riva forni elettrici

Annual Report

Bilancio Consolidato

2014

RIVA FORNI ELETTRICI

Relazione sulla gestione

Bilancio consolidato

Nota illustrativa

Relazione della Società di Revisionee del Collegio Sindacale

Business Report

Consolidated financial statements

Notes to Consolidated financial statements

Auditors’report

Indice Contents

Profilo del Gruppo

I dati significativi

Group Profile

Highlights

3

5

79

35

43

7

Carica cesta rottame in forno - Stabilimento di Siviglia / Steel scrap basket charged into the furnace - Sevilla Plant Riva Acciaio Verona - Tondo in rotoli / Hot rolled stretched coils - Verona plant

Laminati a caldo

VergellaTondo cemento armato

Barre

Laminati a freddo

Rete elettrosaldataFilo trafi lato

Trafi latiPelati

Rettifi cati

Semiprodotti(da colata continua)

BlumiBillette

Hot rolled products

Wire rodConcrete reinforcing barsBars

Cold rolled products

Welded meshDrawn wireDrawn productsPeeled barsGround bars

Semiproducts(continuous casting)

BloomsBillets

I principali prodotti Main products

- 3 -

Trefileries de FontaineL’Eveque

BetonstahlLampertheim

Riva Acciaio

RIVA FORNI ELETTRICI

Holding

Thy Marcinelle

Gruppo RIVA FORNI ELETTRICI - al 31.12.2014

RIVA FORNI ELETTRICI Group - as at 31.12.2014

100%

Holding

MuzzanaTrasporti

9,09%

68,18%

22,73%

87,56%ImmobiliareSiderurgica

SiderurgicaSevillana100%

A.S.I.100%

Parsider100%

Riva Aciér100%

Acor100%

SAM98,13% 1,87%

Iton Seine100%

SAM Montereau100%

Alpa100%

100%

Riva Stahl

H.E.S.

B.E.S.

75%

94%

94%

100%

25%

6%

100%100%

90%

12,44%

10%

6%

Ricordo di Emilio Riva

Mentre si stava chiudendo il primo bilancio consolidato del Gruppo Riva Forni Elettrici, il 29 aprile 2014 è scomparso Emilio Riva, fondatore, nel 1954, della prima società da cui ha preso vita l’attuale Gruppo.Pur senza voler cedere alla retorica, non si può dunque non ricordare qui la fi gura dell’Ingegner Riva, il cui impegno professionale e la cui lungimiranza imprenditoriale hanno svolto un ruolo determinante nella crescita e nello sviluppo di uno dei principali gruppi siderurgici italiani, europei e mondiali.

Emilio Riva è nato il 21 giugno del 1926 a Milano, e ha iniziato la sua carriera imprenditoriale costituendo, insieme al fratello Adriano, nel 1954, a 28 anni, la Riva&C, una società che commercializzava rottami ferrosi destinati alle acciaierie del bresciano.

Tre anni dopo aveva realizzato la prima acciaieria, con forno elettrico, a Caronno Pertusella in provincia di Varese dove, nel 1964, installò – per primo al mondo - la macchina a colata continua “Danieli”, che ancora oggi costituisce una tecnologia imprescindibile per tutti i siti produttivi del mondo, e che, nel 2001, valse a Emilio Riva la Laurea Honoris Causa in ingegneria meccanica del Politecnico di Milano.

Da quella “colata continua”, e da quel forno elettrico, iniziano l’inarrestabile avventura di successo di Emilio Riva e di crescita del Gruppo che diventerà, in pochi decenni, uno dei primi dieci produttori mondiali del settore, e le cui tappe di espansione si possono così sintetizzare; acquisizione delle Acciaierie del Tanaro, nel cuneese (1966); acquisizione della S.E.E.I, nel bresciano (1970); ingresso nella Siderurgica Sevillana in Spagna (1971); nella Iton Seine in Francia (1976).

Fino alla metà degli anni ’70, il Gruppo gestisce anche un’acciaieria ad Addis Abeba e altri impianti di verticalizzazione di prodotti siderurgici in Etiopia, attività che favoriscono lo sviluppo economico della nazione africana e che varranno per questo a Emilio Riva gli encomi dell’allora imperatore Hailé Selassié. Nel 1981 viene quindi acquistata la Offi cine e Fonderie Galtarossa di Verona.

Emilio Riva è stato poi pioniere e grande protagonista (nonché apripista) della stagione delle privatizzazioni della siderurgia europea degli anni ‘80, processo fortemente caldeggiato, all’epoca, dal visconte Étienne Davignon che, in qualità di Commissario europeo agli affari industriali, promosse una drastica ristrutturazione del sistema siderurgico del Vecchio Continente, sistema attanagliato da una crisi che sembrava allora irreversibile.

Investita da una pesantissima crisi congiunturale, oltreché soggetta a distorsioni competitive del mercato, indotte dal dominante controllo pubblico, la siderurgia europea trovò, proprio grazie alla “cura Davignon”, la via della ripresa. Le privatizzazioni ne rappresentarono,

Relazione sulla gestione

Business report

Parco billette - Stabilimento di Siviglia / Billets storage yard - Sevilla PlantRiva Acciaio Verona - Laminatoio vergella n. 3 / No. 3 wire rod hot rolling mill - Verona plant

- 5 -

The Riva Forni Elettrici Group (hereinafter also “RFE Group”) operates in the steel industry and other related activities, and specifi cally in the fi eld of “long products”.The Group started operating, with legal effect on 1st January 2013, following the partial demerger carried out by Riva Fire S.p.A.

The corporate organization chart of the Group as of 31 December 2014 is presented in the fl yer above. The production and processing facilities and sales branches of the Group, on the same date, are located as follows:

Countries Production and processing facilities

Italy 7

France 7

Germany 3

Belgium 2

Spain 1

Canada 1

———

21

=====

In 2014 the RFE Group reached a consolidated turnover of Euro 3,609 million, with a steel production of 7.8 million tons and with the use of 5,061 employees.

Group Profi le

I dati signifi cativi

Highlights

Treno sbozzatore laminazione 1 - Stabilimento di Siviglia / Roughing rolling mill no.1 - Sevilla PlantRiva Acciaio Verona - Carica del rottame nel forno n. 1 / Scrap charging process into no.1 EAF fournace - Verona plant

RIVA FORNI ELETTRICI S.p.A. Milano

USA eCanada

I siti produttivi e di trasformazioneProduction and transformation plantsItalia • Italy

Riva Acciaio - Annone Brianza (LC)Riva Acciaio - Caronno Pertusella (VA)Riva Acciaio - Cerveno (BS)Riva Acciaio - Lesegno (CN)Riva Acciaio - Malegno (BS)Riva Acciaio - Sellero (BS)Riva Acciaio - Verona

Acor - Creil (F)Acor - Vauvert (F)Acor - St. Just St. Rambert (F)Alpa - Gargenville (F)ASI - Montreal (CAN)BES - Brandenburg (D)Betonstahl Lampertheim - Lampertheim (D)HES - Hennigsdorf (D)Iton Seine - Bonnieres Sur Seine (F)SAM - Neuves Maisons (F)SAM - Montereau (F)Siderurgica Sevillana - Siviglia (E)Trefi leries de Fontaine l’Eveque - Fontaine l’Eveque (B)Thy Marcinelle - Charleroi (B)

Estero • Foreign

Società CommercialiTrading Companies

Riva Acciaio - Milano (I)Riva Aciér - Creil (F)Riva Stahl - Hennigsdorf (D)Siderurgica Sevillana - Siviglia (E)Thy Marcinelle - Charleroi (B)

Estero • Foreign

- 17 -

I dati signifi cativi(In milioni di euro)

Dati gestionaliFatturato netto 3.694,5Margine operativo (45,5)Risultato dell’esercizio di Gruppo (60,3)

Struttura patrimonialePatrimonio netto di Gruppo 1.104,9Debiti fi nanziari a lungo termine -Posizione fi nanziaria netta (254,3)Immobili, impianti e macchinari 734,3

Altri datiCash fl ow operativo 134,1Ammortamenti 134,8Proventi / (Oneri) fi nanziari netti (13,6)Investimenti in immobili, impianti e macchinari 84,4

Dati statistici

Dipendenti a fi ne anno n. 5.076

Tonnellate prodotte (in migliaia):- acciaio t. 7.591- vergella t. 4.204- tondo per cemento armato t. 2.101- barre - billette laminate t. 913

Fatturato per dipendente (in migliaia di Euro) 729

2013

- 9 -

Highlights(In million euros)

Operating resultsNet sales 3,608.7 3,694.5EBITDA 145.3 121.6Operating margin (430.9) (45.5)Net income (loss) (439.4) (60.3)

Capital StructureGroup equity 665.8 1,104.9Long-term debt 388.7 -Net Financial Position (428.3) (254.3)Property, plant and equipment 660.8 734.3

Other key fi guresCash fl ow from operations 159.2 134.1Depreciation and amortization 131.9 134.8Net fi nancial income/ (loss) (20.0) (13.6)Capital expenditures 69.0 84.4

Key Statistics

Employees at year end n. 5,043 5,076

Tons produced (in thousands):- Crude steel T. 7,762 7,591- Wire rod T. 4,215 4,204- Concrete reinforcing bars T. 2,190 2,101- Bars, hot-rolled billets T. 956 913

Sales per employee (in thousands of Euros) 713 729

2014 2013

- 11 -

Over 2014 the world economy expanded by 3.3% (IMF source), a rate equal to that of 2013. The largest contribution to the growth came this year once again from the emerging economies that grew in total at a rate of 4.4%.

The growth in the demand of advanced economies and China was substantially the factor that led to support the economies of emerging countries. However, the economic activity remained weak within emerging countries, with the risk of a further slowdown of the Chinese economy and a deterioration in the economic and fi nancial conditions in Russia.

China’s economy expanded at a rate of 7.4%, thus lower than the declared annual growth objective (7.5%), with a signifi cant drop in the fi nal part of the year.

The acceleration of the economy in India remained strong, while stagnation continued in Brazil, where the gross domestic product was slowed by weak investments.

The economic situation in Russia is undergoing a major halt. This rapid deterioration is due to the sanctions imposed by the Western countries at the end of July, the collapse of the rouble and the fall of the oil price. In developed countries the overall cyclical conditions remain very heterogeneous.Overall, they underwent a 1.8% growth, supported by the United States (+2.4%) and the United Kingdom (+2.6%). However the uncertainty on time and on the strength of the recovery in Japan and the Euro area have a remarkable weight on the economic performance of these countries.

Like last year, a multiplicity of factors adversely affected the economic performance of the Euro Area (which closed the year with a +0.8%) such as the consolidation of public accounts and the persistent diffi culties faced by the building sector and the high levels of unemployment.

Among the major economies, the gross domestic product increased once again in Germany (+1.5%) and very slightly in France (+0.4%), but decreased in Italy (-0.4%). The French economy benefi ted from the expansion of public consumption, while in Germany a modest support to the activity was due to the acceleration of household expenditure and public administrations.

In Italy consumptions started growing to a limited extent. Their contribution to the growth of the economy was partially offset by lower investments curbed by uncertainty about the prospects of the demand and the diffi culties of the building industry.

A strengthening in the growth in the Euro area by 1.2% in 2015 and 1.4% in 2016 is forecast.

In the United States the economic activity sharply accelerated with a growth

The internationalsteel industry

- 12 -

of the gross domestic product by 2.8%. The economic growth is expected to be equal to 3.6% in 2015, benefi ting of the strengthening in consumptions.

The Japanese economy grew over 2014 to a disappointing rate of 0.1%. This is due to a new fall in investments, only partially offset by a modest recovery in consumptions.

The year 2014 closed with a new record for the world production that with 1,637 million tons exceeded by 1.1% the record of 2013 (worldsteel data).

The Asian annual production, with 1,111 million tonnes of steel, improved by 1.4% compared to the previous year’s results. The continent’s share increased slightly, from 67.7% in 2013 to 67.9% in 2014. Steel production in China marked a new record in 2014 with 823 million tonnes and an increase of 0.9% compared to 2013. China in 2014 produced little more than half of the world steel, with a production share of 50.3%. Japan produced 110.7 million tonnes in 2014, with an increase of 0.1% from 2013, while India is expanding to 83 million tonnes (2.3%).

A contraction affected the CIS countries (-2.8%), with a substantial decrease of Ukraine (-17.1%), while Russia closed the year with a slight increase (2.6%).

Brazil produced 33.9 Mt in 2014, a decrease of -0.7% compared to 2013, while the United States produced 88.3 million tonnes, with an improvement of +1.7% compared to 2013.

The Middle East improved by 7.9% to reach 28.1 million tonnes, with Iran fi rst (16.3 million tonnes, +5.9%) and Qatar (3.0 million tonnes, +36.3%), while Turkey slowed even further (34.0 million tonnes, -1.8%).

The EU registered a growth of +1.8% compared to 2013 with a production of 169.2 million tonnes. Germany produced 42.9 million tonnes of steel in 2014, with a production level close to that of 2013 (+0.7%). Italy and Spain showed a drop of -1.4% and -0.6% respectively, while the French production improved by 2.9%.

Consumption of fi nished products

The latest data available at the moment (worldsteel source) show a world consumption of fi nished products set on 1,538 million tonnes, with an overall increase of +0.6% compared to 2013, after +6.2% in the previous year.

Apparent steel consumption in the EU28 registered an increase of +3.3% over the previous year. An expansion in the demand for steel by +1.9% and +2.6% respectively in 2015 and 2016 is foreseen.

Steel market

- 13 -

According to worldsteel an increase of the steel market in the EU28 equal to 2.1% in 2015 and to 2.8% in 2016 is expected.

Very positive was the trend of the North African market that grew by 9.4% for 2014 (Algeria: +9.4%; Egypt: +10.6%; Morocco: +2.7%), while the steel consumption in Turkey decreased by 1.8%.

The Italian economy contracted by 0.4% in 2014, due mainly to the weakness of investments, slowed by wide margins of unused capacity. In spite of the oscillations of the world demand, exports continue to support the product dynamic, while the slow recovery of consumption by households continued.

The industrial activity, which has been decreasing almost without interruption since summer 2011, decreased by about 1% in 2014. The climate of trust in the manufacturing fi elds marked a marginal recovery. Businesses that operate in the industrial sector indicate a worsening of the general economic situation, but to a much lesser extent than in the past.

The decline in investment concerned both the building ones and those of capital goods. This would be due to the weakness in demand, while the slowing down resulting from fi nancial constraints signifi cantly attenuated compared to previous years.

A growth was seen in the amount of worked hours in the overall economy thanks to the increase in labour supply, however, the unemployment rate was not reduced, which rose to 12.8% in 2014 (data as of November 2014).As a result, household consumptions continued to increase to a limited extent, confi rming a trend dating back to summer 2013. The diffi cult conditions of the labour market and the uncertainty surrounding the economic situation of families still affect consumption.

Gross fi xed investment decreased by 4% (compared to 5.4% of 2013); the decline in investment in the construction fi eld was approximately 4.1% (estimate, data as of October 2014) while the investments in machinery and equipment moved back to 3.6% (estimate, data as of October 2014).

Positive was the contribution to the growth of the gross domestic product supplied by net foreign demand. The balance of payments on current account returned positive in 2013 and continued to grow reaching 24.7 billion euro in the fi rst eleven months of 2014. However, in the third quarter of 2014 exports of goods and services decelerated due to the stagnation of the demand from other countries of the Euro Area. A picture of great uncertainty emerges on the perspective demand of Italian products abroad.

The Italian steel industryEconomic framework

- 14 -

In 2014 the production of steel in Italy was equal to 23.7 million tonnes, a decrease of 1.5% over 2013, mainly due to the last quarter (-12.6%). The national output dropped by 25% compared with the pre-crisis peak of 2006.

Long products, which continue to be penalized by the decline of the construction sector, undergo a new recession. In 2014 the production of long rolled sections, 11.3 million tonnes, decreased by 1.2% compared to 2013.

Beams and rigging products are the more penalized products (declining on average by 12.2%); wire rods and concrete reinforcing bars lost respectively 0.3% and 1.4%, while the production of merchant bars concluded the year with an increase (+1.4%).

The apparent consumption of primary steel products in 2014 was equal to 25.4 million tonnes, an increase of about +0.8% compared to 2013.

As of 2014, the apparent consumption of long products marked a new historic low since 1999, in harmony with the trend in the national construction sector (2.9%decline). In particular, the rod, beams and rigging material marked a historic low in demand, while the concrete reinforcing bars concluded the year with a 6.2% growth.

The activities of the national companies slowed down considerably in 2014 (26.1 million tonnes delivered, -2.6%), while imports increased by 5.8% to reach 15.3 million tonnes, with an emphasis on European ones (8.2 million tonnes, +3.4%) compared to those outside Europe (7.1 million tonnes, +8.7%).

As regards long products, statistics confi rm the improvement of exports (+3.6%), particularly in favour of markets outside Europe (+5.2%). Imports confi rmed to be undergoing a rise (+6.6%).

The total number of legal entities that are part of the Group is 25. For a complete detail of the consolidation area, see Appendix 1.

None of the companies of the RFE Group has established branches.

Italian steel market

The Riva Forni Elettrici Group

Secondary places of business

- 15 -

The turnover of the RFE Group was Euro 3,609 million, with a 2% decrease compared to the previous year. In detail, the turnover by Country of origin is the following (in millions of Euro):

Countries 2014 2013 + ( -)

Italy 747 742 5

Germany 1,202 1,185 17

France 972 1,077 (105)

Belgium 358 361 (3)

Spain 320 327 (7)

Canada 10 3 7

---------- ---------- ----------

3,609 3,695 (86)

======= ======= =======

Sales of steel products made by the Italian companies represent about 21% of the entire turnover, while the remaining 79% of the total has been achieved by the European subsidiaries. Marginal is the turnover achieved by non-EU companies.

In 2014 the Group produced 7.8 million tons of steel with a prevalence (82%) of the production in the EU countries. The total production of the Group was maintained over the last year, as it can also be seen from the data reported in the following table (in thousands of tons):

Countries 2014 2013 + (-)

Italy 1,405 1,346 59

France 2,554 2,563 (9)

Germany 2,266 2,156 110

Belgium 808 808 -

Spain 729 718 11

---------- ---------- ----------

7,762 7,591 171

======= ======= =======

The Sales

The Production

- 16 -

In terms of production quotas on the total of the EU, in 2014 the Riva Forni Elettrici Group essentially confi rms its presence both in the production of crude steel and in the fi eld of long rolled which operates in. A summary of the shares at European level, drawn up on the basis of data estimates available at present, is shown in the following table:

Market share of the RFE Group in Europe (EU 28) 2014 2013 2012

Raw steel 4.6% 4.6% 4.6%

Long-rolled products 12.6% 12.4% 11.9%

The consolidated income statement can be summarized as follows (in millions of Euro):

2014 % 2013 %

Net sales 3,609 100.0% 3,695 100.0%

Ebitda 145 4.0% 122 3.3%

Operating margin (431) (11.9%) (45) (1.2%)

Net fi nancial loss (20) (0.6%) (14) (0.4%)

Net income (loss) before minority interest (439) (12.2%) (60) (1.6%)

Net income (loss) (439) (12.2%) (60) (1.6%)

The economic results of the fi nancial year 2014 have been affected in particular:

- by the diffi cult economic situation in the global economy, which also refl ected on the steel sector;

- by the achievement of positive operating margins in certain geographical areas and negative in others;

- by the depreciation / provisions made by the parent company Riva Forni Elettrici in the light of the grounds set out in the following paragraphs and to which reference should be made;

- by the consolidation of production quotas in the sector the Group

operates in.

The result of operations

- 17 -

The balance of the fi nancial management is analyzed below (in thousands of Euro):

2014 2013

Interest expense and fi nancial charges 18,188 14,055

Discounting charges 2,116 894

Foreign exchange losses 529 349

------------ ------------

Total fi nancial expenses 20,833 15,298

------------ ------------

Interest income and other fi nancial income 367 120

Income from investments in associates, net (70) 276

Foreign exchange gains 585 1,299

------------ ------------

Total fi nancial income 882 1,695

------------ ------------

Net fi nancial loss (19.951) (13,603)

======== ========

The result of the fi nancial management suffers from the one hand of the stricter conditions on funding applied by credit institutions, given the continuing diffi cult economic situation and, on the other hand, of the different fi nancial structure related to the MLT fi nancing by some companies operating primarily in Germany, France, Spain and Belgium.

The cash fl ow generated from operations was Euro 159 million, thus represented (in millions of Euro):

2014 2013

Income (loss) before minority interests (439) (60)

Depreciation and amortization 474 135Changes in provisions 124 59 ------------ ------------Operating Cash fl ow 159 134

======== ========

Cash fl ow

- 18 -

The net fi nancial position can be summarized below (in millions of Euro)

2014 2013

Cash and cash equivalents 134,658 122,596

Bank overdrafts (136,626) (298,240)

Short-term fi nancing (5,428) (78,655)

------------ ------------

Bank overdrafts, net (7,396) (254,299)

------------ ------------

Financial assets 1,583 -

Current portion of long-term debt (33,776) -

Long-term debt (388,683) -

------------ ------------

Net fi nancial indebtedness (420,876) (254,299)

------------ ------------

Net fi nancial position (428,272) (254,299)

======== ========

The improvement of the fi nancial position in the short term is mainly due to the cash generated by long-term fi nancing. The variation of the total net fi nancial position, on the other hand, suffers from the acquisition by the parent company Riva Forni Elettrici of a debt towards a credit institution previously due to the demerged Riva Fire S.p.A., in the light of the grounds set out in the following paragraphs and which reference is made to.

- 19 -

The main changes occurred over the year are highlighted in the consolidated fi nancial statements (Note 1) of which the following is a summary (in millions of Euro):

2014 2013

Cash and cash equivalents (bank overdrafts) (254) (275)

at the beginning of the year, net ------------ ------------

Cash fl ows provided by operating activities (103) 127

Cash fl ows used in investing activities (73) (105)

Cash fl ows used in fi nancing activities 423 (1)

------------ ------------

Increase in cash and cash equivalents, net 247 21

------------ ------------

Bank overdrafts at the end of the year, net (7) (254)

======== ========

Profi tability indicators

2014 2013

ROI (operating margin/ (operating invested capital - operating liabilities)) (39.71)% (5.19)%

Net ROE (net result/ shareholders’ equity) (65.98)% (5.46)%

ROS (operating margin/ sales) (13.51)% (2.08)%

Solvency Indicators

2014 2013

Working capital (Current assets – Current Liabilities) 385 368

Current Ratio (Current Assets/ Current Liabilities) 1.39 1.33

Operating working capital (Trade and other receivables +

Cash and cash equivalents) – (Current Liabilities) (238) (288)

Cash Ratio (Trade and other receivables + Cash and cash

equivalents)/ (Current Liabilities) 0.76 0.74

Main Indicators

- 20 -

Loan structure indicators

2014 2013

Debt-to-Equity Ratio 2.11 1.05(Long-term Liabilities + Current Liabilities)/ Group EquityLeverage Ratio 0.85 0.34(Financial Liabilities/ Group Equity)

It should be noted that some of the indicators described above, are signifi cantly infl uenced by the entries attributable to the parent company Riva Forni Elettrici S.p.A. taking into account the depreciation and provisions made with reference to the situation of the demerged Riva FIRE S.p.A. better illustrated below.

The number of employees as of December 31, 2014 was 5,043 units, against 5,076 of the previous year. Employees working at foreign units were 3,649, those working within Italian companies 1,394. Comparative data (excluding the employees of non-consolidated minority shareholdings) are as follows:

Average headcount December 31 headcount

Countries 2014 2013 + (-) 2014 2013 + (-)

Italy 1,424 1,426 (2) 1,394 1,442 (48)

France 1,363 1,380 (17) 1,380 1,378 2

Germany 1,540 1,521 19 1,535 1,531 4

Belgium 337 350 (13) 342 350 (8)

Spain 355 357 (2) 350 344 6

Luxembourg 12 - 12 12 - 12

Canada 30 32 (2) 30 31 (1)

------------ ------------ ------------ ------------ ------------ ------------

5,061 5,066 (5) 5,043 5,076 (33)

======== ======== ======== ======== ======== ========

There have been no cases of employees registered in the company’s register subject to death or any serious work accidents that may have resulted, in the year under review, in the assessment of defi nitive corporate responsibility or any claim for work-related illnesses for which the companies of the Group may have been declared defi nitively responsible under criminal law.

Personnel

- 21 -

As already mentioned, the Riva Forni Elettrici Group works in the fi eld of long rolled products in the major European countries: Italy, Germany, France, Spain and Belgium.

In Italy, Riva Acciaio S.p.A. carries out its production and business activities at the plants in Caronno Pertusella (VA), Lesegno (CN), Verona (VR), Cerveno (BS), Sellero (BS), Malegno (BS) and Annone Brianza (LC).

In France, the main production companies are Iton Seine S.A.S., Acieries et Laminoirs de Paris S.A.S., Société des Aciers d’Armature pour le Beton - SAM S.A.S., SAM Montereau S.A.S. and Aciers de Construction Rationalisés - Acor S.A.S., while the purchase of the raw material and supply of semi-fi nished and fi nished products is carried out from the shore Riva Acier S.a. At the level of general coordination is Parsider S. a.

In Germany, with an organization similar to that present in France, the productive activity is carried out by the companies HES – Hennigsdorfer Elektrostahlwerke GmbH, BES – Brandenburger Elektrostahlwerke GmbH and the newly established Betonstahl Lampertheim Gmbh, while the marketing activities are carried out by Riva Stahl GmbH.

In Belgium operate Thy Marcinelle and Tréfi leries de Fontaine L’Eveque: the fi rst manufactures and sell their products directly, entrusting to the second with the transformation services; there is also the Belgian Branch of the Luxembourg law company Stahlbeteiligungen Holding that deals with the fi nancial functions for the non-Italian companies of the Group.

In Spain Siderurgica Sevillana is present while in Canada the ASI activity consists in the selection of iron scrap.

The relationship between the companies within the scope of the present consolidated fi nancial statements refl ect both commercial and fi nancial operations and transactions and are regulated under normal market conditions.

As regards specifi cally to the Parent Company, it has carried out for some subsidiaries, primarily administrative and fi nancial services.

Investments in property, plant and equipment made in 2014 amounted to Euro 69 million, with a contraction in relation to the expenditure carried out in the previous fi nancial year, which amounted to Euro 84 million.As in previous years, the activity of plant investment was focused in the attainment of the improvement of qualitative aspects of the products, in the containment of production costs, in the improvement of safety conditions and in the consolidation of the production asset in the context of preserving and improving environmental factors.

Production and commercial structure

Capital expenditures

- 22 -

Research and Development activities primarily relate to the activities, at the Lesegno (CN) plant of Riva Acciaio, of the experimental laboratory and the system for the simulation of steel processes, which enables to implement the R&D activities at the service of all the Group plants.

These processes are simulated through a number of tools including:

- Gleeble 3800, which is able to recreate, on specially formed specimens, the manufacturing cycle of the steel, starting from the continuous casting, passing through the rolling to get to all the types of subsequent treatments (hot moldings, annealings, welding etc.) performed on the product. Simulations can be either on long products and on the fl at products.

- Experimental melting furnace, that allows to provide experimental casting tests to test new products and/or optimize existing ones without having to use industrial castings.

- Laboratory cold rolling mill, which allows to prepare raw rolling pieces intended to the continuous annealing tests in the Gleeble simulator.

The experimental laboratory of Lesegno is therefore not only a resource within the plant but covers the role of a further resource for the whole Gruppo Riva Forni Elettrici, available to all production linked to it.

In this sense process and product metallurgists, technologists, quality control managers can take advantage of the opportunities offered by the laboratory itself, within the various types of application (simulation of continuous casting, dilatometry and determination of the “ttt” and “cct” curves, simulation of the thermal treatments, simulation of hot rolling, study of hot deformation, workability of the steel, welds).All charges resulting from this R&D activity were fully entered in the consolidated income statement, with the exception of the assets subject to the amortization process.

Over 2014 the activities of implementation and completion of the systems for the containment of air pollution continued, thus implementing the current regulations and authorisation requirements.

There have been no cases where the companies of the Group have been declared defi nitively guilty on matters such as environmental damage, nor penalties were imposed or fi nal judgments under the criminal law for environmental offenses.

Environmental and ecological matters

Research and development

- 23 -

During 2014, the national plants have operated under the following permissions:

- Caronno Pertusella plant: Autorizzazione Integrata Ambientale (Integrated Environmental Authorization) (AIA) N. 7379 of 05.07.2007 and following update N. 3662, Issued by the Province of Varese, and currently in the process of renewal/review;

- Lesegno plant: Autorizzazione Integrata Ambientale (AIA) N. 687 of 26.11.2013, issued by the province of Cuneo.

- Verona plant: Autorizzazione Integrata Ambientale (AIA) N. 1364/13 of 20.03.2013, issued by the Province of Verona.

- Sellero plant: Autorizzazione Integrata Ambientale (AIA) N. 3012 of 20.03.2006 issued by the Province of Brescia and currently undergoing a renewal/review;

- Cerveno plant: Autorizzazione Integrata Ambientale (AIA) N. 641 of 30.01.2007 issued by the Province of Brescia and currently under renewal/review;

- Malegno plant: Autorizzazione Unica Ambientale (Unique Environmental Authorisation) (AUA) N. 3561 of 16.05.2014 issued by the Province of Brescia, concerning a specifi c authorization to discharge water;

- Annone Brianza plant: specifi c authorization for emissions to the atmosphere, issued by the Province of Lecco. The plant required the Province of Lecco the Autorizzazione Unica Ambientale (AUA) that is being examined.

The plant of Caronno Pertusella, over 2014, submitted a request for a non-substantial modifi cation relating to the reorganization of storage areas and waste treatment.

The plant of Lesegno, over 2014, submitted a request for a non-substantial modifi cation related to the implementation of internal yards through the use of steelworks waste.

The plant of Verona, over 2014, submitted a request for a non-substantial modifi cation related to the variation of the monitoring plan for the CO parameter.

All plants, managed under the Autorizzazione Integrata Ambientale (AIA), have complied with the deadlines required by the Piano di Monitoraggio e Controllo (Monitoring and Control Plan) (PMC) of the Authorizing Act. The results obtained always complied with the limits.

During 2014 the plants continued to maintain the appropriate certifi cations relating to the aspects of quality, environment and safety UNI EN ISO 9001, ISO 14001 and OHSAS 18001, issued by the appropriate certifi cation bodies (IGQ, TUV, LLOYD).

As regards the water requirement of the plants, it is satisfi ed by special wells and/or drainage from superfi cial watercourses, and its use is expressly authorized by the park authorities.

- 24 -

As regards the scrap/waste originated from the production process, it should be noted that these were always disposed of and/or recovered in authorized facilities.

Regarding the foreign plants, the situation is as follows:- France: all of the plants are managed following specifi c Prefectural

authority authorizations, the permissions are for an indefi nite period of time.

- Belgium: the plants are managed with specifi c permissions with deadline 02.03.2030 for Thy Marcinelle and 03.11.2014 for Tref. de Fontaine l’Eveque.

- Spain: the plant is managed with proper authorization which expires in 2018.

- Germany: the plants of Brandenburg and Hennigsdorf hold the specifi c permissions for an indefi nite period of time, the plant of Lampertheim for the specifi c machining tasks and in relation to the German legislation does not require particular permissions.

Compliance with the EU legislation on chemicals, Regulation 1907/2006 REACH and of related European regulations (fi rst of all the CLP regulation n. 1272/2008, that reached the third adaptation to scientifi c and technical progress), is ensured by a transverse structure which sees the integrated involvement of professionals with specifi c expertise in the administrative, technical-scientifi c and legal fi eld, operating both at central level and in production units of the Group.

The safety of chemicals produced and used in production processes is the subject of careful monitoring, together with the prevention of any criticality in the vital processes of supply, manufacture and marketing of steel products.

During 2013, activities were carried out to consolidate within the corporate practice the application of new regulations, especially in the case of the obligations deriving from the role of “downstream user” of substances and mixes thereof. The project - started in 2011 - to monitor the entry of dangerous substances and those showing particular problems - “SVHCS”- provides for the construction of a central unifi ed archive with shared management and the widespread dissemination of the information contained in the Safety Data Sheets. These procedures improve in this way, the control of the safety profi le of substances used in the processes and in working locations already from the fi rst supply stages.

Riva Acciaio adheres to the Reach Consortium using the related technical-scientifi c facility, in particular as regards the evaluation of the registration dossier by the ECHA Agency and the need to update the records.

REACH Regulation

- 25 -

Over 2014, the gradual application of the CLP regulation - which enter into force on 01.06.2015 - on classifi cation, labelling and packaging of substances and preparations was closely followed.

With reference to the CO2 market and the Emission Trading System (ETS), please note the following subjects of interest:

- ETS Auctions for 2013 – 2020: as of 2013 emission titles for the III stage of EU ETS for the thermo-electric sector will no longer be allocated by National Allocation Plans but through auctions.

The auctions and market will be organised in compliance with harmonised EU level criteria established in the application Regulations of the new ETS Directive.

The Commission has announced an early auction of EUA permits for 120 million tons of CO2 in 2012. It has also announced that 1.4 billion tons equivalent in emission permits will be reduced from the total auction quotas to mitigate the effect of the economic crisis (drop in emissions) and market length of stage II.

This should contribute to the effectiveness of the plan in transferring price signals to the market for investments in decarbonisation measures.

- ETS Registers: on June 17, 2011 EU Government representatives ratifi ed the EU Regulations introducing further security measures to protect ETS register operations following hacker attacks and their forced closure in January 2011.

Even with the possibility to use trusted accounts and measures to protect operators against theft of access credentials, the Regulation still has provisions for keeping the serial number of titles purchased anonymous.

Said measure exposes credits to be returned in compliance with the measure in which the list of fraudulent EUAs can be updated at any time to risk; possibly making credits bought on the market “in good faith” unusable.

- Clean Development Mechanism (CDM) Market: EU Governments have adopted, at the Commission’s proposal, the European Decision, which bans credits (CER) generated by CDM projects on industrial gases (HFC-23 and N2O) as of May 1, 2013. Furthermore, during the Environmental Council of June 21, 16 EU governments (Germany, UK, France, Austria, Belgium, Estonia, Greece, Sweden, Slovenia, Czech Republic, Malta, Bulgaria, Latvia, Luxembourg and Slovakia but not Italy) signed the Danish Government declaration; so, also within the ”Effort Sharing” framework, they will not use HFC credits in the third ETS period.

- CO2 Expenses: the companies of the Group were assigned emission permits in line with respect to the actual requirements of the lines

Emission Trading

- 26 -

themselves. Therefore, in the statement of accounts being commented, it was not necessary to allocate charges for these purposes. However, it should be noted that it is pending before the TAR (Regional Administrative Court) of Lazio the appeal of act no. 29/2013 of the National Committee for the management of directive 2003/87/EC and to support the management of project activities of the Kyoto Protocol, bearing the list of existing plants and the total annual quantity of emissions allocated free of charge to each manager, for the period 2013/2020 the appeal of the European Commission’s decision n. 2013 /448/CE is pending and also regarding any other act or preordered measure, consequent and/or still connected.

By order fi led on 4th July 2014 the TAR (Regional Administrative Court) of Lazio decided an adjournment the discussion of the merits, following the decision by the EU Court of Justice of which the preliminary ruling.

This ordinance did not suspend the issuance of allowances for the entire reference period: as a result, the measures for the issuing of allowances for 2013 and 2014 remain perfectly valid.

By order fi led 30th July 2014 the TAR of Lazio postponed the issue concerning the legality of the criterion for the allocation of free CO2 allowances to the Court of Justice of the EU.

The deliberations on the assignments to some operators of emission allowances for 2015 have recently been published.

During the year, the companies of the Group have not carried out operations for the purchase or sale of shares.

With regard to the management of risk exposures, with particular reference to fi nancial risks, also within the meaning of art. 2428, paragraph 2, number 6 bis, of Italian civil code, the main risk categories the Group is exposed to, are listed below:

Risks related to the sectors the Group operates in - The results of the Group are infl uenced by the evolution of the prices of the steel market and the effects that this trend has on the achieved margins; in addition, for a proper management of the production cycle and of the trade fl ows, the Group presents stocks of raw materials and end products; the level of these stocks is subject to fl uctuations in the steel market. These risk factors are closely linked to the very nature of the business and are constantly monitored.

Credit Risk - The maximum theoretical exposure to credit risk is represented by the book value of the fi nancial activities described in the budget. Outstanding loans at the end of the year are essentially towards diversifi ed customers and the Exchequer. There are no signifi cant amount expired balances.

Company risk management

- 27 -

Liquidity Risk - The liquidity risk can manifest itself with the inability to fi nd the fi nancial resources necessary for the operation. The companies of the Group are included in the system of centralised management of the Group’s treasury department, therefore the liquidity risks to which they are subject are closely related to those affecting the Group as a whole. The two main factors that determine the liquidity situation of the Group are, on the one hand, the resources generated or absorbed by operational and investment activities, on the other hand, the characteristics of expiry and renewal of debt or liquidity of fi nancial assets and market conditions. The Group has adopted a series of processes designed to optimize the management of fi nancial resources, reducing the liquidity risk:

- centralized management of fl ows of cash receipts and payments (cash pooling) in the various Countries in which it operates;

- maintaining an adequate level of liquidity available;- diversifi cation of the tools for the retrieval of fi nancial resources and

continuing and active presence on the capital market;- obtaining appropriate credit lines; - monitoring of the liquidity conditions in relation to the process of

business planning.

Currently there are ongoing contacts with the various banks to obtain further funding lines, in addition to those already available. These lines, in addition to the funds generated from operating and funding activities, will allow the satisfaction of needs arising from investment, working capital management activities and repayment of debts as they naturally expire.

Foreign exchange risk - No credit or debt positions, or fi nancial derivatives particularly exposed to the exchange risk are outstanding.

Interest rate risk - Interest rate risk - The Group covered its fi nancial needs through both the system of centralized management of the treasury, and with autonomous funding operations on the markets. The function of centralised treasury is now restricted to the foreign companies while those in Italy, mainly Riva Acciaio S.p.A. have installed or are installing autonomous lines. It should be noted that the Group policy provides only for the use of fi nancial derivatives for hedging purposes, being the trading and/or speculative activities precluded.

Other risks on fi nancial derivatives - On the closing date of the fi nancial year, the Group does not carry out any other transaction in fi nancial derivatives.

Risks associated with the demerger of Riva Fire - RFE started operating as a result of the demerger of Riva Fire S.p.A., carried out with legal effect from 1st January 2013, within the context of a broader plan of the group of companies that the latter was heading. As result of the demerger, RFE and Riva Fire S.p.A. have been operating in full autonomy and separately, each within its own sphere of expertise. Although the two companies are entirely distinct entities both in functional and technical terms and under

- 28 -

the legal profi le, starting from mid-2013, the same have been in part together in legal events regarding ILVA S.p.A.. In particular, RFE has been involved in various civil, criminal and administrative procedures, pending or threatened, that derive from events which occurred prior to 1st January 2013 (effective date of the demerger of Riva Fire in favour of RFE). RFE, moreover, within the limits of the assets assigned to it, is responsible, without prejudice, for the debts of the demerged company, prior to the demerger itself, which should remain unsettled.

The situation of the demerged company Riva FireIn the light of the foregoing, it should be noted that Riva Fire was placed into voluntary winding up through the Extraordinary Shareholders’ Meeting resolution of 4th February 2015 fi led with the registry of companies on 13th

February 2015. The budget for the fi nancial year closed on 31st December 2014 indicates a loss of 1,156 million euros. The balance sheet date however is prior to of the decision to voluntary wind up the company due to a decrease of the corporate capital below the legal minimum amount and the facts and the events inherent to the year 2014 relatehave no relation with the activities carried out by the liquidator appointed by the Extraordinary Shareholders’ Meeting. The previous bodyboard of directors, as a result of the events that affected

Riva Fire and its main subsidiary (ILVA S.p.A.) had carried out an evaluation on the prospects for the company focused on the following aspects:

- the inability to manage its main “asset”, consisting of the majority stake in the share capital of ILVA S.p.A., following the commissioner administration defi ned under Law Decree 61/2013;

- the losses suffered by the same ILVA S.p.A. over the years 2012, 2013 and in the fi rst eight months of 2014, on the basis of the fi nancial statements submitted by the commissioners of the same;

- the judicial and legislative provisions adopted in relation to RIVA FIRE that made it impossible to pursue and/or achieve its corporate purpose.

Although the Company fi led an appeal on the receivership and against the insolvency declaration, also concerning its genesis, the company was in no position but to record, as things stand, the economic and accounting consequences of the foregoing. The directors have therefore called the shareholders’ meeting in order for the latter to deliberate on the winding up of the company, in light of two major reasons:• inability to freely manage its main “asset” represented by the participation

in the share capital of ILVA S.p.A.;• crisis of ILVA undercommissioner administration, which took to a

devaluation of the participation, generating losses of such magnitude as to reduce the capital below the legal minimum.

Subsequently, the liquidator, drawing up the fi nancial statements as of 31st December 2014, has shown the prospects, including time frames, of the liquidation, as well as the principles and criteria to be followed to achieve it, in accordance with the rules of art. 2490 of the Civil Code. The liquidator,

- 29 -

however expressed the effects of Law Decree 1/2015, concerning the admission of ILVA S.p.A. to the extraordinary administration procedure following the declaration of insolvency. As a matter fact, on 5th January 2015 Law Decree 1/2015 was published, having the purpose of extending the discipline of Law Decree 347/2003 (the so called “Marzano law”) for businesses that manage industrial plants of strategic national interest, with reference to the particular situation of the ILVA S.p.A. plant of Taranto.This legislation provides that, for the case of companies subject to commissioner administration under Law Decree 61/2013, the commissioner may fi le with the competent Ministry the request for admission to the extraordinary administration procedure of the company, also giving the commissioner the possibility to be appointed as Commissioner also under “Marzano law”. The law decree also modifi es art. 4 of the “Marzano law”, giving the extraordinary commissioner the power to identify the lessee or the purchaser of the company, under a private negotiation, amongst entities that shall ensure, depending on the situation, the productive continuity of the industrial plant of strategic national interest, also maintaining appropriate levels of employment, as well as the promptness of the intervention under the law.

The mentioned decree also provides that the rent of the business or the purchase price cannot be lower than the market price, as resulting from expert report drafted by a primary indipendent fi nancial advisor.Under the new legislation, on 21st January 2015, the extraordinary commissioner of ILVA, Mr. Piero Gnudi, fi led a request with the Minister for Economic Development for the immediate admission of ILVA to the extraordinary administration procedure. The Minister, on the same date, admitted the company to the abovementioned procedure with immediate effect. By the same decree, Mr. Piero Gnudi, Mr. Corrado Carrubba and Prof. Enrico Laghi were appointed commissioners.

On the same day, Riva Fire S.p.A. fi led an appeal against the declaration of the state of insolvency of ILVA with the Registry of the Court of Milan - Bankruptcy section by which, being the majority shareholder of ILVA S.p.A. and therefore being “interested party” under Art. 9 Law Decree No. 270/1999, submitted opposition before the Court of Milan, claiming: • in the fi rst place, the annulment of the declaration of the state of

insolvency of the entity ILVA S.p.A., and the declaration of the insolvency of the company ILVA S.p.A., subject to extraordinary receivership under Law Decree 61/2013;

• alternatively, for the case to be referred to the Constitutional Court, , in order for the latter to declare the constitutional illegitimacy of articles 1 and 2 of Law Decree 61/2013 and of article 1 paragraph 2 of Law Decree 1/2015, being the same in contrast with articles 3, 23, 41, 42, 43, 97 and 117 paragraph 1 of the Italian Constitution.

- 30 -

Riva Fire challenged, with an application fi led on 27th March 2015 with the competent administrative court, the ministerial decree by wich ILVA was admitted to the extraordinary administration. Subsequently, with Law 20 dated 4th March 2015, the Law Decree 1/2015, was amended and fi nally approved. The main amendments concern :- the possibility for small and medium-size enterprises, having receivables

towards Ilva, prior to its admission to the administrative receivership procedure to receive preferential payment of their credits concerning, activities performed for the rehabilitation and environmental safety or for the continuity of the activity of essential manufacturing plants;

- the provision according to which the Commissioner shall require the potential lessee or purchaser of the company, to provide together with its offer the offer, the presentation of an industrial and fi nancial plan where the investments, the coverage methods, as well as the strategic objectives of the industrial production in the group plants.

On 20th February 2015, the Ministry of Economic Development issued further decrees by which other companies of the ILVA Group were admitted to the extraordinary administration procedure, through a motion formalised by the liquidators of the latter, pursuant to article 3 Paragraph 3 Law decree 347/2003. Such companies are Ilvaform S.p.A.; Taranto Energia S.r.l.; Innse Cilindri S.r.l.; Sanac S.p.A.; Ilva Servizi Marittimi S.p.A. and Lyonnaise De Deroulage Sa. According to the arrangement of article 85 of Law Decree No. 270/1999, were appointed as special commissioners the same individuals that cover this role in the “parent” procedure. Finally, with ministerial decree of 17th March 2015, were admitted to the special administration procedure also Tillet sas and Socova sas, controlled indirectly by ILVA S.p.A..

Since Riva Fire owns (directly and indirectly) the majority shareholding of ILVA S.p.A. equal to 87% of the share capital, the participation is classifi ed accounts-wise in the statements of accounts as fi nancial asset.As a result of the admission of ILVA to the extraordinary administration procedure, with consequent declaration of a state of insolvency, as from the Court of Milan decision, the liquidator prudently proceeded to set to zero the value of the participation in the statement of accounts as of 31st December 2014, given the permanent impairment of value in fact actually generated. Of course, the faculty of the company to seek compensation for damages suffered as a result of the receivership of ILVA remains, an expectation that still cannot be included in the statement of accounts.

- 31 -

Guidelines on the liquidation of Riva Fire

In accordance with the rules of art. 2490 of the civil code, the liquidator, in the fi nancial statement of Riva Fire ended 31-12-2014, outlined the prospects of liquidation, and the principles and criteria that might be taken to achieve it.

The vicissitudes of ILVA S.p.A.

The above documents do not, however, lack of detailed illustrations of the events concerning: • the lawsuits in 2012, consisting of real and personal precautionary

measures, exceeded in fact by Law 231/2012.

• the confi scation in May 2013 on the Company’s property and institutions derived from its demerger, up to the amount of 8,100,000,000 which was then cancelled without referral from the Court of Cassation on 20th

December 2013.

This measure, however, seems to have been the reason that prompted the Government to arrange the receivership of ILVA on 4th June 2013. In fact, it does not seems that ILVA contravened specifi c obligations in relation to environmental requirements, but it seems rather that the receivership may arise from the consideration of ILVA’s inability to operate, as under the confi scation order dated 22nd May 2013, although cancelled by the Court of Cassation.

ILVA’s history in receivership has more specifi c characteristics:- the company at the time of the receivership was in bonis and presented

a signifi cant fi nancial soundness, albeit after a diffi cult 2012, at least for the lawsuits that imposed a substantial block in production for certain periods.

- the Commissary function, in the person fi rst of Mr. Enrico Bondi and, with effect from 4th June 2014, of Mr. Piero Gnudi, never delivered formally approved fi nancial statements, although this compliance is attributed by law to his powers. The draft fi nancial statements for 2012, 2013 and the fi rst eight months of 2014, fi led by the commissioner, pointed to the accumulation of relevant operating losses.

- these documents show a progressive deterioration of the situation, consisting of an enormous permanent imbalance in the income statement. This situation of operating losses, which the real reasons are not known, continued, consuming the also large reserves the company still had at the time of the receivership. The continuing wealth erosion described brought ILVA and the group it belongs to a situation of illiquidity.

At this point, there is a new intervention of the executive power, by Law Decree 1/2015, which attributed to the extraordinary commissioner pro tempore the power to require the admission of the extraordinary administration, a procedure which was specifi cally modifi ed to ease the path that at that time the Government prefi gured for ILVA.

- 32 -

Currently, the extraordinary administration of the company seems to proceed relatively slow and with considerable diffi culty and, therefore, it is not possible to predict its evolution.

In light of the above, the following considerations can be expressed:- RIVA FIRE lost the control of ILVA as the joint result of doubtful judicial,

governmental and legislative measures. The judicial measures are all interim measures and, therefore, do not hold the merit; inter alia, the major seizure adopted by the Court of Taranto has been overruled by the Supreme Court, as already mentioned;

- the Government emergency measures, adopted by means of specifi c law decrees, seem to have signifi cant confl ict profi les with the constitutional and European rules together with the general principles of the European Convention on Human Rights.

In short, the following occurred: (a) the compulsory eviction of RIVA FIRE, as shareholder, from the

management of its own participation in ILVA is due to the effect of a urgency decrees and in based on circumstances occurred prior to their entry into force, which are at present sub iudice;

(b) the management of the company by the commissioner produced extremely important losses leading to the decision to admit ILVA to the extraordinary administration procedure, also as a consequence of the entry into force of decree 1/2015.

Moreover, it should be noted that the company has always abided by the environmental rules.

The history of RIVA FIRE shows paradoxical elements, for instance:• RIVA FIRE purchased ILVA from the public shareholder in 1995. Its

main industrial plant, or the steel plant of Taranto, was built by ILVA and in the ‘60 was owned by the state. Then from 1995 to 2012 a private management conducted the business in a profi table manner, strongly increasing the solidity of the company.

• In 2012 several lawsuits started claiming the alleged pollution of the area surrounding the plant and, as of today, there is no judicial decision to such regard. The claims seem to be based on a sort of environmental incompatibility of the industrial plant with respect to the surrounding territory which has a predominance of houses, rather than on actual violations in its management.

• The commissary management, moreover, does not seem to have done signifi cant work regarding the environment, except for the reduction of production, so it is not clear the urgency to proceed to the procedure, having stated that the company would have worked to implement the A.I.A. requirements.

- 33 -

• In this situation, Riva FIRE is evaluating the existence of the conditions for a compensation action that, prima facie, appears feasible and, to this end, leading law fi rms have been appointed to advise on the issue.

The subordination agreement between Riva Forni Elettrici and Riva Fire

In the fi nancial statements drawn up by the demerged Riva Fire, there were remaining debts amounting to approximately Euro 298 million toward the banks. Such debts were entirely referred to the period prior to the demerger and equal to the overall bank exposure of Riva Fire. In light of the particular situation of the company resulting from the management of the commissioner Riva Forni Elettrici, on 15th September 2014, paid the bank exposure following a request by the lender bank to extinguish any loan. As a result, Riva Fire has debts towards Riva Forni Elettrici and no longer towards the banking system. Moreover, Riva Forni Elettrici has granted a postponement by accepting that the reimbursement by Riva FIRE will be performed by means of the future cash fl ows of the same and that the credit is subordinated and subject to the claim of the other creditors, thus renouncing to the share which does not fi nd enough capacity in the Company’s assets. The mentioned agreement also applies to the additional liabilities that might arise towards Riva Fire as a result of a further value adjustment to the remaining stake in ILVA S.p.A. (now under extraordinary administration) for an initial amount of Euro 87 million, then integrated up to the amount of Euro 93 million. Given the economic balance of the merged company Riva Fire, also in light of the fi nancial statement as of 31-12-2014 and the admission to the procedure of voluntary liquidation, Riva Forni Elettrici integrally depreciated the receivables towards Riva Fire (about 316 million) with the provision for risks for an amount of Euro 99 million (as to Euro 93 million to the above mentioned risk and, in addition, as to Euro 6 million for other risks).

The impact of the above-mentioned subordination agreement on the consolidated fi nancial statements of Riva Forni Elettrici

In light of the above, it should be noted that the item “Amortization and depreciation” of the consolidated income statement for the fi nancial year taken into consideration refl ects, therefore, extraordinary and not reoccurring reserves for Euro 415 million related to the above-mentioned measures, mainly as a result of the subordination agreements, in addition to about Euro 10 million as a result of the impairment test carried out by Riva Acciaio with reference to the activities of the Sellero plant that manufactures steel for Innse Cilindri S.r.l. (controlled by ILVA S.p.A., also admitted to the procedure of extraordinary administration).

- 34 -

In the light of the above considerations, and the data gathered in the early months of the current fi nancial year, it is reasonable to assume that 2015 can achieve operating results in line with respect to those of 2014. Evident are still some criticalities in some of the Countries the RFE Group operates in and these aspects could adversely affect the margins of the Group.

In the fi rst quarter the following results were achieved:

2015 2014

Turnover (in million Euros) 852 976Tonnes of steel produced (in thousands) 2,060 2,162

Milan, 27th May 2015

Business outlook

Board of Directors

The President

Bilancio consolidato

Consolidated fi nancial statements

- 37 -

Consolidated income statement for the fi nancial years ended on December 31, 2014 and 2013 - (Note 1)(In thousands of Euros)

Value of production (Note 20) 3,674,576 3,722,455 Net sales 3,608,668 3,694,569

Change in inventories of work-in-progress, semi-fi nished goods and fi nished products (18,948) (31,736)

Other revenues 84,856 59,622

Production costs (Note 21) 4,105,505 3,767,953 Raw, ancillary and consumable materials 2,910,091 3,004,538

Service costs 306,335 292,706

Payroll costs 284,422 275,318

Depreciation, amortization and other provisions 576,258 167,120

Other operating expenses 28,399 28,271

--------------- ---------------

Operating margin (430,929) (45,498) --------------- ---------------

Financial charges, net (Note 22) (19,882) (13,879)

Income from investments, net (69) 276

--------------- ---------------

Income (loss) before taxes (450,880) (59,101) --------------- ---------------

Income taxes (Note 23) 11,491 (1,198)

--------------- ---------------

Income (loss) before minority interests (439,389) (60,299) --------------- ---------------

Minority interests (1) 6

--------------- ---------------

Result of the year (439,390) (60,293) ========== ==========

Earnings per share (Note 12 - expressed in Euro) (20.86) (2.86)

2014 2013

The accompanying notes are an integral part of these consolidated fi nancial statements.

- 38 -

Consolidated income statement for the fi nancial years ended on December 31, 2014 and 2013 - (Note 1) (In thousands of Euros)

Non-current Assets 708,721 778,477

Intangible assets (Note 4) 1,026 816

Property, plant and equipment (Note 5) 660,804 734,256

Investments in affi liates

and other investments (Note 6) 66 19

Long-term fi nancial assets and other non-current assets (Note 7) 46,825 43,386

Current assets 1,363,159 1,486,728

Inventories (Note 8) 622,941 656,173

Trade and other receivables (Note 9) 603,760 706,412

Short-term fi nancial assets (Note 10) 12 13

Cash and cash equivalents (Note 11) 134,646 122,582

Other current assets 1,800 1,548

--------------- ---------------

Total assets 2,071,880 2,265,205 ========== ==========

Assets 2014 2013


- 39 -

(In thousands of Euros)

Group Equity (Note 12) 665,755 1,104,947

Share capital 210,600 210,600

Translation reserve (842) (1,491)

Other reserves and retained earnings 455,997 895,838

Non-current liabilities 644,556 201,090

Passività non correnti 644.556 201.090

Long-term loans (Note 14) 388,683 -

Provisions for risks and charges (Note 15) 150,156 69,611

Provision for severance

indemnities and pensions (Note 16) 36,672 39,453

Deferred taxes (Note 17) 69,045 92,026

Current Liabilities 761,342 958,942

Short-term loans (Note 18) 175,830 376,895

Trade and other payables (Note 19) 582,954 581,911

Other current liabilities 2,558 136

Total liabilities and equity 2,071,880 2,265,205 ========== ==========

Liabilities and Group Equity 2014 2013


Consolidated Balance Sheetsas of December 31, 2014 and 2013 - (Note 1)

- 40 -

Consolidated statements of cash fl ows - (Note 1)

Cash fl ows provided (used) by operating activities (103,024) 126,95 Income (loss) before minority interests (439,389) (60,299)

Adjustments for items not affecting cash fl ows

Depreciation and amortization 474,072 134,781

Changes in provisions 124,566 59,610

--------------- ---------------

159,249 134,092

Payments of severance indemnities and utilization of provisions (69,783) (32,687)

Net change in working capital (192,490) 25,547

Cash fl ows provided/ (used) in investing activities (72,730) (105,154) Capital expenditures (68,939) (83,947)

Net investments in intangible assets (305) (97)

Net decrease in long-term receivables (3,486) (21,110)

Cash fl ows provided/ (used) by fi nancing activities 422,657 (1,177) Proceeds from long-term loans 422,604 -

Payment of long-term loans (146) (35)

Net change in other reserves and retained earnings 199 (1,266)

Net change in minority interests - 124

--------------- ---------------

Increase/ (decrease) in cash and cash equivalents, net 246,903 20,621

Cash and cash equivalents at the beginning of the year (bank overdrafts), net (254,299) (274,920) --------------- ---------------

Cash and cash equivalents at the end of the year (bank overdrafts), net (7,396) (254,299) ========== ==========

Cash and cash equivalents 134,658 122,596

Bank overdrafts (142,054) (376,895)

2014 2013



- 41 -

Consolidated statement of changes in Group Equity - (Note 1)

Translation Other reserves and Capital Reserve retained earnings Total

Balance as of January 1, 2013 210,600 - 955,866 1,166,466 ========= ========= ========= =========

Translation adjustments - (1,491) - (1,491)

Actuarial gains on benefi ts to employees - - 364 364

Other adjustments (note 12) - - (99) (99)

Net income - - (60,293) (60,293)

------------- ------------- ------------- -------------

Balance as of December 31, 2013 210,600 (1,491) 895,838 1,104,947 ========= ========= ========= =========

Translation adjustments - 649 - 649

Actuarial gains on benefi ts to employees - - (450) (450)

Net income - - (439,391) (439,391)

------------- ------------- ------------- -------------

Balance as of December 31, 2013 210,600 (842) 455,997 665,755 ========= ========= ========= =========


The consolidated statement of changes in Group equity has been prepared on the basis of the net result of the year. The changes which have not been directly recorded in the consolidated income statement were highlighted in the individual net equity entries. In order to present the information thoroughly, it should be noted that the cumulative translation reserve change and the other changes in retained earnings are included in the confi guration of the consolidated comprehensive income statement provided for by IAS 1.


- 42 -

Consolidated comprehensive income statementas of December 31, 2014 and 2013 - (Note 1)(In thousands of Euros)

Net income (loss) (439,391) (60,299) Other items:

Translation adjustment 649 (1,491)

Actuarial gains (450) 364

Other profi t and loss account items 199 (1,127) --------------- ---------------

Comprehensive income statement (439,192) (61,426) --------------- ---------------

Minority net income (loss) (1) 6

--------------- ---------------

Total Group net income (loss) (439,193) (61,420) ========== ==========

2014 2013


Nota illustrativa

Notes to Consolidated fi nancial statements

- 45 -

Notes to the consolidated fi nancial statements for the years ended December 31, 2014 and 2013

The Riva Forni Elettrici Group is engaged in the fi eld of production and processing of steel. The Parent Company Riva Forni Elettrici S.p.A. is located in Milan, in Viale Certosa 249.

About the reasons and aspects related to the birth of the RFE Group, please refer to what has been illustrated in detail earlier in the Business Report.These consolidated fi nancial statements have been prepared in accordance with the International Financial Reporting Standards (hereinafter “I.F.R.S.” or “International Accounting Standards”) issued by the International Accounting Standard Board (I.A.S.B.).

These standards were adopted by the European Commission according to the procedure outlined in art. 6/1606 of the European Parliament and Council of July 19, 2002 and pursuant to Italian Legislative Decree n. 38 of February 28, 2005.

The International Accounting Standards adopted by the European Commission may differ in certain aspects from those issued by the International Accounting Standard Board (I.A.S.B.).

It should be noted that the I.F.R.S. adjustments regarding the preceding years were accounted for with direct Equity consideration.

The consolidated fi nancial statements of the Riva Forni Elettrici Group have been prepared through the consolidation of operating companies and the holding companies, both Italian and foreign, where Riva Forni Elettrici S.p.A. owns directly or indirectly the majority of the voting rights.

The fi nancial statements used for the consolidation are generally those prepared by the Boards of Directors of the individual companies for approval by the respective board meetings, i.e. those which are approved by the meetings themselves. These fi nancial statements were adjusted and reclassifi ed to conform them to I.F.R.S. and uniform Group accounting principles and valuation method.

The area of consolidation for the fi nancial years ended December 31, 2014 and 2013 is shown in Appendix 1.

Corporate transactions that affected the Group during 2013 and 2014 are the following:

2013

Amongst the corporate transactions that took place in 2013 we must

Introduction

1. Consolidated fi nancial statements structure and content

- 46 -

remember the transfer made by the German company Riva Stahl Gmbh for the benefi t of the newly-formed company Betonstahl Lampertheim Gmbh and the purchase by third parties of 25% of the share capital of the Spanish society Valorizacion de Aridos S.l by the Siderurgica Sevillana S.a.

2014

The merger by incorporation occurred of the company Riva Energia S.r.l. in the company Muzzana Trasporti S.r.l. and the merger by incorporation of the Belgian company Centre de Coordination Siderurgique S.A. in the Luxembourg parent company Stahlbeteiligungen Holding S.A.

The most important consolidation criteria adopted for the drawing up of the consolidated fi nancial statements were the following:

A. The carrying value of investments in consolidated subsidiaries is eliminated against the related share of their shareholders’ equity; assets, liabilities, income and expenses, are consolidated on a line-by-line basis.

B. The elimination of the book value of investments in subsidiaries as indicated above is carried out on the basis of the current values at the date of the purchasing of the subsidiary. Any positive difference arising from elimination is accounted for as goodwill. Goodwill is not depreciated but impaired at each reporting date in order to verify that its book value does not exceed its recoverable amount. Any negative difference arising from elimination is recognized in the consolidated income statements.

C. Intercompany receivables, payables, costs and revenues, as well as profi t and appreciations which have not yet been realized are eliminated.

D. Dividends distributed among the Group companies are written off in the consolidated income statements. Any related tax credits are shown as a deduction from income taxes of the fi nancial year, up to the amount payable.

E. Minority interests in consolidated subsidiaries are stated in a separate line in the consolidated balance sheets and income statements.

F. The consolidated companies’ fi nancial statements were prepared in their respective local currencies. The fi nancial statements denominated in foreign currencies are translated into Euros as follows: income statement items are translated at the yearly average exchange rates which approximate the exchange rates in force on the date of the

2. Consolidation principles

- 47 -

respective operations; balance sheet items are translated at the year-end exchange rates, except for the net income (loss) which is translated at the yearly average exchange rates. Differences arising upon translation are recorded as a component of Group equity under “Translation reserve”.

The exchange rates applied for the translation of the foreign companies fi nancial statements prepared in currencies different from the Euro, are as follows:

Currency Average 2014 12.31.2014 Average 2013 12.31.2013

Dollaro Canadese 1.467 1.406 1.368 1.467

These consolidated fi nancial statements were drawn up on the basis of the historical cost convention. Currently there are no transactions in fi nancial derivatives.

Euro is the functional currency used. Values in the fi nancial statements and in the illustrative notes are expressed in thousands of Euros, unless differently indicated.

The drawing up of the consolidated fi nancial state-ments and related notes requires the Directors to make estimates which affect the stated values of the assets, liabilities, revenues and expenses, and also of the contingent assets and liabilities on the date of Financial Statement (such as depreciation and provisions). These estimates are based on the going-concern assumption, and on the best information available on the date they were made: the possibility cannot, therefore, be excluded that events may occur which will cause the assumptions to change. The effect of any changes in estimates will be recorded in the consolidated fi nancial statements as soon as they can be objectively determined.

Assets’ values are verifi ed for each fi nancial statement as of its closing date whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. In this case, the asset is recorded at its recovery value, defi ned as the higher of net price of sale and useful value, the latter estimated by discounting the future cash infl ows and outfl ows deriving from the continued use of the asset and its fi nal decommissioning. Where the reasons for any impairment of assets recognized in earlier years no longer exist, the value of the asset is restored, subject to a maximum of the original book value, net of depreciation and write-downs.

Revenues and expenses expressed in foreign currency are translated into the functional currency at the exchange rate ruling at the time of the underlying transaction; monetary assets and liabilities expressed in foreign currency are translated into the functional currency at the year-end exchange rate. Any resulting differences are charged to

3. Accounting principles and valuation criteria

Use of estimates in preparing the fi nancial statements

Impairment of assets

Foreign currency items

- 48 -

the Income Statement. Non monetary assets and liabilities valued at cost measured in foreign currency are translated into the functional currency at the exchange rate ruling at the time of the transaction, while those valued at fair value are converted at the exchange rate prevailing at the time when the value is being determined.

To hedge future cash fl ows related to the payment of interest and commercial transactions in foreign currency derivative contracts are stipulated. Changes in the fair value of hedging instruments are recorded directly to equity reserves. The carrying amounts of the hedged assets and liabilities are adjusted for changes in their fair value in view of the risks covered.

The most signifi cant valuation criteria used in preparing the consolidated fi nancial statements are as follows:

Intangible assets are recorded at their purchase or production cost and are amortized on a straight-line basis over their estimated useful lives.

Business combinations are recorded by posting the difference between the cost of acquisition of the enterprise and the fair value of its assets and liabilities to its assets and liabilities. If the business combination involves the control of the acquired company, the above non-attributed difference is posted to goodwill if positive or to the income statement if negative. Subsequent share purchases after the Group has acquired control, are posted to minority purchases and the differences are offset to “Other reserves and retained earnings”. After the initial posting, goodwill is not amortized and is posted net of any losses in value determined according to the method described above.

Property, plant and equipment are entered at their purchase or production cost, net of accumulated depreciation on each item and written down when necessary as a result of permanent impairments in value, and also net of any capital grants received.

Where a tangible fi xed asset includes signifi cant components with different useful lives, these components are entered as separate assets. The costs sustained for the replacement and renewal of signifi cant components are entered separately. Parts replaced are written-off in full. The subsequent costs on tangible fi xed assets in use are recorded as an increase in the value of the asset only when it is probable that future economic benefi ts will arise that exceed the normal services obtained from the original assets. All other expenses incurred subsequently are charged in full to the income statement in the year in which they are sustained. Depreciation of tangible assets in use is calculated on a straight-line basis at economic-technical rates, which refl ect the estimated useful life of the assets.

Derivative instruments

Business combinations

Intangible assets

Property, plant and equipment

- 49 -

Fixed assets in the course of production and advance payments on fi xed assets are entered at cost; depreciation begins on the date when they enter in use.

The main depreciation rates used are as follows:

Buildings 3-5%

Specifi c equipment and industrial plants 5-20%

Furnaces 6-18%

Fixtures 20-40%

Furniture and offi ce equipment 10-20%

Means of transport 20-25%

Vessels 5-15%

Lands are not subject to depreciation.

Investments in entities where a signifi cant infl uence is exercised by the Group (generally investments between 20% and 50% in a company’s equity) are accounted for under the equity method.

Inventories are stated at the lower of purchase or production cost (determined as average cost) and market or net realizable value. Production cost includes raw materials, labour and all other direct and indirect production overheads.

Receivables and payables are shown at their face value. Receivables are then adjusted to their net realizable value through an allowance for doubtful accounts.

Financial assets are initially entered at cost and thereafter stated at fair value. Any gains or losses arising from such valuations are charged to the income statement.

Provisions for risks and charges cover liabilities whose amount or effective date is uncertain, when a present obligation (legal or constructive) exists as a result of a past event and it is probable that an outfl ow of resources embodying economic benefi ts will be required to discharge the obligation. Provisions are made according to the best probable estimate of the total amount of the obligation. Provisions for risks and charges are reviewed and adjusted at the end of each fi nancial period.

Investments

Inventories

Provisions for risks and charges

Financial assets

Receivables and payables

- 50 -

Consolidated companies have different pension plans, based upon laws, regulations and labour contracts prevailing in the countries where they operate. The most signifi cant provisions for severance indemnities and pensions relate to Italian companies. The provision for severance indemnities and pensions refl ects the present value of the liabilities for benefi ts owed to employees, at the termination date, considering demographic and fi nancial actuarial assumptions. Such provision is computed in the amount of benefi ts earned by each employee in return to their service at each balance sheet date.

The profi ts and losses arising from changes in the actuarial assumptions underlying the determination of the fair value of the liability are charged in full to equity.

Revenues and expenses are accounted for on the accrual basis. Revenues from sales of goods are recognized when the transfer of risk and rewards of ownership has occurred.

Financial revenues and expenses are charged to the income statement on the basis of the accrual principle.

Provision is made for current income taxes on the basis of the best possible estimate of taxable income, taking into account the tax regime and any tax allowances available in the individual countries. They are stated in the Financial Statement net of any tax credits that may be due. Deferred taxes are stated on the basis of the temporary timing differences between the value of an asset or liability for tax purposes and its balance sheet value. These are calculated using the fi scal depreciation quotas applying in the various countries.Due to the peculiar economic conditions of the steel industry, whose profi tability is strongly affected by cyclical trends, tax assets are recognized only to the extent that the timing of their redemption is reasonably foreseeable.

For management purposes, the Group’s activities are organized in a single operating segment.

Contingencies which are probable but for which the amount cannot reasonably be estimated, or which are only possible, are described in the notes to the fi nancial statements, but no provision is set aside for them. Remote contingencies are not taken into account.

Provisions for severance indemnities and pensions

Revenues and expenses

Income taxes

Financial revenues and expenses

Commitments and contingencies

Segment information

- 51 -

Assets or groups of assets and liabilities which meet the criteria for classifi cation as held for sale are stated separately on their own lines in the balance sheet, at the lower of their carrying amount and their presumed realizable value taking selling costs into account; any losses are charged to the income statement. The net income of each individual asset, group of assets or liability to be disposed of is stated separately on its own line in the income statement.

As required by paragraph 28 of IAS 8 are listed below and briefl y explained the IFRS in force since January 1, 2013 with potential effects on the Group.

The IASB and IFRIC have approved some changes to and interpretations of IFRS, which were published in part in the Offi cial Journal of the European Union and applied for the fi rst time to annual periods beginning on or after 1st January 2014.They have also approved some changes in interpretations already issued but applicable to fi nancial statements relating to periods beginning on or after 1st January 2014.

The following accounting standards, amendments and interpretations have been applied by the Group for the fi rst time starting from January 1, 2014:

IFRS 10 - Consolidated Financial Statements

This standard replaces SIC-12 Consolidation – Special Purpose Entities (SPVs) and some parts of IAS 27 - Consolidated and Separate Financial Statements, whose title was changed to IAS 27 - Separate Financial Statements and governs the accounting treatment of equity investments in the separate fi nancial statements.The new IFRS 10 identifi es the concept of control as the factor that determines whether or not a company should be consolidated into the Parent Company’s consolidated fi nancial statements, and provides guidance on determining the existence of control in diffi cult cases. This standard has not had a signifi cant impact on the information included in these fi nancial statements.

Transition guidance (IFRS 10, IFRS 11, IFRS 12)

On 28th June 2012, the IASB issued “Consolidated Financial Statements, Joint Arrangements and Disclosure of Interests in Other Entities”, which clarifi es and simplifi es the transition requirements for IFRS 10, IFRS 11 and IFRS 12. This standard has not had a signifi cant impact on the information included in these fi nancial statements.

Assets and liabilities intended for disposal

Changes to the accounting standards issued by the EU and in force since January 1,2014

- 52 -

IFRS 11 - Joint Arrangements

This standard replaces IAS 31 - Interests in Joint Ventures and SIC-13 – Jointly Controlled Entities - Non-Monetary Contributions by Venturers. The new standard sets out the criteria for identifying joint arrangements based on the rights and obligations arising from the agreement rather than on the legal form of the agreement itself, and establishes that equity investments in jointly controlled entities may only be accounted for in the consolidated fi nancial statements using the equity method. This standard has not had a signifi cant impact on the information included in these fi nancial statements.

IFRS 12 - Disclosure of Interests in Other Entities

This standard describes the additional information to be disclosed about equity investments (subsidiaries, joint arrangements, associates, special purpose entities and other unconsolidated structured entities). This standard has not had a signifi cant impact on the information included in these fi nancial statements.

IAS 27 - Consolidated and Separate Financial Statements

The amendment to IAS 27 sets out the standards to be applied when accounting for investments in subsidiaries, joint ventures and associates when preparing separate fi nancial statements after the introduction of IFRS 10. This amendment has not had a signifi cant impact on the information included in these fi nancial statements.

IAS 28 - Investments in Associates and Joint Ventures

The amendment to IAS 28 (as amended in 2011) sets out the criteria for applying the equity method when accounting for investments in associates and joint ventures. The standard has not had an impact on these fi nancial statements.

IFRIC 21 – “Levies”

The interpretation published on 20th May 2013 by the IASB applies to fi nancial statements beginning on or after 1st January 2014. IFRIC 21 is an interpretation of IAS 37 - Provisions, Contingent Liabilities and Contingent Assets, which stipulates one of the criteria for detecting a liability as the entity having a current liability due to a past event (i.e. an obligating event). The interpretation clarifi es that the obligating event that gives rise to the recognition of a liability to pay a levy is the activity that triggers the payment of the levy, as identifi ed by the legislation. This interpretation has not had a signifi cant impact on these fi nancial statements.

Amendments to IAS 32 - Financial Instruments: Presentation

The amendments clarify certain requirements for offsetting fi nancial assets

- 53 -

and fi nancial liabilities. The amendments, published by the IASB in December 2011, were adopted by the European Commission in December 2012 and apply to periods beginning on or after 1st January 2014. The amendments have not had a signifi cant impact on these fi nancial statements.

Amendments to IAS 36 - Impairment of Assets

The amendments introduce slight changes to the disclosures required under IAS 36, when the recoverable amount is determined using fair value less costs of disposal.

When issuing IFRS 13 - Fair Value, the IASB also introduced some amendments to IAS 36. One of the amendments has had a greater impact than the IASB originally intended. Therefore, in addition to correcting this issue, this amendment requires additional disclosures regarding fair value when there has been value impairment or reversal.The amendment specifi cally:• removed the obligation to indicate the book value of goodwill and

intangible assets with an indefi nite useful life when a CGU contains goodwill or an intangible asset with an indefi nite useful life when there has not been impairment;

• requires disclosure of the recoverable value of an asset or a CGU when an impairment or a reversal has been reported;

• requires detailed disclosure of how the fair value net of costs of disposal has been measured when an impairment has or a reversal has been reported.

Amendments to IAS 39 - Novation of Derivatives and Continuation of Hedge Accounting

The amendments have introduced an exception to the requirements for hedge accounting to be terminated in the event of novation of OTC derivatives with a central counterparty. The amendment specifi cally establishes that it is not necessary to discontinue hedge accounting in the case of a “novated or changed” derivative that has been designated as a hedging instrument if the following conditions are met:

• if, as a consequence of laws and regulations, the parties to a hedging instrument agree that a central counterparty is the new counterparty of the OTC;

• if, as a consequence of laws and regulations, one or more counterparties replace the original counterparty to become their new counterparty;

• if any other changes in the hedging instrument are limited to those necessary to effect such a replacement of the counterparty.

The changes introduced by the amendment therefore clarify that is possible to continue to recognise “novated” hedging derivatives when the replacement or rollover of the derivative into another hedging instrument is not an expiration or temination of the previous instrument. The clarifi cation defi nes the stringent criteria for establishing whether such a replacement

- 54 -

or rollover is a termination, interruption or continuation of the contractual effects of the original derivative.This amendment has not had a signifi cant impact on these fi nancial statements.

Accounting standards, amendments and interpretations not yet applicable and not adopted in advance by the Group

IFRS 9 - Financial InstrumentsThe IASB issued this standard on 12th November 2009. At the reporting date, the IASB had not set the effective date for the standard and the competent bodies of the European Union had not yet completed the endorsement process necessary for the application of the amendment. The amendments concern the reporting and measurement criteria for fi nancial assets and the related classifi cation in the fi nancial statements.

Among other things, the new provisions establish a model for classifying and measuring fi nancial assets based solely on the following categories: (i) assets measured at amortised cost; (ii) assets measured at fair value. The new provisions also require equity

investments other than those in subsidiaries, joint ventures or affi liates to be carried at fair value through profi t or loss. Where such investments are not held for trading, fair value changes may be recognised in the statement of comprehensive income, with only the effects of the distribution of dividends being recognised in the income statement. When the investment is sold, the amounts carried in the statement of comprehensive income do not need to be recognised in the income statement.

Furthermore, on 28th October 2010, the IASB incorporated new requirements into IFRS 9, including the criteria for recognising and measuring fi nancial liabilities. Among other things, the new provisions specifi cally require that, when a fi nancial liability is measured at fair value through profi t or loss, changes in fair value due to changes in the issuer’s credit risk (known as “own credit risk”) must be recognised in the statement of comprehensive income. This component is recognised in the income statement in order to ensure a matching presentation of the other items relating to the liability, and that there is no accounting mismatch.The Group is currently evaluating the impact that the new standard may have on future fi nancial statements.

Annual Improvements to IFRSs 2010-2012 Cycle

The following amendments have been made in the 2010-2012 annual improvements:

• IFRS 2: The defi nition of “vesting conditions” has been clarifi ed, and defi nitions of “service conditions” and “performance conditions” have been introduced.

- 55 -

• IFRS 3: The standard has been amended in order to clarify that the obligation to pay a contingent consideration comes under the defi nition of a fi nancial instrument and must be classifi ed as a fi nancial liability or as an equity item based on the indications provided in IAS 32. It has also been clarifi ed that, unlike equity instruments, obligations to pay a contingent consideration are measured at fair value at the reporting date, and any changes recognised in the income statement.

• IFRS 8: The amendment requires information to be given about the measurements carried out by management when aggregating operating segments, specifying the segments that have been aggregated and the economic indicators that have been assessed in order to determine that the aggregated segments have similar economic characteristics. The standard has also been amended to require that the notes to the fi nancial statements include a reconciliation between the assets of operating segments and the total assets in the statement of fi nancial position (the information must be provided only if information is provided about the assets of the operating segments).

• IAS 16 and IAS 38: both standards have been amended to clarify the accounting treatment of historical cost and the accumulated depreciation or amortisation of a fi xed asset when an entity applies the revalued cost model. It has been clarifi ed that the alignment of the account carrying amount to the revalued amount can be carried out in two ways; a) the gross value of the asset is revalued and the value of the accumulated depreciation or amortisation is revalued, if necessary proportionately; b) the accumulated depreciation or amortisation is offset against the gross value of the asset.

• IAS 24: The amendment introduced sets out the information to be provided when a third party provides key management personnel services to the reporting entity.

At the moment, it is expected that adopting these amendments will not have a signifi cant impact on the Group’s fi nancial statements.

Annual Improvements to IFRSs 2011-2013 Cycle

The following amendments have been made in the 2011-2013 annual improvements:• IFRS 3: The amendment clarifi es that IFRS 3 is not applicable when recognizing accounting impact of setting up a joint venture or joint operation (as defi ned by IFRS 11) in the fi nancial statements of the joint venture or joint operation.• IFRS 13: It has been clarifi ed that the provision of IFRS 13 according to which it is possible to measure the fair value of a group of fi nancial assets and liabilities on a net basis applies to all the contracts (including non-fi nancial contracts) covered by IAS 39 or IFRS 9.• IAS 40: The amendment introduced clarifi es that the provisions of IFRS 3 must be referred to when determining when the purchase of an investment property constitutes a business combination.It is currently believed that adopting these amendments will not have a signifi cant impact on the Group’s fi nancial statements.

- 56 -

The IASB also issued the following amendments, for which the European Union had not completed the endorsement process by the date of these fi nancial statements.

Lo IASB ha emesso inoltre i seguenti emendamenti, il cui processo di omologazione da parte dell’Unione Europea non risulta ancora concluso alla data del presente Bilancio.

Investment entities (IFRS 10; IFRS 12 and IAS 27)

On 31st October 2012, the IASB issued the document “Investment Entities”, which regulates the activities carried out by specifi c types of companies classifi ed as investment entities. The IASB considers investment entities to be companies that invest with the sole capital appreciation or investment income or both. The provisions will be effective from fi nancial years beginning on or after 1st January 2014.

The amendment to IAS 19 - Employee Benefi ts concerns the accounting purpose for defi ned benefi t plans involving contributions from third parties or employees.The plan to revise the accounting standard on fi nancial instruments was completed with the issue of the full version of IFRS 9 - Financial Instruments. The new provisions amend the way fi nancial assets are classifi ed and measured. They introduce the concept of expected loss among the variables to take into consideration in the measurement and writing down of fi nancial assets, and amend the provisions on hedge accounting. The provisions will be effective from fi nancial years beginning on or after 1st January 2018.

IFRS 15 - Revenue from Contracts with Customers: the standard requires companies to recognise revenue when control of the goods or services, the customer obtains control at an amount that refl ects the consideration which is expected to be received in exchange for such goods or services. The standard replaces IAS 18, IAS 11 and the following interpretations: IFRIC 13, IFRIC 15, IFRIC 18 and SIC 31. It applies to all contracts with customers except for agreements that come within the scope of IAS 17, IFRS 4 or IAS 39/IFRS 9.

IFRS 14 - Regulatory Deferral Accounts concerns rate regulated activities, i.e. sectors subject to rate regulation. It only allows fi rst-time adopters of IFRS to continue to recognise regulatory deferral account balances according to the previous accounting standards used. In order to improve comparability with entities applying IFRS that do not recognise these amounts, the standard requires the effect of rate regulation to be presented separately from other items.

IAS 16 - Property, Plant and Equipment and IAS 38: the IASB has clarifi ed that a depreciation process based on revenue cannot be applied to property, plant and equipment, as this method is based on factors that do not represent the effective consumption of the economic benefi ts of the underlying asset.

- 57 -

Amendments to IAS 27 - Separate Financial Statements: the amendment allows the entity to use the equity method in its separate fi nancial statements to value investments in subsidiaries, joint ventures and associates.

Amendments to IFRS 11, Accounting for Acquisitions of Interests in Joint Operations: this amendment requires an entity to adopt IFRS to measure the accounting effects of acquiring an interest in a joint operation that constitutes a business.The document Disclosure Initiative - IAS 1 Amendments clarifi es some aspects regarding the presentation of fi nancial statements by highlighting the importance of fi nancial statement disclosures and specifying that there is no longer a specifi c order for the presentation of the notes to the fi nancial statements, as well as introducing the possibility of aggregating or separating fi nancial statement items, so that items considered to be minimum content under IAS 1 can be aggregated if considered not material.

IFRS 9 - Financial Instruments:this standard replaces IAS 39 and contains a model for measuring fi nancial instruments based on three categories: amortised cost, fair value and fair value through OCI. The standard includes a new impairment model that is different from the one currently used in IAS 39 and is mainly based on expected loss.

Finally, the Annual Improvements to IFRSs 2012-2014 Cycle should be mentioned. This mainly amends some accounting standards by clarifying some areas that were unclear. They mainly refer to IFRS 5 - Non-current Assets Held for Sale and Discontinued Operations, IFRS 7 - Financial Instruments: Disclosures, IAS 19 - Employee Benefi ts and IAS 34 - Interim Financial Reporting.

The Group is currently evaluating the impact, if any, of the above standards and amendments on future fi nancial statements.

- 58 -

The handling of this item is the following (in thousands of Euro):

Other intangible fi xed assets

Net value at January 1, 2013 863

========

Net increases 97

Amortization and impairment (144)

------------

Net value at December 31, 2013 816

========

Net increases 305

Amortization and impairment (95)

------------

Net value at December 31, 2014 1,026

========

4. Intangible assets

- 59 -

5. Property, plant and equipment

The handling of this item is the following (in thousands of Euro):

Industrial & Construction Other Land and Plant and Commercial in progress and fi xed buildings Machinery equipment Advances assets Total

Net value at

January 1, 2013 211,064 511,873 30,239 16,359 15,412 784,947

======= ======== ======= ======= ======= ========

Reclassifi cations 929 18,029 812 (19,847) 77 -

Change in consolid. area - - - - - -

Gross value of assets

Increases 4,801 46,033 8,254 18,615 6,699 84,402

Decreases (148) (3,754) (1,810) (26) (1,257) (6,995)

Accumulated Depreciation

Increases (15,461) (104,896) (8,429) - (5,851) (134,637)

Decreases 63 3,727 1,617 - 1,250 6,657

Translation adjustments (42) (72) - - (4) (118)

----------- ------------ ----------- ----------- ----------- ------------

Net value at

December 31, 2013 201,206 470,940 30,683 15,101 16,326 734,256

======= ======== ======= ======= ======= ========

Reclassifi cations 1,110 17,354 1,518 (19,990) 248 240

Change in consolid. area - - - - - -

Gross value of assets

Increases 4,895 28,570 10,618 18,813 6,108 69,004

Decreases (344) (2,876) (2,575) (101) (2,281) (8,177)

Impairment - (10,499) (27) - (15) (10,541)

Accumulated Depreciation

Increases (13,815) (103,089) (9,501) - (5,437) (131,842)

Decreases 233 2,823 2,498 - 2,274 7,828

Translation adjustments 15 20 - - 1 36

----------- ------------ ----------- ----------- ----------- ------------

Net value at

December 31, 2014 193,300 403,243 33,214 13,823 17,224 660,804

======= ======== ======= ======= ======= ========

- 60 -

The main changes in property, plant and equipment which occurred during 2013 and 2014 are summarized as follows:

2013

Main additions relate to the investments made at Brandenburg (EUR 13 million), Neuves Maison (EUR 11 million), Montereau (EUR 11 million), Lesegno (CN) (EUR 7 million), Gargenville (EUR 7 million), Seville (EUR 6 million), Bonnieres sur Seine (EUR 6 million), Verona (EUR 5 million) and Hennigsdorf (EUR 3 million).

2014

Main additions relate to the investments made at Neuves Maison (EUR 14 million), Montereau (EUR 8 million), Seville (EUR 8 million), Bonnieres sur Seine (EUR 6 million), Hennigsdorf (EUR 6 million), Brandenburg (EUR 5 million), Gargenville (EUR 5 million), Charleroi (EUR 4 million) and Verona (EUR 3 million).

As indicated below (note 24), mortgages are present on some buildings in favour of fi nancial institutions.

Riva Acciaio carried out the impairment test for each of the Cash Generating Units (CGUS), as defi ned within the activities. The results of these tests have led to a full devaluation of installations relating to work performed on behalf of third parties at the Sellero plant, for a total amount of Euro 10.5 million.

The balance at December 31 includes (in thousands of Euro):

% held Value at December 31 2014 2013 2014 2013

Metal Interconnector S.c.p.a. 6.660 - 52 -Immobiliare Siderurgica S.r.l. 12.443 12.443 11 11

Other investments 3 6

---------- ----------

Total 66 19

======= =======

6. Investments in affi liates and other investments

- 61 -

7. Long-term fi nancial assets

The balance at December 31 includes (in thousands of Euro):

2014 2013

Guarantee deposits 2,390 1,729

Other long-term fi nancial assets 621 17

Deferred tax assets 43,814 41,640

---------- ----------

Total 46,825 43,386

======= =======

Deferred tax assets are entered on past tax losses which have become usable without any time limit and are related to foreign companies for Euro 10.4 million (Euro 20.9 million in 2013) and Euro 33.4 million to Italian companies (Euro 20.7 million in 2013); as regards the tax losses of Riva Acciaio, accrued in the years until 2012 and arising from the procedure of the so-called “tax consolidation” of which Riva Fire S.p.A. (now in liquidation) was the parent company, regarding which a fund on risks of an equal amount was constituted, the eligibility was confi rmed by the Agenzia delle Entrate as a result of a tax clearance application.

- 62 -

This caption, at year-end, can be detailed as follows (in thousands of Euros):

2014 2013

Scrap 243,960 249,937

Refractory products and alloys 19,773 19,486

Spare parts and sundry materials 170,942 165,552

Provision for obsolete and slow-moving inventories (40,230) (30,284)

------------ ------------

Total raw materials and spare parts 394,445 404,691

------------ ------------

Work-in-progress and semi-fi nished goods 52,783 53,465

------------ ------------

Long-rolled products 175,557 196,757

Provision for obsolete and slow-moving inventories (321) (56)

------------ ------------

Total fi nished products 175,236 196,701

------------ ------------

Advances 477 1,316

------------ ------------

Totale 622,941 656,173 ======== ========

8. Inventories

- 63 -

9. Trade and other receivables

The breakdown of trade and other receivables is as follows (in thousands of Euros): 2014 2013

Trade receivables.

Due from clients 566,497 675,828

Due from affi liates 2 1

Advances to suppliers 34 -

-------------- --------------

Total trade receivables 566,533 675,829

-------------- --------------

Allowance for doubtful accounts (23,328) (11,748)

-------------- --------------

Total trade receivables, net 543,205 664,081

-------------- --------------

Other receivables:

Tax credit 53,157 31,488

Due from social security agencies 892 1,703

Others 323,935 9,151

-------------- --------------

Total other receivables 377,983 42,342

-------------- --------------

Allowance for doubtful accounts (317,429) (11)

-------------- --------------

Total other receivables (net) 60,554 42,331

-------------- --------------

Total trade and other receivables 603,730 706,412

========= =========

Tax credits mainly include income taxes for Euro 1.5 million (Euro 2.5 million in 2013) and VAT credits for Euro 35.7 million (Euro 11 million in 2013).

The Other debtors entry includes receivables towards Riva Fire Spa in liquidation related to the debt taking over towards credit institutions for Euro 309.2 million, payments made on behalf of Riva Fire Spa in liquidation in favour of third parties for Euro 5.8 million and receivables related to the spin-off equalization towards Riva Fire Spa in liquidation for Euro 2 million.Such receivables toward Riva Fire Spa in liquidation have been the subject of value adjustments for a total of €/000 317,418.

- 64 -

The balance of short-term fi nancial assets includes (in thousands of Euro):

2014 2013

Other fi nancial assets 12 13

------------ ------------

Total 12 13

======= ========

The heading Other fi nancial assets relates to receivables for interest on the fi nancing granted by the subsidiary Riva Acciaio to the owned company Immobiliare Siderurgica.

The balance of cash and cash equivalents includes (in thousands of Euros):

2014 2013

Petty cash 41 41

Bank and postal deposits 134,605 122,541

------------ ------------

Total 134,646 122,582

======= ========

In the 2013 Bank and postal deposits entry were included also balances of the sums directed to the FUG, as a result of the seizures described in the introductory part, amounting to approximately Euro 61 million. Sums that were released only in the fi rst quarter of 2014.

Riva Forni Elettrici S.p.A. share capital, issued and fully paid in, consists of 21,060,000 ordinary shares with a nominal value of Euro 10 each, with equal rights and no restrictions.

The other reserves and retained earnings of some consolidated companies include suspended tax reserves arising from the application of laws of the individual countries, as well as reserves of undistributed profi ts that would be subject to taxation in the event of a distribution. No burden for deferred taxes has been allocated for such reserves as the tax systems and the losses of companies potentially involved in their distribution do not account their taxation (note 17).

10. Short-term fi nancial assets

11. Cash and cash equivalents

12. Group Equity

- 65 -

The other reserves and retained earnings, as of 31st December 2014, show an increase of 0.2 million euro (a decrease of 1.2 million Euro in 2013) on the effect of the conversion of fi nancial statements in a foreign currency for an increase of Euro 0.6 million (decrease for Euro 1.5 million in 2013) and to the actuarial gains according to IAS 19 for a decrease of Euro 0.4 million (an increase of 0.4 million euro in 2013).

The earning per share is negative for Euro 20.86 (negative for Euro 2.86 in 2013) and it was calculated by dividing the result of the year for the number of shares of Riva Forni Elettrici S.p.A.

The Board of Directors of May 27th 2015, which approved the fi nancial statements 2014 of the Parent Company Riva Forni Elettrici S.p.A., has not proposed any dividend distribution.

For the year 2014 the variation in minority interests refl ects only the minority interest in the operating result of consolidated companies. For the year 2013, the variation was related to the minority interest in the operating result (negative for Euro 6 thousands) of the consolidated companies and a variation of the reserves determined by subscription failure of increases in equity of some German subsidiaries by minority shareholders (positive for Euro 124 thousands).

Long-term fi nancial debts can be analysed as follows (in thousands of Euro):

2014 Interest Rates 2013 Interest Rates (indexed on the Euribor at 6 months)

Long-term loans 422,459 2.80% - 3.19% - -

Less - current quota (33,776) - -

------------ ------------ ------------

Total 388,683 - -

======== ======== ========

13. Minority interests

14. Long-term loans

- 66 -

The deadlines for the long-term fi nancial debts are the following (in thousands of Euro):

2014 2013

From 1 to 2 years 33,897 -




Over 5 years 212,719 -

------------ ------------

Total 388,683 -

======== ========

Long-term loans are backed by warranties set forth in Note 24, and, in some cases, are subject to compliance with “covenants”.

The operations for the fi nancial year 2013 and 2014 are the following (in thousands of Euro): Provisions for risks and charges

Balance at January 1, 2013 42,009

========

Increases 30,872

Decreases (3,270)

------------

Balance at December 31, 2013 69,611

========

Increases 105,099

Decreases (24,554)

------------


========

15. Provisions for risks, charges and contingent liabilities

- 67 -

The entry provisions for risks and charges is formed as follows (in thousands of Euro)

2014 2013

Environmental liabilities 33,772 33,201

Legal disputes and contractual, fi scal and other contingencies 11,469 10,728

Others 104,915 25,682

------------ ------------

Total 150,156 69,611

======== ========

The provision for environmental liabilities refl ects primarily the estimate of future remediation and waste disposal costs of sites in Germany for Euro 25.8 million (Euro 24.5 million in 2013), Italy for Euro 7.5 million (Euro 8.3 million in 2013) and France for Euro 0.4 million (Euro 0.4 million in 2013).

The provision for legal disputes and contractual, fi scal and other contingencies is mainly due to work-related disputes.

Other provisions relate mainly to the parent company Riva Forni Elettrici S.p.A. (Euro 99.3 million) and correspond to the overall balance of the spending commitment that the company has taken in regard to Riva Fire Spa in liquidation.

Contingent liabilities are composed of the risks arising from the demerger operation, following the subsidiary responsibility of the parent company, within the limits of the equity assigned to it, for liabilities existing prior to the demerger. No specifi c provisions were made for contingent liabilities, as an outgoing of resources cannot be predicted or quantifi ed.

- 68 -

Changes in the provision for severance indemnities and pensions for the fi nancial years 2013 and 2014 are the following (in thousands of Euro):

Provision for severance indemnities and pensions


========

Increases 8,424

Decreses (12,185)

------------


========

Increases 13,423

Decreses (16,204)

------------


========

The provision for severance indemnities and pensions refl ects the current value of liabilities for benefi ts due to employees, at the date of the termination of the work contract, considering demographic and fi nancial actuarial assumptions and is summarized below:

Recruitment 2014 2013

Mortality rates ISTAT SIMF91 Table ISTAT SIMF91 Table

Infl ation rates The cost of living index for the year The cost of living index for the year

2014, linear variation from 2014 2013, linear variation from 2013

at predictive value 2015 at predictive value 2015

(source: DEF 2014); (source: DEF 2013);

From 2016 constant rate From 2016 constant rate

Salary increases No salary increase No salary increase

Turnover, Rates inferred from observation of the Rates inferred from observation of the

Retirement, employment historical data of the Group’s companies historical data of the Group’s companies

contract expiration

and advances

Interest Rates risk free rate Curve + risk free rate Curve +

spread 0.15% spread 0.15%

16. Provision for severance indemnities and pensions

- 69 -

17. Deferred taxes

Actuarial gains and losses deriving from the change in the assumptions underlying the determination of the current value of liabilities are recognized to equity.

The economic components for the adjustments of the liabilities in relation to the provision for severance indemnities and pensions were classifi ed among personnel costs (Euro 17.4 million in 2014 and 16.3 million in 2013) and amongst fi nancial charges (Euro 38 thousands in 2014 and Euro 69 thousands in 2013).

The variation of deferred taxes is the following (in thousands of Euros):

Deferred tax liabilities


========

Increases 14,205

Decreases (11,122)

------------


========

Increases 4,705

Decreases (27,686)

------------


========

The provision for deferred taxes includes the net tax liability related to the temporary differences between individual company’s carrying amounts of asset and liabilities and their corresponding tax base. As indicated in Note 3 (“Accounting principles and valuation criteria”), the consolidated fi nancial statements as of December 31, 2014 do not include deferred tax assets relating to non-deductible provision and other temporary deductible differences for Euro 17 million (Euro 50 million in 2013).The consolidated fi nancial statements as of 31st December 2014 do not refl ect the allocations of deferred taxes for Euro 9 million (Euro 16 million in 2013) on the undistributed earnings belonging to foreign consolidated companies, which would undergo taxation in the event of a distribution, since the tax systems and the losses of companies potentially interested

- 70 -

in their distribution do not account for their taxation. As far as the Italian companies’ undistributed reserves are concerned, the Group is subject to the tax consolidation regime on a national basis and thus taxation is almost completely excluded in the case of distribution.

The provision for deferred taxes is formed as such (in thousands of Euros):

2014 2013

Tax effects related to temporary differences for:

Property, plant and equipment 37,256 42,103

Inventories 28,780 49,012

Other differences 3,009 911

------------ ------------

Totale 69.045 92.026

======== ========

This entry is as follows (in thousands of Euro):

2014 2013

Short-term debts and bank loans 142,054 376,895

Current quota of long-term loans (note 14) 33,776 -

------------ ------------

Total 175,830 376,895

======== ========

Loans from banks and other lenders are regulated by interest rates varying between 2.9% and 8.8% (between 2% and 7% in 2013).

18. Short-term loans

- 71 -

19. Trade and other payables

The balance of trade and other payables may be analyzed as follows (in thousands of Euro):

2014 2013

Trade payables:

Due to suppliers 504,687 493,024

Advances from customers 964 8,268

------------ ------------

Total trade payables 505,651 501,292

------------ ------------

Other payables:

Due to tax authorities 24,201 24,996

Due to social security institutions 16,697 21,395

Due to personnel 27,728 30,441

Others 8,677 3,787

------------ ------------

Total other payables 77,303 80,589

------------ ------------

Total trade and other payables 582,954 581,911

======== ========

Due to tax authorities mainly includes liabilities for income taxes for the fi scal year for Euro 7.7 million (Euro 3.6 million in 2013), withholding taxes on the wages of the employees for Euro 2.4 million (Euro 2.2 million in 2013) and VAT payables for Euro 7.1 million (Euro 13.3 million in 2013).

- 72 -

Net sales per country of origin, net of the infra-group sales, can be summarized as follows (in thousands of Euros):

2014 2013

Italy 746,550 741,669

Germany 1,201,565 1,185,334

France 971,948 1,076,969

Spain 320,325 327,014

Belgium 358,150 360,558

Canada 10,130 3,025

------------ ------------

Total 3,608,668 3,694,569

======== ========

Other revenues amounted to Euro 84.9 million in 2014 (Euro 59.6 million in 2013) and mainly include fees related to the consumption of electricity for Euro 30.7 million (Euro 27.2 million in 2013), recovery of various charges for Euro 35.1 million (Euro 14.7 million in 2013), capital gains for Euro 0.8 million (Euro 0.4 million in 2013).

Raw, ancillary and consumable materials are identifi able as follows (in thousands of Euros):

2014 2013

Raw Materials 2,161,755 2,249,005

Energy 378,017 385,336

Semi-fi nished and fi nished goods 12 1,079

Metals, iron alloys, fl uxes and refractory 112,677 111,287

Spare Parts 68,390 65,273

Others 178,265 183,192

Change in raw, ancillary

and consumable materials 10,275 9,366

------------ ------------

2,910,091 3,004,538

======== ========

20. Value of production

21. Production costs

- 73 -

Service costs include (in thousands of Euros):

2014 2013

Transport and sales commissions 186,116 181,834

Maintenance 56,357 47,912

Sundry services 37,047 37,248

General and administrative costs 12,903 11,737

Others 13,912 13,975

------------ ------------

Total 306,335 292,706

======== ========

The service costs includes the amounts due to the members of the Parent Group’s Board of Auditors which were stated by the Shareholders’ meeting amounting to Euro 78 thousands (Euro 75 thousands in 2013). There are also fees relevant to the years 2014 and 2013 for the auditing services rendered by Mazars S.p.A. for Euro 16 thousands.

The payroll costs are formed as such (in thousands of Euros):

2014 2013

Salaries and wages 199,131 192,487

Social Security 64,320 62,391

Provision for severance indemnities and pensions 17,383 16,238

Others 3,587 4,202

------------ ------------

Total 284,422 275,318

======== ========

- 74 -

Financial charges, net are reported below (in thousands of Euros):

2014 2013

Interest expense and fi nancial charges (18,188) (14,056)

Discounting losses (2,116) (894)

Foreign exchange losses (529) (349)

------------ ------------

Total fi nancial charges (20,833) (15,299)

------------ ------------

Interest income and fi nancial income 366 120

Foreign exchange gains 585 1,300

------------ ------------

Total fi nancial income 951 1,420

------------ ------------

Total (19,882) (13,879)

======== ========

During the year Euro 16.1 million were paid on interest expense (Euro 11.1 million in 2013) and Euro 282 thousands were received as interest income (Euro 58 thousands in 2013).

This item includes the allocation of current taxes for the year for Euro 15.2 million (Euro 8 million in 2013) and a release of deferred taxes for Euro 22.5 million (provision for Euro 3.1 million in 2013). In 2014 for Euro 4.2 million were accounted for deferred tax on tax losses (Euro 9.9 million in 2013).During the 2014 fi nancial year Euro 9.6 million of income taxes were paid.Deferred taxes derived mainly from temporary differences concerning the values of consolidated fi nancial assets and liabilities and their respective taxable values.

Below is the reconciliation between the theoretical tax charge obtained by applying the Italian tax rate to the economic result before tax and the overall tax charge accounted in the consolidated fi nancial statements (in thousands of Euro):

22. Financial charges, net

23. Income taxes for the year

- 75 -

2014 2013

Income (loss) before taxes (450,880) (59,101) ------------ ------------Theoretical tax charge: IRES (National income tax) - 27.5% (123,992) (16,253) IRAP (Local income tax) - 3.9% * 345 998 ------------ ------------ (123,647) (15,255)

Effects resulting from the differential between the theoretical tax rateand those in force, as a function of the rulesapply in individual countries in which the Group operates (49,187) 6,351

Effect of non-taxable earnings deriving from the valuationof investment with the equity method - -

Effect of non-deductible charges, net 45,831 6,249

Tax effects of temporary deductible differencesand tax losses to be carried forward 115,512 3,853 ------------ ------------Total income tax for the year (11,491) (1,198)

======== ========

* The tax base IRAP is different from the IRES one.

Commitments and guarantees as at December 31, 2014 are represented by:

- guarantees for Euro 32.9 million (Euro 35.5 million in 2013), mainly relating to guarantees and letters of patronage;

- collaterals, supplied for payables entered in the balance sheet, for Euro 467.0 million, for mortgages on land, buildings and industrial plants and share pledges;

On December 31, 2014 and 2013 the Group has no existing derivative contract.

The Riva Forni Elettrici Group operates in a single production sector, therefore no information is provided as segment information, nor information per geographic area as more than 90% of the Group’s activities are carried out within the EU, which is viewed by management as a common market.

24. Commitments and guarantees

25. Derivatives

26. Segment information

- 76 -

List of companies includedin the 2014 and 2013 consolidationCompanies fully consolidated on a line-by-line basis (Note 1)

Production and processing companies

Service centres and trading Companies

Appendix 1

ConsolidationName Headquarters Business % 2014 2013

Italy:

Riva Acciaio S.p.A. Milano, Italia Steel production 100.00 100.00

Abroad:

Aciérs de Construction Rationalisés – Acor S.A.S. Creil, France Processing 100.00 100.00

Aciéries et Laminoirs de Paris S.A.S. Gargenville, France Steel production 100.00 100.00

Associated Steel Industries Ltd. Ville St Catherine, Canada Crushing 100.00 100.00

Betonstahl Lampertheim GmbH Hennigsdorf, Germany Steel production 100.00 100.00

Brandenburger Elektrostahlwerke GmbH Brandenburg, Germany Steel production 99.886 99.886

Iton Seine S.A.S. Bonnieres sur Seine, France Steel production 100.00 100.00

Hennigsdorfer Elektrostahlwerke GmbH Hennigsdorf, Germany Steel production 99.886 99.886

Sam Montereau S.A.S. Montereau, France Steel production 100.00 100.00

Siderurgica Sevillana S.A. Siviglia, Spain Steel production 100.00 100.00

Société des Aciérs d’Armature pour le Beton S.A.S. Neuves Maisons, France Steel production 100.00 100.00

Thy Marcinelle S.A. Charleroi, Belgium Steel production 100.00 100.00

Trefi leries de Fontaine L’Eveque S.A. Fontaine L’Eveque, Belgium Processing 100.00 100.00

Abroad:

Parsider S.A. Gargenville, France Trading 100.00 100.00

Riva Aciér S.A. Gargenville, France Trading 100.00 100.00

Riva Stahl GmbH Hennigsdorf, Germany Trading 100.00 100.00

Trading

- 77 -

Service Companies

Holdings

ConsolidationName Headquarters Business % 2014 2013

Italy:

Muzzana Trasporti S.r.l. Caronno Pertusella, Italy Transport 100,00 100,00

Riva Energia S.r.l. Milano, Italy Energy 0,00 100,00

Abroad:

Brand. Suedstreifen Vermoegensverw. GmbH Brandenburg, Germany Real Estate 99,886 99,886

Centre de Coordination Siderurgique S.A. Mont sur Marchienne, Belgium Services 0,00 100,00

Hierros del Sur S.A. Siviglia, Spain Services 100,00 100,00

Valorizacion de Aridos S.l. Siviglia, Spain Services 100,00 100,00

Italy:

Riva Forni Elettrici S.p.A. Milano, Italy Holding 100,00 100,00

Abroad:

Stahlbeteiligungen Holding S.A. Luxembourg Holding 100,00 100,00

B.E.S/H.E.S. Stahlbeteiligungen GmbH Hennigsdorf, Germany Real Estate 90,00 90,00

Henn. Real Estate & CO KG Hennigsdorf, Germany Real Estate 98,10 98,10

Brand. Real Estate & CO KG Hennigsdorf, Germany Real Estate 98,10 98,10

Relazione della Società di Revisionee del Collegio Sindacale

Auditor’s report

MAZARS SPA SEDE LEGALE: VIALE ABRUZZI, 94 - 20131 MILANO TEL: +39 02 58 20 10 - FAX: +39 02 58 20 14 03 - www.mazars.it SPA - CAPITALE SOCIALE € 1.000.000,00 I.V. REG. IMP. MILANO E COD. FISC. / P. IVA N. 03099110177 - REA DI MILANO 2027292 ISCRITTA AL REGISTRO DEI REVISORI LEGALI AL N. 41306 CON D.M. DEL 12/04/1995 G.U. N.31BIS DEL 21/04/1995 UFFICI IN ITALIA: BARI - BOLOGNA – BRESCIA - FIRENZE - GENOVA – MILANO - NAPOLI - PADOVA - PALERMO - ROMA – TORINO

Auditor’s Report on the consolidated financial statements pursuant to Art. 14 of Lgs. Decree n. 39, of 27 January 2010

To the Shareholders of RIVA FORNI ELETTRICI S.p.A.

1. We have audited the consolidated financial statements of RIVA FORNI ELETTRICI S.p.a., and its subsidiaries (RIVA FORNI ELETTRICI Group) as of and for the year ended December 31st , 2014, which comprise the statement of financial position, the income statement, the statement of changes in equity, the statement of cash flows and the related explanatory notes. These consolidated financial statements prepared in accordance with International Financial Reporting Standards (“IFRS”) as adopted by the European Union are the responsibility of the RIVA FORNI ELETTRICI S.p.A’s Directors. Our responsibility is to express an opinion on these consolidated financial statements based on our audit.

2. We conducted our audit in accordance with the Auditing Standards issued by the Italian Accounting Profession (CNDCEC) and recommended by Consob. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the Directors, as well as evaluating the overall financial statements presentation. We believe that our audit provides a reasonable basis for our opinion.

For the opinion on the prior year’s consolidated financial statements, the data of which are presented for comparative purposes, reference should be made to our auditor’s report issued on June,10th, 2014.

3. In our opinion, the consolidated financial statements of RIVA FORNI ELETTRICI Group as of December,31st, 2014 comply with the International Financial Reporting Standards as adopted by the European Union; accordingly, they give a true and fair view of the financial position, of the results of operations and of the cash flows of the RIVA FORNI ELETTRICI Group for the year then ended.

4. Attention is drawn to the following circumstances:

a) In the Report on Operations the Directors recall that also in 2014 RIVA FORNI ELETTRICI was involved in some judicial events inherent the demerge of the company Riva Fire S.p.A. and its subsidiary Ilva S.p.A.. Furthermore, the Directors recall that Riva Fire S.p.A. is also part in various civil, criminal and administrative procedures, pending or threatened, that derive from events which occurred prior to 1st January 2013 (effective date of the demerger of Riva Fire in favour of Riva Forni Elettrici S.p.A.). Some of those proceedings towards Riva Fire S.p.A. are potential (and actually latent) sources of asset responsibility also for Riva Forni Elettrici.

RIVA FORNI ELETTRICI, moreover, within the limits of the assets assigned to it, is responsible, without prejudice, for the debts of the demerged company, prior to the demerger itself, which should remain unsettled.

5. The Directors of RIVA FORNI ELETTRICI S.p.A are responsible for the preparation of the Report on Operations in accordance with the applicable laws and regulations. Our responsibility is to express an opinion on the consistency of the Report on operations with the consolidated financial statements, as required by law. For this purpose, we have performed the procedures required under Auditing Standard n. 001 issued by the Italian Accounting Profession (CNDCEC) and recommended by Consob. In our opinion, the Report on operations is consistent with the consolidated financial statements of RIVA FORNI ELETTRICI Group as of and for the year ended December 31st, 2014.

Milan, June 11th, 2015 Signed by Simone Del Bianco

Partner

This report has been translated into the English language solely for the convenience of international readers

Riva Forni Elettrici S.p.A.Share Capital 210.600.000 Euro fully paid up

Registered Offi ce in Viale Certosa n. 249 – MilanRegistration Number and Tax Code: 07969220966

REPORT OF THE BOARD OF STATUTORY AUDITORS TO THE SHAREHOLDERS’ MEETING FOR THE FINANCIAL STATEMENT AND FOR THE CONSOLIDATED FINANCIAL STATEMENT

PURSUANT TO ARTICLE 2429 N. 2 OF THE ITALIAN CIVIL CODE

Dear Shareholders of the company Riva Forni Elettrici S.p.A. (following “RFE”),

we point out that a) following the effect of the proportional partial demerger of Riva Fire S.p.A.

occurred on the 1 January 2013, the fi nancial year closed at 31 December 2014 represents the second

operating fi nancial year of RFE; b) pursuant to article 2364 n. 2 of the Italian Civil Code the Company,

having to draft the consolidated fi nancial statement, availed itself of the right to use the longer time

limit of 180 days for convening the shareholders’ meeting to approve the fi nancial statement.

In the fi nancial year closed at 31 December 2014, we discharged the supervisory activities in

accordance with the rules of conduct for the Board of Statutory Auditors as provided for by the Italian

Board of Professional Accountants and Auditors.

• Supervisory activities

We have supervised and checked the compliance with the law and the Company’s by-laws and we

watched over that the principles of correct administration have been observed.

We have attended the Shareholders’ Meetings and the Board’s meetings and, based on the

information provided, we didn’t notice violations of Law and of the Company’s by-laws and we did

not notice operations manifestly imprudent or risky, in potential confl ict of interest or susceptible of

compromising the integrity of the Company’s assets and equity.

During meetings and on the base of the management report on the 2014 fi nancial statement, the

Directors provided us information on the activities undertaken by them, and on the most signifi cant

economic, fi nancial and capital transactions carried out by the Company and its subsidiaries.

Based on the information provided we report the following:

• during the fi nancial year 2014, the economical trend of RFE continued to be infl uenced by issues

related to the demerged company Riva Fire S.p.A., the controlling entity of Ilva S.p.A; in particular,

after the Court of Cassation judgment of the 20 December 2013, further judicial and legislative

measures addressed to Riva Fire and Ilva, led Riva Fire S.p.A to the voluntary liquidation.

• Riva Fire is part of various pending or threatened civil, penal and administrative disputes, related to events

occurred before the 1 January 2013 (date of effect of the proportional partial demerger of Riva Fire S.p.A. in

favour of RFE). Even for RFE some of these disputes represent potential (at present latent) economic losses.

In fact, according to the Italian Law on demerger, payments of compensation due by Riva Fire and related

to events occurred before the effect of the demerger could have negative effects on RFE, even though it is a

mere hypothesis. Moreover, RFE is liable in the alternative for the reimbursement of any unpaid debt of the

demerged Company incurred before the demerger, with the limit of the assigned assets.

• Considering that Riva Fire is managed by a commissioner and following the request of its main

fi nancing bank, on the 15 September 2014 RFE paid the primary bank debt incurred by Riva Fire.

Therefore, from the aforesaid day, Riva Fire is indebted to RFE and, substantially, does not have any

fi nancial debts to banks. Moreover, RFE awarded a contractual payment extension, agreeing that

its credits are subordinated to the rights of other creditors of Riva Fire. Such agreement has been

extended to further potential liabilities, not covered by Riva Fire assets, that could occur to Riva Fire

as a consequence of additional loss of value of the remaining participation in Ilva S.p.A. (now in special

administration). In view of the fi nancial situation of Riva Fire, RFE recognized a complete write-down

of the receivables on Riva Fire (about Euro 316 millions) and a provision for risks of about Euro 99

millions.

No signifi cant aspects or issues worthy of mention arose during the meeting held with the Independent

Auditors.

We have exchanged information with the Statutory Auditors of the controlled companies and no relevant

issues are worthy of mention in this report.

We have acquired knowledge and watched over, insofar as this falls within our competencies, the

adequacy of the organizational structure also by collecting information from the heads of the different

business functions and no relevant issues have to be reported.

We have acquired knowledge and watched over, insofar this falls within our competencies, regarding

the adequacy of the administration/accounting system, as well as on the dependability of this latter to

correctly refl ect operational events by collecting information from heads of different functions and from

the independent auditor and by examining company’s documentation and no relevant objection have to

be reported.

No complaints, pursuant to article 2408 of the Italian Civil Code, were received during the course of the

fi nancial year.

No other relevant issues emerged during the performed supervisory activities described above.

• Financial Statement and Consolidated Financial Statement

We have examined the Draft Financial Statement at 31 December 2014, made available to us within

the terms pursuant to article 2429 of the Italian Civil Code, and we report as follows.

As the Independent Audit of the Financial Statement is not our responsibility, we oversaw compliance

with statutory provisions pertaining to the preparation and layout of the Financial Statements and the

related Reports on Operations and no relevant objection have to be reported.

We oversaw the compliance with the law related to the preparation of the Reports on Operations and

no relevant objection have to be reported.

As far as the Board of Statutory Auditors knows, the Directors have made no derogation from the

Law pursuant to article 2423, paragraph 4, of the Italian Civil Code in the preparation of the Financial

Statement.

The Directors in the Financial Statements have illustrated that the business operations carried out

during the fi nancial year with related parties or with companies belonging to the Group have been

performed within the normal business activities, at market conditions and in the Company’s interest.

Pursuant to Legislative Decree no. 127/1991 the Company have prepared the Consolidated Financial

Statement and the related Reports on Operations.

The Board of Statutory Auditors oversaw the compliance with statutory provisions pertaining to the

preparation and layout of the Consolidate Financial Statements and the related Consolidated Reports

on Operations and no relevant objections have to be reported.

The Independent Auditors on the 11 June 2015 issued the reports which show respectively that the

Financial Statement and the Consolidated Financial Statement as at 31 December 2014 have been

clearly prepared and are a true and fair view of the Company’s and Group’s balance sheets, fi nancial

situations and operating results for the Financial Year. The Independent Auditors report also show the

consistency of the Company’s Reports on Operations and of the Consolidated Reports on Operations

with the Financial Statement and the Consolidated Financial Statement as of 31 December 2014.

We point out that the Independent Auditors, as well as the Board of Statutory Auditors, highlight the

events that led to the voluntary liquidation of Riva Fire and the existence of various legal disputes

towards Riva Fire that could represent potential (at present latent) economic losses even for RFE.

• Conclusions

Given the conclusion of the Independent Auditors reports and as referred in this report, the Board of

Statutory Auditors proposes to the shareholders’ meeting the approval of the Financial Statement as

of 31 December 2014 as prepared by the Directors.

Milan, 12 June 2015

The Board of Statutory Auditors

Enrico Maria Colombo - Chairman

Oliviero Eric Cimaz - Statutory Auditor

Francesco Nobili - Statutory Auditor

This report has been translated into the English language

solely for the convenience of the international readers.

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