ANNUAL REPORT 2018 CONTENTS CORPORATE BODIES BOARD OF DIRECTORS .............................................................................................................................. 05 NOTICE OF ANNUAL GENERAL MEETING ................................................................................................. 07 REPORT ON OPERATIONS 1. PERFORMANCE OF THE GROUP .......................................................................................................... 14 2. PERFORMANCE OF THE PARENT ......................................................................................................... 18 3. RECONCILIATION OF THE PARENT'S FINANCIAL STATEMENTS WITH THE CONSOLIDATED FIGURES .......................................................................................................... 19 4. PERFORMANCE OF THE BUSINESS SEGMENTS ................................................................................... 21 5. OUTLOOK ............................................................................................................................................ 27 6. PRINCIPAL RISKS AND UNCERTAINTIES TO WHICH COFIDE S.P.A. AND THE GROUP ARE EXPOSED .. 27 7. OTHER INFORMATION ........................................................................................................................ 29 CONSOLIDATED FINANCIAL STATEMENTS AT 31 DECEMBER 2018 1. STATEMENT OF FINANCIAL POSITION ................................................................................................ 36 2. INCOME STATEMENT .......................................................................................................................... 37 3. STATEMENT OF COMPREHENSIVE INCOME ....................................................................................... 38 4. STATEMENT OF CASH FLOWS ............................................................................................................. 39 5. STATEMENT OF CHANGES IN EQUITY ................................................................................................. 40 6. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ................................................................. 41 CERTIFICATION OF THE CONSOLIDATED FINANCIAL STATEMENTS PURSUANT TO ART. 154-BIS OF LEGISLATIVE DECREE N. 58/98………………… ............................................. 138 SEPARATE FINANCIAL STATEMENTS AT 31 DECEMBER 2018 1. STATEMENT OF FINANCIAL POSITION ................................................................................................ 140 2. INCOME STATEMENT .......................................................................................................................... 141 3. STATEMENT OF COMPREHENSIVE INCOME ....................................................................................... 142 4. STATEMENT OF CASH FLOWS ............................................................................................................. 143 5. STATEMENT OF CHANGES IN EQUITY ................................................................................................. 144 6. NOTES TO THE SEPARATE FINANCIAL STATEMENTS .......................................................................... 145 CERTIFICATION OF THE SEPARATE FINANCIAL STATEMENTS PURSUANT TO ART. 154-BIS OF LEGISLATIVE DECREE N. 58/98…….………….. ............................................ 182 LIST OF EQUITY INVESTMENTS AT 31 DECEMBER 2018............................................................................... 183 REPORT OF THE BOARD OF STATUTORY AUDITORS ................................................................................... 191 REPORT OF THE INDEPENDENT AUDITORS ................................................................................................. 199 This Annual Report at 31 December 2018 has been prepared pursuant art. 154 ter of Italian Legislative Decree 58/1998 and in accordance with applicable international accounting standards endorsed by the European Union pursuant to EC Regulation 1606/2002 of European Parliament and of the Council of 19 July 2002, as well as all the measures issued in implementation of art. 9 of Italian Legislative Decree 38/2005. 1 2 COFIDE - Gruppo De Benedetti S.p.A. Share capital € 359,604,959 Company Register and Tax Code 01792930016 The Company is subject to management control and coordination by Fratelli De Benedetti S.p.A. Registered office and operating offices Administrative office 20121 Milan, Via Ciovassino 1 10129 Turin, Via Valeggio 41 Tel. (02) 72270.1 Telefax (02) 72270.270 Tel. and Telefax (011) 5517 + 3 4 CORPORATE BODIES BOARD OF DIRECTORS Honorary Chairman CARLO DE BENEDETTI Chairman RODOLFO DE BENEDETTI (*) Directors MASSIMO CREMONA (1) (2) (3) EDOARDO DE BENEDETTI MARCO DE BENEDETTI PAOLA DUBINI (1) (2) PIERLUIGI FERRERO FRANCESCO GUASTI (1) (2) PIA HAHN MOROCCO (2) MARIA SERENA PORCARI (2) Secretary to the Board MASSIMO SEGRE BOARD OF STATUTORY AUDITORS Chairman RICCARDO ZINGALES Acting Statutory Auditors TIZIANO BRACCO ANTONELLA DELLATORRE Alternate Statutory Auditors LUIGI NANI LUIGI MACCHIORLATTI VIGNAT PAOLA ZAMBON INDEPENDENT AUDITORS KPMG S.p.A. Report pursuant to the recommendation in Consob communication DAC/RM/97001574 of 20 February 1997 (*) Powers as per Corporate Governance (1) Member of the Appointments and Compensation Committee (2) Member of the Control and Risk Committee (3) Lead Independent Director 5 6 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 session of the Annual General Meeting on 29 April 2019 at 4.00 p.m., on single call, in the Palazzo delle Stelline Congress Centre, Corso Magenta 61, to discuss and pass resolution on the following AGENDA Ordinary Part 1. Financial Statements for the year ended December 31 2018. Resolutions on the same. Presentation of the Consolidated Financial Statements at as end for the year ended 31 December 2018. 2. Determination of the number of Directors, appointment of the members of the Board of Directors for the years 2019-2021 and decision as to their fees. 3. Proposal to cancel the resolution of 27 April 2018 regarding the authorization to purchase and dispose of treasury shares and proposal for a new authorization. 4. Remuneration Report. Extraordinary Part 1. Amendments to the Company Bylaws on the subject of increased voting rights. 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’ ANNUAL GENERAL 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 in accordance with 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 16 2019, the seventh trading day preceding the date fixed for the single 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 36 of the single Measure on post-trading issued by Consob and Bank of Italy on August 13 2018, 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 7 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 company website www.cofide.it in the section Documents. The proxy form can be sent by registered post with advice of receipt (A.R.) to the Milan Office – Via Nervesa 21 - or, alternatively, may be sent to the certified e-mail address [email protected]. If the proxy gives or sends the Company a copy of the proxy form, he or she must certify under his or her own responsibility that the copy corresponds to the original and confirm the identity of the person appointing such proxy. In accordance with legislation on the subject, Shareholders can, without incurring any charges, appoint as proxy Studio Segre S.r.l. as the Representative Designated by the Company as per the terms of Art. 135-undecies of the TUF. The proxy is appointed by signing the appropriate form available in the above-mentioned section