Financial Statements As of 31 December 2007

200Financial Statements 7

Financial Statements as of 31.12.2007 Sopaf 0 0 5 11 Letters totheShareholders 0 0 12 The Sopaf Group: KeyFigures The SopafGroup: 8

Key Developments Sopaf Group: Corporate Governance 1 0 49 19 0 0

7 4 Performance Report onOperating Financial Statements Sopaf S.p.A. 16 Financial Statements Consolidated Sopaf S.p.A.shares ofthe Performance

Table of Contents

Sopaf

> Letter to the Shareholders

To the Shareholders:

On 28 March 2008, the Sopaf S.p.A. board of directors elected to avail itself of the longer term of 180 days from year end for the approval of the financial statements as of 31 December 2007, as permitted by Article 2364 of the Italian Civil Code and in conformity with the provisions of the corporate by-laws (Article 13). The board made such decision in light of the complexity of various non-recurring transactions and the Group’s restructuring in 2007. The year of 2007 was marked by strong turbulence in the financial markets, essentially due to the so-called “sub-prime crisis” that Alan Greenspan has defined as “the most acute market crisis since the end of World War II.” More specifically, starting in July 2007, the global financial system experienced a shock as the insolvencies in the high-risk, sub-prime mortgage loan market in the United States wielded their effects on stock markets around the world. From a macroeconomic perspective, the growth of the global economy slowed, with a slight deceleration in Europe countered by a more pronounced slowdown in Japan and more importantly, in the United Stated.

The scant indications set out above do not fully account for the sudden transformation of the world’s financial markets that has been inappropriately dubbed the “sub-prime mortgage crisis”. In reality, we are up against a scenario that has not only changed drastically, but has affected the actual capacity of banks and financial institutions to survive. We believe that scenario will continue for some time ahead. We can somewhat proudly say that the Company’s management proved adept at anticipating this negative shift rather than falling victim to it, and did so by adopting a series of measures that are summarized below, starting in the second half of 2006: • Divestiture of industrial shareholdings deemed ripe for sale; • Divestiture of most of the Group’s real estate portfolio; • Reduction of bank debt from € 160 million as of 30 June 2006 to € 115 million as of 31 December 2007; • Stabilization of the holding company’s financial debt through the issue of 5-year convertible bonds and execution of financing to support medium-/long term investments; • Acquisition of 100% of two funds management companies (with the latest acquisition finalized in the first few months of 2008 consisting of the buyout of the minority interests held in the subsidiary company, PWM Sgr) with the assets under management growing to equal to roughly € 250 million; • Acquisition of the shareholdings in Banca Bipielle Net S.p.A. (now known as Banca Network Investimenti S.p.A.), Area Life International Assurance Ltd. and Aviva Previdenza S.p.A. (purchased in January 2008) for a total outlay of roughly € 83 million; • Launch of the investment vehicle, China Opportunity Fund, with capitalization of € 33.5 million; • Reinforcement of the managerial structure; • Absence of off-balance-sheet financial risks. Sopaf 06

As a result of these measures, the year of 2007 ended with consolidated net profit of € 35.8 million, with reflected growth of 21% compared with the aggregate earnings for the 18-month period from 30 June 2005 to 31 December 2006 (the period in which the fiscal year end was changed from 30 June to 31 December). The net profit for 2007 represents the strongest earnings performance in Sopaf’s history, and serves to substanti- ate the validity of the decisions made, particularly in view of the inclusion of some € 13.4 million of charges to the carrying value of the affiliate company, Coronet (whose book value has been reduced to zero) and € 2 million booked as Sopaf’s share of the losses of Banca Network Investimenti which was acquired during the year. It is also noted that Sopaf wrote down the book value of Coronet by € 4.3 million during the 2005-2006 period. After inclusion of the annual profit, consolidated shareholders’ equity comes to € 175 million, whereas the shareholders’ equity of Sopaf S.p.A. is equal to € 131 million. As of 31 December 2006, the balances were € 156 million and € 83 million, respectively. After taking into account the acquisitions made during the year and the issuance of convertible bonds, the consolidated net financial position as of 31 December 2007 was € 152 million versus € 122 million as of 31 December 2006.

> Prospects Sopaf is well positioned to capitalize on the new challenges and the new opportunities that the changing market scenario offers. At this point, we have a structure that is complete from an operational perspective, a motivated and unified management team, investments in high-growth sectors, a balanced financial position, and a strong balance sheet. During the current year, it is the firm commitment of management to continue with the plan to sell off assets that do not offer, including as a result of changing economic trends, returns that are compatible with the objective that Sopaf has set, and to redeploy part of the resources obtained from the divestitures in investments that can be purchased at prices more indicative of the current market prices. At the same time, management is proceeding with a rigorous review of overhead costs with the aim of freeing up resources that can be directed toward expanding our business. From an operational perspective, we are concentrating on three initiatives: -Enhancing the value of the assets to which the Group’s resources have been channelled, actively participating in the operational management thereof; - Growing assets under management by creating new investment vehicles; - Careful, but conservative, evaluation of new investment opportunities that will inevitably arise as a result of the trend of the markets.

Based on these considerations, the results achieved, and the reasonable hope that we shall be able to repro- duce satisfactory earnings for the current year despite the deterioration of the framework of reference for our business, the board of directors is proposing that the holding company’s earnings of € 20.1 million be used for reducing the accumulated losses of € 22.8 million.

We wish to extend our warmest thanks to Francesco Micheli for his active participation in Sopaf’s govern-

Sopaf ance, regretfully accepting his resignation for personal reasons. We also would like to give a warm welcome 07 to Mario Rey, who was appointed as a director at the board meeting held on 29 February 2008. Similarly, we wish to thank Paolo Gualtieri for his valuable work as a statutory auditor for the Company. Finally, we would like to express our special thanks to the regulatory authorities for their active collaboration in working with us in virtually any circumstance. The results for the year would not have been possible without the ongoing and intense commitment of all of the senior managers and free-lance professionals working with Sopaf, and we thus extend our thanks to them. To the shareholders we confirm our continuing commitment to move ahead with the efforts to strengthen and to grow the Company.

Giorgio Cirla Giorgio Magnoni Chairman Vice Chairman and Managing Director Sopaf 08

> Mission

Sopaf is an investment company that invests its own capital and capital of third parties, with the objective of generating returns that (i) are better than industry averages and (ii) have the least possible correlation with market trends. Sopaf employs a multi-strategy approach. Pursuant to its investment policy, Sopaf seeks out high-potential niche businesses and concentrates on their enhancing their value. Often, these businesses are undervalued, or not well known to the market. Sopaf invests in very diverse areas of business, without excluding any sectors a priori.

> Macroeconomic overview

The year of 2007 was marked by strong turbulence in the financial markets, which was essentially due to the so-called “sub-prime crisis”, which Alan Greenspan has defined as “the most acute market crisis since the end of World War II.” More specifically, starting in July 2007, the global financial system experienced a shock as the insolvencies in the high-risk, sub-prime mortgage loan market in the United States wielded their effects on stock markets around the world. From a macroeconomic perspective, the year of 2007 was marked by a decrease in the rate of growth of the global economy. According to estimates prepared by the International Monetary Fund, the gross domestic product (GDP) of the global economy was up by 5.2%, compared with a rate of expansion of 5.4% in 2006. In Europe, the economy decelerated slightly while the slowdown was more marked in Japan, and even more so in the United States. The average annual growth of oil prices in 2007 was around 9.6%, putting the price per barrel at close to USD 75.00 versus the average of USD 66.20 in 2006, when the price rose by 20.3%.

> Sopaf Group: Key Developments

As a result of a plan launched in 2006 to streamline its operations, the Sopaf Group is currently equipped with an organizational structure that is well suited for developing future business via investment funds or investment vehicles managed by funds management companies, where the accent is on sharing the investment risks and returns with customers.

As of 31 December 2007, Sopaf had shareholdings in four product companies active in the securities markets and real estate business; these will be the instruments through which the future investment vehicles will be promoted. In 2007, the management companies were already getting ready for the forthcoming launch of funds; the team to manage the Small Cap Europe Fund is already on board at Sopaf Capital Management, while other units are being set up for the control and risk management activities. The pre-marketing activity to support the launch of the new funds has already begun. The product companies have been flanked by a diversified investment portfolio that includes interests in funds and investment vehicles already set up and managed by the Group, as well direct interests in the capital of companies mostly in the financial services sector. Sopaf 09

The current organizational structure is the result of a series of transactions carried out in 2007. More specifically, over the past year, Sopaf: • completed the acquisition of 100% of Cartesio Alternative Investments Sgr, and then changed the company’s name to Sopaf Capital Management Sgr; • sold the entire investment held in IMMSI S.p.A. and the interest held in the Aster Fund; • liquidated most of the Luxembourg companies, including LM IS S.a.r.l., Star Venture I S.c.p.A., Star Venture Management S.A. and several investment companies in which LM & Partners SCA held investments (the process of liquidating LM & Partners SCA is now almost completed); • incorporated LM Real Estate S.p.A., Ida S.r.l. and Acal S.p.A. via merger-by-incorporation transactions.

In order to complete the reorganization referenced above, Sopaf is evaluating the best opportunity for ex- tracting the most value from the industrial investments held by the Luxembourg company LM & Partners SCA (in liquidation); once LM & Partners SCA is liquidated, those investments will be owned directly by the holding company.

> Sopaf Group: Areas of business

> Product companies As of 31 December 2007, Sopaf was holding investments in product companies operating in the securities and real estate sectors and managing nine funds with total assets under management of roughly € 590 million. More specifically, Sopaf was holding: • 100% of Sopaf Capital Management Sgr S.p.A., a hedge funds management company established during the year, with 15 full-time employees as of 31 December, including 8 operations staff, 5 employees dedicated to administration and back office, and 1 risk manager. The company currently manages the Cartesio Glo- bal Equity Fund with assets of roughly € 47 million and is the manager to launch the Sopaf Group’s new speculative funds. • 66.6% of Private Wealth Management Sgr S.p.A. (with the residual interest acquired in early 2008), a hedge fund manager currently managing five funds-of-funds with assets of € 170 million. In 2007, the company launched the PWM AIG GIG Multimanager fund in collaboration with AIG Global Investment Group. • 49% of Polis Fondi Sgr.p.A., a funds management company partially owned by five banks (each with 9.8%) and by Unione Fiduciaria (with 2%). The company currently manages two closed-end real estate funds, Polis Fund and Tergeste Fund, with aggregate assets of € 336 million. • 85% of Sopaf Asia S.a.r.l., a management and consulting firm currently supporting the activity of China Op- portunity S.A. Sicàr. During 2007, China Opportunity concluded the first investment stage (€ 33 million) and in 2008, it will go through a second round of fund-raising which is reserved for the current shareholders.

> Investment portfolio Sopaf’s investment portfolio which has already been streamlined with respect to its structure in 2006 is now made up of various asset classes, including investments in publicly traded and privately held companies, all of which can be differentiated by the type of activity carried out. As of 31 December 2007, the Group’s investments were concentrated in the following areas: Sopaf 010

> Financial and insurance services

In September 2007, Sopaf made two important investments in the financial services sector, purchasing 44.5% of Banca Bipielle Network S.p.A. (Banca Network Investimenti S.p.A. since February 2008), and 45% of Area Life International Assurance Ltd.

Sopaf purchased Bipielle with the objective of transforming it into a multi-brand platform; as of 31 December 2007, Bipielle was managing roughly € 4.1 billion of assets and boast a network of roughly 875 financial advisors. Sopaf also acquired Area Life, an Irish-law life insurer, as part of a bank/insurance organization.

Such shareholdings are flanked by others held in Delta (a bank active in the consumer credit business) and Essere S.p.A. (a company active in the distribution of mortgages, consumer credit, leasing and insurance products). During 2007, Sopaf also made an investment in Conafi Prestitò, a listed company specializing in retail loans secured by the pledge of future wage/salary flows.

> Real estate

The Sopaf Group’s business in the property market contemplates the majority of the future real estate investments being made through investment funds and special-purpose companies. Consistent with this model, as of 31 December 2006, Sopaf was holding interests in Valore by Avere Asset Management SCA (15%), a real estate investment vehicle specializing in the German market, and in two real estate funds: FIP - Fondo Im- mobili Pubblici (128 units held directly, and 450 units held through the special-purpose company, Five Stars) and Tergeste Fund (100%), a closed-end real estate investment fund managed by Polis Fondi Sgr and reserved for institutional investors. During 2007, Sopaf sold its interest in Aster Fund, a closed-end real estate fund, and purchased 15% of Demofonte S.r.l., a company which won a tender covering the assignment of a portfolio of real estate owned by ENEL.

> Industrial investments

Sopaf directly holds several shareholdings in listed companies (Sadi and Management & Capitali) while the main industrial investments are held through LM & Partners SCA (in liquidation).

Following the divestiture of IMMSI, the most significant shareholdings are: • Res Finco, a company managing one of the largest wind parks in Germany (76.5 MW) and having already completed most of the construction on another 40 MW in France and Poland; • Sila, a company active in the automobile components sector; • Green Bit, a company active in biometric identification systems; • AFT/Linkem, a company active in the telecommunications sector.

Sopaf is also present in the life sciences sector through the company, LM LS, which acquired two other shareholdings in 2007 (Cerma S.r.l., active in developing treatments for varicose veins, and Li Tech S.p.A., operating Sopaf in imaging diagnostics). 011

> The Sopaf Group: Key Figures

Earnings data (in € 000’s) 2006 2007 (6 months) (12 months) Operating profit 3,681 28,908 Profit before interests and taxes 14,340 39,116 Profit before taxes 10,509 35,687 Net profit of the Group 10,091 35,753

Data on capital and financial position (in € 000’s) 2006 2007 Consolidated shareholders’ equity 156,306 174,869 Net financial position (121,734) (151,639) Net invested capital 301,363 333,681

Other indicators 2006 2007 D/E (Net financial position/Shareholders’ equity) 0.78 0.87

Number of employees (at year end) 41 50 Sopaf 012

> Corporate Governance

Sopaf has equipped itself with a corporate governance system in line with the best practices in the market, in terms of transparency and disclosure. On 12 December 2005, Sopaf adopted the Corporate Governance Code for Listed Companies (“Code”), and on 20 July 2006, the Company updated its corporate governance system pursuant to the recommendations provided in the March 2006 version of the Code.

> Shareholders’ meeting

At an ordinary meeting held on 10 November 2006, the shareholders approved regulations governing the formalities and procedures for holding shareholders’ meetings.

> Board of directors

The board of directors consists of 11 members (including one resigning member) whose term of office expires as of the date on which the shareholders approve the financial statements as of 31 December 2009.

board of directors Executive Non Executive Independent

Chairman Giorgio Cirla · Vice Chairman and Giorgio Magnoni · Managing Director Director Giancarlo Boschetti · Director Renato Cassaro · · Director Guidalberto Guidi · · Director Adriano Galliani · · Director Francesco Micheli, resigning · · Director Luca Magnoni · Director Giovanni Jody Vender · Director Renato Martignoni · Director Marco Stella ·

On 14 May 2007, the board of directors appointed the vice chairman Giorgio Magnoni to the position of managing director, vesting him with the authority in relation thereto. At the same meeting, the Board vested powers with Luca Magnoni, administrative director, to be exercised with exclusive reference to the Group companies, Delta S.p.A. and Essere S.p.A.

With the resignation of Francesco Micheli tendered on 24 December 2007, the board of directors made arrangements on 29 February 2008 to substitute Mr. Micheli with the appointment of Mario Rey, who will remain in office until the shareholders’ approval of the financial statements for the year ending 31 December 2007. Sopaf 013

The board of directors consists of executive and non-executive directors. The number and authority of the non-executive directors are such as to guarantee their judgement will have a significant weight in the decisions taken by the Board.

> Internal Controls and Corporate Governance Committee

The committee members are Giancarlo Boschetti, Renato Cassaro and Adriano Galliani, all of whom are non- executive and independent directors. The committee assists the board of directors in establishing the guidelines for the internal controls system. The committee held meetings on 29 March 2007, 6 June 2007, 12 Sep- tember 2007 and 13 November 2007.

> Compensation committee

The compensation committee is also served by three non-executive and independent directors: Giancarlo Boschetti (chairman), Renato Cassaro and Francesco Micheli (resigning director). On 29 February 2008, the board of directors approved the appointment of Mario Rey as a member of the committee, in order to substitute the resigning director, Francesco Micheli. The committee is charged with providing consultative input and proposals to the board of directors with regard to the Managing director’s compensation and the compensation paid to other directors with specific executive responsibilities. The committee also makes recommendations with regard to the use of stock option plans. The committee held meetings on 19 July 2007 and 27 September 2007.

> Board of statutory auditors

The board of statutory auditors, which consists of three acting auditors and three substitute auditors, was appointed by the shareholders at a shareholders’ meeting held on 10 November 2006. The term of office of the present board expires as of the date on which the shareholders approve the financial statements as of 31 December 2008. On 30 November 2007, Paolo Gualtieri tendered his resignation as an acting auditor and as of the same date, was replaced by Riccardo Ronchi, who was previously a substitute auditor.

Position

Chairman Giovanni Sala Acting Auditor Riccardo Ronchi Acting Auditor David Reali Substitute Auditor Francesco Dori Substitute Auditor To be appointed Substitute Auditor Marco Salvatore Sopaf 014

> Independent auditors

At a meeting held on 28 October 2004, the shareholders of Sopaf S.p.A. passed a resolution to appoint Deloitte & Touche S.p.A. as the independent auditors for Sopaf S.p.A. and its main Italian subsidiaries, with the mandate to carry out the annual audit of the holding company’s financial statements and the consolidated financial statements. At an ordinary meeting held on 4 May 2007, the shareholders voted in favour of extending the term of the aforementioned mandate given to the independent audit firm of Deloitte & Touche S.p.A. to include the years of 2007, 2008 and 2009, pursuant to Article 8, Paragraph 7, Legislative Decree n. 303 of 2006.

> Executive responsible for preparation of the corporate accounting documents

At the ordinary meeting held on 10 November 2006, the shareholders approved the amendment of the by-laws to provide for a new Article 26 which authorizes the board of directors to appoint, subject to the concurrence of the board of statutory auditors, the executive responsible for the for the preparation of the company’s accounting documents, vesting him with suitable powers and means for the exercise of the assigned duties. On 18 June 2007, the board of directors appointed Alberto Ciaperoni, the Company’s chief financial officer, as the executive in charge of the preparation of the corporate accounting documents, after having verified that Mr. Ciaperoni meets the professional requisites established by the laws prevailing on the subject.

Sopaf’s corporate governance also includes the following elements: • procedures for disclosures pursuant to Article 150 of the Consolidated Financial Act; • internal controls system; • principles of conduct for carrying out transactions between Group companies and with related parties; • guidelines for internal management and communication of confidential information; • general principles for the organizational model required by Legislative Decree n. 231/2001, as approved by the board of directors on 27 September 2006 with regard to corporate administrative responsibility for criminal acts committed by executives or subordinates; • the organizational model required by Legislative Decree n. 231/2001 that was approved by the board of directors on 13 November 2007; • code of conduct; • investor relations manager. Sopaf 015

> Management

Sopaf Group is managed by a group of seasoned professionals with past experience at leading investment banks and important multinational companies. The Group’s senior management team includes the following:

Group Management Position

Giorgio Magnoni Managing Director Giovanni Caruso Chief Operating Officer Luca Magnoni Investments: Financial & Insurance Services Aldo Magnoni Investments: Real Estate Stefano Siglienti Head of Investments: Industrial Companies Andrea Gerosa Manager of Investments: Industrial Companies Maria Antonietta Barelli Corporate Communications Manager Alberto Ciaperoni Chief Financial Officer Giovanni Nicchiniello General Counsel/Director of Legal & Corporate Affairs Daniele Muneroni Investment Manager, Financial & Insurance Services Sopaf 016

> Performance of the Sopaf S.p.A. shares

During the year ending 31 December 2006 (market calendar from 2 January 2007 to 28 December 2006) the Sopaf share price went from € 0.7411 to € 0.4525 (-38.9%), and had a weighted average price of € 0.6422.

Stock Market Data (€ per share)

Price at 2 January 2007 0.7411 High for the period (22 March 2007) 0.7544 Low for the period (22 November 2007) 0.4167 Weighted average for the period 0.6422 Price at 28 December 2007 0.4525

Capitalization at 28 December 2007 (in € mn) 191 Average daily trading volume for the period (units) 1,249,750

Trend of Sopaf Shares (02.01.2007-28.12.2007)

Source: Bloomberg L 0.80

L 0.70

L 0.60

L 0.50

L 0.40

L 0.30

L 0.20

L 0.10

L 0.00 july may june april 2007 2007 2007 2007 2007 2007 2007 2007 2007 2007 2007 2007 march august january october february eptember december november s Sopaf 017

> Shareholder base

Sopaf S.p.A.’s share capital amounted to € 80,001,850.64 as of 31 December 2007, and consisted of 421,796,809 ordinary shares without par value.

There are also 28,104,600 Sopaf 2005-2011 Ordinary Share Warrants outstanding that give the holders the right to subscribe 56,209,200 ordinary shares at the price of € 0.4591 each, through 31 December 2011.

Principal shareholders of Sopaf S.p.A. (data as of 31/12/2007)

n 25.01% Acqua Blu S.r.l.* n 5.73% Alfabravo S.r.l.* 25.01 n 0.28% Giorgio Magnoni n 8.99% Majest Invest Corp. n 6.52% Magnoni Ruggero n 3.95% Magnoni Aldo** n 3.12% Immobiliare Nord Ovest S.r.l. n 2.88% Anima SGR S.p.A. 5.73% 36.96% n 2.51% Ramius Capital Group LLC 0.28% n 2.04% Eurizon Investimenti SGR S.p.A. n 2.00% Fidelity International Ltd 8.99% n 36.96% Market 2.00% 2.04% 6.52 % 2.51% 2.88% 3.95% 3.12% Source: Consob

* Giorgio Magnoni is the majority shareholder. ** Including 3.819% held through Sanpaolo Fiduciaria S.p.A., the trust company which holds 4.432% of Sopaf’s share capital for the account of third parties. Sopaf 1 The original exercise price of €0.50 per share was modified upon the issuance of the convertible bonds. 018

> Convertible bond issue

On 23 April 2007, the Sopaf board of directors, by virtue of the authority delegated to it by the extraordinary meeting of the shareholders held on 6 May 2003, approved the issue of convertible bonds to be offered under option to the shareholders. The Company issued 56,520,463 SOPAF 2007-2012 3.875% convertible bonds with a unit value of € 0.88, for a total amount of € 49,738,007.44. During the period from 23 July to 10 August 2007, the bonds were offered to the shareholders on the basis of a ratio of 67 bonds for every 500 shares held, and as of 27 August 2007, the bonds began trading on the Italian Borsa. As of 31 December 2007, 2,103 bonds had been converted.

The performance of the bonds since their market listing on 27 August 2007 is shown in the table below.

Italian Borsa data (€ per bond)

Price at 27 August 2007 0.8703 High for the period (31 August 2007) 0.8844 Low for the period (17 January 2008) 0.8114 Price at 28 December 2007 0.8360 Source: Bloomberg

> 2008 Financial Calendar 28 August 2008: Meeting of the board of directors for the approval of the financial statements for the six months ending 30 June 2008

13 November 2008: Meeting of the board of directors for the approval of the financial statements for the nine months ending 30 September 2008. Sopaf 019 Report on Operating Performance 020

> Introduction

The consolidated financial statements and the financial statements of Sopaf S.p.A. as of 31 December 2007 have been prepared in accordance with international accounting principles (IAS/IFRS). As a result of a resolution passed at the extraordinary shareholders’ meeting on 10 November 2006, Sopaf changed its fiscal year end to 31 December, and thus the fiscal year ending 31 December 2006 refers to a period of six months only. The data and the information for the fiscal year are supplied along with the data for the prior fiscal year, even though the comparison of the profit-and-loss data is not significant since the fiscal year ending 31 December 2006 covers a term of six months only.

> Sopaf Group’s Performance

As a typical investment company, Sopaf derives most of its revenues from gains on the sale of non-current investments and the accrual of its share of profits of companies valued with the net equity method. As such, the Group’s profit and loss statement reflects a negative gross margin € 20.4 million (versus a negative gross margin of € 4.4 million for the previous year). Instead, operating earnings amounted to € 28.9 million (versus € 3.7 million for the previous year), and incorporate € 63.7 million of earnings on the sale of non-current assets. Profits accrued on shareholdings valued with the net equity method amounted to € 10.2 million (versus € 10.7 million for the previous year), and are inclusive of: € 2.6 million of net profits on investments in affiliates; € 8.0 million of net earnings realized on the sale of the real estate investment, Telma; and € 0.3 million of losses on the sale of 21.02% of AFT S.p.A. to Nearco SA. The profit before interest and taxes amounted to € 39.1 million, compared with € 14.3 million for the previous year. Net financial charges stood at € 3.4 million, compared with € 3.8 million for the previous year. Pre-tax profit amounted to € 35.7 million (versus € 10.5 million for the previous year). The consolidated profit before minority interests and after income tax provisions of € 0.1 million came to € 35.6 million (versus € 10.1 million for the previous year). The earnings accruing to minority interests were € 0.2 million (versus € 0.06 million for the previous year). The net tax provision reflects the benefit of € 1.6 million of deferred tax assets booked in relation to tax loss carryforwards. Shareholders’ equity and minority interests as of 31 December 2007 stood at € 182 million (versus € 179.6 million as of 31 December 2006), inclusive of € 7.2 million of minority interests (€ 23.3 million as of 31 December 2006). Shareholders’ equity thus amounted to € 174.9 million (versus € 156.3 million as of 31 December 2006). Sopaf | Report Performance on Operating ment income totalling made retroactive to 1 January 2007; retroactiveJanuary made on 1 7 to note shareholdingsand on 6 note in transactionsarediscussed the were effects tax and legal 2007,whose December 14 of merger the S.r.l.with Ida S.p.A.,and effected Acal S.p.A.,Estate companies,Real incorporated LM the by owned shareholdings of contribution the and ments The net increase in shareholdings and assets available for sale (€ able for sale andreal estateunderfinancial lease. Non-current assets mainly consist of shareholdings in and subsidiary affiliate companies, financial assets avail- The holdingcompany’s inthetable below: capitalpositionissummarized > Capital position 31 December2007towhich reference ismade. of as statements financial the of basis the on prepared been have hereunder comments and statements The > SopafS.p.A.’s earnings, capitalandfinancialposition from Benefiting S.p.A., IdaS.r.l. and Acal S.p.A., ofaGroup reorganization planinaugurated aspart in2006. Estate Real subsidiaries,LM owned year. wholly specifically,the the More S.p.A. during incorporated Sopaf place taking transactionsmerger the by influenced arecompany’ 2007 holding December The 31 of as data > SopafS.p.A.’s Performance 151.6 millionasof31December2007, mainly for theeffect oftheconvertible bondissue. Assets totalled at 31December2006to€ As for the balance-sheet accounts, Sopaf S.p.A. increased shareholders’ equity which went from real estate.real wentfromGroup the of position financial net The leased of capitalization the and assets financial and investments equity of holdings higher reflecting mainly and thusachieved significant growth -more than€ € €

396.6 million at year end (versus

54.9 million of capital gains on the sale of shareholdings and dividends and other invest- other and dividends and shareholdings of sale the on gains capital of million 54.9 €

4.2 million, the holding company closed the year with a net profit of

131 millionat31December2007. Shareholders’ equity Total netinvested capital Working capital Assets available for sale Shareholdings Including: assets Non-current In Net indebtedness(liquidity) € 000’s €

353.7 million as of 31 December 2006), with the increase 18.3 million-withrespect totheprevious year. €

121.7 million as of 31 December 2006 to 2006 December 31 of as million 121.7 137,463,000) is due to sizeable new invest- 31/12/2007 (27,730) 188,060 130,967 319,027 129,690 168,827 346,757 021 € €

20.1 million 82.8 million 31/12/2006 (46,450) 148,811 145,710 195,261 66,011 82,800 15,344 €

Sopaf | Report on Operating Performance Sopaf | Report on Operating Performance 022 More detailed information on the changes in shareholders’ equity can be obtained from the statement of changes inshareholders’statement equityand Note15totheholdingcompany’sthe financial statements.from obtained be can equity shareholders’ in changes the on information detailed More S.p.A. and Acal S.p.A., innotestotheSopafS.p.A. asdescribed financial statements. accrual of a merger equity difference of difference equity merger a of accrual S.p.A.),Delta in investmentthe the and of value the of adjustment the to due (essentially reserves valuation financial receivables, and non-current assets held for sale,forequal receivables, whichheld financial of assets all non-current and The negative working capital of capital working negative The 2009. The shareholders’ equity as of 31 December 2007 came to 2009.came 2007 December 31 of shareholders’as The equity December 31 at due come to slated originally and notes promissory by secured debt the of all of settlement of LM & Partners SCA shares, which was paid out on 30 June and on 31 December 2007 and (ii) the advance serves serves for risks and charges, all of which equal counts payable, other non-financial payables, liabilities for employment severance indemnities, and various re- 48,167,000 resulting from the accrual of the annual net profitof net annual the of accrual the resultingfrom 48,167,000 • • • • • • financial assetsoftheholdingcompany, SopafS.p.A. The maintransactions for theyear are indicatedbelow: balance contracted by subscription of a capital increase in Petunia S.p.A. and the simultaneous payment to a special funding special a to payment simultaneous the and S.p.A.Petunia in increase capital a of subscription of ancillary charges of€ of ancillary custo o 18 ls uis f h coe-n ra ett fn, I-od Imbl Pubblici, for Immobili 19,017,000. FIP-Fondo fund, estate real closed-end the of units A Class 128 of acquisition 13,000,000; of investment net a forPWM Fund fund-of-funds hedgeMultimanagernew AIGGIG the of subscription 96,000,000; of investment the of valuationfair-value 2007,which, the December value of 31 inclusivebook of is as for reserve outlaytotal a of work S.p.A.)for € acquisition of 14.99% of the share capital of Banca Network Investimenti S.p.A. (now known as Banca Net- acquisition of 45% of the share capital of Area Life International Assurance Ltd for International of Ltd LifeAssurance capital Area share the of 45% of acquisition Network S.p.A. ; Banca of capital share the of 49.75% of acquisition the for needed resources financial S.p.A.the nia with registration of the investment in Delta S.p.A., following the merger by incorporation of Acal S.p.A., at a S.p.A.,at of Acal incorporation by merger the S.p.A.,following Delta in investment the of registration

19,841,000, charges inclusive of€ ofancillary €

18,720,000, mainly due to (i) the payment of the debt contracted for the acquisition

128,000; €

39,436,000 inclusive of ancillary charges inclusive39,436,000 of ancillary of €

27,730,000 reflects the sum of: (i) trade accounts receivable,non- accounts of:other trade sum (i) the reflects 27,730,000 €

23,110,000 upon the merger by incorporation of LM Real Estate Real LM of incorporation by merger the upon 23,110,000 €

47,342,000. Compared with 31 December 2006, the negative € €

20,076,000,a 130,967,000, with the net increase of increase 130,967,000,net the with 153,000; € €

79,000,provideto as so Petu - 19,612,000,ac- trade (ii) and €

46,986,000 credit to the creditto 46,986,000 €

8,385,000,inclusive € € € €

a the subsidiary company,the subsidiary SCA, LM&Partners transactions withintheGroup. inrelation to treasury The deterioration of the net financial position is due to a to due is financialposition net the of deterioration The The computationofthenetindebtednessisprovided inthefollowing table: ings. It is also noted that other current financial debt includes cluding the convertible bond issue) in relation to the transactions involving the acquisition of new sharehold- €

97,900,000 increase exposure. in medium-term The change (in- of is the mainlyfinancial flows reflective N) Non-current financialindebtedness(K+L+M) Due fromothers Due fromcompaniesoftheGroup M) Othernon-current debt L) Bondsissued K) Non-current bankdebt J) Current financialindebtedness, net(I-E-D) Due fromcompaniesoftheGroup I) Current financialindebtedness(F+G+H) Due fromothers Due fromcompaniesoftheGroup financialdebt H) Othercurrent debt oflong-term maturities G) Current bankdebt F) Current Due fromothers E) Current financial receivables D) Total liquidity(A+B+C) heldfor trading C) Securities B) Othercashandequivalents A) Cash O) Netfinancialindebtedness(J+N) Net financialposition €

24,149,000 increase in short-term exposure, increase24,149,000 short-term in and €

21,859,000 of Sopaf S.p.A.’s borrowings from 31 December (119,787) (188,060) (19,235) (43,390) (57,162) (68,273) (82,337) (19,235) (21,881) (24,570) (30,736) (27,031) (2,689) 4,280 9,784 3,008 1,272 9,774 2007 10 - - 31 December (66,011) (21,887) (19,198) (44,124) (47,481) (21,025) (21,155) (14,269) (12,057) (2,689) (2,689) 3,132 3,132 (130) 023 2006 225 221 4 - - - - (122,049) (97,900) (16,546) (43,390) (37,964) (24,149) (34,856) (16,546) (16,467) (14,974) Change (5,559) (3,415) (1,860) 1,148 9,559 3,008 9,553 (856) 6 - -

Sopaf | Report on Operating Performance Sopaf | Report on Operating Performance 024 The net financial charges of The tax provision mainly reflects the use of the deferred tax assets (€ assets tax deferred the of use the reflects mainlyprovision tax The investmentto support activity. not recurring andthuscannotbecompared from thestandpointoffinancial statements. not recurring 2007. January 1 retroactiveto Furthermore, is,activity Sopaf’s nature,its by arewhich transactions on based S.p.A.,Estate made S.p.A.Real effects LM S.p.A.S.r.l.accounting incorporated Acal Idaand and tax the with of six months only a period (1 Julycomprised the year 2006 - 31 December 2006) and during of 2007, Sopaf 2006 December 31 ending year fiscal the as inasmuch significant not is year prior the for earnings the with 2008 ( January 1 of as 32.31% to for2007 38.25% of rateaggregate the fromgoeswhich (IRAP) productiveactivity on tax regional the of rate the and (IRES) rate tax corporate the changein the to due assets tax deferred of recognition of additional deferred tax assets with respect to tax losses ( losses tax to respect with assets tax deferred additional of recognition The of profit net incorporates statement loss and company’sprofit holding The > Trend ofearnings well as costs for materials and external services of services external and materials for costs as well Personnel and other operating expenses of expenses operating other and Personnel on thesaleofshareholdings intheholding company’s financial statements. Additional details on such income are disclosed in Note 6 - Shareholdings and Note 23 - Capital gains (losses) shares.capital gainsrealized onthesaleof IMMSI andOmniapartecipazioni the investment in Coronet S.p.A. The income from shareholdings as of 31 December 2007 mainlythe reflects of writedown the by impacted negatively was result 2007 year,the previous though the even for reported preciation and amortization chargespreciation andamortization of€ €

€ 45,620,000 of income from shareholdings reflects a sharp increase compared with the with compared increase sharp a reflects shareholdings from income of 45,620,000 1,453,000). € Taxes Net financialincome(charges) expenses Personnel andotheroperating Other revenues writebacks (Writedowns) Capital gains(losses)onsaleofassets Dividends Income (loss)from shareholdings In Net profit for theperiod

9,057,000 mainly consist of interest expense on borrowings incurred in order € 000’s

647,000. €

17,307,000 include 17,307,000 €

8,585,000,expendituresof other €

4,477,000 of outlays for personnel,as for outlays of 4,477,000

221,000) against taxable income,taxable against 221,000) the € 784,000) and the recalculation the and 784,000) €

20,076,000. comparison The 31/12/2007 01/01/2007 € (13,400) (17,307)

(9,057) 20,076 45,620 54,856 3,599,000 and de- and 3,599,000 1,592 4,164 (772) €

7,744,000 31/12/2006 01/07/2006 (2,390) (4,038) (227) 1,797 7,744 7,971 141 340 - > Profit andlossstatement presented hereunder. solidated profit and loss statement, the former has been reclassified with the format used for the latter and is con- the and statement loss company’sand However,holding profit the of comparison forallow to order in real estatebusinesses. and services financial the in operating are which companies and activity investment both out carry which companies consolidate statements such that fact the by dictated is statements financial consolidated forthe structure.ferent manner,reporting Group’s the internal with format line the in of morechoice deemed The dif- a in prepared is statement Company.loss the and profitby consolidated Group’sout Sopaf carried The activity specific the of nature,consideration their in to accordingexpenditures and revenues classifying by With regard to the financial statement format, Sopaf S.p.A. has elected to prepare its profit and loss statement Net profit from operations sold Net profitfromoperations Net profit from continuing operations Income taxes Profit before taxes Net financialincome(charges) Financial charges Financial income Operating profit assets Gains (losses)onsaleofnon-current Depreciation andamortization Risk provisions andwritedowns Gross profit expenses Other operating Personnel expense services andexternal Purchases ofmaterials Other income Revenues In Net profit € 000’s 31/12/2007 (15,069) (13,400) (4,893) (9,935) (3,599) (4,477) (8,585) 20,076 20,076 20,848 25,740 54,856 5,042 1,453 (772) (647) 025 139 - 31/12/2006 (2,722) (4,286) (2,342) 1,798 1,350 1,798 1,457 1,082 3,097 8,826 (227) (887) (41) 375 341 38 - -

Sopaf | Report on Operating Performance Sopaf | Report on Operating Performance 026

** * Sopaf S.p.A. directly holds0.9% of M&C. Sopaf S.p.A. toearnings. and59.38%oftherights holds49% ofthevoting rights Area Life International Conafi Prestitò S.p.A. Westindustrie S.r.l. Investimenti S.p.A. Blue HGroup Ltd Mirror Tre S.àr.l. Valore by Avere Banca Network (25%) Luxembourg Petunia S.p.A.* Assurance Ltd AM SGRSCA Essere S.p.A. Delta S.p.A. (in liquidation) (14.99%) Lodi (11.9%) Milan (45%) Dublin (59.38%) (35.77%) (15.95%) Bologna (3.75%) 49.75% Olanda (1.6%) (22%) Milan Milan Milan Turin LM &Partners SCA(inliq.) Fondo ImmobiliPubblici Demofonte S.r.l. Green BitS.p.A. P.W.M. AIGGIG (50%) Luxembourg Fondo Tergeste Beven Finance Five StarsS.A. Multimanager Value Sec. Inv. Res Finco AG. Venture IILP Cutter S.àr.l. Siskin S.A. Sicar SCA (2.43%) USA Luxembourg Luxembourg Lux S.àr.l. Luxembourg Luxembourg Switzerland Grugliasco Noventi (24.72%) (23.72%) (42.54%) (99.99%) (4.35%) (100%) (100%) (100%) (100%) (2.6%) Monza (15%) Milan

Sopaf S.p.A. 3.39% 5.5% 9.9% 32.5% China Opport. SASicàr (27.5%) Nichelino(TO) Industriale S.p.A. Capitali S.p.A. ** Sopaf Asia S.àr.l. Management & Sila Holding (6.34%) Turin Luxembourg (42.4%) (85%)

Li Tech S.p.A. iM3D S.p.A. Monterotondo Cerma S.A. A.A.A. S.A. Eolia S.A. Switzerland (99.99%) (17.86%) (18.6%) (17.9%) France France (94%) Turin Raffaele CarusoS.p.A. Formula Group Sport Sadi Serv. Ind. S.p.A. Pontelambro S.p.A. (under spec. manag.) ASM Lomellina Coronet S.p.A. Parc Eoliende S.F.E.R.A. S.r.l. S.Riquier SAS S.r.l (inliquid) Ezechiele Lda Tenerani S.r.l. Nearco S.àr.l. LM LSS.p.A. Volare S.p.A. (33%) Vigevano (24.6%) Varese Agrate Brianza Agrate AFT S.p.A. (40%) France Inerti S.r.l.Inerti Luxembourg (19%) Milan Tessitura (2%) Erba (19.90%) (69.27%) (47.46%) Portugal Soragna (2.68%) 21.02% (100%) (0.3%) (48%) (30%) (49%) Milan Milan Milan Milan Milan Management SGRS.p.A. Polis Fondi SGRS.p.A. P.W.M. SGRS.p.A. Sopaf Capital (100%) Milan (66.63%) (49%) Milan Milan 027

Sopaf | Report on Operating Performance Sopaf | Report on Operating Performance 028 58 of 24 February 1998(“DraghiDecree”) regarding issuerregulations. 58 of24February subsequent resolutions, with respect to the adoption of forrules the implementation of Legislative Decree n. n.Resolution CONSOB to and Mayprovidedpursuant 1999 14 is responsibilityof strategic 11971 tiveswith The following information on investments held by directors, general managers, auditors, statutory and execu- >

***** **** Giorgio Cirla Daveri Giuseppe Ven Ven.FinS.p.A.*** Name Surname Boschetti Giancarlo Galliani Adriano Magnoni Luca Renato ***** Martignoni Alfabravo S.r.l. * Acqua BluS.r.l. * Magnoni Giorgio Mesa Yaneisi Fernandez Magnoni Giorgio Responsibility with Strategic Executives **** *** and executives withstrategicresponsibility Information ontheshareholdings ofdirectors, general managers, auditors, statutory ** * Ven FinS.p.A.: acompany indirectly controlledby Giovanni Jody Vender, adirector. 18 March2006to31December2011. Held by family members and by Coemi Property S.p.A. andbyHeld byCoemi Property family members S.p.A. Fiduciari throughEosServizi Held by family members Each warrant may be converted intotwo Sopafshares, may beconverted of Each warrant ataprice Alfabravo S.r.l./Acqua BluS.r.l.: Magnoni. shareholderisGiorgio themajority Chairman Director - Position Director Independent Non-Executive Director Director Director - - Director Managing Magnoni’s wife Giorgio Director Managing Responsibility with Strategic Executives Sopaf S.p.A. Sopaf S.p.A. Sopaf S.p.A. Investment Sopaf S.p.A. Sopaf S.p.A. Sopaf S.p.A Sopaf S.p.A. Sopaf S.p.A Sopaf S.p.A Sopaf S.p.A Sopaf S.p.A LM RES.p.A Sopaf S.p.A Ordinary Ordinary Ordinary Shares Type of Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary 106,011,481 31/12/2006 24,176,000 4,000,000 2,500,000 1,200,000 of Shares Number € 581,940 600,000 300,000 Held at 0.50pershare. from may theperiod beexercised during The warrants 25,500 1,000 - 17,166,868 1,000,000 1,400,000 3,606,099 1,175,000 of Shares Acquired Number 700,000 302,480 529,000 70,000 - - - Shares Sold Number of 1,200,000 400,000 125,000 1,000 - - - - 109,617,580 31/12/2007 17,166,868 24,705,000 5,000,000 1,000,000 3,500,000 1,050,000 of Shares Number 581,940 600,000 327,980 Held at 70,000 - - Warrants ** 31/12/2007 Number of 16,879,600 150,000 300,000 Held at ------

> Minority interests Minority Group shareholders’ equityandearnings Dividends paidby thecompaniesconsolidatedonaline-by-line basis Dividends paidby affiliatecompanies Elimination ofinfragroup dividends: Infragroup net earnings capitalized inconsolidatedcompanies netearnings Infragroup Consolidated shareholders’ equityandearnings Elimination oftheeffects oftransactionsexecuted between theconsolidatedcompanies: Other adjustments with thenetequitymethod Adjustments for theGroup’s share ofprofits(loss)companiesvalued financialassetsatfairvalue Adjustments toreport Adjustments to align certain datawiththeGroup’sAdjustments toaligncertain accountingprinciples: Changes intheconsolidationarea onshareholdings ofwritedowns Reversal Profits (losses)ofthecompaniesconsolidatedonaline-by-line basis Group’s shareofequitytheconsolidatedcompanies Goodwill booked onconsolidation Value oftheshareholdingsinconsolidatedcompanies Elimination of the carrying valueoftheconsolidatedshareholdings: Elimination ofthecarrying Shareholders’ equityandearningsoftheholdingcompany In financial statement Reconciliation between theconsolidatedfinancialstatementsandSopafS.p.A. € 000’s Shareholders’ (80,935) 182,042 174,869 130,967 11,310 13,517 88,039 Equity 7,173 9,266 2,860 (155)

- - - - - Profit for the 31/12/2007 35,539 35,753 20,076 13,517 Period 2,598 (214) (438)

------Shareholders’ (149,824) 179,629 156,306 163,255 (9,097) 82,801 23,323 54,712 029 Equity 2,209 6,957 1,599 4,130 (600) 164 - - Profit for the 31/12/2006

10,091 10,148 Period 1,798 2,416 4,130 (57) 380 681 743 ------

Sopaf | Report on Operating Performance Sopaf | Report on Operating Performance 030 wholly LM RealEstateS.p.A. owned by approved a non-proportional, divestiturepartial in favour of Mercato 24 S.r.l., a newly incorporated company ainvest and LM Real Estate (now part of Sopaf S.p.A.), the board of directors of On 12 March 2007, in accordance with 4 of Article a shareholder agreement signed on 9 May Omni - 2006 by of theSopafGroup inAFTS.p.A.fell from 70.77%to57.76%. shareholders’ meeting held on 28 2007.February As a result of these changes, the direct and indirect holdings S.p.A. AFT an S.a.r.l. subscribed Opportunities also International 2007, 2 addition,RCG 49%. April on In to 100% from Opportunities S.a.r.l.International on 30 March 2007, Sopaf S.p.A. reduced its holding in Nearco Invest S.a.r.l. to Nearco Invest S.a.r.l.InvestNearco to of payment against S.p.A.Sopaf March2007, by 5 full On S.p.A.in in Sopaf interest subscribed 21.02% a transferred S.a.r.l.,InvestNearco company, Luxembourg 2007,a capital share its February with 14 on incorporated was investments> Industrial of July2007,29 total On fora parties thirdS.p.A. to Sopaf aforementionedhedgefund the of severalunits sold ment Group oftheU.S.-based (theassetmanagement arm AIG, aleaderinfinancial andinsurance services). company, subsidiary the by managed Private WealthSgr,Management with Investpartnership Global - in AIG fund hedge new The change thecompany’s nametoSopafCapitalManagementSgrS.p.A. to resolution a passed shareholders the of meeting extraordinary 2007,Maythe Investments.21 native On million.2.9 Following suchacquisitions, S.p.A.Sopaf Cartesio of capital share the of 100% holding was Alter- of total Cartesio fora of S.p.A SgrInvestments70% acquire Alternative to transactions the perfecting with proceeded 2007,Sopaf 16 April and 6 on authorities regulatory the from received authorizations the With outreal estateinvestment activity. hedging fundsmanagement companiestocarry dinary June21 2007,Italyon of Bank the by orderissued an by possiblefor it or- whichmakes influenced also was managementfunds companya manageup to hedgereal estate funds. changeThe strategicorientation the in change the company’s legal status given a different strategic orientation which was initially focusedrenamed on and setting company limited-liability a into transformed was Sopaf Real Estate Management Alternative Sgr S.p.A. was incorporated on 6 March 2007, and on 14 June 2007, > Productcompanies > Principaltransactionsin2007 On 17December2007, theBankofItaly PolisFondiSgrtomanage real authorized estatehedge funds. million. € 1.5 million, with Sopaf S.p.A.’s investment as a co-financial sponsor (together with AIG) falling to fallingwith (togetherAIG) sponsor co-financial S.p.A.’sa million,Sopaf as 1.5 with investment capital increase (corresponding to 3.23% of the sharecapital);the of 3.23% to increase(corresponding capital increasewasthe approved the by became operational on 1 July 2007.July 1 is on fund operational The became Fund Multimanager AIGGIG PWM € 2.7 million. As a result of a capital increase subscribed by RCG by subscribed million.increase 2.7 capital a of result a As Tenerani S.r.l. Tenerani Omniapartecipazioni S.p.A. The decision was made to made was decision The AFT S.p.A. AFT € 13 € ii. The transaction described above generated a total capital gain of around of gain capital total a generated above described transaction The S.p.A. andasof31March 2007, Mercato 24S.r.l. Omniapartecipazioni was holding5,360,288 shares ofIMMSIS.p.A. of shareholder a being S.p.A.ceased Estate Real transactions,LM these of result a As tal) of Omniapartecipazioni S.p.A.tal) ofOmniapartecipazioni toOmniainvest S.p.A. of ataprice As of the same date, LM Real Estate signed an agreement to sell 1,470,000 shares (3.48804% of the share capi- the non-proportional, divestiture partial infavour ofMercato 24S.r.l. S.p.A. approvedOmniapartecipazioni of shareholders the of meeting 2007,extraordinary March the 13 On vestiture, thecapitalgaincameto March2006).13 on di- the Omniapartecipazioni from arising debt the of pro-ratashare the out netting After of shareholders of meeting ordinary the by approved reserves and dividend a of distribution the (including The following events are inrelation reported tothedivestiture transaction: • • • i. The divestiture provided for: ing the RES Finco board’s approval, LM & Partners SCA (in liquidation) funded a 25 agreementsresulton of a signed As of shareholders current the by 2007 April business plan presented in 2006 as demonstrated by the financial statements for the year ending 30 June 30 ending year the for statements financial the by demonstrated as 2006 in presented plan business the of objectives the meet to failurecompany’s the of result a as necessitated million.was writedown The capital gainof addition,In year,the during shares,blockIMMSI remaining of the of perfectedsale Group the the a realizing During 2007, During investmentin the of value the to thecompany in2007withthefinancing tobeusedfor thepurposeofbusinessdevelopment. iii.

3. 1. On 20March 2007, thefollowing transactions were perfected: same date; March2007,19 on registereddivestiturewas agreement The S.r.l.24 Mercato with the of as incorporated 2. The divestiture agreement was executed andfiled on15March 2007; Mercato 24S.r.l. beingassignedfor each S.p.A.; 9,278,887shares ofOmniapartecipazioni S.p.A.,Estate S.p.A.of Real share LM Omniapartecipazioni one the by with of retirementheld shares the by bankdebtintheamountof by S.r.l.Mercato24 to assignment the S.p.A.,IMMSI sharesof 38,360,288 of represented liabilities wellas as the assignment to LM Real Estate S.p.A. of 100% of the share capital of Mercato 24 S.r.l. ( shareholders’ equityofMercato 24S.r.l. equalto

S.p.A., above. asdescribed S.p.A. Omniapartecipazioni of shares million transfer1.47 S.p.A.of Estate Real LM from Omniainvestto from thedivestiture) of atatotalprice transfer to Omnia Holding S.p.A. of 3 million shares of IMMSI S.p.A. owned Mercato by 24 S.r.l. (derived by Mercatoby 24S.r.l. of atatotalprice S.p.A.IMMSI of owned shares million 30 of placement) private a (via investors institutional to transfer € 4 million. € € 52 million( 14.2 millionduetoaleadingbank; € € 65.85 million; was reduced to zero,to reducedwas Coronet of writedown total a with 6.58 million; € 48.4 million, netof thedividends). € 21.1 million. € 10.95 million. € 62 million for the Sopaf Group Sopaf the for million 62 € 4.4 million shareholder loan and followand AG Finco RES - € 031 20,000) against € 13.4

Sopaf | Report on Operating Performance Sopaf | Report on Operating Performance 032 December. InDecember2007, SopafS.p.A. ofthecapitalincrease for itsportion subscribed On 28 December 2007, LM & Partners SCA (in liquidation) subscribed subscribed liquidation) (in 2007,SCA December Partners 28 & On LM of2008. in thefinal quarter production start should shareholders,plant various the the by approved and reviewed plan operational the a 3.45MW photovoltaic plant in photovoltaicplant 3.45MW roughlya investmentof involvestotal that a Apulia in accordance withtheprovisions ofIFRS5. year,one within sold be shareholdingswill forreclassifiedheld assets shareholdingssale as directors the the Holding S.p.A.Industriale and Green Bit S.p.A.) to several investors. Given the Group’s expectation that such S.p.A.,Finco (AFT Res AG,shareholdings industrial SILA of packet a of sale the finalize to order in 2007 of end the at initiatives of series a on embarked company holding the of management the that noted also is It Green Bitthatwas approved on27December2007. theshareholders by As aresult ofthechanges totheby-laws, thePetunia asfollows: share capital isdistributed astheClass rights A shares, except for thevoting rights. providing for two classes of shares: Class A shares with voting rights, and Class B shares which have the same by-laws S.p.A.new Petuniaapproved of shareholders the of meeting extraordinary date,an same the of As S.p.A. andSopafS.p.A., which increased theirholdingsinPetunia S.p.A. to40.62%and59.38%, respectively. of 15% February,S.A.sold 6 Invest De Agostini On the investment inBancaBipielle Network S.p.A. (now known asBancaNetwork Investimenti S.p.A). of acquisition the covering transaction the of phases principal the of summary chronological a is Following services > Financialandinsurance (Sopaf’ssharemillion was 0.95 With reference to the oftheshareholders. talization onthepart 2007, and the of non-recovery profitability that entailed financial tensions and continued requests for recapi- On 4 December 2007, Sopaf and the other shareholders of shareholders other the and 2007,Sopaf December 4 On LS S.p.A. on 26 April 2007, the company’s board approved the funding of the first tranche of SOPAF AVIVA Total Shareholder With Voting Rights € % ofShare Capital 4 million capital increase approved by the extraordinary shareholders’ meeting of 49.0% 51.0% 100% € 0.45 million).0.45 of construction forincrease wasused capital The supporting Without Voting Rights % ofShare Capital 100% 100% 0% Petunia S.p.A. Petunia With Voting Rights Number ofShares . subscribed a capital increase for increase capital a S.r.l. subscribed Sfera 477,882 234,162 243,720 at nominal value to Aviva Italia Holding to Italia Avivavalue nominal at € 1.5 million of a capital increase forincrease capital a of million 1.5 Without Voting Rights Number ofShares € 122,118 122,118 16 million.16 to According 0 € € 1.4 million. 2 million on 3 Total %ofShare 59.38% 40.62% Capital 100% LM € Petunia with the financial resources needed to make the acquisition. In particular,acquisition.S.p.A.In the paid Sopaf make to needed resources financial the with Petunia orderprovidein reserve funding special a to contributions simultaneouslyincreasecapital and capital made a subscribed shareholders Petunia 2007,the September 25 above,on shown breakdown the to relation In while Avivapaid 30 June 2007compared withthe work Investimenti S.p.A. from BancoPopolare Soc. Coop. for and InvestSA Net- Banca of S.p.A.capital AvivashareHolding the Italia of 79.73% purchaseof perfectedthe 2007,September 26 On referencewith 1 on agreementssigned the to August2007, S.p.A.,Sopaf De Agostini On 25June 2007, theacquisitionofbank. authorized authorities theregulatory was laterbooked, asprovided thecontract, by duefrom asareductionSopaf. oftheprice S.p.A.Investimenti Network paymentBanca down of The capital share the of 79.73% of acquisition the for proceed with the subscription of the share capital increase approved by the extraordinary meeting of the of meeting extraordinary the by approved increase capital share the of subscription the with proceed to not decision S.p.A.its Delta of September,other of shareholders the end notified the Group At Sopaf the or BancoPopolare. a meeting on 18 July 2007, electing a new board of without directors any representatives of the Sopaf Group In addition, with the resignation of several members of board of directors in June 2007, the shareholders held that datewas dissolved. to Delta of governance the forprovided thereof,had quence July2007,that agreement16 shareholder on a differencesevidenced in the strategic positions of the shareholders, so much so that, as an immediate conse- plan business revised a of presentation the and increase capital the effecting for means and discussion The 31 December2006. needed to guarantee a authorities levelto the of regulatory capitalization different from the level reported at on the register referenced in Article 64 of the Consolidated Banking Act. 2007 January As a result of such1 registration,of as registrationDelta’sDelta entailed that legislation in changes of result a as increase capital a July5 on held extraordinary2007,meeting an At of shareholders the 2008. month ofJanuary On 3 May 2007, Sopaf S.p.A. transferred sition price was International Assurance Ltd (55% for Aviva and 45% for Sopaf) from the Banco Popolare Soc. Coop. The acqui- On 26September2007, Sopafand Aviva alsoperfected thepurchase of100%theshare capitalof Area Life (14.99%), De Agostini Invest SA(14.99%)andNew Era SA(0.37%). 2007:S.p.A.December PetuniaSoc. (49.75%),Popolare31 Coop. Banco of (19.90%), as Sopaf following the included S.p.A.’s shareholders Investimenti Network Banca acquisition,aforementioned the of result a As special fundingreserve. capital of Banca Network Investimenti S.p.A. was De (and Sopaf by paid price the that noted is It AgostiniInvest forSA) sharethe of 14.99% of acquisition the million toward the capital increase and increase capital the toward million 45% for Sopaf). The price for the acquisition was of capital share the of 100% Avivaof S.p.A.Previdenzaacquisition the to relation in for2007 (55% Avivaand It is also noted that Sopaf and Aviva signed another contract with the Banco Popolare Soc. Coop. on 1 August sition of49.75%theshare capitalofBancaNetwork Investimenti S.p.A. was € € 18.3 million (countervalue adjusted in relation to the shareholders’ equity of Area Life as of 20 million a toward the capital increase and increase capital the toward a million 20 € 23.5 millionindicatedintheagreements signedon1 August 2007). € € 5 million to Banca Popolare Italiana Soc. Coop. as a down payment 10 million of capital contributions to the special funding reserve,funding special the to contributions capital of million 10 € € 34.3 million, and the transaction was perfected during the 19.6 million, while the price paid by Petunia for the acqui- € 104.7 million. € 6.8 million of capital contributions to the to contributions capital of million 6.8 approvedS.p.A. resolutionforDelta a € 65.3 million. 033 € 29.3

Sopaf | Report on Operating Performance Sopaf | Report on Operating Performance 034 which owns an industrial area of roughly 75,000 square meters in Milan.in meters roughlysquare of 75,000 area industrial an whichowns of generatedgain sale capital The a On 7 November 2007, the Tergeste Fund finalized the sale to of third40% of parties is notedthatthecompany was anon-operational vehicle for theGroup. On 25 October 2007, LM Real Estate S.p.A. sold its entire interest in charges.of costsandancillary On 30 May,30 On S.p.A.Estate in investmentReal its LM sold that Demofonte asofthedateperfection would haveoftheacquisition. thecapitalizationnecessary € end real estate fund, 2007,Junecompany, 29 On subsidiary the liquidation),closed- (in the SCA in interest Partners its & sold LM 13,500. ing the month of December 2006. LM Real Estate funded a shareholder loan of real estate portfolio covered by a tender published by ENEL S.p.A. and in which Demofonte participated dur- On 7 February, > Realestate the that announced 2007,Delta December 21 On tion for thecapitalincrease. S.p.A.Delta against severaland shareholders,its of aforementionedrequestingnullificationthe the of resolu - 2007 October 18 on investment,Bologna the companydirectlyof holding the and Court the in claim a filed S.p.A.Sopaf S.p.A.agreements,of Delta shareholder the S.p.A.,subsidiary of Acal a dissolution the declared above,out set considerationsGiven the illegally shareholders aforementionedthe certain wellfactas that as of thecompany. governance the for means the with agree not did decision,it its explainedthat Group specifying Sopaf The heldon5Julyshareholders 2007. losses with respect to the previous carrying value beingbooked directly toshareholders’losses withrespect totheprevious carrying equity. available for sale” in the half-year report, and as a result, the investment is stated at fair value, with among any S.p.A.reclassifiedgains “assets or wasDelta in events,investment mentioned the the Accordingly, of light in companies. in affiliate 28,IAS definedas by influence investmentsof covering reporting the principle accounting international the significant of premise the Delta,excluding of thereby governance the changedradically have events These been dilutedto15.95%. had company) holding the into incorporation Sopaf,by mergedof 2007,was subsidiary S.p.A., 100% Acal a above, eventsdescribed the of light In 2007,December 31 of as S.p.A.’sSopaf December investment (during September 2007ofnotproceeding withthesubscription. of end the at intention their indicated Popolarehad whichBanco and Sopaf than other shareholders the by 8 million. Demofonte S.r.l., a company 15% owned LM Real by Estate, perfected the acquisition of the Aster Fund (33% of the units), to third parties, realizing a € 230 million capital increase had been fully subscribed subscribed fully been had increase capital million 230 Forza Quattro S.r.l. Quattro Forza Vector 102 (57% of the share capital). It to third parties for a price of price a for parties third to € € 10.6 million capital gain, net 3 million in order to ensure Telma S.r.l., a company € financial requirements ofthecompaniesinwhich thefundholdsinvestments. bonds, or 63.935%. of the offer (corresponding to the rights not exercised at the end of the market offer) market the of end the at exercised not rights the to (corresponding offer the 63.935%.bonds,of or convertibletotal coveredthe exercised.bonds been offer)had the by remainingconvertibleThe 36,136,383 holders forholders a total of addition,In year,the during that noted is it the Tergestefavourin sharere-openedthe subscriptions Fund - of • • • • • not to exceed convertible into newly issued Sopaf shares having the same characteristics as those outstanding, in an amount ity approved the extraordinary by shareholders’ meeting of 6 May 2003, and approved the issuance of bonds the value of the same, on 23 April 2007, the Sopaf S.p.A. board of acted directors on the delegation of author- sourcesfinancingforthe of orderdiversify In todevelopingGroup’s the investment enhancing projectsand > Groupinitiatives those unitsinto30of combine to and existing2008,units 474 the January annul 1 to companyproceededmanagement funds the hedgefund;a to forinvestors qualified reserved fund accordingly, of as accounts the of re-opening the upon the approved Italy of Bank 2007,the December 17 On summarized asfollows:summarized be can conditions public.Such the to same the communicated Bonds,and Convertible 3.875% 2007-2012 authorizations, Sopaf determined the definitive conditions for the issuance of the bonds known as the SOPAF aforementioned the to and June 29 23 and July,on approved April 19 resolutions BoardOn the to pursuant information prospectus on18July. transaction’s the of authorization the with concluded positively were proceedings authorities;such latory The board of directors also approved the initiation of the proceedings to secure the authorization of the regu - ItalianaS.p.A. andmanagedorganized Borsa by (Mercato Telematicomarket screen-based Azionario) the on listing to bonds the of admission the for filing rights corresponding to 20,384,080 convertible bonds with a countervalue of countervalue a with bonds convertible 20,384,080 to corresponding rights 152,120,000 of shareholders,total the a by exercised been not had that rights the of offer market the After bond issuewas concluded on4September2007. newly sharesissued ordinary (the “Convertible Bonds”) as of part the “SOPAF 2007-2012 3.875% convertible”SOPAFS.p.A. in convertible bonds 56,520,463 of SOPAFS.p.A. shareholders the to option under offer The hrfr, n re t srie h cneso o te od, oa SpA wl ices is hr capital share its increase through one ormore transactions amaximum nominalamountof by will S.p.A. Sopaf bonds, the of conversion the service to order Therefore, in par.price:at held;issuance bond convertible every for share S.p.A. ordinary Sopaf ratio: one conversion of Sopafheld; the offer of the bonds under option to the shareholders at a ratio of 67 bonds for every 500 ordinary shares annual interest rate: 3.875%perannum; number ofbonds: 56,520,463; total nominalamountoftheissue: of oneormore resolutions, shares. withtheissueofamaximum of56,520,463ordinary € 50 million and with a term of five years, to be offered to existing shareholders, simultaneously € 2.5 million; the transaction will give the fund the resources needed for supporting the € 500,000 each. € 49.7 million(for nominalamountof transformation from an ordinary ordinary an from transformation Fund’s Tergeste € 49.7 million, through theapproval € 0.88 each); € 17.9 million (or 36.065% of 36.065% (or million 17.9 035

Sopaf | Report on Operating Performance Sopaf | Report on Operating Performance 036 • • • • • that: The share-buyback program (“the Program”), which will be used for the employment of liquidity, will provide On 27November 2007, ameetingoftheSopafS.p.A. approved shareholders ashare-buyback program. • • • • • • • • of total countervalue issue,the in a includedfor bonds convertible 56,520,463 all of subscription the with ended transaction the Banca issuer. the by with agreementwere signed subscribed underwriting an of virtue by Akros Accordingly, transactions during theyear:transactions during following the concluded Group control,the of chain the streamline to designed reorganization of part As Each purchase will be made at a unit not price exceeding 5% of the average of the of prices reference reg- of 5.2millionown shares. referenced in Article 2357 and the articles thereafter of the Italian Civil Code, corresponding to a maximum On 27 November 2007, a meeting of the Sopaf S.p.A. approved shareholders the planned merger-by-incor- On 20December2007, theliquidationofLMISS.a.r.l. was completed. of the trades of the month preceding the month during which the Program is announced to the public, and regulated market in which the transaction is effected, as calculated on the basis of the average daily volume The quantity of shares purchased will not exceed 25% of the average daily volume of shares traded on the transaction. threemarketthe preceding anyin sessions electronicsystem individual Italiana Borsa isteredthroughthe The purchases will be made for a maximum of for to offers sale(pursuant 144-bisofCONSOBResolutionn.Article 11971of14May 1999). tablished by Borsa Italiana S.p.A., which do not permit the direct matching of buy bids with pre-determined es- conditions markets,exclusivelyoperationalregulated made the in be to accordingwill purchases The of theshareholder resolution approving theProgram. SASicàr(32.5%oftheshare capital)forholding inChinaOpportunity atotalof of Sopaf S.p.A.) to transfer to the shareholding in Sopaf Asia S.a.r.l. (85% of the share capital) and the share - subsidiary (100% Cutter 2007,with agreementS.a.r.l.December an LM-IS 12 finalized On liquidation) (in accounting effects ofthemerger 2007. asof1January The merger was completedon14December2007; poration of LM Real Estate S.p.A., Acal S.p.A. and IDA S.r.l. in the holding company, Sopaf S.p.A., with tax and S.a.r.l. (inliquidation)(10.81%for IS LM company subsidiary the by held interests minority Estate,the Real of LM acquisition the perfecting subsidiary,owned partially the of 2007,capital September share 11 S.p.A. the On Sopaf of 100% acquired with immediateeffect. companies’the closureapprovingresolutionsof the passed and meetings held liquidation) (in liquidation On 29 June 2007, of Star the shareholders Venture Management SA (in liquidation) and Star Venture I Scpa On 28June 2007, themerger ofMercato 24S.r.l. intoLMRealEstateS.p.A. was completed. ity immediately. On 28 June 2007, a decision was taken to dissolve Vegastar SA, and the company thus discontinued its activ- activity immediately. The purchases will be made through one or more transactions over a period of 18 months from the date the from months 18 of period a overtransactions more or one through made be purchaseswill The On 25 June 2007, a decision was taken to dissolve MGO Lux SA, and the company thus discontinued its discontinued thus company SA,the Lux and MGO dissolve to taken was 2007,decision June a 25 On € 49.7 million. € 8.5 million) and Giorgio Magnoni (0.3%for Magnoni 8.5 million)andGiorgio € 2.7 million, without prejudice to the respect of the limits € € 182,000). 330,000. it is noted that the subsidiary companiesdonotown any shares oftheholdingcompany.it isnotedthatthesubsidiary At the end of the year, Sopaf acquired 390,263 of its own shares in accordance with the program’s guidelines; 4.5 million. 2007,September 26 On transaction didnothave any impact. significant earnings During the month of 2007,February a block of > Othertransactions • • • • fund, On 7 November 2007, Sopaf S.p.A. perfected the acquisition of 128 Class A units of the closed-end real estate S.A., withapayment ofCHF99,998. During the most recent quarter, Sopaf purchased 1,743,000 shares of shares quarter,1,743,000 recent purchased most Sopaf the During ket for December,of month the During purchasedSopaf sharesof 4,950,733 tions ofthisreport, otherunitsofthesamefundare currentlytheGroup affiliate, heldby Five SA. Stars S.p.A.InvestireSgrImmobiliare by managed is fund the and,that noted sec- is other It in alreadyoutlined as lion. specifying thelimits, conditionsandtimingofthetransactions involving thepurchase ofSopaf’s shares. standing, prime of market intermediary securities a to for thirdof parties account the instruments nancial fi- of negotiation the for mandate a Program,provide the will of execution the of purpose Sopaf,the for disposal ofnon-core investments Sopaf. heldby the involving transactions from procured be will purchases share the for needed resources financial The for shallbegiven.the endofperiod whichoftheshareholders theauthorization Information the about execution and the outcome of the Program shall be communicated to the public at All purchase transactions willbeeffected incompliancewithany applicable laws andregulations. fixed, onsuch basis, for theentire duration oftheProgram. , from third-party investors on the secondary market for market secondary the on investors third-party Pubblici,from Immobili FIP-Fondo € 3.8 million. subscribed 99.99% of a newly incorporated Swiss company,Swiss incorporated newly a of 99.99% subscribed S.r.l. Tenerani Gabetti shares equal of 1.3% of the share capital was sold; the on the mar- the on Capitali & Management on the market for market the on Prestitò Conafi 037 € 18.2 mil- 18.2 Eolia €

Sopaf | Report on Operating Performance Sopaf | Report on Operating Performance 038 roughly • • investmentof veins(total varicose year,the During S.r.l., acquiredCerma LS of LM 17.9% Frencha company active developingin treatments for cal, andfitness sectors. purchasing shareholdings in companies operating in the healthcare, diagnostics,for used companybio-technology, investment special-purpose a Sopaf, - pharmaceuti is by owned directly 69.27% is S.p.A.,which LS LM > LMLSS.p.A. • • • of roughly inMilan. 75,000square meters The salegenerated acapitalgainof During the month of November, the fund sold 40% of invests inreal estatedevelopment andreal estatetrading transactions. fund,estate real the 2007,of December units 31 S.p.A.the of Sopaf of As 100% Tergeste,holding was which > Tergeste Fund > Controllinginvestments helddirectly by theholdingcompany, SopafS.p.A., asof31December2007 > Group’s shareholdings asof31December2007 (investment of In addition, theinvestments incompany’s portfolio include: manages various hedge funds, with total assets of roughly of assets total funds,with hedge various manages funds.hedgeItalian-law of currently companydistribution The and management the to dedicated company S.p.A.Sopaf Private shareof the capital of 66.63% holds WealthManagement Sgr S.p.A., managementfunds a > Private Wealth Management SgrS.p.A. below: indicated as companies property in shareholdings several holding was fund 2007,the December 31 of As pany embarked onthemarketingproduct, andsaleofitsfirst bookingrevenues of identify,to tumours.order2007, monitor in com- During and the imaging for diagnose technologies new authorization formalities.authorization As of 31 December 2007, the company reported EBITDA of roughly with proceeding and plants several of production up expansion, starting planned its with ahead moved Italy.in two 2007,company and the During Switzerland in plant production a exams,has diagnostic and opharmaceuticals (investmentopharmaceuticals of roughly 50% ofCO.SE. S.r.l., acompany inComo. thatowns aproperty project inarea ofBarcelona undergoing urbanrenewal; development estate real prestigious a involvedin that FiranegociosS.L.,companylaw of Spanish 25.5% a ( ing and diagnostics (computer-aided detection) (investment of (investment detection) (computer-aided diagnostics and ing an 18.6% interest in interest 18.6% an a 17.86% stake in 15% ofImmobiliare Appia S.r.l., acompany thatowns inthecenterofRome; aportfolio ofproperties € 0.9 millionin2006)andrevenues of € 3 million in 2007 (in line with the prior year),3 millionin2007(inlinewith theprior basically achieving aprofit-and-loss breakeven. € 0.5 million). iM3D S.p.A. , an Italian-French concern active in radi- in S.A.,active Applications Italian-Frenchconcern Accelerator an Advanced (f/k/a I.MED S.p.A.), an up-and-coming firm in the market for medical - imag € 0.8 million) and 94% of Li of 94% and million) 0.8 TechS.p.A., company diagnostics imaging an € 7.5 million( € 3.2 million); the company is a producer of radiotracers used in Telma S.r.l., a company which owns an industrial area € 5.5 million). € 170 million. PWM earned net commissions of commissions net earned million.PWM 170 € 1.5 million);developing 1.5 is company the € 8 million. € 0.4 million. € 1.5 million as of31December2007, ithasinvested roughly investors, third-party and Group the from and tapped 2007, capital During investthe to began company the Group’s interest intheSicàr’s capitalisequalto42.4%. shares).B Class the vis-à-vis returns economic higher Accordingly,guaranteeing and capital the of 32.5% the shares.B Class company,the Group of to Another (equal Class shares S.a.r.l.,the A Cutter of all holding was years.six of 9.9% holding term was specified liquidation) 2007, a (in December SCA 31 Partners of & As LM For the year ending 31 December 2007,December revenuesof 31 consolidated ending yearhad companythe For the connections. broad-band wireless fornetworks managing designing,and in building leader national the become has that Italia. The company also holds 100% of Linkem S.p.A. (f/k/a Megabeam Italia S.p.A),to Telecombelong a company to set up in used 2001 that exchangesnationwide telephone 1,150 roughly of owner the S.p.A.is AFT financial andoperating policiesofthecompany. the control to Sopaf permit consequentlynot that do and directors boardof of members the of majority the remove to and/or appoint to Sopaf allow not do that shareholders other between executed agreements by though holding 57.76% of AFT, the Sopaf Group does not control the company’s governance S.a.r.l.Investwhich Nearco is through Evencoveredindirectly 10.29% S.p.A.of another AFT 47.46% and directly holds Sopaf > AFT S.p.A. > Other investments held directly by the holding company, Sopaf S.p.A., as of as of 31 December 2007 up thecompany’s activityinrelation tonew products tobelaunched onthemarket2008. during 0.2 million in 2006). The loss is exclusively to attributable expenditures incurred the during year for building • • roughlyKong. of Hong commissions and management 2007,Shanghai In earned in it offices sentative S.a.r.l., a company that to providesChina services S.A. Opportunity advisory Sicàr.Sopaf Asia of Sopaf capital shareAsia S.a.r.l.the S.a.r.l.,of Cutter has repre85% - holding,through was 2007,Sopaf December 31 of As > Sopaf Asia S.a.r.l. coverage willextend tomore than75%ofthe resident population. national activated,the are licenses the once Ministry; Communications the by promoted tender of part as It is noted that during the first few months of the 2008, the company was adjudicated several WiMax licenses Equity Fund) with assets equal to roughly S.p.A., a funds management company currently managing a long/short equity arbitrage fund (Cartesio Global As of 31 December 2007, Sopaf S.p.A. was holding 100% of the share capital of Sopaf Capital Management Sgr > SopafCapital Management SGRS.p.A. ments in Chinese companies with international growth potential; the company has capital of company,million.special-purpose The million of net commissions ( commissions net of million lion in2006), anetprofit of earning Myngyang Electric Appliance Co. Ltd, a company active in the production of turbines for wind energy; wind for turbines of production the in active company Co.Ltd,a Appliance Electric Myngyang invested investedChina Opportunity Sino Gas & Energy Limited, a company active in the production and extractiongas;Limited,and of productionEnergy the & in Gas activeOpportunity company Sino China a € 3.7 millionfor 12.6%oftheshare capital. € 1.5 million in 2006), reporting a net loss of loss 2006),net in a million 1.5 reporting € 10 millionfor 20%oftheshare capital; € 0.3 million. is a company dedicated to invest- to dedicated company a is Sicàr, S.A. Opportunity China € 47 million. In 2007, the funds management company booked € 15 million. investmentsThe principal madeare: € 0.6 million (versus a profit of profit a (versus million 0.6 € 8.5 million ( million 8.5 039 € 33 million and € 6.4 mil- 6.4 € 0.7 € € 2

Sopaf | Report on Operating Performance Sopaf | Report on Operating Performance 040 transfer of assets from the Sopaf Group.Sopaf the fromof 2007,assets commissions In transferof net earned PolisFondi lion. In 2007, the company realized a net profit of 17 millionin2006). The netlossfor theyear was aroundvalueof a with mortgages placed 2004 which is active in the of distribution mortgages and insurance products. the During 2007, the company November in up set S.p.A.,brokerEssere financial of a 35.77% 2007, holding December was 31 Sopaf of As > Essere S.p.A. ing to ing real estate fund for the retail market that was set up in June 2000 and has assets under management amount- is active in the management of real estate funds. The company currently manages the Polis Fund, a closed-end As of 31 December 2007, Sopaf S.p.A. was holding 49% of Polis Fondi Sgr.p.A., a funds management company > Polis Fondi Sgr.p.a. of Network.Banca togetherwith hub banking/insurancefuture a ing 2007,loss In net a incurred company the As Sopaf’s investmentfirst in the insurance sector, the 45% holding is being used for the purpose of develop- > Area Life International Assurance Ltd. theGroup withtheacquisitionofinvestment.planned by turnaround the for guidelines the illustrate will plan 2008;new early the in plan strategic three-year new a In November 2007, the bank’s new shareholder base appointed a new management team that will be drafting nancial-product networkdistribution embracing roughly 900 financialoperating advisors across the country. entitled section the in described as rights earnings of 2007”. transactionsin terms “Principal fi- a is bank The in S.p.A Network Bipielle Banca of capital share the of 44.53% 2007,holding December was 31 Sopaf of As > BancaNetwork Investimenti S.p.A. thefund. by and incomeearned million in 2006) reporting a net profit of plant should be productive of2008. inthefinal quarter cused on building a 3.5MW photovoltaic plant in Apulia for a total investment of roughly of investment total a in for Apuliaplant photovoltaic 3.5MW a building on cused S.F.E.R.A.of capital share the 2007,of December S.p.A.48% 31 Sopaf holding of S.r.l.,was As focompany- a > S.F.E.R.A. S.r.l. of Italy gave thecompany tomanage real authorization estate hedge funds. promoted by the Italian of Ministry the Economy and Finance and acquired for a total investment of investmentclosed-endrealthe estate of fund, units company450 The holds FondoPubblici”,- Immobili “FIP and25%toSopafS.p.A. tothewarrant holders the residual earnings time.investors,to earnings of annual 75% of paysout 9% Fiveof preferentialStars a return paid having After any at shares B Class the subscribe to holders the entitling warrants of assignment the through investors of Sopaf holds 99.99% of the Class A shares in the Luxembourg company. The company is controlled by a group > Five StarsS.A. € 3.1 million (though it earned aprofit of 3.1 million(thoughitearned € 319 million,319 the investors,and with qualified forup Tergeste fund set estate Fund, real closed-end a € € 0.8 million ( 377 million,377 revenuesconsolidated of reporting € 1.6 million in the final quarter oftheyear).1.6 millioninthefinal quarter € € 4.4 million ( 1.5 million (versus anetprofit1.5 million(versus of € 0.7 million in 2006). On 17 December 2007, the Bank € 2.3 million in 2006) derived from dividends € 0.4 millionin2006). € 3.7 million ( million 3.7 € € 17 million.17 The 22.5 million ( million 22.5 € 57 mil- € 3.4 € For 2007, Sila Group revenues reported of duction, marketing and sale of gearshifts and flexible cables for autos and industrial vehicles and car interiors. Industriale S.p.A. The Sila Group operates in the automobile components business, and Holding specifically,Sila of capital share the in of the 27.5% pro- holds Group the which through company S.A.,special-purpose a 2007,December 31 of As Siskin of sharecapital the of 100% washolding liquidation) (in SCA Partners & LM > SiskinS.A./SilaHoldingIndustrialeS.p.A. neededfor Sea. authorizations turbinesintheNorth installing64off-shore large,fordeveloping portunities parks.the off-shore secured has regard,company this the In that noted is it (Germany, tries France, Italy, Poland, England, and Spain Turkey).op- the on capitalize to is objective Another coun- European leading in installed parks with Europe playerin diversified a become to aims company The € electronicidentificationcards Spain.in 2007,December 31 of As companythe revenues reported roughlyof of distribution and developedforproduction be the to systems biometric forsupplyof the Ministry Interior tion and security systems. During 2007, the company and its werepartners awarded contracts by the Spanish identification,for recogni- used devices recognition finger-print builds and plans that S.p.A.,company Bit a As of 31 December 2007 LM & Partners SCA (in liquidation) was holding 23.72% of the share capital of Green > Green BitS.p.A. around smallandmedium-sizedbusinesses. thatspecializesinturning the ItalianBorsa Ramius. fund,The the American company holds 5.44% with of the share venture capital of Management joint & Capitali S.p.A.,50/50 a a company as traded on up set was that company S.a.r.l., Luxembourg Finance a Beven of capital share the of 50% holding was liquidation) (in SCA Partners & LM 2007 December 31 of As > Beven FinanceS.a.r.l. meters, with80%ofthetotalrepresented for properties by residential use. square 80,000 roughly embraces currently portfolio area. property Berlin company’s the The in estate real company, Valore Fund By Avere Asset Management SCA The company is active in buying and As selling of 31 December 2007,residential LM & Partners SCA (in liquidation) was holding 11.9% of the real estate investment > Valore By Avere Asset Management S.C.A. > million ( generated revenues of The company currently manages one of Germany’s largest wind parks parks.(installed capacity of 76.5 MW) whichwind of development the on business,specializing energy renewable the in management) and tion company,operating ent (planning,solutions integratedFinco offer Res development,to able AGis - construc Renergys AG’scompany.holding renewablebusiness.companyactivethe The is in energy differ- its Through As of 31 December 2007 LM & Partners SCA (in liquidation) owned 24.72% of Res Finco AG., the German RES > ResFinco AG. 9.8 million( of 31December2007 company, (inliquidation), Shareholdingsheldthroughthesubsidiary SCA Principal as LM&Partners € 13.8 millionin 2006). € 5 millionin2006)andEBITDA of € 2.5 million in 2007. Another 40 MW in France and in Poland are under construction. € 137 million ( € 1.5 million( € 118 million in 2006) and EBITDA of roughly € 0.4 millionin2006) 041 € 16

Sopaf | Report on Operating Performance Sopaf | Report on Operating Performance 042 capital of Aviva Previdenza S.p.A. from Finoa S.r.l. Sopaf S.p.A. acquired a 45% share for of a total price On 11 January 2008, Sopaf S.p.A. and Aviva Italia Holding S.p.A. perfected the acquisition of 100% of the share PWM Sgr held the minority shareholders,PWM Sgr heldtheminority for atotalamountequalto On 9 January and 1 2008,February Sopaf S.p.A. perfected the acquisition of the 23.36% of the share capital of > Materialevents subsequenttoyear end and development activity. Considering the Company operates in the financial sector,services it does out not anycarry specific research > Research anddevelopment activity liquidation), ofSopaf S.p.A. awholly owned subsidiary (in SCA Partners & LM and Sopaf between exist relationships payable and receivable significant most The in Note44totheSopafS.p.A. financial statementsandinNote45totheconsolidatedfinancial statements. The relationships between companies of the Group are settled at market conditions and are reviewed in detail Accounting Standards Board (IASB). 2002,n.September IAS 30 and the 24 of 2064231 Disclosures”PartiesDEM “Related International by issued suant to the CONSOB Notices n. 1997, 97001574 of 20 February n. 1998 and 98015375 n.of the 27 February The information on transactions with related is parties disclosed in the notes to the financial statements pur- > Relationshipsbetween group companiesandwithrelated parties As of31December2007, theCompany was holding390,263ofitsown shares. > Ownshares capital accountsasof31December 2007. break up and liquidate the company after having resolved the reduction of the share capital from On 30 January 2008, the extraordinary meeting of the shareholders of Coronet S.p.A. approved a resolution to form. abbreviatedS.p.A. in BNI S.p.A.,Investimenti or Network Banca to name bank’s the change to resolution a NetworkS.p.A.Bipielle Banca of shareholders passed 2008,the January of 28 meeting extraordinaryOn the 2007. was perfected theRamiusGroup on12February by shares of quantity same reorganization.affiliate’sthe the forS.a.r.l., Financetransactionof same part The as Beven S.p.A.from Capitali & Management of shares 14,999,970 S.p.A.2008,acquired Sopaf January 17 On million. to € 1 million in order to cover the losses sustained to 30 June 2007 and the losses in reflected the company’s € 0.8 million. € 19 million € 15.4 incorporating incentives. rate the of assignment the and installation plant to 100kw),studyfeasibility to the (up from systems voltaic photo- small-/medium-sized of production physical the sector,and particular,process in the managesand it via subscription of a special capital increase forincrease capital special a of subscription via On 12 March 2008, Sopaf S.p.A. completed the acquisition of 15.94% of the share capital of Sun System S.p.A. with USD4billionundermanagement. leading investor in infrastructure projects in the Middle East, North Africa and South America (MENASA) area, is Italy’spopulation.of resident 75% than theretomore representrelation that in investmentregions total The 13 in right-to-use the company,adjudicated affiliate S.p.A.,licenses.was Sopaf’s of WiMaxAFT assignment the for tender public a of results the announced officially Ministry 2008,Communications March the 3 On including through thepurchase andsaleofshareholdings inothercompaniesorentities. interest.sector,estate real the investmentsin selling and buying of purpose forthe up set companywas The 2008, February 27 On RE-Investment Partners S.r.l.& Sopaf wasincorporated, S.p.A.Sopaf with 40% a taking subscriptions came to came subscriptions Fund.Capital fund,Growth private-equity and the Infrastructure to regard with The million USD10 totalling commitment a of tranches second and first the S.p.A. subscribed 2008,Sopaf March 26 and March 11 On € 34 million. € 3.2 million. Infrastructure and Growth Capital Fund is managed by by managed is Capital,million.Fund Abraaj 3.2 Capital Growth and a Infrastructure € 2.5 million. Sun System operates in the renewable energy renewableenergy the million. in 2.5 operates System Sun 043

Sopaf | Report on Operating Performance Sopaf | Report on Operating Performance 044 the notestofinancial statements. in reported and 7 IFRS by required information risks,supplemental financial the of see management the on arranged for an adequate amount of committed credit lines with leading financial institutionsFor more details liquidity,its has commitments. monitors and its constantly meet Company to The funds tapping dif- in ficulties encountering of risk the to exposed be might Companyactivity, the business the of consideration In > Liquidityrisk orsolvencytions ofcredit risk risk. concentra- major any have not do subsidiaries its counterparties,and financialCompany to the regardWith > Credit risk obligations.debt When considered necessary, floating-rate ismanaged through thisrisk theuseofderivatives contracts.their for risk interest-rate to exposed are subsidiaries its and Company The > Interest-rate risk The Company doesbusinessintheEuro primarily Area andisthusnotexposed toforeign-exchange risk. > Foreign-exchange risk capital structure. covenants,with compliance and stakeholders the optimal of interestsan the maintain isfactionof to (ii) and shareholders,sat- the the to returns profitable guarantee to (i) simultaneously continue to Group’scapacity Company’scapital,the the safeguarding and on focused are objectives management Company’scapital The > Capital management liquidity risk. and risk interest-rate essentially are business core the to related risks companies.The subsidiary its of activities the and activity its with connected risks financial the monitors continuously Company The risks onfinancial > Information > Otherinformation growth. its stabilize to order in exploit to and identify to manages Group the that opportunities the and economies world’sleading the of trend the both on depend could year forthcoming the for results the that believed is 2008,of months it few first the during markets financial the of instability the and volatility the Considering > Outlookfor 2008 The direction andcoordination financial mostly transactions and consultingservices. concerns – – – – Sopaf S.p.A. currently directs andcoordinates theactivityoffollowing companies: > Directionandcoordinationactivity Decree n.Legislative 196of30June 2003. by modified 1999,as July 28 of n.138 Republic the of President the of Decree the of 6 Article Document”and Planning the 675/1996 Law updated Security by has requiredData Company “Personal The > Privacy – – – – TENERANI S.r.l. SOPAF CAPITALMANAGEMENTSGRS.p.A. PRIVATE WEALTHMANAGEMENTSGRS.p.A. LM LSS.p.A. 045

Sopaf | Report on Operating Performance Sopaf | Report on Operating Performance 046 - Merger surplusreserve: In addition, theboardoffollowing proposes theoffsetting reserves: forward,losses carried for theboard useofthereserve proposes thepartial capitalreduction. Milan, 13May 2008 The board proposes that the 2007 net profit of profit net 2007 the that proposes board The as presentedtheboard by ofdirectors, whenconsidered individually andtaken asawhole. balance sheet, the profit and loss statement, performance,and the operating the notes on to the report financial the statements approvalas of shareholder 31 for December submits 2007,hereby directors of board The > Proposal totheshareholders’ meeting - Reserve for- Reserve transactions between Group companies: Should theproposal beapproved, SopafS.p.A.’s shareholders’ equitywould beasfollows: - Merger difference - Acal S.p.A.: - Reserve for- Reserve capitalreduction: - Merger difference -LMRealEstateS.p.A.: losses carried forward in the amount of amount the in forward carried losses € 16,711,789.91; Giorgio Cirla Chairman On behalfontheBoard ofDirectors Undivided profits Other reserves Valuation reserve bonds for convertible Capital reserve Own shares Legal reserve Share capital Total shareholders’ equity € € 1,579,359.42; 2,792,843.32; € € 22,823,117.17. With regard to the remaining the to 22,823,117.17.regard With (25,903,290.30). € 20,075,664.11 be earmarked for the partial reduction of reduction partial the for earmarked be 20,075,664.11 € 4,819,297.65; € 2,747,453.06 of 2,747,453.06 In 130,967 € 80,002 50,965 46,986 000’s 3,991 (174) 162 - 047 Consolidated Financial Statements as of 31.12.2007 048

> Consolidated balance sheet*

In € 000’s Note 31/12/2007 31/12/2006

Goodwill 5 2,860 1,599 Intangible fixed assets 6 684 81 Tangible fixed assets 7 23,541 7,365 Shareholdings in affiliate companies / jointly controlled companies 8 116,117 99,517 Financial assets 9 157,031 169,633 Tax credits 10 18,208 17,840 Deferred tax assets 11 5,517 8,964 Total non-current assets 323,958 304,999 Inventories 12 94 - Customer receivables and other trade receivables 13 876 594 Other receivables and other assets 14 14,451 42,613 Other financial assets 15 7,298 3,132 Cash and cash equivalents 16 21,727 2,420 Total current assets 44,446 48,759 Non-current assets held for sale 17 28,208 - Total assets 396,612 353,758 Consolidated Financial Statements as of 31.12.2007 Sopaf | Consolidated Financial 049

In € 000’s Note 31/12/2007 31/12/2006

Capital 80,002 80,000 Own shares (174) - Undivided profits 95,041 76,306 Shareholders’ equity 18 174.869 156,306 Minority interests 19 7,173 23,323 Total shareholders’ equity 182,042 179,629 Bonds 20 43,390 - Due to banks and other lenders 21 61,557 41,360 Financial leases payable 22 14,840 4,600 Other liabilities 23 10,612 12,552 Pension and employment-severance liabilities 24 350 249 Deferred tax liabilities 25 303 4,403 Provisions 26 1,647 2,660 Total non-current liabilities 132,699 65,824 Current maturities of bonds 27 755 - Due to banks and other lenders 28 59,099 81,326 Financial leases payable 29 1,023 - Financial instruments - derivatives 30 11 - Trade accounts payable 31 4,896 3,115 Other liabilities 32 16,087 23,864 Total current liabilities 81,871 108,305 Liabilities related to assets held for sale - - Total liabilities and shareholders’ equity 396,612 353,758

* Pursuant to the CONSOB Resolution n. 15519 of 27 July 2006, the effects of the transactions with related parties on the Sopaf Group consolidated balance sheet are shown in a special balance sheet in this annual report, and are described in Note n. 49 as well as in the comments to the individual

financial statement accounts. Statements as of 31.12.2007 Sopaf | Consolidated Financial 050

> Consolidated profit and loss statement*

In € 000’s Note 01/01/2007 01/01/2006 31/12/2007 31/12/2006

Revenues 33 4,680 2,952 Other income 34 1,506 2,071 Purchases of materials and external services 35 (13,446) (4,394) Personnel expense 36 (6,878) (2,076) Other operating expenses 37 (6,240) (2,978) Gross profit (20,378) (4,425) Risk provisions and writedowns 38 (13,600) (59) Depreciation and amortization 39 (791) (141) Gains (losses) on sale of non-current assets 40 63,677 8,306 Operating profit 28,908 3,681 Earnings accrued on shareholdings valued with net equity method 41 10,208 10,659 Profit before interest and taxes 39,116 14,340 Financial income 5,235 2,563 Financial charges (8,664) (6,394) Net financial income (charges) 42 (3,429) (3,831) Profit before taxes 35,687 10,509 Current taxes (428) (1,654) Deferred taxes 280 1,179 Income taxes 43 (148) (475) Net profit from continuing operations 35,539 10,034 Net profit from operations sold - - Net profit 35,539 10,034 Allocable to: Minority interests 44 (214) (57) Group 35,753 10,091

Earnings per share (in euros) 45 - Primary 0.0843 0.0239 - Diluted 0.0744 0.0229

* Pursuant to the CONSOB Resolution n. 15519 of 27 July 2006, the effects of the transactions with related parties on the Sopaf Group profit and loss statement are shown in a special profit and loss statement in this annual report, and are described in Note n. 49 as well as in the comments to the

Consolidated Financial Statements as of 31.12.2007 Sopaf | Consolidated Financial individual financial statement accounts. 051

> Consolidated balance sheet prepared pursuant to Consob Resolution n. 15519 of 27 July 2006

In € 000’s Note 31/12/2007 Related % 31/12/2006 Related % Parties Parties

Goodwill 5 2,860 1,599 - Intangible fixed assets 6 684 81 - Tangible fixed assets 7 23,541 7,365 - Shareholdings in affiliate companies / jointly controlled 8 116,117 99,517 - companies Financial assets 9 157,031 1,851 1.2% 169,633 7,137 4.2% Tax credits 10 18,208 17,840 - Deferred tax assets 11 5,517 8,964 - Total non-current assets 323,958 304,999 Inventories 12 94 - - - Customer receivables and other trade receivables 13 876 280 32.0% 594 72 12.1% Other receivables and other assets 14 14,451 610 4.2% 42,613 - Other financial assets 15 7,298 3,037 41.6% 3,132 - Cash and cash equivalents 16 21,727 - 2,420 - Total current assets 44,446 48,759 Non-current assets held for sale 17 28,208 - - - Total assets 396,612 353,758 Consolidated Financial Statements as of 31.12.2007 Sopaf | Consolidated Financial 052

In € 000’s Note 31/12/2007 Related % 31/12/2006 Related % Parties Parties

Capital 80,002 - 80,000 - Own Shares (174) - - - Undivided profits 95,041 - 76,306 - Shareholders’ equity 18 174.869 156,306 Minority interests 19 7,173 - 23,323 - Total shareholders’ equity 182,042 179,629 Bonds 20 43,390 - - - Due to banks and other lenders 21 61,557 - 41,360 - Financial leases payable 22 14,840 - 4,600 - Other liabilities 23 10,612 - 12,552 - Pension and employment-severance liabilities 24 350 - 249 - Deferred tax liabilities 25 303 - 4,403 - Provisions 26 1,647 - 2,660 - Total non-current liabilities 132,699 65,824 Current maturities of bonds 27 755 - - Due to banks and other lenders 28 59,099 225 0.4% 81,326 - Financial leases payable 29 1,023 - - - Financial instruments - derivatives 30 11 - - Trade accounts payable 31 4,896 - 3,115 4 0.1% Other liabilities 32 16,087 - 23,864 - Total current liabilities 81,871 108,305 Liabilities related to assets held for sale - - - - Total liabilities and shareholders’ equity 396,612 353,758 Consolidated Financial Statements as of 31.12.2007 Sopaf | Consolidated Financial 053

> Consolidated profit and loss statement prepared pursuant to Consob Resolution n. 15519 of 27 July 2006

In € 000’s Note 01/01/2007 Related % 01/01/2006 Related % 31/12/2007 Parties 31/12/2006 Parties

Revenues 33 4,680 2,952 - Other income 34 1,506 275 18.3% 2,071 33 1.6% Purchases of materials and external services 35 (13,446) (2) 0.0% (4,394) - Personnel expense 36 (6,878) (2,076) - Other operating expenses 37 (6,240) (2,978) - Gross profit (20,378) (4,425) - Risk provisions and writedowns 38 (13,600) (59) - Depreciation and amortization 39 (791) (141) - Gains (losses) on sale of non-current assets 40 63,677 8,306 - Operating profit 28,908 - 3,681 - Earnings accrued on shareholdings valued 41 10,208 10,659 - with the net equity method Profit before interest and taxes 39,116 - 14,340 - Financial income 5,235 4,164 79.5% 2,563 - Financial charges (8,664) (6,394) - Net financial income (charges) 42 (3,429) - (3,831) - Profit before taxes 35,687 - 10,509 - Current taxes (428) (1,654) - Deferred taxes 280 1,179 - Income taxes 43 (148) - (475) - Net profit from continuing operations 35,539 - 10,034 - Net profit from operations sold - - - Net profit 35,539 - 10,034 - Allocable to: Minority interests 44 (214) (57) - Group 35,753 - 10,091 - Consolidated Financial Statements as of 31.12.2007 Sopaf | Consolidated Financial 054

> Statement of changes in consolidated shareholders’ equity for the year ending 31 December 2007

In € 000’s Capital Own Shares Reserve for Valuation Reserve Undivided Profits Profit (Loss) Shareholders’ Minority Total Convertible for the Period Equity Interests Bonds

Balance as of 1 July 2006 80,000 - - 37,145 (9,143) 19,396 127,398 57,024 184,422 Allocation of prior year profit (loss) - - - - 19,396 (19,396) - - - Change in the fair value of financial assets available for sale - - - 35,319 - - 35,319 (14,180) 21,138 Deferred taxes on revaluation of the fair value of financial assets available for sale - - - (2,559) - - (2,559) 714 (1,845) Profits (losses) booked to shareholders’ equity - - - 32,760 19,396 (19,396) 32,760 (13,466) 19,293 Transferred to profit and loss statement for the sale of financial assets available for sale ------Net profit (loss) for the period - - - - - 10,091 10,091 57 10,148 Total profits (losses) booked during the period - - - - - 10,091 10,091 57 10,148 Changes resulting from infragroup transactions regarding shareholdings - - - - 4,551 - 4,551 - 4,551 Effects of changes in the consolidation area - - - - (18,493) - (18,493) (20,292) (38,785) Dividends ------Balance as of 1 January 2007 80,000 - - 69,905 (3,690) 10,091 156,306 23,323 179,629 Allocation of prior year profit (loss) - - - - 10,091 (10,091) - - - Change in the fair value of financial assets available for sale - - - 52,505 - - 52,505 3,615 56,120 Deferred taxes on revaluation of the fair value of financial assets available for sale - - - (1,201) - - (1,201) (128) (1,329) Profits (losses) booked to shareholders’ equity - - - 51,304 10,091 (10,091) 51,304 3,487 54,791 Transferred to profit and loss statement for the sale of financial assets available for sale - - - (65,167) - 65,167 - - - Net profit (loss) for the period - - - - - (29,414) (29,414) (214) (29,628) Total profits (losses) booked during the period - - - (65,167) - 35,753 (29,414) (214) (29,628) Increase in capital upon bond conversions 2 - - - - - 2 - 2 Equity component of convertible bonds - - 5,562 - - - 5,562 - 5,562 Deferred taxes on equity component of convertible bonds - - (1,571) - - - (1,571) - (1,571) Purchase of own shares - (174) - - - - (174) - (174) Capital gain on purchase of incremental share of subsidiary company and other - - - - (7,146) - (7,146) - (7,146) Effects of change in area of consolidation ------(19,423) (19,423) Dividends ------

Balance as of 31 December 2007 80,002 (174) 3,991 56,042 (745) 35,753 174,869 7,173 182,042 Consolidated Financial Statements as of 31.12.2007 Sopaf | Consolidated Financial 055

> Statement of changes in consolidated shareholders’ equity for the year ending 31 December 2007

In € 000’s Capital Own Shares Reserve for Valuation Reserve Undivided Profits Profit (Loss) Shareholders’ Minority Total Convertible for the Period Equity Interests Bonds

Balance as of 31 December 2007 80,002 (174) 3,991 56,042 (745) 35,753 174,869 7,173 182,042 Consolidated Financial Statements as of 31.12.2007 Sopaf | Consolidated Financial 056

> Statement of changes in consolidated financial position

In € 000’s 31/12/2007 31/12/2006

Operating activity Net profit for the period 35,753 10,091 Adjustments for: Share of earnings / losses of affiliate companies (10,208) (10,659) Dividends earned (3,858) (977) Financial charges 8,664 6,393 Financial income (5,235) (2,563) Current income taxes 428 1,659 170,062 mmDeferred income taxes (280) (1,179) Depreciation of buildings, plant and equipment 692 127 Writedowns of financial assets available for sale 13,600 59 Amortization of other intangible fixed assets 99 14 Cash flow from operations before changes in working capital accounts 39,655 2,965 (Increase) decrease in receivables and other assets 27,878 (27,249) (Increase) decrease in inventories (94) 77,636 Increase (decrease) in trade accounts payable and other current liabilities (6,424) 20,004 Increase (decrease) in other non-current liabilities (1,940) - Cash generated from operations 59,075 73,356 Interest paid (7,675) (6,393) Net change in reserves for risks and charges (1,013) 930 Net change in employment severance indemnity reserve 101 117 Writedown of financial assets available for sale (13,600) (59) Change in non-current tax credits (368) 18,470 Change deferred taxes (3,743) 3,616 Interest and deferred charges not paid on convertible bonds 1,446 - Net cash flow from operations 34,222 90,037

Investing activity Interest earned 5,235 1,585 Dividends received from affiliate companies 306 70 Dividends received on financial assets 3,858 907 Share of profit (loss) of affiliate companies 7,610 10,659 Increase in investments in affiliate companies (60,235) - Decreases due to sale of shareholdings in affiliate companies 4,668 23,181 Decreases due to sales of assets available for sale 120,014 754 Sale of shareholdings 40 267 Goodwill on acquisition of shareholdings in subsidiary companies (1,261) (1,599) Subscriptions of capital for shareholdings (47,358) (15,257) Consolidated Financial Statements as of 31.12.2007 Sopaf | Consolidated Financial 057

In € 000’s 31/12/2007 31/12/2006

Increases of financial assets available for sale (43,314) (36,331) Changes in net assets in area of consolidation 3,928 - Decreases due to the writedown of financial assets available for sale 13,600 - Increases in tangible fixed assets, net (16,868) (6,264) Purchases of intangible fixed assets (702) (66) Change in financial derivatives 11 990 Change in non-current financial receivables (3,395) (3,602) Net cash used in investing activity (13,863) (24,706)

Financing activity Proceeds from bond issue 48,416 - Increases in financial leases payable 11,263 4,600 Increase (decrease) in amounts held on deposit in current accounts with banks (3,019) 12,435 Change in current financial assets (4,166) (3,132) Change in financial debt - (73,338) Change in minority interests (16,150) (33,701) Changes in net assets of consolidation area - (2,552) Changes in shareholders’ equity (9,188) 4,550 Net cash flow derived from (used by) financing activity 27,155 (91,138) Change in assets held for sale (28,208) - Net increase (decrease) of cash and cash equivalents 19,307 (25,807) Cash and cash equivalents at the start of the year 2,420 28,227 Cash and cash equivalents of operating activity at the start of the year 21,727 2,420 Consolidated Financial Statements as of 31.12.2007 Sopaf | Consolidated Financial 058

NOTES TO THE FINANCIAL STATEMENTS

> 1 form and content of financial statements and adoption of IFRS accounting principles

The consolidated financial statements as of 31 December 2007 have been prepared by applying the valuation criteria established by the international accounting principles (IFRS – International Financial Reporting Stan- dards) in effect as of 31 December 2007. The consolidated financial statements consist of the balance sheet, the profit and loss statement, the statement of changes in financial position, the statement of changes in shareholders’ equity, and the notes to the financial statements. The profit and loss statement has been prepared on the basis of the minimum contents provided by IAS 1 (Presentation of financial statements) with the expenses classified by the nature thereof; the balance sheet has been prepared using the format evidencing a breakdown between current and non- current assets and liabilities. The statement of changes in financial position has been prepared in accordance with the indirect method.

> 2 Accounting principles and basis for preparation

> 2.1 General principles

The 2007 consolidated financial statements have been prepared in accordance with the International Finan- cial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) and ratified by the European Union. The definition of IFRS also encompasses the International Accounting Standards (IAS) and all of the interpretations of the International Financial Reporting Interpretations Committee (IFRIC), previously known as the Standing Interpretations Committee (SIC).

Point 48 of the notes to the financial statements reports the information required by IAS 1 and by the new principle IFRS7, which was ratified by the European Union in January 2006 (EC Regulation n. 108-2006). Such new principle requires a description of the objectives, the policies and the procedures placed into effect by management for the different types of financial risks (foreign-exchange risk, liquidity risk, interest-rate risk, and credit risk) to which the Group is exposed, inclusive of sensitivity analyses for the various types of risk and disclosures about the concentration and average, minimum and maximum exposure with respect to the various types of risk for the period of reference, whenever the exposure as of the end of the accounting period is not sufficiently disclosed.

The amounts in the consolidated financial statements are denominated in thousands of euros.

> Financial statement formats The consolidated financial statements consist of the statements (profit and loss statement, balance sheet, statement of changes in financial position and statement of changes in shareholders’ equity) and the notes to the financial statements. The profit and loss statement has been prepared in line with the minimum contents

Consolidated Financial Statements as of 31.12.2007 Sopaf | Consolidated Financial provided by IAS 1 (Presentation of financial statements). 059

Consistent with the Group’s internal reporting structure, the profit and loss statement has been prepared on the basis of the format evidencing a breakdown of expenses according to their nature, with the operating profit and the pre-tax profit reported separately prior to net profit. The operating profit is computed as the difference between net revenues and operating expenses (the latter of which include non-monetary items relating to the depreciation, amortization and writedown of current and non-current assets, net of any writebacks), and is inclusive of capital gains (losses) generated on the sale of non-current assets.

The balance sheet has been prepared on the basis of the format evidencing a breakdown between current and non-current assets and liabilities. Assets and liabilities are classified as “current” on the basis of the following criteria: • the assets/liabilities are expected to be converted into cash/extinguished or sold or used in the normal operating cycle or are held mainly for trading purposes; or, • the assets/liabilities are expected to be converted into cash/extinguished within 12 months from the balance-sheet date; • in the absence of the above conditions, the assets/liabilities are booked as non-current.

The statement of changes in financial position has been prepared in accordance with the indirect method, with the profit before taxes being adjusted by the effects of non-monetary transactions, by any deferral or provision of previous or future collections or payments of an operational nature, and by the revenues and expenses connected with the financial flows arising from investing or financing activity.

The statement of changes in shareholders’ equity illustrates changes occurring in the shareholders’ equity accounts in relation to: • the allocation of the holding company’s and the subsidiaries’ earnings for the period to minority shareholders; • amounts regarding transactions with the shareholders; • any profits or losses, net of any fiscal effects, which are either booked directly to shareholders’ equity or are offset by entries to shareholders’ equity reserves; • changes in reserves from the valuation of financial assets available for sale; • the effects of any changes in accounting principles.

The data in these financial statements are compared with the data for the prior year which have been prepared on the basis of the same criteria. The prior-year data have been reclassified whenever necessary in order to provide better representation of the comparative data,.

Finally, the consolidated financial statements are supplemented by the consolidated profit and loss statement and the consolidated balance sheet prepared in accordance with the provisions of the CONSOB Resolution n. 15519 of 27 July 2006 (Provisions on financial statement formats), in order to report separately any significant amounts involved in positions or transactions with related parties. Consolidated Financial Statements as of 31.12.2007 Sopaf | Consolidated Financial 060

> 2.2 Consolidation criteria

The consolidation area includes the holding company, Sopaf S.p.A., and the companies controlled by the holding company, namely, those companies over which the holding company has the power, directly or indirectly, to determine the financial and operating policies for the purpose of obtaining the benefits therefrom. The financial statements of the subsidiaries are included in the consolidated financial statements from the date on which the control is effectively transferred to the Group until the date on which the control is transferred outside of the Group.

The carrying value of the shareholdings is eliminated against the corresponding quota of the shareholders’ equity of the companies in which the investments are held, with the assets and liabilities of such companies consolidated on the basis of their fair value as of the date of the acquisition of control. Any positive differences resulting therefrom are booked to the non-current asset account, “Goodwill”, whereas any negative differences are charged to the profit and loss statement. All significant transactions occurring between the companies of the Group, the balances in relation thereto, and any unrealized earnings or losses on infragroup transactions have been eliminated upon consolidation. The portions of shareholders’ equity and earnings attributable to minority shareholders have been separately identified with respect to the shareholders’ equity and earnings of the Group, in relation to the percentage of the net assets of the Group held by the minority shareholders. Interests in affiliate companies and jointly controlled companies are reported in the consolidated financial statements with the use of the net equity method.

> 2.3 Business combinations and goodwill

As provided by IFRS 3 - Business Combinations, the acquisition of subsidiary companies is booked on the basis of the acquisition method. The cost of the acquisition is thus determined by the sum of the fair value, as of the transaction date, of the assets, the liabilities sustained or assumed with reference to the acquired company, and any financial instruments issued by the Group in exchange for the control of the acquired company, together with any costs directly inherent to the business combination. The acquired company’s identifiable assets, liabilities and contingent liabilities which meet the conditions for their registration provided by IFRS 3 are recorded at their fair values as of the acquisition date. The excess of the acquisition cost over the Group’s share of the fair value of the identifiable assets, liabilities and contingent liabilities booked is goodwill from the acquisition, which is recorded among the assets and initially valued at cost. Should the Group’s share of the fair value of the identifiable assets, liabilities and contingent liabilities after the recalculation of the fair value exceed the acquisition cost, the difference is booked directly to the profit and loss statement. The holdings of minority shareholders in the acquired business are initially valued in an amount equal to the minority shareholders’ quota of the fair value of the assets, liabilities and contingent liabilities booked. In the event of the sale of a subsidiary company, the carrying value of the goodwill ascribed to the company is included in the computation of the capital gain or capital loss on disposal. Consolidated Financial Statements as of 31.12.2007 Sopaf | Consolidated Financial 061

> Acquisitions of incremental interests IFRS3 is not applicable in the case of acquisitions of additional interests in companies after the Group has already secured the controlling interest because the principle applies only to transactions involving the acquiring entity’s acquisition of control. In the absence of a specific accounting principle provided by IAS/ IFRS, reference is made to IAS 8 which requires the adoption of reliable accounting treatment which, in this specific case, entails one of the following two alternatives: - the allocation of the difference between the acquisition price and the shareholders’ equity of the minority shareholders as an increase in the value of the assets (in accordance with the Parent-Company theory); or - the allocation of the difference between the acquisition price and the shareholders’ equity of the minority shareholders to consolidated shareholders’ equity (in accordance with the Economic-Entity theory).

In light of IASB’s recent issuance of a revised IAS 27 and the provisions of the ASSIREVI OPI 3 research document “Treatment in consolidated financial statements of the acquisitions of incremental interests after the acquisition of the controlling interest”, the Group has treated the acquisitions of incremental interests after the acquisition of the controlling interest as an equity transaction in accordance with the economic-entity theory which gives a group precedence over a company, placing the emphasis on the group as a single entity. According to such theory, the consolidated financial statements serve to represent the value of the resources managed overall by the Group, and thus, the individual companies of the group lose their identity, converging into a distinct and larger entity, i.e. the group. Accordingly, with the acquisition of the control of the business combination, the Group acquires the aggregate of the related assets and liabilities, even if it is not holding a 100% interest, with the emphasis on the Group as an entity that alone controls the resources available, including those that have been financed by the minority shareholders. From this perspective, the subsequent purchases of minority interests do not have any effects on the invested capital, an expression of the resources controlled overall by the buyer, but they are allocated to the Group’s shareholders’ equity. Furthermore, in this framework, the valuation reserve attributed to the minority shareholders and created subsequent to the acquisition of the control is to be allocated to the Group after the acquisition of additional interests.

> 2.4 Shareholdings in subsidiary and affiliate companies

The shareholdings in non-consolidated subsidiary companies are valued at cost whenever it is determined that the full consolidation of such companies would not have significant effects on the consolidated capital, financial position and earnings. The shareholdings in affiliate companies are valued on the basis of the net equity method in accordance with international accounting principles. Pursuant to IAS 28, an affiliate company is a company over which the Group is able to exercise significant influence over the decisions about operating and financial policies of the company, without maintaining control or joint control over the company by virtue of the investment. Other non-consolidated subsidiary companies and any affiliates not valued with the net equity method are valued on the basis of the criteria set out in the section hereunder, “Shareholdings in other companies”. Consolidated Financial Statements as of 31.12.2007 Sopaf | Consolidated Financial 062

> 2.5 Shareholdings in other companies

The shareholdings in companies other than affiliate companies are recorded as non-current assets in the account, “Other financial assets”, and, as provided by IAS 39 with reference to financial assets available for sale, are valued at fair value, or at cost whenever fair value cannot be reliably determined. The gains and losses from changes in fair value are booked directly to shareholders’ equity until the assets are sold or until a loss is recognized due to impairment of value. Upon the sale of the assets or the recognition of an impairment loss, the total gains and losses previously booked to shareholders’ equity are transferred to the profit and loss statement for the then current period. The original value may be reinstated in subsequent years should the premises for the writedown effected no longer apply. The risk arising from any losses exceeding shareholders’ equity is quantified in a special reserve to the extent to which the investing company is required to meet legal or implicit obligations with respect to the company in which the investment is held or to cover such company’s losses.

> 2.6 Financial assets

Receivables and financial assets held to maturity are booked at cost, which is equal to the fair value of the initial price paid, increased by any transaction costs (e.g. commissions, costs for advisory services, etc.). The initial carrying value is later adjusted to take into account: the repayments of principal; writedowns, if any; and the amortization of the difference between the repayment value and the initial carrying value. The amortization is based on the actual internal rate of return represented by the rate that equalizes, upon the initial recognition of the assets, the present value of the expected cash flows from the assets and the initial carrying value of the assets (“amortized cost method”). Receivables and financial assets held to maturity are classified as non-current assets unless the directors intend to dispose of the investments within 12 months from the balance-sheet date.

The unrealized gains and losses arising from change in fair value on non-monetary securities classified as assets available for sale are booked to shareholders’ equity. Whenever the securities classified as available for sale are sold or experience a reduction in value, the cu- mulative changes in fair value are booked to the profit and loss statement as gains or losses from investment securities.

The fair value of listed investments is based on current bid prices. Whenever there is no active market for a financial asset (unlisted securities), the Group establishes the fair value by using valuation techniques. Such techniques may include references to recent transactions between knowledgeable and willing parties, references to other, substantially similar instruments, and the analysis of discounted cash flows adapted in order to reflect the issuer’s specific situation. Receivables and loans are non-derivative financial assets entailing fixed or determinable payments which are not traded in an active market, and which are not intended to be traded. The assets mature 12 months or more following the balance-sheet date. Receivables and loans are included in the balance-sheet account, “Other loans and receivables”.

Consolidated Financial Statements as of 31.12.2007 Sopaf | Consolidated Financial At each balance-sheet date, the Group conducts a review to determine the existence of any objective evi- 063 dence that a financial asset or a group of financial assets has experienced impairment of value. In the case of equity securities classified as assets available for sale, the determination of impairment of value also includes any significant and continuing decrease of fair value that would put the fair value below the cost of the securities.

> 2.7 Other financial assets

Financial assets such as restricted guarantee deposits and security deposits, which the Group intends to hold, and is able to hold, until maturity, and which do not meet the requisites for classification as cash and cash equivalents are recorded in the financial statements and eliminated from the financial statements on the basis of the trading date. Such assets are initially booked at an amount corresponding to their fair value, and thereafter, on the basis of amortized cost, net of any writedowns for impairment in value.

> 2.8 Financial derivatives

Derivatives instruments are booked and carried at their fair value. The rules established by IAS 39 for hedge accounting are applied with regard to hedging instruments. The hedging instruments are used to cover exposure to changes in future cash flows, particularly from the variation of interest rates on loans. To the extent that a derivative is determined to be an effective hedge, the changes in the fair value of the derivative are booked to shareholders’ equity. Should the hedging not be effective, the changes in the fair value of the derivative are booked to the profit and loss statement. The effectiveness of the hedging, namely, the suitability to offset adequately the changes caused by the risk hedged, is periodically assessed by analyzing the correlation between the fair value, or the financial flows of the asset, liability or transaction hedged, and the financial flows of the hedging instrument. Whenever the conditions for the application of hedge accounting are not met, any gains or losses arising from valuing the financial derivative instrument at its fair value are booked directly to the profit and loss statement.

> 2.9 Other intangible fixed assets

Pursuant to IAS 38 (Intangible fixed assets), intangible fixed assets acquired or produced internally are booked as assets when it is probable that the assets will generate future economic benefits and when the cost of the assets may be determined in a reliable manner. Such assets, if they have a finite life, are booked at acquisition or production cost, net of amortization computed on a straight-line basis over their estimated useful life and any impairment of value.

> Computer software Software licenses purchased are capitalized and recorded as intangible fixed assets at their acquisition cost, and are amortized on a straight-line basis over their estimated useful life. The costs associated with the development and the ordinary maintenance of the software that do not meet the aforementioned requisites and research costs are charged to the profit and loss statement as incurred. Consolidated Financial Statements as of 31.12.2007 Sopaf | Consolidated Financial 064

> 2.10 Buildings, plant and equipment

Buildings, plant, machinery and equipment are booked at purchase or production cost, inclusive of ancillary charges, and are stated net of accumulated depreciation and any writedowns for impairment of value. Costs sustained for improvements made to third-party assets held under lease are capitalized and reported as part of the tangible fixed assets to which they refer, and are depreciated over the lesser of their useful life and the residual period of the lease contract. Gains and losses arising from the sale or disposal of tangible fixed assets are determined by the difference between the proceeds from the sale or disposal and the net book value of the assets, and are booked to profit and loss statement during the period in which the sale or disposal occurred.

> 2.11 Impairment losses

At each balance-sheet date, the carrying value of the intangible and tangible fixed assets is reviewed to determine if there are any indications of the impairment of value of such assets. In the presence of such indications, the recoverable amount of the assets is estimated in order to calculate any writedown. Whenever it is not possible to estimate the recoverable value of an individual asset, an estimate of the recoverable value of the cash-generating unit to which the asset belongs is used. The recoverable amount is the greater of the fair value, net of selling expenses, and the value in use. In compu- ting the value in use, the estimated future cash flows are discounted to their present value by using a pre-tax interest rate that reflects the time value of money and the specific risks of the activity. If the recoverable amount of an asset (or a cash-generating unit) is estimated to be less than the asset’s carrying value, the carrying value is reduced to the recoverable value. An impairment loss is then recorded in the profit and loss statement, except in the case of land or buildings when the impairment loss is accrued to the respective revaluation reserve. The foregoing does not apply to buildings held for investment purposes, which are revalued. Should the reasons for the writedown no longer exist, the carrying value of the asset (or the cash-generating unit), with the exception of goodwill, is increased to the new value derived from the estimate of recoverable value, to the extent it does not exceed the carrying value that the asset would have had if the impairment loss were not to have been recorded. The reinstatement of value is recorded in the profit and loss statement as booked, unless the asset is stated at fair value, in which case the reinstatement of value is booked to the revaluation reserve.

> 2.12 Leased assets

The assets acquired through financial lease contracts are booked as tangible fixed assets, offset by a liability of the same amount. The liability is gradually reduced by the amounts of principal included in the lease instalments provided by the repayment plan. The value of the asset is depreciated in relation to the lesser of the asset’s useful life or the term of the lease contract. The costs for lease instalments on operating leases are booked on a straight-line basis over the term of the

Consolidated Financial Statements as of 31.12.2007 Sopaf | Consolidated Financial contract. 065

> 2.13 Inventories

Inventories consist of properties in the process of being restructured, properties for sale, and properties held for trading purposes. Buildings under construction and/or being restructured are valued at the lower of cost, which is increased by any expenditures that increase the value of the assets and any financial charges that can be capitalized in relation to the assets, and the corresponding estimated realizable value. Properties held for trading purposes are valued at the lower of cost and market value. Market value is based on transactions involving properties that are similar in terms of their construction and location. Acquisition cost is increased by any expenditures that increase the value of the assets up to the time of the sale.

> 2.14 Customer receivables and other receivables

Receivables are initially booked at their nominal value (representative of the fair value of the transaction) and are valued thereafter at amortized cost, net of any impairment losses recorded in the profit and loss statement when there is objective evidence that the receivables have experienced a loss in value. The writedowns are determined by the difference between the carrying value of the receivables and the present value of the estimated future cash flows (which are discounted by using the effective interest rate). In the case of short-term trade receivables, the impact of discounting is negligible, and the valuation at amortized cost is thus equivalent to nominal value, net of any impairment losses.

> 2.14.1 Transfer of receivables

The receivables transferred through factoring transactions are eliminated as balance-sheet assets only if substantially all of the risks and benefits related to the ownership of the receivables are transferred to the factor. The receivables transferred with recourse and the receivables transferred without recourse which do not satisfy such requisite continue to be reported on the Company’s balance sheet, even if they are legally transferred; in such case, a financial liability of the same amount is booked against the advance received.

> 2.15 Cash and cash equivalents

Cash and cash equivalents include cash, amounts in current accounts with banks, demand deposits, and other, highly liquid short-term financial investments that may be quickly converted into cash and are not subject to any significant risk of change in value. Cash and cash equivalents are valued at fair value, which corresponds to nominal value or cost, increased by any accrued interest.

> 2.16 Convertible bonds

The residual part of the nominal value of the bond is booked as the conversion option, which is reported as part of shareholders’ equity, net of the related costs of issuance. The value of the conversion option does not undergo any changes in subsequent years. The costs of issuance are split proportionally between the debt and equity components of the bond at the date when the costs are first reported.

> 2.17 Due to banks

Interest-bearing bank loans and bank overdrafts are initially booked on the basis of the amounts received, net of any transaction costs, and are valued thereafter at amortized cost, using the effective interest-rate method.

> 2.18 Trade accounts payable and other payables

Trade accounts payable and other payables are stated on the basis of amortized cost which, considering the characteristics and the due dates of the payables, is generally equal to nominal value.

> 2.19 Pension and employment-severance liabilities

On the basis of IAS 19, the reserve for employment-severance liabilities in relation to the employees of the holding company and the subsidiaries having their registered office in Italy is classifiable as defined benefit plan. Accordingly, the amounts already earned must be projected out to the future in order to estimate the amount to be disbursed upon the termination of the employment relationship, and then discounted using the projected unit credit method in order to come up with a reasonable estimate of the amount of the benefits which the employees have earned in return for their service in current and prior periods. The Group has not adopted the corridor method, and therefore, actuarial gains (losses) are booked as earned (incurred) directly to the profit and loss statement.

> 2.20 Provisions

The provisions to the reserves for risks and charges represent costs and charges of a specific nature whose existence is certain or probable, but whose amounts or settlement dates are not known as of the date of the financial statements. The provisions are made against current obligations resulting from past events, which may be legal or contractual obligations or obligations arising from representations or conduct of the business that cause valid expectations on the part of the persons involved (implicit obligations). The provisions are booked at values representing the best estimate of the amount that the company would pay to extinguish the obligation; when the amounts of the obligations are significant and the payments dates can be reliably estimated, the provisions are stated at present value, with the charges accrued over time booked to the profit and loss statement in the “Financial income (charges)” account.

> 2.21 Non-current financial liabilities

Consolidated Financial Statements as of 31.12.2007 Sopaf | Consolidated Financial The liabilities are stated at amortized cost, using the effective interest-rate method. 067

> 2.22 Own shares

Own shares are booked as a reduction of shareholders’ equity. The original cost of own shares and the revenues from any subsequent sale thereof are booked as changes in shareholders’ equity.

> 2.23 Financial income and charges

Interest income and interest expense are booked in accordance with the effective interest-rate method.

> 2.24 Taxes

The tax provisions for the year include current and deferred taxes.

Current taxes are computed on taxable income for the year. Taxable income differs from the income reported in the profit and loss statement since it excludes revenues (expenses) that are taxable (deductible) in other periods, and it also excludes amounts that may never be taxable or deductible. The liability for current taxes is calculated by using tax rates in effect as of the date of the financial statements.

Deferred taxes are taxes that the Group expects to pay or to recover on timing differences between the carrying values of assets and liabilities used for financial reporting purposes and the corresponding values used for taxation purposes

Deferred tax liabilities are generally booked for all taxable timing differences related to the Group companies and to investments in affiliate companies, except in cases where the Group is able to control the cancellation of such timing differences and it is probable that the timing differences will not be cancelled out in the fore- seeable future.

Deferred tax assets arising from timing differences and/or from tax loss carryforwards are booked only to the extent that it is probable that future taxable income will be available against which such deductible timing differences and/or tax loss carryforwards can be used.

Deferred tax assets and liabilities are not booked if the timing differences arise from goodwill or from the initial registration of other assets or liabilities in transactions (and not business combinations) that do not have any influence on income reported in the financial statements or on taxable income. The carrying value of the deferred tax assets is reviewed at each balance-sheet date, and reduced to the extent that it is no longer probable that future taxable income will be sufficient to allow the total or partial recovery of such assets.

Deferred taxes are computed on the basis of tax rates that the Group expects to be in effect as of the date on which the benefits are to be realized or the liabilities are to be extinguished. Deferred tax provisions are booked to the profit and loss statement, with the exception of deferred taxes on amounts booked directly to shareholders’ equity, in which case the related deferred taxes are also booked to shareholders’ equity. Consolidated Financial Statements as of 31.12.2007 Sopaf | Consolidated Financial 068

Deferred tax assets and deferred tax liabilities are offset whenever there is a legal right to offset current tax assets and current tax liabilities, and when the assets and liabilities refer to tax positions with the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis.

> 2.25 Dividends

The dividends are booked during the accounting period in which the distribution is approved.

> 2.26 Earnings per share

Earnings per share is equal to consolidated net profit divided by the number of ordinary shares outstanding. For diluted earnings per share, the earnings attributable to the holders of the ordinary capital instruments of the holding company, Sopaf S.p.A., are adjusted to take into account the effects of all potential ordinary shares with a dilutive effect.

> Use of estimates

The preparation of the financial statements and the notes to the financial statements requires the use of estimates and assumptions that have an effect on the balance-sheet values of assets and liabilities and on the disclosures in relation to potential assets and liabilities as of the date of the financial statements.

> Changes in accounting estimates Pursuant to IAS 8, the effects of changes in accounting estimates are booked to the profit and loss statement as of the period in which the changes are made.

> Adoption of the new accounting principles and interpretations issued by the IASB The IASB issued the following documents that are initially applicable as of 1 January 2007 and have already been ratified by the European Union: • IAS 1 - Presentation of financial statements: supplemental information in relation to capital: amendment issued in August 2005, and effective as of 1 January 2007; • IFRS 7 - Financial instruments: supplemental information: issued in August 2005, and effective as of 1 Janua- ry 2007; • IFRIC 8 - Framework of application of IFRS 2: issued in January 2006, and effective as of 1 January 2007; • IFRIC 9 - Revaluation of the embedded derivatives: issued in March 2006, and effective as of 1 January 2007; • IFRIC 10 - Interim financial statements and impairment: issued in July 2006, and effective as of 1 January 2007.

It is noted that none of the aforementioned documents had any significant effect on the shareholders’ equity or on the earnings for the period. Consolidated Financial Statements as of 31.12.2007 Sopaf | Consolidated Financial 069

Following are new accounting principles and/or interpretations issued by IASB that will become effective in the next few years: • IFRIC 11 - Transactions with own shares and shares of the group: issued in November 2006; • IFRS 8 - Operating sectors: issued in November 2006, and effective as of 1 January 2009; • IAS 23 - Financial charges: issued on 29 March 2007, and effective as of 1 January 2009; • IFRIC 14 on IAS 19 - Assets for defined benefit plans and minimum criteria for coverage: issued on 5 July 2007 and applicable as of 1 January 2008; • IAS 27 and IFRS 3: Consolidated and non-consolidated financial statements and business combinations: both issued in the month of January 2008 and both applicable as of 1 January 2009. Consolidated Financial Statements as of 31.12.2007 Sopaf | Consolidated Financial 070

> 3 Area of consolidation

The consolidated financial statements have been prepared with reference to the financial statements as of 31 December 2007 that have been submitted by the respective consolidated companies, and adjusted,

Company % Held Directly % Held Indirectly Total % Held Country Currency Consolidation Method Company Holding company: Sopaf S.p.A. Direct subsidiary companies: Cutter S.àr.l. 100.00% - 100.00% Luxembourg Luxembourg Eur Full LM & Partners S.C.A. (in liquid.) 100.00% 100.00% Luxembourg Luxembourg Eur Full PWM SGR S.p.A. 66.63% - 66.63% Milan Italy Eur Full Fondo Tergeste 100.00% 100.00% Milan Italy Eur Full Sopaf Capital Management SGR S.p.A. 100.00% - 100.00% Milan Italy Eur Full LM LS S.p.A. 69.27% 69.27% Milan Italy Eur Full Tenerani S.r.l. 100.00% 100.00% Milan Italy Eur Full Direct affiliate companies: Polis Fondi SGR.p.A. 49.00% - 49.00% Milan Italy Eur Net equity method Petunia S.p.A. 59.38% - 59.38% Milan Italy Eur Net equity method S.f.e.r.a. S.r.l. 48.00% - 48.00% Milan Italy Eur Net equity method Essere S.p.A. 35.77% - 35.77% Milan Italy Eur Net equity method Five Stars S.A. 99.99% - 99.99% Luxembourg Luxembourg Eur Net equity method Aft S.p.A. 47.46% 10.30% 57.76% Milan Italy Eur Net equity method PWM AIGGIG Multimanager Fund 42.54% 42.54% Milan Italy Eur Net equity method Banca Network Investimenti S.p.A. 14.99% 29.54% 44.53% Lodi Italy Eur Net equity method Area Life International Assurance Ltd 45.00% 45.00% Dublin Irland Eur Net equity method Nearco Invest S.àr.l. 49.00% 49.00% Luxembourg Luxembourg Eur Net equity method ASM Lomellina Inerti S.r.l. 33.00% 33.00% Vigevano Italy Eur Net equity method Direct investments: Coronet S.p.A. 30.00% - 30.00% Milan Italy Eur Fair value Parc Eolien De S.Riquier SAS 40.00% 40.00% Lion Sur Mer France Eur Cost Noventi Field Venture II LP 2.43% 2.43% Menlo Parc CA USA Eur Cost Volare S.p.A. (in liquidazione) 24.60% - 24.60% Vicenza Italy Eur Cost Sadi S.p.A. 2.68% 2.68% Milan Italy Eur Fair value Demofonte S.r.l. 15.00% 15.00% Monza Italy Eur Fair value Delta S.p.A. 15.95% 15.95% Bologna Italy Eur Fairvalue Fondo Immobili Pubblici 0.96% 3.39% 4.35% Rome Italy Eur Fair value Conafi Prestitò S.p.A. 3.75% 3.75% Torin Italy Eur Fair value Management & Capitali S.pA. 0.90% 3.20% 4.10% Milan Italy Eur Fair value Tessitura Pontelambro S.p.A. 2.00% 2.00% Erba Italy Eur Fair value Raffaele Caruso S.p.A. 0.30% 0.30% Soragna Italy Eur Fair value Value Secondary Inv. Sicar SCA 2.60% 2.60% Luxembourg Luxembourg Eur Fair value Ezechiele Lda 19.90% 19.90% Eur Cost Consolidated Financial Statements as of 31.12.2007 Sopaf | Consolidated Financial 071

> 3 Area of consolidation

The consolidated financial statements have been prepared with reference to the financial statements as of where necessary, to bring them into line with the Group’s classification criteria and accounting principles 31 December 2007 that have been submitted by the respective consolidated companies, and adjusted, (IFRS).The table below shows the companies included in the consolidation area as of 31 December 2007:

Company % Held Directly % Held Indirectly Total % Held Country Currency Consolidation Method Company Indirect subsidiary companies: - through LM & Partners S.C.A. Siskin S.A. 100.00% 100.00% Luxembourg Luxembourg Eur Full - through Cutter S.àr.l. Sopaf Asia Sarl 85.00% 85.00% Luxembourg Luxembourg Eur Full - through Tenerani S.r.l. Eolia S.A. 100.00% 100.00% Bellinzona Switzerland Eur Full - through LM LS S.p.A. Li Tech S.p.A. 94.00% 65.11% Monterotondo Italy Eur Full Indirect affiliate companies: - through LM & Partners S.C.A. Beven Finance S.àr.l. 50.00% 50.00% Luxembourg Luxembourg Eur Net equity method Mirror tre S.àr.l. (in liquidazione) 25.00% 25.00% Luxembourg Luxembourg Eur Net equity method Westindustrie S.r.l. 22.00% 22.00% Milan Italy Eur Cost - through Petunia Banca Network Investimenti S.p.A. 49.75% 44.53% Lodi Italy Eur Net equity method - through Siskin S.A. Sila S.p.A. 27.50% 27.50% Turin Italy Eur Net equity method - through LM & Partners SCA e Cutter S.àr.l. China opportunity SA 42.39% 42.39% Luxembourg Luxembourg Eur Net equity method - through Fondo Tergeste Firanegocios SA 25.50% 25.50% Barcellona Spain Eur Net equity method Cose S.r.l. 50.00% 50.00% Milan Italy Eur Net equity method - through Nearco S.àr.l. Aft S.p.A. 21.02% 57.76% Milan Italy Eur Net equity method Indirect investments: - through LM & Partners SCA Leisure Link Ltd. 1.40% 1.40% UK Eur Fair value Green BIT S.p.A. 23.72% 23.72% Turin Italy Eur Fair value Res Finco AG 24.72% 24.72% Sankt Gallen Switzerland Eur Fairvalue Blue H Group 1.60% 1.60% Oosterhout Netherlands Eur Cost Valore by Avere AM SCA 11.90% 11.90% Luxembourg Luxembourg Eur Cost - through LM LS S.p.A. Advanced Accelerator Applications S.A. 18.60% 12.88% Saint Genis Poully France Eur Fairvalue IM3d 17.86% 12.37% Turin Italy Eur Cost Cerma S.r.l. 17.90% 12.40% Archamps France Eur Cost - through Five Stars S.A. Fondo Immobili Pubblici 3.39% 3.39% Rome Italy Eur Fair value - through Beven finance S.àr.l. Management & Capitali S.p.A. 6.41% 3.20% Turin Italy Eur Fair value - through Fondo Tergeste Immobiliare Appia 15.00% 15.00% Milan Italy Eur Fair value - through PWM SGR S.p.A. Fondo PWM Global Income Low Volatility 0.57% Eur Fair value

Consolidated Financial Statements as of 31.12.2007 Sopaf | Consolidated Financial Fondo HSBC AM Monetaire - Eur Fair value 073

Fondo HSBC AM Monetaire - Eur Fair value Statements as of 31.12.2007 Sopaf | Consolidated Financial 074

Changes in the consolidation area with respect to 31 December 2006 are summarized in the table below:

New subsidiary companies Country Activity

Full consolidation: Sopaf Capital Management Sgr S.p.A. Italy Asset management (f/k/a Cartesio Alternative Inv. Sgr S.p.A.) Mercato 24 S.r.l. (merged into LM Real Estate) Italy Investments in shareholdings Li Tech S.p.A. Italy Medical equipment Tenerani S.r.l. Italy Investments in shareholdings Eolia S.A. Switzerland Investments in shareholdings

Subsidiary companies eliminated Country Activity

Full consolidation: Star Venture Management S.A. (liquidated) Luxembourg Investments in shareholdings Star Venture I S.c.p.a. (liquidated) Luxembourg Investments in shareholdings MGO Lux S.A. (liquidated) Luxembourg Investments in shareholdings Mercato 24 S.r.l. (merged into LM Real Estate) Italy Investments in shareholdings LM Real Estate S.p.A. (merged into Sopaf S.p.A.) Italy Real estate investments IDA S.r.l. (merged into Sopaf S.p.A.) Italy Investments in shareholdings LM IS S.a.r.l. (liquidated) Luxembourg Management company Acal S.p.A. (merged into Sopaf S.p.A.) Italy Investments in shareholdings Vegastar S.A. (liquidated) Luxembourg Investments in shareholdings

New affiliate companies Country Activity

Net equity method: Nearco S.a.r.l. Luxembourg Investments in shareholdings PWM AIGGIG Multimanager Fund Italy Investment fund ASM Lomellina Inerti S.r.l. Italy Investments shareholdings Banca Network Investimenti S.p.A. Italy Financial services Area Life Int. Ass. Ltd Ireland Insurance services

Affiliate companies eliminated Country Activity

Net equity method: Delta S.p.A. Italy Financial services Sopaf Capital Management Sgr S.p.A. Italy Asset management (f/k/a Cartesio Alternative Inv. Sgr S.p.A.) Consolidated Financial Statements as of 31.12.2007 Sopaf | Consolidated Financial 075

> Consolidation Criteria and Valuation of Shareholdings

The consolidation area includes shareholdings in affiliate companies whenever the investing company owns more than 20%, a percentage deemed sufficient for presuming the investing company’s significant influence, but not control, over the financial and operating policies of the affiliate. The shareholdings in such affiliate companies are valued with the net equity method

The Group’s shareholdings in excess of 20% include the following companies for which neither the holding company nor any of its subsidiaries or affiliates exercises significant influence: • Coronet S.p.A.: As a result of its sale of a 30% interest in the company on 4 August 2005, Sopaf S.p.A. neither controls nor significantly influences the company, and thus, the investment is classified as an investment available for sale. • Green Bit (Group’s investment is equal to 23.72%): The investment is stated at fair value, since LM & Part- ners SCA (in liquidation) does not actively participate in the determination of the company’s business and financial policies. • Res Finco AG (Group’s investment is equal to 24.72%): The shareholding is stated at fair value since it is considered a financial investment and since LM & Partners SCA (in liquidation) is not in a position to influence the business or financial policies of the company in light of a prevailing shareholders’ agreement.

Although the Group holds the majority in Five Stars S.A. (99.9%), the investment is not fully consolidated inasmuch as the company’s board of directors approved resolutions on 10 May 2006 to modify the by-laws, thereby eliminating the conditions precedent for the holders of warrants to exercise and convert their warrants into Class B shares. In light of this circumstance (the immediate conversion into Class B shares would give an absolute majority of the voting rights to the warrant holders), and the fact that the current shareholder does not assume the majority of the business risks tied to the company and enjoys only a limited portion of the benefits of the investment, the Group no longer fully consolidates the investment, as provided by IAS 27. In this regard, it is noted that the free exercise of the warrants and the mechanism that governs the substitution of the directors are elements that automatically vest the control of the Board of Directors with the warrant holders (in other words, if the current directors were to take business/financial decisions against the warrant holders’ will, the formal control of the company, via the conversion of the warrants into shares, would be effected immediately).

Although holding 57.76% of AFT, the Group does not control the company’s governance which is covered by agreements executed between other shareholders that do not allow the Group to appoint and/or to remove the majority of the members of Board of Directors and that consequently do not permit the Group to control the financial and operating policies of the company. Accordingly, the investment is valued with the net equity method.

In addition, the Group holds 59.4% of Petunia S.p.A., but does not control the company since it holds 49% of the Class A shares that vest voting rights; the remainder of the investment is represented by Class B shares that entitle the holders to economic rights, but do not entail voting rights. Accordingly, the investment is valued with the net equity method. Statements as of 31.12.2007 Sopaf | Consolidated Financial 076

The shareholding in SILA S.p.A. (Group’s investment is equal to 27.5%) has been maintained at cost since consolidated data as of 31 December 2007 are not available. It is noted, however, that the operating data supplied by the company indicate a positive growth trend with respect to 2006. It is noted that the company engaged an independent expert for the purpose of the first-time adoption of the IAS/IFRS accounting principles with the preparation of consolidated financial statements as of 1 January 2007. The company plans to prepare consolidated financial statements in accordance with IFRS as of 2008. Based on the independent expert’s analysis, there are no significant differences arising as a result of the adoption of the international accounting principles. In addition, the investment has been classified as part of financial assets held for sale in light of the initiatives of Sopaf S.p.A.’s management in the final months of 2007 to sell a packet of industrial investments to several investors and in light of the Group’s expectation to finalize the sale of such investments within one year. The packet embraces investments in AFT S.p.A., partially held through Nearco S.a.r.l., Res Finco AG, SILA Holding Industriale S.p.A. and Green Bit S.p.A.

The investments in IM3d, Resfinco, Cerma SA, Blue H Ltd, Noventi and Ezechiele Lda have been maintained at cost inasmuch as they are new investments or investments in start-up companies, the fair value is more or less equal to cost, and could not be reliably determined because of elements of uncertainty linked to the development of the business activity. The shareholdings in Westindustrie S.r.l. and Parc Eolien SAS have also been maintained at cost since the companies are currently not operational, and the valuation with the net equity method approximates cost.

> Principal transactions in 2007

> Divestiture of holding in Omniapartecipazioni S.p.A Through LM Real Estate S.p.A., the Sopaf Group made an investment in Omniapartecipazioni S.p.A. in No- vember 2002, originally purchasing 39% of the investment company and working alongside the businessman, Roberto Colaninno, in launching a public tender offer for IMMSI S.p.A., a transaction perfected on 13 January 2003 with the purchase of 50.35% of IMMSI’s share capital. On 12 March 2007, in accordance with Article 4 of a shareholder agreement dated 9 May 2006, the Board of Directors of Omniapartecipazioni S.p.A. approved a non-proportional, partial divestiture in favour of Mercato 24 S.r.l., a newly incorporated company wholly owned by LM Real Estate S.p.A. The divestiture provided for a reduction in the share capital of the company being sold in the amount of €9.2 million, through the retirement of 9,278,887 ordinary shares and (i) the reduction of the legal reserve in an amount of €1.8 million, (ii) the reduction of the share premium reserve in the amount of €10.1 million, and (iii) the registration of a divestiture reserve in the amount of €9 million. The divestiture also provided for the assignment to LM Real Estate S.p.A. (the holder of 25.5% of Omniaparte- cipazioni S.p.A.) of 100% of the share capital of Mercato 24 S.r.l. against the retirement of the Omniaparteci- pazioni S.p.A. shares held by LM Real Estate S.p.A., vitti one share of Mercato 24 S.r.l. being assigned for each 9,278,887 shares of Omniapartecipazioni S.p.A. Consolidated Financial Statements as of 31.12.2007 Sopaf | Consolidated Financial 077

Finally, the divestiture also provided for the assignment of the following Omniapartecipazioni assets and liabilities to the beneficiary company: • assets represented by 38,360,288 shares of IMMSI S.p.A., • liabilities represented by bank debt in the amount of €14.2 million due to a leading credit institution under a revocable credit line, along with interest accrued as from 1 January 2007 and not paid prior to the date of the divestiture. Along with the divestiture, on 13 March 2007, LM Real Estate S.p.A. signed an agreement to sell to Omniain- vest S.p.A. the remaining interest in Omniapartecipazioni S.p.A. (1.47 million shares, or 3.48804%) which was not part of the divestiture, for a total price of €10.9 million. The effectiveness of the agreement was subject to the actual execution of the divestiture approved by the Omniapartecipazioni S.p.A. shareholders. On 15 March 2007, the agreement covering the divestiture of Omniapartecipazioni S.p.A. was signed and filed, and on 19 March 2007, such agreement was registered with the Mantua Chamber of Commerce, with the simultaneous incorporation of the beneficiary company, Mercato 24 S.r.l.

On 20 March 2007, the following transactions were perfected: 1. transfer to Omnia Holding S.p.A. of 3 million shares of IMMSI S.p.A. owned by Mercato 24 S.r.l. (derived from the divestiture) at a total price of €6.58 million; 2. transfer to institutional investors (via a private placement) of 30 million shares of IMMSI S.p.A. owned by Mercato 24 S.r.l. at a total price of €65.85 million; 3. transfer of 1.47 million shares of Omniapartecipazioni S.p.A. from LM Real Estate S.p.A. to Omniainvest S.p.A., as described above.

As of the same date, Mercato 24 S.r.l. paid down €14.3 million of principal due under a revocable bank line of credit. As a result of these transactions, LM Real Estate S.p.A. ceased being a shareholder of Omniapartecipazioni S.p.A. and as of 31 March 2007, Mercato 24 S.r.l. was holding 5,360,288 shares of IMMSI S.p.A.

As previously described, the divestiture transaction was perfected on 19 March 2007, while the sale of the block of IMMSI S.p.A. shares (33 million shares) coming from Mercato 24 S.r.l.’s divestiture was perfected on 20 March 2007. In relation to the sale, 3 million shares were settled through a block transaction, while the remaining 30 million shares were placed with institutional investors by a leading intermediary. Also on 20 March 2007, in execution of the contract signed on 13 March, LM Real Estate S.p.A. perfected the sale of the 1.47 million shares in Omniapartecipazioni to Omniainvest S.p.A.

Also on 20 March 2007, Omniapartecipazioni S.p.A. paid a dividend of €3.6 million to LM Real Estate S.p.A., which was the latter’s company share of the dividends approved by resolution of the ordinary shareholders’ meeting held on 13 March 2007. The transactions described above (sale of the interests in IMMSI S.p.A. and Omniapartecipazioni S.p.A.) were perfected by taking into consideration the trend of the IMMSI S.p.A. share price on the stock exchange. The private placement of the 30 million shares was perfected at a price per share of €2.195, which is the same price applied for the block sale of the 3 million shares to Omnia Holding S.p.A.

The sale of 3.48804% of the share capital of Omniapartecipazioni S.p.A. for a total price of €10.9 million was Statements as of 31.12.2007 Sopaf | Consolidated Financial 078

effected by taking into consideration the valuation of the assets (IMMSI S.p.A. shares, at a price of €2.175 per share) and the liabilities (pro-rata debt, net of liquidity) as of 31 December 2006.

At a consolidated level, the investment in Omniapartecipazioni S.p.A. was classified among the financial assets available for sale, with the fair value thereof based on analyses and adjusted through charges/credits to shareholders’ equity through 31 December 2006. Given the existence of shareholder agreements which addressed the company’s governance and administration, the Group did not exercise any significant influence over the company. From the sale of the investment in Omniapartecipazioni S.p.A. the Group realized a net capital gain of €48.5 million. In addition, LM Real Estate S.p.A. (now Sopaf S.p.A.) perfected the sale of the remaining 5,360,288 shares which meant the Group realized a total capital gain of €52.5 million. The capital gain is figured by comparing the overall price received on the divestiture of the investment in Om- niapartecipazioni S.p.A. and the fair value of the investment reported in the consolidated financial statements as of 31 December 2006 and simultaneous recognition in the profit and loss statement of the total net gains and losses previously booked to shareholders’ equity. The transaction had a significant impact on the Sopaf Group’s earnings, capital and financial position, in terms of both the net capital gain realized (€52.5 million before taxes) and the resources to strengthen capital and net financial position.

> Transactions occurring during the year involving investments in subsidiary companies

During the year, various controlling interests in companies were eliminated from the consolidation area for the effect of the following transactions:

• The liquidation and final distribution of the assets of companies holding investments in LM & Partners SCA as part of the Group’s restructuring were effected as a result of the following transactions: -- On 25 June 2007, a decision was taken to dissolve MGO Lux SA, and the company thus discontinued its activity immediately. -- On 28 June 2007, a decision was taken to dissolve Vegastar SA, and the company thus discontinued its activity immediately. -- On 29 June 2007, the shareholders of Star Venture Management SA (in liquidation) and Star Venture I Scpa (in liquidation) held meetings and passed resolutions approving the companies’ liquidation with immediate effect. The controlling interests in the aforementioned companies that had been fully consolidated in the financial statements as of 31 December 2006 were eliminated from the consolidation area as of the date of the closing of the dissolution proceedings. The total effect of the liquidations on the profit and loss statement was a capital loss of €437,000.

• After securing the authorization of the regulatory authorities, Sopaf completed two transactions on 6 and 16 April 2007, which respectively led to the acquisition of 70% the company now known as Sopaf Capital Management Sgr S.p.A. (f/k/a Cartesio Alternative Investment Sgr S.p.A.) for a total outlay of €2.8 million.

Consolidated Financial Statements as of 31.12.2007 Sopaf | Consolidated Financial As a result of the transactions, Sopaf S.p.A. secured 100% ownership of the fund management company’s 079

share capital, and the investment has therefore been fully consolidated as of the date of the acquisition of control.

• For the effect of the merger-by-incorporation of the direct subsidiary companies, LM Real Estate S.p.A., Acal S.p.A. and IDA S.r.l., into Sopaf S.p.A. (as approved on 16 November 2007 by shareholder resolutions of the incorporated companies and on 27 November 2007 by a shareholder resolution of the incorporating company), the subsidiary companies were eliminated from the area of consolidation inasmuch as they were merged into the incorporating company, Sopaf S.p.A., with tax and accounting effects made retroactive to 1 January 2007.

• With reference to the incorporated company, LM Real Estate S.p.A., it is noted that said company perfected a merger-by-incorporation of the wholly owned subsidiary, Mercato 24 S.r.l., on 28 June 2007, with accounting effects made retroactive to 13 March 2007, the date of Mercato 24 S.r.l.’s incorporation, and accordingly, the investment, which was part of the area of consolidation during the first quarter of 2007, is no longer part of area of consolidation as of 31 December 2007.

• LM IS S.a.r.l. was eliminated from the area of consolidation as of 31 December 2007 for the effect of the conclusion of the liquidation proceedings that began on 20 December 2007.

The following tables provide information on the net assets of the business combinations arising from Sopaf S.p.A.’s acquisition of the controlling interest in Sopaf Capital Management Sgr as of the date of reference (31 March 2007) and LM IS S.p.A.’s acquisition of the controlling interest in Li-Tech S.p.A. as of the date of reference (31 December 2007) and the related computation of goodwill booked to the Sopaf Group consolidated financial statements: Consolidated Financial Statements as of 31.12.2007 Sopaf | Consolidated Financial 080

Sopaf S.p.A.’s acquisition of control of the funds management company, Sopaf Capital Management SGR S.p.A.

in € 000’s

% Holding 30.0% Acquisition of 70.0% 100.0%

Non-current assets 71 Current assets 3,567 Cash and cash equivalents 480 Total assets 4,118 1,235 2,883 Financial liabilities 0 Other liabilities 177 Non-current liabilities 177 53 124 Financial liabilities - Other liabilities 0 Current liabilities 470 Total liabilities 647 194 453 Net assets as of 1 January 2007 2,991 897 2,094 Revenues and income 337 Expenses (278) Net profit (loss) as of 31 March 2007 59 18 41 Net assets as of 31 March 2007 898 2,134 3,033 Investment valued on the basis of the 1,032 2,878 3,910 net equity method - 31 March 2007 Goodwill 134 743 877 Consolidated Financial Statements as of 31.12.2007 Sopaf | Consolidated Financial 081

LM LS S.p.A.’s acquisition of control of Li-Tech S.p.A.

in € 000’s

% Holding 94.0%

Non-current assets 550 Current assets 283 Cash and cash equivalents 0 Total assets 833 Financial liabilities (398) Other liabilities (3) Non-current liabilities (401) Financial liabilities (154) Other liabilities (623) Current liabilities (777) Total liabilities (1,178) Net assets as of 31/12/2007 (344) (344)

Shareholding as of 31 December 2007 40 Goodwill 384

Incorporated in 2003 from a spin-off of the National Research Institute, Li Tech S.p.A. carries out research in relation to small-field scintigraphic devices.

Finally, it is noted that the newly incorporated companies, Tenerani S.r.l. and Eolia SA, a subsidiary of Tenerani S.r.l., were fully consolidated for the first time; the companies have been set up for the purpose of developing new projects and are currently not operational. Consolidated Financial Statements as of 31.12.2007 Sopaf | Consolidated Financial 082

> 4 Segment reporting

The Sopaf Group’s activity, the strategies in relation thereto, and the underlying activity of management control are organized by lines of business, which thus serve as the basis for the primary segment reporting, as required by IAS 14. The segmentation of the Group’s business by geographic area is not significant since the Group’s activity is concentrated in Italy. As far as the Luxembourg companies are concerned, they are mostly sub-holding companies whose main investments are made in Italy. The notes to the financial statements present the main profit-and-loss and balance-sheet accounts by line of business, along with the other information required by the Group’s accounting principles. The lines of business served as the basis for primary segment reporting are as follows:

• Asset management; • Real estate; • Financial services and insurance; • Industrial and services companies.

The profit-and-loss and balance-sheet data by line of business with reference to the most recent fiscal year are reported in the schedule below. The activities of the Group’s holding company are not included in the business segments since they do not refer to identifiable operating activities used for supplying products or services, but they exclusively consist of the rendering of general and administrative services for the Group. Accordingly, the data for the holding company’s profit and loss statement and balance sheet are disclosed separately from the segment data. Consolidated Financial Statements as of 31.12.2007 Sopaf | Consolidated Financial 083

> Consolidated balance sheet 31 dicember 2007

Segments

in € 000’s Asset Real Estate Financial Services / Eliminations Shareholdings Consolidated Management Services Industry

Assets Segment assets 5,392 10,309 - 32,595 - 75,658 123,954 Investments valued with net 33,405 3,974 78,245 493 - - 116,117 equity method Financial assets available for sale 3,160 23,687 103,668 22,845 - 322 153,682 Goodwill 2,476 - - 384 - - 2,860 Total assets 44,432 37,970 181,913 56,317 - 75,980 396,612 Liabilities Segment liabilities (2,945) (12,285) (53,056) (1,945) - (144,340) (214,571) Total liabilities (2,945) (12,285) (53,056) (1,945) 0 (144,340) (214,571)

> Consolidated balance sheet 31 dicember 2006

Segments

in € 000’s Asset Real Estate Financial Services / Eliminations Shareholdings Consolidated Management Services Industry Assets Segment assets 2,116 31,912 292 12,699 45,392 92,411 Investments valued with net 16,934 2,947 51,052 28,583 - 99,516 equity method Financial assets available for sale 2,747 41,026 - 116,138 322 160,233 Goodwill 1,588 11 - - - 1,599 Total assets 23,385 75,896 51,344 157,420 - 45,714 353,759 Liabilities Segment liabilities (2,930) (30,033) (37,756) (28,840) (74,571) (174,130) Total liabilities (2,930) (30,033) (37,756) (28,840) - (74,571) (174,130) Consolidated Financial Statements as of 31.12.2007 Sopaf | Consolidated Financial 084

> Consolidated profit and loss statement 31 dicember 2007

in € 000’s Segment Asset Real Financial Services/ Eliminations Holding Consolidated Management Estate Services Industry Revenues and other income With respect to third parties 4,962 616 - 12 - 596 6,186 Within the segment 74 - - - (74) - - Within the group with respect to other segments 2 307 - 26 (389) 54 - Operating expenses ------With respect to third parties (6,572) (4,391) - (1,226) - (14,376) (26,565) Within the segment (74) - - - 74 - - Within the group with respect to other segments (219) - - (139) 389 (31) (0) EBITDA (1,826) (3,468) - (1,326) (0) (13,757) (20,378) Income arising on sale of noncurrent assets - 10,553 - 52,456 - 669 63,678 Risk provisions and writedowns - - - (13,600) - - (13,600) Depreciation and amortization (134) (481) - (10) - (166) (791) Operating profit (1,960) 6,604 - 37,519 (0) (13,254) 28,908 Pro-rata earnings on shareholdings 4,125 8,076 1,112 - - - 13,313 Pro-rata losses on shareholdings (44) (10) (2,601) (451) - - (3,106) Pro-rata earnings (losses) on investments valued 4,081 8,066 (1,489) (451) - - 10,207 with the net equity method EBIT 2,121 14,670 (1,489) 37,068 (0) (13,254) 39,115 Consolidated Financial Statements as of 31.12.2007 Sopaf | Consolidated Financial 085

> Consolidated profit and loss statement 31 dicember 2006

Segment

in € 000’s Asset Real Financial Services / Eliminations Holding Consolidated Management Estate services Industry Revenues and other income With respect to third parties 1,093 3,813 - 1,774 - 2,408 9,088 Within the segment - - - - - 108 108 Within the group with respect to other segments 951 45 - - (996) - - Operating expenses With respect to third parties (2,758) (5,545) (17) (1,205) - (3,988) (13,513) Within the segment - - - - - (108) (108) Within the group with respect to other segments (45) - - (951) 996 - - EBITDA (759) (1,687) (17) (382) - (1,580) (4,425) Income arising on sale of noncurrent assets - 8,338 (2) 454 - (484) 8,306 Risk provisions and writedowns - - - - (59) (59) Depreciation and amortization (68) (32) - - (41) (141) Operating profit (827) 6,619 (19) 72 - (2,164) 3,681 Pro-rata earnings on shareholdings 322 8,606 2,521 22 - 11,471 Pro-rata losses on shareholdings - (337) (45) (430) - (812) Pro-rata earnings (losses) on investments valued 322 8,269 2,476 (408) - - 10,659 with the net equity method EBIT (505) 14,888 2,457 (336) - (2,164) 14,340 Consolidated Financial Statements as of 31.12.2007 Sopaf | Consolidated Financial 086

> Balance sheet – assets

> Non-current assets

> 5 Goodwill The account balance is equal to €2,860,000, reflecting an increase with respect to the previous year as a result of the goodwill booked upon the consolidation of the companies, Sopaf Capital Management Sgr S.p.A. and Li Tech S.p.A., whose control was acquired during the year.

31/12/2007 31/12/2006

PWM Sgr S.p.A. 1,599 1,599 Li Tech S.p.A. 384 - Sopaf Capital Management Sgr S.p.A. 877 - 2,860 1,599

The recoverable value of the cash-generating units whose goodwill has been booked was verified through the computation of the value in use, or namely, the present value of the cash flows estimated on the basis of the most recent business plans available.

> 6 Intangible fixed assets The account balance is equal to €684,000, reflecting an increase of €603,000 principally due to the change of the area of consolidation.

Development Patents Concessions, Other Total Costs Licenses, Trademarks

Balances as of 01/01/2007 - 6 63 12 81 Changes during the year: - changes in area of consolidation 453 70 3 - 526 - acquisitions - - 177 - 177 - disposal - (1) - - (1) - reclassification - - 2 (2) - - amortization - - (89) (10) (99) - writedowns - - - - - Total changes 453 69 93 (12) 603 Balances as of 31/12/2007 453 75 156 - 684 Consolidated Financial Statements as of 31.12.2007 Sopaf | Consolidated Financial 087

> 7 Tangible fixed assets The account balance is equal to €23,541,000, reflecting an increase of €16,176,000 mainly for the effect of Sopaf S.p.A.’s capitalization of contracts of real estate leases for a total amount equal to €17,367,000. The changes in the account balance are detailed as follows:

Land Buildings Leasehold Plant and Equipment Other Total Improvements Machinery Assets

Cost as of 01/01/2007 - 5,074 1,720 - - 872 7,666 Changes during the year: - changes in area of consolidation - - - 31 1 13 45 - acquisitions - - 480 - - 500 980 - increases for assets under financial lease 11,226 1,142 - 1,813 - 1,710 15,891 - disposal - - - - - (53) (53) - reclassification - 1,504 (1,504) 98 100 (198) - - writedowns ------Total changes 11,226 2,646 (1,024) 1,942 101 1,972 16,863 Total cost as of 31/12/2007 11,226 7,720 696 1,942 101 2,844 24,529

Accumulated depreciation as of 01/01/2007 - (25) (81) - - (195) (301) Changes during the year: - changes in the area of consolidation - - - (1) (1) (19) (21) - acquisitions ------disposal - - - - - 26 26 - writedowns ------reclassification - - - - (40) 40 - - depreciation - (167) (53) (163) (13) (296) (692) Total changes - (167) (53) (164) (54) (249) (687) Total accumulated depreciation as of 31/12/2007 - (192) (134) (164) (54) (444) (988)

Balances as of 31/12/2007 11,226 7,528 562 1,778 47 2,400 23,541 Including assets under financial lease: - Historical cost 11,226 7,720 - 1,760 - 1,710 22,416 - Depreciation - (192) - (126) - (82) (400) Consolidated Financial Statements as of 31.12.2007 Sopaf | Consolidated Financial 088

The most significant increases regarded: • €14,181,000 for the acquisition of the Via Mercato 5/Foro Buonaparte 24 real estate under financial lease; the portion of the property available for use (€5,074,000) was capitalized in the previous year; with the completion of the restructuring of the entire property and the records of transfer and testing on 13 De- cember 2007, a special appraisal by an independent expert was commissioned and the total value of the property was subdivided into amounts attributable to the land, buildings and general plant; • €1,710,000 for the acquisition of new financial leases in order to complete the decoration and design of the areas to be used as offices; • €500,000 of increases for other assets, mostly consisting of office equipment acquired as enhancements to the information system and data-transmission network. Depreciation was charged against the assets under financial lease, according to the useful life estimated by the independent expert mentioned above. Consolidated Financial Statements as of 31.12.2007 Sopaf | Consolidated Financial 089

> 8 Shareholdings in affiliate companies/jointly controlled companies The account consists of the following:

31/12/2007 31/12/2006

Shareholdings in affiliate companies Delta S.p.A. - 49,738 Polis Fondi Sgr.p.A. 8,053 7,983 SILA S.p.A. - 4,087 Beven Finance S.a.r.l. 11,126 13,718 AFT S.p.A. - 10,740 Firanegocios S.L. 3,861 2,827 Five Stars S.A. 4,291 2,554 Cartesio Alt. Invest. Sgr S.p.A. - 1,032 China Opportunity S.A. Sicàr 7,479 5,365 Essere S.p.A. 277 838 Mirror Tre S.a.r.l. (in liquidation) - - CO.SE. S.r.l. 113 113 S.F.E.R.A. S.r.l. 461 38 Axxon S.r.l. - - Westindustrie S.r.l. 2 2 Telma S.r.l. and special-purpose subsidiaries (*) - 5 Pwm Aig Multimanager Fund 13,582 - Petunia S.p.A. 38,541 477 Banca Network Investimenti S.p.A. 19,172 - Area Life Int ass. Limited 9,129 - ASM Lomellina Inerti S.r.l. 30 - 116,117 99,517

* The special-purpose companies controlled by Telma are Intarch S.r.l., Valim S.r.l., Agorà S.r.l., Buena Suerte S.r.l., TauCeti S.r.l. and Facere S.r.l.

The changes in shareholdings during the year are summarized in special schedule attached to these notes entitled “Statement of shareholdings in affiliate companies” and “Earnings and financial data of affiliate companies”. Consolidated Financial Statements as of 31.12.2007 Sopaf | Consolidated Financial 090

The increases in the account balance during the year mainly refer to the following events: • The net increase in the investment in Polis Fondi is related to the distribution of dividends (€306,000) and to the accrual of the Group’s share of earnings (€376,000). • In first half of 2007, Tergeste Fund subscribed its pro-rata share of a capital increase for Firanegocios S.L. (€1,020,000), and it also booked earnings accrued on its investment (€14,000). • The increase in the investment in Five Stars is mainly related to the accrual of the Group’s share of earnings for the year (€976,000), and to the fair-value adjustment of the company’s financial assets held for sale (450 units of the Fondo Immobili Pubblici) with the effect on the valuation reserve (€791,000). • In relation to the investment in China Opportunity, the change with respect to the previous year is mainly the result of the accrual of earnings (€2,151,000). • On 4 December 2007, Sopaf subscribed a Sfera S.r.l. capital increase along with the other shareholders. Prior to the capital increase (€0.95 million), Sopaf held 50% of the company. Sopaf’s subscription amounted to €453,000, thereby reducing its stake to 48% of Sfera S.r.l.’s share capital; as of 31 December 2007, Sopaf recognized its share of the company’s loss (€30,000). • On 1 July 2007, the PWM AIGGIG Multimanager Fund was inaugurated. The fund is managed by the subsidiary company, Private Wealth Management Sgr, in partnership with AIG Global Investment Group (the asset management arm of the U.S.-based AIG, a leader in financial and insurance services). The investment, initially equal to €14.5 million, was subsequently reduced by roughly €1.5 million as a result of units to third-party investors; the investment has been classified as an affiliate in light of Sopaf’s role as a financial sponsor together with AIG; as of 31 December 2007, Sopaf recognized its share of the fund’s earnings (€604,000). • On 26 September 2007, with reference to the agreements executed on 1 August 2007, Sopaf S.p.A. acquired 14.99% of the share capital of Banca Bipielle Network (now known as Banca Network Investimenti S.p.A.) for €19,689,000; as of the same date, Petunia S.p.A. acquired 49.75% of the share capital of Banca Network Investimenti S.p.A. for €65,346,000. In relation to the latter transaction, on 25 September 2007, the Petunia shareholders subscribed a capital increase and simultaneously made capital contributions to a special funding reserve in order provide Petunia with the financial resources needed to make the acquisition. In particular, Sopaf S.p.A. paid €29.3 million toward the capital increase and €10 million of capital contributions to the special funding reserve. The value of the investment in Banca Network also includes ancillary charges of €152,000; as of 31 December 2007, the Group’s share of losses for the most recent quarter for Banca Network S.p.A. and Petunia S.p.A., amounted to €668,000 and €1,371,000, respectively. It is noted that the contractual clauses provide for the possible adjustment of the price in relation to the execution of agreements between the seller and Banca Network and the future performance of the bank itself. The effects of such provisions have not been considered in the computation of the acquisition cost inasmuch as they are currently not certain, including when taking into account the current reorganization taking place at the bank. • As of the same date, 26 September 2007, Sopaf and Aviva perfected the purchase of 100% of the share capital of Area Life International Assurance Ltd (55% for Aviva and 45% for Sopaf) from the Banco Popolare Soc. Coop. Sopaf’s acquisition cost was equal to €8,385,000, inclusive of ancillary charges of €128,000; as of 31 December 2007, the Group’s pro-rata share of the company’s profit for the most recent quarter amounted to €744,000. In accordance with the local regulatory requirements, the shareholders, Sopaf and

Consolidated Financial Statements as of 31.12.2007 Sopaf | Consolidated Financial Aviva Previdenza, have stated their willingness to capitalize the company should the capitalization of the 091

same no longer be satisfy the amount requested by the local authorities.

The decreases in the account balance during the year mainly refer to: • The investment in Delta S.p.A. accounted for a decrease of €49,738,000. As a result of the events described in the report on operating performance, the governance of Delta radically changed and it was no longer possible to presume significant influence as defined by IAS 28, the international accounting principle covering the reporting of investments in affiliate companies. Accordingly, the investment was reclassified as an asset available for sale and was thus valued at fair value, by allocating directly to shareholders’ equity the difference vis-à-vis the previous carrying value. • Sila (€4,087,000) and AFT (€10,740,000) were eliminated and reclassified as financial assets held for sale; at the end of 2007, the management of the holding company embarked on a series of initiatives to finalize the sale of a packet of industrial shareholdings (AFT S.p.A. (part of which is held by Nearco S.a.r.l.), Res Fin- co AG, SILA Holding Industriale S.p.A. and Green Bit S.p.A.) to several investors. Given the Group’s expectation that such shareholdings will be sold within one year, the directors reclassified the shareholdings as assets held for sale in accordance with the provisions of IFRS 5. The estimated realizable value is presumed to be higher than the book value. • With regard to the investment in AFT, in March 2007, Sopaf sold 21.02% of AFT S.p.A. to Nearco Invest S.a.r.l., a special-purpose affiliate company 49% owned by Sopaf and incorporated in 2007 with Sopaf’s capital contribution equalling €1,455,000; the stake was sold at a price of €2,733,000. • The value of the investment in Beven Finance S.a.r.l. declined by €2,592,000 as a result of the decrease of €2,569,000 in the fair value of the financial assets held by the company (Management & Capitali S.p.A.) and the accrual of Beven Finance’s pro-rata share of losses (€23,000). • The investment in Sopaf Capital Management Sgr S.p.A. (f/k/a Cartesio Alternative Inv. Sgr S.p.A) decreased by €1,032,000 due to the line-by-line consolidation of the holding after Sopaf purchased the remaining 70% of the company’s capital. • The value of investment in Essere S.p.A. decreased by €562,000 upon Sopaf’s accrual of its share of Essere’s loss for the year.

> 9 Financial assets The account balance is equal to €157,031,000, reflecting a decrease of €12,602,000.

31/12/2007 31/12/2006

Financial assets available for sale 153,683 160,235 Financial derivatives - - Bond securities 792 732 Other loans and receivables 2,548 8,656 Security deposits 8 10 157,031 169,633 Consolidated Financial Statements as of 31.12.2007 Sopaf | Consolidated Financial 092

The account includes the following categories of financial assets:

> Assets available for sale The account includes instruments representative of the capital of companies booked as come financial assets available for sale, and consists of the following:

31/12/2007 31/12/2006

Omniapartecipazioni S.p.A. - 81,790 Delta S.p.A. 96,000 - Sadi S.p.A. 4,946 6,210 Aster Fund - 35,468 Coronet S.p.A. - 13,400 Advanced Accelerator Applications SA 14,884 3,201 Gabetti S.p.A. - 1,622 Green Bit S.p.A. - 3,514 I.Med S.r.l. 1,500 1,500 Leisure Link Ltd. - 200 Volare S.p.A. (in liquidation) - - Bama S.r.l. - - Immobiliare Appia S.r.l. 1,967 1,920 Conafi Prestito’ S.p.A. 4,004 - Option Newman Lowther & Associates 322 322 Res Finco A.G. - 6,165 Cerma SA 850 - F.I.P. - Fondo Immobili Pubblici 19,017 - Parc Eolien De S.Riquier 16 - Noventi Field Venture LP 146 - Tessitura Pontelambro S.p.A. 344 - Value Sec Inv Sicar SCA 381 - Management & Capitali S.p.A. 3,663 - Raffaele Caruso S.p.A. 101 - Ezechiele Ltd. 46 - Fondo Valore by Avere AM 2,000 2,000 Blue H Group Ltd. 160 160 Forza Quattro S.r.l. - 14 Demofonte S.r.l. 703 2 Fondo PWM GILV 1,073 1,092 Hsbc Monétaire 1,560 1,655 153,683 160,235 Consolidated Financial Statements as of 31.12.2007 Sopaf | Consolidated Financial 093

The changes during the period in the balance of financial assets available for sale are detailed in a special schedule attached to these notes (Statement of financial assets available for sale).

The increases during the year in assets available for sale mainly refer to: • €96,000,000 with regard to the investment in Delta S.p.A. which, as indicated previously and described in the report on operating performance, was reclassified as an asset available for sale and thus valued at fair value. • The change in the valuation reserve was €45,894,000, which is the increase over the previous value of €50,106,000 at which the investment was carried as an affiliate company. • The fair value calculation was determined by taking into account a valuation supplied by a leading investment bank appointed by Delta’s management that was drawn up to support the capital increase approved by the shareholders and fully subscribed by shareholders with the exclusion of Sopaf and Banco Popolare (pre-money valuation of the Delta Group equal to €456 million); the aforementioned valuation is supported by a study supplied to Sopaf S.p.A. by a leading investment bank; the directors computed the fair value of the investment on the basis of such information. • €11,681,000 for the adjustment of the fair value of Advance Accelerator Applications SA. The determination of the fair value took into account the value allocated to the company upon the capital increase approved in early 2008 and offered to both the current shareholders and third parties. • Sopaf’s purchase of 1,743,000 shares of Conafi Prestitò for€ 4.5 million in the final quarter of the year; the fair value as of 31 December 2007 reflects the price of the shares on the stock exchange as of such date. • LM LS’ purchase in July 2007 of an interest in Cerma SA, a company active in the treatment of varicose veins, for a price of €250,000 and the subsequent subscription of a share capital increase for €600,000. • Sopaf S.p.A.’s acquisition on 7 November 2007 of 128 Class A units of the closed-end real estate fund, FIP- Fondo Immobili Pubblici; the units were purchased from third-party investors on the secondary market for €18.2 million. It is noted that other units of the same fund are currently held by the Sopaf affiliate, Five Stars SA.; the fair value reported as of 31 December 2007 reflect the fund’s certified NAV at such date. • Sopaf’s market purchase in December of 4,950,733 shares in Management & Capitali S.p.A. for €3.8 million; a portion of the shares was eventually sold. The value of the shares held as of 31 December 2007 was adjusted to fair value, taking market prices into account. • €710,000 for the adjustment to fair value of the investment held in Demofonte; the fair value reflects the price of acquisition in the event of the exercise of the option sold by Sopaf S.p.A. on 11 March 2008 to Helios S.r.l. Consolidated Financial Statements as of 31.12.2007 Sopaf | Consolidated Financial 094

The decreases during the year in assets available for sale mainly refer to: • €81,790,000, for the divestiture of the investment in Omniapartecipazioni S.p.A. an amount corresponding to the fair value as of 31 December 2006 which, as already described in detail above, occurred for the effect of the following transactions: - perfection on 20 March 2007 of the LM Real Estate S.p.A.’s sale of 1,470,000 Omniapartecipazioni S.p.A. shares to Omniainvest S.p.A.; - retirement of 9,278,887 ordinary shares of Omniapartecipazioni S.p.A. for the effect of the non-proportional, partial divestiture in favour of Mercato 24 S.r.l., a newly incorporated company wholly owned by LM Real Estate S.p.A., and the simultaneous non-proportional assignment of the share capital of Mercato 24 S.r.l. on the basis of one unit for every 9,278,887 Omniapartecipazioni S.p.A. shares; • €495,000 for the sale of 215,000 Sadi S.p.A. shares; the fair value as of 31 December 2007 reflects the market price at such date and incorporates a negative adjustment of €770,000; • €35,468,000 for the sale of the investment in the Aster Fund (33% of the units), a closed-end real estate investment fund; the sale was made on 29 June 2007 by the subsidiary company LM & Partners SCA (in liquidation), with the realization of a €10.5 million capital gain, net of costs and ancillary charges. • €13,400,000 for the full writedown of the investment in Coronet; the writedown was necessitated as a result of the company’s failure to meet the objectives of the business plan presented in 2006 as demonstrated by the financial statements for the year ending 30 June 2007, and the non-recovery of profitability that entailed financial tensions and continued requests for recapitalization on the part of the shareholders. In addition, as explained in the Material Events Subsequent to Year End, on 30 January 2008, the extraordinary meeting of the shareholders of Coronet S.p.A. approved a resolution to break up and liquidate the company after having resolved the reduction of the share capital from €19 million to €1 million in order to cover the losses sustained to 30 June 2007 and the losses reflected in the company’s capital accounts as of 31 December 2007. • €1,622,000 for the sale of the investment in Gabetti S.p.A.; • €9,679,000 for the reclassification of the shareholdings, Green Bit S.p.A. (€3,514,000) and Res Finco AG (€6,165,000) as assets held for sale inasmuch as they are part of the packet of industrial shareholdings that management intends to sell, as mentioned in the discussion of shareholdings affiliate companies/jointly controlled companies with reference to the investments in AFT S.p.A. and Sila Holding S.p.A. Consolidated Financial Statements as of 31.12.2007 Sopaf | Consolidated Financial 095

> Other loans and receivables The components of the account are shown in the table below:

31/12/2007 31/12/2006

Financial receivables from companies in which investments are held Nearco S.a.r.l. 22 - CO.SE. S.r.l. 188 188 Immobiliare Appia S.r.l. 390 420 Telma S.r.l. - 5,283 S.F.E.R.A. S.r.l. 15 10 Res Renergys AG. 1,236 1,236 1,851 7,137 Other financial receivables 697 1,519 Bond securities 792 732 Security deposits 8 10 3,348 9,398

The financial receivables with respect to the companies CO.SE., Immobiliare Appia and Telma are shareholder loans granted by Sopaf and LM Real Estate (now part of Sopaf) to the Tergeste Fund, following the transfer of the corresponding shareholdings to the fund.

The amount due from Res Renergys AG, a subsidiary of the affiliate Res Finco AG, is a mezzanine financing

The bond securities include a €1 million convertible bond issue underwritten by Sopaf S.p.A. and issued by the South African firm, Newman Lowther & Associates Ltd., which operates in financial consulting. The bonds come due in 2011. Should the bond issue be converted into shares, Sopaf S.p.A. will own 30% of the company’s current share capital. The coupon payment on the bonds is to be equal to 43% of the dividend paid. The bond securities represent the financing component of the financial instrument. The call option held by Sopaf and embedded in the instrument has a value of €322,000, which has been separated from the financing component and classified among the financial assets available for sale. Consolidated Financial Statements as of 31.12.2007 Sopaf | Consolidated Financial 096

> 10 Tax credits The account balance of €18,208,000 compared with 17,840,000 as of 31 December 2006, and includes credits claimed by the holding company, Sopaf S.p.A.

The balance includes: • corporate income tax credits in relation to the years 1998 and 2001 (including principal of €3,516,000 and accrued interest of €873,000), whose reimbursement was claimed by holding company, Sopaf; such credits were transferred to a financial company in March 2007 through a non-recourse factoring transaction; since the requisites set by IAS 39 for the derecognition of such credit have not been met, the account continues to be reported in the balance sheet, with a corresponding liability to the factor; • corporate income tax credits in relation to the year 1997 (including principal of €10,329,000 and accrued interest of €3,355,000), which have been transferred to third parties as a guarantee for credit lines and whose claim for reimbursement has been initiated.

> 11 Deferred tax assets The account includes deferred tax assets booked during the year in the amount of €5,517,000 (including €5,225,000 referring to the holding company), stated net of deferred tax liabilities in the amount of €2,966,000. The components of the account are shown in the table below:

31/12/2007 31/12/2006

Deferred tax assets Reserve for risks and charges and allowance for doubtful accounts 573 476 Deferred tax assets on loss carryforwards 7,090 8,296 Other deferred tax assets 820 253 8,483 9,025 Deferred tax liabilities (2,966) (61) 5,517 8,964

Deferred tax assets are mainly based on the future benefit of the use of a part of the tax loss carryforwards booked by Sopaf S.p.A. (€6.8 million) and Sopaf Capital Management (€250,000). The deferred tax assets have been booked considering the probability that future taxable income in coming years will be available against which the amounts booked as of 31 December 2007 can be used. The forecasts are based on the taxable income that can be generated with reasonable certainty in light of 2008 budget and having taken into account several transactions which are currently in the negotiation phase and which the directors will be finalized within one year. Consolidated Financial Statements as of 31.12.2007 Sopaf | Consolidated Financial 097

As of 31 December 2007, the holding company’s tax loss carryforwards amounted to €39,561,000 (corresponding to deferred tax assets of €10,879,000).

The deferred tax liabilities amount to €2,966,000, and consist mainly of: • €1,463,000 of provisions in relation to the fair-value valuation of the financial assets available for sale; • €1,448,000 of provisions in relation to the convertible bond issue inasmuch as the fair value of the debt component of the bonds was computed at the date of issue by using the market price of an equivalent non-convertible bond, and accordingly the amount of such deferred taxes represents the tax component in relation to the bond’s cost accounts that will be amortized during the life of the bonds.

The 2007 reduction of the rates for the corporate income tax rate (IRES) and the regional tax on productive activity (IRAP) had a negative effect of €1.4 million on the year’s earnings results.

> Current assets

> 12 Inventories As of 31 December 2007, the account has a balance of €94,000 which refers to the inventories of the subsidiary company, Li Tech S.p.A., which was consolidated for the first time as of such date. The account includes €40,000 of contract work in progress, and €54,000 of raw materials and materials for consumption.

> 13 Customer receivables and other trade receivables The account balance of €876,000 mainly includes €407,000 for commissions due to PWM Sgr S.p.A. for its management activity. The account includes the holding company’s receivables for services and expense recovery with respect to the affiliates, AFT S.p.A. (€81,000) and Polis Fondi Sgr p.A. (€198,000).

> 14 Other receivables and other assets The account balance is equal to €14,451,000, reflecting a decrease of €28,162,000. The account consists of the following:

31/12/2007 31/12/2006

VAT credits 2,391 3,280 Tax credits 2,101 9,648 Other receivables 9,742 24,769 Accrued income and prepayments 217 4,916 14,451 42,613 Consolidated Financial Statements as of 31.12.2007 Sopaf | Consolidated Financial 098

The tax credits mainly include amounts claimed by the holding company, Sopaf S.p.A. and regard: • €2,389,000 of value-added tax credits arising from the annual settlement of value-added taxes for 2007, which include the positions accrued as of 30 November 2007 and 30 September 2007, depending on whether the three companies incorporated on 19 December 2007 pay their value-added tax on a monthly or quarterly basis; • €1,921,000 of tax credits in relation to prior-year taxes, corresponding to taxes credited as of 31 December 2006, net of the use of the corporate income tax credit of €516,000 to offset taxes in 2007.

The other receivables of €9,742,000 decreased by €15,027,000 with respect to the previous year and mainly include: • €1,618,000 of amounts due from Helios S.r.l., the company taking over part of the financing granted to S. Apostoli S.r.l., a former subsidiary sold in 2006; the receivable was collected in full in March 2008; • €1,379,000 of amounts due from the company, Tivoli 101 S.r.l., claimed following the sale of shareholdings; in 2008, the company, Altair S.p.A., took the place of Tivoli 101 S.r.l. and paid out the receivable in March 2008; • €580,000 of amounts due from Coemi Property S.p.A. the company taking over part of the financing granted by Sopaf to the former subsidiary, S. Apostoli S.r.l.; • €3,328,000 of amounts due from Dascal S.p.A., including €2,629,000 in relation to the sale of shareholdings and €700,000 in relation to Dascal’s assumption of part of a financing granted to the former subsidiary company, Giallo Milano S.r.l., and paid out in March 2008; the remaining amount receivable comes due on 31 December 2008 as per an agreement with the counterparty; • €282,000 of commissions advanced on an available line of credit for future acquisitions of shareholdings not yet used as of 31 December 2007. The disbursement of the financing occurred in January 2008, at the time of the acquisition of the investment in Aviva Previdenza; • €1,083,000 of receivable acquired from Nova Surgelati S.p.A. (for the effect of an arbitration settlement between Sopaf and Arena Surgelati) and other minor amounts due, all of which have been written down to zero through a special reserve therefor; €23,000 of the reserve balance of €1,106,000 as of 31 December 2006 was used during the year following certain collections; • €204,000 of an interest-bearing amount due from Banca Network Investimenti S.p.A. which was collected in March 2008.

Accrued income and prepayments include the prepayments of contractual instalments applicable to future periods (€47,000), the prepayment of interest expense due for future years (€24,000) and the prepayment of subscriptions for future periods (€18,000). Consolidated Financial Statements as of 31.12.2007 Sopaf | Consolidated Financial 099

> 15 Other current financial assets The account balance of €7,298,000 includes:

31/12/2007 31/12/2006

Fixed income securities: BTPs 1/2008 - 2.5% interest rate 994 - CCTs 1/2008 2,024 - Financial receivables: Financing due from Demofonte S.r.l. 3,008 Financing due from third parties 1,272 Financing due from Vector 101 S.r.l. - 3,132 7,298 3,132

The fixed-income securities are initially booked at cost, inclusive of the charged directly connected with the acquisition, and are classified financial assets held for trading, valued at the fair value as of year end. The financial receivables include€ 3,008,000 of non-interest-bearing financing made available by the holding company, Sopaf S.p.A., to Demofonte S.r.l., which is to be repaid on 31 December 2008. In March 2008, a first tranche of such financing equal (€600,000) was paid out. Such receivables also include €1,243,000 which is the residual amount due under an agreement signed on 16 February 2005 by LM ETVE S.p.A. (a company later merged into Sopaf), in relation to the sale of the investment in Appaloosa Arbitrage Fund Ltd. securities, for an original amount of €1,815,000; the balance as of 31 December 2007 is inclusive of accrued interest.

> 16 Cash and cash equivalents The balance of €21,727,000 includes the cash and cash equivalents held by the Group, and bank deposits with a term of three months or less.

> 17 Non-current assets classified as assets held for sale The account balance of €28,208,000 includes:

31/12/2007 31/12/2006

Shareholdings in affiliate companies: AFT S.p.A. 7,608 - Sila S.p.A. 4,087 - Nearco S.a.r.l. 1,433 - Other shareholdings: Green Bit S.p.A. 4,900 - Res Finco AG 10,180 - 28,208 - Consolidated Financial Statements as of 31.12.2007 Sopaf | Consolidated Financial 100

As previously reported, such shareholdings have been classified as assets held for sale after considering a series of initiatives undertaken by the management of the holding company at the end of 2007 in order to finalize the sale of a packet of industrial shareholdings (AFT S.p.A. (part (part of which is held by Nearco S.a.r.l.), Res Finco AG, SILA Holding Industriale S.p.A. and Green Bit S.p.A.) to several investors and the Group’s expectation that such shareholdings will be sold within one year.

> Balance sheet – liabilities and shareholders’ equity

> Shareholders’ equity

> 18 Shareholders’ equity The consolidated shareholders’ equity of €174,869,000 reflects an increase of €18,563,000 in comparison with the balance as of 31 December 2006. The components of consolidated shareholders’ equity are shown in the table below:

31/12/2007 31/12/2006

Share capital 80,002 80,000 Legal reserve - - Own shares (174) - Reserve for bond conversion option 3,991 - Valuation reserves 56,042 69,905 Undivided profits (losses) (745) (3,690) Profit (loss) for the period 35,753 10,091 Undivided profits 94,867 76,306 174,869 156,306

The changes in the balances of shareholders’ equity accounts during the period are reported in detail in the statement of changes in shareholders’ equity presented as an exhibit to the financial statements.

> Share Capital

As of 31 December 2007, the share capital amounted to €80,002,000 and consisted of 421,794,809 ordinary shares without par value. The increase of the share capital is related to the conversion of 2,103 bonds into ordinary shares.

When approving the LM ETVE S.p.A. merger by incorporation into Sopaf S.p.A., the extraordinary shareholders’ meeting of 5 May 2005 passed another resolution authorizing the issue of 28,104,600 new Sopaf 2005- 2011 warrants to the holders of LM ETVE S.p.A. warrants; each of the Sopaf warrants entitles the holder to subscribe to two Sopaf S.p.A. ordinary shares without par value at a price of €0.50 per share, inclusive of share premium. As a consequence, the shareholders authorized a share capital increase for up to €28,104,600, to be completed through one or more transactions, for the purpose of servicing the Sopaf warrants, with Consolidated Financial Statements as of 31.12.2007 Sopaf | Consolidated Financial 101 the warrant holders entitled to subscribe a maximum of 56,209,200 Sopaf shares during the period from 18 March 2007 to and including 31 December 2011. In addition, on 23 November 2007, Giorgio Magnoni, Sopaf S.p.A.’s managing director and the principal shareholder, sold 7,225,000 of the aforementioned warrants to managers, directors and associates of the Sopaf Group at the unit price of €0.11 in order to allow such persons to participate in the Group’s results.

> Own shares

The account covers 390,263 own shares acquired by Sopaf in December pursuant to a shareholder resolution of 27 November 2007 approving a share-buyback program to be used for the purpose of investing liquidity. The program provides that the purchases will be made through one or more transactions over a period of 18 months from 27 November 2007, for a maximum number of 5.2 million Sopaf S.p.A. ordinary shares without par value, for a maximum of €2.7 million, without prejudice to the respect of the limits referenced in Article 2357 and the articles thereafter of the Italian Civil Code, at a unit price not exceeding 5% of the average of the prices of reference registered through the Borsa Italiana electronic system in the three market sessions preceding any individual transaction.

> Reserve for bond conversion option

The reserve, whose balance is equal to €3,991,000, represents the value assigned to the conversion option held by the bondholders (€5,715,000), stated net of deferred taxes (€1,572,000) and the ancillary placement charges figured on a pro-rata basis (€152,000). According to international accounting principles, at the date of issue, the fair value of the debt component is figured by using the market price of an equivalent non-convertible bond and corresponds to the difference between the discounting of the bond interest based on the contractual rate and the discounting of the bond interest based on the market rate. Such difference is booked to the profit and loss statement using the amortized cost method until the date of the conversion or reimbursement. At issuance of the bonds, such differential, which is representative of the value assigned to the conversion option, is reported as part of shareholders’ equity, net of the related costs of issuance. The value of the conversion option does not undergo any changes in subsequent years. The costs of issuance are split proportionally between the debt and equity components of the bond.

> Valuation reserve

The valuation reserve is related to the adjustment to fair value of the following financial assets classified as assets available for sale, net of the related fiscal effects; such assets are represented by securities for participation in capital. Consolidated Financial Statements as of 31.12.2007 Sopaf | Consolidated Financial 102

The table below shows the components of the reserve balance and the changes in those components during the year.

Increases/Decreases Balances as of Variazioni di fair value Portion of Reserve Transferred to P&L Deferred Taxes Change Due to Adjustments on Balances as of Minority Interests Group 01/01/2007 Upon Sale of Financial Assets Change in Tax Rate 31/12/2007 Increases Decreases (A+B) (A) (B) Omniapartecipazioni S.p.A./IMMSI S.p.A. 51,459 - - (54,339) 2,880 - - - - Five Stars S.à.r.l. 1,625 791 - - - - 2,416 - 2,416 Aster Fund 13,693 - - (13,693) - - - - - Beven Finance S.à.r.l. (1,359) - (2,569) - - - (3,928) - (3,928) Green Bit S.p.A. 1,798 - (114) - - - 1,684 - 1,684 Gabetti S.p.A. (65) - - 97 (32) - (0) - (0) Immobiliare Appia 2005 S.r.l. 1,669 47 - - - - 1,716 - 1,716 Sadi S.p.A. 992 - (770) (79) 325 - 468 - 468 Fondo PWM Global Income Low Volatility 194 (19) - - (33) 16 158 52 106 HSBC AM Monétaire (101) 60 - (1) 20 (8) (30) (10) (20) Advanced Accelerator Applications S.A. - 11,682 - - (371) - 11,311 3,475 7,836 Tessitura Pontelambro S.p.A. - - (1) - - - (1) - (1) Management & Capitali S.p.A. - 330 - - (91) - 239 - 239 Conafi Prestito S.p.A. - - (463) - 127 - (336) - (336) Fondo Immobili Pubblici _ FIP - 838 - - (230) - 608 - 608 Demofonte S.r.l. - 701 - - (193) - 508 - 508 Raffaele Caruso S.p.A. - 1 - - - - 1 - 1 Res Finco AG - (386) - - - - (386) - (386) Delta S.p.A. - 45,894 - - (763) - 45,131 - 45,131 69,905 59,939 (3,917) (68,015) 1,639 8 59,559 3,517 56,042 Consolidated Financial Statements as of 31.12.2007 Sopaf | Consolidated Financial 103

The table below shows the components of the reserve balance and the changes in those components during the year.

> 19 Minority interests The components of the minority interests account are reported in the table below:

31/12/2007 31/12/2006

Capital and reserves of minority interests 7,387 23,380 Profit (loss) (214) (57) 7,173 23,323

The changes occurring during the year in the different minority interests accounts refer to the holdings of third parties in LM LS S.p.A., PWM Sgr S.p.A., Sopaf Asia S.a.r.l. and Li Tech S.p.A.

> Non-current liabilities

> 20 Convertible bonds The offer under option to the SOPAF S.p.A. shareholders of 56,520,463 bonds convertible in SOPAF S.p.A. newly issued ordinary shares as part of the “SOPAF 2007-2012 3.875% convertible” bond issue was concluded on 4 September 2007. After the market offer of the rights that had not been exercised by the shareholders, a total of 152,120,000 rights corresponding to 20,384,080 convertible bonds with a countervalue of €17,938,000 (or 36.065% of the total convertible bonds covered by the offer) had been exercised. The remaining 36,136,383 convertible bonds, or 63.935% of the offer (corresponding to the rights not exercised at the end of the market offer) were subscribed by Banca Akros by virtue of an underwriting agreement signed with the issuer. Accordingly, the transaction ended with the subscription of all 56,520,463 convertible bonds included in the issue, for a total countervalue of €49,738,000. The conversion of 2,103 bonds into ordinary shares was requested at a later date. The bonds are convertible into ordinary shares of the company at any time during the term of the loan on the basis of a conversion ratio equal to one share for every bond held. If the bonds were not to be converted, they would be reimbursed at a value of €0.88 each. The bonds bear interest at a rate of 3.875% through maturity. The component of the convertible bonds that presents the characteristics of a liability is booked as a balance- sheet liability, stated net of issuance costs. According to international accounting principles, at the date of issue, the fair value of the debt component is figured by using the market price of an equivalent non-convertible bond and corresponds to the difference between the discounting of the bond interest based on the contractual rate and the discounting of the bond interest based on the market rate. Such difference is booked to the profit and loss statement using the amortized cost method until the date of the conversion or reimbursement. At issuance of the bonds, such differential, which is representative of the value assigned to the conversion option, is reported as part of shareholders’ equity, net of the related costs of issuance. The value of the conversion option does not undergo any changes in subsequent years. The costs of issuance are split proportionally between the debt and equity components of the bond. Consolidated Financial Statements as of 31.12.2007 Sopaf | Consolidated Financial 105

Accordingly, on the basis of the foregoing, the detail of the bonds is as follows:

in € 000’s

Nominal value of bonds issued 49,738 Net equity component (5,715) Debt component at issue date 44,023 Interest booked: Contractual interest 755 Interest differential based on market rate 446 Interest paid Residual placement charges (1,079) Debt component as of 31 December 2007 44,145 Including: Current portion 755 Non-current portion 43,390

> 21 Due to banks and other lenders

31/12/2007 31/12/2006

Bank financing 57,162 39,207 Due to other lenders 4,395 2,153 61,557 41,360

The bank financing includes the following amounts that are payable after 12 months: • €30,982,000: medium-/long-term portion of the syndicated financing to support the acquisition of Banca Network Investimenti S.p.A. and Area Life International Assurance Ltd., whose total funding amounted to €54,000,000; the maturity date is 30 September 2012. It is noted that the syndicated financing is backed by the pledge of the Banca Network Investimenti S.p.A. shares held directly by Sopaf S.p.A., the pledge of the shares of Petunia S.p.A., which owns 49.75% of Banca Network Investimenti S.p.A., and the shares of Area Life held by Sopaf S.p.A.; • €8,229,000: medium-/long-term portion of two loans backed by the pledge of 23,001 shares of LM & Part- ners SCA (in liquidation) held by Sopaf S.p.A.; • €10,000,000: an unsecured financing funded by a leading bank to support of the Sopaf’s liquidity needs; • €4,950,000: medium-/long-term portion of syndicated financing backed by tax credits with notional value of €10,329,000 whose reimbursement has already been claimed; • €3,000,000: an unsecured financing funded by a leading bank to support of the Sopaf’s liquidity needs. Consolidated Financial Statements as of 31.12.2007 Sopaf | Consolidated Financial 106

It is noted that the syndicated financing to support the acquisition of Banca Network Investimenti S.p.A. and Area Life is backed by several contractual covenants guaranteeing the respect of pre-established financial parameters (shareholders’ equity and ratio of debt/shareholders’ equity) for both the borrower and the company whose shares are pledged; should there be a default of one or more parameters, the company has 30 days to take actions to remedy the default, starting from the date on which the agent bank provides notice of the default, it being understood that such actions must be completed within 30 days of their adoption. In this regard it is noted that the board of directors of Banca Network Investimenti (f/k/a Banca Network Investimenti S.p.A.) approved the 2007 annual financial statements on 26 March 2008, and that such statements reported a loss of €17 million, which thus reduced the bank’s capital to a level below the parameter of reference established by the financing. The board of directors convened an extraordinary meeting of the shareholders in order to approve capital increase of €20 million which will allow for reinstating the capital to a level in line with the mentioned parameter.

The €4,395,000 due to other lenders exclusively regards debt due to factoring companies for the transfer of tax credits. The debt outstanding as of 31 December 2006 was reclassified as current financial debt inasmuch as it is to be settled in 2008. The aforementioned financing does not entail any amortization plans with instalments coming due beyond five years.

> 22 Financial leases payable - non-current portion Pursuant to IAS 17, the account includes €14,840,000 of the principal amount due on a property lease contracted by holding company with regard to the building situated at Foro Buonaparte 24, Milan, and other assets of the Group under financial lease. As indicated in the comments on tangible fixed assets, the increase is mainly attributable to the conclusion of the building restructuring work and the consequent registration of the tangible fixed assets and the related debt.

> 23 Other liabilities The other liabilities of €10,612,000 reflect a decrease of €1,940,000 and include the non-current portion of debt contracted with the third-party shareholders of LM & Partners SCA (in liquidation) for the purchase of the minority shareholdings in the company. The total remaining debt is €20,624,000, with €10,012,000 carried as a current liability. Such debt bears interest at a rate of 4%. The debt for €6,130,000 that had been formalized in 2006 with the issuance of promissory notes was instead paid out in advance of the original maturity date of 31 December 2009.

> 24 Pension and employment-severance liabilities

31/12/2007 31/12/2006

Employment severance indemnity reserve 350 249 350 249 Consolidated Financial Statements as of 31.12.2007 Sopaf | Consolidated Financial 107

The employment severance indemnity reserve has a balance of €350,000, and incorporates the indemnities accrued primarily in favour of office personnel. The reserve refers to the holding company and the subsidiary companies operating in Italy.

With the application of IAS 19, the valuation of the employment severance indemnity reserve has been determined with the use of the projected unit credit method, inasmuch as the reserve is deemed to be a defined benefit plan. Accordingly, the following aggregates have been computed: • the future benefits potentially due to each employee in the event of retirement, resignation, death or disability. Such benefits have been determined on the basis of the financial assumptions set out below. • the average present value, at each valuation date, of the future benefits payable, with the use of the discount rate indicated below; • the liabilities to be recorded in the financial statements in relation to the average present value of the future benefits payable as of the valuation date.

Financial assumptions: Inflation rate: 2% Rate of increase of salaries/wages: 3% Discount rate: 4.9%

Demographic assumptions Mortality: Mortality tables published by the government statistics bureau (ISTAT) - 2002 Disability: Tables published by the social security administration (INPS) Resignations: 3% for all ages Retirement: Age 65 (males) and age 60 (females)

As a result of the passage of the 2007 budget law in Italy and the decrees for the implementation thereof, changes were made to the regulations governing reserves for employment severance indemnities. Such changes, which went into effect as of 1 January 2007, provide workers with options for the investment of the severance indemnities they earn over the period of their employment. More specifically, funds now flowing into the reserves for employment severance indemnities may be set aside for workers in the form of pre-selected pension plans, or such funds may be maintained by a company (in which case, companies with 49 or more employees are required to pay the contributions to a treasury account set up through the Social Security Administration (“INPS”). Considering Sopaf S.p.A. has less then 50 employees, no changes have been made to the actuarial calculations of the employment severance indemnities compared with those used as of 31 December 2006. Consolidated Financial Statements as of 31.12.2007 Sopaf | Consolidated Financial 108

> 25 Deferred tax liabilities The account balance of €303,000 mainly refers to the tax liabilities computed on the changes in the fair value of the shareholdings available for sale.

> 26 Provisions

31/12/2007 31/12/2006

Reserves for risks and charges 1,647 2,660 1,647 2,660

The account includes provisions for taxes and future tax obligations of foreign subsidiaries (€828,000) and provisions for risks and charges in obligations whose settlement is deemed probable (€808,000). Roughly €519,000 of the balance refers to a risk reserve set up by the holding company, Sopaf S.p.A., with respect to a real estate transaction subject to contractual restrictions linked to the perfection of the transaction and €289,000 refers to a provision to back a patronage letter issued by Sopaf S.p.A. in favour of a leading bank in order to guarantee a receivable (of the same amount) claimed by Sopaf S.p.A. with respect to Formula Sport Group S.r.l., an affiliate company in bankruptcy.

> Current liabilities

> 27 Convertible bonds The account balance of €755,000 reflects the interest accrued in favour of the bondholders for the period from 10 August 2007 to 31 December 2007 with respect to the bonds not yet converted.

31/12/2007 31/12/2006

Due to bondholders 755 - 755 -

> 28 Due to banks and other lenders The account balance of €59,099,000 reflects a decrease of 22,227,000 and consists of the following:

31/12/2007 31/12/2006

Bank financing 56,185 81,196 Financial debt payable to affiliate companies 225 - Due to other lenders 2,689 130 59,099 81,326

The bank financing of€ 56,185,000 mainly includes: • €22,074,000: the short-term portion of the €54,000,000 syndicated financing to support the acquisition of Banca Network Investimenti S.p.A. and Area Life International Assurance Ltd. as described in detail in Consolidated Financial Statements as of 31.12.2007 Sopaf | Consolidated Financial 109

the comments on non-current liabilities; in March 2008, the short-term financing was renewed with a new maturity date of 31 December 2008; • €1,154,000: the current portion of the syndicated financing previously described in the comments on non- current liabilities, backed by tax credits whose reimbursement has already been claimed; • €5,973,000: the current portion of several loan contracts with a leading bank (previously described in the comments on non-current liabilities); • €5,000,000: a line of credit granted by a leading bank, with a term of 18 months less one day and used for short-term liquidity needs; • €11,000,000: a financing coming due in 2008 used for the October 2007 purchase of units of the Fondo Immobili Pubblici, and secured by the same; • €5,442,000: a line of credit granted Tergeste Fund. • €872,000: a facility for coverage of ordinary current-account overdrafts.

The €225,000 of financial debt payable to affiliates regards financing made available to Sopaf Asia S.a.r.l. by China Opportunity.

> 29 Financial leases payable The account balance of €1,023,000 includes the following:

31/12/2007 31/12/2006

Financial leases payable - Furnishings > 12 months 226 - Financial leases payable - Buildings > 12 months 797 - 1,023 -

The account reflects the current portion of financial leases payable.

> 30 Financial derivatives The account balance is equal to €11,000 as shown below:

31/12/2007 31/12/2006

Mark-to-market valuation 11 - 11 -

The account refers to the fair-value valuation at 31 December 2007 of an interest-rate swap in relation to a €3 million financing (taken out by the former LM Real Estate S.p.A.) with a June 2011 maturity, and executed for the purpose of reducing the risk of interest-rate fluctuations. Statements as of 31.12.2007 Sopaf | Consolidated Financial 110

The fair value as of 31 December 2007 is equal to €11,000. As of 31 December 2006, the valuation of the contract was positive for €9,000.

> 31 Trade accounts payable The account balance of €4,896,000 reflects an increase of €1,781,000 and consists of the following:

31/12/2007 31/12/2006

Trade accounts payable 4,896 3,115 4,896 3,115

Trade accounts payable mostly cover obligations for the supply of services.

> 32 Other liabilities The account balance of €16,087,000 reflects a decrease of €7,777,000 and consists of the following:

31/12/2007 31/12/2006

VAT payable 15 1 Taxes payable 1,003 236 Due to social-welfare institutions 761 217 Other payables 13,856 23,202 Accrued liabilities and deferred income 452 208 16,087 23,864

The taxes payable mainly regard amounts to be turned over to the tax authorities that were withheld in De- cember 2007 from employee wages and from payments to project associates and free-lance professionals.

The account balance of other payables decreased by €9,346,000 with respect to the previous year and mainly includes: • €6,670,000: the current portion of debt contracted with the minority shareholders of LM & Partners SCA (in liquidation) for the acquisition of the minority interests’ shares, a transaction already mentioned several times in this document; • €3,343,000: the current portion of debt contracted with the minority shareholders of Star Venture I Scpa, booked by holding company as provided by a plan established for the distribution of assets and liabilities upon the company’s liquidation (which was completed in the first half of 2007); • €1,342,000: compensation due to members of the board of directors and board of statutory auditors; • €1,706,000: employees bonuses for 2007 accrued as of 31 December 2007, and deferred salaries and wages. Consolidated Financial Statements as of 31.12.2007 Sopaf | Consolidated Financial 111

> Profit and loss statement

Considering important changes in the consolidation area and the typical nature of the activity carried out by the Sopaf Group, the comparability of the data with the prior year data and the date for the corresponding period of the previous year is not significant. In addition, last year, Sopaf S.p.A. changed its fiscal year end. For the effect of such change, the profit-and-loss data as of 31 December 2007 are compared with the data as of 31 December 2006, a fiscal year consisting of six months only.

Following are comments on the principal accounts of the profit and loss statement.

> 33 Revenues The principal components of revenues are set out in the table below:

01/01/2007 01/07/2006

31/12/2007 31/12/2006

Service revenues - 1,095 Commission revenues 4,680 512 Revenues from property sales - 1,345 4,680 2,952

The commission revenues refer to management commissions accrued by PWM Sgr S.p.A., Sopaf Capital Ma- nagement Sgr S.p.A. and Sopaf Asia S.a.r.l.

> 34 Other income The components of the account are shown in the table below:

01/01/2007 01/07/2006 31/12/2007 31/12/2006

Rental income 224 119 Reversal of charges previously accrued 913 - Other income 369 1,952 1,506 2,071 Consolidated Financial Statements as of 31.12.2007 Sopaf | Consolidated Financial 112

The reversal of charges previously accrued regards: • the settlement of pending claims with the Luxembourg tax authorities with regard to the liquidated company, LM IS S.a.r.l., with the outlay below the amount of the €132,000 provision; • the reduction of a payable accrued as of 31 December 2006 by the incorporated company, LM Real Estate S.p.A., as a result of changes in the outcome of a real estate transaction not concluded (€235,000); • the recovery from the companies, Catabo S.r.l. and PDB S.r.l., of advance payments on financial leases made by LM Real Estate S.p.A. (€103,000); • adjustments to lease instalments booked as of 31 December 2006 (€177,000).

Other income refers to leasing income earned by Sopaf S.p.A. from Polis Fondi Sgr S.p.A. (€159,000) and the charging back of expenses for services rendered by the holding company to affiliate companies €( 114,000).

> 35 Purchases of materials and external services The components of the account are shown in the table below:

01/01/2007 01/07/2006 31/12/2007 31/12/2006

Change in inventories - (2,698) Consulting services 3,140 1,671 Commissions on financial assets 1,148 200 Commissions on services - 160 Administrative services 2,305 832 Legal services 1,685 377 Compensation to directors 3,351 834 Compensation to statutory auditors - 42 Expense reimbursements 365 79 Leases 472 287 Rentals 321 78 Insurance 223 99 Utilities 317 77 Purchases of materials and goods 119 40 Property operating costs - 571 Property purchases - 1,745 13,446 4,394

As shown by the data in the table above, the two periods are not comparable, with the balances of property operating costs, changes in inventories and property purchases all markedly decreasing due to the deconsolidation of the real estate activities sold to third parties. In addition, even though the two periods are not comparable, there is a non-proportional increase in director compensation (mostly due to non-recurring compensation paid to the sole director of a subsidiary company now merged into Sopaf). Consolidated Financial Statements as of 31.12.2007 Sopaf | Consolidated Financial 113

> 36 Personnel expense The components of the account are shown in the table below:

01/01/2007 01/07/2006 31/12/2007 31/12/2006

Salaries and wages 5,158 1,621 Social-welfare charges 1,375 395 Provision to employment severance indemnity reserve 345 60 6,878 2,076

If the different period of comparison is considered, the account experienced a significant increase due to the recruitment of personnel to handle the reinstatement overall of the holding company’s activity.

> 37 Other operating expenses The components of the account are shown in the table below:

01/01/2007 01/07/2006

31/12/2007 31/12/2006

Bank expenses 590 538 Taxes and duties 1,614 1,131 Miscellaneous operating expenses 963 1,108 Non-operating expenses 3,073 201 6,240 2,978

The taxes and duties mostly cover the costs for non-deductible VAT. The non-operating expenses mainly include amounts paid as settlements by the holding company, Sopaf S.p.A. to shareholders of former subsidiaries and to former employees (€600,000) and indemnities paid for advance terminations of contracts (€1,050,000).

> 38 Risk provisions and writedowns The components of the account are shown in the table below:

01/01/2007 01/07/2006

31/12/2007 31/12/2006

Provisions per risks - 59 Writedowns of shareholdings 13,600 - 13,600 59

The writedowns of shareholdings includes the total writedown of the investment in Coronet (€13,400,000) and the writedown of the residual value of Leisure Link, a company liquidated during 2007 (€200,000). Consolidated Financial Statements as of 31.12.2007 Sopaf | Consolidated Financial 114

> 39 Depreciation and amortization The components of the account are shown in the table below:

01/01/2007 01/07/2006

31/12/2007 31/12/2006

Amortization of intangible fixed assets 99 14 Depreciation of tangible fixed assets 692 127 791 141

> 40 Gains (losses) on disposal of non-current assets In order to make it easier to measure the actual trend of normal operations, a separate indication is provided of the revenue and expense components arising from transactions covering the sale of non-current assets. Gains (losses) on disposal of non-current assets include: • capital gains (losses) on the disposal of shareholdings in subsidiary companies; • capital gains (losses) on the disposal of those shareholdings classified as assets available for sale and carried as other non-current financial assets. Consolidated Financial Statements as of 31.12.2007 Sopaf | Consolidated Financial 115

The components of the account are shown in the table below:

01/01/2007 01/07/2006 31/12/2007 31/12/2006

Capital gains on the sale of controlling interests Forobonaparte S.r.l. - 1,100 Forobonaparte Due S.r.l. - 1,196 Cruiser S.r.l. - 12 Tivoli 101 S.r.l. - 89 Telma S.r.l and special-purpose subsidiaries - 1,951 - 4,348 Capital gains (losses) on settlement

upon liquidation of affiliate companies LMIS S.a.r.l. (in liquidation) 883 Star Venture I S.c.p.A. (in liquidation) (437) - 446 - Capital gains on the sale of non-current financial assets Omniapartecipazioni S.p.A./IMMSI S.p.A. 53,166 - Aster Fund 17,149 - Management & Capitali S.p.A. 47 Sadi S.p.A. 8 Valgardena AIP - 3,000 70,370 3,000

Capital gains on trading of equity securities 172 -

Capital losses and related charges on

transfer of assets available for sale Aster Fund (6,598) - Omniapartecipazioni S.p.A. (711) - Gabetti (2) Bama S.r.l. - (688) (7,311) (688) Capital losses on transfer of shareholdings LM LS S.p.A - (483) Star Venture I S.c.p.A. (in liquidation) - (98) - (581) Income from acquisitions of

equity interests in subsidiary companies LM & Partners SCA (in liquidation) - 2,227 - 2,227 Gains (losses) on disposal of non-current assets 63,678 8,306 Consolidated Financial Statements as of 31.12.2007 Sopaf | Consolidated Financial 116

The account balance for 2007 includes the total net capital gain of €52.5 million arising from the transactions involved in the sale of the investment in Omniapartecipazioni S.p.A./IMMSI S.p.A. The following table provides a summary of the capital gain reported:

Omniapartecipazioni IMMSI S.p.A. Capital Gain S.p.A.

Disposal transactions - LM Real Estate S.p.A. Book value - Omniapartecipazioni S.p.A. as of 01/01/2007: - Cost (25.5% of Omniapartecipazioni S.p.A.) 27,451 - Gains (losses) for adjustment to fair value 54,339 Fair value valuation 81,790

Sale of 1,470,000 shares of Omniapartecipazioni S.p.A.: - Cost (3.49% of Omniapartecipazioni S.p.A.) (3,754) - Sale price 10,953 Capital gain on sale 7,199 7,199 including: Capital gain over fair value (232) Release of valuation reserves to profit and loss statement (A) 7,431

Transfers to Mercato 24 S.r.l. Contribution from non-proportional spin-off by Omniapartecipazioni S.p.A. of equivalent 23,697 pro-rata of shareholding in Omniapartecipazioni S.p.A. (38,360,288 shares of IMMSI S.p.A.)

Allocation to consolidated statements of pro-rata of adjustment to fair value equivalent 46,908 to the corresponding quota of investment in Omniapartecipazioni S.p.A. (B) Fair value valuation 70,605 Sale of 3,000,000 shares of IMMSI S.p.A.: - Cost (1,853) - Sale price 6,585 Capital gain on sale 4,732 4,732

Contribution from non-proportional spin-off by Omniapartecipazioni S.p.A. (10,073) of pro-rata portion of debt

Consolidated Financial Statements as of 31.12.2007 Sopaf | Consolidated Financial Net capital gain 48,464 117

Omniapartecipazioni IMMSI S.p.A. Capital Gain S.p.A.

Sale of 5,360,288 shares of IMMSI S.p.A.: - Cost (3,313) - Sale price 8,955 Capital gain on sale 5,642 5,642

Contribution from non-proportional spin-off by Omniapartecipazioni S.p.A. (1,651) of pro-rata portion of debt Net capital gain 52,455

Note: A+B = €54,339,000 of the valuation reserves released to the profit and loss statement

The capital losses on the distribution effected upon liquidation of subsidiary companies includes the loss arising from the lower value overall of the cost of the investments held by the Group in the capital of the Luxembourg-based Star Venture I Scpa compared with the company’s net equity computed with the plan established for the distribution of assets and liabilities upon the company’s liquidation during the first half of 2007. Such difference was recognized on the deconsolidation of Star Venture I and of the Group’s subsidiaries holding investments in Star Venture I Scpa (Mgo Lux SA, Vegastar SA and Star Venture Management SA), and was booked to the profit and loss statement for €437,000.

> 41 Earnings accrued on shareholdings valued with the net equity method The account includes: • the pro-rata share of the earnings (losses) of the companies valued with the net equity method, inclusive of any impairment losses; • the capital gains (losses) realized on the sale of shareholdings valued with the net equity method; • the capital gains (losses) corresponding to the annual net earnings (losses) of shareholdings no longer consolidated on a line-by-line basis due to a sale of interests in the companies that vests the controlling interest in the same with parties outside of the Group; • the writedowns of investments in companies valued with the net equity method, for which the Group’s share of losses exceeds the carrying value of the investment, to the extent the Group has actual obligations to cover the losses Consolidated Financial Statements as of 31.12.2007 Sopaf | Consolidated Financial 118

The account consists of the following:

01/01/2007 01/07/2006 31/12/2007 31/12/2006

Pro-rata earnings Polis Fondi Sgr.p.A 376 172 Delta S.p.A. 368 1,581 Five Stars S.A. 976 115 Sopaf Capital Management Sgr S.p.A. 18 35 Essere S.p.A. - 150 AFT S.p.A. - 22 China Opportunity SA 2,151 - Pwm Aig Multi-Manager Fund 604 - Firanegocios S.L. 14 - Telma S.r.l. 38 - Telma special-purpose companies 45 - Area Life International Assurance Limited 744 - Co.se S.r.l. - 1 5,334 2,076 Pro-rata losses Essere S.p.A. (562) - Cose S.r.l. (10) - Nearco S.a.r.l. (21) - Telma S.r.l. - (44) AFT S.p.A. (51) S.F.E.R.A. S.r.l. (30) (2) Beven Finance S.a.r.l. (23) (18) Petunia S.p.A. (1,371) (19) Banca Network Investimenti S.p.A. (668) - Firanegocios S.L. - (7) (2,736) (90) Writedowns of shareholdings: AFT S.p.A. - (410) Telma S.r.l. - (70) Essere S.p.A. - (26) Vector 102 S.r.l - (46) - (552) Consolidated Financial Statements as of 31.12.2007 Sopaf | Consolidated Financial 119

01/01/2007 01/07/2006 31/12/2007 31/12/2006

Capital (losses) from sale of investments: Vector 101 S.r.l. - 5,284 Buena Suerte S.r.l. - 18 Facere S.r.l. - 18 Intarch S.r.l. - 27 Tau Ceti S.r.l. - 25 Delta S.p.A. - 790 S. Apostoli S.r.l. - 1,591 Giallo Milano S.r.l. - 1,531 Telma S.r.l. 8,067 111 AFT S.p.A. (349) - Pwm Aig Multi-Manager Fund (21) Telma special-purpose companies (89) (170) 7,609 9,225 Pro-rata earnings (losses) 10,208 10,659

The capital gains (losses) on the sale of investments refer to the consolidated capital loss booked on the sale of 10.86% of AFT S.p.A. held at a Group level.

> 42 Net financial income (charges) The account consists of the following:

01/01/2007 01/07/2006

31/12/2007 31/12/2006

Interest income 1,362 1,585 Dividends 3,858 977 Income from shareholdings - - Capital gains on securities and other financial assets 5 - Foreign-exchange income 10 1 Financial income 5,235 2,563 Foreign-exchange losses (10) (1) Capital losses on securities and other financial assets (3) - Interest expense (8,651) (6,393) Financial charges (8,664) (6,394) (3,429) (3,831) Consolidated Financial Statements as of 31.12.2007 Sopaf | Consolidated Financial 120

Dividends include €3,858,000 of dividends received by the subsidiary, LM Real Estate S.p.A., that were distributed by Omniapartecipazioni S.p.A. and IMMSI S.p.A.

Interest income mainly refers to interest earned on bank accounts (€473,000), interest earned on tax credits whose claim for reimbursement has already been made (€344,000) and interest for unexercised rights on the convertible bond issue (€88,000).

Interest expense includes: • €6,358,000 of expense accrued to 31 December 2007 on used lines of credit and bank loans; • €1,232,000 of expense on the convertible bond issue; • €1,061,000 of expense on payables to former shareholders of LM & Partners SCA in relation to the acquisitions of the shares previously held by the same.

> 43 Income taxes The amount consists of the following:

01/01/2007 01/07/2006 31/12/2007 31/12/2006

- Corporate income tax (400) (1,545) - Regional tax on productivity (28) (109) Total current taxes (428) (1,654) Deferred tax liabilities 854 (310) Deferred tax assets (574) 1,489 Total deferred taxes 280 1,179 Total income taxes (148) (475)

> 44 Minority interests The earnings of minority interests amounted to €214,000 and consisted of the amounts shown in the table below:

01/01/2007 01/07/2006

31/12/2007 31/12/2006

Pro-rata losses of companies in which investments are held (214) (57) (214) (57)

The balance of the account has been almost zeroed out with respect to the first half of 2006 inasmuch as the transaction covering both purchase the minority shareholders’ investments in the subsidiary, LM & Partners SCA, and the liquidation of Star Venture I Scpa had not yet been perfected as of mid-2006. Consolidated Financial Statements as of 31.12.2007 Sopaf | Consolidated Financial 121

> 45 Primary earnings per share and diluted earnings per share The Group reports primary earnings per share and diluted earnings per share as required by IAS 33. Primary earnings per share is equal to consolidated net profit divided by the number of ordinary shares. For diluted earnings per share, the earnings attributable to the holders of the ordinary capital instruments of the holding company, Sopaf S.p.A., are adjusted to take into account the effects of all potential ordinary shares with a dilutive effect.

The primary earnings per share and diluted earnings per share are shown in the table below:

in € 01/01/2007 01/07/2006 31/12/2007 31/12/2006

Primary earnings per share 0.0843 0.0239 Diluted earnings per share 0.0744 0.0229

Details of the computations are presented hereunder:

• Primary earnings per share: The primary earnings per share is calculated by dividing the earnings attributable to the holders of the ordinary capital instruments of the holding company, Sopaf S.p.A., by the weighted average number of ordinary shares outstanding during the accounting period.

• Diluted earnings per share: The diluted earnings per share takes into account the potential reduction in earnings as a result of the exercise of warrants issued and the conversion of the convertible bonds, with the assumption that all potential ordinary shares would be converted into ordinary shares. Accordingly, the diluted earnings attributable to the holders of ordinary capital instruments are adjusted by the after-tax amount, if any, of dividends and interest reported during the period with reference to the potential ordinary shares and to reflect the change of income and charges that could occur from the conversion of the potential ordinary shares having dilutive effects. The number of shares considered for the calculation of diluted earnings per share is the sum of the ordinary shares outstanding and the number of ordinary shares to be issued upon the conversion of all warrants (two ordinary shares for each of the 28,104,600 warrants) with conversion rights that could dilute the ordinary shares and the number of convertible bonds (one ordinary share for each of the 56,520,463 convertible bonds) that could dilute the ordinary shares. For the purpose of determining the weighted average number of shares, it was assumed that the warrants would be converted starting on 31 December 2007. Consolidated Financial Statements as of 31.12.2007 Sopaf | Consolidated Financial 122

> 46 Consolidated net financial position As of 30 June 2007, the Sopaf Group S.p.A. had net financial debt of €152,375,000, which was computed as follows:

in € 000’s 31/12/2007 31/12/2006

Net financial position A) Cash 11 847 B) Other cash and cash equivalents 21,715 1,573 C) Securities held for trading 3,017 - D) Total liquidity (A+B+C) 24,743 2,420 E) Current financial receivables 4,282 3,132 F) Current bank debt (27,198) (61,624) G) Current maturities of long-term debt (30,765) (19,572) H) Other current financial debt (2,914) (130) I) Current financial debt (F+G+H) (60,877) (81,326) J) Net current financial debt (I-E-D) (31,852) (75,774) K) Non-current bank debt (57,162) (39,207) L) Bonds issued (43,390) 0 M) Other non-current debt (19,235) (6,753) N) Non-current financial debt (K+L+M) (119,787) (45,960) O) Net financial debt (J+N) (151,639) (121,734)

> 47 Commitments and guarantees As of 31 December 2007 the following guarantees had been issued:

• €69,019,000: the pledge of units in the FIP (Fondo Immobili Pubblici) Fund to guarantee medium-/long- term financing made available to the affiliate, Five Stars S.A., and used for investment in the closed-end real estate fund, FIP; • €5,706,000: Coronet S.p.A. shares representing a 30% interest in the share capital, provided as a guarantee to a leading bank for financing granted to Coronet S.p.A.; • €67,490,000: guarantees issued to credit institutions to guarantee short- and medium-term bank financing; and specifically: 23,001 shares of LM & Partners SCA (in liquidation), nominal value of €2,300,000; 2,700,000 shares of Sadi S.p.A, nominal value of €1,292,000; 12,145,430 shares of Area Life, nominal value of €12,125,000; 3,903,998 shares of Banca Network Investimenti S.p.A., nominal value of €3,904,000; 29,690,000 shares of Petunia S.p.A., value of €29,690,000; 128 units Fip - Fondo Immobili Pubblici, value of €18,176,000; 2,250 units Demofonte S.r.l., value of €2,000. • €13,685,000: guarantees issued to credit institutions for the transfer of tax credits whose reimbursement has been claimed in prior years. Consolidated Financial Statements as of 31.12.2007 Sopaf | Consolidated Financial 123

As of 31 December 2007, the holding company was a party to an interest-rate swap previously executed by LM Real Estate S.p.A.; the contract, whose reference amount is €3 million and expiration date is June 2011, was executed so as to reduce the risk of the fluctuation of interest rates on a specific financing.

The details of the contract are as follows: • Rate parameter for the 1 July 2006 – 30 June 2007 period: 2.95%; • Rate parameter for the 1 July 2007 – 30 June 2009 period: 3.7%; • Rate parameter for the 1 July 2009 – 30 June 2011 period: 4.2%; • Bank’s rate parameter: 6-month EURIBOR; • Periodic expiration of rate parameter: 6 months; • Payment/collection frequency: semi-annual. Consolidated Financial Statements as of 31.12.2007 Sopaf | Consolidated Financial 124

> 48 Supplemental information about financial instruments and risk management policies With reference to the supplemental disclosures required by IFRS 7 about financial instruments and the risks in relation thereto which are designed to illustrate the impact exercised by the financial instruments with respect to the magnitude of the related risk exposure, the comments below supply details about the measures and mechanisms which the Company has implemented for the purpose of managing exposure to financial risks.

> 48.1 classes of financial instruments: Following is separate information on financial assets and liabilities as required by IFRS 7 within the framework of the different categories contemplated by IAS 39, with regard to the years of 2006 and 2007.

in € 000’s 31/12/2007 31/12/2006 Note

Financial assets valued at amortized cost 3 1 9 Financial receivables 3,310 2,261 9/15 Financial receivables due from related parties 4,317 10,268 9/15 Financial assets available for sale 156,699 160,235 9 Receivables transferred 4,359 - 10 Commercial receivables 596 522 13 Receivables from related parties 891 2,839 13/14 Other receivables 9,288 30,114 14 Cash and cash equivalents 21,727 2,420 16 Financial derivatives for other than hedging purposes: Liabilities (11) - 30 Liabilities for convertible bonds (44,145) - 20/27 Bank financing - secured (89,807) (55,701) 21/28 Bank financing - unsecured (20,908) (59,865) 21/28 Factoring advances (4,395) - 21 Due to banks for current account overdrafts (5,524) (7,120) 21/28 Financing due to related parties - - 21/28 Financial leases payable (15,863) (4,600) 22/29 Trade accounts payable (4,896) (3,114) 31 Due to related parties - (1) 23/32 Other liabilities (22,591) (35,539) 23/32 (6,950) 42,720 Consolidated Financial Statements as of 31.12.2007 Sopaf | Consolidated Financial 125

Following is separate information on current and non-current financial liabilities as required by IFRS 7 within the framework of the different categories contemplated by IAS 39, with regard to the years of 2006 and 2007.

in € 000’s 31/12/2007 31/12/2006

Non-current financial liabilities Liabilities for convertible bonds (43,390) - Bank financing - secured (47,162) (36,362) Bank financing - unsecured (10,000) (4,999) Financial leases payable (14,840) (4,600) Other liabilities (10,612) (12,552) (126,004) (58,513) Current financial liabilities Liabilities for convertible bonds (755) - Bank financing - secured (42,645) (19,339) Bank financing - unsecured (10,908) (54,866) Due to banks for current account overdrafts (5,524) (7,120) Factoring advances (4,395) - Financial leases payable (1,023) - Financial derivatives for other than hedging purposes (11) - Trade accounts payable (4,896) (3,114) Other liabilities (11,979) (22,988) (82,136) (107,427) (208,140) (165,940)

> 48.2 Capital management Sopaf Group’s capital management objectives are based on safeguarding the Group’s capacity to continue simultaneously (i) to guarantee profitable returns to the shareholders, the satisfaction of the interests of the stakeholders and compliance with covenants, and (ii) to maintain an optimal capital structure.

> 48.3 Risk management policies All activities regarding the management of financial risks are the responsibility of the Company’s finance department, the only unit allowed to monitor the risks and to set the related hedging policies. The main sources of risk and the strategies admissible for their coverage are outlined below.

> Interest-rate risk

The interest-rate risk to which the Group is exposed originates primarily from medium-term financial debt. In- dexed to a variable market interest rate, such debt exposes the Group to the risk of fluctuation of cash flow. The Group has set the objective of limiting such risks through entering into derivatives contracts (interest rate swaps). Consolidated Financial Statements as of 31.12.2007 Sopaf | Consolidated Financial 126

The designation of such derivatives as hedging instruments for the purposes of IAS39 is decided on a case-by- case basis, and authorized by the finance, administration and control department.

> Liquidity risk

The Group’s activity is oriented toward prudent management of liquidity risk. The Group’s preference is accordingly to maintain an appropriate mix of cash, cash equivalents and/or financial assets and to have accessibility to available funds through an appropriate amount of committed credit lines with various credit institutions, for a medium-term horizon (36 months).

> Credit risk

The Group does not have any major concentration of credit risk. The activity carried out to reduce exposure to credit risk is based on an analysis of the mix of the customer portfolio for each area of business, so as to ensure a sufficient comfort level about financial solidity of the customers.

> Foreign-exchange risk

The Group currently does business only domestically and is thus not exposed to foreign-exchange risk. Spe- cific foreign-exchange risk hedging policies might be implemented if the Group were to plan and execute development projects on an international basis, including outside of the Euro Area.

> 48.4 Credit risk Exposure to credit risk The exposure to credit risk as of the end of 2007 and 2006 is outlined in the following table.

in € 000’s 31/12/2007 31/12/2006

Exposure to credit risk Financial assets 7,630 12,530 Commercial receivables 596 522 Other receivables 14,538 32,953 22,764 46,005 Consolidated Financial Statements as of 31.12.2007 Sopaf | Consolidated Financial 127

Receivables and writedowns The changes in the reserve for the writedown of commercial and other receivables are shown in the table below.

in € 000’s 31/12/2007 31/12/2006

Balance as of 1 January (135) (135) Provisions / impairment losses during year - - Usage for the period - - (135) (135)

The following table provides on the commercial and other receivables outstanding as of 31 December 2007 and 2006, showing the commercial receivables not yet due (“To come due” line) and those already having come due, with an indication of the period for which they are past due (“0-360 days” and “More than 360 days” lines).

in € 000’s 31/12/2007 31/12/2006

Nominal Value Writedowns Nominal Value Writedowns Coming due 750 - 543 - 0-180 days 126 - 51 - 180-360 days - - 1 - > 360 days - - - - 876 - 594 -

> 48.5 Market risk The risks assumed by the Group as a result of fluctuations of market variables include the risk of fluctuation of the interest-rate curve. The actual exposure to such sources of risk is illustrated as of 31 December 2007, along with the possible balance-sheet impact of the risk factor’s plausible variations. Consolidated Financial Statements as of 31.12.2007 Sopaf | Consolidated Financial 128

> Interest-rate risk

The Group is exposed to interest-rate risk for its floating-rate, medium-/long-term debt obligations.

The following table identifies the book value of the positions subject to interest-rate risk.

in € 000’s 31/12/2007 31/12/2006

Liabilities bearing interest at variable rates Non-current bank financing (61,557) (34,208) Financial leases payable (14,840) (4,600) Current bank financing (59,076) (89,015) (135,473) (127,823) Liabilities bearing interest at fixed rates Non-current liabilities for convertible bonds (43,390) - Current liabilities for convertible bonds (755) - Other non-current liabilities (10,612) (9,273) Other current liabilities (10,013) (13,555) (64,770) (22,828) (200,243) (150,651) Consolidated Financial Statements as of 31.12.2007 Sopaf | Consolidated Financial 129

The terms and contractual positions of the financing are shown in the table below:

in € 000’s 31/12/2007 31/12/2006

Currency Nominal Maturity Nominal Book Nominal Book Interest Rate Value Value Value Value Interbanca financing n. 50694/02 EUR 6m EURIBOR + 1.75% 31/10/08 3,000,000 (2,991,842) 3,000,000 (5,971,792) Interbanca financing n. 51617/02 EUR 6m EURIBOR + 1.75% 31/03/11 5,250,000 (5,224,691) 5,250,000 (6,708,173) Interbanca financing n. 51617/04 EUR 6m EURIBOR + 1.75% 31/07/11 6,000,000 (5,984,927) 6,000,000 (7,476,031) S. Paolo stand-by financing EUR 12m EURIBOR + 1.75% 30/11/09 5,952,027 (6,082,197) 5,952,027 (6,952,027) Banca Popolare di Novara EUR EURIBOR + 1% 22/05/08 5,000,000 (4,998,775) 5,000,000 (4,995,439) e Verona Banca Popolare di Novara e EUR 6m EURIBOR + 1.9 % 30/06/09 3,000,000 (3,000,000) 3,000,000 (3,008,834) Verona mortgage Banca Toscana financing EUR 3m EURIBOR + 0.8% Till revoked 1,500,000 (1,500,000) - - Cassa Risparmio di Ferrara EUR EURIBOR + 0.9% 23/01/09 10,000,000 (9,999,283) - - Unicredit Pool Line A EUR 6m EURIBOR + 1.75% 30/09/12 24,500,000 (24,515,864) - - Unicredit Pool Line B EUR 6m EURIBOR + 1.75% 30/09/12 22,500,000 (22,074,071) - - Unicredit Pool Line D EUR 6m EURIBOR + 1.75% 30/09/12 7,000,000 (6,833,822) - - Unicredit short-term financing EUR 5.51% Fixed Till revoked - - 1,000,000 (1,000,000) Banca Popolare di Sondrio hot EUR 6.4% Fixed Till revoked - - 5,300,000 (5,300,000) money Banca Agricola EUR 6m EURIBOR + 1% 1/6/08 11,000,000 (11,000,000) - - Mantovana financing Banca Agricola EUR 1m EURIBOR + 1.25% 28/07/08 3,000,000 (3,000,000) - - Mantovana financing Banca Agricola Mantovana EUR 1m EURIBOR + 1.25% 31/12/08 1,000,000 (1,000,000) - - financing Factor financing EUR 31/03/14 4,372,685 (4,395,290) - - Current account EUR Till revoked 1,280,679 (1,280,679) 7,392,111 (7,392,111) overdraft facility Promissory notes EUR 5.3% Fixed 06/03/08 2,688,833 (2,688,833) 2,818,833 (2,818,833) Cassa di Risparmio S.Marino EUR 4.4% Fixed 31/01/07 - - 37,100,000 (37,718,752) Unicredit EUR 3m EURIBOR + 2.5% 30/11/06 - - 3,000,000 (1,000,000) Unicredit EUR 3m EURIBOR + 3% 02/02/07 - - 10,400,000 (10,400,000) Banca Popolare di Novara EUR 3m EURIBOR + 1.7% 03/02/07 - - 1,000,000 (693,458) e Verona Banca Popolare di Sondrio EUR 1m EURIBOR + 0.8% Till revoked - - 4,785,693 (4,785,693) Cassa Risparmio di Ferrara EUR 6m EURIBOR + 0.9% 08/05/11 - - 17,000,000 (15,810,000) Total interest-bearing liabilities 117,044,310 (116,570,360) 117,998,664 (122,031,143) Consolidated Financial Statements as of 31.12.2007 Sopaf | Consolidated Financial 130

Sensitivity analysis – interest-rate risk The table below provides an indication of the impact on the profit and loss statement and balance sheet of a parallel +/-100 basis-point and a parallel +/- 50 basis-point shift of the rate curve estimated as of 31 December 2007. The analysis was carried out by assuming that the other variables remained constant, and it was also carried out for 2006 on the basis of the same assumptions. The sensitivity analysis below shows the sensitivity, as of the balance-sheet date, of the cash flow with respect to parallel shifts of the interest-rate curve quoted for 31 December 2007, along with comparable data for the prior year.

in € 000’s 31 December 2007 31 December 2006 Increase of Decrease of Increase of Decrease of 100 bp 100 bp 100 bp 100 bp Change in cash flow (1 year) Floating-rate financing (1,219) 1,219 (833) 833 Financial leases payable (159) 159 - - Financial receivables with floating rates - - - - Net sensitivity of financial flows (1,378) 1,378 (833) 833

31 December 2007 31 December 2006 Increase of Decrease of Increase of Decrease of 50 bp 50 bp 50 bp 50 bp Change in cash flow (1 year) Floating-rate financing (610) 610 (417) 417 Financial leases payable (79) 79 - - Financial receivables with floating rates - - - - Net sensitivity of financial flows (689) 689 (417) 417

> 48.6 Liquidity risk The liquidity risk is the risk that the Group will encounter difficulty in meeting future obligations with respect to financial liabilities. The risk analysis is aimed at quantifying, on the basis of contractual maturity, the cash flow in relation to the reimbursement of the Company’s non-current financial liabilities as of 31 Decem- ber 2007 inasmuch as they are considered significant for the purpose of liquidity risk. The Company’s objective is to achieve a balance between (a) the maintenance of bank credit capacity, and (b) flexibility through the use of overdraft facilities, short-term hot-money facilities and medium-term financing. With reference to the maturities of cash flows related to the Company’s financial exposure, the reimbursement plans for the medium-term secured debt (inclusive of the medium-term financing obtained for equity investment projects) are deemed important for the purpose of liquidity risk, particularly considering the nature of the Company’s cash-flow cycle. The cash flows related to the debt repayment plans for annual periods are presented below for the purpose of being able to quantify the liquidity risk on the Company’s financial exposure, namely, the cash flows reimbur- Consolidated Financial Statements as of 31.12.2007 Sopaf | Consolidated Financial 131 sements to be made on financial indebtedness and other, non-current liabilities. In this regard it is noted that the quantification of the cash-flow payments on non-current financial liabilities was done by calculating the net present value of the future flows generated by the financial instrument, taking into account the principal repayment plan defined at a contractual level. The future interest rates were estimated by calculating the interest-rate-swap (IRS) rates by year as implied by the EURIBOR curve on 31 December 2007.

The tables below summarize the analysis, providing a comparison of the situations as of 31 December 2006 and 31 December 2007:

in € 000’s 31/12/2006 Contractual 12 Months 2 Years 3 Years 4 Years 5 Years > 5 Years Value or Less Liabilities for convertible bonds ------Bank financing (119,578) 108,010 (81,520) (18,988) (8,415) (3,261) (2,337) (5,058) Due to banks for current (7,120) 7,120 - - - - - (7,120) account overdrafts Promissory notes (2,819) 2,819 - (2,819) - - - - Other liabilities (14,725) 15,602 - (8,008) (6,718) - - - (144,242) 133,551 (81,520) (29,814) (15,132) (3,261) (2,337) (12,178)

31/12/2007 Contractual 12 Months 2 Years 3 Years 4 Years 5 Years > 5 Years Value or Less

Liabilities convertible bonds (58,630) 49,738 (1,933) (1,927) (1,927) (1,927) (50,916) - Bank financing (124,977) 111,391 (58,856) (27,801) (13,874) (13,239) (11,207) - Due to factors for transfers of receivables (4,395) 4,373 - - - - - (4,395) Due to banks for current (1,281) 1,281 - - - - - (1,281) account overdrafts Due to related parties (19,031) 19,031 (12,880) (6,152) - - - - Financial leases payable (14,741) 19,084 (1,583) (1,584) (1,585) (2,853) (7,137) - Other liabilities (21,801) 23,602 (10,765) (11,036) - - - - (244,856) 228,499 (86,015) (48,500) (17,387) (18,019) (69,260) (5,676) Consolidated Financial Statements as of 31.12.2007 Sopaf | Consolidated Financial 132

> 49 Relationships Between Group Companies and with Related Parties The following information on transactions with related parties is disclosed pursuant to the provisions of CONSOB Notices n. 97001574 of 20 February 1997, n. 98015375 of 27 February 1998 and DEM 2064231 of 30 September 2002, and the provisions of IAS n. 24 “Related Parties Disclosures” issued by International Ac- counting Standards Board (IASB).

Relationships exist between the holding company, subsidiaries and affiliates, all of which are governed by normal market conditions.

• Revenue/expense relationships with related parties

The table below summarizes the impact of transactions with related parties on the profit and loss statement as of 31 December 2007; the related parties are defined pursuant to IAS 24.

in € 000’s Counterparty Financial Other (Purchases of Revenues Income Operating Materials and (Expenses), Revenues External Services) Net

AFT S.p.A. - 82 - 82 Banca Network Investimenti S.p.A. - 25 - 25 Essere S.p.A. - - (2) (2) Omniapartecipazioni S.p.A. 3,858 - - 3,858 Polis Fondi S.g.r.p.a. 306 166 - 472 PWM Aiggig Multiman.Fund - - - - Telma S.r.l. - 2 - 2 Total Group companies 4,164 275 (2) 4,437 Total profit-and-loss accounts 5,235 1,506 (13,446) % of profit-and-loss accounts 79.5% 18.3% 0.0% Consolidated Financial Statements as of 31.12.2007 Sopaf | Consolidated Financial 133

• Receivable/payable relationships with related parties

The table below summarizes the impact of transactions with related parties on the balance sheet as of 31 December 2007; the related parties are defined pursuant to IAS 24.

in € 000’s Counterparty Financial Due from Customers Other Receivables Other (Due to Banks and Receivables Assets and Other Trade and Financial Other (Payables), Receivables Other Assets Assets Lenders - Current) Net AFT S.p.A. - 82 - - - 82 Cose S.r.l. 188 - - - - 188 Res Renergys A.G. 1,236 - - - - 1,236 Immobiliare Appia S.r.l. 390 - - - - 390 Asm Lomellina S.r.l. - - - - (22) (22) Demofonte S.r.l. - - 3,008 - 3,008 China Opportunity SA (203) (203) Five Star S.a.r.l. - - 30 - - 30 Nearco Inv.S.a.r.l. 22 - - - - 22 Polis Fondi S.g.r.p.a. - 198 - - - 198 S.F.E.R.A. S.r.l. 15 - - - - 15 Total Group companies 1,851 280 30 3,008 (225) 4,944 Total balance-sheet accounts 157,031 876 14,451 7,298 59,099 % of balance-sheet accounts 1.2% 32.0% 0.2% 41.2% -0.4%

The transactions having the biggest impact on the profit and loss statement include: • €1,489,000, of interest expense accrued on financing the subsidiary company LM & Partners SCA (in liquidation); • €3,858,000 of dividends received in 2007 from the incorporated company, LM Real Estate S.p.A.

The main receivable and payable balances are: • a non-interest-bearing €3,008,000 financing in favour of Demofonte S.r.l. that is to be repaid by 31 Decem- ber 2008; • mezzanine financing granted by LM & Partners SCA to Res Renergys AG. Consolidated Financial Statements as of 31.12.2007 Sopaf | Consolidated Financial 134

> Relationships with other related parties

Following is information on relationships with other related parties, which are companies linked to one director.

in € 000’s Counterparty Other Receivables Other Financial Receivables and Other Assets Assets (Payables), Net

Coemi Property S.r.l. 580 - 580 Vector 102 S.r.l. - 29 29 Total other related parties 580 29 609 Total balance-sheet accounts 14,451 7,298 % of balance-sheet accounts 4.0% 0.4%

The receivable from Coemi Property S.p.A. is related to a financing granted by Sopaf S.p.A. to S. Apostoli S.r.l., a company that was sold. S. Apostoli’s obligations were assumed by Coemi Property, and the receivable is to be settled in the first half 2008.

During the year, the following transactions were effected between Group companies and the other related parties: • Acquisition of 47,579 shares of LM Real Estate S.p.A. from LM IS for a countervalue of €8,542,000; • Acquisition of 1,000 shares of LM Real Estate S.p.A. from Giorgio Magnoni for a countervalue of €182,000. • Acquisition of 12,857 Class A shares and 2,874 Class B shares of the fund, Value Secondary Investment Sicàr SCA, from Acqua Blu, a company controlled by Giorgio Magnoni, for the price of €274,000.

The aforementioned acquisitions are in line with the indications given in an appraisal drawn up by an independent expert.

> 50 Significant Non-Recurring Events and Transactions Pursuant to the CONSOB Notice of 28 July 2006, it is noted that during 2007, Sopaf perfected the merger- by-incorporation of wholly and directly controlled companies, LM Real Estate S.p.A, Acal S.p.A. and IDA S.r.l., with the tax and accounting effects to be booked to the Sopaf S.p.A. financial statements as of 1 January 2007, in accordance with Article 2504-bis of the Italian Civil Code. Such transactions are described in detail in the introduction to the notes to the financial statements. Even though effected for the purpose of reorganizing activity within the Group, the non-recurring merger transactions did not entail any economic exchange with third parties, and did not cause, as a substantial economic effect thereof, the transfer of control of the business of the incorporated companies, and accordingly, the transactions are neutral with regard to the representation of the Group’s assets, liabilities, financial position and earnings. Consolidated Financial Statements as of 31.12.2007 Sopaf | Consolidated Financial 135

> 51 Atypical and/or Unusual Transactions In accordance with the CONSOB Notice of 28 July 2006, it is noted that the Sopaf Group did not enter into any atypical and/or unusual transactions during the year of 2007. As defined by said Notice, atypical and/or unusual transactions are those transactions which, because of their significance/importance, nature of the counterparties, subject of the transaction, means for determination of their price and timing of execution (near the end of the year), could give rise to doubts in relation to: the accuracy/completeness of the financial statement information, conflicts of interest, the protection of the company’s capital, and/or the protection of minority shareholders.

> 52 Subsequent Events On 9 January and 1 February 2008, Sopaf S.p.A. perfected the acquisition of 23.36% of the share capital of PWM Sgr for a total of €0.8 million.

On 17 January 2008, as part of the reorganization of the affiliate company, Beven Finance S.a.r.l., Sopaf S.p.A. acquired 14,999,970 shares of Management & Capitali S.p.A. from the affiliate for a price of€ 10.7 million. The same transaction for the same number of shares was perfected by the Ramius Group on 12 February 2007.

On 22 January and 18 March 2008, 105,666 bonds were converted into an equal number of Sopaf ordinary shares, thereby putting the subscribed and paid share capital at €80,095,000, corresponding to 421,902,475 ordinary shares .

On 28 January 2008, the extraordinary meeting of the shareholders of Banca Bipielle Network S.p.A. approved a resolution to change the bank’s name to Banca Network Investimenti S.p.A., or BNI S.p.A. in abbreviated form.

On 30 January 2008, the extraordinary meeting of the shareholders of Coronet S.p.A. approved a resolution to break up and liquidate the company after having resolved the reduction of the share capital from €19 million to €1 million in order to cover the losses sustained to 30 June 2007 and the losses reflected in the company’s capital accounts as of 31 December 2007.

On 31 January 2008, 3,445,585 IMMSI shares were purchased for countervalue of €4,479,000.

On 27 February 2008, Sopaf & Partners RE-Investment S.r.l. was incorporated with share capital of €100,000, with Sopaf S.p.A. taking a 40% interest. The company was set up for the purpose of buying and selling investments in the real estate sector, including through the purchase and sale of shareholdings in other companies or entities.

On 3 March 2008, the Communications Ministry officially announced the results of a public tender for the Statements as of 31.12.2007 Sopaf | Consolidated Financial 136

assignment of WiMax licenses. Sopaf’s affiliate company, AFT S.p.A., was adjudicated the right-to-use in 13 regions that represent more than 75% of Italy’s resident population. The total investment in relation thereto is €34 million.

On 7 March 2008, Demofonte S.r.l. partially repaid a non-interest-bearing financing, reimbursing €600,000.

On 11 March and 26 March 2008, Sopaf S.p.A. subscribed the first and second tranches of a commitment totalling USD10 million with regard to the private-equity fund, Infrastructure and Growth Capital Fund. The subscriptions came to €3.2 million. Infrastructure and Growth Capital Fund is managed by Abraaj Capital, a leading investor in infrastructure projects in the Middle East, North Africa and South America (MENASA) area, with USD4 billion under management.

On 12 March 2008, Sopaf S.p.A. completed the acquisition of 15.94% of the share capital of Sun System S.p.A. via subscription of a special capital increase for €2.5 million. Sun System operates in the renewable energy sector, and in particular, it manages the process and the physical production of small-/medium-sized photovoltaic systems (up to 100kw), from the feasibility study to plant installation and the assignment of the rate incorporating incentives.

Moving ahead with the share buyback program, Sopaf acquired 3,679,759 of its own shares for a total outlay of €1,678,000. Consolidated Financial Statements as of 31.12.2007 Sopaf | Consolidated Financial 137 Exhibits to the notes financial statements 138

> Statement of shareholdings in affiliate companies and jointly controlled companies

in € 000’s Opening Position Changes

Company Name % Held Balances as of Changes in Area of Purchases Capital Increases Sales Pro-rata Dividends Pro-rata Changes for Fair Coverage of Reclass. of Assets Balances as of 31/12/2006 Consolidation (Reimbursements) Earnings Losses Value Valuation Losses Held for Sale 31/12/2007 Affiliated companies Delta S.p.A. 24.0% 49,738 (50,106) - - - 368 ------Polis Fondi S.G.R.P.A. 49.0% 7,983 - - - - 376 (306) - - - - 8,053 Sila S.p.A. 27.5% 4,087 ------(4,087) - Sopaf Capital Management S.p.A. 100.0% 1,032 (3,928) 2,878 - - 18 ------Essere S.p.A. 35.8% 838 - - - - - (562) - - - 277 Co.Se. S.r.l. 50.0% 113 ------(10) - 10 - 113 Five Stars S.a.r.l. 99,99% 2,554 - - (30) - 976 - - 791 - - 4,291 China Opportunity SA 42.4% 5,365 - - - (37) 2,151 - - - - - 7,479 Sfera S.r.l. 48.0% 38 - 453 - - - (30) - - - 461 Beven Finance S.à.r.l. 50.0% 13,718 - - - - - (23) (2,569) - - 11,126 AFT S.p.A. 47.5% 10,740 - - - (3,081) - (51) - - (7,608) - Petunia S.p.A. 59.4% 476 - 21 39,415 - - - (1,371) - - - 38,541 Westindustrie S.r.l. 22.0% 2 ------2 Telma S.r.l. 40.0% - - - - (38) 38 ------Telma special-purpose companies 39.6% 6 - - - (51) 45 - - - - - Nearco S.a.r.l. 49.0% - - 1,454 - - - - (21) - - (1,433) - Pwm Aig Multi-Manager Fund 42,54% - - 14,500 - (1,501) 604 - (21) - - - 13,582 Firanegocios L.S. 25.5% 2,827 - - 1,020 - 14 - - - - - 3,861 ASM Lomellina Inerti S.r.l. 33.0% - - 30 ------30 Area Life Int Ass Limited 45.0% - - 8,385 - - 744 - - - - - 9,129 Banca Network Investmenti S.p.A. (*) 15.0% - - 19,840 - - - - (668) - - - 19,172 99,517 (54,034) 47,108 40,858 (4,708) 5,334 (306) (2,757) (1,778) 10 (13,127) 116,117

Consolidated Financial Statements as of 31.12.2007 Sopaf | Consolidated Financial * Sopaf S.p.A. has a total interest in Banca Network Investimenti equal to 44.5%, including holdings through Petunia S.p.A. 139

> Statement of shareholdings in affiliate companies and jointly controlled companies

in € 000’s Opening Position Changes

* Sopaf S.p.A. has a total interest in Banca Network Investimenti equal to 44.5%, including holdings through Petunia S.p.A. Statements as of 31.12.2007 Sopaf | Consolidated Financial 140

> Statement of financial assets available for sale

in € 000’s Changes

Company Name % Held Balances Changes in Purchases Capital Spin-Offs Sales Decrease Reclass. As Writedowns Adjustments Balances as of Area of Increases or Assets Held to as of 31/12/2006 Consolidation Spin-Off or Sale Fair Value 31/12/2007 Omniapartecipazioni S.p.A. 25.5% 81,790 - - - - (11,185) (70,605) - - - - IMMSI S.p.A. 11.2% - - - - 70,605 (70,605) - - - - - Coronet S.p.A. 30.0% 13,400 ------(13,400) - - Leisure Link Ltd. 1.4% 200 ------(200) - - Advanced Accelerator Applications S.A. 18.6% 3,202 ------11,681 14,883 Green BIT S.p.A. (*) 23.7% 3,514 - - 1,500 - - - (5,014) - - - Forza Quattro S.r.l. 15.0% 14 - - - - (14) - - - - 0 Demofonte S.r.l. 15.0% 2 ------701 703 Aster Fund 33.3% 35,468 - - - - (35,468) - - - - - IMED S.r.l. 17.86% 1,500 ------1,500 Immobiliare Appia S.r.l. 15.0% 1,920 ------47 1,967 Gabetti S.p.A. 1.30% 1,622 - - - - (1,622) - - - - - Delta S.p.A. 16% - 50,106 ------45,894 96,000 Sadi S.p.A. 2.68% 6,210 - - - - (495) - - - (770) 4,946 Fondo Valore sa 11.9% 2,000 ------2,000 Blue H Group Ltd. 1.60% 160 ------160 Fondo PWM Global income low volatility 0.57% 1,092 ------(19) 1,073 HSBC AM Monetarie 0.01% 1,655 - - - - (155) - - - 60 1,560 Res Finco AG (**) 24.72% 6,165 - - 4,400 - - - (10,565) - - - Noventi Field Venture LP 2.43% - - 146 ------146 Parc Eolien De S.Riquier 40.00% - - 16 ------16 Cerma SA 17.90% - - 250 600 ------850 FIP - Fondo Immobili Pubblici 0.96% - - 18,179 ------838 19,017 Tessitura Pontelambro S.p.A. 2.00% - - 345 ------(1) 344 Value Sec Inv Sicar SCA 2.60% - - 381 ------381 Management & Capitali S.p.A. 0.90% - - 3,805 - - (471) - - - 330 3,664 Raffaele Caruso S.p.A. 0.30% - - 100 ------1 101 Ezechiele Ltd 19.90% - - 46 ------46 Conafi Prestito’ S.p.A. 3.70% - - 4,467 ------(463) 4,004 Option Newmann Lowther&Associates Ltd 322 ------322 160,235 50,106 27,735 6,500 70,605 (120,014) (70,605) (15,579) (13,600) 58,300 153,683

* Payment toward a share capital increase perfected in January 2008

Consolidated Financial Statements as of 31.12.2007 Sopaf | Consolidated Financial ** Relative to a shareholder loan funded in 2007 141

> Statement of financial assets available for sale

in € 000’s Changes

* Payment toward a share capital increase perfected in January 2008

** Relative to a shareholder loan funded in 2007 Statements as of 31.12.2007 Sopaf | Consolidated Financial 142

> Statement of assets held for sale

in € 000’s Changes

Company Name % Held Balances as of Changes in Area of Purchases Capital Spin-Offs Sales Decrease for Reclass. As Assets Writedowns Adjustments to Balances as 31/12/2006 Consolidation Increases Spin-Off Held for Sale Fair Value of 31/12/2007 AFT S.p.A. 47.5% ------7,608 - - 7,608 Nearco S.a.r.l. 49.0% ------1,433 - - 1,433 Green BIT S.p.A. 23.7% ------5,014 - (114) 4,900 Sila S.p.A. 27.5% ------4,087 - - 4,087 Res Finco AG 24,72% ------10,565 - (385) 10,180 ------28,706 - (499) 28,208 Consolidated Financial Statements as of 31.12.2007 Sopaf | Consolidated Financial 143

> Statement of assets held for sale

in € 000’s Changes

> Shareholdings in affiliate companies and jointly controlled companies

in € 000’s Balance Sheet Data P & L Data

Registered Capital (Euro) % Held Non-Current Current Total Non-Current Current Total Shareholders’ Revenues Expenses Profit (Loss) Office Assets Assets Assets Liabilities Liabilities Liabilities Equity and Income Before Taxes Sila S.p.A. Turin(IT) 7,340,000 27.5%* 26,461 52,182 78,643* 21,425 44,724 66,149* 12,494* 122,209 (118,186) 4,023 Essere S.p.A. Verona (IT) 1,095,890 35.8% 2,924 4,998 7,922 645 7,102 7,747 175 23,380 (24,951) (1,571) Five Stars S.A. Luxembourg 70,010 100.0% 68,785 338 69,123 49,774 854 50,628 18,495 9 4,489 4,498 Petunia S.p.A. Milan (IT) 50,000,000 59.4% 63,962 656 64,618 201 201 64,417 10 (2,319) (2,309) Polis Fondi S.G.R.P.A. Milan (IT) 5,200,000 49.0% 60 12,448 12,508 207 1,710 1,917 10,591 5,075 (4,310) 765 Beven Finance Sa Luxembourg 540,000 50.0% 22,200 0 22,200 29,498 58 29,556 (7,356) 0 (47) (47) Co.Se. S.r.l. Milan (IT) 25,000 50.0% 340 28 368 359 4 363 5 0 (21) (21) Sfera S.r.l. Milan (IT) 80,000 48.0% 1,781 1,328 3,109 121 1,247 1,368 1,741 0 (60) (60) Firanegocios SL Spain 6,799 25.5% 70,514 70,514 33,754 21,645 55,399 15,115 13 13 China Opportunity SA Bologna (IT) 1,010,180 42.4% 19,592 17,914 37,506 0 108 108 37,398 935 4,134 5,069 Westindustrie S.r.l. *** Milan (IT) 10,000 22.0% - - 0 - - 0 - - Pwm AIG Multimanager Fund NA 42.5% 301 29,617 29,918 0 32,025 32,025 (2,107) 0 1,421 1,421 ASM Lomellina Inerti S.r.l. Vigevano (IT) 23 33.0% 17 22 39 16 16 23 1 1 Area Life Int. Assurance Ltd. Ireland 21,445 45.0% - - 429,966 - - 427,786 2,180 15,475 15,727 (252) Banca Network Investimenti S.p.A. ** Lodi (IT) 26,044 44.5% 47,270 272,159 319,429 44,472 258,796 303,268 16,161 11,125 (15,582) (4,457)

* Data referring to consolidated financial statements at 31 December 2006 prepared in accordance with national accounting principles ** Sopaf S.p.A. has a direct holding of 14.99% and a total holding of 44.5%, including through Petunia S.p.A.; the earnings are relative to the quarter Consolidated Financial Statements as of 31.12.2007 Sopaf | Consolidated Financial *** Inactive company in process of liquidation 145

> Shareholdings in affiliate companies and jointly controlled companies

in € 000’s Balance Sheet Data P & L Data

* Data referring to consolidated financial statements at 31 December 2006 prepared in accordance with national accounting principles ** Sopaf S.p.A. has a direct holding of 14.99% and a total holding of 44.5%, including through Petunia S.p.A.; the earnings are relative to the quarter *** Inactive company in process of liquidation Statements as of 31.12.2007 Sopaf | Consolidated Financial 146

> Appendix Information pursuant to Article 149-duodecies of CONSOB’s Issuer Regulations

Prepared pursuant to Article 149-duodecies of CONSOB’s Issuer Regulations, the following schedule discloses the amounts accrued in 2007 for the audit services and other services rendered by the independent audit firm and by entities affiliated with the independent audit firm’s network.

in € 000’s

Service Provider Note Service Recipient Fees for 2007 Audit of financial statements Deloitte & Touche S.p.A. Sopaf S.p.A. 267 Deloitte & Touche S.p.A. Subsidiary companies 28 Network Deloitte Subsidiary companies 152 Certification services Deloitte & Touche S.p.A. Sopaf S.p.A. 0 Deloitte & Touche S.p.A. Subsidiary companies 0 Network Deloitte Subsidiary companies 0 Other services Deloitte & Touche S.p.A. (1) Sopaf S.p.A. 90 Deloitte & Touche S.p.A. (2) Subsidiary companies 4 Network Deloitte (3) Subsidiary companies 25 Total 566

1 Activity of reviewing proforma balance sheets and profit and loss statements, compilation of tax returns (Modello Unico and 770) 2 Compilation of tax returns (Modello Unico and 770)

Consolidated Financial Statements as of 31.12.2007 Sopaf | Consolidated Financial 3 Audit activity in relation to the liquidation of several Luxembourg companies 147

> Certification of the consolidated financial statements pursuant to Article 81-ter of the CONSOB Resolution n. 11971 of 14 May 1999 and subsequent modifications and additions thereto

The undersigned, Alberto Ciaperoni, as executive in charge of the preparation of the Sopaf S.p.A. corporate accounting documents, certified, including after taking into account the provisions of Article 154 bis, Paragra- phs 3 and 4 of Legislative Decree n. 58 of 24 February 1998: • the adequacy in relation to the business characteristics and • the actual application of the administrative and accounting procedures per the preparation of the consolidated financial statements during 2007.

The undersigned further certifies that the consolidated financial statements as of 31 December 2007: a) correspond to the results in the accounting books and records; b) were prepared in conformity with the international accounting principles (IFRS) issued by the Interna- tional Accounting Standards Board (IASB) and ratified by the European Union, as well as the orders issued for the implementation Article 9 of Legislative Decree n. 38/2005 and, to his knowledge, are suitable for providing a true and accurate representation of the issuer’s capital, financial position and earnings.

Milan, 13 May 2008 Consolidated Financial Statements as of 31.12.2007 Sopaf | Consolidated Financial 148

> Report of the Independent Auditors on the Consolidated Financial Statements Consolidated Financial Statements as of 31.12.2007 Sopaf | Consolidated Financial 149 Sopaf S.p.A. Financial Statements as of 31.12.2007 150

> Balance sheet*

In € Note 31/12/2007 31/12/2006 Restated ** 31/12/2006

Intangible fixed assets 4 156,545 50,837 54,483 Tangible fixed assets 5 23,157,038 251,612 5,934,205 Shareholdings 6 168,827,306 145,709,877 138,063,068 Financial assets 7 131,315,513 22,499,452 105,734,589 Tax credits 8 18,076,091 17,838,963 17,840,196 Deferred tax assets 9 5,224,435 8,910,346 8,939,125 Total non-current assets 346,756,928 195,261,087 276,565,666 Customer receivables and other trade receivables 10 780,878 193,159 193,159 Other receivables and other assets 11 13,408,879 19,229,130 42,092,398 Other financial assets 12 4,280,015 3,131,704 3,131,704 Cash and cash equivalents 13 9,783,972 225,141 619,947 Total current assets 28,253,744 22,779,134 46,037,208 Non-current assets held for sale 14 5,422,698 - - Total assets 380,433,370 218,040,221 322,602,874 Sopaf S.p.A. Financial Statements as of 31.12.2007 Financial Sopaf| Sopaf S.p.A. 151

In € Note 31/12/2007 31/12/2006 Restated ** 31/12/2006

Share capital 80,001,851 80,000,000 80,000,000 Other reserves 29,851,390 21,038,651 (5,990,901) Own shares (173,848) - - Merger equity difference (23,110,447) - - Valuation reserves 46,985,789 4,424,835 57,465,257 Undivided profits (losses) (22,663,007) (24,460,994) (24,460,994) Profit (loss) for the period 20,075,664 1,797,987 8,267,703 Total shareholders’ equity 15 130,967,392 82,800,479 115,281,066 Bonds 16 43,389,715 - - Due to banks and other lenders 17 61,557,237 21,886,683 32,121,347 Financial leases payable 18 14,839,758 - - Other liabilities 19 16,763,368 41,356,096 44,634,721 Pension and employment severance liabilities 20 170,252 127,993 154,127 Provisions 21 807,500 289,000 799,128 Total non-current liabilities 137,527,830 63,659,772 81,100,062 Current maturities of bonds 22 755,070 - - Due to banks and other lenders 23 80,547,797 47,481,220 96,194,927 Financial leases payable 24 1,023,276 - 4,600,000 Financial derivatives 25 10,967 - - Trade accounts payable 26 2,642,862 1,536,881 2,634,243 Other liabilities 27 26,958,176 22,561,869 22,792,577 Total current liabilities 111,938,148 71,579,970 126,221,746 Liabilities related to assets held for sale - - - Total liabilities and shareholders’ equity 380,433,370 218,040,221 322,602,874

* Pursuant to the CONSOB Resolution n. 15519 of 27 July 2006, the effects of the transactions with related parties on the Sopaf S.p.A. balance sheet are shown in a special balance sheet in this annual report, and are described in Note n. 44 as well as in the comments to the individual financial statement accounts. ** The reclassified data as of 31 December 2006 present the situation as of 31 December 2006 as if the merger by incorporation of LM Real Estate S.p.A., Ida S.r.l., Acal S.p.A. were to have taken place at the start of the preceding year. Such data are unaudited. Statements as of 31.12.2007 Financial Sopaf| Sopaf S.p.A. 152

> Profit and loss statement*

In € Note 31/12/2007 31/12/2006 Restated ** 31/12/2006

Dividends and other income from shareholdings 28 4,164,186 - 4,058,275 Capital gains (capital losses) on sale of shareholdings 29 54,856,181 7,971,364 15,055,816 (Writedowns) writebacks of shareholdings 30 (13,400,000) (227,070) (295,202) Other operating revenues 31 1,591,851 140,973 3,229,729 Purchases of materials and external services 32 (8,584,609) (2,341,515) (5,439,617) Personnel expense 33 (4,477,191) (887,116) (1,387,483) Other operating expenses 34 (3,598,771) (768,805) (1,425,082) Depreciation and amortization 35 (646,992) (40,881) (77,458) Provisions to reserves for future charges 36 - - (518,500) Gains (losses) on sale of non-current assets 37 - - - Operating profit 29,904,655 3,846,950 13,200,479 Financial income 878,226 331,806 514,768 Financial charges (9,935,364) (2,721,524) (5,796,671) Net financial income (charges) 38 (9,057,138) (2,389,718) (5,281,903) Profit before taxes 20,847,517 1,457,232 7,918,576 Income taxes 39 (771,853) 340,755 349,127 Net profit from continuing operations 20,075,664 1,797,987 8,267,703 Net profit from operations sold - - - Net profit 20,075,664 1,797,987 8,267,703

Earnings per share (in euro) - Primary 0.04760 0.00426 - Diluted 0.04591 0.00408

* Pursuant to the CONSOB Resolution n. 15519 of 27 July 2006, the effects of the transactions with related parties on the Sopaf S.p.A. profit and loss statement are shown in a special profit and loss statement in this annual report, and are described in Note n. 44 as well as in the comments to the individual financial statement accounts. ** The reclassified data as of 31 December 2006 present the situation as of 31 December 2006 as if the merger by incorporation of LM Real Estate Sopaf S.p.A. Financial Statements as of 31.12.2007 Financial Sopaf| Sopaf S.p.A. S.p.A., Ida S.r.l., Acal S.p.A. were to have taken place at the start of the preceding year. Such data are unaudited. 153

> Statement of changes in financial position*

In € 000’s 31/12/2007 31/12/2006 Restated ** 31/12/2006

Operating activity Net profit for the period 20,076 1,798 8,268 Adjustments for: Current and deferred taxes 772 (341) 349 Depreciation 556 31 67 Amortization 91 10 10 Financial income (878) (332) (515) Financial charges 9,935 2,722 5,797 Provisions to reserves for risks and charges - - 519 Writedowns di financial assets 13,400 227 295 Cash flow from operations before changes in working capital accounts 43,952 4,115 14,790 (Increase)/decrease in receivables and other current assets 5,304 (15,868) (38,731) Increase/(decrease) in payables 1,106 724 1,822 Cash and cash equivalents generated by operating activity 50,362 (11,029) (22,119) Net change in the reserves for risks and charges 519 - (8) Net change in employment severance indemnity reserve 42 29 55 Changes in other non-current liabilities (24,593) 41,356 44,635 Changes in other current liabilities 4,396 21,827 22,058 Change in tax liabilities (772) 341 (349) Change in tax assets (237) 6,670 6,669 Change in the deferred taxes 1,107 (346) 3,016 Interest paid (9,701) (2,500) (5,575) Interest and charges not paid on convertible bonds 1,446 - - Net cash flow from operations 22,569 56,348 48,382 Investing activity Interest received 878 332 515 Investments in shareholdings through: Acquisitions (100,780) (162,477) (155,125) Mergers (28,290) - - Recapitalization of subsidiary companies - (4,696) (4,696) Decreases in shareholdings through: Merger-by-incorporation transactions 77,391 - - Liquidations and capital reimbursement 10,411 - - Allocation to assets held for sale 5,423 - - Increases in assets held for sale (5,423) - - Sopaf S.p.A. Financial Statements as of 31.12.2007 Financial Sopaf| Sopaf S.p.A. 154

In € 000’s 31/12/2007 31/12/2006 Restated ** 31/12/2006

Other investments (tangible fixed assets, intangible fixed assets and other financial assets) (23,685) (202) (5,923) Amounts realized on sale of: Shareholdings 12,657 115,795 115,795 Other non-current assets (tangible fixed assets, intangible fixed assets and other) 27 5 5 Cash and cash equivalents derived from (used in) investing activity (A) (51,391) (51,243) (49,429) Changes for merger by incorporation of subsidiary companies: Decrease in shareholdings due to merger of subsidiary companies (62,597) - - Change in assets 108,194 - - Change in liabilities (78,146) - - Change in fair-value reserves for financial assets available for sale (992) - - Deficit allocated to financial assets available for sale 10,430 - - Merger equity difference (B) (23,111) - - Net cash used in investing activity (A) + (B) (74,502) (51,243) (49,429) Financial assets Change in financial assets (75,458) 15,837 (41,161) Amounts collected on issuance of bonds 48,415 - - Increase (decrease) amounts due to banks and other lenders 88,377 (25,744) 37,801 Changes in shareholders’ equity 332 4,490 4,490 Purchase of own shares (174) - - Net cash flow derived from (used by) financing activity 61,492 (5,417) 1,130 Net increase / (decrease) of cash and cash equivalents 9,559 (312) 83 Cash and cash equivalents at the start of the year 225 537 537 Cash and cash equivalents at the end of the year 9,784 225 620

* Pursuant to the CONSOB Resolution n. 15519 of 27 July 2006, the effects of the transactions with related parties on the Sopaf S.p.A. statement of changes in financial position are shown in a special statement of changes in financial position in this annual report, and are described in Note n. 44 as well as in the comments to the individual financial statement accounts. ** The reclassified data as of 31 December 2006 present the situation as of 31 December 2006 as if the merger by incorporation of LM Real Estate Sopaf S.p.A. Financial Statements as of 31.12.2007 Financial Sopaf| Sopaf S.p.A. S.p.A., Ida S.r.l., Acal S.p.A. were to have taken place at the start of the preceding year. Such data are unaudited. 155

> Balance sheet prepared pursuant to Consob Resolution n. 15519 of 27 July 2006

> Balance sheet

In € Note 31/12/2007 Including % 31/12/2006 Including % Related Parties Related parties

Intangible fixed assets 4 156,545 - 50,837 - Tangible fixed assets 5 23,157,038 - 251,612 - Shareholdings 6 168,827,306 - 145,709,877 - Financial assets 7 131,315,513 137,050 0.1% 22,499,452 4,963,306 22.1% Tax credits 8 18,076,091 - 17,838,963 - Deferred tax assets 9 5,224,435 - 8,910,346 - Total non-current assets 346,756,928 195,261,087 Customer receivables and 10 780,878 675,491 86.5% 193,159 185,464 96.0% other trade receivables Other receivables and other assets 11 13,408,879 950,484 7.1% 19,229,130 2,767,838 14.4% Other financial assets 12 4,280,015 3,037,138 71.0% 3,131,704 3,131,704 100.0% Cash and cash equivalents 13 9,783,972 - 225,141 - Total current assets 28,253,744 22,779,134 Non-current assets held for sale 14 5,422,698 - - - Total assets 380,433,370 218,040,221 Sopaf S.p.A. Financial Statements as of 31.12.2007 Financial Sopaf| Sopaf S.p.A. 156

In € Note 31/12/2007 Including % 31/12/2006 Including % Related Parties Related parties

Share capital 80,001,851 80,000,000 Other reserves 29,851,390 21,038,651 Own shares (173,848) - Merger equity difference (23,110,447) - Valuation reserves 46,985,789 4,424,835 Undivided profits (losses) (22,663,007) (24,460,994) Profit (loss) for the period 20,075,664 1,797,987 Total shareholders’ equity 15 130,967,392 82,800,479 Bonds 16 43,389,715 - - - Due to banks and other lenders 17 61,557,237 - 21,886,683 - Financial leases payable 18 14,839,758 - - - Other liabilities 19 16,763,368 6,151,545 36.7% 41,356,096 32,082,880 77.6% Pension and employment 20 170,252 - 127,993 - severance liabilities Provisions 21 807,500 - 289,000 - Total non-current liabilities 137,527,830 63,659,772 Current maturities of bonds 22 755,070 - - - Due to banks and other lenders 23 80,547,797 21,880,484 27.2% 47,481,220 21,025,402 44.3% Financial leases payable 24 1,023,276 - - - Financial derivatives 25 10,967 - - - Trade accounts payable 26 2,642,862 - 1,536,881 109,282 7.1% Other liabilities 27 26,958,176 12,879,545 47.8% 22,561,869 8,130,680 36.0% Total current liabilities 111,938,148 71,579,970 Liabilities related to assets held for sale - - Total liabilities and shareholders’ equity 380,433,370 218,040,221 Sopaf S.p.A. Financial Statements as of 31.12.2007 Financial Sopaf| Sopaf S.p.A. 157

> Profit and loss statement prepared pursuant to Consob Resolution n. 15519 of 27 July 2006

> Profit and loss statement

In € Note 31/12/2007 Including % 31/12/2006 Including % Related parties Related parties

Dividends and other income from 28 4,164,186 4,164,186 100.0% - - shareholdings Capital gains (capital losses) on sale of 29 54,856,181 - 7,971,364 - shareholdings (Writedowns) writebacks of shareholdings 30 (13,400,000) - (227,070) - Other operating revenues 31 1,591,851 654,766 41.1% 140,973 106,606 75.6% Purchases of materials and external services 32 (8,584,609) (6,913) 0.1% (2,341,515) (115,169) 4.9% Personnel expense 33 (4,477,191) - (887,116) - Other operating expenses 34 (3,598,771) (45,006) 1.3% (768,805) (1,322) 0.2% Depreciation and amortization 35 (646,992) - (40,881) - Provisions to reserves for future charges 36 - - - - Gains (losses) on sale of non-current assets 37 - - - - Operating profit 29,904,655 3,846,950 Financial income 878,226 - 331,806 - Financial charges (9,935,364) (2,263,054) 22.8% (2,721,524) (929,448) 34.2% Net financial income (charges) 38 (9,057,138) (2,389,718) Profit before taxes 20,847,517 1,457,232 Income taxes 39 (771,853) - 340,755 - Net profit from continuing operations 20,075,664 1,797,987 Net profit from operations sold - - - - Net profit 20,075,664 1,797,987 Sopaf S.p.A. Financial Statements as of 31.12.2007 Financial Sopaf| Sopaf S.p.A. 158

> Statement of changes in financial position prepared pursuant to Consob Resolution n. 15519 of 27 July 2006

In € 000’s 31/12/2007 Including 31/12/2006 Including Related Parties Related Parties

Operating activity Net profit for the period 20,076 1,798 Adjustments for: Current and deferred taxes 772 (341) Depreciation 556 31 Amortization 91 10 Financial income (878) (332) Financial charges 9,935 2,263 2,722 929 Provisions to reserves for risks and charges - - Writedowns di financial assets 13,400 227 Cash flow from operations before changes in working capital accounts 43,952 2,263 4,115 929 (Increase)/decrease in receivables and other current assets 5,304 1,328 (15,868) (2,822) Increase/(decrease) in payables 1,106 (109) 724 109 Cash and cash equivalents generated by operating activity 50,362 3,482 (11,029) (1,784) Net change in the reserves for risks and charges 519 - Net change in employment severance indemnity reserve 42 29 Changes in other non-current liabilities (24,593) (25,932) 41,356 32,083 Changes in other current liabilities 4,396 4,749 21,827 8,131 Change in tax liabilities (772) 341 Change in tax assets (237) 6,670 Change in the deferred taxes 1,107 (346) Interest paid (9,701) (2,500) Interest and charges not paid on convertible bonds 1,446 - Net cash flow from operations 22,569 (17,701) 56,348 40,214 Investing activity Interest received 878 332 Investments in shareholdings through: Acquisitions (100,780) (162,477) Mergers (28,290) - Recapitalization of subsidiary companies - (4,696) Decreases in shareholdings through: Merger-by-incorporation transactions 77,391 - Liquidations and capital reimbursement 10,411 - Allocation to assets held for sale 5,423 - Sopaf S.p.A. Financial Statements as of 31.12.2007 Financial Sopaf| Sopaf S.p.A. 159

In € 000’s 31/12/2007 Including 31/12/2006 Including Related Parties Related Parties

Increases in assets held for sale (5,423) - Other investments (23,685) (202) (tangible fixed assets, intangible fixed assets and other financial assets) Amounts realized on sale of: Shareholdings 12,657 115,795 Other non-current assets (tangible fixed assets, intangible fixed assets and other) 27 5 Cash and cash equivalents derived from (used in) investing activity (A) (51,391) (51,243) Changes for merger by incorporation of subsidiary companies: Decrease in shareholdings due to merger of subsidiary companies (62,597) - Change in assets 108,194 - Change in liabilities (78,146) - Change in fair-value reserves for financial assets available for sale (992) - Deficit allocated to financial assets available for sale 10,430 - Merger equity difference (B) (23,111) - Net cash used in investing activity (A) + (B) (74,502) (51,243)

Financial assets Change in financial assets (75,458) 4,921 15,837 19,072 Amounts collected on issuance of bonds 48,415 - Increase (decrease) amounts due to banks and other lenders 88,377 (25,744) Changes in shareholders’ equity 332 855 4,490 (30,689) Purchase of own shares (174) - Net cash flow derived from (used by) financing activity 61,492 5,776 (5,417) (11,617) Net increase / (decrease) of cash and cash equivalents 9,559 (11,925) (312) 28,597 Cash and cash equivalents at the start of the year 225 537 Cash and cash equivalents at the end of the year 9,784 225 Sopaf S.p.A. Financial Statements as of 31.12.2007 Financial Sopaf| Sopaf S.p.A. 160

> Statement of changes in shareholders’ equity as of 31 December 2007 and 2006

In € Capital Other Own Merger Valuation Undivided Profit for Shareholders’ Reserves Shares equity Reserves Profits the Period Equity difference (Losses)

Balance as of 1 July 2006 80,000,000 21,038,651 - - (54,568) (27,258,499) 2,797,505 76,523,089 Change in fair value of financial - - - - (14,132) - - (14,132) assets available for sale Deferred taxes on revaluation - - - - 3,506 - - 3,506 of the fair value of financial assets available for sale Gains (losses) booked to - - - - (10,626) - - (10,626) shareholders’ equity during the period Allocation of profits (losses) for - - - - - 2,797,505 (2,797,505) - prior period Net profit (loss) for the period ------1,797,987 1,797,987 Total gains (losses) booked - - - - - 2,797,505 (999,518) 1,797,987 during the period Carryover of capital gains from - - - - 4,490,028 - - 4,490,028 transfer with parties under common control Dividends ------Balance as of 31 December 2006 80,000,000 21,038,651 - - 4,424,835 (24,460,994) 1,797,987 82,800,479 Increases on fair value of financial - - - - 52,450,423 - - 52,450,423 assets from merger Change in fair value of financial - - - - 46,928,666 - - 46,928,666 assets available for sale Deferred taxes on revaluation of - - - - (855,670) - - (855,670) the fair value of financial assets available for sale Allocated of undivided profits - 4,490,029 - - (4,490,029) - - 0 (losses) to transactions between Group companies Allocation of profits (losses) for - - - - - 1,797,987 (1,797,987) - prior period Gains (losses) booked to - 4,490,029 - - 94,033,390 1,797,987 (1,797,987) 98,523,419 shareholders’ equity during the period Sopaf S.p.A. Financial Statements as of 31.12.2007 Financial Sopaf| Sopaf S.p.A. 161

In € Capital Other Own Merger Valuation Undivided Profit for Shareholders’ Reserves Shares equity Reserves Profits the Period Equity difference (Losses)

Transfer to profit and loss - - - - (51,472,436) - - (51,472,436) statement of reserves upon sale of financial assets available for sale Net profit (loss) for the period ------20,075,664 20,075,664 Total gains (losses) booked - - - - (51,472,436) - 20,075,664 (31,396,772) during the period Conversion of bonds 1,851 ------1,851 Purchase of own shares - - (173,848) - - - - (173,848) Merger difference arising from - - - (25,903,290) - - - (25,903,290) capital gains on purchase of incremental interests over controlling interest Merger-by-incorporation - - - 2,792,843 - - - 2,792,843 difference - subsidiary companies Capital reserve for convertible - 5,464,165 - - - - - 5,464,165 bonds Deferred taxes for equity - (1,473,098) - - - - - (1,473,098) component of convertible bonds Carryover of capital gains from - 331,643 - - - - - 331,643 transfer with parties under common control Dividends ------Balance as of 31 December 2007 80,001,851 29,851,390 (173,848) (23,110,447) 46,985,789 (22,663,007) 20,075,664 130,967,392 Sopaf S.p.A. Financial Statements as of 31.12.2007 Financial Sopaf| Sopaf S.p.A. 162

NOTES TO THE FINANCIAL STATEMENTS

> General Information

Sopaf S.p.A. is a joint-stock company incorporated in Italy, registered on the Milan Business Register and registered on the list maintained by the Italian Foreign-Exchange Office pursuant to Article 113 of the Consolidated Banking Act (Legislative Decree n. 385 of 1993). Sopaf S.p.A. is a holding company that holds, either directly or indirectly through other sub-holding companies, interests in the capital of companies in the sectors in which the Sopaf Group operates. The Company’s registered office is located at Foro Buonaparte, 24, Milan, Italy. The main activities of the Company and its subsidiaries are described in the report on operating performance supplementing the consolidated financial statements. The amounts in these financial statements are denominated in euros. As a holding company, Sopaf S.p.A. has also prepared the consolidated financial statements of the Sopaf Group as of 31 December 2007. The extraordinary meeting of the Sopaf S.p.A. shareholders held on 10 November 2006 approved a resolution to change the fiscal year end from 30 June to 31 December so as to reflect better Sopaf’s activity and operations. For the effect of the aforementioned resolution, the financial statements as of 31 December 2007 are compared with the financial statements for those of the fiscal year of 1 July 2006 to 31 December 2006, a period of six months only. The data and the information for the fiscal year are supplied along with the data for the prior fiscal year, even though the comparison of the profit-and-loss data is not significant since the fiscal year ending 31 December 2006 covers a term of six months only. It is also noted that the financial statements present reclassified data as of 31 December 2006, thereby treating the merger by incorporation of LM Real Estate S.p.A., Ida S.r.l. and Acal S.p.A. described hereunder as if it were to have occurred at the outset of the previous year. Such data are unaudited.

> Merger by Incorporation of Wholly Owned Subsidiaries LM Real Estate S.p.A., IDA S.r.l. and ACAL S.p.A.

Sopaf S.p.A.’s merger-by-incorporation of the wholly and directly controlled subsidiaries, LM Real Estate S.p.A., Acal S.p.A. and IDA S.r.l., was approved on the basis of shareholder resolutions dated 16 November 2007 for the incorporated companies and 27 November 2007 for the incorporating company, and was perfected with a merger agreement dated 14 December 2007 as part of the implementation of a merger plan that was approved by shareholder resolutions dated 17 October 2007 and registered with the office of the Milan Register having responsibility therefor. The merger took place on 14 December 2007, and was registered on the Milan Business Register on 19 Decem- ber 2007. As a result of the merger, Sopaf S.p.A. took over all of the rights set out in Article 2504-bis of the Italian Civil Code with respect to the wholly owned subsidiaries, LM Real Estate S.p.A., Acal S.p.A. and IDA S.r.l., with the effective date thereof for tax and accounting purposes made retroactive to 1 January 2007 for the purpose of Sopaf S.p.A.’s financial statements, as provided by Article 2504-bis of the Italian Civil Code. The merger transaction does not entail any changes to the rights of the holders of the convertible bonds which

Sopaf S.p.A. Financial Statements as of 31.12.2007 Financial Sopaf| Sopaf S.p.A. are part of the “Sopaf 2007-2012 3.875% convertible bond issue” or to the rights accruing to the holders of war- 163 rants on Sopaf S.p.A. ordinary shares which continue to be governed by the respective regulations in effect.

> Adoption of International Accounting Principles

As provided by Italian Legislative Decree n. 38 of 28 February 2005 authorizing the implementation of the Euro- pean Regulation n. 1606 of 2002, companies with securities traded on a regulated market of the EU member states are required to prepare their financial statements as of 2006 in accordance with the international accounting principles (IAS/IFRS) issued by the International Accounting Standard Board (IASB) and ratified by the EU.

The accounting formats and information contained in these financial statements were prepared in accordance with IAS 1, as also provided by the CONSOB Notice n. DEM 6064313 of 28 July 2006.

The financial statements and the notes to the financial statements also contain the supplemental information and disclosures required by the CONSOB Resolutions n. 15519 and n. 15520 and the CONSOB Notice n. 6064293 issued on 27 and 28 July 2006.

The data for the current year are provided with those for the previous year, which have been reclassified and restated on the basis of the same criteria, taking into account the transactions disclosed in the preceding section.

The financial statements include the statements required by international accounting principles (profit and loss statement, balance sheet, statement of changes in shareholders’ equity and statement of changes in financial position) and the notes to the financial statements.

The profit and loss statement has been prepared on the basis of the minimum contents provided by IAS 1 (Pre- sentation of financial statements) with the expenses classified by the nature thereof; the balance sheet has been prepared using the format evidencing a breakdown between current and non-current assets and liabilities. The statement of changes in financial position has been prepared in accordance with the indirect method.

> Summary of Accounting Principles and Valuation Criteria

> General principles

The financial statements as of 31 December 2007 were prepared with the application of the international accounting principles and the interpretations thereof as of such date. Point 43 of the notes to the financial statements provides the disclosures required by IAS 1 and the new accounting principle IFRS7, ratified by the European Union in January 2006 (EC Regulation n. 108-2006). Such new principle requires a description of the objectives, the policies and the procedures placed into effect by management for the different types of financial risks (foreign-exchange risk, liquidity risk, interest-rate risk, and credit risk) to which the Company is exposed, inclusive of sensitivity analyses for the various types of risk and disclosures about the concentration and average, minimum and maximum exposure with respect to the various types of risk for the period of reference, whenever the exposure as of the end of the accounting period is not sufficiently disclosed. Statements as of 31.12.2007 Financial Sopaf| Sopaf S.p.A. 164

The main accounting principles are set out below. Such principles have been applied in a uniform manner for all periods presented. The preparation of the financial statements requires the use of estimates by the directors, and in specific cases, the adoption of assumptions in the application of the accounting principles.

With the exception of financial instruments whose value is based on the fair-value criterion in accordance with IAS 39, the cost criterion has generally been adopted for the valuation of assets and liabilities.

Information about the financial statement formats adopted versus those indicated by IAS 1 is provided below, along with a description of the most significant accounting principles and related valuation criteria adopted in the preparation of these financial statements.

> Financial statement formats

The profit and loss statement has been prepared on the basis of the format evidencing a breakdown of expenses according to their nature, with the operating profit and the pre-tax profit reported separately prior to net profit. In order to make it easier to measure the actual trend of normal operations, a separate indication is provided of the revenue and expense components arising from transactions or events which, because of their nature or the significance of their amounts, may be considered as non-recurring. Such transactions fall within the definition of significant, non-recurring events and transactions contained in the CONSOB Notice 6064293 of 28 July 2006. The significant, non-recurring transactions are different from the atypical and/or unusual transactions defined by the same Notice; the latter are those transactions which, because of their significance/importance, nature of the counterparties, subject of the transaction, means for determination of their price and timing of execution (near the end of the year), could give rise to doubts in relation to: the accuracy/completeness of the financial statement information, conflicts of interest, the protection of the company’s capital, and/or the protection of minority shareholders.

The balance sheet has been prepared on the basis of the format evidencing a breakdown between current and non-current assets and liabilities. Assets and liabilities are classified as “current” on the basis of the following criteria: • The current assets are cash or cash equivalents, assets expected to be converted into cash or sold or used in the normal operating cycle, assets held mainly for trading purposes; and assets are expected to be converted into cash/extinguished within 12 months from the balance-sheet date. • the current liabilities are those expected to be extinguished in the normal operating cycle or within 12 months from the balance-sheet date, liabilities mainly for trading purposes; and those for which there is no unconditional right to defer their extinction beyond 12 months. All other liabilities are classified as non- current.

Sopaf S.p.A. Financial Statements as of 31.12.2007 Financial Sopaf| Sopaf S.p.A. related to medium-/long-term financing transactions and related hedging instruments and dividends paid are 165 included in financing activity.

The data for the current year are compared with those from the financial statements for the previous year which have been prepared using the same criteria. Where necessary for better representation of the comparative data, the prior-year data have been appropriately reclassified.

Finally, the financial statements are supplemented by the profit and loss statement and the balance sheet prepared in accordance with the provisions of the CONSOB Resolution n. 15519 of 27 July 2006 (Provisions on financial statement formats), in order to report separately any significant amounts involved in positions or transactions with related parties.

> Other intangible assets

Software licenses purchased are capitalized and recorded as intangible fixed assets at their acquisition cost, and are amortized on a straight-line basis over their estimated useful life. The costs associated with the development and the ordinary maintenance of the software that do not meet the aforementioned requisites and research costs are charged to the profit and loss statement as incurred.

> Buildings, plant and equipment

Buildings, plant, machinery and equipment are booked at purchase or production cost, inclusive of ancillary charges, and are stated net of accumulated depreciation and any writedowns for impairment of value. The costs incurred following purchase are capitalized only if they increase the future economic benefits of the assets to which they refer. The tangible fixed assets are depreciated on a straight-line basis over the periods reflecting the residual possibilities of use of the assets. Depreciation is computed on a straight-line basis with respect to the cost of the assets, net of any residual value (if significant), in relation to their estimated useful life, with the application of the following percentages:

–– Buildings: 2% –– Furnishings and equipment: 12% –– Plant: 6,67 % –– Computer equipment: 20% –– Auto vehicles: 25% Sopaf S.p.A. Financial Statements as of 31.12.2007 Financial Sopaf| Sopaf S.p.A. 166

The recoverability of the asset value is verified in accordance with the criteria provided by IAS 36, as illustrated in the section hereunder discussing impairment of value. Costs sustained for improvements made to third-party assets held under operating lease are capitalized and reported as part of the tangible fixed assets to which they refer, and are depreciated over the lesser of their useful life and the residual period of the lease contract. Gains and losses arising from the sale or disposal of tangible fixed assets are determined by the difference between the proceeds from the sale or disposal and the net book value of the assets, and are booked to profit and loss statement during the period in which the sale or disposal occurred.

> Shareholdings in subsidiary companies, affiliate companies and joint ventures

The shareholdings in subsidiary companies, affiliate companies and joint ventures are valued at cost, net of any impairment losses booked pursuant to IAS 36. Any writedowns for impairment are booked to the profit and loss statement; the original value of the asset may be reinstated in subsequent periods if the reasons for the writedown no longer apply.

> Other shareholdings

The shareholdings in companies other than subsidiary companies, affiliate companies and joint ventures are recorded as non-current assets in the account, “Other non-current financial assets”, and, as provided by IAS 39 with reference to financial assets available for sale, are valued at fair value, or at cost whenever fair value cannot be reliably determined. The gains and losses from changes in fair value are booked directly to shareholders’ equity until the assets are sold or until a loss is recognized due to impairment of value. Upon the sale of the assets or the recognition of an impairment loss, the total gains and losses previously booked to shareholders’ equity are transferred to the profit and loss statement for the then current period. The original value may be reinstated in subsequent years should the premises for the writedown effected no longer apply. The risk arising from any losses exceeding shareholders’ equity is quantified in a special reserve to the extent to which the investing company is required to meet legal or implicit obligations with respect to the company in which the investment is held or to cover such company’s losses.

> Financial assets

Receivables and financial assets held to maturity are booked at cost, which is equal to the fair value of the initial price paid, increased by any transaction costs (e.g. commissions, costs for advisory services, etc.). The initial carrying value is later adjusted to take into account: the repayments of principal; writedowns, if any; and the amortization of the difference between the repayment value and the initial carrying value. The amortization is based on the actual internal rate of return represented by the rate that equalizes, upon the initial recognition of the assets, the present value of the expected cash flows from the assets and the initial carrying value of the assets (“amortized cost method”). The financial assets available for sale are non-derivative instruments designated in this category and not clas-

Sopaf S.p.A. Financial Statements as of 31.12.2007 Financial Sopaf| Sopaf S.p.A. sified in any of the other categories. 167

The financial assets are classified as non-current assets unless the directors intend to dispose of the investments within 12 months from the balance-sheet date. The unrealized gains and losses arising from change in fair value on non-monetary securities classified as assets available for sale are booked to shareholders’ equity. Whenever the securities classified as available for sale are sold or experience a reduction in value, the cu- mulative changes in fair value are booked to the profit and loss statement as gains or losses from investment securities. The fair value of listed investments is based on current bid prices. Whenever there is no active market for a financial asset (unlisted securities), the Group establishes the fair value by using valuation techniques. Such techniques may include references to recent transactions between knowledgeable and willing parties, references to other, substantially similar instruments, and the analysis of discounted cash flows adapted in order to reflect the issuer’s specific situation. Receivables and loans are non-derivative financial assets entailing fixed or determinable payments which are not traded in an active market, and which are not intended to be traded. The assets mature 12 months or more following the balance-sheet date. Receivables and loans are included in the balance-sheet account, “Other loans and receivables”. At each balance-sheet date, the Group conducts a review to determine the existence of any objective evidence that a financial asset or a group of financial assets has experienced impairment of value. In the case of equity securities classified as assets available for sale, the determination of impairment of value also includes any significant and continuing decrease of fair value that would put the fair value below the cost of the securities. Financial assets such as restricted guarantee deposits and security deposits, which the Company intends to hold, and is able to hold, until maturity, and which do not meet the requisites for classification as cash and cash equivalents are recorded in the financial statements and eliminated from the financial statements on the basis of the trading date. Such assets are initially booked at an amount corresponding to their fair value, and thereafter, on the basis of amortized cost, net of any writedowns for impairment in value.

> Non-current assets held for sale

The non-current assets held for sale are valued at the lower of their prior net carrying value and the market value, net of selling costs. The non-current assets are classified as “held for sale” whenever their carrying value is expected to be recovered through a sale transaction rather than through use in the business operating cycle. This condition is respected only when the sale is considered highly probable, and the assets are available for immediate sale at current conditions. For this purpose, management must be committed to the sale, which should be concluded within 12 months of the date on which the assets are classified as such.

> Financial derivatives

the changes in the fair value of the derivative are booked to shareholders’ equity. Should the hedging not be effective, the changes in the fair value of the derivative are booked to the profit and loss statement. The effectiveness of the hedging, namely, the suitability to offset adequately the changes caused by the risk hedged, is periodically assessed by analyzing the correlation between the fair value, or the financial flows of the asset, liability or transaction hedged, and the financial flows of the hedging instrument. Whenever the conditions for the application of hedge accounting are not met, any gains or losses arising from valuing the financial derivative instrument at its fair value are booked directly to the profit and loss statement.

> Losses of value (“Impairment”)

At each balance-sheet date, the carrying values of the intangible and tangible fixed assets, the shareholdings in subsidiary and affiliate companies, and financial assets, are reviewed to determine if there are any indications of the impairment of value of such assets. In the presence of such indications, the recoverable amount of the assets is estimated in order to calculate any writedown. Whenever it is not possible to estimate the recoverable value of an individual asset, an estimate of the recoverable value of the cash-generating unit to which the asset belongs is used. Intangible assets with an indefinite life, including goodwill, are to be tested annually, or at any time there are indications of a possible loss, in order to determine in there are any impairment losses. The recoverable amount is the greater of the fair value, net of selling expenses, and the value in use. In compu- ting the value in use, the estimated future cash flows are discounted to their present value by using a pre-tax interest rate that reflects the time value of money and the specific risks of the activity. If the recoverable amount of an asset (or a cash-generating unit) is estimated to be less than the asset’s carrying value, the carrying value is reduced to the recoverable value. An impairment loss is then recorded in the profit and loss statement, except in the case of land or buildings when the impairment loss is accrued to the respective revaluation reserve. The foregoing does not apply to buildings held for investment purposes, which are revalued. Should the reasons for the writedown no longer exist, the carrying value of the asset (or the cash-generating unit), with the exception of goodwill, is increased to the new value derived from the estimate of recoverable value, to the extent it does not exceed the carrying value that the asset would have had if the impairment loss were not to have been recorded. The reinstatement of value is recorded in the profit and loss statement as booked, unless the asset is stated at fair value, in which case the reinstatement of value is booked to the revaluation reserve.

> Customer receivables and other receivables

Receivables are initially booked at their nominal value (representative of the fair value of the transaction) and are valued thereafter at amortized cost, net of any impairment losses recorded in the profit and loss statement when there is objective evidence that the receivables have experienced a loss in value. The writedowns are determined by the difference between the carrying value of the receivables and the present value of the estimated future cash flows (which are discounted by using the effective interest rate). In the case of short-term trade receivables, the impact of discounting is negligible, and the valuation at amortized cost is thus equiva-

Sopaf S.p.A. Financial Statements as of 31.12.2007 Financial Sopaf| Sopaf S.p.A. lent to nominal value, net of any impairment losses. 169

> Factoring of receivables

Factored receivables are eliminated from the balance sheet only if all of the risks and benefits in relation to their ownership are transferred to the factor. Receivables factored with or without recourse that do not meet such criterion continued to be carried on the balance sheet, even if the legal title to the receivables has been transferred, with a financial liability of a corresponding amount booked to offset the advance amount received.

> Cash and cash equivalents

> Convertible bonds

The component of the convertible bonds that has the characteristics of a liability is booked as a payable net of the costs of issuance. At the date of issue, the fair value of the debt component is figured by using the market price of an equivalent non-convertible bond; such amount, which is classified as long-term debt, is adjusted using the amortized cost method until the conversion or reimbursement date. The residual part of the nominal value of the bond is booked as the conversion option, which is reported as part of shareholders’ equity, net of the related costs of issuance. The value of the conversion option does not undergo any changes in subsequent years. The costs of issuance are split proportionally between the debt and equity components of the bond at the date when the costs are first reported.

> Due to banks

> Trade accounts payable and other payables

Trade accounts payable and other payables are stated on the basis of amortized cost which, considering the characteristics and the due dates of the payables, is generally equal to nominal value.

> Pension and employment-severance liabilities

amount to be disbursed upon the termination of the employment relationship, and then discounted using the projected unit credit method in order to come up with a reasonable estimate of the amount of the benefits which the employees have earned in return for their service in current and prior periods. The Group has not adopted the corridor method, and therefore, actuarial gains (losses) are booked as earned (incurred) directly to the profit and loss statement.

> Provisions

The provisions to the reserves for risks and charges are made against current legal or implicit obligations resulting from past events whenever the request for the fulfilment of the obligation is deemed probable. The provisions are booked on the basis of the best estimate available, at the end of the accounting period, of the costs required for fulfilling the obligations, and are discounted if the effect thereof is significant. Any changes in the estimate are booked to the profit and loss statement during the period when the change is made.

> Own shares

Own shares are booked as a reduction of shareholders’ equity. The original cost of own shares and the revenues from any subsequent sale thereof are booked as changes in shareholders’ equity.

> Dividend income

Dividends are booked during the period in which the distribution of earnings is approved and only if resulting from a distribution made subsequent to the acquisition of a shareholding. Should dividends be distributed from the reserves set up by a company in which an investment is held before the investment is made, such dividends are booked as a reduction in the cost of the investment.

> Recognition of revenues

Sales are booked upon the actual transfer of the material benefits and risks related to the transfer of ownership, while service revenues are booked upon the rendering of the service.

> Financial income and charges

Interest income and interest expense (inclusive of the interest expense on the bonds) are booked in accordance with the effective interest-rate method.

> Taxes

The provisions for income taxes for the year are determined on the basis of prevailing regulations. Income taxes are booked to the profit and loss statement, except for those taxes related to accounts directly charged or credited to shareholders’ equity, in which case the fiscal effects are directly booked to shareholders’ equity.

Sopaf S.p.A. Financial Statements as of 31.12.2007 Financial Sopaf| Sopaf S.p.A. The tax provisions for the year include current and deferred taxes. 171

Current taxes are computed on taxable income for the year. Taxable income differs from the income reported in the profit and loss statement since it excludes revenues (expenses) that are taxable (deductible) in other periods, and it also excludes amounts that may never be taxable or deductible. The liability for current taxes is calculated by using tax rates in effect as of the date of the financial statements. Deferred tax assets and deferred tax liabilities are determined on the basis of timing differences that arise between the values of assets and liabilities used for financial reporting purposes and the corresponding values used for taxation purposes. Deferred tax assets arising from timing differences and/or from tax loss carryforwards are booked only to the extent that it is probable that future taxable income will be available against which such deductible timing differences and/or tax loss carryforwards can be used. Deferred tax assets and liabilities are not booked if the timing differences arise from goodwill or from the initial registration of other assets or liabilities in transactions (and not business combinations) that do not have any influence on income reported in the financial statements or on taxable income. The carrying value of the deferred tax assets is reviewed at each balance-sheet date, and reduced to the extent that it is no longer probable that future taxable income will be sufficient to allow the total or partial recovery of such assets. Deferred taxes are computed on the basis of tax rates that the Company expects to be in effect as of the date on which the benefits are to be realized or the liabilities are to be extinguished. Deferred tax provisions are booked to the profit and loss statement, with the exception of deferred taxes on amounts booked directly to shareholders’ equity, in which case the related deferred taxes are also booked to shareholders’ equity. Deferred tax assets and deferred tax liabilities are offset whenever there is a legal right to offset current tax assets and current tax liabilities, and when the assets and liabilities refer to tax positions with the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis.

> Earnings per share

Earnings per share is equal to Sopaf’s net profit divided by the number of ordinary shares outstanding. For diluted earnings per share, the earnings attributable to the holders of the ordinary capital instruments of the holding company, Sopaf S.p.A., are adjusted to take into account the effects of all potential ordinary shares with a dilutive effect.

> Use of estimates

The preparation of the financial statements pursuant to IFRS and of the notes to the financial statements requires the use of estimates and assumptions that have an effect on the balance-sheet values of assets and liabilities and on the disclosures in relation to potential assets and liabilities as of the date of the financial statements. The actual results may be different from the estimates. The estimates and assumptions are reviewed periodically, and the effects of any change are reflected in the profit and loss statement during the period in which an estimate is revised if the revision effects only such period, or in other, subsequent periods if the revision affects both the current and future years. Sopaf S.p.A. Financial Statements as of 31.12.2007 Financial Sopaf| Sopaf S.p.A. 172

> Adoption of the new accounting principles and interpretations issued by the IASB

The IASB issued the following documents that are initially applicable as of 1 January 2007 and have already been ratified by the European Union: • IAS 1 - Presentation of financial statements: supplemental information in relation to capital: amendment issued in August 2005, and effective as of 1 January 2007; • IFRS 7 - Financial instruments: supplemental information: issued in August 2005, and effective as of 1 January 2007; • IFRIC 8 - Framework of application of IFRS 2: issued in January 2006, and effective as of 1 January 2007; • IFRIC 9 - Revaluation of the embedded derivatives: issued in March 2006, and effective as of 1 January 2007; • IFRIC 10 - Interim financial statements and impairment: issued in July 2006, and effective as of 1 January 2007.

It is noted that none of the aforementioned documents had any significant effect on the shareholders’ equity or on the earnings for the period.

> Merger by Incorporation of Subsidiary Companies - Introduction

The merger by incorporation of a wholly owned company is a transaction outside of the framework of application of IFRS 3 inasmuch as it does not entail the attainment, on the part of one of the businesses involved in the combination, of the control of the other company in which the investment is held. With the approach adopted for these transactions, the emphasis is placed on (i) the fact that the companies involved in the transaction are affiliated with a group and (ii) the cost sustained by the group for the original acquisition of the company being incorporated. This approach is consistent with the contents of the research document published by ASSIREVI OPI 2 “Accounting treatment of mergers in the annual financial statements” which requires the maintenance of the principle of continuity of values, in absence of an acquisition with an actual economic exchange with third parties. The cost sustained for the acquisition of the incorporated company and the allocation of the same to the current values of the assets and liabilities of the incorporated company and to goodwill are disclosed in the consolidated financial statements of the group incorporating

Sopaf S.p.A. Financial Statements as of 31.12.2007 Financial Sopaf| Sopaf S.p.A. the company. In other words, the merger for the purpose of restructuring causes the convergence of the 173 consolidated financial statements of the incorporating company towards the non-consolidated financial statements of the incorporating company after the merger, thereby triggering the so-called “legal consolidation”. In addition, the transaction of merging wholly owned companies, which causes a changeover from indirect to direct control and the continuity of the values with respect to the consolidated financial statements is a transaction whereby the effects of the merger need to be made retroactive to the beginning of the year for accounting purposes, including with reference to the revenues and expenses of the incorporated company.

The representation of the aforementioned merger is also consistent with the notion of the Group as an economic entity. The Company also uses the economic-entity criterion as the basis for booking the acquisitions of additional shareholdings after having already acquired a controlling interest. Such criterion values the group as a single entity, and exchanges between shareholders as equity transactions and accordingly, the difference between acquisition cost and the book value of the interests acquired is booked to consolidated shareholders’ equity. The aforementioned accounting treatment is also consistent with the provisions of the ASSIREVI OPI 3 research document “Treatment in consolidated financial statements of the acquisitions of incremental interests after the acquisition of the controlling interest”, which have been confirmed by IASB’s recent issuance of a revised IAS 27.

> Merger by Incorporation of Subsidiary Companies, LM Real Estate S.p.A., ACAL S.p.A. and Ida S.r.l., into Sopaf S.p.A.

Sopaf S.p.A.’s merger-by-incorporation of the wholly and directly controlled subsidiaries, LM Real Estate S.p.A., Acal S.p.A. and IDA S.r.l., was approved on the basis of shareholder resolutions dated 16 November 2007 for the incorporated companies and 27 November 2007 for the incorporating company, and was perfected with a merger agreement dated 14 December 2007 as part of the implementation of a merger plan that was approved by shareholder resolutions dated 17 October 2007. The merger took place on 14 December 2007, and was registered on the Milan Business Register on 19 De- cember 2007. As a result of the merger, Sopaf S.p.A. took over all of the rights set out in Article 2504-bis of the Italian Civil Code with respect to the wholly owned subsidiaries, LM Real Estate S.p.A., Acal S.p.A. and IDA S.r.l., with the effective date thereof for tax and accounting purposes made retroactive to 1 January 2007 for the purpose of Sopaf S.p.A.’s financial statements, as provided by Article 2504-bis of the Italian Civil Code. Though effected with the purpose of reorganizing activity within the Group, the non-recurring transaction did not entail any economic exchange with third parties in terms of the businesses that were combined, and did not entail the creation of a new reporting entity inasmuch as the financial statements of the incorporating company were already reflected, following the merger, in the consolidated financial statements of the Group.

In determining the accounting treatment that would represent the aforementioned merger-by-incorporation transaction and that would be consistent with the IAS Framework and with the criteria of IAS 8.10, the critical element is represented by the fact that the accounting principle selected for representing the merger-by-incorporation transactions must reflect the economic substance of the same, regardless of the legal form of the transactions. Accordingly, from the standpoint of the Group’s reorganization and not that of the acquisition of control of another entity, the preference in terms of accounting treatment needs to go to those principles Statements as of 31.12.2007 Financial Sopaf| Sopaf S.p.A. 174

suitable for ensuring the continuity of values. In considering the possibilities for the accounting treatment of the merger in the financial statements of the incorporating company, it is noted that the merger-by-incorporation presents some characteristics in common with the category of transactions between jointly controlled entities, i.e. transactions that cause the transfer of assets or shares, but not necessarily the transfer of control of a business, and transactions that are carried out entirely within a group. Accordingly, as indicated previously, the provisions of the ASSIREVI OPI 2 and OPI 3 documents were considered with regard to the accounting treatment of the transactions.

The application of the principle of continuity appears consistent with the IAS Framework, and in particular, with the postulate of historical cost, and may thus constitute a valid reference for the accounting treatment of a merger of a wholly owned company, inasmuch as: • The FASB has adopted a framework that is consistent with the IAS Framework, according to the criteria reported in IAS 8; • The principle of continuity of values of the consolidated financial statements appears suitable for reflecting the economic substance of a transaction that is executed entirely within a group and a transaction that does not entail exchanges with third-party businesses; • Making the accounting effects of the transaction retroactive to the first day of the year in which the transaction occurred is contemplated by national laws on the subject of mergers.

In addition, it is noted that national accounting principles on mergers do not appear to make up for the absence of a specific IFRS about mergers by incorporation of wholly owned companies inasmuch as: • national accounting principles allow for allocating the equity difference from the elimination of intangible assets existing as of the date of the merger (even they are generated internally) during the period taking place between the acquisition of the shareholding and the merger date (this appears in contrast with the principle for which the internally generated intangible assets may not be capitalized); • national accounting principles, which allow for allocating the equity difference from the elimination to the assets and liabilities of the companies participating in the merger, appear to be in contrast with the IFRS principles that allow for the revaluation of balance-sheet accounts not subject to any economic exchange only after the adoption, on the part of the entity preparing the financial statements, of a valuation criterion other than cost.

Accordingly, the allocation of the merger equity difference from elimination, as contemplated by national accounting principles, appears to be in contrast with the principle of historical cost and precludes the possibi- lity of the recognition, after the merger, of the incorporating company’s actual investment in the incorporated company as of the acquisition date. The application of the principle of the continuity of values means recognizing the relevance of the pre- existing relationship of control between the companies involved in the merger transaction, as well as the cost sustained by the incorporating company for the original acquisition of the incorporated company. Such cost, as well as the allocation of the same to the current values of the assets and liabilities of the incorporated company and to goodwill, is shown in the consolidated financial statements of the group made up of the

Sopaf S.p.A. Financial Statements as of 31.12.2007 Financial Sopaf| Sopaf S.p.A. incorporating company and incorporated company. In other words, the merger with a restructuring nature 175 causes the convergence of the consolidated financial statements of the incorporating company towards the non-consolidated financial statements of the incorporating company after the merger, thereby triggering the so-called “legal consolidation”. The inclusion of the incorporated company’s assets in the incorporating company’s non-consolidated financial statements should not entail the recognition of higher current values of such assets compared with the values reported in the consolidated financial statements, nor should it result in incremental goodwill, inasmuch as the merger by incorporation does not entail any economic exchange with third parties, nor an acquisition in an economic sense.

> Merger by incorporation of LM Real Estate S.p.A.

For the purposes of Sopaf S.p.A.’s non-consolidated financial statements for the year ending 31 December 2007, the merger by incorporation of LM Real Estate into Sopaf S.p.A. entailed the maintenance of the same effects arising from the elimination of the shareholding as effected upon the preparation of the Group’s consolidated financial statements. Accordingly, the elimination of the investment in LM Real Estate S.p.A. sets the book value of the shareholding of €51,975,000 against the net assets of €82,291,000 in the consolidated statements as of 1 January 2007 (inclusive of a fair value reserve equal to €51,459,000).

Therefore, the merger transaction gives rise to a difference of €25,904,000, as a reduction of shareholders’ equity; the difference includes: • €21,143,000, from the difference between the value of the investment in LM Real estate S.p.A. eliminated for the effect of the merger (€51,975,000) and the shareholders’ equity of the incorporated company attributable in the consolidated financial statements as from the date of the Group’s acquisition of control of LM Real Estate S.p.A. not inclusive of the fair-value valuation reserve (€30,832,000) referring to the investment in Omniapartecipazioni (€51,459,000) and booked after the acquisition of control; • €4,761,000, from the adjustment of the capital gains arising from the sales of the shareholdings in Omniapar- tecipazioni S.p.A. and IMMSI S.p.A. in 2007, for the purpose of recomputing the value thereof, by comparing the sale prices with the cost of Omniapartecipazioni S.p.A./IMMSI S.p.A. on a basis consistent with the values transferred upon the merger with effect as of 1 January 2007 and with the values of reference for the purpose of the consolidated statements. Sopaf S.p.A. Financial Statements as of 31.12.2007 Financial Sopaf| Sopaf S.p.A. 176

In particular, the merger difference to be allocated to Sopaf S.p.A.’s non-consolidated statements as of 1 Janua- ry 200 7 is as follows:

In € 000’s LM Real Estate S.p.A.

Non-current assets 94,629 Current assets 22,569 Cash and cash equivalents 1 Total assets 117,199 Financial liabilities (10,235) Other liabilities (6,695) Non-current liabilities (16,929) Financial liabilities (16,693) Other liabilities (1,285) Current liabilities (17,979) Total liabilities (34,908)

Net assets 82,291 Valuation reserves on shareholding in Omniapartecipazioni S.p.A. (51,459) Net assets as of 01/01/2007 (A) 30,832 Shareholding as of 1 January 2007 (B) (51,975) Merger difference (A-B) (21,143) Adjustment of capital gains on sales of shareholdings in (4,761) IMMSI S.p.A. during 2007 (C) Merger difference (A-B+C) (25,904)

Noting that the investment in LM Real Estate S.p.A. eliminated upon the merger was transferred in the prior year to Sopaf S.p.A. in advance of the liquidation of LM & Partner SCA, the merger difference allocated as a reduction of shareholders’ equity originates mainly from the higher values of the acquisition of the incremental interests of the controlling interest in LM & Partners SCA compared with the corresponding portion of shareholders’ equity resulting as of the date of the related business combination, excluding the capital increases and revaluation booked thereafter. Accordingly, the difference from the LM Real Estate S.p.A. merger corresponds to an equivalent consolidation difference coming from the acquisition of interests in the subsidiary company, LM & Partners SCA, subsequent to the attainment of the control which has been booked as a reduction of consolidated shareholders’ equity inasmuch as it corresponds to the higher acquisition cost of the incremental holdings in LM & Partners SCA and the value in the consolidated statements of the respective minority interests acquired. The following is noted with reference to the nature of the difference from the acquisitions of additional holdings in the subsidiary company, LM & Partners SCA, which are the origin of part of the book value of the investment in LM Real Estate S.p.A.: • Such difference originates in the consolidated statements from the comparison between the price paid for the acquisitions of additional shareholdings and the value of the respective minority interests acquired. The transactions covering the acquisition of incremental interests with respect to the controlling inte-

Sopaf S.p.A. Financial Statements as of 31.12.2007 Financial Sopaf| Sopaf S.p.A. • 177

rest do not figure as acquisitions of shareholdings that fall within the framework of application of IFRS3 inasmuch as that principle applies only to transactions involving the acquisition of control by the entity acquiring the assets of the acquired business. • In the absence of accounting treatment specified by IAS/IFRS, Sopaf has adopted, as indicated previously, the economic-entity criterion with the consequent allocation of the difference between the acquisition price and the shareholders’ equity of the minority interests included in the Group’s shareholders’ equity.

The acquisitions of the incremental interests of LM & Partners SCA from minority interests after having already attained control of the subsidiary have been accounted for in the consolidated financial statements as an equity transaction in accordance with the “economic-entity theory” which gives a group precedence over a company, placing the emphasis on the Group as a single entity. From this perspective, the subsequent purchases of minority holdings do not entail any effects on invested capital, an expression of the resources controlled overall by the buyer, but they are allocated to the Group’s shareholders’ equity. In accordance with such theory, the acquisition of minority holdings in LM & Partners SCA and, indirectly, the interests in LM Estate S.p.A., is an equity transaction representative of a reimbursement of equity to the minority shareholders. The following is noted in this regard: • The equity purchased from the minority shareholders does not include the fair-value valuation reserve with respect to Omniapartecipazioni S.p.A. that was booked by LM Real Estate S.p.A. inasmuch as it corresponds to a capital gain implied on the holding but not realized by the Group at the time of the acquisition. Such valuation reserve corresponds to a reserve not available for distribution, and inasmuch as such, theo- retically not payable to the minority shareholders. • The value differential booked on the investment in Omniapartecipazioni S.p.A. for adjusting the investment’s cost to the related fair value needs to continue to have a direct correlation with a corresponding valuation reserve until the time that the investment is converted into cash. • From the standpoint of the economic-entity theory, the risk associated with the value of the entire holding in Omniapartecipazioni S.p.A. is vested with the controlling group until the time that the investment is converted into cash. • Any higher value of investment sustained by the Group for acquiring minority interests vis-à-vis the related value of book equity due to the minority shareholders is to be ascribed to the Group’s shareholders’ equity as an incremental cost sustained for the consolidated net assets. • The valuation reserve reported by LM Real Estate S.p.A. with reference to the adjustment of the fair value of the minority holding in Omniapartecipazioni S.p.A. is recomputed for the consolidated financial statements, including following the acquisition of the minority interests in LM & Partners SCA and the related indirect subsidiary, LM Real Estate S.p.A., ascribing the corresponding quota attributable to the minority interests acquired as a reduction of the Group’s shareholders’ equity.

As a result of the treatment adopted for the Group’s consolidated financial statements, the valuation reserve reported by LM Real Estate S.p.A. and referring to the fair value of the minority holding in Omniapartecipa- zioni S.p.A. (€51,459,000) is recomputed for the consolidated financial statements, including after the acquisition of both the minority holdings in LM & Partners SCA and the related indirect subsidiary, LM Real Estate

S.p.A. Statements as of 31.12.2007 Financial Sopaf| Sopaf S.p.A. 178

Accordingly, consistent with such orientation, the valuation reserve with respect to Omniapartecipazioni is kept aligned with the differential recorded by LM Real Estate S.p.A. on the value of the investment in Omnia- partecipazioni S.p.A. in order to adjust the acquisition cost to the corresponding fair value. In conclusion, as a result of the accounting treatment adopted for the consolidated financial statements, the elimination of the 100% investment in LM Real Estate S.p.A. following the merger entails the alignment of the effects in the shareholders’ equity in Sopaf’s non-consolidated financial statements, reporting the aforementioned difference as an equity transaction that reduces shareholders’ equity

> Merger by incorporation of IDA S.r.l.

For the purposes of Sopaf S.p.A.’s non-consolidated financial statements for the year ending 31 December 2007, the merger by incorporation of IDA S.r.l. into Sopaf S.p.A. entailed the maintenance of the same effects arising from the elimination of the shareholding as effected upon the preparation of the Group’s consolidated financial statements. Accordingly, the elimination of the investment in IDA S.r.l. sets the book value of the shareholding of €71,000 against the net assets of €1,063,000 in the consolidated statements as of 1 January 2007. The merger difference of €992,000 consists of the fair-value valuation reserve in relation to the minority holding in SADI S.p.A ascribed, on a basis consistent with the consolidated financial statements, to an increase in shareholders’ equity in Sopaf S.p.A. non-consolidated statements. In particular, the merger difference to be allocated to Sopaf S.p.A.’s non-consolidated financial statement as of 1 January 2007 is as follows:

In € 000’s IDA S.p.A.

Non-current assets 6,380 Current assets 0 Cash and cash equivalents 136 Total assets 6,516 Financial liabilities 4,850 Other liabilities 488 Non-current liabilities 5,338 Financial liabilities - Other liabilities 114 Current liabilities 114 Total liabilities 5,452

Net assets 1,063 Consolidation effects for purpose of determination of merger difference: Valuation reserves on investment in Sadi S.p.A. (992) Net assets as of 01/01/2007 71

Shareholding as of 1 January 2007 (71) Merger difference - Sopaf S.p.A. Financial Statements as of 31.12.2007 Financial Sopaf| Sopaf S.p.A. 179

> Merger by incorporation of Acal S.p.A.

For the purposes of Sopaf S.p.A.’s non-consolidated financial statements for the year ending 31 December 2007, the merger by incorporation of Acal S.p.A. into Sopaf S.p.A. entailed the maintenance of the same effects arising from the elimination of the shareholding as effected upon the preparation of the Group’s consolidated financial statements. Accordingly, the elimination of the investment in Acal S.p.A. sets the book value of the shareholding of €10,550,000 against the net assets of €2,913,000 in the consolidated financial statements as of 1 January 2007. The comparison between the value of the investment and the related net assets in the consolidated financial statements yields a consolidation difference of €10,430,000 attributable to the investment held by Acal S.p.A. in Delta S.p.A. Such orientation is maintained on a basis consistent with the consolidated financial statements for the purpose of the treatment of the merger by incorporation of Acal into Sopaf, and such difference has been booked to Sopaf S.p.A. non-consolidated financial statements as an increase in the financial assets available for sale in relation to the minority holding in Delta S.p.A. Such accounting treatment gives rise to a merger reserve of €2,793,000. The merger reserve is attributable to Acal’s earnings for the year of 2006, and in particular, to the recognition of Acal’s portion of the earnings of the then affiliate company, Delta, which was valued with the net equity method for the purpose of the consolidated financial statements. The book value of the investment in Delta in Sopaf’s consolidated statements as of 31 December 2006 was €49,738,000, and in addition to the acquisition cost (€37 million) included the Acal consolidation difference (€10.4 million) as well as the pro-rata earnings (€2.3 million). In particular, the merger difference to be allocated to Sopaf S.p.A.’s non-consolidated financial statement as of 1 January 2007 is as follows:

In € 000’s Acal S.p.A.

Non-current assets 40,435 Current assets 6 Cash and cash equivalents 258 Total assets 40,699 Financial liabilities - Other liabilities 22 Non-current liabilities 22 Financial liabilities 37,734 Other liabilities 30 Current liabilities 37,764 Total liabilities 37,786

Net assets 2,913 Consolidation effects for purpose of determination of merger difference: Increase in investment in Delta S.p.A. 10,430 Net assets as of 01/01/2007 13,343

Shareholding as of 1 January 2007 (10,550)

Merger difference 2,793 Statements as of 31.12.2007 Financial Sopaf| Sopaf S.p.A. 180

> Balance Sheet - Assets

> Non-current assets

> 4 Intangible fixed assets The account balance is equal to €157,000, reflecting an increase of €106,000 as shown in the table below:

Intangible Fixed Assets Software Software Trademarks Total Licenses

Balances as of 01/01/2007 (A) 11 34 6 51 Changes during the year: - Merger 01/01/2007 - Acquisitions 5 182 187 - Disposals, net - - - - - Writedowns - - - - - Amortization (6) (74) (1) (81) Total changes (B) (1) 108 (1) 106 Balances as of 31/12/2007 (A)+(B) 10 142 5 157 Including: - Historical cost 46 223 6 275 - Accumulated amortization (36) (81) (1) (118) Net carrying value 10 142 5 157

The account mainly includes investments in software and licenses to use software; the changes in the account balance include investments of €187,000, inclusive of direct amortization of €81,000. Sopaf S.p.A. Financial Statements as of 31.12.2007 Financial Sopaf| Sopaf S.p.A. 181

> 5 Tangible fixed assets The account balance is equal to €23,157,000, with an increase of €22,905,000, as shown in the table below detailing the components of the account and the changes during the year. The changes include the effects of the mergers as of 1 January 2007 (€6,200,000), purchases during the year (€17,300,000), disposals, net of accumulated depreciation (€29,000), and depreciation (€566,000):

Tangible Fixed Assets Land Buildings General Plant Furnishings Other Assets Total and Equipment

Balances at 01/01/2007 (A) 210 42 252 Changes during the year: - Merger 5,377 819 4 6,200 - Acquisitions 11,226 2,800 1,760 1,514 - 17,300 - Disposals (57) (4) (61) - Use of accumulated depreciation 32 - 32 - Writedowns - Depreciation (177) (126) (248) (15) (566) Total changes (B) 11,226 8,000 1,634 2,060 (15) 22,905 Balances at 31/12/2007 (A)+(B) 11,226 8,000 1,634 2,270 27 23,157 Including: - Historical cost 11,226 8,202 1,760 2,654 56 23,898 - Accumulated depreciation - (202) (126) (384) (29) (741) Net carrying value 11,226 8,000 1,634 2,270 27 23,157

The most significant increases regarded: • buildings, general plant and land as a result of: - the effects of the merger of the former subsidiary company, LM Real Estate S.p.A., which as of 31 Decem- ber 2006 had capitalized part of real estate lease in relation to the portion of a building in Via Mercato, Milan that was already available for use; - four real estate leases agreed with Locat S.p.A. following the delivery and testing reports dated 13 Decem- ber 2007; as a result of the merger by incorporation of LM Real Estate S.p.A., Sopaf is the current lessee; the contracts refer to buildings located at Via Mercato 5 and Foro Buonaparte 24 in Milan; the land underneath the buildings and the general plant have been valued separately, on the basis of a special appraisal carried out by an independent expert; • office furnishings and fixtures covered by other financial leases executed as part of the completion of the interior design of office space; • office equipment purchased as part of an effort to restructure and strengthen the information system and the data transmission network, partly in relation to the full start-up of the overall systems project for the offices located at Foro Buonaparte 24, most of which was carried out in 2007.

Depreciation was computed for the assets under financial lease only, in accordance with the estimated useful life provided by the previously mentioned independent expert. Sopaf S.p.A. Financial Statements as of 31.12.2007 Financial Sopaf| Sopaf S.p.A. 182

> 6 Shareholdings The account balance of €168,827,000 reflects an increase of €23,117,000, as shown in the table below:

31/12/2007 31/12/2006

Investments in subsidiary companies 77,317 128,396 Shareholdings in affiliate companies/jointly controlled companies 91,510 17,314 168,827 145,710

> Shareholdings in subsidiary companies

The account balance of €77,317,000 reflects a net decrease of €51,079,000, as shown in the table below:

Shareholdings in subsidiary companies 31/12/2006 Effect of Increases Decreases Reclass. 31/12/2007 Merger

Acal S.p.A. 10,550 - - (10,550) 0 Cutter S.a.r.l. 586 - - (536) 50 Ida S.r.l. - - 150 (150) 0 LM & Partners SCA (in liquidation) 43,845 - 8,376 - 52,221 LM IS S.a.r.l. (in liquidation) 100 - - (100) 0 LM LS S.p.A 3,536 - 1,464 - 5,000 LM Real Estate S.p.A. 51,357 - 618 (51,975) 0 Mercato 24 S.r.l. - 23,697 - (23,697) 0 PWM Sgr S.p.A. 3,826 - - - 3,826 Sopaf Capital Management Sgr.p.a. - - 2,934 - 926 3,860 Star Venture I S.c.p.A. (in liquidation) 9,411 - - (9,411) 0 Tenerani S.r.l. - - 1,000 (900) 100 Vector 102 S.r.l. - - - - 0 Tergeste Fondo immobiliare 5,185 4,575 2,500 - 12,260 Total shareholdings in subsidiary companies 128,396 28,272 17,042 (97,319) 926 77,317 Sopaf S.p.A. Financial Statements as of 31.12.2007 Financial Sopaf| Sopaf S.p.A. 183

The following transactions were carried out as part of the reorganization project undertaken by the holding company: • merger by incorporation of Acal S.p.A., LM Real Estate S.p.A. (which, in turn, had incorporated Mercato 24 S.r.l., a company incorporated with the non-proportional spin-off of Omniapartecipazioni S.p.A.) and Ida S.r.l.; • completion of the liquidation initiated in 2006 in relation to the subsidiaries, LM IS S.a.r.l. and Star Venture I Scpa; • acquisition as of 1 January 2007 of the residual interests in LM & Partners SCA (in liquidation).

Following is some information in relation to the principal changes occurring in the account in 2007: • The elimination of the value of the investment in Acal S.p.A. occurred upon the merger of the subsidiary company, as described above. • The decrease in the investment in the subsidiary company, Cutter S.a.r.l., occurred following the company’s waiver of credit and Sopaf’s recording debt to offset the value of the investment. • The increase of the investment in LM & Partners SCA is attributable to the assignment, following the liquidation of LM IS S.a.r.l., a 100% subsidiary of Sopaf S.p.A., of the investment in LM & Partners SCA held by the liquidated company, and, as previously indicated, by the acquisition of the remaining interests held by minority shareholders for €8 million. • On 20 December 2007, the liquidation of Sopaf S.p.A.’s 100% subsidiary, LM IS S.a.r.l. was completed. The assets and liabilities from the related liquidation were booked thereafter, and in particular, Sopaf S.p.A. booked the following investments: 7.67% of the investment in AFT for €51,000, 10.84% of LM & Partners SCA for €373,000, and 13,89% of LM LS for €30,000. A capital gain of €178,000 was booked after the liquidation. • At the end of December 2007, Sopaf S.p.A. subscribed its portion of a capital increase for the subsidiary company, LM LS S.p.A., for an amount equal to €1.4 million. • The increase in the investment in LM Real Estate S.p.A. is related to the acquisition from the subsidiary company LM IS S.a.r.l. (prior to the liquidation of latter) of its holding in LM Real Estate S.p.A. and the acquisition of remaining 0.03% from a related party. The acquisition values were determined on the basis of a valuation prepared by an independent third party; the elimination of the value of the investment occurred following the merger by incorporation in Sopaf S.p.A. It is noted that the increase of €618,000 shown in the preceding table consisted of: €181,000 in relation to the acquisition of 0.03% from Giorgio Magnoni and 437,000 in relation to the acquisition of 10.81% from the 100% subsidiary LM IS. It is noted that the cost of the acquisition from LM IS (€8,542,000) was reduced, thereby decreasing the capital gain from the liquidation of LM IS inasmuch as the acquisition of LM Real Estate figures as a transaction under common control. • Following the procurement of the authorization from the regulatory authorities, on 6 April 2007 and 16 April 2007, transactions were perfected for the acquisition of 70% of Cartesio Alternative Investments Sgr S.p.A for a total amount equal to €2.9 million. Following such acquisitions, the 30% holding that had been classified as an affiliate for €926,000 as of 31 December 2006 was reclassified in this account. • Following the liquidation of Star Venture I S.c.p.A. finalized in June 2007, the value of the investment was eliminated. The liquidation entailed the realization of a capital gain equal to €1.7 million.

• Sopaf Real Estate Management Alternative Sgr S.p.A. was incorporated on 6 March 2007 (and was thereafter Statements as of 31.12.2007 Financial Sopaf| Sopaf S.p.A. 184

transformed into a limited liability company and renamed Tenerani S.r.l.); the Sgr’s initial share capital was equal to €1 million. With the transformation, which was the result of the Group’s decision to change the strategic orientation of the company (which had originally be set up as a company to manage real estate hedge funds), a resolution was passed to reduce the company’s capital by €900,000, since the higher capitalization was no longer necessary. • Following the incorporation of LM Real Estate S.p.A., Sopaf S.p.A. subscribed another 183 units of the Ter- geste Fund, a fund that re-opened subscriptions during the year in favour of the shareholders for a total of €2.5 million, so as to equip itself with the resources needed for supporting the financial requirements of the companies in which it is investing. On 17 December 2007, the Bank of Italy approved the fund’s transformation from an ordinary fund reserved for qualified investors to a hedge fund; accordingly, upon the re-opening of the accounts as of 1 January 2008, the funds management company proceeded to annul the 474 existing units and to combine those units into 30 units of €500,000 each.

> Shareholdings in affiliate companies/jointly controlled companies

The account balance of €91,510,000 reflects a net increase of €74,196,000, as shown by the following table:

Shareholdings in affiliate companies 31/12/2006 Effect of Increases Decreases Reclass. 31/12/2007 Merger

AFT S.p.A. 5,973 - 51 (2,056) (3,968) 0 Area Life Int.ass.Limited - - 8,385 - 8,385 AsmLomellina Inerti S.r.l. - - 30 - 30 Banca Network S.p.A. - - 19,841 - 19,841 Sopaf Capital Management Sgr S.p.A. 926 - - (926) 0 Delta S.p.A. - 49,738 - (49,738) 0 Essere S.p.A. 2,051 - - 2,051 Five Stars S.A. 100 - (30) 70 Nearco Invest S.a.r.l. - - 1,455 - (1,455) 0 Petunia S.p.A 495 - 39,436 - 39,931 Polis Sgr. p.A. 7,729 - - 7,729 PWM Aiggig Multiman fund - 14,500 (1,521) 12,979 S.F.E.R.A. S.r.l. 40 - 454 - 494 VOLARE Group S.p.A. in Amm. Straord. - - - 0 Total shareholdings in affiliate companies 17,314 49,738 84,152 (3,607) (56,087) 91,510 Sopaf S.p.A. Financial Statements as of 31.12.2007 Financial Sopaf| Sopaf S.p.A. 185

Following is some information in relation to the principal changes occurring in the account in 2007:

• With regard to the change in the affiliate, AFT, it is noted that Sopaf S.p.A. received 7.42% of AFT for a book value of €51,000 following the liquidation of LM IS, as indicated above; in addition, in March, Sopaf sold 21.02% of AFT S.p.A to the affiliate company, Nearco Invest S.a.r.l., which is 49% controlled by Sopaf; Near- co Invest was incorporated in 2007 with a payment of €1,455,000 by Sopaf. • At the end of 2007, the management of the holding company embarked on a series of initiatives to finalize the sale of a packet of industrial shareholdings (AFT S.p.A. (part of which is held by Nearco S.a.r.l.), Res Finco AG, SILA Holding Industriale S.p.A. and Green Bit S.p.A.) to several investors. Given the Group’s expectation that such shareholdings will be sold within one year, the directors reclassified the shareholdings in AFT S.p.A. and Nearco S.a.r.l. as assets held for sale in accordance with the provisions of IFRS 5. The estimated realizable value is presumed to be higher than the book value • On 26 September 2007, with reference to the agreements executed on 1 August 2007, Sopaf S.p.A. acquired 14.99% of the share capital of Banca Bipielle Network (now known as Banca Network Investimenti S.p.A.) for €19,689,000; as of the same date, Petunia S.p.A. acquired 49.75% of the share capital of Banca Network Investimenti S.p.A. for €65,346,000. In relation to the latter transaction, on 25 September 2007, the Petu- nia shareholders subscribed a capital increase and simultaneously made capital contributions to a special funding reserve in order provide Petunia with the financial resources needed to make the acquisition. In particular, Sopaf S.p.A. paid €29.3 million toward the capital increase and €10 million of capital contributions to the special funding reserve. The value of the investment in Banca Network also includes ancillary charges of €152,000; as of 31 December 2007, the Group’s share of losses for the most recent quarter amounted to €1.9 million. As illustrated in the report on operating performance, a new management team was appointed at the end of November 2007. Accordingly, the effects of the new management and the corresponding turnaround are expected to be seen in subsequent years. It is noted that the contractual clauses provide for the possible adjustment of the price in relation to the execution of agreements between the seller and Banca Network and the future performance of the bank itself. The effects of such provisions have not been considered in the computation of the acquisition cost inasmuch as they are currently not certain, including when taking into account the current reorganization taking place at the bank. • As of the same date, 26 September 2007, Sopaf S.p.A. and Aviva Previdenza S.p.A. perfected the purchase of 100% of the share capital of Area Life International Assurance Ltd (55% for Aviva and 45% for Sopaf) from the Banco Popolare Soc. Coop. Sopaf’s acquisition cost was equal to €8,257,000, plus ancillary charges of €128,000. In accordance with the local regulatory requirements, the shareholders, Sopaf and Aviva Pre- videnza, have stated their willingness to capitalize the company should the capitalization of the same no longer be satisfy the amount requested by the local authorities. • The investment in Delta S.p.A was booked following the merger by incorporation of Acal S.p.A. The chro- nology of the events described in the report on operating performance radically changed the governance of Delta, thereby eliminating the premise of significant influence as defined by IAS 28, the international accounting principle covering the reporting of investments in affiliate companies. Accordingly, in light of the events that occurred, the investment in Delta S.p.A. has been reclassified among “assets available for sale” and as a result, the investment is stated at fair value, with the changes with respect to the previous carrying value being booked directly to shareholders’ equity.

• The book value of the investment in Essere S.p.A. as of 31 December 2007 is above the valuation of the Statements as of 31.12.2007 Financial Sopaf| Sopaf S.p.A. 186

investment with the net equity method. Considering the company’s development prospects, possible extraordinary transactions currently under review and the recently approved business plan, the directors believe that the economic value per share is above the book value and that such difference does not represent impairment of value. • On 1 July 2007, the PWM AIGGIG Multimanager Fund was inaugurated. The hedge fund is managed by the subsidiary company, Private Wealth Management Sgr, in partnership with AIG Global Investment Group (the asset management arm of the U.S.-based AIG, a leader in financial and insurance services). The investment, initially equal to €14.5 million, was subsequently reduced by roughly €1.5 million as a result of units to third-party investors; the investment has been classified as an affiliate in light of Sopaf’s role as a financial sponsor together with AIG. • On 4 December 2007, Sopaf and other shareholders of Sfera S.r.l. subscribed a capital increase of €0.95 million. Prior to the capital increase, Sopaf S.p.A. held 50% of the capital. Sopaf’s subscription was equal to €450,000, thereby reducing its holding to 48% of the share capital.

> 7 Financial assets The account balance of €131,316,000 reflects an increase of €108,817,000 as shown in the table below:

31/12/2007 31/12/2006

Financial assets available for sale 129,690 15,344 Bond securities 792 732 Other loans and receivables 272 6,422 Security deposits 562 1 131,316 22,499 Sopaf S.p.A. Financial Statements as of 31.12.2007 Financial Sopaf| Sopaf S.p.A. 187

> Financial assets available for sale The changes in the account balance are shown in the table below:

Assets available for sale 31/12/2006 Effect of Increases Decreases Decreases Changes in Reclass. 31/12/2007 Merger Due to Fair value Spin-Off

Coronet S.p.A. 13,400 - - (13,400) - - - 0 Conafi Prestitò S.p.A. - - 4,467 - - (463) - 4,004 Delta S.p.A. - - - - - 46,262 49,738 96,000 Demofonte S.r.l. - 2 - - - 701 - 703 Ezechiele- Marketing and Sdcc Lda - - 47 - - - - 47 Fip-Fondo immobili Pubblici - - 18,179 - - 838 - 19,017 Formula Sport Group S.r.l. in bankruptcy ------0 Forza Quattro S.r.l. - 14 - (14) - - - 0 GABETTI Property Solution S.p.A. 1,622 - - (1,622) - - - 0 Industria degli Investments FCB S.p.A. ------0 (in liquidation) Management & Capitali S.p.A - - 3,805 (471) - 330 - 3,664 Newman Lowther Ltd 322 ------322 Noventi Field Venture LP - - 146 - - - - 146 Omniapartecipazioni S.p.A. - 81,790 - (11,185) (70,605) - - 0 IMMSI S.p.A. - - 70,605 (70,605) - - - 0 Parc Eolien De S. Riquer - - 16 - - - - 16 Raffaele Caruso S.p.A. - - 100 - - 1 - 101 Sadi S.p.A. - 6,210 - (495) - (770) - 4,945 Tessitura Pontelambro S.p.A. - - 345 - - (1) - 344 Value Sec Inv.Sicar SCA - - 381 - - - - 381 Total assets available for sale 15,344 88,016 98,091 (97,792) (70,605) 46,898 49,738 129,690

Following is some information in relation to the principal changes occurring in the account in 2007: • During 2007, the value of the investment in Coronet was reduced to zero, with a total writedown of €13.4 million. The writedown was necessitated as a result of the company’s failure to meet the objectives of the business plan presented in 2006 as demonstrated by the financial statements for the year ending 30 June 2007, and the non-recovery of profitability that entailed financial tensions and continued requests for recapitalization on the part of the shareholders. In addition, as explained in the Material Events Subsequent to Year End, on 30 January 2008, the extraordinary meeting of the shareholders of Coronet S.p.A. approved a resolution to break up and liquidate the company after having resolved the reduction of the share capital from €19 million to €1 million in order to cover the losses sustained to 30 June 2007 and the losses reflected in the company’s capital accounts as of 31 December 2007. • With reference to the events already described in detail in the report on operating performance, the investment in Delta S.p.A. was reclassified as an “asset available for sale” and valued at the fair value with the Sopaf S.p.A. Financial Statements as of 31.12.2007 Financial Sopaf| Sopaf S.p.A. 188

difference between the book value and the fair value as of 31 December 2007 booked to shareholders’ equity. The fair value calculation was determined by taking into account a valuation supplied by a leading investment bank appointed by Delta’s management that was drawn up to support the capital increase approved by the shareholders and fully subscribed by shareholders with the exclusion of Sopaf and Banco Popolare (pre-money valuation of the Delta Group equal to €456 million); the aforementioned valuation is supported by a study supplied to Sopaf S.p.A. by a leading investment bank; the directors computed the fair value of the investment on the basis of such information. • Following the merger by incorporation of LM Real Estate, Sopaf was holding 15% of Demofonte S.r.l.; the fair value as of 31 December 2007 reflects the price of acquisition in the event of the exercise of the option sold by Sopaf S.p.A. on 11 March 2008 to Helios S.r.l. • During the final quarter of the year, Sopaf purchased 1,743,000 shares of Conafi Prestitò S.p.A. for a countervalue equal to €4.5 million; the fair value as of 31 December 2007 reflects the market price as of such date. • On 7 November 2007, Sopaf S.p.A. perfected the acquisition of 128 Class A units of the closed-end real estate fund, FIP-Fondo Immobili Pubblici; the units were purchased from third-party investors on the secondary market for €18.2 million. It is noted that other units of the same fund are currently held by the Sopaf affiliate, Five Stars SA.; the fair value reported as of 31 December 2007 reflect the fund’s certified NAV at such date. • The Gabetti Property Solution S.p.A. shares acquired in the prior year were sold with the realization of a capital loss equal to €4,000. • With reference to the merger of Mercato 24 S.r.l. into LM Real Estate S.p.A., and the merger thereafter of LM Real Estate S.p.A. into Sopaf S.p.A., the table shows the IMMSI shares remaining from the sale effected by Mercato 24 S.r.l. in March 2007; such shares were sold during the second half of 2007. • With reference to the incorporation of LM Real Estate S.p.A., Acal S.p.A. and IDA S.r.l. into Sopaf S.p.A. with the accounting effects thereof made retroactive to 1 January 2007, it is noted that the financial assets con- tributed by (i) LM Real Estate included the investment in Omniapartecipazioni S.p.A. in the amount of €82 million, and (ii) Ida S.r.l. included the investment in Sadi S.p.A. in the amount of €6.2 million. It is noted that the investment in Omniapartecipazioni was partially sold by LM Real Estate (3.49%), and then decreased to zero with the sale of the assets arising from the non-proportional spin-off of the same that was perfected in March 2007 and is explained in detail in the report on operating performance. • In December 2007, Sopaf purchased 5,650,733 shares of Management & Capitali on the market for a countervalue equal to €3.8 million; 700,000 of the shares were sold thereafter; the value of the shares held as of 31 December 2007 was aligned to fair value, taking market prices into account. • The book value of €322,000 refers to the value of the call option held by Sopaf which is part of a convertible bond issued by the South African firm, Newman Lowther & Associates Ltd., and underwritten by Sopaf as disclosed below. Sopaf S.p.A. Financial Statements as of 31.12.2007 Financial Sopaf| Sopaf S.p.A. 189

> Bond securities

31/12/2006 Increases Decreases 31/12/2007

Newman Lowther & Ass. 732 60 792 Total securities 732 60 792

The bond securities refer to last year’s underwriting of a €1 million convertible bond issued by the South African financial consulting company, Newman Lowther & Associates Ltd. The bond is to be repaid in 2011. Should the bond issue be converted into shares, Sopaf S.p.A. will own 30% of the company’s current share capital. The coupon payment on the bonds is to be equal to 43% of the dividend paid. The bond securities represent the financing component of the financial instrument. The call option held by Sopaf and embedded in the instrument has a value of €322,000, which has been separated from the financing component and classified among the financial assets available for sale.

> Other loans and receivables The account includes receivables and loans as indicated in the table below:

31/12/2007 31/12/2006

Financial receivables from subsidiaries Ida S.r.l. - 4,753 LM IS S.a.r.l. (in liquidation) - 200 Tenerani S.r.l. 100 - Financial receivables from affiliates Nearco Inv. S.a.r.l. 22 - S.F.E.R.A. S.r.l. 15 10 Total 137 4,963 Other financial receivables Miscellaneous financial receivables 135 250 Other receivables 0 1,208 Security deposits 562 1 Total 697 1,459 Total receivables and loans 834 6,422

The financial receivables from subsidiary and affiliate companies include non-interest-bearing loans totalling €137,000 to cover the financial needs. With respect to the previous year, the account balance is €4,826,000 lower, as a result of the zeroing out of the loans to (i) Ida S.r.l., consequent to the merger by incorporation of the same, and (ii) LM IS S.a.r.l. as a result of the company’s liquidation. The miscellaneous financial receivables of a €135,000 deposit referring to a current account with a leading bank which is collateralizing a tax assessment against a company in which Sopaf S.p.A. had previously invested (Codis S.p.A.). The tax authorities filed appeals with the Court of Cassation in order to attempt to over- turn the decisions of two lower courts in favour of Codis S.p.A.; the outcome of appeal is currently pending. Statements as of 31.12.2007 Financial Sopaf| Sopaf S.p.A. 190

The amount of the deposit was reduced from the €250,000 reported at 31 December 2006 to €135,000 in line with the terms prescribed for the tax authorities to file a counterclaim with regard to a tax assessment.

Other financial receivables decreased by €1,208,000 compared with 31 December 2006, following the reclassification of the residual receivable in relation to an agreement executed on 16 February 2005 by LM ETVE S.p.A. (which was later merged into Sopaf S.p.A.), for the sale of a securities investment in the Appaloosa Arbitrage Fund Ltd., as a current receivable since it is coming due in 2008.

The security deposits include €560,000 as a down payment made by the incorporated company LM Real Estate S.p.A. to Osram S.p.A. in relation to a preliminary sale-purchase agreement signed on 15 May 2003 in a 50% partnership with Jargonnant Partners S.r.l. for the acquisition of a building and underlying land at Via Savona n. 105, Milan, for a total price of €11,200,000. The real estate transaction has not been perfected as a result of the counterparty’s default. Accordingly, LM Real Estate S.p.A., together with Jargonnant Partners S.r.l., has initiated legal proceedings to recover the down payment and to collect compensation for the damages sustained. At present, the legal proceedings are in the initial phase, with the judge having requested a technical report that will quantify the damages sustained by LM Real Estate S.p.A. and Jargonnant Partners S.r.l.

> 8 Tax credits The account balance is equal to €18,076,000, with an increase of €237,000, as shown in the following table:

Tax credits due beyond 12 months 31/12/2007 31/12/2006

Corporate income tax and interest credits whose reimbursement has been 4,352 4,389 requested and which have been factored Corporate income tax credits whose reimbursement has been requested 10,329 10,329 and which have been transferred to third parties Interest on corporate income tax credits transferred to third parties 3,355 3,071 as a guarantee Other amounts due from the tax authorities 40 50 18,076 17,839

The corporate income tax credits and interest whose reimbursement has been requested regard credits for the years of 1998 and 2001 (€3,516,000) and related interest (€873,000); such credits were transferred in March 2007 to a financial company through a factoring transaction without recourse. Since the requisites for the derecognition of such credit as established by IAS 39 have not been met, the credit continues to be carried on the balance sheet, with a payable to the factor booked for the same amount. See note 17.

The corporate income tax credits transferred to third parties regard the year of 1997 (€10,329,000) and related interest (€3,355,000), which have been transferred to third parties as a guarantee for lines of credit granted; the formalities for obtaining reimbursement are now being perfected. Sopaf S.p.A. Financial Statements as of 31.12.2007 Financial Sopaf| Sopaf S.p.A. 191

> 9 Deferred tax assets The components of the account are shown in the table below:

31/12/2007 31/12/2006

Deferred tax assets 8,191 8,971 Deferred tax liabilities (2,966) (61) Total 5,225 8,910

Deferred tax assets originate mainly from tax loss carryforwards; €6,826,000 of the 2007 balance relates to carryforwards. The deferred tax assets have been booked considering the probability that future taxable income in coming years will be available against which the amounts booked as of 31 December 2007 can be used. The forecasts are based on the taxable income that can be generated with reasonable certainty, considering the 2008 budget and having taken into account several transactions which are currently in the negotiation phase and which the directors will be finalized within one year.

As of 31 December 2007, the tax loss carryforwards amounted to 39,561,000 (corresponding to deferred tax assets equal to €10,879,000), inclusive of €144,000 of carryforwards of the incorporated company, LM Real Estate S.p.A., and net of the €319,000 of losses carried forward for the fiscal year of 2003, which expired and could not be used as of 31 December 2007.

As of 31 December 2007, there had been no additional deferred tax assets booked vis-à-vis those booked in prior years.

The deferred tax liabilities mainly refer to the convertible bond issue inasmuch as the fair value of the debt component of the bonds was computed at the date of issue by using the market price of an equivalent non- convertible bond, and accordingly the amount of such deferred taxes represents the tax component in relation to the bond’s cost accounts that will be amortized during the life of the bonds

The reduction as of 1 January 2008 of the tax rates applicable in calculating deferred tax assets and liabilities (the new rates are: 27.50% for corporate income taxes (IRES) and 4.81% for the regional tax on productivity) had a negative effect of €1,453,000 on the year’s earnings results. Sopaf S.p.A. Financial Statements as of 31.12.2007 Financial Sopaf| Sopaf S.p.A. 192

The accounts giving rise to deferred tax assets and liabilities are detailed in the table below:

31/12/2007 31/12/2006 Amount of the Fiscal Effect Amount of the Fiscal Effect Differences Differences Assets under financial lease 292 94 Directors compensation 1,094 301 140 46 Reserves risks and charges 807 261 289 111 Allowance for doubtful accounts Crediti 1,084 298 1,106 365 Tax losses 24,822 6,826 25,138 8,296 Intangible fixed assets 115 37 200 75 Amortized banking costs 77 25 140 46 Amortized factoring costs 14 4 Tax credits factored 790 217 Adjustments to fair value 465 128 96 32 Total deferred tax assets 29,560 8,191 27,109 8,971 Assets under financial lease (28) (12) Convertible bond issue (5,267) (1,448) Discounting of employment-severance liabilities 4 1 (27) (10) Financial amortized cost (50) (13) (100) (33) Bond securities (114) (31) (54) (18) Adjustments to fair value (59,576) (1,463) Total deferred tax liabilities (65,031) (2,966) (181) (61) Deferred tax assets / (liabilities), net: (35,471) 5,225 26,928 8,910 Timing differences excluded from the calculation of deferred tax assets (liabilities): Tax loss carryforwards 14,739 4,053 9,230 3,045 Other adjustments - - - - Total differences excluded from the calculation 14,739 4,053 9,230 4,845 of deferred tax assets/(liabilities) Sopaf S.p.A. Financial Statements as of 31.12.2007 Financial Sopaf| Sopaf S.p.A. 193

> Current assets

> 10 Customer receivables and other trade receivables The account balance is equal to €781,000 with an increase of €588,000, as shown in the table below:

31/12/2007 31/12/2006

Due from subsidiary / affiliate companies 676 185 Due from customers 105 8 Total 781 193

The amounts due from subsidiary and affiliate companies mainly regard services rendered by the holding company on the basis of service contracts and real estate rental.

> 11 Other receivables and other current assets The account balance is equal to €13,409,000 with a decrease of €5,820,000, as shown in the following table:

31/12/2007 31/12/2006

Corporate income tax credits whose reimbursement has been - 5,165 requested and which have been transferred to third parties Interest on corporate income tax credits transferred to third - 1,799 parties a guarantees VAT credits 2,391 15 Other tax credits 2,065 2,483 Miscellaneous receivables from subsidiary companies 340 1 Miscellaneous receivables from affiliate companies 38 - Other receivables 8,482 9,495 Accrued income and prepayments 93 271 13,409 19,229

The corporate income tax credits whose reimbursement has been requested regard credits for the year of 1996; after a lengthy recovery process, such credits were reimbursed by the tax authorities in August 2007, along with the interest accrued thereon.

The VAT tax credits include €2,389,000 arising upon the annual settlement of VAT for 2007, including positions accrued as of 30 November 2007 and 30 September 2007, depending on whether the three companies incorporated on 19 December 2007 pay their value-added tax on a monthly or quarterly basis.

Other tax credits mainly regard total taxes of €1,921,000 in relation to prior years, corresponding to taxes credited as of 31 December 2006, net of the use of the corporate income tax credit of €516,000 to offset taxes in 2007. Sopaf S.p.A. Financial Statements as of 31.12.2007 Financial Sopaf| Sopaf S.p.A. 194

Other receivables of €8,482,000 mainly include:

• €1,618,000 of amounts due from Helios S.r.l., the company taking over part of the financing granted to S. Apostoli S.r.l., a former subsidiary sold in 2006; the receivable was collected in full in March 2008; • €1,379,000 of amounts due from the company, Tivoli 101 S.r.l., claimed following the sale of shareholdings; in 2008, the company, Altair S.p.A., took the place of Tivoli 101 S.r.l. and paid out the receivable in March 2008; • €580,000 of amounts due from Coemi Property S.p.A. the company taking over part of the financing granted by Sopaf to the former subsidiary, S. Apostoli S.r.l.; • €3,329,000 of amounts due from Dascal S.p.A., including €2,629,000 in relation to the sale of shareholdings and €700,000 in relation to Dascal’s assumption of part of a financing granted to the former subsidiary company, Giallo Milano S.r.l., and paid out in March 2008; the remaining amount receivable comes due on 31 December 2008 as per an agreement with the counterparty; • €282,000 of commissions advanced on an available line of credit for future acquisitions of shareholdings not yet used as of 31 December 2007. The disbursement of the financing occurred in January 2008, at the time of the acquisition of the investment in Aviva Previdenza; • €1,083,000 of receivable acquired from Nova Surgelati S.p.A. (for the effect of an arbitration settlement between Sopaf and Arena Surgelati) and other minor amounts due, all of which have been written down to zero through a special reserve therefor; €23,000 of the reserve balance of €1,106,000 as of 31 December 2006 was used during the year following certain collections; • €204,000 of an interest-bearing amount due from Banca Network Investimenti S.p.A. which was collected in March 2008.

> 12 Other current financial assets The account balance of €4,280,000 reflects an increase of €1,148,000 with respect to the previous year, as shown by following table:

31/12/2007 31/12/2006

Financing to Vector 101 S.r.l. - 3,132 Financing to third parties 1,272 - Financing to Demofonte S.r.l. 3,008 - 4,280 3,132

The financing to Vector 101 S.r.l. booked as of 31 December 2006 refers to a loan repaid during the month of April 2007, increased by the related accrued interest.

The financing to third parties mainly includes €1,243,000 which is the residual amount due under an agree- Sopaf S.p.A. Financial Statements as of 31.12.2007 Financial Sopaf| Sopaf S.p.A. 195 ment signed on 16 February 2005 by LM ETVE S.p.A. (a company later merged into Sopaf), in relation to the sale of the investment in Appaloosa Arbitrage Fund Ltd. securities, for an original amount of €1,815,000; the balance as of 31 December 2007 is inclusive of accrued interest, and was reported as a current financial asset inasmuch as it comes due in 2008. The account also includes €29,000 of interest-bearing financing disbursed by the incorporated company, LM Real Estate S.p.A., to the company, Vector 102, before the sale of the same.

The financing to Demofonte S.r.l. refers to non-interest-bearing financing made available by the incorporated company, LM Real Estate S.p.A., which is to be repaid on 31 December 2008. In March 2008, a first tranche of such financing equal (€600,000) was paid out.

> 13 Cash and cash equivalents The account includes the cash and cash equivalents, and bank deposits with a term of three months or less; the balance reflects an increase over the past year of €9,559,000, as shown in the following table:

31/12/2007 31/12/2006

Cash and other negotiable instruments on hand 10 4 Bank deposits 5,392 221 Cash equivalents 4,382 - 9,784 225

The cash equivalents refer to the amount received from the sale IMMSI shares on 28 December 2007, and booked by the bank on 4 January 2008.

> 14 Non-current assets classified as assets held for sale As shown in the table below, the account balance of €5,423,000 regards the affiliate companies, AFT S.p.A. and Nearco S.a.r.l., the latter of which was holding 21.02% of AFT, which are to be sold in 2008.

31/12/2007 31/12/2006

AFT S.p.A. 3,968 - Nearco S.a.r.l. 1,455 - 5,423 -

The book value of the 61.06% of AFT S.p.A. was equal to €5,973,000 as of 31 December 2006. During 2007, 21.02% was sold to the affiliate, Nearco S.a.r.l. In addition, as indicated previously, following the liquidation of LM IS (100% subsidiary), Sopaf received 7.42% of AFT for a value of €51,000, thus consequently holding 47.46% directly, and another 10.29% indirectly through the affiliate company, Nearco S.a.r.l. (48.49% owned). It is noted that the sale of the 21.02% of AFT to Nearco entailed a total capital gain of €676,000, including €331,000 booked to a shareholders’ equity reserve inasmuch it relates to a transaction under common control. Sopaf S.p.A. Financial Statements as of 31.12.2007 Financial Sopaf| Sopaf S.p.A. 196

It is noted that the Group does not control the company inasmuch as the company’s governance is covered by agreements executed between other shareholders that do not allow Sopaf to appoint and/or to remove the majority of the members of board of directors and that consequently do not permit Sopaf to control the financial and operating policies of the company.

Such shareholdings have been classified as assets held for sale after considering a series of initiatives undertaken by the management of the holding company at the end of 2007 in order to finalize the sale of a packet of industrial shareholdings (AFT S.p.A. (part (part of which is held by Nearco S.a.r.l.), Res Finco AG, SILA Holding Industriale S.p.A. and Green Bit S.p.A.) to several investors and the Group’s expectation that such shareholdings will be sold within one year.

> Balance sheet - liabilities and shareholders’ equity

> Shareholders’ equity

> 15 Shareholders’ equity The shareholders’ equity of €130,967,000 reflects an increase of €48,166,000 compared with 31 December 2006. The components of the shareholders’ equity are shown in the table below:

31/12/2007 31/12/2006

Capital 80,002 80,000 Own shares (174) - Legal reserve - - Other reserves Reserve for intercompany transactions 4,822 4,490 Merger surplus 16,712 16,712 Reserve for share capital reduction 4,327 4,327 Reserve for bond conversion option 3,991 -

LM Real Estate and Acal merger reserves (23,111) - Valuation reserve 46,986 (65) Undivided profits (losses) (22,663) (24,461) Profit (loss) for the period 20,075 1,798 130,967 82,801

> Share Capital As of 31 December 2007, the share capital amounted to €80,002,000 and consisted of 421,794,809 ordinary shares without par value. The increase of the share capital is related to the conversion of 2,103 bonds into ordinary shares. Sopaf S.p.A. Financial Statements as of 31.12.2007 Financial Sopaf| Sopaf S.p.A. 197

> Own shares The account covers 390,263 own shares acquired by Sopaf in December pursuant to a shareholder resolution of 27 November 2007 approving a share-buyback program to be used for the purpose of investing liquidity. The program provides that the purchases will be made through one or more transactions over a period of 18 months from 27 November 2007, for a maximum number of 5.2 million Sopaf S.p.A. ordinary shares without par value, for a maximum of €2.7 million, without prejudice to the respect of the limits referenced in Article 2357 and the articles thereafter of the Italian Civil Code, at a unit price not exceeding 5% of the average of the prices of reference registered through the Borsa Italiana electronic system in the three market sessions preceding any individual transaction.

> Reserve for transactions between Group companies The reserve, whose balance is equal to €4,822,000, refers to €4,490,000 of capital gains booked on the transfer of 40% of Telma S.r.l. and 0.40% of Telma’s subsidiaries (Agorà S.r.l., Buena Suerte S.r.l., Facere S.r.l., Intarch S.r.l., Tau Ceti S.r.l., and Valim S.r.l.) to the Tergeste closed-end real estate fund, and €332,000 of capital gains realized on the 2007 sale to Nearco S.a.r.l. of part of the investment in AFT S.p.A. a Nearco S.a.r.l., as described above. It is noted that the investment in Telma S.r.l. and its subsidiaries was sold by the Tergeste Fund in 2007 with the realization of a significant capital gain.

> Merger surplus The reserve balance of €16,712,000 was booked upon the LM ETVE S.p.A. merger by incorporation into So- paf, which occurred in the year ending 30 June 2006.

> Reserve for reduction of share capital With a balance of €4,327,000, the reserve for reduction of share capital represents the difference between the €21,588,000 reduction of share capital approved by the extraordinary meeting of the shareholders on 29 March 2005, and the €17,261,000 of coverage of prior-year losses.

> Reserve for bond conversion option The reserve, whose balance is equal to €3,991,000, represents the value assigned to the conversion option held by the bondholders (€5,715,000), stated net of deferred taxes (€1,572,000) and the ancillary placement charges figured on a pro-rata basis (€152,000). According to international accounting principles, at the date of issue, the fair value of the debt component is figured by using the market price of an equivalent non-convertible bond and corresponds to the difference between the discounting of the bond interest based on the contractual rate and the discounting of the bond interest based on the market rate. Such difference is booked to the profit and loss statement using the amortized cost method until the date of the conversion or reimbursement. At issuance of the bonds, such differential, which is representative of the value assigned to the conversion option, is reported as part of shareholders’ equity, net of the related costs of issuance. The value of the conversion option does not undergo any changes in subsequent years. The costs of issuance are split proportionally between the debt and equity components of the bond. Sopaf S.p.A. Financial Statements as of 31.12.2007 Financial Sopaf| Sopaf S.p.A. 198

> LM Real Estate S.p.A. and Acal S.p.A. merger reserves The balance of €23,111,000 was booked upon the merger of LM Real Estate S.p.A. (-€25,904,000) and Acal S.p.A. (€2,793,000) into Sopaf on 19 December 2007, with the accounting and tax effects thereof made retroactive to 1 January. The transactions have been illustrated in detail above

> Valuation reserve The valuation reserve is related to the adjustment to fair value of the following financial assets represented by equity securities classified available for sale, net of the related fiscal effects. The table shows the components and changes in the valuation reserve during the year:

Balances Effect of Changes in Fair Value Portion of Reserve Deferred Change Due to Balances as of Merger Increases Decreases Transferredto P&L Taxes Adjustments on as of 01/01/2007 Upon Sale of Change in 31/12/2007 Financial Assets Tax Rate Financial assets available for sale: Omniapartecipazioni - 51,459 - - (51,459) - - - S.p.A./IMMSI S.p.A. Gabetti S.p.A. (65) - 32 0 65 (32) 0 - Sadi S.p.A. - 992 - (770) (79) 251 75 468 Tessitura Pontelambro S.p.A. - - - (1) - 0 - (1) Management & Capitali S.p.A. - - 330 - - (91) - 239 Conafi Prestito S.p.A. - - - (463) - 127 - (336) Fondo Immobili Pubblici _ FIP - - 838 - - (230) - 608 Demofonte S.r.l. - - 701 - - (193) - 508 Raffaele Caruso S.p.A. - - 1 - - (0) - 0 Delta S.p.A. - - 46,262 - - (780) 17 45,499 (65) 52,450 48,164 (1,235) (51,472) (947) 91 46,986

> Undivided profits (losses) The losses were reduced by €1,798,000 following the shareholders’ meeting held on 4 May 2007, which approved the carryover of the profit reported as of 31 December 2006, and its allocation to cover part of the prior year losses. The undivided profits (losses) include €160,000 reserve for the first-time application of IFRS which covers all effects arising from the first-time application of the IFRS in relation to the discounting of the employment severance liabilities, the reversal of intangible fixed assets, the application of the amortized cost criterion and related fiscal effects.

It is also noted that when approving the LM ETVE S.p.A. merger by incorporation into Sopaf S.p.A., the extraordinary shareholders’ meeting of 5 May 2005 passed another resolution authorizing the issue of 28,104,600 new Sopaf 2005-2011 warrants to the holders of 1,860 LM ETVE S.p.A. warrants; each of the Sopaf warrants

Sopaf S.p.A. Financial Statements as of 31.12.2007 Financial Sopaf| Sopaf S.p.A. entitles the holder to subscribe to two Sopaf S.p.A. ordinary shares without par value at a price of €0.50 per 199 share, inclusive of share premium. As a consequence, the shareholders authorized a share capital increase for up to €28,104,600, to be completed through one or more transactions, for the purpose of servicing the Sopaf warrants, with the warrant holders entitled to subscribe a maximum of 56,209,200 Sopaf shares during the period from 18 March 2006 to and including 31 December 2011. Furthermore, on 23 November 2006, Giorgio Magnoni, the managing director of Sopaf S.p.A. and a major shareholder of the company, sold 7,225,000 of the aforementioned warrants to managers, directors and associates of the Sopaf Group at a price of €0.11 per warrant, so as to allow such persons to participate in the Group’s results. As required by corporate laws, the table below discloses the components of shareholders’ equity, along with the possibilities for their use and distribution.

Schedule of reserves Amount Possibilities Amount for Use Available Capital 80,002 = Reserve for own shares (174) = Share premium reserve Reserve for bond conversion option 3,991 = Merger surplus 16,712 A,B,C 16,712 Reserve for reduction of share capital 4,327 B 4,327 Valuation reserve 46,986 = Reserve for transactions between Group companies 4,490 A,B,C 4,490 Reserve for transactions between Group companies 332 A,B 332 LM Real Estate and Acal merger reserves (23,111) = Undivided profits (losses) (22,663) = Total 110,892

Legend A: for capital increases B: for covering losses C: for distribution to shareholders

> Non-current liabilities

> 16 Convertible bonds

31/12/2007 31/12/2006

Convertible bond issue 2007/2012 44,469 Placement charges (1,079) 43,390 Sopaf S.p.A. Financial Statements as of 31.12.2007 Financial Sopaf| Sopaf S.p.A. 200

The offer under option to the SOPAF S.p.A. shareholders of 56,520,463 bonds convertible in SOPAF S.p.A. newly issued ordinary shares as part of the “SOPAF 2007-2012 3.875% convertible” bond issue was concluded on 4 September 2007. After the market offer of the rights that had not been exercised by the shareholders, a total of 152,120,000 rights corresponding to 20,384,080 convertible bonds with a countervalue of €17,938,000 (or 36.065% of the total convertible bonds covered by the offer) had been exercised. The remaining 36,136,383 convertible bonds, or 63.935%. of the offer (corresponding to the rights not exercised at the end of the market offer) were subscribed by Banca Akros by virtue of an underwriting agreement signed with the issuer. Accordingly, the transaction ended with the subscription of all 56,520,463 convertible bonds included in the issue, for a total countervalue of €49,738,000. The conversion of 2,103 bonds into ordinary shares was requested at a later date. The bonds are convertible into ordinary shares of the company at any time during the term of the loan on the basis of a conversion ratio equal to one share for every bond held. If the bonds were not to be converted, they would be reimbursed at a value of €0.88 each. The bonds bear interest at a rate of 3.875% through maturity. The component of the convertible bonds that presents the characteristics of a liability is booked as a balance- sheet liability, stated net of issuance costs.

Accordingly, on the basis of the foregoing, the detail of the bonds is as follows:

In € 000’s

> 17 Due to banks and other lenders The account balance of €61,557,000 reflects an increase of €39,670,000, as shown in the table below:

31/12/2007 31/12/2006

Bank financing 57,162 19,198 Due to other lenders 4,395 2,689 61,557 21,887

The bank financing includes the following amounts that are payable after 12 months: • €30,983,000: medium-/long-term portion of the syndicated financing to support the acquisition of Banca Network Investimenti S.p.A. and Area Life International Assurance Ltd., whose total funding amounted to €54,000,000; the maturity date is 30 September 2012. It is noted that the syndicated financing is backed by the pledge of the Banca Network Investimenti S.p.A. shares held directly by Sopaf S.p.A., the pledge of the shares of Petunia S.p.A., which owns 49.75% of Banca Network Investimenti S.p.A., and the shares of Area Life held by Sopaf S.p.A.; • €8,229,000: medium-/long-term portion of two loans backed by the pledge of 23,001 shares of LM & Part- ners SCA (in liquidation) held by Sopaf S.p.A.; • €10,000,000: an unsecured financing funded by a leading bank to support of the Sopaf’s liquidity needs; • €4,952,000: medium-/long-term portion of syndicated financing backed by tax credits with notional value of €10,329,000 whose reimbursement has already been claimed; • €3,000,000: an unsecured financing funded by a leading bank to support of the Sopaf’s liquidity needs.

> 18 Financial leases payable The account balance is equal to 14,840,000 as shown in the following table:

31/12/2007 31/12/2006

Financial leases payable - Furnishings > 12 months 1,065 - Financial leases payable - Buildings > 12 months 13,775 - 14,840 -

Following is a schedule of the financial lease contracts, with an indication of the current and non-current portions of the debt.

Financial Leases - Instalments Remaining Contract Residual Amount Furnishings at 31 December 2007 Maturity as of 31 December 2007 Number Date Debt Maturing as of Non-Current Debt Total 31 December 2008 LI915546 11/10/2006 57 11/10/2012 6 27 33 LI915564 30/10/2006 57 30/10/2012 71 304 375 LI894463 16/11/2006 58 16/11/2012 2 8 10 LI915561 30/11/2006 58 30/11/2012 26 109 134 LI915545 24/01/2007 60 24/01/2013 1 2 3 LI915549 24/01/2007 60 24/01/2013 2 7 9 LI915550 24/01/2007 60 24/01/2013 1 4 5 LI938167 01/02/2007 61 05/02/2013 10 44 54 LI915556 02/03/2007 62 02/03/2013 1 6 7 LI915557 02/03/2007 62 02/03/2013 1 7 8 LI915558 02/03/2007 62 02/03/2013 2 11 13 LI915559 02/03/2007 62 02/03/2013 4 21 25 LI915552 21/03/2007 62 21/03/2013 2 7 9 LI915548 17/05/2007 64 17/07/2013 1 6 7 LI915544 18/05/2007 64 24/01/2013 2 9 11 LI915554 18/05/2007 64 18/05/2013 1 7 8 LI915553 18/05/2007 64 18/05/2013 3 13 16 LI915555 22/05/2007 64 22/05/2013 12 59 71 LI958976 06/06/2007 65 06/06/2013 17 89 106 LI958971 27/06/2007 65 27/06/2013 34 178 212 LI915551 17/07/2007 66 17/07/2013 1 5 6 LI938175 04/09/2007 68 04/09/2013 18 100 118 LI958978 01/12/2007 71 07/11/2013 8 42 52 Total 226 1,065 1,291 Sopaf S.p.A. Financial Statements as of 31.12.2007 Financial Sopaf| Sopaf S.p.A. 203

Financial Leases - Instalments Remaining Contract Residual Amount Buildings at 31 December 2007 Maturity as of 31 December 2007 Number Date Debt Maturing as of 31 Non-Current Debt Total December 2008 IR858267 13/12/2007 39 13/12/2017 78 1,262 1,340 IR880495 13/12/2007 59 13/12/2022 18 487 505 IR880500 13/12/2007 59 13/12/2022 61 1,666 1,727 IR891459 13/12/2007 39 13/12/2017 641 10,360 11,001

Total 798 13,775 14,573

> 19 Other liabilities The account balance of €16,763,000 reflects a decrease of €24,593,000 with respect to the previous, as shown in the following table:

31/12/2007 31/12/2006

Due to third parties 10,612 9,273 Due to subsidiary companies 6,151 32,083 16,763 41,356

The amounts due to third parties refer to the non-current portion of debt contracted with the third-party shareholders of LM & Partners SCA (in liquidation) and the former Star Venture I (liquidated on 29 June 2007) for the purchase of the minority shareholdings of LM & Partners in December 2006 and later in January 2007. The total remaining debt is €20,624,000, with €10,012,000 carried as a current liability. Such debt bears interest at a rate of 4%. The debt for €6,130,000 that had been formalized in 2006 with the issuance of promissory notes was instead paid out in advance of the original maturity date of 31 December 2009.

The amounts due to subsidiary companies refers to the non-current portion of debt contracted for the purchase from Star Venture I S.c.p.A. of interests in LM & Partners SCA (in liquidation). Following the liquidation of the Star Venture I, the credit claimed from Sopaf S.p.A. was assigned to the Star Venture I shareholders, one of which was LM & Partners SCA. The reimbursement plan provided by the contract calls for different instalments with maturities of December 2008 (€6,151,000 instalment classified among the current liabilities and December 2009 (€6,151,000). Such debt bears interest at a rate of 4%.

> 20 Pension and employment-severance liabilities

31/12/2007 31/12/2006

Employment severance indemnity reserve 170 128 170 128 Sopaf S.p.A. Financial Statements as of 31.12.2007 Financial Sopaf| Sopaf S.p.A. 204

The employment severance indemnity reserve has a balance of €170,000, and incorporates the indemnities accrued in favour of office personnel and managers as of 31 December 2007, net of advances of €62,000.

Balance as of Merger Transfers w/in Provisions Usage Other Balance as of 31/12/2006 Effects Group changes 31/12/2007 Employment severance 128 26 25 149 (122) (36) 170 indemnity reserve

Financial assumptions: Inflation rate: 2% Rate of increase of salaries/wages: 3% Discount rate: 4.9%

Demographic assumptions Mortality: Mortality tables published by the government statistics bureau (ISTAT 2002) Disability: Tables published by the social security administration (INPS) Resignations: 3% for all ages Retirement: Age 65 (males) and age 60 (females)

As a result of the passage of the 2007 budget law in Italy and the decrees for the implementation thereof, changes were made to the regulations governing reserves for employment termination indemnities. Such changes, which went into effect as of 1 January 2007, provide workers with options for the investment of the termination indemnities they earn over the period of their employment. More specifically, funds now flowing into the reserves for employment termination indemnities may be set aside for workers in the form of pre-

Sopaf S.p.A. Financial Statements as of 31.12.2007 Financial Sopaf| Sopaf S.p.A. selected pension plans, or such funds may be maintained by a company (in which case, companies with 49 205 or more employees are required to pay the contributions to a treasury account set up through the Social Se- curity Administration (“INPS”)). Considering Sopaf S.p.A. has less then 50 employees, no changes have been made to the actuarial calculations of the employment termination indemnities compared with those used as of 31 December 2006.

> 21 Provisions

31/12/2007 31/12/2006

Reserves for risks and charges 808 289 808 289

Following show the changes during the year:

Balance as of 31/12/2006 Merger Effects Usage Balance as of 31/12/2007 Risk reserves 289 519 808

The account balance increased by €519,000 following the addition of a reserve established by the incorporated company, LM Real Estate S.p.A., as of 31 December 2006. The account thus consists of: • €289,000 referring to a provision to back a patronage letter issued by Sopaf S.p.A. in favour of a leading bank in order to guarantee a receivable (of the same amount) claimed by Sopaf S.p.A. with respect to For- mula Sport Group S.r.l., an affiliate company in bankruptcy. • €519,000 booked by the incorporated company, LM Real Estate, against a real estate transaction subject to contractual restrictions linked to the perfection of the transaction.

> Current liabilities

> 22 Convertible bonds The account balance of €755,000 reflects the interest accrued in favour of the bondholders for the period from 10 August 2007 to 31 December 2007 with respect to the bonds not yet converted.

31/12/2007 31/12/2006

Due to bondholders 755 755 Sopaf S.p.A. Financial Statements as of 31.12.2007 Financial Sopaf| Sopaf S.p.A. 206

> 23 Due to banks and other lenders The account balance is equal to €80,548,000 with an increase of €33,067,000, as shown in the following table:

31/12/2007 31/12/2006

Due to banks - current account facilities 4,935 12,057 Bank debt 51,044 14,269 Due to subsidiary companies 21,858 21,025 Due to affiliate companies 22 - Due to other lenders 2,689 130 80,548 47,481

The €4,935,000 due to banks for current account facilities regards ordinary current account overdrafts.

The bank financing of €51,044,000 mainly includes: • €22,074,000: the short-term portion of the €54,000,000 syndicated financing to support the acquisition of Banca Network Investimenti S.p.A. and Area Life International Assurance Ltd. as described in detail in the comments on non-current liabilities; in March 2008, the short-term financing was renewed with a new maturity date of 31 December 2008; • €1,132,000: the current portion of the syndicated financing previously described in the comments on non- current liabilities, backed by tax credits whose reimbursement has already been claimed; • €5,973,000: the current portion of several loan contracts with a leading bank (previously described in the comments on non-current liabilities); • €5,000,000: a line of credit granted by a leading bank, with a term of 18 months less one day and used for short-term liquidity needs; • €11,000,000: a financing coming due in 2008 used for the October 2007 purchase of units of the Fondo Immobili Pubblici, and secured by the same.

The bank debt is stated on the basis of the amounts used as of 31 December 2007, net of the related transaction costs, and then valued at amortized cost by using the effective interest rate method (€707,000).

The €21,858,000 of amounts due to subsidiary companies includes the interest-bearing loans funded by LM & Partners SCA (in liquidation) priced at market interest rates for a total of €21,402,000, including interest, as of 31 December 2007, and non-interest-bearing loans funded by LM & Partners SCA to LM-IS S.a.r.l. in the amount of €456,000; with the liquidation the latter on 20 December 2007 and the assignment of the assets and liabilities to the single shareholder, Sopaf assumed such debt.

The amounts due to other lenders refers to the current maturity of a fiduciary financing totalling €2,689,000 which was classified as a non-current liability as of 31 December 2006. The amount incorporates the interest due to the final maturity of 6 March 2008, adjusted in the prepayments account for the portion referring to future periods. The debt was extinguished in 2008, with a value date of 29 February 2008. Sopaf S.p.A. Financial Statements as of 31.12.2007 Financial Sopaf| Sopaf S.p.A. 207

> 24 Financial leases payable The account balance of €1,023,000 includes the following:

31/12/2007 31/12/2006

Financial leases payable - Furnishings > 12 months 226 - Financial leases payable - Buildings > 12 months 797 - 1,023 -

The account reports the current portion of financial leases payable, the detail of which is reported in the note regarding the non-current portion.

> 25 Financial derivatives The account balance is equal to €11,000 as shown below:

31/12/2007 31/12/2006

Mark-to-market valuation 11 - 11 -

The account refers to the fair-value valuation at 31 December 2007 of an interest-rate swap in relation to a €3 million financing (taken out by the former LM Real Estate S.p.A.) with a June 2011 maturity, and executed for the purpose of reducing the risk of interest-rate fluctuations. The fair value as of 31 December 2007 is equal to €11,000. As of 31 December 2006, the valuation of the contract was positive for €9,000.

> 26 Trade accounts payable The account balance of €2,643,000 reflects an increase of €1,106,000 as shown in the following table:

31/12/2007 31/12/2006

Trade accounts payable 1,352 902 Payables for invoices to be received and amounts to be settled 1,509 546 Credit notes to be received from suppliers (168) (21) VAT on proforma invoices (50) Due to subsidiary companies 109 Due to affiliate companies 1 2,643 1,537

Trade accounts payable, invoices to be received, and amounts to be settled all refer to commercial debts contracted mainly for the supply of services, hardware, software, and notary, legal, tax and administrative advisory services. The balance of such items is adjusted by the amount of credit notes to be received and by the tran- sitory account for VAT on proforma invoices. Sopaf S.p.A. Financial Statements as of 31.12.2007 Financial Sopaf| Sopaf S.p.A. 208

> 27 Other liabilities The account balance of €26,958,000 reflects an increase of €4,396,000, as shown in the table below:

31/12/2007 31/12/2006

Due to employees 1,206 - Due to social-welfare institutions 491 121 Due to directors and statutory auditors 1,228 - Due to subsidiary companies 12,880 8,131 Miscellaneous taxes payable 915 123 Other payables 10,179 14,174 Accrued liabilities and deferred income 59 13 26,958 22,562

The amounts due to employees include the bonuses awarded in 2007 and paid in January 2008, as well as amounts earned by employees as of 31 December 2007 for the fourteenth month of pay, vacations, national holidays that have been abolished, and schedule reduction.

The amounts due to social-welfare institutions include contributions due to welfare, assistance and insurance entities with respect to wages and other employment compensation accrued as of 31 December 2007.

The amounts due to directors and statutory auditors include the fees earned for 2007 and not yet paid during the year, as well as those related to the incorporated company, LM Real Estate S.p.A..

The amounts due to subsidiary companies regard exposure to LM & Partners SCA: • €6,152,000, the current portion of the debt contracted for the acquisition of interests in LM & Partners SCA (in liquidation) from Star Venture I, a subsidiary conclusively liquidated during 2007 and in which LM & Partners took over as a shareholder; • €6,728,000, the amount due to LM & Partners SCA for the transfer without recourse of the residual receivable claimed from Oderfin for the transfer of the units of the Aster Fund.

Other payables mainly include: • €10,013,000: the current portion of debt contracted with the minority shareholders of LM & Partners SCA (in liquidation) and Star Venture I (which has been liquidated) for the acquisition of the minority interests’ shares of LM & Partners SCA, a transaction already mentioned several times in this document; the balance is stated inclusive of accrued interest; during January 2008, the residual amounts due as of 31 December 2007 were paid out for a total of €1,829,000; • €147,000: compensation due to project personnel for the month of December. Sopaf S.p.A. Financial Statements as of 31.12.2007 Financial Sopaf| Sopaf S.p.A. 209

> Profit and loss statement Following are comments on the principal accounts of the profit and loss statement. The comparability of the data as of 31 December 2007 with the data as of 31 December 2006 is not significant due to the fact that the previous year refers to a period of six months only (1 July to 31 December 2006), and considering the incorporation in 2007 of LM Real Estate S.p.A., Acal S.p.A. and Ida with the accounting and fiscal effects thereof made retroactive to 1 January 2007. In addition, the nature of activity carried out by Sopaf is based on transactions that are not of a continuous and comparable nature from a financial reporting perspective.

> 28 Dividends and other income from shareholdings The account balance of €4,164,000 compares with a zero balance as of 31 December 2006:

01/01/2007 01/07/2006 31/12/2007 31/12/2006

Dividends from affiliate companies 306 Dividends from other shareholdings 3,858 4,164

Dividends from affiliate companies refer to dividends received during the year from Polis Fondi Sgr.p.A. Dividends from other shareholdings refer to dividends received during the year from Omniapartecipazioni S.p.A. and IMMSI S.p.A. through the incorporated companies, LM Real Estate S.p.A. and Mercato 24 S.r.l. Sopaf S.p.A. Financial Statements as of 31.12.2007 Financial Sopaf| Sopaf S.p.A. 210

> 29 Capital gains (losses) on sale of shareholdings The account balance of €54,856,000 reflects an increase of €46,885,000, as shown in the following table:

01/01/2007 01/07/2006 31/12/2007 31/12/2006

Capital gains on sale of shareholdings in subsidiary companies 1,854 1,976 Capital gains on sale of shareholdings in affiliate companies 346 6,747 Capital gains on sale of other shareholdings 52,738 - Capital losses on sale of shareholdings in subsidiary companies - (751) Capital losses on sale of shareholdings in affiliate companies (21) (1) Capital losses on sale of other shareholdings (61) - 54,856 7,971

Capital gains on sale of shareholdings in subsidiary companies mainly refer to the capital gain of €1,675,000 realized upon the closing of the liquidation of the subsidiary company, Star Venture I S.c.p.A.

Capital gains on sale of shareholdings in affiliate companies mainly refer to the capital gain realized with the sale of 21.02% of AFT S.p.A. to the affiliate Nearco S.a.r.l. It is noted that such sale entailed a total capital gain equal to €676,000, including €331,000 booked to a shareholders’ equity reserve inasmuch it relates to a transaction under common control.

Capital gains on sale of other shareholdings refer to: • €7,199,000 realized by LM Real Estate S.p.A. (now part of Sopaf S.p.A.) on the sale of a 14% interest in Omniapartecipazioni S.p.A.; • €45,256,000 realized by Mercato 24 S.r.l. (later merged into LM Real Estate S.p.A.) on the sale of 38,360,288 IMMSI S.p.A. shares; • €283,000 of other capital gains realized on the sale of financial assets represented by equity securities. Sopaf S.p.A. Financial Statements as of 31.12.2007 Financial Sopaf| Sopaf S.p.A. 211

The total capital gain booked in 2007 from the sale of the shareholdings in Omniapartecipazioni S.p.A. and IMMSI S.p.A. by Mercato 24 S.r.l. and LM Real Estate S.p.A. (now part of Sopaf S.p.A.) was €52,455,000, net of direct ancillary charges, and is detailed below:

Omnia IMMSI S.p.A. Capital Gain partecipazioni S.p.A.

Allocation to consolidated statements of pro-rata of adjustment to fair value equivalent to the 46,908 corresponding quota of investment in Omniapartecipazioni S.p.A. (B) Fair value valuation 70,605

Sale of 3,000,000 shares of IMMSI S.p.A.: - Cost (1,853) - Sale price 6,585 Capital gain on sale 4,732 4,732

Sale of 30,000,000 shares of IMMSI S.p.A.: - Cost (18,532) - Sale price 65,850 Capital gain on sale 47,318 47,318 including: Capital gain in consolidated financial statements compared with fair value valuation 5,142 Release of valuation reserves to profit and loss statement 46,908 Capital gain 59,248 Direct ancillary charges (711) Capital gain 58,537 Contribution from non-proportional spin-off by Omniapartecipazioni S.p.A. (10,073) of pro-rata portion of debt Net capital gain 48,464 Sopaf S.p.A. Financial Statements as of 31.12.2007 Financial Sopaf| Sopaf S.p.A. 212

Omnia IMMSI S.p.A. Capital Gain partecipazioni S.p.A.

Sale of 5,360,288 shares of IMMSI S.p.A.: - Cost (3,313) - Sale price 8,955 Capital gain on sale 5,642 5,642

Contribution from non-proportional spin-off by Omniapartecipazioni S.p.A. (1,651) of pro-rata portion of debt Net capital gain 52,455

Note: A+B = €54,339,000 of the valuation reserves released to the profit and loss statement

Capital losses on sale of shareholdings in affiliate companies refer to the capital losses generated by sales of an interest in the PWM fund Aiggig.

Capital losses on sale of shareholdings in affiliate companies refer to the capital loss generated by the sale of Gabetti shares and the sale of certain IMMSI shares purchased and sold in the final months of the year. Sopaf S.p.A. Financial Statements as of 31.12.2007 Financial Sopaf| Sopaf S.p.A. 213

> 30 (Writedowns) writebacks of shareholdings The writedowns for impairment of value of financial assets amount to €13,400,000, increasing by €13,173,000 as shown in the table below:

01/01/2007 01/07/2006 31/12/2007 31/12/2006

Writedowns of shareholdings in subsidiary companies - 187 Writedown of shareholdings in affiliate companies - 40 Writedowns of other shareholdings 13,400 - 13,400 227

The writedowns of other shareholdings refer to the provision taken to write off the entire book value of the investment in Coronet S.p.A.; the company was dissolved and put into liquidation on 30 January 2008, as discussed in the comments regarding financial assets available for sale.

> 31 Other operating revenues The account balance of €1,592,000 reflects an increase of €1,451,000, as shown in the table below:

01/01/2007 01/07/2006 31/12/2007 31/12/2006

Revenues from subsidiary companies 234 97 Revenues from affiliate companies 114 9 Capital gains on disposal of fixed assets 9 13 Reversal of charges previously accrued 834 19 Other revenues 401 3 1,592 141

The revenues from subsidiary companies and affiliate companies refer to the charging back of expenses for services rendered to the companies of the Sopaf Group.

> 32 Purchases of materials and external services The account balance of €8,585,000 reflects an increase of €6,243,000, as shown in the table below:

01/01/2007 01/07/2006 31/12/2007 31/12/2006

Purchases of materials and merchandise 69 28 Advisory and professional services 3,295 786 Administrative services 503 392 Director compensation 2,547 488 Compensation to the statutory auditors 165 24 Expense reimbursements 177 43 Leases 238 181 Rentals 181 42 Insurance 189 66 Utilities 211 49 Costs for securities services and commissions 44 22 Cost of project personnel 656 161 Maintenance 82 22 Overhead expenses 228 38

8,585 2,342

Even though the two periods are not comparable, there is a significant increase due to the general reinstatement of the Company’s activity. Following are some details: • advisory and professional services mainly include legal expenses (€1,011,000), tax and administrative services (€460,000), financial advisory services (€420,000), notary expenses (€25,000), advertising and external communications (€140,000), Web site and logo expenses (€10,000), and other services (€722,000); • administrative services mainly refer to the costs of the independent auditors (as reported in a separate schedule), the costs for securities services (€10,000), the costs for the preparation and printing of financial statements and other corporate documents (€74,000) and costs for subscriptions to data banks (€42,000); • compensation to the directors and statutory auditors is detailed in a separate schedule; the increase is mainly related to extraordinary compensation to the sole director of a subsidiary company that has been merged into Sopaf; • leases refer to instalment payments and ancillary expenses on building leases (€180,000), and instalments for the lease of the server (€30,000) and photocopy equipment (€ 23,000); • rentals mainly refer to aircraft (€72,000) and company cars (€87,000); • utilities include electricity (€43,000) and land and mobile telephone lines (€168,000); • overhead expenses mainly refer to costs of security at the Foro Buonaparte building (€124,000) and office cleaning expense (€36,000). Sopaf S.p.A. Financial Statements as of 31.12.2007 Financial Sopaf| Sopaf S.p.A. 215

> 33 Personnel expense Even though the two periods are not comparable, there is a significant increase due to a significant increase due to the recruitment of personnel to handle the expansion of the Company’s activity, as illustrated by the schedule of the staffing numbers shown hereunder and by the following table:

01/01/2007 01/07/2006 31/12/2007 31/12/2006

Salaries and wages 3,275 654 Social-welfare charges 908 197 Provision to employment severance indemnity reserve 254 29 Other 40 7 4,477 887

> 34 Other operating expenses The account balance of €3,599,000 reflects an increase of €2,830,000, as shown in the following table:

01/01/2007 01/07/2006 31/12/2007 31/12/2006

Bank and trading expenses 634 110 Taxes and duties 1,556 5 Business entertainment expenses 98 35 Non-operating expenses 1,203 182 Other 108 437 3,599 769

The non-operating expenses mainly include amounts paid as settlements with shareholders of former subsidiaries and former employees (€600,000). The taxes and duties mostly cover the costs for non-deductible VAT on purchases in 2007 (€1,514,000). Sopaf S.p.A. Financial Statements as of 31.12.2007 Financial Sopaf| Sopaf S.p.A. 216

> 35 Depreciation and amortization The account balance is equal to €647,000, reflecting an increase of €606,000, as shown in the table below:

01/01/2007 01/07/2006 31/12/2007 31/12/2006

Amortization of intangible fixed assets 81 10 Depreciation of tangible fixed assets 566 31 647 41

> 36 Provisions to reserves for future charges There were no entries to account during the year.

> 37 Gains (losses) on disposal of non-current assets There were no entries to account during the year.

> 38 Net financial income (charges) The account consists of the following:

01/01/2007 01/07/2006 31/12/2007 31/12/2006

Financial income Interest income on bank deposits 252 18 Other interest income 625 313 Foreign-exchange differences 1 Total 878 331 Financial charges Interest expense on bank current accounts 798 384 Interest expense on bank financing 4,049 1,317 Interest expense on other financing 2,806 309 Interest expense paid to subsidiary companies 2,281 711 Foreign-exchange differences 1 Total 9,935 2,721 Difference (9,057) (2,390)

Other interest income mainly refers to interest accrued on amounts due from the tax authorities whose reimbursement has already been requested (€344,000) and interest for the bond subscription rights not exercised (€88,000). Interest expense on bank current accounts (€798,000) includes all amounts accrued as of 31 December 2007 on used credit lines. Interest expense on bank financing (€4,049,000) includes the interest accrued on financing made available

Sopaf S.p.A. Financial Statements as of 31.12.2007 Financial Sopaf| Sopaf S.p.A. by various banks. 217

Other interest expense mainly includes interest accrued on the convertible bond issue (€1,232,000) and amounts due to the former shareholders of LM & Partners SCA in relation to the acquisition of their interests (€1,061,000),

Interest paid to subsidiary companies is mainly the interest due on the interest-bearing financing granted by the subsidiaries LM & Partners SCA (in liquidation) (€1,489,000) and interest due to Star Venture I before its liquidation (€772,000).

> 39 Income taxes The account balance is a credit of €772,000, as shown in the table below:

01/01/2007 01/07/2006 31/12/2007 31/12/2006

Current taxes - - Adjustment of deferred tax assets (890) 233 Adjustment of deferred tax liabilities 118 108 (772) 341

The tax provision is made up of the following:

2007

Current taxes - Provision for deferred taxes (35) Change in tax rate for deferred taxes 4 Use of deferred taxes 149 Total deferred taxes 118 Use/elimination of deferred tax assets (221) Change in tax rate for deferred tax assets (1,453) Booking of deferred tax assets 784 Total deferred tax assets (890) Total (772) Sopaf S.p.A. Financial Statements as of 31.12.2007 Financial Sopaf| Sopaf S.p.A. 218

> 40 Primary earnings per share and diluted earnings per share Sopaf reports primary earnings per share and diluted earnings per share as required by IAS 33. Primary earnings per share is equal to Sopaf S.p.A.’s net profit divided by the number of ordinary shares. For diluted earnings per share, the earnings attributable to the holders of the ordinary capital instruments of Sopaf S.p.A., are adjusted to take into account the effects of all potential ordinary shares with a dilutive effect. The primary earnings per share and diluted earnings per share are shown in the table below:

In € 01/01/2007 01/07/2006 31/12/2007 31/12/2006

Primary earnings per share 0.04760 0.00426 Diluted earnings per share 0.04591 0.00408

Details of the computations are presented hereunder: • Primary earnings per share: The primary earnings per share is calculated by dividing the earnings attributable to the holders of the ordinary capital instruments of Sopaf S.p.A., by the weighted average number of ordinary shares outstanding during the accounting period. • Diluted earnings per share: The diluted earnings per share takes into account the potential reduction in earnings as a result of the exercise of warrants issued and the conversion of the convertible bonds, with the assumption that all potential ordinary shares would be converted into ordinary shares. Accordingly, the diluted earnings attributable to the holders of ordinary capital instruments are adjusted by the after-tax amount, if any, of dividends and interest reported during the period with reference to the potential ordinary shares and to reflect the change of income and charges that could occur from the conversion of the potential ordinary shares having dilutive effects. The number of shares considered for the calculation of diluted earnings per share is the sum of the ordinary shares outstanding and the number of ordinary shares to be issued upon the conversion of all warrants (two ordinary shares for each of the 28,104,600 warrants) with conversion rights that could dilute the ordinary shares and the number of convertible bonds (one ordinary share for each of the 56,520,463 convertible bonds) that could dilute the ordinary shares. For the purpose of determining the weighted average number of shares, it was assumed that the warrants would be converted starting on 31 December 2007. Sopaf S.p.A. Financial Statements as of 31.12.2007 Financial Sopaf| Sopaf S.p.A. 219

> 41 Net financial position Pursuant to the provisions of the CONSOB Notice issued on 28 July 2006 and the CESR (Committee of Eu- ropean Securities Regulators) recommendations issued on 10 February 2005 (“Recommendations for the uniform application of the European Commissions rules on disclosure statements”), it is noted that Sopaf S.p.A.’s net financial position as of 31 December 2007 was represented by net borrowing of €188,060,000, with the balance reflecting a €122,049,000 increase with respect to the balance at the prior-year end. Details are disclosed in the table below.

Net financial position 31 December 31 December Change 2007 2006

A) Cash 10 4 6 B) Other cash and cash equivalents 9,774 221 9,553 C) Securities held for trading - - - D) Total liquidity (A+B+C) 9,784 225 9,559 E) Current financial receivables 4,280 3,132 1,148 Due from companies of the Group 3,008 - 3,008 Due from others 1,272 3,132 (1,860) F) Current bank debt (27,031) (12,057) (14,974) G) Current maturities of long-term debt (30,736) (14,269) (16,467) H) Other current financial debt (24,570) (21,155) (3,415) Due from companies of the Group (21,881) (21,025) (856) Due from others (2,689) (130) (2,559) I) Current financial indebtedness (F+G+H) (82,337) (47,481) (34,856) J) Current financial indebtedness, net (I-E-D) (68,273) (44,124) (24,149) K) Non-current bank debt (57,162) (19,198) (37,964) L) Bonds issued (43,390) - (43,390) M) Other non-current debt (19,235) (2,689) (16,546) Due from companies of the Group - - - Due from others (19,235) (2,689) (16,546) N) Non-current financial indebtedness (K+L+M) (119,787) (21,887) (97,900) O) Net financial indebtedness (J+N) (188,060) (66,011) (122,049)

The deterioration of the net financial position is due to a €24,149,000 increase in short-term exposure, and a €97,900,000 increase in medium-term exposure. The change is mainly reflective of the financial flows (including the convertible bond issue) in relation to the transactions involving the acquisition of new shareholdings. Sopaf S.p.A. Financial Statements as of 31.12.2007 Financial Sopaf| Sopaf S.p.A. 220

> 42 Commitments and guarantees The commitments undertaken and the guarantees released are detailed in the table below:

Guarantees released 31/12/2007 31/12/2006

Guarantees released in the interest of: - subsidiary companies - - - affiliate companies - - - third parties 612 887 Securities owned by the Company pledged as collateral 73,196 9,627 Other guarantees 13,685 20,364 Guarantees released 87,493 30,878

The guarantees released in the interest of third parties mainly refer to: • €312,000: a guarantee issued on the sale of an interest of Codis S.p.A. in previous years; • €289,000: a patronage letter issued in favour of a leading bank in the interest of Formula Sport Group S.r.l. (in bankruptcy); • €11,000: a guarantee issued in relation to a real estate lease.

The securities owned by the Company pledged as collateral refer to: • Coronet S.p.A. shares with a nominal value of €5,706,000 pledged to a leading bank to back a loan granted to Coronet S.p.A. Additional information on the transaction is reported in the note regarding the shareholdings account. • Securities issued by companies in which Sopaf S.p.A. holds investments; such securities have an aggregate value of €64,490,000 and have been pledged to banks to back short- and medium-term loans. More specifically, the securities include: 23,001 shares of LM & Partners SCA (in liquidation), nominal value of €2,300,000; 2,700,000 shares of Sadi S.p.A, nominal value of €1,292,000; 12,145,430 shares of Area Life, nominal value of €12,125,000; 3,903,998 shares of Banca Network Investimenti S.p.A., nominal value of €3,904,000; 29,690,000 shares of Petunia S.p.A., value of €29,690,000; 128 units Fip - Fondo Immobili Pubblici, value of €18,176,000 ; 2,250 units Demofonte S.r.l., value of €2,000.

Other guarantees of €13,685,000 cover guarantees issued to a bank via the transfer of tax credits whose reimbursement has been requested in prior years. Sopaf S.p.A. Financial Statements as of 31.12.2007 Financial Sopaf| Sopaf S.p.A. 221

> 43 Supplemental information about financial instruments and risk management policies

With reference to the supplemental disclosures required by IFRS 7 about financial instruments and the risks in relation thereto which are designed to illustrate the impact exercised by the financial instruments with respect to the magnitude of the related risk exposure, the comments below supply details about the measures and mechanisms which the Company has implemented for the purpose of managing exposure to financial risks.

> 43.1 Classes of financial instruments: Following is separate information on financial assets and liabilities as required by IFRS 7 within the framework of the different categories contemplated by IAS 39, with regard to the years of 2006 and 2007.

In € 000’s 31/12/2007 31/12/2006 Note

Financial assets valued at amortized cost 2 1 7 Financial receivables 927 982 7 Financial receivables due from related parties 4,417 9,304 7 Financial assets available for sale 129,690 15,344 7 Receivables transferred 4,359 - 8 Commercial receivables 105 8 10 Receivables from related parties 1,626 2,953 10 Other receivables 8,467 6,730 11 Cash and cash equivalents 9,784 225 13 Financial derivatives for other than hedging purposes: Liabilities (11) - 25 Liabilities for convertible bonds (44,145) - 16/22 Bank financing - secured (89,807) (36,227) 17/23 Bank financing - unsecured (20,498) (4,995) 17/23 Factoring advances (4,395) - 17 Due to banks for current account overdrafts (5,524) (7,120) 17/23 Financing due to related parties (24,319) (21,025) 17/23 Financial leases payable (15,863) - 18/24 Trade accounts payable (2,643) (1,536) 26 Due to related parties (16,570) (40,214) 19/27 Other liabilities (20,625) (22,828) 19/27 (85,023) (98,398) Sopaf S.p.A. Financial Statements as of 31.12.2007 Financial Sopaf| Sopaf S.p.A. 222

In € 000’s 31/12/2007 31/12/2006

Non-current financial liabilities Liabilities for convertible bonds (43,390) - Bank financing - secured (47,162) (16,888) Bank financing - unsecured (10,000) (4,999) Financial leases payable (14,840) - Due to related parties (6,152) (32,083) Other liabilities (10,612) (9,273) (132,156) (63,243) Current financial liabilities Liabilities for convertible bonds (755) - Bank financing - secured (42,645) (19,339) Bank financing - unsecured (10,498) 3 Due to banks for current account overdrafts (5,524) (7,120) Factoring advances (4,395) - Financial leases payable (1,023) - Due to related parties (21,858) (21,025) Financial derivatives for other than hedging purposes: (11) - Trade accounts payable (2,643) (1,536) Due to related parties (12,880) (8,131) Other liabilities (10,012) (13,554) (112,244) (70,702) (244,400) (133,945)

> 43.2 Capital management Sopaf S.p.A. capital management objectives are based on safeguarding the Group’s capacity to continue simultaneously (i) to guarantee profitable returns to the shareholders, the satisfaction of the interests of the stakeholders and compliance with covenants, and (ii) to maintain an optimal capital structure.

> 43.3 Risk management policies All activities regarding the management of financial risks are the responsibility of the Company’s finance department, the only unit allowed to monitor the risks and to set the related hedging policies. The main sources of risk and the strategies admissible for their coverage are outlined below. Sopaf S.p.A. Financial Statements as of 31.12.2007 Financial Sopaf| Sopaf S.p.A. 223

> Interest-rate risk

The interest-rate risk to which the Company is exposed originates primarily from medium-term financial debt. Indexed to a variable market interest rate, such debt exposes the Company to the risk of fluctuation of cash flow. The Company has set the objective of limiting such risks through entering into derivatives contracts (interest rate swaps). The designation of such derivatives as hedging instruments for the purposes of IAS39 is decided on a case-by- case basis, and authorized by the finance, administration and control department.

> Liquidity risk

The Company’s activity is oriented toward prudent management of liquidity risk. The Company’s preference is accordingly to maintain an appropriate mix of cash, cash equivalents and/or financial assets and to have accessibility to available funds through an appropriate amount of committed credit lines with various credit institutions, for a medium-term horizon (36 months).

> Credit risk

Sopaf does not have any major concentration of credit risk. The activity carried out to reduce exposure to credit risk is based on an analysis of the mix of the customer portfolio for each area of business, so as to ensure a sufficient comfort level about financial solidity of the customers.

> Foreign-exchange risk

The Company currently does business only domestically and is thus not exposed to foreign-exchange risk. Specific foreign-exchange risk hedging policies might be implemented if the Company were to plan and execute development projects on an international basis, including outside of the Euro Area. Sopaf S.p.A. Financial Statements as of 31.12.2007 Financial Sopaf| Sopaf S.p.A. 224

> 43.4 Credit risk

> Exposure to credit risk

The exposure to credit risk as of the end of 2007 and 2006 is outlined in the following table.

In € 000’s 31/12/2007 31/12/2006

Exposure to credit risk Financial assets 5,346 10,287 Commercial receivables 105 8 Other receivables 5,985 2,953 11,436 13,248

> Receivables and writedowns

The changes in the reserve for the writedown of commercial and other receivables are shown in the table below.

In € 000’s 31/12/2007 31/12/2006

Balance as of 1 January (135) (135) Provisions / impairment losses during year - - Usage for the period - - (135) (135)

In € 000’s 31/12/2007 31/12/2006

Nominal Value Writedowns Nominal Value Writedowns Coming due - - - - 0-180 days 105 - 7 - 180-360 days - - 1 - > 360 days - - - - 105 - 8 - Sopaf S.p.A. Financial Statements as of 31.12.2007 Financial Sopaf| Sopaf S.p.A. 225

> 43.5 Market risk The risks assumed by the Company as a result of fluctuations of market variables include the risk of fluctuation of the interest-rate curve. The actual exposure to such sources of risk is illustrated as of 31 December 2007, along with the possible balance-sheet impact of the risk factor’s plausible variations.

> Interest-rate risk

The Company is exposed to interest-rate risk for its floating-rate, medium-/long-term debt obligations.

The following table identifies the book value of the positions subject to interest-rate risk.

31/12/2007 31/12/2006

Liabilities bearing interest at variable rates Non-current bank financing (61,557) (14,198) Current bank financing (58,667) (34,145) Financial leases payable (14,840) - Due to related parties (21,402) (19,927) (156,466) (68,270) Liabilities bearing interest at fixed rates Non-current liabilities for convertible bonds (43,390) - Current liabilities for convertible bonds (755) - Other non-current liabilities (10,612) (9,273) Due to related parties (6,152) Other current liabilities (10,013) (13,555) (70,922) (22,828) (227,388) (91,098) Sopaf S.p.A. Financial Statements as of 31.12.2007 Financial Sopaf| Sopaf S.p.A. 226

The terms and contractual positions of the financing are shown in the table below:

31/12/2007 31/12/2006

In € Currency Nominal Interest Rate Maturity Nominal Book Value Nominal Book Value Value Value Interbanca financing n. 50694/02 Euro 6m EURIBOR + 1.75% 31/10/08 3,000,000 (2,991,842) 3,000,000 (5,971,792) Interbanca financing n. 51617/02 Euro 6m EURIBOR + 1.75% 31/03/11 5,250,000 (5,224,691) 5,250,000 (6,708,173) Interbanca financing n. 51617/04 Euro 6m EURIBOR + 1.75% 31/07/11 6,000,000 (5,984,927) 6,000,000 (7,476,031) S. Paolo stand-by financing Euro 12m EURIBOR+ 1.75% 30/11/09 5,952,027 (6,082,197) 5,952,027 (6,952,027) Banca Popolare di Novara e Verona Euro EURIBOR + 1% 22/05/08 5,000,000 (4,998,775) 5,000,000 (4,995,439) Banca Popolare di Novara e Verona Euro 6m EURIBOR + 1.9 % 30/06/09 3,000,000 (3,000,000) - - mortgage Banca Toscana financing Euro 3m EURIBOR + 0.8% Till revoked 1,500,000 (1,500,000) - - Cassa Risparmio di Ferrara Euro EURIBOR + 0.9% 23/01/09 10,000,000 (9,999,283) - - Unicredit Pool Line A Euro 6m EURIBOR + 1.75% 30/09/12 24,500,000 (24,515,864) - - Unicredit Pool Line B Euro 6m EURIBOR + 1.75% 30/09/12 22,500,000 (22,074,071) - - Unicredit Pool Line D Euro 6m EURIBOR + 1.75% 30/09/12 7,000,000 (6,833,822) - - Unicredit short-term financing Euro 5.51% fixed Till revoked - - 1,000,000 (1,000,000) Banca Popolare di Sondrio Euro 6.4% fixed Till revoked - - 5,300,000 (5,300,000) hot money Banca Agricola Mantovana financing Euro 6m EURIBOR + 1% 01/06/08 11,000,000 (11,000,000) - - Banca Agricola Mantovana financing Euro 1m EURIBOR + 1.25% 28/07/08 3,000,000 (3,000,000) - - Banca Agricola Mantovana financing Euro 1m EURIBOR + 1.25% 31/12/08 1,000,000 (1,000,000) - - Factor financing Euro 31/03/14 4,372,685 (4,395,290) - - Current account overdraft facility Euro Till revoked 871,198 (871,198) 7,120,206 (7,120,206) Promissory notes Euro 5.3% fixed 06/03/08 2,688,833 (2,688,833) 2,818,833 (2,818,833) Total interest-bearing liabilities 116,634,829 (116,160,879) 41,441,066 (48,342,501) Sopaf S.p.A. Financial Statements as of 31.12.2007 Financial Sopaf| Sopaf S.p.A. 227

> Sensitivity analysis – interest-rate risk

The table below provides an indication of the impact on the profit and loss statement and balance sheet of a parallel +/-100 basis-point and a parallel +/- 50 basis-point shift of the rate curve estimated as of 31 December 2007. The analysis was carried out by assuming that the other variables remained constant, and it was also carried out for 2006 on the basis of the same assumptions. The sensitivity analysis below shows the sensitivity, as of the balance-sheet date, of the cash flow with respect to parallel shifts of the interest-rate curve quoted for 31 December 2007, along with comparable data for the prior year.

In € 000’s 31 December 2007 31 December 2006 Increase of 100 bp Decrease of 100 bp Increase of 100 bp Decrease of 100 bp Change in cash flow (1 year) Floating-rate financing (1,049) 1,049 (559) 559 Financial leases payable (159) 159 - - Financial receivables with floating rates - - - - Net sensitivity of financial flows (1,208) 1,208 (559) 559

31 December 2007 31 December 2006 Increase of 50 bp Decrease of 50 bp Increase of 50 bp Decrease of 50 bp Change in cash flow (1 year) Floating-rate financing (525) 525 (279) 279 Financial leases payable (79) 79 - - Financial receivables with floating rates - - - - Net sensitivity of financial flows (604) 604 (279) 279

> 43.6 Liquidity risk The liquidity risk is the risk that the Group will encounter difficulty in meeting future obligations with respect to financial liabilities. The risk analysis is aimed at quantifying, on the basis of contractual maturity, the cash flow in relation to the reimbursement of the Company’s non-current financial liabilities as of 31 Decem- ber 2007 inasmuch as they are considered significant for the purpose of liquidity risk. The Company’s objective is to achieve a balance between (a) the maintenance of bank credit capacity, and (b) flexibility through the use of overdraft facilities, short-term hot-money facilities and medium-term financing. With reference to the maturities of cash flows related to the Company’s financial exposure, the reimbursement plans for the medium-term secured debt (inclusive of the medium-term financing obtained for equity investment projects) are deemed important for the purpose of liquidity risk, particularly considering the nature of the Company’s cash-flow cycle. The cash flows related to the debt repayment plans for annual periods are presented below for the purpose of being able to quantify the liquidity risk on the Company’s financial exposure, namely, the cash flows reimbursements to be made on financial indebtedness and other, non-current liabilities. In this regard it is noted that the quantification of the cash-flow payments on non-current financial liabilities was done by calculating Sopaf S.p.A. Financial Statements as of 31.12.2007 Financial Sopaf| Sopaf S.p.A. 228

the net present value of the future flows generated by the financial instrument, taking into account the principal repayment plan defined at a contractual level. The future interest rates were estimated by calculating the interest-rate-swap (IRS) rates by year as implied by the EURIBOR curve on 31 December 2007.

The tables below summarize the analysis, providing a comparison of the situations as of 31 December 2006 and 31 December 2007:

In € 31/12/2006 Contractual 12 Months 2 Years 3 Years 4 Years 5 Years > 5 Years Value or Less

Liabilities for ------convertible bonds Bank financing (42,853,684) 31,502,027 (15,743,746) (13,097,481) (8,414,709) (3,260,638) (2,337,111) - Due to banks for current (9,939,039) 9,939,039 - (2,818,833) - - - (7,120,206) account overdrafts Due to related parties (21,866,418) 21,025,402 (21,866,418) - - - - - Financial leases payable ------Other liabilities (14,725,154) 15,602,084 - (8,007,506) (6,717,648) - - - (89,384,296) 78,068,552 (37,610,164) (23,923,820) (15,132,357) (3,260,638) (2,337,111) (7,120,206)

In € 31/12/2007 Contractual 12 Months 2 Years 3 Years 4 Years 5 Years > 5 Years Value or Less Liabilities for (58,630,209) 49,738,007 (1,932,628) (1,927,348) (1,927,348) (1,927,348) (50,915,538) - convertible bonds Bank financing (124,976,770) 111,390,860 (58,855,528) (27,800,905) (13,873,908) (13,239,207) (11,207,223) - Due to factors for transfers (4,395,290) 4,372,685 - - - - - (4,395,290) of receivables Due to banks for current (871,198) 871,198 - - - - - (871,198) account overdrafts Due to related parties (19,031,090) 19,031,090 (12,879,545) (6,151,545) - - - - Financing from (25,273,327) 24,318,827 (25,273,327) - - - - - related parties Financial leases payable (14,741,202) 19,083,923 (1,582,551) (1,583,949) (1,585,402) (2,852,551) (7,136,749) - Other liabilities (21,801,096) 23,602,084 (10,764,798) (11,036,298) - - - - (269,720,182) 252,408,675 (111,288,376) (48,500,045) (17,386,658) (18,019,106) (69,259,509) (5,266,488) Sopaf S.p.A. Financial Statements as of 31.12.2007 Financial Sopaf| Sopaf S.p.A. 229

> 44 Relationships Between Group Companies and with Related Parties With reference to prevailing regulations, it is first of all noted that the board of directors, at its meeting on 12 December 2005, defined the guidelines for the identification of transactions with related parties, and in particular, the procedures outlining the means for executing the transactions, including the economic terms and conditions for their execution and the valuation proceedings.

All transactions with related parties are effected at market conditions.

> Relationships with Group companies

The following tables summarize the balance-sheet and profit-and-loss relationships with subsidiaries, affiliates and other companies in which investments are held. The relations mainly cover the disbursement of loans and the rendering of administrative and general services. The administrative and general services are supplied at normal market conditions. Loans are normally accor- ded at market conditions, with the exception of various non-interest-bearing loans granted to certain subsidiaries. Additional details on the balance-sheet and profit-and-loss relationships with Group companies are provided in other parts of these notes to the financial statements. Sopaf S.p.A. Financial Statements as of 31.12.2007 Financial Sopaf| Sopaf S.p.A. 230

Following is a summary of the relationships in effect as of as of 31 December 2007:

Counterparty Financial Due from Other Other (Other (Due to (Trade (Other Receivables In € 000’s Assets Customers and Receivables Financial Non- Banks and Other Accounts Current (Payables), Other Trade and Other Assets Current Lenders -Current) payable) Liabilities) Net Receivables Assets Liabilities)

AFT S.p.A. 82 - 82 )Asm Lomellina (22) (22) CUTTER S.a.r.l. - - 339 - - - 339 DEMOFONTE S.r.l. - - 3,008 - - - - 3,008 Five Star 30 30 LM & Partners SCA - - 1 - (6,151) (21,858) - (12,880) (40,888) in liq. LM LS S.p.A. - 167 - - - - - 167 Nearco Inv.S.a.r.l. 22 - - - - 22 Polis Fondi S.g.r.p.a. 198 198 PWM Sgr.p.a. 65 65 S.F.E.R.A. S.r.l. 15 ------15 Sopaf Capital 164 164 Management Tenerani S.r.l. 100 - - - - - 100 Total Group 137 676 370 3,008 (6,151) (21,880) 0 (12,880) (36,720) companies Total balance-sheet 131,316 781 13,409 4,280 (16,763) (80,548) - (26,958) 25,517 accounts % of balance-sheet 0.1% 86.6% 2.8% 70.3% 36.7% 27.2% - 47.8% accounts Sopaf S.p.A. Financial Statements as of 31.12.2007 Financial Sopaf| Sopaf S.p.A. 231

Counterparty Dividends and Capital gains Other (Purchases of (Other (Financial Revenues

In € 000’s Other Income (losses) on Sale Operating Materials and Operating Charges) (Expenses), from Shareholdings of Shareholdings Revenues External Services) Expenses) Net

AFT S.p.A. 82 - - - 82 Bipielle Network 25 25 Essere S.p.A. (2) (2) LM & Partners SCA in liq. - - - (1,489) (1,489) Lm Is S.a.r.l. in liquidation 17 (19) (2) (4) LM LS S.p.A. 139 - (26) - 113 Omniapartecipazioni S.p.A. 3,858 3,858 Polis Fondi S.g.r.p.a. 306 166 472 PWM Sgr S.p.A. 77 (5) - - 72 PWM Aiggig Multiman.Fund 0 Sopaf Capital Management 147 147 STAR VENTURE I S.c.p.A. in liq. - - - (772) (772) Telma S.r.l. 2 2 Total Group companies 4,164 0 655 (7) (45) (2,263) 2,504 Total profit-and-loss accounts 4,164 1,592 (8,585) (3,599) (9,935) (16,363) % of profit-and-loss accounts 100.0% - 41.1% 0.1% 1.3% 22.8% -15.3%

The most significant relationships between Sopaf S.p.A. and the other companies of the Group which are summarized in the tables above are described in further detail hereunder.

Receivable/payable relationships: • a non-interest-bearing €3,008,000 financing in favour of Demofonte S.r.l. that is to be repaid by 31 Decem- ber 2008; • financing from the subsidiary company LM & Partners SCA (in liquidation) for €21,858,000 (inclusive of interest); • Debt contracted with the subsidiary company LM & Partners SCA (in liquidation) for €12,880,000, including €6,152,000, the current portion of the debt contracted for the acquisition of interests in LM & Partners SCA (in liquidation) from Star Venture I (a subsidiary conclusively liquidated during 2007 and in which LM & Partners took over as a shareholder) and €6,728,000 as the amount due to LM & Partners SCA for the transfer without recourse of the residual receivable claimed from Oderfin for the transfer of the units of the Aster Fund.

Revenue/expense relationships: • €1,489,000, of interest expense accrued on financing the subsidiary company LM & Partners SCA (in liquidation); • €3,858,000 of dividends received in 2007 from the incorporated company, LM Real Estate S.p.A. Sopaf S.p.A. Financial Statements as of 31.12.2007 Financial Sopaf| Sopaf S.p.A. 232

> Relationships with other related parties

Following is information on relationships with other related parties, which are companies linked to one director.

In € 000’s Counterparty Financial Due from Other Other (Other (Due to Banks (Trade (Other Receivables Assets Customers and Receivables Financial Non- and Other Accounts Current (Payables), Other Trade and Other Assets Current Lenders payable) Liabilities) Net Receivables Assets Liabilities) -Current) Coemi 580 580 Vector 102 S.r.l. 29 29 Total other related 0 0 580 29 0 0 0 0 609 parties Total balance-sheet accounts 131,316 781 13,409 4,280 (16,763) (80,548) - (26,958) 25,517 % of balance-sheet accounts 0.0% 0.0% 4.3% 0.7% 0.0% 0.0% - 0.0%

> 45 Significant Non-Recurring Events and Transactions Pursuant to the CONSOB Notice of 28 July 2006, it is noted that during 2007, Sopaf perfected the merger- by-incorporation of wholly and directly controlled companies, LM Real Estate S.p.A, Acal S.p.A. and IDA S.r.l., with the tax and accounting effects to be booked to the Sopaf S.p.A. financial statements as of 1 January 2007, in accordance with Article 2504-bis of the Italian Civil Code. Even though effected for the purpose of reorganizing activity within the Group, the non-recurring merger transactions did not entail any economic exchange with third parties, and did not cause, as a substantial economic effect thereof, the transfer of control of the business of the incorporated companies. Sopaf S.p.A. Financial Statements as of 31.12.2007 Financial Sopaf| Sopaf S.p.A. 233

> 46 Atypical and/or Unusual Transactions In accordance with the CONSOB Notice of 28 July 2006, it is noted that the Sopaf S.p.A. did not enter into any atypical and/or unusual transactions during the year of 2007. As defined by said Notice, atypical and/or unusual transactions are those transactions which, because of their significance/importance, nature of the counterparties, subject of the transaction, means for determination of their price and timing of execution (near the end of the year), could give rise to doubts in relation to: the accuracy/completeness of the financial statement information, conflicts of interest, the protection of the company’s capital, and/or the protection of minority shareholders.

> 47 Other Information Average number of full-time employees by job category

The Company had a work force of 27 employees as of 31 December 2007, compared with 13 as of 31 De- cember 2006:

Full-Time Employees Average Work Force Full-Time Employees Average Work Force as of 31/12/2007 01/01/2007- 31/12/2007 as of 31/12/2006 01/07/2006-31/12/2006

Executives 9 6.3 4 3.5 Middle 6 5 3 2.5 managers Clerical 12 8.8 6 6 staff Total 27 20 13 12 Sopaf S.p.A. Financial Statements as of 31.12.2007 Financial Sopaf| Sopaf S.p.A. 234

> Compensation to directors, general managers, statutory auditors, general managers and executives with strategic responsibility

The following information is provided pursuant to Article 78 of CONSOB Resolution n. 11971 of 14 May 1999 and subsequent resolutions, with respect to the adoption of rules for the implementation of Legislative De- cree n. 58 of 24 February 1998 (“Draghi Decree”) regarding issuer regulations.

Surname and Name Position Term of Office Expiration Compensation Non- Bonuses Other of Term (1) Monetary and Other Compensation of Office Benefits Incentives (2) Cirla Giorgio Chairman 01-01-2007 31-12-2009 400 - - - 31-12-2007 Magnoni Giorgio (3) Vice Chairman and 01-01-2007 31-12-2009 300 - - - Managing Director 31-12-2007 Boschetti Giancarlo Director 01-01-2007 31-12-2009 30 - - 6 31-12-2007 Cassaro Renato Director 01-01-2007 31-12-2009 30 - - 19 31-12-2007 Daveri Giuseppe Director 01-01-2007 04-05-2007 10 - - - 04-05-2007 Galliani Adriano Director 01-01-2007 31-12-2009 30 - - 10 31-12-2007 Guidi Guidalberto Director 04-05-2007 31-12-2009 20 13 31-12-2007 Llopart Juan Director 01-01-2007 04-05-2007 10 - - 3 04-05-2007 Magnoni Luca Director 01-01-2007 31-12-2009 70 - - 150 31-12-2007 Martignoni Renato Director 27-11-2007 31-12-2009 3 - 31-12-2007 Micheli Francesco Director 04-05-2007 24-12-2007 19 6 24-12-2007 Stella Marco Director 27-11-2007 31-12-2009 3 31-12-2007 Vender Giovanni Jody Director 01-01-2007 31-12-2009 30 - - - 31-12-2007 Sala Giovanni Chairman of the board 01-01-2007 31-12-2008 50 of statutory auditors 31-12-2007 Reali David Acting auditor 01-01-2007 31-12-2008 40 - - - 31-12-2007 Ronchi Riccardo Acting auditor 30-11-2007 Pross.ass. 3 - - - 31-12-2007 Gualtieri Paolo Acting auditor 01-01-2007 37 30-11-2007 30-11-2007 Sopaf S.p.A. Financial Statements as of 31.12.2007 Financial Sopaf| Sopaf S.p.A. 235

Surname and Name Position Term of Office Expiration Compensation Non- Bonuses Other of Term (1) Monetary and Other Compensation of Office Benefits Incentives (2)

Dori Francesco Substitute auditor 01-01-2007 31-12-2008 - - - - 31-12-2007 Ronchi Riccardo Substitute auditor 01-01-2007 30-11-2007 30-11-2007 Salvatore Marco Substitute auditor 01-01-2007 31-12-2008 - - - - 31-12-2007 Caruso Giovanni Chief Operating Officer 01-01-2007 289 4 68 31-12-2007 Magnoni Aldo Sole director of LM 01-01-2007 1,350 Real Estate, now part 31-05-2007 of Sopaf S.p.A. Executives with Executives with = = 537 6 635 strategic responsibility strategic responsibility Total 1,911 10 703 1,557

(1) The compensation reported refers only to the period in which the person holds office. (2) Other compensation regards amounts paid for offices held with subsidiary companies, and for service on the Compensation Committee and Internal Controls Committee.

(3) The director is an officer for the subsidiary companies as shown in the schedule below. Statements as of 31.12.2007 Financial Sopaf| Sopaf S.p.A. 236

> Offices held by directors, general managers, executives with strategic responsibility, and statutory auditors Sopaf S.p.A. at the subsidiary companies

Surname and Name Company Position Term of Office Expiration of Term of Office

Giorgio Magnoni * LM LS S.p.A. Director 11/05/2005- § 31/12/2007 § 31/12/2007 Vice Chairman and Managing Director Giovanni Jody Vender * LM LS S.p.A. Director 11/05/2005- § 31/12/2007 § 31/12/2007 Director Giovanni Nicchiniello * CUTTER S.a.r.l. Director 19/02/2005 - Until executive with strategic responsibility revocation or resignation * PETUNIA S.p.A. Director 10/07/2006- § 31/12/2008 Unspecified * P.W.M. Sgr S.p.A. Director 15/01/2007- § 31/12/2008 § 31/12/2008 * TENERANI S.r.l. Director 06/03/2007- § 31/12/2009 * SOPAF CAPITAL Director 02/05/2007- § 31/12/2008 Management Sgr S.p.A Alberto Ciaperoni * P.W.M. Sgr S.p.A. Director 15/01/2007- § 31/12/2008 executive with strategic responsibility * SOPAF CAPITAL Director Management Sgr S.p.A * CUTTER S.a.r.l. Director 19/02/2005 - Until Unspecified revocation or resignation * ACAL S.p.A. Sole Director 19-dic-07 * Tenerani S.r.l. Chairman of Board 06/03/2007- § 31/12/2009 * IDA S.r.l. Sole Director 19-dic-07 Giovanni Caruso * P.W.M. Sgr S.p.A. Chairman of Board 15/01/2007- § 31/12/2008 executive with strategic responsibility

Sopaf S.p.A. Financial Statements as of 31.12.2007 Financial Sopaf| Sopaf S.p.A. § Until approval of financial statements as of date indicated. 237

> Events subsequent to 31 December 2007

The most significant transactions are summarized below.

On 9 January and 1 February 2008, Sopaf S.p.A. perfected the acquisition of 23.36% of the share capital of PWM Sgr for a total of €0.8 million.

On 11 January 2008, Sopaf S.p.A. and Aviva Italia Holding S.p.A. perfected the acquisition of 100% of the share capital of Aviva Previdenza S.p.A. from Finoa S.r.l. Sopaf S.p.A. acquired 45% for a total price of €15.4 million. As of the same date, Unicredit Banca d’Impresa S.p.A. and a syndicate of banks funded a €65 million financing collateralized by the Aviva Previdenza S.p.A. shares.

On 17 January 2008, as part of the reorganization of the affiliate company, Beven Finance S.a.r.l., Sopaf S.p.A. acquired 14,999,970 shares of Management & Capitali S.p.A. from the affiliate for a price of €10.7 million. The same transaction for the same number of shares was perfected by the Ramius Group on 12 February 2007.

On 31 January 2008, 3,445,585 IMMSI shares were purchased for countervalue of €4,479,000.

In February and March, a credit line of €7.5 million was opened by a leading bank, with usage of €6.7 million to date. The line is collateralized by the equity securities of Conafi Prestitò S.p.A., Management & Capitali S.p.A. and IMMSI S.p.A.

On 3 March 2008, the Communications Ministry officially announced the results of a public tender for the assignment of WiMax licenses. Sopaf’s affiliate company, AFT S.p.A., was adjudicated the right-to-use in 13 Statements as of 31.12.2007 Financial Sopaf| Sopaf S.p.A. 238

regions that represent more than 75% of Italy’s resident population. The total investment in relation thereto is €34 million.

On 7 March 2008, Demofonte S.r.l. partially repaid a non-interest-bearing financing, reimbursing €600,000.

Moving ahead with the share buyback program, Sopaf acquired 3,679,759 of its own shares for a total outlay of €1,678,000. Sopaf S.p.A. Financial Statements as of 31.12.2007 Financial Sopaf| Sopaf S.p.A. 239 Exhibits to the notes financial statements 240

> List of shareholdings in subsidiary and affiliate companies pursuant to Article 2427, Paragraph 5 of the Civil Code and Consob notice dem 6064293 of 28/07/2006

In € 000’s Shareholders’ equity (*) Profit (loss) for the period (*) Company Name Registered Office Share Capital Par Value Total Value Pro-Rata Total Amount Pro-Rata % Held Directly Shares Owned Book Value Value Based on Subsidiaries of Shares Amount - Direct Amount - Direct Net Equity Method Cutter S.a.r.l. Luxembourg 50 25.00 33 33 (17) (17) 100.00% 2,000 50 1,668 LM & Partners SCA Luxembourg 8,228 100.00 85,250 85,250 (5,975) (5,975) 100.00% 82,284 52,221 78,331 LM LS S.p.A. Milan 718 1.00 5,523 3,826 (284) (197) 69.27% 497,655 5,000 8,165 P.W.M. S.G.R. Milan 1,000 1.00 2,987 1,991 155 104 66.63% 666,352 3,826 3,643 Sopaf Cap.Manag.Sgr S.p.A. Milan 2,000 1000.00 2,991 2,991 242 242 100.00% 2,000 3,860 3,368 Fondo Tergeste (**) Milan N/A N/A N/A N/A 1,194 1,194 100.00% 474 12,260 14,965 Tenerani S.r.l. (**) Milan 50 1.00 N/A N/A N/A N/A 100.00% 50,000 100 54 Shareholders’ equity Profit (loss) for the period Company Name Registered Office Share Capital Par Value Total Value Pro-Rata Total Amount Pro-Rata % Held Directly Shares Owned Book Value Value Based on Affiliates of Shares Amount - Direct Amount - Direct Net Equity Method Area Life Int.Ass.Limited Dublin, Ireland 26,945 1.00 7,575 3,409 (711) (320) 45.00% 12,125,430 8,385 9,129 ASM Lomellina Inerti S.r.l. (**) Vigevano 90 1.00 N/A N/A N/A N/A 33.00% 29,700 30 30 Banca Network Invest. S.p.A. Lodi 26,044 1.00 33,172 4,972 (10,286) (1,542) 14.99% 3,903,998 19,841 19,172 Essere S.p.A. Milan 1,096 10.00 2,419 865 52 19 35.77% 39,200 2,051 277 Five Stars S.a.r.l. Luxembourg 70 10.00 3,969 3,969 2,276 2,276 99.99% 7,000 70 4,291 Petunia S.p.A. Milan 50,000 1.00 600 356 (72) (43) 59.38% 29,690,000 39,931 38,541 Polis Fondi S.g.r.p.a. Milan 5,200 10.00 10,509 5,149 715 350 49.00% 254,800 7,729 8,053 Pwm Aiggig Multimanager Fund Milan N/A N/A N/A N/A N/A N/A 42.54% 25,9583 12,979 13,582 S.F.E.R.A. S.r.l. Agrate Brianza 1,110 1.00 76 36 (4) (2) 48.00% 532,800 494 461 Volare S.p.A. in amm.straord. 162,732 1.00 24.58% 60,000 - Held for Sale AFT S.p.A. Milan 4,355 0.50 5,358 2,543 (55) (26) 47.46% 4,134,150 3,968 7,608 Nearco Invest S.a.r.l. Luxembourg 51 25.00 N/A N/A N/A N/A 49.00% 1,000 1,455 1,433

* The data come from the most recently approved financial statements (31/12/2006)

Sopaf S.p.A. Financial Statements as of 31.12.2007 Financial Sopaf| Sopaf S.p.A. ** N/A: not applicable inasmuch as they are funds, newly incorporated companies and/or companies in the process of liquidation 241

> List of shareholdings in subsidiary and affiliate companies pursuant to Article 2427, Paragraph 5 of the Civil Code and Consob notice dem 6064293 of 28/07/2006

* The data come from the most recently approved financial statements (31/12/2006)

** N/A: not applicable inasmuch as they are funds, newly incorporated companies and/or companies in the process of liquidation Statements as of 31.12.2007 Financial Sopaf| Sopaf S.p.A. 242

> List of shareholdings in companies as provided by Article 2427, Paragraph 5 of the Civil Code and Consob notice dem 6064293 of 28/07/2006

In € 000’s Registered Office Share Capital Par Value % Held Directly Shares Held Book Value of Shares

Conafi Prestito’ S.p.A. Turin 11,160 None 3.7% 1,743,000 4,004 Coronet S.p.A. Milan 19,019 0.52 30.0% 10,972,710 - Delta S.p.A. Bologna 106,372 1.00 15.95% 16,967,900 96,000 Demofonte S.r.l. Monza 15 1.00 15.0% 2,250 703 Ezechiele LDA Madeira, Portugal 5 1.00 19.9% 995 47 FIP-Fondo Imm.Pubblici Rome N/A 100,000.00 0.96% 128 19,019 Formula Sport Group S.r.l. in liq. Milan 2,362 1 19.5% 461,538 - Ind.degli Investimenti S.p.A. Mantua 2,156 0.29 1.7% 123,000 - Management & C. S.p.A. Turin 551,000 1 0.9% 4,950,733 3,664 Noventi Ventures II LP. U.S.A. N/A 1 2.429% 200,000 146 Parc Eolien De S.Riquer Lion sur Mer, France 37 37 40.0% 400 18 Raffaele Caruso S.p.A. Soragna 2,000 1 0.3% 6,451 101 Sadi Services Ind. S.p.A. Milan 48,204 0.52 2.684% 2,485,000 4,945 Tessitura Pontelambro S.p.A. Erba 1,870 0.5 2.0% 75,000 344 Value Sec.Inv.Sicar SCA Luxembourg 1,313 2 2.6% 16,888 381

N/A: Not applicable inasmuch as they are funds (1) Market value

Sopaf S.p.A. Financial Statements as of 31.12.2007 Financial Sopaf| Sopaf S.p.A. (2) Fair value for 100% of the company 243

> Appendix Information pursuant to Article 149-duodecies of Consob’s Issuer Regulations

Prepared pursuant to Article 149-duodecies of CONSOB’s Issuer Regulations, the following schedule discloses the amounts accrued in 2007 for the audit services and other services rendered by the independent audit firm. There were no services rendered during the year by entities affiliated with the independent audit firm’s network.

In € 000’s Service Provider Note Fees for 2007

Audit of financial statements Deloitte & Touche S.p.A. 267 Certification services Deloitte & Touche S.p.A. 0 Other services Deloitte & Touche S.p.A. (1) 90 Total 357

(1) Activity of reviewing proforma balance sheets and profit and loss statements and preparation of tax returns. Statements as of 31.12.2007 Financial Sopaf| Sopaf S.p.A. 244

> Certification of the consolidated financial statements pursuant to Article 81-ter of the Consob Resolution n. 11971 of 14 May 1999 and subsequent modifications and additions thereto

The undersigned further certifies that the consolidated financial statements as of 31 December 2007: a) correspond to the results in the accounting books and records; b) were prepared in conformity with the international accounting principles (IFRS) issued by the Internatio- nal Accounting Standards Board (IASB) and ratified by the European Union, as well as the orders issued for the implementation Article 9 of Legislative Decree n. 38/2005 and, to his knowledge, are suitable for providing a true and accurate representation of the issuer’s capital, financial position and earnings.

Milan, 13 May 2008 Sopaf S.p.A. Financial Statements as of 31.12.2007 Financial Sopaf| Sopaf S.p.A. 245

> Report of the Independent Auditors on the Holding Company Financial Statements Sopaf S.p.A. Financial Statements as of 31.12.2007 Financial Sopaf| Sopaf S.p.A. 246 Sopaf S.p.A. Financial Statements as of 31.12.2007 Financial Sopaf| Sopaf S.p.A. 247

> Shareholders’ meeting resolutions

At the ordinary meeting held on 28 June 2008, the shareholders passed a resolution approving the report on operating performance, the balance sheet, the profit and loss statement, and the notes to the financial statements as of 31 December 2007, as presented by the board of directors, when considered individually and taken as a whole.

The majority of the shareholders approved a resolution to allocate the 2007 net profit of €20,075,664.11 for the partial reduction of losses carried forward in the amount of €22,823,117.17, and to cover the remaining €2,747,453.06 of losses carried forward with the use of part of the reserve for capital reduction.

In addition, the shareholders passed a resolution approving the offsetting of the following reserves: • Merger surplus reserve: €16,711,789.91; • Reserve for transactions between Group companies: €4,819,297.65; • Reserve for capital reduction: €1,579,359.42; • Merger difference - Acal S.p.A.: €2,792,843.32; • Merger difference - LM Real Estate S.p.A.: €(25,903,290.30).

Accordingly, Sopaf S.p.A.’s shareholders’ equity consists of the following amounts:

In € 000’s Share capital 80,002

Legal reserve - Own shares (174) Capital reserve for convertible bonds 3,991 Valuation reserve 46,986 Other reserves 162 Undivided profits 50,965 Total shareholders’ equity 130,967

Milan, 28 June 2008 Sopaf S.p.A. Financial Statements as of 31.12.2007 Financial Sopaf| Sopaf S.p.A. Sopaf S.p.A.

Corporate directory Foro Buonaparte 24, 20121 Milano Tel. 02 7214 2424 [email protected]

Communication and investor relations Foro Buonaparte 24, 20121 Milano Tel. 02 7214 2424 [email protected] www.sopafgroup.it

This is an English language translation of an original Italian document, provided solely for the convenience of international readers. In the event of any discrepancy between the English language version of the document and the Italian language version, the latter shall prevail.

Translated by: Ann Elizabeth Pollak

Editorial design: A+G AchilliGhizzardiAssociati Layout: Ferrariodesign Printed: Grafiche Trotti