DeA Capital_relazione_finanziaria_semestrale_30 giugno_2012_eng_final

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DeA Capital_relazione_finanziaria_semestrale_30 giugno_2012_eng_final

  1. 1. Half-Year Report to 30 June 2012 1 HALF-YEAR REPORT TO 30 JUNE 2012 ______________________ First half of 2012 Board of Directors of DeA Capital S.p.A. Milan, 29 August 2012
  2. 2. Half-Year Report to 30 June 2012 2 DeA Capital S.p.A. (the company or the parent company) 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), represented by shares with a nominal unit value of EUR 1, Each, totalling 306,612,100 shares (27,606,590 of which 29,101,553 own shares at 30 June 2012) Tax code, VAT code and recorded in the Milan Register of Companies under no. 07918170015 Board of Directors (*) Chairman Lorenzo Pellicioli Chief Executive Officer Paolo Ceretti Directors Lino Benassi (1) Rosario Bifulco (1/4/5) Marco Boroli Daniel Buaron Claudio Costamagna (3/5) Marco Drago Roberto Drago Severino Salvemini (2/3/5) (#) Board of Statutory Auditors (*) Chairman Angelo Gaviani Regular Auditors Gian Piero Balducci Cesare Andrea Grifoni Alternate Auditors Andrea Bonafè Maurizio Ferrero Giulio Gasloli Secretariat of the Diana Allegretti Board of Directors Manager responsible for Manolo Santilli preparing the company’s accounting statements Independent auditors KPMG S.p.A. (*) In office until the approval of the financial statements to 31 December 2012 (#) Co-opted by the Board of Directors of DeA Capital S.p.A. on 14 May 2012 (1) Member of the Internal Audit Committee (2) Member and Chairman of the Internal Audit Committee (3) Member of the Remuneration Committee (4) Member and Co-ordinator of the Remuneration Committee (5) Independent director
  3. 3. Half-Year Report to 30 June 2012 3 Contents Interim 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 in the first half of 2012 5. Results of the DeA Capital Group 6. Other information Summary consolidated half-year financial statements for the period 1 January to 30 June 2012 Statement of responsibilities for consolidated financial statements to 30 June 2012 Independent Auditors’ Report (Original report available in Italian version only)
  4. 4. Half-Year Report to 30 June 2012 4 Interim Report on Operations
  5. 5. Half-Year Report to 30 June 2012 5 1. Profile of DeA Capital S.p.A. With an investment portfolio of around EUR 850 million and assets under management of over EUR 10,500 million, 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- investment funds and theme funds  IDeA Capital Funds SGR, which manages private equity funds (funds of funds, co-investment funds and theme funds) Assets under management: EUR 1.2 billion  IDeA FIMIT SGR, which manages real estate funds Assets under management: EUR 9.3 billion  Soprarno SGR, which manages total return funds and other services companies (IDeA SIM, IDeA Servizi Immobiliari and IDeA Agency)
  6. 6. Half-Year Report to 30 June 2012 6 At the end of the first half of 2012, the corporate structure of the Group headed by DeA Capital S.p.A. (DeA Capital Group, or the Group) is as summarised below: DeA Capital S.p.A. Shareholdings and VC Funds 100% DeA Capital Investments S.A. (Luxembourg) Quota IDeA OF I Quota IDeA I Fund of Funds Shareholding Kenan Investments Shareholding Santé Shareholding Sigla Luxembourg Shareholding Migros Shareholding Stepstone IDeA Servizi Immobiliari IDeA Agency 100% IDeA Capital Funds SGR 100% 100% Soprarno SGR 65% Quota ICF II 100% 65% Shareholding Sigla Shareholding GDS Private Equity Investment Alternative Asset Management Holding Companies IDeA SIM Quota EESS IFIM 100% 20,98% 40,32% IDeA FIMIT SGR Quota AVA Direct Private Equity Investment Indirect Private Equity Investment DeA Capital Real Estate Alternative Asset Management With regard to the corporate structure shown above, on 1 January 2012 the merger by incorporation of the wholly-owned subsidiary IDeA Alternative Investments into DeA Capital S.p.A., which was decided by the Boards of Directors of these companies on 26 July 2011, became effective. The purpose of the merger, which entailed the reorganisation of the DeA Capital Group’s corporate structure, is to centralise within the parent company the cash flows from, and the determination of strategic guidelines for, the alternative asset management business. Subsequently, on 28 March 2012, an agreement was signed with Deb Holding, a company controlled by the director Daniel Buaron that holds 30% of the share capital of FARE Holding. The purpose of the agreement was to bring forward, with effect from 24 April 2012, the exercise of the option to sell the stake in FARE Holding held by Deb Holding to DeA Capital S.p.A. Under the agreements stipulated, on 24 April 2012 DeA Capital S.p.A. took full control of FARE Holding, and changed the company name of FARE Holding and its subsidiaries FARE and FAI, to DeA Capital Real Estate, IDeA Servizi Immobiliari and IDeA Agency respectively. Lastly, on 11 April 2012 an agreement was signed with Massimo Caputi and the company he controls, Feidos S.p.A., which together own a stake of 41.69% in I.F.IM. (IFIM), which in turn holds a stake of 20.98% in IDeA FIMIT SGR. The purpose of the agreement was to bring forward, to this date, the exercise of the option to sell the stakes in IFIM held by Massimo Caputi and Feidos to DeA Capital S.p.A. Following the transaction, DeA Capital S.p.A. acquired full control of IFIM.
  7. 7. Half-Year Report to 30 June 2012 7 At 30 June 2012, the DeA Capital Group reported group shareholders’ equity of EUR 728.3 million, corresponding to a net asset value (NAV) of EUR 2.62 per share, with an investment portfolio of EUR 849.9 million. More specifically, the investment portfolio, which consists of private equity investments of EUR 448.6 million, private equity investment funds of EUR 172.4 million and net assets relating to the Alternative Asset Management business of EUR 228.9 million, is detailed below. Investment portfolio n. EUR/mln Equity investments 8 448.6 Funds 12 172.4 Private Equity Investment 20 621.0 Alternative Asset Management (*) 6 228.9 Investment portfolio 26 849.9 (*) Equity investments in subsidiaries relating to Alternative Asset Management are valued using the equity method in this table. 30.06.2012  PRIVATE EQUITY INVESTMENT o Main 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., an associate of the DeA Capital Group (with a stake of 42.89%)  minority shareholding in Migros, Turkey's biggest food retail chain, whose shares are listed on the Istanbul Stock Exchange. The investment is held through the Luxembourg-registered company Kenan Investments S.A., an investment recorded in the AFS portfolio of the DeA Capital Group (with a stake of 17.03%)  strategic shareholding in Sigla, which provides 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%)
  8. 8. Half-Year Report to 30 June 2012 8 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 seven venture capital funds.  ALTERNATIVE ASSET MANAGEMENT  controlling interest in IDeA Capital Funds SGR (100%), which manages private equity funds (funds of funds, co-investment funds and theme funds) with about EUR 1.2 billion in assets under management and four funds  controlling interest in IDeA FIMIT SGR (61.30%), Italy's largest real estate asset management company with about EUR 9.3 billion in assets under management and 23 funds (including five listed funds)  controlling interest in Soprarno SGR (65%), which manages total return funds, in IDeA Servizi Immobiliari/IDeA Agency (100%), which operates in project, property and facility management and real estate brokerage, and in IDeA SIM (65%), which operates in investment consultancy
  9. 9. Half-Year Report to 30 June 2012 9 2. Information for shareholders  Shareholder structure - DeA Capital S.p.A. (#) De Agostini SpA 58.3% Treasury stock 9.5% Mediobanca 4.8% DEB Holding* 3.8% Free float 23.6% (#) Figures to 30 June 2012 (*) Company controlled by director Daniel Buaron
  10. 10. Half-Year Report to 30 June 2012 10  Share performance (°) - Period from 11 January 2007, when DeA Capital S.p.A. began operations, to 30 June 2012 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 DeA Capital LPX 50 FTSE Star FTSE All - Period from 1 January 2012 to 30 June 2012 1.10 1.20 1.30 1.40 1.50 1.60 DeA Capital FTSE All FTSE STAR LPX 50 (°) Source: Bloomberg
  11. 11. Half-Year Report to 30 June 2012 11  Investor relations DeA Capital S.p.A. maintains stable and structured relationships with institutional and individual investors. In 2012, the company continued its communications campaign, participating in the Milan Star Conference in March 2012 and holding meetings and 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. DeA Capital also launched a mobile site www.deacapital.mobi in July 2012. This new tool will enable stakeholders to access key information about DeA Capital including updates on share performance, new financial publications and the calendar of corporate events, as well as a wealth of other information, via their mobile phone or smartphone. Performance of the DeA Capital share at 30 June 2012 The company’s share declined by 54.7% between 11 January 2007, when DeA Capital S.p.A. began operations, and 30 June 2012. In the same period of time, the FTSE All-Share®, FTSE Star® and LPX50® reported performances of -64.1%, -42.5% and -50.1% respectively. The DeA Capital share lost 3.5% in the first half of 2012, while the FTSE All-Share®, the Italian market’s general index, declined 4.2%, the FTSE Star® gained 5.7% and the LPX50® gained 7.9%; the share’s liquidity was lower in the first half of 2012 than in 2011, with average daily trading volumes of around 105,000 shares. The share prices recorded in the first half of 2012 are shown below. (in Euro) 1 Jan – 30 Jun 2012 Maximum price 1.49 Minimum price 1.24 Average price 1.34 Price at 30 June 2012 (EUR per share) 1.28 Market capitalisation at 30 June 2012 (EUR million) 355
  12. 12. Half-Year Report to 30 June 2012 12 3. The Group’s key Balance Sheet and Income Statement figures Key Consolidated Income Statement and Balance Sheet figures at 30 June 2012, compared with the corresponding figures at 30 June 2011 and 31 December 2011, are shown below. NAV/share (EUR) 2.62 2.74 2.38 Group NAV 728.3 792.2 669.0 Group net profit/(loss) 1.3 9.3 (43.6) Comprehensive income (Group share) 63.3 38.5 (70.2) (Statement of Performance – IAS 1) Investment portfolio 849.9 796.9 775.9 Net financial position – Holding Companies (118.2) (5.8) (113.5) Net financial position consolidated (113.1) 18.1 (102.5) (EUR million) June 30, 2012 June 30, 2011 December 31,2011 The table below shows the change in the NAV during the first half of 2012: Group NAV at 31.12.11 669.0 280.7 2.38 Purchase of own shares (4.3) (3.2) 1.34 Other comprehensive income - Statement of Performance – IAS 1 63.3 Other movements of NAV 0.3 Group NAV at 30.06.12 728.3 277.5 2.62 (*) Average price of purchases in 2012 Change in Group NAV Total value (EUR m) No. Shares (millions) Value per share (€) *
  13. 13. Half-Year Report to 30 June 2012 13 4. Significant events in the first half of 2012 The significant events that occurred in the first half of 2012 are reported below.  Private equity funds – paid calls and distributions On 12 January 2012, 16 April 2012 and 3 May 2012, the DeA Capital Group increased its investment in the IDeA I FoF, ICF II, IDeA OF I and IDeA EESS funds, with total payments of EUR 16.2 million (EUR 10.3 million, EUR 4.5 million, EUR 0.5 million and EUR 0.9 million respectively). On 16 April 2012 the DeA Capital Group received capital reimbursements totalling EUR 8.7 million from the IDeA I FoF and ICF II funds (EUR 7.4 million and EUR 1.3 million respectively) to be used in full to reduce the carrying value of the units.  Acquisition of the remaining shares in FARE Holding and IFIM On 28 March 2012, an agreement was signed with Deb Holding, a company controlled by the director Daniel Buaron that holds 30% of the share capital of FARE Holding. The purpose of the agreement was to anticipate, with effect from 24 April 2012, the exercise of the put option held by Deb Holding on its own stake in FARE Holding. The transaction, which enabled DeA Capital S.p.A. to acquire full control of FARE Holding, set the price of the stake at EUR 31.8 million, in addition to the payment of amounts corresponding to the NAV of units of the Atlantic 1 and Atlantic 2/Berenice funds (in line with the amount booked under the net financial position at 31 December 2011), payable as of 12 December 2013. The agreement also stipulates payment to Deb Holding of an amount equal to 30% of any dividends to be distributed by FARE Holding for 2012. In accordance with the agreements already in place, director Daniel Buaron resigned from his positions at IDeA FIMIT SGR and FARE Holding, with effect from 12 April 2012 (the date of the approval of the 2011 financial statements of IDeA FIMIT SGR) and 24 April 2012 respectively. Under the agreements stipulated, on 24 April 2012 DeA Capital S.p.A. changed the company name of FARE Holding and its subsidiaries FARE and FAI, to DeA Capital Real Estate, IDeA Servizi Immobiliari and IDeA Agency respectively. On 11 April 2012 the agreement was signed with Massimo Caputi and the company he controls, Feidos S.p.A., which together own a stake of 41.69% in I.F.IM. (IFIM), which in turn holds 20.98% in IDeA FIMIT SGR, for the purpose of anticipating, on this date, the exercise of the option to sell to DeA Capital S.p.A. the stakes in IFIM held by Massimo Caputi and Feidos. The transaction, which enabled DeA Capital S.p.A. to acquire full control of IFIM, was concluded for EUR 19.3 million. The agreement also provides for the payment to the sellers of a supplement to the price (earn- out), connected to the completion, by IDeA FIMIT SGR - by 30 June 2013 - of a list of potential new funds, negotiations for which were already under way when Massimo Caputi sold his stake.
  14. 14. Half-Year Report to 30 June 2012 14 In accordance with agreements in force, Massimo Caputi resigned from his positions at IDeA FIMIT SGR and IFIM, with effect from 12 April 2012.  Dividends from alternative asset management activities On 27 March 2012, the shareholders’ meeting of IDeA Servizi Immobiliari (previously FARE) approved the payment of a dividend totalling EUR 3.0 million (paid on 31 March 2012), all of which was payable to DeA Capital S.p.A.. On 12 April 2012, the shareholders’ meeting of IDeA FIMIT SGR S.p.A. approved the payment of a dividend totalling EUR 11.8 million, of which around EUR 7.2 million to FARE Holding (now DeA Capital Real Estate) and IFIM, a wholly-owned subsidiary of DeA Capital S.p.A. The dividend was paid on 25 May 2012. On 17 April 2012, the shareholders' meeting of IDeA Capital Funds SGR approved the company's financial statements to 31 December 2011 and voted to pay dividends totalling EUR 4.8 million entirely to DeA Capital S.p.A. The dividend was paid on 13 July 2012. In light of the above, the dividends paid in 2012 from Alternative Asset Management activities to the holding company totaled EUR 15.0 million.  Share buy-back plan On 17 April 2012, the shareholders’ meeting approved a new plan to buy and sell own shares. The plan cancelled and replaced the previous plan authorised by the shareholders’ meeting on 19 April 2011, which was scheduled to expire on 19 October 2012. The new plan will have the same objectives as the previous one, including the purchase of own shares to be used for extraordinary operations and share incentive plans, offering shareholders a means of monetising their investment, stabilising the share price and regulating trading within the limits of the legislation in force. The authorisation specifies that purchases may be carried out, for a maximum period of 18 months starting from 17 April 2012, in accordance with all procedures allowed by current regulations, and that DeA Capital S.p.A. may also sell the shares purchased for the purposes of trading. The unit price for the purchase of the shares is set by the Board of Directors, but in any case must not be more than 20% above or below the share’s reference price on the trading day prior to each purchase. In contrast, the authorisation to sell own shares already held in the company’s portfolio and any shares bought in the future was granted for an unlimited period, to be implemented using the methods deemed most appropriate and at a price to be determined on a case-by-case basis by the Board of Directors, which must not, however, be more than 20% below the share's reference price on the trading day prior to the sale (apart from in certain exceptional cases specified in the plan). Sale transactions may also be carried out for trading purposes. Also on 17 April 2012, the company’s Board of Directors resolved to initiate the plan to buy and sell own shares authorised by the shareholders’ meeting, and to this end vested the Chairman of the Board of Directors and the Chief Executive Officer with all the necessary powers, to be exercised jointly or severally and with full powers of delegation.
  15. 15. Half-Year Report to 30 June 2012 15  Stock option and performance share plans On 17 April 2012, the shareholders’ meeting approved the DeA Capital Stock Option Plan 2012–2014. To implement the resolution of the shareholders' meeting, the Board of Directors of DeA Capital S.p.A., at its meeting held on the same day, allocated a total of 1,350,000 options to certain employees of the company and its subsidiaries and 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 2012-14, the Board of Directors also set the exercise price for the options allocated at EUR 1.3363, which is the arithmetic mean of the official prices of ordinary DeA Capital shares on the Mercato Telematico Azionario, the Italian screen-based trading system organised and managed by Borsa Italiana S.p.A., on the trading days between 17 March 2012 and 16 April 2012. The shareholders’ meeting also approved a paid capital increase, in divisible form, without option rights, via the issue of a maximum of 1,350,000 shares to service the DeA Capital Stock Option Plan 2012-2014. The shareholders’ meeting also approved the Performance Share Plan 2012–2014. To implement the resolution of the shareholders' meeting, the Board of Directors allocated a total of 302,500 units (representing the right to receive ordinary shares of the company, free of charge, under the terms and conditions of the plan) to certain employees of the company and its subsidiaries and of the parent company, De Agostini S.p.A., who carry out important roles for the company. The shares allocated due to the vesting of units will be drawn from the own shares already held by the company. The terms and conditions of the DeA Capital Stock Option Plan 2012–2014 and the Performance Share Plan 2012-2014 are described in the information prospectus prepared in accordance with art. 84-bis of Consob Resolution 11971 of 14 May 1999, available to the public at the registered office of DeA Capital S.p.A. and on the company’s website www.deacapital.it in the section Corporate Governance/Incentive Plans.  Remuneration report, amendments to the articles of association and reduction in the number of directors The shareholders’ meeting of 17 April 2012 also approved the company’s remuneration policy and, lastly: a. the amendments to articles 11 and 18 of the company’s articles of association and the introduction of the new article 27 on the issue of “Gender equality in the composition of boards of directors and statutory auditors” (the “pink quotas”) b. the reduction in the number of directors from 11 to ten following the resignation of director Andrea Guerra c. the amendment to article 5 of the articles of association to incorporate the capital increase approved by the shareholders' meeting The text of the amended articles has been made available in accordance with the legal deadlines at the registered office of DeA Capital S.p.A. at Via Borgonuovo 24, Milan, and on the company's website www.deacapital.it in the section Corporate Governance/Articles of Association.
  16. 16. Half-Year Report to 30 June 2012 16  Resignation of a director and co-option of a new director On 4 May 2012, director Alberto Dessy, who qualified as an “independent” director and who was also Chairman of the Internal Audit Committee and a member of the Remuneration Committee and the Supervisory Board of DeA Capital S.p.A., resigned with immediate effect. His decision was due to an increase in professional commitments incompatible with continuing to hold office in DeA Capital S.p.A. On 11 May 2012, the Board of Directors co-opted Severino Salvemini as a “non-executive” and “independent” director to replace Alberto Dessy, pursuant to art. 11 of the articles of association and art. 2386 of the Italian Civil Code. After verifying that Severino Salvemini met the requirements of independence, the Board of Directors approved the appointment of Salvemini as Chairman of the Internal Audit Committee, Lead Independent Director and a member of the Remuneration Committee and the Supervisory Board of DeA Capital S.p.A.
  17. 17. Half-Year Report to 30 June 2012 17 5. Results of the DeA Capital Group The results reported by the DeA Capital 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  The DeA Capital Group’s investment portfolio The composition of the DeA Capital Group's investment portfolio in the Private Equity Investment and Alternative Asset Management business areas, as defined above, are summarised in the table below. Investment portfolio n. EUR/mln Equity investments 8 448.6 Funds 12 172.4 Private Equity Investment 20 621.0 Alternative Asset Management (*) 6 228.9 Investment portfolio 26 849.9 (*) Equity investments in subsidiaries relating to Alternative Asset Management are valued using the equity method in this table. 30.06.2012 Details on portfolio asset movements in the first six months of 2012 are provided in the sections on the Private Equity Investment and Alternative Asset Management businesses below.
  18. 18. Half-Year Report to 30 June 2012 18  Private Equity Investment In terms of equity investments, at 30 June 2012, the DeA Capital Group was a shareholder of:  Santé, indirect parent company of Générale de Santé (valued at EUR 233.7 million)  Kenan Investments, indirect parent company of Migros (valued at EUR 192.1 million)  Sigla Luxembourg, the direct parent company of Sigla (valued at EUR 21.7 million) The DeA Capital Group is also a shareholder in five companies (Elixir Pharmaceuticals Inc., Kovio Inc., Stepstone, Harvip Investimenti and Alkimis SGR - whose value at 30 June 2012 was EUR 1.1 million overall. With regard to funds, at 30 June 2012 the DeA Capital Group held units in:  IDeA I FoF (valued at EUR 104.6 million)  IDeA OF I (valued at EUR 40.3 million)  ICF II (valued at EUR 12.7 million)  AVA (valued at EUR 2.4 million)  IDeA EESS and seven other venture capital funds (with a total value of approximately EUR 12.4 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.
  19. 19. Half-Year Report to 30 June 2012 19 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, of a 43.01% equity investment in Santé S.A., the parent company of Générale de Santé S.A. both directly and through Santé Dévéloppement Europe S.A.S. At 30 June 2012, the DeA Capital Group's shareholding was 42.89% (i.e. 42.99% in income statement 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 approximately 19,400 employees and 106 clinics in total. In addition, it is the main independent association of doctors in France (more than 5,000 doctors). Its activities include medicine, surgery, obstetrics, oncology and radiotherapy, mental health, subacute pathologies and rehabilitation. The company operates under the following names: Générale de Santé Cliniques (acute care), Médipsy (psychiatry), Dynamis (rehabilitation) and Généridis (radiotherapy). The investment in Santé, which is reported under “Investments in associates”, is valued at approximately EUR 233.7 million in the consolidated financial statements to 30 June 2012 (EUR 235.2 million at 31 December 2011). The change compared with 31 December 2011 is due to the combined effect of the profit for the period of EUR 1.2 million, the EUR 0.5 million increase in the fair value of the interest rate swaps taken out to hedge interest rate risk on debt exposure, and the payment of dividends totalling EUR 3.2 million.
  20. 20. Half-Year Report to 30 June 2012 20 Générale de Santé (EUR millio First Half 2012 First Half 2011 % chg. Revenues 1,014 1,030 -1.5% EBITDA 146 144 1.3% EBIT 78 55 43.3% Group net profit 28 14 102.2% Net financial debt (847) (877) -3.4% With regard to GDS’s operating performance, revenues in the first half of 2012 declined slightly compared with the previous year, but were up by 2.2% on a same-structure basis (i.e. excluding the impact on the 2011 figures of the clinics sold during that year), due to growth in services volumes (particularly in medicine and surgery). The average tariff increase forecast for medical, surgical and obstetric services for 2012 was 0.19%, and 0.29% for psychiatry. This increase in revenues resulted in growth in operating profit, mainly due to the impact on personnel costs of the plan to streamline the central structures and regional coordination, which was completed during 2011 (the “Plan Social”). Comparison with the 2011 EBIT and net result, figures show that these were affected by one- off costs relating to the Plan Social. Net debt was broadly unchanged (EUR 847 million at 30 June 2012 compared with EUR 854 million at 31 December 2011) due to the balancing between operating cash flow and financial income. In strategic and organisational terms, the overall regional reorganisation plan, which, as mentioned above, started with the redesign of the central structures, aimed at creating “centres” to coordinate the operations of several clinics, continues this financial year with the intermediate stage of defining the medical projects for these “centres”. These projects take the form of medical service plans and are intended to create a chain of clinics and identify centres of excellence by medical specialisation, enabling provision to be optimised relative to the needs of the regions in question. The aim of this reorganisation into coordination centres is to enhance GDS’ operating efficiency, and, at the same time, strengthen the Group's profile as an operator of excellence in French healthcare.
  21. 21. Half-Year Report to 30 June 2012 21 - 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 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 personal loans and salary-backed 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 recorded under “Investments in associates”, was worth around EUR 21.7 million in the consolidated financial statements to 30 June 2012. The change compared with 31 December 2011 is due to the impact of the loss made in the period. Sigla (EUR million) First Half 2012 First Half 2011 % chg. Loans to customers* 82.6 87.8 -5.9% Revenues from loans to customer 2.1 2.8 -25.1% CQS granted 43.3 68.5 -36.8% Revenues from CQS 2.3 3.4 -31.5% Group net profit (0.6) 0.0 n.a. * Net receivables exclude salary-backed loans (CQS) In terms of Sigla's operating performance, the Group's results in the first half of 2012 should be seen in the context of the difficult macroeconomic environment. This environment has affected both demand for financing, which is still limited due to stagnant consumption, and supply behaviour, influenced by the funding crunch. From a regulatory point of view, Presidential Decree 141/2010, which will redefine the distribution network for salary-backed loans around exclusive distribution agents, will shortly come into force. This should benefit the more structured operators such as Sigla, helping it to position itself in this current phase of market contraction. In the first half of 2012, salary-backed loans fell by 36.8%. At margins level, the decline in revenues from salary-backed loans and personal loans (due to the company's progressive repositioning around salary-backed loans, which are typically less capital–intensive) was partially reabsorbed at bottom-line level due to measures to improve structural efficiency.
  22. 22. Half-Year Report to 30 June 2012 22 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 764 outlets (at 31 March 2012) with a total net sales area of approximately 809,000 square metres. Migros is present in all seven regions of Turkey, and has a marginal presence abroad, in Kazakhstan and Macedonia. The company operates under the following names: Migros, Tansas and Macrocenter (supermarkets), 5M (hypermarkets), Ramstore (supermarkets abroad) and Kangurum (online store). The extraordinary transactions recently completed by Migros include the sale, on 24 August 2011, of Şok (the discount arm of the Group) to Yildiz Holding Group, a leading Turkish food producer, for approximately 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 equity investment in Kenan Investments is recorded in the consolidated financial statements to 30 June 2012 at EUR 192.1 million (compared with EUR 127.1 million at 31 December 2011). The increase was due to the rise in the value of Migros shares (TRY 17.9 per share at 30 June 2012, compared with approximately TRY 12.6 per share at 31 December 2011, and the strengthening of the Turkish lira against the euro (2.28 TRY/EUR at 30 June 2012 versus 2.44 TRY/EUR at 31 December 2011). The effect on the NAV of the DeA Capital Group of this change in fair value was partially offset by the allocation of around EUR 9.7 million in carried interest, which is to be paid to the lead investor, BC Partners, depending on the overall capital gain. This was partly recognised in the income statement (EUR 3.0 million) and partly in the fair value reserve (EUR 6.7 million).
  23. 23. Half-Year Report to 30 June 2012 23 Migros (mln YTL) First Quarter 2012 First Quarter 2011 % chg. Revenues 1,455 1,271 14.5% EBITDA 99 89 10.9% EBIT 53 51 3.1% Group net profit 62 (128) n.s. Net financial debt (1,587) (1,612) 1.5% * Awaiting publication of the data of the first quarter 2012 - the data for year 2011 are provided In macroeconomic terms, the Turkish economy experienced GDP growth of around 3% y/y in the first quarter of 2012. While this was slower than growth recorded in 2011, domestic spending held up well. The food retail sector in Turkey remains buoyant: growth in commercial space continues apace (11.7% in 12 months) and the supermarket segment maintains its dominant position. In terms of Migros' operating performance, results for the first quarter of 2012 showed that revenues grew by 14.5% compared with the corresponding period in 2011 (with reference to the area of activities that excludes the discount division sold in August 2011), driven by the expansion of the network of sales outlets (100 new supermarkets were opened in 12 months), accompanied by more modest growth in EBITDA, and broadly stable operating profit. The net result increased, due to the revaluation of the debt component in Euro following the rise of the Turkish lira (2.38 TRY/EUR at 31 March 2012 versus 2.44 TRY/EUR at end-2011). As Migros announced previously, the company intends to expand the network by opening about 100 new points of sale per year in 2012 and the medium term. 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.
  24. 24. Half-Year Report to 30 June 2012 24 - Other investments Other investments totaled approximately EUR 1.1 million in the consolidated financial statements to 30 June 2012. Company Registered office Business sector % holding Alkimis SGR Italy Asset management company 10.00 Elixir Pharmaceuticals Inc. USA Biotech 1.30 Harvip Investimenti S.p.A. Italy Distressed real estate and other investments 25.00 Kovio Inc. USA Printed circuitry 0.42 Stepstone Acquisition Sàrl Luxembourg Special Opportunities 36.72
  25. 25. Half-Year Report to 30 June 2012 25 Funds At 30 June 2012, the DeA Capital Group’s PEI business included investments (other than the investment in the IDeA OF I fund and in the AVA real estate fund, which are classified under “Investments in associates”, based on the units held) in two funds of funds (IDeA I FoF and ICF II), one theme fund (IDeA EESS) and another seven venture capital funds for a total of approximately EUR 172.4 million (corresponding to the estimated fair value calculated using the information available on the date this document was prepared). Residual commitments associated with all the funds in the portfolio were approximately EUR 154.4 million (in their respective original currencies of denomination: EUR 150.9 million and GBP 2.8 million). - IDeA OF I IDeA Opportunity Fund I Headquarters: Italy Sector: Private Equity Website: www.ideasgr.it Investment details: IDeA OF I is a closed-end fund under Italian law for qualified investors, which began activity on 9 May 2008, and is managed by IDeA Capital Funds SGR. At its meeting on 20 July 2011, the Board of Directors of IDeA Capital Funds SGR approved a number of regulatory changes. These included changing the name of the IDeA Co- Investment Fund I to IDeA Opportunity Fund I (IDeA OF I) and extending investment opportunities to qualified minority interests, independently or via syndicates. DeA Capital Investments and DeA Capital S.p.A. have subscribed for a total commitment of up to EUR 101.8 million in the fund. Brief description: IDeA OF I has total assets of approximately EUR 217 million. Its objective is to conduct invest operations via syndicates with a lead investor, or independently, by purchasing qualified minority interests. At 30 June 2012, IDeA OF I had called up approximately 52.6% 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
  26. 26. Half-Year Report to 30 June 2012 26 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., the Italian leader in the production of active ingredients for pharmaceutical companies that operate in the generics sector, for EUR 10 million. As part of an extraordinary operation that involved the transfer of the controlling stake in Euticals S.p.A., on 3 April 2012, these bonds were transferred to the acquisition vehicle - Lauro 57 – currently owner of 100% of the capital of Euticals S.p.A.; in exchange, it acquired a stake of 7.77% in the acquisition vehicle (registering a capital gain of EUR 6.9 million); - on 25 February 2011, it purchased a 9.29% stake in Telit Communications PLC, the third-largest producer of machine-to-machine communications systems in the world; the stake held by OF I was subsequently diluted to 9.13% due to the exercise by the company's management of stock options The units held in IDeA OF I were reported in the consolidated financial statements to 30 June 2012 at EUR 40.3 million, a change versus 31 December 2011 relating to capital calls totalling EUR 0.5 million, an increase in fair value delta of EUR 0.4 million, and a pro-rata net result for the period of EUR 2.6 million. The table below shows the key figures for IDeA OF I at 30 June 2012. IDeA OF I Registered office Year of commit ment Fund Size Subscribed commitment % DeA Capital in fund Euro (€) IDeA Opportunity Fund I Italia 2008 216,550,000 101,750,000 46.99 Residual Commitments Total residual commitment in: Euro 48,158,996
  27. 27. Half-Year Report to 30 June 2012 27 - IDeA I FoF IDeA I Fund of Funds Headquarters: Italy Sector: Private Equity Website: www.ideasgr.it Investment details: IDeA I FoF is a closed-end fund under Italian law for qualified investors, which began activity on 30 January 2007 and is managed by IDeA Capital Funds SGR. DeA Capital Investments and DeA Capital S.p.A. have subscribed for a total commitment of up to EUR 173.5 million in the fund. Brief description: IDeA I FoF, which has total assets of approximately EUR 681 million, invests its assets in units of unlisted closed-end funds that are mainly active in the local private equity sector of various countries. It optimises the risk-return profile through careful diversification of assets among managers with a proven track record of returns and solidity, different investment approaches, geographical areas and maturities. At the date of the latest report available, the IDeA ICF II portfolio was invested in 42 funds with different investment strategies; these funds in turn hold around 436 positions in companies with various degrees of maturity that are active in geographical regions with different growth rates. The funds are diversified in the buy-out (control) and expansion (minorities) categories, with overweighting towards medium- and small-scale transactions and special situations (distressed debt/equity and turnaround). At 30 June 2012, IDeA I FoF had called up 71.1% of its total commitment and had made distributions totalling 19.5% of that commitment.
  28. 28. Half-Year Report to 30 June 2012 28 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. Breakdown by industry(1)Breakdown by type(2) Breakdown by vintage(1) Breakdown by geography(2) 21% Uncommitted 1%Global RoW 14% US 20% Europe44% 9% 6% Uncommitted 1%Special Situations 18% Expansion VC 5% Asset Based PE Small Buyout 14% Mid Buyout 31% Large Buyout 15% 5% 13% 12% 10% Distressed Portfolio Materials IT Media 3% Financials4% Pharma1% Healthcare6% Cons. Staples 6% Cons. Discretionary 12% 14%Energy Transportation 8% Industrials 2% RE 4% Leisure 24% 14% 2007 6% 2006 3% 2005 3% 2000-20042012 3% 2011 11% 2010 2009 18% 2008 18% Notes 1. % of the FMV of the invested capital at 30 June 2012 2. % of fund size, based on paid-in exposure (capital invested + residual commitments) at 30 June 2012 The IDeA FoF units are valued at approximately EUR 104.6 thousand in the consolidated financial statements to 30 June 2012, with a change during the period relating to net investment of EUR +2.8 million and an increase in fair value delta of EUR 5.5 million. The table below shows the key figures for IDeA I FoF at 30 June 2012. IDeA I FoF Registered office Year of commit ment Fund Size Subscribed commitment % DeA Capital in fund Euro (€) IDeA I Fund of Funds Italia 2007 681,050,000 173,500,000 25.48 Residual Commitments Total residual commitment in: Euro 50,210,892
  29. 29. Half-Year Report to 30 June 2012 29 - ICF II ICF II Headquarters: Italy Sector: Private Equity Website: www.ideasgr.it Investment details: ICF II is a closed-end fund for qualified investors under Italian law, which began activity on 24 February 2009 and is managed by IDeA Capital Funds SGR. DeA Capital Investments and DeA Capital S.p.A. have subscribed for a total commitment of up to EUR 51 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 23 funds with different investment strategies; these funds in turn hold positions in around 137 companies with various degrees of maturity that are active in geographical regions with different growth rates. At 30 June 2012, ICF II had called up 24.8% 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.
  30. 30. Half-Year Report to 30 June 2012 30 12% Global RoW 28% US 26% Europe 34% 13% 23% Special Situations Expansion VC 7% Small/Mid Buyout 44% Large Buyout 13% 2% 2008 3% 2007 1% 2004-2006 2011 29% 2010 27% 2009 28% 10% 2012 10% 8% Distressed Portfolio 24% Energy 1% Materials 4% Industrial Leisure 5% IT 17% Media 3% Financials Healthcare3% Cons. Staples 10% Cons. Discretionary 14% Breakdown by vintage(1) Breakdown by geography(2) Breakdown by type(2) Breakdown by industry(1) Notes 1. % of the FMV of the invested capital at 30 June 2012 2. % of the commitment, based on paid-in exposure (capital invested + residual commitments) at 30 June 2012 The ICF II units are valued at approximately EUR 12.7 million in the consolidated financial statements to 30 June 2012, with a change in the period mainly related to net investment of EUR +3.2 million. The table below shows the key figures for ICF II at 30 June 2012. ICF II Registered office Year of commit ment Fund Size Subscribed commitment % DeA Capital in fund Euro (€) ICF II Italia 2009 281,000,000 51,000,000 18.15 Residual Commitments Total residual commitment in: Euro 38,351,386
  31. 31. Half-Year Report to 30 June 2012 31 - IDeA EESS IDeA Efficienza Energetica e Sviluppo Sostenibile (Energy Efficiency and Sustainable Development) Headquarters: Italy Sector: Private Equity Website: www.ideasgr.it Investment details: IDeA EESS is a closed-end fund under Italian law for qualified investors, which began operating on 1 August 2011 and is managed by IDeA Capital Funds SGR. DeA Capital Investments and DeA Capital S.p.A. have subscribed for a total commitment of up to EUR 12.8 million in the fund. Brief description: IDeA EESS is a closed-end mutual fund under Italian law for qualified investors, which seeks to acquire minority and controlling interests in unlisted companies in Italy and abroad (particularly Germany, Switzerland and Israel), by investing jointly with local partners. The fund is dedicated to investing in small and medium-sized manufacturing and service companies operating in the field of energy savings and the efficient use of natural resources. It focuses on the development of faster and cheaper solutions in the use of renewable energy sources 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 are in progress. At 30 June 2012, IDeA EESS had called up about 8.4% of the total commitment. On 18 April 2012, the fund signed an investment agreement to acquire 48% of Domotecnica Italiana S.r.l. (independent Italian franchising of thermo-hydraulic installers) for approximately EUR 2.6 million, as well as a commitment to subscribe, within the next 18 months, to capital increases totalling EUR 2.0 million (IDeA EESS pro-rata share: EUR 1.0 million). The ICF II units are valued at approximately EUR 0.7 million in the consolidated financial statements to 30 June 2012, with a change in the period that includes contributions in the form of capital calls of EUR 0.9 million. The table below shows the key figures for IDeA EESS at 30 June 2012. IDeA EESS Registered office Year of commit ment Fund Size Subscribed commitment % DeA Capital in fund Euro (€) IDeA Efficienza Energetica e Sviluppo Sostenibile Italia 2011 53,450,000 12,800,000 23.95 Residual Commitments Total residual commitment in: Euro 11,719,680
  32. 32. Half-Year Report to 30 June 2012 32 - AVA Atlantic Value Added Headquarters: Italy Sector: Private Equity – Real Estate Website: www.ideafimit.it Investment details: The "Atlantic Value Added Closed-End Speculative Real Estate Mutual Fund" is a mixed- contribution fund for qualified investors that began 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), with a payment already made of EUR 2.5 million (five class A units). Brief description: The Atlantic Value Added fund began its operations 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. 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. Units in the AVA fund were reported in the consolidated financial statements to 30 June 2012 at around EUR 2.4 million. The change is due to the pro-rata net result for the period. The table below shows the key figures for AVA at 30 June 2012. AVA Registered office Year of commit ment Fund Size Subscribed commitment % DeA Capital in fund Euro (€) Atlantic Value Added Italia 2011 55,000,000 5,000,000 9.09 Residual Commitments Total residual commitment in: Euro 2,460,000
  33. 33. Half-Year Report to 30 June 2012 33 - 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 11.7 million in the consolidated financial statements to 30 June 2012. The table below shows the key figures for venture capital funds in the portfolio at 30 June 2012. Venture Capital Funds Registered office Year of commit ment 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 417,172,000 5,000,000 1.20 Total Dollars 26,925,000 Euro (€) Nexit Infocom 2000 Guernsey 2000 66,325,790 3,819,167 5.76 Sterlings (GBP) Amadeus Capital II UK EU 2000 235,000,000 13,500,000 5.74 Residual Commitments Total residual commitment in: Euro 3,522,456
  34. 34. Half-Year Report to 30 June 2012 34  Alternative Asset Management At 30 June 2012, DeA Capital S.p.A. was the owner of:  100% of IDeA Capital Funds SGR  61.30% of IDeA FIMIT SGR (including 40.32% held through DeA Capital Real Estate and 20.98% through IFIM)  100% of IDeA Servizi Immobiliari/IDeA Agency (which operates in project, property and facility management and real estate brokerage), 65% of Soprarno SGR (which operates in asset management through the management of total return funds) and 65% of IDeA SIM (which operates in investment consultancy, 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 one of the leading independent Italian asset management companies operating in the management of direct funds and funds of private equity funds. The asset management company manages four closed-end private equity funds, including two funds of funds (IDeA I FoF and ICF II), a "direct" co-investment fund (IDeA OF I) and a sector fund dedicated to energy efficiency (IDeA EESS). The investment programmes of IDeA Capital Funds SGR, which are regulated by the Bank of Italy and Consob, leverage the management team's wealth of experience in the sector. The investment strategies of funds of funds focus on building a diversified portfolio in private equity funds in the top quartile or that are next-generation leaders with balanced asset allocation through diversification by:  Industrial sector  Investment strategy and stages (buy-outs, venture capital, special situations, etc.)  Geographical 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 focus on Europe, and diversification as a function of the appeal of individual sectors by limiting investments during the early stage and excluding purely real estate investments. The investment philosophy of the EESS sector fund is focused on growth capital and buyout private equity to support the growth of small and medium-sized enterprises with excellent products or services in the energy efficiency and sustainable growth arena. Investments in infrastructure for the generation of energy from renewable sources or early stage investments can be made in compliance with regulatory restrictions. The main geographical focus of these funds is Italy.
  35. 35. Half-Year Report to 30 June 2012 35 The table below summarises the value of assets under management and management fees for IDeA Capital Funds SGR at 30 June 2012. (EUR million) Asset Under Management at 30.06.2012 Management fees at 30.06.2012 IDeA Capital Funds SGR ICF II 281 1.4 IDeA EESS 53 0.5 IDeA I FoF 681 2.8 IDeA OF I 217 1.1 Total IDeA Capital Funds SGR 1,232 5.9 With regard to operating performance, the company reported overall management fees for the first half of 2012 in line with the same period last year, as the increase arising from the additional EUR 53 million in assets under management for the IDeA Energy Efficiency and Sustainable Development Fund (first and second closing in second half of 2011) was offset by lower management fees relating to the IDeA I FoF fund. IDeA Capital Funds SGR (EUR million) First Half 2012 First Half 2011 AUM 1,232 1,179 Management fees 5.9 5.9 EBT 3.2 3.8 Net profit 2.0 2.5
  36. 36. Half-Year Report to 30 June 2012 36 - IDeA FIMIT SGR Headquarters: Italy Sector: Alternative Asset Management - Real Estate Website: www.firstatlantic.it Investment details: IDeA FIMIT SGR is the largest independent real estate asset management company in Italy, with around EUR 9.3 billion in assets under management and 23 managed funds (including five listed funds). This puts it among the major partners of Italian and international investors in promoting, creating and managing closed-end mutual investment funds in real estate. IDeA FIMIT SGR has 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 international investors with a high standing such as pension funds, bank and insurance groups, capital companies and sovereign funds. On 28 June 2012, IDeA FIMIT SGR and Duemme SGR signed a deed of transfer, effective 1 July 2012, for a business division comprising joint real estate investment funds managed by Duemme SGR, a subsidiary of the Banca Esperia Group specialising in asset management services. The transfer of the business division enables IDeA FIMIT SGR to take on the management of eight real estate funds with assets that include around 60 buildings, worth a total of approximately EUR 560 million. This transaction confirms IDeA FIMIT SGR’s position as Italian leader and puts it among the major real estate asset management companies in Europe, thanks also to the expansion of its circle of institutional investors. This highly strategic transaction enables IDeA FIMIT SGR to further increase the value of its managed assets and reach the threshold of EUR 10 billion in assets under management with 31 real estate funds managed.
  37. 37. Half-Year Report to 30 June 2012 37 The table below summarises the value of assets under management and management fees for IDeA FIMIT SGR. (EUR million) Asset Under Management at 30.06.2012 Management fees at 30.06.2012 Breakdown of funds Atlantic 1 669 2.8 Atlantic 2 Berenice 532 1.2 Alpha 477 2.1 Beta 214 1.3 Delta 360 1.4 Listed funds 2,252 8.8 Reserved funds 7,037 23.5 Total 9,289 32.3 Some of the key financials of the listed funds (Atlantic 1, Atlantic 2, Alpha, Beta and Delta – figures in Euro) in the asset management portfolio are also provided below, with an analysis of the real estate portfolio at the date of the latest report available, broken down by geographical area and by intended use. Atlantic 1 30/06/2012 Market value of real estate 642,930,000 Historical cost and capitalised charges 619,809,181 Loan 358,098,945 Net Asset Value ("NAV") 288,536,260 NAV / Share (Euro) 553 Market price/share (Euro) 230 Dividend Yield* 5.38% * Ratio of income per share to average nominal value of the share Atlantic 1: Diversification by geographical area Atlantic 1: Diversification by intended use Lombardia 66% Lazio 15% Campania 13% Piemonte 6% Offices 82% Commerc. 18%
  38. 38. Half-Year Report to 30 June 2012 38 Atlantic 2 - Berenice 30/06/2012 Market value of real estate 515,610,000 Historical cost and capitalised charges 483,464,029 Loan 281,797,742 Net Asset Value ("NAV") 239,403,736 NAV / Share (Euro) 339 Market price/share (Euro) 184 Dividend Yield* 11.59% * Ratio of income per share to average nominal value of the share Atlantic 2: Diversification by geographical area Atlantic 2: Diversification by intended use Lombardia 44% Lazio 40% Piemonte 14% Altri 2% Offices 69% Industrial 31% Alpha 30/06/2012 Market value of real estate 418,700,000 Historical cost and capitalised charges 323,005,970 Loan 73,518,806 Net Asset Value ("NAV") 392,336,766 NAV / Share (Euro) 3,777 Market price/share (Euro) 1,270 Dividend Yield* 6.97% * Ratio of income per share to average nominal value of the share Alpha: Diversification by geographical area Alpha: Diversification by intended use Lombardia 12% Lazio 83% Emilia 5% Offices 60% Other 40%
  39. 39. Half-Year Report to 30 June 2012 39 Beta 30/06/2012 Market value of real estate 167,795,100 Historical cost and capitalised charges 163,620,244 Loan 32,284,469 Net Asset Value ("NAV") 150,871,759 NAV / Share (Euro) 562 Market price/share (Euro) 310 Dividend Yield* 10.10% * Ratio of income per share to average nominal value of the share Beta: Diversification by geographical area Beta: Diversification by intended use Umbria 26% Sardegna 39% Lazio 35% Offices 41% Hotels 39% Specific use 19% Commercial 1% Delta 30/06/2012 Market value of real estate 342,531,667 Historical cost and capitalised charges 373,440,569 Loan 141,164,486 Net Asset Value ("NAV") 216,578,523 NAV / Share (Euro) 103 Market price/share (Euro) 27 Dividend Yield* n.a. * No distributions Delta: Diversification by geographical area Delta: Diversification by intended use Hotel 62% Other 34% Offices 4% Lombardia 4% Sardegna 41% Veneto 14% Calabria 11% Emilia 10% Abruzzo 10% Campania 4% Piemonte 3% Toscana 3%
  40. 40. Half-Year Report to 30 June 2012 40 With regard to IDeA FIMIT SGR’s operating performance, the comparison between the income statement for the first half of 2012 and for the same period of the previous year (see the table below) is of limited significance, in view of the changes in business structure that took place on 3 October 2011, with the integration between FARE SGR and FIMIT SGR, and the establishment of IDeA FIMIT SGR. IDeA FIMIT SGR (EUR million) First Half 2012 First Half 2011* AUM 9,289 3,197 Management fees 32.3 10.1 EBT 8.8 5.4 EBT - before PPA 14.5 5.4 Net profit 11.6 3.4 (*)Data are referred to FARE SGR
  41. 41. Half-Year Report to 30 June 2012 41  Financial Review - Income statement The Group reported a net profit of approximately EUR 1.3 million for the first half of 2012, compared with a net profit of EUR 9.3 million in the same period of 2011. When comparing the results of the first half of 2012 with those of the corresponding period of 2011, note the significant change in the basis of consolidation in Alternative Asset Management, which has included the contribution of FIMIT SGR since 3 October 2011 (the date on which the integration with FARE SGR became effective). Revenues and other income break down as follows: - alternative asset management fees totalling EUR 39.9 million - a contribution from investments valued at equity of EUR +3.2 million (EUR -11.2 million in 2011), due to the investment in Santé (around EUR +1.2 million) and the units in IDeA OF I (EUR +2.6 million) - other investment income, net of liabilities, totalling EUR 0.7 million (EUR 27.4 million in the same period of 2011) - other revenues and income totalling EUR 4.9 million due largely to the alternative asset management business (EUR 5.1 million in the same period of 2011) Operating costs totaled EUR 41.2 million (EUR 23.0 million in the same period of 2011), of which EUR 31.7 million was attributable to Alternative Asset Management, EUR 3.7 million to the Private Equity Investment business and EUR 5.8 million to holding company activities. Note that Alternative Asset Management costs include the impact of amortising intangible assets recorded during the allocation of a portion of the purchase price of the investments, totalling EUR 7.0 million. Financial income and charges, which totaled EUR -5.0 million at 30 June 2012 (EUR -0.9 million in the same period of 2011), mainly related to the cost of exercising the put option on subsidiaries’ minority holdings, income generated from cash and cash equivalents, financial charges and income/charges on derivative contracts. The overall positive tax impact of EUR 3.9 million in the first half of 2012 (EUR -5.3 million in the same period of 2011) is the combined result of tax benefits of EUR 1.2 million relating to Alternative Asset Management activities, EUR 1.6 million relating to the Private Equity Investment business and EUR 1.1 million for taxes relating to holding activities. Of the total consolidated net profit of EUR 6.3 million, about EUR 1.2 million was attributable to the Private Equity Investment business, around EUR 14.1 million to Alternative Asset Management and approximately EUR -9.0 million to holding company operations/eliminations.
  42. 42. Half-Year Report to 30 June 2012 42 Summary Group Income Statement (Euro thousands) First Half 2012 First Half 2011 Alternative Asset Management fees 39,948 17,986 Income (loss) from equity investments 3,193 (11,174) Other investment income/expense 672 27,433 Income from services 4,645 4,896 Other income 215 172 Other expenses (41,247) (23,029) Financial income and expenses (4,960) (944) PROFIT/(LOSS) BEFORE TAXES 2,466 15,340 Income tax 3,880 (5,258) PROFIT/(LOSS) FOR THE PERIOD FROM CONTINUING OPERATIONS 6,346 10,082 Profit (Loss) from discontinued operations/held-for-sale assets 0 0 PROFIT/(LOSS) FOR THE PERIOD 6,346 10,082 - Group share 1,290 9,331 - Non controlling interests 5,056 751 Earnings per share, basic (€) 0.005 0.032 Earnings per share, diluted (€) 0.005 0.032 Summary Group Income Statement - performance by business in the first half of 2012 (Euro thousands) Private Equity Investment Alternative Asset Management Holdings/ Eliminations Consolidated Alternative Asset Management fees 0 39,948 0 39,948 Income (loss) from equity investments 3,396 (138) (65) 3,193 Other investment income/expense 0 187 485 672 Income from services 20 4,722 118 4,860 Other expenses (3,721) (31,681) (5,845) (41,247) Financial income and expenses (95) (179) (4,686) (4,960) PROFIT/(LOSS) BEFORE TAXES (400) 12,859 (9,993) 2,466 Income tax 1,635 1,224 1,021 3,880 PROFIT/(LOSS) FOR THE PERIOD FROM CONTINUING OPERATIONS 1,235 14,083 (8,972) 6,346 Profit (Loss) from discontinued operations/held-for-sale assets 0 0 0 0 PROFIT/(LOSS) FOR THE PERIOD 1,235 14,083 (8,972) 6,346 - Group share 1,235 8,684 (8,629) 1,290 - Non controlling interests 0 5,399 (343) 5,056 Summary Group Income Statement - performance by business in the first half of 2011 (Euro thousands) Private Equity Investment Alternative Asset Management Holdings/ Eliminations Consolidated Alternative Asset Management fees 0 17,986 0 17,986 Income (loss) from equity investments (11,174) 0 0 (11,174) Other investment income/expense 27,378 55 0 27,433 Income from services 19 4,859 190 5,068 Other expenses (3,416) (15,866) (3,747) (23,029) Financial income and expenses (137) 157 (964) (944) PROFIT/(LOSS) BEFORE TAXES 12,670 7,191 (4,521) 15,340 Income tax (1,735) (3,476) (47) (5,258) PROFIT/(LOSS) FOR THE PERIOD FROM CONTINUING OPERATIONS 10,935 3,715 (4,568) 10,082 Profit (Loss) from discontinued operations/held-for-sale assets 0 0 0 0 PROFIT/(LOSS) FOR THE PERIOD 10,935 3,715 (4,568) 10,082 - Group share 10,935 2,964 (4,568) 9,331 - Non controlling interests 0 751 0 751
  43. 43. Half-Year Report to 30 June 2012 43  Financial Review - Statement of Performance - IAS 1 Comprehensive income or the Statement of Performance (IAS 1), in which performance for the year is reported for the portion attributable to the Group including results posted directly to shareholders' equity, reflects a net positive balance of approximately EUR 63.3 million compared with a net positive balance of around EUR 38.5 million in the same period of 2011. Results posted directly to shareholders' equity in the first half of 2012 mainly relate to the increase in fair value of Kenan Investments/Migros (EUR +58.4 million) attributable to the adjustment of the valuation on the basis of the market value of Migros shares at 30 June 2012 of TRY 17.9 per share (compared with a figure of around TRY 12.6 per share implied in the valuation at 31 December 2011), as well as the updating of the Turkish lira/Euro exchange rate. (Euro thousands) First Half 2012 First Half 2011 Profit/(loss) for the period (A) 6,346 10,082 Gains/(Losses) on fair value of available-for-sale financial assets 60,016 24,714 Share of other comprehensive income of associates 890 4,461 Other comprehensive income, net of tax (B) 60,906 29,175 Total comprehensive income for the period (A)+(B) 67,252 39,257 Total comprehensive income attributable to: - Group Share 63,250 38,506 - Non Controlling Interests 4,002 751
  44. 44. Half-Year Report to 30 June 2012 44  Financial Review – Balance Sheet Below is the Group’s balance sheet at 30 June 2012 compared with 31 December 2011. (Euro thousand) June 30,2012 December 31,2011 ASSETS Non-current assets Intangible and tangible assets Goodwill 210,113 210,134 Intangible assets 112,564 119,648 Property, plant and equipment 1,193 1,269 Total intangible and tangible assets 323,870 331,051 Investments Investments valued at equity 304,008 302,141 Other available-for-sale companies 192,439 127,380 Available-for-sale funds 167,160 159,673 Other avalaible-for-sale financial assets 324 936 Total Investments 663,931 590,130 Other non-current assets Deferred tax assets 3,806 4,077 Loans and receivables 1,845 1,632 Other non-current assets 25,728 25,729 Total other non-current assets 31,379 31,438 Total non-current assets 1,019,180 952,619 Current assets Trade receivables 5,741 6,070 Available-for-sale financial assets 8,301 13,075 Financial receivables 3,257 1 Tax receivables from Parent companies 7,187 5,929 Other tax receivables 5,243 2,677 Other receivables 5,918 6,128 Cash and cash equivalents 19,496 46,764 Total current assets 55,143 80,644 Total current assets 55,143 80,644 Assets relating to joint ventures - - Held-for-sale assets - - TOTAL ASSETS 1,074,323 1,033,263 SHAREHOLDERS' EQUITY AND LIABILITIES SHAREHOLDERS' EQUITY Net equity Group 728,283 669,045 Minority interests 133,261 134,324 Shareholders' equity 861,544 803,369 LIABILITIES Non-current liabilities Deferred tax liabilities 27,252 40,506 Provisions for employee termination benefits 2,656 2,127 Long term financial loans 142,168 160,020 Total non-current liabilities 172,076 202,653 Current liabilities Trade payables 15,934 10,322 Payables to staff and social security organisations 7,396 7,497 Current tax 8,766 903 Other tax payables 3,722 3,585 Other payables 1,011 1,023 Short term financial loans 3,874 3,911 Total current liabilities 40,703 27,241 Liabilities relating to joint ventures - - Held-for-sale liabilities - - TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES 1,074,323 1,033,263
  45. 45. Half-Year Report to 30 June 2012 45 At 30 June 2012, group shareholders’ equity was approximately EUR 728.3 million, compared with EUR 669.0 million at 31 December 2011. The increase of around EUR 59.3 million in this item in the first half of 2012 was due mainly to the events described in the Statement of Performance – IAS 1 (totalling EUR 63.3 million) and to the effects of the share buyback plan (expenses of EUR 4.3 million).  Financial Review – Net debt At 30 June 2011, consolidated net debt was approximately EUR 113.1 million, as shown in the table below, which provides a breakdown of assets and liabilities and a comparison with the same figures at 31 December 2010: Net financial position Change (EUR million) Cash and cash equivalents 19.5 46.8 (27.3) Available-for-sale financial assets 8.3 13.0 (4.7) Financial receivables 5.1 1.6 3.5 Non-current financial liabilities (142.2) (160.0) 17.8 Current financial liabilities (3.8) (3.9) 0.1 TOTAL (113.1) (102.5) (10.6) June 30,2012 December 31,2011 The change in consolidated net debt in the first half of 2012 was due to the combined effect of the factors below:  cash outlay of EUR 4.3 million for the share buyback plan  payment of dividends to third parties totalling EUR 6.3 million  operating cash flow (mainly comprising fees/revenues for services, net of current expenses and investment costs, as well as the result of financial and tax management), broadly stable. The company believes that the cash and cash equivalents and the other financial resources available are sufficient to meet the requirement relating to payment commitments already subscribed in funds, also taking into account the amounts expected to be called up/distributed by these funds. With regard to these residual commitments, totalling EUR 154.4 million at 30 June 2012, the company believes that the funds and credit lines currently available, as well as those that will be generated by its operational and financing activities, will enable the DeA Capital Group to meet the financing required for its investment activity and to manage working capital and repay debts when they become due. The following points relate to the individual items that make up the consolidated net cash position:  the item “Cash and cash equivalents” relates to cash and bank deposits, including interest accrued during the period, held in the name of Group companies  "available-for-sale financial assets" include investments to be regarded as a temporary use of cash  "non-current financial liabilities" mainly include: - the use of EUR 80.0 million from the credit line provided by Mediobanca for the same amount (maturing on 16 December 2015 and subject to a variable rate of three-month Euribor + spread. At 30 June 2012, the covenant tests for this credit line were successfully passed (i.e. max. debt and debt to equity ratio) - an amount of EUR 12.8 million relating to the medium-term loan taken out by IDeA FIMIT SGR with Banca Intermobiliare di Investimenti e Gestioni S.p.A. in 2009
  46. 46. Half-Year Report to 30 June 2012 46 (maturing on 31 March 2014 with a floating rate of three-month Euribor + spread) for the purchase of units in the Omicron Plus fund - EUR 0.9 million for the estimated future cost for the DeA Capital Group of exercising the pro-rata share of the put options on Santé shares held by the senior management of GDS - EUR 1.6 million for the fair value estimate of payables for put options on minority interests in subsidiaries - EUR 45.0 million, as part of the full acquisition of the FARE Holding group, in relation to the payment of the deferred purchase price, and the earn-out that DeA Capital anticipates paying
  47. 47. Half-Year Report to 30 June 2012 47 6. Other information  Main risks and uncertainties to which the parent company and consolidated Group companies are exposed As described in this Interim Report on Operations, the DeA Capital Group operates through, and is structured as, two business areas: Private Equity Investment and Alternative Asset Management. The risks set out below consider the characteristics of the market and the operations of parent company DeA Capital S.p.A. and the companies included in the Group’s consolidated financial statements, as well as the periodic monitoring conducted partly through the regulatory policies adopted by the Group. There could, however, be risks that are currently unidentified or not considered significant that could have an impact on the Group's operations. The Group has adopted a modern corporate governance system that provides effective management of the organisational complexities of its operations, and enables both individual companies and the Group to achieve their strategic objectives. Furthermore, the assessments conducted by the organisational units and the directors confirm both the non-critical nature of these risks and uncertainties and the financial solidity of the DeA Capital Group. A. Contextual risks A.1. Risks relating to general economic conditions The operating performance and financial position of the DeA Capital Group are affected by the various factors that make up the macro-economic environment, including increases or decreases in GDP, investor and consumer confidence, interest rates, inflation, the costs of raw materials and unemployment. The ability to meet medium- to long-term objectives could be affected by general economic performance, which could slow the development of sectors the Group has invested in, and at the same time, the business of the investee companies. A.2. Socio-political events In line with its own strategic growth guidelines, one of the DeA Capital Group’s activities is private equity investment in companies and funds in different jurisdictions and countries around the world, which, in turn, invest in a number of countries and geographical areas. The DeA Capital Group may have invested in foreign countries whose social, political and economic conditions put the achievement of its investment objectives at risk. A.3. Regulatory changes Many Group companies conduct their operations in highly regulated sectors and markets. Any changes to or developments in the legislative or regulatory framework that affect the costs and revenues structure of investee companies or the tax regime applied, could have negative effects on the Group’s financial results, and necessitate changes in the Group’s strategy. To combat this risk, the Group has established procedures to constantly monitor sector regulation and any changes thereto, in order to seize business opportunities and respond to any changes in the prevailing legislation and regulations in good time.
  48. 48. Half-Year Report to 30 June 2012 48 A.4. Performance of the financial markets The company’s ability to meet its strategic and management objectives could depend on the performance of public markets. A negative trend on the public markets could have an effect on the private equity sector in general, making investment and divestment transactions more complex, and on the Group’s capacity to increase the fair value of investments in particular. The value of investments held directly or indirectly through funds in which the company has invested could be affected by factors such as comparable transactions concluded on the market, sector multiples and market volatility. These factors that cannot be directly controlled by the Group are constantly monitored in order to identify appropriate response strategies that involve both the provision of guidance for the management of Group companies, and the investment and value enhancement strategy for the assets held. A.5. Exchange rates Holding investments in currencies other than the euro exposes the Group to changes in exchange rates between currencies. The investment in Kenan Investments is managed as a special case, since although it was made in euro, the underlying asset is expressed in Turkish lira. Taking into account the time horizon of the investment, it is believed that the expected return on the investment is able to absorb any devaluation of the underlying currency, in line with the outlook for the currency. A.6. Interest rates Ongoing financing operations that are subject to variable interest rates could expose the Group to an increase in related financial charges, in the event that the reference interest rates rise significantly. DeA Capital S.p.A. has established appropriate strategies to hedge against the risk of fluctuations in interest rates. Given the partial hedge of the underlying, the company classifies these strategies as speculative instruments, even though they are put in place for hedging purposes. At the same time, it should be remembered that changes in interest rates can influence the outcomes of the impairment tests carried out by affecting the calculation of cash flow discount rates. B. Strategic risks B.1. Concentration of the Private Equity investment portfolio The private equity investment strategy adopted by the Group includes: - direct investments (in equity investments) - indirect investments (in funds)
  49. 49. Half-Year Report to 30 June 2012 49 Within this strategy, the Group’s overall profitability could be adversely affected by an unfavourable trend in one or a few investments, if there were insufficient risk diversification, resulting from the excessive concentration of investment in a small number of assets, sectors, countries, currencies or of indirect investments in funds with limited investment targets/types of investment. To address these risk scenarios, the Group pursues an asset allocation strategy aimed at creating a balanced portfolio with a moderate risk profile. Furthermore, the combination of direct and indirect investments, which, by their nature, guarantee a high level of diversification, helps reduce the level of asset concentration. B.2. Concentration of Alternative Asset Management activities In Alternative Asset Management, in which the Group is mainly active through the companies IDeA Capital Funds SGR and IDeA FIMIT SGR, events could arise as a result of excessive concentration that would hinder the achievement of the level of expected returns. These events could be due to:  Private equity/absolute return funds o concentration of the management activities of asset management companies across a limited number of funds, in the event that one or more funds decides to cancel its asset management mandate o concentration of the financial resources of the funds managed in a limited number of sectors and/or geographical areas, in the event of currency, systemic or sector crises o for closed funds, concentration of the commitment across just a few subscribers, in the event of a counterparty experiencing financial difficulties  Real estate funds o concentration of real estate present in the portfolio of managed funds in a few cities and/or in limited types of property (management/commercial), in the event of a crisis on the property market concerned o concentration in respect of certain important tenants, in the event that these withdraw from the rental contracts, which could lead to a vacancy rate that has a negative impact on the funds' financial results and the valuation of the property managed o concentration of the maturities of numerous real estate funds within a narrow timeframe, with related high availability of property on the market, leading to a decrease in property values and an increase in selling times For each of the risk scenarios outlined above, the Group has defined and implemented appropriate strategies that include strategic, operational and management aspects, as well as a system monitoring the level of diversification of Alternative Asset Management activities. B.3. Key resources (governance/organisation) The success of the DeA Capital Group depends to a large extent on its executive directors and key management figures, their ability to efficiently manage the business and the normal activities of individual Group companies, as well as knowledge of the market and the professional relationships established. The departure of one or more of these key resources, without a suitable replacement being found, as well as an inability to attract and retain new and qualified resources, could impact growth targets and have a negative effect on the Group’s activities and financial results. To mitigate this risk, the Group has put in place HR management policies that correspond closely to the needs of the business, and incentive policies that are periodically reviewed, in
  50. 50. Half-Year Report to 30 June 2012 50 light of, among other things, the general economic climate and the results achieved by the Group. C. Operating risks C.1. Investment operations Investment operations conducted by the Group are subject to the risks typical of private equity activities, such as an accurate valuation of the target company and the nature of the transactions carried out, which require the acquisition of strategic shareholdings, but not controlling interests, governed by appropriate shareholders’ agreements. The Group has implemented a structured process of due diligence on target companies, involving the different levels of group management concerned and the careful definition of shareholders’ agreements in order to conclude agreements in line with the investment strategy and the risk profile chosen by the Group. C.2. Compliance with covenants Some investment operations were concluded using financial leverage to invest in the target companies. For financing contracts signed by investee companies, often accompanied by real guarantees, specific covenants are in place, failure to comply with which could necessitate recapitalisation operations for those investee companies and lead to an increase in financial charges relating to debt refinancing. Failure to comply with covenants attached to loans could have negative effects on both the financial situation and operations of investee companies, and on the value of the investment. The Group constantly monitors the significant reference parameters for the financial obligations taken on by investee companies, in order to identify any unexpected variance in good time. C.3. Divestment operations As a general rule, the Group invests over a medium-/long-term time horizon, normally three to six years for investments made through the acquisition of direct shareholdings in companies or up to ten years for investments made through funds. Over the investment management period, external situations could arise that might have a significant impact on the operating results of the investee companies, and consequently on the value of the investment itself. Furthermore, in the case of co-investment, guiding the management of an investee company could prove problematic or unfeasible, and it may ultimately prove impossible to dispose of the stakes held owing to lock-up clauses. The divestment strategy could therefore be negatively affected by various factors, some of which cannot be foreseen at the time the investments are made. There is therefore no guarantee that expected earnings will be realised given the risks resulting from the investments made. To combat these risk situations, the Group has defined a process to monitor the performance of its investee companies, facilitated by its representation on the management bodies of significant investee companies, with a view to identifying any critical situations in good time.
  51. 51. Half-Year Report to 30 June 2012 51 C.4. Funding risk The income flows expected from the Alternative Asset Management business depend on the capacity of the Group’s asset management companies to stabilise/grow their assets under management. In this environment, fund raising activity could be harmed by both external factors, such as the continuation of the global economic crisis or the trend in interest rates, and internal factors, such as bad timing in respect of fund raising activities by the asset management companies or the departure of key managers from the companies. The Group has established appropriate risk management strategies in relation to fund raising, with a view to both involving new investors and retaining current investors.
  52. 52. Half-Year Report to 30 June 2012 52  Transactions with parent companies, subsidiaries and related parties Transactions with related parties, including intercompany transactions, were typical, usual transactions that are part of the normal business activities of Group companies. Such transactions are concluded at standard market terms for the nature of the goods and/or services offered. As required by Consob Communication of 28 July 2006, information on related-party transactions is presented in the appropriate section of the notes to the summary consolidated half-year financial statements at 30 June 2012.  Other information At 30 June 2012, the Group had 174 employees (167 at the end of 2011), including 35 senior managers, 51 middle managers and 88 clerical staff. Broken down by business area, 155 of these worked in Alternative Asset Management and 19 in Private Equity Investment/the holding company. These staff levels do not include personnel on secondment from the parent company De Agostini S.p.A. In this regard, the company signed a service agreement with the controlling shareholder, De Agostini S.p.A., for the latter to provide operating services in the administration, finance, control, legal, corporate and tax areas. This agreement, which is renewable annually, is priced at market rates, and is intended to allow the company to maintain a streamlined organisational structure in keeping with its development policy, and at the same time to obtain adequate operational support. DeA Capital S.p.A. and IDeA Capital Funds SGR have adopted the national tax consolidation scheme of the B&D Group (the Group headed by B&D Holding di Marco Drago e C. S.a.p.a.). This option was exercised jointly by each of the two companies and by B&D Holding di Marco Drago e C. S.a.p.a. by signing the "Regulation for participation in the national tax consolidation scheme for companies in the De Agostini Group" and providing notification of this option to the tax authorities pursuant to the procedures and terms and conditions set out by law. As regards DeA Capital S.p.A., the option, which was renewed in 2011, is irrevocable for the three-year period of 2011-2013 unless the requirements for applying the scheme are not met; with reference to IDeA Capital Funds SGR, the option was subscribed during this year with reference to the three-year period of 2012-2014. With regard to the regulatory requirements set out in art. 36 of the Market Regulation on conditions for the listing of parent companies of companies formed or regulated by laws of non-EU countries and of significant importance in the consolidated financial statements, it is hereby noted that no Group company falls within the scope of the above-mentioned provision. Furthermore, conditions prohibiting listing pursuant to art. 37 of the Market Regulation relating to companies subject to the management and coordination of other parties do not apply.
  53. 53. Half-Year Report to 30 June 2012 53 Summary consolidated half-year financial statements for the period 1 January to 30 June 2012
  54. 54. Half-Year Report to 30 June 2012 54 1. Consolidated Statement of Financial Position (Euro thousand) Notes June 30,2012 December 31,2011 ASSETS Non-current assets Intangible and tangible assets Goodwill 1a 210,113 210,134 Intangible assets 1b 112,564 119,648 Property, plant and equipment 1c 1,193 1,269 Total intangible and tangible assets 323,870 331,051 Investments Investments valued at equity 2a 304,008 302,141 Other available-for-sale companies 2b 192,439 127,380 Available-for-sale funds 2c 167,160 159,673 Other avalaible-for-sale financial assets 2d 324 936 Total Investments 663,931 590,130 Other non-current assets Deferred tax assets 2e 3,806 4,077 Loans and receivables 2f 1,845 1,632 Other non-current assets 2g 25,728 25,729 Total other non-current assets 31,379 31,438 Total non-current assets 1,019,180 952,619 Current assets Trade receivables 3a 5,741 6,070 Available-for-sale financial assets 3b 8,301 13,075 Financial receivables 3c 3,257 1 Tax receivables from Parent companies 3d 7,187 5,929 Other tax receivables 3e 5,243 2,677 Other receivables 3f 5,918 6,128 Cash and cash equivalents 3g 19,496 46,764 Total current assets 55,143 80,644 Total current assets 55,143 80,644 Assets relating to joint ventures - - Held-for-sale assets - - TOTAL ASSETS 1,074,323 1,033,263 SHAREHOLDERS' EQUITY AND LIABILITIES SHAREHOLDERS' EQUITY Net equity Group 728,283 669,045 Minority interests 4 133,261 134,324 Shareholders' equity 861,544 803,369 LIABILITIES Non-current liabilities 5a Deferred tax liabilities 5b 27,252 40,506 Provisions for employee termination benefits 5b 2,656 2,127 Long term financial loans 5c 142,168 160,020 Total non-current liabilities 172,076 202,653 Current liabilities Trade payables 6a 15,934 10,322 Payables to staff and social security organisations 6b 7,396 7,497 Current tax 6c 8,766 903 Other tax payables 6d 3,722 3,585 Other payables 6e 1,011 1,023 Short term financial loans 6f 3,874 3,911 Total current liabilities 40,703 27,241 Liabilities relating to joint ventures - - Held-for-sale liabilities - - TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES 1,074,323 1,033,263 Pursuant to Consob Resolution 15519 of 27 July 2006, the impact of dealings with related parties on the balance sheet, income statement and cash flow statement is explained in the notes to the financial statements.
  55. 55. Half-Year Report to 30 June 2012 55 2. Consolidated Income Statement (Euro thousands) Notes First Half 2012 First Half 2011 Alternative Asset Management fees 7a 39,948 17,986 Profit/(loss) from equity investments valued at equity 7b 3,193 (11,174) Other investment income/expenses 7c 672 27,433 Service revenue 7d 4,645 4,896 Other revenues and income 215 172 Personnel costs 8a (16,217) (9,702) Service costs 8b (14,052) (10,220) Depreciation, amortization and impairment 8c (7,740) (2,137) Other charges 9 (3,238) (970) Financial income 10 525 1,429 Financial expenses 10 (5,485) (2,373) PROFIT/(LOSS) BEFORE TAXES 2,466 15,340 Income tax 11 3,880 (5,258) PROFIT/(LOSS) FOR THE PERIOD FROM CONTINUING OPERATIONS 6,346 10,082 Profit (Loss) from discontinued operations/held-for-sale assets 0 0 PROFIT/(LOSS) FOR THE PERIOD 6,346 10,082 - Group share 1,290 9,331 - Non controlling interests 5,056 751 Earnings per share, basic (€) 12 0.005 0.032 Earnings per share, diluted (€) 12 0.005 0.032 Pursuant to Consob Resolution 15519 of 27 July 2006, the impact of dealings with related parties on the balance sheet, income statement and cash flow statement is explained in the notes to the financial statements.
  56. 56. Half-Year Report to 30 June 2012 56 3. Statement of Comprehensive Income (Statement of Performance - IAS 1) Comprehensive income or the Statement of Performance (IAS 1), in which performance for the year is reported for the portion attributable to the Group including results posted directly to shareholders' equity, reflects a net positive balance of approximately EUR 63.3 million compared with a net positive balance of around EUR 38.5 million in the same period of 2011. Results posted directly to shareholders' equity in the first half of 2012 mainly relate to the increase in fair value of Kenan Investments/Migros (EUR 58.4 million) attributable to the adjustment of the valuation on the basis of the market value of Migros shares at 30 June 2012 of TRY 17.9 per share (compared with a figure of around TRY 12.6 per share implied in the valuation at 31 December 2011), as well as the update of the Turkish lira/Euro exchange rate. (Euro thousands) First Half 2012 First Half 2011 Profit/(loss) for the period (A) 6,346 10,082 Gains/(Losses) on fair value of available-for-sale financial assets 60,016 24,714 Share of other comprehensive income of associates 890 4,461 Other comprehensive income, net of tax (B) 60,906 29,175 Total comprehensive income for the period (A)+(B) 67,252 39,257 Total comprehensive income attributable to: - Group Share 63,250 38,506 - Non Controlling Interests 4,002 751
  57. 57. Half-Year Report to 30 June 2012 57 4. Consolidated Cash Flow Statement (direct method) (Euro thousands) First Half 2012 First Half 2011 CASH FLOW from operating activities Investments in companies and funds (35,477) (25,475) Acquistions of subsidiaries net of cash acquired 0 0 Capital reimbursements from funds 10,684 9,776 Proceeds from the sale of investments 5,205 2,350 Interest received 439 411 Interest paid (1,633) (1,285) Cash distribution from investments 1,108 50,551 Realised gains (losses) on exchange rate derivatives (344) (576) Taxes paid (5,878) (3,129) Taxes refunded 0 0 Dividends received 0 270 Management and performance fees received 40,550 16,864 Revenues for services 5,357 5,132 Operating expenses (34,346) (18,108) Net cash flow from operating activities (14,335) 36,781 CASH FLOW from investment activities Acquisition of property, plant and equipment (236) (163) Sale of property, plant and equipment 0 0 Purchase of licenses (62) 0 Net cash flow from investing activities (298) (163) CASH FLOW from investing activities Acquisition of financial assets (1,457) (8,708) Sale of financial assets 0 1,296 Share capital issued 0 0 Share capital issued:stock option plan 0 0 Own shares acquired (4,274) (14,563) Own shares sold 0 0 Interest from financial activities 0 0 Dividends paid (6,290) (2,700) Warrant 0 0 Managers Loan 0 1,683 Bank loan (614) 0 Net cash flow from financing activities (12,635) (22,992) CHANGE IN CASH AND CASH EQUIVALENTS (27,268) 13,626 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 46,764 86,517 Cash and cash equivalents relating to held-for-sale assets 0 0 Cash and cash equivalents at beginning of period 46,764 86,517 0 7,101 CASH AND CASH EQUIVALENTS AT END OF PERIOD 19,496 107,244 Held-for-sale assets and minority interests 0 0 CASH AND CASH EQUIVALENTS AT END OF PERIOD 19,496 107,244 EFFECT OF CHANGE IN BASIS OF CONSOLIDATION: CASH AND CASH EQUIVALENTS Pursuant to Consob Resolution 15519 of 27 July 2006, the impact of dealings with related parties on the balance sheet, income statement and cash flow statement is explained in the notes to the financial statements.

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