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    DeA Capital bilancio 2012 eng DeA Capital bilancio 2012 eng Presentation Transcript

    • Annual financial statements to 31 December 2012 1 FINANCIAL STATEMENTS TO 31 DECEMBER 2012 ______________________ 2012 Board of Directors of DeA Capital S.p.A. Milan, 8 March 2013
    • Annual financial statements to 31 December 2012 2 DeA 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: Via Brera, 21, Milan 20121, Italy Share capital: EUR 306,612,100 (fully paid-up) comprising 306,612,100 shares with a nominal value of EUR 1 each (including 32,006,029 held in the portfolio at 31 December 2012). Tax code, VAT code and recorded in the Milan Register of Companies under no. 07918170015 Board of Directors (*) Chairman Lorenzo Pellicioli Chief Executive Officer Paolo Ceretti Directors Lino Benassi (1) Rosario Bifulco (1/4/5) Marco Boroli Daniel Buaron Claudio Costamagna (3/5) Marco Drago Roberto Drago Severino Salvemini (2/3/5) Board of Statutory Auditors (*) Chairman Angelo Gaviani Regular Auditors Gian Piero Balducci Cesare Andrea Grifoni Alternate Auditors Andrea Bonafè Maurizio Ferrero Giulio Gasloli Secretariat of the Board of Directors Diana Allegretti Manager responsible for preparing the company’s accounts Manolo Santilli Independent 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 statements to 31 December 2012 3 Contents Report on Operations 1. Profile of DeA Capital S.p.A. 2. Information for shareholders 3. DeA Capital Group’s key balance sheet and income statement figures 4. Significant events during the year 5. DeA Capital Group’s results 6. Results of the Parent Company DeA Capital S.p.A. 7. Other information 8. Proposal to approve the financial statements of DeA Capital S.p.A. for the year to 31 December 2012 and related and resulting resolutions Consolidated financial statements for the year to 31 December 2012 Statement of responsibilities for consolidated financial statements pursuant to art. 154-bis of Legislative Decree 58/98 Information pursuant to art. 149-duodecies of the Consob Issuer Regulations - consolidated financial statements Annual financial statements for the year to 31 December 2012 Statement of responsibilities for accounts pursuant to art. 154-bis of Legislative Decree 58/98 Information pursuant to art. 149-duodecies of the Consob Issuer Regulations - annual financial statements Summary of subsidiaries’ financial statements to 31 December 2012 Independent Auditors’ Reports (Original report in Italian version only) Report of the Board of Statutory Auditors (Original report in Italian version only)
    • Annual financial statements to 31 December 2012 4 Report on Operations
    • Annual financial statements to 31 December 2012 5 1. Profile of DeA Capital S.p.A. With an investment portfolio of around EUR 870 million and assets under management of over EUR 10,600 million, DeA Capital S.p.A. is one of Italy’s largest alternative investment operators. The company, which operates in both the Private Equity Investment and Alternative Asset Management businesses, is listed on the FTSE Italia STAR segment of the Milan stock 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 equity funds, which are normally restricted to a pre-set duration – of greater flexibility in optimising the timing of entry to and exit from investments. In terms of investment policy, this flexibility allows it to adopt an approach based on value creation over the medium to long term. In the Alternative Asset Management business, DeA Capital S.p.A. – through its subsidiaries IDeA FIMIT SGR and IDeA Capital Funds SGR – is Italy’s leading operator in real estate fund management and private equity funds of funds programmes, respectively. The two companies are active in the promotion, management and value enhancement of investment funds, using approaches based on sector experience and the ability to identify opportunities for achieving the best returns. As Alternative Asset Management focuses on managing funds with a medium-term to long-term duration, it generates cash flows that are relatively stable over time for DeA Capital S.p.A. This, in turn, enables the company to cover the typically longer investment cycle of the private equity investment sector. PRIVATE EQUITY INVESTMENT ALTERNATIVE ASSET MANAGEMENT  Direct investments In the services sector, in Europe and Emerging Europe.  Indirect investments In private equity funds of funds, co- investment funds and theme funds.  IDeA Capital Funds SGR, which manages private equity funds (funds of funds, co-investment funds and theme funds) Assets under management: EUR 1.2 billion  IDeA FIMIT SGR, which manages real estate funds. Assets under management: EUR 9.4 billion  IRE/IRE Advisory, which operates in project, property and facility management, as well as real estate brokerage
    • Annual financial statements to 31 December 2012 6 At the end of 2012, the corporate structure of the Group headed by DeA Capital S.p.A. (DeA Capital Group, or the Group) was as summarised below: DeA Capital S.p.A. Shareholdings and VC funds 100% DeA Capital Investments S.A. (Luxembourg) Quota IDeA OF I Quota IDeA I Fund of Funds Shareholding Kenan Investments Shareholding Santé Shareholding Sigla Luxembourg Shareholding Migros IRE (ex. IDeA SI) IRE Advisory (ex. IDeA Agency) 100% IDeA Capital Funds SGR 100% 100% Quota ICF II 100% Shareholding Sigla Shareholding GDS Private Equity Investment Alternative Asset Management Holding Companies Quota EESS IFIM 100% 20,98% 40,32% IDeA FIMIT SGR Quota AVA Private Equity Investment “Direct” Private Equity Investment “Indirect” DeA Capital Real Estate Alternative Asset Management With regard to the corporate structure shown above, on 1 January 2012, the merger by incorporation of the wholly-owned subsidiary IDeA Alternative Investments into DeA Capital S.p.A., which was decided by the Boards of Directors of these companies on 26 July 2011, became effective. On 28 March 2012, an agreement was signed with Deb Holding, a company controlled by the director Daniel Buaron that holds 30% of the share capital of FARE Holding. The purpose of the agreement was to bring forward, with effect from 24 April 2012, the exercise of the option to sell the stake in FARE Holding held by Deb Holding to DeA Capital S.p.A. Under the agreements stipulated, on 24 April 2012 DeA Capital S.p.A. took full control of FARE Holding, 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. At the 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 company he controls, Feidos S.p.A., which together own a stake of 41.69% in I.F.IM. (IFIM), which in turn holds a stake of 20.98% in IDeA FIMIT SGR. The purpose of the agreement was to bring forward, to this date, the exercise of the option to sell the stakes in IFIM held by Massimo Caputi and Feidos to DeA Capital S.p.A. Following the transaction, DeA Capital S.p.A. acquired full control of IFIM. In October 2012, the DeA Capital Group launched its plan to exit from the investment advisory business carried out by IDeA SIM. This was effected via an agreement with the company’s CEO to withdraw the powers conferred on him, the cancellation of the active asset management agreements and, from 15 November 2012, the termination of the investment advisory service. Approving the company’s application, Consob issued resolution 18466 of 13 February 2013, which revoked IDeA SIM’s authorisation to provide investment services pursuant to art. 1, para. 5f) of Legislative Decree 58 of 24 February 1998. It also removed the
    • Annual financial statements to 31 December 2012 7 company from the register of real estate brokerage companies. Lastly, on 25 February 2013, in compliance with the provisions of various agreements, DeA Capital S.p.A. acquired the shares held by the former CEO of IDeA SIM, equal to 30% of its capital, bringing its investment to 95% of the company’s capital. To complete the changes made to the Group's corporate structure, on 29 November 2012, Soprarno SGR’s shareholder structure was restructured with the resulting reduction in DeA Capital 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 for Ifigest 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 business held by Cassa di Risparmio di San Miniato (CARISMI) to Soprarno SGR: the business was valued at around EUR 4.5 million (in line with the value attributed to Soprarno SGR).
    • Annual financial statements to 31 December 2012 8 At 31 December 2012, the DeA Capital Group reported Group shareholders’ equity of EUR 723.1 million, corresponding to a net asset value (NAV) of EUR 2.63 per share, with an investment portfolio of EUR 873.1 million. More specifically, the investment portfolio, which consists of private equity investments of EUR 464.7 million, private equity investment funds of EUR 180.8 million and net assets relating to the Alternative Asset Management business of EUR 227.6 million breaks down as follows. Investment portfolio n. EUR/mln Equity investments 9 464.7 Funds 12 180.8 Private Equity Investment 21 645.5 Alternative Asset Management (*) 4 227.6 Investment portfolio 25 873.1 (*) Equity investments in subsidiaries relating to Alternative Asset Management are valued using the equity method in this table. December 31,2012  PRIVATE EQUITY INVESTMENT o Main investments  Strategic shareholding in Générale de Santé (GDS), France's leading private healthcare provider, whose shares are listed on the Eurolist market in Paris (with a free float of less than 5% and low trading volumes). The investment 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, Turkey's biggest food retail chain, whose shares are listed on the Istanbul Stock Exchange. The investment is held through the Luxembourg-registered company Kenan Investments S.A., an investment recorded in the AFS portfolio of the DeA Capital Group (with a stake 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 the Luxembourg-registered company Sigla Luxembourg S.A., an associate of the DeA Capital Group (with a stake of 41.39%)
    • Annual financial statements to 31 December 2012 9 o Funds  units in four funds managed by the subsidiary IDeA Capital Funds SGR i.e. in the funds of funds IDeA I Fund of Funds (IDeA I FoF) and ICF II, in the co-investment fund IDeA Opportunity Fund I (IDeA OF I, formerly IDeA CoIF I) and in the theme fund IDeA Energy Efficiency and Sustainable Growth (IDeA EESS)  a unit in the real estate fund Atlantic Value Added (AVA) managed by IDeA FIMIT SGR  units in seven venture capital funds  ALTERNATIVE ASSET MANAGEMENT  controlling interest in IDeA Capital Funds SGR (100%), which manages private equity funds (funds of funds, co-investment funds and theme funds) with about EUR 1.2 billion in assets under management and four managed funds  controlling interest in IDeA FIMIT SGR (61.30%), Italy's largest independent real estate asset management company with about EUR 9.4 billion in assets under management and 31 managed funds (including five listed funds)  controlling stake (100%) in IRE/IRE Advisory, which operate in project, property and facility management, as well as real estate brokerage
    • Annual financial statements to 31 December 2012 10 2. Information for shareholders  Shareholder structure - DeA Capital S.p.A. (#) De Agostini SpA 58,3% Treasury stock 10.4% Mediobanca 4,8% DEB Holding* 3,8% Free float 22.7% (#) Figures to 31 December 2012 (*) company controlled by director Daniel Buaron
    • Annual financial statements to 31 December 2012 11  Share performance (°) Period from 11 January 2007, when DeA Capital S.p.A. began operations, to 31 December 2012 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 DeA Capital LPX 50 FTSE Star FTSE All Period from 1 January 2012 to 31 December 2012 1.10 1.20 1.30 1.40 1.50 1.60 1.70 DeA Capital FTSE All FTSE Star LPX 50 (°) Source: Bloomberg
    • Annual financial statements to 31 December 2012 12  Investor relations DeA Capital S.p.A. maintains stable and structured relationships with institutional and individual investors. In 2012, the company continued its communications campaign, participating in the Milan STAR Conference in March 2012 and the London STAR Conference in October 2012, and holding meetings and conference calls with institutional investors, portfolio managers 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 of the website www.deacapital.it. In December 2008, the DeA Capital share joined the LPX50® and LPX Europe® indices. The LPX® indices measure the performance of the major listed companies operating in private equity (Listed Private Equity or LPE). Due to its high degree of diversification by region and type of LPE investment, the LPX50® index has become one of the most popular benchmarks for the LPE asset class. The method used to constitute the index is published in the LPX Equity Index Guide. For further information please visit the website: www.lpx.ch. The DeA Capital share is also listed on the GLPE Global Listed Private Equity Index, the index created by Red Rocks Capital, a US asset management company specialising in listed private equity companies. The index was created to monitor the performance of listed private equity companies 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 to subscribe to a mailing list and send questions or requests for information and documents to the company's Investor Relations department, which is committed to answering queries promptly, as stated in the Investor Relations Policy published on the site. A quarterly newsletter is also published for individual investors with the aim of keeping them updated on key events, as well as providing clear and simple analysis of quarterly results and share performance. DeA Capital also launched a mobile site, www.deacapital.mobi in July 2012. This will offer a further tool to stakeholders, who will be able to access key information about DeA Capital via their mobile phone or smartphone. Performance of the DeA Capital share at 31 December 2012 The 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 market index, gained 8.4%, the FTSE Star® gained 16.6% and the LPX50® gained 24.8%. The share’s liquidity was lower than in 2011, with average daily trading volumes of around 103,000 shares.
    • Annual financial statements to 31 December 2012 13 The share prices recorded in 2012 are shown below (in EUR per share) 2012 Maximum price 1.49 Minimum price 1.17 Average price 1.31 Price at 31 December 2012 1.34 (EUR million) 31 Dec 2012 Market capitalisation 411 Capitalisation net of own shares 368
    • Annual financial statements to 31 December 2012 14 3. The DeA Capital Group’s key balance sheet and income statement figures The DeA Capital Group’s key income statement and balance sheet figures to 31 December 2012 compared with the corresponding figures to 31 December 2011 are shown below. 2012 2011 NAV/share (EUR) 2.63 2.38 Group NAV 723.1 669.0 Parent 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 873.1 775.9 Net 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 2.38 Purchase of own shares (8.0) (6.1) 1.31 Other comprehensive income - Statement of Performance – IAS 1 62.5 Other movements of NAV (0.4) Group NAV at 31.12.12 723.1 274.6 2.63 (*) Average price of purchases in 2012 Change in Group NAV Total value (EUR m) No. Shares (millions) Value per share (€) (*)
    • Annual financial statements to 31 December 2012 15 4. Significant events during the year Significant events that occurred in 2012 are described below.  IDeA I Fund of Funds (IDeA I FoF) - Paid calls/reimbursements During 2012, the DeA Capital Group increased its investment in the IDeA I FoF fund following total payments of EUR 17.2 million. At the same time, it received reimbursements of EUR 14.4 million 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 FoF I 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 103.1 million.  IDeA I Opportunity Fund I (IDeA OF I) - Paid calls/reimbursements During 2012, the DeA Capital Group increased its investment in the IDeA OF I fund with payments totalling EUR 17.0 million. In relation to the relevant portion, total payments made by the DeA Capital Group to IDeA OF I from 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 48.1 million.  ICF II (Fund of Funds) - Paid calls/reimbursements During 2012, the DeA Capital Group increased its investment in the ICF II fund following total payments of EUR 9.2 million. At the same time, it received reimbursements of EUR 1.3 million 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 ICF II 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 16.5 million.  IDeA EESS – Paid calls/reimbursements On 4 September 2012, the IDeA EESS fund completed the third closing, taking overall commitments to around EUR 59.5 million. Following the entry of the new unitholders, the Group held a 21.53% minority shareholding.
    • Annual financial statements to 31 December 2012 16 In 2012, the DeA Capital Group increased its investment in the IDeA EESS fund with payments totalling EUR 1.0 million. In relation to the relevant portion, total payments made by the DeA Capital Group to IDeA EESS from the beginning of the fund’s operations until 31 December 2012 were EUR 0.9 million, with a residual commitment of EUR 11.6 million. The units held in the fund are valued in the consolidated financial statements at EUR 0.6 million.  Acquisition of the remaining shares in FARE Holding and IFIM On 28 March 2012, an agreement was signed with Deb Holding, a company controlled by the director Daniel Buaron that holds 30% of the share capital of FARE Holding. The purpose of the agreement was to anticipate, with effect from 24 April 2012, the exercise of the put option held 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, set the price of the stake at EUR 31.8 million, in addition to the payment of amounts corresponding to the NAV of units of the Atlantic 1 and Atlantic 2/Berenice funds (in line with the amount booked under the net financial position at 31 December 2011), payable as of 12 December 2013. The agreement also stipulates payment to Deb Holding of an amount equal to 30% of any dividends to be distributed by FARE Holding for 2012. In accordance with the agreements already in place, director Daniel Buaron resigned from his positions at IDeA FIMIT SGR and FARE Holding, with effect from 12 April 2012 (the date of the approval 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 company name of FARE Holding and its subsidiaries FARE and FAI, to DeA Capital Real Estate, IDeA Servizi Immobiliari and IDeA Agency respectively. At the 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 the agreement was signed with Massimo Caputi and the company he controls, Feidos S.p.A., which together own a stake of 41.69% in I.F.IM. (IFIM), which in turn holds 20.98% in IDeA FIMIT SGR, for the purpose of anticipating, on this date, the exercise of the option to sell to DeA Capital S.p.A. the stakes in IFIM held by Massimo Caputi and Feidos S.p.A.. The transaction, which enabled DeA Capital S.p.A. to acquire full control of IFIM, was concluded 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 new funds, 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 IDeA FIMIT SGR and IFIM, with effect from 12 April 2012.
    • Annual financial statements to 31 December 2012 17  Dividends from Alternative Asset Management activities On 27 March 2012, the shareholders’ meeting of IDeA Servizi Immobiliari (formerly FARE, now IRE) voted to pay dividends totalling EUR 3.0 million entirely to DeA Capital S.p.A. The dividend was paid on 31 March 2012. On 12 April 2012, the shareholders’ meeting of IDeA FIMIT SGR voted to pay a dividend totalling EUR 11.8 million (paid on 25 May 2012), of which around EUR 7.2 million went to FARE Holding (now DeA Capital Real Estate) and IFIM, a wholly-owned subsidiary of DeA Capital S.p.A. On 17 April 2012, the shareholders' meeting of IDeA Capital Funds SGR approved the company's financial statements to 31 December 2011 and voted to pay dividends totalling EUR 4.8 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 the DeA Capital Group's holding companies totalled EUR 15.0 million.  Share buy-back plan On 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 on 19 April 2011, which was scheduled to expire on 19 October 2012. The new plan will have the same objectives as the previous one, including the purchase of own shares to be used for extraordinary operations and share incentive plans, offering shareholders a means of monetising their investment, stabilising the share price and regulating trading within the limits of the legislation in force. The authorisation specifies that purchases may be carried out, for a maximum period of 18 months starting from 17 April 2012, in accordance with all procedures allowed by current regulations, and that DeA Capital S.p.A. may also sell the shares purchased for the purposes of trading. The unit price for the purchase of the shares is set by the Board of Directors, but in any case must not be more than 20% above or below the share’s reference price on the trading day prior to each purchase. In contrast, the authorisation to sell own shares already held in the company’s portfolio and any shares bought in the future was granted for an unlimited period, to be implemented using the methods deemed most appropriate and at a price to be determined on a case-by-case basis by the Board of Directors, which must not, however, be more than 20% below the share's reference price on the trading day prior to each individual sale (apart from in certain exceptional cases specified in the plan). Sale transactions may also be carried out for trading purposes. Also on 17 April 2012, the company’s Board of Directors voted to initiate the plan to buy and sell own shares authorised by the shareholders’ meeting, and to this end vested the Chairman of the Board of Directors and the Chief Executive Officer with all the necessary powers, to be exercised jointly or severally and with full powers of delegation.
    • Annual financial statements to 31 December 2012 18  Stock option and performance share plans On 17 April 2012, the shareholders’ meeting approved the DeA Capital Stock Option Plan 2012–2014. To implement the resolution of the shareholders' meeting, the Board of Directors of DeA Capital S.p.A., at its meeting held on the same day, allocated a total of 1,030,000 options 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 Option Plan 2012–14, the Board of Directors also set the exercise price for the options allocated at EUR 1.3363, which is the arithmetic mean of the official prices of ordinary DeA Capital shares on the Mercato Telematico Azionario, the Italian screen-based trading system organised and managed by Borsa Italiana S.p.A., on the trading days between 17 March 2012 and 16 April 2012. The shareholders’ meeting also approved a paid capital increase, in divisible form, without option rights, via the issue of a maximum of 1,350,000 ordinary shares to service the DeA Capital Stock Option Plan 2012-2014. The shareholders’ meeting also approved the Performance Share Plan 2012–2014. To implement the resolution of the shareholders' meeting, the Board of Directors allocated a total of 302,500 units (representing the right to receive ordinary shares of the company, free of charge, under the terms and conditions of the plan) 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. Shares allocated due to the vesting of units will be drawn from own shares already held by the company. The terms and conditions of the DeA Capital Stock Option Plan 2012–2014 and the Performance Share Plan 2012-2014 are described in the Information Prospectus prepared in accordance 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’s website www.deacapital.it in the section Corporate Governance/Incentive Plans.  Co-option of a new director On 4 May 2012, non-executive director Alberto Dessy resigned. Mr Dessy, who was lead independent director, was also Chairman of the Control and Risk Committee, a member of the Remuneration Committee and a member of the Supervisory Board of DeA Capital S.p.A. His decision was due to an increase in professional commitments incompatible with continuing to hold 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 association and art. 2386 of the Italian Civil Code. After verifying that Severino Salvemini met the requirements of independence, the Board of Directors approved the appointment of Salvemini as Chairman of the Control and Risk Committee, lead independent director and a member of the Remuneration Committee and the Supervisory Board of DeA Capital S.p.A.
    • Annual financial statements to 31 December 2012 19  IDeA FIMIT – Acquisition of the Duemme SGR business division On 1 July 2012, the deed of transfer signed by IDeA FIMIT SGR and Duemme SGR for the business division comprising real estate mutual investment funds managed by Duemme SGR (a subsidiary of the Banca Esperia Group specialising in asset management services) became effective. With the transfer of the business division, IDeA FIMIT SGR has taken over the management of eight 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 real estate funds managed, and puts it among the major real estate asset management companies in Europe, thanks also to the expansion of its circle of institutional investors.  IDeA FIMIT SGR – Award of the AMA tender On 8 October 2012, IDeA FIMIT SGR was awarded the tender organised by Azienda Municipale Ambiente 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 the best solution for the creation and management of a real estate investment fund. The fund will manage assets comprising 56 buildings, all located in the Rome region and primarily designated 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 early 2013. The Group’s technical bid, which had a relative weight of 70% with the financial proposal accounting for the remainder, was crucial in its selection. This demonstrated the quality of IDeA FIMIT SGR’s bid from a management viewpoint.  Innovation Real Estate – Acquisition of a property and facility management business division of Ingenium Real Estate S.p.A. On 10 December 2012, the deed of transfer of a property, agency and facility management business division of Ingenium Real Estate S.p.A. (the Ingenium business division) to IRE became 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 (legal assistance)  management of communal services in apartment blocks, as well as insurance, tax and contractual 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 funds managed by IDeA FIMIT SGR.
    • Annual financial statements to 31 December 2012 20  Capital strengthening of the corporate chain of command at GDS As part of a capital strengthening plan for the corporate chain of command at GDS, on 27 December 2012, DeA Capital Investments – a fully-owned company of DeA Capital S.p.A. and direct shareholder of 42.89% of Santé/SDE/GDS – acquired a tranche of mezzanine bonds for a nominal price of around EUR 25.8 million, issued by SDE. The sale and purchase – carried out with a related-party company of the De Agostini Group - was finalised with a vendor loan of 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 same financial conditions as those currently applied to the credit lines granted to DeA Capital S.p.A.). Subsequently, the above-mentioned tranche of mezzanine bonds was converted, via a complex corporate 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 + 1,000 basis points (with the interest payable in kind up to the expiry date). As mentioned above, these transactions were intended to strengthen the capital of the corporate chain of command of GDS, especially of its equity investments Santé and SDE, as the 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, especially the “leverage ratio” of net debt/EBITDA. The Group will continue to continuously monitor the company’s economic and financial performance in 2013 with a view to preventing – or at least minimising – any difficulties in meeting the financial parameters in the loan agreements relating to the various companies that make up the corporate chain of command.
    • Annual financial statements to 31 December 2012 21 5. The DeA Capital Group’s results Consolidated results for the period relate to the operations of the DeA Capital Group in the following businesses:  Private Equity Investment, which includes the reporting units involved in private equity investment, broken down into equity investments (Direct Investments) and investments in funds (Indirect Investments)  Alternative Asset Management, which includes reporting units involved in asset management activities and related services, with a current focus on the management of private equity and real estate funds  PRIVATE EQUITY 2012 was a year dominated by uncertainty, and one in which political tensions had a harmful effect on the global economy. However, the picture gradually improved in the second half of the 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 the advanced economies are expected to experience growth of 1.4% (2% for the US and -0.2% for the eurozone) and emerging economies growth of 5.5%. The central banks’ actions have considerably reduced the serious risks associated with the crisis in the eurozone, and in the US, 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 emerging countries, others continued to struggle due to weak external demand. The IMF think that there could, however, be a positive surprise, with a more sustained recovery than expected, if the risks connected with the crisis do not materialise and financial conditions continue to improve. However, the risk of a deterioration remains significant and is still associated with eurozone-related issues and the danger of excessive fiscal consolidation in the US. Against this macroeconomic backdrop, volatility on the international financial markets, after peaking 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 is thanks to the positive effect of the various governments’ actions to tackle the crisis and strengthen 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 the Nasdaq) as were those in Japan (+22.9% for the Nikkei 225) and Europe, where, along with Germany (+29.1% for the Dax 30) and France (+15.2% for the CAC 40), Italy also returned to positive territory (+7.8% for the FTSE MIB). Emerging countries also recorded positive returns: +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 in terms of reduced risk aversion. In Italy, the yield spread on ten-year treasury certificates against their German bund counterparts reduced by nearly 200 points, closing at 316 basis points; to a lesser extent, the default risk also fell, returning to July 2011 levels and closing the year at 286 basis points.
    • Annual financial statements to 31 December 2012 22 Spain also seemed to have overcome its worst period, which culminated in July with the approval 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 relate to the management of the public debt problem in the US (the statutory obligation to keep US public 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-spread plan”, and unified banking supervision under the authority of the ECB. Investment prospects and the outlook for the European and global private equity markets Despite 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, the second half of 2012 was much better than the first half, leading to positive expectations for the near future. The improvement was mainly due to the recovery in the private equity sector in the US, where encouraging signs shown by the real estate market, together with the healthy credit system and positive GDP growth, led to a more optimistic approach to dealing with the debt 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 election campaign. Furthermore, the legislative framework has been supplemented with a number of significant changes. In North America, management companies, which are required to register with 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 impose stringent compliance obligations. Another legislative restriction, Solvency II, will have repercussions on insurance companies in the future, as it imposes capital adequacy requirements that aim to increase protection against the higher risks of investing in private equity. The dynamics of the relationships between general partners (GPs) and limited partners (LPs) of funds were similar to those seen in 2011. The larger funds proposed innovative incentive schemes to investors to attract them in the first closing, including reduced fees and priority processing in certain cases. Other funds that are particularly sought-after by institutional investors, on the other hand, have imposed onerous terms and conditions on their subscribers. Lastly, the natural selection process operating among managers became more noticeable, as LPs tended to reduce the number of relationships with GPs. Driven by this trend, the larger listed operators (Blackstone, KKR, Apollo and from this year, Carlyle) further diversified their product range in accordance with the demands of their investors, adding funds dedicated to specific investment and geographical themes.
    • Annual financial statements to 31 December 2012 23 Investment activity declined slightly compared with 2011, although the half-yearly figure shows positive signs. In the second half of 2012, the figure was over 30% higher than in the same 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. The situation is different in Europe, however, as access to credit is still very difficult. The emerging markets remained at the same levels as in previous years. Fig. 3: Volume disinvestimenti dei fondi di buyout ($ mld) Fig. 4: Numero di disinvestimenti dei fondi di buyout Fonte: Preqin Fonte: Preqin 33 64 140 101 143 227 209 87 2012 83 85 118 20112008 20102009 19 310 132 275 173 172 146 384 268 457 582 656 9141 88 257 49 342 2008 684 52 2011 2012 207 2010 935 48 2009 549 102 1,145 43 347 1,192 Trade Sale Sale to GP IPO Restructuring 2° Semestre1° Semestre The 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, “trade sale” transactions represent 55% of the total. This value is mainly based on the availability of cash of the strategic operators. Note also that the number of initial public offerings (IPOs) fell Fig. 1: Global value of buyout investments ($ mld) Fig. 2: Global value of buyout investments by region ($ mld) Source:Preqin 255265 221 96 187 2011201020092008 2012 148 29% 19% 52% 1S 2012 106 14% 2S 2011 124 34% 26% 52% 1S 2011 141 32% 51% 16% 2S 2010 136 12% 27% 57% 1S 2010 85 2S 2009 68 1S 2009 28 17% 2S 2012 39% 14% 52% 36% 46% 56% 28% 16% 62% 13% North AmericaEuropeAsia and rest of the world Source:Preqin
    • Annual financial statements to 31 December 2012 24 markedly due to the ongoing high level of volatility in the financial markets. A possible feature of 2013 could be an increase in exit transactions arising from sales to other private equity funds, given the need to sell off equity investments acquired before 2008 and the high level of dry 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 to the 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 raising was slightly positive. It could be that investors’ interest is motivated by the opportunity to obtain access to good transactions, given the limited level of liquidity in the system. We therefore assume that Europe is still an attractive geographical area from the point of view of private equity. In absolute terms, there has also been a slight decrease in the value of collections of funds focused on emerging markets. Fig. 7: Global capital calls and reimbursements of PE funds (USD billion) Source: Thomson Venture Economics Global PE fundraising ($ mld) Fig.6: Global PE fundraising by region ($ mld) 328312 284 315 2008 2009 2010 2011 2012 681 18% 14% 24% 26% 21% 100% NA EU ROW 2012 328 55% 24% 2011 312 53% 21% 2010 284 56% 21% 2009 315 57% 29% 2008 681 58% 24% Fig. 5: Source:Preqin Source:Preqin 12 33 64 46 69 49 45 30 19 46 54 67 58 35 22 7 2S 20111S 20112S 20101S 20101S 2009 2S 2009 1S 2012 3Q 2012 Distribuzioni (US$ Mld)Richiami (US$ Mld)
    • Annual financial statements to 31 December 2012 25 As shown in figure 7, in 2012 and to some extent in the previous year, global reimbursements exceeded capital calls, confirming that the industry is primarily going through a divestment phase. It is also possible to detect a number of investment themes associated with the current uncertain situation.  In Europe, the increase in fund raising is mainly due to the rise in the number of operators specialising in loan and distressed strategies. The relative disappearance of CLOs (collateralised loan obligations) and the restricted financial activity of credit institutions has opened the door to specialist operators, creating a channel which, given the limited competition, could generate attractive returns with coupon payments and a low risk profile. Moreover, the restructuring of many buy-out transactions could also reveal favourable returns for special situation funds  In the US, funds that aim to help investee companies return to efficiency and value creation through operating improvements are also becoming more numerous, as are funds focusing on specific sectors, especially energy  In emerging markets, opportunities mainly arise from the more mature trends, such as the growth in consumption associated with the increased purchasing power of the middle classes, and urbanisation Private equity in Italy Statistics prepared by AIFI (the Italian Private Equity and Venture Capital Association) and currently updated to the first half of 2012, show that the difficulties continued into the first half of 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 the resources invested, in line with previous years, went into buy-out transactions, which attracted EUR 512 million. This figure, however, is more or less half that recorded in the same period of the previous year (-56%), due to the lack of high-value transactions. The early-stage sector had the highest number of transactions, overtaking the expansion sector, with 55 investments (+10%), more than half of which were invested in high-tech companies. 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 historical acquisition cost, was EUR 141 million, compared with EUR 2,337 million in the first half of 2011 (-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 statements to 31 December 2012 26  REAL ESTATE IN EUROPE Direct investment in non-residential real estate in Europe, which amounted to EUR 120.4 billion in 2012, was in line with the previous year . A very positive sign emerged in the fourth quarter with transactions totalling EUR 41.5 billion (an increase of 16% compared with 4Q 2011 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 five main cities in Germany. This helped consolidate the positions of London and Paris among the ten 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 shown in the various large-scale agreements made in the fourth quarter, investment volumes in the retail sector fell for the whole year, compared with the previous year. Investment volumes in Europe’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% compared with 2011. In Europe there were eight cross-border agreements with a value of over EUR 500 million in the fourth quarter of 2012. These volumes are evidence of investors’ interest in real estate opportunities, especially in the main markets such as the UK, Germany, France and Sweden. In fact, as is the case in the bond market, there is a clear preference for instruments deemed to be "safe", such as US and German government bonds, and in the real estate market products with a low risk profile are also favoured, while markets deemed to be less liquid are penalised. In core markets, i.e. those with a lower "country risk" profile and a correspondingly lower yield on government bonds (Germany, Great Britain and the Scandinavian countries), the spread between yields in the real estate market and yields on government bonds, historically considered a benchmark of the attractiveness of the real estate market, is reaching record levels. Conversely, in peripheral markets, such as Italy, the increase in yields on government bonds reduces this spread to zero or a negative figure. In Italy In 2012, the Italian market of investment in non-residential real estate totalled around EUR 1.7 billion, which was less than the level achieved in the first half of 2011. As a percentage of total investment in Europe, it fell from 3.6% to 1.4%. In the fourth quarter of 2012, only EUR 458 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 was around 52,000 m², bringing the annual total to 239,000 m². While the market declined by 12% in the quarter, year-on-year it fell by 29% compared with 2011. In Rome, investment was rather low, at EUR 150 million, bringing the annual total to EUR 622 million, a decline of 25% on 2011 and 50% lower than in 2010. In the fourth quarter, 19,800 m² of office space was taken up, bringing the annual total to only 66,500 m². The downward trend that started in the second half of 2011 continued in this quarter, leading to the recording of the lowest volume in Rome in the last seven years2 . 1 CBRE, European Investment Quarterly 4Q 2012 2 JLL, Global Capital Markets Research 4Q 2012
    • Annual financial statements to 31 December 2012 27 Real estate funds in Italy In 2012, according to Scenari Immobiliari estimates, assets managed by real estate funds rose by 1.5% over the previous year despite the gloomy economic environment. At the end of 2012, 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) 0 1 2 3 4 5 6 7 8 9 10 IDeAFimit Generali Immobiliare BNPParibas REIM Prelios Investire Immobiliare Fabrica Immobiliare Sorgente Torre Source: Assogestioni – June 2012 Around 61% of investment is concentrated in the office sector, which had the most transactions 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 net asset value (NAV) increased from EUR 36.1 billion to EUR 37.2 billion. NAV of real estate funds in Italy (EUR billion) 0 5 10 15 20 25 30 35 40 2006 2007 2008 2009 2010 2011 2012E Source: Scenari Immobiliari
    • Annual financial statements to 31 December 2012 28 With regard to retail property funds, the study by Scenari Immobiliari reported a decrease in direct real estate assets of around 8.9% to approximately EUR 6.8 billion. The total use of financial 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 a reduction of around 11% on the same period of 2011. Real estate assets of retail funds (EUR billion) 0 1 2 3 4 5 6 7 8 9 10 1H 2007 1H 2008 1H 2009 1H 2010 1H 2011 1H 2012 NAV of retail funds (EUR billion) 0 1 2 3 4 5 6 7 8 1H 2007 1H 2008 1H 2009 1H 2010 1H 2011 1H 2012 Source: Scenari Immobiliari The average discount to NAV for listed funds was around 59% at end-2012, compared with 46% at end-2011. The number of operating funds rose, although at a lower rate than expected, and a modest decrease is projected for 2013. Positive expectations for NAV growth in 2013 are associated with the projected creation of one or more funds for public buildings and possible contributions to 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 a markedly greater reduction in the volume of transactions. The Italian real estate market is becoming increasingly illiquid, and operators believe that the upturn in investment will have to take 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 the next 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 currently in 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 significant decline 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 EUR 609 million in the first six months of 2012.
    • Annual financial statements to 31 December 2012 29 Purchases and sales (EUR billion) 0,0 0,5 1,0 1,5 2,0 2,5 3,0 2009 2010 2011 giu-12 Acquisizioni Dismissioni Allocation of assets Immobili; 90,1% Partecipazioni; 2,0% Valori mobiliari; 5,7% Altro; 2,3% Source: Assogestioni. The latest figures provided by the Osservatorio sul Mercato Immobiliare (OMI) of the Italian Land Agency3 show a significant fall in the volumes of sales and purchases of real estate. In the 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, recorded the worst performance in the third quarter of 2012, with around 96,000 transactions and a decline of 27% in property transactions compared with the same period of the previous year and 20% versus the previous quarter. Non-residential sectors also recorded significantly lower volumes in the first three quarters of 2013. The biggest falls were in the tertiary sector, which reported a decrease of 28% in the volume of sales and purchases in the third quarter, while the commercial and production sectors declined by 30% and 26% respectively. All sectors have been at the lowest level on the 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 total investment. Interest in office property picked up in the fourth quarter compared with previous quarters, with the result that the sector represented 87% of the volumes for the quarter. This was due to the sale by IDeA FIMIT SGR of two properties for office use in Milan and Rome with low 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, according to BNP Real Estate data, net prime returns were as follows: 5.6% in Milan and 6.1% in Rome for office property, 6.6% for shopping centres and 7.75% for the industrial and logistics sector. 3 Agenzia del Territorio, OMI – Note III Quarter 2012. 4 BNP RE, Investment in Italy Q4 2012
    • Annual financial statements to 31 December 2012 30  The DeA Capital Group’s investment portfolio The composition of the DeA Capital Group's investment portfolio in the Private Equity Investment and Alternative Asset Management businesses, as defined above, are summarised in the table below. Investment portfolio n. EUR/mln Equity investments 9 464.7 Funds 12 180.8 Private Equity Investment 21 645.5 Alternative Asset Management (*) 4 227.6 Investment portfolio 25 873.1 (*) Equity investments in subsidiaries relating to Alternative Asset Management are valued using the equity method in this table. December 31,2012 Details of portfolio asset movements in 2012 are provided in the sections on Private Equity Investment and Alternative Asset Management below.  Private Equity Investment In terms of equity investments, at 31 December 2012, the DeA Capital Group was a shareholder 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 has been classified in this category since 31 December 2012) – whose total value at 31 December 2012 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 approximately EUR 10.7 million) Valuations of equity investments and funds in the portfolio reflect estimates made using the information available on the date this document was prepared.
    • Annual financial statements to 31 December 2012 31 Equity investments in associates - Santé (Parent Company of GDS) Headquarters: France Sector: Healthcare Website: www.generale-de-sante.fr Investment details: On 3 July 2007, DeA Capital S.p.A. finalised the purchase, through its wholly-owned subsidiary DeA Capital Investments S.A., of a 43.01% stake in Santé S.A., the Parent Company of Générale de Santé S.A. both directly and through Santé Dévéloppement Europe S.A.S. At 31 December 2012, the DeA Capital Group's stake was 42.89% (i.e. 42.99% in economic terms). Brief description: Founded in 1987 and listed on the Eurolist market in Paris since 2001, Générale de Santé is a leading player in the private healthcare sector in France with revenues of about EUR 2 billion at end-2012. France is the second largest country in Europe in terms of annual healthcare expenditure after Germany. Its healthcare system is one of the most advanced in the world, is still heavily fragmented 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 is the 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 at approximately 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 at 31 December 2011 is attributable to the net loss of EUR 10.8 million for the period combined with other increases in equity of EUR 1.7 million (largely due to the increase in fair value of interest rate swaps taken out to hedge the interest rate risk on debt exposure).
    • Annual financial statements to 31 December 2012 32 Générale 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 the previous year, but up by 2.5% on a same-structure basis (stripping out the impact on the 2011 figures of the clinics sold during that year). This was achieved as the new clinics that were opened during the period (two rehabilitation clinics, two psychiatric clinics and one in medicine, surgery and obstetrics) gradually became fully operational and as a result of growth in the volume of activities. With specific reference to the final figures to 31 December 2012, a comparison of the EBIT and net result with the previous year’s figures shows that these were affected by one-off costs relating 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 geographical areas in which the Group operates, and the capital gains made on the clinics that were sold in 2012 (EUR 29 million). The net financial position of EUR -769 million at 31 December 2012 represents an improvement on the figure of EUR -854 million at 31 December 2011 thanks partly to the receipts from the clinics that were sold. Note however that this growth in revenues occurred against a backdrop of mounting pressure to grow the top line, influenced by (i) trends in demand (a gradual shift in the mix of services offered towards outpatients provision, which has a lower unit cost/lower margins compared with full hospitalisation, and the postponement by patients of non-urgent treatment due to the economic crisis); and (ii) the regulatory framework and the definition of the provision of hospital services (increasing competitive pressure from public operators, which benefit from heavy government investment through discretionary components in the health budget, which offset the unfavourable trend in prices). As regards the institutional framework in 2013, while on the one hand, tariffs are likely to continue to be restrictive, with forecasts of a fall of 0.55% in tariffs in the medicine, surgery and obstetrics sector, on the other, government initiatives to support economic activity are likely to increase. An example is the package of measures to improve the competitiveness of French companies (which includes, inter alia, the competitiveness and employment tax credit, CICE), which should at least partly alleviate the effects on companies of the unfavourable economic climate. This trend in revenues, combined with the partial rigidity in the cost structure, makes it clear that, in order to maintain expected profit levels, it is essential that the planned reorganisation into “hubs” (chains of clinics that optimise provision of the service by tailoring it to the requirements of the relevant geographical area) takes full effect, and that the cost savings initiatives launched relating to significant items of expenditure also bear fruit.
    • Annual financial statements to 31 December 2012 33 - Sigla Luxembourg (Parent Company of Sigla) Headquarters: Italy Sector: Consumer credit Website: www.siglacredit.it Investment details: On 5 October 2007, DeA Capital Investments finalised the acquisition of a stake (currently 41.39%) in Sigla Luxembourg, the holding company that controls Sigla, which operates in Italy 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. (Italian consolidated 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 to households, and operates throughout Italy, chiefly through a network of agents. The company’s product range of salary-backed loans and personal loans was expanded in 2010 to include the servicing of portfolios of unsecured non-performing loans (personal loans and credit cards). The investment in Sigla Luxembourg, which is reported under “Equity investments in associates”, is valued at approximately EUR 12.3 million in the consolidated financial statements to 31 December 2012 (EUR 22.0 million at 31 December 2011). The decrease compared with 31 December 2011 relates to the EUR 0.7 million loss for the period and an impairment charge of EUR 9.0 million to align the carrying value with the company’s pro-rata share 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 compared with 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 gradually repositioned itself). At 31 December 2012, it recorded a fall of 42.6% compared with the same period of the previous year. Although the Group considers that Sigla is in a good position as regards the restructuring of the salary-backed loans business being undertaken following the entry into force of the new legislation required by the Regulator (increased pricing transparency and a reduction in the number of intermediate levels in the existing value chain between the organisation that grants the loan and the consumer, with the resulting sector concentration), the general macroeconomic scenario has forced us to make the above-mentioned impairment on the goodwill implicit in the carrying value. Specifically, the ongoing effects of the economic crisis
    • Annual financial statements to 31 December 2012 34 on the propensity to spend, together with the consequences arising from the deleveraging requirements 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 statements to 31 December 2012 35 Equity investments in other companies - Kenan Investments (indirect Parent Company of Migros) Headquarters: Turkey Sector: Food retail Website: www.migros.com.tr Investment details: In 2008, the DeA Capital Group acquired about 17% of the capital of Kenan Investments, the company 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 Turkey with a share of about 34% in the organised retail market. Growth in the food retail sector in Turkey is a relatively recent phenomenon, brought about by the transition from traditional systems such as bakkals (small stores typically run by families) to an increasingly widespread organised distribution model driven by expansion and the modernisation process under way in Turkey. The company has a total of 874 outlets (at 30 September 2012) with a total net sales area of approximately 850,000 square metres. Migros is present in all seven regions of Turkey, and has a marginal presence in Kazakhstan and Macedonia. The company operates under the following names: Migros, Tansas and Macrocenter (supermarkets), 5M (hypermarkets), Ramstore (supermarkets abroad) and Kangurum (online store). One of the main extraordinary transactions completed by Migros was the sale of discount arm Şok on 24 August 2011 to Yildiz Holding Group, a leading Turkish food producer, for around TRY 600 million. The business sold consisted of some 1,200 supermarkets, with revenues in 2010 of TRY 1.2 billion (or around 19% of Migros’ consolidated revenues). The equity investment in Kenan Investments is recorded in the consolidated financial statements to 31 December 2012 at EUR 223.6 million (compared with EUR 127.1 million at 31 December 2011). The increase of EUR 96.5 million was due to the rise in the value of Migros shares (TRY 21.5 per share at 31 December 2012, compared with approximately TRY 12.6 per share at 31 December 2011), and the strengthening of the Turkish lira against the euro (2.36 TRY/EUR at 31 December 2012 versus 2.44 TRY/EUR at 31 December 2011). The effect on the DeA Capital Group’s NAV of this change in fair value was partially offset by the provisioning of estimated carried interest of around EUR 12.8 million, to be paid to the lead investor, BC Partners, 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 statements to 31 December 2012 36 Migros (mln YTL) Primi Nove Mesi 2012 Primi Nove Mesi 2011 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 2012 With regard to the macro-economic environment, the Turkish economy recorded GDP growth of around 2.6% year-on-year in the first nine months of 2012; the slowdown in economic growth (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 last November 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, with sustained 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 months of 2012 (the scope of activities for which does not include the discount division sold in August 2011), driven by the expansion of the network of sales outlets (143 new supermarkets were opened in 12 months), accompanied by more modest growth in EBITDA, and broadly stable profit. The net result increased, due to the revaluation of the debt component in Euro following the rise of the Turkish lira. Note that Migros has confirmed its intention, for the medium term, to maintain a sustained rate 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 by discount stores), as well as one to two hypermarkets each year. This growth strategy has led the company to issue guidance of double-digit revenue growth and an EBITDA margin within the range of 6-6.5% for 2012-2013.
    • Annual financial statements to 31 December 2012 37 - Other investments Other equity investments, managed opportunistically with a view to increasing their value, totalled approximately EUR 2.7 million in the consolidated financial statements to 31 December 2012, due mainly to investment in Alkimis SGR (EUR 0.3 million) and Soprarno SGR (EUR 1.6 million, as a result of its reclassification from the Alternative Asset Management business). Company Registered office Business sector % holding Alkimis SGR Italy Asset management company 10.00 Elixir Pharmaceuticals Inc. USA Biotech 1.30 Harvip Investimenti S.p.A. Italy Distressed real estate and other investments 25.00 Kovio Inc. USA Printed circuitry 0.42 Soprarno SGR Italy Asset management company 20.00 Stepstone Acquisition Sàrl Luxembourg Special Opportunities 36.72
    • Annual financial statements to 31 December 2012 38 Funds At 31 December 2012, the DeA Capital Group’s Private Equity Investment business included investments (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 of funds (IDeA I FoF and ICF II), one theme fund (IDeA EESS) and another seven venture capital funds for a total of approximately EUR 180.8 million (corresponding to the estimated fair value calculated using the information available on the date this document was prepared). Residual commitments associated with all the funds in the portfolio were approximately EUR 126.3 million (in their respective original currencies of denomination: EUR 122.6 million and GBP 3.0 million).
    • Annual financial statements to 31 December 2012 39 - IDeA OF I IDeA Opportunity Fund I Headquarters: Italy Sector: Private Equity Website: www.ideasgr.it Investment details: IDeA OF I is a closed-end fund under Italian law for qualified investors, which began activity on 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 approved a 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 investment opportunities 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 via syndicates 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 total commitment after making eight investments: - on 8 October 2008, it acquired a 5% stake in Giochi Preziosi S.p.A., a company active in the production, marketing and sale of children’s games with a product line covering childhood to early adolescence - on 22 December 2008, it acquired a 4% stake in Manutencoop Facility Management S.p.A. by subscribing to a reserved capital increase This company is Italy’s leading integrated facility management company, providing and managing a wide range of property management services and other services for individuals and government agencies - on 31 March 2009, it acquired a 17.43% stake in Grandi Navi Veloci S.p.A., an Italian shipping company that transports passengers and goods on various routes around the Mediterranean Sea. On 2 May 2011, with the finalisation of Marinvest's entry into the shareholder structure of Grandi Navi Veloci S.p.A. through the subscription of a reserved capital increase, the stake held by IDeA OF I was diluted to 9.21% On 2 August 2012, IDeA OF I’s decision not to subscribe, on a pro-rata basis, to a further capital 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 Euticals S.p.A., the Italian leader in the production of active ingredients for pharmaceutical companies that operate in the generics sector, for EUR 10 million. As part of the extraordinary transaction that led to the transfer of the controlling share in Euticals S.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 statements to 31 December 2012 40 was acquired in the same acquisition vehicle (generating a capital gain of EUR 6.9 million) - on 25 February 2011, it purchased a 9.29% stake in Telit Communications PLC, the third-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 of stock options by the company's 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 that manufactures trolleys for aeroplanes and trains, and specialises in the design, production and marketing of components for aircraft fittings and furnishings. A maximum of EUR 12 million will be invested, in several phases: (i) subscription to a bond that is convertible into Iacobucci shares, totalling EUR 6 million on the closing date; (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 30 June 2013 and the financial statements to 31 December 2013 – based on the achievement of certain EBITDA and net debt figures. If the above-mentioned convertible 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 of 4.6% in Patentes Talgo S.A. (Talgo), a Spanish company that designs and produces solutions for the rail sector, chiefly sold on the international market (high-speed trains, and maintenance vehicles and systems) - On 12 December 2012, IDeA OF I invested EUR 12.3 million to acquire a stake of 29.34% in 2IL Orthopaedics, a Luxembourg-registered vehicle which, through an initial purchase offer and subsequent delisting of previously listed shares, obtained full control (on 15 February 2013) of English company Corin Group PLC (Corin). Corin is active in the production and marketing of orthopaedic devices, especially for hips and knees. After the closing date for the period, on 11 January 2013, IDeA OF I invested EUR 8.5 million to acquire a stake of 10% in Elemaster S.p.A. (Elemaster), the leading operator in ODM (original design manufacturing) and EMS (electronic manufacturing service) i.e. the design and construction of electronic equipment. At the same time, the Energy Efficiency and Sustainable Development Fund, also managed by IDeA Capital Funds SGR, invested an equal 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 financial statements to 31 December 2012. The change in value compared with the figure at 31 December 2011 is attributable to capital calls of EUR 17.0 million, an increase of EUR 0.5 million in the fair value and pro-rata net loss for the period of EUR 6.3 million (due mainly to the partial impairment of the investments in Giochi Preziosi and Grandi Navi Veloci and to the capital gain made on Euticals). The table below shows the key figures for IDeA OF I at 31 December 2012.
    • Annual financial statements to 31 December 2012 41 IDeA OF I Registered office Year of commit ment Fund Size Subscribed commitment % DeA Capital in fund Euro (€) IDeA Opportunity Fund I Italy 2008 216,550,000 101,750,000 46.99 Residual Commitments Total residual commitment in: Euro 31,665,321
    • Annual financial statements to 31 December 2012 42 - IDeA I FoF IDeA I Fund of Funds Headquarters: Italy Sector: Private Equity Website: www.ideasgr.it Investment details: IDeA I FoF is a closed-end fund under Italian law for qualified investors, which began activity on 30 January 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 of unlisted closed-end funds that are mainly active in the local private equity sector of various countries. It optimises the risk-return profile through careful diversification of assets among managers 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 with different investment strategies; these funds in turn hold around 453 positions in companies with various 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, with overweighting towards medium- and small-scale transactions and special situations (distressed debt/equity and turnaround). At 31 December 2012, IDeA I FoF had called up 75.1% of its total commitment and had made distributions totalling approximately 23.5% of that commitment.
    • Annual financial statements to 31 December 2012 43 Other important information: Below is an analysis of the portfolio, updated to the date of the latest report available, broken down by year of investment, geographical area, type and sector. Notes: 1. % of the FMV of the investment at 31 December 2012 2. % of fund size based on paid-in exposure (capital invested + residual commitments) at 31 December 2012 The IDeA I FoF units are valued at approximately EUR 103.1 million in the consolidated financial statements to 31 December 2012, with a change compared with end-2011 that includes 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 legale Anno di impegno Fund Size Impegno sottoscritto % DeA Capital nel Fondo Euro (€) IDeA I Fund of Funds Italy 2007 681,050,000 173,500,000 25.48 Residual Commitments Total residual commitment in: Euro 43,236,192 Breakdown by industry (1)Breakdown by type of fund (2) Breakdown by vintage (1) Breakdown by geography (2) 21% Not committed 0%Global RoW 14% US 21% Europe45% 9% 6% Not invested 0% Large Buyout 15% Special Situations 19% Expansion VC 5% Asset Based PE Small Buyout 14% Mid Buyout 31% 5% 12% 5% 14% Distressed Assets 8% Raw Materials Energy 12% Financial 5% Pharmaceutical1% Healthcare6% Consumer staples 7% Consumer discretionary 12% Transport Industrial 8% RE 2% Luxury IT Media 3% 24% 2006 6% 2005 3% 2000-2004 3% 2012 6% 2011 12% 2010 2009 15% 2008 16% 2007 14%
    • Annual financial statements to 31 December 2012 44 - ICF II ICF II Headquarters: Italy Sector: Private Equity Website: www.ideasgr.it Investment details: ICF II is a closed-end fund for qualified investors under Italian law, which began activity on 24 February 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-end funds that are mainly active in the local private equity sector of various countries. It optimises the risk-return profile through careful diversification of assets among managers with proven historical returns 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 different investment strategies; these funds in turn hold positions in around 186 companies with various degrees 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 made reimbursements 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, broken down by year of investment, geographical area, type and sector.
    • Annual financial statements to 31 December 2012 45 Notes: 1. % of the FMV of the investment at 31 December 2012 2. % of the commitment. Based on paid-in exposure (capital invested + residual commitments) at 31 December 2012 The ICF II units are valued at approximately EUR 16.5 million in the consolidated financial statements to 31 December 2012, with a change compared with end-2011 that includes an increase 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 II Registered office Year of commit ment Fund Size Subscribed commitment % DeA Capital in fund Euro (€) ICF II Italy 2009 281,000,000 51,000,000 18.15 Residual Commitments Total residual commitment in: Euro 33,676,968 Breakdown by sector (1)Breakdown by type of fund (2) Breakdown by geography (2) 16% Global RoW 28% US 27% Europe 29% 16% Special Situations 25% Expansion VC 6% Small/Mid Buyout 36% Large Buyout 16% 31% 2012 2011 24% 2010 22% 2009 20% 2008 1% 2007 2% 2004-2006 0% 5% 8% Distressed Portfolio 18% Energy 7% Raw Materials 3% Industrial 11% Luxury IT 16% Media 2% Financial Healthcare3% Consumer staples 9% Cons. Discretionary 16% Other 0% Breakdown by vintage (1)
    • Annual financial statements to 31 December 2012 46 - IDeA EESS IDeA Energy Efficiency and Sustainable Development Headquarters: Italy Sector: Private Equity Website: www.ideasgr.it Investment details: IDeA EESS is a closed-end fund under Italian law for qualified investors, which began operating 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 seeks to 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 service companies 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 renewable energy sources while continuing to reduce CO2 emissions effectively, against a backdrop of sustained growth in global energy demand. On 4 September 2012, the fund undertook a third closing, which brought the total commitment to EUR 59.5 million. On 8 May 2012, the fund made its first investment, acquiring 48% of Domotecnica Italiana S.r.l. (independent Italian franchising of thermo-hydraulic installers) for approximately EUR 2.6 million, as well as a commitment to subscribe, within the next 18 months, to capital increases totalling approximately EUR 1.0 million (IDeA EESS pro-rata share, of which EUR 0.3 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 8.5 million to acquire a stake of 10% in Elemaster S.p.A. (Elemaster), the leading operator in ODM (original design manufacturing) and EMS (electronic manufacturing service) i.e. the design and construction of electronic equipment. At the same time, the IDeA Opportunity Fund I, also managed by IDeA Capital Funds SGR, invested an equal amount in Elemaster to acquire a similar stake. The IDeA EESS units are valued at approximately EUR 0.6 million in the consolidated financial statements to 31 December 2012, with a change compared with end-2011 that includes an increase in net investment of EUR 0.9 million and a decrease in fair value of EUR 0.3 million.
    • Annual financial statements to 31 December 2012 47 The table below shows the key figures for IDeA EESS at 31 December 2012. IDeA EESS Registered office Year of commit ment Fund Size Subscribed commitment % DeA Capital in fund Euro (€) IDeA Efficienza Energetica e Sviluppo Sostenibile Italy 2011 59,450,000 12,800,000 21.53
    • Annual financial statements to 31 December 2012 48 - AVA Atlantic Value Added Headquarters: Italy Sector: Private Equity – Real Estate Website: www.ideafimit.it Investment 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 5 million (acquiring five class A units, corresponding to 9.1% of the total commitment), with payments 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 estate investments 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 of around EUR 55 million. On 29 December 2011, the fund made its first investment totalling EUR 41.5 million through the purchase/subscription of units in the Venere Fund, a closed-end speculative reserved real estate fund managed by IDeA FIMIT SGR. The Venere Fund's real estate portfolio consists 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 statements to 31 December 2012, with a change in the period that includes the pro-rata portion of the net loss for the period (EUR 0.2 million) and contributions paid in the form of capital calls (0.1 million). The table below shows the key figures for the AVA fund at 31 December 2012: AVA Registered office Year of commit ment Fund Size Subscribed commitment % DeA Capital in fund Euro (€) Atlantic Value Added Italy 2011 55,000,000 5,000,000 9.08 Residual Commitments Total residual commitment in: Euro 2,370,000
    • Annual financial statements to 31 December 2012 49 - Units in venture capital funds Units 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 December 2012 (EUR 12.2 million at end-2011). The table below shows the key figures for venture capital funds in the portfolio at 31 December 2012. Venture Capital Funds Registered office Year of commit ment Fund Size Subscribed commitment % DeA Capital in fund Dollars (USD) Doughty Hanson & Co Technology UK EU 2004 271,534,000 1,925,000 0.71 GIZA GE Venture Fund III Delaware U.S.A. 2003 211,680,000 10,000,000 4.72 Israel Seed IV Cayman Islands 2003 200,000,000 5,000,000 2.50 Pitango Venture Capital II Delaware U.S.A. 2003 125,000,000 5,000,000 4.00 Pitango Venture Capital III Delaware U.S.A. 2003 417,172,000 5,000,000 1.20 Totale Dollari 26,925,000 Euro (€) Nexit Infocom 2000 Guernsey 2000 66,325,790 3,819,167 5.76 Sterlings (GBP) Amadeus Capital II UK EU 2000 235,000,000 13,500,000 5.74 Residual Commitments Total residual commitment in: Euro 3,731,000
    • Annual financial statements to 31 December 2012 50  Alternative Asset Management At 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 facility management and real estate brokerage) - IDeA Capital Funds SGR Headquarters: Italy Sector: Alternative Asset Management - Private Equity Website: www.ideasgr.it Investment details: IDeA Capital Funds SGR is one of the leading independent Italian asset management companies operating in the management of direct funds, and funds of private equity funds. The asset management company manages four closed-end private equity funds, including two funds of funds (IDeA I FoF and ICF II), a "direct" co-investment fund (IDeA OF I) and a sector fund dedicated to energy efficiency (IDeA EESS). The investment programmes of IDeA Capital Funds SGR, which are regulated by the Bank of Italy and Consob, leverage the management team's wealth of experience in the sector. The investment strategies of funds of funds focus on building a diversified portfolio in private equity funds in the top quartile or that are next-generation leaders with balanced asset allocation through 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 in medium to large-sized LBOs together with leading qualified investors with businesses that primarily focus on Europe, and diversification as a function of the appeal of individual sectors by limiting 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 buyout private equity to support the growth of small and medium-sized enterprises with excellent products or services in the energy efficiency and sustainable growth arena. Investments in infrastructure for the generation of energy from renewable sources or early stage investments can be made in compliance with regulatory restrictions. The main geographical focus of these funds is Italy.
    • Annual financial statements to 31 December 2012 51 The table below summarises the value of assets under management and management fees for IDeA Capital Funds SGR at 31 December 2012. (EUR million) Asset Under Management at 31.12.2012 Management fees at 31.12.2012 Breakdown of funds ICF II 281 2.8 IDeA EESS 59 1.2 IDeA I FoF 681 7.1 IDeA OF I 217 2.3 Totalt- IDeA Capital Funds SGR 1,238 13.5 With regard to its operating performance, note that the company recorded revenue growth in 2012, 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 of strengthening the operating structure to support fund raising activities and asset management in fund portfolios. IDeA Capital Funds SGR (mln €) 2012 2011 AUM 1.238 1.232 Commissioni attive 13,5 12,8 EBT 6,9 7,6 Risultato Netto 4,5 4,9
    • Annual financial statements to 31 December 2012 52 - IDeA FIMIT SGR Headquarters: Italy Sector: Alternative Asset Management - Real Estate Website: www.firstatlantic.it Investment 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 (including five listed funds). This puts it among the major partners of Italian and international investors in 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 institutional clients 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 estate funds with the assistance of in-house experts as well as the best independent technical, legal and tax advisors on the market The company has concentrated its investments in transactions with low risk, stable returns, low volatility, simple financial structures and, most importantly, an emphasis on real estate value. 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 management company is able to rely on a panel of prominent unitholders consisting of Italian and international investors with a high standing such as pension funds, bank and insurance groups, capital companies and sovereign funds. On 1 July 2012, the deed of transfer signed by IDeA FIMIT SGR and Duemme SGR for the business division comprising mutual real estate investment funds managed by Duemme SGR (a subsidiary of the Banca Esperia Group specialising in asset management services) became effective. The transfer of the business division has enabled IDeA FIMIT SGR to take on the management of eight real estate funds with assets that include around 60 buildings, worth a total of approximately EUR 500 million.
    • Annual financial statements to 31 December 2012 53 The table below summarises the value of assets under management and management fees for IDeA FIMIT SGR at 31 December 2012. (EUR million) Asset Under Management at 31.12.2012 Management fees at 31.12.2012 Breakdown of funds Atlantic 1 657 5.7 Atlantic 2 Berenice 469 2.4 Alpha 457 4.3 Beta 210 2.5 Delta 344 2.7 Listed funds 2,137 17.6 Reserved funds 7,273 47.8 Total - IDeA FIMIT SGR 9,410 65.4 Some 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 of the real estate portfolio at the date of the latest report available, broken down by geographical area and by intended use. Atlantic 1 12/31/2012 Market value of property 631,770,000 Historical cost and capitalised charges 618,000,162 Loan 355,596,609 Net Asset Value ("NAV") 281,350,818 NAV/unit (EUR) 539.482 Market price/unit (EUR) 174.41 Dividend yield of placement* 4.55% * Ratio between income per unit and average annual nominal value per unit Atlantic 1: Diversification by geographical area Atlantic 1: Diversification by intended use Lombardia 68% Lazio 15% Campania 12% Piemonte / Emilia R. 5% Offices 84% Commercial 16%
    • Annual financial statements to 31 December 2012 54 Atlantic 2 - Berenice 12/31/2012 Market value of property 396,650,000 Historical cost and capitalised charges 405,042,456 Loan 231,111,952 Net Asset Value ("NAV") 225,892,506 NAV/unit (EUR) 376.5 Market price/unit (EUR) 162.4 Dividend yield of placement* 11.14% * Ratio between income per unit and average annual nominal value per unit Atlantic 2: Diversification by geographical area Atlantic 2: Diversification by intended use Alpha 12/31/2012 Market value of property 407,040,000 Historical cost and capitalised charges 323,428,239 Loan 63,142,155 Net Asset Value ("NAV") 384,442,764 NAV/unit (EUR) 3,701.0 Market price/unit (EUR) 1,058.0 Dividend yield of placement* 6.38% * Ratio between income per unit and average annual nominal value per unit Alpha: Diversification by geographical area Alpha: Diversification by intended use Lombardia 52% Lazio 27% Piemonte 17% Altri 4% Offices 68% Other 32% Lazio 83% Lombardia 12% Emilia Romagna 5% Offices 60%Other 40%
    • Annual financial statements to 31 December 2012 55 Beta 12/31/2012 Market value of property 164,722,200 Historical cost and capitalised charges 163,666,042 Loan 31,723,014 Net Asset Value ("NAV") 149,203,714 NAV/unit (EUR) 555.7 Market price/unit (EUR) 315.3 Dividend yield of placement* 9.52% * Ratio between income per unit and average annual nominal value per unit Beta: Diversification by geographical area Beta: Diversification by intended use Delta 12/31/2012 Market value of property 325,046,667 Historical cost and capitalised charges 375,092,958 Loan 137,332,436 Net Asset Value ("NAV") 204,089,909 NAV/unit (EUR) 96.940 Market price/unit (EUR) 30.5 Dividend yield of placement* n.a. * No distributions arising from the investment Delta: Diversification by geographical area Delta: Diversification by intended use Sardegna 39% Lazio 35% Umbria 26% Offices 41% Hotels 39% Specific Use 19% Commercial 1% Hotels 62% Other 34% Offices 4% Sardegna 39% Veneto 17% Calabria 10% Abruzzo 8% Emilia Romagna 11% Lombardia 5% Campania 4% Piemonte 3% Toscana 3%
    • Annual financial statements to 31 December 2012 56 In 2012, over and above the activities to fully integrate the entities merged in 2011 (FARE SGR and FIMIT SGR), the operating performance of IDeA FIMIT SGR was based on a continuous search for opportunities to grow the assets managed; this broadly took the form of transactions to acquire the Duemme SGR business division and the award of the AMA tender (see the “Significant events during the year” section). The comparison between the income statement for 2012 and 2011 (see the table below) is of limited significance, in view of the changes in business structure that took place on 3 October 2011 (integration of FARE SGR and FIMIT SGR, with the creation of IDeA FIMIT SGR). IDeA FIMIT SGR (EUR million) 2012 2011 AUM 9,410 9,476 Management fees 65.4 30.8 EBT 21.1 11.4 EBT - before PPA 32.7 14.3 Net profit 19.4 7.1
    • Annual financial statements to 31 December 2012 57  Comprehensive income - Income statement The Group made a net loss of about EUR 26.3 million in 2012 compared with a loss of EUR 43.6 million in 2011. When comparing the results of 2012 with those of 2011, note the significant change in the scope of consolidation of the Alternative Asset Management business, which includes FIMIT SGR’s contribution from 3 October 2011 (the effective date of its integration with FARE). Revenues and other income break down as follows: - Alternative Asset Management fees totalling EUR 82.0 million - a contribution from investments valued at equity of EUR -18.4 million (EUR -55.5 million in 2011), due to the investment in Santé (around EUR -10.8 million) and the investment in IDeA OF I (EUR -6.3 million) - other investment income, net of liabilities, totalling EUR -7.9 million (EUR +13.5 million in 2011, which included the capital gain made on the sale of a portion of the Migros shares held by Kenan Investments) - other revenues and income totalling EUR 12.5 million due largely to the Alternative Asset Management business (EUR 10.7 million in 2011) Operating costs totalled EUR 81.3 million (EUR 51.4 million in 2011), of which EUR 64.1 million was attributable to Alternative Asset Management, EUR 4.5 million to the Private Equity Investment business and EUR 12.7 million to holding company activities. Alternative Asset Management costs include the effects of the amortisation of intangible assets, totalling EUR 14.7 million, recorded when a portion of the purchase price of the investments was allocated. Financial income and charges, which totalled EUR -6.7 million at 31 December 2012 (EUR -2.8 million in 2011), mainly related to the cost of exercising the put option on subsidiaries’ minority equity investments, income generated from cash and cash equivalents, financial charges and income/charges on derivative contracts. The total tax impact for 2012 (EUR +1.6 million, compared with EUR -3.8 million in 2011) is the combined result of taxes of EUR 4.9 million due in respect of Alternative Asset Management activities, and tax credits of EUR 1.0 million relating to the Private Equity Investment business and of EUR 5.6 million for holding company activities. Of the total consolidated net loss of EUR 26.3 million, about EUR -30.1 million was attributable to the Private Equity Investment business, around EUR +16.5 million to Alternative Asset Management and approximately EUR -12.7 million to holding company operations/eliminations.
    • Annual financial statements to 31 December 2012 58 Summary Group income statement (Euro thousands) Year 2012 Year 2011 Alternative Asset Management fees 82,004 47,762 Income (loss) from equity investments (18,442) (55,503) Other investment income/expense (7,884) 13,500 Income from services 10,863 10,359 Other income 1,658 322 Other expenses (81,270) (51,360) Financial income and expenses (6,759) (2,757) PROFIT/(LOSS) BEFORE TAX (19,830) (37,677) Income tax 1,621 (3,814) PROFIT/(LOSS) FOR THE PERIOD FROM CONTINUING OPERATIONS (18,209) (41,491) Profit (Loss) from discontinued operations/held-for-sale assets 0 0 PROFIT/(LOSS) FOR THE PERIOD (18,209) (41,491) - Group share (26,277) (43,577) - Non controlling interests 8,068 2,086 Earnings per share, basic (€) (0.095) (0.151) Earnings per share, diluted (€) (0.095) (0.151) Summary Group income statement - performance by business in 2012 (Euro thousands) Private Equity Investment Alternative Asset Management Holdings/ Eliminations Consolidated Alternative Asset Management fees 0 82,004 0 82,004 Income (loss) from equity investments (17,855) (245) (342) (18,442) Other investment income/expense (9,014) 599 531 (7,884) Income from services 555 11,759 207 12,521 Other expenses (4,452) (64,160) (12,658) (81,270) Financial income and expenses (327) (42) (6,390) (6,759) PROFIT/(LOSS) BEFORE TAXES (31,093) 29,915 (18,652) (19,830) Income tax 977 (4,930) 5,574 1,621 PROFIT/(LOSS) FOR THE PERIOD FROM CONTINUING OPERATIONS (30,116) 24,985 (13,078) (18,209) Profit (Loss) from discontinued operations/held-for-sale assets 0 0 0 0 PROFIT/(LOSS) FOR THE PERIOD (30,116) 24,985 (13,078) (18,209) - Group share (30,116) 16,574 (12,735) (26,277) - Non controlling interests 0 8,411 (343) 8,068 Summary Group income statement - performance by business in 2011 (Euro thousands) Private Equity Investment Alternative Asset Management Holdings/ Eliminations Consolidated Alternative Asset Management fees 0 47,762 0 47,762 Income (loss) from equity investments (55,503) 0 0 (55,503) Other investment income/expense 13,773 (273) 0 13,500 Income from services 40 10,332 309 10,681 Other expenses (825) (42,051) (8,484) (51,360) Financial income and expenses (26) (215) (2,516) (2,757) PROFIT/(LOSS) BEFORE TAXES (42,541) 15,555 (10,691) (37,677) Income tax 98 (7,160) 3,248 (3,814) PROFIT/(LOSS) FOR THE PERIOD FROM CONTINUING OPERATIONS (42,443) 8,395 (7,443) (41,491) Profit (Loss) from discontinued operations/held-for-sale assets 0 0 0 0 PROFIT/(LOSS) FOR THE PERIOD (42,443) 8,395 (7,443) (41,491) - Group share (42,443) 6,309 (7,443) (43,577) - Non controlling interests 0 2,086 0 2,086
    • Annual financial statements to 31 December 2012 59  Comprehensive income - Statement of Performance - IAS 1 Comprehensive income or the Statement of Performance (IAS 1), in which performance for the period attributable to the Group is reported including results posted directly to shareholders' equity, reflects a net profit of approximately EUR 62.5 million compared with a net loss of EUR 70.2 million in 2011. This comprised:  a net loss of EUR 26.3 million recorded on the income statement  profits posted directly to shareholders’ equity totalling EUR 88.8 million As regards the latter, the largest component was the increase in fair value of Kenan/Migros. The increase of EUR 96.5 million versus 31 December 2011 in the value of this equity investment was due to the rise in the value of Migros shares (TRY 21.5 per share at 31 December 2012, compared with approximately TRY 12.6 per share at 31 December 2011, and the strengthening of the Turkish lira against the euro (2.36 TRY/EUR at 31 December 2012 versus 2.44 TRY/EUR at 31 December 2011). The effect on the DeA Capital Group’s NAV of this change in fair value was partially offset by the provisioning of estimated carried interest of around EUR 12.8 million, to be paid to the lead investor, BC Partners, 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). (Euro thousands) Note Year 2012 Profit/(loss) for the period (A) (18,209) (41,491) Gains/(Losses) on fair value of available-for-sale financial assets 85,397 (27,158) Share of other comprehensive income of associates 2,138 547 Other comprehensive income, net of tax (B) 87,535 (26,611) Total comprehensive income for the period (A)+(B) 69,326 (68,102) Total comprehensive income attributable to: - Group Share 62,496 (70,188) - Non Controlling Interests 6,830 2,086
    • Annual financial statements to 31 December 2012 60  Comprehensive income – balance sheet Below is the Group’s balance sheet at 31 December 2012 compared with 31 December 2011. (Euro thousand) December 31,2012 December 31,2011 ASSETS Non-current assets Intangible and tangible assets Goodwill 208,891 210,134 Intangible assets 105,992 119,648 Property, plant and equipment 2,527 1,269 Total intangible and tangible assets 317,410 331,051 Investments Investments valued at equity 296,366 302,141 Other available-for-sale companies 223,896 127,380 Available-for-sale funds 166,504 159,673 Other avalaible-for-sale financial assets 327 936 Total Investments 687,093 590,130 Other non-current assets Deferred tax assets 2,754 4,077 Loans and receivables 27,444 1,632 Other non-current assets 25,944 25,729 Total other non-current assets 56,142 31,438 Total non-current assets 1,060,645 952,619 Current assets Trade receivables 12,256 6,070 Available-for-sale financial assets 5,666 13,075 Financial receivables 2,003 1 Tax receivables from Parent companies 7,489 5,929 Other tax receivables 2,522 2,677 Other receivables 7,792 6,128 Cash and cash equivalents 29,156 46,764 Total current assets 66,884 80,644 Total current assets 66,884 80,644 Held-for-sale assets - - TOTAL ASSETS 1,127,529 1,033,263 SHAREHOLDERS' EQUITY AND LIABILITIES SHAREHOLDERS' EQUITY Net equity Group 723,138 669,045 Minority interests 136,309 134,324 Shareholders' equity 859,447 803,369 LIABILITIES Non-current liabilities Deferred tax liabilities 25,668 40,506 Provisions for employee termination benefits 3,035 2,127 Long term financial loans 142,802 160,020 Payables to staff 1,956 - Total non-current liabilities 173,461 202,653 Current liabilities Trade payables 27,420 10,322 Payables to staff and social security organisations 8,868 7,497 Current tax 7,473 903 Other tax payables 4,276 3,585 Other payables 1,495 1,023 Short term financial loans 45,089 3,911 Total current liabilities 94,621 27,241 Held-for-sale liabilities - - TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES 1,127,529 1,033,263
    • Annual financial statements to 31 December 2012 61 At 31 December 2012, Group shareholders’ equity was approximately EUR 723.1 million, compared with EUR 669.0 million at 31 December 2011. The increase of about EUR 54.1 million in Group shareholders' equity in 2012 was chiefly due to the reasons already discussed in the Statement of Performance - IAS 1 (EUR +62.5 million) and to the effects of the share buy-back plan (EUR -8.0 million).  Comprehensive income – Net financial position At 31 December 2012, the consolidated net financial position was approximately EUR -123.6 million, as shown in the table below, which provides a breakdown of assets and liabilities and a comparison with the same figures at 31 December 2011: Net financial position Change (EUR million) Cash and cash equivalents 29.2 46.8 (17.6) Available-for-sale financial assets 7.7 13.0 (5.3) Financial receivables 27.4 1.6 25.8 Non-current financial liabilities (142.8) (160.0) 17.2 Current financial liabilities (45.1) (3.9) (41.2) TOTAL (123.6) (102.5) (21.1) December 31,2012 December 31,2011 The change in the consolidated net financial position in 2012 was due to the combined effect of the following factors:  cash outlay of EUR 8.0 million for the share buy-back plan  payment of dividends to third parties of EUR 6.3 million  investment of EUR 26.0 million, net of divestments and capital reimbursements  operating cash flow (mainly comprising fees/revenues for services, net of current expenses, as well as the result of financial and tax management), totalling EUR +19.2 million The company believes that the cash and cash equivalents and the other financial resources available are sufficient to meet the requirement relating to payment commitments already subscribed in funds, also taking into account the amounts expected to be called up/reimbursed by these funds. With regard to these residual commitments, the company believes that the funds and credit lines currently available, as well as those that will be generated by its operational and financing activities, will enable the DeA Capital Group to meet the financing required for its investment activity and to manage working capital and repay debts when they become due. The following points relate to the individual items that make up the consolidated net financial position:  ”Non-current financial liabilities” mainly include EUR 100.0 million relating to the use of the credit line provided by Mediobanca, EUR 12.7 million relating to the use of the credit line granted to IDeA FIMIT SGR by Banca Intermobiliare di Investimenti e Gestioni S.p.A., EUR 25.8 million in respect of the vendor loan to acquire the tranche of mezzanine bonds issued by SDE (discussed in the “Significant events during the year” section, which was broadly offset in “Financial loans”  “Current financial liabilities” chiefly include the amounts still to be paid for the acquisition of 30% of FARE Holding, now DeA Capital Real Estate (expiry: December 2013)
    • Annual financial statements to 31 December 2012 62 6. Results of the Parent Company DeA Capital S.p.A. The Parent Company DeA Capital S.p.A. operates as a holding company that carries out activities of coordination, development and strategic management of its subsidiaries, and also acts as an entity that makes financial investments directly. A summary of the income statement and balance sheet of DeA Capital S.p.A. for the year ended 31 December 2012 is shown below.  Income statement of the Parent Company (Euro) Year 2012 Year 2011 Other investment income/expense 8,919,489 24,694,430 Income from services 459,075 516,647 Realized gains 0 0 Other income 154,812 121,913 Personnel costs (5,972,054) (3,268,826) Service costs (3,138,118) (3,038,525) Depreciation, amortization and impairment (86,325) (154,436) Other expenses (507,712) (10,244) Financial income 2,043,647 1,384,249 Financial expenses (4,653,117) (6,251,938) PROFIT/(LOSS) BEFORE TAX (2,780,303) 13,993,270 Income tax 4,879,067 1,759,281 Income tax-Joint Venture 170,504 236,607 PROFIT/(LOSS) FOR THE YEAR FROM CONTINUING OPERATIONS 2,269,268 15,989,158 Profit (Loss) from discontinued operations/held-for-sale assets 0 0 PROFIT/(LOSS) FOR THE YEAR 2,269,268 15,989,158 The Parent Company reported net profit for 2012 of around EUR 2.3 million, achieved mainly thanks to dividend flows from investments in Alternative Asset Management, which more than offset structure costs and financial charges (net of the related tax effects). This profit for the period contrasts with a loss of around EUR 32.1 million in 2011 (which reflected a significant realignment of the value of the equity investment in DeA Capital Investments following the reduction in fair value of the Private Equity Investment portfolio).
    • Annual financial statements to 31 December 2012 63  Balance sheet of the Parent Company Below is the Parent Company's balance sheet at 31 December 2012 compared with 31 December 2011. (Euro) 31.12.2012 31.12.2011 ASSETS Non-current assets Intangible and tangible assets Intangible assets 14,981 7,656 Tangible assets 491,494 86,848 Total intangible and tangible assets 506,475 94,504 Investments Subsidiaries and joint ventures 831,253,419 717,130,237 Associates 2,597,643 1,000,000 Available-for-sale investments 286,618 1 Available-for-sale funds 13,364,643 12,234,007 Loans to subsidiaries 0 37,307,101 Total Investments 847,502,323 767,671,346 Other non-current assets Deferred tax assets 0 0 Other non-current assets 0 0 Total other non-current assets 0 0 Total non-current assets 848,008,798 767,765,850 Current assets Trade receivables 2,149,347 217,392 Available-for-sale financial assets 0 5,296,954 Financial receivables 31,269,662 2,879,872 Financial receivables (pass throught arrangement) 0 0 7,488,867 5,928,777 Other tax receivables 1,269,537 1,810,310 Other receivables 67,622 97,133 Cash and cash equivalents 2,153,095 29,056,753 Total current assets 44,398,130 45,287,191 Total current assets 44,398,130 45,287,191 Held-for-sale assets 0 0 TOTAL ASSETS 892,406,928 813,053,041 SHAREHOLDERS' EQUITY AND LIABILITIES SHAREHOLDERS' EQUITY Shareholders' equity 740,383,923 714,038,989 LIABILITIES Non-current liabilities Deferred tax liabilities 0 0 Provisions for employee termination benefits 316,221 192,487 Long term financial loans 102,986,561 93,008,005 Payables to staff and social security organisations 1,189,425 - Total non-current liabilities 104,492,207 93,200,492 Current liabilities Trade payables 2,525,591 768,680 Payables to staff and social security organisations 1,200,959 956,225 Current tax payables 0 5,826 Other tax payables 194,516 158,820 Other payables 24,528 13,407 Short term financial loans 43,585,204 3,910,602 Total current liabilities 47,530,798 5,813,560 Held-for-sale liabilities 0 0 TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES 892,406,928 813,053,041 Tax receivables from Parent companies
    • Annual financial statements to 31 December 2012 64 At 31 December 2012, the Parent Company's shareholders' equity totalled about EUR 740.4 million, compared with EUR 714.0 million at 31 December 2011, an increase of about EUR 26.4 million (due largely to the comprehensive income for the period). Pursuant to the Consob Communication of 28 July 2006, a reconciliation between the loss and shareholders' equity at 31 December 2012 reported by the Parent Company DeA Capital S.p.A. is shown below together with the corresponding consolidated figures. (Euro thousand) Net Equity at Dec. 31, 2012 Net Profit/(Loss) 2012 Net Equity at Dec. 31, 2011 Net Profit/(Loss) 2011 EQUITY and net profit/(loss) for the year, as reported in the Parent Company financial statements 740,384 2,269 714,039 (32,086) Elimination of book values from consolidated shareholdings: - Surplus of net equity reported in financial statements compared to book values of shareholdings in consolidated companies (17,246) 0 (44,994) 0 - Pro-rata results achieved by shareholdings 0 15,371 0 22,971 - Pro-rata results achieved by associated companies, valued as Shareholders’ Equity 0 (18,357) 0 (55,503) - Elimination of impairment of investments in DeA Capital S.p.A. 0 (3,236) 0 88,604 - Elimination of dividends received by shareholdings 0 (22,324) 0 (67,563) EQUITY and Group share of net profit/(loss) 723,138 (26,277) 669,045 (43,577) EQUITY and minority interests share of net profit/(loss) 136,309 8,068 134,324 2,086 EQUITY and net profit for the year, as reported in the consolidated financial statements 859,447 (18,209) 803,369 (41,491)
    • Annual financial statements to 31 December 2012 65 7. Other information  Own shares and Parent Company shares On 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 on 19 April 2011, which was scheduled to expire on 19 October 2012. The new plan will have the same objectives as the previous one, including the purchase of own shares to be used for extraordinary operations and share incentive plans, offering shareholders a means of monetising their investment, stabilising the share price and regulating trading within the limits of the legislation in force. The authorisation specifies that purchases may be carried out, for a maximum period of 18 months starting from 17 April 2012, in accordance with all procedures allowed by current regulations, and that DeA Capital S.p.A. may also sell the shares purchased for the purposes of trading. The unit price for the purchase of the shares is set by the Board of Directors, but in any case must not be more than 20% above or below the share’s reference price on the trading day prior to each purchase. In contrast, the authorisation to sell own shares already held in the company’s portfolio and any shares bought in the future was granted for an unlimited period, to be implemented using the methods deemed most appropriate and at a price to be determined on a case-by-case basis by the Board of Directors, which must not, however, be more than 20% below the share's reference price on the trading day prior to each individual sale (apart from in certain exceptional cases specified in the plan). Sale transactions may also be carried out for trading purposes. Also on 17 April 2012, the company’s Board of Directors voted to initiate the plan to buy and sell own shares authorised by the shareholders’ meeting, and to this end vested the Chairman of the Board of Directors and the Chief Executive Officer with all the necessary powers, to be exercised jointly or severally and with full powers of delegation. In 2012, as a part of the above two plans, DeA Capital S.p.A. purchased around 6.1 million shares valued at about EUR 8.0 million (at an average price of EUR 1.31 per share). Taking into account purchases made in previous years for plans in place from time to time, and uses of own shares to service purchases of controlling interests in FARE Holding and IDeA AI, at 31 December 2012 the company owned 32,006,029 own shares (equal to about 10.4% of the share capital). As of the date of this document, based on purchases of 630,975 shares made after the end of 2012, the company had a total of 32,637,004 own shares corresponding to about 10.6% of the share capital. During 2012, the company did not hold, purchase or sell, on its own account or through a trust company, any shares in Parent Company De Agostini S.p.A.  Stock option and performance share plans On 17 April 2012, the shareholders’ meeting approved the DeA Capital Stock Option Plan 2012–2014. To implement the resolution of the shareholders' meeting, the Board of Directors
    • Annual financial statements to 31 December 2012 66 of DeA Capital S.p.A., at its meeting held on the same day, allocated a total of 1,030,000 options 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 Option Plan 2012–14, the Board of Directors also set the exercise price for the options allocated at EUR 1.3363, which is the arithmetic mean of the official prices of ordinary DeA Capital shares on the Mercato Telematico Azionario, the Italian screen-based trading system organised and managed by Borsa Italiana S.p.A., on the trading days between 17 March 2012 and 16 April 2012. The shareholders’ meeting also approved a paid capital increase, in divisible form, without option rights, via the issue of a maximum of 1,350,000 ordinary shares to service the DeA Capital Stock Option Plan 2012-2014. The shareholders’ meeting also approved the Performance Share Plan 2012–2014. To implement the resolution of the shareholders' meeting, the Board of Directors allocated a total of 302,500 units (representing the right to receive ordinary shares of the company, free of charge, under the terms and conditions of the plan) 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. Shares allocated due to the vesting of units will be drawn from own shares already held by the company. The terms and conditions of the DeA Capital Stock Option Plan 2012–2014 and the Performance Share Plan 2012-2014 are described in the Information Prospectus prepared in accordance 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’s website www.deacapital.it in the section Corporate Governance/Incentive Plans. With regard to the previous year, on 19 April 2011 the shareholders' meeting approved the Stock Option Plan 2011-2016 on the basis of which 2,200,000 shares were allocated. These shares are not yet exercisable.  Transactions with parent companies, subsidiaries and related parties   Transactions with related parties Transactions with related parties, including those with other Group companies, were carried out in accordance with the Procedure for Related Party Transactions adopted by the company with effect from 1 January 2011 in accordance with the provisions of the Regulation pursuant to art. 2391-bis of the Italian Civil Code as specified by Consob in Resolution 17221 of 12 March 2010 as subsequently amended. During the year, the company did not carry out any atypical or unusual transactions with related parties, but only those that are part of the normal business activities of Group companies, and did not carry out any "significant transactions" as defined in the above-mentioned procedure. In addition to the above, the company signed a service agreement with the controlling shareholder De Agostini S.p.A. for the latter to provide operating services in the administration, finance, control, legal, corporate and tax areas. This agreement, which is renewable annually, is priced at market rates, and is intended to allow the company to maintain a streamlined organisational structure in keeping with its development policy, and at the same time to obtain adequate operational support.
    • Annual financial statements to 31 December 2012 67 Remuneration and stock options to directors, auditors, general managers and managers with strategic responsibilities The information on compensation and stock options allocated to directors, auditors, general managers and managers with strategic responsibilities is provided in the related sections of the annual and consolidated financial statements and in the Remuneration Report pursuant to art. 123-ter of the TUF in accordance with art. 84-quater of the Issuer Regulations, which is available to the public at the headquarters of DeA Capital S.p.A. and on the company's website www.deacapital.it.  Equity investments held by directors, auditors, general managers and managers with strategic responsibilities Information regarding the equity investments held by directors, auditors, general managers and managers with strategic responsibilities is reported in the relevant sections of the annual and consolidated financial statements.  Management and coordination Since 30 January 2007, the company has been controlled by De Agostini S.p.A., which, in accordance with art. 2497-sexies of the Italian Civil Code, carries out management and coordination activities in respect of the company. Please see the notes to the financial statements above for key figures from the latest approved financial statements of De Agostini S.p.A.  Research and development activities Note that pursuant to art. 2428, para. 3 of the Italian Civil Code, the company did not carry out any research and development activity in 2012.  Atypical or unusual transactions and non-recurring significant events and transactions Pursuant to Consob Communication 6064293 of 28 July 2006, in 2012 neither the company nor the Group carried out any atypical and/or unusual transactions or significant transactions that were not a part of its ordinary operations.  Corporate governance Please see the document entitled "Report on Corporate Governance and Ownership Structure" (found in the Corporate Governance section of the company's website) for information on the corporate governance structure of DeA Capital S.p.A., adopted to bring the company in line with the principles of the Code of Conduct prepared by the "Committee for the Corporate Governance of Listed Companies". Below is a summary of the main information governing DeA Capital S.p.A.'s corporate governance. Issuer profile The Issuer's corporate governance structure is based on the traditional administration and control model, and hinges on the central role played by the Board of Directors, the proper disclosure of management decisions, an effective internal control system, the appropriate
    • Annual financial statements to 31 December 2012 68 regulation of potential conflicts of interest, and on rigorous standards of conduct for carrying out transactions with related parties. Extent of application of the Code of Conduct For 2012, the Board of Directors again implemented the Board's self-assessment process. Directors showed a high degree of participation in the Board's self-assessment process, and a review of the results of the board performance evaluation resulted in an overall positive opinion on the functioning of the Board. Corporate bodies  The Board of Directors consists of ten members, eight of whom are non-executive directors, and three of whom are independent directors. It plays a key role in the corporate governance system of DeA Capital S.p.A. In particular, it has the power and the duty to manage the operations of the Issuer with the ultimate and main goal of creating value for shareholders. Pursuant to the articles of association, the Board manages the company's business, and is invested with all the administrative powers needed for this purpose, with the exception of those powers reserved for the shareholders' meeting, pursuant to legislation and the articles of association. In 2012, the Board of Directors met six times. For 2012, the calendar of scheduled meetings has been published in both Italian and English (also available at www.deacapital.it).  The Board of Auditors comprises six members (the chairman, two permanent auditors and three deputy auditors). It monitors compliance with the law and the company’s articles of association, observance of the principles of proper management, and the suitability and proper functioning of the organisational, administrative and accounting structure. In 2012, the Board of Auditors met 12 times.  The Remuneration Committee comprises three independent directors. The Committee submits proposals to the Board of Directors concerning the remuneration of the chief executive officer, and assesses the chief executive officer’s recommendations regarding the remuneration of managers with strategic responsibility. In 2012, the Remuneration Committee met twice.  The Control and Risk Committee comprises three non-executive directors, of which two are independent. The Committee has a consultative role and makes proposals to the Board of Directors. In 2012, Control and Risk Committee met seven times.
    • Annual financial statements to 31 December 2012 69 Corporate Governance Chart as at 31 December 2012:  Main risks and uncertainties to which the Parent Company and consolidated Group companies are exposed As described in this Report on Operations, the DeA Capital Group operates through, and is structured as, two business areas: Private Equity Investment and Alternative Asset Management. The risks set out below consider the characteristics of the market and the operations of Parent Company DeA Capital S.p.A. and the companies included in the Group’s consolidated financial statements, and the main findings of a risk assessment, carried out in 2012, as well as the periodic monitoring conducted partly through the regulatory policies adopted by the Group. There could, however, be risks that are currently unidentified or not considered significant that could have an impact on the Group's operations. The Group has adopted a modern corporate governance system that provides effective management of the complexities of its operations, and enables both individual companies and the Group to achieve their strategic objectives. Furthermore, the assessments conducted by the organisational units and the directors confirm both the non-critical nature of these risks and uncertainties and the financial solidity of the DeA Capital Group. With reference to specific risks relating to the main private equity investments, i.e. Générale de Santé and Migros, please see the respective annual reports, and, more specifically, Générale de Santé’s Registration Document and Migros’ Annual Report (available on their websites). In particular, the latest Registration Document (sections 4.1 - RISQUES LIES AUX ACTIVITES DU GROUPE and 4.2 - GESTION DES RISQUES) available as of the date of this report, indicates the following as the main risk factors for Générale de Santé: External Auditors: KPMG Statutory Auditors: Chairman : Angelo Gaviani Perm. Auditors: Cesare Andrea Grifoni, Gian Piero Balducci Dep. Auditors : Giulio Gasloli, Andrea Bonafé, Maurizio Ferrero Board of Directors Executive:: Lorenzo Pellicioli (Chair.), Paolo Ceretti (CEO) Non executive: Lino Benassi, Marco Boroli, Daniel Buaron, Marco Drago, Roberto Drago Rosario Bifulco, Claudio Costamagna, Severino Salvemini Remuneration Committee: Coordinator : Rosario Bifulco (Indep.) Members: Claudio Costamagna (Indep.), Severino Salvemini (Indep.) Manager responsible for the company Accounting statements: Manolo Santilli (CFO) Internal Audit: Davide Bossi Internal Audit Board: Chairman : Gian Piero Balducci (St: Auditor), Members: Severino Salvemini (Indep.), Davide Bossi (Internal Audit) Lead Independent Director: Severino Salvemini (Indep.) Internal Control Committee: Chairman : Severino Salvemini (Indep.) Members:: Rosario Bifulco (Indep.), Lino Benassi (non executive) Shareholders’ Meeting Independent:
    • Annual financial statements to 31 December 2012 70    Risks related to company debt (Risques liés à l’endettement de Générale de Santé)  Liquidity risks (Risques de liquidité)  Interest rate risks (Risques de taux d’intérêt)  Risks relating to obtaining financing (Risques liés à l’obtention de financements)  Risks relating to commitments contained in leases signed by the Group (Risques liés aux engagements contenus dans les baux commerciaux souscrits par le Groupe)  Risks relating to the clinic restructuring and construction programme (Risques liés aux programmes de restructuration ou de construction majeures de cliniques)  Risks relating to the external growth strategy (Risques liés à la stratégie de croissance externe)  Risks relating to changes in prices (Risques liés à l’évolution de la tarification)  Risks relating to competition (Risques liés à la compétitivité)  Risks relating to the recruitment and retention of staff and practitioners (Risques liés au recrutement et à la fidélisation du personnel et des praticiens)  Risks relating to applicable legislation (Risques liés à la réglementation applicable)  Risks of a deterioration in the reputation of Générale de Santé in the event of legal proceedings being brought against a group facility or practitioner (Risques liés à la dégradation de la réputation de Générale de Santé en cas de mise en jeu de la responsabilité d’un établissement ou d’un praticien du Groupe)  Risks relating to environmental protection legislation (Risques liés à la réglementation relative à la protection de l’environnement)  Risks relating to the adequacy, costs and availability of insurance cover (Risques liés à l’adéquation, aux coûts et à la disponibilité de couverture d’assurance)  Exceptional events and disputes (Faits exceptionnels et litiges)  Risks relating to IT suppliers (Risques liés au fournisseur en matière informatique). A. Contextual risks A.1. Risks relating to general economic conditions The operating performance and financial position of the DeA Capital Group are affected by the various factors that make up the macro-economic environment, including increases or decreases in GDP, investor and consumer confidence, interest rates, inflation, the costs of raw materials and unemployment. The ability to meet medium- to long-term objectives could be affected by general economic performance, which could slow the development of sectors the Group has invested in, and at the same time, the business of the investee companies. A.2. Socio-political events In line with its own strategic growth guidelines, one of the DeA Capital Group’s activities is private equity investment in companies and funds in different jurisdictions and countries around the world, which, in turn, invest in a number of countries and geographical areas. The DeA Capital Group may have invested in foreign countries whose social, political and economic conditions put the achievement of its investment objectives at risk. A.3. Regulatory changes Many Group companies conduct their operations in regulated sectors and markets. Any changes to or developments in the legislative or regulatory framework that affect the costs and revenues structure of investee companies or the tax regime applied, could have negative effects on the Group’s financial results, and necessitate changes in the Group’s strategy. To combat this risk, the Group has established procedures to constantly monitor sector regulation and any changes thereto, in order to take advantage of business opportunities and respond to any changes in the prevailing legislation and regulations in good time. A.4. Performance of the financial markets The company’s ability to meet its strategic and management objectives could depend on the performance of financial markets. A negative trend on financial markets could have an effect
    • Annual financial statements to 31 December 2012 71 on the private equity investment sector in general, making investment and divestment transactions more complex, and on the Group’s capacity to increase the NAV of investments in particular. The value of equity investments held directly or indirectly through funds in which the company has invested could be affected by factors such as comparable transactions concluded on the market, sector multiples and market volatility. These factors that cannot be directly controlled by the Group are constantly monitored in order to identify appropriate response strategies that involve both the provision of guidance for the management of Group companies, and the investment and value enhancement strategy for the assets held. A.5. Exchange rates Holding investments in currencies other than the euro exposes the Group to changes in exchange rates between currencies. The investment in Kenan Investments is managed as a special case, since although it was made in euro, the underlying asset is expressed in Turkish lira. Taking into account the time horizon of the investment, it is believed that the expected return on the investment can absorb any devaluation of the underlying currency, if in line with the outlook for the currency. A.6. Interest rates Ongoing financing operations that are subject to variable interest rates could expose the Group to an increase in related financial charges, in the event that the reference interest rates rise significantly. DeA Capital S.p.A. has established appropriate strategies to hedge against the risk of fluctuations in interest rates. Given the partial hedge of the underlying, the company classifies these securities as speculative instruments, even though they are put in place for hedging purposes. B. Strategic risks B.1. Concentration of the Private Equity Investment portfolio The Private Equity Investment strategy adopted by the Group includes: - direct investments - indirect investments (in funds) Within this strategy, the Group’s overall profitability could be adversely affected by an unfavourable trend in one or a few investments, if there were insufficient risk diversification, resulting from the excessive concentration of investment in a small number of assets, sectors, countries, currencies or of indirect investments in funds with limited investment targets/types of investment. To combat these risk scenarios, the Group pursues an asset allocation strategy intended to create a balanced portfolio with a moderate risk profile, investing in attractive sectors and in companies with an appealing current and future risk/return ratio. Furthermore, the combination of direct and indirect investments, which, by their nature, guarantee a high level of diversification, helps reduce the level of asset concentration. B.2. Concentration of Alternative Asset Management activities In Alternative Asset Management, in which the Group is active through the companies DeA Capital Real Estate and IFIM, events could arise as a result of excessive concentration that would hinder the achievement of the level of expected returns. These events could be due to:  Private equity funds o concentration of the management activities of asset management companies across a limited number of funds, in the event that one or more funds decides to cancel its asset management mandate o concentration of the financial resources of the funds managed in a limited number of sectors and/or geographical areas, in the event of currency, systemic or sector crises
    • Annual financial statements to 31 December 2012 72 o for closed funds, concentration of the commitment across just a few subscribers, in the event of a counterparty experiencing financial difficulties  Real estate funds o concentration of real estate present in the portfolio of managed funds in a few cities and/or in limited types of property (management/commercial), in the event of a crisis on the property market concerned o concentration in respect of certain important tenants, in the event that these withdraw from the rental contracts, which could lead to a vacancy rate that has a negative impact on the funds' financial results and the valuation of the property managed o concentration of the maturities of numerous real estate funds within a narrow timeframe, with related high availability of property on the market, leading to a decrease in property values and an increase in selling times For each of the risk scenarios outlined above, the Group has defined and implemented appropriate strategies that include strategic, operational and management aspects, as well as a system monitoring the level of diversification of Alternative Asset Management activities. B.3. Key resources (governance/organisation) The success of the DeA Capital Group depends to a large extent on its executive directors and certain key management figures, their ability to efficiently manage the business and the ordinary operations of the Group, as well as knowledge of the market and the professional relationships established. The departure of one or more of these key resources, without a suitable replacement being found, as well as an inability to attract and retain new and qualified resources, could impact growth targets and have a negative effect on the Group’s operating performance and financial results. To mitigate this risk, the Group has put in place HR management policies that correspond closely to the needs of the business, and incentive policies that are periodically reviewed, in light of, among other things, the general economic climate and the results achieved by the Group. C. Operating risks C.1. Investment operations Investment operations conducted by the Group are subject to the risks typical of private equity activities, such as the accurate valuation of the target company and the nature of the transactions carried out. The Group has implemented a structured process of due diligence on target companies, involving the different levels of group management concerned and the careful definition of shareholders’ agreements in order to conclude agreements in line with the investment strategy and the risk profile defined by the Group. C.2. Compliance with covenants Some investment operations were concluded using financial leverage to invest in the target companies. For financing contracts signed by investee companies, specific covenants generally backed by collateral are in place; failure to comply with these could necessitate recapitalisation operations for investee companies and lead to an increase in financial charges relating to debt refinancing. Failure to comply with covenants attached to loans could have negative effects on both the financial situation and operations of investee companies, and on the value of the investment. The Group constantly monitors the significant reference parameters for the financial obligations taken on by investee companies, in order to identify any unexpected variance in good time. C.3. Divestment operations
    • Annual financial statements to 31 December 2012 73 In its Private Equity Investment business, the Group generally invests over a medium-/long- term time horizon. Over the investment management period, external situations could arise that might have a significant impact on the operating results of the investee companies, and consequently on the value of the investment itself. Furthermore, in the case of co-investment, guiding the management of an investee company could prove problematic or unfeasible, and it may ultimately prove impossible to dispose of the stakes held owing to lock-up clauses. The divestment strategy could therefore be negatively affected by various factors, some of which cannot be foreseen at the time the investments are made. There is therefore no guarantee that expected earnings will be realised given the risks resulting from the investments made. To combat these risk situations, the Group has defined a process to monitor the performance of its investee companies, facilitated by its representation on the management bodies of significant investee companies, with a view to identifying any critical situations in good time. C.4. Funding risk The income flows expected from the Alternative Asset Management business depend on the capacity of the Group’s asset management companies to stabilise/grow their assets under management. In this environment, fund raising activity could be harmed by both external factors, such as the continuation of the global economic crisis or the trend in interest rates, and internal factors, such as bad timing in respect of fund raising activities by the asset management companies or the departure of key managers from the companies. The Group has established appropriate risk management strategies in relation to fund raising, with a view to both involving new investors and retaining current investors.
    • Annual financial statements to 31 December 2012 74  Other information At 31 December 2012, the Group had 207 employees (167 at the end of 2011), including 31 senior managers, 62 middle managers and 114 clerical staff. 190 of these worked in Alternative Asset Management and 17 in Private Equity Investment/the holding company. These staff levels do not include personnel on secondment from the Parent Company De Agostini S.p.A. The company signed a service agreement with the controlling shareholder, De Agostini S.p.A., for the latter to provide operating services in the administration, finance, control, legal, corporate and tax areas. This agreement, which is renewable annually, is priced at market rates, and is intended to allow the company to maintain a streamlined organisational structure in keeping with its development policy, and at the same time to obtain adequate operational support. DeA Capital S.p.A. and IDeA Capital Funds SGR have adopted the national tax consolidation scheme of the B&D Group (the Group headed by B&D Holding di Marco Drago e C. S.a.p.a., the Parent Company of De Agostini S.p.A.). This option was exercised jointly by each of the two companies and B&D Holding di Marco Drago e C. S.a.p.a. by signing the "Regulation for participation in the national tax consolidation scheme for companies in the De Agostini Group" and notifying the tax authorities of this option pursuant to the procedures and terms and conditions set out by law. The option for DeA Capital S.p.A., which was renewed during 2011, is irrevocable for the three-year period of 2011-2013 unless the requirements for applying the scheme are not met, while in the case of IDeA Capital Funds SGR, the option was signed in 2012 and relates to the three-year period of 2012-2014. With regard to the regulatory requirements set out in art. 36 of the Market Regulation on conditions for the listing of parent companies of companies formed or regulated by laws of non-EU countries and of significant importance in the consolidated financial statements, it is hereby noted that no Group company falls within the scope of the above-mentioned provision. Furthermore, conditions prohibiting listing pursuant to art. 37 of the Market Regulation relating to companies subject to the management and coordination of other parties do not apply. Following the conversion of Decree Law 5 of 9 February 2012 (the “Simplifications Decree”), effected via Law 35 of 4 April 2012, the obligation for holders of confidential and legal data that process such data electronically to draft a Security Planning Document was definitely removed. The company, therefore, did not prepare a Security Planning Document, although it complied with the provisions of Legislative Decree 196/03, which is still in force, relating to the protection of personal data.
    • Annual financial statements to 31 December 2012 75  Significant events after the end of 2012 and outlook  Significant events after the end of 2012  Private equity funds – paid calls/reimbursements After the end of 2012, the DeA Capital Group increased its investment in the IDeA I FoF, ICF II, IDeA OF I and IDeA EESS funds following total payments of EUR 12.5 million (EUR 0.3 million, EUR 5.7 million, EUR 4.5 million and EUR 2.0 million respectively). At the same time, the DeA Capital Group received capital reimbursements totalling EUR 6.7 million from the IDeA I FoF and ICF II funds (EUR 5.6 million and EUR 1.1 million respectively) to be used in full to reduce the carrying value of the units.  Purchase of IDeA SIM S.p.A shares On 25 February 2013, in compliance with the provisions of various agreements, DeA Capital S.p.A. acquired the shares held by the former CEO of IDeA SIM, equal to 30% of its capital, bringing its investment to 95% of the company’s capital. The price paid was EUR 79 thousand.  Acquisition of a shareholding in IDeA FIMIT SGR On 27 February 2013, DeA Capital S.p.A. signed an agreement with Inarcassa to acquire shares from the latter representing 2.98% of the capital of IDeA FIMIT SGR, for an estimated price of around EUR 5.9 million; financial equity instruments issued by IDeA FIMIT SGR and held by Inarcassa are excluded from the sale. The closing is expected to take place at the beginning of April once the pre-emptive rights have expired.  Outlook The outlook continues to focus on the strategic development guidelines followed last year, with an emphasis on increasing the value of assets in the Private Equity Investment area and on developing the Alternative Asset Management platforms. In general terms, the economic environment – about which it is still difficult to make forecasts – will influence the industrial and economic performance of the Group’s assets, as well as the outlook for returns on the investments made. The Group believes, however, that it has built a portfolio that is very “resistant” to shocks and one that at the same time is able to benefit from improvements in the environment, particularly on financial markets, which significantly influence expectations of investment value enhancement and the raising of new funds. At the same time, in support of the strategic guidelines set out above, the company will continue to maintain a solid asset and financial structure, implementing any initiative with rigour and discipline.
    • Annual financial statements to 31 December 2012 76 8. Proposal to approve the financial statements of DeA Capital S.p.A. for the year to 31 December 2012 and related and resulting resolutions Dear shareholders, In submitting the annual financial statements for the financial year ended 31 December 2012 for your approval, the Board of Directors proposes that you pass the following resolution: “”” The DeA Capital S.p.A. ordinary shareholders’ meeting, - after reviewing the draft annual financial statements for the year to 31 December 2012, which show profit of EUR 2,269,268 (versus a loss of EUR 32,085,746 in 2011) - in acknowledgement of the Reports of the Board of Auditors and of the independent auditors, KPMG S.p.A. resolves 1. to approve the Report of the Board of Directors on the Group's position and on operating performance 2. to approve the balance sheet, income statement and notes to the financial statements for the year to 31 December 2012 and the related annexes 3. to carry forward the profit of EUR 2,269,268 reported in the financial statements for the year to 31 December 2012 4. to grant Chairman Lorenzo Pellicioli and Chief Executive Officer Paolo Ceretti broad powers to execute this resolution, jointly or severally through their agents and in compliance with the deadlines and procedures established by law “”” Milan, 8 March 2013 FOR THE BOARD OF DIRECTORS The Chairman Lorenzo Pellicioli
    • Annual financial statements to 31 December 2012 77 Consolidated financial statements for the year to 31 December 2012
    • Annual financial statements to 31 December 2012 78 Consolidated financial statements to 31 December 2012  Consolidated Balance Sheet  Consolidated Income Statement  Consolidated statement of comprehensive income  Consolidated cash flow statement  Statement of Changes in Consolidated Shareholders’ Equity  Notes to the accounts
    • Annual financial statements to 31 December 2012 79  Consolidated Balance Sheet (Euro thousand) Notes December 31,2012 December 31,2011 ASSETS Non-current assets Intangible and tangible assets Goodwill 1a 208,891 210,134 Intangible assets 1b 105,992 119,648 Property, plant and equipment 1c 2,527 1,269 Total intangible and tangible assets 317,410 331,051 Investments Investments valued at equity 2a 296,366 302,141 Other available-for-sale companies 2b 223,896 127,380 Available-for-sale funds 2c 166,504 159,673 Other avalaible-for-sale financial assets 2d 327 936 Total Investments 687,093 590,130 Other non-current assets Deferred tax assets 3a 2,754 4,077 Loans and receivables 3b 27,444 1,632 Other non-current assets 3c 25,944 25,729 Total other non-current assets 56,142 31,438 Total non-current assets 1,060,645 952,619 Current assets Trade receivables 4a 12,256 6,070 Available-for-sale financial assets 4b 5,666 13,075 Financial receivables 4c 2,003 1 Tax receivables from Parent companies 4d 7,489 5,929 Other tax receivables 4e 2,522 2,677 Other receivables 4f 7,792 6,128 Cash and cash equivalents 4g 29,156 46,764 Total current assets 66,884 80,644 Total current assets 66,884 80,644 Held-for-sale assets - - TOTAL ASSETS 1,127,529 1,033,263 SHAREHOLDERS' EQUITY AND LIABILITIES SHAREHOLDERS' EQUITY Net equity Group 5a 723,138 669,045 Share premium reserve 5b 386,452 388,362 Legal reserve 5c 61,322 61,322 Fair Value reserve 5d 91,905 3,132 Other reserves 5e (10,444) (10,042) Translation reserve 5f #RIF! #RIF! Retained earnings (losses) 5g 54,426- 10,849)( Profit/(loss) for the year (26,277) (43,577) Net equity Group 5h 723,138 669,045 Minority interests 136,309 134,324 Shareholders' equity 859,447 803,369 LIABILITIES Non-current liabilities 3a Deferred tax liabilities 25,668 40,506 Provisions for employee termination benefits 6a 3,035 2,127 Long term financial loans 6b 142,802 160,020 Payables to staff 6c 1,956 - Total non-current liabilities 173,461 202,653 Current liabilities Trade payables 7a 27,420 10,322 Payables to staff and social security organisations 7b 8,868 7,497 Current tax 7c 7,473 903 Other tax payables 7d 4,276 3,585 Other payables 7e 1,495 1,023 Short term financial loans 7f 45,089 3,911 Total current liabilities 94,621 27,241 Held-for-sale liabilities - - TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES 1,127,529 1,033,263 Pursuant to Consob Resolution 15519 of 27 July 2006, the impact of dealings with related parties on the balance sheet, income statement and cash flow statement is explained in the notes to the financial statements.
    • Annual financial statements to 31 December 2012 80  Consolidated Income Statement (Euro thousands) Note Year 2012 Year 2011 Alternative Asset Management fees 9a 82,004 47,762 Income from equity investments 10a (18,442) (55,503) Other investment income/expense 11 (7,884) 13,500 Income from services 12 10,863 10,359 Other income 13a 1,658 322 Personnel costs 14a (32,846) (25,031) Service costs 14b (26,583) (17,113) Depreciation, amortization and impairment 14c (16,647) (7,080) Other expenses 14e (5,194) (2,136) Financial income 15a 1,831 1,863 Financial expenses 15b (8,590) (4,620) PROFIT/(LOSS) BEFORE TAX (19,830) (37,677) Income tax 16a 1,621 (3,814) PROFIT/(LOSS) FOR THE PERIOD FROM CONTINUING OPERATIONS (18,209) (41,491) Profit (Loss) from discontinued operations/held-for-sale assets 0 0 PROFIT/(LOSS) FOR THE PERIOD (18,209) (41,491) - Group share (26,277) (43,577) - Non controlling interests 8,068 2,086 Earnings per share, basic (€) 17 (0.095) (0.151) Earnings per share, diluted (€) 17 (0.095) (0.151) Pursuant to Consob Resolution 15519 of 27 July 2006, the impact of dealings with related parties on the balance sheet, income statement and cash flow statement is explained in the notes to the financial statements.
    • Annual financial statements to 31 December 2012 81  Statement of Consolidated Comprehensive Income (Statement of Performance - IAS 1) Comprehensive income or the Statement of Performance (IAS 1), in which performance for the period attributable to the Group is reported including results posted directly to shareholders' equity, reflects a net profit of approximately EUR 62.5 million compared with a net loss of EUR 70.2 million in 2011. This comprised:  a net loss of EUR 26.3 million recorded on the income statement  profits posted directly to shareholders’ equity totalling EUR 88.8 million As regards the latter, the largest component was the increase in fair value of Kenan/Migros. The increase of EUR 96.5 million versus 31 December 2011 in the value of this equity investment was due to the rise in the value of Migros shares (TRY 21.5 per share at 31 December 2012, compared with approximately TRY 12.6 per share at 31 December 2011, and the strengthening of the Turkish lira against the euro (2.36 TRY/EUR at 31 December 2012 versus 2.44 TRY/EUR at 31 December 2011). The effect on the DeA Capital Group’s NAV of this change in fair value was partially offset by the provisioning of estimated carried interest of around EUR -12.8 million, to be paid to the lead investor, BC Partners, 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). (Euro thousands) Note Year 2012 Profit/(loss) for the period (A) (18,209) (41,491) Gains/(Losses) on fair value of available-for-sale financial assets 85,397 (27,158) Share of other comprehensive income of associates 2,138 547 Other comprehensive income, net of tax (B) 87,535 (26,611) Total comprehensive income for the period (A)+(B) 69,326 (68,102) Total comprehensive income attributable to: - Group Share 62,496 (70,188) - Non Controlling Interests 6,830 2,086
    • Annual financial statements to 31 December 2012 82  Consolidated Cash Flow Statement (direct method) (Euro thousands) Year 2012 Year 2011 CASH FLOW from operating activities Investments in funds and shareholdings (47,964) (108,902) Acquistions of subsidiaries net of cash acquired (22,931) 0 Capital reimbursements from funds 18,771 13,842 Proceeds from the sale of investments 0 3,607 Interest received 604 1,207 Interest paid (3,224) (3,036) Cash distribution from investments 5,097 64,452 Realized gains (losses) on exchange rate derivatives (889) (803) Taxes paid (6,967) (14,289) Taxes refunded 0 925 Dividends received 0 287 Management and performance fees received 75,870 40,480 Revenues for services 15,064 15,861 Operating expenses (57,183) (37,037) Net cash flow from operating activities (23,752) (23,406) CASH FLOW from investment activities Acquisition of property, plant and equipment (884) (271) Sale of property, plant and equipment 32 1 Purchase of licenses (197) (576) Net cash flow from investing activities (1,049) (846) CASH FLOW from investing activities Acquisition of financial assets (3,258) (13,892) Sale of financial assets 6,587 16,610 Share capital issued 0 0 Share capital issued:stock option plan 0 0 Own shares acquired (8,000) (26,411) Own shares sold 0 0 Interest from financial activities 0 0 Dividends paid (6,290) (2,700) Warrant 0 0 Managers Loan 0 1,683 Vendor loan 25,837 0 Quasi-equity loan (25,837) 0 Bank loan paid back (672) 0 Bank loan received 20,000 0 Net cash flow from financing activities 8,367 (24,710) CHANGE IN CASH AND CASH EQUIVALENTS (16,434) (48,962) CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 46,764 86,517 Cash and cash equivalents relating to held-for-sale assets 0 0 Cash and cash equivalents at beginning of period 46,764 86,517 EFFECT OF CHANGE IN BASIS OF CONSOLIDATION: CASH AND CASH EQUIV (1,174) 9,209 CASH AND CASH EQUIVALENTS AT END OF PERIOD 29,156 46,764 Held-for-sale assets and minority interests 0 0 CASH AND CASH EQUIVALENTS AT END OF PERIOD 29,156 46,764 Pursuant to Consob Resolution 15519 of 27 July 2006, the impact of dealings with related parties on the balance sheet, income statement and cash flow statement is explained in the notes to the financial statements.
    • Annual financial statements to 31 December 2012 83  Statement of Changes in Consolidated Shareholders’ Equity (EUR thousand) Share Capital Share Premium Reserve Legal reserve Riserva Fair Value Reserves relating to joint ventures Other reserves Translation Reserve Profit/(loss) carried forward Profit (loss) for the Group Total Group Non controlling interests Consolidated net equity Total at 31.12.10 294,013 395,614 61,322 29,743 (20) (5,868) 0 15,499 (26,348) 763,955 552 764,507 Allocation of 2010 net profit 0 0 0 0 0 0 (26,348) 26,348 0 0 0 Cost of stock options 0 0 0 0 0 683 0 0 0 683 0 683 Purchase of own shares (18,123) (8,288) 0 0 0 0 0 0 0 (26,411) 0 (26,411) Shares transferred for IDeA AI acquisition 4,807 1,036 0 0 0 0 0 0 0 5,843 0 5,843 Pro-rata bonus shares of Santè 0 0 0 0 0 392 0 0 0 392 0 392 Effect of diluting Santè in GDS 0 0 0 0 0 (2,162) 0 0 0 (2,162) 0 (2,162) Merger FARE-FIMIT 0 0 0 0 0 3,984 0 0 0 3,984 133,799 137,783 Other changes 0 0 0 0 20 448 0 0 0 468 (336) 132 Put option 0 0 0 0 0 (7,519) 0 0 0 (7,519) (1,777) (9,296) Total comprehensive profit/(loss) 0 0 0 (26,611) 0 0 0 0 (43,577) (70,188) 2,086 (68,102) Total at 31.12.11 280,697 388,362 61,322 3,132 0 (10,042) 0 (10,849) (43,577) 669,045 134,324 803,369 (EUR thousand) Share Capital Share Premium Reserve Legal reserve Riserva Fair Value Reserves relating to joint ventures Other reserves Translation Reserve Profit/(loss) carried forward Profit (loss) for the Group Total Group Non controlling interests Consolidated net equity Total at 31.12.11 280,697 388,362 61,322 3,132 0 (10,042) 0 (10,849) (43,577) 669,045 134,324 803,369 Allocation of 2011 net profit 0 0 0 0 0 0 (43,577) 43,577 0 0 0 Cost of stock options 0 0 0 0 0 (77) 0 0 0 (77) 0 (77) Purchase of own shares (6,091) (1,910) 0 0 0 0 0 0 0 (8,001) 0 (8,001) Other changes 0 0 0 0 0 (325) 0 0 0 (325) (4,845) (5,170) Total comprehensive profit/(loss) 0 0 0 88,773 0 0 0 0 (26,277) 62,496 6,830 69,326 Total at 31.12.12 274,606 386,452 61,322 91,905 0 (10,444) 0 (54,426) (26,277) 723,138 136,309 859,447 Pursuant to Consob Resolution 15519 of 27 July 2006, the impact of dealings with related parties on the balance sheet, income statement and cash flow statement is explained in the notes to the financial statements.
    • Annual financial statements to 31 December 2012 84 Notes to the accounts Consolidated financial statements for the year to 31 December 2012
    • Annual financial statements to 31 December 2012 85 Notes to the Consolidated Financial Statements for the year ending 31 December 2012 A. Structure and content of the consolidated financial statements The consolidated financial statements for the year to 31 December 2012 include the Parent Company DeA Capital S.p.A. and all subsidiaries (the Group), and were prepared using the separate financial statements of the companies included in the basis of consolidation corresponding to the relevant individual statements, restated as necessary, to adapt them to the accounting standards listed below as dictated by Italian law. The consolidated financial statements were prepared in accordance with the general principles of IAS 1, specifically: - accruals principle: the effect of events and transactions is recorded when they occur, and not when payment is made or received - going concern principle: the financial statements are prepared under the assumption that business operations will continue in the near future. In this regard, the directors have evaluated this assumption with particular scrutiny in light of the current economic and financial crisis. As indicated in the section “Uncertainties and the management of financial risks” in the Report on Operations, the directors believe that the risks and uncertainties described therein are not critical in nature, confirming the financial solidity of the DeA Capital S.p.A. Group - materiality: when reporting operating events in accounting entries, preference is given to the principle of economic substance over form - comparative information: the consolidated financial statements must show comparative information for the previous period The consolidated financial statements consist of the balance sheet, the income statement, the statement of changes in shareholders’ equity, the cash flow statement, the statement of comprehensive income (Statement of Performance – IAS 1) and these notes to the consolidated financial statements. The consolidated financial statements are also accompanied by the Report on Operations and a Statement of Responsibilities for the Accounts pursuant to art. 154-bis of Legislative Decree 58/98. The balance sheet provides a breakdown of current and non-current assets and liabilities with separate reporting for those resulting from discontinued or held-for-sale operations. In the income statement, the Group has adopted the nature of expense method, whereby costs and revenues are classified according to type. The cash flow statement is prepared using the direct method. Companies over which the Group exercises joint control are consolidated proportionally in the consolidated financial statements, as stipulated by IAS 31 (Interests in joint ventures). Specifically, the Group’s portions of the assets, liabilities, costs and revenues are classified as follows: • assets and liabilities are included under “Assets relating to joint ventures" and “Liabilities relating to joint ventures” respectively • revenues, costs and taxes are included in the applicable items relating to "joint ventures" Unless otherwise indicated, all tables and figures included in these notes to the financial statements are reported in EUR thousand. In addition to the figures at 31 December 2012, the financial statement formats used also provide comparable figures for 31 December 2011.
    • Annual financial statements to 31 December 2012 86 The publication of the consolidated financial statements for the year to 31 December 2012 was authorised by resolution of the Board of Directors dated 8 March 2013. Statement of compliance with accounting standards The consolidated financial statements for the year to 31 December 2012 (2012 consolidated financial statements) were prepared in accordance with the International Accounting Standards adopted by the European Union and approved by the date the financial statements were prepared (International Accounting Standards, or individually IAS/IFRS, or collectively IFRS (International Financial Reporting Standards)). "IFRS" also means all interpretations of the International Financial Reporting Interpretations Committee (IFRIC), including those previously issued by the Standing Interpretations Committee (SIC), and approved by the European Union. The consolidated financial statements were prepared with a focus on clarity, and provide a true and fair view of the balance sheet, financial situation, income statement and cash flows for the period. Accounting standards, amendments and interpretations applied as of 1 January 2012 The IASB-approved international accounting standards and interpretations authorised for adoption in Europe that were applied for the first time from 1 January 2012 are detailed below. None had any significant impact on the consolidated financial statements for the year to 31 December 2012. The Group did not apply any IFRSs in advance. Amendments to IFRS 7 (Financial instruments: disclosures) On 7 October 2010, the IASB published the amendment to IFRS 7 (Disclosures: transfers of financial assets), which requires further information on transfers of financial assets. The changes to IFRS 7 aim to promote greater transparency in relation to the risks associated with transactions where, when a financial asset is transferred, the transferring company continues to be exposed, within certain limits, to risks associated with the derecognised financial asset (known as "continuing involvement"). Additional disclosure is also required on significant transfers of financial assets at particular times (e.g. at the end of an accounting period). The adoption of this amendment did not have any material impact on the valuation of items in the financial statements and in the related disclosure requirements. Future accounting standards, amendments and interpretations Accounting standards, amendments and interpretations that are not yet applicable and have not been adopted in advance by the Group, but were approved for adoption in the European Union as of 28 February 2013. The International Accounting Standards, together with the interpretations and changes to existing IASB-approved accounting standards and interpretations that were ratified for adoption in the European Union on 28 February 2013, are as follows: Amendments to IAS 12 (Income taxes) On 20 December 2010, the IASB published a number of amendments to IAS 12 (Income taxes), which clarify how to calculate deferred taxes on real estate investment measured at fair value. To provide a simplified approach, the amendments introduce the presumption, when calculating deferred taxes, that the carrying amount of the underlying asset will be recovered entirely by sale, unless there is clear evidence that it can be recovered through use. As a result of these changes, the document SIC 21 (Income Taxes - recovery of revalued, non- depreciable assets) was withdrawn at the same time. The entire contents of this document are now covered in IAS 12.
    • Annual financial statements to 31 December 2012 87 The amendments to IAS 12 will be applied from 1 January 2013. Amendments to IFRS 1 (First-time adoption of International Financial Reporting Standards: severe hyperinflation and removal of fixed assets for first-time adopters) On 20 December 2010, the IASB published two amendments to IFRS 1 (First-time adoption of International Financial Reporting Standards). The first amendment introduced the option for entities that are transitioning to IFRS to use the same simplified rules as those permitted to entities that made the transition to international accounting standards in 2005. The second amendment grants an exemption from the retrospective application of IFRS at first-time adoption to entities that are presenting financial statements in accordance with IFRS for the first time, after having been unable to present them due to hyperinflation, allowing such entities to use fair value as a replacement for cost for all assets and liabilities presented. The amendments to IFRS 1 will be applied from 1 January 2013. IFRS 10 (Consolidated financial statements) On 12 May 2011, the IASB published the accounting standard IFRS 10 (Consolidated financial statements), which is intended to replace IAS 27 (Consolidated and separate financial statements) and SIC 12 (Consolidation: special purpose entities). The new standard sets out a single model of consolidation that identifies control as the basis for the consolidation of all types of entities. The new standard defines the concept of control on the basis of the concurrence of three essential elements:  power over the investee company  exposure to or the right to variable returns from its involvement with the investee company  the ability to use that power over the investee to affect the amount of the investor's returns The standard will come into force from 1 January 2014, but can be applied in advance. IFRS 11 (Joint arrangements) On 12 May 2011, the IASB published the accounting standard IFRS 11 (Joint arrangements), which is intended to replace IAS 31 (Interests in joint ventures) and SIC 13 (Jointly controlled entities: non-monetary contributions by venturers). The new standard governs the principles for reporting all joint arrangements. These are divided into two categories, according to the economic substance of the arrangements between the parties:  joint operations, whereby the parties to the arrangement acquire rights to certain assets and assume obligations for certain liabilities  joint ventures, whereby the parties have rights to the net value of a set of jointly controlled assets and liabilities In the first case, the investor recognises the assets and liabilities acquired (along with the associated income and expense) according to the IAS/IFRS standards governing the individual elements; in the second, the pro-rata interest in the joint venture is recognised using the equity method.
    • Annual financial statements to 31 December 2012 88 The standard will come into force from 1 January 2014, but can be applied in advance. IFRS 12 (Disclosure of interests in other entities) On 12 May 2011, the IASB published the accounting standard IFRS 12 (Disclosure of interests in other entities) regarding the information to be provided in the financial statements on interests in other entities, including subsidiaries, associates and joint ventures. This information must enable users of the financial statements to understand the nature of the risks associated with the investments in strategic equity investments that will form part of the company's assets over the long term. The information must also indicate the effects of these investments on financial position, comprehensive income and cash flows. The standard will come into force from 1 January 2014, but can be applied in advance. IFRS 13 (Fair value measurement) On 12 May 2011, the IASB published the accounting standard IFRS 13 (Fair value measurement), which provides a single definition of the concept of fair value and a framework for how it should be applied when another IFRS permits or requires its use. More specifically, IFRS 13 sets out a clear definition of fair value, which is the price that would be received to sell an asset or paid to transfer a liability in a regular transaction between market participants at the measurement date (or exit price). This definition emphasises that fair value is a measure that must be based on the market and not the valuing entity. In other words, the measurement process must take into account the assumptions that market participants would use when pricing the asset or liability in current conditions, including assumptions on risk. As a consequence, the intention to hold an asset or cancel or fail to meet a liability is of no relevance in measuring fair value. The standard will come into force from 1 January 2013, but can be applied in advance. Amendments to IAS 32 (Offsetting financial assets and financial liabilities) On 16 December 2011, the IASB published a number of amendments to IAS 32 (Financial instruments: presentation), clarifying how certain criteria for offsetting financial assets and liabilities, as set out in IAS 32, should be applied. The amendments must be applied from 1 January 2014. Amendments to IFRS 7 (Disclosures: offsetting financial assets and financial liabilities) On 16 December 2011, the IASB published a number of amendments to IFRS 7 (Financial instruments: additional information). The amendment requires information to be disclosed on the effects or potential effects of contracts to offset financial assets and liabilities on the balance sheet. The amendments to IFRS 7 must be applied from 1 January 2013. IAS 1(Presentation of items of other comprehensive income) On 16 June 2011, the IASB issued amendments to IAS 1 (Presentation of items of other comprehensive income), which determine the grouping and components of the statement of comprehensive income according to whether or not they can be reclassified to the income statement. The amendments to IAS 1 must be applied in the financial statements for periods starting from 1 July 2012 onwards.
    • Annual financial statements to 31 December 2012 89 Amendments to IAS 19 (Employee benefits) On 16 June 2011, the IASB issued amendments to IAS 19 (Employee benefits) that introduce the obligation to recognise actuarial gains and losses in the statement of comprehensive income, removing the option of using the "corridor" method and requiring the recognition of actuarial gains and losses resulting from the revaluation of liabilities and assets in the statement of comprehensive income. The amendments to IAS 19 must be applied in the financial statements for periods starting from 1 July 2012 onwards. We do not anticipate that the potential adoption of the standards and interpretations noted above will have a material impact on the valuation of the DeA Capital Group's assets, liabilities, costs and revenues, except for the possible effects of any redefinition of the company’s method of consolidation in accordance with the new IFRS 10. Accounting principles, amendments and interpretations that are not yet applicable, have not been adopted in advance by the Group and not yet approved for adoption in the European Union as of 28 February 2013 The International Accounting Standards, interpretations and changes to existing IASB- approved accounting standards and interpretations that had not been ratified for adoption in the European Union as of 28 February 2013 are as follows: IFRS 9 (Financial instruments) On 12 November 2009, the IASB issued the first part of IFRS 9, which only amends the requirements for classifying and valuing the financial assets that are currently specified in IAS 39; once completed, it will fully replace IAS 39. Financial liabilities do not fall within the scope of IFRS 9, since the IASB intends to go into greater detail on aspects related to the inclusion of own credit risk in the fair value measurement of financial liabilities. Thus, financial liabilities continue to fall within the scope of IAS 39. The endorsement process for IFRS 9 is currently on hold, and this standard is not applicable in the EU, ahead of the European Commission's full assessment of the plan to completely replace IAS 39. Amendments to IFRS 1(Government loans) On 13 March 2012, the IASB published an amendment to IFRS 1 (First-time adoption of International Financial Reporting Standards) regarding government loans taken out at interest rates lower than market rates. The amendment introduced the option for entities that are adopting IFRS for the first time to use the same simplified rules as those permitted to entities that made the transition to International accounting standards in 2005. This means they do not have to change the carrying value calculated according to previous accounting standards for loans already taken out at the date of transition to international accounting standards. The amendments to IFRS 1, which are awaiting ratification by the European Commission, must be applied from 1 January 2013. They may also be applied in advance. Improvements to IFRS 2009-2011 On 17 May 2012, the IASB published its “Annual Improvements to IFRS – 2009-2011 Cycle”, detailing the minor changes to be made to existing accounting standards. The document contains a series of improvements to five accounting standards (IFRS 1, IAS 1, IAS 16, IAS 32 and IAS 34).
    • Annual financial statements to 31 December 2012 90 The amendments, which are expected to be ratified by the European Commission, will apply to financial statements for periods from 1 January 2013 onwards. It may also be applied in advance. Transition Guidance (Amendments to IFRS 10, IFRS 11 and IFRS 12). On 28 June 2012, the IASB published “Consolidated Financial Statements, Joint Arrangements and Disclosure of Interests in Other Entities: Transition Guidance” (Amendments to IFRS 10, IFRS 11 and IFRS 12). The amendments, which clarify the temporary provisions of IFRS 10, are awaiting ratification by the European Commission and must be applied from 1 January 2013. Investment Entities (Amendments to IFRS 10, IFRS 12 and IFRS 27). On 31 October 2012, the IASB published Investment Entities (Amendments to IFRS 10, IFRS 12 and IAS 27). The change introduced an exception to IFRS 10, stipulating that investment entities value certain subsidiaries at fair value on the income statement instead of consolidating them. The amendments, which are expected to be ratified by the European Commission, will apply to financial statements for periods from 1 January 2014 onwards. They may also be applied in advance.
    • Annual financial statements to 31 December 2012 91 Basis of consolidation As a result of the events described in the Report on Operations, the basis of consolidation at 31 December 2012 changed compared with 31 December 2011, due to:  the merger by incorporation of IDeA Alternative Investments into DeA Capital S.p.A., completed on 1 January 2012  the acquisition of full control of IFIM on 11 April 2012  the acquisition of full control of FARE Holding on 24 April 2012, at which time FARE Holding changed its name to DeA Capital Real Estate, and its subsidiaries FARE and FAI changed their names to IRE and IRE Advisory  the restructuring of Soprarno SGR’s shareholder structure, with the resulting reduction in the DeA Capital Group’s equity investment from 65% to 20% on 29 November 29 via the following transactions: - sale by DeA Capital of 25% of Soprarno SGR to Ifigest - capital increase in kind carried out by transferring the Gestioni Patrimoniali division held by Cassa di Risparmio di San Miniato (CARISMI) to Soprarno SGR. As a result, at 31 December 2012, the following companies formed part of the DeA Capital Group's basis of consolidation: Company Registered office Currency Share capital % holding Consolidation method DeA Capital S.p.A. Milan, Italy Euro 306,612,100 Holding DeA Capital Investments S.A. Luxembourg Euro 515,992,516 100% Full consolidation (IAS 27) Santè S.A. Luxembourg Euro 99,922,400 42.89% Equity accounted (IAS 28) Sigla Luxembourg S.A. Luxembourg Euro 482,684 41.39% Equity accounted (IAS 28) IDeA Capital Funds SGR S.p.A. Milan, Italy Euro 1,200,000 100.00% Full consolidation (IAS 27) Soprarno SGR S.p.A. Florence, Italy Euro 2,000,000 20.00% Equity accounted (IAS 28) IDeA SIM S.p.A. Milan, Italy Euro 120,000 65.00% Full consolidation (IAS 27) IDeA OF I Milan, Italy Euro - 46.99% Equity accounted (IAS 28) Atlantic Value Added Rome, Italy Euro - 27.27% Equity accounted (IAS 28) DeA Capital Real Estate S.p.A. Milan, Italy Euro 600,000 100.00% Full consolidation (IAS 27) Innovation Real Estate S.p.A. Milan, Italy Euro 500,000 100.00% Full consolidation (IAS 27) Innovation Real Estate Advisory S.r.l. Milan, Italy Euro 105,000 100.00% Full consolidation (IAS 27) I.F.IM. S.r.l. Milan, Italy Euro 10,000 100.00% Full consolidation (IAS 27) IDeA FIMIT SGR S.p.A. Rome, Italy Euro 16,757,574 61.30% Full consolidation (IAS 27) Harvip Investimenti S.p.A. Milan, Italy Euro 1,980,000 25.00% Equity accounted (IAS 28) The shares held in Santé are subject to a lien in favour of the entities providing credit lines available for companies forming part of the control structure of Générale de Santé (i.e. Santé S.A. and Santé Développement Europe S.A.S.). The above list meets the requirements of Consob Resolution 11971 of 14 May 1999 and subsequent amendments (art. 126 of the Regulation).
    • Annual financial statements to 31 December 2012 92 Consolidation method Subsidiaries are consolidated on a line-by-line basis from their date of acquisition, i.e. on the date the Group acquires a controlling interest, and they cease to be consolidated when control is transferred outside the Group. Subsidiaries are those companies in which the Parent Company, directly or indirectly through subsidiaries, holds a majority of the capital subscribed and/or voting rights, or over which the Parent Company exercises de facto control allowing it to direct the financial and operating policies of the subsidiary pursuant to the articles of association or by agreement. The financial statements of subsidiaries are prepared for each period using the same accounting standards used by the Parent Company. The main criteria adopted to apply this method are indicated below: - the financial statements of the Parent Company and subsidiaries are incorporated on a "line-by-line" basis - the carrying value of the investment is offset against the corresponding net equity figure When a company is included in the basis of consolidation for the first time, the difference between the acquisition cost and the net equity of the investee companies is posted, if the conditions are right, to the assets or liabilities included in the consolidation, pursuant to the provisions of IFRS 3. Any residual portion is taken to the income statement if negative, or recorded as a specific item, “goodwill”, under assets if positive. The latter is subject to an annual impairment test. Alternatively, when a company is included in the basis of consolidation for the first time, the entire amount may be recorded as goodwill including the portion relating to the minority interests (full goodwill approach) - significant transactions between consolidated companies are eliminated as are payables and receivables and unrealised profits resulting from transactions between Group companies net of any tax impact - the portions of shareholders' equity attributable to minority shareholders are reported, along with the respective share of net profit for the period, in appropriate shareholders' equity items In the case of joint control, the integration is carried out, pursuant to IAS 31, in proportion to the share held by the Parent Company.
    • Annual financial statements to 31 December 2012 93 B. Valuation criteria adopted The valuation criteria adopted on the basis of International Accounting Standards and reported below are consistent with the going concern principle and have not changed from those used in the preparation of the consolidated financial statements at 31 December 2011 and the summary consolidated half-year financial statements at 30 June 2012 except as a result of the application of new IAS/IFRS accounting standards as described above. Current and non-current assets and liabilities An asset is considered current if it meets at least one of the following conditions:  It is expected to be converted during the company's normal operating cycle. The "company's operating cycle" means the period from the acquisition of an asset to its conversion to cash and cash equivalents. When the company's operating cycle cannot be clearly identified, its duration is assumed to be 12 months.  it is held mainly for trading purposes  its conversion is expected to occur within 12 months following the end of the financial year  it consists of cash and cash equivalents which have no restrictions that would limit its use in the 12 months following the end of the financial year All other assets are carefully analysed to separate the "current" portion from the "non-current" portion. Furthermore, deferred tax assets are recorded under non-current components. A liability is considered current if it meets at least one of the following conditions:  it is expected to be settled during the company's normal operating cycle  it is held mainly for trading purposes  its settlement is expected to occur within 12 months following the end of the financial year  the company does not have an unconditional right to defer payment of the liability for at least 12 months following the end of the financial year All other liabilities are carefully analysed to separate the "current" portion from the "non- current" portion. Furthermore, deferred tax liabilities are recorded under non-current components. Intangible assets Intangible assets are those assets with no physical form that can be identified and produce future economic benefits. They are recorded under assets when it is likely that their use will generate future economic benefits and when their cost can be determined reliably. The above assets are recorded at purchase cost, or at production cost if they are generated internally. The cost of acquisition is represented by the fair value of the price paid to acquire the asset and all direct costs incurred to prepare the asset for use. The carrying value of intangible assets is maintained in the financial statements to the extent that there is evidence that this value can be recovered through use or if it is likely that these assets will generate future economic benefits. The useful life of intangible assets is assessed as finite or indefinite. Intangible assets with an indefinite useful life are tested to check that their value is still appropriate whenever there are indications of possible impairment as required by IAS 36
    • Annual financial statements to 31 December 2012 94 (Impairment of assets). Intangible assets with an indefinite useful life are not amortised. The useful life of an intangible asset with an indefinite life is reviewed annually to check that the underlying conditions for the classification continue to apply. For additional details, please see the section "Impairment." Except for intangible assets involving rights connected with final variable commissions, intangible assets with a finite useful life are amortised on a straight-line basis over their useful life. The amortisation method used for rights connected with final variable commissions reflects changes in future economic benefits associated with the recognition of the related revenues. The useful life of these intangible assets is tested to check that their value is still appropriate whenever there are indications of possible impairment. Tangible assets Tangible assets are recorded at purchase price or production cost adjusted for accumulated depreciation and any impairment. Their cost includes ancillary costs and direct and indirect costs incurred at the time of purchase necessary to make the asset usable. The purchase cost is represented by the fair value of the price paid to acquire the asset and by all other direct costs incurred to prepare the asset for use. Tangible assets are depreciated on a straight-line basis over their remaining useful life, using the depreciation rates indicated in the notes on the item relating to similar groups of assets. If factors are discovered that lead the company to believe that it may be difficult to recover the net carrying value, an impairment test is performed. If the reasons for the impairment cease to exist, the carrying value of the asset is increased to its recoverable amount. Financial assets Based on the classification of financial assets required by IAS 39, the Group classified its financial assets at the time of the transition to International Accounting Standards, and subsequently when individual financial assets were acquired. Minority interests and investments in funds, which constitute the main, predominant area of the Group's operations, are classified under available-for-sale assets, which are recorded at fair value with a balancing item in shareholders' equity. Fair value is the payment for which an asset could be exchanged in a free transaction between knowledgeable and independent parties. In the case of securities traded in active regulated markets, fair value is determined based on the bid price recorded on the last trading day of the related accounting period. In the case of assets not listed in active markets, such as the Group's direct investments in companies, investments in venture capital funds and funds of funds, the fair value reported in financial statements is determined by the directors based on their best judgment and estimation, using the knowledge and evidence available when the financial statements are prepared. In these cases, the company acts in accordance with the provisions of the IAS. In particular, IAS 39 specifies that:  if there are recent transactions related to the same financial instrument, these may be used to determine fair value after verifying that there have been no significant changes in the economic environment between the date of the transactions being considered and the valuation date  if there are transactions involving similar financial instruments, these may be used to determine fair value after verifying the similarity (as a function of the type of business, size, geographic market, etc.) between the instrument for which transactions have been found and the instrument to be valued
    • Annual financial statements to 31 December 2012 95  if no prices can be found in active markets, fair value must be determined using valuation models that account for all factors that market participants would consider in setting a price However, due to objective difficulties in making assessments and the absence of a liquid market, the values assigned to such assets could differ, and in some cases significantly, from those that could be obtained when the assets are sold. Direct investments in companies that are not subsidiaries or associates and in funds are classified as available-for-sale financial assets, which are initially reported at fair value on the date of the original posting. These assets are measured at fair value when all interim and full- year financial statements are prepared. Gains and losses from fair value measurement are posted to a special shareholders' equity reserve called the "fair value reserve" until the investment is sold or otherwise disposed of, or until impairment occurs, in which cases the gain or loss previously recorded in the fair value reserve is posted to the income statement for the period. On the date of the annual or interim financial statements (IAS 34), a test is performed as to the existence of objective evidence of impairment following one or more events that have occurred after the initial recording of the asset, and this event (or events) has an impact on the estimated cash flow from the financial asset. For equity instruments, a significant or prolonged reduction in fair value below their cost is considered to be objective evidence of impairment. Although International Accounting Standards introduced an important reference to quantitative parameters that must be adhered to, they do not govern quantitative limits to determine when a loss is significant or prolonged. The DeA Capital Group therefore has an accounting policy that defines these parameters. In particular, "significant" means there has been an objective reduction in value when fair value is more than 35% below its historical cost. In this case, impairment is recorded in the income statement without further analysis. The duration of the reduction in value is deemed to be prolonged when the reduction of fair value below historical cost continues for a period of over 24 months. After exceeding 24 months, impairment is recorded in the income statement without further analysis. Associates These are companies in which the Group holds at least 20% of the voting rights or exercises significant influence, but not full or joint control over their financial and operating policies. The consolidated financial statements include the Group’s share of its associates' results, which are reported using the equity method, starting on the date on which significant influence began until the significant influence ceases to exist. If the Group's share of an associate's losses exceeds the carrying value of the equity investment reported in the financial statements, the carrying value of the equity investment is eliminated, and the share in further losses is not reported unless, and to the extent that, the Group is legally liable for such losses. When the equity investment is acquired, any difference between its cost and the Parent Company's stake in the net fair value of the associate's identifiable assets, liabilities and contingent liabilities is recorded as required by IFRS 3, i.e. any goodwill is included in the carrying value of the equity investment.
    • Annual financial statements to 31 December 2012 96 As governed by IAS 28.33, since the goodwill included in the carrying value of an equity investment in an associate is not recorded separately, it is not subject to a separate impairment test pursuant to IAS 36 (Impairment of assets). Instead, the entire carrying value of the equity investment is subject to an impairment test pursuant to IAS 36 by comparing its recoverable value (the greater of its value in use and the fair value adjusted for sales costs) and carrying value whenever there is evidence indicating the possible impairment of the equity investment as set out in IAS 28.31. Derivatives Derivatives are recorded in the balance sheet at fair value calculated in accordance with the criteria already stated in the “Financial assets” section. Fair value changes are reported differently depending on their designation (hedging or speculative) and the nature of the risk hedged (fair value hedge or cash flow hedge). For contracts designated for hedging purposes, the Group documents this relationship when the hedge is established. The documentation incorporates the identification of the hedging instrument, the item or transaction hedged, the nature of the risk hedged, the criteria used to ascertain the effectiveness of the hedging instrument as well as the risk. The hedge is considered effective when the projected change in fair value or in the cash flows of the hedged instrument is offset by the change in fair value or in the cash flows of the hedging instrument, and the net results fall within the range of 80% to 125%. If the instruments are not, or cannot be, designated as hedging instruments, they must be considered "speculative"; in this case, fair value changes are posted directly to the income statement. In the case of fair value hedges, changes in the fair value of the hedging instrument and the hedged instrument are posted to the income statement regardless of the valuation criterion used for the hedged instrument. In the case of cash flow hedges, the portion of the fair value change in the hedging instrument that is recognised as an effective hedge is posted to shareholders' equity, while the portion that is not effective is posted to the income statement. Put options on minority shareholdings For put options that do not grant actual access to the economic benefits associated with owning the minority shareholdings, the shares or shareholdings covered by the options are reported on the date control is acquired as “minority interests”; the portion of profits and losses (and other changes in shareholders' equity) of the entity acquired is allocated to the minority shareholding after the business combination. The minority shareholding is reversed on each reporting date and reclassified as a financial liability at its fair value (equal to the present value of the option's exercise price) as if the acquisition had occurred on that date. The difference between the fair value of the financial liability and the minority interest reversed on the reporting date is recorded as an acquisition of minority shareholdings and reported under the Group's shareholders' equity. The effect of discounting is not recorded separately. Any dividends paid to minority shareholders are posted to shareholders' equity. If the option is not exercised, the minority interest is recognised in the amount that would have been reported if the option had not been recorded; the difference between the minority interest recognised and the cancelled liability is recorded in the Group’s shareholders’ equity. Impairment - IAS 36 Impairment always occurs when the carrying value of an asset is greater than its recoverable value. On each reporting date, the company determines whether there are any indications that an asset may be impaired. If such indications exist, the recoverable value of the asset is estimated (impairment test) and any write-down is recorded. The recoverable value of an asset is the higher of its fair value less selling costs and its value in use. IAS 36 provides instructions on determining fair value less asset selling costs, as follows:  if there is a binding sales agreement, the asset's fair value is the negotiated price  if there is no agreement, but the asset is marketed in an active market, the fair value is
    • Annual financial statements to 31 December 2012 97 the current bid price (thus, the exact price on the value date and not the average price)  if no prices can be found in active markets, fair value must be determined based on valuation methods that incorporate the best information available including any recent transactions involving the same asset, after verifying that there were no significant changes in the economic environment between the date of the transactions under consideration and the valuation date IAS 36 defines value in use as the present value of future cash flows that an asset is projected to produce. The estimate of the value in use must include the items listed below:  an estimate of future cash flows that the company expects to derive from the asset  expectations of potential changes in value and the timing of such cash flows  the time value of money  other factors such as the volatility of the asset's value and the lack of a liquid market for it For more information on determining value in use, please see Appendix A of IAS 36. However, the main elements for accurately estimating the value in use are an appropriate calculation of projected cash flows (for which the investee company's business plan is essential) and their timing, as well as the application of the right discount rate that accounts for both the present value of money and the specific risk factors for the asset to be valued. In all cases, when calculating the value it is important to:  base cash flow projections on reasonable and sustainable assumptions that provide the best estimate of the economic conditions that are likely to exist over the remaining useful life of the asset  base cash flow projections on the most recent budget/plan approved by the investee company, which, however, must exclude any future inflows or outflows of cash that are expected to come from the future restructuring, improvement or optimisation of operating performance. Projections based on these budgets/plans must cover a maximum period of five years unless a longer period of time can be justified  Estimate higher cash flow projections for the period covered by the most recent budgets/plans by extrapolating projections based on the budgets/plans taken into consideration, and using a stable or declining growth rate for subsequent years unless a rising rate can be justified. This growth rate must not exceed the average long-term growth rate for production in the country or countries in which the investee company operates or for markets in which the asset used is placed unless a higher rate can be justified. The assumptions used to determine cash flow projections must be reasonable, and based partly on an analysis of the factors that generated differences between projections of past and current cash flows. In addition, the assumptions used to determine current cash flow projections must be checked to ensure that they are consistent with actual past results, unless in the meantime changes have occurred in the investee company's business model or in the economic environment in which it operates that justify changes vis-a-vis the past. Receivables and payables A receivable is first reported at fair value on the date it is agreed. After initial reporting, receivables are valued at amortised cost. Payables that fall due within normal contractual terms are initially posted at fair value and later valued at amortised cost. Trade receivables If there is objective evidence that a trade receivable has suffered impairment, it must be adjusted down and the loss posted to the income statement; the write-down is allocated to the item, “impairment provisions”, as a direct contra item to the asset item. The amount of the write-down must take into account recoverable cash flows, the related collection dates, future recovery charges and expenses and the discount rate to be applied.
    • Annual financial statements to 31 December 2012 98 Held-for-sale assets A non-current asset or disposal group is classified as held for sale if the carrying value will mainly be recovered from its sale or disposal instead of its ongoing use. In order for this to occur, the asset or disposal group must be available for immediate sale in its current condition, and the sale must be highly likely. Assets meeting the criteria to be classified as held-for-sale assets are valued at the lower of carrying value and sales value adjusted for any related costs. Own shares Own shares are not considered financial assets of the company that issued the shares. The purchase and sales value of own shares is recorded as a change to shareholders' equity. No gain or loss is reported in the income statement for the sale, purchase, issue or cancellation of own shares. Cash and cash equivalents Cash and cash equivalents include cash at hand, demand deposits and short-term, highly liquid financial investments that are readily convertible to cash and subject to a negligible risk of price variation. Their value is reported at fair value. Provisions for risks and future liabilities As necessary, the Group records provisions for risks and future liabilities when:  it has a legal or implicit obligation to third parties resulting from a past event  it is likely that Group resources will be used to fulfil the obligation  a reliable estimate can be made of the amount of the obligation Provisions are recorded based on the projected value and discounted as necessary to present value if the time value is considerable. Changes in estimates are recognised in the income statement of the period in which the change occurs. Income tax Current income taxes are determined and reported on the basis of a reasonable forecast of tax charges resulting from applying the tax rates in effect in the various countries where Group companies operate to taxable income, and taking into account any exemptions and tax credits to which such companies are entitled. Deferred tax liabilities are allocated for all temporary differences between the carrying value of the assets and liabilities and the corresponding amount for tax purposes. Deferred tax assets are recorded for all deductible temporary differences and for tax assets and liabilities carried forward to the extent that it is likely there will be sufficient future taxable profit against which the deductible temporary differences and the tax assets and liabilities carried forward can be used. Deferred taxes are classified under non-current assets and liabilities and are determined using tax rates expected to be applicable under the laws in the countries where the Group operates in the years when the temporary differences will be realised or will expire. The carrying values of deferred tax assets are analysed periodically and reduced if it is not likely that sufficient taxable income will be generated against which the benefits resulting from such deferred assets can be used. Revenues and income Service revenues are recognised at the time the services are rendered based on the progress of the activity on the reporting date. Income from equity investments for dividends or for their full or partial sale is reported when the right to receive payment is determined, with a balancing item (receivable) at the time of
    • Annual financial statements to 31 December 2012 99 the sale or decision to distribute dividends by the entity or appropriate body. Interest is reported using the effective interest rate method. Employee benefits Short-term employee benefits, whether in cash or in kind (meal vouchers) are reported in the income statement in the period when work is performed. Employee benefits related to participation in a defined benefit plan are determined by an independent actuary using the projected unit credit method. Actuarial gains and losses are posted to the income statement in the period in which they occur using the corridor method to record the gains or losses unless these exceed a certain percentage of the obligation. Employee benefits in respect of participation in a defined contribution plan only relate to those plans under mandatory government administration. The payment of contributions fulfils the Group's obligation to its employees. Thus, contributions are costs in the period in which they are payable. In the Group, benefits were provided in the form of stock options or share-based payments. This applies to all employees eligible for stock option plans. The cost of these transactions is determined with reference to the fair value of the options on the date allocation is made and is reported over the period from such date until the expiry date with a balancing entry in shareholders' equity. The cost of stock options for the Group's directors and contributors is determined in the same way. Fair value reserve The fair value reserve incorporates fair value changes to entries measured at fair value with a balancing entry in shareholders' equity. Warrants Warrants issued by the Group, which do not meet the requirements either for being classified as share-based payments to employees pursuant to IFRS 2 or as financial liabilities, are treated as the Group's equity instruments. Earnings per share In accordance with IAS 33, basic earnings per share are calculated as the ratio of net profit for the period attributable to shareholders owning Parent Company shares to the weighted average number of shares outstanding during the period. Own shares in the portfolio are, of course, not included in this calculation. Diluted earnings per share are calculated by adjusting the weighted average number of shares outstanding for all potential ordinary shares resulting from the potential exercise of assigned stock options, which may therefore result in a diluting effect.
    • Annual financial statements to 31 December 2012 100 C. Changes in accounting principles and the treatment of errors Accounting principles are changed from one year to another only if the change is dictated by an accounting standard or if it helps provide more reliable information or more complete reporting of the impact of transactions on the Group's balance sheet, income statement and cash flows. Changes in accounting standards are applied retrospectively with the impact reflected in shareholders' equity in the first of the periods presented. Comparative reporting is adapted accordingly. The prospective approach is used only when it is not practical to restate comparative reporting. The application of a new or amended accounting standard is recorded as required by the standard itself. If the standard does not specify transition methods, the change is reflected retrospectively, or if impractical, prospectively. If there are significant errors, the same treatment dictated for changes in accounting principles is used. If there are minor errors, corrections are posted to the income statement in the period when the error is discovered.
    • Annual financial statements to 31 December 2012 101 D. Use of estimates and assumptions in preparing the financial statements The company's management must make assessments, estimates and assumptions that affect the application of accounting standards and the amounts of assets, liabilities, costs and revenues recorded in the financial statements. Estimates and related assumptions are based on past experience and other factors deemed reasonable in the case concerned; these have been used to estimate the carrying value of assets and liabilities that cannot be easily obtained from other sources. These estimates and assumptions are reviewed regularly. Any changes resulting from revisions to accounting estimates are recorded in the period when the revision is made if such revisions only affect that period. If the revision affects current and future periods, the change is recorded in the period in which the revision is made and in related future periods. Financial statement balances are reported and valued using the valuation criteria described above. At times the application of these criteria involves the use of estimates that may have a significant impact on amounts reported in the financial statements. Estimates and related assumptions are based on past experience and factors deemed reasonable in the case concerned; these are used to estimate the carrying value of assets and liabilities that cannot be easily obtained from other sources. However, since these are estimates, the results obtained should not necessarily be considered definitive. With the understanding that the use of reasonable estimates is an essential part of preparing financial statements, the items where the use of estimates is most prevalent are stated below:  valuation of financial assets not listed in active markets  valuation of financial assets listed in active markets but considered illiquid on the reference market  valuation of equity investments The process described above is made particularly complicated by the unusual levels of volatility in the current macroeconomic and market environment, which affect financial indicators that have a bearing on the above valuations.   An estimate may be adjusted as a result of changes in the circumstances on which it was based, or as a result of new information. Any change in the estimate is applied prospectively and has an impact on the income statement in the period in which the change occurred and potentially on income statements in future periods. As highlighted earlier, a significant proportion of the assets shown in the DeA Capital Group’s consolidated financial statements is represented by unlisted financial investments. These investments are valued at their fair value, calculated by directors based on their best estimate and judgement using the knowledge and evidence available at the time the consolidated financial statements are prepared. However, due to objective difficulties in making assessments and the lack of a liquid market, the values assigned to such assets could differ, and in some cases significantly, from those that could be obtained when the assets are sold.
    • Annual financial statements to 31 December 2012 102 BALANCE SHEET Non-current assets 1 – Intangible and tangible assets 1a - Goodwill Changes in goodwill are shown in the table below: (EUR thousand) Balance at 1.1.2012 Change in the basis of consolidation Acquisitions Decreases Impairment Balance at 31.12.2012 Goodwill 210,134 (1,745) 522 0 (20) 208,891 Goodwill, which amounted to EUR 208,891 thousand at 31 December 2012 (EUR 210,134 thousand at 31 December 2011), relates to the acquisition of FARE Holding (now DeA Capital Real Estate), IDeA Capital Funds SGR, IFIM and FIMIT SGR. On 29 November 2012, Soprarno SGR’s shareholder structure was restructured with a resulting reduction in DeA Capital 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 for Ifigest 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 business held by Cassa di Risparmio di San Miniato (CARISMI) to Soprarno SGR: the business was valued at around EUR 4.5 million (in line with the value attributed to Soprarno SGR) The above-mentioned transaction involved a change in value of EUR 1,745 thousand at 31 December 2012. The full goodwill method was used to record the minority interests of the companies acquired during 2011 (FIMIT SGR and IFIM). This requires minority interests to be recorded at fair value. Impairment tests on goodwill Pursuant to IAS 36, goodwill is not subject to amortisation, and is tested for impairment at least annually. The main assumptions used in the impairment test calculations, together with the results, are set out below. In order to carry out impairment testing on the goodwill of its cash generating units (CGUs), the DeA Capital Group allocates the goodwill to the relevant CGUs, identified as IDeA FIMIT SGR (real estate fund management) and IDeA Capital Funds SGR, which represent the minimum level of monitoring that the DeA Capital Group undertakes for management control purposes consistent with DeA Capital’s strategic vision. The redefinition of the IDeA Alternative Investments CGU following its merger into the Parent Company meant that a new CGU had to be defined, namely IDeA Capital Funds SGR. The previous goodwill of the IDeA Alternative Investments CGU was allocated in its entirety to the new CGU. In the case of CGUs that are not wholly controlled, goodwill is reported on a notional basis, which also includes the portion of goodwill that relates to minorities, using the grossing up method.
    • Annual financial statements to 31 December 2012 103 The carrying value of the CGU is calculated using the same criterion as that used to determine the recoverable value of the CGU. Impairment testing consists of comparing the recoverable amount of each CGU with the carrying amount of goodwill and the other assets attributed to each CGU. Impairment testing was carried out on the IDeA Capital Funds CGU using the sum of the parts model by determining the value in use, calculated as the sum of (i) the current value of dividend flows (the dividend discount model, or DDM) expected in the 2013-2015 period from IDeA Capital Funds SGR and (ii) the current value of the carried interest flows (discounted cash flow method, or DCF) expected from the same company. A number of assumptions were used in determining these flows, including estimates of future increases in revenues, based on expected trends in managed assets, EBITDA and net income, or in the case of carried interest, on the basis of return projections (IRR) made by the company for the various funds under management. The valuation was based on a cost of capital of +12.7% plus a terminal value based on growth assumptions of 2.0%. Note that the recoverable amount relating to this CGU exceeds its carrying amount. Sensitivity analysis performed on the most significant variables in terms of sensitivity to the recoverable value of IDeA Capital Funds, i.e. the discount rate and the rate of return for the managed funds used, leads to a potential change in the carrying value of EUR -4.1/+4.8 million (for changes of +1.0% and -1.0% in the discount rate) and EUR -1.3/+1.3 million (for changes of -1.5% and +1.5% in the expected IRR rate on the managed funds). Similarly, impairment testing was carried out on the IDeA FIMIT SGR CGU using the sum of the parts model by determining the value in use, calculated as the sum of (i) the current value of dividend flows (the dividend discount model, or DDM) expected in the 2013-2015 period from IDeA FIMIT SGR and (ii) the current value of the carried interest flows (discounted cash flow method, or DCF) expected from the funds managed by the same company. A number of assumptions were used in determining these flows, including estimates of future increases in revenues, based on expected trends in managed assets, EBITDA and net income, or in the case of carried interest, on the basis of return projections made by the company for the various funds under management. The valuation was based on a cost of capital of +12.2% plus a terminal value based on growth assumptions of 2.0%. Note that the recoverable amount relating to this CGU exceeds its carrying amount. Sensitivity analysis performed on the most significant variables in terms of sensitivity to the recoverable value of IDeA FIMIT SGR, i.e. the discount rate and the rate of return used, leads to a potential change in the carrying value of EUR -7.6/+8.3 million (for changes of +0.5% and -0.5% in the discount rate) and EUR -5.3/+5.3 million (for changes of -0.5% and +0.5% in the rate of growth (g). 1b - Intangible assets Changes in intangible assets are shown in the tables below:
    • Annual financial statements to 31 December 2012 104 (Euro thousand) Historical cost at Jan.1, 2012 Cum. amort.& prov.charges at Jan. 1, 2012 Net book value at Jan.1, 2012 Historical cost at Dec. 31, 2012 Cum. amort.& prov.charges at June 30, 2012 Net book value at Dec. 31, 2012 Concessions, licence fees & trademarks 3,337 (1,132) 2,205 3,909 (2,056) 1,853 Computer software & other licenses 137 (24) 113 128 (53) 75 Development costs 229 (160) 69 229 (183) 46 Other intangible assets 141,241 (23,980) 117,261 142,745 (38,727) 104,018 Total 144,944 (25,296) 119,648 147,011 (41,019) 105,992 (Euro thousand) Balance at Jan.1, 2012 Additions Amortization Reclasses Change in consolidation area Balance at 31.12.2012 Concessions, licence fees & trademarks 2,205 578 (923) 0 (7) 1,853 Computer software & other licenses 113 4 (237) 207 (12) 75 Development costs 69 0 (22) 0 (1) 46 Other intangible assets 117,261 1,504 (14,540) (207) 0 104,018 Total 119,648 2,086 (15,722) 0 (20) 105,992 Increases in the items “concessions, licences and trademarks” and “software costs” relate to purchases of software usage licences and the related development costs. The “other initial intangible assets” relate to:  Customer relationships arising from the allocation of the residual value of FIMIT SGR on the date of the (inverse) merger into FARE SGR with the recognition of intangible assets identified as customer relationships and intangible assets related to variable commissions that were valued at EUR 38,573 thousand and EUR 68,688 thousand respectively. This value is based on the discounting of fixed management fees (for customer relationships) and variable fees calculated net of directly applicable costs on the basis of the most recent business plans of the funds under management.  customer relationships arising from the allocation of the discounted value of commission flows generated by the funds under management of IDeA Capital Funds SGR, net of management costs, based on the business plans of the funds under management Increases in “other intangible assets” relate to the allocation to intangible assets of the business division following its acquisition from Duemme SGR S.p.A for a gross amount of EUR 1,504 thousand. The value of the business division includes an earn-out component of EUR 432 thousand, which will be recognised only if certain conditions are met. 1c - Tangible assets Changes in tangible assets are shown in the tables below: (Euro thousand) Historical cost at Jan.1, 2012 Cum. deprec.& prov.charges at Jan. 1, 2012 Net book value at Jan.1, 2012 Historical cost at Dec. 31, 2012 Cum. deprec.& prov.charges at Dec. 31, 2012 Net book value at Dec. 31, 2012 Plant 312 (264) 48 306 (260) 46 Leasehold improvements 0 0 0 1,547 (17) 1,530 Furniture and fixtures 1,408 (906) 502 1,327 (955) 372 Computer and office equipment 1,333 (983) 350 1,407 (1,089) 318 Motor vehicles 451 (193) 258 465 (250) 215 Other tangible assets 372 (261) 111 384 (338) 46 Total 3,876 (2,607) 1,269 5,436 (2,909) 2,527
    • Annual financial statements to 31 December 2012 105 (Euro thousand) Balance at Jan.1, 2012 Additions Depreciation Decrease Change in consolidation area Balance at Dec. 31, 2012 Plant 48 35 (26) 0 (11) 46 Leasehold improvements 0 1,547 (17) 0 0 1,530 Furniture and fixtures 502 76 (145) (26) (35) 372 Computer and office equipment 350 166 (183) (3) (12) 318 Motor vehicles 258 96 (93) (46) 0 215 Other tangible assets 111 13 (77) 0 (1) 46 Total 1,269 1,933 (541) (75) (59) 2,527 Acquisitions for the “leasehold improvements” item, totalling EUR 1,547 thousand, relate to improvements made on the building that will be leased to the DeA Capital Group from 2013. Depreciation on leasehold improvements will be charged from the actual date that the asset comes into use in 2013. Depreciation is calculated on a straight-line basis, based on the estimated useful life of the asset. The depreciation rates used in the financial year were 20% for specific plant assets, 12% for furniture and furnishings, 20% for electronic office machines and 20% for company vehicles. 2 – Financial investments Financial investments in companies and funds are the Group's typical assets. These investments rose from EUR 590,130 thousand at 31 December 2011 to EUR 687,093 thousand at end-2012. 2a - Investments in associates This item, totalling EUR 296,366 thousand at 31 December 2012 (EUR 302,141 thousand at end-2011), relates to the following assets: - The investment in Santé, which was reported in the consolidated financial statements to 31 December 2012 at approximately EUR 226,143 thousand (EUR 235,221 thousand at end-2011). The change compared with the figure reported at end-2011 is attributable to the combined effect of the adverse pro-rata impact of the net loss of EUR 10,776 thousand, the increase in the fair value of the interest rate swaps taken out to hedge interest rate risk on debt exposure and other movements of EUR 1,589 thousand, the distribution of dividends of EUR 3,257 thousand, additional investment of around EUR 3,267 thousand and other decreases totalling EUR 99 thousand. - The equity investment in Sigla Luxembourg (Parent Company of the Sigla Group), which was recorded at end-2011 at EUR 22,040 thousand, and reported at EUR 12,314 thousand in the consolidated financial statements to 31 December 2012. The decrease compared with 31 December 2011 relates to the EUR 717 thousand loss for the period and an impairment charge of EUR 9,015 thousand to align the carrying value with the company’s pro-rata share of the net asset value at the same date. - Units in the IDeA Opportunity Fund I, valued at EUR 48,069 thousand in the consolidated financial statements to 31 December 2012. This carrying value represents the NAV advised by the management company in its annual report to 31
    • Annual financial statements to 31 December 2012 106 December 2012, drafted in accordance with the Bank of Italy’s regulation of 14 April 2005 on collective asset management, amended and supplemented by the Bank of Italy’s regulation of 8 May 2012. The change from the end-2011 figure was due to net investments of EUR 17,044 thousand, the net increase in fair value of EUR 544 thousand and the pro-rata portion of the net loss for the period of EUR 6,286 thousand (due mainly to the partial impairment of the investments in Giochi Preziosi and Grandi Navi Veloci, and to the capital gain made on Euticals). Summary financial information on these equity investments is shown in the table below: Santé Group Sigla Group OF I (Euro million) 31.12.2012 31.12.2012 31.12.2012 Total assets/liabilities 2,104 86.4 102.4 Revenues 1,928 15.7 0.0 Net profit/(loss) (15.7) (1.7) (12.2) Net profit/(loss) attributable to NCI 9.4 0.0 0.0 Net profit/(loss) attributable to the Group (25.1) (1.7) (12.2) The DeA Capital Group performed impairment testing on the above-mentioned equity investments in associates by determining their value using the methodology summarised below:  For Santé, the discounted cash flow (DCF) method was applied for the period 2013- 2018, using a number of assumptions, including estimates of future increases in revenues, EBITDAR, investments and working capital. Discounted cash flow here is based on a weighted average cost of capital of 5.78%, which is in turn based on a cost of capital of 11.5%, combined with a debt component – including the capitalisation of rental liabilities (see below). In addition to the discounted cash flows, the enterprise value obtained is also based on a terminal value calculated using the market multiples methodology applied to the EBITDAR of the last year of the plan available, minus non- recurring items. Following the impairment test, the equity investment was revalued from its carrying value to its fair value. It is important to note that, although we continued to use the DCF approach, analysis was focused on gross cash flows (including the effect of rental costs), with the amount of debt deducted from the enterprise value adjusted by a “theoretical” value for the debt arising from the capitalisation of these rental costs. Sensitivity analysis performed on the size of the discount rate and EBITDAR multiple used for calculating the terminal value, leads to a potential change in the carrying value of EUR -22/+23 million (for a change of +0.3%/-0.3% respectively in the discount rate) and of EUR -31/+31 million (for a change of -0.25% and +0.25% respectively in the EBITDAR multiple).  As regards the investment in Sigla, the ongoing effects of the economic crisis, together with the consequences arising from the deleveraging requirements 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. This led the Group to record the complete impairment of the goodwill implicit in the carrying value with the resulting realignment of said value in the Sigla Group’s shareholders’ equity. The table below provides details of the equity investments held in associates at 31 December 2012 by sector of activity: (EUR million)
    • Annual financial statements to 31 December 2012 107 (EUR million) Private Equity Investment Alternative Asset Management Total Santè 226.1 0.0 226.1 Sigla 12.3 0.0 12.3 IDeA OF I 48.1 0.0 48.1 Fondo AVA 2.5 5.0 7.5 Soprarno 1.6 0.0 1.6 Harvip Investimenti S.p.A. 0.8 0.0 0.8 Total 291.4 5.0 296.4 ate 2b - Investments in other companies – available for sale At 31 December 2012, the DeA Capital Group was a minority shareholder of Kenan Investments (the indirect Parent Company of Migros), Stepstone, Alkimis SGR, two US companies operating in the biotech and printed electronics sectors, TLcom Capital LLP (management company under UK law) and TLcom II Founder Partner SLP (limited partnership under UK law). At 31 December 2012, the item totalled EUR 223,896 thousand compared with EUR 127,380 thousand at 31 December 2011. The table below provides details of equity investments in other companies at 31 December 2012 by area of activity. (EUR million) Private Equity Investment Alternative Asset Management Total Kenan Investments 223.6 0.0 223.6 Minor investments 0.3 0.0 0.3 Total 223.9 0.0 223.9 The stake in Kenan Investments (the indirect Parent Company of Migros) was recorded in the consolidated financial statements to 31 December 2012 at a value of EUR 223,610 thousand (compared with EUR 127,090 thousand at 31 December 2011). The increase of EUR 96,520 thousand was due to the rise in the value of Migros shares (TRY 21.5 per share at 31 December 2012 compared with around TRY 12.6 per share at 31 December 2011), and the strengthening of the Turkish lira against the Euro (2.36 TRY/EUR at 31 December 2012 compared with 2.44 TRY/ERU at 31 December 2011). The value of the smaller equity investments, amounting to EUR 287 thousand, relates to:  a minority interest (10% of capital) in Alkimis SGR totalling EUR 286 thousand  the investment in TLcom Capital LLP (management company under UK law) and TLcom II Founder Partner SLP (limited partnership under UK law) for a total of EUR 1 thousand 2c - Available-for-sale funds This item relates to investments in units of two funds of funds (IDeA I FoF and IDeA ICF II), one theme fund (IDeA EESS), 11 real estate funds and seven venture capital funds, totalling approximately EUR 166,504 thousand in the financial statements at the end of 2012, compared with EUR 159,673 thousand at end-2011.
    • Annual financial statements to 31 December 2012 108 The table below shows changes to the funds during 2012. (Euro thousand) Balance at 1.1.2012 Increase (Capital call) Decrease (Capital Distribution) Impairment Fair Value Adjustment Translation effect Balance at 31.12.2012 Venture Capital Funds 12,234 0 (857) (496) (488) (271) 10,122 IDeA I FoF 96,234 17,211 (14,400) 0 4,053 0 103,097 ICF II 9,322 9,206 (1,433) 0 (589) 0 16,506 IDeA EESS 19 988 (77) 0 (309) 0 621 IDeA FIMIT SGR Funds 41,864 1,000 (814) (1,193) (4,699) 0 36,158 Total Funds 159,673 28,405 (17,581) (1,689) (2,032) (271) 166,504 Units in venture capital funds are valued at around EUR 10,122 thousand in the consolidated financial statements to 31 December 2012 (EUR 12,234 thousand at end-2011). The overall change in the investments is mainly attributable to a decrease in fair value (and related exchange rate effects) of EUR 759 thousand, and the impairment (and related exchange rate effects) of certain funds totalling EUR 496 thousand. During the year, the company received capital distributions of EUR 856 thousand, which had a positive impact on the income statement of EUR 1,385 thousand. The fair value measurement of investments in venture capital funds at 31 December 2012, carried out based on the information and documents received from the funds, as well as other available information, meant that the amount had to be written down by EUR 496 thousand; the significant reduction to below cost was considered clear evidence of impairment. Units in IDeA I FoF are valued at around EUR 103,097 thousand in the consolidated financial statements to 31 December 2012 (EUR 96,234 thousand at end-2011). The change in the carrying value compared with 31 December 2011 was due to contributions made for capital calls totalling EUR 17,211 thousand, capital reimbursements of EUR 14,400 thousand and a net increase in fair value of around EUR 4,053 thousand. Units in ICF II are valued at around EUR 16,506 thousand in the consolidated financial statements to 31 December 2012 (EUR 9,322 thousand at end-2011). The change in the carrying value compared with 31 December 2011 was due to contributions made for capital calls totalling EUR 9,206 thousand, capital reimbursements of EUR 1,433 thousand and a net decrease in fair value of around EUR 589 thousand. Units in IDeA EESS are valued at around EUR 621 thousand in the consolidated financial statements to 31 December 2012 (EUR 19 thousand at end-2011). The change in the carrying value compared with 31 December 2011 was due to contributions made for capital calls totalling EUR 988 thousand, capital reimbursements of EUR 77 thousand and a net decrease in fair value of around EUR 309 thousand. The financial assets related to units of funds managed by IDeA FIMIT are considered long-term investments. This item includes:  Mandatory investments (as stipulated by the Bank of Italy Regulation of 14 April 2005, later amended and supplemented by the Bank of Italy Regulation of 8 May 2012) in managed funds that are not reserved for qualified investors. The latter are to be held in the portfolio until the funds' maturity date. However, they were not classified as "held-to- maturity assets" since they are variable rate financial instruments. It was therefore decided
    • Annual financial statements to 31 December 2012 109 to record them in this "residual" category in accordance with IAS 39, which specifies that they should be measured at fair value with a balancing entry in an appropriate unavailable reserve pursuant to Legislative Decree 38/2005.  optional investments in managed funds that may or may not be reserved for qualified investors Units in these funds are valued at around EUR 36,158 thousand in the consolidated financial statements to 31 December 2012 (EUR 41,864 thousand at end-2011). The change in the carrying value compared with 31 December 2011 was due to contributions made for capital calls totalling EUR 1,000 thousand, capital reimbursements of EUR 814 thousand, a net decrease in fair value of around EUR 4,699 thousand, and impairment of EUR 1,193 thousand relating to the Atlantic 2 – Berenice fund. IAS 39 specifies that if a financial instrument has been impaired, all subsequent write-downs must pass through the income statement. The fair value adjustment, calculated using the stock market price on the last open market day, resulted in total impairment of EUR 1,193 thousand. Note that to secure the loan made by Banca Intermobiliare, IDeA FIMIT SGR established a lien in favour of this bank consisting of 600 units in the Omicron Plus fund. The table below provides a breakdown of the funds in the portfolio at 31 December 2012 by area of activity. (EUR million) Private Equity Investment Alternative Asset Management Total Venture capital funds 10.1 0.0 10.1 IDeA I FoF 103.1 0.0 103.1 ICF II 16.5 0 16.5 IDeA EESS 0.6 0.0 0.6 IDeA FIMIT SGR Funds 0.0 36.2 36.2 Total Funds 130.3 36.2 166.5 2d - Other available-for-sale financial assets The item totalled EUR 327 thousand (EUR 936 thousand at 31 December 2012) and mainly relates to the stakes held by IRE in Beni Immobili Gestiti S.p.A. (0.25%) and in AEDES BPM Real Estate SGR S.p.A. (5.0%). 3 – Other non-current assets 3a - Deferred tax assets The balance on the “deferred tax assets” item totalled EUR 2,754 thousand and comprises the value of deferred tax assets minus deferred tax liabilities, where they may be offset. Deferred tax assets relating to the Parent Company of EUR 837 thousand were fully offset against deferred tax liabilities.
    • Annual financial statements to 31 December 2012 110 The changes to deferred tax assets and liabilities during the year, broken down by type, are analysed below. (Euro thousand) At 31 december 2011 Recognised in income statement Recognised in equity Channge in consolidation area Compensatio/other movements At 31 december 2012 Deferred tax assets for: -personnel costs 1,095 209 0 0 0 1,304 -other 1,521 (1) 32 (12) (90) 1,450 Total deferred tax assets 2,616 208 32 (12) (90) 2,755 Deferred tax liabilities for: 0 0 0 0 0 0 -available-for-sale financial assets (6,113) 1,699 636 7 0 (3,772) -TFR discounting IAS (19) 2 0 0 0 (17) -intangible assets (34,832) 12,117 0 0 0 (22,715) Total deferred tax liabilities (40,964) 13,818 636 7 0 (26,504) Losses carried forward available for offset against future taxable profits 1,920 (393) 0 (690) 0 837 Total deferred tax assets 4,077 2,754 Total deferred tax liabilities (40,506) (25,668) The deferred tax liabilities of IDeA FIMIT SGR, amounting to EUR 23,068 thousand, mainly comprise the balancing entry for deferred tax assets relating to variable commissions recorded under intangible assets. The balance is considerably lower than at end-2011 due to the tax redemption (affrancamento fiscale) operation, which enabled the remaining deferred tax liabilities on customer relationship intangible assets at 31 December 2011 (EUR 11,819 thousand) to be released against the cost of withholding tax on the income statement. To this end, IDeA FIMIT SGR opted during the year to recognise for tax purposes the higher values recorded in the financial statements relating to customer relationship intangible assets booked after the merger, in accordance with art. 176, para. 2 of the Italian consolidated law on income tax. An amount of EUR 35,739 thousand was therefore released via a payment of withholding tax of EUR 5,418 thousand. As required by IFRS 3 (Business combinations), the company recorded a deferred tax liability for the assets identified at the date of acquisition. No further deferred tax assets were allocated for the significant tax losses of DeA Capital S.p.A. (around EUR 108,074 thousand, to be reported without limitation) and of DeA Capital Investments S.A. (around EUR 185,032 thousand). This was because there was insufficient information for the group to believe that sufficient taxable income would be generated in future periods against which such tax losses could be recovered. Deferred taxes were calculated using the liability method based on the temporary differences at the reporting date between the tax amounts used as a reference for the assets and liabilities and the amounts reported in the financial statements. 3b –Non-current loans and receivables This item totalled EUR 27,444 thousand at 31 December 2012, compared with EUR 1,632 thousand at end-2011 and mainly relates to loans to the senior management of GDS for the capital increase at Santé, which was partly subscribed by the original shareholders and partly by the senior management of GDS, and to the quasi-equity loan subscribed by DeA Capital Investment S.A. and Santé S.A. in the amount of EUR 25,676 thousand. In 2012, the two companies signed a conversion agreement and a quasi-equity loan, under which, at the request of Santé S.A., DeA Capital Investments S.A. waived its rights relating to the mezzanine bond that was transferred in favour of SDE, receiving in exchange a quasi-equity loan of the same amount, expiring on 26 October 2018, from Santé S.A. The interest rate on the quasi-equity loan is variable and indexed to the 12-month Euribor. 3c – Other non-current assets
    • Annual financial statements to 31 December 2012 111 At 31 December 2012 this item totalled EUR 25,944 thousand and mainly relates to the receivable from Beta Immobiliare fund concerning the final variable commission. The calculation was done pursuant to the provisions of the operating regulations of the Beta Immobiliare fund, taking into account the NAV indicated in the management report at 31 December 2012. This receivable corresponds to the portion of the overperformance commission accrued since the beginning of the fund's operations that the asset management fund will receive when liquidated, only if certain conditions are met. 4 - Current assets 4a - Trade receivables Receivables amounted to EUR 12,256 thousand and mainly included receivables from customers (EUR 11,919 thousand). These related mainly to the balances of IRE (EUR 6,617 thousand), IRE Advisory (EUR 1,675 thousand) and IDeA FIMIT SGR (EUR 2,810 thousand). The latter amount relates to receivables from managed funds for commission due but not yet received. Receivables from customers due to IRE include EUR 3,282 thousand relating to the re-invoicing of expenses incurred by the company in its own name but on behalf of funds managed by IDeA FIMIT SGR. This activity was carried out by the company by virtue of a mandate without appointed representation, signed by IRE and IDeA FIMIT SGR on 12 December 2012. The item “transactions with Related Parties” includes EUR 306 thousand from De Agostini S.p.A. for the agreement to sublet rented premises and the reimbursement of costs associated with said agreement 4b – Available-for-sale financial assets At 31 December 2012, this item totalled EUR 5,666 thousand, compared with EUR 13,075 thousand at 31 December 2011 and relates to the portfolio of government securities and corporate bonds held by IDeA Capital Funds SGR. 4c - Financial receivables At 31 December 2012, this item totalled EUR 2,003 thousand and relates to repurchase agreements signed by DeA Capital RE and IRE relating to a bond loan with Centrobanca. The investment, which will mature at 20 February 2013, is to be regarded as a temporary investment of cash. 4d – Tax receivables relating to the tax consolidation scheme entered into by the parent companies This item totalled EUR 7,489 thousand at 31 December 2012 (EUR 5,929 thousand at 31 December 2011) and relates to the receivable from the Parent Company, B&D Holding S.a.p.A., for joining the tax consolidation scheme. The option for DeA Capital S.p.A. and IDeA Capital Funds SGR to join the Italian tax consolidation scheme to which the B&D Group (the Group headed by B&D Holding di Marco Drago e C. S.a.p.a) belongs was exercised jointly by each company and the Parent Company B&D Holding di Marco Drago e C. S.a.p.a. by signing the "Regulation for participation in the national tax consolidation scheme for companies in the De Agostini Group" and notifying the
    • Annual financial statements to 31 December 2012 112 tax authorities of this option pursuant to the procedures and terms and conditions set out by law. The option for DeA Capital S.p.A., which was renewed during 2011, is irrevocable for the three-year period 2011-2013, unless the requirements for applying the scheme are not met, while in the case of IDeA Capital Funds SGR, the option was signed during this period and relates to the three-year period of 2012-2014. 4e – Other tax receivables At 31 December 2012, this item totalled EUR 2,522 thousand, compared with EUR 2,677 thousand at 31 December 2011. It mainly includes:  advance tax payments made in excess of the consolidated IRES payable at the end of the year, under the tax consolidation scheme of DeA Capital RE, totalling EUR 176 thousand  tax withholdings in the form of advance payments on interest, of EUR 48 thousand  tax withholdings in the form of advance payments on the partial sale of the Soprarno Pronti Termini bond fund in the amount of EUR 37 thousand  regional tax on manufacturing operations (IRAP) credits to be carried forward relating to the tax return for the previous year, of EUR 168 thousand, advance payments made for IRAP of EUR 617,000 and an amount of EUR 68,000 relating to the IRAP appeal submitted by subsidiaries IRE and IRE Advisory  a receivable of EUR 965 thousand arising from the Parent Company’s VAT declaration of the previous year and a VAT receivable of EUR 70 thousand in respect of DeA Capital RE  A receivable of EUR 52 thousand due to the change in the percentage against which VAT may be offset by the Parent Company from 99% to 44% 4f – Other receivables This item, which totalled EUR 7,792 thousand at 31 December 2012 (EUR 6,128 thousand at 31 December 2011), includes guarantee deposits, advances to suppliers and prepaid expenses. The item also includes EUR 3,031 thousand for the invoice issued to ENEL Servizi S.p.A. for costs incurred by IDeA FIMIT SGR in previous years for the project to establish a new real estate fund. In December 2011 the customer decided not to move forward with the project. Under the agreements with ENEL Servizi S.p.A., some of the costs incurred by the Company in relation to external suppliers must be reimbursed. The invoice was settled in January 2013. This item also includes a deposit of EUR 200 thousand paid by IDeA FIMIT SGR after signing a preliminary agreement to hire a building in Rome. Lastly, the item includes prepaid expenses of EUR 2,010 thousand relating to costs due in 2013 for insurance policies and costs for the supply of goods and services (hire of premises and other services). 4g – Cash and cash equivalents This item, which totalled EUR 29,156 thousand at 31 December 2012 (EUR 46,764 thousand at the end of the previous year) comprises bank deposits and cash, including interest accrued to 31 December 2012. Please see the consolidated cash flow statement for further information on changes to this item.
    • Annual financial statements to 31 December 2012 113 The item “cash and cash equivalents” relates to cash balances and bank deposits in the name of Group companies. Cash deposited at banks accrues interest at floating rates, based on the prevailing overnight, 1-2-week and 1-3-month interest rates. 5 – Shareholders' equity At 31 December 2012, Group shareholders’ equity was approximately EUR 723,138 thousand, compared with EUR 669,045 thousand at 31 December 2011. The increase of about EUR 54,093 thousand in Group shareholders' equity in 2012 was mainly due to the reasons already discussed in the Statement of Performance - IAS 1 (EUR 62,496 thousand) and to the impact of the plan to purchase own shares (EUR -8,001 thousand). The main changes in shareholders’ equity are described in more detail in the relevant table of changes included in the Consolidated Financial Statements. 5a – Share capital The share capital (fully subscribed and paid up) totalled EUR 306,612,100, represented by 306,612,100 shares (of which 32,006,029 own shares) with a nominal value of EUR 1 each. Given that the nominal value of the above-mentioned own shares held at 31 December 2012 is deducted from total share capital, share capital of EUR 274,606,071 was reported in the financial statements. Changes in share capital are shown in the table below: (Euro thousand) no. of shares amount no. of shares amount Share Capital 306,612,100 306,612 306,612,100 306,612 of which: Treasury shares (32,006,029) (32,006) (25,915,116) (25,915) Share Capital (excluding treasury shares) 274,606,071 274,606 280,696,984 280,697 31.12.2012 31.12.2011 The table below shows a reconciliation of the shares outstanding: Shares issued Treasury shares held Shares outstanding December 31, 2011 306,612,100 (25,915,116) 280,696,984 2012 movements Share capital increase 0 0 0 Treasury shares purchased 0 (6,090,913) (6,090,913) Treasury shares sold 0 0 0 Treasury shares disposed for 0 0 0 Used for stock option plan 0 0 0 Shares issued through exercise of stock options 0 0 0 December 31, 2012 306,612,100 (32,006,029) 274,606,071
    • Annual financial statements to 31 December 2012 114 5b – Share premium reserve The item in question fell from EUR 388,362 thousand at 31 December 2011 to EUR 386,452 thousand at 31 December 2012, due to the recording of the purchase of own shares (EUR 1,910 thousand) to this reserve. 5c – Legal reserve This reserve, which was unchanged compared with the end of 2011, totalled EUR 61,322 thousand at 31 December 2012. 5d – Fair value reserve The fair value reserve at 31 December 2012 was positive at EUR 91,905 thousand (positive at EUR 3,132 thousand at 31 December 2011) and comprises the following items: (Euro thousand) Balance at 1.1.2012 Change in Fair Value Tax Effect Balance at 31.12.2012 Direct Investments / Shareholdings (4,101) 88,844 0 84,743 Venture capital funds and funds of funds 7,591 (294) 178 7,475 First time adoption IFRS and other reserves (358) 62 (17) (313) Total 3,132 88,612 161 91,905 5e – Other reserves Other reserves totalled EUR -10,444 thousand (EUR -10,042 thousand at 31 December 2011) and are made up of: - a reserve for stock option costs totalling EUR 919 thousand - A reserve for the sale of option rights, totalling EUR 413 thousand. This originated in the previous year from the sale of the remaining option rights to subscribe to a capital increase that had not been exercised by the shareholders, which were sold by the company. - other reserves that are negative at EUR 9,247 thousand relating to the associate of Santé, chiefly for the pro-rata reclassification of the minority interests in Santé connected with the 2008-2009 extraordinary dividend distribution by Générale de Santé, and changes in 2010-2012 - other reserves of EUR -2,529 thousand 5f – Retained earnings (losses) carried forward This item stood at EUR -54,426 thousand at 31 December 2012 compared with EUR -10,849 thousand at 31 December 2011. The total decrease of EUR 43,577 thousand was due to the allocation of profits for 2011. 5g – Profit (loss) for the year The loss reported for the year of EUR 26,277 thousand relates to the consolidated loss attributable to the Group (EUR 43,577 thousand at 31 December 2011). 5h – Minority interests This item, which totalled EUR 136,309 thousand at 31 December 2012 (EUR 134,324 thousand at 31 December 2011) relates to the minority interest in shareholders' equity resulting from the line-by-line consolidation of the 65% stake in IDeA SIM S.p.A., and the 61.30% stake in IDeA FIMIT SGR.
    • Annual financial statements to 31 December 2012 115 6 – Non-current liabilities 6a - End-of-service payment fund The end-of-service payment fund (TFR) is a defined benefit plan, and as such was measured using actuarial methodology. This resulted in a liability calculated in demographic and financial terms on amounts owed to workers according to the number of years worked. The total present value of the liability is proportioned to the period of employment already completed at the calculation date, taking account of future salary increases and the employee's projected length of service. Future TFR flows were discounted at the reporting date based on the projected unit credit method. Changes in TFR in 2012 are shown in the table below: (Euro thousand) Balance at Jan 1., 2012 Portion matured Payments Advances Balance at Dec. 31, 2012 Movement in provision 2,127 1,487 (364) (215) 3,035 The amounts recognised in the item were calculated as follows: (Euro thousand) 31.12.2012 31.12.2011 Nominal value of provision 2,916 2,321 Discounting effect 118 (194) Total provision 3,035 2,127 6b - Non-current financial liabilities This item totalled EUR 142,802 thousand (EUR 160,020 thousand at 31 December 2011) and relates to:  An amount of EUR 100,000 thousand for the use of the credit line provided by Mediobanca for the same amount (maturing on 16 December 2015 and subject to a variable rate of 3-month Euribor + spread). The decrease of EUR 20,000 thousand is connected with the partial utilisation of the revolving loan in place with Mediobanca On 31 December 2012, the covenant tests for this credit line were successfully passed (i.e. debt and debt to equity).  the liability due to the decrease in the fair value of the interest rate swap contracts taken out to partially hedge interest rate risk on the debt exposure with Mediobanca, totalling EUR 830 thousand (maturing on 30 July 2013)  an amount of EUR 12,730 thousand relating to the medium-term loan taken out by IDeA FIMIT SGR with Banca Intermobiliare di Investimenti e Gestioni S.p.A. in 2009 (maturing on 31 March 2014 with a floating rate of 3-month Euribor + spread) for the purchase of units in the Omicron Plus fund  the liability due to the decrease in the fair value of the interest rate swap contracts taken out to partially hedge interest rate risk on the debt exposure with Banca Intermobiliare di Investimenti e Gestioni S.p.A., totalling EUR 494 thousand (maturing on 31 March 2014)
    • Annual financial statements to 31 December 2012 116  an amount of EUR 25,676 thousand relating to the vendor loan agreed for the acquisition of the tranche of mezzanine bonds issued by SDE (discussed above in the “Significant events during the year” section of the Report on Operations. The balancing entry for most of this amount was booked to “financial liabilities”)  the estimated future cost for DeA Capital of exercising its pro-rata share of the put options on Santé shares held by the senior management of GDS, totalling EUR 915 thousand  An earn-out payment (maturing in 2014) of EUR 2,156 thousand, inclusive of interest calculated at present value accrued from the closing date (12 December 2008) to 31 December 2012, equal to EUR 244 thousand. This earn-out, which DeA has agreed to pay to the seller, is equal to 50% of the portion of any performance fees accrued on the funds of the former FARE SGR that are currently managed by IDeA FIMIT SGR. 6c – Payables to staff This item, which totalled EUR 1,956 thousand, broadly relates to payments for 2012 in respect of equity instruments that confer on beneficiaries the right to receive a cash award linked to corporate performance over the medium-term horizon (the three year period 2012 – 2014). 7 – Current liabilities Total liabilities amounted to EUR 94,621 thousand (EUR 27,241 thousand at 31 December 2011) and are all due within the following year. These payables are not secured on any company assets. 7a – Trade payables Trade payables were EUR 27,420 thousand versus EUR 10,322 thousand at 31 December 2011. This amount mainly comprises:  an amount of EUR 12,838 thousand for the allocation of carried interest to be paid to the lead investor, BC Partners, based on the total capital gain on the investment in Kenan  An amount of EUR 5,181 thousand for expenses incurred by the company in its own name but on behalf of the funds managed by IDeA FIMIT and subsequently re-invoiced to them. This activity was carried out by virtue of a mandate without representation signed by IRE and IDeA FIMIT SGR on 12 December 2012. In respect of transactions with related parties, this item includes payables to: - the Parent Company, De Agostini S.p.A., of EUR 313 thousand - the affiliate, De Agostini Editore S.p.A., of approximately EUR 46 thousand - the affiliate, De Agostini Libri S.p.A., of approximately EUR 2 thousand - the affiliate, De Agostini Invest SA, of approximately EUR 25 thousand Trade payables do not accrue interest and are settled, on average, within 30 to 60 days. 7b – Payables in respect of staff and social security organisations This item totalled EUR 8,868 thousand (EUR 7,497 thousand at end-2011) and is largely due to: - payables to social security organisations of EUR 1,998 thousand, paid after the close of the financial year 2012, with the exception of payables for social security liabilities calculated on bonuses being accrued
    • Annual financial statements to 31 December 2012 117 - payables to employees of EUR 6,700 thousand for holidays not taken and accrued bonuses, provision for the remuneration of a former director of IDeA FIMIT SGR for a non-competition agreement, and an estimate of the variable annual remuneration to be paid to a director of IDeA FIMIT SGR - other payables to employees totalling EUR 170 thousand 7c – Current tax payables This item totalled EUR 7,473 thousand (EUR 903 thousand at end-2011) and mainly relates to a payable to the tax authorities, calculated as the difference between advance payments made and the tax due for the year, a payable of EUR 3,793 thousand for withholding tax on the higher values of the assets of IDeA FIMIT SGR and a payable of EUR 2,052 thousand to the Parent Company, B&D Holding S.a.p.A., from IDeA Capital Fund SGR relating to its joining of the tax consolidation scheme. The latter amount relates to the payable connected with the option for DeA Capital S.p.A. and IDeA Capital Funds SGR to join the Italian tax consolidation scheme to which the B&D Group (the Group headed by B&D Holding di Marco Drago e C. S.a.p.a) belongs. This was exercised jointly by each company and the Parent Company B&D Holding di Marco Drago e C. S.a.p.a. by signing the "Regulation for participation in the national tax consolidation scheme for companies in the De Agostini Group" and notifying the tax authorities of this option pursuant to the procedures and terms and conditions set out by law. IDeA Capital Funds SGR exercised the option during 2012 for the three-year period 2012-2014. IDeA FIMIT SGR opted during the year to recognise for tax purposes the higher values recorded in the financial statements relating to customer relationship intangible assets booked after the merger, in accordance with art. 176, para. 2 of the Italian consolidated law on income tax, following the merger of FARE SGR and FIMIT SGR. An amount of EUR 35,738 thousand was therefore released via the payment of withholding tax of EUR 5,418 thousand. The first instalment, of EUR 1,625 thousand, was paid in 2012. The second and third instalments, of EUR 3,793 thousand each, will be paid on the dates stipulated for payment of the related annual balance of income tax. 7d – Other tax payables This item, of EUR 4,276 thousand at 31 December 2012 (EUR 3,583 thousand at end-2011), relates to the payable to the tax authorities in respect of taxes deducted from the income of employees and self-employed staff totalling EUR 1,487 thousand, the VAT payable of EUR 727 thousand, and miscellaneous tax payables totalling EUR 2,062 thousand stemming from the Luxembourg wealth tax. 7e – Other payables This item was EUR 1,495 thousand at 31 December 2012 (EUR 1,023 thousand at end-2011) and mainly relates to accrued expenses, payables to credit card issuers and directors’ emoluments. 7f – Short-term financial payables This item totalled EUR 45,089 thousand (EUR 3,911 thousand at 31 December 2011) and relates to: - the short-term portion of the deferred purchase price (deferred portion) totalling around EUR 3,450 thousand and accrued interest payable from the closing date (12 December 2008) to 31 December 2012 totalling EUR 218 thousand
    • Annual financial statements to 31 December 2012 118 - the amount that DeA Capital is required to pay to the seller for 100% of the units of the Atlantic 1 and Atlantic 2 funds totalling EUR 6,963 thousand - the payable of EUR 31,012 thousand for the exercise price, inclusive of interest calculated at present value, accrued from the closing date (29 June 2012) up to 31 December 2012, of EUR 616 thousand - the payable for the additional price to be paid to the seller of EUR 1,702 thousand - an accrued expense in respect of the line of credit provided by Mediobanca totalling EUR 240 thousand - The price of the business division transferred to IDeA FIMIT SGR by Duemme SGR, of EUR 1,504 thousand. This value includes an earn-out component of EUR 432 thousand, which will be recognised only if certain conditions are met.
    • Annual financial statements to 31 December 2012 119 INCOME STATEMENT When comparing the results of 2012 with those of 2011, note the significant change in the scope of consolidation of the Alternative Asset Management business, which includes FIMIT SGR’s contribution from 3 October 2011 (the effective date of its integration with FARE). Thus, a comparison between the two periods is significantly affected by the above considerations. Alternative asset management fees Alternative Asset Management fees in 2012 were EUR 82,004 thousand versus EUR 47,762 thousand in 2011. These fees mainly relate to management fees paid to IDeA FIMIT SGR and IDeA Capital Funds SGR for the funds they manage. 9 - Income from investments valued at equity This item includes income from companies valued at equity for the period. The loss of EUR 18,442 thousand in 2012 compared with a loss of EUR 55,503 thousand in 2011 was mainly due to the loss reported for the stake in Santé of about EUR 10,776 thousand and the loss related to the stake in IDeA OF I of EUR 6,286 thousand. 10 - Other investment income and expenses The net income realised on equity and fund investments totalled around EUR –7,884 thousand in 2012, compared with EUR –13,500 thousand in 2011. Details are shown below: (Euro thousand) Year 2012 Year 2011 Other income from disposals of equity investments in subsidiaries 0 4 Gains from investments available-for-sale 1,385 0 Income from Kenan distributions 0 27,778 Gains from venture capital fund distributions 0 1,480 Gains from real estate fund distributions 1,765 0 Gains from disposals 47 626 Dividends from minor available-for-sale equity investments 102 95 Gains from investments 3,299 29,983 Losses on disposals of equity investments in subsidiaries 85 144 Impairment venture capital funds 874 846 Impairment real estate funds 1,195 0 Impairment Sigla 9,014 0 Impairment Kovio 0 43 Impairment Stepstone 0 15,080 Other charges 15 370 Charges from investments 11,183 16,483 Total (7,884) 13,500
    • Annual financial statements to 31 December 2012 120 Investment income Income from available-for-sale venture capital funds was EUR 1,385 thousand and came from capital gains from distributions of venture capital funds. The “capital gains on sales” item includes an amount of EUR 47 thousand relating to capital gains made on disposals of the Soprarno Inflazione Fund. The item also includes amounts totalling EUR 1,765 thousand of income distributed in 2012 by the various funds: Beta (EUR 22 thousand), Omicron Plus (EUR 1,249 thousand), Atlantic 1 (EUR 107 thousand), Atlantic 2–Berenice (EUR 173 thousand) and Conero (EUR 214 thousand). Impairment The fair value measurement of equity and fund investments at 31 December 2012, carried out based on the information and documents received from the funds and equity investments, as well as other available information, made it necessary to record impairment of EUR 874 thousand for venture capital funds. For these venture capital funds, the significant reduction below cost was considered clear evidence of impairment. The impairment charge of EUR 1,195 thousand on real estate funds relates to the reduction in the value of units in the Atlantic 2 – Berenice fund. The fund units exhibited objective evidence of impairment at 31 December 2009; the pro-rata NAV was less than carrying value. IAS 39 specifies that if a financial instrument has been impaired in a previous period, all subsequent write-downs must pass through the income statement. The impairment charge of EUR 9,014 thousand on Sigla relates to the write-down of the equity investment in Sigla Luxembourg to align the carrying value with the company’s pro-rata share of the net asset value at the same date. 11 - Service revenues In 2012, these revenues totalled EUR 10,863 thousand, compared with EUR 10,359 thousand in 2011, and chiefly relate to services connected with consulting, management and the sale of real estate held in the portfolios of real estate funds. 12 – Other revenues and income Other revenues and income, totalling EUR 1,647 thousand for 2012, compared with EUR 322 thousand at end-2011, was mainly due to director fees from Santé S.A. of EUR 153 thousand, arrangement fees of EUR 517 thousand for the quasi-equity loan of DeA Capital Investments SA and the reimbursement of EUR 550 thousand from IDeA FIMIT SGR in respect of the organisation costs of creating the AVA fund. 13 - Operating costs Operating costs in 2012 were EUR 81,270 thousand, compared with EUR 51,360 thousand in the previous year. 13a – Personnel costs Total personnel costs were EUR 32,846 thousand in 2012, compared with EUR 25,031 thousand in 2011.
    • Annual financial statements to 31 December 2012 121 The item breaks down as follows: (Euro thousand) Year 2012 Year 2011 Salaries and wages 15,473 10,575 Social charges on wages 5,110 3,834 Board of directors' fees 5,310 6,797 Costo figurativo stock options 945 683 Stock options reversal (1,022) 0 Employee severance indemnity 1,327 950 Other personnel costs 5,703 2,192 Total 32,846 25,031 The effect of the cost arising from the stock option plans for 2012, of EUR 945 thousand (EUR 683 thousand in 2011), was more than offset by the reversal of the cost allocated to the reserve for the 2010-2015 Stock Option Plan, of EUR 1,022 thousand. The allocation plan for 2010-2015 is to be considered lapsed as the conditions for exercising option rights were not met. “Other personnel costs” includes an amount of EUR 1,873 thousand for the incentive scheme, valued in accordance with IFRS 2, which confers on beneficiaries the right to receive a cash award linked to corporate performance over the medium-term horizon (the three year period 2012 – 2014). At 31 December 2012, the Group had a total of 207 employees (167 at 31 December 2011). The table below shows the changes and average number of Group employees during 2012. Position 1.1.2012 Recruits Depart ures Change in consolidation area 31.12.2012 Average Senior Managers 33 6 (6) (2) 31 32 Junior Managers 42 30 (5) (5) 62 51 Staff 92 43 (16) (5) 114 93 Total 167 79 (27) (12) 207 176 Share-based payments Employees of DeA Capital S.p.A. and the Parent Company, De Agostini S.p.A., are beneficiaries of stock option plans based on the shares of DeA Capital S.p.A. Unexercised but valid call options on the company’s shares at 31 December 2012 totalled 2,938,200 (4,643,200 at 31 December 2011). Stock option plans were valued using the numerical binomial tree procedure (the original Cox, Ross and Rubinstein method). Numerical analysis using binomial trees generates simulations of various possible developments in the share price in future periods. With regard to stock option plans, on 17 April 2012 the shareholders' meeting approved the DeA Capital Stock Option Plan for 2012-2014 under which a maximum of 1,350,000 options may be allocated. To implement the resolution of the shareholders' meeting, the DeA Capital S.p.A. Board of Directors allocated a total of 1,030,000 options to certain employees of the company and its subsidiaries, and employees of the Parent Company De Agostini S.p.A. who perform important roles.
    • Annual financial statements to 31 December 2012 122 In line with the criteria specified in the regulations governing the DeA Capital Stock Option Plan for 2012-2017, the Board of Directors also set the exercise price for the options allocated at EUR 1.3363, which is the arithmetic mean of the official price of DeA Capital shares on the Mercato Telematico Azionario, the Italian screen-based trading system organised and managed by Borsa Italiana S.p.A., on the trading days between 17 March 2012 and 16 April 2012. The options can be allocated to the beneficiaries, in one or more tranches, up to 31 December 2014 and exercised by the latter, in one or more tranches, but in any case for an amount per tranche of not less than 25% of the options assigned to each, with effect from the fifth calendar day following the date that the adjusted NAV figure at 31 December 2014 is announced, until 31 December 2017. The adjusted NAV means the value of the assets, net of liabilities, calculated on the basis of the company’s balance sheet at 31 December 2014 and restated, where necessary, to take account of the measurement at fair value of all investments, as assessed by an independent third party. The shareholders’ meeting also approved the Performance Share Plan for 2012–2014. To implement the resolution of the shareholders' meeting, the Board of Directors of DeA Capital S.p.A. allocated a total of 302,500 units (representing the right to receive ordinary shares of the company, free of charge, under the terms and conditions of the plan) 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. Shares allocated due to the vesting of units will be drawn from own shares already held by the Company. An incentive scheme, valued in accordance with IFRS 2, which confers on beneficiaries the right to receive a cash award linked to corporate performance over the medium-term horizon (the three year period 2012–2014) was granted to a manager with strategic responsibilities. An actuarial valuation of this plan was made within the Group during the relevant time period. The current average value of the obligations arising from the plans is based on an appropriate “length of service" table and on specific demographic and economic/financial assumptions. The terms and conditions of the DeA Capital Stock Option Plan for 2012–2014 and the Performance Share Plan for 2012-2014 are described in the Information Prospectus prepared in accordance 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’s website www.deacapital.it in the section Corporate Governance/Incentive Plans. The other incentive plans of the Parent Company and its subsidiaries are assessed in accordance with IFRS 2 and confer on beneficiaries the right to receive a cash award linked to corporate performance over a medium-term timescale (the three year period 2012 – 2014). Actuarial valuations of the plan were made within the Group during the relevant time period. The current average value of the obligations arising from the plans is based on an appropriate “length of service" table and on specific demographic and economic/financial assumptions.   No loans and/or guarantees in favour of directors and/or auditors of the Parent Company and its subsidiaries were issued. 13b – Service costs Service costs were EUR 26,583 thousand in 2012 versus EUR 17,113 thousand in 2011. A breakdown of these costs is shown in the table below:
    • Annual financial statements to 31 December 2012 123 (Euro thousand) Year 2012 Year 2011 Admin. Consulting, Tax and Legal and other 10,414 8,788 Remuneration of internal committees 1,217 788 Maintenance 250 206 Travel expenses 1,074 788 Utilities and general expenses 1,937 1,421 Third-party rental, royalties and leasing 3,547 2,376 Bank charges 633 69 Books, stationery and conventions 448 490 Commission expense 4,107 660 Other expenses 2,956 1,527 Total 26,583 17,113 13c – Depreciation, amortisation and impairment losses Please see the table on changes in intangible and tangible assets for details on this item. 13d – Other costs This item totalled EUR 5,194 thousand (EUR 2,136 thousand in 2011) and mainly consisted of the Luxembourg wealth tax of EUR 647 thousand and the cost of EUR 2,922 thousand incurred by IDeA FIMIT SGR and DeA Capital given that they were unable to deduct the VAT paid on purchase transactions on the basis of the pro-rata amount specified by art. 19 of Presidential Decree 633/1972. It also included charges of EUR 1,558 thousand, most of which comprised the negative impact of the transaction concluded by IDeA FIMIT SGR with Enel Servizi S.p.A., which enabled it to reclaim only a portion – albeit a significant one – of the costs it incurred in creating a real estate fund. The project did not come to fruition. 14 – Financial income and charges 14a – Financial income Financial income in 2012 totalled EUR 1,831 thousand (EUR 1,863 thousand in 2011) and includes interest income of EUR 612 thousand. The bulk of this amount (EUR 521 thousand) relates to interest due from banks. (Euro thousand) Year 2012 Year 2011 Interest income 601 1,464 Income from financial instruments valued at fair value through profit and loss 485 195 Derivative income 224 0 Altri proventi su strumenti AFS 113 0 Foreign exchange gains 408 204 Total 1,831 1,863
    • Annual financial statements to 31 December 2012 124 14b- Financial charges Financial charges were EUR 8,590 thousand during the year (EUR 4,620 thousand in 2011), due mainly to interest expenses, losses realised on hedging derivatives, and realised and converted exchange rate losses. Specifically, financial charges mainly break down as follows: - charges of EUR 889 thousand relating to interest rate swaps - a capital loss realised on the sale of the Soprarno bond fund of EUR 7 thousand - exchange rate losses of EUR 3 thousand - realised exchange rate losses on financial instruments of EUR 29 thousand - negative alignment of the valuation of the earn-out accrued in 2012, of EUR 208 thousand - interest expenses for the acquisition of the FARE Group in December 2008, accrued during 2012, totalling EUR 785 thousand - interest expenses on the Mediobanca credit line of EUR 2,410 thousand and fees of EUR 256 thousand - interest expenses of EUR 366 thousand for the medium-term credit line taken out by the subsidiary IDeA FIMIT SGR with Banca Intermobiliare di Investimenti e Gestioni S.p.A. - the cost for the year of exercising the put options on the minority equity investments of subsidiaries IFIM and DeA RE, of EUR 2,946 thousand - costs relating to the derivative taken out to hedge the interest rate swaps of IDeA FIMIT SGR, totalling EUR 313 thousand (Euro thousand) Year 2012 Year 2011 Interest expense 4,166 3,525 Charges on derivatives 313 903 Exchange losses 32 192 Other 4,079 - Total 8,590 4,620 15 – Income tax for the period, deferred tax assets and deferred tax liabilities This item, totalling EUR 1,621 thousand for 2012, includes current income tax due for the year of EUR -12,577 thousand and deferred tax assets of EUR +14,198 thousand. The table below shows the taxes determined on the basis of the rates and the Group’s taxable income. The latter was calculated in light of applicable legislation.
    • Annual financial statements to 31 December 2012 125 (Euro thousand) Year 2012 Year 2011 Current taxes: - Income from tax consolition scheme 4,821 2,839 - IRES (8,698) (7,454) - IRAP (3,282) (2,747) - Other tax (5,418) 0 Total current taxes (12,577) (7,362) Deferred taxes for the period: - Charges for deferred/prepaid taxes (106) (541) - Income from deferred/prepaid taxes 13,279 2,621 - Use of deferred tax liabilities 1,025 1,468 - Use of deferred tax assets 0 0 Total deferred taxes 14,198 3,548 Total income tax 1,621 (3,814) The item in question was impacted positively by the tax redemption (affrancamento fiscale) operation, which enabled the remaining deferred tax liabilities on the customer relationship intangible assets of IDeA FIMIT SGR at 31 December 2011 (EUR 11,818 thousand) to be released against the cost of withholding tax (EUR 5,418 thousand). The table below shows a reconciliation of the tax charges recorded in the consolidated financial statements and the theoretical tax charge for 2012 calculated using the corporate income tax (IRES) rate applicable in Italy. (Euro thousand) Amount Rate Amount Rate Profit before tax (19,830) (37,677) Tax on theoretical income (5,453) 27.5% (10,361) 27.5% Participation in participation exemption scheme 0 0.0% (537) 1.4% Tax on inter-company dividends 251 -0.7% 1,071 -2.8% Amortisation of customer relationships 0 0.0% 779 -2.1% Write-downs of equity investments and loans 2,892 -7.7% 110 -0.3% Effect of companies with different taxation from that of Italy 0 0.0% 0 0.0% Use of tax losses not previously recognised 0 0.0% (580) 1.5% Net profit/(loss) from subsidiaries not subject to taxation 0 0.0% 0 0.0% Net profit/(loss) from associates not subject to taxation 5,021 -13.3% 15,263 -40.5% Non-deductible interest 466 -1.2% 497 -1.3% Income from tax consolidation scheme (2,685) 7.1% (1,259) 3.3% Substitude tax effect on release IDeA FIMIT SGR (6,377) 16.9% 0 0.0% Other net differences 1,356 -3.6% (336) 0.9% Net effect of prepaid/deferred taxes (174) 0.5% (3,547) 9.4% IRAP and other taxes on foreign income 3,082 -8.2% 2,714 -7.2% Income tax reported in the income statement (1,621) 17.3% 3,814 -10.1% 20112012 16 – Basic earnings (loss) per share Basic earnings per share are calculated by dividing net profit for the period attributable to the Group's shareholders by the weighted average number of shares outstanding during the period.
    • Annual financial statements to 31 December 2012 126 Diluted earnings per share are calculated by dividing net profit for the period attributable to the Group's shareholders by the weighted average number of shares outstanding during the period including any diluting effects of existing stock option plans, in the event the allocated options are "in the money". The table below shows the income and the share information used to calculate basic and diluted earnings per share. (Euro thousand) Year 2012 Year 2011 Consolidated net profit/(loss) - Group share (A) (26,276,947) (43,577,335) Weighted average number of ordinary shares outstanding (B) 277,469,810 288,942,756 Basic earnings/(loss) per share (€ per share) (C=A/B) (0.0947) (0.1508) Restatement for dilutive effect - - Consolidated net profit/(loss) restated for dilutive effect (D) (26,276,947) (43,577,335) Weighted average number of shares to be issued for the exercise of stock options (E) - 174,632 Total number of shares outstanding and to be issued (F) 277,469,810 288,942,756 Diluted earnings/(loss) per share (€ per share) (G=D/F) (0.0947) (0.1508) Options have a dilutive effect only when the average market price of the share for the period exceeds the strike price of the options or warrants (i.e. when they are "in the money").
    • Annual financial statements to 31 December 2012 127 Primary and secondary reporting formats The information on businesses reflects the Group's internal reporting structure. These businesses are: - Private Equity Investment, which includes the reporting units involved in investment activities and breaks down into equity investments ("direct investments") and investments in funds ("indirect investments") - Alternative Asset Management, which includes reporting units involved in asset management activities and related services, with a current focus on the management of private equity and real estate funds Summary Group income statement - performance by business in 2012 (Euro thousands) Private Equity Investment Alternative Asset Management Holdings/ Eliminations Consolidated Alternative Asset Management fees 0 82,004 0 82,004 Income (loss) from equity investments (17,855) (245) (342) (18,442) Other investment income/expense (9,014) 599 531 (7,884) Income from services 555 11,759 207 12,521 Other expenses (4,452) (64,160) (12,658) (81,270) Financial income and expenses (327) (42) (6,390) (6,759) PROFIT/(LOSS) BEFORE TAXES (31,093) 29,915 (18,652) (19,830) Income tax 977 (4,930) 5,574 1,621 PROFIT/(LOSS) FOR THE PERIOD FROM CONTINUING OPERATIONS (30,116) 24,985 (13,078) (18,209) Profit (Loss) from discontinued operations/held-for-sale assets 0 0 0 0 PROFIT/(LOSS) FOR THE PERIOD (30,116) 24,985 (13,078) (18,209) - Group share (30,116) 16,574 (12,735) (26,277) - Non controlling interests 0 8,411 (343) 8,068 Summary Group income statement - performance by business in 2011 (Euro thousands) Private Equity Investment Alternative Asset Management Holdings/ Eliminations Consolidated Alternative Asset Management fees 0 47,762 0 47,762 Income (loss) from equity investments (55,503) 0 0 (55,503) Other investment income/expense 13,773 (273) 0 13,500 Income from services 40 10,332 309 10,681 Other expenses (825) (42,051) (8,484) (51,360) Financial income and expenses (26) (215) (2,516) (2,757) PROFIT/(LOSS) BEFORE TAXES (42,541) 15,555 (10,691) (37,677) Income tax 98 (7,160) 3,248 (3,814) PROFIT/(LOSS) FOR THE PERIOD FROM CONTINUING OPERATIONS (42,443) 8,395 (7,443) (41,491) Profit (Loss) from discontinued operations/held-for-sale assets 0 0 0 0 PROFIT/(LOSS) FOR THE PERIOD (42,443) 8,395 (7,443) (41,491) - Group share (42,443) 6,309 (7,443) (43,577) - Non controlling interests 0 2,086 0 2,086 Alternative Asset Management costs include the effects of the amortisation of intangible assets, totalling EUR 14.7 million, recorded when a portion of the purchase price of the investments was allocated.
    • Annual financial statements to 31 December 2012 128 Notes to the cash flow statement Given the type of activity carried out by the Group, cash flow from investment in companies and funds (one of the Group’s typical activities) is included in cash flow from operating activities. In 2012, operating activities, as defined above, absorbed cash and cash equivalents of EUR 23,752 thousand (while EUR 23,406 thousand was absorbed in 2011). Please see the consolidated cash flow statement for information on changes to this item. In 2012, financial activities generated EUR 8,367 thousand (while in 2011 they absorbed EUR 24,710 thousand), mainly connected with the partial utilisation (EUR 20,000 thousand) of the revolving credit line taken out with Mediobanca – Banca di Credito Finanziario S.p.A., net of the outlay (EUR 8,001 thousand) relating to the plan to purchase own shares. Changes in the basis of consolidation had an effect of EUR -1,174 thousand. Cash and cash equivalents totalled EUR 29,156 thousand at end-2012 (EUR 46,764 thousand at the end of the previous year). Changes to the cash flow statement have been reported using the direct method.
    • Annual financial statements to 31 December 2012 129 Other information  Commitments At 31 December 2012, residual commitments for payments to funds totalled EUR 131.0 million, compared with EUR 174.4 million at end-2011. The change in commitments is shown in the table below. (Dati in milioni di Euro) Residual Commitments vs. Fondi - 31.12.2011 174,4 Variazione Commitments dei fondi VC 1,3 Nuovi Commitment 0,0 Capital Calls (44,7) Residual Commitments vs. Fondi - 31.12.2012 131,0 Posizione Finanziaria Netta al 31 dicembre 2012 (123,6) PFN vs. Residual Commitments - 31.12.2012 (Overcommitment) (254,6) With regard to these overcommitments, the management believes that the funds and credit lines currently available, as well as funds that will be generated by its operating and financing activities, will enable the DeA Capital Group to meet the financing required for its investment activity, manage working capital and repay debts when they become due.  Own shares and Parent Company shares On 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 on 19 April 2011, which was scheduled to expire on 19 October 2012. The new plan will have the same objectives as the previous one, including the purchase of own shares to be used for extraordinary operations and share incentive plans, offering shareholders a means of monetising their investment, stabilising the share price and regulating trading within the limits of the legislation in force. The authorisation specifies that purchases may be carried out, for a maximum period of 18 months starting from 17 April 2012, in accordance with all procedures allowed by current regulations, and that DeA Capital S.p.A. may also sell the shares purchased for the purposes of trading. The unit price for the purchase of the shares is set by the Board of Directors, but in any case must not be more than 20% above or below the share’s reference price on the trading day prior to each purchase. In contrast, the authorisation to sell own shares already held in the company’s portfolio and any shares bought in the future was granted for an unlimited period, to be implemented using the methods deemed most appropriate and at a price to be determined on a case-by-case basis by the Board of Directors, which must not, however, be more than 20% below the share's reference price on the trading day prior to each individual sale (apart from in certain exceptional cases specified in the plan). Sale transactions may also be carried out for trading purposes. Also on 17 April 2012, the company’s Board of Directors voted to initiate the plan to buy and sell own shares authorised by the shareholders’ meeting, and to this end vested the Chairman of the Board of Directors and the Chief Executive Officer with all the necessary powers, to be exercised jointly or severally and with full powers of delegation.
    • Annual financial statements to 31 December 2012 130 In 2012, as a part of the above two plans, DeA Capital S.p.A. purchased around 6.1 million shares valued at about EUR 8.0 million (at an average price of EUR 1.31 per share). Taking into account purchases made in previous years for plans in place from time to time, and uses of own shares to service purchases of controlling interests in FARE Holding and IDeA AI, at 31 December 2012 the Company owned 32,006,029 own shares (equal to about 10.4% of the share capital). As of the date of this document, based on purchases of 630,975 shares made after the end of 2012, the company had a total of 32,637,004 own shares corresponding to about 10.6% of the share capital. During 2012, the Company did not hold, purchase or sell, on its own account or through a trust company, any shares in Parent Company De Agostini S.p.A.  Stock option and performance share plans On 17 April 2012, the shareholders’ meeting approved the DeA Capital Stock Option Plan for 2012–2014. To implement the resolution of the shareholders' meeting, the Board of Directors of DeA Capital S.p.A., at its meeting held on the same day, allocated a total of 1,030,000 options 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 Option Plan for 2012–14, the Board of Directors also set the exercise price for the options allocated at EUR 1.3363, which is the arithmetic mean of the official prices of ordinary DeA Capital shares on the Mercato Telematico Azionario, the Italian screen-based trading system organised and managed by Borsa Italiana S.p.A., on the trading days between 17 March 2012 and 16 April 2012. The shareholders’ meeting also approved a paid capital increase, in divisible form, without option rights, via the issue of a maximum of 1,350,000 ordinary shares to service the DeA Capital Stock Option Plan for 2012-2014. The shareholders’ meeting also approved the Performance Share Plan for 2012–2014. To implement the resolution of the shareholders' meeting, the Board of Directors allocated a total of 302,500 units (representing the right to receive ordinary shares of the company, free of charge, under the terms and conditions of the plan) 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. Shares allocated due to the vesting of units will be drawn from own shares already held by the Company. The terms and conditions of the DeA Capital Stock Option Plan for 2012–2014 and the Performance Share Plan for 2012-2014 are described in the Information Prospectus prepared in accordance 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’s website www.deacapital.it in the section Corporate Governance/Incentive Plans. The tables below summarise the assumptions made in calculating the fair value of the stock option plans:
    • Annual financial statements to 31 December 2012 131 Stock Option 2004 plan 2005 plan 2010 plan march 2010 plan 2011 plan 2012 plan N° options allocated 160,000 180,000 2,235,000 500,000 1,845,000 1,030,000 Average market price at allocation date 2.445 2.703 1.2964 1.3606 1.55 1.38 Value at allocation date 391,200 486,540 2,897,454 680,300 2,859,750 1,421,400 Average exercise price 2.026 2.459 1.318 1.413 1.538 1.3363 Expected volatility 31.15% 29.40% 35.49% 33.54% 33.43% 33.84% Option expiry date 8/31/2015 4/30/2016 12/31/2015 12/31/2015 12/31/2016 12/31/2017 Risk free yield 4.25125% 3.59508% 1.88445% 2.95194% 3.44% 2.47% The allocation plan for 2010-2015 is to be considered lapsed as the conditions for exercising option rights were not met. Performance Share 2012 plan N° options allocated 302,500 Average market price at allocation date 1.380 Value at allocation date 417,450 Expected volatility 33.84% Option expiry date 12/31/2014 Risk free yield 2.470% The Warrant Plan 2009-2012 lapsed during 2012 as the conditions for exercising the warrants were not met.  Transactions with parent companies, subsidiaries and related parties Intercompany relationships with the Parent Company and its Group In 2012, the Company carried out transactions under normal market conditions with the Parent Company, De Agostini S.p.A., and its subsidiaries. In particular, on 22 March 2007 the Company signed a service agreement with the controlling shareholder, De Agostini S.p.A. (which was renewed on 31 March 2011), for the latter to provide operating services in the administration, finance, control, legal, corporate, tax, investor relations and external communications areas for a total payment of EUR 480,000 per year. The agreement, which is renewable annually, is priced at market rates, and is intended to allow the Company to maintain a streamlined organisational structure in keeping with its development policy, and to obtain adequate operational support at the same time. Finally, in 2012 the company did not hold, purchase or dispose of shares of related-party companies. The table below summarises the amounts of trade-related transactions with related parties. (Euro thousand) Financial receivables Trade receivables Tax receivables Financial payables Tax payables Trade payables Income from services Tax income Personnel costs Service costs B&D Holding di Marco Drago e C. S.a.p.a. 0 0 7,489 0 2,052 0 0 2,769 0 0 Santé S.A. 25,676 0 0 0 0 0 0 0 0 0 B&D Finance 2 S.A. 0 0 0 25,676 0 0 0 0 0 0 De Agostini S.p.A. 0 306 0 0 0 25 131 0 73 670 De Agostini Editore S.p.A. 0 0 0 0 0 46 0 0 0 171 De Agostini Libri S.p.A. 0 0 0 0 0 1 0 0 0 1 Lottomatica S.p.A. 0 0 0 0 0 0 0 0 0 0 De Agostini Publishing S.p.A. 0 21 0 0 0 0 0 0 0 0 Nova Immobiliare S.p.A. 0 0 0 0 0 0 0 0 0 0 De Agostini Invest SA 0 0 0 0 0 25 0 0 0 25 Total related parties 25,676 326 7,489 25,676 2,052 97 131 2,769 73 867 Total financial statement line item 27,444 12,256 7,489 25,668 7,473 27,420 10,863 1,621 32,846 26,583 As % of financial statement line item 93.6% 2.7% 100.0% 100.0% 27.5% 0.4% 1.2% 0.2% 3.3% 12/31/2012 Year 2012
    • Annual financial statements to 31 December 2012 132 At 31 December 2012, leasehold improvements incurred in the name of and on behalf of third parties were reimbursed on a pro-rated basis and allocated as follows: - EUR 233 thousand to De Agostini S.p.A. - EUR 17 thousand to De Agostini Publishing Italia S.p.A. Remuneration: directors, auditors, general managers and managers with strategic responsibilities In 2012, remuneration payable to the directors and auditors of DeA Capital S.p.A. for the performance of their duties totalled EUR 308 thousand and EUR 175 thousand respectively. Remuneration paid to directors and auditors is shown in the table below: Director Position Year appointed Term ends Compensation received for office within the consolidating company (€ thousands) Benefits in kind Bonuses and other benefits Other principal auditor fees for subsidiaries Other compensation (€ thousand) Lorenzo Pellicioli Chairman 2012 2012 AGM 30 0 0 0 0 Paolo Ceretti CEO 2012 2012 AGM 30 0 0 0 60 Daniel Buaron Director 2012 2012 AGM 30 0 0 0 189 Lino Benassi Director 2012 2012 AGM 30 0 0 0 195 Rosario Bifulco Director 2012 2012 AGM 30 0 0 0 20 Claudio Costamagna Director 2012 2012 AGM 30 0 0 0 5 Alberto Dessy Director till may 2012 2012 AGM 10 0 0 0 8 Roberto Drago Director 2012 2012 AGM 30 0 0 0 3 Marco Drago Director 2012 2012 AGM 30 0 0 0 0 Severino Salvemini Director may 2012 2012 AGM 19 0 0 0 19 Andre Guerra Director till april 2012 2012 AGM 9 0 0 0 1 Marco Boroli Director 2012 2012 AGM 30 0 0 0 0 Angelo Gaviani Chairman of the Board of 2012 2012 AGM 75 0 0 14 0 Cesare Andrea Grifoni Principal Auditor 2012 2012 AGM 50 0 0 26 0 Gian Piero Balducci Principal Auditor 2012 2012 AGM 50 0 0 56 15 Giulio Gasloli Principal Auditor till may 2012 2012 AGM 0 0 0 3 0 In contrast to the data contained in the Remuneration Report prepared pursuant to art. 123- ter of the TUF in accordance with art. 84-quater of the Issuer Regulations 11971/1999, the emoluments and compensation indicated above does not include social security contributions where applicable. The “other remuneration” item relates to remuneration received for other positions held in either DeA Capital S.p.A. or other Group companies. In 2012, annual salaries and bonuses, excluding benefits in kind, paid to managers with strategic responsibilities in the Parent Company totalled about EUR 742 thousand.
    • Annual financial statements to 31 December 2012 133  Equity investments held by directors, auditors, general managers and managers with strategic responsibilities Details of equity investments held in DeA Capital S.p.A. and its subsidiaries by members of the boards of directors and auditors and by managers with strategic responsibilities are provided in aggregate format in the table below. No equity investments were reported for general managers, since to date this position does not exist. All those who held positions on the boards of directors or auditors, or as managers with strategic responsibilities, for the whole or part of the year in question, are included. Lorenzo Pellicioli DeA Capital S.p.A. 2,566,323 0 0 2,566,323 Paolo Ceretti DeA Capital S.p.A. 1,000,000 0 0 1,000,000 Rosario Bifulco DeA Capital S.p.A. 1,536,081 0 0 1,536,081 Lino Benassi DeA Capital S.p.A. 23,500 0 0 23,500 Daniel Buaron * DeA Capital S.p.A. 11,689,552 0 0 11,689,552 Daniel Buaron DeA Capital Real Estate S.p.A. 180,000 0 (180,000) 0 Key Management DeA Capital S.p.A. 50,000 55,000 0 105,000 Total 17,045,456 55,000 (180,000) 16,920,456 * through DEB Holding S.r.l. Beneficiary Company Number of shares held at 1.1.2012 Number of shares purchased Number of shares sold Number of shares held at 31.12.2012 Other than the shares indicated above, no DeA Capital shares are held by other directors or auditors who are currently in office; furthermore, no shares are held in companies controlled by DeA Capital.   The directors Lorenzo Pellicioli, Lino Benassi, Marco Drago, Marco Boroli and Roberto Drago own shares of B&D Holding di Marco Drago e C. S.a.p.a. and New B&D Holding di Marco Drago e C.S.a.p.A., the direct and indirect parent companies of De Agostini S.p.A. (which is in turn the Parent Company of the company) and are parties to a shareholder agreement covering these shares.  Stock options allocated to members of the boards of directors and auditors, general managers and managers with strategic responsibilities Details of stock options held by members of the boards of directors and auditors and by managers with strategic responsibilities in DeA Capital S.p.A. and its subsidiaries are provided in aggregate format in the table below. Options lapsed during 2012 Beneficiary Position Number of options Average exercise price Average expiry date Number of options Average exercise price Average expiry date Number of options Number of options Average exercise price Average expiry date Paolo Ceretti CEO 750,000 1.318 5 0 0 0 0 750,000 1.318 5 Paolo Ceretti CEO 750,000 1.538 5 0 0 0 0 750,000 1.538 5 Paolo Ceretti CEO 0 0 0 630,000 1.3363 5 0 630,000 1.3363 5 Key Management 985,000 1.318 5 0 0 0 0 985,000 1.318 5 Key Management 500,000 1.413 5 0 0 0 0 500,000 1.413 5 Key Management 485,000 1.538 5 0 0 0 0 485,000 1.538 5 Key Management 0 0 0 400,000 1.3363 5 0 400,000 1.3363 5 Options outstanding at Jan. 1, 2012 Options granted during 2012 Options outstanding at December 31, 2012 Lastly, note that the Chief Executive Officer, Paolo Ceretti, and managers with strategic responsibilities have been assigned 80,000 and 52,500 performance shares respectively, as shown in the table below.
    • Annual financial statements to 31 December 2012 134 Options lapsed during 2012 Beneficiary Position Number of options Average exercise price Average expiry date Number of options Average exercise price Average expiry date Number of options Number of options Average exercise price Average expiry date Paolo Ceretti CEO 0 0 0 80,000 1.38 2 0 80,000 1.38 2 Key Management 0 0 0 52,500 1.38 2 0 52,500 1.38 2 Options outstanding at Jan. 1, 2012 Options granted during 2012 Options outstanding at December 31, 2012  National tax consolidation scheme: De Agostini Group DeA Capital S.p.A. has adopted the national tax consolidation scheme of the B&D Group (the Group headed by B&D Holding di Marco Drago e C. S.a.p.a.). This option was exercised jointly by each company and the Parent Company B&D Holding di Marco Drago e C. S.a.p.a. by signing the "Regulation for participation in the national tax consolidation scheme for companies in the De Agostini Group" and providing notification of this option to the tax authorities pursuant to the procedures and terms and conditions set out by law. The option is irrevocable for the three-year period of 2011-2013 unless the requirements for applying the scheme are not met. Information on the fair value hierarchy IFRS 7 stipulates that financial instruments reported at fair value should be classified based on a hierarchy that reflects the importance and quality of the inputs used in calculating fair value. Three levels have been determined: • Level 1: the fair value of instruments classified at this level is calculated based on the (unadjusted) quoted prices recorded on an active market for the assets or liabilities being valued • Level 2: the fair value of instruments classified at this level is calculated using valuation techniques that use directly or indirectly observable market parameters other than the quoted price of the financial instruments • Level 3: the fair value of instruments classified at this level is calculated using valuation techniques that do not use observable market parameters as benchmarks. The table below shows assets measured at fair value by hierarchical level at 31 December 2012. (Euro thousand) Level 1 Level 2 Level 3 Total Other shareholdings available-for-sale 223.6 0.3 223.9 Funds avalilable-for-sale 7.1 159.4 166.5 Other non current financial assets available-for-sale 0.3 0.3 Current financial assets available-for-sale 5.7 5.7 Total assets 12.8 383.0 0.6 396.4 For level 3, a reconciliation of the opening and closing balances is shown in the table below. Income and expenses posted to the income statement or shareholders’ equity, and purchases and sales made during 2012, are identified separately.
    • Annual financial statements to 31 December 2012 135 (Euro thousand) Balance at 1.1.2012 Increase Decrease Impairment e related translaction effect Fair Value Adjustment Fair Value through Profit and Loss Translation adjustments Balance at 31.12.2012 Stepstone Acquisition S.à r.l. 0 0 0 0 0 0 0 0 Elixir Pharmaceuticals Inc. 0 0 0 0 0 0 0 0 Kovio Inc. 0 0 0 0 0 0 0 0 Other companies 290 0 (3) 0 0 0 0 287 Other shareholdings available-for-sale 290 0 (3) 0 0 0 0 287 Other non current financial assets available-for-sale 936 0 (609) 0 0 0 0 327
    • Annual financial statements to 31 December 2012 136 Main risks and uncertainties to which the Parent Company and consolidated Group companies are exposed As described in the Report on Operations, the DeA Capital Group operates through, and is structured as, two business areas, Private Equity Investment and Alternative Asset Management. The risks set out below arise from a consideration of the characteristics of the market and the operations of Parent Company DeA Capital S.p.A. and the companies included in the Group’s consolidated financial statements, as well as from the main results of risk assessment work and the periodic monitoring conducted partly through the regulatory policies adopted by the Group. There could, however, be risks that are currently unidentified or not considered significant that could have an impact on the Group's operations. The Group has adopted a modern corporate governance system that provides effective management of the complexities of its operations, and enables both individual companies and the Group to achieve their strategic objectives. Furthermore, the assessments conducted by the organisational units and the directors confirm both the non-critical nature of these risks and uncertainties and the financial solidity of the DeA Capital Group. With reference to the specific risks relating to the main private equity investments, i.e. Générale de Santé and Migros, please see the respective annual reports, and more specifically Générale de Santé’s Registration Document and Migros’ Annual Report (available on their websites). In particular, the latest Registration Document (sections 4.1 - RISQUES LIES AUX ACTIVITES DU GROUPE and 4.2 - GESTION DES RISQUES) available as of the date of this report, indicates the following as the main risk factors for Générale de Santé:    Risks related to company debt (Risques liés à l’endettement de Générale de Santé)  Liquidity risks (Risques de liquidité)  Interest rate risks (Risques de taux d’intérêt)  Risks relating to obtaining financing (Risques liés à l’obtention de financements)  Risks relating to commitments contained in leases signed by the Group (Risques liés aux engagements contenus dans les baux commerciaux souscrits par le Groupe)  Risks relating to the clinic restructuring and construction programme (Risques liés aux programmes de restructuration ou de construction majeures de cliniques)  Risks relating to the external growth strategy (Risques liés à la stratégie de croissance externe)  Risks relating to changes in prices (Risques liés à l’évolution de la tarification)  Risks relating to competition (Risques liés à la compétitivité)  Risks relating to the recruitment and retention of staff and practitioners (Risques liés au recrutement et à la fidélisation du personnel et des praticiens)  Risks relating to applicable legislation (Risques liés à la réglementation applicable)  Risks of a deterioration in the reputation of Générale de Santé in the event of legal proceedings being brought against a group facility or practitioner (Risques liés à la dégradation de la réputation de Générale de Santé en cas de mise en jeu de la responsabilité d’un établissement ou d’un praticien du Groupe)  Risks relating to environmental protection legislation (Risques liés à la réglementation relative à la protection de l’environnement)  Risks relating to the adequacy, costs and availability of insurance cover (Risques liés à l’adéquation, aux coûts et à la disponibilité de couverture d’assurance)  Exceptional events and disputes (Faits exceptionnels et litiges)  Risks relating to IT suppliers (Risques liés au fournisseur en matière informatique).
    • Annual financial statements to 31 December 2012 137 A. Contextual risks A.1. Risks relating to general economic conditions The operating performance and financial position of the DeA Capital Group are affected by the various factors that make up the macro-economic environment, including increases or decreases in GDP, investor and consumer confidence, interest rates, inflation, the costs of raw materials and unemployment. The ability to meet medium- to long-term objectives could be affected by general economic performance, which could slow the development of sectors the Group has invested in, and at the same time, the business of the investee companies. A.2. Socio-political events In line with its own strategic growth guidelines, one of the DeA Capital Group’s activities is private equity investment in companies and funds in different jurisdictions and countries around the world, which, in turn, invest in a number of countries and geographical areas. The DeA Capital Group may have invested in foreign countries whose social, political and economic conditions put the achievement of its investment objectives at risk. A.3. Regulatory changes Many Group companies conduct their operations in regulated sectors and markets. Any changes to or developments in the legislative or regulatory framework that affect the costs and revenues structure of investee companies or the tax regime applied, could have negative effects on the Group’s financial results, and necessitate changes in the Group’s strategy. To combat this risk, the Group has established procedures to constantly monitor sector regulation and any changes thereto, in order to take advantage of business opportunities and respond to any changes in the prevailing legislation and regulations in good time. A.4. Performance of the financial markets The company’s ability to meet its strategic and management objectives could depend on the performance of financial markets. A negative trend on financial markets could have an effect on the private equity sector in general, making investment and divestment transactions more complex, and on the Group’s capacity to increase the NAV of investments in particular. The value of equity investments held directly or indirectly through funds in which the company has invested could be affected by factors such as comparable transactions concluded on the market, sector multiples and market volatility. These factors that cannot be directly controlled by the Group are constantly monitored in order to identify appropriate response strategies that involve both the provision of guidance for the management of Group companies, and the investment and value enhancement strategy for the assets held. A.5. Exchange rates Holding investments in currencies other than the euro exposes the Group to changes in exchange rates between currencies. The investment in Kenan Investments is managed as a special case, since although it was made in euro, the underlying asset is expressed in Turkish lira. Taking into account the time horizon of the investment, it is believed that the expected return on the investment can absorb any devaluation of the underlying currency, if in line with the outlook for the currency. A.6. Interest rates Ongoing financing operations that are subject to variable interest rates could expose the Group to an increase in related financial charges, in the event that the reference interest rates rise significantly. DeA Capital S.p.A. has established appropriate strategies to hedge against the risk of fluctuations in interest rates. Given the partial hedge of the underlying, the company classifies these securities as speculative instruments, even though they are put in place for hedging purposes.
    • Annual financial statements to 31 December 2012 138 B. Strategic risks B.1. Concentration of the Private Equity Investment portfolio The private equity investment strategy adopted by the Group includes: - direct investments - indirect investments (in funds) Within this strategy, the Group’s overall profitability could be adversely affected by an unfavourable trend in one or a few investments, if there were insufficient risk diversification, resulting from the excessive concentration of investment in a small number of assets, sectors, countries, currencies or of indirect investments in funds with limited investment targets/types of investment. To combat these risk scenarios, the Group pursues an asset allocation strategy intended to create a balanced portfolio with a moderate risk profile, investing in attractive sectors and in companies with an appealing current and future risk/return ratio. Furthermore, the combination of direct and indirect investments, which, by their nature, guarantee a high level of diversification, helps reduce the level of asset concentration. B.2. Concentration of Alternative Asset Management activities In Alternative Asset Management, in which the Group is active through the companies IDeA Alternative Investments (from 1 January 2012 when it was merged into DeA Capital S.p.A.), First Atlantic Real Estate Holding and IFIM, events could arise as a result of excessive concentration that would hinder the achievement of the level of expected returns. These events could be due to:  Private equity funds o concentration of the management activities of asset management companies across a limited number of funds, in the event that one or more funds decides to cancel its asset management mandate o concentration of the financial resources of the funds managed in a limited number of sectors and/or geographical areas, in the event of currency, systemic or sector crises o for closed funds, concentration of the commitment across just a few subscribers, in the event of a counterparty experiencing financial difficulties  Real estate funds o concentration of real estate present in the portfolio of managed funds in a few cities and/or in limited types of property (management/commercial), in the event of a crisis on the property market concerned o concentration in respect of certain important tenants, in the event that these withdraw from the rental contracts, which could lead to a vacancy rate that has a negative impact on the funds' financial results and the valuation of the property managed o concentration of the maturities of numerous real estate funds within a narrow timeframe, with related high availability of property on the market, leading to a decrease in property values and an increase in selling times For each of the risk scenarios outlined above, the Group has defined and implemented appropriate strategies that include strategic, operational and management aspects, as well as a system monitoring the level of diversification of Alternative Asset Management activities. B.3. Key resources (governance/organisation) The success of the DeA Capital Group depends to a large extent on its executive directors and certain key management figures, their ability to efficiently manage the business and the ordinary operations of the Group, as well as knowledge of the market and the professional relationships established. The departure of one or more of these key resources, without a
    • Annual financial statements to 31 December 2012 139 suitable replacement being found, as well as an inability to attract and retain new and qualified resources, could impact growth targets and have a negative effect on the Group’s operating performance and financial results. To mitigate this risk, the Group has put in place HR management policies that correspond closely to the needs of the business, and incentive policies that are periodically reviewed, in light of, among other things, the general economic climate and the results achieved by the Group. C. Operating risks C.1. Investment operations Investment operations conducted by the Group are subject to the risks typical of private equity activities, such as the accurate valuation of the target company and the nature of the transactions carried out. The Group has implemented a structured process of due diligence on target companies, involving the different levels of group management concerned and the careful definition of shareholders’ agreements in order to conclude agreements in line with the investment strategy and the risk profile defined by the Group. C.2. Compliance with covenants Some investment operations were concluded using financial leverage to invest in the target companies. For financing contracts signed by investee companies, specific covenants generally backed by collateral are in place; failure to comply with these could necessitate recapitalisation operations for investee companies and lead to an increase in financial charges relating to debt refinancing. Failure to comply with covenants attached to loans could have negative effects on both the financial situation and operations of investee companies, and on the value of the investment. The Group constantly monitors the significant reference parameters for the financial obligations taken on by investee companies, in order to identify any unexpected variance in good time. C.3. Divestment operations In its Private Equity Investment business, the Group generally invests over a medium-/long- term time horizon. Over the investment management period, external situations could arise that might have a significant impact on the operating results of the investee companies, and consequently on the value of the investment itself. Furthermore, in the case of co-investment, guiding the management of an investee company could prove problematic or unfeasible, and it may ultimately prove impossible to dispose of the stakes held owing to lock-up clauses. The divestment strategy could therefore be negatively affected by various factors, some of which cannot be foreseen at the time the investments are made. There is therefore no guarantee that expected earnings will be realised given the risks resulting from the investments made. To combat these risk situations, the Group has defined a process to monitor the performance of its investee companies, facilitated by its representation on the management bodies of significant investee companies, with a view to identifying any critical situations in good time. C.4. Funding risk The income flows expected from the Alternative Asset Management business depend on the capacity of the Group’s asset management companies to stabilise/grow their assets under management. In this environment, fund raising activity could be harmed by both external factors, such as the continuation of the global economic crisis or the trend in interest rates, and internal factors, such as bad timing in respect of fund raising activities by the asset management companies or the departure of key managers from the companies. The Group has established appropriate risk management strategies in relation to fund raising, with a view to both involving new investors and retaining current investors.
    • Annual financial statements to 31 December 2012 140 Significant events after the year-end  Private equity funds – paid calls/reimbursements After the end of 2012, the DeA Capital Group increased its investment in the IDeA I FoF, ICF II, IDeA OF I and IDeA EESS funds following total payments of EUR 12.5 million (EUR 0.3 million, EUR 5.7 million, EUR 4.5 million and EUR 2.0 million respectively). At the same time, the DeA Capital Group received capital reimbursements totalling EUR 6.7 million from the IDeA I FoF and ICF II funds (EUR 5.6 million and EUR 1.1 million respectively) to be used in full to reduce the carrying value of the units.  Purchase of IDeA SIM S.p.A shares On 25 February 2013, in compliance with the provisions of various agreements, DeA Capital S.p.A. acquired the shares held by the former CEO of IDeA SIM, equal to 30% of its capital, bringing its investment to 95% of the company’s capital. The price paid was EUR 79 thousand.  Acquisition of a shareholding in IDeA FIMIT SGR On 27 February 2013, DeA Capital S.p.A. signed an agreement with Inarcassa to acquire shares from the latter representing 2.98% of the capital of IDeA FIMIT SGR, for an estimated price of around EUR 5.9 million; financial equity instruments issued by IDeA FIMIT SGR and held by Inarcassa are excluded from the sale. The closing is expected to take place at the beginning of April once the pre-emptive rights have expired.
    • Annual financial statements to 31 December 2012 141 Further information  Publication of the 2012 financial statements In accordance with the provisions of IAS 10, the Parent Company authorised the publication of these financial statements within the terms authorised by existing legislation.  Atypical or unusual transactions In 2012, there were no atypical or unusual transactions as defined by Consob Communication 6064293 of 28 July 2006.  Significant non-recurring events and transactions In 2012, the DeA Group did not undertake any significant non-recurring transactions as defined by the above-mentioned Consob Communication.
    • Annual financial statements to 31 December 2012 142 Statement of responsibilities for the consolidated financial statements pursuant to art. 154-bis of Legislative Decree 58/98 The undersigned, Paolo Ceretti, as Chief Executive Officer, and Manolo Santilli, as the manager responsible for preparing the accounting statements of DeA Capital S.p.A., hereby certify, pursuant to art. 154-bis, paragraphs 3 and 4 of Legislative Decree 58 of 24 February 1998, that based on the characteristics of the company, the administrative and accounting procedures for preparing the consolidated financial statements during 2012 were suitable and effectively applied. The assessment as to the suitability of the administrative and accounting procedures for preparing the consolidated financial statements for the year to 31 December 2012 was based on a process established by DeA Capital S.p.A. in keeping with the Internal Control - Integrated Framework model issued by the Committee of Sponsoring Organisations of the Treadway Commission, which is the generally accepted reference framework at the international level. Note in this regard, that as described in the notes to the annual financial statements, a significant portion of the assets are investments stated at fair value. Fair values were determined by directors based on their best estimate and judgment using the knowledge and evidence available at the time the financial statements were prepared. However, due to objective difficulties in making assessments and the absence of a liquid market, the values assigned to such assets could differ, and in some cases significantly, from those that could be obtained when the assets are sold. The undersigned further certify that the consolidated financial statements to 31 December 2012: - correspond to the companies' accounting records - have been prepared in compliance with the International Financial Reporting Standards adopted by the European Union, and the measures issued to implement art. 9 of Legislative Decree 38/2005 - to the best of their knowledge, provide a true and fair view of the operating performance and financial position of the issuer and the group of companies included in the basis of consolidation The report on operations contains a reliable analysis of operating performance and results and of the position of the issuer and all companies included in the basis of consolidation, together with a description of the main risks and uncertainties to which they are exposed. 8 March 2013 Paolo Ceretti Chief Executive Officer Manolo Santilli Manager responsible for preparing the company’s accounts
    • Annual financial statements to 31 December 2012 143 Information pursuant to art. 149-duodecies of the Consob Issuer Regulations The table below was prepared in accordance with art. 149-duodecies of the Consob Issuer Regulations and reports the fees for 2012 for auditing and other services provided by the independent auditors and entities belonging to the independent auditors’ network. The fees reported below do not include VAT and out-of-pocket expenses. (Euro thousand) Company providing the service Beneficiary Compensation paid for FY 2012 Audit KPMG S.p.A. DeA Capital S.p.A. 93 KPMG S.p.A. IFIM 21 KPMG Audit S.à.r.l. DeA Capital Investments SA 36 KPMG S.p.A. DeA Capital Real Estate 40 KPMG S.p.A. Innovation Real Estate 28 KPMG S.p.A. IRE Advisory 11 KPMG S.p.A. IDeA Capital Funds SGR 22 KPMG S.p.A. IDeA SIM 10 Certification services (1) KPMG S.p.A. DeA Capital S.p.A. 0 KPMG S.p.A. DeA Capital Real Estate 2 KPMG S.p.A. Innovation Real Estate 35 KPMG S.p.A. IRE Advisory 1 KPMG S.p.A. IDeA Capital Funds SGR 2 KPMG S.p.A. IDeA SIM 1 Other services KPMG S.p.A. DeA Capital S.p.A. 7 KPMG S.p.A. DeA Capital Real Estate 0 KPMG Advisory S.p.A. IDeA FIMIT SGR (2) 473 Total 789 1) Presentation of tax return 2) Company non subject to audit by KMPG S.p.A.
    • Annual financial statements to 31 December 2012 144 Annual financial statements for the year to 31 December 2012
    • Annual financial statements to 31 December 2012 145 Annual financial statements for DeA Capital S.p.A. for the period 1 January to 31 December 2012  Balance Sheet  Income Statement  Statement of Comprehensive Income  Cash Flow Statement  Statement of Changes In Shareholders’ Equity  Notes to the accounts
    • Annual financial statements to 31 December 2012 146 Statement of Financial Position - DeA Capital S.p.A. (Euro thousand) Notes 31.12.2012 31.12.2011 ASSETS Non-current assets Intangible and tangible assets Intangible assets 1a 14,981 7,656 Tangible assets 1b 491,494 86,848 Total intangible and tangible assets 506,475 94,504 Investments Subsidiaries and joint ventures 2a 831,253,419 717,130,237 Associates 2b 2,597,643 1,000,000 Available-for-sale investments 2c 286,618 1 Available-for-sale funds 2d 13,364,643 12,234,007 Loans to subsidiaries 2e 0 37,307,101 Total Investments 847,502,323 767,671,346 Other non-current assets Deferred tax assets 3a 0 0 Other non-current assets 3b 0 0 Total other non-current assets 0 0 Total non-current assets 848,008,798 767,765,850 Current assets Trade receivables 4a 2,149,347 217,392 Available-for-sale financial assets 4b 0 5,296,954 Financial receivables 4c 31,269,662 2,879,872 Financial receivables (pass throught arrangement) 0 0 4d 7,488,867 5,928,777 Other tax receivables 4e 1,269,537 1,810,310 Other receivables 4f 67,622 97,133 Cash and cash equivalents 4g 2,153,095 29,056,753 Total current assets 44,398,130 45,287,191 Total current assets 44,398,130 45,287,191 Held-for-sale assets 0 0 TOTAL ASSETS 892,406,928 813,053,041 SHAREHOLDERS' EQUITY AND LIABILITIES SHAREHOLDERS' EQUITY Share capital 5a 274,606,071 280,696,984 Share premium reserve 5b 386,452,243 388,361,873 Legal reserve 5c 61,322,420 61,322,420 Fair Value reserve 5d 26,088,064 -1,654,899 Other reserves 5e 500,322 1,409,199 Retained earnings (losses) 5f -10,854,465 15,989,158 Profit/(loss) for the year 5g 2,269,268 -32,085,746 Shareholders' equity 740,383,923 714,038,989 LIABILITIES Non-current liabilities Deferred tax liabilities 3a 0 0 Provisions for employee termination benefits 6a 316,221 192,487 Long term financial loans 6b 102,986,561 93,008,005 Payables to staff and social security organisations 6c 1,189,425 - Total non-current liabilities 104,492,207 93,200,492 Current liabilities Trade payables 7a 2,525,591 768,680 Payables to staff and social security organisations 7b 1,200,959 956,225 Current tax payables 0 5,826 Other tax payables 7c 194,516 158,820 Other payables 24,528 13,407 Short term financial loans 7d 43,585,204 3,910,602 Total current liabilities 47,530,798 5,813,560 Held-for-sale liabilities 0 0 TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES 892,406,928 813,053,041 Tax receivables from Parent companies
    • Annual financial statements to 31 December 2012 147 Income Statement-DeA Capital S.p.A. (Euro) Notes Year 2012 Year 2011 Gains from subsidiaries 8a 0 0 Dividends from subsidiaries and joint ventures 8a 8,860,000 67,562,703 Losses from available-for-sale funds 8a 0 (142,397) Gains from available-for-sale funds 8a 1,431,626 2,106,325 Subsidiaries and joint ventures impairment 8a (498,526) (93,301,094) Impairment of Investments in other companies-available-for-sale 8a 0 (42,841) Impairment di Fondi-disponibili alla vendita 8a (873,611) (846,351) Income from services 8b 459,075 295,014 Other income 8c 154,812 177,155 Personnel costs 9a (5,972,054) (5,083,899) Service costs 9b (3,138,118) (3,090,294) Depreciation, amortization and impairment 9c (86,325) (84,693) Other expenses 9d (507,712) (387,664) Financial income 10a 2,043,647 1,844,889 Financial expenses 10b (4,653,117) (4,341,057) PROFIT/(LOSS) BEFORE TAX (2,780,303) (35,334,204) Income tax 11a 4,879,067 2,839,218 Deferred tax 11b 170,504 409,240 PROFIT/(LOSS) FOR THE YEAR FROM CONTINUING OPERATIONS 2,269,268 15,989,158 Profit (Loss) from discontinued operations/held-for-sale assets 0 0 PROFIT/(LOSS) FOR THE YEAR 2,269,268 15,989,158 Earnings per share, basic (€) 12 0.01 (0.11) Earnings per share, diluted (€) 12 0.01 (0.11) Pursuant to Consob Resolution 15519 of 27 July 2006, the impact of dealings with related parties on the balance sheet, income statement and cash flow statement is explained in the notes to the financial statements.
    • Annual financial statements to 31 December 2012 148 Statement of Comprehensive Income (Statement of Performance – IAS 1) Comprehensive income or the Statement of Performance (IAS 1), in which performance for the year is reported including results posted directly to shareholders' equity, reflects a net positive balance of approximately EUR 33,241 thousand compared with a net negative balance of around EUR 25,146 thousand in 2011. This statement provides an overview of the performance of the company and shows the actual result of the company’s activities, as explained in the Report on Operations and the notes to the financial statements. Statement of comprehensive income (Euro) Notes 31.12.2012 31.12.2011 Profit/(loss) for the year (A) 2,269,268 (32,085,746) Gains/(Losses) on fair value of available-for-sale financial 5d 30,971,560 6,939,417 Other comprehensive income, net of tax (B) 5d 30,971,560 6,939,417 Total comprehensive income for the year (A)+(B) 33,240,828 (25,146,329)
    • Annual financial statements to 31 December 2012 149 Cash Flow Statement-DeA Capital S.p.A. (Euro thousand) Year 2012 Year 2011 CASH FLOW from operating activities Investments in funds and shareholdings (24,151) (27,216) Proceeds from the sale of investments 0 1,257 Capital reimburments by Funds 2,558 1,067 Interest received 253 861 Interest received-intercompany 1,096 138 Interest paid (2,583) (2,919) Interest paid-intercompany 0 0 Cash distribution from investments 0 1,480 Realized gains (losses) on exchange rate derivatives (889) (792) Exhange gains (losses) (1) (11) Taxes paid (59) (237) Taxes refunded 4,613 1,162 Dividends received 8,860 63,500 Revenues for services 168 0 Revenues for services-intercompany 313 488 Operating expenses -intercompany (226) 0 Operating expenses-Cash movements 0 0 Operating expenses (7,629) (7,727) Net cash flow from operating activities (17,677) 31,051 CASH FLOW from investment activities Acquisition of property, plant and equipment (626) (3) Sale of property, plant and equipment 0 1 Purchase of licenses (9) (9) Net cash flow from investing activities (635) (11) CASH FLOW from investing activities Acquisition of financial assets 0 0 Sale of financial assets 6,454 10,000 Share capital issued 0 0 Share capital issued:stock option plan 0 0 Own shares acquired (8,001) (26,411) Own shares sold 0 0 Warrant 0 0 Bank Loan reimbursement 0 0 Bank loan 20,000 0 Short term loan intercompany (27,093) (2,500) Long term loan intercompany 0 (37,307) Net cash flow from financing activities (8,640) (56,218) CHANGE IN CASH AND CASH EQUIVALENTS (26,952) (25,178) CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 29,058 54,236 Cash and cash equivalents relating subsidiaries merged in the year 48 0 Cash and cash equivalents at beginning of period 29,106 54,236 EFFECT OF CHANGE IN BASIS OF CONSOLIDATION: CASH AND CASH EQUIVALENTS 0 0 2,154 29,058 Held-for-sale assets and minority interests 0 0 CASH AND CASH EQUIVALENTS AT END OF PERIOD 2,154 29,058 CASH AND CASH EQUIVALENTS AT END OF PERIOD
    • Annual financial statements to 31 December 2012 150 Summary statement of Changes in Net Shareholders’ Equity for the Parent Company DeA Capital SpA Euro thousand Share capital (par value) Share premium Legal reserve Fair value reserve Stock options reserve Reserve for sale of rights Merger Reserve- IDeA AI Other reserves Profit (loss) brought forward Group net profit (loss) Discontinue d operations result Total Total at 31.12.2010 294,013 395,614 61,322 (8,594) 313 413 0 0 0 15,989 0 759,070 Net result allocation 0 0 0 0 0 0 0 15,989 (15,989) 0 0 Stock option 0 0 0 0 683 0 0 0 0 0 0 683 Buy-back of treasury shares (18,123) (8,288) 0 0 0 0 0 0 0 0 0 (26,411) Shares for IDeA AI acquisition 4,807 1,036 0 0 0 0 0 0 0 0 0 5,843 Total comprehensive income for the year 2011 0 0 0 6,939 0 0 0 0 0 (32,086) 0 (25,147) Total at 31.12.2011 280,697 388,362 61,322 (1,655) 996 413 0 0 15,989 (32,086) 0 714,038 Net result allocation 0 0 0 0 0 0 0 (32,086) 32,086 0 0 Stock option 0 0 0 0 (77) 0 0 0 0 0 0 (77) Buy-back of treasury shares (6,091) (1,910) 0 0 0 0 0 0 0 0 0 (8,001) Merger IDeA AI 0 0 0 (3,229) 0 0 (831) 0 5,243 0 0 1,183 Total comprehensive income for the year 2012 0 0 0 30,972 0 0 0 0 0 2,269 0 33,241 Total at 31.12.2012 274,606 386,452 61,322 26,088 919 413 (831) 0 (10,854) 2,269 0 740,384
    • Annual financial statements to 31 December 2012 151 Notes to the accounts Annual Financial Statements for the year to 31 December 2012
    • Annual financial statements to 31 December 2012 152 Structure and content of the financial statements DeA Capital S.p.A. (the company or the Parent Company or DeA Capital) is a joint stock company with its registered office in Via Brera 21, Milan. The financial statements were prepared in accordance with the general principles of IAS 1, specifically: - accruals principle: the effect of events and transactions is recorded when they occur, and not when payment is made or received - going concern principle: the financial statements are prepared under the assumption that business operations will continue in the near future. In this regard, the directors have evaluated this assumption with particular scrutiny in light of the current economic and financial crisis. As indicated in the section "Uncertainties and the management of financial risks" in the Report on Operations, the directors believe that the risks and uncertainties described therein are not critical in nature, confirming the financial solidity of the Parent Company, DeA Capital S.p.A. - materiality: when reporting operating events in accounting entries, preference is given to the principle of economic substance over form - comparative information: the financial statements must show comparative information for the previous period The DeA Capital financial statements consist of the balance sheet, the income statement, the statement of comprehensive income (Statement of Performance - IAS 1), the cash flow statement, the statement of changes in shareholders’ equity and the notes to the financial statements. The balance sheet provides a breakdown of current and non-current assets and liabilities with separate reporting for those resulting from discontinued or held-for-sale operations. In the income statement, the company has adopted the nature of expense method, whereby costs and revenues are classified according to type. The cash flow statement is prepared using the "direct method". Unless otherwise indicated, all tables and figures included in these notes to the financial statements are reported in EUR thousand. As the Parent Company, DeA Capital S.p.A. has also prepared the consolidated financial statements for the DeA Capital Group to 31 December 2012. In addition to the figures at 31 December 2012, the financial statement formats used also provide comparable figures for 31 December 2011. The publication of the draft financial statements for the year to 31 December 2012 was authorised by resolution of the Board of Directors dated 8 March 2013. Statement of compliance with accounting standards The financial statements for the year to 31 December 2012 (2012 financial statements) have been prepared in accordance with the International Accounting Standards adopted by the European Union and approved by the date the financial statements were prepared (International Accounting Standards, or individually IAS/IFRS, or collectively IFRS (International Financial Reporting Standards)). "IFRS" also means all interpretations of the International Financial Reporting Interpretations Committee (IFRIC), including those previously issued by the Standing Interpretations Committee (SIC), and approved by the European Union.
    • Annual financial statements to 31 December 2012 153 The financial statements were prepared with a focus on clarity, and provide a true and fair view of the balance sheet, financial situation, income statement and cash flows for the period. Accounting standards, amendments and interpretations applied as of 1 January 2012 The IASB-approved international accounting standards and interpretations authorised for adoption in Europe that were applied for the first time from 1 January 2012 are detailed below. None had any significant impact on the consolidated financial statements for the year to 31 December 2012. The Group did not apply any IFRSs in advance. Amendments to IFRS 7 (Financial instruments: disclosures) On 7 October 2010, the IASB published the amendment to IFRS 7 (Disclosures – transfers of financial assets), which requires further disclosure on transfers of financial assets. The changes to IFRS 7 aim to promote greater transparency in relation to the risks associated with transactions where, when a financial asset is transferred, the transferring company continues to be exposed, within certain limits, to risks associated with the derecognised financial asset (known as "continuing involvement"). Additional disclosure is also required on significant transfers of financial assets at particular times (e.g. at the end of an accounting period). The adoption of this amendment did not have any material impact on the valuation of items in the financial statements or the relative disclosure. Future accounting standards, amendments and interpretations Accounting standards, amendments and interpretations that are not yet applicable and have not been adopted in advance by the Group, but were approved for adoption in the European Union as of 28 February 2013. The International Accounting Standards, together with the interpretations and changes to existing IASB-approved accounting standards and interpretations that were ratified for adoption in the European Union on 28 February 2013, are as follows: Amendments to IAS 12 (Income taxes) On 20 December 2010, the IASB published a number of amendments to IAS 12 (Income taxes), which clarify how to calculate deferred taxes on real estate investment measured at fair value. To provide a simplified approach, the amendments introduce the presumption, when calculating deferred taxes, that the carrying amount of the underlying asset will be recovered entirely by sale, unless there is clear evidence that it can be recovered through use. As a result of these changes, the document SIC 21 (Income Taxes - recovery of revalued, non- depreciable assets) was withdrawn at the same time. The entire contents of this document are now covered in IAS 12. The amendments to IAS 12 will be applied from 1 January 2013. Amendments to IFRS 1 (First-time adoption of International Financial Reporting Standards: severe hyperinflation and removal of fixed assets for first-time adopters) On 20 December 2010, the IASB published two amendments to IFRS 1 (First-time adoption of International Financial Reporting Standards). The first amendment introduced the option for entities that are transitioning to IFRS to use the same simplified rules as those permitted to entities that made the transition to international accounting standards in 2005. The second amendment grants an exemption from the retrospective application of IFRS at first-time adoption to entities that are presenting financial statements in accordance with IFRS for the first time, having been unable to present them due to hyperinflation, allowing such entities to use fair value as a replacement for cost for all assets and liabilities presented.
    • Annual financial statements to 31 December 2012 154 The amendments to IFRS 1 will be applied from 1 January 2013. IFRS 10 (Consolidated financial statements) On 12 May 2011, the IASB published the accounting standard IFRS 10 (Consolidated financial statements), which is intended to replace IAS 27 (Consolidated and separate financial statements) and SIC 12 (Consolidation: special purpose entities). The new standard sets out a single model of consolidation that identifies control as the basis for the consolidation of all types of entities. The new standard defines the concept of control on the basis of the concurrence of three essential elements:  power over the investee company  exposure to or the right to variable returns from its involvement with the investee company  the ability to use that power over the investee to affect the amount of the investor's returns The standard will come into force from 1 January 2014, but can be applied in advance. IFRS 11 (Joint arrangements) On 12 May 2011, the IASB published the accounting standard IFRS 11 (Joint arrangements), which is intended to replace IAS 31 (Interests in joint ventures) and SIC 13 (Jointly controlled entities: non-monetary contributions by venturers). The new standard governs the principles for reporting all joint arrangements. These are divided into two categories, according to the economic substance of the arrangements between the parties:  joint operations, whereby the parties to the arrangement acquire rights to certain assets and assume obligations for certain liabilities  joint ventures, whereby the parties have rights to the net value of a set of jointly controlled assets and liabilities. In the first case, the investor recognises the assets and liabilities acquired (along with the associated income and expense) according to the IAS/IFRS standards governing the individual elements; in the second, the pro-rata interest in the joint venture is recognised using the equity method. The standard will come into force from 1 January 2014, but can be applied in advance. IFRS 12 (Disclosure of interests in other entities) On 12 May 2011, the IASB published the accounting standard IFRS 12 (Disclosure of interests in other entities) regarding the information to be provided in the financial statements on interests in other entities, including subsidiaries, associates and joint ventures. This information must enable users of the financial statements to understand the nature of the risks associated with the investments in strategic equity investments that will form part of the company's assets over the long term. The information must also indicate the effects of these investments on financial position, financial performance and cash flows. The standard will come into force from 1 January 2014, but can be applied in advance. IFRS 13 (Fair value measurement)
    • Annual financial statements to 31 December 2012 155 On 12 May 2011, the IASB published the accounting standard IFRS 13 (Fair value measurement), which provides a single definition of the concept of fair value and a framework for how it should be applied when another IFRS permits or requires its use. More specifically, IFRS 13 sets out a clear definition of fair value, which is the price that would be received to sell an asset or paid to transfer a liability in a regular transaction between market participants at the measurement date (or exit price). This definition emphasises that fair value is a measure that must be based on the market and not the valuing entity. In other words, the measurement process must take into account the assumptions that market participants would use when pricing the asset or liability in current conditions, including assumptions on risk. As a consequence, the intention to hold an asset or cancel or fail to meet a liability is of no relevance in measuring fair value. The standard will come into force from 1 January 2013, but can be applied in advance. Amendments to IAS 32 ( Offsetting financial assets and financial liabilities) On 16 December 2011, the IASB published a number of amendments to IAS 32 (Financial instruments: presentation), clarifying how certain criteria for offsetting financial assets and liabilities, as set out in IAS 32, should be applied. The amendments must be applied from 1 January 2014. Amendments to IFRS 7 (Disclosure – offsetting financial assets and financial liabilities) On 16 December 2011, the IASB published a number of amendments to IFRS 7 (Financial instruments: additional information). The amendment requires information to be disclosed on the effects or potential effects of contracts to offset financial assets and liabilities on the balance sheet. The amendments to IFRS 7 must be applied from 1 January 2013. IAS 1 (Presentation of items of other comprehensive income) On 16 June 2011, the IASB issued amendments to IAS 1 (Presentation of items of other comprehensive income), which determine the grouping and components of the statement of comprehensive income according to whether or not they can be reclassified to the income statement. The amendments to IAS 1 must be applied in the financial statements for periods starting from 1 July 2012 onwards. Amendments to IAS 19 (Employee benefits) On 16 June 2011, the IASB issued amendments to IAS 19 (Employee benefits) that introduce the obligation to recognise actuarial gains and losses in the statement of comprehensive income, removing the option of using the "corridor" method and requiring the recognition of actuarial gains and losses resulting from the revaluation of liabilities and assets in the statement of comprehensive income. The amendments to IAS 19 must be applied in the financial statements for periods starting from 1 July 2012 onwards. We do not anticipate that the potential adoption of the standards and interpretations noted above will have a material impact on the valuation of the company’s assets, liabilities, costs and revenues, except for the possible effects of any redefinition of the company’s method of consolidation in accordance with the new IFRS 10.
    • Annual financial statements to 31 December 2012 156 Accounting principles, amendments and interpretations that are not yet applicable, have not been adopted in advance by the Group and not yet approved for adoption in the European Union as of 28 February 2013 The International Accounting Standards, interpretations and changes to existing IASB- approved accounting standards and interpretations that had not been ratified for adoption in the European Union as of 28 February 2013 are as follows: IFRS 9 (Financial instruments) On 12 November 2009, the IASB issued the first part of IFRS 9, which only amends the requirements for classifying and valuing the financial assets that are currently specified in IAS 39; once completed, it will fully replace IAS 39. Financial liabilities do not fall within the scope of IFRS 9, since the IASB intends to go into greater detail on aspects related to the inclusion of own credit risk in the fair value measurement of financial liabilities. Thus, financial liabilities continue to fall within the scope of IAS 39. The endorsement process for IFRS 9 is currently on hold, and this standard is not applicable in the EU, ahead of the European Commission's full assessment of the plan to completely replace IAS 39. Amendments to IFRS 1( Government loans) On 13 March 2012, the IASB published an amendment to IFRS 1 (First-time adoption of International Financial Reporting Standards) regarding government loans taken out at interest rates lower than market rates. The amendment introduced the option for entities that are adopting IFRS for the first time to use the same simplified rules as those permitted to entities that made the transition to International accounting standards in 2005. This means they do not have to change the carrying value calculated according to previous accounting standards for loans already taken out at the date of transition to international accounting standards. The amendments to IFRS 1, which are awaiting ratification by the European Commission, must be applied in the financial statements of periods starting from 1 July 2013 onwards. They may also be applied in advance. Improvements to IFRSs 2009-2011 On 17 May 2012, the IASB published its “Annual Improvements to IFRS – 2009-2011 Cycle”, detailing the minor changes to be made to existing accounting standards. The document contains a series of improvements to five accounting standards (IFRS 1, IAS 1, IAS 16, IAS 32 and IAS 34). The amendments, which are expected to be ratified by the European Commission, will apply to financial statements for periods from 1 January 2013 onwards. They may also be applied in advance. Transition Guidance” (Amendments to IFRS 10, IFRS 11 and IFRS 12). On 28 June 2012, the IASB published “Consolidated Financial Statements, Joint Arrangements and Disclosure of Interests in Other Entities: Transition Guidance” (Amendments to IFRS 10, IFRS 11 and IFRS 12). The amendments, which clarify the temporary provisions of IFRS 10, are awaiting ratification by the European Commission and must be applied from 1 January 2013. Investment Entities (Amendments to IFRS 10, IFRS 12 and IFRS 27).
    • Annual financial statements to 31 December 2012 157 On 31 October 2012, the IASB published Investment Entities (Amendments to IFRS 10, IFRS 12 and IAS 27). The change introduced an exception to IFRS 10 stipulating that investment entities value certain subsidiaries at fair value on the income statement instead of consolidating them. The amendments, which are expected to be ratified by the European Commission, will apply to financial statements for periods from 1 January 2014 onwards. They may also be applied in advance.
    • Annual financial statements to 31 December 2012 158 B. Most important accounting principles and valuation criteria The accounting principles and valuation criteria adopted for the 2012 separate financial statements of DeA Capital are the same as those used to draw up the consolidated financial statements, with the exception of specific principles and criteria relating to the consolidated financial statements and methods for valuing subsidiaries and joint ventures, as specified below. Investments in subsidiaries and joint ventures are classified as available-for-sale assets and are measured at fair value with appropriate reserves of shareholders’ equity as a balancing entry. Current and non-current assets and liabilities An asset is considered current if it meets at least one of the following conditions:  It is expected to be converted during the company's normal operating cycle. The "company's operating cycle" means the period from the acquisition of an asset to its conversion to cash and cash equivalents. When the company's operating cycle cannot be clearly identified, its duration is assumed to be twelve months.  it is held mainly for trading purposes  its conversion is expected to occur within 12 months following the end of the financial year  it consists of cash and cash equivalents which have no restrictions that would limit its use in the 12 months following the end of the financial year All other assets are carefully analysed to separate the "current" portion from the "non-current" portion. Furthermore, deferred tax assets are recorded under non-current components. A liability is considered current if it meets at least one of the following conditions:  it is expected to be settled during the company's normal operating cycle  it is held mainly for trading purposes  its settlement is expected to occur within 12 months following the end of the financial year  the company does not have an unconditional right to defer payment of the liability for at least 12 months following the end of the financial year All other liabilities are carefully analysed to separate the "current" portion from the "non- current" portion. Furthermore, deferred tax liabilities are recorded under non-current components. Intangible assets Intangible assets are those assets with no identifiable physical form that are controlled by the company and produce future economic benefits. They are recorded under assets when it is likely that their use will generate future economic benefits and when their cost can be determined reliably. The above assets are recorded at purchase cost, or at production cost if they are generated internally. The purchase cost is represented by the fair value of the price paid to acquire the asset and all direct costs incurred to prepare the asset for use.
    • Annual financial statements to 31 December 2012 159 The carrying value of intangible assets is maintained in the financial statements if there is evidence that this value can be recovered through use or if it is likely that these assets will generate future economic benefits. The useful life of intangible assets is assessed as finite or indefinite. Intangible assets with an indefinite useful life are tested to check that their value is still appropriate whenever there are indications of possible impairment, as required by IAS 36 (Impairment of assets). Intangible assets with an indefinite useful life are not amortised. The useful life of an intangible asset with an indefinite useful life is reviewed annually to check that the underlying conditions for the classification continue to apply. Intangible assets with a finite useful life are amortised on a straight-line basis over their expected useful life. The useful life of these intangible assets is tested to check that their value is still appropriate whenever there are indications of possible impairment. Tangible assets Tangible assets are recorded at purchase price or production cost adjusted for accumulated depreciation and any impairment. Their cost includes ancillary costs and direct and indirect costs incurred at the time of purchase necessary to make the asset usable. The purchase cost is represented by the fair value of the price paid to acquire the asset and by all other direct costs incurred to prepare the asset for use. Tangible assets are depreciated on a straight-line basis over their remaining useful life, using the depreciation rates indicated in the notes on the item relating to similar groups of assets. If factors are discovered that lead the company to believe that it may be difficult to recover the net carrying value, an impairment test is performed. If the reasons for the impairment cease to exist, the carrying value of the asset is increased to its recoverable amount. Impairment Impairment always occurs when the carrying value of an asset is greater than its recoverable value. On each reporting date, the company determines whether there are any indications that an asset may be impaired. If such indications exist, the recoverable value of the asset is estimated (impairment test) and any write-down is recorded. The recoverable value of an asset is the higher of its fair value less selling costs and its value in use. IAS 36 provides instructions on determining fair value less asset selling costs, as follows:  if there is a binding sales agreement, the asset's fair value is the negotiated price  if there is no agreement, but the asset is marketed in an active market, the fair value is the current bid price (thus, the exact price on the value date and not the average price)  if no prices can be found in active markets, fair value must be determined based on valuation methods that incorporate the best information available including any recent transactions involving the same asset, after verifying that there were no significant changes in the economic environment between the date of the transactions under consideration and the valuation date IAS 36 defines value in use as the present value of future cash flows that an asset is projected to produce. The estimate of the value in use must include the items listed below:  an estimate of future cash flows that the company expects to derive from the asset  expectations of potential changes in value and the timing of such cash flows  the time value of money  other factors such as the volatility of the asset's value and the lack of a liquid market for it
    • Annual financial statements to 31 December 2012 160 Please see Appendix A of IAS 36 for more information on calculating value in use. However, the main elements for accurately estimating the value in use are: an appropriate calculation of projected cash flows and their timing, as well as the application of the right discount rate that takes into account for both the present value of money and the specific risk factors for the asset to be valued. In all cases, when calculating the value it is important to:  base cash flow projections on reasonable and sustainable assumptions that provide the best estimate of the economic conditions that are likely to exist over the remaining useful life of the asset  base cash flow projections on the most recent budget/plan approved by the investee company, which, however, must exclude any future inflows or outflows of cash that are expected to come from the future restructuring, improvement or optimisation of operating performance. Projections based on these budgets/plans must cover a maximum period of five years unless a longer period of time can be justified  Estimate higher cash flow projections for the period covered by the most recent budgets/plans by extrapolating projections based on the budgets/plans taken into consideration, and using a stable or declining growth rate for subsequent years unless a rising rate can be justified. This growth rate must not exceed the average long-term growth rate for production in the country or countries in which the investee company operates or for markets in which the asset used is placed unless a higher rate can be justified. The assumptions used to determine cash flow projections must be reasonable, and based partly on an analysis of the factors that generated differences between projections of past and current cash flows. In addition, the assumptions used to determine current cash flow projections must be checked to ensure that they are consistent with actual past results, unless in the meantime changes have occurred in the investee company's business model or in the economic environment in which it operates that justify changes vis-a-vis the past. Financial assets Based on the classification of financial assets required by IAS 39, the company classified its financial assets at the time of the acquisition of each individual asset. Minority interests in companies and investments in funds, which constitute the main, predominant area of the Parent Company's operations, are classified under available-for-sale assets, which are recorded at fair value with a balancing item in shareholders' equity. Fair value is the payment for which an asset could be exchanged in a free transaction between knowledgeable and independent parties. In the case of securities traded in active regulated markets, fair value is determined based on the bid price recorded on the last trading day of the related accounting period. In the case of assets not listed on active markets, such as the company’s direct investments in companies and its investments in venture capital funds, the fair value reported in the financial statements is determined by the directors based on their best estimate and judgment, using the knowledge and evidence available when the financial statements are prepared. In these cases, the company acts in accordance with the provisions of the IAS. In particular, IAS 39 specifies that:  if there are recent transactions related to the same financial instrument, these may be used to determine fair value after verifying that there have been no significant changes in the economic environment between the date of the transactions being considered and the valuation date  if there are transactions involving similar financial instruments, these may be used to determine fair value after verifying the similarity (as a function of the type of business,
    • Annual financial statements to 31 December 2012 161 size, geographic market, etc.) between the instrument for which transactions have been found and the instrument to be valued  if no prices can be found in active markets, fair value must be determined using valuation models that account for all factors that market participants would consider in setting a price However, due to objective difficulties in making assessments and the lack of a liquid market, the values assigned to such assets could differ, and in some cases significantly, from those that could be obtained when the assets are sold. Direct investments in companies that are neither subsidiaries nor associates and in venture capital funds are classified as available-for-sale financial assets, which are initially reported at fair value on the date of the original posting. These assets are measured at fair value when all interim and full-year financial statements are prepared. Gains and losses from fair value measurement are posted to a special shareholders' equity reserve called the "fair value reserve" until the investment is sold or otherwise disposed of, or until impairment occurs, in which cases the gain or loss previously recorded in the fair value reserve is posted to the income statement for the period. At each reporting date, a test is performed to show objective evidence of impairment following one or more events that have occurred after the initial recording of the asset, and that this event (or events) has an impact on the estimated cash flow from the financial asset. For equity instruments, a significant or prolonged reduction in fair value below their cost is considered to be objective evidence of impairment. Although International Accounting Standards introduced an important reference to quantitative parameters that must be adhered to, they do not govern quantitative limits to determine when a loss is significant or prolonged. DeA Capital S.p.A. has therefore adopted an accounting policy that defines these parameters. In particular, "significant" means there has been an objective reduction in value when fair value is more than 35% below its historical cost. In this case, impairment is recorded in the income statement without further analysis The duration of the reduction in value is deemed to be prolonged when the reduction of fair value below historical cost continues for a period of over 24 months. After exceeding 24 months, impairment is recorded in the income statement without further analysis Derivatives Derivatives contracts are recorded in the balance sheet at fair value. Fair value changes are reported differently depending on their designation (hedging or speculative) and the nature of the risk hedged (fair value hedge or cash flow hedge). For contracts designated for hedging purposes, the company documents this relationship when the hedge is established. The documentation includes identification of the hedging instrument, the item or transaction hedged, the nature of the risk hedged, the criteria used to ascertain the effectiveness of the hedging instrument as well as the risk. The hedge is considered effective when the projected change in fair value or in the cash flows of the hedged instrument is offset by the change in fair value or in the cash flows of the hedging instrument, and the net results fall within the range of 80% to 125%. If the instruments are not, or cannot be, designated as hedging instruments, they must be considered "speculative"; in this case, fair value changes are posted directly to the income statement. In the case of fair value hedges, changes in the fair value of the hedging instrument and the hedged instrument are posted to the income statement regardless of the valuation criterion
    • Annual financial statements to 31 December 2012 162 used for the hedged instrument. In the case of cash flow hedges, the portion of the fair value change in the hedging instrument that is recognised as an effective hedge is posted to shareholders' equity, while the portion that is not effective is posted to the income statement. Receivables and payables A receivable is first reported at fair value on the date it is agreed. After initial reporting, receivables are valued at amortised cost. Payables that fall due within normal contractual terms are initially posted at fair value and later valued at amortised cost. Held-for-sale assets A non-current asset or disposal group is classified as held for sale if the carrying value will mainly be recovered from its sale or disposal instead of its ongoing use. In order for this to occur, the asset or disposal group must be available for immediate sale in its current condition, and the sale must be highly likely. Assets meeting the criteria to be classified as held-for-sale assets are valued at the lower of carrying value and sales value adjusted for any related costs. Own shares Own shares are not considered financial assets of the company that issued the shares. The purchase and sales value of own shares is recorded as a change to shareholders' equity. No gain or loss is reported in the income statement for the sale, purchase, issue or cancellation of own shares. Fair value reserve The fair value reserve incorporates fair value changes to entries measured at fair value with a balancing entry in shareholders' equity. Cash and cash equivalents Cash and cash equivalents include cash at hand, demand deposits and short-term, highly liquid financial investments that are readily convertible to cash and subject to a negligible risk of price variation. Their value is reported at fair value. Provisions for risks and future liabilities If necessary, the company records provisions for risks and future liabilities when:  it has a legal or implicit obligation to third parties resulting from a past event  it is likely that it will be necessary to use company resources to fulfil the obligation  a reliable estimate can be made of the amount of the obligation Provisions are recorded based on the projected value and discounted as necessary to present value if the time value is considerable. Changes in estimates are recognised in the income statement of the period in which the change occurs. Income tax Current income taxes are determined and reported on the basis of a reasonable forecast of tax liability by applying the tax rates in force to taxable income, taking into account any exemptions and tax credits to which the company may be entitled.
    • Annual financial statements to 31 December 2012 163 Deferred tax liabilities are allocated for all temporary differences between the carrying value of the assets and liabilities and the corresponding amount for tax purposes. Deferred tax assets are recorded for all deductible temporary differences and for tax assets and liabilities carried forward if it is likely there will be sufficient future taxable profit against which the deductible temporary differences and the tax assets and liabilities carried forward can be used. Deferred taxes are classified under non-current assets and liabilities and are determined using tax rates expected to be applicable in the years when the temporary differences will be realised or will expire. The carrying values of deferred tax assets are analysed periodically and reduced if it is not likely that sufficient taxable income will be generated against which the benefits resulting from such deferred assets can be used. Revenues and income Service revenues are recognised at the time the services are rendered based on the progress of the activity on the reporting date. Income from equity investments for dividends or for their full or partial sale is reported when the right to receive payment is determined, with a balancing item (receivable) at the time of the sale or decision to distribute dividends by the entity or appropriate body. Interest is reported using the effective interest rate method. Employee benefits Short-term employee benefits, whether in cash or in kind (meal vouchers) are reported in the income statement in the period when the work is performed. Employee benefits related to participation in a defined benefit plan are determined by an independent actuary using the projected unit credit method. Actuarial gains and losses are posted to the income statement in the period in which they occur, only using the corridor method to record the gains or losses if these exceed a certain percentage of the obligation. Employee benefits in respect of participation in a defined contribution plan only relate to those plans under mandatory government administration. The payment of contributions fulfils the company's obligation to its employees. Thus, contributions are costs in the period in which they are payable. Benefits have been provided in the form of stock options and share-based payments. This applies to all employees eligible for stock option plans. The cost of these transactions is determined with reference to the fair value of the options on the date allocation is made and is reported over the period from such date until the expiry date with a balancing entry in shareholders' equity. The cost of stock options for the company's directors and employees is determined in the same way. Warrants Warrants issued by the company, which do not meet the requirements either for being classified as share-based payments to employees pursuant to IFRS 2 or as financial liabilities, are treated as company equity instruments.
    • Annual financial statements to 31 December 2012 164 Earnings per share In accordance with IAS 33, basic earnings per share are determined as the ratio of net profit for the period attributable to holders of Parent Company shares to the weighted average number of shares outstanding during the period. Own shares in the portfolio are, of course, not included in this calculation. Diluted earnings per share are calculated by adjusting the weighted average number of shares outstanding for all potential ordinary shares resulting from the potential exercise of assigned stock options, which may result in a diluting effect.
    • Annual financial statements to 31 December 2012 165 C. Changes in accounting principles and the treatment of errors Accounting principles are changed from one year to another only if the change is dictated by an accounting standard or if it contributes to providing more reliable information or more complete reporting of the impact of transactions on the company's balance sheet, income statement and cash flow statement. Changes in accounting principles are applied retroactively with the impact reflected in shareholders' equity in the first of the periods presented. Comparative reporting is adapted accordingly. The prospective approach is used only when it is not practical to restate comparative reporting. The application of a new or amended accounting standard is recorded as required by the standard itself. If the standard does not specify transition methods, the change is reflected retroactively, or if impractical, prospectively. If there are significant errors, the same treatment dictated for changes in accounting principles is used. If there are minor errors, corrections are posted to the income statement in the period when the error is discovered.
    • Annual financial statements to 31 December 2012 166 D. Use of estimates and assumptions in preparing the financial statements The company's management must make assessments, estimates and assumptions that affect the application of accounting standards and the amounts of assets, liabilities, costs and revenues recorded in the financial statements. Estimates and related assumptions are based on past experience and other factors deemed reasonable in the case concerned; these have been used to estimate the carrying value of assets and liabilities that cannot be easily obtained from other sources. These estimates and assumptions are reviewed regularly. Any changes resulting from revisions to accounting estimates are recorded in the period when the revision is made if such revisions only affect that period. If the revision affects current and future periods, the change is recorded in the period in which the revision is made and in related future periods. Financial statement balances are reported and valued using the valuation criteria described above. At times the application of these criteria involves the use of estimates that may have a significant impact on amounts reported in the financial statements. Estimates and related assumptions are based on past experience and factors deemed reasonable in the case concerned; these are used to estimate the carrying value of assets and liabilities that cannot be easily obtained from other sources. However, since these are estimates, the results obtained should not necessarily be considered definitive. With the understanding that the use of reasonable estimates is an essential part of preparing financial statements, the items where the use of estimates is most prevalent are stated below:  valuation of financial assets not listed in active markets  valuation of financial assets listed in active markets but considered illiquid on the reference market  valuation of equity investments The process described above is made particularly complicated by the unusual levels of volatility in the current macroeconomic and market environment, which affect financial indicators that have a bearing on the above valuations.   An estimate may be adjusted as a result of changes in the circumstances on which it was based, or as a result of new information. Any change in the estimate is applied prospectively and has an impact on the income statement in the period in which the change occurred and potentially on income statements in future periods. As highlighted earlier, a significant proportion of the assets shown in the annual financial statements of DeA Capital S.p.A. is represented by unlisted financial investments. These investments are measured at their fair value, calculated by directors based on their best estimate and judgement using the knowledge and evidence available at the time the financial statements are prepared. However, due to objective difficulties in making assessments and the lack of a liquid market, the values assigned to such assets could differ, and in some cases significantly, from those that could be obtained when the assets are sold.
    • Annual financial statements to 31 December 2012 167 Notes to the balance sheet NON-CURRENT ASSETS 1 – Intangible and tangible assets 1a – Intangible assets Changes in intangible assets are shown in the tables below: (Euro thousand) Historic cost at Jan. 1, 2012 Cum. amort. & prov. charges at Jan. 1, 2012 Net book value at Jan. 1, 2012 Historic cost at Dec. 31, 2012 Cum. amort. & prov. charges at Dec. 31, 2012 Net book value at Dec. 31, 2012 Concessions, licence fees & trademarks 300 (292) 8 327 (312) 15 Total 300 (292) 8 327 (312) 15 (Euro thousand) Balance at Jan.1, 2012 Merger IDeA AI Additions Amortization Balance at Dec.31, 2012 Concessions, licence fees & trademarks 8 11 7 (11) 15 Total 8 11 7 (11) 15 The increase in "concessions, licences and trademarks" relates to the acquisition of new software licences, the cost of which is amortised over three years. 1b – Tangible assets Changes in tangible assets are shown in the tables below: (Euro thousand) Historic cost at Jan. 1, 2012 Cum. deprec. & prov. charges at Jan. 1, 2012 Net book value at Jan. 1, 2012 Historic cost at Dec. 31, 2012 Cum. deprec. & prov. charges at Dec. 31, 2012 Net book value at Dec. 31, 2012 Plant 198 (188) 10 227 (220) 7 Furniture and fixtures 470 (442) 28 571 (519) 52 Computer and office equipment 228 (207) 21 245 (234) 11 Leasehold improvements 0 0 0 393 0 393 Non-depreciable tangible assets 28 0 28 28 0 28 Total 924 (837) 87 1,464 (973) 491 (Euro thousand) Balance at Jan.1, 2012 Merger IDeA AI Additions Decrease (cost) Decrease (cum. deprec.) Depreciation Balance at Dec.31, 2012 Plant 10 9 1 0 0 (13) 7 Furniture and fixtures 28 63 0 0 0 (39) 52 Computer and office equipment 21 11 3 (2) 1 (23) 11 Leasehold improvements 0 0 393 0 0 0 393 Non-depreciable tangible assets 28 0 0 0 0 0 28 Total 87 83 397 (2) 1 (75) 491 Depreciation is calculated on a straight-line basis, based on the estimated useful life of the asset. The depreciation rates used in the financial statements are 20% for specific plant assets, 12% for furniture and furnishings, and 20% for electronic office equipment. Acquisitions relate to improvements made to the building that will be leased to the DeA Capital Group from 2013. Depreciation on leasehold improvements will be charged from the actual date that the building comes into use in 2013.
    • Annual financial statements to 31 December 2012 168 2 – Financial investments 2a – Equity investments in subsidiaries Equity investments in subsidiaries are measured at fair value in accordance with IAS 39. For the method of determining fair value, please refer to the relevant paragraphs in the section "Key accounting principles and valuation criteria adopted". Details of the existing equity investments at 31 December 2012 are shown in the table below: (Euro thousand) % shareholding at Dec. 31,2012 Value at Dec. 31, 2012 % shareholding at Dec. 31,2011 Value at Dec. 31, 2011 DeA Capital Investments S.A. 100.00% 583,721 100.00% 552,491 DeA Capital Real Estate S.p.A. 100.00% 116,203 70.00% 80,123 I.F.IM. S.r.l. 100.00% 77,494 58.31% 22,131 IDeA Capital Funds SGR S.p.A. 100.00% 53,709 0 0 IDeA SIM S.p.A. 100.00% 126 0 0 IDeA Alternative Investments S.p.A. 0 0 100.00% 62,385 Total 831,253 717,130 I.F.IM. S.r.l. On 11 April 2012 an agreement was signed with Massimo Caputi and the company he controls, Feidos S.p.A., which together own a stake of 41.69% in IFIM S.r.l., which in turn holds 20.98% in IDeA FIMIT SGR S.p.A., to bring forward the exercise of put options on the stakes in IFIM S.r.l. held by Massimo Caputi and Feidos. The transaction, which enabled DeA Capital S.p.A. to acquire full control of IFIM S.r.l., was concluded for EUR 19.3 million. Subsequently, on 7 May 2012, DeA Capital S.p.A. waived the receivable of EUR 35.8 million arising from the loan agreement signed the previous year. This amount was added to the value of the equity investment. DeA Capital Real Estate S.p.A. On 28 March 2012, an agreement was signed with Deb Holding, a company controlled by the director Daniel Buaron that holds 30% of the share capital of DeA Capital Real Estate S.p.A. (formerly FARE Holding). The purpose of the agreement was to bring forward, with effect from 24 April 2012, the exercise of put option on the stake held by Deb Holding to DeA Capital S.p.A. Under the agreements stipulated, on 24 April 2012, DeA Capital S.p.A. acquired full control of DeA Capital Real Estate S.p.A. IDeA Capital Funds SGR S.p.A. and IDeA SIM S.p.A. With a view to simplifying the shareholder structure, IDeA Alternative Investments S.p.A (IDeA AI) was merged with DeA Capital S.p.A. on 1 January 2012. The purpose of the merger, which entails the reorganisation of the DeA Capital Group’s corporate structure, is to centralise within the Parent Company the cash flows from, and the determination of strategic guidelines for, the Alternative Asset Management business. Following the merger of IDeA AI, DeA Capital holds 100% of IDeA Capital Funds SGR S.p.A., a company active in the management of private equity funds (funds of funds, co-investment funds and theme funds) and 65% of IDeA SIM.
    • Annual financial statements to 31 December 2012 169 The changes in the item in question at 31 December 2012 compared with end-2011, apart from the effects of the merger of IDeA AI, relate to: - an increase of EUR 33,033 thousand for the purchase of the remaining stake in DeA Capital Real Estate S.p.A. - an increase of EUR 19,280 thousand for the purchase of the remaining stake in IFIM S.r.l. and the conversion of the loan for EUR 35,800 thousand - an increase of EUR 191 thousand, for capital increases in IDeA SIM - the measurement at fair value of the subsidiaries, which entailed increases of EUR 31,231 thousand for DeA Capital Investments S.A., EUR 3,047 thousand for DeA Capital Real Estate S.p.A., and EUR 283 thousand for IFIM S.r.l., and decreases of EUR 76 thousand for IDeA SIM S.p.A. and EUR 3,044 thousand for IDeA Capital Funds SGR S.p.A. A list of the investments with the information required under art. 2427 of the Italian Civil Code is shown in the table below: LIST OF INVESTMENTS IN SUBSIDIARIES AND JOINT VENTURE AS DEC. 31, 2012 DeA Capital Investments S.A. Luxembourg, Luxembourg Euro 515,992,516 583,721,277 (30,115,532) 100.00% 583,721,277 583,721,277 DeA Capital Real Estate S.p.A. Milan, Italy Euro 600,000 25,659,947 17,032,066 100.00% 25,659,947 116,202,821 I.F.IM. S.r.l. Milan, Italy Euro 10,000 48,677,778 1,697,249 100.00% 48,677,778 77,494,000 IDeA Capital Funds SGR S.p.A. Milan, Italy Euro 1,200,000 6,579,907 4,450,690 100.00% 6,579,907 53,709,487 IDeA SIM S.p.A. Milan, Italy Euro 120,000 193,591 (259,251) 65.00% 125,834 125,834 Total (7,194,778) 664,764,743 831,253,419 Company Registered Office Curren cy Share Capital Book Value (€uro) Total Net Equity Net profit/(loss) for the year % holding Value of share of net equity (€uro) 2b – Equity investments in associates Equity investments in associates comprise the investment in Harvip Investimenti S.p.A. (Harvip), a company operating in the management of funds or investment vehicles dedicated to the purchase of distressed real estate and other assets, for a price of EUR 1 million, and the investment in Soprarno SGR S.p.A., arising from the merger with IDeA AI, for EUR 1,598 thousand. On 29 November 2012, Soprarno S.G.R.’s shareholder structure was restructured with the resulting reduction in DeA Capital 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 for Ifigest 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 business held by Cassa di Risparmio di San Miniato (CARISMI) to Soprarno SGR: the business was valued at around EUR 4.5 million (in line with the value attributed to Soprarno SGR). Details of the existing investments at 31 December 2012 are shown in the table below:
    • Annual financial statements to 31 December 2012 170 (Euro thousand) Balance at Jan.1, 2012 Merger IDeA Share capital increase Fair value adjustment Impairment recorded in Income Statement Decrease Balance at Dec. 31, 2012 Harvip Investimenti S.p.A. 1,000 0 0 0 0 0 1,000 Soprarno SGR S.p.A. 0 2,597 0 0 (499) (500) 1,598 Total 1,000 2,597 0 0 (499) (500) 2,598 2c – Equity investments in other companies Equity investments in other companies totalled EUR 287 thousand and comprise three direct minority investments in foreign companies and a direct minority investment in Alkimis SGR, arising from the merger with IDeA AI. 2d - Available-for-sale funds This item relates to investments in seven venture capital funds totalling EUR 10,122 thousand, compared with EUR 12,234 thousand at the end of 2011, and four funds arising from the merger with IDeA AI, in an amount of EUR 3,242 thousand, as shown in the table below: (Euro thousand) Balance at Jan. 1, 2012 Merger IDeA AI Increase (capital call) Decrease (Capital Distribution) Impairment Fair Value Adjustment Translation adjustment Balance at Dec. 31, 2012 Venture Capital Funds 12,234 0 0 (857) (496) (488) (271) 10,122 Other funds 0 2,755 840 (318) 0 (35) 0 3,242 Total Funds 12,234 2,755 840 (1,175) (496) (523) (271) 13,364 During the year, the company received capital distributions of EUR 1,175 thousand, which had a positive impact on the income statement of EUR 1,385 thousand. The fair value measurement of investments in venture capital funds at 31 December 2012, carried out based on the information and documents received from the funds, as well as other available information, meant that the amount had to be written down along with the related exchange effect by EUR 496 thousand; the significant reduction to below cost was considered clear evidence of impairment. The other changes were for the decrease in fair value (and related exchange effect) of EUR 794 thousand. 2e - Loans to subsidiaries This item had a zero balance at 31 December 2012 (compared with EUR 37,307 thousand at end-2011, which related to the credit line granted to the subsidiary IFIM S.r.l.). 3 – Other non-current assets 3a – Deferred tax assets Deferred tax assets of EUR 837 thousand were fully offset against deferred tax liabilities. The changes in deferred tax assets and deferred tax liabilities are shown in the table below:
    • Annual financial statements to 31 December 2012 171 (Euro thousand) At December 31, 2012 Merger IDeA AI Taken to the income statement Taken to equity At December 31, 2012 Total prepaid tax assets 0 0 0 0 0 Prepaid tax assets from: - securities available-for-sale (1,230) (75) 0 468 (837) Total deferred tax liabilities (1,230) (75) 0 468 (837) Losses carried forward available for offset against future taxable profits 1,230 0 (393) 0 837 Total prepaid tax assets, net of deferred tax liabilities 0 (75) (393) 468 0 No deferred tax assets were allocated against the significant tax losses of DeA Capital S.p.A. (of around EUR 108,074 thousand (to be reported without limitation). This was because there was insufficient evidence to indicate that in future periods it would be possible to generate sufficient taxable income against which these tax losses could be recovered.   Deferred taxes were calculated using the liability method based on the temporary differences at the reporting date between the tax amounts used as a reference for the assets and liabilities and the amounts reported in the financial statements. 4 – Current assets At 31 December 2012, current assets were approximately EUR 44,398 thousand, compared with EUR 45,287 thousand at 31 December 2011. 4a – Trade receivables This item totalled EUR 2,149 thousand (EUR 217 thousand at 31 December 2011) and relates to: - EUR 306 thousand from De Agostini S.p.A. for the agreement to sublet rented premises and the reimbursement of costs associated with this agreement, and for the pro-rata reimbursement for leasehold improvements relating to the building at Via Brera, 21 - EUR 64 thousand from IRE S.p.A., EUR 737 thousand from IDeA FIMIT SGR S.p.A, EUR 357 thousand from IDeA Capital Funds SGR S.p.A., EUR 20 thousand from De Agostini Publishing Italia S.p.A. for the pro rata reimbursement for leasehold improvements relating to the building at Via Brera, 21 - EUR 1 thousand from IDeA SIM S.p.A. for the inter-company consultancy agreement signed with the Parent Company - EUR 151 thousand from Santé S.A. for remuneration due as part of the subsidiary’s “director fee” agreement - EUR 500 thousand from Banca Ifigest S.p.A. for the sale of part of the stake in Soprarno SGR S.p.A. These receivables break down by geographical area as follows: - 53.95% from Italian subsidiaries - 23.36% from Italian customers - 14.22% from Italian parent companies - 7.03% from Luxembourg associates - 0.95% from Italian affiliates - 0.49% from Italian associates
    • Annual financial statements to 31 December 2012 172 4b – Available-for-sale financial assets The item, which totalled EUR 5,297 thousand at 31 December 2011, had a zero balance at the end of 2012 due to the divestment of 1,006,392.58 units in the Soprarno Pronti Termine fund, which had a negative impact of EUR 7 thousand on the income statement. 4c - Financial receivables This item totalled EUR 31,270 thousand (EUR 2,880 thousand at 31 December 2011) and relates to: - EUR 31,100 thousand for the revolving line of credit of EUR 40 million signed on 18 March 2011 with the subsidiary DeA Capital Investments S.A. (maturing on 15 March 2014 with a variable rate of 3-month Euribor + a spread) - EUR 170 thousand for interest accrued on this line of credit but not yet paid by DeA Capital Investments S.A. 4d – Tax receivables relating to the tax consolidation scheme entered into by the parent companies This item totalled EUR 7,489 thousand (EUR 5,929 thousand at 31 December 2011) relates to the receivable from the Parent Company B&D Holding di Marco Drago e C. S.a.p.A. for participation in the tax consolidation scheme. 4e – Other tax receivables Tax receivables were EUR 1,270 thousand (EUR 1,810 thousand at 31 December 2011) and related to: - tax deductions in the form of advance payments on interest of EUR 48 thousand - tax deductions in the form of advance payments on the partial sale of the Soprarno Pronti Termini bond fund in the amount of EUR 37 thousand - regional tax on manufacturing operations (IRAP) credits to be carried forward arising from the tax return for the previous year of EUR 168 thousand - a receivable arising from the previous year’s VAT declaration, in the amount of EUR 965 thousand - a receivable of EUR 52 thousand due to the change in the percentage against which VAT may be offset from 99% to 44% 4f – Other receivables These receivables totalling EUR 68 thousand (EUR 97 thousand at 31 December 2011) relate mainly to receivables for guarantee deposits, advances to suppliers and prepaid expenses. These receivables fall due within the next year. 4g – Cash and cash equivalents This item consists of bank deposits and cash (EUR 5 thousand), including interest accrued at 31 December 2012. At the end of 2012, this came in at EUR 2,153 thousand, compared with the figure of EUR 29,057 thousand recorded at the end of 2011. This decrease is primarily due to the combined effect of the following factors: - receipt of dividends of EUR 4,060 thousand from DeA Capital Real Estate S.p.A. and of EUR 4,800 thousand from IDeA Capital Funds SGR S.p.A. - draw down of EUR 20,000 thousand from the credit line taken out with Mediobanca - receipt of EUR 5,180 thousand for the complete liquidation of the Soprarno Pronti Termine fund and EUR 1,249 thousand for the partial liquidation of the equity investment in Soprarno SGR S.p.A.
    • Annual financial statements to 31 December 2012 173 - outlay of EUR 3,668 thousand for payment of the fourth tranche of the deferred price in the transaction to purchase FARE Holding (now DeA Capital RE) - interest, commission and bank fees of EUR 2,583 thousand in relation to the credit lines taken out with Mediobanca - service expenses of EUR 7,629 thousand - the purchase of own shares in the amount of EUR 8,001 thousand - outlay of EUR 19,280 thousand for the acquisition of the remaining stake in IFIM S.r.l. - outlay of EUR 28,600 thousand for the credit line granted to the subsidiary DeA Capital Investments S.A. Please see the company’s cash flow statement for further information on changes to this item. 5 – Shareholders' equity At 31 December 2012, shareholders’ equity totalled approximately EUR 740,384 thousand, compared with EUR 714,039 thousand at 31 December 2011. The decrease of around EUR 26,345 thousand in shareholders’ equity in 2012 was mainly due to: - an increase of EUR 27,743 thousand in the fair value reserve - the purchase of own shares in the amount of EUR 8,001 thousand - reserves of EUR 1,183 thousand arising from the merger with IDeA AI - the profit of EUR 2,269 thousand for the period Please see the statement of changes in shareholders’ equity for more information on the main changes in this item. 5a – Share capital Share capital (fully subscribed and paid up) totalled EUR 306,612,100, represented by 306,612,100 shares (of which 32,006,029 own shares) with a nominal value of EUR 1 each. Given that the nominal value of the 32,006,029 own shares held at 31 December 2012 is deducted from total share capital, share capital of EUR 274,606,071 was reported in the financial statements. Changes in share capital are shown in the table below: (Euro thousand) no. of shares amount no. of shares amount Share Capital 306,612,100 306,612 306,612,100 306,612 of which: Treasury shares (32,006,029) (32,006) (25,915,116) (25,915) Share Capital (excluding treasury shares) 274,606,071 274,606 280,696,984 280,697 31.12.2012 31.12.2011 The table below shows a reconciliation of the shares outstanding:
    • Annual financial statements to 31 December 2012 174 Shares issued Treasury shares held Shares outstanding December 31, 2011 306,612,100 (25,915,116) 280,696,984 2012 movements Share capital increase 0 0 0 Treasury shares purchased 0 (6,090,913) (6,090,913) Treasury shares sold 0 0 0 Treasury shares disposed for 0 0 0 Used for stock option plan 0 0 0 Shares issued through exercise of stock options 0 0 0 December 31, 2012 306,612,100 (32,006,029) 274,606,071 5b – Share premium reserve (net of share issue costs reserve) This item decreased by EUR 1,910 thousand (from EUR 388,362 thousand at 31 December 2011 to EUR 386,452 thousand at 31 December 2012) after posting the purchase of own shares to this reserve. 5c – Legal reserve This reserve totalled EUR 61,322 thousand, which was unchanged from the figure at 31 December 2011. 5d – Fair value reserve The fair value reserve was positive at EUR 26,088 thousand (compared with a negative balance of EUR 1,655 thousand at 31 December 2011) and comprises: - the reserve for first-time adoption of IAS/IFRS, which was negative at EUR 3,745 thousand, compared with a negative balance of EUR 337 thousand at 31 December attributable to the merger with IDeA AI - a positive fair value reserve of EUR 29,833 thousand compared with a negative value of 1,318 thousand at 31 December 2011. The table below shows a summary of the change in this item during the year: (Euro thousand) Balance at Jan. 1, 2012 Merger IDeA AI Fair Value Reserve reclying with Impairment Change in Fair Value Tax effect Balance at Dec. 31, 2012 Direct Investments / Shareholdings (2,612) 140 0 31,405 239 29,172 Venture Capital Funds 1,210 0 0 (759) 210 661 Available-for-sale financial assets 84 0 0 (84) 0 0 Fair value reserves IFRS transition and other (337) (3,408) 0 0 0 (3,745) Total (1,655) (3,268) 0 30,562 449 26,088
    • Annual financial statements to 31 December 2012 175 5e – Other reserves This item consists of: - a reserve for stock option costs totalling EUR +919 thousand - a reserve for the merger of the subsidiary IDeA AI totalling EUR -831 thousand - a reserve for the sale of option rights, unchanged from 31 December 2011, totalling EUR + 413 thousand. This originated from the sale of the remaining option rights to subscribe to a capital increase that had not been exercised by the shareholders, and were sold by the company 5f – Retained earnings (losses) carried forward This item, which totalled EUR -10,854 thousand, encompasses earnings and losses carried forward from previous years, including EUR 5,242 thousand arising from the merger with IDeA AI. 5g – Profit (loss) for the year This item includes profit of EUR 2,269 thousand for the year 2012, compared with a loss of EUR 32,086 for the year 2011. Art. 2427, para. 1 no. 7-bis) of the Italian Civil Code: details of shareholders' equity items The table below shows a breakdown of shareholders’ equity items at 31 December 2012, with details of their origin, how they can be used and paid out, and use in previous years: Description (Euro) Possible use Share available other Share capital = = Share capital reserves: Share premium A,B,C 394,280,415 6,304,717 28,946,835 Profit reserves: Legal reserve B = = Reserve for the cost of share issue = = = = Stock option reserve = = = = Reserve for the sale of rights = = = = Merger reserve = = = = Fair value reserve = = = = Profit/(loss) brought forward A,B,C = = Net loss for the year = = = = TOTAL 394,280,415 Key: A capital increase, B to cover losses, C for distribution to shareholders 394,280,415 Amount 412,798 740,383,923 (831,486) 26,088,064 76,808,340 2,269,268 Summary of use in previous years 274,606,071 919,010 (7,828,172) =61,322,420 (10,854,465) Losses coverage 6 – Non-current liabilities 6a – End-of-service payment fund The end-of-service payment fund is a defined benefit plan, and has therefore been valued using actuarial assessments. The assumptions used in calculating the fund were: a discount rate of 2.7%; an annual rate of inflation of 2.0%; annual salary growth of 3.0%; and an annual fund growth rate of 3.0%. The change in the end-of-service payment fund was as follows: (Euro thousand) Balance at Jan 1., 2012 Merger IDeA AI Portion matured Payments Advances Balance at Dec. 31, 2012 Movement in provision 192 16 148 (40) 0 316
    • Annual financial statements to 31 December 2012 176 The amounts concerned were calculated as follows: (Euro thousand) 31.12.2012 31.12.2011 Nominal value of provision 301 237 Discounting effect 15 (45) Total provision 316 192 6b – Financial liabilities This item totalled EUR 102,987 thousand (EUR 93,008 thousand at 31 December 2011) and relates to: - An earn-out payment (maturing in 2014) of EUR 2,156 thousand, inclusive of interest calculated at present value accrued from the closing date (12 December 2008) to 31 December 2012, equal to EUR 244 thousand. This earn-out, which DeA is required to pay to the seller, is equal to 50% of the portion of any performance fees accrued on certain of the funds managed by IDeA FIMIT SGR S.p.A. (formerly FARE SGR). - An amount of EUR 100,000 thousand for the use of the credit line provided by Mediobanca for the same amount (maturing on 16 December 2015 and subject to a variable rate of 3- month Euribor + spread). On 31 December 2012, the covenant tests for this credit line were successfully passed (i.e. debt and debt to equity). - a liability of EUR 831 thousand due to the decrease in the fair value of the interest rate swap contracts to partially hedge interest rate risk on the debt exposure with Mediobanca (maturing on 30 July 2013)   6c – Payables to staff This item includes an amount of EUR 1,189 thousand for the incentive scheme, valued in accordance with IFRS 2, which confers on beneficiaries the right to receive a cash award linked to corporate performance over the medium-term horizon (the three year period 2012 – 2014). 7 – Current liabilities Total current liabilities amounted to EUR 47,531 thousand (EUR 5,814 thousand at 31 December 2011) and are all due within the following year. These payables are not secured on any company assets. These liabilities are made up of the items detailed below. 7a – Trade payables This item totalled EUR 2,526 thousand, compared with EUR 769 thousand in 2011, and result from ordinary operations. With regard to transactions with related parties, this item includes: - payables to the Parent Company, De Agostini S.p.A., of EUR 25 thousand - payables to affiliate De Agostini Editore S.p.A. of approximately EUR 46 thousand - payables to affiliate De Agostini Libri S.p.A. of approximately EUR 1 thousand - payables to affiliate Soprarno SGR S.p.A. of approximately EUR 86 thousand - payables to the subsidiary IRE of approximately EUR 57 thousand - payables to the subsidiary IDeA FIMIT SGR S.p.A. of approximately EUR 27 thousand
    • Annual financial statements to 31 December 2012 177 A breakdown of these payables by geographical area is set out below: - 90.04% due to suppliers in Italy - 3.41% due to suppliers in respect of associates in Italy - 3.29% due to suppliers in respect of subsidiaries in Italy - 1.85% due to suppliers in respect of affiliates in Italy - 1.01% due to suppliers in respect of parent companies in Italy - 0.22% due to suppliers in the UK - 0.18% due to suppliers in the US Trade payables do not accrue interest and are settled, on average, within 30 to 60 days. 7b – Payables in respect of staff and social security organisations This item amounted to EUR 1,201 thousand (EUR 956 thousand at 31 December 2011) and breaks down as follows: - EUR 609 thousand for payables to social security organisations, paid after the end of financial year 2012 - EUR 592 thousand for payables to staff for holidays not taken, and accrued bonuses 7c – Other tax payables This item amounted to EUR 195 thousand (EUR 159 thousand at 31 December 2011) and consists of payables to the tax authorities in respect of taxes deducted from the income of employees and self-employed staff. 7d – Short-term financial payables These financial payables totalling EUR 43,585 thousand (EUR 3,911 thousand at 31 December 2011) are mostly attributable to the acquisition of the FARE Group in December 2008. This amount comprises: - the payable for the deferred purchase price (deferred price) of EUR 3,450 thousand - interest accrued from the closing date (12 December 2008) to 31 December 2012, totalling EUR 218 thousand - the amount that DeA Capital is required to pay to the seller for 100% of the units of the Atlantic 1 and Atlantic 2 funds totalling EUR 6,963 thousand - the payable for the remaining 30% of DeA Capital Real Estate S.p.A. (formerly FARE Holding S.p.A.) of EUR 31,012 thousand, inclusive of interest expenses calculated at present value, accrued from the closing date up to 31 December 2012, of EUR 616 thousand - the payable for the additional price to be paid to the seller of EUR 1,702 thousand - an accrued expense in respect of the line of credit provided by Mediobanca totalling EUR 240 thousand
    • Annual financial statements to 31 December 2012 178 Notes to the income statement 8 – Revenues and income 8a – Investment income and expenses Net income arising from investments totalled EUR 8,919 thousand (compared with net expenses of EUR 24,663 thousand incurred in 2011). Details of this item are shown below: (Euro thousand) Year 2012 Year 2011 Dividends from subsidiaries 8,860 67,563 Gains from venture capital fund distributions 1,385 1,480 Gains from disposals 47 626 Gains from investments 10,292 69,669 Impairment Soprarno SGR S.p.A. 499 0 Impairment DeA Capital Investments S.A. 0 93,301 Losses on sheres distributed 0 142 Impairment Kovio 0 43 Impairment venture capital funds 874 846 Charges from investments 1,373 94,332 Total 8,919 (24,663) Dividends from subsidiaries and other income This item is formed of dividends distributed by IDeA Capital Funds SGR S.p.A., totalling EUR 4,800 thousand, and dividends of EUR 4,060 thousand distributed by DeA Capital Real Estate S.p.A. Income from available-for-sale funds Income from available-for-sale funds was EUR 1,385 thousand (EUR 1,480 thousand in 2011) and came from capital gains from distributions of venture capital funds. Capital gains on disposals This item, which totalled EUR 47 thousand, relates to the capital gain from sales of the Soprarno Inflazione fund. Impairment of equity investments and available-for-sale funds On 29 November 2012, the restructuring of the shareholder structure of Soprarno SGR was completed. This resulted in a reduction in the DeA Capital Group’s stake from 65% to 20%, following the sale by DeA Capital S.p.A. of 25% of Soprarno SGR S.p.A. to Banca Ifigest S.p.A., for a payment of EUR 500 thousand and a resulting loss of EUR 499 thousand. The fair value measurement of investments in venture capital funds at 31 December 2012, carried out based on the information and documents available, made it necessary to record impairment of EUR 874 thousand for the venture capital funds. For these venture capital funds, the significant reduction below cost was considered clear evidence of impairment.
    • Annual financial statements to 31 December 2012 179 8b – Service revenues Income of EUR 459 thousand was reported in 2012 (EUR 295 thousand in 2011), attributable to the reimbursement of costs or supply of services, in the following amounts: - EUR 131 thousand from De Agostini S.p.A. - EUR 6 thousand from Soprarno SGR S.p.A. - EUR 5 thousand from Harvip Investimenti S.p.A. - EUR 36 thousand from IDeA Capital Funds SGR S.p.A. - EUR 120 thousand from IDeA FIMIT SGR S.p.A. - EUR 46 thousand from I.F.IM. S.r.l. - EUR 1 thousand from IDeA SIM S.p.A. - EUR 25 thousand from DeA Capital Real Estate S.p.A. - 70 thousand from IRE - 19 thousand from IRE Advisory 8c – Other revenues and income Other revenues and income, totalling EUR 155 thousand (compared with EUR 177 thousand in 2011), related mainly to director fees paid to Santé S.A. of EUR 153 thousand. 9 – Operating costs 9a – Personnel costs Personnel costs totalled EUR 5,972 thousand, compared with EUR 5,084 thousand in 2011. The item breaks down as follows: (Euro thousand) Year 2012 Year 2011 Salaries and wages 1,971 2,152 Social charges on wages 983 752 Board of directors' fees 309 332 Costo figurativo stock options 945 683 Stock options reversal (1,022) 0 Employee severance indemnity 265 139 Other personnel costs 2,521 1,026 Total 5,972 5,084 The effect of the cost arising from the stock option plans for 2012, of EUR 945 thousand (EUR 683 thousand in 2011), was more than offset by the reversal of the cost allocated to the reserve for the Stock Option Plan for 2010-2015 of EUR 1,022 thousand. The allocation plan for 2010-2015 is to be considered lapsed as the conditions for exercising option rights were not met. “Other personnel costs” include an amount of EUR 1,107 thousand for the incentive scheme, valued in accordance with IFRS 2, which confers on beneficiaries the right to receive a cash award linked to corporate performance over the medium-term horizon (the three year period 2012 – 2014). The Parent Company has 16 employees (14 at 31 December 2011).
    • Annual financial statements to 31 December 2012 180 The table below shows changes and the average number of Parent Company employees during the year. Position 1.1.2012 Merger IDeA AI Recruits Internal movements Departures 31.12.2012 Average Senior Managers 5 1 0 0 (2) 4 5 Senior Managers defined term 1 0 0 0 0 1 1 Junior Managers 3 2 0 1 0 6 6 Staff 5 1 1 (1) (1) 5 5 Total 14 4 1 0 (3) 16 17     Share-based payments Employees of DeA Capital S.p.A. and the Parent Company, De Agostini S.p.A., are beneficiaries of stock option plans based on the shares of DeA Capital S.p.A. Unexercised but valid call options on the company’s shares at 31 December 2012 totalled 2,938,200 (4,643,200 at 31 December 2011). Stock option plans were valued using the numerical binomial tree procedure (the original Cox, Ross and Rubinstein method). Numerical analysis using binomial trees generates simulations of various possible developments in the share price in future periods. With regard to stock option plans, on 17 April 2012 the shareholders' meeting approved the DeA Capital Stock Option Plan for 2012-2014 under which a maximum of 1,350,000 options may be allocated. To implement the resolution of the shareholders' meeting, the DeA Capital S.p.A. Board of Directors allocated a total of 1,030,000 options to certain employees of the company and its subsidiaries, and employees of the Parent Company De Agostini S.p.A. who perform important roles. In line with the criteria specified in the regulations governing the DeA Capital Stock Option Plan for 2012-2017, the Board of Directors also set the exercise price for the options allocated at EUR 1.3363, which is the arithmetic mean of the official price of DeA Capital shares on the Mercato Telematico Azionario, the Italian screen-based trading system organised and managed by Borsa Italiana S.p.A., on the trading days between 17 March 2012 and 16 April 2012. The options can be allocated to the beneficiaries, in one or more tranches, up to 31 December 2014 and exercised by the latter, in one or more tranches, but in any case for an amount per tranche of not less than 25% of the options assigned to each, with effect from the fifth calendar day following the date that the adjusted NAV figure at 31 December 2014 is announced, until 31 December 2017. The adjusted NAV means the value of the assets, net of liabilities, calculated on the basis of the company’s balance sheet at 31 December 2014 and restated, where necessary, to take account of the measurement at fair value of all investments, as assessed by an independent third party. The shareholders’ meeting also approved the Performance Share Plan for 2012–2014. To implement the resolution of the shareholders' meeting, the Board of Directors of DeA Capital S.p.A. allocated a total of 302,500 units (representing the right to receive ordinary shares of the company, free of charge, under the terms and conditions of the plan) 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. Shares allocated due to the vesting of units will be drawn from own shares already held by the company. A manager with strategic responsibilities was given the entitlement to an incentive scheme. The scheme, valued in accordance with IFRS 2, confers on beneficiaries the right to receive a cash award linked to corporate performance over the medium-term horizon (the three year period 2012–2014). An actuarial valuation of this plan was made in-house during the relevant
    • Annual financial statements to 31 December 2012 181 time period. The current average value of the obligations arising from the plans is based on an appropriate “length of service" table and on specific demographic and economic/financial assumptions. The terms and conditions of the DeA Capital Stock Option Plan for 2012–2014 and the Performance Share Plan for 2012-2014 are described in the Information Prospectus prepared in accordance 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’s website www.deacapital.it in the section Corporate Governance/Incentive Plans. 9b – Service costs The table below shows a breakdown of service costs, which came in at EUR 3,138 thousand (EUR 3,090 thousand in 2011): (Euro thousand) Year 2012 Year 2011 Admin. Consulting, Tax and Legal and other 1,689 1,799 Remuneration of internal committees 255 263 Maintenance 103 83 Travel expenses 137 137 Utilities and general expenses 772 615 Bank charges 13 13 Books, stationery and conventions 143 149 Other expenses 26 31 Total 3,138 3,090 9c – Depreciation and amortisation Please see the table on changes in intangible and tangible assets for a breakdown of this item. 9d – Other costs This item totalled EUR 508 thousand (EUR 388 thousand in 2011) and mainly comprises the non-deductible portion of VAT as a result of applying the new percentage of 44% against which VAT on purchases made during the year may be offset. 10 – Financial income and charges 10a – Financial income Financial income totalled EUR 2,044 thousand (EUR 1,845 thousand in 2011) and included interest income of EUR 1,040 thousand, income from the collection of the coupon on the Soprarno Pronti Termine bond fund in the amount of EUR 111 thousand, income from financial instruments at fair value through profit and loss of EUR 485 thousand, and exchange rate gains of EUR 408 thousand. A breakdown of interest income shows that EUR 154 thousand was earned on bank current accounts and EUR 886 thousand on loans to subsidiaries.
    • Annual financial statements to 31 December 2012 182 (Euro thousand) Year 2012 Year 2011 Interest income 1,040 1,446 Gain from available for sale financial instruments 111 0 Income from financial instruments at fair value through profit and loss 485 195 Exchange gains 408 204 Total 2,044 1,845 10b – Financial charges Financial charges totalled EUR 4,653 thousand in 2012, compared with EUR 4,341 thousand in 2011. These mainly included interest expenses on loans and losses on hedging derivatives and exchange rates. Specifically, financial charges mainly break down as follows: - charges of EUR 889 thousand relating to interest rate swaps - a capital loss realised on the sale of the Soprarno bond fund of EUR 7 thousand - exchange rate losses of EUR 3 thousand - realised exchange rate losses on financial instruments of EUR 29 thousand - negative alignment of the valuation of the earn-out accrued in 2012, of EUR 208 thousand - interest expense for the acquisition of the FARE Group in December 2008, accrued during 2012, totalling EUR 785 thousand - interest expenses on the Mediobanca credit line of EUR 2,410 thousand and fees of EUR 226 thousand (Euro thousand) Year 2012 Year 2011 Interest expense 3,517 3,296 Charges on financial liabilities 208 0 Charges on derivatives 896 853 Exchange losses 32 192 Total 4,653 4,341 11 - Tax 11a – Income tax for the period At 31 December 2012, no IRAP taxes were recorded because of the negative tax base. This item mainly includes current tax income, amounting to EUR 4,821 thousand relates to DeA Capital S.p.A.’s decision to join (on 13 June 2008) the national tax consolidation scheme of the B&D Group (the Group headed by B&D Holding di Marco Drago e C. S.a.p.a.). 11b – Deferred tax assets and liabilities This item came in at EUR 171 thousand and consists entirely of provisions for deferred tax assets during the year. The table below shows a reconciliation of the tax charges recorded in the financial statements and the theoretical tax charge calculated using the IRES rate applicable in Italy:
    • Annual financial statements to 31 December 2012 183 (Euro thousand) Amount Rate Amount Rate Profit before tax (2,780) (35,334) Theoretical income tax (765) -27.5% (9,717) -27.5% Tax effect on permanent differences - Impairment on Investments 137 4.9% 25,632 72.5% - Gains Pex 0 0.0% (1,227) -3.5% - Dividends (2,315) -83.3% (16,424) -46.5% - Non deductible interests 439 15.8% 497 1.4% - Other movements 367 13.2% (134) -0.4% Tax effect of utilisation of previously unrecognised tax losse 0 0.0% (409) -1.2% Deferred tax assets for available losses 0 0.0% 0 0.0% Fiscal consolidation gain (2,685) -96.6% (1,259) -3.6% Other net differences (228) 8.2% (208) -0.6% IRAP and taxes on foreign income 0 0.0% 0 0.0% Income tax charged in the income statement (5,050) (3,248) 2012 2011 12 – Basic earnings (loss) per share Basic earnings per share are calculated by dividing net profit or loss for the period attributable to the Parent Company by the weighted average number of ordinary shares outstanding during the period. Diluted earnings per share are calculated by dividing net profit for the period attributable to shareholders by the weighted average number of ordinary shares outstanding during the period, including any dilutive effects of stock options. The table below shows the share information used to calculate basic and diluted earnings per share: Year 2012 Year 2011 Parent company net profit/(loss) (A) 2,269,268 (32,085,746) Weighted average number of ordinary shares outstanding (B) 277,469,810 288,942,756 Basic earnings/(loss) per share (€ per share) (C=A/B) 0.0082 (0.1110) Restatement for dilutive effect - - Parent company net profit/(loss) restated for dilutive effect (D) 2,269,268 (32,085,746) Weighted average number of shares to be issued for the exercise of stock options (E) - 174,632 Total number of shares outstanding and to be issued (F) 277,469,810 289,117,388 Diluted earnings/(loss) per share (€ per share) (G=D/F) 0.0082 (0.1110) Options have a dilutive effect only when the average market price of the share for the period exceeds the strike price of the options or warrants (i.e. when they are "in the money").
    • Annual financial statements to 31 December 2012 184 Other information  Commitments At 31 December 2012, remaining commitments to make paid calls to venture capital funds totalled EUR 3.7 million, compared with EUR 2.4 million in 2011. Changes in commitments are shown in the table below. (Euro million) Residual Commitments vs. Funds - Dec. 31, 2011 2.4 Capital Calls at commitment value 0.0 Distributions callable 1.2 Exchange differences 0.1 Residual Commitments vs. Funds - Dec. 31, 2012 3.7  Own shares and Parent Company shares On 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 on 19 April 2011, which was scheduled to expire on 19 October 2012. The new plan will have the same objectives as the previous one, including the purchase of own shares to be used for extraordinary operations and share incentive plans, offering shareholders a means of monetising their investment, stabilising the share price and regulating trading within the limits of the legislation in force. The authorisation specifies that purchases may be carried out, for a maximum period of 18 months starting from 17 April 2012, in accordance with all procedures allowed by current regulations, and that DeA Capital S.p.A. may also sell the shares purchased for the purposes of trading. The unit price for the purchase of the shares is set by the Board of Directors, but in any case must not be more than 20% above or below the share’s reference price on the trading day prior to each purchase. In contrast, the authorisation to sell own shares already held in the company’s portfolio and any shares bought in the future was granted for an unlimited period, to be implemented using the methods deemed most appropriate and at a price to be determined on a case-by-case basis by the Board of Directors, which must not, however, be more than 20% below the share's reference price on the trading day prior to each individual sale (apart from in certain exceptional cases specified in the plan). Sale transactions may also be carried out for trading purposes. Also on 17 April 2012, the company’s Board of Directors voted to initiate the plan to buy and sell own shares authorised by the shareholders’ meeting, and to this end vested the Chairman of the Board of Directors and the Chief Executive Officer with all the necessary powers, to be exercised jointly or severally and with full powers of delegation. In 2012, as a part of the above two plans, DeA Capital S.p.A. purchased around 6.1 million shares valued at about EUR 8.0 million (at an average price of EUR 1.31 per share). Taking into account purchases made in previous years for plans in place from time to time, and uses of own shares to service purchases of controlling interests in FARE Holding and IDeA AI, at 31 December 2012 the company owned 32,006,029 own shares (equal to about 10.4% of the share capital).
    • Annual financial statements to 31 December 2012 185 As of the date of this document, based on purchases of 630,975 shares made after the end of 2012, the company had a total of 32,637,004 own shares corresponding to about 10.6% of the share capital. During 2012, the company did not hold, purchase or sell, on its own account or through a trust company, any shares in Parent Company De Agostini S.p.A.  Stock option and performance share plans On 17 April 2012, the shareholders’ meeting approved the DeA Capital Stock Option Plan for 2012–2014. To implement the resolution of the shareholders' meeting, the Board of Directors of DeA Capital S.p.A., at its meeting held on the same day, allocated a total of 1,030,000 options 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 Option Plan for 2012–14, the Board of Directors also set the exercise price for the options allocated at EUR 1.3363, which is the arithmetic mean of the official prices of ordinary DeA Capital shares on the Mercato Telematico Azionario, the Italian screen-based trading system organised and managed by Borsa Italiana S.p.A., on the trading days between 17 March 2012 and 16 April 2012. The shareholders’ meeting also approved a paid capital increase, in divisible form, without option rights, via the issue of a maximum of 1,350,000 ordinary shares to service the DeA Capital Stock Option Plan for 2012-2014. The shareholders’ meeting also approved the Performance Share Plan for 2012–2014. To implement the resolution of the shareholders' meeting, the Board of Directors allocated a total of 302,500 units (representing the right to receive ordinary shares of the company, free of charge, under the terms and conditions of the plan) 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. Shares allocated due to the vesting of units will be drawn from own shares already held by the company. The terms and conditions of the DeA Capital Stock Option Plan 2012–2014 and the Performance Share Plan 2012-2014 are described in the Information Prospectus prepared in accordance 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’s website www.deacapital.it in the section Corporate Governance/Incentive Plans. The tables below summarise the assumptions made in calculating the fair value of the stock option plans: Stock Option 2004 plan 2005 plan 2010 plan march 2010 plan 2011 plan 2012 plan N° options allocated 160,000 180,000 2,235,000 500,000 1,845,000 1,030,000 Average market price at allocation date 2.445 2.703 1.2964 1.3606 1.55 1.38 Value at allocation date 391,200 486,540 2,897,454 680,300 2,859,750 1,421,400 Average exercise price 2.026 2.459 1.318 1.413 1.538 1.3363 Expected volatility 31.15% 29.40% 35.49% 33.54% 33.43% 33.84% Option expiry date 8/31/2015 4/30/2016 12/31/2015 12/31/2015 12/31/2016 12/31/2017 Risk free yield 4.25125% 3.59508% 1.88445% 2.95194% 3.44% 2.47% The allocation plan for 2010-2015 is to be considered lapsed as the conditions for exercising option rights were not met.
    • Annual financial statements to 31 December 2012 186 Performance Share 2012 plan N° options allocated 302,500 Average market price at allocation date 1.380 Value at allocation date 417,450 Expected volatility 33.84% Option expiry date 12/31/2014 Risk free yield 2.470% The Warrant Plan for 2009-2012 lapsed during 2012 as the conditions for exercising the warrants were not met.  Transactions with parent companies, subsidiaries and related parties - Intercompany relationships with the Parent Company and its Group On 22 March 2007, the company signed a Service Agreement with the controlling shareholder, De Agostini S.p.A. (which was renewed on 31 March 2011), for the latter to provide operating services in administration, finance, control, legal, corporate, tax, investor relations and public relations areas for a total payment of EUR 480,000 per year. The agreement, which is renewable annually, is priced at market rates, and is intended to allow the company to maintain a streamlined organisational structure in keeping with its development policy, and to obtain adequate operational support at the same time. The company also carried out transactions with its subsidiaries, particularly with regard to the provision of management support services. These transactions were carried out under normal market conditions. Lastly, the company did not hold, purchase or dispose of the shares of any related parties in 2012. The table below shows the balances arising from transactions with related parties. (Euro thousand) Trade receivables Financial receivables Tax receivables Tax payables Trade payables Service revenues Payroll recharge Financial income Tax income Costi su distacco Personale Service costs IDeA SIM S.p.A. 1.2 - - - - 1.0 - - - - - IDeA Capital Funds SGR S.p.A. 357.3 - - - - 35.7 - - - - 15.7 IDeA FIMIT SGR S.p.A. 737.1 - - - 26.6 120.0 17.0 - - - 60.0 I.FI.M. S.r.l. - - - - - 45.7 - 499.7 - - - Harvip Investimenti S.p.A. 3.2 - - - - 5.1 - - - - - Soprarno SGR S.p.A. 7.4 - - - 86.2 6.5 10.3 - - 18.3 86.2 DeA Capital Real Estate S.p.A. - - - - - 24.4 - - - - - Innovation Real Estate S.p.A. 63.9 - - - 56.6 70.4 44.7 - - - - I.R.E. Advisory S.r.l. - - - - - 19.0 - - - - - De Agostini S.p.A. 305.6 - - - 25.3 131.3 45.4 - - 96.7 610.1 B&D Holding di Marco Drago e C. S.a.p.A. - - 7,488.9 - - - - - 4,821.3 - - De Agostini Libri S.p.A. - - - - 0.7 - - - - - 1.2 DeA Capital Investments S.A. - 31,269.7 - - - - - 385.7 - - - De Agostini Publishing Italia S.p.A. 20.5 - - - - - - - - - 0.3 De Agostini Editore S.p.A. - - - - 46.0 - - - - - 162.7 Total related parties 1,496.2 31,269.7 7,488.9 - 241.4 459.1 117.4 885.4 4,821.3 115.0 936.2 Total financial statement line item 2,149.3 31,269.7 7,488.9 - 2,525.6 459.1 117.7 2,043.7 4,821.3 4,977.9 3,138.1 as % of financial statement line item 69.6% 100.0% 100.0% - 9.6% 100.0% 99.7% 43.3% 100.0% 2.3% 29.8% 12/31/2012 Year 2012 At 31 December 2012, leasehold improvements incurred in the name of and on behalf of third parties were reimbursed on a pro-rated basis and allocated as follows: - EUR 233 thousand to De Agostini S.p.A. - EUR 295 thousand to IDeA Capital Funds SGR S.p.A. - EUR 53 thousand to IRE - EUR 17 thousand to De Agostini Publishing Italia S.p.A. - EUR 607 thousand to IDeA FIMIT S.p.A.
    • Annual financial statements to 31 December 2012 187 - Remuneration of directors, auditors, general managers and managers with strategic responsibilities In 2012, remuneration payable to the directors and auditors of DeA Capital S.p.A. for the performance of their duties totalled EUR 308 thousand and EUR 175 thousand respectively. Remuneration paid to directors and auditors is shown in the table below: Director Position Year appointed Term ends Compensation received for office within the consolidating company (€ thousands) Benefits in kind Bonuses and other benefits Other principal auditor fees for subsidiaries Other compensation (€ thousand) Lorenzo Pellicioli Chairman 2012 2012 AGM 30 0 0 0 0 Paolo Ceretti CEO 2012 2012 AGM 30 0 0 0 60 Daniel Buaron Director 2012 2012 AGM 30 0 0 0 189 Lino Benassi Director 2012 2012 AGM 30 0 0 0 195 Rosario Bifulco Director 2012 2012 AGM 30 0 0 0 20 Claudio Costamagna Director 2012 2012 AGM 30 0 0 0 5 Alberto Dessy Director till may 2012 2012 AGM 10 0 0 0 8 Roberto Drago Director 2012 2012 AGM 30 0 0 0 3 Marco Drago Director 2012 2012 AGM 30 0 0 0 0 Severino Salvemini Director may 2012 2012 AGM 19 0 0 0 19 Andre Guerra Director till april 2012 2012 AGM 9 0 0 0 1 Marco Boroli Director 2012 2012 AGM 30 0 0 0 0 Angelo Gaviani Chairman of the Board of 2012 2012 AGM 75 0 0 14 0 Cesare Andrea Grifoni Principal Auditor 2012 2012 AGM 50 0 0 26 0 Gian Piero Balducci Principal Auditor 2012 2012 AGM 50 0 0 56 15 Giulio Gasloli Principal Auditor till may 2012 2012 AGM 0 0 0 3 0 In contrast to the data contained in the Remuneration Report prepared pursuant to art. 123- ter of the TUF in accordance with art. 84-quater of the Issuer Regulations, the emoluments and compensation indicated above do not include social security contributions where applicable. “Other remuneration” relates to remuneration received for other positions held in either DeA Capital S.p.A. or other Group companies. In 2012, annual salaries and bonuses, excluding benefits in kind, paid to managers with strategic responsibilities in the Parent Company totalled about EUR 742 thousand.  Equity investments held by directors, auditors, general managers and managers with strategic responsibilities Details of equity investments held in DeA Capital S.p.A. and its subsidiaries by members of the boards of directors and auditors and by managers with strategic responsibilities are provided in aggregate format in the table below. No equity investments were reported for general managers, since to date, this position does not exist.
    • Annual financial statements to 31 December 2012 188 All those who held positions on the boards of directors or auditors, or as managers with strategic responsibilities, for the whole or part of the year in question, are included. Lorenzo Pellicioli DeA Capital S.p.A. 2,566,323 0 0 2,566,323 Paolo Ceretti DeA Capital S.p.A. 1,000,000 0 0 1,000,000 Rosario Bifulco DeA Capital S.p.A. 1,536,081 0 0 1,536,081 Lino Benassi DeA Capital S.p.A. 23,500 0 0 23,500 Daniel Buaron * DeA Capital S.p.A. 11,689,552 0 0 11,689,552 Daniel Buaron DeA Capital Real Estate S.p.A. 180,000 0 (180,000) 0 Key Management DeA Capital S.p.A. 50,000 55,000 0 105,000 Total 17,045,456 55,000 (180,000) 16,920,456 * through DEB Holding S.r.l. Beneficiary Company Number of shares held at 1.1.2012 Number of shares purchased Number of shares sold Number of shares held at 31.12.2012 No DeA Capital shares are held by other directors or auditors who are currently in office; furthermore, no shares are held in companies controlled by DeA Capital. The directors Lorenzo Pellicioli, Lino Benassi, Marco Drago, Marco Boroli and Roberto Drago own shares of B&D Holding di Marco Drago e C. S.a.p.a. and New B&D Holding di Marco Drago e C.S.a.p.A., the direct and indirect parent companies of De Agostini S.p.A. (which is in turn the Parent Company of the company) and are parties to a shareholders’ agreement covering these shares.
    • Annual financial statements to 31 December 2012 189  Stock options allocated to members of the boards of directors and auditors, general managers and managers with strategic responsibilities Details of stock options held by members of the boards of directors and auditors and by managers with strategic responsibilities in DeA Capital S.p.A. and its subsidiaries are provided in aggregate format in the table below. Options lapsed during 2012 Beneficiary Position Number of options Average exercise price Average expiry date Number of options Average exercise price Average expiry date Number of options Number of options Average exercise price Average expiry date Paolo Ceretti CEO 750,000 1.318 5 0 0 0 0 750,000 1.318 5 Paolo Ceretti CEO 750,000 1.538 5 0 0 0 0 750,000 1.538 5 Paolo Ceretti CEO 0 0 0 630,000 1.3363 5 0 630,000 1.3363 5 Key Management 985,000 1.318 5 0 0 0 0 985,000 1.318 5 Key Management 500,000 1.413 5 0 0 0 0 500,000 1.413 5 Key Management 485,000 1.538 5 0 0 0 0 485,000 1.538 5 Key Management 0 0 0 400,000 1.3363 5 0 400,000 1.3363 5 Options outstanding at Jan. 1, 2012 Options granted during 2012 Options outstanding at December 31, 2012 Lastly, note that the Chief Executive Officer, Paolo Ceretti, and managers with strategic responsibilities have been assigned 80,000 and 52,500 performance shares respectively, as shown in the table below. Options lapsed during 2012 Beneficiary Position Number of options Average exercise price Average expiry date Number of options Average exercise price Average expiry date Number of options Number of options Average exercise price Average expiry date Paolo Ceretti CEO 0 0 0 80,000 1.38 2 0 80,000 1.38 2 Key Management 0 0 0 52,500 1.38 2 0 52,500 1.38 2 Options outstanding at Jan. 1, 2012 Options granted during 2012 Options outstanding at December 31, 2012
    • Annual financial statements to 31 December 2012 190 Management and coordination The Parent Company is subject to the management and coordination of De Agostini S.p.A. Key figures from the latest approved financial statements of De Agostini S.p.A. are shown below. INCOME STATEMENT 2011 2010 Total operating revenues 3,479,992 3,054,546 Total operating expenses (28,066,035) (26,968,755) Financial income and expenses (5,590,599) 32,890,135 Restatement of financial assets (71,155,333) (346,068,081) Extraordinary income/(expenses) 92,329,256 (1,240,563) Income tax charge 25,155,794 7,497,238 Net profit 16,153,075 (330,835,480) BALANCE SHEET 2011 2010 Receivables from shareholders for amounts due 0 0 Non-current assets 3,149,722,282 3,375,891,032 Operating assets 631,210,453 485,446,867 Prepaid expenses and accrued income 4,492,915 3,533,259 Net equity (2,606,439,702) (2,590,286,628) Provisions for liability and charges (62,609,668) (72,499,799) Provisions for employee end-of-service benefits (863,158) (823,755) Debt (1,111,240,894) (1,196,428,115) Accrued expenses and deferred income (4,272,228) (4,832,861)
    • Annual financial statements to 31 December 2012 191 Risks As described earlier in the Report on Operations, the company operates through, and is structured as, two business areas, Private Equity Investment and Alternative Asset Management. The risks set out below stem from a consideration of the characteristics of the market and the company’s operations, and the main findings of a risk assessment, and from periodic monitoring, including that carried out through the regulatory policies adopted by the Group. There could, however, be risks that are currently unidentified or not considered significant that could have an impact on the company's operations. The company has adopted a modern corporate governance system that provides effective management of the complexities of its operations and enables its strategic objectives to be achieved. Furthermore, the assessments conducted by the organisational units and the directors confirm both the non-critical nature of these risks and uncertainties and the financial solidity of the company. A. Contextual risks A.1. Risks relating to general economic conditions The operating performance and financial position of the company are affected by the various factors that make up the macro-economic environment, including increases or decreases in GDP, investor and consumer confidence, interest rates, inflation, the costs of raw materials and unemployment. The ability to meet medium- to long-term objectives could be affected by general economic performance, which could slow the development of sectors the Group has invested in, and at the same time, the business of the investee companies. A.2. Socio-political events In line with its strategic growth guidelines, one of the company's activities is private equity investment in companies and funds in different jurisdictions and countries around the world, which, in turn, invest in a number of countries and geographical areas. The company may have invested directly and indirectly in foreign countries whose social, political and economic conditions put the achievement of its investment objectives at risk. A.3. Regulatory changes Many of the company's investee companies conduct their operations in highly regulated sectors and markets. Any changes to or developments in the legislative or regulatory framework that affect the costs and revenue structure of investee companies or the tax regime applied, could have negative effects on the company's financial results, and necessitate changes in the company's strategy. To combat this risk, the company has established procedures to constantly monitor sector regulation and any changes thereto, in order to seize business opportunities and respond to any changes in the prevailing legislation and regulations in good time. A.4. Performance of the financial markets The company’s ability to meet its strategic and management objectives could depend on the performance of public markets. A negative trend on the public markets could have an effect on the private equity sector in general, making investment and divestment transactions more complex, and on the company’s capacity to increase the NAV of investments in particular.
    • Annual financial statements to 31 December 2012 192 The value of equity investments held directly or indirectly through funds in which the company has invested could be affected by factors such as comparable transactions concluded on the market, sector multiples and market volatility. These factors that cannot be directly controlled by the company are constantly monitored in order to identify appropriate response strategies that involve both the provision of guidance for the management of investee companies, and the investment and value enhancement strategy for the assets held. A.5. Exchange rates Holding investments in currencies other than the euro exposes the company to changes in exchange rates between currencies. A.6. Interest rates Ongoing financing operations that are subject to variable interest rates could expose the company to an increase in related financial charges, in the event that the reference interest rates rise significantly. The company has established appropriate strategies to hedge against the risk of interest rate fluctuations. Given the partial hedge of the underlying, the company classifies these securities as speculative instruments, even though they are put in place for hedging purposes. B. Strategic risks B.1. Concentration of the Private Equity Investment portfolio The private equity investment strategy adopted by the company includes: - direct investments - indirect investments Within this strategy, the company's overall profitability could be adversely affected by an unfavourable trend in one or a few investments, if there were insufficient risk diversification, resulting from the excessive concentration of investment in a small number of assets, sectors, countries, currencies or of indirect investments in funds with limited investment targets/types of investment. To combat these risk scenarios, the company pursues an asset allocation strategy intended to create a balanced portfolio with a moderate risk profile, investing in attractive sectors and in companies with an appealing current and future risk/return ratio. Furthermore, the combination of direct and indirect investments, which, by their nature, guarantee a high level of diversification, helps reduce the level of asset concentration. B.2. Concentration of Alternative Asset Management activities In Alternative Asset Management, in which the company is active through the companies DeA Capital Real Estate S.p.A. and IFIM S.r.l., events could arise as a result of excessive concentration that would hinder the achievement of the level of expected returns. These events could be due to:  Private equity funds o concentration of the management activities of asset management companies across a limited number of funds, in the event that one or more funds decides to cancel its asset management mandate
    • Annual financial statements to 31 December 2012 193 o concentration of the financial resources of the funds managed in a limited number of sectors and/or geographical areas, in the event of currency, systemic or sector crises o for closed funds, concentration of the commitment across just a few subscribers, in the event of a counterparty experiencing financial difficulties  Real estate funds o concentration of real estate in the portfolio of managed funds in a few cities and/or in limited types of property (management/commercial), in the event of a crisis on the property market concerned o concentration in respect of certain key tenants, in the event that these withdraw from the rental contracts, which could lead to a vacancy rate that has a negative impact on the funds' financial results and the valuation of the property managed o concentration of the maturities of numerous real estate funds within a narrow timeframe, with related high availability of property on the market, leading to a decrease in property values and an increase in selling times For each of the risk scenarios outlined above, the Group has defined and implemented appropriate strategies that include strategic, operational and management aspects, as well as a system monitoring the level of diversification of Alternative Asset Management assets. B.3. Key resources (governance/organisation) The success of the company depends to a large extent on its executive directors and key management figures, their ability to efficiently manage the business and the normal activities of individual Group companies, as well as knowledge of the market and the professional relationships established. The departure of one or more of these key resources, without a suitable replacement being found, as well as an inability to attract and retain new and qualified resources, could impact growth targets and have a negative effect on the Group’s operating performance and financial results. To mitigate this risk, the Group has put in place HR management policies that correspond closely to the needs of the business, and incentive policies that are periodically reviewed, in light of, inter alia, the general economic climate and the results achieved by the Group. C. Operating risks C.1. Investment operations Investment operations conducted by the company are subject to the risks typical of private equity activities, such as an accurate valuation of the target company and the nature of the transactions carried out, which require the acquisition of strategic equity investments, but not controlling interests, governed by appropriate shareholders’ agreements. The company implements a structured process of due diligence on target companies, which requires the involvement of the different levels of group management involved and the careful definition of shareholders’ pacts in order to conclude agreements in line with the investment strategy and the risk profile defined by the company. C.2. Compliance with covenants Some investment operations were concluded using financial leverage to invest in the target companies. For financing contracts signed by investee companies, specific covenants backed by real guarantees are in place; failure to comply with these could necessitate recapitalisation operations for investee companies and lead to an increase in financial charges relating to debt
    • Annual financial statements to 31 December 2012 194 refinancing. Failure to comply with covenants attached to loans could have negative effects on both the financial situation and operations of investee companies, and on the value of the investment. The company constantly monitors the significant reference parameters for the financial obligations taken on by investee companies, in order to identify any unexpected variance in good time. C.3. Divestment operations The company invests over a medium- to long-term horizon. Over the investment management period, external situations could arise that might have a significant impact on the operating results of the investee companies, and consequently on the value of the investment itself. Furthermore, in the case of co-investment, guiding the management of an investee company could prove problematic or unfeasible, and it may ultimately prove impossible to dispose of the stakes held owing to lock-up clauses. The divestment strategy could therefore be negatively affected by various factors, some of which cannot be foreseen at the time the investments are made. There is therefore no guarantee that expected earnings will be realised given the risks resulting from the investments made. To combat these risk situations, the company has defined a process to monitor the performance of its investee companies, facilitated by its representation on the management bodies of significant investee companies, with a view to identifying any critical situations in good time. C.4. Funding risk The income flows expected from the Alternative Asset Management business depend on the capacity of the asset management companies in which the company invests to stabilise/grow their assets under management. In this environment, fund raising activity could be harmed by both external factors, such as the continuation of the global economic crisis or the trend in interest rates, and internal factors, such as bad timing in respect of fund raising activities by the asset management companies or the departure of key managers from the companies. The company has established appropriate risk management strategies in relation to fund raising, with a view to both involving new investors and retaining current investors.
    • Annual financial statements to 31 December 2012 195 Significant events after the end of 2012  Purchase of IDeA SIM S.p.A shares On 25 February 2013, in compliance with the provisions of various agreements, DeA Capital S.p.A. acquired the shares held by the former CEO of IDeA SIM, equal to 30% of its capital, bringing its investment to 95% of the company’s capital. The price paid was EUR 79 thousand.  Acquisition of a shareholding in IDeA FIMIT SGR On 27 February 2013, DeA Capital S.p.A. signed an agreement with Inarcassa to acquire shares from the latter representing 2.98% of the capital of IDeA FIMIT SGR, for an estimated price of around EUR 5.9 million; financial equity instruments issued by IDeA FIMIT SGR and held by Inarcassa are excluded from the sale. The closing is expected to take place at the beginning of April once the pre-emptive rights have expired. Further information In accordance with the provisions of IAS 10, the company authorised the publication of these financial statements within the terms authorised by existing legislation. Atypical or unusual transactions In 2012, there were no atypical or unusual transactions as defined by Consob Communication 6064293 of 28 July 2006. Significant non-recurring events and transactions In 2012, the company did not undertake any significant non-recurring transactions as defined by the above-mentioned Consob Communication.
    • Annual financial statements to 31 December 2012 196 Statement of responsibilities for the annual financial statements pursuant to art. 154-bis of Legislative Decree 58/98 The undersigned, Paolo Ceretti, as Chief Executive Officer, and Manolo Santilli, as the manager responsible for preparing the accounting statements of DeA Capital S.p.A., hereby certify, pursuant to art. 154-bis, paragraphs 3 and 4 of Legislative Decree 58 of 24 February 1998, that based on the characteristics of the company, the administrative and accounting procedures for preparing the annual financial statements of DeA Capital S.p.A. during the year were suitable and effectively applied. The assessment as to the suitability of the administrative and accounting procedures for preparing the annual financial statements for the year to 31 December 2012 was based on a process established by DeA Capital S.p.A. in keeping with the Internal Control - Integrated Framework model issued by the Committee of Sponsoring Organisations of the Treadway Commission, which is the generally accepted reference framework at the international level. Note in this regard, that as described in the notes to the annual financial statements, a significant portion of the assets are investments stated at fair value. Fair values were determined by directors based on their best estimate and judgment using the knowledge and evidence available at the time the financial statements were prepared. However, due to objective difficulties in making assessments and the absence of a liquid market, the values assigned to such assets could differ, and in some cases significantly, from those that could be obtained when the assets are sold. The undersigned further certify that the annual financial statements to 31 December 2012: - correspond to the company’s accounting records - have been prepared in compliance with the International Financial Reporting Standards adopted by the European Union, and the measures issued to implement art. 9 of Legislative Decree 38/2005 - to the best of their knowledge, provide a true and fair view of the operating performance and financial position of the issuer The report on operations contains a reliable analysis of operating performance and results and of the position of the issuer and all companies included in the basis of consolidation, together with a description of the main risks and uncertainties to which they are exposed. 8 March 2013 Paolo Ceretti Chief Executive Officer Manolo Santilli Manager responsible for preparing the company’s accounts
    • Annual financial statements to 31 December 2012 197 Information pursuant to art. 149-duodecies of the Consob Issuer Regulations The table below was prepared in accordance with art. 149-duodecies of the Consob Issuer Regulations and reports the fees for 2012 for auditing and other services provided by the independent auditors and entities belonging to the independent auditors’ network. The fees reported below do not include VAT and out-of-pocket expenses. (Euro thousand) Company providing the service Beneficiary Compensation paid for 2012 FY Audit KPMG S.p.A. DeA Capital S.p.A. 93 Certification services (1) KPMG S.p.A. DeA Capital S.p.A. 7 Totale 100 1) Presentation of tax return
    • Annual financial statements to 31 December 2012 198 Summary of Subsidiaries’ Financial Statements to 31 December 2012
    • Annual financial statements to 31 December 2012 199 (Euro thousands) DeA Capital Investments S.A. I.F.IM. IDeA Capital Funds SGR IDeA FIMIT SGR IDeA SIM DeA Capital Real Estate Innovation Real Estate Innovation Real Estate Advisory Non-current assets 768,029 48,431 849 264,166 33 10,950 1,113 10 Current assets 163 291 10,994 27,762 270 2,506 11,563 2,137 Available-for-sale financial assets - non-current portion - - - - - - - - Consolidated assets 768,192 48,722 11,843 291,928 303 13,456 12,676 2,147 Shareholders’ equity 694,606 48,678 6,580 235,547 194 11,596 4,713 640 Non-current liabilities 26,591 - 276 37,932 - 792 737 95 Current liabilities 46,995 44 4,987 18,449 109 1,068 7,226 1,412 Consolidated liabilities 768,192 48,722 11,843 291,928 303 13,456 12,676 2,147 Alternative asset management fees - - 13,534 65,426 260 - - - Service revenues - - 16 - - 290 - - Other investment income/charges (5,758) 2,467 (15) 571 - 7,741 1,000 1,000 Other income 555 - 17 711 13 - - - Personnel costs - (128) (5,227) (15,869) (252) - - - External service costs (3,804) (87) (1,455) (12,612) (256) (129) (129) (129) Depreciation and amortisation - - (137) (12,830) (10) (1) (1) (1) Other charges (646) (2) - (3,976) (2) (1) (1) (1) Financial income 66 - 207 149 - 1,614 1,614 1,614 Financial charges (394) (500) - (682) (1) (845) (845) (845) Taxes 978 (53) (2,489) (1,601) (11) (39) (39) (39) Profit/(loss) for the period from held-for-sale operations - - - - - - - - Net profit/(loss) (9,003) 1,697 4,451 19,287 (259) 8,630 1,599 1,599
    • Annual financial statements to 31 December 2012 200 Independent Auditors’ Report (Original available in Italian version only)
    • Annual financial statements to 31 December 2012 201 Reports of the Board of Statutory Auditors (Original available in Italian version only)