half-yearly financial report at 30 june …. +39 0522 9433 fax +39 0522 944044 share capital: €...

Half-yearly financial report – H1 2012 ________________________________________________________________ 1

HALF-YEARLY FINANCIAL REPORT AT 30 JUNE 2012

(Translation of the Italian original which remains the definitive version)


CONTENTS

1. GENERAL INFORMATION

1.1. Corporate officers and information 1.2. Group Structure 1.3. Landi Group Financial Highlights 1.4. Significant Events During the Six Months

2. INTERIM REPORT ON OPERATING PERFORMANCE

2.1. Macroeconomic context and reference market 2.2. Company development 2.3. Innovation, industrial research and development 2.4. Human Resources, training and safety at work 2.5. Operating performance 2.6. Landi Renzo and the financial markets 2.7. Policy for analyzing and managing risks connected with the activities of the Group 2.8. Other information 2.9. Significant events after closing the six-month period and forecast for operations.

3. ABBREVIATED SIX-MONTHLY INTERIM CONSOLIDATED FINANCIAL STATEMENTS AS AT 30 JUNE

2012

3.1. CONSOLIDATED STATEMENT OF FINANCIAL POSITION 3.2. General consolidated Income Statement 3.3. Consolidated cash flow statement 3.4. Consolidated statement of changes in Equity

4. EXPLANATORY NOTES TO THE ABBREVIATED SIX-MONTHLY CONSOLIDATED FINANCIAL STATEMENTS AS AT 30 JUNE 2012

4.1. General information 4.2. General preparation criteria and Consolidation Principles 4.3. Consolidation scope 4.4. Explanatory notes to the consolidated financial statements

5. Declaration of the abbreviated consolidated half-yearly financial statements pursuant to art. 154-bis,

subsections 3 and 4, of Legislative Decree 58/1998 6. Auditors' Report


1. GENERAL INFORMATION

1.1. CORPORATE OFFICERS AND INFORMATION

Board of directors

Chairperson of the board of directors Stefano Landi

Director - Honorary Chairperson Giovannina Domenichini

Chief Executive Officer Claudio Carnevale

Executive Director Carlo Alberto Pedroni

Director Carlo Coluccio

Independent Director Alessandro Ovi (*)

Independent Director Tomaso Tommasi di Vignano

Board of Statutory Auditors

Chairman of the Board of Statutory Auditors Luca Gaiani

Standing Auditor Massimiliano Folloni

Standing Auditor Marina Torelli

Alternate Auditor Filippo Nicola Fontanesi

Alternate Auditor Filomena Napolitano

Control and Risks Committee

Chairman Carlo Coluccio

Member of the Committee Alessandro Ovi

Member of the Committee Tomaso Tommasi di Vignano

Committee for Remuneration

Chairman Carlo Coluccio



Committee for Transactions with Related Parties



Surveillance Body pursuant to Legislative Decree 231/01

Chairman Daniele Ripamonti

Member of the Body Domenico Aiello

Member of the Body Enrico Gardani

Independent Auditors

KPMG S.p.A.

(*) The Director also holds the office of Lead Independent Director


Registered office and parent details

Landi Renzo S.p.A.

Via Nobel 2/4

42025 Corte Tegge – Cavriago (RE) – Italy

Tel. +39 0522 9433

Fax +39 0522 944044

Share capital: € 11,250,000 Tax No. and VAT No. IT00523300358 This report is available on the website

www.landi.it


1.2. GROUP STRUCTURE

Company Name Registered Office Share capital

Direct investment

Indirect investment

Landi Renzo S.p.A. Cavriago (RE) EUR

11,250,000 Parent

Company

Landi International B.V. Utrecht (The Netherlands) EUR

18,151 100.00%

Eurogas Utrecht B.V. Utrecht (The Netherlands) EUR

36,800 100.00% (*)

Landi Renzo Polska Sp.Zo.O. Warsaw (Poland) PLN 50,000 100.00% (*)

LR Industria e Comercio Ltda Espirito Santo (Brazil) BRL 4,320,000 99.99%

Beijing Landi Renzo Autogas System Co. Ltd Beijing (China) USD

2,600,000 100.00%

L.R. Pak (Pvt) Limited Karachi (Pakistan) PKR 75,000,000 70.00%

Landi Renzo Pars Private Joint Stock Company Teheran (Iran) IRR 8,753,640,000 75.00%

Landi Renzo RO srl Bucharest (Romania) RON

20,890 100.00%

LandiRenzo VE C.A. Caracas (Venezuela) VEF 244,000 100.00%

Landi Renzo USA Corporation Wilmington - DE (USA) USD

18,215,400 100.00%

Baytech Corporation Los Altos - CA (USA) USD

5,000 100.00% (+)

AEB S.p.A. Cavriago (RE) EUR

2,800,000 100.00%

AEB America s.r.l. Buenos Aires (Argentina) ARS 2,030,220 96.00% (§)

Lovato Gas S.p.A. Vicenza EUR

120,000 100.00%

Lovato do Brasil Ind Com de Equipamentos para Gas Ltda (^)

Curitiba (Brazil) BRL 100,000 100.00% (#)

Officine Lovato Private Limited Mumbai (India) INR 20,000,000 100.00% (#)

Detailed notes on investments:

(*) held by Landi International B.V.

(+) held by Landi Renzo Usa Corporation

(§) held by AEB S.p.A.

(#) held by Lovato Gas S.p.A.

(^) not consolidated because not significant

The structure of the Landi Group has not changed compared with 31 December 2011.


1.3. LANDI GROUP FINANCIAL HIGHLIGHTS

1.3. LANDI GROUP FINANCIAL HIGHLIGHTS


(Amounts in thousands of Euros) 6 MONTHS QUARTER

2011 2012 2011 Var. Diff. % Q2 2012 Q2 2011 Var. Diff. %

INCOME STATEMENT

253,529 Net Revenues 139,155 127,743 11,412 8.9% 79,557 80,575 -1,018 -1.3%

19,477 Gross Operating Profit 15,885 10,885 5,000 45.9% 10,267 11,996 -1,729 -14.4%

-3,260 Operating Profit 6,736 1,797 4,939 274.8% 5,661 6,789 -1,128 -16.6%

-8,213 Result Before Tax 4,902 -1,748 6,650 n.a. 5,594 4,634 960 20.7%

-9,138 Net Result for the Group 2,606 -2,397 5,003 n.a. 3,398 2,926 472 16.1%

7.7% Gross Operating Profit/Net Revenues 11.4% 8.5% 12.9% 14.9%

-1.3% Operating Profit/Net Revenues 4.8% 1.4% 7.1% 8.4%

-3.6% Net Group Result/Net Revenues 1.9% -1.9% 4.3% 3.6%

CONSOLIDATED BALANCE SHEET

INVESTED CAPITAL

143,974 Net tangible and other non-current assets 140,215 147,865

103,188 Working Capital (1) 90,487 95,190

-20,046 Non-current liabilities (2) -19,290 -20,410

227,116 NET CAPITAL EMPLOYED 211,412 222,645

SOURCES

90,112 Net financial position (opening cash) 71,565 80,394

137,004 Equity 139,848 142,251

227,116 BORROWINGS 211,412 222,645

MAIN INDICATORS

40.7% Working Capital/Turnover (rolling) 34.2% 36.9%

65.8% Net Financial Debt / Equity 51.2% 56.5%

11,992 Gross tangible and intangible investments 6,428 6,320

866 Personnel (peak) 860 884

(1) This is calculated as the difference between Trade Receivables, Inventories, Other Current Assets and Trade Payables, Tax liabilities, Other Current Liabilities;

(2) These are calculated by totaling Deferred Tax Liabilities, Defined Benefit Plans and Provisions for Risks and Charges;


1.4. SIGNIFICANT EVENTS DURING THE SIX MONTHS

April On 24 April 2012 the Shareholders' Meeting resolved, amongst other things, the following:

Covering of the loss for the year posted by Landi Renzo S.p.A. equal to € 8,529,753.47 through

use of the Extraordinary Reserve.

renewal of authorization for the purchase and disposal of treasury shares;

April In April 2012 the subsidiary Landi Renzo USA obtained EPA approval for the conversion of

Ford F-series Medium Duty Vehicles including F-250/F-350 2WD /4WD pickup variants, which

use CNG systems.

May In May 2012 Landi Renzo S.p.A. proposed, with completion in the following July, rental - with

conditional purchase - of the former SAFE business unit from Agave S.r.l. in arrangement with

creditors.

The aim of this transaction, strategic for the expansion of the industrial offer and know-how, is to

relaunch the SAFE brand, known for more than 35 years in the gas treatment compressor

manufacturing sector and active in the main business areas related to compressed natural gas

(systems for the supply of CNG for vehicles)), in Oil and Gas (compressors and auxiliary systems

for processing gas from extraction to distribution), and in systems for the processing of

biomethane, hydrogen, and liquefied natural gas.

The purchase of the business unit is subject to the approval of the agreement with creditors.


2. INTERIM REPORT ON OPERATING PERFORMANCE

This consolidated half-yearly financial report at 30 June 2012 was prepared pursuant to Legislative Decree 58/1998 and subsequent modifications, as well as by the Issuer Regulations issued by CONSOB.

This Report has been prepared in accordance with International Financial Reporting Standards (“IFRS”) issued by the International Accounting Standards Board (“IASB”) and endorsed by the European Union, and has been prepared in accordance with IAS 34 - Interim Financial Reporting, applying the same accounting policies as adopted in preparing the consolidated financial statements at 31 December 2011. In partial exception to the provisions of IAS 34, this report provides detailed rather than synthetic schemes in order to provide a clearer view of the economic-patrimonial and financial dynamics that occurred over the six-month period. The explanatory notes are also presented in compliance with the information required by IAS 34 with the supplements considered useful for a clearer understanding of the half-yearly financial statements.

The consolidated financial statements of the Landi Group at 30 June 2012 close with a net profit for the Group of

€ 2,606 thousand, compared with a loss for the Group of € -2,397 in the first half of 2011.

Revenues (goods and services) amounted to € 139,155 thousand, up by 8.9% compared with the same period in

2011.

The gross operating profit (EBITDA) is equal to € 15,885 thousand, compared with € 10,885 in June 2011, an

increase of 45.9%.

The operating profit (EBIT) is equal to € 6,736 thousand, compared with € 1,797 in 2011, an increase of 274.8%.

The net financial position at 30 June 2012 is negative for € 71,565 thousand, while at 30 June 2011 it was negative

for € 80,394 thousand.

In the second quarter of this year the Landi Group achieved revenues of € 79,557 thousand, an increase of €

19,959 thousand compared with the first quarter of 2012 (+33.5%).

The Group's net profit for the second quarter was € 3,398 thousand, an increase of 16.1% compared with the

second quarter of 2011.

2.1. MACROECONOMIC CONTEXT AND REFERENCE MARKET

In the early months of 2012, world economic activity, although hampered by stagnation in Europe and the

slowdown in the U.S. and emerging economies, showed some acceleration expanding at a moderate pace, while

international trade showed general signs of recovery.

From April 2012 the economic environment weakened again, conditioned by uncertainty on the evolution of the

sovereign debt crisis in the Euro zone and fiscal policy in the United States, although there was an attenuation of

inflationary pressures due to the decline in the prices of raw materials. According to the latest projections by the


International Monetary Fund (IMF), released in July 2012, global growth this year is expected to fall to 3.5%

(from 3.9% in 2011), held back by the fall in business in the Euro zone and a slowdown in emerging markets.

The signs of a slowdown arriving from the Eurozone are compounded by the volatility in financial markets,

characterized by a considerable increase in aversion to riskier assets.

At a global level, however, the trend in the car market is positive. Registrations of new cars actually increased

worldwide by 6.6% in the first half of 2012, mainly due to the growth seen in the United States, as well as in

China, India and Russia and to the recovery of the Japanese market.

The positive trend in this auto market, however, does not seem to reach the Euro zone countries where, during

the first six months of the year, there was a decline in registrations of 6.8% (according to data released by ACEA

– Association des Constructeurs Européens d’Automobiles) compared with the same period last year, although with

differing trends among the major countries. The exact figure just for the month of June showed a decrease

limited to 2.8%.

Amidst this economic uncertainty, registrations of new cars in Italy during the first half of 2012 showed a

decrease of 19.7% compared with the same period last year, despite a significant increase in registrations of cars

powered by LPG, up from 2.82% of total registrations in 2011 to 7.52% in 2012, as well as the registration of

CNG-powered cars, which increased from 1.94% in 2011 to 3.56% in 2012.

The Landi Group, in the macroeconomic context described above, was able to follow the growth trend of its own

business sector, although in a declining Italian and European auto market, while at the same time grabbing some

of the opportunities offered by the worldwide automotive market.

The commercial strategy of the Landi Group focused on the one hand on strengthening relations with major

OEM players in the European market and on the other, in driving sales in the After Market channel, especially in

emerging markets, such as Asia and Latin America where, increasingly, policies are implemented for

diversification of energy sources favoring the use of natural gas for vehicles.

2.2. COMPANY DEVELOPMENT

A leader in sustainable mobility since 1954, Landi Renzo holds about a 30% share of the world market for gas

fuel supply systems for motor vehicles, a sector that currently operates in a fleet of more than 30 million LPG or

CNG vehicles, a number that confirms the absolute primacy of technologies of this sector to promote ecological

mobility.

In recent years, technological innovation and continuous research have made Landi Renzo a prestigious brand

worldwide, increasingly aimed at the development of new expertise and functional choices in the context of a

strategy of growth and internationalization.

The continuous technological and quality development of its products, characterized by the combination of

seeking excellence in production, a flexible approach to the customer, and the international vocation (as


demonstrated by the direct presence in key markets and indirect presence in more than 50 countries), are the

cornerstones underlying the company's success.

A key element of this strategy has been the ability to identify, with precise timing, each region capable of

expressing sales potential of innovative technologies for gas fuel supply systems.

With regard to the business sectors, alongside the historic After Market channel (retailers and importers), the

Group has also expressed its leadership through its collaboration with leading car manufacturers (Original

Equipment Manufacturing or “OEM” customers) worldwide, providing systems and installation services while

constantly monitoring quality at the critical stages of the production process.

During the first half of 2012, the Group finalized the development of dual fuel technology (diesel and CNG mix)

and continued with the HERS project (hybrid electric vehicles already on the road), showing its constant cutting

edge proposals for the use of energy sources with a lower environmental impact.

With regard to expansion of the product range, aimed at completing its offer and capacity for partnerships with

industrial and institutional partners, in July 2012 the Group expanded its business perimeter by renting a

business unit with subsequent conditional purchase, of the company Agave S.r.l. (formerly SAFE) operating in

the production of compressors for treatment of gases for multiple applications.

In the first half of 2012, the Group further strengthened its internationalization strategy, consolidating its

presence in the markets of the BRIC and neighboring countries, which are characterized by an increasing use of

CNG vehicles in the presence of substantial reserves of natural gas and government incentive policies.

2.3. INNOVATION, INDUSTRIAL RESEARCH AND DEVELOPMENT

During the first half of 2012, research continued on innovative technologies and development of fuel supply

systems that can contribute to reducing emissions of pollutants and greenhouse gases (CO2).

In particular, the Group introduced its new range of After Market CNG and LPG conversion kits to the market,

consisting of a series of new components developed during the previous year such as injectors, gearboxes,

electronic and multi-valve power units. The success of the sale of these kits supported further development

activities aimed at expanding the range of new products for the conversion of all types of vehicles. In this

context, the first conversion kits for direct injection petrol engines were recently presented: this type of engine,

increasingly widespread on the market, is characterized by the fact that the fuel is injected directly into the

combustion chamber with consequent optimization in terms of consumption and performance.

The guidelines used for the development of applications intended for direct injection engines are the same as

those used for adapting gas fuel supply systems to all the technological innovations that car manufacturers

introduce regarding the operation and control of the engine, including those of the latest generation.

With regard to collaboration with auto manufacturers, the first half of the year was characterized by the

development of systems to be applied to new car models for CNG and LPG supply, in order to complete the

entire range aimed at customers.


Studies on the dual fuel diesel-CNG combustion process were continued, after the first approvals obtained in

2011, toward increasingly complex types of engines and applications, with particular reference to the buses used

in public transport as well as small goods vehicles. Thanks to this innovative dual fuel system it is now possible

to apply a dual diesel/CNG fuel supply, capable of reducing polluting emissions and running costs. The system

developed by the Landi Group allows CNG to be mixed with diesel, guaranteeing driving performances similar

to those obtained by full diesel engines. In this way, the system increases the fuel distance of vehicles, with

significant savings on consumption, and allows dual fuel supply to be reversed to diesel only at any time.

Research activities on new technologies are being continued both at the Cavriago headquarters and in the

branches, and were demonstrated during an event held at the new Research and Development Center in June

2012, at the same time as the NGV 2012 fair in Bologna.

On this occasion, a group of customers selected from around the world were able to test some of the

technologies recently implemented or under development on vehicles at their disposal, including systems for

direct injection vehicles, dual-fuel engines for ecological fleets, and applications for hybrid-electrical vehicles.

2.4. HUMAN RESOURCES, TRAINING AND SAFETY AT WORK

Human resources

The total number of employees of the Landi Group at 30 June 2012 was 860 units compared with 866 at 31

December 2011, an overall decrease of 6 units during the six-month period.

The following table lists the number of employees in the workforce.

Company 30/06/2012 31/12/2011 30/06/2011

Landi Renzo S.p.A. 359 363 369

A.E.B. S.p.A. 189 172 181

Lovato Gas S.p.A. 107 108 105

Foreign companies 205 223 229

Total 860 866 884

The number of employees compared with the first half of 2011 shows a decrease of 24 units, mainly because of

the reduction in the number of employees at foreign subsidiaries in Iran and Pakistan.

Training

Landi Renzo believes that the training of human resources represents a fundamental investment for the

development of company activities and, for this purpose, promotes the sharing of business know-how between

employees through training initiatives put forward by “LANDIRENZO Corporate University”.


The 2012 training plan is aimed at strengthening technical and managerial skills, as well as updating and

qualification of human resources. During the first half of 2012, more than 750 hours of training were carried out

with a strong focus on the issue of safety in the context of the new State-Region Agreement.

As regards the activity for discovering and promoting new talents, the companies of the Landi Group continued

to host students coming from university and post-university specialization paths, involved internships and

company field projects in Research and Development, Commercial and Business Development areas.

In the area of installer training, the R&D function and the Corporate University worked in close contact with

important results: 250 hours of training with more than 450 installers trained throughout the national territory.

Another important goal was attained by the Corporate University thanks to the issue of the first two books in

the series of publications created in collaboration with the Group Il Sole24Ore: “Landi Renzo and Sustainable

Mobility” and “Eco & Green Car, A guide to the ecological and sustainable car”.

Health, Safety and Environment

The Landi Group, which has always been active regarding safety in the workplace, is subject to the regulatory

principles pursuant to Legislative Decree no. 81 of 9 April 2008 regarding safety in the workplace.

On the strength of its OHSAS 18001:2007 certification, the Group continued with its activity of spreading

knowledge on safety and risk prevention in the workplace, also through innovative internal communication

systems for improved communication of the main standards and conduct regarding safety in the workplace.

Aware that environmental protection is one of the factors on which our future depends, the Group, in line with

its corporate mission, considered its commitment in this area within its own structures to be important,

spreading information on ecological topics in order to educate towards sustainable behavior while monitoring

the environmental impacts associated with its activities. Against this background, projects were started up for

the implementation of the Environmental Management System and ISO 14001 Certification, and to update the

Organization and Control Model pursuant to Legislative Decree 231/2001.

2.5. OPERATING PERFORMANCE

Consolidated results

In the first half of 2012, the Landi Group achieved revenues of € 139,155 thousand, an increase of 8.9% over the

previous year.

Gross operating profit amounted to € 15,885 thousand (+45.9%), while there a net profit for the Group equal to €

2,606 thousand was recorded, compared with a net loss of € -2,397 thousand in the first half of 2011.

The figures for the six-month period show a strong improvement in the results achieved for the second quarter

of 2012 in terms of both turnover and profit compared with the first quarter.


The following table shows the evolution of the main economic performance indicators divided by six-month

period.

(thousands of Euros) H1 2012 % H2 2011 % H1 2011 %

Revenues (goods and services) 139,155 125,786 127,743

Other Revenue and Income 959 968 678

Operating costs -124,229 -89.3% -118,162 -

93.9% -117,536 -92.0%

Gross Operating Profit 15,885 11.4% 8,592 6.8% 10,885 8.5%

Amortization, depreciation and impairment losses -9,149 -6.6% -13,649 * -

10.9% -9,088 -7.1%

Operating Profit 6,736 4.8% -5,057 -4.0% 1,797 1.4%

Financial income 352 0.3% 211 0.2% 271 0.2%

Financial expenses -2,177 -1.6% -2,010 -1.6% -1,600 -1.3%

Exchange rate gains and losses -9 0.0% 391 0.3% -2,216 -1.7%

Profit (Loss) before tax 4,902 3.5% -6,465 -5.1% -1,748 -1.4%

Taxes -2,177 -1.6% -19 0.0% -907 -0.7%

Net profit (loss) for the Group and minority interests, including: 2,725 2.0% -6,484 -5.2% -2,655 -2.1%

Minority interests 119 0.1% 257 0.2% -258 -0.2%

Net Profit (Loss) of the Group 2,606 1.9% -6,741 -5.4% -2,397 -1.9%

* of which € 4,316 thousand relates to writedowns of tangible and intangible assets.

The increase in revenues recorded in the first half of 2012 compared with the same period in 2011 is primarily

due - while taking account of the negative trend of the South-West Asian market reasons that will be discussed

later - to the significant progress recorded in the Italian market (+96.7%) and in the European market (+35.8%)

and to the positive growth of the markets in the rest of the world (+11.8%).

In further detail, two macro elements can be highlighted that generated this positive performance compared to

last year:

the increase in registrations of LPG and CNG vehicles in Italy and Europe on EuroV engines;

the significant recovery in motor vehicle conversions in the After Market, favored mainly by the increase in

the price of traditional fuels, especially in Italy, and also as a result of the positive trend in demand in far east

countries and in some Latin American countries where the Group is increasing its penetration.

Breakdown of sales by business segment


Q2 2012 v. Q2 2011

(Thousands of Euros) Q2 2012 % of

revenue Q2 2011

% of revenue

Change %

Gas sector - LPG line 55,761 70.1% 35,254 43.8% 20,507 58.2%

Gas sector - CNG line 19,876 25.0% 41,751 51.8% -21,875 -52.4%

Total revenues - GAS sector 75,637 95.1% 77,005 95.6% -1,368 -1.8% Other (Alarm systems, Sound, Aquatronics and Robotics) 3,920 4.9% 3,570 4.4% 350 9.8%

Total revenues 79,557 100.0% 80,575 100.0% -1,018 -1.3%

H1 2012 v. H1 2011

(Thousands of Euros) At 30/06/12 % of

revenue At 30/06/11

% of revenue

Change %



Total revenues - GAS sector 132,073 94.9% 121,098 94.8% 10,974 9.1% Other (Alarm systems, Sound, Aquatronics and Robotics) 7,082 5.1% 6,645 5.2% 438 6.6%

Total revenues 139,155 100.0% 127,743 100.0% 11,412 8.9%

Revenues from sales of products and services in the GAS segment increased over the six months in question

from € 121,098 thousand in the first half of 2011 to € 132,073 thousand in the first half of 2012, recording an

increase of 9.1%. The increase (+ 54.9%) in six-monthly sales in the gas sector – LPG line was generated mainly

by the European markets, and in particular by the Italian market where there was a strong increase in demand

in both the OEM and After Market sectors, also favored by the increase in the price of traditional fuels (Petrol and

Diesel) recorded in the first part of 2012, as well as by the increasing interest regarding environmental and

energy issues. Sales in the gas segment - CNG line, on the other hand, dropped by 35.5% compared with the

first half of 2011, mainly due to the contraction of the market recorded in South-West Asia. This downturn can

be ascribed on the one hand to the significant slowdown in the Iranian market, which is suffering under trade

and financial restrictions as a result of the increasingly stringent embargo, and on the other to the contraction of

the Pakistani market as a result of unfavorable regulations.

Revenues from the sales of products in the Alarms, Sound and Other sector increased by 6.6% from € 6,645

thousand to € 7,082 thousand.

Revenues from sales of products and services in the GAS segment for the quarter in question decreased, overall,

from € 77,005 thousand in the second quarter of 2011 to € 75,637 thousand in the second quarter of 2012,

recording a decrease of 1.8%.


Within the Gas segment, revenues from the sale of LPG systems increased 58.2% from € 35,254 thousand to €

55,761 thousand. On the other hand, revenues from the sale of CNG systems dropped 52.4% from € 41,751

thousand to € 19,876 thousand.

Based on these figures, and given the little materiality of Alarm Systems, Sound and Other sales, the Landi

Group's sole business segment can be considered to be the “Gas Segment” for the production of LPG and CNG

fuel supply systems. Considering that the principal source of risks and benefits is connected with the activity

carried out and that the structure of the internal reporting uses a single activity segment, it is not considered

necessary to provide further specifications regarding the Gas Sector since it coincides substantially with that of

the entire company.

Geographical distribution of sales

Q2 2012 v. Q2 2011

(Thousands of Euros) Q2 2012 % of

revenue Q2 2011

% of revenue

Change %

Italy 24,589 30.9% 14,000 17.4% 10,589 75.6%

Europe (excluding Italy) 27,481 34.5% 20,727 25.7% 6,754 32.6%

South-west Asia 5,589 7.0% 19,295 23.9% -13,706 -71.0%

America 8,903 11.2% 14,912 18.5% -6,009 -40.3%

Rest of the World 12,995 16.3% 11,641 14.4% 1,354 11.6%

Total 79,557 100% 80,575 100% -1,018 -1.3%

H1 2012 v. H1 2011


revenue At 30/06/11

% of revenue

Change %

Italy 42,954 30.9% 21,832 17.1% 21,122 96.7%


South-west Asia 12,393 8.9% 35,171 27.5% -22,778 -64.8%

America 17,174 12.3% 18,233 14.3% -1,059 -5.8%

Rest of the World 21,730 15.6% 19,439 15.2% 2,291 11.8%

Total 139,155 100% 127,743 100% 11,412 8.9%


Analyzing the geographical distribution of revenues, during the first half of 2012 the Landi Group realized

69.1% (82.9% at 30 June 2011) of its consolidated revenues abroad (32.3% in Europe and 36.8% outside Europe).

The Italian market, in the six-month period, grew by 96.7% compared with the same period of the previous year

and revenues stood at € 42,954 thousand. This increase was generated by the increase in the demand for cleaner

and cheaper fuels (LPG and CNG) and by the full availability, from the start of the year, of the product range for

the OEM channel, completely renewed with systems that comply with the requirements of the Euro V standard

currently in force. Indeed, even in the context of an automobile market in steep decline (814,132 registrations in

the first half of 2012, in other words -19.7% compared with first half of 2011 - data source UNRAE) the sales mix

of new cars equipped with LPG and CNG systems increased in significantly (from 4.76% in the first half of 2011

to 11.08% in the first half of 2012), generating a positive effect on the volumes and revenues recorded in the first

part of the year.

The After Market conversions market in Italy has also developed significantly: the data processed by the Ecogas

consortium show the number of conversions in the first half of 2012 as 101,884, a strong increase (+45%)

compared with the same period of the previous year when they amounted to 70,143. The Landi Group's share of

the national market on the After Market channel in the first half of 2012 was close to 28.5%.

The trend in revenues in Europe increased by 35.8% compared with first half of 2011: Group sales benefited both

from the growth of the main markets in this geographical area, and from the positive effect generated by the

market launch of a completely renovated product range for the After Market channel. We point out that there

were significant increases in sales in Eastern European countries, with excellent performances in Poland and

Romania, as well as in Western Europe - in particular France.

The South West Asian market, as already shown in the first quarter of 2012, recorded a downturn in sales of

64.8% compared with the same period in 2011, primarily due to a serious slowdown in the Iranian and Pakistani

markets

A decrease of 5.8% was recorded in the American markets compared with the same period last year, while the

markets in the Rest of the World recorded an increase of 11.8% as a result of the positive trend in demand in

Thailand and the good performance of the Indian market, where the Group recently signed a preliminary

agreement to set up a Joint Venture with a local partner operating in the automotive sector.

Profit

Over the six-month period the Gross Operating Profit (GOP) of the Landi Group was positive for € 15,885

thousand (11.4% of turnover), an increase of 45.9% compared with value recorded for the same in 2011 (8.5% of

turnover). This increase can be ascribed to the elements summarized below:

increase in sales volumes and turnover;

productive optimizations to reduce the incidence of costs of materials achieved through rationalization of


supplies and better industrialization of the products;

activities for the reduction and rationalization of structural costs already in operation during the previous

year.

Operating Profit was equal to € 6,736 thousand, compared with € 1,797 thousand in the first half of 2011, after

taking account of the depreciation and amortization of tangible and intangible fixed assets for € 9,149 thousand,

compared with depreciation and amortization of € 9,088 thousand recorded in the same period of 2011.

The result before tax was positive and equal to € 4,902 thousand compared with a pre-tax loss of € -1,748

thousand recorded in the first half of the previous year.

The Net Result of the Group for the first half of 2012 showed a profit of € 2,606 thousand, compared with a

negative net result for the first half of 2011 equal to € -2,397.

The following table is included to provide a clearer representation and to understand the positive trend of the

key performance indicators of the Group, analyzed by quarters with the same consolidation scope.

CONSOLIDATED INCOME STATEMENT

Q2 2012 % Q1 2012 % Q4 2011 % Q3 2011 % (thousands of Euros)

Revenues (goods and services) 79,557 59,598 63,390 62,396

Gross Operating Profit 10,267 12.9% 5,618 9.4% 3,473 5.5% 5,119 8.2%

Operating Profit 5,661 7.1% 1,075 1.8% -1,265 -2.0% -3,792 -6.1%

Profit Before Tax 5,594 7.0% -692 -1.2% -2,230 -3.5% -4,235 -6.8% Net profit (loss) for the Group and minority interests 3,547 4.5% -822 -1.4% -1,271 -2.0% -5,213 -8.4%

Note that the results obtained in the second quarter of 2012 as well as showing a significant increase in turnover

of € 19,959 thousand compared with the first quarter of 2012, also record an improvement in gross operating

profit, 12.9% of turnover, a significant increase compared with trend in recent quarters.

More particularly, the economic results of the second quarter show:

- consolidated EBITDA up by 82.7% compared with the previous quarter and which has almost trebled

compared to the last quarter of 2011;

- a net result of € 3,547 thousand that follows the same positive trend - the first result in profit after three

quarters closed with a net loss.

Net financial position

Financial Position (thousands of Euros) 30/06/2012 31/03/2012 31/12/2011 30/06/2011

Trade receivables 92,708 82,855 77,790 80,298

Inventories 79,028 72,052 67,408 74,079

Trade Payables -86,419 -56,567 -55,964 -76,005


Other current 5,170 13,030 13,954 16,818

Net operating capital 90,487 111,370 103,188 95,190

Property, plant and equipment; 33,341 32,994 35,096 37,156

Intangible assets 92,690 93,986 95,434 100,818

Other non-current assets 14,184 13,894 13,444 9,891

Fixed capital 140,215 140,874 143,974 147,865

TFR and other provisions -19,290 -19,723 -20,046 -20,410

Net capital employed 211,412 232,521 227,116 222,645

Financed by:

Net Financial Position 71,564 96,549 90,112 80,394

Group shareholders’ equity 139,068 135,344 136,266 141,804

Minority interests 780 628 738 447

Borrowings 211,412 232,521 227,116 222,645

Indices 30/06/2012 31/03/2012 31/12/2011 30/06/2011

Net operating capital 90,487 111,370 103,188 95,190

Net operating capital/Turnover 34.2% 41.9% 40.7% 36.9%

Net capital employed 211,412 232,521 227,116 222,645

Net capital employed/Turnover 79.8% 87.4% 89.6% 86.3%

Net Financial Position (thousands of Euros) 30/06/2012 31/03/2012 31/12/2011 30/06/2011

Cash and cash equivalents 24,978 23,568 20,059 24,557

Bank overdrafts and short-term loans -65,978 -81,891 -69,878 -50,996

Short-term loans -74 -125 -125 -252

Net short term indebtedness -41,074 -58,448 -49,944 -26,691

Medium-Long term loans -30,491 -38,101 -40,168 -53,703

Net medium-long term indebtedness -30,491 -38,101 -40,168 -53,703

NET FINANCIAL POSITION -71,565 -96,549 -90,112 -80,394

The net financial position at 30 June 2012 is negative for € 71,565 thousand compared with a negative net

financial position at 31 March 2012 equal to € 96,549 thousand (negative and equal to € 80,394 thousand at 30

June 2011).


The significant reduction in debt, which dropped in the quarter by € 24,984 thousand, is a result of greater

profits produced and the change in net working capital, with particular regard to the increase in trade payables.

Net operating capital (€ 90,487 thousand) decreased compared with 31 March 2012, by € 20,883 thousand, while

the percentage indicator, calculated on rolling turnover decreased from 41.9% to 34.2%.

An analysis of the individual items in comparison to the previous quarter shows:

- an increase in trade receivables equal to € 9,853 thousand as a result of increased revenue;

- a greater level of stocks amounting to € 6,976 thousand;

- a significant increase in trade payables of € 29,852 thousand primarily due to the increase in business volumes

as well as to the more favorable contractual conditions agreed with the suppliers;

- a reduction in other current assets of € 7,860 thousand, mostly due to assignment without recourse of the 2011

VAT credit of the parent company.

Net capital employed (€ 211,412 thousand), the fixed portion of which remains substantially unchanged,

decreased compared with 31 March 2012 by € 21,109 thousand, while the percentage indicator, calculated on

rolling turnover decreased from 87.4% to 79.8% .

The following table illustrates the trend of the total cashflow over the last 12 months:

(thousands of Euros) 30-Jun-12 31-Mar-12 31-Dec-11 30-Sep-11 30-Jun-11

Cash flow from (for) operating activities 24,189 -3,657 275 390 5,118

Cash flow from (used in) financing activities -5,693 -2,782 -14,270 -13,759 -9,523

Cash flow from (used in) financing activities -9,677 -2,067 -33,714 -18,952 -19,923

Total cash flow 8,819 -8,506 -47,709 -32,321 -24,328

Cash flow from operational activities at the end of the six-month period was positive for € 24,189 thousand,

showing a strong change of direction compared with the figure at 31 March 2012, when it was negative and

equal to € -3,657 thousand). The policy of investment in assets absorbed financial resources totaling € 5,693

thousand (net of receipts from divestments).

The cash flow for financing activities, negative for € -9,677 thousand, was generated by repayment of loans, net

of new loans totaling € 6,500 thousand.

In addition, the following table lists the amounts by year of expiry of medium/long term loans, equal to € 30,491

thousand.


Year falling due

(thousands of Euros) 2013 - H2 2014 2015

Medium-Long term loans 14,849 13,975 1,667

Investments

Investments in property, plant and equipment were equal to € 4,313 thousand (€ 4,153 thousand at 30 June 2011)

and relate both to the purchase of machinery and production equipment in order to deal with the new

production and business needs.

The increases in intangible assets were equal to € 1,416 thousand (€ 2,293 thousand at 30 June 2011) and relate

primarily to capitalized costs for the development of new products and the costs incurred for the

implementation of management software.

Statement of reconciliation between the data of the Parent Company's financial statements and the data of

the consolidated financial statements

Pursuant to CONSOB Communication no.6064293 of 28 July 2006, a reconciliation statement between the result

for the period and equity of the group with the corresponding values of the Parent Company is provided.

RECONCILIATION STATEMENT (in thousands of €) Equity at

30/06/2012

Result for the year at

30/06/2012 Equity at

31/12/2011

Result for the year at

31/12/2011

Equity and result for the year of the Parent Company 120,638 -108 120,745 -8,530 Difference in value between carrying value ad pro-quota value of the accounting equity of the consolidated companies 21,432 -627 18,225 501

Pro-quota results achieved by investees 0 5,634 0 2,977

Elimination of intercompany dividends 0 -1,999 0 -7,600

Elimination of the effects of intercompany commercial transactions -2,754 -294 -2,258 -164

Elimination of revaluation/write-down of investments 0 0 0 3681

Elimination of the effects of intercompany assets -248 0 -237 0

Accounting for financial leasing operations 0 0 -209 -2

Equity and result for the year from Consolidated Financial Statements 139,068 2,606 136,266 -9,138

Equity and result for the year of minority interests 780 119 738 -1

Equity and result for the year of the Group 139,848 2,725 137,004 -9,139


Performance of the main companies of the Group

Landi Renzo S.p.A. (Parent Company)

In the first six months of 2012 Landi Renzo S.p.A. achieved revenues of € 72,740 thousand, compared with €

59,876 thousand in the first half of 2011, an increase of 21.5%. The increase in turnover can be ascribed primarily

to the increase in sales on the LPG line, primarily in Italy and Europe, achieving significant volumes on OEM

installations, and to consolidation in the After Market sector.

Gross Operating Profit was € 3,183 thousand, compared with a negative result of € 805 thousand at 30 June 2011.

The net financial position at 30 June 2012 is negative and equal to € -64,796 thousand, compared with a negative

net financial position at 31 December 2011 equal to € -87,281 thousand. At the close of the six-month period, the

Parent Company's workforce numbered 359 employees, an increase of 4 units compared with 31 December 2011.

Lovato Gas S.p.A.

The revenues of Lovato Gas dropped from € 33,825 thousand at 30 June 2011 to € 27,466 thousand at 30 June

2012, recording a decrease of 18.8% primarily due to the steep slowdown in the Iranian market, which is

suffering under trade and financial restrictions related to the increasingly stringent international embargo

provisions. The gross operating result of the first half of 2012 was positive and equal to € 3,183 thousand,

compared with a positive gross operating result equal to € 3,896 thousand reported in the first half of 2011. The

net financial position, negative, was € -13,899 thousand at 30 June 2012, compared with € -12,214 thousand at 31

December 2011.

A.E.B. S.p.A.

Revenues of A.E.B. S.p.A. at 30 June 2012 were € 41,957 thousand, including € 13,972 thousand from Group

companies, and were up by 26.4% compared with the same period of the previous year. The gross operating

result was positive and equal to € 7,390 thousand (17.6% of turnover).

The net financial position, positive, was equal to € 1,705 thousand at 30 June 2012 compared with € 4,157

thousand at 31 December 2011, after payment of dividends of € 2,000 thousand to the Parent Company.

The foreign subsidiaries of the Group, whose percentage weight in terms of revenue was 30% lower than

consolidated turnover, recorded an overall positive Gross Operating Profit, influenced to a large extent by the

good performance of the subsidiaries located in Romania and Poland.


2.6. LANDI RENZO AND THE FINANCIAL MARKETS

The Landi Group maintains a constant dialog with its Shareholders through a responsible and transparent

activity of communication carried out by the Investor Relations office with the aim of providing a clear

explanation of the company's evolution. The Investor Relations function is also assigned the task of organizing

presentations, events and “Roadshows” that enable a direct relationship between the financial community and the

Group's Top management. For further information and to consult the economic-financial data, corporate

presentations, periodical publications, official communications and real time updates on the share price you can

visit the Investor Relations section of the site www.landi.it.

The following table summarizes the main share and stock market data for the six-month period.

Share Price and Stock Market Information (source Borsa Italiana S.p.A.)

Price at 2 January 2012 1.265

Price at 29 June 2012 1.35

Maximum price 2012 (02/01/12 - 29/06/12) 2.08

Minimum price 2012 (02/01/12 - 29/06/12) 1.228

Market Capitalization at 30 June 2012 151,875,000

Number of shares representing the share capital 112,500,000

The share capital is made up of 112,500,000 shares with a nominal value of € 0.10 per share, for a total of €

11,250,000.00.

2.7. POLICY FOR ANALYZING AND MANAGING RISKS CONNECTED WITH THE ACTIVITIES OF THE LANDI GROUP

This section provides information on exposure to risks connected with the activities of the Group as well as the

objectives, policies and processes for managing such risks and the methods used to asses and to mitigate them

mitigate them.

The Guidelines for the Internal Control System of the Landi Group defined by the Board of Directors identify the

Internal Control System as a cross-sectional process integrated with all the company activities, based on the

international principles of Enterprise risk management, and in particular on the framework CoSo Report indicated by

the Sarbanes-Oxley Act of 2002 as a reference best practice for the architecture of internal control systems. The

purpose of the Internal Control System is to help the Group to realize its performance and profit objectives, to

obtain reliable economic-financial information and to ensure compliance with the laws and regulations in force,

avoiding damage to the company's image and economic losses. In this process, particular importance is given to

the identification of corporate objectives and the classification and control of the business risks connected to

http://www.landi.it/


them, through the implementation of specific actions aimed at containing such risks. There can be various types

of business risks: strategic, operational (related to the effectiveness and efficiency of business operations),

financial, reporting (related to the reliability of economic-financial information) and, lastly compliance (related to

the observance of the laws and regulations in force, to avoid the company suffering damage to its image or

and/or economic losses). In addition, all these risks can originate within or outside the Group. The exposure of

the Group to the above-mentioned risks has not changed significantly compared with 31 December 2011.

Those in charge of the various branches of company management identify and assess the risks within their

jurisdiction and identify actions to limit and reduce them (so-called “first line control”).

To the above-mentioned activities we can also add those of the Manager in charge of drafting corporate

documents and his staff (so-called “second level control”), the Supervisor for Internal Control (so-called “third

level control”), who continuously monitors the efficiency and effectiveness of the internal control system

through risk assessment activities, the cyclical performance of audit operations and the subsequent management

of follow up.

The results of the risk identification procedures are reported and discussed at the Top Management level of the

Group in order to create the prerequisites for their cover, insurance and for the assessment of the residual risk.

The following paragraphs describe the risks considered to be significant and connected with the activities of the

Group (the order in which they are listed does not imply any indication, either in terms of probability of their

occurrence or in terms of possible impact).

STRATEGIC RISKS

Risks connected with the international expansion strategy

The Group sells its products in more than 50 countries, in 11 of which it operates directly through its own

companies. During these six months, the Group achieved 69.1% of consolidated revenues abroad.

In pursuing its expansion strategy, the Landi Group has invested, and may invest more in the future, also in

countries characterized by considerable instability of their political institutions and/or at the center of situations

of international tension. The above-mentioned strategy could expose the Landi Group to various risks of a

macroeconomic nature, arising, for example, from changes in the political, social, economic and regulatory

systems of such countries or from extraordinary events such as acts of terrorism, civil disorder, restrictions on

trade, sanctions, limitation on foreign investment, nationalization and inadequate protection of intellectual

property rights. The probability of the above mentioned events actually occurring varies from country to

country and is difficult to predict. However, a constant monitoring activity is carried out by company Top


management in order to become aware of any changes as early as possible, so as to minimize any economic

impact that may ensue.

Risks related to growth

The Group aims at continued growth by means of a strategy based on gaining strength in the markets where it is

already present and on further geographical expansion. In the context of such a strategy, the Group could

encounter difficulties in managing the adaptation of the structure and business model or in the ability to identify

market trends or the preferences of local consumers. Furthermore, the company may have to incur start-up costs

arising from the opening of new companies. Lastly, in the case where the Group's growth is pursued through

external lines through acquisition transactions, it may encounter, amongst other things, difficulties related to the

correct valuation of the assets acquired, to the integration of such assets and also to the failure to achieve the

expected synergy, which may have a negative impact on the activity and on the future economic-financial

results of the Group.

Risks connected with the recoverability of intangible assets, in particular goodwill

Intangible assets totaling € 92,690 thousand are reported in the consolidated financial statements at 30 June 2011,

including € 8,875 thousand for development expenditure, € 55,582 thousand for goodwill, € 28,233 thousand for

trademarks and licenses, as well as net prepaid tax totaling € 13,992 thousand. The recoverability of such values

is related to the materialization of future product plans and the cash generating unit to which they refer.

In particular, in the context of its development strategy, the Landi Group has acquired companies that have

allowed it to increase its market presence and to take advantage of the opportunities for growth that it provides.

In regard to such investments, recorded in the financial statements as goodwill, there is no guarantee that the

Landi Group will succeed in achieving the benefits originally expected from these operations.

The Landi Group constantly monitors the progress of performance in comparison to the forecast plans, initiating

the necessary corrective actions whenever unfavorable trends emerge that may involve significant changes in

expected cash flows used for impairment test when evaluating the coherency of the values recorded in the

financial statements.

OPERATING RISKS

Risks connected to relationships with OEM customers

The Landi Group distributes and sells its systems and components to the main automobile manufactures at a

world-wide level (OEM customers). In the half-year ending 30 June 2012, sales of systems and components by

the Landi Group to OEM customers represented approximately 37% of the total sales of such products. The

Group boasts long-standing relationships with the main world-wide automobile manufacturers. The ability of


the group to strengthen the existing relationships with such customers, or to establish new relationships, is a

determining factor in order to consolidate the leadership position that Landi Group holds in the market. The

relationships with OEM customers are typically governed by agreements that do not require minimum purchase

quantities. Therefore the demand for predefined quantities of Landi Group products from such customers

cannot be guaranteed. In order to best satisfy the requirements of various customers to its best ability, the Landi

Group has over the last few years initiated a policy of delocalization of part of its production in countries where

it already has a number of customers and is attempting to do the same in other countries. Due to these

considerations, and also in the light of the competitive advantage acquired in the offer of solutions for the

development of sales in the After Market channel, the Group does not consider itself to be a subject with a

significant risk of dependency on OEM customers. However, it is not possible to exclude the fact that a possible

loss of important customers or a reduction in orders from them or a delay in collection compared to contractual

stipulations may determine negative effects on the economic-financial results of the Group.

Product liability risks

Any design or manufacturing defects in the products of the Landi Group, also attributable to third party subjects

such as suppliers and installers, may generate product liability against third party subjects. In addition, should

the products turn out to be defective or fail to comply with technical and legal specifications, the Landi Group,

also at the request of its customers, could be obliged to withdraw such products from the market while incurring

the related costs. For these reasons an insurance structure has been set up that is centered on master policies

negotiated and contracted centrally and local policies of initial risk. The latter guarantee immediate activation of

the cover which is supplemented by master policies where the impact of the damage exceeds the local maximum

amount. In addition, allocations are made to appropriate risk provisions determined on the basis of historical

analysis and through evaluation of the individual commercial contracts signed with the main customers.

FINANCIAL RISKS

Interest rate risk

The Landi Group is exposed to the interest rate risk associated both with cash at hand and with short, medium

and long term financing. The exposure refers mainly to the Euro zone. As regards exposure to the risk of interest

rate volatility, note that the financial indebtedness is regulated primarily by variable interest rates. Therefore, the

financial management of the Group remains exposed to fluctuations in interest rates, not having, at the date of

the present financial statements, subscribed to instruments covering the variability of the interest rates on loans

contracted with the banks.

Exchange risk


The Landi Group sells part of its production and, although to much lesser degree, also purchases some

components also in Countries outside the Euro zone. In relation to the exchange risk, note that the amount of the

consolidated equity balances expressed in currency other than the functional currency is to be considered as

rather insignificant at Group level, although more important for the Iranian and Pakistani subsidiaries. The

Group has not subscribed to any instruments to cover exchange rate fluctuations and, in accordance with the

Group’s policy up to this moment, no speculative derivatives have been subscribed.

Credit risk

Credit risk is the risk that a customer or one of counterparts of a financial instrument causes a financial loss

through failure to fulfill an obligation and derives primarily from trade receivables, from other financial assets

and from guarantees that may have been given by the Group.

Trade receivables and other receivables

The Group normally deals with known and reliable customers. It is the Landi Group's policy to subject

customers requesting extended payment conditions to procedures for checking their credit class. This check also

includes external assessments when available. In addition, the balance of the receivables is monitored on a

fortnightly basis over the period, in order to minimize exposure to the risk of losses. Finally, regarding new

customers and those not operating in EU countries, a letter of credit to guarantee successful collection is

normally used, where possible.

The Parent Company insures part of its foreign receivables, which are not guaranteed by letters of credit,

through a leading Insurance Company and makes use of pro-soluto assignment of debts. The Group allocates a

provision for loss of value that reflects the estimated losses on trade receivables and on other creditors, made up

primarily of individual write-downs of significant exposures.

Lastly, we point out that the persistence or deterioration of the current economic and financial crisis could have

an impact, even significantly, on the capacity of some client companies to regularly meet their obligations to the

Group.

Other financial assets

The credit risk regarding the other financial assets of the Group, including cash and cash equivalents, presents a

maximum risk equal to the book value of these assets in the case of insolvency of the counterpart.

Guarantees

The policies of the Group provide for the issue of financial guarantees only in favor of subsidiary companies.

Liquidity risk

The liquidity risk is the risk that the Group may have difficulty in meeting obligations associated with financial


liabilities. The Landi Group manages the liquidity risk by maintaining an adequate level of available financial

resources and bank credit granted by the main Credit Institutions, in order to satisfy the finance requirements of

the operational activity. The uncertainty in the markets in which the Group operates and of the financial markets

requires particular attention in managing the liquidity risk and, to this end, particular attention is given to the

actions aimed at generating financial resources with operating activities and at maintaining an adequate level of

cash and cash equivalents as an important factor in facing this and future years. Therefore, the Group expects to

deal with the necessities arising from receivables falling due and from investments planned by means of flows

deriving from operating activities, available liquidity, and the renewal or refinancing of bank loans.

The Group has not adopted a specific policy for management of the centralized treasury. In particular, the

management of the ordinary treasury is delegated locally to the individual companies of the Group, while the

extraordinary treasury is subject to the decision-making process of the Parent company.

2.8. OTHER INFORMATION Transactions with related parties

The creditor/debtor relationships and economic transactions with related companies are the subject of a specific

analysis in “Explanatory Notes to the Abbreviated Half-yearly Consolidated Financial Statements” to which you

may refer. Please also note that sales and purchases between the parties cannot be qualified as either atypical or

unusual, as they are part of the normal activities of the Group companies, and that they are carried out at normal

market values. Regarding the relationships with the parent company Girefin S.p.A., also bear in mind that the

Directors of Landi Renzo S.p.A. do NOT consider it to exercise the management and coordination activities

provided for by article 2497 of the Italian Civil Code. Lastly, please note that in accordance with CONSOB

Regulation 17221/2010, and pursuant to Article 2391-bis of the Civil Code, the Board of Directors has adopted

the specific procedure for transactions with related parties, available on the company website, to which you are

referred.

Positions or transactions deriving from atypical and/or unusual transactions

Pursuant to CONSOB communication no. 6064293 of July 28th 2006, note that during the six-month period no

atypical and/or unusual transactions occurred outside the normal operation of the company that could give rise

to doubts regarding the correctness and completeness of the information in the financial statements, conflicts of

interest, the protection of company assets or the safeguarding of minority stockholders.

Treasury shares and shares of parent companies

In compliance with the provisions of article 2428 of the Italian Civil Code, it is confirmed that during the year

2011 and the first six months of 2012 the Parent company did not negotiate any treasury shares or shares of

parent companies and does not at present hold any treasury shares or shares of parent companies.


Sub-offices

No sub-offices were set up.


2.9. SIGNIFICANT EVENTS AFTER CLOSING OF THE SIX-MONTH PERIOD AND FORECAST FOR OPERATIONS

After the closing of the six-month period and up to the present we point out that:

registrations of motor vehicles in Italy in the period January-July (ANFIA figures) totaled 928,064 units,

a decrease of 19.9% compared to the same period in 2011. In July 2012 a total of 109,380 vehicles were

registered, a decrease of 21.6% compared with volumes in 2011. also in July 2012 (UNRAE figures)

registration of LPG and CNG bi-fuel vehicles represented 13.4% of the total (5.2% in July 2011), including

9.8% LPG and 3.5% CNG.

since 18 July 2012, as mentioned in the introduction, the company structure acquired on rental with

conditional purchase of the former SAFE business unit has been active, for which, taking account of

current jobs in the portfolio, good revenue prospects are expected over the next six-month period.

on 30 July 2012 an agreement was signed setting up a joint venture in India between Landi Renzo S.p.A.

and Krishna Group, which will have the aim of becoming a leader in the supply of automobile gas

conversion systems for the Indian OEM sector, and in particular for the customer Maruti Suzuki.

Forecast for operations

The performance of the first six months is aligned with the Group's forecasts for the year 2012, posting positive

results regarding both revenues and margins, despite ongoing difficulties related to the macroeconomic scenario

and the reference market, including the business restrictions related to problematic countries in South West

Asia.

As regards the foreseeable future development of operations, the Landi Group confirms a positive outlook for

2012 with turnover up by more than 5% compared with 2011, and EBITDA margin greater than 10%, also due to

the consolidation of all the activities for optimization of structural and product costs already implemented as of

2011. The extraordinary operation linked to the company structure acquired on rental ex Safe represents, in the

current year, an additional turnover of more than € 6 million.

Cavriago, 28 August 2012

Chief Executive Officer: Claudio Carnevale


3. ABBREVIATED SIX-MONTHLY INTERIM CONSOLIDATED FINANCIAL STATEMENTS AS AT 30 JUN 2012

3.1. CONSOLIDATED STATEMENT OF FINANCIAL POSITION

ASSETS (thousands of Euros) Notes 30/06/2012 31/12/2011 30/06/2011

Non-current assets

Property, plant and equipment 2 33,341 35,096 37,156

Development expenditure 3 8,875 10,346 10,992

Goodwill 4 55,582 55,582 59,498

Other intangible assets with finite useful lives 5 28,233 29,506 30,328

Other non-current financial assets 6 192 170 259

Deferred tax assets 7 13,992 13,274 9,632

Total non-current assets 140,215 143,974 147,865

Current assets

Trade receivables 8 92,423 77,429 79,837

Trade receivables - related parties 285 361 461

Inventories 9 79,028 67,408 74,079

Other receivables and current assets 10 20,549 27,452 30,389

Current financial assets 11 174 176 152

Cash and cash equivalents 12 24,978 20,059 24,557

Total current assets 217,437 192,885 209,475

TOTAL ASSETS 357,652 336,859 357,340

EQUITY AND LIABILITIES (thousands of Euros) 30/06/2012 31/12/2011 30/06/2011

Equity

Share capital 11,250 11,250 11,250

Other reserves 125,212 134,154 132,951

Profit (loss) for the period 2,606 -9,138 -2,397

Total equity attributable to the shareholders of the parent 139,068 136,266 141,804

Minority interests 780 738 447

TOTAL EQUITY 13 139,848 137,004 142,251

Non-current liabilities

Bank loans 14 30,442 40,119 53,580

Other non-current financial liabilities 15 49 49 123

Provisions for risks and charges 16 5,292 4,860 4,240

Defined benefit plans 17 2,938 2,835 3,067

Deferred tax liabilities 18 11,060 12,351 13,103

Total non-current liabilities 49,781 60,214 74,113

Current liabilities

Bank overdrafts and short-term loans 19 65,978 69,878 50,996

Other current financial liabilities 20 74 125 252

Trade payables 21 86,358 55,903 75,671

Trade payables – related parties 61 61 334

Tax liabilities 22 6,965 6,458 5,203

Other current liabilities 23 8,587 7,216 8,520

Total current liabilities 168,023 139,641 140,976

TOTAL EQUITY AND LIABILITIES 357,652 336,859 357,340


3.2. GENERAL CONSOLIDATED INCOME STATEMENT

GENERAL CONSOLIDATED INCOME STATEMENT (thousands of Euro) Note

s 30/06/2012 30/06/2011

Revenues (goods and services) 24 139,143 126,844

Revenues (goods and services) - related parties 12 899

Other revenue and income 25 959 678

Cost of raw materials, consumables and goods and change in inventories 26 -62,422 -61,296

Costs for services and use of third party assets 27 -37,961 -32,976

Costs for services and use of third party assets – related parties -788 -762

Personnel expenses 28 -21,846 -21,161

Accruals, doubtful debts and other operating expenses 29 -1,212 -1,341

Gross Operating Profit 15,885 10,885

Amortization, depreciation and impairment losses 30 -9,149 -9,088

Operating Profit 6,736 1,797

Financial income 31 352 271

Financial expenses 32 -2,177 -1,600

Exchange rate gains (losses) 33 -9 -2,216

Profit (Loss) before tax 4,902 -1,748

Taxes 34 -2,177 -907

Net profit (loss) for the Group and minority interests, including: 2,725 -2,655

Minority interests 119 -258

Net profit (loss) for the Group 2,606 -2,397

Basic earnings (loss) per share (calculated on 112,500,000 shares) 35 0.0232 -0.0213

Diluted earnings (loss) per share 0.0232 -0.0213

OTHER COMPONENTS OF THE GENERAL INCOME STATEMENT (thousands of Euro) 30/06/2012 30/06/2011

Net profit (loss) for the Group and minority interests: 2,725 -2,655

Exchange rate differences from conversion of foreign operations 191 -1,609

Other Equity movements from foreign operations 0 0

Profits/Losses recorded directly to Equity net of tax effects 191 -1,609

Total general income statement for the year 2,916 -4,264

Profit (loss) for Shareholders of the Parent Company 2,803 -3,952

Minority interests 113 -312


3.3. CONSOLIDATED CASH FLOW STATEMENT

CASH FLOW STATEMENT (thousands of Euros) 30/06/2012 31/12/2011 30/06/2011

Opening cash and cash equivalents -49,819 -2,110 -2,110

Profit (Loss) before tax (less minority interests) 4,782 -8,212 -1,489

Adjustments for:

Net financial Income / (Charges) including exchange rate differences 1,834 4,737 4,878

Amortization, depreciation and impairment losses 9,149 18,421 9,088

Impairment of tangible and intangible fixed assets 0 4,316 0

Changes in provisions and benefits for employees 347 343 22

Changes in other provisions 1,105 107 -513

Net change in deferred taxes -2,008 -2,567 0

(Increase) decrease in current assets:

Inventories -11,621 -428 -7,099

trade receivables -14,994 2,757 348

trade receivables – related parties 76 351 251

receivables from others and other receivables 6,526 -6,149 -9,062

Increase (decrease) in current liabilities:

trade payables 30,454 -4,285 11,198

trade payables – related parties 0 -293 -20

payables to others and other liabilities 1,321 1,747 1,796

Financial flow from (for) operating activities 26,971 10,845 9,398

Net interest paid (including exchange rate differences realized) -1,630 -4,737 -1,334

Income taxes paid -1,152 -5,833 -2,946

Net financial flow from (for) operating activities 24,189 275 5,118

Investments in intangible assets -1,062 -1,307 -1,559

Development expenditure -1,238 -3,089 -1,450

Investments in property, plant and equipment -3,850 -10,495 -6,514

Proceeds from the sale of fixed assets 478 569 0

Investments in other non-current financial assets -21 52 0

Financial flow for acquisition of equity investments -5,693 -14,270 -9,523

Dividends paid in the period 0 -6,188 -6,188

Loans obtained/repaid to/from banks and other financial backers during the period -9,677 -27,079 -13,417

Payments for reduction of payables for financial leasing 0 -447 -318

Financial flow from (for) financing activities -9,677 -33,714 -19,923

Total financial flow 8,819 -47,709 -24,328

Closing cash and cash equivalents -41,000 -49,819 -26,438

This statement, as required by IAS 7 paragraph 18, was prepared using the indirect method; the items posted in the current year were uniformly included in the previous year's statement. The opening and closing cash and cash equivalents reflect the difference between cash and cash equivalents and bank overdrafts and short-term loans.


3.4. CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (in thousands of Euros)

Share capital

Legal Reserve

Extraordinary and Other Reserves

Share Premium Reserve

Result for the period

Equity attributable to

the shareholders of the parent

Profit (Loss) attributable to

minority interests

Capital and reserves

attributable to minority interests

Total equity

Balance at 31 December 2010 11,250 2,250 73,210 46,598 18,636 151,943 715 43 152,702

Allocation of profit 18,636 -18,636 0 -715 715 0

Translation difference -1,555 -1,555 -54 -1,609

Distribution of reserves -6,188 -6,188 -6,188

Reclassification of reserves 0 0

Other changes 0 0

Other share capital increases 0 0

Result for the period -2,397 -2,397 -258 -2,655

Balance at 30 June 2011 11,250 2,250 84,103 46,598 -2,397 141,803 -258 704 142,251

Balance at 31 December 2011 11,250 2,250 85,306 46,598 -9,138 136,266 -1 739 137,004

Allocation of profit -9,138 9,138 0 1 -1 0

Translation difference 196 196 -6 190

Distribution of reserves 0 0

Reclassification of reserves 0 0

Other changes 0 0

Other share capital increases 0 -71 -71

Result for the period

2,606 2,606 119 2,725

Balance at 30 June 2012 11,250 2,250 76,364 46,598 2,606 139,068 119 661 139,848


4. EXPLANATORY NOTES TO THE ABBREVIATED SIX-MONTHLY INTERIM CONSOLIDATED FINANCIAL STATEMENTS AS AT 30 JUNE 2012

4.1. GENERAL INFORMATION

The LANDI RENZO Group has been active for more than fifty years in the automotive fuel supply systems

sector operating in the design, manufacture installation and sale of eco-compatible LPG and CNG systems (the

“LPG line” and “CNG line” respectively). To a much lesser extent, the Group also deals with car audio and

alarm systems under the MED brand through its subsidiary A.E.B. S.p.A. The Group also maintains commercial

and technical collaboration relationships with the main car manufacturers at a world-wide level (OEM

customers) and with independent retailers and importers (After Market customers).

Note that the structure of the Group has not changed compared with 31 December 2011.

The parent company of the LANDI RENZO Group is Landi Renzo S.p.A. with its registered office in Cavriago

(RE). The company is listed on the Milan Stock Exchange in the FTSE Italy STAR segment.

4.2. GENERAL PREPARATION CRITERIA AND CONSOLIDATION PRINCIPLES

4.2.1. Premise

The abbreviated half-yearly consolidated financial statements at 30 June 2012 were prepared pursuant to Article

154-ter of Legislative Decree 58/1998 “Consolidated Financial Law (Testo Unico della Finanza)”, in accordance

with the provisions of international accounting principles (IAS/IFRS) recognized in the European Community,

and in particular those of IAS 34 “Interim Financial Statements”. In partial exception to the provisions of IAS 34,

this report provides detailed rather than synthetic schemes in order to provide a clearer view of the economic-

patrimonial and financial dynamics that occurred over the six-month period. The explanatory notes are also

presented in compliance with the information required by IAS 34 with the supplements considered useful for a

clearer understanding of the half-yearly financial statements.

The abbreviated half-yearly consolidated financial statements at 30 June 2012, approved by the Board of

Directors on 28 August 2012, must be read in conjunction with the consolidated annual financial statements as at

31 December 2011.

These Financial Statements are submitted to limited auditing by KPMG S.p.A.

They are consolidated on a line-by-line basis to include all assets and liabilities in their entirety.

The accounting policies used for the preparation of the consolidated financial statements for the six months

closed at 30 June 2012 are the same as those used for the consolidated financial statements as at 31 December

2011.


In addition to the interim values of the income statement and overall income statement at 30 June 2012 and 2011,

the balance sheet figures for the year closed at 31 December 2011 and at 30 June 2011 are included in the tables

below for purposes of comparison. The functional and presentation currency is the Euro. Figures in the

schedules and tables in this half-yearly financial report are in thousands of Euros.

In consideration of the proposed changes to the Issuer Regulations contained in the Consultation Document

issued by CONSOB on 7 July 2008, the half-yearly communication of the Parent Company has not been inserted

in this report.

The accounting principles are described in the Consolidated Financial Statements at 31 December 2011 and were

applied uniformly across all the companies of the Group and for all periods presented. Note also that the new

accounting principles approved by the European Union that will come into force after 30 June 2012 have not

been adopted in advance.

4.2.2. Consolidation procedures and Accounting policies

The preparation of the abbreviated half-yearly consolidated financial statements requires the directors to apply

accounting standards and methods that are sometimes based on difficult and subjective assessments and

estimates derived from past experience and based on assumptions that are considered reasonable and realistic

given the circumstances. Application of these estimates and assumptions affects the amounts presented in the

financial statements, such as the Balance Sheet, Income Statement, Overall Income Statement, Cash Flow

Statement and disclosures. Estimates are used in recognizing goodwill, impairment of non-current assets,

development expenditure, taxes, provisions for bad debts and inventories, employee benefits and other accruals

and provisions. Estimates are used in recognizing goodwill, impairment of non current assets, development

expenditure, taxes, provisions for bad debts and inventories, employee benefits and other accruals and

provisions.

It is also pointed out that some valuation processes, especially the more complex ones such as establishing any

loss in value of non-current assets, are normally carried out to a fuller extent only during preparation of the

annual financial statements, when all the necessary information is available, except for those cases in which

there are impairment indicators that require an immediate assessment of possible losses in value.

The Group performs activities that do not on the whole present significant seasonal or cyclical variations total

sales over the course of the year, except for the signing of new supply contracts on the OEM channel which may

provide for planned and differing delivery schedules in the individual quarters.


4.2.3. Conversion of the financial statements of foreign companies

The Financial Statements in the currency of the foreign subsidiaries are converted into the accounting currency,

adopting the half-year end exchange rate for the Statement of Financial Position and the average exchange rate

over the six months for the Income Statement. The conversion differences deriving from the adjustment of

opening Equity to the current rates at the end of the period, and those due to the different method used for

conversion of the result for the period, are accounted for in Equity under the other reserves.

The following table specifies the exchange rates used for the conversion of financial statements expressed in

currencies other than the accounting currency.

Exchange rate (Value against €) At 30/06/12

Average H1 2012 At 31/12/2011 Average 2011 At 30/06/2011

Average H1 2011

Real – Brazil 2.579 2.414 2.416 2.326 2.260 2.287

Renminbi – China 8.001 8.190 8.159 8.996 9.342 9.176

Iranian Rial 15464.900 15674.798 14449.300 14779.592 15423.100 14757.017

Pakistani Rupee 119.048 118.422 116.382 120.132 124.259 119.802

Zloty – Poland 4.249 4.246 4.458 4.119 3.990 3.952

Leu - Romania 4.451 4.390 4.323 4.239 4.244 4.180

US Dollar 1.259 1.296 1.294 1.392 1.445 1.403

Bolivar Fuerte - Venezuela 5.407 5.568 3.360 3.614 3.753 3.644

Peso Argentina 5.643 5.691 5.568 5.743 5.932 5.679

Indian Rupee 70.120 67.596 68.713 64.867 64.562 63.132


4.3. CONSOLIDATION SCOPE

The consolidation scope includes the parent company Landi Renzo S.p.A. and the companies over which the

latter exercises direct and indirect control. Control exists when the parent has the majority voting rights or when,

despite not holding such rights, has the power to govern the financial and operating policies of an entity so as to

obtain benefits from its activities.

Companies consolidated with the global consolidation method

At 30 June 2012 the LANDI RENZO Group is made up of the following companies, consolidated with the full

consolidation method:

Company Name Registered Office Share capital

Direct investment Indirect

investment

Landi Renzo S.p.A. Cavriago (RE) EUR

11,250,000 Parent Company

Landi International B.V. Utrecht (The Netherlands) EUR

18,151 100.00%

Eurogas Utrecht B.V. Utrecht (The Netherlands) EUR

36,800 100.00% (*)

Landi Renzo Polska Sp.Zo.O. Warsaw (Poland) PLN 50,000 100.00% (*)

LR Industria e Comercio Ltda Espirito Santo (Brazil) BRL 4,320,000 99.99%

Beijing Landi Renzo Autogas System Co. Ltd

Beijing (China) USD

2,600,000 100.00%

L.R. Pak (Pvt) Limited Karachi (Pakistan) PKR 75,000,000 70.00%

Landi Renzo Pars Private Joint Stock Company

Teheran (Iran) IRR 8,753,640,000 75.00%

Landi Renzo RO srl Bucharest (Romania) RON

20,890 100.00%

LandiRenzo VE C.A. Caracas (Venezuela) VEF 244,000 100.00%

Landi Renzo USA Corporation Wilmington - DE (USA) USD

18,215,400 100.00%

Baytech Corporation Los Altos - CA (USA) USD

5,000 100.00% (+)

AEB S.p.A. Cavriago (RE) EUR

2,800,000 100.00%

AEB America s.r.l. Buenos Aires (Argentina) ARS 2,030,220 96.00% (§)

Lovato Gas S.p.A. Vicenza EUR

120,000 100.00%

Lovato do Brasil Ind Com de Equipamentos para Gas Ltda (^)

Curitiba (Brazil) BRL 100,000 100.00% (#)


Officine Lovato Private Limited Mumbai (India) INR 20,000,000 100.00% (#)

Detailed notes on investments:

(*) held by Landi International B.V.

(+) held by Landi Renzo Usa Corporation

(§) held by AEB S.p.A.

(#) held by Lovato Gas S.p.A.

(^) not consolidated because not significant The consolidation scope has not changed compared with 31 December 2011.

Companies consolidated using the proportional method

There are no companies belonging to the Group included in the abbreviated half-yearly consolidated financial

statements that were consolidated with the proportional method.

Companies consolidated using the equity method

There are no companies belonging to the Group included in the abbreviated half-yearly consolidated financial

statements that were consolidated with the equity method.

4.4 EXPLANATORY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS The changes provided hereafter were calculated on the balances at 31 December 2011 as regards balance sheet

items, and on the values of the first half of 2011 as regards income statement items.

4.4.1. SEGMENT REPORTING

The following table provides an analysis of consolidated revenues in comparison to the same period of 2011

(thousands of Euros):

Distribution of revenues per area of activity


revenue At 30/06/11

% of revenue

Change %



Total revenues - GAS sector 132,073 94.9% 121,098 94.8% 10,974 9.1% Other (Alarm systems, Sound, Aquatronics and Robotics) 7,082 5.1% 6,645 5.2% 438 6.6%

Total revenues 139,155 100.0% 127,743 100.0% 11,412 8.9%

Based on these figures, and given the little materiality of the sales of “alarm systems, sound and other”, the

group’s sole business segment can be said to be the production of LPG and CNG fuel supply systems.


Considering that the principal source of risks and benefits is connected with the activity carried out and that the

structure of the internal reporting uses a single activity segment, it is not considered necessary to provide further

specifications regarding the Gas Sector since it coincides substantially with those of the entire company.

The revenues of the Landi Renzo Group have been divided by geographical area, with reference to location of

the end customer, while the value of the assets and investments are broken down by geographical segment

based on location of the actual assets.

Consolidated revenues recorded for the first half of 2012 and 2011 by the Landi Renzo group are analyzed by

geographical segment as follows (thousands of Euros):


revenue At 30/06/11

% of revenue

Change %

Italy 42,954 30.9% 21,832 17.1% 21,122 96.7%


South-west Asia 12,393 8.9% 35,171 27.5% -22,778 -64.8%

America 17,174 12.3% 18,233 14.3% -1,059 -5.8%

Rest of the World 21,730 15.6% 19,439 15.2% 2,291 11.8%

Total 139,155 100% 127,743 100% 11,412 8.9%

For a more detailed analysis of sales dynamics, broken down both geographically and by area of activity, please

refer to the interim Directors' Report

The following table provides the values (in thousands of €) relating to assets analyzed by geographical segment

of origin:

Total Assets 30 June 2012 31 December 2011 Change

Italy 293,361 277,205 16,156

Western Europe (excluding Italy) 1,650 1,423 227

Eastern Europe 18,664 9,771 8,893

South-west Asia 16,460 21,576 -5,116

Rest of Asia 10,625 9,267 1,358

America 16,892 17,617 -725

Total ASSETS 357,652 336,859 20,793


The values (in thousands of €) relating to investments are provided below, net of disposals, analyzed by

geographical segment of origin:

Total Investments in Fixed Assets 30/06/12 30/06/11 Change

Italy 3,648 5,432 -1,784

Western Europe (excluding Italy) 38 5 33

Eastern Europe 404 454 -50

South-west Asia 148 151 -3

Rest of Asia -9 40 -48

America 38 238 -200

Total INVESTMENTS IN FIXED ASSETS 4,267 6,320 -2,053

NON-CURRENT ASSETS

4.4.2. PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment show an overall net decrease of € 1,755 thousand, decreasing from € 35,096

thousand at 31 December 2011 to € 33,341 thousand at 30 June 2012.

The following is an analysis of changes in “Property, plant and equipment” that took place during the period

(thousands of Euro):

HISTORICAL COST

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Property, plant and equipment 35,096 4,313 -3,119 1,658 -4,812 205 33,341

87,245 -52,149 88,644 -55,303

The main increases in property, plant and equipment during the first half of 2012 relate to:

- purchase of plant and machinery for € 2,089 thousand;

- purchase of industrial equipment, in particular moulds for € 407 thousand and testing and control tools for €

618 thousand;

- payments on account made to suppliers and assets under construction for € 929 thousand.

The main decreases in property, plant and equipment during the first half of 2012 relate to disposals of industrial


and commercial equipment, and in particular to the sale by the Parent Company of certain plant as a result of

outsourcing some production processes for electronic components.

No significant capital gains or capital losses were recognized in relation to the aforementioned disposals.

4.4.3. DEVELOPMENT EXPENDITURE

DEVELOPMENT EXPENDITURE

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Development expenditure 10,346 1,238 0 -2,809 100 8,875

23,416 -13,070 24,754 -15,879

Development expenditure amounted to € 8,875 thousand (€ 10,346 thousand at 31 December 2011) and includes

the costs incurred by the Group both for internal personnel and for services rendered by third parties for projects

meeting the requirements IAS 38. In particular, projects capitalized during the first half of 2012 refer to

innovative projects aimed at new market segments, capable of expanding and optimizing the product range, the

value of which will be recovered through revenue flows generated in future years.

It is expected that new product development activities will continue during the second half of 2012.

All the increases for the period relate to development projects not yet concluded at 30 June 2012 and therefore

not subject to amortization.

To evaluate any losses in value of capitalized development costs, the Group attributes such costs to the

corresponding cash-generating units (CGUs) and evaluates their recoverability, calculating the value of use with

the discounted financial flow method.


4.4.4. GOODWILL

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Goodwill 55,582 55,582

Total 55,582 0 0 0 0 0 55,582 0 0

The item Goodwill is equal to € 55,582 thousand, unchanged compared with 31 December 2011.

The following table analyses this amount broken down by company:

Company June 2012 year 2011 Change

Lovato Gas S.p.A. 50,221 50,221 0

AEB S.p.A. 2,813 2,373 440

MED S.p.A. (merged into Landi Renzo in 2010) 2,548 2,988 -440

Total 55,582 55,582 0

The increase in the value of goodwill for the company A.E.B. S.p.A., for € 440 thousand, and the equivalent

decrease for the parent company Landi Renzo S.p.A. is a result of the contribution - with effect from 1 January

2012 - of the business unit active in the “Alarm Systems” segment, including the corresponding portion of

goodwill, to the subsidiary A.E.B. S.p.A.

No events or circumstances arose during the period indicating possible impairment losses related to the

goodwill mentioned above. The performance of the CGUs over the six months was, however, found to be

substantially in line with the business plan and budget plans used at 31 December 2011, and the assumptions

underlying the determination of WACC (cost of capital) at 31 December 2011 were found to be still valid at 30

June 2012. Therefore, no trigger events emerged that would have required reformulation of the impairment test at

30 June 2012 given that all the Goodwill items were subject to impairment test at 31 December 2011.


4.4.5. OTHER INTANGIBLE ASSETS WITH FINITE USEFUL LIVES

Other intangible assets with finite useful lives

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Other intangible assets with finite useful lives 29,506 0 178 -11 11 -1,528 77 28,233

40,840 11,335 41,086 -12,853

The other intangible assets with finite useful lives, equal to € 28,233 thousand at 30 June 2012 (€ 29,506 thousand

at 31 December 2011), include primarily Rights to use intellectual property and Trademarks owned by the

Group, in particular the values of the LOVATO trademark, for € 13,379 thousand, the trademarks A.E.B. and

18SOUND, for € 11,555 thousand, and the Baytech trademark, for € 1,307 thousand, stated at fair value at the

moment of the purchase on the basis of valuations made by independent professionals and amortized over 18

years, the period deemed representative of the useful life of the trademarks.

4.4.6. OTHER NON-CURRENT FINANCIAL ASSETS Other Non-current Financial Assets, equal to € 192 thousand (€ 170 thousand at 31 December 2010) include,

primarily, guarantee deposits. These items were not actualized since the impact of the financial effect is not

significant.

4.4.7. DEFERRED TAX ASSETS

Deferred tax assets, equal to € 13,274 thousand (€ 13,274 thousand at 31 December 2010), refer to the following

main cases:

- remission of the goodwill ex Legislative Decree no. 185/2008, recorded by the subsidiary Lovato Gas S.p.A.

prior to acquisition by the Landi Renzo Group;

- temporary differences deriving from asset adjustment funds posted primarily by the Italian companies of the

Group;

- temporary differences deriving from adjustments for consolidation;

- previous tax losses of the parent company Landi Renzo S.p.A. and the subsidiary Landi Renzo Usa


Corporation.

The allocation of deferred tax assets is carried out for each company of the Group by assessing the existence of

the conditions of future recoverability of such taxes on the basis of the updated strategic plans, together with the

corresponding tax plans, taking the applicable tax rules into consideration.

CURRENT ASSETS

4.4.8. TRADE RECEIVABLES (including related parties) Trade receivables (including trade receivables due from related parties), stated net of the related depreciation

fund, are analyzed by geographical segment as follows (thousands of Euros):

Trade receivables per geographical area 30/06/2012 31/12/2011 Change

Italy 29,354 17,769 11,585

Europe (excluding Italy) 23,127 14,970 8,157

South-west Asia 19,427 26,084 -6,657

America 15,856 18,763 -2,907

Rest of the World 9,579 4,624 4,955

Provision for bad debts -4,635 -4,420 -215

Total 92,708 77,790 14,918

Trade Receivables at 30 June 2012 amount to € 92,708 thousand, net of the Provision for Bad Debts equal to €

4,635 thousand, compared with € 77,790 thousand at 31 December 2011.

The Parent Company carried out operations for assignment of trade receivables through pro-soluto factoring

and at 30 June 2012 total assignments with credit maturity, for which the corresponding receivables were

derecognized, amounted to € 7,311 thousand (€ 196 thousand at 31 December 2011).

The provision for bad debts, which was calculated using analytical criteria on the basis of the data available and,

in general, of the historical trend, changed as follows:

Provision for bad debts 31/12/2011 Provision Utilization 30/06/2012

Provision for bad debts 4,420 377 -162 4,635


The allocations made during the period, taking account of the assurance policies set up for part of the foreign

receivables of the Parent Company, are equal to € 377 thousand and their purpose is to adjust the receivables to

their assumed recovery value utilizations, equal to € 162 thousand, refer mainly to the write-off of a receivable of

the subsidiary Lovato Gas S.p.A.

In accordance with the requirements of Accounting Principle IFRS 7, the following table provides information on

the maximum credit risk divided by expiry classes, gross of the Provision for Bad Debts:

Past due

(Thousands of Euros) Not past due 0-30 days 30-60 days 60 and beyond Provision for Bad

Debts

Trade Receivables at 31/12/2011 50,492 8,595 4,412 18,711 -4,420

Trade Receivables at 30/06/2012 66,322 5,565 2,156 23,300 -4,635

It is considered that the book value of the Trade Receivables approximates their fair value. In addition, to date, it

is believed that there are no particular risks of solvency.

The increase in receivables overdue by more than 60 days, an increase of € 4.589 thousand compared with 31

December 2011, was mainly due to a lengthening of payment times by several major Iranian auto manufacturers

as a result of financial constraints related to the increasingly strict measures of the international embargo. It

should also be emphasized that a significant portion of these items was collected after the date of these interim

financial statements.

4.4.9. INVENTORIES

This item is analyzed as follows (thousands of Euros):

Inventories 30/06/2012 31/12/2011 Change

Raw materials and parts 49,668 45,674 3,994

Work in progress and semi-finished products 11,432 7,440 3,992

Finished products 24,271 20,381 3,890

(Provision for inventories) -6,343 -6,087 -256

Total 79,028 67,408 11,620

Closing inventories at 30 June 2011 amount overall to € 79,028 thousand, net of the provision for inventories

equal to € 6,343 thousand, and therefore record an increase of € 11,620 thousand compared to 31 December 2011,


primarily due to the dynamics of supply related to the increase the volume of business.

The Group estimated the size of the provision for inventories so as to take account of the risks of technical

obsolescence of inventories and to align the book value with their assumed recovery value. At 30 June 2012 this

item was equal to € 6,343 thousand, an increase of € 256 thousand compared with 31 December 2011.

4.4.10. OTHER RECEIVABLES AND CURRENT ASSETS


Other receivables and current assets 30/06/2012 31/12/2011 Change

Tax assets 15,202 21,376 -6,174

Amounts due from others 3,503 5,164 -1,661

Prepayments and accrued income 1,844 912 932

Total 20,549 27,452 -6,903

Tax assets

Tax assets consist primarily of VAT recoverable from the tax authorities for € 9,385 thousand, including € 7,373

thousand requested as a refund. The remainder consists of credits for income taxes due to a surplus of advance

payments made during the previous year by the Italian companies of the Group as well as other tax credits

attributable to the foreign Group companies

Please note that during the six month period the parent company completed the sale without recourse of a VAT

credit equal to € 5,500 thousand.

Amounts due from others

These refer to payments on account granted, credit notes to be received and other receivables, mainly of the

Italian companies of the Group

Prepayments and accrued income

This item includes primarily prepaid insurance premiums, rental, membership contributions, and for hardware

and software maintenance fees paid in advance.

4.4.11. CURRENT FINANCIAL ASSETS

At 30 June 2012 the other current financial assets amount to € 174 thousand and consist primarily of the equity

investment in Deutsche Telekom, held by the Parent Company and entered for € 117 thousand, which

corresponds to the stock market share price at the end of the six month period.


4.4.12. CASH AND CASH EQUIVALENTS This item, consisting of the active balances of bank current accounts and cash in hand in both Euros and foreign

currency, is analyzed as follows (thousands of Euros):

Cash and cash equivalents 30/06/2012 31/12/2011 Change

Bank and post office accounts 24,960 20,007 4,953

Cash 18 52 -34

Total 24,978 20,059 4,919

Cash and cash equivalents at 30 June 2012 amount to € 24,978 thousand (€ 20,059 thousand at 31 December 2011).

For an analysis relating to the generation and absorption of cash during the year, please refer to the cash flow

statement.

The values stated can be readily converted into cash and are subject to an insignificant risk of change in value. It

is considered that the carrying value of Cash and cash equivalents is aligned with their fair value at the balance

sheet date.

The credit risk relating to Cash and cash equivalents is therefore deemed to be limited since the deposits are split

over primary national and international banking institutions.

4.4.13. EQUITY

The following table provides a breakdown of the items of equity (in thousands of Euros):

Equity 30/06/2012 31/12/2011 Change

Share capital 11,250 11,250 0

Other reserves 125,212 134,154 -8,942

Profit (loss) for the period 2,606 -9,138 11,744

Total Equity attributable to the Shareholders of the Parent 139,068 136,266 2,802

Capital and Reserves attributable to minority interests 661 739 -78

Profit (loss) attributable to minority interests 119 -1 120

Total Minority Interests 780 738 42

Total Consolidated Equity 139,848 137,004 2,844

The share capital stated in the Financial Statements for the year at 30 June 2012 represents the share capital fully

subscribed and paid-up of the company Landi Renzo S.p.A. with a nominal value of € 11,250 thousand,


subdivided into a total of 112,500,000 shares with a par value of € 0.10.

Consolidated Equity at 30 June 2012 shows a positive change of € 2,844 thousand compared with 31 December

2011, mainly due to the result of the period.

The other reserves are analyzed as follows:

Other reserves 30/06/2012 31/12/2011 Change

Legal Reserve 2,250 2,250 0

Extraordinary and Other reserves 76,364 85,306 -8,942

Share premium reserve 46,598 46,598 0

Total Other Reserves of the Group 125,212 134,154 -8,942

The balance of the Legal Reserve at 30 June 2012 amounts to € 2,250 thousand and remains unchanged since it

has reached one fifth of the share capital. The Extraordinary Reserve and the other reserves refer to the profits

recorded by the Parent Company and by the subsidiary companies in the preceding years and have decreased by

€ 8,942 thousand as a result of the previous year's loss and the movements of the translation reserve.

The Share Premium Reserve originated as a result of the floatation operation for an amount equal to € 46,598

thousand, net of the related costs.

The minority interests represent the share of equity and year's profit of those foreign subsidiaries not owned in

full. During the period, the item “capital and reserves attributable to minority interests” decreased by € 71

thousand due to the purchase from third parties by the parent company of further shares representing 3.99% of

the share capital of the subsidiary LR Industria e Comercio Ltda.

NON-CURRENT LIABILITIES

4.4.14. BANK LOANS

This item includes medium/long term portion of the bank debts for unsecured loans and finance. At 30 June

2012 it was equal to € 30,442 thousand compared with € 40,119 thousand at 31 December 2011.

The structure of the debt is exclusively at a variable rate indexed to the Euribor and increased by a spread aligned

with the normal market conditions; the loan currency is the Euro. The loans are not secured by collateral, do not

provide for covenants and there are no clauses other than the early payment clauses normally envisaged by

commercial practice. The Group does not have any derivatives to cover the loans.


4.4.15. OTHER NON-CURRENT FINANCIAL ASSETS At 30 June 2012 the item, equal to € 49 thousand (€ 49 thousand at 31 December 2011) includes only the long

term portions of facilitated fixed rate loans obtained from the Ministry for Economic Development on the basis

of specific regulations.

4.4.16. PROVISIONS FOR RISKS AND CHARGES These provisions can be broken down as follows (thousands of Euros):

Provisions for risks and charges 31/12/2011 Provision Utilization

Exchange differences

on translation

30/06/2012

Provision for product warranties 4,493 501 -81 4,913

Provision for lawsuits in progress 232 14 246

Provisions for pensions 105 5 -7 103

Other provisions 30 30

Total 4,860 506 -88 14 5,292

The item “Provision for Product Warranties” includes the best estimate of the costs related to the commitments

that the Group companies have incurred as an effect of legal or contractual provisions, in relation to the expenses

connected with providing product warranties for a fixed period of time starting from the sale thereof.

This estimate was determined on the basis of the Group's experience, with specific contractual content, and has

been increased compared with 31 December 2011 as a result of new commercial agreements with car

manufacturers and the effect of expansion of the supply perimeter to them.

At 30 June 2012 this provision amounted to € 4,913 thousand (€ 4,493 thousand at 31 December 2011). The

provision was recognized in the Income statement under the item “Accruals, impairment losses and other

operating expenses”.

Management believes that the value set aside as at 30 June 2012 is sufficient to cover any future requests for

damages deriving from product warranties.

4.4.17. DEFINED BENEFIT PLANS

This item includes exclusively employee severance indemnity funds set up by the Italian companies in

compliance with the regulations in force. The following is the overall change in defined benefit plans for

employees (thousands of Euros):


Defined benefit plans 31/12/2011 Provision Utilization 30/06/2012

Employee termination indemnities 2,835 231 -128 2,938

The allocation is due to the effect of the revaluation of the TFR of employees in existence at the end of the period

(net of the actuarial adjustment as provided for by IAS 19). The utilizations, totaling € 128 thousand, refer to the

amounts paid out to employees who ceased to work for the Italian companies of the Group.

4.4.18. DEFERRED TAX LIABILITIES

At 31 June 2012 deferred tax liabilities amount to € 11,060 thousand (€ 12,351 thousand at 31 December 2011)

with a decrease equal to € 1,291 thousand, and are primarily related to temporary differences between the book

values of certain tangible and intangible assets and the values recognized for tax purposes.

No deferred taxes have been recorded on undistributed profit reserves of subsidiaries, since the Parent

Company is able to control the time frame for the distribution of said reserves and it is currently likely that they

will not be distributed.

CURRENT LIABILITIES

4.4.19. BANK OVERDRAFTS AND SHORT-TERM LOANS

The item “Bank overdrafts and short-term loans” at 30 June 2012, totaling € 65,978 thousand, compared with €

69,878 thousand in 2011 consists of the current portion of existing unsecured loans and financing amounting to €

40,869 thousand (€ 39,596 thousand at 31 December 2011) and the current use of short term credit facilities for

advances on invoices and portfolio subject to final payment amounting to € 25,109 thousand. Note that the

above-mentioned financing is not secured by guarantees.

An analysis of the net financial position of the Group is provided below (thousands of Euros):

Net financial position (thousands of Euros) 30/06/2012 31/12/2011

Cash and cash equivalents 24,978 20,059

Bank overdrafts and short-term loans -65,978 -69,878

Short-term loans -74 -125

Net short term indebtedness -41,074 -49,944

Medium-Long term loans -30,491 -40,168

Net medium-long term indebtedness -30,491 -40,168

NET FINANCIAL POSITION -71,565 -90,112


The net financial position at 30 June 2012 is negative for € 71,565 thousand compared with a negative net

financial position at 31 December 2011 equal to € 90,112 thousand.

Note that the short-term net financial position also includes the current portion of the other financial liabilities,

which are not included, however, not in the analytical structure of the table relating to the cash flow statement.

4.4.20. OTHER CURRENT FINANCIAL LIABILITIES

At 30 June 2009 this item, equal to € 74 thousand, concerns the short-term portions of the fixed rate facilitated

loans provided by the Italian Ministry for Economic Development on the basis of specific regulations. At 31

December 2011 the other current financial liabilities amounted to € 125 thousand.

4.4.21. TRADE PAYABLES (including related parties)

Trade payables at 30 June 2012 amount to € 86,419 thousand, with an increase of € 30,455 thousand compared

with 31 December 2011.

Trade payables (including trade payables to related parties) can be analyzed by geographical segment as follows

(thousands of Euros):

Trade payables per geographical area 30/06/2012 31/12/2011 Change

Italy 69,326 47,599 21,727

Europe (excluding Italy) 11,629 5,101 6,528

South-west Asia 534 1,171 -637

America 828 544 284

Rest of the World 4,102 1,549 2,553

Total 86,419 55,964 30,455

Trade payables to related parties amounting to € 61 thousand refer primarily to the dealings of the company

A.E.B. S.p.A. with the company Gestimm S.r.l., for property rental charges.

All the related transactions are carried out at normal market conditions. For further details see the next chapter

OTHER INFORMATION – paragraph TRANSACTIONS WITH RELATED PARTIES.

4.4.22. TAX LIABILITIES

Tax liabilities at 30 June 2012 amount to € 6,965 thousand (€ 6,458 thousand at 31 December 2011) and are made

up of the total of payables to the Tax Authorities of the individual countries in which the Group companies are

located.


4.4.23. OTHER CURRENT LIABILITIES - (including related parties)

Other current liabilities 30/06/2012 31/12/2011 Change

Amounts owed to pension and social security institutions 1,903 2,050 -147

Other payables (amounts owed to employees, to others) 6,170 4,888 1,282

Accrued expenses and deferred income 514 278 236

Total 8,587 7,216 1,371

Other current liabilities at 30 June 2012 amount to € 8,587 thousand, an increase of € 1,371 thousand compared

with 31 December 2011.

In particular, the item “other payables”, totaling € 6,170 thousand, refers primarily to amounts due for current

and deferred pay to be settled for employees. The increase in this item compared with the total at 31 December

2011 relates to the amount owing for deferred salaries and accrued holidays.

INCOME STATEMENT

4.4.24. REVENUES (including related parties)

Revenues (goods and services) 30/06/2012 30/06/2011 Change

Revenues related to the sale of assets 136,869 126,555 10,314

Revenues for services and other revenues 2,285 1,188 1,097

Total 139,155 127,743 11,412

The Net Revenues of the Group in the first half of 2012 amounted to € 139,155 thousand (€ 127,743 thousand at

30 June 2011), up by 8.9% compared with the same period in 2011.

The item “Revenues for services and other” includes reimbursements of transport costs, insurance

reimbursements, revenues for services rendered and revenues for technical consultancy supplied to third parties

by Group companies.

Revenues from related parties totaling € 12 thousand refer in whole to supplies of goods to the Pakistani

company AutoFuels.

4.4.25. OTHER REVENUE AND INCOME



Other revenue and income 30/06/2012 30/06/2011 Change

Grants 107 160 -53

Other income 852 518 334

Total 959 678 281

Other revenues and income at 30 June 2012 amount to € 959 thousand compared with € 678 thousand at 30 June

2011.

4.4.26. COST OF RAW MATERIALS, CONSUMABLES AND GOODS (including related parties)

Cost of raw materials, consumables and goods and change in inventories

30/06/2012 30/06/2011 Change

Raw materials and parts 52,658 47,991 4,667

Finished products intended for sale 7,959 11,185 -3,226

Other materials and equipment for use and consumption 1,804 2,120 -316

Total 62,422 61,296 1,126

The total costs for purchases of raw materials, consumables and goods (including the change in inventories)

increased from € 61,296 thousand at 30 June 2011 to € 62,422 thousand at 30 June 2012.

4.4.27. COSTS FOR SERVICES AND USE OF THIRD PARTY ASSETS (including related parties)


Costs for services and use of third party assets 30/06/2012 30/06/2011 Change

Industrial and technical services 26,638 18,865 7,773

Commercial services 4,546 6,571 2,025

General and administrative services 5,806 6,432 -626

Costs for use of third party assets 1,759 1,870 -111

Total 38,749 33,738 5,011

The items posted in the current year were uniformly included in the previous year's statement.

Costs for services and the use of third party assets at 30 June 2012 amounts to € 38,749 thousand, compared with

€ 33,738 thousand at 30 June 2011, with an increase of € 5,011 thousand.


The increase in costs for industrial and technical services refers to the increase in activities for the installation of

LPG systems on the OEM channel, as well as the related external processing on materials.

The reduction in costs for commercial, general and administrative services and for use of third party assets

reflects the results of the savings and rationalization policies already initiated during the latter part of the

previous year.

For transactions with related parties, please refer to paragraph 4.4.37 below.

4.4.28. PERSONNEL EXPENSES Personnel expenses are analyzed as follows (thousands of Euros):

Personnel expenses 30/06/2012 30/06/2011 Change

Wages and salaries 13,958 14,573 -615

Social security contributions 3,980 4,049 -69

Expenses for defined benefit plans 977 778 199

Loaned and transferred work 2,350 1,049 1,301

Directors' fees 581 712 -131

Total 21,846 21,161 685

During the reporting period personnel expenses increased by € 685 thousand, from € 21,161 thousand at 30 June

2011 to € 21,846 thousand at 30 June 2012.

This increase is primarily due to growth in production, which the Group dealt with by making greater use of

temporary work.

In spite of this increase in absolute terms, the impact of personnel expenses on turnover fell to 15.7% from 16.6%

in the first half of 2011.

4.4.29. ACCRUALS, IMPAIRMENT LOSSES AND OTHER OPERATING EXPENSES Accruals, impairment losses and other operating expenses amount to € 1,212 thousand in the first half of 2012,

compared with € 1,341 thousand in first half of 2011, a decrease of € 129 thousand. At 30 June 2012 this item is

consists mainly of allocations to the provisions for product warranties and for bad debts, entered at € 878

thousand.

4.4.30. AMORTIZATION, DEPRECIATION AND IMPAIRMENT LOSSES

Amortization, depreciation and impairment losses 30/06/2012 30/06/2011 Change


Amortization of intangible assets 4,337 4,045 292

Depreciation of property, plant and equipment 4,812 5,043 -231

Total 9,149 9,088 61

Depreciation and amortization at 30 June 2012 amount to € 9,149 thousand, a slight increase compared with €

9,088 thousand at 30 June 2011.

The amortization of intangible assets refers primarily to the amortization of development and design costs

incurred by the Group, costs for the purchase and registration of trademarks and licenses and for software

(applications and management) purchased over time.

Depreciation of property, plant and equipment refers primarily to property, plant and machinery for production,

assembly and running-in of the products, to industrial and commercial equipment for the purchase of moulds, to

testing and control tools and to electronic processors.

4.4.31. FINANCIAL INCOME

Financial income at 30 June 2012 amounts to € 352 thousand, compared with € 271 thousand at 30 June 2011,

with an increase of € 81 thousand, and relates primarily to interest income on bank deposits.

4.4.32. FINANCIAL EXPENSES

Financial expenses at 30 June 2012 amount to € 2,177 thousand, compared with € 1,600 thousand at 30 June 2011,

and relate to the higher average debt for the period compared to the first half of 2011.

4.4.33. EXCHANGE RATE GAINS (LOSSES)

At 30 June 2012 the net negative exchange rate differences amount to € -9 thousand, compared to net negative

exchange rate differences of € -2,216 thousand in the first half of the previous year, mainly due to the revaluation

of currencies linked to the U.S. dollar against the Euro during the six months under review.

At 30 December 2012 the company does not have any financial instruments to cover of the variability of

exchange rates.

4.4.34. TAXES

Taxes at 30 June 2012 - when the expected tax rate is applied - amount to € 2,177 thousand, compared with € 907

thousand at 30 June 2011, with an increase of € 1,270 thousand. The increase in taxes is determined by the

increase in taxable income as a result of the better economic results achieved.

The theoretical rate used for the calculation of taxes on the income of Italian companies is 31.40% of the taxable


income subject to IRES and IRAP for the year. The taxes of the foreign companies are calculated according to the

rates applicable in the respective countries.

4.4.35. EARNINGS PER SHARE

The “base” earnings per share were calculated by relating the net profit of the Group to the weighted average

number of ordinary shares in circulation in the period ( 112,500,000). The “base” earnings per share, which

correspond to the “diluted” earnings per share since there are no convertible bonds, are positive and equal to €

0.0232. The earnings per share in the first half of 2011 were equal to € -0.0213 (negative € -0.0812 at 31 December

2011).

OTHER INFORMATION

4.4.36. ANALYSIS OF THE MAIN DISPUTES IN PROGRESS

The Group companies are involved in proceedings, for both assets and liabilities, for non-significant amounts.

The directors of the Parent Company, supported by the opinion of its lawyers, did not deem it necessary to

make provision for any further funds in the financial statements beyond those already allocated as at 31

December 2011.

There are currently no disputes with the Tax Authority.

4.4.37. TRANSACTIONS WITH RELATED PARTIES

The Landi Group deals with related parties at market conditions considered to be normal in the markets in

question, taking account of the characteristics of the goods and the services supplied.

Transactions with related parties listed below include:

- relationships for supply of services between Gireimm S.r.l. and Landi Renzo S.p.A. for rent of the

property used as the operational headquarters of the Parent Company;

- relationships for supply of services between Gestimm S.r.l., a company in which a stake is held through

the parent company Girefin S.p.A., and the company A.E.B. S.p.A. for rent of the property used as the

operational headquarters of the subsidiary;


- relationships for supply of services between Bynet di Vecchi e Turini S.n.c., a company subject to

considerable influence by the manager with strategic responsibilities, and the company A.E.B. S.p.A. for

the supply of IT services;

- the relationships for supply of goods to the Pakistani company AutoFuels (held by a minority

shareholder of the Pakistani subsidiary LR PAK).

The following table summarizes the relationships with related parties (thousands of Euros):

Incidence of Transactions with Related Parties Total item

Absolute value

related parties

% Related party

a) incidence of the transactions or positions with related parties on balance sheet items

Trade receivables 92,708 285 0.31% Autofuels

Trade payables 86,419 61 0.07% Gestimm, Bynet

b) incidence of the transactions or positions with related parties on income statement items

Cost for services and use of third party assets 38,749 788 2.03% Gireimm, Gestimm, Bynet

Revenues (goods and services) 139,155 12 0.01% Autofuels

4.4.38. POSITIONS OR TRANSACTIONS DERIVING FROM ATYPICAL AND/OR UNUSUAL TRANSACTIONS

Pursuant to CONSOB communication no. 6064293 of July 28th 2006, note that during the first six months of 2012

no atypical and/or unusual transactions occurred outside the normal operation of the company that could give

rise to doubts regarding the correctness and completeness of the information in the financial statements, conflicts

of interest, protection of company assets, safeguarding the minority stockholders.

4.4.39. NON-RECURRING SIGNIFICANT EVENTS AND OPERATIONS

Pursuant to CONSOB communication no. 6064293 of 28th July 2006, it is stated that during the first half of 2012

no non-recurring significant events or operations took place.

4.4.40. SIGNIFICANT EVENTS OCCURRING AFTER THE CLOSE OF THE FINANCIAL YEAR Please refer to comments relating to this in the interim directors' report.


5. Declaration of the abbreviated half-yearly Financial Statements pursuant to art. 81-ter of CONSOB Regulation no. 11971 of May 14, 1999 and subsequent modifications and

supplements

We the undersigned, Claudio Carnevale and Paul Cilloni, respectively Chief Executive Officer and Officer in

charge of preparing the corporate Financial Statements of Landi Renzo S.p.A., declare, also taking account of the

provisions of article 154-bis, subsections 3 and 4, of Legislative Decree no. 58 dated 24 February 1998 :

- the appropriateness to the characteristics of the company and

- the effective application of the administrative and accounting procedures for preparing the abbreviated

half-yearly financial statements as at 30 June 2012.

There are no significant aspects to report in relation thereto.

We furthermore declare that:

1) the abbreviated half-yearly consolidated financial statements at 30 June 2012:

- have been prepared in compliance with the international accounting principles issued by the

International Accounting Standards Board and adopted by the European Commission in accordance

with the procedure specified in art. 6 of the Regulation (CE) no. 1606/2002 of the European Parliament

and the Council, dated 19 July 2002;

- correspond to the information in the accounting books and records;

- are capable of providing a true and correct representation of the patrimonial, economic and financial

situation of the issuer and of the companies included in the consolidation.

2) the interim directors' report includes a reliable analysis of the references to the important events that

occurred in the first six months of the year and to their impact on the abbreviated half-yearly consolidated

financial statements, together with a description of the main risks and uncertainties for the remaining

months of the year. The interim directors' report also includes a reliable analysis of the information on the

significant transactions with related parties.

Cavriago, 28 August 2012 Officer in charge of preparing Chief Executive Officer corporate Financial Statements Claudio Carnevale Paolo Cilloni

KPMG S.p.A.

Revisione e organizzazione contabile

Viale Mentana, 148

43121 PARMA PR

Telefono 0521 236211

Telefax 0521 2362303

e-mail [email protected]

PEC [email protected]

KPMG S.p.A. è una società per azioni di diritto italiano e fa parte del

network KPMG di entità indipendenti affiliate a KPMG International

Cooperative (“KPMG International”), entità di diritto svizzero.

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Società per azioni

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Euro 8.128.900,00 i.v.

Registro Imprese Milano e

Codice Fiscale N. 00709600159

R.E.A. Milano N. 512867

Partita IVA 00709600159

VAT number IT00709600159

Sede legale: Via Vittor Pisani, 25

20124 Milano MI ITALIA

(Translation from the Italian original which remains the definitive version)

Auditors’ report on review of condensed interim consolidated financial statements

To the shareholders of

Landi Renzo S.p.A.

1 We have reviewed the condensed interim consolidated financial statements of the Landi

Renzo Group as at and for the six months ended 30 June 2012, comprising the statement

of financial position, statement of comprehensive income, statement of changes in equity,

statement of cash flows and notes thereto. The parent’s directors are responsible for the

preparation of these condensed interim consolidated financial statements in accordance

with the International Financial Reporting Standard applicable to interim financial

reporting (IAS 34), endorsed by the European Union. Our responsibility is to prepare this

report based on our review.

2 We conducted our review in accordance with Consob (the Italian Commission for Listed

Companies and the Stock Exchange) guidelines set out in Consob resolution no. 10867

dated 31 July 1997. The review consisted primarily of the collection of information about

the captions of the condensed interim consolidated financial statements and the

consistency of application of the accounting policies through discussions with parent

company directors and analytical procedures applied to the financial data presented in

such condensed interim consolidated financial statements. The review excluded such

audit procedures as tests of controls and substantive procedures on assets and liabilities

and is substantially less in scope than an audit conducted in accordance with generally

accepted auditing standards. As a consequence, contrary to our report on the annual

consolidated financial statements, we do not express an audit opinion on the condensed

interim consolidated financial statements.

With regard to the corresponding figures included in the prior year consolidated financial

statements and condensed interim consolidated financial statements, presented for

comparative purposes, reference should be made to our reports dated respectively

30 March 2012 and 28 August 2011.

Landi Renzo Group

Auditors’ report on review of condensed interim consolidated financial statements

30 June 2012

2

3 Based on our review, nothing has come to our attention that causes us to believe that the

condensed interim consolidated financial statements of the Landi Renzo Group as at and

for the six months ended 30 June 2012 have not been prepared, in all material respects, in

conformity with the International Financial Reporting Standard applicable to interim

financial reporting (IAS 34), endorsed by the European Union.

Parma, 28 August 2012

KPMG S.p.A.

(signed on the original)

Lino Barbieri

Director of Audit

half-yearly financial report at 30 june …. +39 0522 9433 fax +39 0522 944044 share capital: €...

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