report of the directors and financial statements of immsi

IMMSI Società per Azioni Share capital 178,464,000 euro fully paid up

Registered office: P.zza Vilfredo Pareto, 3 – 46100 Mantova

Mantova Register of Companies – Tax Code and VAT number 07918540019

Report of the Directors and Financial statements of

Immsi Group as of 31 December 2014

This Report of the Directors and Financial statements is a translation provided only for the convenience of foreign readers.

The Italian version will prevail.

Company Boards

2

Index:

COMPANY BOARDS……………………………….....………………………….……... page 5

DIRECTORS’ REPORT ON OPERATIONS

- Information on operations and Immsi Group activities........……………………………. page 7

- Report on Corporate Governance and Corporate Ownership...….……………………… page 57

IMMSI GROUP

- Consolidated financial statements .……………………….…………………………….. page 104

- Notes to the consolidated financial statements………………………………………...... page 111

- List of companies included in the consolidated financial statements and equity

investments.……………………………………………………………………………….. page 185

- Certification of the consolidated financial statements pursuant to Article 154-bis of the

Italian Legislative Decree 58/98 ….…................................................................................ page 188

IMMSI S.p.A.

- Financial statements …………..….…………………………………………………….. page 190

- Notes to the financial statements………………………………………………………... page 195

- Certification of the financial statements pursuant to Article 154-bis of the Italian

Legislative Decree 58/98 ………………………………………………………………..... page 231

REPORTS OF THE AUDITING FIRM AND OF THE BOARD OF STATUTORY

AUDITORS……………….................................................................................................. page 232

This report was approved by the Board of Directors of Immsi S.p.A. on 16 March 2015 and is available on its website

www.immsi.it in the section “Investors – Financial reports”

Company Boards

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Company Boards

5

COMPANY BOARDS The Board of Directors and the Board of Statutory Auditors of Immsi S.p.A. were appointed by a shareholder resolution on 11 May 2012 and their term in office expires on the date of the Shareholders’ Meeting called to approve the financial statements for the year ending as of 31 December 2014.

BOARD

OF DIRECTORS

Roberto Colaninno ChairmanCarlo d'Urso (1) Deputy ChairmanMichele Colaninno Chief Executive OfficerMatteo Colaninno DirectorRita Ciccone DirectorGiorgio Cirla DirectorGiovanni Sala DirectorEnrico Maria Fagioli Marzocchi (2) DirectorRuggero Magnoni Director

BOARD OF STATUTORY AUDITORS

Alessandro Lai ChairmanDaniele Girelli Statutory auditor Leonardo Losi Statutory auditor Gianmarco Losi Alternate auditorElena Fornara Alternate auditor

INDIPENDENT AUDITORS

PricewaterhouseCoopers S.p.A. 2012 - 2020

GENERAL MANAGER

Michele Colaninno (1) Term of office ended on 1 February 2015 (2) Term of office ended on 8 October 2014

Company Boards

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In accordance with the principles of Corporate Governance recommended by the Self-Regulatory Code of Conduct for Listed Companies, as with Italian Legislative Decree no. 231/01 the Board of Directors has established the following bodies:

CHAIRMAN OF THE REMUNERATION COMMITTEEGiovanni Sala ChairmanGiorgio CirlaRita Ciccone (1)

CONTROL AND RISKS COMMITTEE

Giovanni Sala ChairmanRita CicconeGiorgio Cirla

COMMITTEE FOR THE APPROVAL OF RELATED-PARTY TRANSACTIONS

Giovanni Sala ChairmanGiorgio Cirla Rita Ciccone (2)

SUPERVISORY BOARD

Marco Reboa ChairmanAlessandro LaiMaurizio Strozzi

LEAD INDEPENDENT DIRECTOR

Giovanni Sala

DIRECTOR APPOINTED

Michele Colaninno

HEAD OF INTERNAL AUDIT

Maurizio Strozzi

EXECUTIVE IN CHARGE

Andrea Paroli

INVESTOR RELATOR

Andrea Paroli (3)

(1) Appointed by resolution of the Board on 16 March 2015, replacing Carlo d’Urso. (2) Appointed by resolution of the Board on 16 March 2015, replacing Enrico Maria Fagioli Marzocchi. (3) Appointed by resolution of the Board on 13 May 2014.

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Information on operations and Immsi Group activities

Directors’ report on operations These financial statements of the Immsi Group as of 31 December 2014 are drawn up in compliance with International Accounting Standards (IAS/IFRS) in force at that date, issued by the International Accounting Standards Board and approved by the European Commission, as well as in compliance with provisions issued pursuant to Article 9 of Italian Legislative Decree no. 38/2005 (Consob Resolution no. 15519 dated 27/7/06 containing “Provisions for the presentation of financial statements", Consob Resolution no. 15520 dated 27/7/06 containing “Changes and additions to the Regulation on Issuers” adopted by Resolution no. 11971/99”, Consob communication no. 6064293 dated 28/7/06 containing “Corporate reporting required in accordance with Article 114, paragraph 5 of Italian Legislative Decree no. 58/98"): the interpretations of the International Financial Reporting Interpretations Committee (“IFRIC”), previously the Standing Interpretations Committee (“SIC”), have also been taken into account. This Report contains also the Group consolidated financial statements, the Notes as well as the financial statements and related notes of the Parent company Immsi S.p.A.. Furthermore, it should be noted that the data contained in this document may in some cases present rounding defects due to the representation in millions: in this respect, please note that the variations and percentages are generally based on data expressed in thousands and not on those rounded and sometimes shown in millions.

Report on Corporate Governance and Corporate Ownership of Immsi Group In 2014, the Immsi Group reported a considerable improvement in net revenues and operating income compared to the previous year, in a macroeconomic scenario characterised by a 3% growth in the world economy, but with dynamics that differed by geographic segment, with Italy recording a decrease in GDP for the third year running (although there are glimpses of a recovery for 2015). In this context, all the restructuring actions that the Immsi Group has undertaken in order to adapt its production capacity to market trends have continued, aiming to balance the available capacity with the actual demand, and consequently increase the productivity of the Group. The earnings for the period also present different trends as regards the various sectors that make up the Group as a consequence of the different business dynamics that characterised the period in question. Referring to the explanations given later in this document for a more detailed description of what is written below, it should be noted at the outset that:

the “property and holding sector” consolidates the balance sheet and income results of Immsi S.p.A., Immsi Audit S.c.a r.l., ISM Investimenti S.p.A., Is Molas S.p.A., Apuliae S.p.A., Pietra S.r.l. and RCN Finanziaria S.p.A.;

the “industrial sector” includes the companies owned by the Piaggio Group, while while

the “Marine sector” includes Intermarine S.p.A. and other minor subsidiary or associated

companies. Some of the main income and balance sheet figures of the Immsi Group are presented below, divided by business sector and determined, as already stated, in accordance with the international accounting standards (IAS/IFRS). A more detailed description of the figures below may be found later on in this document.


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Alternative non-GAAP performance measures This Report contains some measures that, albeit not laid down in the IFRS (“Non-GAAP Measures”), derived from IFRS financial measures. These measures – which are presented in order to evaluate the trend of the Group's operations to a better extent – should not be considered as an alternative to IFRS measures and are homogeneous with those in the Annual Report and Financial Statements as of 31 December 2013 and in the periodical quarterly reports of the Immsi Group, without prejudice to information specifically given below. It should, furthermore, be borne in mind that the methods for calculating the measures applied therein might not be homogeneous with those adopted by others, as they are not specifically governed by the reference accounting standards, with the result that said measures might not prove sufficiently comparable. In particular the following alternative performance measures have been used:

EBITDA: defined as operating income (EBIT) gross of amortisation and depreciation. In this regard, it should be noted that - as of 31 December 2013 - the definition of EBITDA has been revised, considering it equal to operating income (EBIT) before depreciation, amortisation and impairment costs of tangible and intangible assets, as reported in the Income statement.

Net financial debt: represented by (current and non-current) financial liabilities, minus

cash on hand and other cash and cash equivalents, as well as other (current and non-current) financial receivables. The other financial assets and liabilities arising from the valuation at fair value of the derivative financial instruments designated as hedges and the fair value adjustment of the related hedged items do not, however, enter into determining net financial debt. Among the schedules contained in this Report, a table detailing the items of the balance sheet situation used to determine this indicator is also included. In this regard, in compliance with the CESR recommendation of 10 February 2005 “Recommendations for the consistent implementation of the European Commission’s Regulation on Prospectuses”, it should be noted that the indicator, thus formulated, represents what was monitored by the Group's management and differs from what is suggested by Consob Communication no. 6064293 of 28 July 2006, as it also includes the non-current portion of financial receivables (equal to 0 in the two periods compared).


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Immsi Group as of 31 December 2014

Property Industrial Marine Immsi and holding in % sector in % sector in % Group in %

In thousands of euros sector

Net revenues

4,819 1,213,272 56,486 1,274,577

Operating income before depreciation and amortisation (EBITDA)

-4,562 n/m 159,305 13.1% -5,709 -10.1% 149,034 11.7%

Operating income (EBIT) -5,060 n/m 69,661 5.7% -6,976 -12.3% 57,625 4.5%

Earnings before taxation -82,633 n/m 26,514 2.2% -12,646 -22.4% -68,765 -5.4%

Earnings for the period including non-controlling interests

-78,113 n/m 16,064 1.3% -9,295 -16.5% -71,344 -5.6%

Group earnings for the period (for consolidation purposes)

-73,068

n/m

8,127

0.7%

-5,873

-10.4%

-70,814

-5.6%

Adjusted earnings for the period including non-controlling interests *)

-78,113 n/m 18,639

1.5% -9,295 -16.5% -68,769 -5.4%

Adjusted Group earnings for the period (for consolidation purposes) *)

-73,068 n/m 9,430 0.8% -5,873 -10.4% -69,511 -5.5%

Net financial position -300,244 -492,809 -116,702 -909,755 Personnel (number) 71 7,510 284 7,865

*) For details on how this adjustment was calculated, see the Notes.

Hereunder we give the same table referring to the preceding year. A comparison between the two periods is made in the specific comment to the single business sectors presented further on: Immsi Group as of 31 December 2013

Property Industrial Marine Immsi and holding in % sector in % sector in % Group in %


Net revenues 5,080 1,212,535 40,129 1,257,744


-4,062 n/m 146,772 12.1% -21,493 -53.6% 121,217 9.6%

Operating income (EBIT) -4,617 n/m 62,627 5.2% -23,150 -57.7% 34,860 2.8%

Earnings before taxation -28,557 n/m 30,266 2.5% -27,699 -69.0% -25,990 -2.1%

Earnings for the period including non-controlling interests

-23,931 n/m -6,528 -0.5% -19,377 -48.3% -49,836 -4.0%

Group earnings for the period (for consolidation purposes) Adjusted earnings for the period including non-controlling interests *) Adjusted Group earnings for the period (for consolidation purposes) *)

-19,120

-23,931

-19,120

n/m

n/m

n/m

-2,188

18,066

10,293

-0.2%

1.5%

0.8%

-12,243

-19,377

-12,243

-30.5%

-48.3%

-30.5%

-33,551

-25,242

-21,069

-2.7%

-2.0%

-1.7%

Net financial position -256,640 -475,628 -118,515 -850,783 Personnel (number) 74 7,688 302 8,064


It should be noted that the data given in the preceding tables refer to the consolidable results, that is in particular net of the intergroup revenues and costs and the dividends from subsidiaries.


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The property and holding sector

31/12/2014 in % 31/12/2013 in % Change in %

In thousands of euros

Net revenues 4,819 5,080 -261 -5.1%


-4,562 n/m -4,062 n/m -500 -12.3%

Operating income (EBIT) -5,060 n/m -4,617 n/m -443 -9.6%

Earnings before taxation -82,633 n/m -28,557 n/m -54,076 n/m

Earnings for the period including non-controlling interests -78,113 n/m -23,931 n/m -54,182 n/m

Group earnings for the period (for consolidation purposes) -73,068 n/m -19,120 n/m -53,948 n/m

Net financial position -300,244 -256,640 -43,604 -17.0%

Personnel (number) 71 74 -3 -4.1%

The “property and holding sector” consolidates the balance sheet and income results of Immsi S.p.A., Immsi Audit S.c.a.r.l., ISM Investimenti S.p.A., Is Molas S.p.A., Apuliae S.p.A., Pietra S.r.l. and RCN Finanziaria S.p.A..

Overall, the property and holding sector posted a net loss for consolidation purposes for 2014 of approximately 73.1 million euros, compared to a net loss of approximately 19.1 million euros as of 31 December 2013. Net debt for the sector was negative amounting to 300.2 million euros, while it totalled 256.6 million at the end of the previous period; below is a description of the developments of the operating outlook regarding the major companies in this sector. The Parent Company Immsi S.p.A. in the separate financial statements (including intergroup eliminations), posted a net loss for the period of approximately 65.6 million euros, compared to a net profit of approximately 14.8 million euros as of 31 December 2013, mainly due to a weaker contribution from net financial activities. In fact, in 2014, the Company posted an operating loss of approximately 0.9 million euros, compared to the figure of -0.6 million euros for 2013, and a negative balance from financial activities of 66.4 million euros (+12.1 million euros in 2013). The negative result of financial activities in 2014 was due in particular to the impairment of the Alitalia - CAI investment for a total of 64,350 thousand euros, which was necessary after impairment testing carried out in 2014 on the recoverability of the carrying amount of the investment. Instead, in 2013, against an impairment of 14 million euros relative to the Alitalia - CAI investment, income had been posted following the distribution of dividends by Piaggio & C. S.p.A. amounting to approximately 18.1 million euros, and during the last quarter of the year, a total of 14.5 million Piaggio shares were sold in three separate tranches, for total proceeds of approximately 29 million euros and a capital gain, gross of the relative tax effect, of approximately 9.6 million euros. For details of the analysis of impairment relative to the Alitalia - CAI investment, reference is made to the Notes. Lastly, as regards non-financial income components, net revenues of Immsi S.p.A. realised during 2014 from property and services management amounted to 4.5 million euros, which is basically in line with the previous year. Net financial debt of the Parent Company Immsi S.p.A. as of 31 December 2014 amounted to 85.8 million euros, up by approximately 28.7 million euros compared to figures as of 31 December 2013


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(equal to 57.1 million euros). This increase is mainly due to: the conversion in January 2014 of the subscribed portion of the subordinated convertible

debenture loan issued by Alitalia - CAI in February 2013 (equal to 11.7 million euros, including interest accrued at that date);

the payment of a total of 5.4 million euros to Alitalia – CAI in the fourth quarter of 2014, in compliance with the Stand-by Equity Commitment undertaken in September 2014 to subscribe and issue for a maximum of 10 million euros the capital increase payment, also in several tranches and in advance for a maximum of 7.8 million euros in relation to the closing of the Etihad operation;

cash flows relating to the operating management of the Company and to the hedging of temporary financial requirements of some subsidiaries.

Lastly, it should be noted that Immsi S.p.A. did not pay dividends during 2014. As regards the property sector and in particular with reference to the subsidiary Is Molas S.p.A., which runs a tourist and sports' resort in Pula (Cagliari), activities in 2014 were considerably affected by the management of litigation with the company Italiana Costruzioni. In February 2013, contracts had been signed for the construction of the first 15 holiday villas and first section of primary services: in March the works were handed over with the relative opening of the construction sites. In October 2013 the second state of progress regarding performed works was prepared: subsequently, the construction company greatly slowed its activities - already affected by delays - despite the constant requests to resume the works. As a result of this event, a dispute arose between Is Molas S.p.A. and the contractor: for further details reference is made to the specific comments in the section entitled "Disputes in progress”. As regards the award of new contracts for the construction of 15 villas and the first section of primary services, Is Molas is directly negotiating the award of the works to a company that took part in the previous tender. In the meantime, the Company contacted the Muncipality of Pula in order to define a new Planning Document that takes into account the extension of the deadline the Company had to deal with, for the development, due to Regional authorisation procedures introduced after the 2006 Document had been stipulated, establishing a new deadline for 30 June 2021. From the commercial point of view, during 2014 also the promotional activity of the residential component of the project continued, assigned to some of the leading international real estate brokerage companies specialising in the sale of prestigious properties: in particular, exclusive mandates were granted to real estate brokerage companies operating in Europe and worldwide, as well as to real estate brokerage companies specialising in the sale of residential products in Sardinia and in major Italian cities. As regards earnings for the period, during 2014 net revenues of approximately 2.3 million euros were posted, in line with the previous year. In terms of margins, during 2014 the Company posted an operating loss of 3.8 million euros (-3.7 million euros in the previous year) and a net loss for consolidation purposes for the Immsi Group equal to 2.2 million euros (in line with the figure of the previous year). Net debt of the Company amounted to 43.8 million euros, with a cash flow of 1.8 million euros compared to 31 December 2013 (when net debt amounted to 42 million euros): this change is mainly due to the negative contribution of cash generated internally, only partially offset by a payment of 3.6 million euros made by the partner ISM Investimenti S.p.A. in relation to the subscription and payment of capital increases in 2014. As regards the Pietra Ligure project (Pietra S.r.l.), the administrative procedure to approve the Final Project, pursuant to Italian Presidential Decree no. 509/1997, to turn the former Rodriquez shipyard (now Intermarine) into a marina, with relative public, hospitality, residential and production facilities, in the Municipality of Pietra Ligure, was completed during 2014. After the project was


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approved by the Local Council of Pietra Ligure in its meeting of 15 July, the Local Authorities Planning Conference authorised the issue of a maritime concession and planning permission on 31 October 2014. Following this authorisation, the deadlines for completing the preliminary sales contract for the property portfolio commenced. On 30 December 2014, the long-term document for the maritime concession was signed, in which the Municipality of Pietra Ligure granted a 99-year maritime concession for a state-owned area to build and operate a marina with related tourist/hospitality, commercial, recreational and sports' facilities and relative shipyard. With reference to the subsidiary Apuliae S.p.A., it should be reminded that at present the suspension of the renovation work started in March 2005 following investigations by the legal authorities continues, pending the final decision of the outstanding matters. For updates on the matter, reference is made to the paragraph "Disputes in progress" below. As of 31 December 2014, the company posted an economic break-even and a net financial debt equal to approximately 0.2 million euros, up by approximately 0.1 million euros increase compared to 31 December 2013 due to the negative contribution of cash generated internally. Other major companies falling within the property and holding sector also include RCN Finanziaria S.p.A. and ISM Investimenti S.p.A.:

RCN Finanziaria S.p.A., in which Immsi S.p.A. holds a 63.18% stake, and sole shareholder of Intermarine S.p.A., reported a net loss for consolidation purposes for the Immsi Group equal to approximately 2.5 million euros (-2.2 million euros in 2013) and Net financial debt as of 31 December 2014 amounting to 118.7 million euros, an increase of approximately 5 million euros compared to 31 December 2013 (figure equal to 113.7 million euros): such increase is predominantly relative to the recapitalisation of overall 4 million euros of the subsidiary Intermarine S.p.A. through the conversion of financial receivables – preliminarily transferred by Immsi S.p.A. to RCN Finanziaria S.p.A. and owed by the subsidiary – into equity reserves of the same;

ISM Investimenti S.p.A., in which Immsi S.p.A. holds a 72.64% stake in terms of voting rights, and which controls Is Molas S.p.A. with an 89.48% stake as of 31 December 2014, posted a net loss for consolidation purposes for the Immsi Group equal to approximately 2.5 million euros (-1.9 million euros in 2013) and Net financial debt as of 31 December 2014 amounting to 73.6 million euros, an increase of approximately 8.1 million euros compared to 31 December 2013 primarily as a result i) of the subscription of tranches of a share capital increase of the subsidiary Is Molas, as already indicated; and ii) of the capitalisation of interest payable on some outstanding loans.


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The industrial sector: Piaggio Group

31/12/2014 in % 31/12/2013 in % Change in %


Net revenues 1,213,272 1,212,535 737 0.1%


159,305 13.1% 146,772 12.1% 12,533 8.5%

Operating income (EBIT) 69,661 5.7% 62,627 5.2% 7,034 11.2%

Earnings before taxation 26,514 2.2% 30,266 2.5% -3,752 -12.4%

Earnings for the period including non-controlling interests 16,064 1.3% -6,528 -0.5% 22,592 n/m

Group earnings for the period (for consolidation purposes) 8,127 0.7% -2,188 -0.2% 10,315 n/m Adjusted earnings for the period including non-controlling interests *) Adjusted Group earnings for the period (for consolidation purposes) *)

18,639

9,430

1.5%

0.8%

18,066

10,293

1.5%

0.8%

573

-864

3.2%

-8.4%

Net financial position -492,809 -475,628 -17,181 -3.6%

Personnel (number) 7,510 7,688 -178 -2.3%


As regards the industrial sector, in 2014 the Piaggio Group sold 546,500 vehicles worldwide, with a reduction in volumes of approximately 1.6% compared to the previous year, when 555,600 vehicles were sold. In geographic terms, minor decreases were recorded on all reference markets: Emea and Americas (-0.6%), India (-1.8%) and Asia Pacific 2W (-3.5%). Sales of commercial vehicles increased (+4.1%) while sales of two-wheeler vehicles went down (-5.0%). Two-wheeler vehicle sales were affected by the particular market context. In Europe, which is the reference area for Piaggio Group operations, the two-wheeler market finally reversed its negative trend in 2014, with a 2.9% increase in sales compared to 2013 (+8.5% for the motorcycle segment, and -0.9% for the scooter segment). The Asean 5 area (Asia) recorded a slight downturn in sales (-2.2% compared to 2013) and in particular sales fell by 2.6% in Vietnam. In Europe, the Piaggio Group retained its market leadership, with a 16.1% share. The Group achieved excellent sales results on the American market (+4.0%). Sales of commercial vehicles rose in EMEA and the Americas (+5.9%) and in India (+4.0%) boosted by the positive performance of respective reference markets. In terms of consolidated turnover, the Group ended 2014 with net revenues equal to 1,213.3 million euros, slightly up compared to the figure of 1,212.5 million euros in 2013 (+0.1%). As for the type of products, turnover from commercial vehicles increased (+3.4%), while it went down for two-wheeler vehicles (-1.4%). As a result, the percentage of two-wheeler vehicles accounting for overall turnover dropped from 70.3% in 2013 to the current figure of 69.3%; vice versa, the percentage of commercial vehicles rose from 29.7% in 2013 to 30.7% in 2014. Operating income including amortisation and depreciation and impairment costs of intangible assets and plant, property and equipment (EBITDA) for 2014 amounted to 159.3 million euros, equal to 13.1% of net revenues, registering an increase (+8.5%) compared to 146.8 million euros (12.1% of net revenues) for the previous year. Operating income (EBIT) for 2014 amounted to 69.7 million euros, registering an increase


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compared to 62.6 million euros in 2013 (+7 million euros, i.e. +11.2%), with amortisation and depreciation and impairment costs of intangible assets and plant, property and equipment totalling 89.6 million euros (+5.5 million euros, i.e. +6.5% compared to the previous year): in 2014, operating income (EBIT) accounted for 5.7% of net revenues, up on the figure of 5.2% for the previous year. The result of financing activities declined compared to the previous year by 10.7 million euros, with a negative value of 43.1 million euros (32.4 million euros in 2013). This performance is due in particular to non-recurrent costs relating to the early repayment of a debenture loan maturing in 2016 and to the refinancing of a revolving credit line, amounting to 3.6 million euros, and also to a poorer performance of investments measured at equity amounting to 2.5 million euros, a lower capitalisation of interest amounting to 2 million euros (due to lower qualifying assets) and the increase in average debt. In 2014, profit before tax of the Piaggio Group amounted to 26.5 million euros (-12.4% compared to 30.3 million euros in 2013) while adjusted net profit, calculated excluding the impact arising from the above non-recurrent costs and their related tax effect, amounted to 18.6 million euros (1.5% of turnover), up on adjusted profit for the previous year, amounting to 18.1 million euros (1.5% of turnover). The adjustment to net profit for 2013 referred to the non-recurrent cost recognised, following the verification by the Italian Revenue Agency for the 2009, 2010 and 2011 periods, which terminated with the issue of Reports of Verification (PVC) mainly concerning transfer pricing. Taxes for 2014 amounted to 10.5 million euros, while they stood at 36.8 million euros in 2013, when the value was particularly high due to the recognition of a non-recurrent cost amounting to 24.6 million euros. The net financial debt of the Piaggio Group as of 31 December 2014 was equal to 492.8 million euros, compared to 475.6 million euros as of 31 December 2013. The increase of approximately 17.2 million euros mainly refers to the investment programme. Cash flow from operating activities (defined as net profit, minus non-monetary costs and income), was equal to 105.3 million euros (compared to 78.1 million euros in 2013), net working capital involved a cash flow of approximately 14.3 million euros (cash flows amounted to 50.7 million euros in 2013) while investing activities involved a total of 113 million euros of financial resources (compared to 70 million euros in 2013). Two-wheeler business Two-wheeler vehicles can mainly be grouped into two product segments: scooters and motorcycles, in addition to the related spare parts and accessories business, the sale of engines to third parties, involvement in leading two-wheeler sports championships and the provision of technical services. The world two-wheeler market comprises two macro areas, which clearly differ in terms of characteristics and scale of demand: economically advanced countries (Europe, United States, Japan) and emerging nations (Asia Pacific, China, India, Latin America). In the first macro area, which is a minority segment in terms of volumes, the Piaggio Group has a historical presence, with scooters meeting the need for mobility in urban areas and motorcycles for recreational purposes. In the second macro area, which in terms of sales, accounts for most of the world market and is the Group's target for expanding operations, two-wheeler vehicles are the primary mode of transport. In 2014, the world two-wheeler market (scooters and motorcycles) recorded a decrease of around 3% compared to the previous year, with 49 million vehicles sold. India, the most important two-wheeler market, continued to grow in 2014, ending the year with 16 million vehicles sold, equal to an increase of 11.5% compared to 2013. China instead recorded decreasing volumes in 2014, down by 8.3% compared to the previous year and ending the period with just under 11 million units sold. The Asian area, termed Asean 5, reported a slight decrease in 2014 (-2.2% compared to 2013) ending the year with 13.5 million units sold. Indonesia, the main market in this area, continued its growth trend in 2014, with total volumes of over 7.8 million units and an increase of 0.9% compared to the previous year. Sales were down in Vietnam (2.7 million units sold; -2.6%


15

compared to 2013), in Thailand (1.7 million units sold; -13.1% compared to 2013) and in Malaysia (470 thousand units sold; -14% compared to 2013); the last country in the Asean 5 area, the Philippines, recorded a positive growth trend, with 786 thousand units sold in 2014 (+4.5% compared to 2013). Volumes of other Asian area countries (Singapore, Hong Kong, South Korea, Japan, Taiwan, New Zealand and Australia) increased, in overall terms, compared to the previous year, with nearly 1.29 million units sold (+1.2%). In this area, Taiwan continued to grow in 2014, closing the period with 674 thousand units sold (+4.4% compared to 2013). The North American market, up 4.1% compared to 2013 (539,000 vehicles sold) confirmed its growth trend. South America closed 2014 with over 4 million vehicles sold. Brazil, the first market in the area, recorded a downturn of 9.9%, with just over 1.4 million vehicles sold in 2014. Europe, which is the reference area for Piaggio Group operations, finally reversed its negative trend in 2014, with a 2.9% increase in sales on the two-wheeler market compared to 2013 (+8.5% for the motorcycle segment, and -0.9% for the scooter segment). In the scooter segment, the decrease refers to the 50cc market (-7%), while the over 50cc market reported an increase (+4.6%). In the motorcycles segment, over 50cc models reported a growth of 9%, while 50cc models reported a more modest increase of 1.2%. In this international scenario, the Piaggio Group maintained its leadership position on the European market in 2014, with a 16.1% market share thanks to consolidation in the scooter segment (a 16.6% share in 2013). The change in market share is basically due to the different weight of the Group's operations in the scooter segment compared to the motorcycle segment. In the scooter segment, the Group consolidated its leadership position, with a 24.8% market share. With production at its own site in Vinh Phuc, the Group also consolidated its position in the premium end of the market in Vietnam (with successful sales of its Vespa and Liberty models), and laid the foundations for future growth in other Asian countries, by forging business relations with local importers. Piaggio retained its strong position on the North American scooter market, where it has consolidated its leadership with a market share of just under 22%, and where the Group is committed to increasing its profile in the motorcycle segment, through the Aprilia and Moto Guzzi brands. During 2014, the Piaggio Group sold a total of 334,200 units in the two-wheeler segment worldwide, accounting for a net turnover equal to approximately 841 million euros (-1.4%), including spare parts and accessories (114.4 million euros, -1.5%). In Europe, the performance of the Piaggio Group was affected by a falling demand in the scooter segment (-0.9%). In Asia Pacific, the decline in sales is due to a weak demand and a particularly aggressive sales policy adopted by the main competitor, that launched some new models in 2014. Commercial Vehicles business The Commercial Vehicles business includes three- and four-wheelers with a maximum mass below 3.5 tons (category N1 in Europe) designed for commercial and private use, and related spare parts and accessories. The Piaggio Group operates in Europe and India on the light commercial vehicles market, with vehicles designed for short range mobility in urban areas (European urban centres) and suburban areas (the product range for India). The Group acts as operator on European markets in a niche segment (urban mobility), thanks to its range of low environmental impact products, whereas it is also present in India, in the passenger vehicle and cargo sub-segments of the three-wheeler market. Specifically, in 2014, in Europe, the volume of light commercial vehicles, the segment where the Piaggio Group operates, amounted to 1.5 million units sold, with an increase of 11.3% compared to 2013. Sales on the Indian three-wheeler market, where Piaggio Vehicles Private Limited, a subsidiary of Piaggio & C. S.p.A. operates, went up from 501,000 units in 2013 to 531,150 in 2014, registering a 6% increase. On this market, the passenger vehicle segment performed well, up by 5.9% and selling 431,000 units. The cargo segment also reported a growth trend, up by 6.6%, from


16

94,000 units in 2013 to 100,000 units in 2014. In 2014, the Commercial Vehicles business generated a turnover of approximately 372.3 million euros, including approximately 34.4 million euros relative to spare parts and accessories, registering a 3.4% increase over the previous year. During the year, 212,300 units were sold, up 4.1% compared to 2013. On the EMEA and Americas market, the Piaggio Group sold 10,100 units, generating a total net turnover of approximately 65.9 million euros, including spare parts and accessories for 15.6 million euros. The 5.9% increase in sales is mainly due to the good performance of the reference market. On the Indian three-wheeler market, up 6% over the previous year, Piaggio Vehicles Private Limited holds a 32.5% share (34.6% in 2013). Sales of three-wheeler vehicles went down from 173,320 units in 2013 to 172,615 units in 2014, registering a decrease of 0.4%. Detailed analysis of the market shows that Piaggio Vehicles Private Limited consolidated its market leader position in the goods transport segment (cargo segment) with a market share of 52.2% (52.6% in 2013). Its market share, although decreasing, remained steady in the Passenger segment, standing at 27.9% (30.4% in 2013). On the four-wheeler market, sales of Piaggio Vehicles Private Limited in 2014 went up by 16.3% compared to 2013, with 6,388 units sold, while the market share went up to 4.6% (2.9% in 2013).


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The Marine sector: Intermarine

31/12/2014 in % 31/12/2013 in % Change in %


Net revenues 56,486 40,129 16,357 40.8%


-5,709 -10.1% -21,493 -53.6% 15,784 73.4%

Operating income (EBIT) -6,976 -12.3% -23,150 -57.7% 16,174 69.9%

Earnings before taxation -12,646 -22.4% -27,699 -69.0% 15,053 54.3%

Earnings for the period including non-controlling interests -9,295 -16.5% -19,377 -48.3% 10,082 52.0%

Group earnings for the period (for consolidation purposes) -5,873 -10.4% -12,243 -30.5% 6,370 52.0%

Net financial position -116,702 -118,515 1,813 1.5%

Personnel (number) 284 302 -18 -6.0%

As regards the Marine sector, net sales revenues went up considerably during 2014 (comprising turnover and changes to orders in progress) compared to the same period of the previous year, with a 40.8% increase, to 56.5 million euros, compared to 40.1 million euros for 2013. The progress in production, including the activities of research and development, and the completion of the constructions and deliveries have concerned particularly:

the Defence division, with 52 million euros (36.4 million during 2013), mainly due to progress

in activities to modernise the Gaeta minesweepers of the Italian Navy, the construction and supply of logistics services for Guardia di Finanza [Italian tax police], the construction of the remaining minesweeper unit for the Finnish Navy and the Selex contract for the construction of an integrated minesweeper platform, in a capacity as sub-supplier in a contract with a leading company operating in the sector;

the Fast Ferries and Yachts division, with a total of 4.5 million euros (3.7 million during 2013), mainly for repair activities, relative to the transfer of the last catamaran to Oman and to progress concerning the change request made by Oman.

Production was characterised, in all sectors, by volumes and margins that overall were not sufficient to absorb direct production costs and fixed structure costs; however progress relating to the Selex contract, for an integrated minesweeper platform, acquired in December 2013, made it possible to considerably decrease negative margins compared to the previous year. Furthermore, it should be noticed that for the Fast Ferries and Yacht business there is a continued lack of new significant sales contracts for both new and previously owned vessels. The company, in the light of the results recorded, and pending a market recovery and developments on the sales front, which are crucial for absorbing indirect costs and overheads to an adequate degree, exploited to the full every opportunity to contain structural costs in 2014 so as to minimise losses incurred. At the same time, commercial activities continued in all the operational businesses of the company, trying to capture favourable commercial opportunities. Earnings for the period showed negative deviations, at an operational level, compared to forecasts, due to additional construction costs for the 3 minesweeper units and to obtaining Final Approvals for the first two units delivered to the Finnish Navy, to delays in production progress of contracts for


18

Guardia di Finanza, higher costs for transport of the last unit to Oman and the effects of Amendments signed with Oman for the delivery, the adjustment in the stock value of the two semi-finished 38-metre yachts under construction, to the lower realisation value determined by the lower sale price resulting from a contract signed in December 2014 with a company in the pleasure craft sector, and negative effects relative to non-recurrent costs related to a decrease in personnel and further costs for completion of the Pietra Ligure project as a result of the authorisation procedure continuing. In view of the above, an operating loss of 7 million euros was recorded for 2014, improving by approximately 16.2 million euros compared to 2013 (when this figure stood at -23.2 million euros). As regards profit before tax, a loss of 12.6 million euros was recorded (compared to a loss of 27.7 million euros in 2013) while net loss for consolidation purposes for the Immsi Group amounted to 5.9 million euros as of 31 December 2014 compared to a loss of 12.2 million euros recorded in the previous year. As of 31 December 2014, the overall order book of the company amounted to approximately 148 million euros. In particular, the portion relative to the Defence segment amounted to approximately 147.3 million euros, mainly relative to i) the Selex integrated minesweeper platform (for an outstanding 63.7 million euros); ii) the refitting programme for eight Gaeta minesweepers for the Italian Navy (for an outstanding 56.4 million euros); iii) construction programmes and relative logistics services for Guardia di Finanza (for an outstanding 25.9 million euros); and iv) remaining progress relative to the construction programme for 3 minesweepers for the Finnish Navy (for approximately 1.3 million euros). The company's outstanding portfolio of orders (equal to approximately 0.9 million euros), is attributable to the Fast Ferries business and mainly concerns repair and maintenance activities. As regards the financial position, net financial debt, equal to 116.7 million euros as of 31 December 2014 was down by approximately 1.8 million euros compared to 31 December 2013 (118.5 million euros), mainly due to the effect of incomings during the period, used to settle trade payables, and the recapitalisation for a total of 4 million euros of Intermarine S.p.A. by the direct parent company RCN Finanziaria S.p.A. through the conversion of financial receivables due from the subsidiary into reserves of shareholders' equity which therefore resulted in a decrease of the same amount of the net financial debt of Intermarine S.p.A..


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Economic situation and statement of financial position of the Group As stated previously, in 2014, the Immsi Group reported a considerable improvement in net revenues and operating income compared to 2013, in a macroeconomic scenario characterised by a 3% growth in the world economy, but with dynamics that differed by geographic segment, with Italy recording a decrease in GDP for the third year running (although there are glimpses of a recovery for 2015). In this context, all the restructuring actions that the Immsi Group has undertaken in order to adapt its production capacity to market trends have continued, aiming to balance the available capacity with the actual demand, and consequently increase the productivity of the Group. The scope of consolidation has not significantly changed compared to the consolidated financial statements as of 31 December 2013. In particular, the following should be noted:

the increase in the stake held by ISM Investimenti S.p.A. in Is Molas S.p.A., went from 88.86% as of 31 December 2013 to 89.48% as of 31 December 2014, following the subscription of the tranche of capital increase of the latter and the related unsubscribed shares by the non-controlling shareholder IN.CO.FIN. S.p.A.;

as regards the stake held by the Parent Company Immsi S.p.A. in ISM Investimenti S.p.A., considering the different equity rights of the two partners, the stake of shareholders' equity of ISM Investimenti S.p.A. consolidated by Immsi S.p.A. was estimated to be equal to 60.39% as of 31 December 2014;

the establishment of a new company on 14 April 2014, Piaggio Concept Store Mantova S.r.l., which manages the group's flagship stores;

the closure of the company Derbi Racing S.L., previously held 100% by Nacional Motor

S.A., on 16 December 2014; on 4 August 2014, the Spanish branch of Piaggio & C. S.p.A. - Piaggio & C. S.p.A. -

Sucursal en España was closed down. These changes did not alter the comparability of the balance sheet and income results between the two periods of reference, as the changes are of a limited extent, resulting in only a partial redistribution of the net profit and shareholders' equity between the share pertaining to the Group and minority interests. Lastly, following the purchase and sale of treasury shares by Piaggio & C. S.p.A. in 2014, the stake of consolidated shareholders' equity of the Piaggio Group, which amounted to 50.75% as of 31 December 2013, stood at 50.59% as of 31 December 2014. Net revenues realised in 2014, equal to 1,274.6 million euros and increasing over the previous year (+1.3%), mainly refer to the industrial sector (1,213.3 million euros), with 56.5 million euros relative to the Marine sector and the remaining part relative to the property and holding sector. With constant exchange rates, revenues amounted to 1,290.4 million euros (+2.6% compared to 2013). Operating income gross of amortisation, depreciation and impairment costs of intangible assets and plant, property and equipment (EBITDA) amounted to 149 million euros as of 31 December 2014, equal to 11.7% of net revenues, and increasing in absolute terms and as a percentage compared to the previous year's figure of 121.2 million euros, equal to 9.6% of revenues; Operating income (EBIT) was equal to 57.6 million euros (4.5% of net revenues), up by 22.8 million euros compared to 34.9 million euros for the previous year).


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Moreover, consolidated operating income (EBIT) does not include goodwill amortisations as, on the basis of results expected from the long-term development Plans prepared by Group companies and used in impairment testing, no impairment was deemed necessary, because goodwill is considered to be recoverable with future cash flows. Considering that the analyses conducted to estimate the recoverable value of the goodwill allocated for the Immsi Group cash-generating unit have also been determined on the basis of estimates, the Group cannot assure that there will not be a loss in value of the goodwill in future periods. Owing to the current context of the crunch in the markets of reference and in the financial markets, the different factors – both inside and outside the identified cash-generating units – used in drawing up the estimates could in the future be reviewed. The Group will constantly monitor these factors and the possible existence of future impairment losses.

A loss before tax of 68.8 million euros was recorded for 2014, compared to a loss of 26 million euros as of 31 December 2013: this performance (with a higher loss of 42.8 million euros), is due to the following in particular:

the recognition of a write-down relative to the investment held in Alitalia – Compagnia Aerea Italiana S.p.A. equal in total to 64.35 million euros in 2014, against a write-down for the same investment in 2013 of 14 million euros;

a 3.8 million euros decrease in profit before tax recorded for the industrial sector (Piaggio

Group);

the loss before taxes of the Marine sector, which recovered 15.1 million euros in 2014

compared to the loss registered for 2013;

as regards the remaining portion, to higher losses of the property and holding sector, and in

particular the increase in borrowing costs relative to the higher level of debt. Taxes for the period totalled 2.6 million euros, down by 21.3 million euros compared to 23.8 million euros as of 31 December 2013: this decrease refers to the fact that as of 31 December 2013 a non-recurrent cost of 24.6 million euros was recognised by the Piaggio Group, following an inspection by the Revenue Agency for 2009, 2010 and 2011, which terminated with the issue of reports of verification (PVC) mainly concerning transfer pricing. The company, after having explained the correctness of its actions to the Italian Revenue Agency, decided to take advantage of litigation deflationary measures, avoiding the onset of tax litigation, and has therefore settled the PVCs, significantly reducing initial requests from the inspectors. In view of this non-recurrent cost, the calculation of the consolidated average tax rate for 2013 is not significant: in this regard, the consolidated average tax rate calculation for 2014 was not significant, since profit before tax was negatively affected - as in 2013 - by a significant write-down recorded by the Parent company Immsi S.p.A. in relation to the investment in Alitalia – Compagnia Aerea Italiana S.p.A.. Lastly, following the above dynamics, the Group recorded a net loss for the period of 70.8 million euros, compared to the loss of 33.6 million euros as of 31 December 2013. The Group's net financial debt as of 31 December 2014 totalled 909.8 million euros, registering an increase of approximately 59 million euros compared to the balance of 850.8 million euros as of 31 December 2013, mainly due to net investments for the period in plant, property and equipment and


21

intangible assets, amounting to a total of 96.4 million euros and movements related to the investee Alitalia – Compagnia Aerea Italiana S.p.A. equal to 17 million euros, only partially offset by the net cash flow generated from operations, equal to 60.2 million euros.

Group gross investments in the year totalled 114.3 million euros, divided as follows:

58.5 million euros for intangible assets, almost entirely referring to the Piaggio Group; 38.8 million euros for plant, property and equipment, of which 36.6 million euros referred to

the Piaggio Group, 0.7 million euros to Intermarine S.p.A. and the remainder to the property and holding sector; and

17 million euros relative to the investee Alitalia – Compagnia Aerea Italiana S.p.A., and

specifically 11.7 million euros for the conversion in January 2014 of the subscribed portion of the subordinated convertible debenture loan issued by Alitalia - CAI in February 2013, and 5.4 million euros for payments made in the fourth quarter of 2014 in compliance with the Stand-by Equity Commitment undertaken in September 2014.

In addition to the above cash flows for the period in question, treasury shares were purchased net on the market by Piaggio & C. S.p.A. for approximately 3.6 million euros and treasury shares were assigned to beneficiaries of stock option plans for 5.1 million euros. The total shareholders’ equity of the Immsi Group as of 31 December 2014 was equal to 442.1 million euros; excluding the portion of non-controlling interest, the Group shareholders’ equity was equal to 268.2 million euros.


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Financial performance of the Group The Group prepares reclassified figures as well as the financial statement schedules required by law. A short description of the main balance sheet and income statement items is provided below the reclassified schedules. For further information on these items, reference is made to the Notes. Specific notes referring to the mandatory schedule items are omitted since the main aggregates coincide. The reclassified Consolidated income statement of the Immsi Group shown below is classified by the nature of the income components and is in line with IAS/IFRS guidelines which consider them entirely arising from ordinary activities, except for those of a financial nature. In thousands of euros 31/12/2014 31/12/2013 Change

Net revenues 1.274.577 100% 1,257,744 100% 16,833 1.3%

Costs for materials 728,406 57.1% 732,477 58.2% -4,071 -0.6% Costs for services and leases and rentals 240,775 18.9% 230,407 18.3% 10,368 4.5% Personnel costs 229,684 18.0% 230,537 18.3% -853 -0.4% Other operating income 101,282 7.9% 98,144 7.8% 3,138 3.2% Other operating costs 27,960 2.2% 41,250 3.3% -13,290 -32.2%

OPERATING INCOME BEFORE DEPRECIATION AND AMORTISATION

149,034 11.7% 121,217 9.6% 27,817 22.9%

Depreciations and write-down of plant, property and equipment

43,419 3.4% 40,799 3.2% 2,620 6.4%

Amortisation of goodwill 0 - 0 - 0 - Amortisation and write-downs of finite life intangible assets 47,990 3.8% 45,558 3.6% 2,432 5.3%

OPERATING INCOME 57,625 4.5% 34,860 2.8% 22,765 65.3%

Gain / loss on equity investments -113 0.0% 2,110 0.2% -2,223 - Financial income 14,680 1.2% 16,871 1.3% -2,191 -13.0% Borrowing costs 140,957 11.1% 79,831 6.3% 61,126 76.6%

EARNINGS BEFORE TAXATION -68,765 -5.4% -25,990 -2.1% -42,775 n/m

Taxation 2,579 0.2% 23,846 1.9% -21,267 -89.2%

EARNINGS AFTER TAXATION FROM CONTINUING ASSETS

-71,344 -5.6% -49,836 -4.0% -21,508 n/m

Gain (loss) from assets held for disposal or sale 0 - 0 - 0 -

EARNINGS FOR THE PERIOD INCLUDING NON-CONTROLLING INTERESTS

-71,344 -5.6% -49,836 -4.0% -21,508 n/m

Non-controlling interest earnings for the period -530 0.0% -16,285 -1.3% 15,755 96.7%

GROUP EARNINGS FOR THE PERIOD -70,814 -5.6% -33,551 -2.7% -37,263 n/m

ADJUSTED EARNINGS FOR THE PERIOD INCLUDING NON-CONTROLLING INTEREST

-68,769 -5.4% -25,242 -2.0% -43,527 n/m

Adjusted non-controlling interest earnings for the period 742 0.1% -4,172 -0.3% 4,915 n/m

ADJUSTED GROUP EARNINGS FOR THE PERIOD -69,511 -5.5% -21,069 -1.7% -48,442 n/m

Consolidated Group net revenues in 2014 amounted to 1,274.6 million euros, of which 1,213.3 million euros from the Piaggio Group, 56.5 million euros from the Marine sector (Intermarine S.p.A.) and 4.8 million euros from the property and holding sector. Net revenues for the industrial sector were basically stable compared to the previous year and amounted to 1,213.3 million euros (0.1%). As regards the Marine sector, consolidated revenues increased by 40.8% compared to the previous year, registering 56.5 million euros. Lastly, as regards the property and holding sector, revenues for the period (equal to 4.8 million euros) are basically in line with final figures for 2013.


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Operating costs and other consolidated Group net costs in 2014 totalled 1,125.5 million euros (88.3% of net revenues), of which 1,054 million euros relative to the Piaggio Group (equal to approximately 86.9% of net revenues for the sector). Costs for materials totalled 728.4 million euros, accounting for 57.1% of net revenues. the part relating to the industrial sector amounted to 707.5 million euros, equal to 58.3% of net revenues for the sector. Personnel costs totalled 229.7 million euros, accounting for 18% of net revenues. The largest part, 211.5 million euros (17.4% of net revenues for the sector), refers to the Piaggio Group. Operating income gross of amortisation, depreciation and impairment costs of intangible assets and plant, property and equipment (EBITDA) amounted to 149 million euros, equal to 11.7% of net revenues, of which 159.3 million euros referred to the industrial sector. Depreciation and amortisation and impairment costs of intangible assets and plant, property and equipment totalled 91.4 million euros (of which 89.6 million euros related to the industrial sector), accounting for 7.2% of net revenues. The portion related to plant, property and equipment accounted for 43.4 million euros, while the portion related to intangible assets – excluding goodwill amortisation – totalled 48 million euros. Consolidated operating income (EBIT) stood at 57.6 million euros, equal to 4.5% of net revenues, of which 69.7 million euros referring to the industrial sector. The net balance of financial activities - including investments - was negative by 126.4 million euros, comprising a net negative balance of 43.1 million euros for the industrial sector and a net negative balance of 5.7 million euros relative to the Marine sector, while the property and holding sector registered a negative balance of approximately 77.6 million euros: as already mentioned, the latter is negatively influenced by the recognition of an impairment loss by the Parent Company Immsi S.p.A. of 64.35 million euros, relating to the shareholding in Alitalia – Compagnia Aerea Italiana S.p.A.. This impairment loss was necessary after impairment tests during 2014 on the recoverability of the investment in Alitalia – Compagnia Aerea Italiana S.p.A. (“Alitalia - CAI”) which showed impairment losses. In view of the above dynamics, a loss before tax of 68.8 million euros was posted, comprising profit before tax of 26.5 million euros from the industrial sector, a loss of 12.6 million euros from the Marine sector and a loss of 82.6 million euros from the property and holding sector. Lastly, a net loss for the period, after taxation and net of the portion attributable to non-controlling interest, was registered, amounting to approximately 70.8 million euros, which is higher than the loss of 33.6 million euros recorded as of 31 December 2013. Excluding non-recurring components (adjusted result) and not considering the write-downs made by Immsi S.p.A. relative to the investment in Alitalia (equal to 64.35 million euros in 2014 and to 14 million euros in 2013 respectively) the Group recorded a net loss of 5.2 million euros in 2014, compared to a net loss of 6.4 million euros in 2013.


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Reclassified statement of financial position of the Group In thousands of euros 31/12/2014 in % 31/12/2013 in %

Current assets: Cash and cash equivalent 103,942 4.8% 74,285 3.5% Financial assets 0 0.0% 13,617 0.6% Operating assets 597,128 27.4% 584,857 27.3%

Total current assets 701,070 32.2% 672,759 31.4%

Non-current assets: Financial assets 0 0.0% 0 0.0% Intangible assets 846,575 38.9% 832,574 38.8% Plant, property and equipment 344,450 15.8% 340,309 15.9% Other assets 284,644 13.1% 300,031 14.0%

Total non-current assets 1,475,669 67.8% 1,472,914 68.6%

TOTAL ASSETS 2,176,739 100.0% 2,145,673 100.0%

Current liabilities: Financial liabilities 440,483 20.2% 359,691 16.8% Operating liabilities 600,658 27.6% 588,504 27.4%

Total current liabilities 1,041,141 47.8% 948,195 44.2%

Non-current liabilities: Financial liabilities 573,214 26.3% 578,994 27.0% Other non-current liabilities 120,273 5.5% 109,317 5.1%

Total non-current liabilities 693,487 31.9% 688,311 32.1%

TOTAL LIABILITIES 1,734,628 79.7% 1,636,506 76.3%

TOTAL SHAREHOLDERS’ EQUITY 442,111 20.3% 509,167 23.7%

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY 2,176,739 100.0% 2,145,673 100.0%

Current assets as of 31 December 2014 amounted to 701.1 million euros, up by 28.3 million euros compared to 31 December 2013. This increase is due to positive changes in cash and cash equivalents, equal to 29.7 million euros and in operating assets, amounting to 12.3 million euros, partly offset by the resetting of financial activities, which were equal to 13.6 million euros as of 31 December 2013. Non-current assets as of 31 December 2014 (including assets for disposal) amounted to 1,475.7 million euros compared to 1,472.9 million euros as of 31 December 2013, with an increase of 2.8 million euros. In particular, under non-current assets, intangible assets amounted to 846.6 million euros, up by 14 million euros compared to 31 December 2013; plant, property and equipment amounted to 344.5 (340.3 million at the end of 2013) and other assets totalled 284.6 million euros (compared to 300 million at the end of 2013). Current liabilities as of 31 December 2014 totalled 1,041.1 million euros, up by 92.9 million euros compared to 31 December 2013, compared to the increase in current operating liabilities (+80.8 million euros) and financial liabilities (+12.2 million euros). Non-current liabilities as of 31 December 2014 totalled 693.5 million euros compared to 688.3 million euros as of 31 December 2013, up due to the increase in other non-current liabilities (+11 million euros) and higher than the decrease in financial liabilities (-5.8 million euros). Consolidated shareholders' equity of the Group and of non-controlling interest amounted to 442.1 million euros as of 31 December 2014, of which 174 million euros attributable to minority shareholders.


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An analysis of invested capital and its financial hedging is presented below: In thousands of euros 31/12/2014 in % 31/12/2013 in %

Current operating assets 597,128 40.6% 584,857 39.8% Current operating liabilities -600,658 -40.8% -588,504 -40.1%

Net operating working capital -3,530 -0.2% -3,647 -0.2%

Intangible assets 846,575 57.5% 832,574 56.7% Plant, property and equipment 344,450 23.4% 340,309 23.2% Other assets 284,644 19.3% 300,031 20.4%

Invested capital 1,472,139 100.0% 1,469,267 100.0%

Non-current non-financial liabilities 120,273 8.2% 109,317 7.4% Non-controlling interest capital and reserves 173,923 11.8% 171,247 11.7% Consolidated shareholders’ equity of the Group 268,188 18.2% 337,920 23.0%

Total non-financial sources 562,384 38.2% 618,484 42.1%

Net financial debt 909,755 61.8% 850,783 57.9%

The schedule below illustrates the Statement of Cash Flows for the period: In thousands of euros 31/12/2014 31/12/2013

Cash generated internally 88,479 76,816 Change in net working capital -28,316 -64,948

Net cash flow generated from operations 60,163 11,868

Payment of dividends by Parent company 0 0 Payment of dividends to non-controlling interest by the companies of the Group 0 -14,942 Increase in share capital of subsidiaries underwritten by non-controlling interest 5,076 0 Net purchases of treasury shares by Group companies -3,542 -1,003 Acquisition of intangible assets -58,496 -48,873 Purchase of plant, property and equipment -38,773 -40,193 Net decrease from property disposals 910 1,123 Acquisition of non-controlling equity investments, net of disposal -16,999 -27,996 Acquisition of controlling equity investments and business complexes, net of disposals 0 29,960 Other net movements -7,311 8,615

Change in net financial position -58,972 -81,441

Initial net financial position -850,783 -769,342

Closing net financial position -909,755 -850,783


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Net financial debt, equal to 909.8 million euros as of 31 December 2014, is analysed below and compared with the same figure as of 31 December 2013. In thousands of euros 31/12/2014 31/12/2013

Short-term liquidity Cash and cash equivalent -103,942 -74,285 Financial assets 0 -13,617

Total short-term financial assets -103,942 -87,902

Short-term financial payables Bonds 0 0 Amounts due to banks 383,225 294,815 Amounts due under finance leases 30 5,809 Amounts due to other lenders 57,228 59,067

Total short-term financial payables 440,483 359,691

Total short-term financial debt 336,541 271,789

Medium/long-term financial assets Receivables for loans 0 0 Other financial assets 0 0

Total medium/long-term financial assets 0 0

Medium/long-term financial payables Bonds 288,369 195,318 Amounts due to banks 283,372 380,483 Amounts due under finance leases 211 0 Amounts due to other lenders 1,262 3,193

Total medium/long-term financial payables 573,214 578,994

Total medium-/long-term financial debt 573,214 578,994

Net financial debt *) 909,755 850,783

*) The indicator does not include financial assets and liabilities arising from the fair value valuation of derivative financial instruments designated as hedges and the adjustment to fair value of the related hedged items and related expenses (see note G2 – “Financial liabilities” in the Explanatory Notes).


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Financial situation and statement of financial position of the Parent Company

A summary sheet and a short description of the main balance sheet and income statement items is provided below. Further information on these items may be found in the Notes to the financial statements of Immsi S.p.A.. In thousands of euros 2014 Year 2013

Earnings on financial operations -66,359 12,103 Earnings before taxation -67,309 11,536 Earnings of the period -65,628 14,843

Net operating working capital 58,903 48,171 Invested capital 466,179 504,126 Non financial sources 380,358 447,033 Net financial position -85,822 -57,092 Shareholders’ equity 359,443 425,259

Personnel (number) 12 13

During 2014, the Company posted a loss from financial activities of 66,359 mainly due to the write-down of 64,350 thousand euros relative to the investment in Alitalia – Compagnia Aerea Italiana S.p.A..

Net operating working capital went from 48,171 thousand euros as of 31 December 2013 to 58,903 thousand euros at the end of 2014, mainly due to the increase in receivables due from Group companies. Invested capital amounted to 466,179 thousand euros, down compared to 31 December 2013, and mainly comprised the investment property situated in Rome amounting to 73,887 thousand euros, investments in subsidiaries amounting to 322,359 thousand euros, and the investment in Alitalia – Compagnia Aerea Italiana S.p.A. amounting to 10,349 thousand euros. Non-financial sources, consisting of 20,915 thousand euros relative to non-current non-financial liabilities (mainly deferred tax liabilities) and 359,443 thousand euros relative to shareholders' equity, went down compared to 31 December 2013, due to the change in shareholders' equity at the end of 2014. Net financial debt as of 31 December 2014 amounted to 85,822 thousand euros, up by 28,730 thousand euros compared to the figure as of 31 December 2013. This increase was caused in particular by cash flows generated by the Company equal to 11.5 million euros, the conversion in January 2014 of the subscribed portion of the subordinated convertible debenture loan issued by Alitalia - CAI in February 2013 equal to 11.7 million euros and the payment of a total of 5.4 million euros to Alitalia – CAI in the fourth quarter of 2014, in compliance with the Stand-by Equity Commitment undertaken in September 2014.


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Reconciliation between shareholders’ equity and earnings for the period of the Parent Company and the Consolidated figures Below is a reconciliation between shareholders’ equity and earnings for the period of the Parent Company and the consolidated figures: In thousands of euros

Shareholders’ Earnings for equity the period

Shareholders’ equity and earnings for the period as recorded in the financial statements of the Parent Company Immsi S.p.A.

359,443 (65,628)

Dividends derecognition from subsidiaries of the Parent Company n/a 0 Eliminating the gains from disposals of shares in subsidiaries of the Parent company n/a 0 Pro rata earnings and shareholders’ equity of investee companies 493,509 (5,186) Eliminating the carrying amount of the investments (584,764) 0 Eliminating the effects of other intergroup transactions and records 0 0

TOTAL 268,188 (70,814)


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Research & development The Immsi Group carries out research and development activities through the Piaggio Group and the subsidiary Intermarine S.p.A.: below is a summary of the main current activities in the two respective sectors. With reference to the Piaggio Group, in 2014 the Group continued its policy of retaining technological leadership in the sector, allocating total resources of 46.3 million euros to research and development, of which 31.8 million euros capitalised under intangible assets as development costs. Piaggio's research and development is strongly focussed on two main themes: developing engines that are even more environmentally friendly and with an even better performance, and vehicles with an improved functionality and safety. Anticipating customer requirements, creating products that are innovative in terms of their technology, style and functionality, pursuing research for a better quality of life are all fields of excellence in which the Piaggio Group excels, as well as a means for measuring its leadership position on the market: the Group develops these areas through research and development at seven centres in Italy, India, Vietnam, the United States and China. In particular, the main objective of the Piaggio Group is to meet the most progressive needs for mobility, while reducing the environmental impact and consumption of its vehicles, guaranteeing their performance and levels of excellence. A constant focus is placed on research into vehicles that are at the forefront in terms of:

environmental credibility, products that can reduce pollutant gas and CO2 emissions in town and out-of-town use; this is achieved by further developing traditional engine technologies (increasingly sophisticated internal combustion engines), as well as making more use of renewable, sustainable energy sources;

reliability and safety, vehicles that enable a growing number of users to get about town easily, helping to reduce traffic congestion and guaranteeing high standards of active, passive and preventive safety;

recyclability, i.e. products that minimise environmental impact at the end of their useful life cycle; and

cost-effectiveness, vehicles with lower running and maintenance costs. In 2014 research results which became actual applications for vehicles in production are summarised below:

Reduction of consumption and emissions, improvement of the engines Results in this field were seen particularly in three fundamental fields of research: - optimisation of engine thermal fluid dynamics, with particular reference to the combustion process; - reduction of organic leaks (friction, pumping); - improvement in the performance of the CVT transmission system. Much energy is also invested in engine acoustics and timbre by developing numerical/experimental methodologies for designing the intake and exhaust systems and engine components with acoustic emissions that are lower and "more pleasant".

Improvement of the vehicles, reduction of absorption This objective is methodically pursued by using aerodynamic simulations (CFD) and validation of the results through comparative analysis with experimental data obtained in the University of Perugia's wind gallery.

Increasing performance Although activities concern all projects, the product which is most emblematic of the Group's technical capabilities in the field of performance-related research is the 2015 version of the RSV4, which was unveiled in November 2014. This motorcycle is the current (2014) champion of the World Superbike, with an entirely redesigned engine to get 16


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horsepower more and a 1.6 kg weight reduction. As regards the most important new features only, the 2015 version of the 65° V4 has a newly designed air box - just like all internal fluid dynamics - with CFD (Computational Fluid Dynamics). New upper injectors, new intake ducts with adjustable length with individual management per cylinder bank, a perfect solution for being integrated with the new PRC system. Now the valves are made out of titanium and the entire distribution has been lightened, just like the driveshaft and the connecting rods. The upper crankcase is lighter and stronger; the ventilation system has been optimised to reduce power losses due to the pressure inside the cases. Improved oil suction and reduction of the level to lower friction. New transmission and exhaust system, with new electronic management of the valve and equipped with two lambda probes (one per bank). Engine control unit's calculation power also increased for more accurate management of the engine in the area of maximum rotation that can be reached.

Increase in safety and comfort Activities were strongly focussed in this area in 2014, including: - Wireless Traction Control for vehicles not equipped with the Ride by wire, paired with ABS to maximise traction during acceleration and braking; the system was extended to the entire Vespa product line > 50 cc., MP3, Beverly, X10; - study and experimentation of an advanced semi-active electronic suspension system ADD (Aprilia Dynamic Damping) and use in the mass production of the Aprilia Caponord 1200, of which another version was developed in 2014; - extension of the Ride by wire to the majority of Group vehicles, including the 500 version of the MP3 2014, which has allowed for adoption of the “by wire” Traction Control together with ABS, to maximise traction while accelerating or breaking, and offers multi-map management of the engine to adapt the power supply to traction or driving conditions; - cruise control (based on ride by wire), available for the Aprilia and Moto Guzzi motorcycles; - the APRC system (Aprilia Performance Ride Control based on the ride by wire system) on the RSV4; - ABS race system (only for the RSV4), designed and developed by Aprilia in conjunction with Bosch to guarantee not only outstanding safety on the road, but also the best performance on the track; - a preloading, electrically adjustable suspension for the Piaggio X10 and Aprilia Caponord, of which the ADD package is a part (electronic suspension); - full-LED scooter headlight (Vespa 946); - dissemination and expansion of the Piaggio Multimedia Platform info-mobility system, based on a smartphone/vehicle connection using Bluetooth® (Piaggio MP3 and X10, Vespa GTS 2014, Vespa 946, Aprilia Caponord, Aprilia RSV4), iOS and Android.

With reference to the marine sector, Intermarine pays particular attention to research, also with financing from the Italian Ministry of University and Research (MIUR), the Ministry of Transport, the Ministry of the Economic Development and the Liguria Region (FILSE) and to develop some of the subjects concerning the research, it is also assisted by universities and public research institutes. In particular, the activities of research and development can be divided into four main branches:

o vessels and prototypes – new projects; o plant engineering innovation; o production technologies of innovative materials; o technological innovation work.

Vessels and prototypes – new projects This branch comprises the research projects called: “Hydrofoils with immersed wing”, “Enviroaliswath” and “USV Permare”.


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The "Aliscafi and Ala Immersa" project was developed with the aim of studying, designing and developing two prototypes (with two different propulsion systems) on a 1:1 scale of a new type of hydrofoil with immersed wings. The prototypes, which are highly innovative in relation to traditional hydrofoils, ensure greater comfort, greater stability, better handling and a greater speed. In 2014, activities continued for the experimental testing of the vessel with pod propulsion (H325). As regards the hydrofoil with propeller propulsion (H326), the company's strategy has been to focus on completion, after the finalisation of one of the negotiations ongoing with shipping companies interested in using the vessel. As the project concerns a prototype, an initial stage provides for hire of the vessel with a purchase option, to allow the shipping companies to evaluate performance and reliability of the innovative vessel. The purpose of the "Enviro-Aliswah" project was to study, design and develop a prototype on a 1:1 scale of a revolutionary quick vessel, the Aliswath. The main characteristic of the Aliswath is the combined use of foils and an immersed body (“torpedo”) (SWATH): this combination will considerably reduce the phenomenon of wake wash and consumption, in the same carrying capacity and speed conditions. During the year, no significant developments were made on the prototype. The company had previously planned to complete the construction of the prototype and to carry out tests at sea, paying relative costs. However, due to the current downturn on the Fast Ferries market, it was decided to postpone the start of activities to complete the vessel until an actual interest was shown by the market for this type of product which is so innovative. As regards Intermarine S.p.A.’s involvement in the Distretto Ligure delle Tecnologie Marine (Ligurian Marine Technologies District - DLTM), the "Usvpermare" project, the purpose of which is to design a swath with unmanned technology for coastal and harbour monitoring, was presented. The project involves building a small (5-metre) prototype to test the project experimentally. After the successful Ministerial investigation, the project was started in the second half of 2012 and was subsequently suspended for problems that arose regarding the level of funding requested by the DLTM. In September 2013, the Ministry issued a corrective decree, restoring the funding initially provided. In November 2014, a decree was issued approving the reformulation presented and referred to a new allocation of activities among project participants. Plant engineering innovation This branch comprises the “Amico” project, the “Riace Mare” project and the “Siblue” project. The “Amico” (Automation and Smart Monitoring of Consumption) project, submitted under the Ministry of Economic Development’s "Made in Italy" programme, carried out jointly with other bodies and companies and sets out to develop robotic and mechatronic systems with self-diagnosis and self-repair functions and screening, alarm, call, communications and emergency management systems. During 2011 scientific work continued and reshaping of the technical specifications, with variation of partners, was presented; in 2012 the activities were suspended pending approval of the reformulation presented by the competent Ministry of Productive Activities and made necessary by the exit of some of the partners from the project. In 2013, the lead company provided further technical and administrative documentation requested by the Ministry and in October 2014, a decree consistent with the reformulation presented, was issued. The NAVTEC District, with which Rodriquez Cantieri Navali S.p.A. (now merged into Intermarine S.p.A.) is in a consortium, presented in 2011 to the Italian Ministry of Education a myriad of projects called "Riacemare": in 2012 the projects were approved for funding with the formal issuance of the relative decrees. Within the "Riacemare" myriad, the company participates in the following projects:

“Seaport” project, which provides for the development of research work on systems using


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the blades of the stabilisation systems and the propellers already installed on board to recover energy from wave movement: planned research activities began in 2012 and regularly continued in 2014;

"Theseus" project, which provides for the development of technologies for energy efficiency and the use of renewable sources on vessels: in this project, the company is expected to participate through the CTMI Consortium, developing activities initially attributed to another member of the consortium who left the District. At the end of 2013, the Ministry of Research accepted the submitted reformulation by issuing a corrective decree, and Intermarine activities began in 2014.

The "Siblue" project, to which Intermarine participates in consortium along with other companies adhering to the DLTM (Ligurian District of Marine Technologies), is an integrated on-board system for small vessels (fast patrol vessels or light coastguard units between 20-30 m in length). The vessels must be able to carry out their functions operating individually and communicating with an operations base or coordinating in formation. “Siblue” intends integrating all the on-board systems such as cartography, sensors, telecommunications, equipment, automation, monitoring and dynamic positioning, and implement new functions aimed at providing embarked crews and land controllers an effective valid instrument for carrying out their mission and achieving the goals listed above. In addition, “Siblue” can be used to implement a maintenance system depending on the actual conditions of the vessel in order to improve fleet management. The project was presented in March 2011 and in September 2011 was approved by FILSE (Finanziaria Ligure per lo Sviluppo Economico – Ligurian Finance Company for Economic Development): as anticipated in the Tender, within the following sixty days a temporary grouping of companies participating in the project was set up with Intermarine as co-proponent. In 2014, project activities were recorded and funding was issued in January 2015. Production technologies of innovative materials This branch comprises the MAC project, that also includes the participation of other partners, and has the objective of developing materials and technologies for moulds and structural components for ships. During 2011, MIUR was presented with a reshaping of the technical specifications with a variation of the proposing subjects and at the same time an extension was requested for the project execution times. During 2012 there were no significant changes, pending the new decree, which had to incorporate the changes mentioned above. In 2013, technical and administrative meetings were held with the project partners, while an inspection by the Technical Expert appointed by the Ministry was conducted in January 2014. The company is waiting for the decree to be issued. The "Seabutterfly" project is in the same vein, proposing to study and design innovative systems of stabilisation at anchor. The project was presented in December 2012 on Liguria Region funds reserved for members of the DLTM District, and involves the participation of Intermarine as leader, and of other subjects. In July 2013, the positive outcome of the investigation and the entry in the rankings of the submitted project was published on the site of FILSE Liguria. Documentation for Antimafia controls was subsequently presented prior to the issue of the funding approval decree; the funding decree was issued in January 2014. In February 2014, project activities commenced. Technological innovation activity Together with the activity of research and development, Intermarine also participated in programmes of technological innovation contemplated by the Ministry of Transport for the Marine sector. The "Wavepax" project belongs to this vein, and contributions for it have been approved by a decree of 2008, which concerned the project development of a fast unit (High Speed Craft type) for carrying passengers and their cars of the “wave piercing” type. The contribution to this project had been envisaged in the form of innovation work on vessel 351 (Oman order): in light of the reversal of the sequence of completion of the five units which led to the completion of the first twin vessel 354, permission to report on the building work on it was asked of and granted by the Ministry of Transport. In 2012, the reporting was drafted and sent, and the inspection was carried out by the


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Ministry of Transport: the payment of the contribution provided for the final technical and economic evaluation of the project by the Technical Scientific Committee (CTS) of the Ministry. In December 2013, the Ministry convened the CTS, and on this occasion Intermarine presented the technical and economic report of the project. The outcome of the presentation was positive; in September 2014, a final decree was issued and in December 2014, funding of 405 thousand euros was issued.


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Risk factors The Immsi Group has perfected procedures both in the Parent Company and in the main subsidiaries for risk management in the areas most exposed, identifiable at strategic, market, operational, financial and legal level. Strategic risks The Immsi Group has identified strategic risks in the system of opportunities and threats that can significantly affect the accomplishment of the Group’s objectives. In particular, the Group’s strategy is aimed at:

completing and consolidating the processes of restructuring and re-launching started in the different sectors of activity in which the Group operates;

seizing new business opportunities in terms of geographical areas and market sectors; correctly appraising the markets potential; investing the financial resources in the areas with greater potential; choosing the most suitable methodologies for the various local realities; protecting its trademarks and products.

Market risks related to the business sectors The market risks that the Group sometimes faces are specific for a certain sector of business while in other cases they can invest the entire business portfolio. Risks related to changed customer preferences – The success of the Group’s products depends on its ability to manufacture products that cater for consumer's tastes and – with particular reference to the Piaggio Group – can meet their needs for mobility. With reference to the subsidiary Intermarine, however, the success of the company in the different lines of business in which it operates depends on the ability to offer innovative and high quality products that guarantee the performance demanded by customers, in terms of lower fuel consumption, higher performance, greater passenger transport capacity, greater cruising comfort, handling and safety of the vessels used, among other things, in the defence and control of territories. If the products of the Immsi Group companies were not appreciated by customers, revenues or, further to more aggressive sales policies in terms of discount drives, margins would be lower, and this would have a negative impact on the related economic and financial situation. In order to guard against this risk, the Group invests constantly in research and development work (see paragraph “Research and development”), in order to optimally meet customer needs and anticipate market trends, introducing innovative products. Risks related to a high level of market competition – With particular reference to the Piaggio Group, over the last few years, the competitiveness of sectors in which the group operates has increased considerably – above all in terms of prices – and also subsequent to a declining demand worldwide. Piaggio has tried to tackle this risk, which could have a negative impact on the financial position and performance of the group, by manufacturing high quality products that are innovative, cost-effective, reliable, safe and have reduced emissions as well as reinforcing their presence in the Asian continent. With reference to the Marine sector, in the segment of minesweepers, Intermarine has a significant technological advantage over the competition while the Fast Ferry segment particularly faces tough competition from competitors working in countries with lower labour costs. Risks related to the protection of trademark, licence and patent rights – The Group legally protects


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its products and brands throughout the world. In some countries where the Group operates, laws do not offer certain standards of protection for intellectual property rights. This circumstance could therefore render the measures adopted by the Group to protect itself from the unlawful use of these rights by third parties inadequate. Unlawful plagiarism by competitors could have a negative effect on sales. Risks related to seasonal fluctuations in operations – The Piaggio Group's business is extremely seasonal, particularly on western markets where sales of two-wheeler vehicles mainly take place in spring and summer. In addition, an extremely wet spring could lead to fewer sales of products with a negative effect on business and related financial performance. The group tackles these risks first and foremost by consolidating its presence on markets, such as India and Asia Pacific, which are not affected by an extremely seasonal nature and by adopting a flexible production structure that can deal with peak demand through partial and fixed term employment contracts. In the other sectors in which the Immsi Group operates, seasonality has a significantly lower effect. Risks related to the regulatory reference framework – The sectors in which the Group is present are subject to a high level of regulations. With reference in particular to the Piaggio Group, numerous national and international laws and regulations on safety, noise levels, consumption and the emission of pollutant gases apply to Piaggio products. Strict regulations on atmospheric emissions, waste disposal, the drainage and disposal of water and other pollutants also apply to the group's production sites. The enactment of regulations which are more stringent than those currently in force could lead to products being taken off the market and force manufacturers to make investments to renew product ranges and/or renovate/upgrade production sites. To deal with these risks, the group has always invested in research and development into innovative products that anticipate any restrictions on current regulations. Moreover, the group, as one of the sector's leading manufacturers, is often requested to be represented on parliamentary committees appointed to discuss and formulate new laws. In this framework, government measures in the form of incentives or tax reductions to boost demand must be taken into account. These measures, which are not easy to predict, may affect the financial position and performance of the Group to a considerable extent. Risks related to the macroeconomic and sector situation - All the Group’s business sectors are affected moreover by the general conditions of the economy, that can occur with diversified effects in the various markets in which it operates. The global economic crisis of the last few years has led to a significant downturn in consumption, and consequently, to a decline in demand from markets where the Group operates: in 2014, the world economy grew by 3%, but with dynamics that differed by geographic segment, with Italy recording a decrease in GDP for the third year running. The persistence or worsening of the weakness of global and national markets, despite measures taken by Governments and monetary authorities, could compromise the strategy, prospects and financial position and performance of the Group. To offset the negative effects of the decline in demand, on one side the Group has introduced innovative products on the market, to enable it to obtain higher market shares, and on the other side also adopted a flexible organisational structure which, through the use of fixed term employment contracts, can match production capacity to market requirements. Moreover, to attenuate the negative effects of the world macroeconomic situation, the Piaggio Group continued to pursue its strategic vision, expanding its presence on Asian area markets, where growth rates have remained high, and consolidating the competitive positioning of its products, through research and a considerable focus on the development of engines with a low consumption and low or zero environmental impact. With particular reference to the subsidiary Intermarine, the company has found a growing weakness in the general conditions of some of the industries in which it operates, with difficulties in finalising sales negotiations, especially in the market for recreational craft, also in consideration of the increasing difficulty of finding the financial resources by the clients to support the stages of


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progress of the construction and by the operating companies to finance the working capital. If this uncertainty and weakness persists, the activities and prospects in the Yacht and Fast Ferries markets could be negatively affected, with a negative impact on the economic, equity and financial position of the company. Furthermore, with particular reference to the Yacht market, the company has currently frozen all construction programmes due to the difficulties in obtaining new contracts from clients: this correlates with the risk of not fully recovering the investments made in projects for the development of models, absorbable on original construction programmes, with development costs to be recovered over a number of constructions over a multi-year plan. As regards the subsidiary Is Molas S.p.A., the latest analysis of the property market shows a slight upturn in sales volumes with prices decreasing; this could affect the financial results of the project. However, sales results cannot overlook the construction of at least the sample villas, which will shortly take place as required by the project, taking into account the considerable availability of properties, including valuable sites, currently on the market: the business strategies adopted will therefore be constantly checked and updated based on the actual sales performance. As regards tourism/hotel activities, the segment basically confirmed a positive increase in the number of guests recorded in the previous year, while a negative performance was recorded for the golf sector; the general ongoing economic crisis could negatively affect guest numbers and average market prices. In response to this, the company plans to curb expenditure aiming at a more efficient management of the structure and the improvement of commercial activities aimed at increasing the number of stays. Country risk – The Group operates in an international arena and is therefore exposed to risks connected with a high level of internationalisation, such as exposure to local economic conditions and policies, compliance with different tax systems, customs barriers or more in general the introduction of laws or regulations which are more stringent than the current regulatory framework. All these factors may have a negative impact on the financial position and performance of the Group. With particular reference to the Piaggio Group, the growing presence of the group in India and Vietnam has increased its exposure to political instability or negative economic developments in these countries. Operational risks By operational risks we mean all those factors inside the business organisation and outside it but correlated to the current administration that can have negative effects on the Group. In order to satisfy the needs of the various markets the Group must be able to organise and coordinate integrated processes of production, logistics and sales. The activity of procuring goods, correct warehouse management, the manufacture of products according to required standards and the ability to deliver the products and spare parts in appropriate times are essential for the success of business strategies. External factors to the company, such as prolonged strikes or delays in times for obtaining licences or permits, can stop production activities and the delivery and availability of products. Risks connected with dependence on suppliers and the policy of global sourcing – In carrying on its business, the Group uses different suppliers of raw materials, semi-finished products and components. The business of the Group is conditioned by the capacity of its suppliers to guarantee the quality standards and the specific requests for the products, as well as the relative delivery times. In the future any shortages of the supplied products or breaches by the suppliers concerning the quality standards, the specific requests and/or the delivery times could involve increases in the prices of the supplies, interruptions and prejudices in the business of the Group. With reference to the subsidiary Intermarine S.p.A., please note how the company purchases raw materials, contracts and services from a large number of external suppliers: the close cooperation between producers and suppliers is common in the fields where the company operates and, while it may lead economic benefits in terms of lower costs and greater flexibility, it also means that


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companies must rely on these suppliers. For this reason, any difficulties of suppliers could adversely impact Intermarine, causing for example the interruption or slow down of activities, with the risk of failure or delay in meeting deadlines of existing orders. Risks related to higher energy, raw material and component costs - Production costs are exposed to the risk of fluctuating of energy prices, raw material and component. If the Group was not able to offset an increase in these costs against sales prices, its financial position and economic performance would be affected. Risks related to the operation of industrial sites – The Group operates through industrial sites located in Italy, India and in Vietnam. These sites are subject to operating risks, including for example, plant breakdowns, failure to update to applicable regulations, withdrawal of permits and licences, lack of manpower, natural disasters, sabotage, terrorist attacks or major interruptions to supplies of raw materials or components. Any interruption to production activities could have a negative impact on the operations and financial position and performance of the Group. In particular, the operating risks related to industrial sites in Italy and other countries are managed through specific insurance cover assigned to sites based on their relative importance. With particular reference to the subsidiary Intermarine, please note that - in consideration of the flooding suffered in recent years - the Sarzana shipyard is exposed to the risk of recurrence of similar events: the company has expressed its concerns to the local and institutional authorities, highlighting all the risks and operational needs to obtain the necessary works for the protection of the river and self-protection of the shipyard. In order to minimise the risks associated with the above, the company also signed in December 2012 a preliminary 18 year contract for the use of areas near the Italian Navy Arsenal of La Spezia, to be used as stores, warehouses and boat preparation activities. IT and data and information management risks – The Group is exposed to the risk of company data and information being accessed and used without authorisation, which could have a negative impact on profitability. Therefore, the Group has established operating policies and technical security measures designed to afford adequate protection for company data and information. Risks related to delays in the completion of orders - With particular reference to the subsidiary Intermarine operating in the marine industry, please note that any delay in the completion of contracts in progress may lead to the request by customers of penalties for late delivery - where contractually agreed - with the risk of reducing the overall profitability of orders: in particular, recurrent postponements in the completion programme and delivery of the third minesweeper unit for the Finnish Navy, could cause the risk of penalties from the client for delayed delivery, in addition to interest on advances collected. The company is deploying all resources necessary to solve technical problems concerning the contract and all contract evaluations will be made at the end of the contract, when the third unit is delivered; considering this intent, also formally notified by the client, the value of contractual payments and penalties at present may not be objectively and specifically determined. On the other hand, the company could pass on the effect of the impact on delivery times, for delays in deliveries and in completing services and for failing to pass tests, with the need to perform the tests again, to suppliers; in this regard, reference is made to the supplier of the conditioning system of the Finland contract. To partially mitigate this potential risk, the company constantly monitors the progress of its orders and maintains ongoing information relationships with its customers. In some cases, moreover, the company could recharge wholly or partly to its suppliers - where their responsibility is objectively determinable - the possible negative economic impact resulting from delivery delays of units in progress, arising from delays in the deliveries and/or in the completion of contractually agreed services.


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Other risks – In the specific case of the Parent Company Immsi S.p.A., in consideration of its nature as a holding company and the different phase of development and advancement of the investments made both directly and through the subsidiaries, its financial performance and its profitability are strictly correlated to the financial performances of the subsidiaries. Any negative results recorded by associated companies, any failure to complete the process of restructuring the Marine sector as well as any lack of development of the real estate sector could negatively influence the financial position and performance of the Company and Group. Financial risks Risks connected with financial debt – At the date of the financial statements the main sources of financing of the Group were:

debenture loans for a nominal amount of approximately 302 million euros issued by Piaggio & C. S.p.A.;

bank loans for a nominal amount of approximately 669.3 million euros. The type, rates and maturities of these loans are discussed in the Notes.

In addition, the Group has outstanding debts for financial leases, payables to subsidiaries that are not fully consolidated and amounts due to other lenders for a total of approximately 58.7 million euros. The described debt could in the future negatively condition the business of the Group, limiting its capacity to obtain further financing or to obtain it at more unfavourable conditions. Liquidity risk (access to the credit market) – This risk is connected with any difficult the Group could have in obtaining financing on an appropriate timescale for its operations. Where necessary, the Parent Company Immsi S.p.A. supports its subsidiaries through credit lines in order to guarantee support for implementing development plans. As far as the Piaggio Group is concerned, the cash flows, financing requirements and liquidity of group companies are monitored or managed centrally by the group's Finance Management, with the aim of guaranteeing an effective and efficient management of financial resources. To provide further hedging for the liquidity risk, the group's Central Treasury Department has committed credit lines, as described in the Notes to the Financial Statements. Exchange rate risks – The Group, primarily through the companies of Piaggio Group and Intermarine, undertakes operations in currencies other than the euro and this exposes it to the risk of fluctuating exchange rates of different currencies. Exposure to the business risk consists of envisaged payables and receivables in foreign currency, taken from the budget for sales and purchases reclassified by currency and accrued on a monthly basis. With reference to the Piaggio Group, the policy is to hedge at least 66% of the exposure of each reference month. Exposure to the settlement risk consists of receivables and payables in foreign currency acquired in the accounting system at any moment. The hedge must at all times be equal to 100% of the import, export or net settlement exposure for each currency. In 2014, the exchange risk was managed in line with the policy introduced in 2005, which aims to neutralise the possible negative effects of exchange rate changes on company cash-flow, by hedging the business risk which concerns changes in company profitability compared to the annual business budget on the basis of a key exchange rate (the so-called “budget change”) and of the transaction risk, which concerns differences between the exchange rate recorded in the financial statements for receivables or payables in foreign currency and that recorded for related receipt or payment. Interest rate risks – The Group has assets and liabilities which are sensitive to changes in interest rates and are necessary to manage liquidity and financial requirements. These assets and liabilities are subject to an interest rate risk and are hedged by derivatives or, where necessary, by specific fixed-rate loan agreements.


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Credit risk – The Group is exposed to the risk of late payments of receivables. To balance this risk, Piaggio & C. S.p.A. has stipulated agreements with primary factoring companies in Italy and other countries for the sale of trade receivables without recourse, while in the Marine sector it is customary to request advance payments on work in progress.

Legal risks

Risks related to product liability and risks connected with vehicle defects – The Group is exposed to the risk of product liability actions in countries where it operates. With particular reference to the Piaggio Group, although no claims for compensation which are not covered by insurance have so far been made against the group, these claims could be made in the future as regards the United States. Any future payment of compensation exceeding insurance cover for product liability could have negative affects on the operations and financial position and performance of the group. The vehicles manufactured by the Piaggio Group, including components supplied by third parties, could have unexpected defects that require repairs under warranty, as well as costly recall campaigns. To prevent these risks, the Piaggio Group adopts an efficient quality control system for supplied components and end products.

Risks connected with legal and tax litigation – As regards the legal litigation, reference is made to the paragraph related to the “Disputes in progress”. Risks connected with trade union relations – The employees of the Group companies are protected by laws and collective labour contracts that guarantee them - through local and national representation - the right to be consulted on specific matters, including the programmes related to the use of staff in accordance with the ongoing orders. In particular, in Europe, the Piaggio Group operates in an industrial context with a strong trade union presence, and is potentially exposed to the risk of strikes and interruptions to production activities. In the recent past, the Group was not affected by any major interruptions to production because of strikes. With reference to the subsidiary Intermarine, please note that - at this time of great difficulty in the reference markets which made it difficult to sign new orders - it was necessary to rationalise the structures, bringing them in line with the needs of completion of the works in progress: in such circumstances, industrial action by employees could adversely affect the company's business and in particular the ability to complete construction in accordance with the deadlines agreed with customers. To avoid the risk of interruptions to production activities, as far as possible, the companies of the Immsi Group have always established a relationship of exchange and dialogue with trade union organisations. Risks related to the publication of the financial disclosure – The Group is exposed to the risk of possible inadequacies in its procedures that are intended to ensure compliance with Italian and relevant foreign regulations applicable to financial disclosure. To deal with this risk, its financial statements are audited by Independent Auditors. The control activities required by Ital. Law 262/2005 are also carried out at the most important foreign subsidiaries Piaggio Vehicles Private Ltd, Piaggio Vietnam Co Ltd, Piaggio Hellas S.A. and Piaggio Group Americas Inc..


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Human resources As of 31 December 2014, Immsi Group employees totalled 7,865 staff, of which 71 in the property and holding sector, 7,510 in the industrial sector (Piaggio Group) and 284 in the Marine sector (Intermarine S.p.A.). The following tables divide resources by category and geographical area: Human resources by category numbers 31/12/2014

Property and holding sector

Industrial sector

Marine sector Group total

Senior managers 7 95 8 110 Middle management and white collars 38 2,669 139 2,846 Manual workers 26 4,746 137 4,909 TOTAL 71 7,510 284 7,865

numbers 31/12/2013


Industrial sector


Senior managers 7 95 8 110 Middle management and white collars 41 2,704 141 2,886 Manual workers 26 4,889 153 5,068 TOTAL 74 7,688 302 8,064

numbers Changes


Industrial sector


Senior managers 0 0 0 0 Middle management and white collars -3 -35 -2 -40 Manual workers 0 -143 -16 -159 TOTAL -3 -178 -18 -199

Human resources by geographical area numbers 31/12/2014


Industrial sector


Italy 71 3,734 284 4,089 Rest of Europe 0 223 0 223 Rest of the World 0 3,553 0 3,553 TOTAL 71 7,510 284 7,865

numbers 31/12/2013


Industrial sector


Italy 74 3,805 302 4,181 Rest of Europe 0 245 0 245 Rest of the World 0 3,638 0 3,638 TOTAL 74 7,688 302 8,064

numbers Changes


Industrial sector


Italy -3 -71 -18 -92 Rest of Europe 0 -22 0 -22 Rest of the World 0 -85 0 -85 TOTAL -3 -178 -18 -199


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The decrease in personnel (-199 units compared to 2013) mainly refers to the Piaggio Group (-178 units) in 2014, due above all to streamlining and organisational cutbacks in the EMEA area and Americas (-90 units), and in India (-55 units). As of 31 December 2014 Group staff also included seasonal staff (with term contracts), mainly relating to the industrial sector.


42

Group and Related Party Dealings As regards information to be provided on related-party transactions as of IAS 24 - Related Party Disclosures, with Group companies, it should be pointed out that such transactions take place as part of normal operations at market conditions or according to specific laws. As of 31 December 2014 no atypical or unusual transactions were carried out. It should be noted that, in compliance with the Regulation no. 17221 regarding Related Parties dealings issued by Consob on 12 March 2010 and subsequently amended, the Company adopted a new procedure aimed at regulating the approval practices for Related Party dealings that can be reviewed on the institutional website of the Issuer www.immsi.it, in the section Governance - Procedures. The following table shows the impact of Related Party transactions on the income statement and on the balance sheet of the Immsi Group and the effects on each financial statement item as of 31 December 2014: it should be pointed out that the effects on the income statement and on the balance sheet deriving from consolidated intergroup operations have been removed during consolidation.

Main income and balance sheet headings Amount

s in €/000

% incidence

on financial statement

item

Description of the transactions

Transactions with Related Parties:

Current trade payables 506

62

0.1%

0.0%

Legal assistance provided by St. d’Urso Gatti Bianchi & Ass. To

the Group Tax advisory services provided by St. Girelli & Ass. to the Group

Costs for services and leases and rentals 377

134

0.2%

0.1%

Legal assistance provided by St. d’Urso Gatti Bianchi & Ass. To

the Group Tax advisory services provided by St. Girelli & Ass. to the Group

Transactions with Parent companies: Non-current financial liabilities 2,900 0.5% Piaggio debenture loan (PO) undersigned by Omniaholding

Current trade payables 25 0.0% Rental of offices provided by Omniaholding S.p.A. to the GroupCosts for services and leases and rentals 472 0.2% Rental of offices provided by Omniaholding S.p.A. to the Group

Borrowing costs 156 0.1% Charges related to the Piaggio bonded loan undersigned by

Transactions with Subsidiaries, Associated companies, Joint Ventures: Trade receivables and other non-current

receivables 197 1.2% Receivables from Fondazione Piaggio

Current trade receivables and other receivables 3,120 3,377

1.3% 1.4%

Receivables from Consorzio CTMI and Rodriquez do Brasil Trade receivables from Piaggio Foshan

Current financial liabilities 55 0.0% Financial payables to Rodriquez Engineering S.r.l.

Current trade payables 14,874

35 2.9% 0.0%

Trade payables by Piaggio & C. S.p.A. to Piaggio Foshan Payables to Consorzio CTMI

Other current payables 1,797 3.1% Payables to Fondazione Piaggio to Piaggio Foshan

Net revenues 166 135

0.0% 0.0%

Sales to Piaggio Foshan Revenues from the Consortium CTMI

Costs for materials 20,674 2.8% Purchases by Piaggio & C. S.p.A. from Piaggio Foshan

Costs for services and leases and rentals 20 14

0.0% 0.0%

Costs for services rendered by Consorzio CTMI Costs for services from Piaggio Foshan

Other operating income 2,385 2.4% Income from Piaggio Foshan Borrowing costs 232 0.2% Charges to Piaggio Foshan

It should be noted that Intesa Sanpaolo S.p.A. group, minority shareholder of RCN Finanziaria S.p.A., ISM Investimenti S.p.A. and Pietra S.r.l., has convertible shareholder financing agreements in the companies in which the investment is made, and financing and warranties towards Intermarine S.p.A..


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Stock options At end of 2014, Immsi S.p.A. has no existing stock option plan. With reference to the subsidiary Piaggio & C. S.p.A., please note that by 2010 the company no longer approved any incentive plans based on the allocation of financial instruments. With reference to the 2007-2009 incentive plan approved by the Shareholders’ Meeting of the subsidiary Piaggio & C. S.p.A. on 7 May 2007 and subsequently amended, reserved for senior executives of Italian and/or foreign companies controlled by it in accordance with Article 2359 of the Italian Civil Code, as well as for the directors with proxies in the aforesaid subsidiary companies (“2007-2009 Plan”), it should be noted that, during 2014, 2,980,000 option rights were exercised, whereas the remaining 390,000 option rights expired. As of 31 December 2014, no exercisable option rights were still available and therefore the 2007 – 2009 Plan has ended. Detailed information on the 2007-2009 Plan is available in the informative documents published by Piaggio & C. S.p.A. in accordance with Article 84-bis of the Consob Regulation on Issuers, which can also be viewed on the Issuer’s institutional website www.piaggiogroup.com in the section Governance.

Rights No. of options Average exercise price

(euro) Market price

(euro)

Rights existing as of 31 December 2013 3,370,000 1.72

of which exercisable as of 31 December 2013 3,370,000

New rights assigned in 2014 0

Rights exercised in 2014 (2,980,000) 1.79 2.75

Rights expired in 2014 (390,000) 1.22

Rights existing as of 31 December 2014 0

of which exercisable as of 31 December 2014 0


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Equity investments held by members of company management and supervisory boards, by general managers and senior managers with strategic responsibilities Regarding the disclosure requirements provided by the Issuers’ Regulation no. 11971/99, relating to equity investments held in the Parent company and in its subsidiaries, by the members of the management and supervisory boards, by the general managers and senior managers with strategic responsibilities, as well as spouses not legally separated and children who are minors, directly or through subsidiaries, trustees or third parties, as evidenced in the shareholder list or from information received and other information acquired by those members of the management and supervisory boards, by the general managers and senior managers with strategic responsibilities, reference is made to the Report on Remuneration foreseen in Article 84-quater of the aforementioned Issuers’ Regulations which will be made available, under the terms of the law, also on the Issuer's website www.immsi.it under the section ”Governance/General Meeting/Archive/2014”.

Other information Treasury shares As of 31 December 2014, Immsi S.p.A. held no treasury share. The share capital of Immsi S.p.A. is unchanged at 178,464,000.00 euros, represented by 340,530,000 ordinary shares with no nominal value. Furthermore, the General Shareholders’ Meeting of Immsi S.p.A. of 13 May 2014 approved a plan for the purchase and disposal of ordinary shares of the Company, revoking the shareholders' resolution of 30 April 2013, for the part not executed. The Board of Directors of Immsi S.p.A. held on 13 May 2014 – following the above authorisation by the shareholders’ meeting – approved a programme to purchase treasury shares within the scope of “market practices” permitted by Consob in accordance with Article 180, paragraph 1, letter c) of the Consolidated Law on Finance with resolution no. 16839 dated 19 March 2009 and in EC regulation no. 2273/2003 of 22 December 2003. In particular, the aim of the purchase programme will be the constitution of a “securities portfolio” to be used for executing any future investment operations to be made through exchange, trade, conferment, transfer or other act of disposing of own shares, including the obligation to guarantee the Company’s financial operations. The purchase may cover a maximum of 10,000,000 Immsi ordinary shares, without expressed nominal value, and, therefore, within the limits of the law (20% of the share capital pursuant to Article 2357, paragraph 3, of the Italian Civil Code) and must take place within the limits of the distributable dividends and the available reserves shown in the last approved financial statements (including interim) at the time of the transaction. Purchases of treasury shares shall be made in compliance with the operating conditions established by Consob pursuant to Article 180, paragraph 1, subparagraph c) of the Consolidated Law on Finance with resolution no. 16839 of 19 March 2009 and by EC Regulation no. 2273/2003 of 22 December 2003, where applicable, as well as in compliance with Article 144-bis, paragraph 1, subparagraph b) of Consob Regulation 11971/1999 (as amended) and any applicable provisions, in such a way as to allow the equal treatment of shareholders pursuant to Article 132 of the Consolidated Law on Finance. The purchase programme, which may also take place in several tranches, will expire during 2015; whereas authorisation for placing was granted with no time limits. With reference to the subsidiary Piaggio & C. S.p.A., during 2014 the company purchased 1,826,831 ordinary shares while 200,000 treasury shares were sold to beneficiaries of stock option


45

plans: as of 31 December 2014, the Company held 2,466,500 treasury shares, equal to 0.68% of the share capital. Disclosure of Considerations In relation to the information obligations required by Article 149-duodecies of the Consob Regulation on Issuers no.11971/99, regarding the publishing of the payments relating to the year made to the Parent Company Immsi S.p.A. and its subsidiaries for the services provided: a) by the independent auditors, for the provision of auditing services; b) by the independent auditors, for the provision of services other than auditing, divided into

services of verification finalised at issuing certification and other services, distinguished by type;

c) by the bodies belonging to the network of the independent auditors, for the provision of services, divided by type;

the table below provides a breakdown of the payments (in addition to charges and ancillary expenses):

Disclosure of considerations referred to the period 2014

Type of service Company providing the

service

Recipient Notes Consideration in euros

Auditing of accounts

PwC S.p.A. Parent company - Immsi S.p.A. 47,733

PwC S.p.A. Subsidiaries 462,192

PwC network Subsidiaries 365,933

Certification services

PwC S.p.A. Parent company - Immsi S.p.A. 20,000

PwC S.p.A. Subsidiaries 342,000

PwC network Subsidiaries 69,387

Other services

PwC S.p.A. Subsidiaries 1) 40,000

Total 1,347,245

1) Activities related to the audit of the Corporate Social Responsibility Report for Piaggio & C. S.p.A.

The fees of subsidiaries operating in currencies other than the euro and agreed in local currency have been translated at the average exchange rate for 2014. The Ordinary General Meetings of the companies belonging to the Immsi Group have granted, in the course of 2012, to the independent auditors PricewaterhouseCoopers S.p.A. the assignment for the period 2012-2020.


46

Corporate Ownership Information Information on corporate ownership is reported in section 2 of the Report on Corporate Governance and Corporate Ownership as of 31 December 2014, which is referred to. Activity of management and coordination The Company provides the reasons for the lack of management and coordination activities performed by its parent company, in section 2, letter l) of the Report on Corporate Governance and Corporate Ownership as of 31 December 2014, which is referred to. Processing of personal data – Italian Legislative Decree n. 196 of 30 June 2003 As regards the “Testo Unico sulla Privacy” [Personal data protection code], Italian Legislative Decree 196 of 30 June 2003 – Annex B Disciplinare Tecnico [Technical specifications], as well as having adopted the various security measures listed within it, Immsi S.p.A., as data controller, has updated its Documento Programmatico sulla Sicurezza [Security Planning Document]. This document aims to:

1. define and describe the security policies adopted regarding processing of personal data of employees, collaborators, customers and suppliers;

2. define and describe the organisational criteria followed by the Company when implementing such policies;

3. provide suitable information on the subject to third parties as well; 4. provide formal evidence of the corporate changes made.

Disputes in progress There are no ongoing disputes of any significance involving the Parent Company Immsi S.p.A.. With reference to the property sector (Is Molas S.p.A.), with a summons dated 20 March 2014, Sarroch Granulati S.r.l. lodged an appeal against the first instance ruling handed down by the Court of Bergamo. However, at the hearing of 8 July 2014, Sarroch's solicitor informed the Court that the company had been declared insolvent and the Court stopped the proceedings. The proceedings resumed with an appeal lodged on 30 October 2014 and notified on 18 February 2015 along with the ruling of the judge, with whom a hearing has been set for 27 May 2015. As regards the dispute between the contractor in the temporary joint venture, in 2013 contracts were signed for the development of the first 15 villas and the first section of primary services and works were delivered with the relative opening of work sites. With works on hold, Is Molas S.p.A. notified termination of the contract, due to breach of the contractor. In the meantime, the contractor notified the suspension of the work site, raising doubts as to whether the works had started in the times established by Italian Presidential Decree no. 380/2001 for building permission to be valid. On 31 December 2013, Is Molas, as a cautionary measure, submitted two applications for retrospective planning permission for primary services and for the construction of 15 villas to the Muncipality of Pula. In response to the applications, the Muncipality of Pula issued a ruling on 14 March 2014 in which it declared that the application for retrospective planning permission could not be accepted. In April 2014, Is Molas was notified of the appeal lodged with the Administrative Law Court of the Region of Sardinia by the companies Italiana Costruzioni S.p.A. and Pula Lavori S.c.a.r.l. against the Municipality of Pula and Is Molas, to have the ruling of 14 March 2014 overturned. The hearing on the merits of the case has not yet been set. The contractor also applied to the Court of Cagliari for an injunction preventing Is Molas from collecting contract bonds, claiming the invalidity of the latter due to an alleged expiry of the validity


47

of building permits. Is Molas appealed against this application and on 20 March 2014 filed the notification of the Muncipality of Pula with the Court of Cagliari, in which it confirmed the validity and effectiveness of the building permits. On 3 November 2014, the Court of Cagliari issued an order in which it upheld the appeal lodged by Italiana Costruzioni to prevent the collection of the bonds, confirming the invalidity of the contracts entered into between the parties, based on the unlawful nature of their object (expired rights). An appeal was lodged against this sentence on 18 November 2014 with the Court of Cagliari. The judges assessing the case settled the dispute and on 18 February 2015 issued an order in which they upheld the appeal lodged by Is Molas, fully overturning the previous ruling issued by the judge on 3 November 2014 and ordering the other party to pay legal fees for both the first and second stage of the proceedings. Moreover, as regards the order issued by the Court of Cagliari on 3 November 2014, Is Molas requested the Municipality of Pula, on 24 December 2014, to speed up the proceedings, conforming the dual conformity and issuing relative authorisation procedures. At present, proceedings are being reviewed by the competent authority. At the end of 2013, the contractor had also requested the Court of Cagliari to order a preventive technical appraisal in order to check the works performed and quantify their value; the Technical Consultant filed his report on 12 November 2014. In the hearing of 25 February 2015, the parties submitted their requests for clarification and the judge summoned the parties to appear on 23 March 2015. Regarding the proceeding relating to the property "Le Ginestre", the Court of Appeal of Brescia adjourned the ruling for the specification of pleadings regarding the appeal lodged by the company to 13 January 2016. With reference to the property sector (Apuliae S.p.A), the Province of Lecce has sought to amend the request for settlement with the State Property Agency, as Article 56-bis of Italian Law Decree no. 69 of 21 June 2013, the so-called "Decreto del Fare", converted into law with amendments by Law no. 98 of 9 August 2013 introduced simplified procedures for the free transfer of property to local authorities, implementing Legislative Decree no. 85 of 28 May 2010 (so-called "State Property Federalism"). From 1 September 2013 up until 30 November 2013, Municipalities, Provinces, Metropolitan Cities and Regions could apply for the free acquisition of real estate properties of the State. The State Property Office, having verified the existence of conditions for the acceptance of the request, reports the outcome to the Authority concerned within 60 days of receipt. The Province of Lecce adopted this simplified procedure to obtain the property of the former Scarciglia holiday complex with ruling no. 241 of 26 November 2013 and with a letter of 13 November 2014 it stated the need for acknowledgement that no reciprocal debit/credit situations existed and for the pending ruling to be cancelled. Negotiations for an amicable settlement between the parties are in the advanced stage. Legal proceedings are also underway, brought by Apuliae S.p.A. against the Province of Lecce for the harmful consequences sustained, requesting the Province of Lecce to pay the company costs incurred for the works performed and investments made. The Court adjourned the hearing to 18 December 2014 for the closing of the arguments, deeming the case ready for a decision. A brief adjournment was requested pending an out-of-court settlement. Regarding the industrial sector (Piaggio Group), Piaggio & C. S.p.A. opposed the proceedings undertaken by the consumer association Altroconsumo, in accordance with Article 140 of the Italian Code of Consumers, opposing the alleged existence of a design defect and hazardous nature of the Gilera Runner first series, which was manufactured and sold by Piaggio from 1997 to 2005. In the case put forward by Altroconsumo, the erroneous design would make the vehicle in question more hazardous in the event of an accident with frontal impact, referring as an example to two accidents occurring in 1999 and 2009 to Mr Gastaldi and Mr Stella respectively, following which the Gilera Runner burst into flames. The trial judge rejected the claim, ordering


48

Altroconsumo to pay Piaggio's legal fees. Following the appeal made by Altroconsumo, a technical appraisal was ordered to ascertain the existence of the design defect claimed by Altroconsumo. On the outcome of the appraisal, the Board informed the parties on 29 January 2013 that Altroconsumo's appeal had been upheld, ruling Piaggio to (i) inform owners of the hazardous nature of the product, (ii) publish the ruling of the Board in some newspapers and specialised magazines (iii) recall the product. The effects of the ruling were subsequently suspended by the Court of Pontedera with a ruling of 28 March 2013, concerning the appeal made by Piaggio, in accordance with Article 700 of the Italian Code of Civil Proceedings. Following the cross examination with Altroconsumo, the suspension ruling was confirmed by the Court of Pontedera on 3 June 2013. Altroconsumo appealed against the suspension ruling before the Board at the Court of Pisa. The Board therefore ordered a new technical appraisal, having established contradictions between i) the appraisal of the Court-appointed expert in proceedings brought by Altroconsumo and ii) the appraisal of the same Court-appointed expert in proceedings brought in a separate ruling for the compensation of damages. Activities of the expert were completed and the technical appraisal report was filed in December 2014. The results of the technical appraisal were discussed in the hearing of 19 January 2015 at the end of which no ruling was issued. Piaggio has also taken action before the Court of Pontedera (now the Court of Pisa) for a final dismissal of the ruling of the Court of Pisa of 29 January 2013. The hearing, originally set for 6 November 2014, was adjourned to 21 January 2015. At this hearing, in view of the reservations of the Board in the precautionary procedure concerning Piaggio's request for a new technical appraisal, the judge further deferred the case to 7 May 2015. Canadian Scooter Corp. (CSC), the sole distributor of Piaggio for Canada, summoned Piaggio & C. S.p.A., Piaggio Group Americas Inc. and Nacional Motor S.A. to appear before the Court of Toronto (Canada) in August 2009 to obtain compensation for damages sustained due to the alleged infringement of regulations established by Canadian law on franchising (the Arthur Wishart Act). Proceedings have been stopped while a settlement of the dispute is being defined. In 2010, Piaggio took action to establish an arbitration board through the Arbitration Chamber of Milan, for a ruling against some companies of the Case New Holland Group (Italy, Holland and the USA), to recover damages under contractual and non-contractual liability relating to the execution of a supply and development contract of a new family of utility vehicles (NUV). In the award notified to the parties on 3 August 2012, the Board rejected the claims made by the Company. The Company has appealed against this award to the Court of Appeal of Milan, which has set the first hearing for 4 June 2013. The case has been adjourned to 12 January 2016 for specification of the pleadings. Da Lio S.p.A., by means of a writ received on 15 April 2009, summoned Piaggio & C. S.p.A. to appear before the Court of Pisa to claim compensation for the alleged damages sustained for various reasons as a result of the termination of supply relationships. The Company appeared in court requesting the rejection of all opposing requests. Da Lio requested a joinder with the opposition concerning the injunction obtained by Piaggio to return the moulds retained by the supplier at the end of the supply agreement. Judgements were considered and a ruling issued pursuant to Article 186-ter of the Italian Code of Civil Proceedings, on 7 June 2011, ordering Piaggio to pay the sum of approximately 110 thousand euros, in addition to interest relative to sums which were not disputed. During 2012, testimonial evidence was presented. After reaching a decision at the end of testimonial evidence, the judge admitted a technical/accounting court-appointed expert requested by Da Lio to quantify the amount of interest claimed by Da Lio and value of stock. The technical appraisal was completed at the end of 2014. At the hearing of 12 February, the judge arranged for a mediation hearing for 23 April 2015. In June 2011 Elma srl, a Piaggio dealer since 1995, started two separate proceedings against the Parent Company, claiming the payment of approximately 2 million euros for alleged breach of the


49

sole agency ensured by Piaggio for the Rome area and an additional 5 million euros as damages for alleged breach and abuse of economic dependence by the Company. Piaggio opposed the proceedings undertaken by Elma, fully disputing its claims and requesting a ruling for Elma to settle outstanding sums owing of approximately 966 thousand euros. During the case, Piaggio requested the payment of bank guarantees that ensured against the risk of default by the dealer issued in its favour by three banks. The proceedings ended in favour of Piaggio that collected the amounts of the guarantees (over 400 thousand euros). Trial proceedings took place and a hearing was held on 24 April 2013 to examine evidence, during which the judge set the hearing for 17 December 2015 for closing arguments. As regards the matter, Elma has also brought a case against a former senior manager of the Company with the Court of Rome, claiming compensation for damages. Piaggio appeared in the proceedings, requesting, among others, that the case be moved to the Court of Pisa. At the hearing of 27 January 2014, the judge ruled on the preliminary exceptions and did not admit preliminary briefs. The hearing for closing arguments has been set for 21 December 2015. In a writ received on 29 May 2007, Gammamoto S.r.l. in liquidation, an Aprilia licensee in Rome, brought a case against the Parent Company before the Court of Rome for contractual and non-contractual liability. The Company fully opposed the injunction disputing the validity of Gammamoto’s claims and objecting to the lack of jurisdiction of the judge in charge. Gammamoto has continued proceedings through the Court of Venice. The judge admitted testimonial evidence and evidence for examination requested by the parties, establishing the hearing for the preliminary investigation on 12 November 2012. After defining the closing arguments of the hearing of 26 June 2013, the case was ruled on. The Court of Venice issued a ruling in favour of Piaggio, filed on 17 February 2014. Gammamoto appealed and at the first hearing on 23 October 2014 the Court decide to rule without proceeding with the preliminary investigation requested by the other party. The hearing for closing arguments has been set for 1 April 2019. Leasys–Savarent S.p.A., summoned to appear before the Court of Monza by Europe Assistance in relation to the rental supply of Piaggio vehicles to the Italian Postal System, summoned the Company as a guarantee, also filing for damages against Piaggio for alleged breach of the supply agreement. The Court of Monza declared its lack of jurisdiction concerning the applications filed against Piaggio, and Leasys-Savarent therefore summoned Piaggio to appear before the Court of Pisa. The trial was suspended while awaiting the resolution of the dispute pending before the Court of Monza, which turned down the application of Leasys-Savarent. Leasys-Savarent continued proceedings through the Court of Pisa, applying only for damages against Piaggio. On the hearing of 5 October 2011, the parties requested the admission of preliminary briefs and the judge deferred its decision. After reaching a decision, the judge admitted some of the testimonial evidence and rejected the request for a court-appointed expert. After questioning the witnesses, the case was adjourned to the hearing of 10 July 2014 for the specification of closing arguments. During this hearing, the judge did not issue a decision, giving the parties deadlines for filing final briefs and replies. The parties reached a settlement agreement in which Piaggio, as compensation, paid a sum of 200 thousand euros. The company Taizhou Zhongneng summoned Piaggio before the Court of Turin, requesting the annulment of the Italian part of the 3D mark registered in Italy protecting the form of the Vespa, as well as a ruling dismissing the offence of the counterfeiting of the 3D mark in relation to scooter models seized by the Guardia di Finanza at the 2013 EICMA trade show, based on the petition filed by Piaggio, in addition to compensation for damages. At the first hearing for the parties to appear, set for 5 February 2015, the judge lifted reservations, arranging for a technical appraisal to establish the validity of the Vespa 3D mark and the infringement or otherwise of Znen scooter models, setting the next hearing for the 18 March 2015. In a writ of 27 October 2014 Piaggio summoned the companies Peugeot Motocycles Italia S.p.A.,


50

Motorkit S.a.s. di Turcato Bruno e C., Gi.Pi. Motor di Bastianello Attilio and GMR MOTOR S.r.l. before the Court of Milan to obtain the recall of Peugeot “Metropolis” motorcycles from the market, and to establish the infringement of some European patents and designs owned by Piaggio, as well as a ruling for the compensation of damages for unfair competition, and the publication of the ruling in some newspapers. The first hearing for the parties to appear in court has been set for 4 March 2015. In a writ of 4 November 2014 Piaggio summoned the companies Yamaha Motor Italia s.p.a., Terzimotor di Terzani Giancarlo e Alberto s.n.c., Negrimotors s.r.l. and Twinsbike s.r.l. before the Court of Milan to obtain the recall of Yamaha "Tricity" motorcycles from the market, and to establish the infringement of some European patents and designs owned by Piaggio, as well as a ruling for the compensation of damages for unfair competition, and the publication of the ruling in some newspapers. The first hearing for the parties to appear in court has been set for 24 March 2015. The amounts allocated by Piaggio for the potential risks deriving from the current dispute appear to be consistent with the predictable outcome of the disputes. As regards tax claim rulings involving Piaggio & C. S.p.A., two appeals are ongoing against two tax assessments notified to the Company and relative to the 2002 and 2003 tax years respectively. These assessments originate from an audit conducted by the Italian Revenue Agency in 2007 at the Company's offices, following information filed in the report of verification issued in 2002 following a general audit. The Company has obtained a favourable ruling concerning these verification notices, in both the first and second instance, and with reference to both tax periods, against which the Italian Revenue Agency has lodged an appeal with the Supreme Court of Cassation. the Company has filed relative counter claims and is waiting for dates of hearings to be set. The Company has also received a draft assessment order from the Indian tax authorities after a verification of the income generated by Piaggio & C. S.p.A. in India during the Indian 2009-2010 tax period, concerning figures of approximately 1 million euros. On 16 April 2014, the Company filed an appeal with the Dispute Resolution Panel (the pre-litigation body which taxpayers may refer to in order to obtain an opinion which is binding for the tax authorities), which ruled against the Company in January 2015. The Company, after receiving the final assessment order, will file an appeal with the Income Tax Appellate Tribunal. For both cases, as well as the claims relative to income generated in India, the Company has not considered it necessary to allocate provisions, in view of the positive opinions expressed by consultants appointed as counsel. The main tax disputes of other Group companies concern Piaggio Vehicles PVT Ltd and Piaggio France S.A.. With reference to the Indian subsidiary, some disputes concerning different tax years from 1998 to 2013 are ongoing related to direct and indirect tax assessments and for a part of which, considering positive opinions expressed by consultants appointed as counsel, provisions have not been made in the financial statements. The Indian company has already partly paid the amounts contested, as required by local laws, that will be paid back when proceedings are successfully concluded in its favour. As regards the French company, a favourable ruling was issued in December 2012 by the Commission Nationale des Impots directes et des taxes sur le chiffre d’affaires, the decision-making body ruling prior to legal proceedings in disputes with the French tax authorities concerning a general audit of the 2006 and 2007 periods. The French tax authorities however upheld its claims against the company, requesting payment of the amounts claimed. The company therefore filed an appeal against the claims of the Local Authorities, which however rejected the considerations made by the companies. It therefore filed an appeal with the Tribunal Administratif and is waiting


51

for the date of the hearing to be set. The Company has not considered allocating provisions necessary, in view of the positive opinions expressed by consultants appointed as counsel, as well as the opinion of the above Commission. The tax inspection undertaken by the Revenue Agency relative to the company Piaggio Vespa BV, following the findings reported in the report of verification serviced in October 2013 to Piaggio & C. S.p.A. was settled. As regards the Marine sector (Intermarine), there are the following disputes of a legal and fiscal character. With reference to the original Italian contractor assigned the design and construction of the conditioning system by Intermarine (Atisa), that created major technical issues concerning the operation of the first two units delivered, the contractor served three injunction orders to Intermarine for a total of 160 thousand euros, requesting payment as if services had been completed and accepted. At the end of February 2014, Intermarine appealed against the injunction orders and filed a counterclaim, to obtain the performance of the contractor's obligations and to order the contractor to pay all direct and indirect costs for corrective measures and to compensate all damage sustained and still being sustained by Intermarine. In May, the company formally served Atisa formal "notice to perform" within 30 days. Atisa, without upholding the requests of the company, appeared in court at the hearing of 19 June 2014 with the filing of three statements of defence, in which it requested that the requests and claims of Intermarine be fully rejected, also requesting that the Court of La Spezia take action to enforce all three injunction orders. In the same hearing, Intermarine opposed the provisional enforcement, requesting settlement with acknowledgement of the serious breach of Atisa. The appointed judge, examining all requests of the parties, ruled the following in an order of 26 and 30 June 2014: (i) that the three rulings be examined; (ii) that the supplier's request for temporary enforcement be rejected; (iii) that the parties be granted the deadlines for filing briefs as of Article 183/VI of the Italian Code of Civil Proceedings; (iv) that the proceedings as above be adjourned to 15 January 2015 for the admission of evidence. The next hearing has been set for 16 April 2015, after the filing of briefs pursuant to Article 183/VI. With reference to the arbitration that ended in 2013 with Sea Services S.r.l. regarding the termination of a purchase contract for a 38-metre yacht, in March 2014 the Company received notice of an appeal from the party that had been unsuccessful in the arbitration award of 2013; on 9 July, the first hearing took place at the Court of Appeal of Milan, during which the company appeared before the court submitting its petition. The hearing for closing arguments was set for 23 March 2016. With the sentence filed in January 2012, the Rome Court sentenced Intermarine to pay Yachtitaly a total of 693 thousand euros, of which 43 thousand euros related to the restoration works, 386 thousand euros plus legal interest from the date of application for refund of the lease payments disbursed until the date of the summons and 264 thousand euros for the leasing fees paid, plus statutory interest with effect from the individual monthly deadlines, in addition to paying litigation and court technical expert’s expenses. In February 2012, the company presented an appeal, contesting the ruling and requesting its suspension and temporary execution. Despite the appeal, the company followed the ruling by making the payment in January 2013, with "the right of repetition", of the entire amount of 761 thousand euros. The appeal hearing has been set for 27 January 2016. In an appeal pursuant to Article 702-bis of the Italian Code of Civil Proceedings, served to Intermarine on 21 November 2014, YachtItaly requested that Intermarine be ordered to compensate it for all damages sustained, for a total of 1.7 million euros, for lease payments at the


52

redemption date of 0.1 million euros, for the residual value equal to 0.2 million euros, for interest from the individual instalment up to fulfilment and for all sums for the purchase of the vessel which the Italian Revenue Agency did not consider as deductible. In the hearing of 23 April 2015, the judge should declare lis alibi pendens, ordering the second ruling to be overturned or its suspension until the appeal is ruled on. With reference to the legal dispute with the Municipality of Messina, for which on 28 January 2013 a favourable ruling was issued rejecting all claims of the Municipality and recognising the ownership of the areas owned by the State and the right of the Port Authority to manage them, with the consequent right of Intermarine to continue to occupy its premises and the exclusion of any real and credit right for the Municipality, Intermarine was served notice of the appeal lodged by the Autonomous Port Authority of Messina. In that appeal, the Autonomous Port Authority of Messina requested the suspension of the effects of the ruling of 28 January and the recognition that, by virtue of the agreement signed in 1918, some areas of the "Zona Falcata" would pertain to the Autonomous Port Authority of Messina itself and not to the Port Authority as laid down in the ruling. In the hearing of 9 October 2014, the Municipality of Messina appeared in court, filing its statement of defence in which the Muncipality basically upheld the reasons of the appeal lodged by the Autonomous Port Authority, requesting the ruling to be reviewed. At the same time, the Port Authority's solicitor withdrew the proceedings lodged subject to the appellees accepting the payment of fees and expenses. The judge adjourned the hearing to 9 April 2015, to enable the counterparties to evaluate the proposal made by the appellant. The Legal Practice appointed by Intermarine evaluated the risk level of the dispute as minor. With reference to the company Scoppa Charter S.r.l. (formerly Immobilservice Rad S.p.A. purchaser, through Unicredit Leasing, of the vessel Conam 75 WB Alvadis II delivered on 2010 for a sum of 2 million euros), in summons before the Court of Naples, the Shipping Company appealed against the alleged nonconformity of the asset to sales specifications and the owner manual and the unsafe nature of the unit and requested compensation for alleged damage amounting to approximately 5 million euros. In the hearing of 16 June 2014, the preliminary applications and appeals were examined and in July 2014, the judge adjourned the hearing to 5 November 2015 for the closing of the arguments, deeming the case ready for a decision. Please note that there are other disputes in progress with suppliers and customers as well as labour disputes, for which on the basis of the opinions of the attorneys that assist the Company, no significant liabilities or costs should emerge that exceed the risk funds already allocated in the financial statements. With reference to the disputes of a tax nature, the following is highlighted. In July 2013, the Customs Agency of Messina served a notice of payment to the company for approximately 51 thousand euros (including 5 thousand euros of interest and interest on arrears), and a notice of payment of sanctions for 9 thousand euros in relation to inspections conducted from October 2012 to February 2013. In particular, the Customs Agency of Messina mainly claimed the failure to pay excise relative to some diesel fuel fuelling operations used in 2009 and 2010 for tests at sea of some vessels being built. In reality, this infringement, which is administrative, basically depends on a failure to perform correctly of the supplier and the tax deposit of contractual agreements reached concerning the status and payment of excise. In this regard, the supplier recognised the error made and consequently formally indemnified the company against any cost arising therefrom. Moreover, the Customs Agency of Messina also claimed an alleged use in the Territory of the State of fuel constituting stock on board two vessels to be exported to Oman. This finding has no legal grounds. The company promptly took action against the notices served by the Customs Agency and filed an appeal with the competent Provincial Tax Commission. At present, no date has been set for the hearing. At the same time that tax inspection activities were completed,


53

the Customs Agency notified competent Legal Authorities of the criminal offence concerning the case. In September 2014, the Public Prosecutor of the Court of Messina sent notice of the completion of preliminary investigations and defence rights pursuant to articles 415-bis and 369-bis of the Italian Code of Civil Proceedings, in relation to claims made. A defence brief was filed with objective arguments intending to demonstrate the absence of a criminal nature of the alleged irregularities and a consequent request for the case to be dismissed. As regards the appeals lodged by the company against the Refusal Notices, served on 25 May 2010 by the Revenue Agency - Genoa Department, the claims for partial reimbursement of the registration tax and property assessment taxes in relation to the Sale of 18 December 2007 of the property portfolio situated in the Municipality of Pietra Ligure, Section 12 of the Tax Commission of the Province of Genoa issued a favourable ruling in May 2013. The judges of the local court upheld the appeal lodged by the company as regards the registration tax and consequently ordered the Italian Revenue Agency to reimburse the amount equal to 264 thousand euros, in addition to interest accrued. The Genoa office of the Revenue Agency appealed against this ruling; the company promptly appeared before the commission. At present, no date has been set for the hearing. On 26 May 2008, the Customs Agency of La Spezia served a report of verification to the Company, relative to the inspection which began on 24 April 2008 concerning excise on mineral oils. Based on the above report, on 19 June 2008, the Financial Administration served the Company a Notice of Payment requesting payment of the above excise, in addition to interest and interest on arrears, for a total amount equal to 38 thousand euros. The Company promptly appealed against this Notice of Payment, lodging an appeal with the Tax Commission of the Province of La Spezia. On 10 January 2012, the Tax Commission issued a ruling rejecting the initial appeal. In November 2013, the Company appealed against this ruling with the Regional Tax Commission in Genoa. At present, no date has been set for the hearing. As regards the tax litigation brought by the subsidiary RCN S.p.A. for the 2003 tax year, the Regional Tax Commission in Messina (separate section) still has to set the date for the hearing to discuss the merits of the appeal lodged by the Company against the sentence partially upholding the initial appeal. In relation to the fiscal appeals of the subsidiary Rodriquez do Brasil, some unfavourable rulings were received in 2014, at various levels of judgement: the subsidiary, in consultation with Intermarine, lodged appropriate appeals. In particular, the situation is the following: the appeal against the verification notice concerning value added tax, income tax and the

contribution on profits required by Brazilian tax laws, referred to 2003, for 8.8 million Brazilian Real, consisting of taxes, sanctions and interest (current value of approximately 2.7 million euros), was qualified by the company's tax consultants as a "possible" risk. Unfavourable rulings were issued in the first and second instance against the Company, that lodged a special appeal in 2012;

as regards the assessment concerning value added tax, income tax and the contribution on profits required by Brazilian tax laws for 2003, an unfavourable ruling was issued at the highest level of administrative judgement in March 2013; this assessment was qualified by the company's tax consultants as "probable" and provisions for 0.8 million Brazilian real (263 thousand euros) have been allocated, at the present value. The assessment will be registered and further 3 judgement levels are possible, with the need to submit adequate bank guarantees or guarantee deposits;

litigation is also ongoing concerning other types of taxes for a total of 0.5 million Brazilian Real (approximately 143 thousand euros), for which an unfavourable ruling was issued against the company in 2014; the risk level has been evaluated as "probable" and the subsidiary has allocated costs, estimated at 143 thousand euros, in addition to approximately 16 thousand


54

euros for two cases closed with a payment based on a settlement programme in accordance with a decree published during 2014 by the Brazilian financial authorities; as regards Intermarine, the total cost for the three cases (approximately 160 thousand euros), was offset by the use of a corresponding portion of a tax fund already allocated.

two cases are ongoing concerning other types of taxes referred to 2002 and 2003 for a total of 0.6 million Brazilian Real (approximately 180 thousand euros), qualified by the company's tax consultants as "possible" for which the company has allocated 90 thousand euros.

In cases where the risk was qualified as “possible” and not quantifiable, no further hedging funds have currently been allocated in the financial statements of the Brazilian company, also in response to the recommendations of the firms that assist the company, which do not exclude the possibility of favourable outcomes. As regards the Pietra Ligure project, reference is made to the section below. Significant events occurring after the reporting period As regards the Parent Company Immsi S.p.A., the Company, in compliance with the Stand-by Equity Commitment undertaken in September 2014 to subscribe and issue for a maximum of 10 million euros the capital increase payment resolved by the General Meeting of Alitalia - CAI on 25 July 2014, made a payment of 0.6 million euros on 15 January 2015 as a "payment for a future capital increase". With reference to the Pietra Ligure project (Pietra S.r.l.), in January 2015, the planning document was signed, but the promissory purchaser notified its intention that it did not wish the preliminary sales contract concerning the property portfolio to go ahead, also requesting enforcement of the bank guarantee issued for the payment of the bank guarantee issued as a deposit. Intermarine formally notified the other party to proceed and stipulate the final contract and lodged an appeal with the Court of Rome, pursuant to Article 700 of the Italian Code of Civil Proceedings, to prevent enforcement of the above guarantee. With reference to the subsidiaries Piaggio & C. S.p.A. and Is Molas S.p.A., no significant events occurred after the end of the year, apart from those already indicated. With reference to the Marine sector (Intermarine S.p.A.), the demerger in which Intermarine demerged the property and planning portfolio into Pietra Ligure S.r.l. was completed in 2015. Moreover, following the award of a tender by an Asian Navy to the local lead shipyard and its signing on 3 November 2014 of a contract with the Ministry of National Defence (MND), the local shipyard and Intermarine at the end of January 2015 formalised Manufacturing Contracts for a platform at Sarzana, for Technology Transfer for the construction of a shipyard and another 5 units in the country and for the recognition of royalties for the 5 constructions in loco. Intermarine, in order to start performance of the contracts, has procedures underway to obtain export licences from the Italian Ministry of Foreign Affairs within a maximum of 10 months from the signing of the contract between the MND and the local shipyard (thus before the end of August 2015). Intermarine has also started application procedures with banks, for letters of credit to be issued by the client for payments, and for guarantees that Intermarine shall issue as contract bonds. Lastly, reference is made to the previous section “Disputes in progress” for a description of events occurring after 31 December 2014 as regards disputes of the company and in particular litigation with the supplier of the conditioning system relative to the Finland contract.


55

Operating outlook for 2015 As regards the operating outlook of the Immsi Group, with reference to the subsidiary Is Molas S.p.A. the contract was signed and works started for primary services and to complete the first lot of 15 villas. As regards the industrial sector (Piaggio Group), in a macroeconomic context in which the recovery of the global economy will probably consolidate, but which is still affected by uncertainties over the growth rate in Europe and risks of a slowdown in some emerging countries, the Group is committed, in commercial and industrial terms, to:

confirming its leadership position on the European two-wheeler market, optimally levering the expected recovery by:

o further consolidating the product range and targeting a growth in sales and margins in the motorcycle segment, with the restyled Moto Guzzi and Aprilia ranges;

o entry on the electrical bicycle market, levering technological and design leadership; o Current positions on the European commercial vehicles market will be maintained.

continuing the growth strategy in the Asia Pacific area, exploring new opportunities in medium and large sized motorcycle segments, and replicating the premium strategy for Vietnam, throughout the region. During 2015, direct sales activities of the Group will be consolidated in China, with the aim of penetrating the premium two-wheeler market;

consolidating sales on the Indian scooter market, focussing on an increase in Vespa products and the introduction of new models in the premium scooter and motorcycle segments;

increasing sales of commercial vehicles in India and in emerging countries, targeting a further development of exports to African and Latin American markets.

In technological terms, the Piaggio Group will continue to develop technologies and platforms that underline the functional aspects and emotional appeal of vehicles with ongoing developments to engines, extended use of vehicle/user digital platforms and the trialling of new product and service configurations. More generally, the Group is committed - as in the past and for operations in 2015 - to increasing productivity with a strong focus on efficient costs and investments, while complying with its business ethics. With reference to the Marine sector (Intermarine S.p.A.), it is pointed out how – in the current context of the international economic crisis – aims to grow significantly in the Defence sector that doesn’t seem to show the same critical state shown in the pleasure craft and passenger transport markets. Pending the acquisition and performance of new contracts, particularly in the Defence sector, Company Management:

will rigorously monitor the progress of production relative to contracts, trying to minimise the effects of activities to obtain final acceptance from clients and to take every opportunity to cut costs;

and will continue to pursue all opportunities to keep organisation costs down. In commercial and productive terms, in addition to information in the previous section regarding the contract awarded by the Asian Navy, the following is reported: the orders portfolio as of 31 December 2014 totalled 148 million euros; at present, the Defence

sector guarantees the development of construction activities for approximately 1 year for patrol vessel supply contracts, in addition to service and logistics activities for 5 years from the delivery of the units, up until 2015/the start of 2016 for the contract for minesweepers for the Finnish Navy, up until 2017 for the contract for the supply of an integrated minesweeper platform and up until 2018 for the refitting of the Gaeta class minesweepers of the Italian Navy;

the Yacht and Fast Ferries segment is currently affected by a considerable downturn and Intermarine will operate minimising costs and using financial resources, continuing sales


56

activities to sell semi-finished products currently in stock. as part of the contract with an Italian Group operating in the sector for the construction of an

integrated platform unit, final quotes were submitted to the client in February 2015 for two units in addition to the same type of unit already being built;

for Guardia di Finanza contracts, delivery of the last unit is scheduled for 2015; as regards the Finnish Navy, activities are underway to issue Final Acceptance of the two units

delivered and the programme for the third unit is underway, to be completed in 2015, with delivery in the 1st quarter of 2016.

In view of the production progress that will be made in 2015, concerning ongoing contracts and developments for new contracts, a considerable increase in revenues and operating income is expected for 2015 compared to 2014. In financial terms, positive developments are expected as regards net financial exposure, due to advances collected from new contracts that will mainly be used to pay advances to suppliers to start production activities and to settle amounts payable concerning other ongoing contracts. The Company has also updated 2015-2017 three-year forecasts, taking into consideration contracts acquired and, in particular, for the Defence sector, the contract already signed with the Asian shipyard that will become effective in 2015 to obtain export licences, the new contracts for an additional 2 integrated platforms, similar to the one already being built, for an Italian client in the sector and negotiations underway with the Italian Navy. The forecast for the orders portfolio for 2016 stands at more than 500 million euros. With these forecasts, the company may achieve positive financial results in the medium term, with a consequent increase in shareholders' equity and decrease in financial exposure.

Report on Corporate Governance and Corporate Ownership of Immsi Group 57

REPORT ON CORPORATE GOVERNANCE AND

CORPORATE OWNERSHIP

in accordance with Article 123-bis Consolidated Law on Finance

(Traditional management and control model)

The Report is referred to the Year: 2014 Date of approval of the Report: 16 March 2015

www.immsi.it

Report on Corporate Governance and Corporate Ownership of Immsi Group

58

INDEX

GLOSSARY ...................................................................................................................................................... 61

1. ISSUER’S PROFILE .................................................................................................................................... 62

2. INFORMATION ON CORPORATE OWNERSHIP (PURSUANT TO ARTICLE 123-BIS, PARAGRAPH 1,

CONSOLIDATED LAW ON FINANCE) ........................................................................................................... 62

A) SHARE CAPITAL STRUCTURE (PURSUANT TO ARTICLE 123-BIS, PARAGRAPH 1, LETTER A),

CONSOLIDATED LAW ON FINANCE) .................................................................................................................... 62

B) RESTRICTIONS ON THE TRANSFER OF SECURITIES (PURSUANT TO ARTICLE 123-BIS,

PARAGRAPH 1, LETTER B), CONSOLIDATED LAW ON FINANCE) ................................................................. 62

C) SIGNIFICANT EQUITY INVESTMENTS (PURSUANT TO ARTICLE 123-BIS, PARAGRAPH 1, LETTER C),


D) SECURITIES THAT GIVE SPECIAL RIGHTS (PURSUANT TO ARTICLE 123-BIS, PARAGRAPH 1,

LETTER D), CONSOLIDATED LAW ON FINANCE) ............................................................................................... 63

E) EMPLOYEES' EQUITY HOLDINGS: MECHANISM OF EXERCISING VOTING RIGHTS (PURSUANT TO

ARTICLE 123-BIS, PARAGRAPH 1, LETTER E), CONSOLIDATED LAW ON FINANCE) ................................. 63

F) RESTRICTIONS TO VOTING RIGHTS (PURSUANT TO ARTICLE 123-BIS, PARAGRAPH 1, LETTER F),


G) SIGNIFICANT AGREEMENTS BETWEEN SHAREHOLDERS (PURSUANT TO ARTICLE 123-BIS,

PARAGRAPH 1, LETTER G), CONSOLIDATED LAW ON FINANCE) ................................................................. 63

H) CLAUSES OF CHANGE OF CONTROL (PURSUANT TO ARTICLE 123-BIS, PARAGRAPH 1, LETTER H)

OF THE CONSOLIDATED LAW ON FINANCE) AND STATUTORY PROVISIONS CONCERNING

TAKEOVERS (PURSUANT TO ARTICLE 104, PARAGRAPH 1-TER, AND 104-BIS, PARAGRAPH 1 OF THE


I) PROXIES TO INCREASE THE SHARE CAPITAL AND AUTHORISATIONS TO PURCHASE TREASURY

SHARES (PURSUANT TO ARTICLE 123-BIS, PARAGRAPH 1, LETTER M), CONSOLIDATED LAW ON

FINANCE) .................................................................................................................................................................... 64

L) ACTIVITY OF MANAGEMENT AND COORDINATION (PURSUANT TO ARTICLE 2497 AND FOLLOW. OF

THE ITALIAN CIVIL CODE) ....................................................................................................................................... 66

3. COMPLIANCE (PURSUANT TO ARTICLE 123-BIS, PARAGRAPH 2, LETTER A), CONSOLIDATED

LAW ON FINANCE) ......................................................................................................................................... 67

4. BOARD OF DIRECTORS ............................................................................................................................ 67

4.1. APPOINTMENT AND SUBSTITUTION (PURSUANT TO ARTICLE 123-BIS, PARAGRAPH 1, LETTER L),



4.2. Composition (PURSUANT TO ARTICLE 123-BIS, PARAGRAPH 2, LETTER D), CONSOLIDATED LAW

ON FINANCE) ............................................................................................................................................................. 69

4.3. DUTY OF THE BOARD OF DIRECTORS (PURSUANT TO ARTICLE 123-BIS, PARAGRAPH 2, LETTER

D), CONSOLIDATED LAW ON FINANCE) .............................................................................................................. 72

4.4. DELEGATED BODIES ........................................................................................................................................ 74

4.5. OTHER EXECUTIVE DIRECTORS .................................................................................................................... 76

4.6. INDEPENDENT DIRECTORS ............................................................................................................................ 76

4.7. LEAD INDEPENDENT DIRECTOR .................................................................................................................... 77

5. TREATMENT OF COMPANY INFORMATION ........................................................................................... 77

6. COMMITTEES INSIDE THE BOARD (PURSUANT TO ARTICLE 123-BIS, PARAGRAPH 2, LETTER D),


7. NOMINATION COMMITTEE ........................................................................................................................ 78

8. REMUNERATION COMMITTEE .................................................................................................................. 78

9. REMUNERATION OF DIRECTORS ............................................................................................................ 79

10. CONTROL AND RISKS COMMITTEE ...................................................................................................... 79

11. INTERNAL AUDIT AND RISKS MANAGEMENT SYSTEM ..................................................................... 81

11.1. DIRECTOR APPOINTED TO THE INTERNAL AUDIT AND RISK MANAGEMENT SYSTEM ................... 83

11.2. HEAD OF THE INTERNAL AUDIT FUNCTION .............................................................................................. 83

11.3. ORGANISATION MODEL PURSUANT TO ITALIAN LEGISLATIVE DECREE 231/2001 .......................... 84

11.4. AUDITING FIRM ................................................................................................................................................ 86

11.5. MANAGER IN CHARGE OF PREPARING THE COMPANY ACCOUNTS AND DOCUMENTS AND

OTHER COMPANY FUNCTIONS ............................................................................................................................. 86

11.6. COORDINATION BETWEEN THE PERSONS INVOLVED IN THE INTERNAL AUDIT AND RISK

MANAGEMENT SYSTEM .......................................................................................................................................... 87

12. AFFAIRS OF THE DIRECTORS AND RELATED PARTY DEALINGS .................................................... 87

13. APPOINTMENT OF AUDITORS ................................................................................................................ 88

14. COMPOSITION AND OPERATION OF THE BOARD OF STATUTORY AUDITORS (PURSUANT TO

ARTICLE 123-BIS, PARAGRAPH 2, LETTER D), CONSOLIDATED LAW ON FINANCE) .......................... 90

15. SHAREHOLDER RELATIONS .................................................................................................................. 91


60

16. SHAREHOLDERS’ MEETINGS (PURSUANT TO ARTICLE 123-BIS, PARAGRAPH 2, LETTER C),


17. FURTHER PRACTICES OF CORPORATE GOVERNANCE (PURSUANT TO ARTICLE 123-BIS,

PARAGRAPH 2, LETTER A), CONSOLIDATED LAW ON FINANCE) .......................................................... 94

18. CHANGES SINCE THE CLOSE OF THE YEAR OF REFERENCE ......................................................... 94

TABLE 1: INFORMATION ON CORPORATE OWNERSHIP ................................................................................. 95

TABLE 2: STRUCTURE OF THE BOARD OF DIRECTORS AND COMMITTEES .............................................. 96

TABLE 3: STRUCTURE OF THE BOARD OF STATUTORY AUDITORS ............................................................ 97

ATTACHMENT 1: SECTION ABOUT THE “MAIN CHARACTERISTICS OF THE SYSTEMS OF RISK

MANAGEMENT AND AUDITING IN RELATION TO THE PROCESS OF FINANCIAL DISCLOSURE,” IN

ACCORDANCE WITH ARTICLE 123-BIS, PAR. 2, LETTER B), CONSOLIDATED LAW ON FINANCE .......... 98


GLOSSARY

Code / Self-Regulatory Code of Conduct: the Corporate Governance Code for listed companies approved in July 2014 by the Committee for Corporate Governance and promoted by Borsa Italiana S.p.A., ABI, Ania, Assogestioni, Assonime and Confindustria; available at www.borsaitaliana.it, in the section "Borsa Italiana/Rules/Corporate Governance". Civ. code / c.c.: the Italian Civil Code. Board / Board of Directors / Administrative Body: the Board of Directors of the Issuer. Issuer / Company / Immsi: the Issuer of transferable securities to which the Report refers. Year: the financial year to which the Report refers. Consob Regulation on Issuers or Regulation on Issuers: the Regulation issued by Consob with resolution no. 11971 of 1999 (as amended) on issuers. Consob Regulation on Markets or Markets Regulation: the Regulations issued by Consob with resolution no. 16191 of 2007 (as amended) on markets. Consob Regulation on Related Parties or Related-Parties Regulation: the Regulations issued by Consob with resolution no. 17221 of 12 March 2010 (as amended) on transactions with related parties. Report: the report on corporate governance and ownership that companies are bound to issue in accordance with Article 123-bis Consolidated Law on Finance. Remuneration Report: the remuneration report prepared pursuant to Article 123-ter of the Consolidated Law on Finance and Article 84-quater of the Consob Regulation on Issuers pursuant to legislation at the registered office of the Company, at Borsa Italiana and on the website of the Issuer at www.immsi.it. Consolidated Finance Act / Consolidated Law on Finance: the Italian Legislative Decree 58 of 24 February 1998.


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1. ISSUER’S PROFILE

Immsi is organised following the traditional management and control model established in Article 2380-bis and follow. of the Italian Civil Code, with a General Shareholders’ Meeting, a Board of Directors and a Board of Statutory Auditors.

In particular, the Company’s purpose is: (i) investing in the equity of other Italian or foreign companies, that is, the activity of acquiring, holding and managing the rights, whether represented by securities or not, over the share capital of other companies; (ii) the purchase, sale and management of bonds; (iii) the granting of loans, mortgages and guarantees. The above-mentioned activities may not be conducted with the public and will be in any event carried out pursuant to and within the limits of Italian Legislative Decree 385/1993 and its implementing rules.

Moreover, the Company’s purpose includes all activities and transactions in the property sector, both in Italy and abroad, on its own behalf and for third parties, including but not limited to, the purchase, sale, exchange, construction, restructuring, management of corporate assets, leasing (non-finance) and maintenance of buildings and property in general for all types of use, as well as the establishment, purchase, sale and exchange of rights relating to property, excluding the activity of real estate brokerage. The Company may also provide technical, commercial and financial assistance in the preliminary and executive phases of property projects.

The Company may carry out the above activities directly and indirectly on its own behalf and for third parties, including accepting and/or assigning contracts or concessions and development ventures in the property field. The Issuer may carry out, not directly with the general public, all those acts necessary, in the judgement of the Board of Directors, to implement the corporate purpose.

2. INFORMATION ON CORPORATE OWNERSHIP (pursuant to Article 123-bis, paragraph 1, Consolidated Law on Finance)

as of 31/12/2014

a) Share capital structure (pursuant to Article 123-bis, paragraph 1, letter a), Consolidated Law on Finance)

The share capital of the Issuer, fully subscribed and paid up, is equal to 178,464,000.00 euros divided into 340,530,000 dividend-bearing ordinary shares, with no indication of nominal value. The shares - each share gives entitlement to one vote - are indivisible and are issued in the dematerialised form. Reference is made to Table 1, in the appendix, with information updated as of 31/12/2014 b) Restrictions on the transfer of securities (pursuant to Article 123-bis, paragraph 1, letter b), Consolidated Law on Finance)

There are no restrictions on the transfer of securities. c) Significant equity investments (pursuant to Article 123-bis, paragraph 1, letter c), Consolidated Law on Finance)

As regards significant direct or indirect equity investments, as reported by notices pursuant to Article 120 of the Consolidated Law on Finance and information from the Issuer, reference is made to Table 1, in the appendix, with information updated as of 31/12/2014.


d) Securities that give special rights (pursuant to Article 123-bis, paragraph 1, letter d), Consolidated Law on Finance)

No securities have been issued that give special rights of control or special powers. e) Employees' equity holdings: mechanism of exercising voting rights (pursuant to Article

123-bis, paragraph 1, letter e), Consolidated Law on Finance)

There is no system for employees’ equity holdings. f) Restrictions to voting rights (pursuant to Article 123-bis, paragraph 1, letter f), Consolidated Law on Finance)

There are no restrictions on voting rights. The Issuer's Articles of Association do not contain provisions relating to the increased vote pursuant to Article 127-quinquies of the Consolidated Law on Finance. For more information, reference is made to the information contained in section 16 of this Report. g) Significant agreements between shareholders (pursuant to Article 123-bis, paragraph 1, letter g), Consolidated Law on Finance)

No agreement in force exists involving shares of the Issuer relevant in accordance with Article 122 Consolidated Law on Finance. h) Clauses of change of control (pursuant to Article 123-bis, paragraph 1, letter h) of the Consolidated Law on Finance) and statutory provisions concerning takeovers (pursuant to Article 104, paragraph 1-ter, and 104-bis, paragraph 1 of the Consolidated Law on Finance)

The Issuer has stipulated some significant agreements that could be or be extinguished in case of change to the control of Immsi S.p.A., such as in particular: a bullet - multi borrower loan contract in force as of 31 December 2014 for a total of 119 million euros, of which 70 million euros disbursed to Immsi S.p.A., 30 million euros to ISM Investimenti S.p.A. and 19 million euros to Intermarine S.p.A.; a mortgage loan contract for a residual nominal value of approximately 23 million euros nominal value; further financing facilities and credit lines for a total nominal value of approximately 103.5 million euros.

The Piaggio Group has signed significant agreements that are modified or can be extinguished in the event of changes to the ownership of the contracting company. Specifically the following agreements have been made: a contract for a syndicated term loan and revolving credit facility for a total of 220 million euros; a debenture loan of 250 million euros issued by Piaggio & C. S.p.A.; a debenture loan of 75 million USD issued by Piaggio & C. S.p.A.; a financing contract with the European Investment Bank for 150 million euros; a financing contract with the European Investment Bank for 60 million euros; financing contracts for overall 56.5 million USD with International Finance Corporation to support the subsidiaries from India and Vietnam; a revolving credit facility with Banco Popolare totalling 20 million euros.

With reference to the subsidiary Intermarine S.p.A., we note the following significant agreements that could be modified or be extinguished in the case in which the indirect parent company Immsi S.p.A. loses control over the contracting company: a signed credit line (for a total value of 84.5 million USD and used as of 31 December 2014 for 3.8 million USD) valid on the contract with the Sultanate of Oman, guaranteed by a pool of banks; a guarantee for an amount of 2.7 million euros issued by Banco Popolare with reference to the Pietra Ligure project; additional credit lines and financing associated with the company’s operations for a total amount used as of 31 December 2014 of 85.7 million euros, including the aforesaid share of the Bullet – Multiborrower loan issued to Intermarine S.p.A. for an amount of 19 million euros. Lastly, it should be pointed out how,


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following the contract stipulated between the Finnish Navy and the subsidiary Intermarine S.p.A. for the construction of three minesweepers, the Finnish Navy granted advance payments – for an amount of 115% of the sum received – through insurance guarantees issued by SACE; SACE declares to be willing to issue the above guarantees upon Immsi S.p.A. co-obligation: these amounts as of 31 December 2014 – in the light of the progress and executed discharges of the guarantees – total 9.3 million euros.

In addition, the indirect subsidiary Is Molas S.p.A. has a mortgage loan contract for an amount of approximately 3 million euros that has provision for invalidating the benefit of the term if changes are made to the ownership of the subsidiary such as to have a negative effect on the assets and liabilities, corporate, financial and economic situation of the mortgaging party.

Lastly, we note how i) within the framework of investments in other enterprises conducted by the Issuer and ii) as used in order to regulate and discipline the relationships of governance with any minority shareholders in some of the companies directly or indirectly invested in by Immsi S.p.A., there are currently shareholders’ agreements stipulated with the aforesaid shareholders in the companies and/or loans allocated by the aforesaid associated companies to the companies invested in that give special rights to the contracting parties (inter alia rights of pre-emption, rights of co-sale, obligations of co-sale) in case of change of direct and/or indirect control of the company invested in.

The provisions of the Issuer's Articles of Association do not infringe on the passivity rule discipline provided for by Article 104, pars. 1 and 1-bis, Consolidated Law on Finance. In addition it is pointed out that the Issuer's Articles of Association does not provide for application of the neutralisation rules contemplated by Article 104-bis, par. 2 and 3, Consolidated Law on Finance. i) Proxies to increase the share capital and authorisations to purchase treasury shares (pursuant to Article 123-bis, paragraph 1, letter m), Consolidated Law on Finance)

The Extraordinary General Meeting of 13 May 2014 resolved to give the Board of Directors the following powers set out in point (i) or alternatively in point (ii):

(i) pursuant to Article 2443 of the Italian Civil Code, to increase on one or more occasions, against payment and also in divisible amounts, within five years from the date of the resolution, the share capital up to a maximum amount of 500 million euros nominal value, with or without a share premium, by issuing new ordinary shares having the same characteristics as those already in circulation, to be offered as an option to those entitled;

(ii) pursuant to Article 2443 and 2420-ter of the Italian Civil Code, to increase on one or more occasions, against payment and also in divisible amounts, within five years from the date of the resolution, the share capital up to a maximum amount of 500 million euros nominal value, to be assigned as follows:

- a) for a maximum amount of 250 million euros, of debenture loans which may be converted into ordinary shares with or without warrants to be issued in compliance with the option right of those entitled. The Board of Directors is therefore given, in accordance with Article 2420-ter of the Italian Civil Code, the right to issue on one or more occasions, in compliance with the option right, loans, which may be converted into ordinary shares having the same characteristics as those already in circulation, with or without warrant, within a period of five years from the date of the resolution, for a maximum amount of 250 million euros and, in any case, for amounts that, within the aforesaid limit, do not exceed, from one time to the next, the limits set by the law for issuing bonds; and

- b) for a maximum amount of 250 million euros nominal value, as well as for the residual amount, if any, in case the convertible debenture loans are issued by not using fully the amount of such proxy, with or without premium, by issuing new ordinary shares having the same features as those already in circulation, to be offered as an option to those entitled.


The Board will have the right from time to time, in exercising the aforesaid proxies, observing the right of option for those with the right and the procedures required by the provisions of the law and regulations from time to time applicable, as well as the above-stated limits, to determine the amount of the increase in capital (and/or of the single tranches), the price of issue (including any surcharge) of the new common stock, taking account of the trend of the markets and the customary market procedures for similar operations, the times, methods and conditions of the offer under option; as well as the amount of the bonds that can be converted into common stock with or without warrants and of the increase in capital to their service, the methods, terms and conditions of the issue of the debenture loans (among which the exchange rate and the methods of conversion of the bonds; the interest rate, the expiration and the methods of reimbursement, also in advance, the characteristics, the terms and the conditions of issue of the warrants) and of the related regulations and/or of the regulation of the combined warrants, as well as, in general, to define the terms and conditions of the increase in capital and the operation as a whole.

The Board of Directors will also have the powers for all the necessary fulfilments and formalities to allow the newly issued financial instruments to be admitted to trading.

During the Year none of the aforesaid proxies has been exercised.

With a resolution passed on 13 May 2014, the Ordinary General Meeting authorised the purchase and allocation of ordinary shares of the Company, pursuant to Articles 2357 and 2357-ter of the Italian Civil Code, as well as Article 132 of the Consolidated Law on Finance and relative implementing provisions. Purchase authorisation was granted for the 18 month period as of the date of the above mentioned resolution, whereas authorisation for placing was granted with no time limits.

The authorisation to purchase and dispose of treasury shares is aimed at providing the Company with a useful strategic investment opportunity for any purpose permitted by the applicable provisions, including the purposes set out in the "market practices" permitted by Consob pursuant to Article 180, paragraph 1, letter c) of the Consolidated Law on Finance with resolution no. 16839 of 19 March 2009 and EC Regulation no. 2273/2003 of 22 December 2003, and to proceed with the purchase of treasury shares based on its subsequent cancellation, on the terms and in such manner as may be approved by the competent corporate bodies.

This authorisation is requested to purchase, even in several tranches, ordinary Immsi shares up to such a maximum amount which, taking account of the Immsi ordinary shares held in portfolio by the Company and by its subsidiary companies from time to time, is no greater than the maximum limit fixed by the applicable pro tempore provision. Purchases may be carried out in the manner, to be identified case by case in compliance with Article 144-bis, paragraph 1, letter a) and letter b) of the Consob Regulation on Issuers and of the applicable provisions, so as to permit compliance with the same treatment of the shareholders as provided for by Article 132 of the Consolidated Law on Finance. As for the amount, the Board of Directors proposed that the purchases of treasury shares be made at a price which does not exceed the higher price between the price of the last independent trade and the highest current independent bid price on the trading venues where the purchase is made, provided that the unit price may not in any event be less than the minimum of 20% and no greater than the maximum of 10% of the arithmetic mean of the official prices recorded by the Immsi share in the ten days of trading prior to each single purchase. In cases where purchases are made through public purchase or exchange offers, the unit price shall not be lower by 10% or higher by 10% compared to the official price recorded by the Immsi stock on the trading day prior to the announcement to the public.

The Shareholders’ Meeting has likewise authorised the use, pursuant to Article 2357-ter of the Italian Civil Code, at any time, entirely or partially, in one or more times, of treasury shares purchased according to the aforesaid resolution or in any case in the Company’s portfolio by selling them on the stock exchange or over the counter, possibly by selling any real and/or personal rights, including but not limited to securities lending, at the terms, modes and conditions


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of the act of disposal of treasury shares deemed most appropriate to the interest of the Company, subject to the statutory and regulatory provisions pro tempore in force and for the achievement of the objectives referred to in the aforementioned shareholders' resolution.

During the Year no treasury shares have been bought, therefore as of 31 December 2014 and at the date of this Report, the Issuer holds no treasury shares in portfolio. l) Activity of management and coordination (pursuant to Article 2497 and follow. of the Italian

Civil Code)

The Issuer is directly and indirectly controlled, in accordance with Article 93 of the Consolidated Law on Finance, by Omniaholding S.p.A., a company wholly owned by the Colaninno family, through the subsidiary company Omniainvest S.p.A.

In particular, it is specified that, at the situation of control of the Issuer, no tangible activity of management and coordination is carried on in relation to the case in point of Article 2497 et seq. of the Italian Civil Code and that none of said parties has a structure or organisation such as to allow it to be carried on. Therefore, the Company and, particularly, its Board of Directors take their respective decisions in full autonomy.

* * *

Please note that:

- the information required by Article 123-b, first paragraph, letter i) (“the agreements between the company and the directors ... that require indemnity in case of resignation or dismissal without a just cause or if their working relationship ceases following a take-over bid”) is included in the Remuneration Report published pursuant to Article 123-ter Consolidated Law on Finance and in Sect. 9 of this Report;

- the information required by Article 123-bis, first paragraph, letter l) (“the norms applicable to the appointment and substitution of the directors… as well as to changes to the Articles of Association, if other than the legislative and regulamentary ones applicable in a supplementary fashion”) is illustrated in section 4.1 of this Report on the Board of Directors.


3. COMPLIANCE (pursuant to Article 123-bis, paragraph 2, letter a), Consolidated Law on Finance)

The Issuer has adopted a corporate governance system conforming to the principles contained in the Corporate Governance Code, as indicated in this Report, prepared by the Committee for the Corporate Governance of listed companies, last amended in July 2014 and available at www.borsaitaliana.it, in the section “Borsa Italiana/Rules/Corporate Governance”. Neither Immsi nor its subsidiaries with strategic importance are subject to provisions of the Law that are not Italian that affect the structure of corporate governance of the Company.

4. BOARD OF DIRECTORS

4.1. APPOINTMENT AND SUBSTITUTION (pursuant to Article 123-bis, paragraph 1, letter l),

Consolidated Law on Finance)

The rules contained in the Issuer’s Articles of Association, applied to the appointment and replacement of the Directors, are suitable to guarantee the respect of the provisions introduced to this end, lastly, by the Italian Legislative Decree 27/10, making reference to the performance of directive 2007/36/EC regarding the exercise of some rights of the shareholders of listed companies. In addition, the Board of Directors of the Company updated the Articles of Association on 13 November 2014, to take into account regulations on the gender balance of boards of administration as per Article 147-ter, paragraph 1-ter of the Consolidated Law on Finance, as introduced by Law no. 120/2011, and Article 144-undecies.1 of the Consob Regulation on Issuers. The Company is managed by a Board of Directors comprising no fewer than five and no more than thirteen members appointed by the Shareholders’ Meeting. The Shareholders’ Meeting determines the number of Board members as well as the term of their office which cannot be more than three years, and will expire at the date of the Shareholders’ Meeting called to approve the financial statements of the last year of their term in office. Directors may be re-appointed. According to the Articles of Association, the Directors must have the requirements of the current pro tempore legislation; of them a minimum number, corresponding to the minimum required by the legislation, must have the requirements of independence as per Article 148, paragraph 3, of Consolidated Law on Finance. Whenever the requirements are no longer met, the Director is invalidated. Whenever there is no longer the requirement of independence, prescribed by Article 148, paragraph 3, of Consolidated Law on Finance, of a Director, it does not determine the director’s invalidity if the requirements remain valid for the minimum number of Directors that according to current legislation must have such requisites. The Board of Directors is appointed in compliance with pro tempore regulations on gender balance, based on lists presented by Shareholders, according to procedures established hereunder, in which the candidates shall be listed with a consecutive number. The lists presented by the Shareholders, undersigned by those who submit them, must be deposited at the Company’s headquarters, at the disposal of whoever applies for them, at least twenty-five days before the date set for the first convocation of the Shareholders Meeting and they are subject to the other forms of publishing required by the current pro tempore regulations. Each Shareholder, the Shareholders belonging to a significant shareholder agreement in accordance with Article 122 of Consolidated Law on Finance, the controlling party, the subsidiary companies and those subject to a common control in accordance with Article 93 of Consolidated Law on Finance, cannot present or contribute to the presentation, not even by mediation or a trust company, more than only one list neither can they vote different lists and every candidate can


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present himself/herself in only a single list under penalty of ineligibility. The support and votes expressed in breach of this prohibition are not attributed to any list. The right to present lists is only for Shareholders that, alone or together with other presenting Shareholders, are altogether owners of shares with voting rights representing at least 2.5% of the share capital with voting rights in the Ordinary Shareholders’ Meeting, or representing another percentage that may be established by provisions of the law or regulations. It is specified that, with deliberation no. 19109 of 28 January 2015, Consob has confirmed the required stake at 2.5% of the share capital for presenting the lists of candidates for the election of the Company’s Administration. For the purposes of presenting the list, ownership of the stake required is determined having regard to the shares registered in the name of the shareholder on the date on which the lists are filed with the Issuer; certification of the same can also be submitted subsequent to filing the list, provided that this takes place within the deadline for the publication of such lists. Together with each list, within the respective terms stated above, they must deposit (i) the declarations with which the single candidates accept their own candidacy and they certify, under their own responsibility, the non-existence of causes of ineligibility and incompatibility, as well as the existence of the requisites prescribed for the respective positions; (iii) a curriculum vitae regarding the personal and professional characteristics of each candidate, possibly stating the person’s fitness to be qualified as independent. Lists with a number of candidates greater than or equal to three shall be composed of candidates from both genders, in such a way that at least one fifth (on the occasion of the first term after 12 August 2012) and thereafter one third (in any case rounded up) of candidates belong to the less represented gender. Lists presented without observing the above provisions are considered as not presented. To the election of the Board of Directors the proceedings are as specified below: a) the list that obtained the highest number of votes is used for drawing all the Directors to be elected except one, in the progressive order in which they are listed in the list itself; b) the remaining Director is drawn from the minority list that is not connected in any way, not even indirectly, with those who presented or voted the list of the preceding letter a) and that has obtained the second highest number of votes. If the minority list of point b) has not achieved a percentage of votes equal to at least half that required for the presentation of lists, all the Directors to be elected will be drawn from the list of point a). If the candidates elected with the above procedures do not assure the appointment of a number of independent Directors pursuant to Article 148 of the Consolidated Law on Finance, equal to the minimum number established by law in relation to the total number of Directors, the non-independent candidate pursuant to Article 148 of the Consolidated Law on Finance, elected last in progressive order in the list that received the highest number of votes, as per the preceding letter a), is replaced by the first independent candidate pursuant to Article 148 of the Consolidated Law on Finance, according to the progressive order not elected in the same list, or, failing this, by the first independent candidate pursuant to Article 148 of the Consolidated Law on Finance, according to the progressive order not elected in the other lists, according to the number of votes obtained by each one. This procedure of substitution is used until the Board of Directors is composed of a number of independent Directors pursuant to Article 148 Consolidated Law on Finance, equal to at least the minimum prescribed by Law. If said procedure does not assure the result last indicated, the substitution is made with a resolution passed by the Meeting with a relative majority, upon presentation of candidacies of subjects with the above mentioned requisites. If, in addition, with the candidates elected in the manner described above, a composition of the Board of Directors compliant with pro tempore legislation in force at any time concerning the balance between genders is not ensured, the candidate of the more represented gender elected as last in the sequential order in the list that received the most votes shall be replaced by the first candidate of the less represented gender not elected from the same list according to the sequential


order. This replacement procedure is repeated until a composition of the Board of Directors compliant with pro tempore legislation in force at any time concerning the balance between genders has been ensured. If the aforesaid procedure does not ensure the last result indicated above, the replacement will take place by resolution passed by the General Meeting by relative majority subject to the presentation of candidates belonging to the less represented gender. If a single list or no list is presented, the General Meeting shall resolve with the majorities established by law, without observing the above procedure, save for compliance with pro tempore regulations on gender balance.

If during the year one or more Directors are terminated, provided that the majority is always composed of Directors appointed by the Shareholders’ Meeting, steps will be taken in accordance with Article 2386 of the Italian Civil Code as follows: a) the Board of Directors makes the substitution from those belonging to the same list to which the terminated Director belonged and the meeting deliberates, with the majorities of Law, respecting the same criterion; b) if in the aforesaid list of candidates not elected previously, in other words candidates with the requisites, or in any case when for any reason it is not possible to respect the provisions of letter a), the Board of Directors makes the substitution, as subsequently done by the Shareholders’ Meeting, with the legal majorities with no list vote. In any case, the Board of Directors and General Meeting shall make appointments in such a way as to ensure (i) that independent directors are appointed to the board, pursuant to Article 148 of the Consolidated Law on Finance, in the minimum number required by pro tempore regulations and (ii) compliance with pro tempore regulations on gender balance. If because of resignations or other causes there is no longer a majority of Directors, the whole Board is considered resigning and its cessation will take effect from the moment when the Board of Directors will be reconstituted following acceptance by at least half the new Directors appointed by the Shareholders’ Meeting, that must be urgently convened. Considering the organisational structure of the Issuer, as well as the practice of appointing persons that have gained significant experience within the company, or who have gained experience in sectors in which the Issuer operates, as executive directors, the Board of Directors, in the meeting of 16 March 2015, considered it was not necessary to adopt a plan for the succession of executive directors, with the possibility that it may do so in the future.

4.2. COMPOSITION (pursuant to Article 123-bis, paragraph 2, letter d), Consolidated Law on

Finance)

At the date of this report, the Board of Directors of the Issue comprises 7 members appointed by the Ordinary General Meeting of 11 May 2012. On 8 October 2014, the Director Enrico Maria Fagioli Marzocchi resigned from his position as director, while on 1 February 2015 the Deputy Chairman, Carlo d’Urso, passed away. The Board with its current composition, appointed based on the single list of candidates presented by the majority shareholder Omniainvest S.p.A. was elected with a percentage of votes in relation to voting capital equal to 94.77%, and shall remain in office until the date of the Shareholders’ Meeting called to approve the financial statements for the year ending 31 December 2014. For more information about the list submitted for the appointment of the Administrative Body, reference is made to the Issuer's institutional website, in the section Governance/General Meeting/Archive/2012.


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The professional curriculum of the Directors have been filed at the Company’s head office and are available on the Issuer’s institutional website, in the section "Governance/Management". The Directors currently in office are in possession of all the requirements envisaged by the Articles of Association and the applicable Law and Regulations. Please refer to Table 2, given in the appendix.

* * *

Pursuant to Article 20 of the Articles of Association, the Chairman, or anyone acting on his behalf, shall convene a Board of Directors meeting at the registered office or in another location, whenever the same retains such necessary in the interests of the Company or on the request of three Board members. Board meetings will be convened in writing, which may also be sent by fax, cable or by e-mail to the Board members in office and to the Auditors at least five days before the date fixed for the meeting, or, in the event of an emergency, in the same way, but with a minimum notice of six hours. The participation and attendance of the meetings of the Board of Directors may also take place by means of teleconference and/or video conference, on condition that all of those entitled may participate or attend, may be identified and that the same are able to follow the meeting and to intervene in real time in discussions of the items on the agenda; once said conditions have been verified, the Board Meeting shall be considered to have taken place in the location where the Chairman and Secretary of the meeting are, in order to enable the minutes to be drawn up and signed by both of the latter. Pursuant to Article 22 of the Articles of Association, in order for the resolutions of the Board of Directors to be valid, the presence of the majority of Board members in office is required. Resolutions will be passed by the absolute majority of those present.

Maximum aggregation of offices held in other companies

Each member of the Board of Directors must deliberate with full awareness and independently, in the pursuit of creating Shareholder value and is committed to dedicate to this corporate office the time necessary to ensure diligent fulfilment of his duties, irrespective of the offices held outside the Immsi Group, being well aware of the responsibilities of the office held. To this end, each Director must have already evaluated, at the time of accepting office in the Company and independently from the limits established by law and the Regulation Governing the aggregation of offices, his ability to carry out with due diligence and effectiveness the duties attributed to him, with particular attention being paid to overall commitments outside the Immsi Group. Each member of the Board of Directors must also inform the same Board of any appointment to Director or Auditor in other companies, so as to comply with the disclosure obligations established by applicable Regulations and Law. The Board has decided not to define general criteria on the maximum number of offices of Administration and Auditing in other companies, that can be considered compatible with an effective performance of the role of Director of the Issuer, saving the duty of each Director to evaluate the compatibility of the positions of Director and Auditor, held in other companies listed on regulated markets (also outside Italy), in holding, banking, insurance or large-sized companies, conscientiously carrying out the duties taken on as Director of the Issuer. During the session held on 16 March 2015, the Board, with the outcome of the verification of the offices currently held by its Directors in other companies, indeed considered that the number and the quality of the offices held does not interfere and is, therefore, compatible with an effective performance of the office of Director in the Issuer. In addition, the majority of the members of the Board of Directors of the strategic subsidiary


Piaggio & C. S.p.A. do not hold Administrative and/or Directive positions in the Parent Company Immsi S.p.A. The table below lists the positions of Director and Auditor held as of 31 December 2014 by the members of the Board of Directors holding office, in other companies listed on regulated markets (also outside Italy), finance, banking, insurance companies or companies of significant dimensions.

Full name Company Positions held as Directors or Auditors

Roberto Colaninno

- Piaggio & C. S.p.A.* - Omniaholding S.p.A.* - Omniainvest S.p.A.* - Alitalia - Compagnia Aerea Italiana S.p.A. (1)

- RCN Finanziaria S.p.A.* - Intermarine S.p.A.*

Chairman BoD and Chief Executive Officer Chairman BoD Chairman BoD Chairman BoD Director Director

Michele Colaninno

- Omniaholding S.p.A.* - Omniainvest S.p.A.* - ISM Investimenti S.p.A.* - Banca Popolare di Mantova S.p.A. - Piaggio & C. S.p.A.* - Is Molas S.p.A.* - RCN Finanziaria S.p.A.* - Piaggio Vietnam Co. Ltd.* - Immsi Audit S.c. a r.l.* - Intermarine S.p.A.*

Chief Executive Officer Chief Executive Officer Chairman BoD Deputy Chairman BoD Director Director Director Director Director Director

Carlo d’Urso (2)

- Gruppo Banca Leonardo S.p.A. - Stilo Immobiliare Finanziaria S.r.l. - F.C. Internazionale Milano S.p.A.

Director Director Director

Matteo Colaninno

- Omniaholding S.p.A.* - Piaggio & C. S.p.A.* - Omniainvest S.p.A.*

Deputy Chairman and Chief Executive Officer Deputy Chairman Director

Rita Ciccone

-

-

Enrico Maria Fagioli Marzocchi (3)

-

-

Giorgio Cirla

- Astaldi S.p.A.

Director

Giovanni Sala

- Intermonte SIM S.p.A. - Intermonte Holding SIM S.p.A. - Gianni Versace S.p.A. - CLN S.p.A. - Gewiss S.p.A.

Chairman, Board of Statutory Auditors Chairman, Board of Statutory Auditors Chairman, Board of Statutory Auditors Statutory Auditor Director

Ruggero Magnoni

- Compagnie Financiere Richemont SA - Quattroduedue Holding BV - Raffaele Caruso S.p.A. - Compagnie Financiere Rupert

Director Director Director Unlimited Partner

* Company of the Group at the head of or to which the Issuer belongs.

(1) Term of office ended as from 31/12/2014. Since 01/01/2015, he has been Honorary Chairman and Director of Alitalia – Società Aerea Italiana S.p.A.

(2) Term of office at Immsi S.p.A. ended on 01/02/2015.

(3) Term of office at Immsi S.p.A. ended on 08/10/2014.

The type of board disclosure allows Directors to have adequate knowledge of the sector in which


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the Issuer operators, of corporate dynamics and their developments, as well as the regulatory and self-regulatory reference framework.

4.3. DUTY OF THE BOARD OF DIRECTORS (pursuant to Article 123-bis, paragraph 2, letter d), Consolidated Law on Finance)

During the year, the Board of Directors met 7 times, for one hour fifteen minutes on average, with the Board of Statutory Auditors attending.

The general average of participation of the Directors in the aforesaid meetings was equal to 90.48%, while, with reference to the participation of only the independent Directors, this average was equal to 100%.

The Articles of Association do not require a minimum number of directors’ meetings, nevertheless for the financial year 2015 it is expected that the Board of Directors meets at least 5 times. At the date of this Report, 1 meeting had taken place on 16 March 2015.

In compliance with Article 2.6.2, paragraph 1 letter b) of the Rules of markets organised and managed by Borsa Italiana S.p.A., on 29 January 2015, Immsi S.p.A. notified the market management company of the annual schedule of corporate events for 2015. This schedule has also been published on the Issuer’s institutional website, in the section "Investors/Calendar".

The Chairman of the Board of Directors, through the Secretary of the Board of Directors, makes sure adequate information regarding the items on the agenda is made available to all the Directors with reasonable promptness. Particularly, the documentation pertaining to the topics being resolved is forwarded by e-mail 48 hours in advance of the convened Board meeting, with the sole exception of the cases of particular and proven urgency or for special needs of confidentiality. In the latter case, the Chairman ensures that topics are adequately reviewed during Board meetings. In this way, the Chairman of the Board of Directors promotes an informed debate, encouraging the contribution of all participants, ensuring that the topics on the agenda will receive the time necessary for a constructive dialogue.

Participants in the directors’ meetings also include Executives of the Issuer and of the Group, to provide the appropriate detailed information on the items on the agenda.

The Board of Directors plays a central role within the corporate organisation and is in charge of strategic and organisational functions and responsibilities, as well as verifying the existence of the necessary controls to monitor the performance of the Issuer and the companies in the Group.

The Board of Directors is granted all powers to manage the Company and to that end may approve or carry out all acts it deems necessary or useful to fulfil the corporate purpose, except those matters reserved for the Shareholders’ Meeting by Law and the Articles of Association.

In accordance with Article 23 of the Articles of Association, the Board of Directors is also responsible for deciding upon all matters regarding:

- mergers and demergers in accordance with articles 2505, 2505-bis of the Italian Civil Code, the latter being referred to by Article 2506-ter of the Italian Civil Code;

- establishment or closure of secondary offices;

- which Directors represent the Company;

- reductions in share capital in the event of withdrawal of the Shareholder;

- amending the Articles of Association to comply with regulatory provisions;

- transfer of the registered office to another location in Italy;

notwithstanding that such decisions may also be taken by an Extraordinary Shareholders’ Meeting.


The Board of Directors, at the meeting on 11 May 2012, decided on the distribution of the management competencies of the Board of Directors (see section 4.4 below for the competencies of the Chairman and of the Chief Executive Officer), reserving in all cases for the Board jointly not only the powers granted by Law or by provision of the Articles of Association as well as the approval of "related party transactions" as provided for by the procedure adopted by the Company (see the following section 12 of this Report), but all the powers to:

a) define the strategic, industrial and financial objectives as well as general policy for the Company and Group;

b) acquire and dispose of controlling equity investments, acquire or dispose of business units for individual amounts greater than 25 million euros, mergers and demergers;

c) approve multi-year plans;

d) carry out property dealings for individual amounts greater than 25 million euros. Within the limits of its capacity, the Board approves the Issuer’s Corporate Governance system, defines the structure of the Group headed by the Issuer, examines and approves all strategic, industrial and financial plans of the Issuer and of the Group headed by the Issuer, periodically monitoring its implementation.

In accordance with Article 2381 of the Italian Civil Code and of the applicative criterion 1.C.1, letter b) of the Code, in the course of the year the Board has evaluated the adequacy of the organisational, administrative and general accounting structure of the Issuer and its strategic subsidiaries, with particular reference to the internal control system and the management of risks, according to the procedures implemented by the Issuer for this purpose. In particular, at its meeting on 25 March 2014 and on 16 March 2015, the Board took into account - among other things - the functional organisational charts of each of the major strategic companies of the Group, with a particular focus on the functional organisational charts of the respective Directorates of Administration, Finance and Control, taking into account the main organisational changes that occurred during the preceding financial year.

Within the framework of this periodic activity the Board has, depending on the case, used the support of the Control and Risks Committee, the Head of Internal Audit, the auditing company Immsi Audit S.c. a r.l. and the Manager in charge of preparing the company accounts and documents as well as the procedures and checks implemented also in accordance with Italian Law 262/2005. In particular, the Internal Control and Risks Committee of the Issuer, at its meeting held on 12 May 2014 examined the specific documentation aimed at determining the operating and relevant companies to be included in the scope of the audit for the purposes of Italian Law 262/2005, agreeing on the applied methodology and the scope of the companies to be audited.

The relevant subsidiaries were identified using quantitative parameters, determining specific threshold values, and qualitative parameters, performing assessments on the basis of the knowledge of the Company and the existing specific risk factors.

As a result of this analysis and also taking into account its nature as a diversified industrial group, the main subsidiaries of strategic importance were determined, and subsequently included within the scope of control for the purposes of Italian Law 262/2005. For a description of the main characteristics of the system of risk management and auditing in relation to the process of financial information, in accordance with Article 123-bis, paragraph 2, letter b), Consolidated Law on Finance, reference is made to Attachment 1 given in the appendix. During the year, the Board evaluated the general trend of operations, on a quarterly basis, taking into consideration information received from Delegated Bodies, as well as periodically comparing results achieved with those planned.


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In accordance with the statutory provisions, the Articles of Association and the Code, the Board pre-emptively reviews and approves the transactions of the Issuer and of its subsidiaries, when such operations have a significant strategic, equity, economic or financial importance for the Issuer, with particular attention to situations in which one or more Directors have an interest on behalf of themselves or third parties.

On 16 March 2015, the Issuer’s Board conducted the annual review required by application criterion 1.C.1 letter g) of the Self-Regulatory Code of Conduct. The review found that the size, composition and operation of the Board of Directors and its committees were adequate, given the Issuer’s management and organisational requirements and considering the professional and managerial characteristics and experience of its members, their seniority in office, as well as the fact that out of a total of seven Board members, five are non-executive directors, three of whom are independent non-executive directors, who also ensure a suitable composition of the Board's committees.

In this regard, the Board has decided February perform an activity of self-assessment in order to evaluate its ability to fulfil the functions conferred to the Board itself by the current regulations. This assessment was conducted in February 2015; it concerned the Financial Year and was based on a self-assessment questionnaire sent to all Board Directors. The questionnaire - divided into different areas of investigation (i.e., composition, structure, size, operation and dynamics of the Board, interaction with the management team, risk governance, composition and structure of the Committees) and with the possibility to make comments and proposals - was completed by all Directors and shared by the Board. As described above, the outcome of the assessment was one of substantial suitability of the Administrative Body and its Committees to carry out their respective functions.

Following the outcome of the self-assessment process, considering the end of the term of office of the administrative body with the approval of the financial statements as of 31 December 2014, the Board of Directors gave shareholders recommendations on a suitable composition of the new Board, following appointment by the General Meeting. For more information, see the report of the Board of Directors to the General Meeting convened to re-appoint the Board and available on the Company website www.immsi.it in the section “Governance/General Meeting/Archive/2015” and in the authorised storage mechanism www.emarketstorage.com.

Article 18 of the Articles of Association requires that, until a contrary resolution of the meeting, the Directors are not bound by the prohibition of Article 2390 of the Italian Civil Code. It is specified that, to date, the aforesaid derogation has found no application in any specific case.

4.4. DELEGATED BODIES

The Chairman is appointed by the Board of Directors from its members, should the shareholders not have done so.

The Chairman calls the Board of Directors and coordinates its activities, ensuring that adequate information regarding the items on the agenda is made available to all the Directors, taking account of the circumstances. Furthermore, he chairs shareholder meetings, ascertains the identity and entitlement of those attending, ascertains the proper calling of the meeting, the presence of a sufficient number of shareholders for resolutions to be valid, governs the procedures of shareholder meetings, establishes voting methods and monitors the results.

The Board of Directors may also appoint a Deputy Chairman, who substitutes the Chairman in the above functions in his absence or impediment. The Chairman signs for and represents the Company with third parties and in legal matters. In his absence or impediment, these duties are carried out by the Deputy Chairman.


The Board of Directors may also delegate, within the same limits, its powers to one or more of its members, possibly as Chief Executive Officers, granting them several or joint powers of signature, as it deems appropriate.

In accordance with Article 23 of the Articles of Association, the Board of Directors may appoint General Managers, Managers and Attorneys-in-fact, with several or joint signature powers, determining their powers and duties, as well as delegate powers for certain acts or categories of acts.

Powers of representation and signature may also be granted by the Board, which determines the limits, to Company’s employees or to third parties.

Chairman of the Board of Directors and Chief Executive Officer

On 11 May 2012, the Ordinary General Meeting of the Company appointed the Board Director Roberto Colaninno as Chairman, who will remain in office until approval of the financial statements for the year ending 31 December 2014.

The Chairman of the Board of Directors is the person mainly responsible for the Issuer’s management (Chief Executive Officer); a Board resolution of 11 May 2012 granted Chairman power to superintend the ordinary management of the company and all powers of ordinary and extraordinary management, excluding those powers reserved by Law or the Articles of Association to the entire Board of Directors, as well as the powers in all cases reserved to the Board on the basis of said resolution (refer to section 4.3 above for a list). In the event of acts or transactions of extraordinary management, the Chairman must adequately inform the Board at the first possible meeting.

The Board considers that the granting of executive powers to the Chairman responds to the considerable organisational needs of the Issuer that reside in the streamlined functioning of the Board of Directors of the Company. Should this situation be recurring, please note that the Company has appointed Director Giovanni Sala as Lead Independent Director under the Code. For more information about the figure of Lead Independent Director reference is made to section 4.7.

It should be noted that the situation of interlocking directorate as of application criterion 2.C.5 of the Code is not recurring.

Michele Colaninno, former General Manager of the Company, was re-appointed Chief Executive Officer on 11 May 2012. In addition to powers to act as the company’s legal representative vis-à-vis third parties and before the courts and to sign on behalf of the company, he was granted the power to superintend the ordinary management of the company, being authorised, to that end, to perform all routine acts and operations for sums not exceeding 20,000,000 euros per transaction or series of interconnected transactions, and to implement the resolutions passed by the Shareholders’ Meeting and the Board of Directors.

He was also granted the power to appoint, dismiss, direct, supervise and discipline the Company’s Manager(s) and their subordinates, with the exception of any such power regarding the General Manager(s), with the approval of the Chairman.

It is to be noted that the powers conferred on the Chief Executive Officer exclude those set aside by law or by provision of the Articles of Association as prerogatives of the Board of Directors as a whole and the powers in any case set aside as prerogatives of the Board pursuant to said resolution (section 4.3, paragraphs a), b), c) and d) above should be consulted for a complete list, even those involving sums lower than those stated).

Information for the Board

In accordance with Article 21 of the Articles of Association, the Delegated Bodies inform the Board of Directors and the Board of Statutory Auditors regarding its activities and the most significant


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financial and economic transactions carried out by the Company or its subsidiaries, referring in particular to transactions in which the Directors have an interest, on their own behalf or on behalf of third parties, or are influenced by the individual exercising the activity of management and coordination. The information is given timely (at least quarterly) at meetings of the Board or by means of a written memorandum addressed to the Chairman of the Board of Statutory Auditors.

In particular, during the 7 Board meetings held during the Year the Delegated Bodies adequately and promptly reported to the Board of Directors on the activity performed, on the general course of the administration and on its predictable evolution, as well as on the operations that are most significant for their dimensions and characteristics, carried out by the Company and by its subsidiaries, as prescribed in accordance with the law and the Articles of Association.

4.5. OTHER EXECUTIVE DIRECTORS

Besides the Chairman and the Chief Executive Officer there are no other Executive Directors.

4.6. INDEPENDENT DIRECTORS

The number and stature of the Non-Executive Directors, who are five out of the seven members of the Board of Directors of the Issuer, of whom three independents, ensure that their judgement may have a significant weight upon the decision-making of the Issuer’s directors. On 16 March 2015, the Board of Directors acknowledged that the non-executive director Rita Ciccone meets requirements of independence. The Non-Executive Directors and the Independent Directors bring their specific competencies to Board discussions and contribute to decisions being made in the Company’s interest.

The Board of Directors evaluates the independence of its Non-Executive members in accordance with both Article 148, paragraph 3, points b) and c) of the Consolidated Law on Finance, referred to by Article 147-ter, paragraph 4 of the Consolidated Law on Finance, and by applying all criteria in accordance with Article 3 of the Self-Regulatory Code of Conduct at the time of appointment, making known the results of its assessments by means of a press release issued to the market, as well as periodically during the term in office. The result of that evaluation is made public through the annual report on corporate governance. The criteria and the monitoring procedures adopted by the Board of Directors for evaluating the requirements of independence are verified by the Board of Statutory Auditors in accordance with the Self-Regulatory Code of Conduct.

The Board of Directors verifies the requirements of independence as of Article 3 of the Code and Article 148, paragraph 3, letters b) and c) of the Consolidated Law on Finance, of independent directors in office on an annual basis; it also verified the requirements when they were first appointed and in the meeting on 16 March 2015. On the same date, the Board of Statutory Auditors acknowledged that the criteria and the monitoring procedures adopted by the Board of Directors for evaluating the requirements of independence had been correctly applied.

It is pointed out that, in order to rule out potential risks of limiting the management independence of the strategic subsidiary Piaggio & C. S.p.A., the majority of the members of the Board of Directors of Piaggio & C S.p.A. has no administrative and/or managerial duties in the Parent Company Immsi S.p.A.

The Independent Directors are committed to maintaining independence during the term of office, and in any event to inform the Board of Directors of any situation that might compromise their independence. Moreover, please note that, pursuant to the provisions of Article 17, paragraph 4, of the Articles of Association of the Issuer, the loss of the independence requirements prescribed by Article 148, paragraph 3, Consolidated Law on Finance by a Director does not result in disqualification if the requirements are still held by the legally mandated minimum number of


Directors that must meet this requirement.

During the Year, the independent Directors came together in an informal manner in the absence of the other Directors.

4.7. LEAD INDEPENDENT DIRECTOR

The Chairman of the Board of Directors is the person mainly responsible for the Issuer’s management (Chief Executive Officer). Therefore, on 11 May 2012, the Board of Directors appointed Giovanni Sala, the Independent Non-Executive Director, Lead Independent Director, so that he may be a point of reference and coordination of the decisions of the Non-Executive Directors and, in particular, of the Independent Directors. The Lead Independent Director Giovanni Sala having suitable skills in accounting and finance and/or risk management, is also Chairman of the Control and Risks Committee as well as Chairman of the Remuneration Committee, of the Issuer itself. The Lead Independent Director also has the task of working with the Chairman to ensure that the Directors receive thorough and timely information flows, and may call, independently or at the request of other Directors, special meetings of only Independent Directors to discuss issues considered of interest regarding the functions of the Board of Directors and corporate management. As stated in the previous paragraph, during the Year, the independent Directors met informally in the absence of the other Directors.

5. TREATMENT OF COMPANY INFORMATION

As regards issues concerning the management of price sensitive information and in order to regulate internal management and disclosure, the Board of Directors of the Issuer updated the "Procedure for the management of the Register of persons with access to Privileged Information" on 20 December 2012, while in the meeting of 13 November 2014, it amended the "Procedure for Communicating Privileged Information to the General Public". In particular, the above procedures define in detail the modalities for monitoring, access to and circulation of Price-sensitive Information before its transmission to the public, to assure observance of the obligations of confidentiality and market protection, under the provisions of the Law and Regulations.

The aforesaid procedures are also available on the Issuer’s institutional website, in the section "Governance/Procedures". 6. COMMITTEES INSIDE THE BOARD (pursuant to Article 123-bis, paragraph 2, letter d),

Consolidated Law on Finance)

Within the Board, the Remuneration Committee, the Control and Risks Committee and the Related Party Transactions Committee were established. It is pointed out that the Issuer has formed neither a committee that performs the functions of two or more committees provided for by the Code nor other committees to the ones provided for by the Code, nor the functions of one or more committees were assigned to the entire Board under the coordination of the Chairman.


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7. NOMINATION COMMITTEE

Considering the size and organisational structure of the Issuer, the Board has not recognised – at the present time - the necessity to set up a Committee for the appointment of Directors or to assign its functions to another committee or to the entire Board. In particular, the presence of a control Shareholder guarantees the presentation of the candidates to the office of Director. It is customary for the candidates to the office of Executive Director to be subjects who have acquired experience in the sectors in which the Issuer operates that is direct knowledge thereof.

8. REMUNERATION COMMITTEE

The Board of Directors of the Company, in compliance with the Corporate Governance Code, established a Remuneration Committee, within the Board, comprising independent directors that will remain in office until the date of the General Meeting convened to approve the financial statements for the year ending 31 December 2014.

Composition and operation of the Remuneration Committee (pursuant to Article 123-bis, paragraph 2, letter d), Consolidated Law on Finance)

On 11 May 2012, the Board of Directors appointed the Remuneration Committee comprising the independent directors Giovanni Sala, Chairman, and Giorgio Cirla, as well as the non-executive director Carlo d’Urso. On 16 March 2015, the Board of Directors appointed the independent director Rita Ciccone to replace Carlo d’Urso. Please note that all members of the aforementioned committee possess adequate knowledge and experience in accounting and finance, and/or remuneration policy, deemed in compliance by the Board at the time of their appointment.

During the Year, the Remuneration Committee held 1 meeting, with a duration of about 30 minutes, at which all of its members, the secretary taking the minutes as well as the Board of Statutory Auditors took part, the latter being involved in sharing all of the decisions made by the Committee, before the same proposed them to the Board of Directors of the Issuer.

For 2015, at least 2 meetings of the Remuneration Committee are planned, with the first scheduled for 16 March 2015. Please refer to Table 2, given in the appendix.

Functions of the Remuneration Committee

The Remuneration Committee of the Issuer has the following duties, in the absence of persons directly concerned:

presenting proposals to the Board to define the General Remuneration Policy for Executive Directors, for other Directors with special positions and Key Managers, monitoring the application of decisions taken;

presenting proposals to the Board concerning the remuneration of Executive Directors and Directors with special positions as well as defining performance objectives related to the variable component of remuneration, monitoring the application of decisions adopted by the Board and verifying, in particular, the actual achievement of performance objectives.

In particular, the Committee considers the following, when defining the above remuneration: consistency with remuneration defined in previous terms of office, suitability with commitments undertaken and responsibilities of positions held, professional qualifications of persons concerned as well as the size of the Company, Group and relative prospects for growth.


For further information, reference is made to the Remuneration Report available, in the times established by law, on the Issuer's institutional website, in the section “Governance/General Meeting/Archive”.

9. REMUNERATION OF DIRECTORS

On 16 March 2015, the Board, following a proposal made by the Remuneration Committee, confirmed the "General policy for the remuneration of directors and key managers” (the “Remuneration Policy”) pursuant to Article 6 of the Code. This policy defines the basic guidelines on which the remunerations must then be concretely established by the competent company bodies.

For a description of the Remuneration Policy and of the remunerations paid during the Fiscal Year to the Directors, the General Managers and to the Executives with strategic responsibilities, reference is made to the Remuneration Report available, within the terms of Law, on the internet site of the Issuer, in the section "Governance/General Meeting/Archive".

Mechanisms of incentive of the Head of the Internal Audit Function and of the Manager in charge of preparing the company accounts and documents.

At the date of this Report, there are no mechanisms of incentive of the Head of the Internal Audit Function and of the Manager in charge of preparing the company accounts and documents.

Directors’ indemnity in case of resignations, dismissal or cessation of the relationship following a public purchase offer (pursuant to Article 123-bis, paragraph 1, letter i), Consolidated Law on Finance)

No agreements have been stipulated between the Issuer and the Directors that require indemnity in case of resignation or dismissal/revocation without a just cause or if the working relationship ceases following a public purchase offer.

10. CONTROL AND RISKS COMMITTEE

The Board of Directors of the Company, in compliance with the provisions of the Self-Regulatory Code of Conduct, has established an Internal Control and Risks Committee, comprising the majority of Non-Executive and Independent Directors, whose work is coordinated by a Chairman.

Composition and operation of the Control and Risks Committee (pursuant to Article 123-bis, paragraph 2, letter d), Consolidated Law on Finance)

On 11 May 2012, the Board of Directors appointed the independent Director Giovanni Sala, who has suitable skills in accounting and finance and/or risk management, with the function of Chairman (also appointed Lead Independent Director), along with the independent directors Giorgio Cirla and Rita Ciccone as members of the Control and Risks Committee, on the basis of the professional characteristics of the candidates put forward.

During the year, the Control and Risks Committee held 5 meetings, lasting on average one hour, with all members attending.

The Manager of the Internal Audit function, draws up the minutes of each meeting held by the


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Committee in order to officially certify the progress, contents and decisions of the session to which it refers.

In addition, upon the invitation of the Committee and in relation to the various subjects on the agenda, the meetings were also attended by the Board of Statutory Auditors, the Manager in charge of preparing the company accounts and documents and, during the meeting held on the occasion of the review of the audit plan for the year 2013 and the first half-year period of 2014, a representative of the independent auditors. The Italian Legislative Decree no. 39/2010, “Implementation of directive 2006/43/EC, regarding the legal audit of the annual and the consolidated accounts, that amends directives 78/660/EEC and 83/349/EEC, and that abrogates directive 84/253/EEC”, identified the Board of Statutory Auditors as the committee for the internal audit and the auditing of accounts (the “Internal Control and Auditing of Accounts Committee”) carrying out monitoring functions on: i) financing information process; ii) efficiency of the internal audit systems; iii) accounts auditing of the annual and consolidated accounts; iv) independence of the external audit firm, in particular with regard to the non-auditing services rendered to the body’s accounts to be audited. In particular, the Control and Risks Committee has operated over the Year in question in liaison with the Board of Statutory Auditors and with a continuous flow of information on the issues that were the responsibility of the Committee itself. In view of the foregoing, and with particular reference to the duty of monitoring the financial reporting system, the internal audit and risk management system implemented by the Issuer already regulates the handling of privileged information and market abuse in this respect, and the process of drafting and authorising the report on the accounts and its certification for external purposes as well.

For the year 2015 it is expected for the Control and Risks Committee to meet at least 4 times, the first of which was held on 12 March 2015.

Please refer to Table 2, given in the appendix.

Functions ascribed to the Control and Risks Committee

The Control and Risks Committee, in assisting the Board of Directors in performing its duties concerning internal control and risk management:

(i) evaluates, together with the Manager in charge of preparing the company accounts and documents and having heard the external auditor and the Board of Statutory Auditors, the correct use of the accounting standards and their consistency for the purpose of preparing the consolidated financial statements;

(ii) gives opinions on specific aspects relating to the identification of the main business risks;

(iii) reviews the periodic reports relating to the evaluation of the internal audit and risk management system, and of those of particular significance prepared by the Internal Audit function;

(iv) monitors the independence, adequacy, effectiveness and efficiency of the Internal Audit Function;

(v) requests that the Internal Audit Function perform any verifications on specific operational areas, giving simultaneous communication to the Chairman of the Board of Statutory Auditors;

(vi) reports to the Board, at least every six months, at the time of approving the yearly and half-yearly financial report, regarding activities carried out as well as the adequacy of the internal


audit and risk management system;

(vii) provides an opinion to the Board with reference to decisions regarding the appointment, removal, remuneration and allocation of resources of the Head of the Internal Audit Function.

During the Year, the Control and Risks Committee carried out a consistent activity of auditing regarding the internal audit and risk management, in particular:

a) the audit of the changes that have occurred in the organisational structure, the variations within the processes and the firm activities;

b) the progress of the working plan on internal auditing with particular regard to the implementation of provisions further to audit activities of the previous years, the progress of activities of the 2014 Audit Plan, including risk analysis, and checks of compliance carried out pursuant to Italian Law 262/2005 and Italian Legislative Decree no. 231/01;

c) the monitoring of independence, adequacy, effectiveness and efficiency of the Internal Audit Function, also through the auditing of specific indicators and the Quality Assurance Review process activated by the function itself in accordance with international standards of the profession and recommendations in the Self-Regulatory Code of Conduct;

d) the audit, with the Manager in charge of preparing the company accounts and documents and, after consulting with the External Auditor and the Board of Statutory Auditors, of the accounting principles adopted in the preparation of the periodic reports and financial statements as well as the homogeneity of the principles for the purposes of preparing the consolidated financial statements;

e) the audit of the impairment test procedure applied to verify the adequacy and correspondence to the IAS/IFRS, in acknowledgement of the recommendations expressed in the Banca d'Italia, CONSOB and ISVAP joint document of 3 March 2010.

For the purposes of carrying out its duties, the Committee:

- is permanently supported by the Internal Audit function; - has the right to access the necessary information and business functions for carrying out its

duties; - can use outside professionals, in the limits of the budget established by the Board of

Directors, provided they are adequately bound to the necessary confidentiality.

The Board of Directors, meeting on 11 May 2012, set the annual expense budget for the Control and Risks Committee at euro 30,000.

11. INTERNAL AUDIT AND RISKS MANAGEMENT SYSTEM

The internal audit and risks management system is constituted by the set of rules, procedures and organisational structures aimed at allowing the identification, measurement, management and monitoring of the main risks. Such a system is integrated at different levels within the widest organisational and corporate government structures adopted by the Company, and it contributes to guarantee the maintenance of the company assets, the efficiency and effectiveness of the company processes, the reliability of financial information, the compliance with the laws and the rules as well as the company Articles of Association and internal procedures.

The Board of Directors, after consultation with the Control and Risks Committee:


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a) defines the nature and level of risk compatible with the strategic objectives of the Issuer;

b) defines the guidelines for the internal audit and risk management system, so that the main risks facing the Issuer and its subsidiaries are correctly identified and adequately measured, managed and monitored, determining the degree of compatibility of these risks with the management of the company in line with the identified strategic objectives;

c) evaluates at least annually, the adequacy of the internal audit and risk management system with respect to the characteristics of the company and the assumed risk profile, as well as its effectiveness;

d) approves, at least annually, the work plan prepared by the Head of the Internal Audit Function, after hearing the Board of Statutory Auditors and the Director appointed to the internal audit and risk management system;

e) describes, in the report on corporate governance, the main features of the internal audit and risk management system, expressing its assessment of the adequacy of the same;

f) evaluates, after hearing the Board of Statutory Auditors, the results presented by the External Auditor in the possible letter of suggestions and in the report on key matters arising from the external audit.

In carrying out such functions, the Board is assisted by the Director appointed to the internal audit and risk management system (“the Director Appointed”) and by the Control and Risks Committee; it also takes account of the organisational and management Models adopted by the Issuer and by the Group headed by the Issuer in accordance with Italian Legislative Decree no. 231/2001.

During the Year, the Control and Risks Committee has regularly reported to the Board on its work, on the result of the checks made and on the operation of the internal audit and risk management system, highlighting how it has substantially turned out congruous with the dimensions and the organisational and operational structure of the Issuer.

The Board of Directors, during the meeting on 16 March 2015, also taking account of the directions provided by the Control and Risks Committee, assessed as adequate the effectiveness of the internal audit and risk management system of the Issuer, with respect to the characteristics of the company and the assumed risk profile.

In addition, it is stressed that, on 12 December 2008, a consortium company was established called Immsi Audit Società Consortile di Internal Auditing del Gruppo Immsi a r.l. (“Immsi Audit”), in order to start a project for the centralisation and transfer of all the activities of internal auditing of the companies in the Immsi Group, under a single company. Immsi Audit provides its services solely for the pooled companies (Immsi S.p.A., Intermarine S.p.A., Is Molas S.p.A. and Piaggio & C. S.p.A.) and, in their interest, it performs all the activities connected with and functional for the internal auditing, with the objective of improving the effectiveness and the efficiency of the internal audit and risk management system and appraising its functionality. This choice allows the Group to acquire the necessary knowledge and skills on the subject of Risk Assessment and Internal Audit, realising, in the meantime, economies of scale and synergies in the application of uniform audit methods. For a description of the main characteristics of the system of risk management and auditing in relation to the process of financial information, in accordance with Article 123-bis, paragraph 2, letter b), Consolidated Law on Finance, reference is made to Attachment 1 given in the appendix.


11.1. DIRECTOR APPOINTED TO THE INTERNAL AUDIT AND RISK MANAGEMENT SYSTEM

On 11 May 2012, the Board of Directors of the Company, in compliance with the provisions of the Self-Regulatory Code of Conduct, with the assistance of the Control and Risks Committee, appointed the Chief Executive Officer Michele Colaninno, as Director appointed to the internal audit and risk management system.

The Director Appointed, identified as above, is mandated to supervise the functioning of the internal audit and risk management system within the guidelines established by the Board of Directors. To this regard, the Appointed Director: - overlooked the identification of the main corporate risks (strategic, operating, financial and

related to compliance), taking into account the characteristics of the activities of the Issuer and its subsidiaries, and periodically submitted them to the Board’s review;

- implemented the guidelines defined by the Board, arranging for the design, creation and management of the internal control and risk management system, continuously verifying its overall adequacy, effectiveness and efficiency;

- adjusted the system to changes in operating conditions and in the legal and regulatory framework;

- has the power to request that the Internal Audit Function perform verifications on specific areas of operation and on compliance with the internal rules and procedures in the execution of corporate operations, giving concurrent communication to the Chairman of the Board of Directors, the Chairman of the Control and Risks Committee and the Chairman of the Board of Statutory Auditors;

- proposes the Board to appoint the Head of the Internal Audit Function.

In carrying out these duties, the Appointed Director is assisted by the Head of the Internal Audit Function, and reports to the Control and Risks Committee, the Board of Directors and the Board of Statutory Auditors regarding his activities and the existence of any specific problem.

11.2. HEAD OF THE INTERNAL AUDIT FUNCTION

On 11 May 2012, the Board of Directors of the Company, in response to a proposal by the Appointed Director and having obtained the favourable opinion both of the Control and Risks Committee and the Board of Statutory Auditors, appointed Maurizio Strozzi, Chief Executive Officer of Immsi Audit S.c. a r.l., as the Person in charge of internal audit, delegating the Chairman and/or the Chief Executive Officer of Immsi to formalise the terms, methods and conditions, consistent with corporate policies. The Board, moreover, has taken care that this subject outside the Issuer, equipped with suitable requisites of professionalism and independence, was given adequate powers and means to carry out his existence functions, also under the profile of the operational structure and the internal organisational procedures, for access to the necessary information to the carrying out his appointment. The Head of Internal Audit has not been given any specific financial resources as, in order to carry out its duties, he makes use of facilities and structures of the Issuer and of Immsi Audit consortium which recharges each Company in the consortium the expenses incurred in relation to the activities it has carried out. The Head of the Internal Audit Function, who is not responsible for any operational area of the Issuer and depends hierarchically (in functional terms) from the Board of Directors, has direct access to all relevant information for the performance of his duties, among which he has:


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verified, continuously and in relation to specific needs and in compliance with international standards, the functionality and the suitability of the internal audit and risk management system, through a plan of audit, approved by the Board of Directors, based on a structured process of analysis and prioritisation of the key risks;

prepared half-yearly reports containing adequate information about their activity and an assessment of the suitability of the internal audit and risk management system, as well as the compliance with the plans defined for their reduction;

prepared the audit plan for the 2015-2017 financial year, comprising an audit of information system reliability, including accounting systems.

During the year, the Internal Audit Manager, with the assistance of Immsi Audit, S.c. a r.l., verified the internal control and risk management system, in accordance with the Internal Audit Plan for the three-year period 2012-2014, originally approved by the Board on 19 December 2011 and subsequently updated, for 2014, by the Board of Directors on 25 March 2014, developing activities related to risk analysis, financial, operational and compliance auditing (with particular reference to audits of compliance with the provisions of Law no. 262 /2005 and Legislative Decree no. 231/2001), verifying the reliability of information systems, including accounting systems, as well as monitoring concerning adoption of the improvement/corrective plans agreed following these internal auditing activities. The results of the auditing activity, performed in the light of the Audit Plans, have always been analysed, discussed and shared with the various Managers of the processes/functions and the Management of the Company, in order to arrange and implement the preventive/corrective provisions, whose accomplishment is continually monitored up to their complete execution. The Head of Internal Audit has therefore presented the audit reports to the Chairman, the Director appointed to the internal audit and risk management system, the Chairman of the Control and Risks Committee and the Chairman of the Board of Statutory Auditors, as well as the Supervisory Board and the Executive in Charge with regard to matters under his responsibility.

11.3. ORGANISATION MODEL pursuant to Italian Legislative Decree 231/2001

As of 13 September 2004, the Issuer adopted the organisation, management and control Compliance programme (the “Compliance programme”) for the prevention of crimes in accordance with Italian Legislative Decree 231/2001 and further integrations. This procedure was also followed by the subsidiary companies with strategic importance, which in their turn passed a resolution to use the respective Models pursuant to Italian Legislative Decree 231/2001.

The model currently in force is divided into a general section, chiefly comprising the Code of Ethics (available for consultation also on the Issuer’s institutional website, under the Section Governance/Procedures) and the Disciplinary system, and special individual sections covering the various categories of offence envisaged to date in the Decree.

“Special Section 1” applies to the specific category of crimes against Government Agencies, against Public Property and the crime of inducement to give or promise benefits envisaged in pursuant to Article 24 and 25 of the Decree, to the computer crimes and illicit data processing envisaged in pursuant to Article 24-bis of the Decree and to the copyright infringement offences envisaged in pursuant to Article 25-novies of the Decree;

“Special Section 2” refers to corporate crime and the crimes of corruption between private individuals, as envisaged in Article 25-ter of the Decree;

“Special Section 3” covers the market abuse-related crimes and offences envisaged in Article 25-sexies of the decree;


“Special Section 4” refers to crimes committed in breach of the accident prevention regulations on workplace health and safety, as envisaged in Article 25-septies of the Decree and to crimes against the environment pursuant to Italian Legislative Decree 152/2006;

“Special Section 5” applies to the categories of crimes committed in breach of the regulations against use of the financial system for laundering the proceeds of crime or for funding terrorism as envisaged in Article 25-octies of the Decree.

● "Special Section 6" applies to the types of crimes committed in violation of environmental standards as per Article 25-undecies of the Decree.

The Model is constantly monitored and periodically updated. In particular, as regards developments relative to Legislative Decree no. 231/01, the Company evaluated the non-relevance of company activities as regards the new predicate offence "soliciting minors" pursuant to Article 609-undecies of the Italian Criminal Code (Article 25-quinquies, letter c) of the aforementioned Decree). As regards the introduction of Article 648-ter-1 of the Italian Criminal Code ("Anti-money laundering”) pursuant to Legislative Decree no. 231/01 (Article 25-octies of the aforementioned Decree) which came into force on 1 January 2015, the Company evaluated relative risk in relation to the category of offences. Following publication of the new version of Confindustria's “Guidelines for preparing Compliance Programmes pursuant to Legislative Decree no. 231/01”, the Company, like other Group companies and with the support of Immsi Audit, is also evaluating necessary additions to its programme.

It is to be noted that the model is being constantly updated to keep it in step with the updating of the corporate procedures, whose correct application is, at the indication and with the coordination of the Supervisory Body, constantly monitored through the planned activity of compliance, performed by Management and the Internal Audit function. This process of monitoring also includes the collaboration of the Process Owners, that is the persons in charge of the company processes considered “sensitive” for committing any malfeasances, which periodically report to the Supervisory Body. The employees – chief subjects and subordinated subjects – as well as third counterparties (i.e., suppliers, customers, consultants, etc.) are informed about the adoption of the Code of Ethics and the Code of Conduct and, upon underwriting of the contracts, specific clauses are foreseen to recall the adopted ethic-behavioural principles.

The Board of Directors of 11 May 2012 appointed, as members of the Supervisory Board of the Issuer: Marco Reboa, as Chairman chosen among external professionals with the necessary requirements, Alessandro Lai, chosen in his capacity of Chairman of the Board of Statutory Auditors, and Maurizio Strozzi, chosen as Chief Executive Officer of Immsi Audit S.c. a r.l., chosen as Head of the Internal Audit Function of the Company. This Organism, that will remain in office till the date of the Shareholders’ Meeting, summoned for the approval of the financial statements related to the year closed on 31 December 2014, operates at the highest corporate level and follows the principles of independence and impartiality, as well as on the basis of a Regulation approved by the Board of Directors to which it periodically reports regarding its activities, the notifications received and the sanctions handed out. In this connection it should be noted that there is an active e-mail address, which can only be read by the Supervisory Board, that allows each of the Issuer’s employees to be able to send any notices to the Organism. The Body is furthermore provided with the financial and logistical means to enable it to carry out its duties.

During the Year, the Supervisory Body of Immsi S.p.A. met 4 times and overall member attendance was 100%.

For the year 2015 it is expected for the Supervisory Body to meet at least 4 times, with the first meeting held on 12 March 2015.


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11.4. AUDITING FIRM

The General Shareholders’ Meeting of Immsi S.p.A. of 11 May 2012, granted the appointment of accounts auditing for the years 2012 – 2020 to the auditing firm PricewaterhouseCoopers S.p.A.

11.5. MANAGER IN CHARGE OF PREPARING THE COMPANY ACCOUNTS AND DOCUMENTS AND OTHER COMPANY FUNCTIONS

On 18 June 2007, the Issuer's Articles of Association was updated to conform to the provisions introduced by Italian Law 262/2005 and by Italian Legislative Decree 303/2006, regarding the appointment of the Manager in charge of preparing the company accounts and documents. In accordance with the Articles of Association, the Board of Directors, with the mandatory opinion of the Board of Statutory Auditors, appoints and revokes the Manager in charge of preparing the company accounts and documents, who must have not only the requisites of honour prescribed by the current regulations for those who perform functions of administration and management, but also requisites of professionalism, characterised by specific competence in administration and accountancy. This competence, to be ascertained by the Board of Directors, must be acquired through work experience in positions of suitable responsibility for a congruous time period. The aforesaid Manager is ascribed with the powers and functions established by Law and by the other applicable provisions, as well as the powers and functions established by the Board at the time of appointment or with a subsequent resolution.

On 18 June 2007, the Board of Directors, upon the opinion of the Board of Statutory Auditors, appointed Andrea Paroli, already in charge of the Administration and Financial Statements function of Immsi S.p.A., Manager in charge of preparing the company accounts and documents, giving him all the powers and means necessary for carrying out the duties assigned to him and specifically:

a) free access to all information considered important for fulfilling his duties, both within Immsi and within the companies in the Group, with the power to inspect all the documentation related to drawing up the accounting documents of Immsi and the Group and with the power to request explanations and elucidations of all the subjects involved in the process of forming the accounting data of Immsi and the Group;

b) attendance at the meetings of the Board of Directors;

c) the right to dialogue with every Administrative and Auditing Body;

d) the right to prepare and put forward for approval the company procedures, when they impact the balance sheet, the consolidated financial statements and the documents submitted for certification;

e) participation in designing the information systems that impact the economic, asset and financial situation, with the possibility of using them for purposes of auditing;

f) the right to organise a suitable structure within his own area of activity, internally employing the available resources and, where necessary, outsourcing;

g) the right to employ the Internal Audit function for mapping the processes of competence and in the phase of execution of specific checks, with the possibility, if this Function is not internally present, of using resources through outsourcing.

Lastly, it is specified that the Manager in charge of preparing the company accounts and documents must report, at least half-yearly, to the Board of Directors, on the activity carried on and the expenses sustained.


For a description of the main characteristics of the system of risk management and auditing in relation to the process of financial information, in accordance with Article 123-bis, paragraph 2, letter b), Consolidated Law on Finance, reference is made to Attachment 1 given in the appendix. 11.6. COORDINATION BETWEEN THE PERSONS INVOLVED IN THE INTERNAL AUDIT AND

RISK MANAGEMENT SYSTEM

The Issuer, in order to ensure coordination between said parties involved in the internal audit and risk management system, promotes the organisation and conduct of its periodic meetings on a joint basis. This maximises the efficiency of the internal audit and risk management system implemented by the Issuer, reducing, at the same time, any duplication of activities.

12. AFFAIRS OF THE DIRECTORS AND RELATED PARTY DEALINGS

The Board, on 17 December 2013, updated the Procedure aimed at regulating the approval and management of Related Party dealings (“Related Parties Procedure”), pursuant to Article 4 of Consob Regulation No. 17221 dated 12 March 2010 (as subsequently amended), carried out by Immsi S.p.A., even through its subsidiaries.

The Company applies the Related Parties Procedure taking into account the CONSOB Communication no. DEM/10078683, published on 24 September 2010, containing “Indications and orientations for applying the Regulations on operations with related parties adopted with deliberation n. 17221 dated 12 March 2010 as amended”.

The Related Parties Procedure disciplines the identification, approval and management of operations with related parties. In particular, the Procedure:

- disciplines the manner of identifying related parties, defining means and times for the preparation and updating of the related parties list and identifying the company functions competent to it;

- fixes the terms for identifying operations with related parties to estimate their conclusion;

- regulates the procedures for the Company to perform operations with related parties, even through subsidiaries pursuant to Article 2359 of the Italian Civil Code or in any case subjected to direction and coordination;

- establishes the means and timing for fulfilling information obligations towards the company organs and towards the market.

Moreover, in accordance with current regulations and the Articles of Association, the Board is also responsible for the prior review and approval of the transactions of the Issuer and its subsidiaries in which one or more Directors has an interest on behalf of himself or third parties. The Issuer’s Board instituted its own Committee for the Operations with Related Parties responsible for the operations of both minor and major importance. This Committee, appointed by the Board on 16 March 2015, consists of 3 independent Directors that, in compliance with regulations, must be non-related Directors as regards each operation. In particular, the members of the Committee with related Parties are: Giovanni Sala, Chairman, Giorgio Cirla and Rita Ciccone. Such a Committee is entrusted with the functions reported in the relevant Procedure that is available on the Issuer’s institutional website, in the section "Governance/Procedures".


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13. APPOINTMENT OF AUDITORS

The rules contained in the Issuer’s Articles of Association, that applies to the appointment and replacement of the Directors, are suitable to guarantee the respect of the provisions introduced to this end, lastly, by the Italian Legislative Decree 27/10, making reference to the performance of directive 2007/36/EC regarding the exercise of some rights of the shareholders of listed companies. In addition, the Board of Directors of the Company updated the Articles of Association on 13 November 2014, to take into account regulations on the gender balance of boards of administration as of Article 148, paragraph 1-bis of the Consolidated Law on Finance, as introduced by Italian Law no. 120/2011, and Article 144-undecies.1 of the Consob Regulation on Issuers.

In accordance with Article 25 of the Articles of Association, the Board of Statutory Auditors comprises three Statutory Auditors and two Substitute Auditors, who remain in office for three years, the term expiring at the date of the Shareholder Meeting called to approve the financial statements relating to the last year of office and they may be re-elected.

The Auditors have the attributions and duties of the current provisions of the law and must have the requisites, also concerning the limit to the aggregation of offices, required by the current, also regulatory, legislation.

All the Auditors must be registered auditors and have carried on the activity of legal auditing of accounts for a period of no less than three years. Auditors cannot be appointed and if elected they lose office when they are in situations of incompatibility as provided for by the Law. The Board of Statutory Auditors is appointed in compliance with pro tempore regulations on gender balance, based on lists presented by Shareholders, according to procedures established hereunder, in which the candidates shall be listed with a consecutive number. The list of one or more candidates, with names given a consecutive number, indicates whether the candidate is nominated for the position of statutory auditor or alternate auditor. Lists with a number of candidates greater than or equal to three shall be composed of candidates from both genders, in such a way that at least one fifth (on the occasion of the first term after 12 August 2012) and thereafter one third (in any case rounded up) of candidates for Statutory Auditor and that at least one fifth (on the occasion of the first term after 12 August 2012) and thereafter one third (in any case rounded up) of candidates for Alternate Auditor belong to the less represented gender. Each Shareholder, the Shareholders belonging to a significant shareholder agreement in accordance with Article 122 of Consolidated Law on Finance, the controlling party, the subsidiary companies and those subject to a common control in accordance with Article 93 of Consolidated Law on Finance, cannot present or contribute to the presentation, not even by mediation or a trust company, more than only one list neither can they vote different lists and every candidate can present himself/herself in only a single list under penalty of ineligibility. The support and votes expressed in breach of this prohibition will not be attributed to any list.

The lists presented by the Shareholders must be deposited at the Company’s headquarters, at least fifteen days before the date set for the first convocation of the Shareholders Meeting, bar any other forms of publishing and methods of depositing required by the current pro-tempore regulations. If, once the deadline has lapsed, only one slate of candidates has been filed or the candidate slates nominated are filed by shareholders that are connected in a material way with the candidates as per laws and regulations in force at the time, the deadline for filing candidate slates may be extended by the term contemplated by applicable ad interim laws and regulations. in this case the minimum threshold for the presentation of the lists is reduced by half.

The right to present lists is for Shareholders that, alone or together with other Shareholders, are altogether owners of shares representing at least 1% of the share capital with voting rights in the Ordinary General Meeting, or representing another percentage that may be established or called upon by provisions of the Law or Regulations. It is specified that, with deliberation no. 19109 of 28


January 2015, Consob has determined the required stake at 2.5% of the share capital for presenting the lists of candidates for the election of the Company’s Control Body.

The lists must be equipped with: a) information on the identity of the Shareholders that presented the lists, stating the

percentage of shares altogether held; ownership of the total investment, determined in relation to the shares registered in the name of the shareholder on the date when the lists are filed with the Issuer, is certified, even after the lists have been filed, according to the terms indicated by pro tempore regulations and laws in force;

b) a declaration of Shareholders other than those that, even jointly, hold a controlling or relative majority shareholding, certifying there are no relationships of liaison, as required also by the current regulations, with the latter;

c) exhaustive information on the personal characteristics of the candidates, as well as a declaration of the candidates themselves certifying, under their own responsibility, the non-existence of causes of ineligibility and incompatibility, the possession of the requisites required by the Law and their acceptance of the candidacy, as well as the list of offices of Administration and Auditing held, if any, with other companies.

Any list presented without observing the above prescriptions will be considered as not presented. Each Shareholder can vote only one list.

There will be elected: from the list that obtained the highest number of votes, in the progressive order in which they are listed in the list, two standing members and one substitute; from the list that obtained the second highest number of votes and that, in accordance with the current regulations is not connected, not even indirectly, with those who presented or voted the list that obtained the highest number of votes, in the progressive order in which they are listed in the list, one standing member, who is to be the Chairman of the Board of Statutory Auditors and one substitute.

If lists receive the same number of votes, there will be another ballot by the whole Shareholders’ Meeting to elect the candidates of the list that obtains the simple majority of the votes.

If with the procedures described above, a composition of the Board of Statutory Auditors, in terms of its statutory members, compliant with pro tempore legislation in force at any time concerning the balance between genders is not ensured, the necessary replacements shall be made, within the scope of candidates for the office of Statutory Auditor of the list which obtained the greatest number of votes, according to the sequential order in which the candidates are listed. If only one or no list is presented, the Statutory and substitute auditors elected will be all the candidates for this position indicated in the list or respectively those voted by the Shareholders’ Meeting, provided that they achieve the relative majority of the votes cast in the Shareholders’ Meeting and save for compliance with pro tempore regulations on gender balance.

If there are no longer the requisites of the Regulations and Articles of Association, the Auditor loses office.

In case of substitution of an Auditor, the substitute belonging to the same list as the one terminated takes over. The foregoing is without prejudice to the fact that the Chairman of the Board of Statutory Auditors shall be the minority Auditor and the composition of the Board of Auditors shall comply with pro tempore regulations on gender balance.

When the General Meeting must appoint the Statutory and/or substitute Auditors, necessary for supplementing the Board of Statutory Auditors, it proceeds as follows: if it is necessary to substitute Auditors elected in the majority list, the appointment is made with a relative majority vote, without being bound to a list; if, instead, it is necessary to replace Auditors elected in the minority list, the General Meeting replaces them with a relative majority vote, choosing them from the candidates indicated in the list to which the Auditor to be substituted belonged.


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If the application of these procedures does not, for any reason, allow substitution of the Auditors designated by the minority, the General Meeting will vote with a relative majority; however, in ascertaining the results of this last vote, the votes of the Shareholders will not be calculated that, according to the communications made in accordance with the current regulations, they hold, even indirectly or jointly with other Shareholders in a significant shareholder agreement in accordance with Article 122 of Consolidated Law on Finance, the relative majority of the votes that can be cast in a Shareholders’ Meeting, as well as of the controlling Shareholders, are controlled or are subject to a common control. The replacement procedures described above shall in any event ensure compliance with legislation in force relating to the balance between genders.

14. COMPOSITION AND OPERATION OF THE BOARD OF STATUTORY AUDITORS (pursuant to Article 123-bis, paragraph 2, letter d), Consolidated Law on Finance)

At the time of this Report, the Board of Statutory Auditors of the Issuer, in office at the date of this Report has been appointed by the Shareholder’s General Meeting held on 11 May 2012, on the basis of the single list of candidates presented by the majority Shareholder Omniainvest S.p.A., in conformity to the provisions of the Articles of Association. The Supervisory Board formed in this manner, elected with a percentage of votes in relation to the voting capital equal to 99.90%, shall remain in office until the date of the Shareholders’ Meeting called for approval of the financial statements for the year ending 31 December 2014. For more information about the list submitted for the appointment of the Administrative Body, reference is made to the Issuer's institutional website, in the section "Governance/General Meeting/Archive/2012". As required by the Self-Regulatory Code of Conduct, the professional curriculum of the Directors have been filed at the Company’s head office and are available on the Issuer’s institutional website, in the section "Governance/Management".

During 2014, the Board of Statutory Auditors held 10 meetings with an average duration of 2 hours, with an average overall attendance of 96.67%.

For the year 2015 the Board of Statutory Auditors is expected to meet at least 8 times. At this date of this report, 2 meetings had been held on: 12 and 16 March 2015. Please refer to Table 3, given in the appendix.

The Board of Statutory Auditors, during its meeting of 20 March 2014 and 16 March 2015, verified that Board members met independence requirements, as already verified on their appointment and during their term of office, also based on criteria established by the Self-Regulatory Code of Conduct with reference to Directors. During the Board meeting of 16 March 2015, save for evaluations in the remit of the Board of Statutory Auditors as regards its composition, the Board, favouring a composition based on substance, resolved the following: (i) to consider appropriate, in the interest of the Company, the non-application of the criterion 3.C.1 point e) of the Self-Regulatory Code of Conduct with regard to the Auditor Alessandro Lai (possessing high professional profiles that over time have proven valuable to the Issuer), (ii) to recognise the fulfilment of the requirements of independence pursuant to Article 148, paragraph 3, of the Consolidated Law on Finance and Article 3 of the Self-Regulatory Code of Conduct by all the members of the Board of Statutory Auditors.

The characteristics of the Board Report enable the Auditors to gather adequate knowledge of the


field of activity in which the Issuer operates, its corporate dynamics and their evolution, as well as the relevant regulatory framework.

As it is considered to be a deontological duty to inform the other Auditors and the Chair of the Board of Directors whenever an Auditor has, on his own account or on that of third parties, an interest in a specific operation of the Issuer, no provision is made for any specific obligations on the matter.

In carrying out its own activity, the Board of Statutory Auditors is coordinated both with the Internal Audit function and with the Control and Risks Committee. In particular, it is noted that the person in charge of the Internal Audit has participated in some meetings of the Board of Statutory Auditors, while the Board of Statutory Auditors has participated to the majority of the meetings of the Control and Risks Committee.

15. SHAREHOLDER RELATIONS

The Company believes suitable to its specific interest – besides representing a duty towards the market – establishing a continuous dialogue based on the reciprocal understanding of the functions, with the majority of the Shareholders, as well as the institutional investors; such a relation should be carried on within the observance of the “Procedure for Communicating Privileged Information to the General Public”, available on the Issuer's institutional website, in the section Governance - Procedures, and referenced in the above section 5.

In this respect, it is believed that these relations with the Shareholders and institutional investors may be facilitated by establishing dedicated corporate structures with adequate staff and organisational means.

For this purpose, during the meeting held on 15 October 2003, the Board of Directors of the Company resolved to establish an Investor Relations office, which, assisted by the Legal and Corporate Affairs function, handles the relations with the Shareholders and Institutional Investors and to carry out any specific duties regarding the handling of price-sensitive information, as well as relations with Consob and Borsa Italiana S.p.A.

At the date of this Report, the Manager of the Investor Relations Function is Andrea Paroli appointed by the Board of Directors on 13 May 2014. Contact: [email protected].

Information for the Investors is also ensured by making available the most significant corporate documents in a timely and continuous manner on the Issuer’s institutional website, in the sections Investor Relations and Governance.

In particular, the company website makes available in Italian and in English to Investors, the CVs of Directors and Auditors, all press releases distributed to the market, the periodical accounting documentation of the Company approved by the Company Bodies, as well as the documentation distributed at meetings with professional investors, analysts and the financial community. Furthermore, the Issuer’s website contains the documents prepared for Shareholders’ Meetings, releases regarding Internal Dealing, the yearly report on corporate governance and corporate ownership and any other document which needs to be published on the Issuer’s website in accordance with applicable regulations.

Again in order to facilitate prompt updating of the market, the Company has prepared an e-mail alert service that allows receiving the material published on the site in real time.


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16. SHAREHOLDERS’ MEETINGS (pursuant to Article 123-bis, paragraph 2, letter c), Consolidated Law on Finance)

The Shareholders’ Meeting represents all shareholders and their resolutions, passed in compliance with law and the Articles of Association, bind all shareholders, even if absent or dissenting. The Ordinary Shareholders’ Meeting must be called at least once a year, within one hundred and twenty days from the end of the year, for the approval of the financial statements, or within one hundred and eighty days, in accordance with law terms and conditions.

Both Ordinary and Extraordinary Shareholders’ Meetings are called by the Board of Directors, even outside the registered office, provided it is in Italy, by means of a notice published on the Internet web site of the Company and, if required by the applicable pro tempore legislation, in the “Gazzetta Ufficiale della Repubblica” [Italian Official Gazette] or, at the choice of the Board of Directors, in at least one of the following newspapers: “Il Sole 24 Ore” or “MF” – “Milano Finanza”, as laid down by the law and being understood any other prescription foreseen by the current provisions and the Articles of Association.

Article 127 - ter Consolidated Law on Finance provides that those who have the right to vote may ask questions on the items on the agenda even prior to the Shareholders’ meeting. Questions submitted before the General Meeting shall be answered at the latest during the meeting itself, with the option for the Company to provide a joint answer to questions having the same content. The call notice shall specify the deadline within which the questions posed before the General Meeting must be received by the Company. The deadline can not be later than three days prior to the date of the first or only call for the General Meeting, or five days if the call notice provides that the Company give a response to the questions received before the General Meeting. In this case, the answers are given at least two days before the General Meeting also by means of publication in a special section of the Company's website.

The Shareholders’ Meeting shall be chaired by the Chairman of the Board of Directors or by a person acting on his/her behalf or by another person designated by Board of Directors; failing such, the shareholders’ meeting shall appoint its own Chairman. The Chairman of the Shareholders’ Meeting shall be assisted by a Secretary, appointed by the same Shareholders’ Meeting, and said person does not necessarily have to be a shareholder.

The ordinary and extraordinary General Meeting is duly established and resolves according to law, and all actions give entitlement to a vote.

Ordinary Shareholders’ Meetings can: (a) approve the financial statements; (b) appoint and remove Directors, Auditors and the Chairman of the Board of Statutory Auditors and the subject to which the auditing of company accounts is assigned; (c) determine the fees of the Directors and the Statutory Auditors, if not established in the Articles of Association; (d) decide on the responsibilities of the Directors and Statutory Auditors; (e) decide on other matters attributed by law to the shareholders, as well as on any authorisations required by the Articles of Association for the carrying out of Director duties, notwithstanding in all cases their being responsible for their actions; (f) approve any rules governing meetings; (g) decide on any other matters within their powers, in accordance with the Law.

The Extraordinary General Meeting passes resolutions with regard to the amendments to the Articles of Association, the appointment, substitution and the powers of the receivers and any other issue expressly attributed by law to its authority. In accordance with Article 23 of the Articles of Association, the Board competence is derogated to the Board of Directors for deciding upon all matters regarding: - mergers and demergers in accordance with articles 2505 and 2505-bis of the Italian Civil Code, the latter being referred to by Article 2506-ter of the Italian Civil Code; - establishment or closure of secondary offices; - which Directors represent the Company;


- reductions in share capital in the event of withdrawal of the shareholder; - amending the Articles of Association to comply with regulatory provisions; - transfer of the registered office to another location in Italy.

Such decisions may also be taken by an Extraordinary Shareholders’ Meeting.

Applicable laws and regulations in force govern the rights of shareholders. besides that which has already been stated in the above paragraphs in this Report.

Pursuant to Article 12 of the Issuer's Articles of Association, all shareholders registered as of the seventh market trading day prior to the first scheduled date of a General Meeting, as notified to the Company within the statutory term by the intermediary responsible by law for the keeping of shareholder accounts, are entitled to attend the General Meeting and exercise their voting rights. To this end, reference is made to the date of the first call, as long as the dates of any subsequent calls are indicated in the only meeting call; otherwise, reference is made the date of each meeting call.

The credit and debit entries made in the accounts after said deadline are irrelevant for the purposes of entitlement to exercise voting rights at the Shareholders’ Meeting.

Holders of voting rights may be represented by written proxy as laid down by the law. Electronic notification of proxies may be made, in accordance with the procedures stated in the letter of convocation concerned, by e-mail addressed to the certified electronic mail box stated in said letter or using a section of the company’s Internet site set aside for the purpose.

The Chairman of the Shareholders’ Meeting has the duty to ascertain the regularity of the proxies and the right of those present to attend the Shareholders’ Meeting, as well as to establish the rules for its performance including therein the timing of any speakers.

The Issuer takes action to aid and encourage the fullest participation of the Shareholders in the meetings and to use these meetings as a moment of dialogue and liaison between the Company and the Investors, guaranteeing, to all the participants legitimated to intervene, the right to be able to express their opinion in relation to the topics on the agenda.

The Company does not currently see the need to propose the adoption of a specific regulation governing Shareholders’ Meetings, considering that it deems appropriate that, in principle, the shareholders shall be assured the widest participation and expression in shareholder discussions.

The Board, through the Chairman and the Chief Executive Officer, reports to the Shareholders’ Meeting on the activity it has performed and programmed, taking steps to assure the Shareholders, also on the basis of what is illustrated in the above section 15, the necessary information so that they can knowledgeably make their decisions.

During the ordinary and extraordinary General Meetings of the Issuer, held on 13 May 2014, 6 out of 9 Directors and the entire Board of Statutory Auditors took part. It is also deemed that the Shareholders were adequately informed about the operation of the Remuneration Committee through the Remuneration Report, prepared by the Company pursuant to Article 123- ter of the Consolidated Law on Finance, and published on the Issuer's institutional website, in the section "Governance/General Meeting/Archive". The Company also has distributed a copy of the same to all the Shareholders who attended the General Meeting, in order to facilitate the expression of the advisory vote.

The Board, during the meeting of 16 March 2015, did not consider it necessary to suggest any amendments to the Articles of Association to the General Meeting, in relation to the percentages established for protecting minorities, since – in application of Article 144-quater of the Consob Regulation on Issuers for the presentation of lists for appointing members of the Board of Directors and the Board of Statutory Auditors - Articles 17 and 25 of the Issuer’s Articles of Association require percentages thresholds of 2.5% and 1% of capital with voting rights respectively or any other percentage that may be established or referred to in provisions of the Law or Regulations. It


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should be noted that, with resolution no. 19109 of 28 January 2015, Consob has determined the required stake at 2.5% of the share capital for taking part in the lists of candidates for the election of the Bodies of Administration and Control of the Issuer.

17. FURTHER PRACTICES OF CORPORATE GOVERNANCE (pursuant to Article 123-

bis, paragraph 2, letter a), Consolidated Law on Finance) The Issuer shall implement no further practices of corporate governance other than those required by the legislative norms and/or regulations described in this Report.

18. CHANGES SINCE THE CLOSE OF THE YEAR OF REFERENCE

As of the date of closing the year, no change has occurred to the corporate governance structure, than those notified within the specific sections.


TABLE 1: INFORMATION ON CORPORATE OWNERSHIP

SHARE CAPITAL STRUCTURE

as of 31/12/2014

Number of shares

% compared to the s.c.

Listed (indicate the markets)/ not listed

rights and obligations

Ordinary shares 340,530,000 100% MTA

Standard Segment Article 2346 et seq. of the Italian Civil Code

Multiple vote shares - - - -

Shares with restricted voting right - - - -

Shares with no voting right - - - -

Other brands - - - -

OTHER FINANCIAL INSTRUMENTS (assigning the right to subscribe newly issued shares)

as of 31/12/2014

Listed (indicate the markets)/ not listed

Number of instruments in

circulation

Class of share to be assigned to conversion /

exercise

Number of share to be assigned to conversion /

exercise

Bonds - - - -

Warrant - - - -

SIGNIFICANT INVESTMENTS IN CAPITAL

as of 31/12/2014

Declarant Direct shareholder % portion on ordinary

capital % on shares with voting

rights

Omniaholding S.p.A.

Omniaholding S.p.A. 13.75% 13.75% Omniainvest S.p.A. 44.14% 44.14%

Total 57.89% 57.89%

TABLE 2: STRUCTURE OF THE BOARD OF DIRECTORS AND COMMITTEES

Board of Directors Control and

Risks Committee

Remuneration Committee

Appointments

Committee

Executive Committee (as

applicable)

Office Member/Name Year of birth Date of first

appointment *In office

since In office up

to List

** Exec.

Non-exec.:

Indep. Code

Indep. Consolidated Law on

Finance

No. of other

offices ***

(*)

(*) (**) (*) (**) (*) (**) (*) (**)

Chairman ◊ Roberto Colaninno 16/08/1943 31/01/2003 General Meeting for the Financial

Statements 11/05/2012

General Meeting for the Financial


M X 6 7/7

Deputy Chairman

Carlo d’Urso 10/08/1943 31/01/2003 General Meeting for the Financial


01/02/2015 M X 3 5/7 1/1 M

Chief Executive Officer ●

Michele Colaninno 23/11/1976 13/11/2006 General Meeting for the Financial




M X 10 7/7

Director Matteo Colaninno 16/10/1970 31/01/2003 General Meeting for the Financial




M X 3 5/7

Director Giorgio Cirla 29/02/1940 11/09/2006


Statements 31/12/2014 11/05/2012



M X X X 1 7/7 5/5 M 1/1 M

Director Ruggero Magnoni 10/02/1951 27/08/2010 General Meeting for the Financial




M X 4 6/7

Director ○ Giovanni Sala 14/04/1938 13/11/2008


Statements 31/12/2014 11/05/2012



M X X X 5 7/7 5/5 P 1/1 P

Director Rita Ciccone 06/06/1960 11/05/2012 General Meeting for the Financial




M X X (1) X (1) - 6/7 5/5 M M (2)

----------------------------- DIRECTORS NO LONGER IN OFFICE DURING THE REPORTING PERIOD -----------------------------

Director Enrico Maria Fagioli Marzocchi

23/06/1956 29/04/2009 11/05/2012 08/10/2014 M X X X - 5/5

Number of Meetings held during the reporting period – BoD: 7 Control and Risks Committee 5 Remuneration Committee 1

Appointments Committee -

Executive Committee: -

Indicate the quorum required by minorities to submit lists to elect one or more members (pursuant to Article 147-ter Consolidated Law on Finance): 2.5% • This symbol indicates the director appointed to oversee the internal control and risk management system. ◊ This symbol indicates the main person responsible for management of the issuer (Chief Executive Officer or CEO). ○ This symbol indicates the Lead Independent Director (LID). * The date of the first appointment of each director means the date when the director was appointed for the first time ever to the Board of the issuer. ** This column indicates the list from which the director was elected (“M”: majority list; “m”: minority list; “BoD”: list submitted by the BoD). *** This column indicates the number of appointments as Director or Auditor held by the person concerned in other companies listed on regulated markets, including foreign markets, in financial, banking, insurance companies or companies of significant dimensions. In the Corporate Governance Report, positions are indicated in full. (*) This column indicates the involvement of directors in Board meetings and committee meetings (indicate the number of meetings directors took part in out of the total number of meetings they could have taken part in; e.g. 6/8; 8/8 etc.). (**) This column indicates the position of the director on the Committee: “P”: Chairman; “M”: member. (1) On 16/03/2015 the Board of Directors verified that directors/committee members met requirements of independence. (2) Appointment by the Board of Directors on 16/03/2015, to replace Carlo d’Urso

TABLE 3: STRUCTURE OF THE BOARD OF STATUTORY AUDITORS

Board of Statutory Auditors

Office Member/Name Year of birth Date of first

appointment * In office since In office up to

List **

Indep. Code Involvement in

Board meetings ***

No. of other offices

****

Chairman Alessandro Lai 10/01/1960

05/05/2003

General Meeting Financial

statements 11/05/2012


Statements 31/12/2014 31/12/2014

M

X

10/10 9

Statutory Auditor Leonardo Losi 27/10/1938

29/08/2008




Statements 31/12/2014 31/12/2014

M

X

10/10 5

Statutory Auditor Daniele Girelli 16/05/1960

11/05/2012




Statements 31/12/2014 31/12/2014

M

X

9/10 13

Alternate Auditor Gianmarco Losi 22/07/1964

29/04/2009




Statements 31/12/2014 31/12/2014

M

X

-- --

Alternate Auditor Elena Fornara 31/05/1974

29/04/2009




Statements 31/12/2014 31/12/2014

M

X

-- --

----------------------------- AUDITORS NO LONGER IN OFFICE DURING THE REPORTING PERIOD -----------------------------

Number of meetings held during the reporting period: 10

Indicate the quorum required by minorities to submit lists to elect one or more members (pursuant to Article 148-ter Consolidated Law on Finance): 2.5%

* The date of the first appointment of each auditor means the date when the auditor was appointed for the first time ever to the Board of Statutory Auditors of the issuer. ** This column indicates the list from which the auditor was elected (“M”: majority list; “m”: minority list). *** This column indicates the involvement of auditors in meetings of the Board of Statutory Auditors (indicate the number of meetings auditors took part in out of the total number of meetings they could have taken part in; e.g. 6/8; 8/8 etc.). ****This column indicates the number of position held with companies as of Book V, Part V, Sections V, VI and VII of the Italian Civil Code. For information on administration and control positions held by members of the Board of Statutory Auditors which are significant pursuant to articles 144-duodecies et seq. of the Consob Regulation on Issuers, reference is made to data published by Consob pursuant to Article 144-quinquiesdecies of the Regulation, on the website www.sai.consob.it in the section “Corporate Boards - Disclosure”.

98


Attachment 1: Section about the “Main characteristics of the systems of risk management and auditing in relation to the process of financial disclosure,” in accordance with Article 123-bis, par. 2, letter b), Consolidated Law on Finance

Introduction

Immsi S.p.A. defined specific guidelines for aligning its own Internal Audit System on the financial disclosure, requesting the Administration and Executive Officers (where designated)/Managing Directors of the subsidiaries for formal certification for the Chief Executive Officer and the Manager in charge of preparing the company accounts and documents, concerning the adequate and effective application of the administrative-accounting standards implemented for drafting the consolidation forms transmitted to the parent company.

Aims and objectives

The System of risk management and internal audit in relation to the financial disclosure of the Immsi Group has been developed using the “COSO Report 2013”1 as a model of reference, according to which the Internal Audit System, in its broadest meaning, is defined as “a process, carried on by the Board of Directors, the Executives and other subjects in the business structure, finalised at providing reasonable certainty on the attainment of the objectives in the following categories:

‐ effectiveness and efficiency of the operational activities;

‐ reliability of the information of the financial statements;

‐ conformity with the Law and Regulations in force”.

In relation to the process of financial disclosure, such objectives are mainly identified in the reliability, accuracy, dependability and timeliness of the information.

The Group, in defining its internal audit and risk management system in relation to the process of financial information, has kept – among other things – to the existing guidelines to this regard in the regulations and rules of reference, such as:

‐ Italian Legislative Decree no. 58 of 24 February 1998 (“Testo Unico della Finanza” – Italian Finance Consolidation Act) as further updated and amended;

‐ Italian Law no.262 of 28 December 2005 (and subsequent amendments, among which the legislative decree of assimilation of the so-called Transparency directive approved on 30 October 2007) on the subject of drafting the company’s accounts documents;

‐ Consob Regulation on Issuers issued on 4 May 2007, “Certification of the Manager in charge of preparing the company accounts and documents and of the delegated Administrative Bodies on the consolidated balance sheet and on the half-year report in accordance with Article 154-bis of the Consolidated Law on Finance”;

‐ Consob Regulation on Issuers issued on 6 April 2009, “Implementation of the Transparency directive 2004/109/EC on the harmonisation of transparency requirements in relation to the information on the issuers whose securities are admitted to trading on a regulated market, amending the directive 2001/34/EC”;

‐ the Italian Civil Code, that extends the liability in company management to the Managers in charge of preparing the company accounts and documents (Article 2434 of the Italian Civil

1 COSO model, drawn up by the Committee of Sponsoring Organisations of the Treadway Commission - “Internal Control – Integrated Framework” published in 1992 and updated recently 2013 by the Committee of Sponsoring Organisations of the Treadway Commission.

99


Code), of the offence of disloyalty after giving or promising benefit (Article 2635 of the Italian Civil Code) and the offence of obstructing public and supervisory authorities in performing their functions (Article 2638 of the Italian Civil Code);

‐ Legislative Decree No. 231/2001 which, in consideration of the aforementioned Articles of the Italian Civil Code and the administrative liability of legal entities for offences committed by their employees, treats the Manager in charge of preparing the company accounts and documents as top management.

The implementation of the risk management and internal control system in relation to Group financial disclosure was performed also considering the guidelines supplied by some industry associations concerning the activities of the Manager in charge of preparing the company accounts and documents, such as in particular:

‐ Position Paper Andaf “The Manager in charge of preparing the company accounts and documents”;

‐ Position Paper AIIA “Law no. 262 on the Protection of Savings”;

‐ Guidelines to perform the activity of the Manager in charge of preparing the company accounts and documents in accordance with Article 154-bis Consolidated Law on Finance), issue by Confindustria (Italian Manufacturers' Association)

in addition to the “Format for the Report on Corporate Governance and Corporate Ownership” issued by Borsa Italiana (Italian Stock Exchange).

Main characteristics of the risk management and internal control system in relation to the financial disclosure process

Methodological approach

The risk management and internal auditing System in relation to Immsi Group financial disclosure is part of the Group's wider-ranging Internal audit and risk management system, which includes the following:

‐ Code of Ethics;

‐ Organisational and management Compliance programme pursuant to Italian Legislative Decree 231/2001 and related protocols;

‐ Procedures for Internal Dealing notices;

‐ Principles and procedures to carry out significant transactions and transactions with related parties;

‐ System granting powers and proxies;

‐ Company Organisation Chart and Job profiles;

‐ Procedure on reporting information to the Market;

‐ Risk Analysis process adopted (Risk Assessment);

‐ Accounting and Management Auditing System.

In its turn, the Accounts and Administrative Auditing System of Immsi S.p.A. comprises a set of procedures and operative documents, including:

100


‐ Accounting and Administrative Auditing Model – a document at the disposal of all employees directly involved in the process of training and/or control of the accounting information, which defines the operating procedures of the Accounting Auditing System;

‐ Group’s Accounts manual – a document promoting the development and application of uniform accounts criteria within the Group as regards the identification, classification and measurement of the operating activities;

‐ Operating instructions for the financial statements and reporting and closing calendars – documents finalised at informing the different company Functions the detailed operating procedures for managing the activities of preparing the financial statements within set, shared deadlines;

‐ Administrative and accounting procedures – documents defining the responsibilities and the auditing rules to follow with particular reference to the administrative/accounting processes.

The Accounting and Administrative Control Model of Immsi S.p.A. defines a methodological approach to the risk management and internal auditing System comprising the following stages:

a) Identification and assessment of financial disclosure risk;

b) Identification of controls for identified risks;

c) Evaluation of controls for identified risks and management of any problems detected.

Elements of the System

a) Identification and assessment of financial disclosure risks

The risk identification and evaluation associated with the preparation of the accounting disclosure is based on a structured process of Risk Assessment. This process identifies the objectives that the internal auditing system on the financial disclosure intends to achieve in order to assure a truthful and correct representation of it. Those objectives cover the assertions made in financial reports (regarding the existence and occurrence of events, comprehensiveness, rights and obligations, the measurement/recognition of items, presentation and disclosures) and other control objectives (such as, for example, compliance with approval limits, the separation of roles and responsibilities, the documentation and traceability of transactions, and so on).

Risk assessment, including the risk of fraud, is therefore focused on the different areas of the financial statements in which the failure to deliver control objectives would have a potential impact on financial disclosure requirements.

The process to determine the scope of the entities and processes that are “significant” in terms of potential impact on the financial disclosure is to identify, with reference to the consolidated financial statements of the Group, the financial statement accounts, the subsidiaries and the administrative accounting processes considered as significant, on the basis of evaluations made using quantitative and qualitative parameters.

Particularly, such parameters are defined:

‐ by determining the quantitative threshold values through which to compare both the accounts related to the consolidated financial statements and the relative contribution of the Group subsidiaries;

‐ making qualitative evaluations based on the knowledge of the business reality and the existing specific risk factors inherent in the administrative–accounting processes.

101


b) Identification of controls for identified risks

As stated above, the control identification necessary to mitigate the risks identified on the administrative – accounting processes is made considering the control objectives associated with the financial disclosure.

In particular, the accounts of the financial statements classified as significant are connected to the business processes underlying them in order to identify the controls geared to meet the objectives of the internal audit and risk management system for the financial information. The identified controls are subsequently submitted to the evaluation of adequacy and real application; with reference to the automatic controls, the verification of adequacy and real application concerns also the general IT controls concerning the applications that support the processes considered significant.

The Functions involved in the financial disclosure process ensure, for their own areas of competence, that the administrative and accounting procedures and the controls in being are updated.

If, following the phase of identification of the scope of action, sensitive areas are identified that are not governed, entirely or partly, by the body of the administrative and accounting procedures, with the coordination of the Manager in charge, the existing procedures are integrated and new procedures formalised in relation to the areas of managerial competence.

c) Evaluation of controls for identified risks and problems detected

The activity of evaluation of the Accounting Auditing System is performed periodically and at least half-yearly, on the occasion of drawing up, respectively, the separate annual financial statements and the condensed consolidated interim financial statements.

The evaluations related to the adequacy and the real application of the administrative and accounting procedures and the controls contained in them are developed through specific activities of monitoring (testing) based on the best practices in this framework.

The testing activity is carried on continuously during the entire financial year on the indication and with the coordination of the assigned Manager in charge of preparing the company accounts and documents that uses his own structure and, where considered necessary, with the support of the Internal Audit or of appropriately identified external advisors.

The tests are split up among the administrative and functional structures coordinated by the Manager in charge of preparing the company accounts and documents or by officers delegated by him, with the involvement of the Internal Audit both to check the actual carrying out of the controls required by the administrative and accounting procedures both to perform specific focused controls on companies, processes and accounts items.

The Delegated Bodies and the administrative persons in charge of the subsidiaries in the sphere of application are called upon to make a supporting declaration to the Manager in charge of preparing the company accounts and documents with reference to the verifications made on the adequacy and real application of the administrative and accounting procedures.

The Manager in charge, with the support of the Internal Audit Supervisor, draws up a report summarising the results of the evaluations of the controls against the risks previously identified (Management Summary) based on the results of the monitoring activities carried on and on declarations by the Managing Directors and the administrative managers of the subsidiaries. The evaluation of the controls can involve identifying compensatory controls, corrective actions or plans for improvement in relation to any identified problems.

102


The Management Summary is drafted and once shared with the Chief Executive Officer, is submitted to the Board of Statutory Auditors of the Parent Company, to the Control and Risks Committee e and to the Board of Directors.

Roles and functions involved

The risk management and internal auditing System on financial disclosure is governed by the Manager in charge of preparing the company accounts and documents; the Manager is appointed by the Board of Directors and in agreement with the Chief Executive Officer, is responsible for designing, implementing and approving the Accounting and Administrative Auditing Model, as well as assessing its application, issuing a certification related to the half-year and annual financial statements, including consolidated statements.

The Manager in charge of preparing the company accounts and documents is moreover responsible for drawing up suitable administrative and accounting procedures for forming the year’s and consolidated balance sheet and, with the support of the Internal Audit, provide the subsidiaries, considered as significant within the framework of drawing up the consolidated Group information, guidelines for carrying out appropriate activities of evaluation of its own Accounts Auditing System.

In carrying out his activities, the Manager in charge of preparing the company accounts and documents:

‐ interacts with the Head of the Internal Audit Function, that performs independent verifications on the operativeness of the Audit System and supports the Manager in charge of preparing the company accounts and documents in the activities of monitoring the System, and with the Legal and Corporate Affairs function for legislative-regulatory compliance issues related to financial disclosure;

‐ is supported by the Function Managers involved which, relatively to the area of their own competence, assure the completeness and reliability of the streams of information to the Manager in charge of preparing the company accounts and documents for accounts disclosure purposes;

‐ coordinates the activities carried on by the administrative managers of the significant subsidiaries, which are assigned to implement, within their own company, together with the delegated organisms, a suitable Accounts Auditing System to control the administrative-accounting processes and they evaluate their effectiveness over time reporting the results to the parent company through a process of internal certification;

‐ establishes a mutual exchange of information with the Control and Risks Committee and with the Board of Directors, reporting on the activity performed, on the use of the accounting principles and their uniformity for the purposes of preparing the consolidated financial statements, and on the adequacy of the internal audit and risk management system on the financial disclosure, as part of the wider overall assessment of corporate risks.

Finally, the Board of Statutory Auditors, the Control and Risks Committee and the Supervisory Board are relatively informed on the adequacy and the reliability of the administrative-accounting system.

103


Immsi Group

Financial statements as of

31 December 2014

Consolidated Financial Statements of the Immsi Group and Notes

105

CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS OF 31 DECEMBER 2014 Amounts in thousands of euros ASSETS 31 December

2014 31 December

2013

NON-CURRENT ASSETS Intangible assets F1 846,575 832,574 Plant, property and equipment

F2 344,450 340,309

Property investments F3 85,848 81,126 Equity investments F4 8,831 8,168 Other financial assets F5 29,461 68,168 Receivable due from the tax authorities F6 3,641 4,383 Deferred tax assets F7 116,065 98,534 Trade receivables and other receivables F8 16,071 15,858 - of which with Related Parties 197 231

TOTAL NON-CURRENT ASSETS 1,450,942 1,449,120

ASSETS INTENDED FOR DISPOSAL F9 24,727 23,794

CURRENT ASSETS Trade receivables and other receivables F8 236,969 262,373 - of which with Related Parties 6,497 4,174 Receivable due from the tax authorities F6 39,262 27,543 Inventories F10 306,021 279,939 Other financial assets F5 14,876 28,619 Cash and cash equivalent F11 103,942 74,285

TOTAL CURRENT ASSETS 701,070 672,759

TOTAL ASSETS 2,176,739 2,145,673

LIABILITIES 31 December

2014 31 December

2013

SHAREHOLDERS’ EQUITY Consolidated shareholders’ equity of the Group 268,188 337,920 Non-controlling interest capital and reserves 173,923 171,247

TOTAL SHAREHOLDERS’ EQUITY G1 442,111 509,167

NON-CURRENT LIABILITIES Financial liabilities G2 591,136 587,761 - of which with Related Parties 2,900 2,900 Trade payables and other payables G3 5,592 6,074 Reserves for retirement fund and similar obligations G4 60,743 54,324 Other long-term reserves G5 11,247 11,690 Deferred tax liabilities G6 24,769 28,462

TOTAL NON-CURRENT LIABILITIES 693,487 688,311

LIABILITIES RELATED TO ASSETS HELD FOR DISPOSAL 0 0

CURRENT LIABILITIES Financial liabilities G2 440,483 359,691 - of which with Related Parties 55 109 Trade payables G3 507,511 492,507 - of which with Related Parties 15,502 11,069 Current taxation G7 15,775 14,054 Other payables G3 58,611 56,746 - of which with Related Parties 1,797 84 Current portion of other long-term reserves G5 18,761 25,197

TOTAL CURRENT LIABILITIES 1,041,141 948,195

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY 2,176,739 2,145,673


106

CONSOLIDATED INCOME STATEMENT AS OF 31 DECEMBER 2014 Amounts in thousands of euros

31 December 2014

31 December 2013

Net revenues H1 1,274,577 1,257,744 - of which with Related Parties 301 343

Costs for materials H2 728,406 732,477 - of which with Related Parties 20,674 23,143 Costs for services and leases and rentals H3 240,775 230,407 - of which with Related Parties 1,017 959 Personnel costs H4 229,684 230,537 Depreciation of plant, property and equipment H5 43,128 40,374 Amortisation of goodwill 0 0 Amortisation of finite life intangible assets H6 47,990 44,851 Other operating income H7 101,282 98,144 - of which with Related Parties 2,385 427 Other operating costs H8 28,251 42,382 OPERATING INCOME 57,625 34,860

Gain / loss on equity investments H9 (113) 2,110 Financial income H10 14,680 16,871 Borrowing costs H11 140,957 79,831 - of which with Related Parties 388 308

EARNINGS BEFORE TAXATION (68,765) (25,990)

Taxation H12 2,579 23,846 EARNINGS AFTER TAXATION FROM CONTINUING ASSETS (71,344) (49,836)

Gain (loss) from assets held for disposal or sale H13 0 0 EARNINGS FOR THE PERIOD INCLUDING NON-CONTROLLING INTEREST (71,344) (49,836)

Non-controlling interest earnings for the period (530) (16,285) GROUP EARNINGS FOR THE PERIOD H14 (70,814) (33,551)

EARNINGS PER SHARE

In euros

From continuing and discontinued activities: 31 December

2014 31 December

2013 Basic

O (0.208) (0.099)

Diluted (0.208) (0.099)

From continuing activities: 31 December 2014

31 December 2013

Basic O

(0.208) (0.099) Diluted (0.208) (0.099)

Average number of shares:

340,530,000

340,530,000


107

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME AS OF 31 DECEMBER 2014 Amounts in thousands of euros

31 December

2014 31 December

2013 EARNINGS FOR THE PERIOD INCLUDING NON-CONTROLLING INTEREST

G1 (71,344) (49,836)

Items that will not be reclassified to profit or loss Actuarial Gains (Losses) on defined benefit plans G4 (6,051) 484

Total (6,051) 484

Items that may be reclassified to profit or loss Gains/(Losses) on cash flow hedges P 714 2,273 Gains/(Losses) on exchange differences on translating foreign operations 8,215 (10,173) Gains/(Losses) on evaluation at fair value of assets available for sale and property investments

F3-F5 (124) 4,665

Total 8,805 (3,235)

Other items of Consolidated statement of comprehensive income 2,754 (2,751)

TOTAL PROFIT (LOSS) FOR THE PERIOD G1 (68,590) (52,587)

Comprehensive non-controlling interest earnings for the period G1 971 (20,224)

COMPREHENSIVE GROUP EARNINGS FOR THE PERIOD G1 (69,561) (32,363)

The values presented in the preceding table are all given net of the corresponding fiscal effect.


108

STATEMENT OF CONSOLIDATED CASH FLOWS AS OF 31 DECEMBER 2014 Amounts in thousands of euros 31 December

2014 31 December

2013

Operating assets

Earnings before taxation (68,765) (25,990) Depreciation of plant, property and equipment (including property investments) H5 43,128 40,374 Amortisation of intangible assets H6 47,990 44,851 Provisions for risks and for severance indemnity and similar obligations H4 - H8 22,318 29,789 Write-downs (Reversals/fair value measurements) H7 - H8 62,507 19,070 Capital losses / (gains) on disposal of plant, property and equipment (including property investments)

H7 - H8 37 (164)

Interest receivable H10 (915) (3,433) Dividend income H10 (5) (154) Interest payable H11 57,185 49,356 Depreciation of grants H7 (3,454) (4,967) Portion of earnings before taxation of the period due to associated companies (and other companies valued using the equity method)

H9 113 (2,110)

Change in working capital:

(Increase) / Decrease in trade receivables

F8

(2,347)

(15,057)

(Increase) / Decrease in inventories F10 (26,082) 12,100 Increase / (Decrease) in trade payables G3 15,004 (57,253) (Increase) / Decrease in contract work in progress F8 18,166 44,248 Increase / (Decrease) in provisions for risks G5 (19,917) (18,632) Increase / (Decrease) reserves for retirement fund and similar obligations G4 (3,332) (10,248) Other changes

(25,578) (9,896)

Cash generated from operating activities 116,053 91,884

Interest paid

(50,562)

(44,825)

Taxes paid

(22,018) (16,779)

Cash flow from operations 43,473 30,280


109

31 December 2014

31 December 2013

Investing activities

Acquisition of subsidiaries, net of cash and cash equivalents

F1

(3,542)

(1,003)

Sale price of subsidiaries, net of cash and cash equivalents 0 28,957 Investments in plant, property and equipment F2 (37,836) (39,523) Sale price, or repayment value, of plant, property and equipment (including property investments)

F2 873 1,287

Investments in intangible assets F1 (58,496) (48,873) Sale price, or repayment value, of intangible assets 59 219 Sale price of non-consolidated equity investments 0 4 Loans provided (115) (12,235) Repayment of loans 12,880 1,328 Purchase of financial assets F5 (16,999) (28,838) Sale price of financial assets 929 1,278 Interests received 552 1,034 Sale price from assets held for disposal or sale 4 9 Other flows from assets held for disposal or sale (937) (670) Grants received

405 207

Cash flow from investing activities (102,223) (96,819)

Financing activities

Increase in share capital by third parties G1 5,076 0 Loans received G2 362,452 263,803 Outflow for repayment of loans G2 (262,183) (208,266) Financing received for leases 267 0 Repayment of finance leases G2 (5,835) (936) Outflow for dividends paid to Non-controlling Interest

0 (14,942)

Cash flow from financing activities 99,777 39,659

Increase / (Decrease) in cash and cash equivalents 41,027 (26,880)

Opening balance 40,623 74,678

Exchange differences (5,751) (7,175)

Closing balance 75,899 40,623

Changes in working capital include higher trade payables and other payables due to Related Parties for 6,064 thousand euros and higher trade receivables and other receivables due from Related Parties for 2,323 thousand euros. For more details of transactions between Related Parties during 2013, reference is made to the paragraph in the Report on operations.

This schedule illustrates the changes in cash and cash equivalents totalling 103.9 million euros as of 31 December 2014, gross of short-term bank overdrafts equal to 28 million euros.


110

CHANGES IN CONSOLIDATED SHAREHOLDERS’ EQUITY AS OF 31 DECEMBER 2014 In thousands of euros

Share capital

Reserves and

retained earnings

Earnings for the period

Group shareholders’

equity

Non-controlling

interest capital

and reserves

Group and non-

controlling interest

shareholders’ equity

Balances as of 31 December 2012 177,076 216,528 (33,609) 359,995 187,943 547,938

Allocation of Group earnings to Legal Reserve 0 0 0 0 0 0

Allocation of Group earnings to Dividends 0 0 0 0 (14,942) (14,942)

Allocation of Group earnings to Retained Earnings

0 (33,609) 33,609 0 0 0

Purchase of treasury shares by Piaggio & C. S.p.A.

0 (509) 0 (509) (494) (1,003)

Sale of treasury shares by Piaggio & C. S.p.A. 0 270 0 270 263 533

Figurative cost of stock options 0 139 0 139 135 274

Other changes 1,388 8,999 0 10,387 18,567 28,954

Overall earnings for the period 0 1,188 (33,551) (32,363) (20,224) (52,587)



Share capital

Reserves and

retained earnings


Group shareholders’

equity

Non-controlling

interest capital

and reserves

Group and non-

controlling interest

shareholders’ equity


Allocation of Group earnings to Legal Reserve 0 742 (742) 0 0 0

Allocation of Group earnings to Dividends 0 0 0 0 0 0

Allocation of Group earnings to Retained Earnings

0 (34,293) 34,293 0 0 0

Purchase of treasury shares by Piaggio & C. S.p.A.

0 (1,916) 0 (1,916) (1,871) (3,787)

Sale of treasury shares by Piaggio & C. S.p.A. 0 0 0 0 0 0

Figurative cost of stock options 0 0 0 0 0 0

Other changes 0 1,745 0 1,745 3,576 5,321

Overall earnings for the period 0 1,253 (70,814) (69,561) 971 (68,590)



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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS OF 31 DECEMBER 2014

Note Description

A General aspects

B Consolidation area

C Consolidation principles

D Accounting standards and measurement criteria

E Segment reporting

F Information on the main asset items

F1 Intangible assets

F2 Plant, property and equipment

F3 Property investments

F4 Equity investments

F5 Other financial assets

F6 Receivable due from the tax authorities

F7 Deferred tax assets

F8 Trade receivables and other receivables

F9 Assets held for disposal

F10 Inventories

F11 Cash and cash equivalent

G Information on the main liabilities items

G1 Shareholders’ equity

G2 Financial liabilities

G3 Trade payables and other payables

G4 Reserves for severance indemnity and similar obligations

G5 Other long-term reserves

G6 Deferred tax liabilities

G7 Current taxation

H Information on the main Income Statement items

H1 Net revenues

H2 Costs for materials

H3 Costs for services and leases and rentals

H4 Personnel costs

H5 Depreciation of plant, property and equipment

H6 Amortisation of finite life intangible assets

H7 Other operating income

H8 Other operating costs

H9 Gain / loss on equity investments

H10 Financial income

H11 Borrowing costs

H12 Taxation

H13 Gain/loss on the disposal of assets

H14 Earnings for the period

I Commitments, risks and guarantees

L Related Party dealings

M Financial position

N Dividends paid

O Earnings per share

P Information on financial instruments


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- A - GENERAL ASPECTS__________________________________________ Immsi S.p.A. (the “Company”) is a limited company established under Italian law and has registered offices in Mantova - P.zza Vilfredo Pareto, 3 Centro Direzionale Boma. The main activities of the company and its subsidiaries (the “Immsi Group”), the information on the relevant events occurred after the year end and on the predictable evolution of operations are described in the Directors’ Report on Operations. As of 31 December 2014, Immsi S.p.A. was directly and indirectly, pursuant to Article 93 of the Consolidated Law on Finance, controlled by Omniaholding S.p.A., a company entirely owned by the Colaninno family, through the subsidiary Omniainvest S.p.A.. The consolidated financial statements of the Immsi Group include the financial statements of the Parent Company Immsi S.p.A. and the Italian and international companies directly and indirectly controlled by it, approved by the relevant corporate functions of respective companies, the list of which is shown in the paragraph “List of companies included in the consolidated financial statements and equity investments” contained in this Report. The financial statements are expressed in Euros since that is the currency in which most of the Group’s transactions take place. The amounts in the above schedules and in the Explanatory Notes on the consolidated accounting statements are stated in thousands of euros (if not otherwise indicated). For a greater clarity and understanding of information included in the Financial Statements as of 31 December 2013, some changes were made to the income statement, statement of financial position and notes as regards information presented for comparative purposes, only as regards consolidated figures for the Piaggio Group. In particular, transport costs and costs for outsourced services relative to goods purchased and managed as stock, previously recognised as services (11 million euros) were reclassified as purchase costs, additional information was added concerning costs for services, and the sum of 209 thousand euros previously recognised as an item offsetting tax payables was reclassified under short-term tax receivables. These changes, when compared to 2013 figures, are not considered as significant. These financial statements are audited by PricewaterhouseCoopers S.p.A. pursuant to the mandate granted by the Shareholders’ Meeting on 11 May 2012 for the period 2012-2020.

Compliance with international accounting standards These financial statements of Immsi Group as of 31 December 2014 are drawn up in compliance with the International Accounting Standards (IAS/IFRS) in force at that date, issued by the International Accounting Standards Board and approved by the European Commission, as well as in compliance with the provisions established in Article 9 of Italian Legislative Decree no. 38/2005 (Consob Resolution no. 15519 dated 27/7/06 containing the “Provisions for the presentation of financial statements", Consob Resolution no. 15520 dated 27/7/06 containing the “Changes and additions to the Regulation on Issuers” adopted by Resolution no. 11971/99”, Consob communication no. 6064293 dated 28/7/06 containing the “Corporate reporting required in accordance with Article 114, paragraph 5 of Italian Legislative Decree 58/98"): The interpretations of the International Financial Reporting Interpretations Committee (“IFRIC”), previously the Standing Interpretations Committee (“SIC”), were also taken into account.

Moreover, international accounting standards have been uniformly adopted for all Group companies: the financial statements of subsidiaries, used for consolidation, have been appropriately modified and reclassified, where necessary, to bring them in line with the international accounting standards and uniform classification criteria used by the Group. The Financial Statements have been prepared on a historical cost basis, amended as required for the measurement of some financial statement items, and on a going-concern basis. In fact, despite


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the difficult economic and financial context, the Group has evaluated that there are no significant doubts about its continuing as a going concern (as defined in section 25 of IAS 1), also in relation to actions already identified to adapt to changing levels in demand, as well as the industrial and financial flexibility of the Group.

Form and content of the consolidated financial statements The Group has chosen to highlight all changes generated by transactions with non-shareholders within two statements reporting trends of the period, respectively named the "Consolidated Income Statement" and "Consolidated Statement of Comprehensive Income". These consolidated financial Statements are therefore composed of the Consolidated Income Statement, Consolidated Statement of Comprehensive Income, the Consolidated Statement of Financial Position, the Statement of Changes in Consolidated Shareholders’ Equity, the Consolidated Statement of Cash Flows, and these Notes to the consolidated financial statements. With reference to Consob Resolution no. 15519 of 27 July 2006 it is pointed out that, as regards the financial schedules, specific Income statement and Statement of financial position schedules have been inserted with the evidence of significant Related Party dealings and non-recurring transactions. In this respect, it should be pointed out that in 2012 and 2013 (with reference to the 2009, 2010 and 2011 tax periods) tax inspections of Piaggio & C S.p.A. were conducted by the Italian Revenue Agency, which terminated with the issue in late 2013 of a report of verification concerning transfer pricing. The company, after having explained the correctness of its actions to the Italian Revenue Agency, decided to take advantage of the litigation deflationary measures, avoiding the onset of tax litigation, and has therefore defined the PVCs, significantly reducing the initial requests from the assessors. The operation, recognised in 2013 as taxes in the income statement, comes under significant non-recurrent transactions, as defined by Consob Communication DEM/6064293 of 28 July 2006. During 2014, Piaggio & C. S.p.A. exercised the call option of the debenture loan issued by the Company on 1 December 2009 for a total amount of 150,000 thousand euros and maturing on 1 December 2016. On 9 June, the remaining portion of this loan (equal to approximately 42 million euros) was paid back at the price of 103.50%, after the finalisation of the exchange offer launched on 7 April. The operation led in 2014 to the premium paid to bond holders that did not take up the exchange offer and of costs not yet depreciated of the reimbursed loan being recognised under borrowing costs in the income statement. During 2014, Piaggio & C. S.p.A. refinanced a revolving credit line of a nominal value of 200,000 thousand euros, maturing in December 2015, with a small pool of banks. This operation resulted in the recognition of costs not yet amortised in the income statement in 2014. These operations come under significant non-recurrent transactions, as defined by CONSOB Communication DEM/6064293 of 28 July 2006. Consolidated income statement The Consolidated income statement is presented with the items classified by nature. The overall Operating Income is shown, which includes all income and cost items, irrespective of their repetition or fact of falling outside normal operations, except for the items of financial operations included under Operating Income and Earnings before tax. In addition, the income and cost items arising from assets that are held for disposal or sale, including any capital gains or losses net of the tax element, are recorded in a specific item of the consolidated statement of financial position which precedes Group net income and non-controlling interest. Consolidated statement of comprehensive income The Consolidated Statement of Comprehensive Income is presented as provided for in IAS 1


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revised. This amended version of the standard requires income attributable to owners of the parent company and to non-controlling interest net of the corresponding fiscal effect. With this regard, it should be remembered that on 16 June 2011 IASB issued an amendment to IAS 1 – Presentation of Financial Statements to require entities to group all items presented in Other comprehensive income based on whether they are potentially reclassifiable to profit or loss. The amendment is applicable to financial years started after or on 1 July 2012. Consolidated statement of financial position The Consolidated statement of financial position is presented in opposite sections with separate indication of assets, liabilities, and shareholders’ equity. In turn, assets and liabilities are reported in the Consolidated Financial Statements on the basis of their classification as current and non-current. Consolidated Statement of Cash Flows The Consolidated Statement of Cash Flows is divided into cash-flow generating areas. The Consolidated Statement of Cash Flows model adopted by the Immsi Group has been prepared using the indirect method. The cash and cash equivalents recorded in the Statement of cash flows include the Consolidated Statement of Financial Position balances for this item at the reporting date. Financial flows in foreign currency have been converted at the average exchange rate for the period. Income and costs related to interest, dividends received and income taxes are included in the cash flow generated from operations. Net consolidated financial position The statement of the Consolidated net financial position contained in this Report details this aggregate: in this respect, in conformity to the CESR recommendation of 10 February 2005 “Recommendations for the consistent implementation of the European Commission’s Regulation on Prospectuses”, it should be noted that the indicator, thus formulated, represents what was monitored by the Group's management and that it differs from what is suggested by Consob Communication no. 6064293 of 28 July 2006, as it also highlights the non-current portion of financial receivables. Statement of changes in consolidated shareholders' equity The statement of the Changes to the consolidated shareholders’ equity is presented as required by the reviewed version of IAS 1. It includes the total income statement, separately stating the amounts ascribed to the shareholders of the parent company and to the relevant stake of third parties, the amounts of the operations with shareholders acting in this quality and any effects of the retroactive application or of the retroactive determination in accordance with IAS 8. For each item a reconciliation is presented between the balance at the start and at the end of the period. - B - CONSOLIDATION AREA________________________________________ The scope of consolidation has not significantly changed compared to the consolidated financial statements as of 31 December 2013. In particular, the following should be noted:

the increase in the stake held by ISM Investimenti S.p.A. in Is Molas S.p.A., went from 88.86% as of 31 December 2013 to 89.48% as of 31 December 2014, following the subscription of the tranche of capital increase of the latter and the related unsubscribed shares by the non-controlling shareholder IN.CO.FIN. S.p.A.;

as regards the stake held by the Parent Company Immsi S.p.A. in ISM Investimenti S.p.A.,

considering the different equity rights of the two partners, the stake of shareholders' equity of ISM Investimenti S.p.A. consolidated by Immsi S.p.A. was estimated to be equal to 60.39% as of 31 December 2014;


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the establishment of a new company on 14 April 2014, Piaggio Concept Store Mantova

S.r.l., which manages the group's flagship stores;

the closure of the company Derbi Racing S.L., previously held 100% by Nacional Motor S.A., in December 2014;

on 4 August 2014, the Spanish branch of Piaggio & C. S.p.A. - Piaggio & C. S.p.A. - Sucursal en España was closed down.

These changes did not alter the comparability of the balance sheet and income results between the two periods of reference, as the changes are of a limited extent, resulting in only a partial redistribution of the net profit and shareholders' equity between the share pertaining to the Group and minority interests. Lastly, the consolidated portion of shareholders' equity of the Piaggio Group which amounted to 50.59% as of 31 December 2014 was equal to 50.75% as of 31 December 2013: - C - CONSOLIDATION PRINCIPLES_______________________ __________ The assets and liabilities, and income and costs, of consolidated companies are recognised on a global integration basis, eliminating the carrying amount of consolidated equity investments in relation to the relative shareholders' equity at the time of purchase or underwriting. The carrying amount of equity investments has been eliminated against the shareholders' equity of subsidiaries/associated companies, assigning to non-controlling interest under specific items the relative portion of shareholders' equity and relative net income due for the period, in the case of subsidiaries consolidated on a line-by-line basis. Subsidiaries

Subsidiaries are companies in which the Group has a major influence. This influence exists when the Group has direct or indirect power to determine the financial and operational policies of a company in order to gain benefits from its operations. The acquisition of subsidiaries is recognised according to the acquisition method. The cost of acquisition is determined by the sum of present values at the date control of the given assets was obtained, liabilities borne or undertaken and financial instruments issued by the Group in exchange for control of the acquired company. In the case of acquisitions of businesses, the assets, liabilities and contingent liabilities acquired and identifiable are recognised at their fair value at the date of acquisition. The positive difference between the acquisition cost and the share of the Group's interest in the fair value of these assets and liabilities is classified as goodwill and recorded on the balance sheet as an intangible asset. Any negative difference ("negative goodwill") is instead recorded in the Income statement at the time of acquisition. The financial statements of subsidiaries are included in the Consolidated Financial Statements starting from the date when control is acquired until control ceases. The portions of shareholders' equity and income attributable to non-controlling interest are separately indicated in the Consolidated Statement of Financial Position and Consolidated Income Statement respectively. Associated companies

Associated companies are companies in which the Group has considerable influence but not joint control of financial and operational policies. The Consolidated Financial Statements include the portion relative to the Group of income of associated companies, accounted for using the equity


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method, starting from the date when it commences to have considerable influence and ending when said influence ceases. In the event any portion attributable to the Group of losses of the associated company exceeds the book value of equity investment in the financial statements, the value of the equity investment is reset to zero and the portion of further losses is not recorded, except in cases where and to the extent in which the Group is required to be held liable for said losses. Joint arrangements

Jointly controlled companies are companies in which the Group has joint control of operations, as defined by contractual agreements: these joint venture agreements require the establishment of a separate entity in which each participating organisation has a stake known as a joint control shares. The Group recognises joint control investments using the equity method. As regards transactions between a Group company and a jointly controlled company, unrealised profits and losses are eliminated to an extent equal to the percentage of the investment of the Group in the jointly controlled company, with the exception of unrealised losses that constitute evidence of an impairment of the transferred asset. The Group adopts IFRS 11 for all joint arrangements. According to IFRS 11, investments in joint arrangements are classified as joint operations or joint ventures depending on the contractual obligations and rights of each investor. The Group has classified the only joint arrangement agreement in place as being a joint venture. Joint ventures are measured with the equity method. With the equity method, interests in joint ventures are initially recognised at cost and subsequently adjusted to indicate the portion of post-acquisition profits or losses attributable to the Group and movements in the statement of comprehensive income. In the event any portion attributable to the Group of losses of the joint venture exceeds the book value of the investment in the financial statements, the value of the investment is reset to zero and the portion of further losses is not recorded, except in cases where and to the extent in which the Group is required to be held liable for said losses. As regards transactions between a Group company and a joint venture, unrealised profits and losses are eliminated to an extent equal to the percentage of the investment of the Group in the jointly controlled company, with the exception of unrealised losses that constitute evidence of an impairment of the transferred asset.

Equity investments in other companies

Equity investments in other companies (usually the percentage held is less than 20%) are entered at cost minus any impairment losses. Dividends received from these companies are included under the item Financial income. It should also be noted that the Group Parent Company Immsi S.p.A. has minority stakes in Alitalia - Compagnia Aerea Italiana S.p.A. and Unicredit S.p.A., both classified under the item Financial assets available for sale ("AFS") and valued at each year end at fair value: gains and losses arising from changes in fair value are recognised directly in equity until they are sold or a significant impairment loss is recorded. At that time the cumulative gains or losses previously recognised in equity are recognised in the Income statement for the period. Transactions eliminated during the consolidation process

In preparing the Consolidated Financial Statements, all balances and significant transactions between Group companies have been eliminated, as well as unrealised profits and losses arising from intergroup transactions. Unrealised profits and losses generated from transactions with associated companies or jointly controlled companies are eliminated based on the value of the equity stake of the Group in the companies.


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Transactions in foreign currency

Transactions in foreign currency are recorded at the exchange rate in effect at the end of the reporting period and are translated at the exchange rate in effect at that date. Exchange differences arising when monetary items are settled or translated at rates different from those at which they were translated when initially recognised in the period or in previous financial statements are reported in the income statement. Consolidation of foreign companies

The separate financial statements of each company belonging to the Group are prepared in the currency of the primary economic environment in which they operate (the functional currency). For the purposes of the consolidated financial statements, the financial statements of each foreign entity are in Euros, which is the functional currency of the Group and the presentation currency of the consolidated financial statements. All assets and liabilities of foreign companies in a currency other than the Euro which come under the scope of consolidation are translated, using rates of exchange in effect at the end of the reporting period (currency exchange rates method). Income and costs are translated at the average exchange rate of the period. Translation differences arising from the adoption of this method, as well as the exchange differences arising from the comparison between the initial shareholders' equity converted at current exchange rates and the same translated at historical exchange rates, pass through the Comprehensive income statement and are accumulated in a specific reserve of shareholders' equity until disposal of the equity investment: average exchange rates for translating the cash flows of foreign subsidiaries are used in preparing the Statement of consolidated cash flows. During the first-time adoption of IFRSs, cumulative translation differences arising from the consolidation of foreign companies outside the euro zone were not reset to zero, as allowed by IFRS 1 and have therefore been maintained. The exchange rates used to translate the financial statements of companies included in the scope of consolidation into euros are shown in the following table (data rounded up to 2 decimal places):

End of period exchange rate

31 December 2014

Average exchange rate 2014

End of period exchange rate

31 December 2013

Average exchange rate 2013

US Dollar 1.21 1.33 1.38 1.33 Pounds Sterling 0.78 0.81 0.83 0.85 Brazilian Real 3.22 3.12 3.26 2.87 Indian Rupee 76.72 81.04 85.37 77.93 Singapore Dollars 1.61 1.68 1.74 1.66 Chinese Renminbi 7.54 8.19 8.35 8.16 Croatian Kuna 7.66 7.63 7.63 7.58 Japanese Yen 145.23 140.31 144.72 129.67 Vietnamese Dong 25,834.65 27,967.22 28,801.07 27,660.17 Australian Dollar 1.48 1.47 1.54 1.38 Swedish Krona 9.39 9.10 8.86 8.65 Canadian dollars 1.41 1.47 1.47 1.37 Indonesian Rupee 15,103.40 15,720.31 16,866.39 13,907.56

- D - ACCOUNTING STANDARDS AND MEASUREMENT CRITERIA________ The most significant accounting policies adopted to prepare the Consolidated Financial Statements as of 31 December 2014 are outlined below: INTANGIBLE ASSETS

As provided for in IAS 38, an intangible asset which is purchased or self-created is recognised as an asset only if it is identifiable, controllable and future economic benefits are expected and its cost


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may be measured reliably. Intangible assets with a finite life are measured at acquisition cost or production cost net of amortisation and accumulated impairment losses. For an asset that justifies capitalisation, the cost also includes borrowing costs that are directly attributable to the acquisition or construction of the asset itself. Amortisation is referred to the expected useful life and commences when the asset is available for use. Goodwill

In the case of acquisitions of companies, acquired and identifiable assets, liabilities and potential liabilities are recognised at fair value at the date of acquisition. The positive difference between the acquisition cost and the share of the Group's interest in the fair value of these assets and liabilities is classified as goodwill and recorded on the balance sheet as an intangible asset. Any negative difference ("negative goodwill") is instead recorded in the Income statement at the time of acquisition. Goodwill is not amortised but tested annually for impairment, or more frequently if specific events or changed circumstances indicate that an asset may be impaired, as provided for in IAS 36 - Impairment of Assets. After initial recognition, goodwill is recognised at cost net of any accumulated impairment losses. During first-time adoption of IFRSs, the Group opted not to retroactively apply IFRS 3 – Business Combinations to acquisitions of companies that took place before 1st January 2004. As a result, the goodwill generated on acquisitions prior to the date of transition to IFRSs was maintained at the previous value, determined according to Italian accounting standards, subject to assessment and recognition of any impairment loss. After 1 January 2004, and following acquisitions made during 2004, additional goodwill was generated, the amount of which was measured again in the light of the different values of shareholders' equity in the acquired companies in relation to provisions in IFRS 3. Development costs Development costs are recognised as assets only if all of the following conditions are met: the costs may be reliably measured and the technical feasibility of the product, the volumes and expected prices indicate that costs incurred during development will generate future economic benefits. Capitalised development costs include only costs incurred that may be directly attributed to the development process. Capitalised development costs are amortised on a systematic criterion basis, starting from the beginning of production through the estimated life of the product. All other development costs are recorded in the Income statement when they are incurred. Other intangible assets As provided for in IAS 38 – Intangible Assets, other intangible assets which are purchased or selfcreated are recognised as assets if it is probable that use of the asset will generate future economic benefits and the cost of the asset can be reliably measured. These assets are recognised at acquisition or production cost and amortised on a straight line basis over their estimated useful life, if they have a finite useful life. Intangible assets with an indefinite useful life are not amortised but tested annually for impairment, or more frequently if there is an indication that an asset may be impaired. Other intangible assets recognised following the acquisition of a company are accounted for separately from goodwill, if their present value may be reliably measured. The amortisation period for an intangible asset with a finite useful life are reviewed at least each year end: if the expected useful life proves different


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from previous estimates, the amortisation period is changed accordingly.

The amortisation periods of Intangible assets are shown below:

Development costs 3 - 5 yearsIndustrial patents and rights of use for original works 3 - 5 yearsOther 5 yearsBrands 15 years

PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment

The Immsi Group opted to use the cost method for the first-time adoption of IAS/IFRSs in preparing its financial statements, as provided for by IFRS 1. The fair value method was therefore not used to measure property, plant and equipment. Property, plant and equipment are therefore recognised at acquisition or production cost and are not revalued. In the case of an asset for which capitalisation is justified, the cost also includes the borrowing costs directly attributable to the acquisition, construction or production of the asset. Costs incurred after acquisition are capitalised only if they increase the future economic benefits of the asset they refer to. All other costs are recorded in the income statement when they are incurred. Property, plant and equipment under construction are measured at cost and depreciated starting from the period in which they are put into operation. Depreciation is determined, on a straight-line basis, on the cost of the assets net of their relative residual values, based on their estimated useful life, while land is not depreciated. Assets are depreciated by applying the criterion and rates indicated below:

Property from 1.67% to 3% Plant and machinery from 5% to 30% Miscellaneous equipment and other plant, property and equipment from 10% to 40% Land not depreciated

Assets to be given free of charge based on the duration

of the concession

Assets held through finance lease agreements, on the basis of which all risks and benefits related to ownership are basically transferred to the Group, are recognised as Group assets at their fair value, or if lower, at the present value of minimum payments due for the lease. The corresponding liability vis-à-vis the lessor is recognised in the financial statements as a financial payable. The assets are depreciated applying the criterion and rates used for assets owned by the company. Leases in which the lessor basically retains all risks and benefits related to ownership are classified as operating leases. The costs referred to operating leases are recognised on a line-by-line basis in the Income statement over the term of the lease agreement. The Group – through the Piaggio Group – has its own production plants even in countries where ownership rights are not allowed. On the basis of clarification from IFRIC, in 2007 rentals paid in advance to obtain the availability of land where its production sites are situated, are recorded as receivables. Profits and losses arising from the sale or disposal of assets are measured as the difference between the sale revenue and net book value of the asset and are entered in the income statement for the period.


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Assets to be given free of charge are assets held by Intermarine S.p.A. further to an agreement to lease and at the end thereof must be given free of charge and in perfect working order to the lessor. These assets are depreciated according to the duration of the concession. Impairment

At the end of the reporting period, the Group reviews the book value of its tangible and intangible assets to determine whether there is any indication that these assets may be impaired (impairment test). If there is an indication that an asset may be impaired, the asset's recoverable amount is estimated to determine the amount of the impairment. Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the asset's cash generating unit. The recoverable amount is the higher of an asset's fair value less costs to sell (if available) and its value in use. In measuring the value in use, estimated future cash flows are discounted at their fair value, using a rate net of taxes, which reflects current market changes in the fair value of money and specific risks of the asset. If the recoverable amount of an asset (or of a cash generating unit) is estimated to be lower than the relative carrying amount, the carrying amount of the asset is reduced to the lower recoverable value. An impairment loss is immediately recognised in profit or loss, unless the asset is land or buildings other than the property investments recognised at revalued amounts, in which case the loss is charged to the respective revaluation reserve. When the conditions that gave rise to an impairment loss no longer exist, the carrying amount of the asset (or of a cash generating unit), except for goodwill, is increased to the new value arising from an estimate of its recoverable amount, up to the net carrying amount applicable to the asset if no impairment loss had been recognised. The reversal of the impairment loss is immediately recognised in profit or loss, unless the asset is land or buildings other than the property investments recognised at revalued amounts, in which case the loss is charged to the respective revaluation reserve. An intangible asset with an indefinite useful life is tested annually for impairment, or more frequently if there is an indication that an asset may be impaired. Property investments

International accounting standards regulate the accounting treatment of property used for production or administrative purposes (IAS 16) differently from investment property (IAS 40). As provided for by IAS 40, non-instrumental property held to earn rentals and/or for capital appreciation and/or both is measured at fair value. Property investments are eliminated from the financial statements when they are disposed of or when the property investment may not be used over time and future economic benefits from its sale are not expected. NON-CURRENT ASSETS HELD FOR SALE

Non-current assets (or disposal groups) that are classified as held for sale are measured at the lower of the carrying amount and fair value less costs to sell. Non-current assets (and disposal groups) are classified as held for sale when it is expected that their carrying amount will be recovered through a sale rather than through their use in company operations. This condition is only met when the sale is highly probable, the asset (or disposal group) is available for immediate sale and management is committed to a plan to sell, which should take place within 12 months of classification as held for sale. FINANCIAL ASSETS

Financial assets are recognised and deleted from the financial statements based on the negotiation date and are initially measured at fair value, represented by the initial increased


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amount, with the exception of assets held for negotiation, of costs relative to the transaction. At subsequent end of reporting periods, the financial assets the Group intends and can retain up until maturity (securities held until maturity) are recognised at amortised cost based on the effective interest rate method, net of reversals for impairment losses. Financial assets other than those held until maturity are classified as held for trading or for sale, and are measured at fair value at the end of each period. When financial assets are held for trading, profits and losses arising from changes in fair value are recognised in profit or loss for the period. In the case of financial assets held for sale, profits and losses arising from changes in fair value are recognised in other components of the statement of comprehensive income and allocated to a specific reserve of shareholders' equity until sold, recovered or disposed of or until an impairment loss is recognised. INVENTORIES

Inventories are recognised as the lower of the purchase or production cost, determined by assigning to products the costs directly incurred in addition to the portion of indirect costs reasonably attributable to the performance of production activities in normal production capacity conditions, and the market value at the end of the reporting period. The purchase or production cost is determined based on the weighted average cost method. As regards raw materials and work in progress, the market value is represented by the estimated net realisable value of corresponding finished products minus completion costs. As regards end products, the market value is represented by the estimated net realisable value (price lists less the costs for sales and distribution). The lower measurement based on market trends is eliminated in subsequent years, if the trends no longer exist. Obsolete, slow moving and/or excess inventories are impaired in relation to their possible use or future realisation, in a provision for the impairment of inventories. RECEIVABLES

Trade receivables and other receivables are recognised initially at fair value and subsequently valued at amortised cost, net of the impairment provision. Receivables losses are recognised in the financial statements when there is objective evidence that the company will not be able to recover the amount due based on the contractual terms from the counterparty. When payment of amounts due exceeds standard terms of payment granted to clients, the receivable is discounted. Orders in progress, entirely related to the Marine sector (Intermarine S.p.A.), were classified under the item Other receivables and consist mainly of:

building work for the company’s own account and repair work, valued at the lower value between cost incurred and revenue achievable: To this end, they are entered as assets in the Statement of financial position net of the write-down fund for vessels and semi-finished items likely to prove hard to sell;

building work covered by standard contracts, valued in terms of revenue based on the status reached at the close of the year, calculated, as far as the materials and work contracted out are concerned, with reference to the costs actually incurred compared with the costs forecast on the basis of updated estimates and, with regard to labour, with reference to the direct hours actually worked compared with the direct hours forecast. The price revision is recognised based on a prudent basis taking into account the amounts recognisable by customers, in proportion to the value of the progress. Due to the features of the works in progress produced by the company, they also include parts of the assets the ownership of which was transferred in guarantee of payments received from customers. In fact assessment of proceeds takes place when the purchaser of the work accepts it, since


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the order is a unitary indivisible object. FACTORING AND REVERSE FACTORING OPERATIONS

The Group – mainly through the companies of the Piaggio Group – sells a significant part of its trade receivables through factoring. Factoring may be without recourse, and in this case no risks of recourse or liquidity exist, as corresponding amounts of the balance of trade receivables are reversed when the receivable is sold to the factor. For factoring with recourse, the risk of non-payment and the liquidity risk are not transferred, and therefore relative receivables remain under the Statement of financial position until payment by the client of the amount due: in this case any advance payments collected by the factor are recognised under payables as amounts due to other lenders. Also note how the Immsi Group - through the Piaggio Group - in order to ensure easier access to credit for its suppliers, has put in place factoring arrangements, typically in the technical forms of supply-chain financing or reverse factoring. On the basis of the existing contractual structures, the supplier has the option to sell, at its discretion, the amounts due from the group to a financing institution and cash in the amount before the expiration. In some cases, the timing of payment provided in the invoice is subject to further extensions agreed between the supplier and the group: these extensions can be against payment or not. In order to assess the nature of these reverse factoring transactions, the group has adopted a specific policy: in relation to the contractual terms, differentiated on the basis of place of origin, a qualitative analysis of the contract terms is performed centrally by the Finance department, as well as a legal analysis aimed at evaluating the regulatory references and the assignment nature of the transaction (in accordance with the provisions of IAS 39 AG57 b). Furthermore, in some cases where there are extensions, a quantitative analysis is performed aimed at verifying the materiality or not of the amendment to the terms of the contract, through the preparation of the quantitative test in accordance with IAS 39 AG 62. These relationships, for which the primary obligation is maintained with the supplier and the possible extension, where granted, does not involve a material change in the terms of payment, maintain their nature and therefore are classified as trade liabilities. CASH AND CASH EQUIVALENTS

Cash and cash equivalents includes cash on hand, current bank accounts, deposits payable on demand and other high liquidity short term financial investments, which are readily convertible into cash and not affected by any major risk of a change in value. TREASURY SHARES

Treasury shares are deducted from shareholders' equity. The original cost of treasury shares and the revenue proceeds from any subsequent sale are recognised directly in equity. FINANCIAL LIABILITIES

Financial liabilities are recognised at fair value net of relative transaction costs. After initial recognition, loans are measured at amortised cost, calculated using the effective interest rate. Financial liabilities hedged by derivatives are measured at present value, according to procedures established for hedge accounting and applicable to fair value hedge: profits and losses arising from subsequent measurements at present value, due to changes in interest rates, are recognised in profit or loss and offset by the effective portion of the loss and profit arising from subsequent measurements at present value of the hedged instrument. At the moment of the initial assessment, a liability may be designated to the fair value taken from the Income statement (profit & loss) when such designation eliminates or significantly reduces a lack of uniformity in the evaluation or in the assessment (at times defined “accounting asymmetry”) that otherwise would appear from the asset or liability evaluation or from the evaluation of the relative profits and losses on different bases.


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This choice of designation to the fair value is applied exclusively to certain financial liabilities in currency, that are the object of covering the exchange risk.

DERIVATIVES AND MEASUREMENT OF HEDGING OPERATIONS

Group assets are primarily exposed to financial risks from changes in exchange and interest rates. The Group uses derivatives to hedge risks arising from changes in foreign currency and interest rates in particular irrevocable commitments and planned future transactions. With particular reference to the Piaggio Group, the use of these instruments is regulated by written procedures on the use of derivatives, in line with the risk management policies of the group. Derivatives are initially recognised at fair value, represented by the initial amount, and adjusted to fair value at subsequent end of reporting periods. Financial derivatives are only used with the intent of hedging, in order to reduce the exchange risk, interest rate risk and risk of changes in market prices. In accordance with IAS 39, derivative financial instruments can be recorded in the manner prescribed for hedge accounting only when, at the beginning of the hedge, there is formal designation and documentation of the hedging relationship, it is assumed that the hedge is highly effective, its effectiveness can be reliably measured and the hedge is highly effective throughout the financial reporting periods for which it is designated. When financial instruments may be measured by hedge accounting, the following accounting treatment is adopted:

Fair value hedge: if a derivative financial instrument is designated as a hedge of the exposure to changes in present value of a recognised asset or liability, attributable to a particular risk and could affect profit or loss, the gain or loss from the subsequent change in present value of the hedging instrument is recognised in profit or loss. The gain or loss on the hedged item, attributable to the hedged risk, change the carrying amount of the hedged item and is recognised in profit or loss;

Cash flow hedge: if an instrument is designated as a hedge of the exposure to variability in

cash flows of a recognised asset or liability or of a highly probable forecast transaction which could affect profit or loss, the effective portion of the gain or loss on the financial instrument is recognised in the statement of comprehensive income. Accumulated gain or loss is reversed from the statement of comprehensive income and recognised in profit or loss in the same period as the hedging transaction. The gain or loss associated with hedging or the part of hedging which is ineffective, is immediately recognised in profit or loss. If the transaction is still expected to occur and the hedge relationship ceases, the amounts accumulated in the statement of comprehensive income will be retained in equity until the hedged item affects profit or loss. If hedge accounting ceases for a cash flow hedge relationship, gains and losses deferred in the statement of comprehensive income are recognised immediately in profit or loss.

If hedge accounting cannot be applied, gains and losses from measurement at present value of the derivative financial instrument are immediately recognised in profit or loss. LONG-TERM PROVISIONS

The Group recognises provisions for risks and charges when it has a legal or implicit obligation to third parties and it is likely that Group resources will have to be used to meet the obligation and when the amount of the obligation itself can be reliably estimated. Changes in estimates are recognised in profit or loss when the change takes place. If the effect is considerable, allocations are calculated discounting future cash flows estimated at a discount rate gross of taxes, to reflect current market changes in the fair value of money and specifics risks of the liability.


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RETIREMENT FUNDS AND EMPLOYEE BENEFITS

Liabilities relative to employee benefits paid on or after termination of employment for defined benefit plans are determined separately for each plan, based on actuarial hypotheses estimating the amount of future benefits that employees will accrue at the reporting date (the "projected unit credit method”). Liabilities, recognised in the financial statements net of any assets serving the plan, are entered for the period when the right accrues. Liabilities are measured by independent actuaries. The cost components of defined benefits are recognised as follows:

the costs relative to services are recognised in the Income Statement under employee costs;

net financial borrowing costs of liabilities or assets with defined benefits are recognised in the Income Statement as financial income/(borrowing costs), and are determined by multiplying the value of the net liability/(asset) by the rate used to discount the obligations, taking account of the payment of contributions and benefits during the period;

the remeasurement components of net liabilities, which include actual gain and losses, the return on assets (excluding interest income recognised in the Income Statement) and any change in the limit of the assets, are immediately recognised as "Other total profits (losses). These components must not be reclassified to the Income Statement in a subsequent period.

STOCK OPTION PLAN

As provided for in IFRS 2 - Share-Based Payment, the total amount of the present value of stock options at the date of assignment is recognised wholly in profit or loss under employee costs, with a counter entry recognised directly in shareholders' equity, if the grantees of the instruments representing capital become owners of the right on assignment. If a "maturity period" is required, in which certain conditions are necessary before grantees become holders of the right, the cost for payments, determined on the basis of the present value of options at the date of assignment, is recognised under employee costs on a straight line basis for the period between the date of assignment and maturity, with a counter entry directly recognised in shareholders' equity. Determination of fair value based on the Black-Scholes method. Changes in the present value of options subsequent to the date of assignment do not have any effect on initial recognition. TAX ASSETS AND LIABILITIES

Deferred taxes are determined based on the temporary taxable differences between the value of the asset and liability and their tax value. Deferred tax assets are measured only to the extent to which it is likely that adequate future taxable sums exist against which the deferred taxes can be used. The carrying amount of deferred tax assets is reviewed at the end of the reporting period and reduced to the extent to which it is no longer likely that sufficient taxable income exists allowing for all or a portion of said assets to be recovered. Deferred taxes are determined based on tax rates expected for the period in which the tax assets are realised, considering the rates in effect or which are known to come into effect. Deferred taxes are directly recognised in profit or loss, except for items directly recognised in shareholders' equity, in the case that relative deferred taxes are also recognised in Shareholders' equity. In the case of reserves of undistributed profits of subsidiaries and because the Group is able to control distribution times, deferred taxes are allocated for the reserves when distribution is expected in the future. The deferred tax assets and liabilities are shown at net when they can be offset within the same tax jurisdiction. PAYABLES


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Trade payables falling due within normal business terms are not discounted and are recognised at nominal value, deemed representative of their extinction value. RECOGNITION OF REVENUES

According to IFRS, sales of goods are recognised when the goods are dispatched and the company has transferred the significant risks and benefits connected with ownership of the goods to the purchaser. Revenues are recognised net of returns, discounts, rebates and premiums, as well as taxes directly connected with the sale of the goods and provision of services. Financial revenues are recognised based on an accrual principle. GRANTS

Equipment grants are recognised in the financial statements when their payment is certain and are recognised in profit or loss based on the useful life of the asset for which the grants have been provided. Operating grants are recognised in the financial statements, when their payment is certain and are recognised in profit or loss in relation to costs for which the grants have been provided. With specific reference to the subsidiary Intermarine S.p.A. operating in the Marine sector, it should be noted that the company benefits from different types of Ministerial contributions, accounted for according to the criteria described below:

ministerial research grants, out of national and Community funds, due on the research and development costs incurred and capitalised, are entered under Other payables and will be offset against the amortisation and depreciation entries of the capitalised costs they are related to in the Income statement; where projects entail the building of a prototype, the subsidy granted for the costs incurred is entered in the Income statement account in proportion to the work progress status of the underlying construction;

ministerial grants for investment programmes, subsidised under Ital. Law 488/92 and Ital.

Law 237/73 and specific to the renovation of the boatyard in Messina, to the building of plants related to Yacht < 25 m line and of the boatyard in Sarzana, are entered under receivables based on the contribution due in proportion to the investment made. They are counterbalanced as follows:

o in the Income statement account with reference to the portion for the year in which the assets concerned were purchased; and

o under Other payables with reference to the portions falling under future amortisation/depreciation periods.

FINANCIAL INCOME

Financial income is recognised on an accrual basis and includes interest payable on invested funds, exchange differences receivable and income from financial derivatives, when not offset in hedging transactions. Interest income is charged to the Income statement as it accrues, considering the effective yield. BORROWING COSTS

Borrowing costs are recognised on an accrual basis and include interest payable on financial payables calculated using the effective interest rate method, exchange differences payable and losses on financial derivatives. The rate of interest payable of finance lease payments is recognised in profit or loss, using the effective interest rate method.


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DIVIDENDS

Dividends recognised in profit or loss, from non-controlling interest, are recognised on an accrual basis, and therefore at the time when, following the resolution to distribute dividends by the subsidiary, the relative right to payment arises. INCOME TAXES

Taxes represent the sum of current and deferred tax assets and liabilities. Taxes allocated under statutory accounting circumstances of individual companies included in the scope of consolidation are recognised in the consolidated financial statements, based on taxable income estimated in compliance with national laws in force at the end of the reporting period, considering applicable exemptions and tax receivables owing. Income tax is recognised in profit or loss, with the exception of items directly charged to or from Shareholders' equity, in which case the tax effect is directly recognised in shareholders' equity. Taxes are recorded under “Tax payables” net of advances and withheld taxes. Taxes due in the event of the distribution of reserves as withheld taxes recognised in the financial statements of individual Group companies are not allocated, as their distribution is not planned. It should be reminded that Immsi S.p.A. has adhered with the subsidiary companies Piaggio & C. S.p.A., Aprilia Racing S.r.l., Apuliae S.p.A., Intermarine S.p.A., RCN Finanziaria S.p.A., ISM Investimenti S.p.A. and Pietra S.r.l. to the Group tax regime according to Article 117 et seq. of the Consolidated Act of Income Taxes (National Consolidated Tax Convention). By virtue of the exercise of this option, each company which is party to the National Consolidated Tax Convention transfers its fiscal income (taxable income or fiscal loss) to the consolidating company: the consolidating company therefore determines one taxable base for the group of companies that take part to the National Consolidated Tax Convention, and may therefore offset taxable income against tax losses in one tax return. In the case of companies with fiscal losses, the consolidating company records a related payable equal to corporate income tax on the portion of the loss actually offset at a Group level. EARNINGS PER SHARE

Earnings per share are calculated by dividing the income or loss attributable to parent company shareholders by the weighted average number of ordinary shares outstanding during the period, excluding treasury shares. Diluted earnings per share are calculated by dividing the profit or loss attributable to shareholders of the Group Parent Company by the weighted average number of shares outstanding adjusted to take into account the effects of all the potential ordinary shares having a dilution effect. USE OF ESTIMATES

The preparation of the financial statements and notes in compliance with IFRS requires management to make estimates and assumptions which have an impact on the values of assets and liabilities and on disclosure regarding contingent assets and liabilities at the end of the reporting period. The actual results may differ from such estimates. Moreover, estimates are used to measure intangible assets tested for impairment and to identify allocations for bad debts, for obsolete inventories, amortisation and depreciation, impairment of assets, employee benefits, taxes, restructuring provisions and other allocations and funds. Estimates and assumptions are periodically revised and the effects of any change are immediately recognised in profit or loss. In the current world economic and financial crisis, assumptions made as to future trends are marked by a considerably degree of uncertainty. Therefore the possibility in the next reporting


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period of results that differ from estimates cannot be ruled out, and these could require even significant adjustments which at present cannot be predicted or estimated. TRANSACTIONS WITH SUBSIDIARIES AND RELATED PARTIES

Transactions with subsidiaries and related parties are described in the Report on Operations and in the Additional Note, referred to herein. NEW ACCOUNTING STANDARDS, AMENDMENTS AND INTERPRETATIONS APPLIED AS FROM 1 JANUARY 2014

Competent bodies of the European Union have approved the following accounting standards and amendments to adopt as from 1 January 2014:

On 12 May 2011, the IASB issued the standard IFRS 10 - Consolidated Financial Statements which replaces SIC-12 Consolidation - Special Purpose Entities and parts of IAS 27 - Consolidated and Separate Financial Statements renamed Separate Financial Statements and regulate the accounting treatment of investments in separate financial statements. The new standard deviates from existing standards by identifying the concept of control, according to a new definition of it as the determinant factor for the purposes of consolidation of a company in the consolidated financial statements of the parent company. It also provides a guide for determining the existence of control where it is difficult to establish (actual control, potential votes, special purpose entity, etc.). The standard is applicable in a retrospective manner from 1 January 2014. The Group reviewed the control relationships of its investee companies as of 1 January 2014, without noting any effect caused by the adoption of the new standard.

On 12 May 2011, the IASB issued the standard IFRS 12 – Disclosure of Interests in Other

Entities which is a new and complete standard on disclosures to provide on all types of investments including in subsidiaries, joint arrangements, associated companies, special purpose entities and unconsolidated structured entities. The standard is applicable in a retrospective manner from 1 January 2014. The adoption of the new standard has not resulted in any significant effects for the Group.

At the same time as IFRS 10 and IFRS 12 were issued, the pre-existing IAS 27 Consolidated and Separate Financial Statements, renamed Separate Financial Statements was amended as regards its name and contents, deleting all requirements relative to consolidated financial statements (other provisions are still valid). Following this amendment, the standard only defines the measurement and recognition criteria, as well as reporting to include in separate financial statements as regards subsidiaries, joint ventures and associated companies.

On 12 May 2011, the IASB issued the standard IFRS 11 – Joint Arrangements which

replaces IAS 31 – Interests in Joint Ventures and SIC-13 – Jointly Controlled Entities - Non-Monetary Contributions by Venturers. The new standard provides methods for identifying joint arrangements based on the rights and obligations under such arrangements rather than their actual legal form and establishes the equity method as the only accounting treatment for jointly controlled entities (joint ventures) in consolidated financial statements. The standard is applicable in a retrospective manner from 1 January 2014. After the issue of the standard IAS 28 – Investments in associates it was amended to include jointly controlled entities within its field of application, as of the date the standard became effective. The Group reviewed the control relationships of its investee companies as of 1 January 2014, without noting any effect caused by the adoption of the new standard.


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At the same time as IFRS 11 and IFRS 12 were issued, the name and content of the pre-existing IAS 28 were amended. In particular, the new standard, which also includes provisions of SIC 13, outlines the application of the equity method which is used to measure joint ventures and associated companies in consolidated financial statements. The adoption of the new standard has not resulted in any significant effects for the Group.

On 16 December 2011, the IASB issued some amendments to IAS 32 – Financial

Instruments: Presentation, to clarify the use of some criteria for offsetting financial assets and liabilities contained in IAS 32. The standard is applicable in a retrospective manner from 1 January 2014. The adoption of the new standard has not resulted in any significant effects for the Group.

On 29 May 2013, the IASB issued an amendment to IAS 36 – Recoverable Amount

Disclosures for Non-Financial Assets, to clarify disclosure on the recoverable amount of assets subject to impairment, if the amount is based on the fair value net of costs to sell. The standard is applicable in a retrospective manner from 1 January 2014. The adoption of the new standard has not resulted in any significant effects for the Group.

On 27 June 2013, the IASB issued some minor amendments to IAS 39 – Financial

Instruments: Recognition and Measurement - Novation of derivatives and hedge accounting continuity The amendments allow for the continuation of hedge accounting if a financial derivative, designated as a hedging instrument, is novated following the adoption of the law or regulations in order to replace the original counterparty to guarantee the successful outcome of the obligation undertaken and if certain conditions are met. This amendment is also included in IFRS 9 - Financial Instruments The standard is applicable in a retrospective manner from 1 January 2014. The adoption of the new standard has not resulted in any significant effects for the Group.

On 20 May 2013, the IASB issued IFRIC 21 - Levies, an interpretation of IAS 37 - Provisions, Contingent Liabilities and Contingent Assets. IFRIC 21 provides clarifications on when an entity must recognise a liability for the payment of levies imposed by governments, other than levies regulated by other standards (eg. IAS 12 – Income taxes). IAS 37 establishes criteria for the recognition of a liability, including the existence of the current obligation of the entity as the result of a past event (known as the binding fact). The interpretation clarifies that the binding fact, which gives rise to a liability for the payment of the tax, is described in the reference standard from which the payment arises. IFRIC 21 is effective from years commencing from 1 January 2014. The adoption of the new standard has not resulted in any significant effects for the Group.

ACCOUNTING STANDARDS, AMENDMENTS AND INTERPRETATIONS NOT YET APPLICABLE

Furthermore, at the date of issue of these financial statements, competent bodies of the European Union had not completed the approval process necessary for the application of the following accounting standards and amendments:

On 24 July 2014, the IASB finalised its project to revise the accounting standard for financial instruments, with the issue of the complete version of IFRS 9 - “Financial Instruments”. In particular, the new provisions of IFRS 9: (i) amend the model that classifies and measures financial assets; (ii) introduce a new method for writing down financial assets, that takes account of expected credit losses; and (iii) amend hedge accounting provisions. The provisions of IFRS 9 will be applicable for years commencing on or after 1 January 2018.


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On 21 November 2013, the IASB published some minor amendments to IAS 19 –

Employee benefits: Defined Benefit Plans: Employee Contributions. These amendments concern the simplification of the accounting treatment of employees or, in specific cases, third-party contributions, to defined benefit plans. The amendments are applicable for years commencing on or after 1 July 2014, but early adoption is permitted;

on 12 December 2013, the IASB issued some amendments to IFRS (Annual Improvements to IFRSs - 2010-2012 Cycle and Annual Improvements to IFRSs - 2011-2013 Cycle). The most significant issues addressed in these amendments concern: the definition of accrual conditions in IFRS 2 – Share-Based Payment, disclosure on estimates and opinions used in grouping operating segments in IFRS 8 – Operating Segments, the identification and disclosure of related-party transactions arising when a services company provides a service for the management of key directors that prepare financial statements in IAS 24 – Related Party Disclosures, the exclusion from the scope of application of IFRS 3 – Business Combinations, of all types of joint arrangements, and some clarifications about exceptions to the scope of IFRS 13 – Fair Value Measurement;

on 6 May 2014, the IASB issued an amendment to IFRS 11 – Joint Arrangements, on the accounting for acquisitions of initial or additional interests in joint operations (without amending the definition of joint operation), of which operations meet the definition of business in IFRS 3 – Business Combinations. The amendment to IFRS 11 is applicable as from 1 January 2016, but early adoption is permitted;

On 12 May 2014, the IASB issued amendments to IAS 16 - Plant, Property and Equipment

and to IAS 38 - Intangible Assets, that consider the adoption of depreciation and amortisation methods based on revenues as unacceptable. As regards intangible assets, this indication is considered as a relative assumption, that may only be overcome in one of the following circumstances: (i) the right to use an intangible asset is related to achieving a pre-established limit of revenues to produce; or (ii) when it may be demonstrated that the realisation of revenues and use of the economic benefits of the asset are strongly related. Amendments are applicable as from 1 January 2016;

on 28 May 2014, the IASB issued IFRS 15 – Revenue from Contracts with Customers, on the timing and amount of the recognition of revenue arising from contracts with customers (including contracts concerning works on order). In particular, IFRS 15 requires the recognition of revenues to be based on the following 5 steps: (i) identify the contract with the customer; (ii) identify the performance obligations in the contract (i.e. the contractual obligations to transfer goods and/or services to a customer); (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations identified based on the stand alone sale price of each good or service; and (v) recognise revenue when (or as) the entity satisfies a performance obligation. IFRS 15 also includes additional disclosure requirements as regards the nature, amount, timing and uncertainty of revenue and relative cash flows. The provisions of IFRS 15 are applicable as from 1 January 2017, but early adoption is permitted;

on 12 August 2014, the IASB amended IAS 27 – Separate Financial Statements, which allows for the equity method to be used to recognise investments in subsidiaries, joint ventures and associated companies in separate financial statements. Amendments are applicable as from 1 January 2016;

on 11 September 2014, the IASB issued amendments to IFRS 10 – Consolidated Financial Statements and to IAS 28 – Investments in associates. The amendments clarify accounting


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treatment in the case of loss of a control of a subsidiary (regulated by IFRS 10) and in the case of downstream transactions regulated by IAS 28, depending on whether the transaction concerns a business or otherwise, as defined by IFRS 3. If the transaction concerns a business, profit shall be recognised in full in both cases, while if the transaction does not concern a business, profit shall be recorded, in both cases, only for the portion relative to non-controlling interest. The amendments are applicable as from 1 January 2016, but early adoption is permitted;

on 25 September 2014, the IASB issued a series of amendments to IFRS (Annual Improvements to IFRSs – 2012-2014 Cycle), in response to issues that arose during 2012-2014. Four standards have been amended: IFRS 5 – Non-current Assets Held for Sale and Discontinued Operations, IFRS 7 – Financial Instruments: Disclosures, IAS 19 – Employee Benefits and IAS 34 – Interim Financial Reporting. These amendments are applicable as from 1 January 2016, but early adoption is permitted;

- E - SEGMENT REPORTING________________________________________ The application of the IFRS 8 - Operating Segments is mandatory as of 1 January 2009. This principle requires operating segments to be identified on the basis of an internal reporting system which top company management utilises to allocate resources and to assess performance. The information for operating sectors presented below reflects the internal reporting utilised by management for making strategic decisions. In this respect, as regards business areas, where possible information is provided relating to the property and holding sector, industrial and Marine sectors. Primary sector: business areas

Income statement as of 31 December 2014

Property Industrial Marine Immsi

and holding sector sector Group


Net revenues to third parties 4,819 1,213,272 56,486 1,274,577

Intercompany net revenues 0

NET REVENUES 4,819 1,213,272 56,486 1,274,577

OPERATING INCOME -5,060 69,661 -6,976 57,625

Gain / loss on equity investments 0 -113 0 -113

Financial income 233 13,961 486 14,680

Borrowing costs 77,806 56,995 6,156 140,957

EARNINGS BEFORE TAXATION -82,633 26,514 -12,646 -68,765

Taxation -4,520 10,450 -3,351 2,579

EARNINGS AFTER TAXATION FROM CONTINUING ASSETS -78,113 16,064 -9,295 -71,344

Gain (loss) from assets intended for disposal or sale 0 0 0 0

EARNINGS FOR THE PERIOD INCLUDING NON-CONTROLLING INTEREST

-78,113 16,064 -9,295 -71,344

Non-controlling interest earnings for the period -5,045 7,937 -3,422 -530

GROUP EARNINGS FOR THE PERIOD -73,068 8,127 -5,873 -70,814


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Balance sheet as of 31 December 2014




Segment assets 337,570 1,556,410 282,547 2,176,527

Equity investments in associated companies

0 198 14 212

TOTAL ASSETS 337,570 1,556,608 282,561 2,176,739

TOTAL LIABILITIES 308,326 1,143,539 282,763 1,734,628

Other information as of 31 December 2014




Investments in tangible and intangible assets 563 94,893 876 96,332

Depreciation, amortisation and write-downs

571 87,384 1,320 89,275

Cash flow from operations -22,092 66,362 -797 43,473

Cash flow from investing activities -6,605 -96,100 482 -102,223

Cash flow from financing 26,099 72,798 880 99,777

Secondary sector: geographical areas

The following table presents the Group income statement and balance sheet figures of 2014 for relation to the geographical areas “of origin”, that is, with reference to the country of the company which received the revenues or which owns the assets. The distribution of revenues by the geographical area of “destination”, that is, with reference to the customer’s country, is analysed in the Explanatory and Additional Note in the consolidated financial statements as of 31 December 2014 under the Income statement net revenues.


Italy Rest of India Rest of the Immsi

In thousands of euros Europe United States

World Group

NET REVENUES 674,126 27,353 324,680 59,345 189,073 1,274,577


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World Group

Segment assets 1,796,191 28,307 188,339 30,147 133,543 2,176,527


147 3 0 0 62 212

TOTAL ASSETS 1,796,338 28,310 188,339 30,147 133,605 2,176,739



World Group

Total receivables * 110,166 42,033 17,639 3,610 24,723 198,171

Total payables ** 350,342 77,510 107,411 1,811 34,640 571,714

*) Contract work in progress and Amounts due from the Tax authorities are not included.

**) Payables for Current taxation and Financial liabilities are not included.




World Group

Investments in tangible and intangible assets

83,836 1,009 8,304 68 3,115 96,332


69,853 -3,300 14,705 96 7,921 89,275

For comparability, the corresponding tables referring to 31 December 2013 are shown below:





NET REVENUES 5,080 1,212,535 40,129 1,257,744

OPERATING INCOME (EBIT) -4,617 62,627 -23,150 34,860


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Gain / loss on equity investments 0 2,110 0 2,110

Financial income 16,871

Borrowing costs 79,831

EARNINGS BEFORE TAXATION -25,990

Taxation 23,846

EARNINGS AFTER TAXATION FROM CONTINUING ASSETS -49,836

Gain (loss) from assets intended for disposal or sale 0

EARNINGS FOR THE PERIOD INCLUDING NON-CONTROLLING INTEREST

-49,836

Non-controlling interest earnings for the period -16,285

GROUP EARNINGS FOR THE PERIOD -33,551





Segment assets 391,436 1,434,060 319,959 2,145,455


0 204 14 218

TOTAL ASSETS 391,436 1,434,264 319,973 2,145,673

TOTAL LIABILITIES 279,883 1,042,149 314,474 1,636,506





Investments in tangible and intangible assets 327 87,603 466 88,396

Depreciation, amortisation and write-downs 585 87,944 1,754 90,283

Cash flow from operations -11,342 36,120 5,502 30,280

Cash flow from investing activities -8,697 -85,684 -2,438 -96,819

Cash flow from financing 18,474 25,415 -4,230 39,659


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Secondary sector: geographical areas




World Group

NET REVENUES 651,229 29,271 320,096 62,816 194,332 1,257,744




World Group

Segment assets 1,818,874 24,647 177,352 18,511 106,071 2,145,455


153 3 0 0 62 218

TOTAL ASSETS 1,819,027 24,650 177,352 18,511 106,133 2,145,673



World Group

Total receivables * 105,901 61,083 14,563 2,904 20,745 205,196

Total payables ** 320,326 106,864 95,854 2,291 29,992 555,327

*) Contract work in progress and Amounts due from the Tax authorities are not included.

**) Payables for Current taxation and Financial liabilities are not included.




World Group

Investments in tangible and intangible assets

67,989 227 7,480 36 12,664 88,396


68,463 1,306 13,626 143 6,745 90,283


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- F - INFORMATION ON THE MAIN ASSET ITEMS_______________________ Amounts are stated in thousands of euros unless otherwise indicated.

- F1 - INTANGIBLE ASSETS 846,575

Net intangible assets as of 31 December 2014 totalled 846,575 thousand euros, up by 14,001 thousand euros compared to 31 December 2013, and are detailed as follows:

In thousands of euros Development costs

Concessions, patents,

industrial and similar

rights

Trademarks and

licences

Goodwill Other intangible

assets

TOTAL

Gross amounts as of 31 December 2012 187,235 231,979 148,422 617,415 8,802 1,193,853 Increases 30,812 17,618 0 0 443 48,873 Change in consolidation area 0 0 0 0 0 0 Other movements (31,496) (2,574) 778 0 690 (32,602)

Gross amounts as of 31 December 2013 186,551 247,023 149,200 617,415 9,935 1,210,124

Accumulated amortisations as of 31 December 2012

77,001 186,378 80,880 3,433 7,015 354,707

Depreciation 23,755 15,066 4,828 0 1,202 44,851 Change in consolidation area 0 0 0 0 0 0 Other changes (21,099) (1,763) 778 0 76 (22,008)


79,657 199,681 86,486 3,433 8,293 377,550

Net amounts as of 31 December 2013 106,894 47,342 62,714 613,982 1,642 832,574

Gross amounts as of 31 December 2013 186,551 247,023 149,200 617,415 9,935 1,210,124 Increases 31,810 26,341 0 0 345 58,496 Change in consolidation area 0 0 0 0 0 0 Other movements (18,627) 9,108 0 8,006 (711) (2,224)

Gross amounts as of 31 December 2014 199,734 282,472 149,200 625,421 9,569 1,266,396


79,657 199,681 86,486 3,433 8,293 377,550

Depreciation 26,780 15,525 4,828 0 857 47,990 Change in consolidation area 0 0 0 0 0 0 Other changes (14,603) 1,503 0 8,006 (625) (5,719)


91,834 216,709 91,314 11,439 8,525 419,821

Net amounts as of 31 December 2014 107,900 65,763 57,886 613,982 1,044 846,575

N.B.: The “Other movements” item includes the reductions for fully amortised intangible assets, translation differences relating to financial statements in foreign currencies, reclassifications and write-downs. Development costs

Development costs include costs for products and engines in projects for which there is an expectation for the period of the useful life of the asset to see net sales at such a level as to allow the recovery of the costs incurred. This item includes assets under construction for 31,631 thousand euros, entirely ascribable to the Piaggio Group, which instead represent costs for which the conditions for capitalisation exist, but in relation to products that will go into production in future years. With particular reference to the industrial sector (Piaggio Group), new projects capitalised during 2014 refer to the study of new vehicles and new engines (two-/three-/four-wheelers) which will feature as the top products in the 2014-2016 range.


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Borrowing costs attributable to the development of products which require a considerable period of time to be realised are capitalised as a part of the cost of the actual assets. Development costs included under this item are amortised on a straight line basis over 5 years (founding products) or 3 years, in consideration of their remaining useful life. Assets under construction amounting to 31.6 million euros are also included. Lastly, during 2014, development costs of approximately 14.5 million euros were recognised directly by the Piaggio Group in profit or loss. With reference to the Marine sector (Intermarine S.p.A.), it should be remembered that in the last few years two important research projects had started called “Hydrofoils with immersed wing” and “Enviroaliswath”. The first project envisages the planning and construction of two prototypes of a new submerged-foil hydrofoil: for this project, costs equal to around 8.4 million euros have been capitalised as of 31 December 2014, amortised for approximately 2.9 million euros. The second project, named “Enviroaliswath” envisages the planning and construction of a Marine vessel that is innovative as regards environmental impact in terms of wake wash reduction: costs for around 6.2 million euros have been capitalised as of 31 December 2014, net of amortisations of approximately 1 million euros. In this respect, it should be remembered that the above items have been amortised until the year ending on 31 December 2004 at a rate of 20% a year: the recoverability of these costs is provided through the production and sale of the related vessels as from 2016-2017. The company is also holder of the project named "Pia-Lightprop", which involves the design and construction of new generation marine stern drives for which approximately 1.5 million euros of fully amortised costs have been capitalised. For further details regarding the activities of research and development carried on by the companies in the Immsi Group reference is made to the paragraph “Research & Development”. Concessions, patents, industrial and similar rights The net balance of this item, equal to 65,763 thousand euros as of 31 December 2014, is mainly related to the Piaggio Group that has recorded software, patents and know-how for a total of 65,609 thousand euros, of which fixed assets in progress for 887 thousand euros. Patents and know-how mainly refer to the Vespa, GP 800, MP3, RSV4, hybrid MP3 vehicles and the 1200 cc engine, while increases for the period chiefly concern new calculation, design and production techniques and methodologies developed by the Group for its new products in the 2014-2016 range. The costs of rights of industrial patents and rights of use of intellectual works are amortised in 3 years. It is also to be noted that other Immsi Group companies, too, have entered the item “software” in the case of Intermarine S.p.A. for Marine architecture, structural design and EDP programmes and, in the case of subsidiary Is Molas S.p.A., for the hotel management programme and other applications. Trademarks and licences The trademarks and licences with a finite life item, totalling 57,886 thousand euros, is as follows:

In thousands of euros Net Value as of 31 December 2014

Net Value as of 31 December 2013 Change

Guzzi brand 19,500 21,125 (1,625)

Aprilia brand 38,316 41,509 (3,193)

Other brands 70 80 (10)

Total brands 57,886 62,714 (4,828)

The Aprilia and Guzzi trademarks are amortised over a period of 15 years, expiring in 2026.


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Goodwill The goodwill registered by the Group has unchanged compared to the balance at the end of 2013. The composition of the item in question is detailed in the following table:

In thousands of euros Net Balance as of 31/12/2014

Acquisition of 100% of Piaggio & C. S.p.A. by Piaggio Holding N. BV (in 2003) 405,985 Acquisition of 2.81% of Piaggio & C. S.p.A. by Piaggio Holding N. BV (in 2006) 14,620 Acquisition of 31.25% of Piaggio Holding N. BV by Immsi S.p.A. (in 2003) 3,480 Acquisition of 5.23% of Piaggio & C. S.p.A. by Immsi S.p.A. (in 2004) / Sale of 2.32% of Piaggio & C. S.p.A. by Immsi S.p.A. in 2008

3,643

Acquisition of 17.7% of Piaggio Holding N. BV by Immsi S.p.A. (in 2004 and 2006) 64,756 Acquisition of 2.22% of Piaggio & C. S.p.A. by Immsi S.p.A. (in 2007 and 2008) 7,143 Acquisition of 100% of Aprilia S.p.A. by Piaggio & C. S.p.A. (in 2004) 79,705 Acquisition of 66.49% of Rodriquez Cantieri Navali S.p.A. by RCN Finanziaria S.p.A. (in 2004) 30,337 Acquisition of 33.51% of Rodriquez Cantieri Navali S.p.A. by RCN Finanziaria S.p.A. (in 2005) 2,001 Acquisition of 2.37% of RCN Finanziaria S.p.A. by Immsi S.p.A. (in 2007) 1,286 Other acquisitions / changes 1,026 TOTAL 613,982

‐ of which allocated to Piaggio Group cash-generating unit ‐ of which allocated to Intermarine cash-generating unit

579,492 34,428

Goodwill derives from the greater value paid compared to the corresponding portion of the investee companies’ shareholders’ equity at the time of the purchase, reduced by the related cumulative amortisation until 31 December 2003. During first-time adoption of the IFRS, in fact, the Group chose not to apply IFRS 3 – Business combinations retroactively to company acquisitions prior to 1 January 2004; As a result, the goodwill generated on acquisitions prior to the date of transition to IFRSs was maintained at the previous value, determined according to Italian accounting standards, subject to assessment and recognition of any impairment loss. As of 1 January 2004 goodwill is no longer amortised: the recoverable value of the cash-generating unit, to which the single goodwills have been attributed, is verified by determining the current value and submitted to an impairment test, applying the method required by the International Accounting Standard IAS 36. Such value has been estimated on the basis of:

o the current value of the future financial flows over a multi-year forecasting period that are estimated to be generated by the continuous use of the assets referred to the single cash generating units (method of “Discounted Cash Flow” in its “Unlevered” version); and

o by the terminal value attributable to them (estimated according to the perpetuity growth method), so as to reflect the residual value that each cash-generating unit is expected to generate beyond the planning horizon and representative of the current value of the future cash flows subsequent to the period of explicit projection of the financial data forecast.

It should be borne in mind, lastly, that goodwills recoverability is checked at least once a year (as of 31 December), even failing indicators of a possible loss of value. The goodwill has been allocated to the Intermarine and Piaggio Group cash-generating units. With reference to the Piaggio Group cash-generating unit, the impairment test was arranged inhouse by the Immsi S.p.A. company management, whereas for Intermarine, cash-generating unit, the Parent Company called in an external consultant to draw up an impairment report to support the Parent Company’s Board of Directors for the purposes of the application of the procedure set out in accounting standard IAS 36. As concerns the Piaggio Group, it has been considered reasonable to consider the Piaggio cash-generating unit coincident with the Piaggio Group as a whole (Piaggio & C. S.p.A. and its subsidiaries). Therefore all the considerations related to the estimate of the utilisation value of the cash-generating unit and to its use for the purposes of the impairment test were developed considering the Piaggio Group at consolidated level. It should be noted that the book value of the goodwill allocated to the cash-generating unit Piaggio Group is equal to around 579.5 million


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euros. The main hypotheses and assumptions used in determining the recoverable value of the cash generating unit are related to i) the use of forecast economic and asset data of the Piaggio Group; ii) the discount rate used for making the estimated expected cash flows current; iii) the use of the expected growth rate for the calculation of the terminal value consistently with the approach of the perpetuity growth. As regards the figures as of point i), analyses were based on predicted financial flows relative to a four-year period assumed from 2015 budget data supplemented by forecast data relative to 2016-2018 (approved by the Board of Directors of Piaggio & C. S.p.A. on 9 February 2015), in line with the 2014-2017 Plan already approved in March 2014. In particular, with regard to the rates of turnover growth for the period covered by the forecast data considered, outside sources representative of the expected growth in relevant markets were also used as reference. With reference to the value of point ii), for discounting the estimated expected cash flows, a weighted average discount rate calculated beginning from the discount rates related to the different geographical areas of operation of the Piaggio Group for its own cash-generating units has been used, that reflect the current market evaluations of the cost of money and that take account of the specific risks of the business and of the geographical area in which the different cash-generating units of the Piaggio Group operate. In particular, to establish the cost of its equity (“Ke”) according to the CAPM (“Capital Asset Pricing Model”) we have considered a) a variable long-term risk-free rate for the different areas of operation of the group; b) a market risk premium in an unconditional form (normal long-term premium), in order to avoid the risk of running into a “double counting” of the country risk associated to the group’s operational areas; c) Beta coefficients taking into account also the Beta coefficients of the principal listed companies that are comparable to the Piaggio Group. The cost of debt (“Kd”) net of taxes has been estimated taking account of the target financial structure that can be related to the main listed companies comparable to the Piaggio Group as well as – prudentially in order to mitigate the positive impact of the current expansive monetary policy – a long-term risk-free rate. The weighted average discount rate (“WACC”) used for the purposes of the impairment test net of taxes is therefore estimated equal to approximately 7.7%: the reduction in the WACC from the previous year (8.4% as of 31 December 2013) is mainly due to the decrease in the interest rate for risk-free activities. With respect to point iii), it is noted that in drawing up the impairment test, the terminal value was determined using a weighted average perpetual growth rate (“g rate”), calculated based on different “g rate” values set by Piaggio Group for its own cash-generating units: the weighted average “g rate” was estimated as being equal to 1.4% (slightly below the figure of approximately 1.7% used as of 31 December 2013, as a lower perpetual growth rate was assumed - decreasing it from 1.5% to 1% - for the Western Countries market). The conducted analyses have not highlighted any impairment loss: therefore, no write-down has been reflected in the data of the Consolidated Financial Statements of Immsi Group as of 31 December 2014. It should therefore be noted that in correspondence with the aforesaid values of the basic assumptions considered, the goodwill test regarding the Piaggio Group cash-generating unit was passed with a broad margin. In addition, also on the basis of the indications contained in the Document Banca d’Italia/Consob/Isvap no. 2 of 6 February 2009 and in the document Banca d’Italia/Consob/Isvap no. 4 of March 2010, sensitivity analysis has been carried out on the results of the test in relation to the change in basic assumptions such as the perpetual growth rate in processing the terminal value (“g rate”) and the discount rate (WACC), that condition the estimate of the utilisation value of the Piaggio Group cash-generating unit: the impairment test was passed in all reasonably considered cases. In this regard, changes in values assigned to basic assumption considered reached the worst case scenario of a reduction in the perpetual growth rate (“g rate”) of one percent, and an increase in the WACC of one percent. As concerns the Intermarine cash-generating unit, we point out how the company – following the merger through incorporation of the parent company Rodriquez Cantieri Navali S.p.A. which took place in December 2012 – coincides with the “Marine sector” identified by the Immsi Group within


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its sectorial information in application of the IFRS 8 – Operating segments accounting principle: the book value of the goodwill allocated to the Rodriquez group cash-generating unit is equal to around 34.4 million euros. The main hypotheses and assumptions used in determining the recoverable value of the cash generating unit are related to i) the use of forecast economic and asset data of Intermarine; ii) the discount rate used for making the estimated expected cash flows current; iii) the expected growth rate for the calculation of the terminal value consistently with the approach of updating the “perpetuity growth”. With respect to the values of point i) the analyses were based on a hypothesis of forecast cash flows related to a three-year time-line inferable from budget data for the year 2015, supplemented with forecast data for the period 2016-2017 prepared by the management of Intermarine S.p.A.: The data, processed as above, were approved by the Board of Directors of the Company on 17 February 2015. In this regard, we stress how the forecast data considered – uncertain and variable by nature – reflect the evolution of the company’s order portfolio as well as its future industrial and commercial strategies: the data, in particular, are based - to a significant extent - on the acquisition of future contracts for which negotiations, at various stages, are ongoing with the Italian Navy and international navies. Updates, revisions or negative developments relative to the aforesaid assumptions and to the projections that should occur after the date of reference of this evaluation work could influence, even significantly, the results of the impairment test shown below. In this regard, we point out that during the preceding years the final results of the Marine sector showed significant variances with respect to what was forecast in the forward looking financial data used, even after several exceptional and non foreseeable events, such as the floods in the Intermarine site in Sarzana: given the intrinsically uncertain nature of the forward looking data considered, it cannot be excluded that these variances may continue to take place even in the future with respect to the forward looking data used with reference to the impairment test carried out as of 31 December 2014. With reference to the value of point ii), for making the estimated expected cash flows current of Intermarine, a discount rate has been used that reflects the current market evaluations of the cost of money and that takes account of the specific risks of the business and of the geographical area in which the company operates. In particular, the cost of equity (“Ke”) has been determined according to the CAPM (“Capital Asset Pricing Model”). For this purpose, we have considered a) a long-term risk-free rate; b) a market risk premium in an unconditional form (normal long-term premium; c) a Beta coefficient calculated by taking into account also the Beta coefficient of companies’ sample comparable to the group and operating in the leisure and defense shipbuilding sector. For the purpose of estimating the aforementioned rate, a specific risk premium equal to 2% was also considered: this methodological choice was made in light of the above analyses regarding the divergences between the results forecast in the 2014 budget and the actual results for 2014. The cost of debt (“Kd”) net of taxes has been estimated taking account of the expected financial structure of a panel of listed companies comparable to Intermarine as well as – prudentially in order to mitigate the positive impact of the current expansive monetary policy - a long-term risk-free rate. The discount rate used for the purposes of the impairment test net of taxes was therefore estimated as being equal to approximately 8.29%: With respect to point iii), it is noted that in drawing up the impairment test, the terminal value was determined using a prudentially estimated perpetual growth rate (“g rate”) prudentially estimated at 1.5%, in line with the data used as of 31 December 2013. The conducted analyses have not highlighted any impairment loss regarding the goodwill test allocated to Intermarine cash-generating unit: therefore, no impairment of goodwill has been reflected in the data of the consolidated Financial statements of Immsi Group as of 31 December 2014. In addition, also on the basis of the indications contained in the joint Document Banca d'Italia/Consob/Isvap no. 2 of 6 February 2009 and in the Document Banca d'Italia/Consob/Isvap no. 4 of March 2010, sensitivity analysis has been carried out on the results of the test in relation to the change in basic assumptions such as the perpetual growth rate in processing the terminal value (“g rate”) and the discount rate (WACC), that condition the estimate of the utilisation value of


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Intermarine cash-generating unit: the goodwill test allocated to the cash-generating unit in question was passed in all reasonably considered cases. In this respect, it should be noted that the variations in the values assigned to the basic assumptions considered have grown to the joint consideration (“Worst Case Scenario”) of a reduction in the rate of perpetual growth (“g rate”) by a half percentage point, at the same time as an increase in the WACC of half a percentage point Considering that the analyses conducted to estimate the recoverable value both for the Piaggio Group cash-generating unit and for the Intermarine cash-generating unit has also been determined on the basis of estimates, the Group cannot assure that there will not be a loss in value of the goodwill in future periods. Owing to the current context of the crunch in the markets of reference and in the financial markets, the different factors – both inside and outside the identified cash-generating units – used in drawing up the estimates could in the future be reviewed. The Group will constantly monitor these factors and the possible existence of future impairment losses. Other intangible assets The “Other intangible assets with a finite life” item, totalling 1,044 thousand euros, mainly includes charges held by Piaggio Vietnam. The item also includes assets under construction for 25 thousand euros, referring entirely to the Piaggio Group. - F2 - PROPERTY, PLANT AND EQUIPMENT 344,450

Net plant, property and equipment as of 31 December 2014 total 344,450 thousand euros, compared to 340,309 thousand euros as of 31 December 2013, and comprise property assets of the Piaggio Group for 307,561 thousand euros, of Intermarine S.p.A. for 19,238 thousand euros, of Is Molas S.p.A. for 17,393 thousand euros and of Immsi S.p.A. for 247 thousand euros. The following table details this item: In thousands of euros Land Property Plant and

machinery Industrial

and commercial equipment

Assets to be given free of charge

Other assets

TOTAL

Gross amounts as of 31 December 2012 48,197 182,655 442,482 505,674 10,388 52,491 1,241,887 Increases 0 3,080 20,427 14,433 15 1,350 39,305 Decreases (24) (79) (5,843) (3,873) 0 (819) (10,638) Change in consolidation area 0 0 0 0 0 0 0 Other movements (3,522) (8,376) (12,517) (609) 0 (391) (25,415)

Gross amounts as of 31 December 2013 44,651 177,280 444,549 515,625 10,403 52,631 1,245,139


0 56,569 309,888 462,034 9,356 43,978 881,825

Depreciation 0 5,277 18,477 14,376 59 2,185 40,374 Applications 0 (1) (5,062) (3,792) 0 (387) (9,242) Change in consolidation area 0 0 0 0 0 0 0 Other changes 0 (2,452) (4,975) (447) 0 (253) (8,127)


0 59,393 318,328 472,171 9,415 45,523 904,830

Net amounts as of 31 December 2013 44,651 117,887 126,221 43,454 988 7,108 340,309

Gross amounts as of 31 December 2013 44,651 177,280 444,549 515,625 10,403 52,631 1,245,139 Increases 171 5,029 18,421 11,103 118 2,887 37,729 Decreases 0 (70) (1,397) (2,388) 0 (2,893) (6,748) Change in consolidation area 0 0 0 0 0 0 0 Other movements 43 2,491 13,550 (716) 0 839 16,207


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Gross amounts as of 31 December 2014 44,865 184,730 475,123 523,624 10,521 53,464 1,292,327


0 59,393 318,328 472,171 9,415 45,523 904,830

Depreciation 0 5,477 20,024 15,209 56 2,362 43,128 Applications 0 (59) (1,212) (2,197) 0 429 (3,039) Change in consolidation area 0 0 0 0 0 0 0 Other changes 0 702 4,738 (258) 0 (2,224) 2,958


0 65,513 341,878 484,925 9,471 46,090 947,877

Net amounts as of 31 December 2014 44,865 119,217 133,245 38,699 1,050 7,374 344,450

N.B.: The “Other movements” item includes the translation differences relating to financial statements in foreign currencies, reclassifications and write-downs.

It should be remembered that the plant, property and equipment are amortised at rates considered fit to represent their useful life and in any case according to a plan of fixed rate amortisation for which reference is made to paragraph D – Accounting standards and measurement criteria. Among the plant, property and equipment as of 31 December 2014 there are approximately 1,050 thousand euros entirely related to freely transferable assets ascribable to Intermarine represented by light constructions, properties and related costs of restructuring, built on the State land in the Municipality of Messina. The amortisation of the buildings built on State land is performed according to the residual duration of the concession: after the procedure for the renewal of the concession of that area, the company reparameterised the depreciation calculation on the basis of the new available information. These assets, held because of a concession agreement, at its expiry, must be freely and in a perfect state of operation transferred to the granting body. Furthermore, please note that the borrowing costs on the purpose loans acquired to finance the building of properties that require a substantial period of time to be ready for use are capitalised as part of the cost of the assets themselves: in this regard, the Group capitalised borrowing costs for 315 thousand euros in the year. Land and property

Land and industrial property refer to production facilities of the Piaggio Group located in Pontedera (Pisa), Noale (Venice), Mandello del Lario (Lecco), Barcelona (Spain), Baramati (India) and Vinh Phuc (Vietnam), to the industrial complex of Intermarine S.p.A. in Sarzana (La Spezia) and to the tourism/hotel structure managed by Is Molas S.p.A. in the Municipality of Pula (Cagliari). The item also includes a land and a building belonging to the Piaggio Group at Pisa which was transferred by the Piaggio & C. S.p.A. in December 2009 to a property fund, consolidated on a line-by-line basis. The Group recognised 6,598 thousand euros regarding assets under construction at owned property. Plant and machinery The “Plant and machinery” item refers essentially to the production facilities of the Piaggio Group located in Pontedera (Pisa), Noale (Venice), Mandello del Lario (Lecco), Baramati (India) and Vinh Phuc (Vietnam), as well as the structures owned by Intermarine S.p.A. and the facilities located in the tourism/hotel complex managed by Is Molas S.p.A., for a net overall amount (excluding assets held under finance leases) of 133,245 thousand euros. The Group has registered 14,342 thousand euros for fixed assets in progress and as a whole it uses plant and machinery completely amortised for a gross value of around 24,799 thousand euros.


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Industrial and commercial equipment The “Industrial and commercial equipment” item, totalling 38,699 thousand euros, comprises essentially the production equipment of Piaggio & C. S.p.A., Piaggio Vehicles Private Ltd, Piaggio Vietnam Co. Ltd and Intermarine S.p.A.. The balance includes assets under construction for 7,584 thousand euros, mainly recognised by the Piaggio Group and equipment fully amortised but still in use for a total of 7,321 thousand euros fully recognised by Intermarine S.p.A.. Main investments in equipment were made by the Piaggio Group and concerned moulds for new vehicles launched during the year or scheduled to be launched in the first half of next year, moulds for new engines and specific equipment for assembly lines. Other assets The “Other assets” item comprises vehicles, furniture, office fittings and EDP systems. The other assets are registered for a total value of 7,374 thousand euros, net of cumulative depreciation. The Group uses fully depreciated assets belonging to this item with a gross value of 5,425 thousand euros and recorded fixed assets in progress for 171 thousand euros. The item includes the net value, as of 31 December 2014, of assets held through lease agreements equal to 223 thousand euros and referring to vehicles used by the Aprilia Racing Team. Guarantees As of 31 December 2014, the Group has land and property encumbered by mortgages or pledges in favour of financial institutions to guarantee bank loans, for which reference is made to paragraph I – Commitments, risks and guarantees.

- F3 - PROPERTY INVESTMENTS 85,848 As of 31 December 2014 property investments were registered in the Immsi Group for overall 85,848 thousand euros, referable to the Parent Company Immsi S.p.A. for 73,887 thousand euros and to the Piaggio Group for 11,961 thousand euros: the increase of 4,722 thousand euros compared to the value recognised as of 31 December 2013 refers to i) the fair value adjustment of the value of the Spanish site of Martorelles of the Piaggio Group, with an effect of 4,615 thousand euros; and ii) the reorganisation and restructuring works done during 2014 on the property of Immsi S.p.A. located in Rome – Via Abruzzi for 107 thousand euros. With reference to the property of the Parent company Immsi S.p.A., as known, since 2008 the Company has classified it (located in Rome – Via Abruzzi) as property investment, as defined by IAS 40: the book value was reassessed to the market value at the date of change of destination (in the amount of 72.1 million euros), since it was no longer instrumental to the typical activity, yet rather as an asset usable to finance the other ongoing investment activities. The greater value was entered in a specific reserve of the equity, net of the related tax effect. Subsequent investments have led to an increase of the property as periodically confirmed by the external independent survey. The investment moreover is no longer subject to a process of amortisation starting from the year 2009 as required by the international accounting standards. The value recognised in the financial statement as of 31 December 2014 includes 24 thousand euros of works in progress that will be completed and will generate profit starting from 2015. The valuation of the real estate investment at issue is based on a survey performed by an external advisor that estimated the fair value at the end of 2014 in line with the value of registration in the financial statements as of 31 December 2014. The valuation criteria used in this survey refer to generally accepted valuation methodologies and principles, using discounted cash flow analysis. The valuation is therefore based on discounting cash flows generated during the period at the estimate date. Revenues and costs were considered at present value, at the time when they arose and were discounted bank using a suitable rate.


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The market value of the property complex therefore comprises the discounting of operating costs, revenues from the property according to various uses and revenues from the sale of the property assumed for capitalisation of the rental payment of the last period considered. In order to determine the rental payment of the property, the comparative synthetic method was used. It makes it possible to determine the value corresponding to the sum of money for which the property could be rented, at the time of the estimate, between an owner and lessee both interested in the transaction, in the absence of particular interests and after an adequate sale, assuming that both parties act freely, cautiously and are informed. This comparative procedure estimates the rental value by comparing recent or present transactions, relative to similar assets as regards the type, building and location. The rental payment for the asset may, therefore, be determined taking into account rental prices and making adjustments considered adequate as regards the morphological aspects of the asset, its maintenance, profitability, the qualities of any lessee and any other factor considered relevant. The continued uncertainty in the real estate market makes it possible for prices and values to have periods of extreme volatility as long as the market does not recover its stability. Lastly, it should be noted that rental income referred to the building and recognised among Net revenues amounts to 2,841 thousand euros, whereas the costs connected to it refer substantially to ordinary maintenance and operating administration of the building. Most of these costs are then debited to the tenants as per condominium regulations. There is also a 92 million euro mortgage on this property in guarantee of the financing obtained in 2010 by a pool of banks headed by Banco Popolare group (Efibanca, Cassa di Risparmio Lucca Pisa Livorno and Banca Popolare di Lodi) for original 46 million euros, of which 23 million euros already reimbursed, the extinction of which is foreseen in June 2019. As regards the property of the Piaggio Group, the book value of the Martorelles site as of 31 December 2014 was determined by a specific appraisal conducted by an independent expert who measured the "Fair Value less cost of disposal" based on a market approach (as provided for in IFRS 13). These analyses recorded a total value of the investment equal to 11,961 thousand euros, compared to the previous carrying amount at the start of the year for the property of 7,346 thousand euros. The Group uses the "fair value model" as provided for in IAS 40, thus the measurement updated during 2014 resulted in profit adjusted to fair value, equal to 4,615 thousand euros being recognised under other revenues in the income statement for the period. In this regard, the greater value of the investment compared to 31 December 2013 is due to the regulatory change (with the approval of the local authorities of Martorelles on 18 February 2014), whereby the area where the land and building are located may be used for commercial purposes (in addition to industrial purposes). The Group has prepared a project to convert the area, for the development of a retail centre. This change, along with comparable transactions and the project, was considered for the purposes of measuring the fair value of the site as of 31 December 2014, with the valuation referring however to the current status of the property. Following the site redevelopment project, an agency management contract was given to a Spanish property company, to seek investors interested in the property.


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- F4 - EQUITY INVESTMENTS 8,831

The table below details the item Equity investments as of 31 December 2014: In thousands of euros

Balance as of

Increases Decreases Reversals /

Reclassifications /

Balance as of

31/12/2013 Write-downs

Exchange differences

31/12/2014

Equity investments in subsidiaries 12 0 0 (3) 0 9 Equity investments in associated companies and joint ventures

8,156 0 0 (113) 779 8,822

TOTAL 8,168 8,831

The increase of the above item refers to the criteria of equity valuation in the Zongshen Piaggio Foshan Motorcycles Co. Ltd. joint-venture. It is also noted that i) the Piaggio Group adjusted the value of the equity investment in associated companies to the corresponding shareholders’ equity value; whereas ii) Intermarine S.p.A., further to the merging by incorporation of the parent company Rodriquez Cantieri Navali S.p.A. in December 2012, adopted the criteria of the shareholders’ equity to evaluate the equity investment in subsidiaries. Below is the corresponding table related to the changes that occurred during 2013: In thousands of euros

Balance as of

Increases Decreases Reversals /

Reclassifications Balance as of

31/12/2012 Write-downs

31/12/2013

Equity investments in subsidiaries 16 0 (4) 0 0 12 Equity investments in associated companies and joint ventures

6,053

0

(7)

2,110

0

8,156

TOTAL 6,069 8,168

The table below details the equity investments as of 31 December 2014: Equity investments % Group Book value at

31 December 2014

Valued using the equity method:

Rodriquez Cantieri Navali do Brasil Ltda *** 100.00% 0

Rodriquez Pietra Ligure S.r.l. 100.00% 9

Valued using the cost method:

Rodriquez Mexico *** 50.00% 0

Total subsidiaries 9

Valued using the equity method:

Zongshen Piaggio Foshan Motorcycle Co. LTD. 45.00% 8,610

Total joint-ventures 8,610

Valued using the cost method:

S.A.T. Societé d’Automobiles et Triporteurs S.A. 20.00% 0

Depuradora d’Aigües de Martorelles S.C.C.L. 22.00% 42

Pont - Tech, Pontedera & Tecnologia S.c.r.l. 20.44% 156

Consorzio CTMI – Messina 25.00% 14

Total associated companies 212

TOTAL 8,831

*** Inactive companies or companies in liquidation

The equity investment in Zongshen Piaggio Foshan Motorcycles Co. Ltd has been classified under “Joint ventures” in relation to the agreement signed on 15 April 2004 between Piaggio & C. S.p.A. and Foshan Motorcycle Plant, on one side, and the Chinese company Zongshen Industrial Group Company Limited on the other side. Piaggio & C. S.p.A.’s equity investment in Zongshen Piaggio Foshan Motorcycles is equal to 45%, of which 12.5% through the direct subsidiary Piaggio China Company Ltd. The book value of the equity investment is equal to 8,610 thousand euros and


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reflects the adjusted pro-quota shareholders' equity to take account of the criteria of evaluation adopted by the group, as well as the recoverable value determined during impairment by the parent company Piaggio & C. S.p.A.. The following table summarises the main financial highlights of the joint venture:

Financial Statements as of 31 December 2014 (data in thousands of euros)

45% owned by the Piaggio Group Operating capital 4,987Total non-current assets 5,444NET INVESTED CAPITAL 10,432

Reserves 59Financial position 1,833Shareholders’ equity 8,540TOTAL SOURCES OF FUNDS

10,432

- F5 - OTHER FINANCIAL ASSETS 44,337

- Non-current portion Other non-current financial assets, equal to 29,461 thousand euros, decreased by 38,707 thousand euros compared to the value at the end of 2013 and mainly refer to financial assets available for sale, consisting of the investment (equal to 2.55% of capital) in Alitalia – Compagnia Aerea Italiana S.p.A. held by Immsi S.p.A.. This investment was recognised in the financial statements as of 31 December 2014 as 10,349 thousand euros, down by 47,351 thousand euros compared to the corresponding value as of 31 December 2013 (57,700 thousand euros). This decrease is the algebraic sum of the following effects:

the conversion in January 2014 of the subscribed portion of the subordinated convertible debenture loan issued by Alitalia - CAI in February 2013 (equal to 11.7 million euros, including interest accrued at that date);

the payment of a total of 5.4 million euros to Alitalia – CAI in the fourth quarter of 2014, in compliance with the Stand-by Equity Commitment undertaken in September 2014 to subscribe and issue for a maximum of 10 million euros the capital increase payment resolved by shareholders of Alitalia – CAI on 25 July 2014;

the recognition of an impairment loss in the Income statement of the Parent Company Immsi S.p.A. and of the Immsi Group estimated on the basis of valuations carried out as of 31 December 2014 for an amount of approximately 64,350 thousand euros, following the identification of impairment losses considered to be durable.

In this regard, it should be noted that the Parent Company availed itself of the assistance of an external consultant for the preparation of an impairment report to support the Board of Directors of Immsi S.p.A. in its valuations: the fair value of the investment was estimated considering the transaction value, as described below, and considering the average value of results from applying the two valuation methods based on determining the present value of future financial flows relative to a long-term forecast period (“Dividend Discount Model, DDM” and “Discounted Cash Flow, DCF”). On 31 December 2014, a final agreement was signed between the long-standing shareholders of Alitalia – CAI and lender banks with a new minority shareholder of Alitalia, Etihad Airways, as part of an operation to reorganise and relaunch Alitalia, through a strategic partnership with the new partner and airline company Etihad Airways.


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This operation established a number of conditions, including 1) a significant reduction in the staff of Alitalia – CAI; 2) the recapitalisation of the company by long-standing shareholders; 3) the restructuring of bank debt. Compliance with these conditions enabled Etihad to have a 49% stake in a new company, specifically established, in which the operating assets of Alitalia – CAI were transferred, and in which Immsi is still a shareholder. At a financial level, Etihad's commitment, in subscribing shares of the new operating company and acquiring other assets of Alitalia – CAI, totals 560 million euros, in addition to the cash recapitalisation by current shareholders, estimated at 300 million euros. The complex operation will also transfer the operating assets of Alitalia – CAI, with the exception of: (i) financial debt relative to credit lines/exposures of Alitalia - CAI still pending; (ii) litigation and liabilities (current and potential) not strictly related to typical activities of an airline company; (iii) the investments in AirOne S.p.A. and Midco S.p.A., in a new company called Alitalia – Società Aerea Italiana (SAI). The investment of Alitalia - CAI in SAI was transferred to this newly established company, Midco S.p.A., held 100% by CAI. After this operation, Midco S.p.A. holds 51% of SAI. As part of the above operation, the new partner Etihad developed an industrial and financial plan for SAI for 2015 – 2018, of which flows were considered to evaluate the investment of Etihad made by the appraisal expert in the appraisal of the transfer of CAI's operating assets to SAI and lastly by Immsi, during evaluations as of 31 December 2014. In particular, to discount estimated financial flows, a Ke (“Cost of Equity”) equal to approximately 12.2% and a WACC (“Weighted Average Cost of Capital”) equal to approximately 9.8% respectively were used for the DDM and DCF method: the financial flows considered for the evaluation covered a four-year period, while for the terminal value of the investment, a perpetual growth rate“g rate” equal to 2% was considered, aligned with the growth rate of GDP expected for Europe for the period in question. The item in question also includes:

for a total of 19,026 thousand euros, the fair value of the hedging derivative instruments entered into by the Piaggio Group in relation to its foreign currency borrowings and comprising: o 13,230 thousand euros from the fair value of the cross currency swap relative to a

private debenture loan; o 5,712 thousand euros from the fair value of the cross currency swap relative to a

medium-term loan of the Indian subsidiary; and o 84 thousand euros from the fair value of the cross currency swap relative to a medium-

term loan of the Vietnamese subsidiary; and the carrying amount of investments held in other minor companies by the Piaggio Group for

a total of 86 thousand euros, with a reduction compared to 2013 due to the impairment of the investment in Consorzio Pisa Ricerche for 76 thousand euros.

- Current portion

Other current financial assets totalled 14,876 thousand euros at the end of the period, down by 13,743 thousand euros compared to 31 December 2013. This item exclusively includes the investment (equal to 2,788,464 shares) held by Immsi S.p.A. in Unicredit S.p.A., measured at fair value at the reporting date of 31 December 2014 and down by approximately 126 thousand euros (gross of the relative tax effect) compared to 31 December 2013. The value of the Unicredit share recorded a significant increase during the first half of 2014, reaching a maximum value of 6.87 euros per share in June, then dropping in the second half of the year to a low of 5.105 euros in November, picking up to reach 5.335 euros as of 31 December 2014, which is higher than the carrying amount for Immsi S.p.A. (equal to approximately 5.326 euros per share), with no impairment loss recorded: in this regard, the procedure of Immsi S.p.A. relating to the determination of the impairment of equity financial instruments classified as "Available For Sale" ("AFS") has


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defined alternatively the conditions of a prolonged or significant reduction in fair value on the basis of i) a reduction in the market value exceeding two thirds of the original cost; and ii) a market value continuously lower than the original carrying amount, observed over a period of time of at least two years. It remains understood that, in exceptional circumstances, the Company Management may consider any such decline as not representative of a significant or prolonged loss of value of the security and exceptionally derogate from the specified thresholds, reserving the right - in justified circumstances - to change the aforementioned thresholds in order to reflect any significant changes in the economic and financial context. As of 31 December 2013, the item included 10,907 thousand euros for a portion of the subordinated convertible debenture loan resolved by the extraordinary General Meeting of Alitalia – Compagnia Aerea Italiana S.p.A. (converted into equity in January 2014), the amount of 1,858 thousand euros for the deposit from Intermarine S.p.A. as a guarantee of the endorsement credit contract relative to the agreement with the Sultanate of Oman (which ended in July 2014) and the amount of 838 thousand euros, for a short-term, guaranteed capital, variable return investment made by the Chinese subsidiary of the Piaggio Group Foshan Piaggio Vehicles Technology Research and Development.

- F6 - RECEIVABLES DUE FROM THE TAX AUTHORITIES 42,903

Current and non-current receivables due from tax authorities total 42,903 thousand euros and are as follows:

- Non-current portion In thousands of euros

Balance as of Balance as of 31/12/2014 31/12/2013

VAT receivables 1,811 1,110 Income tax receivables 1,219 1,664 Other tax receivables 611 1,609 TOTAL 3,641 4,383

It should be reminded that Immsi S.p.A. has undersigned with the subsidiary companies Piaggio & C. S.p.A., Aprilia Racing S.r.l., Apuliae S.p.A., Intermarine S.p.A., RCN Finanziaria S.p.A., ISM Investimenti S.p.A. and Pietra S.r.l. fiscal consolidated contracts. Based on these contracts, the Parent Company Immsi S.p.A. – in a capacity as consolidating party - recognised 1,636 thousand euros, of which 411 thousand euros of non-current receivables presumed to be used after the current year in view of industrial plans produced by Group companies, in its financial statements as tax receivables. Group taxation calculated for 2014 recorded a tax loss, therefore no advance payments on Italian Tax on Corporate Income will be made in 2015.

- Current portion In thousands of euros


VAT receivables 34,972 23,596 Income tax receivables 1,675 1,340 Other tax receivables 2,615 2,607 TOTAL 39,262 27,543

Amounts due from tax authorities within 12 months mainly refer to VAT receivables of the Piaggio Group, increased compared to 31 December 2013 mainly because of the increase in the VAT credit of the parent company Piaggio & C. S.p.A..


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- F7 - DEFERRED TAX ASSETS 116,065 As of 31 December 2014, net deferred tax assets due within 12 months totalled 8,286 thousand euros (5,078 thousand euros as of 31 December 2013) while those due after 12 months amounted to 107,779 thousand euros (93,456 thousand euros as of 31 December 2013): such values are recorded net of deferred tax liabilities homogeneous in maturity and nature. The Piaggio Group recognised 46,434 thousand euros of deferred tax assets compared to 33,660 thousand euros recorded as of 31 December 2013: this increase is due to the recognition of deferred tax assets relative to the 2014 tax loss and temporary deductible changes. The deferred tax assets recognised by Intermarine S.p.A. total 47,553 thousand euros (compared to 46,351 thousand euros as of 31 December 2013) and are calculated mainly on tax losses suffered by group companies and on temporary deductible differences: The related fiscal benefit has been measured solely on the fiscal losses and on the temporary differences for which there is the probability of accomplishing taxable amounts able to absorb them, taking account of the forecast plan drawn up by Intermarine and also considering the results expected by the national fiscal consolidation underlying the Parent Company Immsi S.p.A., that Intermarine S.p.A. joins. The 1,202 thousand euros increase compared to the value recorded as of 31 December 2013 is due to the recognition of additional deferred taxes in 2014 relative to temporary differences which will cancel out in future years and to tax losses that will be offset by future taxable income. Deferred tax assets accrued by Is Molas S.p.A. totalled 12,770 thousand euros (11,274 thousand euros as of 31 December 2013) and refer to temporary differences recorded during 2014 and previous years, losses for the years from 2004 to 2014 in addition to the excess of interest payable and similar costs not deducted in previous years but that may be carried forward to subsequent years. As regards the measurements to define the deferred tax assets, the Group mainly took account of i) the tax regulations in the various countries in which it operates; ii) their impact in terms of timing differences and any tax benefits deriving from the use of prior tax losses in consideration of their falling due; iii) the estimated financial results for each individual company; iv) the economic and tax repercussions of the implementation of the reorganisations; and v) of the agreements and plans of national tax consolidation over a period of five years. In view of the above considerations and also for the sake of prudence, the tax benefits deriving from the losses carried forward and from temporary differences were not fully recognised. Gross deferred tax assets are as follows: In thousands of euros

Taxable income Fiscal effect Recorded Not recorded

Timing differences for reserve provisions 68,396 19,991 n/a n/a

Other timing differences 58,172 17,130 n/a n/a

Total reserves and other timing differences 126,568 37,121 35,716 1,405

Fiscal losses 332,458 94,810 82,172 12,638

Grand total as of 31 December 2014 459,026 131,931 117,888 14,043

Unrecognised deferred tax assets – amounting to 14,043 thousand euros – are entirely attributable to the Piaggio Group, in relation to prior losses and other temporary differences. For comparability, the following is the corresponding table as of 31 December 2013:


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Taxable income Fiscal effect Recorded Not recorded

Timing differences for reserve provisions 88,093 26,783 n/a n/a

Other timing differences 19,085 5,969 n/a n/a

Total reserves and other timing differences 107,178 32,752 27,457 5,295

Fiscal losses 325,503 93,770 72,018 21,752

Grand total as of 31 December 2013 432,680 126,522 99,475 27,047

- F8 - TRADE RECEIVABLES AND OTHER RECEIVABLES 253,040

- Non-current portion Trade receivables and other receivables included under non-current assets totalling 16,071 thousand euros against 15,858 thousand euros as of 31 December 2013 and are detailed below: In thousands of euros


Amounts due from associated companies 197 231 Other receivables 15,874 15,627 TOTAL 16,071 15,858

The receivables from associated companies fully comprise credits from Fondazione Piaggio. Among the other non-current receivables, there are mainly 10,103 thousand euros of prepaid expenses, 671 thousand euros of guarantee deposits, 61 thousand euros of amounts advanced to employees and other receivables of various kinds. These include in particular the receivable of 2,227 thousand euros recognised by Is Molas and referring to the “Le Ginestre” case. Within the item in question there are moreover trade receivables expiring over 12 months registered by Intermarine S.p.A. and to this date completely devalued for 1,203 thousand euros. - Current portion Trade receivables and other receivables included under current assets are as follows: In thousands of euros


Trade receivables 114,894 114,834 Receivable due from subsidiaries 2,575 2,546 Receivable due from associated companies 545 410 Receivable due from joint ventures 3,377 1,220 Other receivables 115,578 143,363 TOTAL 236,969 262,373

The Trade receivables item comprises amounts due from normal sales transactions, stated net of a bad debt reserve equal to 31,121 thousand euros (of which 1,203 thousand euros related to non-current receivables), which as of 31 December 2014 decreases compared to 31 December 2013 by 603 thousand euros. The following table shows the movements of the provision in question over the course of 2014:


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In thousands of euros Balance as of 31/12/2013 30,518 Increases on provisions 1,911 Decreases for applications (1,308) Balance as of 31/12/2014 31,121

It should also be remembered that the Piaggio Group transfers on a regular basis a large part of its trading receivables mainly with the pro-soluto and pro-solvendo clause [i.e., without and with recourse]: The Group has signed contracts with some of the most important Italian and foreign factoring companies as a move to optimise the monitoring and the management of its trade receivables, besides offering its customers an instrument for funding their own inventories, for factoring classified as without the substantial transfer of risks and benefits. In contrast, for non-recourse disposals, contracts were formalised aimed at the material transfer of risks and benefits. As of 31 December 2014, the “pro-soluto” sold trade receivables not due yet altogether amount to 69,693 thousand euros: on such receivables, the Piaggio Group received the consideration before the natural expiration of the credit for 69,632 thousand euros. As of 31 December 2014, the advances received – both from factoring firms and from banks – on pro-solvendo disposals of trade receivables total 20,744 thousand euros and are offset in the current liabilities. The balance of Receivables from subsidiaries, equal to 2,575 thousand euros, refers mainly to trade receivables from the subsidiary Rodriquez Cantieri Navali do Brasil Ltda. The balance of receivables due from associated companies refers instead to receivables due from Consorzio CTMI amounting to 545 thousand, while receivables due from joint ventures (equal to 3,377 thousand euros as of 31 December 2014) refer to receivables due from Zongshen Piaggio Foshan Motorcycle Co. Ltd.. Other receivables include advances to suppliers for 29,457 thousand euros, mainly recognised by the subsidiary Intermarine S.p.A., accrued income and deferred charges for a total of 6,351 thousand euros, advances to employees for 2,135 thousand euros, guarantee deposits for 294 thousand euros, receivables due from social security institutes for 132 thousand euros, receivables relating to hedging instruments for 696 thousand euros and other receivables of a various type. Finally the other receivables include the equivalent value of the works in progress to order net of the advance payments received, referable entirely to the subsidiary Intermarine S.p.A., whose composition is detailed as follows: In thousands of euros

Balance as of Increases Decreases Balance as of 31/12/2013 31/12/2014

Contract work in progress gross of advances 190,830 32,886 (24,457) 199,259 Contractual advances received from customers 117,795 144,390 Contract work in progress net of advances 73,035 54,869

Costs incurred 178,426 171,363 Margins recorded (net of losses) 12,404 27,896

- F9 - ASSETS INTENDED FOR DISPOSAL 24,727

The assets held for disposal are recorded by Intermarine S.p.A. for a net book value of around 24,727 thousand euros and they refer almost exclusively to the property of Pietra Ligure acquired at the public auction of the State in December 2007 for a total of 19.1 million euros and accounted in the buildings destined to be dismissed in relation to the contracts and obligations undersigned by the company. Reference is made to the Directors Report on Operations of the Immsi Group as of 31 December 2014 for an update on the situation regarding the progress of the project for the real estate complex at Pietra Ligure.


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The increase by 933 thousand euros compared to the 31 December 2013 figure is attributable to the capitalisation of the building project development costs incurred during 2014.

- F10 - INVENTORIES 306,021

Inventories are measured at the lower of cost and market value and total 306,021 thousand euros at the year end and comprise: In thousands of euros Balance as of 31/12/2014 Balance as of 31/12/2013

Cost Write-down Net Cost Write-down Net Consumables 35 0 35 27 0 27 Raw materials 115,666 (16,661) 99,005 101,114 (15,925) 85,189 Work in progress and semi-finished products 79,306 (1,102) 78,204 79,633 (1,102) 78,531 Finished products 152,810 (24,033) 128,777 137,694 (21,502) 116,192 TOTAL 347,817 (41,796) 306,021 318,468 (38,529) 279,939

The above write-downs were necessary for the presence of raw materials no longer usable in the production process and obsolete or slow-moving finished products and goods. As of 31 December 2014, the Piaggio Group recognises, net of write-downs, inventories for 232,398 thousand euros referred to components, accessories, 2-wheeler, 3-wheeler and 4-wheeler vehicles. Intermarine S.p.A. contributes 44,078 thousand euros, mainly raw materials and contract work in progress for prototypes, internal construction and repairs. Finally, Is Molas S.p.A. records 29,545 thousand euros of inventories at the year end relating to the hotel business, as well as work in progress and semi-finished products represented by land, volumes, costs for services and consultancy for the property development project relating to the allotment located in Is Molas - Cagliari.

- F11 - CASH AND CASH EQUIVALENTS 103,942 Cash and cash equivalents at the year end total 103,942 thousand euros against 74,285 thousand euros as of 31 December 2013, as detailed in the table below: In thousands of euros


Cheques 7 4 Cash and cash equivalents 115 103 Securities 5,934 9,159 Receivable due from banks within 90 days 97,886 65,019 TOTAL 103,942 74,285

The aggregate in question covers cash, current bank accounts, deposits refundable on demand and other short-term high-liquidity financial investments readily convertible into cash and subject to an insignificant risk of variation in value. The item Securities is related to deposit contracts made by the Indian subsidiary of the Piaggio Group in order to use the cash temporarily available in an effective way, while receivables from banks with a maturity of less than 90 days (ascribable to the Piaggio Group for 92,211 thousand euros) mainly refer to bank and postal deposits.


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- G - INFORMATION ON THE MAIN LIABILITIES ITEMS__________________ Amounts are stated in thousands of euros unless otherwise indicated.

- G1 - SHAREHOLDERS’ EQUITY 442,111

Shareholders’ equity as of 31 December 2014 stands at 442,111 thousand euros, of which 268,188 thousand euros being consolidated Group shareholders’ equity and 173,923 thousand euros referring to non-controlling interest capital and reserves. Share capital As of 31 December 2014, the share capital of Immsi S.p.A., fully subscribed and paid up, comprised 340,530,000 ordinary shares with no nominal value, for a total of 178,464,000.00 euros. As already stated, as of 31 December 2014, Immsi S.p.A. held no treasury shares. Each ordinary share entitles the holder to a proportionate part of distributable profits and of the shareholders’ equity resulting from any liquidation, as well as to unlimited voting rights. Legal reserve The legal reserve comprises reserves allocated following the distribution of profits of Immsi S.p.A. from the year 2000 to the year 2013, in accordance with the provisions of law and totals 6,989 thousand euros at the year end 2014. Other reserves This item totals 198,226 thousand euros. The share premium reserve includes the consideration of the shares underwritten following the increase in share capital of Immsi S.p.A. in 2005 and 2006 for an overall amount of 95,216 thousand euros. Other reserves also include the reserve generated from the Group’s transition to international accounting standards as of 1 January 2004, equal to 5,300 thousand euros, details of which are in the Report to the Financial Statements as of 31 December 2005, also available on the www.immsi.it website. The stock option reserve amounts to 6,742 thousand euros while the reserve allocated to the measurement of financial instruments is negative amounting to 1,669 thousand euros. Other changes primarily include the effects of redistributing reserves between the Group and non-controlling interest, due to changes in the consolidation portions of shareholders' equity of the Piaggio Group following the sale of shares of Piaggio & C S.p.A. by Piaggio & C. S.p.A.. The details of the item are shown in the table below:


Extraordinary

reserve

Share premium reserve / share capital increase

IAS transition reserve

Reserves as per

Ital.Law 413/91

Legal reserves

Translation reserves

Stock Option reserve

Reserve for termination

benefit discounting

Financial instrument

measurement reserve

Other changes

Total other

reserves

Balances as of 31 December 2013

7,103 95,216 5,300 4,602 1,153 (14,324) 6,742 (1,194) (1,896) 92,526 195,228

Other changes 1,745 1,745

Overall earnings for the period

4,160 (3,134) 227 1,253


7,103 95,216 5,300 4,602 1,153 (10,164) 6,742 (4,328) (1,669) 94,271 198,226

Retained earnings The earnings carried forward total 44,677 thousand euros negative and refer to cumulative Group earnings.


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Non-controlling interest capital and reserves As of 31 December 2014 the balance of capital and reserves attributable to non-controlling interest amounted to 173,923 thousand euros, up by 2,676 thousand euros compared to 31 December 2013. Such variation is mainly explainable in consideration:

of the portion of Net earnings for the period owing to non-controlling interest; of the change in the portion owing to the Parent Company Immsi S.p.A. in some of the main

subsidiary companies.

- G2 - FINANCIAL LIABILITIES 1,031,619

Financial liabilities as of 31 December 2014 amounted to 1,031,619 thousand euros: the portion recognised as non-current liabilities amounted to 591,136 thousand euros, compared to 587,761 as of 31 December 2013, while the portion recognised as current liabilities amounted to 440,483 thousand euros, registering an increase compared to 359,691 thousand euros as of 31 December 2013. Non-current financial liabilities also include the fair value measurement of financial derivatives used to hedge exchange and interest rate risks and the adjustment of relative items hedged - underwritten by the Piaggio Group – for a total of 17,922 thousand euros, up by 9,155 thousand euros compared to 31 December 2013. As already stated, net financial debt does not include financial assets and liabilities arising from the fair value measurement of financial derivatives used for hedging, the fair value adjustment of relative hedged items and related accruals. The following tables summarise the composition by type of the gross Financial debt:

- Non-current portion In thousands of euros


Bonds 288,369 195,318 Amounts due to banks 283,372 380,483 Amounts due under finance leases 211 0 Amounts due to other lenders 1,262 3,193 TOTAL 573,214 578,994

We point out that in the item Amounts due to banks and in the item Bonds there are financings treated from an accounting point of view according to the criterion of amortised cost. According to this criterion the nominal amount of the liability is decreased by the amount of the relative issuing and/or stipulation costs in addition to any costs linked to refinancing previous liabilities. Amortisation of such costs is determined according to the method of the actual interest rate, meaning the rate that discounts the future flow of passive interest and reimbursements of capital to the net accounting value of the financial liability. Furthermore, some financial liabilities ascribable to the Piaggio Group are entered at fair value with registration in the Income statement of the relative effects.


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- Current portion In thousands of euros


Amounts due to banks 383,225 294,815 Amounts due under finance leases 30 5,809 Amounts due to subsidiaries *) 55 109 Amounts due to other lenders 57,173 58,958 TOTAL 440,483 359,691

*) not consolidated on a global integration basis

The composition of the gross Financial debt is the following: In thousands of euros

Balance as of Balance as of Nominal value as of

Nominal value as of

31/12/2014 31/12/2013 31/12/2014 31/12/2013 Bonds 288,369 195,318 301,799 201,799 Amounts due to banks 666,597 675,298 669,288 677,411 Amounts due under finance leases 241 5,809 241 5,809 Amounts due to subsidiaries *) 55 109 55 109 Amounts due to other lenders 58,435 62,151 58,434 62,151 TOTAL 1,013,697 938,685 1,029,817 947,279

*) not consolidated on a global integration basis

The following prospectus shows the reimbursement plan for gross financial debt as of 31 December 2014 of the Group: In thousands of euros

Nominal value as

of

Portions falling

due within 12 months

Portions falling due

within 31/12/2016


within 31/12/2017


within 31/12/2018


within 31/12/2019

Portions falling

due beyond 31/12/2014

Bonds 301,799 0 0 9,669 9,669 10,360 272,101 Amounts due to banks 669,288 382,225 57,286 92,751 48,482 88,403 141 Amounts due under finance leases 241 30 33 35 37 106 0 Amounts due to subsidiaries *) 55 55 0 0 0 0 0 Amounts due to other lenders 58,434 57,172 312 314 317 319 0 TOTAL 1,029,817 439,482 57,631 102,769 58,505 99,188 272,242

*) not consolidated on a global integration basis The following table analyses the gross Financial debt by currency and interest rate: In thousands of euros

Balance as of Balance as of Nominal value as of

Interest rate as of

31/12/2013 31/12/2014 31/12/2014 31/12/2014 Euro 888,960 941,705 957,825 4.16% Vietnamese Dong 16,197 31,596 31,596 10.90% Japanese Yen 3,040 4,751 4,751 2.83% Indian Rupee 21,445 21,385 21,385 10.96% Indonesian Rupee 2,906 3,112 3,112 10.85% US Dollar 6,137 11,148 11,148 1.58% TOTAL 938,685 1,013,697 1,029,817 4.50%


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Amounts due to banks mainly include the following loans: Immsi S.p.A. a loan of 22,802 thousand euros granted by a pool of banks originally comprising the Banca

Popolare di Lodi, Efibanca and Cassa di Risparmio di Lucca Pisa Livorno (now merged into Banco Popolare) at a rate equal to the variable Euribor increased by a spread maturing in June 2019 and reimbursement in 18 constant half-yearly instalments beginning from 31 December 2010. At the same time as starting the financing, the Company stipulated a contract to hedge the variable rate with a fixed rate equal to 2.41% (plus spread) on 75% of the nominal value of the loan. The loan, guaranteed by a mortgage on the property situated in Via Abruzzi, 25 – Rome for 92 million euros and by a bonded securities deposit currently comprising 3,041,000 Piaggio shares, has two covenants (with conditions complied with at the verification date), calculated in relation to the ratio of Net financial debt/Shareholders' equity ratio of Immsi S.p.A. and in relation to the ratio of payment instalments/interest payable on the loan;

a revolving credit line granted by the bank Monte dei Paschi di Siena for a total nominal value of 30 million euros (fully used as of 31 December 2014). The line, maturing in April 2017 and with a benchmark rate equal to the variable Euribor increased by a spread, is guaranteed by a lien on 20 million Piaggio & C. S.p.A. shares and envisages meeting a covenant relative to the minimum value of Shareholders’ equity of the Immsi Group (complied with at the last verification date);

a Bullet – Multi Borrower loan disbursed by Intesa Sanpaolo for a total of 130 million, maturing in June 2015, with a benchmark rate equal to the variable Euribor increased by a spread, and disbursed up to the end of 2014 for 119 million euros, of which 70 million euros granted to Immsi S.p.A., 30 million euros granted to ISM Investimenti S.p.A. and 19 million euros granted to Intermarine S.p.A.; this loan is guaranteed by a lien on a total of 53.5 million Piaggio & C. S.p.A. shares, in addition to 4 million shares transferred to a custodian account;

a revolving credit line, disbursed up to the end of 2015 by Intesa Sanpaolo for 25 million euros, fully used as of 31 December 2014, with a benchmark rate equal to the 3 month Euribor increased by a spread. This line envisages a covenant (complied with at the last verification date) to be calculated in relation to the ratio Net financial position/Shareholders’ equity at an Immsi Group level;

a credit line granted by Intesa Sanpaolo for a nominal amount of 15 million euros (fully used as of 31 December 2014), and recognised in the financial statements at a value of 14,919 thousand euros based on the amortised cost principle. The line, expiring in February 2016 and having a rate of reference equal to the variable Euribor increased by a spread, is guaranteed by the lien on 10 million Piaggio & C. S.p.A. shares and envisages meeting a covenant regarding the ratio between Net financial position and Shareholders’ equity at Immsi Group level (complied with at the last verification date);

a revolving credit line granted by Unicredit for 25 million euros (of which 22 million euros used as of 31 December 2014), with a benchmark rate equal to the month Euribor increased by a spread and maturing in October 2015. This line is assisted by a deposit of overall 17 million Piaggio & C. S.p.A. shares, and envisages a covenant (complied with at the last verification date) to be calculated from the ratio between the total value of shares held by Immsi S.p.A. in Piaggio & C. S.p.A. and the Net financial debt of the Company;

a revolving credit line granted by Banco Popolare for 20 million euros (fully used as of 31 December 2014), guaranteed by 10.95 million Piaggio & C. S.p.A. shares, maturing in May 2015 and with a benchmark rate equal to the variable Euribor increased by a spread;

a loan granted by Banca Popolare dell’Emilia Romagna for nominal value of 15 million euros maturing on 31 March 2017 and with a benchmark rate equal to the three-month Euribor increased by a spread. The loan provides for six-monthly increasing repayments and is recognised on an amortised cost basis for a value of 11,414 thousand euros, of which 4 million


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maturing in 2015 and therefore recognised in the current portion. The issued guarantee is represented by the lien on 8.1 million Piaggio shares. This loan also envisages two covenants regarding the ratio between the net financial position/EBITDA and net financial position/Shareholders’ equity at an Immsi Group level (complied with at the last verification date);

a revolving credit line granted by the bank Banca Nazionale del Lavoro for a total of 10 million euros (fully used as of 31 December 2014). The line, maturing in April 2015 and with a benchmark rate equal to the variable Euribor increased by a spread, is guaranteed by a lien on 7 million Piaggio & C. S.p.A. shares and envisages meeting two covenants relative to the EBITDA/net borrowing costs ratio at an Immsi Group level and the net financial debt/shareholders' equity ratio of Immsi S.p.A.;

a securities loan contract between Immsi S.p.A. and Banca Akros, which - against a loan of 2,787,000 Unicredit shares, envisages a cash collateral from the bank of approximately 13.3 million euros represented by the market value of the share at the date of subscription net of a spread, which takes into account any downward fluctuations in the share. The contract, which expires on withdrawal, envisages a fee equal to 0.05% and interest payable equal to the EONIA increased by a spread, calculated on the cash collateral disbursed by Banca Akros.

Piaggio Group

a medium-term loan for a residual amount of 32,143 thousand euros from the European Investment Bank to finance Research & Development investments planned for the 2009-2012 period. The loan will fall due in February 2016 and has an initial amortisation quota of 14 six-monthly instalments to be repaid at a variable rate equal to the six-month Euribor plus a spread of 1.323%. The contractual terms envisage covenants. An Interest Rate Swap has been taken out on this loan to hedge the interest rate risk;

a medium-term loan for 54,545 thousand euros from the European Investment Bank to finance Research & Development investments planned for the 2013-2015 period. The loan will fall due in December 2019 and has an amortisation quota of 11 six-monthly instalments at a fixed rate of 2.723%. The contractual terms envisage loan covenants;

a syndicated loan of 113,677 thousand euros (nominal value of 116,000 thousand euros) undersigned in July 2014 following refinancing with a limited pool of banks of a revolving credit line of a nominal value of 200,000 thousand euros maturing in December 2015. This overall loan of 220,000 thousand euros comprises a four-year tranche of 154,000 thousand euros as a revolving credit line of which a nominal value of 50,000 thousand euros had been used as of 31 December 2014 and a tranche as a five-year loan with amortisation of 66,000 thousand euros which has been wholly disbursed. The contractual terms envisage loan covenants;

a medium-term loan for a total of 14,763 thousand USD, with 8,570 thousand euros granted by International Finance Corporation (a World Bank member) to the subsidiary Piaggio Vehicles Private Limited with interest accruing at a variable rate. The loan will fall due on 15 January 2018 and has an amortisation quota of six-monthly instalments as from January 2014. Contract terms provide for a guarantee from Piaggio & C. S.p.A. and compliance with some covenants. Cross currency swaps were taken out on the loan to hedge the exchange risk and interest rate risk;

a medium-term loan of 17,850 thousand USD, with 12,815 thousand euros granted by International Finance Corporation to the subsidiary Piaggio Vehicles Private Limited with interest accruing at a variable rate. The loan will fall due on 15 July 2019 and has an amortisation quota of six-monthly instalments from July 2015. Contract terms provide for a guarantee from Piaggio & C. S.p.A. and compliance with some covenants. Cross currency swaps were taken out on the loan to hedge the exchange risk and interest rate risk;

a medium-term loan of 17,476 thousand USD, with 14,220 thousand euros granted by International Finance Corporation to the subsidiary Piaggio Vietnam with interest accruing at a variable rate. The loan will fall due on 15 July 2018 and has an amortisation quota of


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six-monthly instalments from July 2014. Contract terms provide for a guarantee from Piaggio & C. S.p.A. and compliance with some covenants. Cross currency swaps were taken out on the loan to hedge the exchange risk and interest rate risk;

2,613 thousand euros of loans from various banks pursuant to Italian Law no. 346/88 on subsidised applied research;

a loan of 1,829 thousand euros from Banca Intesa granted pursuant to Italian Law no. 297/99 on subsidised applied research;

an eight-year loan of 600 thousand euros from ICCREA in December 2008 granted under Italian Law 100/90.

Intermarine S.p.A. loans disbursed by Banca Intesa for a total of 26.8 million euros to be repaid in correlation with

the residual proceeds from the contract with the Finnish Navy, guaranteed by a lien on shares of Piaggio & C S.p.A. held by Immsi S.p.A. and letters of guarantee;

loan for a nominal 15 million euros relative to an "Amortising Loan" line issued by Banca Intesa in November 2012, with a maturity of five years, two years of pre-amortisation and co-obligation of the parent Immsi S.p.A.: this line is assisted by a second mortgage on the warehouse of Sarzana and a second degree insurance assignment;

a revolving credit line from Banca Intesa equal to 18 million euros, fully used as of 31 December 2014 and guaranteed by a lien on Piaggio & C. S.p.A. shares held by Immsi S.p.A.;

residual financial exposure equal to 0.78 million euros with Banca Popolare di Lodi for the medium-/long-term loan of an original sum of 8 million euros, with seven annual repayments, the first of which expired in 2009. Following the flood event of 2011, the maturity of the loan - secured by a first mortgage on the buildings located in Sarzana - has been extended to March 2015. The loan - which is associated with a rate hedging contract that transforms the floating rate into fixed rate - accrues interest at the Euribor rate plus spread;

financial payables for advance transactions by Banca Carige for approximately 0.8 million euros: this line is assisted by a letter of patronage issued by Immsi S.p.A.;

financial payables for the loan granted by Banca Carige in March 2012 with reference to damage caused by flooding in October 2011 for a total of 114 thousand euros with monthly repayments, of which 80 thousand euros due after the year;

financial payables for Gaeta contract and invoice advances by Banca IFIS for 12,051 thousand euros. Contract advances are repaid on a pro rata basis when the customer is paid sums based on contract progress. The contract advance line is assisted by a letter of patronage issued by RCN Finanziaria and Immsi;

the use of current account overdrafts with various banks for a total amount of approximately 1.9 million euros.

Is Molas S.p.A. a variable rate loan granted by Monte dei Paschi di Siena to Is Molas S.p.A., valid until

withdrawal, usable for cash, for a total of 20 million euros equal to the actual debt for capital, interest and additional costs accrued and payable;

1st degree mortgage loan on the “Le Ginestre” real estate complex for a duration of 7 years, stipulated in November 2009 with Banca Popolare di Lodi for an amount equal to 5 million euros, which to date is outstanding for approximately 3.1 million euros; the terms of the mortgage require 2 years of pre-amortisation at a three-month Euribor rate increased by a spread.

The item Bonds for 288,369 thousand euros (nominal value equal to 301,799 thousand euros) refers to:


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51,523 thousand euros (nominal value of 51,799 thousand euros) relative to a private debenture loan (US Private Placement) issued on 25 July 2011 for 75,000 thousand USD wholly subscribed by an American institutional investor, payable in 5 annual portions from July 2017, with a semi-annual coupon with fixed annual nominal rate of 6.50%. As of 31 December 2014 the fair value measurement of the debenture loan was equal to 64,075 thousand euros (the fair value is determined based on IFRS relative to fair value hedging). A Cross Currency Swap has been taken out on this debenture loan to hedge the exchange risk and interest rate risk.

236,846 thousand euros (nominal value of 250,000 thousand euros) refers to the liability management operation completed during the second quarter of 2014. In particular, this operation was for the refinancing of a debenture loan issued on 1 December 2009 for a total of 150,000 thousand euros and maturing on 1 December 2016. Favourable market conditions resulted in improved economic conditions, enabling optimised borrowing costs, a longer average life and greater use of capital.

In particular, the liability management operation concerned the following stages:

1. the launch on 7 April 2014, of an exchange offer for bonds relative to the existing debenture loan with new issue bonds. 72% of bondholders took up the offer, for a total value of 108,027 thousand euros;

2. the issue on 24 April 2014 of a High Yield debenture loan (with the same characteristics as the bond issued in 2009), for a total of 250,000 thousand euros, maturing on 30 April 2021 and six-monthly coupon with nominal annual rate fixed at 4.625% (as mentioned, the issue for 108,027 thousand euros was on an exchange basis, while the remaining portion concerned inflows of new liquidity for the Group). Standard & Poor’s and Moody’s assigned a BB- rating with a negative outlook and a Ba3 rating with a stable outlook respectively;

3. given the positive outcome of the operation, in May 2014, the Group exercised the call option of the debenture loan issued in 2009 in order to repay 41,973 thousand euros in advance to bondholders that had not taken part in the exchange. The operation resulted in the premium for the repurchase of securities in circulation, amounting to 1,469 thousand euros, being recognised under non-recurrent borrowing costs in the income statement. The income statement was also affected by the adjustment of the amortised cost (equal to an additional 1,478 thousand euros) due to the settlement of financial liabilities, as provided for by IAS 39 AG 62.

The company may pay back the amount of the High Yield debenture loan issued on 24 April 2014, early, in full or in part, under the conditions indicated in the indenture. The value of prepayment options was not deducted from the original contract, as these are considered as being closely related to the host instrument, as provided for by IAS 39 AG30 g). The items Medium-/long-term bank debt and Bonds include loans which, in accounting terms, have been recognised on an amortised cost basis (revolving loan, high-yield debenture loan and private debenture loan). According to this criterion, the nominal amount of the liability is decreased by the amount of relative costs of issue and/or stipulation, in addition to any costs relating to refinancing of previous liabilities. Amortisation of such costs is determined according to the method of the actual interest rate, meaning the rate that discounts the future flow of passive interest and reimbursements of capital to the net accounting value of the financial liability. In addition, some liabilities were recognised at fair value, with relative effects recognised in the income statement. Payables for finance leases refer to a lease granted for 241 thousand euros by VFS Servizi Finanziari for the use of vehicles.

Payables to other lenders total 58,435 thousand euros, of which 57,173 thousand euros due after the year. They are detailed below:


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subsidised loans for a total of 2,387 thousand euros provided by the Italian Ministry of Economic Development and Italian Ministry of Education, University and Research using regulations to encourage exports and investments in research and development (non-current portion of 1,262 thousand euros).

two shareholder loans of 6,000 and 8,290 thousand euros respectively granted to RCN Finanziaria S.p.A. by Intesa Sanpaolo (shareholder of the Company), convertible into shares of the beneficiary, maturing in April 2015;

shareholder loans for 21,014 thousand euros with a duration of 10 years, maturing in December 2018, granted by IMI Investimenti S.p.A. (shareholder of the Company) to ISM Investimenti S.p.A.;

financial advances from factoring companies and banks for credit sold with recourse relative to trade receivables amounting to 20,744 thousand euros and entirely referred to the Piaggio Group.

- G3 - TRADE PAYABLES AND OTHER PAYABLES 571,714

Trade payables to other lenders total 571,714 thousand euros, of which 566,122 thousand euros due after the year. Trade payables and other current payables are detailed below: In thousands of euros


Trade payables 492,578 481,855 Amounts due to associated companies 14,910 10,628 Amounts due to controlling companies 23 24 Other payables 58,611 56,746 TOTAL 566,122 549,253

With particular reference to the Piaggio Group, it should be noted how – to facilitate credit conditions for its suppliers – the group has used factoring agreements since 2012, mainly supply chain financing and reverse factoring agreements. These operations did not change the primary obligation, nor substantially changed payment terms, so their nature is the same and they are still classified as trade liabilities. As of 31 December 2014, the value of trade payables covered by reverse factoring or supply chain financing agreements was equal to 168,431 thousand euros (123,108 thousand euros as of 31 December 2013). Payables to associated companies as of 31 December 2014, equal to 14,910 thousand euros, mainly refer to purchases made by Piaggio Foshan Motorcycles of the Piaggio Group. The “Other current payables” item is detailed below:



Amounts due to employees 19,165 18,011 Liabilities connected to hedging instruments 506 1,006 Advances from customers 822 834 Amounts due to partners and shareholders 2 2 Amounts due for guarantee deposits 36 34 Amounts due to company boards 410 482 Amounts due to social security institutions 10,022 9,992 Other amounts due to third parties 2,500 1,687 Other amounts due to subsidiaries 39 26 Accrued expenses 7,323 8,803 Deferred income 5,195 5,635 Other payables 10,833 10,176 TOTAL 58,611 56,746


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Amounts due to employees include holidays accrued and not taken and other remuneration to pay, as of 31 December 2014, while amounts to social security institutes basically refer to amounts owing for items payable by companies and employees relative to salaries and wages as well as sums accrued and not paid.

- G4 - RESERVES FOR SEVERANCE INDEMNITY AND SIMILAR OBLIGATIONS 60,743

The reserve for pension and similar obligations as of 31 December 2014 amounted to 60,743 thousand euros, up by 6,419 thousand euros compared to the figure as of 31 December 2013. Below is the breakdown of its composition and movements: In thousands of euros

Balance as of

Service cost

Actuarial cost

Interest cost

Applications and other

Balance as of

31/12/2013 movements 31/12/2014 Termination benefit reserves 53,242 9,363 6,103 112 (8,935) 59,885 Other reserves 1,082 388 0 0 (612) 858 TOTAL 54,324 9,751 6,103 112 (9,547) 60,743

The item Other funds is mainly attributable to the Piaggio Group and includes i) funds for personnel set aside by foreign companies of the Group; and ii) the supplementary indemnity fund for customers, that represents the indemnities owing to the agents of the Piaggio Group in case of the agency contract winding up due to events not ascribable to them. The uses refer to the liquidation of indemnities already set aside in preceding years while the allocations correspond to the indemnities matured in the period. The item Provision for termination benefits comprises termination benefits for employees of Italian companies belonging to the Immsi Group and includes post-employment benefits identified as defined benefit plans. The economic / technical assumptions used to discount the value by the companies of the Immsi Group operating in Italy are described below:

Technical annual discount rate 1.25-1.86%;

Annual rate of inflation 0.60% for 2015; 1.20% for 2016; 1.50% for 2017 and 2018; 2.00% from 2019 onwards;

Annual rate of increase in termination benefits 1.95% for 2015;

2.40% for 2016; 2.625% for 2017 and 2018; 3.00% from 2019 onwards.

As regards the discount rate, the iBoxx Corporates AA rating (Piaggio Group) and iBoxx Corporates A rating (other Group companies) with a duration from 7 to 10+ were used for the evaluation. In 2013, the Piaggio Group had used the iBoxx Corporates A rating, like other Group companies. The Group, considering this change as not significant, recognised the effect of the change in the accounting estimate in a forward-looking manner. In fact, as referred to in the Notes to the Consolidated Financial Statements as of 31 December 2013, by using the iBoxx Corporates


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AA rating with a 10+ duration, the carrying amount of the provision and actuarial losses as of 31 December 2013 would have been higher by 948 thousand euros. The table below shows the effects, in absolute terms, as of 31 December 2014, which would have occurred following changes in reasonably possible actuarial assumptions: In thousands of euros

Assumprions taken into consideration Termination benefit fund

Turnover rate +2% 59,020

Turnover rate -2% 60,749

Inflation rate + 0.25% 60,694

Inflation rate - 0.25% 58,880

Discount rate + 0.50% 56,965

Discount rate - 0.50% 62,827

The average duration of the bond ranges from 7 to 31 years, while future payments estimated in the Group are equal to: In thousands of euros

Year Future payments

1 3,249

2 3,253

3 3,386

4 5,402

5 1,572

Being an actuarial valuation, the results depend on the technical bases adopted such as - among others - the interest rate, the inflation rate and the expected turnover. A variation of these parameters could lead to a significant change in the liability estimated to date: similar impacts may be caused by unexpected changes in other technical bases. The German and Indonesian subsidiaries of the Piaggio Group have provisions for employees identified as defined benefit plans. As of 31 December 2014, these provisions amounted to 154 thousand euros.

- G5 - OTHER LONG-TERM RESERVES 30,008

The balance of other long-term reserves, including the portion due within 12 months, totalled 30,008 thousand euros at the end of December 2014, registering a decrease of 6,879 thousand euros compared to 31 December 2013. The other reserves recognised in the financial statements are detailed below: In thousands of euros

Balance

as of Provisions Applications Other

Balance as of

Of which

current 31/12/2013 movements 31/12/2014 portion

Product warranty reserve 14,851 11,473 (12,185) 275 14,414 9,932 Reserve for risks on equity investments

3,048 408 (128) 0 3,328 3,092

Contractual risks reserve 4,292 6 (177) 0 4,121 216 Other provisions for risks and charges 14,696 680 (2,181) (5,050) 8,145 5,521 TOTAL 36,887 12,567 (14,671) (4,775) 30,008 18,761


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The product warranty provision refers to allocations recognised as of 31 December 2014 by the Piaggio Group for 11,782 thousand euros and by Intermarine S.p.A. for 2,632 thousand euros for technical warranty operations on products covered by warranties, which are expected to be carried out in the contractual warranty period. As regards – in particular – the forecasts made by the Piaggio Group, this period varies according to the type of goods sold and the market, and is also determined by the customer take-up to commit to planned maintenance. With reference to Intermarine S.p.A., it should be noticed that the company allocates this reserve for maintenance under guarantee to be carried out in the future years on Marine vessels under construction delivered during the year and/or in previous years, assessed on the basis of the estimate of costs incurred in the past for similar vessels. As regards other main provisions recognised, the provision for risks on investments refers to 3,064 thousand euros for the hedging of negative shareholders' equity of the investee Rodriquez Cantieri Navali do Brasil Ltda. The provision for contractual risks refers mainly to costs that could arise from the negotiation of an ongoing supply contract in the Piaggio Group, while other provisions for risks and charges include the provision for legal risks allocated by the Piaggio Group and amounting to 2,346 thousand euros. The provision for tax risks, established by the Piaggio Group in 2013 (classified under other provisions for risks and charges) for a value of 5,130 euros, concerning estimated costs following an inspection by the Italian Revenue Agency for 2009, 2010 and 2011, which terminated with the issue of a report of verification (PVC) mainly concerning transfer pricing, was reclassified under tax payables, following the start of the verification with acceptance procedure which ended with the signing of acceptance documents in March 2014.

- G6 - DEFERRED TAX LIABILITIES 24,769

The “Deferred tax liabilities” item refers to tax payables provisioned by the individual companies on the basis of applicable national laws. The balance was offset by 1,823 thousand euros by deferred tax assets, of a uniform maturity and type. The reduction in the item of 3,693 thousand euros, compared to the figure recognised as of 31 December 2013 mainly refers to Intermarine (for 2,213 thousand euros) and to the reversal in the year of deferrals relative to receivables for interest on arrears (which comprise taxable income according to the collection criterion, rather than the principle of accrual), collected in 2014. Deferred tax assets are recognised by the Piaggio Group for 5,123 thousand euros, by the Parent Company Immsi S.p.A. for 19,623 thousand euros (mainly concerning the fair value measurement of the property investment in Rome) and by Intermarine S.p.A. for 23 thousand euros.

- G7 - CURRENT TAXATION 15,775

The item Current taxes - which includes tax payables recognised in the financial statements of individual consolidated companies, allocated as regards taxes based on applicable national legislation - increased by 1,721 thousand euros compared to the end of 2013, and are broken down as follows: In thousands of euros


Amounts due for income tax 8,379 2,961


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VAT payables 970 2,283 Amounts due for withholding tax 5,949 7,516 Amounts due for local taxes 40 30 Other payables 437 1,264 TOTAL 15,775 14,054

VAT payables refer exclusively to the Piaggio Group, while amounts due for withholding tax refer mainly to withholdings on salaries, on termination payments and self-employed income. H – INFORMATION ON THE MAIN INCOME STATEMENT ITEMS___________ Amounts are stated in thousands of euros unless otherwise indicated. Before analysing the individual item, it is pointed out that the general information on costs and revenues is contained in the Report on operations, in accordance with Article 2428 of the Italian Civil Code.

- H1 - NET REVENUES 1,274,577

Revenues from sales and services as of 31 December 2014 amounted to 1,274,577 thousand euros, up by 1.3% (+16,833 thousand euros) compared to the same period of the previous year. The increase is attributable in particular to the marine sector (+16,357 thousand euros, +40.8%) and marginally to the industrial sector (+737 thousand euros, +0.1%) net of the negative contribution from the property and holding sector (-261 thousand euros, -5.1%). This item is stated net of premiums given to the customers of the Piaggio Group (dealer) and it does not include transport costs recharged to customers and the recovery of advertising costs invoiced, which are shown under other operating income. Moreover, revenues do not include recharges for condominium fees, offset with the related costs incurred by the Parent Company Immsi S.p.A.. Below is a division of net revenues by business sectors and by geographical area of destination, that is, referring to the nationality of the customer: By business sector

Year 2014

Year 2013 In thousands of euros

Amount % Amount %

Property and holding sector 4,819 0.4% 5,080 0.4%

Industrial sector (Piaggio Group) 1,213,272 95.2% 1,212,535 96.4% of which Two-Wheeler business 841,000 66.0% 852,632 67.8% of which Commercial Vehicle business 372,272 29.2% 359,903 28.6%

Shipyard sector (Intermarine Group) 56,486 4.4% 40,129 3.2%

TOTAL 1,274,577 100.0% 1,257,744 100.0%

By geographical area Year

2014 Year 2013 In thousands of euros

Amount % Amount %

Italy 203,064 15.9% 208,337 16.6%

Other European countries 479,743 37.6% 451,069 35.9%

Rest of the World 591,770 46.4% 598,338 47.6%


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TOTAL 1,274,577 100.0% 1,257,744 100.0%

With particular reference to the Piaggio Group, the trend of net sales revenues was basically in line with the previous year, with an increase in turnover from commercial vehicles that offset the decrease in turnover from the two-wheeler segment. The increase in revenues from the marine sector was instead due to the production start-up of a major new contract in the defence sector. - H2 - COSTS FOR MATERIALS 728,406

Costs for materials totalled 728,406 thousand euros, compared to 732,477 thousand euros for the previous year. In particular, the percentage accounting for net revenues decreased, from 58.2% in 2013 to 57.2% in the current period, mainly due to the lower impact of purchases of scooters from the Chinese subsidiary Zongshen Piaggio Foshan of the Piaggio Group, which are sold on European and Asian markets and whose value in 2014 amounted to 20,674 thousand euros (23,143 thousand euros in 2013). The item in question does not include costs recharged to customers and tenants, for an equal amount, and costs related to assets held for disposal, which are recognised separately in a specific item in the Income Statement. The table below details the contents of the item: In thousands of euros

Year Year 2014 2013

Change in inventories of finished products, work in progress and semi-finished products (8,224) 5,334 Change in capitalised piecework (1,492) (824) Purchase of raw materials and consumables 750,034 726,190 Change in raw materials and consumables (11,912) 1,777 TOTAL 728,406 732,477

- H3 - COSTS FOR SERVICES AND THE USE OF THIRD PARTY ASSETS

240,775

Costs for services and leases and rentals total 240,775 thousand euros and are detailed in the table below: In thousands of euros

Year Year 2014 2013

Transport costs 33,729 34,201 Product warranty costs 10,024 10,485 Advertising and promotion 23,561 22,675 Work performed by third parties 24,784 22,552 External maintenance and cleaning costs 8,936 8,240 Personnel costs 16,576 15,164 Technical, legal, tax, administrative consultancy, etc. 28,697 27,324 Sundry commercial expenses 10,647 9,232 Energy, telephone, postage costs, etc. 19,599 21,249 Services provided 9,281 8,084 Insurance 5,141 4,982 Cost of company boards 4,647 4,696 Sales commissions 1,266 2,473 Part-time staff and staff of other companies 2,724 707 Other costs 25,268 20,971 TOTAL COSTS FOR SERVICES 224,880 213,035

Rental instalments of business property 6,365 8,072 Other instalments 9,530 9,300 TOTAL COSTS FOR USE OF THIRD PARTY ASSETS 15,895 17,372


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TOTAL COSTS FOR SERVICES AND USE OF THIRD PARTY ASSETS 240,775 230,407

For greater clarity and an adequate comparison of information under the item Costs for services, leases and rentals in the Consolidated Financial Statements as of 31 December 2013, some changes have been made to this item, adding further details and consequently reclassifying information presented for comparative purposes. The Group does not consider these changes, when compared to 2013 figures, as significant. The increase of 10,368 thousand euros (+4.5%) in the item was due to higher costs for services (+11,845 thousand euros, +5.6%), that was only partly offset by the reduction in costs for leases and rentals (-1,477 thousand euros, -8.5%). The increase in costs for services was attributable in particular to higher expenses, partly for advisory fees and partly for costs incurred in the year for quality incidents relative to the Piaggio Group; the number of temporary workers used by the Piaggio Group and Intermarine went up during the year. The item under review includes Related Party Transactions for 984 thousand euros, which are detailed in a paragraph contained within this Report.

- H4 - PERSONNEL COSTS 229,684

Personnel costs comprise the following: In thousands of euros

Year Year 2014 2013

Salaries and wages 167,528 163,846 Social security contributions 46,896 45,235 Termination benefits 9,363 9,291 Pension and similar obligations 388 441 Other costs 5,509 11,724 TOTAL 229,684 230,537

The table below shows the average number of employees by category. For more details on personnel, refer to the specific paragraph in the Report on operations:

Year Year 2014 2013

Senior managers 111 111 Middle managers and white collars 2,868 2,916 Manual workers 5,207 5,533 TOTAL 8,186 8,560

Employee costs decreased in absolute terms by 853 thousand euros compared to figures for the previous year (-0.4%). This reduction is mainly attributable to Intermarine (-582 thousand euros) and to company streamlining and cost cutting measures. In 2014, the Piaggio Group also reduced employee numbers, due mainly to restructuring, streamlining and organisational cutbacks in the EMEA area. As of 31 December 2014, Piaggio Group employees totalled 7,510, down by 178 (-2.3%) compared to 31 December 2013. the reduction in employee numbers led to a slight decrease in overall employee costs for the Piaggio Group, which were equal to 143 thousand euros. Other employee costs mainly refer to costs concerning mobility plans adopted by the Piaggio Group. In 2014, these costs, equal to 5,107 thousand euros, mainly concerned the production sites at Pontedera and Noale, while in 2013, 11,439 thousand euros had been recognised for plans also


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concerning Martorelles. The average number of employees was affected by seasonal workers in the summer months (with fixed-term contracts and fixed-term service contracts) which the Group uses to deal with typical peaks in demand in the summer months. As required by international accounting standards and the recognition of stock options, no costs for stock options were recognised under employee costs, with no stock options in either 2014 or 2013. As previously indicated in the section on consolidation principles, the cost for fees, corresponding to the present value of options which Piaggio & C. S.p.A. determined applying the Black-Scholes valuation model using average historical fluctuations of Company shares and the average interest rate on loans with the same duration as the contract validity, is recognised under employee costs on a straight-line basis for the period between the allocation and maturity date, with the counter entry directly recognised as shareholders' equity. In accordance with CONSOB regulations, the following table shows the options allocated to directors, general managers and senior managers with strategic responsibilities of the Piaggio Group:

Options held at the beginning of the period

Options held at the end of the period

Office

N°. of options Average exercise

price

Average maturity N°. of options Average exercise price

Average maturity

Allocation 18 December

2009

Finance General Manager

250,000 1.826 18/12/2014 - - -

- H5 - DEPRECIATION OF PROPERTY, PLANT AND EQUIPMENT 43,128

Depreciation recognised as of 31 December 2014 for plant, property and equipment is listed below, with depreciation rates indicated in the section on accounting standards adopted by the Group: In thousands of euros

Year Year 2014 2013

Depreciation of property 5,477 5,277 Depreciation of plant and machinery 20,024 18,477 Depreciation of industrial and commercial equipment 15,209 14,376 Depreciation of assets to be given free of charge 56 59 Depreciation of other assets 2,362 2,185 DEPRECIATION OF PROPERTY, PLANT AND EQUIPMENT 43,128 40,374

- H6 - AMORTISATIONS OF FINITE LIFE INTANGIBLE ASSETS 47,990

Amortisation of intangible assets with a finite life recognised in 2014 totalled 47,990 thousand euros, and is broken down as follows: In thousands of euros

Year Year 2014 2013

Amortisation of development costs 26,780 23,755 Amortisation of concessions, patents, industrial and similar rights 15,500 15,056 Amortisation of trademarks and licences 4,828 4,828 Amortisation of software 25 10 Amortisation of other intangible assets with a finite life 857 1,202 AMORTISATION OF INTANGIBLE ASSETS 47,990 44,851


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As set out in more detail in the paragraph on intangible assets, as from 1 January 2004, goodwill is no longer amortised, but tested annually for impairment. for further details, readers are referred to Explanatory and Additional Note F1 – Intangible Assets. Please note that among the amortisation of intangible assets do not include impairments of goodwill either during 2014 or in the preceding year, as – on the basis of the tests carried out – no need arose for any write-downs as the goodwill was deemed to be recoverable through future cash flows relating to the cash-generating units to which such goodwill has been allocated.

- H7 - OTHER OPERATING INCOME 101,282

The “Other operating income” item comprises: In thousands of euros

Year Year 2014 2013

Gains on disposal of plant, property and equipment 44 548 Sponsorships 2,845 3,082 Grants 3,454 4,967 Recovery of sundry costs 30,556 34,302 Licence rights 3,072 2,104 Sale of materials and sundry equipment 1,415 1,140 Insurance settlements 4,985 6,257 Increases for capitalised internal construction 39,103 32,225 Income from the fair value revaluation of investment property 4,615 0 Active instalments 650 531 Other operating income 10,543 12,988 TOTAL 101,282 98,144

The increase in the item is mainly due to higher increases for capitalised internal construction relative to the Piaggio Group and to income of 4,615 thousand euros arising from the fair value revaluation of the Martorelles site, whose value increased following a change in use of the entire site, approved by the local authorities, that will enable it to be used in the future also for commercial purposes. The operating grants relate mainly to the Piaggio Group and mainly refer to government and EU funding for research projects. The grants are recognised in profit or loss, with reference to the amortisation and depreciation of capitalised costs for which the grants were received. The same item also includes contributions to exports received by the Indian subsidiary of the Piaggio Group. “Recovery of sundry costs” (less the amount in reduction of costs incurred) are related to transport costs recharged to customers, the charges for which are classified under “Costs for services and use of third party assets”. The item under review includes Related Party Transactions for 2.385 thousand euros, which are detailed in a paragraph contained within this Report.

- H8 - OTHER OPERATING COSTS 28,251

The item Other operating costs as of 31 December 2014 amounted to 28,251 thousand euros and is broken down as follows: In thousands of euros

Year Year 2014 2013

Capital losses on disposal of plant, property and equipment 81 384 Taxation (not on the income) 5,235 4,974 Impairment losses of plant, property and equipment 291 425 Impairment losses of intangible assets 0 707


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Provisions for product warranty 11,473 10,126 Provisions for future and other risks 1,094 9,931 Write-down of trade receivables (including provisions to bad debt reserve) 2,478 3,926 Other operating costs 7,599 11,909 TOTAL 28,251 42,382

Overall, the item Other operating costs recorded a decrease of 14,131 thousand euros (-33.3%) compared to the previous year, mainly due to the decrease in the items Provisions for future risks and Impairment losses of trade receivables. The value of Provisions for future risks and other risks was particularly high in 2013, above all as regards the marine sector, in relation to which provisions of 6,048 thousand euros were allocated for the Oman contract, that was completed in 2014, and provisions of 2,960 thousand euros were allocated for other contracts.

- H9 - GAIN / LOSS ON EQUITY INVESTMENTS (113)

The item recorded a negative balance as of 31 December 2014 of 113 thousand euros and mainly refers to the equity measurement of the investment held by the Piaggio Group in the joint venture Zongshen Piaggio Foshan Motorcycle Co. Ltd..

-H10 - FINANCIAL INCOME 14,680

Financial income recognised by the Group in 2014 is detailed below: In thousands of euros

Year Year 2014 2013

Interest receivable 915 3,433 Exchange gains 12,737 11,143 Income from fair value hedging and interest rates 730 1,148 Dividends 5 154 Other income 293 993 TOTAL 14,680 16,871

During 2014, financial income was lower by 2,191 thousand euros compared to the figure recorded for the previous year: this decrease is mainly related to lower interest receivable recognised by the Group compared to figures for the previous year. The increase in exchange gains, recorded above all by the Piaggio Group, was offset during the year by the increase in exchange losses recognised under the item Borrowing costs.

- H11 - BORROWING COSTS 140,957

Borrowing costs as of 31 December 2014 are broken down as follows: In thousands of euros

Year Year 2014 2013

Interest payable on bank loans 28,310 25,218 Interest payable on loans from third parties 7,559 7,511 Interest payable on debenture loans 18,548 14,381 Other interest payable 2,768 2,246 Commissions due 2,647 2,135 Charges for impairment of negotiable securities 64,350 14,012 Exchange losses 13,682 11,432 Costs from fair value hedging and interest rates 680 1,608 Financial component relating to pension funds and termination benefit

1,432 11

Other charges 981 1,277 TOTAL 140,957 79,831


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In 2014, the item Borrowing costs was considerably affected by the recognition by the Parent Company Immsi S.p.A. of an impairment loss equal to 64.35 million euros relative to the investment in Alitalia – Compagnia Aerea Italiana S.p.A.: for details, reference is made to the note “F5 – Other financial assets”. This impairment follows on from previous impairments of the same investment recorded in 2013 for 14,012 thousand euros and in 2012 for 36,288 thousand euros. Net of these items, borrowing costs as of 31 December 2014 would have recorded an increase of 10,788 thousand euros, mainly due to:

non-recurrent costs of 3,552 thousand euros relating to the issue of a new debenture loan and the refinancing of a revolving credit line by the Piaggio Group;

a lower capitalisation of borrowing costs, in compliance with IAS 23, for 1,977 thousand euros, with reference only to the Piaggio Group;

an increase in interest due to the increase in average debt of the Group. Lastly, exchange losses went up, mainly recorded by the Piaggio Group, and were partially offset by the increase in exchange gains, recognised under the item Financial income.

- H12 - TAXATION 2,579

Taxation on the income of companies consolidated on a line-by-line basis recognised in the Financial Statements as of 31 December 2014 amounted to 2,579 thousand euros, and is broken down as follows: In thousands of euros

Year Year 2014 2013

Current taxation 8,278 32,200 Deferred tax liabilities (5,699) (8,354) TOTAL 2,579 23,846

Taxes for the period decreased by 21,267 thousand euros compared to 31 December 2013, when the value was considerably affected by 24,594 thousand euros of a non-recurrent cost recognised by the Piaggio Group following the inspection by the Italian Revenue Agency for 2009, 2010 and 2011, which terminated with the issue of report of verification (PVC) mainly concerning transfer pricing. The company, after having explained the correctness of its actions to the Italian Revenue Agency, decided to take advantage of litigation deflationary measures, avoiding the onset of tax litigation, and has therefore settled the PVCs, significantly reducing initial requests from the inspectors. Taxes as of 31 December 2014 included 977 thousand euros relative to the tax component related to non-recurrent costs incurred by the Piaggio Group for the issue of the new debenture loan and the refinancing of a revolving credit line. In view of the high non-recurrent cost recognised in 2013 and of the impairment recognised by the Parent Company Immsi S.p.A. for the investment held in Alitalia – Compagnia Aerea Italiana S.p.A., the calculation of the average consolidated tax rate in the two years compared, is not considered as significant. The Parent Company Immsi S.p.A., Piaggio & C. S.p.A., Intermarine S.p.A., Apuliae S.p.A., RCN Finanziaria S.p.A., ISM Investimenti S.p.A., Pietra S.r.l. and Aprilia Racing S.r.l. are party to the National Consolidated Tax Convention, and were therefore able to recognise overall deferred tax assets for 2014 of 7.4 million euros, in the view of results forecast for the Immsi Group. Below is a reconciliation between the theoretical tax burden and the actual tax burden:


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TOTAL

Profit before tax -68,765 Theoretical rate (27.5%) Theoretical income tax -18,910

Non-recurrent charges -977 Effect arising from the changes on the profit before tax and from deferred tax liabilities 9,474 Tax effect arising from taxes on income produced abroad 9,219 Other differences -1,991 Tax on dividend distribution 2,104

Income tax recognised in the financial statements (Italian Tax on Corporate Income) -1,081

Regional Tax on Productive Activities 3,660

Income tax recognised in the financial statements 2,579

The impact arising from the regional production tax rate was determined separately, as this tax is not calculated on the basis of profit before tax.

- H13 - GAIN/LOSS ON THE DISPOSAL OF ASSETS 0

At the balance sheet date there are no gains or losses from assets held for sale or disposal, as well as for the previous year.

- H14 - EARNINGS FOR THE PERIOD (70,814)

As of 31 December 2014, the Immsi Group posted a loss for the period of 70,814 thousand euros, after attributing a loss of 530 thousand euros to non-controlling interest.


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- I - COMMITMENTS, RISKS AND GUARANTEES_______________________ The main guarantees provided by lending institutions on behalf of Piaggio & C. S.p.A in favour of third parties are:

Type In thousands of euros

Guarantee of BCC-Fornacette issued in favour of the Livorno Customs Authority for Piaggio goods handling in the Port of Livorno 200

A guarantee of BCC-Fornacette issued to Pisa Customs Authorities for handling Piaggio goods at the Pisana docks and at Livorno Port 200

Guarantee of BCC-Fornacette issued for Piaggio & C. S.p.A. in favour of Poste Italiane – Rome to guarantee contract obligations for the supply of vehicles 1,321

Guarantee of Banco di Brescia issued in favour of the Municipality of Scorzè, to guarantee the urbanisation and construction of the plant in Scorzè 166

Guarantee of Banca Intesa Sanpaolo issued to the Ministry of the Interior of Algeria, to guarantee contract obligations for the supply of vehicles 140

Guarantee of Banca Intesa Sanpaolo issued to the Ministry of the Defence National Algeria, to guarantee contract obligations for the supply of vehicles 158

A guarantee of Monte dei Paschi di Siena issued to Chen Shin Rubber for 650,000 euros for an ongoing supply agreement 650

Guarantee of the Banca Nazionale del Lavoro issued to China Shipping Containers Lines for USD 122,000 for a supply agreement

100

The main guarantees given to third parties recorded by Intermarine are detailed below: Entity In thousands of euros

Defence Ministry - Rome 64,642

Finnish Naval Headquarters 21,529

Selex ES 15,808

Guardia di Finanza General Command 7,461

MIUR – Dipartimento URST 3,631

Sultanate of Oman 3,130

Como S.r.l. 2,700

Guarantees to suppliers 698

Ministry of Transport 443

State Property Office 288

Italian Navy Arsenal – La Spezia 65

Various minor items 569

Guarantees to third parties mainly refer to guarantees issued for contracts ongoing with the following customers:

the Italian Ministry of Defence, for 64,642 thousand euros, referred to the performance

bond and to guarantees issued for payments received as an advance on the Gaeta minesweeper modernisation contract, signed in 2009;

the Finnish Navy, for 21,529 thousand euros, referred to the supply contract for 3 minesweepers, of which i) 12,240 thousand euros for a contract guarantee issued by the


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parent company RCN Finanziaria S.p.A.; and ii) the remaining portion referred to guarantees for payments received as advances issued by SACE with Immsi S.p.A. as joint and several guarantor (as described below);

Selex Es, for 15,808 thousand euros referred to the performance bond and to guarantees on advances on the contract to build a minesweeper;

Comando Generale Guardia di Finanza, for 7,461 thousand euros, referred to guarantees

on contracts;

Oman, for 3,130 thousand euros, referred to guarantees for post delivery bonds issued to Oman for constructions C351 and C353. These guarantees are covered by a counter-guarantee of Immsi S.p.A. (as described below).

Other risks total 2,933 thousand euros, referred to the maximum penalty that may be calculated in relation to the commitment undertaken by Intermarine S.p.A. with the Industrial Participation contract (obligation to obtain exports of Finnish products) signed along with the construction contract with the Finnish Navy. Lastly, as a partial guarantee of amounts payable to banks by Intermarine, a first mortgage and second mortgage relative to the building in Sarzana (Intermarine S.p.A.) were issued for 16 million euros and 30 million euros respectively, against a total repayment balance of approximately 15.8 million euros as of 31 December 2014. As regards the company Is Molas S.p.A., the amount of the commitment with the Municipality of Pula for the completion of primary and secondary urbanisation works relating to the Is Molas allotment and deriving from the contract signed in 2005 and the Additional Act signed in 2006 is equal to 7,395 thousand euros: a guarantee was provided by Industria e Finanza S.p.A. and Etruria S.p.A. in favour of the Municipality of Pula to cover this commitment. Finally, please note that - as collateral for bank loans - a first degree mortgage was issued by the subsidiary Is Molas S.p.A. on the real estate complex “Le Ginestre”. With reference to the subsidiary Apuliae S.p.A. commitments were found totalling approximately 1.4 million euros related i) by approximately 1.3 million euros to the contract entered into for the renovation of the property located in S. Maria di Leuca (Lecce); and ii) by approximately 0.1 million euros to the lease agreement with the Municipality of Castrignano del Capo (LE) concerning the twenty nine year lease of the former school building. Notwithstanding what has been described regarding the lawsuits that prevent the implementation of the entire investment, it was deemed best not to change the amount of the aforementioned contractual obligation, since the contract is formally still in force, although its execution is currently suspended. The Parent Company Immsi S.p.A. has a mortgage (on the property in via Abruzzi – Rome) for 92 million euros, to guarantee the loan obtained in June 2010 by Efibanca, Banca Popolare di Lodi and Cassa di Risparmio di Lucca Pisa Livorno (now Banco Popolare) equal to 46 million euros, with an outstanding sum of 23 million euros to repay. With this financing, Immsi must for the entire duration of the contract channel the revenues from leasing into a deposit account and keep a minimum amount there equal to the interest instalment nearest maturity and deposited 3,041,000 Piaggio & C. S.p.A. shares as guarantee. To guarantee the lease contracts on the property, as of 31 December 2014 Immsi S.p.A. had received guarantees for a total of 692 thousand euros and guarantee deposits for 34 thousand euros. Intesa Sanpaolo has moreover issued a revocable signed credit line equal to 0.4 million euros that Immsi has used for 350 thousand euros for the Cassa di Previdenza Integrativa (supplementary


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social security fund) of the personnel of Istituto San Paolo di Torino, with which Immsi stipulated in the month of December 2008 a contract to lease property located in Milan – via Broletto. It is noted that the Company, in view of the credit lines and loans received, has deposited 34,991 thousand shares as a guarantee, and 98,600 thousand Piaggio shares as a lien, for further details of which reference is made to items Equity investments in subsidiaries and Financial liabilities. We also report that Immsi S.p.A. has deposited in surety 11,450 thousand Piaggio shares as security for a loan granted by Intesa Sanpaolo to Intermarine for 18 million euros, also guaranteed by a commitment by Immsi to inject equity in favour of Intermarine for it to meet the financial requirements for the construction and completion of its contracts. Intermarine pays Immsi a remuneration in proportion to the amounts paid by the Institution. Immsi S.p.A. has deposited in surety a further 17,050 thousand Piaggio shares, signed an autonomous first request guarantee for a maximum amount of 33.8 million euros and issued a letter of commitment in favour of Intesa Sanpaolo in guarantee of the revolving line granted to Intermarine S.p.A. by Intesa itself, used as of 31 December 2014 for 26.8 million euros, correlated to the future collections of the order with the Finland Navy. The subsidiary corresponds remuneration to Immsi in proportion to the amounts disbursed by the bank. Following the contract stipulated between the Finnish Navy and Intermarine S.p.A. for the construction of three minesweepers, the Finnish Navy granted three advance payments guaranteed for an amount equal to 115% of the sum received, through insurance guarantees issued by SACE, which has stated its willingness to issue said guarantees provided there is the co-obligation of Immsi S.p.A.. In consideration of the progress made, the guarantee for the last vessel equal to 8.1 million euros is still outstanding. With reference to the same contract, it is highlighted that RCN Finanziaria S.p.A. issued a Parent Company Guarantee at the end of 2012 in favour of the Finnish Navy for a maximum amount of 12.24 million euros, with a maturity of 5 years from the final approval of the first unit. Against the issued guarantees, Intermarine corresponds a remuneration in proportion to the sums secured. Immsi, as part of the supply contract for five catamarans to the Sultanate of Oman for which Intermarine, former Rodriquez Cantieri Navali, entered an endorsement credit contract with a pool of banks for an amount of 84.5 million US dollars to guarantee payment of the consideration envisaged in the contract signed with the Sultanate of Oman for 90 million US dollars, counter-guaranteed the “pre-delivery performance bond”, “advanced payment bond” and “post-delivery bond” issued by the above banks for a maximum amount of 60 million US dollars by issuing a bank guarantee and a letter of patronage for any part exceeding such amount in relation to Intermarine S.p.A.’s obligations to channel payments. Following completion of the last unit in 2014, the actual exposure of Intermarine S.p.A. vis-à-vis banks as of 31 December 2014 for the post-delivery bond was 3.8 million US dollars (equal to 3.1 million euros). The guarantor banks granted an extension of the relative guarantees up to July 2016. Immsi S.p.A. has issued a letter of patronage on the surety issued by Efibanca in favour of the company Como for the down payment of 2.7 million euros paid by it to Intermarine S.p.A. and a letter of patronage as collateral for credit facilities granted by Banca Carige to Intermarine S.p.A. used for operations of advances for 0.8 million euros in late 2014. Immsi S.p.A. is also co-obligated for the repayment of the loan of 15 million euros that Intesa Sanpaolo granted to the subsidiary Intermarine, maturing in 2017.


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In relation to the line of credit in place between Intermarine S.p.A. and Banca IFIS S.p.A., in the form of an advance on contract and factoring for the sale of receivables from the Italian Navy arising from the Refitting contract of the Gaeta Minesweeper, Banca IFIS has been issued a patronage by the direct parent company RCN Finanziaria S.p.A. confirmed by Immsi S.p.A.. The value of the guarantee at the end of 2014 amounted to 6.1 million euros. Lastly, it is reported that, against the 30 million-euro loan granted to ISM Investimenti S.p.A. by Intesa Sanpaolo, Immsi S.p.A. has undertaken, in the interests of IMI Investimenti, to grant a shareholder loan for the sum that proves necessary to enable ISM to repay its debt in full, in case it fails to refinance such liability towards Intesa Sanpaolo on the market.

- L - RELATED PARTY DEALINGS___________________________________________

Reference should be made to the relevant paragraph in the Report on Operations as regards the main business relations of Group companies with related parties.

- M - FINANCIAL POSITION_________________________________________________

The Immsi Group Net financial debt as of 31 December 2014 is shown below. Further details of the main components are provided in the tables in the Report on operations and the related information below them: (in thousands of euros) 31/12/2014 31/12/2013 Cash and cash equivalent -103,942 -74,285 Other short-term financial assets 0 -13,617 Medium/long-term financial assets 0 0 Short-term financial payables

440,483 359,691

Medium/long-term financial payables 573,214 578,994 Net financial debt * 909,755 850,783

*) The indicator does not include financial assets and liabilities arising from the fair value valuation of derivative financial instruments designated as hedges and the adjustment to fair value of the related hedged items and related expenses (see note G2 – “Financial liabilities” in the Explanatory Notes)

- N - DIVIDENDS PAID______________________________________________________ As proposed by the Board of Directors on 25 March 2014 and approved by the Ordinary General Meeting of 13 May 2014, the Parent Company Immsi S.p.A. did not distribute dividends in 2014. It must be reminded that Immsi S.p.A. did not pay dividends during 2013, too.


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- O - EARNINGS PER SHARE________________________________________________ Earnings per share The earnings per share is calculated by dividing the net income/loss for the year attributable to Parent company shareholders by the average weighted number of ordinary shares in circulation during the period, from which any own shares held are excluded. The average number of shares in circulation is calculated by using the principle of retrospectively applying the changes in the number of shares in circulation.

Year Year 2014 2013

Net profit attributable to ordinary shareholders (in thousands of euros) (70,814) (33,551) Average weighted number of shares in circulation during the year 340,530,000 340,530,000 Basic earnings per share (in euros) (0.208) (0.099)

In order to ensure adequate comparability of 2014 results with those of previous years, Net profits per share were recalculated for 2013 and 2014, excluding the effect of non-recurring events (discussed in full previously and referring entirely to the Piaggio Group). This additional measure of profitability is defined as Adjusted net profit per share and is offered below:

Year 2014

Year 2013

Adjusted net profit attributable to ordinary shareholders (in thousands of euros) (69,511) (21,069) Average weighted number of shares in circulation during the year 340,530,000 340,530,000 Basic earnings per share (in euros) (0.204) (0.062)

Diluted earnings per share Diluted earnings per share are calculated by dividing the net income/loss for the year attributable to Ordinary Shareholders of the Parent Company by the average weighted number of shares in circulation during the year, taking account of the diluting effect of potential shares. Excluded from this calculation are any treasury shares held. The Company has no category of potential ordinary shares as of 31 December 2014, therefore the diluted income per share coincides with the above basic earnings per share. - P - INFORMATION ON FINANCIAL INSTRUMENTS_____________________________ Below we summarise the information related to the financial instruments, the risks connected with them, as well as the “sensitivity analysis” in accordance with the requirements of IFRS 7 that came into force on 1 January 2007. The following table shows the financial instruments of the Immsi Group registered in the financial statements as of 31 December 2014 and as of 31 December 2013:


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In thousands of euros 31 December 2014

31 December 2013

ASSETS

NON-CURRENT ASSETS

Other financial assets 29,375 68,005 Financial receivables 0 0 Financial assets 29,375 68,005

CURRENT ASSETS

Other financial assets 14,876 28,619 Financial receivables 0 12,765 Financial assets 14,876 15,854

LIABILITIES

NON-CURRENT LIABILITIES

Financial liabilities 591,136 587,761 Bonds 288,369 195,318 Amounts due to banks 283,372 380,483 Amounts due under finance leases 211 0 Amounts due to other lenders 1,262 3,193 Financial liabilities for hedging instruments 17,922 8,767

CURRENT LIABILITIES

Financial liabilities 440,483 359,691 Amounts due to banks 383,225 294,815 Amounts due under finance leases 30 5,809 Amounts due to subsidiaries 55 109 Amounts due to other lenders 57,173 58,958

Financial assets The current and non-current financial assets are fully commented upon within the Explanatory note F5 – Other financial assets, which reference is made to. Current and non-current liabilities The current and non-current liabilities are fully commented upon within the Explanatory note G2 – Financial liabilities, which reference is made to. In this section the debt is divided by type and detailed by expiration. The main loan agreements entered by the companies of the Group (fully described in the above mentioned explanatory note), require – in line with market practices for borrowers with a similar credit standing – also the compliance with:

financial covenants, on the basis of which the financed company undertakes to comply with certain levels of contractually defined financial indices, with the most significant comprising the ratio of net financial debt/gross operating margin (EBITDA), measured on the consolidated perimeter of the Group, according to definitions agreed on with lenders;

negative pledges according to which the company may not establish collaterals or other constraints on company assets;

“pari passu” clauses, on the basis of which the loans will have the same repayment priority as other financial liabilities;

change of control clauses, which are effective if the majority shareholder loses control of the company;

limitations on the extraordinary operations the company may carry out. The measurement of financial covenants and other contract commitments is monitored by the


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Group companies on an ongoing basis: with reference to the Piaggio Group, and in particular according to results as of 31 December 2014, all covenants had been met. Finally, it should be noted that any failure to comply with these covenants and the other contractual commitments applied to the loans mentioned above - if not adequately remedied within the agreed time - could result in the requirement of early repayment of the related outstanding debt. With reference to the parent company Immsi S.p.A. and the other companies of the Group, reference is made to the detailed information in the Note G2 - Financial liabilities. Lines of credit As of 31 December 2014 the Immsi Group has irrevocable credit lines available until maturity amounting to 1,057.9 million euros. For further details reference is made to the Note G2 on Financial liabilities. Management of financial risks The financial risks to which the Immsi Group believes to be potentially exposed to are:

the management of capital and the liquidity risk; the exchange risk; the interest rate risk; and the credit risk.

In the Piaggio Group, management of these risks is centralised and treasury operations are performed in the sphere of policy and formalised guidelines, valid for all the companies in the group. Management of capital and liquidity risk The liquidity risk derives from the possibility that available financial resources may not be sufficient to hedge, in the means and times, future disbursements generated by financial and/or commercial bonds. The Parent Company Immsi S.p.A. operates with financing for the Group’s subsidiaries and/or by issuing guarantees finalised at facilitating their supply: the above operations are regulated under normal market conditions. With particular reference to the Piaggio Group, to face such risk, cash flows and the company’s credit line needs are monitored and/or managed centrally under the control of the group’s Cash management in order to guarantee an effective and efficient management of the financial resources as well as optimising the debt’s maturity standpoint. Moreover, Piaggio & C. S.p.A. finances the temporary cash requirements of Group companies by providing direct or indirect short-term loans regulated in market conditions or through guarantees. Between the parent company Piaggio & C. S.p.A. and its European subsidiaries there is also an active cash pooling zero balance system that enables the daily resetting of the asset and liability balances of the subsidiaries, with the result of having a more effective and efficient management of liquidity in the euro area. For greater coverage of the risk of liquidity, as of 31 December 2014 the Immsi Group had unused credit lines available for 266,427 thousand euros (302,437 thousand euros as of 31 December 2013) of which 162,427 thousand euros with expiration within 12 months and 104,000 thousand euros with following expiration. The Management believes that the currently available funds, in addition to those that will be generated from operating and financing activities, will enable the Group to meet its own needs arising from investments, management of working capital and repayment of debts when they become due, and will ensure an adequate level of operational and strategic flexibility.


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Management of the exchange rate risk The Immsi Group – particularly through the subsidiaries of the Piaggio Group and through the subsidiary Intermarine S.p.A. – operates in an international context where transactions are conducted in currencies different from Euro. This exposes the Group to risks arising from exchange rates fluctuations: currency exchange rate risk hedging contracts are entered into solely by companies belonging to the aforementioned groups. In particular the Piaggio Group has an exchange rate risk management policy which aims to neutralise the possible negative effects of the changes in exchange rates on company cash-flows. The policy considers:

The transactive exchange risk: the policy provides the integral hedging of this risk, which derives from the differences between the exchange rate recorded in the financial statements for receivables or payables in foreign currency and that recorded in the related receipt or payment. To cover this type of exchange risk, first of all recourse is taken to the natural offsetting of the exposure (netting between sales and purchases in the same foreign currency) and, if necessary, to signing derivative contracts of temporary sales or purchase in foreign currency as well as denominated credit advances in foreign currency;

The transfer risk: arises from the conversion into Euros of consolidated financial statements of subsidiaries drawn up in currencies different from Euros performed during the consolidation process: the policy adopted by the group does not impose the hedging of such a kind of exposure;

The business risk: arises from changes in company profitability in relation to annual figures planned in the economic budget on the basis of a reference change (the "budget change") and is covered by derivatives. The items of these hedging operations are therefore represented by foreign currency costs and revenues forecast by the sales and purchases budget. The total of forecast costs and revenues is processed monthly and relative hedging is positioned exactly on the average weighted date of the economic event, recalculated based on historical criteria. The economic occurrence of future receivables and payables will occur during the budget year.

Cash flow hedging related to the Piaggio Group As of 31 December 2014, the Group had undertaken the following futures operations (recognised based on the regulation date), relative to payables and receivables already recognised to hedge the transaction exchange risk:

Company Operation Currency Amount in local

currency

Value in local currency

(forward exchange rate)

Average maturity

In thousands In thousands

Piaggio & C. Purchase CNY 49,300 6,483 14/01/2015

Piaggio & C. Purchase JPY 250,000 1,707 07/01/2015

Piaggio & C. Purchase GBP 250 319 29/01/2015

Piaggio & C. Purchase USD 5,100 4,152 06/01/2015

Piaggio & C. Sale CNY 26,500 3,486 07/01/2015

Piaggio & C. Sale GBP 150 191 29/01/2015

Piaggio & C. Sale INR 453,000 5,855 12/01/2015


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Piaggio & C. Sale JPY 30,000 220 30/01/2015

Piaggio & C. Sale SEK 1,200 130 30/01/2015

Piaggio & C. Sale USD 5,800 4,728 15/02/2015

Piaggio & C. Sale SGD 175 108 30/01/2015

Piaggio Indonesia Purchase EUR 2,350 30,605,500 10/02/2015

Piaggio Vehicles

Private Limited

Sale USD 1,475 94,222 29/01/2015

Piaggio Vespa BV Sale SGD 865 532 26/05/2015

As of 31 December 2014, the group had the following transactions to hedge the business risk:

Company Operation Currency Amount in local

currency

Value in local currency

(forward exchange rate)

Average maturity

In thousands In thousands

Piaggio & C. Purchase CNY 244,000 30,987 14/06/2015

Piaggio & C. Sale GBP 8,470 10,728 03/07/2015

To hedge the business risk, cash flow hedging is adopted with the effective portion of profits and losses recognised in a specific shareholders' equity reserve. Fair value is determined based on market quotations provided by main traders. As of 31 December 2014, the overall fair value of hedging instruments on the exchange risk recognised on a hedge accounting basis was positive, amounting to 656 thousand euros. During 2014, profit under other components of the Statement of comprehensive income was recognised amounting to 656 thousand euros and profit from other components of the Statement of comprehensive income was reclassified under profit/loss for the period amounting to 234 thousand euros. The net balance of cash flows during 2014 is shown below, divided by main currency:

Amounts in

millions of euros

Cash-flow 2014

Pound sterling ............................................................................................. 22.1

Indian rupee ................................................................................................ 12.4

Croatian kuna .............................................................................................. 3.3

US dollar ...................................................................................................... 10.7

Canadian dollar ........................................................................................... 7.0

Indonesian Rupiah ...................................................................................... 13.9

Vietnamese Dong ........................................................................................ 20.5

Chinese yuan* ............................................................................................. (47.9)

Japanese Yen ............................................................................................. (4.6)

Total cash flow in foreign currency ......................................................... 37.4

*) flow partially settled in euros

Also the subsidiary Intermarine covers the risks deriving from swings in the rates of exchange through specific operations tied to the single orders that require billing in currencies other than the euro. In particular, the policy concerning the foreign exchange risk implemented by the Group is actualised in the total elimination of every risk through the definition of a fixed forward exchange rate to hedge for swings in exchange rates. With this hedging, Euro/USD exchange rates were fixed for sums collected and revenues from the Oman contract were recognised. As of 31 December 2014, no forward sales contracts were ongoing.


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In consideration of the above, hypothesising an appreciation of 3% of the mean exchange rate of the euro on the portion of the economic exposure not covered on the main currencies observed in the year 2014, the consolidated operating income of the Immsi Group would be reduced by around 0.7 million euros. Management of the interest rate risk The exposure to interest rate risk arises from the necessity to fund operating activities, both industrial and financial, of Group companies and to use available liquidity. Changes in interest rates may affect the costs and the returns of investment and financing operations: this risk arises from fluctuations in the interest rates and the impact that this may have on future cash flows arising from floating rate financial assets and liabilities. Therefore, the Group regularly measures and controls its exposure to interest rates changes with the aim of reducing the fluctuation of borrowing costs limiting the risk of a potential rise in interest rates: this objective is pursued both through an appropriate mix of fixed rate and floating rate exposure, and through the use of derivative instruments, mainly Interest Rate Swap and Cross Currency Swap, also according to what established by its own management policies. As of 31 December 2014, variable rate debt, net of financial assets and considering the hedging derivatives, was equal to around 550.7 million euros. Consequently a 1% increase or decrease in the Euribor above this net specific exposure would have generated higher or lower interest payables of around 5,507 thousand euros per year. With reference to the Piaggio Group, as of 31 December 2014, the following hedging derivative instruments were taken out: Hedging of financial flows (cash flow hedging)

an Interest Rate Swap to hedge the variable rate loan for a nominal amount of 117,857

thousand euros (as of 31 December 2014 standing at for 32,143 thousand euros) granted by the European Investment Bank. The structure has fixed step-up rates, in order to stabilise financial flows associated with the loan; in accounting terms, the instrument is recognised on a cash flow hedge basis, with profits/losses arising from the fair value measurement allocated to a specific reserve in Shareholders’ equity. As of 31 December 2014, the fair value of the instrument was negative by 693 thousand euros. Sensitivity analysis of the instrument, assuming a 1% increase and decrease in the shift of the variable rates curve, shows a potential impact on Shareholders' Equity – net of the relative tax effect – equal to 98 thousand euros and -100 thousand euros respectively.

Fair value hedging derivatives (fair value hedging and fair value options)

a Cross Currency Swap to hedge the private debenture loan issued by Piaggio & C. S.p.A.

for a nominal amount of 75,000 thousand USD dollars. The purpose of the instrument is to hedge both the exchange risk and interest rate risk, turning the loan from US dollars to euro, and from a fixed rate to a variable rate. The instrument is accounted for on a fair value hedge basis, with effects arising from the measurement recognised as profit and loss. As of 31 December 2014, the fair value of the instrument was equal to 13,230 thousand euros, whereas the net economic effect arising from the measurement of the instrument and underlying private debenture loan was equal to 677 thousand euros. Sensitivity analysis of the instrument, and its underlying, assuming a 1% increase and decrease in the shift of the variable rates curve, showed a potential impact on the Income statement – net of the relative tax effect – equal to 63 thousand euros and -60 thousand euros respectively,


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assuming constant exchange rates; whereas assuming a 1% appreciation and depreciation of the exchange rates, sensitivity analysis identified a potential impact on the Income statement – net of the relative tax effect – of -46 thousand euros and 47 thousand euros respectively;

a cross currency swap to hedge loans relative to the Indian subsidiary for 14,763 thousand USD granted by International Finance Corporation (as of 31 December 2014, 8,570 thousand euros). The purpose of the instruments is to hedge the exchange risk, turning the loan from US dollars to Indian Rupees, and to hedge the interest rate risk on the US dollar. As of 31 December 2014 the fair value of the instruments was equal to 3,677 thousand euros. Sensitivity analysis of the instrument and its underlying, assuming a 1% increase and decrease in the shift of the variable rates curve, showed a potential impact on the Income Statement, net of the relative tax effect, of 39 thousand euros and -40 thousand euros respectively, assuming constant exchange rates. Assuming a 1% appreciation and depreciation of the exchange rate of the Indian Rupee, sensitivity analysis of the instrument and its underlying identified a potential impact on the Income Statement – net of the relative tax effect – of -3 thousand euros and 3 thousand euros respectively;

a cross currency swap to hedge loans relative to the Indian subsidiary for 17,850 thousand

USD granted by International Finance Corporation (as of 31 December 2014, 12,815 thousand euros). The purpose of the instruments is to hedge the exchange risk, turning the loan from US dollars to Indian Rupees, and to hedge the interest rate risk on the US dollar. As of 31 December 2014 the fair value of the instruments was equal to 2,035 thousand euros. Sensitivity analysis of the instrument and its underlying, assuming a 1% increase and decrease in the shift of the variable rates curve, showed a potential impact on the Income Statement, net of the relative tax effect, of 5 thousand euros and -4 thousand euros respectively, assuming constant exchange rates. Assuming a 1% appreciation and depreciation of the exchange rate of the Indian Rupee, sensitivity analysis of the instrument and its underlying identified a potential impact on the Income Statement – net of the relative tax effect – of -8 thousand euros and 8 thousand euros respectively;

a cross currency swap to hedge the loan relative to the Vietnamese subsidiary for 17,476

thousand USD granted by International Finance Corporation (as of 31 December 2014, 14,220 thousand euros). The purpose of the instruments is to hedge the exchange risk and partially hedge the interest rate risk, turning the loan from US dollars at a variable rate into Vietnamese Dong at a fixed rate, except for a minor portion (24%) at a variable rate. As of 31 December 2014 the fair value of the instruments was positive amounting to 84 thousand euros. Sensitivity analysis of the instrument and its underlying, assuming a 1% increase and decrease in the shift of the variable rates curve, showed a potential impact on the Income Statement – net of the relative tax effect – of 97 thousand euros and -100 thousand euros respectively, assuming constant exchange rates. Assuming a 1% appreciation and depreciation of the exchange rate of the Vietnamese Dong, sensitivity analysis of the instrument and its underlying identified a potential impact on the Income Statement – net of the relative tax effect – of -4 thousand euros and 5 thousand euros respectively.

As of 31 December 2014, the Group had a cross currency swap relative to the Indian subsidiary to hedge the intercompany loan of 5,000 thousand euros granted by Piaggio & C. S.p.A.. The purpose of the instrument is to hedge the exchange risk and interest rate risk, turning the loan from Euros to Indian Rupees and from a variable to a fixed rate. Based on hedge accounting principles, this derivative is classified as non-hedging and therefore is measured at fair value with measurement effects recognised in profit or loss. As of 31 December 2014 the fair value of the instrument was equal to -599 thousand euros. Sensitivity analysis of the instrument, assuming a 1% increase and decrease in the shift of the variable rates curve, showed a potential impact on the


182

Income Statement, net of the relative tax effect, of 43 thousand euros and -44 thousand euros respectively, assuming constant exchange rates. Assuming a 1% appreciation and depreciation of the exchange rate of the Indian Rupee, sensitivity analysis of the instrument and its underlying identified a potential impact on the Income Statement – net of the relative tax effect – of -30 thousand euros and 30 thousand euros respectively. In thousands of euros FAIR VALUE

Piaggio & C. S.p.A.

Interest Rate Swap (693) Cross Currency Swap 13,230

Piaggio Vehicles Private Limited

Cross Currency Swap Cross Currency Swap Cross Currency Swap

3,677 2,035 (599)

Piaggio Vietnam

Cross Currency Swap 84

The subsidiary Intermarine – in relation to the interest rate risk hedging – has set up operations of Interest Rate Swaps for converting the variable rate of the contracts to a fixed rate. Hedging is specific to a loan taken out by Intermarine S.p.A with a remaining amount of 0.78 million euros as of 31 December 2014. The Parent company Immsi S.p.A. has an Interest Rate Swap to change from variable to fixed the 75% of the flows for interest related to the current loan for residual nominal 23 million euros granted by the pool of lenders originally composed by Banca Popolare di Lodi, Efibanca e Cassa di Risparmio di Lucca Pisa Livorno (now merged into Banco Popolare): as of 31 December 2014, the fair value of the instrument amounted to 947 thousand euros. The overall fair value of the hedge instruments entered by the Immsi Group – excluding what already specified for the Piaggio Group – in accordance with the hedge accounting principle was negative for 951 thousand euros as of 31 December 2014. Profit for 298 thousand euros emerged over the year 2014 in the schedule of the other components of the overall Income Statement. Management of the credit risk

The Group considers its exposure to the risk of credit to be the following:

In thousands of euros 31 December 2014

31 December 2013

Cash and cash equivalent 103,942 74,285 Financial assets 0 852 Financial receivables 0 12,765 Trade receivables 114,894 114,834

Total 218,836 202,736

In particular, the Piaggio Group monitors or manages credit centrally by using established policies and guidelines. The portfolio of trade receivables shows no signs of concentrated credit risk in light of the broad distribution of its own licensee or distributor network. In addition, most trade receivables are short-term. In order to optimise credit management, Piaggio & C. S.p.A. has established revolving programmes with some primary factoring companies for selling its trade


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receivables without recourse in Europe and the United States. With reference to the subsidiary Intermarine, that by business type can present concentrations of credits with a few customers, it is noted that the most significant customers under the quantitative profile are represented by public bodies: moreover, in general production to order requires substantial advance payments by the customer as works progress, thereby reducing the credit risk. With reference to the other companies of the Immsi Group, there is currently no significant exposure to credit risk. Hierarchical fair value valuation levels IFRS 13 – Fair value measurement applies as from 1 January 2013. The Standard defines fair value on the basis of the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In case of absence of an active market or of irregular operation of the same, the determination of the fair value must be carried out by means of valuation techniques. The principle therefore defines a hierarchy of fair value:

level 1 quoted prices taken from an active market in terms of assets and liabilities under valuation;

level 2 directly (prices) or indirectly (price-derived) observable market inputs other than level 1 inputs;

level 3 inputs not based on observable market data. The valuation techniques that refer to levels 2 and 3 must take into account adjustment factors that measure the risk of failure of both parties: to this end, the principle introduces the concepts of Credit Value Adjustment (CVA) and Debit Value Adjustment (DVA). The CVA allows the inclusion, in the determination of the fair value, of the credit risk of the counterparty, while the DVA reflects the insolvency risk of the Group. Besides, the IFRS 7 principle requires, only for disclosure purposes, to determine the fair value of the payables entered in the accounts on the basis of the amortised cost. The table below highlight such values:

In thousands of euros Nominal Value Book Value Fair Value Estimate *

Piaggio Group - High yield debenture loan 250,000 236,846 257,348

Piaggio Group - Private debenture loan 51,799 51,523 67,413

Piaggio Group - EIB (2009-2012 R&D fund) 32,143 32,143 31,978

Piaggio Group - EIB (2013-2015 R&D fund) 54,545 54,545 52,582

Piaggio Group - Syndicated Revolving Credit line 50,000 48,461 46,408

Piaggio Group - Syndicated loan maturing in July 2019 66,000 65,216 64,151

Immsi S.p.A. – Mortgage loan with Banco Popolare 23,000 22,802 22,074

Immsi S.p.A. – Credit line maturing in March 2017 11,500 11,414 11,704

Immsi S.p.A. – Credit line maturing in February 2016 15,000 14,919 15,079

*) the value deducts the DVA related to the issuer, i.e. it includes the risk of the insolvency of Piaggio.

For the other financial liabilities of the Immsi Group not expressly included in the table provided, it is deemed that the book value is essentially similar to the fair value.


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The table below shows the assets and liabilities valued at fair value as of 31 December 2014, by fair value measurement hierarchical level. In thousands of euros Level 1 Level 2 Level 3

Assets valued at fair value 14,876 10,349

Hedging financial derivatives 18,942 84

Property investments 85,848

Other assets 696 86

Total assets valued at fair value 14,876 19,638 96,367

Liabilities valued at fair value (104,728)

Derivative hedging financial instruments (1,550)

Other liabilities (733)

Total liabilities valued at fair value 0 (107,011) 0

Balance as of 31 December 2014 14,876 (87,373) 96,367

Hierarchical level 1 includes the carrying amount of the investment held by Immsi S.p.A. in Unicredit S.p.A., down by 126 thousand euros compared to 31 December 2013 following a slight decrease in the share price recorded at the end of 2014. Hierarchical level 2 includes among the assets the positive value of the derivative hedging financial instruments attributable to the Piaggio Group, while the liabilities include the negative value of the derivative financial instruments (Interest Rate Swap) attributable to the Parent company Immsi S.p.A. and the subsidiary Intermarine S.pA.. Lastly, hierarchical level 3, under financial assets, includes the carrying amount of the investment held by Immsi S.p.A. in Alitalia – Compagnia Aerea Italiana S.p.A.. The Real Estate Investments primarily include the fair value of the investment property attributable to Immsi S.p.A. (located in Via Abruzzi, Rome) and the former Spanish plant of Martorelles of the Piaggio Group (the latter transferred during 2013 from non-current plant, property and equipment to Investment property). Finally, it should be noted that the valuation of the Cross Currency Swap in place on the Vietnamese subsidiary of the Piaggio Group has been classified within hierarchical level 3: this classification reflects the characteristics of illiquidity of the local market that do not allow a valuation with the traditional criteria. If we had adopted the valuation techniques typical of liquid markets - a characteristic that is notably not found in the Vietnamese market - the derivatives would have expressed a negative fair value amounting to 2,097 thousand euros (instead of negative 84 thousand euros, included in the derivative hedging financial instruments item - Level 3) and accrued expenses on derivative hedging financial instruments amounting to 949 thousand euros.

The following table highlights the changes that occurred within the various levels in the course of 2014: In thousands of euros Level 1 Level 2 Level 3


Gain and (loss) recognised in the income statement 835 (59,454)

Increases / (Decreases) (126) 891 17,107



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LIST OF COMPANIES INCLUDED IN THE CONSOLIDATED FINANCIAL STATEMENTS AND EQUITY INVESTMENTS AS OF 31 DECEMBER 2014 Pursuant to CONSOB Resolution 11971 of 14 May 1999 and subsequent amendments thereto (Article 126 of the Regulations), a list of the IMMSI Group companies and its major equity investments it is set out below. The list states the companies, divided according to consolidation procedure. The following information is also shown for each company: its corporate name, its registered headquarters and nationality and its share capital in the original currency. The percentage stakes owned by IMMSI S.p.A. or other group companies are also stated. The percentage of Ordinary Shareholders’ Meeting votes is also shown in a separate column where it differs from the equity percentage held in the share capital.

Company Name

Currency

Share Capital (subscribed and paid-up)

% of Share Capital owned

% voting rights

(if different)

LIST OF COMPANIES INCLUDED IN THE CONSOLIDATED FINANCIAL STATEMENTS ON A LINE-BY-LINE BASIS

Immsi S.p.A. Euro 178,464,000.00 Mantova (MN) – Italy Parent Company Apuliae S.p.A. Euro 1,000,000.00 85.69% Lecce (LE) – Italy Immsi S.p.A. equity investment: 85.69% ISM Investimenti S.p.A. Euro 6,654,902.00 72.64% Mantova (MN) – Italy Immsi S.p.A. equity investment: 72.64% Pietra S.r.l. Euro 40,000.00 77.78% Milano (MI) – Italy Immsi S.p.A. equity investment: 77.78% Is Molas S.p.A. Euro 5,898,437.00 89.48% Pula (CA) – Italy ISM Investimenti S.p.A. equity investment: 89.48% Immsi Audit S.c.a r.l. Euro 40,000.00 100.00% Mantova (MN) – Italy Immsi S.p.A. equity investment: 25.00% Is Molas S.p.A. equity investment: 25.00% Piaggio & C. S.p.A. equity investment: 25.00% Intermarine S.p.A. equity investment: 25.00% RCN Finanziaria S.p.A. Euro 32,135,988.00 63.18% Mantova (MN) – Italy Immsi S.p.A. equity investment: 63.18% Piaggio & C. S.p.A. Euro 206,026,903.84 50.25% 50.59% Pontedera (PI) – Italy Immsi S.p.A. equity investment: 50.25% Aprilia Racing S.r.l. Euro 250,000.00 100.00% Pontedera (PI) – Italy Piaggio & C. S.p.A. equity investment: 100.00% Atlantic 12 – Property investment fund Euro 10,993,353.46 100.00% Milano (MI) – Italy Piaggio & C. S.p.A. equity investment: 100.00% Foshan Piaggio Vehicles Technology Research & Development Co. Ltd

RMB 10,500,000.00 100.00%

Foshan City – China Piaggio Vespa B.V. equity investment: 100.00% Nacional Motor S.A. Euro 1,588,422.00 100.00% Barcelona – Spain Piaggio & C. S.p.A. equity investment: 100.00% Piaggio Asia Pacific PTE Ltd. SGD 100,000.00 100.00% Singapore – Singapore Piaggio Vespa B.V. equity investment: 100.00% Piaggio Advanced Design Center Corp. USD 100,000.00 100.00% California – USA Piaggio & C. S.p.A. equity investment: 100.00%


186

Company Name

Currency

Share Capital (subscribed and paid-up)


% voting rights

(if different)

Piaggio Deutschland Gmbh Euro 250,000.00 100.00% Düsseldorf – Germany Piaggio Vespa B.V. equity investment: 100.00% Piaggio Espana S.L.U. Euro 426,642.00 100.00% Alcobendas – Spain Piaggio & C. S.p.A. equity investment: 100.00% Piaggio France S.A.S. Euro 250,000.00 100.00% Clichy Cedex – France Piaggio Vespa B.V. equity investment: 100.00% Piaggio Group Americas Inc. USD 2,000.00 100.00% New York - USA Piaggio Vespa B.V. equity investment: 100.00% Piaggio Group Japan YEN 99,000,000.00 100.00% Tokyo – Japan Piaggio Vespa B.V. equity investment: 100.00% Piaggio Hellas S.A. Euro 2,204,040.00 100.00% Athens – Greece Piaggio Vespa B.V. equity investment: 100.00% Piaggio Hrvatska D.o.o. HRK 400,000.00 75.00% Split – Croatia Piaggio Vespa B.V. equity investment: 75.00% Piaggio Limited GBP 250,000.00 100.00% Bromley Kent – UK Piaggio Vespa B.V. equity investment: 99.9996% Piaggio & C. S.p.A. equity investment: 0.0004% Piaggio Vehicles Private Limited INR 349,370,000.00 100.00% Maharashtra – India Piaggio & C. S.p.A. equity investment: 99.9999971% Piaggio Vespa B.V. equity investment: 0.0000029% Piaggio Vespa B.V. Euro 91,000.00 100.00% Breda – Holland Piaggio & C. S.p.A. equity investment: 100% Piaggio Vietnam Co. Ltd. VND 64,751,000,000.00 100.00% Hanoi – Vietnam Piaggio & C. S.p.A. equity investment: 63.50% Piaggio Vespa B.V. equity investment: 36.50% Piaggio Group Canada, Inc. CAD$ 10,000.00 100.00% Toronto – Canada Piaggio Group Americas Inc. equity investment: 100.00% PT Piaggio Indonesia Rupiah 4,458,500,000.00 100.00% Jakarta – Indonesia Piaggio Vespa B.V. equity investment: 99.00% Piaggio & C. S.p.A. equity investment: 1.00% Aprilia Brasil Industria de Motociclos S.A.*** R$ 2,020,000.00 51.00% Manaus – Brazil Aprilia World Service Holding do Brasil Ltda. equity investment: 51.00%

Aprilia World Service Holding do Brasil Ltda.*** R$ 2,028,780.00 99.99995% San Paolo – Brazil Piaggio Group Americas Inc. equity investment: 99.99995% Piaggio China Co. LTD USD 12,100,000.00 99.99999% Hong Kong – China Piaggio & C. S.p.A. equity investment: 99.99999% Piaggio Concept Store Mantova S.r.l. Euro 100,000.00 100.00% Mantova – Italy Piaggio & C. S.p.A. equity investment: 100% Intermarine S.p.A. Euro 10,000,000.00 100.00% Sarzana (La Spezia) – Italy RCN Finanziaria S.p.A. equity investment: 100.00%


187

Company Name

Currency

Share Capital (subscribed and

paid-up)


% voting rights (if different)

EQUITY INVESTMENTS IN SUBSIDIARIES, ASSOCIATED AND JOINT CONTROL COMPANIES VALUED USING THE EQUITY METHOD

Zongshen Piaggio Foshan Motorcycle Co. Ltd. USD 29,800,000.00 45.00% Foshan City – China Piaggio & C. S.p.A. equity investment: 32.50% Piaggio China Co. Ltd. equity investment: 12.50% Rodriquez Cantieri Navali do Brasil Ltda. R$ 2,030,496.00 100.00% Rio de Janeiro – Brazil Intermarine S.p.A. equity investment: 100.00% less one share held by Rodriquez Pietra Ligure S.r.l.

Rodriquez Engineering S.r.l. *** Euro 119,756.00 100.00% Messina (ME) – Italy Intermarine S.p.A. equity investment: 100.00% Rodriquez Pietra Ligure S.r.l. Euro 20,000.00 100.00% Milano (MI) – Italy Intermarine S.p.A. equity investment: 100.00% EQUITY INVESTMENTS IN SUBSIDIARIES AND ASSOCIATED COMPANIES VALUED USING THE COST METHOD

Depuradora d’Aigües de Martorelles S.C.C.L. Euro 60,101.21 22.00% Barcelona – Spain Nacional Motor S.A. equity investment: 22.00% Pont - Tech, Pontedera & Tecnologia S.c.r.l. Euro 884,160.00 20.44% Pontedera (PI) – Italy Piaggio & C. S.p.A. equity investment: 20.44% S.A.T. Societé d’Automobiles et Triporteurs S.A. TND 210,000.00 20.00% Tunis – Tunisia Piaggio Vespa B.V. equity investment: 20.00% Mitsuba Italia S.p.A. Euro 1,000,000.00 10.00% Pontedera (PI) – Italy Piaggio & C. S.p.A. equity investment: 10.00% Rodriquez Mexico *** Pesos 50,000.00 50.00% La Paz – Mexico Intermarine S.p.A. equity investment: 50.00% Consorzio CTMI – Messina Euro 53,040.00 25.00% Messina (ME) – Italy Intermarine S.p.A. equity investment: 25.00% Fondazione Piaggio Onlus Euro 103,291.38 66.67% Pontedera (PI) – Italy Piaggio & C. S.p.A. equity investment: 66.67%

*** Non-operating company or company in liquidation.

* * *

This document was published on 9 April 2015 by authorisation of the Chairman of the Company, Roberto Colaninno.

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Certification of the Consolidated Financial Statements pursuant to Article 154-bis of Italian Legislative Decree no. 58/98 The undersigned Roberto Colaninno, as Chairman of the Board of Directors, Michele Colaninno, as Chief Executive Officer and Andrea Paroli, Manager in charge of preparing the company accounts and documents of Immsi S.p.A., certify, also taking account of the provisions of Article 154-bis, paragraphs 3 and 4 of the Italian Legislative Decree 58 of 24 February 1998:

- the appropriateness with regard to the company’s characteristics and - effective application

of the administrative and accounting procedures to form the consolidated financial statements as of 31 December 2014.

To this regard no aspects of particular importance have emerged.

In addition, it is certified that the consolidated financial statements as of 31 December 2014:

were drawn up in conformity to the applicable international accounting standards recognised by the European Union in accordance with the regulation (EC) no. 1606/2002 of the European Parliament and of the Council of 19 July 2002;

correspond to the documentary results, the registers and the accounting records; are suited to provide a truthful and correct representation of the Issuer’s assets and

liabilities, profit and loss and financial situation, as well as its consolidated subsidiaries.

The Report on Operations includes a reliable analysis of the progress and result of management, as well as of the situation of the Issuer and of the group of companies included in the consolidation, together with a description of the main risks and uncertainties to which they are exposed. 16 March 2015

________________________________

_____________________________

Chairman

Roberto Colaninno

Manager in charge of preparing the company

accounts and documents Andrea Paroli

________________________________

Chief Executive Officer

Michele Colaninno

190

IMMSI S.p.A.

Financial statements as of

31 December 2014

Financial statements of Immsi S.p.A. and Notes

191

Below are the Statement of Financial Position, Income Statement, Statement of Comprehensive Income, Statement of Cash Flows and Schedule of Changes in Shareholders’ Equity, detailing the significant amounts relating to intergroup and Related Party dealings:

Statement of Financial Position In thousands of euros ASSETS Notes 31/12/2014 31/12/2013 NON-CURRENT ASSETS Intangible assets 0 0 Plant, property and equipment C1 247 240 - of which intergroup and related parties 16 21 Property investments C2 73,887 73,780 Equity investments in subsidiaries and associated companies C3 322,359 322,359 Other financial assets C4 11,449 60,700 - of which intergroup and related parties 1,100 3,000 Receivables due from the tax authorities C5 411 1,409 Deferred tax assets C6 0 227 Trade receivables and other receivables C7 22 240 - of which intergroup and related parties 15 233 TOTAL NON-CURRENT ASSETS 408,375 458,955 ASSETS INTENDED FOR DISPOSAL 0 0 CURRENT ASSETS Trade receivables and other receivables C7 44,988 34,888 - of which intergroup and related parties 44,246 33,737 Receivables due from the tax authorities C5 1,443 782 Other financial assets C4 164,734 164,795 - of which intergroup and related parties 149,857 138,886 Cash and cash equivalents C8 2,651 2,513 TOTAL CURRENT ASSETS 213,816 202,978 TOTAL ASSETS 622,191 661,933 LIABILITIES Notes 31/12/2014 31/12/2013 SHAREHOLDERS’ EQUITY Share capital 178,464 178,464 Reserves and retained earnings 246,607 231,952 Net profit of the period E10 (65,628) 14,843 TOTAL SHAREHOLDERS’ EQUITY D1 359,443 425,259 NON-CURRENT LIABILITIES Financial liabilities D2 70,025 118,955 Trade payables and other payables D5 947 926 Reserves for retirement fund and similar obligations D3 344 344 Other long-term reserves 0 0 Deferred tax liabilities D4 19,624 20,504 TOTAL NON-CURRENT LIABILITIES 90,940 140,729 LIABILITIES RELATED TO ASSETS HELD FOR DISPOSAL 0 0 CURRENT LIABILITIES Financial liabilities D2 169,405 93,443 Trade payables D5 1,152 1,137 - of which intergroup and related parties 291 260 Current taxation D6 404 494 Other payables D5 847 871 - of which intergroup and related parties 2 2 Current portion of other long-term reserves 0 0 TOTAL CURRENT LIABILITIES 171,808 95,945 TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY 622,191 661,933


192

Income statement In thousands of euros

Notes 2014 Year 2013

Financial income E1 7,841 35,467 - of which intergroup and related parties 7,538 24,828 Borrowing costs E2 (74,200) (23,364) - of which intergroup and related parties 0 (1,192)Gain / loss on equity investments 0 0

Operating income E3 4,549 4,754 - of which intergroup and related parties 2,049 2,041 Costs for materials (40) (40)Costs for services and leases and rentals E4 (3,479) (3,276) - of which intergroup and related parties (548) (551)Personnel costs E5 (1,295) (1,344)Depreciation of plant, property and equipment E6 (78) (128)Amortisation of goodwill 0 0 Amortisation of finite life intangible assets 0 0

Other operating income E7 230 169 - of which intergroup and related parties 86 86 Other operating costs E8 (838) (702)EARNINGS BEFORE TAXATION (67,309) 11,536 Taxation E9 1,681 3,307 - of which intergroup and related parties 968 3,475 EARNINGS AFTER TAX FROM OPERATING ACTIVITIES (65,628) 14,843 Gain (loss) from assets held for disposal or sale 0 NET PROFIT OF THE PERIOD E10 (65,628) 14,843

Statement of Comprehensive Income In thousands of euros

Notes 2014 Year 2013

NET PROFIT OF THE PERIOD E10 (65,628) 14,843

Items that can be reclassified in the Income statement:

Gains/(Losses) on evaluation at fair value of assets available for sale (AFS) (124) 4,666Gains/(Losses) on cash flow hedges (21) 570

Items that cannot be reclassified in the Income statement:

Actuarial Gains (Losses) on defined benefit plans (44) 12

TOTAL GAINS (LOSSES) OF THE PERIOD D1 (65,817) 20,091

The values presented in the above table are all given net of the corresponding fiscal effect.


193

Statement of Cash Flows In thousands of euros

This schedule illustrates the changes in cash and cash equivalents, net of short-term bank overdrafts (equal to 0 during the two periods under comparison).

Notes 31/12/2014 31/12/2013Operating assets Earnings before taxation E10 67,309 11,536 Depreciation of plant, property and equipment E6 78 128 Amortisation of intangible assets 0 0 Provisions for risks and for severance indemnity and similar obligations D3 80 80 Write-downs / (Reversals) C3-C4 64,380 15,234 Capital losses / (Capital gains) on the disposal of property, plant and equipment (including property investment)

5 0

Losses / (Gains) on disposal of securities 0 (9,607)Interest receivable (1) E1 (7,003) (6,053)Dividend income (2) 0 (18,145)Interest payable E2 8,765 7,455 Change in working capital (Increase) / Decrease in trade receivables (3) C7 (6,514) (6,357)Increase / (Decrease) in trade payables (4) D5 15 (331)Increase / (Decrease) reserves for severance indemnity and similar obligations D3 (80) (59)Other changes (5) 4,725 4,996 Cash generated from operating activities (2,857) (1,123)Interest paid E2 (8,519) (7,455)Taxation paid (167) (66) Cash flow from operations (11,543) (8,644)

Investing activities Acquisition of subsidiaries, net of cash and cash equivalents 0 0 Sale price of subsidiaries, net of cash and cash equivalents 0 28,957 Investments in property, plant and equipment (including property investment)

C1-C2 (237) (221)

Sale price, or repayment value, of plant, property and equipment (including property investment)

39 0

Loans provided (6) C4 (12,071) (33,661)Repayment of loans (7) C4 13,907 0 Purchase of financial assets C4 (16,999) (28,000)Interests received 13 30 Dividends from equity investments (2) 0 18,145 Cash flow from investing activities (15,348) (14,750)

Financing Loans received D2 107,849 35,384Outflow for repayment of loans D2 (80,817) (12,860)Outflow for dividends paid H 0 0 Cash flow from financing 27,032 22,524

Increase / (Decrease) in cash and cash equivalents 141 (870)

Opening balance 2,514 3,384 Exchange differences 0 0Closing balance 2,655 2,514

(1) of which 6,983 thousand euros from loans granted to companies in the Group;

(2) dividends paid out by Piaggio & C. S.p.A.;

(3) of which a 6,829 thousand increase in trade receivables due from Group companies;

(4) of which a 31 thousand euros increase related to payables to companies in the Group and other Related Parties;

(5) of which approximately 3,680 thousand euros for receivables from companies in the Group adhering to the fiscal consolidated agreements;

(6) of which 6,112 thousand euros to ISM Investimenti, 4,749 thousand euros to RCN Finanziaria S.p.A., 1,100 thousand euros to Intermarine S.p.A., 100 thousand euros to Apuliae S.p.A. and 10 thousand euros to Pietra S.r.l.; (7) of which a reduction in receivables due from Intermarine S.p.A. of 3,000 thousand euros.

Changes in Shareholders’ Equity Note D1


Share capital

Extraordinary reserve A - B - C

Share premium reserve

A - B

Reserves for the fair value measurement

of financial assets

available for sale

Reserves for

evaluation at fair value of hedging

instruments

Measurement reserve for

Entities Under

Common Control

Property Investment Revaluation

reserve

Actuarial evaluation reserve on

defined benefit plans

Reserves for

revaluation A - B - D

Legal reserve

A

Other legal

reserves A - B - D

IAS transition reserves

Earnings reserves A - B - C


Shareholders’ equity


177,076 7,103 95,216 (4,515) (1,496) 65,087 40,709 (8) 4,602 6,247 1,153 (1,614) 45,469 (29,860) 405,168

Increases in share capital against payment

0

Allocation of earnings to Legal Reserve

0

Allocation of earnings to Dividends

0

Allocation of earnings to Retained Earnings

(29,860) 29,860 0

Purchase of treasury 0 Other changes 1,388 (1,388) 0 Comprehensive income 4,666 570 12 14,843 20,091


178,464 7,103 95,216 151 (926) 65,087 40,709 4 4,602 6,247 1,153 (1,614) 14,223 14,843 425,259


Share capital

Extraordinary reserve A - B - C

Share premium reserve

A - B

Reserves for the fair value measurement

of financial assets

available for sale

Reserves for

evaluation at fair value of hedging

instruments

Measurement reserve for

Entities Under

Common Control

Property Investment Revaluation

reserve

Actuarial evaluation reserve on

defined benefit plans

Reserves for

revaluation A - B - D

Legal reserve

A

Other legal

reserves A - B - D

IAS transition reserves

Earnings reserves A - B - C




178,464 7,103 95,216 151 (926) 65,087 40,709 4 4,602 6,247 1,153 (1,614) 14,223 14,843 425,259

Increases in share capital against payment

0

Allocation of earnings to Legal Reserve

742 (742) 0

Allocation of earnings to Dividends

0

Allocation of earnings to Retained Earnings

14,101 (14,101) 0

Purchase of treasury 0 Other changes 0 Comprehensive income (124) (21) (44) (65,628) (65,817)


178,464 7,103 95,216 27 (947) 65,087 40,709 (40) 4,602 6,989 1,153 (1,614) 28,324 (65,628) 359,443

Available for: A: Loss balance B: Share capital increase C: Distribution to shareholders D: Distribution to shareholders under tax suspension


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Notes to the financial statements as of 31 December 2014

Note Description

A General aspects

B Accounting standards and measurement criteria

C Information on the main asset items

C1 Plant, property and equipment

C2 Property investments

C3 Equity investments in subsidiaries and associated companies

C4 Other financial assets

C5 Amounts due from the tax authorities

C6 Deferred tax assets

C7 Trade receivables and other receivables

C8 Cash and cash equivalents

D Information on the main liabilities items

D1 Shareholders’ equity

D2 Financial liabilities

D3 Reserves for severance indemnity and similar obligations

D4 Deferred tax liabilities

D5 Trade payables and other payables

D6 Current taxation

E Information on the main Income Statement items

E1 Financial income

E2 Borrowing costs

E3 Operating income

E4 Costs for services and the use of third party assets

E5 Personnel costs

E6 Depreciation of plant, property and equipment

E7 Other operating income

E8 Other operating costs

E9 Taxation

E10 Net earnings of the period

F Commitments, risks and guarantees

G Net financial position

H Dividends paid

I Group and Related Party Dealings

L Risks and uncertainties

M Auditing costs


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A – General aspects Immsi S.p.A. (the Company) is a limited company established under Italian law and has registered offices in Mantova - P.zza Vilfredo Pareto, 3 and sub-offices in via Abruzzi, 25 – Rome and via Broletto, 13 – Milan. The main activities of the company and its subsidiaries (the Group) are described in the first section of the Directors’ Report on operation. As of 31 December 2014, Immsi S.p.A. was directly and indirectly, pursuant to Article 93 of the Consolidated Law on Finance, controlled by Omniaholding S.p.A., a company entirely owned by the Colaninno family, through the subsidiary Omniainvest S.p.A.. Following the coming into force of European Regulation no. 1606 in July 2002, Immsi S.p.A. has adopted the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) and approved by the European Commission, the updates of those pre-existing ones (IAS), as well as the documents of the International Financial Reporting Interpretations Committee (IFRIC) deemed applicable to the transactions carried out by the Company. The financial statements of Immsi S.p.A. are drawn up in compliance with Italian Legislative Decree no. 58/1998, as well as in compliance with provisions issued pursuant to Article 9 of Italian Legislative Decree no. 38/2005 (Consob Resolution no. 15519 dated 27/7/06 containing “Provisions for the presentation of financial statements", Consob Resolution no. 15520 dated 27/7/06 containing “Changes and additions to the Regulation on Issuers” adopted by Resolution no. 11971/99”, Consob communication no. 6064293 dated 28/7/06 containing “Corporate reporting required in accordance with Article 114, paragraph 5 of Italian Legislative Decree no. 58/98”). The Company did not deem significant the presentation of information by sector, as established in IFRS 8. The currency used in preparing these financial statements is the euro and the amounts are expressed in thousands of euros (unless otherwise indicated). These financial statements are audited by PricewaterhouseCoopers S.p.A. pursuant to the mandate granted by the Shareholders’ Meeting on 11 May 2012 for the period 2012-2020.

Presentation of the financial statements The consolidated financial statements consist of the Statement of Financial Position, the Income Statement, the Statement of Comprehensive Income, the Statement of Cash Flows, the Schedule of changes to Shareholders’ Equity and the Notes. With reference to Consob Resolution no. 15519 of 27 July 2006 it is pointed out that, as regards the financial schedules, Income Statement, specific Statement of financial position and Statement of Cash Flows have been inserted to evidence significant Related Party dealings and intergroup. In relation to the options envisaged in IAS 1 - Presentation of Financial Statements, Immsi S.p.A. has opted to present the following types of accounting schedules: - Statement of Financial Position: The Statement of Financial Position is presented in sections

with Assets, Liabilities and Shareholders’ Equity indicated separately. Assets and Liabilities are shown in the financial statements on the basis of their classification as current and non-current;

- Income Statement: The Income Statement is presented with the items classified by kind of costs. The Company, in the light of the economic importance of the financial component in relation to the real estate and services component, has adopted from these financial statements a report on the Income Statement that highlights at the top of the chart the predominant business of Immsi S.p.A.;

- Statement of Comprehensive Income: The Statement of Comprehensive Income is presented in accordance with the provisions of reviewed version of IAS 1, net of a possible fiscal component. The items presented in Other comprehensive profits/(losses) are grouped according to whether or not they can be subsequently reclassified in the Income statement;


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- Statement of Cash Flows: The Statement of Cash Flows is presented divided into areas generating cash flows, as indicated by international accounting standards. The Statement adopted by Immsi has been prepared using the indirect method;

- Schedule of Changes in Shareholders’ Equity: The Schedule of Changes in Shareholders’ Equity is shown as required by the reviewed version of IAS 1. It includes the Statement of Comprehensive Income. For each item a reconciliation is presented between the balance at the start and at the end of the period.

B - Accounting standards and measurement criteria The accounting standards adopted in preparing this financial statements are the same as those applied in preparing the annual financial statements as of 31 December 2013, except for the contents of next section on accounting policies applied starting on 1 January 2014. The directors have drawn up the financial statements on the basis of the historical cost principle modified as requested for evaluating certain financial statement items and with the presumption of the business continuing since, even in a difficult economic and financial context, the uncertainties found, as defined by IAS 1, are not significant and generate no significant doubts about the presumed continuity of the business. No atypical, unusual or non-recurrent operations have been found during 2013 and 2014. No exceptional cases occurred that required derogations to the norms of the law related to the financial statements of the year in accordance with Article 2423, paragraph 4, of the Italian Civil Code. The international accounting standards adopted are listed and summarised below. Intangible assets

An intangible asset is recorded only if it is identifiable, verifiable and it is likely to generate future economic benefits and its costs can be reliably determined. These assets are recognised at acquisition or production cost and amortised on a straight line basis over their estimated useful life, if they have a finite useful life. Intangible assets with an indefinite useful life are not amortised but are subject to impairment testing. The amortisation period for an intangible asset with a finite useful life are reviewed at least each year end: if the expected useful life proves different from previous estimates, the amortisation period is changed accordingly. Plant, property and equipment

Plant, property and equipment are recorded at purchase cost, including directly attributable accessory charges, net of accumulated depreciation and impairment losses. In the case of an asset for which capitalisation is justified, the cost also includes the borrowing costs directly attributable to the acquisition, construction or production of the asset. The costs incurred following the purchase are capitalised only if they increase the future economic benefits inherent in the asset to which they refer. All other costs are recorded in the income statement when they are incurred. Plant, property and equipment in progress are valued at cost and are depreciated from the period in which they come into operation. Depreciation is determined on a straight-line basis over the estimated useful life of the assets or, in the case of disposal, until the end of the complete previous year. Land is not depreciated. Profits and losses arising from the sale or disposal of assets are measured as the difference between the sale revenue and net book value of the asset and are entered in the income statement for the period.


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The Company does not hold any asset under financial lease contract as of 31 December 2014. The other plant, property and equipment are depreciated applying the rates indicated below, reduced by half for fixed assets acquired during the year:

Plant and machinery from 15% to 30% Furniture and fittings, electrical machines 12% Personal computers, hardware, EDP and telephone systems 20% Motor vehicles 25% Other equipment 15%

Property investments

As allowed by IAS 40, a non-instrumental property owned in order to obtain rents and/or for the appreciation of the property is valued at fair value. The property investments are not subject to the process of amortisation and they are eliminated from the financial statements when they are sold or when the property investment is durably unusable and no future economic benefits are expected from its sale. The Company annually revises the carrying amount of investment property held or more frequently if required by facts or circumstances. Equity investments

Equity investments in subsidiaries and associated companies are recorded at cost adjusted for any impairment. The flows of purchase and sale related to the investments follow the criterion of FIFO. Impairment

Plant, property and equipment and equity investments in subsidiaries and associated companies are subjected to impairment tests annually, or more frequently, whenever there is an indication that the asset may have suffered impairment. If there is evidence that such assets have suffered a prolonged or significant loss in value, the asset's recoverable amount is estimated to determine the amount of the impairment and it is immediately observed in the Income Statement. Where it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the asset's cash generating unit. The recoverable amount is the higher of an asset's fair value less costs to sell (if available) and its value in use. In measuring the value in use, estimated future cash flows are discounted at their fair value, using a rate net of taxes, which reflects current market changes in the fair value of money and specific risks of the asset. If the recoverable amount of an asset (or of a cash generating unit) is estimated to be lower than the relative carrying amount, the carrying amount of the asset is reduced to the lower recoverable value. An impairment loss is immediately recognised in profit or loss, unless the asset is land or buildings other than the property investments recognised at revalued amounts, in which case the loss is charged to the respective revaluation reserve. With reference to the measuring of the equity investments, if any portion belonging to the Company of the investee’s losses exceeds the book value of the equity investment and the Company is answerable for them, the value of the equity investment is reversed and the portion of any further losses is recorded as a provision in the liabilities. Should the recorded write-down no longer be valid, the book value of the asset is increased to the new value arising from the estimate made of its recoverable value, but not more than the net carrying value that the asset would have had if the write-down for impairment losses had not been made. The reversal of the impairment loss is immediately recognised in profit or loss.


199

Receivables

Receivables are recorded at their nominal adjusted value, in order to align them to their presumed realisable value, through the recording of a bad debt provision. This provision is calculated on the basis of the recovery assessments carried out by analysis of the individual positions and of the overall risk of all the receivables, also taking account of any guarantees. When the payment of the sum due is deferred beyond normal credit terms offered to customers and the financial effect associated with such deferral is significant, it is necessary to discount the receivable. Cash and cash equivalents

This item includes cash in hand, on demand deposit accounts and other highly-liquid short-term financial investments, which are readily convertible into cash and have an insignificant risk of losing value. Financial assets

The item financial Assets includes: i) assets held for trading (fair value to profit and loss)), ii) investments held at maturity, iii) loans and receivables and iv) the residual category for assets available for sale. Included among financial assets are current securities, that is, short-term or negotiable securities that represent temporary investments of liquidity and do not meet the requirements for classification as cash equivalents. Their initial measurement takes account of the transition costs directly attributable to their purchase or issue. After initial recognition at cost, financial instruments available for sale and these held for trading are measured at fair value. When financial assets are held for trading, the gains and losses arising from changes in the fair value are charged to the Income statement. When financial assets are available for sale, namely they are not classified as financial assets held for trading and they are not loans or receivables, the gains and losses arising from changes in the fair value are charged to Statement of Comprehensive Income until the financial asset is sold or derecognised; at that moment the accumulated overall gains or losses, including the ones previously recognised in the shareholders’ equity, are included in the Income statement of the period. The investments held to maturity and not for purposes of negotiation (financings and credits originated during the characteristic activity) and all the financial activities with medium-long term preset maturities, for which there are no quotations available in an active market and whose fair value cannot be determined reliably, are valued according to the criterion of the amortised cost net of any write-downs operated to reflect impairment losses. The loans and receivables originated during the activity that Immsi S.p.A. does not hold for trading for which the fair value cannot be reliably determined, and they do not have a fixed maturity, are measured at purchase cost. Treasury shares Shares of treasury shares are deducted from shareholders' equity. The original cost of treasury shares and the revenue proceeds from any subsequent sale are recognised directly in equity. Financial liabilities

Financial liabilities include loans that are recognised at the cost represented by the original value of the sums received are recorded and reversed from the financial statements on the basis of their trade date. Non- current financial liabilities which differ from the financial liabilities measured at fair


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value and recognised in the Income statement, are registered net of the accessory acquisition fees and, subsequently, are measured with the amortised cost method, using the effective interest rate. The Company's activities are exposed primarily to financial risks from changes in interest rates. The Company uses derivative instruments to hedge risks arising from changes in interest rates on certain irrevocable commitments and planned future transactions. The derivatives are initially recognised at the fair value represented by the initial consideration. Derivative financial instruments are used solely for hedging purposes, in order to hedge against fluctuations in interest rates. In accordance with IAS 39, derivative financial instruments can be recorded in the manner prescribed for hedge accounting only when, at the beginning of the hedge, there is formal designation and documentation of the hedging relationship, it is assumed that the hedge is highly effective, its effectiveness can be reliably measured and the hedge is highly effective throughout the financial reporting periods for which it is designated. Financial liabilities hedged with derivative instruments are booked according to the methods established for hedge accounting, applicable to the cash flow hedge: the profit and loss portion on the hedging instrument that is considered actual coverage is charged in the prospectus of the Statement of Comprehensive Income, the aggregate gain or loss is removed from Shareholders' equity and recognised in the Income statement in the same period during which the hedged transaction is recognised. The ineffective portion of the profits and losses on the hedging instrument is entered in the Comprehensive Income. If the transaction is still expected to occur and the hedge relationship ceases, the amounts accumulated in the statement of comprehensive income will be retained in equity until the hedged item affects profit or loss. If the hedged transaction is no longer expected to occur, the unrealised gains or losses suspended in Shareholders' equity are recognised immediately in the Income statement. Payables

Trade payables falling due within normal business terms are not discounted and are recognised at nominal value, deemed representative of their extinction value. The interest portion possibly included in the nominal value not accrued at the end of the period is deferred to future periods. Employee benefits

With the adoption of the IFRS, termination benefits accrued up to 31 December 2006, that will now be held by the company, is considered a defined benefit obligation to be recorded in accordance with IAS 19 - Employee Benefits, consequently, it must be recalculated using the projected unit credit method, by undertaking actuarial valuations at the end of each period, through independent actuaries. The liabilities for benefits following the employment relationship recorded in the financial statements represent the present value of liabilities for defined benefit plans adjusted to take account of actuarial gains and losses and the unrecorded costs related to previous employment services. The cost components of defined benefits are recognised as follows: the costs relative to services are recognised in the Income Statement under employee

costs; net financial borrowing costs of liabilities or assets with defined benefits are recognised in

the Income Statement as financial income/(borrowing costs), and are determined by multiplying the value of the net liability/(asset) by the rate used to discount the obligations, taking account of the payment of contributions and benefits during the period;

the remeasurement components of net liabilities, which include actual gain and losses, the return on assets (excluding interest income recognised in the Income Statement) and any change in the limit of the assets, are immediately recognised as Other total profits (losses). These components must not be reclassified to the Income Statement in a subsequent period.


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Deferred taxation assets and liabilities

Deferred taxation assets and liabilities are calculated on all of the temporary taxable differences between the book value and their tax value. Deferred tax assets on tax losses are recognised only to the extent that the existence of adequate future taxable income of the Group against which to use this positive balance is considered likely. The book value of deferred tax assets is subject to annual review and is reduced to the extent to which the existence of sufficient taxable income to allow the whole or partial recovery of such assets is no longer probable. Assets for deferred taxation and the reserve for deferred taxation are offset when there is a legal right to offset and when the taxes are due to the same tax authority. Deferred taxation is determined on the basis of the tax rates which are expected to be applied in the periods in which such temporary differences will occur or be extinguished. Deferred taxation may not be discounted and is classified under non-current assets and liabilities. Financial income and charges

Financial income and charges are recorded on an accrual basis. Financial income includes dividends, interest income on invested funds and income arising from financial instruments. Interest income is charged to the Income statement as it accrues, considering the effective yield. Interests due on financial payables are calculated using the effective interest rate method. Dividends recorded in the Income statement are recorded when, following the resolution to distribute a dividend is passed by the investee company, the related tax credit right arises. Operating revenues and costs

The costs and revenues from the sale of assets are given in the financial statements only when the risks and the correlated benefits to the owners of the assets are considered transferred while, as concerns the services, costs and revenues, they are ascribed to the Income statement with reference to their advancement and the benefits achieved at the date of the financial statements.

The reporting criteria required by IAS 18 are applied to one or more operations as a whole when they are so closely connected that the commercial result cannot be valued without making reference to such operations as to a single whole, therefore the income from re-charging costs for materials and services sustained by Immsi S.p.A. on behalf of companies in the Group or third parties is not given in the Income statement as it is offset with the related costs that generated them. Current taxation

The income taxes for the year are calculated using the tax rates in force at the balance sheet date and are recorded in the Income statement, except for income tax relating to items directly charged or debited to Shareholders’ equity, in which case the tax effect is recognised directly as a reduction or increase in Shareholders’ equity under examination. Other taxation unrelated to income is included in other operating costs. Income tax for Regional Tax on Productive Activities is recognised in the amounts due to the tax authorities net of advances while as for Italian Tax on Corporate Income it is noted, that since 2007 the Company has undersigned with some companies of the Group a national fiscal consolidated contract, therefore the payables, advance payments and withholdings suffered were transferred at the end of the year to the fiscal consolidated company. Immsi, as the consolidating company, has reported in its own financial statements the net effect of the amount due to the companies transferring fiscal losses and tax credits, and of the credit towards the companies transferring a


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taxable amount set off respectively against the credit or the cumulative payables with the tax authorities. Use of estimates

The preparation of the financial statements and the related notes in application of the IAS/IFRS requires Management to make estimates and assumptions that have an impact on the values of the assets and liabilities in the financial statements and on the information relating to contingent assets and liabilities at the financial statement date. The actual results may differ from such estimates. Estimates are used, among others, to evaluate activities subject to impairment testing, and to identify provisions for bad debts, amortisation and depreciation, impairment losses of assets, employee benefits, taxes and other provisions and reserves. These estimates and assumptions are periodically reviewed and the impact of each change is immediately reflected in the Income statement. It should be pointed out that, in particular, considering the current global economic and financial crisis, assumptions about future trends reflect a significant degree of uncertainty. Consequently, the Group cannot rule out the possibility that next year's results will differ from estimates and may require adjustments that are even considerable and which are not foreseeable and cannot be estimated at present. New accounting standards applicable as from 1 January 2014

At the date of issue of these financial statements, competent bodies of the European Union had completed the approval process necessary for the application of new accounting standards and amendments as from 1 January 2014. The adoption of the new standard has not resulted in any significant effects for Immsi S.p.A.. Standards applicable to separate financial statements are reported below: On 12 May 2011, the IASB issued the standard IFRS 12 – Disclosure of Interests in Other

Entities which is a new and complete standard on disclosures to provide on all types of investments including in subsidiaries, joint arrangements, associated companies, special purpose entities and unconsolidated structured entities.

At the same time as IFRS 10 and IFRS 12 were issued, the pre-existing IAS 27 Consolidated and Separate Financial Statements, renamed Separate Financial Statements was amended as regards its name and contents, deleting all requirements relative to consolidated financial statements. Following this amendment, the standard only defines the measurement and recognition criteria, as well as reporting to include in separate financial statements as regards subsidiaries, joint ventures and associated companies.

On 29 May 2013, the IASB issued an amendment to IAS 36 – Recoverable Amount Disclosures for Non-Financial Assets, to clarify disclosure on the recoverable amount of assets subject to impairment, if the amount is based on the fair value net of costs to sell.

On 16 December 2011, the IASB issued some amendments to IAS 32 – Financial Instruments: Presentation, to clarify the use of some criteria for offsetting financial assets and liabilities contained in IAS 32.

On 27 June 2013, the IASB issued some minor amendments to IAS 39 – Financial Instruments: Recognition and Measurement, entitled "Novation of derivatives and hedge accounting continuity". The amendments allow for the continuation of hedge accounting if a financial derivative, designated as a hedging instrument, is novated following the adoption of the law or regulations in order to replace the original counterparty to guarantee the successful outcome of the obligation undertaken and if certain conditions are met. This amendment is also included in IFRS 9 - Financial Instruments

On 20 May 2013, the IASB issued IFRIC 21 - Levies, an interpretation of IAS 37 - Provisions, Contingent Liabilities and Contingent Assets. IFRIC 21 provides clarifications on when an entity must recognise a liability for the payment of levies imposed by governments,


203

other than levies regulated by other standards (e.g. IAS 12 – Income taxes). IAS 37 establishes criteria for the recognition of a liability, including the existence of the current obligation of the entity as the result of a past event (known as the binding fact). The interpretation clarifies that the binding fact, which gives rise to a liability for the payment of the tax, is described in the reference standard from which the payment arises.


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C – Information on the main asset items C1 Plant, property and equipment 247 The changes in plant, property and equipment are detailed below:

In thousands of euros Plant, property and equipment

Situation as of 31/12/2013 240

- Capital amount 1,376- Accumulated depreciation -1,136

Increases for investments 130

Decreases for depreciation -78

Decreases for disposals -45

- (Capital amount) -121

- Accumulated depreciation 76

Situation as of 31/12/2014 247

- Capital amount 1,385- Accumulated depreciation -1,138

The item includes plant, furniture and furnishings, office machinery and electronics, motorcars and various equipment.

C2 Property investments 73,887 Since 2008 the Company has classified the property located in Rome – via Abruzzi as property investment, as defined by IAS 40, reassessing the book value to the market value at the date of change of destination, in the amount of 72.1 million euros, since it was no longer instrumental to the typical activity, yet rather as an asset usable to finance the other ongoing investment activities. The greater value was entered in a specific reserve of the equity, net of the related tax effect. Subsequent investments have led to an increase of the property. The investment moreover is no longer subject to a process of amortisation starting from the year 2009 as required by the international accounting standards. The value recognised in the financial statement includes 24 thousand euros of works in progress that will be completed and will generate profit starting from 2015. The valuation of the real estate investment at issue is based on a survey performed by an external advisor that estimated the fair value at the end of 2014 in line with the value of registration in the financial statements as of 31 December 2014. The valuation criteria used in this survey refer to generally accepted valuation methodologies and principles, using discounted cash flow analysis. The valuation is therefore based on discounting cash flows generated during the period at the estimate date. Revenues and costs were considered at present value, at the time when they arose and were discounted bank using a suitable rate. The market value of the property complex therefore comprises the discounting of operating costs, revenues from the property according to various uses and revenues from the sale of the property assumed for capitalisation of the rental payment of the last period considered. In order to determine the rental payment of the property, the comparative synthetic method was used. It makes it possible to determine the value corresponding to the sum of money for which the property could be rented, at the time of the estimate, between an owner and lessee both interested in the transaction, in the absence of particular interests and after an adequate sale, assuming that both parties act freely, cautiously and are informed. This comparative procedure estimates the rental value by comparing recent or present transactions, relative to similar assets as regards the


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type, building and location. The rental payment for the asset may, therefore, be determined taking into account rental prices and making adjustments considered adequate as regards the morphological aspects of the asset, its maintenance, profitability, the qualities of any lessee and any other factor considered relevant. The continued uncertainty in the real estate market makes it possible for prices and values to have periods of extreme volatility as long as the market does not recover its stability. Rental income referred to the building and recognised as operating income amounts to 2,841 thousand euros. The costs connected to it refer substantially to ordinary maintenance and operating administration of the building. Most of these costs are then debited to the tenants as per condominium regulations. A mortgage of 92 million euros has been taken out on the property situated in Rome, to guarantee the loan obtained in 2010 from a pool of banks led by the Banco Popolare Group for 46 million euros, of which 23 million euros already repaid, with settlement in June 2019.

C3 Equity investments in subsidiaries and associated companies 322,359 Equity investments in subsidiaries and associated companies are detailed below. The overall value has not changed compared to 31 December 2013. The figures shown have been calculated adopting international accounting standards and refer to the last financial statements approved by relative Boards of Directors.

Company name and Head office

Share capital


Net earnings


Pro rata shareholders’

equity

Difference between pro

rata shareholders’

equity and book value

No. of shares

Book value

Apuliae S.p.A. Lecce 1,000 866 -100 85.69% 742 -597 2,000,000 1,339ISM Investimenti S.p.A. Mantova

6,655 33,789 -4,172 72.64% 24,545 -11,915 6,654,902 36,460

Piaggio & C. S.p.A. Pontedera (Pisa) *

206,228 328,978 14,810 50.59% 166,424 -81,368 363,674,880 247,792

RCN Finanziaria S.p.A. Mantova

32,136 23,151 -3,981 63.18% 14,628 -3,370 64,271,976 17,998

Pietra S.r.l. Milano

40 23,348 -109 77.78% 18,160 -600 n/a 18,761

Immsi Audit S.C. a R.L. Mantova

40 25 -16 25.00% 6 -4 n/a 10

* share capital net of treasury shares.

APULIAE S.p.A. The equity investment in Apuliae S.p.A, is recognised in the financial statements for the amount underwritten upon establishing the company in December 2003, increased by the amount paid for a future increase in share capital in January 2004 for 2 millions euros and in December 2012 for 92 thousand euros. As a consequence of the extended suspension of the restructuring activities relating to the “ex Colonia Scarciglia” building in Santa Maria di Leuca (Lecce), during 2006 Immsi wrote down its shareholding by 2,453 thousand euros. The Extraordinary Shareholders’ Meeting of Apuliae S.p.A. held in 2008 resolved, partial coverage of the losses accumulated as of 31 December 2007 equal to 2,490 thousand euros by writing down the shareholders’ equity and zeroing the reserve of 2 million euros paid by Immsi. The General Meeting in late 2012 resolved to partially cover the accumulated losses at 30 September 2012 amounting to 620 thousand euros through a reduction of the share capital.


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At present the suspension of the work of renovation begun in March 2005 following investigations by the legal authorities continues. Reference is made to the sections on the Property and holding sector and Disputes in progress in the Directors' Report and the Financial Statements of the Immsi Group as of 31 December 2014 for an update on the situation. ISM INVESTIMENTI S.p.A. Immsi S.p.A. acquired at the end of the year 2008 a stake equal to 100% in Ballo in Maschera S.r.l., then transformed into ISM Investimenti S.p.A.. The body of shareholders of this company was at the same time expanded with the entry in the capital of the minority shareholder IMI Investimenti S.p.A.. The company ISM Investimenti S.p.A. has, after the aforesaid capitalisation, acquired from Immsi S.p.A. the shares, equal to 60% of the capital, related to the investment in Is Molas S.p.A., previously held directly by Immsi S.p.A., paying an amount equal to 84 million euros. The operation responded to the strategy of Immsi to concentrate some of the Group’s business of tourist-real estate development in a specific company, with the objective of associating partners with these initiatives that strengthen the asset base. On the basis of the agreements between the shareholders, Immsi S.p.A. has maintained control of Is Molas S.p.A.. The company issued convertible financial instruments early in 2010 (so-called " Equity Financial Instruments" or "SFP") subscribed for 1,262,746 by the shareholder Immsi S.p.A. ("Category A SFPs") and for 392,156 by the shareholder IMI Investimenti S.p.A. ("Category B SFPs"): Following said operation, the holdings of the shareholders Immsi S.p.A. and IMI Investimenti S.p.A. have not been changed and have remained respectively 71.43% and 28.57% until the end of 2012. After the conversion of the above SFPs into shares in 2013, Immsi S.p.A. holds 4,834,175 category A shares, while IMI Investimenti S.p.A. holds 1,820,727 category B shares, with investments (in terms of voting rights) equal to 72.64% and 27.36% respectively. In this regard, considering the different equity rights of the two shareholders established by the co-investment and shareholders agreement signed at the time of the initial investment as supplemented and amended in 2013 - the portion of shareholders' equity of ISM Investimenti S.p.A. consolidated by Immsi S.p.A. was estimated to be 60.39% as of 31 December 2014. The value of the registered investment is 11,915 thousand euros greater than the pro-quota shareholders' equity. This difference is believed to be recoverable in the light of the present progress of the project for residential and tourist-hotel development presented by the indirect subsidiary Is Molas S.p.A.. Reference is made to the sections on the Property and holding sector and Disputes in progress in the Directors' Report and the Financial Statements of the Immsi Group as of 31 December 2014 for an update on the situation. Piaggio & C. S.p.A. Immsi S.p.A.'s investment in Piaggio & C. S.p.A. was recognised under assets as of 31 December 2014 for 247,792 thousand euros, and remained unchanged compared to 31 December of the previous year. As a result of sales and purchase of treasury shares by Piaggio & C. S.p.A. that took place in 2014, the stake of Immsi went from 50.75% as of 31 December 2013 to 50.59% as of 31 December 2014. The value of the shareholding calculated based on the specific listing as of 31 December 2014 amounted to 440,376 thousand euros. The stake as of 31 December 2014 was 81,368 thousand euros more than the pro-quota shareholders' equity. This difference is considered by the Directors to be recoverable in relation to the development plans of the Piaggio Group as backed up by the impairment test carried out on 31 December 2014. It is to be noted, indeed, that the conducted analyses have not highlighted any losses of value in terms of the book value of the stake held by Immsi S.p.A. in Piaggio & C. S.p.A.. In particular, it is reported that, in correspondence with the values taken into consideration for the main basic assumptions considered for the impairment test (i.e. average “g rate” weighted for the Piaggio Group equal to approximately 1.4% and average WACC weighted for the Piaggio Group


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equal to approximately 7.7%), the test regarding the verification of the value in use of the stake held in the Piaggio Group was passed with a broad margin. In addition, also on the basis of the indications contained in the Document Banca d’Italia/Consob/Isvap no. 2 of 6 February 2009 and in the document Banca d’Italia/Consob/Isvap no. 4 of March 2010, sensitivity analysis has been carried out on the results of the test in relation to the change in basic assumptions such as the perpetual growth rate in processing the terminal value (“g rate”) and the discount rate (WACC), that condition the estimate of the utilisation value of the Piaggio Group cash-generating unit: the impairment test was passed in all reasonably considered cases. In this regard, changes in values assigned to basic assumption considered reached the worst case scenario of a reduction in the perpetual growth rate (“g rate”) of one percent, and an increase in the WACC of one percent. For further details regarding the impairment test conducted and the assumptions underlying it, readers are referred to the comments made in the Notes on the Immsi Group’s consolidated financial statements. Lastly, of the 182,728,621 Piaggio shares held by Immsi as of 31 December 2014, 133,590,962 thousand Piaggio shares were deposited as security on loans granted by banks to Immsi S.p.A. as described under Financial Liabilities, as well as an additional 28,500,000 Piaggio shares which bear a pledge as collateral for loans amounting to a total of 44.8 million euros granted by Intesa Sanpaolo to Intermarine S.p.A.. RCN Finanziaria S.p.A. The 63.18% equity investment in RCN Finanziaria S.p.A. is recognised in the financial statements at the end of the reporting period for 17,998 thousand euros, and is unchanged compared to the figure as of 31 December 2013. The stake as of 31 December 2014 was 3,370 thousand euros more than the pro-quota shareholders' equity. this difference is considered by the Directors to be recoverable in relation to development plans of the indirect subsidiary Intermarine S.p.A. as backed up by the impairment test carried out on 31 December 2014. Analyses conducted did not highlight any impairment loss as regards the carrying amount of the investment held by Immsi S.p.A.. The main hypotheses and assumptions used in determining the recoverable value of the stake are related to i) the use of forecast economic and asset data of Intermarine S.p.A., a 100% subsidiary of RCN Finanziaria S.p.A.; ii) the discount rate used for making the estimated expected cash flows current; and iii) the expected growth rate for the calculation of the terminal value consistently with the approach of updating the perpetuity growth. For further details regarding the impairment test conducted and the assumptions underlying it, readers are referred to the comments made in the Notes on the Immsi Group’s consolidated financial statements. The forecast data considered – uncertain and variable by nature – reflect the evolution of the Company’s order portfolio as well as its future industrial and commercial strategies. The data, in particular, are based - to a significant extent - on the acquisition of future contracts for which negotiations, at various stages, are ongoing with the Italian Navy and international navies. updates, revisions or negative developments relative to the aforesaid assumptions and to the projections that should occur after the date of reference of this evaluation work could influence, even significantly, the results of the impairment test. In this regard, during previous years the final results of Intermarine S.p.A. showed significant deviations compared to forecasts of forward looking financial data used, even after several exceptional and non foreseeable events, such as the floods at the Intermarine site in Sarzana: given the intrinsically uncertain nature of the forward looking data considered, we cannot exclude that these variances may continue to take place even in the future with respect to the forward looking data used with reference to the assessments carried out as of 31 December 2014. Lastly, an impairment loss for the investment was recorded amounting to 22,607 thousand euros, based on the results of impairment testing carried out in 2010, 2011, 2012 and 2013. Given that the analyses conducted to determine the recoverable amount were also carried out on the basis of estimates, the existence of adequate cash flows to allow the recovery of the carrying amount of the


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equity investment and the period within which those flows will be produced, is dependent on the outcome of initiatives provided within the forecast data of Intermarine S.p.A.. In particular, this data provides for the return to a position of economic and financial stability in the medium term mainly thanks to orders acquired by the Defence business and the reduction of indirect and general costs. Given the current crisis in the reference markets and the financial markets, the management of the Company can not guarantee that there will be no further impairment loss of the equity investment in future periods: in view also of the fact that a number of factors - both internal and external to Intermarine S.p.A. - considered in the calculation of the estimates could be revised in the future, the Company will constantly monitor these factors and the possible existence of future impairment losses. PIETRA S.r.l. At the end of 2006, Immsi S.p.A. acquired a 77.78% equity investment in Rodriquez Pietra Ligure S.r.l. (transformed into Pietra S.r.l. in early 2007), recognised in the financial statements for an amount of 18,761 thousand euros, the amount paid upon the initial underwriting, equal to 16 thousand euros, and at the subsequent increases in share capital, 3,889 thousand euros during 2006 and in 2007 for 14,856 thousand euros. This company, established in December 2006 by Rodriquez Cantieri Navali S.p.A., was then sold to the two current shareholders (Immsi S.p.A. and Intesa San Paolo S.p.A.), so as to be able to sign an agreement to sell the future receivable relating to the Pietra Ligure shipyard project with Rodriquez Cantieri Navali S.p.A. itself. In parallel with the transfer of the credit, Rodriquez Cantieri Navali S.p.A. granted Pietra S.r.l. the stock rights for the acquisition of the entire stake in the Newco, contributor of the industrial complex together with the area transferred from the State, at the price of 300 thousand euros. The option is subject to the condition of suspension of the non-stipulation of the final contract of sale of the shareholding to which Rodriquez Cantieri Navali S.p.A. and the promissory purchaser Como S.r.l. committed themselves by effect of the stated preliminary contract. This project refers to the building yard area located in Pietra Ligure (Savona) that – in the intentions of the subsidiary – should be turned into a property complex made up of apartments, a hotel, mooring places, shops and other services. The area concerned was acquired by the Immsi Group by assignment during a public auction in 2007. Reference is made to the sections on the property and holding sector and Significant events after the reporting period in the Directors' Report and the Financial Statements of the Immsi Group as of 31 December 2014 for an update on the situation. Therefore, in relation to the goals of the company and to the project’s current state of progress, the 600 thousand euros difference between the book value and the pro-rata shareholders’ equity is deemed recoverable. Lastly, on 12 December 2008, a company was established called IMMSI Audit Società Consortile di Internal Auditing del Gruppo Immsi a R.L. (IMMSI Audit S.c. a r.l.), with Immsi S.p.A. undersigning 25% of the share capital, equal to 10 thousand euros.

C4 Other financial assets 176,183 Below is a breakdown of other financial assets held by Immsi S.p.A.: In thousands of euros 2014 Year 2013

Other non-current financial assets: 11,449 60,700

Financial assets available for sale (afs) 10,349 57,700

Financial receivables to third parties - -

Financial receivables to Group companies 1,100 3,000

Other current financial assets: 164,734 164,795

Financial assets available for sale (afs) 14,876 15,002

Financial receivables to third parties - 10,907

Financial receivables to Group companies 149,857 138,886


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Total other financial assets 176,183 225,495

Other non-current financial assets include the value of the investment held in Alitalia – Compagnia Aerea Italiana S.p.A. acquired in 2008 and loans to Group companies. This investment was recognised in the financial statements as of 31 December 2014 as 10,349 thousand euros, down by 47,351 thousand euros compared to the corresponding value as of 31 December 2013 (57,700 thousand euros). This decrease is the algebraic sum of the following effects:

the conversion in January 2014 of the subscribed portion of the subordinated convertible debenture loan issued by Alitalia - CAI in February 2013 (equal to 11.7 million euros, including interest accrued at that date);

the payment of a total of 5.4 million euros to Alitalia – CAI in the fourth quarter of 2014, in compliance with the Stand-by Equity Commitment undertaken in September 2014 to subscribe and issue for a maximum of 10 million euros the capital increase payment resolved by shareholders of Alitalia – CAI on 25 July 2014;

the recognition of an impairment loss in the Income statement of the Parent Company Immsi S.p.A. and of the Immsi Group estimated on the basis of valuations carried out as of 31 December 2014 for an amount of approximately 64,350 thousand euros, following the identification of impairment losses considered to be durable.

In this regard, it should be noted that the Parent Company availed itself of the assistance of an external consultant for the preparation of an impairment report to support the Board of Directors of Immsi S.p.A. in its valuations: the fair value of the investment was estimated considering the transaction value, as described below, and considering the average value of results from applying the two valuation methods based on determining the present value of future financial flows relative to a long-term forecast period (“Dividend Discount Model, DDM” and “Discounted Cash Flow, DCF”). On 31 December 2014, a final agreement was signed between the long-standing shareholders of Alitalia – CAI and lender banks with a new minority shareholder of Alitalia, Etihad Airways, as part of an operation to reorganise and relaunch Alitalia, through a strategic partnership with the new partner and airline company Etihad Airways. This operation established a number of conditions, including 1) a significant reduction in the staff of Alitalia – CAI; 2) the recapitalisation of the company by long-standing shareholders; 3) the restructuring of bank debt. Compliance with these conditions enabled Etihad to have a 49% stake in a new company, specifically established, in which the operating assets of Alitalia – CAI were transferred, and in which Immsi is still a shareholder. At a financial level, Etihad's commitment in subscribing shares of the new operating company and acquiring other assets of Alitalia – CAI, totals 560 million euros, in addition to the cash recapitalisation by current shareholders, estimated at 300 million euros. The complex operation will also transfer the operating assets of Alitalia – CAI, with the exception of: (i) financial debt relative to credit lines/exposures of Alitalia - CAI still pending; (ii) litigation and liabilities (current and potential) not strictly related to typical activities of an airline company; (iii) the investments in AirOne S.p.A. and Midco S.p.A., in a new company called Alitalia – Società Aerea Italiana (SAI). The investment of Alitalia - CAI in SAI was transferred to this newly established company, Midco S.p.A., held 100% by CAI. After this operation, Midco S.p.A. holds 51% of SAI. As part of the above operation, the new partner Etihad developed an industrial and financial plan for SAI for 2015 – 2018, of which flows were considered to evaluate the investment of Etihad made


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by the appraisal expert in the appraisal of the transfer of CAI's operating assets to SAI and lastly by Immsi, during evaluations as of 31 December 2014. In particular, to discount estimated financial flows, a Ke (“Cost of Equity”) equal to approximately 12.2% and a WACC (“Weighted Average Cost of Capital”) equal to approximately 9.8% respectively were used for the DDM and DCF method: the financial flows considered for the evaluation covered a four-year period, while for the terminal value of the investment, a perpetual growth rate“g rate” equal to 2% was considered, aligned with the growth rate of GDP expected for Europe for the period in question. After this operation, Immsi S.p.A. held a 2.55% investment as of 31 December 2014. In the non-current portion are recorded the financial receivables for loans granted to the subsidiary Intermarine S.p.A. for 1,1 million euros whose reimbursement is subject to long-term commitments entered into by Intermarine. Other current financial assets as of 31 December 2014 amounted to 164,734 thousand euros and include the shareholding in Unicredit and loans granted to subsidiaries. Loans to some Group companies amounted to 149,857 thousand euros, at the end of 2014, up by 10,971 thousand euros compared to the end of 2013. In particular, the Company has receivables amounting to 103,250 thousand euros due from RCN Finanziaria S.p.A. which include, among others, two convertible shareholder loans subscribed by the Parent Company, for 26.2 million euros and 12 million euros respectively, with the Company already stating its intention to renew the loans, even though they mature in April 2015. Receivables due from RCN Finanziaria increased substantially during the year due to two transactions for the sale of credit without recourse concluded between Intermarine, as obligor, Immsi, as transferor and RCN Finanziaria as transferee, pursuant to which the Parent company sold for 4 million euros to RCN Finanziaria financial receivables for the same amount owed by Intermarine. After this operation, RCN Finanziaria transformed the credit towards Intermarine into a capital contribution payment. The Company also granted loans to ISM Investimenti S.p.A. for a total of 22,577 thousand euros, of which 6,112 granted in 2014, mainly to allow the subsidiary to take part in the capital increase operation undertaken by Is Molas S.p.A.. Loans receivable include 21,600 thousand euros payable to the Parent Company by Is Molas S.p.A., 2,230 thousand euros payable by Pietra S.r.l. and 200 thousand euros payable to the subsidiary Apuliae S.p.A.. Current financial assets available for sale include the investment held in Unicredit equal to 14,876 thousand euros for 2,788,464 shares. The fair value of the investment, represented by the share price at the end of 2014, is down slightly compared to the end of 2013, by approximately 126 thousand euros and is recognised under positive components of the Statement of Comprehensive Income net of the relative tax effect equal to approximately 2 thousand euros. At the end of the year the value of the investment is thus detailed:

Purchase cost Market Value

In euros unit overall unit overall

Unicredit 5.326 14,850,590 5.335 14,876,455

Lastly, it should be pointed out that 2,787,000 Unicredit shares are bound up to 31 December 2014 as a result of a security loan contract guaranteed by cash collateral that the Company undersigned with Banca Akros as from December 2007 and periodically renewed. Contractually the agreements between the parties do not modify the ownership of the securities subject of the loan but they solely


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transfer the rights and duties deriving from their possession for the duration of the contract, therefore the shareholding is registered in the assets of Immsi for a liability equal to the liquidity disbursed by the Bank as collateral. In fact, the existing revocation contract with Banca Akros, with the loan of the above Unicredit shares, requires delivery by the intermediary of cash collateral for an amount of 13,294 thousand euros as of 31 December 2014, represented by the market value of the stock net of a margin that absorbs any downward swing. The contract, which expires on withdrawal, envisages a fee receivable and interest payable equal to the EONIA increased by a spread, calculated on the cash collateral disbursed by Banca Akros.

C5 Amounts due from the tax authorities 1,854 The Company opted to join the Group's taxation conditions, as established by Articles 117 et. seq. of the Consolidated Act on Income Taxes, along with the subsidiaries Piaggio & C. S.p.A., Aprilia Racing S.r.l., Apuliae S.p.A., Intermarine S.p.A., RCN Finanziaria S.p.A., ISM Investimenti S.p.A. and Pietra S.r.l.. Against the contracts signed with these companies, Immsi S.p.A., as the consolidating company, registered in its own financial statements non-current tax receivables, related to withholding tax and advance Italian Tax on Corporate Income payments made, transferred from adhering companies, for 411 thousand euros, in addition to 1,225 thousand euros registered in the current portion since they were transferred to subsidiary companies pursuant to Article 43-ter of Italian Presidential Decree no. 602/73 to be used for offsetting in 2015. Current tax receivables total 1,443 thousand euros and are broken down as follows:

In thousands of euros Current amounts due from tax authorities

Amounts due from the tax authorities for VAT 79 Amounts due from the tax authorities for advances 112 Amounts due from the tax authorities for reimbursements 27 Amounts due pursuant to Article 43-ter DPR (Presidential Decree) 602/73 1,225 Current amounts due from tax authorities 1,443

C6 Deferred tax assets 0 The Company has recognised gross deferred tax assess amounting to 1,822 thousand euros, of which 273 thousand euros for temporary differences for costs deductible in subsequent years and approximately 1,549 thousand euros for tax losses with a recoverability under the national consolidated tax convention confirmed in future years (when estimating the recoverable value, the Company considered the long-term plans of Group companies that are included in the national consolidated tax convention). Deferred tax assets were entirely offset by deferred tax liabilities as they refer to the same income tax owing to the tax authorities.

C7 Trade receivables and other receivables 45,010 Trade receivables and other non-current receivables total 22,000 euros and mainly refer to receivables for interest receivable on non-current loans granted to Intermarine S.p.A.. Current trade receivables and other receivables are represented by trade receivables from third parties and from companies of the Group for contracts of lease, contracts of management, remunerations paid for appointments made to employees of the Parent Company, interests, guarantee fees and expenses charged for activities managed by Immsi S.p.A. on behalf of the subsidiaries. This item includes receivables due from companies belonging to the Immsi Group for


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44,246 thousand euros, and namely Intermarine for 9,482 thousand euros, Is Molas for 8,002 thousand euros, RCN Finanziaria for 13,671 thousand euros, Piaggio for 620 thousand euros, ISM Investimenti for 1,411 thousand euros and the remainder from other Group companies. Other current receivables of Immsi S.p.A., as the consolidating company, defined in the national consolidated tax convention, include the net receivable from companies party to the convention, for a total amount of 10,697 thousand euros. Trade receivables are recorded net of a bad debt reserve prudently allocated for 805 thousand euros against the uncertain recoverability of approximately 690 thousand euros receivables due from Volare Group relative to the rental of a portion of the property of Via Pirelli – Milan sold by Immsi during 2005. In this respect, it is noted that Volare Group is subject to extraordinary administration since the end of 2004 and Immsi, proving its debts, has been admitted to the benefit. We are awaiting the registration of the distribution plans of the assets subsequent to those that have allowed payment of the sums specifically regarding the relationships of subordinate work. It should be pointed out that, as security for rental agreements for the building in Rome, Immsi S.p.A. received guarantees for 692 thousand euros and guarantee deposits recorded under other current receivables for 34 thousand euros. The Company has not recorded any receivables from foreign companies due after 5 years.

C8 Cash and cash equivalents 2,651 This item covers cash, current bank accounts. As regards the loan for the original sum of 46 million euros from a pool of banks now merged into Banco Popolare, maturing in June 2019, Immsi is required to channel income from leasing into a deposit account, for the entire duration of the contract, and to keep a minimum amount there equal to the interest instalment nearest maturity. This sum, equal to 69 thousand euros as of 31 December 2014 was, to all effects, unavailable up to the minimum amount for payment of the interest instalment due in June 2015.


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D - Information on the main liabilities items D1 Shareholders’ equity 359,443 Share capital

As of 31 December 2014, the share capital of Immsi S.p.A. totalled 178,464,000.00 euros, fully subscribed and paid up, and represented by 340,530,000 ordinary shares with no nominal value. Each ordinary share entitles the holder to a proportionate part of distributable profits and of the shareholders’ equity resulting from any liquidation, as well as to unlimited voting rights. With regard to the proxies to increase the share capital and authorisations to purchase treasury shares, reference is made to the Report on Corporate Governance and Corporate Ownership for the year 2014. Other reserves and retained earnings

The item Other reserves as of 31 December 2014 is broken down as follows: legal reserve comprising provisions approved following the distribution of profit for the year

for 6,989 thousand euros; legal reserves for a total of 1,153 thousand euros; tangible asset revaluation reserve set up in accordance with Italian Law 413/91 by Sirti and

transferred to Immsi following the demerger for 4,602 thousand euros; extraordinary reserve for 7,103 thousand euros; fair value evaluation reserve of the property investments for 40,709 thousand euros, whose

details can be found in the comment of the corresponding entry, recognised as a non-current asset;

share premium reserve that includes the increase in share capital of 44,880 thousand euros in early 2005, as well as the consideration for the 2006 increase in share capital of 50,336 thousand euros;

reserve for valuation at fair value of the financial assets available for sale, equal to 27 thousand euros corresponding to the higher value of the stake in Unicredit compared to the purchase value, net of the corresponding tax impact;

evaluation reserve under common control equal to 65,087 thousand euros, in compliance with guidelines as of OPI (Assirevi preliminary guidelines on IFRS) no. 1, whose underlying operation, concerning the subsidiaries Is Molas S.p.A. and ISM Investimenti S.p.A., is commented on in the Investments item.

The item Other reserves includes, with a negative sign, the component arising from the retrospective measurement of the actuarial gain/loss referred to defined benefit obligations for 40 thousand euros, the reserve for transition to international accounting standards for 1,614 thousand euros and the reserve relative to the fair value of the hedging instrument - an interest rate swap - for 947 thousand euros. Reserves recognised under Shareholders' Equity were not used in the three previous years for covering losses, increasing capital or for distribution to shareholders. Retained earnings amount to 28,324 thousand euros, registering an increase compared to the previous year, due to earnings for 2013 being retained.


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Statement of Comprehensive Income In 2014, the Statement of Comprehensive Income registered a loss for the period equal to 65,817 thousand euros. 21 thousand euros refer to the fair value reduction of the hedging instrument subscribed in 2010 and discussed under the item Non-current financial liabilities, and the lower value of the fair value of the investment held in Unicredit compared to the value at the end of 2013, which was equal to 124 thousand euros, net of the tax effect equal to 2 thousand euros. Lastly, components of the Statement of Comprehensive Income included 44 thousand euros, a decrease in the reserve from the valuation of defined benefit plans relating to the actuarial loss arising in 2014.

D2 Financial liabilities 239,430 Non-current financial liabilities, equal to 70,025, include the loan signed by the Company in June 2010 with a pool of banking firms composed of Banca Popolare di Lodi (nominal 10.5 million euros), Efibanca (nominal 25 million euros) and Cassa di Risparmio di Lucca Pisa Livorno (nominal 10.5 million euros), now merged in Banco Popolare, at a rate equal to the six-month Euribor increased by a spread maturing June 2019 and the reimbursement in 18 constant half-yearly instalments. The financing is entered on the balance sheet using the amortised cost method, for a total of 22,802 thousand euros, of which 5,111 thousand euros relative to the instalments reimbursable in 2015, which therefore have been entered in the current portion. The liability is guaranteed by a mortgage on the property situated in Rome – via Abruzzi for 92 million euros and by a bonded securities deposit comprising 3,041,000 Piaggio shares, as well as the channelling of income from lease contracts for the property into a deposit account up to the interest instalment nearest maturity. The financing facility foresees two covenants, respected at the date of this report. The former, defined gearing ratio, is to be calculated as the ratio between the net financial liabilities and the latter, defined interest service cover ratio, is calculated as the ratio between the rental payments for the lease of the property in Rome and the interest on the financing. In case of failure to respect even just one of the two ratios, Immsi must state the reason and steps taken to restore the agreed conditions or the institute will have the right to terminate the financing contract. To cover the risk of interest rate fluctuation for the cash flows deriving from starting the financing mentioned above, Immsi S.p.A. signed an interest rate swap type of hedging contract, which contemplates changing the variable rate with a fixed rate for the duration of the contract on 75% of the nominal value of the loan. The rate has been fixed at 2.41% in addition to a spread. The evaluation at fair value of this hedging instrument is entered among the liabilities, offset with equity in the Statement of Comprehensive Income. The non-current component also includes: a loan from Banca Popolare dell’Emilia Romagna for nominal value of 15 million euros

maturing on 31 March 2017 and with a benchmark rate equal to the three-month Euribor increased by a spread. The loan provides for six-monthly increasing repayments and is recognised on an amortised cost basis for a value of 11,414 thousand euros, of which 4 million maturing in 2015 and therefore recognised in the current portion. The issued guarantee is represented by the lien on 8.1 million Piaggio shares. This loan also envisages two covenants regarding the ratio between the net financial position/EBITDA and net financial position/Shareholders’ equity at an Immsi Group level (complied with at the last verification date);

a revolving credit line with the Istituto Monte dei Paschi di Siena for a total of 30 million euros maturing in April 2017. The agreements provide for a covenant related to the minimum value of the consolidated Shareholders' equity, complied with as of 31 December 2014, a reference rate equal to the variable Euribor plus a spread, and the issuance by the


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Company of a pledge on Piaggio shares, corresponding as of 31 December 2014 to 20 million in securities. The line is recognised in the financial statements at nominal value as periodic charges contractually apply throughout the duration of the loan;

a credit line from Intesa Sanpaolo in February 2013 for a total nominal amount of 15 million euros, recognised in the financial statements on an amortised cost basis and equal to 14,919 thousand euros. The line, expiring in 3 yeas and with a benchmark rate equal to the 6 month Euribor increased by a spread, is guaranteed by the lien on 10 million Piaggio & C. S.p.A. shares and envisages meeting a covenant regarding the ratio between the Net financial position and Shareholders’ equity at an Immsi Group level, which was complied with at the last verification date.

Current financial liabilities at the end of 2014 amounted to 169,405 thousand euros and include, as an advance, the current portion of the two medium-/long-term loans: 5,111 thousand euros relative to the original sum of 46 million euros from a pool of banks, and 4 million euros from the loan agreement signed with the Banca Popolare dell’Emilia Romagna. In addition, the current liabilities include: a Bullet – Multi Borrower loan from Intesa Sanpaolo for a total of 130 million, maturing in

June 2015, with a benchmark rate equal to the variable Euribor increased by a spread, and disbursed up to the end of 2014 for 119 million euros, of which 70 million euros granted to Immsi S.p.A., 30 million euros granted to ISM Investimenti S.p.A. and 19 million euros granted to Intermarine S.p.A.. This loan, whose benchmark rate is equal to the variable Euribor increased by a spread, is guaranteed by a lien on 53.5 million Piaggio shares, in addition to 4 million shares transferred to a custodian account;

a revolving credit line, disbursed up to the end of 2015 by Intesa Sanpaolo for 25 million euros at a benchmark rate equal to the 3 month Euribor increased by a spread. The covenant related to this line, referred to the ratio between consolidated Net Financial Position and Group’s Shareholding equity, is complied with at the end of 2014;

a revolving credit line equal to 25 million euros, of which 22 million used at the end of 2014, disbursed by Unicredit, maturing in October 2015 and with a rate equal to the variable Euribor increased by a spread. The agreements require a guarantee deposit of 17 million Piaggio shares and compliance with covenants at the end of the year, to calculate in relation to the ratio between the overall value of shares held by Immsi S.p.A. in Piaggio & C. S.p.A. and the Company's Net financial debt;

a revolving credit line granted until May 2015 by Banco Popolare for a total of 20 million euros. This loan, whose benchmark rate is equal to the variable Euribor increased by a spread, is guaranteed by a lien on 10,950,000 million Piaggio shares;

a revolving credit line granted until April 2015 by Banca Nazionale del Lavoro for 10 million euros. This financing, whose reference rate is equal to the variable Euribor increased by a spread, is guaranteed by a lien on 7 million Piaggio shares. The line envisages meeting two covenants regarding the EBITDA/Net financial borrowing costs ratio at Immsi Group level and Net debt/Shareholders’ equity of Immsi S.p.A., complied with at the date of this report. Preliminary negotiations are underway to renew the line.

A further 4.6 million euros relative to a revolving line of credit granted by Intesa Sanpaolo do not appear to have been used at the end of the fiscal year.

Current financial liabilities include moreover the collateral in cash received from Banca Akros with the Unicredit stock loan for 13,294 thousand euros. The comment on this is given under the item Other Financial Assets. Nominal financial payables, by due date, are shown below:


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In thousands of euros Within 1

year 1 to 2 years

2 to 3 years

3 to 4 years

4 to 5 years

Over 5 years Total

Payables to banks 169,405 25,111 37,611 5,111 2,556 0 239,794

D3 Reserves for severance indemnity and similar obligations 344 Liabilities only include the reserve for termination benefits totalling 344 thousand euros at the end of 2014. As foreseen by the Italian Legislative Decree 252/2005 and by the Italian Law 296 of 27 December 2006, since Immsi has fewer than 50 employees, as regards the termination benefit of the employees that did not choose to assign it to any other complementary social security, the Company will keep on managing such reserve until otherwise indicated by the personnel. The new IFRS financial reporting identifies the liability relating to employees’ termination benefit using the actuarial measurement method. An estimate is made of the probable employment period in the company for each employee. For this period, annual salaries were revised based on an expected rate of inflation and a portion (legal rate) was allocated as termination benefit. The portion of termination benefit already accrued, and which will accrue at the foreseeable date of termination of employment, is revised as required by law and discounted by a rate equal to 1.86%. With regard to the discount rate, the evaluation of this parameter took as reference the index iBoxx Corporates A with a duration of 10+ as of 31 December 2014. The parameters used in the evaluation are shown below: Inflation rate Rate of increase in termination benefit2015 0.60% 1.95%2016 1.20% 2.40%2017 1.50% 2.625%2018 1.50% 2.625%since 2019 2.00% 3.00%

The table below shows the effects, as of 31 December 2014, which would have occurred following changes in reasonably possible actuarial assumptions: In thousands of euros Termination benefit fund

Turnover rate +2% 340

Turnover rate -2% 351

Inflation rate + 0.25% 350

Inflation rate - 0.25% 338

Discount rate + 0.50% 329

Discount rate - 0.50% 361

Estimated future payments are shown below: In thousands of euros Future payments

Year 1 22

Year 2 50

Year 3 21

Year 4 21

Year 5 22

The average duration of the obligation is 13 years. Being an actuarial valuation, the results depend on the technical bases adopted such as, among others, the interest rate, the inflation rate and the expected turnover. A variation of these parameters could lead to a significant change in the liability estimated to date; similar impacts may be caused by unexpected changes in other technical bases.


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Movements of the reserve during the year are shown below: In thousands of euros

Balance as of 31/12/2013 344

Service cost 28 Applications for employment termination/advances -81 Interest cost 10 Actuarial (gain)/loss 43

Balance as of 31/12/2014 344

The evaluation takes account of the change relative to substitute tax as established by Law 190/2014, the effect of which is shown in the item Actuarial (gains)/losses. As foreseen by the amendment to IAS 19, the cost components relating to the provision of work and net borrowing costs, equal to 38 thousand euros, were directly recognised in the Income Statement, whereas the recognition of actuarial gains arising from the remeasurement each year of liabilities, equal to 43 thousand euros, was recorded in the Statement of Comprehensive Income net of the relative tax effect.

D4 Deferred tax liabilities 19,624 Deferred tax liabilities as of 31 December 2014 total 19,624 thousand euros, net of the portion of deferred tax assets allocated for temporary differences and fiscal losses, offset by 1,822 thousand euros in that they are consistent for nature and the Tax authority. Gross deferred tax assets are recognised for a total of 20,114 thousand euros, concerning the fair value measurement of the investment property in Rome, for 1,215 thousand euros relative to lower depreciation identified during the transition to international accounting standards for buildings and plants, depreciated net of the value of land and the recoverable value at the end of the useful life, and for 117 thousand euros relative to other temporary differences in the taxation of positive components.

D5 Trade payables and other payables 2,946 Other non-current debts, equal to 947 thousand euros, include exclusively the mark to market value at the end of 2014 of the hedging instrument specific of the risk of interest rate variation (IRS) with reference to 75% of the 2010-2019 mortgage loan contract of an original 46 million euros existing with a pool of banks now merged into Banco Popolare. The changed compared to 2013, amounts to 21 thousand euros and is recognised in the Statement of Comprehensive Income. Current trade payables refer to invoices received and not yet paid and to invoices to be received assessed according to the competence standard and total 1,152 thousand euros, of which 291 thousand euros to Related Parties and other companies of the Group. Other current payables are mainly recognised as payables due to social security institutes for 115 thousand euros, to employees and company bodies for 250 thousand euros, guarantee deposits received for 34 thousand euros, and accrued liabilities and deferred income for 447 thousand euros. At end of year 2014 there were no trade payables or other amounts due to foreign companies or payables falling due beyond 5 years.


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D6 Current taxation 404 Current taxes as of 31 December 2014 refer to taxes withheld on the income of employees and freelance workers. Group taxation calculated for 2014 recorded a tax loss, therefore no advance payments on Italian Tax on Corporate Income will be made in 2015.


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E - Information on the main Income Statement items E1 Financial income 7,841 Financial income for 2014 is as follows: In thousands of euros 2014 Year 2013

Dividends from subsidiaries - 18,145 Gains from sale of subsidiaries’ shares - 9,607 Interests and commission from subsidiaries 7,538 6,683 Interests receivable on a/c 10 40 Other financial income 293 992

Total 7,841 35,467

The decrease compared to 2013 is attributable to a capital gain realised in the previous year of 9,607 thousand euros, following the sale of 14.5 million shares of Piaggio & C. S.p.A., the collection of 18,145 thousand euros for dividends from Piaggio & C S.p.A. and the recognition of other income amounting to 736 thousand euros for interest accrued on the convertible subordinated debenture loan Alitalia – Compagnia Aerea Italiana. Other financial income recognised in 2014 includes mainly interest accrued on loans granted to subsidiaries, fees for guarantees granted in favour of subsidiaries, as well as income from Banca Akros for the securities loan agreement guaranteed by a cash collateral, following the distribution of Unicredit dividends received from the borrower referred to the shares covered by the agreement.

E2 Borrowing costs 74,200 Borrowing costs total 74,200 thousand euros and mainly include the impairment loss of the investment in Alitalia – Compagnia Aerea Italiana S.p.A., equal to 64,350 thousand euros, as commented on in more detail in the item Other Financial Assets, in addition to approximately 9,839 thousand euros for interest and charges paid on bank loans and approximately 10 thousand euros as the financial component of the actuarial valuation of termination benefit.

E3 Operating income 4,549 Operating income, equal to 4,549 thousand euros, includes 1,708 thousand euros referred to service contracts with Group companies and revenues for approximately 2,841 thousand euros from the lease on the property situated in Rome, of which 341 thousand euros to Group companies. Revenues from recharging costs for materials and services sustained by Immsi S.p.A. on behalf of Group companies and tenants are not recognised in the Income Statement as they are offset by relative costs generating them, as provided for by IAS 18, according to which the commercial result of operations that in their entirety are strictly related, may not be measured without referring to such operations as a whole.

E4 Costs for services and leases and rentals 3,479 Costs for services and leases and rentals, net of costs recharged in accordance with IAS 18 as described above, total 3,479 thousand euros, of which approximately 548 thousand euros deriving from intergroup transactions and with related parties, the details of which are provided at the end of


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these Notes. Costs for services and leases and rentals are detailed below: In thousands of euros 2014 Year 2013

Transport costs 3 3 External maintenance and cleaning expenses 139 129 Personnel costs 31 27 Technical, legal, tax, administrative consultancy, etc. 734 561 Material, promotional activities and brands 21 13 Energy, telephone, postal costs, etc. 54 62 Insurance 44 34 Board of Directors operating costs 1,672 1,653 Board of Statutory Auditors operating costs 141 132 Communication and publication costs 14 12 Certification fees 85 73 Listing rights and Securities Centralised Administration (Montetitoli) 58 56 Condominium, security and porter costs 48 47 Bank charges 7 7 Expenses for website handling and maintenance 10 9 Charges for property rentals 362 403 Charges for rents and other renting 56 55

Total 3,479 3,276

E5 Personnel costs 1,295 Employee costs recognised in 2014 refer to salaries for approximately 947 thousand euros, social security contributions for 268 thousand euros and provisions as termination benefit for 80 thousand euros. For a close examination of this latter item, reference is made to item Reserves for severance indemnity and similar obligations. Immsi S.p.A. currently has no employee stock option plan. We wish to point out, in addition, as required by par. 1-bis of the Article 78 in the Issuers’ Regulations, that the Company has not begun operations suited to encourage the purchase or underwriting of shares by employees pursuant to Article 2358 of the Italian Civil Code. The average workforce paid in the year is 12 employees, of which 3 senior managers.

E6 Depreciation of plant, property and equipment 78 Depreciation of plant, property and equipment referred to 2014 total 78 thousand euros and refer to electronic machines, hardware, vehicles, furniture and fittings and miscellaneous equipment. It should be remembered that since 2009 the buildings and plants relating to the property owned in Via Abruzzi 25 – Rome are no longer subject to depreciation. For further details, reference is made to the comment in the item Investment Property. As regards investments during the year, it was deemed appropriate to apply the depreciation rates reduced by 50% due to their limited use. The Company also fully depreciated those assets of minor value whose use had essentially ended during the year.

E7 Other operating income 230 This item amounted to 230 thousand euros, net of income generated from recharged costs as provided for by IAS 18, and basically refers to income for fees repaid by Company employees for company positions held within the Group, contingent items and the recovery of insurance costs and compensation.


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E8 Other operating costs 838 Other operating costs incurred in 2014 total 838 thousand euros, increasing compared to the previous year and mainly due to higher stamp duty on bank security deposits and the cost relative to TASI (the new local council tax). The details of other operating costs are indicated below: In thousands of euros 2014 Year 2013

Capital losses on disposals 5 - ICI (local property tax)/IMU 532 548 Provisions for bad debt 30 30 Other taxes and duties 219 93 Other operating charges 52 31

Total 838 702

E9 Taxation 1,681 Against a loss before taxes of 67,309 thousand euros, income tax for the year, calculated according to rates in effect at the end of 2014, was recognised as a positive income component amounting to 1,681 thousand euros. The item profit before tax accounted for a minimum part of taxable income as regards income tax, because most components comprise financial items and impairment losses, which are tax-neutral; these are commented on under the item Other Financial Assets. The proceeds arising from the use, in the context of fiscal consolidation, of the foreign ROL for the deduction of the interest paid, that individual member companies would not have been able to deduct independently, contribute to the positive balance of the Taxes entry. The agreements between the parties provide that the benefit for the deduction of this financial expense, equal to 50%, if the transferred ROL comes from virtually consolidated foreign companies, should be recognised to the consolidating entity. The positive income effect amounted to 968 thousand euros in 2014 (shown in the table under the item Other adjustments), and may change when the tax form CNM2015 is filed. A reconciliation between the theoretical tax burden and the actual tax burden follows: Italian Tax on Corporate Income Income Taxation

In thousands of euros Earnings

Timing components

Current Deferred

Earnings before taxation -67,309 Theoretical tax charge (benefit) -18,510 Timing differences taxable in later years -10 -10 3 -3 Timing differences deductible in later years 277 -277 76 -76 Reversal of timing differences arisen in previous years -351 351 -97 97 Permanent differences that will not be reversed in later years 64,683 0 17,788 0 Total differences 64,599 64 17,770 18 Taxable income -2,710 Total tax charge (benefit) on income for the period -740 18 Other adjustments -972 13 Total tax charge (benefit) on income registered in the FS -1,711 31


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Regional Tax on Productive Activities Income Taxation

In thousands of euros Earnings

Timing components

Current Deferred

Value of gross production -950 Theoretical tax charge (benefit) -53 Borrowing costs/income -2,278 0 -127 0 Timing differences taxable / deductible in later years 0 0 0 0 Reversal of timing differences arisen in previous years -17 17 -1 1 Permanent differences that will not be reversed in later years 3,344 0 186 0 Total differences 1,049 17 58 1 Taxable income/Value of net production 99 Total tax charge (benefit) on income for the period 6 1 Other adjustments -7 0 Total tax charge (benefit) on income registered in the FS -1 1

E10 Net loss for the period 65,628 Immsi S.p.A. realised a net loss of 65,628 thousand euros in 2014, due in particular to the impairment loss of the investment in Alitalia – Compagnia Aerea Italiana S.p.A., as commented under the item Other Financial Assets.


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F – Commitments, risks and guarantees To guarantee the lease contracts of the property in Rome in being at the date of 31 December 2014 Immsi S.p.A. received bank guarantees for a total of 692 thousand euros and guarantee deposits for 34 thousand euros. The Company has a mortgage on the same building recorded for 92 million euros to secure the loan provided in June 2010 by Efibanca, Banca Popolare di Lodi and Cassa di Risparmio di Lucca Pisa Livorno, now merged into Banco Popolare, for an original amount of 46 million euros. With this financing, Immsi must for the entire duration of the contract channel the revenues from leasing into a deposit account and keep a minimum amount there equal to the interest instalment nearest maturity. Intesa Sanpaolo has issued a revocable signed credit line equal to 400 thousand euros, of which Immsi used 350 thousand euros for the Cassa di Previdenza Integrativa (supplementary social security fund) of personnel of Istituto San Paolo di Torino, with which Immsi stipulated a lease contract in December 2008 for the property located in Milan – via Broletto 13. The Company, as regards the credit lines and loans received, deposited 34,991 thousand shares as a guarantee, and approximately 98,600 thousand Piaggio shares as a lien; for further details, reference is made to the item Financial liabilities. We also report that Immsi S.p.A. has deposited in surety 11,450 thousand Piaggio shares as security for a loan granted by Intesa Sanpaolo to Intermarine for 18 million euros, also guaranteed by a commitment by Immsi to inject equity in favour of Intermarine for it to meet the financial requirements for the construction and completion of its contracts. Intermarine pays Immsi a remuneration in proportion to the amounts paid by the Institution. Immsi S.p.A. has deposited in surety a further 17,050 thousand Piaggio shares, signed an autonomous first request guarantee for a maximum amount of 33.8 million euros and issued a letter of commitment in favour of Intesa Sanpaolo in guarantee of the revolving line granted to Intermarine S.p.A. by Intesa itself, used as of 31 December 2014 for 26.8 million euros, correlated to the future collections of the order with the Finland Navy. The subsidiary corresponds remuneration to Immsi in proportion to the amounts disbursed by the bank. Following the contract stipulated between the Finnish Navy and the subsidiary Intermarine S.p.A. for the construction of three minesweepers, two of which already delivered, the Finnish Navy granted three advance payments, for an amount of 115% of the sum received, through insurance guarantees issued by SACE, which has stated its willingness to issue said guarantees provided there is the co-obligation of Immsi S.p.A.. The Parent Company is remunerated in proportion to the sums secured. In consideration of the progress made, the guarantee for the last vessel equal to 8.1 million euros is still outstanding. As part of the supply contract for five catamarans to the Sultanate of Oman, for which Intermarine, former Rodriquez Cantieri Navali, entered an endorsement credit contract with a pool of banks for an amount of 84.5 million US dollars to guarantee payment of the consideration envisaged in the contract signed with the Sultanate of Oman for 90 million US dollars, Immsi counter-guaranteed the “pre-delivery performance bond”, “advanced payment bond” and “post-delivery bond” issued by the above banks for a maximum amount of 60 million US dollars by issuing a bank guarantee, and a letter of patronage for any part exceeding such amount in relation to Intermarine S.p.A.’s obligations to channel payments. Following completion of the last unit in 2014, the actual exposure of Intermarine S.p.A. vis-à-vis banks as of 31 December 2014 for the post-delivery bond was equal to 3.8 million US dollars. The


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guarantor banks granted an extension of the relative guarantees up to July 2016. Immsi S.p.A. has issued a letter of patronage on the surety issued by Efibanca in favour of the company Como for the down payment of 2.7 million euros paid by it to Intermarine S.p.A. and a letter of patronage as collateral for credit facilities granted by Banca Carige to Intermarine S.p.A. used for operations of advances for 0.8 million euros in late 2014. Immsi S.p.A. is also co-obligated for the repayment of the loan of 15 million euros that Intesa Sanpaolo granted to the subsidiary Intermarine, maturing in 2017. In relation to the line of credit in place between Intermarine S.p.A. and Banca IFIS S.p.A., in the form of an advance on contract and factoring for the sale of receivables from the Italian Navy arising from the Refitting contract of the Gaeta Minesweeper, Banca IFIS has been issued a patronage by the direct parent company RCN Finanziaria S.p.A. confirmed by Immsi S.p.A.. The value of the guarantee at the end of 2014 amounted to 6.1 million euros. Lastly, it is reported that, against the 30 million euros loan granted to ISM Investimenti S.p.A. by Intesa Sanpaolo, IMMSI has undertaken, in the interests of IMI Investimenti S.p.A., to grant a shareholder loan for the sum that proves necessary to enable ISM to repay its debt in full, in case it fails to refinance such liability towards Intesa Sanpaolo on the market.


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G – Net financial position The Net financial debt of Immsi S.p.A. as of 31 December 2014 is shown below. For further details on main components, reference is made to the Notes to these financial statements. In thousands of euros 31/12/2014 31/12/2013Cash and cash equivalent (2,651) (2,513)Other short-term financial assets (149,857) (149,793)Medium/long-term financial assets (1,100) (3,000)Short-term financial payables 169,405 93,443 Medium/long-term financial payables 70,025 118,955 Net financial debt 85,822 57,092 Net financial debt as of 31 December 2014 amounted to 85,822 thousand euros, up by 28,730 thousand euros compared to the figure as of 31 December 2013. In thousands of euros 31/12/2014 31/12/2013Cash generated internally (9,684) 11,282 Change in net working capital (1,854) (1,751)Net cash flow generated from operations (11,538) 9,531 Payment of dividends by Parent company 0 0 Acquisition of intangible assets 0 0 Acquisition of plant, property and equipment and property investments (237) (221)Net decrease from property disposals 44 0 Acquisition of non-controlling equity investments, net of disposal (16,999) (28,000)Acquisition of controlling equity investments, net of disposal 0 28,957 Other net movements 0 0 Change in net financial position (28,730) 10,267

Initial net financial position (57,092) (67,359)

Closing net financial position (85,822) (57,092)

In compliance with CESR recommendation of 10 February 2005 “Recommendations for the consistent implementation of the European Commission’s Regulation on Prospectuses”, the indicator, thus formulated, represents aspects monitored by the Group's management and differs from recommendations in Consob Communication no. 6064293 of 28 July 2006, as it also includes the non-current portion of financial receivables. H - Dividends paid Immsi S.p.A. did not distribute dividends in 2014 or 2013.

I - Group and Related Party Dealings As regards the information to be provided on related party transactions in accordance with IAS 24 - Related Parties Disclosures, followed by the Group’s companies, it should be pointed out that such transactions take place as part of normal operations at market conditions or as laid down under specific laws. No atypical or unusual transactions were carried out during the period to 31 December 2014. It should be noted that, in compliance with the Regulations no. 17221 regarding Related Parties dealings issued by Consob on 12 March 2010 and subsequently amended by resolution no. 17389 of 23 June 2010, the Company adopted a new procedure aimed at regulating the approval practices for Related Party dealings, for a closer examination of which reference is made to the Governance section in www.immsi.it website.


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The following table shows the impact of related party transactions on the income statement (excluding revenues from amounts recharged to subsidiaries and parent companies in accordance with IAS 18) and on each single item of the balance sheet of Immsi S.p.A. as of 31 December 2014:

Main income and balance sheet headings Amountsin €/000

% incidence

on financial statement

item

Description of the transactions

Transactions with Related Parties:

Current trade payables 158 19

13.7% 1.6%

Legal assistance provided by Studio d’Urso Gatti Bianchi e Associati Tax advisory services provided by Studio Girelli e Associati


4.5% 1.1%

Legal assistance provided by Studio d’Urso Gatti Bianchi e Associati Tax advisory services provided by Studio Girelli e Associati

Transactions with Parent companies:

Costs for services and leases and rentals 217 6.2% Rental of offices in Mantova provided by Omniaholding S.p.A.

Transactions with Subsidiaries:

Plant, property and equipment 15 6.1% Plants and fittings provided by Is Molas S.p.A. Other non-current financial assets 1,100 9.6% Loans granted to Intermarine S.p.A.

Other non-current receivables 15 68.2% Receivables due by Intermarine S.p.A. for interests on non-current loans

Current trade receivables and other receivables

9,482 21.1% Receivables due by Intermarine S.p.A. for recharged costs, rental of offices in

Rome, interest, fees and consultancy contract

13,671 30.4% Receivables due by RCN Finanziaria S.p.A. for recharged costs and interest

8,002 17.8% Receivables due by Is Molas S.p.A. for recharged costs, consultancy contract and

interest

1,411 3.1% Receivables due by ISM Investimenti S.p.A. for recharged costs and interest

620 1.4% Receivables due from Piaggio & C. S.p.A. for recharged expenses, advisory

services and the repayment of fees

358 0.8% Receivables due by Pietra S.r.l. for interest 10,697 23.8% Payables from national consolidated tax convention

Other current financial assets

103,250 21,600 22,577 2,230 200

62.7% 13.1% 13.7% 1.4% 0.1%

Loans granted to RCN Finanziaria S.p.A. Loans granted to Is Molas S.p.A.

Loans granted to ISM Investimenti S.p.A. Loans granted to Pietra S.r.l.

Loans granted to Apuliae S.p.A.

Current trade payables 104

8 9.0% 0.7%

Amount due to Piaggio & C. S.p.A. for recharged costs Amount due to Immsi Audit S.c.a.r.l. for auditing

Financial income

4,147 644

1,061 1,569 109

52.9% 8.2% 13.5% 20.0% 1.4%

Interest income from RCN Finanziaria S.p.A. Interest income and guarantee fees from Intermarine S.p.A.

Interest income from Is Molas S.p.A. Interest income from ISM Investimenti S.p.A.

Interest income from Pietra S.r.l.

Operating income 1,325 600 115

29.1% 13.2% 2.5%

Consultancy & Assistance contract and rental of offices in Rome rented to Piaggio & C. S.p.A.

Consultancy & Assistance contract with Is Molas S.p.A. Consultancy & Assistance contract and rental of offices in Rome rented to

Intermarine S.p.A.


2.2% 1.6%

Internal auditing services by Immsi Audit S.c.a.r.l. Recharges to be received by Piaggio & C. S.p.A.

Other operating income 80 34.8% Repayment of fees by Piaggio & C. S.p.A.

Taxation 968 57.6% Proceeds on use of foreign ROL within CNM Figures including non-deductible VAT.

With regard to the reports, guarantees and commitments in force with the companies of the Group, reference is made to item F - Commitments, risks and guarantees.


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L - Risks and uncertainties Financial instruments With reference to financial instruments, already commented on in the Notes, the Parent Company did not identify any differences between the fair value and the carrying amount for all items in question, excluding investments in Unicredit and Alitalia, the details of which are included in the section on financial assets. As of 31 December 2014 the Company had no long-term fixed rate assets and/or liabilities for which it is necessary to recalculate the relative value according to current market rates. In thousands of euros 31/12/2014 31/12/2013

NON-CURRENT ASSETS Other financial assets 11,449 60,700Financial receivables 1,100 3,000Financial assets 10,349 57,700

CURRENT ASSETS Other financial assets 164,734 164,795Financial receivables 149,857 149,793Financial assets 14,876 15,002

NON-CURRENT LIABILITIES Financial liabilities 70,025 118,955Amounts due to banks 70,025 118,955

CURRENT LIABILITIES Financial liabilities 169,405 93,443Amounts due to banks 169,405 93,443

Interest Rate Risk As is known, the variations in the interest rates on the market can impact the fair value of a financial asset or liability. Exposure to the market risk deriving from the variation in interest rates is mainly connected to the operations of medium and long term financing. The following table illustrates the book value, for expiration in relation to 31 December 2014, of the Company's financial assets and liabilities, that are exposed to the risk of interest rates, divided depending on whether they are contractually subject to fixed or variable rates (net of any specific hedging instruments of the interest rate variation).


Within 1 year

1 to 2 years

2 to 3 years

3 to 4 years

4 to 5 years

Over 5 years

Total

Total fixed rate -3,833 -3,833 -3,833 -3,833 -1,917 0 -17,249

Total variable rate -15,715 -21,278 -32,678 -1,278 -639 0 -71,588

An increase or decrease of 1% of the Euribor rate with reference to the net punctual exposure of Immsi S.p.A. would have produced greater or lesser interest for 716 thousand euros per year. Price Risk Concerning the price risk on the investments held by the Company and classified among the other financial assets available for sale, reference is made to the comments already contained in this Note. Credit risk The following table gives an analysis by maturity of the item of Trade receivables, including the devalued or guaranteed payables, for the related comment reference is made to the Notes on the financial statements.


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In thousands of euros 31/12/2014 31/12/2013

Overdue receivables:

0-30 days 3,700 5,626

30-60 days 36 35

60-90 days 128 110

> 90 days 30,548 21,525

Total overdue receivables 34,412 27,296Total receivables on maturity -4 -28

Total 34,408 27,268

Liquidity Risk While the Company is not exposed to its own and specific risks of liquidity connected with its holding business, it could suffer from possibly critical situations concerning the subsidiaries, especially those for which it granted short-term financings. As regards debt, the Company basically renewed expired credit lines in 2014 with new loans of the same duration. At the end of 2014, the Company had unused credit lines totalling 7.6 million euros, of which 3 million euros referred to the Unicredit credit line of 25 million euros and 4.6 million euros relative to the revolving credit line with agreed withdrawal, from Intesa Sanpaolo. As concerns the risk of liquidity to which the Immsi Group is exposed, in relation to its own operational activity, please read the comments in the Notes on the consolidated financial statements. Hierarchical fair value valuation levels As regards financial instruments recorded at fair value under the Statement of financial position, IFRS 7 requires these values to be classified on the basis of hierarchical levels which reflect the significance of the inputs used in determining fair value. These levels are as follows: level 1 – quoted prices taken from an active market in terms of assets and liabilities under

valuation; level 2 – directly (prices) or indirectly (price-derived) observable market inputs other than level

1 inputs; level 3 – inputs not based on observable market data. With reference to assets measured at fair value that have quotations on an active market held by Immsi S.p.A. (level 1) Unicredit shares in the portfolio as of 31 December 2014 were equal to 2,788,464 shares, for a total value at that date of 14,876 thousand euros. The fair value of the investment, represented by the share price at the end of 2014, is down slightly compared to the end of 2013, by approximately 126 thousand euros. As of 31 December 2014, among the non-current liabilities is the hedging instrument (IRS) underwritten to hedge the 75% of the 2010-2019 loan for a total of 46 million euros, the fair value of which at the end of the accounting period is negative and in the amount of 947 thousand euros (level 2 Financial Instruments). The financial assets valued at fair value for which there are no observable market data (level 3) amount to 84,236 thousand euros and are represented for 10,349 thousand euros by the investment held in Alitalia – Compagnia Aerea Italiana S.p.A. and for 73,887 thousand euros by the property investment located in via Abruzzi, Rome. In addition, IFRS 7 requires the fair value of payables recognised on an amortised cost basis, to be determined, only for disclosure purposes, as indicated below:


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In thousands of euros Nominal Value Book Value Fair Value

Estimate

Immsi S.p.A. – Mortgage loan with Banco Popolare 23,000 22,802 22,073

Immsi S.p.A. – Credit line maturing in March 2017 11,500 11,414 11,704

Immsi S.p.A. – Credit line maturing in February 2016 15,000 14,919 15,079

For other financial liabilities not expressly included in the table provided, the carrying amount is considered to be basically aligned with the fair value.


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M - Auditing costs As regards disclosure obligations pursuant to Article 149-duodecies of the Regulation on Issuers, concerning remuneration pertaining to the year for appointments assigned by Immsi S.p.A. to the independent auditors, remuneration paid in 2014 to Pricewaterhouse Coopers S.p.A. amounted to 67,733 euros (in addition to costs, additional fees and regulatory fees). In this respect, please note that the General Meeting of 11 May 2012 granted the assignment for the period 2012-2020 to PricewaterhouseCoopers S.p.A..

* * *

This document was published on 9 April 2015 by authorisation of the Chairman of the Company, Roberto Colaninno.

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Certification of the financial statements pursuant to Article 154-bis of the Italian Legislative Decree 58/98 The undersigned Roberto Colaninno, as Chairman of the Board of Directors, Michele Colaninno, as Chief Executive Officer and Andrea Paroli, Manager in charge of preparing the company accounts and documents of Immsi S.p.A., certify, also taking account of the provisions of Article 154-bis, paragraphs 3 and 4 of the Italian Legislative Decree 58 of 24 February 1998:

- the appropriateness with regard to the company’s characteristics and - effective application

of the administrative and accounting procedures to form the separate financial statements during 2014.

To this regard no aspects of particular importance have emerged.

In addition, it is certified that the financial statements as of 31 December 2014: were drawn up in conformity to the applicable international accounting standards

recognised by the European Union in accordance with the regulation (EC) no. 1606/2002 of the European Parliament and of the Council of 19 July 2002;

correspond to the documentary results, the registers and the accounting records;

are suited to provide a truthful and correct representation of the issuer’s assets and

liabilities, profit and loss and financial situation.

The Report on Operations includes a reliable analysis of the progress and result of management, as well as of the situation of the Issuer, together with a description of the main risks and uncertainties to which they are exposed. 16 March 2015

________________________________

________________________________

Chairman Roberto Colaninno

Manager in charge of preparing the company

accounts and documents Andrea Paroli

________________________________

Chief Executive Officer Michele Colaninno

232

REPORTS OF THE AUDITING FIRM AND OF THE BOARD OF STATUTORY AUDITORS

Report of the Board of Statutory Auditors to the General Shareholders' Meeting

of IMMSI S.p.A.

pursuant to Article 153 of Legislative Decree no. 58/98 and Article 2429 of the Italian Civil

Code

== oo == oo ==

Dear Shareholders,

We submit the Financial Statements of IMMSI S.p.A., for the year ending 31 December 2014,

prepared according to IAS/IFRS international accounting standards, with a net loss of

65,628,000 euros.

The Consolidated Financial Statements for 2014 are also presented, with a total loss of

71,344,000 euros, of which 530,000 euros attributable to non-controlling interests and

70,814,000 euros attributable to the Group.

The Financial Statements of the Company and the Consolidated Financial Statements of the

Group, prepared by the Directors pursuant to law, were duly notified to the Board of Statutory

Auditors along with the Directors' Report on Operations and the Report on Corporate

Governance and Corporate Ownership. The Board of Statutory Auditors was also given reports

of the Independent Auditors.

To the best of our knowledge, the Directors did not depart from legal provisions relative to the

preparation of Financial Statements and when preparing financial reports, considered the Doc-

uments of the Bank of Italy/Consob/Isvap no. 2 of 6 February 2009 and no. 4 of 3 March 2010.

During 2014, the Board of Statutory Auditors performed oversight activities required by law,

also taking account of Consob communications on corporate controls and relative to the activi-

ties of the Board of Statutory Auditors. It therefore monitored: (i) compliance with law and the

memorandum of association, (ii) compliance with principles of correct administration, (iii) the

adequacy of the company's organisational structure as regards aspects in its remit, the internal

237

control system, the accounting and administrative system, as well as the reliability of the latter

in correctly representing operations, (iv) procedures to implement the corporate governance

rules established in the Corporate Governance Code of the Committee for the Corporate Gov-

ernance of listed companies which the Company endorses (v) the adequacy of instructions giv-

en to subsidiaries pursuant to Article 114, paragraph 2 of the Consolidated Law on Finance.

Moreover, in its capacity as "Internal Control and Audit Committee", the Board of Statutory

Auditors, pursuant to Article 19 of Italian Legislative Decree no. 39 of 27 January 2010, also

monitored (i) the financial disclosure process, (ii) the effectiveness of the internal control, inter-

nal audit and risk management systems, (iii) the auditing of the annual and consolidated ac-

counts, (iv) the independence of the independent auditors, in particular as regards the provision

of non-audit services to the organisation whose accounts are audited.

In compliance with Article 2429 of the Italian Civil Code and Article 153 of Italian Legislative

Decree no. 58/98 and considering the indications of Consob in its communication no.

DEM/1025564 of 06/04/2001, as amended by communication no. 6031329 of 07/04/2006, the

Board of Statutory Auditors reports on the following.

1. The most significant financial operations performed by the Company in 2014 are de-

scribed by the Directors in full in their Report on Operations. The Board of Statutory Auditors

was informed of the above financial operations by taking part in Board Meetings and in meet-

ings with the Company's management. The Board of Statutory Auditors established that opera-

tions performed were not imprudent, risky, did not involve a conflict of interests, did not go

against shareholders' resolutions and the articles of association or were such as to affect the in-

tegrity of company assets. The notes to the Consolidated Financial Statements (in the section on

the "form and content of the consolidated financial statements") also refer to significant non-

recurrent transactions, attributable to the subsidiary Piaggio & C. S.p.A.

2. In 2014, no atypical and/or unusual transactions took place with third parties, Group

238

companies or related parties; for a list of ordinary transactions between the Group or Parent

Company IMMSI and related parties or other Group companies, reference is made to the Direc-

tors' Report and the section “Group and related party dealings" as regards the Group, and to the

Notes, section “I - Group and related party dealings", as regards IMMSI. These transactions

mainly concern trade and financial receivables/payables, supplies of materials, financial, tax

and contractual advisory services and leases/rentals. Income from subsidiaries is also signifi-

cant, for the Parent Company only. The above documents also give full details of the relative

economic effects; the transactions take place in normal market conditions or according to spe-

cific legal provisions. The Board of Statutory Auditors also considers that these transactions are

consistent and in the interests of the company. The report also considers that, in compliance

with regulation no. 17221 on related-party transactions issued by Consob on 12 March 2010 as

amended, the Company has adopted the procedure which, since 2011, regulates procedures for

approving related-party transactions.

3. The Board of Statutory Auditors considers the information given by Directors in the

Report on Operations and in the notes to the separate Financial Statements as adequate, as re-

gards intergroup and related-party transactions.

4. The independent auditors PricewaterhouseCoopers S.p.A. audited the financial state-

ments and issued reports on 2 April 2015 with no material findings or requests for additional

disclosure.

5. During 2014, no information was reported to the Board of Statutory Auditors pursuant

to article 2408 Italian Civil Code.

6. During 2014, no complaints were submitted to the Board of Statutory Auditors.

7. The independent auditors PricewaterhouseCoopers S.p.A. issued a statement on 2 April

2015 (or previously for Piaggio & C. S.p.A.), declaring that it performed "auditing services"

and "other services" for the company IMMSI S.p.A. and its subsidiaries. The Board of Statutory

239

Auditors carried out checks - also at a group level - which showed that PricewaterhouseCoopers

was paid 47,733 euros for "auditing services" only for IMMSI and 462,192 euros for the rest of

the Group (of which 357,810 euros referred to the subsidiary Piaggio & C. S.p.A. and 9,000 eu-

ros referred to Piaggio subsidiaries). Analysis also showed that the Independent Auditors pro-

vided certification services for IMMSI S.p.A. for 20,000 euros, and for Group subsidiaries

342,000 euros (of which 336,000 referred to the subsidiary Piaggio & C. S.p.A. and 6,000 euros

referred to Piaggio subsidiaries) and other services (in relation to Piaggio's Corporate Social

Responsibility Report) for 40,000 euros. In the above mentioned statement, the Independent

Auditors also stated that from 1 January 2014 up to the date of the statement, no situations that

may have compromised independence or causes of incompatibility pursuant to articles 10 and

17 of Italian Legislative Decree no. 39/2010 and relative implementing provisions were identi-

fied.

8. Moreover, the PricewaterhouseCoopers network was paid for "auditing services" entire-

ly by Piaggio & C. S.p.A. subsidiaries for 365,933 euros. The network was also paid 69,387 eu-

ros by Piaggio & C. S.p.A. subsidiaries for “certification services”.

In the light of previous observations and information in point 7 above, and considering the in-

ternational dimension of the Group, the Board of Statutory Auditors does not consider that any

critical aspects occurred concerning the independence of the Independent Auditors.

9. During 2014, the Board of Statutory Auditors also provided, where necessary, opinions

and observations required by law. The content of these opinions does not contrast with subse-

quent resolutions undertaken by the Board of Directors.

10. In 2014, the Board of Directors met 7 times, with the Board of Statutory Auditors also

attending the meetings; the Internal Control and Risk Management Committee met 5 times; the

Remuneration Committee met once, while the Board of Statutory Auditors met ten times and

the full board, and/or individual members, also met with the independent auditors Pricewater-

240

houseCoopers S.p.A.. Meetings of the Internal Control and Risk Management Committee usual-

ly include the entire Board of Statutory Auditors, in order to ensure that external/internal infor-

mation flows are shared.

11. The Company observed principles of correct administration and the resolutions of the

Board of Directors were made in the interests of the company.

12. The Board of Statutory Auditors, as regards aspects in its remit, considers the Compa-

ny's organisational structure to be adequate, also in relation to actual company operations, main-

ly as the holding of a group with 43 companies in different sectors (of which 32" consolidated

in the group's Financial Statements), and in particular in the industrial (and specifically the two-

wheeler and commercial vehicles), marine and property/holding segments. Operations mainly

concerns funding subsidiaries, as well as the management of these investments. In this regard,

the fact that Company Directors are on the Boards of Group Companies reinforces control of

subsidiaries. The Board of Statutory Auditors monitored the Company's organisational structure

during its periodic controls and also reviewed the organisational oversight systems of the

Group's organisation, with a particular focus on administration. In addition, the fact that the

Chairman of the Board of Statutory Auditors is also an Auditor of the subsidiary Piaggio & C.

S.p.A. facilitates the exchange of information concerning this listed subsidiary. The Chairman

of the Board of Statutory Auditors liaised with the Chairmen of the Boards of Statutory Audi-

tors of the Group's most important companies, and in particular of sub-parent companies, re-

porting to the Board if problems of a common interest occurred. Frequent financial disclosure

on the sub-group in the marine sector was provided, for which IMMSI Directors continuously

ensured financial support for operations, as stated in the sections "The Intermarine Marine Sec-

tor" and "The property and holding sector" of the Directors' Report on Operations. The trend of

net debt - which is summarised in the section “Financial position and performance of the

Group" (in the Directors' Report) was systematically overseen by the Board of Statutory Audi-

241

tors in its meetings: the Board of Statutory Auditors was periodically updated - during the year -

on developments and specific meeting were held in this regard with the Administrative Director

of IMMSI, in order to determine the financial strategies of the Group, as well outcomes of net

debt monitoring, also by segment of activity. The Board of Statutory Auditors confirms that the

Directors addressed this issue and the adequacy of the organisational structure in relation to the

monitoring process.

13. The Board of Statutory Auditors monitored the adequacy of the internal control system,

collecting information, among others, from Directors, the Independent Auditors as well as the

Internal Control Officer, that is also responsible for the internal audit function and the Chief

Executive Officer of IMMSI Audit S.C. a r.l..

IMMSI, in addition to other Group companies and in particular the main subsidiary Piaggio &

C. S.p.A., was also assisted by IMMSI Audit S.C. a r.l. that provided internal auditing services

on an outsourcing basis. IMMSI Audit S.C. a r.l. also monitored the compliance programme

used by the Supervisory Body as of Italian Legislative Decree no. 231/01 and carried out

checks in relation to controls required by Italian Law no. 262/05 and activities of the Financial

Reporting Officer. The Board of Statutory Auditors liaised with the internal control officer, who

is the audit function manager; the activities of the officer were performed successfully and ef-

fectively (as in previous years) and as regards company cycles and functions controlled in 2014

- no Company shortcomings were identified that require disclosure in this report.

IMMSI Audit S.C. a r.l. presented an audit plan for IMMSI S.p.A. for the 2012-2014 period,

with the aim of controlling, over the three year period, all significant company activities and

processes, at least once. This plan was approved by the Board of Directors of IMMSI. Activities

actually performed in 2014 - which are covered by a detailed report examined by the Internal

Control and Risk Management Committee and the Board of Statutory Auditors - were success-

fully evaluated by the Board, that provided findings on audit activities performed for the parent

242

company and subsidiaries, also giving an opinion on problems identified and on their elimina-

tion or mitigation. Objectives and activities for 2015 were identified, also in view of activities

performed in 2014 and indications from the Executive Director appointed to supervise the in-

ternal control system, and namely the Chief Executive Officer, or from corporate governance

bodies, in order to include new issues to analyse or assign a different priority to audit activities,

also based on information shared with management. The Board of Statutory Auditors consid-

ered the control system as adequate. Following the entry into force of Italian Legislative Decree

no. 39 of 27 January 2010, the Board of Statutory Auditors, in its capacity as "Internal Control

and Audit Committee", through the Chairman, liaised with and provided continual information

flows to the Internal Control and Risk Management Committee comprising Directors, and also

all members of the Board of Statutory Auditors.

Lastly, the Board of Statutory Auditors interfaced with the Supervisory Board - through the

Chairman (who is a member of the Board), - also coordinating as regards updates to the Com-

pliance Programme pursuant to Italian Legislative Decree no. 231/2001.

During the meetings of the Internal Control and Risk Management Committee, no aspects that

require disclosure in this report were identified.

In view of the above, the Board of Statutory Auditors considers the current internal control sys-

tem to be adequate, in overall terms.

14. The Board of Statutory Auditors, as regards aspects in its remit, considers the adminis-

trative/accounting system as adequate and suitable for correctly representing operations. In this

context, the Board of Statutory Auditors was periodically informed about supporting activities

for the Financial Reporting Officer (with the Company also assisted by IMMSI Audit S.c. a

r.l.), that analysed company areas considered significant and evaluated connected risks, also

considering the mitigation of these risks. Based on information exchanged with the administra-

tion manager and meetings with the Independent Auditors, the Board of Statutory Auditors

243

acknowledged the validity of this system's operation. The Chairman of the Company, the Chief

Executive Officer and Director and the Financial Reporting Officer issued statements as re-

quired by Article 154-bis, paragraph 5 of Italian Legislative Decree no.58/1998. The Internal

Control and Risk Management Committee, before the Meeting of the Board to approve the Fi-

nancial Statements, reviewed the results of impairment procedures and discussed them with the

Independent Auditors, in the presence of the Board of Statutory Auditors.

15. Pursuant to Article 114 of Italian Legislative Decree no. 58/98, the Company gives sub-

sidiaries adequate instructions in order to obtain information necessary to comply with commu-

nication obligations established by law. In addition, Company Directors have positions in main

subsidiaries.

16. During 2014 and up to the date of this report, the Board of Statutory Auditors met with

the independent auditors PricewaterhouseCoopers to exchange data and information for per-

forming their respective duties as required by point 3 of Article 150 of Italian Legislative De-

cree no. 58/98; no findings were identified during these meetings. Moreover, in order to further

investigate aspects as of Article 19, paragraph 1, point c) of Italian Legislative Decree no.

39/2010, the Board of Statutory Auditors reviewed significant aspects of the audit plan, includ-

ing an assessment of significant risks and related audit responses. This assessment also investi-

gated main risk aspects in full, with the independent auditors. The Board of Statutory Auditors

also examined the report as of Article 19, paragraph 3 of Italian Legislative Decree no. 39/2010

produced by the independent auditors - also discussing it with them. In this report, Pricewater-

houseCoopers declared that there were no material findings to notify to the Board of Statutory

Auditors and that no major shortcomings in the internal control system had been identified as

regards the financial disclosure process. The Board of Statutory Auditors was also able to ana-

lyse other aspects from this report, concerning: i) the control system of the subsidiary Piaggio &

C. S.p.A. (as regards processes and information systems); ii) assessment of the investment in

244

Alitalia – Compagnia Aerea Italiana S.p.A. by IMMSI S.p.A. and the recoverability of deferred

taxes for the Parent Company.

17. The Directors, in the "Report on Corporate Governance and Corporate Ownership” pur-

suant to Article 123-bis of the Consolidated Law on Finance, which is included with the Finan-

cial Statements, have provided detailed information about the corporate governance system, in-

dicating the level of compliance with indications in the Corporate Governance Code. In particu-

lar, the Company established the Remuneration Committee for Directors, the Internal Control

and Risk Management Committee, the Lead Independent Director and the Executive Director

appointed to supervise the operation of the internal control system. The Company has put in

place a "procedure for the disclosure of price-sensitive information", a "procedure for the man-

agement of the list of persons that have access to price-sensitive information" and a "procedure

for compliance with obligations concerning insider dealing" and a "regulation for related-party

transactions". These aspects are also addressed in the Annual Report on Corporate Governance.

The Company adopted the procedure – effective from 1 January 2011 and updated in December

2013 – for regulating the approval and management of related-party transactions, pursuant to

Article 4 of Consob Regulation no. 17221 of 12 March 2010, undertaken by IMMSI also

through subsidiaries. The term of office of the Committee is related to the existence of three in-

dependent Directors: this circumstance was verified on 25 March 2014 and due to the resigna-

tion of a Director on the committee on 8 October 2014, on 16 March 2015. At other times, in

the absence of a sufficient number of independent directors, the procedure allows relative func-

tions to be carried out by independent Directors or by the Board of Statutory Auditors or by an

independent expert appointed by the Board of Directors. Independence requirements, as of Ar-

ticle 3 of the Corporate Governance Code and Article 148, paragraph 3, letters b) and c) of Ital-

ian Legislative Decree no. 58/98 of independent directors were verified by the Board of Direc-

tors on 25 March 2014 (and subsequently amended on 16 March 2015). The Board of Statutory

245

Auditors acknowledged that the criteria and the monitoring procedures adopted by the Board of

Directors for evaluating independence requirements had been correctly applied. The Board of

Statutory Auditors also verified the independence requirements of its members based on the

same criteria and reported on this to the Board of Directors. In this regard, on 25 March 2014

and on 16 March 2015, with reference to members of the control body, the Board of Directors

resolved on the following, save for evaluations made by the Board of Statutory Auditors as re-

gards its composition: (i) to consider appropriate, in the interest of the Company, the non-

application of criterion 3.C.1 point e) of the Corporate Governance Code with regard to the

Statutory Auditor Alessandro Lai; (ii) to recognise compliance with independence requirements

pursuant to Article 148, paragraph 3, of the Consolidated Law on Finance and Article 3 of the

Corporate Governance Code relative to all members of the Board of Statutory Auditors. Indi-

vidual members of the Board of Statutory Auditors also comply with limits on the number of

positions that may be held as of article 148-bis, paragraph 1 of Italian Legislative Decree no.

58/98. Members of the Board of Statutory Auditors agreed on the need, in the case of transac-

tions in which they may have in interest directly or on behalf of others, to report the situation to

the Board of Directors and to other members of the Board of Statutory Auditors.

For some time now, the Company has established a Code of Ethics, a Compliance Programme

pursuant to Italian Legislative Decree no. 231/2001 and a Supervisory Body, which the Chair-

man of the Board of Statutory Auditors, is also a member of.

The Company submits a Remuneration Report to Shareholders pursuant to Article 123-ter of

Legislative Decree no. 58/1998 and Article 84-quater of Consob Regulation no. 11971/1999

and in compliance with Attachment 3, diagrams 7-bis and 8-ter of the regulation.

In November, the Company supplemented some articles of the Articles of Association, in order

to ensure compliance with legal provisions, and also in accordance with Article 23, paragraph

two of the Articles of Association, that gives the Board of Directors the power to resolve on the

246

aforesaid amendments and additions, in accordance with legal provisions, including compliance

with requirements concerning the gender balance of company boards.

18. The Board of Statutory Auditors, during its control activities, did not identify any omis-

sions, aspects to report, or serious irregularities, and therefore does not consider that any infor-

mation needs to be reported to the Control Bodies or to the Shareholders' Meeting as required

by paragraph 1 of Article 153 of Italian Legislative Decree no. 58/98.

19. The Board of Statutory Auditors has no proposals to submit to the Shareholders' Meet-

ing, pursuant to Article 153 par. 2 of Legislative Decree no. 58/98, apart from information con-

cerning the approval of the financial statements.

== oo ==

The Board of Statutory Auditors, in view of considerations made as regards aspects in its remit,

has not identified any reasons to prevent the approval of the Financial Statements as of 31 De-

cember 2014 and agrees with the proposal put forward by the Board of Directors to fully cover

the loss for the year by using reserves available from the Shareholders' Equity of the Company

at 31 December 2014.

At the end of its three-year term of office, the Board of Statutory Auditors would like to thank

Shareholders for the trust given to it, and the Company for the assistance provided while it per-

formed its activities.

Mantova, 8 April 2015.

On behalf of the Board of Statutory Auditors

The Chairman - Alessandro Lai

247

report of the directors and financial statements of immsi

Documents