".

As of today's date, the Board of Directors has not exercised the

powers bestowed upon it by the shareholders' meeting referred to

in point 2 above, meaning that the capital used to service the stock

option plan assigned to employees is therefore only increased for

those employees identified by name as per point 1 above.

Code of Ethics On 29 January 2003, the Board of Directors of Impregilo S.p.A.

approved the adoption of a new version of the "Impregilo Group's

Code of Ethics" (available at the website www.impregilo.it). This

Code identifies the values and principles, such as honesty,

correctness, integrity, transparency, impartiality, confidentiality and

respect, which are to be complied with, through their conduct, by

all persons who, as members of executive bodies, employees or

outside collaborators, act on behalf of the Impregilo Group, in

order to ensure that conditions of correctness prevail during the

conducting of business affairs and undertaking of company

activities, while protecting the Group's image and the

safeguarding the expectations of its shareholders and the public.

The Code contains rules governing relationships with clients,

suppliers, offices of the Public Administration, the media, and

political and union organisations, so as to protect the company's

assets. The Code also provides for a control system devised to

ensure that the Code itself is properly observed.

Organisational ModelThe Board of Directors, at its meeting of 29 January 2003, also

approved the company's "Organisation and Management Model"

(available at the website www.impregilo.it), provided for by Article

6 of Legislative Decree. 231/01 and based upon the guidelines of

Confindustria, approved on 7 March 2002.

In keeping with the changes made to the legislative framework

after the adoption of the Model, the updating of Confindustria's

guidelines on 18 May 2004, the adjustments made to the

company's organisational changes following the adoption of the

Model and the activities undertaken in the meantime by the

Compliance Body, on 30 March 2005, the Board of Directors

carried a resolution approving the updating of the Model.

The adoption of the Model, which finds it necessary premise in the

Code of Ethics, marks a further step towards accuracy,

transparency and a sense of responsibility in internal and external

dealings and provides shareholders with an adequate guarantee

for efficient and correct business operations, while encouraging all

those operating in the name of, and on behalf of, Impregilo to adopt

consistent and proper conduct when going about their duties, in

order to prevent the risk of the crimes referred to in Legislative

Decree 231/2001 from arising. The Model is composed of a

general section (that describes, among other things, the content of

Legislative Decree 231/2001, the objectives and functioning of the

Model, the duties of the Compliance Body - identified by the Board

in the Head of Internal Audit - and the penalty system adopted) and

of two separate "special sections", concerning the different types

of crime foreseen by Legislative Decree 231/2001.

In order for activities involving the constant updating of the Model

to be undertaken properly, in keeping (among other things) with

regulatory changes including new types of crime among those

considered by Legislative Decree 231/2001, Impregilo has

appointed KPMG Advisory S.p.A., a leading company that is an

expert in the sector, to provide the necessary assistance and

consulting services.


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SECOND SECTION

IMPLEMENTATION OFTHE SELF-DISCIPLINE CODE A detailed description of the decisions made by the company

with regard to the actual implementation of requirements set out

in the Self-discipline Code is provided below.

Board of DirectorsThe Board of Directors assumes a central role in the running and

organisation of the company. As part of this role, the Board of

Directors:

• examines and approves the company's strategic, industrial

and financial plans, which take cognizance of the plans of

subsidiaries;

• examines and evaluates business performance projections;

• examines and approves accounting statements for specific

periods;

• oversees the general outcome of the business management

of the company and Group, examines key business events as

well as investments and divestments, periodically checking

that the results projected are actually achieved;

• examines and approves the Significant Transactions

previously referred to, and specifically Significant

Transactions with related parties, such as those identified in

the relevant Guidelines referred to below;

• receives, as does the Board of Statutory Auditors, a constant

flow of information from the parties to whom powers are

delegated regarding the activities undertaken in exercising

said powers;

• checks that the general organisational and administrative

structure of the company and the Group is adequate;

• determines, after receiving the opinion of the Board of Statutory

Auditors and further to a proposal from the Remuneration

Committee, the remuneration of the Managing Director and the

Directors vested with specific roles and duties;

• approves incentive schemes for executive management;

• reports to shareholders at shareholders' meetings; and

• defines corporate governance rules.

The Board of Directors has vested the Chairman Cesare Romiti

with the power to execute the resolutions carried by the Board,

in addition to legally representing the company and signing on

its behalf against third parties and before a court of law, said

powers being bestowed upon him pursuant to the provisions of

Article 27 of the company's Articles of Incorporation; the

Chairman also heads up Impregilo's internal audit system and is

responsible for co-ordinating communication activities of an

institutional nature.

The Chairman calls meetings of the Board of Directors and

defines their Agenda, ensuring that adequate and timely

information is circulated to the directors and statutory auditors

(except for in special cases of need and urgency), co-ordinates

the activities of the Board of Directors and steers the way in

which its meetings proceed; it also chairs shareholders'

meetings.

The Chairman also interacts with the Managing Director with

regard to the definition of objectives, strategies and business plans.

On 2 May 2005, the Board of Directors vested the Managing

Director Alberto Lina with powers to legally represent the

company and sign on its behalf against third parties and before

a court of law, as well as with wide powers for the management

of business activities within commitment and expenditure limits

of Euro 10 million per single transaction, and the ability to sub-

delegate his responsibility for the organisation and running of

certain areas of activity. During the year, the Managing Director

periodically reports to the Board on the activities undertaken

when exercising the powers delegated to him.

The company's organisational structure is defined by way of

organisational requirements that are promulgated by the

Managing Director and identify the executives responsible for

the various functions and business sectors, establishing with

these requirements the various responsibilities and areas of

competence. Function heads are assigned general powers of

attorney, which are tailored to match the powers bestowed upon

them, for the business management responsibilities with which

they are vested.

107

The Board is required to meet at least quarterly, at the request

of the Chairman or - in his absence - at the request of the

Managing Director, or whenever a meeting is requested in

writing by at least two directors.

Over the course of financial year 2005, 23 Board meetings were

held at regular intervals. The Directors and Statutory Auditors

diligently partook in the meetings.

It is customary to provide the Directors and Statutory Auditors,

adequately in advance, with the documentation and information

needed or deemed useful to discuss and resolve upon the

matters making up the Agenda in an informed manner.

The calendar of institutional meetings scheduled for the year

currently underway (available at the website www.impregilo.it)

involves the Board meeting four times.

At its meeting of 7 July 2005, the Board of Directors adopted,

whilst incorporating the principles relating to transactions with

related parties provided for in the Self-discipline Code, a new

procedure devised to ensure that transactions effected by the

company with related parties are effected with substantial and

formal correctness ("Guidelines for Transactions with Related

Parties").

For the purpose of the above Guidelines, a party is considered

"related" to an entity where:

a) directly, or indirectly through one or more intermediaries, the

party:

(i) controls the concern, is controlled by, or is under common

control with, the entity (this includes parent companies,

subsidiaries and fellow subsidiaries);

(ii) has an interest in the entity that gives it significant

influence over the entity; or

(iii) has joint control over the entity;

b) the party is an associate of the entity;

c) the party is a joint venture in which the entity is a venturer;

d) the party is one of the management executives vested with

strategic responsibilities for the entity or for its parent

company;

e) the party is a close family member of any one of the parties

referred to in (a) or (d);

f) the party is an entity that is controlled, jointly controlled or

significantly influenced by or for which significant voting

power in such entity resides with, directly or indirectly, any

individual referred to in (d) or (e); or

g) the party is a pension fund for the benefit of employees of the

entity, or of any other entity that is a related party of the entity.

For the purpose of the definition above, please note that:

(i) the notion of "control" is that provided by International

Accounting Standard 24 (i.e. control means the power to

determine the financial and management policies of an

entity in order to benefit from the activities it engages in.

Joint control means the contractually stipulated sharing of

the control of a business);

(ii) the notion of "considerable influence" is that provided by

International Accounting Standard 24 (i.e. considerable

influence means the power to participate in the

determination of the financial and management policies of

an entity without having control of it. Considerable influence

may be obtained by holding shares or through statutory

clauses or agreements);

(iii) the notion of an associated company is that provided by

International Accounting Standard 28 (i.e. an associated

company is an entity in which an investor has significant

influence and but not control or joint control);

(iv) the term "executive managers vested with strategic

responsibilities" means the directors and statutory auditors,

general managers and executives vested with powers and

responsibilities concerning the planning, steering and control

of the company's activities;

(v) the term "close family member" means those who could

influence, or be influenced by, a private individual related to

the company, which includes cohabiting partners and in any

event any spouse who is not legally separated, and first-

degree and second-degree family members and relatives.

The procedure adopted by the Board requires transactions with

related parties to be approved in advance by the Board of


108

Directors, where significant in consideration of their subject, fee,

and the procedures and timeframe established for their

realisation, with Significant Transactions ("Significant

Transactions with Related Parties") meaning all those

transactions with related parties other than the following:

(i) transactions with companies that are 100%-controlled by the

company and bear a value of no more than Euro 500,000;

(ii) transactions realised within the Group that are not atypical or

unusual, or that in any case are completed according to

standardised conditions.

"Typical" or "usual" transactions are those transactions that,

due to their subject or nature, form part of the normal day-to-

day affairs of the company and those that do not contain any

particular criticalities with regard to the features or risks

inherent in the nature of the counterparty, at the time they are

accomplished. Transactions are considered "completed

according to standardised conditions" where completed with the

same conditions as those applied to any party.

The Board of Directors, in order to make a well-informed

decision regarding the execution of every single Significant

Transaction with Related Parties and to ensure that it complies

with principles for substantial and procedural correctness,

receives from the appointed party reasonably in advance and

possibly through the officer responsible for the unit to which the

transaction refers, adequate and specific information regarding

the nature of the correlation, the methods of execution and the

pricing of the transaction, the evaluation procedure followed -

including in terms of strategic compatibility, economic feasibility

and the return expected to be generated by the company - along

with its business interest, as well as the potential risks that the

transaction constitutes for the company.

The Board of Directors, in order to prevent conditions other than

those that would have been realistically negotiated with

unrelated parties from being stipulated, ensures that the

transaction concerned is completed with the assistance of

independent experts with recognised professionalism and

experience (banks, auditing firms, legal firms and other experts

with special knowledge), whom it asks to express an opinion

about the pricing, methods of execution, technical aspects and

lawfulness of the Significant Transaction with Related Parties.

Other transactions with related parties, where not provided for

otherwise in the legislation that applies from time to time, do not

have to be approved in advance by the Board of Directors. The

Managing Director reports to the Board of Directors, as well as

to the Board of Statutory Auditors, at least every quarter and in

summary form but exhaustively, on any such transactions that

he has effected while exercising the powers delegated to him.

In the event that he has an interest in the transaction, be it for

his own account or for the account of third parties, he shall

abstain from effecting it, vesting the Board of Statutory Auditors

with the power to make a decision in this regard.

The Chairman of the Board of Directors ensures that the above

procedure is duly observed and correctly applied.

The Board of Directors is composed of one executive director

(the Managing Director Alberto Lina) and 14 non-executive

directors. Five of these 14 non-executive directors are

independent directors (Alfredo Cavanenghi, Ezio Gandini, Gian

Luigi Garrino, Carlo Lotti and Giorgio Robba). The status of

independent director, in conformity to the provisions of the

current Self-discipline Code, is periodically evaluated by the

Board of Directors while taking into account any information

provided in this regard by those directly concerned. This

evaluation procedure was last completed at the Board meeting

held on 7 June 2005.

Non-executive directors are, in terms of number and

authoritativeness, such to ensure that their judgement may

significantly influence the decisions carried by the Board.

109

The Directors currently serving on the Board of Impregilo perform the following duties with other

companies:

Director Company Position

Enrico Bonatti Techint S.p.A DirectorDalmine S.p.A. DirectorIgli S.p.A. Vice-Chairman

Alfredo Cavanenghi SIAS S.p.A. Permanent auditorAutostrada Torino - Milano S.p.A. Permanent auditor

Gianni Maria Chiarva Sirti S.p.A. ChairmanSirti Sistemi S.p.A. ChairmanStella Jones Inc. Vice-ChairmanStella International S.A. DirectorSankt Anton S.A. DirectorStella Jones International S.A. DirectorStella Jones Participations S.A. DirectorHilux S.A. DirectorBeleura S.A. DirectorStella S.p.A. DirectorSeirt S.A.U. Director

Vito Gamberale Autostrade S.p.A. Managing DirectorAutostrade per l'Italia S.p.A. ChairmanAutostrade del Brennero S.p.A. Vice-ChairmanSchemaventotto S.p.A. DirectorIgli S.p.A. DirectorAutovie Venete S.p.A. Director

Ezio Gandini - -

Gian Luigi Garrino Fondaco SGR S.p.A. Chairman

Beniamino Gavio Aurelia S.p.A. Managing DirectorArgo Finanziaria S.p.A. ChairmanInterstrade S.p.A. ChairmanSEA Segnaletica Stradale S.p.A. ChairmanSIAS S.p.A. DirectorGavio & Torti Casa di Spedizione S.p.A. DirectorIMCO Progetti e Costruzioni S.r.l. DirectorAutostrade Sud America - ASA S.r.l. ChairmanIgli S.p.A. Director

Carlo Gatto Gemina S.p.A. Vice-ChairmanRAI S.p.A. Chairman of the Board of

Statutory Auditors

Alberto Lina Sirti S.p.A. Vice-ChairmanTechint S.p.A. Director

Carlo Lotti Soc. di Ingegneria C. Lotti & Associati Honorary ChairmanAssociazione Idrotecnica Italiana Honorary Chairman


110

Director Company Position

Andrea Novarese Alerion Industries S.p.A. DirectorCentro Cardiologico Monzino Vice-ChairmanEffe Finanziaria S.p.A. ChairmanFinadin S.p.A. DirectorFineuras S.p.A. ChairmanFinsai International S.A. DirectorGemina S.p.A. DirectorIst. Europeo di Oncologia S.r.l. Vice-ChairmanMeliorbanca S.p.A. Vice-ChairmanNovagest SIM S.p.A. DirectorPortofino Vetta S.r.l. DirectorSaifin - Saifinanziaria S.p.A. DirectorSai Holding S.p.A. DirectorSai International S.A. DirectorSai Lux S.A. DirectorSRP Asset Management S.A. Director

Giorgio Robba Ferfina S.p.A. DirectorCondotte Immobiliare Director

Cesare Romiti Infrastrutture e Sviluppo S.p.A. DirectorBigli 1 S.r.l. Chairman

Pier Giorgio Romiti Gemina S.p.A. Managing DirectorAeroporti di Roma S.p.A. DirectorSistemi di Energia S.p.A. ChairmanLeonardo S.p.A. DirectorConsorzio Venezia Nuova Director

Alberto Sacchi Argo Finanziaria S.p.A. Executive DirectorAutostrada Torino Milano S.p.A. Managing DirectorAutostrade Sud America S.p.A. DirectorSIAS S.p.A. DirectorS.A.L.T. S.p.A. DirectorAutostrada dei Fiori S.p.A. DirectorAutocamionale della Cisa S.p.A. DirectorSitrasb S.p.A. DirectorMilano Serravalle - Milano Tangenziali S.p.A. Permanent auditor

The appointment of directors lies exclusively with the company's shareholders, who at one of

their meetings present their appointment proposals, accompanied by an exhaustive collection of

information regarding the personal and professional qualities of the candidates concerned.

The shareholders meeting held on 2 May 2005 determined the payment of an annual fee of Euro

25,000 to each director nominated pursuant to the provisions of law, the payment of an annual

fee of Euro 25,000 to each member of the Executive Committee, and the payment of an annual

fee of Euro 6,000 to each member of any Committee established by the Board of Directors,

including the Internal Audit Committee and the Remuneration Committee.

111

Pursuant to the provisions of Article 2389 of the Italian Civil

Code and further to the necessary proposal being submitted by

the Remuneration Committee, the Board of Directors - after

receiving the opinion of the Board of Statutory Auditors -

determined the fee attributable to the Chairman and Managing

Director as directors vested with specific duties.

Remuneration CommitteeBy way of a resolution carried on 2 May 2005, the current Board

of Directors has established a Remuneration Committee within

its own structure. Said Committee is currently composed of the

following individuals: Cesare Romiti (Chairman), Vito Gamberale

and Ezio Gandini. All Remuneration Committee members are

therefore non-executive directors. It is the Remuneration

Committee's duty to submit proposals to the Board of Directors

for the remuneration of those Directors performing specific

duties, as well as - as per the instructions of the Managing

Director - for the determination of criteria pertaining to the

remuneration of the company's executive management.

In financial year 2005, the Remuneration Committee met three

times, with all members in attendance. The entire Board of

Statutory Auditors attended two of these meetings, with the

majority of said Board present at one.

A proposal regarding the fee payable to the Chairman was

carried in the absence of the individual concerned.

The Committee has adopted a set of regulations that establish

the rules by which it operates.

Internal Audit CommitteeIn keeping with the resolution carried on 2 May 2005, the Board

of Directors established an Internal Audit Committee within its

own structure. Said Committee is currently composed of the

following individuals: Pier Giorgio Romiti (Chairman), Gian Luigi

Garrino and Giorgio Robba. All Internal Audit Committee

members are therefore non-executive directors, the majority of

whom are independent. The Internal Audit Committee performs

consulting and proposal-making functions. It is its duty to

evaluate the adequacy of the internal audit system adopted by

the Board of Directors at its meeting of 8 February 2000, duly

reporting to the Board of Directors on the activities undertaken

at least every six months, to evaluate the Head of Internal Audit's

working plan, receive periodic reports from said Head, to

evaluate the proposals formulated by the independent auditing

firm along with the working plan produced by it, and to receive

the reports of the Compliance Body as referred to in Legislative

Decree 231/2001.

In financial year 2005, the Internal Audit Committee met twice.

One meeting was attended by the entire Board of Statutory

Auditors, while the other was attended by the majority of said

Board.

While the Committee's meetings were not attended by the

Managing Director, the Head of Internal Audit was always

present to participate.

At its meetings, the Committee examined and evaluated reports

provided by the Head of Internal Audit, reports produced by the

Compliance Body (as referred to in Legislative Decree

231/2001) and the report regarding the activities undertaken to

verify the correctness and adequacy of the international

accounting standards (IAS/IFRS) adopted when preparing the

interim report. The Committee confirmed the adequacy of the

accounting standards used, along with their consistency for the

purpose of producing the consolidated financial statements. The

Committee thus reported to the Board of Directors, when the

accounts and interim report were approved, on the activities

undertaken and the adequacy of the internal audit system.

The Committee has adopted a set of regulations that establish

the rules by which it operates.

Treatment of confidential information At its meeting of 27 March 2001, the Board of Directors

approved a procedure of for the handling and treatment of

confidential information regarding the company and its


112

subsidiaries. Said procedure defines the various roles and

responsibilities along with the procedures by which news that

may be considered price-sensitive is to be disclosed to third

parties and circulated to the public.

In conformity to this procedure:

• the handling of information is overseen by the Chairman in

agreement with the Managing Director. Said individuals are

required to authorise expressly and in advance every report

issued to the press as well as other forms of communication

(press releases, interviews, etc.) as well as with financial

analysts and institutional investors, the purpose of which is to

disclose documents and circulate price-sensitive, confidential

information concerning the company or subsidiaries;

• price-sensitive information is to be disclosed completely,

promptly, adequately and not selectively, in conformity to the

legal and regulatory provisions that are in force and

applicable from time to time, avoiding any possible

imbalances in the information circulated to investors and

preventing situations that may in some way alter the

performance of Impregilo shares from arising;

• it is absolutely forbidden for anyone to provide interviews to

the press or issue statements relating to significant events

and facts that have yet to be made public pursuant to legal

provisions;

• the directors and statutory auditors are required to treat

documents and information acquired when performing their

duties with the utmost confidentiality. The executives and

employees of the company and its subsidiaries are required

to keep reserved information regarding the company and its

subsidiaries confidential and to deal with such information

only via the authorised channels, exercising all necessary

caution so that it is circulated within the company without its

reserved nature being prejudiced in any way.

At its meeting of 24 March 2006, the Board of Directors

established a directory for those subjects that, in consideration

of the work or professional activities undertaken by them - or

rather, as a result of the functions performed by them - have

access to privileged information relating to the listed issuer or its

subsidiaries, pursuant to the provisions of Article 9 of Law 62 of

18 April 2005 ("Community Law of 2004"), which incorporated

Directive 2003/6/EC (otherwise known as the "Market Abuse

Directive") into the Italian legal system and introduced, among

other things, Article 115 (ii) into Legislative Decree 58/98

(Finance Consolidation Act - also referred to hereinafter as the

"FCA"), which comes into effect from 1 April 2006.

Code of Conduct relating to Internal DealingAt its meeting of 17 December 2002, the Board of Directors

carried a resolution to adopt a Code of Conduct relating to

internal dealing, which was subsequently amended and

supplemented in accordance with regulatory provisions

promulgated by Borsa Italiana S.p.A., said provisions requiring

listed companies to disclose periodically transactions involving

the listed securities of the issuer that have been entered into by

subjects with an in-depth knowledge of the company's

performance and affairs as a result of their position within the

company ("Significant Persons").

The Code of Conduct thus approved requires Significant Persons

to report to notify the company, by the fifth day on which the

Stock Exchange is open for business after each calendar

quarter, of any transactions whose countervalue (even where

accumulated over the quarter) is equal to or greater than Euro

50,000 (but less than Euro 250,000), as well as notifying it -

without delay and in any event by the day following the day on

which any such transaction has been completed (regardless of

its settlement date) - of any transactions of a significant amount,

or rather in excess of Euro 250,000.

The Code also requires subjects to disclose any exercising of

stock options or option rights, and gives the Board of Directors

the ability to prohibit some or all Significant Persons from

113

effecting some or all of the transactions referred to in the Code

of Conduct (or limit their execution of such transactions) during

certain periods of the year and/or when certain circumstances

arise.

The Code of Conduct provides for a penalty system to which the

Significant Persons will be subjected in the event of their

breaching the requirements laid down by it.

The Code of Conduct is available at the website

www.impregilo.it.

Further to Article 9 of the Community Law of 2004 adding a

new seventh paragraph to Article 114 of the FCA and since this

provision, which will come into effect on 1 April 2006, replaces

the provision contained in the Regulations for markets

organised and managed by Borsa Italiana and the requirements

issued in their connection, on 24 March 2006 the Board of

Directors amended the company's Code of Conduct relating to

insider dealing (the "Code") and adopted by the company, in

order to adjust its content to the new legal and regulatory

requirements. The main amendments concerned adapting the

Code to the new definition of "Significant Subjects" and

"Closely Related Persons", the identification of the transactions

needing to be disclosed and the notion of persons possibly

being exempted from disclosure requirements, as well as the

procedures by which and the deadlines by which disclosures

are to be made.

Internal audit systemAt its meeting of 8 February 2000, the Board of Directors carried

a resolution agreeing to provide the company with an internal

audit system, said system being a collection of rules of conduct

and organised and co-ordinated procedures that would

guarantee sound and efficient management practices, in order

to identify, prevent and manage financial and operational risks

while safeguarding the company's assets.

At said meeting, the Board established an Internal Audit

Committee, vesting it with the consulting and proposal-making

functions described previously.

At its meeting of 12 September 2000, the Board - further to a

proposal from the Internal Audit Committee - appointed a Head

of Internal Audit.

The Head of Internal Audit reports to the Chairman of the Board

of Directors and operates with complete independence from the

heads of the various operational areas. Said Head has been

provided with a dedicated structure comprising five officers (in

addition to the Head himself, who acts as co-ordinator) with

varying levels of professional experience. The Head of Internal

Audit is vested with autonomous powers to take measures on

his own initiative and engage in control activities as well as

financial autonomy.

The Head is also responsible for guaranteeing compliance with

internal and external requirements, carrying out (via the Internal

Audit Unit that he manages) activities to identify particular areas

of risk, to this end providing for the necessary monitoring and

checking procedures.

Over the course of financial year 2005, the Internal Audit Unit

continued to embark on activities geared to identify the areas

where action should be taken in order to reduce business risk,

while carrying out 30 auditing exercises and drawing up an audit

plan for the period 2006-2008.

For the purposes of, and pursuant to, point b) of the first

paragraph of Article 6 of Legislative Decree 231/2001, the

Board of Directors identified the Head of Internal Audit as the

Compliance Body. This role involves activities being started up to

implement the Organisation and Management Model adopted by

the Board of Directors, supervisory activities being undertaken to

verify the functioning of, and compliance with, the Model and the

necessary measures being taken to circulate the Model

throughout the Group.


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Investor RelationsJuly 2001 saw the establishment of a new Reporting function for

the company's relations with institutional investors and other

shareholders. This involved creating a dedicated business unit,

which reports to the "Investor Relator", whose specific duty is to

manage investor relations. The Investor Relator has set up a

special email address for the notices and requests of shareholders

([email protected]). The website www.impregilo.it

also contains a section regarding the company's relations with its

shareholders, entitled "investor relations", where both information

of an economic and financial nature and up-to-date documents of

interest to all shareholders may be found.

The company feels that maintaining an ongoing dialogue with

shareholders in general as well as with institutional investors,

which is based on a mutual understanding of roles, is not only a

duty that it owes to the market but also in its own interests. This

dialogue is to proceed, however, in compliance with procedures

established for the treatment of reserved information, to

guarantee current investors and potential investors the right to

receive such information enabling them to make well thought

through investment decisions.

Board of Statutory AuditorsThe statutory auditors were selected, in conformity to Article 28

of the company's Articles of Incorporation, from a list submitted

by the shareholder Gemina S.p.A., by the shareholders' meeting

held on 2 May 2005.

Over the course of 2005, the Board of Statutory Auditors met 18

times, its members diligently participating at the meetings thus

held.

Impregilo's statutory auditors are also directors or statutory

auditors with the following listed companies:

Statutory auditor Company Position

Roberto Ascoli

Vittorio Amadio Gemina S.p.A. Chairman of the Board of Statutory Auditors

Giuseppe Angiolini

Guido Zavadini

Giuseppe Piaggio Autostrade S.p.A. Director


OTHER INFORMATION

115


116

EQUITY INTERESTS HELD BY DIRECTORS,STATUTORY AUDITORS AND GENERAL MANAGERS

With reference to the information required under Article 79 of CONSOB Resolution 1197/99, the

table below provides details of the equity interests held in Impregilo S.p.A. and its subsidiaries

by Directors and Statutory Auditors - the company not having appointed any General Managers -

directly or through subsidiary companies, custodian companies or other intermediaries, as at 31

December 2005, as per the company's register of shareholders, notices received and other

information obtained from the Directors and Statutory Auditors themselves.

Name Company Number of Number of Number of Number of shares held at shares shares shares heldthe end of the acquired sold at the endprevious year of the year

Gandini Ezio Impregilo 200,000 200,000 -

Savona Paolo Impregilo 360,000 360,000 -

STOCK OPTION PLANImpregilo S.p.A. has introduced a stock option plan, which was approved by the Board of

Directors on 7 July 2005 and officially adopted by the meeting of shareholders held on 26

September 2005. This stock plan, which is offered exclusively to the Managing Director and to

a number of executives of Impregilo and subsidiary companies, is for a total sum equal to

approximately 1.5% of share capital in existence prior to its adoption.

The exercising of rights is subject to the plan's beneficiaries remaining with the company until

same rights actually mature and - in the case of the Managing Director - his remaining in said

position. Every option entitles its holder to subscribe one share.

The principal conditions are summarised below:

Subject No. of options Strike Final exercise allocated price date

Managing Director (Alberto Lina) 3,983,124 3.023 (°°) (°)

Senior executives of Impregilo and the Group 1,710,000 3.023 (°°) (*)

Total 5,693,124

(*) option rights may be exercised during the period between the publication date of the company's interim accounts forfirst half 2006 and the last business day of the thirty-sixth calendar month following the date on which said rights maystart to be exercised.

(°°) of which: Euro 1.243 as a premium.(°) In the case of options allocated to Directors, the exercise period for rights is established as follows

• in the case of one third of the rights: from the first business day following the date on which the resolution approvingthe capital increase to service the options is recorded in the Milan Companies' Register;

• in the case of a further third of rights, from the first business day of the twelfth month after 2 May 2005, the monthin which the Managing Director is appointed to his position;

• in the case of the remaining third of rights, from the first business day of the twenty-fourth month after 2 May 2005.The deadline by which options are to be exercised coincides with the date on which the current three-year term inoffice comes to an end: in other words, the date of the shareholders' meeting called to approve the financialstatements for the year ending 31 December 2007.

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The stock option plan also bestows upon the Board of Directors the ability to:

• further increase - for a fee, in one or more transactions and within 36 months of the date on

which the company's interim report accounts for 2006 are published - share capital by up to

Euro 501,180 in total through the issue of new ordinary shares, to be offered to employees

of the company and its subsidiaries as stock option plan beneficiaries who will be identified

by the Board of Directors.

RELATIONSHIPS WITH GROUP COMPANIESAND RELATED PARTIESThe relationships that Impregilo S.p.A. maintains with its subsidiaries and affiliates primarily

concern the following:

• commercial relationships, relating to purchases and procurement arrangements for assets

needed to accomplish jobs, relationships linked to contracts or sub-contracts;

• relationships linked to the provision of services (of a technical, organisational, legal and

administrative nature) undertaken by centralised functions;

• arrangements of a financial nature, represented by loans, current accounts and overdraft

facilities utilised as part of centralised treasury management activities (cash pooling) and

guarantees issued on behalf of Group companies;

• relationships enjoyed as part of the Group taxation regime (following the introduction of the

so-called "consolidato fiscale"/group taxation regime to the Italian tax system, Impregilo

S.p.A. and its Italian subsidiary companies have decided to partake in the aforementioned

regime, as referred to in Articles 117-129 of the Consolidation Act for Income Taxes).

Engaging in transactions with Group companies fulfils the parent company's desire to build upon

the synergies already created within the Group, in terms of achieving productive and commercial

integration, putting existing skills to good use and rationalising the use of central structures and

financial resources.

Relationships with related parties, as defined pursuant to the accounting standard IAS 24, are

regulated by specific agreements whose conditions are in keeping with market conditions.

A Group procedure is in place that governs the way in which relationships with related parties

are handled, in accordance with principles for objectivity, transparency and truthfulness.

Specifically, said procedure defines the criteria applied when identifying Significant Transactions

completed with related parties, the general rules and standards of conduct governing such

transactions, and the process by which Significant Transactions are to be approved by

Impregilo's Board of Directors. The general principle is that all transactions with related parties,

even when completed through subsidiary companies, must comply with criteria for correctness

in terms of their substance and the procedure adopted.

The prior approval of the Board of Directors is not required for "insignificant" transactions with


118

related parties, where by "significant" we mean - in consideration of the subject, fee, procedures

and timeframe for completion - all transactions with related parties other than the following:

(i) transactions with companies 100%-controlled by the company with a value of no more than

Euro 500,000;

(ii) transactions accomplished within the Group that are not atypical or unusual, or that in any

event are completed in accordance with standardised conditions.

"Typical" or "usual" transactions are those transactions that, due to the object they involve or their

nature, are part of the company's normal course of affairs, and those that do not contain any

specific criticalities as regards their features or risks inherent in the nature of the counterparty, at

the time they are executed. Transactions completed in accordance with "standardised conditions"

are those completed under the conditions that would be applied to any party.

The financial highlights as at 31 December 2005 for the relationships of Impregilo S.p.A. with

related parties are presented in the table below. For a more detailed description of the transactions

concerned, please refer to the relevant appendix of the individual accounts of Impregilo S.p.A.

Payables of a Payables of acommercial financial Other Total

(Euro thousands) nature nature

Subsidiaries 16,311 681,651 4,217 702,179

Affiliates 16,924 1,199 18,123

Other companies 662,776 110,283 49,520 822,579

Total 696,011 793,133 53,737 1,542,881

Payables of a Payables of acommercial financial Other Total

(Euro thousands) nature nature

Subsidiaries 44,131 50,241 6,882 101,254

Affiliates 24,370 20 137 24,527

Other companies 512,087 230,580 76,044 818,711

Total 580,588 280,841 83,063 944,492

revenues from cost o financial financialsponsor sponsorships income charges

fee fee(Euro thousands) income expense

Subsidiaries 1,117 30,050 13,132

Affiliates 231 2,799

Other companies 22,834 1,166 17,349 9,037

Total 24,182 1,166 50,198 22,169

Figuring among relationships with other related parties is the 130-million Euro loan granted by the

shareholder Gemina S.p.A. at market conditions and repaid over the course of financial year 2005.

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Please note that the transfer of the equity interest held by

Impregilo in Leonardo S.r.l. (following the merger of Leonardo

Holding S.r.l. with Leonardo S.r.l.) was effected in keeping with

the provisions of the put and call option entered into with

Gemina, which expressed its willingness to exercise this option

in September. The sale price was approximately 62 million Euros

and was settled by being set off against a debt for a similar

amount payable to Gemina as a result of loans provided by the

latter, as previously specified.

The stake held by Impregilo in the capital of Leonardo S.r.l. and

subsequently transferred as mentioned above changed over the

course of the year, due to Impregilo's subscribing the capital

increase resolved upon by the shareholders and settled by

utilising the 20.5 million Euros receivable from the investee

company (loan notes previously issued by Leonardo Holding and

converted into a shareholders' loan).

Furthermore, whilst not significant from an economic

standpoint, contracts for the supply of various services are in

place for some of the year with the same shareholder.

Similarly, relationships were maintained with the following

subsidiaries of Gemina S.p.A.:

• Elilario S.p.A., whose shareholder Gemina S.p.A. holds 100%

of share capital, for the provision of helicopter services and

information services totalling 1.2 million Euros;

• Aeroporti di Roma S.p.A., whose shareholder Gemina S.p.A.

holds 51.08% of share capital, for the use by Impregilo of an

area that has been fitted-out within the airport, for a

negligible amount.

We should also mention the transfer by the subsidiary Impregilo

International Infrastructures N.V. of its stake in the company

Costanera Norte S.A. to Autostrade S.p.A. and SIAS S.p.A. For a

more detailed description of this transaction, please see

specifically the paragraph outlining strategic guidelines for the

three-year period 2005-2007 and the paragraph dealing with

significant events taking place after the end of the year reviewed

in this Report on Operations.

This transaction may be regarded as a transaction with a related

party, pursuant to the provisions of the accounting standard IAS

24, due to the fact that SIAS S.p.A. may be considered a related

party through an Impregilo S.p.A. Board member.

In addition to the above, transactions were underway during the

year with companies fulfilling the definition of "related parties"

through one of the company's Board directors. These

relationships, arising in any event before the Director was

appointed such, may be summarised as follows:

• revenues received from Grassetto Lavori S.p.A. amounted to

approximately 4.2 million Euros in total. Said revenues

related largely to two sub-contracting arrangements that are

the property of the subsidiary company S.G.F. - I.N.C. S.p.A.

and concern the delivery of various projects for the new

Rho/Pero Trade Fair complex and works to adapt the Turin-

Milan motorway stretch, which generated turnover of 3.5

million Euros and 0.7 million Euros respectively. During the

year under review, costs totalling 4 million Euros were

incurred with the same counterparty, which was mainly

imputable to the expenses borne by the C.A.V.TO.MI.

consortium (3.9 million Euros) for sub-contracted works and

the supply of structures for two sections of motorway (Turin-

Novara and Novara-Milan), as well as for the engineering and

supply of technological systems used in the Turin-Novara

section;

• costs incurred with the company SATAP S.p.A. amounted to

around 32.1 million Euros and related essentially to charges

borne by the C.A.V.TO.MI. consortium for road signs,

surveillance services and the monitoring of motorway

diversions and closures along the Turin-Novara section;

• the C.A.V.TO.MI. consortium incurred costs of 23.9 million

Euros and 13.0 million Euros respectively with the

consortium companies Agognate S.c.a.r.l. and Biandrate

S.c.a.r.l., largely in connection with the subcontracting of

works and supplies for the Turin-Novara section;


120

• costs totalling approximately 3.8 million Euros were incurred with the company SINA S.p.A.,

with most of this amount being due to the expenses borne by the COCIV consortium for the

viability project concerning the base camps and villages and for environmental activities

connected with the definitive project for the high-speed section, the total value of which

amounted to approximately 3.6 million Euros in the year under review;

• dealings involving negligible amounts were also entered into with the companies ABC

Costruzioni S.p.A., Argo Costruzioni Infrastrutture S.c.p.a., Brandizzo S.c.a.r.l., Codelfa S.p.A.,

Euroimpianti Electronic S.p.A., Impresa Grassetto S.p.A., Interstrade S.p.A., Itinera S.p.A.,

Marcallo S.c.a.r.l. and Transider S.p.A., with said dealings collectively generating revenues of

0.2 million Euros and costs of 3.7 million Euros.

INDEPENDENT AUDITING FIRM

Auditing planThe company and its principal Italian subsidiaries have charged auditing firms listed in the

special CONSOB directory with the duty of auditing the individual financial statements,

consolidated financial statements (only Impregilo S.p.A.) and the interim report and verifying that

ledgers are properly maintained in conformity to the provisions of Legislative Decree 58/1998.

The objectives of these verification procedures also absorb the duties and responsibilities

provided for by the Italian Civil Code (as later amended by Legislative Decree 6/2003) with

regard to auditing activities. Added to these duties are those conferred by the most significant

foreign subsidiaries, as part of the Group's general auditing plan, which in principle sets itself

the objective of having not only the accounts of those companies that meet the minimum

"significance" thresholds foreseen by CONSOB but all Group companies (except for those of only

negligible importance) verified by an auditor.

It should be pointed out, however, that in the remaining cases where only a Board of Statutory

Auditors has been appointed, then said Board is statutorily required to engage in the necessary

auditing activities as well.

EmolumentsReconta Ernst & Young S.p.A. (REY) engages in auditing activities in accordance with the

mandate awarded to it by the meeting of shareholders for the three-year period 2003-2005.

The project relating to the implementation of international accounting standards, as well as the

checking of opening balances, as required under IFRS 1, and the other activities rendered

necessary as a result of the transactions taking place during the year under review, lead to an

increase in the fee originally agreed.

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INVESTIGATIONS CONDUCTED BY THE JUDICIARYFollowing the proceedings initiated by the Public Prosecutor's

Office before the Court of Monza, which involve investigations

being conducted in respect of the former Chairman of the Board

of Directors and the former Managing Director of Impregilo (in

office at the time of the alleged events), for the crimes referred

to in Articles 81 and 110 of the Penal Code and Articles 2621

and 2637 of the Italian Civil Code, Impregilo S.p.A., and similarly

Imprepar (in liquidation), has been subjected to preliminary

investigations in relation to unlawful administrative operations as

a result of the crimes referred to in Articles 25 (iii) points a) and

r), 5 and 44 of Legislative Decree 231/2001.

The company was notified of the contestations filed against the

individuals under investigation by way of a notice from the Public

Prosecutor's Office on 13 October 2005.

The company is alleged to have "provided and implemented an

organisational model incapable of preventing crimes" allegedly

committed by the directors involved in the investigation and from

which it allegedly benefited.

On 6 December 2005, Impregilo received a notice (addressed to

the investigated party) advising that the preliminary

investigations pursuant to Article 415 (ii) of the Code for Penal

Proceedings had been completed. The company was later

advised by way of a notice sent by recorded delivery on 21

February 2006 that a preliminary hearing, pursuant to Article

419 of the Code for Penal Proceedings, had been set for 3 April

2006.

With regard to the above, Impregilo has contested the charge

imputed to it, filing a detailed memorandum - drawn up with the

assistance of technical consultants - through its defence lawyer.

Total auditing costs for Impregilo in respect of 2005 amount to Euro 763,000, which may be broken down as follows:

Description of fees Auditing Other activities for financial year 2005 Grand total(amounts expressed in Euros) Fee (*) Fee (*)

Auditing of the individual financial statements 220,400 220,400

Auditing of the consolidated financial statements 26,000 26,000

Limited auditing of the interim report 28,247 28,247

Periodic checks pursuant to Legislative Decree 58/1998 9,600 9,600

Total ordinary auditing activities 284,247 284,247

Other activities

Application of international accounting standards 244,004 244,004

Checking of 2005 global accounts 5,000 5,000

Parere di congruità per Piano di Stock option 42,000 42,000

Opinion regarding the adequacy of the stock option plan 172,950 172,950

Translation of presentation of accounts and IAS presentation 14,500 14,500

478,454 478,454

TOTAL AUDITING ACTIVITIES 284,247 478,454 762,701

(*) This fee is updated as per the ISTAT cost-of-living index, in accordance with the original proposal. The global amount also includes expenses invoiced by the auditing firm.

The current engagement of REY expires with the meeting of shareholders that will approve the financial statements for the year ending 31

December 2005. The Board of Directors is presently undertaking tender procedures so as to determine, as efficiently as possible, which

firm should be charged with the company’s auditing activities for the six-year period 2006-2011.


122

SIGNIFICANT EVENTS TAKING PLACEAFTER THE END OF THE YEAR

Merger by incorporation of Tesco S.r.l. and Impregilo Italia Concessioni S.p.A. On 27 January 2006, Impregilo's Board of Directors approved

the proposed merger of the subsidiaries Tesco S.r.l. and

Impregilo Italia Concessioni S.p.A. with Impregilo S.p.A., once

Impregilo Italia Concessioni S.p.A. had been acquired by

Impregilo International Infrastructures N.V.

This merger will neither increase share capital nor involve any

share-swap arrangement, since the two companies being

incorporated are both wholly owned.

The merger, whose purpose is to simplify and rationalise the

Group's structure, is part of plans to redesign its organisational

set-up, as provided for in the new guidelines for the three-year

period 2005-2007.

Cancellation of Fibe S.p.A.'s projectfinance agreementOn 31 January 2006, Impregilo reached an agreement to cancel

the project finance agreement entered into by Fibe S.p.A.

Specifically, Impregilo S.p.A. agreed to acquire, on a non-

recourse basis, the sum of 174.8 million Euros (including

accrued interest) due to the banks WestLB AG and Banca OPI

S.p.A. by Fibe S.p.A. and originating from the first tranche of

173.5 million Euros being drawn down under the project finance

facility utilised over the course of 2003 by Fibe. At the same

time, measures were also taken to cancel the security package

pledged in relation to said project finance facility. At the same

time as the assignment took place, a loan agreement was thus

stipulated between Impregilo S.p.A. and Fibe S.p.A. for the same

amount.

Impregilo S.p.A. also entered into a medium/long-term loan

agreement for 173.5 million Euros with the same banks that

matures on 31 December 2012. The terms and conditions of the

loan include the following:

• semi-annual instalments for variable amounts of between 10

million Euros and 16 million Euros;

• a variable interest rate of six-month EURIBOR plus a spread

of 1.35% on 12.5 million Euros;

• a fixed interest rate of 4.97% (stemming from an interest rate

swap agreement) on the remaining 161 million Euros until 31

December 2011.

New contractsAs highlighted in the chapter dealing with the Constructions

Division, two important contracts were perfected after the end of

the year as follows:

• Thessaloniki Metro (Greece): in March 2006, the formal

mandate letter was provided by Attiko Metro S.A., the

company in charge of the construction and management of

Greece's underground transport systems, awarding the

contract for the realisation of Thessaloniki's automatic

underground system. The group of companies awarded the

job is made up of Impregilo, AEGEK (Greece), Seli, Ansaldo

ATSF and Ansaldo-Breda. The contract is worth 798 million

Euros in total, with the portion relating to civil works worth

around 500 million Euros.

• The Guaigui Dam (Dominican Republic): in February 2006, a

contract worth approximately US$ 60 million in total was

entered into with the Dominican Republic's National Water

Board (INDRHI) for the realisation of a water facility along the

Camu' River. Impregilo is part of the project with a 70%

interest in the consortium formed with a local firm. The

project involves the realisation of a dam and hydropower

facility, along with the necessary transmission lines.

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Awarding of the Messina Strait bridgecontract: appeal lodged with theRegional Administrative Tribunal of Lazio by rival firm ATI Further to a group of companies (led by Impregilo) being

provisionally awarded, on 12 October 2005, a contract to realise

the bridge over the Messina Strait along with the annexed road

and rail links, and following the formal awarding of the job by

way of a resolution carried by the Board of Directors of the

company Stretto di Messina S.p.A. on 24 November 2005, ATI -

a rival firm headed up by Astaldi - lodged an appeal in

December 2005 with the Lazio Region Administrative Tribunal.

With said appeal, it requested the annulment, further to

suspension, of the resolution carried by the Board of Directors of

Stretto di Messina S.p.A. that formally awarded the contract.

At the first hearing held on 23 December 2005, the President of

the Tribunal established the deadlines by which the various

documents would need to be submitted by the parties and set

the date for the next hearing.

During the hearing of 8 February 2006, the President of the

Lazio Region Administrative Tribunal advised the parties that any

decision had been adjourned until the next hearing, scheduled

for 8 March 2006.

During this next hearing, the Tribunal carried a ruling, with which

it rejected the suspension request and issued a sentence

ordering a preliminary investigation so as to carry a verdict in

this regard and in relation to costs, with the next hearing

scheduled for 21 June 2006.

Following the Tribunal's ruling, ATI (which is led by Impregilo)

immediately asked Stretto di Messina S.p.A. in writing to sign

the contract. The contract was stipulated on 27 March 2006.

Sale of Costanera Norte(motorway franchise in Chile)After the end of the year under review, on 15 March 2006,

agreements incorporating the terms and conditions of the final

offer made on 23 December 2005 were signed with Autostrade

S.p.A. and SIAS S.p.A. The documents signed on 5 August 2005

were therefore amended to incorporate all the terms of the final

offer accepted by Impregilo International Infrastructure in

December 2005, with an option also included in the contract

allowing Impregilo International Infrastructures N.V. to buy back

up to 10% of the share capital of the Chilean holding company

through which Autostrade and SIAS will acquire Costanera

Norte. This deal is still subject to the fulfilment of suspensive

conditions (pursuant to the agreement of the guarantors of

Costanera Norte's bond issue and the franchisor company),

which are expected to be met shortly, the original timeframe for

their fulfilment having been extended from 90 days to 130 days.

Imprepar - Iraq settlementOn 13 March 2006, a 7.2-million Euro cash offer relating to the

trade debt due to Imprepar by the Iraqi Government via the joint

venture Gimod, was formalised and made to the Settlement

Agent (CitiCorp). Acceptance and subsequent payment are

expected to be forthcoming by the end of March 2006.

Investigations conducted by the judiciaryOn 21 February 2006, the company was advised that a

preliminary hearing, pursuant to Article 419 of the Code for

Penal Proceedings, had been set for 3 April 2006. This was in

relation to the proceedings initiated by the Public Prosecutor's

Office before the Court of Monza, following which Impregilo

S.p.A, and similarly Imprepar (in liquidation), has been subjected

to preliminary investigations in relation to unlawful

administrative operations as a result of the crimes referred to in

Articles 25 (iii) points a) and r), 5 and 44 of Legislative Decree

231/2001. For further details, please refer to the information

provided in the section "Other information".


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FORESEEABLE BUSINESSDEVELOPMENTS

Given the way in which industrial operations have proceeded

and in the view of the company's jobs book, as well as the

measures currently being taken on the business and operations

front, in the absence of extraordinary events - above all within

non-core business activities - that are not foreseeable at

present, the restructuring and relaunch plan devised for the

three-year period 2005-2007 (presented to the market when

the capital increase was accomplished back in June-July 2005)

is expected to achieve its objectives sooner that had originally

been predicted and, therefore, enable a positive result to be

registered as early as financial year 2006.

RECENT DEVELOPMENTS RELATINGTO THE CAMPANIA USW PROJECT (Addition to the Report on Operations due to

events taking place after the date on which

the Financial Statements were approved by

the Board of Directors of Impregilo S.p.A. on 24

March 2006)

In the Gazzetta Ufficiale of 31 March last, tenders were called,

inviting bids for the awarding of waste disposal services in

Campania Region, as provided for by Legislative Decree

245/2005, subsequently converted into Law 21/2006.

Other than for what is indicated below, these contracts

incorporate the values of assets contained in the "promise of

sale agreements", signed by Fibe and Fibe Campania on 24

March, substantially confirming therefore the reasonable

recoverability prospects of said assets by the above companies

when drawing up the 2005 financial statements and

incorporated within the individual financial statements of

Impregilo, also approved by the company's Board of Directors on

24 March. (See the section of this report entitled "Campania

USW Project - Fibe and Fibe Campania").

Excepted here are assets with a value of around Euro 8.7

million, which have been excluded and in respect of which

problems could therefore arise when attempting to recover them

through the aforementioned tenders.

It should be noted, however, that the above value constitutes a

marginal fraction of the global amount of assets contained in the

promise of sale agreements mentioned above (around Euro 360

million). In any event, Fibe and Fibe Campania reserve the right

to evaluate the most appropriate methods and initiatives devised

to obtain complete consistency between the values incorporated

in the tenders and those previously determined and contained in

said promise of sale agreements, or any compensation that may

be obtained in this regard.

It should also be noted that, as part of the legal case underway

before the Court of Naples between the Government-appointed

receiver and Fibe and Fibe Campania, said receiver has recently

increased his requests for damages by a further Euro 415

million, which is due almost entirely to the alleged costs of

retreating or disposing of stored WDF outside of the region.

Fibe and Fibe Campania have reiterated their counterclaim for

damages and costs, which involves an amount that is higher

than the total amount being claimed by the counterparty.

According to the lawyers advising the companies in the case,

even the additional request for damages filed by the

Government-appointed receiver should be considered as

reasonably contestable. However, with regard to the issue of

stored WDF, it is worth considering the points set out in the

previously mentioned paragraph of this report entitled

"Campania USW Project - Fibe and Fibe Campania".

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CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP AS AT 31 DECEMBER 2005

AND SUPPLEMENTARY NOTES TO THE FINANCIAL STATEMENTS

CONSOLIDATEDINCOME STATEMENT

127

The figures presented for comparative purposes have been prepared in accordance with the accounting standards IAS/IFRS. Please refer to the

reconciliation schedules for a comparative description.

(amounts expressed in Euro/000s) Notes 31 December 2005 31 December 2004

Renues

Revenues 2,318,499 2,714,125

Other revenues 124,481 285,542

Total revenues 32 2,442,980 2,999,667

Costs

Raw materials and consumables 33 (372,511) (528,254)

Sub-contracting 34 (515,376) (771,458)

Other operating expenses 35 (988,173) (1,010,786)

Staff costs 36 (395,532) (382,380)

Amortisation, depreciation and write-downs 37 (425,789) (164,991)

Total costs (2,697,381) (2,857,869)

EBIT (254,401) 141,798

Financial income and charges

Result from shareholdings 38 39,374 67,800

Financial income/(charges) 39 (94,290) (199,934)

Foreign exchange gains/(losses) 40 6,354 (19,065)

Total financial income and charges (48,562) (151,199)

Pre-tax result (302,963) (9,401)

Taxes 41 (51,698) (83,985)

Result of ongoing business activities (354,661) (93,386)

Net result from assets held for sale 42 (11,685)

Net result attributable to the Group and minority interests (366,346) (93,386)

Minority interests 8,102 4,825

Net result attributable to the Group (358,244) (88,561)

Result per share (*)

From ongoing and ceased activities:

Base (0.76) (0.12)

From ongoing activities:

Base (0.75)

(*) The result per share is not provided on a diluted basis, since the conditions needed in order for the options to be exercised have yet to emerge.

CONSOLIDATEDBALANCE SHEET

Consolidated financial statements as at 31 December 2005

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Assets

Non-current assets

Tangible assets 1 519,626 553,901

Freely transferable assets 2 55,800 337,888

Intangible assets 3 63,363 78,379

Goodwill 4 26,105 26,291

Shareholdings 5 244,361 212,270

Non-current financial assets (*) 6, 18 70,364 68,022

Non-current amounts receivable from affiliates 7 30,613 29,851

Other non-current assets 8 134,138 237,875

Deferred fiscal assets 9 71,811 85,294

Total non-current assets 1,216,181 1,629,771

Current assets

Inventories 10 80,364 156,167

Goods being made to order 10 243,671 217,407

Trade receivables 11 980,278 936,132

Current amounts receivable from Group companies 12 145,669 213,434

Derivatives and other current financial assets (*) 13, 18 22,258 43,373

Other current assets 14 486,168 467,343

Cash at bank and on hand (*) 15, 18 566,703 467,665

Total current assets 2,525,111 2,501,521

Non-current assets held for sale 16 461,698 -

Total assets 4,202,990 4,131,292

(*) Items making up financial position.



129


Shareholders' equity

Share capital 17 708,996 384,040

Share premium reserve 17 301,965 28,994

Other reserves 17 65,453 20,190

Retained earnings/(losses) 17 (205,495) (145,928)

Result for the period 17 (358,244) (88,561)

Total Group shareholders' equity 512,675 198,735

Minority interests 4,002 12,922

Total shareholders' equity 516,677 211,657

Non-current liabilities

Bank loans and other loans (*) 18, 19 750,566 102,016

Bonds (*) 18, 20 - 225,581

Leasing liabilities (*) 18, 21 8,226 16,356

Staff severance fund 22 43,396 43,492

Non-current amounts payable to affiliates 23 10,385 15,131

Deferred fiscal liabilities - 5,779

Provisions for risks and liabilities 24 174,860 67,959

Other non-current liabilities 619 20,541

Total non-current liabilities 988,052 496,855

Current liabilities

Bank overdrafts and current portion of loans (*) 18, 25 378,273 821,586

Current portion of bond loans (*) 18, 26 - 549,290

Current portion of leasing liabilities (*) 18, 21 7,566 19,282

Derivatives and current financial liabilities (*) 18, 27 4,015 6,415

Down payments received for goods being made to order 28 588,705 600,220

Trade payables 29 832,869 900,563

Current amounts payable to affiliates 23 99,044 110,187

Other current liabilities 30 415,308 415,237

Total current liabilities 2,325,780 3,422,780

Liabilities directly associated with non-current assets held for sale 16 372,481 -

Total shareholders' equity and liabilities 4,202,990 4,131,292

(*) Items making up financial position.



CONSOLIDATEDCASHFLOW STATEMENT


130

of which: assets(amounts expressed in Euro/000s) held for sale Financial year 2005 Financial year 2004

Operating activities

Net profit for the year (11,685) (358,244) (88,561)

Amortisation of intangible assets 27,469 38,385

Depreciation of tangible fixed assets 9,283 96,145 83,063

Write-downs and provisions 614 299,887 112,019

Change in staff severance fund 23,863 1,105

Capital gains/(losses) (18,316) (65,397)

Decrease/(Increase) in deferred taxes 7,981 49,754

Result of companies measured by the equity method (248) (16,200) (351)

Total income statement (2,036) 62,585 130,017

Decrease/(increase) in inventories 30,749 43,383 137,272

Decrease/(increase) in trade receivables 10,796 (206,260) 59,562

(Decrease)/increase in down payments from clients 4,669 13,815 (37,578)

(Decrease)/increase in suppliers 5,429 (36,370) (193,970)

Decrease/(increase) in other assets/liabilities (29,176) 27,842 89,954

Total cashflow from operating activities 22,467 (157,590) 55,240

Cash generated/(absorbed) by operating activities 20,431 (95,005) 185,257

Investment activities

Net investments in intangible assets (10,787) (19,362)

Investments in tangible fixed assets (28,198) (133,699) (205,120)

Investments in financial assets (12,832) (30,329)

Realisable price or redemption price of non-current assets 54,664 103,261

Cash generated/(absorbed) by investment activities (28,198) (102,654) (151,550)

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of which: assets(amounts expressed in Euro/000s) held for sale Financial year 2005 Financial year 2004

Financial activities

Dividends received from companies measured at equity 9,627 9,842

Dividends distributed and contributions made to cultural initiatives (22,625)

Capital increase 593,855 19

Increase/(decrease) in bank loans and other financing 706,602 (113,856)

Bond loans redeemed (549,290) (200,000)

Bond loans taken out 10,945 10,945 11,338

Change in other financial assets/liabilities (3,473) (66,839)

Cash generated/(absorbed) by financial activities 10,945 768,266 (382,121)

Other changes, including changes in the consolidation structure (9,359) 20,990 (14,378)

Increase/(decrease) in cashflow (6,181) 591,597 (362,792)

Cash 61,617 467,665 677,041

Bank overdrafts and current portion of loans (6,190) (821,586) (668,170)

Total cash at start of year 55,427 (353,921) 8,871

Cash 49,246 615,949 467,665

Bank overdrafts and current portion of loans (378,273) (821,586)

Total cash at end of year 49,246 237,676 (353,921)

SCHEDULE OF CHANGES IN CONSOLIDATED EQUITY


132

Share premium reserve

(Amounts expressed in Euro/000s) share capital share additional total revaluation legalpremium expenses reserve reserve

reserve relating to capital

increase

As at 31 December 2003 384,029 28,986 28,986 1,345 21,939

Allocation of the year's result 1,620

Exercising of options/allocation to cultural initiatives 11 8 8

Distribution of dividends

Net foreign exchange differences arising from the conversion of accounts expressed in foreign currency

Minority interests

Other movements in third-party interests, including exchange rate differences

Result for the year

As at 31 December 2004 384,040 28,994 28,994 1,345 23,559

Allocation of the year's result (28,994) (28,994)

Capital increase 324,956 326,951 (24,986) 301,965

Net foreign exchange differences arising from the conversion of accounts expressed in foreign currency

Minority interests

Other movements in third-party interests,including exchange rate differences

Result for the year

As at 31 December 2005 708,996 326,951 (24,986) 301,965 1,345 23,559

Impregilo S.p.A., making use of the ability provided for in Article 4 of Legislative Decree 38 of 28 February 2005, has drawn up its individual financial statements inaccordance with current Italian accounting standards. A schedule reconciling the parent company's equity and net result with the equity and net result reported in theGroup's consolidated financial statements is not therefore provided.

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Other reserve

foreign- stock consolidation total retained net profit/ consolidated minority Totalexchange option reserve earnings/ (loss) for equity interests

fluctuation reserve (losses) the yearreserve

1,480 24,764 (121,879) 315,900 21,310 337,210

1,620 1,620 1,620

(300) (281) (281)

(22,325) (22,325) (22,325)

(6,194) (6,194) (6,194) (6,194)

(6,519) (6,519)

(1,424) (1,424) (1,869) (3,293)

(88,561) (88,561) (88,561)

(6,194) 1,480 20,190 (145,928) (88,561) 198,735 12,922 211,657

(59,567) 88,561

626,921 626,921

42,408 42,408 42,408 42,408

(8,102) (8,102)

2,855 2,855 2,855 (818) 2,037

(358,244) (358,244) (358,244)

36,214 2,855 1,480 65,453 (205,495) (358,244) 512,675 4,002 516,677

EXPLANATORY NOTES FOR THE GROUP


134

GENERAL SECTION

INTRODUCTIONThe consolidated financial statements as at 31 December 2005 have been prepared in conformity to the international accounting standards

represented by IFRS, as adopted by the European Union.

The consolidated financial statements have been prepared in accordance with the principle of historical cost, with the exception of derivative

instruments and financial assets held for sale, which are recognised at fair value. The carrying value of assets and liabilities that are the subject of

fair-value hedging transactions and would otherwise be carried at cost is adjusted in order to take into account the changes in the fair value

attributable to the risks being hedged.

The consolidated financial statements are presented in Euros, while amounts are expressed in thousands of Euros, unless indicated otherwise.

FORM AND CONTENT OF THE CONSOLIDATED FINANCIAL STATEMENTSThe consolidated financial statements of the Impregilo Group include the respective financial statements of the parent company, Impregilo S.p.A.,

and those Italian and foreign operating companies in which Impregilo S.p.A. directly or indirectly holds control.

For consolidation purposes, the financial statements used are those approved by the companies' respective shareholders or, where these are not

available, the draft accounts approved by their Boards. In the event that a company's financial year does not coincide with the calendar year,

appropriate interim situations are consolidated to reflect the reporting year adopted by the parent company.

The financial statements included in the consolidation process are prepared by adopting for each company the same accounting standards as those

of the parent company and by effecting any necessary consolidation adjustments in order to bring consistency to those items affected by the

application of different accounting standards.

The schedule of the companies and other concerns of the Impregilo Group included in the consolidation structure, together with tables presenting

the changes undergone by the consolidation structure during 2005, are provided as appendices at the end of this report.

To present its financial statements, the Group adopted the following choices:

• In the consolidated balance sheet, current assets and non-current assets and current liabilities and non-current liabilities are shown separately.

Current assets, which include cash and cash equivalents, are those that are due to be realised, transferred or utilised during the Group's normal

operating cycle. Non-current assets include credit balances that are due to be realised after more than twelve months, and include fixed,

intangible and financial assets, as well as prepaid taxes. Current liabilities include amounts receivable within twelve months and include the

current portion of non-current loans. Non-current liabilities include amounts receivable after more than twelve months and include loans

receivable, provisions relating to staff and deferred taxes.

• The consolidated income statement classifies costs by nature and highlights the year's result before financial charges and taxes. The net result

from ongoing activities and assets held for sale is also highlighted, as is the net result attributable to third parties (minority interests) and the net

result attributable to the Group.

135

• The consolidated cashflow statement reports the cashflow from operating activities, investment activities and financial activities separately. The

indirect method was adopted when preparing the cashflow statement.

CONSOLIDATION PRINCIPLESThe consolidated financial statements have been prepared by consolidating on a line-by-line basis the separate financial statements as at 31

December 2005 of Impregilo S.p.A. (the parent company) and those Italian and foreign companies in which Impregilo S.p.A. maintains control.

Control arises when the Group has the power to determine, directly or indirectly, a company's operating, business and administrative decisions and

to obtain the associated benefits. In general, the Group is presumed to hold control when it directly or indirectly holds more than half of a company's

voting rights.

In keeping mpanies over which Impregilo has joint control are consolidated by proportional consolidation.

Associated companies are valued by the equity method of accounting.

The financial statements used for consolidation have been adapted (standardised) and reclassified as appropriate, in order to bring them into line with

accounting standards and valuation criteria adopted by the Group, in accordance with the requirements of the IAS/IFRS standards currently in force.

The financial statements used for conversion purposes are those expressed in the functional currency (represented by local currency or another

currency in which the majority of business transactions and assets and liabilities are denominated).

Please note that the functional currency of most foreign branches is the Euro, since it is the main currency used in the operations and the running

of said branches.

Financial statements expressed in foreign currency are converted into Euros by using year-end exchange rates in the case of balance-sheet items

and the average exchange rates in the case of income-statement items.

Any differences stemming from the conversion of opening net equity to year-end exchange rates is carried under the exchange-rate conversion

reserve.

The following exchange rates were used to convert financial statements expressed in foreign currency into Euros:

In the event of any equity interests being subsequently disposed of, the value of any cumulative conversion differences is reported in the income statement.

Currency 31.12.2005 31.12.2005 31.12.2004 31.12.2004Period-end Average Period-end Average

United States - USD 1.1797 1.2441 1.3621 1.2439

United Kingdom - GBP 0.6853 0,6838 0,7051 0,6787

Switzerland - CHF 1.5551 1.5483 1.5429 1.5438

Argentina - ARS 3.5727 3.6352 4.0460 3.6591

Brazil - BRL 2.7432 3.0344 3.6143 3.6335

Chile - CLP 604.5180 697.0020 759.0850 756.9580

Peru - PEN 4.0558 4.0966 4.4689 4.2429

Venezuela - VEB 2,533.1700 2,620.6600 2,608.6900 2,337.2000


136

In keeping with what is permitted under IFRS 1, cumulative conversion differences as at the date of the first-time adoption of IFRS have been

reclassified under the equity item "Retained earnings/(losses)", and will not therefore be reported in the income statement should the equity interest

in question subsequently be disposed of.

The consolidation principles adopted may be summarised as follows:

• subsidiary companies whose accounting standards are in line with Group standards are consolidated on a line-by-line basis, meaning that:

(i) the assets and liabilities, and costs and revenues of the financial statements of subsidiary companies are assumed for their full amounts,

regardless of the size of investments held in the companies concerned;

(ii) the carrying value of shareholdings is eliminated against the share of net equity effectively held through said investments;

(iii) relationships between companies consolidated on a line-by-line basis affecting their respective balance sheets and income statements,

including dividends distributed within the Group, are elided;

(iv) minority interests are shown under the heading used for this specific purpose under equity; similarly, the share of profit or loss attributable to

third-party shareholders is reported separately in the income statement.

• investments in associated companies are valued by the equity method, whereby their carrying values are adjusted to take the following factors

into account:

(i) the investor company's share of the economic results of the investee company realised after the date of acquisition;

(ii) amendments stemming from changes in the investee company's equity that have not been carried to the income statement in accordance

with the standards of reference;

(iii) dividends distributed by the investee company;

(iv) any goodwill paid at the time of the acquisition (measured by adopting the criteria indicated in the section dealing with goodwill under the

paragraph "Valuation criteria");

(v) the share in the result arising from application of the companies valued by the equity method are carried in the income statement;

(vi) wherever necessary, standardisation to Group accounting standards is carried out.

• investments in jointly controlled entities are consolidated by the proportional method, whereby the proportional share of assets and liabilities, and

costs and revenues of the accounts of jointly controlled entities is assumed.

Dividends, revaluations, write-downs and losses on investments in companies included in the consolidation area, as well as capital gains, capital

losses on the inter-group disposal of investments in companies included in the consolidation area are eliminated.

Gains and losses arising from transactions between companies included in the consolidation structure, which are not realised directly or indirectly

through transactions with third parties, are eliminated on the basis of the percentage held in the companies concerned.

137

BUSINESS COMBINATIONSThe acquisition of subsidiaries is computed in accordance with the acquisition method described in IFRS 3. The cost of an acquisition is determined

by the sum of fair values as at the date on which the control of the assets acquired and liabilities incurred or assumed, and the financial instruments

issued by the Group is obtained in exchange for control in the business acquired, plus costs that are directly attributable to the business combination.

The assets, liabilities, and identifiable potential liabilities of the business acquired that meet the conditions established for them to be carried in

accordance with IFRS 3 are recognised at their fair value as at the date of their acquisition, with the exception of non-current assets (or groups of

assets in the process of being sold) that are classified as "assets held for sale", in accordance with IFRS 5. The latter are recognised and measured

at the lower of fair value and acquisition value less costs attributable to their sale.

Goodwill generated on an acquisition is carried as an asset and initially measured at cost, which is represented by the excess cost paid over the

Group's share in the current values of the assets, liabilities, and identifiable potential liabilities recorded. If, after these values have been

redetermined, the Group's share in the current values of the assets, liabilities, and identifiable potential liabilities exceeds the cost of the acquisition,

the excess is immediately recognised in the income statement.

The interest of minority shareholders in the business acquired is initially measured for the share they hold in the current values of the assets,

liabilities, and identifiable potential liabilities recorded.

Where a business combination is accomplished in several stages through later acquisitions of shares or quotas, every transaction is treated

separately by using the cost and information relating to fair value prevailing as at the date of each transaction, in order to determine any other quota

of goodwill needing to be provided for.

When a later acquisition enables control to be obtained in the company concerned, the interest previously held is revalued by referring to the fair

value of assets, liabilities, and identifiable potential liabilities, determined as at the date of this later acquisition. The balancing entry of this revaluation

is carried as part of equity pertaining to the Group. Acquisitions effected after control has been obtained no longer give rise to the fair value of assets,

liabilities, and identifiable potential liabilities being revalued. The positive or negative difference arising between purchase cost and the

complementary share acquired in the business's net assets is carried directly under Group equity.

The acquisition or sale of quotas that do not involve control being acquired or lost is not covered by the IFRS currently in force. The Group, while

waiting for amendments to be made to current requirements or for interpretations to be issued by the IFRIC, is reporting the difference between cost

paid and the effective share of equity acquired under the item "goodwill".

In the event of a sale, the difference between the selling price and the carrying value of the assets sold is carried in the income statement.


138

ACCOUNTING STANDARDS AND VALUATION CRITERIAThe accounting standards and valuation criteria adopted when producing the consolidated financial statements of the Impregilo Group are those laid

down by the international accounting standards IAS/IFRS, the latter being consistent with those adopted the previous year, except for the adoption

of new/revised standards that are compulsory from 1 January 2005, as presented below.

TRANSITION TO INTERNATIONAL ACCOUNTING STANDARDS AND THE FIRST-TIMEADOPTION OF IFRSThe date of transition to IFRS for the Impregilo Group is 1 January 2004, with the Group drawing up an opening balance sheet as at said transition

date, while IFRS were adopted for the Impregilo Group on 1 January 2005.

By virtue of the options offered by Legislative Decree 38/2005, the parent company Impregilo S.p.A. chose not to adopt international accounting

standards IFRS to prepare its individual financial statements for the year ending 31 December 2005. The charts of account of the parent company

Impregilo S.p.A., which are included in these financial statements, have therefore been prepared in accordance with Italian accounting standards.

The adoption of IFRS by the parent company to prepare its own individual financial statements for has been deferred to 1 January 2006.

In accordance with the recommendations of the CESR (Committee of European Securities Regulators) and the CONSOB Regulation on Issuers, the

appendix attached hereto outlines the impact determined by the conversion to international accounting standards on the consolidated balance sheet

and financial situation, business performance and consolidated cashflow statements of the Group as at 1 January 2004 and 31 December 2004.

With this purpose in mind, reconciliations, accompanied by explanatory notes, of equity - as at both the transition date of 1 January 2004 and 31

December 2004 - with the result for financial year 2004 are provided, as obtained from the consolidated financial statements prepared in

accordance with Italian accounting standards and from the same document prepared in accordance with the new international accounting

standards.

The reconciliations of equity and the year's result as at 1 January 2004 and 31 December 2004 have been audited by the accountancy firm Reconta

Ernst & Young S.p.A.

The opening balance sheet has been prepared in conformity to the requirements of IFRS 1 ("First-time Adoption of International Financial Reporting

Standards"), or rather:

• by recognising all assets and liabilities that need to be reported under IFRS;

• by not recognising as assets and liabilities those elements whose reporting is not permitted under IFRS;

• by reclassifying balance-sheet entries in accordance with IFRS requirements; and

• by adopting IFRS when measuring all assets and liabilities being reported.

The valuation criteria adopted for opening balance sheets do not differ from the accounting standards in force as at 31 December 2005 due to the

new standards being issued by the IASB or the interpretations issued by the IFRIC.

During its transition to IFRS, the Impregilo Group adopted a number of compulsory exceptions and optional exemptions when retroactively applying

international accounting standards.

139

When applying IFRS 1, the following optional exemptions were adopted:

• Business combinations: the Impregilo Group decided not to apply retroactively IFRS 3 ("Business Combinations") to those business acquisitions

taking place prior to 1 January 2004. As a result, the goodwill generated on acquisitions preceding transition to IFRS has been left at the previous

value that was determined under Italian accounting standards, subject to any impairment losses being verified and reported, as required under

IAS 38.

• Cumulative conversion differences: the Impregilo Group has availed itself of the possibility of setting to zero all cumulative conversion

differences existing as at the date of transition to IFRS and stemming from the consolidation of foreign subsidiaries and associated companies.

Capital gains or capital losses arising from the future disposal of foreign subsidiaries and associated companies will include the conversion

differences determined after the date of transition to IFRS.

• Measurement of tangible and intangible assets: after being initially recorded at cost, under IAS 16 and IAS 38, tangible and intangible

assets may be measured at cost (and depreciated/amortised) or at fair value. The Group has chosen to adopt the cost model of accounting.

• Employee benefits: the Group has decided not to adopt the so-called "corridor method" and to carry all actuarial gains and losses to the income

statement, following its first-time adoption of IAS 19 as at 1 January 2004.

• Monetary revaluation: it should be noted that an investment has benefited from monetary revaluation pursuant to Law 72/83 and has therefore

been considered as a "revalued cost" as a replacement for "fair value" as at the transition date.

The Impregilo Group has decided to adopt the standards IAS 32 and 39 with effect from 1 January 2004.


140

VALUATION CRITERIA

Non-current assets

Property, plant and machineryThe Impregilo Group, as mentioned previously, has chosen to report property, plant and machinery at purchase or production cost, less accumulated

depreciation and any impairment.

Depreciation is calculated by the straight-line method using rates reflecting the economic benefit and wear and tear of assets, determined in relation

to the residual useful life of assets. The annual depreciation rates applied are as follows:

Category Depreciation rate

Land 0%

Buildings 3%

Plant and machinery 10% - 20%

Industrial and commercial equipment 25% - 40%

Other tangible assets 12% - 25%

Land, buildings, plant and machinery whose accounting value will be recovered mainly through their sale (rather than through their continuous use)

are measured at the lower of carrying value and fair value less disposal costs. Assets classified as "held for sale" must be immediately available for

sale and their disposal must be highly likely (or rather, there are already commitments to this effect), while their transfer value must be reasonable

in relation to their fair value.

Assets acquired as a result of business combinations are recognised at their fair value as at the acquisition date, which may be adjusted within the

twelve months that follow thereafter.

After an asset has been initially reported thus, it is measured by the costing method and depreciated in line with its useful life, less any impairment losses.

When an asset consists of components of significant value with different useful lives, recognition and subsequent measurement are effected

separately.

The carrying value of non-current assets is audited in order to ascertain any possible impairment losses, on an annual basis or whenever events

arise or there are changes in the prevailing situation that suggest that book value may not be recovered. Please refer to the paragraph "Impairment

of assets" for details of the auditing procedure followed.

The company has adopted the alternative method when computing financial charges that are directly imputable to the acquisition or construction

of an asset, where said charges are capitalised as part of the cost of the asset, within the limits of recoverable value. As required under IAS 23,

"Financial Charges", the Group has adopted this method to all "qualifying assets" provided for therein.

Financial charges are capitalised from the time the costs borne to acquire an asset and related financial charges start to be incurred, and the

activities needing to be undertaken to put the asset in a position to be used are underway.

Costs that have been set aside but have yet to be incurred in respect of "qualifying assets" should be excluded when determining the amount to be

capitalised.

The capitalisation of financial charges should be suspended during periods when development activities are interrupted.

141

Moreover, the capitalisation of financial charges is interrupted when all the activities needing to be undertaken before a "qualifying asset" can be

introduced to operations have been substantially completed.

The costs incurred after an asset has been acquired are only capitalised if they increase the same asset's future economic benefits. Any other costs

incurred are carried to the income statement when incurred.

Maintenance costs of an ordinary nature are charged in full to the income statement relating to the period in which they have been incurred.

Maintenance costs of an extraordinary nature recurring at regular intervals are capitalised when the criteria for their capitalisation are duly satisfied.

The costs to dismantle and restore fixed assets used in jobs currently underway, where foreseeable and objectively determinable, are added to the

values of the assets to which they refer and depreciated in proportion to the stage of completion reached by the contracts in question.

Leased assetsAssets held under leasing agreements, by way of which all ownership-related risks and benefits are substantially transferred to the Group, are

recognised as Group assets and carried as part of "Property, plant and machinery", while the associated liability towards the lessor is reported in

the balance sheet as part of borrowing. The rent payable is broken down into financial cost (charged to the income statement) and the repayment

of principal (allocated to the balance sheet and used to reduce borrowing). The value of a leased asset is based on its fair value or, where lower, on

the present value of rent charges.

Capitalised leased assets are depreciated over a period of time defined as the shorter of their estimated useful life and the term of their underlying

leasing agreements.

Those leasing agreements under which the lessor retains all risks and benefits typically associated with owning the asset concerned are regarded

as "operating leases". The initial negotiation costs incurred for this type of agreement are considered to add value to the cost of the leased asset

and are carried over the term of the leasing agreement in such a way to offset the revenues generated by the arrangement. Rents in respect of

operating leases are charged to the income statement on a straight-line basis over the term of the agreements themselves.

Freely transferable assetsFreely transferable assets pertaining to concession arrangements are covered by a draft interpretation that is presently being examined by the IFRIC.

While waiting for this interpretation to be adopted, the Impregilo Group has not amended its own principle for the measurement of concession

arrangements, which is based upon the best accounting practice currently in force.

The approval of the above interpretation, expected to be forthcoming in 2006, with the possibility of its being adopted before time, could lead to

significant changes in the figures presented in the accounts as at 1 January 2004 and subsequent period-ends.

At present, freely transferable assets are measured at cost. When reporting freely transferable assets, the financial charges and general costs that

may be capitalised during their creation, as defined in the standard regarding property, plant and machinery, are also included.

When adopting IFRS as at 1 January 2004, the Group also set about eliminating those capitalised costs (primarily start-up costs) that do not fulfil

the conditions for being reported under current IFRS requirements.

The carrying value of freely transferable assets also includes margins stemming from work carried out within the Group. This is because such jobs

are awarded via contracts at market value and may be treated in the same way as work undertaken on behalf of outside parties, given that the

assets thus realised will need to be transferred free of charge at the end of the concession period to the body granting the concession itself.

Freely transferable assets are depreciated over the term of the concession in keeping with the economic life of the assets in question. Any provision

for the cost of restoring or replacing freely transferable assets is carried as part of provisions for risks and liabilities.


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While waiting for the IFRIC (International Financial Reporting Interpretation Committee, the body responsible for interpreting international standards)

to issue its interpretation for freely transferable assets, the assets and liabilities, and income and costs related to concessions under which plant

and equipment realised by the Group are freely transferred have been adjusted as highlighted above, and remain classified in the accounts as they

were previously, i.e. as part of tangible fixed assets.

GoodwillGoodwill acquired through a business combination is made up of the extra cost paid for the combination over the effective share of equity at current

values, as per the identifiable values of the assets, liabilities and potential liabilities acquired.

After being initially measured, goodwill is measured at cost less accumulated impairment losses.

Goodwill relating to acquisitions taking place either before or after 1 January 2004 is not amortised. The recoverability of carrying value is verified

at least annually, and in any event whenever events take place that lead to a reduction in value being presumed, in accordance with the provisions

of IAS 36, "Impairment of Assets".

For impairment purposes, the goodwill acquired through business combinations is allocated, from the date of acquisition, to each of the Group's

cash generating units (or groups of cash generating units) that are expected to benefit from the synergistic effects of the acquisition in question.

The value of goodwill will be monitored within each such unit for internal management purposes.

Impairment is determined by defining the recoverable value of the cash generating unit (or group of cash generating units) to which goodwill is allocated.

When the recoverable value of the cash generating unit (or group of cash generating units) is lower than accounting value, an impairment loss is

recognised. Where goodwill is attributed to a cash generating unit (or group of cash generating units) whose asset is partially disposed of, the goodwill

associated with the asset thus sold is considered for the purpose of determining any capital gain or loss arising from the transaction. In such circumstances,

the goodwill transferred is measured by referring to the values of the asset sold compared with the asset still held in respect of the same unit.

Other intangible assetsOther intangible assets purchased or produced in-house are carried on the assets side of the balance sheet, as stipulated in IAS 38, "Intangible

Assets", when their use is likely to generate future economic benefits and the cost of a given asset may be determined by reliable means. Such

assets with a defined useful life are measured at purchase or production cost and depreciated systematically over their estimated useful life. The

recoverability of their carrying value is verified by adopting the criteria indicated in the section "Impairment of Assets".

The amount by which purchase cost exceeds the Group's effective share in the net fair value of high-speed businesses is reported as part of "Other

intangible assets" and refers largely to contracts contained in the jobs books of said businesses. Depreciation is calculated in proportion to the stage

of completion reached in the contracts themselves.

Additional charges pertaining to capital increases are allocated to equity to reduce the value of share capital less any deferred fiscal effect.

Additional charges pertaining to debt transactions are allocated to liabilities to reduce the value of the actual loans received, as per the paragraph

"Loans and bond loans".

ShareholdingsInvestments in companies other than subsidiaries, affiliates and joint ventures, which are reported under the consolidation structure, are recognised

at the time they are acquired as part of "investments in shareholdings".

Said investments are measured at fair value or rather at cost in the case of unlisted shareholdings or shareholdings for which fair value is not reliable

and cannot be determined, adjusted to take into account impairment losses in accordance with IAS 39.

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Other non-current assetsOther non-current assets relate mainly to receivables and claims pertaining to contracts that have already been completed or are in the process of

being completed, as in the case of Imprepar S.p.A. (a company in liquidation). Under the company's liquidation programme, said claims are expected

to be realised more than twelve months after the end of the financial year.

These assets are measured at estimated realisable value by setting up a provision that is used to decrease their values under the relevant balance-

sheet heading. Claims are reported solely for amounts that have accrued, and for the portion that may be reasonably regarded as recoverable. The

estimated realisable value of such assets includes the financial component stemming from the time value of deferred debt-recovery forecasts.

Impairment of assetsWhenever there is any indication that a tangible asset or intangible asset may be impaired, the recoverable amount of the asset concerned needs

to be estimated, in order to determine the extent to which it may need writing down. Goodwill and other intangible assets with an indefinite life are

tested for impairment on an annual basis.

An asset's recoverable amount is the higher of its fair value less costs of disposal and its value in use.

In the absence of a binding sale agreement, fair value is based on the amounts expressed by an active market and/or recent transactions, or rather

on the best information available to reflect the amount that the company could obtain from the sale of the asset in question.

Value in use is determined by discounting the present value of estimated future cash flows expected to arise from the use of the assets (gross of

taxes) and - where reasonably determinable - from its disposal at the end of its useful life. This "time-discounting" is carried out by applying a pre-

tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.

Recoverable amount is determined for the individual asset or for the smallest, identifiable group of assets that generates cash inflows from

continuing use (a "cash-generating unit"). An impairment loss is recognised whenever recoverable amount is below carrying value. Where the

reasons for carrying out write-downs in the first place are no longer justifiable, the assets concerned (goodwill excepted) are revalued and the

reversal of the impairment loss thus effected is carried to the income statement as a revaluation (restoration of value). The asset is revalued at the

lower of recoverable amount and carrying value gross of any write-downs previously effected and less any depreciation (or amortisation) that would

have been set aside had it not been written down.

Current assets

Inventories: goodsGoods are carried at the lower of average cost of purchase and market value.

For the purposes of this measurement process, cost, used as the point of reference, includes additional charges that are directly imputable, while

market value is determined by taking the replacement value of goods into account.

Any write-downs are eliminated in future years where the reasons for effecting them originally cannot be justified.

Work in progress and revenues from long-term contractsInventories in the form of "work in progress" reflect jobs carried out net of invoices issued in advance to a client while the contract is being carried

out. Since a fee is paid on a definitive basis, the turnover arising from this - including down payments - is recognised in the income statement under

the item "revenues from the sale of products and the provision of services", with the value of inventories consequently undergoing change.

Inventories are reduced by way of the contractual risk provision, set aside to cover against any possible charges and losses in contractual

arrangements for both direct initiatives and joint ventures.


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Work in progress arising under construction contracts is measured on the basis of the fees defined with clients in proportion to the stage of

completion of contract activity.

Revenues and costs relating to construction contracts are recognised by the percentage of completion method of accounting.

This method involves contract revenues and costs being recognised as costs and revenues in the profit and loss account for the period in which the

work is realised.

The method used to calculate the percentage of completion is the cost-to-cost method, determined by applying the percentage of completion to the

aggregate revenues expected, forming a ratio between costs incurred and aggregate costs expected.

Given the technical complexity, size and duration of projects, additional fees constitute elements that really must be taken into consideration and

assessed before any agreement is formalised with the counterparty. In evaluating work in progress, requests for any fees that in addition to those

contractually agreed need to be taken into account, if their quantification and actual emergence is reasonably certain.

Where events taking place after the reporting date of the accounts, but before the date of their approval, provide further evidence as to possible

gains or losses on a contract, this additional evidence is taken into account when determining contractual revenues or costs to be covered in order

to incorporate gains or losses.

Whenever the costs budgeted for the completion of a contract are higher than expected revenues, the ensuing loss is computed in full to the financial

year in which the company becomes aware of it.

Contract costs, which are part of the cost-to-cost measurement process, may be classified as follows:

• Pre-operations costs, incurred during the initial stage of a contract prior to construction work getting underway, are included within this category:

specific planning, design and study costs that relate to the contract in question, costs for the organisation and commencement of production,

and worksite installation costs. These pre-operations costs are included in the stage of completion calculation, and become part of the cost-to-

cost measurement process from the time they are incurred. During the initial stage of the contract, these costs are suspended in the value of

work in progress, where recoverable, without any margin being recorded, whenever the contract's margin cannot be reliably estimated.

• Post-operations costs: this category covers the costs of clearing a worksite that are generally borne after a contract has been wrapped up to

remove installations (or an entire building site) and to recover systems and equipment from the site or to transfer them to another site. Also

included as part of this item are losses on abandoned materials and the costs of transporting unused materials. These costs are to be included

in the costing budget and therefore, where incurred over the course of a contract, determine the stage of completion reached themselves. No

special provisions are therefore carried to the income statement.

• Costs arising from service contracts needing to be fulfilled after the completion of a job: it is possible for contracts to require service contracts

to be fulfilled after the completion of a contract.

Cases of this would include, for example, assistance and supervision while a plant/system is first up and running, scheduled maintenance work, etc. If

the contract does not provide for additional fees that are specific to such services, and where from an accounting perspective the contract can be

"closed" (generally, a contract is closed upon completion of a project and upon acceptance by the client), the costs needing to be incurred in order to

provide such services should be set aside at the time the contract is closed in the ledger. These costs are included for cost-to-cost calculation purposes,

and should therefore be included in projected aggregate costs, constituting - at the time they arise - "completion" for revenue calculation purposes.

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Real-estate venturesReal-estate ventures are measured at the lower of cost, inclusive of additional costs incurred, and presumed realisable value. Costs incurred are

made up of the costs to purchase the areas of property and related additional charges, realisation costs and financial charges attributable to the

venture up until the venture is completed.

Trade receivables and other receivablesTrade receivables are recorded at face value less any bad debt provision, which is estimated by considering the probability of the full amount

receivable actually being collected. Amounts that cannot be collected are written down upon being identified thus.

Should the date on which these amounts are received be extended over time and exceed the normal commercial terms adopted within the sector,

then said receivables are discounted to their present value by the amortised cost method.

Assignment of receivablesThe Impregilo Group assigns some of its trade receivables, loans and fiscal receivables by way of recourse factoring arrangements. This type of

arrangement does not meet the prerequisites of IAS 39 in order for the assets concerned to be eliminated from the balance sheet, since the risks and

benefits associated with them are not substantially transferred. As a result, all receivables assigned by way of factoring that do not meet said criteria

continue to be carried in the Group's balance sheet, even though they may have been legally transferred elsewhere. A financial liability for a similar

amount is computed in the consolidated financial statements as "Payables arising from advances received for assigned receivables". The gains and

losses arising from the assignment of these assets are recognised when the assets themselves are removed from the Group's balance sheet.

Financial instrumentsThe Group's activities are exposed primarily to the financial risk arising from changes in exchange rates and interest rates and in the forward

purchasing of commodities (metal futures: copper and nickel) for a number of companies operating in the Environment Division. The Group uses

derivatives (mainly forward currency contracts) to hedge the risks stemming from changes in foreign currencies in certain irrevocable commitments

and in foreseen future transactions. Interest-rate risks originate from bank loans.

Derivatives are only used for hedging purposes, in order to reduce exchange-rate risk, interest-rate risk and the risk of changes to market price. In

keeping with the requirements of IAS 39, derivatives may only be measured as per the procedures established for hedge accounting when, at the

start of a hedging arrangement, they are formally designated as hedging instruments and there is actual documentation for the hedging relationship

itself in place, it is assumed that the hedging arrangement is highly effective, effectiveness can be reliably measured and the hedging arrangement

itself is highly effective during the various accounting periods for which it is designated.

All derivatives are measured at present value, as established under IAS 39.

When financial instruments bear the features needed in order to be measured by hedge accounting, the following forms of accounting treatment apply:

• Fair value hedge - if a derivative is designated as a hedging instrument against exposure to the changes in the present value of a balance-

sheet asset or liability that are attributable to a specific risk that may have an impact on the income statement, the profit or loss arising from

subsequent assessments of the present value of the hedging instrument used are recorded in the income statement. The profit or loss on the

hedged entry, attributable to the risk being hedged, alters the carrying value of this entry and is recorded in the income statement.


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• Cash flow hedge - if a derivative is designated to hedge exposure to the variability of cash flows from an asset or liability carried in the balance

sheet or from an expected transaction that is highly likely and that could have an impact on the income statement, the effective portion of profits

or losses on the financial instrument is allocated to equity. The accumulated profit or loss is removed from equity and allocated to the income

statement in the same period that the transaction being hedged is recorded. The profit or loss associated with a hedging arrangement, or that

portion of the hedging arrangement that has become ineffective, is carried to the income statement immediately. If a hedging instrument or

hedging arrangement is closed, but the transaction being hedged has yet to be accomplished, the accumulated profits and losses, recorded until

then under equity, are recorded in the income statement at the time the transaction to which they refer is actually accomplished. If the transaction

being hedged is no longer deemed likely, then the profits and losses yet to be realised (and suspended under equity) are immediately allocated

to the income statement.

If hedge accounting measurement cannot be applied, as a result of the formal and substantial requirements laid down by IAS 39 not being met, the

profits or losses arising from the derivative being valued at present value are immediately allocated to the income statement.

Cancellation of financial assets and liabilities

Financial assetsA financial asset (or, where applicable, part of a financial asset or parts of a group of similar financial assets) is removed from the balance sheet

when:

• the rights to receive cash flows are removed;

• the Group retains the right to receive cash flows from the asset, but has assumed the contractual obligation to pay them in full and without delay

to a third party;

• the Group has transferred to right to receive cash flows from the asset and (a) has transferred substantially all the risks and benefits associated

with the ownership of the financial asset or (b) has neither substantially transferred or retained all the asset's risks and benefits, but has

transferred control of the same.

In those cases where the Group has transferred the rights to receive cash flows from an asset and has neither substantially transferred or retained

all the asset's risks and benefits, or has not lost the control it holds over the same, the asset is recognised in the Group's balance sheet to the extent

of its residual involvement in the asset itself. This residual involvement, which takes the form of a guarantee in respect of the transferred asset, is

measured at the lower of the asset's initial accounting value and the maximum fee that the Group could be required to pay.

In those cases where this residual involvement takes the form of an option issued and/or acquired in respect of the transferred asset (including options

settled with cash or by similar means), the size of the Group's involvement equates to the amount of the transferred asset that the Group may be able

to buy back. However, in the case of a put option issued in respect of an asset measured at fair value (including options settled with cash or by similar

means), the size of the Group's residual involvement is limited to the lower of the fair value of the transferred asset and the option's strike price.

Financial liabilitiesA financial liability is removed from the balance sheet when the obligation underlying it is removed, annulled or fulfilled.

In those cases where an existing financial liability is replaced with another of the same lender, under substantially different conditions, or the

conditions of an existing liability are substantially amended, this exchange or amendment is treated as if the original liability had been removed from

the balance sheet and a new liability is recorded, with any differences between accounting values recognised in the income statement.

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Cash at bank and on hand and cash equivalentsThe above caption includes cash on hand and sight bank deposits, as well as other treasury investments with an original foreseen maturity of no

more than three months. For the purpose of the cash flow statement, cash is shown net of overdrafts recorded as at the reporting date of the

accounts.

Staff severance fundThe staff severance fund is reported at the actuarial value of Group liabilities determined in conformity to current legislation, collective labour

agreements and supplementary company agreements. Actuarial assessment activities, based on demographic, financial and staff turnover

assumptions, are entrusted to professional actuaries. Gains and losses arising from actuarial calculations are carried to the income statement as a

cost or revenue.

Employee benefitsCurrent employee benefits, or rather those due within twelve months of the end of the year in which employees have served with the company, are

computed as a cost and as a liability for an amount equal to the undiscounted sum of what needs to be paid to the member of staff in exchange

for the service rendered by him. Long-term benefits, such as emoluments to be paid after more than twelve months of the end of the year in which

employees have served with the company, are computed as a liability for an amount equal to the present value of benefits as at the reporting date

of the accounts.

Share-based payment (stock options)The Group has applied the principles laid down by IFRS 2 - "Share-based Payment". In accordance with transitory principles, IFRS 2 has been

applied to all stock options allocated after 7 November 2002 that have not matured as at 1 January 2005. Stock option plans only require the

physical delivery of shares on the date on which options are exercised.

Share-based payments are measured at the fair value recorded as at allocation date. This value is imputed to the income statement on a straight-

line basis over the period during which the rights mature. This entry is based on an estimate made by management with regard to those stock

options that will effectively be accrued by staff entitled to them.

When adopting the fair value measurement principle, the binomial method is used to measure options. The useful life used in the model has been

adjusted in line with the estimate made by management in order to take into account the effects of shares not being transferable, the restrictions

imposed on the exercising of rights and considerations regarding the conduct of the individuals concerned.

Loans and bond loansLoans are initially recognised at cost, which is equal to the fair value of the amount received under a loan less additional charges incurred to obtain it.

After this initial recognition process, loans are subsequently measured at amortised cost. This involves loans being amortised by applying the

effective internal interest rate, which is represented by the rate that makes the level of cash flow expected and the initial reporting value equal, at

the time loans are initially recognised.

Amortised cost is calculated by considering issue costs and any discount or premium foreseen at settlement.

The economic effects of loan write-downs on the amortised cost of loans are carried under the item "Financial income/(charges)".


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Income taxes Current taxes are set aside in accordance with the tax rates and legislation prevailing in both Italy and the other countries in which the Group

operates, by making the best possible estimate of taxable income for the period.

The tax liabilities and assets of individual companies are set off against one another where set-off is permitted by law.

Since financial year 2004, the parent company Impregilo S.p.A., together with some of its Italian subsidiaries, has been adopting the "national fiscal

scheme of consolidation", which is governed by conditions set out in a special regulatory agreement between companies partaking in said scheme.

As a result, the consolidated financial statements reflect the Group's global fiscal exposure following the elimination of inter-group relationships

arising as a result of taxable bases undergoing set-off.

Under the Group's own regulations, fiscal losses transferred by subsidiaries will be recognised to them up to the amounts that they could have

utilised in the absence of the aforementioned fiscal scheme of consolidation. In its absence, the benefit will be enjoyed by the parent company,

except where partial recognition is made to the company transferring the losses. Therefore, the lower taxes paid by Impregilo following the adoption

of the fiscal scheme of consolidation are prudently carried in a provision to be utilised to cover whatever is recognised to the investee companies

that have transferred their fiscal losses.

Assets in the form of prepaid taxes and liabilities in the form of deferred taxes are calculated by considering the temporary differences between

asset amounts and liability amounts recorded in the balance sheet and the amounts recognised in respect of the same items for fiscal purposes.

Assets in the form of prepaid taxes are recorded when the Group feels that they are likely to be recovered.

The value of prepaid taxes is re-examined at the end of every reporting period and is reduced to the extent that sufficient fiscal earnings are no

longer likely to become available in the future in order for some of all of this credit to be used.

Deferred fiscal assets and liabilities are measured on the basis of the tax rates that are expected to be applied in the year in which the assets will

be realised or the liabilities will be cleared, considering the tax rates in force and those already introduced or substantially introduced as at the

reporting date of the accounts.

Assets in the form of prepaid taxes and liabilities in the form of deferred taxes are carried as part of non-current assets and liabilities respectively

and are set off for each company separately where they concern taxes that may be set off. Where positive, the resulting balance is allocated to the

item "Deferred fiscal assets"; where negative, it is allocated to the item "Deferred fiscal liabilities".

Where transactions are allocated directly to equity, the deferred or prepaid fiscal effect is also allocated to equity.

Own sharesOwn shares are allocated to equity, which they reduce directly. The original cost of the company's own shares and the income arising from any

subsequent share sales are recognised as equity movements.

Provisions for risks and chargesIn accordance with the provisions of IAS 37, the Impregilo Group makes an allocation to provisions for risks and charges where the following

conditions are met:

• the Group or one of the companies belonging to it has assumed a current, legal or implicit obligation as at the reporting date of the accounts,

which involves a sum being paid as a result of events arising in the past;

• the fulfilment of obligations (through financial payment) must be probable;

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• the amount of the obligation is reasonably estimable (undertaking of best possible estimate of future liability).

When the financial effect of time is significant and the estimation of the dates on which obligations are paid is reliable, the value recognised as a

provision is equal to future pre-tax cash flows (or rather the amounts expected to be paid out), discounted by using a rate that reflects present

market value and the specific risks of the liability concerned.

The increase in the provision over time is carried in the income statement as financial expenditure.

Should the cash flows be included in an interval of estimates, when measuring the liability, the median value of the interval will be discounted.

Allocations made for restructuring costs are recognised when the parent company or Group company concerned has approved a formal detailed

plan that has already been launched and announced to the interested third parties.

Criteria for the conversion of entries denominated in foreign currency and the conversion ofaccounts denominated in foreign currency of companies that are consolidated or valued by theequity methodThe criteria adopted by the Group when converting entries denominated in foreign currency may be summarised as follows:

• assets and liabilities denominated in foreign currency, excluding tangible and intangible assets and shareholdings measured at cost, are recorded

by using the spot exchange rate reported on the last day of the financial year, with any variation carried to the income statement;

• tangible and intangible assets (non-monetary assets) are measured by using their historical costs denominated in foreign currency and

subsequently converted at the historical exchange rate;

• revenues and costs related to transactions denominated in foreign currency are recorded in the income statement by using the exchange rate

reported on the day on which the transaction concerned is actually effected;

• any significant effects caused by changes in exchange rates after the end of the financial year are duly reported in the supplementary notes to

the financial statements.

Information regarding the conversion of the accounts denominated in a currency other than the currency of presentation (functional currency) of

those companies that are consolidated or valued by the equity method is contained in the section dealing with consolidation principles.

Non-current assets held for saleNon-current assets (and groups of disposal assets) are classified as being held for sale when their book value is expected to be recovered through

their being disposed of rather than through their continual use.

Assets held for sale are recorded as such upon the emergence of the first of the following events:

• the parent company stipulates a binding sale agreement;

• the Board of Directors approves and announces a formal disposal plan;

• the assets involved must be: immediately available for sale in their current conditions; subjected to the normal terms of sale applied to similar

assets; their sale must be highly likely and expected to take place within one year.

Non-current assets (and groups of disposal assets) classified as held for sale are measured at the lower of their previous book value and market

value less the costs attributable to their sale.


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Recognition of revenues Revenues are measured to the extent that it is likely that their economic benefits can be attained by the Group and the amount represented by them

can be determined in a reliable manner.

Sales of goods are recognised when the goods are sent and the company has transferred the significant risks and benefits associated with the ownership

of the goods to the buyer. Revenues from construction contracts are recognised as foreseen in the relevant accounting standard, as detailed below.

When the economic result of a construction contract can be reliably estimated, the revenues and costs inherent in said contract are recognised

respectively as revenues and costs in relation to the stage of completion reached by activities as at the last day of the financial year, based on the

ratio between the costs incurred for the activity undertaken until the reporting date of the accounts and estimated total contract costs, except where

this is not considered to reflect the stage of completion reached in the contract.

Changes made to the contract, revised prices and incentives are included to the extent that they have been agreed with the client concerned.

Contract revenues are recognised within the limits of contract costs that are expected to be recovered, with contract costs recognised as costs for the

year in which they are borne.

Interest receivable Interest receivable is recognised in accordance with the accrual method of accounting, on the basis of the financial amount and effective interest

rate applicable, which is the rate that discounts the amounts expected to be received in the future over the financial asset's estimated life, in order

to adjust them to the carrying value of the asset itself.

Dividends Dividends are recognised when it is established that shareholders, in conformity to prevailing local laws, are entitled to receive them as payment.

Sector informationThe primary information provided for the Group concerns its areas of business activity, while secondary information is provided regarding the

geographical areas of its activity.

The activities in which the Group operates and that form the information regarding its primary areas of activity are as follows: Engineering & Plant

Construction Division, Concession Division, Building & Services Division, Infrastructure Division, Imprepar Division and Corporate Division.

The Group's management and organisational structure essentially reflect the primary section concerning business activities.

The Group's geographical areas, which form the information provided for the second section are: Europe, America, Middle East and Asia.

Operating activities are organised and managed according to the type of activity and country involved (organised by geographical area).

The transfer prices applied to transactions between business sectors relating to the exchange of goods and provision of services are regulated by

the standard market conditions.

Schedules presenting information by business sector are provided in the Report on Operations.

Financial risk exposure and management The Impregilo Group operates on a domestic and international scale in business sectors with exposure to market risks that relate to changes in

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interest rates, exchange rates and the price of goods. These risks are connected to the very nature of activities and may only be partially mitigated

by implementing the appropriate risk management policies.

With the Group engaging in its activities in areas including those outside of the Eurozone, the risk factor associated with exchange rate trends is a

significant issue. The Group monitors its exposure to the exchange-rate risk inherent in its projects and, to limit the sensitivity of its results to

exchange-rate fluctuations, funds part of its international contracts through credit facilities granted in the same currency as that in which proceeds

are received and also enters into arrangements that hedge exchange rates on a forward basis.

The risk associated with interest-rate fluctuations within Group operations is related principally to long-term loans negotiated at variable rates of

interest. Such risk is managed through interest rate swaps.

Notwithstanding these measures, the Group cannot rule out the possibility of sudden exchange-rate fluctuations arising in the short/medium term

and leading to an increase in costs, or rather having a negative effect on its economic results.

Risk factors relating to clients and the countries in which the Group operatesThe Group operates in sectors in which a large proportion of contracts come from public clients. The Group's economic results are therefore closely

correlated to the size and term of investments made in large-scale infrastructure projects that are planned and supported by the Governments or

public bodies of the countries in which the Group operates on an ongoing basis. The Group is also exposed to a series of risks that may emerge

locally, including political and social instability and the evolution of economic policies.

Significant accounting estimatesWhen preparing the financial statements and the notes that accompany them, in accordance with IFRS, management is required to undertake

discretionary valuations and accounting estimates that have an effect on the values of the assets and liabilities contained in the balance sheet and

on the information provided in this regard. Estimates are made specifically to recognise the impairment of assets, depreciation and amortisation,

employee benefits, taxes and allocations to provisions for risks and liabilities and to determine global contract costs and the state of completion

reached by the contracts themselves. Actual results may differ from estimated results due to the uncertainty surrounding the assumptions and

conditions upon which estimates are based.

The Group carries out a sizeable part of its activities by way of contracts requiring the payment of a fee that is determined at the time each contract

is awarded. This means that the nature of margins realised on contracts is such that they can vary in relation to the original estimates made,

depending on whether the increased costs and/or charges that the Group may incur when executing these contracts are recoverable or not.

The fundamental assumptions made regarding the future and other factors that give rise to uncertainty when carrying out estimates on the reporting

date of the accounts, which may lead to sizeable adjustments being made to the respective accounting values of assets and liabilities, have been

described in the section of the Report on Operations that analyses the areas of risk affecting each sector.


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COMPOSITION OF THE CHANGES UNDERGONE BY BALANCE-SHEET ITEMS

BALANCE SHEET

NON-CURRENT ASSETS

1. FIXED ASSETSThe table below provides a summary of the gross and net values of fixed assets.

31 December 2005 31 December 2004(amounts expressed in Euro/000s) Cost Fund Net value Cost Fund Net value

Land 10,438 10,438 9,736 9,736

Buildings 5,098 (1,953) 3,145 13,477 (3,812) 9,665

Plant and machinery 589,203 (231,005) 358,198 275,111 (130,478) 144,633

Industrial and commercial equipment 51,182 (40,438) 10,744 54,229 (41,404) 12,825

Other tangible fixed assets 111,397 (77,700) 33,697 151,548 (102,138) 49,410

Work in progress and down payments 103,404 103,404 327,632 327,632

Total 870,722 (351,096) 519,626 831,733 (277,832) 553,901

Fixed assets amounted to 519.6 million Euros, down by 34.3 million Euros on the previous year. The variations undergone during the period may

be summarised as follows:

31 December Increases Depre- Other Reclassi- Disposals Fore Consoli- 31 December2004 ciation write- fications differences dation area 2005

(amounts expressed in Euro/000s) downs differences

Land 9,736 356 1,275 (1,181) 252 10,438

Buildings 9,665 154 (479) (4,132) (2,136) 256 (183) 3,145

Plant and machinery 144,633 53,182 (56,906) (666) 252,143 (24,117) 2,781 (12,852) 358,198

Industrial and commercial equipment 12,825 7,964 (6,397) (676) (3,332) 235 125 10,744

Other tangible fixed assets 49,410 15,120 (16,512) (2,662) (6,037) 196 (5,818) 33,697

Work in progress and down payments 327,632 22,750 (246,978) 103,404

Total 553,901 99,526 (80,294) (666) (1,030) (36,803) 3,720 (18,728) 519,626

The item "land" includes the purchase cost of the areas around Acerra (3.4 million Euros) and Santa Maria La Fossa (3.3 million Euros), as well as

an area of land situated in Switzerland and owned by the subsidiary company CSC (1.8 million Euros).

Civil and commercial buildings include above all a building situated in Shanghai (1.1 million Euros), while industrial buildings included a property

owned by the Argentine company Caminos de Las Sierras (1.6 million Euros).

Investments made during the year by the Group totalled 98.9 thousand Euros and primarily regarded the Constructions Division and the works

carried out to construct the plants for the Campania USW Project.

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The reclassifications carried out related mainly to the asset involved in the Santiago motorway franchise in Chile, which has been carried as part of

non-current assets held for sale and the WDF plants of Fibe and Fibe Campania, which were previously carried as part of "freely transferable assets".

Work in progress and down payments relate mainly to the costs incurred to realise the Acerra waste-to-energy transformer.

The WDF plants of Fibe and Fibe Campania and the Acerra waste-to-energy transformer, reported as part of "work in progress", have not been

carried as assets held for sale, given the possibility of the tenders held to appoint new mandatees taking over the project's management receiving

no bids, and therefore on the assumption that activities are undertaken on an ongoing basis, presuming that the new regional waste plan being

drawn up contains prerequisites to be met in order for the criticalities in the previous plan to be overcome. As a result, the requirements laid down

by IFRS 5 in order for such items to be classified as "assets held for sale" have not been satisfied in full.

Depreciation effected during the period under review amounted to 81.5 million Euros, which was calculated by using the rates displayed in the

previous section of the supplementary notes to the financial statements.

During the period under review, no fixed assets were revalued.

2. FREELY TRANSFERABLE ASSETSThe table below provides a summary of the gross and net values of freely transferable assets:


Franchised assets 86,563 (30,763) 55,800 434,342 (96,454) 337,888

The table below provides a breakdown of the movements undergone by individual franchised assets.

31 December Increases Amortisation Permanent Reclassi- Forex 31 December2004 impairment fications differences 2005

(amounts expressed in Euro/000s) losses

Caminos de Las Sierras 64,023 689 (4,711) (35,653) 8,058 32,406

Glasgow parking facility 5,213 (208) 9,667 14,672

Arezzo parking facility 10,432 695 (397) (4,258) 6,472

Mercovia - Argentina (34) 2,273 (1) 2,238

Fisia 19 (7) 12

WDF plants - Fibe 263,414 (263,414)

Total 337,888 6,597 (5,357) (35,653) (255,732) 8,057 55,800

The recoverable value for the Argentine concession Caminos de Las Sierras S.A. was estimated, leading to an impairment loss of 35.9 million Euros,

which was imputed to the carrying value of said asset, thus adjusting it to its recoverable value. The recoverable value estimated for this franchised

asset refers to the notion of value in use and has been estimated by adopting a measurement criterion founded on the potential cash flows that the

franchisee (cash generating unit) is capable of generating. The present value of these cash flows, considered net of the carrying value of operating

assets, has been compared with the carrying value of assets considered. The flows used in estimating recoverable value are those indicated by the


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franchisee's financial plan. Said flows stem from management forecasts based on previous experience and on market prospects. Flows have been

calculated by using the exchange rate prevailing on 31 December 2005. The weighted average cost of capital used to discount potential cash flows

to their present value is equal to 14.3%, as determined by the WACC method ("weighted average cost of capital").

In the previous year, the Glasgow parking facility was carried as part of fixed assets under construction. During the period under review, the

construction of the asset was completed with 5.2 million Euros of costs capitalised during the period under review. The concession commenced

operations in July.

The Arezzo parking facility refers to a thirty-year franchise held by the subsidiary company Imprepar S.p.A. (in liquidation) for the management of

1,000 parking spaces and annexed business units in Arezzo, the value of which is expected to be recovered through proceeds from the use of the

grant foreseen by the Tognoli Law, from the sale of parking spaces and from the leasing of commercial properties.

The Mercovia franchise was carried as part of intangible assets.

The WDF plants relating to the Campania USW Project have been carried as part of fixed assets in that - in view of the new legal resolutions carried

for the underlying mandate - they may no longer be defined as "freely transferable assets".

3. INTANGIBLE ASSETSThe gross and net values of intangible assets and the changes undergone by the various items maybe summarised as follows:


Industrial patents 379 (277) 102 360 (245) 115

Concessions 4,809 (4,784) 25 19,692 (4,740) 14,952

Software 1,244 (852) 392 989 (691) 298

Contract acquisition costs 105,529 (42,923) 62,606 95,033 (33,930) 61,103

Improvements to leased assets 931 (693) 238 978 (457) 521

Other intangible assets 29,149 (27,759) 1,390

Total 112,892 (49,529) 63,363 146,201 (67,822) 78,379

The variations undergone during the period may be summarised as follows:

31 December Increases Amortisation Reclassi- Disposals 31 December(amounts expressed in Euro/000s) 2004 fications 2005

Industrial patents 115 (1,453) 1,440 102

Concessions 14,952 (14,927) 25

Software 298 291 (197) 392

Contract acquisition costs 61,103 10,496 (19,824) 10,831 62,606

Improvements to leased assets 521 (245) (38) 238

Other intangible assets 1,390 (5,748) 4,358

Total 78,379 10,787 (27,467) 1,702 (38) 63,363

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As at 31 December 2004 the item "Concessions" included the costs incurred when obtaining concessions and rights in relation to the urban motor-

way in Santiago del Chile (Sociedad Concessionaria Costanera Norte S.A.): this asset has been reported as part of "Non-current assets held for sale".

The item "Contract acquisition costs" includes the excess paid when acquiring the high-capacity business units from the parent company. These

assets are intangible assets with a definite life, which are allocated to the jobs book and amortised in keeping with the stage of completion reached

in the contracts themselves.

The increase registered during the period under review relates primarily to the "Contract acquisition costs" of the high-capacity railway businesses

(Cociv, C.A.V.E.T. and C.A.V.TO.MI.). This item increased during 2005 due to the acquisition cost of these businesses being adjusted, as agreed with

the counterparty. As at the reporting date, this item was made up as follows:

(amounts expressed in Euro/000s) Value 2004 Progressive amortisation Value 2005

Cociv (Milan-Genoa section) 45,319 45,319

C.A.V.TO.MI. (Turin- Milan section) 49,882 (33,889) 15,993

C.A.V.E.T. (Florence-Bologna section) 10,329 (9,035) 1,294

Total 105,530 (42,924) 62,606

The contract acquisition costs for the high-capacity business units are amortised by referring to the percentage of completion method of accounting,

with amortisation determined by the cost-to-cost method after taking into account the date on which the unit in question was acquired.

4. GOODWILLThe composition of goodwill may be summarised as follows:

(amounts expressed in Euro/000s) 31 December 2005 31 December 2004 Change

Fisia Babcock 11,875 11,875

Bocoge 10,712 (10,712)

Fisia 14,230 3,252 10,978

Altri 452 (452)

Total 26,105 26,291 (186)

As at 31 December 2005, goodwill amounted to 26.1 million Euros, which was promptly subjected to impairment testing and related primarily to

the following:

• the increase in value stemming from the acquisition of BBP Environment G.m.b.H. (11.9 million Euros) by Fisia Babcock Environment G.m.b.H;

• an impairment loss of 10.7 million Euros relating to goodwill stemming from the merger deficit was recognised during the incorporation of Bocoge

S.p.A. in 1997. This impairment loss is justified by the CNR project (National Research Board) in Cosenza failing to get off the ground, following

which the reasons for carrying this deficit in the accounts can no longer be justified;

• additional goodwill amounting to 10.9 million Euros, arising from Impregilo's acquisition, on 21 December 2005, of 49% of the capital of Fisia

Italiimpianti S.p.A. (a company owned by Equinox Investment Company S.c.p.a.) for 68.5 million Euros. This acquisition price equates to neither

the value of the put option nor that of the call option, but is rather the result of the contract's rescission, said rescission arising from the need to

implement new industrial strategies. As a result, the prerequisites underlying the previous contract could no longer be fulfilled.


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5. SHAREHOLDINGSThe value of shareholdings is composed of investments in affiliates and other companies as at the reporting date as at the reporting date. The table

below details the value of the most significant shareholdings.

(amounts expressed in Euro/000s) Type 31 December 2005 31 December 2004

Primav Ecorodovias S.A. affiliate 90,260 52,162

Shangai Pucheng Ltd. affiliate 54,246 46,036

Ponte de pedra energetica S.A. affiliate 41,069 23,415

Acqua italia S.p.A. affiliate 22,427 22,422

Agua Azul affiliate 9,270 8,901

Leonardo Holding S.A. other company - 26,615

Other interests 27,089 32,719

Total 244,361 212,270

The increase recorded for the period was mainly related to the share of results achieved by the above companies and changes in the reference

currencies that led to them being revalued. Said revaluation was carried as part of equity under the "Exchange-rate fluctuation reserve". Figuring

among the most significant contributions during the period were the following:

• Primav Ecorodovias S.A., a Brazilian motorway franchise, posted a result of 18.1 million Euros, an increase in its exchange-rate fluctuation reserve

of 17.6 million Euros and distributed dividends of 5.4 million Euros, in addition to registering an increase in its book value due to the definition

of the investment's purchase price at 7.8 million Euros, which was agreed during 2005;

• Shangai Pucheng Ltd, a franchisee operating in the energy sector, posted a result of 2.7 million Euros, while also recording an increase of 5.5

million Euros in its exchange-rate fluctuation reserve.

While 2005 witnessed the positive results mentioned above, the financial year also saw a number of non-recurring events, which made it necessary

to write down a number of shareholdings operating in the franchising business. This is referred to in greater detail in the Report on Operations.

During the period under review, investee companies measured at equity distributed dividends totalling 9.6 million Euros, which may be broken down

as follows:

(amounts expressed in Euro/000s) Business unit Amount

Primav Ecorodovias S.A. Concession 5,424

Borini & Prono Ltd Major Projects 273

Yacilec S.A. Concession 577

Acqua italia S.p.A. Concession 2,774

Agua Azul Concession 579

Total 9,627

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Financial highlights for the principal shareholdings measured by the equity method are provided in the table below.

Company name Country Stake held % of capital % of exercisable Main Reporting dateheld voting rights activity of accounts

Acqua italia S.p.A. Italy 33.333% 33.333% 33.333% Concession 31.12.2005

Consorcio agua azul S.A. Peru 45.000% 45.000% 45.000% Concession 31.12.2005

Aguas del gran buenos aires S.A. Argentina 42.589% 42.589% 42.589% Concession 31.12.2005

Impregilo wolverhampton limited UK 20.000% 20.000% 20.000% Concession 31.12.2005

Contarina S.p.A. Italy 49.000% 49.000% 49.000% Concession 31.12.2005

Enecor S.A. Argentina 30.000% 30.000% 30.000% Concession 31.12.2005

Nuova romea S.p.A. Italy 22.386% 23.760% 22.386% Concession 31.12.2005

Ponte de pedra energetica S.A. Brazil 50.000% 50.000% 50.000% Concession 31.12.2005

Puentes del litoral S.A. Argentina 26.000% 26.000% 26.000% Concession 31.12.2005

Primav ecorodovias S.A. (consolidado) Brazil 35.000% 35.000% 35.000% Concession 31.12.2005

Shanghai pucheng thermal power energy co. Ltd China 50.000% 50.000% 50.000% Concession 31.12.2005

Yacylec S.A. Argentina 22.062% 35.556% 22.062% Concession 31.12.2005

Balance sheet Income statement

Company name Total assets Total liabilities Total equity Share Net profit/ Shareof equity (loss) of result

attributable attributable to the Group to the Group

Acqua italia S.p.A. 240,146 182,071 58,075 19,358 7,764 2,588

Consorcio agua azul S.A. 45,170 24,569 20,601 9,270 695 313

Aguas del gran buenos aires S.A. 14,083 1,263 12,820 (1) (13,141) (5,597)

Impregilo wolverhampton limited 28,544 27,035 1,508 302 530 106

Contarina S.p.A. 26,015 21,793 4,222 2,069 (151) (74)

Enecor S.A. 5,896 5,896 (3,144) (943)

Nuova romea S.p.A. 3,712 3,712 (3,804) (852)

Ponte de pedra energetica S.A. 226,162 144,025 82,137 41,069 1,828 914

Puentes del litoral S.A. 82,306 82,306 (9,081) (2,361)

Primav ecorodovias S.A. (consolidado) 224,125 7,009 217,116 75,991 51,681 18,088

Shanghai pucheng thermal power energy co. Ltd 74,969 3,507 71,462 35,731 5,479 2,739

Yacylec S.A. 26,604 6,527 20,077 4,429 5,887 1,299

Total 188,217 16,221


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6. NON-CURRENT FINANCIAL ASSETSNon-current financial assets are mainly made up of the RAS securities "Fondo rivalutazione Vitariv", a collective capitalisation policy involving the

revaluation of capital. This investment in securities was made by the C.A.V.TO.MI. consortium, with Impregilo's share amounting to 70.1 million

Euros. These securities, together with a tied-up deposit (included as part of "Cash at bank and on hand" for the sum of 38.1 million Euros), have

been stood as collateral for a guarantee issued by RAS in favour of the ongoing high-speed train project (TAV) for a performance bond in respect of

the Novara-Milan line. These securities bear a minimum guaranteed return of 2%, which is reported in the income statement.

7. NON-CURRENT AMOUNTS RECEIVABLE FROM AFFILIATESAs at 31 December 2005, the above item amounted to 30.6 million Euros (against 29.9 million Euros as at 31 December 2004). These amounts, of a

financial nature and due from affiliates, relate above all to relationships between the subsidiary Imprepar S.p.A. (in liquidation) and its investee companies.

The table included as an appendix to the supplementary notes accompanying the financial statements provides a breakdown of the item in question.

8. OTHER NON-CURRENT ASSETSThe table below provides a breakdown of the item "other non-current assets":

31 December 2005 31 December 2004 Change

Amounts receivable from third parties after more than 12 months (gross value) 192,614 304,331 (111,717)

Amounts receivable from third parties after more than 12 months (provision) (58,476) (66,456) 7,980

Total 134,138 237,875 (103,737)

This item contains primarily the value of the assets of Imprepar S.p.A. (in liquidation) and its subsidiaries, which under the payment terms established

become collectible after the next financial year.

In this regard, we wish to point out that the amounts to be collected and the payments foreseen after 31 December 2006, increased by interest

accrued on them, have been discounted to present value by using the Group's medium-term borrowing rate. The net present value of collectible

amounts and payments was compared with the net amounts carried in the accounts, with any negative difference computed as a bad debt provision.

The change on the previous year was due to the reclassification of both the amounts expected to be collected in financial year 2006 (as per the

liquidation plans in place) and the amounts actually received in financial year 2005.

The most significant item included in the balance reported above refers to the Promissory Notes issued by Iraq for the payment, for work carried

out on the Mosul Dam, of 65.6 million Euros, which included interests calculated up to 31 December 2002 and carried in the balance sheet for 7.1

million Euros (net of the write-down provisions totalling 58.5 million Euros).

It also includes amounts expected to be collected after a time period of more than twelve months, in respect of amounts due from Italian and foreign

clients to the order of 111 million Euros. Amounts due from abroad are due from clients in connection with work carried out in Colombia, while in

Italy the main amounts due relate to contracts that have already been completed, mainly in Sicily, Apulia and Campania.

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9. DEFERRED TAX ASSETSPrepaid taxes amounted to 71.8 million Euros as at 31 December 2005, down by 13.5 million Euros on the figure reported as at 31 December

2004.

During the period under review, income for prepaid taxes of 19 million Euros was computed, said amount originating from temporary differences

relating to allocations for future risks and liabilities as well as the losses of certain Group companies that can be carried forward for fiscal purposes.

Prepaid taxes, computed with a balancing entry under equity and amounting to 11.1 million Euros, relate to the deferred fiscal effect stemming from

the recognition of additional charges incurred for the capital increase, which were deducted from the parent company's equity.

The utilisation of the previous year's prepaid taxes (30.8 million Euros) was largely related to the year's share of a "deferred tax asset" being posted

in the income statement. This deferred tax asset relates to the reversal of an inter-group capital gain that arose at the end of 2002 in connection

with the Fisia Hiatus deal. The residual balance of this deferred tax asset amounts to approximately 57 million Euros and is posted in the income

statement with the various amortisation methods adopted for the goodwill stemming from said deal. Furthermore, during the year under review, it

was decided that the deferred tax asset relating to Fibe and Fibe Campania, which was carried in the consolidated financial statements as at 31

December 2004 for 18 million Euros, was no longer recoverable.

Please note that no prepaid taxes have been carried in respect of previous fiscal losses (amounting to approximately 60 million Euros) that arose

from within the so-called "Group tax regime". Neither have any prepaid taxes been carried in respect of the temporary differences reported by

subsidiary companies (estimated to total 105 million Euros) for allocations made to cover future risks and liabilities of around 28 million Euros and

the debt write-down effected for the difference. No prepaid taxes were carried since they are expected to be claimed back in a time horizon that

goes beyond the forecasts of Impregilo's 2006-2008 plan.


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CURRENT ASSETS

10. INVENTORIESThe item "inventories" amounted to 324 million Euros as at 31 December 2005, compared with 373.6 million Euros the previous year. The net

change undergone is broken down for each item in the table below:

31 December 2005 31 December 2004gross provision net gross provision net change

(amounts expressed in Euro/000s) value value value value

Real estate ventures 21,816 21,816 95,950 95,950 (74,134)

Finished products and goods 5,613 5,613 4,230 4,230 1,383

Raw, ancillary and consumable materials 44,372 (2,202) 42,170 40,945 (2,601) 38,344 3,826

Unfinished and semi-finished products 10,765 10,765 17,643 17,643 (6,878)

Total inventories 82,566 (2,202) 80,364 158,768 (2,601) 156,167 (75,803)

Work in progress arising under construction contracts 243,671 243,671 217,407 217,407 26,264

Total 326,237 (2,202) 324,035 376,175 (2,601) 373,574 (49,539)

Real-estate venturesReal-estate ventures, shown net of advances received, amounted to 21.8 million Euros, down on the previous year by 74.1 million Euros. This

decrease was due to the disposals carried out during the year. These included the sale of the interest in Anita S.r.l. the owner of land at Melchiorre

Gioia and the "Colli di San Avendrace" real-estate venture in Cagliari. Collectively, the disposals effected in 2005 enabled book values to be realised.

The table below highlights real-estate ventures carried at the end of financial year 2005.

Property State of sale 31 December 2005(Euro millions)

Malpensa Business Park preliminary agreement for Euro 5 million 19.3

Via Tibaldi preliminary stages 3.8

Land at San Martino Siccomario preliminary stages 1.2

Office and land - Buenos Aires for sale 1.2

Office - Berlin for sale 0.4

Down payments received (4.1)

Total 21.8 (*)

(*) Gross of risk provisions totalling Euro 7.8 million.

Finished products and goodsInventories in the form of finished products and goods are made up of stocks of materials being used in contracts. As at 31 December 2005, this

item amounted to 5.6 million Euros and was mainly made up of high-capacity railway contracts as well a number of contracts in Ecuador and

Venezuela.

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Raw, ancillary and consumable materialsAs at 31 December 2005, the above item amounted to 42.2 million Euros and was mainly made up of high-capacity railway contracts and the

Karahnjukar contract in Iceland.

Unfinished and semi-finished productsInventories in the form of unfinished products are mainly made up of waste-derived fuels relating to the Campania USW Project. The value reported

remained unchanged at 8.7 million Euros. The value of WDF stocks was considered to be fully recoverable based on technical and legal assessments

carried out, in the light of the possibility of these stocks being used by the new mandatees, as provided for in Campania Region's new waste plan,

which is in the process of being approved by the bodies responsible for such matters.

In addition to the above, are inventories comprising electromechanical materials and other pre-manufactured items currently being processed in

respect of the Acueducto Oriental contract at Santo Domingo.

Work in progress arising under construction contractsWork in progress arising under construction contracts amounted to 243.7 million Euros, up by 26.2 million Euros on 31 December 2004. The table

below shows the amount reported for work in progress, measured by the percentage of completion method of accounting, net of losses incurred or

estimated as at the reporting date and invoices for work completed:


Certified work in progress 11,001,049 9,254,523 1,746,526

Down payments received (for work certified) (10,757,378) (9,037,116) (1,720,262)

Total 243,671 217,407 26,264

The table below provides a summary of the most significant contracts making up inventories in the form of "work in progress", along with the volume

of work completed in 2005.

Closing stocks Work output

(amounts expressed in Euro/000s) 31.12.2005 31.12.2004 Change 31.12.2005 31.12.2004 Change

High-capacity projects 50,038 119,905 (69,867) 1,055,463 1,320,684 (265,221)

Iceland 17,669 45,987 (28,318) 180,720 160,821 19,899

Venezuela/others 24,167 17,007 7,160 80,324 27,324 53,000

Salerno - Reggio Calabria 19,845 19,845 15,744 (127,474) 143,218

Environmental Systems 66,801 66,801 156,109 156,109

Other contracts 65,151 34,508 30,643 (55,717) (55,717)

Total 243,671 217,407 26,264 1,432,643 1,381,355 51,288

As at 31 December 2005, the amounts held as guarantees from clients for work in progress amounted to 29.2 million Euros. Down payments

received from clients for work in progress amounted to 732.9 million Euros, with 247.3 million Euros of this relating to high-capacity projects and

a further 265.7 million Euros relating to the Engineering & Plant Construction Division.


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11. TRADE RECEIVABLESTrade receivables are mainly made up of amounts due from clients for both invoices issued and the completion of work that has already been

certified but has yet to be invoiced, net of bad debt provisions. As at 31 December 2005, such receivables amounted to 980.3 million Euros,

representing an increase of 44.1 million Euros on 31 December 2004. Trade receivables gross of provisions are summarised in the table below.


Due from clients 1,132,773 1,001,912 130,861

Bad debt provision (152,495) (65,780) (86,715)

Total 980,278 936,132 44,146

The total reported above is broken down in the table below.

Contract Amount

High-capacity project 303,495

Fibe 252,178

Iceland branch 67,660

Venezuela branch 46,272

Contuy 42,897

Impregilo Edilizia e Servizi 41,393

Impregilo S.p.A. 30,355

PDM 29,805

CAO 29,329

Healy 18,798

Imprepar 17,891

Mercovia 11,672

Other contracts 88,533

Total 980,278

The bad debt provision as amounted to 152.5 million Euros at 31 December 2005, further to an allocation of 128 million Euros being made during

the year, in order to realign the existing provision to reflect the actual recoverability of receivables reported in the balance sheet.

Value Allocation Withdrawals Withdrawals Other Value at start from movements at end

(amounts expressed in Euro/000s) of year account of year

Provisions for the write-down of trade receivables 48,111 92,652 (2,031) (35,111) 981 104,602

Provision for arrears interest 17,669 35,349 (1,180) (3,064) (881) 47,893

Total 65,780 128,001 (3,211) (38,175) 100 152,495

The allocation made to the bad debt provision relates primarily to the following:

• 44 million Euros in respect of the subsidiary company Imprepar S.p.A. (in liquidation);

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• 27.5 million Euros in respect of write-downs effected against receivables relating to the Building Division;

• 9.5 million Euros in respect of write-downs effected against receivables relating to the Concession Division, said amounts being due to a number

of subsidiaries from the concerns granting them their respective concession;

• 9.3 million Euros in respect of amounts receivable from clients of the Constructions Division.

The allocation made to the provision for arrears interest relates mainly to amounts receivable by companies involved in the Campania USW Project.

The Group assigned receivables totalling 55.5 million Euros to factoring companies by way of a recourse clause. The receivables assigned through

such a clause do not comply with the requirements laid down by international accounting standards for the removal of an asset from the balance

sheet. For this reason, such receivables are shown under the item "trade receivables", even though they have been legally assigned. However, a

financial liability for the same amount is carried at the same time under the item "Payables arising from advances received for assigned receivables".

Gains and losses relating to assignment procedures are reported in the income statement.

12. CURRENT AMOUNTS RECEIVABLE FROM AFFILIATES Amounts due from affiliates and other unconsolidated companies relate to dealings of a commercial nature, the provision of services and financial

dealings entered into in order for said companies to obtain the necessary loans and guarantees and allocate (through set-off) costs and revenues

to the contracts undertaken in this regard. As at 31 December 2005, such receivables amounted to 145.70 million Euros.

The schedule attached to the supplementary notes accompanying the financial statements provides a breakdown of these items.

13. DERIVATIVE AND OTHER CURRENT FINANCIAL ASSETSThe item "Derivatives and other current financial assets" as at 31 December 2005 amounted to 22.3 million Euros, and included Government bonds

and other bonds (Euro 18.8 million) and derivatives used to hedge exchange-rate risk measured at fair value (3.5 million Euros). These securities

may be broken down as follows:

Description Amount

Government bonds - Caminos 10,738

Other bonds - Fisia Babcock 5,034

Other securities - Venezuela 987

Others 2,063

Total 18,822

Government bonds are held by the company Caminos de la Sierras, which was consolidated on a line-by-line basis in 2005. These bonds are

secured loans from Banco Galicia, as issued by the Ministry of the Economy as part of the Argentine franchisee's debt restructuring exercise.

Other bonds are made up of bonds held by Fisia Babcock Environment G.m.b.H. (5 million Euros). These short-maturity bonds were issued by various

banks during 2004 and attract an interest rate of 2.3-2.5%.


164

Current currency derivatives refer to contracts, measured at fair value, that were stipulated to hedge exchange-rate and interest-rate fluctuation.

The section "Derivatives and other current financial liabilities" provides a description of derivative contracts in place as at 31 December 2005.

14. OTHER CURRENT ASSETS"Other current assets" refer to the following items:


Amounts receivable from the Inland Revenue 272,657 249,040 23,617

Loans receivable 19,322 33,809 (14,487)

Advances to suppliers 82,363 70,699 11,664

Other receivables 57,688 51,336 6,352

Accrued income and prepaid expenses 54,138 62,459 (8,321)

Total 486,168 467,343 18,825

Amounts receivable from the Inland Revenue increased from 249 million Euros to 272.7 million Euros, due above all to the increase in the VAT credit.

High-capacity railway contracts were responsible for 14 million Euros of this increase and Fibe and Fibe Campania for the other 14.6 million Euros,

net of decreases.

Loans receivables decreased, above all following the receipt of 11.9 million Euros during the year, said amount being receivable by the parent

company from Mantovani S.p.A. in respect of the sale of Commesse Venete during 2004.

Advances to suppliers increased, which was the combined effect of decreases generated by high-capacity railway contracts and increases relating

to the environment sector, to Fibe and Fibe Campania and to the new contract won in Ecuador. The table below provides a breakdown of this item

as at 31 December 2005.

(amounts expressed in Euro/000s)

High-capacity projects 42,138

Fisia and Fisia Babcock 20,209

Fibe 4,986

Mazar - Ecuador 5,892

Other 9,138

Total 82,363

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Accrued income and prepaid expenses are made up of expenses paid in advance - such as utilities, insurance, guarantee fees and interest on loans

received. The table below provides a breakdown of this item.

31 December 2005

Accrued income:

Interest and other financial income 464

Other 401

Total accrued income 865

Prepaid expenses:

Insurance 13,813

Guarantee fees 10,455

Rents for Fibe land 2,671

Costs recognised on the basis of the stage of completion reached in contracts 22,736

Other 3,598

Total prepaid expenses 53,273

Total accrued income and prepaid expenses 54,138

15. CASH AT BANK AND ON HANDCash at bank and on hand amounted to 566.7 million Euros as at 31 December 2005 and may be broken down as follows:


Cash at bank and on hand 566,703 467,665 99,038

Breakdown by company: Amount Of which: tied-up

Impregilo S.p.A. 202,387 22,800

Fibe 37,639 31,404

Fisia 20,925

Imprepar 20,273

Salerno Reggio Calabria 14,884

Fisia Babcock 12,031

CSC 10,534

Total 318,673 54,204

High-capacity contracts 161,793 38,100

Other 86,237

Total 566,703 92,304


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The item "cash at bank and on hand" includes deposits of Impregilo S.p.A. amounting to 22.8 million Euros that are tied-up for specific projects.

The above "cash at bank and on hand" also includes 31.4 million Euros in bank deposits that comprise sums collected by Fibe and Fibe Campania

that are due, in the form of royalties, to the relevant organisation.

As already mentioned in the section dealing with long-term securities, C.A.V.TO.MI. consortium has tied-up cash amounting to 38.1 million Euros, stood

as collateral for the guarantee issued by RAS in favour of the high-speed train project (TAV) for a performance bond in respect of the Novara-Milan line.

Please also note that, with regard to the consortiums in which Impregilo participates, the acquisition of funds by partners is subjected to regulations

where approval is required from all consortium members, the purpose being to safeguard the financial requirements of contracts as they progress.

16. NON-CURRENT ASSETS HELD FOR SALEAs mentioned in the Report on Operations, the Impregilo Group has decided to dispose of various assets. A number of these disposals were

completed over the course of financial year 2005, their effects on the accounts being duly incorporated into the financial statements for the year

ending 31 December 2005. Others, for which the conditions needing to be met in order to define disposal procedures are expected to be satisfied

within twelve months, have been classified as groups of assets held for sale. These assets are presented separately on the assets side of the balance

sheet, just as the liabilities associated with them are presented separately on the liabilities side.

Assets classified as "held for sale" relate to the following: Costanera Norte (Chile), Società Industriale Prefabbricazione Edilizia del Mediterraneo -

Sipem S.p.A. (in liquidation), Gricignano 3 S.r.l., and Borini and Prono Ltd (Nigeria).

With regard to Costanera Norte, Gricignano 3 S.r.l. and Borini and Prono Ltd, the fees from their sale will be higher than the carrying value of the

assets and liabilities relating to them. Therefore, in compliance with accounting standard IFRS 5, these disposal groups have been measured at the

lower of cost and fair value, net of additional expenses associated with their sale. At the time that Sipem was classified as an asset held for sale, a

write-down of 0.6 million Euros was effected, in order to adjust its book value to the amount agreed with the counterparty.

The classes of assets and liabilities attributable to the disposal groups classified as "held for sale" are detailed in the table below.

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Total Costanera Borini e Prono Sipem Gricignano NuovaNorte coimpresa

Balance sheet figures

Freely transferable assets 337,299 337,299

Concession granted 11,522 11,522

Other fixed assets 5,804 2,023 3,776 5

Intangible assets with definitive useful life 107 107

Shareholdings measured at equity 1,614 1,614

Deferred tax assets 1,105 1,105

Other inventories 2,132 1,010 1,122

Trade receivables 15,261 14,945 127 189

Other current assets 37,608 37,256 129 223

Cash at bank and on hand 49,246 49,171 26 49

Total assets 461,698 454,438 1,614 5,180 466

Other non-current liabilities (4,707) (3,949) (730) (28)

Advances received for goods being made to order (25,330) (25,330)

Trade payables (31,324) (31,324)

Other current liabilities (12,017) (11,769) (136) (112)

Borrowing (299,103) (299,103)

Total liabilities (372,481) (371,475) (866) (140)

Net assets 89,217 82,963 1,614 4,314 326

Net financial position attributable to assets held for sale (249,857) (249,932) 26 49

Income statement figures

Revenues 74,536 73,136 362 1,038

Costs (83,060) (81,226) (975) (859)

Result from shareholdings (3,161) 248 (3,409)

Net result attributable to assets held for sale (11,685) (8,090) 248 (613) 180 (3,409)

The amounts set out in the table above refer to consolidated figures.


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17. SHAREHOLDERS' EQUITYEquity attributable to the Group amounted to 512.7 million Euros as at 31 December 2005, compared with 198.7 million Euros as at 31 December

2004.

The changes undergone during the year by the various items making up shareholders equity are summarised in the schedule of movements that

may be found in the section containing various accounting schedules.

Information regarding the individual components of equity follows below.

Share capitalOn 20 May 2005, a Special Meeting of Shareholders of Impregilo resolved upon a share capital increase, to be effected for a fee and possibly by

way of more than one transaction, for a total of Euro 650,000,000 maximum (including any premium), with the Board of Directors vested with the

widest possible powers to execute the capital increase itself and establish its timing in detail. This shareholders' resolution was carried further to

the revocation of the powers delegated in October 2004 by the shareholders to the Board of Directors, enabling it to increase share capital and

issue convertible bonds for up to 400 million Euros in total, as well as warrants for a further 100 million Euros maximum. These amounts later proved

to be insufficient in consideration of the size of the financial restructuring exercise that was deemed appropriate.

To service the capital increase approved on 20 May 2005, the meeting of shareholders carried a resolution, approving the issue of a number of

Impregilo ordinary shares bearing the same features as those already in circulation. Said shares, to be offered as an option to assignees (i.e. all

holders of the ordinary and savings shares of Impregilo), would be equal to the quotient of the total amount of the capital increase (including any

premium) divided by the issue price of the new shares, as determined by the Board of Directors in keeping with the criteria predetermined by the

same shareholders' resolution of 20 May 2005.

The Special Meeting of Shareholders held on 20 May 2005 also carried a resolution agreeing to regroup the existing ordinary and savings shares

of Impregilo (shares whose nominal value had been eliminated since the previous resolution approving a capital increase), whereby one new

ordinary/savings share would be allocated for every ten ordinary/savings shares already held, with - solely to round off allocation procedures - five

ordinary shares owned by Gemina cancelled and share capital consequently reduced by Euro 2.60, the latter amount equating to the number of

shares cancelled (4).

On 7 June 2005, the company's Board of Directors (among other things) thus set the unitary issue price of the new shares at Euro 2.00, including

Euro 1.00 as a share premium, and, for the purpose of the increase, established that 324,956,544 new shares would be offered as an option to

shareholders, with 22 new shares being allocated for every five ordinary/savings shares already held (5).

The offer took place, and was completely successful, from 13 June to 1 July 2005, with 73,384,345 option rights - equal to 99.36% of the total

offer - exercised. The capital increase was thus perfected with the rights unexercised being offered via the Stock Exchange from 7 to 13 July 2005.

This offer, however, enabled Impregilo to receive further proceeds of 2 million Euros, meaning that it was not necessary for the guarantee consortium -

(4) Share regrouping operations commenced on 30 May 2005.

(5) As a result, the maximum capital increase, including any premium, has been set at Euro 649,913,088, with the maximum amount resolved upon by the meeting of shareholders rounded

down, purely to round off the allocation ratio.

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consisting of Banca Caboto S.p.A., Banca IMI S.p.A., Efibanca S.p.A. and UniCredit Banca Mobiliare S.p.A. - to intervene in order to guarantee the

transaction's successful outcome.

Further to the capital increase, Impregilo's shareholder structure changed significantly, due among other things to the agreements previously

stipulated between Gemina and IGLI (a company controlled by Argo Finanziaria S.p.A., Autostrade per l'Italia S.p.A., Tesir S.r.l. and Efibanca S.p.A.)

for the latter party's participation in Impregilo's share capital through the subscription of a portion of the capital increase (ordinary shares): Gemina

exercised its own option rights to the extent that after the capital increase it ended up holding a 11.82% stake in Impregilo, while it transferred its

remaining option rights to IGLI, which after exercising them held 12.59% stake in Impregilo after the capital increase. (This had been raised to

18.037% by 15 March 2006, according to the announcements made by IGLI).

In short, the company's share capital has progressed as follows:

Number of shares Shareordinary savings total Euro

Number of shares and share capital at start of year 722,382,695 16,154,910 738,537,605 384,039,555

Shares cancelled (5) (5) (3)

Reduction in the number of shares due to regrouping exercise (650,144,421) (14,539,419) (664,683,840) -

Number of shares and share capital after cancellation and regrouping of shares 72,238,269 1,615,491 73,853,760 384,039,552

Capital increase 324,956,544 324,956,544 324,956,544

Number of shares and share capital as at 31 December 2005 397,194,813 1,615,491 398,810,304 708,996,096

The company's savings shares, issued pursuant to the provisions of law, do not bear any voting rights, have priority when it comes to the distribution

of earnings and the redemption of capital, and may be bearer shares, with the exception of what is established in the second paragraph of Article

2354 of the Italian Civil Code. At the request and expense of the shareholder, they may be converted into registered shares and vice versa. The

savings shares belonging to the company's Directors, Statutory Auditors and General Managers must be registered shares. Other than for what is

laid down by the company's Articles of Incorporation and by the law, savings shares allocate the same rights as ordinary shares.

The holders of the company's savings shares are neither entitled to take the floor at shareholders' meetings nor entitled to ask a meeting to be

called. Special meetings for the holders of savings shares are regulated by the provisions of law. In the event of the company's reserves being

distributed, savings shares have the same rights as ordinary shares.

Upon the company's winding-up, savings shares enjoy pre-emption rights with regard to the redemption of capital, effected at up to Euro 5.2 per

share. In the event of shares being regrouped or split (as in the case of capital transactions, where it is necessary so that the rights of the holders

of savings shares are no different from if shares bore nominal value), the amount set per share shall be amended as outlined below.


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The net profits reported in the annual accounts are distributed as follows:

a) 5% to the legal reserve, up to the limit established by law;

b) to the savings shares, up 5% of Euro 5.2 per share (equal to Euro 0.26 per share). In the event that savings shares are allocated a dividend of

less than 5% of Euro 5.2 per share (equal to Euro 0.26) in any given year, the difference is added to the preference dividend in the two years

that follow;

c) the remaining amount will be allocated to all shareholders in such a way that the total dividend due to savings shares is greater than that due to

ordinary shares, to the order of 2% of Euro 5.2 per share (equal to Euro 0.104 per share), unless the meeting of shareholders carried resolutions

prescribing special withdrawals in favour of the extraordinary reserves or for other purposes.

Share premium reserveThe share premium reserve carried in the financial statements for the year ending 31 December 2004 was used to cover part of the losses incurred

during the previous year.

As already mentioned in the previous section, following the capital increase finalised during the year under review, a share premium reserve was

set up for 325 million Euros. In conformity to international accounting standards, the additional expenses incurred in connection with this transaction

have been deducted from the share premium reserve, net of the deferred fiscal effect arising in this connection. The share premium reserve amounts

to 302 million Euros net.

Exchange-rate fluctuation reserveAs already mentioned in the section dealing with consolidation principles, the differences arising from the conversion of opening equity to year-end

exchange rates are carried under the exchange-rate fluctuation reserve. In financial year 2005, this reserve increased by 42.4 million Euros, due

above to the exchange-rate trends seen for South American currencies (the Brazilian and Chilean national currencies in particular). Please note that

as at 1 January 2004, following the transition to IAS/IFRS standards, the exchange-rate fluctuation reserve accumulated to said date (reporting a

negative balance of 201.6 million Euros) was cancelled in full by being set off against the "Retained earnings/(losses) reserve", in accordance with

the options available under IFRS 1.

Stock option allocation reserveThe above reserve reflects the fair value of the stock option plan introduced in 2005 and described in the Report on Operations. Said reserve, which

is determined by way of actuarial procedures, amounts to 2.9 million Euros. The section dealing with the accounting standards adopted contains a

description of the way in which this reserve is computed.

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18. NET FINANCIAL POSITIONA comparison between the carrying value and fair value of financial positions reflected in the consolidated financial statements follows below.

Carrying value Fair value31.12.2005 01.01.2005 31.12.2005 01.01.2005

Cash at bank and on hand 566,703 467,665 566,703 467,665

Insurance stocks and other securities 70,364 68,022 70,364 68,022

Government bonds and other bonds 18,549 30,583 18,549 30,583

Assets in the form of derivatives 3,436 12,588 3,436 12,588

Other financial assets 273 202 273 202

Total financial assets 659,325 579,060 659,325 579,060

Current liabilities

Bank overdrafts and short-term portion of loans (378,273) (821,586) (378,273) (821,586)

Current portion of bond loans - (549,290) - (549,290)

Current portion of leasing liabilities (7,566) (19,282) (7,566) (19,282)

Liabilities in the form of derivatives (4,015) (6,415) (4,015) (6,415)


Bank loans and other borrowing (750,566) (102,016) (750,566) (102,016)

Bonds - (225,581) - (225,581)

Leasing liabilities (8,226) (16,356) (8,226) (16,356)

Total financial liabilities (1,148,646) (1,740,526) (1,148,646) (1,740,526)

Total net financial position attributable to ongoing business activities (489,321) (1,161,466) (489,321) (1,161,466)

Net financial position attributable to assets held for sale (249,857) - (249,857) -

Total net financial position (739,178) (739,178)


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The methods employed when measuring assets and liabilities at fair value are summarised below for the main types of financial instrument, to which

said methods have been applied:

• Insurance stocks: market value recorded on the reporting date has been utilised.

• Government bonds and other bonds: market value recorded on the reporting date has been utilised.

• Loans payable are initially recognised at cost, which is equal to the fair value of the amount received under a loan less additional charges incurred

to obtain it.

After this initial recognition process, loans are subsequently measured at amortised cost, as provided for in IAS 39. This method involves loans

being amortised by applying the effective internal interest rate. Amortised cost is calculated by taking into account issue costs and any discount

or premium foreseen at settlement.

• Derivatives: with the exception of commodities contracts (purchasing of metals for plant-engineering companies), hedge accounting has not been

applied in the case of derivative contracts hedging exchange rates and interest-rate risk since the Group does not meet the formal prerequisites

of IAS 39. Derivatives have therefore been measured at fair value recorded on the reporting date. For a description of the features of the derivative

contracts in place as at 31 December 2005, please refer to the section "Derivatives and other current liabilities of a financial nature".

• Leasing liabilities, be they current or non-current, reflect the principal amounts maturing under the instalments payable on contracts in place on

the last day of the financial year. The amount of debt outstanding as at 31 December 2005 is split between a current portion and a non-current

portion.

• For a description of the net financial position attributable to assets held for sale, please see the comments contained in the section "Non-current

assets held for sale".

NON-CURRENT LIABILITIES

19. BANK LOANS AND OTHER BORROWINGBank loans and other medium/long-term borrowing amounted to 750.6 million Euros, representing an increase of 648.6 million Euros on 31

December 2004. 621.9 million Euros of the total amount of medium/long-term bank borrowing reported relate to the parent company Impregilo

S.p.A. and are reported by the amortised cost method, or rather net of the additional expenses incurred for the financial restructuring exercise. Under

said method, financial charges servicing the debt are carried in the income statement based on the effective interest rate applied.

Type 31 December 2005

Due to banks within 5 years 499,381

Due to banks after more than 5 years 139,117

Additional expenses for financial restructuring exercise (16,549)

Total 621,949

We also wish to mention that during the year, 26 million Euros of the Salerno Reggio Calabria S.c.p.a. loan was utilised, said facility relating to the

300-million Euro loan stipulated on 26 October 2004 and provided as a club loan by the company Infrastrutture S.p.a. and Depfa Bank. This facility

charges an interest rate of EURIBOR plus a spread of 1.5% in the case of the mobilisation loan and EURIBOR plus a spread of 1.15% in the case

of the S.A.L. advance.

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Taking out this loan led to a lien being granted over shares and a pledge being stood over current accounts, as well as all receivables of any kind

being stood as collateral, be they current or future. Said receivables stem from agreements stipulated by Salerno Reggio Calabria S.c.p.a. in relation

to the realisation of its project and the obligation to buy back receivables assigned by the company Progetto to lenders, should the debts on question

prove not to be collectible for any reason other than the insolvency of ANAS.

The bank borrowing of Passante di Mestre S.c.p.a., amounting to 13 million Euros, relates to the company's drawing down the first tranche of a

syndicated loan facility entered into with a group of banks led by Banca Intesa Infrastrutture S.p.A. Some of the funds were drawn down through

the setting off and complete closure of the bridging loan provided by Banca Intesa in 2005 for 21.4 million Euros (the maximum lent was 56 million

Euros), while some were drawn down by setting off the fees due to the bank (3 million Euros) and the remaining 6.6 million Euros through the

balance available on the company's current account.

The events underlying the bank borrowing trends seen during the period under review are summarised below.

Granting of a bridging loan and medium/long-term loanFollowing on from the first bridging loan, for 120 million Euros, provided by a group of banks (90 million Euros) and Gemina (30 million Euros), on

16 May 2005, Impregilo entered into a bridging loan agreement with Banca Intesa S.p.A., UniCredit Banca d'Impresa S.p.A., Sanpaolo IMI S.p.A.

and UniCredit Banca Mobiliare S.p.A., the latter acting as Arranging Bank. The purpose of this bridging loan, which is for up to 680 million Euros

and matures 31 July 2005, is to meet the Group's cashflow requirements (repayment of maturing bond loans and operating requirements) until the

capital increase is accomplished. Around 660 million Euros of this facility was utilised, and in keeping with terms and conditions was transformed

into a 500-million Euro medium-term loan, while the remaining 160 million Euros was repaid. To be more precise, on 7 June 2005, Impregilo entered

into an agreement with the same banks to transform the 500 million Euros into a medium-term loan. The agreement thus came into effect on 29

July 2005, following the execution of the entire capital increase and repayment of the 160 million Euros outstanding on the bridging loan.

The main features of this medium-term loan may be summarised as follows:

• term of 7 years, with an 18-month grace period;

• interest rate of six-month EURIBOR plus a variable spread, depending on the gearing ratio;

• fulfilment, at a consolidated level, of the following financial covenants, which is due to be checked, as provided for by the agreement, from when

the interim report for the period to 30 June 2006 is approved:

(i) Gearing ratio (debt/equity);

(ii) Debt/EBITDA;

(iii) EBITDA/interest expense;

• the undertaking of Impregilo to (among other things) dispose of non-current financial and fixed assets for the total sum of:

(i) 281.3 million Euros by 31 December 2006 (including the indirect interest held in Aeroporti di Roma S.p.A.);

(ii) 131.5 million Euros by 31 December 2007;

(iii) 35.2 million Euros by 31 December 2009;

• the undertaking of Impregilo to repay the lending institutions any amount of above one million Euros received following the sale of non-current

financial and fixed assets;


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• the undertaking of Impregilo to repay the lending institutions any amount stemming from capital increases and/or any other extraordinary

transaction carried out on the capital of the company or other entities belonging to the Impregilo Group, other than for some stated exceptions;

• the undertaking of Impregilo to repay the lending institutions any amount that is paid or distributed by Imprepar (in liquidation) in favour of Group

entities.

The amounts to be repaid will be determined net of costs incurred, including fiscal charges. Please note that, further to the facility's drawdown and

as required under the agreement, the company has prepaid principal of 44.3 million Euros (including 15.1 million Euros relating to rescheduled

borrowing) further to disposing of its assets.

Rescheduling of short-term borrowing On the strength of the commitments assumed on 7 June 2005 and following the execution of the entire capital increase, on 28 July 2005 a number

of agreements were entered into for the rescheduling - subject to the 500-million Euro loan being transformed into medium-term borrowing - of

the Group's short-term debt to the order of 206.9 million Euros (including the Euro equivalent, as at the rescheduling date of the agreements, of a

US$ 25.4 million debt), with 181.2 million Euros of this total pertaining to Impregilo S.p.A. and the rest to other Group companies.

The conditions of the rescheduling agreements referred to above may be summarised as follows:

• term of 5 years, with a 24-month grace period;

• interest rate of six-month EURIBOR (LIBOR in the case of amounts denominated in dollars), plus a variable spread, depending on the gearing ratio;

• fulfilment, at a consolidated level, of the same financial covenants as those contained in the medium-term loan agreement, which is due to be

checked, as provided for by this facility's agreement, from when the interim report for the period to 30 June 2006 is approved.

20. BONDSAs at 31 December 2004, the item "Bonds" showed the amount of the 9.5-million unidad de fomento bond loan (equal to 226 million Euros, based

on exchanges rates as at 31 December 2004) that the franchisee Costanera Norte had placed with the Chilean market. The features of this bond

are detailed below.

Type of security Nominal amount Interest Issue Final(unidad de fomento) rate date repayment date

Costanera Norte S.A. 1,900,000.00 5.00% December 2003 June 2016

Costanera Norte S.A. 7,600,000.00 5.50% December 2003 December 2024

Total 9,500,000.00

As at 31 December 2005, this bond loan, amounting to 299 million Euros based on the 31 December 2005 exchange rate, was carried as part of

liabilities directly associated with assets held for sale, as per the information provided in another section of the supplementary notes to the financial

statements.

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21. LEASING LIABILITIESThe Group has stipulated commercial lease agreements for plant and machinery. The lease agreements in question have an average life of between

three and five years. As at 31 December 2005, the effective rate of interest on these agreements averaged out at 5.36%. The principal amount of future

rents due under the agreements in place as at 31 December 2005 is subdivided into a short-term portion (7.6 million Euros) and a medium/long-term

portion (8.2 million Euros). The 20-million Euro decrease on 31 December 2004 was due to the payment of instalments maturing during the year.

The fair value of financial leases entered into by the Group is close to carrying value.

Leasing liabilities are guaranteed to the lessor through rights stood over the assets leased.

22. STAFF SEVERANCE FUNDAs at 31 December 2005 the present value of the Group's effective liability towards employees, determined by applying the criteria laid down by

IAS 19, was equal to 43.4 million Euros and substantially in line with the value reported as at 31 December 2004. The actuarial value of the staff

severance fund was determined by using the services of an independent actuary.

The movement undergone by the staff severance fund may be summarised as follows:

31 December Allocation Withdrawals 31 December(amounts expressed in Euro/000s) 2004 for the year 2005

Staff severance fund 43,492 23,863 (23,959) 43,396

The allocation effected for the year includes the effect of the actuarial measurement referred to above, which involved recognising an actuarial loss

of Euro 788 thousand in the income statement. This was because the Group decided not to adopt the so-called "corridor method". The financial

component of the time-discounting process, carried in the income statement as part of "sundry financial charges" amounted to Euro 728 thousand.

The actuarial measurement process was undertaken by using an average turnover rate of 8%, a discount rate of 4% and a staff turnover rate of 3%.

23. NON-CURRENT AMOUNTS PAYABLE TO AFFILIATESThe debts refer to non-current amounts due to unconsolidated affiliates and are primarily of a commercial nature for services provided, as well as

of a sundry nature for the allocation of contract costs or proceeds realised in partnership. As at 31 December 2005, such amounts amounted to

10.4 million Euros, down by 4.7 million Euros on 31 December 2004.

The appendix to the supplementary notes accompanying the financial statements provides a breakdown of relationships with Group companies.

24. PROVISIONS FOR RISKS AND LIABILITIESAs at 31 December 2005, provisions for non-current risks and liabilities amounted to 174.9 million Euros. The table below details their composition

and the movements undergone by them during the period under review.


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Value at start Allocations Withdrawals Other Value at end(amounts expressed in Euro/000s) of year movements of year

Provisions for risks relating to shareholdings 7,263 3,060 237 10,560

Other provisions 60,696 126,313 (29,472) 6,763 164,300

Total 67,959 129,373 (29,472) 7,000 174,860

The provisions for risks relating to shareholdings refer to the foreseeable impairment losses of companies (affiliates and other companies) controlled

by Imprepar (7.9 million Euros), the risk provision for the investment in Puentes del Litoral (2.4 million) and other minor provisions (0.3 million Euros).

"Other provisions" were made up of the following main items, as detailed below:

Balance as at 31.12.2005

Campania USW Project 31,216

Provisions of Imprepar and its subsidiaries 17,543

Losses incurred on contracts 91,251

Lawsuits 7,131

Disputes with staff 2,545

Disputes with foreign fiscal authorities 7,185

Provision for environmental risk 1,352

Other provisions 6,077

Total 164,300

The provisions relating to the Campania USW Project are mainly made up of the following: the costs expected to be incurred at the end of concession

for the sites used for the temporary storage of fuel-blocks to restore them to their original condition, risk coverage charges in connection with a ten-

year land sub-letting agreement, and the charges foreseen for the management of WDF storage areas.

The provisions relating to Imprepar and its subsidiaries contain allocations made for probable future liabilities determined upon completion of

contracts and the effects of lawsuits already initiated against said entities.

The provisions for loss incurred on contracts include, specifically, allocations set aside for the losses foreseen in respect of the Trans Alp Tunnel

(Switzerland), in Pakistan and for a number of the contracts and real-estate ventures embarked upon by Impregilo Edilizia e Servizi.

The provision for current lawsuits refers to legal proceedings initiated against Healy and the Emirates branch of Impregilo Edilizia e Servizi.

The provision for environmental risk, which regards Fisia Italimpianti, relates primarily to the management of the Fossano waste disposal site and

covers future liabilities inherent in "burial" and "post-mortem" activities.

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While we cannot predict when these liabilities will need to be borne with any accuracy, most of them are expected to emerge within the next three

financial years.

No allocations have been effected for potential liabilities, since - as things presently stand - they are unlikely to arise, and in any event, the amounts

involved cannot be reliably quantified. In short, the areas of risk highlight the criticalities inherent in contracts that have now been wrapped up in

the Constructions Division, the progress made in the winding-up of Imprepar and the developments within the Argentine franchisees, operating

against a backdrop of economic instability. A more detailed description of these areas of risk is contained in the Report of Operations, in the section

dealing with "Business Divisions".

25. CURRENT LIABILITIES

Bank overdrafts and current portion of loans

The above item may be broken down as follows:

(amounts expressed in Euro/000s) 31 December 2005 31 December 2004

Current amounts payable to banks 315,154 592,083

Current amounts payable to other lenders 63,119 129,503

Current amounts payable to shareholders for loans received 100,000

Total 378,273 821,586

Current amounts payable to banks decreased due to the financial restructuring exercise described previously.

As at 31 December 2005, as was also the case on 31 December 2004, this item included the first tranche of the project finance facility granted to

Fibe S.p.A. (173.5 million Euros). As mentioned in the Report on Operations, on 31 January 2006 an agreement was reached to cancel the

agreement for said facility. The effect of this rescission - the transformation of short-term debt into medium/long-term debt - will be incorporated

in the accounts from 2006, as required under international accounting standards.

Appearing among short-term bank borrowing is the debt of the Argentine subsidiary Caminos de las Sierras S.A., which - based on 31 December

2005 exchange rates - amounted to 57.3 million Euros, compared with 56.4 million Euros on 31 December 2004.

Amounts payable to other lenders amounted to 63.1 million Euros, and primarily included debts relating to receivables being assigned on a recourse

basis by Impregilo S.p.A., Fisia Italimpianti S.p.A. and the C.A.V.E.T. consortium.

As at 31 December 2004, the item "Current amounts payable to shareholders for loans received" was made up of a loan received during financial

year 2004 from the shareholder Gemina. This loan, which is subjected to an interest rate of one-month EURIBOR plus a spread of 3.0%, increased

to 130 million Euros on 23 March 2005 before being repaid between June and September of the current year. It was repaid in part through the

capital increase described in the section dealing with shareholders' equity and in part by being set off against the transfer price applied for the 11%

share of Leonardo S.r.l. and Leonardo Holding S.A., as well as bonds issued by Leonardo Holding S.A. itself.


178

26. CURRENT PORTION OF BOND LOANSAs at 31 December 2004, the above item amounted to 549.3 million Euros and related to bonds issued by the company Impregilo International

Infrastructures N.V. During 2005, these bonds loans were repaid in full.

27. DERIVATIVES AND OTHER CURRENT FINANCIAL LIABILITIESThe 4,015,000 Euros reported under this heading relates to the negative fair value registered as at 31 December 2005 by derivatives in respect of

currencies (US$) and interest rates totalling 3,635 thousand Euros and metals totalling 380 thousand Euros, with the derivative contracts themselves

stipulated by the subsidiary company Fisia Italimpianti S.p.A.

The table below provides a breakdown of the derivative contracts in place as at 31 December 2005.

Exchange-rate derivatives

Company Stipulation date of contract Maturity date Currency Notional amount Fair Value

Euro 000s

Impregilo S.p.A. 9.11.2005 27.01.2006 USD 10,000,000 (27)



Impregilo S.p.A. 30.11.2005 28.02.2006 USD 52,400,000 402


Impregilo S.p.A. 23.12.2005 28.03.2006 CHF 6,000,000 4

Impregilo S.p.A. 23.12.2005 28.03.2006 CHF 6,000,000 2

Impregilo in favour of Casisa 14.09.2005 14.03.2006 ARS/USD 4,144,000 (48)



Total (158)

Fisia Italimpianti 11.01.2006 USD 10,000,000 (107)





Total (3,535)

179

Interest-rate derivatives

Company Stipulation date of contract Maturity date Currency Notional amount Fair Value

Euro 000s

PDM/Banca Intesa 13.12.2005 30.06.2009 Euro 25,000,000

PDM/Efibanca 13.12.2005 30.06.2009 Euro 10,000,000

PDM/B.B.V.A. 13.12.2005 30.06.2009 Euro 25,000,000

Fisia Italimpianti Euro 57,000,000 (100)

Total (100)

Price-hedging derivatives

Company Maturity Quantity Forward price USD/Tonne Value USD 000s Fair Value

(Tonnes) Euro 000s

Forward contracts for the purchasing of metals

Fisia Italimpianti 17 July 2006 CU 2,750 2,385 6,559 2,638

Fisia Italimpianti 16 October 2006 CU 2,750 2,335 6,421 2,359

Fisia Italimpianti 17 July 2006 NI 310 11,050 3,425 218

Fisia Italimpianti 16 October 2006 NI 310 10,650 3,302 296

Fisia Italimpianti 13 January 2006 CU 599 3,160 1,893 698

Fisia Italimpianti 13 January 2006 NI 98 14,700 1,441 (108)

Fisia Italimpianti 13 March 2006 CU 868 2,890 2,509 1,123

Fisia Italimpianti 13 March 2006 NI 99 13,700 1,356 (18)

Fisia Italimpianti 15 May 2006 CU 1,813 2,805 5,085 2,244

Fisia Italimpianti 15 May 2006 NI 284 13,550 3,848 (4)

Fisia Italimpianti 18 December 2006 CU 1,500 2,650 3,975 1,535

Fisia Italimpianti 18 December 2006 NI 211 13,000 2,743 73

Total purchases CU 10,280 26,442 10,597

NI 1,312 16,115 457

Forward contracts for the sale of metals

Fisia Italimpianti 13 March 2006 CU 707 3,805 2,690 (371)

Fisia Italimpianti 13 March 2006 NI 99 12,500 1,238 (82)

Fisia Italimpianti 15 May 2006 CU 629,5 4,030 2,536 (137)

Fisia Italimpianti 15 May 2006 NI 204,5 12,850 2,628 (116)

Fisia Italimpianti 15 May 2006 CU 662 4,225 2,797 (37)

Fisia Italimpianti 15 May 2006 NI 79,5 13,250 1,053 (19)

Total sales CU 1,998.5 8,023 (545)

NI 383 4,919 (217)

Total 13,973.50 55,499 10,292


180

Reconciliation between the fair values indicated above and the amounts recognised in the balance sheet follows below.

Asset Liability Net

Total Fair Value 10,673 4,015 6,658

Fair value for metals 10,672 380 10,292

Fair value for exchange-rate derivatives 3,535 (3,535)

Fair value for interest-rate derivatives 100 (100)

Balancing entry for metal derivatives - carried as a liability 7,236 (7,236)

Net (579)

Recognised in:

Financial assets 3,436 3,436

Financial liabilities 4,015 (4,015)

Net (579)

The fair values of exchange-rate derivatives relating to Impregilo S.p.A. have not been recognised in the accounts, since the amount involved is negligible.

The derivative contracts entered into by the Group for the fluctuation risk inherent in exchange rates, metal prices and interest rates are summarised below.

Exchange-rate risk derivatives As at 31 December 2005, the following types of derivative contract were in place:

The parent company Impregilo S.p.A. had a series of contracts with a global notional value of 82.7 million Euros in place for the buying and selling

of currency on a forward basis to hedge exchange-rate risk.

The subsidiary company Fisia Italimpianti S.p.A. had a contract in place to sell US$ 10,000 thousand on a forward basis. Said contract was set to

mature on 10 January 2006 and carried a forward rate of 1.19526. It also had a series of derivative contracts in place to hedge currencies (US$)

with a global notional value of US$ 37,775 thousand.

The fair values of the above contracts as at 31 December 2005 were recognised in the income statement (as financial income and charges), in the

absence of all prerequisites needed in order for them to be defined as "hedging contracts".

Derivative contracts to protect against fluctuations in metal prices The subsidiary company Fisia Italimpianti S.p.A. has entered into a number of "derivative" contracts with banks, which relate to the buying and

selling of metals (without physical delivery) on a forward basis, the aim being to hedge the fluctuation risks inherent in certain raw materials used

to realise pipes and plates, which have been commissioned to suppliers and will be used in desalination plants currently under construction. The

fair value of derivatives as at 31 December 2005 reported a positive balance of 10,292 thousand Euros in total. This was carried in the income

statement by reducing applicable costs, or rather it was set off against the costs underlying hedging operations (cost of materials purchased) for

the total sum of 1,840 thousand Euros. The remaining portion of fair value - a positive balance of 8,452 - will be carried in the income statement

upon the emergence of the costs stemming from the items hedged.

181

Derivative contracts to protect against interest-rate fluctuations As at 31 December 2005, the following types of derivative contract were in place:

The subsidiary company Fisia Italimpianti S.p.A. had a derivative contract (notional amount: 57,000 thousand Euro) underway at the end of the year,

which it used to hedge the risk of an increase in the interest rate applied to a portion of the debt outstanding on its medium-long-term loan. By way

of this transaction, the company has the assurance that six-month EURIBOR, upon which the interest payable to the lender is based, cannot exceed

4.35%. However, in consideration of the absence of all prerequisites needed in order to define a contract as a "hedging contract", the fair value

determined as at 31 December 2005 - a negative balance of 100 thousand Euros - has been recognised in the income statement, in accordance

with the logic applied to non-hedging derivatives.

The consortium company Passante di Mestre S.c.p.a., in which Impregilo holds a 42% stake, has taken out three derivative contracts with a notional

value of 60,000 thousand Euros, which it is using to hedge the risk of any change in the interest rate applied to its loan. It has entered into these

contracts with three banks that are part of the syndicate providing the loan itself. Measuring these contracts at fair value does not have an impact

on the period-end income statement, since they were taken out at the end of the year.

28. DOWN PAYMENTS RECEIVED FOR GOODS BEING MADE TO ORDERThe above item reflects the amount by which invoices exceed the work actually completed, net of costs added to margins and net of any losses.

As at 31 December 2005, down payments amounted to 588.7 million Euros, representing a decrease of 11.5 million Euros on 31 December 2004.

This decrease was due to the completion stage reached in high-capacity railway contracts, which was made up for by the advances received for

Engineering & Plant Construction Division contracts and the new contract won in Ecuador.

The down payments reported as at 31 December 2005 related specifically to high-capacity railway contracts (247.4 million Euros), Engineering &

Plant Construction Division contracts (121.6 million Euros) and other contracts awarded to the Constructions Division, including those in Iceland

(17.1 million Euros), Venezuela (34.9 million Euros), and Ecuador (13.4 million Euros).

29. TRADE PAYABLESTrade payables amounted to 832.9 million Euros, representing a decrease of 67.7 million Euros on 31 December 2004.

For the most part, trade payables relate to amounts due to high-capacity railway project suppliers, which totalled 350.9 million Euros as at 31

December 2005 (representing a decrease of 120.3 million Euros on the previous year).

The Environmental Systems Division registered a 32.7-million Euro increase in trade payables, while Fibe and Fibe Campania similarly saw their

debt in this respect increase by 80.3 million Euros.

30. OTHER CURRENT LIABILITIESAs at 31 December 2005, other current liabilities amounted to 415.3 million Euros, thus remaining substantially unchanged on the previous year.


182

This item may be broken down as follows:


Due to welfare agencies 14,864 12,707 2,157

Due to staff 38,247 28,437 9,810

Liabilities in the form of damages and compulsory purchases 56,125 71,459 (15,334)

Due to public bodies 33,929 23,108 10,821

Other payables 166,968 184,589 (17,621)

Accrued liabilities and deferred income 57,582 52,207 5,375

Fiscal liabilities 47,593 42,730 4,863

Total 415,308 415,237 71

The item "other payables" includes the following principal items:

• 88.1 million Euros due to the Council Executive and local councils of provinces within Campania Region in respect of the USW Project; this item

is primarily made up of amounts payable for environmental restoration work and amounts due to the Government Commissioner pursuant to the

provisions of Ruling 175/01 and Ruling of the President of the Council of Ministers ("OPCM") 3286/03;

• 37,9 million Euros payable for the acquisition of business units;

• 11.4 million Euros of emoluments payable to staff for services rendered.

31. GUARANTEES ISSUED OR RECEIVEDThe principal guarantees issued may be summarised as follows:

• Contractual guarantees: amounting to 3,498,611 thousand Euros, these have been issued to clients to guarantee the successful completion of

works, contractual advances, the release of amounts withheld for guarantee purposes and the participation in tenders, and refer to all contracts

currently underway.

183

Performance bonds (guaranteeing the successful completion of works) include guarantees totalling 50.4 million Euros, which were issued by

Impregilo in respect of the Campania USW Project and under which a counterclaim was made by San Paolo and Zurich International S.p.A., as

mentioned in the relevant chapter of the Report on Operations.

As cover for the performance bonds issued to clients, guarantees have also been issued by subcontractors in favour of Group companies.

• Guarantees for credit commitments: amounting to 25,402 thousand Euros, these relate to unconsolidated companies.

• Guarantees issued to SACE (Italy's export credit agency) for export credits, which amount to 229,472 thousand Euros.

• Other personal guarantees amounting to 304,927 thousand and guaranteeing the fulfilment of obligations towards customs and fiscal authorities.

• Tangible security relating to the following:

a. a lien over the shares of Fisia Italimpianti S.p.A., stood as collateral for a loan granted to said company by Banca di Roma and other banks

(5,100 thousand Euros);

b. a lien consisting of a RAS insurance policy for 70,097 thousand Euros and a tied-up bank deposit for 38,118 thousand Euros, stood as

collateral for the issuance and release of the relevant portion of a guarantee issued by RAS for a performance bond in respect of the sub-

section of the high-capacity Novara-Milan railway line;

c. a lien over the shares of Salerno Reggio Calabria S.c.p.a. and Reggio Calabria-Scilla S.c.p.a., stood as collateral for a loan granted to said

companies by Depfa Bank Plc (43,350 thousand Euros); and

d. a deposit of 95,054 thousand, pledged to guarantee the shares of the investee companies Ponte de Pedra Energetica S.A., Sociedad

Concesionaria Costanera Norte S.A., Fibe S.p.A., Impregilo Wolverhampton Ltd. and Impregilo Parking Glasgow.

Commitments are made up of the following:

• Undertakings to sell financial instruments (swaps) entered into by Impregilo S.p.A. for a notional amount of 82,761 thousand Euros;

• Undertakings to sell financial instruments (swaps) entered into by Impregilo International Infrastructures for a notional amount of 6,807 thousand Euros;

• Financial instruments subscribed by Fisia Italimpianti S.p.A. for a notional amount of 144,576 thousand Euros;

• Interest rate swap agreements entered into by Passante di Mestre S.c.p.a. for a notional amount of 25,200 thousand Euros; and

• An undertaking to sell 24% of the COCIV consortium for 21,714 thousand Euros.


184

COMPOSITION OF CHANGES UNDERGONE BY INCOME-STATEMENT ITEMS

32. PRODUCTION VALUEDuring the year, the Impregilo Group generated revenues of 2,443 million Euros, down by 556.7 million Euros (or approximately 19%) on the previous

year. This decrease was primarily imputable to a falloff in worksite activities, with projects having now entered the final phase (specifically the Turin-

Novara sub-section of the Turin-Milan high-speed railway line) and the delays encountered in getting new worksites up and running, including the

two sections of the Salerno-Reggio Calabria motorway (Gioia Tauro-Scilla and Scilla-Reggio Calabria) and the Mestre Loop Road.

(amounts expressed in Euro/000s) Financial year 2005 Financial year 2004 Change

Contract revenues from the sale of products and the provision of services 2,318,499 2,714,125 (395,626)

Other revenues and income 124,481 285,542 (161,061)

Total 2,442,980 2,999,667 (556,687)

Contract revenues arise from the year's production, determined by the cost-to-cost method, as well as from the invoicing of services performed by

Group companies. This item may be broken down as follows:


Jobs invoiced to clients 655,511 1,154,822 (499,311)

Change in inventories: work in progress and real estate ventures 1,278,797 1,188,115 90,682

Revenues in the form of sponsor fees and fees from consortiums and joint ventures 199,126 185,400 13,726

Revenues from the provision of services 185,065 185,788 (723)

Total 2,318,499 2,714,125 (395,626)

The item "other revenues" may be broken down as follows:


Internal work capitalised on fixed assets 139,375 (139,375)

Other revenues and income 124,481 146,167 (21,686)

Total 124,481 285,542 (161,061)

The increases undergone by the item "Internal work capitalised on fixed assets" as at 31 December 2004 related primarily to costs incurred during

the period under review for the construction of the urban motorway in Santiago, Chile (Sociedad Concessionaria Costanera Norte S.A.), regulated

by a thirty-year franchise, which in financial year 2005 has been classified as part of "assets held for sale".

185

The item "Other revenues and income" - which refers primarily to costs recovered from third parties in respect of compulsory purchases and

contingent assets - may be broken down as follows:


Costs recovered 33,057 33,455 (398)

Sundry fees 13,370 43,184 (29,814)

Rental income and hire fees received 1,968 3,220 (1,252)

Capital gains on the disposal of fixed assets 7,081 4,442 2,639

Contingent assets 37,502 41,865 (4,363)

Withdrawal from risk provisions 29,472 20,001 9,471

Other 2,031 2,031

Total 124,481 146,167 (21,686)

The item "Costs recovered" refers to costs incurred that have subsequently been invoiced to third parties that have used services pertaining to the

Impregilo Group, such as personnel on attachment.

The item "Sundry fees" refers primarily to the high-capacity consortium C.A.V.TO.MI., with said fees coming from services provided as a result of

additions to the original agreement (Euro 5,623 thousand), the revaluation of trade receivables and other amounts receivable by the company

Imprepar (Euro 3,041 thousand) and the high-capacity consortium C.A.V.E.T. (Euro 1,011 thousand).

The item "Contingent assets" related to C.A.V.TO.MI. consortium (Euro 13,530 thousand), with most of this entry stemming from the updating of

amounts verified for compulsory purchases in respect of the two sub-sections; to the parent company Impregilo S.p.A. (Euro 6,553 thousand), due

to both the recognition of a foreign tax credit and other tax refunds (Euro 5,161 thousand) and other arrangements reached for old debt positions;

and to the subsidiary Imprepar (Euro 4,532 thousand), due to some provisions previously set aside being written back after consortium costs were

claimed back and some costs, which were partly the responsibility of shareholders, were recovered.

For further details about the item "Withdrawal from risk provisions", please refer to the comments already made in the relevant section of these Notes.

33. COST OF RAW MATERIALS AND CONSUMABLES



Purchases: raw materials and consumables 367,078 520,438 (153,360)

Other 5,433 7,816 (2,383)

Total 372,511 528,254 (155,743)

The decrease in raw materials was the result of the high-speed Novara-Turin sub-section being completed.


186

34. SUB-CONTRACTINGSub-contracting costs amounted to 515.4 million Euros representing a decrease of 256 million Euros on the same period of the previous year, which

was due to the sub-section referred to above being completed.

35. OTHER OPERATING EXPENSESAs at 31 December 2005, other operating expenses amounted to 988.2 million Euros, representing a decrease of 22.6 million Euros on the same

period of the previous year.



Consultants' fees 324,663 360,832 (36,169)

Fees payable to Directors, Internal Auditors and Accountants 13,340 5,175 8,165

Maintenance 21,684 18,186 3,498

Transportation and rental charges 77,147 55,996 21,151

Costs claimed back from consortiums and allocation of costs incurred by joint ventures 154,170 153,463 707

Insurance 19,338 34,905 (15,567)

Rents and hire chargers 68,368 75,866 (7,498)

Contingent liabilities 20,493 29,569 (9,076)

Capital losses on the disposal of fixed assets 5,683 9,554 (3,871)

Cost of outside services 79,571 124,627 (45,056)

Indirect taxes and duties 13,054 10,303 2,751

Losses on receivables not covered by bad debt provision 13,117 20,055 (6,938)

Sundry operating expenses 177,545 112,255 65,290

Total 988,173 1,010,786 (22,613)

The fees payable to Directors and Internal Auditors include their share of stock options, measured at fair value of 2.1 million Euros.

The table below provided a breakdown of the item "Sundry operating expenses".

Financial year 2005

WDF storage costs, FOS waste disposal costs and free services - Fibe and Fibe Campania 92,814

Compulsory purchases relating to high-capacity project 66,013

Compensation and commercial settlements received by Imprepar 2,430

Sundry charges for Mazar contract, Ecuador 3,264

Settlement of legal disputes and other commercial settlements relating to Impregilo S.p.A. 5,533

Other sundry operating expenses 7,491

Total 177,545

187

36. STAFF COSTSStaff costs for financial year 2005 amounted to 395.5 million Euros, compared with 382 million Euros for the previous year. This item may be broken

down as follows:


Wages and salaries 253,128 261,714 (8,586)

Social and welfare charges 77,065 82,240 (5,175)

Allocation to staff severance fund 23,863 18,007 5,856

Other staff costs 41,476 20,419 21,057

Total 395,532 382,380 13,152

The increase undergone by staff costs was due to the restructuring costs borne during the year as a result of the company's reorganisation, which - further

to an agreement being reached with the unions - led to a decrease in the headcount in both the Corporate Division and the various Business Divisions.

The average headcount is broken down by Business Division in the table below.

Corporate Constructions Concession Fibe and Engineering & Building TotalFibe Campania Plant Construction & Services

Managers 43 155 49 3 31 20 301

Clerical officers 162 1,928 1,451 27 531 114 4,213

Blue-collar workers - 5,449 446 30 268 206 6,399

Total 205 7,532 1,946 60 830 340 10,913

Italy 4,640

Abroad 6,273

Total 10,913

It is important to note that total staff costs include the share of stock options assigned to staff, which have been measured at a fair value of Euro

750 thousand.

37. AMORTISATION, DEPRECIATION, ALLOCATIONS AND WRITE-DOWNSThe above item may be broken down as follows:


Amortisation of intangible assets 27,467 38,385 (10,918)

Depreciation of fixed assets 85,651 83,063 2,588

Other write-downs effected against non-current assets 34,987 310 34,677

Allocation to bad debt provision 148,311 7,578 140,733

Allocations for other risks 129,373 35,655 93,718

Total 425,789 164,991 260,798


188

Financial year 2005 saw the allocations effected for bad debts and other risks undergo a significant increase. This was due to the reasons already

outlined in the relevant section dealing with the balance sheet in the supplementary notes accompanying the financial statements. The most

significant allocations made to risk provisions concerned the following:

• the costs expected to be incurred at the end of concession for the sites used for the temporary storage of fuel-blocks to restore them to their

original condition, risk coverage charges in connection with a ten-year land sub-letting agreement, and the charges foreseen for the management

of WDF storage areas with regard to Fibe and Fibe Campania;

• the liabilities arising from the ongoing legal proceedings initiated against Imprepar following the rulings pronounced during the year;

• the estimated losses incurred on contracts, including the Trans Alp Tunnel (Switzerland) and Ghazi Barotha in Pakistan, and allocations effected

for a number of the contracts and real-estate ventures embarked upon by Impregilo Edilizia e Servizi;

• the liabilities expected to arise from the legal disputes and litigation proceedings initiated against the subsidiary Healy and the Emirates branch

of Impregilo Edilizia e Servizi;

• charges pertaining to Fisia Italimpianti and relating primarily to the management of the Fossano waste disposal site, for future liabilities inherent

in "burial" and "post-mortem" activities.

38. RESULT OF SHAREHOLDINGSThe net result from shareholdings in financial year 2005 amounted to 39.4 million Euros, which was lower than the 67.8 million Euros registered

in the same period of the previous year. This was due to the non-recurring income generated in 2004 from the sale of the stake in Consorzio Venezia

Nuova.

The above result may be broken down as follows:


Income shareholding 16,200 70,290 (54,090)

Shareholding consolidated by the equity method 23,174 (2,490) 25,664

Total 39,374 67,800 28,426

189

The income thus generated may be attributed to the companies listed below:

Value Capital gains Dividends from Other income Totaldetermined by from unconsolidated from

(amounts expressed in Euro/000s) equity method disposals companies shareholdings

Primav Ecorodovias 18,088 18,088

Shangai Pucheng 2,739 2,739

Acqua Italia 2,588 2,588

Agba (5,597) (5,597)

Puentes de Litoral (2,690) (2,690)

Yacilec 1,299 1,871 3,170

Asociados 908 908

Leonardo S.r.l. 15,601 15,601

Wolverhampton 2,715 2,715

Bocoge (1,319) (1,319)

Coincar 377 377

Nuova Romea (852) (852)

Ponte de Pedra 914 914

Enecor (943) (943)

Rodoconsult 154 154

Sistranyac 427 427

Seis 384 384

Other minor investments (631) 105 3,236 2,710

Total 16,200 18,316 1,070 3,788 39,374

39. FINANCIAL INCOME AND CHARGESAs at 31 December 2005, financial income and charges produced a net charge of 94.3 million Euros, which marked a 105.6 million Euro

improvement on the same period of the previous financial year.



Interest receivable and other financial income 74,330 49,502 24,828

Interest payable and other financial charges (169,314) (255,594) 86,280

Income and charges from assessments at fair value 694 6,158 (5,464)

Total (94,290) (199,934) 105,644

The decrease in the net balance produced by financial income and charges was thanks to both an increase in interest received from third parties

(interest from clients, which was mainly computed by the subsidiaries Fibe and Fibe Campania) and lower financial charges further to the previously

mentioned financial restructuring exercise embarked upon by the Group during the year under review, and specifically to the redemption of the bond

loan on 31 May 2005 and 24 June 2005.


190

The table below provides a breakdown of interest payable and other financial charges:

Financial year 2005 Financial year 2004

Interest payable to banks 60,553 50,287

Allocation to provision for arrears interest 35,350 14

Interest payable on bond loans 15,184 49,292

Guarantee charges 15,149 29,794

Interest payable to other creditors 11,191 11,827

Interest payable to other lenders 8,575 15,970

Write-downs effected against trade receivables and other current receivables and liquid assets 3,829 486

Losses on partnership arrangements 2,787 1,185

Financial discounts and allowances 2,491 51

Financial charges payable on leasing agreements 1,925 2,088

Interest payable on mortgages and loans 1,096 1,530

Bank charges for loans 3,398 2,531

Capital losses on the sale of long-term investments - 12,474

Allocation to the provision for long-term bad and doubtful debts - 58,573

Other financial charges 7,787 19,492

Total 169,314 255,594

As at 31 December 2004, financial charges included the write-down, amounting to 58.6 million Euros, effected against items of a financial nature

receivable by Imprepar S.p.A. (in liquidation) from the Iraqi Government. Please note that the write-downs effected in 2005, relating to Imprepar's

Iraqi debt, concerned trade receivables, meaning that these charges have been carried as part of EBIT.

Interest receivable and other financial income may be broken down as follows:


Long-term receivables 234 734 (500)

Investment securities 2,265 1,689 576

Trading securities 13,225 5,078 8,147

Sundry financial income 58,606 42,004 16,602

Total 74,330 49,505 24,825

191

40. FOREIGN EXCHANGE GAINS AND LOSSESIn 2005, foreign exchange differences reported a positive net balance of 6.4 million Euros, compared with negative net balance of 19 million Euros

the previous year. This change in trend was the result of the weak currencies of countries such as Venezuela, Nigeria, Arab countries and Pakistan.

41. TAXESAs at 31 December 2005, the Group's tax burden amounted to 51.7 million Euros, which may be broken down as follows:


Current taxes 37,522 26,929 10,593

Deferred/(Prepaid) taxes, net 7,981 49,754 (41,773)

Taxes from previous years 6,195 7,302 (1,107)

Total 51,698 83,985 (32,287)

The year's current taxes comprise an allocation made to cover the IRAP liabilities (local business taxes) of the parent company and its subsidiary

companies, as well as an allocation made for the income taxes of the parent company's branches, as well as its subsidiaries and their respective

branches.

Deferred taxation instead consisted of the following:

• An allocation for deferred taxes in respect of the temporary differences emerging from the application of fiscal legislation, with said taxes due to

be paid in future years.

• The utilisation of deferred taxes already provided for in previous years and written back into the current year's income statement in accordance

with accrual accounting principles.

• The recognition of prepaid taxes, again due to the temporary differences that will be written back in future years, specifically in respect of

allocations for future risks and liabilities, effected on the assumption that they will effectively be reabsorbed and in consideration of the industrial

plans approved by the Group. It should also be noted that no prepaid taxes have been carried in respect of previous fiscal losses (estimated at

60 million Euros) arising from within the so-called "Group tax regime". Neither have any prepaid taxes been carried in respect of the temporary

differences reported by subsidiary companies (estimated to total 105 million Euros) for allocations made to cover future risks and liabilities of

around 28 million Euros and the debt write-down effected for the difference.

• The utilisation of taxes prepaid in previous years, which were written back into the income statement in accordance with the previously mentioned

accrual accounting principles.


192

For purposes of clarity, the table below provides further details of the Group's tax burden and the principal items determining it.

(amounts expressed in Euro/000s) Financial year 2005

Pre-tax result (302,963)

Theoretical taxation

Local business tax applied to production value 12,564

Current income taxes, determined in accordance with the fiscal laws of the various countries in which activities are undertaken 24,958

Previous years' taxes 6,195

Utilisation of deferred taxes set aside in previous years, carried principally for capital gains realisedin previous years and divided into instalments for fiscal purposes (21,730)

Utilisation of tax prepaid in previous years, carried principally for write-downs on shareholdings that are tax-deductible by instalments and for capital gains realised on the companies Fibe S.p.A., Fibe Campania S.p.A. and Fisia S.p.A. 45,400

Recognition of prepaid taxes on temporary differences relating to allocations for future risksand liabilities as well as on the fiscal losses of the subsidiary company Fisia S.p.A. (19,033)

Allocation to the deferred taxation provision in accordance with the accrual method of accounting 3,344

Total fiscal effect of permanent variations 7,981

Total taxes 51,698

42. NET RESULT FROM ASSETS HELD FOR SALEThis is the result relating to investments held for sale, in respect of which preliminary contracts of sale have already been signed and of which the

definitive disposal will be perfected in 2006.

The investments held for sale belong to the following areas of business activity:

(amounts expressed in Euro/000s) Financial year 2005

Concession and Services Business Divisions

Costanera Norte Ltd (8,090)

Gricignano 3 Scarl 180

Nuova coimpresa (3,409)

Engineering and Constructions Business Divisions

Sipem S.p.A. in liquidation (614)

Borini e Prono 248

Total (11,685)

193


EFFECTS OF THE TRANSITION TO IAS/IFRS STANDARDS


194

EFFECTS ON EQUITY AS AT 1 JANUARY 2004The table below summarises the main changes undergone by the Group's consolidated equity due to its transition to IFRS:

Reconciliation of equity as at 1 January 2004

(amounts expressed in millions of Euros)

Group equity as at 1 January 2004 326.4

1. Business combinations

2. Intangible assets (6.2)

3. Tangible assets (6.0)

4. Recognition and measurement of derivatives (2.8)

5. Work in progress arising under construction contracts 6.4

6. Financial leases (9.0)

7. Put/call options in respect of shares 3.4

8. Change in consolidation structure (2.1)

9. Cumulative conversion difference 0.0

10. Employee benefits 3.6

11. Other adjustments 0.6

12. Deferred taxes 1.6

Group equity as at 1 January 2004 according to IAS/IFRS 315.9

EFFECTS OF THE TRANSITIONTO IAS/IFRS STANDARDS

195

EFFECTS ON EQUITY AND THE NET RESULT AS AT 31 DECEMBER 2004The table below summarises the main changes undergone by the Group's consolidated equity due to its transition to IFRS:

Reconciliation of equity and net result as at 31 December 2004

Profit Group(amounts expressed in millions of Euros) for the year Equity

Values as at 31 December 2004 (101.5) 211.5

1. Business combinations 6.5 6.5

2. Intangible assets 3.0 (3.2)

3. Tangible assets (3.0) (9.0)

4. Recognition and measurement of derivatives 4.5 1.7

5. Work in progress arising under construction contracts (11.7) (5.3)

6. Financial leases 7.8 (1.2)

7. Put/call options in respect of shares (6.6) (3.2)

8. Change in consolidation structure (0.7) (5.2)

9. Cumulative conversion difference 12.8

10. Employee benefits 3.6

11. Other adjustments 0.6

12. Deferred taxes 0.3 1.9

Values as at 31 December 2004 according to IAS/IFRS (88.6) 198.7


196

(1) This 12.5-million Euro difference is due to the derivatives used to hedge exchange-rate and interest-rate risk relating to Impregilo S.p.A. and

Fisia Italimpianti S.p.A. being measured at fair value.

(2) The extension of the Group's consolidation structure led to the following variations in bank borrowing net of cash at bank and on hand:

(amounts expressed in Euro/million)

Increase in cash at bank and on hand (44.0)

Increase in medium/long-term bank debt 40.2

Increase in short-term bank debt 29.6

Total 25.8

(3) The recognition of financial leases by the method described in IAS 17 led to a 16.4 million Euro increase in medium/long-term debt and a 19.3

million Euro increase in short-term debt;

(4) Dealings with Equinox have been accounted for in accordance with IAS/IFRS standards, which led to a debt of 50.5 million Euros; these dealings

have been superseded and replaced with new agreements dated 21 December 2005 (see introduction of the Report on Operations);

EFFECTS ON THE NET FINANCIAL POSITION AS AT 31 DECEMBER 2004

Italian accounting standards IAS/IFRS Differences31 December 2004 31 December 2004

Liquid assets

Non-current financial assets (68,022) (68,022) -

Derivatives and other current financial assets (30,785) (43,373) (12,588) (1)

Cash at bank and on hand (423,639) (467,665) (44,026) (2)

Total liquid assets (522,446) (579,060) (56,614)

Medium and long-term borrowing

Bank loans and other loans 235,304 102,016 (133,288) (2)

Bonds 225,581 225,581 -

Leasing liabilities - 16,356 16,356 (3)

Total medium and long-term borrowing 460,885 343,953 (116,932)

Short-term borrowing

Bank overdrafts and current portion of loans 568,068 821,586 235,518 (2) (4)

Current portion of bond loans 550,000 549,290 (710) (5)

Current portion of leasing liabilities - 19,282 19,282 (3)

Derivatives and other current liabilities of a financial nature - 6,415 6,415 (6)

Total short-term borrowing 1,118,068 1,396,573 278,505

Total net borrowing 1,056,507 1,161,466 104,959

197

(5) Measuring the costs of taking out the bond loans of Impregilo International Investments NV at amortised cost, in accordance with the method

provided for by IAS/IFRS standards, produced an effect of 0.7 million Euros;

(6) Measuring the derivatives used to hedge exchange-rate and interest-rate risk relating to Impregilo International Investments NV at fair value

produced an effect of 6.4 million Euros.

EXPLANATORY NOTES REGARDING THE RECONCILIATION SCHEDULE PREPAREDIN ACCORDANCE WITH IFRS 1Following the introduction of IAS/IFRS, the Group's consolidation structure has been extended to all subsidiary companies, regardless of their

significance or state of liquidation. Specifically, companies belonging to the Imprepar business unit have been consolidated. The number of

companies increased by 92 as at 1 January 2004 and by 87 as at 31 December 2004.

The adjustments reported in the tables provided above are outlined below. Effects are shown without the associated deferred fiscal effect.

1. Business combinations

As described previously in "valuation criteria", the Group decided not to apply retroactively IFRS 3 ("Business Combinations") to those business

combinations that took place prior to the date of its transition to IFRS.

As required under IFRS 3, from 1 January 2004, the income statement no longer includes amortisation charges in respect of goodwill, which had

a positive impact of 6.5 million Euros on the accounts for financial year 2004.

2. Intangible assets

Under Italian accounting standards, the Group used to report certain costs (mainly start-up and expansion costs) which, under IFRS requirements,

must be recognised in the income statement when incurred.

The reversal of these capitalised costs led to a 6.2-million Euro reduction in shareholders' equity as at 1 January 2004.

The income statement for financial year 2004 no longer includes the amortisation of these costs, which had a positive impact of 3.0 million Euros

net on the accounts.

3. Tangible assets

Under Italian accounting standards, the Group includes those start-up costs that are directly attributable to the production of the asset itself as

part of property, plant and machinery. Under IFRS requirements, said costs must be recognised in the income statement when incurred.

The reversal of these capitalised costs led to a 6.0-million Euro reduction in shareholders' equity as at 1 January 2004 and had a negative impact

of 3.0 million Euros on the 2004 income statement.

4. Recognition and measurement of derivatives

Under Italian accounting standards, the Group usually reports derivatives as "off balance sheet" items. Under IFRS requirements, said items must

be recognised in the balance sheet and measured at fair value.

As at 1 January 2004, shareholders' equity was reduced by 2.8 million as a result of derivatives held by the Group being measured at fair value.

These are made up of contracts taken out by the Group in order to protect itself from fluctuations in exchange rate and interest rates, which do

not meet the formal requirements established to be regarded as "hedging instruments" for IFRS purposes.

The income statement for financial year 2004 includes the variations in amount undergone by these financial instruments as a positive impact

of 4.5 million Euros.

5. Work in progress arising under construction contracts

As reported previously under "valuation criteria", work in progress arising under construction contracts is measured by the percentage of

completion method of accounting.


198

The extension of the cost-to-cost method of accounting to Group contracts, which up until 31 December 2004 were measured by the physical

measurement method, led to a 6.4-million Euro increase in shareholders' equity as at 1 January 2004, and had a negative impact of 11.7 million

Euros on the profit and loss account for financial year 2004 due to revenues on work in progress arising under construction contracts being

recognised differently from a timing perspective. Since 1 January 2005, all Group contracts have been measured by the cost-to-cost method.

6. Assets held under leasing agreements

As reported previously, assets held under financial leases, by way of which all ownership-related risks and benefits are substantially transferred

to the Group, are recognised as Group assets.

The recognition of those financial leases previously regarded as operating leases by the method foreseen by IAS 17 led to a 9.0-million Euro

decrease in shareholders' equity as at 1 January 2004.

The value in use, for first-time application purposes, was lower than the value of leases recalculated by the financial method. Therefore, the

adoption of the new standards had a negative effect on equity.

The income statement for financial year 2004 includes the recognition of interest earned on financed capital and depreciation charges incurred

in respect of the value of leased assets, producing a positive impact of 7.8 million Euros, which is equal to the difference between the rents paid

during the year and the sum of the financial component of the rent paid and the annual depreciation charge for the assets involved.

7. Put/call options in respect of shares or quotas

IAS 32 - in contrast to Italian accounting standards - states that in the presence of commitments stemming from put options granted in respect

of shares or quotas jointly with rights related to call options obtained, the amount of these commitments is to be carried as part of balance-sheet

liabilities. Since the contract involving the transfer of 49% of the shares of the subsidiary company Fisia Italimpianti S.p.A., completed with

Equinox in March 2003, involved a put/call option between the parties, it has been reported in accordance with the aforementioned provisions.

As a result, Group equity as at 1 January 2004, calculated under IFRS methodology, increased by 3.4 million Euros, which was due to a change

in the percentage of capital held in Fisia Italimpianti in connection with the above effect.

8. Consolidation structure

Under Italian accounting standards, insignificant subsidiary companies and companies put into liquidation may be excluded from a group's

consolidation structure and measured respectively at cost and at realisable value upon liquidation.

This type of exclusion is not permitted under IFRS requirements. Including all subsidiary companies in the consolidation structure therefore reduces

shareholders' equity as at 1 January 2004 by 2.1 million Euros and reduces the 2004 result attributable to the Group by 0.7 million Euros.

9. Cumulative conversion differences

As permitted by IFRS 1, accumulated net exchange-rate differences arising from the previous translations of foreign subsidiaries' financial statements

have not been recorded as at the transition date (i.e. 1 January 2004). Instead, only those differences emerging after said date have been reported.

Setting to zero those cumulative conversion differences emerging before 1 January 2004 produces a positive impact of 12.8 million Euros on

the 2004 profit and loss account. This comes from the net exchange-rate differences accumulated from previous translations already included

in the "First-adoption reserve".

10. Employee benefits

Under IFRS methodology, the staff severance fund falls under the category of defined benefit plans that are to be measured by actuarial

procedures in order to determine the present value of a benefit, which is payable upon termination of an employer-employee relationship and

which has been accrued by employees up until the reporting date of the financial statements.

The opening balance sheet as at 1 January 2004 therefore benefits from a 3.6-million Euro increase in Group equity due to liabilities in respect

of the staff severance fund being adjusted to comply with IFRS requirements.

199

EFFECTS ON THE BALANCE SHEET AS AT 31 DECEMBER 2004The table below summarises the main changes undergone by the Group's consolidated balance sheet due to its transition to IFRS.

Italian Adjustments Change IAS/accounting and in consolidation IFRS

(amounts expressed in Euro/000s) standards reclassifications structure (**)

Assets

Non-current assets

Fixed assets 479,743 33,075 41,083 553,901

Freely transferable assets 337,327 (9,871) 10,432 337,888

Intangible assets 22,525 55,854 78,379

Goodwill 83,633 (57,342) 26,291

Shareholdings 214,305 (2,035) 212,270

Non-current financial assets (*) 68,022 68,022

Non-current amounts receivable from affiliates 246,969 (217,118) 29,851

Other non-current assets 7,310 230,565 237,875

Deferred tax assets 77,574 7,720 85,294

Total non-current assets 1,537,408 29,436 62,927 1,629,771

Current assets

Inventories 445,179 (90,889) 19,284 373,574

Trade receivables 921,514 14,618 936,132

Current amounts receivable from affiliates 247,436 (34,002) 213,434

Derivatives and other current financial assets (*) 30,785 12,588 43,373

Other current assets 367,149 72,426 27,768 467,343

Cash at bank and on hand (*) 423,639 44,026 467,665

Total current assets 2,435,702 (5,875) 71,694 2,501,521

Non-current assets held for sale - - - -

Total assets 3,973,110 23,561 134,621 4,131,292

11. Other adjustments

This item includes other minor differences between Italian accounting standards and IFRS.

12. Deferred taxes

This item includes the net effect of deferred taxes arising from the IFRS adjustments described above.

(*) Items included in net financial position.

(**) Changes relating to companies listed in the paragraph "Consolidation structure" contained in the attachments.


200



Shareholders' equity and liabilities


Share capital 384,040 - 384,040

Share premium reserve 28,994 - 28,994

Other reserves (175,245) 198,066 (2,631) 20,190

Retained earnings/(losses) 75,141 (221,270) 201 (145,928)

Result for the period (101,472) 12,911 (88,561)

Total Group equity 211,458 (10,293) (2,430) 198,735

Minority interests 60,046 (45,223) (1,901) 12,922

Total shareholders' equity 271,504 (55,516) (4,331) 211,657


Bank loans and other loans (*) 235,304 (173,500) 40,212 102,016

Bonds (*) 225,581 225,581

Leasing liabilities (*) - 16,356 16,356

Staff severance fund 45,150 (3,606) 1,948 43,492

Non-current amounts payable to affiliates - 15,131 15,131

Deferred fiscal liabilities 1,322 4,457 5,779

Provisions for risks and liabilities 49,429 (320) 18,850 67,959

Other non-current liabilities 7,662 12,879 20,541

Total non-current liabilities 564,448 (156,613) 89,020 496,855

Current liabilities

Bank overdrafts and current portion of loans (*) 568,068 223,951 29,567 821,586

Current portion of bond loans (*) 550,000 (710) 549,290

Current portion of leasing liabilities (*) - 19,282 19,282

Derivatives and current financial liabilities (*) - 6,415 6,415

Down payments received for goods being made to order 608,599 (13,248) 4,869 600,220

Trade payables 840,112 60,451 900,563

Current amounts payable to affiliates 203,989 (93,802) 110,187

Provisions for current risks and liabilities - - -

Other current liabilities 366,390 48,847 415,237

Total current liabilities 3,137,158 235,690 49,932 3,422,780

Liabilities directly associated with non-current assets held for sale - - -

Total shareholders' equity and liabilities 3,973,110 23,561 134,621 4,131,292

(*) Items included in net financial position.(**) Changes relating to companies listed in the paragraph "Consolidation structure" contained in the attachments.

201

(*) Changes relating to companies listed in the paragraph "Consolidation structure" contained in the attachments.

EFFECTS ON THE INCOME STATEMENT AS AT 31 DECEMBER 2004The table below summarises the main changes undergone by the Group's consolidated income statement due to its transition to IFRS.



Revenues

Revenues 2,735,298 (16,515) (4,658) 2,714,125

Other revenues 225,855 7,476 52,211 285,542

Total revenues 2,961,153 (9,039) 47,553 2,999,667

Costs

Raw materials and consumables (498,048) (30,206) (528,254)

Sub-contracting (763,806) (7,652) (771,458)

Other operating expenses (1,065,214) 16,271 38,157 (1,010,786)

Staff costs (357,301) (25,079) (382,380)

Amortisation, depreciation and write-downs (148,957) 1,565 (17,599) (164,991)

Total costs (2,833,326) 17,836 (42,379) (2,857,869)

EBIT 127,827 8,797 5,174 141,798


Financial income/(charges) (131,430) (2,603) (65,901) (199,934)

Foreign exchange gains/(losses) (26,628) 9,702 (2,139) (19,065)

Result from shareholdings (984) 2,563 66,221 67,800

Total financial income and charges (159,042) 9,662 (1,819) (151,199)

Pre-tax result (31,215) 18,459 3,355 (9,401)

Taxes (74,754) (5,572) (3,659) (83,985)

Result of ongoing business activities (105,969) 12,887 (304) (93,386)

Net result from assets held for sale - - - -

Net result attributable to the Group and minority interests (105,969) 12,887 (304) (93,386)

Minority interests 4,497 24 304 4,825

Net result attributable to the Group (101,472) 12,911 - (88,561)


202

EFFECTS ON THE CASHFLOW STATEMENT AS AT 31 DECEMBER 2004The table below summarises the main changes undergone by the Group's consolidated cashflow statement due to its transition to IFRS.

Year 2004 Year 2004(amounts expressed in Euro/000s) IAS published


Net profit for the year (88,561) (101,472)


Depreciation of tangible fixed assets 83,063 76,232

Write-downs and provisions 112,019 97,585

Change in staff severance fund 1,105 3,670

Capital gains (65,397) (65,397)

Deferred fiscal charges/(income) 49,754 49,981

Result of companies measured by the equity method (351) (1,600)

Total income statement 130,017 104,488

Decrease/(increase) in inventories 137,272 176,640

Decrease/(increase) in trade receivables 59,562 (11,346)

(Decrease)/increase in down payments from clients (37,578) (97,008)

(Decrease)/increase in suppliers (193,970) (153,933)

Decrease/(increase) in other assets/liabilities 95,172 65,627

Total working capital 60,458 (20,020)

Cash generated/(absorbed) by operating activities 190,475 84,468



Investments in tangible fixed assets (205,120) (205,120)


Change in non-current assets and liabilities (5,218)

Realisable price or redemption value of non-current assets 103,261 93,339

Cash generated/(absorbed) by investment activities (156,768) (160,223)

203

Year 2004 Year 2004(amounts expressed in Euro/000s) IAS published


Dividends received from companies measured at equity 9,842 9,842

Dividends distributed and contributions made to cultural initiatives (22,625) (22,625)

Capital increase 19 19

Decrease in bank loans and other financings (*) (113,856) (62,742)

Bond loans redeemed (200,000) (200,000)

Bond loans taken out 11,338 11,338

Change in other financial assets/liabilities (66,839) (28,729)

Cash generated/(absorbed) by financial activities (382,121) (292,897)

Other changes, including changes in the consolidation structure (14,378) 7,523

Increase/(decrease) in cashflow (362,792) (361,129)

Cash at bank and on hand 677,041 632,906


Total cash at start of year 8,871 240,411

Cash at bank and on hand 467,665 423,639


Total cash at end of year (353,921) (120,718)

204

CHANGES UNDERGONE BY THE CONSOLIDATION STRUCTURE OFTHE IMPREGILO GROUP FOLLOWING THE INTRODUCTION OF IAS/IFRS STANDARDS

The 92 companies included in the Group's consolidation structure as at 31 December 2003 following the introduction of IAS/IFRS standards are

listed below, subdivided by business unit. These companies were not consolidated in the financial statements prepared in accordance with Italian

accounting standards since they are either undergoing liquidation proceedings or insignificant.

31 December 2003 Method

INFRASTRUCTUREConsorzio Cogefar-Impresit Cariboni per la Frana di Spriana S.c.r.l. Line-by-line method

Impregilo Healy Joint Venture Line-by-line method

INC - Algerie S.a.r.l. Line-by-line method

Inchiriere Si Lucrari Maritime (I.L.M.) Constanta S.r.l. Line-by-line method

Nuovo Dolonne S.c.r.l. Line-by-line method

Otto Koch A.G. Line-by-line method

PGH Ltd (*) Line-by-line method

SGF Nigeria L.t.d. Line-by-line method

Società Industriale Prefabbricazione Edilizia del Mediterraneo - S.I.P.E.M. S.p.A. (*) Line-by-line method

Impregilo Infraestructura Ltd (*) Line-by-line method

B.B.A. S.c.r.l. Proportional method

Consorcio Impregilo - Ingco Proportional method

Empresa Constructora Costanera Norte Ltda Proportional method

Nathpa Jhakri J.V. Proportional method

Passante Proportional method

Val Viola S.c.r.l. Proportional method

Consorzio Cociv Proportional method

Consorzio Autosilo Vico Morcote Proportional method

Granda S.c.r.l. Proportional method

Ravedis 2001 S.c.r.l. Proportional method

Nuova Domina S.c.r.l. Proportional method

CONCESSION Impregilo Wolverhampton Ltd (*) Line-by-line method

IMC ST David's L.t.d. (*) Line-by-line method

ENGINEERING & PLANT CONSTRUCTIONBBP Environment Betriebs-und Beteiligungsellschaft Eberswalde Gmbh Line-by-line method

BBP Environment Betriebs-und Beteiligungsellschaft Schmallenberg Gmbh Line-by-line method

BUILDING & SERVICESCampione S.c.r.l. Line-by-line method

Fiera 2000 S.c.r.l. Line-by-line method

Gricignano 3 S.r.l. (*) Line-by-line method

Castello 99 S.c.r.l. Proportional method

Cernusco S.c.r.l. Proportional method

Consorzio Camaiore Impianti Proportional method


205

31 December 2003 MethodBUILDING & SERVICES (cont.)Consorzio Caserma Donati Proportional method

Hospital Lecco S.c.r.l. Proportional method

Lavori Lingotto S.c.r.l. Proportional method

Auditorium Roma S.c.r.l. Proportional method

Parcheggio Lingotto S.c.r.l. Proportional method

SO.CO.M. S.c.r.l. Proportional method

Hospital Gricignano S.c.r.l. Proportional method

OTHER BUSINESSESGloboworks Italia S.p.A. (*) Line-by-line method

IMPREPARImprepar - Impregilo Partecipazioni S.p.A. Line-by-line method

Alia S.c.r.l. Line-by-line method

BATA S.r.l. Line-by-line method

CIS Divisione Prefabbricati Vibrocesa Scac - C.V.S. S.r.l. Line-by-line method

Cogefar Cameroun S.A. Line-by-line method

Congressi 91 S.c.r.l. Line-by-line method

Achieve Company S.r.l. Line-by-line method

Costruzioni Ferroviarie Torinesi Duemila S.c.r.l. Line-by-line method

Edilizia Militare Reggio Calabria S.c.r.l. Line-by-line method

Engeco France S.a.r.l. Line-by-line method

Consorzio Ambiente 2000 Line-by-line method

Entreprises et Travaux de Construction S.A. Line-by-line method

Eurotechno S.r.l. Line-by-line method

IGLYS S.A. Line-by-line method

Imprepar International B.V. Line-by-line method

Imprefeal S.p.A. Line-by-line method

Impregilo Argentina S.A. (*) Line-by-line method

Impregilo U.K. Ltd Line-by-line method

Impresa Castelli S.p.A. Line-by-line method

Impresa Elettrica Sarda - IMESA S.r.l. Line-by-line method

Impresit del Pacifico S.A. Line-by-line method

INCAVE S.r.l. Line-by-line method

S. Leonardo S.c.r.l. Line-by-line method

San Martino Prefabbricati S.p.A. Line-by-line method

Savico S.c.r.l. Line-by-line method

Suramericana de Obras Publicas C.A.- Suropca C.A. Line-by-line method

Sviluppo Applicazioni Industriali - SAPIN S.r.l. Line-by-line method

Watis Bau GmbH Line-by-line method

Aquilgest S.c.r.l. Proportional method

Aquilpark S.c.r.l. Proportional method

BA.TA. 91 S.c.r.l. Proportional method

CO. MAR. S.c.r.l. Proportional method

CO.LO.MAR S.c.r.l. Proportional method


206

31 December 2003 Method

IMPREPAR (cont.)Consorzio/Vianini lavori/Impresit/Dal Canton/Icis/Siderbeton - VIDIS Proportional method

Constuctora Embalse Casa de Piedra S.A. Proportional method

Costruzioni Metropolitane S.c.p.a. Proportional method

Celoria S.c.r.l. Proportional method

Ferdep srl Proportional method

Ferscalo Fiorenza S.c.r.l. Proportional method

Gesuati S.c.r.l. Proportional method

La Fenice S.c.r.l. Proportional method

Librino S.c.r.l. Proportional method

Melito S.c.r.l. Proportional method

Montenero S.c.r.l. Proportional method

Nuova Pavoncelli S.c.r.l. Proportional method

San Benedetto S.c.r.l. Proportional method

OS.A.V.E. S.c.r.l. Proportional method

S. Leonardo Due S.c.r.l. Proportional method

Saalp S.c.n.c. Proportional method

Stelvio 91 S.c.r.l. Proportional method

Trincerone Ferroviario S.c.r.l. Proportional method

Urbana S.c.r.l. Proportional method

Vittoria S.c.r.l. Proportional method

(*) Companies measured in the consolidated financial statements for the year ending 31 December 2003 by the equity method.

207

IN THE GROUP'S CONSOLIDATION STRUCTURE AS AT 31 DECEMBER 2004,THE 92 COMPANIES LISTED ABOVE WERE JOINED, DUE TO THE EFFECTS OF IAS/IFRS,BY THE FOLLOWING COMPANIES:

Method

INFRASTRUCTURE

Consorzio Scilla Proportional method

OR.MA - S.c.r.l. Proportional method

CONCESSION

Impregilo Parking Glasgow Ltd Line-by-line method

BUILDING & SERVICES

Anita S.r.l. Line-by-line method

IMPREPAR

Consorzio Pielle Line-by-line method

FURTHERMORE, THE GROUP'S CONSOLIDATION STRUCTURE AS AT 31 DECEMBER 2004NO LONGER INCLUDED THE FOLLOWING COMPANIES:

INFRASTRUCTURE

Ravedis 2001 S.c.r.l.

Passante

Nuova Domina S.c.r.l.

Consorzio Autosilo Vico Morcote

Granda S.c.r.l.

CONCESSION

IMC ST David's L.t.d.

BUILDING & SERVICES

Auditorium Roma S.c.r.l.

Achieve Company S.r.l.

IMPREPAR

San Benedetto S.c.r.l.

Imprepar International B.V.

Achieve Company S.r.l.

Celoria S.c.r.l.

CONSOLIDATION STRUCTURE


208

Company name Country Currency Share capital % % % Companies Methodsubscribed/ interest held held participating 31.12.2005

paid-in held directly indirectly indirectly

CONSTRUCTIONS

Impregilo S.p.A. Italy Euro 708,996,096 100 100 Various line-by-line

Consorzio Cogefar-Impresit Cariboni per la Frana di Spriana S.c.r.l. Italy Euro 45,900 100 100 line-by-line

Construtora Impregilo y Associados S.A.-CIGLA S.A. Brazil BRL 7,641,014 100 100 line-by-line

CSC Impresa Costruzioni S.A. Switzerland CHF 2,000,000 100 100 line-by-line

Effepi - Finanza e Progetti S.r.l. Italy Euro 78,000 100 100 SGF INC S.p.A. line-by-line

Impregilo Healy Joint Venture USA 100 15 85 Healy S.A. line-by-line

Impresit Bakolori Plc Nigeria NGN 100,800,000 50.71 50.71 line-by-line

Inchiriere Si Lucrari Maritime (I.L.M.) Constanta S.r.l. Romania ROL 10,000,000 100 100 line-by-line

INC - Algerie S.a.r.l. Algeria DZD 5,000,000 99 99 SGF INC S.p.A. line-by-line

Nuovo Dolonne S.c.r.l. Italy Euro 50,000 100 100 line-by-line

Otto Koch A.G. Switzerland CHF 100,000 90 90 CSC S.A. line-by-line

PGH Ltd Nigeria NGN 52,000,000 60 60 line-by-line

S.A. Healy Company USA USD 11,320,863 100 100 line-by-line

S.G.F. - I.N.C. S.p.A. Italy Euro 3,859,680 100 100 line-by-line

SGF Nigeria L.t.d. Nigeria NGN 52,000,000 77.11 77.11 SGF INC S.p.A. line-by-line

Società Industriale Prefabbricazione Edilizia del Mediterraneo -

S.I.P.E.M. S.p.A. Italy Euro 438,546 100 100 line-by-line

Suramericana de Obras Publicas C.A.- Suropca C.A. Venezuela VEB 4,344,118,000 100 99 1 Imprepar S.p.A. (*) line-by-line

B.B.A. S.c.r.l. Italy Euro 10,000 80 80 SGF INC S.p.A. proport.

Consorcio Acueducto Oriental Dom. Republic 67 67 proport.

Consorcio Central Hidroelectrica

Daule Peripa Division Obras Civiles Ecuador 90 85 5 Imprepar S.p.A. proport.

Consorcio Contuy Medio Grupo A C.I. S.p.A.

Ghella Sogene C.A., Otaola C.A. Venezuela 36.4 36.4 proport.

Consorcio Impregilo - Ingco Dom. Republic 70 70 proport.

Consorzio Alta Velocità Torino/Milano - C.A.V.TO.MI. Italy Euro 5,000,000 74.69 74.69 proport.

Consorzio Autosilo Vico Morcote Switzerland 70 70 CSC S.A. proport.

Consorzio Cociv Italy Euro 516,457 94.5 94.5 proport.

Consorzio C.A.V.E.T. - Consorzio Alta Velocità Emilia/Toscana Italy Euro 5,422,797 75.98 75.98 proport.

Consorzio Scilla Italy Euro 1,000 51 51 proport.

Consorzio Venice Link Italy Euro 1,000 42 42 proport.

Constructora Mazar Impregilo-Herdoiza Crespo Ecuador 70 70 proport.

Empresa Constructora Costanera Norte Ltda Chile CLP 10,000,000 77.78 77.78 proport.

Ghazi-Barotha Contractors J.V. Switzerland 57.8 57.8 proport.

Impregilo S.p.A.-NCC International A.B. Joint Venture Switzerland 75 75 proport.

Joint Venture Impregilo S.p.A. - Empedos Greece 60 60 proport.

Nathpa Jhakri J.V. India USD 1,000,000 60 60 proport.

OR.MA - S.c.r.l. Italy Euro 10,000 55 55 SGF INC S.p.A. proport.

Passante di Mestre S.c.p.A. Italy Euro 50,000,000 42 42 proport.

Reggio Calabria - Scilla S.c.p.a. Italy Euro 35,000,000 51 51 proport.

Salerno-Reggio Calabria S.c.p.a. Italy Euro 50,000,000 51 51 proport.

Val Viola S.c.r.l. Italy Euro 10,200 60 60 proport.

Aurelia 98 S.c.r.l. Italy Euro 10,000 40 40 equity

209



CONSTRUCTIONS (cont.)

Arbeitsgemeinschaft Tunnel Umfahrung Saas (ATUS) Switzerland 32 32 CSC S.A. equity

Borini Prono & Co Nigeria Ltd Nigeria NGN 125,000,000 23.87 23.87 equity

B.O.B.A.C. S.c.a.r.l. Italy Euro 10,200 50 50 SGF INC S.p.A. equity

C.B.N. Chiasso consorzio Switzerland 34 34 CSC S.A. equity

CASV Consorzio Allargamento Strada Vogorno Switzerland 50 50 CSC S.A. equity

CE.S.I.F. S.c.p.a. Italy Euro 250,000 24.18 24.18 equity

Consorcio Cigla-Sade Brazil 50 50 Cigla S.A. equity

Consorcio Contuy Medio Venezuela 29.04 29.04 equity

Consorcio Grupo Contuy-Proyectos y Obras de Ferrocarriles Venezuela 33.33 33.33 equity

Consorcio Imigrantes Brazil 50 50 Cigla S.A. equity

Consorcio Impregilo Cosapi Peru 55 55 equity

Consorcio V.I.T. - Tocoma Venezuela 35 35 equity

Consorcio V.S.T. Tocoma Venezuela 30 30 equity

Consorzio ABICC 3160 Switzerland 40 40 CSC S.A. equity

Consorzio Brescia Val Italy Euro 25,000 20 20 equity

Consorzio CPS Pedemontana Veneta Costruttori Progettisti e Servizi Italy Euro 1,000 35 35 equity

Consorzio Edile Palazzo Mantegazza Switzerland 45 45 CSC S.A. equity

Consorzio FLP Switzerland 30 30 CSC S.A. equity

Consorzio Galleria Maroggia Switzerland 25 25 CSC S.A. equity

Consorzio Genio Civile Palazzo Mapp. 20 Paradiso Switzerland 50 50 CSC S.A. equity

Consorzio Intragna - Verdasio Switzerland 50 50 CSC S.A. equity

Consorzio Intragna - Verdasio 2 Switzerland 50 50 CSC S.A. equity

Consorzio RCPS Nuova Romea Italy Euro 20,000 30.6 30.6 equity

Consorzio San Cristoforo Italy Euro 51,645 48 48 equity

Consorzio TAT-Tunnel Alp Transit Ticino, Arge Switzerland 25 17.5 7.5 CSC S.A. equity

Consorzio Tre Esse Italy Euro 51,646 38 38 SGF INC S.p.A. equity

Consorzio Trevi - S.G.F. INC per Napoli Italy Euro 10,000 45 45 SGF INC S.p.A. equity

CSLN Consorzio Switzerland 28 28 CSC S.A. equity

E.R. Impregilo/Dumez y Asociados para Yaciretê - ERIDAY Argentina USD 539,400 20.75 18.75 2 Iglys S.A. (*) equity

Ertan J.V. China 42.5 42.5 equity

G.T.B. S.c.r.l. Italy Euro 51,000 24.17 24.17 equity

Gotschnatunnel Arge Switzerland 20 20 CSC S.A. equity

Groupement Hydrocastoro Algeria DZD 2,000,000 49.5 49.5 INC Algerie Sarl equity

Healy-Yonkers-Atlas-Gest J.V. USA 45 45 Healy S.A. equity

Impregilo - Ebasco-Losinger J.V. USA 75 18.75 56.25 Healy S.A. equity

Impregilo Infraestructura Ltd Ireland Euro 12,697 100 100 equity

Impregilo S.p.A.-Iglys SA-Hochtief AG-

Hochtief C-Roggio-Iecsa-Sideco-Techint, UTE Argentina 26 22 4 Iglys S.A. (*) equity

J.Cartellone C.C. S.A.-Igl S.p.A.-Iglys S.A.-

Codi S.A.-EC Delta S.A.-Caruso S.A.- (Casisa UTE) Argentina ARS 10,000 39.1 29.1 10 Iglys S.A. (*) equity

Joint Venture Aktor Ate - Impregilo S.p.A. (Constantinos) Greece 40 40 equity

Joint Venture Aktor S.A. - Impregilo S.p.A. Greece 50 50 equity


210



CONSTRUCTIONS (cont.)

Joint Venture Terna - Impregilo Greece 45 45 equity

Metrogenova S.c.r.l. Italy Euro 25,500 35.63 35.63 equity

Mohale Dam Contractors (MDC) J.V. Lesotho 50 50 equity

Mohale Tunnel Contractors (MTC) J.V. Lesotho 35 35 equity

Quattro Venti S.c.r.l. Italy Euro 51,000 40 40 equity

Rivers State Contractor Nigeria 42 42 PGH Ltd equity

Trevi S.G.F. S.c.r.l. Italy Euro 51,000 45 45 SGF INC S.p.A. equity

Wan Long Joint Venture China USD 1,000,000 48 48 equity

Yellow River Contractors J.V. China 36.5 36.5 equity

ENGINEERING & PLANT CONSTRUCTION

Fisia Italimpianti S.p.A. Italy Euro 10,000,000 100 100 line-by-line

Fisia Babcock Environment Gmbh Germania Euro 10,000,000 100 100 Fisia Italimpianti S.p.A. line-by-line

Gestione Napoli S.p.A. Italy Euro 100,000 99 54 Fisia Italimpianti S.p.A. line-by-line

24 Impregilo Italia Concessioni S.p.A.

21 Fisia Babcock Gmbh

Società Italiana per l'Ecologia Marina Castalia Ecolmar S.c.p.a. Italy Euro 102,000 51.88 51.88 Fisia Italimpianti S.p.A. proport.

Consorzio Macopsissa Ambiente Italy Euro 30,987 45.12 45.12 Fisia Italimpianti S.p.A. equity

Consorzio Marmeco Italy Lit 100,000,000 34 34 Fisia Italimpianti S.p.A. equity

Nautilus S.c.p.a. Italy Euro 479,880 34.39 34.39 Fisia Italimpianti S.p.A. equity

Villagest S.c.r.l. Italy Euro 13,944 50 50 Fisia Italimpianti S.p.A. equity

CONCESSION

Impregilo International Infrastructures N.V. Netherlands Euro 50,000,000 100 100 line-by-line

Coincar S.A. Argentina ARS 25,462,000 35 26.25 8.75 Iglys S.A. (*) equity

Caminos de las Sierras S.A. Argentina ARS 120,000,000 90.52 90.52 Impregilo Intern. Infr. N.V line-by-line

Fibe Campania S.p.A. Italy Euro 21,000,000 99.5 93.67 Impregilo Intern. Infr. N.V. line-by-line

3.01 Fisia Babcock Gmbh

2.1 Impregilo Edilizia e Servizi S.p.A.

0.72 Fisia Italimpianti S.p.A.

Fibe S.p.A. Italy Euro 11,773,000 95 77.5 Impregilo Intern. Infr. N.V. line-by-line

10.5 Fisia Babcock Gmbh

5 Fisia Italimpianti S.p.A.

1 Impregilo Edilizia e Servizi S.p.A.

1 Igl Italia Concessioni S.p.A.

Impregilo Italia Concessioni S.p.A. Italy Euro 1,000,000 100 100 Impregilo Intern. Infr. N.V. line-by-line

Impregilo Parking Glasgow Ltd United Kingdom GBP 1 100 100 Impregilo Intern. Infr. N.V. line-by-line

Mercovia S.A. Argentina ARS 10,000,000 60 60 Impregilo Intern. Infr. N.V. line-by-line

Sociedad Concesionaria Costanera Norte S.A. Chile CLP 35,600,000,000 77.89 77.89 Impregilo Intern. Infr. N.V. line-by-line

Acqua Italia S.p.A. Italy Euro 82,113,000 33.33 33.33 Impregilo Intern. Infr. N.V. equity

Aguas del Gran Buenos Aires S.A. Argentina ARS 45,000,000 42.58 16.5 23.73 Impregilo Intern. Infr. N.V. equity

2.35 Iglys S.A. (*)

Aguas del Oeste S.A. Argentina ARS 170,000 33.33 33.33 Iglys S.A. (*) equity

Consorcio Agua Azul S.A. Peru PEN 69,001,000 45 45 Impregilo Intern. Infr. N.V. equity

Contarina S.p.A. Italy Euro 1,800,000 49 49 Impregilo Intern. Infr. N.V. equity

211



CONCESSION (cont.)

Ecologia Montana S.p.A. Italy Euro 548,069 49 49 Impregilo Intern. Infr. N.V. equity

Enecor S.A. Argentina ARS 12,000 30 30 Impregilo Intern. Infr. N.V. equity

Impregilo Wolverhampton Ltd United Kingdom GBP 1,000 20 20 Impregilo Intern. Infr. N.V. equity

Nuova Romea S.p.A. Italy Euro 3,800,000 21.78 21.78 Impregilo Intern. Infr. N.V. equity0.61 RCPS Nuova Romea

Ochre Solutions Holdings Ltd United Kingdom 40 40 Impregilo Intern. Infr. N.V. equity

Ponte de Pedra Energetica S.A. Brazil BRL 214,000,000 50 50 Impregilo Intern. Infr. N.V. equity

Primav Ecorodovias S.A. Brazil BRL 466,699,080 35 35 Impregilo Intern. Infr. N.V. equity

Puentes del Litoral S.A. Argentina ARS 43,650,000 26 22 4 Iglys S.A. (*) equity

Rodoconsult Assessoria L.t.d. Brazil BRL 25,000 20 20 Impregilo Intern. Infr. N.V. equity

Sistranyac S.A. Argentina ARS 12,000 20.1 20.1 Impregilo Intern. Infr. N.V. equity

Shangai Pucheng Thermal Power Energy Co. L.t.d. China RMB 200,000,000 50 50 Impregilo Intern. Infr. N.V. equity

Yacylec S.A. Argentina ARS 45,000,000 18.67 18.67 Impregilo Intern. Infr. N.V. equity

BUILDING

Impregilo Edilizia e Servizi S.p.A. Italy Euro 83,750,000 100 100 line-by-line

Bocoge S.p.A. - Costruzioni Generali Italy Euro 1,702,720 100 100 Impregilo Ed. e Ser. S.p.A. line-by-line

Campione S.c.r.l. Italy Euro 11,000 99.9 99.9 Impregilo Ed. e Ser. S.p.A. line-by-line

Gricignano 3 S.r.l. Italy Euro 50,000 60 60 Impregilo Ed. e Ser. S.p.A. line-by-line

I.L.IM. - Iniziative Lombarde Immobiliari S.r.l. Italy Euro 3,100,000 100 100 Impregilo Ed. e Ser. S.p.A. line-by-line

Impregilo Engineering CO. Ltd China Euro 140,000 100 100 Impregilo Ed. e Ser. S.p.A. line-by-line

Impregilo New Cross Ltd United Kingdom GBP 2 100 100 Impregilo Ed. e Ser. S.p.A. line-by-line

Castello 99 S.c.r.l. Italy Euro 11,000 60 60 Impregilo Ed. e Ser. S.p.A. proport.

Cernusco S.c.r.l. Italy Euro 10,000 60 60 Impregilo Ed. e Ser. S.p.A. proport.

Consorzio Camaiore Impianti Italy Euro 25,500 55 55 Impregilo Ed. e Ser. S.p.A. proport.

Consorzio Caserma Donati Italy Euro 300,000 80 80 Impregilo Ed. e Ser. S.p.A. proport.

Consorzio CCTE Italy Euro 41,315 100 60 Impregilo Ed. e Ser. S.p.A. (*) equity40 ILIM S.r.l.

Hospital Lecco S.c.r.l. Italy Euro 46,800 55 55 Impregilo Ed. e Ser. S.p.A. proport.

Lavori Lingotto S.c.r.l. Italy Euro 25,000 65 65 Impregilo Ed. e Ser. S.p.A. proport.

Anagnina 2000 S.c.r.l. Italy Euro 10,329 50 50 Impregilo Ed. e Ser. S.p.A. equity

Auditorium Roma S.c.r.l. Italy Euro 90,000 60 60 Impregilo Ed. e Ser. S.p.A. equity

Consorzio Porto Turistico di Roma Italy Euro 516,457 27.37 27.37 Bocoge S.p.A. equity

Executive J.V. Impregilo S.p.A. Terna S.A. - Iris S.A. Greece 33.33 33.33 Impregilo Ed. e Ser. S.p.A. equity

Follonica S.c.r.l. Italy Euro 10,200 42.86 42.86 Bocoge S.p.A. equity

Fox Valley West Properties JV USA 50 50 Healy S.A. (*) equity

Monte Mario S.c.r.l. Italy Euro 10,328 50 50 Bocoge S.p.A. equity

S. Anna Palermo S.c.r.l. Italy Euro 40,800 45 45 Impregilo Ed. e Ser. S.p.A. equity

S.I.MA. GEST 3 S.c.r.l. Italy Euro 50,000 35 35 Impregilo Ed. e Ser. S.p.A. equity

SO.CO.TAU. S.c.r.l. Italy Euro 10,200 20.27 20.27 Bocoge S.p.A. equity

Società Edilizia Immobiliare Sarda - S.E.I.S. S.p.A. Italy Euro 3,877,500 48.33 48.33 Impregilo Ed. e Ser. S.p.A. equity

Techint S.A.C.I.- Hochtief A.G.- Impregilo S.p.A.-Iglys S.A. UTE Argentina 35 26.25 8.75 Iglys S.A. (*) equity

VE.CO. S.c.r.l. Italy Euro 10,200 25 25 Impregilo Ed. e Ser. S.p.A. equity

Versilia S.c.r.l. Italy Euro 10,200 34 34 Impregilo Ed. e Ser. S.p.A. equity

Versilia Servizi S.c.a.r.l. Italy Euro 20,000 34 34 Impregilo Ed. e Ser. S.p.A. equity


212



OTHER BUSINESSES

Globoworks Italia S.p.A. Italy Euro 2,500,000 100 100 line-by-line

Technical Services Company - TESCO S.r.l. Italy Euro 6,000,000 100 100 line-by-line

Impregilo y Asociados (Panama) S.A. Panama USD 26,000,000 100 100 equity

IMPREPAR

Imprepar - Impregilo Partecipazioni S.p.A. Italy Euro 3,100,000 100 100 line-by-line

Alia S.c.r.l. Italy Euro 10,200 100 100 Imprepar S.p.A. line-by-line

BATA S.r.l. Italy Euro 102,000 50.69 50.69 Imprepar S.p.A. line-by-line

CIS Divisione Prefabbricati Vibrocesa Scac - C.V.S. S.r.l. Italy Euro 10,000 100 100 INCAVE S.r.l. line-by-line

Cogefar Cameroun S.A. Cameroon XAF 1,260,000,000 99.97 99.97 Imprepar S.p.A. line-by-line

Congressi 91 S.c.r.l. Italy Euro 25,000 100 80 Impresa Castelli S.p.A. line-by-line20 Bocoge S.p.A. (*)

Consorzio Pielle Italy Euro 15,493 100 33.33 Imprepar S.p.A. line-by-line66.67 Incave S.r.l.

Costruzioni Ferroviarie Torinesi Duemila S.c.r.l. Italy Euro 10,328 100 100 INCAVE S.r.l. line-by-line

Edilizia Militare Reggio Calabria S.c.r.l. Italy Euro 45,900 100 85 Imprepar S.p.A. line-by-line15 Sapin S.r.l.

Engeco France S.a.r.l. France Euro 15,470 100 99.67 Imprepar S.p.A. line-by-line0.33 Incave S.r.l.

Entreprises et Travaux de Construction S.A. Switzerland CHF 50,000 100 100 Imprepar S.p.A. line-by-line

Eurotechno S.r.l. Italy Euro 26,245 100 100 Imprepar S.p.A. line-by-line

IGLYS S.A. Argentina ARS 17,000,000 100 98 Imprepar S.p.A. line-by-line2 INCAVE S.r.l.

Imprefeal S.p.A. Italy Euro 2,580,000 100 100 Imprepar S.p.A. line-by-line

Impregilo Argentina S.A. Argentina ARS 200,000 100 77.74 22.03 Iglys S.p.A. line-by-line0.23 INCAVE S.r.l.

Impregilo U.K. Ltd United Kingdom GBP 1,500,000 100 100 Imprepar S.p.A. line-by-line

Impresa Castelli S.p.A. Italy Euro 10,000 100 100 Imprepar S.p.A. line-by-line

Impresit del Pacifico S.A. Peru PEN 2,472,319 100 100 Imprepar S.p.A. line-by-line

INCAVE S.r.l. Italy Euro 90,000 100 100 Imprepar S.p.A. line-by-line

S. Leonardo S.c.r.l. Italy Euro 25,500 99.99 99.99 Imprepar S.p.A. line-by-line

San Martino Prefabbricati S.p.A. Italy Euro 510,000 100 100 Impresa Castelli S.p.A. line-by-line

Savico S.c.r.l. Italy Euro 10,200 100 81 Imprepar S.p.A. line-by-line19 Sapin S.r.l.

Sviluppo Applicazioni Industriali - SAPIN S.r.l. Italy Euro 51,480 100 100 Imprepar S.p.A. line-by-line

Watis Bau GmbH Germany Euro 2,046,000 100 100 Imprepar S.p.A. line-by-line

Aquilgest S.c.r.l. Italy Euro 10,000 51 51 Imprepar S.p.A. proport.

Aquilpark S.c.r.l. Italy Euro 10,000 51 51 Imprepar S.p.A. proport.

BA.TA. 91 S.c.r.l. Italy Euro 50,000 50.69 50.69 Imprepar S.p.A. proport.

CO. MAR. S.c.r.l. Italy Euro 10,200 84.99 84.99 Imprepar S.p.A. proport.

CO.LO.MAR S.c.r.l. Italy Euro 10,200 80 80 Imprepar S.p.A. proport.

Consorzio/Vianini lavori/Impresit/Dal Canton/Icis/Siderbeton - VIDIS Italy Euro 25,822 60 60 Imprepar S.p.A. proport.

Constuctora Embalse Casa de Piedra S.A. Argentina ARS 821 72.93 72.93 Imprepar S.p.A. proport.

Costruzioni Metropolitane S.c.p.a. Italy Euro 153,000 60 40 Imprepar S.p.A. proport.20 INCAVE S.r.l.

213



IMPREPAR (cont.)

Gesuati S.c.r.l. Italy Euro 10,300 80 80 Impresa Castelli S.p.A. proport.

La Fenice S.c.r.l. Italy Euro 51,646 57.39 57.39 Imprepar S.p.A. proport.

Librino S.c.r.l. Italy Euro 45,900 66 66 Imprepar S.p.A. proport.

Nuova Pavoncelli S.c.r.l. Italy Euro 45,900 85 85 Imprepar S.p.A. proport.

OS.A.V.E. S.c.r.l. Italy Euro 10,199 66.15 66.15 Imprepar S.p.A. proport.

S. Leonardo Due S.c.r.l. Italy Euro 40,800 60 60 Imprepar S.p.A. proport.

Saalp S.c.n.c. Italy Euro 51,600 69.9 69.9 Imprepar S.p.A. proport.

Stelvio 91 S.c.r.l. Italy Euro 45,900 62 62 Imprepar S.p.A. proport.

Trincerone Ferroviario S.c.r.l. Italy Euro 45,900 60 60 Imprepar S.p.A. proport.

Urbana S.c.r.l. Italy Euro 10,200 55.55 55.55 Imprepar S.p.A. proport.

Vittoria S.c.r.l. Italy Euro 20,400 58 58 Imprepar S.p.A. proport.

A.T.I. Girola-Romagnoli-Poscio - Domo II S.c.r.l. Italy Euro 10,200 40 40 Imprepar S.p.A. equity

A.T.I. Monte Bianco S.c.r.l. Italy Euro 10,329 33.33 33.33 SGF INC S.p.A. (*) equity

Adduttore Ponte Barca S.c.r.l. Italy Euro 45,900 24.33 24.33 Imprepar S.p.A. equity

ANBAFER S.c.r.l. Italy Euro 25,500 50 50 Imprepar S.p.A. equity

Ancipa S.c.r.l. Italy Euro 10,200 50 50 Imprepar S.p.A. equity

Antignano S.c.r.l. Italy Euro 10,200 47.37 47.37 Imprepar S.p.A. equity

Aquilvie S.c.r.l. Italy Euro 10,000 26 26 Imprepar S.p.A. equity

Arca 88 S.c.r.l. Italy Euro 25,000 27 27 Impresa Castelli S.p.A. equity

Associazione Temporanea Priolo Siracusa S.c.r.l. Italy Euro 11,000 20 20 Imprepar S.p.A. equity

Borini Prono & Co Ghana Ltd Ghana GHC 95,000 50 50 Imprepar S.p.A. equity

Cagliari 89 S.c.r.l. Italy Euro 10,200 49 49 Sapin S.r.l. equity

Cannatello S.c.r.l. Italy Euro 20,400 40 40 Imprepar S.p.A. equity

Cogefar Italstrade per la Metropolitana Milanese - COGITAL S.c.r.l. Italy Euro 60,044 50 50 Imprepar S.p.A. equity

Cogefar/C.I.S.A./Icla/Fondedile - Sorrentina S.c.r.l. Italy Euro 46,480 25 25 Imprepar S.p.A. equity

Consorcio de Ingegnieria y Constr. S.A.-Sade Skanska- S.A.-Iglys S.A. UTE Argentina 27.5 27.5 Iglys S.A. equity

Consorcio Federici/Impresit/Ice Cochabamba Bolivia USD 100,000 25 25 Imprepar S.p.A. equity

Consorcio V.S.T. Venezuela 35 35 Suropca C.A. (*) equity

Consorzio Agenzia del Mare Italy Lit 300,000,000 25 25 Fisia Italimpianti S.p.A. (*) equity

Consorzio Carnia S.c.r.l. Italy Euro 45,900 50 50 Imprepar S.p.A. equity

Consorzio CO.RI.TECNO Italy Euro 51,646 50 50 Imprepar S.p.A. equity

Consorzio Cogefar/Italstrade/Recchi/CMC - CIRC Italy Euro 51,000 25 25 Imprepar S.p.A. equity

Consorzio Consavia S.c.n.c. Italy Euro 20,658 50 50 Imprepar S.p.A. equity

Consorzio del Sinni Italy Euro 51,646 43.16 43.16 Imprepar S.p.A. equity

Consorzio Destra Secchia - CDS Italy Euro 5,164 50 50 Imprepar S.p.A. equity

Consorzio Ferrofir Italy Euro 30,987 33.33 33.33 Imprepar S.p.A. equity

Consorzio Ferrovie Sarde - COFESAR S.c.r.l. Italy Euro 45,900 34 34 Imprepar S.p.A. equity

Consorzio Imprese Lavori FF.SS. di Saline - FEIC Italy Lit 30,000,000 33.33 33.33 Imprepar S.p.A. equity

Consorzio Iniziative Ferroviarie - INFER Italy Euro 41,316 35 35 Imprepar S.p.A. equity

Consorzio Lavori Interventi Straordinari Palermo - Colispa S.c.r.l. Italy Euro 21,420 29.76 29.76 Imprepar S.p.A. equity

Consorzio LVS Italy Lit 40,000,000 25 25 Sapin S.r.l. equity

Consorzio Metropolitane Italy Lit 100,000,000 25 25 Imprepar S.p.A. equity


214



IMPREPAR (cont.)

Consorzio per il Nucleo di Balvano Italy Euro 51,645 40.26 40.26 Imprepar S.p.A. equity

Consorzio Records Center Italy Euro 515,940 33.33 33.33 Fisia Italimpianti S.p.A. (*) equity

Consorzio Sarda Costruzioni Generali - SACOGEN Italy Lit 20,000,000 25 25 Sapin S.r.l. equity

Consorzio Sardo d'Imprese Italy Euro 103,291 34.38 34.38 Sapin S.r.l. equity

Consorzio Suburbia Italy Euro 15,494 33.33 33.33 Impresa Castelli S.p.A. equity

Consorzio Volgograd Opere Civili - CONVOLCI S.c.n.c. Italy Euro 5,165 45.26 45.26 Imprepar S.p.A. equity

Corso Malta S.c.r.l. Italy Euro 40,800 42.5 42.5 Imprepar S.p.A. equity

Costruttori Riuniti per la Valtellina - CORIVALT S.c.r.l. Italy Euro 10,200 42.5 42.5 Imprepar S.p.A. equity

Depurazione Palermo S.c.r.l. Italy Lit 20,000,000 50 50 Imprepar S.p.A. equity

Diga Ancipa S.c.r.l. Italy Euro 10,200 50 50 Imprepar S.p.A. equity

Dragados y Obras Portuarias S.A., Iglys S.A. UTE Argentina ARS 200,000 50 50 Iglys S.A. equity

Edificatrice Sarda S.r.l. Italy Euro 10,328 25 25 Sapin S.r.l. equity

Edil.Gi. S.c.r.l. Italy Lit 20,000,000 50 50 Imprepar S.p.A. equity

Edilizia Giudiziaria S.c.r.l. Italy Euro 10,200 26.66 26.66 Imprepar S.p.A. equity

Eurosilos S.r.l. Italy Euro 102,000 50 50 Imprepar S.p.A. equity

Famagosta S.c.r.l. Italy Euro 10,200 40 40 Imprepar S.p.A. equity

FE.LO.VI. S.c.n.c. Italy Euro 25,822 32.5 32.5 Imprepar S.p.A. equity

Fedco J.V. Malta 33.33 33.33 Imprepar S.p.A. equity

Galliera 2000 S.c.r.l. Italy Euro 25,500 25 25 Impresa Castelli S.p.A. equity

German/Italian/Mosul/Dam - GIMOD J.V. Iraq IQD 150,000,000 20 20 Imprepar S.p.A. equity

Gestioni Sanitarie Toscane S.c.r.l. Italy Euro 103,290 30 30 Imprepar S.p.A. equity

Grandi Uffizi S.c.r.l. Italy Euro 10,200 31.46 31.46 Imprepar S.p.A. equity

Groupement SNCE/Girola S.p.A. Canal T II - Lot. 1/B Morocco Lit 3,176,144,444 70 70 Imprepar S.p.A. equity

Groupement SNCE/Girola S.p.A. Canal T II - Lot. 4 Morocco Lit 3,176,144,444 50 50 Imprepar S.p.A. equity

Groupment Cogefar Italstrade Recchi S.p.A. Italy Euro 90,000 33.33 33.33 Imprepar S.p.A. equity

Hescorp Singapore Pte Ltd Singapore SGD 100,000 100 100 Imprepar S.p.A. equity

Highlands Water Venture J.V. Lesotho 30 30 Imprepar S.p.A. equity

GL-Stfa - Impregilo Sezai Turkes Feyzi Akkaya J.V. (Bosforo) Turkey USD 1,000,000 50 50 Imprepar S.p.A. equity

Iglys S.A. -Josa Cartellone Construcciones Civiles S.A.-UTE Argentina 50 50 Iglys S.A. equity

Iglys S.A.-Iecsa S.A.-Dragados Obras y Proyectos S.A.-Dycasa S.A., UTE Argentina 33.33 33.33 Iglys S.A. equity

IMPRAC-DZ Impregilo-Accept (Dzhambul) A.P. Kazakistan 50 50 Imprepar S.p.A. equity

IMPRAC-KU Impregilo-Accept (Kurchum) A.P. Kazakistan 50 50 Imprepar S.p.A. equity

IMPRAC-PR Impregilo-Accept (Prirechny) A.P. Kazakistan 50 50 Imprepar S.p.A. equity

Impregilo - Salini Joint Venture for Kapichira Malawi 50 50 Imprepar S.p.A. equity

Impregilo - Salini Joint Venture for Owen Falls Uganda 50 50 Imprepar S.p.A. equity

Imprese Riunite Genova Irg S.c.r.l. Italy Euro 25,000 26.3 26.3 Imprepar S.p.A. equity

Imprese Riunite Genova Seconda S.c.r.l. Italy Euro 25,000 26.3 26.3 Imprepar S.p.A. equity

International Engineering Services - INESER N.V. Dutch Antilles USD 50,000 50 50 Impregilo y Asociados S.A. equity

Italsagi SP. ZO.O Poland PLN 10,000 33 33 Imprepar S.p.A. equity

J.V. Salini Impregilo (Sudan) Sudan USD 20,000 50 50 Imprepar S.p.A. equity

Joint Venture Impregilo S.p.A. - Empedos S.A. - Aktor A.T.E. Greece 66 66 equity

Lambro S.c.r.l. Italy Euro 10,200 50 50 Impresa Castelli S.p.A. equity

215



IMPREPAR (cont.)

Livorno Due S.c.r.l. Italy Euro 40,800 45 45 Imprepar S.p.A. equity

Lodigiani-Pgel J.V. Pakistan 100 100 Imprepar S.p.A. equity

Lodola S.c.r.l. Italy Euro 51,000 50 50 Impresa Castelli S.p.A. equity

Marsico Nuovo S.c.r.l. Italy Euro 10,200 25 25 Imprepar S.p.A. equity

Matsoku Civil Contractor (MMC) J.V. Lesotho 30 30 Imprepar S.p.A. equity

MESA S.c.r.l. Italy Euro 40,800 25 25 Imprepar S.p.A. equity

Metroduebi S.c.r.l. Italy Euro 12,750 40 40 Imprepar S.p.A. equity

Milano Sviluppo 45 S.c.r.l. Italy Euro 35,700 35.71 19.05 Impresa Castelli S.p.A. equity16.66 Imprepar S.p.A.

Milano Sviluppo S.p.A. Italy Euro 10,000 33.33 33.33 Impresa Castelli S.p.A. equity

Monte Vesuvio S.c.r.l. Italy Euro 45,900 50 50 Imprepar S.p.A. equity

Morrison Impregilo (Coventry) developments limited United Kingdom GBP 1,000 50 50 Impregilo U.K. Ltd equity

MS Villa Fiorita S.c.r.l. Italy Euro 35,700 50 33.33 Impresa Castelli S.p.A. equity

16.67 Imprepar S.p.A.

Napoli Porto S.c.r.l. Italy Euro 10,329 35 35 Imprepar S.p.A. equity

Nuovi Mercati S.c.r.l. Italy Lit 20,000,000 49 30 Imprepar S.p.A. equity19 Sapin S.r.l.

Olbia 90 S.c.r.l. Italy Euro 10,200 24.5 24.5 Sapin S.r.l. equity

Olimpico 90 S.c.r.l. Italy Euro 45,900 31.59 31.59 Imprepar S.p.A. equity

Paullese S.c.r.l. Italy Euro 25,500 50 50 Impresa Castelli S.p.A. equity

Piceno S.c.r.l. Italy Euro 10,200 50 50 Imprepar S.p.A. equity

Pietrarossa S.c.r.l. Italy Euro 10,200 50 50 Imprepar S.p.A. equity

Pisogne S.c.r.l. Italy Euro 25,000 40 40 Imprepar S.p.A. equity

Platano S.c.n.c. Italy Euro 30,987 33.33 33.33 Imprepar S.p.A. equity1 Imprepar S.p.A.

Prato consorzio Italy Euro 10,000 30 30 Imprepar S.p.A. equity

RCCF Nodo di Torino S.c.p.a. Italy Euro 102,000 26 26 INCAVE S.r.l. equity

Ripristino Beni Culturali - RIBEC S.c.r.l. Italy Euro 10,200 40 40 Imprepar S.p.A. equity

Saces S.r.l. Italy Euro 26,000 37 37 Imprepar S.p.A. equity

Salini - Cogefar Impresit Osborne Dam J.V. Zimbabwe 50 50 Imprepar S.p.A. equity

Salini - Cogefar Impresit Zhovhe Dam J.V. Zimbabwe 50 50 Imprepar S.p.A. equity

San Giorgio Caltagirone S.c.r.l. Italy Euro 25,500 33 33 Imprepar S.p.A. equity

Sclafani S.c.r.l. Italy Euro 10,400 41 41 Imprepar S.p.A. equity

Sep Eole France FF 10,000 50 50 Imprepar S.p.A. equity

Shurtan C JV Uzbekistan 50 50 Imprepar S.p.A. equity

Simco S.r.l. Italy Euro 104,000 20 20 INCAVE S.r.l. equity

Sincat S.c.r.l. Italy Lit 80,000,000 28.57 28.57 Imprepar S.p.A. equity

Sistema Sinni S.c.r.l. Italy Euro 30,600 31.25 31.25 Imprepar S.p.A. equity

Societê Gestione Depuratore - SOGEDEP S.r.l. Italy Euro 20,400 22.84 22.84 Imprepar S.p.A. equity

Soingit S.c.r.l. Italy Lit 80,000,000 29.49 29.49 Imprepar S.p.A. equity

Stelvio 38 S.c.r.l. Italy Euro 10,200 50 50 Imprepar S.p.A. equity

Taormina S.c.r.l. Italy Euro 49,579 33.75 33.75 Imprepar S.p.A. equity

TMCR Consortium J.V. Czech Republic 35 35 Imprepar S.p.A. equity

RELATIONSHIPS WITH GROUP COMPANIES


216

RECEIVABLES

commercial financial other TOT. RECEIVABLESSUBSIDIARIES

Major ProjectsImpregilo Infraestructura 16,012 16,012

Impregilo y Asociados (Panama) S.A. 93,933 204,534 298,467

Reggio Calabria - Scilla S.c.p.a. 635,624 635,624

Salerno-Reggio Calabria S.c.p.a. 8,204 1,557,653 1,565,857

Technical Services Company - TESCO S.r.l. 2 2

Val Viola S.c.r.l. 34,666 34,666

Total Major Projects 118,151 2,432,477 2,550,628

Building & ServicesAuditorium Roma S.c.r.l. 670,830 670,830

Castello 99 S.c.r.l. 29,659 29,659

Cernusco S.c.r.l. 60,127 100,511 160,638

Hospital Lecco S.c.r.l. 15,292 15,292

Lavori Lingotto S.c.r.l. 11 11

Nuova Iniziative Coimpresa S.r.l. 105,042 105,042

Total Building & Services 165,180 816,292 981,472

Imprepar-Impregilo Partecipazioni S.p.A.Aquilgest S.c.r.l. 63,771 54,536 118,307

Aquilpark S.c.r.l. 601,457 339,116 940,573

BA.TA. 91 S.c.r.l. 197,301 3,980 201,281

CO. MAR. S.c.r.l. 47,795 4,288 52,083

CO.LO.MAR S.c.r.l. 66,542 66,542

Constuctora Embalse Casa de Piedra S.A. 8,912 40 8,952

Costruzioni Metropolitane S.c.p.a. 121,889 121,889

Gesuati S.c.r.l.

Hescorp Singapore Pte Ltd 4,081 4,081

INCAVE S.r.l.

La Fenice S.c.r.l. 32,172 23,170 55,342

Librino S.c.r.l. 23,642 23,642

Melito S.c.r.l.

Montenero S.c.r.l. 102,137 102,137

Nuova Pavoncelli S.c.r.l. 24,322 24,322

OS.A.V.E. S.c.r.l.

S. Leonardo Due S.c.r.l. 9,843 9,843

Saalp S.c.n.c.

San Benedetto S.c.r.l.

Trincerone Ferroviario S.c.r.l. 4,143 4,143

Urbana S.c.r.l.

Vittoria S.c.r.l. 7,733 7,733

Total Imprepar-Impregilo Partecipazioni S.p.A. 1,151,653 589,217 1,740,870

Totale Subsidiaries 1,434,984 3,837,986 5,272,970

IMPREGILO GROUP - BREAKDOWN OF INTER-COMPANY RELATIONSHIPS

217

PAYABLES Net of set-off

commercial financial other TOT. PAYABLES receivables payables

(11,939) (11,939) 4,073

298,467

635,624

1,565,857

2

34,666

(11,939) (11,939) 2,538,689

(998,141) (998,141) (327,311)

29,659

160,638

15,292

(22,737) (22,737) (22,726)

(137,447) (137,447) (32,405)

(1,020,878) (137,447) (1,158,325) 205,589 (382,442)

118,307

940,573

201,281

52,083

66,542

8,952

121,889

4,081

(33) (33) (33)

55,342

(100,120) (39,248) (139,368) (115,726)

(72,519) (1,316) (73,835) (73,835)

(22,379) (2,632) (25,011) 77,126

24,322

(4,434) (5,264) (9,698) (9,698)

(1,788) (10,528) (12,316) (2,473)

(17,536) (17,536) (17,536)

(45,520) (26) (45,546) (45,546)

(32,707) (32,707) (28,564)

(32,347) (71,301) (103,648) (103,648)

7,733

(279,140) (180,558) (459,698) 1,678,231 (397,059)

(1,300,018) (329,944) (1,629,962) 4,422,509 (779,501)


218

RECEIVABLES

commercial financial other TOT. RECEIVABLES

AFFILIATESMajor Projects

Aurelia 98 S.c.r.l. 945,242 35,015 980,257

B.O.B.A.C. S.c.a.r.l. 24,043 110,855 134,898

Borini Prono & Co Nigeria Ltd 11,939 11,939

CE.S.I.F. S.c.p.a.

Coincar S.A. 992,191 992,191

G.T.B. S.c.r.l.

Metrogenova S.c.r.l. 2,747,633 2,747,633

Passante di Mestre S.c.p.a. 6,104,603 1,881,624 7,986,227

Quattro Venti S.c.r.l. 958,522 958,522

Trevi S.G.F. S.c.r.l. 5,300 5,300

Total Major Projects 10,791,982 3,024,985 13,816,967

Building & Services

Anagnina 2000 S.c.r.l. 408,276 408,276

Isibari S.c.r.l. 17,725 17,725

Monte Mario S.c.r.l. 207,934 207,934

S. Anna Palermo S.c.r.l. 70,648 70,648

S.I.MA. GEST 3 S.c.r.l.

Unicatanzaro S.c.r.l. 124,853 124,853

VE.CO. S.c.r.l. 269,324 9,524 278,848

Versilia S.c.r.l. 274,462 274,462

Versilia Servizi S.c.a.r.l. 77,082 77,082

Total Building & Services 1,242,370 217,458 1,459,828

Concession

Acqua Italia S.p.A. 47,226 47,226

Aguas del Gran Buenos Aires S.A. 11,168 16 11,184

Aguas del Oeste S.A. 7,563 7,563

Consorcio Agua Azul S.A. 55,127 53,872 108,999

Contarina S.p.A. 115,900 115,900

Impregilo Wolverhampton Ltd 197,461 688,458 885,919

Ponte de Pedra Energetica S.A. 1,294,283 1,294,283

Puentes del Litoral S.A. 418,860 171,374 1,164 591,398

Rodoconsult Assessoria L.t.d.

Shangai Pucheng L.t.d. 71,937 71,937

Sistranyac S.A.

Società Edilizia Immobiliare Sarda 18,036 18,036

Yacylec S.A. 40,076 40,076

Total Concession 2,277,637 859,848 55,036 3,192,521

Engineering & Plant Construction

Società Italiana per l'Ecologia Marina Castalia E. 61,318 468,753 530,071

Villagest S.c.r.l. 348,509 348,509

Total Engineering & Plant Construction 409,827 468,753 878,580

219



(1,607,874) (2,800) (1,610,674) (630,417)

(514,035) (514,035) (379,137)

11,939

(7,023) (7,023) (7,023)

992,191

300 300 300

(4,504,529) (136,720) (4,641,249) (1,893,616)

7,986,227

(2,781,497) (2,781,497) (1,822,975)

(29,593) (29,593) (24,293)

(9,444,251) (2,800) (136,720) (9,583,771) 8,990,657 (4,757,461)

(3,615) (3,615) 404,661

(97,987) (97,987) (80,262)

(106,434) (106,434) 101,500

(12,517) (12,517) 58,131

(6,359,425) (6,359,425) (6,359,425)

(930) (930) 123,923

(138,527) (138,527) 140,321

(956,853) (37) (956,890) (682,428)

(166,570) (166,570) (89,488)

(7,838,313) (4,545) (37) (7,842,895) 828,536 (7,211,603)

47,226

11,184

7,563

(2,765) (2,765) 106,234

115,900

885,919

1,294,283

(932) (17,051) (17,983) 573,415

(106,143) (106,143) (106,143)

71,937

(77,168) (77,168) (77,168)

18,036

40,076

(3,697) (200,362) (204,059) 3,171,773 (183,311)

530,071

(101,475) (101,475) 247,034

(101,475) (101,475) 777,105


220

RECEIVABLES


AFFILIATES (cont.)

Imprepar-Impregilo Partecipazioni S.p.A.

A.T.I. Girola-Romagnoli-Poscio - Domo II S.c.r.l. 201,099 201,099

Adduttore Ponte Barca S.c.r.l.

ANBAFER S.c.r.l. 118,787 118,787

Ancipa S.c.r.l. 490,336 117,036 607,372

Antignano S.c.r.l. 319,676 2,947,132 3,266,808

Associazione Temporanea Priolo Siracusa S.c.r.l. 473,174 473,174

Borini Prono & Co Ghana Ltd

Cannatello S.c.r.l. 7,219 7,219

Cogefar Italstrade per la Metropolitana Milanese 145,770 145,770

Cogefar/C.I.S.A./Icla/Fondedile 71,498 133,905 205,403

Consorzio Carnia S.c.r.l. 226,193 226,193

Consorzio Consavia S.c.n.c. 184,226 115,998 300,224

Consorzio Ferrovie Sarde - COFESAR S.c.r.l. 108,655 135,361 244,016

Consorzio Lavori Interventi Straordinari Palermo 149,910 149,910

Consorzio Volgograd Opere Civili 203,014 203,014

Corso Malta S.c.r.l. 300,028 300,028

Costruttori Riuniti per la Valtellina 29,449 87,497 116,946

Depurazione Palermo S.c.r.l.

Diga Ancipa S.c.r.l. 120,511 6,418 126,929

Edil.Gi. S.c.r.l. 5,947 5,947

Edilizia Giudiziaria S.c.r.l. 1,256,150 2,174,527 3,430,677

Eurosilos S.r.l. 117,327 81,734 199,061

Famagosta S.c.r.l. 20,054 105,464 125,518

FE.LO.VI. S.c.n.c.

Galliera 2000 S.c.r.l.

Gestioni Sanitarie Toscane S.c.r.l. 56,736 56,736

Grandi Uffizi S.c.r.l. 865 46,057 46,922

Groupment Cogefar Italstrade Recchi S.r.l. 1,204 1,204

Imprese Riunite Genova Irg S.c.r.l. 69,401 69,401

Imprese Riunite Genova Seconda S.c.r.l. 437,907 437,907

Lambro S.c.r.l. 67,725 22,962 90,687

Livorno Due S.c.r.l. 703 22,281 22,984

Lodola S.c.r.l. 37,907 132,033 169,940

Marsico Nuovo S.c.r.l. 11,362 29,497 40,859

MESA S.c.r.l.

Metroduebi S.c.r.l. 117,597 78,648 196,245

Milano Sviluppo S.p.A. 104,137 104,137

Monte Vesuvio S.c.r.l. 232,147 17,791 249,938

MS Villa Fiorita S.c.r.l. 25,506 25,506

Napoli Porto S.c.r.l. 130,572 130,572

Paullese S.c.r.l. 2,750 2,750

Pietrarossa S.c.r.l. 123,393 123,393

221



201,099

(102,972) (4,881) (107,853) (107,853)

(106) (106) 118,681

(152,696) (2,841) (155,537) 451,835

(11,179) (11,179) 3,255,629

(240,390) (240,390) 232,784

(27,056) (140,448) (167,504) (167,504)

(9,455) (9,455) (2,236)

145,770

(111,914) (111,914) 93,489

(19,960) (19,960) 206,233

(22,288) (22,288) 277,936

(75,653) (75,653) 168,363

(40,756) (40,756) 109,154

(472,415) (472,415) (269,401)

300,028

116,946

(13,302) (3,615) (16,917) (16,917)

(129,798) (3,615) (133,413) (6,484)

5,947

(2,949,624) (2,949,624) 481,053

199,061

125,518

(12,350) (617) (12,967) (12,967)

(10,000) (10,000) (10,000)

56,736

46,922

1,204

(600,720) (600,720) (531,319)

186,786 186,786 624,693

(3,615) (3,615) 87,072

22,984

(40,092) (40,092) 129,848

40,859

(5,449) (5,449) (5,449)

196,245

104,137

(204,002) (16,268) (220,270) 29,668

25,506

130,572

2,750

(7,965) (2,582) (10,547) 112,846


222

RECEIVABLES


AFFILIATES (cont.)


Pisogne S.c.r.l. 50 50

Platano S.c.n.c.

RCCF Nodo di Torino S.c.p.a. 52,760 52,760

Ripristino Beni Culturali - RIBEC S.c.r.l. 178,566 178,566

Saces S.r.l.

San Giorgio Caltagirone S.c.r.l. 95,710 43,279 138,989

Sclafani S.c.r.l. 1,506 242,378 243,884

Sincat S.c.r.l. (13,219) (13,219)

Sistema Sinni S.c.r.l. 12,773 12,773

Società Gestione Depuratore 495,851 495,851

Soingit S.c.r.l. 273,594 134,621 408,215

Stelvio 38 S.c.r.l. 1,999 41 2,040

Taormina S.c.r.l. 440,181 519,674 959,855

Total Imprepar-Impregilo Partecipazioni S.p.A. 6,276,842 8,310,200 115,998 14,703,040

Total Affiliates 20,998,658 12,881,244 171,034 34,050,936

OTHER COMPANIES

Major Projects

Consorcio Cigla-Sade 156,022 14,149,974 14,305,996

Consorcio Contuy Medio 401,861 468,030 869,891

Consorcio Contuy Medio Grupo A C.I. S.p.A. 3,080,355 873,522 3,953,877

Consorcio Grupo Contuy-Proyectos y Ob. De F. 1,065,630 1,065,630

Consorcio Imigrantes 69,196 69,196

Consorcio Impregilo Cosapi

Consorcio V.S.T. Tocoma 14,329 375,220 371,388 760,937

Consorzio C.A.V.E.T. - Consorzio Alta V. Em/Tosc. 234,096 37,795 271,891

Consorzio Cociv 2,802,898 436,167 3,239,065

Consorzio Iricav Due 422,374 422,374

Consorzio MARC 13,659 13,659

Consorzio RCPS Nuova Romea 5,834 16,903 22,737

Consorzio San Cristoforo 306,040 306,040

Consorzio Scilla

Consorzio TAT-Tunnel Alp Transit Ticino 55,539 12,854,989 12,910,528

Consorzio tra le Societê Cogefar/B/C 354 644,933 645,287

Consorzio TRA.DE.CI.V. 650,110 650,110

Consorzio Tre Esse 2,946,186 9,989 2,956,175

Consorzio Trevi - S.G.F. INC per Napoli 3,656,309 3,656,309

Consorzio Venezia Nuova 4,893,066 4,893,066

Consorzio Venice Link 2,167,803 2,167,803

E.R. Impregilo/Dumez y Asociados para Yaciretê 916,462 727,289 9,363 1,653,114

Ertan J.V. 32,588 560,281 592,869

223



50

(119,239) (17) (119,256) (119,256)

(505,393) (505,393) (452,633)

(5,736) (5,736) 172,830

(23) (1,071,339) (1,071,362) (1,071,362)

(32,621) (32,621) 106,368

243,884

(13,219)

(37,566) (37,566) (24,793)

(231,660) (231,660) 264,191

(160,461) (160,461) 247,754

2,040

(18,642) (18,642) 941,213

(5,712,282) (1,722,253) (7,434,535) 10,079,898 (2,811,393)

(23,100,018) (1,929,960) (136,757) (25,166,735) 23,847,969 (14,963,768)

(10,384,916) (10,384,916) 3,921,080

(73,440) (73,440) 796,451

3,953,877

1,065,630

(257,671) (257,671) (188,475)

(71,849) (71,849) (71,849)

760,937

271,891

(50,601) (50,601) 3,188,464

(1,937,187) (1,937,187) (1,514,813)

13,659

(2,805) (2,805) 19,932

(90,080) (90,080) 215,960

(6,141) (2) (6,143) (6,143)

(7,476,618) (7,476,618) 5,433,910

(63,803) (63,803) 581,484

(534,945) (534,945) 115,165

(5,854,470) (5,854,470) (2,898,295)

(837,991) (837,991) 2,818,318

(40,012) (40,012) 4,853,054

(3,373) (3,373) 2,164,430

(178,958) (738,152) (917,110) 736,004

(91,383) (1,270,309) (1,361,692) (768,823)


224

RECEIVABLES


OTHER COMPANIES (cont.)

Major Projects (cont.)

Impregilo - Ebasco-Losinger J.V. 103,877 103,877

Impregilo S.p.A.-NCC International A.B. J.V. 780,946 352,432 1,133,378

Impregilo S.p.A.-Iglys S.A.-Hochtief AG-Hochtief UTE 442,444 12,618 455,062

Impregilo Strabag J.V. 2,525,858 2,787,639 2,220,547 7,534,044

J.Cartellone C.C. S.A.-Igl S.p.A - (Casisa UTE) 214,579 3,857,619 4,072,198

Joint Venture Aktor Ate - Impregilo S.p.A. 9,577 9,577

Joint Venture Aktor S.A. - Impregilo S.p.A. 206,413 378,748 585,161

Joint Venture Impregilo S.p.A. - Empedos 206,413 206,413

Joint Venture Terna - Impregilo 112,154 112,154

Libyan Italian Joint Company

M.N. 6 S.c.r.l.

Metropolitana di Napoli S.p.A. 146,674 146,674

Mohale Dam Contractors (MDC) J.V. 182,951 182,951

Mohale Tunnel Contractors (MTC) J.V. 4,333,049 4,333,049

Normetro - Agrupamento Do Metropolitano Do P.

Rivers State Contractors 3,214,735 25,108 3,239,843

Techint S.A.C.I.- Hochtief A.G.- Impregilo S.p.A 13,637 40,911 5,534,325 5,588,873

Transmetro - Construcao de Metropolitano A.C.E. 5,437 5,437

Wan Long Joint Venture 19,185 19,185

Yellow River Contractors J.V. 2,237 864,680 866,917

Terzi gruppo 91,631 273,038 364,669

Total Major Projects 32,197,774 42,132,415 10,055,827 84,386,016

Building & Services

Consorzio Camaiore Impianti 34,013 17,713 51,726

Consorzio Caserma Donati 131,064 342,941 474,005

EDIL.CRO S.c.r.l.

I.C.R. S.c.r.l. 43,738 43,738

Impregilo - Rizzani de Eccher J.V. 1,487,441 9,670,484 11,157,925

J.V. Impregilo-Iris-Terna 3,796,930 3,796,930

Sarmento S.c.r.l. 46,665 308,190 354,855

SO.CO.TAU. S.c.r.l. 28,422 28,422

Terzi gruppo 69,345 2,514,538 13,465 2,597,348

Total Building & Services 5,565,458 3,255,542 9,683,949 18,504,949

Concession

Acqua Campania S.p.A. 657,104 657,104

Terzi gruppo 221,899 221,899

Total Concession 879,003 879,003

225



103,877

1,133,378

(309,867) (309,867) 145,195

(8,774,578) (8,774,578) (1,240,534)

(2,805,828) (1,543,649) (4,349,477) (277,279)

9,577

585,161

206,413

112,154

(13,340) (13,340) (13,340)

(15,000) (15,000) (15,000)

(43,044) (43,044) 103,630

182,951

4,333,049

(216) (216) (216)

3,239,843

5,588,873

(330) (330) 5,107

19,185

(2,814,276) (443) (2,814,719) (1,947,802)

(6,594) (6,594) 358,075

(21,410,779) (4,407,794) (20,473,298) (46,291,871) 47,036,714 (8,942,569)

51,726

474,005

(31,116) (31,116) (31,116)

(4,204) (4,204) 39,534

(6,581,855) (4,576,070) (11,157,925)

3,796,930

354,855

28,422

(12,853) (2,330) (15,183) 2,582,165

(48,173) (6,584,185) (4,576,070) (11,208,428) 7,327,637 (31,116)

657,104

(143,235) (143,235) 78,664

(143,235) (143,235) 735,768


226

RECEIVABLES




Consorzio Agrital Ricerche

Consorzio Macopsissa Ambiente 255,951 255,951

Consorzio Ramsar Molentargius 61,320 212,803 274,123

Consorzio Unitam

Nautilus S.c.p.a.

Total Engineering & Plant Construction 61,320 468,754 530,074


Arena Flegrea S.c.r.l.

Consorcio Federici/Impresit/Ice Cochabamba 1,000,000 1,000,000

Consorcio V.S.T.

Consorzio Agenzia del Mare

Consorzio CCTE 139,756 139,756

Consorzio CO.RI.TECNO 299,628 299,628

Consorzio Cogefar/Italstrade/Recchi/CMC - CIRC 302,541 302,541

Consorzio del Sinni 42,248 42,248

Consorzio Destra Secchia - CDS 48,800 3 48,803

Consorzio Eastital Costruzioni

Consorzio Edilizia Sociale Industralizzata Lazio 280,771 70,417 351,188

Consorzio Ferrofir 617,186 37 617,223

Consorzio Ferroviario Milanese (149,754) (149,754)

Consorzio Imprese Lavori FF.SS. di Saline - FEIC 7,943 7,943

Consorzio Iniziative Ferroviarie - INFER 339,319 339,319

Consorzio Melandro Viggiano 7,564 7,564

Consorzio Metropolitane

Consorzio per il Nucleo di Balvano 343,862 170,889 514,751

Consorzio Suburbia 7,845 7,845

Dragados y Obras Portuarias S.A., Iglys S.A. UTE

Fedco J.V. 151,296 151,296

GE.A.C. S.r.l. 173,116 173,116

German/Italian/Mosul/Dam - GIMOD J.V. 247,896 247,896

Impregilo Recchi J.V. 115 115

GL-Stfa - Impregilo Sezai Turkes Feyzi Akkaya J.V. 1,044 299,404 893,928 1,194,376

Groupement SNCE/Girola S.p.A. Canal T II 1/B 464,823 464,823

Highlands Water Venture J.V. 2,400,000 2,400,000

Iglys S.A. -Josè Cartellone Construcciones Civiles 262,480 262,480

Iglys S.A.-Iecsa S.A.-Dragados Obras y Proyectos UTE

IMPRAC-KU Impregilo-Accept (Kurchum) A.P.

Impregilo - Salini Joint 187,307 187,307

Impregilo - Salini Joint Venture for Kapichira 46,804 2,123,436 2,170,240

Impregilo - Salini Joint Venture for Owen Falls 1,195,039 402,616 1,597,655

227



(24,236) (24,236) (24,236)

(25,883) (25,883) 230,068

(5,862) (5,862) 268,261

(747) (2,776) (3,523) (3,523)

(50,619) (50,619) (50,619)

(107,347) (2,776) (110,123) 498,329 (78,378)

(24) (24) (24)

(100,967) (100,967) 899,033

(1,529,264) (1,529,264) (1,529,264)

(3,209) (3,209) (3,209)

(61,776) (61,776) 77,980

(30,245) (30,245) 269,383

(94,107) (94,107) 208,434

(21,474) (21,474) 20,774

(17,323) (17,323) 31,480

(95,028) (35,151) (130,179) (130,179)

(6,343) (6,343) 344,845

(5,102) (5,102) 612,121

(546,277) (546,277) (696,031)

(13,538) (13,538) (5,595)

(353,984) (353,984) (14,665)

7,564

(10,846) (10,846) (10,846)

514,751

7,845

(4,686) (4,686) (4,686)

151,296

173,116

(262,000) (77,913) (339,913) (92,017)

115

(4,368) (4,368) 1,190,008

464,823

(610,057) (27,148) (637,205) 1,762,795

262,480

(346,206) (346,206) (346,206)

(154,415) (154,415) (154,415)

(8,736) (8,736) 178,571

(69,768) (69,768) 2,100,472

1,597,655

RECEIVABLES



Imprepar-Impregilo Partecipazioni S.p.A. (cont.)

Impregilo Cogefar New Esna Barrage J.V. 520 520

J.V. Salini Impregilo (Sudan) 7,039,288 2,103 7,041,391

Joint Venture Impregilo S.p.A. - Empedos S.A. - Ak 183,750 183,750

Matsoku Civil Contractor (MMC) J.V. 349,717 8,365,250 8,714,967

Owen Fall J.V. 1,430,245 1,430,245

Prato consorzio 156,488 156,488

Ricostruzione Ferrovie Nord S.c.r.l. 557 557

S.P.P.C.A.C. S.c.r.l. 25,077 25,077

Salini - Cogefar Impresit Osborne Dam J.V.

Salini - Cogefar Impresit Zhovhe Dam J.V. 7,523 42,067 49,590

Salini - Impregilo Joint Venture for Mukorsi 7,522 7,522

Sep Eole 421,068 315,387 736,455

Shurtan C JV 35,263 35,263

SO.C.E.T. Società Costruttori Edili Toscani 114,403 114,403

Strade e Depuratori Palermo S.c.r.l. 231,646 231,646

Valtellina S.c.r.l. 15,961 15,961

Terzi gruppo 813,728 721,557 1,535,285

Total Imprepar-Impregilo Partecipazioni S.p.A. 7,180,310 21,561,204 3,915,965 32,657,479

Total other companies 45,883,865 67,417,915 23,655,741 136,957,521

Generale Total 176,281,427


228



(1,403) (1,403) (883)

7,041,391

183,750

(30,192) (17,331,971) (17,362,163) (8,647,196)

(2,335) (2,335) 1,427,910

(88,910) (88,910) 67,578

557

(16,835) (16,835) 8,242

(2,609) (2,609) (2,609)

49,590

7,522

736,455

35,263

(220,690) (220,690) (106,287)

(66,827) (66,827) 164,819

(10,000) (10,000) 5,961

(2,046,697) (569,747) (2,616,444) (1,081,159)

(5,934,385) (1,584,667) (17,359,119) (24,878,171) 260,604,579 (12,825,271)

(27,643,919) (12,579,422) (42,408,487) (82,631,828) 76,203,027 (21,877,334)

(109,428,525)

229


STATUTORY FINANCIAL STATEMENTS OF IMPREGILO S.p.A. AS AT 31 DECEMBER 2005

AND SUPPLEMENTARY NOTESTO THE FINANCIAL STATEMENTS

230

BALANCE SHEET OF IMPREGILO S.p.A.

Statutory financial statements as at 31 December 2005

ASSETS

(in Euros) as at 31.12.2005 as at 31.12.2004

Non-current assets

Intangible assetsstart-up and expansion costs 33,563,730

industrial patents and property rights

concessions, licences, trademarks and similar rights

goodwill 62,605,208 61,103,022

other intangible assets 16,068,473 3,524,265

work in progress and down payments

Total intangible assets 112,237,411 64,627,287

Fixed assetsland and buildings 1,357,927 1,402,679

plant and machinery 17,925,944 17,319,266

industrial and commercial equipment 1,667,652 1,992,467

other fixed assets 7,507,573 6,900,793

work in progress and down payments

Total fixed assets 28,459,096 27,615,205

Non-current financial assetsshareholdings in 263,486,731 314,455,487

subsidiaries 185,844,293 199,188,135

affiliates 24,802,673 26,148,336

other companies 52,839,765 89,119,016

receivables 164,884,678 231,426,697

due from subsidiaries after more than a year 163,892,503 230,125,838

due from others within a year 992,175 1,300,859

other securities 389 389

Total non-current financial assets 428,371,798 545,882,573

Total non-current assets 569,068,305 638,125,065

Current assets

Inventoriesraw, ancillary and consumable materials 17,031,781 10,136,852

real-estate ventures 400,000 400,000

work in progress arising under construction contracts 131,318,727 224,918,098

finished products and goods 580,818 3,273,142

down payments 2,648,078 12,041,639

Total inventories 151,979,404 250,769,731

232

(in Euro) as at 31.12.2005 as at 31.12.2004

Receivables

trade receivables 144,794,746 70,286,117

receivable within a year 133,453,926 66,647,111

receivable after more than a year 11,340,820 3,639,006

due from subsidiaries 661,205,680 172,281,654

due from affiliates 2,253,497 25,014,078

tax receivables 135,104,512 146,774,477

prepaid taxes 3,298,008

other receivables 9,802,347 29,139,537


receivable after more than a year 230,107 110,100

due from other companies 142,247,952 125,126,106


receivable after more than a year 266,591 22,109,919

Total receivables 1,098,706,742 568,621,969

Short-termfinancial assets

shareholdings in 2,603,089 2,603,089

subsidiaries 2,602,624 2,602,624

affiliates

other companies 465 465

other securities 986,906 85,981

Total short-termfinancial assets 3,589,995 2,689,070

Cash at bank and on hand

deposits with banks and post office 202,387,501 80,937,319

cash and equivalents on hand 205,963 164,703

Total cash at bank and on hand 202,593,464 81,102,022

Total current assets 1,456,869,605 903,182,792

Accrued income and prepaid expenses 3,749,133 2,143,218

Total assets 2,029,687,043 1,543,451,075

233


SHAREHOLDERS' EQUITY AND LIABILITIES



Capital 708,996,096 384,039,555

Share premium reserve 326,951,558 28,994,315

Legal reserve 23,559,743 23,559,743

Other reserves (merger surplus) 2,893,987

Retained earnings/(losses) (61,609,190) 49,161,835

Result for the period (257,352,393) (142,659,327)

Total shareholders' equity 740,545,814 345,990,108

Provisions for risks and liabilities

Provisions for taxes (inc. deferred taxes) 5,608,257 18,801,622

Other provisions 106,355,658 24,456,578

Total provisions for risks and liabilities 111,963,915 43,258,200

Staff severance fund 13,858,464 14,576,752

Payables

Bonds

payable within a year

payable after more than a year

loans from shareholders 100,000,000

due to banks 669,159,591 193,246,293

payable within a year 30,662,408 193,246,293

payable after more than a year 638,497,183

due to other lenders 19,704,156 24,803,185



down payments received 98,395,254 96,997,205


payable after more than a year 25,798,868 11,809,188

trade payables 62,233,829 83,843,803

due to subsidiaries 60,282,033 254,668,758

due to affiliates 8,657,751 28,673,854

fiscal liabilities 26,295,298 24,473,035


payable after more than a year 2,195,333

due to social security and welfare agencies 2,509,034 2,759,339

234


other payables 62,277,750 47,525,927



due to other companies 138,379,148 279,805,905

Total payables 1,147,893,844 1,136,797,304

Accrued liabilities and deferred income 15,425,006 2,828,711

Total liabilities 2,029,687,043 1,543,451,075

Memorandum accounts

Guarantees issued 4,875,283,070 5,274,350,012

Personal guarantees: 4,826,833,070 5,205,247,702

guarantees for the benefit of the company 656,573,915 411,910,270

guarantees in favour of subsidiaries 1,210,649,372 1,720,731,125

guarantees in favour of affiliates 151,079,100 123,391,417

guarantees in favour of other companies 2,808,530,683 2,949,214,890

other personal guarantees

Tangible security 48,450,000 69,102,310

Commitments 104,475,049 132,208,848

Our assets lodged with third parties 29,500,077 29,041,901

Total guarantees received 5,009,258,196 5,435,600,761

Total guarantees provided 164,147,821 196,649,128

235

INCOME STATEMENT OF IMPREGILO S.p.A.



Production value

revenues from the sale of products and the provision of services 289,881,651 757,874,978

change in inventories: unfinished,

semi-finished and finished products 3,217,598

change in real-estate ventures (1,431,257)

change in work in progress arising under construction contracts 1,338,665,773 1,251,971,241

internal work capitalised on fixed assets 9,648,643

other revenues and income 48,361,727 33,064,582

Total production value 1,676,909,151 2,054,345,785

Production cost

cost of raw, ancillary and consumable materials and goods (62,856,657) (49,206,753)

cost of outside services (1,298,818,012) (1,721,427,818)

leasing costs (45,276,823) (47,524,991)

staff costs:

wages and salaries (66,926,555) (57,446,107)

social charges (13,062,731) (14,105,785)

staff severance fund (7,907,255) (5,184,613)

other costs (27,008,217) (10,901,984)

Total staff costs (114,904,758) (87,638,489)amortisation, depreciation and write-downs:

amortisation of intangible assets (17,782,871) (30,123,576)

depreciation of fixed assets (6,416,805) (3,859,972)

write-downs against current receivables and cash at bank and on hand (8,271,688) (2,000,000)

Total amortisation, depreciation and write-downs (32,471,364) (35,983,548)

change in inventories: raw, ancillary and consumable materials and goods 4,202,605 621,711

allocations for risks (58,309,797) (6,212,548)

sundry operating expenses (16,406,442) (19,246,129)

Total production cost (1,624,841,248) (1,966,618,565)

236


Difference between production value and production cost 52,067,903 87,727,220


income from shareholdings:

from subsidiaries 3,882,239 2,666,089

from affiliates 272,642 4,246,293

from other companies 1,703,108 52,977,140

for others 263,128

Total income from shareholdings 5,857,989 60,152,650

other financial income:

from non-current receivables

other

from long-term securities

from short-term securities 9,422,073 76

sundry items of financial income: 59,155,733 49,755,181

from subsidiaries 30,049,911 11,915,605

from affiliates 2,798,635 2,008,396

from other companies 17,348,726 17,114,997

from others 8,958,461 18,716,183

Total other financial income 68,577,806 49,755,257

interest payable and other financial charges:

to subsidiaries (13,131,758) (32,768,183)

to affiliates (3)

to other companies (9,039,080) (7,932,457)

other (45,308,717) (37,090,530)

Total interest payable and other financial charges (67,479,555) (77,791,173)

Net foreign exchange differences (10,956,639) (21,970,807)

Total financial income and charges (4,000,399) 10,145,927

237

INCOME STATEMENT OF IMPREGILO S.p.A. (continued)



Value adjustments to financial assets

revaluations:

shareholdings 3,716,206 880,072

short-term securities

Total revaluations 3,716,206 880,072

write-downs:

shareholdings (164,805,467) (132,355,871)

loans receivable (136,092,938) (70,375,865)

non-current financial assets (39,277)

Total write-downs (300,898,405) (202,771,013)

Total value adjustments to financial assets (297,182,199) (201,890,941)

Extraordinary income and charges

extraordinary income:

other extraordinary income 2,514,999

Total extraordinary income 2,514,999

extraordinary charges:

other extraordinary charges (872)

taxes relating to previous years (3,800,356) (2,906,989)

withdrawal from current taxation provision 540,000

Total extraordinary charges (3,260,356) (2,907,861)

Total extraordinary items (3,260,356) (392,862)

Pre-tax result (252,375,051) (104,410,656)

Taxation for the year: current, deferred and prepaid taxes (4,977,342) (38,248,671)

Net result for the year (257,352,393) (142,659,327)

238

CASHFLOW STATEMENT

Financial year Financial year(amounts expressed in Euro/000s) 2005 2004


Net profit for the year (257,352) (142,659)


Depreciation of tangible fixed assets 6,417 3,860

Write-downs and provisions 59,397 8,200

Write-down of loans receivable 136,093 68,476

Write-down of shareholdings 161,089 117,199

Change in staff severance fund (719) 701

Capital gains (10,070) (52,321)

Decrease/(Increase) in deferred taxes (18,933) 24,149

Total income statement 93,705 57,729

Decrease/(increase) in inventories 98,791 71,310

Decrease/(increase) in trade receivables (67,072) (11,294)

(Decrease)/increase in down payments from clients 1,398 28,648

(Decrease)/increase in suppliers (21,610) 884

Decrease/(increase) in other assets/liabilities (161,628) (55,267)

Total working capital (150,121) 34,281

Cash generated/(absorbed) by operating activities (56,416) 92,010



Investments in tangible fixed assets (7,631) (25,608)


Realisable price or redemption price of non-current assets 12,470 58,089

Cash generated/(absorbed) by investment activities (149,903) (175)


(Decrease)/increase in borrowing in the form of bonds (125,000)

Loans made to Group companies (762,028)

(Decrease)/increase in bank loans and other financings 658,566 54,799

Dividends distributed and contributions made to cultural initiatives (22,625)

Capital increase 593,856 19

Cash generated/(absorbed) by financial activities 490,394 (92,807)

Increase/(decrease) in cash 284,075 (972)

Cash and cash equivalents at start of year (112,144) (111,172)

Cash and cash equivalents at end of year 171,931 (112,144)

239


240

The figures contained in the balance sheet and income statement of Impregilo S.p.A. have been measured in accordance with the provisions of the

Italian Civil Code and Italian accounting standards, issued by the National Board of Accountants and Book-keepers.

ACCOUNTING STANDARDS AND VALUATION CRITERIAThe individual financial statements as at 31 December 2005, consisting of a balance sheet, income statement and supplementary notes to the

financial statements, have been prepared in accordance with Article 2423 and successive Articles of the Italian Civil Code, while omitting - for

simplification in presentation - all indications in the form of capital letters, Roman numerals and Arabic numerals, while of course keeping all

balance-sheet content (Article 2424) and income-statement content (Article 2425) intact. In these supplementary notes, all amounts are expressed

in thousands of Euros unless stated otherwise.

The charts adopted, like the general valuation criteria adopted, comply with the provisions of the Italian Civil Code, amended following Legislative

Decree 6 of 17 January 2003, and the subsequent amendments made to the same (referred to hereinafter as the "Vietti Reform").

When preparing the financial statements, attention has been paid, specifically, to general principles for prudence while assuming the business to be

an ongoing concern, as well as to principles for the coherence and consistency over time of the valuation criteria adopted, while taking into account

the economic function of the various assets, liabilities, costs and revenues considered.

The financial statements include data for all activities carried out directly by Impregilo S.p.A., both in Italy and abroad through its branches. In this

regard, we wish to remind you that the foreign branches in the individual countries in which they operate are treated as autonomous entities locally,

from an exchange-control and fiscal perspective, and are therefore required to maintain a set of ledgers and submit their financial statements to

the local authorities.

Such financial statements have been included in the accounts of Impregilo S.p.A. while strictly complying with the accounting standards presented herein.

In order for the balance sheet to be presented with as much clarity as possible, please note that amounts receivable from and payable to

subsidiaries, affiliates and other companies have been shown net, as was also the case in the financial statements for the year ending 31 December

2004, with regard to each amount due to and from every single counterparty, given that such amounts, relating primarily to relationships with

consortium companies and consortiums, concern the claiming back of costs and revenues and various services provided. These supplementary

notes do however provide the gross values of the amounts due from and to the above entities, with a breakdown of receivables and payables

provided for every single company as an appendix.

To provide an immediate point of reference, the most significant accounting standards and valuation criteria adopted are presented below.

Intangible assetsIntangible assets are recognised at purchase cost or production cost, which includes any additional charges incurred and which may be adjusted

in the presence of permanent impairment losses, and are systematically amortised over their foreseen useful life.

Start-up and expansion costs include the costs incurred for the company's share capital increase and are amortised over a period of five years.

Goodwill is carried for the cost incurred when acquiring businesses; since it refers substantially to the contracts awarded to the businesses acquired,

goodwill is amortised in proportion to the stage of completion reached by the contracts themselves.

Other intangible assets are primarily made up of the additional expenses incurred for the financial restructuring exercise. Such expenses are

recognised with the consent of the Board of Statutory Auditors and are amortised over five years.

SUPPLEMENTARY NOTES TOTHE INDIVIDUAL FINANCIAL STATEMENTS

241

Fixed assetsFixed assets are reported at purchase or production cost, which may be adjusted in the case of certain assets pursuant to special monetary

revaluation laws. Cost includes additional purchase costs and direct and indirect production costs for the share that is reasonably imputable to the

asset concerned.

Fixed assets are systematically depreciated every financial year by the straight-line method, using rates reflecting the economic benefit and wear

and tear of assets, determined in relation to the residual useful life of assets. The annual depreciation rates applied are as follows:

%

Land 0

Buildings 3

Plant and machinery 10 - 20

Industrial and commercial equipment 25 - 40

Other tangible assets 12 - 25

Where, regardless of the depreciation already computed, a permanent impairment loss is recovered, the asset in question is written down

accordingly. If in subsequent years the reasons for carrying out a write-down in the first place can no longer be justified, then the original value is

restored, adjusted solely to take depreciation into account.

Maintenance costs of an ordinary nature are charged in full to the income statement. Maintenance costs that increase the value of assets are

attributed to the assets to which they refer and depreciated in relation to their residual useful life.

Please also note that the company does not capitalise financial charges on fixed assets.

Leased assetsImpregilo S.p.A. reports its leasing arrangements by carrying rents that have already reached maturity in the income statement and carrying those

that have yet to mature as part of the memorandum accounts, in keeping with prevailing company accounting laws and fiscal legislation. If leases

were to be computed by the financial method, then the economic result and balance sheet for the year ending 31 December 2005 would have

undergone the following changes:

Impact on income statement Impact on balance sheet

Increase in depreciation (1,388) Increase in net non-current assets 1,282

Decrease in rents 7,517 Increase in payables -

Decrease in deferred income -

Gross impact on income statement 6,129 Gross impact on equity 1,282

Fiscal effect (2,283) Fiscal effect (478)

Increase in net profit 3,846 Increase in equity 804

Decrease in memorandum accounts -


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ShareholdingsShareholdings in subsidiaries and affiliates, where in the form of equity or otherwise, are measured at cost. Cost, which may be adjusted pursuant

to special monetary revaluation laws, is reduced for permanent impairment losses when the investee companies concerned have registered losses,

and profits of a size to absorb the losses thus incurred cannot be foreseen within a reasonable timeframe.

Dividends are recognised during the year in which their distribution is resolved upon by the companies paying them.

In the event of negative equity, a relevant adjustment is carried in order for the relevant book value of the investment concerned to be reached, with

said value directly reduced, with the surplus reported in the risk provision for shareholdings on the liabilities side of the balance sheet.

Interests in companies undergoing liquidation proceedings are recognised for the presumable realisable value that may be recovered at the end of

said proceedings.

Inventories: goodsGoods are recognised at the lower of average purchase cost and market value. Cost includes additional expenses. Market value is determined by

taking the replacement value of assets into account. Any write-downs are eliminated in future years where the reasons for effecting them in the first

place can no longer be justified.

Work in progress and revenues from long-term contractsWork in progress arising under long-term construction contracts is measured on the basis of the fees defined contractually and the stage of

completion reached in the contracts in question. Specifically, the value of the above items is determined, depending on the type of contract and work

being carried out, as follows:

• by the cost-to-cost method, by applying the percentage of completion to the aggregate revenues expected, forming a ratio between costs incurred

and aggregate costs expected;

• by the "physical measurement method", applying to the jobs the fees contractually agreed for each of them, with said fees including any price

revisions carried out in the meantime.

Inventories in the form of "work in progress" reflect jobs carried out net of invoices issued in advance to a client while the contract is being carried

out. Since a fee is paid on a definitive basis, the turnover arising from this - including down payments - is recognised in the income statement under

the item "revenues from the sale of products and the provision of services", with the value of inventories consequently undergoing change.

The contractual risks provision is used to reduce the value of inventories directly, to cover for possible charges and losses arising under contracts

that are part of projects embarked upon directly or as part of a partnership.

Requests made to clients for additional fees are computed solely for those amounts that will definitely be received and whose quantification is

founded. If an operating loss is expected to be incurred upon completion of a contract, then this loss is recognised in full in the year in which the

company becomes aware of it, with the necessary allocations to the contractual risks provision.

Pre-operations costs, incurred during the initial stage of a contract prior to construction work getting underway (specific planning, design and study

costs that relate to the contract in question, costs for the organisation and commencement of production, and worksite installation costs) are

included in the stage of completion calculation, and become part of the cost-to-cost measurement process from the time they are incurred.

The costs borne after a contract has been wrapped up to remove installations (or an entire building site) and to recover systems and equipment

from the site, along with the costs arising from contracts requiring services to be provided after the completion of a contract (assistance and

243

supervision while a plant is first up and running, scheduled maintenance work, etc.) are included for cost-to-cost calculation purposes. They should

therefore be included in projected aggregate costs, constituting - at the time they arise - "completion" for revenue calculation purposes. The costs

themselves, where determined by the physical measurement method, are covered by way of the contractual risks provision.

Receivables and payablesReceivables are recorded at presumed realisable value less any provisions allocated to reduce their value. Payables are recorded at face value.

Fixed income securitiesFixed income securities are recognised in the balance sheet at the lower of acquisition cost and presumed realisable value.

Accrued income, prepaid expenses, accrued liabilities and deferred incomeThe above headings are used to record the share of income and costs that are common to two or more financial years, in accordance with the

accrual method of accounting.

Staff severance fundThe staff severance fund is set aside to cover all liabilities accrued with employees in conformity to current legislation, collective labour agreements

and supplementary company agreements. This liability is revalued by applying the appropriate indices.

Income taxesIncome taxes relating to the period are determined by estimating taxable income and by referring to the legislation prevailing in both Italy and the other

countries in which the company operates through its permanent establishments. The liability foreseen is carried under the item "Fiscal liabilities".

Future fiscal effects relating to the temporary differences between the value of an asset or liability recorded in the balance sheet and the value attributed

to this same asset or liability for fiscal purposes, as well as those relating to fiscal losses that may be carried forward, are determined on the basis of the

fiscal liability/benefit foreseen, which is calculated by taking into account the taxable base and the tax rates foreseen for the year in which these differences

are eliminated. The fiscal effects thus determined are re-examined every year, while considering any new events or more reliable forecasts. In this regard,

future fiscal charges are carried, where probable, as part of risk provisions under the item "deferred taxation provision". In this case, future fiscal benefits

are only recognised where it is reasonably certain that they will arise, and are carried under the item of current assets "Prepaid taxes".

Since financial year 2004, some of the Group's Italian companies have been adopting the "national fiscal scheme of consolidation". In accordance

with the agreements established, fiscal losses transferred by subsidiaries will be recognised to them up to the amounts that they could have utilised

them in the absence of the aforementioned fiscal scheme of consolidation. In its absence, the benefit will be enjoyed by the parent company, except

where partial recognition is made to the company transferring the losses.

Provisions for risks and liabilitiesThe purpose of allocations effected for risks and liabilities is to cover liabilities of a determined nature whose existence is certain or likely, but in

respect of which - as at the end of the financial year - their amount and/or the date on which they will arise could not be determined. The allocations

effected reflect the best possible estimate made on the basis of the information available.

The taxation provision contains those amounts that are prudently set aside to cover possible fiscal liabilities as well as deferred taxes.


244

Criteria for the conversion of entries denominated in foreign currency The criteria adopted when converting entries denominated in foreign currency may be summarised as follows:

• assets and liabilities denominated in foreign currency, excluding tangible and intangible assets and shareholdings measured at cost, are recorded

by using the spot exchange rate reported on the last day of the financial year, with any variation carried to the income statement;

• revenues and costs related to transactions denominated in foreign currency are recorded in the income statement by using the exchange rate

reported on the day on which the transaction concerned is actually effected;

• any significant effects caused by changes in exchange rates after the end of the financial year are duly reported in the supplementary notes to

the financial statements.

Derivative contractsThe derivative contracts entered into to hedge exchange-rate risk in place at the end of the year are reported in the memorandum accounts by using

the spot exchange rate recorded on the last day of the financial year. The underlying assets and liabilities are converted by using the exchange rate

recorded on the date of the hedging agreement, while premiums are recognised in the income statement on an accrual basis, in relation to the term

of the contract concerned, as part of foreign exchange differences, carried as the balancing entry for accrued and deferred items.

Similarly, in the case of contracts that hedge interest-rate risk, the effect of the differential between the contractual rate and the effective rate at the

end of the year is reported in the memorandum accounts. When interest is accrued, the charge effectively borne is recognised in the income

statement, after taking the hedging arrangement into account.

COMPOSITION OF CHANGES UNDERGONE BY BALANCE SHEET ITEMS

NON-CURRENT ASSETS

INTANGIBLE ASSETS The above amounted to Euro 112,237 thousand and may be broken down as follows:

31 December 2005 31 December 2004Cost Fund Net Value Cost Fund Net Value

Start-up and expansion costs 37,293 (3,729) 33,564

Goodwill 105,529 (42,924) 62,605 95,033 (33,930) 61,103

Other intangible assets 81,301 (65,233) 16,068 130,793 (127,269) 3,524

Total 224,123 (111,886) 112,237 225,826 (161,199) 64,627

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During the year under review, the following changes were recorded:

31 December 2004 Increases Amortisation 31 December 2005

Start-up and expansion costs - 37,293 (3,729) 33,564

Goodwill 61,103 10,496 (8,994) 62,605

Other intangible assets 3,524 17,604 (5,060) 16,068

Total 64,627 65,393 (17,783) 112,237

START-UP AND EXPANSION COSTSThe item "start-up and expansion costs" refers to costs incurred in relation to the capital increase finalised in July and described in the section

dealing with shareholders' equity. These costs have been capitalised with the consent of the Board of Statutory Auditors by virtue of their long-term

usefulness, and are amortised over a period of five years.

The nature of the capitalised costs referred to above is the result of the fees due to banks forming the guarantee syndicate, as well as the fees paid

to the lawyers and other professional consultants who contributed to the transaction's successful outcome.

In this regard, please refer to the Report on Operations, where details of the financial restructuring exercise are provided.

GOODWILLGoodwill increased by Euro 1,502 thousand on 31 December 2004, due to a Euro 10,496 thousand increase arising from the adjustment of

acquisition values for high-capacity businesses, net of amortisation set aside during the period under review (Euro 8,994 thousand). Goodwill has

arisen from the acquisition of the businesses of Grassetto S.p.A. (1998), F.lli Costanzo S.p.A. (2002) and Tecnimont S.p.A.(2003) and refers to the

high-capacity projects. Specifically, Euro 45,318 thousand relates to the Milan-Genoa section (Cociv), Euro 15.993 thousand to the Turin-Milan

section (C.A.V.TO.MI.) and Euro 1,294 thousand to the Bologna-Florence section (C.A.V.E.T.).

Description Gross value Progressive amortisation Net value

Cociv (Milan-Genoa line) 45,318 45,318

C.A.V.TO.MI. (Turin-Milan) 49,882 (33,889) 15,993

C.A.V.E.T. (Florence-Bologna) 10,329 (9,035) 1,294

Goodwill 105,529 (42,924) 62,605

The goodwill pertaining to the company's high-capacity railway businesses is amortised by applying a percentage to reflect the stage of completion

reached by the contracts awarded to them. As at 31 December 2005, "progressive amortisation" relates to the Turin-Milan and Bologna-Florence

lines, in that work on the Milan-Genoa has yet to get underway. The residual value recognised in the balance sheet is excepted to be recovered

through the revenues generated by the business units to which the goodwill refers.


246

OTHER INTANGIBLE ASSETSEuro 15,855 thousand of the net value reported as at 31 December 2005 was made up of additional expenses incurred in respect of the company's

financial restructuring exercise (described in the "Liabilities" section dealing with the item "due to banks") and capitalised during the period under

review, while the remainder was made up of worksite installation costs.

FIXED ASSETSThe table below provides a summary of gross and net values, along with the movements undergone:

31 December 2005 31 December 2004Cost Fund Net Value Cost Fund Net Value

Land and buildings 1,751 (393) 1,358 1,752 (349) 1,403

Plant and machinery 22,823 (4,897) 17,926 19,347 (2,028) 17,319

Industrial and commercial equipment 4,533 (2,865) 1,668 3,469 (1,476) 1,993

Other fixed assets 11,568 (4,061) 7,507 9,177 (2,277) 6,900

Total 40,675 (12,216) 28,459 33,745 (6,130) 27,615

The changes undergone during the year may be summarised as follows:

31 December 2004 Increases Depreciation Reclassifications Disposals 31 December 2005

Land and buildings 1,403 (45) 1,358

Plant and machinery 17,319 3,556 (2,948) (1) 17,926

Industrial and commercial equipment 1,993 1,096 (1,421) 1,668

Other fixed assets 6,900 2,979 (2,003) (369) 7,507

Total 27,615 7,631 (6,417) (370) 28,459

Investments for the period were made primarily by the company's Iceland branch (Euro 2,497 thousand) and Venezuela branch (Euro 4,949

thousand) respectively for the realisation of the Karahnjukar Dam in Iceland and the Puerto Cabello-La Encrucijada railway line in Venezuela.

Depreciation for the period, amounting to Euro 6,417 thousand, has been determined by applying the depreciation rates set out in the section dealing

with accounting standards.

Pursuant to the provisions of Article 10 of Law 72/83, it should be noted that the financial statements for the year ending 31 December 2005 do

not contain any fixed assets that have been subjected to monetary or economic revaluations in previous years. Please also note that no write-downs

have been effected against fixed assets.

NON-CURRENT FINANCIAL ASSETS Non-current financial assets amounted to Euro 428,372 thousand. Their composition and the changes undergone by them may be summarised as follows:

Balance as at Balance as at Change31 December 2005 31 December 2004

Shareholdings 263,487 314,455 (50,968)

Receivables 164,885 231,427 (66,542)

Total 428,372 545,882 (117,510)

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SHAREHOLDINGSShareholdings amounted to Euro 263,487 thousand, reporting a decrease of Euro 50,968 thousand on 31 December 2004.

The table below provides a summary of the book values of shareholdings, broken down into subsidiaries, affiliates and other companies, along with

a summary of the movements undergone by same shareholdings. A complete list of all shareholdings is provided at the end of the supplementary

notes to the financial statements.

Pursuant to the provisions of Law 72/83, we wish to point out that the monetary revaluation of Euro 1,933 thousand has been effected against

subsidiary company CSC Impresa Costruzioni S.A., which is carried in the balance sheet for Euro 3,209 thousand.


Subsidiaries 185,485 199,188 (13,343)

Affiliates 24,802 26,148 (1,346)

Other companies 52,840 89,119 (36,279)

Total 263,487 314,455 (50,968)

The change thus registered is summarised in the table below.

Book value of shareholdings

Net value at start of period 314,455

Increases

Formation of companies and subscription of capital 112,496

Adjustments to capital holding 4,266

Total increases 116,762

Decreases

Write-downs net of withdrawals 103,992

Transfers to third parties 63,274

Companies put into liquidation 464

Total decreases 167,730

Net value at end of period 263,487

These movements are analysed below.

With regard to the principal increases recorded, please note the following:

• the subscription of 51% of the share capital (equal to Euro 17,850 thousand, of the consortium company Reggio Calabria Scilla S.c.p.a., a general

contractor mandated for the third lot of the Salerno-Reggio Calabria motorway. As at the reporting date, Euro 7,811 thousand of the capital

subscribed had been paid-in. The portion not paid-in (equal to Euro 10,039 thousand is reported on the liabilities side of the balance sheet as

part of "due to subsidiaries";

• the acquisition of 49% of the share capital of the company Fisia Italimpianti S.p.A. (already 51%-owned) for Euro 68,500 thousand;

• the participation in the capital increase of the Leonardo S.r.l. at a level of Euro 20,489 thousand. This company was sold later on in the year

under review, as described later on in this report;


248

• the Euro 4,266 thousand adjustment made to the endowment fund of the joint venture Ghazi Barotha Contractors J.V., due to the high volatility

reported by the currency of reference;

• the acquisition by Imprepar S.p.A. of the company Suropca Ca, following the new strategic stance adopted by the Impregilo Group with regard

to the Venezuelan market. This interest was acquired at the book value determined by a survey, for Euro 3,365 thousand. Acquiring this interest

meant that Imprepar S.p.A. also took over a Euro 10,193 thousand loan provided to Suropca. These amounts have partly reduced the amount

receivable by Imprepar S.p.A.

With regard to the principal decreases recorded, please note the following:

• Write-downs of Euro 132,277 thousand, following the losses incurred during the reporting period, which are regarded to be permanent losses,

and withdrawals from the provision set aside in previous years to the order of Euro 28,285 thousand. The movement undergone by the provision

for the write-down of shareholdings is summarised in the table below:

Value of provision Allocations Withdrawals Value of provisionat start at end

of period of period

Provision for the write-down of shareholdings 191,413 132,277 (28,285) 295,405

• Transfers were mainly made up of the sale of the interests held in the companies Leonardo Holding S.A. and Leonardo S.r.l. (collective book value:

Euro 61,963 thousand) to the shareholder Gemina in September 2005.

The next table presents the differences between book values (net of the write-down provision and risks provision) and the effective share of equity

held in investee companies as at 31 December 2005, determined by referring to the accounts approved by their respective Boards. No values have

been reported for consortium companies, consortiums or foreign joint ventures, whose results are incorporated through the allocation of the costs

and revenues attributable.

249

% Gross Write-down Risks Net Share of Differenceheld value provision provision value equity

effectively held

Agba - Aguas del Gran Buenos Aires S.A. 16.500 8,098 (8,098) 144 144

Borini Prono & Co Nigeria Ltd 23.867 533 533 1,613 1,080

Coincar S.A. 26.250 6,508 (3,347) 3,161 3,161

C.A.V.E.T. consortium 75.983 4,120 (1,754) 2,366 2,366

C.A.V.TO.MI. consortium 74.690 3,735 (2,543) 1,192 1,192

Cociv consortium 94.500 488 (100) 388 388

Construtora Cigla S.A. 100.000 11,700 (11,700) (13,745) (13,745) (13,745)

CSC Impresa Costruzioni S.A. 100.000 3,209 3,209 12,906 9,697

Fisia Italimpianti 100.000 109,300 109,300 62,430 (46,870)

Healy S.A. Company 100.000 26,370 (17,919) 8,451 10,742 2,291

Igl Argentina S.A. 77.738 354 (238) 116 116

Impregilo Edilizia e Servizi S.p.A. 100.000 168,269 (159,404) 8,865 8,865

Impregilo International Infrastructures N.V. 100.000 50,000 (50,000) (18,337) (18,337) (121,337) (103,000)

Impregilo y Asociados S.A. 100.000 22,539 (22,539) (296) (296) (296)

Imprepar S.p.A. (in liquidation) 100.000 3,100 (3,100) (157,503) (157,503)

Impresit Bakolori Plc 50.707 3,404 (3,404) (6,684) (6,684) (6,684)

PGH Ltd 60.000 373 (373) (2,773) (2,773) (2,773)

Puentes del Litoral S.A. 22.000 9,323 (9,323) (3,014) (3,014) (3,014)

SGF - INC S.p.A. 100.000 4,723 (1,563) 3,160 3,160

Suropca Ca 99.000 3,365 3,365 9,450 6,085

Tesco - Technical Services Company S.r.l. 100.000 6,004 6,004 7,092 1,088

Total 445,516 (295,405) (44,849) 105,262 (181,727) (286,988)


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Please note the following with regard to shareholdings whose net book value is higher than the share of equity effectively held in the companies

concerned:

• Fisia Italimpianti: the difference between book value and the share of equity held is supported by the business performance forecasts presented

in the industrial plan. This measurement approach is also supported by an impairment test.

• Impregilo International Infrastructures: The book value of this interest was set to zero following the losses posted at the end of financial year

2005. The difference between the share of negative equity and book value is justified by the implicit gain that will be realised following the sale

of the stake in Sociedad Concessionaria Costanera Norte S.A., already described in the Report on Operations.

• Imprepar - Impregilo Shareholdings S.p.A. (in liquidation): to cover the negative equity reported by this investee company, a provision has been

carried on the asset side of the balance sheet to adjust the amount receivable, as described in the next section. Said provision amounts to Euro

157,503 thousand, including Euro 87,127 thousand set aside during the year under review.

The table below details the write-downs and allocations recognised during the year.

Allocations Allocationsto write-down provision to risks provision

Agba - Aguas del Gran Buenos Aires S.A. (2,340)

C.A.V.E.T. consortium (1,754)

C.A.V.TO.MI. consortium (2,543)

Cociv consortium (100)

Construtora Cigla S.A. (9,349)

Igl Argentina S.A. (formerly "Iramoc") (200)

Impregilo Edilizia e Servizi S.p.A. (73,777)

Impregilo International Infrastructures N.V. (50,000) (18,337)

Impresit Bakolori Plc (345)

PGH Ltd (422)

Puentes del Litoral S.A. (2,361)

SGF - INC S.p.A. (1,563)

Total (132,277) (30,814)

NON-CURRENT RECEIVABLESThe above receivables, which decreased by Euro 66,542 thousand on 31 December 2004, may be broken down as follows:

31 December of which: of which: of which: 31 December Changes2005 within after more after more 2004

a year than a year than 5 years

Due from subsidiaries 163,893 163,893 230,126 (66,233)

Due from others 992 992 1,301 (309)

Total 164,885 992 163,893 231,427 (66,542)

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Amounts due from subsidiaries include Euro 163,893 thousand due from the company Imprepar - Impregilo Shareholdings S.p.A. (in liquidation), which

is shown net of bad debt provisions of Euro 157,503 thousand (including Euro 87,127 thousand set aside over the course of financial year 2005). This

provision has been carried to cover the negative equity reported in the statement of liquidation produced for Imprepar as at 31 December 2005.

Balance as at Changes during Allocation for Balance as at31 December 2004 the period 2005 31 December 2005

Due from Imprepar 300,502 20,894 321,396

Bad debt provision (70,376) (87,127) (157,503)

Total 230,126 20,894 (87,127) 163,893

Over the course of 2005, a portion of the amount receivable by Impregilo S.p.A. from Imprepar S.p.A. was set off against amounts payable by

Impregilo S.p.A., which arose following the acquisition by Impregilo S.p.A. of an equity interest in Suropca Ca and an amount receivable from

Suropca by Imprepar S.p.A. Set-off involved receivables that arose before 1 January 2004, or rather prior to the date on which the amendments to

legal provisions stemming from Legislative Decree 6 of 17 January 2003 (which introduced among other things special regulations relating to

shareholders' loans to Article 2467 of the Italian Civil Code) came into effect. Said provisions require the payment of debts, upon the emergence of

determined circumstances, to be deferred until other creditors have been satisfied. These requirements, however, are not applied retroactively, and

so do not concern the receivables that arose before they came into effect.

Among the amounts due from Imprepar is Euro 6,780 thousand, with Euro 6,000 thousand being the portion of the purchase price of the receivable

from Suropca (referred to in the previous paragraph) that has not been set off, and Euro 780 thousand being the amount arising from Imprepar's

acquisition of an amount previously receivable by Iglys from the Argentine branch of Impregilo.

In consideration of the debts referred to above, net amounts receivable from Imprepar, as highlighted in the table below, totalled to Euro 314,616

thousand and - after bad debt provisions - to Euro 157,113 thousand.

Balance as at 31 December 2005

Due from Imprepar 321,396

Due to Imprepar (6,780)

Net amount receivable from Imprepar 314,616

The net amount receivable from Imprepar is considered to be in keeping with the subsidiary's liquidation plan, in that it has been substantially aligned

to the present value of future cashflows, net of payments to banks and suppliers and after future running costs, stemming from liquidation

proceedings, have been paid. Since it does not attract any interest, this amount has assumed the features of an investment in a company or rather

of a "capital holding".

Other receivables due after the next year include Euro 992 thousand, which relates to the advance tax payment made pursuant to the provisions of

Article 3, paragraphs 211 to 213, of Law 662/1996, in respect of the amount allocated under the staff severance fund.


252

CURRENT ASSETS

INVENTORIES Inventories amounted to Euro 151,979 thousand, compared with Euro 250,770 thousand as at 31 December 2004, and may be broken down as follows:

31 December 2005 31 December 2004Gross Provision Net Gross Provision Net Changevalue value value value

Raw, ancillary and consumable materials 17,032 17,032 10,137 10,137 6,895

Work in progress arising under construction contracts 205,069 (73,751) 131,318 302,188 (77,270) 224,918 (93,600)

Real-estate ventures 400 400 400 400 -

Finished products and goods 581 581 3,273 3,273 (2,692)

Down payments 2,648 2,648 12,042 12,042 (9,394)

Total 225,730 (73,751) 151,979 328,040 (77,270) 250,770 (98,791)

RAW, ANCILLARY AND CONSUMABLE MATERIALSMost of the above item refers, on both 31 December 2005 and 31 December 2004, to materials being used by the company's Iceland branch to

construct the Karahnjukar Dam.

WORK IN PROGRESS ARISING UNDER CONSTRUCTION CONTRACTSAs at 31 December 2005, work in progress arising under construction contracts amounted to Euro 131,318 thousand, net of the contractual risks

provision (Euro 73,751 thousand). The total thus reported may be broken down into contracts in Italy (68%), rest of Europe (13%) and non-European

countries (19%). The percentage of work in progress that Italy accounts for remained substantially unchanged on the previous year.

Work in progress arising under construction contracts, net of the contractual risks provision, is summarised in the table below.

Balance as at Balance as at Change 31 December 2005 31 December 2004

High Capacity Project 6,089,783 5,076,366 1,013,417

Venezuela 128,666 48,343 80,323

Iceland 390,657 209,936 180,721

Nepal 167,152 159,813 7,339

Others 457,065 403,719 53,346

Certified work in progress 7,233,323 5,898,177 1,335,146

High Capacity Project (6,006,389) (4,917,886) (1,088,503)

Venezuela (104,500) (31,335) (73,165)

Iceland (372,988) (163,949) (209,039)

Nepal (159,813) (159,813) -

Others (384,564) (323,006) (61,558)

Down payments received (for certified work) (7,028,254) (5,595,989) (1,432,265)

Contractual risks provision (73,751) (77,270) 3,519

Total work in progress arising under construction contracts 131,318 224,918 (93,600)

253

The purpose of the contractual risks provision is to cover possible liabilities and losses arising in connection with work in progress. The movements

recorded by this provision during the year under review were as follows:

Value of fund Allocations Withdrawals Value of fundat start at end

of period of period

Contractual risks provision 77,270 14,223 (17,742) 73,751

Total 77,270 14,223 (17,742) 73,751

The next table presents the balances reported in the balance sheet for the most significant contracts, along with comparative data for the previous year:

Closing stocks: Closing stocks: Changework in progress work in progress

as at 31 December 2005 as at 31 December 2004

Contract

High Capacity Project 50,038 119,905 (69,867)

Salerno - Reggio Calabria 19,845 7,193 12,652

Passante di Mestre 2,180 6,392 (4,212)

Venezuela 24,167 17,007 7,160

Iceland 17,669 45,987 (28,318)

Others 17,419 28,434 (11,015)

Total 131,318 224,918 (93,600)

REAL-ESTATE VENTURESThe Euro 400 thousand reported refers to a plot of land in Berlin, carried at the lower of cost and presumed realisable value.

FINISHED PRODUCTS AND GOODSMost of the above item refers to the company's Venezuela branch.

DOWN PAYMENTSThese are primarily made up of advances paid to the suppliers of contracts in Iceland and Venezuela.

RECEIVABLESIn order for the balance sheet to be presented with as much clarity as possible, please note that amounts receivable from and payable to

subsidiaries, affiliates and other Group companies have been shown net, as was also the case in the financial statements for the year ending 31

December 2004, with regard to each amount due to and from every single counterparty, given that such amounts, relating primarily to relationships

with consortium companies and consortiums, concern the claiming back of costs and revenues and various services provided. These supplementary

notes do however provide the gross values of the amounts due from and to the above entities, with a breakdown of receivables and payables

provided for every single company as an appendix.

Gross receivables amounted to Euro 1,835,879 thousand, compared with Euro 1,501,350 thousand in the previous balance sheet, thus representing

an increase of Euro 334,529 thousand. Net receivables increased by Euro 530,084 thousand.


254

Receivables may be broken down as follows:

31 December 2005 31 December 2004

Net receivables Receivables Total Net receivables Receivables Total Changescarried in the subjected gross carried in the subjected grossbalance sheet to set-off receivables balance sheet to set-off receivables

Trade receivables 144,795 144,795 70,286 70,286 74,509

Due from subsidiaries 661,205 40,972 702,177 172,282 27,441 199,723 502,454

Due from affiliates 2,254 15,869 18,123 25,014 4,243 29,257 (11,134)

Due from other companies 142,248 680,332 822,580 125,126 901,044 1,026,170 (203,590)

Tax receivables 135,104 135,104 146,774 146,774 (11,670)

Prepaid taxes 3,298 3,298 3,298

Other receivables 9,802 9,802 29,140 29,140 (19,338)

Total 1,098,706 731,173 1,835,879 568,622 932,728 1,501,350 334,529

Receivables may be broken down by maturity as follows:


of which: of which: of which: Total of which: of which: of which: Totalwithin after more after more within after more after morea year than a year than 5 years a year than a year than 5 years

Trade receivables 133,454 11,341 144,795 66,647 3,639 70,286

Due from subsidiaries 702,177 702,177 198,454 1,269 199,723

Due from affiliates 18,123 18,123 29,257 29,257

Due from other Group companies 822,313 267 822,580 1,004,060 22,110 1,026,170

Tax receivables 135,104 135,104 146,774 146,774

Prepaid taxes 3,298 3,298

Other receivables 9,572 228 2 9,802 29,030 110 29,140

Total 1,820,743 15,134 2 1,835,879 1,474,222 27,128 1,501,350

The tables below present receivables before and after bad debt provisions, along with the movements undergone by the provision itself.


Amount Provisions Value after Amount Provisions Value after receivable provisions receivable provisions

Trade receivables 153,621 (8,826) 144,795 74,211 (3,925) 70,286

Due from subsidiaries 725,519 (23,342) 702,177 199,723 199,723

Due from affiliates 46,283 (28,160) 18,123 29,257 29,257

Due from other companies 822,580 822,580 1,026,170 1,026,170

Tax receivables 135,104 135,104 146,774 146,774


Other receivables 9,802 9,802 29,140 29,140

Total 1,896,207 (60,328) 1,835,879 1,505,275 (3,925) 1,501,350

255

Value of fund Allocations Withdrawals Value of fundat start at end

of period of period

Bad debt provision for trade receivables 3,800 8,272 (835) 11,237

Bad debt provision for loans 48,966 48,966

Risk provision for arrears interest due from clients 125 125

Total 3,925 57,238 (835) 60,328

The allocations effected in the period in respect of trade receivables were as follows:

• the amounts receivable from the client of the project undertaken at the company's Nepal branch were written down by Euro 4,900 thousand;

• the amounts receivable from the Group companies Aguas del Gran Buenos Aires, Impresit Bakolori and Puentes del Litoral were written down by

Euro 2,537 thousand;

• tundry receivables were written down by Euro 835 thousand.

The allocations effected in the period in respect of loans related to the subsidiary Impresit Bakolori Plc (Euro 21,921 thousand), which has been

affected by having a seriously poor jobs book within the instable environment of the local market. This situation makes the recoverability of the amounts

receivable uncertain. The affiliate company Puentes del Litoral S.A., a franchisee operating in Argentina, has also been affected by the instability

pervading its country. As a result, the loans made to said company have been written down by Euro 27,045 thousand. For further information regarding

this issue, please refer to the comments provided in the chapter of the Report on Operations dealing with the various areas of activity.

Receivables may be broken down by nature as follows:


Commercial Financial Other Total Commercial Financial Other Total

Trade receivables 144,795 144,795 70,286 70,286

Due from subsidiaries 16,311 681,650 4,216 702,177 18,908 178,787 2,028 199,723

Due from affiliates 16,924 1,199 18,123 7,057 22,168 32 29,257

Due from other companies 662,776 110,283 49,521 822,580 861,755 124,603 39,812 1,026,170

Tax receivables 135,104 135,104 146,774 146,774


Other receivables:

due from staff 318 318

due from welfare agencies 529 529 288 288

sundry amounts receivable 4,683 4,272 8,955 16,365 12,487 28,852

Total other receivables 9,802 29,140

Total 840,806 932,919 62,154 1,835,879 958,006 488,697 54,647 1,501,350


256

TRADE RECEIVABLESThis item is made up of amounts receivable from clients in respect of both invoices issued and the stage of completion reached by work already

certified but yet to be invoiced, net of provisions.

The amounts due from the company's principal clients may be summarised as follows:

Client Country Balance as at 31 December 2005

Landsvirkjun Iceland 67,661

I.A.F.E. Venezuela 46,272

R.A.V. Raccordo Autostradale Italy 18,930

Ansaldo Trasporti Italy 3,642

Others - 8,290

Total trade receivables 144,795

Please note that during the period under review, trade receivables due from Italian clients totalling Euro 4,051 thousand were transferred to the

factoring company Fercredit. These assigned receivables are maintained in the relevant items of the balance sheet detailing receivables, while the

advance received from the factoring company is carried as part of "due to other lenders" until the transferred receivable has been collected by the

financing concern.

257

DUE FROM GROUP COMPANIESAmounts due from subsidiaries, affiliates and other companies, totalling Euro 1,542,880 thousand, relate to relationships of a commercial and

financial nature in connection with the provision of services and other activities, whereby the costs and revenues involved are claimed back. This

item registered a net increase on the previous period of Euro 287,730 thousand, as presented in the table below.


Subsidiaries

Impregilo International Infrastructures N.V. 474,811 474,811

Impregilo Edilizia e Servizi S.p.A. 86,839 77,787 9,052

S.G.F. - I.N.C. S.p.A. 40,454 34,027 6,427

Technical Services Company - Tesco S.r.l. 21,602 14,923 6,679

Constructora Cigla y Asociados S.A. 13,824 2,799 11,025

Suropca Ca 10,193 15 10,178

Constructora Costanera Norte Ltda 7,778 1,863 5,915

PGH Ltd 6,755 5,833 922

Healy S.A. Company 4,814 3,118 1,696

CSC Impresa Costruzioni S.A. 4,298 858 3,440

Salerno Reggio Calabria S.c.p.a. 3,299 996 2,303

Fisia Italimpianti S.p.A. 2,219 891 1,328

Others 25,291 56,613 (31,322)

Total due from subsidiaries 702,177 199,723 502,454

Affiliates

Passante di Mestre S.c.p.a. 13,825 1,969 11,856

Metrogenova S.c.r.l. 1,757 1,192 565

Others 2,541 26,096 (23,555)

Total due from affiliates 18,123 29,257 (11,134)

Other companies

C.A.V.TO.MI. consortium 492,646 685,793 (193,147)

C.A.V.E.T. consortium 52,997 71,483 (18,486)

Cociv consortium 60,277 60,996 (719)

Ghazi Barotha J.V. 57,446 51,535 5,911

Consorcio Acueducto Oriental 35,561 30,605 4,956

Consorcio Contuy Medio Grupo A 25,731 18,512 7,219

Consorzio TAT 12,910 4,917 7,993

Leonardo Holding S.A. 22,110 (22,110)

Others 85,012 80,219 4,793

Total due from other companies 822,580 1,026,170 (203,590)

Total due from investee companies 1,542,880 1,255,150 287,730


258

The change in amounts receivable from subsidiaries was due essentially to the amount due from Impregilo International Infrastructures N.V., which

during the period under review was provided with liquidity of Euro 570,280 thousand, which was needed to repay its bond loans. Please note that

as at 31 December 2004, Impregilo International Infrastructures N.V. reported a credit of Euro 217,287 thousand, with the overall net change

reported (of Euro 692,098 thousand) due not only to the previously mentioned funding but also to the funds that were granted to the subsidiary

enabling it to meet its requirements in relation to the critical situation reached by the Fibe project (Euro 79,700 thousand) and - with regard to the

remaining amount - to engage in investment activities.

The increase in the amounts due from Constructora Cigla y Asociados was due to the loans granted by Impregilo during the year under review, while

the increase in the amounts due from Suropca came from the acquisition of amounts previously receivable by Imprepar, as already detailed in the

previous paragraphs.

There are also increases to report as regards the amounts due from Technical Services Company - Tesco S.r.l., Impregilo Edilizia e Servizi S.p.A.

and S.G.F. - I.N.C. S.p.A., as a result of greater cashflow being absorbed to cover the current expenditure of these subsidiaries, with which banking

relationships regulated by way of a cash pooling arrangement are in place. These increases were only partially offset by the reduction created when

provisions were allocated to the amount due from the Nigerian company Impresit Bakolori Plc, as already described.

The decrease in amounts due from affiliates was due essentially to the allocation of a provision to the amount receivable from the Argentine company

Puentes del Litoral S.A., which was adjusted to reflect its presumed realisable value.

The decrease in amounts due from other companies was mainly caused by the decrease in amounts due from the High Capacity Project consortiums

(due essentially to a decline in revenues).

Of note is the reduction in the amount due from Leonardo Holding S.A., following the sale of the shareholding, the latter transaction being described

in the "Liabilities" section under "Loans from shareholders".

TAX RECEIVABLESTax receivables, mainly made up of corporation tax (IRPEG) and VAT along with associated interest, decreased from Euro 146,774 thousand to Euro

135,104 thousand. The net decrease thus registered was Euro 11,670 thousand, as may be seen from the table below.


Amounts receivable from Inland Revenue - VAT 40,313 48,558 (8,245)

Other amounts receivable - indirect Italian taxes 1,532 5,577 (4,045)

Amounts receivable from Inland Revenue - indirect foreign taxes 141 110 31

Corporation tax credits 88,538 84,736 3,802

Local business tax credits 7 1,548 (1,541)

Other amounts receivable - direct Italian taxes 2,511 2,227 284

Amounts receivable from Inland Revenue - direct foreign taxes 753 3,416 (2,663)

Tax credits and withholding taxes 1,309 602 707

Total tax receivables 135,104 146,774 (11,670)

259

The decrease recorded was due to both the reduction in the current VAT credit (input) and the set-off and partial receipt of amounts in respect of

direct taxes.

Please note that over the course of financial year 2003, Impregilo S.p.A. entered into recourse factoring agreements for the transfer of VAT credits

with a face value of Euro 24,352 thousand. As at 31 December 2005, the residual value of these credits after the amounts received amounted to

Euro 19,460 thousand. These transferred receivables are maintained in the relevant items of the balance sheet detailing receivables, while the

advance received from the factoring company is carried as part of "due to other lenders" until the transferred receivable has been collected by the

financing concern.

PREPAID TAXESDuring the year under review, prepaid taxes totalled Euro 12,455 thousand in connection with the temporary differences generated by allocations

for future risks and liabilities.

Due to this recognition process, as well as to the taxes relating to the temporary differences computed in previous years being reabsorbed, the

difference between receivables in the form of prepaid taxes and the deferred taxation provision produced a positive balance Euro 3,298 thousand,

which was carried under this item, while the deferred taxation provision shows a zero balance.

The item "Prepaid taxes" expresses the net balance between deferred taxes and prepaid taxes, and is determined as follows:

31 December 2005 31 December 2004 Difference

Temporary Fiscal Temporary Fiscal Fiscaldifferences effect differences effect effect

Prepaid taxes

Write-down due to permanent losses incurred by intangible assets 5,263 1,737 5,263 1,737 -

Write-down due to permanent losses incurred by non-current financial assets 29,203 9,637 64,850 21,401 (11,764)

Provisions for risks and liabilities 38,085 12,568 7,619 2,514 10,054

Total prepaid taxes 72,551 23,942 77,732 25,652 (1,710)

Deferred taxes

Deferred capital gains realised on non-current financial assets (62,556) (20,644) (125,111) (41,287) 20,643

Prepaid/(deferred) taxes 3,298 (15,635) 18,933

In order to determine the fiscal effect of these temporary differences, a tax rate of 33% was applied.

Please note that no prepaid taxes have been recognised for temporary differences - estimated to total Euro 206,469 thousand and relating to write-

downs effected against amounts receivable from Imprepar, Impresit Bakolori Plc and Puentes del Litoral S.A. - since they are expected to be

reabsorbed in periods following those covered by the three-year plan that has already been approved.


260

OTHER RECEIVABLESOther receivables amounted to Euro 9,802 thousand, representing a decrease of Euro 19,338 thousand on 31 December 2004. These receivables

include loans made to third parties (Euro 4,683 thousand), other types of receivables (mainly guarantee deposits and amounts due from receivers)

totalling Euro 4,272 thousand and amounts due from welfare agencies and staff (Euro 847 thousand). The decrease thus reported was mainly due

to the loan made to Mantovani S.p.A. in respect of the sale of Commesse Venete during the year 2004 (Euro 11,852 thousand) and other minor

amounts (Euro 7,486 thousand) being received during the year under review.

SHORT-TERM FINANCIAL ASSETS

SHAREHOLDINGS AND OTHER SECURITIESThe above item, totalling Euro 3,590 thousand, may be broken down as follows:


Shareholdings

subsidiaries 2,603 2,603 -

Total Shareholdings 2,603 2,603 -

Securities

other securities 987 86 901

Total securities 987 86 901

Total 3,590 2,689 901

Shareholdings carried as part of short-term financial assets, referring to companies undergoing liquidation proceedings or in the process of being

sold, amounted to Euro 2,603 thousand (unchanged on 31 December 2004).

Other securities amounted to Euro 987 thousand as at 31 December 2005 and referred to Government bonds purchased during the year under

review by the company's Venezuela branch.

CASH AT BANK AND ON HAND The above item amounted to Euro 202,593 thousand, up by Euro 121,491 thousand on 31 December 2004, which was due above all to the capital

increase accomplished as part of the financial restructuring exercise. As at 31 December 2005, this item includes tied-up deposits for special

projects totalling Euro 22,804 thousand.

261


Deposits with banks and post office 202,387 80,937 121,450

Cash and equivalents on hand 206 165 41

Total 202,593 81,102 121,491

Cash at bank and on hand may be broken down as follows:

Operation Total as at 31 December 2005

Milan head office 181,793



Other operations 2,379

Total 202,593

ACCRUED INCOME AND PREPAID EXPENSES The above heading totalled Euro 3,749 thousand, divided into accrued income (Euro 126 thousand) and prepaid expenses (Euro 3,623 thousand).

Accrued income and prepaid expenses are made up of expenses paid in advance, such as rents, utilities, insurance, guarantee fees and interest on

loans received.


Accrued income:

other accrued income 126 222 (96)

Total accrued income 126 222 (96)

Prepaid expenses:

insurance of which: after next year 463 946 1,564 (618)

guarantee fees of which: after next year 59 505 261 244

other prepaid expenses 2,172 96 2,076

Total prepaid expenses 3,623 1,921 1,702

Total 3,749 2,143 1,606


262

SHAREHOLDERS' EQUITYShareholders' equity amounted to Euro 740,546 thousand, compared with Euro 345,990 thousand as at 31 December 2004. The schedule below

provides a breakdown of the changes undergone by the various items making up equity during financial year 2004 and during the current year.

Share Share Legal Other Retained Net result Totalcapital premium reserve reserves Earnings/ for the

reserve (losses) period

As at 31 December 2003 384,029 28,986 21,939 2,894 40,998 32,409 511,255

Exercising of options 11 8 19

Distribution of previous year's result 1,620 8,164 (32,409) (22,625)

Net result for financial year 2004 (142,659) (142,659)

As at 31 December 2004 384,040 28,994 23,559 2,894 49,162 (142,659) 345,990

Distribution of previous year's result (28,994) (2,894) (110,771) 142,659 -

Capital increase 324,956 324,957 649,913

Rights not taken up 1,995 1,995

Result as at 31 December 2005 (257,352) (257,352)

As at 31 December 2005 708,996 326,952 23,559 - (61,609) (257,352) 740,546

The meeting of shareholders that met to approve the company's financial statements for the year ending 31 December 2004 resolved upon the

proposed coverage of the year's loss, to be effected by utilising retained earnings and available reserves and carrying forward the residual loss of

Euro 61,609 thousand.

On 20 May 2005, a Special Meeting of Shareholders of Impregilo resolved upon a share capital increase, to be effected for a fee and possibly by

way of more than one transaction, for a total of Euro 650,000,000 maximum (including any premium), with the Board of Directors vested with the

widest possible powers to execute the capital increase itself and establish its timing in detail. This shareholders' resolution was carried further to

the revocation of the powers delegated in October 2004 by the shareholders to the Board of Directors, enabling it to increase share capital and

issue convertible bonds for up to 400 million Euros in total, as well as warrants for a further 100 million Euros maximum. These amounts later proved

to be insufficient in consideration of the size of the financial restructuring exercise that was deemed appropriate.

To service the capital increase approved on 20 May 2005, the meeting of shareholders carried a resolution, approving the issue of a number of

Impregilo ordinary shares bearing the same features as those already in circulation. Said shares, to be offered as an option to assignees (i.e. all

holders of the ordinary and savings shares of Impregilo), would be equal to the quotient of the total amount of the capital increase (including any

premium) divided by the issue price of the new shares, as determined by the Board of Directors in keeping with the criteria predetermined by the

same shareholders' resolution of 20 May 2005.

The Special Meeting of Shareholders held on 20 May 2005 also carried a resolution agreeing to regroup the existing ordinary and savings shares

of Impregilo (shares whose nominal value had been eliminated since the previous resolution approving a capital increase), whereby one new

ordinary/savings share would be allocated for every ten ordinary/savings shares already held, with - solely to round off allocation procedures - five

ordinary shares owned by Gemina cancelled and share capital consequently reduced by Euro 2.60, the latter amount equating to the number of

shares cancelled (6).

(6) Share regrouping operations commenced on 30 May 2005.

263

On 7 June 2005, the company's Board of Directors (among other things) thus set the unitary issue price of the new shares at Euro 2.00, including

Euro 1.00 as a share premium, and, for the purpose of the increase, established that 324,956,544 new shares would be offered as an option to

shareholders, with 22 new shares being allocated for every five ordinary/savings shares already held (7) .

The offer took place, and was completely successful, from 13 June to 1 July 2005, with 73,384,345 option rights - equal to 99.36% of the total offer

- exercised. The capital increase was thus perfected with the rights unexercised being offered via the Stock Exchange from 7 to 13 July 2005. This

offer, however, enabled Impregilo to receive further proceeds of 2 million Euros, meaning that it was not necessary for the guarantee consortium -

consisting of Banca Caboto S.p.A., Banca IMI S.p.A., Efibanca S.p.A. and UniCredit Banca Mobiliare S.p.A. - to intervene in order to guarantee the

transaction's successful outcome.

It should also be noted that the Special Meeting of Shareholders held on 26 September 2005 approved a stock option plan to be offered exclusively

to the Managing Director and a number of executives of Impregilo and subsidiary companies. Said plan is equal to approximately 1.5% of share

capital in existence prior to the approval of the stock option. For further information, please refer to the chapter dealing with this issue in the Report

on Operations.

Further to the capital increase, Impregilo's shareholder structure changed significantly, due among other things to the agreements previously

stipulated between Gemina and IGLI (a company controlled by Argo Finanziaria S.p.A., Autostrade per l'Italia S.p.A., Tesir S.r.l. and Efibanca S.p.A.)

for the latter party's participation in Impregilo's share capital through the subscription of a portion of the capital increase (ordinary shares): Gemina

exercised its own option rights to the extent that after the capital increase it ended up holding a 11.82% stake in Impregilo, while it transferred its

remaining option rights to IGLI, which after exercising them held 12.59% stake in Impregilo after the capital increase. (This had been raised to

15.526% by 7 September 2005, according to the announcements made by IGLI).

In short, the company's share capital has progressed as follows:

Number of shares Share capitalOrdinary savings Total (Euro)

Number of shares and share capital at start of year 722,382,695 16,154,910 738,537,605 384,039,555

Shares cancelled (5) (5) (3)

Reduction in the number of shares due to regrouping exercise (650,144,421) (14,539,419) (664,683,840) -

Number of shares and share capital after cancellation and regrouping of shares 72,238,269 1,615,491 73,853,760 384,039,552

Capital increase 324,956,544 324,956,544 324,956,544

Number of shares and share capital as at 31 December 2005 397,194,813 1,615,491 398,810,304 708,996,096

The company's savings shares, issued pursuant to the provisions of law, do not bear any voting rights, have priority when it comes to the distribution

of earnings and the redemption of capital, and may be bearer shares, with the exception of what is established in the second paragraph of Article

2354 of the Italian Civil Code. At the request and expense of the shareholder, they may be converted into registered shares and vice versa. The

savings shares belonging to the company's Directors, Statutory Auditors and General Managers must be registered shares. Other than for what is

laid down by the company's Articles of Incorporation and by the law, savings shares allocate the same rights as ordinary shares.

(7) As a result, the maximum capital increase, including any premium, has been set at Euro 649,913,088.00, with the maximum amount resolved upon by the meeting of shareholdersrounded down, purely to round off the allocation ratio.


264

The holders of the company's savings shares are neither entitled to take the floor at shareholders' meetings nor entitled to ask a meeting to be

called. Special meetings for the holders of savings shares are regulated by the provisions of law. In the event of the company's reserves being

distributed, savings shares have the same rights as ordinary shares.

Upon the company's winding-up, savings shares enjoy pre-emption rights with regard to the redemption of capital, effected at up to Euro 5.2 per

share. In the event of shares being regrouped or split (as in the case of capital transactions, where it is necessary so that the rights of the holders

of savings shares are no different from if shares bore nominal value), the amount set per share shall be amended accordingly.

The net profits reported in the annual accounts are distributed as follows:

a) 5% to the legal reserve, up to the limit established by law;

b) to the savings shares, up to 5% of Euro 5.2 per share (equal to Euro 0.26 per share). In the event that savings shares are allocated a dividend

of less than 5% of Euro 5.2 per share (equal to Euro 0.26 per share) in any given year, the difference is added to the preference dividend in the

two years that follow;

c) the remaining amount will be allocated to all shareholders in such a way that the total dividend due to savings shares is greater than that due to

ordinary shares, to the order of 2% of Euro 5.2 per share (equal to Euro 0.104 per share), unless the meeting of shareholders carries resolutions

prescribing special withdrawals in favour of the extraordinary reserves or for other purposes.

The table below provides a summarised breakdown regarding the ability to make withdrawals from the equity accounts, together with details of the

withdrawals effected in previous years.

Summary of withdrawals effectedin the previous three financial years

Nature/description Amount Available Quota For coverage For otherfor utilisation available of losses reasons

(A, B, C,) (3)

Capital 708,996 - - -

Capital reserves:

Share premium reserve 326,952 A,B,C 326,952 28,994 (4)

Reserves for the allocation of earnings

Legal reserve 23,559 B

Other reserves 2,894 (4)

Retained earnings 31,632 (5)

Total 1,059,507 - 326,952 31,888 31,632

Quota that may not be distributed 213,412

Residual quota that may be distributed 113,539

Legend: A: for capital increase, B: for coverage of losses, C: for distribution to shareholders.

(3) Available reserves may not be distributed until the legal reserve is equal to 20% of capital.

(4) Reserves utilised to cover losses, as per the shareholders' resolution of 2 May 2005.

(5) Earnings distributed to shareholders, as per the shareholders' resolution of 6 May 2003 (Euro 9,007 thousand) and as per the shareholders' resolution of 5 May

2004 (Euro 22,625 thousand).

265

We also wish to point out that:

• the company does not own any of its own shares, be it directly or through custodian companies or other intermediaries;

• during the year under review, the company did not acquire or dispose of any of its own shares, be it directly or through custodian companies or

other intermediaries.

PROVISION FOR TAXES (INCLUDING DEFERRED TAXES)The above provision registered the following movements:

Balance as at Allocation (Withdrawals) Other Balance as at31 December 2004 movements 31 December 2005

Deferred taxation provision 15,635 (15,635)

Taxation provision for Group tax regime 3,167 1,532 909 5,608

Provision for taxes (including deferred taxes) 18,802 1,532 (15,635) 909 5,608

The deferred taxation provision has been set to zero. This is not only the result of the taxes relating to the temporary differences computed in previous

years being reabsorbed, but is also due to prepaid taxes on temporary differences generated by allocations for future risks and liabilities being

recognised during the current year. The difference between receivables in the form of prepaid taxes and the deferred taxation provision produced a

positive balance and gave rise to the recognition of receivables in the form of prepaid taxes, as already discussed in the section regarding balance-

sheet assets.

The taxation provision for the Group tax regime, which amounted to Euro 5,608 thousand, is equal to the amount that will be paid to those investee

companies that have registered fiscal losses, under the regulations adopted for Group tax regime procedures, while also taking into account the

objective and subjective conditions in which said companies find themselves.

PROVISIONS RISKS AND LIABILITIES The provisions for risks and liabilities are presented in the table below.

Value of fund Allocations Withdrawals Reclassifications Value of fundat start at end

of period of period

Risk provision for shareholdings 17,731 30,814 (3,097) 45,448

Other provisions 6,725 58,310 (6,350) 2,223 60,908

Provisions for risks and liabilities 24,456 89,124 (9,447) 2,223 106,356

The "Risk provision for shareholdings" refers to the adjustments made to the book values of certain subsidiary companies and affiliates, with Euro 44,849

thousand relating to shareholdings carried under non-current assets and Euro 599 thousand relating to shareholdings carried under current assets.

The increase undergone by this provision was mainly attributable to the investments in Impregilo International Infrastructures N.V. (Euro 18,337

thousand) and Cigla Construtora Impregilo y Asociados S.A. per Euro 9,350 thousand.


266

Other provisions for risks and liabilities increased by Euro 54,183 thousand, with the main allocations effected in this case relating to the following:

• an allocation was made for the foreseen losses of Euro 26,080 thousand on the contract relating to the San Gottardo Tunnel in Switzerland, in

which Impregilo has a share of 17.5%. This allocation proved necessary, since it has emerged from the information contained in the new contract

budget produced by the consortium, which reflects the operational difficulties that have been encountered, that the contract will produce a

definitive loss that is not expected to be recovered, unlike what was foreseen in the previous budget plans;

• an allocation was made for the costs to be written off in respect of the Ghazi Barotha contract in Pakistan, which total Euro 19,063 thousand.These costs

have been provided for following the settlement of legal proceedings (initiated against and by the company) with the client and joint venture partners;

• an allocation of Euro 2,700 thousand was made for the fiscal risks relating to the company's Chilean branch; and

• an allocation of Euro 2,500 thousand was made for the fiscal risks relating to the staff working on the Karahnjukar contract in Iceland.

STAFF SEVERANCE FUNDThe staff severance fund is determined on the basis of the benefits accrued by employees pursuant to current legislation in Italy and abroad. The fund

amounted to Euro 12,255 thousand in Italy and to Euro 1,603 thousand abroad. The movements undergone by the fund may be broken down as follows:

Value of fund Allocations Payments Other Value of fundat start movements at end

of period of period

Total 14,577 7,907 (8,776) 150 13,858

PAYABLESIn order for the balance sheet to be presented with as much clarity as possible, please note that amounts receivable from and payable to

subsidiaries, affiliates and other companies have been shown net, as was also the case in the financial statements for the year ending 31 December

2004, with regard to each amount due to and from every single counterparty, given that such amounts, relating primarily to relationships with

consortium companies and consortiums, concern the claiming back of costs and revenues and various services provided. These supplementary

notes do however provide the gross values of the amounts due from and to the above entities. Gross payables amounted to Euro 1,885,067

thousand, compared with Euro 2,069,525 thousand in the previous balance sheet, thus representing a decrease of Euro 184,458 thousand. Net

payables increased by Euro 11,097 thousand.

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Payables may be broken down as follows:


Net payables Payables Total Net payables Payables Total Changecarried in the subjected gross carried in the subjected grossbalance sheet to set-off payables balance sheet to set-off payables

Loans from shareholders 100,000 100,000 (100,000)

Due to banks 669,160 669,160 193,247 193,247 475,913

Due to other lenders 19,704 19,704 24,803 24,803 (5,099)

Down payments received 98,395 98,395 96,997 96,997 1,398

Trade payables 62,234 62,234 83,844 83,844 (21,610)

Due to subsidiaries 60,282 40,972 101,254 254,669 27,441 282,110 (180,856)

Due to affiliates 8,658 15,869 24,527 28,673 4,243 32,916 (8,389)

Due to other companies 138,379 680,332 818,711 279,806 901,044 1,180,850 (362,139)

Fiscal liabilities 26,295 26,295 24,473 24,473 1,822

Due to social security and welfare agencies 2,509 2,509 2,759 2,759 (250)

Other payables 62,278 62,278 47,526 47,526 14,752

Total 1,147,894 737,173 1,885,067 1,136,797 932,728 2,069,525 (184,458)

Payables may be broken down by maturity as follows:

31 December of which: of which: of which: 31 December of which: of which: of which:2005 within after more after more 2004 within after more after more

a year than a year than 5 years a year than a year than 5 years

Loans from shareholders 100,000 100,000

Due to banks 669,160 30,662 499,381 139,117 193,247 193,247

Due to other lenders 19,704 19,704 24,803 24,803

Down payments received 98,395 72,596 25,799 96,997 85,188 11,809

Trade payables 62,234 62,234 83,844 83,844

Due to subsidiaries 101,254 100,990 264 282,110 282,110

Due to affiliates 24,527 24,527 32,916 32,916

Due to other companies 818,711 525,961 217,102 75,648 1,180,850 1,180,850

Fiscal liabilities 26,295 26,295 24,473 22,278 2,195

Due to social security and welfare agencies 2,509 2,509 2,759 2,759

Other payables 62,278 62,278 47,526 47,526

Total 1,885,067 927,756 742,546 214,765 2,069,525 2,055,521 14,004


268

Receivables may be broken down by nature as follows:


Commercial Financial Other Total Commercial Financial Other Total

Loans from shareholders 100,000 100,000

Due to banks 669,160 669,160 193,247 193,247

Due to other lenders 19,704 19,704 24,803 24,803

Down payments received 98,395 98,395 96,997 96,997

Trade payables 62,234 62,234 83,844 83,844

Due to subsidiaries 44,132 50,240 6,882 101,254 22,755 259,355 282,110

Due to affiliates 24,370 20 137 24,527 17,123 15,770 23 32,916

Due to other companies 512,087 230,580 76,044 818,711 737,261 336,045 107,544 1,180,850

Fiscal liabilities 26,295 26,295 24,473 24,473

Due to social security and welfare agencies 2,509 2,509 2,759 2,759

Other payables:

due to staff 14,378 14,378 7,044 7,044

sundry amounts payable 32,833 15,067 47,900 26,684 13,798 40,482

Total other payables 32,833 29,445 62,278 26,684 20,842 47,526

Total 741,218 1,028,832 115,017 1,885,067 957,980 980,377 131,168 2,069,525

The main payables relate to the following:

LOANS FROM SHAREHOLDERSAs at 31 December 2004, the item "Loans from shareholders" was made up of the loan received from the shareholder Gemina during financial year

2004 itself. This loan, which is subjected to an interest rate of one-month EURIBOR plus a spread of 3.0%, was increased to Euro 130,000 thousand

on 23 March 2005 before being repaid between June and September of the current year. It was repaid in part through the capital increase described

in the section dealing with shareholders' equity and in part by being set off against the transfer price applied for the 11% share of Leonardo S.r.l.

and Leonardo Holding S.A., as well as bonds issued by Leonardo Holding S.A. itself.

DUE TO BANKSThe item "Due to banks" amounted to Euro 669,160 thousand, compared with Euro 193,247 thousand while as at 31 December 2004, thus

representing an increase of Euro 475,913 thousand. This item was made up of overdrafts, currency facilities and loans. Short and medium/long-

term borrowing may be broken down as follows:


Amounts payable within a year 30,662 193,247 (162,585)

Amounts payable after more then one year but within five years 499,381 - 499,381

Amounts payable after more than five years 139,117 139,117

Total 669,160 193,247 475,913

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The item "Due to banks" may be broken down as follows:

31 December 2005

Milan head office 642,929



Total 669,160

The way in which amounts payable to banks evolved during the period under review was influenced by the events detailed below.

GRANTING OF A BRIDGING LOAN AND MEDIUM/LONG-TERM LOAN Following on from the initial bridging loan for 120 million Euros, provided by a group of banks (90 million Euros) and Gemina S.p.A. (30 million

Euros), on 16 May 2005 Impregilo entered into a bridging loan agreement with Banca Intesa S.p.A., UniCredit Banca d'Impresa S.p.A., Sanpaolo

IMI S.p.A. and UniCredit Banca Mobiliare S.p.A., the latter acting as Arranging Bank. The purpose of this bridging loan, which is for up to 680

million Euros and matures on 31 July 2005, is to meet the Group's cashflow requirements (repayment of maturing bond loans and operating

requirements) until the capital increase is accomplished. Around 660 million Euros of this facility was utilised, and in keeping with terms and

conditions was transformed into a 500-million Euro medium-term loan, while the remaining 160 million Euros was repaid. To be more precise, on

7 June 2005, Impregilo entered into an agreement with the same banks to transform the 500 million Euros into a medium-term loan. The

agreement thus came into effect on 29 July 2005, following the execution of the entire capital increase and repayment of the 160 million Euros

outstanding on the bridging loan.

The main features of this medium-term loan may be summarised as follows:

• term of 7 years, with an 18-month grace period;

• interest rate of six-month EURIBOR plus a variable spread, depending on the gearing ratio;

• fulfilment, at a consolidated level, of the following financial covenants, which is due to be checked, as provided for by the agreement, from when

the interim report for the period to 30 June 2006 is approved:

(i) Gearing ratio (debt/equity);

(ii) Debt/ EBITDA;

(iii) EBITDA/interest expense;

• the undertaking of Impregilo to (among other things) dispose of non-current financial and fixed assets for the total sum of:

(iv) 281.3 million Euros by 31 December 2006 (including the indirect interest held in Aeroporti di Roma S.p.A.);

(v) 131.5 million Euros by 31 December 2007;

(vi) 35.2 million Euros by 31 December 2009;

• an undertaking to repay the lending institutions any amount of above one million Euros received following the sale of non-current financial and

fixed assets;


270

• an undertaking to repay the lending institutions any amount stemming from capital increases and/or any other extraordinary transaction carried

out on the capital of the company or other entities belonging to the Impregilo Group, other than for some stated exceptions;

• an undertaking to repay the lending institutions any amount that is paid or distributed by Imprepar (in liquidation) in favour of Group entities.

The amounts to be repaid will be determined net of costs incurred, including fiscal charges. Please note that, further to the facility's drawdown and

as required under the agreement, the company has prepaid principal of 42.7 million Euros (including 15.1 million Euros relating to rescheduled

borrowing) further to disposing of its assets.

RESCHEDULING OF SHORT-TERM BORROWING On the strength of the commitments assumed on 7 June 2005 and following the execution of the entire capital increase, on 28 July 2005 a number

of agreements were entered into for the rescheduling - subject to the 500-million Euro loan being transformed into medium-term borrowing - of

the Group's short-term debt to the order of 206.9 million Euros (including the Euro equivalent, as at the rescheduling date of the agreements, of a

US$ 25.4 million debt), with 181.2 million Euros of this total pertaining to Impregilo S.p.A. and the rest to other Group companies.

The conditions of the rescheduling agreements referred to above may be summarised as follows:

• term of 5 years, with a 24-month grace period;

• interest rate of six-month EURIBOR (LIBOR in the case of amounts denominated in dollars), plus a variable spread, depending on the gearing ratio;

• fulfilment, at a consolidated level, of the same financial covenants as those contained in the medium-term loan agreement, which is due to be

checked, as provided for by this facility's agreement, from when the interim report for the period to 30 June 2006 is approved.

DUE TO OTHER LENDERSThe item "Due to other lenders", amounting to Euro 19,704 thousand, relates to relationships with factoring companies, as presented in the table below.


Factoring company

Unicredit Factoring S.p.A. 19,460 24,352 (4,892)

Fercredit 244 451 (207)

Total due to other lenders 19,704 24,803 (5,099)

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DOWN PAYMENTS RECEIVED FROM CLIENTS Down payments received under construction contracts amounted to Euro 98,395 thousand, which may be broken down into contracts in Italy (Euro

4,607 thousand), rest of Europe (Euro 34,724 thousand) and non-European countries (Euro 59,064 thousand). This item increased by Euro 1,398

thousand, this being the balance between the down payments received during the year and those recovered in respect of work carried out.

The most significant amounts are presented in the table below.


Client Country

I.A.F.E. Venezuela 59,061 42,080 16,981

Landsvirkjun Iceland 34,724 52,903 (18,179)

Other clients - 4,610 2,014 2,596

Total down payments received under construction contracts 98,395 96,997 1,398

TRADE PAYABLESTrade payables may be broken down as follows:


Milan head office 39,480 50,515 (11,035)

Iceland branch 20,360 22,310 (1,950)

Venezuela branch 1,826 7,982 (6,156)

Other branches 568 3,037 (2,469)

Total trade payables 62,234 83,844 (21,610)

Trade payables amounted to Euro 62,234 thousand, which may be broken down into Italy (Euro 39,480 thousand), rest of Europe (Euro 20,775

thousand) and non-European countries (Euro 1,979 thousand). The Euro 21,610 thousand decrease recorded on the previous year was primarily

imputable to such debts being paid more quickly, thanks to the company's increased financial resources.

DUE TO SUBSIDIARIES, AFFILIATES AND OTHER COMPANIESAmounts due to subsidiaries, affiliates and other Group companies, which relate to relationships of a commercial and financial nature, in connection

with the allocation of costs and revenues and services received, amounted to Euro 944,492 thousand, registering a decrease of Euro 551,384

thousand, as presented in the table below.


272


Subsidiaries

Impregilo International Infrastructures N.V. - 217,287 (217,287)

Salerno Reggio Calabria S.c.p.a. 33,844 21,295 12,549

Reggio Calabria Scilla S.c.p.a. 14,600 - 14,600

Technical Services Company - Tesco S.r.l. 10,122 - 10,122

Constructora Costanera Norte Ltda 6,965 52 6,913

Imprepar S.p.A. (in liquidation) 6,780 12 6,768

Others 28,943 43,464 (14,521)

Total due to subsidiaries 101,254 282,110 (180,856)

Affiliates

Metrogenova S.c.r.l. 4,632 7,814 (3,182)

Passante di Mestre S.cpa 16,431 21,521 (5,090)

Others 3,464 3,581 (117)

Total due to affiliates 24,527 32,916 (8,389)

Other companies

C.A.V.TO.MI. consortium 444,178 807,808 (363,630)

C.A.V.E.T consortium 93,291 104,234 (10,943)

Cociv consortium 119,347 103,651 15,696

Ghazi Barotha contractors J.V. 84,177 86,289 (2,112)

Others 77,718 78,868 (1,150)

Total due to other companies 818,711 1,180,850 (362,139)

Total due to investee companies 944,492 1,495,876 (551,384)

The decrease in amounts payable to subsidiaries was due primarily to the amount due from Impregilo International Infrastructures N.V., the change

in which is described in the section of "Assets" dealing with inter-group receivables section.

The decreases undergone by the amounts due to affiliates and other companies are to be attributed primarily to the consortiums of the High Capacity

Railway Project, the amounts due from which also underwent a notable decrease due to the compensation computed during the year.

273

As may be seen from the table, the amounts payable include Euro 6,780 thousand due to Imprepar, in that it has not been set off against the receivables

carried as part of non-current financial assets. This amount has already been explained in detail in the section dealing with non-current financial assets.

FISCAL LIABILITIESFiscal liabilities increased from Euro 24,473 thousand to Euro 26,295 thousand, representing a net increase of Euro 1,822 thousand as presented in

the table below.

Fiscal liabilities Fiscal liabilities Changeas at 31 December 2005 as at 31 December 04

Current tax liabilities - local business tax 53 53

Current tax liabilities - corporation tax 1,434 (1,434)

Current tax liabilities - foreign taxes 13,947 3,805 10,142

VAT payable to the Inland Revenue 8,997 13,415 (4,418)

Indirect foreign taxes payable 267 401 (134)

Amounts payable for withholding taxes applied in Italy 1,819 1,561 258

Amounts payable for withholding taxes applied abroad 480 200 280

Other fiscal liabilities 732 3,657 (2,925)

Total fiscal liabilities 26,295 24,473 1,822

With regard to the company's year 2005 fiscal situation, we wish to inform you that the company has not provided for any tax liabilities, having

benefited from the losses of subsidiaries that are part of the Group tax regime.

OTHER PAYABLESOther payables amounted to Euro 62,278 thousand (against Euro 47,526 thousand as at 31 December 2004) including Euro 32,833 thousand of

a financial nature comprising debts relating to the acquisition of High Capacity Project businesses. The most significant amounts are presented in

the table below.


High Capacity Project 30,550 24,554 5,996

Employees 11,396 7,044 4,352

Liabilities relating to corporate restructuring exercise 2,982 - 2,982

Due to third parties for down payments received in connectionwith the sale of businesses in the process of being defined 7,314 7,314 -

Sundry amounts payable 10,436 8,614 1,822

Total other payables 62,278 47,526 15,152


274

ACCRUED LIABILITIES AND DEFERRED INCOME Accrued liabilities and deferred income totalled Euro 15,425 thousand, compared with Euro 2,829 thousand the previous year.


Accrued liabilities:

rents 2 2

guarantee fees 552 194 358

accrued interest charges 14,098 195 13,903

other accrued liabilities 686 2,427 (1,741)

Deferred income:

other deferred income 87 13 74

Total 15,425 2,829 12,596

The Euro 14,098 thousand reported under the heading "Accrued interest charges" relates to interest accrued on the loan granted to the company

and its rescheduled medium-term credit facilities.

MEMORANDUM ACCOUNTS The memorandum accounts are made up of "debit positions" (guarantees issued, commitments and company assets lodged with third parties)

totalling Euro 5,009,258 thousand and "credit positions" (guarantees received) totalling Euro 164,148 thousand, as reflected in greater detail in the

schedules that follow below.

275

Memorandum accounts Own account Subsidiaries Affiliates Other Total as at Total as at Changecompanies 31 December 31 December

2005 2004

Personal guarantees for contracts:

participation in tenders (and bid bonds) 40,728 16,740 57,468 14,780 42,688

down payments under construction contracts 11,161 60,873 1,981 485,523 559,538 799,128 (239,590)

performance bonds 345,226 574,175 21,019 1,257,648 2,198,068 1,928,105 269,963

release of amounts withheld for guarantee purposes (and price revisions) 15,338 66,738 1,197 396,317 479,590 426,695 52,895

Personal guarantees for contracts 412,453 701,786 24,197 2,156,228 3,294,664 3,168,708 125,956

Personal guarantees for the granting of credit, others:

granting of credit 160,892 417,862 122,775 385,822 1,087,351 1,380,086 (292,735)

SACE for export credits 10,275 531 218,666 229,472 328,017 (98,545)

other personal guarantees for the fulfilment of obligations towards customs and fiscal authorities 72,954 90,471 4,107 47,814 215,346 328,437 (113,091)

Personal guarantees for the granting of credit, others 244,121 508,864 126,882 652,302 1,532,169 2,036,540 (504,371)

Personal guarantees provided 656,574 1,210,650 151,079 2,808,530 4,826,833 5,205,248 (378,415)

Tangible security:

securities pledged to third parties 48,450 48,450 69,102 (20,652)

Tangible security 48,450 48,450 69,102 (20,652)

Total guarantees issued 705,024 1,210,650 151,079 2,808,530 4,875,283 5,274,350 (399,067)

Commitments:

commitments under contracts to buy and sell 104,475 104,475 67,922 36,553

commitments for the acquisition of shareholdings 50,452 (50,452)

commitments for rents payable on leased assets 9,896 (9,896)

commitments for other reasons 3,939 (3,939)

Commitments 104,475 104,475 132,209 (27,734)

Our assets lodged with third parties:

our securities lodged with third parties 29,493 29,493 29,033 460

our assets lodged with third parties 7 7 9 (2)

Our assets lodged with third parties 29,500 29,500 29,042 458

Total 838,999 1,210,650 151,079 2,808,530 5,009,258 5,435,601 (426,343)

Other memorandum accounts:

guarantees received for contracts 164,148 164,148 182,752 (18,604)

liens received from third parties 13,897 (13,897)

Other memorandum accounts 164,148 164,148 196,649 (32,501)

Total 1,003,147 1,210,650 151,079 2,808,530 5,173,406 5,632,250 (458,844)


276

Guarantees issued amounted to Euro 4,875,283 thousand and were made up of guarantees for contracts (Euro 3,294,664 thousand), guarantees

for the granting of loans (Euro 1,532,169 thousand) and tangible security (Euro 48,450 thousand).

With regard to guarantees for contracts, please be advised that guarantees issued in respect of down payments under construction contracts -

amounting to Euro 559,538 thousand - are reported in the memorandum accounts net of Euro 91,509 thousand, which has been carried as part

of liabilities. Similarly, guarantees for the granting of credit - amounting to Euro 1,087,351 thousand - are shown net of Euro 22,321 thousand,

which has been carried as part of liabilities.

Performance bonds (guaranteeing the successful completion of works) include guarantees totalling 50.4 million Euros, which were issued by

Impregilo in respect of the Campania USW Project and under which a counterclaim was made by San Paolo Banco di Napoli and Zurich International

S.p.A., as mentioned in the relevant chapter of the Report on Operations.

Most guarantees issued for the granting of credit relate to subsidiary companies and other companies. Of note as at 31 December 2004 was the

Euro 558,632 thousand reported for guarantees issued for liabilities in the form of bonds, which were issued by the subsidiary Impregilo International

Infrastructures N.V. and repaid during the period under review.

"Tangible security" is made up of a lien over the shares of Fisia Italimpianti S.p.A., stood as collateral for a loan granted to said company by Banca di

Roma and other banks (Euro 5,100 thousand), as well as a lien over the shares of Salerno Reggio Calabria S.c.p.a. and Reggio Calabria Scilla S.c.p.a.

(Euro 25,500 thousand and Euro 17,850 thousand respectively), stood as collateral for a loan granted to said companies by Depfa Bank Plc.

Commitments relating to contracts to buy and sell, totalling Euro 104,475 thousand, include forward sale agreements stipulated to hedge exchange-

rate risk (Euro 82,761 thousand) and an undertaking to sell 24% of the Cociv consortium for Euro 21,714 thousand.

Company assets lodged with third parties, amounting to Euro 29,500 thousand are mainly made up of shares relating to investee companies.

With regard to "credit positions", amounts relating to liens and guarantees received from third parties have been recorded on the other side of the

memorandum accounts.

Memorandum accounts Own account Subsidiaries Affiliates Other Balance as at Balance a at Changecompanies 31 December 31 December

2005 2004

Other memorandum accounts

guarantees received for contracts 164,148 164,148 182,752 (18,604)

liens from third parties 13,897 (13,897)

Total 164,148 164,148 196,649 (32,501)

Guarantees received, carried for Euro 164,148 thousand, are essentially made up of guarantees received from sub-contractors and partners that

are jointly liable for the successful completion of works.

277

Liens from third parties, which as at 31 December 2004 amounted to Euro 13,897 thousand, related to receivables transferred with the business

unit "Commesse Venete", which were collected during the period under review.

COMPOSITION OF INCOME STATEMENT ITEMS

PRODUCTION VALUEProduction value amounted to Euro 1,676,909 thousand, compared with Euro 2,054,346 thousand as at 31 December 2004, thus registering a

decrease of Euro 377,437 thousand, which was due to the reduction in revenues attributed by foreign joint ventures as well as the decline in

revenues relating to high-capacity contracts, as a result of the high-speed Novara-Turin sub-section of the Turin-Milan line being completed.

as at 31.12.2005 as at 31.12.2004 Change

Revenues from the sale of products and the provision of services 289,882 757,875 (467,993)

Change in inventories: unfinished,semi-finished and finished products 3,218 (3,218)

Change in real-estate ventures (1,431) 1,431

Change in work in progress arising under construction contracts 1,338,665 1,251,971 86,694

Internal work capitalised on fixed assets 9,649 (9,649)

Other revenues and income 48,362 33,064 15,298

Total 1,676,909 2,054,346 (377,437)

Revenues from the sale of products and the provision of services included revenues from the execution of jobs, made up of fees that are contractually

accrued in keeping with the stage of completion reached in contracts, acquired definitively during the year under review, revenues for other services,

such as sponsor fees for operating activities, rents, services rendered by company staff and other services, as well as revenues from the transfer of

materials.

The item "Other revenues and income" includes costs recovered from Group companies (Euro 14,645 thousand), costs recovered from third parties

(Euro 14,842 thousand), withdrawals from provisions (Euro 7,186 thousand, including Euro 6,351 thousand relating to other provisions for risks and

Euro 835 thousand relating to the bad debt provision for trade receivables), tax credits (Euro 4,015 thousand), rental income and hire fees received

(Euro 1,688 thousand), capital gains on the disposal of machinery (Euro 765 thousand), sundry income and non-recurring and contingent items of

income (Euro 5,221 thousand).

The table below reconciles the economic and balance-sheet changes undergone by inventories in the form of work in progress:

Change

Certified work in progress 1,335,146

Decrease/(increase) in contractual risks provision 3,519

Change in work in progress arising under construction contracts 1,338,665


278

PRODUCTION COST Production cost totalled Euro 1,624,841 thousand, compared with Euro 1,966,619 thousand as at 31 December 2004, this representing a decrease

of Euro 341,778 thousand on the previous year. The table below highlights the principal items of cost.

as at 31.12.2005 as at 31.12.2004 Change

Cost of raw and ancillary materials and goods 62,857 49,207 13,650

Cost of outside services 1,298,818 1,721,428 (422,610)

Cost of leased assets 45,277 47,525 (2,248)

Staff costs:wages and salaries 66,927 57,446 9,481

social charges 13,063 14,106 (1,043)

staff severance fund 7,907 5,185 2,722

other staff costs 27,008 10,902 16,106

Total staff costs 114,905 87,639 27,266

Amortisation, depreciation and write-downs:amortisation of intangible assets 17,783 30,123 (12,340)

depreciation of fixed assets 6,417 3,860 2,557

write-downs against current receivables 8,271 2,000 6,271

Total amortisation, depreciation and write-downs 32,471 35,983 (3,512)

Change in inventories: raw, ancillary and consumable materials and goods (4,203) (622) (3,581)

Allocations for risks 58,310 6,213 52,097

Sundry operating expenses 16,406 19,246 (2,840)

Total 1,624,841 1,966,619 (341,778)

279

The cost of outside services, which is dominant item within production cost, totalled Euro 1,298,818 thousand. The most significant item is made

up of costs claimed back by consortiums and those charged by joint ventures, which amounted to Euro 1,127,516 thousand, registering a

decrease on the previous year, primarily due to the Novara-Turin sub-section of the Turin-Milan line being completed.

Staff costs totalled Euro 114,905 thousand compared with Euro 87,639 thousand of the previous year, representing an increase of Euro

27,266 thousand, which was mainly due to the increase in staff working at the company's Icelandic branch and to the restructuring plan

introduced for head office staff.

As already mentioned in the section of "Liabilities" dealing with risk provisions, allocations for risks, which totalled Euro 58,310 thousand

(compared with Euro 6,213 thousand the previous year), are mainly made up of the definitive losses foreseen on the contract relating to the San

Gottardo Tunnel in Switzerland (Euro 26,080 thousand), costs expected to be written off in respect of the Ghazi Barotha contract in Pakistan (Euro

19,063 thousand), fiscal risks relating to the company's Chilean branch (Euro 2,700 thousand) and fiscal risks relating to the company's branch

in Iceland (Euro 2,500 thousand).

Sundry operating expenses include overhead, indirect taxes and sundry taxes, contingent liabilities and sundry costs.

STAFFThe table below presents the various headcount averages for each staff category.

as at 31.12.2005 as at 31.12.2004

Managers 105 108

Clerical workers 604 756

Blue-collar workers 870 846

Average total 1,579 1,710

Actual total 1,487 1,593

Emoluments payable to the Directors and Statutory Auditors(Pursuant to Article 78 of CONSOB Resolution 11971 of 14 May 1999)

Name Position held Term Compensation Other Compensation Totalin office for duties emoluments for positions

Compensation for pursuant to held inposition covered Art. 2389, 3c subsidiaryUntil From of the Italian Companies

02.05.05 02.05.05 Civil Code

Romiti Cesare Chairman 31.12.2007 33,926 566,667 600,593

Savona Paolo Chairman 02.05.2005 13,704 207,233 2,116,866 2,337,803

Lina Alberto (1) Managing Director 31.12.2007 1,797 32,055 1,100,000 1,133,852

Romiti Pier Giorgio (1) Director (Managing Director until 02.05.05) 31.12.2007 10,696 36,049 310,849 3,455,238 3,812,832

Bonatti Enrico (1) Director 31.12.2007 33,140 33,140

Cavanenghi Alfredo Director 31.12.2007 15,411 15,411

Chiarva Gianni Maria Director 31.12.2007 15,411 15,411

Colombo Umberto Director 02.05.2005 10,696 10,696

De Maio Adriano Director 02.05.2005 10,696 10,696

De Stasio Vittorio Director 02.05.2005 13,704 13,704

Gamberale Vito Director 31.12.2007 20,638 20,638

Gandini Ezio (1) Director 31.12.2007 10,696 22,762 10,696 44,154

Garrino Gian Luigi Director 31.12.2007 10,696 20,638 31,334

Gatto Carlo Director 31.12.2007 16,644 16,644

Gavio Beniamino (1) Director 31.12.2007 32,055 32,055

Grilli Enzo Director 16.04.2005 11,907 11,907

Lotti Carlo Director 31.12.2007 10,696 16,644 27,340

Novarese Andrea Director 31.12.2007 15,411 15,411

Robba Giorgio Director 31.12.2007 19,553 19,553

Sacchi Alberto Director 31.12.2007 15,411 15,411

Ascoli Roberto Chairman of the Board of Statutory Auditors 31.12.2007 17,262 51,575 9,877 78,714

Silva Giorgio Chairman Board of Statutory Auditors 02.05.2005 25,894 43,104 68,998

Amadio Vittorio Permanent auditor 31.12.2007 17,262 34,383 7,032 58,677

Angiolini Giuseppe Permanent auditor 31.12.2007 34,383 1,476 35,859

Total 165,706 466,089 2,195,445 5,572,104 61,489 8,460,833

(1) Member of the Executive Committee.

The table above detailed the emoluments payable to the Directors for the year 2005, in accordance with what was established by the resolutions

carried by shareholders and the Board, calculated in proportion to the fraction of the year during which said individuals were in office.


280

281

The compensation due for positions held until 2 May 2005 is that resolved upon by the shareholders' meeting of 7 May 2002, which assigned to

the entire Board of Directors an annual fee of Euro 315,000 and that the subsequent Board meeting held on 14 May 2002 distributed by allocating

an annual fee of Euro 32,000 to each Director and an additional annual sum of Euro 4,500 to each member of the Internal Audit Committee and to

each member of the Remuneration Committee.

The compensation due for positions held from 2 May 2005 is that resolved upon by the shareholders' meeting of 2 May 2002, which assigned an

annual fee of Euro 25,000 to each Director, an additional annual fee of Euro 25,000 to each member of the Executive Committee and an additional

annual fee of Euro 6,000 to each member of the Internal Audit Committee and Remuneration Committee.

The compensation payable to Directors vested with special duties pursuant to Article 2389 of the Italian Civil Code was established as per the

following resolutions:

• for Paolo Savona and Piergiorgio Romiti, by the resolution carried by the Board on 14 May 2002;

• for Ezio Gandini, by the resolution carried by the Board on 9 March 2004;

• for Cesare Romiti and Alberto Lina, by the resolution carried by the Board on 7 July 2005.

The item "Other emoluments", regarding Paolo Savona and Piergiorgio Romiti, refers to an extraordinary fee payable at the end of their term in

office, as resolved upon by the shareholders' meeting of 2 May 2005.

FINANCIAL INCOME AND CHARGES

INCOME FROM SHAREHOLDINGSThe above item amounted to Euro 5,858 thousand, compared with Euro 60,153 thousand the previous year, registering a decrease of Euro 54,295

thousand. Such income is mainly made up of the dividends resolved upon and received by CSC Impresa Costruzioni S.A. (Euro 3,882 thousand) and

the distribution of earnings by Achelos J.V. (Euro 1,647 thousand). Over the course of financial year 2004, a capital gain was registered on the sale

of the company's stake in Consorzio Venezia Nuova to third parties for Euro 52,975 thousand.

Subsidiaries Affiliates Other Financial year Financial year companies 2005 2004

Dividends

Csc Impresa Costruzioni S.A. 3,882 3,882

Borini and Prono Ltd. 273 273

Impregilo Infraestructura Ltd 1,442

Fisia Italimpianti S.p.A. 1,224

Concessionaria Ecovias Dos Imigrantes S.A. 2,917

Other minor dividends 2 3

Total dividends 3,882 273 2 4,157 5,586

Tax credit on dividends

Capital gains from shareholdings 54 54 54,304

Credit for taxes paid abroad 263

Income from shareholdings - earnings from joint ventures 1,647 1,647

Total 3,882 273 1,703 5,858 60,153


282

OTHER FINANCIAL INCOMEThe above item amounted to Euro 68,578 thousand, registering an increase of Euro 18,823 thousand, which was mainly due to the increase (on the

previous year) in interest charged to the subsidiary company Impregilo International Infrastructures N.V. Furthermore, during the period under review,

capital gains were realised on the sale of short-term securities, which mainly involved the company's Venezuelan branch (Euro 9,305 thousand).

as at 31.12.2005 as at 31.12.2004 Change

Other financial income:

interest from subsidiaries 30,050 11,916 18,134

interest from affiliates 2,799 2,008 791

interest from other companies 17,349 17,111 238

interest from loans and trade payables 3,663 1,023 2,640

interest from bank deposits 1,972 1,722 250

Interest from other payables 2,824 2,276 548

capital gains on the sale of short-term securities 9,422 9,422

earnings from partnerships 379 379

other financial income 120 13,699 (13,579)

Total other financial income 68,578 49,755 18,823

Total 68,578 49,755 18,823

INTEREST PAYABLE AND OTHER FINANCIAL CHARGESThe above item amounted to Euro 67,480 thousand, registering a decrease of Euro 10,311 thousand, which was mainly due to the reduction in

interest paid to other Group companies. Bank charges increased by Euro 15,769 thousand, due to the rise in borrowing following the restructuring

of the Group's bank borrowing. As a result of said restructuring, most borrowing was transferred to Impregilo. Financial charges payable to Group

companies consequently decreased, from Euro 40,171 thousand to Euro 22,171 thousand.

The majority (Euro 6,616 thousand) of the item "Losses from partnerships" is made up of the allocation of the result from a venture entered into

with the subsidiary Suropca Ca.

283

Financial year Financial year Change2005 2004

Interest from Group companies:

interest from subsidiaries (13,132) (32,768) 19,636

interest from affiliates

interest from other companies (9,037) (7,866) (1,171)

interest from third parties within the Group (2) (67) 65

Total interest from Group companies (22,171) (40,701) 18,530

Interest payable and other financial charges:

interest payable to banks (30,278) (14,509) (15,769)

interest payable to other lenders (23) (2,831) 2,808

interest payable on bond loans (2,748) 2,748

interest payable on loans from third parties and trade payables (4,281) (10,961) 6,680

financial discounts and allowances (3) (2) (1)

guarantee fees and bank charges (290) (505) 215

other financial charges (3,321) (1,265) (2,056)

capital losses from shareholdings and securities (66) (3,960) 3,894

losses from partnerships (7,047) (309) (6,738)

Total interest payable and other financial charges (45,309) (37,090) (8,219)

Total (67,480) (77,791) 10,311

NET FOREIGN EXCHANGE DIFFERENCES The breakdown of foreign exchange differences, which as at 31 December 2005 reported a net charge of Euro 10,957 thousand, is provided in the

table below.

Financial year Financial year Change 2005 2004

Positive foreign exchange differences:

gains on financial transactions 222 2,433 (2,211)

positive foreign exchange differences - realised 11,382 2,705 8,677

positive foreign exchange differences - unrealised 27,660 26,662 998

Total positive foreign exchange differences 39,264 31,800 7,464

Negative foreign exchange differences:

losses on financial transactions (8,115) (4,850) (3,265)

negative foreign exchange differences - realised (15,956) (7,683) (8,273)

negative foreign exchange differences - unrealised (26,150) (41,238) 15,088

Total negative foreign exchange differences (50,221) (53,771) 3,550

Total net foreign exchange differences (10,957) (21,971) 11,014


284

Realised foreign exchange differences, originating mainly from the results of financial transactions and currency hedging contracts, produced a net

charge of Euro 12,467 thousand.

Unrealised foreign exchange differences, originating from the adjustments made to receivables and payables to align them to year-end exchanges

rates, produced a net gain of Euro 1,510 thousand, which was made up of gains from adjustments totalling Euro 27,660 thousand and losses from

adjustments totalling Euro 26,150 thousand.

As already mentioned in the section regarding accounting standards and valuation criteria, losses on financial transactions stemming from currency

hedging contracts have been recognised in the income statement on an accrual basis, on the basis the term of the respective contracts.

Pursuant to the provisions of Article 2427 (ii) of the Italian Civil Code, the table below provides key information regarding the derivative contracts

used to hedge exchange rates that were in place at the end of the financial year, along with separate details of the economic effect that would arise

were they adjusted to their fair value as at 31 December 2005 instead.

Contract Stipulation date Maturity date Currency Notional Adjustment to fair value (Euro)

Impregilo US$ 09.11.2005 27.01.2006 US$ 10,000,000 (26,789)

Impregilo US$ 03.10.2005 27.01.2006 US$ 10,000,000 (199,527)

Impregilo US$ 27.09.2005 27.01.2006 US$ 5,000,000 (120,090)

Impregilo US$ 30.11.2005 28.02.2006 US$ 52,400,000 401,765

Impregilo US$ 23.12.2005 09.01.2006 US$ 6,930,000 (30,394)

Impregilo CHF 23.12.2005 28.03.2006 CHF 6,000,000 4,288

Impregilo CHF 23.12.2005 28.03.2006 CHF 6,000,000 2,294

Impregilo for the account of Casisa ARS/US$ 14.09.2005 14.03.2006 ARS/US$ 4,144,000 (48,233)



VALUE ADJUSTMENTS TO FINANCIAL ASSETS The above adjustments are made up of write-downs effected against shareholdings, allocations to the risk provision for shareholdings recorded as

a result of book value being aligned to the effective share of equity held by the company, following the permanent impairment losses of investee

companies as well as the write-down of loans associated with investment activities.

As already mentioned, write-downs effected against shareholdings concerned specifically Impregilo Edilizia e Servizi S.p.A. (Euro 73,777 thousand)

and Impregilo International Infrastructures N.V. (Euro 68,337 thousand). The write-down effected against non-current receivables, amounting to Euro

87,127 thousand, refers to the amounts receivable from Imprepar S.p.A., while the write-down effected against loans, amounting to Euro 48,966

thousand, refers to amounts arising from investment activities with the subsidiary company Impresit Bakolori Plc (Euro 21,921 thousand) and the

affiliate company Puentes del Litoral S.A. (Euro 27,045 thousand).

The allocation to the risk provision for shareholdings related largely (Euro 9,350 thousand) to Cigla Construtora Impregilo y Asociados S.A., as

previously described in the section dealing with provisions for risks and liabilities.

285


Revaluations:

shareholdings 619 42 577

long-term securities and working capital

Withdrawal from risk provision for shareholdings 3,097 838 2,259

Total revaluations 3,716 880 2,836

Write-downs:

shareholdings (133,990) (121,903) (12,087)

allocation to risk provision for shareholdings (30,815) (10,453) (20,362)

Total (164,805)) (132,356) (32,449)

Write-downs:

non-current receivables (87,127) (70,376) (16,751)

loans (48,966) (48,966)

Total (136,093) (70,376) (65,717)

Write-down of long-term securities (39) 39

Total write-downs (300,898) (202,771) (98,127)

Total (297,182) (201,891) (95,291)

EXTRAORDINARY INCOME AND CHARGES Net extraordinary charges amounted to Euro 3,260 thousand, compared with Euro 393 thousand in 2004, and were mainly made up of taxes relating

to previous years and attributable to the company's branches in Chile (Euro 1,929 thousand) and Venezuela (Euro 1,409 thousand).


Income:

extraordinary income 2,515 (2,515)

contingent assets of a non-recurring nature

Total income 2,515 (2,515)

Charges:

other extraordinary charges (1) 1

taxes relating to previous years (3,800) (2,907) (893)

withdrawal from current taxation provision 540 540

Total charges (3,260) (2,908) (352)

Total (3,260) (393) (2,867)


286

TAXATION OF THE YEAR'S EARNINGS

The table below provides a summary of the company's tax burden as at 31 December 2005 (in Euro/000s).


Current taxes:

local business taxes (IRAP) (5,081) (4,838) (243)

foreign taxes (17,297) (9,262) (8,035)

taxation of the company's taxable earnings (IRES) (set off against losses of subsidiaries) (50,643) (3,167) (47,476)

Income from Group tax regime 49,111 49,111

Total current taxes (23,910) (17,267) (6,643)

Deferred/prepaid taxes

Withdrawal from deferred taxation provision 20,643 22,520 (1,877)

Withdrawal from provision for prepaid taxes (14,165) (43,502) 29,337

Prepaid taxes for the year 12,455 12,455

Total deferred/prepaid taxes 18,933 (20,982) 39,915

Total (4,977) (38,249) 33,272

Current income taxes, amounting to Euro 73,021 thousand were made up of the taxation of foreign branches, calculated in accordance with the

fiscal laws of the countries in which Impregilo operates (Euro 17,297 thousand), current corporation tax (Euro 50,643 thousand) and local business

taxes (Euro 5,081 thousand). The latter taxes originate from the significant increases applied in compliance with Italian fiscal legislation. The item

"Income from Group tax regime" refers to the benefit derived from the application of the provisions of Article 117 and subsequent Articles of the

Consolidation Act for Income Taxes, and is related to the utilisation of the fiscal losses incurred by investee companies.

The fee that the company is required to pay to subsidiaries transferring their losses is allocated to the taxation provision for the Group tax regime.

As mentioned in the section dealing with receivables in the form of prepaid taxes and the taxation provision, prepaid and deferred taxes, which

originate from the recognition and absorption of existing temporary differences pursuant to company accounting laws and fiscal legislation, have

been carried in the balance sheet at their net value, under the item "Prepaid taxes".

Please note that no prepaid taxes have been recognised for temporary differences - estimated to total Euro 206,469 thousand and relating to write-

downs effected against amounts receivable from Imprepar, Impresit Bakolori Plc and Puentes del Litoral S.A. - since they are expected to be

reabsorbed in periods following those covered by the three-year plan that has already been approved.

To every useful end, we wish to reiterate that Impregilo S.p.A. does not have fiscal losses that can be carried forward.

287

The table below presents the temporary differences relating to the financial years ending 31 December 2004 and 31 December 2005.

2005 2004

Temporary Fiscal effect Temporary Fiscal effectdifferences differences

Increase in prepaid taxes:

Provisions for risks and liabilities 37,744 12,455

37,744 12,455

Reabsorption of prepaid taxes:

Amortisation of intangible assets

Write-downs for permanent losses in non-current financial assets (35,646) (11,763) (116,340) (38,438)

Write-down of work in progress under construction contracts

Provisions for risks and liabilities (7,279) (2,402) (5,742) (2,009)

Fiscal losses of previous years

Realignment to presumed rate of reabsorption (3,055)

(42,925) (14,165) (122,082) (43,502)

Reabsorption of deferred taxes:

Deferred capital gains realised on non-current financial assets 62,555 20,643 62,555 21,268

Deferred capital gains realised on fixed assets

Realignment to presumed rate of reabsorption 1,251

62,555 20,643 62,555 22,519

Net prepaid/(deferred) taxes 18,933 (20,983)

The fiscal effect has been calculated by taking into account a tax rate of 33%.

For increased clarity, the table below provides a detailed account of the company's tax burden and the principal items that have determined it.

(in Euro/000s) Financial year 2005

Pre-tax result (257,352)

Theoretical tax

Local business tax (IRAP) on production value (5,081)

Taxation of branches in accordance with the fiscal laws of the countries in which they operate (17,297)

Taxation of the company's earnings (IRES) relating to temporary differences that are insignificant for fiscal purposes (50,643)

Utilisation of deferred taxes in relation to the division into instalments of capital gains realised in previous years 20,643

Utilisation of prepaid taxes relating to the reabsorption of provisions that were previously taxed (14,165)

Recognition of prepaid taxes in respect of allocations for future risks and liabilities 12.455

Total net effect of temporary differences (31,710)

Income from Group tax regime following the ability to determine just one taxable base for a number of Group entities 49,111

Total taxes (4,977)

INFORMATION BYGEOGRAPHICAL AREA


288

Italy Other EU Rest of North Central Asia Rest of Totalcountries Europe America and South world

America

Receivables

Trade receivables 25,426 456 67,661 49,237 571 1,444 144,795

Due from subsidiaries 152,378 478,008 674 4,814 18,961 6,371 661,206

Due from affiliates 815 1,438 1 2,254

Due from other companies 55,419 9,563 256 4,834 66,375 102 5,699 142,248

Other receivables 135,599 880 208 11,139 356 22 148,204

Total receivables 369,637 488,907 68,799 9,648 147,150 1,029 13,537 1,098,707

Cash at bank and on hand 180,454 985 6,128 14,543 483 202,593

Payables

Due to banks (642,929) (4,167) (22,064) (669,160)

Due to other lenders (19,704) (19,704)

Down payments received (4,607) (34,724) (59,064) (98,395)

Trade payables (34,837) (4,768) (20,360) (7) (1,951) (306) (5) (62,234)

Due to subsidiaries (60,249) (27) (6) (60,282)

Due to affiliates (8,658) (8,658)

Due to other companies (101,216) (1,240) (667) (29,358) (5,898) (138,379)

Fiscal liabilities (4,802) (249) (7,962) (13,277) (5) (26,295)

Due to social security and welfare agencies (1,488) (560) (455) (6) (2,509)

Other payables (51,196) (17) (4,544) (6,302) (160) (59) (62,278)

Total payables (929,686) (5,034) (73,584) (7) (103,780) (29,841) (5,962) (1,147,894)

Production value

Revenues from the sale of products and the provision of services

Changes in inventories: 39,587 46,393 38,425 10,493 107,154 35,633 12,196 289,881

Unfinished, semi-finished and finished products

Changes in work in progress arising under construction contracts 1,084,959 180,721 80,324 (7,338) 1,338,666

Changes in real-estate ventures

Internal work capitalised on fixed assets

Other revenues and income 30,384 1,373 2,792 172 12,663 702 276 48,362

Total production value 1,154,930 47,766 221,938 10,665 200,141 28,997 12,472 1,676,909

PROPOSAL OF THE BOARD OF DIRECTORSTO THE MEETING OF SHAREHOLDERS

289

Shareholders,

we hereby invite you to approve the company's financial statements for the year ending 31 December 2005, which report a loss of Euro

257,352,393 which - added to the losses of previous years, which have been brought forward and total Euro 61,609,190 - produces a total loss

of Euro 318,961,583. We propose that this loss be covered by withdrawing a similar amount from the share premium reserve as follows:

(amounts expressed in Euros)

Net loss for financial year 2005 (257,352,393)

Previous years' losses brought forward (61,609,190)

Total losses to be covered (318,961,583)

Withdrawal from share premium reserve 318,961,583

For the Board of Directors of Impregilo S.p.A.

The Chairman

Cesare Romiti

SHAREHOLDINGS OF IMPREGILO S.p.A.AS AT 31 DECEMBER 2005

company name % held % interest registered value Igl S.p.A. increases no.directly as at office 1.1.2005 during

31.12.2005 (Euro) the period

SUBSIDIARIES (long-term investments)

Major Projects Division

Construtora Impregilo y Associados S.A.- Cigla S.A. 100 100 Sao Paulo

CSC Impresa Costruzioni S.A. 100 100 Lugano 3,208,553

Empresa Constructora Costanera Norte Ltda 77.78 77.78 Santiago del Chile 14,634

Impregilo Argentina S.A. 77.74 100 Buenos Aires 315,752 C

Impregilo Infraestructura Ltd 100 100 Dublin 10,166

Impregilo y Asociados (Panama) S.A. 100 100 Panama

Impresit Bakolori Plc 50.71 50.71 Abuja

INC - Algerie S.a.r.l. 99 Hassi

Inchiriere Si Lucrari Maritime (I.L.M.) Constanta S.r.l. 100 100 Constanza 502

OR.MA. S.c.r.l. 55 Venafro (IS)

Otto Koch A.G. 90 Buchrain

PGH Ltd 60 60 Port Harcourt

Reggio Calabria - Scilla S.c.p.a. 51 51 Rome 17,850,000 A

Salerno-Reggio Calabria S.c.p.a. 51 51 Rome 25,500,000

S.A. Healy Company 100 100 Lombard 8,451,000

S.G.F. - I.N.C. S.p.A. 100 100 Milan 2,582,834 2,140,001 O

SGF Nigeria L.t.d. 77.11 Abuja

Suramericana de Obras Publicas C.A.- Suropca C.A. 99 100 Caracas 3,365,395 B

Technical Services Company - TESCO S.r.l. 100 100 Milan 6,004,528

Building & Services Division

Impregilo Edilizia e Servizi S.p.A. (*) 100 100 Milan 62,616,042 20,026,201 O

Bocoge S.p.A. - Costruzioni Generali 100 Milan

Campione S.c.r.l. 99.9 Milan

Gricignano 3 S.r.l. 60 Milan

I.L.IM. - Iniziative Lombarde Immobiliari S.r.l. 100 Milan

Impregilo Engineering CO. Ltd 100 Shangai

Impregilo New Cross Ltd 100 Cardiff

Isibari S.c.r.l. 55 Bari

Premed - Prefabbricati Mediterranei S.r.l. 100 Milan

Engineering & Plant Construction Division

Fisia Italimpianti S.p.A. (*) 100 100 Genoa 40,799,877 68,500,000 B

Fisia Babcock Environment Gmbh 100 Gummersbach

Gestione Napoli S.p.A. 99 Acerra (NA)

Società Italiana per l'Ecologia Marina Castalia Ecolmar S.c.p.a. 51.88 Genoa


290

latest official fin. statements in Euro at 31.12.2005 exch. rate direct ownership

decreases no. value Igl S.p.A. currency nominal value nominal value net book profit/(loss) date ofduring 31.12.2005 symbol sub./paid-in sub./paid-in capital financial

the period (Euro) in currency of % held statementsaccount 31.12.2005 in Euros

BRL 7,641,014 2,785,438 1 (6,186,206) (7,651,648) fin. 12.04

3,208,553 CHF 2,000,000 1,286,091 14,701,939 1,653,546 fin. 12.04

14,634 CLP 10,000,000 12,866 10,128,047 9,551,955 fin. 12.03

200,382 N 115,370 ARS 200,000 55,980 1 (1,899,586) (114,078) fin. 12.04

10,166 Euro 12,697 12,697 11,939 ---- fin. 12.04

USD 26,000,000 22,039,502 1 (1,263,850) (12,271,590) fin. 12.04

NGN 100,800,000 333,490 1 (7,351,873) (1,542,722) fin. 12.04

DZD 5,000,000 57,533 ---- ----

502 ROL 10,000,000 272 (157,945) (15,640) fin. 12.04

Euro 10,000 5,500 ---- ----

CHF 100,000 57,874 ---- ----

NGN 52,000,000 203,556 1 (3,056,819) (484,859) fin. 12.03

17,850,000 Euro 35,000,000 17,850,000

25,500,000 Euro 50,000,000 25,500,000 25,500,000 ---- fin. 12.04

8,451,000 USD 11,320,863 9,596,391 2 5,287,654 (1,713,975) fin. 12.03

1,563,127 N 3,159,708 Euro 3,859,680 3,859,680 2,582,834 (4,329,619) fin. 12.04

NGN 52,000,000 261,603 ---- ----

3,365,395 VEB 4,344,118,000 1,714,894 4,718,897 (902,377) fin. 12.04

6,004,528 Euro 6,000,000 6,000,000 8,513,372 296,576 fin. 12.04

73,777,684 N 8,864,559 Euro 83,750,000 83,750,000 63,723,800 (90,906,492) fin. 12.04

Euro 1,702,720 1,702,720 ---- ----

Euro 11,000 10,989 ---- ----

Euro 50,000 30,000 ---- ----

Euro 3,100,000 3,100,000 ---- ----

Euro 140,000 140,000 ---- ----

GBP 2 3 ---- ----

Euro 15,300 8,415 ---- ----

Euro 1,007,778 1,007,778 ---- ----

109,299,877 Euro 10,000,000 10,000,000 2 86,842,952 823,264 fin. 12.04

Euro 10,000,000 10,000,000 ---- ----

Euro 100,000 99,000 ---- ----

Euro 102,000 52,918 ---- ----

291


292



SUBSIDIARIES (long-term investments) (cont.)

Concession Division

Impregilo International Infrastructures N.V. (*) 100 100 Amsterdam 50,000,000

Caminos de las Sierras S.p.A. 90.52 Cordoba

Fibe Campania S.p.A. 99.5 Naples

Fibe S.p.A. 95 Naples

Impregilo Italia Concessioni S.p.A. 100 Milan

Impregilo Parking Glasgow Ltd 100 Cardiff

Mercovia S.A. 60 Buenos Aires

Sociedad Concesionaria Costanera Norte S.A. 77.89 Santiago


Imprepar - Impregilo Partecipazioni S.p.A. in liquid. (°°) 100 100 Milan

Società di Imprepar (°°) Milan

Total Subsidiaries (long-term investments) 199,188,136 112,197,349

SUBSIDIARIES (short-term investments)


B.B.A. S.c.r.l. 80 Venafro (IS)

Consorzio Cogefar-Impresit Cariboni per la Frana di Spriana S.c.r.l. 100 100 Milan 46,481

Globoworks Italia S.p.A. 100 100 Milan 2,500,000

Nuovo Dolonne S.c.r.l. in liquid. 100 100 Milan 50,000

Società Industriale Prefabb. Edilizia del Mediterraneo - S.I.P.E.M. S.p.A. 100 100 Assoro (EN)

Val Viola S.c.r.l. in liquid. 60 60 Milan 6,143

Building Division

Auditorium Roma S.c.r.l. 60 Lecco

Castello 99 S.c.r.l. 60 Florence

Cernusco S.c.r.l 60 Milan

Hospital Lecco S.c.r.l. 55 Reggio Emilia

Lavori Lingotto S.c.r.l. 65 Torino

Unicatanzaro S.c.r.l. 56 Germaneto (CZ)

Total Subsidiaries (short-term investments) 2,602,624

Total Subsidiaries 201,790,760 112,197,349

293




50,000,000 N Euro 50,000,000 50,000,000 2 44,661,000 (9,331,000) fin. 12.04

ARS 120,000,000 30,403,726 ---- ----

Euro 21,000,000 20,985,000 ---- ----

Euro 11,773,000 11,184,350 ---- ----

Euro 1,000,000 1,000,000 ---- ----

GBP 1 1 ---- ----

ARS 10,000,000 1,679,393 ---- ----

CLP 35,600,000,000 45,869,337 ---- ----

Euro 3,100,000 3,100,000 (70,452,825) (73,980,691) fin. 12.04

125,541,193 185,844,292

Euro 10,000 8,000 ---- ----

46,481 Euro 45,900 45,900 46,481 ---- fin. 12.04

2,500,000 Euro 2,500,000 2,500,000 2,520,314 (35,850) fin. 12.04

50,000 Euro 50,000 50,000 49,999 ---- fin. 12.00

Euro 438,546 438,546 1 (585,986) (1,635,975) fin. 12.04

6,143 Euro 10,200 6,120 6,197 ---- fin. 12.04

Euro 90,000 54,000 ---- ----

Euro 11,000 6,600 ---- ----

Euro 10,000 6,000 ---- ----

Euro 46,800 25,740 ---- ----

Euro 25,000 16,250 ---- ----

Euro 15,300 8,568 ---- ----

2,602,624

125,541,193 188,446,916


294



AFFILIATES (long-term investments)


Aurelia 98 S.c.r.l. 40 40 Milan 4,000

B.O.B.A.C. S.c.a.r.l. 50 Pozzuoli (NA)

Borini Prono & Co Nigeria Ltd 23.87 23.87 Apapa (Lagos) 501,629 31,499 B

CE.S.I.F. S.c.p.a. 24.18 24.18 Naples 63,460

Coincar S.A. 26.25 35 Buenos Aires 2,541,884 618,956 P

G.T.B. S.c.r.l. 24.17 24.17 Naples 12,329

Metrogenova S.c.r.l. 35.63 35.63 Genoa 8,257

Passante di Mestre S.c.p.a. 42 42 Venice 21,000,000

Quattro Venti S.c.r.l. 40 40 Rome 20,658

Building Division

Anagnina 2000 S.c.r.l. 50 Milan

Sima Gest3 S.c.r.l. 35 Zola Predosa (BO)

Società Edilizia Immobiliare Sarda - S.E.I.S. S.p.A. 48.33 Rome

VE.CO. S.c.r.l. 25 Venice

Versilia S.c.r.l. 34 Carpi (MO)

Versilia Servizi S.c.a.r.l. 34 Carpi (MO)

Concession Division

Acqua Italia S.p.A. 33.33 Rome

Aguas del Gran Buenos Aires S.A. 16.5 42.58 La Plata 1,996,119 343,699 C

Aguas del Oeste S.A. 33.33 Buenos Aires

Consorcio Agua Azul S.A. 45 Lima

Contarina S.p.A. 49 Spresiano (TV)

Ecologia Montana S.p.A. 49 Roccavione (CN)

Enecor S.A. 30 Buenos Aires

Impregilo Wolverhampton L.t.d. 20 Cardiff

Nuova Romea S.p.A. 21.78 Venice

Ochre Solutions Holdings Ltd 40

Ponte de Pedra Energetica S.A. 50 Cuiabà

Primav Ecorodovias S.A. 35 Sao Paulo

Puentes del Litoral S.A. 22 26 Buenos Aires

Rodoconsult Assessoria Ltda 20 Cidade de Poà

Shangai Pucheng Thermal Power Energy Co. L.t.d. 50 Shangai

Sistranyac S.A. 20.1 Buenos Aires

Yacylec S.A. 18.67 Buenos Aires

Total Affiliates (long-term investments) 26,148,336 994,154

295




4,000 Euro 10,000 4,000 4,000 ---- fin. 12.04

Euro 10,200 5,100 ---- ----

533,128 NGN 125,000,000 194,666 1,154,775 233,624 fin. 12.03

63,460 Euro 250,000 60,450 62,695 ---- fin. 12.04

3,160,840 ARS 25,462,000 2,494,374 2 2,738,918 (113,004) fin. 05.03

12,329 Euro 51,000 12,327 12,327 ---- fin. 12.04

8,257 Euro 25,500 9,086 9,201 ---- fin. 12.04

21,000,000 Euro 50,000,000 21,000,000 21,000,000 ---- fin. 12.04

20,658 Euro 51,000 20,400 20,658 ---- fin. 12.03

Euro 10,329 5,165 ---- ----

Euro 50,000 17,500 ---- ----

Euro 3,877,500 1,873,996 ---- ----

Euro 10,200 2,550 ---- ----

Euro 10,200 3,468 ---- ----

Euro 20,000 6,800 ---- ----

Euro 82,113,000 27,368,263 ---- ----

2,339,818 N ARS 45,000,000 5,363,141 3,201,568 (134,189) fin. 12.03

ARS 170,000 15,859 ---- ----

PEN 69,001,000 7,597,165 ---- ----

Euro 1,800,000 882,000 ---- ----

Euro 548,069 268,554 ---- ----

ARS 12,000 1,008 ---- ----

GBP 1,000 292 ---- ----

Euro 3,800,000 827,640 ---- ----

GBP ---- ----

BRL 214,000,000 39,005,541 ---- ----

BRL 466,699,080 59,545,304 ---- ----

ARS 43,650,000 3,176,571 4,868,384 (1,037,870) fin. 12.03

BRL 25,000 1,823 ---- ----

CNY 200,000,000 10,503,760 ---- ----

ARS 12,000 675 ---- ----

ARS 45,000,000 2,351,570 ---- ----

2,339,818 24,802,672


296



AFFILIATES (short-term investments)

Building Division

Follonica S.c.r.l. 42.86 Rome

Monte Mario S.c.r.l. 50 Rome

S. Anna Palermo S.c.r.l. 45 Palermo

SO.CO.TAU. S.c.r.l. 20.27 Guidonia (Rome)

Total Affiliates (short-term investments)

Total Affiliates 26,148,336 994,154

OTHER COMPANIES (long-term investments)

Major Projects Constructions Division

Arbeitsgemeinschaft Aschertunnel 15 Herzogenbuchsee

Arbeitsgemeinschaft Oenzberg-Tunnel Arge 10 Herzogenbuchsee

Arbeitsgemeinschaft Tunnel Zurich - Thalwil 10 Herzogenbuchsee

Arbeitsgemeinschaft Tunnel Umfahrung Saas (ATUS) 32 Herzogenbuchsee

Arbeitsgemeinschaft Sicherheitsstollen Gotshana 18 Chur

Arge Uetlibergtunnel 15 Zurigo

Association AVC 10 Les Geneveys

Asociacion Costanera Norte - Impregilo filiale Cile 77.78 Santiago del Chile

C.B.N. Chiasso consorzio 34 Lugano

CASV Consorzio Allargamento Strada Vogorno 50 Bedano

Consorcio Acueducto Oriental 67 67 Santo Domingo

Consorcio Cigla-Sade 50 Sonora

Consorcio Contuy Medio 29.04 29.04 Caracas

Consorcio Contuy Medio Grupo A C.I. S.p.A. Ghella Sogene C.A., Otaola C.A. 36.4 36.4 Charallave 1,027

Consorcio Grupo Contuy-Proyectos y Obras de Ferrocarriles 33.33 33.33 Caracas

Consorcio Imigrantes 50 S. Bernardo

Consorcio Impregilo - Ingco 70 70 Santo Domingo

Consorcio Impregilo Cosapi 55 55 Lima

Consorcio Normetro 13.18 13.18 Porto

Consorcio V.I.T. - Tocoma 35 35 Caracas

Consorcio V.S.T. Tocoma 30 30 Caracas

Consorzio ABICC 3160 40 Bedano

Consorzio Alta Velocità Torino/Milano - C.A.V.TO.MI. 74.69 74.69 Milan 605,385 3,129,115 O

Consorzio Autosilo Vico Morcote 70 Lugano

Consorzio Brescia Val Milan 5,001

297




Euro 10,200 4,372 ---- ----

Euro 10,328 5,164 ---- ----

Euro 40,800 18,360 ---- ----

Euro 10,200 2,068 ---- ----

2,339,818 24,802,672

(°)

(°)

(°)

(°)

(°)

(°)

(°)

(°)

(°)

(°)

(°)

(°)

(°)

1,027 (°)

(°)

(°)

(°)

(°)

(°)

(°)

(°)

(°)

2,543,194 N 1,191,306 Euro 5,000,000 3,734,500

(°)

5,001 I


298



OTHER COMPANIES (long-term investments) (cont.)

Major Projects Constructions Division (cont.)

Consorzio C.A.V.E.T. - Consorzio Alta Velocità Emilia/Toscana 75.98 75.98 Pianoro (BO) 2,197,387 1,923,017 O

Consorzio Cociv 94.5 94.5 Genoa 385,382 102,670 O

Consorzio CPS Pedemontana Veneta Costruttori Progettisti e Servizi 35 35 Verona 35,000 A

Consorcio Daule Peripa 85 90 Ecuador

Consorzio Edile Palazzo Mantegazza 45 Lugano

Consorzio FLP 30 Bioggio

Consorzio Intragna - Verdasio 50 Bedano

Consorzio Intragna - Verdasio 2 50 Bedano

Consorzio Iricav Due 12 12 Rome 61,975

Consorzio Galleria Maroggia 25 Bedano

Consorzio Genio Civile palazzo Mapp.20 Paradiso 50 Lugano

Consorzio Nazionale Imballaggi - CO.NA.I. 1 1 Milan 5

Consorzio RCPS Nuova Romea 30.6 30.6 Milan 6,120

Consorzio San Cristoforo 48 48 Milan 24,790

Consorzio Scilla 51 51 Palmi 510

Consorzio TAT-Tunnel Alp Transit Ticino, Arge 17.5 25 Aarau

Consorzio tra le Società Cogefar/Bordin/Coppetti/Icep - CORAV 96.97 96.97 Milan 49,580

Consorzio TRA.DE.CI.V. 8.06 8.06 Naples 12,534

Consorzio Tre Esse 38 Cividate (BG)

Consorzio Trevi - S.G.F. INC per Napoli 45 Rome

Consorzio Venezia Nuova 1 1 Venice 52,727

Consorzio Venice Link 42 42 Venice 420

Constructora Mazar Impregilo-Herdoiza Crespo 70 70

CSLN Consorzio 28 Lugano

E.R. Impregilo/Dumez y Asociados para Yaciretà - ERIDAY 18.75 20.75 Buenos Aires

Emittenti Titoli S.p.A. 0.24 0.24 Milan 10,831

Ertan J.V. 42.5 42.5 China

Ghazi-Barotha Contractors J.V. 57.8 57.8 Lugano 43,411,860 4,266,031 P

Gotschnatunnel Arge 20 Chur

Groupement Hydrocastoro 49.5 Touggourt

Healy-Yonkers-Atlas-Gest J.V. 45 Harrogate

Impregilo Civilcad Ingco 70 70 Santo Domingo

Impregilo-Ebasco-Losinger J.V. 18.75 75 Illinois

Impregilo S.p.A. Empedos S.A. Aktor Ate J.V. 66 66 Athens

Impregilo Healy joint venture 15 100 Oregon

Impregilo Strabag J.V. 51 51 Costanza

299




1,753,813 N 2,366,591 Euro 5,422,797 4,120,241

100,079 N 387,973 Euro 516,457 488,052

35,000 Euro 100,000 350

(°)

(°)

(°)

(°)

(°)

61,975 Euro 510,000 61,200

(°)

(°)

5 Euro 130 1

6,120 Euro 20,000 6,120

24,790 Euro 51,645 24,790

510 Euro 1,000 510

(°)

49,580 Euro 51,129 49,580

12,534 Euro 155,535 12,536

Euro 51,646 19,625

Euro 10,000 4,500

52,727 Euro 260,000 2,600

420 Euro 1,000 420

(°)

(°)

USD 539,400 94,876

10,831 Euro 4,264,000 10,234

(°)

47,677,891 (°)

(°)

DZD 2,000,000 11,507

(°)

(°)

(°)

(°)

(°)

(°)


300




Major Projects Constructions Division (cont.)

Impregilo S.p.A.-NCC International A.B. Joint Venture 75 75 Lugano

Impregilo S.p.A.-Iglys S.A.-Hochtief AG-Hochtief C-Roggio-Iecsa-Sideco-Tech., UTE 22 26 Rosario

I-Faber S.p.A. 8 Milan

J.Cartellone S.A.-IGL S.p.A.-Iglys S.A.-Codi S.A.-E.C. Delta S.A.Caruso S.A.-(Casisa UTE) 29.1 39.1 Malagueno 2,516

Joint Venture Aktor S.A. - Impregilo S.p.A. (Constantinos) 40 40 Athens

Joint Venture Aktor S.A. - Impregilo S.p.A. 50 50 Athens

Joint Venture Impregilo S.p.A. - Empedos 60 60 Drakotrypa

Joint Venture Impregilo S.p.A. - Terna 45 45 Athens

Libyan Italian Joint Company 1.19 1.98 Tripoli 29,863

M.N. 6 S.c.r.l. 1 5.65 Naples 510

Metropolitana di Napoli S.p.A. 5.18 5.18 Naples 313,652

Mohale Dam Contractors (MDC) J.V. 50 50 no registered office

Mohale Tunnel Contractors (MTC) J.V. 35 35 no registered office

Nathpa Jhakri J.V. 60 60 Nuova Delhi

Normetro - Agrupamento Do Metropolitano Do Porto ACE 13.18 13.18 Porto

Pedemontana Veneta S.p.A. 19 20.75 Verona 570,000 A

Rivers State Contractors 42

Società di gestione SSIC-TI 5 Bellinzona

Transmetro - Construcao de Metropolitano A.C.E. 5 5 Porto

TUF Arge Umfahrung Fluelen 10 Fluelen

Wang Long J.V. 48 48 Shanxi Province 429,322

Yellow River Contractors J.V. 36.5 36.5 Beijing

Building Division

COLPARK S.p.A. 5 Rende (CS)

Consorzio Camaiore Impianti 55 Cavriago (RE)

Consorzio Casal Monastero 1.28 Rome

Consorzio Casale Nei 3.45 Rome

Consorzio Caserma Donati 80 Milan

Consorzio CON.SI 2.27 Pordenone

EDIL.CRO S.c.r.l. 16.65 Lamezia (CZ)

Executive J.V. Impregilo S.p.A. Terna S.A. - Iris S.A. 33.33 Athens

Fox Valley West Properties J.V. 50 Illinois

Immobiliare Golf Club Castel D'Aviano S.r.l. 0.52 Aviano (PN)

301




(°)

(°)

Euro 5,652,174 452,174

2,516 ARS 10,000 1,094

(°)

(°)

(°)

(°)

29,863 LYD 1,442,250 17,969

510 Euro 51,000 510

313,652 Euro 3,655,397 189,350

(°)

(°)

USD 1,000,000 508,604

PTE 100,000 13,180

570,000 Euro 3,000,000 570,000

(°)

CHF 1,000,000 32,152

(°)

(°)

429,322 N USD 1,000,000 406,883

(°)

Euro 102,000 5,100

Euro 25,500 14,025

Euro 60,425 773

Euro 22,466 775

Euro 300,000 240,000

Euro 22,724 516

Euro 10,200 1,698

(*)

(*)

Euro 3,891,720 20,237


302




Building Division (cont.)

Impregilo Rizzani de Eccher J.V. 67 Lugano

Impregilo U.K. L.t.d. - Macob Construction L.t.d., J.V. 61 Cardiff

Iris A.E.-Terna A.E. partners for Larissa E.E. 16.5 Athens

Istituto Promozionale per l'Edilizia - ISPREDIL S.p.A. 0.42 Rome

J.V. Impregilo-Iris-Terna 90 Athens

Nuova Florim S.r.l. 1.6 Rome

Nuova Florit S.r.l. 1.6 Rome

Rimini Fiera S.p.A. 2.09 Rimini

Skiarea Valchiavenna S.p.A. 1.27 Campodolcino

Techint S.A.C.I.- Hochtief A.G.- Impregilo S.p.A.-Iglys S.A. UTE 26.25 35 Buenos Aires 3,945

Concession Division

Autopistas del Sol S.A. 19.82 Buenos Aires

Consorzio Acqua Blu 16 19 Naples 40,000

Acqua Campania S.p.A. 0.1 Naples

Leonardo S.r.l. Milan 2,971,364 20,489,276 D

Leonardo Holding S.A. Luxembourg 38,502,310

Total Other Companies (long-term investments) 89,119,016 30,515,109

OTHER COMPANIES (short-term investments)

Building Division

Consorzio Porto Turistico di Roma 27.37 Rome

Florbis S.c.r.l. 0.01 Milan

I.C.R. S.c.r.l. 16.66 Guidonia (Rome)

Malpensa 2000 S.c.r.l. 10.21 Parma

Markland S.r.l. 1.9 Milan


Società di Imprepar (°°) 100 100 Milan 465

Total Other Companies (short-term investments) 465

Total Other Companies 89,119,481 30,515,109

General Total 317,058,577 143,706,612

(°) Participation without reserve.(°°) We don't enclose the table of Imprepar's subsidiaries and affiliated companies because they are in the majority no-operative companies or held for sale in liquidation.(*) Company leader in the business unit, of which are related the participation of the other companies of the same business unit1 Permanent Depreciation included in the risk funds or included in profit and loss.2 Temporary depreciation.

303




(°)

(°)

GRD 5,000,000 825,000

Euro 111,045 466

(°)

Euro 8,050,000 128,800

Euro 7,660,000 122,560

Euro 42,294,067 883,946

Euro 8,118,181 103,101

3,945 (°)

ARS 175,396,394 9,730,280

40,000 Euro 250,000 47,500

Euro 4,950,000 4,950

23,460,640 H

38,502,310 H

66,794,359 52,839,766

Euro 516,457 141,354

Euro 45,900 5

Euro 10,200 1,699

Euro 10,200 1,041

Euro 66,810 1,269

465

465

66,794,359 52,840,231

194,675,370 266,089,819


304

SUMMARY OF MOVEMENTS UNDERGONE BY SHAREHOLDINGS

Formation and subscription A 18,455,000

Acquisition and increase of interests B 71,896,894

Various reclassifications C 659,451

Share capital increases D 20,489,276

Payment into fund for capital increases E

Reclassification of investments from long-term to short-term F

Inter-group transfer G

Transfer to third parties H 61,962,950

Liquidation I 5,001

Reclassifications following changes in stakes or other L

Restoration of value within the limits of the previous write-downs effected M

Write-down N 132,707,419

Replenishment of capital due to the making-good of losses O 27,321,004

Revaluation P 4,884,987

Merger by incorporation Q

Elimination by incorporation R

Total movements 143,706,612 194,675,370

RELATIONSHIPS OF IMPREGILO S.p.A.WITH GROUP COMPANIES

RECEIVABLES PAYABLES

commercial financial other nature Totale receivables commercial financial

SUBSIDIARIES

Major Projects

B.B.A. S.c.r.l. (469,040)

Consorzio Cog-Impresit Car. per la Frana di S. 545,035 116,398 661,433 (502,507)

Construtora Impregilo y Associados S.A. 13,465,571 358,321 13,823,892 (3,678,868)

CSC Impresa Costruzioni S.A. 440,333 3,858,273 4,298,606 (66,188) (3,558,426)

Empresa Constructora Costanera Norte Ltda 237,614 7,540,338 7,777,953 (83,529)

Globoworks Italia S.p.A. (2,480,958)

Impregilo Infraestructura J.V. (11,939)

Impregilo y Asociados (Panama) S.A. 204,534 204,534

Impresit Bakolori Plc 6,929 1,055,745 1,062,675 (6,929) (1,055,745)

Inchiriere Si Lucrari Mar. Constanta S.r.l. 42,000 42,000

Nuovo Dolonne S.c.r.l. 29,377 29,377 (109,801)

PGH Ltd 2,334,144 4,420,486 6,754,630 (487,837)

Reggio Calabria Scilla S.c.p.a. 536,069 761,123 1,297,192 (4,561,296) (10,038,999)

S.A. Healy Company 36,983 4,776,877 4,813,860

S.G.F. - I.N.C. S.p.A. 26,369 40,427,287 40,453,656 (1,268,773)

S.G.F. I.N.C. S.p.A. - Venezuela branch 26,902 26,902 (2,866,485)

Salerno-Reggio Calabria S.c.p.a. 3,299,213 54 3,299,266 (19,502,123) (14,341,838)

SGF Nigeria L.t.d. 104,031 104,031

SGF-INC Islanda branch 250,564 250,564 (2,740,232) (10,157)

Società Industriale Prefabbricazione Edilizia 2,284,582 2,284,582

Suramericana de Obras Publicas C.A. 10,193,476 10,193,476 (6,184,414)

Technical Services Company - TESCO S.r.l. 1,735,320 19,867,307 21,602,627 (10,121,985)

Val Viola S.c.r.l. 87,912 87,912

Total Major Projects 9,448,574 105,404,000 4,216,594 119,069,168 (42,317,685) (41,830,384)

Building & Services

I.L.IM. - Iniziative Lombarde Immobiliari S.r.l. 340,760 340,760 (84,254)

Bocoge S.p.A. - Costruzioni Generali 365,040 38,088 403,128

Campione S.c.r.l. 10,800 10,800 (113,370)

Castello 99 S.c.r.l. (17,622)

Cernusco S.c.r.l. (102,798)

Gricignano 3 S.r.l. (81,899)

Impregilo Edilizia e Servizi S.p.A. 1,806,459 85,048,666 86,855,125 (1,705,266) (187,718)

Impregilo Edilizia Argentina branch 703 703 (52,601) (110,905)

Impregilo Engineering CO Ltd (6,302)

Impregilo Hellas Monoprossopi E.P.E. 2,514,538 2,514,538

Nuova Iniziative Coimpresa S.r.l. 10,275 10,275 (137,447)

PREMED S.r.l. - Prefabbricati Mediterranei S.r.l. 49,904 49,904 (242,133)

Total Building & Services 2,583,942 87,601,293 90,185,235 (1,757,868) (1,084,450)


306

NET OF SET-OFF

revenues from costs of financial financialother nature Totale receivables receivables payables sponsor fees sponsor fees income expense

(469,040) (469,040) 6,368

(502,507) 158,926 3,605 124

(3,678,868) 10,145,025

(3,624,614) 673,992 1,023,041 2,098 53,318

(6,881,843) (6,965,372) 812,580 93,779

(2,480,958) (2,480,958) 47,179

(11,939) (11,939)

204,534

(1,062,675) 1,512,363

42,000

(109,801) (80,425) 763 10

(487,837) 6,266,794 136,199 1,640

(14,600,295) (13,303,103)

4,813,860 170,107 26,321

(1,268,773) 39,184,884 1,943,270 812,542

(2,866,485) (2,839,583)

(33,843,961) (30,544,695)

104,031 6,631

(2,750,389) (2,499,824)

2,284,582

(6,184,414) 4,009,063

(10,121,985) 11,480,642 2,546,675 656,668

87,912 2,097

(6,881,843) (91,029,912) 80,268,824 (52,229,568) 1,116,820 6,321,711 1,606,267

(84,254) 256,506 340,760 29

403,128 10,551

(113,370) (102,570) 217

(17,622) (17,622) 68 182

(102,798) (102,798) 533

(81,899) (81,899)

(1,892,985) 84,962,141 4,574,543

(163,506) (162,803)

(6,302) (6,302)

2,514,538

(137,447) (127,172)

(242,133) (192,229) 51,343 49,963

(2,842,317) 88,136,313 (793,395) 4,977,265 50,924

307


308



SUBSIDIARIES (cont.)

Concession

Caminos de las Sierras S.A. 458,328 619,517 1,077,845 (13,001)

Fibe Campania S.p.A. 6,197 6,197 (39,880)

Fibe S.p.A. 411,579 2,899,450 3,311,029 (4,443)

Impregilo International Infrastructures N.V. 30,763 474,780,453 474,811,216 (47)

Impregilo Italia Con. S.p.A. Argentina branch 40,793 40,793 (393) (44)

Impregilo Italia Concessioni S.p.A. 179,760 1,961,555 2,141,315

Mercovia S.A. 269,190 64,533 333,723 (2,035)

Sociedad Concesionaria Costanera Norte S.A. 9,562 9,562

Total Concession 1,406,173 480,325,507 481,731,680 (19,919) (39,924)


Fisia Babcock Environment Gmbh 682,635 682,635

Fisia Italimpianti S.p.A. 1,807,333 411,700 2,219,033

Gestione Napoli S.p.A. 50,954 50,954

Total Engineering & Plant Construction 2,540,922 411,700 2,952,622


Alia S.c.r.l. 165,745 165,745

Aquilgest S.c.r.l. 132,174 132,174

Aquilpark S.c.r.l. 365,735 365,735

BA.TA. 91 S.c.r.l. 37,947 37,947

CIS Divisione Prefabbricati Vibrocesa Scac 1,471,478 1,471,478

CO. MAR. S.c.r.l. 24,162 24,162

Congressi 91 S.c.r.l. (6,428)

Constuctora Embalse Casa de Piedra S.A. 207 207

Costruzioni Ferroviarie Torinesi Duemila S.c.r.l. 18,000 2,584,136 2,602,136

Edilizia Militare Reggio Calabria S.c.r.l. (84,989)

Entreprises et Travaux de Construction S.A. (15,139)

Eurotechno S.r.l. 842 842

IGLYS S.A. 9,074 1,564,596 1,573,669 (21,107)

Imprefeal S.p.A. 49,977 134,915 184,893

Impregilo Argentina S.A. 831,023 831,023

Imprepar - Impregilo Partecipazioni S.p.A. (6,779,877)

Impresa Castelli S.p.A. 237,989 237,989 (59,906)

INCAVE S.r.l. 16,014 16,014 (310,585)

La Fenice S.c.r.l. 54,379 54,379

Librino S.c.r.l. 66,974 66,974

Montenero S.c.r.l. 262,603 262,603

Nuova Pavoncelli S.c.r.l. 162,150 162,150

309

NET OF SET-OFF


(13,001) 1,064,844

(39,880) (33,683)

(4,443) 3,306,586 174,897

(47) 474,811,169 17,869,619 11,469,956

(437) 40,356

2,141,315 238,810 1,451

(2,035) 331,688

9,562

(59,843) 481,705,520 (33,683) 18,283,326 11,471,407

682,635

2,219,033 500

50,954

2,952,622 500

165,745 10,658

132,174 2,241

365,735 31,994

37,947 1,816 59

1,471,478 94,256

24,162 6,073

(6,428) (6,428) 67

207

2,602,136 91,834

(84,989) (84,989) 1,285

(15,139) (15,139)

842 336

(21,107) 1,552,562 84,471

184,893

831,023 76,414

(6,779,877) (6,779,877)

(59,906) 178,082 154 511

(310,585) (294,571) 25,913 670

54,379 3,608

66,974 5,674

262,603 16,874

162,150 9,759


310



SUBSIDIARIES (cont.)


S. Leonardo Due S.c.r.l. 19,778 19,778

S. Leonardo S.c.r.l. 763 763

San Martino Prefabbricati S.p.A. (30,304)

Stelvio 91 S.c.r.l. (4,661)

Sviluppo Applicazioni Industriali - SAPIN S.r.l. (8,315)

Trincerone Ferroviario S.c.r.l. 10,357 10,357

Urbana S.c.r.l. (1,101)

Vittoria S.c.r.l. 18,412 18,412

Total Imprepar-Impregilo Partecipazioni S.p.A. 331,053 7,908,376 8,239,429 (36,246) (7,286,168)

Total Subsidiaries 16,310,665 681,650,875 4,216,594 702,178,134 (44,131,719) (50,240,925)

AFFILIATES

Major Projects

Aurelia 98 S.c.r.l. 404,516 35,015 439,530 (1,427,271) (2,800)

Borini Prono & Co Nigeria Ltd 1,033 1,033

CE.S.I.F. S.c.p.a. (7,023)

Coincar S.A. 992,191 992,191

G.T.B. S.c.r.l. 300

Metrogenova S.c.r.l. 1,757,697 1,757,697 (4,495,719)

Passante di Mestre S.c.p.a. 13,825,126 13,825,126 (16,430,553)

Quattro Venti S.c.r.l. 601,477 601,477 (2,781,497)

Total Major Projects 16,589,848 1,027,205 17,617,054 (25,141,762) (2,800)

Building & Services

Anagnina 2000 S.c.r.l. 3,600 3,600

Società Edilizia Immobiliare Sarda 6,286 6,286

Versilia S.c.r.l. 1,152 1,152

Total Building & Services 11,037 11,037

Concession

Acqua Italia S.p.A. 27,226 27,226

Aguas del Gran Buenos Aires S.A. 26 16 41

Aguas del Oeste S.A. 7,563 7,563

Consorcio Agua Azul S.A. 3,800 3,800

Ponte de Pedra Energetica S.A. 5,514 5,514

Puentes del Litoral S.A. 274,854 171,374 446,228 (932) (17,051)

Total Concession 318,983 171,390 490,372 (932) (17,051)

311

NET OF SET-OFF


19,778 3,530

763 2 8

(30,304) (30,304) 283

(4,661) (4,661) 91

(8,315) (8,315) 541 93

10,357 312 69

(1,101) (1,101) 24

18,412 651

(7,322,414) 8,142,402 (7,225,387) 467,111 3,160

(6,881,843) (101,254,486) 661,205,680 (60,282,033) 1,116,820 30,049,913 13,131,758

(1,430,071) (990,541)

1,033

(7,023) (7,023)

992,191

300 300

(136,720) (4,632,438) (2,874,741) 174,596

(16,430,553) (2,605,427) 55,995

(2,781,497) (2,180,020)

(136,720) (25,281,281) 993,524 (8,657,751) 230,591

3,600

6,286

1,152

11,037

27,226

41

7,563

3,800

5,514

(17,983) 428,245 2,798,635

(17,983) 472,389 2,798,635


312



AFFILIATES (cont.)


Eurosilos S.r.l. 732 732

Imprese Riunite Genova Seconda S.c.r.l. 772,216

Monte Vesuvio S.c.r.l. 3,600 3,600

Total Imprepar-Impregilo Partecipazioni S.p.A. 4,332 4,332 772,216

Total Affiliates 16,924,200 1,198,595 18,122,795 (24,370,478) (19,851)

OTHER COMPANIES

Major Projects

Consorcio Acueducto Oriental 14,991 23,744,326 11,802,210 35,561,528 (28,212) (8,882,992)

Consorcio Central Hidroelectrica Daule Peripa D. 4,757,690 4,757,690 (5,352,849)

Consorcio Cigla-Sade 156,016 926,946 1,082,962

Consorcio Contuy Medio 468,030 468,030 (73,440)

Consorcio Contuy Medio Grupo A C.I. S.p.A. 6,216,788 19,514,104 25,730,892 (2,239,684)

Consorcio Grupo Contuy-Proyectos y Ob. De F. 1,065,630 1,065,630

Consorcio Impregilo - Ingco 43,810 1,919,350 301,745 2,264,904 (23,598) (602,322)

Consorcio Impregilo Cosapi

Consorcio V.S.T. Tocoma 375,220 371,388 746,609

Consorzio Alta V. Torino/Milano - C.A.V.TO.MI. 492,646,290 492,646,290 (285,275,901) (156,849,000)

Consorzio C.A.V.E.T. - Consorzio Alta V. Em/Tosc. 52,997,785 52,997,785 (85,030,708) (8,042,833)

Consorzio Cociv 60,277,082 60,277,082 (119,347,195)

Consorzio Iricav Due 414,561 414,561 (1,937,187)

Consorzio RCPS Nuova Romea 5,834 16,903 22,738 (2,805)

Consorzio San Cristoforo 306,040 306,040 (90,080)

Consorzio Scilla 7,053,966 7 7,053,973 (6,152,804)

Consorzio TAT-Tunnel Alp Transit Ticino 55,539 12,854,989 12,910,528

Consorzio tra le Società Cogefar/B/C 644,933 644,933 (63,803)

Consorzio TRA.DE.CI.V. 650,110 650,110 (534,945)

Consorzio Tre Esse (5,751)

Consorzio Venezia Nuova (356) (356)

Consorzio Venice Link 3,738,199 3,738,199 (4,047,282)

Constructora Mazar Impregilo 1,086,374 22,040 591,056 1,699,469 (31,273)

E.R. Impregilo/Dumez y Asociados para Yaciretà 913,663 727,289 1,640,952 (29,373)

Ertan J.V. 32,588 560,281 592,869 (1,270,309)

Ghazi-Barotha Contractors J.V. 24,341,053 33,105,074 57,446,127 (862,401) (40,901,162)

313

NET OF SET-OFF


732

772,216 772,216

3,600

772,216 776,547

(136,720) (24,527,049) 2,253,497 (8,657,751) 230,591 2,798,635

(8,911,204) 26,650,323 64,238 1,385,067 563,255

(5,352,849) (595,159) 80,647

1,082,962 62,787

(73,440) 394,590 7,430

(2,239,684) 23,491,208 3,716,910

1,065,630

(625,920) 1,638,985 19,321

(71,849) (71,849) (71,849)

746,609

(2,052,673) (444,177,574) 48,468,716 11,724,987 12,707,527 6,896,205

(217,040) (93,290,580) (40,292,795) 3,314,195 1,273,957 963,508

(119,347,195) (59,070,113)

(1,937,187) (1,522,626)

(2,805) 19,933

(90,080) 215,960

(6,152,804) 901,169

(8,205,857) (8,205,857) 4,704,671 45,572

(63,803) 581,130

(534,945) 115,165

(5,751) (5,751)

(356)

(4,047,282) (309,084)

(31,273) 1,668,196

(738,152) (767,525) 873,427 1,271 347

(1,270,309) (677,441) 23,858

(42,413,371) (84,176,934) (26,730,807) 1,368,605 1,797,543 243,897


314




Major Projects (cont.)

Ghella Sogene S.A.

Impregilo - Ebasco-Losinger J.V. 103,877 103,877

Impregilo Healy Joint Venture 3,009,333 1,778,173 4,787,506 (56,985)

Impregilo S.p.A.-NCC International A.B. J.V. 535,501 3,998,009 4,533,510 (3,314,275)

Impregilo S.p.A.-Iglys S.A.-Hochtief AG-Hochtief UTE 442,444 12,618 455,062 (309,867)

Impregilo Strabag HO Joint Venture 2,075,939 2,787,639 2,220,547 7,084,125 (8,324,659)

J. Cartellone C.C. S.A.-Igl S.p.A. - (Casisa UTE) 3,857,620 3,857,620 (364)

Joint Venture Aktor Ate - Impregilo S.p.A. 9,577 9,577

Joint Venture Aktor S.A. - Impregilo S.p.A. 206,413 378,748 585,161

Joint Venture Impregilo S.p.A. - Empedos 128,141 11,243,424 11,371,565

Joint Venture Terna - Impregilo

M.N. 6 S.c.r.l. (15,000)

Metropolitana di Napoli S.p.A. 146,674 146,674 (43,044)

Mohale Dam Contractors (MDC) J.V. 182,951 182,951

Mohale Tunnel Contractors (MTC) J.V. 4,330,589 4,330,589

Nathpa Jhakri J.V. 745,501 2,217,583 2,963,084 (7,365) (1)

Normetro - Agrupamento Do Metropolitano Do P. (216)

Yellow River Contractors J.V. 1,154 864,680 865,834 (2,814,276)

Total Major Projects 662,115,694 100,623,867 43,257,117 805,996,677 (511,984,392) (230,579,570)

Building & Services

Sarmento S.c.r.l. 308,190 308,190

Techint S.A.C.I.- Hochtief A.G.- Impregilo S.p.A 40,911 6,263,347 6,304,258

Total Building & Services 349,101 6,263,347 6,612,448


Cartellone Iglys y Otros 40 40

Impregilo - Salini Joint 30,987 30,987

Impregilo - Salini Joint Venture for Kapichira 20,142 792,582 812,724 (69,768)

Impregilo - Salini Joint Venture for Owen Falls 259,785 151,826 411,611

Matsoku Civil Contractor (MMC) J.V. 349,717 8,365,250 8,714,967 (30,191)

Owen Fall J.V. (2,335)

Total Imprepar-Impregilo Partecipazioni S.p.A. 660,671 9,309,658 9,970,329 (102,295)

Total Other companies 662,776,365 110,282,626 49,520,463 822,579,454 (512,086,686) (230,579,570)

315

NET OF SET-OFF


1,165,646

103,877

(56,985) 4,730,521 397,700

(963,225) (4,277,500) 256,010 175,256

(309,867) 145,196

(8,324,659) (1,240,534) 3,392

(1,543,649) (1,544,013) 2,313,606 29,651

9,577

585,161 2,021,459

(2,403,000) (2,403,000) 8,968,565

225,925

(15,000) (15,000)

(43,044) 103,630 14,309

182,951

4,330,589

(2,854,166) (2,861,532) 101,552

(216) (216)

(443) (2,814,720) (1,948,886) 21,074 49,022

(61,463,424) (804,027,386) 134,449,909 (132,480,618) 22,834,019 1,165,646 17,327,841 9,037,055

308,190 20,885

6,304,258

6,612,448 20,885

40

30,987

(69,768) 742,956

411,611

(14,580,972) (14,611,163) (5,896,196)

(2,335) (2,335)

(14,580,972) (14,683,266) 1,185,594 (5,898,531)

(76,044,396) (818,710,652) 142,247,951 (138,379,149) 22,834,019 1,165,646 17,348,726 9,037,055

321

REPORT OF THE STATUTORY BOARD OF AUDITORSON THE CONSOLIDATED FINANCIAL STATEMENTS OF IMPREGILO S.p.A.AS AT 31 DECEMBER 2005

Shareholders,

The Consolidated Financial Statements of the Impregilo Group for the year ending 31 December 2005, which have been provided to us with the

Individual Financial Statements, include the income statement, balance sheet, cashflow statement and statement of changes in consolidated

shareholders' equity, a well as supplementary notes. They have been prepared for the first time in conformity to the International Financial Reporting

Standards adopted by the European Union. Furthermore, the explanatory notes illustrate the effects of the transition to IAS/IFRS standards.

The Consolidated Financial Statements report shareholders' equity of Euro 512,675 thousand, net of minority interests totalling Euro 4,002

thousand, and a loss for the year of Euro 358,244 thousand, after considering the loss of Euro 8,102 thousand attributable to minority interests.

The information used by Reconta Ernst & Young S.p.A., the firm appointed to audit the financial statements, has enabled us to ascertain that the

amounts expressed in the financial statements tally with the accounting entries of the parent company and the information formally provided to the

latter by its subsidiaries.

The independent auditing firm has issued a certification report, without any special observations, regarding the consolidated financial statements,

attesting that they have been prepared with clarity and truthfully and correctly represent the Group's balance-sheet situation, financial position,

economic result, changes in equity and cashflow.

The report extensively provides several pieces of important information, whose content we agree to and that have been highlighted by us in the

report accompanying the individual financial statements.

It has been the company's desire to comply with the informational requirements laid down by Article 2428 of the Italian Civil Code, by providing one

single document.

Specific information regarding the Group considered unitarily, as conveyed in its economic and financial aspects, which are reflected in the amounts

contained in the consolidated financial statements, is extensively provided in the Report on Operations, which presents the overall business

performance of the Group's companies, highlighting among other things, the decisions adopted and the strategic guidelines followed.

Sesto San Giovanni, 12 April 2006

The Statutory Board of Auditors

Roberto Ascoli, Chairman

Vittorio Amadio, Permanent Auditor

Giuseppe Angiolini, Permanent Auditor

327

REPORT OF THE BOARD OF STATUTORY AUDITORS DELIVEREDTO THE MEETING OF SHAREHOLDERS OF IMPREGILO S.p.A. PURSUANTTO THE PROVISIONS OF ARTICLE 153 OF LEGISLATIVE DECREE 58/1998 AND ARTICLE 2429, PARAG. 3, OF THE ITALIAN CIVIL CODE

Shareholders,Pursuant to the provisions of Article 153 of Legislative Decree 58 of 24 February 1998 and Article 2429 of the Italian Civil Code, we hereby informyou that during the financial year ending 31 December 2005 we undertook our supervisory activities in accordance with the requirements of theItalian Civil Code, Article 148 and subsequent Articles of the aforementioned Legislative Decree, and the requirements contained in CONSOB NoticeDEM/1025564 of 6 April 2001. We also took into account the standards of conduct laid down jointly by the National Board of Accountants and theNational Board of Bookkeepers. In this regard, the Board of Statutory Auditors wishes to inform you that the company has not made use of the abilityforeseen under Legislative Decree 38 of 2005 to adopt the international accounting standards IFRS for the purpose of preparing the company'sindividual financial statements.

With regard to the ways in which the Board of Statutory Auditors engaged in its institutional activities, we hereby confirm that we:• attended the meetings of the Board of Directors, the Executive Committee, the Internal Audit Committee and the Remuneration Committee;• met with the Head of Internal Audit on several occasions, in order to exchange information regarding the activities undertaken and the various

audit programmes;• held the usual period meetings;• engaged in exchanges of information with the Chairman of the Board of Statutory Auditors or with the head of the audit function of the principal

investee companies, within which no members of the Board of Statutory Auditors itself were present, pursuant to the provisions of Article 151,paragraph 1 of the previously mentioned Legislative Decree 58 of 1998, as later amended by Law 262 of 28 December 2005;

• examined, during visits, the register of the independent auditing firm and held periodic meetings with said firm's managers; • constantly followed events concerning the company and the Group.

Further to the completion of our activities, we wish to highlight the following:1. Significant transactions from an economic, financial and balance-sheet perspective.

We have received from the Directors, with the required regularity, information regarding the activities undertaken and the most significanttransactions from an economic, financial and balance-sheet perspective that have been effected by the company and its subsidiaries. TheDirectors have accounted for such transactions in their report, to which reference should be made, as well as for information regarding thefeatures of transactions and their economic effects. Specifically, during July 2005, the company completed its share capital increase, which wasrealised as part of a broader financial restructuring exercise, approved by the Special Meeting of Shareholders held on 20 May 2005 and offeredto the market on 13 June. The company's current financial and ownership structures and new strategic guidelines, as well as the major disposalsaccomplished during the period or expected to take place during the current year, are all extensively covered within the Report on Operations,specifically in the sections "Financial restructuring transactions" and "Strategic guidelines for the three-year period 2005-2007", to whichreference is made in full. The Board of Statutory Auditors obtained adequate information regarding these transactions that enabled them to verifytheir compliance with the law and the company's Articles of Incorporation, as well as with principles for good business administration.

2. Atypical and/or unusual transactions, effected with third parties, inter-group or with related parties.We have neither discovered, nor received any indications from the Board of Directors, independent auditing firm or Head of Internal Audit as tothe existence of, any atypical and/or unusual transactions, effected with third parties, related parties or inter-group.

3. Adequacy of the information provided in the Directors' Report on Operations, with regard to atypical and/or unusual transactions,effected with third parties, inter-group or with related parties.In their report, the Directors have accounted for transactions of an ordinary nature carried out during the year with Group companies and withrelated parties, specifically in the section of the Report on Operations entitled "Relationships with Group companies and related parties", as well

328

as in the appendix to the supplementary notes accompanying individual financial statements entitled "Breakdown of relationships withsubsidiaries, affiliates and related parties", to which reference should be made, also to obtain information about the features of these transactionsand their economic effects. The Board of Statutory Auditors has verified the existence of, and compliance with suitable procedures devised toensure that these transactions were completed in accordance with the appropriate conditions that satisfy the interests of the company.

4. Comments and proposals regarding the findings and items of information contained in the report of the independent auditing firm.The independent auditing firm has issued its certification report in respect of the individual financial statements and expressed its opinion without

any special observations regarding the financial statements, thus attesting that they comply with the law that govern the criteria with which they

are prepared, while extensively highlighting a number of important pieces of information, the content of which we agree to and that form in part

the disclosures included within our own considerations set out in paragraph 18, "Conclusive evaluations of the supervisory activities undertaken".

5. Plaints pursuant to Article 2408 of the Italian Civil Code.During the Special Meeting of Shareholders held on 26 September 2005, a shareholder owning ten shares filed a plaint pursuant to the provisions

of Article 2408 of the Italian Civil Code "so that the Board of Statutory Auditors may verify whether refusing to provide those shareholders who

have requested it with the Stock Option Plan approved by the Board of Directors is a censurable act". Upon the plaint being filed, this shareholder

was joined by another shareholder owning one share, who extended said plaint to "the failure also to provide the regulations of the same Stock

Option Plan". Since the conditions referred to in the second paragraph of Article 2408 of the Italian Civil Code were not met, in conformity to the

first paragraph of the above Article, the Board of Statutory Auditors analysed - partly by availing itself of the services of an outside legal firm - the

plaint and came to the conclusion that it did not detect any censurable conduct. The Board of Statutory Auditors wishes to point out that the Stock

Option Plan proposed by the Board of Directors at its meeting of 7 July 2005 and approved by the Special Meeting of Shareholders on 26

September 2005, which is offered exclusively to the Managing Director and a number of Executives, is extensively covered in the Report on

Operations accompanying the Financial Statements for 2005 in the section "Share Capital and Shareholder Structure".

6. Filing of petitions. No petitions have been filed.

7. Appointment of an independent auditing firm.We have received details of the calculation by the firm of the following fees paid to the independent auditing firm in relation to the duties

specified therein:

Description of fees Auditing activities Other activities for financial year 2005 Grand total(amounts expressed in Euros)

Auditing of the individual financial statements 220,400 220,400

Auditing of the consolidated financial statements 26,000 26,000

Limited auditing of the interim report 28,247 28,247

Periodic checks pursuant to Legislative Decree 58/1998 9,600 9,600

Total ordinary auditing activities 284,247 284,247

Other activities

Application of international accounting standards 244,004 244,004

Checking of 2005 global accounts 5,000 5,000

Opinion regarding the adequacy of the stock option plan 42,000 42,000

Auditing of Information Memorandum produced for capital increase 172,950 172,950

Translation of presentation of accounts and IAS presentation 14,500 14,500

478,454 478,454

TOTAL AUDITING ACTIVITIES 284,247 478,454 762,701

The amount relating to the checking of year 2005 global accounts, with regard to which the Board of Statutory Auditors hereby expresses a favourable

opinion, will be submitted for approval at the next General Meeting of Shareholders held to approve the individual financial statements.

329

8. Conferment of additional duties to parties related to the independent auditing firm.We have received details of the calculation by the firm of the following additional fees paid to companies or professional firms associated with

the international network Ernst & Young Global in relation to the duties specified below (amounts in Euros):

Company/professional firm belonging to the Ernst & Young Global network Objective Amount

Ernst & Young Fin. Bus. Adv. S.p.A. Analysis of the process by which the auditing systemfor the C.A.V.TO.MI. contract is implemented 17,000

Other Ernst & Youngs in Argentina, Chile and Germany Various fiscal and organisational services 122,688

9. Opinions provided pursuant to the provisions of law.During the year, the Board of Statutory Auditors issued a favourable opinion, pursuant to the provisions of Article 2389 of the Italian Civil Code,

regarding the remuneration of Directors vested with special duties.

10. Attendance of the meetings of the company's executive bodies.We have attended 23 meetings of the Board of Directors and 9 meetings of the Executive Committee and have held 18 of our own meetings.

11. Comments regarding compliance with the principles for good business administration.The Board of Statutory Auditors, further to undertaking its supervisory activities, has no comments to make regarding compliance with the

principles for good business administration.

12. Comments regarding the adequacy of the company's organisational structure.The Board of Statutory Auditors has followed the creation of the company's new organisational model aimed at the simplification, operational

decentralisation and containment of costs, as described in the section of the Report on Operations entitled "Human Resources, Organisation

and Information Systems", verifying its adequacy through direct inspections, the gathering of information from function heads and meetings

with the independent auditing firm, for the mutual exchange of significant data and information. The Statutory Board of Auditors believes that

the company's organisational structure is adequate in relation to its size and the type of activities undertaken. We wish to inform you that on

20 May 2005, the Board of Directors resolved upon the formation of the Executive Committee, with the powers described in the section

"Corporate Governance", contained in the Report on Operations.

13. Adequacy of the internal audit system.We have overseen, verified and affirmed the adequacy of the internal audit system; specifically:

a. we have regularly gathered, as required, information on the activities undertaken, at the meetings of the Internal Audit Committee, at

meetings with the Head of Internal Audit and by obtaining the relevant periodic documentation;

b. we have requested, and obtained, evidence of the corrective measures taken where criticalities have emerged;

c. we have taken cognizance of the report of the Head of Internal Audit, which provides a summary of the activities undertaken over the course

of the year and is mainly geared to verifying that the Group's internal audit system complies with requirements and is adequate by carrying

out checks on the various business areas at both a peripheral level and within the Corporate Division;

d. we have taken cognizance of the report of the Compliance Body provided for by Legislative Decree 231/2001, which provides a summary

of the activities undertaken over the course of the year and is geared to updating the "Organisation and Management Model" adopted within

the company in terms of making amendments and additions to it in accordance with best market practice, as well as in consideration of the

unlawful acts associated with "Market Abuse", as referred to in Article 9 of Law 62/2005. To the extent to which it is responsible for such

matter, the Statutory Board of Auditors, having considered also the opinion that the company asked outside consultants to provide, believes

that the Model adopted is suitable for preventing the crimes provided for by the Law in question.

330

14. Adequacy and reliability of the company's administration & accounting system.We have verified, and kept an eye on, the adequacy of the company's administration & accounting system, as well as its reliability and abilityto portray business operations accurately, by obtaining the necessary information from the heads of the relevant functions, examining companydocuments and analysing the findings of the work undertaken by the independent auditing firm.

15. Adequacy of the instructions issued to subsidiary companies.We believe that the instructions issued by the company to its subsidiaries, pursuant to the provisions of Article 114, paragraph 2, of LegislativeDecree 58/1998 is adequate, for the purpose of fulfilling the disclosure requirements laid down by law.

16. Significant issues regarding meetings with the company's auditing firm.During the meetings held with the company's independent auditing firm pursuant to the provisions of Article 150 of Legislative Decree 58/1998,no issues of significance or worthy of disclosure emerged.

17. Adoption of the Self-discipline Code produced by the Corporate Governance Committee for Listed Companies.The company has adopted the Self-discipline Code produced by the Corporate Governance Committee for Listed Companies. On 29 January2003, it established an Internal Audit Committee, a Remuneration Committee and a Head of Internal Audit, all of which have assumed aconsulting and proposal-making function. The Board of Directors deemed it appropriate, in view of present conditions, not to form anyCommittee for Appointment Proposals, in that no difficulties have been encountered to date by the shareholders when proposing suitablecandidates such to ensure that the composition of the Board of Directors duly conforms to that laid down by the Self-discipline Code, specificallywith regard to the presence of independent and non-executive directors. In financial year 2005, the Remuneration Committee met three times,and the Internal Audit Committee met twice.At its meeting of 7 July 2005, the Board of Directors adopted, whilst incorporating the principles relating to transactions with related partiesprovided for in the Self-discipline Code, a new procedure devised to ensure that transactions effected by the company are effected withsubstantial and formal correctness.

18. Conclusive evaluations of the supervisory activities undertaken.While undertaking the supervisory activities described above, no censurable facts, omissions or irregularities emerged that were such to needdisclosing to the supervisory bodies. However, we wish to inform you of the following in this report:1. following the proceedings initiated by the Public Prosecutor before the Court of Monza, the company and its subsidiary Imprepar S.p.A. (in

liquidation) were subjected to preliminary investigations in relation to unlawful administrative operations as a result of the crimes referred toin Articles 25 (iii) points a) and r), 5 and 44 of Legislative Decree 231/2001. The company is alleged to have "provided and implemented anorganisational model incapable of preventing crimes" allegedly committed by the directors involved in the investigation and from which itallegedly benefited. On 6 December 2005, upon completion of these preliminary investigations pursuant to Article 415 (ii) of the Code forPenal Proceedings, the company advised by way of a notice that a preliminary hearing, pursuant to Article 419 of the Code for PenalProceedings, had been set for 3 April 2006, later adjourned to 24 April 2006;

2. the liquidation activities of the subsidiary Imprepar S.p.A. (in liquidation), continued, despite a number of problems being encountered. To benoted in this regard is the appointment of a new receiver, after the previous receiver passed away. The Statutory Board of Auditors agreedon the procedures followed by the new receiver when examining the credit and debit positions that form the statement of liquidation, pointingout the fact that the new plan may undergo further changes and may need to be amended due to the risks associated with the emergenceof future events, which are not reasonably foreseeable at present, in terms of both impact and timing. We do however approve of the contentof the report of the independent auditing firm regarding the financial statements Imprepar S.p.A. (in liquidation), with regard to the objectiveuncertainties surrounding the realisation of the company's long-term assets and the possibility of liquidation charges arising, as well as thepossibility of capital gains being realised;

3. the Statutory Board of Auditors has constantly followed developments in the Campania USW Project, which is extensively covered in the sectionof the Report on Operations entitled "Campania USW Project - Fibe and Fibe Campania", which has included in-depth discussions with the

331

heads of the relevant business functions and the exchange of information with the Statutory Board of Auditors of the investee companies FibeS.p.A. and Fibe Campania S.p.A. The information presented in the Report on Operations in this regard is an addendum made by the Directorsafter the approval of the document by the Board of Directors, in order to amend it to reflect recent developments. The Statutory Board ofAuditors does however agree with what has been provided by the Directors regarding the ongoing presence of significant risk margins that areunquantifiable and related to the complexity of both the matter in question and the intricate procedures involved to recover the debts and toselect new operators to take over the management of the Campania Project and pay the value of the fixed assets to the company. The Directorsalso report that as part of the legal case underway before the Court of Naples between the Government-appointed receiver and the subsidiariesFibe and Fibe Campania, said receiver has increased his requests for damages, which are however lower than the counterclaim filed by thecompany and are deemed unfounded by the Directors themselves.

19. Proposals of the Statutory Board of Auditors to the Meeting of Shareholders.The Statutory Board of Auditors, with regard to the issues for which it is responsible, has not found any reasons for preventing the approval of

the financial statements for the year ending 31 December 2005 and agrees with the proposals for resolution formulated by the Board of Directors.

Sesto San Giovanni, 12 April 2006

The Statutory Board of Auditors

Roberto Ascoli, Chairman

Vittorio Amadio, Permanent Auditor

Giuseppe Angiolini, Permanent Auditor

RESOLUTIONS OF THE ANNUAL GENERALMEETING OF MAY 3, 2006

The second calling of the Annual General Meeting of Impregilo S.p.A. held on May 3, 2006 and chaired by Cesare Romiti, was attended by

Shareholders owning a total of 124,936,973 ordinary shares, equivalent to 31.46% of share capital, and having voting rights.

The AGM:

1) approved the Financial Statements for the Year Ended December 31, 2005 of Impregilo S.p.A. and the coverage of the Euro 257,352,393 loss

which, summed with the Euro 61,609,190 of losses carried forward from the previous years, results in a total of Euro 318,961,583, by using

the same amount from the share premium reserve.

2) carried a resolution to appoint PricewaterhouseCoopers S.p.A. as independent auditors, to audit accounting records for the period 2006-2011

in accordance with articles 155 and following of Legislative Decree no. 58 dated February 24, 1998 as well as the half-year report, and

established the relative compensation.

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Published byImpregiloMay 2006

Printed Edita by GilcarMilan

cd uk pp01-124 ok - zonebourse.com€¦ · this great history of success and traditions is the ......

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