DeA Capital 2012 Annual Report
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    DeA Capital 2012 Annual Report DeA Capital 2012 Annual Report Document Transcript

    • Annual financial statementsto 31 December 2012 1FINANCIAL STATEMENTSTO 31 DECEMBER 2012______________________2012Board of Directors of DeA Capital S.p.A.Milan, 8 March 2013
    • Annual financial statementsto 31 December 2012 2DeA Capital S.p.A.Corporate information DeA Capital S.p.A. is subject to the management and co-ordination of De Agostini S.p.A. Registered Office: ViaBrera, 21, Milan 20121, ItalyShare capital: EUR 306,612,100 (fully paid-up)comprising 306,612,100 shares with a nominal value ofEUR 1 each (including 32,006,029 held in the portfolio at31 December 2012).Tax code, VAT code and recorded in the Milan Register ofCompanies under no. 07918170015Board of Directors (*)Chairman Lorenzo PellicioliChief Executive Officer Paolo CerettiDirectors Lino Benassi (1)Rosario Bifulco (1/4/5)Marco BoroliDaniel BuaronClaudio Costamagna (3/5)Marco DragoRoberto DragoSeverino Salvemini (2/3/5)Board of StatutoryAuditors (*)Chairman Angelo GavianiRegular Auditors Gian Piero BalducciCesare Andrea GrifoniAlternate Auditors Andrea BonafèMaurizio FerreroGiulio GasloliSecretariat of the Board ofDirectorsDiana AllegrettiManager responsible forpreparing the company’saccountsManolo SantilliIndependent Auditors KPMG S.p.A.(*)In office until the approval of the financial statements to 31 December 2012(1)Member of the Control and Risk Committee(2) Member and Chairman of the Control and Risk Committee(3)Member of the Remuneration Committee(4)Member and Co-ordinator of the Remuneration Committee(5)Independent director
    • Annual financial statementsto 31 December 2012 3ContentsReport on Operations1. Profile of DeA Capital S.p.A.2. Information for shareholders3. DeA Capital Group’s key balance sheet and income statement figures4. Significant events during the year5. DeA Capital Group’s results6. Results of the Parent Company DeA Capital S.p.A.7. Other information8. Proposal to approve the financial statements of DeA Capital S.p.A. for the year to31 December 2012 and related and resulting resolutionsConsolidated financial statements for the year to 31December 2012Statement of responsibilities for consolidated financialstatementspursuant to art. 154-bis of Legislative Decree 58/98Information pursuant to art. 149-duodeciesof the Consob Issuer Regulations - consolidated financialstatementsAnnual financial statements for the year to 31 December2012Statement of responsibilities for accountspursuant to art. 154-bis of Legislative Decree 58/98Information pursuant to art. 149-duodeciesof the Consob Issuer Regulations - annual financialstatementsSummary of subsidiaries’ financial statementsto 31 December 2012Independent Auditors’ Reports(Original report in Italian version only)Report of the Board of Statutory Auditors(Original report in Italian version only)
    • Annual financial statementsto 31 December 2012 4Report on Operations
    • Annual financial statementsto 31 December 2012 51. Profile of DeA Capital S.p.A.With an investment portfolio of around EUR 870 million and assets under managementof over EUR 10,600 million, DeA Capital S.p.A. is one of Italy’s largest alternativeinvestment operators.The company, which operates in both the Private Equity Investment and AlternativeAsset Management businesses, is listed on the FTSE Italia STAR segment of the Milanstock exchange, and heads the De Agostini Group in the area of financial investments.With reference to the Private Equity Investment business, DeA Capital has "permanent"capital, and therefore has the advantage – compared with traditional private equityfunds, which are normally restricted to a pre-set duration – of greater flexibility inoptimising the timing of entry to and exit from investments. In terms of investmentpolicy, this flexibility allows it to adopt an approach based on value creation over themedium to long term.In the Alternative Asset Management business, DeA Capital S.p.A. – through itssubsidiaries IDeA FIMIT SGR and IDeA Capital Funds SGR – is Italy’s leading operator inreal estate fund management and private equity funds of funds programmes,respectively. The two companies are active in the promotion, management and valueenhancement of investment funds, using approaches based on sector experience andthe ability to identify opportunities for achieving the best returns. As Alternative AssetManagement focuses on managing funds with a medium-term to long-term duration, itgenerates cash flows that are relatively stable over time for DeA Capital S.p.A. This, inturn, enables the company to cover the typically longer investment cycle of the privateequity investment sector.PRIVATE EQUITYINVESTMENTALTERNATIVE ASSETMANAGEMENT Direct investmentsIn the services sector, in Europe andEmerging Europe. Indirect investmentsIn private equity funds of funds, co-investment funds and theme funds. IDeA Capital Funds SGR, whichmanages private equity funds (fundsof funds, co-investment funds andtheme funds)Assets under management: EUR 1.2 billion IDeA FIMIT SGR, which managesreal estate funds.Assets under management: EUR 9.4 billion IRE/IRE Advisory, which operates inproject, property and facilitymanagement, as well as real estatebrokerage
    • Annual financial statementsto 31 December 2012 6At the end of 2012, the corporate structure of the Group headed by DeA Capital S.p.A. (DeACapital Group, or the Group) was as summarised below:DeA CapitalS.p.A.Shareholdingsand VC funds100%DeA CapitalInvestments S.A.(Luxembourg)QuotaIDeAOF IQuotaIDeA IFund of FundsShareholdingKenanInvestmentsShareholdingSantéShareholdingSiglaLuxembourgShareholdingMigrosIRE(ex. IDeA SI)IRE Advisory(ex. IDeAAgency)100%IDeACapital FundsSGR100%100%QuotaICF II100%ShareholdingSiglaShareholdingGDSPrivate Equity InvestmentAlternative Asset ManagementHolding CompaniesQuotaEESSIFIM100%20,98%40,32%IDeA FIMITSGRQuotaAVAPrivate EquityInvestment “Direct”Private Equity Investment“Indirect”DeA CapitalReal EstateAlternativeAsset ManagementWith regard to the corporate structure shown above, on 1 January 2012, the merger byincorporation of the wholly-owned subsidiary IDeA Alternative Investments into DeACapital S.p.A., which was decided by the Boards of Directors of these companies on 26 July2011, became effective.On 28 March 2012, an agreement was signed with Deb Holding, a company controlledby the director Daniel Buaron that holds 30% of the share capital of FARE Holding. Thepurpose of the agreement was to bring forward, with effect from 24 April 2012, the exercise ofthe option to sell the stake in FARE Holding held by Deb Holding to DeA Capital S.p.A. Underthe agreements stipulated, on 24 April 2012 DeA Capital S.p.A. took full control of FAREHolding, and changed the company name of FARE Holding and its subsidiaries FARE and FAI,to DeA Capital Real Estate, IDeA Servizi Immobiliari and IDeA Agency respectively. Atthe end of November 2012, these two companies were re-named Innovation Real Estate(IRE) and Innovation Real Estate Advisory (IRE Advisory) respectively.On 11 April 2012, an agreement was signed with Massimo Caputi and the companyhe controls, Feidos S.p.A., which together own a stake of 41.69% in I.F.IM. (IFIM), which inturn holds a stake of 20.98% in IDeA FIMIT SGR. The purpose of the agreement was to bringforward, to this date, the exercise of the option to sell the stakes in IFIM held by MassimoCaputi and Feidos to DeA Capital S.p.A. Following the transaction, DeA Capital S.p.A. acquiredfull control of IFIM.In October 2012, the DeA Capital Group launched its plan to exit from the investment advisorybusiness carried out by IDeA SIM. This was effected via an agreement with the company’sCEO to withdraw the powers conferred on him, the cancellation of the active assetmanagement agreements and, from 15 November 2012, the termination of the investmentadvisory service. Approving the company’s application, Consob issued resolution 18466 of 13February 2013, which revoked IDeA SIM’s authorisation to provide investment servicespursuant to art. 1, para. 5f) of Legislative Decree 58 of 24 February 1998. It also removed the
    • Annual financial statementsto 31 December 2012 7company from the register of real estate brokerage companies. Lastly, on 25 February 2013, incompliance with the provisions of various agreements, DeA Capital S.p.A. acquired the sharesheld by the former CEO of IDeA SIM, equal to 30% of its capital, bringing its investment to95% of the company’s capital.To complete the changes made to the Groups corporate structure, on 29 November 2012,Soprarno SGR’s shareholder structure was restructured with the resulting reduction in DeACapital S.p.A.’s equity investment from 65% to 20%, via the following transactions:- the sale by DeA Capital S.p.A. of 25% of Soprarno SGR to Banca Ifigest S.p.A. (Ifigest),for a payment of EUR 0.5 million, with the simultaneous cancellation of the option forIfigest to sell its stake in Soprarno SGR to DeA Capital S.p.A., for the same amount- a capital increase in kind carried out via the transfer of the asset management businessheld by Cassa di Risparmio di San Miniato (CARISMI) to Soprarno SGR: the businesswas valued at around EUR 4.5 million (in line with the value attributed to SoprarnoSGR).
    • Annual financial statementsto 31 December 2012 8At 31 December 2012, the DeA Capital Group reported Group shareholders’ equity of EUR723.1 million, corresponding to a net asset value (NAV) of EUR 2.63 per share, with aninvestment portfolio of EUR 873.1 million.More specifically, the investment portfolio, which consists of private equity investments of EUR464.7 million, private equity investment funds of EUR 180.8 million and net assets relating tothe Alternative Asset Management business of EUR 227.6 million breaks down as follows.Investment portfolion. EUR/mlnEquity investments 9 464.7Funds 12 180.8Private Equity Investment 21 645.5Alternative Asset Management (*) 4 227.6Investment portfolio 25 873.1(*) Equity investments in subsidiaries relating to Alternative Asset Management arevalued using the equity method in this table.December 31,2012 PRIVATE EQUITY INVESTMENTo Main investments Strategic shareholding in Générale de Santé (GDS), Frances leadingprivate healthcare provider, whose shares are listed on the Eurolist market inParis (with a free float of less than 5% and low trading volumes). Theinvestment is held through the Luxembourg-registered company Santé S.A.,an associate of the DeA Capital Group (with a stake of 42.89%) Minority shareholding in Migros, Turkeys biggest food retail chain, whoseshares are listed on the Istanbul Stock Exchange. The investment is heldthrough the Luxembourg-registered company Kenan Investments S.A., aninvestment recorded in the AFS portfolio of the DeA Capital Group (with astake of 17.03%) Strategic shareholding in Sigla, which provides consumer credit for non-specific purposes (salary-backed loans and personal loans) and services non-performing loans in Italy. The equity investment is held through theLuxembourg-registered company Sigla Luxembourg S.A., an associate of theDeA Capital Group (with a stake of 41.39%)
    • Annual financial statementsto 31 December 2012 9o Funds units in four funds managed by the subsidiary IDeA Capital Funds SGR i.e. inthe funds of funds IDeA I Fund of Funds (IDeA I FoF) and ICF II, in theco-investment fund IDeA Opportunity Fund I (IDeA OF I, formerly IDeACoIF I) and in the theme fund IDeA Energy Efficiency and SustainableGrowth (IDeA EESS) a unit in the real estate fund Atlantic Value Added (AVA) managed byIDeA FIMIT SGR units in seven venture capital funds ALTERNATIVE ASSET MANAGEMENT controlling interest in IDeA Capital Funds SGR (100%), which managesprivate equity funds (funds of funds, co-investment funds and theme funds)with about EUR 1.2 billion in assets under management and four managedfunds controlling interest in IDeA FIMIT SGR (61.30%), Italys largestindependent real estate asset management company with about EUR 9.4billion in assets under management and 31 managed funds (including fivelisted funds) controlling stake (100%) in IRE/IRE Advisory, which operate in project,property and facility management, as well as real estate brokerage
    • Annual financial statementsto 31 December 2012 102. Information for shareholders Shareholder structure - DeA Capital S.p.A. (#)De AgostiniSpA58,3%Treasurystock10.4%Mediobanca4,8%DEBHolding*3,8%Free float22.7%(#) Figures to 31 December 2012(*) company controlled by director Daniel Buaron
    • Annual financial statementsto 31 December 2012 11 Share performance (°)Period from 11 January 2007, when DeA Capital S.p.A. began operations, to 31 December20120.51.01.52.02.53.03.54.0DeA Capital LPX 50 FTSE Star FTSE AllPeriod from 1 January 2012 to 31 December 20121.101.201.301.401.501.601.70DeA Capital FTSE All FTSE Star LPX 50(°) Source: Bloomberg
    • Annual financial statementsto 31 December 2012 12 Investor relationsDeA Capital S.p.A. maintains stable and structured relationships with institutional andindividual investors. In 2012, the company continued its communications campaign,participating in the Milan STAR Conference in March 2012 and the London STAR Conference inOctober 2012, and holding meetings and conference calls with institutional investors, portfoliomanagers and financial analysts from Italy and abroad.Coverage of the DeA Capital share is currently carried out by Equita SIM and Intermonte SIM,the two main intermediaries on the Italian market, with Intermonte SIM acting as a specialist.The research prepared by these intermediaries is available in the Investor Relations section ofthe website www.deacapital.it.In December 2008, the DeA Capital share joined the LPX50® and LPX Europe® indices. TheLPX® indices measure the performance of the major listed companies operating in privateequity (Listed Private Equity or LPE). Due to its high degree of diversification by region andtype of LPE investment, the LPX50® index has become one of the most popular benchmarksfor the LPE asset class. The method used to constitute the index is published in the LPX EquityIndex Guide. For further information please visit the website: www.lpx.ch. The DeA Capitalshare is also listed on the GLPE Global Listed Private Equity Index, the index created by RedRocks Capital, a US asset management company specialising in listed private equitycompanies. The index was created to monitor the performance of listed private equitycompanies around the world and is composed of 40 to 75 stocks. For further information:www.redrockscapital.com (GLPE Index).The website is the primary mode of contact for individual investors, who may choose tosubscribe to a mailing list and send questions or requests for information and documents tothe companys Investor Relations department, which is committed to answering queriespromptly, as stated in the Investor Relations Policy published on the site. A quarterlynewsletter is also published for individual investors with the aim of keeping them updated onkey events, as well as providing clear and simple analysis of quarterly results and shareperformance. DeA Capital also launched a mobile site, www.deacapital.mobi in July 2012. Thiswill offer a further tool to stakeholders, who will be able to access key information about DeACapital via their mobile phone or smartphone.Performance of the DeA Capital share at 31 December 2012The company’s share declined by 52.7% between 11 January 2007, when DeA Capital S.p.A.began operations, and 31 December 2012. In the same period of time, the FTSE All-Share®,FTSE Star® and LPX50® reported performances of -59.4%, -36.6% and -43.7% respectively.The DeA Capital share gained 0.8% in 2012, while the FTSE All-Share®, the Italian marketindex, gained 8.4%, the FTSE Star® gained 16.6% and the LPX50® gained 24.8%. Theshare’s liquidity was lower than in 2011, with average daily trading volumes of around 103,000shares.
    • Annual financial statementsto 31 December 2012 13The share prices recorded in 2012 are shown below(in EUR per share) 2012Maximum price 1.49Minimum price 1.17Average price 1.31Price at 31 December 2012 1.34(EUR million) 31 Dec 2012Market capitalisation 411Capitalisation net of own shares 368
    • Annual financial statementsto 31 December 2012 143. The DeA Capital Group’s key balance sheet and incomestatement figuresThe DeA Capital Group’s key income statement and balance sheet figures to 31 December2012 compared with the corresponding figures to 31 December 2011 are shown below.2012 2011NAV/share (EUR) 2.63 2.38Group NAV 723.1 669.0Parent Company net profit/(loss) 2.3 (32.1)Group net profit/(loss) (26.3) (43.6)Comprehensive income (Group share) 62.5 (70.2)(Statement of Performance – IAS 1)Investment portfolio 873.1 775.9Net financial position – Holding Companies (141.6) (113.5)Net financial position consolidated (123.6) (102.5)(EUR million)The table below shows the composition of NAV during 2012.Group NAV at 31.12.11 669.0 280.7 2.38Purchase of own shares (8.0) (6.1) 1.31Other comprehensive income - Statement of Performance – IAS 1 62.5Other movements of NAV (0.4)Group NAV at 31.12.12 723.1 274.6 2.63(*) Average price of purchases in 2012Change in Group NAVTotal value (EURm)No. Shares(millions)Value per share(€)(*)
    • Annual financial statementsto 31 December 2012 154. Significant events during the yearSignificant events that occurred in 2012 are described below. IDeA I Fund of Funds (IDeA I FoF) - Paid calls/reimbursementsDuring 2012, the DeA Capital Group increased its investment in the IDeA I FoF fund followingtotal payments of EUR 17.2 million. At the same time, it received reimbursements of EUR 14.4million to be used in full to reduce the carrying value of the units.In relation to the relevant portion, total payments made by the DeA Capital Group to IDeA FoFI from the beginning of the fund’s operations until 31 December 2012 were EUR 130.3 million,with a residual commitment of EUR 43.2 million.The units held in the fund are valued in the consolidated financial statements at EUR 103.1million. IDeA I Opportunity Fund I (IDeA OF I) - Paid calls/reimbursementsDuring 2012, the DeA Capital Group increased its investment in the IDeA OF I fund withpayments totalling EUR 17.0 million.In relation to the relevant portion, total payments made by the DeA Capital Group to IDeA OF Ifrom the beginning of the fund’s operations until 31 December 2012 were EUR 70.1 million,with a residual commitment of EUR 31.7 million.The units held in the fund are valued in the consolidated financial statements at EUR 48.1million. ICF II (Fund of Funds) - Paid calls/reimbursementsDuring 2012, the DeA Capital Group increased its investment in the ICF II fund following totalpayments of EUR 9.2 million. At the same time, it received reimbursements of EUR 1.3 millionto be used in full to reduce the carrying value of the units.In relation to the relevant portion, total payments made by the DeA Capital Group to IDeA ICFII from the beginning of the fund’s operations until 31 December 2012 were EUR 17.3 million,with a residual commitment of EUR 33.7 million.The units held in the fund are valued in the consolidated financial statements at EUR 16.5million. IDeA EESS – Paid calls/reimbursementsOn 4 September 2012, the IDeA EESS fund completed the third closing, taking overallcommitments to around EUR 59.5 million. Following the entry of the new unitholders, theGroup held a 21.53% minority shareholding.
    • Annual financial statementsto 31 December 2012 16In 2012, the DeA Capital Group increased its investment in the IDeA EESS fund with paymentstotalling EUR 1.0 million.In relation to the relevant portion, total payments made by the DeA Capital Group to IDeAEESS from the beginning of the fund’s operations until 31 December 2012 were EUR 0.9million, with a residual commitment of EUR 11.6 million.The units held in the fund are valued in the consolidated financial statements at EUR 0.6million. Acquisition of the remaining shares in FARE Holding and IFIMOn 28 March 2012, an agreement was signed with Deb Holding, a company controlled by thedirector Daniel Buaron that holds 30% of the share capital of FARE Holding. The purpose of theagreement was to anticipate, with effect from 24 April 2012, the exercise of the put optionheld by Deb Holding on its own stake in FARE Holding.The transaction, which enabled DeA Capital S.p.A. to acquire full control of FARE Holding, setthe price of the stake at EUR 31.8 million, in addition to the payment of amountscorresponding to the NAV of units of the Atlantic 1 and Atlantic 2/Berenice funds (in line withthe amount booked under the net financial position at 31 December 2011), payable as of 12December 2013.The agreement also stipulates payment to Deb Holding of an amount equal to 30% of anydividends to be distributed by FARE Holding for 2012.In accordance with the agreements already in place, director Daniel Buaron resigned from hispositions at IDeA FIMIT SGR and FARE Holding, with effect from 12 April 2012 (the date of theapproval of the 2011 financial statements of IDeA FIMIT SGR) and 24 April 2012 respectively.Under the agreements stipulated, on 24 April 2012 DeA Capital S.p.A. changed the companyname of FARE Holding and its subsidiaries FARE and FAI, to DeA Capital Real Estate, IDeAServizi Immobiliari and IDeA Agency respectively. At the end of November 2012, these twocompanies were re-named Innovation Real Estate (IRE) and Innovation Real Estate Advisory(IRE Advisory) respectively.On 11 April 2012 the agreement was signed with Massimo Caputi and the company hecontrols, Feidos S.p.A., which together own a stake of 41.69% in I.F.IM. (IFIM), which in turnholds 20.98% in IDeA FIMIT SGR, for the purpose of anticipating, on this date, the exercise ofthe option to sell to DeA Capital S.p.A. the stakes in IFIM held by Massimo Caputi and FeidosS.p.A..The transaction, which enabled DeA Capital S.p.A. to acquire full control of IFIM, wasconcluded for EUR 19.3 million.The agreement also provides for the payment to the sellers of a supplement to the price (earn-out), connected to the completion, by IDeA FIMIT SGR - by 30 June 2013 - of potential newfunds, negotiations for which were already under way when Massimo Caputi sold his stake.In accordance with agreements in force, Massimo Caputi resigned from his positions at IDeAFIMIT SGR and IFIM, with effect from 12 April 2012.
    • Annual financial statementsto 31 December 2012 17 Dividends from Alternative Asset Management activitiesOn 27 March 2012, the shareholders’ meeting of IDeA Servizi Immobiliari (formerly FARE, nowIRE) voted to pay dividends totalling EUR 3.0 million entirely to DeA Capital S.p.A. Thedividend was paid on 31 March 2012.On 12 April 2012, the shareholders’ meeting of IDeA FIMIT SGR voted to pay a dividendtotalling EUR 11.8 million (paid on 25 May 2012), of which around EUR 7.2 million went toFARE Holding (now DeA Capital Real Estate) and IFIM, a wholly-owned subsidiary of DeACapital S.p.A.On 17 April 2012, the shareholders meeting of IDeA Capital Funds SGR approved thecompanys financial statements to 31 December 2011 and voted to pay dividends totalling EUR4.8 million entirely to DeA Capital S.p.A. The dividend was paid on 13 July 2012.In summary, dividends paid during 2012 by the Alternative Asset Management business to theDeA Capital Groups holding companies totalled EUR 15.0 million. Share buy-back planOn 17 April 2012, the shareholders’ meeting approved a new plan to buy and sell own shares.The plan cancelled and replaced the previous plan authorised by the shareholders’ meeting on19 April 2011, which was scheduled to expire on 19 October 2012. The new plan will have thesame objectives as the previous one, including the purchase of own shares to be used forextraordinary operations and share incentive plans, offering shareholders a means ofmonetising their investment, stabilising the share price and regulating trading within the limitsof the legislation in force.The authorisation specifies that purchases may be carried out, for a maximum period of 18months starting from 17 April 2012, in accordance with all procedures allowed by currentregulations, and that DeA Capital S.p.A. may also sell the shares purchased for the purposes oftrading. The unit price for the purchase of the shares is set by the Board of Directors, but inany case must not be more than 20% above or below the share’s reference price on thetrading day prior to each purchase.In contrast, the authorisation to sell own shares already held in the company’s portfolio andany shares bought in the future was granted for an unlimited period, to be implemented usingthe methods deemed most appropriate and at a price to be determined on a case-by-casebasis by the Board of Directors, which must not, however, be more than 20% below theshares reference price on the trading day prior to each individual sale (apart from in certainexceptional cases specified in the plan). Sale transactions may also be carried out for tradingpurposes.Also on 17 April 2012, the company’s Board of Directors voted to initiate the plan to buy andsell own shares authorised by the shareholders’ meeting, and to this end vested the Chairmanof the Board of Directors and the Chief Executive Officer with all the necessary powers, to beexercised jointly or severally and with full powers of delegation.
    • Annual financial statementsto 31 December 2012 18 Stock option and performance share plansOn 17 April 2012, the shareholders’ meeting approved the DeA Capital Stock Option Plan2012–2014. To implement the resolution of the shareholders meeting, the Board of Directorsof DeA Capital S.p.A., at its meeting held on the same day, allocated a total of 1,030,000options to certain employees of the company and its subsidiaries and of the Parent Company,De Agostini S.p.A., who perform important roles for the company.In line with the criteria specified in the regulations governing the DeA Capital Stock OptionPlan 2012–14, the Board of Directors also set the exercise price for the options allocated atEUR 1.3363, which is the arithmetic mean of the official prices of ordinary DeA Capital shareson the Mercato Telematico Azionario, the Italian screen-based trading system organised andmanaged by Borsa Italiana S.p.A., on the trading days between 17 March 2012 and 16 April2012.The shareholders’ meeting also approved a paid capital increase, in divisible form, withoutoption rights, via the issue of a maximum of 1,350,000 ordinary shares to service the DeACapital Stock Option Plan 2012-2014.The shareholders’ meeting also approved the Performance Share Plan 2012–2014. Toimplement the resolution of the shareholders meeting, the Board of Directors allocated a totalof 302,500 units (representing the right to receive ordinary shares of the company, free ofcharge, under the terms and conditions of the plan) to certain employees of the company andits subsidiaries and of the Parent Company, De Agostini S.p.A., who perform important rolesfor the Company.Shares allocated due to the vesting of units will be drawn from own shares already held by thecompany.The terms and conditions of the DeA Capital Stock Option Plan 2012–2014 and thePerformance Share Plan 2012-2014 are described in the Information Prospectus prepared inaccordance with art. 84-bis of Consob Resolution 11971 of 14 May 1999 (Issuer Regulations),available to the public at the registered office of DeA Capital S.p.A. and on the company’swebsite www.deacapital.it in the section Corporate Governance/Incentive Plans. Co-option of a new directorOn 4 May 2012, non-executive director Alberto Dessy resigned. Mr Dessy, who was leadindependent director, was also Chairman of the Control and Risk Committee, a member of theRemuneration Committee and a member of the Supervisory Board of DeA Capital S.p.A. Hisdecision was due to an increase in professional commitments incompatible with continuing tohold the various offices in DeA Capital S.p.A.On 14 May 2012, the Board of Directors co-opted Severino Salvemini as a non-executive,independent director to replace Alberto Dessy, pursuant to art. 11 of the articles of associationand art. 2386 of the Italian Civil Code.After verifying that Severino Salvemini met the requirements of independence, the Board ofDirectors approved the appointment of Salvemini as Chairman of the Control and RiskCommittee, lead independent director and a member of the Remuneration Committee and theSupervisory Board of DeA Capital S.p.A.
    • Annual financial statementsto 31 December 2012 19 IDeA FIMIT – Acquisition of the Duemme SGR business divisionOn 1 July 2012, the deed of transfer signed by IDeA FIMIT SGR and Duemme SGR for thebusiness division comprising real estate mutual investment funds managed by Duemme SGR(a subsidiary of the Banca Esperia Group specialising in asset management services) becameeffective.With the transfer of the business division, IDeA FIMIT SGR has taken over the management ofeight funds with a total value of around EUR 500 million.This transaction confirms IDeA FIMIT SGR’s position as Italian leader in the sector with 31 realestate funds managed, and puts it among the major real estate asset management companiesin Europe, thanks also to the expansion of its circle of institutional investors. IDeA FIMIT SGR – Award of the AMA tenderOn 8 October 2012, IDeA FIMIT SGR was awarded the tender organised by Azienda MunicipaleAmbiente S.p.A. (AMA), Rome, to manage some of its real estate assets.AMA, Rome’s leading operator in environmental services, identified IDeA FIMIT’s bid as thebest solution for the creation and management of a real estate investment fund. The fund willmanage assets comprising 56 buildings, all located in the Rome region and primarilydesignated for office use, with an estimated value of EUR 140-160 million.The new fund will have a maximum duration of ten years and will become operational in early2013.The Group’s technical bid, which had a relative weight of 70% with the financial proposalaccounting for the remainder, was crucial in its selection. This demonstrated the quality ofIDeA FIMIT SGR’s bid from a management viewpoint. Innovation Real Estate – Acquisition of a property and facility managementbusiness division of Ingenium Real Estate S.p.A.On 10 December 2012, the deed of transfer of a property, agency and facility managementbusiness division of Ingenium Real Estate S.p.A. (the Ingenium business division) to IREbecame effective.The Ingenium business division provides services in the real estate sector, and specifically: legal and administrative assistance for the sale and purchase of real estate (legalassistance) management of communal services in apartment blocks, as well as insurance, tax andcontractual matters relating to real estate (property and facility management) planning and analysis of building works (project and construction management)These activities are predominantly but not exclusively carried out for the real estate fundsmanaged by IDeA FIMIT SGR.
    • Annual financial statementsto 31 December 2012 20 Capital strengthening of the corporate chain of command at GDSAs part of a capital strengthening plan for the corporate chain of command at GDS, on 27December 2012, DeA Capital Investments – a fully-owned company of DeA Capital S.p.A. anddirect shareholder of 42.89% of Santé/SDE/GDS – acquired a tranche of mezzanine bonds fora nominal price of around EUR 25.8 million, issued by SDE. The sale and purchase – carriedout with a related-party company of the De Agostini Group - was finalised with a vendor loanof the same amount with an expiry date of October 2017 and an interest rate equal to Euribor+ 200 basis points. In practice, this means that it was broadly carried out under the samefinancial conditions as those currently applied to the credit lines granted to DeA CapitalS.p.A.).Subsequently, the above-mentioned tranche of mezzanine bonds was converted, via a complexcorporate transaction, into a quasi-equity loan granted to Santé, the sole shareholder of SDE,with a maximum expiry date of October 2018 and an interest rate equal to Euribor + 1,000basis points (with the interest payable in kind up to the expiry date).As mentioned above, these transactions were intended to strengthen the capital of thecorporate chain of command of GDS, especially of its equity investments Santé and SDE, asthe new quasi-equity loan is subordinated to the other credit lines granted to the companies(although senior in the repayment plan to Santé’s equity loan).Note that in relation to the other credit lines granted to Santé and SDE, at 31 December 2012,all the financial parameters stipulated by the relevant agreements had been met, especiallythe “leverage ratio” of net debt/EBITDA.The Group will continue to continuously monitor the company’s economic and financialperformance in 2013 with a view to preventing – or at least minimising – any difficulties inmeeting the financial parameters in the loan agreements relating to the various companiesthat make up the corporate chain of command.
    • Annual financial statementsto 31 December 2012 215. The DeA Capital Group’s resultsConsolidated results for the period relate to the operations of the DeA Capital Group in thefollowing businesses: Private Equity Investment, which includes the reporting units involved in private equityinvestment, broken down into equity investments (Direct Investments) and investmentsin funds (Indirect Investments) Alternative Asset Management, which includes reporting units involved in assetmanagement activities and related services, with a current focus on the management ofprivate equity and real estate funds PRIVATE EQUITY2012 was a year dominated by uncertainty, and one in which political tensions had a harmfuleffect on the global economy. However, the picture gradually improved in the second half ofthe year, when financial tensions abated, leading to a reduction in the spread in the eurozone,and growth on the international equity markets.The IMF’s latest estimates forecast growth of 3.5% in the global economy. Specifically theadvanced economies are expected to experience growth of 1.4% (2% for the US and -0.2% forthe eurozone) and emerging economies growth of 5.5%. The central banks’ actions haveconsiderably reduced the serious risks associated with the crisis in the eurozone, and in theUS, where a solution to the country’s fiscal problems was found after President Obama’s re-election in November. Moreover, while economic activity picked up in some emergingcountries, others continued to struggle due to weak external demand.The IMF think that there could, however, be a positive surprise, with a more sustainedrecovery than expected, if the risks connected with the crisis do not materialise and financialconditions continue to improve. However, the risk of a deterioration remains significant and isstill associated with eurozone-related issues and the danger of excessive fiscal consolidation inthe US.Against this macroeconomic backdrop, volatility on the international financial markets, afterpeaking in the middle of the year, continued to lessen. The default risk, measured by the five-year Credit Default Swaps (CDS), of the major eurozone countries also continued to fall. This isthanks to the positive effect of the various governments’ actions to tackle the crisis andstrengthen the European Union, and the political and fiscal events in the US.All the major international equities markets recorded positive returns in local currency in 2012.Specifically, indices in the US were positive (+13.4% for the S&P 500 and +15.9% for theNasdaq) as were those in Japan (+22.9% for the Nikkei 225) and Europe, where, along withGermany (+29.1% for the Dax 30) and France (+15.2% for the CAC 40), Italy also returned topositive territory (+7.8% for the FTSE MIB). Emerging countries also recorded positivereturns: +5.2% in Russia, +25.7% in India, +7.4% in Brazil and +3.2% in China.In common with the equities markets, bond markets also showed a general improvement interms of reduced risk aversion. In Italy, the yield spread on ten-year treasury certificatesagainst their German bund counterparts reduced by nearly 200 points, closing at 316 basispoints; to a lesser extent, the default risk also fell, returning to July 2011 levels and closingthe year at 286 basis points.
    • Annual financial statementsto 31 December 2012 22Spain also seemed to have overcome its worst period, which culminated in July with theapproval of a EUR 100 billion bailout programme to recapitalise its banks.The key events that will probably attract the attention of the markets in the short term relateto the management of the public debt problem in the US (the statutory obligation to keep USpublic debt below a specific ceiling), the impact of the political elections in Italy and Germany,and the expected decisions on the Outright Monetary Transactions (OMT) or the “anti-spreadplan”, and unified banking supervision under the authority of the ECB.Investment prospects and the outlook for the European and global private equitymarketsDespite the continuing uncertainty surrounding the economy, the private equity business (PE)seems to be heading towards a return to normality. Unlike the turn of events in 2011, thesecond half of 2012 was much better than the first half, leading to positive expectations for thenear future. The improvement was mainly due to the recovery in the private equity sector inthe US, where encouraging signs shown by the real estate market, together with the healthycredit system and positive GDP growth, led to a more optimistic approach to dealing with thedebt ceiling (although an agreed plan has not yet been finalised).Public attention on the sector in the US is still high in the wake of the recent electioncampaign. Furthermore, the legislative framework has been supplemented with a number ofsignificant changes. In North America, management companies, which are required to registerwith the SEC, will be audited by the supervisory authorities in the next few years. In Europe,the enactment of the Alternative Investment Fund Managers Directive (AIFMD) will imposestringent compliance obligations. Another legislative restriction, Solvency II, will haverepercussions on insurance companies in the future, as it imposes capital adequacyrequirements that aim to increase protection against the higher risks of investing in privateequity.The dynamics of the relationships between general partners (GPs) and limited partners (LPs) offunds were similar to those seen in 2011. The larger funds proposed innovative incentiveschemes to investors to attract them in the first closing, including reduced fees and priorityprocessing in certain cases. Other funds that are particularly sought-after by institutionalinvestors, on the other hand, have imposed onerous terms and conditions on their subscribers.Lastly, the natural selection process operating among managers became more noticeable, asLPs tended to reduce the number of relationships with GPs. Driven by this trend, the largerlisted operators (Blackstone, KKR, Apollo and from this year, Carlyle) further diversified theirproduct range in accordance with the demands of their investors, adding funds dedicated tospecific investment and geographical themes.
    • Annual financial statementsto 31 December 2012 23Investment activity declined slightly compared with 2011, although the half-yearly figureshows positive signs. In the second half of 2012, the figure was over 30% higher than in thesame period of 2011. The main driver of the recovery in investment, as indicated previously,was activity in the US, which was supported in large part by a favourable credit market. Thesituation is different in Europe, however, as access to credit is still very difficult. The emergingmarkets remained at the same levels as in previous years.Fig. 3: Volume disinvestimenti dei fondidi buyout ($ mld)Fig. 4: Numero di disinvestimenti deifondi di buyoutFonte: Preqin Fonte: Preqin3364140101143227209872012838511820112008 2010200919310132275173 172 146384268457582 656914188257493422008684522011 201220720109354820095491021,145433471,192Trade SaleSale to GP IPORestructuring2° Semestre1° SemestreThe volume of divestments of companies owned by buy-out funds fell slightly (by around 10%compared with 2011). However, encouraging signs began to appear in the second half of 2012,although they varied according to the individual geographical area. In numerical terms, “tradesale” transactions represent 55% of the total. This value is mainly based on the availability ofcash of the strategic operators. Note also that the number of initial public offerings (IPOs) fellFig. 1: Global value of buyout investments($ mld)Fig. 2: Global value of buyout investmentsby region ($ mld)Source:Preqin255265221961872011201020092008 201214829%19%52%1S 201210614%2S 201112434%26%52%1S 201114132%51%16%2S 2010136 12%27%57%1S 2010852S 2009681S 20092817%2S 201239%14%52%36%46%56%28%16%62%13%North AmericaEuropeAsia and restof the worldSource:Preqin
    • Annual financial statementsto 31 December 2012 24markedly due to the ongoing high level of volatility in the financial markets. A possible featureof 2013 could be an increase in exit transactions arising from sales to other private equityfunds, given the need to sell off equity investments acquired before 2008 and the high level ofdry powder in the market.However, the positive trend in fund raising, which emerged in 2011, continued in 2012 (+5%year-on-year and +15% compared with the second half of 2011). The biggest contribution tothe growth of capital collections comes from some North American mega buy-out funds.Although Europe does not seem particularly attractive in the eyes of investors, fund raisingwas slightly positive. It could be that investors’ interest is motivated by the opportunity toobtain access to good transactions, given the limited level of liquidity in the system. Wetherefore assume that Europe is still an attractive geographical area from the point of view ofprivate equity. In absolute terms, there has also been a slight decrease in the value ofcollections of funds focused on emerging markets.Fig. 7: Global capital calls and reimbursements of PE funds (USD billion)Source: Thomson Venture EconomicsGlobal PE fundraising($ mld)Fig.6: Global PE fundraising by region($ mld)3283122843152008 2009 2010 2011 2012681 18% 14%24% 26% 21%100%NAEUROW201232855%24%201131253%21%201028456%21%200931557%29%200868158%24%Fig. 5:Source:Preqin Source:Preqin12336446694945301946546758352272S 20111S 20112S 20101S 20101S 2009 2S 2009 1S 2012 3Q 2012Distribuzioni (US$ Mld)Richiami (US$ Mld)
    • Annual financial statementsto 31 December 2012 25As shown in figure 7, in 2012 and to some extent in the previous year, global reimbursementsexceeded capital calls, confirming that the industry is primarily going through a divestmentphase.It is also possible to detect a number of investment themes associated with the currentuncertain situation. In Europe, the increase in fund raising is mainly due to the rise in the number ofoperators specialising in loan and distressed strategies. The relative disappearance ofCLOs (collateralised loan obligations) and the restricted financial activity of creditinstitutions has opened the door to specialist operators, creating a channel which, giventhe limited competition, could generate attractive returns with coupon payments and alow risk profile. Moreover, the restructuring of many buy-out transactions could alsoreveal favourable returns for special situation funds In the US, funds that aim to help investee companies return to efficiency and valuecreation through operating improvements are also becoming more numerous, as arefunds focusing on specific sectors, especially energy In emerging markets, opportunities mainly arise from the more mature trends, such asthe growth in consumption associated with the increased purchasing power of themiddle classes, and urbanisationPrivate equity in ItalyStatistics prepared by AIFI (the Italian Private Equity and Venture Capital Association) andcurrently updated to the first half of 2012, show that the difficulties continued into the first halfof the year, with a 17% decline in fund raising compared with the same period of 2011.The number of new investments fell from 159 to 147, with a total value of EUR 868 million, i.e.a decline of 43% on the same period of 2011. As regards the amount, the bulk of theresources invested, in line with previous years, went into buy-out transactions, which attractedEUR 512 million. This figure, however, is more or less half that recorded in the same period ofthe previous year (-56%), due to the lack of high-value transactions.The early-stage sector had the highest number of transactions, overtaking the expansionsector, with 55 investments (+10%), more than half of which were invested in high-techcompanies.As regards divestments, 44 equity investments were sold in the first half of 2012, or 41%fewer than in the same period of 2011. The amount divested, calculated at historicalacquisition cost, was EUR 141 million, compared with EUR 2,337 million in the first half of2011 (-94%). This is due to the fact that very high individual sales were made in 2011,whereas no such sales were made in 2012.
    • Annual financial statementsto 31 December 2012 26 REAL ESTATE IN EUROPEDirect investment in non-residential real estate in Europe, which amounted to EUR 120.4billion in 2012, was in line with the previous year . A very positive sign emerged in the fourthquarter with transactions totalling EUR 41.5 billion (an increase of 16% compared with 4Q2011 and 48% versus the previous quarter)1.The office market experienced an excellent year in 2012, with a 24% increase in activity year-on-year; nearly 60% of transactions in the office sector were in London, Paris and the fivemain cities in Germany. This helped consolidate the positions of London and Paris among theten main cities with the highest volumes of investment, with London stable at number one.Despite the continuous demand for excellent-quality real estate for shopping centres, as shownin the various large-scale agreements made in the fourth quarter, investment volumes in theretail sector fell for the whole year, compared with the previous year. Investment volumes inEurope’s retail real estate market (excluding high street property) totalled EUR 19.4 billion,down on the figure of EUR 31.3 billion in 2011, due to the scarcity of properties on the market.In 2012, net investment in Europe by investors outside the region increased by 36% comparedwith 2011. In Europe there were eight cross-border agreements with a value of over EUR 500million in the fourth quarter of 2012. These volumes are evidence of investors’ interest in realestate opportunities, especially in the main markets such as the UK, Germany, France andSweden.In fact, as is the case in the bond market, there is a clear preference for instruments deemedto be "safe", such as US and German government bonds, and in the real estate marketproducts with a low risk profile are also favoured, while markets deemed to be less liquid arepenalised.In core markets, i.e. those with a lower "country risk" profile and a correspondingly lower yieldon government bonds (Germany, Great Britain and the Scandinavian countries), the spreadbetween yields in the real estate market and yields on government bonds, historicallyconsidered a benchmark of the attractiveness of the real estate market, is reaching recordlevels. Conversely, in peripheral markets, such as Italy, the increase in yields on governmentbonds reduces this spread to zero or a negative figure.In ItalyIn 2012, the Italian market of investment in non-residential real estate totalled around EUR1.7 billion, which was less than the level achieved in the first half of 2011. As a percentage oftotal investment in Europe, it fell from 3.6% to 1.4%. In the fourth quarter of 2012, only EUR458 million was invested. These figures are the lowest recorded in Italy in the last ten years.Real estate transactions in Milan, which totalled only EUR 140 million in the fourth quarter,were no higher than EUR 500 million in 2012. In the fourth quarter, the take-up volume wasaround 52,000 m², bringing the annual total to 239,000 m². While the market declined by12% in the quarter, year-on-year it fell by 29% compared with 2011. In Rome, investmentwas rather low, at EUR 150 million, bringing the annual total to EUR 622 million, a decline of25% on 2011 and 50% lower than in 2010. In the fourth quarter, 19,800 m² of office spacewas taken up, bringing the annual total to only 66,500 m². The downward trend that started inthe second half of 2011 continued in this quarter, leading to the recording of the lowestvolume in Rome in the last seven years2.1CBRE, European Investment Quarterly 4Q 20122JLL, Global Capital Markets Research 4Q 2012
    • Annual financial statementsto 31 December 2012 27Real estate funds in ItalyIn 2012, according to Scenari Immobiliari estimates, assets managed by real estate funds roseby 1.5% over the previous year despite the gloomy economic environment. At the end of2012, the 329 existing funds directly controlled real estate assets of around EUR 47.1 billion.AUM of the eight largest real estate asset managers (EUR billion)012345678910IDeAFimitGeneraliImmobiliareBNPParibasREIMPreliosInvestireImmobiliareFabricaImmobiliareSorgenteTorreSource: Assogestioni – June 2012Around 61% of investment is concentrated in the office sector, which had the mosttransactions in 2012 (44% of the total); 20% relates to the commercial sector and barely 3%to the residential and other sector.Analysis by Scenari Immobiliari on the retail and reserved funds industry shows that total netasset value (NAV) increased from EUR 36.1 billion to EUR 37.2 billion.NAV of real estate funds in Italy (EUR billion)05101520253035402006 2007 2008 2009 2010 2011 2012ESource: Scenari Immobiliari
    • Annual financial statementsto 31 December 2012 28With regard to retail property funds, the study by Scenari Immobiliari reported a decrease indirect real estate assets of around 8.9% to approximately EUR 6.8 billion. The total use offinancial leverage, at 52%, fell slightly compared with 2011.The total NAV of retail property funds at end-2012 was around EUR 5.4 billion, representing areduction of around 11% on the same period of 2011.Real estate assets of retail funds (EURbillion)0123456789101H 2007 1H 2008 1H 2009 1H 2010 1H 2011 1H 2012NAV of retail funds (EUR billion)0123456781H 2007 1H 2008 1H 2009 1H 2010 1H 2011 1H 2012Source: Scenari ImmobiliariThe average discount to NAV for listed funds was around 59% at end-2012, compared with46% at end-2011.The number of operating funds rose, although at a lower rate than expected, and a modestdecrease is projected for 2013. Positive expectations for NAV growth in 2013 are associatedwith the projected creation of one or more funds for public buildings and possible contributionsto the real estate funds of banks to continue the process of reducing financial leverage.Italian real estate funds saw substantial stability in property prices at the expense of amarkedly greater reduction in the volume of transactions. The Italian real estate market isbecoming increasingly illiquid, and operators believe that the upturn in investment will have totake place via a “repricing” of properties, which have seen a modest decline of around 10-12%since 2008 along with a similar reduction in rents. Property prices are expected to fall over thenext few quarters, partly because many investors will be forced to liquidate their assets.According to Bank of Italy figures, 58 real estate funds, totalling EUR 5.2 billion, are currentlyin liquidation. Over 75% of retail property funds are due to expire in the next two years.In the first six months of 2012, real estate of just EUR 292 million was acquired, a significantdecline of EUR 1,633 million on the previous year’s volume (according to Assogestioni data).Sales followed the same trend, falling from EUR 1,221 million in the first half of 2011 to EUR609 million in the first six months of 2012.
    • Annual financial statementsto 31 December 2012 29Purchases and sales (EUR billion)0,00,51,01,52,02,53,02009 2010 2011 giu-12AcquisizioniDismissioniAllocation of assetsImmobili;90,1%Partecipazioni;2,0%Valorimobiliari;5,7%Altro; 2,3%Source: Assogestioni.The latest figures provided by the Osservatorio sul Mercato Immobiliare (OMI) of the ItalianLand Agency3show a significant fall in the volumes of sales and purchases of real estate. Inthe first three quarters of 2012, sales and purchases fell by 18%, 25% and 26% respectively,compared with transactions in the first three quarters of 2011.The residential sector, which represents around 45% of the entire property market, recordedthe worst performance in the third quarter of 2012, with around 96,000 transactions and adecline of 27% in property transactions compared with the same period of the previous yearand 20% versus the previous quarter.Non-residential sectors also recorded significantly lower volumes in the first three quarters of2013. The biggest falls were in the tertiary sector, which reported a decrease of 28% in thevolume of sales and purchases in the third quarter, while the commercial and productionsectors declined by 30% and 26% respectively. All sectors have been at the lowest level onthe index of the number of normalised transactions (an index calculated by the Land Agency)since 2004.The office market, which is historically the most significant non-residential real estate market,reported an increase in investment compared with 2011, rising from 35% to 44% of totalinvestment. Interest in office property picked up in the fourth quarter compared with previousquarters, with the result that the sector represented 87% of the volumes for the quarter. Thiswas due to the sale by IDeA FIMIT SGR of two properties for office use in Milan and Rome withlow returns, as they are ideally located and well positioned4.In all sectors, the fall in prices led to a slight increase in yields. At the end of 2012, accordingto BNP Real Estate data, net prime returns were as follows: 5.6% in Milan and 6.1% in Romefor office property, 6.6% for shopping centres and 7.75% for the industrial and logistics sector.3Agenzia del Territorio, OMI – Note III Quarter 2012.4BNP RE, Investment in Italy Q4 2012
    • Annual financial statementsto 31 December 2012 30 The DeA Capital Group’s investment portfolioThe composition of the DeA Capital Groups investment portfolio in the Private EquityInvestment and Alternative Asset Management businesses, as defined above, are summarisedin the table below.Investment portfolion. EUR/mlnEquity investments 9 464.7Funds 12 180.8Private Equity Investment 21 645.5Alternative Asset Management (*) 4 227.6Investment portfolio 25 873.1(*) Equity investments in subsidiaries relating to Alternative Asset Management arevalued using the equity method in this table.December 31,2012Details of portfolio asset movements in 2012 are provided in the sections on Private EquityInvestment and Alternative Asset Management below. Private Equity InvestmentIn terms of equity investments, at 31 December 2012, the DeA Capital Group was ashareholder of: Santé, indirect Parent Company of Générale de Santé (valued at EUR 226.1 million) Kenan Investments, indirect Parent Company of Migros (valued at EUR 223.6 million) Sigla Luxembourg, the Parent Company of Sigla (valued at EUR 12.3 million)The DeA Capital Group is also a shareholder in six companies (Elixir Pharmaceuticals Inc.,Kovio Inc., Stepstone, Harvip Investimenti, Alkimis SGR and Soprarno SGR (the latter hasbeen classified in this category since 31 December 2012) – whose total value at 31 December2012 was EUR 2.7 million).With regard to funds, at 31 December 2012, the DeA Capital Group held units in: IDeA I FoF (valued at EUR 103.1 million) IDeA OF I (valued at EUR 48.1 million) ICF II (valued at EUR 16.5 million) AVA (valued at EUR 2.4 million) IDeA EESS and seven other venture capital funds (with a total value of approximatelyEUR 10.7 million)Valuations of equity investments and funds in the portfolio reflect estimates made using theinformation available on the date this document was prepared.
    • Annual financial statementsto 31 December 2012 31Equity investments in associates- Santé (Parent Company of GDS)Headquarters: FranceSector: HealthcareWebsite: www.generale-de-sante.frInvestment details:On 3 July 2007, DeA Capital S.p.A. finalised the purchase, through its wholly-ownedsubsidiary DeA Capital Investments S.A., of a 43.01% stake in Santé S.A., the ParentCompany of Générale de Santé S.A. both directly and through Santé Dévéloppement EuropeS.A.S. At 31 December 2012, the DeA Capital Groups stake was 42.89% (i.e. 42.99% ineconomic terms).Brief description:Founded in 1987 and listed on the Eurolist market in Paris since 2001, Générale de Santé is aleading player in the private healthcare sector in France with revenues of about EUR 2 billionat end-2012.France is the second largest country in Europe in terms of annual healthcare expenditure afterGermany. Its healthcare system is one of the most advanced in the world, is still heavilyfragmented and is marked by the presence of numerous independent hospitals.The company has approximately 19,400 employees and 106 clinics in total. In addition, it isthe main independent association of doctors in France (over 5,000 doctors).Its activities include medicine, surgery, obstetrics, oncology and radiotherapy, mental health,subacute pathologies and rehabilitation.The company operates under the following names: Générale de Santé Cliniques (acute care),Médipsy (psychiatry), Dynamis (rehabilitation) and Généridis (radiotherapy).The investment in Santé, which is reported under “Investments in associates”, is valued atapproximately EUR 226.1 million in the consolidated financial statements to 31 December 2012(EUR 235.2 million at 31 December 2011). The change compared with the figure reported at31 December 2011 is attributable to the net loss of EUR 10.8 million for the period combinedwith other increases in equity of EUR 1.7 million (largely due to the increase in fair value ofinterest rate swaps taken out to hedge the interest rate risk on debt exposure).
    • Annual financial statementsto 31 December 2012 32Générale de Santé (EUR million) 2012 2011 % Chg.Revenues 1,929 1,955 -1.4%EBITDA 240 249 -3.7%EBIT 134 50 167.0%Group net profit 56 (29) n.a.Net financial debt (769) (854) -10.0%With regard to GDS’s operating performance, revenues in 2012 were slightly down on theprevious year, but up by 2.5% on a same-structure basis (stripping out the impact on the2011 figures of the clinics sold during that year). This was achieved as the new clinics thatwere opened during the period (two rehabilitation clinics, two psychiatric clinics and one inmedicine, surgery and obstetrics) gradually became fully operational and as a result of growthin the volume of activities.With specific reference to the final figures to 31 December 2012, a comparison of the EBIT andnet result with the previous year’s figures shows that these were affected by one-off costsrelating to the Plan Social completed in 2011 (with an effect on the net result of around EUR -19 million), goodwill impairment (EUR –50.5 million) relating to some of the geographicalareas in which the Group operates, and the capital gains made on the clinics that were sold in2012 (EUR 29 million).The net financial position of EUR -769 million at 31 December 2012 represents animprovement on the figure of EUR -854 million at 31 December 2011 thanks partly to thereceipts from the clinics that were sold.Note however that this growth in revenues occurred against a backdrop of mounting pressureto grow the top line, influenced by (i) trends in demand (a gradual shift in the mix of servicesoffered towards outpatients provision, which has a lower unit cost/lower margins comparedwith full hospitalisation, and the postponement by patients of non-urgent treatment due to theeconomic crisis); and (ii) the regulatory framework and the definition of the provision ofhospital services (increasing competitive pressure from public operators, which benefit fromheavy government investment through discretionary components in the health budget, whichoffset the unfavourable trend in prices).As regards the institutional framework in 2013, while on the one hand, tariffs are likely tocontinue to be restrictive, with forecasts of a fall of 0.55% in tariffs in the medicine, surgeryand obstetrics sector, on the other, government initiatives to support economic activity arelikely to increase. An example is the package of measures to improve the competitiveness ofFrench companies (which includes, inter alia, the competitiveness and employment tax credit,CICE), which should at least partly alleviate the effects on companies of the unfavourableeconomic climate.This trend in revenues, combined with the partial rigidity in the cost structure, makes it clearthat, in order to maintain expected profit levels, it is essential that the planned reorganisationinto “hubs” (chains of clinics that optimise provision of the service by tailoring it to therequirements of the relevant geographical area) takes full effect, and that the cost savingsinitiatives launched relating to significant items of expenditure also bear fruit.
    • Annual financial statementsto 31 December 2012 33- Sigla Luxembourg (Parent Company of Sigla)Headquarters: ItalySector: Consumer creditWebsite: www.siglacredit.itInvestment details:On 5 October 2007, DeA Capital Investments finalised the acquisition of a stake (currently41.39%) in Sigla Luxembourg, the holding company that controls Sigla, which operates inItaly and provides consumer credit for non-specific purposes.Brief description:Sigla, which is recorded in the special list pursuant to art. 107 of the T.U.B. (Italianconsolidated banking law) with effect from 31 March 2011, specialises in personal loans and"salary-backed loans". It is a benchmark operator in the provision of financial services tohouseholds, and operates throughout Italy, chiefly through a network of agents.The company’s product range of salary-backed loans and personal loans was expanded in2010 to include the servicing of portfolios of unsecured non-performing loans (personal loansand credit cards).The investment in Sigla Luxembourg, which is reported under “Equity investments inassociates”, is valued at approximately EUR 12.3 million in the consolidated financialstatements to 31 December 2012 (EUR 22.0 million at 31 December 2011). The decreasecompared with 31 December 2011 relates to the EUR 0.7 million loss for the period and animpairment charge of EUR 9.0 million to align the carrying value with the company’s pro-ratashare of the net asset value at the same date.Sigla (EUR million) 2012 2011 % Chg.Loans to customers* 81.7 83.9 -2.6%Revenues from loans to customers 3.6 4.9 -26.1%CQS granted 78.2 136.2 -42.6%Revenues from CQS 3.6 7.3 -50.5%Group net profit (1.7) (0.1) n.a.* Net receivables exclude salary-backed loans (CQS)Sigla’s operating performance in 2012 declined at all levels of the income statement comparedwith the previous year, due mainly to the contraction in the number of salary-backed loans(CQS) granted (a typically less capital-intensive product, on which the Group has graduallyrepositioned itself). At 31 December 2012, it recorded a fall of 42.6% compared with the sameperiod of the previous year.Although the Group considers that Sigla is in a good position as regards the restructuring ofthe salary-backed loans business being undertaken following the entry into force of the newlegislation required by the Regulator (increased pricing transparency and a reduction in thenumber of intermediate levels in the existing value chain between the organisation that grantsthe loan and the consumer, with the resulting sector concentration), the generalmacroeconomic scenario has forced us to make the above-mentioned impairment on thegoodwill implicit in the carrying value. Specifically, the ongoing effects of the economic crisis
    • Annual financial statementsto 31 December 2012 34on the propensity to spend, together with the consequences arising from the deleveragingrequirements of banks that grant salary-backed loans, have led to much longer times for top-line growth than were originally reflected in the asset valuation.
    • Annual financial statementsto 31 December 2012 35Equity investments in other companies- Kenan Investments (indirect Parent Company of Migros)Headquarters: TurkeySector: Food retailWebsite: www.migros.com.trInvestment details:In 2008, the DeA Capital Group acquired about 17% of the capital of Kenan Investments, thecompany heading the structure to acquire the controlling interest in Migros.Brief description:Migros was established in 1954, and is the leading company in the food retail sector in Turkeywith a share of about 34% in the organised retail market.Growth in the food retail sector in Turkey is a relatively recent phenomenon, brought aboutby the transition from traditional systems such as bakkals (small stores typically run byfamilies) to an increasingly widespread organised distribution model driven by expansion andthe modernisation process under way in Turkey.The company has a total of 874 outlets (at 30 September 2012) with a total net sales area ofapproximately 850,000 square metres.Migros is present in all seven regions of Turkey, and has a marginal presence in Kazakhstanand Macedonia.The company operates under the following names: Migros, Tansas and Macrocenter(supermarkets), 5M (hypermarkets), Ramstore (supermarkets abroad) and Kangurum (onlinestore).One of the main extraordinary transactions completed by Migros was the sale of discount armŞok on 24 August 2011 to Yildiz Holding Group, a leading Turkish food producer, for aroundTRY 600 million. The business sold consisted of some 1,200 supermarkets, with revenues in2010 of TRY 1.2 billion (or around 19% of Migros’ consolidated revenues).The equity investment in Kenan Investments is recorded in the consolidated financialstatements to 31 December 2012 at EUR 223.6 million (compared with EUR 127.1 million at 31December 2011). The increase of EUR 96.5 million was due to the rise in the value of Migrosshares (TRY 21.5 per share at 31 December 2012, compared with approximately TRY 12.6 pershare at 31 December 2011), and the strengthening of the Turkish lira against the euro (2.36TRY/EUR at 31 December 2012 versus 2.44 TRY/EUR at 31 December 2011). The effect on theDeA Capital Group’s NAV of this change in fair value was partially offset by the provisioning ofestimated carried interest of around EUR 12.8 million, to be paid to the lead investor, BCPartners, based on the total capital gain. This was partly recognised in the income statement(EUR 3.0 million) and partly recognised in the fair value reserve (EUR 9.8 million).
    • Annual financial statementsto 31 December 2012 36Migros (mln YTL)Primi Nove Mesi2012Primi Nove Mesi2011 Var. %Ricavi 4.832 4.253 13,6%EBITDA 320 296 8,1%EBIT 187 175 6,9%Risultato Netto di Gruppo 117 (236) n.s.Indebitamento Netto (1.401) (1.593) 12%* In attesa della pubblicazione dei dati al 31 dicembre 2012 si riportano i dati al 30 settembre 2012With regard to the macro-economic environment, the Turkish economy recorded GDP growthof around 2.6% year-on-year in the first nine months of 2012; the slowdown in economicgrowth (from a rate of 8.5% in 2011) helped the country to reduce the current account deficit,which contributed to the raising of its country rating to investment grade by Fitch lastNovember for the first time. This in turn led to a stabilisation in the exchange rate.The food retail sector in Turkey remained buoyant in the first nine months of 2012, withsustained growth in commercial space (11.6% in 12 months) and in the supermarket sector(13.1% yoy), which maintained its dominant position.In terms of Migros’ operating performance, revenues grew by 13.6% in the first nine monthsof 2012 (the scope of activities for which does not include the discount division sold in August2011), driven by the expansion of the network of sales outlets (143 new supermarkets wereopened in 12 months), accompanied by more modest growth in EBITDA, and broadly stableprofit. The net result increased, due to the revaluation of the debt component in Euro followingthe rise of the Turkish lira.Note that Migros has confirmed its intention, for the medium term, to maintain a sustainedrate of expansion of its network, by opening between 100 and 150 new supermarkets a year,with a focus on areas of 150-350 square metres (with a particular emphasis on fresh products,a growing proportion of private label products and a much broader choice than offered bydiscount stores), as well as one to two hypermarkets each year.This growth strategy has led the company to issue guidance of double-digit revenue growthand an EBITDA margin within the range of 6-6.5% for 2012-2013.
    • Annual financial statementsto 31 December 2012 37- Other investmentsOther equity investments, managed opportunistically with a view to increasing their value,totalled approximately EUR 2.7 million in the consolidated financial statements to 31 December2012, due mainly to investment in Alkimis SGR (EUR 0.3 million) and Soprarno SGR (EUR 1.6million, as a result of its reclassification from the Alternative Asset Management business).CompanyRegisteredofficeBusiness sector % holdingAlkimis SGR Italy Asset management company 10.00Elixir Pharmaceuticals Inc. USA Biotech 1.30Harvip Investimenti S.p.A. Italy Distressed real estate and other investments 25.00Kovio Inc. USA Printed circuitry 0.42Soprarno SGR Italy Asset management company 20.00Stepstone Acquisition Sàrl Luxembourg Special Opportunities 36.72
    • Annual financial statementsto 31 December 2012 38FundsAt 31 December 2012, the DeA Capital Group’s Private Equity Investment business includedinvestments (other than the investment in the IDeA OF I fund and in the AVA real estate fund,which are classified under “Investments in associates”, based on the units held) in two funds offunds (IDeA I FoF and ICF II), one theme fund (IDeA EESS) and another seven venture capitalfunds for a total of approximately EUR 180.8 million (corresponding to the estimated fair valuecalculated using the information available on the date this document was prepared).Residual commitments associated with all the funds in the portfolio were approximately EUR126.3 million (in their respective original currencies of denomination: EUR 122.6 million andGBP 3.0 million).
    • Annual financial statementsto 31 December 2012 39- IDeA OF IIDeA Opportunity Fund IHeadquarters: ItalySector: Private EquityWebsite: www.ideasgr.itInvestment details:IDeA OF I is a closed-end fund under Italian law for qualified investors, which began activityon 9 May 2008 and is managed by IDeA Capital Funds SGR.At its meeting on 20 July 2011, the Board of Directors of IDeA Capital Funds SGR approveda number of regulatory changes. These included changing the name of the IDeA Co-Investment Fund I to IDeA Opportunity Fund I (IDeA OF I) and extending investmentopportunities to qualified minority interests, independently or via syndicates.The DeA Capital Group has a total commitment of up to EUR 101.8 million in the fund.Brief description:IDeA OF I has total assets of approximately EUR 217 million. Its objective is to invest viasyndicates with a lead investor, independently, or by purchasing qualified minority interests.At 31 December 2012, IDeA OF I had called up approximately 68.9% of the totalcommitment after making eight investments:- on 8 October 2008, it acquired a 5% stake in Giochi Preziosi S.p.A., a company activein the production, marketing and sale of children’s games with a product linecovering childhood to early adolescence- on 22 December 2008, it acquired a 4% stake in Manutencoop Facility ManagementS.p.A. by subscribing to a reserved capital increase This company is Italy’s leadingintegrated facility management company, providing and managing a wide range ofproperty management services and other services for individuals and governmentagencies- on 31 March 2009, it acquired a 17.43% stake in Grandi Navi Veloci S.p.A., an Italianshipping company that transports passengers and goods on various routes aroundthe Mediterranean Sea. On 2 May 2011, with the finalisation of Marinvests entry intothe shareholder structure of Grandi Navi Veloci S.p.A. through the subscription of areserved capital increase, the stake held by IDeA OF I was diluted to 9.21% On 2August 2012, IDeA OF I’s decision not to subscribe, on a pro-rata basis, to a furthercapital increase led to a dilution in its equity investment to 3.68%- on 10 February 2011, it invested in a bond that is convertible into shares of EuticalsS.p.A., the Italian leader in the production of active ingredients for pharmaceuticalcompanies that operate in the generics sector, for EUR 10 million. As part of theextraordinary transaction that led to the transfer of the controlling share in EuticalsS.p.A., on 3 April 2012 these bonds were transferred into the acquisition vehicle,Lauro 57, which now owns 100% of Euticals S.p.A.; in exchange, a stake of 7.77%
    • Annual financial statementsto 31 December 2012 40was acquired in the same acquisition vehicle (generating a capital gain of EUR 6.9million)- on 25 February 2011, it purchased a 9.29% stake in Telit Communications PLC, thethird-largest producer of machine-to-machine communications systems in the world;the stake held by OF I was subsequently diluted to 9.08% due to the exercise ofstock options by the companys management- On 11 September 2012, an investment agreement was signed with Filocapital S.r.l.,the main shareholder in Iacobucci HF Electronics S.p.A. (Iacobucci), a company thatmanufactures trolleys for aeroplanes and trains, and specialises in the design,production and marketing of components for aircraft fittings and furnishings. Amaximum of EUR 12 million will be invested, in several phases: (i) subscription to abond that is convertible into Iacobucci shares, totalling EUR 6 million on the closingdate; (ii) subscription to a capital increase, in divisible form, totalling EUR 6 million,to be paid in two equal tranches – following approval of the half-year figures to 30June 2013 and the financial statements to 31 December 2013 – based on theachievement of certain EBITDA and net debt figures. If the above-mentionedconvertible bond were converted and the events for a capital increase materialised,IDeA OF I would acquire an overall stake of 34.9% in Iacobucci.- On 9 October 2012, IDeA OF I invested EUR 15 million to acquire an indirect stake of4.6% in Patentes Talgo S.A. (Talgo), a Spanish company that designs and producessolutions for the rail sector, chiefly sold on the international market (high-speedtrains, and maintenance vehicles and systems)- On 12 December 2012, IDeA OF I invested EUR 12.3 million to acquire a stake of29.34% in 2IL Orthopaedics, a Luxembourg-registered vehicle which, through aninitial purchase offer and subsequent delisting of previously listed shares, obtainedfull control (on 15 February 2013) of English company Corin Group PLC (Corin). Corinis active in the production and marketing of orthopaedic devices, especially for hipsand knees.After the closing date for the period, on 11 January 2013, IDeA OF I invested EUR 8.5million to acquire a stake of 10% in Elemaster S.p.A. (Elemaster), the leading operator inODM (original design manufacturing) and EMS (electronic manufacturing service) i.e. thedesign and construction of electronic equipment. At the same time, the Energy Efficiencyand Sustainable Development Fund, also managed by IDeA Capital Funds SGR, invested anequal amount in Elemaster to acquire a similar stake.The units held in IDeA OF I were reported at EUR 48.1 million in the consolidated financialstatements to 31 December 2012. The change in value compared with the figure at 31December 2011 is attributable to capital calls of EUR 17.0 million, an increase of EUR 0.5million in the fair value and pro-rata net loss for the period of EUR 6.3 million (due mainly tothe partial impairment of the investments in Giochi Preziosi and Grandi Navi Veloci and to thecapital gain made on Euticals).The table below shows the key figures for IDeA OF I at 31 December 2012.
    • Annual financial statementsto 31 December 2012 41IDeA OF IRegisteredofficeYear ofcommitmentFund SizeSubscribedcommitment% DeACapital infundEuro (€)IDeA Opportunity Fund I Italy 2008 216,550,000 101,750,000 46.99Residual CommitmentsTotal residual commitment in: Euro 31,665,321
    • Annual financial statementsto 31 December 2012 42- IDeA I FoFIDeA I Fund of FundsHeadquarters: ItalySector: Private EquityWebsite: www.ideasgr.itInvestment details:IDeA I FoF is a closed-end fund under Italian law for qualified investors, which began activity on 30January 2007 and is managed by IDeA Capital Funds SGR.The DeA Capital Group has a total commitment of up to EUR 173.5 million in the fund.Brief description:IDeA I FoF, which has total assets of approximately EUR 681 million, invests its assets in units ofunlisted closed-end funds that are mainly active in the local private equity sector of variouscountries. It optimises the risk-return profile through careful diversification of assets amongmanagers with a proven track record of returns and solidity, different investment approaches,geographical areas and maturities.At the date of the latest report available, the IDeA ICF II portfolio was invested in 42 funds withdifferent investment strategies; these funds in turn hold around 453 positions in companies withvarious degrees of maturity that are active in geographical regions with different growth rates.The funds are diversified in the buy-out (control) and expansion (minorities) categories, withoverweighting towards medium- and small-scale transactions and special situations (distresseddebt/equity and turnaround).At 31 December 2012, IDeA I FoF had called up 75.1% of its total commitment and had madedistributions totalling approximately 23.5% of that commitment.
    • Annual financial statementsto 31 December 2012 43Other important information:Below is an analysis of the portfolio, updated to the date of the latest report available, brokendown by year of investment, geographical area, type and sector.Notes:1. % of the FMV of the investment at 31 December 20122. % of fund size based on paid-in exposure (capital invested + residual commitments) at 31 December 2012The IDeA I FoF units are valued at approximately EUR 103.1 million in the consolidatedfinancial statements to 31 December 2012, with a change compared with end-2011 thatincludes an increase in net investment of EUR 2.8 million and in fair value of EUR 4.1 million.The table below shows the key figures for IDeA I FoF at 31 December 2012.IDeA I FoF Sede legaleAnno diimpegnoFund SizeImpegnosottoscritto% DeACapital nelFondoEuro (€)IDeA I Fund of Funds Italy 2007 681,050,000 173,500,000 25.48Residual CommitmentsTotal residual commitment in: Euro 43,236,192Breakdown by industry (1)Breakdown by type of fund (2)Breakdown by vintage (1) Breakdown by geography (2)21%Not committed0%GlobalRoW 14%US21%Europe45%9%6%Not invested0%Large Buyout15%Special Situations19%ExpansionVC5%Asset Based PESmall Buyout14%Mid Buyout31%5%12%5%14%Distressed Assets8%Raw MaterialsEnergy 12%Financial5% Pharmaceutical1%Healthcare6%Consumer staples7%Consumer discretionary12%TransportIndustrial8%RE2%LuxuryITMedia3%24%20066%20053%2000-20043%20126%201112%2010200915%200816%200714%
    • Annual financial statementsto 31 December 2012 44- ICF IIICF IIHeadquarters: ItalySector: Private EquityWebsite: www.ideasgr.itInvestment details:ICF II is a closed-end fund for qualified investors under Italian law, which began activity on 24February 2009 and is managed by IDeA Capital Funds SGR.The DeA Capital Group has a total commitment of up to EUR 51 million in the fund.Brief description:ICF II, which has total assets of EUR 281 million, invests its assets in units of unlisted closed-endfunds that are mainly active in the local private equity sector of various countries. It optimises therisk-return profile through careful diversification of assets among managers with proven historicalreturns and solidity, different investment approaches, geographical areas and maturities.The fund started building its portfolio by focusing on funds in the area of mid-market buy-outs,distressed and special situations, loans, turnarounds and funds with a specific sector slant,targeting in particular opportunities offered in the secondary market.At the date of the latest report available, the ICF II portfolio was invested in 26 funds with differentinvestment strategies; these funds in turn hold positions in around 186 companies with variousdegrees of maturity that are active in geographical areas with different growth rates.At 31 December 2012, ICF II had called up 33.9% of its total commitment and had madereimbursements totalling approximately 2.6% of that commitment.Other important information:Below is an analysis of the portfolio, updated to the date of the latest report available, brokendown by year of investment, geographical area, type and sector.
    • Annual financial statementsto 31 December 2012 45Notes:1. % of the FMV of the investment at 31 December 20122. % of the commitment. Based on paid-in exposure (capital invested + residual commitments) at 31 December 2012The ICF II units are valued at approximately EUR 16.5 million in the consolidated financialstatements to 31 December 2012, with a change compared with end-2011 that includes anincrease in net investment of EUR 7.9 million and a decrease in fair value of EUR 0.6 million.The table below shows the key figures for ICF II at 31 December 2012.ICF IIRegisteredofficeYear ofcommitmentFund SizeSubscribedcommitment% DeACapital infundEuro (€)ICF II Italy 2009 281,000,000 51,000,000 18.15Residual CommitmentsTotal residual commitment in: Euro 33,676,968Breakdown by sector (1)Breakdown by type of fund (2)Breakdown by geography (2)16%GlobalRoW28%US27%Europe29%16%Special Situations25%ExpansionVC6%Small/Mid Buyout36%Large Buyout16%31%2012201124%201022%200920%20081%20072%2004-20060%5%8%Distressed Portfolio18%Energy 7%Raw Materials 3%Industrial11%Luxury IT16% Media2% FinancialHealthcare3%Consumer staples9%Cons. Discretionary16%Other0%Breakdown by vintage (1)
    • Annual financial statementsto 31 December 2012 46- IDeA EESSIDeA Energy Efficiency and Sustainable DevelopmentHeadquarters: ItalySector: Private EquityWebsite: www.ideasgr.itInvestment details:IDeA EESS is a closed-end fund under Italian law for qualified investors, which beganoperating on 1 August 2011 and is managed by IDeA Capital Funds SGR.The DeA Capital Group has a total commitment of up to EUR 12.8 million in the fund.Brief description:IDeA EESS is a closed-end mutual fund under Italian law for qualified investors, which seeksto acquire minority and controlling interests in unlisted companies in Italy and abroad(particularly Germany, Switzerland and Israel), by investing jointly with local partners.The fund is dedicated to investing in small and medium-sized manufacturing and servicecompanies operating in the field of energy savings and the efficient use of natural resources.It focuses on the development of faster and cheaper solutions in the use of renewableenergy sources while continuing to reduce CO2 emissions effectively, against a backdrop ofsustained growth in global energy demand.On 4 September 2012, the fund undertook a third closing, which brought the totalcommitment to EUR 59.5 million.On 8 May 2012, the fund made its first investment, acquiring 48% of Domotecnica ItalianaS.r.l. (independent Italian franchising of thermo-hydraulic installers) for approximately EUR2.6 million, as well as a commitment to subscribe, within the next 18 months, to capitalincreases totalling approximately EUR 1.0 million (IDeA EESS pro-rata share, of which EUR0.3 thousand was paid on 7 December 2012).At 31 December 2012, IDeA EESS had called up about 7% of the total commitment.After the closing date for the period, on 11 January 2013, IDeA EESS invested EUR 8.5million to acquire a stake of 10% in Elemaster S.p.A. (Elemaster), the leading operator inODM (original design manufacturing) and EMS (electronic manufacturing service) i.e. thedesign and construction of electronic equipment. At the same time, the IDeA OpportunityFund I, also managed by IDeA Capital Funds SGR, invested an equal amount in Elemaster toacquire a similar stake.The IDeA EESS units are valued at approximately EUR 0.6 million in the consolidated financialstatements to 31 December 2012, with a change compared with end-2011 that includes anincrease in net investment of EUR 0.9 million and a decrease in fair value of EUR 0.3 million.
    • Annual financial statementsto 31 December 2012 47The table below shows the key figures for IDeA EESS at 31 December 2012.IDeA EESSRegisteredofficeYear ofcommitmentFund SizeSubscribedcommitment% DeACapital infundEuro (€)IDeA Efficienza Energetica e Sviluppo Sostenibile Italy 2011 59,450,000 12,800,000 21.53
    • Annual financial statementsto 31 December 2012 48- AVAAtlantic Value AddedHeadquarters: ItalySector: Private Equity – Real EstateWebsite: www.ideafimit.itInvestment details:The "Atlantic Value Added Closed-End Speculative Real Estate Mutual Fund" is a mixed-contribution fund for qualified investors that began operations on 23 December 2011.DeA Capital Investments subscribed to a total commitment in the fund of up to EUR 5million (acquiring five class A units, corresponding to 9.1% of the total commitment), withpayments of EUR 2.6 million already made at 31 December 2012.Brief description:The Atlantic Value Added fund began its operations with a primary focus on real estateinvestments in the office and residential markets. The duration of the fund is eight years.The fund, which is managed by the subsidiary IDeA FIMIT SGR, has a commitment ofaround EUR 55 million.On 29 December 2011, the fund made its first investment totalling EUR 41.5 million throughthe purchase/subscription of units in the Venere Fund, a closed-end speculative reservedreal estate fund managed by IDeA FIMIT SGR. The Venere Funds real estate portfolioconsists of 16 properties primarily for residential purposes located in northern Italy.The units in AVA are valued at around EUR 2.4 million in the consolidated financial statementsto 31 December 2012, with a change in the period that includes the pro-rata portion of the netloss for the period (EUR 0.2 million) and contributions paid in the form of capital calls (0.1million).The table below shows the key figures for the AVA fund at 31 December 2012:AVARegisteredofficeYear ofcommitmentFund SizeSubscribedcommitment% DeACapital infundEuro (€)Atlantic Value Added Italy 2011 55,000,000 5,000,000 9.08Residual CommitmentsTotal residual commitment in: Euro 2,370,000
    • Annual financial statementsto 31 December 2012 49- Units in venture capital fundsUnits in venture capital funds are all concentrated in the Parent Company DeA Capital S.p.A.,and are valued at approximately EUR 10.1 million in the financial statements to 31 December2012 (EUR 12.2 million at end-2011).The table below shows the key figures for venture capital funds in the portfolio at 31 December2012.Venture Capital FundsRegisteredofficeYear ofcommitmentFund SizeSubscribedcommitment% DeA Capital infundDollars (USD)Doughty Hanson & Co Technology UK EU 2004 271,534,000 1,925,000 0.71GIZA GE Venture Fund III Delaware U.S.A. 2003 211,680,000 10,000,000 4.72Israel Seed IV Cayman Islands 2003 200,000,000 5,000,000 2.50Pitango Venture Capital II Delaware U.S.A. 2003 125,000,000 5,000,000 4.00Pitango Venture Capital III Delaware U.S.A. 2003 417,172,000 5,000,000 1.20Totale Dollari 26,925,000Euro (€)Nexit Infocom 2000 Guernsey 2000 66,325,790 3,819,167 5.76Sterlings (GBP)Amadeus Capital II UK EU 2000 235,000,000 13,500,000 5.74Residual CommitmentsTotal residual commitment in: Euro 3,731,000
    • Annual financial statementsto 31 December 2012 50 Alternative Asset ManagementAt 31 December 2012, DeA Capital S.p.A. was the owner of: 100% of IDeA Capital Funds SGR 61.30% of IDeA FIMIT SGR (including 40.32% held through DeA Capital Real Estate,and 20.98% through IFIM) 100% of IRE/IRE Advisory (which operates in project, property and facilitymanagement and real estate brokerage)- IDeA Capital Funds SGRHeadquarters: ItalySector: Alternative Asset Management - Private EquityWebsite: www.ideasgr.itInvestment details:IDeA Capital Funds SGR is one of the leading independent Italian asset management companiesoperating in the management of direct funds, and funds of private equity funds. The assetmanagement company manages four closed-end private equity funds, including two funds offunds (IDeA I FoF and ICF II), a "direct" co-investment fund (IDeA OF I) and a sector funddedicated to energy efficiency (IDeA EESS).The investment programmes of IDeA Capital Funds SGR, which are regulated by the Bank of Italyand Consob, leverage the management teams wealth of experience in the sector.The investment strategies of funds of funds focus on building a diversified portfolio in privateequity funds in the top quartile or that are next-generation leaders with balanced asset allocationthrough diversification by: Industrial sector Investment strategy and stages (buy-outs, venture capital, special situations, etc.) Geographical area (Europe, US and the Rest of the World) Year (commitments with diluted investment periods over time)The investment strategies of the "direct" co-investment fund focus on minority interests inmedium to large-sized LBOs together with leading qualified investors with businesses thatprimarily focus on Europe, and diversification as a function of the appeal of individual sectors bylimiting investments during the early stage and excluding purely real estate investments.The investment philosophy of the EESS sector fund is focused on growth capital and buyoutprivate equity to support the growth of small and medium-sized enterprises with excellentproducts or services in the energy efficiency and sustainable growth arena. Investments ininfrastructure for the generation of energy from renewable sources or early stage investments canbe made in compliance with regulatory restrictions. The main geographical focus of these funds isItaly.
    • Annual financial statementsto 31 December 2012 51The table below summarises the value of assets under management and management fees forIDeA Capital Funds SGR at 31 December 2012.(EUR million)Asset UnderManagementat 31.12.2012Managementfeesat 31.12.2012Breakdown of fundsICF II 281 2.8IDeA EESS 59 1.2IDeA I FoF 681 7.1IDeA OF I 217 2.3Totalt- IDeA Capital Funds SGR 1,238 13.5With regard to its operating performance, note that the company recorded revenue growth in2012, despite unchanged assets under management, primarily due to one-off items of income.In terms of profitability, the performance recorded in 2012 was due to the effects ofstrengthening the operating structure to support fund raising activities and asset managementin fund portfolios.IDeA Capital Funds SGR (mln €) 2012 2011AUM 1.238 1.232Commissioni attive 13,5 12,8EBT 6,9 7,6Risultato Netto 4,5 4,9
    • Annual financial statementsto 31 December 2012 52- IDeA FIMIT SGRHeadquarters: ItalySector: Alternative Asset Management - Real EstateWebsite: www.firstatlantic.itInvestment details:IDeA FIMIT SGR is the biggest independent real estate asset management company in Italy,with around EUR 9.4 billion in assets under management and 31 managed funds (includingfive listed funds). This puts it among the major partners of Italian and international investorsin promoting, creating and managing closed-end mutual real estate investment funds.IDeA FIMIT SGR has three main lines of business: the development of mutual real estate investment funds designed for institutionalclients and private investors the promotion of innovative real estate financial instruments to satisfy investors’increasing demands the professional management (technical, administrative and financial) of real estatefunds with the assistance of in-house experts as well as the best independenttechnical, legal and tax advisors on the marketThe company has concentrated its investments in transactions with low risk, stable returns,low volatility, simple financial structures and, most importantly, an emphasis on real estatevalue. In particular, the asset management company specialises in "core" and "core plus"properties, but its major investments also include important "value added" transactions.Due in part to successful transactions concluded in recent years, the asset managementcompany is able to rely on a panel of prominent unitholders consisting of Italian andinternational investors with a high standing such as pension funds, bank and insurancegroups, capital companies and sovereign funds.On 1 July 2012, the deed of transfer signed by IDeA FIMIT SGR and Duemme SGR for thebusiness division comprising mutual real estate investment funds managed by Duemme SGR(a subsidiary of the Banca Esperia Group specialising in asset management services) becameeffective. The transfer of the business division has enabled IDeA FIMIT SGR to take on themanagement of eight real estate funds with assets that include around 60 buildings, worth atotal of approximately EUR 500 million.
    • Annual financial statementsto 31 December 2012 53The table below summarises the value of assets under management and management fees forIDeA FIMIT SGR at 31 December 2012.(EUR million)Asset UnderManagementat 31.12.2012Managementfeesat 31.12.2012Breakdown of fundsAtlantic 1 657 5.7Atlantic 2 Berenice 469 2.4Alpha 457 4.3Beta 210 2.5Delta 344 2.7Listed funds 2,137 17.6Reserved funds 7,273 47.8Total - IDeA FIMIT SGR 9,410 65.4Some of the key financials of the listed funds (Atlantic 1, Atlantic 2, Alpha, Beta and Delta –figures in EUR) in the asset management portfolio are also provided below, with an analysis ofthe real estate portfolio at the date of the latest report available, broken down by geographicalarea and by intended use.Atlantic 1 12/31/2012Market value of property 631,770,000Historical cost and capitalised charges 618,000,162Loan 355,596,609Net Asset Value ("NAV") 281,350,818NAV/unit (EUR) 539.482Market price/unit (EUR) 174.41Dividend yield of placement* 4.55%* Ratio between income per unit and average annual nominal value per unitAtlantic 1: Diversification by geographical area Atlantic 1: Diversification by intended useLombardia68%Lazio 15%Campania12%Piemonte /Emilia R.5%Offices 84%Commercial16%
    • Annual financial statementsto 31 December 2012 54Atlantic 2 - Berenice 12/31/2012Market value of property 396,650,000Historical cost and capitalised charges 405,042,456Loan 231,111,952Net Asset Value ("NAV") 225,892,506NAV/unit (EUR) 376.5Market price/unit (EUR) 162.4Dividend yield of placement* 11.14%* Ratio between income per unit and average annual nominal value per unitAtlantic 2: Diversification by geographical area Atlantic 2: Diversification by intended useAlpha 12/31/2012Market value of property 407,040,000Historical cost and capitalised charges 323,428,239Loan 63,142,155Net Asset Value ("NAV") 384,442,764NAV/unit (EUR) 3,701.0Market price/unit (EUR) 1,058.0Dividend yield of placement* 6.38%* Ratio between income per unit and average annual nominal value per unitAlpha: Diversification by geographical area Alpha: Diversification by intended useLombardia52%Lazio 27%Piemonte17%Altri 4%Offices 68%Other 32%Lazio 83%Lombardia12%EmiliaRomagna 5%Offices 60%Other 40%
    • Annual financial statementsto 31 December 2012 55Beta 12/31/2012Market value of property 164,722,200Historical cost and capitalised charges 163,666,042Loan 31,723,014Net Asset Value ("NAV") 149,203,714NAV/unit (EUR) 555.7Market price/unit (EUR) 315.3Dividend yield of placement* 9.52%* Ratio between income per unit and average annual nominal value per unitBeta: Diversification by geographical area Beta: Diversification by intended useDelta 12/31/2012Market value of property 325,046,667Historical cost and capitalised charges 375,092,958Loan 137,332,436Net Asset Value ("NAV") 204,089,909NAV/unit (EUR) 96.940Market price/unit (EUR) 30.5Dividend yield of placement* n.a.* No distributions arising from the investmentDelta: Diversification by geographical area Delta: Diversification by intended useSardegna39%Lazio 35%Umbria 26%Offices 41%Hotels 39%Specific Use19%Commercial1%Hotels62%Other34%Offices4%Sardegna39%Veneto 17%Calabria 10%Abruzzo 8%EmiliaRomagna11%Lombardia5%Campania 4% Piemonte3%Toscana3%
    • Annual financial statementsto 31 December 2012 56In 2012, over and above the activities to fully integrate the entities merged in 2011 (FARESGR and FIMIT SGR), the operating performance of IDeA FIMIT SGR was based on acontinuous search for opportunities to grow the assets managed; this broadly took the form oftransactions to acquire the Duemme SGR business division and the award of the AMA tender(see the “Significant events during the year” section).The comparison between the income statement for 2012 and 2011 (see the table below) is oflimited significance, in view of the changes in business structure that took place on 3 October2011 (integration of FARE SGR and FIMIT SGR, with the creation of IDeA FIMIT SGR).IDeA FIMIT SGR (EUR million) 2012 2011AUM 9,410 9,476Management fees 65.4 30.8EBT 21.1 11.4EBT - before PPA 32.7 14.3Net profit 19.4 7.1
    • Annual financial statementsto 31 December 2012 57 Comprehensive income - Income statementThe Group made a net loss of about EUR 26.3 million in 2012 compared with a loss of EUR43.6 million in 2011.When comparing the results of 2012 with those of 2011, note the significant change in thescope of consolidation of the Alternative Asset Management business, which includes FIMITSGR’s contribution from 3 October 2011 (the effective date of its integration with FARE).Revenues and other income break down as follows:- Alternative Asset Management fees totalling EUR 82.0 million- a contribution from investments valued at equity of EUR -18.4 million (EUR -55.5million in 2011), due to the investment in Santé (around EUR -10.8 million) and theinvestment in IDeA OF I (EUR -6.3 million)- other investment income, net of liabilities, totalling EUR -7.9 million (EUR +13.5 millionin 2011, which included the capital gain made on the sale of a portion of the Migrosshares held by Kenan Investments)- other revenues and income totalling EUR 12.5 million due largely to the AlternativeAsset Management business (EUR 10.7 million in 2011)Operating costs totalled EUR 81.3 million (EUR 51.4 million in 2011), of which EUR 64.1 millionwas attributable to Alternative Asset Management, EUR 4.5 million to the Private EquityInvestment business and EUR 12.7 million to holding company activities. Alternative AssetManagement costs include the effects of the amortisation of intangible assets, totalling EUR14.7 million, recorded when a portion of the purchase price of the investments was allocated.Financial income and charges, which totalled EUR -6.7 million at 31 December 2012 (EUR -2.8million in 2011), mainly related to the cost of exercising the put option on subsidiaries’minority equity investments, income generated from cash and cash equivalents, financialcharges and income/charges on derivative contracts.The total tax impact for 2012 (EUR +1.6 million, compared with EUR -3.8 million in 2011) isthe combined result of taxes of EUR 4.9 million due in respect of Alternative AssetManagement activities, and tax credits of EUR 1.0 million relating to the Private EquityInvestment business and of EUR 5.6 million for holding company activities.Of the total consolidated net loss of EUR 26.3 million, about EUR -30.1 million was attributableto the Private Equity Investment business, around EUR +16.5 million to Alternative AssetManagement and approximately EUR -12.7 million to holding company operations/eliminations.
    • Annual financial statementsto 31 December 2012 58Summary Group income statement(Euro thousands) Year 2012 Year 2011Alternative Asset Management fees 82,004 47,762Income (loss) from equity investments (18,442) (55,503)Other investment income/expense (7,884) 13,500Income from services 10,863 10,359Other income 1,658 322Other expenses (81,270) (51,360)Financial income and expenses (6,759) (2,757)PROFIT/(LOSS) BEFORE TAX (19,830) (37,677)Income tax 1,621 (3,814)PROFIT/(LOSS) FOR THE PERIOD FROM CONTINUING OPERATIONS (18,209) (41,491)Profit (Loss) from discontinued operations/held-for-sale assets 0 0PROFIT/(LOSS) FOR THE PERIOD (18,209) (41,491)- Group share (26,277) (43,577)- Non controlling interests 8,068 2,086Earnings per share, basic (€) (0.095) (0.151)Earnings per share, diluted (€) (0.095) (0.151)Summary Group income statement - performance by business in 2012(Euro thousands)Private EquityInvestmentAlternativeAssetManagementHoldings/Eliminations ConsolidatedAlternative Asset Management fees 0 82,004 0 82,004Income (loss) from equity investments (17,855) (245) (342) (18,442)Other investment income/expense (9,014) 599 531 (7,884)Income from services 555 11,759 207 12,521Other expenses (4,452) (64,160) (12,658) (81,270)Financial income and expenses (327) (42) (6,390) (6,759)PROFIT/(LOSS) BEFORE TAXES (31,093) 29,915 (18,652) (19,830)Income tax 977 (4,930) 5,574 1,621PROFIT/(LOSS) FOR THE PERIOD FROM CONTINUING OPERATIONS (30,116) 24,985 (13,078) (18,209)Profit (Loss) from discontinued operations/held-for-sale assets 0 0 0 0PROFIT/(LOSS) FOR THE PERIOD (30,116) 24,985 (13,078) (18,209)- Group share (30,116) 16,574 (12,735) (26,277)- Non controlling interests 0 8,411 (343) 8,068Summary Group income statement - performance by business in 2011(Euro thousands)Private EquityInvestmentAlternativeAssetManagementHoldings/Eliminations ConsolidatedAlternative Asset Management fees 0 47,762 0 47,762Income (loss) from equity investments (55,503) 0 0 (55,503)Other investment income/expense 13,773 (273) 0 13,500Income from services 40 10,332 309 10,681Other expenses (825) (42,051) (8,484) (51,360)Financial income and expenses (26) (215) (2,516) (2,757)PROFIT/(LOSS) BEFORE TAXES (42,541) 15,555 (10,691) (37,677)Income tax 98 (7,160) 3,248 (3,814)PROFIT/(LOSS) FOR THE PERIOD FROM CONTINUING OPERATIONS (42,443) 8,395 (7,443) (41,491)Profit (Loss) from discontinued operations/held-for-sale assets 0 0 0 0PROFIT/(LOSS) FOR THE PERIOD (42,443) 8,395 (7,443) (41,491)- Group share (42,443) 6,309 (7,443) (43,577)- Non controlling interests 0 2,086 0 2,086
    • Annual financial statementsto 31 December 2012 59 Comprehensive income - Statement of Performance - IAS 1Comprehensive income or the Statement of Performance (IAS 1), in which performance for theperiod attributable to the Group is reported including results posted directly to shareholdersequity, reflects a net profit of approximately EUR 62.5 million compared with a net loss of EUR70.2 million in 2011. This comprised: a net loss of EUR 26.3 million recorded on the income statement profits posted directly to shareholders’ equity totalling EUR 88.8 millionAs regards the latter, the largest component was the increase in fair value of Kenan/Migros.The increase of EUR 96.5 million versus 31 December 2011 in the value of this equityinvestment was due to the rise in the value of Migros shares (TRY 21.5 per share at 31December 2012, compared with approximately TRY 12.6 per share at 31 December 2011, andthe strengthening of the Turkish lira against the euro (2.36 TRY/EUR at 31 December 2012versus 2.44 TRY/EUR at 31 December 2011). The effect on the DeA Capital Group’s NAV of thischange in fair value was partially offset by the provisioning of estimated carried interest ofaround EUR 12.8 million, to be paid to the lead investor, BC Partners, based on the totalcapital gain. This was partly recognised in the income statement (EUR 3.0 million) and partlyrecognised in the fair value reserve (EUR 9.8 million).(Euro thousands) Note Year 2012Profit/(loss) for the period (A) (18,209) (41,491)Gains/(Losses) on fair value of available-for-salefinancial assets 85,397 (27,158)Share of other comprehensive income of associates 2,138 547Other comprehensive income, net of tax (B) 87,535 (26,611)Total comprehensive income for the period(A)+(B) 69,326 (68,102)Total comprehensive income attributable to:- Group Share 62,496 (70,188)- Non Controlling Interests 6,830 2,086
    • Annual financial statementsto 31 December 2012 60 Comprehensive income – balance sheetBelow is the Group’s balance sheet at 31 December 2012 compared with 31 December 2011.(Euro thousand)December31,2012December31,2011ASSETSNon-current assetsIntangible and tangible assetsGoodwill 208,891 210,134Intangible assets 105,992 119,648Property, plant and equipment 2,527 1,269Total intangible and tangible assets 317,410 331,051InvestmentsInvestments valued at equity 296,366 302,141Other available-for-sale companies 223,896 127,380Available-for-sale funds 166,504 159,673Other avalaible-for-sale financial assets 327 936Total Investments 687,093 590,130Other non-current assetsDeferred tax assets 2,754 4,077Loans and receivables 27,444 1,632Other non-current assets 25,944 25,729Total other non-current assets 56,142 31,438Total non-current assets 1,060,645 952,619Current assetsTrade receivables 12,256 6,070Available-for-sale financial assets 5,666 13,075Financial receivables 2,003 1Tax receivables from Parent companies 7,489 5,929Other tax receivables 2,522 2,677Other receivables 7,792 6,128Cash and cash equivalents 29,156 46,764Total current assets 66,884 80,644Total current assets 66,884 80,644Held-for-sale assets - -TOTAL ASSETS 1,127,529 1,033,263SHAREHOLDERS EQUITY AND LIABILITIESSHAREHOLDERS EQUITYNet equity Group 723,138 669,045Minority interests 136,309 134,324Shareholders equity 859,447 803,369LIABILITIESNon-current liabilitiesDeferred tax liabilities 25,668 40,506Provisions for employee termination benefits 3,035 2,127Long term financial loans 142,802 160,020Payables to staff 1,956 -Total non-current liabilities 173,461 202,653Current liabilitiesTrade payables 27,420 10,322Payables to staff and social security organisations 8,868 7,497Current tax 7,473 903Other tax payables 4,276 3,585Other payables 1,495 1,023Short term financial loans 45,089 3,911Total current liabilities 94,621 27,241Held-for-sale liabilities - -TOTAL SHAREHOLDERS EQUITY AND LIABILITIES 1,127,529 1,033,263
    • Annual financial statementsto 31 December 2012 61At 31 December 2012, Group shareholders’ equity was approximately EUR 723.1 million,compared with EUR 669.0 million at 31 December 2011.The increase of about EUR 54.1 million in Group shareholders equity in 2012 was chiefly dueto the reasons already discussed in the Statement of Performance - IAS 1 (EUR +62.5 million)and to the effects of the share buy-back plan (EUR -8.0 million). Comprehensive income – Net financial positionAt 31 December 2012, the consolidated net financial position was approximately EUR -123.6million, as shown in the table below, which provides a breakdown of assets and liabilities and acomparison with the same figures at 31 December 2011:Net financial position Change(EUR million)Cash and cash equivalents 29.2 46.8 (17.6)Available-for-sale financial assets 7.7 13.0 (5.3)Financial receivables 27.4 1.6 25.8Non-current financial liabilities (142.8) (160.0) 17.2Current financial liabilities (45.1) (3.9) (41.2)TOTAL (123.6) (102.5) (21.1)December31,2012December31,2011The change in the consolidated net financial position in 2012 was due to the combined effect ofthe following factors: cash outlay of EUR 8.0 million for the share buy-back plan payment of dividends to third parties of EUR 6.3 million investment of EUR 26.0 million, net of divestments and capital reimbursements operating cash flow (mainly comprising fees/revenues for services,net of current expenses, as well as the result of financial and tax management),totalling EUR +19.2 millionThe company believes that the cash and cash equivalents and the other financial resourcesavailable are sufficient to meet the requirement relating to payment commitments alreadysubscribed in funds, also taking into account the amounts expected to be called up/reimbursedby these funds. With regard to these residual commitments, the company believes that thefunds and credit lines currently available, as well as those that will be generated by itsoperational and financing activities, will enable the DeA Capital Group to meet the financingrequired for its investment activity and to manage working capital and repay debts when theybecome due.The following points relate to the individual items that make up the consolidated net financialposition: ”Non-current financial liabilities” mainly include EUR 100.0 million relating to the use ofthe credit line provided by Mediobanca, EUR 12.7 million relating to the use of thecredit line granted to IDeA FIMIT SGR by Banca Intermobiliare di Investimenti eGestioni S.p.A., EUR 25.8 million in respect of the vendor loan to acquire the tranche ofmezzanine bonds issued by SDE (discussed in the “Significant events during the year”section, which was broadly offset in “Financial loans” “Current financial liabilities” chiefly include the amounts still to be paid for theacquisition of 30% of FARE Holding, now DeA Capital Real Estate (expiry: December2013)
    • Annual financial statementsto 31 December 2012 626. Results of the Parent Company DeA Capital S.p.A.The Parent Company DeA Capital S.p.A. operates as a holding company that carries outactivities of coordination, development and strategic management of its subsidiaries, and alsoacts as an entity that makes financial investments directly.A summary of the income statement and balance sheet of DeA Capital S.p.A. for the yearended 31 December 2012 is shown below. Income statement of the Parent Company(Euro) Year 2012 Year 2011Other investment income/expense 8,919,489 24,694,430Income from services 459,075 516,647Realized gains 0 0Other income 154,812 121,913Personnel costs (5,972,054) (3,268,826)Service costs (3,138,118) (3,038,525)Depreciation, amortization and impairment (86,325) (154,436)Other expenses (507,712) (10,244)Financial income 2,043,647 1,384,249Financial expenses (4,653,117) (6,251,938)PROFIT/(LOSS) BEFORE TAX (2,780,303) 13,993,270Income tax 4,879,067 1,759,281Income tax-Joint Venture 170,504 236,607PROFIT/(LOSS) FOR THE YEAR FROM CONTINUING OPERATIONS 2,269,268 15,989,158Profit (Loss) from discontinued operations/held-for-sale assets 0 0PROFIT/(LOSS) FOR THE YEAR 2,269,268 15,989,158The Parent Company reported net profit for 2012 of around EUR 2.3 million, achieved mainlythanks to dividend flows from investments in Alternative Asset Management, which more thanoffset structure costs and financial charges (net of the related tax effects).This profit for the period contrasts with a loss of around EUR 32.1 million in 2011 (whichreflected a significant realignment of the value of the equity investment in DeA CapitalInvestments following the reduction in fair value of the Private Equity Investment portfolio).
    • Annual financial statementsto 31 December 2012 63 Balance sheet of the Parent CompanyBelow is the Parent Companys balance sheet at 31 December 2012 compared with 31December 2011.(Euro) 31.12.2012 31.12.2011ASSETSNon-current assetsIntangible and tangible assetsIntangible assets 14,981 7,656Tangible assets 491,494 86,848Total intangible and tangible assets 506,475 94,504InvestmentsSubsidiaries and joint ventures 831,253,419 717,130,237Associates 2,597,643 1,000,000Available-for-sale investments 286,618 1Available-for-sale funds 13,364,643 12,234,007Loans to subsidiaries 0 37,307,101Total Investments 847,502,323 767,671,346Other non-current assetsDeferred tax assets 0 0Other non-current assets 0 0Total other non-current assets 0 0Total non-current assets 848,008,798 767,765,850Current assetsTrade receivables 2,149,347 217,392Available-for-sale financial assets 0 5,296,954Financial receivables 31,269,662 2,879,872Financial receivables (pass throught arrangement) 0 07,488,867 5,928,777Other tax receivables 1,269,537 1,810,310Other receivables 67,622 97,133Cash and cash equivalents 2,153,095 29,056,753Total current assets 44,398,130 45,287,191Total current assets 44,398,130 45,287,191Held-for-sale assets 0 0TOTAL ASSETS 892,406,928 813,053,041SHAREHOLDERS EQUITY AND LIABILITIESSHAREHOLDERS EQUITYShareholders equity 740,383,923 714,038,989LIABILITIESNon-current liabilitiesDeferred tax liabilities 0 0Provisions for employee termination benefits 316,221 192,487Long term financial loans 102,986,561 93,008,005Payables to staff and social security organisations 1,189,425 -Total non-current liabilities 104,492,207 93,200,492Current liabilitiesTrade payables 2,525,591 768,680Payables to staff and social security organisations 1,200,959 956,225Current tax payables 0 5,826Other tax payables 194,516 158,820Other payables 24,528 13,407Short term financial loans 43,585,204 3,910,602Total current liabilities 47,530,798 5,813,560Held-for-sale liabilities 0 0TOTAL SHAREHOLDERS EQUITY AND LIABILITIES 892,406,928 813,053,041Tax receivables from Parent companies
    • Annual financial statementsto 31 December 2012 64At 31 December 2012, the Parent Companys shareholders equity totalled about EUR 740.4million, compared with EUR 714.0 million at 31 December 2011, an increase of about EUR 26.4million (due largely to the comprehensive income for the period).Pursuant to the Consob Communication of 28 July 2006, a reconciliation between the loss andshareholders equity at 31 December 2012 reported by the Parent Company DeA Capital S.p.A.is shown below together with the corresponding consolidated figures.(Euro thousand)Net Equity atDec. 31,2012NetProfit/(Loss)2012Net Equity atDec. 31,2011NetProfit/(Loss)2011EQUITY and net profit/(loss) for the year, as reported in the Parent Companyfinancial statements740,384 2,269 714,039 (32,086)Elimination of book values from consolidated shareholdings:- Surplus of net equity reported in financial statements compared to book values ofshareholdings in consolidated companies (17,246) 0 (44,994) 0- Pro-rata results achieved by shareholdings 0 15,371 0 22,971- Pro-rata results achieved by associated companies, valued as Shareholders’ Equity 0 (18,357) 0 (55,503)- Elimination of impairment of investments in DeA Capital S.p.A. 0 (3,236) 0 88,604- Elimination of dividends received by shareholdings 0 (22,324) 0 (67,563)EQUITY and Group share of net profit/(loss) 723,138 (26,277) 669,045 (43,577)EQUITY and minority interests share of net profit/(loss) 136,309 8,068 134,324 2,086EQUITY and net profit for the year, as reported in the consolidated financialstatements859,447 (18,209) 803,369 (41,491)
    • Annual financial statementsto 31 December 2012 657. Other information Own shares and Parent Company sharesOn 17 April 2012, the shareholders’ meeting approved a new plan to buy and sell own shares.The plan cancelled and replaced the previous plan authorised by the shareholders’ meeting on19 April 2011, which was scheduled to expire on 19 October 2012. The new plan will have thesame objectives as the previous one, including the purchase of own shares to be used forextraordinary operations and share incentive plans, offering shareholders a means ofmonetising their investment, stabilising the share price and regulating trading within the limitsof the legislation in force.The authorisation specifies that purchases may be carried out, for a maximum period of 18months starting from 17 April 2012, in accordance with all procedures allowed by currentregulations, and that DeA Capital S.p.A. may also sell the shares purchased for the purposes oftrading. The unit price for the purchase of the shares is set by the Board of Directors, but inany case must not be more than 20% above or below the share’s reference price on thetrading day prior to each purchase.In contrast, the authorisation to sell own shares already held in the company’s portfolio andany shares bought in the future was granted for an unlimited period, to be implemented usingthe methods deemed most appropriate and at a price to be determined on a case-by-casebasis by the Board of Directors, which must not, however, be more than 20% below theshares reference price on the trading day prior to each individual sale (apart from in certainexceptional cases specified in the plan). Sale transactions may also be carried out for tradingpurposes.Also on 17 April 2012, the company’s Board of Directors voted to initiate the plan to buy andsell own shares authorised by the shareholders’ meeting, and to this end vested the Chairmanof the Board of Directors and the Chief Executive Officer with all the necessary powers, to beexercised jointly or severally and with full powers of delegation.In 2012, as a part of the above two plans, DeA Capital S.p.A. purchased around 6.1 millionshares valued at about EUR 8.0 million (at an average price of EUR 1.31 per share).Taking into account purchases made in previous years for plans in place from time to time, anduses of own shares to service purchases of controlling interests in FARE Holding and IDeA AI,at 31 December 2012 the company owned 32,006,029 own shares (equal to about 10.4% ofthe share capital).As of the date of this document, based on purchases of 630,975 shares made after the end of2012, the company had a total of 32,637,004 own shares corresponding to about 10.6% of theshare capital.During 2012, the company did not hold, purchase or sell, on its own account or through a trustcompany, any shares in Parent Company De Agostini S.p.A. Stock option and performance share plansOn 17 April 2012, the shareholders’ meeting approved the DeA Capital Stock Option Plan2012–2014. To implement the resolution of the shareholders meeting, the Board of Directors
    • Annual financial statementsto 31 December 2012 66of DeA Capital S.p.A., at its meeting held on the same day, allocated a total of 1,030,000options to certain employees of the company and its subsidiaries and of the Parent Company,De Agostini S.p.A., who perform important roles for the company.In line with the criteria specified in the regulations governing the DeA Capital Stock OptionPlan 2012–14, the Board of Directors also set the exercise price for the options allocated atEUR 1.3363, which is the arithmetic mean of the official prices of ordinary DeA Capital shareson the Mercato Telematico Azionario, the Italian screen-based trading system organised andmanaged by Borsa Italiana S.p.A., on the trading days between 17 March 2012 and 16 April2012.The shareholders’ meeting also approved a paid capital increase, in divisible form, withoutoption rights, via the issue of a maximum of 1,350,000 ordinary shares to service the DeACapital Stock Option Plan 2012-2014.The shareholders’ meeting also approved the Performance Share Plan 2012–2014. Toimplement the resolution of the shareholders meeting, the Board of Directors allocated a totalof 302,500 units (representing the right to receive ordinary shares of the company, free ofcharge, under the terms and conditions of the plan) to certain employees of the company andits subsidiaries and of the Parent Company, De Agostini S.p.A., who perform important rolesfor the Company.Shares allocated due to the vesting of units will be drawn from own shares already held by thecompany.The terms and conditions of the DeA Capital Stock Option Plan 2012–2014 and thePerformance Share Plan 2012-2014 are described in the Information Prospectus prepared inaccordance with art. 84-bis of Consob Resolution 11971 of 14 May 1999 (Issuer Regulations),available to the public at the registered office of DeA Capital S.p.A. and on the company’swebsite www.deacapital.it in the section Corporate Governance/Incentive Plans.With regard to the previous year, on 19 April 2011 the shareholders meeting approved theStock Option Plan 2011-2016 on the basis of which 2,200,000 shares were allocated. Theseshares are not yet exercisable. Transactions with parent companies, subsidiaries and related parties Transactions with related partiesTransactions with related parties, including those with other Group companies, were carriedout in accordance with the Procedure for Related Party Transactions adopted by the companywith effect from 1 January 2011 in accordance with the provisions of the Regulation pursuantto art. 2391-bis of the Italian Civil Code as specified by Consob in Resolution 17221 of 12March 2010 as subsequently amended. During the year, the company did not carry out anyatypical or unusual transactions with related parties, but only those that are part of the normalbusiness activities of Group companies, and did not carry out any "significant transactions" asdefined in the above-mentioned procedure.In addition to the above, the company signed a service agreement with the controllingshareholder De Agostini S.p.A. for the latter to provide operating services in theadministration, finance, control, legal, corporate and tax areas.This agreement, which is renewable annually, is priced at market rates, and is intended toallow the company to maintain a streamlined organisational structure in keeping with itsdevelopment policy, and at the same time to obtain adequate operational support.
    • Annual financial statementsto 31 December 2012 67Remuneration and stock options to directors, auditors, general managers andmanagers with strategic responsibilitiesThe information on compensation and stock options allocated to directors, auditors, generalmanagers and managers with strategic responsibilities is provided in the related sections of theannual and consolidated financial statements and in the Remuneration Report pursuant to art.123-ter of the TUF in accordance with art. 84-quater of the Issuer Regulations, which isavailable to the public at the headquarters of DeA Capital S.p.A. and on the companys websitewww.deacapital.it. Equity investments held by directors, auditors, general managers andmanagers with strategic responsibilitiesInformation regarding the equity investments held by directors, auditors, general managersand managers with strategic responsibilities is reported in the relevant sections of the annualand consolidated financial statements. Management and coordinationSince 30 January 2007, the company has been controlled by De Agostini S.p.A., which, inaccordance with art. 2497-sexies of the Italian Civil Code, carries out management andcoordination activities in respect of the company. Please see the notes to the financialstatements above for key figures from the latest approved financial statements of De AgostiniS.p.A. Research and development activitiesNote that pursuant to art. 2428, para. 3 of the Italian Civil Code, the company did not carryout any research and development activity in 2012. Atypical or unusual transactions and non-recurring significant events andtransactionsPursuant to Consob Communication 6064293 of 28 July 2006, in 2012 neither the companynor the Group carried out any atypical and/or unusual transactions or significant transactionsthat were not a part of its ordinary operations. Corporate governancePlease see the document entitled "Report on Corporate Governance and Ownership Structure"(found in the Corporate Governance section of the companys website) for information on thecorporate governance structure of DeA Capital S.p.A., adopted to bring the company in linewith the principles of the Code of Conduct prepared by the "Committee for the CorporateGovernance of Listed Companies". Below is a summary of the main information governing DeACapital S.p.A.s corporate governance.Issuer profileThe Issuers corporate governance structure is based on the traditional administration andcontrol model, and hinges on the central role played by the Board of Directors, the properdisclosure of management decisions, an effective internal control system, the appropriate
    • Annual financial statementsto 31 December 2012 68regulation of potential conflicts of interest, and on rigorous standards of conduct for carryingout transactions with related parties.Extent of application of the Code of ConductFor 2012, the Board of Directors again implemented the Boards self-assessment process.Directors showed a high degree of participation in the Boards self-assessment process, and areview of the results of the board performance evaluation resulted in an overall positiveopinion on the functioning of the Board.Corporate bodies The Board of Directors consists of ten members, eight of whom are non-executivedirectors, and three of whom are independent directors. It plays a key role in thecorporate governance system of DeA Capital S.p.A. In particular, it has the power andthe duty to manage the operations of the Issuer with the ultimate and main goal ofcreating value for shareholders.Pursuant to the articles of association, the Board manages the companys business, andis invested with all the administrative powers needed for this purpose, with theexception of those powers reserved for the shareholders meeting, pursuant tolegislation and the articles of association. In 2012, the Board of Directors met six times.For 2012, the calendar of scheduled meetings has been published in both Italian andEnglish (also available at www.deacapital.it). The Board of Auditors comprises six members (the chairman, two permanent auditorsand three deputy auditors). It monitors compliance with the law and the company’sarticles of association, observance of the principles of proper management, and thesuitability and proper functioning of the organisational, administrative and accountingstructure. In 2012, the Board of Auditors met 12 times. The Remuneration Committee comprises three independent directors. TheCommittee submits proposals to the Board of Directors concerning the remuneration ofthe chief executive officer, and assesses the chief executive officer’s recommendationsregarding the remuneration of managers with strategic responsibility. In 2012, theRemuneration Committee met twice. The Control and Risk Committee comprises three non-executive directors, of whichtwo are independent. The Committee has a consultative role and makes proposals tothe Board of Directors. In 2012, Control and Risk Committee met seven times.
    • Annual financial statementsto 31 December 2012 69Corporate Governance Chart as at 31 December 2012: Main risks and uncertainties to which the Parent Company and consolidatedGroup companies are exposedAs described in this Report on Operations, the DeA Capital Group operates through, and isstructured as, two business areas: Private Equity Investment and Alternative AssetManagement.The risks set out below consider the characteristics of the market and the operations of ParentCompany DeA Capital S.p.A. and the companies included in the Group’s consolidated financialstatements, and the main findings of a risk assessment, carried out in 2012, as well as theperiodic monitoring conducted partly through the regulatory policies adopted by the Group.There could, however, be risks that are currently unidentified or not considered significant thatcould have an impact on the Groups operations.The Group has adopted a modern corporate governance system that provides effectivemanagement of the complexities of its operations, and enables both individual companies andthe Group to achieve their strategic objectives. Furthermore, the assessments conducted bythe organisational units and the directors confirm both the non-critical nature of these risksand uncertainties and the financial solidity of the DeA Capital Group.With reference to specific risks relating to the main private equity investments, i.e. Généralede Santé and Migros, please see the respective annual reports, and, more specifically,Générale de Santé’s Registration Document and Migros’ Annual Report (available on theirwebsites).In particular, the latest Registration Document (sections 4.1 - RISQUES LIES AUX ACTIVITESDU GROUPE and 4.2 - GESTION DES RISQUES) available as of the date of this report, indicatesthe following as the main risk factors for Générale de Santé:External Auditors:KPMGStatutory Auditors:Chairman : Angelo GavianiPerm. Auditors: Cesare Andrea Grifoni,Gian Piero BalducciDep. Auditors : Giulio Gasloli,Andrea Bonafé, Maurizio FerreroBoard of DirectorsExecutive:: Lorenzo Pellicioli (Chair.), Paolo Ceretti (CEO)Non executive: Lino Benassi, Marco Boroli, Daniel Buaron,Marco Drago, Roberto DragoRosario Bifulco, Claudio Costamagna,Severino SalveminiRemuneration Committee:Coordinator : Rosario Bifulco (Indep.)Members: Claudio Costamagna (Indep.),Severino Salvemini (Indep.)Manager responsiblefor the companyAccounting statements:Manolo Santilli (CFO)Internal Audit:Davide BossiInternal Audit Board:Chairman : Gian Piero Balducci (St: Auditor),Members: Severino Salvemini (Indep.),Davide Bossi (Internal Audit)Lead IndependentDirector: Severino Salvemini (Indep.)Internal Control Committee:Chairman : Severino Salvemini (Indep.)Members:: Rosario Bifulco (Indep.),Lino Benassi (non executive)Shareholders’MeetingIndependent:
    • Annual financial statementsto 31 December 2012 70  Risks related to company debt (Risques liés à l’endettement de Générale de Santé) Liquidity risks (Risques de liquidité) Interest rate risks (Risques de taux d’intérêt) Risks relating to obtaining financing (Risques liés à l’obtention de financements) Risks relating to commitments contained in leases signed by the Group (Risques liés auxengagements contenus dans les baux commerciaux souscrits par le Groupe) Risks relating to the clinic restructuring and construction programme (Risques liés auxprogrammes de restructuration ou de construction majeures de cliniques) Risks relating to the external growth strategy (Risques liés à la stratégie de croissanceexterne) Risks relating to changes in prices (Risques liés à l’évolution de la tarification) Risks relating to competition (Risques liés à la compétitivité) Risks relating to the recruitment and retention of staff and practitioners (Risques liés aurecrutement et à la fidélisation du personnel et des praticiens) Risks relating to applicable legislation (Risques liés à la réglementation applicable) Risks of a deterioration in the reputation of Générale de Santé in the event of legalproceedings being brought against a group facility or practitioner (Risques liés à ladégradation de la réputation de Générale de Santé en cas de mise en jeu de laresponsabilité d’un établissement ou d’un praticien du Groupe) Risks relating to environmental protection legislation (Risques liés à la réglementationrelative à la protection de l’environnement) Risks relating to the adequacy, costs and availability of insurance cover (Risques liés àl’adéquation, aux coûts et à la disponibilité de couverture d’assurance) Exceptional events and disputes (Faits exceptionnels et litiges) Risks relating to IT suppliers (Risques liés au fournisseur en matière informatique).A. Contextual risksA.1. Risks relating to general economic conditionsThe operating performance and financial position of the DeA Capital Group are affected by thevarious factors that make up the macro-economic environment, including increases ordecreases in GDP, investor and consumer confidence, interest rates, inflation, the costs of rawmaterials and unemployment. The ability to meet medium- to long-term objectives could beaffected by general economic performance, which could slow the development of sectors theGroup has invested in, and at the same time, the business of the investee companies.A.2. Socio-political eventsIn line with its own strategic growth guidelines, one of the DeA Capital Group’s activities isprivate equity investment in companies and funds in different jurisdictions and countriesaround the world, which, in turn, invest in a number of countries and geographical areas. TheDeA Capital Group may have invested in foreign countries whose social, political and economicconditions put the achievement of its investment objectives at risk.A.3. Regulatory changesMany Group companies conduct their operations in regulated sectors and markets. Anychanges to or developments in the legislative or regulatory framework that affect the costs andrevenues structure of investee companies or the tax regime applied, could have negativeeffects on the Group’s financial results, and necessitate changes in the Group’s strategy. Tocombat this risk, the Group has established procedures to constantly monitor sector regulationand any changes thereto, in order to take advantage of business opportunities and respond toany changes in the prevailing legislation and regulations in good time.A.4. Performance of the financial marketsThe company’s ability to meet its strategic and management objectives could depend on theperformance of financial markets. A negative trend on financial markets could have an effect
    • Annual financial statementsto 31 December 2012 71on the private equity investment sector in general, making investment and divestmenttransactions more complex, and on the Group’s capacity to increase the NAV of investments inparticular. The value of equity investments held directly or indirectly through funds in whichthe company has invested could be affected by factors such as comparable transactionsconcluded on the market, sector multiples and market volatility. These factors that cannot bedirectly controlled by the Group are constantly monitored in order to identify appropriateresponse strategies that involve both the provision of guidance for the management of Groupcompanies, and the investment and value enhancement strategy for the assets held.A.5. Exchange ratesHolding investments in currencies other than the euro exposes the Group to changes inexchange rates between currencies. The investment in Kenan Investments is managed as aspecial case, since although it was made in euro, the underlying asset is expressed in Turkishlira. Taking into account the time horizon of the investment, it is believed that the expectedreturn on the investment can absorb any devaluation of the underlying currency, if in line withthe outlook for the currency.A.6. Interest ratesOngoing financing operations that are subject to variable interest rates could expose the Groupto an increase in related financial charges, in the event that the reference interest rates risesignificantly. DeA Capital S.p.A. has established appropriate strategies to hedge against therisk of fluctuations in interest rates. Given the partial hedge of the underlying, the companyclassifies these securities as speculative instruments, even though they are put in place forhedging purposes.B. Strategic risksB.1. Concentration of the Private Equity Investment portfolioThe Private Equity Investment strategy adopted by the Group includes:- direct investments- indirect investments (in funds)Within this strategy, the Group’s overall profitability could be adversely affected by anunfavourable trend in one or a few investments, if there were insufficient risk diversification,resulting from the excessive concentration of investment in a small number of assets, sectors,countries, currencies or of indirect investments in funds with limited investment targets/typesof investment.To combat these risk scenarios, the Group pursues an asset allocation strategy intended tocreate a balanced portfolio with a moderate risk profile, investing in attractive sectors and incompanies with an appealing current and future risk/return ratio. Furthermore, thecombination of direct and indirect investments, which, by their nature, guarantee a high levelof diversification, helps reduce the level of asset concentration.B.2. Concentration of Alternative Asset Management activitiesIn Alternative Asset Management, in which the Group is active through the companies DeACapital Real Estate and IFIM, events could arise as a result of excessive concentration thatwould hinder the achievement of the level of expected returns. These events could be due to: Private equity fundso concentration of the management activities of asset management companies across alimited number of funds, in the event that one or more funds decides to cancel its assetmanagement mandateo concentration of the financial resources of the funds managed in a limited number ofsectors and/or geographical areas, in the event of currency, systemic or sector crises
    • Annual financial statementsto 31 December 2012 72o for closed funds, concentration of the commitment across just a few subscribers, in theevent of a counterparty experiencing financial difficulties Real estate fundso concentration of real estate present in the portfolio of managed funds in a few citiesand/or in limited types of property (management/commercial), in the event of a crisison the property market concernedo concentration in respect of certain important tenants, in the event that these withdrawfrom the rental contracts, which could lead to a vacancy rate that has a negative impacton the funds financial results and the valuation of the property managedo concentration of the maturities of numerous real estate funds within a narrowtimeframe, with related high availability of property on the market, leading to adecrease in property values and an increase in selling timesFor each of the risk scenarios outlined above, the Group has defined and implementedappropriate strategies that include strategic, operational and management aspects, as well asa system monitoring the level of diversification of Alternative Asset Management activities.B.3. Key resources (governance/organisation)The success of the DeA Capital Group depends to a large extent on its executive directors andcertain key management figures, their ability to efficiently manage the business and theordinary operations of the Group, as well as knowledge of the market and the professionalrelationships established. The departure of one or more of these key resources, without asuitable replacement being found, as well as an inability to attract and retain new and qualifiedresources, could impact growth targets and have a negative effect on the Group’s operatingperformance and financial results. To mitigate this risk, the Group has put in place HRmanagement policies that correspond closely to the needs of the business, and incentivepolicies that are periodically reviewed, in light of, among other things, the general economicclimate and the results achieved by the Group.C. Operating risksC.1. Investment operationsInvestment operations conducted by the Group are subject to the risks typical of private equityactivities, such as the accurate valuation of the target company and the nature of thetransactions carried out. The Group has implemented a structured process of due diligence ontarget companies, involving the different levels of group management concerned and thecareful definition of shareholders’ agreements in order to conclude agreements in line with theinvestment strategy and the risk profile defined by the Group.C.2. Compliance with covenantsSome investment operations were concluded using financial leverage to invest in the targetcompanies. For financing contracts signed by investee companies, specific covenants generallybacked by collateral are in place; failure to comply with these could necessitate recapitalisationoperations for investee companies and lead to an increase in financial charges relating to debtrefinancing. Failure to comply with covenants attached to loans could have negative effects onboth the financial situation and operations of investee companies, and on the value of theinvestment.The Group constantly monitors the significant reference parameters for the financialobligations taken on by investee companies, in order to identify any unexpected variance ingood time.C.3. Divestment operations
    • Annual financial statementsto 31 December 2012 73In its Private Equity Investment business, the Group generally invests over a medium-/long-term time horizon. Over the investment management period, external situations could arisethat might have a significant impact on the operating results of the investee companies, andconsequently on the value of the investment itself. Furthermore, in the case of co-investment,guiding the management of an investee company could prove problematic or unfeasible, and itmay ultimately prove impossible to dispose of the stakes held owing to lock-up clauses. Thedivestment strategy could therefore be negatively affected by various factors, some of whichcannot be foreseen at the time the investments are made. There is therefore no guaranteethat expected earnings will be realised given the risks resulting from the investments made.To combat these risk situations, the Group has defined a process to monitor the performanceof its investee companies, facilitated by its representation on the management bodies ofsignificant investee companies, with a view to identifying any critical situations in good time.C.4. Funding riskThe income flows expected from the Alternative Asset Management business depend on thecapacity of the Group’s asset management companies to stabilise/grow their assets undermanagement. In this environment, fund raising activity could be harmed by both externalfactors, such as the continuation of the global economic crisis or the trend in interest rates,and internal factors, such as bad timing in respect of fund raising activities by the assetmanagement companies or the departure of key managers from the companies. The Group hasestablished appropriate risk management strategies in relation to fund raising, with a view toboth involving new investors and retaining current investors.
    • Annual financial statementsto 31 December 2012 74 Other informationAt 31 December 2012, the Group had 207 employees (167 at the end of 2011), including 31senior managers, 62 middle managers and 114 clerical staff. 190 of these worked inAlternative Asset Management and 17 in Private Equity Investment/the holding company.These staff levels do not include personnel on secondment from the Parent Company DeAgostini S.p.A.The company signed a service agreement with the controlling shareholder, De Agostini S.p.A.,for the latter to provide operating services in the administration, finance, control, legal,corporate and tax areas.This agreement, which is renewable annually, is priced at market rates, and is intended toallow the company to maintain a streamlined organisational structure in keeping with itsdevelopment policy, and at the same time to obtain adequate operational support.DeA Capital S.p.A. and IDeA Capital Funds SGR have adopted the national tax consolidationscheme of the B&D Group (the Group headed by B&D Holding di Marco Drago e C. S.a.p.a., theParent Company of De Agostini S.p.A.). This option was exercised jointly by each of the twocompanies and B&D Holding di Marco Drago e C. S.a.p.a. by signing the "Regulation forparticipation in the national tax consolidation scheme for companies in the De Agostini Group"and notifying the tax authorities of this option pursuant to the procedures and terms andconditions set out by law.The option for DeA Capital S.p.A., which was renewed during 2011, is irrevocable for thethree-year period of 2011-2013 unless the requirements for applying the scheme are not met,while in the case of IDeA Capital Funds SGR, the option was signed in 2012 and relates to thethree-year period of 2012-2014.With regard to the regulatory requirements set out in art. 36 of the Market Regulation onconditions for the listing of parent companies of companies formed or regulated by laws ofnon-EU countries and of significant importance in the consolidated financial statements, it ishereby noted that no Group company falls within the scope of the above-mentioned provision.Furthermore, conditions prohibiting listing pursuant to art. 37 of the Market Regulation relatingto companies subject to the management and coordination of other parties do not apply.Following the conversion of Decree Law 5 of 9 February 2012 (the “Simplifications Decree”),effected via Law 35 of 4 April 2012, the obligation for holders of confidential and legal datathat process such data electronically to draft a Security Planning Document was definitelyremoved. The company, therefore, did not prepare a Security Planning Document, although itcomplied with the provisions of Legislative Decree 196/03, which is still in force, relating to theprotection of personal data.
    • Annual financial statementsto 31 December 2012 75 Significant events after the end of 2012 and outlook Significant events after the end of 2012 Private equity funds – paid calls/reimbursementsAfter the end of 2012, the DeA Capital Group increased its investment in the IDeA I FoF, ICFII, IDeA OF I and IDeA EESS funds following total payments of EUR 12.5 million (EUR 0.3million, EUR 5.7 million, EUR 4.5 million and EUR 2.0 million respectively).At the same time, the DeA Capital Group received capital reimbursements totalling EUR 6.7million from the IDeA I FoF and ICF II funds (EUR 5.6 million and EUR 1.1 million respectively)to be used in full to reduce the carrying value of the units. Purchase of IDeA SIM S.p.A sharesOn 25 February 2013, in compliance with the provisions of various agreements, DeA CapitalS.p.A. acquired the shares held by the former CEO of IDeA SIM, equal to 30% of its capital,bringing its investment to 95% of the company’s capital. The price paid was EUR 79 thousand. Acquisition of a shareholding in IDeA FIMIT SGROn 27 February 2013, DeA Capital S.p.A. signed an agreement with Inarcassa to acquireshares from the latter representing 2.98% of the capital of IDeA FIMIT SGR, for an estimatedprice of around EUR 5.9 million; financial equity instruments issued by IDeA FIMIT SGR andheld by Inarcassa are excluded from the sale.The closing is expected to take place at the beginning of April once the pre-emptive rightshave expired. OutlookThe outlook continues to focus on the strategic development guidelines followed last year, withan emphasis on increasing the value of assets in the Private Equity Investment area and ondeveloping the Alternative Asset Management platforms.In general terms, the economic environment – about which it is still difficult to make forecasts– will influence the industrial and economic performance of the Group’s assets, as well as theoutlook for returns on the investments made.The Group believes, however, that it has built a portfolio that is very “resistant” to shocks andone that at the same time is able to benefit from improvements in the environment,particularly on financial markets, which significantly influence expectations of investment valueenhancement and the raising of new funds.At the same time, in support of the strategic guidelines set out above, the company willcontinue to maintain a solid asset and financial structure, implementing any initiative withrigour and discipline.
    • Annual financial statementsto 31 December 2012 768. Proposal to approve the financial statements of DeA CapitalS.p.A. for the year to 31 December 2012 and related andresulting resolutionsDear shareholders,In submitting the annual financial statements for the financial year ended 31 December 2012for your approval, the Board of Directors proposes that you pass the following resolution:“””The DeA Capital S.p.A. ordinary shareholders’ meeting,- after reviewing the draft annual financial statements for the year to 31 December 2012,which show profit of EUR 2,269,268 (versus a loss of EUR 32,085,746 in 2011)- in acknowledgement of the Reports of the Board of Auditors and of the independentauditors, KPMG S.p.A.resolves1. to approve the Report of the Board of Directors on the Groups position and on operatingperformance2. to approve the balance sheet, income statement and notes to the financial statements forthe year to 31 December 2012 and the related annexes3. to carry forward the profit of EUR 2,269,268 reported in the financial statements for theyear to 31 December 20124. to grant Chairman Lorenzo Pellicioli and Chief Executive Officer Paolo Ceretti broad powersto execute this resolution, jointly or severally through their agents and in compliance withthe deadlines and procedures established by law“””Milan, 8 March 2013FOR THE BOARD OF DIRECTORSThe ChairmanLorenzo Pellicioli
    • Annual financial statementsto 31 December 2012 77Consolidated financial statements for the year to 31 December 2012
    • Annual financial statementsto 31 December 2012 78Consolidated financial statementsto 31 December 2012 Consolidated Balance Sheet Consolidated Income Statement Consolidated statement of comprehensive income Consolidated cash flow statement Statement of Changes in Consolidated Shareholders’ Equity Notes to the accounts
    • Annual financial statementsto 31 December 2012 79 Consolidated Balance Sheet(Euro thousand) NotesDecember31,2012December31,2011ASSETSNon-current assetsIntangible and tangible assetsGoodwill 1a 208,891 210,134Intangible assets 1b 105,992 119,648Property, plant and equipment 1c 2,527 1,269Total intangible and tangible assets 317,410 331,051InvestmentsInvestments valued at equity 2a 296,366 302,141Other available-for-sale companies 2b 223,896 127,380Available-for-sale funds 2c 166,504 159,673Other avalaible-for-sale financial assets 2d 327 936Total Investments 687,093 590,130Other non-current assetsDeferred tax assets 3a 2,754 4,077Loans and receivables 3b 27,444 1,632Other non-current assets 3c 25,944 25,729Total other non-current assets 56,142 31,438Total non-current assets 1,060,645 952,619Current assetsTrade receivables 4a 12,256 6,070Available-for-sale financial assets 4b 5,666 13,075Financial receivables 4c 2,003 1Tax receivables from Parent companies 4d 7,489 5,929Other tax receivables 4e 2,522 2,677Other receivables 4f 7,792 6,128Cash and cash equivalents 4g 29,156 46,764Total current assets 66,884 80,644Total current assets 66,884 80,644Held-for-sale assets - -TOTAL ASSETS 1,127,529 1,033,263SHAREHOLDERS EQUITY AND LIABILITIESSHAREHOLDERS EQUITYNet equity Group 5a 723,138 669,045Share premium reserve 5b 386,452 388,362Legal reserve 5c 61,322 61,322Fair Value reserve 5d 91,905 3,132Other reserves 5e (10,444) (10,042)Translation reserve 5f #RIF! #RIF!Retained earnings (losses) 5g 54,426- 10,849)(Profit/(loss) for the year (26,277) (43,577)Net equity Group 5h 723,138 669,045Minority interests 136,309 134,324Shareholders equity 859,447 803,369LIABILITIESNon-current liabilities 3aDeferred tax liabilities 25,668 40,506Provisions for employee termination benefits 6a 3,035 2,127Long term financial loans 6b 142,802 160,020Payables to staff 6c 1,956 -Total non-current liabilities 173,461 202,653Current liabilitiesTrade payables 7a 27,420 10,322Payables to staff and social security organisations 7b 8,868 7,497Current tax 7c 7,473 903Other tax payables 7d 4,276 3,585Other payables 7e 1,495 1,023Short term financial loans 7f 45,089 3,911Total current liabilities 94,621 27,241Held-for-sale liabilities - -TOTAL SHAREHOLDERS EQUITY AND LIABILITIES 1,127,529 1,033,263Pursuant to Consob Resolution 15519 of 27 July 2006, the impact of dealings with related parties on the balancesheet, income statement and cash flow statement is explained in the notes to the financial statements.
    • Annual financial statementsto 31 December 2012 80 Consolidated Income Statement(Euro thousands) Note Year 2012 Year 2011Alternative Asset Management fees 9a 82,004 47,762Income from equity investments 10a (18,442) (55,503)Other investment income/expense 11 (7,884) 13,500Income from services 12 10,863 10,359Other income 13a 1,658 322Personnel costs 14a (32,846) (25,031)Service costs 14b (26,583) (17,113)Depreciation, amortization and impairment 14c (16,647) (7,080)Other expenses 14e (5,194) (2,136)Financial income 15a 1,831 1,863Financial expenses 15b (8,590) (4,620)PROFIT/(LOSS) BEFORE TAX (19,830) (37,677)Income tax 16a 1,621 (3,814)PROFIT/(LOSS) FOR THE PERIOD FROM CONTINUING OPERATIONS (18,209) (41,491)Profit (Loss) from discontinued operations/held-for-sale assets 0 0PROFIT/(LOSS) FOR THE PERIOD (18,209) (41,491)- Group share (26,277) (43,577)- Non controlling interests 8,068 2,086Earnings per share, basic (€) 17 (0.095) (0.151)Earnings per share, diluted (€) 17 (0.095) (0.151)Pursuant to Consob Resolution 15519 of 27 July 2006, the impact of dealings with related parties on the balancesheet, income statement and cash flow statement is explained in the notes to the financial statements.
    • Annual financial statementsto 31 December 2012 81 Statement of Consolidated Comprehensive Income (Statement of Performance -IAS 1)Comprehensive income or the Statement of Performance (IAS 1), in which performance for theperiod attributable to the Group is reported including results posted directly to shareholdersequity, reflects a net profit of approximately EUR 62.5 million compared with a net loss of EUR70.2 million in 2011. This comprised: a net loss of EUR 26.3 million recorded on the income statement profits posted directly to shareholders’ equity totalling EUR 88.8 millionAs regards the latter, the largest component was the increase in fair value of Kenan/Migros.The increase of EUR 96.5 million versus 31 December 2011 in the value of this equityinvestment was due to the rise in the value of Migros shares (TRY 21.5 per share at 31December 2012, compared with approximately TRY 12.6 per share at 31 December 2011, andthe strengthening of the Turkish lira against the euro (2.36 TRY/EUR at 31 December 2012versus 2.44 TRY/EUR at 31 December 2011). The effect on the DeA Capital Group’s NAV of thischange in fair value was partially offset by the provisioning of estimated carried interest ofaround EUR -12.8 million, to be paid to the lead investor, BC Partners, based on the totalcapital gain. This was partly recognised in the income statement (EUR -3.0 million) and partlyrecognised in the fair value reserve (EUR -9.8 million).(Euro thousands) Note Year 2012Profit/(loss) for the period (A) (18,209) (41,491)Gains/(Losses) on fair value of available-for-salefinancial assets 85,397 (27,158)Share of other comprehensive income of associates 2,138 547Other comprehensive income, net of tax (B) 87,535 (26,611)Total comprehensive income for the period(A)+(B) 69,326 (68,102)Total comprehensive income attributable to:- Group Share 62,496 (70,188)- Non Controlling Interests 6,830 2,086
    • Annual financial statementsto 31 December 2012 82 Consolidated Cash Flow Statement (direct method)(Euro thousands) Year 2012 Year 2011CASH FLOW from operating activitiesInvestments in funds and shareholdings (47,964) (108,902)Acquistions of subsidiaries net of cash acquired (22,931) 0Capital reimbursements from funds 18,771 13,842Proceeds from the sale of investments 0 3,607Interest received 604 1,207Interest paid (3,224) (3,036)Cash distribution from investments 5,097 64,452Realized gains (losses) on exchange rate derivatives (889) (803)Taxes paid (6,967) (14,289)Taxes refunded 0 925Dividends received 0 287Management and performance fees received 75,870 40,480Revenues for services 15,064 15,861Operating expenses (57,183) (37,037)Net cash flow from operating activities (23,752) (23,406)CASH FLOW from investment activitiesAcquisition of property, plant and equipment (884) (271)Sale of property, plant and equipment 32 1Purchase of licenses (197) (576)Net cash flow from investing activities (1,049) (846)CASH FLOW from investing activitiesAcquisition of financial assets (3,258) (13,892)Sale of financial assets 6,587 16,610Share capital issued 0 0Share capital issued:stock option plan 0 0Own shares acquired (8,000) (26,411)Own shares sold 0 0Interest from financial activities 0 0Dividends paid (6,290) (2,700)Warrant 0 0Managers Loan 0 1,683Vendor loan 25,837 0Quasi-equity loan (25,837) 0Bank loan paid back (672) 0Bank loan received 20,000 0Net cash flow from financing activities 8,367 (24,710)CHANGE IN CASH AND CASH EQUIVALENTS (16,434) (48,962)CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 46,764 86,517Cash and cash equivalents relating to held-for-sale assets 0 0Cash and cash equivalents at beginning of period 46,764 86,517EFFECT OF CHANGE IN BASIS OF CONSOLIDATION: CASH AND CASH EQUIV (1,174) 9,209CASH AND CASH EQUIVALENTS AT END OF PERIOD 29,156 46,764Held-for-sale assets and minority interests 0 0CASH AND CASH EQUIVALENTS AT END OF PERIOD 29,156 46,764Pursuant to Consob Resolution 15519 of 27 July 2006, the impact of dealings with relatedparties on the balance sheet, income statement and cash flow statement is explained in thenotes to the financial statements.
    • Annual financial statementsto 31 December 2012 83 Statement of Changes in Consolidated Shareholders’ Equity(EUR thousand)ShareCapitalShare PremiumReserveLegalreserveRiservaFair ValueReservesrelating tojointventuresOtherreservesTranslationReserveProfit/(loss)carriedforwardProfit(loss) forthe GroupTotal GroupNoncontrollinginterestsConsolidatednet equityTotal at 31.12.10 294,013 395,614 61,322 29,743 (20) (5,868) 0 15,499 (26,348) 763,955 552 764,507Allocation of 2010 net profit 0 0 0 0 0 0 (26,348) 26,348 0 0 0Cost of stock options 0 0 0 0 0 683 0 0 0 683 0 683Purchase of own shares (18,123) (8,288) 0 0 0 0 0 0 0 (26,411) 0 (26,411)Shares transferred for IDeA AI acquisition 4,807 1,036 0 0 0 0 0 0 0 5,843 0 5,843Pro-rata bonus shares of Santè 0 0 0 0 0 392 0 0 0 392 0 392Effect of diluting Santè in GDS 0 0 0 0 0 (2,162) 0 0 0 (2,162) 0 (2,162)Merger FARE-FIMIT 0 0 0 0 0 3,984 0 0 0 3,984 133,799 137,783Other changes 0 0 0 0 20 448 0 0 0 468 (336) 132Put option 0 0 0 0 0 (7,519) 0 0 0 (7,519) (1,777) (9,296)Total comprehensive profit/(loss) 0 0 0 (26,611) 0 0 0 0 (43,577) (70,188) 2,086 (68,102)Total at 31.12.11 280,697 388,362 61,322 3,132 0 (10,042) 0 (10,849) (43,577) 669,045 134,324 803,369(EUR thousand)ShareCapitalShare PremiumReserveLegalreserveRiservaFair ValueReservesrelating tojointventuresOtherreservesTranslationReserveProfit/(loss)carriedforwardProfit(loss) forthe GroupTotal GroupNoncontrollinginterestsConsolidatednet equityTotal at 31.12.11 280,697 388,362 61,322 3,132 0 (10,042) 0 (10,849) (43,577) 669,045 134,324 803,369Allocation of 2011 net profit 0 0 0 0 0 0 (43,577) 43,577 0 0 0Cost of stock options 0 0 0 0 0 (77) 0 0 0 (77) 0 (77)Purchase of own shares (6,091) (1,910) 0 0 0 0 0 0 0 (8,001) 0 (8,001)Other changes 0 0 0 0 0 (325) 0 0 0 (325) (4,845) (5,170)Total comprehensive profit/(loss) 0 0 0 88,773 0 0 0 0 (26,277) 62,496 6,830 69,326Total at 31.12.12 274,606 386,452 61,322 91,905 0 (10,444) 0 (54,426) (26,277) 723,138 136,309 859,447Pursuant to Consob Resolution 15519 of 27 July 2006, the impact of dealings with relatedparties on the balance sheet, income statement and cash flow statement is explained in thenotes to the financial statements.
    • Annual financial statementsto 31 December 2012 84Notes to the accountsConsolidated financial statements for the year to 31 December 2012
    • Annual financial statementsto 31 December 2012 85Notes to the Consolidated Financial Statements for the year ending 31 December2012A. Structure and content of the consolidated financial statementsThe consolidated financial statements for the year to 31 December 2012 include the ParentCompany DeA Capital S.p.A. and all subsidiaries (the Group), and were prepared using theseparate financial statements of the companies included in the basis of consolidationcorresponding to the relevant individual statements, restated as necessary, to adapt them tothe accounting standards listed below as dictated by Italian law.The consolidated financial statements were prepared in accordance with the general principlesof IAS 1, specifically:- accruals principle: the effect of events and transactions is recorded when they occur, and notwhen payment is made or received- going concern principle: the financial statements are prepared under the assumption thatbusiness operations will continue in the near future. In this regard, the directors haveevaluated this assumption with particular scrutiny in light of the current economic and financialcrisis. As indicated in the section “Uncertainties and the management of financial risks” in theReport on Operations, the directors believe that the risks and uncertainties described thereinare not critical in nature, confirming the financial solidity of the DeA Capital S.p.A. Group- materiality: when reporting operating events in accounting entries, preference is given to theprinciple of economic substance over form- comparative information: the consolidated financial statements must show comparativeinformation for the previous periodThe consolidated financial statements consist of the balance sheet, the income statement, thestatement of changes in shareholders’ equity, the cash flow statement, the statement ofcomprehensive income (Statement of Performance – IAS 1) and these notes to theconsolidated financial statements. The consolidated financial statements are also accompaniedby the Report on Operations and a Statement of Responsibilities for the Accounts pursuant toart. 154-bis of Legislative Decree 58/98.The balance sheet provides a breakdown of current and non-current assets and liabilities withseparate reporting for those resulting from discontinued or held-for-sale operations. In theincome statement, the Group has adopted the nature of expense method, whereby costs andrevenues are classified according to type. The cash flow statement is prepared using the directmethod.Companies over which the Group exercises joint control are consolidated proportionally in theconsolidated financial statements, as stipulated by IAS 31 (Interests in joint ventures).Specifically, the Group’s portions of the assets, liabilities, costs and revenues are classified asfollows:• assets and liabilities are included under “Assets relating to joint ventures" and “Liabilitiesrelating to joint ventures” respectively• revenues, costs and taxes are included in the applicable items relating to "joint ventures"Unless otherwise indicated, all tables and figures included in these notes to the financialstatements are reported in EUR thousand.In addition to the figures at 31 December 2012, the financial statement formats used alsoprovide comparable figures for 31 December 2011.
    • Annual financial statementsto 31 December 2012 86The publication of the consolidated financial statements for the year to 31 December 2012 wasauthorised by resolution of the Board of Directors dated 8 March 2013.Statement of compliance with accounting standardsThe consolidated financial statements for the year to 31 December 2012 (2012 consolidatedfinancial statements) were prepared in accordance with the International Accounting Standardsadopted by the European Union and approved by the date the financial statements wereprepared (International Accounting Standards, or individually IAS/IFRS, or collectively IFRS(International Financial Reporting Standards)). "IFRS" also means all interpretations of theInternational Financial Reporting Interpretations Committee (IFRIC), including those previouslyissued by the Standing Interpretations Committee (SIC), and approved by the European Union.The consolidated financial statements were prepared with a focus on clarity, and provide a trueand fair view of the balance sheet, financial situation, income statement and cash flows for theperiod.Accounting standards, amendments and interpretations applied as of 1 January 2012The IASB-approved international accounting standards and interpretations authorised foradoption in Europe that were applied for the first time from 1 January 2012 are detailed below.None had any significant impact on the consolidated financial statements for the year to 31December 2012. The Group did not apply any IFRSs in advance.Amendments to IFRS 7 (Financial instruments: disclosures)On 7 October 2010, the IASB published the amendment to IFRS 7 (Disclosures: transfers offinancial assets), which requires further information on transfers of financial assets. Thechanges to IFRS 7 aim to promote greater transparency in relation to the risks associated withtransactions where, when a financial asset is transferred, the transferring company continuesto be exposed, within certain limits, to risks associated with the derecognised financial asset(known as "continuing involvement"). Additional disclosure is also required on significanttransfers of financial assets at particular times (e.g. at the end of an accounting period).The adoption of this amendment did not have any material impact on the valuation of items inthe financial statements and in the related disclosure requirements.Future accounting standards, amendments and interpretationsAccounting standards, amendments and interpretations that are not yet applicable and havenot been adopted in advance by the Group, but were approved for adoption in the EuropeanUnion as of 28 February 2013.The International Accounting Standards, together with the interpretations and changes toexisting IASB-approved accounting standards and interpretations that were ratified foradoption in the European Union on 28 February 2013, are as follows:Amendments to IAS 12 (Income taxes)On 20 December 2010, the IASB published a number of amendments to IAS 12 (Incometaxes), which clarify how to calculate deferred taxes on real estate investment measured atfair value. To provide a simplified approach, the amendments introduce the presumption, whencalculating deferred taxes, that the carrying amount of the underlying asset will be recoveredentirely by sale, unless there is clear evidence that it can be recovered through use.As a result of these changes, the document SIC 21 (Income Taxes - recovery of revalued, non-depreciable assets) was withdrawn at the same time. The entire contents of this document arenow covered in IAS 12.
    • Annual financial statementsto 31 December 2012 87The amendments to IAS 12 will be applied from 1 January 2013.Amendments to IFRS 1 (First-time adoption of International Financial Reporting Standards:severe hyperinflation and removal of fixed assets for first-time adopters)On 20 December 2010, the IASB published two amendments to IFRS 1 (First-time adoption ofInternational Financial Reporting Standards). The first amendment introduced the option forentities that are transitioning to IFRS to use the same simplified rules as those permitted toentities that made the transition to international accounting standards in 2005. The secondamendment grants an exemption from the retrospective application of IFRS at first-timeadoption to entities that are presenting financial statements in accordance with IFRS for thefirst time, after having been unable to present them due to hyperinflation, allowing suchentities to use fair value as a replacement for cost for all assets and liabilities presented.The amendments to IFRS 1 will be applied from 1 January 2013.IFRS 10 (Consolidated financial statements)On 12 May 2011, the IASB published the accounting standard IFRS 10 (Consolidated financialstatements), which is intended to replace IAS 27 (Consolidated and separate financialstatements) and SIC 12 (Consolidation: special purpose entities). The new standard sets out asingle model of consolidation that identifies control as the basis for the consolidation of alltypes of entities.The new standard defines the concept of control on the basis of the concurrence of threeessential elements: power over the investee company exposure to or the right to variable returns from its involvement with the investeecompany the ability to use that power over the investee to affect the amount of the investorsreturnsThe standard will come into force from 1 January 2014, but can be applied in advance.IFRS 11 (Joint arrangements)On 12 May 2011, the IASB published the accounting standard IFRS 11 (Joint arrangements),which is intended to replace IAS 31 (Interests in joint ventures) and SIC 13 (Jointly controlledentities: non-monetary contributions by venturers). The new standard governs the principlesfor reporting all joint arrangements. These are divided into two categories, according to theeconomic substance of the arrangements between the parties: joint operations, whereby the parties to the arrangement acquire rights to certainassets and assume obligations for certain liabilities joint ventures, whereby the parties have rights to the net value of a set of jointlycontrolled assets and liabilitiesIn the first case, the investor recognises the assets and liabilities acquired (along with theassociated income and expense) according to the IAS/IFRS standards governing the individualelements; in the second, the pro-rata interest in the joint venture is recognised using theequity method.
    • Annual financial statementsto 31 December 2012 88The standard will come into force from 1 January 2014, but can be applied in advance.IFRS 12 (Disclosure of interests in other entities)On 12 May 2011, the IASB published the accounting standard IFRS 12 (Disclosure of interestsin other entities) regarding the information to be provided in the financial statements oninterests in other entities, including subsidiaries, associates and joint ventures. Thisinformation must enable users of the financial statements to understand the nature of the risksassociated with the investments in strategic equity investments that will form part of thecompanys assets over the long term. The information must also indicate the effects of theseinvestments on financial position, comprehensive income and cash flows.The standard will come into force from 1 January 2014, but can be applied in advance.IFRS 13 (Fair value measurement)On 12 May 2011, the IASB published the accounting standard IFRS 13 (Fair valuemeasurement), which provides a single definition of the concept of fair value and a frameworkfor how it should be applied when another IFRS permits or requires its use.More specifically, IFRS 13 sets out a clear definition of fair value, which is the price that wouldbe received to sell an asset or paid to transfer a liability in a regular transaction betweenmarket participants at the measurement date (or exit price). This definition emphasises thatfair value is a measure that must be based on the market and not the valuing entity. In otherwords, the measurement process must take into account the assumptions that marketparticipants would use when pricing the asset or liability in current conditions, includingassumptions on risk. As a consequence, the intention to hold an asset or cancel or fail to meeta liability is of no relevance in measuring fair value.The standard will come into force from 1 January 2013, but can be applied in advance.Amendments to IAS 32 (Offsetting financial assets and financial liabilities)On 16 December 2011, the IASB published a number of amendments to IAS 32 (Financialinstruments: presentation), clarifying how certain criteria for offsetting financial assets andliabilities, as set out in IAS 32, should be applied.The amendments must be applied from 1 January 2014.Amendments to IFRS 7 (Disclosures: offsetting financial assets and financial liabilities)On 16 December 2011, the IASB published a number of amendments to IFRS 7 (Financialinstruments: additional information). The amendment requires information to be disclosed onthe effects or potential effects of contracts to offset financial assets and liabilities on thebalance sheet.The amendments to IFRS 7 must be applied from 1 January 2013.IAS 1(Presentation of items of other comprehensive income)On 16 June 2011, the IASB issued amendments to IAS 1 (Presentation of items of othercomprehensive income), which determine the grouping and components of the statement ofcomprehensive income according to whether or not they can be reclassified to the incomestatement.The amendments to IAS 1 must be applied in the financial statements for periods starting from1 July 2012 onwards.
    • Annual financial statementsto 31 December 2012 89Amendments to IAS 19 (Employee benefits)On 16 June 2011, the IASB issued amendments to IAS 19 (Employee benefits) that introducethe obligation to recognise actuarial gains and losses in the statement of comprehensiveincome, removing the option of using the "corridor" method and requiring the recognition ofactuarial gains and losses resulting from the revaluation of liabilities and assets in thestatement of comprehensive income.The amendments to IAS 19 must be applied in the financial statements for periods startingfrom 1 July 2012 onwards.We do not anticipate that the potential adoption of the standards and interpretations notedabove will have a material impact on the valuation of the DeA Capital Groups assets, liabilities,costs and revenues, except for the possible effects of any redefinition of the company’smethod of consolidation in accordance with the new IFRS 10.Accounting principles, amendments and interpretations that are not yet applicable, have notbeen adopted in advance by the Group and not yet approved for adoption in the EuropeanUnion as of 28 February 2013The International Accounting Standards, interpretations and changes to existing IASB-approved accounting standards and interpretations that had not been ratified for adoption inthe European Union as of 28 February 2013 are as follows:IFRS 9 (Financial instruments)On 12 November 2009, the IASB issued the first part of IFRS 9, which only amends therequirements for classifying and valuing the financial assets that are currently specified in IAS39; once completed, it will fully replace IAS 39. Financial liabilities do not fall within the scopeof IFRS 9, since the IASB intends to go into greater detail on aspects related to the inclusion ofown credit risk in the fair value measurement of financial liabilities. Thus, financial liabilitiescontinue to fall within the scope of IAS 39.The endorsement process for IFRS 9 is currently on hold, and this standard is not applicable inthe EU, ahead of the European Commissions full assessment of the plan to completely replaceIAS 39.Amendments to IFRS 1(Government loans)On 13 March 2012, the IASB published an amendment to IFRS 1 (First-time adoption ofInternational Financial Reporting Standards) regarding government loans taken out at interestrates lower than market rates.The amendment introduced the option for entities that are adopting IFRS for the first time touse the same simplified rules as those permitted to entities that made the transition toInternational accounting standards in 2005. This means they do not have to change thecarrying value calculated according to previous accounting standards for loans already takenout at the date of transition to international accounting standards.The amendments to IFRS 1, which are awaiting ratification by the European Commission, mustbe applied from 1 January 2013. They may also be applied in advance.Improvements to IFRS 2009-2011On 17 May 2012, the IASB published its “Annual Improvements to IFRS – 2009-2011 Cycle”,detailing the minor changes to be made to existing accounting standards. The documentcontains a series of improvements to five accounting standards (IFRS 1, IAS 1, IAS 16, IAS 32and IAS 34).
    • Annual financial statementsto 31 December 2012 90The amendments, which are expected to be ratified by the European Commission, will apply tofinancial statements for periods from 1 January 2013 onwards. It may also be applied inadvance.Transition Guidance (Amendments to IFRS 10, IFRS 11 and IFRS 12).On 28 June 2012, the IASB published “Consolidated Financial Statements, Joint Arrangementsand Disclosure of Interests in Other Entities: Transition Guidance” (Amendments to IFRS 10,IFRS 11 and IFRS 12).The amendments, which clarify the temporary provisions of IFRS 10, are awaiting ratificationby the European Commission and must be applied from 1 January 2013.Investment Entities (Amendments to IFRS 10, IFRS 12 and IFRS 27).On 31 October 2012, the IASB published Investment Entities (Amendments to IFRS 10, IFRS12 and IAS 27). The change introduced an exception to IFRS 10, stipulating that investmententities value certain subsidiaries at fair value on the income statement instead ofconsolidating them.The amendments, which are expected to be ratified by the European Commission, will apply tofinancial statements for periods from 1 January 2014 onwards. They may also be applied inadvance.
    • Annual financial statementsto 31 December 2012 91Basis of consolidationAs a result of the events described in the Report on Operations, the basis of consolidation at31 December 2012 changed compared with 31 December 2011, due to: the merger by incorporation of IDeA Alternative Investments into DeA Capital S.p.A.,completed on 1 January 2012 the acquisition of full control of IFIM on 11 April 2012 the acquisition of full control of FARE Holding on 24 April 2012, at which time FARE Holdingchanged its name to DeA Capital Real Estate, and its subsidiaries FARE and FAI changedtheir names to IRE and IRE Advisory the restructuring of Soprarno SGR’s shareholder structure, with the resulting reduction inthe DeA Capital Group’s equity investment from 65% to 20% on 29 November 29 via thefollowing transactions:- sale by DeA Capital of 25% of Soprarno SGR to Ifigest- capital increase in kind carried out by transferring the Gestioni Patrimoniali division heldby Cassa di Risparmio di San Miniato (CARISMI) to Soprarno SGR.As a result, at 31 December 2012, the following companies formed part of the DeA CapitalGroups basis of consolidation:Company Registered office Currency Share capital % holding Consolidation methodDeA Capital S.p.A. Milan, Italy Euro 306,612,100 HoldingDeA Capital Investments S.A. Luxembourg Euro 515,992,516 100% Full consolidation (IAS 27)Santè S.A. Luxembourg Euro 99,922,400 42.89% Equity accounted (IAS 28)Sigla Luxembourg S.A. Luxembourg Euro 482,684 41.39% Equity accounted (IAS 28)IDeA Capital Funds SGR S.p.A. Milan, Italy Euro 1,200,000 100.00% Full consolidation (IAS 27)Soprarno SGR S.p.A. Florence, Italy Euro 2,000,000 20.00% Equity accounted (IAS 28)IDeA SIM S.p.A. Milan, Italy Euro 120,000 65.00% Full consolidation (IAS 27)IDeA OF I Milan, Italy Euro - 46.99% Equity accounted (IAS 28)Atlantic Value Added Rome, Italy Euro - 27.27% Equity accounted (IAS 28)DeA Capital Real Estate S.p.A. Milan, Italy Euro 600,000 100.00% Full consolidation (IAS 27)Innovation Real Estate S.p.A. Milan, Italy Euro 500,000 100.00% Full consolidation (IAS 27)Innovation Real Estate Advisory S.r.l. Milan, Italy Euro 105,000 100.00% Full consolidation (IAS 27)I.F.IM. S.r.l. Milan, Italy Euro 10,000 100.00% Full consolidation (IAS 27)IDeA FIMIT SGR S.p.A. Rome, Italy Euro 16,757,574 61.30% Full consolidation (IAS 27)Harvip Investimenti S.p.A. Milan, Italy Euro 1,980,000 25.00% Equity accounted (IAS 28)The shares held in Santé are subject to a lien in favour of the entities providing credit linesavailable for companies forming part of the control structure of Générale de Santé (i.e. SantéS.A. and Santé Développement Europe S.A.S.).The above list meets the requirements of Consob Resolution 11971 of 14 May 1999 andsubsequent amendments (art. 126 of the Regulation).
    • Annual financial statementsto 31 December 2012 92Consolidation methodSubsidiaries are consolidated on a line-by-line basis from their date of acquisition, i.e. on thedate the Group acquires a controlling interest, and they cease to be consolidated when controlis transferred outside the Group.Subsidiaries are those companies in which the Parent Company, directly or indirectly throughsubsidiaries, holds a majority of the capital subscribed and/or voting rights, or over which theParent Company exercises de facto control allowing it to direct the financial and operatingpolicies of the subsidiary pursuant to the articles of association or by agreement.The financial statements of subsidiaries are prepared for each period using the sameaccounting standards used by the Parent Company.The main criteria adopted to apply this method are indicated below:- the financial statements of the Parent Company and subsidiaries are incorporated on a"line-by-line" basis- the carrying value of the investment is offset against the corresponding net equityfigure When a company is included in the basis of consolidation for the first time, thedifference between the acquisition cost and the net equity of the investee companies isposted, if the conditions are right, to the assets or liabilities included in theconsolidation, pursuant to the provisions of IFRS 3. Any residual portion is taken to theincome statement if negative, or recorded as a specific item, “goodwill”, under assets ifpositive. The latter is subject to an annual impairment test. Alternatively, when acompany is included in the basis of consolidation for the first time, the entire amountmay be recorded as goodwill including the portion relating to the minority interests (fullgoodwill approach)- significant transactions between consolidated companies are eliminated as are payablesand receivables and unrealised profits resulting from transactions between Groupcompanies net of any tax impact- the portions of shareholders equity attributable to minority shareholders are reported,along with the respective share of net profit for the period, in appropriate shareholdersequity itemsIn the case of joint control, the integration is carried out, pursuant to IAS 31, in proportion tothe share held by the Parent Company.
    • Annual financial statementsto 31 December 2012 93B. Valuation criteria adoptedThe valuation criteria adopted on the basis of International Accounting Standards and reportedbelow are consistent with the going concern principle and have not changed from those used inthe preparation of the consolidated financial statements at 31 December 2011 and thesummary consolidated half-year financial statements at 30 June 2012 except as a result of theapplication of new IAS/IFRS accounting standards as described above.Current and non-current assets and liabilitiesAn asset is considered current if it meets at least one of the following conditions: It is expected to be converted during the companys normal operating cycle. The"companys operating cycle" means the period from the acquisition of an asset to itsconversion to cash and cash equivalents. When the companys operating cycle cannot beclearly identified, its duration is assumed to be 12 months. it is held mainly for trading purposes its conversion is expected to occur within 12 months following the end of the financialyear it consists of cash and cash equivalents which have no restrictions that would limit its usein the 12 months following the end of the financial yearAll other assets are carefully analysed to separate the "current" portion from the "non-current"portion.Furthermore, deferred tax assets are recorded under non-current components.A liability is considered current if it meets at least one of the following conditions: it is expected to be settled during the companys normal operating cycle it is held mainly for trading purposes its settlement is expected to occur within 12 months following the end of the financialyear the company does not have an unconditional right to defer payment of the liability for atleast 12 months following the end of the financial yearAll other liabilities are carefully analysed to separate the "current" portion from the "non-current" portion.Furthermore, deferred tax liabilities are recorded under non-current components.Intangible assetsIntangible assets are those assets with no physical form that can be identified and producefuture economic benefits. They are recorded under assets when it is likely that their use willgenerate future economic benefits and when their cost can be determined reliably. The aboveassets are recorded at purchase cost, or at production cost if they are generated internally.The cost of acquisition is represented by the fair value of the price paid to acquire the assetand all direct costs incurred to prepare the asset for use.The carrying value of intangible assets is maintained in the financial statements to the extentthat there is evidence that this value can be recovered through use or if it is likely that theseassets will generate future economic benefits.The useful life of intangible assets is assessed as finite or indefinite.Intangible assets with an indefinite useful life are tested to check that their value is stillappropriate whenever there are indications of possible impairment as required by IAS 36
    • Annual financial statementsto 31 December 2012 94(Impairment of assets). Intangible assets with an indefinite useful life are not amortised. Theuseful life of an intangible asset with an indefinite life is reviewed annually to check that theunderlying conditions for the classification continue to apply. For additional details, please seethe section "Impairment."Except for intangible assets involving rights connected with final variable commissions,intangible assets with a finite useful life are amortised on a straight-line basis over their usefullife.The amortisation method used for rights connected with final variable commissions reflectschanges in future economic benefits associated with the recognition of the related revenues.The useful life of these intangible assets is tested to check that their value is still appropriatewhenever there are indications of possible impairment.Tangible assetsTangible assets are recorded at purchase price or production cost adjusted for accumulateddepreciation and any impairment.Their cost includes ancillary costs and direct and indirect costs incurred at the time of purchasenecessary to make the asset usable. The purchase cost is represented by the fair value of theprice paid to acquire the asset and by all other direct costs incurred to prepare the asset foruse. Tangible assets are depreciated on a straight-line basis over their remaining useful life,using the depreciation rates indicated in the notes on the item relating to similar groups ofassets. If factors are discovered that lead the company to believe that it may be difficult torecover the net carrying value, an impairment test is performed. If the reasons for theimpairment cease to exist, the carrying value of the asset is increased to its recoverableamount.Financial assetsBased on the classification of financial assets required by IAS 39, the Group classified itsfinancial assets at the time of the transition to International Accounting Standards, andsubsequently when individual financial assets were acquired.Minority interests and investments in funds, which constitute the main, predominant area ofthe Groups operations, are classified under available-for-sale assets, which are recorded atfair value with a balancing item in shareholders equity.Fair value is the payment for which an asset could be exchanged in a free transaction betweenknowledgeable and independent parties. In the case of securities traded in active regulatedmarkets, fair value is determined based on the bid price recorded on the last trading day of therelated accounting period. In the case of assets not listed in active markets, such as theGroups direct investments in companies, investments in venture capital funds and funds offunds, the fair value reported in financial statements is determined by the directors based ontheir best judgment and estimation, using the knowledge and evidence available when thefinancial statements are prepared.In these cases, the company acts in accordance with the provisions of the IAS. In particular,IAS 39 specifies that: if there are recent transactions related to the same financial instrument, these may beused to determine fair value after verifying that there have been no significant changesin the economic environment between the date of the transactions being consideredand the valuation date if there are transactions involving similar financial instruments, these may be used todetermine fair value after verifying the similarity (as a function of the type of business,size, geographic market, etc.) between the instrument for which transactions have beenfound and the instrument to be valued
    • Annual financial statementsto 31 December 2012 95 if no prices can be found in active markets, fair value must be determined usingvaluation models that account for all factors that market participants would consider insetting a priceHowever, due to objective difficulties in making assessments and the absence of a liquidmarket, the values assigned to such assets could differ, and in some cases significantly, fromthose that could be obtained when the assets are sold.Direct investments in companies that are not subsidiaries or associates and in funds areclassified as available-for-sale financial assets, which are initially reported at fair value on thedate of the original posting. These assets are measured at fair value when all interim and full-year financial statements are prepared.Gains and losses from fair value measurement are posted to a special shareholders equityreserve called the "fair value reserve" until the investment is sold or otherwise disposed of, oruntil impairment occurs, in which cases the gain or loss previously recorded in the fair valuereserve is posted to the income statement for the period.On the date of the annual or interim financial statements (IAS 34), a test is performed as tothe existence of objective evidence of impairment following one or more events that haveoccurred after the initial recording of the asset, and this event (or events) has an impact onthe estimated cash flow from the financial asset.For equity instruments, a significant or prolonged reduction in fair value below their cost isconsidered to be objective evidence of impairment.Although International Accounting Standards introduced an important reference to quantitativeparameters that must be adhered to, they do not govern quantitative limits to determine whena loss is significant or prolonged.The DeA Capital Group therefore has an accounting policy that defines these parameters. Inparticular, "significant" means there has been an objective reduction in value when fair value ismore than 35% below its historical cost. In this case, impairment is recorded in the incomestatement without further analysis.The duration of the reduction in value is deemed to be prolonged when the reduction of fairvalue below historical cost continues for a period of over 24 months. After exceeding 24months, impairment is recorded in the income statement without further analysis.AssociatesThese are companies in which the Group holds at least 20% of the voting rights or exercisessignificant influence, but not full or joint control over their financial and operating policies. Theconsolidated financial statements include the Group’s share of its associates results, which arereported using the equity method, starting on the date on which significant influence beganuntil the significant influence ceases to exist.If the Groups share of an associates losses exceeds the carrying value of the equityinvestment reported in the financial statements, the carrying value of the equity investment iseliminated, and the share in further losses is not reported unless, and to the extent that, theGroup is legally liable for such losses.When the equity investment is acquired, any difference between its cost and the ParentCompanys stake in the net fair value of the associates identifiable assets, liabilities andcontingent liabilities is recorded as required by IFRS 3, i.e. any goodwill is included in thecarrying value of the equity investment.
    • Annual financial statementsto 31 December 2012 96As governed by IAS 28.33, since the goodwill included in the carrying value of an equityinvestment in an associate is not recorded separately, it is not subject to a separateimpairment test pursuant to IAS 36 (Impairment of assets). Instead, the entire carrying valueof the equity investment is subject to an impairment test pursuant to IAS 36 by comparing itsrecoverable value (the greater of its value in use and the fair value adjusted for sales costs)and carrying value whenever there is evidence indicating the possible impairment of the equityinvestment as set out in IAS 28.31.DerivativesDerivatives are recorded in the balance sheet at fair value calculated in accordance with thecriteria already stated in the “Financial assets” section.Fair value changes are reported differently depending on their designation (hedging orspeculative) and the nature of the risk hedged (fair value hedge or cash flow hedge).For contracts designated for hedging purposes, the Group documents this relationship whenthe hedge is established. The documentation incorporates the identification of the hedginginstrument, the item or transaction hedged, the nature of the risk hedged, the criteria used toascertain the effectiveness of the hedging instrument as well as the risk. The hedge isconsidered effective when the projected change in fair value or in the cash flows of the hedgedinstrument is offset by the change in fair value or in the cash flows of the hedging instrument,and the net results fall within the range of 80% to 125%.If the instruments are not, or cannot be, designated as hedging instruments, they must beconsidered "speculative"; in this case, fair value changes are posted directly to the incomestatement.In the case of fair value hedges, changes in the fair value of the hedging instrument and thehedged instrument are posted to the income statement regardless of the valuation criterionused for the hedged instrument. In the case of cash flow hedges, the portion of the fair valuechange in the hedging instrument that is recognised as an effective hedge is posted toshareholders equity, while the portion that is not effective is posted to the income statement.Put options on minority shareholdingsFor put options that do not grant actual access to the economic benefits associated withowning the minority shareholdings, the shares or shareholdings covered by the options arereported on the date control is acquired as “minority interests”; the portion of profits andlosses (and other changes in shareholders equity) of the entity acquired is allocated to theminority shareholding after the business combination. The minority shareholding is reversed oneach reporting date and reclassified as a financial liability at its fair value (equal to the presentvalue of the options exercise price) as if the acquisition had occurred on that date. Thedifference between the fair value of the financial liability and the minority interest reversed onthe reporting date is recorded as an acquisition of minority shareholdings and reported underthe Groups shareholders equity. The effect of discounting is not recorded separately. Anydividends paid to minority shareholders are posted to shareholders equity.If the option is not exercised, the minority interest is recognised in the amount that wouldhave been reported if the option had not been recorded; the difference between the minorityinterest recognised and the cancelled liability is recorded in the Group’s shareholders’ equity.Impairment - IAS 36Impairment always occurs when the carrying value of an asset is greater than its recoverablevalue. On each reporting date, the company determines whether there are any indications thatan asset may be impaired. If such indications exist, the recoverable value of the asset isestimated (impairment test) and any write-down is recorded. The recoverable value of anasset is the higher of its fair value less selling costs and its value in use.IAS 36 provides instructions on determining fair value less asset selling costs, as follows: if there is a binding sales agreement, the assets fair value is the negotiated price if there is no agreement, but the asset is marketed in an active market, the fair value is
    • Annual financial statementsto 31 December 2012 97the current bid price (thus, the exact price on the value date and not the average price) if no prices can be found in active markets, fair value must be determined based onvaluation methods that incorporate the best information available including any recenttransactions involving the same asset, after verifying that there were no significantchanges in the economic environment between the date of the transactions underconsideration and the valuation dateIAS 36 defines value in use as the present value of future cash flows that an asset is projectedto produce. The estimate of the value in use must include the items listed below: an estimate of future cash flows that the company expects to derive from the asset expectations of potential changes in value and the timing of such cash flows the time value of money other factors such as the volatility of the assets value and the lack of a liquid marketfor itFor more information on determining value in use, please see Appendix A of IAS 36. However,the main elements for accurately estimating the value in use are an appropriate calculation ofprojected cash flows (for which the investee companys business plan is essential) and theirtiming, as well as the application of the right discount rate that accounts for both the presentvalue of money and the specific risk factors for the asset to be valued.In all cases, when calculating the value it is important to: base cash flow projections on reasonable and sustainable assumptions that provide thebest estimate of the economic conditions that are likely to exist over the remaininguseful life of the asset base cash flow projections on the most recent budget/plan approved by the investeecompany, which, however, must exclude any future inflows or outflows of cash that areexpected to come from the future restructuring, improvement or optimisation ofoperating performance. Projections based on these budgets/plans must cover amaximum period of five years unless a longer period of time can be justified Estimate higher cash flow projections for the period covered by the most recentbudgets/plans by extrapolating projections based on the budgets/plans taken intoconsideration, and using a stable or declining growth rate for subsequent years unless arising rate can be justified. This growth rate must not exceed the average long-termgrowth rate for production in the country or countries in which the investee companyoperates or for markets in which the asset used is placed unless a higher rate can bejustified.The assumptions used to determine cash flow projections must be reasonable, and basedpartly on an analysis of the factors that generated differences between projections of past andcurrent cash flows. In addition, the assumptions used to determine current cash flowprojections must be checked to ensure that they are consistent with actual past results, unlessin the meantime changes have occurred in the investee companys business model or in theeconomic environment in which it operates that justify changes vis-a-vis the past.Receivables and payablesA receivable is first reported at fair value on the date it is agreed.After initial reporting, receivables are valued at amortised cost. Payables that fall due withinnormal contractual terms are initially posted at fair value and later valued at amortised cost.Trade receivablesIf there is objective evidence that a trade receivable has suffered impairment, it must beadjusted down and the loss posted to the income statement; the write-down is allocated to theitem, “impairment provisions”, as a direct contra item to the asset item.The amount of the write-down must take into account recoverable cash flows, the relatedcollection dates, future recovery charges and expenses and the discount rate to be applied.
    • Annual financial statementsto 31 December 2012 98Held-for-sale assetsA non-current asset or disposal group is classified as held for sale if the carrying value willmainly be recovered from its sale or disposal instead of its ongoing use. In order for this tooccur, the asset or disposal group must be available for immediate sale in its current condition,and the sale must be highly likely. Assets meeting the criteria to be classified as held-for-saleassets are valued at the lower of carrying value and sales value adjusted for any related costs.Own sharesOwn shares are not considered financial assets of the company that issued the shares. Thepurchase and sales value of own shares is recorded as a change to shareholders equity. Nogain or loss is reported in the income statement for the sale, purchase, issue or cancellation ofown shares.Cash and cash equivalentsCash and cash equivalents include cash at hand, demand deposits and short-term, highly liquidfinancial investments that are readily convertible to cash and subject to a negligible risk ofprice variation. Their value is reported at fair value.Provisions for risks and future liabilitiesAs necessary, the Group records provisions for risks and future liabilities when: it has a legal or implicit obligation to third parties resulting from a past event it is likely that Group resources will be used to fulfil the obligation a reliable estimate can be made of the amount of the obligationProvisions are recorded based on the projected value and discounted as necessary to presentvalue if the time value is considerable. Changes in estimates are recognised in the incomestatement of the period in which the change occurs.Income taxCurrent income taxes are determined and reported on the basis of a reasonable forecast of taxcharges resulting from applying the tax rates in effect in the various countries where Groupcompanies operate to taxable income, and taking into account any exemptions and tax creditsto which such companies are entitled.Deferred tax liabilities are allocated for all temporary differences between the carrying value ofthe assets and liabilities and the corresponding amount for tax purposes.Deferred tax assets are recorded for all deductible temporary differences and for tax assetsand liabilities carried forward to the extent that it is likely there will be sufficient future taxableprofit against which the deductible temporary differences and the tax assets and liabilitiescarried forward can be used.Deferred taxes are classified under non-current assets and liabilities and are determined usingtax rates expected to be applicable under the laws in the countries where the Group operatesin the years when the temporary differences will be realised or will expire.The carrying values of deferred tax assets are analysed periodically and reduced if it is notlikely that sufficient taxable income will be generated against which the benefits resulting fromsuch deferred assets can be used.Revenues and incomeService revenues are recognised at the time the services are rendered based on the progressof the activity on the reporting date.Income from equity investments for dividends or for their full or partial sale is reported whenthe right to receive payment is determined, with a balancing item (receivable) at the time of
    • Annual financial statementsto 31 December 2012 99the sale or decision to distribute dividends by the entity or appropriate body.Interest is reported using the effective interest rate method.Employee benefitsShort-term employee benefits, whether in cash or in kind (meal vouchers) are reported in theincome statement in the period when work is performed.Employee benefits related to participation in a defined benefit plan are determined by anindependent actuary using the projected unit credit method.Actuarial gains and losses are posted to the income statement in the period in which theyoccur using the corridor method to record the gains or losses unless these exceed a certainpercentage of the obligation.Employee benefits in respect of participation in a defined contribution plan only relate to thoseplans under mandatory government administration. The payment of contributions fulfils theGroups obligation to its employees. Thus, contributions are costs in the period in which theyare payable.In the Group, benefits were provided in the form of stock options or share-based payments.This applies to all employees eligible for stock option plans. The cost of these transactions isdetermined with reference to the fair value of the options on the date allocation is made and isreported over the period from such date until the expiry date with a balancing entry inshareholders equity.The cost of stock options for the Groups directors and contributors is determined in the sameway.Fair value reserveThe fair value reserve incorporates fair value changes to entries measured at fair value with abalancing entry in shareholders equity.WarrantsWarrants issued by the Group, which do not meet the requirements either for being classifiedas share-based payments to employees pursuant to IFRS 2 or as financial liabilities, aretreated as the Groups equity instruments.Earnings per shareIn accordance with IAS 33, basic earnings per share are calculated as the ratio of net profit forthe period attributable to shareholders owning Parent Company shares to the weightedaverage number of shares outstanding during the period. Own shares in the portfolio are, ofcourse, not included in this calculation.Diluted earnings per share are calculated by adjusting the weighted average number of sharesoutstanding for all potential ordinary shares resulting from the potential exercise of assignedstock options, which may therefore result in a diluting effect.
    • Annual financial statementsto 31 December 2012 100C. Changes in accounting principles and the treatment of errorsAccounting principles are changed from one year to another only if the change is dictated byan accounting standard or if it helps provide more reliable information or more completereporting of the impact of transactions on the Groups balance sheet, income statement andcash flows.Changes in accounting standards are applied retrospectively with the impact reflected inshareholders equity in the first of the periods presented. Comparative reporting is adaptedaccordingly. The prospective approach is used only when it is not practical to restatecomparative reporting. The application of a new or amended accounting standard is recordedas required by the standard itself. If the standard does not specify transition methods, thechange is reflected retrospectively, or if impractical, prospectively.If there are significant errors, the same treatment dictated for changes in accounting principlesis used. If there are minor errors, corrections are posted to the income statement in the periodwhen the error is discovered.
    • Annual financial statementsto 31 December 2012 101D. Use of estimates and assumptions in preparing the financial statementsThe companys management must make assessments, estimates and assumptions that affectthe application of accounting standards and the amounts of assets, liabilities, costs andrevenues recorded in the financial statements. Estimates and related assumptions are basedon past experience and other factors deemed reasonable in the case concerned; these havebeen used to estimate the carrying value of assets and liabilities that cannot be easily obtainedfrom other sources.These estimates and assumptions are reviewed regularly. Any changes resulting from revisionsto accounting estimates are recorded in the period when the revision is made if such revisionsonly affect that period. If the revision affects current and future periods, the change isrecorded in the period in which the revision is made and in related future periods.Financial statement balances are reported and valued using the valuation criteria describedabove. At times the application of these criteria involves the use of estimates that may have asignificant impact on amounts reported in the financial statements. Estimates and relatedassumptions are based on past experience and factors deemed reasonable in the caseconcerned; these are used to estimate the carrying value of assets and liabilities that cannotbe easily obtained from other sources. However, since these are estimates, the resultsobtained should not necessarily be considered definitive.With the understanding that the use of reasonable estimates is an essential part of preparingfinancial statements, the items where the use of estimates is most prevalent are stated below: valuation of financial assets not listed in active markets valuation of financial assets listed in active markets but considered illiquid on thereference market valuation of equity investmentsThe process described above is made particularly complicated by the unusual levels of volatilityin the current macroeconomic and market environment, which affect financial indicators thathave a bearing on the above valuations. An estimate may be adjusted as a result of changes in the circumstances on which it wasbased, or as a result of new information. Any change in the estimate is applied prospectivelyand has an impact on the income statement in the period in which the change occurred andpotentially on income statements in future periods.As highlighted earlier, a significant proportion of the assets shown in the DeA Capital Group’sconsolidated financial statements is represented by unlisted financial investments. Theseinvestments are valued at their fair value, calculated by directors based on their best estimateand judgement using the knowledge and evidence available at the time the consolidatedfinancial statements are prepared. However, due to objective difficulties in makingassessments and the lack of a liquid market, the values assigned to such assets could differ,and in some cases significantly, from those that could be obtained when the assets are sold.
    • Annual financial statementsto 31 December 2012 102BALANCE SHEETNon-current assets1 – Intangible and tangible assets1a - GoodwillChanges in goodwill are shown in the table below:(EUR thousand)Balance at1.1.2012Change in thebasis ofconsolidationAcquisitions Decreases ImpairmentBalance at31.12.2012Goodwill 210,134 (1,745) 522 0 (20) 208,891Goodwill, which amounted to EUR 208,891 thousand at 31 December 2012 (EUR 210,134thousand at 31 December 2011), relates to the acquisition of FARE Holding (now DeA CapitalReal Estate), IDeA Capital Funds SGR, IFIM and FIMIT SGR.On 29 November 2012, Soprarno SGR’s shareholder structure was restructured with aresulting reduction in DeA Capital S.p.A.’s equity investment from 65% to 20%, via thefollowing transactions:- the sale by DeA Capital S.p.A. of 25% of Soprarno SGR to Banca Ifigest S.p.A. (Ifigest),for a payment of EUR 0.5 million, with the simultaneous cancellation of the option forIfigest to sell its stake in Soprarno SGR to DeA Capital S.p.A., for the same amount- a capital increase in kind carried out via the transfer of the asset management businessheld by Cassa di Risparmio di San Miniato (CARISMI) to Soprarno SGR: the businesswas valued at around EUR 4.5 million (in line with the value attributed to SoprarnoSGR)The above-mentioned transaction involved a change in value of EUR 1,745 thousand at 31December 2012.The full goodwill method was used to record the minority interests of the companies acquiredduring 2011 (FIMIT SGR and IFIM). This requires minority interests to be recorded at fairvalue.Impairment tests on goodwillPursuant to IAS 36, goodwill is not subject to amortisation, and is tested for impairment atleast annually.The main assumptions used in the impairment test calculations, together with the results, areset out below.In order to carry out impairment testing on the goodwill of its cash generating units (CGUs),the DeA Capital Group allocates the goodwill to the relevant CGUs, identified as IDeA FIMITSGR (real estate fund management) and IDeA Capital Funds SGR, which represent theminimum level of monitoring that the DeA Capital Group undertakes for management controlpurposes consistent with DeA Capital’s strategic vision.The redefinition of the IDeA Alternative Investments CGU following its merger into the ParentCompany meant that a new CGU had to be defined, namely IDeA Capital Funds SGR. Theprevious goodwill of the IDeA Alternative Investments CGU was allocated in its entirety to thenew CGU.In the case of CGUs that are not wholly controlled, goodwill is reported on a notional basis,which also includes the portion of goodwill that relates to minorities, using the grossing upmethod.
    • Annual financial statementsto 31 December 2012 103The carrying value of the CGU is calculated using the same criterion as that used to determinethe recoverable value of the CGU.Impairment testing consists of comparing the recoverable amount of each CGU with thecarrying amount of goodwill and the other assets attributed to each CGU.Impairment testing was carried out on the IDeA Capital Funds CGU using the sum of the partsmodel by determining the value in use, calculated as the sum of (i) the current value ofdividend flows (the dividend discount model, or DDM) expected in the 2013-2015 period fromIDeA Capital Funds SGR and (ii) the current value of the carried interest flows (discountedcash flow method, or DCF) expected from the same company.A number of assumptions were used in determining these flows, including estimates of futureincreases in revenues, based on expected trends in managed assets, EBITDA and net income,or in the case of carried interest, on the basis of return projections (IRR) made by thecompany for the various funds under management.The valuation was based on a cost of capital of +12.7% plus a terminal value based on growthassumptions of 2.0%.Note that the recoverable amount relating to this CGU exceeds its carrying amount.Sensitivity analysis performed on the most significant variables in terms of sensitivity to therecoverable value of IDeA Capital Funds, i.e. the discount rate and the rate of return for themanaged funds used, leads to a potential change in the carrying value of EUR -4.1/+4.8million (for changes of +1.0% and -1.0% in the discount rate) and EUR -1.3/+1.3 million (forchanges of -1.5% and +1.5% in the expected IRR rate on the managed funds).Similarly, impairment testing was carried out on the IDeA FIMIT SGR CGU using the sum of theparts model by determining the value in use, calculated as the sum of (i) the current value ofdividend flows (the dividend discount model, or DDM) expected in the 2013-2015 period fromIDeA FIMIT SGR and (ii) the current value of the carried interest flows (discounted cash flowmethod, or DCF) expected from the funds managed by the same company.A number of assumptions were used in determining these flows, including estimates of futureincreases in revenues, based on expected trends in managed assets, EBITDA and net income,or in the case of carried interest, on the basis of return projections made by the company forthe various funds under management.The valuation was based on a cost of capital of +12.2% plus a terminal value based on growthassumptions of 2.0%.Note that the recoverable amount relating to this CGU exceeds its carrying amount.Sensitivity analysis performed on the most significant variables in terms of sensitivity to therecoverable value of IDeA FIMIT SGR, i.e. the discount rate and the rate of return used, leadsto a potential change in the carrying value of EUR -7.6/+8.3 million (for changes of +0.5% and-0.5% in the discount rate) and EUR -5.3/+5.3 million (for changes of -0.5% and +0.5% inthe rate of growth (g).1b - Intangible assetsChanges in intangible assets are shown in the tables below:
    • Annual financial statementsto 31 December 2012 104(Euro thousand)Historicalcost at Jan.1,2012Cum. amort.&prov.chargesat Jan. 1,2012Net bookvalue atJan.1, 2012Historicalcost at Dec.31, 2012Cum. amort.&prov.chargesat June 30,2012Net bookvalue at Dec.31, 2012Concessions, licence fees & trademarks 3,337 (1,132) 2,205 3,909 (2,056) 1,853Computer software & other licenses 137 (24) 113 128 (53) 75Development costs 229 (160) 69 229 (183) 46Other intangible assets 141,241 (23,980) 117,261 142,745 (38,727) 104,018Total 144,944 (25,296) 119,648 147,011 (41,019) 105,992(Euro thousand)Balance atJan.1, 2012Additions Amortization ReclassesChange inconsolidationareaBalance at31.12.2012Concessions, licence fees &trademarks 2,205 578 (923) 0 (7) 1,853Computer software & other licenses 113 4 (237) 207 (12) 75Development costs 69 0 (22) 0 (1) 46Other intangible assets 117,261 1,504 (14,540) (207) 0 104,018Total 119,648 2,086 (15,722) 0 (20) 105,992Increases in the items “concessions, licences and trademarks” and “software costs” relate topurchases of software usage licences and the related development costs.The “other initial intangible assets” relate to: Customer relationships arising from the allocation of the residual value of FIMIT SGR onthe date of the (inverse) merger into FARE SGR with the recognition of intangible assetsidentified as customer relationships and intangible assets related to variablecommissions that were valued at EUR 38,573 thousand and EUR 68,688 thousandrespectively. This value is based on the discounting of fixed management fees (forcustomer relationships) and variable fees calculated net of directly applicable costs onthe basis of the most recent business plans of the funds under management. customer relationships arising from the allocation of the discounted value of commissionflows generated by the funds under management of IDeA Capital Funds SGR, net ofmanagement costs, based on the business plans of the funds under managementIncreases in “other intangible assets” relate to the allocation to intangible assets of thebusiness division following its acquisition from Duemme SGR S.p.A for a gross amount of EUR1,504 thousand. The value of the business division includes an earn-out component of EUR432 thousand, which will be recognised only if certain conditions are met.1c - Tangible assetsChanges in tangible assets are shown in the tables below:(Euro thousand)Historicalcost at Jan.1,2012Cum.deprec.&prov.chargesat Jan. 1,2012Net bookvalue atJan.1, 2012Historicalcost at Dec.31, 2012Cum.deprec.&prov.chargesat Dec. 31,2012Net bookvalue at Dec.31, 2012Plant 312 (264) 48 306 (260) 46Leasehold improvements 0 0 0 1,547 (17) 1,530Furniture and fixtures 1,408 (906) 502 1,327 (955) 372Computer and office equipment 1,333 (983) 350 1,407 (1,089) 318Motor vehicles 451 (193) 258 465 (250) 215Other tangible assets 372 (261) 111 384 (338) 46Total 3,876 (2,607) 1,269 5,436 (2,909) 2,527
    • Annual financial statementsto 31 December 2012 105(Euro thousand)Balance atJan.1, 2012Additions Depreciation DecreaseChange inconsolidationareaBalance atDec. 31, 2012Plant 48 35 (26) 0 (11) 46Leasehold improvements 0 1,547 (17) 0 0 1,530Furniture and fixtures 502 76 (145) (26) (35) 372Computer and office equipment 350 166 (183) (3) (12) 318Motor vehicles 258 96 (93) (46) 0 215Other tangible assets 111 13 (77) 0 (1) 46Total 1,269 1,933 (541) (75) (59) 2,527Acquisitions for the “leasehold improvements” item, totalling EUR 1,547 thousand, relate toimprovements made on the building that will be leased to the DeA Capital Group from 2013.Depreciation on leasehold improvements will be charged from the actual date that the assetcomes into use in 2013.Depreciation is calculated on a straight-line basis, based on the estimated useful life of theasset.The depreciation rates used in the financial year were 20% for specific plant assets, 12% forfurniture and furnishings, 20% for electronic office machines and 20% for company vehicles.2 – Financial investmentsFinancial investments in companies and funds are the Groups typical assets. Theseinvestments rose from EUR 590,130 thousand at 31 December 2011 to EUR 687,093 thousandat end-2012.2a - Investments in associatesThis item, totalling EUR 296,366 thousand at 31 December 2012 (EUR 302,141 thousand atend-2011), relates to the following assets:- The investment in Santé, which was reported in the consolidated financialstatements to 31 December 2012 at approximately EUR 226,143 thousand (EUR235,221 thousand at end-2011). The change compared with the figure reported atend-2011 is attributable to the combined effect of the adverse pro-rata impact ofthe net loss of EUR 10,776 thousand, the increase in the fair value of the interestrate swaps taken out to hedge interest rate risk on debt exposure and othermovements of EUR 1,589 thousand, the distribution of dividends of EUR 3,257thousand, additional investment of around EUR 3,267 thousand and other decreasestotalling EUR 99 thousand.- The equity investment in Sigla Luxembourg (Parent Company of the Sigla Group),which was recorded at end-2011 at EUR 22,040 thousand, and reported at EUR12,314 thousand in the consolidated financial statements to 31 December 2012. Thedecrease compared with 31 December 2011 relates to the EUR 717 thousand lossfor the period and an impairment charge of EUR 9,015 thousand to align thecarrying value with the company’s pro-rata share of the net asset value at the samedate.- Units in the IDeA Opportunity Fund I, valued at EUR 48,069 thousand in theconsolidated financial statements to 31 December 2012. This carrying valuerepresents the NAV advised by the management company in its annual report to 31
    • Annual financial statementsto 31 December 2012 106December 2012, drafted in accordance with the Bank of Italy’s regulation of 14 April2005 on collective asset management, amended and supplemented by the Bank ofItaly’s regulation of 8 May 2012. The change from the end-2011 figure was due tonet investments of EUR 17,044 thousand, the net increase in fair value of EUR 544thousand and the pro-rata portion of the net loss for the period of EUR 6,286thousand (due mainly to the partial impairment of the investments in Giochi Preziosiand Grandi Navi Veloci, and to the capital gain made on Euticals).Summary financial information on these equity investments is shown in the table below:Santé Group Sigla Group OF I(Euro million) 31.12.2012 31.12.2012 31.12.2012Total assets/liabilities 2,104 86.4 102.4Revenues 1,928 15.7 0.0Net profit/(loss) (15.7) (1.7) (12.2)Net profit/(loss) attributable to NCI 9.4 0.0 0.0Net profit/(loss) attributable to the Group (25.1) (1.7) (12.2)The DeA Capital Group performed impairment testing on the above-mentioned equityinvestments in associates by determining their value using the methodology summarisedbelow: For Santé, the discounted cash flow (DCF) method was applied for the period 2013-2018, using a number of assumptions, including estimates of future increases inrevenues, EBITDAR, investments and working capital. Discounted cash flow here isbased on a weighted average cost of capital of 5.78%, which is in turn based on a costof capital of 11.5%, combined with a debt component – including the capitalisation ofrental liabilities (see below). In addition to the discounted cash flows, the enterprisevalue obtained is also based on a terminal value calculated using the market multiplesmethodology applied to the EBITDAR of the last year of the plan available, minus non-recurring items. Following the impairment test, the equity investment was revaluedfrom its carrying value to its fair value. It is important to note that, although wecontinued to use the DCF approach, analysis was focused on gross cash flows (includingthe effect of rental costs), with the amount of debt deducted from the enterprise valueadjusted by a “theoretical” value for the debt arising from the capitalisation of theserental costs. Sensitivity analysis performed on the size of the discount rate andEBITDAR multiple used for calculating the terminal value, leads to a potential change inthe carrying value of EUR -22/+23 million (for a change of +0.3%/-0.3% respectivelyin the discount rate) and of EUR -31/+31 million (for a change of -0.25% and +0.25%respectively in the EBITDAR multiple). As regards the investment in Sigla, the ongoing effects of the economic crisis, togetherwith the consequences arising from the deleveraging requirements of banks that grantsalary-backed loans, have led to much longer times for top-line growth than wereoriginally reflected in the asset valuation. This led the Group to record the completeimpairment of the goodwill implicit in the carrying value with the resulting realignmentof said value in the Sigla Group’s shareholders’ equity.The table below provides details of the equity investments held in associates at31 December 2012 by sector of activity:(EUR million)
    • Annual financial statementsto 31 December 2012 107(EUR million)Private EquityInvestmentAlternative AssetManagementTotalSantè 226.1 0.0 226.1Sigla 12.3 0.0 12.3IDeA OF I 48.1 0.0 48.1Fondo AVA 2.5 5.0 7.5Soprarno 1.6 0.0 1.6Harvip Investimenti S.p.A. 0.8 0.0 0.8Total 291.4 5.0 296.4ate2b - Investments in other companies – available for saleAt 31 December 2012, the DeA Capital Group was a minority shareholder of KenanInvestments (the indirect Parent Company of Migros), Stepstone, Alkimis SGR, two UScompanies operating in the biotech and printed electronics sectors, TLcom Capital LLP(management company under UK law) and TLcom II Founder Partner SLP (limited partnershipunder UK law).At 31 December 2012, the item totalled EUR 223,896 thousand compared with EUR 127,380thousand at 31 December 2011.The table below provides details of equity investments in other companies at 31 December2012 by area of activity.(EUR million)Private EquityInvestmentAlternative AssetManagementTotalKenan Investments 223.6 0.0 223.6Minor investments 0.3 0.0 0.3Total 223.9 0.0 223.9The stake in Kenan Investments (the indirect Parent Company of Migros) was recorded in theconsolidated financial statements to 31 December 2012 at a value of EUR 223,610 thousand(compared with EUR 127,090 thousand at 31 December 2011).The increase of EUR 96,520 thousand was due to the rise in the value of Migros shares (TRY21.5 per share at 31 December 2012 compared with around TRY 12.6 per share at 31December 2011), and the strengthening of the Turkish lira against the Euro (2.36 TRY/EUR at31 December 2012 compared with 2.44 TRY/ERU at 31 December 2011).The value of the smaller equity investments, amounting to EUR 287 thousand, relates to: a minority interest (10% of capital) in Alkimis SGR totalling EUR 286 thousand the investment in TLcom Capital LLP (management company under UK law) and TLcomII Founder Partner SLP (limited partnership under UK law) for a total of EUR 1 thousand2c - Available-for-sale fundsThis item relates to investments in units of two funds of funds (IDeA I FoF and IDeA ICF II),one theme fund (IDeA EESS), 11 real estate funds and seven venture capital funds, totallingapproximately EUR 166,504 thousand in the financial statements at the end of 2012,compared with EUR 159,673 thousand at end-2011.
    • Annual financial statementsto 31 December 2012 108The table below shows changes to the funds during 2012.(Euro thousand)Balance at1.1.2012Increase(Capital call)Decrease(CapitalDistribution)ImpairmentFair ValueAdjustmentTranslationeffectBalance at31.12.2012Venture Capital Funds 12,234 0 (857) (496) (488) (271) 10,122IDeA I FoF 96,234 17,211 (14,400) 0 4,053 0 103,097ICF II 9,322 9,206 (1,433) 0 (589) 0 16,506IDeA EESS 19 988 (77) 0 (309) 0 621IDeA FIMIT SGR Funds 41,864 1,000 (814) (1,193) (4,699) 0 36,158Total Funds 159,673 28,405 (17,581) (1,689) (2,032) (271) 166,504Units in venture capital funds are valued at around EUR 10,122 thousand in the consolidatedfinancial statements to 31 December 2012 (EUR 12,234 thousand at end-2011).The overall change in the investments is mainly attributable to a decrease in fair value (andrelated exchange rate effects) of EUR 759 thousand, and the impairment (and relatedexchange rate effects) of certain funds totalling EUR 496 thousand.During the year, the company received capital distributions of EUR 856 thousand, which had apositive impact on the income statement of EUR 1,385 thousand.The fair value measurement of investments in venture capital funds at 31 December 2012,carried out based on the information and documents received from the funds, as well as otheravailable information, meant that the amount had to be written down by EUR 496 thousand;the significant reduction to below cost was considered clear evidence of impairment.Units in IDeA I FoF are valued at around EUR 103,097 thousand in the consolidated financialstatements to 31 December 2012 (EUR 96,234 thousand at end-2011).The change in the carrying value compared with 31 December 2011 was due to contributionsmade for capital calls totalling EUR 17,211 thousand, capital reimbursements of EUR 14,400thousand and a net increase in fair value of around EUR 4,053 thousand.Units in ICF II are valued at around EUR 16,506 thousand in the consolidated financialstatements to 31 December 2012 (EUR 9,322 thousand at end-2011).The change in the carrying value compared with 31 December 2011 was due to contributionsmade for capital calls totalling EUR 9,206 thousand, capital reimbursements of EUR 1,433thousand and a net decrease in fair value of around EUR 589 thousand.Units in IDeA EESS are valued at around EUR 621 thousand in the consolidated financialstatements to 31 December 2012 (EUR 19 thousand at end-2011).The change in the carrying value compared with 31 December 2011 was due to contributionsmade for capital calls totalling EUR 988 thousand, capital reimbursements of EUR 77 thousandand a net decrease in fair value of around EUR 309 thousand.The financial assets related to units of funds managed by IDeA FIMIT are considered long-terminvestments. This item includes: Mandatory investments (as stipulated by the Bank of Italy Regulation of 14 April 2005,later amended and supplemented by the Bank of Italy Regulation of 8 May 2012) inmanaged funds that are not reserved for qualified investors. The latter are to be held in theportfolio until the funds maturity date. However, they were not classified as "held-to-maturity assets" since they are variable rate financial instruments. It was therefore decided
    • Annual financial statementsto 31 December 2012 109to record them in this "residual" category in accordance with IAS 39, which specifies thatthey should be measured at fair value with a balancing entry in an appropriate unavailablereserve pursuant to Legislative Decree 38/2005. optional investments in managed funds that may or may not be reserved for qualifiedinvestorsUnits in these funds are valued at around EUR 36,158 thousand in the consolidated financialstatements to 31 December 2012 (EUR 41,864 thousand at end-2011).The change in the carrying value compared with 31 December 2011 was due to contributionsmade for capital calls totalling EUR 1,000 thousand, capital reimbursements of EUR 814thousand, a net decrease in fair value of around EUR 4,699 thousand, and impairment of EUR1,193 thousand relating to the Atlantic 2 – Berenice fund.IAS 39 specifies that if a financial instrument has been impaired, all subsequent write-downsmust pass through the income statement. The fair value adjustment, calculated using thestock market price on the last open market day, resulted in total impairment of EUR 1,193thousand.Note that to secure the loan made by Banca Intermobiliare, IDeA FIMIT SGR established a lienin favour of this bank consisting of 600 units in the Omicron Plus fund.The table below provides a breakdown of the funds in the portfolio at 31 December 2012 byarea of activity.(EUR million)Private EquityInvestmentAlternative AssetManagementTotalVenture capital funds 10.1 0.0 10.1IDeA I FoF 103.1 0.0 103.1ICF II 16.5 0 16.5IDeA EESS 0.6 0.0 0.6IDeA FIMIT SGR Funds 0.0 36.2 36.2Total Funds 130.3 36.2 166.52d - Other available-for-sale financial assetsThe item totalled EUR 327 thousand (EUR 936 thousand at 31 December 2012) and mainlyrelates to the stakes held by IRE in Beni Immobili Gestiti S.p.A. (0.25%) and in AEDES BPMReal Estate SGR S.p.A. (5.0%).3 – Other non-current assets3a - Deferred tax assetsThe balance on the “deferred tax assets” item totalled EUR 2,754 thousand and comprises thevalue of deferred tax assets minus deferred tax liabilities, where they may be offset.Deferred tax assets relating to the Parent Company of EUR 837 thousand were fully offsetagainst deferred tax liabilities.
    • Annual financial statementsto 31 December 2012 110The changes to deferred tax assets and liabilities during the year, broken down by type, areanalysed below.(Euro thousand)At 31 december2011Recognised inincomestatementRecognised inequityChannge inconsolidationareaCompensatio/othermovementsAt 31 december2012Deferred tax assets for:-personnel costs 1,095 209 0 0 0 1,304-other 1,521 (1) 32 (12) (90) 1,450Total deferred tax assets 2,616 208 32 (12) (90) 2,755Deferred tax liabilities for: 0 0 0 0 0 0-available-for-sale financial assets (6,113) 1,699 636 7 0 (3,772)-TFR discounting IAS (19) 2 0 0 0 (17)-intangible assets (34,832) 12,117 0 0 0 (22,715)Total deferred tax liabilities (40,964) 13,818 636 7 0 (26,504)Losses carried forward available for offsetagainst future taxable profits 1,920 (393) 0 (690) 0 837Total deferred tax assets 4,077 2,754Total deferred tax liabilities (40,506) (25,668)The deferred tax liabilities of IDeA FIMIT SGR, amounting to EUR 23,068 thousand, mainlycomprise the balancing entry for deferred tax assets relating to variable commissions recordedunder intangible assets. The balance is considerably lower than at end-2011 due to the taxredemption (affrancamento fiscale) operation, which enabled the remaining deferred taxliabilities on customer relationship intangible assets at 31 December 2011 (EUR 11,819thousand) to be released against the cost of withholding tax on the income statement. To thisend, IDeA FIMIT SGR opted during the year to recognise for tax purposes the higher valuesrecorded in the financial statements relating to customer relationship intangible assets bookedafter the merger, in accordance with art. 176, para. 2 of the Italian consolidated law onincome tax. An amount of EUR 35,739 thousand was therefore released via a payment ofwithholding tax of EUR 5,418 thousand.As required by IFRS 3 (Business combinations), the company recorded a deferred tax liabilityfor the assets identified at the date of acquisition.No further deferred tax assets were allocated for the significant tax losses of DeA CapitalS.p.A. (around EUR 108,074 thousand, to be reported without limitation) and of DeA CapitalInvestments S.A. (around EUR 185,032 thousand). This was because there was insufficientinformation for the group to believe that sufficient taxable income would be generated infuture periods against which such tax losses could be recovered.Deferred taxes were calculated using the liability method based on the temporary differencesat the reporting date between the tax amounts used as a reference for the assets and liabilitiesand the amounts reported in the financial statements.3b –Non-current loans and receivablesThis item totalled EUR 27,444 thousand at 31 December 2012, compared with EUR 1,632thousand at end-2011 and mainly relates to loans to the senior management of GDS for thecapital increase at Santé, which was partly subscribed by the original shareholders and partlyby the senior management of GDS, and to the quasi-equity loan subscribed by DeA CapitalInvestment S.A. and Santé S.A. in the amount of EUR 25,676 thousand. In 2012, the twocompanies signed a conversion agreement and a quasi-equity loan, under which, at therequest of Santé S.A., DeA Capital Investments S.A. waived its rights relating to themezzanine bond that was transferred in favour of SDE, receiving in exchange a quasi-equityloan of the same amount, expiring on 26 October 2018, from Santé S.A. The interest rate onthe quasi-equity loan is variable and indexed to the 12-month Euribor.3c – Other non-current assets
    • Annual financial statementsto 31 December 2012 111At 31 December 2012 this item totalled EUR 25,944 thousand and mainly relates to thereceivable from Beta Immobiliare fund concerning the final variable commission. Thecalculation was done pursuant to the provisions of the operating regulations of the BetaImmobiliare fund, taking into account the NAV indicated in the management report at 31December 2012. This receivable corresponds to the portion of the overperformancecommission accrued since the beginning of the funds operations that the asset managementfund will receive when liquidated, only if certain conditions are met.4 - Current assets4a - Trade receivablesReceivables amounted to EUR 12,256 thousand and mainly included receivables fromcustomers (EUR 11,919 thousand). These related mainly to the balances of IRE (EUR 6,617thousand), IRE Advisory (EUR 1,675 thousand) and IDeA FIMIT SGR (EUR 2,810 thousand).The latter amount relates to receivables from managed funds for commission due but not yetreceived.Receivables from customers due to IRE include EUR 3,282 thousand relating to the re-invoicingof expenses incurred by the company in its own name but on behalf of funds managed by IDeAFIMIT SGR. This activity was carried out by the company by virtue of a mandate withoutappointed representation, signed by IRE and IDeA FIMIT SGR on 12 December 2012.The item “transactions with Related Parties” includes EUR 306 thousand from De AgostiniS.p.A. for the agreement to sublet rented premises and the reimbursement of costs associatedwith said agreement4b – Available-for-sale financial assetsAt 31 December 2012, this item totalled EUR 5,666 thousand, compared with EUR 13,075thousand at 31 December 2011 and relates to the portfolio of government securities andcorporate bonds held by IDeA Capital Funds SGR.4c - Financial receivablesAt 31 December 2012, this item totalled EUR 2,003 thousand and relates to repurchaseagreements signed by DeA Capital RE and IRE relating to a bond loan with Centrobanca. Theinvestment, which will mature at 20 February 2013, is to be regarded as a temporaryinvestment of cash.4d – Tax receivables relating to the tax consolidation scheme entered into by the parentcompaniesThis item totalled EUR 7,489 thousand at 31 December 2012 (EUR 5,929 thousand at 31December 2011) and relates to the receivable from the Parent Company, B&D HoldingS.a.p.A., for joining the tax consolidation scheme.The option for DeA Capital S.p.A. and IDeA Capital Funds SGR to join the Italian taxconsolidation scheme to which the B&D Group (the Group headed by B&D Holding di MarcoDrago e C. S.a.p.a) belongs was exercised jointly by each company and the Parent CompanyB&D Holding di Marco Drago e C. S.a.p.a. by signing the "Regulation for participation in thenational tax consolidation scheme for companies in the De Agostini Group" and notifying the
    • Annual financial statementsto 31 December 2012 112tax authorities of this option pursuant to the procedures and terms and conditions set out bylaw.The option for DeA Capital S.p.A., which was renewed during 2011, is irrevocable for thethree-year period 2011-2013, unless the requirements for applying the scheme are not met,while in the case of IDeA Capital Funds SGR, the option was signed during this period andrelates to the three-year period of 2012-2014.4e – Other tax receivablesAt 31 December 2012, this item totalled EUR 2,522 thousand, compared with EUR 2,677thousand at 31 December 2011. It mainly includes: advance tax payments made in excess of the consolidated IRES payable at the end ofthe year, under the tax consolidation scheme of DeA Capital RE, totalling EUR 176thousand tax withholdings in the form of advance payments on interest, of EUR 48 thousand tax withholdings in the form of advance payments on the partial sale of the SoprarnoPronti Termini bond fund in the amount of EUR 37 thousand regional tax on manufacturing operations (IRAP) credits to be carried forward relatingto the tax return for the previous year, of EUR 168 thousand, advance payments madefor IRAP of EUR 617,000 and an amount of EUR 68,000 relating to the IRAP appealsubmitted by subsidiaries IRE and IRE Advisory a receivable of EUR 965 thousand arising from the Parent Company’s VAT declaration ofthe previous year and a VAT receivable of EUR 70 thousand in respect of DeA CapitalRE A receivable of EUR 52 thousand due to the change in the percentage against whichVAT may be offset by the Parent Company from 99% to 44%4f – Other receivablesThis item, which totalled EUR 7,792 thousand at 31 December 2012 (EUR 6,128 thousand at31 December 2011), includes guarantee deposits, advances to suppliers and prepaid expenses.The item also includes EUR 3,031 thousand for the invoice issued to ENEL Servizi S.p.A. forcosts incurred by IDeA FIMIT SGR in previous years for the project to establish a new realestate fund. In December 2011 the customer decided not to move forward with the project.Under the agreements with ENEL Servizi S.p.A., some of the costs incurred by the Company inrelation to external suppliers must be reimbursed. The invoice was settled in January 2013.This item also includes a deposit of EUR 200 thousand paid by IDeA FIMIT SGR after signing apreliminary agreement to hire a building in Rome.Lastly, the item includes prepaid expenses of EUR 2,010 thousand relating to costs due in2013 for insurance policies and costs for the supply of goods and services (hire of premisesand other services).4g – Cash and cash equivalentsThis item, which totalled EUR 29,156 thousand at 31 December 2012 (EUR 46,764 thousand atthe end of the previous year) comprises bank deposits and cash, including interest accrued to31 December 2012.Please see the consolidated cash flow statement for further information on changes to thisitem.
    • Annual financial statementsto 31 December 2012 113The item “cash and cash equivalents” relates to cash balances and bank deposits in the nameof Group companies.Cash deposited at banks accrues interest at floating rates, based on the prevailing overnight,1-2-week and 1-3-month interest rates.5 – Shareholders equityAt 31 December 2012, Group shareholders’ equity was approximately EUR 723,138 thousand,compared with EUR 669,045 thousand at 31 December 2011.The increase of about EUR 54,093 thousand in Group shareholders equity in 2012 was mainlydue to the reasons already discussed in the Statement of Performance - IAS 1 (EUR 62,496thousand) and to the impact of the plan to purchase own shares (EUR -8,001 thousand).The main changes in shareholders’ equity are described in more detail in the relevant table ofchanges included in the Consolidated Financial Statements.5a – Share capitalThe share capital (fully subscribed and paid up) totalled EUR 306,612,100, represented by306,612,100 shares (of which 32,006,029 own shares) with a nominal value of EUR 1 each.Given that the nominal value of the above-mentioned own shares held at 31 December 2012 isdeducted from total share capital, share capital of EUR 274,606,071 was reported in thefinancial statements.Changes in share capital are shown in the table below:(Euro thousand) no. of shares amount no. of shares amountShare Capital 306,612,100 306,612 306,612,100 306,612of which: Treasury shares (32,006,029) (32,006) (25,915,116) (25,915)Share Capital (excluding treasury shares) 274,606,071 274,606 280,696,984 280,69731.12.2012 31.12.2011The table below shows a reconciliation of the shares outstanding:Shares issued Treasuryshares heldSharesoutstandingDecember 31, 2011 306,612,100 (25,915,116) 280,696,9842012 movementsShare capital increase 0 0 0Treasury shares purchased 0 (6,090,913) (6,090,913)Treasury shares sold 0 0 0Treasury shares disposed for 0 0 0Used for stock option plan 0 0 0Shares issued through exercise ofstock options0 0 0December 31, 2012 306,612,100 (32,006,029) 274,606,071
    • Annual financial statementsto 31 December 2012 1145b – Share premium reserveThe item in question fell from EUR 388,362 thousand at 31 December 2011 to EUR 386,452thousand at 31 December 2012, due to the recording of the purchase of own shares (EUR1,910 thousand) to this reserve.5c – Legal reserveThis reserve, which was unchanged compared with the end of 2011, totalled EUR 61,322thousand at 31 December 2012.5d – Fair value reserveThe fair value reserve at 31 December 2012 was positive at EUR 91,905 thousand (positive atEUR 3,132 thousand at 31 December 2011) and comprises the following items:(Euro thousand)Balance at1.1.2012Change in FairValueTax EffectBalance at31.12.2012Direct Investments / Shareholdings (4,101) 88,844 0 84,743Venture capital funds and funds of funds 7,591 (294) 178 7,475First time adoption IFRS and other reserves (358) 62 (17) (313)Total 3,132 88,612 161 91,9055e – Other reservesOther reserves totalled EUR -10,444 thousand (EUR -10,042 thousand at 31 December 2011)and are made up of:- a reserve for stock option costs totalling EUR 919 thousand- A reserve for the sale of option rights, totalling EUR 413 thousand. This originated inthe previous year from the sale of the remaining option rights to subscribe to a capitalincrease that had not been exercised by the shareholders, which were sold by thecompany.- other reserves that are negative at EUR 9,247 thousand relating to the associate ofSanté, chiefly for the pro-rata reclassification of the minority interests in Santéconnected with the 2008-2009 extraordinary dividend distribution by Générale deSanté, and changes in 2010-2012- other reserves of EUR -2,529 thousand5f – Retained earnings (losses) carried forwardThis item stood at EUR -54,426 thousand at 31 December 2012 compared with EUR -10,849thousand at 31 December 2011. The total decrease of EUR 43,577 thousand was due to theallocation of profits for 2011.5g – Profit (loss) for the yearThe loss reported for the year of EUR 26,277 thousand relates to the consolidated lossattributable to the Group (EUR 43,577 thousand at 31 December 2011).5h – Minority interestsThis item, which totalled EUR 136,309 thousand at 31 December 2012 (EUR 134,324 thousandat 31 December 2011) relates to the minority interest in shareholders equity resulting fromthe line-by-line consolidation of the 65% stake in IDeA SIM S.p.A., and the 61.30% stake inIDeA FIMIT SGR.
    • Annual financial statementsto 31 December 2012 1156 – Non-current liabilities6a - End-of-service payment fundThe end-of-service payment fund (TFR) is a defined benefit plan, and as such was measuredusing actuarial methodology. This resulted in a liability calculated in demographic and financialterms on amounts owed to workers according to the number of years worked. The totalpresent value of the liability is proportioned to the period of employment already completed atthe calculation date, taking account of future salary increases and the employees projectedlength of service.Future TFR flows were discounted at the reporting date based on the projected unit creditmethod.Changes in TFR in 2012 are shown in the table below:(Euro thousand)Balance atJan 1., 2012PortionmaturedPayments AdvancesBalance atDec. 31, 2012Movement in provision 2,127 1,487 (364) (215) 3,035The amounts recognised in the item were calculated as follows:(Euro thousand) 31.12.2012 31.12.2011Nominal value of provision 2,916 2,321Discounting effect 118 (194)Total provision 3,035 2,1276b - Non-current financial liabilitiesThis item totalled EUR 142,802 thousand (EUR 160,020 thousand at 31 December 2011) andrelates to: An amount of EUR 100,000 thousand for the use of the credit line provided byMediobanca for the same amount (maturing on 16 December 2015 and subject to avariable rate of 3-month Euribor + spread). The decrease of EUR 20,000 thousand isconnected with the partial utilisation of the revolving loan in place with Mediobanca On31 December 2012, the covenant tests for this credit line were successfully passed (i.e.debt and debt to equity). the liability due to the decrease in the fair value of the interest rate swap contractstaken out to partially hedge interest rate risk on the debt exposure with Mediobanca,totalling EUR 830 thousand (maturing on 30 July 2013) an amount of EUR 12,730 thousand relating to the medium-term loan taken out byIDeA FIMIT SGR with Banca Intermobiliare di Investimenti e Gestioni S.p.A. in 2009(maturing on 31 March 2014 with a floating rate of 3-month Euribor + spread) for thepurchase of units in the Omicron Plus fund the liability due to the decrease in the fair value of the interest rate swap contractstaken out to partially hedge interest rate risk on the debt exposure with BancaIntermobiliare di Investimenti e Gestioni S.p.A., totalling EUR 494 thousand (maturingon 31 March 2014)
    • Annual financial statementsto 31 December 2012 116 an amount of EUR 25,676 thousand relating to the vendor loan agreed for theacquisition of the tranche of mezzanine bonds issued by SDE (discussed above in the“Significant events during the year” section of the Report on Operations. The balancingentry for most of this amount was booked to “financial liabilities”) the estimated future cost for DeA Capital of exercising its pro-rata share of the putoptions on Santé shares held by the senior management of GDS, totalling EUR 915thousand An earn-out payment (maturing in 2014) of EUR 2,156 thousand, inclusive of interestcalculated at present value accrued from the closing date (12 December 2008) to 31December 2012, equal to EUR 244 thousand. This earn-out, which DeA has agreed topay to the seller, is equal to 50% of the portion of any performance fees accrued on thefunds of the former FARE SGR that are currently managed by IDeA FIMIT SGR.6c – Payables to staffThis item, which totalled EUR 1,956 thousand, broadly relates to payments for 2012 in respectof equity instruments that confer on beneficiaries the right to receive a cash award linked tocorporate performance over the medium-term horizon (the three year period 2012 – 2014).7 – Current liabilitiesTotal liabilities amounted to EUR 94,621 thousand (EUR 27,241 thousand at 31 December2011) and are all due within the following year. These payables are not secured on anycompany assets.7a – Trade payablesTrade payables were EUR 27,420 thousand versus EUR 10,322 thousand at 31 December2011.This amount mainly comprises: an amount of EUR 12,838 thousand for the allocation of carried interest to be paid tothe lead investor, BC Partners, based on the total capital gain on the investment inKenan An amount of EUR 5,181 thousand for expenses incurred by the company in its ownname but on behalf of the funds managed by IDeA FIMIT and subsequently re-invoicedto them. This activity was carried out by virtue of a mandate without representationsigned by IRE and IDeA FIMIT SGR on 12 December 2012.In respect of transactions with related parties, this item includes payables to:- the Parent Company, De Agostini S.p.A., of EUR 313 thousand- the affiliate, De Agostini Editore S.p.A., of approximately EUR 46 thousand- the affiliate, De Agostini Libri S.p.A., of approximately EUR 2 thousand- the affiliate, De Agostini Invest SA, of approximately EUR 25 thousandTrade payables do not accrue interest and are settled, on average, within 30 to 60 days.7b – Payables in respect of staff and social security organisationsThis item totalled EUR 8,868 thousand (EUR 7,497 thousand at end-2011) and is largely dueto:- payables to social security organisations of EUR 1,998 thousand, paid after the close ofthe financial year 2012, with the exception of payables for social security liabilitiescalculated on bonuses being accrued
    • Annual financial statementsto 31 December 2012 117- payables to employees of EUR 6,700 thousand for holidays not taken and accruedbonuses, provision for the remuneration of a former director of IDeA FIMIT SGR for anon-competition agreement, and an estimate of the variable annual remuneration to bepaid to a director of IDeA FIMIT SGR- other payables to employees totalling EUR 170 thousand7c – Current tax payablesThis item totalled EUR 7,473 thousand (EUR 903 thousand at end-2011) and mainly relates toa payable to the tax authorities, calculated as the difference between advance payments madeand the tax due for the year, a payable of EUR 3,793 thousand for withholding tax on thehigher values of the assets of IDeA FIMIT SGR and a payable of EUR 2,052 thousand to theParent Company, B&D Holding S.a.p.A., from IDeA Capital Fund SGR relating to its joining ofthe tax consolidation scheme.The latter amount relates to the payable connected with the option for DeA Capital S.p.A. andIDeA Capital Funds SGR to join the Italian tax consolidation scheme to which the B&D Group(the Group headed by B&D Holding di Marco Drago e C. S.a.p.a) belongs. This was exercisedjointly by each company and the Parent Company B&D Holding di Marco Drago e C. S.a.p.a. bysigning the "Regulation for participation in the national tax consolidation scheme for companiesin the De Agostini Group" and notifying the tax authorities of this option pursuant to theprocedures and terms and conditions set out by law. IDeA Capital Funds SGR exercised theoption during 2012 for the three-year period 2012-2014.IDeA FIMIT SGR opted during the year to recognise for tax purposes the higher valuesrecorded in the financial statements relating to customer relationship intangible assets bookedafter the merger, in accordance with art. 176, para. 2 of the Italian consolidated law onincome tax, following the merger of FARE SGR and FIMIT SGR. An amount of EUR 35,738thousand was therefore released via the payment of withholding tax of EUR 5,418 thousand.The first instalment, of EUR 1,625 thousand, was paid in 2012. The second and thirdinstalments, of EUR 3,793 thousand each, will be paid on the dates stipulated for payment ofthe related annual balance of income tax.7d – Other tax payablesThis item, of EUR 4,276 thousand at 31 December 2012 (EUR 3,583 thousand at end-2011),relates to the payable to the tax authorities in respect of taxes deducted from the income ofemployees and self-employed staff totalling EUR 1,487 thousand, the VAT payable of EUR 727thousand, and miscellaneous tax payables totalling EUR 2,062 thousand stemming from theLuxembourg wealth tax.7e – Other payablesThis item was EUR 1,495 thousand at 31 December 2012 (EUR 1,023 thousand at end-2011)and mainly relates to accrued expenses, payables to credit card issuers and directors’emoluments.7f – Short-term financial payablesThis item totalled EUR 45,089 thousand (EUR 3,911 thousand at 31 December 2011) andrelates to:- the short-term portion of the deferred purchase price (deferred portion) totalling aroundEUR 3,450 thousand and accrued interest payable from the closing date (12 December2008) to 31 December 2012 totalling EUR 218 thousand
    • Annual financial statementsto 31 December 2012 118- the amount that DeA Capital is required to pay to the seller for 100% of the units of theAtlantic 1 and Atlantic 2 funds totalling EUR 6,963 thousand- the payable of EUR 31,012 thousand for the exercise price, inclusive of interestcalculated at present value, accrued from the closing date (29 June 2012) up to 31December 2012, of EUR 616 thousand- the payable for the additional price to be paid to the seller of EUR 1,702 thousand- an accrued expense in respect of the line of credit provided by Mediobanca totallingEUR 240 thousand- The price of the business division transferred to IDeA FIMIT SGR by Duemme SGR, ofEUR 1,504 thousand. This value includes an earn-out component of EUR 432 thousand,which will be recognised only if certain conditions are met.
    • Annual financial statementsto 31 December 2012 119INCOME STATEMENTWhen comparing the results of 2012 with those of 2011, note the significant change in thescope of consolidation of the Alternative Asset Management business, which includes FIMITSGR’s contribution from 3 October 2011 (the effective date of its integration with FARE).Thus, a comparison between the two periods is significantly affected by the aboveconsiderations.Alternative asset management feesAlternative Asset Management fees in 2012 were EUR 82,004 thousand versus EUR 47,762thousand in 2011.These fees mainly relate to management fees paid to IDeA FIMIT SGR and IDeA Capital FundsSGR for the funds they manage.9 - Income from investments valued at equityThis item includes income from companies valued at equity for the period.The loss of EUR 18,442 thousand in 2012 compared with a loss of EUR 55,503 thousand in2011 was mainly due to the loss reported for the stake in Santé of about EUR 10,776 thousandand the loss related to the stake in IDeA OF I of EUR 6,286 thousand.10 - Other investment income and expensesThe net income realised on equity and fund investments totalled around EUR –7,884 thousandin 2012, compared with EUR –13,500 thousand in 2011.Details are shown below:(Euro thousand) Year 2012 Year 2011Other income from disposals of equity investments in subsidiaries 0 4Gains from investments available-for-sale 1,385 0Income from Kenan distributions 0 27,778Gains from venture capital fund distributions 0 1,480Gains from real estate fund distributions 1,765 0Gains from disposals 47 626Dividends from minor available-for-sale equity investments 102 95Gains from investments 3,299 29,983Losses on disposals of equity investments in subsidiaries 85 144Impairment venture capital funds 874 846Impairment real estate funds 1,195 0Impairment Sigla 9,014 0Impairment Kovio 0 43Impairment Stepstone 0 15,080Other charges 15 370Charges from investments 11,183 16,483Total (7,884) 13,500
    • Annual financial statementsto 31 December 2012 120Investment incomeIncome from available-for-sale venture capital funds was EUR 1,385 thousand and came fromcapital gains from distributions of venture capital funds. The “capital gains on sales” itemincludes an amount of EUR 47 thousand relating to capital gains made on disposals of theSoprarno Inflazione Fund.The item also includes amounts totalling EUR 1,765 thousand of income distributed in 2012 bythe various funds: Beta (EUR 22 thousand), Omicron Plus (EUR 1,249 thousand), Atlantic 1(EUR 107 thousand), Atlantic 2–Berenice (EUR 173 thousand) and Conero (EUR 214thousand).ImpairmentThe fair value measurement of equity and fund investments at 31 December 2012, carried outbased on the information and documents received from the funds and equity investments, aswell as other available information, made it necessary to record impairment of EUR 874thousand for venture capital funds.For these venture capital funds, the significant reduction below cost was considered clearevidence of impairment.The impairment charge of EUR 1,195 thousand on real estate funds relates to the reduction inthe value of units in the Atlantic 2 – Berenice fund. The fund units exhibited objective evidenceof impairment at 31 December 2009; the pro-rata NAV was less than carrying value. IAS 39specifies that if a financial instrument has been impaired in a previous period, all subsequentwrite-downs must pass through the income statement.The impairment charge of EUR 9,014 thousand on Sigla relates to the write-down of the equityinvestment in Sigla Luxembourg to align the carrying value with the company’s pro-rata shareof the net asset value at the same date.11 - Service revenuesIn 2012, these revenues totalled EUR 10,863 thousand, compared with EUR 10,359 thousandin 2011, and chiefly relate to services connected with consulting, management and the sale ofreal estate held in the portfolios of real estate funds.12 – Other revenues and incomeOther revenues and income, totalling EUR 1,647 thousand for 2012, compared with EUR 322thousand at end-2011, was mainly due to director fees from Santé S.A. of EUR 153 thousand,arrangement fees of EUR 517 thousand for the quasi-equity loan of DeA Capital InvestmentsSA and the reimbursement of EUR 550 thousand from IDeA FIMIT SGR in respect of theorganisation costs of creating the AVA fund.13 - Operating costsOperating costs in 2012 were EUR 81,270 thousand, compared with EUR 51,360 thousand inthe previous year.13a – Personnel costsTotal personnel costs were EUR 32,846 thousand in 2012, compared with EUR 25,031thousand in 2011.
    • Annual financial statementsto 31 December 2012 121The item breaks down as follows:(Euro thousand) Year 2012 Year 2011Salaries and wages 15,473 10,575Social charges on wages 5,110 3,834Board of directors fees 5,310 6,797Costo figurativo stock options 945 683Stock options reversal (1,022) 0Employee severance indemnity 1,327 950Other personnel costs 5,703 2,192Total 32,846 25,031The effect of the cost arising from the stock option plans for 2012, of EUR 945 thousand(EUR 683 thousand in 2011), was more than offset by the reversal of the cost allocated to thereserve for the 2010-2015 Stock Option Plan, of EUR 1,022 thousand. The allocation plan for2010-2015 is to be considered lapsed as the conditions for exercising option rights were notmet.“Other personnel costs” includes an amount of EUR 1,873 thousand for the incentive scheme,valued in accordance with IFRS 2, which confers on beneficiaries the right to receive a cashaward linked to corporate performance over the medium-term horizon (the three year period2012 – 2014).At 31 December 2012, the Group had a total of 207 employees (167 at 31 December 2011).The table below shows the changes and average number of Group employees during 2012.Position 1.1.2012 RecruitsDeparturesChange inconsolidationarea 31.12.2012 AverageSenior Managers 33 6 (6) (2) 31 32Junior Managers 42 30 (5) (5) 62 51Staff 92 43 (16) (5) 114 93Total 167 79 (27) (12) 207 176Share-based paymentsEmployees of DeA Capital S.p.A. and the Parent Company, De Agostini S.p.A., are beneficiariesof stock option plans based on the shares of DeA Capital S.p.A. Unexercised but valid calloptions on the company’s shares at 31 December 2012 totalled 2,938,200 (4,643,200 at 31December 2011).Stock option plans were valued using the numerical binomial tree procedure (the original Cox,Ross and Rubinstein method). Numerical analysis using binomial trees generates simulations ofvarious possible developments in the share price in future periods.With regard to stock option plans, on 17 April 2012 the shareholders meeting approved theDeA Capital Stock Option Plan for 2012-2014 under which a maximum of 1,350,000 optionsmay be allocated. To implement the resolution of the shareholders meeting, the DeA CapitalS.p.A. Board of Directors allocated a total of 1,030,000 options to certain employees of thecompany and its subsidiaries, and employees of the Parent Company De Agostini S.p.A. whoperform important roles.
    • Annual financial statementsto 31 December 2012 122In line with the criteria specified in the regulations governing the DeA Capital Stock OptionPlan for 2012-2017, the Board of Directors also set the exercise price for the options allocatedat EUR 1.3363, which is the arithmetic mean of the official price of DeA Capital shares on theMercato Telematico Azionario, the Italian screen-based trading system organised and managedby Borsa Italiana S.p.A., on the trading days between 17 March 2012 and 16 April 2012.The options can be allocated to the beneficiaries, in one or more tranches, up to 31 December2014 and exercised by the latter, in one or more tranches, but in any case for an amount pertranche of not less than 25% of the options assigned to each, with effect from the fifthcalendar day following the date that the adjusted NAV figure at 31 December 2014 isannounced, until 31 December 2017. The adjusted NAV means the value of the assets, net ofliabilities, calculated on the basis of the company’s balance sheet at 31 December 2014 andrestated, where necessary, to take account of the measurement at fair value of allinvestments, as assessed by an independent third party.The shareholders’ meeting also approved the Performance Share Plan for 2012–2014. Toimplement the resolution of the shareholders meeting, the Board of Directors of DeA CapitalS.p.A. allocated a total of 302,500 units (representing the right to receive ordinary shares ofthe company, free of charge, under the terms and conditions of the plan) to certain employeesof the company and its subsidiaries and of the Parent Company, De Agostini S.p.A., whoperform important roles for the Company.Shares allocated due to the vesting of units will be drawn from own shares already held by theCompany. An incentive scheme, valued in accordance with IFRS 2, which confers onbeneficiaries the right to receive a cash award linked to corporate performance over themedium-term horizon (the three year period 2012–2014) was granted to a manager withstrategic responsibilities. An actuarial valuation of this plan was made within the Group duringthe relevant time period. The current average value of the obligations arising from the plans isbased on an appropriate “length of service" table and on specific demographic andeconomic/financial assumptions.The terms and conditions of the DeA Capital Stock Option Plan for 2012–2014 and thePerformance Share Plan for 2012-2014 are described in the Information Prospectus preparedin accordance with art. 84-bis of Consob Resolution 11971 of 14 May 1999 (IssuerRegulations), available to the public at the registered office of DeA Capital S.p.A. and on theCompany’s website www.deacapital.it in the section Corporate Governance/Incentive Plans.The other incentive plans of the Parent Company and its subsidiaries are assessed inaccordance with IFRS 2 and confer on beneficiaries the right to receive a cash award linked tocorporate performance over a medium-term timescale (the three year period 2012 – 2014).Actuarial valuations of the plan were made within the Group during the relevant time period.The current average value of the obligations arising from the plans is based on an appropriate“length of service" table and on specific demographic and economic/financial assumptions. No loans and/or guarantees in favour of directors and/or auditors of the Parent Company andits subsidiaries were issued.13b – Service costsService costs were EUR 26,583 thousand in 2012 versus EUR 17,113 thousand in 2011.A breakdown of these costs is shown in the table below:
    • Annual financial statementsto 31 December 2012 123(Euro thousand) Year 2012 Year 2011Admin. Consulting, Tax and Legal and other 10,414 8,788Remuneration of internal committees 1,217 788Maintenance 250 206Travel expenses 1,074 788Utilities and general expenses 1,937 1,421Third-party rental, royalties and leasing 3,547 2,376Bank charges 633 69Books, stationery and conventions 448 490Commission expense 4,107 660Other expenses 2,956 1,527Total 26,583 17,11313c – Depreciation, amortisation and impairment lossesPlease see the table on changes in intangible and tangible assets for details on this item.13d – Other costsThis item totalled EUR 5,194 thousand (EUR 2,136 thousand in 2011) and mainly consisted ofthe Luxembourg wealth tax of EUR 647 thousand and the cost of EUR 2,922 thousand incurredby IDeA FIMIT SGR and DeA Capital given that they were unable to deduct the VAT paid onpurchase transactions on the basis of the pro-rata amount specified by art. 19 of PresidentialDecree 633/1972. It also included charges of EUR 1,558 thousand, most of which comprisedthe negative impact of the transaction concluded by IDeA FIMIT SGR with Enel Servizi S.p.A.,which enabled it to reclaim only a portion – albeit a significant one – of the costs it incurred increating a real estate fund. The project did not come to fruition.14 – Financial income and charges14a – Financial incomeFinancial income in 2012 totalled EUR 1,831 thousand (EUR 1,863 thousand in 2011) andincludes interest income of EUR 612 thousand. The bulk of this amount (EUR 521 thousand)relates to interest due from banks.(Euro thousand) Year 2012 Year 2011Interest income 601 1,464Income from financial instruments valued at fairvalue through profit and loss 485 195Derivative income 224 0Altri proventi su strumenti AFS 113 0Foreign exchange gains 408 204Total 1,831 1,863
    • Annual financial statementsto 31 December 2012 12414b- Financial chargesFinancial charges were EUR 8,590 thousand during the year (EUR 4,620 thousand in 2011),due mainly to interest expenses, losses realised on hedging derivatives, and realised andconverted exchange rate losses.Specifically, financial charges mainly break down as follows:- charges of EUR 889 thousand relating to interest rate swaps- a capital loss realised on the sale of the Soprarno bond fund of EUR 7 thousand- exchange rate losses of EUR 3 thousand- realised exchange rate losses on financial instruments of EUR 29 thousand- negative alignment of the valuation of the earn-out accrued in 2012, of EUR 208thousand- interest expenses for the acquisition of the FARE Group in December 2008, accruedduring 2012, totalling EUR 785 thousand- interest expenses on the Mediobanca credit line of EUR 2,410 thousand and fees ofEUR 256 thousand- interest expenses of EUR 366 thousand for the medium-term credit line taken out bythe subsidiary IDeA FIMIT SGR with Banca Intermobiliare di Investimenti e GestioniS.p.A.- the cost for the year of exercising the put options on the minority equity investments ofsubsidiaries IFIM and DeA RE, of EUR 2,946 thousand- costs relating to the derivative taken out to hedge the interest rate swaps of IDeAFIMIT SGR, totalling EUR 313 thousand(Euro thousand) Year 2012 Year 2011Interest expense 4,166 3,525Charges on derivatives 313 903Exchange losses 32 192Other 4,079 -Total 8,590 4,62015 – Income tax for the period, deferred tax assets and deferred tax liabilitiesThis item, totalling EUR 1,621 thousand for 2012, includes current income tax due for the yearof EUR -12,577 thousand and deferred tax assets of EUR +14,198 thousand.The table below shows the taxes determined on the basis of the rates and the Group’s taxableincome. The latter was calculated in light of applicable legislation.
    • Annual financial statementsto 31 December 2012 125(Euro thousand) Year 2012 Year 2011Current taxes:- Income from tax consolition scheme 4,821 2,839- IRES (8,698) (7,454)- IRAP (3,282) (2,747)- Other tax (5,418) 0Total current taxes (12,577) (7,362)Deferred taxes for the period:- Charges for deferred/prepaid taxes (106) (541)- Income from deferred/prepaid taxes 13,279 2,621- Use of deferred tax liabilities 1,025 1,468- Use of deferred tax assets 0 0Total deferred taxes 14,198 3,548Total income tax 1,621 (3,814)The item in question was impacted positively by the tax redemption (affrancamento fiscale)operation, which enabled the remaining deferred tax liabilities on the customer relationshipintangible assets of IDeA FIMIT SGR at 31 December 2011 (EUR 11,818 thousand) to bereleased against the cost of withholding tax (EUR 5,418 thousand).The table below shows a reconciliation of the tax charges recorded in the consolidated financialstatements and the theoretical tax charge for 2012 calculated using the corporate income tax(IRES) rate applicable in Italy.(Euro thousand) Amount Rate Amount RateProfit before tax (19,830) (37,677)Tax on theoretical income (5,453) 27.5% (10,361) 27.5%Participation in participation exemption scheme 0 0.0% (537) 1.4%Tax on inter-company dividends 251 -0.7% 1,071 -2.8%Amortisation of customer relationships 0 0.0% 779 -2.1%Write-downs of equity investments and loans 2,892 -7.7% 110 -0.3%Effect of companies with different taxation from that of Italy 0 0.0% 0 0.0%Use of tax losses not previously recognised 0 0.0% (580) 1.5%Net profit/(loss) from subsidiaries not subject to taxation 0 0.0% 0 0.0%Net profit/(loss) from associates not subject to taxation 5,021 -13.3% 15,263 -40.5%Non-deductible interest 466 -1.2% 497 -1.3%Income from tax consolidation scheme (2,685) 7.1% (1,259) 3.3%Substitude tax effect on release IDeA FIMIT SGR (6,377) 16.9% 0 0.0%Other net differences 1,356 -3.6% (336) 0.9%Net effect of prepaid/deferred taxes (174) 0.5% (3,547) 9.4%IRAP and other taxes on foreign income 3,082 -8.2% 2,714 -7.2%Income tax reported in the income statement (1,621) 17.3% 3,814 -10.1%2011201216 – Basic earnings (loss) per shareBasic earnings per share are calculated by dividing net profit for the period attributable to theGroups shareholders by the weighted average number of shares outstanding during theperiod.
    • Annual financial statementsto 31 December 2012 126Diluted earnings per share are calculated by dividing net profit for the period attributable tothe Groups shareholders by the weighted average number of shares outstanding during theperiod including any diluting effects of existing stock option plans, in the event the allocatedoptions are "in the money".The table below shows the income and the share information used to calculate basic anddiluted earnings per share.(Euro thousand) Year 2012 Year 2011Consolidated net profit/(loss) - Group share (A) (26,276,947) (43,577,335)Weighted average number of ordinary shares outstanding (B) 277,469,810 288,942,756Basic earnings/(loss) per share (€ per share) (C=A/B) (0.0947) (0.1508)Restatement for dilutive effect - -Consolidated net profit/(loss) restated for dilutive effect (D) (26,276,947) (43,577,335)Weighted average number of shares to be issued for the exercise ofstock options (E) - 174,632Total number of shares outstanding and to be issued (F) 277,469,810 288,942,756Diluted earnings/(loss) per share (€ per share) (G=D/F) (0.0947) (0.1508)Options have a dilutive effect only when the average market price of the share for the periodexceeds the strike price of the options or warrants (i.e. when they are "in the money").
    • Annual financial statementsto 31 December 2012 127Primary and secondary reporting formatsThe information on businesses reflects the Groups internal reporting structure. Thesebusinesses are:- Private Equity Investment, which includes the reporting units involved in investmentactivities and breaks down into equity investments ("direct investments") andinvestments in funds ("indirect investments")- Alternative Asset Management, which includes reporting units involved in assetmanagement activities and related services, with a current focus on themanagement of private equity and real estate fundsSummary Group income statement - performance by business in 2012(Euro thousands)Private EquityInvestmentAlternativeAssetManagementHoldings/Eliminations ConsolidatedAlternative Asset Management fees 0 82,004 0 82,004Income (loss) from equity investments (17,855) (245) (342) (18,442)Other investment income/expense (9,014) 599 531 (7,884)Income from services 555 11,759 207 12,521Other expenses (4,452) (64,160) (12,658) (81,270)Financial income and expenses (327) (42) (6,390) (6,759)PROFIT/(LOSS) BEFORE TAXES (31,093) 29,915 (18,652) (19,830)Income tax 977 (4,930) 5,574 1,621PROFIT/(LOSS) FOR THE PERIOD FROM CONTINUING OPERATIONS (30,116) 24,985 (13,078) (18,209)Profit (Loss) from discontinued operations/held-for-sale assets 0 0 0 0PROFIT/(LOSS) FOR THE PERIOD (30,116) 24,985 (13,078) (18,209)- Group share (30,116) 16,574 (12,735) (26,277)- Non controlling interests 0 8,411 (343) 8,068Summary Group income statement - performance by business in 2011(Euro thousands)Private EquityInvestmentAlternativeAssetManagementHoldings/Eliminations ConsolidatedAlternative Asset Management fees 0 47,762 0 47,762Income (loss) from equity investments (55,503) 0 0 (55,503)Other investment income/expense 13,773 (273) 0 13,500Income from services 40 10,332 309 10,681Other expenses (825) (42,051) (8,484) (51,360)Financial income and expenses (26) (215) (2,516) (2,757)PROFIT/(LOSS) BEFORE TAXES (42,541) 15,555 (10,691) (37,677)Income tax 98 (7,160) 3,248 (3,814)PROFIT/(LOSS) FOR THE PERIOD FROM CONTINUING OPERATIONS (42,443) 8,395 (7,443) (41,491)Profit (Loss) from discontinued operations/held-for-sale assets 0 0 0 0PROFIT/(LOSS) FOR THE PERIOD (42,443) 8,395 (7,443) (41,491)- Group share (42,443) 6,309 (7,443) (43,577)- Non controlling interests 0 2,086 0 2,086Alternative Asset Management costs include the effects of the amortisation of intangibleassets, totalling EUR 14.7 million, recorded when a portion of the purchase price of theinvestments was allocated.
    • Annual financial statementsto 31 December 2012 128Notes to the cash flow statementGiven the type of activity carried out by the Group, cash flow from investmentin companies and funds (one of the Group’s typical activities) is included incash flow from operating activities.In 2012, operating activities, as defined above, absorbed cash and cash equivalents of EUR23,752 thousand (while EUR 23,406 thousand was absorbed in 2011). Please see theconsolidated cash flow statement for information on changes to this item.In 2012, financial activities generated EUR 8,367 thousand (while in 2011 they absorbed EUR24,710 thousand), mainly connected with the partial utilisation (EUR 20,000 thousand) of therevolving credit line taken out with Mediobanca – Banca di Credito Finanziario S.p.A., net ofthe outlay (EUR 8,001 thousand) relating to the plan to purchase own shares.Changes in the basis of consolidation had an effect of EUR -1,174 thousand.Cash and cash equivalents totalled EUR 29,156 thousand at end-2012 (EUR 46,764 thousandat the end of the previous year).Changes to the cash flow statement have been reported using the direct method.
    • Annual financial statementsto 31 December 2012 129Other information CommitmentsAt 31 December 2012, residual commitments for payments to funds totalled EUR 131.0million, compared with EUR 174.4 million at end-2011. The change in commitments is shownin the table below.(Dati in milioni di Euro)Residual Commitments vs. Fondi - 31.12.2011 174,4Variazione Commitments dei fondi VC 1,3Nuovi Commitment 0,0Capital Calls (44,7)Residual Commitments vs. Fondi - 31.12.2012 131,0Posizione Finanziaria Netta al 31 dicembre 2012 (123,6)PFN vs. Residual Commitments - 31.12.2012 (Overcommitment) (254,6)With regard to these overcommitments, the management believes that the funds and creditlines currently available, as well as funds that will be generated by its operating and financingactivities, will enable the DeA Capital Group to meet the financing required for its investmentactivity, manage working capital and repay debts when they become due. Own shares and Parent Company sharesOn 17 April 2012, the shareholders’ meeting approved a new plan to buy and sell own shares.The plan cancelled and replaced the previous plan authorised by the shareholders’ meeting on19 April 2011, which was scheduled to expire on 19 October 2012. The new plan will have thesame objectives as the previous one, including the purchase of own shares to be used forextraordinary operations and share incentive plans, offering shareholders a means ofmonetising their investment, stabilising the share price and regulating trading within the limitsof the legislation in force.The authorisation specifies that purchases may be carried out, for a maximum period of 18months starting from 17 April 2012, in accordance with all procedures allowed by currentregulations, and that DeA Capital S.p.A. may also sell the shares purchased for the purposes oftrading. The unit price for the purchase of the shares is set by the Board of Directors, but inany case must not be more than 20% above or below the share’s reference price on thetrading day prior to each purchase.In contrast, the authorisation to sell own shares already held in the company’s portfolio andany shares bought in the future was granted for an unlimited period, to be implemented usingthe methods deemed most appropriate and at a price to be determined on a case-by-casebasis by the Board of Directors, which must not, however, be more than 20% below theshares reference price on the trading day prior to each individual sale (apart from in certainexceptional cases specified in the plan). Sale transactions may also be carried out for tradingpurposes.Also on 17 April 2012, the company’s Board of Directors voted to initiate the plan to buy andsell own shares authorised by the shareholders’ meeting, and to this end vested the Chairmanof the Board of Directors and the Chief Executive Officer with all the necessary powers, to beexercised jointly or severally and with full powers of delegation.
    • Annual financial statementsto 31 December 2012 130In 2012, as a part of the above two plans, DeA Capital S.p.A. purchased around 6.1 millionshares valued at about EUR 8.0 million (at an average price of EUR 1.31 per share).Taking into account purchases made in previous years for plans in place from time to time, anduses of own shares to service purchases of controlling interests in FARE Holding and IDeA AI,at 31 December 2012 the Company owned 32,006,029 own shares (equal to about 10.4% ofthe share capital).As of the date of this document, based on purchases of 630,975 shares made after the end of2012, the company had a total of 32,637,004 own shares corresponding to about 10.6% of theshare capital.During 2012, the Company did not hold, purchase or sell, on its own account or through atrust company, any shares in Parent Company De Agostini S.p.A. Stock option and performance share plansOn 17 April 2012, the shareholders’ meeting approved the DeA Capital Stock Option Plan for2012–2014. To implement the resolution of the shareholders meeting, the Board of Directorsof DeA Capital S.p.A., at its meeting held on the same day, allocated a total of 1,030,000options to certain employees of the company and its subsidiaries and of the Parent Company,De Agostini S.p.A., who perform important roles for the company.In line with the criteria specified in the regulations governing the DeA Capital Stock OptionPlan for 2012–14, the Board of Directors also set the exercise price for the options allocated atEUR 1.3363, which is the arithmetic mean of the official prices of ordinary DeA Capital shareson the Mercato Telematico Azionario, the Italian screen-based trading system organised andmanaged by Borsa Italiana S.p.A., on the trading days between 17 March 2012 and 16 April2012.The shareholders’ meeting also approved a paid capital increase, in divisible form, withoutoption rights, via the issue of a maximum of 1,350,000 ordinary shares to service the DeACapital Stock Option Plan for 2012-2014.The shareholders’ meeting also approved the Performance Share Plan for 2012–2014. Toimplement the resolution of the shareholders meeting, the Board of Directors allocated a totalof 302,500 units (representing the right to receive ordinary shares of the company, free ofcharge, under the terms and conditions of the plan) to certain employees of the company andits subsidiaries and of the Parent Company, De Agostini S.p.A., who perform important rolesfor the Company.Shares allocated due to the vesting of units will be drawn from own shares already held by theCompany.The terms and conditions of the DeA Capital Stock Option Plan for 2012–2014 and thePerformance Share Plan for 2012-2014 are described in the Information Prospectus preparedin accordance with art. 84-bis of Consob Resolution 11971 of 14 May 1999 (IssuerRegulations), available to the public at the registered office of DeA Capital S.p.A. and on theCompany’s website www.deacapital.it in the section Corporate Governance/Incentive Plans.The tables below summarise the assumptions made in calculating the fair value of the stockoption plans:
    • Annual financial statementsto 31 December 2012 131Stock Option 2004 plan 2005 plan 2010 planmarch 2010plan 2011 plan 2012 planN° options allocated 160,000 180,000 2,235,000 500,000 1,845,000 1,030,000Average market price at allocation date 2.445 2.703 1.2964 1.3606 1.55 1.38Value at allocation date 391,200 486,540 2,897,454 680,300 2,859,750 1,421,400Average exercise price 2.026 2.459 1.318 1.413 1.538 1.3363Expected volatility 31.15% 29.40% 35.49% 33.54% 33.43% 33.84%Option expiry date 8/31/2015 4/30/2016 12/31/2015 12/31/2015 12/31/2016 12/31/2017Risk free yield 4.25125% 3.59508% 1.88445% 2.95194% 3.44% 2.47%The allocation plan for 2010-2015 is to be considered lapsed as the conditions for exercisingoption rights were not met.Performance Share 2012 planN° options allocated 302,500Average market price at allocation date 1.380Value at allocation date 417,450Expected volatility 33.84%Option expiry date 12/31/2014Risk free yield 2.470%The Warrant Plan 2009-2012 lapsed during 2012 as the conditions for exercising the warrantswere not met. Transactions with parent companies, subsidiaries and related partiesIntercompany relationships with the Parent Company and its GroupIn 2012, the Company carried out transactions under normal market conditions with theParent Company, De Agostini S.p.A., and its subsidiaries.In particular, on 22 March 2007 the Company signed a service agreement with the controllingshareholder, De Agostini S.p.A. (which was renewed on 31 March 2011), for the latter toprovide operating services in the administration, finance, control, legal, corporate, tax,investor relations and external communications areas for a total payment of EUR 480,000 peryear.The agreement, which is renewable annually, is priced at market rates, and is intended toallow the Company to maintain a streamlined organisational structure in keeping with itsdevelopment policy, and to obtain adequate operational supportat the same time.Finally, in 2012 the company did not hold, purchase or dispose of shares of related-partycompanies.The table below summarises the amounts of trade-related transactions with related parties.(Euro thousand)FinancialreceivablesTrade receivables Tax receivablesFinancialpayablesTax payables Trade payables Income from services Tax income Personnel costs Service costsB&D Holding di Marco Drago e C. S.a.p.a. 0 0 7,489 0 2,052 0 0 2,769 0 0Santé S.A. 25,676 0 0 0 0 0 0 0 0 0B&D Finance 2 S.A. 0 0 0 25,676 0 0 0 0 0 0De Agostini S.p.A. 0 306 0 0 0 25 131 0 73 670De Agostini Editore S.p.A. 0 0 0 0 0 46 0 0 0 171De Agostini Libri S.p.A. 0 0 0 0 0 1 0 0 0 1Lottomatica S.p.A. 0 0 0 0 0 0 0 0 0 0De Agostini Publishing S.p.A. 0 21 0 0 0 0 0 0 0 0Nova Immobiliare S.p.A. 0 0 0 0 0 0 0 0 0 0De Agostini Invest SA 0 0 0 0 0 25 0 0 0 25Total related parties 25,676 326 7,489 25,676 2,052 97 131 2,769 73 867Total financial statement line item 27,444 12,256 7,489 25,668 7,473 27,420 10,863 1,621 32,846 26,583As % of financial statement line item 93.6% 2.7% 100.0% 100.0% 27.5% 0.4% 1.2% 0.2% 3.3%12/31/2012 Year 2012
    • Annual financial statementsto 31 December 2012 132At 31 December 2012, leasehold improvements incurred in the name of and on behalf of thirdparties were reimbursed on a pro-rated basis and allocated as follows:- EUR 233 thousand to De Agostini S.p.A.- EUR 17 thousand to De Agostini Publishing Italia S.p.A.Remuneration: directors, auditors, general managers and managers with strategicresponsibilitiesIn 2012, remuneration payable to the directors and auditors of DeA Capital S.p.A. for theperformance of their duties totalled EUR 308 thousand and EUR 175 thousand respectively.Remuneration paid to directors and auditors is shown in the table below:Director PositionYearappointedTerm endsCompensationreceived for officewithin theconsolidatingcompany (€thousands)Benefitsin kindBonusesandotherbenefitsOtherprincipalauditor feesforsubsidiariesOthercompensation(€ thousand)Lorenzo Pellicioli Chairman 2012 2012 AGM 30 0 0 0 0Paolo Ceretti CEO 2012 2012 AGM 30 0 0 0 60Daniel Buaron Director 2012 2012 AGM 30 0 0 0 189Lino Benassi Director 2012 2012 AGM 30 0 0 0 195Rosario Bifulco Director 2012 2012 AGM 30 0 0 0 20Claudio Costamagna Director 2012 2012 AGM 30 0 0 0 5Alberto Dessy Director till may 2012 2012 AGM 10 0 0 0 8Roberto Drago Director 2012 2012 AGM 30 0 0 0 3Marco Drago Director 2012 2012 AGM 30 0 0 0 0Severino Salvemini Director may 2012 2012 AGM 19 0 0 0 19Andre Guerra Director till april 2012 2012 AGM 9 0 0 0 1Marco Boroli Director 2012 2012 AGM 30 0 0 0 0Angelo GavianiChairman of theBoard of2012 2012 AGM 75 0 0 14 0Cesare AndreaGrifoniPrincipal Auditor 2012 2012 AGM 50 0 0 26 0Gian Piero Balducci Principal Auditor 2012 2012 AGM 50 0 0 56 15Giulio Gasloli Principal Auditor till may 2012 2012 AGM 0 0 0 3 0In contrast to the data contained in the Remuneration Report prepared pursuant to art. 123-ter of the TUF in accordance with art. 84-quater of the Issuer Regulations 11971/1999, theemoluments and compensation indicated above does not include social security contributionswhere applicable.The “other remuneration” item relates to remuneration received for other positions held ineither DeA Capital S.p.A. or other Group companies.In 2012, annual salaries and bonuses, excluding benefits in kind, paid to managers withstrategic responsibilities in the Parent Company totalled about EUR 742 thousand.
    • Annual financial statementsto 31 December 2012 133 Equity investments held by directors, auditors, general managers andmanagers with strategic responsibilitiesDetails of equity investments held in DeA Capital S.p.A. and its subsidiaries by members of theboards of directors and auditors and by managers with strategic responsibilities are provided inaggregate format in the table below.No equity investments were reported for general managers, since to date this position doesnot exist.All those who held positions on the boards of directors or auditors, or as managers withstrategic responsibilities, for the whole or part of the year in question, are included.Lorenzo Pellicioli DeA Capital S.p.A. 2,566,323 0 0 2,566,323Paolo Ceretti DeA Capital S.p.A. 1,000,000 0 0 1,000,000Rosario Bifulco DeA Capital S.p.A. 1,536,081 0 0 1,536,081Lino Benassi DeA Capital S.p.A. 23,500 0 0 23,500Daniel Buaron * DeA Capital S.p.A. 11,689,552 0 0 11,689,552Daniel Buaron DeA Capital Real Estate S.p.A. 180,000 0 (180,000) 0Key Management DeA Capital S.p.A. 50,000 55,000 0 105,000Total 17,045,456 55,000 (180,000) 16,920,456* through DEB Holding S.r.l.Beneficiary CompanyNumber ofshares held at1.1.2012Number ofsharespurchasedNumber ofshares soldNumber ofshares held at31.12.2012Other than the shares indicated above, no DeA Capital shares are held by other directors orauditors who are currently in office; furthermore, no shares are held in companies controlledby DeA Capital. The directors Lorenzo Pellicioli, Lino Benassi, Marco Drago, Marco Boroli and Roberto Dragoown shares of B&D Holding di Marco Drago e C. S.a.p.a. and New B&D Holding di Marco Dragoe C.S.a.p.A., the direct and indirect parent companies of De Agostini S.p.A. (which is in turnthe Parent Company of the company) and are parties to a shareholder agreement coveringthese shares. Stock options allocated to members of the boards of directors and auditors,general managers and managers with strategic responsibilitiesDetails of stock options held by members of the boards of directors and auditors and bymanagers with strategic responsibilities in DeA Capital S.p.A. and its subsidiaries are providedin aggregate format in the table below.Optionslapsedduring 2012Beneficiary Position Number ofoptionsAverageexercisepriceAverageexpirydateNumber ofoptionsAverageexercisepriceAverageexpirydateNumber ofoptionsNumber ofoptionsAverageexercisepriceAverageexpirydatePaolo Ceretti CEO 750,000 1.318 5 0 0 0 0 750,000 1.318 5Paolo Ceretti CEO 750,000 1.538 5 0 0 0 0 750,000 1.538 5Paolo Ceretti CEO 0 0 0 630,000 1.3363 5 0 630,000 1.3363 5Key Management 985,000 1.318 5 0 0 0 0 985,000 1.318 5Key Management 500,000 1.413 5 0 0 0 0 500,000 1.413 5Key Management 485,000 1.538 5 0 0 0 0 485,000 1.538 5Key Management 0 0 0 400,000 1.3363 5 0 400,000 1.3363 5Options outstanding at Jan. 1, 2012 Options granted during 2012 Options outstanding at December31, 2012Lastly, note that the Chief Executive Officer, Paolo Ceretti, and managers with strategicresponsibilities have been assigned 80,000 and 52,500 performance shares respectively, asshown in the table below.
    • Annual financial statementsto 31 December 2012 134Optionslapsedduring 2012Beneficiary Position Number ofoptionsAverageexercisepriceAverageexpirydateNumber ofoptionsAverageexercisepriceAverageexpirydateNumber ofoptionsNumber ofoptionsAverageexercisepriceAverageexpirydatePaolo Ceretti CEO 0 0 0 80,000 1.38 2 0 80,000 1.38 2Key Management 0 0 0 52,500 1.38 2 0 52,500 1.38 2Options outstanding at Jan. 1, 2012 Options granted during 2012 Options outstanding at December31, 2012 National tax consolidation scheme: De Agostini GroupDeA Capital S.p.A. has adopted the national tax consolidation scheme of the B&D Group (theGroup headed by B&D Holding di Marco Drago e C. S.a.p.a.). This option was exercised jointlyby each company and the Parent Company B&D Holding di Marco Drago e C. S.a.p.a. bysigning the "Regulation for participation in the national tax consolidation scheme for companiesin the De Agostini Group" and providing notification of this option to the tax authoritiespursuant to the procedures and terms and conditions set out by law. The option is irrevocablefor the three-year period of 2011-2013 unless the requirements for applying the scheme arenot met.Information on the fair value hierarchyIFRS 7 stipulates that financial instruments reported at fair value should be classified based ona hierarchy that reflects the importance and quality of the inputs used in calculating fair value.Three levels have been determined:• Level 1: the fair value of instruments classified at this level is calculated based on the(unadjusted) quoted prices recorded on an active market for the assets or liabilities beingvalued• Level 2: the fair value of instruments classified at this level is calculated usingvaluation techniques that use directly or indirectly observable market parameters other thanthe quoted price of the financial instruments• Level 3: the fair value of instruments classified at this level is calculated using valuationtechniques that do not use observable market parameters as benchmarks.The table below shows assets measured at fair value by hierarchical level at 31 December2012.(Euro thousand) Level 1 Level 2 Level 3 TotalOther shareholdings available-for-sale 223.6 0.3 223.9Funds avalilable-for-sale 7.1 159.4 166.5Other non current financial assets available-for-sale 0.3 0.3Current financial assets available-for-sale 5.7 5.7Total assets 12.8 383.0 0.6 396.4For level 3, a reconciliation of the opening and closing balances is shown in the table below.Income and expenses posted to the income statement or shareholders’ equity, and purchasesand sales made during 2012, are identified separately.
    • Annual financial statementsto 31 December 2012 135(Euro thousand)Balance at1.1.2012Increase DecreaseImpairmente relatedtranslactioneffectFair ValueAdjustmentFair Valuethrough Profitand LossTranslationadjustmentsBalance at31.12.2012Stepstone Acquisition S.à r.l. 0 0 0 0 0 0 0 0Elixir Pharmaceuticals Inc. 0 0 0 0 0 0 0 0Kovio Inc. 0 0 0 0 0 0 0 0Other companies 290 0 (3) 0 0 0 0 287Other shareholdings available-for-sale 290 0 (3) 0 0 0 0 287Other non current financial assets available-for-sale 936 0 (609) 0 0 0 0 327
    • Annual financial statementsto 31 December 2012 136Main risks and uncertainties to which the Parent Company and consolidated Groupcompanies are exposedAs described in the Report on Operations, the DeA Capital Group operates through, and isstructured as, two business areas, Private Equity Investment and Alternative AssetManagement.The risks set out below arise from a consideration of the characteristics of the market and theoperations of Parent Company DeA Capital S.p.A. and the companies included in the Group’sconsolidated financial statements, as well as from the main results of risk assessment workand the periodic monitoring conducted partly through the regulatory policies adopted by theGroup. There could, however, be risks that are currently unidentified or not consideredsignificant that could have an impact on the Groups operations.The Group has adopted a modern corporate governance system that provides effectivemanagement of the complexities of its operations, and enables both individual companies andthe Group to achieve their strategic objectives. Furthermore, the assessments conducted bythe organisational units and the directors confirm both the non-critical nature of these risksand uncertainties and the financial solidity of the DeA Capital Group.With reference to the specific risks relating to the main private equity investments, i.e.Générale de Santé and Migros, please see the respective annual reports, and more specificallyGénérale de Santé’s Registration Document and Migros’ Annual Report (available on theirwebsites).In particular, the latest Registration Document (sections 4.1 - RISQUES LIES AUX ACTIVITESDU GROUPE and 4.2 - GESTION DES RISQUES) available as of the date of this report, indicatesthe following as the main risk factors for Générale de Santé:  Risks related to company debt (Risques liés à l’endettement de Générale de Santé) Liquidity risks (Risques de liquidité) Interest rate risks (Risques de taux d’intérêt) Risks relating to obtaining financing (Risques liés à l’obtention de financements) Risks relating to commitments contained in leases signed by the Group (Risques liés auxengagements contenus dans les baux commerciaux souscrits par le Groupe) Risks relating to the clinic restructuring and construction programme (Risques liés auxprogrammes de restructuration ou de construction majeures de cliniques) Risks relating to the external growth strategy (Risques liés à la stratégie de croissanceexterne) Risks relating to changes in prices (Risques liés à l’évolution de la tarification) Risks relating to competition (Risques liés à la compétitivité) Risks relating to the recruitment and retention of staff and practitioners (Risques liés aurecrutement et à la fidélisation du personnel et des praticiens) Risks relating to applicable legislation (Risques liés à la réglementation applicable) Risks of a deterioration in the reputation of Générale de Santé in the event of legalproceedings being brought against a group facility or practitioner (Risques liés à ladégradation de la réputation de Générale de Santé en cas de mise en jeu de laresponsabilité d’un établissement ou d’un praticien du Groupe) Risks relating to environmental protection legislation (Risques liés à la réglementationrelative à la protection de l’environnement) Risks relating to the adequacy, costs and availability of insurance cover (Risques liés àl’adéquation, aux coûts et à la disponibilité de couverture d’assurance) Exceptional events and disputes (Faits exceptionnels et litiges) Risks relating to IT suppliers (Risques liés au fournisseur en matière informatique).
    • Annual financial statementsto 31 December 2012 137A. Contextual risksA.1. Risks relating to general economic conditionsThe operating performance and financial position of the DeA Capital Group are affected by thevarious factors that make up the macro-economic environment, including increases ordecreases in GDP, investor and consumer confidence, interest rates, inflation, the costs of rawmaterials and unemployment.The ability to meet medium- to long-term objectives could be affected by general economicperformance, which could slow the development of sectors the Group has invested in, and atthe same time, the business of the investee companies.A.2. Socio-political eventsIn line with its own strategic growth guidelines, one of the DeA Capital Group’s activities isprivate equity investment in companies and funds in different jurisdictions and countriesaround the world, which, in turn, invest in a number of countries and geographical areas. TheDeA Capital Group may have invested in foreign countries whose social, political and economicconditions put the achievement of its investment objectives at risk.A.3. Regulatory changesMany Group companies conduct their operations in regulated sectors and markets. Anychanges to or developments in the legislative or regulatory framework that affect the costs andrevenues structure of investee companies or the tax regime applied, could have negativeeffects on the Group’s financial results, and necessitate changes in the Group’s strategy. Tocombat this risk, the Group has established procedures to constantly monitor sector regulationand any changes thereto, in order to take advantage of business opportunities and respond toany changes in the prevailing legislation and regulations in good time.A.4. Performance of the financial marketsThe company’s ability to meet its strategic and management objectives could depend on theperformance of financial markets. A negative trend on financial markets could have an effecton the private equity sector in general, making investment and divestment transactions morecomplex, and on the Group’s capacity to increase the NAV of investments in particular. Thevalue of equity investments held directly or indirectly through funds in which the company hasinvested could be affected by factors such as comparable transactions concluded on themarket, sector multiples and market volatility. These factors that cannot be directly controlledby the Group are constantly monitored in order to identify appropriate response strategies thatinvolve both the provision of guidance for the management of Group companies, and theinvestment and value enhancement strategy for the assets held.A.5. Exchange ratesHolding investments in currencies other than the euro exposes the Group to changes inexchange rates between currencies. The investment in Kenan Investments is managed as aspecial case, since although it was made in euro, the underlying asset is expressed in Turkishlira. Taking into account the time horizon of the investment, it is believed that the expectedreturn on the investment can absorb any devaluation of the underlying currency, if in line withthe outlook for the currency.A.6. Interest ratesOngoing financing operations that are subject to variable interest rates could expose the Groupto an increase in related financial charges, in the event that the reference interest rates risesignificantly. DeA Capital S.p.A. has established appropriate strategies to hedge against therisk of fluctuations in interest rates. Given the partial hedge of the underlying, the companyclassifies these securities as speculative instruments, even though they are put in place forhedging purposes.
    • Annual financial statementsto 31 December 2012 138B. Strategic risksB.1. Concentration of the Private Equity Investment portfolioThe private equity investment strategy adopted by the Group includes:- direct investments- indirect investments (in funds)Within this strategy, the Group’s overall profitability could be adversely affected by anunfavourable trend in one or a few investments, if there were insufficient risk diversification,resulting from the excessive concentration of investment in a small number of assets, sectors,countries, currencies or of indirect investments in funds with limited investment targets/typesof investment.To combat these risk scenarios, the Group pursues an asset allocation strategy intended tocreate a balanced portfolio with a moderate risk profile, investing in attractive sectors and incompanies with an appealing current and future risk/return ratio. Furthermore, thecombination of direct and indirect investments, which, by their nature, guarantee a high levelof diversification, helps reduce the level of asset concentration.B.2. Concentration of Alternative Asset Management activitiesIn Alternative Asset Management, in which the Group is active through the companies IDeAAlternative Investments (from 1 January 2012 when it was merged into DeA Capital S.p.A.),First Atlantic Real Estate Holding and IFIM, events could arise as a result of excessiveconcentration that would hinder the achievement of the level of expected returns. Theseevents could be due to: Private equity fundso concentration of the management activities of asset management companies across alimited number of funds, in the event that one or more funds decides to cancel its assetmanagement mandateo concentration of the financial resources of the funds managed in a limited number ofsectors and/or geographical areas, in the event of currency, systemic or sector criseso for closed funds, concentration of the commitment across just a few subscribers, in theevent of a counterparty experiencing financial difficulties Real estate fundso concentration of real estate present in the portfolio of managed funds in a few citiesand/or in limited types of property (management/commercial), in the event of a crisison the property market concernedo concentration in respect of certain important tenants, in the event that these withdrawfrom the rental contracts, which could lead to a vacancy rate that has a negative impacton the funds financial results and the valuation of the property managedo concentration of the maturities of numerous real estate funds within a narrowtimeframe, with related high availability of property on the market, leading to adecrease in property values and an increase in selling timesFor each of the risk scenarios outlined above, the Group has defined and implementedappropriate strategies that include strategic, operational and management aspects, as well asa system monitoring the level of diversification of Alternative Asset Management activities.B.3. Key resources (governance/organisation)The success of the DeA Capital Group depends to a large extent on its executive directors andcertain key management figures, their ability to efficiently manage the business and theordinary operations of the Group, as well as knowledge of the market and the professionalrelationships established. The departure of one or more of these key resources, without a
    • Annual financial statementsto 31 December 2012 139suitable replacement being found, as well as an inability to attract and retain new and qualifiedresources, could impact growth targets and have a negative effect on the Group’s operatingperformance and financial results. To mitigate this risk, the Group has put in place HRmanagement policies that correspond closely to the needs of the business, and incentivepolicies that are periodically reviewed, in light of, among other things, the general economicclimate and the results achieved by the Group.C. Operating risksC.1. Investment operationsInvestment operations conducted by the Group are subject to the risks typical of private equityactivities, such as the accurate valuation of the target company and the nature of thetransactions carried out. The Group has implemented a structured process of due diligence ontarget companies, involving the different levels of group management concerned and thecareful definition of shareholders’ agreements in order to conclude agreements in line with theinvestment strategy and the risk profile defined by the Group.C.2. Compliance with covenantsSome investment operations were concluded using financial leverage to invest in the targetcompanies. For financing contracts signed by investee companies, specific covenants generallybacked by collateral are in place; failure to comply with these could necessitate recapitalisationoperations for investee companies and lead to an increase in financial charges relating to debtrefinancing. Failure to comply with covenants attached to loans could have negative effects onboth the financial situation and operations of investee companies, and on the value of theinvestment.The Group constantly monitors the significant reference parameters for the financialobligations taken on by investee companies, in order to identify any unexpected variance ingood time.C.3. Divestment operationsIn its Private Equity Investment business, the Group generally invests over a medium-/long-term time horizon. Over the investment management period, external situations could arisethat might have a significant impact on the operating results of the investee companies, andconsequently on the value of the investment itself. Furthermore, in the case of co-investment,guiding the management of an investee company could prove problematic or unfeasible, and itmay ultimately prove impossible to dispose of the stakes held owing to lock-up clauses. Thedivestment strategy could therefore be negatively affected by various factors, some of whichcannot be foreseen at the time the investments are made. There is therefore no guaranteethat expected earnings will be realised given the risks resulting from the investments made.To combat these risk situations, the Group has defined a process to monitor the performanceof its investee companies, facilitated by its representation on the management bodies ofsignificant investee companies, with a view to identifying any critical situations in good time.C.4. Funding riskThe income flows expected from the Alternative Asset Management business depend on thecapacity of the Group’s asset management companies to stabilise/grow their assets undermanagement. In this environment, fund raising activity could be harmed by both externalfactors, such as the continuation of the global economic crisis or the trend in interest rates,and internal factors, such as bad timing in respect of fund raising activities by the assetmanagement companies or the departure of key managers from the companies. The Group hasestablished appropriate risk management strategies in relation to fund raising, with a view toboth involving new investors and retaining current investors.
    • Annual financial statementsto 31 December 2012 140Significant events after the year-end Private equity funds – paid calls/reimbursementsAfter the end of 2012, the DeA Capital Group increased its investment in the IDeA I FoF, ICFII, IDeA OF I and IDeA EESS funds following total payments of EUR 12.5 million (EUR 0.3million, EUR 5.7 million, EUR 4.5 million and EUR 2.0 million respectively).At the same time, the DeA Capital Group received capital reimbursements totalling EUR 6.7million from the IDeA I FoF and ICF II funds (EUR 5.6 million and EUR 1.1 million respectively)to be used in full to reduce the carrying value of the units. Purchase of IDeA SIM S.p.A sharesOn 25 February 2013, in compliance with the provisions of various agreements, DeA CapitalS.p.A. acquired the shares held by the former CEO of IDeA SIM, equal to 30% of its capital,bringing its investment to 95% of the company’s capital. The price paid was EUR 79 thousand. Acquisition of a shareholding in IDeA FIMIT SGROn 27 February 2013, DeA Capital S.p.A. signed an agreement with Inarcassa to acquireshares from the latter representing 2.98% of the capital of IDeA FIMIT SGR, for an estimatedprice of around EUR 5.9 million; financial equity instruments issued by IDeA FIMIT SGR andheld by Inarcassa are excluded from the sale.The closing is expected to take place at the beginning of April once the pre-emptive rightshave expired.
    • Annual financial statementsto 31 December 2012 141Further information Publication of the 2012 financial statementsIn accordance with the provisions of IAS 10, the Parent Company authorised the publication ofthese financial statements within the terms authorised by existing legislation. Atypical or unusual transactionsIn 2012, there were no atypical or unusual transactions as defined by Consob Communication6064293 of 28 July 2006. Significant non-recurring events and transactionsIn 2012, the DeA Group did not undertake any significant non-recurring transactions asdefined by the above-mentioned Consob Communication.
    • Annual financial statementsto 31 December 2012 142Statement of responsibilities for the consolidated financialstatements pursuant to art. 154-bis of Legislative Decree58/98The undersigned, Paolo Ceretti, as Chief Executive Officer, and Manolo Santilli, as the managerresponsible for preparing the accounting statements of DeA Capital S.p.A., hereby certify,pursuant to art. 154-bis, paragraphs 3 and 4 of Legislative Decree 58 of 24 February 1998,that based on the characteristics of the company, the administrative and accountingprocedures for preparing the consolidated financial statements during 2012 were suitable andeffectively applied.The assessment as to the suitability of the administrative and accounting procedures forpreparing the consolidated financial statements for the year to 31 December 2012 was basedon a process established by DeA Capital S.p.A. in keeping with the Internal Control -Integrated Framework model issued by the Committee of Sponsoring Organisations of theTreadway Commission, which is the generally accepted reference framework at theinternational level.Note in this regard, that as described in the notes to the annual financial statements, asignificant portion of the assets are investments stated at fair value. Fair values weredetermined by directors based on their best estimate and judgment using the knowledge andevidence available at the time the financial statements were prepared. However, due toobjective difficulties in making assessments and the absence of a liquid market, the valuesassigned to such assets could differ, and in some cases significantly, from those that could beobtained when the assets are sold.The undersigned further certify that the consolidated financial statements to 31 December2012:- correspond to the companies accounting records- have been prepared in compliance with the International Financial Reporting Standardsadopted by the European Union, and the measures issued to implement art. 9 of LegislativeDecree 38/2005- to the best of their knowledge, provide a true and fair view of the operating performance andfinancial position of the issuer and the group of companies included in the basis ofconsolidationThe report on operations contains a reliable analysis of operating performance and results andof the position of the issuer and all companies included in the basis of consolidation, togetherwith a description of the main risks and uncertainties to which they are exposed.8 March 2013Paolo CerettiChief Executive OfficerManolo SantilliManager responsible for preparing the company’s accounts
    • Annual financial statementsto 31 December 2012 143Information pursuant to art. 149-duodecies of the ConsobIssuer RegulationsThe table below was prepared in accordance with art. 149-duodecies of the Consob IssuerRegulations and reports the fees for 2012 for auditing and other services provided by theindependent auditors and entities belonging to the independent auditors’ network. The feesreported below do not include VAT and out-of-pocket expenses.(Euro thousand)Company providing theservice BeneficiaryCompensation paid forFY 2012Audit KPMG S.p.A. DeA Capital S.p.A. 93KPMG S.p.A. IFIM 21KPMG Audit S.à.r.l. DeA Capital Investments SA 36KPMG S.p.A. DeA Capital Real Estate 40KPMG S.p.A. Innovation Real Estate 28KPMG S.p.A. IRE Advisory 11KPMG S.p.A. IDeA Capital Funds SGR 22KPMG S.p.A. IDeA SIM 10Certification services (1) KPMG S.p.A. DeA Capital S.p.A. 0KPMG S.p.A. DeA Capital Real Estate 2KPMG S.p.A. Innovation Real Estate 35KPMG S.p.A. IRE Advisory 1KPMG S.p.A. IDeA Capital Funds SGR 2KPMG S.p.A. IDeA SIM 1Other services KPMG S.p.A. DeA Capital S.p.A. 7KPMG S.p.A. DeA Capital Real Estate 0KPMG Advisory S.p.A. IDeA FIMIT SGR (2)473Total 7891) Presentation of tax return2) Company non subject to audit by KMPG S.p.A.
    • Annual financial statementsto 31 December 2012 144Annual financial statements for the year to 31 December 2012
    • Annual financial statementsto 31 December 2012 145Annual financial statements for DeA Capital S.p.A.for the period 1 January to 31 December 2012 Balance Sheet Income Statement Statement of Comprehensive Income Cash Flow Statement Statement of Changes In Shareholders’ Equity Notes to the accounts
    • Annual financial statementsto 31 December 2012 146Statement of Financial Position - DeA Capital S.p.A.(Euro thousand) Notes 31.12.2012 31.12.2011ASSETSNon-current assetsIntangible and tangible assetsIntangible assets 1a 14,981 7,656Tangible assets 1b 491,494 86,848Total intangible and tangible assets 506,475 94,504InvestmentsSubsidiaries and joint ventures 2a 831,253,419 717,130,237Associates 2b 2,597,643 1,000,000Available-for-sale investments 2c 286,618 1Available-for-sale funds 2d 13,364,643 12,234,007Loans to subsidiaries 2e 0 37,307,101Total Investments 847,502,323 767,671,346Other non-current assetsDeferred tax assets 3a 0 0Other non-current assets 3b 0 0Total other non-current assets 0 0Total non-current assets 848,008,798 767,765,850Current assetsTrade receivables 4a 2,149,347 217,392Available-for-sale financial assets 4b 0 5,296,954Financial receivables 4c 31,269,662 2,879,872Financial receivables (pass throught arrangement) 0 04d 7,488,867 5,928,777Other tax receivables 4e 1,269,537 1,810,310Other receivables 4f 67,622 97,133Cash and cash equivalents 4g 2,153,095 29,056,753Total current assets 44,398,130 45,287,191Total current assets 44,398,130 45,287,191Held-for-sale assets 0 0TOTAL ASSETS 892,406,928 813,053,041SHAREHOLDERS EQUITY AND LIABILITIESSHAREHOLDERS EQUITYShare capital 5a 274,606,071 280,696,984Share premium reserve 5b 386,452,243 388,361,873Legal reserve 5c 61,322,420 61,322,420Fair Value reserve 5d 26,088,064 -1,654,899Other reserves 5e 500,322 1,409,199Retained earnings (losses) 5f -10,854,465 15,989,158Profit/(loss) for the year 5g 2,269,268 -32,085,746Shareholders equity 740,383,923 714,038,989LIABILITIESNon-current liabilitiesDeferred tax liabilities 3a 0 0Provisions for employee termination benefits 6a 316,221 192,487Long term financial loans 6b 102,986,561 93,008,005Payables to staff and social security organisations 6c 1,189,425 -Total non-current liabilities 104,492,207 93,200,492Current liabilitiesTrade payables 7a 2,525,591 768,680Payables to staff and social security organisations 7b 1,200,959 956,225Current tax payables 0 5,826Other tax payables 7c 194,516 158,820Other payables 24,528 13,407Short term financial loans 7d 43,585,204 3,910,602Total current liabilities 47,530,798 5,813,560Held-for-sale liabilities 0 0TOTAL SHAREHOLDERS EQUITY AND LIABILITIES 892,406,928 813,053,041Tax receivables from Parent companies
    • Annual financial statementsto 31 December 2012 147Income Statement-DeA Capital S.p.A.(Euro) Notes Year 2012 Year 2011Gains from subsidiaries 8a 0 0Dividends from subsidiaries and joint ventures 8a 8,860,000 67,562,703Losses from available-for-sale funds 8a 0 (142,397)Gains from available-for-sale funds 8a 1,431,626 2,106,325Subsidiaries and joint ventures impairment 8a (498,526) (93,301,094)Impairment of Investments in other companies-available-for-sale 8a 0 (42,841)Impairment di Fondi-disponibili alla vendita 8a (873,611) (846,351)Income from services 8b 459,075 295,014Other income 8c 154,812 177,155Personnel costs 9a (5,972,054) (5,083,899)Service costs 9b (3,138,118) (3,090,294)Depreciation, amortization and impairment 9c (86,325) (84,693)Other expenses 9d (507,712) (387,664)Financial income 10a 2,043,647 1,844,889Financial expenses 10b (4,653,117) (4,341,057)PROFIT/(LOSS) BEFORE TAX (2,780,303) (35,334,204)Income tax 11a 4,879,067 2,839,218Deferred tax 11b 170,504 409,240PROFIT/(LOSS) FOR THE YEAR FROM CONTINUING OPERATIONS 2,269,268 15,989,158Profit (Loss) from discontinued operations/held-for-sale assets 0 0PROFIT/(LOSS) FOR THE YEAR 2,269,268 15,989,158Earnings per share, basic (€) 12 0.01 (0.11)Earnings per share, diluted (€) 12 0.01 (0.11)Pursuant to Consob Resolution 15519 of 27 July 2006, the impact of dealings with related parties on the balancesheet, income statement and cash flow statement is explained in the notes to the financial statements.
    • Annual financial statementsto 31 December 2012 148Statement of Comprehensive Income (Statement of Performance – IAS 1)Comprehensive income or the Statement of Performance (IAS 1), in which performance for theyear is reported including results posted directly to shareholders equity, reflects a net positivebalance of approximately EUR 33,241 thousand compared with a net negative balance ofaround EUR 25,146 thousand in 2011.This statement provides an overview of the performance of the company and shows the actualresult of the company’s activities, as explained in the Report on Operations and the notes tothe financial statements.Statement of comprehensive income(Euro) Notes 31.12.2012 31.12.2011Profit/(loss) for the year (A) 2,269,268 (32,085,746)Gains/(Losses) on fair value of available-for-sale financial 5d 30,971,560 6,939,417Other comprehensive income, net of tax (B) 5d 30,971,560 6,939,417Total comprehensive income for the year (A)+(B) 33,240,828 (25,146,329)
    • Annual financial statementsto 31 December 2012 149Cash Flow Statement-DeA Capital S.p.A.(Euro thousand) Year 2012 Year 2011CASH FLOW from operating activitiesInvestments in funds and shareholdings (24,151) (27,216)Proceeds from the sale of investments 0 1,257Capital reimburments by Funds 2,558 1,067Interest received 253 861Interest received-intercompany 1,096 138Interest paid (2,583) (2,919)Interest paid-intercompany 0 0Cash distribution from investments 0 1,480Realized gains (losses) on exchange rate derivatives (889) (792)Exhange gains (losses) (1) (11)Taxes paid (59) (237)Taxes refunded 4,613 1,162Dividends received 8,860 63,500Revenues for services 168 0Revenues for services-intercompany 313 488Operating expenses -intercompany (226) 0Operating expenses-Cash movements 0 0Operating expenses (7,629) (7,727)Net cash flow from operating activities (17,677) 31,051CASH FLOW from investment activitiesAcquisition of property, plant and equipment (626) (3)Sale of property, plant and equipment 0 1Purchase of licenses (9) (9)Net cash flow from investing activities (635) (11)CASH FLOW from investing activitiesAcquisition of financial assets 0 0Sale of financial assets 6,454 10,000Share capital issued 0 0Share capital issued:stock option plan 0 0Own shares acquired (8,001) (26,411)Own shares sold 0 0Warrant 0 0Bank Loan reimbursement 0 0Bank loan 20,000 0Short term loan intercompany (27,093) (2,500)Long term loan intercompany 0 (37,307)Net cash flow from financing activities (8,640) (56,218)CHANGE IN CASH AND CASH EQUIVALENTS (26,952) (25,178)CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 29,058 54,236Cash and cash equivalents relating subsidiaries merged in the year 48 0Cash and cash equivalents at beginning of period 29,106 54,236EFFECT OF CHANGE IN BASIS OF CONSOLIDATION: CASH AND CASH EQUIVALENTS 0 02,154 29,058Held-for-sale assets and minority interests 0 0CASH AND CASH EQUIVALENTS AT END OF PERIOD 2,154 29,058CASH AND CASH EQUIVALENTS AT END OF PERIOD
    • Annual financial statementsto 31 December 2012 150Summary statement of Changes in Net Shareholders’ Equity for the Parent Company DeA Capital SpAEuro thousandSharecapital (parvalue)SharepremiumLegalreserveFair valuereserveStockoptionsreserveReserve forsale ofrightsMergerReserve-IDeA AIOtherreservesProfit (loss)broughtforwardGroup netprofit (loss)DiscontinuedoperationsresultTotalTotal at 31.12.2010 294,013 395,614 61,322 (8,594) 313 413 0 0 0 15,989 0 759,070Net result allocation 0 0 0 0 0 0 0 15,989 (15,989) 0 0Stock option 0 0 0 0 683 0 0 0 0 0 0 683Buy-back of treasury shares (18,123) (8,288) 0 0 0 0 0 0 0 0 0 (26,411)Shares for IDeA AI acquisition 4,807 1,036 0 0 0 0 0 0 0 0 0 5,843Total comprehensive income for the year 2011 0 0 0 6,939 0 0 0 0 0 (32,086) 0 (25,147)Total at 31.12.2011 280,697 388,362 61,322 (1,655) 996 413 0 0 15,989 (32,086) 0 714,038Net result allocation 0 0 0 0 0 0 0 (32,086) 32,086 0 0Stock option 0 0 0 0 (77) 0 0 0 0 0 0 (77)Buy-back of treasury shares (6,091) (1,910) 0 0 0 0 0 0 0 0 0 (8,001)Merger IDeA AI 0 0 0 (3,229) 0 0 (831) 0 5,243 0 0 1,183Total comprehensive income for the year 2012 0 0 0 30,972 0 0 0 0 0 2,269 0 33,241Total at 31.12.2012 274,606 386,452 61,322 26,088 919 413 (831) 0 (10,854) 2,269 0 740,384
    • Annual financial statementsto 31 December 2012 151Notes to the accountsAnnual Financial Statements for the year to 31 December 2012
    • Annual financial statementsto 31 December 2012 152Structure and content of the financial statementsDeA Capital S.p.A. (the company or the Parent Company or DeA Capital) is a joint stockcompany with its registered office in Via Brera 21, Milan.The financial statements were prepared in accordance with the general principles of IAS 1,specifically:- accruals principle: the effect of events and transactions is recorded when they occur, and notwhen payment is made or received- going concern principle: the financial statements are prepared under the assumption thatbusiness operations will continue in the near future. In this regard, the directors haveevaluated this assumption with particular scrutiny in light of the current economic and financialcrisis. As indicated in the section "Uncertainties and the management of financial risks" in theReport on Operations, the directors believe that the risks and uncertainties described thereinare not critical in nature, confirming the financial solidity of the Parent Company, DeA CapitalS.p.A.- materiality: when reporting operating events in accounting entries, preference is given to theprinciple of economic substance over form- comparative information: the financial statements must show comparative information forthe previous periodThe DeA Capital financial statements consist of the balance sheet, the income statement, thestatement of comprehensive income (Statement of Performance - IAS 1), the cash flowstatement, the statement of changes in shareholders’ equity and the notes to the financialstatements.The balance sheet provides a breakdown of current and non-current assets and liabilities withseparate reporting for those resulting from discontinued or held-for-sale operations.In the income statement, the company has adopted the nature of expense method, wherebycosts and revenues are classified according to type.The cash flow statement is prepared using the "direct method".Unless otherwise indicated, all tables and figures included in these notes to the financialstatements are reported in EUR thousand.As the Parent Company, DeA Capital S.p.A. has also prepared the consolidated financialstatements for the DeA Capital Group to 31 December 2012.In addition to the figures at 31 December 2012, the financial statement formats used alsoprovide comparable figures for 31 December 2011.The publication of the draft financial statements for the year to 31 December 2012 wasauthorised by resolution of the Board of Directors dated 8 March 2013.Statement of compliance with accounting standardsThe financial statements for the year to 31 December 2012 (2012 financial statements) havebeen prepared in accordance with the International Accounting Standards adopted by theEuropean Union and approved by the date the financial statements were prepared(International Accounting Standards, or individually IAS/IFRS, or collectively IFRS(International Financial Reporting Standards)). "IFRS" also means all interpretations of theInternational Financial Reporting Interpretations Committee (IFRIC), including those previouslyissued by the Standing Interpretations Committee (SIC), and approved by the European Union.
    • Annual financial statementsto 31 December 2012 153The financial statements were prepared with a focus on clarity, and provide a true and fairview of the balance sheet, financial situation, income statement and cash flows for the period.Accounting standards, amendments and interpretations applied as of 1 January 2012The IASB-approved international accounting standards and interpretations authorised foradoption in Europe that were applied for the first time from 1 January 2012 are detailed below.None had any significant impact on the consolidated financial statements for the year to 31December 2012. The Group did not apply any IFRSs in advance.Amendments to IFRS 7 (Financial instruments: disclosures)On 7 October 2010, the IASB published the amendment to IFRS 7 (Disclosures – transfers offinancial assets), which requires further disclosure on transfers of financial assets. The changesto IFRS 7 aim to promote greater transparency in relation to the risks associated withtransactions where, when a financial asset is transferred, the transferring company continuesto be exposed, within certain limits, to risks associated with the derecognised financial asset(known as "continuing involvement"). Additional disclosure is also required on significanttransfers of financial assets at particular times (e.g. at the end of an accounting period).The adoption of this amendment did not have any material impact on the valuation of items inthe financial statements or the relative disclosure.Future accounting standards, amendments and interpretationsAccounting standards, amendments and interpretations that are not yet applicable and havenot been adopted in advance by the Group, but were approved for adoption in the EuropeanUnion as of 28 February 2013.The International Accounting Standards, together with the interpretations and changes toexisting IASB-approved accounting standards and interpretations that were ratified foradoption in the European Union on 28 February 2013, are as follows:Amendments to IAS 12 (Income taxes)On 20 December 2010, the IASB published a number of amendments to IAS 12 (Incometaxes), which clarify how to calculate deferred taxes on real estate investment measured atfair value. To provide a simplified approach, the amendments introduce the presumption, whencalculating deferred taxes, that the carrying amount of the underlying asset will be recoveredentirely by sale, unless there is clear evidence that it can be recovered through use.As a result of these changes, the document SIC 21 (Income Taxes - recovery of revalued, non-depreciable assets) was withdrawn at the same time. The entire contents of this document arenow covered in IAS 12.The amendments to IAS 12 will be applied from 1 January 2013.Amendments to IFRS 1 (First-time adoption of International Financial Reporting Standards:severe hyperinflation and removal of fixed assets for first-time adopters)On 20 December 2010, the IASB published two amendments to IFRS 1 (First-time adoption ofInternational Financial Reporting Standards). The first amendment introduced the option forentities that are transitioning to IFRS to use the same simplified rules as those permitted toentities that made the transition to international accounting standards in 2005. The secondamendment grants an exemption from the retrospective application of IFRS at first-timeadoption to entities that are presenting financial statements in accordance with IFRS for thefirst time, having been unable to present them due to hyperinflation, allowing such entities touse fair value as a replacement for cost for all assets and liabilities presented.
    • Annual financial statementsto 31 December 2012 154The amendments to IFRS 1 will be applied from 1 January 2013.IFRS 10 (Consolidated financial statements)On 12 May 2011, the IASB published the accounting standard IFRS 10 (Consolidated financialstatements), which is intended to replace IAS 27 (Consolidated and separate financialstatements) and SIC 12 (Consolidation: special purpose entities). The new standard sets out asingle model of consolidation that identifies control as the basis for the consolidation of alltypes of entities.The new standard defines the concept of control on the basis of the concurrence of threeessential elements: power over the investee company exposure to or the right to variable returns from its involvement with the investeecompany the ability to use that power over the investee to affect the amount of the investorsreturnsThe standard will come into force from 1 January 2014, but can be applied in advance.IFRS 11 (Joint arrangements)On 12 May 2011, the IASB published the accounting standard IFRS 11 (Joint arrangements),which is intended to replace IAS 31 (Interests in joint ventures) and SIC 13 (Jointly controlledentities: non-monetary contributions by venturers). The new standard governs the principlesfor reporting all joint arrangements. These are divided into two categories, according to theeconomic substance of the arrangements between the parties: joint operations, whereby the parties to the arrangement acquire rights to certainassets and assume obligations for certain liabilities joint ventures, whereby the parties have rights to the net value of a set of jointlycontrolled assets and liabilities.In the first case, the investor recognises the assets and liabilities acquired (along with theassociated income and expense) according to the IAS/IFRS standards governing the individualelements; in the second, the pro-rata interest in the joint venture is recognised using theequity method.The standard will come into force from 1 January 2014, but can be applied in advance.IFRS 12 (Disclosure of interests in other entities)On 12 May 2011, the IASB published the accounting standard IFRS 12 (Disclosure of interestsin other entities) regarding the information to be provided in the financial statements oninterests in other entities, including subsidiaries, associates and joint ventures. Thisinformation must enable users of the financial statements to understand the nature of the risksassociated with the investments in strategic equity investments that will form part of thecompanys assets over the long term. The information must also indicate the effects of theseinvestments on financial position, financial performance and cash flows.The standard will come into force from 1 January 2014, but can be applied in advance.IFRS 13 (Fair value measurement)
    • Annual financial statementsto 31 December 2012 155On 12 May 2011, the IASB published the accounting standard IFRS 13 (Fair valuemeasurement), which provides a single definition of the concept of fair value and a frameworkfor how it should be applied when another IFRS permits or requires its use.More specifically, IFRS 13 sets out a clear definition of fair value, which is the price that wouldbe received to sell an asset or paid to transfer a liability in a regular transaction betweenmarket participants at the measurement date (or exit price). This definition emphasises thatfair value is a measure that must be based on the market and not the valuing entity. In otherwords, the measurement process must take into account the assumptions that marketparticipants would use when pricing the asset or liability in current conditions, includingassumptions on risk. As a consequence, the intention to hold an asset or cancel or fail to meeta liability is of no relevance in measuring fair value.The standard will come into force from 1 January 2013, but can be applied in advance.Amendments to IAS 32 ( Offsetting financial assets and financial liabilities)On 16 December 2011, the IASB published a number of amendments to IAS 32 (Financialinstruments: presentation), clarifying how certain criteria for offsetting financial assets andliabilities, as set out in IAS 32, should be applied.The amendments must be applied from 1 January 2014.Amendments to IFRS 7 (Disclosure – offsetting financial assets and financial liabilities)On 16 December 2011, the IASB published a number of amendments to IFRS 7 (Financialinstruments: additional information). The amendment requires information to be disclosed onthe effects or potential effects of contracts to offset financial assets and liabilities on thebalance sheet.The amendments to IFRS 7 must be applied from 1 January 2013.IAS 1 (Presentation of items of other comprehensive income)On 16 June 2011, the IASB issued amendments to IAS 1 (Presentation of items of othercomprehensive income), which determine the grouping and components of the statement ofcomprehensive income according to whether or not they can be reclassified to the incomestatement.The amendments to IAS 1 must be applied in the financial statements for periods starting from1 July 2012 onwards.Amendments to IAS 19 (Employee benefits)On 16 June 2011, the IASB issued amendments to IAS 19 (Employee benefits) that introducethe obligation to recognise actuarial gains and losses in the statement of comprehensiveincome, removing the option of using the "corridor" method and requiring the recognition ofactuarial gains and losses resulting from the revaluation of liabilities and assets in thestatement of comprehensive income.The amendments to IAS 19 must be applied in the financial statements for periods startingfrom 1 July 2012 onwards.We do not anticipate that the potential adoption of the standards and interpretations notedabove will have a material impact on the valuation of the company’s assets, liabilities, costsand revenues, except for the possible effects of any redefinition of the company’s method ofconsolidation in accordance with the new IFRS 10.
    • Annual financial statementsto 31 December 2012 156Accounting principles, amendments and interpretations that are not yet applicable, have notbeen adopted in advance by the Group and not yet approved for adoption in the EuropeanUnion as of 28 February 2013The International Accounting Standards, interpretations and changes to existing IASB-approved accounting standards and interpretations that had not been ratified for adoption inthe European Union as of 28 February 2013 are as follows:IFRS 9 (Financial instruments)On 12 November 2009, the IASB issued the first part of IFRS 9, which only amends therequirements for classifying and valuing the financial assets that are currently specified in IAS39; once completed, it will fully replace IAS 39. Financial liabilities do not fall within the scopeof IFRS 9, since the IASB intends to go into greater detail on aspects related to the inclusion ofown credit risk in the fair value measurement of financial liabilities. Thus, financial liabilitiescontinue to fall within the scope of IAS 39.The endorsement process for IFRS 9 is currently on hold, and this standard is not applicable inthe EU, ahead of the European Commissions full assessment of the plan to completely replaceIAS 39.Amendments to IFRS 1( Government loans)On 13 March 2012, the IASB published an amendment to IFRS 1 (First-time adoption ofInternational Financial Reporting Standards) regarding government loans taken out at interestrates lower than market rates.The amendment introduced the option for entities that are adopting IFRS for the first time touse the same simplified rules as those permitted to entities that made the transition toInternational accounting standards in 2005. This means they do not have to change thecarrying value calculated according to previous accounting standards for loans already takenout at the date of transition to international accounting standards.The amendments to IFRS 1, which are awaiting ratification by the European Commission, mustbe applied in the financial statements of periods starting from 1 July 2013 onwards. They mayalso be applied in advance.Improvements to IFRSs 2009-2011On 17 May 2012, the IASB published its “Annual Improvements to IFRS – 2009-2011 Cycle”,detailing the minor changes to be made to existing accounting standards. The documentcontains a series of improvements to five accounting standards (IFRS 1, IAS 1, IAS 16, IAS 32and IAS 34).The amendments, which are expected to be ratified by the European Commission, will apply tofinancial statements for periods from 1 January 2013 onwards. They may also be applied inadvance.Transition Guidance” (Amendments to IFRS 10, IFRS 11 and IFRS 12).On 28 June 2012, the IASB published “Consolidated Financial Statements, Joint Arrangementsand Disclosure of Interests in Other Entities: Transition Guidance” (Amendments to IFRS 10,IFRS 11 and IFRS 12).The amendments, which clarify the temporary provisions of IFRS 10, are awaiting ratificationby the European Commission and must be applied from 1 January 2013.Investment Entities (Amendments to IFRS 10, IFRS 12 and IFRS 27).
    • Annual financial statementsto 31 December 2012 157On 31 October 2012, the IASB published Investment Entities (Amendments to IFRS 10, IFRS12 and IAS 27). The change introduced an exception to IFRS 10 stipulating that investmententities value certain subsidiaries at fair value on the income statement instead ofconsolidating them.The amendments, which are expected to be ratified by the European Commission, will apply tofinancial statements for periods from 1 January 2014 onwards. They may also be applied inadvance.
    • Annual financial statementsto 31 December 2012 158B. Most important accounting principles and valuation criteriaThe accounting principles and valuation criteria adopted for the 2012 separate financialstatements of DeA Capital are the same as those used to draw up the consolidated financialstatements, with the exception of specific principles and criteria relating to the consolidatedfinancial statements and methods for valuing subsidiaries and joint ventures, as specifiedbelow.Investments in subsidiaries and joint ventures are classified as available-for-sale assets andare measured at fair value with appropriate reserves of shareholders’ equity as a balancingentry.Current and non-current assets and liabilitiesAn asset is considered current if it meets at least one of the following conditions: It is expected to be converted during the companys normal operating cycle. The"companys operating cycle" means the period from the acquisition of an assetto its conversion to cash and cash equivalents. When the companys operatingcycle cannot be clearly identified, its duration is assumed to be twelve months. it is held mainly for trading purposes its conversion is expected to occur within 12 months following the end of thefinancial year it consists of cash and cash equivalents which have no restrictions that wouldlimit its use in the 12 months following the end of the financial yearAll other assets are carefully analysed to separate the "current" portion from the "non-current"portion.Furthermore, deferred tax assets are recorded under non-current components.A liability is considered current if it meets at least one of the following conditions: it is expected to be settled during the companys normal operating cycle it is held mainly for trading purposes its settlement is expected to occur within 12 months following the end of thefinancial year the company does not have an unconditional right to defer payment of theliability for at least 12 months following the end of the financial yearAll other liabilities are carefully analysed to separate the "current" portion from the "non-current" portion.Furthermore, deferred tax liabilities are recorded under non-current components.Intangible assetsIntangible assets are those assets with no identifiable physical form that are controlled by thecompany and produce future economic benefits. They are recorded under assets when it islikely that their use will generate future economic benefits and when their cost can bedetermined reliably. The above assets are recorded at purchase cost, or at production cost ifthey are generated internally.The purchase cost is represented by the fair value of the price paid to acquire the asset and alldirect costs incurred to prepare the asset for use.
    • Annual financial statementsto 31 December 2012 159The carrying value of intangible assets is maintained in the financial statements if there isevidence that this value can be recovered through use or if it is likely that these assets willgenerate future economic benefits.The useful life of intangible assets is assessed as finite or indefinite.Intangible assets with an indefinite useful life are tested to check that their value is stillappropriate whenever there are indications of possible impairment, as required by IAS 36(Impairment of assets). Intangible assets with an indefinite useful life are not amortised. Theuseful life of an intangible asset with an indefinite useful life is reviewed annually to check thatthe underlying conditions for the classification continue to apply.Intangible assets with a finite useful life are amortised on a straight-line basis over theirexpected useful life. The useful life of these intangible assets is tested to check that their valueis still appropriate whenever there are indications of possible impairment.Tangible assetsTangible assets are recorded at purchase price or production cost adjusted for accumulateddepreciation and any impairment.Their cost includes ancillary costs and direct and indirect costs incurred at the time of purchasenecessary to make the asset usable. The purchase cost is represented by the fair value of theprice paid to acquire the asset and by all other direct costs incurred to prepare the asset foruse. Tangible assets are depreciated on a straight-line basis over their remaining useful life,using the depreciation rates indicated in the notes on the item relating to similar groups ofassets. If factors are discovered that lead the company to believe that it may be difficult torecover the net carrying value, an impairment test is performed. If the reasons for theimpairment cease to exist, the carrying value of the asset is increased to its recoverableamount.ImpairmentImpairment always occurs when the carrying value of an asset is greater than its recoverablevalue. On each reporting date, the company determines whether there are any indications thatan asset may be impaired. If such indications exist, the recoverable value of the asset isestimated (impairment test) and any write-down is recorded. The recoverable value of anasset is the higher of its fair value less selling costs and its value in use.IAS 36 provides instructions on determining fair value less asset selling costs, as follows: if there is a binding sales agreement, the assets fair value is the negotiated price if there is no agreement, but the asset is marketed in an active market, the fair value isthe current bid price (thus, the exact price on the value date and not the average price) if no prices can be found in active markets, fair value must be determined based onvaluation methods that incorporate the best information available including any recenttransactions involving the same asset, after verifying that there were no significantchanges in the economic environment between the date of the transactions underconsideration and the valuation dateIAS 36 defines value in use as the present value of future cash flows that an asset is projectedto produce. The estimate of the value in use must include the items listed below: an estimate of future cash flows that the company expects to derive from the asset expectations of potential changes in value and the timing of such cash flows the time value of money other factors such as the volatility of the assets value and the lack of a liquid marketfor it
    • Annual financial statementsto 31 December 2012 160Please see Appendix A of IAS 36 for more information on calculating value in use. However,the main elements for accurately estimating the value in use are: an appropriate calculation ofprojected cash flows and their timing, as well as the application of the right discount rate thattakes into account for both the present value of money and the specific risk factors for theasset to be valued.In all cases, when calculating the value it is important to: base cash flow projections on reasonable and sustainable assumptions that provide thebest estimate of the economic conditions that are likely to exist over the remaininguseful life of the asset base cash flow projections on the most recent budget/plan approved by the investeecompany, which, however, must exclude any future inflows or outflows of cash that areexpected to come from the future restructuring, improvement or optimisation ofoperating performance. Projections based on these budgets/plans must cover amaximum period of five years unless a longer period of time can be justified Estimate higher cash flow projections for the period covered by the most recentbudgets/plans by extrapolating projections based on the budgets/plans taken intoconsideration, and using a stable or declining growth rate for subsequent years unless arising rate can be justified. This growth rate must not exceed the average long-termgrowth rate for production in the country or countries in which the investee companyoperates or for markets in which the asset used is placed unless a higher rate can bejustified.The assumptions used to determine cash flow projections must be reasonable, and basedpartly on an analysis of the factors that generated differences between projections of past andcurrent cash flows. In addition, the assumptions used to determine current cash flowprojections must be checked to ensure that they are consistent with actual past results, unlessin the meantime changes have occurred in the investee companys business model or in theeconomic environment in which it operates that justify changes vis-a-vis the past.Financial assetsBased on the classification of financial assets required by IAS 39, the company classified itsfinancial assets at the time of the acquisition of each individual asset.Minority interests in companies and investments in funds, which constitute the main,predominant area of the Parent Companys operations, are classified under available-for-saleassets, which are recorded at fair value with a balancing item in shareholders equity.Fair value is the payment for which an asset could be exchanged in a free transaction betweenknowledgeable and independent parties. In the case of securities traded in active regulatedmarkets, fair value is determined based on the bid price recorded on the last trading day of therelated accounting period. In the case of assets not listed on active markets, such as thecompany’s direct investments in companies and its investments in venture capital funds, thefair value reported in the financial statements is determined by the directors based on theirbest estimate and judgment, using the knowledge and evidence available when the financialstatements are prepared.In these cases, the company acts in accordance with the provisions of the IAS. In particular,IAS 39 specifies that: if there are recent transactions related to the same financial instrument, these may beused to determine fair value after verifying that there have been no significant changesin the economic environment between the date of the transactions being consideredand the valuation date if there are transactions involving similar financial instruments, these may be used todetermine fair value after verifying the similarity (as a function of the type of business,
    • Annual financial statementsto 31 December 2012 161size, geographic market, etc.) between the instrument for which transactions have beenfound and the instrument to be valued if no prices can be found in active markets, fair value must be determined usingvaluation models that account for all factors that market participants would consider insetting a priceHowever, due to objective difficulties in making assessments and the lack of a liquid market,the values assigned to such assets could differ, and in some cases significantly, from thosethat could be obtained when the assets are sold.Direct investments in companies that are neither subsidiaries nor associates and in venturecapital funds are classified as available-for-sale financial assets, which are initially reported atfair value on the date of the original posting. These assets are measured at fair value when allinterim and full-year financial statements are prepared.Gains and losses from fair value measurement are posted to a special shareholders equityreserve called the "fair value reserve" until the investment is sold or otherwise disposed of, oruntil impairment occurs, in which cases the gain or loss previously recorded in the fair valuereserve is posted to the income statement for the period.At each reporting date, a test is performed to show objective evidence of impairment followingone or more events that have occurred after the initial recording of the asset, and that thisevent (or events) has an impact on the estimated cash flow from the financial asset.For equity instruments, a significant or prolonged reduction in fair value below their cost isconsidered to be objective evidence of impairment.Although International Accounting Standards introduced an important reference to quantitativeparameters that must be adhered to, they do not govern quantitative limits to determine whena loss is significant or prolonged.DeA Capital S.p.A. has therefore adopted an accounting policy that defines these parameters.In particular, "significant" means there has been an objective reduction in value when fairvalue is more than 35% below its historical cost. In this case, impairment is recorded in theincome statement without further analysisThe duration of the reduction in value is deemed to be prolonged when the reduction of fairvalue below historical cost continues for a period of over 24 months. After exceeding 24months, impairment is recorded in the income statement without further analysisDerivativesDerivatives contracts are recorded in the balance sheet at fair value. Fair value changes arereported differently depending on their designation (hedging or speculative) and the nature ofthe risk hedged (fair value hedge or cash flow hedge).For contracts designated for hedging purposes, the company documents this relationship whenthe hedge is established. The documentation includes identification of the hedging instrument,the item or transaction hedged, the nature of the risk hedged, the criteria used to ascertainthe effectiveness of the hedging instrument as well as the risk. The hedge is consideredeffective when the projected change in fair value or in the cash flows of the hedged instrumentis offset by the change in fair value or in the cash flows of the hedging instrument, and the netresults fall within the range of 80% to 125%.If the instruments are not, or cannot be, designated as hedging instruments, they must beconsidered "speculative"; in this case, fair value changes are posted directly to the incomestatement.In the case of fair value hedges, changes in the fair value of the hedging instrument and thehedged instrument are posted to the income statement regardless of the valuation criterion
    • Annual financial statementsto 31 December 2012 162used for the hedged instrument. In the case of cash flow hedges, the portion of the fair valuechange in the hedging instrument that is recognised as an effective hedge is posted toshareholders equity, while the portion that is not effective is posted to the income statement.Receivables and payablesA receivable is first reported at fair value on the date it is agreed.After initial reporting, receivables are valued at amortised cost. Payables that fall due withinnormal contractual terms are initially posted at fair value and later valued at amortised cost.Held-for-sale assetsA non-current asset or disposal group is classified as held for sale if the carrying value willmainly be recovered from its sale or disposal instead of its ongoing use. In order for this tooccur, the asset or disposal group must be available for immediate sale in its current condition,and the sale must be highly likely. Assets meeting the criteria to be classified as held-for-saleassets are valued at the lower of carrying value and sales value adjusted for any related costs.Own sharesOwn shares are not considered financial assets of the company that issued the shares. Thepurchase and sales value of own shares is recorded as a change to shareholders equity. Nogain or loss is reported in the income statement for the sale, purchase, issue or cancellation ofown shares.Fair value reserveThe fair value reserve incorporates fair value changes to entries measured at fair value with abalancing entry in shareholders equity.Cash and cash equivalentsCash and cash equivalents include cash at hand, demand deposits and short-term, highly liquidfinancial investments that are readily convertible to cash and subject to a negligible risk ofprice variation. Their value is reported at fair value.Provisions for risks and future liabilitiesIf necessary, the company records provisions for risks and future liabilities when: it has a legal or implicit obligation to third parties resulting from a past event it is likely that it will be necessary to use company resources to fulfil theobligation a reliable estimate can be made of the amount of the obligationProvisions are recorded based on the projected value and discounted as necessary to presentvalue if the time value is considerable. Changes in estimates are recognised in the incomestatement of the period in which the change occurs.Income taxCurrent income taxes are determined and reported on the basis of a reasonable forecast of taxliability by applying the tax rates in force to taxable income, taking into account anyexemptions and tax credits to which the company may be entitled.
    • Annual financial statementsto 31 December 2012 163Deferred tax liabilities are allocated for all temporary differences between the carrying value ofthe assets and liabilities and the corresponding amount for tax purposes.Deferred tax assets are recorded for all deductible temporary differences and for tax assetsand liabilities carried forward if it is likely there will be sufficient future taxable profit againstwhich the deductible temporary differences and the tax assets and liabilities carried forwardcan be used.Deferred taxes are classified under non-current assets and liabilities and are determined usingtax rates expected to be applicable in the years when the temporary differences will berealised or will expire.The carrying values of deferred tax assets are analysed periodically and reduced if it is notlikely that sufficient taxable income will be generated against which the benefits resulting fromsuch deferred assets can be used.Revenues and incomeService revenues are recognised at the time the services are rendered based on the progressof the activity on the reporting date.Income from equity investments for dividends or for their full or partial sale is reported whenthe right to receive payment is determined, with a balancing item (receivable) at the time ofthe sale or decision to distribute dividends by the entity or appropriate body.Interest is reported using the effective interest rate method.Employee benefitsShort-term employee benefits, whether in cash or in kind (meal vouchers) are reported in theincome statement in the period when the work is performed.Employee benefits related to participation in a defined benefit plan are determined by anindependent actuary using the projected unit credit method.Actuarial gains and losses are posted to the income statement in the period in which theyoccur, only using the corridor method to record the gains or losses if these exceed a certainpercentage of the obligation.Employee benefits in respect of participation in a defined contribution plan only relate to thoseplans under mandatory government administration. The payment of contributions fulfils thecompanys obligation to its employees. Thus, contributions are costs in the period in whichthey are payable.Benefits have been provided in the form of stock options and share-based payments. Thisapplies to all employees eligible for stock option plans. The cost of these transactions isdetermined with reference to the fair value of the options on the date allocation is made and isreported over the period from such date until the expiry date with a balancing entry inshareholders equity.The cost of stock options for the companys directors and employees is determined in the sameway.WarrantsWarrants issued by the company, which do not meet the requirements either for beingclassified as share-based payments to employees pursuant to IFRS 2 or as financial liabilities,are treated as company equity instruments.
    • Annual financial statementsto 31 December 2012 164Earnings per shareIn accordance with IAS 33, basic earnings per share are determined as the ratio of net profitfor the period attributable to holders of Parent Company shares to the weighted averagenumber of shares outstanding during the period. Own shares in the portfolio are, of course, notincluded in this calculation.Diluted earnings per share are calculated by adjusting the weighted average number of sharesoutstanding for all potential ordinary shares resulting from the potential exercise of assignedstock options, which may result in a diluting effect.
    • Annual financial statementsto 31 December 2012 165C. Changes in accounting principles and the treatment of errorsAccounting principles are changed from one year to another only if the change is dictated byan accounting standard or if it contributes to providing more reliable information or morecomplete reporting of the impact of transactions on the companys balance sheet, incomestatement and cash flow statement.Changes in accounting principles are applied retroactively with the impact reflected inshareholders equity in the first of the periods presented. Comparative reporting is adaptedaccordingly. The prospective approach is used only when it is not practical to restatecomparative reporting. The application of a new or amended accounting standard is recordedas required by the standard itself. If the standard does not specify transition methods, thechange is reflected retroactively, or if impractical, prospectively.If there are significant errors, the same treatment dictated for changes in accounting principlesis used. If there are minor errors, corrections are posted to the income statement in the periodwhen the error is discovered.
    • Annual financial statementsto 31 December 2012 166D. Use of estimates and assumptions in preparing the financial statementsThe companys management must make assessments, estimates and assumptions that affectthe application of accounting standards and the amounts of assets, liabilities, costs andrevenues recorded in the financial statements. Estimates and related assumptions are basedon past experience and other factors deemed reasonable in the case concerned; these havebeen used to estimate the carrying value of assets and liabilities that cannot be easily obtainedfrom other sources.These estimates and assumptions are reviewed regularly. Any changes resulting from revisionsto accounting estimates are recorded in the period when the revision is made if such revisionsonly affect that period. If the revision affects current and future periods, the change isrecorded in the period in which the revision is made and in related future periods.Financial statement balances are reported and valued using the valuation criteria describedabove. At times the application of these criteria involves the use of estimates that may have asignificant impact on amounts reported in the financial statements. Estimates and relatedassumptions are based on past experience and factors deemed reasonable in the caseconcerned; these are used to estimate the carrying value of assets and liabilities that cannotbe easily obtained from other sources. However, since these are estimates, the resultsobtained should not necessarily be considered definitive.With the understanding that the use of reasonable estimates is an essential part of preparingfinancial statements, the items where the use of estimates is most prevalent are stated below: valuation of financial assets not listed in active markets valuation of financial assets listed in active markets but considered illiquid on thereference market valuation of equity investmentsThe process described above is made particularly complicated by the unusual levels of volatilityin the current macroeconomic and market environment, which affect financial indicators thathave a bearing on the above valuations. An estimate may be adjusted as a result of changes in the circumstances on which it wasbased, or as a result of new information. Any change in the estimate is applied prospectivelyand has an impact on the income statement in the period in which the change occurred andpotentially on income statements in future periods.As highlighted earlier, a significant proportion of the assets shown in the annual financialstatements of DeA Capital S.p.A. is represented by unlisted financial investments. Theseinvestments are measured at their fair value, calculated by directors based on their bestestimate and judgement using the knowledge and evidence available at the time the financialstatements are prepared. However, due to objective difficulties in making assessments and thelack of a liquid market, the values assigned to such assets could differ, and in some casessignificantly, from those that could be obtained when the assets are sold.
    • Annual financial statementsto 31 December 2012 167Notes to the balance sheetNON-CURRENT ASSETS1 – Intangible and tangible assets1a – Intangible assetsChanges in intangible assets are shown in the tables below:(Euro thousand)Historic costat Jan. 1,2012Cum. amort. &prov. chargesat Jan. 1, 2012Net bookvalue at Jan.1, 2012Historic costat Dec. 31,2012Cum. amort.& prov.charges atDec. 31, 2012Net bookvalue at Dec.31, 2012Concessions, licence fees & trademarks 300 (292) 8 327 (312) 15Total 300 (292) 8 327 (312) 15(Euro thousand)Balance atJan.1, 2012Merger IDeA AI Additions AmortizationBalance atDec.31, 2012Concessions, licence fees & trademarks 8 11 7 (11) 15Total 8 11 7 (11) 15The increase in "concessions, licences and trademarks" relates to the acquisition of newsoftware licences, the cost of which is amortised over three years.1b – Tangible assetsChanges in tangible assets are shown in the tables below:(Euro thousand)Historic costat Jan. 1,2012Cum. deprec.& prov.charges atJan. 1, 2012Net bookvalue at Jan.1, 2012Historic costat Dec. 31,2012Cum. deprec.& prov.charges atDec. 31, 2012Net bookvalue at Dec.31, 2012Plant 198 (188) 10 227 (220) 7Furniture and fixtures 470 (442) 28 571 (519) 52Computer and office equipment 228 (207) 21 245 (234) 11Leasehold improvements 0 0 0 393 0 393Non-depreciable tangible assets 28 0 28 28 0 28Total 924 (837) 87 1,464 (973) 491(Euro thousand)Balance atJan.1, 2012Merger IDeAAIAdditionsDecrease(cost)Decrease(cum.deprec.)DepreciationBalance atDec.31, 2012Plant 10 9 1 0 0 (13) 7Furniture and fixtures 28 63 0 0 0 (39) 52Computer and office equipment 21 11 3 (2) 1 (23) 11Leasehold improvements 0 0 393 0 0 0 393Non-depreciable tangible assets 28 0 0 0 0 0 28Total 87 83 397 (2) 1 (75) 491Depreciation is calculated on a straight-line basis, based on the estimated useful life of theasset.The depreciation rates used in the financial statements are 20% for specific plant assets, 12%for furniture and furnishings, and 20% for electronic office equipment.Acquisitions relate to improvements made to the building that will be leased to the DeA CapitalGroup from 2013. Depreciation on leasehold improvements will be charged from the actualdate that the building comes into use in 2013.
    • Annual financial statementsto 31 December 2012 1682 – Financial investments2a – Equity investments in subsidiariesEquity investments in subsidiaries are measured at fair value in accordance with IAS 39.For the method of determining fair value, please refer to the relevant paragraphs in the section"Key accounting principles and valuation criteria adopted".Details of the existing equity investments at 31 December 2012 are shown in the table below:(Euro thousand)%shareholdingat Dec.31,2012Value at Dec. 31,2012%shareholdingat Dec.31,2011Value at Dec. 31,2011DeA Capital Investments S.A. 100.00% 583,721 100.00% 552,491DeA Capital Real Estate S.p.A. 100.00% 116,203 70.00% 80,123I.F.IM. S.r.l. 100.00% 77,494 58.31% 22,131IDeA Capital Funds SGR S.p.A. 100.00% 53,709 0 0IDeA SIM S.p.A. 100.00% 126 0 0IDeA Alternative Investments S.p.A. 0 0 100.00% 62,385Total 831,253 717,130I.F.IM. S.r.l.On 11 April 2012 an agreement was signed with Massimo Caputi and the company he controls,Feidos S.p.A., which together own a stake of 41.69% in IFIM S.r.l., which in turn holds20.98% in IDeA FIMIT SGR S.p.A., to bring forward the exercise of put options on the stakesin IFIM S.r.l. held by Massimo Caputi and Feidos.The transaction, which enabled DeA Capital S.p.A. to acquire full control of IFIM S.r.l., wasconcluded for EUR 19.3 million.Subsequently, on 7 May 2012, DeA Capital S.p.A. waived the receivable of EUR 35.8 millionarising from the loan agreement signed the previous year. This amount was added to the valueof the equity investment.DeA Capital Real Estate S.p.A.On 28 March 2012, an agreement was signed with Deb Holding, a company controlled by thedirector Daniel Buaron that holds 30% of the share capital of DeA Capital Real Estate S.p.A.(formerly FARE Holding). The purpose of the agreement was to bring forward, with effect from24 April 2012, the exercise of put option on the stake held by Deb Holding to DeA CapitalS.p.A. Under the agreements stipulated, on 24 April 2012, DeA Capital S.p.A. acquired fullcontrol of DeA Capital Real Estate S.p.A.IDeA Capital Funds SGR S.p.A. and IDeA SIM S.p.A.With a view to simplifying the shareholder structure, IDeA Alternative Investments S.p.A (IDeAAI) was merged with DeA Capital S.p.A. on 1 January 2012. The purpose of the merger, whichentails the reorganisation of the DeA Capital Group’s corporate structure, is to centralise withinthe Parent Company the cash flows from, and the determination of strategic guidelines for, theAlternative Asset Management business.Following the merger of IDeA AI, DeA Capital holds 100% of IDeA Capital Funds SGR S.p.A., acompany active in the management of private equity funds (funds of funds, co-investmentfunds and theme funds) and 65% of IDeA SIM.
    • Annual financial statementsto 31 December 2012 169The changes in the item in question at 31 December 2012 compared with end-2011, apartfrom the effects of the merger of IDeA AI, relate to:- an increase of EUR 33,033 thousand for the purchase of the remaining stake in DeA CapitalReal Estate S.p.A.- an increase of EUR 19,280 thousand for the purchase of the remaining stake in IFIM S.r.l.and the conversion of the loan for EUR 35,800 thousand- an increase of EUR 191 thousand, for capital increases in IDeA SIM- the measurement at fair value of the subsidiaries, which entailed increases of EUR 31,231thousand for DeA Capital Investments S.A., EUR 3,047 thousand for DeA Capital Real EstateS.p.A., and EUR 283 thousand for IFIM S.r.l., and decreases of EUR 76 thousand for IDeA SIMS.p.A. and EUR 3,044 thousand for IDeA Capital Funds SGR S.p.A.A list of the investments with the information required under art. 2427 of the Italian Civil Codeis shown in the table below:LIST OF INVESTMENTS IN SUBSIDIARIES AND JOINT VENTURE AS DEC. 31, 2012DeA Capital Investments S.A. Luxembourg, Luxembourg Euro 515,992,516 583,721,277 (30,115,532) 100.00% 583,721,277 583,721,277DeA Capital Real Estate S.p.A. Milan, Italy Euro 600,000 25,659,947 17,032,066 100.00% 25,659,947 116,202,821I.F.IM. S.r.l. Milan, Italy Euro 10,000 48,677,778 1,697,249 100.00% 48,677,778 77,494,000IDeA Capital Funds SGR S.p.A. Milan, Italy Euro 1,200,000 6,579,907 4,450,690 100.00% 6,579,907 53,709,487IDeA SIM S.p.A. Milan, Italy Euro 120,000 193,591 (259,251) 65.00% 125,834 125,834Total (7,194,778) 664,764,743 831,253,419Company Registered OfficeCurrencyShareCapitalBook Value(€uro)Total NetEquityNetprofit/(loss)for the year % holdingValue ofshare of netequity(€uro)2b – Equity investments in associatesEquity investments in associates comprise the investment in Harvip Investimenti S.p.A.(Harvip), a company operating in the management of funds or investment vehicles dedicatedto the purchase of distressed real estate and other assets, for a price of EUR 1 million, and theinvestment in Soprarno SGR S.p.A., arising from the merger with IDeA AI, for EUR 1,598thousand.On 29 November 2012, Soprarno S.G.R.’s shareholder structure was restructured with theresulting reduction in DeA Capital S.p.A.’s equity investment from 65% to 20%, via thefollowing transactions:- the sale by DeA Capital S.p.A. of 25% of Soprarno SGR to Banca Ifigest S.p.A. (Ifigest),for a payment of EUR 0.5 million, with the simultaneous cancellation of the option forIfigest to sell its stake in Soprarno SGR to DeA Capital S.p.A., for the same amount- a capital increase in kind carried out via the transfer of the asset management businessheld by Cassa di Risparmio di San Miniato (CARISMI) to Soprarno SGR: the businesswas valued at around EUR 4.5 million (in line with the value attributed to SoprarnoSGR).Details of the existing investments at 31 December 2012 are shown in the table below:
    • Annual financial statementsto 31 December 2012 170(Euro thousand)Balance atJan.1, 2012MergerIDeASharecapitalincreaseFair valueadjustmentImpairmentrecorded inIncomeStatementDecreaseBalance atDec. 31,2012Harvip Investimenti S.p.A. 1,000 0 0 0 0 0 1,000Soprarno SGR S.p.A. 0 2,597 0 0 (499) (500) 1,598Total 1,000 2,597 0 0 (499) (500) 2,5982c – Equity investments in other companiesEquity investments in other companies totalled EUR 287 thousand and comprise three directminority investments in foreign companies and a direct minority investment in Alkimis SGR,arising from the merger with IDeA AI.2d - Available-for-sale fundsThis item relates to investments in seven venture capital funds totalling EUR 10,122 thousand,compared with EUR 12,234 thousand at the end of 2011, and four funds arising from themerger with IDeA AI, in an amount of EUR 3,242 thousand, as shown in the table below:(Euro thousand)Balance atJan. 1, 2012Merger IDeA AIIncrease(capital call)Decrease(CapitalDistribution)ImpairmentFair ValueAdjustmentTranslationadjustmentBalance at Dec.31, 2012Venture Capital Funds 12,234 0 0 (857) (496) (488) (271) 10,122Other funds 0 2,755 840 (318) 0 (35) 0 3,242Total Funds 12,234 2,755 840 (1,175) (496) (523) (271) 13,364During the year, the company received capital distributions of EUR 1,175 thousand, which hada positive impact on the income statement of EUR 1,385 thousand.The fair value measurement of investments in venture capital funds at 31 December 2012,carried out based on the information and documents received from the funds, as well as otheravailable information, meant that the amount had to be written down along with the relatedexchange effect by EUR 496 thousand; the significant reduction to below cost was consideredclear evidence of impairment.The other changes were for the decrease in fair value (and related exchange effect) of EUR794 thousand.2e - Loans to subsidiariesThis item had a zero balance at 31 December 2012 (compared with EUR 37,307 thousand atend-2011, which related to the credit line granted to the subsidiary IFIM S.r.l.).3 – Other non-current assets3a – Deferred tax assetsDeferred tax assets of EUR 837 thousand were fully offset against deferred tax liabilities.The changes in deferred tax assets and deferred tax liabilities are shown in the table below:
    • Annual financial statementsto 31 December 2012 171(Euro thousand)At December 31,2012Merger IDeA AITaken to theincomestatementTaken to equityAt December31, 2012Total prepaid tax assets 0 0 0 0 0Prepaid tax assets from:- securities available-for-sale (1,230) (75) 0 468 (837)Total deferred tax liabilities (1,230) (75) 0 468 (837)Losses carried forward available for offsetagainst future taxable profits 1,230 0 (393) 0 837Total prepaid tax assets, net of deferredtax liabilities 0 (75) (393) 468 0No deferred tax assets were allocated against the significant tax losses of DeA Capital S.p.A.(of around EUR 108,074 thousand (to be reported without limitation). This was because therewas insufficient evidence to indicate that in future periods it would be possible to generatesufficient taxable income against which these tax losses could be recovered. Deferred taxes were calculated using the liability method based on the temporary differencesat the reporting date between the tax amounts used as a reference for the assets and liabilitiesand the amounts reported in the financial statements.4 – Current assetsAt 31 December 2012, current assets were approximately EUR 44,398 thousand, comparedwith EUR 45,287 thousand at 31 December 2011.4a – Trade receivablesThis item totalled EUR 2,149 thousand (EUR 217 thousand at 31 December 2011) and relatesto:- EUR 306 thousand from De Agostini S.p.A. for the agreement to sublet rented premises andthe reimbursement of costs associated with this agreement, and for the pro-ratareimbursement for leasehold improvements relating to the building at Via Brera, 21- EUR 64 thousand from IRE S.p.A., EUR 737 thousand from IDeA FIMIT SGR S.p.A, EUR 357thousand from IDeA Capital Funds SGR S.p.A., EUR 20 thousand from De AgostiniPublishing Italia S.p.A. for the pro rata reimbursement for leasehold improvements relatingto the building at Via Brera, 21- EUR 1 thousand from IDeA SIM S.p.A. for the inter-company consultancy agreement signedwith the Parent Company- EUR 151 thousand from Santé S.A. for remuneration due as part of the subsidiary’s “directorfee” agreement- EUR 500 thousand from Banca Ifigest S.p.A. for the sale of part of the stake in Soprarno SGRS.p.A.These receivables break down by geographical area as follows:- 53.95% from Italian subsidiaries- 23.36% from Italian customers- 14.22% from Italian parent companies- 7.03% from Luxembourg associates- 0.95% from Italian affiliates- 0.49% from Italian associates
    • Annual financial statementsto 31 December 2012 1724b – Available-for-sale financial assetsThe item, which totalled EUR 5,297 thousand at 31 December 2011, had a zero balance at theend of 2012 due to the divestment of 1,006,392.58 units in the Soprarno Pronti Termine fund,which had a negative impact of EUR 7 thousand on the income statement.4c - Financial receivablesThis item totalled EUR 31,270 thousand (EUR 2,880 thousand at 31 December 2011) andrelates to:- EUR 31,100 thousand for the revolving line of credit of EUR 40 million signed on 18 March2011 with the subsidiary DeA Capital Investments S.A. (maturing on 15 March 2014 with avariable rate of 3-month Euribor + a spread)- EUR 170 thousand for interest accrued on this line of credit but not yet paid by DeA CapitalInvestments S.A.4d – Tax receivables relating to the tax consolidation scheme entered into by the parentcompaniesThis item totalled EUR 7,489 thousand (EUR 5,929 thousand at 31 December 2011) relates tothe receivable from the Parent Company B&D Holding di Marco Drago e C. S.a.p.A. forparticipation in the tax consolidation scheme.4e – Other tax receivablesTax receivables were EUR 1,270 thousand (EUR 1,810 thousand at 31 December 2011) andrelated to:- tax deductions in the form of advance payments on interest of EUR 48 thousand- tax deductions in the form of advance payments on the partial sale of the Soprarno ProntiTermini bond fund in the amount of EUR 37 thousand- regional tax on manufacturing operations (IRAP) credits to be carried forward arising fromthe tax return for the previous year of EUR 168 thousand- a receivable arising from the previous year’s VAT declaration, in the amount of EUR 965thousand- a receivable of EUR 52 thousand due to the change in the percentage against which VATmay be offset from 99% to 44%4f – Other receivablesThese receivables totalling EUR 68 thousand (EUR 97 thousand at 31 December 2011) relatemainly to receivables for guarantee deposits, advances to suppliers and prepaid expenses.These receivables fall due within the next year.4g – Cash and cash equivalentsThis item consists of bank deposits and cash (EUR 5 thousand), including interest accrued at31 December 2012. At the end of 2012, this came in at EUR 2,153 thousand, compared withthe figure of EUR 29,057 thousand recorded at the end of 2011.This decrease is primarily due to the combined effect of the following factors:- receipt of dividends of EUR 4,060 thousand from DeA Capital Real Estate S.p.A. and ofEUR 4,800 thousand from IDeA Capital Funds SGR S.p.A.- draw down of EUR 20,000 thousand from the credit line taken out with Mediobanca- receipt of EUR 5,180 thousand for the complete liquidation of the Soprarno Pronti Terminefund and EUR 1,249 thousand for the partial liquidation of the equity investment inSoprarno SGR S.p.A.
    • Annual financial statementsto 31 December 2012 173- outlay of EUR 3,668 thousand for payment of the fourth tranche of the deferred price in thetransaction to purchase FARE Holding (now DeA Capital RE)- interest, commission and bank fees of EUR 2,583 thousand in relation to the credit linestaken out with Mediobanca- service expenses of EUR 7,629 thousand- the purchase of own shares in the amount of EUR 8,001 thousand- outlay of EUR 19,280 thousand for the acquisition of the remaining stake in IFIM S.r.l.- outlay of EUR 28,600 thousand for the credit line granted to the subsidiary DeA CapitalInvestments S.A.Please see the company’s cash flow statement for further information on changes to this item.5 – Shareholders equityAt 31 December 2012, shareholders’ equity totalled approximately EUR 740,384 thousand,compared with EUR 714,039 thousand at 31 December 2011.The decrease of around EUR 26,345 thousand in shareholders’ equity in 2012 was mainly dueto:- an increase of EUR 27,743 thousand in the fair value reserve- the purchase of own shares in the amount of EUR 8,001 thousand- reserves of EUR 1,183 thousand arising from the merger with IDeA AI- the profit of EUR 2,269 thousand for the periodPlease see the statement of changes in shareholders’ equity for more information on the mainchanges in this item.5a – Share capitalShare capital (fully subscribed and paid up) totalled EUR 306,612,100, represented by306,612,100 shares (of which 32,006,029 own shares) with a nominal value of EUR 1 each.Given that the nominal value of the 32,006,029 own shares held at 31 December 2012 isdeducted from total share capital, share capital of EUR 274,606,071 was reported in thefinancial statements.Changes in share capital are shown in the table below:(Euro thousand) no. of shares amount no. of shares amountShare Capital 306,612,100 306,612 306,612,100 306,612of which: Treasury shares (32,006,029) (32,006) (25,915,116) (25,915)Share Capital (excluding treasury shares) 274,606,071 274,606 280,696,984 280,69731.12.2012 31.12.2011The table below shows a reconciliation of the shares outstanding:
    • Annual financial statementsto 31 December 2012 174Shares issued Treasuryshares heldSharesoutstandingDecember 31, 2011 306,612,100 (25,915,116) 280,696,9842012 movementsShare capital increase 0 0 0Treasury shares purchased 0 (6,090,913) (6,090,913)Treasury shares sold 0 0 0Treasury shares disposed for 0 0 0Used for stock option plan 0 0 0Shares issued through exercise ofstock options0 0 0December 31, 2012 306,612,100 (32,006,029) 274,606,0715b – Share premium reserve (net of share issue costs reserve)This item decreased by EUR 1,910 thousand (from EUR 388,362 thousand at 31 December2011 to EUR 386,452 thousand at 31 December 2012) after posting the purchase of ownshares to this reserve.5c – Legal reserveThis reserve totalled EUR 61,322 thousand, which was unchanged from the figure at 31December 2011.5d – Fair value reserveThe fair value reserve was positive at EUR 26,088 thousand (compared with a negativebalance of EUR 1,655 thousand at 31 December 2011) and comprises:- the reserve for first-time adoption of IAS/IFRS, which was negative at EUR 3,745 thousand,compared with a negative balance of EUR 337 thousand at 31 December attributable to themerger with IDeA AI- a positive fair value reserve of EUR 29,833 thousand compared with a negative value of1,318 thousand at 31 December 2011.The table below shows a summary of the change in this item during the year:(Euro thousand)Balance atJan. 1, 2012Merger IDeAAIFair ValueReservereclying withImpairmentChange in FairValueTax effectBalance atDec. 31, 2012Direct Investments / Shareholdings (2,612) 140 0 31,405 239 29,172Venture Capital Funds 1,210 0 0 (759) 210 661Available-for-sale financial assets 84 0 0 (84) 0 0Fair value reserves IFRS transition and other (337) (3,408) 0 0 0 (3,745)Total (1,655) (3,268) 0 30,562 449 26,088
    • Annual financial statementsto 31 December 2012 1755e – Other reservesThis item consists of:- a reserve for stock option costs totalling EUR +919 thousand- a reserve for the merger of the subsidiary IDeA AI totalling EUR -831 thousand- a reserve for the sale of option rights, unchanged from 31 December 2011, totallingEUR + 413 thousand. This originated from the sale of the remaining option rights tosubscribe to a capital increase that had not been exercised by the shareholders, andwere sold by the company5f – Retained earnings (losses) carried forwardThis item, which totalled EUR -10,854 thousand, encompasses earnings and losses carriedforward from previous years, including EUR 5,242 thousand arising from the merger with IDeAAI.5g – Profit (loss) for the yearThis item includes profit of EUR 2,269 thousand for the year 2012, compared with a loss ofEUR 32,086 for the year 2011.Art. 2427, para. 1 no. 7-bis) of the Italian Civil Code: details of shareholders equity itemsThe table below shows a breakdown of shareholders’ equity items at 31 December 2012, withdetails of their origin, how they can be used and paid out, and use in previous years:Description (Euro) Possible use Share availableotherShare capital = =Share capital reserves:Share premium A,B,C 394,280,415 6,304,717 28,946,835Profit reserves:Legal reserve B = =Reserve for the cost of share issue= = = =Stock option reserve = = = =Reserve for the sale of rights = = = =Merger reserve = = = =Fair value reserve = = = =Profit/(loss) brought forward A,B,C = =Net loss for the year = = = =TOTAL 394,280,415Key: A capital increase, B to cover losses, C for distribution to shareholders394,280,415Amount412,798740,383,923(831,486)26,088,06476,808,3402,269,268Summary of use in previous years274,606,071919,010(7,828,172)=61,322,420(10,854,465)Losses coverage6 – Non-current liabilities6a – End-of-service payment fundThe end-of-service payment fund is a defined benefit plan, and has therefore been valuedusing actuarial assessments. The assumptions used in calculating the fund were: a discountrate of 2.7%; an annual rate of inflation of 2.0%; annual salary growth of 3.0%; and anannual fund growth rate of 3.0%.The change in the end-of-service payment fund was as follows:(Euro thousand)Balance atJan 1., 2012Merger IDeA AIPortionmaturedPayments AdvancesBalance atDec. 31, 2012Movement in provision 192 16 148 (40) 0 316
    • Annual financial statementsto 31 December 2012 176The amounts concerned were calculated as follows:(Euro thousand) 31.12.2012 31.12.2011Nominal value of provision 301 237Discounting effect 15 (45)Total provision 316 1926b – Financial liabilitiesThis item totalled EUR 102,987 thousand (EUR 93,008 thousand at 31 December 2011) andrelates to:- An earn-out payment (maturing in 2014) of EUR 2,156 thousand, inclusive of interestcalculated at present value accrued from the closing date (12 December 2008) to 31December 2012, equal to EUR 244 thousand. This earn-out, which DeA is required to payto the seller, is equal to 50% of the portion of any performance fees accrued on certain ofthe funds managed by IDeA FIMIT SGR S.p.A. (formerly FARE SGR).- An amount of EUR 100,000 thousand for the use of the credit line provided by Mediobancafor the same amount (maturing on 16 December 2015 and subject to a variable rate of 3-month Euribor + spread). On 31 December 2012, the covenant tests for this credit linewere successfully passed (i.e. debt and debt to equity).- a liability of EUR 831 thousand due to the decrease in the fair value of the interest rateswap contracts to partially hedge interest rate risk on the debt exposure with Mediobanca(maturing on 30 July 2013) 6c – Payables to staffThis item includes an amount of EUR 1,189 thousand for the incentive scheme, valued inaccordance with IFRS 2, which confers on beneficiaries the right to receive a cash award linkedto corporate performance over the medium-term horizon (the three year period 2012 – 2014).7 – Current liabilitiesTotal current liabilities amounted to EUR 47,531 thousand (EUR 5,814 thousand at 31December 2011) and are all due within the following year. These payables are not secured onany company assets.These liabilities are made up of the items detailed below.7a – Trade payablesThis item totalled EUR 2,526 thousand, compared with EUR 769 thousand in 2011, and resultfrom ordinary operations.With regard to transactions with related parties, this item includes:- payables to the Parent Company, De Agostini S.p.A., of EUR 25 thousand- payables to affiliate De Agostini Editore S.p.A. of approximately EUR 46 thousand- payables to affiliate De Agostini Libri S.p.A. of approximately EUR 1 thousand- payables to affiliate Soprarno SGR S.p.A. of approximately EUR 86 thousand- payables to the subsidiary IRE of approximately EUR 57 thousand- payables to the subsidiary IDeA FIMIT SGR S.p.A. of approximately EUR 27 thousand
    • Annual financial statementsto 31 December 2012 177A breakdown of these payables by geographical area is set out below:- 90.04% due to suppliers in Italy- 3.41% due to suppliers in respect of associates in Italy- 3.29% due to suppliers in respect of subsidiaries in Italy- 1.85% due to suppliers in respect of affiliates in Italy- 1.01% due to suppliers in respect of parent companies in Italy- 0.22% due to suppliers in the UK- 0.18% due to suppliers in the USTrade payables do not accrue interest and are settled, on average, within 30 to 60 days.7b – Payables in respect of staff and social security organisationsThis item amounted to EUR 1,201 thousand (EUR 956 thousand at 31 December 2011) andbreaks down as follows:- EUR 609 thousand for payables to social security organisations, paid after the end of financialyear 2012- EUR 592 thousand for payables to staff for holidays not taken, and accrued bonuses7c – Other tax payablesThis item amounted to EUR 195 thousand (EUR 159 thousand at 31 December 2011) andconsists of payables to the tax authorities in respect of taxes deducted from the income ofemployees and self-employed staff.7d – Short-term financial payablesThese financial payables totalling EUR 43,585 thousand (EUR 3,911 thousand at 31 December2011) are mostly attributable to the acquisition of the FARE Group in December 2008.This amount comprises:- the payable for the deferred purchase price (deferred price) of EUR 3,450 thousand- interest accrued from the closing date (12 December 2008) to 31 December 2012, totallingEUR 218 thousand- the amount that DeA Capital is required to pay to the seller for 100% of the units of theAtlantic 1 and Atlantic 2 funds totalling EUR 6,963 thousand- the payable for the remaining 30% of DeA Capital Real Estate S.p.A. (formerly FAREHolding S.p.A.) of EUR 31,012 thousand, inclusive of interest expenses calculated atpresent value, accrued from the closing date up to 31 December 2012, of EUR 616thousand- the payable for the additional price to be paid to the seller of EUR 1,702 thousand- an accrued expense in respect of the line of credit provided by Mediobanca totalling EUR240 thousand
    • Annual financial statementsto 31 December 2012 178Notes to the income statement8 – Revenues and income8a – Investment income and expensesNet income arising from investments totalled EUR 8,919 thousand (compared with netexpenses of EUR 24,663 thousand incurred in 2011).Details of this item are shown below:(Euro thousand) Year 2012 Year 2011Dividends from subsidiaries 8,860 67,563Gains from venture capital fund distributions 1,385 1,480Gains from disposals 47 626Gains from investments 10,292 69,669Impairment Soprarno SGR S.p.A. 499 0Impairment DeA Capital Investments S.A. 0 93,301Losses on sheres distributed 0 142Impairment Kovio 0 43Impairment venture capital funds 874 846Charges from investments 1,373 94,332Total 8,919 (24,663)Dividends from subsidiaries and other incomeThis item is formed of dividends distributed by IDeA Capital Funds SGR S.p.A., totalling EUR4,800 thousand, and dividends of EUR 4,060 thousand distributed by DeA Capital Real EstateS.p.A.Income from available-for-sale fundsIncome from available-for-sale funds was EUR 1,385 thousand (EUR 1,480 thousand in 2011)and came from capital gains from distributions of venture capital funds.Capital gains on disposalsThis item, which totalled EUR 47 thousand, relates to the capital gain from sales of theSoprarno Inflazione fund.Impairment of equity investments and available-for-sale fundsOn 29 November 2012, the restructuring of the shareholder structure of Soprarno SGR wascompleted. This resulted in a reduction in the DeA Capital Group’s stake from 65% to 20%,following the sale by DeA Capital S.p.A. of 25% of Soprarno SGR S.p.A. to Banca IfigestS.p.A., for a payment of EUR 500 thousand and a resulting loss of EUR 499 thousand.The fair value measurement of investments in venture capital funds at 31 December 2012,carried out based on the information and documents available, made it necessary to recordimpairment of EUR 874 thousand for the venture capital funds.For these venture capital funds, the significant reduction below cost was considered clearevidence of impairment.
    • Annual financial statementsto 31 December 2012 1798b – Service revenuesIncome of EUR 459 thousand was reported in 2012 (EUR 295 thousand in 2011), attributableto the reimbursement of costs or supply of services, in the following amounts:- EUR 131 thousand from De Agostini S.p.A.- EUR 6 thousand from Soprarno SGR S.p.A.- EUR 5 thousand from Harvip Investimenti S.p.A.- EUR 36 thousand from IDeA Capital Funds SGR S.p.A.- EUR 120 thousand from IDeA FIMIT SGR S.p.A.- EUR 46 thousand from I.F.IM. S.r.l.- EUR 1 thousand from IDeA SIM S.p.A.- EUR 25 thousand from DeA Capital Real Estate S.p.A.- 70 thousand from IRE- 19 thousand from IRE Advisory8c – Other revenues and incomeOther revenues and income, totalling EUR 155 thousand (compared with EUR 177 thousand in2011), related mainly to director fees paid to Santé S.A. of EUR 153 thousand.9 – Operating costs9a – Personnel costsPersonnel costs totalled EUR 5,972 thousand, compared with EUR 5,084 thousand in 2011.The item breaks down as follows:(Euro thousand) Year 2012 Year 2011Salaries and wages 1,971 2,152Social charges on wages 983 752Board of directors fees 309 332Costo figurativo stock options 945 683Stock options reversal (1,022) 0Employee severance indemnity 265 139Other personnel costs 2,521 1,026Total 5,972 5,084The effect of the cost arising from the stock option plans for 2012, of EUR 945 thousand(EUR 683 thousand in 2011), was more than offset by the reversal of the cost allocated to thereserve for the Stock Option Plan for 2010-2015 of EUR 1,022 thousand. The allocation planfor 2010-2015 is to be considered lapsed as the conditions for exercising option rights werenot met.“Other personnel costs” include an amount of EUR 1,107 thousand for the incentive scheme,valued in accordance with IFRS 2, which confers on beneficiaries the right to receive a cashaward linked to corporate performance over the medium-term horizon (the three year period2012 – 2014).The Parent Company has 16 employees (14 at 31 December 2011).
    • Annual financial statementsto 31 December 2012 180The table below shows changes and the average number of Parent Company employees duringthe year.Position 1.1.2012MergerIDeA AI RecruitsInternalmovements Departures 31.12.2012 AverageSenior Managers 5 1 0 0 (2) 4 5Senior Managers defined term 1 0 0 0 0 1 1Junior Managers 3 2 0 1 0 6 6Staff 5 1 1 (1) (1) 5 5Total 14 4 1 0 (3) 16 17   Share-based paymentsEmployees of DeA Capital S.p.A. and the Parent Company, De Agostini S.p.A., are beneficiariesof stock option plans based on the shares of DeA Capital S.p.A. Unexercised but valid calloptions on the company’s shares at 31 December 2012 totalled 2,938,200 (4,643,200 at 31December 2011).Stock option plans were valued using the numerical binomial tree procedure (the original Cox,Ross and Rubinstein method). Numerical analysis using binomial trees generates simulations ofvarious possible developments in the share price in future periods.With regard to stock option plans, on 17 April 2012 the shareholders meeting approved theDeA Capital Stock Option Plan for 2012-2014 under which a maximum of 1,350,000 optionsmay be allocated. To implement the resolution of the shareholders meeting, the DeA CapitalS.p.A. Board of Directors allocated a total of 1,030,000 options to certain employees of thecompany and its subsidiaries, and employees of the Parent Company De Agostini S.p.A. whoperform important roles.In line with the criteria specified in the regulations governing the DeA Capital Stock OptionPlan for 2012-2017, the Board of Directors also set the exercise price for the options allocatedat EUR 1.3363, which is the arithmetic mean of the official price of DeA Capital shares on theMercato Telematico Azionario, the Italian screen-based trading system organised and managedby Borsa Italiana S.p.A., on the trading days between 17 March 2012 and 16 April 2012.The options can be allocated to the beneficiaries, in one or more tranches, up to 31 December2014 and exercised by the latter, in one or more tranches, but in any case for an amount pertranche of not less than 25% of the options assigned to each, with effect from the fifthcalendar day following the date that the adjusted NAV figure at 31 December 2014 isannounced, until 31 December 2017. The adjusted NAV means the value of the assets, net ofliabilities, calculated on the basis of the company’s balance sheet at 31 December 2014 andrestated, where necessary, to take account of the measurement at fair value of allinvestments, as assessed by an independent third party.The shareholders’ meeting also approved the Performance Share Plan for 2012–2014. Toimplement the resolution of the shareholders meeting, the Board of Directors of DeA CapitalS.p.A. allocated a total of 302,500 units (representing the right to receive ordinary shares ofthe company, free of charge, under the terms and conditions of the plan) to certain employeesof the company and its subsidiaries and of the Parent Company, De Agostini S.p.A., whoperform important roles for the Company.Shares allocated due to the vesting of units will be drawn from own shares already held by thecompany.A manager with strategic responsibilities was given the entitlement to an incentive scheme.The scheme, valued in accordance with IFRS 2, confers on beneficiaries the right to receive acash award linked to corporate performance over the medium-term horizon (the three yearperiod 2012–2014). An actuarial valuation of this plan was made in-house during the relevant
    • Annual financial statementsto 31 December 2012 181time period. The current average value of the obligations arising from the plans is based on anappropriate “length of service" table and on specific demographic and economic/financialassumptions.The terms and conditions of the DeA Capital Stock Option Plan for 2012–2014 and thePerformance Share Plan for 2012-2014 are described in the Information Prospectus preparedin accordance with art. 84-bis of Consob Resolution 11971 of 14 May 1999 (IssuerRegulations), available to the public at the registered office of DeA Capital S.p.A. and on thecompany’s website www.deacapital.it in the section Corporate Governance/Incentive Plans.9b – Service costsThe table below shows a breakdown of service costs, which came in at EUR 3,138 thousand(EUR 3,090 thousand in 2011):(Euro thousand) Year 2012 Year 2011Admin. Consulting, Tax and Legal and other 1,689 1,799Remuneration of internal committees 255 263Maintenance 103 83Travel expenses 137 137Utilities and general expenses 772 615Bank charges 13 13Books, stationery and conventions 143 149Other expenses 26 31Total 3,138 3,0909c – Depreciation and amortisationPlease see the table on changes in intangible and tangible assets for a breakdown of this item.9d – Other costsThis item totalled EUR 508 thousand (EUR 388 thousand in 2011) and mainly comprises thenon-deductible portion of VAT as a result of applying the new percentage of 44% against whichVAT on purchases made during the year may be offset.10 – Financial income and charges10a – Financial incomeFinancial income totalled EUR 2,044 thousand (EUR 1,845 thousand in 2011) and includedinterest income of EUR 1,040 thousand, income from the collection of the coupon on theSoprarno Pronti Termine bond fund in the amount of EUR 111 thousand, income from financialinstruments at fair value through profit and loss of EUR 485 thousand, and exchange rategains of EUR 408 thousand.A breakdown of interest income shows that EUR 154 thousand was earned on bank currentaccounts and EUR 886 thousand on loans to subsidiaries.
    • Annual financial statementsto 31 December 2012 182(Euro thousand) Year 2012 Year 2011Interest income 1,040 1,446Gain from available for sale financial instruments 111 0Income from financial instruments at fair valuethrough profit and loss 485 195Exchange gains 408 204Total 2,044 1,84510b – Financial chargesFinancial charges totalled EUR 4,653 thousand in 2012, compared with EUR 4,341 thousand in2011. These mainly included interest expenses on loans and losses on hedging derivatives andexchange rates.Specifically, financial charges mainly break down as follows:- charges of EUR 889 thousand relating to interest rate swaps- a capital loss realised on the sale of the Soprarno bond fund of EUR 7 thousand- exchange rate losses of EUR 3 thousand- realised exchange rate losses on financial instruments of EUR 29 thousand- negative alignment of the valuation of the earn-out accrued in 2012, of EUR 208thousand- interest expense for the acquisition of the FARE Group in December 2008, accruedduring 2012, totalling EUR 785 thousand- interest expenses on the Mediobanca credit line of EUR 2,410 thousand and fees ofEUR 226 thousand(Euro thousand) Year 2012 Year 2011Interest expense 3,517 3,296Charges on financial liabilities 208 0Charges on derivatives 896 853Exchange losses 32 192Total 4,653 4,34111 - Tax11a – Income tax for the periodAt 31 December 2012, no IRAP taxes were recorded because of the negative tax base. Thisitem mainly includes current tax income, amounting to EUR 4,821 thousand relates to DeACapital S.p.A.’s decision to join (on 13 June 2008) the national tax consolidation scheme of theB&D Group (the Group headed by B&D Holding di Marco Drago e C. S.a.p.a.).11b – Deferred tax assets and liabilitiesThis item came in at EUR 171 thousand and consists entirely of provisions for deferred taxassets during the year.The table below shows a reconciliation of the tax charges recorded in the financial statementsand the theoretical tax charge calculated using the IRES rate applicable in Italy:
    • Annual financial statementsto 31 December 2012 183(Euro thousand) Amount Rate Amount RateProfit before tax (2,780) (35,334)Theoretical income tax (765) -27.5% (9,717) -27.5%Tax effect on permanent differences- Impairment on Investments 137 4.9% 25,632 72.5%- Gains Pex 0 0.0% (1,227) -3.5%- Dividends (2,315) -83.3% (16,424) -46.5%- Non deductible interests 439 15.8% 497 1.4%- Other movements 367 13.2% (134) -0.4%Tax effect of utilisation of previously unrecognised tax losse 0 0.0% (409) -1.2%Deferred tax assets for available losses 0 0.0% 0 0.0%Fiscal consolidation gain (2,685) -96.6% (1,259) -3.6%Other net differences (228) 8.2% (208) -0.6%IRAP and taxes on foreign income 0 0.0% 0 0.0%Income tax charged in the income statement (5,050) (3,248)2012 201112 – Basic earnings (loss) per shareBasic earnings per share are calculated by dividing net profit or loss for the period attributableto the Parent Company by the weighted average number of ordinary shares outstanding duringthe period.Diluted earnings per share are calculated by dividing net profit for the period attributable toshareholders by the weighted average number of ordinary shares outstanding during theperiod, including any dilutive effects of stock options.The table below shows the share information used to calculate basic and diluted earnings pershare:Year 2012 Year 2011Parent company net profit/(loss) (A) 2,269,268 (32,085,746)Weighted average number of ordinary shares outstanding (B) 277,469,810 288,942,756Basic earnings/(loss) per share (€ per share) (C=A/B) 0.0082 (0.1110)Restatement for dilutive effect - -Parent company net profit/(loss) restated for dilutive effect (D) 2,269,268 (32,085,746)Weighted average number of shares to be issued for the exercise ofstock options (E) - 174,632Total number of shares outstanding and to be issued (F) 277,469,810 289,117,388Diluted earnings/(loss) per share (€ per share) (G=D/F) 0.0082 (0.1110)Options have a dilutive effect only when the average market price of the share for the periodexceeds the strike price of the options or warrants (i.e. when they are "in the money").
    • Annual financial statementsto 31 December 2012 184Other information CommitmentsAt 31 December 2012, remaining commitments to make paid calls to venture capital fundstotalled EUR 3.7 million, compared with EUR 2.4 million in 2011. Changes in commitments areshown in the table below.(Euro million)Residual Commitments vs. Funds - Dec. 31, 2011 2.4Capital Calls at commitment value 0.0Distributions callable 1.2Exchange differences 0.1Residual Commitments vs. Funds - Dec. 31, 2012 3.7 Own shares and Parent Company sharesOn 17 April 2012, the shareholders’ meeting approved a new plan to buy and sell own shares.The plan cancelled and replaced the previous plan authorised by the shareholders’ meeting on19 April 2011, which was scheduled to expire on 19 October 2012. The new plan will have thesame objectives as the previous one, including the purchase of own shares to be used forextraordinary operations and share incentive plans, offering shareholders a means ofmonetising their investment, stabilising the share price and regulating trading within the limitsof the legislation in force.The authorisation specifies that purchases may be carried out, for a maximum period of 18months starting from 17 April 2012, in accordance with all procedures allowed by currentregulations, and that DeA Capital S.p.A. may also sell the shares purchased for the purposes oftrading. The unit price for the purchase of the shares is set by the Board of Directors, but inany case must not be more than 20% above or below the share’s reference price on thetrading day prior to each purchase.In contrast, the authorisation to sell own shares already held in the company’s portfolio andany shares bought in the future was granted for an unlimited period, to be implemented usingthe methods deemed most appropriate and at a price to be determined on a case-by-casebasis by the Board of Directors, which must not, however, be more than 20% below theshares reference price on the trading day prior to each individual sale (apart from in certainexceptional cases specified in the plan). Sale transactions may also be carried out for tradingpurposes.Also on 17 April 2012, the company’s Board of Directors voted to initiate the plan to buy andsell own shares authorised by the shareholders’ meeting, and to this end vested the Chairmanof the Board of Directors and the Chief Executive Officer with all the necessary powers, to beexercised jointly or severally and with full powers of delegation.In 2012, as a part of the above two plans, DeA Capital S.p.A. purchased around 6.1 millionshares valued at about EUR 8.0 million (at an average price of EUR 1.31 per share).Taking into account purchases made in previous years for plans in place from time to time, anduses of own shares to service purchases of controlling interests in FARE Holding and IDeA AI,at 31 December 2012 the company owned 32,006,029 own shares (equal to about 10.4% ofthe share capital).
    • Annual financial statementsto 31 December 2012 185As of the date of this document, based on purchases of 630,975 shares made after the end of2012, the company had a total of 32,637,004 own shares corresponding to about 10.6% of theshare capital.During 2012, the company did not hold, purchase or sell, on its own account or through a trustcompany, any shares in Parent Company De Agostini S.p.A. Stock option and performance share plansOn 17 April 2012, the shareholders’ meeting approved the DeA Capital Stock Option Plan for2012–2014. To implement the resolution of the shareholders meeting, the Board of Directorsof DeA Capital S.p.A., at its meeting held on the same day, allocated a total of 1,030,000options to certain employees of the company and its subsidiaries and of the Parent Company,De Agostini S.p.A., who perform important roles for the company.In line with the criteria specified in the regulations governing the DeA Capital Stock OptionPlan for 2012–14, the Board of Directors also set the exercise price for the options allocated atEUR 1.3363, which is the arithmetic mean of the official prices of ordinary DeA Capital shareson the Mercato Telematico Azionario, the Italian screen-based trading system organised andmanaged by Borsa Italiana S.p.A., on the trading days between 17 March 2012 and 16 April2012.The shareholders’ meeting also approved a paid capital increase, in divisible form, withoutoption rights, via the issue of a maximum of 1,350,000 ordinary shares to service the DeACapital Stock Option Plan for 2012-2014.The shareholders’ meeting also approved the Performance Share Plan for 2012–2014. Toimplement the resolution of the shareholders meeting, the Board of Directors allocated a totalof 302,500 units (representing the right to receive ordinary shares of the company, free ofcharge, under the terms and conditions of the plan) to certain employees of the company andits subsidiaries and of the Parent Company, De Agostini S.p.A., who perform important rolesfor the Company.Shares allocated due to the vesting of units will be drawn from own shares already held by thecompany.The terms and conditions of the DeA Capital Stock Option Plan 2012–2014 and thePerformance Share Plan 2012-2014 are described in the Information Prospectus prepared inaccordance with art. 84-bis of Consob Resolution 11971 of 14 May 1999 (Issuer Regulations),available to the public at the registered office of DeA Capital S.p.A. and on the company’swebsite www.deacapital.it in the section Corporate Governance/Incentive Plans.The tables below summarise the assumptions made in calculating the fair value of the stockoption plans:Stock Option 2004 plan 2005 plan 2010 planmarch 2010plan 2011 plan 2012 planN° options allocated 160,000 180,000 2,235,000 500,000 1,845,000 1,030,000Average market price at allocation date 2.445 2.703 1.2964 1.3606 1.55 1.38Value at allocation date 391,200 486,540 2,897,454 680,300 2,859,750 1,421,400Average exercise price 2.026 2.459 1.318 1.413 1.538 1.3363Expected volatility 31.15% 29.40% 35.49% 33.54% 33.43% 33.84%Option expiry date 8/31/2015 4/30/2016 12/31/2015 12/31/2015 12/31/2016 12/31/2017Risk free yield 4.25125% 3.59508% 1.88445% 2.95194% 3.44% 2.47%The allocation plan for 2010-2015 is to be considered lapsed as the conditions for exercisingoption rights were not met.
    • Annual financial statementsto 31 December 2012 186Performance Share 2012 planN° options allocated 302,500Average market price at allocation date 1.380Value at allocation date 417,450Expected volatility 33.84%Option expiry date 12/31/2014Risk free yield 2.470%The Warrant Plan for 2009-2012 lapsed during 2012 as the conditions for exercising thewarrants were not met. Transactions with parent companies, subsidiaries and related parties- Intercompany relationships with the Parent Company and its GroupOn 22 March 2007, the company signed a Service Agreement with the controlling shareholder,De Agostini S.p.A. (which was renewed on 31 March 2011), for the latter to provide operatingservices in administration, finance, control, legal, corporate, tax, investor relations and publicrelations areas for a total payment of EUR 480,000 per year.The agreement, which is renewable annually, is priced at market rates, and is intended toallow the company to maintain a streamlined organisational structure in keeping with itsdevelopment policy, and to obtain adequate operational support at the same time.The company also carried out transactions with its subsidiaries, particularly with regard to theprovision of management support services. These transactions were carried out under normalmarket conditions.Lastly, the company did not hold, purchase or dispose of the shares of any related parties in2012.The table below shows the balances arising from transactions with related parties.(Euro thousand)TradereceivablesFinancialreceivablesTaxreceivables Tax payablesTradepayablesServicerevenuesPayrollrechargeFinancialincomeTaxincomeCosti sudistaccoPersonaleServicecostsIDeA SIM S.p.A. 1.2 - - - - 1.0 - - - - -IDeA Capital Funds SGR S.p.A. 357.3 - - - - 35.7 - - - - 15.7IDeA FIMIT SGR S.p.A. 737.1 - - - 26.6 120.0 17.0 - - - 60.0I.FI.M. S.r.l. - - - - - 45.7 - 499.7 - - -Harvip Investimenti S.p.A. 3.2 - - - - 5.1 - - - - -Soprarno SGR S.p.A. 7.4 - - - 86.2 6.5 10.3 - - 18.3 86.2DeA Capital Real Estate S.p.A. - - - - - 24.4 - - - - -Innovation Real Estate S.p.A. 63.9 - - - 56.6 70.4 44.7 - - - -I.R.E. Advisory S.r.l. - - - - - 19.0 - - - - -De Agostini S.p.A. 305.6 - - - 25.3 131.3 45.4 - - 96.7 610.1B&D Holding di Marco Drago e C. S.a.p.A. - - 7,488.9 - - - - - 4,821.3 - -De Agostini Libri S.p.A. - - - - 0.7 - - - - - 1.2DeA Capital Investments S.A. - 31,269.7 - - - - - 385.7 - - -De Agostini Publishing Italia S.p.A. 20.5 - - - - - - - - - 0.3De Agostini Editore S.p.A. - - - - 46.0 - - - - - 162.7Total related parties 1,496.2 31,269.7 7,488.9 - 241.4 459.1 117.4 885.4 4,821.3 115.0 936.2Total financial statement line item 2,149.3 31,269.7 7,488.9 - 2,525.6 459.1 117.7 2,043.7 4,821.3 4,977.9 3,138.1as % of financial statement line item 69.6% 100.0% 100.0% - 9.6% 100.0% 99.7% 43.3% 100.0% 2.3% 29.8%12/31/2012 Year 2012At 31 December 2012, leasehold improvements incurred in the name of and on behalf of thirdparties were reimbursed on a pro-rated basis and allocated as follows:- EUR 233 thousand to De Agostini S.p.A.- EUR 295 thousand to IDeA Capital Funds SGR S.p.A.- EUR 53 thousand to IRE- EUR 17 thousand to De Agostini Publishing Italia S.p.A.- EUR 607 thousand to IDeA FIMIT S.p.A.
    • Annual financial statementsto 31 December 2012 187- Remuneration of directors, auditors, general managers and managers withstrategic responsibilitiesIn 2012, remuneration payable to the directors and auditors of DeA Capital S.p.A. for theperformance of their duties totalled EUR 308 thousand and EUR 175 thousand respectively.Remuneration paid to directors and auditors is shown in the table below:Director PositionYearappointedTerm endsCompensationreceived for officewithin theconsolidatingcompany (€thousands)Benefitsin kindBonusesandotherbenefitsOtherprincipalauditor feesforsubsidiariesOthercompensation(€ thousand)Lorenzo Pellicioli Chairman 2012 2012 AGM 30 0 0 0 0Paolo Ceretti CEO 2012 2012 AGM 30 0 0 0 60Daniel Buaron Director 2012 2012 AGM 30 0 0 0 189Lino Benassi Director 2012 2012 AGM 30 0 0 0 195Rosario Bifulco Director 2012 2012 AGM 30 0 0 0 20Claudio Costamagna Director 2012 2012 AGM 30 0 0 0 5Alberto Dessy Director till may 2012 2012 AGM 10 0 0 0 8Roberto Drago Director 2012 2012 AGM 30 0 0 0 3Marco Drago Director 2012 2012 AGM 30 0 0 0 0Severino Salvemini Director may 2012 2012 AGM 19 0 0 0 19Andre Guerra Director till april 2012 2012 AGM 9 0 0 0 1Marco Boroli Director 2012 2012 AGM 30 0 0 0 0Angelo GavianiChairman of theBoard of2012 2012 AGM 75 0 0 14 0Cesare AndreaGrifoniPrincipal Auditor 2012 2012 AGM 50 0 0 26 0Gian Piero Balducci Principal Auditor 2012 2012 AGM 50 0 0 56 15Giulio Gasloli Principal Auditor till may 2012 2012 AGM 0 0 0 3 0In contrast to the data contained in the Remuneration Report prepared pursuant to art. 123-ter of the TUF in accordance with art. 84-quater of the Issuer Regulations, the emolumentsand compensation indicated above do not include social security contributions whereapplicable.“Other remuneration” relates to remuneration received for other positions held in either DeACapital S.p.A. or other Group companies.In 2012, annual salaries and bonuses, excluding benefits in kind, paid to managers withstrategic responsibilities in the Parent Company totalled about EUR 742 thousand. Equity investments held by directors, auditors, general managers andmanagers with strategic responsibilitiesDetails of equity investments held in DeA Capital S.p.A. and its subsidiaries by members of theboards of directors and auditors and by managers with strategic responsibilities are provided inaggregate format in the table below.No equity investments were reported for general managers, since to date, this position doesnot exist.
    • Annual financial statementsto 31 December 2012 188All those who held positions on the boards of directors or auditors, or as managers withstrategic responsibilities, for the whole or part of the year in question, are included.Lorenzo Pellicioli DeA Capital S.p.A. 2,566,323 0 0 2,566,323Paolo Ceretti DeA Capital S.p.A. 1,000,000 0 0 1,000,000Rosario Bifulco DeA Capital S.p.A. 1,536,081 0 0 1,536,081Lino Benassi DeA Capital S.p.A. 23,500 0 0 23,500Daniel Buaron * DeA Capital S.p.A. 11,689,552 0 0 11,689,552Daniel Buaron DeA Capital Real Estate S.p.A. 180,000 0 (180,000) 0Key Management DeA Capital S.p.A. 50,000 55,000 0 105,000Total 17,045,456 55,000 (180,000) 16,920,456* through DEB Holding S.r.l.Beneficiary CompanyNumber ofshares held at1.1.2012Number ofsharespurchasedNumber ofshares soldNumber ofshares held at31.12.2012No DeA Capital shares are held by other directors or auditors who are currently in office;furthermore, no shares are held in companies controlled by DeA Capital.The directors Lorenzo Pellicioli, Lino Benassi, Marco Drago, Marco Boroli and Roberto Dragoown shares of B&D Holding di Marco Drago e C. S.a.p.a. and New B&D Holding di Marco Dragoe C.S.a.p.A., the direct and indirect parent companies of De Agostini S.p.A. (which is in turnthe Parent Company of the company) and are parties to a shareholders’ agreement coveringthese shares.
    • Annual financial statementsto 31 December 2012 189 Stock options allocated to members of the boards of directors and auditors,general managers and managers with strategic responsibilitiesDetails of stock options held by members of the boards of directors and auditors and bymanagers with strategic responsibilities in DeA Capital S.p.A. and its subsidiaries are providedin aggregate format in the table below.Optionslapsedduring 2012Beneficiary Position Number ofoptionsAverageexercisepriceAverageexpirydateNumber ofoptionsAverageexercisepriceAverageexpirydateNumber ofoptionsNumber ofoptionsAverageexercisepriceAverageexpirydatePaolo Ceretti CEO 750,000 1.318 5 0 0 0 0 750,000 1.318 5Paolo Ceretti CEO 750,000 1.538 5 0 0 0 0 750,000 1.538 5Paolo Ceretti CEO 0 0 0 630,000 1.3363 5 0 630,000 1.3363 5Key Management 985,000 1.318 5 0 0 0 0 985,000 1.318 5Key Management 500,000 1.413 5 0 0 0 0 500,000 1.413 5Key Management 485,000 1.538 5 0 0 0 0 485,000 1.538 5Key Management 0 0 0 400,000 1.3363 5 0 400,000 1.3363 5Options outstanding at Jan. 1, 2012 Options granted during 2012 Options outstanding at December31, 2012Lastly, note that the Chief Executive Officer, Paolo Ceretti, and managers with strategicresponsibilities have been assigned 80,000 and 52,500 performance shares respectively, asshown in the table below.Optionslapsedduring 2012Beneficiary Position Number ofoptionsAverageexercisepriceAverageexpirydateNumber ofoptionsAverageexercisepriceAverageexpirydateNumber ofoptionsNumber ofoptionsAverageexercisepriceAverageexpirydatePaolo Ceretti CEO 0 0 0 80,000 1.38 2 0 80,000 1.38 2Key Management 0 0 0 52,500 1.38 2 0 52,500 1.38 2Options outstanding at Jan. 1, 2012 Options granted during 2012 Options outstanding at December31, 2012
    • Annual financial statementsto 31 December 2012 190Management and coordinationThe Parent Company is subject to the management and coordination of De Agostini S.p.A.Key figures from the latest approved financial statements of De Agostini S.p.A. are shownbelow.INCOME STATEMENT 2011 2010Total operating revenues 3,479,992 3,054,546Total operating expenses (28,066,035) (26,968,755)Financial income and expenses (5,590,599) 32,890,135Restatement of financial assets (71,155,333) (346,068,081)Extraordinary income/(expenses) 92,329,256 (1,240,563)Income tax charge 25,155,794 7,497,238Net profit 16,153,075 (330,835,480)BALANCE SHEET 2011 2010Receivables from shareholders for amounts due 0 0Non-current assets 3,149,722,282 3,375,891,032Operating assets 631,210,453 485,446,867Prepaid expenses and accrued income 4,492,915 3,533,259Net equity (2,606,439,702) (2,590,286,628)Provisions for liability and charges (62,609,668) (72,499,799)Provisions for employee end-of-service benefits (863,158) (823,755)Debt (1,111,240,894) (1,196,428,115)Accrued expenses and deferred income (4,272,228) (4,832,861)
    • Annual financial statementsto 31 December 2012 191RisksAs described earlier in the Report on Operations, the company operates through, and isstructured as, two business areas, Private Equity Investment and Alternative AssetManagement.The risks set out below stem from a consideration of the characteristics of the market and thecompany’s operations, and the main findings of a risk assessment, and from periodicmonitoring, including that carried out through the regulatory policies adopted by the Group.There could, however, be risks that are currently unidentified or not considered significant thatcould have an impact on the companys operations.The company has adopted a modern corporate governance system that provides effectivemanagement of the complexities of its operations and enables its strategic objectives to beachieved. Furthermore, the assessments conducted by the organisational units and thedirectors confirm both the non-critical nature of these risks and uncertainties and the financialsolidity of the company.A. Contextual risksA.1. Risks relating to general economic conditionsThe operating performance and financial position of the company are affected by the variousfactors that make up the macro-economic environment, including increases or decreases inGDP, investor and consumer confidence, interest rates, inflation, the costs of raw materialsand unemployment.The ability to meet medium- to long-term objectives could be affected by general economicperformance, which could slow the development of sectors the Group has invested in, and atthe same time, the business of the investee companies.A.2. Socio-political eventsIn line with its strategic growth guidelines, one of the companys activities is private equityinvestment in companies and funds in different jurisdictions and countries around the world,which, in turn, invest in a number of countries and geographical areas. The company may haveinvested directly and indirectly in foreign countries whose social, political and economicconditions put the achievement of its investment objectives at risk.A.3. Regulatory changesMany of the companys investee companies conduct their operations in highly regulated sectorsand markets. Any changes to or developments in the legislative or regulatory framework thataffect the costs and revenue structure of investee companies or the tax regime applied, couldhave negative effects on the companys financial results, and necessitate changes in thecompanys strategy.To combat this risk, the company has established procedures to constantly monitor sectorregulation and any changes thereto, in order to seize business opportunities and respond toany changes in the prevailing legislation and regulations in good time.A.4. Performance of the financial marketsThe company’s ability to meet its strategic and management objectives could depend on theperformance of public markets. A negative trend on the public markets could have an effect onthe private equity sector in general, making investment and divestment transactions morecomplex, and on the company’s capacity to increase the NAV of investments in particular.
    • Annual financial statementsto 31 December 2012 192The value of equity investments held directly or indirectly through funds in which the companyhas invested could be affected by factors such as comparable transactions concluded on themarket, sector multiples and market volatility.These factors that cannot be directly controlled by the company are constantly monitored inorder to identify appropriate response strategies that involve both the provision of guidance forthe management of investee companies, and the investment and value enhancement strategyfor the assets held.A.5. Exchange ratesHolding investments in currencies other than the euro exposes the company to changes inexchange rates between currencies.A.6. Interest ratesOngoing financing operations that are subject to variable interest rates could expose thecompany to an increase in related financial charges, in the event that the reference interestrates rise significantly.The company has established appropriate strategies to hedge against the risk of interest ratefluctuations. Given the partial hedge of the underlying, the company classifies these securitiesas speculative instruments, even though they are put in place for hedging purposes.B. Strategic risksB.1. Concentration of the Private Equity Investment portfolioThe private equity investment strategy adopted by the company includes:- direct investments- indirect investmentsWithin this strategy, the companys overall profitability could be adversely affected by anunfavourable trend in one or a few investments, if there were insufficient risk diversification,resulting from the excessive concentration of investment in a small number of assets, sectors,countries, currencies or of indirect investments in funds with limited investment targets/typesof investment.To combat these risk scenarios, the company pursues an asset allocation strategy intended tocreate a balanced portfolio with a moderate risk profile, investing in attractive sectors and incompanies with an appealing current and future risk/return ratio.Furthermore, the combination of direct and indirect investments, which, by their nature,guarantee a high level of diversification, helps reduce the level of asset concentration.B.2. Concentration of Alternative Asset Management activitiesIn Alternative Asset Management, in which the company is active through the companies DeACapital Real Estate S.p.A. and IFIM S.r.l., events could arise as a result of excessiveconcentration that would hinder the achievement of the level of expected returns. Theseevents could be due to: Private equity fundso concentration of the management activities of asset management companies across alimited number of funds, in the event that one or more funds decides to cancel its assetmanagement mandate
    • Annual financial statementsto 31 December 2012 193o concentration of the financial resources of the funds managed in a limited number ofsectors and/or geographical areas, in the event of currency, systemic or sector criseso for closed funds, concentration of the commitment across just a few subscribers, in theevent of a counterparty experiencing financial difficulties Real estate fundso concentration of real estate in the portfolio of managed funds in a few cities and/or inlimited types of property (management/commercial), in the event of a crisis on theproperty market concernedo concentration in respect of certain key tenants, in the event that these withdraw fromthe rental contracts, which could lead to a vacancy rate that has a negative impact onthe funds financial results and the valuation of the property managedo concentration of the maturities of numerous real estate funds within a narrowtimeframe, with related high availability of property on the market, leading to adecrease in property values and an increase in selling timesFor each of the risk scenarios outlined above, the Group has defined and implementedappropriate strategies that include strategic, operational and management aspects, as well asa system monitoring the level of diversification of Alternative Asset Management assets.B.3. Key resources (governance/organisation)The success of the company depends to a large extent on its executive directors and keymanagement figures, their ability to efficiently manage the business and the normal activitiesof individual Group companies, as well as knowledge of the market and the professionalrelationships established.The departure of one or more of these key resources, without a suitable replacement beingfound, as well as an inability to attract and retain new and qualified resources, could impactgrowth targets and have a negative effect on the Group’s operating performance and financialresults.To mitigate this risk, the Group has put in place HR management policies that correspondclosely to the needs of the business, and incentive policies that are periodically reviewed, inlight of, inter alia, the general economic climate and the results achieved by the Group.C. Operating risksC.1. Investment operationsInvestment operations conducted by the company are subject to the risks typical of privateequity activities, such as an accurate valuation of the target company and the nature of thetransactions carried out, which require the acquisition of strategic equity investments, but notcontrolling interests, governed by appropriate shareholders’ agreements.The company implements a structured process of due diligence on target companies, whichrequires the involvement of the different levels of group management involved and the carefuldefinition of shareholders’ pacts in order to conclude agreements in line with the investmentstrategy and the risk profile defined by the company.C.2. Compliance with covenantsSome investment operations were concluded using financial leverage to invest in the targetcompanies. For financing contracts signed by investee companies, specific covenants backedby real guarantees are in place; failure to comply with these could necessitate recapitalisationoperations for investee companies and lead to an increase in financial charges relating to debt
    • Annual financial statementsto 31 December 2012 194refinancing. Failure to comply with covenants attached to loans could have negative effects onboth the financial situation and operations of investee companies, and on the value of theinvestment.The company constantly monitors the significant reference parameters for the financialobligations taken on by investee companies, in order to identify any unexpected variance ingood time.C.3. Divestment operationsThe company invests over a medium- to long-term horizon.Over the investment management period, external situations could arise that might have asignificant impact on the operating results of the investee companies, and consequently on thevalue of the investment itself. Furthermore, in the case of co-investment, guiding themanagement of an investee company could prove problematic or unfeasible, and it mayultimately prove impossible to dispose of the stakes held owing to lock-up clauses.The divestment strategy could therefore be negatively affected by various factors, some ofwhich cannot be foreseen at the time the investments are made. There is therefore noguarantee that expected earnings will be realised given the risks resulting from theinvestments made.To combat these risk situations, the company has defined a process to monitor theperformance of its investee companies, facilitated by its representation on the managementbodies of significant investee companies, with a view to identifying any critical situations ingood time.C.4. Funding riskThe income flows expected from the Alternative Asset Management business depend on thecapacity of the asset management companies in which the company invests to stabilise/growtheir assets under management.In this environment, fund raising activity could be harmed by both external factors, such asthe continuation of the global economic crisis or the trend in interest rates, and internalfactors, such as bad timing in respect of fund raising activities by the asset managementcompanies or the departure of key managers from the companies.The company has established appropriate risk management strategies in relation to fundraising, with a view to both involving new investors and retaining current investors.
    • Annual financial statementsto 31 December 2012 195Significant events after the end of 2012 Purchase of IDeA SIM S.p.A sharesOn 25 February 2013, in compliance with the provisions of various agreements, DeA CapitalS.p.A. acquired the shares held by the former CEO of IDeA SIM, equal to 30% of its capital,bringing its investment to 95% of the company’s capital. The price paid was EUR 79 thousand. Acquisition of a shareholding in IDeA FIMIT SGROn 27 February 2013, DeA Capital S.p.A. signed an agreement with Inarcassa to acquireshares from the latter representing 2.98% of the capital of IDeA FIMIT SGR, for an estimatedprice of around EUR 5.9 million; financial equity instruments issued by IDeA FIMIT SGR andheld by Inarcassa are excluded from the sale.The closing is expected to take place at the beginning of April once the pre-emptive rightshave expired.Further informationIn accordance with the provisions of IAS 10, the company authorised the publication of thesefinancial statements within the terms authorised by existing legislation.Atypical or unusual transactionsIn 2012, there were no atypical or unusual transactions as defined by Consob Communication6064293 of 28 July 2006.Significant non-recurring events and transactionsIn 2012, the company did not undertake any significant non-recurring transactions as definedby the above-mentioned Consob Communication.
    • Annual financial statementsto 31 December 2012 196Statement of responsibilities for the annual financialstatements pursuant to art. 154-bis of Legislative Decree58/98The undersigned, Paolo Ceretti, as Chief Executive Officer, and Manolo Santilli, as the managerresponsible for preparing the accounting statements of DeA Capital S.p.A., hereby certify,pursuant to art. 154-bis, paragraphs 3 and 4 of Legislative Decree 58 of 24 February 1998,that based on the characteristics of the company, the administrative and accountingprocedures for preparing the annual financial statements of DeA Capital S.p.A. during the yearwere suitable and effectively applied.The assessment as to the suitability of the administrative and accounting procedures forpreparing the annual financial statements for the year to 31 December 2012 was based on aprocess established by DeA Capital S.p.A. in keeping with the Internal Control - IntegratedFramework model issued by the Committee of Sponsoring Organisations of the TreadwayCommission, which is the generally accepted reference framework at the international level.Note in this regard, that as described in the notes to the annual financial statements, asignificant portion of the assets are investments stated at fair value. Fair values weredetermined by directors based on their best estimate and judgment using the knowledge andevidence available at the time the financial statements were prepared. However, due toobjective difficulties in making assessments and the absence of a liquid market, the valuesassigned to such assets could differ, and in some cases significantly, from those that could beobtained when the assets are sold.The undersigned further certify that the annual financial statements to 31 December 2012:- correspond to the company’s accounting records- have been prepared in compliance with the International Financial Reporting Standardsadopted by the European Union, and the measures issued to implement art. 9 of LegislativeDecree 38/2005- to the best of their knowledge, provide a true and fair view of the operating performance andfinancial position of the issuerThe report on operations contains a reliable analysis of operating performance and results andof the position of the issuer and all companies included in the basis of consolidation, togetherwith a description of the main risks and uncertainties to which they are exposed.8 March 2013Paolo CerettiChief Executive OfficerManolo SantilliManager responsible for preparing the company’s accounts
    • Annual financial statementsto 31 December 2012 197Information pursuant to art. 149-duodecies of the ConsobIssuer RegulationsThe table below was prepared in accordance with art. 149-duodecies of the Consob IssuerRegulations and reports the fees for 2012 for auditing and other services provided by theindependent auditors and entities belonging to the independent auditors’ network. The feesreported below do not include VAT and out-of-pocket expenses.(Euro thousand)Companyproviding theservice BeneficiaryCompensation paidfor 2012 FYAudit KPMG S.p.A. DeA Capital S.p.A. 93Certification services (1) KPMG S.p.A. DeA Capital S.p.A. 7Totale 1001) Presentation of tax return
    • Annual financial statementsto 31 December 2012 198Summary of Subsidiaries’ Financial Statements to 31December 2012
    • Annual financial statementsto 31 December 2012 199(Euro thousands)DeA CapitalInvestments S.A.I.F.IM.IDeA Capital FundsSGRIDeA FIMIT SGR IDeA SIMDeA Capital RealEstateInnovation RealEstateInnovation RealEstate AdvisoryNon-current assets 768,029 48,431 849 264,166 33 10,950 1,113 10Current assets 163 291 10,994 27,762 270 2,506 11,563 2,137Available-for-sale financial assets - non-current portion - - - - - - - -Consolidated assets 768,192 48,722 11,843 291,928 303 13,456 12,676 2,147Shareholders’ equity 694,606 48,678 6,580 235,547 194 11,596 4,713 640Non-current liabilities 26,591 - 276 37,932 - 792 737 95Current liabilities 46,995 44 4,987 18,449 109 1,068 7,226 1,412Consolidated liabilities 768,192 48,722 11,843 291,928 303 13,456 12,676 2,147Alternative asset management fees - - 13,534 65,426 260 - - -Service revenues - - 16 - - 290 - -Other investment income/charges (5,758) 2,467 (15) 571 - 7,741 1,000 1,000Other income 555 - 17 711 13 - - -Personnel costs - (128) (5,227) (15,869) (252) - - -External service costs (3,804) (87) (1,455) (12,612) (256) (129) (129) (129)Depreciation and amortisation - - (137) (12,830) (10) (1) (1) (1)Other charges (646) (2) - (3,976) (2) (1) (1) (1)Financial income 66 - 207 149 - 1,614 1,614 1,614Financial charges (394) (500) - (682) (1) (845) (845) (845)Taxes 978 (53) (2,489) (1,601) (11) (39) (39) (39)Profit/(loss) for the period from held-for-sale operations - - - - - - - -Net profit/(loss) (9,003) 1,697 4,451 19,287 (259) 8,630 1,599 1,599
    • Annual financial statementsto 31 December 2012 200Independent Auditors’ Report(Original available in Italian version only)
    • Annual financial statementsto 31 December 2012 201Reports of the Board of Statutory Auditors(Original available in Italian version only)