Economic/financial results

REVIEW OF THE CONSOLIDATED RESULTS of the EXOR Group – SHORTENED

The EXOR Group ended the year 2012 with a consolidated profit of €398.2 million; 2011 closed with a consolidated profit of €504.2 million. The decrease of €106 million is due to a reduction in the share of the results of subsidiaries and associates (-€128.6 million), a decrease in dividends from investments (-€10.2 million), an increase in net financial expenses (-€6.4 million), compensated in part by the increase in net gains realized during the year (+€15.8 million) and other net positive changes (+€23.4 million).

The share of the profit (loss) of investments decreased €128.6 million due to the reduction in the profit reported by the Fiat Group which in 2011 had benefited from the acquisition of control of Chrysler (EXOR’s share was €306.6 million), partially compensated by the significant improvement in the profit (loss) of other investments.

The consolidated equity attributable to the owners of the parent amounts to €7,164.4 million at December 31, 2012, with a net increase of €761 million compared with €6,403.4 million at the end of 2011. Further details are provided in note 10.

The negative balance of the consolidated net financial position of the Holdings System at December 31, 2012 is €525.9 million, with a negative change of €200.1 million compared with the negative balance of €325.8 million at year-end 2011. Further details are provided in note 11.

The shortened consolidated income statement and statement of financial position and notes on the most significant line items are presented below.

NOTE

Through the subsidiary EXOR S.A., EXOR holds some important investments and controls some companies which contribute to the Group's investment and financial resource management activities. These companies constitute the so-called Holdings System (the complete list of these companies is presented below).

EXOR presents annual consolidated financial statements (statement of financial position and income statement) prepared by applying the “shortened” consolidation criteria. Such shortened-form financial statements, in order to facilitate the analysis of the financial position and the results of operations of the Group, are also presented along with the half-year condensed consolidated financial statements and in the interim reports at March 31 and September 30 of each year.

In the preparation of the shortened-form consolidated statement of financial position and income statement, the financial statements or accounting data drawn up in accordance with IFRS by EXOR  and by the subsidiaries in the “Holdings System” are consolidated line-by-line; the investments in the operating subsidiaries and associates (Fiat Industrial, Fiat, C&W Group, Juventus Football Club, Almacantar, and Arenella Immobiliare) are accounted for using the equity method on the basis of their consolidated financial statements or separate financial statements (in the case of Juventus Football Club) or accounting data prepared in accordance with IFRS.

Following its partial subscription to the €150 million capital increase by Sequana S.A., in the first half of 2012 EXOR S.A.’s investment in that company decreased from 28.24% to 18.74%.

As a result of the above, and consistently with IAS 28, from June 30, 2012 EXOR S.A recorded the investment in assets available-for-sale and measured it at fair value in accordance with IAS 39 since the requisites for accounting for the investment using the equity method were no longer applicable. At June 30, 2012 the transaction generated a loss on consolidation recorded in a specific line of the income statement, in accordance with the reference accounting policies, determined by the first-time application of fair value measurement and by the reduction of EXOR’s ownership interest. Beginning July 1, 2012, the change in fair value is recorded in equity.

The results of operations of Sequana for the first half of 2012 are shown in the income statement under “Share of the profit (loss) of investments accounted for using the equity method” since the capital increase, giving rise to the new classification, was finalized on June 27, 2012.

The following table shows the consolidation and valuation methods of the investment holdings.