Consolidated annual account 2007 by CPL CONCORDIA

consolidated

annual accounts annual accounts

2007

the nautilus The image on the cover and inside of this annual accounts represents the nautilus, shellfish whose name derives from the greek nautilos (seafarers, navigator). Its shell is the symbol of natural perfection, but also the exact geometric symmetry (golden section). These characteristics make it object of curiosity and admiration in the world of science, architecture, technology. We use the nautilus to synthesize and tell CPL Concordia identity: a group of women and men moving in time (1899) and in space (from Emilian throughout Italy and the world). A Cooperative who looks for perfection and works, as our mission tells, to the best of its ability, with seriousness, consistency and professionalism.

consolidated

annual accounts annual accounts

2007

table of contents CPL Concordia Group 8. Report on operations in relation to the consolidated annual accounts 33. Consolidated balance sheet of the CPL Concordia Group 40. Details of the profit and loss statement 44. Balance sheets of the companies belonging to the Group 49. Report of the board of auditors on the consolidated annual accounts 51. Certification report

CPL Concordia Soc. Coop 54. 89. 96. 99. 101. 102.

Report on the management of the financial year ending Balance sheet of CPL Concordia Soc. Coop. Details of the profit and loss statement Board of auditors report to the shareholdersâ&#x20AC;&#x2122; meeting for the annual financial statements Certification report Certification UNI EN ISO 9001:2000

2007

consolidated annualaccounts

consolidated

annual2007 accounts

annual report on the consolidated balance sheet as of December 31, 2007 “Dear Shareholders, First and foremost, we wish to emphasize that the Parent Company’s directors have carried out their mandate, in accordance with article 2 of Law 59/92, with the aim of reaching the Cooperative’s mutual goals as provided for by the law and Bylaws. Their actions have been consistent with the goal of attaining continuity of work activities and the best economic, company, and professional conditions possible. The Directors have acted with this spirit on behalf of all entities in our Group. For these reasons, the Parent Company has acted to maintain full employment of shareholders and employees of companies within the Group, compensating them for their work services under the best contractual conditions possible, while bearing in mind the market trends and performance of the specific sector in which each company operates. The company has operated, moreover, towards improving the professional and cultural qualifications of shareholders and employees of the Group’s companies, making investments to guarantee the best working conditions. The consolidated balance sheet for the fiscal year ending on 31/12/2007, which was drafted in conformity with the provisions of Legislative Decree number 127 of 09/04/1991, reports a consolidated value of production of Euro/000 230.905, with a Euro/000 11.929 or 5,4% increase compared to the previous fiscal year. This production has generated a pre-tax profit of 11.070.127 Euro for the Group during the fiscal period. Net of current, deferred, and antici-

2007

consolidated annualaccounts

pated taxes, this determines a net profit equal to 6.802.374 Euro. We consider this result to be absolutely positive, in line with the budget, and consider it one of the best results of the past five years if we exclusively look at company activities.

Structure of the 2007 Consolidated Balance Sheet The consolidated balance sheet closed on 31 December 2007, in its capital, financial, and economic structure, provides a snapshot of the CPL CONCORDIA Group in a state of optimal health, both in terms of economic performance as well as its own financial accounts. The excellent economic outturn of 2007 is due to the constant growth of the group’s business activities, as well as the reduced impact of certain areas of business that have contributed negatively in the past and are currently in course of being closed. Even in 2004 and 2005, several areas of business were being abandoned, such as the trade of methane and maintenance of high-pressure networks for Snam Gas Networks. In the past, these activities have contributed sore losses to the consolidated balance sheet. Other activities abandoned in the previous fiscal year include the maintenance, emergency, and other services for the Ottana petrochemical plant, another business which has played no small part in eroding the profit margin of company activities. If we disregard the bad results achieved in the

Greek territory, the group has registered great results in all areas of business, as we will analyze in detail when we discuss the profit and loss account. As shown in the balance sheet for the last fiscal year, the capital and financial structure of the Group has already been significantly affected by the planned closings from the 2004 – 2005 two year period. Fiscal year 2007 registers clear continuity with the previous fiscal year as the group has continued its own inevitable process of investment, both in the development of gas distribution networks as well as in renovation projects for heat management plants. During 2007, the group also continued working with alternative energy: cogeneration, which has always been a strong point of the group, and now photovoltaics. Despite these investments, the capital and financial structure today appears to be extremely balanced, thanks in part to the group’s continuous net worth. We will analyze the reclassified balance sheet in subsequent parts of this report. We will analyze the balance sheet according to the principal of liquidity, and the profit and loss account according to the method of added value.

The Balance Sheet Balance sheets from the last five years are displayed in the following table. This provides a useful method for analyzing the dynamic of this fiscal year in comparison to the previous four fiscal years:

CONSOLIDATED BALANCE SHEET (values expressed in Euro) As of Dec. 31,2007

Final Statements ASSETS Short term assets

Liquid assets Non-permanent assets Revenues from clients and others

As of Dec. 31,2006

As of Dec. 31,2005

As of Dec. 31,2004

As of Dec. 31,2003

11,766,914

13,617,415

7,534,571

14,670,321

8,486,072

115,881

1,350

130,329,690 130,870,797 127,978,596 132,019,289 104,106,354 28,788,701

26,140,017

36,745,161

38,367,698

47,290,401

Subscribed capital, unpaid

Inventory

1,261,737

1,250,904

1,250,006

1,269,712

1,155,086

Accruals and deferred income

6,475,179

6,635,666

8,517,982

5,235,733

1,190,397

Total short term assets Fixed assets

178,738,102 178,514,883 182,026,316 191,562,752 162,229,660

Intangible assets

16,340,101

13,351,631

14,084,073

Tangible assets

93,061,164

80,844,348

62,550,349 117,368,410 120,442,662

17,881,743

17,174,232

18,339,281

Investments

15,659,671

15,465,470

14,050,038

19,692,039

Total fixed assets Total ASSETS

127,283,008 111,370,210 94,973,703 147,078,119 155,600,171 306,021,110 289,885,093 277,000,018 338,640,871 317,829,831

LIABILITIES Short term liabilities

Amounts owed to banks

17,492,340

15,092,838

19,708,552

69,040,457

47,095,404

As of Dec. 31,2007

Final Statements Amounts owed to shareholders and other financiers

As of Dec. 31,2006

6,154,891

As of Dec. 31,2005

4,950,419

As of Dec. 31,2004

4,264,103

As of Dec. 31,2003

8,516,870

2,676,232

Advance payments

14,881,644

12,878,459

15,426,293

11,742,131

4,903,198

Amounts owed to suppliers

92,894,949

74,125,417

71,148,370

72,422,732

69,687,827

Debts represented by bills of exchange

Amounts owed to subsidiary companies

2,205

2,759

Amounts owed to affiliated companies Amounts owed to tax administration owed to social security and welfare Amounts institutions Other short term debts Accruals and deferred income – liabilities Total short term liabilities Long term liabilities

332,760

303,761

885,376

167,236

437,850

4,579,699

7,935,892

4,244,144

5,622,354

4,366,111

3,653,343

3,033,287

1,707,985

1,801,444

1,806,999

5,809,331

7,500,789

7,303,347

5,906,281

8,174,627

479,934

942,023

1,286,141

3,591,600

6,639,007

146,278,891 126,762,884 125,974,310 178,813,309 145,790,014

Debenture loans Amounts owed to banks

49,990,419

58,489,020

55,564,136

66,714,262

70,217,850

Amounts owed to shareholders and other financiers

3,312,864

Advance payments

1,801,315

1,701,134

2,255,596

2,884,933

2,164,004

Debts represented by bills of exchange

Amounts owed to suppliers

Amounts owed to tax administration

Other debts from other fiscal periods Provision for severance pay Fund for social security and other welfare institution Provisions for taxation Other funds Total medium/long term liabilities Net equity

Share capital

516,139

270,843

278,499

263,307

6,450,792

6,955,065

7,431,485

7,115,472

6,995,220

21,526

36,426

45,825

180,518

150,012

70,873

97,876

2,455,799

2,942,883

3,111,398

5,010,409

3,503,360

61,416,508

70,530,483

68,733,514

82,122,684

86,239,123

13,706,084

Revaluation reserve Legal reserve Reserves foreseen by company bylaws

12,952,749

12,702,218

13,335,213

14,878,043

656,679

72,387,954

69,866,959

67,692,238

66,683,567

78,184

78,185

Capital gains reserve Lex 784/80

1,269,396

Consolidation reserve

2,256,942

2,565,595

(7,874,424)

Merger advance

235,597

3,102,096

Foreign currency conversion fund

(79,039)

483,057

(79,316)

(35,563)

(338,671)

Profit/Loss carried forward Fiscal year profit/loss Total group net equity Third party net capital Total LIABILITIES

(6,624,127) (36,538,702)

6,802,374

3,238,135

5,643,749

(4,351,051)

31,668,663

97,314,172 1,011,540

91,346,351 1,245,375

80,324,322 1,967,873

75,123,065 2,581,813

81,459,255 4,341,439

306,021,110 289,885,093 277,000,018 338,640,871 317,829,831

2007

consolidated annualaccounts

As it is possible to infer from the table, short term assets have remained substantially unchanged in comparison with the previous fiscal year, even with the 5,4% increase in the value of production. Short term assets predominantly consist of receivables from both public and private clients. The parent company directly manages receivables with internal resources and employees and very limited recourse to external professionals. This management adheres to specific decisions. In fact, because the majority of the clientele (both direct clients and clients through contracts purchased by consortiums) falls in the category of public entities or public property, the collection of receivables requires the collaboration of all internal subjects that have relationships with that client, in addition to constant monitoring by the financial structure. Subjects involved include the business component that acquires the job order, the technical structure that manages it, and in some cases the Legal Office that evaluates potential actions. Outsourcing is not considered a suitable method for managing receivables from this type of client. External companies prevalently manage private utilities. The Parent Company performs monthly surveys of receivables for the entire group. These surveys are subdivided by area of business pertaining to business managers, who among their other duties have the responsibility to contain the incidence of overdue receivables within predetermined limits. Surveys are also performed by aging zones. Internal procedure provides several operational steps for overdue receivables, including written notice/warning as well as potential legal action towards the debtor (in the meantime declared in arrears). At the end of fiscal year 2007, the Consolidated Balance Sheet shows, among the current assets, client receivables for a total of 119,7 million Euro

in comparison to 121,5 million from the previous fiscal year. The incidence of total receivables recorded in the current assets has also improved in comparison to the total assets, which fell to 42,6% from 45,2% in the previous fiscal year. On the same date, the total amount of receivables overdue was 33 million Euro, which is better than the data from the last five years. Of these, 21% were overdue by less than 30 days, 15% were overdue by 30 to 60 days, 11% were overdue by 60 to 90 days, and 53% were overdue by over 90 days. Among the receivables most overdue, about half were attributable to a client (public) that since 2003, the year of the contract acquisition, has continually held a D.S.O. of over 180 days. Generally, receivables are not backed by guarantees, as their counterparties are mostly public entities. Guarantees are instead requested by the Parent Company when drafting principal service contracts for private clients, or whenever it considers guarantees to be appropriate. The Groupâ&#x20AC;&#x2122;s intense supervision of receivables and thorough understanding of individual situations and D.S.O.â&#x20AC;&#x2122;s allow it to make, when necessary, bad debt provisions. The total increase of assets, which are equal to 15,9 million Euro, can be attributed to investments in tangible and intangible assets, as mentioned before. In particular, details on intangible assets are given in the following:

CHANGES OF TANGIBLE ASSETS (values expressed in Euro) Fiscal year variation Initial book Accounting Amortiza- Devaluavalue Purchases variations tions tions

Item

Final book value

Decrements

Costs of installation and expansion

288

130

102

314

Costs of installation and expansion

288

130

102

314

Costs of research, development, and advertising

155

149

Costs of research, development, and advertising Industrial patent rights

155

Industrial patent rights Concessions, licenses, and trade marks

Concessions, licenses, and trade marks Goodwill

898

751

(628)

1,021

898

751

(628)

1,021

Other fixed assets INTANGIBLE ASSETS

Assets in progress Other

Consolidation difference Assets in progress

Goodwill Consolidation difference

149

11,951

7,371

628

4,360

715

11,951

7,371

628

4,360

715

13,352

8,371

4,666

717

14,875

14,875 16,340

It can be inferred from the table above that investment during the fiscal year totaled Euro/000 8.371, amortization amounted to Euro/000 4.666, and alienation to Euro/000 717. The change in tangible assets is summarized in the following table:

CHANGES OF TANGIBLE ASSETS (values expressed in Euro) Item

Fiscal year variation Initial book value Purchases Accounting Amortiza- Devaluavariations tions tions

Decrements

Final book value

Land and buildings

2,633

4,343

124

2,621

4,231

Land and buildings Plants and machinery

2,633

4,343

124

2,621

4,231

Plants and machinery Equipment

Other assets Licensed gas networks

Assets in progress TANGIBLE ASSETS

10,011

1,491

2,402

453

78,756

70,109

10,011

1,491

2,402

453

78,756

Industrial and commercial equipment Other assets

70,109

343

402

269

481

343

402

269

481

2,555

2,561

2,555

2,561

5,204

80,844

21,084

2007

consolidated annualaccounts

(1,213)

4,340

6,100

3,493

189

(2,832)

1,545

(2,832)

3,767

1,545

111

3,767

5,204

111

6,100

3,314

93,061

Investment, net of alienation and reclassification adjustments, amounts to Euro/000 16.557, while amortization totals Euro/000 4.340. Financial assets increased by Euro/000 924. In particular, we wish to relate some important news on our affiliated companies. Fontenergia S.p.A.: the group holds 49% of this company’s block of shares. The company continues to manage the distribution of LPG in the Ogliastra area, and seeks to widen its own activities by building small networks powered by tanks installed near residential units not served by the main network, in the Ogliastra area as well as for a large part of the Sardinian Region. This fiscal year was also marked by the intense activity concerning assumption of grants provided for by Resolution number 54/28 made by the Sardinian Region on 22/11/2005. The Region has collected all the necessary documentation to liquidate grants and decided on 28 November 2007, with Committee number 49/29, to approve the rider contract for the Framework Agreement on the Methanization of Sardinia. This agreement comprehensively covers the resources intended to finance, by grants, provision of methane to specific areas, including area 22 of Ogliastra. A total of 13,2 million Euro in grants is available for this initiative. Following this resolution, the company Directors recorded this sum as a receivable from the Sardinian Region, lowering the value of investments as a counterparty to which the specific grants refer. Thus the major amortizations accounted for in previous fiscal years have generated a contingent asset of 1,5 million Euro in the 2007 balance sheet. On the basis of this operation, Fontenergia’s Balance Sheet shows a profit equal to Euro 1.514.108. The directors of the Parent Company, considering the procedural anomalies followed by the Sardinian Region in liquidating grants, opted to account for the effects of the receipt of capital gains only by liquidation of the same, thus fitting this both into accruals and cash. Consequently, the evaluation of the company according to net worth accounting was performed without considering the effects following the inclusion of capital gains. Pegognaga Servizi S.r.l.: the company was incorporated in April 2005 with the purpose of managing cemetery services for the Municipality of Pegognaga (MN). The group holds 50% of shares, while the other 50% is held by the company Mazzola & Bignardi Servizi S.r.l.. The fiscal year’s outturn shows a profit equal to Euro 21.077, which is considered absolutely satisfactory. Teclab S.r.l.: the Group holds 35% in this company, which was purchased on 22 April 2004, by registered deed at the Business Registry of La Spezia at reference number 4365. The company, which engages in the design and execution of distant remote control software, was purchased as an ideal partner for our ex Systems Division. During fiscal year 2007 it focused on increasing company net equity by Euro 100.000 through a 40.000 Euro increase in share capital and changing 60.000 Euro of share premiums to Reserve. In light of operations, the decrease in orders was followed by a major restructuration and consequent reorganization of the company. The fruit of these decisions should mature over the next several fiscal years. The outturn for fiscal year 2007 shows, in fact, a loss equal to 91.808 Euro. Coimmgest S.p.A.: the company was incorporated on 14 May 2007, before Notary Silvio Vezzi of Modena, who registered the deed at Record 114655 register 17735. The larger block of 55% is held by Sofinco S.p.A., while the Group holds the remaining 45%. The company was established to manage the Cooperative’s real estate equity and has at the moment acquired leasing contracts relevant to the office real estate in Concordia sulla Secchia, Melegnano, Milano, Bologna and the new property at Via Grandi, 43-45. The company then stipulated rent contracts with the Parent Company for each of these

properties. The company uses international ac-

equity surpassing 100 million Euro. The group’s

counting principles in drafting its own balance

net equity can be considered a factor of great

sheet for the fiscal year, and IAS 17 in particular

satisfaction.

for evaluation of the leasing contracts. We also wish to inform you that an option pact exists on this company’s share quotas, which the Parent Company can make use of in order to

Financial Management

purchase the remaining 55% owned by the ma-

We would like to first provide a brief analysis

jority shareholder. This option must be exercised

of the macroeconomic context in which the

no earlier than 2 years after the establishment

Group’s financial management operates. We will

and before 31 December 2017.

then analyze the trends of major characteristic

The fiscal year’s outturn for this company shows

elements of financial management during Fiscal

a profit equal to 13.312 Euro.

Year 2007.

The company holds, moreover, 100% of the shares in the subsidiary Ristorotel S.r.l., whose business consists of the management of real estate used as hotel and classified as CH4. Ristorotel’s profit and loss account substantially consists of income and revenue from rent payments invoiced to the Estate agent of Concordia S.r.l. and the operational costs of the existing leasing contract with ING Lease (Italy) S.p.A.. The company, which closed its first balance sheet on 30 June 2006, has made a profit equal to Euro/000 37.

The national context The second semester of 2007 was marked by the subprime lending crisis in the United States, which had wide repercussions on the global financial system. The protracted turbulence has not yet been overcome. Heavy losses were reported by primary international banks that had made wide use of progressive loan securitization and greatly jeopardized the efficiency of derivative financial instruments. This created

Crist Gas S.r.l.: The Cooperative holds 50% of the shares in this company, incorporated in 2002. The company was established as the sales company for Cristoforetti Ser S.r.l. in accordance

an unprecedented crisis of trust in the financial markets, which constrained the Central Banks to intervene by consistently issuing cash to prevent the system from freezing.

with Legislative Decree number 164/2000. To

In the United Kingdom, the government was

date, the company remains inactive.

constrained to nationalize a bank in order to

The transfer of the remaining 50% of shares at

avoid bank failure. In the United States, a strong-

nominal value still owned by CPL CONCORDIA

ly expansive monetary policy consistently re-

is currently being finalized with the shareholder

duced interest rates in an attempt to avert a

Cristoforetti.

recession. The Federal Reserve intervened with

With regard to the Balance Sheet liabilities, a

specific instruments in favor of several primary

strong increase in short term debt appears,

financial institutions.

above all consisting of debt towards supplies,

In Europe, however, even with the rather re-

which amounts to a total of 19,6 million Euro.

pressed growth of the economy and an incred-

Contextually, there is a decrease in long term

ibly high quotation of the Euro, the Central

debt, for 9,1 million Euro, generated mostly by

European Bank has, in its turn, introduced strong

the transfer of the lending rate due in 2008 to

cash flows into the market. However it has pre-

the short term.

ferred to raise taxes, and is above all concerned

Net equity on the consolidated balance sheet

with the effects of inflation linked to the rising of

amounts to 97,3 million Euro. In 2009, the Par-

prices of raw materials for energy and food.

ent Company will celebrate 110 years of history

Despite the difficulties experienced in the sec-

and, with the entire group, a consolidated net

ond period, the world economy overall contin-

2007

consolidated annualaccounts

ued expanding 2007 at the pace of 5%, much as it has over the past two years. This growth is still principally led by China (+11%), India (+9%), and Russia (+8%), while the American economy has registered a 2,2% increase in GDP, as compared to 2,9% in 2006. In Europe, the economy grew by 2,6% thanks to the investment push, sustained exportations (despite the strong revaluation of the Euro) and the drop in unemployment. In the latter months of the year a slowdown took place, partly attributable to the erosion of purchasing power due to price increases of raw materials, and partly attributable to the increased caution of families and companies in a more uncertain economy. In December 2007, the rate of inflation reached 3,1% as compared to 1,8% around the beginning of the year, pushed by the rise in food prices and higher energy bills. At the moment, resolution of the financial market crisis still appears to be far away. The recovery of the Stock Market will require more time, and the strains on the prices of raw materials caused by strong demand in emerging countries does not indicate that they will decrease, as petroleum hits new records every day and the price of food also constantly rising. In the current 2008 fiscal year, the European GDP is predicted to increase by a modest 1,8%, against inflation that reached 3,5% last March, consequently causing negative effects on the income available and consumption. During 2007, Italyâ&#x20AC;&#x2122;s GDP grew by 1,5%, below the European average, despite a moderate flow of the balance of trade. Negative performance was experienced in the low level of investment and low growth in consumption, in turn burdened by the reduction of income purchasing power and the strong implications of rent or interest on mortgages and energy bills. The ratio between debt and income available to Italian families reached an average of 50% in at the end of 2007. Better results were obtained by redevelopment projects in public finance. Though the stock of public debt still reflected 105% of the GDP at the end of 2007 (however reduced from 106,8% in 2006), the fiscal deficit dropped to1,9% (compared to the GDP), the lowest level since 2000. This caused the EU infraction procedure brought against Italy to be suspended by two years or so. The data represents a significant improvement in comparison to 2006, when this number was at 4,4%. It is also very comforting on the level of its composition. In fact, the reduction reflects both an increase in the incidence of revenue as well as a reduction in the weight on output, with progress in comparison to 2006. Improvement, net of extraordinary measures, was determined exclusively from the increase of tax revenue. The Italian unemployment rate fell to 6,1% in 2007, but this descent came to an end in the last trimester. Employment grew by 1%, mostly with regard to women and immigrants, however with a geographic concentration in the center-North of the country. The category of employees especially increased, although incidence of part time work also continued to grow. A period of substantial stagnation is predicted for our country in 2008. Consumption is predicted to remain stationary, given that debt service and energy costs will continue to greatly affect families. The first data released regarding industrial production also foreshadows a dynamic of scarcity and reflect low occurrence of operating investments in Italian companies, whose productivity indexes remain, consequently, fixed. The construction sector is experiencing a period of slowed growth, and further deceleration is predicted for real estate speculation. The prospects for this sector, which has traditionally led the Italian economy, therefore appear strongly linked to the development of investments in infrastructure, which financial resources and time will verify. 2007 has also brought about a troubling decrease in the characteristic profitability of companies, above all because of the increase in interest rates. The greatest effect of this phenomenon is felt in the Italian industrial structure, where companies are less capitalized as compared to those in other

countries, and are therefore more dependent on sources of valuable funding. Company selffunding is therefore reduced, and borrowing requirements have grown. Demand for credit remained, in fact, well sustained and, despite the turbulence of the financial markets, bank credit to the private sector increased to + 10,9%, greater than the Euro area. Towards the end of the year, and above all in the first period of 2008, a clear tendency towards tightening criteria for granting credit emerged. This is confirmed both by analyses made by the Bank of Italy as well as the Central European Bank. For now, the phenomenon has not led to significant reductions in the amounts loaned, but it has certainly affected price policies, with average spread in snapback. Despite the difficulties of the economic cycle, there is however no sign, throughout the system, of a decline in the quality of credit. Interest rates were adjusted twice in 2007 by the Governing Council of the Central European Bank to the current rate of 4%., due to concerns regarding the turbulence of financial markets and risk of inflation. Due to these measures, the official rate increased half a point in one year. Expectations for the year currently underway seem to indicate another increase, even if fears of recessive effects have, for now, prevented an increase that the same sources at the Central European Bank gave at a discount for the first semester of 2008. Much more noticeable instead was the increase of the Euribor tax during 2007: at the end of the year, the 3 month rate rose to 4,765% from 3,775% on 02/01/2007, and the 6 month rate to 4,834% from 3,904% on 02/01/2007. After a brief drop during the first two months of 2008, the Eurobar resumed its growth: on today’s date it remains higher by about 25 basis points in comparison with the 31/12/2007 rate. This data confirms that, despite the continues issuance of money performed by the Central Banks, the request for money in the system remains very high and trust is low: thereof the increase of taxes on the inter-bank market higher than those determined by the Central European Bank.

2007

consolidated annualaccounts

Group financial operations in fiscal year 2007 The result of the financial operations of many companies was negatively characterized by fiscal year 2007, due to the economic reasons detailed above. The progressive increase of taxes during fiscal year 2006 continued throughout 2007 and is still underway, and has had a contained impact on the group’s total financial expenses. In fact, thanks to the restructuration of the debt performed during 2005, all of the Parent Company’s debt was structured into medium/long term in 2007. Most loans received by the Parent Company provide for interest and capital liquidations at six-month rates: the reference rate has therefore been added twice, helping to limit the negative effect of rising rates. The survey performed at the end of the third semester (a reference for the rate on principal credit lines which benefit the group) already showed the significant effect of the financial crisis that exploded on the markets in August. It must also be mentioned that this year, improvement of the principal balance sheet indicators, following the important decisions made at the end of 2004 by the Parent Company’s Board of Directors, have allowed for the restraint, thanks to covenants foreseen by contracts, of the spread reciprocated by the Parent Company on two principal lines supplied by the banking system: the pool directed by “Unicredit Banca d’Impresa” on 04/08/2005 and that directed by the “Banco Popolare di Verona e Novara” on 21/02/2003. During all of fiscal year 2007, the Parent Company did not access new medium to long term lines of credit, despite share capital repayment of over 7,5 million Euro on the lines that were at its disposal at the beginning of the year. The Parent Company only occasionally, and for very limited amounts, used some of the short term credit lines. It should be remembered that during the last twelve months the value of production moved from 217,6 to 230,9 million Euro. This particularly positive trend of income, together with the deferment of payments granted by several important suppliers, has allowed the

Group to dispose of a particularly considerable measure of liquidity during the second and third trimester (during which, at any time, the Parent Company had at its disposal inventory over 20 million Euro). Thus, financial operations at the group level were optimized as well as the result of the financial operations on the consolidated balance sheet. Reclassification of the profit and loss accounts on the consolidated balance sheet show a slight increase in the incidence of financial management on the value of production in fiscal year 2007 as compared to fiscal year 2006. However, the outturn remains the second best for the entire period: 1,81% in 2007, 1,70% in 2006, 2,14% in 2005, 2,21% in 2004, 1,92% in 2003. The variation was created by the need to finance investments performed by the Group during 2007. Investments, net of amortizations and dismissals, were equal to 15,9 million Euro. During 2007, the Group took out four new lines of credit. The first, of 2,5 million Euro, was granted by the “Banca Popolare di Verona” to “Immobiliare della Concordia S.r.l.” and on 31/12/2007 was supplied for only 250.000,00, Euro, while the other three where obtained from “Cristoforetti Servizi Energia S.r.l.” for a total of 1,13 million Euro. The following table summarizes the existing Borrowings and Loans subscribed by the Group:

List of outstanding bank loans as of December 31, 2007 (Values expressed in Euro/thousand) Financing entity BPV-BSGSP Pool Min. act. Prod. L. 46/82

Amount delivered

Date of delivery

15,000 21/02/2003 154 09/05/2003

Interest rate Euribor 3/6 months + 1,2% 4,110%

As of Dec. 31, 2007 Not Current current

Total

Rate Termination with expiry > date 5 years

3,000

4,500

7,500 21/02/2010

85 03/10/2012

217

217 10/06/2008

527

3,947

4,474 31/12/2016

1,842

554

2,375

2,929 31/12/2012

3 months 2,000 10/06/2003 Euribor + 1,1% 6months 4,500 30/07/2004 Euribor /360 + 1,2% 6 months 4,500 27/12/2004 Euribor + 0,5% Media Euribor3-6 2,000 13/06/2005 months+ 1,5% 6 months 33,000 15/09/2005 Euribor /360 + 1%

352

352 12/06/2008

3,771

25,457

29,228 30/09/2015

10,371

948 15/11/2006 Fixed rate 6,20%

489

489 14/09/2008

293

383 18/10/2011

252

328 31/12/2011

101

454

555 14/11/2012

576

600 18/06/2018

360

109

464

573 24/07/2012

247

300 14/12/2012

65 20/03/2009

195

240 02/07/2012

BANCA POP. EMILIA ROMAGNA

3 months 550 19/10/2005 Euribor + 1,5% 3 months 400 19/12/2006 Euribor + 1,2% 3 months 650 14/11/2006 Euribor + 1,25% 3 months 600 19/06/2006 Euribor + 1,2% 3 months 600 24/07/2007 Euribor + 1,2% 3 months 300 14/12/2007 Euribor + 1,25% 3 months 150 29/03/2006 Euribor + 1,2% 3 months 250 02/07/2007 Euribor + 1,2% 3 months 6,000 07/12/2006 Euribor + 1,2%

100

100 07/12/2017

BANCA POP. VERONA E NOVARA

4,000 11/12/2006 Euribor 6 months

500

3,500

4,000 31/12/2016

2,500

BANCA POP. EMILIA ROMAGNA

3 months 5,000 07/12/2006 Euribor + 1,2% 1 month 500 30/06/2006 Euribor + 2,6% 1 month 1,200 30/09/2006 Euribor + 2,6%

3,703

3,703 07/12/2017

422

422 30/09/2014

1,157

1,157 30/09/2014

Credito Emiliano S.p.A BANCO DI SICILIA UNICREDITI S.P.A. CASSA DI RISP. FERARRA POOL UNICREDIT BANCA SPA MCC (ACCOLLO ENERFIN) CASSA RURALE LAVIS I CASSA DI RISPARMIO BOLZANO CASSA DI RISPARMIO TRENTO CASSA RURALE LAVIS III CASSA RURALE LAVIS IV BANCA INTESA BANCA POPOLARE DI BERGAMO CASSA DI RISPARMIO BOLZANO

UNICREDIT ROMANIA S.A. UNICREDIT ROMANIA S.A.

Financing entity

Amount delivered

BPV - BSGSP BPV - BSGSP - Venture loan B.P.E. Unsecured loan

Date of delivery

Interest rate

3 months 480 07/02/2005 Euribor + 1,25% 3 months 2,500 09/10/2007 Euribor + 1,25% 6 months 2,000 29/07/2004 Euribor /360 + 1,5%

As of Dec. 31, 2007 Not Current current

Total

Rate Termination with expiry > date 5 years

130

143 30/09/2016

194

250

250 09/10/2012

211

1,478

1,689 29/07/2014

217

10,318

49,990

60,308

15,484

With the exception of financing granted by “MCC S.p.A.” at a fixed rate of 6,20% which presented a residual debt of 0,489 million Euro at the end of the fiscal year, all other credit lines of the Parent Company are at a variable rate. On 31/12/2007 the Group had two existing hedging contracts, the first of notional amounts of 20 million, accessed by the Parent Company on 29/10/2003 with “Unicredit Banca d’Impresa”, expiring on 31/10/2008. This contract presents a negative mark to market of 0,585 million Euro. The second was stipulated on 13/6/2003 with UNICREDIT BANCA D’IMPRESA as a 5-year “Convertible Swap” contract, expiring on 17/6/2008, with a reference amount of Euro/000 1.000 and a bank reference rate of EURIB 3M. The contract was prudently considered non-hedging. Over the fiscal year the operation generated active interest for a total amount of Euro/000 10. On 31/12/2007 the derived fair value of the contract was Euro/000 8 positive for the Group. The Group manages rate risk through constant monitoring of market developments and continuous comparison with average rates estimated in the budget. Any activation of new coverage can take place only if the increases recorded and trend estimates correspond to rates higher than those used in drafting the annual and tri-annual budgets, causing significant risks of damage to the accomplishment of goals. The Group consults with qualified external professionals in monitoring rate trends. With the exception of the emerging relations in Romania initiated by the Romanian Branch whose local currency is the Ron, importations of raw materials and sales in currencies other than the Euro were very limited. Given the low volume, no coverage of foreign exchange risk was taken out. When several important procurements were performed abroad, the Parent Company purchased the amount of currency coinciding with the times in which it needed to make payments in currency, thus eliminating the risk of foreign exchange. The Parent Company evaluated the risk of oscillations in the exchange rate when considering transactions made in Ron, moving towards medium-term coverage by evaluating the most economically advantageous and least risky opportunities.

Profit and Loss Account The profit and loss account statement, contained with the Consolidated Group Balance Sheet of 31 December 2007, is included below for analysis, complete with comparisons with the last 4 fiscal years. The reclassified form is used, according to the method of added value, in order to emphasize the most significant indexes.

2007

consolidated annualaccounts

Consolidated profit and loss statements reclassified using the value added method (values expressed in Euro) Final Statements

As of Dec. 31,2007

Income from sales 204,373,523 and services Variation in inventory of finished and 1,078,802 semi-finished goods Variation of work 1,360,421 in progress Low cost works 19,862,333 Other proceeds VALUE OF PRODUCTION

4,229,435

As of Dec. 31,2006

88,51% 201,310,854

As of Dec. 31,2005

As of Dec. 31,2004

As of Dec. 31,2003

92,50% 226,056,566 93,48% 227,537,890 88,52% 175,073,206 76,12%

0,47% (2,569,631)

-1,18% (10,187,122)

0,59% (2,135,696)

-0,98%

847,557

8,60% 17,294,210

7,95%

15,934,003

6,59%

23,075,550

8,98%

35,590,190 15,47%

1,83%

1,71%

9,178,587

3,80%

15,986,119

6,22%

12,173,187

3,728,427

-4,21%

5,204,351

2,02%

6,363,772

2,77%

0,35% (14,750,459) -5,74%

791,819

0,34% 5,29%

230,904,515 100,00% 217,628,163 100,00% 241,829,591 100,00% 257,053,450 100,00% 229,992,174 100,00%

Costs from purchases Variation in inventory of raw materials Other costs for service Expenses for use of assets owned by others Other operational fees ADDED VALUE

(82,776,468) -35,85% (69,336,134) -31,86% (91,571,513) -37,87% (110,830,619) -43,12% (91,990,382) -40,00%

Cost of labor and related fees GROSS OPERATING MARGIN

(38,792,077) -16,80% (36,456,477) -16,75% (37,507,271) -15,51% (39,574,568) -15,40% (36,933,231) -16,06%

(939,634)

-0,41% (5,695,328)

-2,62%

1,080,564

0,45%

4,640,637

1,81%

3,196,893

1,39%

(72,815,190) -31,53% (72,614,398) -33,37% (83,655,008) -34,59% (86,407,797) -33,61% (85,810,793) -37,31% (8,257,076)

-3,58% (9,818,513)

-4,51% (10,481,809)

-4,33%

(7,971,511) -3,10%

(5,835,499) -2,54%

(2,492,213)

-1,08% (2,700,807)

-1,24%

(3,490,490)

-1,44%

(3,970,689) -1,54%

(3,931,721) -1,71%

63,623,934

27,55% 57,462,984

26,40%

53,711,334 22,21%

52,513,470 20,43%

45,620,671 19,84%

24,831,857

10,75% 21,006,507

9,65%

16,204,064

6,70%

12,938,903

5,03%

8,687,440

3,78%

Amortization of tangible assets (4,338,661)

-1,88% (3,660,616)

-1,68%

(4,456,592)

-1,84%

(5,669,249) -2,21%

(6,749,324) -2,93%

Amortization of intangible assets (4,665,535)

-2,02% (4,583,865)

-2,11%

(4,322,471)

-1,79%

(3,566,695) -1,39%

(2,211,199) -0,96%

Accruals and (1,206,669) devaluations Amortization, accruals, and (10,210,865) devaluations

-0,52% (1,907,161)

-0,88%

(1,858,729)

-0,77%

(3,571,721) -1,39%

(4,145,456) -1,80%

-4,42% (10,151,642)

-4,66% (10,637,792)

-4,40% (12,807,665) -4,98% (13,105,980) -5,70%

EBIT

14,620,993

6,33% 10,854,865

4,99%

5,566,272

2,30%

Interest and other financial fees Other financial proceeds TOTAL FINANCIAL MANAGEMENT CURRENT PROFIT/LOSS

(4,844,780)

-2,10% (4,198,165)

-1,93%

(5,543,328)

-2,29%

503,898

0,23%

362,905

0,15%

-1,81% (3,694,267)

-1,70%

(5,180,424)

-2,14%

(5,670,305) -2,21%

(4,416,303) -1,92%

(5,539,067) -2,15%

(8,834,842) -3,84%

655,073 (4,189,707)

0,28%

10,431,286

4,52%

7,160,598

3,29%

385,848

0,16%

51,637

0,02%

550,224

0,25%

7,717,593

3,19%

131,238

0,05%

(4,418,539) -1,92%

(5,983,193) -2,33%

(4,866,351) -2,12%

312,889

0,12%

450,048

0,20%

Income from equity investments Financial activity adjustments Shareholder repayment Extraordinary operations PROFIT/LOSS BEFORE TAXES

(431,123)

-0,19%

(664,559)

-0,31%

(1,410,864)

-0,58%

(1,100,000)

-0,48%

(750,000)

-0,34%

(500,000)

-0,21%

0,00%

2,118,327

0,92%

2,507,949

1,15%

3,139,422

1,30%

791,174

0,31%

(722,991) -0,31%

11,070,127

4,79%

8,804,212

4,05%

9,331,999

3,86%

(3,072,553) -1,20%

40,273,555 17,51%

Annual income tax

(4,404,553)

-1,91% (5,585,887)

-2,57%

(3,640,956)

-1,51%

(1,969,666) -0,77%

(9,091,255) -3,95%

NET PROFIT/LOSS

6,665,574

1,48%

5,691,042

2,35%

(5,042,219) -1,96%

31,182,300 13,56%

2,89%

3,218,325

2,203,675

0,86%

55,987,891 24,34%

(528,335) -0,21%

(6,156,504) -2,68% 0

THIRD PARTY (PROFIT) LOSS

136,800

19,810

(47,293)

691,168

486,363

GROUP PROFIT (LOSS)

6,802,374

3,238,135

5,643,749

(4,351,051)

31,668,663

Compared to other trends in the past, deviations between 2006 and 2007 were not determined by particularly relevant extraordinary events, but are merely the product of regular operational activities. Extraordinary events, though of little significance, are correctly noted in the item “Extraordinary Op-

0,00%

erations” devoted to them. The values, and consequently the indexes, are therefore consistent with fiscal year 2006. Increases in turnover and improvement of the indexes are the result of the quality of work performed, loyal dedication and preset objectives. The drop in turnover as compared to fiscal years 2004 and 2005 is the consequence of choices made to abandon projects, sometimes partially as in the cession of the majority share packet in Fontenergia S.p.A., and at other times total as in the cession of assets and consequent pull-out and trading of methane gas or the cession of assets and the consequent maintenance and emergency service activities in Ottana (NU) petrochemicals. It is evident that there is a decrease in turnover, but profit margins have also improved. On this subject, the value of the Gross Operating Margin (GOM or EBIT) is indicative, reaching 24,8 million Euro in the Consolidated statement, equal to 10,75% of the value of production. This result is the best performance of the past five years. The same can be said for the EBIT and the current operating results. These two indexes have expressed a powerful dynamic over the past five years. Current operating results go from a negative result of 8,8 million Euro in 2003 to a positive result of 10,4 million Euro in 2007. This means that over five years, the Group has improved its operations, including financial operations, by almost 20 million Euro. Operations were developed, at the level of the Parent Company as well as for the entire group, by territory as well as productive sectors. The following analysis details the economic progress of areas and sectors. Headquarters The headquarters area includes construction and maintenance activities of the gas distribution networks, as well as the requalification and operation of thermal, heating, and district heating plants in the Emilia and Mantova regions. Production hovers around 36,2 million Euro, which is substantially unchanged in comparison to the previous fiscal year. This area has almost

2007

consolidated annualaccounts

doubled its contribution margin. Among its most important works are street maintenance for the Municipality of Bologna PER Hera S.p.A., districting heating for AMPS in Parma, plant management for the Province of Modena, and Global Service for the Municipality of Mantova. Rome – Sardinia – Tirrenian Area The area has principally been active in the construction, management, and conduction of thermal and heating plants in Lazio. The area has developed truly positive results with production of 31,9 million Euro. Major projects include IACP thermal plant management for the Municipality of Roma, thermal plant management for the Auditorium of Roma, and plant management for the Municipality of Rome. Northwest – Milan Area Much like the headquarters area, the northwest area has also put all of its group know-how to work, forging a wide array of available services performed in Piedmont, Lombardy, and Liguria. The area has developed a production of 27 million Euro with a constant profit margin as compared to the previous fiscal year. Major works performed include the extraordinary maintenance of the Milan Subway, Linate airport maintenance, thermal plant management for the Cremona Hospital and the Province of Milan. Sant’Omero Area – Adriatic The area, which operates mainly in the regions of Abruzzo, Molise and Puglia, has developed a production of 13,2 million Euro with an increase in respect to the previous year of 17%. It has maintained a constant profit margin in comparison to the past and its most significant activities performed include network maintenance for the Municipality of Serravalle in Chianti and thermal plant management for the Province of Ascoli Piceno, the ASL of Teramo, and the Muncipality of Pescara. Fano Area – Umbria The area, which has its operational headquarters

in Fano (PU), includes Romagna, the provinces of Pesaro-Urbino and Ancona, and the Umbria region. It has developed a production of 15,1 million Euro for a 30% increase over the previous fiscal year, but experienced a significant decrease in the profit margin due to the Sna emergency services network project. Major works performed during 2007 include the maintenance of Aset gas, water, and sewage networks in Fano and thermal plant management in the Province of Pesaro-Urbino and the Municipality of Riccione. Campania – Calabria – Sicily Area The area operating in the Southern part of the country undoubtedly has the greatest need for development. This area has not encompassed distribution and gas sales activities, including the distribution sector, which will be the subject of separate analysis. The value of production developed in 2007 to 3 million Euro. Major projects included the construction of the gas distribution networks for the island of Ischia, areas of Calabria and Campania, and the management and conduction of thermal plants in the Province of Caserta. Padova Area – Northeast This area experienced the most development during 2007, thanks in part to innovative projects such as the construction of the photovoltaic plant in the Municipality of Carano in Trentino. The value of production in 2007 amounts to 21,6 million Euro with a 30% increase as compared to the previous fiscal year sum of 4,9 million Euro, with good contribution profit margins. In addition to the aforementioned photovoltaic plant in Carano, major projects include the maintenance of water and gas distribution networks for the Municipality of Padova and Global Service for the Province of Vicenza. The energy service contracts purchased in the Trentino Alto Adige region significantly contribute to the determination of work totals. Tuscan Area This area, one of the nation’s most particular regions, has developed a value of production equal to 6,7 million Euro with an increase of 0,7 million Euro equal to 12%. Some of the major projects include the maintenance of electric plants operated by Enel S.p.A. and ASL thermal plant management in Arezzo. Foreign activity In terms of activities performed outside the national territory, the Group has primarily operated in Greece and Romania. The Group developed a value of production of 2,9 million Euro in Greece, generating a loss of 1,2 million Euro. As previously mentioned, this is the only business in the group to generate losses. The works performed include the construction of aqueducts and sewers in the Municipality of Salonicco. These activities will end in 2008. The losses estimated for 2008 have already been acknowledged in this balance sheet. Retained earnings on future losses do not consider price and accounting revisions for work stoppage caused by customers, which could generate additional proceeds not yet accounted for. The projects undertaken in Romania include the construction and management of gas distribution networks located in over 25 municipalities of the Cluj Napoca province in Transylvania. During 2007, the area developed a production of 5,4 million Euro with an increase of over 1 million Euro in comparison to the previous fiscal year and a profit of 0,6 million Euro. The company that operated in the area during 2007 served over 10.400 users, selling 13,1 million cubic meters of gas. Considering the process of great economic development underway in this

country, continued investment is considered extremely profitable due to the increase in the critical mass of users. In fact, development plans for the Rumanian territory already provide for new investments in concessions in 2008.

AREA

MC SALES

CALABRIA 20

2,239,502

CALABRIA 30

365,267

CAMPANIA 25

6,726,192

CAMPANIA 30

4,994,609

CITTANOVA

Plant technology, Odorants & Services Sector These two sectors experienced an extremely significant increase in turnover in 2007. Altogether, they have developed a production equal to 26,4 million Euro with an increase of 7,8 million Euro over the previous fiscal year, without the contribution of particularly significant investments. The increase in turnover is also linked to the marketing of our products beyond national borders, particularly in Croatia and Algeria. Specific conditions have been created in Algeria for on-site operation with a structure autonomous of local law, in addition to a branch that has been useful in diffusing our brand in a market in which gas is one of the main goods used for the creation of wealth. Distribution Sector The distribution sector, which includes the construction of our networks, distribution, trading, and sales, has always been one of the group’s strong points, not just from a perspective of absolute values but, above all, from a strategic point of view. During 2007 the Group developed a value of production of 25,1 million Euro, in line with the previous fiscal year despite a mild winter that significantly contributed to decrease in consumption and consequently the decrease in revenue. Many companies in this sector recorded considerable losses in 2007. This was not the case for the group, which recorded a good profit margin, thanks to prudent management of gas supplies in a season that was heavily affected by rising crude prices and the products to which its value is connected. During 2007 the Group sold over 34 million cubic meters of gas, summarized by area in the following table:

2007

consolidated annualaccounts

MARIGLIANO

14,554 2,585,948

MORFASSO

135,372

PALMA AND CAMASTRA

762,278

SAN GIUSEPPE VESUVIANO

395,848

SICILIA 12

460,696

SICILIA 17

2,324,077

BACINO CLUJ NAPOCA

13,051,957

SAPRI AND CAMEROTA

314,413

TOTAL

34,370,713

The table does not include gas transited and sold by sales companies that do not belong to the group, such as in the Calabria 30 area where only part is sold by the Group. The rest is sold by the Eon Group or other smaller companies. 46.174 total users were served, plus 6.544 users in the areas of Calabria where the group performs only transit activities. The 7.240 users of the affiliated Fontenergia area can be added for a total of almost 60 thousand users, out of 120 thousand potential users. Other sectors and income The remaining portion of the value of production was contributed by the sector called “Information & Communications Technology”, the building sector, and revenue generated by activities in the process of divesture that present other business codes. The value of production, as it is said, amounts to a total of Euro/000 230.905 and consists of the provisions and services performed for third parties and group companies: their allocation is the following (to Euro/000): Revenue from production projects Sale and transit of gas Sale of combustible energy

157,235 19,969 14

Sale of electric energy

1,882

Sale of materials

15,960

Services 5,272 Sale of buildings and land

2,105

Other revenue, services, and sales

1,937

TOTAL PRODUCTION REVENUE

Changes in stock

204,374

1,079

Variation of projects currently underway 1,360 Increase of tangible assets for internal projects

19,862

OTHER REVENUE

Amortizations and devaluations amount to a total of Euro/000 9.458. The EBIT presents a profit of Euro/000 14.621, financial management amounts to Euro/000 (4.190), value adjustments for financial assets and investment income total Euro/000 (379), shareholder repayment amounts to Euro/000 (1.100), extraordinary operations amount to Euro/000 2.118. The pre-tax amount totals Euro/000 11.070, third party interests contribute positively for Euro/000 137, while current, deferred, or anticipated taxes amount to Euro/000 (4.405). Composed as such, the final result determines a profit for the period that amounts to Euro/000 6.802.

4,230

TOTAL 230,905 Directly allocated costs amount to Euro/000 167.281 and consist of primary and subsidiary materials, including gas, services to third parties, rentals, leasing, rents, and other operational charges. Personnel costs, whether for Parent Company shareholders or employees, amount to Euro/000 38.792. Personnel costs include all direct and indirect charges related to the payment of professional services for the fiscal year, including bonuses and salary inclusions for employee personnel. In comparison to the previous fiscal year, personnel costs increased by 2,2 million Euro. This increase is partly attributable to the increase of the cost of labor, determined by recognized increases, salary inclusions and contractual increases, and partly to the increase of the average number of employees employed by the Group, that equaled 24 in 2007. The following table shows the dynamic of personnel in occupational terms: Number

2007

Value of production for “Cpl Concordia” and the “Cpl Concordia” Group amounts expressed in thousands of Euros 257,053

300,000 250,000

229,992

241,830 217,628 230,905

200,000 150,000

155,819 176,464 180,929 184,119 198,997

100,000 50,000 0

2003 2004 2005 2006 2007 CPL Concordia Group

CPL Concordia Soc. Coop.

2006

Senior Management

Middle Management

Office workers

391

343

Manual workers

501

521

Total

941

917

Balance Sheet Indexes The table below provides an overview with the most important indexes of the 2007 Consolidated Balance Sheet, shown in comparison with the past four fiscal years:

Principal indexes used on the balance sheet Statement dates ECONOMIC ANALYSIS

As of Dec. 31,2007

As of Dec. 31,2006

As of Dec. 31,2005

As of Dec. 31,2004

As of Dec. 31,2003

R.O.E. (Return on Equity)

7,52%

3,68%

7,56%

-5,47%

63,60%

R.O.I. (Return on Investment)

4,78%

3,74%

2,01%

0,04%

-1,39%

Gross Operating Margin Ratio/Value of Production

10,75%

9,65%

6,70%

5,03%

3,78%

Incidence of expenditures and revenue from extraordinary operations

53,48%

70,17%

-1,39%

3415,40%

816,72%

1,81%

1,70%

2,14%

2,21%

1,92%

Incidence of Net Financial Expenditures on the value of production Incidence of Net Financial Expenditures on the R.O.

28,66%

34,03%

93,07%

4320,63%

-99,95%

Statement dates FINANCIAL AND CAPITAL ANALYSIS

As of Dec. 31,2007

Liquidity index

As of Dec. 31,2006

1,22

1,41

As of Dec. 31,2005

As of Dec. 31,2004

1,44

As of Dec. 31,2003

1,07

1,11

Leverage (gearing)

3,38

3,29

3,71

4,26

6,38

Ratio of Interest-paying debt

0,68

0,74

0,96

1,63

2,31

1,40

1,60

1,92

1,30

1,04

EBITDA/DEBT

Elasticity index

40,14%

32,36%

22,50%

9,98%

7,57%

DEBTI/EBITDA

2,49

3,09

4,44

10,02

13,22

Several of these indexes, especially those of an economic nature, have already been commented upon. In any event, it must be emphasized that these indexes should be read positively, particularly the index that measures the relationship between the EBIT and the debt. This index measures the capacity of the group to pay its own debts with the profit from regular company activities. An index of about 3 is considered optimal. The table above shows a ratio index of 2,49 that has consistently improved over the past five years. A ratio close to 0 as measured by this index can indicate a lack of investment, certainly a negative element in a continually evolving market that requires constant investment. Another positive factor is the ratio of interest-paying debt, an index derived from the ratio between group capital and capital brought by financing entities.

Relationships with affiliated companies The following provides an economic analysis of the relationships with affiliated companies. Relationships concerning capital have already been commented upon in the appropriate sections.

Group revenue COMPANY

SERVICES

SUPPLIES

INTEREST

TOTAL

FONTENERGIA

35,164

4,760

39,924

SARDA RETI

20,000

ENERFIN

TECLAB

17,915

PEGOGNAGA SERVIZI

2007

consolidated annualaccounts

Group Costs COMPANY

SERVICES

FONTENERGIA

SUPPLIES

INTEREST

TOTAL

138

SARDA RETI

ENERFIN

74,097

33,305

107,402

TECLAB

Research and Development The Group has, moreover, continued its research and development activities during the fiscal year. It has particularly directed its energy to the following projects: Activity 1: Study and design to optimize and extend the field of application for EDOR, EMET, and EFOR electronic and telereading systems. Activity 2: Structure, design and creation of a new electronic odor tank system called EASYDOR Activity 3: Study, development, and implementation of a new service/product for the creation of photovoltaic plants. The activities listed above have been prevalently performed in the plant in Concordia sulla Secchia (Mo), Via Achille Grandi number 39 and in the building at Mirandola, Via di Mezzo 64.

Foreseeable evolution of management It can be said that Fiscal Year 2006 was characterized by consolidation of the Groupâ&#x20AC;&#x2122;s typical activities and a reorganization process geared towards greater penetration of local markets with the full array of services the Group is capable of providing. Fiscal Year 2007 was the year in which the fruits of this labor, and results reached, were collected. There is, however, still more to do, especially with regard to the difficult circumstances the world economy currently faces, with the exception of emerging countries such as China and India, and consequently the national economy that is also going through a time of political transition. One can see periods of stagnation on the horizon, which will undoubtedly slow down public investments and inevitably cause damage to those who work with them. This consequently interacts with the private fabric, which remains the leading economic substratum in this country. A major indicator of this trend is the decrease in demand for services and the contextually strong increase of subjects competing to contract them, especially foreign multinationals. In this macroeconomic climate, the Group is pushing both its own commercial organization as well as the new territorial organization forward. The challenges that lie ahead over the next few years will be difficult. However, we believe we are sufficiently prepared to overcome them, while also pursuing our interests in new technologies. A company that seeks to compete in a continually evolving market must also know how to evaluate new technologies and the clientâ&#x20AC;&#x2122;s evolving needs. The last government administration, defeated in the last political election, as well as the current administration consider the subject of energy to be one of the highest priorities. The government has begun to tackle this issue, alongside security and trash, especially in light of the cost of petroleum which devastated the market in 2007 and the first months of 2008. Nuclear power is once again under consideration as a possible solution, but we believe that renewable sources must not be undervalued, including biomass, wind power, and solar power. The Parent Company has been active in

cogeneration for many years, using it for the production of combustible electric energy (gasoline or gas) as well as for gas discharge products. To this end, during the first months of 2008 the Group purchased minority shares in a company that is involved in composting and production of biomass energy. After the experience with the Carano solar panel plant in Trentino, the Group has become interested in making strong investments in this sector, both by itself and through partnerships with other national and foreign investors. Finally, the Group retains a strong presence in construction activities and management of gas distribution networks, particularly in the Sardinian Region where it has been awarded several important areas and where, within the next 6-8 years, it should perform about 200 million Euro in investments. Based on the projects in its portfolio and in consideration of projects purchased and under evaluation, the Parent Company is currently updating the three year 2008 â&#x20AC;&#x201C; 2010 plan, that will soon be approved by the Board of Directors. The 2008 budget has already been approved. The 2008 budget was drafted on the base of the projects purchased by the month of December 2007 as well as those in the process of being purchased. This budget was adjusted on the basis of evaluations performed upon the closing of this balance sheet. In the following, we will analyze the balance sheets and the reclassified consolidated profit and loss accounts of fiscal year 2008 as compared with the four previous fiscal years.

2007

consolidated annualaccounts

Balance Sheet CONSOLIDATED BALANCE SHEET (values expressed in Euro) Estimate

ASSETS Short term assets

As of Dec. 31,2007

Liquid assets Non-permanent investments Receivables from clients and others

As of Dec. 31,2006

As of Dec. 31,2005

As of Dec. 31,2004

5,260,421

11,766,914

13,617,415

7,534,571

14,670,321

115,881

130,513,709 130,329,690 130,870,797 127,978,596 132,019,289

Inventory Subscribed capital, unpaid Accruals and deferred income Total short term assets Fixed assets

Final Statements

As of Dec. 31,2008

29,431,018

28,788,701

26,140,017

36,745,161

38,367,698

1,303,600

1,261,737

1,250,904

1,250,006

1,269,712

3,846,398

6,475,179

6,635,666

8,517,982

5,235,733

170,355,230 178,738,102 178,514,883 182,026,316 191,562,752

Intangible assets

25,057,024

Tangible assets

106,559,777

93,061,164

80,844,348

62,550,349 117,368,410

7,220,427

17,881,743

17,174,232

18,339,281

Investments Total fixed assets Total ASSETS LIABILITIES Short term liabilities

16,340,101

138,837,229 127,283,008 309,192,458 306,021,110

13,351,631

111,370,210 289,885,093

14,084,073

15,659,671 14,050,038

94,973,703 147,078,119 277,000,018 338,640,871

Amounts owed to banks Amounts owed to shareholders and other financiers Advances

12,798,301

17,492,340

15,092,838

19,708,552

69,040,457

5,487,179

6,154,891

4,950,419

4,264,103

8,516,870

9,204,964

14,881,644

12,878,459

15,426,293

11,742,131

Amounts owed to suppliers

84,984,809

92,894,949

74,125,417

71,148,370

72,422,732

Debts represented by bills of exchange

Amounts owed to subsidiary companies

2,205

425,803

332,760

303,761

885,376

167,236

7,443,251

4,579,699

7,935,892

4,244,144

5,622,354

2,513,754

3,653,343

3,033,287

1,707,985

1,801,444

5,842,307

5,809,331

7,500,789

7,303,347

5,906,281

525,845

479,934

942,023

1,286,141

3,591,600

Amounts owed to affiliated companies Amounts owed to tax administration Amounts owed to social security and welfare institutions Other short term liabilities Accruals and deferred income – liabilities Total short term liabilities Medium/long term liabilities Debenture loans Amounts owed to banks Amounted owed to shareholders and other Financiers Advance payments Amounts owed to suppliers

129,226,212 146,278,891 126,762,884 125,974,310 178,813,309 0

63,545,325

49,990,419

58,489,020

55,564,136

66,714,262

1,500,000

1,801,315

1,701,134

2,255,596

2,884,933

Estimate

As of Dec. 31,2008

Debts represented by bills of exchange Amounts owed to tax administration Severance indemnity fund Fund for social security and other welfare obligations Tax fund Other funds Total medium/long term liabilities Net equity

Final Statements As of Dec. 31,2007

Revaluation reserve Reserve foreseen by company bylaws

As of Dec. 31,2004

516,139

270,843

278,499

263,307

7,285,385

6,450,792

6,955,065

7,431,485

7,115,472

21,526

36,426

180,518

150,012

70,873

97,876

2,625,738

2,455,799

2,942,883

3,111,398

5,010,409

75,666,630

61,416,508

70,530,483

68,733,514

82,122,684

14,000,000

Legal reserve

As of Dec. 31,2005

508,138

Share capital

As of Dec. 31,2006

13,706,084

12,952,749

12,702,218

13,335,213

656,679

77,140,319

72,387,954

69,866,959

67,692,238

78,184

Capital gains reserve Lex 784/80

1,269,396

Consolidation reserve

3,171,412

2,256,942

2,565,595

(7,874,424)

(6,624,127)

Merger advance

235,597

3,102,096

Foreign currency conversion reserve

(79,039)

483,057

(79,316)

(35,563)

6,607,360

6,802,374

3,238,135

5,643,749

(4,351,051)

Profit/loss carried forward Fiscal year profit/loss Total net equity of group Net equity of third parties Total LIABILITIES

103,079,909 1,219,708

97,314,172 1,011,540

91,346,351 1,245,375

80,324,322 1,967,873

75,123,065 2,581,813

309,192,458 306,021,110 289,885,093 277,000,018 338,640,871

As stated in the introduction, the 2008 budget is characterized by a strong incidence of investments. In fact, the assets are characterized by a slight decrease in current assets, mostly due to a decrease in liquidity and a consolidation of trade receivables. Contextually, a strong increase takes place in fixed assets. What is truly significant is the increase of tangible and intangible assets, for a total increase of 22,2 million Euro. A decrease in short term liabilities is foreseen, even in the presence of greater investments, as particularly significant payment flows to suppliers will be made. Long term liabilities will increase, after new lines of credit are taken out, as explained in the chapter dedicated to the financial management. Net equity, finally, surpasses the threshold of 100 million Euro.

2007

consolidated annualaccounts

Profit and Loss Account Consolidated profit and loss statements reclassified using the value added method (values expressed in Euro)

Estimate As of Dec. % 31,2008

Income from sales 224,475,831 and services Variation in inventory of finished and (1,765,371) semi-finished goods Variation of work 653,765 in progress Low cost works 21,732,634 Other proceeds VALUE OF PRODUCTION Costs from purchases Variation in inventory of raw materials Other costs for services Expenses for use of assets owned by others Other operational fees ADDED VALUE Cost of labor and related fees GROSS OPERATING MARGIN Amortization of tangible assets Amortization of intangible assets Accruals and devaluations Amortization, accruals, and devaluations EBIT Interest and other financial fees Other financial proceeds TOTAL FINANCIAL MANAGEMENT CURRENT PROFIT/LOSS

611,102

As of Dec. 31,2007

91,36% 204,373,523

As of Dec. 31,2006

Final Statements As of Dec. % 31,2005

As of Dec. 31,2004

88,51% 201,310,854

92,50% 226,056,566

93,48% 227,537,890 -4,21%

88,52%

-0,72%

1,078,802

0,47% (2,569,631)

-1,18% (10,187,122)

0,27%

1,360,421

0,59% (2,135,696)

-0,98%

8,84% 19,862,333

8,60% 17,294,210

7,95% 15,934,003

6,59%

23,075,550

8,98%

0,25%

1,83%

1,71%

3,80%

15,986,119

6,22%

4,229,435

3,728,427

847,557 9,178,587

5,204,351

2,02%

0,35% (14,750,459)

-5,74%

245,707,961 100,00% 230,904,515 100,00% 217,628,163 100,00% 241,829,591 100,00% 257,053,450 100,00% (93,863,374) -38,20% (82,776,468) -35,85% (69,336,134) -31,86% (91,571,513) -37,87% (110,830,619) -43,12% (2,581,212)

-1,05%

(939,634)

-0,41% (5,695,328)

-2,62%

1,080,564

0,45%

4,640,637

1,81%

(72,919,123) -29,68% (72,815,190) -31,53% (72,614,398) -33,37% (83,655,008) -34,59% (86,407,797) -33,61% (10,147,579)

-4,13% (8,257,076)

-3,58% (9,818,513)

-4,51% (10,481,809)

-4,33%

(7,971,511)

-3,10%

(1,366,718)

-0,56% (2,492,213)

-1,08% (2,700,807)

-1,24% (3,490,490)

-1,44%

(3,970,689)

-1,54%

64,829,955

26,38% 63,623,934

27,55% 57,462,984

26,40% 53,711,334

22,21%

52,513,470

20,43%

(40,921,560) -16,65% (38,792,077 -16,80% (36,456,477) -16,75% (37,507,271) -15,51% (39,574,568) -15,40% 23,908,395

9,73% 24,831,857

10,75% 21,006,507

9,65% 16,204,064

6,70%

12,938,903

5,03%

(4,142,102)

-1,69% (4,338,661)

-1,88% (3,660,616)

-1,68% (4,456,592)

-1,84%

(5,669,249)

-2,21%

(4,982,406)

-2,03% (4,665,535)

-2,02% (4,583,865)

-2,11% (4,322,471)

-1,79%

(3,566,695)

-1,39%

(1,025,000)

-0,42% (1,206,669)

-0,52% (1,907,161)

-0,88% (1,858,729)

-0,77%

(3,571,721)

-1,39%

(10,149,508)

-4,13% (10,210,865)

-4,42% (10,151,642)

-4,66% (10,637,792)

-4,40% (12,807,665)

-4,98%

13,758,887

5,60% 14,620,993

6,33% 10,854,865

(4,879,523)

-1,99% (4,844,780)

-2,10% (4,198,165)

65,550

0,03%

655,073

0,28%

503,898

-1,81% (3,694,267)

4,99%

5,566,272

2,30%

131,238

0,05%

-1,93% (5,543,328)

-2,29%

(5,983,193)

-2,33%

362,905

0,15%

312,889

0,12%

-1,70% (5,180,424)

-2,14%

(5,670,305)

-2,21%

0,23%

(4,813,973)

-1,96% (4,189,707)

8,944,915

3,64% 10,431,286

4,52%

7,160,598

3,29%

385,848

0,16%

(5,539,067)

-2,15%

0,00%

51,637

0,02%

550,224

0,25%

7,717,593

3,19%

2,203,675

0,86%

1,385,689

0,56%

(431,123)

-0,19%

(664,559)

-0,31% (1,410,864)

-0,58%

(528,335)

-0,21%

0,00% (1,100,000)

-0,48%

(750,000)

-0,34%

(500,000)

-0,21%

0,00%

2,118,327

0,92%

2,507,949

1,15%

3,139,422

1,30%

791,174

0,31%

4,79%

8,804,212

4,05%

9,331,999

3,86%

(3,072,553)

-1,20%

-2,57% (3,640,956)

-1,51%

(1,969,666)

-0,77%

2,35%

(5,042,219)

-1,96%

Income from equity investments Financial activity adjustments Shareholder repayment Extraordinary operations PROFIT/LOSS BEFORE TAX

10,439,189

4,25% 11,070,127

Annual income tax

(3,623,461)

-1,47% (4,404,553)

NET PROFIT/LOSS

6,815,728

THIRD PARTY (PROFT) LOSS

(208,368)

136,800

19,810

(47,293)

691,168

GROUP PROFIT (LOSS)

6,607,360

6,802,374

3,238,135

5,643,749

(4,351,051)

0 108,586

0,04%

2,77%

6,665,574

-1,91% (5,585,887) 2,89%

3,218,325

1,48%

5,691,042

The 2008 consolidated profit and loss account table shows definite homogeneity with the recently closed balance sheet. The value of production is equal to 245,7 million Euro, a sum greater than the 2007 value by 14,8 million Euro, equal to about 6,4%. The continuous increase of the value of production is linked to the continual growth of gas distribution concessions and the continuous process of investments. Both gross operating margins as well as EBIT reflect upon the 2007 amounts in terms of absolute values. The slight dip is essentially due to market contraction and the continuous increase of the cost of labor and raw materials, and most of all in relation to the strong increases of oil products. The pre-tax result totals 10,4 million Euro and is in line with that of 2007, as is the net result. In summary, the 2008 balance statement replicates the results of 2007. In a climate of market stagnation, this should be considered a great success.

Indexes of the 2008 budget ECONOMIC ANALYSIS

Statement dates As of Dec.31,2008 As of Dec.31,2007 As of Dec.31,2006 As of Dec.31,2005 As of Dec.31,2004

R.O.E. (Return on Equity)

6,85%

7,52%

3,68%

7,56%

-5,47%

R.O.I. (Return on Investment)

4,45%

4,78%

3,74%

2,01%

0,04%

Gross Operating Margin Ratio/Value of Production Incidence of expenditures and revenue from extraordinary operations Incidence of Net Financial Expenditures on the value of production Incidence of Net Financial Expenditures on the R.O.

9,73%

10,75%

9,65%

6,70%

5,03%

51,98%

53,48%

70,17%

-1,39%

3415,40%

1,96%

1,81%

1,70%

2,14%

2,21%

34,99%

28,66%

34,03%

93,07%

4320,63%

FINANCIAL AND CAPITAL ANALYSIS

Statement dates As of Dec.31,2008 As of Dec.31,2007 As of Dec.31,2006 As of Dec.31,2005 As of Dec.31,2004

Liquidity index

1,32

1,22

1,41

1,44

1,07

Leverage (gearing)

3,20

3,38

3,29

3,71

4,26

Ratio of Interest-paying debt

0,79

0,68

0,74

0,96

1,63

Elasticity index

1,23

1,40

1,60

1,92

1,30

EBITDA/DEBT

31,22%

40,14%

32,36%

22,50%

9,98%

DEBTI/EBITDA

3,20

2,49

3,09

4,44

10,02

After reading the indexes, it appears clear that the company, having predicted strong investment in its own company activities, slightly drops its own economic indexes in comparison to the previous fiscal year, as well as those of a financial nature, so as to be able to finance the investments scheduled to occur to debt equity. Note how the DEBT/EBITDA ratio, or the ratio between the operating margin and the debt, reaches 3,20. This is an index representing good financial balance between group profitability and the recourse to credit needed to finance activities.

2007

consolidated annualaccounts

Finally, we wish to point out the important operations that have taken place since the closing of the balance sheet on 31 December 2007 On 5 March 2008, the company AI POWER S.p.A. was incorporated in Algiers (Algeria). The Group holds shares of a nominal value of 10.800.000 Algerian dinar, equal to 54% of the share capital totaling 20.000.000 Algerian dinar. The company will engage in the importation, creation, and installation of afferent, energy, gas, water, and sewage systems, as well as the creation of technologies connected to these systems. On 9 April 2008, the Cooperative purchased 20% of the block of shares in the company Compagri S.p.A., a company that engages in the construction and operation of compost and waste treatment plants. On 9 April 2008, the Cooperative purchased 20% of the shares of the Agro-energy company Consortile a.r.l., a company controlled by Compagri S.p.A and operating in the same sector. On 13 May 2008, the group purchased 30% of the shares of the company Xdatanet S.r.l., a company that designs and creates software and provides Information Technology consulting services.

Other information We wish to inform you that the Parent Company, within the terms foreseen by the appropriate decree, provided for the inclusion of the policy paper on security, in compliance with the provisions of enclosure B of Legislative Decree 196/03, cd. “Privacy Consolidation Act”, which relays the provisions concerning technical methods to assume when handling sensitive data with electronic instruments. We wish to inform you that with the widest consideration for the transparent and correct management of the company, and with respect for the active laws and fundamental principles of business ethics in pursuit of company objectives, the Parent Company has approved the “Organization, management, and control system in accordance with Legislative Decree number 231 of 8/6/2001” and has appointed the Supervisory Committee, for the 1/1/2008 – 31/12/2010 period. Finally, we wish to inform you that the Parent Group, together with all the companies of the Group, is drafting the tables foreseen by Legislative Decree number 164/2000 and Resolution number 311/01 made by the Gas and Electric Energy Authority, on the subject of account separation pertaining to productive processes in the methane gas sector. We would like to take this opportunity to thank you for your confidence in us. We invite you to approve the Balance Sheet closed on 31/12/2007, as it is presented. Concordia, 19/05/2008

The Board of Directors The President (CASARI Roberto)

2007

consolidated annualaccounts

consolidated balance sheet of the CPL Concordia Group as of December 31, 2007

Statement of assets and liabilities Assets As of Dec. 31,2007

ASSETS A)

UNPAID SUBSCRIBED CAPITAL

Amounts in Euro

1,261,737

already called-up B)

As of Dec. 31,2006

Amounts in Euro

1,261,737

1,250,904 1,250,904

FIXED ASSETS

INTANGIBLE ASSETS 1)

Installation and expansion expenses

Research, development, and advertising expenses

Industrial patent and intellectual property rights

Concessions, licenses, trade marks and similar rights

Goodwill

5b)

Difference by consolidation

Intangible assets in progress and advances

1,020,410

897,449

Other

14,875,243

11,950,606

Total

16,340,101

13,351,631

314,329

288,131

81,188

155,196

41,279

50,907

7,652

9,342

TANGIBLE ASSETS 1)

Land and buildings

Plants and machinery

Industrial and commercial equipment

480,626

342,992

Other assets

3,492,606

2,554,907

Tangible assets in course of construction and advances

6,100,337

5,204,213

93,061,163

80,844,347

179,685

347,804

Total III

4,231,488

2,633,438

78,756,106

70,108,797

INVESTMENTS: 1)

Equity investments in: a) subsidiary companies b) affiliated companies c) parent companies d) other companies

Receivables:

3,500,653 (within 12 months)

1,696,172 (within 12 months)

a) from subsidiary companies b) from affiliated companies

10,779,000

10,754,000

1,234,065

1,864,471

533,908

2,601,975

c) to parent companies d) to other companies 3)

Other investments

Own shares

1,033

Total

16,324,842

15,400,984

TOTAL FIXED ASSETS

125,726,106

109,596,962

2007

consolidated annualaccounts

As of Dec. 31,2007

ASSETS C)

Amounts in Euro

CURRENT ASSETS

INVENTORY: 1)

Raw materials, supplies, and consumbales

3,177,592

3,253,514

Works in progress and components

5,366,048

4,108,238

Contracts in progress

12,066,586

11,904,013

Finished goods and merchandise

6,613,629

5,157,002

Advance payments Total

II 1)

RECEIVABLES:

(over 12 months)

Trade debtors:

1,556,902

1,564,846

1,717,249

28,788,701

26,140,016 (over 12 months)

119,739,229

Receivables from subsidiary companies:

664,502

Receivables from affiliated companies:

652,125

Receivables from parent company:

1,765,146

121,493,423

8,103

224,209

4 bis) Tax assets

3,878,380

2,852,787

4 ter) Advance taxes

1,724,397

2,262,000

5,227,959

5,811,626

131,886,592

132,644,045

Other receivables Total

III

NON-PERMANENT INVESTMENTS 1)

Shares in subsidiary companies

115,797

Shares in affiliated companies

Other shares

Company shares

Other investments

115,881

11,688,157

13,562,294

1,207

38,500

Total IV

LIQUID ASSETS 1)

Current bank and postal accounts

Bank cheques

Cash on hand Total

TOTAL CURRENT ASSETS D)

As of Dec. 31,2006

Amounts in Euro

ACCRUALS AND DEFERRED INCOME: TOTAL ASSETS

77,550

16,622

11,766,914 172,558,088

13,617,416 172,401,561

6,475,179

6,635,666

306,021,110

289,885,093

Statement of assets and liabilities Liabilities As of Dec. 31,2007

LIABILITIES A)

As of Dec. 31,2006

Amounts in Euro

NET EQUITY I

CAPITAL

SHARE PREMIUM RESERVES

III

REVALUATION RESERVES

LEGAL RESERVES

RESERVES FORESEEN BY COMPANY BYLAWS

RESERVES FOR COMPANY SHARES

VII

13,706,084

12,952,749

656,679

72,387,954

69,866,959

78,184

OTHER RESERVES: a)

CAPITAL GAINS L. 784/80

1,269,396

CONSOLIDATION RESERVE

2,256,942

2,565,595

MERGER SURPLUS

235,597

TRANSLATION RESERVE

(79,039)

483,057

VIII

PROFIT (LOSS) CARRIED FORWARD

FISCAL YEAR PROFIT (LOSS) TOTAL GROUP NET EQUITY

6,802,374

3,238,135

97,314,171

91,346,351

THIRD PARTY CAPITAL AND RESERVES

1,148,340

1,265,186

THIRD PARTY PROFIT (LOSS)

(136,800)

(19,811)

THIRD PARTY NET EQUITY

1,011,540

1,245,375

98,325,711

92,591,726

TOTAL B)

PROVISIONS FOR LIABILITIES AND CHARGES 1)

Provisions for pensions and similar obligations

For taxes

Other

TOTAL

21,526

180,518

150,012

2,455,799

2,942,883

2,657,843

3,114,421

SEVERANCE INDEMNITY

6,450,792

ACCOUNTS PAYABLE:

(over 12 months)

6,955,065 (over 12 months)

Debenture loans:

Convertible debenture loans:

Amounts owed to shareholders for financing:

Amounts owed to banks:

Amounts owed to other financiers:

Advance payments:

Amounts owed to suppliers:

Debts represented by bills of exchange:

Amounts owed to subsidiary companies:

49,990,419

1,801,315

10) Amounts owed to affiliated companies:

3,224,800

2,723,657

67,482,759

73,581,858

2,930,091

2,226,762

14,881,644

12,878,459

94,696,264

75,826,551

332,760

303,761

11) Amounts owed to parent companies:

12) Amounts owed to tax administration:

4,579,699

7,935,892

Amounts owed to social security and welfare institutions:

3,653,343

3,033,287

13)

2007

consolidated annualaccounts

As of Dec. 31,2007

LIABILITIES

Amounts in Euro

14) Other accounts payable:

516,139

Amounts in Euro

6,325,470

TOTAL

7,771,631

198,106,830

As of Dec. 31,2006

CCRUALS AND DEFERRED INCOME: TOTAL LIABILITIES

186,281,858

479,934

942,023

306,021,110

289,885,093

186,110,000

190,529,741

4,028,830

4,114,166

190,138,830

194,643,907

MEMORANDUM ACCOUNTS: I)

Guarantees - Securities - Real guarantees

125,316,000 60,794,000

Total II)

Other memorandum accounts - Subject to collection - Other

Total MEMORANDUM ACCOUNTS

7,000 4,021,830

Profit and loss statement As of Dec. 31,2007

PROFIT AND LOSS STATEMENT A)

As of Dec. 31,2006

Amounts in Euro

Value of production: 1)

Net turnover from sales and services

Variation in inventory of finished, in progress, and semi-finished goods

Variation in contracts in progress

Capital improvement investments for internal works

Other income and revenue - miscellaneous

204,373,523

202,658,804

1,078,802

(2,569,631)

1,360,421

(2,135,696)

19,862,333

17,294,210

4,224,233

- transferred to the profit and loss account

3,728,427

5,203

4,229,436

Total

218,976,114

3,728,427

230,904,515

COST OF PRODUCTION: 6)

For raw materials, consumable goods, and merchandise

82,776,468

69,336,134

For services

72,815,190

72,614,398

For use of assets owned by others

8,257,076

9,818,513

For staff: a) salaries and wages

29,061,736

27,107,357

b) social security costs

9,005,220

8,371,880

c) severance indemnity

1,825,121

1,727,240

a) amortization of intagible assets

4,665,535

4,583,865

b) amortization of tangible assets

4,338,661

3,660,616

54,131

d) pension costs 10)

Amortization and depreciation

c) other reductions in value of fixed assets

11)

d) allowance for debtors included in current assets and other cash accounts Variations in stocks of raw materials, consumable goods, and merchandise di consumo e merci

12)

Amounts for risk provisions

13)

Other accruals

14)

Other operating charges

453,531

Total

DIFFERENCE BETWEEN VALUE AND COST OF PRODUCTION (A - B) C)

9,457,727

560,430

8,859,042

939,634

5,695,328

753,138

1,292,600

2,492,212

2,700,807

217,383,522

13,520,993

207,523,299 11,452,815

FINANCIAL REVENUE AND EXPENDITURES: 15)

Income from equity investments - from subsidiary companies

511,454

- from affiliated companies

- from other companies 16)

51,637

38,770

550,224

Other financial income: a) from loans constituting part of fixed assets: - from subsidiary companies

- from affiliated companies

- from parent companies

- from other companies

2007

consolidated annualaccounts

As of Dec. 31,2007

PROFIT AND LOSS STATEMENT

Amounts in Euro

As of Dec. 31,2006 Amounts in Euro

b) from other permanent investments other than equity income c) from other investments that are not permanent d) other income not included above: - from subsidiary companies - from affiliated companies - from parent companies

0 323

- from other companies 17)

0 2,072

653,001

655,073

503,576

503,899

4,627,182

4,350,069

Interest payable and other charges - from subsidiary companies - from affiliated companies - from parent companies - from other companies

17 bis)

PROFIT AND LOSS FROM FOREIGN CURRENCY CONVERSION Profit and loss from foreign currency conversion

217,598

(151,902)

Total ( 15 + 16 - 17 - 17 bis) D)

(4,138,070)

(3,144,044)

VALUE ADJUSTMENTS FOR INVESTMENTS 18)

Revaluations: a) of equity investments b) of permanent investments that are not equity investments c) of non-permanent investments which are not equity investments

19)

350,665

60,905

350,665

60,905

Devaluations: a) of equity investments b) of permanent investments that are not equity investments c) of non-permanent investments which are not equity investment

781,788

725,464

781,788

Total adjustments ( 18 - 19 ) E)

725,464

(431,123)

(664,559)

EXTRAORDINARY REVENUE AND EXPENSES: 20)

Revenue: a) gains from disposal of assets whose proceeds are not recorded at number 5 b) Capital gains c) other

21)

Expenses: a) losses from disposal of assets whose accounting effects are not recorded in number 14 b) taxes pertaining to prior fiscal year c) other Total extraordinary income and losses ( 20 - 21 )

PROFIT OR LOSS BEFORE TAX ( A - B ± C ± D ± E ) 22)

Income tax for the fiscal year: current, deffered, and anticipated

26)

PROFIT (LOSS) FOR THE FISCAL YEAR THIRD PARTY PROFIT (LOSS) GROUP PROFIT (LOSS)

1,465,542

4,458,308

737,914

2,203,456

16,346

54,316

4,512,624

49,947

60,308

8,475

85,129

2,118,327 11,070,127

3,302,678

3,352,625

1,159,999 8,804,211

(4,404,553)

(5,585,887)

6,665,574

3,218,324

136,800

19,811

6,802,374

3,238,135

details of the profit and loss statement Consolidated profit and loss account reclassified with the value-added method (values expressed in Euro)

Final Statements As of Dec. 31,2007

As of Dec. 31,2006

As of Dec. 31,2005

As of Dec. 31,2004

As of Dec. 31,2003

Net turnover from sales and services 204,373,523 88,51% 201,310,854 92,50% 226,056,566 93,48% 227,537,890 88,52% 175,073,206 76,12% Variation in inventory of finished and semi-finished goods

1,078,802 0,47%

(2,569,631) -1,18% (10,187,122) -4,21%

Variation in contracts in progress

1,360,421 0,59%

(2,135,696) -0,98%

Low-cost works

19,862,333 8,60%

17,294,210 7,95%

15,934,003 6,59%

23,075,550 8,98% 35,590,190 15,47%

Various income

4,229,435 1,83%

3,728,427 1,71%

9,178,587 3,80%

15,986,119 6,22% 12,173,187 5,29%

VALUE OF PRODUCTION Costs for purchases

5,204,351 2,02%

6,363,772 2,77%

847,557 0,35% (14,750,459) -5,74%

791,819 0,34%

230,904,515100,00% 217,628,163100,00% 241,829,591100,00% 257,053,450100,00% 229,992,174100,00% (82,776,468) -35,85% (69,336,134) -31,86% (91,571,513) -37,87% (110,830,619) -43,12% (91,990,382) -40,00%

Variation in inventory of raw materials

(939,634) -0,41%

Various costs for services

(5,695,328) -2,62%

1,080,564 0,45%

4,640,637 1,81%

3,196,893 1,39%

(72,815,190) -31,53% (72,614,398) -33,37% (83,655,008) -34,59% (86,407,797) -33,61% (85,810,793) -37,31%

Expenses for use of assets owned by others

(8,257,076) -3,58%

(9,818,513) -4,51% (10,481,809) -4,33%

(7,971,511) -3,10% (5,835,499) -2,54%

Other operational expenses

(2,492,213) -1,08%

(2,700,807) -1,24%

(3,970,689) -1,54% (3,931,721) -1,71%

ADDED VALUE Cost of work and related expenses

(3,490,490) -1,44%

63,623,934 27,55% 57,462,984 26,40% 53,711,334 22,21% 52,513,470 20,43% 45,620,671 19,84% (38,792,077) -16,80% (36,456,477) -16,75% (37,507,271) -15,51% (39,574,568) -15,40% (36,933,231) -16,06%

Gross Operating Margin Amortization of tangible assets

24,831,857 10,75% (4,338,661) -1,88%

21,006,507 9,65% (3,660,616) -1,68%

16,204,064 6,70% (4,456,592) -1,84%

12,938,903 5,03% 8,687,440 3,78% (5,669,249) -2,21% (6,749,324) -2,93%

Amortization of intangible assets

(4,665,535) -2,02%

(4,583,865) -2,11%

(4,322,471) -1,79%

(3,566,695) -1,39% (2,211,199) -0,96%

Retained earnings and depreciation

(1,206,669) -0,52%

(1,907,161) -0,88%

(1,858,729) -0,77%

(3,571,721) -1,39% (4,145,456) -1,80%

Amortizations, retained earnings, and depreciation

(10,210,865) -4,42% (10,151,642) -4,66% (10,637,792) -4,40% (12,807,665) -4,98% (13,105,980) -5,70%

EBIT 14,620,993 6,33% 10,854,865 4,99% 5,566,272 2,30% 131,238 0,05% (4,418,539) -1,92% Interest and other financial income (4,844,780) -2,10% (4,198,165) -1,93% (5,543,328) -2,29% (5,983,193) -2,33% (4,866,351) -2,12% Other financial income

655,073 0,28%

503,898 0,23%

362,905 0,15%

450,048 0,20%

(4,189,707) -1,81%

CURRENT PROFIT OR LOSS Income from equity investments

10,431,286 4,52% 51,637 0,02%

7,160,598 3,29% 550,224 0,25%

385,848 0,16% 7,717,593 3,19%

(5,539,067) -2,15% (8,834,842) -3,84% 2,203,675 0,86% 55,987,891 24,34% (528,335) -0,21% (6,156,504) -2,68%

Value adjustments for investments Shareholder repayment Extraordinary operations

(3,694,267) -1,70% (85,180,424) -2,14%

312,889 0,12%

TOTAL FINANCIAL MANAGEMENT

(431,123) -0,19%

(664,559) -0,31%

(1,410,864) -0,58%

(1,100,000) -0,48%

(750,000) -0,34%

(500,000) -0,21%

(5,670,305) -2,21% (4,416,303) -1,92%

0 0,00%

791,174 0,31%

(722,991) -0,31%

2,118,327 0,92%

2,507,949 1,15%

3,139,422 1,30%

PRE-TAX PROFIT OR LOSS

11,070,127 4,79%

8,804,212 4,05%

9,331,999 3,86%

(3,072,553) -1,20% 40,273,555 17,51%

Taxes on operating profit

(4,404,553) -1,91%

(5,585,887) -2,57%

(3,640,956) -1,51%

(1,969,666) -0,77% (9,091,255) -3,95%

6,665,574 2,89% 136,800 6,802,374

3,218,325 1,48% 19,810 3,238,135

NET PROFIT OR LOSS THIRD PARTY PROFIT (LOSS) GROUP PROFIT (LOSS)

2007

consolidated annualaccounts

5,691,042 2,35% (5,042,219) -1,96% 31,182,300 13,56% (47,293) 691,168 486,363 5,643,749 (4,351,051) 31,668,663

Consolidated balance sheet reclassified by liquidity (values expressed in Euro)

TOTAL ASSETS Short term assets

As of Dec. 31,2007

As of Dec. 31,2006

Liquid assets Non-permanent assets Receivables from clients and others

Final Statements As of Dec. As of Dec. As of Dec. 31,2005 31,2004 31,2003

11,766,914

13,617,415

7,534,571

14,670,321

8,486,072

115,881

1,350

130,329,690 130,870,797 127,978,596 132,019,289 104,106,354

Inventory

28,788,701

26,140,017

36,745,161

38,367,698

47,290,401

Subscribed capital, unpaid

1,261,737

1,250,904

1,250,006

1,269,712

1,155,086

Accruals and deferred income - assets

6,475,179

6,635,666

8,517,982

5,235,733

1,190,397

Total short term assets Fixed assets

178,738,102 178,514,883 182,026,316 191,562,752 162,229,660

Intangible assets

16,340,101

13,351,631

14,084,073

Tangible assets

93,061,164

80,844,348

62,550,349 117,368,410 120,442,662

17,881,743

17,174,232

Investments Total fixed assets TOTAL ASSETS TOTAL LIABILITIES Short-term liabilities Amounts owed to banks Amounts owed to shareholders and other financiers

127,283,008 111,370,210 306,021,110 289,885,093 17,492,340

15,092,838

18,339,281

15,659,671

15,465,470

14,050,038

19,692,039

94,973,703 147,078,119 277,000,018 338,640,871

155,600,171

19,708,552

69,040,457

317,829,831

47,095,404

6,154,891

4,950,419

4,264,103

8,516,870

2,676,232

Advance payments

14,881,644

12,878,459

15,426,293

11,742,131

4,903,198

Amounts owed to suppliers

92,894,949

74,125,417

71,148,370

72,422,732

69,687,827

Debts represented by bills of exchange Amounts owed to subsidiary companies

2,205

2,759

332,760

303,761

885,376

167,236

437,850

Amounts owed to tax administration

4,579,699

7,935,892

4,244,144

5,622,354

4,366,111

Amounts owed to social security and welfare institutions

3,653,343

3,033,287

1,707,985

1,801,444

1,806,999

Other short-term debts

5,809,331

7,500,789

7,303,347

5,906,281

8,174,627

479,934

942,023

1,286,141

3,591,600

6,639,007

Amounts owed to affiliated companies

Accruals and deferred income - liabilities Total short-term liabilities Medium/long term liabilities Debenture loans Amounts owed to banks Amounts owed to shareholders and other financiers Advance payments Amounts owed to suppliers

146,278,891 126,762,884 125,974,310 178,813,309 145,790,014 0

49,990,419

58,489,020

55,564,136

66,714,262

70,217,850

3,312,864

1,801,315

1,701,134

2,255,596

2,884,933

2,164,004

Debts represented by bills of exchange

Amounts owed to tax administration

Final Statements As of Dec. As of Dec. As of Dec. As of Dec. As of Dec. 31,2007 31,2006 31,2005 31,2004 31,2003 516,139 270,843 278,499 263,307 0

Other amounts owed beyond the fiscal year Provision for severance pay Fund for social security and welfare institutions Tax fund Other funds Total medium/long term liabilities NET EQUITY

Share capital Revaluation reserve Legal reserve Reserves foreseen by company bylaws

6,450,792

6,955,065

7,431,485

7,115,472

6,995,220

21,526

36,426

45,825

180,518

150,012

70,873

97,876

2,455,799

2,942,883

3,111,398

5,010,409

3,503,360

61,416,508

70,530,483

68,733,514

82,122,684

86,239,123

13,706,084

12,952,749

12,702,218

13,335,213

14,878,043

656,679

72,387,954

69,866,959

67,692,238

66,683,567

78,184

78,185

1,269,396

Capital gains reserve Lex 784/80

1,269,396

Consolidation reserve

2,256,942

2,565,595

(7,874,424)

(6,624,127) (36,538,702)

Merger advance

235,597

3,102,096

Foreign currency conversion fund

(79,039)

483,057

(79,316)

(35,563)

(338,671)

Profit / loss carried forward Fiscal year profit / loss Total Group Profit or Loss Third party net capital TOTAL LIABILITIES

6,802,374

3,238,135

5,643,749

(4,351,051)

31,668,663

97,314,172 1,011,540

91,346,351 1,245,375

80,324,322 1,967,873

75,123,065 2,581,813

81,459,255 4,341,439

306,021,110 289,885,093 277,000,018 338,640,871 317,829,831

2007

consolidated annualaccounts

NET GROUP DEBT AS OF 31.12.2007 ITEMS

As of Dec. 31,2007

As of Dec. 31,2006

SHORT TERM DEBTS OWED TO BANKS

17,492,340

15,092,838

LONG TERM DEBTS OWED TO BANKS

49,990,419

58,489,020

6,154,891

4,950,419

- LIQUIDITY DEDUCTIONS

(11,766,914)

(13,617,415)

- GROUP LOAN DEDUCTIONS

(11,229,142)

(2,701,142)

50,641,594

62,213,719

LOANS FROM COOPERATIVE MEMBERS AND OTHER FINANCIERS

NET DEBT

DEBT TOWARDS THE BANKING SYSTEM AND SHAREHOLDERS ITEMS

As of Dec. 31,2007

As of Dec. 31,2006

SHORT TERM DEBTS OWED TO BANKS

17,492,340

15,092,838

LONG TERM DEBTS OWED TO BANKS

49,990,419

58,489,020

6,154,891

4,950,419

(11,766,914)

(13,617,415)

61,870,736

64,914,861

LOANS FROM COOPERATIVE MEMBERS AND OTHER FINANCIERS - LIQUIDITY DEDUCTIONS NET DEBT

Principal indexes used on the balance sheet ECONOMIC ANALYSIS

Statement Dates As of Dec. 31,2007

As of Dec. 31,2006

As of Dec. 31,2005

As of Dec. 31,2004

As of Dec. 31,2003

R.O.E. (Return on Equity)

7,52%

3,68%

7,56%

-5,47%

63,60%

R.O.I. (Return on Investment)

4,78%

3,74%

2,01%

0,04%

-1,39%

10,75%

9,65%

6,70%

5,03%

3,78%

53,48%

70,17%

-1,39%

3415,40%

816,72%

1,81%

1,70%

2,14%

2,21%

1,92%

28,66%

34,03%

93,07%

4320,63%

-99,95%

FINANCIAL AND EQUITY ANALYSIS

Statement Dates As of Dec. 31,2007

As of Dec. 31,2006

As of Dec. 31,2005

As of Dec. 31,2004

As of Dec. 31,2003

Liquidity index

1,22

1,41

1,44

1,07

1,11

Leverage (Gearing)

3,38

3,29

3,71

4,26

6,38

Leverage debt ratio

0,68

0,74

0,96

1,63

2,31

Elasticity index

1,40

1,60

1,92

1,30

1,04

Debt/EBITDA

40,14%

32,36%

22,50%

9,98%

7,57%

Debt/EBITDA

2,49

3,09

4,44

10,02

13,22

balance sheets of the companies belonging to the Group BALANCE SHEET FOR GAS COMPANY ACTIVITY - METHANE AND LPG As of December 31, 2007 FINANCIAL STATEMENTS BALANCE SHEET OWNERSHIP PERCENTAGE ASSETS

MARIGLIANO GAS S.R.L.

COOP GAS S.R.L.

99,5%

100%

Subscribed capital, unpaid

SI.GAS S.R.L.

ERREGAS S.R.L.

100%

3,600

654

38,874

93,155

2,304

249,572

123,887

7,472,692

3,273

3,823,729

146,993

12,805,814

5,948,371

Total intangible assets Total tangible assets

ISCHIA GAS PROGAS S.R.L. METANO S.R.L.

Total investments

1,214

648,801

7,236

4,297

8,386

Total fixed assets

7,474,560

690,948

3,924,120

149,297

13,059,684

6,080,644

Total inventory Total receivables

3,264,847

6,492

79,191

1,063,056

5,973,878

625,202

1,280

890,086

829,235

Total short term assets

4,833

91,562

38,966

125,132

25,298

36,239

1,067,889

9,330,286

664,168

126,412

921,876

944,665

66,414

82,429

41,675

567

110,710

22,068

8,612,463

10,103,663

4,629,964

276,276

14,092,270

7,047,377

Total liquid assets Total current assets Total accruals and deferred income TOTAL ASSETS LIABILITIES Total net equity

3,352,388

5,238,632

Fund for risk and other charges

181,720

Severance indemnity

52,841

Financial payables Commercial payables Total accruals and deferred income

2,499,805

219,192

9,031,440

598,936

520,591

98,742

3,235

4,832,728

1,700,000

210,000

3,320,000

6,020,000

412,405

2,882,691

1,919,754

57,084

1,108,929

423,566

14,943

47,779

405

12,568

1,640

8,612,463

10,103,663

4,629,964

276,276

14,092,270

7,047,377

726,051

15,902,245

14,476

2,500,604

1,373,189

Total cost of production

(385,402) (15,486,522)

(98,125)

(3,907)

Total revenue and expenditures Total value adjustments for investments Extraordinary revenue and expenditures

(250,426)

(18,913)

586

3,099

(73,245)

(269,273)

1,465,542

TOTAL LIABILITIES PROFIT AND LOSS ACCOUNT Total value of production

Profit or loss before taxes

(2,455,830) (1,305,083)

90,223

1,862,351

(83,063)

(808)

(28,471)

(201,167)

Taxes on operating profit

(14,668)

(115,000)

26,843

(1,106)

55,070

Profit or loss for the fiscal year

75,555

1,747,351

(56,220)

(808)

(29,577)

(146,097)

2007

consolidated annualaccounts

BALANCE SHEET FOR ENERGY COMPANY ACTIVITY As of December 31, 2007 FINANCIAL STATEMENTS BALANCE SHEET OWNERSHIP PERCENTAGE ASSETS

CRISTOFORETTI S.E.R. S.r.l.

ENERGY OF CONCORDIA S.r.l.

SERIO ENERGIA S..r.l.

50%

100%

40%

Subscribed capital, unpaid

Total intangible assets

3,675,234

13,806

Total tangible assets

1,450,802

2,269,467

2,692,326

Total investments

94,699

246,596

3,400

Total fixed assets

5,220,736

2,516,063

2,709,533

Total inventory

5,027,034

11,995,912

605,020

551,766

Total receivables Total short term assets

168

Total liquid assets

1,686,451

2,791

196,281

Total current assets

18,709,565

607,811

748,047

5,726

3,268

Total accruals and deferred income TOTAL ASSETS

23,936,027 LIABILITIES

Total net equity Fund for risk and other charges Severance indemnity Financial payables Commercial payables Total accruals and deferred income TOTAL LIABILITIES PROFIT AND LOSS ACCOUNT

3,127,141

3,457,579

1,685,657

520,522

1,196,748

30,000

355,728

12,024,430

1,688,573

9,831,612

2,576,620

571,687

38,600

572

23,936,027

3,127,141

3,457,579

Total value of production

19,625,838

199,104

1,881,869

Total cost of production

(18,794,523)

(249,021)

(1,553,533)

(432,934)

13,337

(101,337)

Total value adjustments for investments

Extraordinary revenue and expenditures

Profit or loss before taxes

398,380

(36,579)

226,999

Taxes on operating profit

(278,257)

8,668

(90,154)

120,123

(27,911)

136,845

Total revenue and expenditures

Profit or loss for the fiscal year

BALANCE SHEET FOR FOREIGN COMPANIES As of December 31, 2007 FINANCIAL STATEMENTS BALANCE SHEET OWNERSHIP PERCENTAGE ASSETS

CPL HELLAS A.B.E. & T.E.

CPL MAGHREB SERVICE SARL

CPL CONCORDIA FILIALA CLUJ S.R.L.

100,0%

90,0%

100%

Subscribed capital, unpaid Total intangible assets Total tangible assets

25,761

414,708

106,656

9,520,794

Total investments

21,902

7,512

Total fixed assets

154,319

9,943,014

69,420

23,134

1,447,523

1,209,507

Total inventory Total receivables Total short term assets Total liquid assets Total current assets Total accruals and deferred income TOTAL ASSETS

106,696

11,000

98,477

1,623,638

11,000

1,331,117

1,777,958 LIABILITIES

Total net equity Fund for risk and other charges Severance indemnity Financial payables Commercial payables Total accruals and deferred income TOTAL LIABILITIES PROFIT AND LOSS ACCOUNT

11,000

Total value of production

11,274,131

385,272

10,080

7,266,419

114,083

2,449

2,608,302

1,306,767

920

1,285,327

83,468

1,777,958

11,000

11,274,131

2,679,197

5,375,608

(3,832,003 )

(4,725,583)

(19,985 )

(332,204)

Total value adjustments for investments

Extraordinary revenue and expenditures

(16,346 )

Profit or loss before taxes

(1,189,136)

317,821

Taxes on operating profit

(77,361)

Total cost of production Total revenue and expenditures

Profit or loss for the fiscal year

(1,189,136)

2007

consolidated annualaccounts

240,460

BALANCE SHEET FOR OTHER SUBSIDIARY COMPANIES As of December 31, 2007 FINANCIAL STATEMENTS BALANCE SHEET OWNERSHIP PERCENTAGE ASSETS

REAL ESTATE AGENT OF CONCORDIA S.R.L.

NUORO SERVIZI S.R.L.

100%

44%

Subscribed capital, unpaid Total intangible assets Total tangible assets

41,425

1,680,139

Total investments

115,354

30,307

Total fixed assets

1,836,918

30,307

Total inventory

3,708,826

308,724

5,404,003

Total receivables Total short term assets

134,167

224,453

Total current assets

4,151,716

5,628,456

Total accruals and deferred income

1,193,426

Total liquid assets

TOTAL ASSETS

7,182,060 LIABILITIES

Total net equity Fund for risk and other charges Severance indemnity Financial payables Commercial payables Total accruals and deferred income TOTAL LIABILITIES PROFIT AND LOSS ACCOUNT

5,658,763

4,354,482

511,515

39,952

19,037

16,446

594,138

2,519,569

2,168,020

2,608,641

9,021

7,182,060

5,658,763

Total value of production

2,949,969

210,253

Total cost of production

(3,631,078)

(343,938)

(219,505)

(169,867)

Total value adjustments for investments

Extraordinary revenue and expenditures

Profit or loss before taxes

(900,615)

(303,551)

Taxes on operating profit

1,376

81,948

(899,238)

(221,603)

Total revenue and expenditures

Profit or loss for the fiscal year

BALANCE SHEET FOR ASSOCIATED COMPANIES As of December 31, 2007 FINANCIAL STATEMENTS BALANCE SHEET OWNERSHIP PERCENTAGE ASSETS

COIMMGEST S.P.A.

FONTENERGIA S.P.A.

TECLAB S.R.L.

PEGOGNAGA SERVIZI S.R.L.

45%

49%

35%

50,0%

Subscribed capital, unpaid Total intangible assets Total tangible assets

28,376

200,594

464,585

18,890

23,592,775

19,205,803

48,406

221,813

Total investments

10,000

444,911

8,227

239

Total fixed assets

23,631,151

19,851,308

521,218

240,942

3,264

528,106

201,490

95,071

16,789,704

726,642

19,410

Total inventory Total receivables

500,000

Total liquid assets

Total short term assets

241,216

46,063

2,212

43,859

Total current assets

339,551

17,863,873

930,344

63,269

5,999

77,460

11,028

1,004

23,976,701

37,792,641

Total accruals and deferred income TOTAL ASSETS LIABILITIES Total net equity Fund for risk and other charges Severance indemnity Financial payables Commercial payables Total accruals and deferred income TOTAL LIABILITIES PROFIT AND LOSS ACCOUNT

1,462,590

305,215

133,312

4,849,612

105,355

130,712

25,324

75,661

218,200

4,271

19,915,839

30,565,018

811,253

90,000

612,804

2,194,808

327,782

78,650

3,289,422

107,542

1,582

23,976,701

37,792,641

1,462,590

305,215

Total value of production

892,162

7,542,386

1,612,331

186,258

Total cost of production

(284,839)

(6,511,529)

(1,655,157)

(144,264)

Total revenue and expenditures

(537,528)

-988,987

(58,559)

(3,671)

Total value adjustments for investments

Extraordinary revenue and expenditures

1,519,273

Profit or loss before taxes

69,795

1,561,144

(101,385)

38,324

Taxes on operating profit

(56,483)

(146,696)

(17,247)

13,312

1,414,448

(101,385)

21,077

Profit or loss for the fiscal year

2007

consolidated annualaccounts

board of auditors report on the consolidated balance sheet as of December 31, 2007 Dear Shareholders, pursuant to the responsibilities bestowed upon us in accordance with article 41 of Legislative Decree number 127 of 9 April 1991, we have checked the consolidated balance sheet of the CPL Group together with the annual report. In summary, the consolidated Balance Sheet of the CPL group on 31/12/2007 presents the following given in €uro:

ASSETS Accounts receivable for sums still owed

1,261,737

Fixed assets

125,726,106

Current assets

172,558,088

Accruals and deferred income

6,475,179

Total assets

306,021,110

LIABILITIES Group shareholder’s equity

97,314,171

Third party capital and reserves

1,011,540

Total equity

98,325,711

Provisions for liabilities and charges

2,657,843

Severance indemnities

6,450,792

Accounts payable

198,106,830

Accruals and deferred income

479,934

Total liabilities

306,021,110

Memorandum accounts are equal to €uro 190,138,830.

CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR FY 2007 Value of production

230,904,515

Cost of production

(217,383,522)

Difference between value and cost of production

13,520,993

Financial income and charges

(4,138,070)

Value adjustments

(431,123)

Extraordinary income and charges

2,118,327

Result before taxes

11,070,127

Annual income tax (current - deferred - anticipated taxes)

(4,404,553)

Fiscal year profit

6,665,574

Third party equity loss

136,800

Group profit

6,802,374

The Balance sheet was drafted in conformity with the dispositions of Legislative Decree number 127 from 9 April 1991, integrated with the accounting principles detailed by the National Council of Accountants and Tax Advisers, and, in the absence of other standards, by the standards of the International Accounting Standards Board (I.A.S., now I.F.R.S.) The company balances recorded on the consolidated balance sheet have been checked by the respective Board of Auditors and/or, in absence of the same as not required by law, by the audit firm PriceWaterhouseCoopers SpA. Based on the inspections made by the Board we certify the following: the companies included in the scope of consolidation are correctly identified and respond to the requirements for controlled companies as foreseen by the legislation indicated above; the information conveyed by companies included in the consolidating company’s scope of consolidation conforms to the evaluation, structure, and content criteria defined by the consolidating company itself, as confirmed by the administrative bodies of each consolidated company. the information received as well as the information from the consolidating company’s own account records was correctly used for the creation of the consolidated balance sheet; the evaluation criteria and the consolidation principles used conform to the regulations, as do the consolidation method and criteria: the balance sheets for the companies included in the scope of consolidation, opportunely reclassified, have fully recaptured the assets and liabilities, as well as the revenue and expenditures, according to the criteria of the total consolidation method; all operations of significant importance, whether for their value or affect within the group, that took place between companies included in the scope of consolidation – particularly receivables/payables, costs/revenue and capital gains – have been elimi-

2007

consolidated annualaccounts

nated; all operations of significant importance, whether for their value or affect within the group, that took place between companies included in the scope of consolidation – particularly receivables/payables, costs/revenue and capital gains – have been eliminated; therefore the Board has adopted the total consolidation method in cases of real and de facto control of the management of associated companies, the Board proceeded with the net equity method for other companies; we have given our consent for the inclusion of installation and expansion costs in the balance sheet, as well as the costs for research, development, and advertising, for 314.329 Euro and 81.188 Euro, respectively; the explanatory notes contain the information foreseen by the regulations; the data and information contained in the annual report respect the content foreseen by article 40 of Legislative Decree 127/91 and do not conflict with the data and information contained in the statutory consolidated balance sheet. In our judgment, this consolidated balance sheet correctly represents the equity and financial condition and the profits and losses of the group heading the CPL Concordia cooperative society for the fiscal year closing on 31/12/2007, in conformity with the laws that govern the drafting of the consolidated balance sheet. Concordia sulla Secchia, 04 June 2008 The Board of Auditors Pelliciardi Dott. Carlo Alberto (President) Ascari Rag. Fausto Casari Dott. Mauro

certification report

annual accounts

2007

annual2007 accounts

report on the management of the financial year ending as of December 31, 2007

Dear Associates, the Budget of the financial year ending 31.12.07 which is presented for approval presents a Profit, net of the taxes of the financial year and of the allowances of ordinary and extraordinary character, equal to Euro 5.879.687, a result in perfect line with the objectives which were fixed in the budget and which represent the best performance of the last few years. The production carried out during the course of the financial year amounts to Euro 198.997.185, with an increment in respect of the previous financial year equal to 7.3%. The Asset total works out as equal to Euro 265.793.587, the Net assets amounts to Euro 94.213.581, the Funds amount to Euro 1.357.063, the Severance pay amounts to Euro 6.101.664 and the total of the debts and the accruals and deferrals amount to Euro 164.121.279. As ever, the administrators of the Cooperative, in accordance with art. 2 of Law 59/92, have carried out their own mandate with the wish of having the Cooperative achieve the mutualistic goals expected by law and by Statute, consisting in the aim of obtaining continuity in employment and the best possible economic, social and professional conditions. For these reasons, the Cooperative has acted with the intent of maintaining full occupation of the associates and remunerating their work services to the best possible contractual conditions, taking account of the market trend and of the specific sector of reference in which it operates. The company has operated, moreover, in order to improve the professional and cultural qualification of the associates, investing to guarantee optimal conditions in the work environment. With the aim of continuing the process of capitalisation of the Cooperative, as well as to loyalise and reward the contribution of the social base, the Board of Directors proposes, by virtue of the good results achieved in the financial year, to attribute to each partner, in accordance with art.3 par.2 item b of Law 142 of 3 April 2001 and subsequent modifications, as a rebate, an amount determined in relation to the quantity and to the quality of the work carried out during the course of the financial year 2007. The amount that the Board of Directors proposes to the Assembly of partners to be attributed to each individual partner, based on the criteria set out above, amounts to Euro 1.100.000, which already appears recorded as item B9 of the Profit and Loss Account between the personnel costs like the integration of the salaries paid out to the working partners during the course of 2007, 50% intended as a free increase of the underwritten and disbursed capital and the remaining 50% as the integration of the salaries owed to cooperative partners, conditions, these, both expected by article 62 of the social statute and in accordance and in effect of which to art.6 second paragraph of the DL no 63/02 converted in the Law no 112/02. With this significant Rebate proposal, which has naturally been made in respect of the limits expected by the law and by the Social Statute, we desire to give a strong signal not only to our partners, but

annual accounts

2007

also to those who are not yet partners but hope soon to become one. We believe that the forms of self-incentivisation of the cooperative entity, such as the rebate, and the relationship with both the social base and with our “stakeholders” are noted also by those that will read and analyse the data of our budget, and they will only be able to ascertain the uniqueness, not so much of our society, but of an entity making part of a world, that of the Cooperative, that is surely unique and exciting, but which today unfortunately is still the subject of discussion for its fundamental values and principles. Indeed, under pressure from the European Commission, the new government has already announced that it wishes to intervene on the legislation concerned, even to the limit of the constitutional order that forecasts (article 45) the promotion of the cooperative form, going to limit further several institutions, including that of the social loan. We consider it timely to recall that the cooperative legislation began to develop with the liberal governments of the beginning of the 20th century, and it is fruit of the idea that the cooperative movement represents a part of the economy with precise characteristics. Under the purely economic profile, among these certainly not-unimportant peculiarities, was inserted the now only partial non-taxable status of the profits, provided that these became set aside in an indivisible reserve, and the social loan. Both of these institutions are assigned in aid of the cooperative society for its entrepreneurial and occupational development, and as guarantee of its future. In fact, it was for workers without economic means, often unemployed and without social assistance, that these institutions in the cooperative undertaking were used, then as today, to capitalise. In not taking care of these principles, the French

multinational groups have confused the foundational principles of the cooperative system with the presumed assistance of the State to the cooperative system, deliberately ignoring that the first to take advantage of this system are the millions of people, the associates, who are seen acknowledging several points of interest more in their loan in respect of those of the banking current accounts, and it allows the associate to contribute financially to the development of his or her own Cooperative undertaking. At a time when a social disinterest in participation is perceived, we instead seek to effect democracy in people: not only in daily life, but doing so that even in their projects, in their dreams, they reason in democratic terms. We believe that this is a fact which marks the life of a cooperator. A great cooperator, our ex-President Giuseppe Tanferri, who passed away not long ago, used to say: “Living in the cooperative means that when the workers are not happy with the directors, they change them, whereas in a private enterprise when the directors are not happy with the workers, they fire them,” and they transfer the factories to where they earn the most. In a society of precarious workers, living in a cooperative like ours is a big expression of democracy, which often is not seen or appreciated in the right way. Let us think of the property of the enterprise; how many people today know exactly who owns their company … For us, it is normal to live in a cooperative knowing that it belongs to the Partners, who are called at least once a year to give their consensus to the work of the directors, or to change them if they wish, freely. In its 110 years, our company has had several generational changes, and if we are still active today, we owe that to the good choices of those who preceded us in the government of

the cooperative society and to the sacrifices of the partners in safeguarding the cooperative values. As far as the cooperative context in which we move is concerned, during the financial year 2007, the vivacity of the cooperative economy and its capacity to produce rhythms of growth superior to the averages of the Country was once more confirmed, both on a national level and across various territories. Indeed, the full-year forecast data relative to the cooperatives joining Legacoop show an increment of the turnover of +4.09%, confirming the importance of the cooperation for national development. Employment has increased by 2.87%, with more than 12.000 additional employees in respect of the previous year. Another strongly positive data is that relative to the partners, who grow overall by 2.67%, coming to approximately eight million people, confirming the social rooting capacity of the cooperation. The positive dynamic of the turnover concerned all sectors of the cooperative, with the exception of the food division which results stagnant, due to the high increase in the costs of the raw materials; particularly positive points are on the other hand noted in the work and production sector, the services sector and the social cooperation sector, which obtain results greater than the cooperative average. In the distribution sector, even with a modest dynamic of the consumption of foodstuffs, the consumer and retailer cooperatives have increased sales and employees while continuing with their development phase. These are, perhaps, the last data to worry our French competitors. The cooperative system continues to develop even, and above all, in those productive sectors that are attractive to

annual accounts

2007

foreign multinationals. These, in attempting to dismantle the scaffolding which holds up the fiscal structure, as we have seen before, think to have an easy life on the national market, completely ignoring the aspects of a social character which are the real brand to be defended. Measuring the effects of a social character that the cooperative system produces is possible via so-called social accounting. This operates in a parallel mode to ordinary accounting, through reclassification and indexing of all assets. We will see the indices applied to our budget in the following pages. Social accounting is concentrated on the analysis of the riches created and distributed by CPL Concordia to the advantage of the whole system with which the Cooperative itself interacts. Under this profile, the social performance of the cooperatives are measured through the determination of the Gross Global Added Value (GGAV). The Gross Global Added Value is an economic value which describes the riches that the Cooperative, through its own activity, is able to generate and allocate among all the subjects that â&#x20AC;&#x201C; directly (workers, partners, shareholders, backers, public administration) or indirectly (community, the cooperative world) â&#x20AC;&#x201C; have an interest them. The Gross Global Added Value (GGAV) is determined by the difference between the production value and the value of the conditions of production acquired abroad; it is a set of verifiable and checkable data, obtained from a reclassification of the profit and loss account which is partially different in respect of that carried out at head office, of analyses of the finance account. The Gross Global Added Value, therefore, describes the economic undertaking towards whoever, internally or externally to the Cooperative, interacts with the same.

In the following table, the determination of the Gross Global Added Value is analysed:

GLOBAL GROSS ADDED VALUE (values expressed in Euro) 2007 Income from sales and services

179,562,310 2,658,347

1,34%

Other income and proceeds

4,172,220

2,10%

A) VALUE OF PRODUCTION Consumption of Prime Materials and Materials of Consumption

90,23% 172,845,785

Variation in inventory of finished and semi-finished goods and work in progress Income from Typical Production Income for atypical production (increases in fixed assets for internal works)

2006

186,392,877 12,604,307

2005

93,88% 165,438,299

91,44%

(2,444,283)

-1,33%

(3,494,561)

-1,93%

3,771,923

2,05%

8,510,074

4,70%

93,67% 174,173,424 94,60% 170,453,812 94,21% 6,33%

9,945,241

5,40%

10,475,074

(63,848,770) -32,09% (53,925,418) -29,29% (53,029,303) -29,31%

Costs of services

(62,556,747) -31,44% (63,688,996) -34,59% (68,481,472) -37,85%

Other operational fees B) INTERMEDIATE COSTS OF PRODUCTION CHARACTERISTIC GROSS ADDED VALUE Proceeds from partnerships

(7,677,374)

-3,86%

(9,169,583)

-4,98% (10,622,070)

-5,87%

(1,103,941)

-0,55%

(1,255,005)

-0,68%

-0,75%

Corrections on financial activity C) ACCESSORY AND EXTRAORDINARY COMPONENTS GLOBAL GROSS ADDED VALUE

(1,359,978)

(135,186,833) -67,93% (128,039,002) -69,54% (133,492,822) -73,78% 63,810,351 32,07% 56,079,664 30,46% 47,436,063 26,22% 91,550 0,05% 550,195 0,30% 4,527,721 2,50% (1,406,642)

-0,71%

(2,347,069)

-1,27%

(2,162,320)

-1,20%

0,00%

1,402,234

0,76%

1,831,359

1,01%

Balance of the Extraordinary Operations

(1,315,093)

-0,66%

62,495,259

(394,640)

31,41%

-0,21%

55,685,024

4,196,760

30,24%

51,632,823

51,633

Values expressed in Euro 55,685

2,32%

Global gross added value

62,495

5,79%

198,997,184 100,00% 184,118,665 100,00% 180,928,886 100,00%

Costs for use of third party property

70,000

60,000 50,000 40,000 30,000 20,000 10,000 0

2007 2006 2005

28,54%

In the following table, how the GGAV is distributed among those with an interest is analysed:

PROSPECT OF DISTRIBUTION OF THE GLOBAL GROSS ADDED VALUE (values expressed in Euro) 2007

Gross Remuneration

Rebate

Re-evaluation of the share quota

Profits distributed to the Shareholders of Coop.

Burdens of Social Use

TOTAL OF PARTNERS AND SHAREHOLDERS Incidence on the Added Value Direct Remunerations

Payments and salaries Provision for severance pay

Personnel costs

Indirect Remuneration Social costs

TOTAL PERSONNEL Incidence on the Added Value

Direct Taxes

Indirect Taxes and other Taxes or Expenses

74,815

60,180

625,883

620,137

239,372

190,457

136,294

2,290,304

1,865,601

1,475,912

3,35% 26,775,219

25,894,533

25,900,306

22,444,016

21,907,066

1,723,462

1,486,411

1,487,109

3,176,297

2,844,793

2,500,359

8,373,756

7,096,185

7,299,499

8,373,756

7,096,185

7,299,499

39,173,821

33,871,404

33,194,032

60,83%

Rates on loans from Partners

Other

- Active Rates

Bank Expenses and Commissions TOTAL EXTERNAL BACKERS Incidence on the Added Value

Mutual Funds

5,134,301

Cooperative League Association Contributions

1,034,795

649,243

6,169,096

3,257,418

11,08% 2,763,220

3,487,241

3,278,902

3,453,363

3,570,562

150,029

108,723

100,560

40,109

122,323

440,339

1,036,653

921,189

624,221

711,738

640,541

719,313

3,144,125

3,403,761

4,206,554

6,11%

176,391

106,582

Amortisations and Allowances

Profits assigned to the Reserve

184,635

184,628

291,216

277,855

annual accounts

2007

0,52%

0,54%

149,971

166,194

137,660

149,971

166,194

137,660

0,24%

0,30%

TOTAL BUSINESS SYSTEM

93,227

183,817 0,58%

TOTAL COMMUNITY

8,15%

360,208

Incidence on the Added Value

6,31%

2,432,387

5,03%

Donations

2,608,176

1,214,608

TOTAL COOPERATIVE MOVEMENT

64,29%

5,386,669

Bank Rates

2,86%

30,800,065

8,62%

Rates on Debenture Loans

74,655 612,787

4,172,062

Incidence on the Added Value GLOBAL GROSS ADDED VALUE

159,301 500,000

62,68%

Incidence on the Added Value

224,445 750,000

TOTAL PUBLIC ADMINISTRATION Incidence on the Added Value Net Financial Burden

263,489

2005

1,100,000

3,66%

2006

0,27%

7,237,795

7,396,758

6,908,672

4,752,365

2,520,995

2,174,721

11,990,160

9,917,753

9,083,393

19,19%

17,81%

62,495,258

55,685,024

17,59% 51,632,824

Shareholders and partners 3,66% Enterprise system 19,19%

Internal Personnel 62,68%

Cooperative movement 0,58% External Backers 5,03% Public Administration 8,52%

“Generate real work” in the present and in the future, starting with the work carried out in the past. This is where the ability of CPL Concordia to grow and develop together with the regions and the individuals with which it has a relationship comes from: the creation of riches in the present is subject to the bind that links the partners and the workers of today to the partners and the workers of tomorrow. We hold it useful to read and evaluate the last years of the Cooperative in the light of these considerations. In past years, the cooperative invested in new businesses but the regulations and the conditions of the markets did not permit to achieve quite as much as was expected (especially with regards to the liberalisation of the energy sector). The process of dismission and restructuring which arose between 2004 and 2005 has redefined the business lines and has permitted a re-balancing of the financial structure for the medium and long term, maintaining high productivity and work capacity, however. The Cooperative is living through a phase of growth and development. The year 2007 is an integral part of a journey begun in 2004 and which is guaranteeing the hoped-for results. With the company policies adopted in the twoyear period 2005-2006, CPL Concordia financially structured itself and now remains of those cooperatives that is highly capitalised. The excellent result of 2007 (the GGAV grew by 12.23% in respect of 2006 and by 21.04% in respect of 2005) makes it even more evident how

much the will, the sense of belonging, the sharing of ideas and the motivational aspect must always constitute the reference view of our Cooperative. The above-mentioned principles and the regulations associated with the cooperative model define and regulate the methods of distribution of the Added Value among the various holders of interest. From the analysis of the 2007 results emerge some reflections regarding the following subjects: personnel, external backers, public administration, enterprise system, community, cooperative movement, partners and shareholders.

Internal Personnel The employed Personnel are the stakeholders that obtain from the Cooperative the most relevant share of the Added Value (over 39.1 million Euro, equal to 62.68% of the overall Global Added Value produced, in respect of the 33.8 million Euro from 2006, equal to 60.83%). The value assigned for the workers is a tangible sign of how much the cooperative remains loyal to its mission of “generating real work” in the regions of reference. The Added Value assigned for the Personnel is distinguished in two categories of costs for the company: direct remuneration and indirect remuneration. The direct remunerations comprise all those components (financial or in kind) which combine to measure the immediate (or deferred) benefit that the employee obtained from the relationship with the company. These make up therefore the direct remunerations of the personnel (corresponding to the item “Payments and Salaries” of the Financial Statement), the shares of the “golden handshake” (TFR), the other Personnel expenses, including all those costs sustained by the Cooperative on behalf of its own personnel (insurance, meals, travel, training courses, medical examinations, clothing). The indirect remunerations represent the social contributions charged to the company. The

costs sustained by the company for the personnel are not perceived as remuneration by the interlocutor, insofar as they transform in benefits acquired in an indirect manner, through the Company in charge of the management of the social service. The significant increase in the cost of the personnel in respect of previous years is to be attributed in part to the new company organisation which, together with the acquisition of important orders, has generated new requirements for human resources, increased by 129 units during the course of the year. This increase is principally due to the assumption of young graduates. The personnel cost is a fundamental element for the development of a work production cooperative. At the same time, it can become a problem if the cost is not supported by positive economic results in the production activity, both immediate and prospective. The analysis of the Value of Production in respect of the number of employees reveals a drop in productivity (from € 241.309 in 2006 to € 234.944 in 2007); this data is however justified by the choice to increase considerably the company staff in the face of investments which will bring results in future. The following table analyses the production factor of the employees, as well as the investments in training and the occupational dynamic::

Indicator of employee productivity* * Value of production/No of employees at 31/12 of the year

2007

2006

2005

2004

2003

2002

234.944

241.309

231.071

228.877

214.038

201.069

847

763

783

771

Average staff per year

728

Investment in Human Resources TRAINING COSTS

2007

2006

814.013 129

WORK POSITIONS CREATED NET OF RESIGNATIONS

2005

2004

2003

2002

469.688

370.906

520.411

579.639

404.678

-38

External Backers The External Backers are the Credit Institutes and other financers (among which are, once again, the partners of CPL Concordia through the savings accounts) who supply the Cooperative with the financial sources necessary for the continuation and the development of its activities. The remuneration of the credit capital is composed of the total of the financial burdens (net of the proceeds) and the Expenses that the Cooperative has sustained for the banking services enjoyed. In 2007, this value amounts to 3.1 million Euro with an incidence of 5.03% on the distribution of the Added Value. The reduction of the costs for the financial burdens continues, despite the progressive increase on taxes recorded during the two-year period 2006-2007 and still now underway. These last have been mitigated at the hands of the Cooperative through a restructuring of the debt already since 2005. All the details which have arisen from the constant improvement of the financial structure of the Cooperative will be provided in the chapter dedicated to the financial analysis.

Public administration The Public Administration received 8.62% of the Added Value under the form of direct taxes (4.1 million Euro) and indirect taxes, as well as other expenses relative to the relationships with Public Agencies (1.2 million Euro). The Cooperative is subject to an elevated fiscal load, just as the whole entrepreneurial sector of the

annual accounts

2007

country: we are an integral part of a system which must sustain itself and guarantee common equity and development, even through the payment of taxes. In 2007, CPL Concordia produced a fiscal supply equal to 2.1 million Euro of Corporate Tax (equal to 33% of the same) and 2 million Euro in regional tax on business activities (equal to 4.25% of the net value of production).

List by Category of Contributions to the Community

2007

CULTURAL ASSOCIATIONS

56,345

LOCAL SPORTS ASSOCIATIONS

25,650

AGENCIES AND COUNCILS

8,682

EVENTS

4,500

MOVEMENTS

14,955

SCHOOL

6,960

ENTREPRENEURIAL COMPANIES AND ASSOCIATIONS

32,880

TOTAL

149,971

Enterprise system The Enterprise System reserved itself 11.9 million Euro, equal to 19.19% of the wealth produced, against the 9.9 million Euro of 2006, with an incidence of 17.81% on the Gross Global Added Value distributed. In 2007, the Company set aside more than one million Euro as risk cover on work carried out, but it has above all paid 4.7 million Euro into a closed reserve, contributing to the increase in its net assets. The total amortisation represents the most important share of the distributed Added Value, for a value equal to 6.1 million Euro, which is nevertheless in line with previous financial years. The amortisation is the cost of the systems, the concessions and the costs sustained through investments, distributed for their value over the fi-

Cooperative movement By contributing to the diffusion of the model which it promotes, CPL Concordia sustains the Cooperative Movement, both through the payment of a share of the Profits from the financial year to Mutual Funds for the promotion and the development of the Cooperation, and through the Associative Contributions. According to the regulations which regulate the cooperation (Law 59/92), the setting aside amounts to 3% of the profits of the financial year. The Associative Contributions towards the Cooperative League (183 thousand Euro) are included in Added Value, which amounts to 360 thousand Euro (0.58% of the Distributed Added Value) for 2007.

nancial years in which these same are used and/ or develop activity.

Community A total of 150 thousand Euro has been distributed to the Community, 0.24% of the generated wealth. These contributions have gone to finance associated companies, cultural and sporting associations for a non-lucrative aim, initiatives and events of a cultural, sporting and folkloristic character. CPL Concordia is very sensitive to the activities of Council Administrations – for the organisation of events – and of Sporting Associations, especially with regards to the activities of the youth sectors.

Partners and Shareholders The Added Value assigned for the Partners and Shareholders (owners of the capital of the Cooperative) amounts to 2.29 million Euro, equal to 3.66% of the wealth produced, unlike the values distributed in 2006, 1.86 million Euro and 3.35% respectively. The increase of this value is of considerable importance, since it guarantees a suitable remuneration and a sign of continuity and improvement. Over and above the gross remuneration of the partner’s capital (equal to 6.00% gross of the Social Capital), the partners can benefit from the distribution of a rebate equal to 1.1 million Euro, according to the directives prescribed by the regulations and by the Cooperative.

Whereas, in relation to 2006, the gross remuneration has remained almost unvaried (equal to 6%), the rebate delivered has increased by 350 thousand Euro (in 2006, it was equal to 750 thousand Euro). Finally, CPL Concordia has assigned 239 thousand Euro for the costs of social burdens during the course of 2007. This value is the fruit of the following factors: contributions in kind, social trips, social dinners and parties for partners and their families, contracts for subscriptions to magazines, theatres and others. The capital of the Cooperative is also formed from the capital underwritten by the Cooperative Participation Shareholders, equal to 7.5 million Euro, 3 million of which are underwritten in relation to the new five-year plan decided upon by the Board of Directors in 2004. The shareholders have obtained for 2007 a yield of their own capital equal to 8% gross of the shares. Under this aspect, even 2007 has recorded a satisfying number of admissions to partnership, a fact that certifies the level of loyalty that is to be found in our reality at this time. In the view that follows, the movements of the financial year can be analysed: ADMISSIONS AND WITHDRAWALS IN THE FINANCIAL YEAR 2007 on 01/01/2007

admissions

withdrawals

Mov. Internal Movements

on 31/12/2007

workers

Working Partners

184

-6

200

office workers

214

243

directors

413

460

totals

Considering the entire Group, among our approximately 1000 employees, there are 460 partners spread across the national territory. Especially for young people (our average age is 38 years), the cooperative represents an example and a gymnasium of industrial democracy. CPL Concordia is composed of the partners and their families. It is in respect of them and the undertaking to improve their quality of life both in the present and the future that the Cooperative operates, also through the continuous process of investments.

Investments that create value Net Investments

2007

2006

2005

INTANGIBLE FIXED ASSETS

6,259,983

3,343,989

4,335,435

MATERIAL FIXED ASSETS

7,696,263

7,057,044

(5,676,980)

PARTNERSHIPS FINANZIAM. FUNDING TO THE GROUP AND OTHER BUSINESSES TOTAL INVESTMENTS

(1,325,351)

1,734,233

520,488

(106,905)

(6,519,511)

5,861,500

12,523,990

5,615,755

5,040,443

With the strategic objective of consolidating our own characteristic assets achieved, as already indicated several times, the level of investments has undoubtedly grown in 2007, in respect of previous years. The value of the capital assets has increased on the whole, despite the reduction in participations as the effect of the reduction of the capital of the Coopgas S.r.l. company following the merger operation for incorporation into the Gas company of Concordia S.p.A. Considerable growth also for the values inherent to the material capital assets as an effect of the investments on the gas distribution networks, with a notable increase of the Councils served. The net investments in immaterial capital assets are predominantly linked to multi-year undertakings for the construction of plants for heat management and public illumination which, at the end of the contract, will remain the property of the customer.

annual accounts

2007

Research and Development The Cooperative has, moreover, continued during the course of the financial year in its activity of research and development and has addressed its efforts on the following projects in particular: Activity 1: Study and design for the optimisation and extension of the field of application of the electronic and remote reading systems known as EDOR, EMET, EFOR. Activity 2: System, design and implementation of a new electronic scent system known as EASYDOR. Activity 3: Study, development and implementation of a new service/product for the realisation of solar plants. The activities here above were predominantly carried out in the plant of Concordia sulla Secchia (Mo), Via Achille Grandi no 39 and in the building of Mirandola, Via di Mezzo 64. For the development of the projects indicated above, the Company has sustained costs per a total value equal to € 256,851.26. On this value, the company has the intention of making use of the tax credit expected by the law 296/06 art.1 paragraphs 280-283 modified by the law 244/07 art.1 paragraphs 53 and 66. On the cost of the personnel, equal to € 204,288.22, the company has the intention of availing itself of the tax abolition provided for regional tax on business activities art.11 of the DL no446 of 15 December 1997, modified by art.17 para 3 of DL no247 of 18 November 2005, acknowledged by law 296/06 art.1 para 266. The material capital assets present a positive balance of 7.7 million Euro. The principal investments refer to the distribution networks and to the meters relative to the concessions of gas distribution in activity during the financial year 2007; investments that guarantee more than 4.5 million Euro. In particular, the concessions that have carried out their distribution activity refer to fields “Campania 25”, “Campania 30”, “Calabria 20”, “Sicilia 12”, “Sicilia 17” and to the Municipality of Cittanova (Calabria), Palma di Montechiaro (Sicilia), Camastra (Sicilia) and San Giuseppe Vesuviano (Campania).

The other significant item that concerns the investments in material capital assets is given by the buyback of the land adjacent to the head office of the Cooperative at Concordia s/s, for an amount equal to 1.7 million Euro. The 7.7 million increase in the material capital assets are attributable to 4.5 million Euro for internal works and 3.2 million Euro for external acquisitions. The balance of the variation on the financial capital assets, equal to 106,905 Euro, is principally attributable to: increase in financial credits towards companies of the group in the form of profitable financing, for an amount equal to 695,000 Euro; decrease of financial credits towards others, for an amount equal to 800,000 Euro. The financial movements which have had the greatest impact during the course of the financial year were the following: reduction of the capital of the Coopgas S.r.l. company following the merger operation for incorporation of the Gas company of Concordia S.p.A increase of capital for 900,000 Euro in the Marigliano Gas S.r.l. company, concessionholder for gas distribution in the municipality of Marigliano (NA) increase in capital of 1.25 million Euro for the Ischia Gas S.r.l. company, concession-holder for gas distribution in the municipality of Ischia (NA), as expected among the covenants of financing provided to the Company from the Banca Popolare dell’Emilia Romagna for 6 million Euro

CPL Concordia finances the companies controlled and connected by the Group. The Cooperative agrees a holding role with functions of coordination and support of the activities carried out. The companies of the Group that made the greatest use of the resources of CPL Concordia in 2007 are: ERRE.GAS S.r.l., Marigliano Gas S.r.l., CPL Concordia Filiala Cluj Romania S.r.l., Si.Gas S.r.l.. Financing under the form of profitable and non-profitable financing was granted to these. During the course of 2007, the cover of the financial demand of the controlled and connect-

Safety and the Environment Until now, the elements of a financial and economic character with a strict social impact have been analysed, underlining that the term â&#x20AC;&#x153;socialâ&#x20AC;? does not refer exclusively to the company sphere, but also and especially to all the interlocutors or stakeholders of reference. In this context, that which the Cooperative has carried out for years in terms of safety and environmental impact assumes particular relevance. Our Safety and Environment office carries out a series of tasks which are across all the activities of the company, such as the drafting of safety plans and the management of the waste coming from the construction sites. In order to be able to best carry out this task, the office has produced a document of operational safety plans or risk evaluation, which must always be completed upon request. This document is available to all the workers who manage the sites and permits the collection in a coordinated manner of the data that is required by the safety inspectors for the completion of the risk evaluation documents. Moreover, it has been integrated with a part that concerns the management and the disposal of waste. This, in order to support the decisions of those in charge when they are concerned with finding the best way for disposing the waste products of the sites. Moreover, the following waste was disposed of in the head officeâ&#x20AC;&#x2122;s temporary deposit: 5.600 kg of oils; 18.615 kg of wash water solutions and

Net investment for employee Values expressed in Euros 14,000

13,717

ed companies, through the implementation of taxing bank financing, has allowed the Group Leader to reduce its financial exposure towards the companies of the CPL Concordia group. The Added Value reinvested in the Cooperative which was calculated in this head office, is in fact very similar to the Cash Flow of the financial year inasmuch as the non-distributed profits were added together with the amortisation and the allowances. The difference between the two quantities, therefore, is uniquely due to the absence, in the Added Value, of the amount set aside to the TFR Fund (this figure makes up part of the added value in favour of the employees) and of the variation of the net circulating capital (which expresses in brief terms the undertaking in assets, net of the assigned sources). The Added Value is understood in this case in its meaning of source of financing par excellence and measures the revenue generated by the management used for financing the investments. The trend of the relationship between the Investments Total and the Added Value assigned to the Enterprise System shows how the consolidation of the historical assets and the relative plan of dismissions for the two-year period 2005-2006 has brought a phase of new material and immaterial investments in 2007, in which the enterprise system contributes in part to the covering of the costs. The value of the Net Investments per Employee highlights that the Cooperative, following important efforts in the two-year period 2005-2006 to re-balance its own financial and economic structure and to redefine its business model, has been able to best take advantage of the opportunities created in the preceding years, investing a large part of the resources generated by the management in new projects.

annual accounts

2007

10,000

6,694

The year 2007 represents an important goal for CPL Concordia which expresses the strength of the Cooperative in pursuing its assumed commitments. The partners and the employees, each by their own contribution, have guaranteed the continuity, the reaching of objectives and the possibility of thinking of the future with serenity and awareness of its own means.

7,163

12,000

8,000 6,000 4,000 2,000 0

2007 2006 2005

mother liquor (odorising reclamation service); 1.320 kg of polyethylene, 19.320 kg of paper and cardboard; 1.000 kg of electrical and electronic waste; 54.780 kg of steel; 13.210 kg of wood; 61.820 kg of mixed packaging; 5.455.930 kg of earth and excavated rocks; 11.522.030 kg of mixed construction and demolition waste; and 324.260 of cement piles. As for the evaluation, 123 risk evaluation documents were edited (POS and art.7 of law 626) which, including the ongoing adjudication works, become 250. In this regard, it should be noted that the Cooperative has made itself the promoter of an initiative which has turned into research carried out in collaboration with the University of Modena and Reggio Emilia in regard to the perception of risk in the company. Fortunately, our Cooperative has a very low accident index, just as the index of the seriousness of these same is also low. The accidents of the last decade can be analysed from the following table: YEAR Â 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

ACCIDENTS OCCURRING NÂ° 54 50 42 30 61 49 48 71 65 41 54

In 2007, there were 54 accidents among an annual average of employees equal to 847 units. This means, therefore, an incidence of 6.4%, with a frequency of 39.02, as can be inferred from the following table.

FREQUENCY INDEX Fa 81,04 66,47 52,14 32,99 53,27 44,58 38,18 52,78 46,73 31,84 39,02

SERIOUSNESS INDEX Sa 1,44 1,36 0,84 0,36 1,69 0,87 1,21 0,93 1,50 0,52 0,83

The seriousness index is determined from the relationship between the hours lost and total hours worked, per thousand. Also in this case, the resulting index is extremely low. It is important to note, however, that the Cooperative constantly checks on the use of the PPE (personal protection equipment) and the means of collective protection, even if many studies affirm that the most decisive factor in the reduction of accidents is training. During the course of the financial year 2007, in fact, 318 hours of basic training courses were carried out, as were 66 hours of first aid, 55 of fire safety, 9 for waste disposal, 64 on forms, 15 for category 3 PPE and 4 on PES PEI. For the sanitary medical examinations and material acquisition for first aid, 67.750.00 Euro was spent. All the necessary interventions for improving the efficiency and the control of the safety systems have already been developed for the year 2008. The financial economic elements that characterise the balance sheet of the financial year 2007 are analysed below.

Analyses of the economic and financial indicators of the financial year 2007 It is useful to state beforehand that having done an analysis of the data that emerge from the financial year 2007, there is a clear continuity of values in respect of the previous financial year, both under the economic profile and the financial one. That which has changed in respect of the previous financial year was not the strategy, but the profitability of the distinctive management. Throughout our analysis, the principal elements which have characterised the formulation of the balance sheet of the financial year 2007, seen under the patrimonial, economic and financial profile, will be provided.

Patrimonial analyses In order best to proceed to a rapid analysis of the patrimonial structure of the Cooperative, we here analyse the Balance Sheet 2007 when compared with that pertaining to the 4 previous financial years, in order to provide the data for an entire five-year period.

Reclassified assets according to the method of liquidity of the posts (values expressed in Euro)

As of Dec. 31,2007

Balance sheet dates ASSETS Short term activity

Liquid assets

As of Dec. 31,2006

9,820,928

Non-permanent assets

Credits towards clients and others

As of Dec. 31,2005

As of Dec. 31,2004

11,127,629

As of Dec. 31,2003

5,046,492

12,719,079

3,972,279

115,797

1,350

113,401,341

114,793,337

109,284,631

100,511,093

92,118,130

Stocks

21,612,224

19,608,968

21,519,647

24,311,527

21,353,911

Credits towards partners for payments still owing

1,258,137

1,210,554

1,246,406

1,265,512

992,886

Accruals and deferred income

4,951,759

4,968,267

4,909,661

4,930,132

565,767

Total short-term assets Fixed assets

Intangible fixed assets

151,160,185

13,498,336

151,708,755

11,408,796

142,006,836

12,243,148

143,737,343

11,929,375

119,004,324

9,221,627

Material fixed assets

47,827,824

42,099,293

36,715,963

44,255,988

48,267,180

Financial fixed assets

53,307,242

55,983,102

62,679,434

58,742,296

59,647,266

Total fixed assets Total ASSETS

114,633,402

ORDER COUNT LIABILITIES Short term liabilities

Bank debts Debts with other backers

Financial debts towards controlled/connected companies

111,638,544

114,927,659

117,136,073

265,793,587

261,199,946

253,645,380

258,665,001

236,140,397

171,468,227

177,431,671

184,742,912

167,041,130

157,174,363

109,491,190

10,806,199

10,701,805

9,645,384

40,298,359

23,604,381

3,224,800

2,545,157

2,331,665

2,427,745

3,545,959

246,000

10,914,000

10,650,000

1,700,000

Advance payments

14,177,189

12,389,313

12,218,806

9,540,411

4,898,788

Debts towards suppliers

84,072,192

63,749,194

55,066,894

52,715,486

46,032,160

annual accounts

2007

As of Dec. 31,2007

Balance sheet dates

Debts represented by bills of exchange

As of Dec. 31,2006

As of Dec. 31,2005

As of Dec. 31,2004

As of Dec. 31,2003

Debts towards controlled companies

2,568,636

4,306,318

4,927,300

5,784,269

1,065,922

Debts towards connected companies

99,023

90,904

503,126

167,236

437,850

Tax debts

3,868,897

6,817,606

3,474,793

4,058,863

2,690,631

Debts towards social security and welfare institutions

2,235,968

1,425,301

1,321,314

1,376,026

1,259,661

Other short-term debts

4,381,088

3,965,238

6,213,651

4,528,828

5,991,864

Accruals and deferred income - liabilities

291,387

340,704

507,784

576,489

482,595

Total short-term liabilities Medium-long term liabilities

125,971,378

Debenture loans

Bank debts

117,245,540

106,860,718

123,173,712

90,009,810

36,348,586

45,273,309

50,097,220

39,361,654

46,586,869

Debts with other backers

Debts towards suppliers

1,801,315

1,701,134

2,255,596

2,884,933

2,164,004

Debts represented by bills of exchange

6,101,664

6,507,062

5,832,038

5,461,142

5,205,849

21,526

21,633

45,825

Provision for severance pay

Fund for social security and other welfare institutions

Other funds

Total medium-long term liabilities Net equity

Share capital

1,335,537

1,839,090

2,836,404

4,494,620

3,705,046

45,608,627

55,342,121

61,042,784

52,223,982

57,707,593

13,706,084

Re-evaluation reserve Legal reserve Reserves foreseen by company by-laws Merger advance Capital gains reserve Law 784/80

Financial year profit/loss

12,952,749

12,702,218

13,335,213

14,878,043

656,679

72,387,954

69,866,959

67,692,238

66,683,567

78,184

Foreign currency conversion fund

Total net equity Total LIABILITIES ORDER COUNTS

235,597

3,102,096

1,269,396

5,879,687

3,552,720

3,107,566

-2,866,499

1,755,028

94,213,582

88,612,285

85,741,878

83,267,307

88,422,994

265,793,587 171,468,227

As established above, the financial year 2007 is characterised by elements of continuity in respect of the previous financial year. The patrimonial asset, which amounts to 265.8 Euro/000, increased in respect of the previous financial year, exclusively for the effect of the increase in the capital assets. The current assets remained substantially unchanged, which highlights a reduction of the credits compensated by an increase in the remainder. As far as the trend of the credits of the current assets is concerned, which are principally credits towards our clients, it is noted that despite the certainly not rosy situation of our national

261,199,946 177,431,671

253,645,380 184,742,912

258,665,001 167,041,130

236,140,397 157,174,363

economy, during the course of the financial year, and thanks also to a careful management of the credits, a disinvestment through the takings was provided, of significant values. The increase of the investments is native to the characteristic activities of the cooperative, in particular the investments in plants for heat management, registered in the immaterial capital assets, and investments in the construction of gas distribution networks, registered in the material capital assets. The Financial capital assets are instead reduced, above all as effect of the reduction of social capital by redundancy, paid off by the controlled company Coopgas

S.r.l. for 10.5 million Euro. As far as the movement of the shareholdings is concerned and the comment of these same, please refer to that mentioned in the Additional Note of the balance sheet of the financial year. As far as the Balance Sheet of Liabilities is concerned, not without satisfaction we underline that the Net Assets of the Cooperative has reached 94.2 million Euro, assets in which the group reserve stands out, for an amount equal to 72.4 million Euro. Among the positive elements, we note the reduction of bank debt – the short-term quota remains constant, the long-term quota reduced by 9 million Euro – as effect of the loan quotas paid in the financial year without embarking on new forms of financing. On the other hand, the short-term debts have increased, principally as effect of the increase in debts towards our suppliers.

Economic analysis In order best to proceed to a rapid economic analysis of the Cooperative, we here analyse the Profit and Loss Account 2007 when compared with that pertaining to the 4 previous financial years, in order to provide the data for an entire five-year period.

Economic accounts reclassified with the Added Value method (values expressed in Euro) Balance sheet dates

As of Dec. 31,2007

As of Dec. 31,2006

As of Dec. 31,2005

As of Dec. 31,2004

As of Dec. 31,2003

Income from sales 179,562,310 90,23% 172,845,785 93,88% 165,438,299 91,44% 163,812,968 92,83% 126,624,794 81,26% and services Variation in inventory of finished and 0 0,00% (1,552,050) -0,84% 0 0,00% 0 0,00% 0 0,00% semi-finished goods Variation in work 2,658,347 1,34% (892,233) -0,48% (3,494,561) -1,93%(15,099,987) -8,56% 1,722,321 1,11% in progress Works in economy Other proceeds VALUE OF PRODUCTION Costs for acquisitions Variation in inventory of prime materials Various costs for services Expenses for the use of third party property Other operational fees ADDED VALUE Cost of work and relative costs GROSS OPERATING MARGIN Amortisation of material fixed assets Amortisation of material intangible assets Allowances and devaluations

12,604,307 6,33% 4,172,220 2,10%

9,945,241 5,40% 10,475,074 5,79% 14,111,186 8,00% 17,285,600 11,09% 3,771,923 2,05%

8,510,074 4,70% 13,639,837 7,73% 10,186,712 6,54%

198,997,184100,00% 184,118,665100,00% 180,928,886100,00% 176,464,004100,00% 155,819,427100,00%

(63,885,797) -32,10% (54,226,507) -29,45% (52,715,594) -29,14% (49,754,348) -28,20% (46,642,774) -29,93% 9,455 0,00%

274,277 0,15%

(346,772) -0,19%

(482,830) -0,27%

(378,994) -0,24%

(66,632,270) -33,48%(67,308,739) -36,56%(71,767,063) -39,67% (73,695,523) -41,76%(68,682,473) -44,08% (8,445,660) -4,24% (9,881,067) -5,37%(10,826,715) -5,98% (8,310,388 -4,71% (6,013,257) -3,86% (1,908,365) -0,96% (1,958,381) -1,06% (2,164,174) -1,20% (2,242,431) -1,27% (2,681,744) -1,72% 58,134,548 29,21% 51,018,249 27,71% 43,108,568 23,83% 41,978,484 23,79% 31,420,185 20,16% (35,997,524) -18,09%(31,026,611) -16,85%(30,693,673) -16,96%(30,686,348) -17,39%(28,128,605) -18,05% 22,137,024 11,12% 19,991,638 10,86% 12,414,895 6,86% 11,292,136 6,40%

3,291,580 2,11%

(1,967,731) -0,99% (1,673,715) -0,91% (1,863,046) -1,03% (2,581,728) -1,46% (2,075,324) -1,33% (4,170,443) -2,10% (4,178,341) -2,27% (4,021,661) -2,22% (2,884,484) -1,63% (1,515,615) -0,97% (1,099,621) -0,55% (1,544,703) -0,84% (1,023,965) -0,57%

(643,054) -0,36% (1,179,448) -0,76%

Amortisations and allowances

(7,237,795) -3,64% (7,396,758) -4,02% (6,908,672) -3,82% (6,109,266) -3,46% (4,770,388) -3,06%

EBIT

14,899,229 7,49% 12,594,880 6,84%

annual accounts

2007

5,506,223 3,04%

5,182,870 2,94% (1,478,808) -0,95%

Balance sheet dates

As of Dec. 31,2007

Interest and other financial fees

(3,469,020) -1,74% (3,668,045) -1,99% (4,066,967) -2,25% (3,913,559) -2,22% (3,214,228) -2,06%

Other financial proceeds

As of Dec. 31,2006

1,036,632 0,52%

As of Dec. 31,2005

904,825 0,49%

As of Dec. 31,2004

579,726 0,32%

As of Dec. 31,2003

317,057 0,18%

935,438 0,60%

TOTAL FINANCIAL MANAGEMENT

(2,432,387) -1,22% (2,763,220) -1,50% (3,487,241) -1,93% (3,596,502) -2,04% (2,278,790) -1,46%

CURRENT LOSS

12,466,841 6,26%

9,831,661 5,34%

2,018,981 1,12%

Proceeds from partnerships

91,550 0,05%

550,195 0,30%

4,527,721 2,50%

1,586,367 0,90% (3,757,598) -2,41%

2,336,675 1,32% 20,404,475 13,09%

Corrections on financial activity

(1,406,642) -0,71% (2,347,069) -1,27% (2,162,320) -1,20% (5,131,523) -2,91%(10,946,643) -7,03%

Rebate to partners

(1,100,000) -0,55%

(750,000) -0,41%

-500,000 -0,28%

(34,308) -0,02%

1,402,234 0,76%

1,889,160 1,04%

RESULT BEFORE TAXES

10,017,441 5,03%

8,687,021 4,72%

5,773,543 3,19%

Income taxes for the year

(4,137,754) -2,08% (5,134,301) -2,79% (2,665,977) -1,47% (3,107,770) -1,76% (2,886,693) -1,85%

Extraordinary operations

NET RESULT

5,879,687 2,95%

3,552,720 1,93%

Even from the brief analysis of the principal items of the profit and loss account, it is possible to sustain that the results of the financial year being analysed are the best of the five-year period. Over and above the result of the financial year, there appears an improvement in all the assessed indices, beginning with EBITDA (earnings before interest, taxes, depreciation and amortization) which, in percentage terms, exceeds 11%. The operative result, which amounts to 14.9 million Euro, has a percentage incidence of 7.49%, this too the best of the five-year period. To underline the index of the financial management that, in the presence of a system that has

0 0,00%

1,449,751 0,82% (1,058,513) -0,68% 241,271 0,14%

3,107,566 1,72% (2,866,499) -1,62%

4,641,721 2,98%

1,755,028 1,13%

seen the constant raising of interest rates, imposes as a financial burden for 2.4 million Euro, a decrease in respect of the previous financial year. In the chapter dedicated to the financial management, the dynamics of the credit system and the trend of our financial system will be analysed in detail. The latter, as mentioned under the patrimonial structure of the Cooperative, has been in constant improvement over a number of years. The principal costs relative to the operational management were as follows: personnel costs

35,997

rebate costs 1,100 raw material costs, subsidies, etc

Value of production trend

costs for services and third party assets 75,078 198,997

184,118

180,929

176,464

200,000 180,000 160,000 140,000 120,000 100,000 80,000 60,000 40,000 20,000 0

155,819

amounts expressed in thousands of Euros

63,877

2003 2004 2005 2006 2007

burdens other than management

1,908

interest and financial burdens

3,469

depreciation of shareholdings 1,407 The production, and the margin produced by it, have made use of the production reorganisation in territorial areas initiated at the end of 2006. The proceeds earned in the financial year (value of production) amount to Euro/000 198.997 and this amount is due to the supply and services

Head Office Area

37,514

Area Roma Sardegna Tirreno

31,872

Area Milano – North West

27,008

Area S,Omero Adriatica

13,205

Area Fano - Umbria

15,107

Area Campania-Calabria-Sicilia

4,366

Area Padova – North East

11,935

Area Toscana

6,665

Overseas 2,717 Technological and Odorising plants

26,803

Distribution Sector

9,759

Information Technology

2,780

Services to companies of the Group

2,319

Construction 1,088 Other Proceeds

5,859

TOTAL 198,997 As it is possible to infer from the above table, the Head Office Area (which includes Emilia and the province of Mantova) still represents an important reference for the business of the Cooperative. There are, in fact, important clients, such as Hera Bologna e Modena, Tea of Mantova, Sorgea and others for whom we are able to offer our know-how, which runs from the construction and maintenance of distribution networks for gas, water and sewerage, emergency intervention, energy services, the Global Services up to the billing of the consumer. Of great importance is the Area that includes Lazio and Sardegna, where the Cooperative decidedly carries out the Heat Management activity for I.A.C.P. of Rome, the municipality of Rome and the province of Rome. Of particular prestige is the thermal management of the Auditorium della Musica in Rome, famous for its large concerts of classical music

annual accounts

2007

and other events of national and international prominence. In the next few financial years, the area will certainly see a strong development due to the acquisition of important orders concerning the methanisation of Sardegna. The area will carry out investments for more than 200 million Euro in 6 to 8 years. The other Area that provides a strong impulse is the north west Area, that includes the regions of Lombardia, Piemonte, Valle d’Aosta and Liguria, in which all the activities of the Cooperative for public, municipal and private clients are carried out, as for the head office area. The activities, therefore, range from emergency intervention and the maintenance of networks for AEM Milano, through heat management for the provinces of Alessandria, Asti and Milano, to thermal management for the Hospitals of Desenzano and Cremona. As far as the other areas are concerned, it is considered that across the greater market presence outlined by the new company organisation, ever more interesting numbers can be developed in the short term. A particular mention is made of the north east area, protagonist in 2007 of the construction of one of the largest solar power plants installed in Italy, in the municipality of Carano, in Trentino, to be precise. Over an area of approximately 15.000 m2, at an altitude of 1.200m, CPL Concordia has installed a groundbased solar power plant comprised of 2.946 solar panels in monocrystal silicon.

CONTRIBUTION OF THE AREA OFFICES AND DEPARTMENTS TOWARDS TOTAL WORKS 18,85% 16,02% 13,57% 6,64% 7,32% 2,19% 6,00% 3,61% 1,37% 5,47% 8,00% 4,90% 1,40% 1,17% 0,33% 0,55% 0,43% 0,89% 1,31%

AREA OFFICE 1: Headquarters (Concordia and Emilia) AREA OFFICE 2: Rome, Sardinia, and Tyrrhene AREA OFFICE 3: Milan and Northwest AREA OFFICE 4: Sant’Omero and Adriatic AREA OFFICE 5: Fano and Umbria AREA OFFICE 6: Campania, Calabria, and Sicily AREA OFFICE 7: Padua and Northeast AREA OFFICE 8: Tuscany Greece DEPARTMENT NO. 1: Odorizers & Services DEPARTMENT NO. 2: Technological Systems DEPARTMENT NO. 3: Supply Networks DEPARTMENT NO. 4: Information & Comm.Technology DEPARTMENT NO. 5: Intergroup Services DEPARTMENT NO. 6: Investments in offices DEPARTMENT NO. 7: Building Technical Service Divisions being closed Services

TOTAL 198,997,184.40

carried out for third parties and connected and/ or controlled companies, details of which are available on the following pages; their allocation is as follows (amounts in Euro/000):

Some 2.856 of these are fixed and 90 are tracking, that is, that they follow the movement of the sun by rotating on a vertical axis. The solar panels, of 170 Wp each one, produce a total of 600 thousand kWh a year which, when introduced in the national transmission network, allows the municipality to earn, through the old Energy Account, 0.47 Euro for kWh of energy produced. The energy produced by the plant covers the energy needs of more than ¾ of the resident population. The Overseas area in 2007 is composed exclusively of orders for the construction of waterworks and sewerage at Salonicco in Greece. This activity will finish in the first half of 2008. The contribution of the sectors that deal with the construction of gas reduction groups and the commercialisation of odoriser was important. The plant construction sector has begun to overcome the national borders by acquiring important orders in Algeria, where in 2008 a company (AI Power S.p.A.) was formed which we expect will be able to open up the market in a country of great development potential. The gas distribution sector, for which we are directly present in important fields in Campania, Calabria and Sicily, continues to hold a role of great strategic importance for the Cooperative. In 2007, some 29.600 users out of a potential of approximately 100.000 users were served by the distribution service.

The principal indices of the Balance Sheet Having analysed the Net Worth and the profit and loss account, the following table provides the principal indices of the balance sheet for the five-year period:

Principal indices of the balance sheet Economic analysis R.O.E. (Return on Equity) R.O.I. (Return on Investment) Ratio of Gross Operating Margin to Value of Production Incidence of expenditures and revenue from extraordinary operations Incidence of Net Financial Expenditures on the value of production Incidenza Oneri Finanz. Incidence of Net Financial Expenditures on the R.O. FINANCIAL AND CAPITAL ANALYSIS Liquidity index

Actual data As of Dec. As of Dec. As of Dec. As of Dec. As of Dec. 31,2007 31,2006 31,2005 31,2004 31,2003 6,66% 4,18% 3,76% -3,33% 2,03% 5,61%

4,82%

2,17%

2,00%

-0,63%

11,12%

10,86%

6,86%

6,40%

2,11%

60,54%

71,79%

43,56%

155,31%

218,68%

1,22%

1,50%

1,93%

2,04%

1,46%

16,33%

21,94%

63,33%

69,39%

-154,10%

Actual data As of Dec. As of Dec. As of Dec. As of Dec. As of Dec. 31,2007 31,2006 31,2005 31,2004 31,2003 1,20 1,29 1,33 1,17 1,32

Leverage (Gearing)

3,01

3,07

3,00

2,72

Ratio of Interest-paying debt

0,46

0,69

0,82

0,83

0,80

Elasticity index

1,32

1,39

1,27

1,25

1,02

EBITDA/DEBT

54,25%

34,29%

18,34%

15,89%

4,72%

DEBT/EBITDA

1,84

2,92

5,45

6,29

21,19

From the analysis of the indices, it can be noted that, as previously stated, all of the indices are in constant improvement. In particular, the economic indices of R.O.E. and R.O.I. are to be underlined, as are those of assets inherent to the ratio of interest-paying debt, or rather the relationship between the debts towards backers and Net Equity and the classic relationship between DEBT and EBITDA, which in 2007 was 1.84. The financial world considers this index as balanced when it turns around 3. The value that emerges from the 1.84% encourages investments, that the Cooperative has already programmed for the next three-year period and that will be analysed in their own chapter.

Financial Analysis As far the as the financial management of the Cooperative is concerned, we provide at first a brief analysis of the macro-economic context of reference and will subsequently analyse the trend of the principal elements characteristic of the management during the financial year 2007.

The National and International Context The year 2007 was marked in the second semester by the sub-prime mortgages crisis in the United States. This has had considerable repercussions on the world financial system, with protracted trouble in the markets which we cannot yet say has been overcome. The heavy losses reported by primary international banks that had made large-scale use of progressive securitisations on credits, and who were greatly exposed in the practicality in derived instruments, created a crisis of confidence without precedent in the financial markets. This forced the Central Banks to intervene with substantial inputs of liquidity to avoid the blocking of the system. At present, the resolution of the crisis of the financial markets seems still far away, the recovery of the runs on the Stock Exchange will require time and the strains on the prices of prime materials caused by the strong demand of the emerging countries give no hint of reducing, with oil prices hitting new record highs every day. In Italy, during the course of 2007, the GDP grew by 1.5%, therefore below the European average, despite a moderate trend in the commercial balance. The low level of investments and low growth in consumption have had a negative influence. The reduction in purchasing power and in salaries, the strong incidence of energy bills and of rents or mortgage interest rates have all had a bearing upon these factors. The relationship between debt and disposable income of Italian

annual accounts

2007

families has reached an average of 50% at the end of 2007. A situation of substantial stagnation is forecast for our country for 2008. Even the first industrial production data foreshadow a lean dynamic and reflect the scarce propensity for capital investments expressed by Italian enterprise, the productivity indices of which remain fixed, however. The construction sector is in a slowdown phase and further deceleration of real estate prices is forecast. The prospects of this traditionally compelling sector for the Italian economy appear therefore strongly linked to the development of investments in infrastructure, for which the times and financial cover remain to be verified. The year 2007 has moreover signalled a worrying decline in the characteristic profitability of the businesses, especially due to the increase in interest rates. This has the greatest effect on the Italian industrial system, the businesses of which are less capitalised in respect of those of other countries, and therefore are more dependent on more taxing financial sources. The self-financing of companies has therefore reduced, and the financial requirements are increasing. Towards the end of the year, and above all in this first part of 2008, a clear tendency towards the tightening of criteria for granting credit has emerged. This has been confirmed by both the analyses of the Banca dâ&#x20AC;&#x2122;Italia and those of the European Central Bank. For now, the phenomenon has not brought significant reductions in the quantity of credits, but it has without doubt had an effect on the price policy, with the average spreads in net recovery. Notwithstanding the difficulty of the economic cycle, no deterioration in the quality of the credit, at a system level, has been noted however. The interest rates have been retouched twice by the Governing Council of the European Central Bank during the course of 2007, for concerns linked to the troubles of the financial markets and the risks of inflation. The rates thus arrived at the present level of 4%. The bank rate has increased by half a point in one year, as an effect of these measures. The estimates for the current year seem to be

based on a further increase, even if fears of recessionary effects have for the time being avoided an increase that the same sources of the European Central Bank took for granted for the first semester of 2008. More marked on the other hand was the increase in the Euribor rate recorded during the course of 2007: at the end of the year, the 3-month rate had risen to 4.765% from the 3.775% of 02.01.07, whereas the 6-month rate quoted 4.834% against the 3.904% of 02.01.07. Following a brief drop recorded during the first two months of 2008, the Euribor recovered its growth: at today’s date, it is approximately 25 basis points higher than the quotation of 31.12.07. These data confirm that, despite the continuous inputs of money made by the Central Banks, the request for money on the system remains highly elevated and confidence is scarce: from this, the increase in taxes on the interbank market so they are greater than those determined by the European Central Bank.

Trend of CPL Concordia financial management in financial year 2007 The financial year 2007 has negatively characterised the result of the financial management of many businesses, because of the economic reasons seen above. It is of great satisfaction to be able to affirm that the same negative reflections are not encountered on the balance sheet of CPL Concordia which, on the contrary, presents in a very difficult year the best result of the last five years of the financial management. From the reclassification of the profit and loss accounts, this affirmation appears evident: the incidence of the financial management brought to the value of production was 1.22% in 2007, 1.50% in 2006, 1.93% in 2005, 2.04% in 2004 and 1.46% in 2003. The progressive increase of taxes recorded by the financial year 206, continued throughout 2007 and still now underway, had in impact contained within the overall financial burdens of CPL Concordia: indeed, thanks to the restructuring of the debt already carried out in 2005, during the entire course of 2007 all the debt of the Cooperative was structured in the medium-long term. The greater part of the funding plans received by the Company expect the liquidation of interests and capital with halfyearly instalments; the reference tax was consequently updated twice, contributing to the limiting of the negative effect coming from the increasing taxes. This, in spite of the survey carried out at the end of the third quarter (reference for the tax on the principal line of credit by which the Company benefits) having already felt in significant measure the financial crisis that exploded onto the markets in the month of August. It should moreover be specified that also this year, the improvement in the principal balance indicators resulting from the important decisions made at the end of 2004 by the Board of Directors, has permitted, thanks to the covenants provided for by the contracts, the containing of the spread paid out by the Cooperative on the two principal lines supplied by the banking system: the pool promoted by “Unicredit Banca d’Impresa” of 04.08.05 and that promoted by “Banco Popolare di Verona e Novara” of 21.02.03. During the entire financial year 2007, the Company did not open any new lines of medium-long term credit, notwithstanding a reimbursement of capital shares of more than 7.5 million Euro on the lines at its disposal at the start of the year. The Company used only occasionally and for very limited amounts part of the short-term bank credit lines. It should be noted that during the course of the last twelve months, the value of production has gone from 185.5 to 199.0 million Euro. The particularly positive trend of the takings, together with payment deferments conceded by several important suppliers, has permitted CPL to make use of liquidity in particularly important measure during the second and third quarters (during which, at any time, the Company had stock at its disposal of more than 20

million Euro). This liquidity was invested with the opening of short-term bank deposits or, in case of need by the Controlled Companies, loaned to these same, thereby avoiding their getting into debt with the credit system at rates greater than those that CPL would have realised. If the Controller had not opened any new multi-year line, four new lines were obtained from two Controlled Companies: one, of 2.5 million Euro, was granted by “Banca Popolare di Verona” to “Immobiliare della Concordia S.r.l.”, and on 31/12/2007 turned out to be supplied for only 250.000.00 Euro, whereas the other three were obtained from “Cristoforetti Servizi Energia S.r.l.” for a total of 1.13 million Euro. With the exception of funding granted by “MCC S.p.A.” which predicts a fixed rate of 6.20%, and which at the end of the financial year presented a residual debt of 0.489 million Euro, all the other credit lines of the Cooperative predict a variable rate. On 31/12/2007, the Company had a still active contract of rate cover for the notional value of 20.0 million Euro, opened on 29/10/2003 with “Unicredit Banca d’Impresa”, expiring on 31/10/2008. This contract presented a negative mark to market of 0.585 million Euro. The Company manages the tax risk through the constant monitoring of the trends of the market and with continuous comparing with the average rates estimated from the budget: any activation of new cover can only occur if the recorded increments and the expectations of the trends will show rates higher than those used in the compilation of the annual and three-year budgets, thereby causing significant risks of prejudice in achieving the objectives. In this activity of monitoring the trends of the rates, the Cooperative also makes use of consultations by qualified external professionals. The imports of prime materials and sales in currencies other than the Euro are very limited and, given their low amount, no currency risk cover is in force. On the occasion of any important supplies being carried out abroad, the Company has carried out forward buying in currency, coinciding with the times at which it had to carry out currency payments, eliminating thereby the exchange risk.

annual accounts

2007

The management of credits is carried out directly by the Company, with the assistance of internal resources and experience, and with limited recourse to external professionals. This management is consequent to a precise choice made: indeed, since the greater part of the clientele is composed of public bodies or public property (either directly or through purchasing contracts via a consortium), the collection of credits requires, over and above constant monitoring on the part of the financial structure, the collaboration of all the internal subjects who have relationships with the client: the commercial structure that acquires the order, the technical one that manages it, and, in some cases, the Legal Office that evaluates any shares. Outsourcing is held not to be appropriate for managing credits held towards this type of clientele. The Company carries out monthly surveys of the credits, subdivided by business areas, with reference to the business managers who, among others, are charged with containing the incidence of overdue credits within predetermined limits. The surveys are then also carried out according to age. The internal procedure predicts several steps of management of the overdue credit, which go from the written advice/warning up to possible legal action towards the debtor (in arrears, in the meantime). At the end of the financial year 2007, the final balance of CPL highlights, in the current assets, credits towards clients for a total of 103.6 million Euro, in respect of the 106.6 million of the previous financial year; there is an improvement also on the incidence of the total of the credits registered in the current assets, down to 43.25% from 44.62% of the previous financial year. On the same date, the total amount of the overdue credits was 31 million Euro, the best figure of the last five years. Of these, 21% presented delays of less than 30 days, 15% delays of between 30 and 60 days, 11% delays of between 60 and 90 days, and 53% delays of more than 90 days. Among the credits that presented the greatest delays, approximately half were in reference to a (public) client that, since 2003, the year of acquisition of the contract, constantly presents a DSO of more than 180 days.

The credits, seeing as they are principally counterparts to public bodies, are generally not associated with guarantees. On the other hand, these are requested by the Company during the drawing up of the principal contracts of supply to private clientele, or whenever they are held to be appropriate. These amounted to a total, at the end of the financial year 2007, of 1.2 million Euro. The strong presence made on the credits, the perfect knowledge of the individual situations and the DSOs, permit the Company to make in a precise manner, where necessary, the risk fund allowances on credits. As far as the trend of the financial management of CPL during the course of the first months of the 2008 financial year is concerned, an increase in exposure towards the credit system is noted. This is for approximately 4 million Euro, funded for 3.0 million Euro with the granting of a new line of credit over a five-year period contracted with “Cassa di Risparmio di Parma e Piacenza”. The slight worsening of the net financial position of the Group Leader finds it justification in the worsening of the trend of income: in the same period, the amount of overdue credits rose by approximately 5.0 million Euro, and the Company managed only in part to unload the greater requirements of the circulating capital onto the suppliers. This situation is absolutely in line with that which is encountered by other competitors and the cause is attributable to the difficulties of financial procurement that ever more businesses encounter following the current liquidity crisis. If the financial crisis does not resolve in the short term, it is probable that CPL will have to open new lines of credit before the end of the financial year, possibly at medium-long term. These will be necessary to finance the investments expected by the 2008 budget, over and above the greater requirements of the circulating capital.

Controlled companies Relationships with associate companies In the area of its own activities and during the course of the financial year 2007, the Cooperative has entertained the following relationships with the companies controlled by it, or linked to it:

CPL Proceeds – Company costs of the Group COMPANY PROGAS METANO COOPGAS

PERFORMANCE

SUPPLY

RATES

TOTAL

55,000

4,504,202

68,469

4,572,671

123,634

65,629

52,017

241,279

CPL HELLAS

CONCORDIA SERVICE MAGHREB

100,824

850

101,674

33,620

2,346,216

2,379,837

ERRE.GAS

386,873

26,140

59,389

472,402

SI.GAS

513,669

59,248

73,849

646,765

CPL CONCORDIA FILIALA CLUJ ROMANIA

CRISTOFORETTI SERVIZI ENERGIA ENERGIA DELLA CONCORDIA

425,000

IMMOBILIARE DELLA CONCORDIA

1,217,762

11,572

210,051

1,439,384

ISCHIA GAS

1,295,408

8,672

1,304,080

320,282

1,731

75,371

397,384

TRADENERGY

MARIGLIANO GAS NUORO SERVIZI

71,725

369

72,094

SERIO ENERGIA

121,612

5,120

126,732

9,114,610

2,571,506

548,187

12,234,303

Totals

COMPANY

PERFORMANCE

SUPPLY

RATES

TOTAL

FONTENERGIA

35,164

4,760

39,924

SARDA RETI COSTRUZIONI

20,000

ENERFIN

17,915

9,187,689

2,576,266

548,187

12,312,142

TECLAB PEGOGNAGA SERVIZI TOTALS

CPL Costs – Company proceeds of the Group COMPANY

PERFORMANCE

RATES

TOTAL

2,534

81,491

84,025

PROGAS METANO COOPGAS

SUPPLY

7,486

2,538,522

CPL NUPI PIPE CINA

CRISTOFORETTI SER

176,811

CPL CONCORDIA FILIALA CLUJ ROMANIA CPL HELLAS

ENERGIA DELLA CONCORDIA ERRE.GAS SI.GAS

9,057

13,557

22,614

60,982

3,838

141,945

40,466

ISCHIA COM IMMOBILIARE DELLA CONCORDIA ISCHIA GAS MARIGLIANO GAS

2,981,641

81,491

13,557

3,076,689

138

74,097

33,305

107,402

NUORO SERVIZI Totals FONTENERGIA SARDA RETI COSTRUZIONI ENERFIN TECLAB PEGOGNAGA SERVIZI TOTALS

3,055,827

114,845

0 13,557

3,184,229

These relationships, all regulated by normal market conditions, arise from the nature of the business purpose of those shared companies that carry out similar and/or complementary activities to the activity of the cooperative.

annual accounts

2007

Audit of the final Balance of the new multi-year programme of investments from April 1, 2004 to December 31, 2008 With effect from the financial year 2004, the analysis of the accomplishment of the Programme of investments is carried out on the data of the new multi-year plan approved by the Partnerâ&#x20AC;&#x2122;s Assembly of 04.12.04. Attachment 1 reports the five-year plan of the CPL investments, in the Assemblyapproved version of 04.12.04, and Attachment 2 the analysis of the gap between the estimated and the final data, with reference to the financial years 2004-2007.

Multi-year plan of investments 2004-2008 (approved by the Ordinary Assembly of Partners of 04/12/04) (values expressed in thousands of Euro) Description

2004

2005

2006

2007

2008

Total

A) INTANGIBLE FIXED ASSETS - Application programmes

200

279

300

1,379

6,500

4,800

5,000

5,250

5,500

27,050

6,700

5,079

5,300

5,550

5,800

28,429

- Real estate

(8,500)

(400)

(8,900)

- Granted plants

20,000

371

3,500

30,871

1,800

500

750

1,000

5,050

13,300

471

4,250

4,500

27,021

- Various

1,000

(30,000)

500

(27,500)

TOTAL FINANCIAL FIXED ASSETS

1,000

(30,000)

500

(27,500)

21,000

(24,450)

10,050

10,550

10,800

27,950

(21,000)

24,450

(10,050)

(10,550)

(10,800)

(27,950)

- Works on third party property - Others TOTAL INTANGIBLE FIXED ASSETS B) MATERIAL FIXED ASSETS

- Industrial and commercial apparatus - Others TOTAL MATERIAL FIXED ASSETS C) FINANCIAL FIXED ASSETS

TOTAL INVESTMENTS OUTGOINGS FOR INVESTMENTS FORMS OF FUNDING Operative Cash Flow Share Capital payments (APC) Variation of debts for investments

500

7,500

10,500

11,500

12,500

42,500

6,800

(800)

(5,000)

(1,000)

(13,700)

31,150

(4,550)

(50)

1,700

14,550

Multi-year plan of investments 2004-2008 (gap analysis for financial year 2007) (values expressed in thousands of Euro) Description A) INTANGIBLE FIXED ASSETS

Estimate

Actual data

2004

- Application programmes

Delta

Estimate

Actual data

2005

Difference

200

105

(95

279

381

102

6,500

4,792

(1,708)

4,800

3,560

(1,240)

695

395

6,700

5,592

(1,108)

5,079

4,336

(743)

- Real estate

(8,500)

(8,303)

197

(400)

(257)

- Granted plants

20,000

7,242

(12,758)

371

(4,962)

(5,333)

1,800

681

(1,119)

500

(521)

(1,021)

- Works on third party property - Others TOTAL INTANGIBLE FIXED ASSETS B) MATERIAL FIXED ASSETS

- Industrial and commercial apparatus - Others TOTAL MATERIAL FIXED ASSETS

143

(1,049)

13,300

(1,429)

(14,729)

471

(5,677)

(6,148)

C) FINANCIAL FIXED ASSETS

- Various

1,000

(681)

(1,681)

(30,000)

4,407

34,407

TOTAL FINANCIAL FIXED ASSETS

1,000

(681)

(1,681)

(30,000)

4,407

34,407

21,000

3,482

(17,518)

(24,450)

3,066

27,516

(21,000)

(3,482)

17,518

24,450

(3,066)

(27,516)

TOTAL NET INVESTMENTS TOTAL OUTGOINGS FOR INVESTMENTS FUNDING SOURCES

Operative Cash Flow

500

4,691

4,191

7,500

8,100

600

Payments/Reimbursements of Share Capital (APC)

6,800

(1,200)

(8,000)

(800)

341

1,141

TOTAL FUNDING SOURCES

7,300

3,491

(3,809)

6,700

8,441

1,741

(13,700)

13,709

31,150

5,375

(25,775)

Incr (-) / Red (+) financial debts for investments

Financial Year 2007 During the course of the financial year 2007, the Cooperative has sustained outgoings for investments (net of transfers) for approximately 11.5 million Euro. The figure differs from the formulated estimate of net investments for the financial year to the amount of 938.000 Euro. CPL has made net investments in Intangible Fixed Assets to a value of approximately 6.3 million Euro, of which approximately 5.4 million Euro are relative to “works on third party property”. These concern, predominantly, the investments made by the Division denominated “Energy” (which supplies the greatest contribution to the making of the Value of Production), the principal activities of which concern the management of heat and cogeneration. These activities, characterised by the improvement of multi-year contracts with the client, initially require the execution of investments in property which, at the end of the contract, will remain third party property. Their repayment is made through the good marginality produced by the orders. Being able to lay claim to a portfolio of work acquired, formed from various contracts, of considerable amounts, having multi-year durations and good marginality, are held to be a valid guarantee for the future activity of the Cooperative. From the financial point of view, this type of order generates commitments of circulating capital, since the clientele is

annual accounts

2007

Estimate

Actual data

Difference

Estimate

Actual data

Difference

Estimate

2006

2007

2008

Total of Total of plan actual data

300

366

300

542

242

300

1,694

1,379

5,000

1,987

(3,013)

5,250

5,368

118

5,500

21,207

27,050

991

349

2,430

5,300

3,344

(1,956)

5,550

6,259

709

5,800

25,331

28,429

264

1,768

(6,528)

(8,900)

3,500

5,715

2,215

3,500

4,733

1,233

3,500

16,228

30,871

750

911

161

1,000

685

(315)

1,000

2,756

5,050

167

511

(308)

4,250

7,057

2,807

4,500

7,697

3,197

4,500

12,148

27,021

500

(6,375)

(6,875)

500

(2,468)

(2,968)

500

(4,617)

(27,500)

500

(6,375)

(6,875)

500

(2,468)

(2,968)

500

(4,617)

(27,500)

10,050

4,026

(6,024)

10,550

11,488

938

10,800

32,862

27,950

(10,050)

(4,026)

6,024

(10,550)

(11,488)

(938)

(10,800)

(32,862)

(27,950)

10,500)

9,502

(998)

11,500

11,479

(21)

12,500

46,272

42,500

(5,000)

(1,720)

3,280

(1,000)

(164)

836

(2,743)

5,500

7,782

2,282

10,500

11,315

815

12,500

43,529

42,500

(4,550)

3,756

8,306

(50)

(173)

(123)

1,700

10,667

14,550

predominantly public. Anyway, the very characteristics of the clientele allow the Cooperative to liquidate the claimed credit, as the rating of this clientele is generally high. Together, the “Intangible Fixed Assets” recorded greater investments in respect of the forecast, for approximately 700.000 Euro: the difference is attributable to the choice of the Cooperative to invest mainly in application programmes and software to use principally for the management of services for public bodies and Public Utilities. As to the macro-class of “Material Fixed Assets”, the plan of investments estimated net outgoings of 4.5 million Euro; the final balance shows net investments for approximately 7.7 million Euro. The gap is principally attributable to the following items:

CASH FLOW 70,000

amounts expressed in thousands of Euros

60,000 50,000 40,000 30,000 20,000 10,000 0

18,682

12,974

13,615

10,891 9,395

2003 2004 2005 2006 2007

“Real estate”, which presents an increase equal to approximately 1.8 million Euro, attributable to the reacquisition of the land sited in Via Provinciale at S.Possidonio and attached to the registered office. I would like to remind that, in the area of reorganisation and restructuring of the activities of the Group, the Cooperative had evaluated as important to grant, during the course of 2004, the real estate of the registered office of Concordia sulla Secchia, assigning the financial resources to cover the investments in activities inherent to its traditional core business. “Granted plants”, that present an increase equal to 4.7 million Euro (in respect of the 3.5 million forecast in the Plan), attributable to the greater costs sustained for the construction of the gas distribution networks, stations and meters, with particular reference to the concessions relative to the fields denominated “Campania 25”, “Campania 30”, “Calabria 20”, “Sicilia 12”, “Sicilia 17”, to the municipalities of Palma di Montechiaro and Camastra in Sicily, to the municipality of Cittanova in Calabria and to the municipality of San Giuseppe Vesuviano in Campania. Recall that, following transfer to the former controlled company Co.Gas S.p.A. of the company arm denominated “Administrations”, CPL began the construction of the networks in the above-mentioned fields, awarded through public tender. Once completed, these fields should also have been ceded to Co.Gas S.p.A., but the subsequent development of events prevented this from occurring. CPL, therefore, held it appropriate to resume direct management, the natural complement to the construction of the distribution network, in spite of this bringing raised investments, concentrated above all in the initial phase.

Finally, as far as the financial fixed assets are concerned, at the end of the financial year 2007 the Cooperative recorded net dismissions for approximately 2.5 million Euro (against a forecast of investments for 0.5 million Euro). The reduction was determined as follows:

increases in partnerships for 10.5 million Euro (in particular: 5.0 million in Real Estate of Concordia S.r.l. for payments into capital increase account; 1.25 million in Ischia Gas S.r.l. for payments into capital increase account; 1.1 million for the coverage of losses in Cpl Hellas, with head office at Athens; 0.9 million in Marigliano Gas S.r.l. for payments into capital increase account; 1.65 million for the acquisition of partnerships in the company Intermedia S.p.A.); reductions in partnerships for 11.9 million Euro (10.5 million for reduction in share capital of Coopgas S.r.l., held to be redundant following the merger with Gas of Concordia S.p.A. during the previous financial year; 1.1 million for the cancellation of partnerships in Borgoverde S.r.l., following the merger for incorporation into Real Estate of Concordia S.r.l.; 0.25 million for transfer of partnerships in Enerfin (S.r.l.); net increase of credits towards controlled or connected companies for 0.7 million Euro; reduction of locked credits towards others for 0.8 million Euro (reduction of non-profitable financing granted to Nebrodi Gas Service);

annual accounts

2007

devaluation of partnerships for approximately 964.000 Euro (in particular: Cpl Hellas for 0.8 million; Nuoro Servizi S.r.l. for 0.1 million and Enerfin S.r.l. for 0.1 million). It is appropriate to recall that in the process of restructuring of the Group, in 2005 the controlled company Gas della Concordia S.p.A. relinquished the company arm represented by the activity of research and cultivation of liquid petroleum and gas products (activity denominated â&#x20AC;&#x153;E & Pâ&#x20AC;?). In 2006, Gas della Concordia conferred on Coop Gas S.r.l. the production and commercialisation activity for natural gas, contextually acquiring partnership in the control of the same. Later on, it was decided to incorporate Coop Gas S.r.l. into Gas della Concordia, which took the name Coopgas S.r.l. (operation completed in December 2006).

The gap between the forecast values and those of the final balance (approximately 3 million Euro), with reference to the Fixed Financial Assets, finds its explanation principally in the reduction of the charge value of several partnerships, following the Coopgas operation and the necessity to cover losses on several controlled/ connected companies.

Financial cover of investments as a consequence of the gaps noted in respect of the data forecast by the Five-year Investment Plan, described in the preceding pages, we note that during the course of the financial year 2007 the Cooperative sustained outgoings for investments, net of income deriving from dismissions, for an amount of 11.5 million Euro. The financial cover of these investments was entirely guaranteed through the resources (cash flow) produced by the characteristic company management. The net variation of the share capital represented by APC results as negative for approximately 164.000 Euro, following the reimbursement of shares underwritten in 1999. As is apparent from reading the bottom line of the outline reported in Attachment 1, with reference to the final balance of 2007, the net investments sustained by the Cooperative were funded practically without recourse to further debt with the credit system (the net financial position on 31.12.07 is equal to 40.8 million Euro, with a reduction in respect of the previous financial year equal to approximately 17.5 million Euro).

Conclusions The data of the CPL final balance relative to the investments sustained in the financial year 2007 highlight a gap equal to approximately 900,000 Euro, reasonably contained and, above all, considerably less than the gaps shown in reference to previous financial years. This difference in the values on the balance sheet is explained by the various choices of investment and disinvestment made with reference to the various components of the fixed assets. These greater undertakings found complete cover in the self-funding generated by the Cooperative, which was able to avoid recourse to bank credit and, better still, through overall management, was able to reduce the net financial position in significant measure. It is possible to express a decidedly positive opinion on the validity of the new strategic choices adopted by the Board of Directors of CPL since the financial year 2004. These choices, in large part, determined the gaps shown in the last several financial years. The choice to bring a large part of the business back into the area of the traditional core business has been the source of much satisfaction which has in the past allowed even us shareholders to benefit from the significant results obtained by CPL (materialised in the payment of significant dividends). This choice has also brought the Cooperative to recover effective production and profitability, as was already hoped for at our Meeting on the occasion of the evaluation of the balance sheet for the financial years 2004 and 2005. Even the credit system in these few years has shown a positive opinion of the strategic choices made by the Cooperative: this is demonstrated by the 3.0 million Euro of new APC

annual accounts

2007

underwritten by institutional investors, issued in the month of December 2004 based on the new plan of investments for 2004 â&#x20AC;&#x201C; 2008, as well as the significant medium-long term financial operations that CPL and its controlled companies completed in the last few financial years. Future growth of management Considering the cost of a barrel of oil reached in these last few months, our country, and others, will have to work hard to incentivise any form of renewable energy. The cooperative has already activated plants and has launched a strong campaign on solar power. Moreover, in the next 3 years, we think to invest approximately 200 million Euro, together with collaboration with other companies, for the construction of solar power field for approximately 40 megawatt. The cooperative will moreover be committed to the methanisation of Sardinia, which will see us as protagonists with powerful investments influencing our balances in a significant manner. Based on the orders in the portfolio, and in consideration of the projects in solar power and wind power that we are considering, and the methanisation of Sardinia, the Cooperative working on updating the three-year plan 2008 â&#x20AC;&#x201C; 2010, which will be approved by the Board of Directors in a short time. The 2008 budget has already been approved, on the other hand. This was edited based on the orders acquired up to the month of December 2007, over and above those under acquisition, and corrected based on the updates carried out on the results of the first quarter of 2008. The balance sheets and the reclassified profit and loss accounts for the financial year 2008 are analysed below, in comparison with the four previous financial years.

Economic accounts reclassified with the Added Value method (values expressed in Euro)

Estimate

As of Dec. 31,2008

Balance sheet dates As of Dec. 31,2007

As of Dec. 31,2006

As of Dec. 31,2005

As of Dec. 31,2004

Income from sales 195,319,445 91,33% 179,562,310 90,23% 172,845,785 93,88% 165,438,299 91,44% 163,812,968 92,83% and services Variation in inventory of 0 0,00% 0 0,00% (1,552,050) -0,84% 0 0,00% 0 0,00% finished and semifinished goods Variation in work 652,880 0,31% 2,658,347 1,34% (892,233) -0,48% (3,494,561) -1,93%(15,099,987) -8,56% in progress Works in economy Other proceeds

17,304,134 8,09% 12,604,307 6,33% 585,102 0,27%

4,172,220 2,10%

9,945,241 5,40% 10,475,074 5,79% 14,111,186 8,00% 3,771,923 2,05%

8,510,074 4,70% 13,639,837 7,73%

VALUE OF 213,861,561100,00% 198,997,184100,00% 184,118,665100,00% 180,928,886100,00% 176,464,004100,00% PRODUCTION Amortisation of material fixed (74,766,727) -34,96%(63,885,797) -32,10%(54,226,507) -29,45%(52,715,594) -29,14%(49,754,348) -28,20% assets Amortisation of material intangible (144,237) -0,07% 9,455 0,00% 274,277 0,15% (346,772) -0,19% (482,830) -0,27% assets Various costs (70,000,000) -32,73%(66,632,270) -33,48%(67,308,739) -36,56%(71,767,063) -39,67%(73,695,523) -41,76% for services Expenses for the use of third party (9,700,000) -4,54% (8,445,660) -4,24% (9,881,067) -5,37%(10,826,715) -5,98% (8,310,388) -4,71% property Other operational (1,000,000) -0,47% (1,908,365) -0,96% (1,958,381) -1,06% (2,164,174) -1,20% (2,242,431) -1,27% fees ADDED VALUE

58,250,597 27,24% 58,134,548 29,21% 51,018,249 27,71% 43,108,568 23,83% 41,978,484 23,79%

Cost of work and (38,550,000) -18,03%(35,997,524) -18,09%(31,026,611) -16,85%(30,693,673) -16,96%(30,686,348) -17,39% relative costs GROSS OPERATING 19,700,597 9,21% 22,137,024 11,12% 19,991,638 10,86% 12,414,895 6,86% 11,292,136 6,40% MARGIN Amortisation of material fixed (2,136,000) -1,00% (1,967,731) -0,99% (1,673,7159 -0,91% (1,863,046) -1,03% (2,581,728) -1,46% assets Amortisation of material intangible (4,500,000) -2,10% (4,170,443) -2,10% (4,178,341) -2,27% (4,021,661) -2,22% (2,884,484) -1,63% assets Allowances and (900,000) -0,42% (1,099,621) -0,55% (1,544,703) -0,84% (1,023,965) -0,57% (643,054) -0,36% devaluations Amortisations and allowances

(7,536,000) -3,52% (7,237,795) -3,64% (7,396,758) -4,02% (6,908,672) -3,82% (6,109,266) -3,46%

EBIT

12,164,597 5,69% 14,899,229 7,49% 12,594,880 6,84%

5,506,223 3,04%

5,182,870 2,94%

Interest and other (3,364,060) -1,57% (3,469,020) -1,74% (3,668,045) -1,99% (4,066,967) -2,25% (3,913,559) -2,22% financial fees Other financial 214,060 0,10% 1,036,632 0,52% 904,825 0,49% 579,726 0,32% 317,057 0,18% proceeds TOTAL FINANCIAL (3,150,000) -1,47% (2,432,387) -1,22% (2,763,220) -1,50% (3,487,241) -1,93% (3,596,502) -2,04% MANAGEMENT CURRENT LOSS Proceeds from partnerships Corrections on financial activity Rebate to partners

9,014,597 4,22% 12,466,841 6,26%

1,000,000 0,47%

91,550 0,05%

9,831,661 5,34%

550,195 0,30%

2,018,981 1,12%

1,586,367 0,90%

4,527,721 2,50%

2,336,675 1,32%

0 0,00% (1,406,642) -0,71% (2,347,069) -1,27% (2,162,320) -1,20% (5,131,523) -2,91% 0 0,00% (1,100,000) -0,55%

(750,000) -0,41%

(500,000) -0,28%

0 0,00%

Estimate

As of Dec. 31,2008

Balance sheet dates %

As of Dec. 31,2007

As of Dec. 31,2006

As of Dec. 31,2005

As of Dec. 31,2004

Extraordinary 0 0,00% (34,308) -0,02% 1,402,234 0,76% 1,889,160 1,04% 1,449,751 0,82% operations RESULT BEFORE 10,014,597 4,68% 10,017,441 5,03% 8,687,021 4,72% 5,773,543 3,19% 241,271 0,14% TAXES Taxes on the finan(3,204,709) -1,50% (4,137,754) -2,08% (5,134,301) -2,79% (2,665,977) -1,47% (3,107,770) -1,76% cial year income NET RESULT

6,809,888 3,18%

5,879,687 2,95%

3,552,720 1,93%

3,107,566 1,72% (2,866,499) -1,62%

The financial year 2008 feels the effect of two fundamental factors under the economic profile. The first, of a general character, contains the general moment of national economic difficulty on the balance sheet of the Cooperative, which is reflected through a contraction of the orders and the marginality. The second, of special character, acknowledges the impact of the investments, which for the financial year 2008 are expected to be in the order of approximately 20 million Euro. It is however comforting to note that the forecasted net profits near 7 million Euro.

Reclassified assets according to the method of liquidity of the posts (values expressed in Euro)

Estimate As of Dec. 31,2008

ASSETS

Balance sheet dates As of Dec. As of Dec. As of Dec. 31,2006 31,2005 31,2004

Short term activity

Liquid assets

Non-permanent assets

Credits towards clients and others

3,487,369

9,820,928

11,127,629

5,046,492

12,719,079

115,797

121,868,720 113,401,341 114,793,337 109,284,631 100,511,093

Stocks

Credits towards partners for payments still owing

Accruals and deferred income

Total short-term assets Fixed assets

As of Dec. 31,2007

24,450,000

21,612,224

19,608,968

21,519,647

24,311,527

1,300,000

1,258,137

1,210,554

1,246,406

1,265,512

3,450,000

4,951,759

4,968,267

4,909,661

4,930,132

154,556,090 151,160,185 151,708,755 142,006,836 143,737,343

Intangible fixed assets

21,792,726

13,498,336

11,408,796

12,243,148

11,929,375

Material fixed assets

49,168,069

47,827,824

42,099,293

36,715,963

44,255,988

Financial fixed assets

39,368,304

53,307,242

55,983,102

62,679,434

58,742,296

Total fixed assets Total ASSETS ORDER COUNTS

110,329,098 114,633,402 264,885,188 265,793,587 170,000,000 171,468,227

109,491,190 111,638,544 261,199,946 253,645,380 177,431,671 184,742,912

LIABILITIES

Short term liabilities

114,927,659 258,665,001 167,041,130

Bank debts

6,395,367

10,806,199

10,701,805

9,645,384

40,298,359

Debts with other backers

3,000,000

3,224,800

2,545,157

2,331,665

2,427,745

Financial debts towards controlled/connected companies

246,000

10,914,000

10,650,000

1,700,000

Advance payments

Debts towards suppliers

Debts represented by bills of exchange

9,073,944

14,177,189

12,389,313

12,218,806

9,540,411

76,921,313

84,072,192

63,749,194

55,066,894

52,715,486

Debts towards controlled companies

2,405,513

2,568,636

4,306,318

4,927,300

5,784,269

Debts towards connected companies

50,000

99,023

90,904

503,126

167,236

annual accounts

2007

Estimate

Tax debts Debts towards social security and welfare institutions Other short-term debts

Accruals and deferred income - liabilities

Total short-term liabilities Medium-long term liabilities

Balance sheet dates

As of Dec. 31,2008

As of Dec. 31,2007

As of Dec. 31,2006

As of Dec. 31,2005

As of Dec. 31,2004

7,046,130

3,868,897

6,817,606

3,474,793

4,058,863

2,398,651

2,235,968

1,425,301

1,321,314

1,376,026

5,338,012

4,381,088

3,965,238

6,213,651

4,528,828

400,000

291,387

340,704

507,784

576,489

113,028,930 125,971,378 117,245,540 106,860,718 123,173,712

Debenture loans

Bank debts

41,348,586

36,348,586

45,273,309

50,097,220

39,361,654

Debts with other backers

1,500,000

1,801,315

1,701,134

2,255,596

2,884,933

6,847,280

6,101,664

6,507,062

5,832,038

5,461,142

21,526

21,633

Debts towards suppliers

Debts represented by bills of exchange

Provision for severance pay Fund for social security and other welfare institutions Other funds

Total medium-long term liabilities Net equity

Share capital

Re-evaluation reserve

Legal reserve

Reserves foreseen by company by-laws

Foreign currency conversion fund

1,948,803

1,335,537

1,839,090

2,836,404

4,494,620

51,666,195

45,608,627

55,342,121

61,042,784

52,223,982

14,000,000

13,706,084

12,952,749

12,702,218

13,335,213

656,679

77,140,319

72,387,954

69,866,959

67,692,238

78,184

Merger advance

235,597

3,102,096

Capital gains reserve Law 784/80

1,269,396

Financial year profit/loss

6,809,888

5,879,687

3,552,720

3,107,566

(2,866,499)

Total net equity Total LIABILITIES ORDER COUNTS

100,190,063

94,213,582

88,612,285

85,741,878

83,267,307

264,885,188 265,793,587 261,199,946 253,645,380 258,665,001 170,000,000 171,468,227 177,431,671 184,742,912 167,041,130

Under the profile of the asset structure of the Cooperative’s balance sheet, a certain continuity with the values expressed in previous balance sheets can be noted. Two elements stand out – the first concerns the increase in long term debts in connection with the investments mentioned in these pages, whereas the second concerns the Net assets which exceed 100 million

Euro, this in the very year that the Cooperative nears the celebration of 110 years of history. The principal economic and asset indices of the five-year period are given below, with particular attention to those which come out of the 2008 budget:

Principal indices of the balance sheet Balance sheet dates Economic analysis

As of Dec. 31,2007

As of Dec. 31,2006

As of Dec. 31,2005

As of Dec. 31,2004

As of Dec. 31,2003

R.O.E. (Return on Equity)

7,29%

6,66%

4,18%

3,76%

-3,33%

R.O.I. (Return on Investment)

4,59%

5,61%

4,82%

2,17%

2,00%

9,21%

11,12%

10,86%

6,86%

6,40%

44,02%

60,54%

71,79%

43,56%

155,31%

1,47%

1,22%

1,50%

1,93%

2,04%

25,89%

16,33%

21,94%

63,33%

69,39%

Ratio of Gross Operating Margin to Value of Production Incidence of expenditures and revenue from extraordinary operations Incidence of Net Financial Expenditures on the value of production Incidenza Oneri Finanz. Incidence of Net Financial Expenditures on the R.O.

Balance sheet dates FINANCIAL AND CAPITAL ANALYSIS

As of Dec. 31,2007

As of Dec. 31,2006

As of Dec. 31,2005

As of Dec. 31,2004

As of Dec. 31,2003

Liquidity index

1,37

1,20

1,29

1,33

1,17

Leverage (Gearing)

2,84

3,01

3,07

3,00

Ratio of Interest-paying debt

0,51

0,46

0,69

0,82

0,83

Elasticity index

1,40

1,32

1,39

1,27

1,25

EBITDA/DEBT

41,67%

54,37%

34,29%

18,34%

15,89%

DEBT/EBITDA

2,40

1,84

2,92

5,45

6,29

Important events occurring following the end of the financial year

On 5 March 2008, the AI POWER S.p.A. company was formed in Algiers (Algeria). The Cooperative holds shares to the nominal value of 10.800.000 Algerian dinars, equal to 54% of the share capital, which amounts to 20.000.000.00 Algerian dinars.

The company will take care of the importation, production and assembly of plants related to energy, gas, water and the sewerage system, as well as the production of technologies related to these. On 9 April 2008, the Cooperative acquired 20% of the shares in SocietĂ Compagri S.p.A., a com pany which operates in the construction and management of composting and waste treatment plants.

On 9 April 2008, the Cooperative acquired 20% of the shares in Agrienergia, a limited consortium company controlled by the same Compagri S.p.a and operating in the same sector of activity. On 13 May 2008, the Cooperative acquired 30% of the shares in Xdatanet S.r.l., a company which carries out software design and implementation activities, as well as Information Technology consultancy.

annual accounts

2007

Other information It is noted, moreover, that the Cooperative has organised the updating of the safety programme document, within the terms expected by the appropriate decree, in accordance with that expected by attachment B of D.Lgs. 196/03, “Personal Data Protection Code”. This makes arrangements for the technical methods to be adopted in the case of the treatment of sensitive data on electronic instruments. It is further noted that, in the area of the widest policy of making aware of the transparent and correct management of the company, in respect of existing regulations and the fundamental ethical business principles in the carrying out of the business purpose, the Cooperative has approved the “Model of organisation, administration and control in accordance with D. lgs. 8/6/2001, n. 231” and has nominated the Supervision Body for the period 1/1/2008 – 31/12/2010. It is further noted that the Cooperative, together with the Group companies concerned, is arranging for the editing of the outlines required by Decreto Legislativo n° 164/2000 and Delibera Del’Autorità per L’Energia Elettrica ed il Gas n° 311/01, in the separation of accounting relative to the production processes inherent to the methane gas sector.

It is specified that, in accordance with art. 2497 of the civil code, the Cooperative is not subject to management and coordination activities. However, the Cooperative exercises management and coordination activities in the following controlled companies: Coopgas S.r.l. Energia della Concordia S.p.A. Immobiliare della Concordia S.r.l. Borgoverde S.r.l. Progas Metano S.r.l. Erre.Gas S.r.l. Marigliano Gas S.r.l. Ischia Gas S.r.l. Si.gas S.r.l. Nuoro Servizi S.r.l. Serio Energia S.r.l. Cpl Filiala Cluj Romania S.r.l. Cpl Hellas A.B.& T.E.

NET PROFITS amounts expressed in thousands of euros 30,000 25,000 20,000 15,000 10,000 5,000

3,108

1,755

3,553

5,880

0 -5,000

-2,866

2003 2004 2005 2006 2007

Destination of the profit Based on the results achieved and having obtained the motivated opinion of the Special Assembly of shareholders, the Board of Directors proposes that the Partners Assembly approve the implementation of the multi-year investment plan relative to the financial year 2007 and that the Net Profits of the financial year of 5.879.687 Euro be assigned in the following manner: 361.351.94 Euro to the Cooperative Shareholders (underwriters) by way of dividend (for the period 01.01.07 – 31.12.07) in measure of the 8.00% gross per share of the nominal value of 51.64 Euro at 31.12.07, payable on 02.07.08; 11.435.16 Euro to the Cooperative Shareholders (Stock Option) by way of dividend (for the period 01.01.07 – 31.12.07) in measure of the 8.00% gross per share of the nominal value of 51.64 Euro at 31.12.07, payable on 02.07.08; 240.000.00 Euro to the Cooperative Shareholders (underwriters) by way of dividend (for the pe riod 01.01.07 – 31.12.07) in measure of the 8.00% gross per share of the nominal value of 500.00 Euro at 31.12.07, payable on 02.07.08; 263.489.19 Euro by way of dividend to the cooperative partners and voting partners in measure equal to the 6.00% gross compared to the Share Capital actually paid, payable on 02.07.08; 74.655.36 Euro, equal to 1.70% to the free increase (in accordance with Law 59/92) of the share capital actually paid, able to be capitalised; 176.390.61 Euro, equal to 3.00% (three percent) to the Mutual Funds for the Promotion and De velopment of the Cooperative, in accordance with art.11 of Law 59 of 31.01.1992; 1.763.906.10 Euro, equal to 30%, to the Legal Reserve Fund, as expected by the Statute and in conformity with art.12 of L. 16/12/77 N. 904. 2.988.458.64 Euro to the Ordinary Reserve Fund, indivisible among the partners both during the lifetime of the Cooperative and at its dissolution, as expected by the Statute and in conformity with art.12 of L. 16/12/77 N. 904. We thank you for the confidence accorded to us and we invite you to approve the Balance sheet closed on 31/12/07 as presented. Concordia s/S, 19.05.2008 The Board of Directors President (CASARI Roberto)

ALLOCATION OF PROFITS FOR FISCAL YEAR 2007 Dividend to Cooperative Shareholders (subscribers) 10,23% Dividend to Cooperative Shareholders (stock options) 0,19% Dividend to Cooperating Shareholders and Supporting Shareholders 4,48% Revaluation of the Shareholders’ Share Capital 1,27% Reserve Fund 80,83%

Mutual Assistance Funds 3,00%

annual accounts

2007

balance sheet of CPL Concordia Soc. Coop. as of December 31, 2007

Statement of assets and liabilities Assets AS OF DECEMBER 31, 2007 Amounts expressed in euros

ASSETS A)

SUBSCRIBED CAPITAL, UNPAID

1,258,137

already called-up B)

AS OF DECEMBER 31, 2006 Amounts expressed in euros

1,258,137

1,210,554 1,210,554

FIXED ASSETS

INTANGIBLE ASSETS: 1)

Installation and expansion expenses Research, development, and advertising expenses Industrial patent and intellectual property rights Concessions, licenses, trade marks and similar rights Goodwill

Difference by consolidation

Other intangible assets

12,904,470

10,370,781

Total

13,498,336

11,408,796

3,080,083

1,411,515

41,819,395

38,060,370

319,005

283,566

2) 3) 4)

81,186

155,196

41,279

50,907

471,401

831,912

TANGIBLE ASSETS: 1)

Land and buildings

Plants and machinery

Industrial and commercial equipment

Other assets Tangible assets in course of construction and advances Total

III

1,786,316

1,318,574

823,025

1,025,267

47,827,824

42,099,292

24,453,945

28,471,622

2,349,412

2,495,112

INVESTMENTS: 1)

Equity investments in: a) subsidiary companies b) affiliated companies c) parent companies d) other companies

Receivables:

3,457,447

1,654,782

(within 12months)

a) from subsidiary companies

9,180,000

8,485,000

b) from affiliated companies

10,779,000

10,754,000

1,025,130

1,530,536

381,299

2,357,440

c) from parent companies

d) from other companies

Other investments

Own shares

Total

51,750,340

54,217,956

TOTAL FIXED ASSETS

113,076,500

107,726,044

annual accounts

2007

AS OF DECEMBER 31, 2007 Amounts expressed in euros

ASSETS C)

CURRENT ASSETS

INVENTORY: 1)

Raw materials, supplies, and consumbales

2,806,748

2,675,373

Works in progress and components

5,366,048

3,858,438

Contracts in progress

11,928,182

11,305,318

Finished goods and merchandise

Advance payments Total

RECEIVABLES:

(over 12 months)

Trade debtors:

1,556,902

Receivables from subsidiary companies:

Receivables from affiliated companies:

Receivables from parent company:

4 bis) Tax assets 4 ter) Advance taxes 5)

Other accounts receivables: Total

III

121,336

243,257

1,389,909

1,526,582

21,612,223

19,608,968 (over 12 months)

105,177,878

1,765,146

108,441,689

6,594,872 652,125

5,394,431 8,103

224,209

1,450,347

415,835

656,478

1,187,597

426,543

894,723

114,958,243

116,558,484

115,797

NON-PERMANENT INVESTMENTS: 1)

Shares in subsidiary companies

Shares in affiliated companies

Other shares

Company shares

Other investments

115,797

9,795,803

11,116,883

1,207

1,903

Total IV

LIQUID ASSETS: 1)

Current bank and postal accounts

Bank cheques

Cash on hand Total

TOTAL CURRENT ASSETS D)

AS OF DECEMBER 31, 2006 Amounts expressed in euros

ACCRUALS AND DEFERRED INCOME: TOTAL ASSETS

23,918

8,843

9,820,928 146,507,191

11,127,629 147,295,081

4,951,759

4,968,267

265,793,587

261,199,946

Statement of assets and liabilities Liabilities AS OF DECEMBER 31, 2007 Amounts expressed in euros

LIABILITIES A)

AS OF DECEMBER 31, 2006 Amounts expressed in euros

NET EQUITY I

CAPITAL

SHARE PREMIUM RESERVES

III

REVALUATION RESERVES

LEGAL RESERVES

RESERVES FORESEEN BY COMPANY BYLAWS

RESERVES FOR COMPANY SHARES

VII

OTHER RESERVES: MERGER SURPLUS EXCHANGE RATE FLUCTUATION RESERVES CAPITAL GAINS L. 784/80

VIII

PROFIT (LOSS) CARRIED FORWARD

FISCAL YEAR PROFIT (LOSS) TOTAL

13,706,084

12,952,749

656,679

72,387,954

69,866,959

78,184

235,597

1,269,396

5,879,687

3,552,720

94,213,581

88,612,284

21,526

PROVISIONS FOR LIABILITIES AND CHARGES 1)

Provisions for pensions and similar obligations

For taxes

Other

TOTAL

1,335,537

1,839,090

1,357,063

1,860,616

SEVERANCE INDEMNITY

ACCOUNTS PAYABLE:

6,101,664

(over 12months)

Debenture loans:

Convertible debenture loans:

Amounts owed to shareholders for financing:

Amounts owed to banks:

Amounts owed to other financiers:

Advance payments:

Amounts owed to suppliers:

Debts represented by bills of exchange:

Amounts owed to subsidiary companies:

6,507,062 (over 12months)

36,348,586

3,224,800

2,545,157

47,154,785

45,273,309

55,975,114

14,177,189 1,801,315

85,873,507

10) Amounts owed to affiliated companies:

12,389,313 1,701,134

65,450,328

2,814,636

15,220,318

99,023

90,904

11) Amounts owed to parent companies:

12) Amounts owed to tax administration:

3,868,897

6,817,606

Amounts owed to social security and welfare 13) institutions:

2,235,968

1,425,301

14) Other accounts payable:

4,381,087

3,965,239

TOTAL

163,829,892

ACCRUALS AND DEFERRED INCOME: TOTAL LIABILITIES

annual accounts

2007

163,879,280

291,387

340,704

265,793,587

261,199,946

AS OF DECEMBER 31, 2007 Amounts expressed in euros

LIABILITIES

AS OF DECEMBER 31, 2006 Amounts expressed in euros

MEMORANDUM ACCOUNTS: I)

Guarantees - Securities - Real guarantees

106,099,073

113,817,505

60,794,000

59,500,000

Total II)

166,893,073

173,317,505

Other memorandum accounts - Subject to collection - Other

Total TOTAL MEMORANDUM ACCOUNTS

7,000

199,420

4,568,154

3,914,746 4,575,154

4,114,166

171,468,227

177,431,671

Profit and loss statement AS OF DECEMBER 31, 2007 AS OF DECEMBER 31, 2006 Amounts expressed in euros Amounts expressed in euros

PROFIT AND LOSS ACCOUNT A)

VALUE OF PRODUCTION: 1)

Net turnover from sales and services

Variation in stocks of finished, in progress, and semi-finished goods

Variation in contracts in progress

Capital improvement investments for internal projects

Other income and revenue -miscellaneous

179,562,310

174,193,735

(1,552,050)

2,658,347

(892,233)

12,604,307

9,945,241

4,167,018

- transferred to the profit and loss account

3,771,923

5,203

4,172,221

Total

185,466,616

3,771,923

198,997,185

COST OF PRODUCTION: 6)

For raw materials, consumable goods, and merchandise

63,885,797

54,226,506

For services

66,632,270

67,308,739

8,445,660

9,881,067

For use of assets owned by others

For staff:

10)

a) salaries and wages

27,000,306

23,194,016

b) social security costs

8,373,756

7,096,185

c) severance indemnity

1,723,462

1,486,410

d) pension costs

e) other costs

a) amortization of intagible assets

4,170,443

4,178,341

b) amortization of tangible assets

1,967,731

1,673,715

1,731

c) other reductions in value of fixed assets

11)

37,097,524

d) allowance for debtors included in current assets and other cash accounts Variations in stocks of raw materials, consumable goods, and merchandise

12)

Amounts for risk provisions

13)

Other accruals

14)

Other operating charges

370,000

6,508,174

417,000

6,270,787

(9,455)

Total

(274,277)

729,621

1,125,972

1,908,365

1,958,381

185,197,956

172,273,786

DIFFERENCE BETWEEN VALUE AND COST OF PRODUCTION (A - B) C)

31,776,611

Amortization and depreciation

13,799,229

13,192,830

FINANCIAL REVENUE AND EXPENDITURES: 15)

Income from equity investments - from subsidiary companies

40,000

- from affiliated companies

- from other companies 16)

511,454

51,550

0 91,550

38,741

Other financial income: a) from receivables included in fixed assets: - from subsidiary companies

- from affiliated companies

annual accounts

2007

550,195

PROFIT AND LOSS ACCOUNT

AS OF DECEMBER 31, 2007 AS OF DECEMBER 31, 2006 Amounts expressed in euros Amounts expressed in euros

- from parent companies

- from other companies

0 0

531,726

2,072

323

486,373

1,036,632

- from subsidiary companies - from parent companies - from other companies

904,826

13,557

2,403

3,450,427

3,463,984

3,673,965

3,676,368

5,036

(8,323)

PROFIT AND LOSS FROM FOREIGN CURRENCY CONVERSION Profit and loss from foreign currency conversion Total ( 15 + 16 - 17 - 17 bis )

372,777

Interest payable and other charges - from affiliated companies

17bis)

548,187

(2,340,838)

(2,213,024)

VALUE ADJUSTMENTS FOR INVESTMENTS 18)

Revaluations: a) of equity investments

b) of permanent investments that are not equity investments c) of non-permanent investments which are not equity investments 19)

Devaluations: a) of equity investments b) of permanent investments that are not equity investments c) of non-permanent investments which are not equity investments

1,406,642

2,347,069

0 1,406,642

Total adjustments (18 - 19 ) E)

2,347,069

(1,406,642)

(2,347,069)

EXTRAORDINARY REVENUE AND EXPENSES: 20)

21)

Revenue: a) gains from disposal of assets whose proceeds are not recorded at number 5

b) Capital gains

c) Other

0 0 0

54,284

Expenses: a) losses from disposal of assets whose accounting effects are not recorded in number 14 b) taxes pertaining to prior fiscal year c) other Total extraordinary income and losses ( 20 - 21 )

PROFIT OR LOSS BEFORE TAX ( A - B ± C ± D ± E )

34,308

(34,308) 10,017,441

54,284 8,687,021

22)

Annual income tax

(4,137,754)

(5,134,301)

22 a)

Current taxes for the fiscal year

(3,606,635)

(4,167,849)

22 b)

Anticipated (deferred) taxes

(531,119)

(966,452)

26)

PROFIT (LOSS) FOR THE FISCAL YEAR

5,879,687

3,552,720

details of the profit and loss statement Consolidated profit and loss account reclassified with the value-added method (values expressed in Euro)

Statement Dates As of Dec. 31,2007

Net turnover from sales and services Variation in inventory of finished and semi-finished goods Variations in contracts in progress Low-cost works Various income

As of Dec. 31,2006

As of Dec. 31,2005

As of Dec. 31,2004

As of Dec. 31,2003

179,562,310 90,23% 172,845,785 93,88% 165,438,299 91,44% 163,812,968 92,83% 126,624,794 71,76% 0 2,658,347

0,00% (1,552,050) -0,84% 1,34%

0,00%

(892,233) -0,48% (3,494,561) -1,93% (15,099,987) -8,56%

1,722,321

0,98%

12,604,307

6,33%

9,945,241

5,40% 10,475,074

5,79% 14,111,186

8,00% 17,285,600

9,80%

4,172,220

2,10%

3,771,923

2,05%

4,70% 13,639,837

7,73% 10,186,712

6,54%

8,510,074

VALUE OF PRODUCTION 198,997,184 100,00% 184,118,665 100,00% 180,928,886 Costs for purchases (63,885,797) -32,10% (54,226,507) -29,45% (52,715,594) Variations in inventory 9,455 0,00% 274,277 0,15% (346,7729 of raw materials Various costs for services (66,632,270) -33,48% (67,308,739) -36,56% (71,767,063) Expenses for uses of assets (8,445,660) -4,24% (9,881,067) -5,37% (10,826,715) owned by others Other operational expenses (1,908,365) -0,96% (1,958,381) -1,06% (2,164,174)

100,00% 176,464,004 100,00% 155,819,427 100,00% -29,14% (49,754,348) -28,20%(46,642,774) -29,93% -0,19%

(482,830) -0,27%

(378,994) -0,24%

-39,67% (73,695,523) -41,76%(68,682,473) -44,08% -5,98% (8,310,388) -4,71% (6,013,257) -3,86% -1,20% (2,242,431) -1,27% (2,681,744) -1,72%

ADDED VALUE 58,134,548 29,21% 51,018,249 27,71% 43,108,568 23,83% 41,978,484 23,79% 31,420,185 20,16% Cost of work and related (35,997,524) -18,09% (31,026,611) -16,85% (30,693,673) -16,96% (30,686,348) -17,39%(28,128,605) -18,05% charges Gross Operating Margin 22,137,024 11,12% 19,991,638 10,86% 12,414,895 6,86% 11,292,136 6,40% 3,291,580 2,11% Amortization of (1,967,731) -0,99% (1,673,715) -0,91% (1,863,046) -1,03% (2,581,728) -1,46% (2,075,324) -1,33% tangible assets Amortization of (4,170,443) -2,10% (4,178,341) -2,27% (4,021,661) -2,22% (2,884,484) -1,63% (1,515,615) -0,97% intangible assets Retained earnings (1,099,621) -0,55% (1,544,703) -0,84% (1,023,965) -0,57% (643,054) -0,36% (1,179,448) -0,76% and depreciation Amortizations and retained (7,237,795) -3,64% (7,396,758) -4,02% (6,908,672) -3,82% (6,109,266) -3,46% (4,770,388) -3,06% earnings EBIT 14,899,229 7,49% 12,594,880 6,84% 5,506,223 3,04% 5,182,870 2,94% (1,478,808) -0,95% Interest and other financial (3,469,020) -1,74% (3,668,045) -1,99% (4,066,967) -2,25% (3,913,559) -2,22% (3,214,228) -2,06% income Other financial income 1,036,632 0,52% 904,825 0,49% 579,726 0,32% 317,057 0,18% 935,438 0,60% TOTAL FINANCIAL (2,432,387) -1,22% (2,763,220) -1,50% (3,487,241) -1,93% (3,596,502) -2,04% (2,278,790) -1,46% MANAGEMENT CURRENT PROFIT OR LOSS 12,466,841 6,26% 9,831,661 5,34% 2,018,981 1,12% 1,586,367 0,90% (3,757,598) -2,41% Income from equity 91,550 0,05% 550,195 0,30% 4,527,721 2,50% 2,336,675 1,32% 20,404,475 13,09% investments Value adjustments for (1,406,642) -0,71% (2,347,0699 -1,27% (2,162,320) -1,20% (5,131,523) -2,91%(10,946,643) -7,03% investments Shareholder repayment (1,100,000) -0,55% (750,000) -0,41% (500,000) -0,28% 0 0,00% 0 0,00% Extraordinary management

(34,3089 -0,02%

0,76%

1,889,160

1,04%

1,449,751

8,687,021

4,72%

5,773,543

3,19%

241,271

0,82% (1,058,513) -0,68%

PRE-TAX PROFIT OR LOSS

10,017,441

Taxes on operating profit

(4,137,754) -2,08% (5,134,301) -2,79% (2,665,977) -1,47% (3,107,770) -1,76% (2,886,693) -1,85%

NET PROFIT OR LOSS

5,879,687

5,03%

1,402,234

2,95%

3,552,720

annual accounts

1,93%

2007

3,107,566

0,14%

1,72% (2,866,499) -1,62%

4,641,721 1,755,028

2,98% 1,13%

Consolidated balance sheet reclassified by liquidity (values expressed in Euro)

Statement Dates As of Dec. 31,2007

TOTAL ASSETS Short term assets Liquid assets Non-permanent assets Receivables from clients and others Inventory Subscribed capital, unpaid Accruals and deferred income - assets Total short term assets Fixed assets Intangible assets Tangible assets Investments Total fixed assets Total ASSETS MEMORANDUM ACCOUNTS TOTAL LIABILITIES Short-term liabilities Amounts owed to banks Amounts owed to other financiers Financial debt owed to subsidiary/affiliated companies Advance payments Amounts owed to suppliers Debts represented by bills of exchange Amounts owed to subsidiary companies Amounts owed to affiliated companies Amounts owed to tax administration Amounts owed to social security and welfare institutions Other short-term debts Accruals and deferred income - liabilities Total short-term liabilities Medium/long term liabilities Debenture loans Amounts owed to banks Amounts owed to other financiers Amounts owed to suppliers Debts represented by bills of exchange Provision for severance pay Fund for social security and welfare institutions Other funds Total medium/long term liabilities NET EQUITY Share capital Revaluation reserve Legal reserve Reserves foreseen by company bylaws Foreign currency conversion fund Merger Advance Capital gains reserve Lex 784/80 Fiscal year profit / loss TOTAL NET EQUITY TOTAL LIABILITIES MEMORANDUM ACCOUNTS

As of Dec. 31,2006

As of Dec. 31,2005

As of Dec. 31,2004

As of Dec. 31,2003

9,820,928 11,127,629 5,046,492 12,719,079 3,972,279 115,797 0 0 0 1,350 113,401,341 114,793,337 109,284,631 100,511,093 92,118,130 21,612,224 19,608,968 21,519,647 24,311,527 21,353,911 1,258,137 1,210,554 1,246,406 1,265,512 992,886 4,951,759 4,968,267 4,909,661 4,930,132 565,767 151,160,185 151,708,755 142,006,836 143,737,343 119,004,324 13,498,336 11,408,796 12,243,148 11,929,375 9,221,627 47,827,824 42,099,293 36,715,963 44,255,988 48,267,180 53,307,242 55,983,102 62,679,434 58,742,296 59,647,266 114,633,402 109,491,190 111,638,544 114,927,659 117,136,073 265,793,587 261,199,946 253,645,380 258,665,001 236,140,397 171,468,227 177,431,671 184,742,912 167,041,130 157,174,363 10,806,199 10,701,805 9,645,384 40,298,359 23,604,381 3,224,800 2,545,157 2,331,665 2,427,745 3,545,959 246,000 10,914,000 10,650,000 1,700,000 0 14,177,189 12,389,313 12,218,806 9,540,411 4,898,788 84,072,192 63,749,194 55,066,894 52,715,486 46,032,160 0 0 0 0 0 2,568,636 4,306,318 4,927,300 5,784,269 1,065,922 99,023 90,904 503,126 167,236 437,850 3,868,897 6,817,606 3,474,793 4,058,863 2,690,631 2,235,968 1,425,301 1,321,314 1,376,026 1,259,661 4,381,088 3,965,238 6,213,651 4,528,828 5,991,864 291,387 340,704 507,784 576,489 482,595 125,971,378 117,245,540 106,860,718 123,173,712 90,009,810 0 0 0 0 0 36,348,586 45,273,309 50,097,220 39,361,654 46,586,869 0 0 0 0 0 1,801,315 1,701,134 2,255,596 2,884,933 2,164,004 0 0 0 0 0 6,101,664 6,507,062 5,832,038 5,461,142 5,205,849 21,526 21,526 21,526 21,633 45,825 1,335,537 1,839,090 2,836,404 4,494,620 3,705,046 45,608,627 55,342,121 61,042,784 52,223,982 57,707,593 13,706,084 12,952,749 12,702,218 13,335,213 14,878,043 656,679 656,679 656,679 656,679 656,679 72,387,954 69,866,959 67,692,238 67,692,238 66,683,567 78,184 78,184 78,184 78,184 78,184 0 0 0 0 0 235,597 235,597 235,597 3,102,096 3,102,096 1,269,396 1,269,396 1,269,396 1,269,396 1,269,396 5,879,687 3,552,720 3,107,566 -2,866,499 1,755,028 94,213,582 88,612,285 85,741,878 83,267,307 88,422,994 265,793,587 261,199,946 253,645,380 258,665,001 236,140,397 171,468,227 177,431,671 184,742,912 167,041,130 157,174,363

CPL CONCORDIA COOPERATIVE SOCIETY NET DEBT OF THE PARENT COMPANY AS OF 31.12.2007 ITEM

AS OF 31.12.2007

AS OF 31.12.2006

SHORT TERM DEBTS OWED TO BANKS

10,806,199

10,701,805

LONG TERM DEBTS OWED TO BANKS

36,348,586

45,273,309

LOANS FROM COOPERATIVE MEMBERS FINANCIAL DEBT OWED TOWARDS OTHER ENTITIES - LIQUIDITY DEDUCTIONS - CASH DEDUCTIONS - GROUP FINANCING DEDUCTIONS NET DEBT

3,224,800

2,545,157

246,000

10,914,000

(9,795,803)

(11,116,883)

(25,124)

(10,746)

(20,410,142)

(21,940,142)

20,394,515

36,366,500

DEBT OWED TO THE BANKING WORLD AND PARENT COMPANY SHAREHOLDERS AS OF 31.12.2007 SHORT TERM DEBTS OWED TO BANKS

10,806,199

10,701,805

LONG TERM DEBTS OWED TO BANKS

36,348,586

45,273,309

3,224,800

2,545,157

(9,795,803)

(11,116,883)

(25,124)

(10,746)

LOANS FROM COOPERATIVE MEMBERS - LIQUIDITY DEDUCTIONS - CASH DEDUCTIONS FINANCIAL DEBT GROUP DEBT

40,558,657

47,392,642

246,000

10,914,000

40,804,657

58,306,642

Principal indexes used on the balance sheet ECONOMIC ANALYSIS

Statement Dates As of Dec. 31,2007

R.O.E. (Return on Equity)

As of Dec. 31,2006

6,66%

R.O.I. (Return on Investment)

As of Dec. 31,2005

4,18%

As of Dec. 31,2004

3,76%

As of Dec. 31,2003

-3,33%

2,03%

5,61%

4,82%

2,17%

2,00%

-0,63%

Gross Operating Margin Ratio/Value of Production

11,12%

10,86%

6,86%

6,40%

2,11%

Incidence of expenditures and revenue from extraordinary operations

60,54%

71,79%

43,56%

155,31%

218,68%

1,22%

1,50%

1,93%

2,04%

1,46%

16,33%

21,94%

63,33%

69,39%

-154,10%

Incidence of Net Financial Expenditures on the value of production Incidence of Net Financial Expenditures on the R.O.

FINANCIAL AND EQUITY ANALYSIS

Statement Dates As of Dec. 31,2007

As of Dec. 31,2006

As of Dec. 31,2005

As of Dec. 31,2004

As of Dec. 31,2003

Liquidity index

1,20

1,29

1,33

1,17

1,32

Leverage (Gearing)

3,01

3,07

3,00

2,72

Leverage debt ratio

0,46

0,69

0,82

0,83

0,80

Elasticity index

1,32

1,39

1,27

1,25

1,02

Debt/EBITDA

54,25%

34,29%

18,34%

15,89%

4,72%

Debt/EBITDA

1,84

2,92

5,45

6,29

21,19

annual accounts

2007

board of auditors report to the shareholders’ meeting for the annual financial statements as of December 31, 2007

Dear Shareholders, In compliance with the tasks and duties assigned to the Board of Auditors, we hereby inform you of the supervisory activities we have performed during the past fiscal year in fulfillment of the responsibilities reserved to us by article 2403 of the Italian Civil Code. The Board of Auditors participated in the meetings and conferences of the Board of Directors, performed in respect for the legislative and statutory laws that regulate its operations. We have obtained the information requested regarding the general progress of operations and their predictable evolution, as well as information regarding featured operations performed by the company and companies under its control. In particular, the Board has overseen that all actions performed remain in conformity with the Law and Company Bylaws, and are not demonstrably ill-advised, risky, in potential conflict of interest or in opposition to resolutions made, or could in any other way compromise the integrity of company assets. The Board, in its supervisory activities, kept close contact with the audit firm PriceWaterhouseCoopers SpA, responsible for the audit of financial statements for our accounts. The Board of Auditors, in its supervisory activities, performed its control and consultation duties, actively participated in meetings of the Board of Directors and in meetings with the administrative and financial directors of the Cooperative, and provided consultation to supervisory committees on specific company problems. Last year, in support of the almost complete internal company reorganization by geographic sector and area, we met with different sector managers to control the evolution of administrative efficiency in the company’s different “business units”. In these meetings, we noted the growing degree of professionalism shown by managers, increased education of staff, and manager involvement in dynamic organization of several sectors. Young and motivated staff create a satisfying and appreciative environment. We also acknowledge the administrative efficiency that we noticed during these meetings, indispensable for the comprehension of the Cooperative’s central and peripheral organization. These meetings allowed the controlling committee to express judgments and suggestions in the most opportune office, that of the Board of Directors. Proof of consolidated efficiency is revealed in the different financial, equity, and economic indicators of the company, reported in the balance sheet dossier submitted for your approval. During the fiscal year ending on 31/12/2007, our activity was inspired by the Behavior Rules for the Board of Auditors recommended by the National Council of Accountants and Tax Advisers. Therefore, in the fiscal year specific to the supervisory activities devolved to us, we have acquired knowledge of and supervised the appropriateness of the company organization; we acknowledge

that the supervisory managers, the Council members invested with powers to supervise internal control of management, have openly collaborated with the Board of Auditors and provided the Board with the appropriate information regarding different problems that mark the progress of the Cooperative. As always, collaboration between the Board of Auditors, the administrative body and general Management has continued. This has allowed us to elaborate upon our knowledge of the company organization in sectors in which this relationship exists, and thus perform our own supervisory activity with mindful certainty. This year, the Board also thanks Accountant Massimo Continati and his close administrative collaborators for their proactive collaboration and availability and collaboration offered to the Board of Auditors. This allowed us to obtain the necessary information requested in real time. Evaluating and supervising the appropriateness of the administrative and accounting system, as well as the reliability of the latter to correctly represent the facts of management, we have obtained a flux of information from office mangers and through examination of company documents. During the past year, accusations pursuant to article 2408 of the Italian Civil Code were not received by the Board of Auditors. As described above, no other significant facts emerged from supervisory activities that would require being mentioned in this report. As per our responsibility, we examined the balance sheet for the fiscal year ending on 31/12/2007. We were not asked to perform an analytical inspection of the content of the balance sheet, but we did supervise the general arrangement of the same and its general conformity to the law pertaining to formation and structure. With regard to this, we have no particular observations to report. To the best of our knowledge, the Directors, in drafting the balance sheet, have not departed from the law in accordance with article 2423, fourth paragraph, of the Italian Civil Code. We have verified that the balance sheet corresponds to facts and information we are aware of, in performing our duties With regard to this, we

100

annual accounts

2007

have no observations to report. We have verified that laws were observed during the preparation of the annual report and with regard to this, we have no particular observations to report. The same is also valid regarding the content of the Explanatory Notes that are expressed clearly and comprehensibly to the company body and to third parties, and that takes in the further information required by the law and specific rules regarding production and work oriented cooperative societies and, in their absence, those regarding joint stock companies. In accordance with article 2426 of the Italian Civil Code we express our consent to record the following assets in the balance sheet: Research, development, and advertising costs; while, already, the “start-up” and “costs of installation and expansion” entries have been reset for depreciation. The Explanatory Notes specify the criteria followed for these entries regarding the depreciation policy according to a plan programmed with the allowed criteria. In accordance with article 2 of Law 59/92 the Board of Auditors acknowledges that during the past year, in fulfillment of their duties, the directors have operated and managed the company in pursuit of the company’s goals according to the cooperative’s mutual principles. The Annual Report takes into account the requirements of article 2428 number 6 bis of the Italian Civil Code. Dear Shareholders, in light of what is put forth above, we express our favorable opinion towards approval of the 31/12/2007 balance sheet, as well as the proposal made by the Board of Directors regarding the destination of operating profits.

Concordia sulla Secchia, 04 June 2008 THE BOARD OF AUDITORS Pelliciardi Dott. Carlo Alberto (President) Ascari Rag. Fausto Casari Dott. Mauro

certification report

101

certification UNI EN ISO 9001:2000

102

annual accounts

2007

CPL CONCORDIA Soc. Coop. Via A. Grandi 39 - 41033 Concordia s/S. (MO) Italy tel. +39.535.616.111 - fax +39.535.616.300 info@cpl.it - w w w . c p l . i t

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CPL CONCORDIA è un’azienda sostenitrice di UNICEF