ANNUAL REPORT CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS 2017 COFIDE ‐ Gruppo De Benedetti S.p.A. Share Capital € 359,604,959 Register of Companies ref. no. and Tax Code 01792930016 A company subject to management and coordination by FRATELLI DE BENEDETTI S.p.A. Registered office and operations centre Administrative office 20121 Milan, Via Ciovassino 1 10129 Turin, Via Valeggio 41 Tel. (02) 72270.1 Fax (02) 72270.270 Tel. and Fax (011) 5517 + CONTENTS ADMINISTRATIVE BODIES BOARD OF DIRECTORS .......................................................................................................................... 05 ANNUAL GENERAL MEETING OF THE SHAREHOLDERS ........................................................................ 07 REPORT ON OPERATIONS 1. PERFORMANCE OF THE GROUP ..................................................................................................... 16 2. PERFORMANCE OF THE PARENT COMPANY…………. ...................................................................... 19 3. RECONCILATION OF THE PARENT COMPANY’S FINANCIAL STATEMENTS WITH THE CONSOLIDATED FINANCIAL STATEMENTS .............................................................................. 20 4. PERFORMANCE OF THE SUBSIDIARIES ........................................................................................... 22 5. SIGNIFICANT EVENTS WHICH OCCURRED AFTER THE CLOSE OF THE YEAR .................................. 28 6. OUTLOOK FOR OPERATIONS ......................................................................................................... 28 7. PRINCIPAL RISKS AND UNCERTAINTIES TO WHICH COFIDE S.p.A. AND THE GROUP ARE EXPOSED ..................................................................................................... 28 8. OTHER INFORMATION ................................................................................................................... 30 9. PROPOSED ALLOCATION OF THE 2016 NET INCOME .................................................................... 33 CONSOLIDATED FINANCIAL STATEMENTS AT 31 DECEMBER 2016 1. CONSOLIDATED STATEMENT OF FINANCIAL POSITION ................................................................. 36 2. CONSOLIDATED INCOME STATEMENT .......................................................................................... 37 3. CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME ........................................................ 38 4. CONSOLIDATED STATEMENT OF CASH FLOWS .............................................................................. 39 5. CONSOLIDATED STATEMENT OF CHANGES IN EQUITY .................................................................. 40 6. EXPLANATORY NOTES .................................................................................................................... 41 CONSOLIDATED FINANCIAL STATEMENTS OF DIRECTLY SUBSIDIARY AT 31 DECEMBER 2016 ....................................................................................... 131 CERTIFICATION OF THE CONSOLIDATED FINANCIAL STATEMENTS PURSUANT TO ART. 154 BIS OF D.LGS 58/98 .............................................................................................. 134 SEPARATE FINANCIAL STATEMENTS AT 31 DECEMBER 2016 1. STATEMENT OF FINANCIAL POSITION ........................................................................................... 136 2. INCOME STATEMENT ..................................................................................................................... 137 3. STATEMENT OF COMPREHENSIVE INCOME .................................................................................. 138 4. STATEMENT OF CASH FLOWS ........................................................................................................ 139 5. STATEMENT OF CHANGES IN EQUITY ............................................................................................ 140 6. EXPLANATORY NOTES .................................................................................................................... 141 SEPARATE FINANCIAL STATEMENTS OF THE DIRECT SUBSIDIARY AT 31 DECEMBER 2016 ......................... 177 CERTIFICATION OF THE SEPARATE FINANCIAL STATEMENTS PURSUANT TO ART. 154 BIS OF D.LGS 58/98 .............................................................................................. 180 LIST OF EQUITY INVESTMENTS ............................................................................................................ 181 REPORT OF THE BOARD OF STATUTORY AUDITORS ............................................................................. 189 REPORT OF THE INDIPENDENT AUDITORS ........................................................................................... 195 This Annual Report and Financial Statements as of 31 December 2016 were prepared as per the terms of Art. 154 ter of D.Lgs. 58/98 and were drawn up in accordance with international accounting standards applicable as recognized by the European Union in Regulation (EC) no. 1606/2002 of the European Parliament and the Council, of July 19 2002, as well as with the measures issued in implementation of Art. 9 of D. Lgs. No 38/2005. This Annual Report has been translated into the English language solely for the convenience of international readers. In the event of any ambiguity the Italian text will prevail. ADMINISTRATIVE BODIES BOARD OF DIRECTORS Honorary Chairman CARLO DE BENEDETTI and Director Chairman RODOLFO DE BENEDETTI (*) Directors SILVIA CANDIANI MASSIMO CREMONA (1) (2) (3) EDOARDO DE BENEDETTI MARCO DE BENEDETTI PAOLA DUBINI (1) (2) PIERLUIGI FERRERO FRANCESCO GUASTI (1) (2) MARIA SERENA PORCARI (2) Secretary to the Board MASSIMO SEGRE BOARD OF STATUTORY AUDITORS Chairman RICCARDO ZINGALES Statutory Auditors TIZIANO BRACCO ANTONELLA DELLATORRE Alternate Auditors LUIGI NANI LUIGI MACCHIORLATTI VIGNAT PAOLA ZAMBON INDEPENDENT AUDITORS KPMG S.p.A. Notice in accordance with the recommendation of Consob contained in its Communiqué no. DAC/RM/97001574 of 20 February 1997 (*) Powers as per Corporate Governance (1) Member of the Appointments and Compensation Committee (2) Member of the Internal Control and Risks Committee (3) Lead Independent Director COFIDE – GRUPPO DE BENEDETTI S.p.A. Milano – Via Ciovassino 1 Share Capital: Euro 359,604,959.00 fully paid up – Company Register and Tax Code. No. 01792930016 Company subject to management and coordination by F.lli De Benedetti S.p.A. NOTICE OF ANNUAL GENERAL MEETING The Shareholders are invited to attend the Ordinary and Extraordinary sessions of the Annual General Meeting on April 26 2018 at 4.00 p.m., at the first call, in the Palazzo delle Stelline Congress Centre, Corso Magenta 61, Milan and, if necessary, at the second call on April 27 2018, same time and place, to discuss and pass resolution on the following AGENDA Ordinary Part 1. Financial Statements for the year ended December 31 2017. Resolutions on the same. Presentation of the Consolidated Financial Statements for the year ended December 31 2017. 2. Proposal to cancel the resolution of April 28 2017 regarding the authorization to buy back and dispose of own shares and proposal for a new authorization. 3. Compensation Report. Extraordinary Part 4. Amendment of Article 11 of the Company Bylaws. Resolutions pertaining to and resulting from the same. 5. Authorization of the Board of Directors as per the terms of Articles 2420-ter and 2443 of the Civil Code; consequent amendment of Article 17 of the Company Bylaws. Resolutions pertaining to and resulting from the same. INFORMATION ON THE SHARE CAPITAL The share capital amounts to € 359,604,959.00 and consists of 719,209,918 ordinary shares each with a nominal value of € 0.50 and with voting rights except for the own shares for which voting rights are suspended. Each share is assigned one vote or two votes as per the terms of Art. 8 of the Company Bylaws if the Board of Directors has ascertained that such a right exists. ATTENDING THE SHAREHOLDERS’ MEETING IN PERSON AND BY PROXY Entitlement to take part in the Meeting and exercise a vote is attested by a notification – made by an authorized intermediary as per the terms of Art. 83-sexies of D.Lgs. no. 58/98 and subsequent amendments and additions (TUF) – in favour of the individual who has the right to vote based on evidence available at the close of business Tuesday April 17 2018, the seventh trading day preceding the date fixed for the first call of the Shareholders’ Meeting. Any persons who obtain entitlement only after that date will not have the right to attend or vote at the Meeting. To make it easier to check their entitlement to take part in the proceedings of the Meeting, participants are requested to show their copy of the notice made to the Company, which the authorized intermediary, in accordance with current regulations, is required to make available to them. Any holders of shares that have not yet been dematerialized should first present their share certificates to an authorized intermediary for input into the centralized clearing system in electronic form, in accordance with the provisions of Article 17 of joint Consob/Bank of Italy Measure of October 22 2008, and should request that the notification be sent in as above. Persons with voting rights can appoint a proxy to represent them at the Shareholders’ Meeting in accordance with Art. 2372 of the Civil Code and with any other rules or regulations applicable. The proxy form at the bottom of the notification issued by the authorized intermediary may be used or alternatively there is a proxy form that can be downloaded from the