MANAGEMENT REPORT 2014

3O. OTHER COSTS The breakdown of other costs is the following:

(in thousands of euro) 2O14 2O13 Services rendered by subsidiaries 6,473 6,784 25,076 25,309 Consultancy and collaboration services 8,917 6,611 Accruals for the provision of future liabilities and charges 1,071 361 Legal and notarial expenses 1,564 1,991 Travel expenses 3,442 5,008 Compensation of Board members and Supervisory Board 2,928 3,243 Membership fees and contributions 3,516 5,128 Rental and lease instalments 9,808 9,211 IT expenses 2,445 2,265 Power, gas and water expenses 1,836 2,301 Security service 1,839 1,924 Insurance premiums 1,228 1,016 Patents and trademarks expenses 764 1,458 Cleaning and property ordinary maintenance expenses 551 950 Property maintenance 985 1,550 Other 7,832 10,867 80,275 85,977

31. NET INCOME (LOSS) FROM EQUITY INVESTMENTS 31.1 Gains on equity investments They amounted to euro 18,941 thousand (euro 293 thousand in 2013) and mainly refer to the income from conversion of Prelios S.p.A. Convertendo (euro 13,307 thousand) and to the gain derived from disposal to third parties of the subsidiary Finance (Luxembourg) S.A. (euro 4,781 thousand).

326 Parent Financial Statements

31.2. Losses from equity investments Amounted to euro 139,121 thousand (euro 126,731 thousand in 2013), in detail:

(in thousands of euro) 2O14 2O13 Impairment losses on equity investments in subsidiaries: - PZero S.r.l. 10,169 15,220 - Pirelli & C.Ambiente S.r.l. 16,156 20,137 - Pirelli Finance (Luxembourg) S.A. - 809 Impairment losses on equity investments in associates: - Prelios S.p.A. 35,657 10 - Fenice S.r.l. 44,927 4,801 Impairment losses on other financial assets: - Prelios S.p.A. category B shares 4,772 - - Convertendo Prelios S.p.A. - 44,286 - S.p.A. - 10,429 - Alitalia S.p.A. 11,229 4,925 - Fin.Priv. S.r.l. - 1,345 - RCS Mediagroup S.p.A. 15,860 23,721 - Others 351 1,048 139,121 126,731

The impairment of investments in subsidiaries refers to the adjustment of Pirelli & C. Ambiente S.r.l. at its value in use and to PZero S.r.l. at its fair value, which is estimated to be its net equity value (refer to note 9).

The impairment of investments in associates refers to the adjustment of Prelios S.p.A. at its value in use and of Fenice S.r.l. at its fair value (refer to note 10).

The impairment of other financial assets refers to the impairments of available for sale financial assets, recognised in the income statement for exceeding the thresholds of significance or durabil- ity. For Alitalia S.p.A. (euro 11,229 thousand) and Euroqube S.A. (in liquidation) (euro 222 thousand) it represents the alignment to the fair value based on the best information available; for RCS Media- group S.p.A. (euro 15,860 thousand) it represents the alignment to the fair value equal to the stock market listing, for Prelios S.p.A. class B shares it represents the difference between the initial rec- ognition amount (euro 47,536 thousand) and the fair value at the date of the transfer (euro 42,764 thousand), equal to the stock market listing of A shares at June 30, 2014 (euro 0.56 per share) less the discount for illiquidity of 18.45% (euro 0.46 per share), first recognized as a decrease of equity in a special reserve and immediately after, following the transfer (treated as a sale), the negative reserve is reversed to the income statement. 327 MANAGEMENT REPORT 2014

31.3. DIVIDENDS Amounted to euro 312,921 thousand compared to euro 325,722 thousand in 2013. The breakdown is as follows:

(in thousands of euro) 2O14 2O13 From subsidiaries: - Pirelli Tyre S.p.A. - 294,000 310,000 - Pirelli Ltda - Brasil 7,671 10,530 - Pirelli Sistemi Informativi S.r.l. - Italy 500 1,000 - Pirelli Servizi Amministrazione e Tesoreria S.p.A. - Italy 800 1,000 - Maristel S.p.A. - Italy 1,000 - - Pirelli Group Reinsurance Company SA 4,299 - 308,270 322,530 From associates: - Eurostazioni S.p.A. - Italy 1,011 1,947 1,011 1,947 From other companies: - Mediobanca S.p.A. - Italy 2,363 - - ECA Ltd - Great Britain - 21 - Sint S.p.A. - Italy - 481 - Fin. Priv. S.r.l. - Italy 308 103 - Emittente Titoli S.p.A. - Italy 33 30 - Fondo Anastasia - Italy 680 610 - Euroqube S.A. (in liquidation) 256 - 3,640 1,245 312,921 325,722 32. FINANCIAL INCOME Amounted to euro 19,619 thousand (euro 23,817 thousand in 2013). It mainly includes interest on loans granted to the subsidiary Pirelli Tyre S.p.A. (euro 13,964 thousand in 2014, euro 14,605 thousand in 2013) and to Pirelli Industrie Pneumatici S.r.l. (euro 3,791 thousand in 2014, euro 4,420 thousand in 2013). The decrease compared to 2013 is essentially due to the conversion in 2014 of the financial receivable from Prelios S.p.A. in an equity investment as part of the company’s financial restructuring process. 33. FINANCIAL EXPENSES Amounted to euro 29,615 thousand (euro 27,175 thousand in 2013 and essentially include euro 26,730 thousand for interest accrued on the Bond (euro 26,673 thousand in 2013) and euro 2,440 thousand related to interest on borrowings (euro 306 thousand in 2013). 328