circir - Cofide

Transcription

circir - Cofide

COFIDE
Compagnia Finanziaria De Benedetti
Semi-annual Interim Financial Report
as of June 30 2008
COFIDE - Compagnia Finanziaria De Benedetti S.p.A.
Share Capital € 359,604,959
Register of Companies and Tax Code 01792930016
Company subject to management and coordination by CARLO DE BENEDETTI & FIGLI S.a.p.A.
Registered and Administrative
Office
10129 Torino, Via Valeggio 41
Tel. and Fax (011) 5517 +
Operating Headquarters
20121 Milano, Via Ciovassino 1
Tel. (02) 72270.1 Fax (02) 72270.270
Board of Directors
CARLO DE BENEDETTI (*) (***)
Chairman
RODOLFO DE BENEDETTI (*)
Chief Executive Officer
ROGER ABRAVANEL (***)
GIAMPAOLO BRUGNOLI (****)
MASSIMO CREMONA (****)
FRANCO DEBENEDETTI
MARCO DE BENEDETTI
PIERLUIGI FERRERO
FRANCO GIRARD
JOSEPH OUGHOURLIAN
ROBERTO ROBOTTI (****)
PAOLO RICCARDO ROCCA (***) (*****)
MASSIMO SEGRE (**)
Directors
FRANCA SEGRE
Secretary to the Board
Board of Statutory Auditors
VITTORIO BENNANI
Chairman
TIZIANO BRACCO
RICCARDO ZINGALES
Statutory Auditors
RAFFAELE CATARINELLA
LUIGI MACCHIORLATTI VIGNAT
LUIGI NANI
Alternate Auditors
Independent Auditors
Deloitte & Touche S.p.A.
Notice in accordance with the recommendation of Consob as contained in Communiqué no.
DAC/RM/97001574 of February 20 1997.
(*)
Power to sign all documents relating to ordinary and extraordinary administration with single
signature except for those reserved by law to the Board of Directors
(**)
Power to sign documents specified in mandate with single signature
(***) Member of the Compensation Committee
(****) Member of the Internal Control Committee
(*****) Lead Independent Director
CONTENTS
FINANCIAL REPORT
SEMI-ANNUAL INTERIM MANAGEMENT REPORT ............................................................... 1
1.
2.
3.
4.
5.
6.
PERFORMANCE OF THE GROUP.................................................................................................. 3
PERFORMANCE OF THE PARENT COMPANY…………........................................................... 7
CHART RECONCILING THE ACCOUNTS OF THE PARENT COMPANY
AND THE FIGURES OF THE CONSOLIDATED FINANCIAL STATEMENTS.......................... 8
PERFORMANCE OF THE SUBSIDIARIES .................................................................................... 10
SIGNIFICANT EVENTS WHICH OCCURRED AFTER JUNE 30 2008
AND OUTLOOK FOR THE REST OF THE YEAR......................................................................... 19
OTHER INFORMATION .................................................................................................................. 19
CONDENSED SEMI-ANNUAL INTERIM CONSOLIDATED FINANCIAL STATEMENTS
BALANCE SHEET ............................................................................................................................ 22
INCOME STATEMENT.................................................................................................................... 23
CASH FLOW STATEMENT............................................................................................................. 24
STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY .................................................... 25
EXPLANATORY NOTES TO THE FINANCIAL STATEMENTS................................................. 26
1.
2.
3.
4.
5.
CERTIFICATION OF THE CONDENSED SEMI-ANNUAL INTERIM FINANCIAL STATEMENTS
AS OF JUNE 30 2008 IN ACCORDANCE WITH ART. 81-TER OF CONSOB REGULATION
NO. 11971 OF MAY 14 1999 AND SUBSEQUENT AMENDMENTS AND ADDITIONS ................... 71
CONDENSED SEMI-ANNUAL INTERIM FINANCIAL STATEMENTS OF THE PARENT
COMPANY
1.
2.
3.
4.
5.
BALANCE SHEET ............................................................................................................................ 73
INCOME STATEMENT.................................................................................................................... 74
CASH FLOW STATEMENT............................................................................................................. 75
STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY .................................................... 76
EXPLANATORY NOTES TO THE FINANCIAL STATEMENTS................................................. 77
LIST OF EQUITY INVESTMENTS AS OF JUNE 30 2008............................................................. 90
INDEPENDENT AUDITORS’ REVIEW REPORT .......................................................................... 101
This Semi-annual Interim Financial Statements as of June 30 2008 was prepared in accordance with Art. 154 ter of D. Lgs.
58/1998 and in conformity with applicable international accounting standards recognized in the European Union as per EU
Regulation no. 1606/2002 of the European Parliament and the Council of July 19 2002, and specifically with IAS 34 – Interim Financial Reporting, and also with the measures issued in implementation of Art. 9 of D. Lgs no. 38/2005.
SEMI-ANNUAL INTERIM MANAGEMENT REPORT
In the first half of financial year 2008:
– The consolidated net income of the Cofide group was € 66 million, up from € 33.3 million in
the same period of 2007;
– The consolidated shareholders’ equity of the Cofide group rose from € 692.7 million at December 31 2007 to € 737.1 million at June 30 2008.
The rise in net income was due to the change in the contribution of the subsidiary Cir, which went
up from € 32.7 million in the first six months of 2007 to € 69.3 million. Cir’s result in the first
half of 2008 benefited from non-recurring income of approximately € 117.8 million resulting from
the subscription by Verbund, a partner of Cir, of a capital increase of € 200 million in Sorgenia
and, by Morgan Stanley and Cir, of a capital increase of € 40 million in HSS. The capital increase
in Sorgenia was made on the basis of a valuation of € 3.3 billion and that in Hss on the basis of a
valuation of over € 200 million. The two transactions were confirmation of the validity of the investment choices made by Cir, which have led to an important creation of value.
The current configuration of the Cir Group includes five business sectors: utilities (electricity and
gas), media (publishing, radio and television), automotive components (filters and suspension
components), healthcare (residences for the elderly, rehabilitation and hospitals) and the financial
services sector (non-performing loans and financial products for non-prime clients).
In the financial services sector Cofide operates through the company Euvis, set up in 2005 to introduce lifetime mortgages for the third age into Italy. At June 30 2008, Euvis was managing lifetime mortgages for a total of approximately € 26.4 million.
1
With a view to providing further information on the financial and economic performance of the
Cofide group during the first half of 2008, below are the key income statement and balance sheet
figures, which show the contribution of Cir to the aggregate earnings and shareholders’ equity of
Cofide S.p.A. and Cofide International S.A..
The income statement is as follows:
(in millions of euro)
1st Half
2008
1st Half
2007
69.3
(0.5)
32.7
(0.5)
- Other financial companies
1.0
1.8
TOTAL CONTRIBUTIONS
69.8
34.0
Dividends
2.2
1.5
Net gains and losses from trading and valuing securities
(0.5)
1.8
Net financial income and expense
(3.9)
(2.4)
Net operating costs
(1.9)
(1.8)
INCOME BEFORE TAXES
65.7
33.1
Income taxes
0.3
0.2
NET INCOME
66.0
33.3
Contributions to earnings of shareholdings in subsidiaries and associates:
- Cir S.p.A.
- Euvis S.p.A.
The balance sheet at June 30 2008 shows aggregate net financial debt of € 20.4 million and a
portfolio of equity investments of € 757.4 million against shareholders’ equity of € 737.1 million.
30.06.2008
31.12.2007
720.7
672.7
Euvis S.p.A.
4.6
5.1
Others
1.1
3.8
726.4
681.6
31.0
47.8
757.4
729.4
1.4
1.4
(1.3)
(7.6)
757.5
723.2
Shareholders’ equity
737.1
692.7
Aggregate net financial debt
(20.4)
(30.5)
Cir S.p.A.
EQUITY INVESTMENTS CLASSIFIED AS FIXED ASSETS
Other equity investments
TOTAL EQUITY INVESTMENTS
Tangible assets
Net receivables and payables for the period
NET INVESTED CAPITAL
Funded by:
2
1.
PERFORMANCE OF THE GROUP
Consolidated revenues totalled € 2,363.8 million in first half 2008, up from € 2,059.4 million in
the same period of 2007, with a rise of € 304.4 million (+14.8%).
Consolidated revenues can be broken down by business sector as follows:
Utilities
Sorgenia group
Media
Espresso group
1st Half
2008
%
1st Half
2007
%
Change
absolute
%
1,145.7
48.5
883.7
42.9
262.0
29.7
543.2
23.0
561.6
27.3
(18.4)
(3.3)
Automotive components
Sogefi group
556.3
23.5
541.7
26.3
14.6
2.7
Healthcare
HSS group
118.5
5.0
72.3
3.5
46.2
63.9
0.1
--
0.1
--
Total consolidated revenues
2,363.8
100.0
2,059.4
100.0
304.4
14.8
of which: ITALY
1,848.5
78.2
1,573.1
76.4
275.4
17.5
515.3
21.8
486.3
23.6
29.0
6.0
Other sectors
OTHER COUNTRIES
The key figures of the consolidated income statement of the Cofide group are as follows:
100.0
1st Half
2007
2,059.4
100.0
245.7
10.4
276.0
13.4
179.6
7.6
215.4
10.5
58.5
2.5
(9.6)
(0.5)
(57.2)
(2.4)
(75.7)
(3.7)
Income (loss) from assets held for disposal
--
--
(0.3)
-
Net income including minority interests
180.9
7.7
129.8
6.3
(114.9)
(4.9)
(96.5)
(4.7)
66.0
2.8
33.3
1.6
1st Half
2008
2,363.8
Consolidated gross operating margin (EBITDA)
Consolidated operating income (EBIT)
Revenues
Financial management result
Income taxes
Net income minority interests
Net income of the Group
%
%
The consolidated gross operating margin (EBITDA) in first half 2008 was € 245.7 million
(10.4% of revenues), down from € 276 million in first half 2007 (13.4% of revenues), with a decline of € 30.3 million (-11%). This result was due to a combination of the following factors:
- A decline in revenues of the Espresso group, especially from advertising;
- The application of the so-called “Robin Hood tax” to the company Tirreno Power in the
Sorgenia group;
- Restructuring costs incurred by the Sogefi group;
- An improvement of the profitability of the HSS Group.
3
The consolidated operating margin (EBIT) in first half 2008 was € 179.6 million (7.6% of revenues) compared to € 215.4 million (10.5% of revenues) in the same period of 2007, with a decline of € 35.8 (-16.6%). The further decline compared to EBITDA was due to higher amortization in the Sorgenia group.
The financial management result, a positive € 58.5 million versus net expense of € 9.6 million in
the first six months of 2007, was determined by the following:
- Net financial expense of € 62.9 million (€ 40 million in first half 2007),
- Net gains from trading and valuing securities of € 3.6 million (€ 22.6 million in first half
2007),
- Non-recurring gains from capital increases of € 117.8 million (€ 7.8 million in first half 2007).
The key figures of the consolidated balance sheet of the Cofide Group at June 30 2008, compared with the same situation at December 31 2007, are as follows:
30.06.2008
31.12.2007
3,205.4
3,069.6
73.6
112.1
467.0
281.1
Net invested capital
3,746.0
3,462.8
Net financial position
(1,486.5)
(1,367.6)
2,259.5
2,095.2
Fixed assets
Other net non-current assets and liabilities
Net working capital
Total shareholders’ equity
Shareholders’ equity of the Group
Minority Shareholders’ equity
737.1
692.7
1,522.4
1,402.5
The net capital invested at June 30 2008 amounted to € 3,746 million, up from € 3,462.8 million
at December 31 2007, with a rise of € 283.2 million, due mainly to a rise in net working capital
and in fixed asset investments in the Sorgenia group.
The net financial position at June 30 2008 showed net debt of € 1,486.5 million (up from
€ 1,367.6 million at December 31 2007) resulting from:
- net debt of € 20.4 million for Cofide and Cofide International, down from € 30.5 million at
December 31 2007;
- a financial surplus for Cir and the financial holding companies of € 154.5 million which compares with € 112.3 million at December 31 2007. The net rise of € 42.2 million during the first
half was due mainly to the positive balance of € 101 million between dividends received and
those paid out and to the disbursement of approximately € 42 million for investments in equity,
private equity funds and own shares;
- total net debt in the operating groups of € 1,620.6 million, up from € 1,449.4 million at December 31 2007. The rise of € 171.2 million was mainly due to the Sogefi group’s higher level
of debt after paying out ordinary and extraordinary dividends.
4
Capital gains accruing but not yet realized on the fair value treatment of available-for-sale securities, held mainly by the company Medinvest, totalled € 138.1 million at June 30 2008 and are included for this amount in the consolidated net financial position of the Cofide group.
Of these gains the part attributable to Cofide (both directly and indirectly through the subsidiary
Cir) of € 75.3 million, was posted directly to the “Fair value reserve” in shareholders’ equity.
The performance of Medinvest since it started (April 1994) up to the end of 2007 was particularly
satisfactory, recording a weighted average annual return on the portfolio in dollar terms of 9.9%.
In the first half of 2008 despite the crisis in the financial markets the performance was negative by
only 0.15%.
Total shareholders’ equity at June 30 2008 stood at € 2.259,5 million, up from € 2,095.2 million
at December 31 2007, with a rise of € 164.3 million after the distribution of € 10.8 million of
dividends by Cofide and a total of € 125.7 million by the subsidiaries to their minority shareholders.
The shareholders’ equity of the Group rose from € 692.7 million at December 31 2007 to
€ 737.1 million at June 30 2008, with a net rise of € 44.4 million.
Minority shareholders’ equity went up from € 1,402.5 million at December 31 2007 to
€ 1,522.4 million at June 30 2008, with a rise of € 119.9 million.
The evolution of consolidated shareholders’ equity is given in the Explanatory Notes to the Financial Statements.
5
The consolidated cash flow statement for the first half of 2008, prepared according to a “managerial” format which, unlike the format used for the financial statements, shows the changes in net
financial position instead of the changes in cash and cash equivalents, can be broken down as follows:
1st Half 2008
1st Half 2007
SOURCES OF FUNDING
Net income for the year including minority interests
180.9
129.8
Amortization, depreciation, write-downs and other non-monetary changes
(51.8)
40.5
Self-financing
129.1
170.3
Change in working capital
(280.2)
26.3
CASH FLOW GENERATED BY OPERATIONS
(79.1)
196.6
Capital increases
268.7
42.9
42.5
127.3
232.1
366.8
(199.1)
(213.6)
(13.8)
(37.5)
(136.5)
(85.1)
(1.6)
16.3
TOTAL APPLICATIONS
(351.0)
319.9
FINANCIAL SURPLUS (DEFICIT)
(118.9)
46.9
NET FINANCIAL POSITION AT START OF PERIOD
(1,367.6)
(833.0)
NET FINANCIAL POSITION AT END OF PERIOD
(1,486.5)
(836.1)
Repayment of loan by Tirreno Power
TOTAL SOURCES OF FUNDING
APPLICATIONS
Net investments in fixed assets
Buyback of own shares
Dividend payouts
Other changes
A breakdown of the net financial position is given in the Explanatory Notes to the Financial Statements.
The cash flow from operations shows that liquidity was absorbed rather than generated. This was
due to the absorption of € 179.6 million of liquidity by the increase in net working capital of the
Sorgenia group.
At June 30 2008 the group had 13,095 employees on its payrolls compared to 12,450 at December
31 2007.
6
2.
PERFORMANCE OF THE PARENT COMPANY OF THE GROUP
The parent company Cofide S.p.A. closed the first half of 2008 with net income of € 16.9 million
(€ 17.4 million in first half 2007) and shareholders’ equity of € 570.6 million at June 30 2008
(€ 574.7 million at December 31 2007).
The key figures of the income statement of Cofide for first half 2008, compared with those of
the first six months of 2007, are as follows:
1st Half
2008
(1.5)
1st Half
2007
(1.3)
Other operating costs, amortization and depreciation
(0.3)
(0.3)
Financial management result
18.4
18.8
Income before taxes
16.6
17.2
Income taxes
0.3
0.2
Net income
16.9
17.4
Net operating costs
The financial management result mainly refers to the dividends of subsidiaries and associates,
which totalled € 19.6 million in first half 2008 compared to € 19.5 million in the first half of 2007.
The key figures of the balance sheet of Cofide at June 30 2008, compared with the position at
December 31 2007, are as follows:
30.06.2008
31.12.2007
572.5
572.5
Other net non-current assets and liabilities
(3.3)
(8.2)
Net working capital
33.0
48.2
Net invested capital
602.2
612.5
Net financial position
(31.6)
(37.8)
570.6
574.7
Fixed assets
The change in shareholders’ equity from € 574.7 million at December 31 2007 to € 570.6 million
at June 30 2008 was the result of a rise of € 16.9 million, which was the net income for the period,
and a decline from the distribution of dividends for € 10.8 million and from the fair value adjustment, net of tax, of the investment in Banca Intermobiliare of € 10.2 million.
7
3.
CHART RECONCILING THE ACCOUNTS OF THE PARENT COMPANY AND THE
FIGURES OF THE CONSOLIDATED FINANCIAL STATEMENTS
The following chart reconciles the result for the year and the shareholders’ equity of the group
with the same values of the financial statements of the parent company.
(in thousands of euro)
30.06.2008
Shareholders’
Equity
Result of
1st Half 2008
Financial statements of the parent company Cofide S.p.A.
570,569
16,857
- Dividends from companies included in the consolidation
(19,611)
(19,611)
- Net contribution of consolidated companies
195,660
68,762
(9,518)
--
737,100
66,008
- Difference between carrying values of investee companies and the
portions of consolidated shareholders’ equity
Consolidated financial statements, part attributable to the group
8
MAIN EQUITY INVESTMENTS OF THE GROUP (*)
AT JUNE 30 2008
COFIDE
COFIDE
48.0%
54.2% (**)
SORGENIA
SORGENIA
Utilities
54.5%
ESPRESSO
ESPRESSO
Media
CIR
CIR
57.4%
SOGEFI
SOGEFI
Automotive
components
HSS
HSS
Healthcare
65.4%
98.8%
47.5%
JUPITER
JUPITER
OAKWOOD
OAKWOOD
54.6%
EUVIS
EUVIS
(*)
(**)
the percentage is calculated net of own shares held as treasury stock
percentage of indirect control through Sorgenia Holding (formerly Energia Holding)
Financial
services
4.
PERFORMANCE OF THE SUBSIDIARIES
EUVIS – Cofide was the first group in Italy to enter the lifetime mortgage market, introducing a
new financial product aimed at the third age, through the company Euvis, which was set up in
2005 with the name Società Finanza Attiva.
The lifetime mortgage is a loan aimed at older people who are at least 65 and who own their own
homes and does not involve any repayments until the death of the borrower. Commissions and interest are capitalized and become due only at maturity. Repayment is due up to twelve months after the death of the borrower and is paid by the heirs to the estate.
At June 30 2008 Euvis was managing lifetime mortgages for a total € 26.4 million, of which € 5.9
million were made in the first half of 2008.
In the first six months of 2008 the company reported a net loss of € 1 million, due to the start-up
phase of the business.
The company had 23 employees at June 30 2008.
COFIDE INTERNATIONAL - This company was established in 1998 as a vehicle for raising medium/long term funding for the Cofide group and managing financial assets. With a view to optimizing the margin between funding costs and investment returns, the company invested part of its
free cash flow in Medinvest Plc, the fund of funds authorized by the Bank of Ireland and listed on
the Dublin Stock Exchange.
In the first half of 2008 the company reported earnings of € 0.5 million with shareholders’ equity
of € 16.5 million. The net financial position at June 31 2008 showed a positive balance of € 16.6
million, resulting from free cash flow of € 10.2 million, a loan of € 35.3 million from Cofide and
the investment in Medinvest, which had a fair value of € 41.7 million.
CIR GROUP - In the first half of 2008 the Cir group reported consolidated net earnings of € 144.3
million, up from € 68.6 million in the same period of 2007 (+110.3%).
10
The following charts show the contributions of the main subsidiaries of Cir to its earnings and to
its consolidated equity:
1st Half
2008
1st Half
2007
CONTRIBUTIONS TO EARNINGS
Sorgenia group
Espresso group
Sogefi group
HSS group
Other subsidiaries
13.7
19.9
11.6
0.4
(0.6)
22.6
26.5
16.8
0.4
(0.7)
Total operating subsidiaries
45.0
65.6
4.9
10.5
CIR and CIR International (before non-recurring items)
(24.6)
(12.2)
Non-recurring items
119.0
4.7
Net result of the Cir Group
144.3
68.6
Financial subsidiaries
The contribution of the operating groups to consolidated earnings, amounting to € 45 million
down from € 65.6 million in first half 2007, was penalized for € 7 million by non-recurring items
in the Sorgenia group (Robin Hood Tax) and the Sogefi group (restructuring charges).
The contribution of the financial subsidiaries was € 4.9 million, down from € 10.5 million in first
half 2007, which had benefited from capital gains on the sale of shares in hedge funds by Medinvest.
The item “Non-recurring items” refers to capital gains from capital dilution following the capital
increases in Sorgenia and HSS.
30.06.2008
31.12.2007
CONTRIBUTIONS TO SHAREHOLDERS’ EQUITY
Sorgenia group
424.6
301.8
Espresso group
271.4
290.4
Sogefi group
99.6
179.5
HSS group
94.6
69.5
Other subsidiaries
22.6
15.3
Total subsidiaries
912.8
856.5
CIR and CIR International
- invested capital
- net financial position
507.1
352.5
154.6
463.4
351.1
112.3
1,419.9
1,319.9
Shareholders’ equity of the Cir Group
Consolidated shareholders’ equity went up from € 1,319.9 million at December 31 2007 to
€ 1,419.9 million at June 30 2008 with a net increase of € 100 million.
11
There now follows a more in-depth analysis of the business sectors of the Cir group.
UTILITIES SECTOR
In the first half of 2008 the Sorgenia group reported consolidated revenues of € 1,145.7 million,
up by 29.7% from € 883.7 million in first half 2007. In a domestic environment in which demand
for electricity was unchanged, the Sorgenia group managed to increase its energy sales volumes
(+7.9% on the same period of the previous year) by expanding its portfolio of micro-business clients. Revenues also benefited from the rise in unit revenues thanks to the economic scenario
which saw price rises in benchmark oil products.
In the first six months of 2008 the Sorgenia group posted consolidated net income of € 25.4 million, down from € 38.9 million in the same period of last year. This decline was due partly to higher financial expense because of the higher average debt over the period but even more to the effect of the Robin Hood Tax, which had an impact of € 7.6 million on the result of the group, penalizing the result of the affiliated company Tirreno Power. The new tax rules introduced by Art.
81 of Decree Law no. 112 of June 25 2008 (the so-called Robin Hood Tax) involve a rise in the
IRES tax rate from 27.5% to 33% with the application of a surtax of 5.5% for entities operating
in the production or marketing of electricity that reported a volume of revenues of over € 25 million in the previous tax year.
Consolidated sales revenues can be broken down as follows:
1st Half 2008
1st Half 2007
Change
Values
%
Values
%
%
Electricity
769.8
67.2
571.2
64.6
34.8
Natural gas
367.9
32.1
307.7
34.8
19.6
8.0
0.7
4.8
0.6
66.6
883.7 100.0
29.7
Other revenues
TOTAL
1,145.7 100.0
In the first half of 2008 the group sold 5,062 GWh of electricity and 1,128 million cubic metres of
natural gas.
The consolidated gross operating margin (EBITDA) was € 82 million (7.2% of revenues) compared with € 87.3 million (9.9% of sales) in the first six months of 2007. The improved sales margins for both electricity (especially in the segment of clients with lower consumption but higher
profitability) and natural gas would have led to a 5.4% rise in margin on first half 2007 to € 92
million instead of the € 82 million actually recorded, the decline being due to the lower contribution of the associated company Tirreno Power whose earnings were negatively affected by the
Robin Hood Tax, as described above.
Consolidated operating income (EBIT) for first half 2008 came in at € 65.2 million, down from
€ 76.2 million in the same period of last year.
The consolidated net financial position of the Sorgenia group at June 30 2008 showed net debt of
€ 897 million, with a slight improvement on € 904.9 million at December 31 2007. The change
was substantially due to the financial disbursements made for investment in new production capacity for approximately € 109 million (relating to the Modugno and Lodi power plants under
construction, to the photovoltaic plants of Sorgenia Solar and to wind plants) and to the rise in net
12
working capital of approximately € 139 million, largely offset by the subscription of the capital
increase of € 200 million in Sorgenia at the end of June 2008, by the repayment of the loans made
to Tirreno Power and by dividends received for a total of € 53.8 million.
At June 30 2008 the group had 317 employees on its payrolls, up from 276 at December 31 2007.
In the first half of 2008 the Sorgenia group continued with the rollout of its business plan 20082012, which involves reaching an installed capacity of 5.2 GW by 2012 with four greenfield
CCGT plants (each with an output of approximately 770 MW), its share of the output of Tirreno
Power post repowering, the development of 920 MW of wind generating capacity (of which 450
MW in Italy) and the installation of 50 MW of photovoltaic plants.
Regarding wind generation, during the first half of the year construction work went ahead on the
new plants situated in the local districts of Minervino Murge, Castelnuovo di Conza and San Gregorio Magno, for a totalled installed capacity of around 70 MW.
The acquisition in France of Société Française d’Eoliennes (SFE), which took place in December
2007, enabled the Sorgenia group to increase its wind generating portfolio by 100 MW installed,
71 MW authorized and soon to be built and 1,000 MW at various stages of development. Then at
the end of March 2008 the company Sorgenia Romania was established based in Bucharest with
the aim of building, managing and maintaining wind farms.
In the field of solar energy, at the end of the first six months of 2008 there were 10 photovoltaic
plants in operation, each with an output of approximately 1MW, all belonging to the subsidiary
Sorgenia Solar. A further 5 plants should start operating by the end of 2008.
Regarding the Sorgenia group’s plan of investment in thermoelectric plants, in the first half of the
year work continued on the construction of the combined cycle plant at Bertonico-Turano Lodigiano (Lombardy), a favourable ruling by the Council of State put an end to the dispute regarding
the plan for the Aprilia power plant, and building work progressed on the Modugno plant (Puglia),
which is scheduled to start operating by the end of this year.
The repowering program of Tirreno Power is also going ahead according to plan. In the first half
of the year building work continued on a new combined cycle module with an output of 380 MW
at Napoli Levante, which is also expected to start operating by the end of 2008.
The Sorgenia group is also engaged in important projects that aim to guarantee diversification of
gas sourcing, thus enhancing the safety of the whole domestic network. LNG Med Gas Terminal,
a company 69.77% controlled by Fin Gas Srl, an equal share joint venture between Sorgenia and
Iride, completed successfully the investigatory process for obtaining the VIA (Evaluation of environmental impact) for the construction of a 12 billion cubic metre regasification terminal at Gioia
Tauro (Calabria).
In June the company Sorgenia E&P was set up. This company is 100% controlled by Sorgenia
and is involved in the exploration and production of hydrocarbons.
13
MEDIA SECTOR
The Espresso group closed the first half of 2008 with consolidated revenues of € 543.2 million,
down by 3.3% from € 561.6 million in first half 2007.
Consolidated net income was € 36.4 million compared with € 50.0 million in the first half of
2007, which had benefited from the positive effect of the different accounting treatment of TFR,
amounting to € 7.8 million in terms of net income. Net of this item, earnings would have been
down by € 5.8 million.
The revenues of the group can be broken down as follows:
1st Half 2008
1st Half 2007
Change
Values
%
Values
%
%
Circulation
207.2
38.2
209.0
37.2
(0.9)
Advertising
323.3
59.5
335.8
59.8
(3.7)
12.7
2.3
16.8
3.0
(24.4)
543.2
100.0
561.6
100.0
(3.3)
Other revenues
TOTAL
The result of the first half of 2008 was affected by negative factors on the revenue front (advertising and sales) only partly offset by other positive factors (optional products) and by the recovery
of costs. This happened thanks to investments made in past years and to the first effects of a series
of new initiatives undertaken in 2008 which, when fully implemented with corporate reorganizations that will involve a reduction of some 100 staff over the next three years, will lead to a decline in costs year on year of approximately € 40 million. Should the negative trend of advertising
become more pronounced, more action is being planned to cut operating costs, including personnel costs.
Advertising, which has been negatively affected by the gradual worsening of the international and
domestic economic downturn, declined significantly during the first half (-10% approximately) in
terms of domestic commercial advertising in la Repubblica and the periodicals, while local advertising was up by more than the market average (+5.7%) as indeed was internet advertising
(+30.3%). In the second quarter even the radio and television sector stalled, causing sales revenues for the first half to decline by 5.8% compared to the same period of the previous year.
By contrast the margin on optional products was higher although revenues and volumes edged
down slightly because of the unfavourable conditions of the market.
A fact that was common to all the titles of the group was the growth in traffic of their respective
internet websites and readership indices were also either stable or rising, showing a total of 8.4
million contacts with the media of the group.
Sales on the news-stands were different for the various titles. The circulation of la Repubblica fell
by 4.1%, clocking up 593 thousand average copies per issue, partly as a result of the choice made
to change certain marketing initiatives, but it kept its total readership at around 3 million and on
the internet, consolidating its leadership, it clocked up 10.9 million users in the month of June
(over 1 million per day).
The local newspapers substantially confirmed their sales figures with 462 thousand average copies
per issue (467 thousand in first half 2007), kept their readership numbers at over 3 million, and
reached 1.3 million unique users on their websites.
Lastly L'espresso experienced a decline of 4.9% in circulation because of a downturn in the quantities of optional products sold and fewer copies sold on the news-stands, which were partly offset
by a rise in subscriptions, confirming a readership figure of 2.4 million.
14
Radio Deejay, the number one commercial radio broadcaster with around 5.5 million listeners on
an average day (13.5 million over the week), also benefited from new ways of accessing its programs: web streaming and podcast downloads, many of which are at the top of Italian rankings.
Up slightly were also the listening figures of m2o (1.4 million on an average day and 3.7 million
over the week), while the audience of Radio Capital stood at just over 1.6 million listeners on an
average day (6 million over the week).
Consolidated operating income in first half 2008 was € 75.5 million versus € 102.1 million in the
same period of last year.
Consolidated net financial debt at June 30 2008, which as usual was affected by the seasonal nature of the business, was € 328.8 million, up from € 264.9 million at December 31 2007, because
the payment of dividends (€ 68.8 million), net disbursements for investment in fixed assets
(€ 30.7 million) and the buyback of own shares (€ 5.6 million) absorbed more liquidity than that
generated by operations.
Consolidated shareholders’ equity went down from € 535.4 million at December 31 2007 to
€ 520.2 million at June 30 2008.
At June 30 2008, including temporary contracts, the group had 3,450 employees on its payrolls,
compared to 3,414 at December 31 2007.
Based on recent estimates, circulation of the titles of the group and sales of optional products
should continue to be in line with the trend of the first half, and for advertising too there is not likely to be a change in trend in the second half of the year from that recorded in the first half to
June 30.
The economic scenario in the whole of the publishing sector continues to be critical.
In this environment, the income figures for this year will be positive but will certainly be lower
than those reported in 2007 even net of the extraordinary one-off items that boosted last year because of the new legislation on the TFR and the recalculation of deferred taxes.
AUTOMOTIVE COMPONENTS SECTOR
The consolidated revenues of the Sogefi group in the first half of 2008 totalled € 556.3 million,
with a rise of 2.7% (+4.9% at the same exchange rates) from € 541.7 million in the first six
months of last year, despite a vehicle market in difficulty because of the worsening of the economic situation in the mature markets and a significant rise in the prices of commodities and oil.
The rise in revenues was due to the positive trend of the South American market and increased
business in suspension components.
Consolidated net income came in at € 20.2 million, down from € 28.9 million in the first half of
2007 (-30.1%).
15
The breakdown of the consolidated revenues of the Sogefi group by business sector is as follows:
1st Half 2008
Values
%
1st Half 2007
Values
%
Change
%
Filters
271.3
48.8
278.0
51.3
(2.4)
Suspension components and precision springs
286.2
51.4
264.1
48.7
8.4
(1.2)
(0.2)
(0.4)
--
--
556.3
100.0
541.7
100.0
2.7
Intercompany
TOTAL
In spite of a generalized rise in the cost of raw materials, especially of steel and aluminium components, thanks to the substantial transfer of these higher costs on to selling prices, the group reported consolidated operating income of € 53.8 million (9.7% of sales), which was substantially in
line with the result of the corresponding period of 2007 of € 56 million (10.3% of sales), which
had benefited from positive adjustments of around € 2 million.
In the first half of 2008, EBITDA and EBIT were impacted to a significant degree by restructuring charges of € 6.9 million (versus € 1 million in 2007), while the first half of 2007 had benefited
from positive non-recurring items of € 6.5 million (the sale of a property and adjustments to liabilities).
Consolidated EBITDA in first half 2008 came to € 61 million (11% of revenues), down by 18.5%
from € 74.8 million (13.8% of sales) in the same period of last year.
Consolidated EBIT was € 38.7 million (7% of sales) down from € 51.6 million in the first six
months of 2007 (9.5% of sales) (-25%).
In the first half of 2008 the result before taxes and before minority interests was € 32.7 million,
down from € 47.1 million in the same period of 2007, both becausse of the rise in financial expense because of the higher level of debt after the distribution of the extraordinary dividend and
because of the fall in EBIT.
At June 30 2008 the consolidated net financial position showed net debt of € 251 million, up from
€ 121.2 million at June 30 2007 and € 92.4 million at December 31 2007, following the payout of
€ 159.5 million in ordinary and extraordinary dividends.
The group had 6,308 employees at June 30 2008 compared to 6,208 at December 31 2007.
In the first half of 2008 the filter division reported revenues of € 271.3 million, down slightly
(-2.4%) from € 278 million in the first six months of 2007, due to the contraction in demand in the
European after-market which was only partly offset by the higher sales in Latin America and in
the original-market sector.
EBITDA came in at € 25 million (9.2% of sales), down from € 41.1 million (14.8% of sales) in
the first half of 2007, while EBIT was € 15.9 million (5.9% of sales), down from € 31.7 million
(11.4% of sales). These results were penalized by restructuring costs, mainly for the Mantua works, of € 6.5 million, while the first half of 2007 had benefited from positive items totalling € 6.5
million, resulting from the above-mentioned sale of a property and from pension fund adjustments.
16
The suspension components division reported revenues in first half 2008 of € 286.2 million, up by
8.4% from € 264.1 million in the same period of 2007, thanks partly to the rise in selling prices.
The higher sales volumes, especially in the industrial vehicle sector, and the transfer of the higher
cost of steel on to prices made it possible to improve profitability. EBITDA rose to € 38.6 million
(13.5% of sales) from € 36.8 million (13.9% of sales) and EBIT came in at € 25.6 million (8.9%
of sales) up from € 23.3 million (8.8% of sales) in the first half of 2007.
The economic scenario in which the group will have to operate in the second half of 2008 should
involve a modest contraction in vehicle production in Europe and the continuation of good performance in South American markets. In order to keep operating profitability levels on a par with
those reported in first half 2008, the further sizeable rises in the cost of steel will have to be transferred on to selling prices.
HEALTHCARE SECTOR
In the first half of 2008 the HSS group continued to strengthen its operating subsidiaries and to
seek new development opportunities to consolidate its presence in the healthcare sector.
In the first six months of 2008 the HSS group reported consolidated revenues of € 118.5 million,
up from € 72.3 million in the previous period (+64%), with a rise of € 46.2 million, thanks to the
development of all areas of the business.
Consolidated EBITDA was € 14.1 million (11.9% of sales revenues), up from € 9.8 million in the
first six months of 2007, having benefited from the contribution of the acquisitions made in the
second half of 2007.
Consolidated EBIT was € 9 million (7.6% of sales) with a rise of € 2.9 million from € 6.1 million
in the corresponding period of the previous year.
Consolidated net income came in at € 0.7 million compared to € 0.5 million in the first six months
of 2007.
At June 30 2008 the HSS group had net financial debt of € 124 million, down from € 148.6 million at December 31 2007. The improvement was the result of the subscription on June 25 2008
by Cir and the Morgan Stanley funds already shareholders of HSS, of a capital increase in HSS
for a total amount of € 40 million offsetting a rise in debt due to the acquisitions and investments
made in the first six months of the year.
At June 30 2008 consolidated shareholders’ equity stood at € 144.6 million, up from € 102.8 million at December 31 2007.
The business of the HSS is currently focused on managing:
1)
Residences and nursing homes (RSAs), with 35 residences under management and 4 under
construction (approximately 3,500 beds operational and more than 450 under construction);
2)
Hospitals and rehabilitation centres, with 5 rehabilitation hospitals, 8 psychiatric rehabilitation communities and 13 day hospitals for a total of 1,100 beds operational and 50 under
construction;
3)
One hospital and high tech activities within hospitals, with 7 diagnostic imaging departments.
17
The HSS group currently manages a total of around 4,700 beds plus a further 500 soon to be completed.
The group had 2,940 employees at June 30 2008 compared to 2,472 at December 31 2007.
FINANCIAL SERVICES SECTOR
The Cir group operates in the financial services sector with the company Jupiter Finance and the
investment made in the Oakwood group, as described in detail below.
JUPITER FINANCE – This company, which operates in the sector of non-performing loans, was set
up at the end of 2005 with the aim of becoming an independent industrial partner of Italian banks
and businesses in the management of non-performing loans. The company thus carries out a debt
collection activity and collects payment in securitization deals as master servicer, and providing
both operational services and carrying out a guarantee function makes sure that the procedures of
the securitization process are followed correctly.
At June 30 2008 the total number of loan receivables under the management of Jupiter Finance as
master servicer amounted to € 942.8 million of gross book value purchased for a price of € 111.8
million. As of the same date the company had collected receivables for € 37.3 million, which was
in line with its collection programs.
During 2008 Jupiter Finance continued in its role as master servicer in the program of securitization of portfolios of receivables through the vehicle company (as per law 130) Zeus Finance,
which is included in the consolidated financial statements of Cir. This program involves the issue
of securities for a maximum amount of € 400 million, subdivided into two classes, a senior class
for a maximum of € 200 million and a class of junior securities for a maximum of € 200 million,
which are subordinate to the first class both for the capital and the interest. At June 30 2008 the
securities issued, totalling € 89 million, were underwritten by Cir International for the junior part
amounting to € 38 million and by a prime bank for the senior part amounting to € 51 million as
part of an underwriting agreement for all of the senior tranche for a total value of € 200 million.
In July 2007 Jupiter Finance started operating abroad, focusing on certain specific countries in
central and southern Europe: as of June 30 2008 four acquisitions had been made for a total nominal value of € 54 million at a purchase price of € 13 million.
OAKWOOD – The investment made by Cir, in a joint venture with Merrill Lynch, in the Oakwood Global Finance group was worth € 75 million at June 30 2008 after a write-down at December 31 2007 of approximately € 65 million. During the first half of 2008 the two companies
Ktesios and Pepper continued to do business.
Ktesios, despite the well-known liquidity problems in the financial markets, is still operating in
the loan business making loans secured on one fifth of workers’ salaries or pensions and has confirmed its ranking as leader in Italy in this segment of the market. During the first half it made loans of € 315 million compared to € 308 million in the first six months of 2007.
Pepper, which operates in the Australian non-conforming mortgage sector, has reduced its loan
originating business quite significantly, as was expected, and has instead expanded the scope of
servicing in its business plan.
CIR VENTURES – At June 30 2008 the portfolio of Cir Ventures, the venture capital fund of the
Group, contained investments in seven companies of which six in the United States and one in Is-
18
rael. These companies all operate in the sector of information and communications technology.
The total fair value of these investments at June 30 2008 amounted to 18.5 million dollars.
The management activity of the fund is still mainly directed towards supporting the companies in
the portfolio and identifying opportunities for taking profit. The prospects for the evolution of the
business of these companies remain cautiously optimistic within a scenario of a general improvement in the technology sector.
INVESTMENT IN PRIVATE EQUITY FUNDS - Through its subsidiary Cir International the Cir group
holds a diversified portfolio of funds and minority private equity holdings, the fair value of which
determined on the basis of the NAV provided by the various funds was approximately € 78 million at June 30 2008. During the first half of 2008 further investments were made for approximately € 6 million and funds were redeemed for € 1.5 million. Remaining commitments outstanding at June 30 2008 amounted to € 38 million.
5.
SIGNIFICANT EVENTS WHICH OCCURRED AFTER JUNE 30 2008 AND OUTLOOK FOR THE REST OF THE YEAR
Regarding the outlook for the year, taking into account the net non-recurring income already realized in the first half it is thought that the consolidated net result will be higher than that of last
year. As far as the performance of the operating groups is concerned, reference should be made to
the analysis of the various sectors.
On July 31 2008 the Board of Directors of Cir approved a proportional partial demerger of the
Company’s non-media businesses: activities in the utilities sector (Sorgenia), automotive sector
(Sogefi), healthcare (Holding Sanità e Servizi) and financial services (Jupiter, Oakwood, CIR International and Ciga/Medinvest) will be spun off into a new company, the “beneficiary company”,
which will be listed on the MTA market. The controlling shareholding in the Editoriale
L’Espresso Group will remain in the demerged company. Each Cir shareholder will be assigned
shares in the beneficiary company pro rata on the basis of a 1:1 assignment ratio. The demerger
will take place at book value and will be based on the balance sheet of Cir at June 30 2008.
Once the proposed demerger has been approved by the Board of Directors, it will be submitted to
the approval of the Shareholders at a meeting to be convened in mid October, with the objective
of implementing it in January 2009. Completion of the demerger is in any case conditional on the
admission to listing on MTA of the shares of the beneficiary company.
6.
OTHER INFORMATION
Transactions with companies of the Group and related parties
In accordance with the law and with the recommendations of CONSOB given in communiqués
DAC/RM/97001574 of February 20 1997 and DAC/98015375 of February 27 1998, we should
point out that in the half-year ended June 30 2008:
- Transactions with subsidiaries consisted mainly of the following:
•
Management support and communication services for € 1,036 thousand supplied by
Cofide S.p.A. to Cir S.p.A.;
19
•
•
•
•
-
Financial, legal and administrative assistance for € 274 thousand supplied by Cir S.p.A. to
Cofide S.p.A.;
Receipt of dividends distributed by Cir S.p.A. for € 17,973 thousand;
Receipt of dividends distributed by Cofidefin Servicos de Consultoria Lda for € 1,638
thousand;
An interest-bearing loan made to Cofide International S.A. to cover temporary funding
needs for € 34,360 thousand plus accumulated interest for the period of € 963 thousand;
No transaction involving own shares was carried out during the first half of the year.
As can be seen from the balance sheet, there was no treasury stock on the books at June 30
2008.
Relations during the first half of the year with the parent company Carlo De Benedetti & Figli
S.a.p.A., which exercises a management and coordination role, were exclusively in relation to the
distribution of dividends to the same for the amount of € 4,902 thousand.
It should be pointed out that the Cofide Group did not enter into any transactions with related
parties, according to Consob’s definition, of a non-typical or unusual nature beyond normal
business administration or such as to have any significant impact on the economic, financial
or equity situation of the Group.
Other
The company Cofide S.p.A. – has its registered office in Via Valeggio, 41 – 10129 Turin (To), Italy.
Cofide shares, which have been quoted on the Milan Stock Exchange since 1985, since 2004 have
been traded on the Ordinary segment – MTA (Reuter code: COFI.MI, Bloomberg code COF IM).
This Financial Report for the period January 1 – June 30 2008 was approved by the Board of Directors on July 31 2008.
The company is subject to management and coordination by Carlo De Benedetti & Figli S.a.p.a..
20
Cofide Group
Condensed Semi-annual Interim Consolidated Financial Statements
BALANCE SHEET
INCOME STATEMENT
CASH FLOW STATEMENT
STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY
EXPLANATORY NOTES TO THE FINANCIAL STATEMENTS
21
1.
CONSOLIDATED BALANCE SHEET
ASSETS
NON-CURRENT ASSETS
INTANGIBLE ASSETS
TANGIBLE ASSETS
INVESTMENT PROPERTY
INVESTMENTS IN COMPANIES VALUED AT EQUITY
OTHER EQUITY INVESTMENTS
OTHER RECEIVABLES
of which with related parties (*)
SECURITIES
DEFERRED TAXES
Notes
(7.a)
(7.b)
(7.c)
(7.d)
(7.e)
(7.f)
(7.f)
(7.g)
(7.h)
30.06.2008
31.12.2007
3,631,438
1,339,190
1,594,214
19,822
240,189
11,996
228,450
3,524,719
1,283,133
1,473,973
20,109
280,554
11,885
263,397
111,614
75,542
96,121
101,456
97,037
94,631
3,226,144
207,447
3,261
1,241,418
2,999,031
203,967
2,564
1,070,273
CURRENT ASSETS
INVENTORIES
CONTRACTED WORK IN PROGRESS
TRADE RECEIVABLES
of which from related parties (*)
OTHER RECEIVABLES
FINANCIAL RECEIVABLES
SECURITIES
AVAILABLE-FOR-SALE FINANCIAL ASSETS
CASH AND CASH EQUIVALENTS
(8.d)
(8.e)
(8.f)
(8.g)
51,273
703,877
370,000
377,983
37,171
328,566
420,374
726,988
ASSETS HELD FOR DISPOSAL
(2.c.)
6,692
6,756
6,864,274
6,530,506
30.06.2008
31.12.2007
2,259,470
359,605
154,163
157,324
66,008
737,100
1,522,370
2,095,196
359,605
164,337
136,397
32,352
692,691
1,402,505
2,559,836
774,796
1,425,917
343
149,510
166,149
43,121
2,970,547
1,189,672
1,431,060
320
146,940
160,637
41,918
2,044,968
213,540
382,182
162,177
942,270
1,464,763
96,102
-116,106
942,582
(8.a)
(8.b)
(8.b)
(8.c)
270,885
34,522
TOTAL ASSETS
LIABILITIES AND SHAREHOLDERS' EQUITY
SHAREHOLDERS' EQUITY
SHARE CAPITAL
RESERVES
RETAINED EARNINGS (LOSSES)
NET INCOME FOR THE PERIOD
SHAREHOLDERS' EQUITY OF THE GROUP
MINORITY SHAREHOLDERS' EQUITY
NON-CURRENT LIABILITIES
BONDS AND NOTES
OTHER BORROWINGS
OTHER PAYABLES
DEFERRED TAXES
PERSONNEL PROVISIONS
PROVISIONS FOR RISKS AND LOSSES
(9.a)
(9.b)
(9.c)
(10.a)
(10.b)
(7.h)
(10.c)
(10.d)
CURRENT LIABILITIES
BANK OVERDRAFTS
BONDS AND NOTES
OTHER BORROWINGS
TRADE PAYABLES
of which with related parties (*)
OTHER PAYABLES
PROVISIONS FOR RISKS AND LOSSES
(11.a)
(11.b)
(11.c)
(11.c)
(11.d)
(10.d)
LIABILITIES HELD FOR DISPOSAL
(2.c.)
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
(*) As per the terms of Consob resolution no. 6064293 of July 28 2006
3,404
1,759
209,128
--
13,712
18,014
276,361
68,438
247,145
62,828
--
--
6,864,274
6,530,506
2.
CONSOLIDATED INCOME STATEMENT
1st Half
2008
Notes
SALES REVENUES
(12)
(12)
1st Half 2007
2,363,808
882
CHANGE IN INVENTORIES
2,059,548
6,459
7,412
1,693
COSTS FOR THE PURCHASE OF GOODS
(13.a)
(13.a)
(1,373,690)
COSTS FOR SERVICES
(13.b)
(397,497)
(373,801)
PERSONNEL COSTS
(13.c)
(351,559)
(301,961)
OTHER OPERATING INCOME
(13.d)
42,322
41,444
OTHER OPERATING COSTS
(13.e)
(52,243)
(40,711)
ADJUSTMENTS TO THE VALUE OF INVESTMENTS
VALUED AT EQUITY
(9.d)
(79,804)
AMORTIZATION, DEPRECIATION AND WRITE-DOWNS
INCOME BEFORE FINANCIAL ITEMS ( E B I T )
(1,127,340)
(53,815)
7,186
17,145
(66,101)
179,638
(60,613)
215,404
FINANCIAL INCOME
(14.a)
(14.a)
FINANCIAL EXPENSE
(14.b)
(98,193)
2,491
2,116
GAINS FROM TRADING SECURITIES
(14.c)
133,476
55,296
LOSSES FROM TRADING SECURITIES
(14.d)
(10,438)
(19,384)
(4,185)
(7,671)
238,093
205,797
DIVIDENDS
ADJUSTMENTS TO THE VALUE OF FINANCIAL ASSETS
INCOME BEFORE TAXES
INCOME TAXES
(15)
INCOME AFTER TAXES FROM OPERATING ACTIVITY
INCOME (LOSS) FROM ASSETS HELD FOR DISPOSAL
NET INCOME FOR PERIOD INCLUDING MINORITY INTERESTS
- NET INCOME OF MINORITY SHAREHOLDERS
- NET INCOME OF THE GROUP
BASIC EARNINGS PER SHARE (in euro)
DILUTED EARNINGS PER SHARE (in euro)
(*) As per Consob resolution no. 6064293 of July 28 2006
(16)
(16)
35,304
6,131
35,635
8,041
(57,196)
(75,599)
(75,677)
180,897
130,120
--
(297)
180,897
129,823
(114,889)
66,008
(96,529)
33,294
0.0918
0.0918
0.0463
0.0463
3.
CONSOLIDATED CASH FLOW STATEMENT
1st Half
2008
1st Half
2007
180,897
129,823
66,101
(7,186)
60,613
(17,145)
OPERATING ACTIVITY
NET INCOME FOR THE PERIOD INCLUDING MINORITY INTERESTS:
ADJUSTMENTS:
PORTION OF EARNINGS OF COMPANIES VALUED AT EQUITY
ACTUARIAL VALUATION OF STOCK OPTION PLANS
1,144
4,416
12,325
4,185
(117,810)
(7,067)
(208,175)
(7,670)
7,671
-148,675
4,780
CASH FLOW FROM OPERATING ACTIVITY
(75,586)
331,163
of which:
- interest income (expense)
- income tax payments
(51,409)
(30,489)
(24,139)
(43,467)
INVESTMENT ACTIVITY
(PURCHASE) SALE OF SECURITIES
PURCHASE OF FIXED ASSETS
(302,182)
(242,112)
(56,147)
(116,280)
CASH FLOW FROM INVESTMENT ACTIVITY
(544,294)
(172,427)
FUNDING ACTIVITY
INFLOWS FROM CAPITAL INCREASES
OTHER CHANGES IN SHAREHOLDERS' EQUITY
DRAWDOWN/(REPAYMENT) OF OTHER BORROWINGS
FINANCIAL RECEIVABLES FROM JOINT VENTURES
BUYBACK OF OWN SHARES
DIVIDENDS PAID OUT
268,683
(1,580)
(5,868)
42,499
(13,842)
(136,455)
42,854
16,350
173,050
-(37,451)
(85,080)
CASH FLOW FROM FUNDING ACTIVITY
153,437
109,723
INCREASE (REDUCTION) IN NET CASH AND CASH EQUIVALENTS
(466,443)
268,459
NET CASH AND CASH EQUIVALENTS AT START OF PERIOD
630,886
199,114
NET CASH AND CASH EQUIVALENTS AT CLOSE OF PERIOD
164,443
467,573
CHANGE IN PERSONNEL PROVISIONS AND PROV. FOR RISKS AND LOSSES
CAPITAL GAIN ON SUBSCRIPTION OF SHARE CAPITAL BY MINORITY SHAREHOLDERS
INCREASE (REDUCTION) IN NON-CURRENT RECEIVABLES & PAYABLES
(INCREASE) REDUCTION IN NET WORKING CAPITAL
4.
STATEMENT OF CHANGES IN CONSOLIDATED EQUITY
Attributable to the Shareholders of the parent company
Share
Capital
BALANCE AT DECEMBER 31 2006
Reserves Retained earnings Net income (losses)
(losses)
for period
Minority
Total
Interests
Total
359,605
159,509
104,195
43,746
667,055
1,366,515
Capital increases
--
--
--
--
--
54,634
2,033,570
54,634
Dividends to Shareholders
--
--
--
(10,788)
(10,788)
(74,353)
(85,141)
Retained earnings
Fair value measurement of hedging instruments
---
756
178
32,202
--
(32,958)
--
-178
-364
-542
Fair value measurement of securities
--
13,664
--
--
13,664
18,290
31,954
Securities fair value reserve to income statement
--
(7,314)
--
--
(7,314)
(7,371)
(14,685)
Effects of equity changes in subsidiaries
--
14,045
--
--
14,045
(98,385)
(84,340)
Currency translation differences
--
(16,501)
--
--
(16,501)
(13,990)
(30,491)
Result for the period
--
--
--
32,352
32,352
156,801
189,153
2,095,196
359,605
164,337
136,397
32,352
692,691
1,402,505
Capital increases
--
--
--
--
--
268,683
268,683
Dividends to Shareholders
--
--
--
(10,788)
(10,788)
(125,667)
(136,455)
Retained earnings
---
637
762
20,927
--
(21,564)
--
-762
-1,676
-2,438
--
(12,671)
--
--
(12,671)
(3,510)
(16,181)
Securities fair value reserve to income statement
--
(1,454)
--
--
(1,454)
(298)
(1,752)
Value of options on shares of subsidiaries
--
--
--
--
--
(5,326)
(5,326)
--
4,044
--
--
4,044
(127,092)
(123,048)
--
(1,492)
--
--
(1,492)
(3,490)
(4,982)
Result for the period
--
--
--
66,008
66,008
114,889
180,897
359,605
154,163
157,324
66,008
737,100
1,522,370
2,259,470
BALANCE AT JUNE 30 2008
1.
STRUCTURE AND CONTENT OF THE FINANCIAL REPORT
Criteria used for the preparation of the consolidated semi-annual interim consolidated financial statements and accounting principles adopted
The annual consolidated financial statements of the group are prepared in accordance with IFRS
international accounting standards issued by the International Accounting Standards Board
(IASB) and ratified by the European Union as per the terms of Regulation no. 1606/2002.
This consolidated semi-annual interim financial report in shortened form was prepared in a condensed form in compliance with IAS 34 “Interim Financial Reporting”.
This semi-annual interim report in shortened form does not therefore include all the information
required for the annual report and must be read together with the annual report and financial statements for the year ended December 31 2007.
The accounting principles adopted in the preparation of this consolidated semi-annual interim financial report are the same as those adopted in the preparation of the annual consolidated financial statements of the Group for the year ended December 31 2007. The full text of these principles is given below in order to facilitate consultation.
The consolidated semi-annual interim financial statements in shortened form include the Parent
Company of the Group Cofide S.p.A. (hereinafter “Cofide”) and the companies over which it
has control and were prepared using the statements of the individual companies included in the
consolidation, either their individual interim financial reports (“separate” in IAS/IFRS terminology), or their consolidations into subgroups, examined and approved by their administrative bodies and suitably modified and reclassified, where necessary, to bring them into line with the accounting standards listed below where compatible with Italian regulations.
These financial statements were prepared in thousands of euro, which is the “functional” and
“presentation” currency of the Group according to the terms of IAS 21, except where expressly
indicated otherwise.
2.
CONSOLIDATION PRINCIPLES
2.a.
Consolidation methods
Subsidiaries:
All the companies over which the Group exercises control according to the terms of IAS 27, SIC
12 and IFRIC Interpretation 2 are considered as subsidiaries. In particular, companies and investment funds are considered as controlled companies when the Group has the power to make decisions regarding financial and operating policy. The existence of this power is presumed to exist
when the Group possesses the majority of the voting rights of a company, including potential voting rights that are exercisable without any restrictions or when it has in any case effective control
over Shareholders’ Meetings.
26
Subsidiaries are fully consolidated as from the date on which the Group takes control and are deconsolidated when such control ceases to exist.
Consolidation is carried out using the full line-by-line consolidation method. The main criteria
adopted for the application of this method are principally the following:
- The book value of the holding is eliminated against the appropriate portion of shareholders’ equity and the difference between acquisition cost and the shareholders’ equity of investee companies is posted, where the conditions exist, to the items of assets and liabilities included in the consolidation. Any remaining part is recognized to the income statement when it is negative or to the
“Goodwill” item of the assets when it is positive. Goodwill is subjected to an impairment test to
determine its recoverable value;
- Significant transactions between consolidated companies are eliminated as are payables, receivables and unrealized income resulting from transactions between companies of the Group, net of
any tax;
- Minority shareholders’ equity and their share of net income for the period are shown in special
items of the consolidated balance sheet and income statement;
- In the event of a reduction of the shareholding, not involving a loss of control, due to an increase
in the capital held by minority shareholders, except for cases resulting from the subscription of
stock option plans, any gains or losses from the dilution are recognized to the income statement in
application of the Parent Company method.
Associates
All those companies in which the Group has a significant influence, without having control, in accordance with the terms of IAS 28, are considered as associated companies or associates. Significant influence is presumed to exist when the Group holds a percentage of the voting rights of between 20% and 50% (excluding cases where there is joint control).
Associates are consolidated using the equity method as from the date on which the Group acquires
significant influence in the associate and they are de-consolidated from the moment when significant influence ceases to exist.
The criteria adopted for applying the equity method are principally the following:
- The book value of the holding is eliminated against the appropriate portion of shareholders’ equity and any positive difference, identified at the time of the acquisition, net of any lasting loss of
value resulting from an impairment test to establish its recoverable value; the corresponding share
of the net income or loss for the period is recognized to the income statement. Whenever the part
attributable to the Group of the losses of the associate exceeds the carrying value of the investment in the accounts, the value of the investment is written off and the share of any further losses
are not recognized unless the Group has any contractual obligation to do so;
- Any unrealized gains and losses generated by transactions between companies of the Group are
netted out except in cases where losses represent a permanent loss of value of the assets of the associate;
- The accounting principles of the associate are amended, where necessary, in order to make them
compatible with the accounting principles adopted by the Group.
Joint ventures:
All companies in which the Group exercises control jointly with another company according to
the terms of IAS 31 are considered as joint ventures. More specifically it is presumed that joint
control exists when the Group owns half of the voting rights of a company.
International accounting standards give two methods for consolidating investments in joint ventures:
27
. the reference method, which involves pro-rata consolidation:
. the alternative method which involves consolidation using the equity method.
The Group has adopted the equity method of consolidation.
2.b.
Translation of foreign companies’ financial statements into euro
The translation into euro of the financial statements of foreign subsidiaries not belonging to the
single currency, none of which has an economy subject to hyperinflation according to the definition given in IAS 29, is carried out at the exchange rate prevailing at the reporting date for the balance sheet and at the period average exchange rate for the income statement. Any exchange rate
differences resulting from the translation of shareholders’ equity at the close of period exchange
rate and from the translation of the income statement at the average rate for the period are recorded in the item “Other reserves” under shareholders’ equity.
The main exchange rates used are the following:
1st Half 2008
1st Half 2007
Average rate
30.06.2008
Average rate
30.06.2007
US Dollar
1.5304
1.5764
1.3291
1.3505
UK Pound
0.7748
0.7922
0.6746
0.674
Swedish Krona
9.3756
9.4706
9.2225
9.2524
Brazilian Real
2.5938
2.5112
2.7172
2.5971
Argentine Peso
Chinese Renminbi
2.c.
4.7982
4.7660
4.1061
4.1717
10.7991
10.8050
10.2575
10.2817
Consolidation area
The consolidated financial statements as of June 30 2008 and the consolidated financial statements for the previous year of the Group are the result of the consolidation at those dates of the
Parent Company of the Cofide Group and of all the companies directly or indirectly controlled,
jointly controlled or associated, with the exception of any companies being wound up. Assets and
liabilities scheduled for disposal are reclassified in the items of assets and liabilities that show
such an eventuality. The assets at June 30 2008 refer to properties of the Sogefi group which are
scheduled to be sold during 2008.
The main changes in the consolidation compared with the previous year have to do with the acquisition by Sorgenia of the company Société Francaise d’Eolienne (SFE), the second largest
wind energy operator in France and to the acquisition by HSS of the S.Stefano group. The principal figures of the acquired companies are shown in paragraph 21 of these Explanatory Notes.
It should be noted that in application of Standing Interpretations Committee 12 (SIC 12), the securitization company (vehicle company) Zeus Finance S.r.l. has been consolidated.
The list of equity investments included in the consolidation with an indication of the method used
and of those not included is given in the appropriate section of this document.
28
3.
ACCOUNTING PRINCIPLES APPLIED
3.a.
Intangible assets (IAS 38)
Intangible assets are recognized only if they can be separately identified, if it is probable that they
will generate future economic benefits and if their cost can be measured reliably.
Intangible assets with a finite useful life are valued at purchase or production cost net of any accumulated amortization and impairment.
Intangible assets are initially recognized at purchase or production cost. Purchase cost is represented by the fair value of the means of payments used to purchase the asset and any additional
direct cost incurred for preparing the asset for use. The purchase cost is the equivalent price in
cash as of the date of recognition and, where payment is deferred beyond normal terms of credit,
the difference compared with the cash price is recognized as interest for the whole period of deferment.
Amortization is calculated on a straight-line basis following the expected useful life of the asset
and starts when the asset is ready for use.
The carrying value of intangible assets is maintained as long as there is evidence that this value
can be recovered through use; to this end at least once a year an impairment test is carried out to
check that the intangible asset is able to generate future cash flows.
However, intangible assets with an indefinite useful life are not amortized but are constantly
monitored for any permanent loss of value. It is mainly the newspaper and magazine titles and
frequencies of the Espresso Group that are considered as intangible assets with an indefinite useful life.
Development costs are recognized as intangible assets when their cost can be measured reliably,
when there is a reasonable assumption that the asset can be made available for use or for sale and
that it is able to generate future benefits. Once a year or any time there are reasons which justify
it, capitalized costs are subjected to an impairment test.
Research costs are charged to the income statement as and when they are incurred.
Trademarks and licenses, which are initially recognized at cost, are subsequently accounted for
net of amortization and any impairment. The period of amortization is defined as the lower of the
contractual duration for use of the license and the useful life of the asset.
Software licenses, including associated costs, are recognized at cost and are recorded net of amortization and of any impairment.
Goodwill
In the event of acquisitions of companies, the assets, liabilities and potential liabilities acquired
and identifiable are recognized at their fair value on the date of the acquisition. The positive difference between the cost of the acquisition and the Group’s share of the fair value of the assets
and liabilities is classified as goodwill and recognized in the balance sheet as an intangible asset.
Any negative difference (“negative goodwill”) is recognized to the income statement at the moment of the acquisition.
After initial recognition, goodwill is valued at cost less any accumulated impairment.
29
Goodwill always refers to identified income-producing assets, the ability of which to generate income and cash flows is constantly monitored for any impairment.
On the first adoption of IFRS, the Group opted not to apply IFRS 3 – Business Combinations retrospectively to acquisitions made before January 1 2004. As a result of this, goodwill generated
on acquisitions prior to the date of transition to IFRS was maintained at the value previously determined according to Italian accounting principles, subject to checking for and recognizing any
impairment.
Regarding transactions involving acquisition/disposal of holdings in companies that are already
subsidiaries, including extraordinary deals involving a change in the stake held in the said subsidiaries, IFRS 3 is not applicable due to the fact that it governs only transactions involving the
acquisition of control by the acquiring entity of the business activities of the acquired company.
Thus the acquisition of further shares after having already obtained control of the acquired company is not specifically governed by IAS/IFRS.
In the absence of a Principle or a specific Interpretation on this subject and in consideration of the
instructions contained in IAS 8 (Accounting policies, changes in accounting estimates and errors), the Group opted to apply the accounting policies described below, identifying two different
kinds of transaction:
- acquisition/sale of shares in companies already controlled: in application of the Parent entity
extension method which considers minority shareholders as third parties, the Group
- in the event of acquisitions pays to third-party shareholders an amount in cash or in new
shares thus resulting in the simultaneous elimination of their respective minority shares
and recognition of goodwill for the amount of the difference between the acquisition cost
and the carrying value of the assets and liabilities acquired;
- in the event of a sale the difference between the selling price and the corresponding carrying value in the consolidated statements is recognized to the income statement;
- intercompany transfer of shares in controlled companies which involves a change in the percentage of ownership: the shares transferred remain recorded at historical cost and the gain or loss
resulting from the transfer is fully reversed out. The holdings of third-party shareholders, not directly taking part in the transaction, are adjusted to reflect the change in their respective portion of
shareholders’ equity with an offsetting adjustment to the equity of the shareholders of the Parent
Company without recognizing any goodwill and without of course having any effect on the total
income situation or on total equity.
3.b.
Tangible assets (IAS 16)
Tangible assets are recognized at purchase price or at production cost net of accumulated depreciation.
Cost includes associated expenses and any direct and indirect costs incurred at the moment of acquisition and necessary to make the asset ready for use. Financial expense relating to specific
loans for long-term investments are capitalized until the date when the assets start operating.
When there are contractual or compulsory obligations for decommissioning, removing or clearing
sites where fixed assets are installed, the value recognized includes an estimate of costs that will
be incurred on disposal of the same, discounted to present value.
Fixed assets are depreciated on a straight-line basis for each year in relation to their remaining
useful life.
Land, assets under construction and advance payments are not subject to depreciation.
30
Real estate and land not used for corporate operating purposes are classified under a special item
of assets and are accounted for on the basis of the terms of IAS 40 “Investment properties” (see
paragraph 3.e. below).
Should there be any events which one can assume will cause a lasting reduction in the value of an
asset, its carrying value is checked against its recoverable value, which is the higher of its fair
value and its value in use. Fair value is defined on the basis of values expressed by the active market, by recent transactions or from the best information available to determine the potential
amount obtainable from the sale of the asset. Value in use is determined from the net present
value of cash flows resulting from the use expected of the same asset, applying the best estimates
of its residual useful life and a rate that also takes into account the implicit risk of the specific
business sectors in which the Group operates. This valuation is carried out for each individual asset or for the smallest identifiable cash generating unit (CGU).
Where there is a negative difference between the values stated above and the carrying value, the
asset’s carrying value is written down, while as soon as the reasons for such loss in value cease to
exist the asset then undergoes an upward revaluation. Write-downs and revaluations are posted to
the income statement.
3.c.
Public entity grants
Any grants from a public entity are recognized when there is a reasonable degree of certainty that
the receiving company will comply with all the conditions stipulated for such a grant, independently of whether or not there is a formal resolution awarding the said grant, and the certainty that
the grant will actually be received.
Capital contributions are recognized in the balance sheet either as deferred income, which is posted to the income statement on the basis of the useful life of the asset for which it has been
granted so that the depreciation can be reduced, or else they are deducted directly from the asset to
which they refer.
Any public entity grants obtained in the form of reimbursement of expenses and costs already incurred or with the purpose of providing immediate support for the beneficiary company without
there being any future related costs, are recognized as income in the period in which they can be
claimed.
3.d.
Leasing contracts (IAS 17)
Leasing contracts for assets where the lessee substantially assumes all the risks and rewards of
ownership are classified as finance leases. Where there are such finance lease contracts outstanding the asset is recognized at the lower of its fair value and the present value of the minimum
lease payments stipulated in the relevant contracts. The total lease payments are allocated between
the liability and finance charges so as to achieve a constant rate on the finance balance outstanding. The residual lease payments, net of financial expense, are classified as borrowings. The
interest expense is charged to the income statement over the lease period. Assets acquired with financial leasing contracts are depreciated to an extent consistent with the nature of the asset.
Leasing contracts in which the lessor substantially retains the risks and rewards of ownership are,
on the other hand, classified as operating leases and payments made under such leases are charged
to the income statement on a straight-line basis over the period of the lease.
In the event of a sale and lease-back agreement through a finance lease, any difference between
the price of sale and the carrying value of the asset is not recognized to the income statement
unless there is a loss representing an impairment of the asset itself.
31
3.e.
Investment property (IAS 40)
An investment property is a property, either land or building – or part of a building – or both, owned by the owner or by the lessee, through a financial leasing agreement, for the purpose of receiving lease payments or for obtaining a return on the capital invested or for both of these reasons, rather than for the purpose of directly using it for the production or supply of goods or services or for administration of the company or for sales, in ordinary business activities.
The cost of an investment property is represented by its purchase price, any improvements made,
any replacements and extraordinary maintenance.
For self-constructed investment property an estimation is made of all costs incurred as of the date
on which the construction or the development was finished. Until that date the conditions set forth
in IAS 16 apply.
In the event of an asset held through a finance lease contract, the initial cost is determined according to IAS 17 from the lower of the fair value of the property and the present value of the minimum lease payments due.
The Group has opted for the cost method to be applied to all investment property held. According
to the cost method, measurement is made net of any accumulated depreciation and any impairment.
At the moment of disposal or in the event of permanent non-use of the assets, all related income
and expenses will be charged to the income statement.
3.f.
Impairment of assets (IAS 36)
Periodically and whenever there are specific indications, tangible and intangible assets are subjected to an impairment test to see whether they have undergone any loss in value.
The impairment test consists of an estimate of the recoverable value of the asset and a subsequent
comparison with its net carrying amount. If the recoverable value is lower than the carrying
amount, the latter is written down and the impairment loss is charged to the income statement.
If at a later date the reasons for the write-down cease to exist, the original carrying amount is restored with the relative posting to the income statement.
3.g.
Other equity investments
Investments in companies where the Parent Company does not exercise a significant influence are
accounted for in accordance with IAS 39 and are therefore classified as available-for-sale investments and are measured at fair value or at cost if the estimation of fair value or market price is not
reliable (see paragraph 3.i. below).
3.h.
Receivables and payables (IAS 32, 39 and 21)
Receivables are recognized at amortized cost and measured at their presumed realization value,
while payables are recognized at amortized cost.
Receivables and payables in foreign currencies, which are originally recognized at the spot rates
of the transaction date, are adjusted to period-end spot exchange rates and any exchange gains and
losses are recognized to the income statement.
32
3.i.
Securities (IAS 32 and 39)
In accordance with IAS 32 and IAS 39 investments in companies other than subsidiaries and associates are classified as available-for-sale financial assets and are measured at fair value.
Gains and losses resulting from fair value adjustments are recorded in a special equity reserve.
When there are impairment losses or when the assets are sold, the gains and losses recognized
previously to shareholders’ equity are then posted to the income statement.
Purchases and sales are recognized on the date of the trade.
This category also includes financial assets bought or issued that are classified as either held
for trading or at fair value through profit and loss on adoption of the fair value option.
For a more complete description of the principles regarding financial assets we would refer readers to the note specially prepared on the subject (“financial instruments”).
3.l.
Income taxes (IAS 12)
Current taxes are recorded and determined on the basis of a realistic estimate of taxable income
following current tax regulations of the country in which the company is based and taking into account any exemptions that may apply and any tax credits that may be claimed.
Deferred taxes are calculated on the basis of time differences, whether taxable or deductible, between the carrying values of assets and liabilities and their tax bases and are classified under noncurrent assets and liabilities.
A deferred tax asset is recognized if it is likely that there will be sufficient taxable income against
which the deductible temporary difference can be used.
The carrying value of deferred tax assets is subject to periodic analysis and is reduced to the extent to which it is no longer likely that there will be sufficient taxable income to allow the benefit
of this deferred asset to be utilized.
3.m. Inventories (IAS 2)
Inventories are recorded at the lower of purchase or production cost, calculated using the weighted average cost method, and their presumed realizable value.
3.n.
Cash and cash equivalents (IAS 32 and 39)
Cash and cash equivalents include cash in hand, call deposits and short-term and high-liquidity
financial assets, which are easily convertible into cash and have an insignificant risk of change in
value.
3.o.
Ordinary shares are recorded at nominal value. Costs directly attributable to the issuance of new
shares are deducted from the shareholders’ equity reserves, net of any related tax benefit.
33
Own shares are classified in a special item which is deducted from reserves; any subsequent
transaction of sale, re-issuance or cancellation will have no impact on the income statement but
will affect only shareholders’ equity.
Unrealized gains and losses, net of tax, on financial assets classified as available for sale are recorded under shareholders’ equity in the fair value reserve.
The reserve is reversed to the income statement when the asset is realized or when a impairment
loss is recognized.
The hedging reserve is formed from the fair value movements of derivatives which, under IAS 39,
have been designated as “cash flow hedges” or as “hedges of net investments in foreign operations”.
The portion of the profit and loss considered as “effective” is recognized to shareholders’ equity
and is reversed to the income statement as and when the elements hedged are in turn recognized to
the income statement, i.e. when the subsidiary is sold.
When a subsidiary prepares its financial statements in a currency different from the Group’s functional currency, the subsidiary’s financial statements are translated accounting any differences resulting from such translation in a special reserve. When the subsidiary is sold the reserve is reversed to the income statement with a detail of any gains or losses resulting from the subsidiary’s
disposal.
The item “Retained earnings (losses)” includes accumulated income and losses and the transfer of
balances from other equity reserves when these become free of any restrictions to which they have
been subject.
This item also shows the cumulative effect of the changes in accounting principles and/or the correction of errors which are accounted for in accordance with IAS 8.
3.p.
Borrowings (IAS 32 and 39)
Loans are initially recognized at cost represented by their fair value net of ancillary costs incurred.
Subsequently loans are measured at amortized cost calculated by applying the effective interest
rate, taking into consideration any issuance costs incurred and any premium or discount applied at
the time in which the instrument is settled.
3.q.
Provisions for risks and losses (IAS 37)
Provisions for risks and losses refer to liabilities which are extremely likely but where the amount
and/or maturity are uncertain. They are the result of past events which will cause future cash outflows. Provisions are recognized exclusively in the presence of a current obligation, either legal or
constructive, towards third parties which implies an outflow and when a reliable estimate of the
amount involved can be made. The amount recognized as a provision is the best estimate of the
disbursement required to fulfil the obligation as of the balance sheet date. The provisions recognized are re-examined at the close of each accounting period and are adjusted to represent the best
current estimate. Changes in the estimates are recognized to the income statement.
When the estimated disbursement relating to the obligation is expected in a time horizon longer
than normal payment terms and the discount factor is significant, the provision represents the pre-
34
sent value, discounted at a risk-free interest rate, of the expected future outflows to discharge the
obligation.
Contingent assets and liabilities (possible assets and liabilities, or those not recognized because no
reliable estimate can be made) are not recognized. However adequate disclosure on such items is
given.
3.r.
Revenue recognition (IAS 18)
Revenues from the sale of goods are recognized at the moment when ownership and the risks of
the goods are transferred. Revenues are recognized net of returns, discounts and rebates. Revenues
for the rendering of services are recognized at the moment when the service is rendered, with reference to the state of completion of the activity as of the balance sheet date.
Income from dividends, interest and royalties is recognized as follows:
- Dividends, when the right to receive payment is established (with an offset in receivables when
distribution is approved);
- Interest, using the effective interest rate method (IAS 39);
- Royalties, on an accruals basis, in accordance with the underlying contractual agreement.
3.s.
Employee benefits (IAS 19)
Benefits to be paid to employees after the termination of their employment and other long term
benefits are subject to actuarial valuation.
Following this methodology, liabilities recognized represent the present value of the obligation
adjusted for any actuarial gains or losses which have not been accounted for.
Financial Law no. 296/2006 (Budget) made important changes to severance and leaving indemnity (TFR) regulations, introducing the possibility for workers to transfer their TFR maturing after
January 1 2007 to selected pension schemes. Thus the TFR accruing as of December 31 2006 for
employees who exercised the above option, while remaining within the sphere of defined benefit
plans, was determined using actuarial methods that exclude the actuarial / financial components
relating to future salary dynamics. Given that this new method of calculation reduces the volatility of actuarial gains / losses the decision was taken to abandon the corridor method and recognize
all the actuarial gains and losses to the Income Statement.
Accounting principle IFRS 2 “Share based payments” issued in February 2005 but applicable as
from January 1 2005 stated in its transition instructions that application would be retrospective for
all transactions where stock options were awarded before November 7 2002 and where, as of the
date of its taking effect, the vesting conditions contained in the various plans had not yet been satisfied.
In compliance with this principle the Cofide Group measures the notional cost of stock options
and recognizes it to the income statement under personnel costs during the vesting period of the
benefit, with a corresponding posting to the appropriate reserve in shareholders’ equity.
35
The cost of the option is determined at the award date of the plan applying special models and
multiplying by the number of options exercisable over the respective period, which is evaluated
with the aid of appropriate actuarial variables.
Similarly the cost resulting from the award of phantom stock options is determined in relation to
the fair value of the options at the award date and is recognized to the income statement under
personnel costs throughout the vesting period of the benefit. The offsetting entry, unlike for stock
options, is made in the liabilities (other personnel provisions) and not in an equity reserve. Until
this liability is extinguished its fair value is recalculated at each balance sheet date and on the date
of actual disbursement and all the fair value changes are posted to the income statement.
3.t.
Derivative instruments (IAS 32 and 39)
Derivative instruments are measured at fair value.
The Group uses derivatives mainly to hedge risks, in particular interest rate, foreign exchange and
commodity price risks. The hedging purpose of the derivative is formally documented and the degree of “effectiveness” of the hedge is specified.
For accounting purposes hedging transactions can be classified as:
- fair value hedges – where the effects of the hedge are recognized to the income statement.
- cash flow hedges – where the effective portion of the hedge is recognized directly to shareholders’ equity while the non-effective part is recognized to income statement.
- hedges of net investments in foreign operations – where the effective portion of the hedge is
recognized directly to shareholders’ equity while the non-effective part is recognized to the income statement.
3.u.
Foreign currency translation (IAS 21)
The Group’s functional currency is the euro, which is the currency in which its financial statements are prepared and published.
The companies of the Group prepare their financial statements in the currencies that are used in
their respective countries.
Transactions carried out in foreign currencies are initially recognized at the spot exchange rate on
the date of the transaction.
At the balance sheet date monetary assets and liabilities denominated in foreign currencies are
translated at the spot exchange rate prevailing on that date.
Non-monetary items measured at historical cost in a foreign currency are translated using the historical exchange rate prevailing on the date of the transaction.
Non-monetary items measured at fair value are translated using the spot exchange rate at the date
on which the measurements are determined for the financial statements.
The assets and liabilities of the companies within the Group whose functional currency is not the
euro are valued using the following procedures:
- assets and liabilities are translated using the spot exchange rate prevailing at the balance sheet
date;
- costs and revenues are translated using the average exchange rate for the period;
Exchange rate differences are recognized directly to a special reserve in shareholders’ equity.
36
Should an investment in a foreign operation be sold, the accumulated exchange rate differences
recognized in the equity reserve are reversed to the income statement.
3.v. Adoption of new accounting standards
In the first six months of 2008 the Group adopted the following Principles, Interpretations and
Updates to the standards already published:
- IFRIC 7 – The application of the restatement method as required by IAS 29 in hyperinflationary
economies;
- IFRIC 8 – The scope of application of IFRS 2;
- IFRIC 9 – The revaluation of embedded derivatives;
- IFRIC 10 – Interim financial reporting and impairment;
- IFRS 7 – Financial instruments: new disclosures;
- IAS 1 – (Update) notes on capital.
Moreover the Group did not opt for the early adoption of the following Principles, Interpretations
and Updates:
- IFRS 8 (Operating segments)
- IFRIC 11 (Group and treasury share transactions – IFRS 2)
- IFRIC 12 (Service concession arrangements)
- IFRIC 13 (Customer loyalty programmes)
- IFRIC 14 (The limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction)
- IAS 23 (Borrowing costs) revised
- IAS 1 Presentation of Financial Statements (revised)
- IFRS 3 Business combinations (revised)
- IAS 27 Consolidated and separate Financial Statements (revised)
- IFRS 2 Share-based payment vesting conditions and cancellations (revised)
which will become obligatory in following years.
3.w. Earnings per share (IAS 33)
Basic earnings per share are determined by dividing the net income attributable to the ordinary
shareholders of the Parent Company by the weighted average number of ordinary shares in circulation during the period.
Diluted earnings per share are calculated by adjusting the weighted average number of ordinary
shares in circulation to take into account the effect of all potential ordinary shares, resulting for
example from the possibility of the exercise of stock options assigned, which can have a dilutive
effect.
4.
FINANCIAL INSTRUMENTS
Financial instruments take on a particular significance in the economic and financial structure of
the Cofide Group and for this reason and in order to give a better and clearer understanding of the
financial issues involved, it was considered useful to devote a special section to the accounting
treatment of IAS 32 and IAS 39.
37
According to IAS 32 financial instruments are classified into four categories:
a) Financial instruments that are valued at fair value with an offsetting entry in the income
statement (“fair value through profit and loss” - FVTPL) in application of the fair value
option, which are held for trading purposes;
b) Investments held to maturity (HTM);
c) Loans and receivables (L&R);
d) Available-for-sale financial assets (AFS).
Classification depends on Financial Management’s intended use of the financial instrument in the
business context and each involves a different measurement for accounting purposes. Financial
transactions are recognized on the basis of their value date.
Financial instruments at fair value through profit and loss
Instruments are classified as such if they satisfy one of the following conditions:
- they are held for trading purposes;
- they are a financial asset designated on adoption of the fair value option, the fair value of
which can be reliably determined.
Trading generally means frequent buying and selling with the aim of generating profit on price
movements in the short term.
Derivatives are included in this category unless they are designated as hedging instruments.
The initial designation of financial instruments, other than derivatives and those held for trading,
as instruments at fair value through profit and loss in adoption of the fair value option is limited to
those instruments that meet the following conditions:
a) The fair value option designation eliminates or significantly reduces an accounting mismatch;
b) A group of financial assets, financial liabilities, or both are managed and their performance is evaluated on a fair value basis, in accordance with a documented investment risk
management strategy, and
c) An instrument contains an implicit derivative which meets particular conditions.
The designation of an individual instrument to this category is definitive, is made at the moment
of initial recognition and cannot be modified.
Investments held to maturity
This category includes non-derivative instruments with fixed payments or payments that can be
determined and that have a fixed maturity, and which it is intended and possible to hold until maturity.
These instruments are measured at amortized cost and constitute an exception to the general principle of measurement at fair value.
Amortized cost is determined by applying the effective interest rate of the financial instrument,
taking into account any discounts or premiums received or paid at the moment of purchase, and
recognizing them throughout the whole life of the instrument until its final maturity.
Amortized cost represents the initial recognition value of a financial instrument, net of any capital
repayments and of any impairment, plus or minus the cumulated amount of the differences between its initial net value and the nominal amount at maturity calculated using the effective interest rate method.
The effective interest rate method is a calculation criterion used to assign financial expenses to
their appropriate time period.
The effective interest rate is the rate that gives a correct present value to expected future cash
flows until maturity, so as to obtain the net present carrying value of the financial instrument.
38
If even one single instrument belonging to this category is sold before maturity, for a significant
amount and where there is no special justification for this, the tainting rule is applicable and requires that the whole portfolio of securities classified as Held To Maturity be reclassified and
measured at fair value, and this category cannot then be used in the following two years.
Loans and receivables
This refers to financial instruments which are not derivatives, have payments that are either fixed
or can be determined, which are not quoted on an active market and which are not intended to be
traded.
This category includes trade receivables (and payables), which are classified as current assets or
liabilities with the exception of the part due in over 12 months from the balance sheet date.
The measurement of these instruments is made by applying the method of amortized cost, using
the effective interest rate and taking into account any discounts or premiums obtained or paid at
the moment of acquisition and recognizing them throughout the whole life of the instrument until
its final maturity.
Available-for-sale financial assets
This is a “residual” category which includes non-derivative financial instruments that are designated as available for sale and are not included in any of the previous categories.
Financial instruments held for trading are recognized at their fair value plus any transaction costs.
Gains and losses are recognized to a special equity reserve until the financial instruments are sold
or have been impaired. In such cases the profit or loss accrued under shareholders’ equity is released to the income statement.
Fair value is the amount for which an asset can be exchanged or a liability can be settled, between
knowledgeable, willing parties in a transaction at arm’s length.
In the case of securities listed on regulated markets, the fair value is the bid price at the close of
trading on the last day of the accounting period.
Where no market prices are available, fair value is determined either on the basis of the fair value
of another financial instrument that is substantially similar or by using appropriate financial techniques (for example the discounted cash flow method).
Investments in financial assets can be eliminated from the balance sheet, or derecognized, only
when the contractual rights to receive their respective financial cash flows have expired or when
the financial asset is transferred to third parties together with all its associated risks and rewards.
5. ACCOUNTING PRINCIPLES, CHANGES IN ACCOUNTING ESTIMATES AND ERRORS
The criteria for making estimates and measurements are re-examined on a regular basis and are
based on historical experience and on other factors such as expectations of possible future events
that are reasonably likely to take place.
If the initial application of a principle affects the current year or the previous one, its effect is recognized by indicating the change resulting from any transitional rules, the nature of the change,
the description of the transitional rules, which may also affect future years, and the amount of any
adjustments relating to years preceding those being presented.
39
If a voluntary change of a principle affects the current or previous year this effect is shown by indicating the nature of the change, the reasons for the adoption of the new principle, and the
amount of any adjustments made for years preceding those being presented.
In the event of a new principle/interpretation issued but not yet in force, an indication is given of
the fact, of its potential impact, the reason for the principle/interpretation, the date on which it will
take effect and the date on which it will first be applied.
A change in accounting estimates involves an indication of the nature and the impact of the
change. Estimates are used mainly to show impairment of assets recorded, provisions made for
risks, employees benefits, taxes and other provisions and reserves. Estimates and assumptions are
reviewed regularly and the effects of any changes are reflected in the income statement.
The treatment of accounting errors involves an indication of the nature of the error, the amount of
the adjustments and corrections to be made at the beginning of the first accounting period after it
was recognized.
6.
NON-CURRENT ASSETS HELD FOR SALE (IFRS 5)
A non-current asset is held for sale if its carrying value will be recovered principally through a
sale rather than through use. For this condition to be satisfied the asset must be immediately sellable in its present condition and the sale must be considered as highly likely.
The assets or groups of assets for disposal that are classified as held for sale are valued at the
lower of their carrying value and fair value less costs to sell.
Individual assets or assets belonging to a group classified as held for sale are not amortized.
The inclusion in the financial statements of these assets means showing their profits and losses in
a single line of the income statement net of any taxes resulting from the sale. Similarly the assets
and liabilities must be shown on a separate line of the Balance Sheet. Key balance sheet and income information relating to transactions carried out during the period are given in the note on the
“Consolidation area” (2c).
40
NOTES ON THE BALANCE SHEET
7.
NON-CURRENT ASSETS
7.a. INTANGIBLE ASSETS
Opening position
Start-up and expansion costs
Capitalized development costs
- purchased
- produced internally
Industrial patents and intellectual
property rights
Concessions, licenses, trademarks & other rig
Titles and trademarks
Frequencies
Goodwill
Assets in progress and advance payments
- purchased
- produced internally
Others
Total
Closing position
Changes in the period
Historical
cost
Accum. amort.
& write-downs
Net balance
31.12.2007
Acquisitions
Business combinations and sales
increases
decreases
--
Exchange
rate
differences
--
Other
changes
75
(69)
6
--
-53,907
-(32,672)
-21,235
-3,219
---
21,754
61,155
400,245
211,620
1,018,511
(19,187)
(50,405)
--(393,056)
2,567
10,750
400,245
211,620
625,455
513
2,752
-7,384
47,306
5,035
2,111
11,507
1,785,920
--(7,398)
(502,787)
5,035
2,111
4,109
1,283,133
1,886
1,307
420
64,787
Amort. &
write-downs
Historical
cost
Accum. amort.
& write-downs
Balance
30.06.2008
1
Net
disposals
cost
--
(2)
75
(70)
5
---
-36
-418
-(267)
-(3,231)
-54,415
-(33,005)
-21,410
-12
--46
------
(3)
(7)
----
121
361
--(1,138)
---(496)
--
(936)
(2,663)
----
18,529
64,155
400,245
218,508
1,064,766
(16,267)
(52,950)
--(393,097)
---
3
(8)
1
22
(795)
(113)
189
(956)
(4)
--(767)
--(255)
(7,087)
6,125
3,297
11,097
1,841,212
--(6,633)
(502,022)
2,262
11,205
400,245
218,508
671,669
-6,125
3,297
4,464
1,339,190
---58
--
Intangible assets rose from € 1,283,133 thousand at December 31 2007 to € 1,339,190 thousand at June 30 2008.
The item Goodwill rose in the period mainly due to the consolidation difference of approximately € 35 million generated on the subscription of a capital increase by Sorgenia Holding S.p.A. in its
subsidiary Sorgenia S.p.A.
AMORTIZATION RATES
Description
Capitalized development costs
Industrial patents and intellectual property
rights
Concessions licenses, trademarks and
similar rights
Other intangible assets
%
20-33%
4-20%
16-30%
16-30%
A more detailed analysis of the main items making up the item intangible assets is given in the
following charts.
Titles and trademarks:
30.06.2008
31.12.2007
la Repubblica
229,952
229,952
Il Piccolo / Messaggero Veneto
104,527
104,527
61,222
61,222
4,544
4,544
400,245
400,245
30.06.2008
31.12.2007
80,225
74,301
Television frequencies
138,283
137,319
Total
218,508
211,620
30.06.2008
31.12.2007
139,268
137,779
Sogefi S.p.A.
92,391
91,293
Cir S.p.A.
33,206
32,937
Sorgenia Holding S.p.A. (formerly Energia Holding S.p.A.)
287,031
252,934
Holding Sanità e Servizi S.p.A.
119,773
110,512
Total
671,669
625,455
Local newspapers
Other titles and trademarks
Total
Frequencies:
Radio frequencies
Goodwill:
Gruppo Editoriale L’Espresso S.p.A.
For the purposes of carrying out the Impairment test on goodwill, the estimate of the value recoverable for each cash generating unit, as defined by IAS 38, was carried out on the basis of the
value in use calculated by discounting to net present value, at an appropriate discount rate, the future cash flows generated by the unit in its productive phase and at the moment of its disposal
(discounted cash flow method).
The cash flows of the single operating units were extrapolated from the budgets and forecasts
made by management. These plans were then processed on the basis of economic trends recorded
in previous years and using the forecasts made by leading analysts on the outlook for the respective markets and more in general on the evolution of each business sector.
In order to determine the discount rate to use, an estimate was made of the weighted average cost
of capital invested (WACC) net of inflation, gross of taxes and independently of the financial
structure of the individual company/subgroup.
The impairment tests carried out using the cash flow method and other methods of valuation
showed that there had been no losses of value.
It should also be noted that the impairment test carried out on publication titles and radio and television frequencies, considered as assets with an indefinite useful life, ascertained that there were
no losses in value to be recorded in the balance sheet.
42
For estimating the recoverable value of each asset the higher of fair value less costs to sell and
value in use was used.
Calculating the value in use of Cash Generating Units
To determine the value in use of Cash Generating Units, future financial cash inflows and outflows generated by the unit in its productive phase and at the moment of its final disposal were
discounted to present value using an appropriate discount rate. In other words, value in use was
calculated by applying the unlevered (or asset side) variation of the Discounted Cash Flow model,
with the formula that includes discounting the expected flows analytically within the time horizon
of forecast projection (2008-2012) and determining terminal value.
To estimate the value in use of a Cash Generating Unit correctly, it is necessary to assess the size
of the expected cash flows of the unit; expectations regarding possible variations in the amount
and timing of the flows; the discount rate to be used; any risk factors caused by the conditions under which the investment in that unit was made.
Regarding the characteristics of the flows to be discounted, international accounting standards require explicitly that, for the purposes of checking value, no account should be taken of inflows
and outflows generated by financing activities, or relating to income tax receipts or payments. The
flows to be discounted are, therefore, operating cash flow, unlevered and differential (because
they refer to the single unit).
As the discount rate, the average cost of invested capital (WACC) was used.
The calculation of fair value less costs to sell of Cash Generating Units
IAS 36 states that the fair value less costs to sell of an asset or a group of assets (e.g. a Cash Generating Unit) is best expressed in the price “made” in a binding sale agreement between independent parties, net of any direct disposal costs. If this is not evident, the fair value net of costs to sell
can be determined in relation to the following trading prices, in order of importance: the current
price traded in an active market; the previous price for a similar transaction; the estimated price
based on information obtained from the company.
In this particular instance, fair value less costs to sell was calculated following a different methodological approach for each business sector. For the publishing business, for which there is no
actively traded market, reference was made to direct valuation multipliers, while for the TV and
radio business a price/users type multiple was used, observing the trading prices of similar frequencies based on the amount of population potentially reachable by the signal.
In order to determine the possible “price” of the publishing Cash Generating Unit, entity-side
multiples were used in the trailing version (or historical/point multiples) or in the leading version
(expected/average multiples).
The estimation of fair value less costs to sell of the radio and television operating units was carried out starting from the observation of trading prices of frequencies similar to those under examination in relation to the population potentially reachable by the signal. This valuation approach makes it possible to estimate the fair value of radio and TV frequencies considering the ratio of the price that the market is prepared to pay to purchase the frequency to the number of inhabitants that the signal can reach.
43
7.b. TANGIBLE ASSETS
Opening position
Land
Buildings used for business
Plant and machinery
Power plants
Industrial & commercial equipment
Other assets
Assets under construction & advance pay
Total
Historical
cost
Accum. deprec.
& write-downs
Net balance
31.12.2007
Acquisitions
29,068
304,809
985,362
492,775
102,004
219,814
385,245
2,519,077
-(92,623)
(692,439)
(27,794)
(82,971)
(149,173)
(104)
(1,045,104)
29,068
212,186
292,923
464,981
19,033
70,641
385,141
1,473,973
4,286
3,461
12,457
11,128
2,354
5,762
123,018
162,466
increases decreases
11,391
-2,251
-178
---19
-191
---14,030
--
Capitalized
financial
expense
------5,868
5,868
Exchange
rate
differences
22
(642)
(1,318)
-(175)
(179)
198
(2,094)
Closing position
Other
changes
1
2,446
4,855
3,260
1,205
1,026
(10,752)
2,041
Net
disposals
cost
(324)
-(2,694)
-(78)
(176)
(71)
(3,343)
Deprec. &
write-downs
Historical
cost
Accum. deprec.
& write-downs
Balance
30.06.2008
-(4,957)
(29,392)
(10,855)
(2,756)
(8,656)
(2,112)
(58,728)
44,444
313,516
981,745
507,404
102,856
225,713
503,402
2,679,080
-(98,771)
(704,736)
(38,890)
(83,253)
(157,104)
(2,112)
(1,084,866)
44,444
214,745
277,009
468,514
19,603
68,609
501,290
1,594,214
Tangible assets rose from € 1,473,973 thousand at December 31 2007 to € 1,594,214 thousand at June 30 2008.
The increases in the period mainly refer to the capitalization of the costs of the building project for the Modugno thermoelectric power plant and investments in photovoltaic solar panels as part of the
development of projects in the renewables business, both of which belong to the Sorgenia group.
DEPRECIATION RATES
Description
Buildings used for business
Plant and machinery
%
3.00%
10.00-25.00%
Other assets:
- Electronic office equipment
- Furniture and fittings
- Motor vehicles
20.00%
12.00%
25.00%
7.c. INVESTMENT PROPERTY
Opening position
Properties
Total
Historical
cost
Accum. deprec.
& write-downs
Net balance
31.12.2007
21,151
21,151
(1,042)
(1,042)
20,109
20,109
Acquisitions
--
increases
decreases
-----
Capitalized
financial
charges
---
Exchange
rate
differences
---
Closing position
Other
movements
(1)
(1)
Investment properties declined from€ 20,109 thousand at December 31 2007 to € 19,822 thousand at June 30 2008.
This item refers to two buildings situated in the centre of Milan the carrying value of which in the accounts corresponds substantially
to the market value of the properties
DEPRECIATION RATES
Description
Properties
%
3.00%
Net
disposals
cost
---
Depreciation
& write-downs
Historical
cost
Accum. deprec.
& write-downs
Balance
30.06.2008
(286)
(286)
21,150
21,150
(1,328)
(1,328)
19,822
19,822
LEASING
The position of assets under leasing as of June 30 2008 and of restrictions applied to tangible assets on account of guarantees and commitments is as follows:
Gross leasing amount
Accumulated depreciation
Restrictions for guarantees and
commitments
30.06.2008
31.12.2007
30.06.2008
31.12.2007
30.06.2008
31.12.2007
1,279
15,979
51,946
2,459
2,513
34,715
56,792
4,208
-4,075
6,532
459
-4,593
12,792
1,227
1,039
6,707
211,650
274
1,039
6,707
211,650
273
--
--
--
--
312,876
299,779
Land
Buildings
Plant and machinery
Other assets
Assets under construction and
advance payments
The “Restrictions for guarantees and commitments” in the item “Assets under construction and
advance payments” refer to collateralized loans made to Energia Modugno S.p.A..
7.d.
INVESTMENTS IN COMPANIES VALUED AT EQUITY
%
Balance
31.12.2007
Aire/Tirreno Power
50.00
249,494
Le Scienze S.p.A.
50.00
197
Editoriale La Libertà S.p.A.
35.00
22,845
Corriere di Romagna S.p.A.
49.00
Altrimedia S.p.A.
35.00
Allevard Ressorts Composites S.A.
50.00
Increases
Decreases
Dividends
Portion of result
Loss
Income
Other
changes
Balance
30.06.2008
--
--
(50,121)
--
--
--
(121)
--
7,455
(3,804)
203,024
85
--
--
--
--
--
161
397
--
23,242
3,075
--
--
--
749
--
--
(140)
(92)
--
--
2,983
--
88
--
101
--
--
--
697
--
--
--
101
Oakwood Global Finance S.C.A.
47.54
--
8
--
--
--
--
--
8
Resource Energy B.V.
47.50
590
1,517
--
--
(530)
--
--
1,577
GICA S.A.
25.00
494
--
--
--
(178)
--
18
334
Fingas S.r.l.
50.00
2,830
5,000
--
--
(35)
--
(6)
7,789
Epense S.a.s.
25.00
72
--
--
--
(10)
--
--
62
Voie Sacrée S.a.s.
25.00
107
--
--
--
--
6
98
211
280,554
6,525
--
(50,382)
(845)
(8,031)
(3,694)
240,189
Total
7.e.
Sanatrix S.r.l.
Fidia S.r.l.
Ansa S. Coop. A.R.L.
E-Ink Corporation
Tecnoparco Valbasento
Emittenti Titoli S.p.A.
Others
Total
%
30.06.2008
31.12.2007
26.45
50.00
17.32
0.05
20.00
5.44
--
5,105
402
2,209
1,481
516
132
2,151
11,996
5,105
402
2,209
1,481
516
132
2,040
11,885
46
The values recorded in the balance sheet correspond to cost, less any impairment, if applicable,
and are considered to be substantially equivalent to the fair value of the same investments.
7.f.
OTHER RECEIVABLES
“Other receivables” totalled € 228,450 thousand at June 30 2008 versus € 263,397 thousand at
December 31 2007 and refer for € 75,013 thousand (€ 69,115 thousand at December 31 2007) to
the subscription of Preferred Equity Certificates (PECS) by Cir International S.A. and Cir Investment Affiliate S.A. in the company Oakwood Global Finance (a jointly controlled company).
At June 30 2008 this item also included € 81,485 thousand (€ 85,768 thousand at December 31
2007) of receivables (unsecured and mortgage-based) of the securitization company Zeus Finance
S.r.l., € 16,184 thousand (€ 16,138 thousand at December 31 2007) of Inland Revenue receivables
for Iva rebates applied for by the Sorgenia group and € 19,803 thousand (€ 17,347 thousand at
December 2007) of security deposits to suppliers of the Sorgenia group for the purchase of CIP 6
energy and for the purchase of wind turbines.
It should be noted that the decline in the balance during the period was due mainly to the full repayment of the long-term loan made by Energia Italiana to Tirreno Power for an amount of
€ 42,499 thousand.
7.g.
SECURITIES
“Securities” totalled € 96,121 thousand at June 30 2008 down from € 97,037 thousand at December 31 2007 and refer mainly to investments in private equity funds. These funds were valued at
fair value with recognition to the fair value reserve of an amount of € 8,311 thousand (€ 10,236
thousand at December 31 2007).
At June 30 2008 the remaining commitment for investment in private equity funds was for € 38
million.
7.h.
DEFERRED TAXES
The amounts refer to taxes resulting from deductible temporary differences and from losses carried forward, which are deemed to be recoverable.
47
The breakdown of “Deferred tax assets and liabilities” by type of temporary difference, is as follows:
Temporary difference liabilities from:
- write-down of current assets
- write-down of fixed assets
1st Half 2008
Amount of
temporary
differences
55,899
53,911
Tax
19,045
17,775
31.12.2007
Amount of
temporary
differences
54,714
48,785
Tax
15,966
15,247
- revaluation of current liabilities
10,504
3,433
9,377
2,963
- revaluation of personnel provisions
40,582
12,642
39,803
12,158
- revaluation of provisions for risks and losses
61,659
19,187
55,061
15,748
- revaluation of long-term debt
28
8
22
6
6,802
1,900
7,428
2,070
98,720
27,466
109,801
30,473
Total deferred tax assets
328,105
101,456
324,991
94,631
Temporary difference assets from:
- revaluation of current assets
- revaluation of fixed assets
4,225
420,321
1,193
133,711
3,992
405,267
1,085
127,755
- write-down of current liabilities
12,251
3,841
6,968
2,419
- valuation of personnel provisions
21,056
5,812
21,297
5,872
3,553
1,148
3,620
1,166
12,179
3,805
26,842
8,643
473,585
149,510
467,986
146,940
- write-down of financial instruments
- tax losses from prior periods
- write-down of provisions for risks and losses
- revaluation of financial instruments
Total deferred tax liabilities
Net deferred taxes
(48,054)
(52,309)
The amount of deferred taxes credited directly to shareholders’ equity during the period was
€ 4,747 thousand.
Earlier losses not utilized for the calculation of deferred taxes refer to the Espresso group for
€ 11.1 million, the company Cir International for € 313.5 million, which can be carried forward
indefinitely, and the Sogefi group for € 8.9 million. It should be pointed out that no deferred tax
assets were calculated for these losses because at present conditions are such that there is no certainty that they can be recovered.
48
8.
CURRENT ASSETS
8.a.
INVENTORIES
Inventories can be broken down as follows:
30.06.2008
31.12.2007
Raw materials, secondary materials and consumables
82,283
74,866
Work in progress and semi-finished goods
16,858
14,287
107,602
114,775
704
39
207,447
203,967
Finished goods and merchandise
Advance payments
Total
The value of stocks is shown net of any write-down made either in past periods or in this current
one and takes into account the degree of obsolescence of finished goods, merchandise and secondary materials.
8.b.
TRADE RECEIVABLES
Receivables - clients
Receivables – subsidiaries and joint ventures
Receivables – associated companies
Total
30.06.2008
31.12.2007
1,239,659
1,066,869
1,310
2,644
449
760
1,241,418
1,070,273
“Receivables - clients” are non-interest bearing and have an average maturity in line with market
conditions. The net increase is mainly due to the increase in revenues.
Trade receivables are shown net of any write-downs taking credit risk into account. During the
first half of 2008 provisions were made to the reserve for the write-down of receivables for the
sum of € 10,498 thousand, and losses on receivables were recognized for € 1,460 thousand.
“Receivables – subsidiaries and joint ventures” represent intercompany receivables not eliminated
because they refer to companies not fully consolidated line by line. The balance at June 30 2008
refers mainly to receivables from Tirreno Power S.p.A..
8.c.
OTHER RECEIVABLES
Receivables – associated companies
Receivables – subsidiaries and joint ventures
Tax receivables
Receivables - others
Total
30.06.2008
31.12.2007
1,077
715
33,445
--
160,511
148,217
75,852
60,196
270,885
209,128
49
The item “Receivables – others” amounted to € 270,885 thousand, up from € 209,128 thousand at
December 31 2007.
The item “Receivables – joint ventures” refers to the dividends already approved but not yet received by Tirreno Power.
The item “Receivables – subsidiaries and joint ventures” refers to the dividend receivable from
Tirreno Power which has already been approved but not yet received.
8.d.
FINANCIAL RECEIVABLES
“Financial receivables” rose from € 37,171 thousand at December 31 2007 to € 51,273 thousand
at June 30 2008 and refer mainly for € 6,151 thousand to interest accruing on the swap associated
with the Cir International S.A. bond maturing in 2009 and for € 37,336 thousand to the fair value
of trades hedging energy purchases by the Sorgenia group.
8.e.
SECURITIES
This item contains the following categories of securities:
30.06.2008
31.12.2007
365,022
19,961
Investments funds or similar funds
79,283
16,164
Bonds and notes
45,566
46,352
Certificates of deposit and miscellaneous securities
214,006
246,089
Total
703,877
328,566
Italian Government securities or equivalent
The fair value measurement of the item “Securities” involved a negative adjustment to the income
statement of € 3.5 million.
8.f.
AVAILABLE-FOR-SALE FINANCIAL ASSETS
This item refers for € 339,011 thousand to shares in hedge funds and redeemable shares in asset
management companies held by Medinvest which collects the excess liquidity that the group has
available on a regular basis. The degree of liquidity of the investment is a function of the time required for the redemption of the funds in which Medinvest invests, which normally varies from
one to three months.
Diversification between categories of funds give the performance of Medinvest a low level of
volatility.
Assigning a fair value to the funds held by Medinvest has over the years involved making adjustments to the value of these funds which at June 30 2008 amounted to € 138,892 thousand
(€ 153,310 thousand at December 31 2007). The effects of this valuation on the shareholders’ equity of Cofide for the amount pertaining to the group came to € 75,299 thousand (€ 82,860 thousand at December 31 2007). The pertinent amount of fair value credited to the income statement
after the sale of some of the funds came to € 357 thousand.
To cover the exchange rate risk resulting from the translation of the portion of the equity of
Medinvest denominated in USD into the functional currency of the group, hedging contracts were
50
entered into, the effects of which are indicated under item 9.b. “Reserves” in the breakdown of the
“Translation reserve”.
The item “Available-for-sale financial assets” also includes the investment in shares and bonds of
Banca Intermobiliare d’Investimento e Gestioni S.p.A. for the amount of € 30,989 thousand
(€ 47,752 thousand at December 31 2007). The fair value measurement of the investment meant
making an adjustment to its value which at June 30 2008 amounted to € 5,766 thousand (€ 20,865
thousand at December 31 2007) and the sum of € 3,899 thousand was recognized, net of tax, to
the “Fair value reserve” (€ 14,105 thousand at December 31 2007).
8.g.
Cash and cash equivalents declined from € 726,988 thousand at December 31 2007 to € 377,983
thousand at June 30 2008.
The breakdown of the change in the period is given in the cash flow statement.
9.
SHAREHOLDERS’ EQUITY
9.a.
SHARE CAPITAL
Share capital stood at € 359,604,959 at June 30 2008, unchanged from December 31 2007, and
consisted of 719,209,918 ordinary shares each with a nominal value of € 0.50.
The share capital is fully subscribed and paid up.
9.b.
RESERVES
The breakdown of the item “Reserves” is shown below:
Share
premium
reserve
Legal
reserve
Fair value
reserve
Translation
reserve
Other
reserves
Total
reserves
107,371
(2,195)
29,300
159,509
5,044
19,989
Retained earnings
--
756
--
--
--
756
--
--
178
--
--
178
--
--
13,664
--
--
13,664
Securities fair value reserve recognized to income statement
--
--
(7,314)
--
--
(7,314)
--
--
--
--
14,045
14,045
--
--
(6,451)
(10,050)
--
(16,501)
5,044
20,745
107,448
(12,245)
43,345
164,337
Retained earnings
--
637
--
--
--
637
--
--
762
--
--
762
--
--
(12,671)
--
--
(12,671)
Securities fair value reserve recognized to income statement
--
--
(1,454)
--
--
(1,454)
--
--
--
--
5,004
21,382
Balance at December 31 2006
Balance at June 30 2008
-(5.565)
88,520
--
4,044
4,044
4.073
--
(1.492)
(8,172)
47,389
154,163
51
The “Fair value reserve” stood at € 88,520 at June 30 2008 and referred for € 8,311 thousand to
the valuation of “Securities” in items 7.g., for € 79,198 thousand to the valuation of “Availablefor-sale financial assets” in item 8.f. and to the valuation of hedging instruments for an amount of
€ 1,011 thousand.
The “Translation reserve” at June 30 2008 had a negative balance of € 8,172 thousand with the
following breakdown:
31.12.2007
Sogefi Group
30.06.2008
--
(634)
854
(86)
--
(51)
(137)
(1,711)
--
(408)
(2,119)
(19,121)
--
(13,188)
(32,309)
7,091
18,404
--
25,495
44
-
--
44
(12,245)
18,404
(14,331)
(8,172)
CIR Ventures
Medinvest hedging effect
Others
Total
Decreases
1,538
Sorgenia Group
Medinvest
Increases
The item “Other reserves” had the following breakdown at June 30 2008:
Merger surplus
Reserve for the difference between the carrying values of investee companies
and the respective portions of consolidated shareholders’ equity
Total
9.c.
43
47,346
47,389
The changes in Retained earnings (losses) are shown in the “Statement of Changes in Shareholders’ Equity”.
10.
10.a. BONDS AND NOTES
The detail of the item “Bonds and notes”, net of intercompany elimination, is as follows:
Effective rate
30.06.2008
31.12.2007
CIR S.p.A. 5.75% Note 2004/2024
5.90%
274,334
266,548
CIR International S.A. 6.375% Note 2003/2011
6.03%
181,643
198,175
CIR International S.A. 5.25% Note 1999/2009
5.41%
--
413,232
Gruppo Editoriale L’Espresso S.p.A. 5.125% Note 2004/2014
4.82%
315,175
307,875
Société Française d’Eoliennes (SFE) 6.5% Note 2006/2016
6.50%
3,644
3,842
774,796
1,189,672
Total
52
In application of IAS 32 and 39, at January 1 2005 the original values of bond and note issues
were written down to account for expenses incurred and bond issuance discounts.
At June 30 2008 Cir International was holding a nominal € 30,000 thousand (unchanged from December 31 2007) of the CIR 5.75% 2004/2024 bond issue.
It should be noted that during the first half of 2008 Cir International S.A. bought back and then
cancelled a nominal € 10,000 thousand of the note issue maturing in 2011.
The CIR International 5.25% 2009 issue has now been reclassified under current liabilities.
10.b. OTHER BORROWINGS
30.06.2008
31.12.2007
Collateralized bank loans
160,056
148,874
Other bank loans
990,099
1,055,474
66,342
67,836
209,420
158,876
1,425,917
1,431,060
Leasing
Other borrowings
Total
The item “Other bank loans” consists mainly of the following:
- € 44,000 thousand made in 2003 to Energia Italiana by Banca Monte dei Paschi di Siena at a floating rate, maturing in 2010, and with a current interest rate of 4.83%;
- € 149,500 thousand made to Sorgenia by Banca Intesa SanPaolo at a floating rate, maturity
2012, and with a current interest rate of 5.46%;
- € 50,000 thousand made to Sorgenia by Banca Intesa SanPaolo at a floating rate, maturity 2011,
and a current interest rate of 5.73%;
- € 221,000 thousand made to Sorgenia by Banca Monte dei Paschi di Siena at a floating rate, maturity 2012, and a current interest rate of 4.88%;
- € 153,972 thousand made to Sorgenia Puglia S.p.A. by Banca Monte dei Paschi di Siena at a
floating rate, maturity 2014, and a current interest rate of 5.79%;
- € 198,000 thousand made to Energia Molise S.p.A. by Banca Monte dei Paschi di Siena at a floating rate, maturity 2013, and a current interest rate of 5.72%;
- € 47,122 thousand, as partial drawdown of a loan facility of € 50,000 thousand, signed by Sogefi
S.p.A. with maturity September 2012 at a floating rate and a current interest rate of 5.18%;
- € 99,783 thousand, as partial drawdown of a facility of € 100,000 thousand, signed by Sogefi
S.p.A. with maturity in 2012 at a floating rate and a current interest rate of 5.18%.
At June 30 2008 this item included a syndicated floating rate loan of € 149,946 thousand made to
the parent company of the Cofide Group by Banca Monte dei Paschi di Siena. This loan has a duration of five years and is set at Euribor three or six months plus a spread of one percentage point.
At June 30 2008 the interest rate applied was 5.96%.
53
10.c. PERSONNEL PROVISIONS
The breakdown of these provisions are as follows:
Employee severance and leaving indemnity (TFR)
Retirement and similar obligations
Total
Opening balance
Provisions made for work done during the period
Increases for interest
Actuarial income or expense
Benefits paid out
Increases or decreases due to changes in consolidation area
Other changes
Closing balance
30.06.2008
31.12.2007
119,053
47,096
166,149
119,203
41,434
160,637
30.06.2008
31.12.2007
160,637
16,237
3,135
-(13,994)
-134
166,149
167,328
19,581
5,966
(2,975)
(36,759)
11,038
(3,542)
160,637
Incentive Plans (Phantom Stock Options) outstanding at June 30 2008
Options in circulation at
start of period
Number of
Weighted
options
average
strike price
Phantom 2007 – 1st tranche
nd
Phantom 2007 – 2 tranche
Options exercised during
period
Number of
Weighted
options
average
strike price
Options in circulation at end of period
Number of
options
Average
strike price
Average
duration
(years)
Options exercisable at end
of period
Number of
Weighted
options
average
strike price
790,000
3.0877
--
--
--
--
790,000
3.0877
9.26
237,000
3.0877
790,000
2.7344
--
--
--
--
790,000
2.7344
9.75
142,200
2.7344
st
Phantom 2008 – 1 tranche
Total
Options awarded during
period
Number of
Weighted
options
average
strike price
--
--
790,000
1.6806
--
--
790,000
1.6806
10.26
--
--
1,580,000
2.9111
790,000
1.6806
--
--
2,370,000
2.5009
9.76
379,200
2.9552
10.d. PROVISIONS FOR RISKS AND LOSSES
The breakdown and changes in the non-current part of these provisions are as follows:
Provision for
disputes in progress
15,949
Provisions for
restructuring charges
6,670
Provisions for
sundry risks
19,299
41,918
2,362
3,066
657
6,085
Withdrawals
(27)
(1,504)
(999)
(2,530)
Exchange rate differences
266
--
(16)
250
Other changes
(1,729)
(743)
(130)
(2,602)
16,821
7,489
18,811
43,121
Sums set aside during the period
Total
54
The breakdown and changes in the current part of these provisions are as follows:
Provision for
disputes in progress
7,441
Provisions for
restructuring charges
3,653
Provisions for
sundry risks
51,734
62,828
95
427
11,257
11,779
Withdrawals
(2,080)
(997)
(5,805)
(8,882)
Exchange rate differences
1,729
667
317
2,713
7,185
3,750
57,503
68,438
Sums set aside during the period
Total
Apart from the libel disputes regarding the Espresso group, which are typical of all publishing
businesses, the Provision for disputes in progress includes risks for disputes of a commercial nature and labour disputes.
The Provision for restructuring charges includes sums set aside for restructuring action that has
been announced to the parties concerned and in particular refers to the production reorganization
programs of the Sogefi group.
The Provisions for sundry risks is mainly to cover tax disputes outstanding with local tax authorities.
11.
CURRENT LIABILITIES
11.a. BONDS AND NOTES
This item refers to the CIR International S.A. 5.25% 1999/2009 issue. It should be noted that during the first half of the year a nominal € 20,000 thousand of this issue were bought back and subsequently cancelled. Liabilities were also recognized for an amount of € 3.8 million in relation to
fixed/floating interest rate swaps entered into to hedge the loan.
30.06.2008
31.12.2007
Collateralized bank loans
30,028
23,079
Other bank loans
78,586
44,205
5,342
5,713
48,215
43,109
6
--
162,177
116,106
Finance leases
Other borrowings
Loans from subsidiaries
Total
55
11.c. TRADE PAYABLES
30.06.2008
31.12.2007
16,903
12,406
1,111
1,306
Payables - suppliers
921,812
927,534
Advance payments
2,399
1,286
45
50
942,270
942,582
Payables – subsidiaries and joint ventures
Payables – associated companies
Payables in the form of notes
Total
The item “Payables – subsidiaries and joint ventures” refers mainly to the trade payables of
Sorgenia S.p.A. with Tirreno Power S.p.A..
11.d. OTHER PAYABLES
30.06.2008
31.12.2007
Due to employees
84,699
69,655
Tax payables
96,003
70,583
Social security payables
37,549
44,754
Other payables
58,110
62,153
276,361
247,145
Total
56
NOTES ON THE INCOME STATEMENT
12.
REVENUES
BREAKDOWN BY BUSINESS SECTOR
1st Half 2008
amount
Utilities
1st Half 2007
amount
%
Change
%
1,145.7
48.5
883.7
42.9
29.6
Media
543.2
23.0
561.6
27.3
(3.3)
556.3
23.5
541.7
26.3
2.7
Healthcare
118.5
5.0
72.3
3.5
63.9
0.1
--
0.1
--
--
2,363.8
100.0
2,059.4
100.0
14.8
Other
BREAKDOWN BY GEOGRAPHICAL AREA
South
America
Asia
Other
countries
--
--
--
--
Total
revenues
Utilities
1,145.7
1,136.9
Media
543.2
543.2
--
--
--
--
--
556.3
49.8
401.8
10.3
86.2
6.3
1.9
Healthcare
118.5
118.5
--
--
--
--
--
0.1
0.1
--
--
--
--
--
2,363.8
1,848.5
410.6
10.3
86.2
6.3
1.9
Percentages
100.0%
78.2%
17.4%
0.4%
3.6%
0.3%
0.1%
Italy Other European
countries
North
America
South
America
Asia
Other
countries
Others
Italy Other European
countries
North
America
1st Half 2008
8.8
1st Half 2007
Total
revenues
Utilities
883.7
883.7
--
--
--
--
--
Media
561.6
561.6
--
--
--
--
--
541.7
55.4
398.2
13.0
67.1
6.1
1.9
72.3
72.3
--
--
--
--
--
0.1
0.1
--
--
--
--
--
2,059.4
1,573.1
398.2
13.0
67.1
6.1
1.9
Percentages
100.0%
76.4%
19.3%
0.6%
3.3%
0.3%
0.1%
Healthcare
Other
The types of products marketed by the Group and the nature of the business sectors in which it
operates mean that revenues flows are reasonably linear throughout the year and are not subject to
any particular cyclical phenomena provided that the basis of consolidation remains unchanged.
57
13.
OPERATING COSTS AND REVENUES
13.a. COSTS FOR THE PURCHASE OF GOODS
Costs for the purchase of goods rose from € 1,127,340 thousand in first half 2007 to € 1,373,690
thousand in the corresponding period of 2008. The rise was mainly in the Sorgenia group.
13.b. COSTS FOR SERVICES
This item rose from € 373,801 thousand in first half 2007 to € 397,497 thousand in first half 2008,
as can be seen from the following breakdown:
Technical and professional consulting
1st Half
2008
42,534
1st Half
2007
37,441
Distribution and transportation costs
26,878
24,277
Outsourcing
55,343
61,883
Other expenses
272,742
250,200
Total
397,497
373,801
13.c. PERSONNEL COSTS
Personnel costs came to € 351,559 thousand in the first half of 2008 (€ 301,961 thousand in first
half 2007) and have the following breakdown:
Salaries and wages
1st Half
2008
242,371
1st Half
2007
219,970
Social contributions
74,968
66,639
Severance and leaving indemnity
10,631
(7,067)
Retirement and similar benefits
6,869
3,743
Valuation of stock option plans
1,144
4,416
Other costs
Total
15,576
14,260
351,559
301,961
The Group had an average of 12,855 employees on its payrolls in the first half of 2008.
58
13.d. OTHER OPERATING INCOME
This item can be broken down as follows:
State grants and contributions
Capital gains on disposals
1st Half
2008
2,039
1st Half
2007
2,151
1,658
6,981
Non-recurring gains and other income
38,625
32,312
Total
42,322
41,444
1st Half
2008
11,958
1st Half
2007
7,835
8,144
6,851
11,151
12,074
13.e. OTHER OPERATING COSTS
This item can be broken down as follows:
Write-downs and losses on receivables
Provisions made for risks and losses
Indirect taxes
Taxes relating to prior periods
Capital losses on disposal of assets
Non-recurring losses and other charges
Total
1
7
6,887
399
265
13,545
52,243
40,711
The item “Restructuring charges” in first half 2008 refers to the costs of restructuring programs
already being implemented in the Sogefi group.
14.
FINANCIAL INCOME AND EXPENSE
14.a. FINANCIAL INCOME
The item “Other income” has the following detail:
1st Half
2008
10,219
1st Half
2007
6,571
Interest on securities
7,174
9,472
Other interest income
11,099
12,838
382
819
Exchange rate gains
3,200
1,364
Other financial income
3,230
4,571
35,304
35,635
Interest income on bank accounts
Interest rate derivatives
Total
The item “Interest rate derivatives”, amounting to € 382 thousand, includes € 236 thousand which
refers to the net measurement at fair value of hedging transactions.
59
14.b. FINANCIAL EXPENSE
This item has the following breakdown:
Interest expense on bank accounts
1st Half
2008
39,360
1st Half
2007
23,013
Interest expense on bonds
31,093
31,549
Other interest expense
7,828
10,428
Interest rate derivatives
3,912
179
Exchange rate losses
4,969
3,979
Other financial expense
11,031
6,451
Total
98,193
75,599
The item “Other financial expense” includes € 3,525 thousand relating to the write-down of the
investment in Oakwood Global Finance
14.c. GAINS FROM TRADING SECURITIES
The breakdown of “Gains from trading securities” is the following:
Shares and options - subsidiaries
Shares and options - other companies
Other securities and other gains
Total
1st Half
2008
117,810
1st Half
2007
10,714
2,964
11,100
12,702
33,482
133,476
55,296
The item “Shares and options - subsidiaries” refers to the income from the subscription of capital
increases by minority shareholders in the company Sorgenia Holding (€ 114,935 thousand) and in
HSS (€ 2,875 thousand).
14.d LOSSES FROM TRADING SECURITIES
The breakdown of “Losses from trading securities” is the following:
Shares and options - other companies
Other securities and other losses
Total
1st Half
2008
2,679
1st Half
2007
13,754
7,759
5,630
10,438
19,384
60
15.
INCOME TAXES
Income taxes can be broken down as follows:
Current taxes
Deferred taxes
Total
16.
1st Half
2008
57,473
1st Half
2007
54,468
(277)
21,209
57,196
75,677
EARNINGS PER SHARE
The basic earnings per share is calculated by dividing the net income for the period attributable to
ordinary Shareholders by the weighted average number of shares in circulation. The diluted earnings per share is calculated by dividing the net income for the period attributable to ordinary
Shareholders by the weighted average number of ordinary shares in circulation during the period,
adjusted for the capital dilution effects of any options outstanding. The calculation of the shares in
circulation does not include own shares held as treasury stock.
Since the company has no options outstanding or any treasury stock, its diluted earnings per share
are equal to basic earnings per share.
The following chart shows the information on the shares used to calculate the basic and diluted
earnings per share.
Net income attributable to the Shareholders (in thousands of euro)
Weighted average number of ordinary shares in circulation
Basic earnings per share (euro)
17.
1st Half
2008
66,008
1st Half
2007
33,294
719,209,918
719,209,918
0.0918
0.0463
OTHER INFORMATION
IFRS7 – FINANCIAL RISK MANAGEMENT: ADDITIONAL DISCLOSURES
The Cofide group operates in different sectors of industry and services both at national and international level and thus its business is exposed to various kinds of financial risk, including market
risk (exchange rate risk and price risk), credit risk, liquidity risk and interest rate risk.
To minimize these risks the group uses financial derivative instruments for hedging purposes.
Risk management is carried out by the central finance and treasury function on the basis of policies approved by Management and transmitted to the subsidiaries on July 25 2003.
61
Market risk
Foreign currency risk
Some companies of the group (especially in the Sogefi group) are exposed to exchange rate risk
resulting from the use of different currencies. Changes in foreign exchange rates can affect the fair
value of assets and liabilities.
This kind of risk is however limited because the companies operate in the local currency, they are
active both in their own domestic markets and abroad and in the event of need financial resources
are raised locally.
With reference to the net capital invested in Medinvest Plc, which is denominated in USD, a special hedging strategy is followed which aims to protect the investment from the volatility of the
spot EUR/USD exchange rate when translating the capital of the subsidiary into the functional
currency of the group, i.e. the euro. Any rise or fall in the exchange rate would not have any significant effect on the equity or financial situation of the group.
Price risk
The group is exposed to price risk on various raw materials and commodities, such as for example, paper, cellulose products, steel, plastic products, aluminium, oil and gas.
Risk is managed centrally by the individual groups by diversifying their sourcing and, where
deemed necessary, using appropriate hedging derivatives.
Regarding the Sorgenia group in particular, commodity risk is managed by entering into derivative contracts with prime financial institutions with a high credit rating. These instruments are
generally fixed to floating interest rate swaps or vice versa. Although the commodity derivatives
are traded for hedging purposes, they are not managed according to the rules of hedge accounting
(IAS 39). Thus the income effects of the changes in their fair value are recognized directly to the
Income Statement under the item Other operating income/losses.
The fair value of these derivative contracts with a duration of no longer than 12 months is determined using market forward prices or, where these are not available, using valuation models developed internally based on data and information provided by third party sources that are recognized and reliable.
Credit risk
Credit risk can be valued both in commercial terms relating to client type, the terms of the contract and the concentration of sales, and in financial terms connected with the type of counterparty
dealt with in financial transactions. Within the group there is no significant concentration of credit
risk.
Some time ago adequate policies were put in place to ensure that sales are made to clients with an
appropriate credit history. Counterparties for derivative products and cash transactions are exclusively financial institutions with a high credit rating. The group has policies that limit credit exposure to individual financial institutions.
Credit risk is different for the various sectors of business in which it occurs. In the energy sector,
for example, the assessment of exposure to credit risk is made using internal processes and with
the aid of companies with expertise both in the sector of assessment and granting credit lines and
in credit recovery. The number of clients and their diversification make exposure to a concentration of credit risk irrelevant.
In the “Automotive components” sector, there is no evidence of any excessive concentration of
credit risk since the “Original Equipment” and “After market” distribution channels with which
the group operates consist of car manufacturers or large purchasing groups.
62
The “Media” sector has no areas of risk for trade receivables of a significant entity and in any case
the group adopts operating procedures that prevent the sale of products or services to clients without an adequate credit profile or a collateral guarantee.
The healthcare sector does not present any concentration of credit risk because credit exposure is
spread over a large number of clients and counterparties especially in the sector of residences for
the elderly. The hospital sector, however, has a higher concentration of risk because the most significant counterparties are the local health authorities.
In 2006 the Cofide group set up a business involving acquiring and managing non-performing
loans and has put in place procedures for evaluating and establishing the fair value of its portfolios.
Liquidity risk
Prudent management of liquidity risk implies maintaining sufficient liquidity and short term securities and ensuring an adequate supply of credit lines to ensure that sufficient financial resources
can be raised.
The group meets its maturities and commitments systematically, and such conduct enables it to
operate in the market with the necessary flexibility and reliability to maintain a correct balance
between the sources and applications of its financial resources.
The companies that head the four most significant business sectors manage their liquidity risk directly and independently. Tight control is exercised over the net financial position and its evolution in the short, medium and long term. In general the Cofide group follows an extremely prudent financial policy using funding structures mainly in the medium-long term. The operating
groups manage their treasury functions in a centralized manner.
Interest rate risk (fair value risk and cash flow risk)
Interest rate risk depends on the movements in interest rates in the market which can cause changes in the fair value of the cash flows of financial assets and liabilities.
Interest rate risk mainly concerns long-term bond and note borrowings which are issued at a fixed
rate thus exposing the group to the risk of fair value changes on the loans themselves as interest
rates move.
Following risk management policies, the Parent Company and the subsidiaries have entered into
various IRS contracts throughout the years in order to hedge the interest rate risk on their bond
and note issues and on loan agreements.
Derivative instruments
Derivative instruments are recognized at their fair value.
For accounting purposes hedging transactions are classified as:
- fair value hedges if they are subject to price changes in the market value of the underlying asset or liability;
- cash flow hedges if they are entered into to protect from the risk of changing cash flows from
an existing asset and liability, or from a future transaction;
- hedges of a net investment in a foreign operation if they are entered into to protect from the
exchange rate risk in the conversion of the equity of subsidiaries denominated in a currency
other than the functional currency of the group.
63
For derivative instruments classified as fair value hedges gains and losses resulting from both the
determination of their market value and the adjustment to fair value of the element underlying the
hedge are posted to the income statement.
For instruments classified as cash flow hedges (for example interest rate swaps) gains and losses
from marking them to market are posted directly to shareholders’ equity for the part which “effectively” covers the risk they are intended to cover, while any “non-effective” part is posted to the
income statement.
For instruments classified as hedges of net investments in foreign operations gains and losses obtained from marking them to market are posted directly to shareholders’ equity for the part which
“effectively” hedges the risk they are intended to cover, while any “non-effective” part is posted
to the income statement.
Derivatives used for hedging purposes, when the hedge accounting is entered, are accompanied by
a hedging relationship which designates the individual instrument as entered into for the purposes
of hedging and gives the parameters of effectiveness of the hedge in relation to the financial instrument being hedged.
The level of effectiveness of the hedge is evaluated at regular intervals and the effective part of
the relationship is posted to shareholders’ equity while any non-effective part is charged to the income statement. More specifically, the hedge is considered to be effective when the change in fair
value or in the financial flows of the instrument hedged is almost entirely compensated for by the
change in the fair value or the financial flows of the hedging instrument and when the results
achieved are in a range of between 80% and 125%.
Derivative contracts
At June 30 2008 the group had the following derivatives contracts booked as hedges, expressed at
their notional value:
(a) Interest rate swaps:
Fixed to floating hedging interest (€ 380 million) on Cir International bond issue maturing in
2009;
Hedging bank loans to Sogefi, notional value € 50 million – maturity 2012;
Hedging Sorgenia bank loans, notional value € 119 million - maturity 2013;
(b) Foreign currency hedges:
forward sales for a total of USD 540 million hedging investments in Medinvest Plc and in private equity funds;
Capital parameters
Management of the subsidiary Cir regulates the use of leverage to guarantee solidity and flexibility in the asset and liability structure of Cir and its financial holding companies, measuring the ratio of funding sources to the asset invested in.
Leverage is calculated as the ratio between net financial debt (represented by bond or notes issued
net of free cash flow and investments in financial instruments considered as liquid, according to
parameters agreed on with the rating agency) and the total investment assets measured at fair
value (including equity investments and the remaining part of investments in financial instruments).
Management’s objective is to maintain a sold and flexible financial structure in order to maintain
this ratio below 30%. Today it stands at 19%.
64
18.
GUARANTEES AND COMMITMENTS
At June 30 2008 the guarantee and commitment position was the following:
Cofide S.p.A.
Securities as collateral for financial transactions for € 6,522 thousand.
Cir and financial holding companies
- Guarantees in favour of Inland Revenue for VAT credits totalling € 6,781 thousand;
- Commitments for investment in private equity funds by Cir International for € 38 million;
- An annual commitment to cover just the running costs of the company Oakwood Global Finance SCA, the holding company of the Oakwood group.
Sorgenia group
Within the group there are guarantees made to third parties for a total amount of € 379,136 thousand.
These are mainly bonds deposited as collateral for sums to be paid, relating to the purchase and
transportation of electricity and gas and to commitments in favour of Inland Revenue for quarterly
IVA for which a rebate has been applied for.
Also in this category are guarantees requested for obtain the energy account grant.
As collateral for loans obtained by the jointly controlled company Tirreno Power S.p.A., shares
worth € 123,577 thousand representing 50% of the capital of Tirreno Power S.p.A. have been
pledged.
It should also be noted that there is a commitment to make a financial contribution to the associated company GICA S.A. and to the subsidiary Noventi Ventures II LP of a maximum of
€ 15,000 thousand and USD 30,000 thousand respectively (of the latter the sum of USD 11,745
thousand has already been paid in).
Espresso group
Guarantees issued totalled € 3,022 thousand and referred to guarantees made by the parent company of the Group and the subsidiaries Elemedia and A. Manzoni & C. for the lease of their respective premises and by the subsidiary Ksolutions in favour of Public Administration clients with
whom they have service contracts.
Commitments outstanding, for a total of € 7,055 thousand, referred to:
- contracts for the purchase of plant and equipment (€ 4,611 thousand) mainly for Repubblica
and Finegil Editoriale for the full-colour project;
- a contract for the purchase of a property as the new headquarters of the Mantua operating division of Finegil Editoriale for € 2,394 thousand.
Sogefi group
Operating Leases
For accounting purposes, leasing and hire contracts are classified as operating leases when the following conditions apply:
65
- a significant part of the risks and benefits of ownership are maintained by the lessor;
- there are no options giving the right to buy the leased property at a price that does not represent
the presumed market value of the same at the close of the period;
- the duration of the contract does not extend over most of the useful life of the asset rented or
hired.
The rental payments for operating leases are recognized to the income statement in line with the
underlying contracts.
The main operating lease refers to a contract signed by the American subsidiary Allevard Spring
U.S.A. Inc. for the lease of the production site situated in Prichard (West Virginia). The contract
terminates on October 27 2018 and the remaining instalments total USD 4,181 thousand, of which
USD 386 thousand by the end of the year.
Against this contract Sogefi S.p.A. has issued a guarantee for approximately 50% of the remaining lease instalments which is renewed at the end of each year on the basis of the remaining
amount. There are no restrictions of any kind connected with this kind of leasing and at the end of
the contract the US company will have the right to buy the property at a market price.
Commitments for investments
At June 30 2008 there were commitments for investments for a total of € 4,436 thousand.
Guarantees issued
The detail of these guarantees is as follows:
30.6.2008
31.12.2007
Guarantees in favour of third parties
2,825
2,744
Other guarantees in favour of third parties
9,714
9,714
Collateral security provided for debt shown in the balance sheet
5,681
5,681
Guarantees issued refer to borrowings and to guarantees given to certain clients and are recognized at the value of the commitment outstanding as of the balance sheet date.
The item “Other guarantees in favour of third parties” refers to the commitment of LPDN GmbH
towards the employee pension fund of the two business divisions at the time of the acquisition
made in 1996. This commitment is covered by contractual obligations on the part of the vendor, a
prime German economic operator.
Collateral security refers to bonds or privileges granted to lenders against loans obtained for the
purchase of assets.
Other risks
At June 30 2008 the Sogefi group had assets belonging to third parties on the premises of its companies for € 6,337 thousand.
66
19.
JOINT VENTURES
The joint ventures at June 30 2008 were Tirreno Power and Oakwood.
International accounting standards give two methods for consolidating holdings in joint ventures:
. the usual method, which involves pro-rata consolidation;
. the alternative method which involves use of the equity method.
The Group has adopted the equity method for the sake of consistency with the way the accounts
were presented previously.
The chart below shows the key financial figures of the company Tirreno Power and of the Oakwood group:
Tirreno Power
Income statement
Electricity sold (TWh)
Revenues from sales and services
Gross operating margin
Net income
Balance sheet
Total assets
Net financial debt
Number of employees
1st Half
2008
1st Half
2007
7.9
725.6
120.7
14.9
5.8
456.1
116.8
36.0
30.06.2008
31.12.2007
1,311.1
967.1
344.0
626
1,445.4
1,008.4
436.9
607
The pertinent part of the earnings of Tirreno Power, consolidated using the equity method on the
basis of values determined by the application of IAS/IFRS accounting standards, totalled € 7.5
million in the first half of 2008, down from € 18 million in the first half of 2007.
67
Oakwood
30.06.2008
31.12.2007
Assets
- Current
- Non-current
Total assets
123.0
672.0
795.0
167.2
1,526.1
1,693.3
Liabilities and equity
- Current liabilities
- Non-current liabilities
Total liabilities and equity
680.5
268.4
(153.9)
795.0
1,717.5
116.2
(140.4)
1,693.3
1st Half
2008
1st Half
2007
24.1
50.2
74.3
(33.3)
(32.8)
(20.2)
(1.0)
(87.3)
(13.0)
73.8
68.7
142.5
48.1
52.0
46.8
3.0
149.9
(7.4)
Income statement
Interest income
Commissions income
Total income
Interest expense
Commissions expense
Operating costs and other
Taxes
Total costs
Net income (loss)
20.
INFORMATION ON THE BUSINESS SECTORS
The business sectors coincide with the Groups of companies over which Cofide S.p.A. holds control through Cir. These are:
- the Sorgenia group: utilities;
- the Espresso group: media;
- the Sogefi group: automotive components;
- the HSS group: healthcare.
From the geographical point of view, with the exception of the Sogefi group, the business is carried out almost exclusively in Italy.
A chart showing the breakdown of income components and balance sheet information of the primary sector is shown in the Interim Management Report while details regarding revenues by geographical area (secondary sector) are given in the explanatory notes to the financial statements in
the section regarding revenues (note 12).
68
21.
NET FINANCIAL POSITION
The net financial position can be broken down as follows:
30.06.2008
31.12.2007
A.
Cash and bank deposits
377,983
726,988
B.
Other free cash flow (*)
339,011
372,622
C.
Securities held for trading
703,877
328,566
D.
Cash and cash equivalents (A) + (B) + (C)
1,420,871
1,428,176
E.
Current financial receivables
51,273
37,171
F.
Current bank borrowings
(322,154)
(163,386)
G.
Bond and note issues
(382,182)
--
H.
Current part of non-current debt
(53,507)
(48,822)
IH.
Other current borrowings
(56)
--
J.
Current financial debt (F) + (G) + (H) + (I)
(757,899)
(212,208)
K.
Net current financial position (J) + (E) + (D)
714,245
1,253,139
L.
Non-current bank borrowings
(1,150,155)
(1,204,348)
M.
Bond and notes issued
(774,796)
(1,189,672)
N.
Other non-current payables
(275,762)
(226,712)
O.
Non-current financial debt (L) + (M) + (N)
(2,200,713)
(2,620,732)
P.
Net financial position (K) + (O)
(1,486,468)
(1,367,593)
(*) not including the investment in Banca Intermobiliare d’Investimento e Gestioni S.p.A.
21.
DIVIDENDS PAID OUT
Dividends paid out in the first half of 2008 (referring to the distribution of earnings for the year
2007, as per AGM resolution adopted on April 29 2008) totalled € 10,788 thousand, the equivalent of € 0.015 per share.
22.
SUBSEQUENT EVENTS
As far as subsequent events are concerned, reference should be made to the paragraph of the
Management Report on this subject.
23.
SIGNIFICANT NON-RECURRING EVENTS AND TRANSACTIONS AND NONTYPICAL AND/OR UNUSUAL TRANSACTIONS
During the first half there were no items of a non-recurring nature included in the operating result
for the half. It should, however, be noted that the consolidated net income figure benefited from
69
the results of the capital increase reserved for the minority shareholders of Sorgenia Holding and
HSS (see note 14.c).
It should also be noted that there were no non-typical and/or unusual transactions during the period.
24.
RELATED-PARTY TRANSACTIONS
Information showing the impact of transactions with related parties on the financial, equity and
income statements for the first half are shown in the comments on the individual items of the financial statements.
The paragraph “Other information” of the Interim Management Report shows the types of transactions with related parties, the values of which are given in the Explanatory Notes.
70
CERTIFICATION OF THE CONDENSED SEMI-ANNUAL FINANCIAL STATEMENTS AS OF
JUNE 30 2008 IN ACCORDANCE WITH ART. 81-TER OF CONSOB REGULATION NO. 11971
OF MAY 14 1999 AND SUBSEQUENT AMENDMENTS AND ADDITIONS
Consolidated Semi-annual Financial Statements as of June 30 2008.
1. The undersigned:
Rodolfo De Benedetti – Chief Executive Officer of Cofide S.p.A.
Oliviero Maria Brega – Officer responsible for the preparation of the financial statements of the
company Cofide S.p.A.
Hereby certify, taking into account even the terms of art. 154-bis, paragraphs 3 and 4, of Legislative Decree no. 58 of February 24 1998:
•
that the administrative and accounting procedures for the preparation of the Semi-annual Financial Statements as of June 30 2008, during the period January 1 – June 30 2008, were
adequate in relation to the characteristics of the business and
• that they were effectively applied.
2. On this subject no aspects emerged that needed to be notified.
3. It is also certified that the Condensed Semi-annual Financial Statements as of June 30 2008:
a) correspond to the amount shown in the Company’s accounts, books and records;
b) have been prepared in accordance with International Financial Reporting Standards
(IAS/IFRS) and, as far as we know, are adequate to give a true and fair representation of the
financial conditions, results of operations and cash flows of the Company and its consolidated subsidiaries as of 30 June 2008 and for the six months then ended.
Milan, August 25 2008
Signed by
Rodolfo De Benedetti
Chief Executive Officer
Signed by
Oliviero Maria Brega
Officer Responsible
CONDENSED SEMI-ANNUAL INTERIM FINANCIAL STATEMENTS
OF THE PARENT COMPANY
BALANCE SHEET
INCOME STATEMENT
CASH FLOW STATEMENT
CHANGES IN SHAREHOLDERS’ EQUITY
72
1.
BALANCE SHEET
ASSETS
Notes
NON-CURRENT ASSETS
30.06.2008
31.12.2007
572,689
572,714
574
TANGIBLE ASSETS
6.a.
548
INVESTMENT PROPERTY
6.b.
850
850
INVESTMENTS IN SUBSIDIARIES
6.c.
571,111
571,111
6.d.
0
0
OTHER RECEIVABLES
6.e.
180
179
156,546
163,186
36,359
34,360
CURRENT ASSETS
RECEIVABLES WITH RELATED PARTIES
7.a.
OTHER RECEIVABLES
7.b.
3,298
2,672
SECURITIES
7.c.
105,777
100,314
7.d.
11,112
25,840
729,235
735,900
30.06.2008
31.12.2007
TOTAL ASSETS
LIABILITIES AND SHAREHOLDERS’ EQUITY
570,569
574,707
SHARE CAPITAL
8.a.
359,605
359,605
RESERVES
8.b.
163,681
173,251
8.c.
30,426
29,114
16,857
12,737
153,398
158,282
NET INCOME (LOSS) FOR THE PERIOD
OTHER BORROWINGS
9.a.
149,946
149,890
OTHER PAYABLES
9.b.
34
34
DEFERRED TAXES
9.c.
1,868
7,052
9.d.
1,550
1,306
5,268
2,911
BANK OVERDRAFTS
10.a.
2
49
CURRENT LIABILITIES
OTHER BORROWINGS
10.b.
2,834
595
TRADE PAYABLES
10.c.
413
464
PAYABLES WITH RELATED PARTIES
10.d.
274
0
OTHER PAYABLES
10.e.
1,745
1,803
729,235
735,900
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
73
2.
INCOME STATEMENT
Notes
SUNDRY REVENUES AND INCOME
1st Half 2008
1st Half 2007
1,057
11
1,036
of which from related parties
COSTS FOR PURCHASE OF GOODS
12
COSTS FOR SERVICES
13
980
(40)
(41)
(1,598)
(274)
999
(1,496)
(260)
PERSONNEL COSTS
14
(865)
(766)
15
(294)
(271)
AMORTIZATION, DEPRECIATION & WRITE-DOWNS
16
(47)
(49)
(1,787)
(1,624)
1,586
1,952
OPERATING RESULT
FINANCIAL INCOME
17
963
FINANCIAL EXPENSE
18
DIVIDENDS
19
769
(6,763)
21,810
19,611
(3,720)
21,009
19,509
20
847
119
21
0
(226)
ADJUSTMENTS TO VALUE OF FINANCIAL ASSETS
22
872
(325)
16,565
17,185
292
190
16,857
17,375
INCOME / LOSS BEFORE TAXES
INCOME TAXES
NET INCOME (LOSS) FOR THE PERIOD
23
74
3.
CASH FLOW STATEMENT
1st Half 2008
1st Half 2007
16,857
17,375
OPERATING ACTIVITY
NET INCOME / (LOSS) FOR THE PERIOD
ADJUSTMENTS:
SUMS SET ASIDE TO PERSONNEL PROVISIONS NET OF WITHDRAWALS
47
49
244
136
LOSSES / (GAINS) FROM SALE OF CURRENT SECURITIES
-847
107
-872
325
ADJUSTMENTS TO THE VALUE OF NON-HEDGING DERIVATIVES
DEFERRED AND ADVANCE TAXES ON FAIR VALUE CHANGES
(RISE) REDUCTION IN NET WORKING CAPITAL
CASH FLOW FROM OPERATING ACTIVITY
0
-109
-292
-190
-2,460
-2,797
12,677
14,896
0
-2,334
INVESTMENT ACTIVITY
CHANGE IN INVESTMENTS IN SUBSIDIARIES
CHANGE IN TANGIBLE ASSETS
-21
-29
CHANGE IN OTHER FIXED ASSET RECEIVABLES
-1
-1
CASH FLOW FROM INVESTMENT ACTIVITY
-22
-2,364
FUNDING ACTIVITY
CHANGE IN OTHER BORROWINGS
2,295
227
NET CHANGE IN CURRENT SECURITIES
-18,843
-16,936
DIVIDENDS PAID OUT
-10,788
-10,788
CASH FLOW FROM FUNDING ACTIVITY
-27,336
-27,497
RISE (REDUCTION) IN NET CASH AND CASH EQUIVALENTS
-14,681
-14,965
NET CASH AND CASH EQUIVALENTS AT START OF PERIOD
25,791
17,570
NET CASH AND CASH EQUIVALENTS AT END OF PERIOD
11,110
2,605
75
4.
CHANGE IN SHAREHOLDERS’ EQUITY
Retained
Net income (loss)
capital
Share
Reserves
earnings (losses)
for the period
Total
359,605
176,600
25,540
15,118
576,863
Allocation of earnings for the year 2006
0
756
3,574
(4,330)
0
Distribution to Shareholders
0
0
0
(10,788)
(10,788)
- Change in reserve
0
(8,625)
0
0
(8,625)
- Deferred taxes on change in reserve
0
4,520
0
0
4,520
BALANCE AT JANUARY 1 2007
Adjustment of securities to fair value:
Net income for the year 2007
0
0
0
12,737
12,737
359,605
173,251
29,114
12,737
574,707
Allocation of earnings for the year 2007
0
637
1,312
(1,949)
0
Distribution to Shareholders
0
0
0
(10,788)
(10,788)
- Change in reserve
0
(15,099)
0
0
(15,099)
- Deferred taxes on change in reserve
0
4,892
0
0
4,892
Net income for first half 2008
0
0
0
16,857
16,857
359,605
163,681
30,426
16,857
570,569
Adjustment of securities to fair value:
76
5.
ACCOUNTING PRINCIPLES
Criteria for the preparation of the condensed interim financial statements and the accounting
principles adopted
The annual statutory financial statements of Cofide S.p.A. are prepared in conformity with IFRS
international accounting standards issued by the International Accounting Standards Board (IASB)
and ratified by the European Union in accordance with Regulation no. 1606/2002. This separate semiannual financial report has been prepared in a condensed form in compliance with IAS 34 "Interim
Financial Reporting”.
This semi-annual financial report does not, therefore, include all the information required of the annual
report and should be read together with the annual report and financial statements for the year ended
December 31 2007.
The accounting principles adopted in the preparation of this semi-annual condensed financial
statements are the same as those adopted for the preparation of the annual report and statutory
financial statements of the Group for the year ended December 31 2007.
These semi-annual condensed financial statements are expressed in thousands of euro except where
indicated otherwise.
BALANCE SHEET
6.
NON-CURRENT ASSETS
6.a.
TANGIBLE ASSETS
This item underwent the following changes:
Opening position
Historical
Reval.
cost
Buildings for business use
Ind. and commercial equipment
Total
Changes in the first half
Accum.
Balance
deprec.
01.01.2008
Acquisitions
Disposals
Closing position
Depreciation
cost
depr.
Historical
Reval.
cost
Accum.
Balance
deprec.
30.06.2008
1,147
--
(662)
485
--
--
--
(17)
1,147
--
(679)
468
633
--
(544)
89
42
(29)
8
(30)
646
--
(566)
80
1,780
--
(1,206)
574
42
(29)
8
(47)
1,793
--
(1,245)
548
The following depreciation rates were used:
Buildings for business use
3%
Industrial and commercial equipment:
- Electronic office equipment
20%
- Furniture and fittings
15%
- Motor vehicles
25%
- Alarm systems
30%
- Telephone systems
- Assets expendable during the year
20%
100%
77
6.b.
INVESTMENT PROPERTY
This item has not changed since the beginning of the year and refers to a building situated in the centre
of Milan the market value of which is significantly higher than its carrying value in the balance sheet.
6.c.
INVESTMENTS IN SUBIDIARIES
Opening position
Changes during the first half
01.01.2008
no. of shares
amount
CIR S.p.A.
Increases
amount
Closing position
no. of shares
amount
Write-downs/
revaluation
recoveries
amount
Decreases
no. of shares
30.06.2008
no. of shares
amount
359,458,621
564,595
--
--
--
--
--
359,458,621
564,595
COFIDE INTERNATIONAL S.A.
50,000
1,267
--
--
--
--
--
50,000
1,267
COFIDE SERVICOS DE CONSULTORIA LDA
32,000
32
--
--
--
--
--
32,000
32
5,217
--
--
--
--
--
2,469,500
--
--
EUVIS S.P.A. (formerly SO.FI.A. S.p.A.)
2,469,500
Total
6.d.
571,111
--
5,217
571,111
OTHER INVESTMENTS
Opening position
Changes during the first half
Closing position
Write-downs
revaluation
01.01.2008
amount
no. of shares
Increases
Decreases
amount
no. of shares
amount
no. of shares
recoveries
amount
no. of shares
30.06.2008
amount
C IDC S.p.A.
(in liquidation and settlement with creditors)
1,231,319
--
--
--
--
--
--
1,231,319
--
KIWI.COM – SERVICOS DE CONSULTORIA S.A.
3,812,055
--
--
--
--
--
--
3,812,055
--
--
--
Total
--
--
--
These investments were already fully written down at the end of the previous year.
6.e.
OTHER RECEIVABLES
Inland Revenue receivables
Total
30.06.2008
31.12.2007
163
162
17
17
180
179
78
7.
CURRENT ASSETS
7.a.
RECEIVABLES WITH RELATED PARTIES
Financial receivables
Other receivables
Total
30.06.2008
31.12.2007
35,323
34,360
1,036
0
36,359
34,360
The financial receivables refer essentially to an interest-bearing loan made in 2006 to the subsidiary
Cofide International S.A. to cover temporary liquidity requirements. The interest rate was set in
agreement with the counterparty based on normal market conditions. At June 30 2008 the interest rate
applied was 5.797%.
7.b.
OTHER RECEIVABLES
30.06.2008
31.12.2007
80
50
3,218
2,622
Total
3,298
2,672
Inland Revenue receivables
7.c.
SECURITIES
This item includes the following categories of securities:
30.06.2008
31.12.2007
- Banca Intermobiliare S.p.A.
25,828
41,653
Italian Government securities
15,869
15,949
- Banca Intermobiliare S.p.A.
5,116
6,009
Non-convertible bonds
4,026
4,077
54,636
32,271
302
355
105,777
100,314
Investments in other companies:
Convertible bonds:
Investment funds
Interest on securities
Total
79
The shareholding in Banca Intermobiliare S.p.A. and its convertible bonds are classified as availablefor-sale securities. Their fair value measurement involved a negative adjustment for the period of
€ 13,476 thousand which was posted directly to the appropriate equity reserve.
The fair value measurement of other securities classified as held for trading in the short term (Fair
Value Through Profit or Loss) led to a negative adjustment for the period of € 872 thousand, which
was recognized to the income statement.
7.d.
Cash and cash equivalents declined by € 14,728 thousand from € 25,840 thousand to € 11,112
thousand.
A breakdown of the changes is given in the cash flow statement together with that of current bank
liabilities.
8.
8.a.
SHARE CAPITAL
Share capital totalled € 359,604,959, and consisted of 719,209,918 ordinary shares each with a
nominal value of € 0.50. There have been no changes since the beginning of the year.
All the ordinary shares are fully paid up.
8.b.
RESERVES
The changes in equity reserves are shown in the following chart:
Share
Legal
Merger
Transition
Fair
premium
reserve
surplus
to IAS
value
reserve
reserve
5,044
20,745
43
133,314
14,105
173,251
0
637
0
0
0
637
. sale of available-for-sale securities
0
0
0
0
(1,623)
(1,623)
. fair value measurement of available-for-sale securities
0
0
0
0
(13,476)
(13,476)
. deferred taxes on sale of securities
0
0
0
0
526
526
. deferred taxes on fair value measurements at year end
0
0
0
0
4,366
4,366
5,044
21,382
43
133,314
3,898
163,681
reserve
BALANCE AT JANUARY 1 2008
TOTAL
Allocation of earnings 2007
. recognized to reserves
Change in fair value reserve:
Deferred taxes on changes in fair value reserve:
80
The “fair value reserve” reflects the valuation of the securities in current assets classified as available
for sale.
8.c.
This item contains the restatement, in application of international accounting standards, of the reserve
for the revaluation of shareholdings used until December 31 2004 to value investments in subsidiaries
using the equity method. The amount in question was € 16,399 thousand.
Compared to December 31 2007, this item rose by € 1,312 thousand after allocation of part of net
income for 2007.
9.
9.a.
OTHER BORROWINGS
30.06.2008
31.12.2007
Bank loan
149,946
149,890
Total
149,946
149,890
This item refers to an uncollateralized syndicated loan with a floating rate and a duration of five years,
entered into in 2006 with a pool of prime banks. The loan is at Euribor three or six months plus a
spread of one percentage point.
At June 30 2008 the interest rate was 5.961%.
The contractual covenants, under which the company undertakes to hold no less than 40% of the
ordinary shares of CIR until the loan is repaid, are fully complied with.
During the first half there was no failure to comply with the terms of the contract nor was there any
breach of the same.
9.b.
OTHER PAYABLES
30.06.2008
31.12.2007
Sundry payables due in over twelve months
34
34
Total
34
34
9.c.
DEFERRED TAXES
81
30.06.2008
31.12.2007
Amount of
temporary
differences
Tax
Amount of
temporary
differences
Tax
Valuation of available-for-sale securities
5,766
1,868
20,866
6,760
Valuation of securities held for trading
2,021
=
1,149
372
(2,485)
=
(248)
(80)
Valuation of trading derivatives
Total deferred taxes
1,868
7,052
The deferred taxes on the valuation of available-for-sale securities are recognized by reducing the fair
value reserve.
In application of accounting principles no advance taxes were set aside on the measurement of
securities held for trading and on trading derivatives.
9.d.
The breakdown of the provisions is as follows:
30.06.2008
31.12.2007
Employee severance and leaving indemnity
820
791
Other personnel provisions
730
515
1,550
1,306
Total
Balance at January 1 2008
Amount accrued during the period
Decreases
30.06.2008
1,306
245
(1)
1,550
The “other personnel provisions” refer to the fair value measurement, including the ancillary costs
required by current legislation for employee income, of phantom stock option plans (for further details
see paragraph 10.c. of the consolidated semi-annual financial statements).
82
10.
10.a.
CURRENT LIABILITIES
BANK OVERDRAFTS
Bank liabilities were not significant. The breakdown of any changes is given in the cash flow
statement together with than of cash and cash equivalents.
This item consists of the following:
Non-hedging derivatives
Other borrowings
Total
30.06.2008
31.12.2007
2,833
594
1
1
2,834
595
The non-hedging derivatives reflect the fair value measurement of the premium received on the sale of
a put option on 3,000,000 ordinary Cir shares, strike price 2.72, expiry on September 29 2008. Should
the counterparty exercise the option, the disbursement for the purchase of the equities would amount
to € 8,160 thousand.
10.c. TRADE PAYABLES
These refer to sums due to suppliers, which declined from € 464 thousand to € 413 thousand.
10.d. PAYABLES – RELATED PARTIES
This item includes the following:
30.06.2008
31.12.2007
Other payables
274
0
Total
274
0
10.e. OTHER PAYABLES
30.06.2008
31.12.2007
Inland Revenue payables
1,438
1,464
Social security payables
28
43
279
296
1,745
1,803
Other payables
Total
83
INCOME STATEMENT
11.
SUNDRY REVENUES AND INCOME
1st Half
1st Half
2008
2007
1,036
980
Real estate revenues
13
12
Other revenues and recovery of costs
8
7
Services supplied to related parties
Total
1,057
999
The services supplied to related parties refer to management support and communication services
supplied to Cir S.p.A.
12.
COSTS FOR THE PURCHASE OF GOODS
This item shows the value of purchases of consumable goods made by the company.
The change was from € 41 thousand to € 40 thousand.
13.
COSTS FOR SERVICES
1st Half
1st Half
2008
2007
Services supplied by related parties
274
260
Administrative, fiscal, legal and corporate governance consulting fees
669
663
Directors’ and Statutory Auditors’ emoluments
435
372
Other operating expenses
220
201
1,598
1,496
Total
The services supplied by related parties refer to the financial, legal and administrative assistance
carried out by Cir S.p.A.
14.
PERSONNEL COSTS
Personnel costs rose from € 766 thousand to € 865 thousand, with a rise of € 99 thousand.
They include the amount of € 215 thousand set aside to personnel provisions in relation to Phantom
stock options.
84
15.
1st Half
1st Half
2008
2007
104
95
41
39
135
135
14
2
294
271
Taxes , duties and charges
Obligatory charges and membership fees
Donations to charity
Other expenses and charges
Total
16.
This item contains only the depreciation of tangible assets, which went down from € 49 thousand to €
47 thousand.
17.
FINANCIAL INCOME
1st Half
1st Half
2008
2007
Interest income from related parties
963
769
Interest income on Italian Government securities
337
312
Interest income on fixed income securities
137
469
Interest income on deposits
148
253
1
149
1,586
1,952
Other financial income
Total
18.
FINANCIAL EXPENSE
1st Half
1st Half
2008
2007
4,478
3,669
6
8
40
43
Other financial expense
2,239
0
Total
6,763
3,720
Interest expense and charges on bank loan
Interest expense and commissions on bank accounts
Commissions on stock exchange trades
85
19.
DIVIDENDS
1stHalf
1st Half
2008
2007
Dividends from related parties:
-
Cir S.p.A.
-
Cofidefin Servicos de Consultoria Lda
Total
17,973
17,973
1,638
1,536
19,611
19,509
2,199
1,500
2,199
1,500
21,810
21,009
Dividends from other companies:
-
Banca Intermobiliare S.p.A.
Total
Total dividends
20.
1st Half
1st Half
2008
2007
847
0
Gains from trading fixed income securities
0
2
Gains from trading investment funds
0
117
847
119
1st Half
1st Half
2008
2007
Losses from trading fixed income securities
0
226
Total
0
226
Gains from trading available-for-sale equity investments
Total
21.
86
22.
1st Half
1st Half
Write-down of other fixed asset equity investments
2008
0
2007
(193)
Write-down of fixed income securities
(132)
(641)
Revaluation of fixed income securities
0
6
1,004
503
872
(325)
1st Half
1st Half
2008
0
2007
0
Deferred and advance taxes
292
190
Total
292
190
Revaluation of investment funds
Total
23.
INCOME TAXES
Current taxes
Against the positive earnings figure no current tax provisions were set aside mainly because dividends
are no longer subject to income tax according to current Italian regulations.
No deferred taxes were set aside on tax losses since they are not expected to be recovered.
24.
RELATED PARTY TRANSACTIONS
Information regarding the impact that related-party transactions had on the balance sheet and the
income statement can be found in the comment on the individual items of the financial statements.
The paragraph “Other information” of the Interim Management Report shows the effects of the above
transactions.
25.
DIVIDENDS PAID OUT
The dividends paid out in first half 2008 (relating to the distribution of the earnings of 2007, as per the
resolution adopted by the Shareholders’ Meeting held on April 29 2008) totalled € 10,788 thousand,
equal to € 0.015 per share.
87
26.
SUBSEQUENT EVENTS
For information on subsequent events reference should be made to the paragraph in the Management
Report on this subject.
27.
SIGNIFICANT NON-RECURRING EVENTS AND TRANSACTIONS AND NONTYPICAL AND/OR UNUSUAL TRANSACTIONS
During the first half of the year there were no items of a non-recurring nature nor were there any nontypical and/or unusual transactions.
28.
NET FINANCIAL POSITION
The net financial position has the following breakdown:
A.
Cash and bank deposits
B.
Other free cash flow
C.
Securities held for trading
74,788
52,563
D.
Cash and cash equivalents
85,900
78,403
E.
Current financial receivables
36,359
34,360
F.
Current bank borrowings
2
49
- Short term loans made to related parties
30.06.2008
11,112
31.12.2007
25,840
0
0
G.
Current part of non-current debt
0
0
H.
Other current borrowings
2,834
595
I.
Current financial debt (F) + (G) + (H)
2,836
644
J.
Net current financial debt (surplus) (I) – (E) – (D)
(119,423)
(112,119)
K.
Non-current bank borrowings
149,946
149,890
L.
Non-current financial debt
149,946
149,890
M.
Net financial debt (surplus) (J) + (L)
30,523
37,771
29.
OTHER INFORMATION
The following commitments entered into by the company should be noted.
30.06.2008
31.12.2007
Securities as collateral for financial transactions
6,522
6,580
Total
6,522
6,548
FINANCIAL RISK MANAGEMENT
Regarding business risks, the main financial risks identified, monitored and actively managed by the
company were the following:
88
a)
b)
c)
The interest rate risk from exposure to movement in interest rates;
The credit risk from the possibility of a counterparty defaulting;
The liquidity risk resulting from a lack of financial resources to meet short term commitments.
Interest rate risk
Fluctuation in interest rates affects the market value of financial assets and the level of net financial
expense.
The company continually monitors its exposure to interest rate risk and manages this risk by investing
in financial instruments that are consistent with its medium-term funding through the syndicated loan
at a floating rate which matures in 2011.
Credit risk
Credit risk means the exposure of the company to potential losses resulting from the failure of a
counterparty to meet its obligations. In relation in particular to the financial counterparty risk resulting
from the investment of liquidity and from derivatives positions, counterparties are selected according
to guidelines which set out the characteristics of counterparties suitable for financial transactions. The
list of possible counterparties includes both national and international companies with a high credit
rating.
The company has not had any cases of default of its counterparties.
At June 30 2008 there were no significant concentrations of credit risk.
Liquidity risk
Liquidity risk is the risk that financial resources may not be available or may be available only at a
monetary cost. As things stand today the company believes that it will be able to fulfil its expected
financial needs on the basis of its free cash flow and expected future cash inflows. The objective of
liquidity risk management is not only that of guaranteeing sufficient available financial resources to
cover short term commitments, but also to ensure where necessary a sufficient level of operating
flexibility for the development programs within the Group.
Milan, July 31 2008
THE CHAIRMAN OF THE BOARD OF DIRECTORS
- Ing. Carlo DE BENEDETTI -
***********************
The officer responsible for the preparation of the accounting and corporate documents Oliviero
Maria Brega hereby attests in accordance with the terms of paragraph 2 article 154 bis of the
Finance Consolidation Act (TUF) that the accounting information contained in the
“Condendensed Semi-annual Interim Financial Statements of the Parent Company as of June 30
2008” corresponds to the results of the Company’s books and general ledger.
89
LIST OF EQUITY INVESTMENTS
AT JUNE 30 2008
in accordance with Art. 38.2 of
D.Lgs. no. 127/91
90
SUBSIDIARIES CONSOLIDATED USING THE FULL INTEGRATION METHOD
(in euro or foreign currency)
Name of company
COFIDE GROUP
CIR S.p.A. (*)
COFIDE INTERNATIONAL S.A.
EUVIS S.p.A.
Head
Office
Italy
Luxembourg
Share
capital
Currency Investor companies
% of
ownership
395,465,333,50
500,000.00
€ COFIDE S.p.A.
€ COFIDE S.p.A.
45.45
100.00
Italy
2,750,000.00
€ COFIDE S.p.A.
54.64
CIR GROUP
CIR INTERNATIONAL S.A.
INTERGEFI S.r.l.
Luxembourg
Italy
1,000,000.00
500,000.00
€ CIR S.p.A.
€ CIR S.p.A.
100.00
100.00
COFIDEFIN SERVICOS
DE CONSULTORIA Lda
Portugal
125,000.00
€ CIR S.p.A.
COFIDE S.p.A.
74.40
25.60
100.00
CIRINVEST S.p.A.
Italy
121,750.00
€ CIR S.p.A.
100.00
JUPITER FINANCE S.p.A.
Italy
600,000.00
€ CIR S.p.A.
98.80
JUPITER MARKETPLACE S.p.A.
Italy
1,000,000.00
CIGA LUXEMBOURG S.A.r.l.
Luxembourg
SORGENIA HOLDING S.p.A.
(formerly Energia Holding S.p.A.)
SORGENIA S.p.A.
ENERGIA ITALIANA S.p.A.
€ JUPITER FINANCE S.p.A.
100.00
318,200,000.00
€ CIR S.p.A.
100.00
Italy
Italy
Italy
129,668,732.00
8,676,723.49
26,050,000.00
€ CIR S.p.A.
€ SORGENIA HOLDING S.p.A.
€ SORGENIA S.p.A.
SORGENIA IDRO S.r.l.
(formerly Energia Plassier S.r.l)
Italy
50,000.00
ENERGIA LUCANA S.p.A.
Italy
SORGENIA PROGETTI S.r.l.
(formerly Energia Progetti S.r.l.)
SORGENIA GROUP
68.13
79.52
78.00
€ SORGENIA S.p.A.
100.00
750,000.00
€ SORGENIA S.p.A.
TECNOPARCO VALBASENTO S.p.A.
80.00
20.00
100.00
Italy
500,000.00
€ SORGENIA S.p.A.
80.00
ENERGIA MOLISE S.p.A.
Italy
14,600,000.00
€ SORGENIA S.p.A.
100.00
ENERGIA APRILIA S.r.l.
Italy
10,000.00
€ SORGENIA S.p.A.
90.00
SORGENIA MINERVINO S.p.A.
(formerly Energia Minervino S.p.A.)
Italy
1,700,000.00
€ SORGENIA S.p.A.
75.00
ENERGIA LOMBARDA S.p.A.
Italy
120,000.00
€ SORGENIA S.p.A.
100.00
SORGENIA PUGLIA S.p.A.
(formerly Energia Modugno S.p.A.)
Italy
7,623,190.00
€ SORGENIA S.p.A.
90.22
SORGENIA SOLAR S.r.l.
(formerly Soluxia S.r.l.)
Italy
670,000.00
€ SORGENIA S.p.A.
100.00
SORGENIA VENTO S.p.A.
(formerly Anemon S.p.A.)
Italy
1,343,156.00
€ SORGENIA S.p.A.
100.00
SORGENIA MENOWATT S.r.l.
(formerly Eligent S.r.l.)
Italy
136,050.00
€ SORGENIA S.p.A.
70.00
11,745,454.00
USD SORGENIA S.p.A.
69.47
NOVENTI VENTURES II LP
United States
SOLUXIA SARDA S.r.l.
Italy
85,200.00
SORGENIA E&P S.p.A.
Italy
2,500,000.00
RACOON S.r.l.
Italy
20,000.00
€ SORGENIA SOLAR S.p.A.
(formerly Soluxia S.r.l.)
€ SORGENIA S.p.A.
90.00
100.00
€ SORGENIA S.p.A.
100.00
(*) 47.85% of voting rights
91
Name of company
Head
Office
Share
capital
COMPAGNIE FINANCIERE DE SUROIT S.A.
France
310,700.00
SOCIÉTÉ FRANÇAISE D’EOLIENNES S.A.
France
9,808,287.00
SOCIÉTÉ FRANÇAISE DES ALIZÉS SARL
France
580,125.00
€ SOCIÉTÉ FRANÇAISE D’EOLIENNES S.A.
100.00
SAINT CRÉPIN S.a.s.
France
1,657,000.00
100,00
ARGONNE S.a.s.
France
2,179,000.00
100.00
€ SORGENIA S.p.A.
€ SORGENIA S.p.A.
COMPAGNIE FINANCIERE DE SUROIT S.A.
% of
ownership
100.00
84.19
15.70
99.89
CÔTE DE CHAMPAGNE SUD S.a.s.
France
802,000.00
100.00
CÔTE DE CHAMPAGNE S.a.s.
France
2,179,000.00
100.00
VALLÉE DE L'AUTHIE S.a.s.
France
37,000.00
100.00
BERNAY ST MARTIN S.a.s.
France
37,000.00
100.00
EOLE CONSTRUCTION ET MAINTENANCE S.a.s.
France
37,000.00
100.00
VALLE DE L’EPTE S.a.s.
France
37,000.00
100.00
HOLDING DES PARCS EOLIENS DE LA BAUME SARL
France
7,700.00
100.00
HOLDING VOIE SACRÉE S.a.s.
France
9,757,000.00
100.00
LONGEVILLE S.a.s.
France
37,000.00
100.00
MAURECHAMPS S.a.s.
France
1,117,000.00
100.00
ORME CHAMPAGNE S.a.s.
France
37,000.00
100.00
EOLIENNES NORD PAS DE CALAIS S.a.s.
France
1,973,300.00
100.00
RAIVAL S.a.s.
France
1,117,000.00
100.00
VALETTE S.a.s.
France
1,117,000.00
100.00
VILLER S.a.s.
France
577,000.00
100.00
BOUILLANCOURT EN SÉRY S.a.s.
France
37,000.00
100.00
MESNIL REAUME S.a.s.
France
37,000.00
100.00
SAINT GERMAIN MARENCENNES S.a.s.
France
37,000.00
100.00
ECHELLE S.a.s.
France
37,000.00
100.00
BLOMBAY S.a.s.
France
37,000.00
100.00
CÔTE DE LA SAUSETTE S.a.s.
France
37,000.00
100.00
MACHAULT S.a.s.
France
37,000.00
100.00
SEMIDE CONTREUVE S.a.s.
France
37,000.00
100.00
LEFFINCOURT S.a.s.
France
37,000.00
100.00
LA RENARDIÈRE S.a.s.
France
37,000.00
100.00
PLAINCHAMP S.a.s.
France
37,000.00
100.00
FRESNOY FOLNY S.a.s.
France
37,000.00
100.00
JONQUIÈRES S.a.s.
France
37,000.00
100.00
SOCIÉTÉ FRANÇAISE DE PHOTOVOLTAIQUE
France
37,000.00
100.00
GRAND RHÔNE S.a.s.
France
37,000.00
100.00
HERBISSONNE S.a.s.
France
37,000.00
50.00
50.82
ESPRESSO GROUP
GRUPPO EDITORIALE L’ESPRESSO S.p.A. (**)
Italy
65,167,018.20
€ CIR S.p.A.
FIN.E.GI.L. EDITORIALE S.p.A.
Italy
18,161,000.00
€ GRUPPO EDITORIALE L’ESPRESSO S.p.A.
100.00
S.E.T.A. S.p.A.
Italy
774,750.00
71.00
(**) 54.54% of voting right
92
Name of company
Head
Office
Share
capital
A. MANZONI & C. S.p.A.
Italy
15,000,000.00
100.00
CENTRO PREPARAZIONE STAMPA –
C.P.S. S.p.A.
Italy
520,000.00
100.00
ROTOCOLOR S.p.A.
Italy
23,000,000.00
100.00
SOMEDIA S.p.A.
Italy
500,000.00
100.00
ROTOSUD S.p.A.
Italy
2,860,000.00
100.00
ELEMEDIA S.p.A.
EDITORIALE FVG S.p.A.
EDITORIALE LA NUOVA SARDEGNA S.p.A.
E.A.G. S.p.A.
EDIZIONI NUOVA EUROPA S.p.A.
EDITORIALE LA CITTÀ S.p.A.
Italy
Italy
Italy
Italy
Italy
Italy
25,000,000.00
87,959,976.00
775,500.00
815,000.00
104,000.00
332,000.00
€
€
€
€
€
€
GRUPPO EDITORIALE L’ESPRESSO S.p.A.
100.00
92.12
100.00
100.00
100.00
100.00
S.E.L.P.I. S.p.A.
Italy
1,000,000.00
70.00
30.00
100.00
EDIGRAF S.r.l.
KATAWEB NEWS S.r.l.
KSOLUTIONS S.p.A.
EDITORIALE METROPOLI S.p.A.
RETE A S.p.A.
ALL MUSIC S.p.A.
SAIRE S.r.l.
ROTONORD S.p.A.
Italy
Italy
Italy
Italy
Italy
Italy
Italy
Italy
312,000.00
10,330.00
1,000,000.00
500,000.00
13,198,000.00
6,500,000.00
46,800.00
120,000.00
€
€
€
€
€
€
€
€
66.67
100.00
100.00
100.00
100.00
100.00
100.00
100.00
SOGEFI S.p.A. (***)
Italy
60,397,475.84
€ CIR S.p.A.
REJNA S.p.A.
Italy
5,200,000.00
€ SOGEFI S.p.A.
99.84
FILTRAUTO S.A.
France
5,750,000.00
€ SOGEFI S.p.A.
99.99
ELEMEDIA S.p.A.
ELEMEDIA S.p.A.
ELEMEDIA S.p.A.
RETE A S.p.A.
ROTOCOLOR S.p.A.
% of
ownership
SOGEFI GROUP
56.41
SOGEFI FILTRATION Ltd
United Kingdom
SOGEFI FILTRATION B.V.
Netherlands
5,126,737
GBP SOGEFI S.p.A.
100.00
1,125,000.00
€ SOGEFI S.p.A.
100.00
SOGEFI FILTRATION A.B.
Sweden
100,000
SEK SOGEFI S.p.A.
100.00
SOGEFI FILTRATION S.A.
Spain
12,953,713.60
€ SOGEFI S.p.A.
FILTRAUTO S.A.
SOGEFI FILTRATION d.o.o.
Slovenia
10,291,798.00
€ SOGEFI S.p.A.
86.08
13.92
100.00
100.00
ALLEVARD REJNA
AUTOSUSPENSIONS S.A.
SOGEFI FILTRATION S.p.A.
France
Italy
36,000,000.00
21,951,000.00
€ SOGEFI S.p.A.
€ SOGEFI S.p.A.
99.98
100.00
FILTRAUTO GmbH (in liquidation)
Germany
51,130.00
€ SOGEFI FILTRATION B.V.
100.00
SOGEFI FILTRATION DO BRASIL Ltda
Brazil
29,857,374
Real SOGEFI FILTRATION S.A.
99.99
SOGEFI FILTRATION ARGENTINA S.A.
Argentina
10,691,607
Pesos SOGEFI FILTRATION DO BRASIL Ltda
FILTRAUTO S.A.
SOGEFI FILTRATION S.p.A.
91.90
7.28
0.81
99.99
(***) 57.74% of voting rights
93
Name of company
Head
Office
SHANGHAI SOGEFI FILTRATION Co., Ltd
China
Share
Capital
3,600,000
USD SOGEFI FILTRATION S.p.A.
% of
ownership
100.00
ALLEVARD SPRINGS Co. Ltd
United Kingdom
4,000,002
GBP ALLEVARD REJNA AUTOSUSPENSIONS S.A.
99.99
ALLEVARD FEDERN GmbH
Germany
50,000.00
€ ALLEVARD REJNA AUTOSUSPENSIONS S.A.
100.00
ALLEVARD REJNA ARGENTINA S.A.
Argentina
600,000
Pesos ALLEVARD REJNA AUTOSUSPENSIONS S.A.
99.97
IBERICA DE SUSPENSIONES S.L. (ISSA)
Spain
10,529,668.00
50.00
ALLEVARD MOLAS DO BRAZIL Ltda
Brazil
37,161,683
Real ALLEVARD REJNA AUTOSUSPENSIONS S.A.
ALLEVARD SPRINGS Co. Ltd
99.99
0.01
100.00
UNITED SPRINGS Ltd
United Kingdom
6,500,000
GBP ALLEVARD REJNA AUTOSUSPENSIONS S.A.
100.00
UNITED SPRINGS B.V.
Netherlands
254,979.00
100.00
SHANGHAI ALLEVARD SPRINGS Co. Ltd
China
5,335,308.00
60.58
UNITED SPRINGS S.A.S.
ALLEVARD SOGEFI U.S.A. Inc.
( formerly Allevard Springs U.S.A. Inc.)
LUHN & PULVERMACHER – DITTMANN
& NEUHAUS GmbH
France
10,218,000.00
99.99
FILTRAUTO DO BRASIL Ltda
United States
Germany
Brazil
20,055,000
50,000.00
354,600
USD SOGEFI S.p.A.
100.00
€ ALLEVARD FEDERN GmbH
Real SOGEFI FILTRATION DO BRASIL Ltda
FILTRAUTO S.A.
100.00
99.00
1.00
100.00
HOLDING SANITÀ E SERVIZI GROUP
HSS – HOLDING SANITÀ E SERVIZI S.p.A.
Italy
6,479,972.00
€ CIR S.p.A.
65.42
REDANCIA S.r.l.
Italy
100,000.00
€ HOLDING SANITÀ E SERVIZI S.p.A.
100.00
REHAB S.r.l.
Italy
120,000.00
100.00
OSPEDALE DI SUZZARA S.p.A.
Italy
1,000,000.00
65.00
MEDIPASS S.p.A.
Italy
700,000.00
100.00
RESIDENZE ANNI AZZURRI S.r.l.
HSS REAL ESTATE S.p.A.
(formerly Residenze Anni Azzurri Monza S.p.A.)
Italy
27,079,034.00
100.00
Italy
2,064,000.00
€ RESIDENZE ANNI AZZURRI S.r.l.
100.00
TUGA S.r.l.
Italy
50,000.00
PARCO IMMOBILIARE S.r.l.
Italy
100,000.00
LE COLLINE DEL PO S.r.l.
Italy
MEIA S.r.l.
Italy
ISTITUTO DI RIABILITAZIONE S. STEFANO S.r.l.
Italy
2,500,000.00
ABITARE IL TEMPO S.r.l.
Italy
99,000.00
CASA ARGENTO S.r.l.
Italy
1,096,500.00
ARIEL TECHNOMEDICAL S.r.l.
Italy
10,000.00
€ REDANCIA S.r.l.
90.00
100.00
50,000.00
100.00
50,000.00
100.00
100.00
€ ISTITUTO DI RIABILITAZIONE S. STEFANO S.r.l.
55.00
€ ABITARE IL TEMPO S.r.l.
51.00
51.00
SANITECH S.r.l.
Italy
100,000.00
50.10
HEALTH EQUITY S.r.l.
CYBER THERAPHY S.r.l.
Italy
Italy
100,000.00
100,000.00
HEALTH EQUITY S.r.l.
60.00
20.00
60.00
80.00
Italy
100,000.00
€ CIR S.p.A.
55.00
Italy
3,000,000.00
DRY PRODUCTS GROUP
DRY PRODUCTS S.p.A.
FOOD MACHINERY MEDIUM VOLUME S.p.A.
(in liquidation)
€ DRY PRODUCTS S.p.A.
100.00
94
Name of company
CIR INTERNATIONAL GROUP
CIR VENTURES L.P.
CIR INVESTMENT AFFILIATE S.A.
Head
Office
United States
Luxembourg
Share
capital
22,020,000
277,988.00
USD CIR INTERNATIONAL S.A.
€ CIR INTERNATIONAL S.A.
% of
ownership
99.00
96.00
CIGA LUXEMBOURG GROUP
CIRFUND – CONSULTADORIA ECONOMICA E
PARTECIPAÇOES, SOCIEDADE UNIPESSOAL LDA
MEDINVEST Plc
Portugal
Ireland
318,000,000.00
361,489.87
€ CIGA LUXEMBOURG S.A.r.l.
USD CIRFUND – CONSULTADORIA ECONOMICA E
PARTECIPAÇOES, SOCIEDADE UNIPESSOAL LDA
100.00
87.02
95
INVESTMENTS IN JOINT VENTURES AND ASSOCIATES
VALUED USING THE EQUITY METHOD
Name of company
Head
Office
Share
capital
% of
ownership
SORGENIA GROUP
TIRRENO POWER S.p.A.
Italy
91,130,000.00
GICA S.A.
Switzerland
LNG MED GAS TERMINAL S.r.l.
Italy
VOIE SACRÉE S.a.s.
France
2,197,000.00
EPENSE S.a.s.
France
802,000.00
FIN GAS S.r.l.
Italy
ESPRESSO GROUP
LE SCIENZE S.p.A.
Italy
103,400.00
EDITORIALE CORRIERE ROMAGNA S.r.l.
EDITORIALE LIBERTÀ S.p.A.
ALTRIMEDIA S.p.A.
Italy
Italy
Italy
2,856,000.00
1,000,000.00
517,000.00
SOGEFI GROUP
ALLEVARD RESSORTS COMPOSITES S.A.S.
France
OAKWOOD GLOBAL FINANCE S.C.A.
RESOURCE ENERGY B.V.
€ ENERGIA ITALIANA S.p.A.
50.00
3,500,000.00
CHF SORGENIA S.p.A.
25.00
18,440,655.10
€ FIN GAS S.r.l
69.77
25.00
€ SOCIÉTÉ FRANÇAISE D’EOLIENNES
25.00
€ SORGENIA S.p.A.
50.00
50.00
€ FIN.E.GI.L. EDITORIALE S.p.A.
49.00
35.00
35.00
300,000.00
50.00
Luxembourg
561,461.25
CIR INVESTMENT AFFILIATE S.A.
35.86
11.68
47.54
Netherlands
100,000
47.50
10,000.00
96
INVESTMENTS IN SUBSIDIARIES AND ASSOCIATES
VALUED USING THE COST METHOD (*)
Name of company
Head
Office
Share
capital
%o
ownership
CIR GROUP
CIR VENTURE S.r.l. (non-operational)
Italy
10,000.00
€ CIR S.p.A.
100.00
TECNOPARCO VALBASENTO S.p.A.
Italy
945,000.00
€ SORGENIA S.p.A.
20.00
E-ENERGY S.r.l.
Italy
15,000.00
€ SORGENIA S.p.A.
20.00
EOLICA BISACCIA S.r.l.
Italy
10,000.00
€ SORGENIA S.p.A.
20.00
SORGENIA ROMANIA S.r.l.
Romania
200.00
Ron SORGENIA S.p.A.
100.00
TORRE MAGGIORE WIND POWER S.r.l.
Italy
10,000.00
€ SORGENIA S.p.A.
75.00
ENOTRYA S.r.l. (in liquidation)
Italy
78,000.00
€ ELEMEDIA S.p.A.
70.00
ZIVAGO S.p.A. (in liquidation)
CELLULARMANIA.COM S.r.l.
(in liquidation)
UHURU MULTIMEDIA S.r.l.
(non-operational
Italy
3,096,000.00
€ ELEMEDIA S.p.A.
50.00
Italy
10,400.00
€ ELEMEDIA S.p.A.
100.00
Italy
10,400.00
€ KSOLUTIONS S.p.A.
100.00
BENEDETTINE S.r.l. (in liquidation)
Italy
255,000.00
SORGENIA GROUP
ESPRESSO GROUP
35.00
SOGEFI GROUP
MAKKAWI CARS & LORRIES Co.
Sudan
900,000
Ls.Pt. REJNA S.p.A.
25.00
HOLDING SANITÀ E SERVIZI GROUP
OSIMO SALUTE S.p.A.
Italy
750,000.00
25.50
CONSORZIO OSPEDALE DI OSIMO
Italy
20,000.00
24.70
FIDIA S.r.l.
Italy
10,200.00
€ HEALTH EQUITY S.r.l.
50.00
JESILAB S.r.l.
Italy
80,000.00
€ HEALTH EQUITY S.r.l.
ISTITUTO DI RIABILITAZIONE S. STEFANO S.r.l.
SANATRIX S.r.l.
Italy
843.700.00
13.75
41.25
55.00
26.44
BANQUE DUMENIL LEBLE S.A.
(in liquidation)
France
DUMENIL LEBLE (SUISSE) S.A.
Switzerland
PHA – Participations Hotelieres Astor
France
CIR VENTURES MANAGEMENT CO. L.L.C. United States
OAKWOOD GLOBAL FINANCE
MANAGEMENT S.A.
Luxembourg
16,007,146.81
100.00
102,850
CHF CIR INTERNATIONAL S.A.
100.00
12.150,00
99.99
7,100
USD CIR INTERNATIONAL S.A.
20.00
31,000,00
CIR INVESTMENT AFFLILIATE S.A.
34.69
11.31
46.00
(*) Investments that are non-significant, non-operational or that have been recently acquired, unless stated otherwise
97
INVESTMENTS IN OTHER COMPANIES
VALUED USING THE COST METHOD (*)
(in euro o valuta)
Name of company
Head
Office
Share
Capital
% of
ownership
COFIDE GROUP
KIWI.COM – SERVICOS DE CONSULTORIA S.A.
C IDC S.p.A.
(in liquidation and settlement with creditors)
Portugal
Italy
45,739,020.50
4,000,000.00
€ COFIDE S.p.A.
€ COFIDE S.p.A.
CIR S.p.A.
2.08
1.23
1.23
2.46
€ ANEMON S.p.A.
2.50
SORGENIA GROUP
8.2 ENERGIA S.r.l.
Italy
100,000.00
A.G.F. S.r.l.
Italy
30,000.00
AGENZIA A.N.S.A. S. COOP. A.r.l.
Italy
CONSULEDIT S. CONSORTILE a.r.l.
Italy
ESPRESSO GROUP
10.00
12,307,880.82
S.E.T.A. S.p.A.
E.A.G. S.p.A.
3.21
3.21
3.21
3.21
2.56
1.92
17.32
20,000.00
S.E.T.A. S.p.A.
E.A.G. S.p.A.
6.62
3.99
0.62
0.49
0.47
0.39
12.58
E-INK CORPORATION
United States
IMMOBILIARE EDITORI GIORNALI S.r.l.
Italy
165,456,000
830,462.00
USD GRUPPO EDITORIALE L’ESPRESSO S.p.A.
€ S.E.T.A. S.p.A.
TRENTO PRESS SERVICE S.r.l.
Italy
260,000.00
€ S.E.T.A. S.p.A.
0.05
0.17
0.12
0.29
14.40
AGENZIA INFORMATIVA
ADRIATICA d.o.o.
Slovenia
12,767.75
CLUB D.A.B. ITALIA – CONSORZIO
Italy
18,075.96
AUDIRADIO S.r.l.
Italy
258,000.00
PRESTO TECHNOLOGIES Inc. (non- operational)
United States
7,663,998.4
USD ELEMEDIA S.p.A.
7.83
CERT – CONSORZIO EMITTENTI
RADIO TELEVISIVE
Italy
177,531.00
€ RETE A S.p.A.
6.67
CONSORZIO COLLE MADDALENA
Italy
62,224.99
TELELIBERTÀ S.p.A.
Italy
500,000.00
AFICO FILTERS S.A.E.
Egypt
10,000,000
BRE-MA S.r.l.
Italy
30,000.00
Sit. EDITORIALE FVG S.p.A.
€ ELEMEDIA S.p.A.
€ A. MANZONI & C. S.p.A.
€ RETE A S.p.A.
19.00
14.29
3.63
4.17
19.00
SOGEFI GROUP
EGP SOGEFI FILTRATION S.p.A.
€ SOGEFI S.p.A.
19.00
15.00
(*) Holdings of less than 20%
98
INVESTMENTS IN OTHER COMPANIES
VALUED AT FAIR VALUE (*)
Name of company
COFIDE GROUP
BANCA INTERMOBILIARE DI
INVESTIMENTI E GESTIONI S.p.A.
Head
Office
Italy
Share
capital
155,640,716.00
€ COFIDE S.p.A.
% of
ownership
3.77
(*) Holdings of less than 20%
99
INVESTMENTS IN SUBSIDIARIES AND ASSOCIATES AND IN OTHER COMPANIES
NOT INCLUDED IN THE CONSOLIDATED FINANCIAL STATEMENTS
Name of company
Head
Office
Share
capital
% of
ownership
CIR GROUP
C.B.D.O. - COMPAGNIE BOURGUIGNONNE
DES OENOPHILES EURL (in liquidation)
France
9,000.00
€ CIGA LUXEMBOURG S.A.r.l.
SO.GE.LOC. S.a.r.l. (in liquidation)
VICTOR HUGO CENTRE D’AFFAIRES S.A.r.l. (in
liquidation)
France
7,622.45
€ C.B.D.O. EURL
100.00
99.80
France
7,622.45
€ C.B.D.O. EURL
76.00
FINAL S.A. (in liquidation)
France
2,324,847.00
€ C.B.D.O. EURL
47.73
OWP Parc Eolienne du Banc des Olives
France
10,000.00
20.00
OTA
France
37,000.00
50.00
SOGEFI GROUP
INTEGRAL S.A.
Argentina
2,515,600
SORGENIA GROUP
LES NOUVEAUX ATELIERS
MECANIQUES S.A. (in liquidation)
Belgium
AUTORUBBER S.r.l.
Italy
Pesos FILTRAUTO S.A.
SOGEFI FILTRATION ARGENTINA S.A.
93.50
6.50
100.00
2,880,000.00
€ SOGEFI S.p.A.
REJNA S.p.A.
74.90
25.10
100.00
50,000.00
€ REJNA S.p.A.
100.00
100
Independent Auditors’ Review Report
101

circir - Cofide

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