DeA Capital bilancio_2011_completo_eng_final

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DeA Capital bilancio_2011_completo_eng_final

  1. 1. Financial Statements to 31 December 2011 1 FINANCIAL STATEMENTS TO 31 December 2011 ______________________ 2011 Board of Directors of DeA Capital S.p.A. Milan, 12 March 2012
  2. 2. Financial Statements to 31 December 2011 2 NOTICE OF SHAREHOLDERS' MEETING All eligible persons are invited to attend the Ordinary and Extraordinary Shareholders' Meeting to be held in Milan at Spazio Chiossetto - Via Chiossetto 20: - at 11 a.m. on Tuesday, 17 April 2012 on first call; - at 11 a.m. on Monday, 30 April 2012 on second call: to discuss and resolve on the following AGENDA Ordinary part 1. Approval of the financial statements for the year ended 31 December 2011. Related and consequent resolutions. Presentation of the Consolidated Financial Statements of the Group headed by DeA Capital S.p.A. for the year ended 31 December 2011; 2. Authorisation to buy and dispose of treasury shares, subject to prior revocation of the previous authorisation. Related and consequent resolutions; 3. Approval of a performance share plan and stock option plan reserved for certain employees of DeA Capital S.p.A., its subsidiaries and parent company. Related and consequent resolutions; 4. Presentation of the DeA Capital S.p.A. Remuneration Report and advisory vote by the Meeting on the DeA Capital S.p.A. Remuneration Policy (Section I of the Remuneration Report), in accordance with Art. 123-ter of Legislative Decree no. 58 of 24 February 1998, as subsequently amended and supplemented; 5. Extension of the financial audit contract for the years 2012-2014 and determination of the fee pursuant to Legislative Decree 39/2010. Related and consequent resolutions; 6. Reduction in the number of members of the board of directors following the resignation of one director. Related and consequent resolutions. Extraordinary part 1. Share capital increase for payment, in divisible form, without option rights pursuant to Art. 2441, eighth paragraph, of the Italian Civil Code and Art. 134 of Legislative Decree no. 58 of 24 February 1998, as subsequently amended and supplemented, by a maximum amount of EUR 1,350,000, by issuing a maximum of 1,350,000 shares, reserved exclusively and irrevocably for subscription by beneficiaries of the 2012- 2014 Stock Option Plan. Consequent amendment of Art. 5 of the Articles of Association. Related and consequent resolutions; 2. Amendment of the Articles of Association (Art. 11 "Management Body" and 18 "Auditors"), with the inclusion of a new Article 27 "Transitional Clause" to comply with the rules governing gender distribution in the supervisory bodies of listed companies, as set out in Art. 147-ter, paragraph 1-ter, and Art. 148 paragraph 1-bis, of Legislative Decree no. 58 of 24 February 1998, as subsequently amended and supplemented. Related and consequent resolutions. *** Shareholders who, individually or jointly, represent at least 2.5% of the share capital may ask for items to be added to the agenda for discussion in the Meeting. The request and a list of proposed items for discussion shall be submitted to the Registered Office by 26 March 2012, together with the notice certifying ownership of the above shareholding, issued by the intermediaries that hold the accounts on which the shares are registered. Items may not be added to the agenda if they are items on which, by law, the Meeting resolves on a proposal from the directors or on the basis of a draft or report prepared by them (other than those set out in Art. 125-ter, paragraph 1, of Legislative Decree no. 58 of 24 February 1998, as subsequently amended and supplemented, hereinafter "TUF").
  3. 3. Financial Statements to 31 December 2011 3 Shareholders may ask questions about items on the agenda before the Meeting but shall be required to do so by no later than the end of the second market day preceding the scheduled date of the Meeting, (i.e., by 13 April 2012), by sending a letter to the registered office or email to the following address: ir@deacapital.it. The persons concerned shall provide information identifying them and confirming their shareholder status. Questions received before the Meeting shall be answered during the Meeting itself at the latest and the Company shall be entitled to reply to all questions having the same content with a single answer. Persons shall be entitled to attend the Meeting if they are registered as holding voting rights at the end of the accounting day on the seventh market day prior to the scheduled date of the Meeting at first call (4 April 2012) and if the respective notice issued by the authorised intermediary has been received by the Company. Persons who become shareholders only after that date shall not be entitled to participate or vote in the Meeting. All persons entitled to take part in the Meeting may arrange to be represented by means of a written proxy pursuant to current laws, to which end they may use the proxy form available on the website www.deacapital.it. The proxy may be sent to the Company by post to the Company's registered office or by email to the following certified address: deacapital@pecserviziotitoli.it. Any prior notice shall not release the proxy holder, at the time of confirming his eligibility to participate in the Meeting, from his obligation to certify conformity to the original. The Company has appointed Servizio Titoli S.p.A. as the body to which persons entitled to vote may grant a special proxy free of charge ("Appointed Proxy"). A proxy with voting instructions shall be granted using the form available on the website www.deacapital.it or from the registered office of Servizio Titoli S.p.A. or from the Company's registered office. The original proxy must in any case be sent to Servizio Titoli S.p.A. at Via Lorenzo Mascheroni 19 – 20145 Milan and, where appropriate, a copy may be sent in advance together with a declaration that it conforms to the original, either by fax to number 02.46776850 or as an attachment to an email to be sent to the following address ufficiomilano@pecserviziotitoli.it, by 13 April 2012. A proxy thus granted shall be valid only for motions in relation to which voting instructions have been given. Proxies and voting instructions may be revoked by the same date indicated above. *** Documentation relating to the agenda, as required by current legislation, including proposed resolutions, shall be made available to the public at the Company's registered office or from Borsa Italiana S.p.A. (www.borsaitaliana.it) in accordance with the law. The same documentation shall be available for consultation on the Company's website (www.deacapital.it). More specifically, at the time of publication of the notice of meeting, the following documents shall be made available: (i) the Directors' Report on item 3 of the ordinary part and the prospectus pursuant to Article 84-bis of the Issuer Regulations; (ii) the Directors' Report on item 5 and iii) the Directors' Report on item 6. On 27 March 2012, the financial report and the other documents referred to in Article 154-ter of the TUF, as well as the Directors' Reports on the remaining items on the agenda. All eligible persons have the right to read and, on request, obtain a copy thereof. *** Milan, 16 March 2012 For the Board of Directors The Chairman of the Board of Directors (Lorenzo Pellicioli) “Notice published on daily newspaper MF on 16 March 2012”
  4. 4. Financial Statements to 31 December 2011 4 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 Borgonuovo, 24, 20121 Milan, Italy Share capital: EUR 306,612,100 (fully paid-up) comprising 306,612,100 shares with a nominal value of EUR 1 each (including 25,915,116 held in the portfolio at 31 December 2011). 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) Alberto Dessy (2/5) Marco Drago Roberto Drago Andrea Guerra (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 Manager responsible for preparing the company’s accounts Independent auditors Diana Allegretti Manolo Santilli KPMG S.p.A. (*) In office until the approval of the financial statements to 31 December 2012. (1) Member of the Internal Audit Committee. (2) Member and Chairman of the Internal Audit Committee - Lead Independent Director. (3) Member of the Remuneration Committee. (4) Member and Co-ordinator of the Remuneration Committee. (5) Independent director.
  5. 5. Financial Statements to 31 December 2011 5 Contents Report on Operations 1. Profile of DeA Capital S.p.A. 2. Information for shareholders 3. The group’s key Balance Sheet and Income Statement figures 4. Significant events during the year 5. Results of the DeA Capital Group 6. Results of the parent company DeA Capital S.p.A. 7. Other information 8. DeA Capital S.p.A. - Proposal for approval of the financial statements for the year ending 31 December 2011 and related and consequent resolutions. Consolidated Financial Statements for the year ending 31 December 2011 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 ending 31 December 2011 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 Regulation - annual financial statements Summary of Subsidiaries’ Financial Statements to 31 December 2011 Independent Auditors’ Reports (Original report in Italian version only) Report of the Board of Statutory Auditors (Original report in Italian version only)
  6. 6. Financial Statements to 31 December 2011 6 Report on Operations
  7. 7. Financial Statements to 31 December 2011 7 1. Profile of DeA Capital S.p.A. With an investment portfolio of around EUR 780 million and assets under management of approximately EUR 11 billion, DeA Capital S.p.A. is currently 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. 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. 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- investments and sectors.  IDeA Capital Funds SGR, which operates in the management of private equity funds (co-investment funds, theme funds and funds of funds) Assets under management: EUR 1.2 billion  IDeA FIMIT SGR, which operates in the management of real estate funds. Assets under management: EUR 9.5 billion  Soprarno SGR, which operates in the management of total return funds and other service companies (IDeA SIM and FARE/FAI)
  8. 8. Financial Statements to 31 December 2011 8 At the end of 2011, 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. 100% Shareholdings and VC Funds 100% DeA Capital Investments (Luxembourg) Quota IDeA OF I Quota IDeA I Fund of Funds Shareholding Kenan Investments Shareholding Santé Shareholding Sigla Luxembourg Shareholding Migros Shareholding Stepstone FARE Holding FARE FAI 70% IDeA Capital Funds SGR IDeA Alternative Investments 100% 100% Soprarno SGR 65% Quota IDeA ICF II 100% Other Minority Stakes 65% Quota Blue Skye Shareholding Sigla Shareholding GDS Private Equity Investment Alternative Asset Management Holding Companies IDeA SIM Quota IDeA EESS IFIM 58,31 % 20,98% 40,32% IDeA FIMIT SGR Quota AVA In relation to the corporate structure shown above, the procedure for the partial non-proportional demerger of IDeA Alternative Investments (IDeA AI) was completed on 17 January 2011, with the result that Investitori Associati SGR and Wise SGR were removed from the basis of consolidation. In addition, on 1 February 2011, IDeA AI completed the sale of its stake in IDeA AI Sarl (holder of a portion of the investments in Stepstone/Blue Skye) and on 28 September 2011, FARE Holding completed the sale of its entire holding in FARE NPL (65%). Lastly, the merger of FARE SGR and FIMIT SGR was completed on 3 October 2011. This created IDeA FIMIT SGR, Italy’s largest real estate asset management company with around EUR 9.5 billion in assets under management and 24 funds (including five listed funds) at 31 December 2011. Following the series of planned operations, FARE Holding has a stake of 40.32% and IFIM S.r.l. (IFIM) a stake of 20.98% in IDeA FIMIT SGR. The latter company was acquired by DeA Capital S.p.A. at the time of the finalisation of the above merger (for a more complete description of the transaction, please see the section below on ”Significant events during the year").
  9. 9. Financial Statements to 31 December 2011 9 At 31 December 2011, the DeA Capital Group reported group shareholders’ equity of EUR 669.0 million, corresponding to a net asset value (NAV) of EUR 2.38 per share, with an investment portfolio of EUR 775.9 million. More specifically, the investment portfolio, which consists of equity investments of EUR 385.3 million, funds of EUR 154.3 million and net assets relating to the Alternative Asset Management business (i.e. the stake in IDeA Alternative Investments, FARE Holding and IFIM) of EUR 236.3 million, is detailed below. Investment portfolio 31.12.11 31.12.10 no. EUR/mln no. EUR/mln Equity investments 7 385.3 7 516.5 Funds 12 534.3 10 132.7 Private equity investment 19 539.6 17 649.2 Alternative asset management (*) 3 236.3 2 151.1 Investment portfolio 22 775.9 19 800.3 (*) Equity investments in subsidiaries and joint ventures relating to alternative asset management are valued using the equity method in this table.  PRIVATE EQUITY INVESTMENT o Equity 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. (with a stake of 42.99%)  minority interest 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 finance to all customer segments ("salary-backed loans" and personal loans) and services non-performing loans in Italy. The 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%)
  10. 10. Financial Statements to 31 December 2011 10 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  other units in venture capital funds  ALTERNATIVE ASSET MANAGEMENT  controlling interest in IDeA Capital Funds SGR (100%), which operates in the management of private equity funds (funds of funds, co-investment funds and theme funds) with about EUR 1.2 billion in assets under management  controlling interest in IDeA FIMIT SGR (61.30%), Italy's largest real estate asset management company with about EUR 9.5 billion in assets under management and 24 funds (including five listed funds)  controlling interest in Soprarno SGR (65%), which operates in the management of total return funds, in FARE/FAI (100%), which operate in project, property and facility management, agency services and real estate brokerage, and in IDeA SIM (65%), which operates in the segment of property brokerage companies
  11. 11. Financial Statements to 31 December 2011 11 2. Information for shareholders  Shareholder structure - DeA Capital S.p.A. (#) De Agostini SpA 58.3% Treasury stock 8.5% Mediobanca 4.8% DEB Holding* 3.8% Free float 24.6% (#) Figures to 31 December 2011. (*) Company linked to director Daniel Buaron.  Share performance (°) 0.70 0.80 0.90 1.00 1.10 1.20 1.30 1.40 1.50 1.60 DeA Capital FTSE All FTSE Star LPX 50 (°) Source: Bloomberg – 1 January to 31 December 2011
  12. 12. Financial Statements to 31 December 2011 12  Investor relations DeA Capital S.p.A. maintains stable and structured relationships with institutional and individual investors. In 2011, the company continued its communications campaign, participating in meetings and holding conference calls with portfolio managers and financial analysts from Italy and abroad. Coverage of the DeA Capital stock 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: www.lpx.ch. 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 area, 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 news, as well as providing clear and simple analysis of quarterly results and share performance. Performance of the DeA Capital share in 2011 In 2011, the DeA Capital share was up 16.9%, performing better than the FTSE Italia All-Share® index, the general index of the Italian market (-24.3%), the FTSE Star® index (-19.0%) and the LPX50® (-18.6%). The share’s liquidity was higher than in 2010, with average daily trading volumes of around 373,000 shares. Share prices for 2011 are shown below: (in Euro) 1 Jan - 31 Dec 2011 Maximum price 1.60 Minimum price 1.13 Average price 1.43 Price at 31 December 2011 (EUR per share) 1.33 Capitalisation at 31 December 2011 (EUR million) 408
  13. 13. Financial Statements to 31 December 2011 13 3. The group’s key Balance Sheet and Income Statement figures Key income statement and balance sheet figures to 31 December 2011 compared with the corresponding figures to 31 December 2010 are shown below. (EUR million) 2011 2010 NAV/share (EUR) 2.38 2.60 Group NAV 669.0 764.0 Parent Company net profit/(loss) (32.1) 16.0 Group net profit/(loss) (43.6) (26.3) Comprehensive income (Group share) Statement of Performance – IAS 1 (70.2) (15.6) Investment portfolio 775.9 800.3 Net financial position – holding companies (*) (113.5) (40.7) Net financial position - consolidated (102.5) (20.4) (*) Holding companies are as defined in the corporate structure previously reported The table below shows the composition of NAV during 2011. Change in Group NAV Total value (EUR m) No. shares (millions) Value per share (EUR) Group NAV at 31.12.10 764.0 294.0 2.60 Purchase of own shares (26.4) (18.1) 1.46 (*) Transferral of own shares (acquisition of IDeA AI minorities) 5.8 4.8 1.21 (**) Comprehensive income - Statement of Performance – IAS 1 (70.2) Other changes in NAV (4.2) Group NAV at 31.12.11 669.0 280.7 2.38 (*) Average price of purchases in 2011 (**) Consideration calculated as the average of official stock market prices in the three months prior to the transaction, weighted for volumes traded
  14. 14. Financial Statements to 31 December 2011 14 4. Significant events during the year Significant events that occurred in 2011 are described below.  IDeA I Fund of Funds (IDeA I FoF) - Paid calls and reimbursements On 4 January 2011, 1 April 2011, 1 July 2011 and 3 October 2011, DeA Capital Investments increased its investment in the IDeA I FoF fund with payments totalling EUR 17.3 million. On 1 April 2011 and 1 August 2011, DeA Capital Investments received reimbursements of EUR 11.5 million from the fund, which were used in full to reduce the carrying value of the units. In relation to the relevant portion, total payments made by DeA Capital Investments to IDeA FoF I from the beginning of the fund’s operations until 31 December 2011 were EUR 110.8 million, with a residual commitment of EUR 59.2 million. The carrying value of the fund in the consolidated financial statements is EUR 94.3 million.  IDeA Opportunity Fund I (IDeA OF I) - Paid calls and reimbursements On 4 January 2011, 1 April 2011 and 1 July 2011, DeA Capital Investments increased its investment in the IDeA OF I fund with payments totalling EUR 9.8 million. Then on 3 October 2011, DeA Capital Investments received reimbursements totalling EUR 0.5 million from the same fund (to be used in full to reduce the carrying value of the units) with a concurrent capital call of EUR 0.3 million. On 18 November 2011, the company made another payment of EUR 0.5 million thereby bringing the total investment in IDeA OF I at 31 December 2011 to EUR 52.1 million with a residual commitment of EUR 47.9 million and carrying value of EUR 36.2 million in the consolidated financial statements. 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 (IDeA CoIF I) to IDeA Opportunity Fund I (IDeA OF I) and extending investment opportunities to qualified minority interests, independently or via syndicates.  ICF II (Fund of Funds) - Paid calls On 4 January 2011, 1 April 2011, 1 July 2011 and 3 October 2011, DeA Capital Investments increased its investment in the ICF II fund with payments totalling EUR 2.6 million. In relation to the relevant portion, payments made by DeA Capital Investments to ICF II, from the beginning of the fund’s operations until 31 December 2011, totalled EUR 8.0 million, with a residual commitment of EUR 42.0 million. The carrying value of the fund in the consolidated financial statements is EUR 9.1 million.  Reorganisation of IDeA Alternative Investments With a view to simplifying the shareholder base, corporate governance and investment processes, at the start of 2011 the first step was taken to reorganise IDeA Alternative Investments (IDeA AI), achieved through a partial non-proportional demerger, with a reduction in the share capital of IDeA AI and allocation of Investitori Associati SGR and Wise SGR to the management of Investitori Associati
  15. 15. Financial Statements to 31 December 2011 15 SGR and Wise SGR respectively, in return for the cancellation of the stakes held by those companies in IDeA AI. Following approval by the Bank of Italy and the Italian Competition Authority, the deed of the demerger of IDeA AI, effective from 17 January 2011, was completed on 13 January 2011. DeA Capital S.p.A., which previously held 44.36% of the company’s capital, has therefore acquired control of 90.11% of IDeA AI and its assets. These primarily include 100% of IDeA Capital Funds SGR, 65% of Soprarno SGR and 65% of IDeA SIM. Subsequently, on 20 January 2011, in order to gain control of the entire share capital of IDeA AI, DeA Capital S.p.A. acquired the remaining 9.89% of the company’s stock held by private investors, including directors Lorenzo Pellicioli and Paolo Ceretti, in exchange for 4,806,921 DeA Capital shares, using existing own shares in the portfolio, equal to 1.57% of the capital. As part of the valuations performed for the various transactions mentioned above, the company employed the services of independent external consultants. On 26 July 2011, in order to continue the process of simplifying the shareholder base, corporate governance and investment processes, which began with the partial non-proportional demerger at the beginning of 2011, the Board of Directors of DeA Capital S.p.A. approved the merger by incorporation of the wholly-owned subsidiary IDeA Alternative Investments. The intention behind the operation, which entails the reorganisation of the DeA Capital Group’s corporate structure, is to centralise within the parent company the cash flows and the determination of strategic guidelines for the alternative asset management business. The Bank of Italy has already given its approval, and the operation took effect on 1 January 2012.  Sale of the stake in Stepstone by IDeA AI On 1 February 2011, IDeA AI sold the entire share capital of IDeA AI Sarl, which in turn owns a 4.9% stake in Stepstone, and also has a right to a portion of the management fees and carried interest of the Blue Skye fund. The total proceeds from the transaction were around EUR 2.6 million, in line with the carrying value recorded in the consolidated financial statements at 31 December 2010.  Dividends from Alternative Asset Management activities On 30 March 2011, the shareholders' meeting of FARE Holding approved the company's financial statements to 31 December 2010 and approved the distribution of dividends totalling EUR 9.0 million, including EUR 6.3 million to the parent company DeA Capital S.p.A. (paid out on 31 March 2011). On 19 April 2011, the shareholders' meeting of IDeA Alternative Investments approved the company's financial statements to 31 December 2010 and approved the distribution of dividends totalling EUR 6.7 million, to be paid entirely to the parent company DeA Capital S.p.A. (paid on 16 May 2011). Therefore, total dividends from Alternative Asset Management activities paid in 2011 to the parent company DeA Capital S.p.A. totalled EUR 13.0 million compared with EUR 9.4 million in 2010.
  16. 16. Financial Statements to 31 December 2011 16  Santé – partial cancellation of the equity plan granted to the senior management of GDS On 31 March 2011, DeA Capital Investments acquired a portion of the Santé shares subscribed for during the second half of 2009 by the senior management of GDS as part of the equity plan arranged for this purpose. Specifically, the shares acquired related to the equity plan of the chairman of the GDS executive committee, whose mandate was terminated by mutual consent at the end of 2010. The transaction, which was completed with a net investment of around EUR 1.0 million, involved the cancellation of a portion of the loans earmarked to execute the above-mentioned equity plan and put options available for the seller of the shares. Following this transaction, the DeA Capital Group's shareholding in Santé increased from 42.61% to 42.89% (i.e. 42.87% to 42.99% in economic terms).  Share buy-back plan In relation to the plan to buy and sell own shares approved by the shareholders’ meeting on 26 April 2010, on 14 February 2011 DeA Capital S.p.A. announced its intention to buy, depending on market conditions, shares up to a maximum of 50% of the average daily trading volume for the 20 trading days preceding the date of purchase. Subsequently, on 19 April 2011, the shareholders' meeting approved a new plan to buy and sell own shares that cancels and replaces the previous plan approved by the shareholders' meeting on 26 April 2010, with the same objectives as the previous plan, including the purchase of own shares to be used for extraordinary transactions and share incentive schemes, offering shareholders a means of monetising their investment, stabilising the share price and regulating trading within the limits of current legislation. The approved plan authorised the Board of Directors to buy and sell a maximum number of ordinary shares in the company representing a stake of up to 20% of share capital, on one or more occasions, on a rotating basis. The authorisation specifies that purchases may be carried out, for a maximum period of 18 months starting from 19 April 2011, in accordance with all procedures allowed by current regulations, including a public purchase or exchange offer, which was not permitted under the previous authorisation granted by the shareholders' meeting. The unit price for the purchase of the shares will be set on a case-by- case basis 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 to be 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 sale (apart from certain exceptions specified in the plan), although this limit may not apply in specific cases. Sale transactions may also be carried out for trading purposes. On the same date, the Board of Directors met after the shareholders' meeting and resolved to initiate the plan to buy and sell own shares authorised by the shareholders’ meeting, and to this end invested the Chairman of the Board of Directors and Chief Executive with all the necessary powers, to be exercised jointly or severally and with full power of delegation. In 2011, under the above-mentioned two plans, DeA Capital S.p.A. purchased around 18.1 million shares valued at about EUR 26.4 million (at an average price of EUR 1.46 per share).
  17. 17. Financial Statements to 31 December 2011 17 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 2011 the Company owned 25,915,116 own shares (equal to about 8.5% of share capital).  Stock option plan On 19 April 2011, the shareholders’ meeting approved the DeA Capital stock option plan for 2011– 2016. To implement the resolution of the shareholders' meeting, the Board of Directors of DeA Capital S.p.A. allocated a total of 1,845,000 options to certain employees of the company and its subsidiaries, and employees of the parent company De Agostini S.p.A. who carry out important roles. In line with the criteria specified in the regulations governing the DeA Capital stock option plan for 2011–2016, the Board of Directors also set the exercise price for the options allocated at EUR 1.538, which is the arithmetic mean of the official price 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 18 March 2011 and 18 April 2011. The terms and conditions of the DeA Capital stock option plan for 2011–2016 are set out in the Information Prospectus prepared in accordance with art. 84-bis of Consob Resolution 11971 of 14 May 1999, available to the public at the headquarters of DeA Capital S.p.A.
  18. 18. Financial Statements to 31 December 2011 18  Placement of Migros shares by Kenan Investments through accelerated book-building and subsequent cash distribution In April 2011, Kenan Investments, a company controlled by funds managed by BC Partners, in which the DeA Capital Group holds a stake of around 17%, completed the placement of 31 million Migros shares (representing 17.4% of the company's share capital) with institutional investors. The placement was carried out using an accelerated book-building procedure, at a price of TRY 25 per share, for a total value of around TRY 775 million (about EUR 346.5 million). Following the receipt of the proceeds from this share placement, on 5 May 2011 Kenan Investments distributed a total of EUR 296.5 million to shareholders; DeA Capital’s share amounted to EUR 50.5 million, generating a capital gain of around EUR 26.6 million. Subsequently, on 18 October 2011 Kenan Investments completed the distribution of the remainder totalling about EUR 50 million; DeA Capital's share amounts to EUR 8.5 million, generating a capital gain of about EUR 1.2 million. The above distributions, with capital gains totalling EUR 27.8 million, combined with the amount collected in 2010, bring total proceeds to date from Kenan Investments to EUR 79.8 million (with capital gains of EUR 30.1 million) for an initial investment of EUR 175 million (with the investment valued at acquisition cost of EUR 125.3 million and a carrying value in the consolidated accounts to 31 December 2011 of EUR 127.1 million). Following this placement, the indirect stake of the DeA Capital Group in Migros was 13.7% resulting from the above-mentioned direct 17% interest in Kenan Investments and the 80.5% stake held by the latter in Migros.  Sale of Şok by Migros On 7 June 2011, Migros signed an agreement to sell Şok (the discount arm of the Migros Group) to Yildiz Holding Group, a leading Turkish food producer, for around TRY 600 million. Following approval from the Turkish anti-trust authority on 17 August 2011, the deal was closed on 24 August 2011 and the transaction was settled in cash. The business sold consists of some 1,200 supermarkets, with revenues in 2010 of around TRY 1.2 billion (or 19% of Migros Group revenues).  Générale de Santé – adoption of a new corporate governance system With the aim of streamlining and achieving greater efficiency in the company's governance and operations, on 30 June 2011 the shareholders' meeting of Générale de Santé, which is controlled by the investee company Santé S.A., changed the company's governance structure by replacing the previous dual system (of a supervisory board and an executive committee) with a traditional system of just a board of directors. This change had essentially no impact on the shareholders' agreements signed by DeA Capital and the other Santé shareholders in 2007. The Board of Directors therefore appointed Pascal Roché as the new Directeur Général of the company, with management responsibilities similar to those of a CEO.
  19. 19. Financial Statements to 31 December 2011 19  First and second closing of the Idea Energy Efficiency and Sustainable Growth Fund On 1 August 2011, DeA Capital Investments participated in the first closing of the IDeA Energy Efficiency and Sustainable Growth (IDeA EESS) fund by subscribing to 250 “A” units and 1 “B” unit (the latter confers the right to 5% of any carried interest), representing a maximum commitment of up to around EUR 12.6 million. DeA Capital Investments paid approximately EUR 0.2 million into the fund on the same date. IDeA Alternative Investments subscribed to a further five “B” units of the fund (conferring the right to a total of 25% of any carried interest). On 15 December 2011, the fund undertook a second closing for a total of EUR 2.5 million, which brought the total commitment to EUR 53.5 million. Following the addition of the new shareholders, DeA Capital Investments held a 23.5% stake.  Finalisation of merger between FARE SGR and FIMIT SGR In 2011, the merger by incorporation of First Atlantic Real Estate SGR S.p.A. (FARE SGR) into FIMIT SGR S.p.A. (FIMIT SGR), which had begun with a series of non-binding agreements in 2010, was completed. Specifically, on 3 October 2011, in executing the merger deed concluded between FARE SGR and FIMIT SGR on 26 September 2011 (as approved by the respective shareholders' meetings after obtaining the favourable opinion of the Italian Competition Authority and the approval of the Bank of Italy), the merger of FARE SGR into FIMIT SGR was completed. At the same time, the latter changed its name to IDeA FIMIT SGR S.p.A. The exchange ratio, i.e. the ratio between the economic values of FIMIT SGR and FARE SGR was 1.48, which was supported by leading investment banks and judged suitable in the report by the independent expert appointed pursuant to art. 2501-sexies of the Italian Civil Code by the Court of Rome on 15 February 2011, which was filed at the registered offices of the former FARE SGR and the former FIMIT SGR on 1 April 2011. Note that determination of the exchange ratio did not include the economic rights to the performance fees of the two asset management companies' existing funds at the time of the merger, which, as agreed, continued to belong to the previous shareholders through the allocation of financial equity instruments (strumenti finanziari partecipativi, or SFP) issued before the execution of the merger deed (on 5 September 2011 by FARE SGR and on 13 September 2011 by FIMIT SGR). These SFPs were issued on a proportional basis, and more precisely, at a ratio of one financial equity instrument for every share held with no specific contribution to be made by shareholders. The SFPs grant holders specific ownership rights; they do not confer the right to participate or vote at shareholders' meetings, but only the right to vote at the special shareholders' meeting for holders of SFPs pursuant to art. 2376 of the Italian Civil Code. SFPs may be freely transferred with or without the shares. In addition, they confer the right to receive, on a proportional basis, distributions calculated as the difference between the overall amount of performance fees collected each financial year by IDeA FIMIT and directly allocable costs. These ownership rights are granted to holders of SFPs only if the shareholders' meeting of IDeA FIMIT SGR approves the distribution of profits for the period and/or reserves, up to the limits of such profits and/or reserves. In this regard, holders of SFPs have priority over shareholders in the division of profits and reserves. If the shareholders' meeting does not approve any distribution, or the amounts for which the shareholders' meeting approves a distribution are lower than the ownership rights attaching to the SFPs, these rights shall accrue, with no time limitation, with those that materialise in future periods. Any ownership rights not exercised at the dissolution date of IDeA FIMIT SGR will be granted to holders of such instruments through the division of the remaining settlement proceeds, with priority over any distribution to ordinary shareholders. The SFPs confer no rights of reimbursement or withdrawal.
  20. 20. Financial Statements to 31 December 2011 20 At the same time as the merger, the other actions to acquire control of IDeA FIMIT SGR by DeA Capital S.p.A. came into effect, namely:  the acquisition by DeA Capital of a 58.31% stake in IFIM S.r.l. (IFIM) from Feidos S.p.A. (Feidos), a company owned by Massimo Caputi  the acquisition by IFIM of the stake held by the LBREP III Fimit S.a.r.l. fund (LBREP) in FIMIT SGR, equal to 18% (pre-merger) of the company's share capital Following the series of planned operations, FARE Holding has a stake of 40.32% and IFIM a stake of 20.98% in the new IDeA FIMIT SGR. Both these companies are controlled by DeA Capital S.p.A. In financial terms, the operation required an outlay for DeA Capital S.p.A. of EUR 59.4 million, of which EUR 37.3 million related to shareholder loans to IFIM (to cover the company’s entire debt at the time of the operation, and the partial financing of the acquisition of LBREP's stake in FIMIT SGR. Inpdap EnasarcoEnpals Inarcassa Other partners IDeA Fimit Fare Holding 40.32% 18.33 % 11.34 % 5.97 % 2.98% 0.08% IFIM 20.98% DeA Capital Daniel Buaron DeA Capital Feidos Massimo Caputi 70% 30% 58.31% 30.03% 11.66% 61.30% De Agostini 58.31% Pursuant to the provisions of art. 21 of Decree Law 201 of 6 December 2011, which was converted with revisions by Law 214 of 22 December 2011, INPDAP and ENPALS were abolished and the relevant functions transferred to INPS (National Social Security Institute), which takes over all the assets and liabilities of the abolished entities from 1 January 2012. The shareholders' meeting of IDeA FIMIT SGR, held after completion of the merger, appointed the Board of Directors, comprising 13 members, of whom the majority (seven) were appointed directly or indirectly by DeA Capital S.p.A. It also appointed Massimo Brunelli as Chief Executive of IDeA FIMIT SGR and the Executive Committee comprising seven members, (of whom three were appointed by DeA Capital S.p.A.). Two of these seven members are independent. The operation described forms part of the development process that DeA Capital S.p.A. has undertaken in recent years to create an independent platform for alternative asset management. The union of FARE SGR and FIMIT SGR will make it possible to continue the growth process and consolidate the company’s leading position in the domestic market, as well as lay the foundations for strong growth in the international market as well. IDeA FIMIT will oversee the entire range of products and will be seen as the leading integrated management centre for real estate funds. It will have substantial business advantages, such as significant economies of scale and improved capacity to create and place new managed products, making it a leader in its reference market. In addition, the presence of institutional partners (such as the DeA Capital Group and leading Italian social security organisations) among shareholders will provide significant support for the development of the company and new products, allowing IDeA FIMIT SGR to position itself as the preferred partner
  21. 21. Financial Statements to 31 December 2011 21 among Italian and international institutional investors in the promotion, creation and management of real estate mutual funds. At 31 December 2011, the company had assets under management of around EUR 9.5 billion through 24 real estate funds, of which five are listed on the MIV segment of Borsa Italiana. Over 80 institutional entities and 80,000 retail investors have invested in the funds.  First closing of the Atlantic Value Added (AVA) fund The "Atlantic Value Added Closed-End Speculative Real Estate Mutual Fund" commenced operations on 23 December 2011 with a primary focus on real estate investments in the office and residential markets with the potential for growth in value. The duration of the fund is eight years. The fund, which is managed by the subsidiary IDeA FIMIT SGR, completed the first closing with a commitment of around EUR 55 million compared with a target commitment of EUR 150 million. DeA Capital Investments subscribed to a total commitment of EUR 5 million in the fund (corresponding to 9.1% of the overall commitment), and at 31 December 2011 had made the first payment of EUR 2.5 million (five units).  Investment in Harvip Investimenti S.p.A. (Harvip) On 28 December 2011, DeA Capital S.p.A. purchased 25% of the share capital of Harvip Investimenti (Harvip) from the subsidiary IDeA FIMIT SGR for consideration equal to EUR 1 million. The company manages funds and investment vehicles used to purchase distressed real estate and other investments.
  22. 22. Financial Statements to 31 December 2011 22 5. Results of the DeA Capital Group The results reported by the group for the period relate to the businesses below:  Private Equity Investment, which includes the reporting units that carry out 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 focus on the management of private equity and real estate funds Private equity The complex economic and financial situation that arose in 2008-2009 had an obvious impact on the general economy in 2010, while in 2011 there was a more widespread recovery in the first half, which was more pronounced in emerging economies. During the second half of 2011, however, on the basis of International Monetary Fund (IMF) projections, global economic growth prospects worsened. In the second half, the global financial markets experienced significant volatility mainly due to uncertainties surrounding the future of the single European currency. In 2012, a minor recession in mature European economies is projected due to the sovereign debt crisis, the impact of bank deleveraging on the real economy and the impact of further tax consolidation policies announced by governments. The most significant risks are mainly linked to the possibility that the negative effects of the sovereign debt and banking crisis in the Eurozone will get worse. This would lead to a further contraction of loans to businesses and households, and lower expectations of economic growth as a result. The first signs provided by financial markets at the beginning of 2012 seem to dismiss the most catastrophic scenarios that were taking shape in the fourth quarter of last year. Although the problems with European sovereign debt, and in particular, Greek debt, have not been resolved, the efforts of governments and commitment of the International Monetary Fund are gathering the support of investors as demonstrated by the recovery of major stock indices and the reduction in the yield spread between German government bonds and those of peripheral countries. The uncertain economic situation and the resulting volatility in financial markets have also had a major impact on the global private equity market. Investment activity has suffered from the greater unwillingness of European banks to provide loans for buy-out transactions, which is only partially offset by investors' additional use of bond financing. Furthermore, the prospect of a zero-growth scenario in Europe affected the ability of European private equity funds to raise capital, with a gradual increase in allocations toward funds focused on emerging countries. There were no trend reversals in funds raised, which totalled USD 277 billion in 2011, in line with 2010 (USD 307 billion in 2009). Instead, there was a sharp increase in the value of the amount raised in listings of companies owned by private equity and venture capital funds. The volumes of IPOs by companies financed by private equity funds in 2011 totalled USD 24 billion (USD 17 billion in 2010), exceeding even the 2007 levels. Investment activity was higher than in 2010 with buyout investment volume reaching a level of USD 258 billion compared with around USD 218 billion in 2010. Despite widespread uncertainty, investment activities rose by 18% on an annual basis. However, the aggregate figure conceals a significant reduction in investments in the second half of the year (-16%). The first three quarters of 2011 generated distributions of USD 55 billion, which was a sharp reduction from the USD 111 billion in 2010, which included USD 65 billion in the first half alone.
  23. 23. Financial Statements to 31 December 2011 23 Private equity in Europe The European private equity market amounts to just over 20% of the total. Fund raising declined markedly in 2009, while there was a gradual recovery in the following two years. Fund raising rose from EUR 55 billion in 2010 to EUR 61 billion in 2011. To be specific, with regard to the main businesses in which DeA Capital invests, in 2010 transactions were carried out at multiples, which, on average were higher than the book value multiples of Générale de Santé. In the food retail sector, acquisitions were primarily made by groups active in the sector with the aim of expanding in emerging countries, at multiples in line with the book value multiples of Migros. Total investments in buy-outs (EUR billion) 0 100 200 300 400 500 600 700 2006 2007 2008 2009 2010 2011 Investments in buy-outs in Europe (EUR billion) 0 10 20 30 40 50 60 1S 2008 2S 2008 1S 2009 2S 2009 1S 2010 2S 2010 1S 2011 2S 2011 Source: Preqin Total PE fund raising (EUR billion) 0 100 200 300 400 500 600 700 800 2006 2007 2008 2009 2010 2011 PE fund raising in Europe (EUR billion) 0 20 40 60 80 100 120 140 160 180 2006 2007 2008 2009 2010 2011 Source: Preqin Private equity in Italy Statistics prepared by AIFI (the Italian Private Equity and Venture Capital Association) and currently updated to the first half of 2011 show a 19% decline in fund raising compared with the same period in 2010, even though the first signs of the European sovereign debt crisis occurred in the second half of the year. Conversely, investment operations improved significantly and are still focused on small transactions – traditionally a feature of the Italian market – which proved to be more stable than large transactions requiring significant financial leverage.
  24. 24. Financial Statements to 31 December 2011 24 The number of new investments rose from 129 to 159, with a total value of EUR 1,524 million (up by 176% compared with the same period in 2010). Despite the difficult environment, there are positive signs from the buy-out sector, where investments in the first half of 2011 more than tripled from EUR 329 million to EUR 1,160 million, with 27 transactions. There were also good results from the expansion segment relating to minority investments intended to support the growth programmes of existing businesses, which doubled in the first half of 2011 with 74 transactions ranging from EUR 145 million to EUR 280 million. Outlook for private equity in 2012 It is reasonable to expect that the recovery in private equity investment activities may continue in future years if the macro-economic situation allows banks to avoid solvency problems and to provide cash to the credit market. The strengthening of fund raising at lower levels, together with the natural selection process of managers, will result in less competition in the area of investments, and as a result, stability in purchase prices. It will finally be possible to work out several current investment issues related to today’s environment of volatility and uncertainty. Distressed funds will benefit from new opportunities provided by the European sovereign debt crisis following the process of reducing non-core assets by European banks. Certain emerging economies such as China, Brazil, Turkey and Indonesia, offer opportunities that are mainly linked to clear economic growth and healthy government finances. In these economies, PE also benefits from a low level of penetration in total M&A transactions with a lower level of competition. Lastly, a rise in conversions linked to expectations of an increase in the value of portfolios is also likely.
  25. 25. Financial Statements to 31 December 2011 25 Real estate market in Europe The main European performance indices in the non-residential sector, such as the DTZ Fair Value Index1 , again declined in the third quarter of 2011 after posting an initial uptick over 2010 levels at the beginning of the year. Jones Lang La Salle2 also reported positive real estate performance in Europe for the first two quarters, with an overall increase in take-up of 10%, while the negative results in the third and fourth quarter, which were also tied to the decline in business confidence, will reduce overall volumes to 2010 levels leaving the average vacancy rate stable at 10.2% This trend is a reflection of the pessimistic market environment and reduced opportunities due in part to investors' increased aversion to risk. 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. However, this situation is not likely to continue since, in the Italian and other markets, an increase in required yields is also projected in response to greater systemic risk. The impact of the slowdown in the overall economic environment is instead common to all European markets as many observers are reporting a slowdown, including going forward, in the growth in lease payments, which will negatively affect potential returns and various real estate sectors since businesses will postpone their expansion plans. DTZ Research3 is projecting average global growth in lease payments for the entire real estate sector of 2.1% per annum for the four-year period 2012-2016, which is lower than the projections made in mid-2011, but still higher than the 1.7% projected in the Eurozone and US. 1 European Fair Value Q3 2011 – DTZ Foresight 2 EMEA Corporate Occupier Condition Q4 2011 – Jones Land LaSalle 3 Italy ViewPoint Nov. 2011 - CBRE
  26. 26. Financial Statements to 31 December 2011 26 Real estate funds in Italy In 2011 (Scenari Immobiliari estimates), assets managed by real estate funds rose by 4.8% over the previous year despite a gloomy economic environment. At the end of 2011 the 310 existing funds directly controlled real estate assets of around EUR 46 billion. AUM of the eight largest real estate asset managers (EUR billion) 0 1 2 3 4 5 6 7 8 9 10 IDeAFimit* Prelios Generali Immobiliare Investire Immobiliare BNPParibas REIM Fabrica Immobiliare Sorgente Torre *Pro-forma calculated as the sum of assets managed by FARE SGR and FIMIT SGR at 30 June 2011 Source: Assogestioni. Around 62% of investment is concentrated in the office market and 20% in the commercial market, the sector with the highest number of transactions in 2011. At the same time, only 1% is concentrated in the residential market. However, the trend towards a more uniform breakdown of real estate investments has still not made it possible to get close to the average overall distribution seen in Europe. Based on the analysis of Scenari Immobiliari on the retail and reserved funds industry in Italy, the real estate fund market has demonstrated its countercyclical characteristics. The overall net asset value ("NAV") of funds rose from around EUR 34 billion to EUR 36 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 Source: Scenari Immobiliari With regard to retail funds, the study by Scenari Immobiliari reports a decrease in direct real estate assets of around 4% to a level of around EUR 7.5 billion. The overall use of financial leverage dropped by 7% compared with 2010.
  27. 27. Financial Statements to 31 December 2011 27 Total NAV at year-end 2011 was about EUR 6 billion, representing a reduction of around 3% on the same period in 2010. Real estate assets of retail funds (EUR billion) 6 7 8 9 1H 2006 1H 2007 1H 2008 1H 2009 1H 2010 1H 2011 NAV of retail funds (EUR billion) 0 1 2 3 4 5 6 7 8 1H 2006 1H 2007 1H 2008 1H 2009 1H 2010 1H 2011 Source: Scenari Immobiliari For listed funds, the average discount to NAV was around 33% in 2011, a decline of about 2 points from the previous year. Following the publication of Decree Law 78/2010, the regulatory uncertainty over the last two years has left operators with the perception that there is volatility in this area. Nonetheless, the number of operating funds has risen, although at a lower rate than expectations, and a modest increase is also projected for 2012. Positive expectations for NAV growth in 2012 are associated with the projected creation of one or more funds for public buildings as specified by the recently approved stability law. Italian real estate funds saw substantial stability in property prices, while the volume of purchase and transfer transactions rose slightly. During the last six months of 2011, real estate totalling EUR 1,101 million was purchased and transferred, representing an increase of around EUR 100 million over the same period in 2010 (Assogestioni data). Sales followed the same trend moving from EUR 1,153 million in the second half of 2010 to EUR 1,221 million in the first six months of 2011.
  28. 28. Financial Statements to 31 December 2011 28 Purchases and Sales (EUR billion) 0,0 0,5 1,0 1,5 2,0 2,5 3,0 3,5 2009 2010 Jun-11 Acquisizioni Dismissioni Allocation of assets Immobili; 88,4% Partecipazioni; 1,8% Valori mobiliari; 6,6% Altro; 3,1% Source: Assogestioni. The office market, which is historically the most significant non-residential real estate market, reported a 13% increase in investments over 2010, while yields remained largely unchanged. In 2011, institutional investors were particularly interested in the commercial market, thanks especially to the greater coverage of inflation risk and the stability of cash flows. This confirmed the positive trend that had begun in 2006, which led to a gradual increase in this component to the detriment of the office market. In the three-year period 2007-2010, the Italian residential real estate market saw a sharp reduction of around 30% in purchases and sales. In the first nine months of 2011, the number of house sales and purchases declined by a further 3.3% compared with the same period in the previous year. Prices continue to be more stable than in other countries, especially with respect to high-end commercial and management property in large cities, for which there is a considerable imbalance between demand (continually growing) and supply (largely stable since 2005). Lower recourse to financial leverage in Italy than in other countries is also considered a factor of relative stability. The use of leverage is equivalent to 55% of the value of the investments for retail funds and 65% for reserved funds.
  29. 29. Financial Statements to 31 December 2011 29  The DeA Capital Group’s investment portfolio Changes in the DeA Capital Group's investment portfolio in the Private Equity Investment and Alternative Asset Management business areas, as defined above, are summarised in the table below. Investment portfolio 31.12.11 31.12.10 no. EUR/mln no. EUR/mln Equity investments 7 385.3 7 516.5 Funds 12 154.3 10 132.7 Private equity investment 19 539.6 17 649.2 Alternative asset management (*) 3 236.3 2 151.1 Investment portfolio 22 775.9 19 800.3 (*) Equity investments in subsidiaries and joint ventures relating to alternative asset management are valued using the equity method in this table. Details of portfolio asset movements in 2011 are provided in the sections on private equity investment and alternative asset management below.
  30. 30. Financial Statements to 31 December 2011 30  Private Equity Investment In terms of equity investments, at 31 December 2011, the DeA Capital Group was a shareholder of:  Santé, indirect parent company of Générale de Santé (valued at EUR 235.2 million)  Kenan Investments, indirect parent company of Migros (valued at EUR 127.1 million)  Sigla Luxembourg, the parent company of Sigla (valued at EUR 22.0 million) The investment in Mobile Access Networks Inc. was sold in 2011 for a purchase price of EUR 1.2 million. This resulted in the recording of a capital gain of EUR 0.5 million. The DeA Group is also a shareholder in four companies (Elixir Pharmaceuticals Inc., Kovio Inc., Stepstone (holder of the units in the Blue Skye fund) and Harvip Investimenti) whose value at 31 December 2011 was EUR 1 million. With regard to funds, at 31 December 2011 the PEI business of the DeA Capital Group held units in:  IDeA I FoF (valued at EUR 94.3 million)  IDeA OF I (valued at EUR 36.2 million)  ICF II (valued at EUR 9.1 million)  AVA (valued at EUR 2.5 million)  IDeA EESS and seven other venture capital funds (with a total value of approximately EUR 12.2 million) Valuations of equity investments and funds in the portfolio reflect estimates made using the information available on the date this document was prepared. Please see the notes to the financial statements below for further details on valuations and related estimates.
  31. 31. Financial Statements to 31 December 2011 31 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 2011, the DeA Capital Group's stake was 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-2011. 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 around 21,500 employees and a total of about 110 clinics. In addition, it is the main independent association of doctors in France (5,500 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 recorded under "Investments in Associates," is reported at a value of around EUR 235.2 million (EUR 282.9 million at 31 December 2010) in the consolidated financial statements at 31 December 2011; the change from 31 December 2010 was due to the loss of EUR 50.7 million and other increases of EUR 3.0 million (including the net investment linked to the partial termination of the Equity Plan granted to GDS senior management).
  32. 32. Financial Statements to 31 December 2011 32 Générale de Santé (EUR million) 2011 2010 % chg. Revenues 1,955 1,926 +1.5 EBITDA 249 229 +8.6 Recurring operating profit 50 104 -51.6 Group net profit (29) 35 -181.4 Net financial debt (854) (871) -2.0 With regard to GDS’s operating performance, 2011 saw revenues growth of +1.5% compared with the previous year (+2.4% on a same-structure basis). This translated into an increase in the EBITDA margin, thanks in part to the increasing focus on improving operating efficiency by the company, which has completed the lion's share of the plan to restructure central staff functions in the first nine months of the year ("Plan Social"). EBIT and net profit were affected by extraordinary items totalling about EUR -75.1 million resulting from the impairment of goodwill (EUR -50.5 million at GDS level for certain regions where the Group operates), net capital gains related to the sale of clinics and properties (EUR +19.0 million) and other extraordinary costs (about EUR -43.6 million including EUR -29 million related to the Plan Social). Net debt improved from EUR -871 million at 31 December 2010 to EUR -854 million at 31 December 2011, taking account of the payment of a dividend totalling EUR 56 million. The results achieved by GDS in 2011, which were positive from an operating standpoint, were generated in the context of an economic crisis and a protracted freeze on tariff increases. As already noted, the company has intensified efforts to increase organisational flexibility and efficiency. The first step in this direction, which was already seen in the final results for 2011, was the creation of the Plan Social, which made it possible to significantly reduce the cost of central departments and regional coordination. In addition, GDS's management launched a new phase calling for the reorganisation of local activities with the creation of "centres" that coordinate the operations of several clinics by optimising the utilisation of facilities and enhancing the specialist expertise of each clinic. The aim of this reorganisation is to increase GDS's operating efficiency, while strengthening the Group's image as a symbol of excellence in the French healthcare market. Another significant project launched by the company was the reduction of purchasing costs. In 2012, the tariff structure was still restrictive (although better than in previous years): the average increase forecast for medical, surgical and obstetric services was 0.19%, and 0.29% for psychiatry (well below the projected inflation rate). In addition to the aforementioned reorganisation, GDS is completing a plan to group clinics together, which also involves another three initiatives. It has commenced construction of eight new facilities including five rehabilitation centres and three psychiatry centres.
  33. 33. Financial Statements to 31 December 2011 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 finance to all customer segments. 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 the consumer credit sector in Italy by providing 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 2011 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 “Investments in associates”, is valued at approximately EUR 22.0 million in the consolidated financial statements to 31 December 2011, in line with the figure reported at 31 December 2010 (as the company broadly broke even for the period). Sigla (EUR million) 2011 2010 % chg. Loans to customers* 83.9 93.5 -10.3 Revenues from loans to customers 4.9 8.3 -40.4 CQS granted 136.2 128.8 +5.7 Revenues from CQS 7.3 7.8 -6.0 Group net profit (0.1) 0.1 n.a. (*) Net receivables exclude salary-backed loans (CQS) In terms of Sigla's operating performance, the group's results in 2011 should be seen in the context of the turbulence affecting the macroeconomic situation and financial markets. In 2011 there was a 5.7% increase in salary-backed loans in a market that continued to show the signs of weakness seen in 2010 (-9.0% to December 2011). As regards profitability, the company continued to minimise the impact on net profit of the reduction in revenues from personal loans (caused by the company's gradual shift towards salary-backed loans, which are typically less capital-intensive), thanks to the effects of measures to improve operational efficiency (operating costs were down by 28%).
  34. 34. Financial Statements to 31 December 2011 34 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 731 outlets (at 30 September 2011) with a total net sales area of approximately 782,000 square metres. Migros is present in all seven regions of Turkey, and has a marginal presence abroad in Kazakhstan, Kyrgyzstan and Macedonia. The company operates under the following names: Migros, Tansas and Macrocenter (supermarkets), 5M (hypermarkets), Ramstore (supermarkets abroad) and Kangurum (online store). On 17 February 2011 Migros finalised the sale to third parties of stores located in Azerbaijan for a total of about TRY 22 million. On 24 August 2011, Migros also completed the sale of Şok (the discount arm of the group) 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’s consolidated revenues). The stake in Kenan Investments was recorded in the consolidated financial statements to 31 December 2011 at a value of EUR 127.1 million (compared with EUR 195.0 million at 31 December 2010), including the capital reimbursement of EUR -31.2 million (part of the distribution of EUR 59 million received in 2011) and the net decrease in fair value of EUR 36.7 million. This decrease in the fair value is mostly due to the negative performance of the EUR/TRY exchange rate (2.44 at 31 December 2011 versus 2.05 at end-2010), and to a lesser extent to the decrease in the value of Migros shares (TRY 12.6 per share at 31 December 2011 versus around TRY 14 per share implied in the valuation at 31 December 2010).
  35. 35. Financial Statements to 31 December 2011 35 Moreover, using the EUR/TRY exchange rate (2.33) and reference price for Migros shares (TRY 16.35/share) on the same date, the valuation of the equity investment in Kenan Investments at 29 February 2012 would be EUR 164.1 million. Migros (TRY million) First nine months 2011 * First nine months 2010 % chg. Revenues 4,253 3,848 +10.5 EBITDA 287 252 +14.1 EBIT 175 166 +5.5 Group net profit (236) 103 n.m. Net financial debt (1,593) (1,583) -1 (*) Figures for the nine months of 2010 are provided, pending the publication of data to 31 December 2010 In terms of Migros' operating performance (with specific reference to the area of activities that excludes the discount division sold) compared with the corresponding period in 2010, results at the end of the third quarter of 2011 showed that revenues grew by 10.5% (mainly due to the opening of new supermarkets), accompanied by similar growth in operating profit. Net profit was down due to the impact the devaluation of the Turkish lira (around -22% to September 2011) had on the debt component in euros. The Turkish economy continued to grow at a fast pace (+8.2%) in 2011 although international macroeconomic tensions affected the trend. The food retail sector in Turkey performed particularly well. Revenues in the sector rose by over 17% due in part to continued growth of 13.5% in commercial space (source: Migros). The retail food market continued to show the highest growth rate in the discount segment (> 20%). However, the supermarket business continues to dominate representing 62% of the food retail sector. Migros solidified its leading position in this segment in terms of both market share and profitability. The sale of Şok at a price of TRY 600 million was motivated by the desire to focus on the business in which Migros is a leader by reducing financial leverage and operating losses resulting from the development of the discount network. The focus on the Migros brand was further strengthened with the decision to convert around 100 points of sale that were previously under the Tansas brand to the main brand. This strategy also helped the company to improve efficiency in the supply chain. For 2012 and the medium term, Migros announced its intention to expand the network by opening about 100 new points of sale per year. The new openings will mainly be in the form of small supermarkets of between 150 and 2,500 square metres. Specifically, the 150-350 square metre size will be used in high-traffic residential areas with a special emphasis on fresh products and a much broader assortment than in discount stores.
  36. 36. Financial Statements to 31 December 2011 36 - Other investments Other investments were valued at about EUR 1 million in the consolidated financial statements to 31 December 2011, a decrease of EUR 15.5 million on 31 December 2010, which was mainly due to the full write-down of investments in Stepstone and Kovio (totalling around EUR 15.2 million), the sale of the stake in Mobile Access Networks (EUR 1.3 million) and the investment in Harvip (EUR 1 million). Company Registered office Business sector % holding Elixir Pharmaceuticals Inc. US Biotech 1.30 Harvip Investimenti S.p.A. Italy Distressed real estate and other investments 25.00 Kovio Inc. US Printed circuitry 0.42 Stepstone Acquisition Sàrl Luxembourg Special opportunities 36.72 Funds At 31 December 2011, the DeA Capital Group’s PEI business included investments (other than the investment in the IDeA OF I fund and 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 seven venture capital funds worth a total of approximately EUR 154.3 million (corresponding to the estimated fair value calculated using the information available on the date this document was prepared) in the consolidated financial statements to 31 December 2011. Residual commitments associated with all the funds in the portfolio were approximately EUR 166.3 million (in their respective original currencies of denomination: EUR 164.0 million and GBP 2.0 million).
  37. 37. Financial Statements to 31 December 2011 37 - IDeA OF I IDeA Opportunity Fund I Headquarters: Italy Sector: Private equity Website: www.ideasgr.it Investment details: 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. IDeA OF I is a closed-end fund for qualified investors, which began activity on 9 May 2008 and is managed by IDeA Capital Funds SGR. The DeA Capital Investments has subscribed for a total commitment of up to EUR 100 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 – in medium-sized and large transactions. At 31 December 2011, IDeA OF I had called up approximately 52.1% of the total commitment after making five 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. through subscription 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 10 February 2011, it invested in a bond that is convertible into shares of Euticals S.p.A., Italian leader in the production of active ingredients for pharmaceutical companies that operate in the generics sector - 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 9.13% due to the exercise by the company's management of stock options.
  38. 38. Financial Statements to 31 December 2011 38 The units in IDeA OF I are valued at approximately EUR 36.2 million in the consolidated financial statements to 31 December 2011 (EUR 34.1 million at 31 December 2010) due to net investments of EUR 10.2 million, a decrease in fair value of EUR 3.2 million and the pro-rata share of the net loss for the period of EUR 4.9 million. The table below shows the key figures for IDeA OF I at 31 December 2011. IDeA OF I Registered office Year of commitment Fund size Subscribed commitment % DeA capital in fund EUR (€) IDeA Opportunity Fund I Italy 2008 216,550,000 100,000,000 46.18 Residual Commitments Total residual commitment in: EUR 47,870,000
  39. 39. Financial Statements to 31 December 2011 39 - 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 for qualified investors, which began activity on 30 January 2007 and is managed by IDeA Capital Funds SGR. DeA Capital Investments has subscribed for a total commitment of up to EUR 170 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 I FOF portfolio was invested in 42 funds with different investment strategies; these funds in turn hold around 421 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 an overweighting in medium-sized and small transactions and special situations (distressed debt, and equities and turnarounds). At 31 December 2011, IDeA I FoF had called up 65.2% of its total commitment and had made distributions totalling around 14.5% of that commitment.
  40. 40. Financial Statements to 31 December 2011 40 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 2011 2. % of fund size. Based on paid-in exposure (capital invested + residual commitments) at 31 December 2011 Units in IDeA I FoF were shown at approximately EUR 94.3 million in the consolidated financial statements to 31 December 2011 (EUR 79.9 million at end-2010); the change in the carrying value compared with the end-2010 figure was due to contributions made for capital calls totalling EUR +17.3 million, capital reimbursements received of EUR -11.5 million and a net increase in fair value of around EUR +8.6 million. The table below shows the key figures for IDeA I FoF at 31 December 2011. IDeA I FoF Registered office Year of commitme nt Fund size Subscribed commitment % DeA capital in fund EUR (€) Idea I Fund of Funds Italy 2007 681,050,000 17,000,000 24.96 Residual Commitments Total residual commitment in: EUR 59,228,000 Breakdown by Industry (1)Breakdown by type of fund (2) Breakdown by vintage (1) Breakdown by geographical area (2) 20% Not committed 2%Global RoW 14% US 20% Europe44% 9% 6% Not committed 2%Special Situations 18% Expansion VC 5% Asset Based PE Small Buyout 14% Mid Buyout 31% Large Buyout 15% 9% 6% 13% Raw materials Energy 15% Transport Industrial 8% RE 3% Luxury 4% IT Media 4% Financial 4% Pharmaceutical2% Healthcare6% Consumer staples 5% Consumer discretionary 13%9% Distressed assets 23% 2011 8% 2010 2009 20% 2008 18% 200717% 2006 8% 2005 4% 2000-2004 3%
  41. 41. Financial Statements to 31 December 2011 41 - 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, which began activity on 24 February 2009 and is managed by IDeA Capital Funds SGR. DeA Capital Investments has subscribed for a total commitment of up to EUR 50 million in the fund. Brief description: ICF II, which had 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 18 funds with different investment strategies; these funds in turn hold around 64 positions in companies with various degrees of maturity that are active in geographical regions with different growth rates. At 31 December 2011, IDeA ICF II had called up about 16% of the total 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.
  42. 42. Financial Statements to 31 December 2011 42 Notes 1. % of the FMV of the investment at 30 September 2011 2. % of the commitment. Based on paid-in exposure (capital invested + residual commitments) at 30 September 2011 Units in ICF II are valued at approximately EUR 9.1 million in the consolidated financial statements to 31 December 2011 (EUR 5.8 million at 31 December 2011), due to contributions made in the form of capital calls of EUR +2.6 million and an increase in fair value making up the difference. The table below shows the key figures for ICF II at 31 December 2011. IDeA II Registered office Year of commitme nt Fund size Subscribed commitment % DeA capital in fund EUR (€) ICF II Italy 2009 281,000,000 50,000,000 17.79 Residual Commitments Total residual commitment in: EUR 42,012,187 Breakdown by sector (1)Breakdown by type of fund(2) Breakdown by vintage (1) Breakdown by geographical area (2) 15% Global RoW 18% US 30% Europe 37% 16% Special Situations 21% Expansion VC 9% Small/Mid Buyout 38% Large Buyout 16% 11% 2011 8% 2010 34% 2009 44% 2008 2% 2007 2004-2006 2% 8% 6% Distressed assets 36% Other 0% Energy 4% Raw Materials 2% Industrial Luxury 0% IT 16% Media 4% Financial Healthcare2% Consumer staples 11% Consumer discretionary 11%
  43. 43. Financial Statements to 31 December 2011 43 - IDeA EESS Idea Energy Efficiency and Sustainable Growth Fund Headquarters: Italy Sector: Private equity Website: www.ideasgr.it Investment details: On 1 August 2011, DeA Capital Investments participated in the first closing of the IDeA Energy Efficiency and Sustainable Growth (IDeA EESS) Fund by subscribing to 250 “A” units and one “B” unit (the latter confers the right to 5% of any carried interest), representing a maximum commitment of around EUR 12.6 million. On 15 December 2011, the fund undertook a second closing for a total of EUR 2.5 million which brought the total commitment to EUR 53.5 million. Following the entry of the new shareholders, DeA Capital Investments held a 23.5% stake. IDeA AI subscribed to a further five “B” units of the fund (conferring the right to a total of 25% of any carried interest). Brief description: IDeA EESS is a closed-end mutual fund under Italian law for qualified investors, managed by IDeA Capital Funds SGR, which seeks to acquire minority and controlling holdings 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 without compromising effectiveness in reducing CO2 emissions, against a backdrop of sustained growth in global energy demand. In accordance with the objective of an overall size of EUR 100 million for the fund, IDeA Capital Funds SGR is continuing its fund raising activities in both Italy and other countries, where contacts with a number of leading institutional investors have already been made. The units subscribed in IDeA EESS in 2011 are valued at approximately EUR 18 thousand in the consolidated financial statements to 31 December 2011. The table below shows the key figures for IDeA EESS at 31 December 2011. IDeA EESS Registered office Year of commitment Fund size Subscribed commitment % DeA capital in fund EUR (€) Idea Energy Efficiency and Sustainable Growth Fund Italy 2011 53,450,000 12,550,000 23.48 Residual Commitments Total residual commitment in: EUR 12,331,794
  44. 44. Financial Statements to 31 December 2011 44 - AVA Atlantic Value Added Headquarters: Italy Sector: Private equity 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 its operations on 23 December 2011. DeA Capital Investments subscribed to a total commitment in the fund of up to EUR 5 million (corresponding to 9.1% of the overall commitment), and at 31 December 2011 had made the first payment of EUR 2.5 million (five class A units). Brief description: The "Atlantic Value Added Closed-End Speculative Real Estate Mutual Fund" commenced operations on 23 December 2011 with a primary focus on real estate investments in the office and residential markets with a potential for growth in value. The duration of the fund is eight years. The fund, which is managed by the subsidiary IDeA FIMIT SGR, completed the first closing with a commitment of around EUR 55 million compared with a target commitment of EUR 150 million. On 29 December 2011, the fund made its first investment totalling EUR 41.5 million through the purchase/subscription of 83 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 15 properties primarily for residential purposes located in northern Italy. The table below shows the key figures for AVA at 31 December 2011. AVA Registered office Year of commitment Fund size Subscribed commitment % DeA capital in fund EUR (€) Atlantic Value Added Italy 2011 55,000,000 5,000,000 9.09 Residual Commitments Total residual commitment in: EUR 2,460,000
  45. 45. Financial Statements to 31 December 2011 45 - 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 12.2 million in the financial statements to 31 December 2011 (EUR 13.0 million at end-2010). The table below shows the key figures for venture capital funds in the portfolio at 31 December 2011. Venture capital fund Registered office Year of commitme nt Fund size Subscribed commitme nt % 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 389,172,000 5,000,000 1.29 Total dollars 26,925,000 EUR (€) Nexit Infocom 2000 Guernsey 2000 66,325,790 3,819,167 5.76 Sterling (GBP) Amadeus Capital II UK EU 2000 235,000,000 13,500,000 5.74 Residual Commitments Total residual commitment in: EUR 2,432,977
  46. 46. Financial Statements to 31 December 2011 46  Alternative Asset Management At 31 December 2011, DeA Capital S.p.A. was the owner of:  100% of IDeA Capital Funds SGR (through IDeA AI, which merged into DeA Capital S.p.A. effective 1 January 2012)  61.30% of IDeA FIMIT SGR (including 40.32% held through FARE Holding and 20.98% through IFIM)  100% of FARE/FAI (which operates in project, property and facility management, agency services and real estate brokerage), 65% of Soprano SGR (which operates in asset management through the management of total return funds) and 65% of IDeA SIM (which operates in the business of property brokerage companies with no temporary or permanent holdings of liquid assets or clients’ financial instruments, and with no assumption of risk) - IDeA Capital Funds SGR Headquarters: Italy Sector: Alternative Asset Management - Private Equity Website: www.ideasgr.it Investment details: IDeA Capital Funds SGR is the leading independent Italian asset management company operating in the management of direct funds and funds of domestic and global 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). Although managed through separate investment programmes, the business areas are part of the same strategy to create value. The investment programmes of IDeA Capital Funds SGR, which are regulated by the Bank of Italy and Consob, leverage the management team's and sponsors' 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:  Industry  Investment strategy and stage (buy-outs, venture capital, special situations, etc.)  Geographical region (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 concentrate 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 sector funds such as EESS is focused on growth capital and buyout private equity to support the growth of small and medium-sized enterprises with
  47. 47. Financial Statements to 31 December 2011 47 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. The table below summarises the value of assets under management for IDeA Capital Funds SGR at 31 December 2011. (EUR million) Assets under management at 31.12.11 Management fees at 31.12.11 IDeA Capital Funds SGR ICF II 281 2,8 IDeA EESS 53 0.8 IDeA I FoF 681 6,8 IDeA OF I 217 2,4 Total IDeA Capital Funds SGR 1,232 12,8 In 2011 the company's operating performance was largely in line with performance in the previous year. IDeA Capital Funds SGR (EUR million) 2011 2010 % change AUM 1.232 1.179 4,5% Management fees 12,8 12,9 -0,6% EBT 7,6 7,7 -2,1% Net profit 4,9 5,1 -4,1%
  48. 48. Financial Statements to 31 December 2011 48 - IDeA FIMIT SGR Headquarters: Italy Sector: Alternative Asset Management - Real Estate Website: www.firstatlantic.it Investment details: On 3 October 2011, in executing the merger deed concluded between FARE SGR and FIMIT SGR on 26 September 2011, as approved by their respective shareholders' meetings after obtaining the favourable opinion of the Italian Competition Authority and the approval of the Bank of Italy, the merger of FARE SGR and FIMIT SGR was completed. At the same time, the latter changed its name to IDeA FIMIT SGR. At the same time as the merger, the other steps for the acquisition of control of IDeA FIMIT SGR by DeA Capital S.p.A. came into effect, namely:  the purchase by DeA Capital S.p.A. from Feidos S.p.A. (a company owned by Massimo Caputi) of a 58.31% stake in IFIM S.r.l. (IFIM), which in turn holds a 17.15% (pre- merger) stake in FIMIT SGR  the acquisition by IFIM from LBREP III Fimit S.a.r.l. of the stake held by the latter in FIMIT SGR, equal to 18% (pre-merger) of the share capital of FIMIT SGR Following the series of planned operations, FARE Holding has a stake of 40.32% and IFIM a stake of 20.98% in the new IDeA FIMIT SGR. Both these companies are controlled by DeA Capital S.p.A. IDeA FIMIT SGR is the largest real estate asset management company in Italy, with around EUR 9.5 billion in assets under management and 24 managed funds (including five listed funds). This puts it among the major partners of Italian and international institutional investors in promoting, creating and managing closed-end mutual investment real estate funds. IDeA FIMIT SGR undertakes three main lines of business:  the development of real estate mutual investment funds dedicated to 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 investment in transactions with low risk, a stable return, low volatility, simple financial structure 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 unit-holders consisting of Italian and
  49. 49. Financial Statements to 31 December 2011 49 international investors with a high standing such as pension funds, bank and insurance groups, capital companies and sovereign funds. The table below summarises the value of assets under management for IDeA FIMIT SGR at 31 December 2011. Certain key financials relating to the listed funds (Atlantic 1, Atlantic 2 Alpha, Beta and Delta) in the asset management portfolio are also reported together 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. (EUR millions) Assets under management at 31.12.11 Breakdown of funds Atlantic 1 680 Atlantic 2 Berenice 536 Alpha 493 Delta 359 Beta 210 Listed funds 2.278 Reserved funds 7.198 Total 9.476
  50. 50. Financial Statements to 31 December 2011 50 Atlantic 1: Diversification by geographical area Atlantic 1: Diversification by intended use Atlantic 2: Diversification by geographical area Atlantic 2: Diversification by intended use Atlantic 1 31/12/2011 Market value of property 655.070.000 Historical cost and capitalised charges 618.075.337 Loan 359.662.249 Net Asset Value ("NAV") 269.803.263 NAV/unit (EUR) 569,112 Market price/unit (EUR) 316,90 Dividend yield of placement* 5,49% Ratio between income per unit and average annual nominal value per unit Atlantic 2 - Berenice 31/12/2011 Market value of property 518.370.000 Historical cost and capitalised charges 482.652.918 Financing 281.797.742 Net Asset Value ("NAV") 242.369.608 NAV/unit (EUR) 403,947 Market price/unit (EUR) 299,00 Dividend yield of placement* 11,82% Ratio between income per unit and average annual nominal value per unit Lombardia 66% Lazio 15% Campania 13% Piemonte 6% Offices 82% Commercial 18% Lombardia 44% Lazio 40% Piemonte 14% Other 2% Offices 69% Industrial 31%
  51. 51. Financial Statements to 31 December 2011 51 Alpha: Diversification by geographical area Alpha: Diversification by intended use Beta: Diversification by geographical area Beta: Diversification by intended use Alpha 31/12/2011 Market value of property 421.988.195 Historical cost and capitalised charges 321.489.509 Financing 84.484.777 Net Asset Value ("NAV") 394.550.636 NAV / Quota (Euro) 3.798,321 NAV/unit (EUR) 1.515 Dividend yield of placement* 6,97% Ratio between income per unit and average annual nominal value per unit Beta 31/12/2011 Market value of property 166.542.243 Historical cost and capitalised charges 163.271.910 Loan 32.657.518 Net Asset Value ("NAV") 147.384.355 NAV/unit (EUR) 548,971 Market price/unit (EUR) 474 Dividend yield of placement* 10,10% Ratio between income per unit and average annual nominal value per unit Lombardia 12% Lazio 83% Emilia 5% Offices 60% Other 40% Umbria 26% Sardegna 39% Lazio 35% Offices 41% Hotels 39% Specific Use 19% Commercial 1%
  52. 52. Financial Statements to 31 December 2011 52 Delta: Diversification by geographical area Delta: Diversification by intended use In terms of the operating performance of IDeA FIMIT SGR, the comparison between the income statement figures in the financial statements to 31 December 2011 and the income statement for the year ending 31 December 2010 is not very meaningful due to changes in the basis of consolidation that occurred in 2011. Thus, a pro-forma income statement was prepared for 2011 which simulates the effects of the merger as if it had occurred on 1 January 2011. Delta 31/12/2011 Market value of property 342.443.333 Historical cost and capitalised charges 373.440.569 Loan 145.721.800 Net Asset Value ("NAV") 209.739.751 NAV/unit (EUR) 99,624 Market price/unit (EUR) 44,73 Dividend yield of placement* n.a. No distributions arising from the investment IDeA FIMIT SGR (mln €) 2011 2011 Pro-rata 2010 Pro-rata AUM 9.476 9.476 8.342 Management fees 30,8 58,6 56,6 EBT 11,4 23,6 29,2 Net profit 7,1 14,8 18,8 Hotels 62% Other 34% Offices 4% Lombardia 4% Sardegna 41% Veneto 14% Calabria 11% Emilia 10% Abruzzo 10% Campania 4% Piemonte 3% Toscana 3%

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