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 2018.104.22.1681.401.501.601.70DeA 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%