Salcostruttori Cons 06 2012 Ifrs En1

Interim Directors‟ Report - Half-Year Financial Report as at 30 June 2012

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HALF-YEAR FINANCIAL

REPORT

SALINI COSTRUTTORI S.p.A.

30 JUNE 2012

PREPARED IN ACCORDANCE WITH INTERNATIONAL FINANCIAL

REPORTING STANDARDS (IFRS)


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MISSION

The Salini Costruttori Group is an international general contractor specialising in the

construction of major, complex works throughout the world. Inspired by the principles of

sustainable development, the Group leverages technological and organisational innovation as

well as its extraordinary human and professional resources to develop construction solutions

capable of enhancing the resources of communities and contributing to the economic and

social improvement of nations.


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TABLE OF CONTENTS

INTERIM DIRECTOR’S REPORT………………………………………………………................4 CORPORATE BODIES……………………………………………………………………………….5

KEY GROUP DATA…………………………………………………………………………………..8

GROUP FINANCIAL HIGHLIGHTS……………………………………………………….................9

MACROECONOMIC SCENARIO AND REFERENCE MARKETS………………………………..13

SUSTAINABLE DEVELOPMENT…………………………………………………………………...16

QUALITY, SAFETY AND ENVIRONMENT………………………………………………………..18

CORPORATE GOVERNANCE………………………………………………………………………19

HUMAN RESOURCES…………………………………………………………………………….....20

CREATION OF A “NATIONAL CHAMPION”……………………………………………………...21

RESEARCH AND DEVELOPMENT………………………………………………………………...22

OPERATING PERFORMANCE…………………………………………………………………....23

ANALYSIS OF THE GROUP‟S INCOME, FINANCIAL POSITION AND CASH FLOW………24

The Group today: summary of consolidated financial information……………………………24

Income and operating performance of the Group………………………………………………..24

Financial results………………………………………………………………………………………27

Reclassified consolidated statements…………………………………………………………….…29 PORTFOLIO OF WORK IN HAND………………………………………………………………….31

BUSINESS PERFORMANCE BY GEOGRAPHICAL AREA……………………………................32

Abroad………………………………………………………………………………………………….32

Italy……………………………………………………………………………………………………..39 MAIN GROUP COMPANIES………………………………………………………………………...43 SaliniS.p.A……………………………………………………………………………………………..43

Todini Costruzioni Generali S.p.A…………………………………………………………….…….48 OTHER INFORMATION…………………………………………………………………….…….50 TREASURY SHARES………………………………………………………………………………..51

MANAGEMENT AND COORDINATION………………………………………………………….51

AUDITS……………………………………………………………………………………………….51

ALTERNATIVE PERFORMANCE INDICATORS……………………………………………….…51

INFORMATION ON RELATED-PARTY TRANSACTIONS………………………………………51

EXERCISE OF THE TAX CONSOLIDATION OPTION FOR IRES (CORPORATE INCOME

TAX)…………………………………………………………………………………………………...52

SUBSEQUENT EVENTS……………………………………………………………………………..53

OUTLOOK…………………………………………………………………………………………….54

INTERIM CONSOLIDATED FINANCIAL STATEMETS AT 30 JUNE 2012……..…54

NOTES TO FINANCIALSTATEMENTS………………………………………………...56


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INTERIM DIRECTORS’ REPORT


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CORPORATE BODIES


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Corporate bodies

BOARD OF DIRECTORS

Chairman Simonpietro Salini

CEO Pietro Salini

Directors Simon Pietro Salini

Luisa Todini

Alessandro Salini

Francesco Perrini*

David Morganti*

Roberto Cera*

Gianluca Piredda*

*Independent

INTERNAL CONTROL AND CORPORATE GOVERNANCE COMMITTEE

Committee Members David Morganti

Roberto Cera

Gianluca Piredda

REMUNERATION COMMITTEE

Committee Members Francesco Perrini

David Morganti

Gianluca Piredda


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EXECUTIVE COMMITTEE

Committee Members Simonpietro Salini

Pietro Salini

Simon Pietro Salini

BOARD OF STATUTORY AUDITORS

Chairman Andrea Monorchio

Statutory Auditors Gennaro Mariconda

Claudio Valerio

Alternate Auditors Roberto Parasassi

Claudio Volponi

INDEPENDENT AUDITORS

Independent Auditors Reconta Ernst & Young


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KEY GROUP DATA Financial highlights


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Group financial highlights

(€/000) June 2012 2011 June 2011

TOTAL INCOME 821,049 1,423,877 609,586

VALUE ADDED 192,292 350,295 158,198

Value Added Ratio 23.4% 24.6% 26.0%

EBITDA 91,279 173,409 66,452

EBITDA Margin 11.1% 12.2% 10.9%

EBIT 47,560 91,360 33,910

EBIT Margin 5.8% 6.4% 5.6%

EBT 41,719 74,680 35,319

EBT Margin 5.1% 5.2% 5.8%

NET PROFIT ATTRIBUTABLE TO THE GROUP 17,567 36,142 19,678

TOTAL FIXED ASSETS 792,550 467,461 307,369

OPERATING WORKING CAPITAL 1,836 (238,097) 8,583

RESERVES (32,268) (30,292) (21,677)

Uses 762,118 199,073 294,275

SHAREHOLDERS‟ EQUITY (386,143) (245,121) (226,087)

NET FINANCIAL DEBT (375,975) 46,048 (68,188)

Funding (762,118) (199,073) (294,275)


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PORTFOLIO OF WORK IN HAND BY SECTOR (€/000) June 2012

December 2011

Dams and hydroelectric plants 51.0% 5,187,414 48.4% 5,019,590

Railways and metro systems 31.1% 3,165,158 31.1% 3,227,770

Civil buildings 10.5% 1,063,075 10.5% 1,086,278

Roads and motorways 7.4% 756,270 10.1% 1,047,483

10,171,918

10,381,121


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PORTFOLIO OF WORK IN HAND BY GEOGRAPHICAL AREA (€/000) June 2012

December 2011

Africa 58.1% 5,908,520 55.2% 5,735,072

EU 30.7% 3,123,994 31.1% 3,230,291

Asia 9.0% 918,100 9.6% 999,517

Non-EU 2.2% 221,303 4.0% 416,241

10,171,918

10,381,121

OPERATING INCOME BY SECTOR (€/000) June 2012

December 2011

June 2011

Dams and hydroelectric plants 32.5% 261,413 30.8% 427,492 33.4% 198,395

Railways and metro systems 15.9% 128,190 15.0% 208,918 15.6% 92,642

Civil buildings 3.7% 29,411 4.7% 65,574 3.8% 22,524

Roads and motorways 47.9% 385,947 49.5% 687,719 47.3% 281,298

804,961

1,389,703

594,859


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OPERATING INCOME BY GEOGRAPHICAL

AREA (€/000) June 2012

December 2011

June 2011

EU 23.4% 188,181 26.6% 369,058 29.9% 177,939

Non-EU 22.1% 178,091 8.1% 112,137 5.5% 32,693

Asia 19.3% 155,562 27.6% 384,175 23.5% 139,926

Africa 35.2% 283,127 37.7% 524,333 41.1% 244,301

America 0.0% - 0.0% - 0.0% -

804,961

1,389,703 594,859

Summary personnel figures JUNE 2012 DECEMBER 2011 JUNE 2011

PERSONNEL COSTS 97,256 163,001 82,508 17.9%

NUMBER OF EMPLOYEES 18,668 15,508 13,723 36.0%


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Macroeconomic scenario and reference markets

In recent years the construction market has been characterised by considerable uncertainty,

even though worldwide demand for infrastructures has remained steady partly due to the

unstoppable urbanisation process affecting emerging and developing economies.

The continuing instability in the world economy has heavily hit several areas of business in

the construction sector, such as residential and commercial building, resulting in a significant

shift of the focus of major players towards projects for the generation of energy,

transportation and communications.

It should be noted that an increasing demand for infrastructures, and specifically complex and

large-scale infrastructures, is encouraging concentration among engineering and construction

firms, resulting in companies that are increasingly larger and more diversified, with specific

skills for executing more technologically complex projects with greater value added.

Competition among the main market players increasingly hinges on testimonials, expertise

and adequate funding, and thus the ability to attract new resources and talent, if necessary

through acquisitions, has become a critical factor for success.

In the current economic situation, the Italian government has focused on measures to

stimulate sustainable growth and, specifically in relation to the construction industry, plans to

close the infrastructure gap which still exists in our country.

Thus, it is hoped that the commitment undertaken by the government in the “infrastructure

appendix” to the Economy and Finance Document of April 2012, will serve as the impetus for

the completion of priority civil projects for the country with the launch of new work sites with

positive repercussions on employment in the sector.

Outside Italy, the most interesting opportunities for large-scale development are in areas such

as India, the Far East and Latin America. For these reasons, size and worldwide presence are

increasingly critical factors for bringing in new projects. Hand in hand with the increase in

size, there will be an increase in the complexity that major worldwide competitors must face

taking into account the various political, commercial, regulatory and governance frameworks

involved.

“Mega projects” undoubtedly offer more attractive profitability margins for a general

contractor, especially considering the high level of complexity involved in the design and

execution phases for these works, and thus the projects represent interesting opportunities but

only for those players that have achieved levels of excellence in the identification, analysis

and management of risk.

In this environment, the Salini Costruttori Group has been able to see the signs of market

change in advance (a strategy leaning toward business areas with greater value added) and has

strengthened its position in those countries in which it has managed to establish a strong

competitive advantage in recent decades (Africa, Asia and Italy) and at the same time has

expanded its area of operations towards new companies that offer interesting growth

prospects (Denmark and Latin America).

Against this backdrop was the increase, in the first half of the year, in the investment in

Impregilo, which continues to pursue the goal of creating a “National Champion”, meaning a

worldwide leader with the know-how, expertise, track record and size needed to compete in

the global construction sector through more efficient and effective corporate management.

This initiative will help to create a Group characterised by:

a global presence with a greater, nearly unequalled sales force;

the dimensional size of a market leader, partly due to the foreseeable achievement of

significant sales and cost synergies;

a combination and enhancement of the management expertise that currently exists

within the two groups through the creation of an integrated management team with the


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determination and experience necessary to compete on large-scale, highly complex

infrastructure projects;

a strong financial structure bolstered by a suitable credit standing.

With regard to project management, from the time a project is brought in until it is completed

and delivered, the Salini Costruttori Group places a particular emphasis on assessing risks

with the development of a complex methodology that makes it possible to monitor and

manage the various aspects of country risk as well as risks connected with the execution of

work, including the safety of its personnel in the latter.

The Salini Group works both in Italy and in areas and countries with good political stability

and solid economic fundamentals, in general harmony with local administrations and on-site

management and without being particularly affected by late payment issues.

In the first half of 2012, 35% of production was generated by African projects, 23% by EU

projects, 22% by non-EU projects and 19% by Asian projects.

The residual value of the portfolio of work in hand at 30 June 2012 amounted to €10.2 billion,

and was distributed in areas and countries of the Eurasian and African continents with high

expected growth rates. Hydroelectric plants and dams accounted for 51% of these projects;

railways and metro systems for 31.1%; roads, motorways and bridges for 7.4%; and industrial

and civil infrastructures for the remaining 10.5%.

In Sub-Saharan Africa, which represents 53.4% of the Group‟s portfolio, there has been a

consolidated and generalised improvement in many economic and socio-political indicators.

Growth prospects remain unchanged for 2012 during which an improvement in aggregate

GDP of 5.4% is projected.

In Ethiopia the political situation is stable, and the economy is recovering thanks, in

particular, to the energy sector, where the Group is making a significant contribution to the

growth in investments in production from renewable sources and to agricultural growth.

Growth is estimated at 5% and the World Bank is involved with 25 projects for a total

commitment of US$ 3.6 billion.

In Nigeria, following the April 2011 elections that confirmed the outgoing president, the

economy benefited from political stability with a positive impact on expected economic

growth of over 7% due to petroleum exports. The authorities restructured the banking industry

and began investing in transport and energy infrastructures, sectors in which the World Bank

is financing over 20 projects.

The Group has a widespread presence in the CIS region, and the country where the most

significant projects are located is Kazakhstan, which is rich in gas and hydrocarbons and has

an expected growth rate of 5.9%. The World Bank, the European Bank for Reconstruction and

Development (EBRD) and the Asian Development Bank (ADB) are active there in the

transport, energy and environmental sectors.

In Ukraine, which is benefiting from investments by UEFA, and where the World Bank and

EBRD are active, growth of 3% is projected, and is bolstered by steel exports.

In Azerbaijan, the crossroad between Europe and Asia for oil and gas pipelines, the building

and infrastructure sectors are growing due to a public investment plan launched by the

government, and GDP is expected to grow by 3.1%.

Malaysia is characterised by gradual growth in investment projects as a part of the economic

transformation programme planned by the government, with a strong private contribution, a

significant degree of commercial receptiveness and a strong banking system. Growth is

projected to be 4.4%.

Turkey, which represents a significant new market for the Group, has significant investments

planned in transport and energy infrastructures which are partially supported by an efficient

banking system. The government recently approved a new investment incentive programme.

GDP growth is expected to be 2.3%.


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Finally, Denmark, where the Group, as leader of the Copenhagen Metro Team, has the

privilege of building one of the most significant urban transport projects in Europe, has one of

the most stable and solid economies and one of the lowest public debts in the EU, which will

aid the government in making future public investments.


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Sustainable development

Working in numerous and diversified environments means interpreting and respecting the

expectations of institutions, clients, local communities, consumers and technical and

operating counterparties with different histories and cultures.

The Company has translated these requirements into a vision and style of work based on the

value of human beings, attention to the environment, the principles of social responsibility

and corporate citizenship. This choice gives rise to our commitment to a broad notion of

“sustainable development”, which is a key aspect of our business. The projects we carry out –

energy from renewable sources, infrastructures to reduce urban traffic congestion, public

metro systems with a low environmental impact, development and upgrading of regional

infrastructures to boost regional development – create lasting value for the communities

involved and are a catalyst for further growth.

The Group has formalised its working philosophy in a coordinated set of policies, procedures

and organisational structures aligned with major international benchmark standards. In

particular, since 2010, we have been a member of the United Nations Global Compact, a

worldwide initiative for sustainable development, which requires a commitment to aligning

our strategies and operations with ten universal principles relating to human rights, labour, the

environment and the fight against corruption.

At a national level, we are also part of the Global Compact Network Italy, and work together

with other member organisations and businesses to execute specific projects and initiatives

aimed at advancing the priorities set forth in the Global Compact.

The Group‟s sustainability strategy is implemented by maximising the benefits generated in

the areas in which it works, benefiting local stakeholders. Our priorities include creating new

jobs, using local suppliers, investing and engaging in initiatives in favour of local

communities, and conforming rigorously to high environmental standards.

The commitment to use local workers and suppliers has a positive impact on the development

of national economies, especially in emerging markets, by increasing workers‟ skill levels and

suppliers‟ qualitative standards, while at the same time improving infrastructures and

environmental conditions in the areas where we execute our projects.

Our complete dedication to human resources is especially concentrated in the areas of health,

safety and human rights, through the adoption of widely shared standards and codes of

conduct that are supported by a commitment to training and regular dialogue with over 18,650

employees from 80 different countries.

The Company‟s commitment is also characterised by thorough consideration of the needs of

local communities. The Head Office divisions as well as on-site management analyse and

assess community requirements and, often in partnership with institutions and other

organisations, develop investment projects in the areas of education, health, culture and

recreation.

In recent years, significant resources have been allocated to construct buildings, schools,

hospitals and roads. Furthermore, energy and water distribution as well as health care have

been provided for local communities. In addition, while projects are under way, Salini allows

local communities to access some work site facilities, such as medical clinics, classrooms,


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wells, roads and bridges, which are often turned over to the communities and institutions

when the project is complete.

Our daily commitment extends from people to the conservation of the environment and

natural resources, which are crucial aspects of our business model.

For this purpose, the Company structures and conducts its work while guaranteeing the best

possible environmental protection, and is committed to continuously improving

environmental services, considered an integral part of the Company‟s financial and operating

performance. Our work sites are focused on reducing energy and water consumption by

developing innovative projects to re-use and recycle natural resources and scrap generated

while works are being conducted. Mitigating the impacts of work site activities on

communities is another priority to which the Salini Costruttori Group dedicates the utmost

attention, by monitoring and closely managing aspects relating to noise, vibrations, dust and

road conditions.

Since the environmental aspect includes strategic objectives within a globalised and extremely

competitive market, not only in-house human resources and professionals, but also clients,

suppliers, authorities and other stakeholders are invited to take part in environmental

processes and initiatives.

The commitment to constantly maintaining an open dialogue with stakeholders, in order to

understand their legitimate expectations and create opportunities for involvement and

cooperation, is implemented through tools and highly diversified methods both at corporate

level and at the individual work sites, generating positive interactions with increasingly broad

groups of internal and external stakeholders.

The commitment to transparency is also demonstrated by reaching the A+ application level of

the Global Reporting Initiative (GRI-G3) on the 2011 Sustainability Report. This document,

which was published in the first half of 2012 and is available on the Company's website,

reports the Group's sustainability practices and performance. To protect all stakeholders, the

Report was certified externally (KPMG) on a voluntary basis.


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Quality, Safety and Environment

The Quality, Health, Safety and Environment System (QHSE) is a management tool used by

senior management to ensure that important activities are continually planned, developed and

improved to the full satisfaction of all stakeholders.

In the first half of 2012, the review of the QHSE System, which was carried out on the basis

of 2011 results, led to the identification of measurable objectives, which are pursued through

raising the awareness and ensuring the involvement of head office and work-site units.

In addition, the necessary training was provided to the personnel concerned, and especially to

delegated executives and managers whose training was arranged by the Health, Safety and

Environment Department (HSE) in collaboration with Human Resources and in compliance

with current regulations.

The performance of the QHSE System was checked by executing internal audits and

analysing reports from work sites that indicated a satisfying degree of application of the

system.

A QHSE System was set up for the newly established Salini S.p.A. that complies with the

highest international standards and allowed the Company to obtain the renewal of ISO

9001:2008 certification in June 2012.

Lastly, there are plans for the development and integration of several operating procedures

with the dual goal of standardising certain aspects for executing projects whilst further

improving the overall performance of the QHSE System.


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Corporate governance

The Salini Costruttori Group has approached the issue of Corporate Governance with a wide-

ranging vision and scope. Although it is unlisted, it has adopted a dynamic model compliant

with the principles enshrined in the Code of Conduct for Listed Companies, CONSOB

recommendations and best practice at national and international level.

Its Corporate Governance policies are therefore continuously updated and documented in the

Annual Corporate Governance Report. That document describes the corporate governance

model in detail, defines the Company‟s organisation, specifying the roles and responsibilities

of each Corporate Body and of the top management, and provides information on the

implementation of the provisions of the Code of Conduct.

The Internal Control System monitors the practical implementation of governance policies

and works effectively to promote their actual and constant execution.

The Board of Directors of the parent company Salini Costruttori S.p.A. was re-elected at the

Board meeting on 16 July 2012. At that time, the number of directors was increased from

seven to nine, of whom three have particular duties, and six are non-executive directors

(including four independent directors). The Board will remain in office until the approval of

the financial statements at 31 December 2014. During the half-year just ended, the Board met

five times, and the main resolutions concerned the review and/or approval of:

the Company‟s and the Group‟s interim reports;

the acquisition of strategic equity investments;

the top management‟s pay policies;

economic forecasts.

With regard to the Internal Control System, the Internal Audit Department conducted the

audits set forth in the Audit Plan defined at the beginning of the year in order to monitor the

suitability of the applicable procedures, as well as the compliance of processes with local and

international regulations.

During the first half of 2012, the inspections requested by the Supervisory Body at Italian and

foreign operating divisions were conducted with the aim of assessing the effectiveness of the

Organisation, Management and Control Model.

With regard to the environmental offences specified in Directives 2008/99/EC, 2009/123/EC

and 2005/35/EC, and referenced in Article 25-undecies of Legislative Decree 231/2001

(introduced following the issuance of Legislative Decree 121 of 7 July 2011), after adjusting

the Organisation, Management and Control Model of Salini Costruttori, the update of the

Model of Todini Costruzioni Generali S.p.A. (approved by the Board of Directors at its

meeting on 27 March 2012) was also completed.

Following the establishment of Salini S.p.A. on 6 December 2011, the Supervisory Body was

appointed (consisting of two independent directors and an outside professional) for the new

company, and the related Code of Ethics and Organisation, Management and Control Model

were prepared pursuant to Legislative Decree 231/2001. The documents were approved by the

Board of Directors on 21 December 2011.

Periodic training sessions on matters relating to Legislative Decree 231/2001 continued for all

Group personnel.


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During the year, the Company aligned itself with the regulations in force on IT data security

(pursuant to Legislative Decree 196/2003) and updated its “Data Security Policy” as required

by the regulations in force.

Human Resources

As at 30 June 2012, the Salini Group had 18,668 employees, of which 3% are located in Italy

and the remaining 97% abroad.

The Company's multinational and multiethnic characteristics are emphasised by its presence

in 40 countries and its employment of personnel from 80 different countries, distributed as

follows based on continent of origin:

Africa 12,811 (68.62%)

Asia 3,698 (19.81%)

Europe 2,109 (11.30%)

Americas 49 (0.26%)

Oceania 1 (0.001%)

During the first half of the year, the work force rose by 20.37% (+3,160 employees) based on

performance that benefited, in particular, from the consolidation of Ethiopian projects and the

full operations of the Ulu Jelai project in Malaysia.

The presence of female employees on the Company's staff continues to grow with an increase

of 29% over 31 December 2011, and female staff now represent 8.52% of the work force

(7.93% in 2011).

In 2012, the process of recruiting and hiring resources with advanced professional

qualifications continued, both with a view to reinforcing the quality of non-central offices and

to guarantee suitable and gradual generational turnover.

The distribution of employees by age brackets is as follows:

< 30 years 8,052 (equal to 43.13%)

30-50 years 8,660 (equal to 46.39%)

> 50 years 1,956 (equal to 10.48%)


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If the same figure were compared with the distribution of the Company's employees in 2010

and 2011, it would be immediately obvious that the Group's growth in employment is mainly

in the under-30 age bracket, thereby making progress on the goal of making the Company a

place that attracts younger resources.

Creation of a “National Champion”

During the first half of the year, the Salini Costruttori Group expanded its strategic investment

in Impregilo S.p.A., a company listed on the Italian stock exchange, reaching a stake of about

28.1% in the share capital.

This project was part of the project to create a “National Champion”, meaning a worldwide

leader with the know-how, expertise, track record and size needed to compete in the global

construction sector through more efficient and effective business management.

This project represents a unique growth opportunity for both Groups (Salini and Impregilo)

which would entail the enhancement of the complementarity of the specific skills and


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testimonials obtained in their respective geographical markets in the area of construction of

major, complex works.

Although it is true that ongoing instability in the world economy continues to have a major

impact on certain business areas in the sector (in particular residential and commercial

building), it can also be said that major infrastructures remain a priority for the development

of national economies, especially in those geographical areas with the highest growth rates.

Competition among the main market players increasingly hinges on testimonials and qualified

expertise and adequate funding. Thus, the ability to attract new resources and talent, if

necessary through acquisitions, has become a critical success factor.

In this regard, the creation of a “National Champion” (Impregilo and Salini) would make it

possible to create greater value by generating additional significant benefits such as:

a more widespread geographical presence worldwide enriched by the in-depth

knowledge of the individual countries in which the two groups have already been

operating successfully for decades;

a size comparable to major global players in the sector with an obvious impact on

opportunities to access larger, more technologically complex infrastructure projects;

a strong financial structure characterised by a suitable credit standing;

sales and cost synergies achievable by making available to both groups the specific

expertise and testimonials obtained in other market segments and pursuing greater

efficiency in the integrated management of resources;

the creation of value for all shareholders and stakeholders through significant growth

in total revenues and operating margins.

Research and development

Research, development and technological innovation have always been essential to the

Company‟s success in the realisation of large-scale projects.

If, today, the Group is one of the most advanced in terms of technologies used, project and

work site management procedures and security measures adopted, it is thanks to the

continuous and increasing commitment of the economic and human resources invested in

research and development.

In close partnership with qualified professionals and engineering companies at an

international level, highly innovative techniques and solutions have been developed to be used

on projects of any type, size and complexity.

This approach is one of the strengths that make the Group competitive worldwide, even under

the most demanding working conditions.

The constant bid for innovation has made a significant contribution to the evolution of the

entire construction and plant engineering sector, with the Fast Track Implementation method

specifically designed to construct large-scale „turnkey‟ hydroelectric power plants.

The method, based on the simultaneous launch of all critical operational phases, helps to

dramatically reduce project timescales by at least 50%. Therefore, a hydroelectric plant begins

to generate benefits and revenue streams much sooner than it would with a traditional

organisation, delivering a faster return on investment.

The Fast Track Implementation method, which Salini has already successfully applied to three

large-scale hydroelectric plants, can be used for many project types that require swift

completion times, anywhere in the world.

http://www.salini.it/index.php/italian/content/executed

http://www.salini.it/index.php/italian/content/executed


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OPERATING PERFORMANCE Analysis of the Group's results


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Analysis of the Group’s income, financial position and cash flow

The Group today: summary of consolidated financial information

The interim consolidated financial statements as at 30 June 2012 report pre-tax profit of €41.7

million and income of €821.0 million.

The first six months of the year were positive confirmation of the Group's operating and

technical capabilities in the complex works segment.

The exponential growth in total income, which rose by €211.5 million over the same period in

2011, is concrete evidence of the structural strength of the Group, which despite the domestic

and European environment of continuing economic contraction, has managed to maintain a

strong upward trend in production in accordance with the objectives stated in its business

plans.

Against this backdrop, operating margins have improved in absolute terms, especially with

regard to EBITDA (€91.3 million, +37.4%) and EBIT (€47.6 million, +40.3%).

Net financial debt of €376 million was the anticipated result of planned investment policies,

including the purchase of shares of Impregilo S.p.A. in an amount totalling about €269

million over the last 12 months. This equity investment, which is considered strategic, was

recorded under non-current financial assets.

Reaching a level of €10.2 billion, the portfolio of work in hand confirms the quality of the

Group's sales activities which are aimed at seizing opportunities in those markets that are less

vulnerable to slowdowns in the current economic situation.

Finally, the expansion of industrial activities also had a positive impact on the increase in

Group employment, and the headcount grew by 3,160 employees (20.37%), from 15,508

employees at 31 December 2011 to 18,668 at 30 June 2012.

Income and operating performance of the Group

Key consolidated income figures €/000 30 June 2012 30 June 2011 Change %

Total Income 821,049 609,586 34.7%

EBITDA 91,279 66,452 37.4%

EBIT 47,560 33,910 40.3%

EBT 41,719 35,319 18.1%

Net Profit 17,567 19,678 -10.7%

Net profit/Total income 2.1% 3.2%


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Production

In the first half of 2012, income rose sharply (34.7% on an annual basis) to a level of €821.0

million.

(€/000) June 2012 2011 June 2011

Production in Italy 113,611 320,446 171,027

Production abroad 707,438 1,103,431 438,559

TOTAL 821,049 1,423,877 609,586

Income from projects being completed abroad, which represent 86.1% of the total for the

period (71.9% at 30 June 2011), rose by 61.3%, which more than offset the decline of 33.6%

in the Italian market. Continued growth in international operations is confirmation of the

Group's strong competitive position in geographical areas with high potential such as Africa

and Asia, which represent 54% of total value of production.

Operating income amounted to €804.9 million, accounting for 98.0% of turnover (+35.3%

over the same amount reported on 30 June 2011).

In this regard, there was a significant contribution from the Gibe III and GERDP projects

(Ethiopia), the Cityringen project (Denmark), the Zhytomir project (Ukraine) and Kyzlorda

project (Kazakhstan) and growing operations in Malaysia, Belarus and Zimbabwe.

OPERATING INCOME BY GEOGRAPHICAL AREA

(€/000) June 2012

December 2011

June 2011

EU 23.4% 188,181 26.6% 369,058 29.9% 177,939

Non-EU 22.1% 178,091 8.1% 112,137 5.5% 32,693

Asia 19.3% 155,562 27.6% 384,175 23.5% 139,926

Africa 35.2% 283,127 37.7% 524,333 41.1% 244,301

America 0.0% - 0.0% - 0.0% -

804,961

1,389,703

594,859

In terms of operating income, the road and motorway area continued to be the most

significant with 47.9% of operating income for the year (+€210 million over 30 June 2011, an

increase of 35.3%) due mainly to the full operations of road lots for the reconstruction of the

International Transit Corridor Western Europe - Western China in Kazakhstan and works to

rehabilitate the motorway section along the Kiev-Chop motorway in Ukraine.

The dams and hydroelectric plants segment, which had no change in the percentage of the

Group's total business volume, grew by about €63 million over the same period in 2011

(+31.8%) mainly due to the contribution of the Gibe III and Grand Ethiopian Renaissance

Dam projects located in Ethiopia.

Similar comments can be made for transport infrastructures (+€35 million over 30 June 2011,

an increase of 37.6%). The highlights of this area are the contribution of works to build line

B1 of the Rome metro system and the new “Cityringen” ring road in Copenhagen.

Income in the civil building segment rose by 26.0% as a result of the completion of pending

projects, almost all of which are in Italy.


December 2011

June 2011

Dams and hydroelectric plants 32.5% 261,413 30.8% 427,492 33.4% 198,395

Railways and metro systems 15.9% 128,190 15.0% 208,918 15.6% 92,642

Civil buildings 3.7% 29,411 4.7% 65,574 3.8% 22,524

Roads and motorways 47.9% 385,947 49.5% 687,719 47.3% 281,298

804,961

1,389,703

594,859


26

Other non-operating income, amounting to €16.1 million, is mainly the result of the supply of

goods and services which, by their nature, are not part of the Group's core business (e.g.,

disposals of materials, services provided to third parties and rentals).

Costs

Costs of production totalled €629 million, which was an increase of €177 million over the

previous year, as a direct result of higher production volume for the period.

Personnel costs, which came in at €97 million, rose in absolute terms (+€14.7 million), but

absorbed only 11.8% of total income compared to 13.5% reported for the same period of the

previous year.

The Group continues to focus on the creation of a structure with high professionalism and

effectiveness among both workers and management in order to optimise cost synergies

between direct production and sub-contracted production.

Results of operations

Operating margins confirm the major income-earning capacity of pending projects and the

selective quality of the project portfolio.

This is reflected in the level of key profitability indices applicable to interim operating

statements such as ROS, which at a level of 5.8% confirms the good profitability of unit sales

in monetary terms.

At €91.3 million EBITDA was up €24.8 million over the same period of the previous year

(+37.4%) with an EBITDA margin of 11.1%.

EBIT reached a level of €47.6 million, representing an increase of €13.6 million over 30 June

2011.

Period results

EBT (earnings before taxes) totalled €41.7 million (+18.1% over the €35.3 million at 30 June

2011) representing 5.1% of income.

The estimate of current and deferred taxes for the period was determined in accordance with

current tax regulations.

For additional information on the calculation of taxes, see Note 8 in the notes to the financial

statements.


27

Financial results

Key consolidated financial position figures (€/000) 30 June 2012 31 December 2011

Net fixed assets 792,550 467,461

Operating working capital 1,836 (238,097)

Reserves (32,268) (30,292)

Net invested capital 762,118 199,073

Shareholders’ equity 386,143 245,121

Net financial position (375,975) 46,048

Net fixed assets, which totalled €792.6 million, increased by €325.1 million over the previous

period mainly due to increases in property, plant and equipment and the valuation of equity

investments.

Financial assets rose at a particularly impressive pace: compared to 31 December 2011 their

growth (+€257.9 million) was largely due to the acquisition of the stake in Impregilo S.p.A.

and its measurement at fair value.

Net invested capital of €762.1 million (+€563.0 million compared to December 2011) reflects

the excellent performance of production activities, the growth of which during the period had

a proportional impact on operating working capital, especially with regard to inventories for

works in progress, certification levels and exposure to suppliers.

Net financial position As at 30 June 2012 the net financial position amounted to €(376) million and, in keeping with

management's expectations, during this period of the year this figure resulted from

investments scheduled to sustain growth in production volume and support the launch of new

projects, and from investments made in the shares of Impregilo S.p.A. in an amount totalling

about €269 million.

The projections of the five-year business plan, which were met, and in certain cases exceeded

by the positive performance during the period under review, lead to the reasonable

assumption that by the end of the current year, there will be an improvement in financial debt.

The financial ratios, and especially the leverage ratio, remain in balance.


28

(€/000) June 2012 2011 Change

Cash funds 288,131 542,998 (254,867)

Current financial assets 4 14 (10)

Current financial liabilities (470,267) (293,338) (176,929)

NET FINANCIAL DEBT, current portion (182,132) 249,674 (431,806)

Non-current financial assets 24,497 24,295 202

Non-current financial liabilities (218,340) (227,921) 9,581

NET FINANCIAL DEBT, non-current portion (193,843) (203,626) 9,783

NET FINANCIAL DEBT (375,975) 46,048 (422,024)

0

Net Debt/Equity 0.97 (0.19)

Net Debt/EBITDA 2.06 (0.27)


29

Reclassified consolidated statements

Reclassified income statement

(€/000) June 2012 June 2011 Change %

Income 804,868 98.0% 596,518 97.9% 34.9%

Other income 16,181 2.0% 13,067 2.1% 23.8%

Total Income 821,049 100.0% 609,586 100.0% 34.7%

Costs of production (628,757) 76.6% (451,387) 74.0% 39.3%

Value Added 192,292 23.4% 158,198 26.0% 21.6%

Personnel costs (97,256) 11.8% (82,508) 13.5% 17.9%

Other operating costs (3,757) 0.5% (9,238) 1.5% -59.3%

EBITDA 91,279 11.1% 66,452 10.9% 37.4%

Depreciation and amortisation (39,943) 4.9% (32,449) 5.3% 23.1%

Allocation to provisions (1,664) 0.2% (91) 0.0% ns

Write-downs (2,113) 0.3% (3) 0.0% ns

(Capitalised costs) 0 0.0% 0 0.0% -100.0%

EBIT 47,560 5.8% 33,910 5.6% 40.3%

Financial income and expenses (net) (5,841) -0.7% 1,409 0.2% ns

Pre-tax profit/(loss) 41,719 5.1% 35,319 5.8% 18.1%

Taxes (15,535) 1.9% (15,372) 2.5% 1.1%

Net Profit 26,184 3.2% 19,947 3.2% 31.3%

Profit/(loss) attributable to minority interests 8,617 1.0% 269 0.0% ns

Profit/(loss) attributable to the Group 17,567 2.1% 19,678 3.2% -10.7%


30

Reclassified statement of financial position

(€/000) June 2012 2011 Change Change %

Intangible assets 2,380 2,419 (39) -1.6%

Property, plant and equipment 389,248 323,065 66,183 20.5%

Equity investments 396,795 138,872 257,923 185.7%

Other fixed assets 4,127 3,105 1,022 32.9%

Total fixed assets (A) 792,550 467,461 325,089 70%

Inventories 213,217 185,730 27,487 14.8%

Amounts due from clients 589,756 437,836 151,920 34.7%

Amounts due to clients (1,184,732) (1,159,992) (24,740) 2.1%

Trade receivables 670,572 574,635 95,937 16.7%

Other assets 242,670 223,573 19,097 8.5%

Tax receivables 135,443 83,157 52,286 62.9%

subtotal 666,926 344,939 321,987 93.3%

Trade payables (525,602) (490,066) (35,536) 7.3%

Other liabilities (139,488) (92,969) (46,519) 50.0%

subtotal (665,090) (583,036) (82,054) 14.1%

Operating Working Capital (B) 1,836 (238,097) 239,933 -101%

Employee benefits (4,222) (4,271) 49 -1.2%

Provisions for risks and charges (28,046) (26,021) (2,025) 7.8%

Total reserves (C) (32,268) (30,292) (1,976) 7%

Total uses (D=A+B+C) 762,118 199,073 563,045 283%

(€/000) 2012 2011 Change Change %

Cash and cash equivalents 288,131 542,998 (254,867) -46.9%

Current financial assets 4 14 (10) -72.7%

Non-current financial assets 24,497 24,295 202 0.8%

Current financial liabilities (470,267) (293,338) (176,929) 60.3%

Non-current financial liabilities (218,340) (227,921) 9,581 -4.2%

Net financial payables/receivables (375,975) 46,048 (422,024) -916%

Shareholders‟ equity 349,247 219,285 129,962 59.3%

Minority interests 36,896 25,836 11,060 42.8%

Shareholders’ equity 386,143 245,121 141,022 58%

Total funding 762,118 199,073 563,045 283%

12,6% 15,9% 5,4% 6,5%


31

Portfolio of work in hand

As at 30 June 2012 the portfolio of work in hand amounts to about €10.2 billion, a figure that

reflects the excellent results achieved by the Group in terms of sales penetration capabilities.

The new projects secured over the last 12 months (a total of €856 million) were mainly the

result of the “roads and motorways” and “hydroelectric plants” areas.

The size and trends of the portfolio of work in hand confirm the high growth potential of total

revenues expected in the coming years, as well as the strategic ability to operate in markets

which are less exposed to the economic downturn, by dedicating itself to competitive sectors

of excellence such as dams, hydroelectric plants and transport infrastructures.

Overall, 16% of the portfolio of work in hand refers to domestic projects (€1.7 billion) and the

remaining 84% is from initiatives abroad, with Europe representing 17% (€1.7 billion), Africa

58% (€5.9 billion) and Asia 9% (€0.9 billion).

Driven by Ethiopia and Nigeria with growth of 5% over June 2011, Africa continued the

upward trend of recent years and is turning out to be the Group's main market, especially in

the area of “dams and hydroelectric plants”.

Business development in Europe has been particularly impressive with new projects

representing 36% of the portfolio of work in hand generated over the last 12 months.

The dams and hydroelectric plants sector (€5,187 million) accounts for 51% and is therefore

the Group‟s core business, although the impact of railway and metro system initiatives is

increasing; with a value of €3,165 million, they represent 31.1% of the total work to be

executed.


32

Business performance by geographical area

Abroad

The Group‟s global mission is particularly apparent from its presence in foreign countries

through permanent offices, branches and local companies which, due to their integration

within the various markets, are ready to take advantage of the strategic potential and business

opportunities to be found there.

Within the portfolio of work in hand, the value of international business (€8,498 million)

accounts for 84% of the total. The sectors concerned are summarised below (€/million):

Dams and hydroelectric plants 5,187.4 51%

Railways and metro systems 1,590.9 16%

Civil buildings 984.9 10%

Roads and motorways 735.2 7%

8,498.4 84%

International market activity, totalling €707.4 million, represents 86.2% of total income as at

30 June 2012.

The sectors that contributed to operating income abroad are Roads and Motorways (47.9%),

Dams and Hydroelectric Plants (37.4%), Railways and Metro Systems (11.7%) and Civil

Buildings (3.0%).

Below is a brief description of the key events relating to the main projects of the first six

months of 2012.

AFRICA

Ethiopia

Work on the Gibe III project continues. The contract for this work, signed on 19 July 2006

with a value of €1,470 million, involves building a hydroelectric plant with a capacity of


33

1,870 MW, consisting of an RCC (roller-compacted concrete) dam which is 243 metres high,

with a surface powerhouse. Other permanent works include a total of 75 km of access roads, a

new bridge over the Omo river and camps and facilities for the client.

In addition, in 2010 an agreement was signed with the client for the construction of a 66 kV

electrical line from the Sodo-Wolayta substation to the Gibe III work site. This line and its

substations will remain the property of the client EEPCo (Ethiopian Electric Power

Corporation), but to compensate for this, Salini will be supplied with electricity at a

preferential rate below the national standard.

On 30 December 2010, Salini Costruttori and EEPCo entered into an agreement to construct

the “Grand Ethiopian Renaissance Dam” (GERDP), which will be the largest dam in Africa

(1,800 m long, 170 m high with an overall volume of 10 million cubic metres), along with

two powerhouses located on the banks of the Blue Nile, equipped with a total of 16 turbines

each with installed capacity of 375 MW.

The project is valued at over €3.3 billion.

Currently, excavations are being carried out for the main dam, the bridge is being built over

the Nile, and work is being done to divert the river, roads and work-site installations.

On 12 March 2012 Addendum No 2 was signed to formalise the request for an increase in

voltage on the electrical line between Beles and the GERDP from the originally planned level

of 132 kV to 400 kV. This change resulted in an increase of €42 million in the contract

amount resulting in a new project total of €3,377 million.

The Gibe II (420 MW) and Beles (460 MW) hydroelectric projects, with contractual values of

€397 million and €467 million, respectively, were completed and the relevant “taking-over

certificate” issued. The contracts are in the defect liability period awaiting receipt of the final

certificate.

Nigeria

The work relating to the “Gurara Dam and Water Transfer Project, Lot A – Dam and

Associated Works” project is in progress. The current value of the job, inclusive of the

various contract addenda issued over the years (the contract was signed on 30 January 2001)

is approximately €545 million. The dam, consisting of 9 million m3 of earth and rock-fill, the

intake structure and the 30 MW hydropower plant are complete; the power transmission line,

the irrigation perimeter and some road works still need to be finished. The project should be

completed within two years.

Work continues on the project called “Development of Idu Industrial Area Engineering

Infrastructure” (with a contract amount of about €237 million) consisting of works involving

the primary urbanisation of a new neighbourhood in the capital Abuja to be used for industrial

purposes. The sewer and drainage networks have been completed; 60% of the road network,

including four viaducts, has been asphalted, and construction is being launched for the water

supply and power supply networks.

Works are also continuing in relation to the design and execution of the “Nigeria Cultural

Centre and Millennium Tower” (with a contract valued at about €421 million). The tower has

reached a height of 110 metres (of the 170-metre final height), the underground parking

structures under the square are complete, the artificial tunnel linking the two project plots is

complete, and structures of two of the seven buildings making up the Cultural Centre are in

the advanced phase of construction.

The section of urban motorway related to the project “Extension of Inner Southern

Expressway (ISEX)”, which was assigned by the Federal Capital Development Authority and


34

is valued at about €65 million under an agreement signed on 13 January 2010, is in the

advanced stage of construction. At present, two of the four main viaducts are complete, the

drainage works are nearly completed, and a section of the road has been asphalted.

The “Dualisation of Suleja Minna Road in Niger State” project acquired in November 2010,

worth approximately €50 million, is currently under way. At present, earthmoving and

drainage works are under way, and the construction of two bridges has begun.

Similarly, the “Development of District 1 Abuja North Phase IV West” project is being

developed. This project‟s overall value is approximately €250 million, and the awarding

process was carried out in two steps (phase 1 on 30 December 2010 and phase 2 on 5 March

2012). At present the mobilisation of the work site is under way, and the construction of one

of the project's main viaducts has been started.

Sierra Leone Activities relating to the management and maintenance of the Bumbuna hydroelectric power

plant and the related transmission line are progressing steadily. Electricity generation takes

place in coordination with the National Power Authority, which is responsible for the

country‟s electricity distribution.

The contract value, originally €10.2 million, was increased to €22.3 million as a result of an

addendum signed on 18 November 2011.

The same applies to the “Rehabilitation of 21.2 km of urban town roads” project for the

rehabilitation of several sections of main roads located in the four main cities of Sierra Leone.

When three new contract addenda were signed, in June and October 2011 and March 2012,

the project‟s value increased from the original €10.3 million to €23.4 million.

On 16 March 2010, work on the “Rehabilitation of the Masiaka-Bo highway (164 km)”

contract was completed. On 9 August 2012 the final acceptance certificate was issued.

Uganda

In June 2012 the inauguration of the fifth and final turbine was completed at the Bujagali

Hydroelectric Power Project.

Civil works were terminated, and only certain finishing and environmental rehabilitation work

remains.

With the construction of a dam and hydroelectric power plant (255 MW) on the White Nile,

the Bujagali project, the total value of which is about US$ 284 million, has significantly

increased electricity available in Uganda, thereby satisfying domestic demand and putting an

end to a long and problematic energy shortage, and at the same time favouring a considerable

acceleration in local economic development.

In addition, a reserve for extension of time and additional costs was negotiated with the client,

which in addition to the completion certificate, resulted in a bonus of about US$ 17 million.

In addition, the growing realisation of the importance of using the best practices dictated by

key international treaties and conventions such as the Universal Declaration of Human Rights,

the Kyoto Protocol, the United Nations Convention against Corruption and the Rio

Declaration on Environmental Development led to Salini being given the momentous URI

award in the Engineering and Construction sector.

Uganda Responsible Investment (URI) created this form of recognition to reward those

companies that have distinguished themselves as the most responsible investors in areas such

as workers' rights, product quality, the prevention of discrimination and corruption and

environmental protection.


35

Finally, Salini Hydro Ltd (a wholly owned subsidiary), which was awarded the Bujagali

Hydroelectric Power Project – “Engineering, Procurement and related services” with a value

of approximately US$ 330 million, has finished the activities it was assigned for the execution

of electromechanical works.

Algeria

The maintenance period for the “Autoroute Est-Ouest, troncon Bouira-El Adjiba” project

(27 km motorway section), carried out by the “Groupement Todini Enaler”, came to an end in

2011.

The documentation needed to issue the avenant de cloture (final acceptance certificate) was

submitted to the client and is currently being assessed.

With regard to the Algiers Inter-City Collector, the completion of the intermediate section

between the railway and the Omar Rahsim High School commenced, which enabled surface

links to be made with the old sewer network.

On the next level down, the catch basin accessing the subterranean basin has been completed,

while there continue to be certain geotechnical problems at well 5 in the next level up. Thus,

as a result of force majeure, works in this area are currently suspended.

In agreement with the client, a series of surveys to identify the most appropriate technical

solution are currently under way so that efforts to complete the aforementioned well 5 can be

completed.

Tunisia

At the beginning of the year, work on the road project called “La Marsa” was completed

through the construction of a four-lane widening in both directions of the existing road over a

6-kilometre section.

Preliminary testing was completed without qualification, and the client's signature is being

awaited for the issuance of the final test.

In 2010 the contract was awarded for the construction of the Sfax-Gabes motorway which is a

part of the Maghrebine Autoroute.

This work, fully financed by the European Investment Bank (EIB), involves building two

motorway lots of approximately 25 km each in southern Tunisia and has a value of

approximately €81 million.

Work, which began in March 2010, has been significantly delayed due to the social unrest that

led President Ben Ali to flee the country and also due to the revolutionary uprisings that

occurred in bordering Libya.

In agreement with the other companies awarded Sfax-Gabes lots, a claim was submitted to the

client, for which the EIB has already granted an agreement in principle. Similarly, the client

accepted the reason for the claims, but the calculation methods and amounts must still be

established.

In May 2012, the service order for the beginning of works on the Oued Zarga - Bou Salem

motorway section was received. The project, which is valued at about €44 million, is located

in the north-western area of the country and co-financed by FADES. It consists of the

construction of 18 kilometres of new motorway.

The two operating projects are a part of the large “Autoroutes Maghrebine” project which will

foster trade and economic development in the Mediterranean area by joining Mauritania to

Egypt passing through Morocco, Algeria, Tunisia and Libya.


36

Zimbabwe

The addendum to complete the Tokwe Mukorsi dam was signed on 8 April 2011 with the

Zimbabwean government, represented by the Ministry of Water Resources Development and

Management. The addendum, with a value of approximately €66 million, also requires the full

collection of delayed receivables due from the client, totalling approximately €11 million.

In the first half of 2012, two contract changes valued at a total of €5.7 million were

recognised bringing the new contract value to about €73 million.

During its first year of operation, the work site completed about 43 kilometres of road, the

senior and junior fields were completely redone as were the workshop and warehouse. Dam

installation was organised, excavations on the left and right face are under way, and the rock

quarry was opened on the main dam.

Libya

In 2010, a contract awarding the rehabilitation of the Kufra airport runways was signed, worth

around €53 million.

The guarantees required under the contract have been submitted, and we are currently waiting

for the contract advance. The commercial activities aimed at formalising the contracts relating to the Kufra

Urbanisation project and Tripoli Airport were interrupted due to rioting in 2011 and the

country's uncertain political situation.

However, it is expected that the signed documents will be received by the end of the second

half of 2012.

ASIA

United Arab Emirates

In Dubai, works related to the “Ras Al Khor Crossing - Improvement of Interchange No 1 on

Sheikh Zayed Road” project were completed and the road is open to traffic. The main

structures built are three underpasses with a total length of 1,128 metres and 20 concrete

bridges. In June, the client issued the taking-over certificate, which will soon be followed by

the completion certificate. In addition, an agreement was reached with the client involving the

payment of AED 45 million to the project as additional compensation for the extension of

time and other additional costs.

The “Comprehensive Improvements of the parallel roads” project, involving the construction

of a stretch of motorway (lots 2C and 3A) in the city of Dubai, was delayed as a result of the

continuing financial and liquidity crisis which has affected the Emirate‟s economy.

With renewed funding capacity due in part to the recognition of several claims by the client

for lot 2C (AED 40 million), the work sites have resumed contractually required works, which

consist, among other things, of the completion of 30 bridges, new road paving totalling about

200,000 square metres and a large number of sub-services.

Malaysia

In Malaysia, the Ulu Jelai hydroelectric project is currently under way, which includes a first

lot relating to the access roads (CW1) and a second lot (CW2+EM1) that involves building an

RCC (roller-compacted concrete) dam 90 metres high, an underground powerhouse with

372 MW installed capacity, complete with hydro-electromechanical equipment with intake

works, and approximately 25 km of tunnels. The contractual value is €484 million.

Construction works, which are managed by the subsidiary Salini Malaysia in a consortium

with the local partner TMSB (Salini 90%, TMSB 10%) will last until 2016. At present the

access road, which is about 10 km long (lot CW1), is nearly finished; the excavation of three


37

of the five tunnels that make up the underground section of the project has begun on lot CW2-

EM1, and excavations for the dam are under way.

Kazakhstan

Work continues on the project awarded in December 2009 for the rebuilding of the “Western

Europe - Western China” International Transit Corridor, one of the most important sections of

road in Kazakhstan‟s road infrastructure.

The contract is divided into 11 lots and has a total value of approximately €645 million. It

involves building and rehabilitating the existing road corridor over a total distance of 630 km.

As is customary in the country, the volume of production in the first half of the year was

affected by adverse weather conditions that interfered with full operation in the first three

months of the year.

Azerbaijan

During the previous year, as set forth in the work plan, the three road projects – Kurdamir-

Ujar, Baku-Samur and Baku-Shamachi – were completed.

Thus, during the half year under review, work focused exclusively on the construction of the

new motorway section called “Alat-Masalli Highway” which is broken down into two

separate lots.

Work mainly involved the production of road rises, the spreading of the first layers of

stabilised base and the beginning of bridge construction.

Georgia

Works for the Sveneti-Ruisi project are in the completion phase. This project is for the

construction of a four-lane motorway section, and includes building a twin-tube tunnel 800 m

in length.

On 28 November 2011 the lot was opened to traffic. Works for the tunnel‟s electromechanical

systems are still in the production phase, and are expected to be installed in October 2012.

The mobilisation and initial production activities related to the construction of the new

Kutaisi Bypass along the East-West Highway in the Zestafoni-Kutaisi-Samtredia section were

begun at the beginning of the year.

The project, which is valued at about €45 million, is managed through a subsidiary in which

the Japanese company Takenaka has a minority interest.

A ground-breaking ceremony was held in Kutaisi in February 2012, attended by the President

of Georgia, the financing institution JICA and the local authorities.

In March 2012, again in a consortium with the Japanese company Takenaka, a new contract

was awarded with a value of about €53 million for the construction of a 27-kilometre, high-

speed, two-lane relief road in the Kutaisi-Samtredia section. On 18 July 2012 the order was

received to commence work, which was done with the initial mobilisation of equipment and

staff.

India On 24 November 2011 Salini India Private Ltd was established with its registered office in

New Delhi; it is owned 95% by Salini Costruttori, and 5% by Co.Ge.Ma. At the end of

January 2012 the first offer was submitted for the EPC construction of an 850 MW

hydroelectric dam in Kashmir called GVK Ratle HEP, in relation to which client negotiations

are still pending.

Another hydroelectric project called Pakal Dul (1,000 MW) is also being studied, as is the

Shapurkandi river dyke.

Various other initiatives in the country are also under preliminary development, especially in

the hydroelectric sector.


38

SOUTH AMERICA

A branch office was opened in Chile in order to expand the Group‟s business in that country

and throughout South America in general.

In this regard, there were also commercial initiatives in Ecuador, Peru, Brazil, Argentina and

Chile.

CENTRAL AMERICA

In June 2012 the Panama branch office was established to promote the Group's presence in

Central America and the Caribbean islands.

AUSTRALIA

On 13 June 2012, Salini Australia Pty Ltd was established with head office in Brisbane in

Queensland; it is wholly owned by Salini S.p.A. Business development activities are under

way to bring in orders, as are preliminary activities aimed at obtaining the certifications and

authorisations necessary to operate in the country's construction sector.

EUROPE

Denmark

On 7 January 2011, the subsidiary Copenhagen Metro Team I/S, a company established under

Danish law, with shareholders including Salini, Tecnimont and S.e.l.i., signed a contract to

build the new line of the Copenhagen metro, which will be one of the most modern transport

infrastructures in the world.

The “Copenhagen Cityringen Project” consists of designing and building the new circular

metro line located in the city centre, including 17 stations and expected traffic of 240,000

passengers per day.

The original contract value of €1,497 million was updated to €1,544 million following the

additional five addenda formalised during the year, which were in addition to the three

optioned by the client in 2011.

In addition to the design of stations and underground sections, construction works are

currently under way on the first 16 sites of the 21 planned sites (17 stations and 4 shafts) of

which the client took delivery.

Ukraine

The works to rehabilitate the road section along the Kiev-Chop motorway are complete, the

road has been opened to traffic and the taking-over certificates have been received. The

guarantee period lapsed on 30 June 2012.

On 5 August 2011, the joint venture including Salini Costruttori, the subsidiary Todini

Costruzioni Generali S.p.A. and the Azerbaijani company Akkord won the tender to

rehabilitate the Kiev-Zhytomir motorway section, along the same route as the Kiev-Chop

contract. The contractual value of the four lots assigned amounts to roughly €205 million and

the works, which according to the contract should take 15 months to carry out, began

immediately after the award documents were signed.


39

The contract was part of the activities in preparation for the upcoming European Football

Championships, also known as Poland-Ukraine 2012, and therefore the timescales and

especially the execution procedures were strongly influenced by this sporting event.

As per the specific request of the client (State Road Administration of Ukraine), on 31 May

2012 there was a partial delivery of the work with the completion of the binder layer and the

opening of the road to traffic in order to allow through traffic following the European Football

Championships.

Following the “European Championships”, the work site resumed full operation, and it is

anticipated that the project will be delivered in the second half of the year.

Albania

Works to construct the Levan Dames main road section continue smoothly, and had

physically progressed by 90% at 30 June 2012.

The contract has a total value of approximately €42 million and involves, inter alia, the

construction of 19 bridges.

Turkey

On 17 November 2011, the subsidiary SKG, which is owned by Salini, the local company

Kolin and Generali Costruzioni Ferroviarie received an order to begin works for the

“Rehabilitation and reconstruction of the Kosekoy-Gezbe section of the Ankara Istanbul high-

speed train project”.

This initiative, a symbol of the modernisation of Turkey‟s transport system, includes

dismantling the existing railway as well as building a new double track railway 55.6 km in

length, which will link the country‟s two “capitals”. The project also involves building the

railway superstructure and carrying out signalling, electrification and telecommunications

works.

The contract‟s value is €147 million.

In March, a ceremony was held to lay the first stone at Kosekoy Station, attended by

representatives from senior government, Salini management and the Italian Consul of

Istanbul.

The dismantling of the pre-existing railroad section is in advanced stages of completion, while

earthmoving and structural works have just begun.

Belarus

On 19 July 2011, a contract was signed to carry out resurfacing work on the M5 Minsk-

Gomel road section.

Work physically began in November 2011 after the client handed over the four lots assigned.

Earthmoving (excavations and ridges) continued during the half year, and works of art, such

as gratings and bridges, have been started.

The proposed term of the contract is 600 days, and its value is approximately €88 million.

Italy

Within the portfolio of work in hand, the value of domestic business (€1,673 million) accounts

for 16% of the total. The sectors comprising it are summarised below (€/million):

Railways and metro systems 1,574.2 15%

Civil buildings 78.1 0.8%

Roads and motorways 21.1 0.2%

1,673.4 16%


40

Domestic market activity, totalling €113.6 million, represents 13.8% of total income as at 30

June 2012.

The sectors that contributed to operating income in Italy are Roads and motorways (48.2%),

Railways and metro systems (43.8%) and Civil buildings (8.1%).

The most significant events regarding these activities in the first half of 2012 are described

below.

Rome metro, B1 line

On 13 June 2012, with the attendance of the mayor of Rome and senior city officials, the new

section of line B1 connecting Piazza Bologna with Piazza Conca d'Oro was put into

operation.

The final accounting of the contract, the liquidation of remaining reserves posted and the

administrative regularisation of additional works related to requirements and requested

changes are to be settled with the client.

At the same time, the section of the line's tunnel was completed from Piazza Conca d'Oro to

Jonio station, while the construction of parking and feed shafts are in the advanced stage of

construction. As at 30 June, physical completion of the project was equal to 70% of the

contract amount.

The Group also won the tender to extend the Rome metro B line from Rebibbia to Casal

Monastero. The project, assigned by Roma Metropolitane to a consortium including Vianini

and Ansaldo, will be conducted using the property development technique, and its value is

calculated as €948 million.

The main works will be Rebibbia terminus, the San Basilio station and the Torraccia/Casal

Monastero station with about 3.8 km of tunnels, an interchange junction and parking facilities

with 2,500 parking places.

On 18 June 2012 the Conference of Services was initiated for the approval of the final project

and changes made during the tender.

Milan-Naples A1 Motorway, upgrading of the Apennine section between Sasso Marconi

and Barberino di Mugello, the La Quercia-Aglio section

This initiative is for works to extend and modernise the A1 Motorway base tunnel – Lot 9-11

– Valico Bypass. This job is part of the larger project being carried out by Autostrade per

l‟Italia S.p.A. to develop the A1 by building the Valico Bypass, in order to improve road

conditions and reduce the time it takes to travel between Bologna and Florence. The symbolic

structure of the Valico Bypass is the Base Tunnel: a tunnel with divided carriageways (160 m2

section, approximately 8.6 km long), which will connect the Emilia Romagna and Tuscany

regions, linking the future Badia Nuova service area in the north with the new Poggiolino

junction to the south.

In 2012 the substantial completion of production work in the tunnel is to be announced where

several fittings for electrical systems are to be finished.

With regard to external works, the layouts of base tunnel entrances and the Poggio Civitella

are being finished, while works at the Castiglione dei Pepoli junction in Badia Nova are on

schedule.

Overall, works have progressed by 93%, in line with the project schedule, which estimates a

final delivery date by the end of 2012.

Construction of road infrastructure to replace the Capo Boi-Terra Mala S.S.125 trunk road


41

In Sardinia, work continues on the construction of the road infrastructure to replace the

S.S.125 trunk road from the Capo Boi junction to the Terra Mala junction. At 30 June 2012,

overall works had progressed to about 77% and mainly involved the completion and testing of

new viaducts and tunnels.

On 28 March 2012, through an amicable agreement pursuant to Article 240 of Legislative

Decree 163/2006, amounts totalling €22.6 million were recognised for reserves recorded until

IPC 12, for works carried out until 19 September 2011, inclusive.

Rome-Fiumicino motorway, construction of parallel roads and access roads

Works to construct the Rome-Fiumicino motorway section were completed in June 2011. The

completion of certain finishing work, which will not interfere with the roadway, was deferred

due to delays in the issuance of the necessary permits by the Archaeological Superintendence

Office. Lastly, on 21 March 2012 the client prepared the final work completion report. Final

testing should be concluded by the beginning of 2013.

Naples, construction of a railway section for heavy underground transport, Piscinola-

Secondigliano section

Activities to carry out civil engineering works on the Piscinola-Secondigliano railway, as part

of the modernisation and upgrading of the Naples-Alifana line, were suspended during the

second half of 2011 due to the client‟s failure to make contractual payments.

The non-payment is due to the financial difficulties of the Campania Regional Authority,

resulting in a funding shortfall for the subsidiary Metrocampania Nordest S.r.l. and making it

extremely difficult to pay the amounts due. The Company has taken all measures deemed

necessary to obtain payment, while at the same time maintaining a conflict-free relationship

with the client, which still considers the lot in question strategic for the completion of the

circular metro system.

Terni, public works as part of activities to complete the detailed “Zona Corso del Popolo”

plan

In the concession department, activities relating to the execution of public works in the

Municipality of Terni to complete the detailed “Zona Corso del Popolo” plan continue. The

contract signed with the local council involves managing the public car park, which is almost

completely finished, for a period of 30 years.

Furthermore, the Principal also approved the executive project for the architectural, structural

and engineering upgrade of the municipal building, the value of which is approximately €2.1

million.

The deadline for overall testing and the start date for the concession have been set for May

2013.

Civil buildings: Property-related activities

In the first half of the year, the subsidiary Zeis S.r.l. strengthened the management and

development activities of the Group's property operations both directly, through the lease and

sale of buildings, and indirectly, through its subsidiaries. To be specific, the sale of units in

the property located on Via Blaserna continued with the concurrent assignment of all

residential housing.

In terms of indirect activities, the property initiative at the area of the former SDO in Rome

was particularly interesting.

In February 2012, Galla Placidia S.c.r.l. (71.75% owned by the subsidiary Plus S.r.l.) was

established and charged with organising and coordinating, on behalf of consortium members,


42

activities related to the contractual execution of residential building works on areas identified

within the Detailed Plan of the Eastern Tiburtino District in Rome.

The areas were delivered in March 2012, and thus excavation and underpinning work has

begun.

On 1 March 2012 a concession agreement was entered into with the Municipality of Terni,

with a 29-year term, for the design, construction and management of a multi-purpose sports

complex called “Le Piscine dello Stadio”. The initiative, which calls for the construction of

indoor and outdoor swimming pools, fitness facilities, a shopping and restaurant area, and an

outdoor green area enhanced by city walkways, is based on the use of modern technologies

with low environmental impact and the rational, targeted use of alternative energy sources.

In June a consortium company was set up to complete the works, and at the end of July,

demolition and work-site development work was begun.


43

Main Group companies

Below is a brief analysis of the consolidated figures as at 30 June 2012 for the main Group

companies.

Salini S.p.A.

On 30 November 2011, the Board of Directors of parent company Salini Costruttori S.p.A.

resolved to establish a wholly owned limited company named “Salini S.p.A.”, the aim of

which will be to design and build infrastructural works.

The same meeting also approved the contribution in kind by the sole partner Salini Costruttori

S.p.A. – effective at 1 January 2012 – of the business unit operating in the infrastructure

construction sector to the aforementioned Salini S.p.A., inclusive of all associated contracts

undertaken directly or indirectly in Italy and abroad.

That transaction, to be considered an essential component of the parent company‟s corporate

reorganisation project, was completed through the establishment of Salini S.p.A. on 6

December 2011 and the subsequent contribution of the business unit, including its equity,

assets and liabilities, examined in the report of the independent expert, appointed pursuant to

the procedure set forth in Article 2343-ter, paragraph 2, letter b), of the Italian Civil Code.

Pursuant to letter G) of the articles of association of Salini S.p.A., the first financial year ends

on 31 December 2012, and thus the summary tables provide no comparison with the previous

year.

The first interim consolidated financial statements of Salini S.p.A. as at 30 June 2012 report

pre-tax profit of €47.5 million with total income of €818.8 million.

If the consolidated income statement of only the business unit of Salini Costruttori

specialising in infrastructural construction, which was the subject of the transfer noted above,

were taken into consideration, the increase in total income compared to 30 June 2011 would

be 35.2% with significant growth in EBITDA (+€28.6 million) and EBIT (+€17.4 million).

The significant improvements in profit margins for the half year are confirmation of the

capabilities and efficiency achieved at the Company in building complex works by

maximising cost synergies to favour high technical expertise.


44


(€/000) June 2012

Income 802,933 98.1%

Other income 15,908 1.9%

Total Income 818,841 100.0%

Costs of production (625,835) 76.4%

Value Added 193,007 23.6%

Personnel costs (96,485) 11.8%

Other operating costs (3,497) 0.4%

EBITDA 93,025 11.4%

Depreciation and amortisation (38,681) 4.7%

Allocation to provisions (1,664) 0.2%

Write-downs (2,113) 0.3%

(Capitalised costs) 0 0.0%

EBIT 50,568 6.2%

Financial income and expenses (net) (3,109) -0.4%

Pre-tax profit/(loss) 47,459 5.8%

Taxes (16,648) 2.0%

Net Profit 30,811 3.8%

Profit/(loss) attributable to minority interests 8,670 1.1%

Profit/(loss) attributable to the Group 22,141 2.7%

Production

As at 30 June 2012 consolidated income of Salini S.p.A. totalled €818.8 million, an increase

of €213.1 million over the same period of the previous year if the consolidated income

statement of only the business unit of Salini Costruttori S.p.A. specialising in infrastructural

construction, which was the subject of the transfer, were taken into consideration.

Foreign projects represented 86.4% of the total for the year.

Operating income amounted to €802.9 million, accounting for 98.1% of turnover. In this

regard, there was a significant contribution from the Ethiopian hydroelectric projects of Gibe

III and the Grand Ethiopian Renaissance Dam, road projects of Zhytomir in Ukraine and

Kyzilorda in Kazakhstan, and the project involving the construction of the Copenhagen metro

system in Denmark.

OPERATING INCOME BY GEOGRAPHICAL AREA (€/000) June 2012

EU 22.4% 179,585

Non-EU 22.8% 182,682

Asia 19.6% 157,166

Africa 35.3% 283,500

America 0.0% -

802,933

The road and motorway area continued to be the most significant with 48% of operating

income for the period due mainly to the operations of road lots for the reconstruction of the

International Transit Corridor Western Europe - Western China in Kazakhstan and works to

rehabilitate the motorway section from Kiev to Zhytomir along the Kiev-Chop motorway in

Ukraine.


45


Dams and hydroelectric plants 32.6% 261,413

Railways and metro systems 16.0% 128,190

Civil buildings 3.4% 27,384

Roads and motorways 48.1% 385,947

802,933

Other non-operating income, amounting to €15.9 million, is essentially the result of the

supply of goods and services which, by its nature, is not part of the core business (e.g.,

technical and administrative services provided to third parties and disposals of materials).

Costs

Costs of production amounted to 76.4% of total income and were largely in line with the

percentages reported by the Group in previous years.

Personnel costs of €96.5 million represented 11.8% of total income. If the equivalent cost as

at 30 June 2011 were taken into account only for the unit of Salini Costruttori S.p.A.

specialising in infrastructural construction, it could be shown that the relative percentage for

the last 12 months fell from 13.4% to 11.8% as noted above.

Period result

EBITDA for the first half of 2012 totalled €93.0 million, with an EBITDA margin of 11.4%.

If a comparison were to be made with margins as at 30 June 2011 from the income statement

of only the unit of Salini Costruttori S.p.A. specialising in infrastructural construction,

EBITDA growth would have been €28.6 million.

Similar considerations can be applied to EBIT, which amounted to €50.6 million and an EBIT

margin of 6.2%

Pre-tax profit net of minority interests totalled €38.8 million or 4.7% of revenues.


46

Reclassified statement of financial position

(€/000) June 2012

Intangible assets 2,380

Property, plant and equipment 316,670

Equity investments 389,198

Other fixed assets 4,048

Total fixed assets (A) 712,297

Inventories 172,776

Amounts due from clients 589,756

Amounts due to clients (1,184,732)

Trade receivables 675,562

Other assets 276,594

Tax receivables 73,563

subtotal 603,518

Trade payables (524,840)

Other liabilities (128,941)

subtotal (653,781)

Operating Working Capital (B) (50,262)

Employee benefits (3,828)

Provisions for risks and charges (27,911)

Total reserves (C) (31,818)

Total uses (D=A+B+C) 630,216

(€/000) June 2012

Cash and cash equivalents 285,328

Current financial assets 0

Non-current financial assets 24,542

Current financial liabilities (431,288)

Non-current financial liabilities (109,974)

Net financial payables/receivables (231,392)

Shareholders‟ equity 370,705

Minority interests 28,119

Shareholders’ equity 398,824

Total funding 630,216

Fixed assets totalled €712.3 million and consisted mainly of technical equipment assigned to

work sites and the value of the investment in Impregilo S.p.A. totalling about €381 million.

Net invested capital, amounting to €630.2 million, reflects the evolving trend in production

for the period, whose positive performance impacted the Company's capital structure in a

balanced manner.


47

Net financial position

(€/000) June 2012

Cash funds 285,328



NET FINANCIAL DEBT, current portion (145,960)



NET FINANCIAL DEBT, non-current portion (85,432)

NET FINANCIAL DEBT (231,392)

0

Net Debt/Equity 0.58

Net Debt/EBITDA 1.24

Net financial position for the period was temporarily affected by the investment made to

acquire the equity investment in Impregilo S.p.A. However, financial ratios remained in

balance in terms of both the timing of repayments of financial liabilities and leverage

capacity.

Direct guarantees given

Guarantees given totalled €2,707.0 million and were mainly for bonds for new credit facilities

established on behalf of subsidiaries, associates and other investee companies, project-related

bonds issued on behalf of the Group by banks and insurance companies in favour of client

companies for various purposes, as well as other bonds issued for various purposes (financial

administration and corporate guarantees).

Guarantees and bonds issued by third parties in favour of the Company

Indirect guarantees and those issued by credit institutions and insurance companies on behalf

of domestic and foreign suppliers/subcontractors, or in favour of other foreign financial

institutions for contractual obligations towards the Group, totalled €79.6 million.


48

Todini Costruzioni Generali S.p.A.

The interim consolidated financial statements as at 30 June 2012 for Todini Costruzioni

Generali S.p.A. report pre-tax profit of €22.7 million, an increase of €22.2 million compared

to the prior year EBT figure.

Similarly, total income of €318.6 million was an improvement of €90.2 million (+39.5%)

over 30 June 2011.

In terms of profit margins, the performance of EBIT was particularly impressive: at €30.5

million, it represented an increase over the same period in 2011 (+€24.9 million over 2011).

The growth in EBITDA (+152.6%) was also noteworthy: the increase of €24.7 million

brought the figure to €40.9 million.


(€/000) June 2012 June 2011 Change %

Income 314,992 98.9% 220,999 96.8% 42.5%

Other income 3,558 1.1% 7,359 3.2% -51.6%

Total Income 318,550 100.0% 228,357 100.0% 39.5%

Costs of production (243,933) 76.6% (173,804) 76.1% 40.3%

Value Added 74,618 23.4% 54,554 23.9% 36.8%

Personnel costs (31,065) 9.8% (32,644) 14.3% -4.8%

Other operating costs (2,691) 0.8% (5,735) 2.5% -53.1%

EBITDA 40,861 12.8% 16,174 7.1% 152.6%

Depreciation and amortisation (9,907) 3.1% (10,612) 4.6% -6.6%

Allocation to provisions (415) 0.1% (6) 0.0% ns

Write-downs 0 0.0% (3) 0.0% ns

(Capitalised costs) 0 0.0% 0 0.0% -100.0%

EBIT 30,538 9.6% 5,554 2.4% ns

Financial income and expenses (net) (7,804) -2.4% (5,036) -2.2% ns

Pre-tax profit/(loss) 22,734 7.1% 517 0.2% ns

Taxes (11,588) 3.6% (202) 0.1% ns

Net Profit 11,145 3.5% 315 0.0% ns

Profit/(loss) attributable to minority interests 10,452 3.3% 1 0.0% ns

Profit/(loss) attributable to the Group 693 0.2% 314 0.1% ns

Production

As at 30 June 2012, the Todini Group's total consolidated income was €318.6 million, up

39.5% compared to the same period of last year, mainly due to the positive performance of

projects abroad, which specifically accounted for 81% of the total for the year.

Consolidated operating income accounts for 98.9% of turnover, and amounted to €315.0

million.

Annual growth of 42.5% was mainly due to the contribution of the Eastern Europe and Asian

areas whose projects included a contract for the rehabilitation of the Kiev-Zhytomir motorway

section in Ukraine and work on the reconstruction of the “International Transit Corridor

Western Europe - Western China” in Kazakhstan.

In terms of geographical areas, 18% of operating income was earned in Italy and 82% abroad,

with a notable contribution from the non-EU and Asian areas. To be specific, the increase in


49

production in the non-EU area (+€143.4 million) was due to road projects in Ukraine and

Belarus, the contracts for which were assigned in the second half of 2011.

The roads and motorways sector is the Company's absolute core business, accounting for 97%

of income (94% in 2011), while the other sectors contributed only marginally to production

volumes.

Operating income by geographical area (€/000) 30 June 2012 % 30 June 2011 %

Italy 58,157 18% 87,594 39%

EU (excluding Italy) 0 0% 71 0%

Non-EU 176,162 56% 32,716 15%

Asia 64,283 20% 89,685 40%

Africa 16,389 5% 15,196 7%

TOTAL OPERATING INCOME 314,992 100% 225,261 100%

Operating income by sector (€/000) 30 June 2012 % 30 June 2011 %

Dams and hydroelectric plants 2,785 1% 5,231 2%

Railways and metro systems 243 0% 6,342 3%

Civil buildings 6,579 2% 2,789 1%

Roads and motorways 305,386 97% 210,899 94%

TOTAL OPERATING INCOME 314,992 100% 225,261 100%

Other non-operating income, amounting to €3.6 million, is essentially the result of the supply

of goods and services which, by its nature, is not part of the core business (e.g., technical and

administrative services provided to third parties and disposals of materials).

Costs

Costs of production accounted for 76.6% of total income and reflect growth that is

proportional to the increase in operating income for the period.

Personnel costs came out at €31.1 million (-€1.6 million compared to 2011), and their impact

decreased to 9.8% from 14.3% reported in the first half of last year.

Period result

As a result of the positive performance indicated above, pre-tax profit, net of minority

interests, totalled €12.3 million, or 3.9% of revenues, and an increase of €11.8 million

compared to 30 June 2011.

The estimate of current and deferred taxes for the period was determined in accordance with

current tax regulations.


50

OTHER INFORMATION


51

Treasury shares

At 30 June 2012 the company held 11,708,900 treasury shares with a nominal value of €0.52

each representing 9.76% of share capital.

Management and coordination

Salini Costruttori S.p.A. is not subject to the management and coordination of any company.

Audits

The Company has appointed the independent auditors Reconta Ernst & Young S.p.A. to audit

the interim consolidated financial statements, prepared on a voluntary basis in accordance

with the IFRS adopted by the European Union, for the three-year period 2010-2012.

Alternative performance indicators

The Company‟s management assesses the financial and operating performance of the Group

and business lines based on certain indicators not covered by IFRS. Below is a description, as

required by the CESR/05-178b recommendation, of the components of each of these

indicators.

EBITDA: this is obtained by stripping out the following elements from EBIT, as defined

below: (i) depreciation and amortisation of tangible and intangible fixed assets; (ii) write-

downs and provisions; and (iii) costs capitalised for internal work.

EBIT (net operating profit): means earnings before interest and taxes, unadjusted. EBIT also

excludes income and expenses deriving from the management of non-consolidated equity

investments and securities, in addition to the proceeds from any disposals of consolidated

shareholdings, classified in the financial statements under financial income and expenses or,

for the proceeds from equity-accounted investments, under the heading “Effects of measuring

equity investments according to the equity method”.

EBT (earnings before taxes): is calculated as EBIT net of financial income and expenses, in

addition to the effects of measuring equity investments according to the equity method.

Net Debt/Equity ratio: this is obtained from the ratio between net financial position –

according to the CESR (Committee of European Securities Regulators) – as the numerator

and net equity as the denominator, excluding treasury shares.

Net Financial Position (net financial debt): this is obtained by subtracting the amount of non-

current financial receivables and receivables from concessions, as well as other specific

components, from net financial debt, calculated in accordance with the CESR

recommendation of 10 February 2005.

Net fixed assets: means total non-current assets; specifically it refers to tangible fixed assets,

intangible assets, investments and other non-current items.

Operating Working Capital: is obtained from the algebraic sum of receivables and payables

from the core business (trade receivables and payables, inventories, work in progress, tax

credits, advances from clients, residual components of current assets and liabilities).

Net Invested Capital: is the sum of total fixed assets, operating working capital, provisions

for risks and provisions for employee benefits.

ROS (Return on Sales): this indicator is calculated as the ratio between EBIT and Total

Income.

ROE (Return on Equity): this is calculated as the ratio between earnings for the period and

Group equity.


52

ROI (Return on Investment): this is calculated as the ratio between EBIT and Net Invested

Capital.

Current Asset Ratio: this is calculated as the ratio between current assets and current

liabilities.

Information on related-party transactions

Please see the relevant section of the notes to the financial statements for details of

transactions with related parties.

These transactions essentially concern the exchange of goods, the provision of services,

funding and the use of financial resources with the Company‟s subsidiaries, associates and

other investee companies, in addition to optimising the Group‟s centralised cash management

activities.

The aforementioned transactions are part of the Company‟s ordinary business and are

conducted under normal market conditions, that is, at arm‟s length.

Exercise of the tax consolidation option for IRES (Corporate

Income Tax)

Together with the subsidiaries Zeis S.r.l., Co.Ge.Ma. S.p.A., Madonna dei Monti S.r.l.,

TBMetro S.r.l., Todini Costruzioni Generali S.p.A., G.A.B.I.RE S.r.l. and Salini S.p.A., the

Company exercised the option for group taxation for IRES purposes pursuant to Article 117 et

seq. of the Combined Income Tax Law (TUIR) and the Ministerial Decree of 9 June 2004.

The provisions referenced call for the calculation of overall profit as the algebraic sum of the

total net profits of the participating companies. The economic and financial implications of

joining the group taxation regime concerned are governed by special regulations signed by the

parties.


53

Subsequent events

In the first months following the end of the first half of the year, Salini S.p.A. expanded its

strategic investment in Impregilo S.p.A., a company listed on the Italian stock exchange,

reaching a stake of about 29.83% in the share capital.

Impregilo's Ordinary Shareholders' Meeting, the first session of which was held on 12 July

2012, and the second on 17 July 2012, approved the following measures by a majority vote

with the attendance of shareholders holding over 80% of share capital:

removal of all directors in office;

the term of the new board of directors is set to last three years ending on the occasion

of the Shareholders' Meeting called to approve the financial statements as at 31

December 2014;

appointment of the following candidates, all of whom were taken from the list

submitted by the promoter, Salini, with the exception of candidate G. Capaldo, who

was taken from the list submitted by IGLI S.p.A.:

- Marina BROGI - Mario Giuseppe CATTANEO

- Roberto CERA - Laura CIOLI

- Claudio COSTAMAGNA - Massimo FERRARI

- Alberto GIOVANNINI - Pietro GUINDANI

- Claudio LAUTIZI - Geert LINNEBANK

- Laudomia PUCCI - Giorgio Rossi CAIRO

- Pietro SALINI - Simon Pietro SALINI

- Giuseppina CAPALDO

Thus, the new Board of Directors consists of fifteen members, of whom nine are independent.

The Chairman is Claudio Costamagna, and Pietro Salini was appointed as CEO.

On 25 September 2012 the Boards of Directors of Impregilo S.p.A. and Salini Costruttori

S.p.A. approved an agreement for organisational and commercial cooperation between the

Impregilo Group and Salini Group in order to launch a common strategy aimed at seizing

market opportunities, increasing value and achieving cost savings as a result of operating and

industrial synergies.

The agreement, which is consistent with the objectives that inspired the “National Champion”

project, and respects the companies' respective individuality and autonomy, will allow both

groups to benefit from an optimal working relationship from a commercial, managerial and

profit standpoint.

The document, which sets the main objectives as the enhancement of the strong geographical

complementarity of the two groups, the diversification of risk and implementation of the

financial structure, lays the foundation for the creation of a National Champion in the

construction sector that can serve as one of the catalysts for the recovery of the national

economy by simultaneously creating new employment opportunities in Italy and in those

countries where it will be asked to work.

In terms of commercial activity, a noteworthy event was the assignment of the project for the

construction of a water purification plant in Adyan near the city of Lagos in Nigeria.


54

This project, called Adyan Waterworks Phase II, calls for the construction of a purification

plant for water taken from the Ogun River, as well as a pumping station and an 8.2-kilometre

cast iron feeder pipeline.

Once operational, the project, which is valued at about €250 million, will have a treatment

capacity of about 340,000 m3/day, providing the city of Lagos with a significant improvement

in the quality and quantity of drinking water for daily consumption.

The Adyan project represents the completion of the water cycle of the Group's technical

activities: from the construction of storage basins for irrigation or industrial uses to the

production of “clean” energies and purification for non-industrial purposes.

Finally, in December 2012, in a tax settlement hearing, the subsidiary Todini Costruzioni

Generali S.p.A. addressed IRES and IRAP observations for the years 2007 to 2010 and VAT

observations for the years 2008, 2009 and 2010 that were contained in the official audit report

of 1 April 2011 concerning the proper timing of certain reserves (“claims”) and the

application of VAT instead of registration tax on amounts paid as compensation, interest for

late payment or compensatory interest, based on agreements pursuant to Article 31-bis of Law

109/94 and on arbitral awards or settlements. Pursuant to Article 60, paragraph 7 of

Presidential Decree 633/1972, Todini Costruzioni Generali S.p.A. will exercise recourse to

clients for the higher amount of VAT paid at that time through the issuance of supplementary

invoices. With regard to tax year 2006, which was already covered in an assessment notice, in

January 2013 a partial annulment order was served in self-defence with the total annulment of

adjustments made for IRES and IRAP purposes, and the reversal of penalties for the false

reporting and invoicing for the higher amount of VAT assessed for 2006. The right of

recourse to the client may also be exercised for this VAT. Thus, in order to reflect the impact

from the aforementioned order, as at 30 June 2012 an adjustment was made in the amount of

€2,120 to the risk provision allocated by Todini Costruzioni Generali S.p.A. as at 31

December 2011 to cover the risk related to this dispute totalling €1,170. Thus, as at 30 June

2012, the tax reserve (Other reserves) totalled €3,290.

Outlook

The size and growth in the portfolio of work in hand, together with operating results for the

first half, make it possible to confirm expectations that the growth objectives contained in the

2012-2015 business plan can be achieved in the periods following the reporting period.

The significant growth capacity in terms of total income generated in a macroeconomic

environment characterised by overall contraction, together with the growth in operating

margins, is confirmation of the present and future income and financial quality of existing

projects, including significant initiatives in the dam and hydroelectric plants sector (Ethiopia),

the railways and metro systems sector (Denmark and Turkey) and the roads and motorways

sector (Ukraine and Kazakhstan).

The important new award of the hydroelectric project in Nigeria and the beginning of works

on contracts recently awarded in Tunisia, Georgia and Turkey provide the assurance of

additional significant development.

The ability to work in areas and countries with good political stability and solid economic

fundamentals, the search for new opportunities by widening the scope of operations in new

areas such as Latin America, together with the desire to create a “National Champion”

through the integration with the Impregilo Group lead us to reasonably project that we will


55

achieve the goal of establishing ourselves as the leader in the sector involving the construction

of complex works.

CEO

Pietro Salini

Interim Consolidated Financial Statements - Half-Year Financial Report as at 30 June 2012

56

INTERIM CONSOLIDATED FINANCIAL

STATEMENTS

at 30 June 2012


57

CONSOLIDATED INCOME STATEMENT

(€/000) Note 30 June 2012 30 June 2011

Income 804,868 596,518

Other operating income 16,181 13,067

Total income

821,049 609,586

Cost of sales

(214,057) (137,188)

Cost of services

(414,700) (314,199)

Personnel costs

(97,256) (82,508)

Amortisation, depreciation and write-downs

(42,055) (32,451)

Other operating costs

(5,421) (9,329)

Total costs

(773,489) (575,676)

Costs capitalised for internal work

0 0

Operating income

47,560 33,910

Financial income

43,278 57,555

Financial expenses

(48,286) (55,168)

Income/(expenses) from equity-accounted investments

(833) (978)

Pre-tax profit

41,719 35,319

Income tax (8) (15,535) (15,372)

Income from operations 26,184 19,947

Net profit for the period 26,184 19,947

attributable to:

Net profit for the period attributable to the Group 17,567 19,678

Net profit/(loss) for the period attributable to minority

interests 8,617 269


58

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

(€/000) Note 30 June 2012 30 June 2011

Net profit 26,184 19,947

Cumulative translation adjustment (9) 351 680

Actuarial gains/(losses) on employee benefits 0 0

Cash flow hedge (9) (122) 184

Valuation of equity investment in Impregilo (FV) (9) 112,069 0

Total comprehensive income statement profit/(loss)

before tax 112,298 864

Taxes 34 (51)

Total comprehensive income statement profit/(loss)

after tax 112,331 814

Total profit/(loss) after tax 138,515 20,761

Attributable to:

Owners of the parent 129,898 20,492

Minority interests 8,617 269


59

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

(€/000) Note 30 June 2012 31 December 2011

ASSETS

Property, plant and equipment (10) 324,888 257,575

Investment property (11) 61,205 62,296

Intangible assets (12) 2,380 2,419

Investments in associates and JV (13) 14,541 14,883

Other equity investments (13) 382,255 123,989

Non-current financial assets (14) 24,497 24,295

Other non-current assets (15) 4,127 3,105

Deferred tax assets (8) 40,022 26,340

Total non-current assets

853,914 514,902

Inventories (16) 213,217 185,730

Amounts due from clients (17) 589,756 437,836

Trade receivables (18) 670,572 574,635

Current financial assets

4 14

Tax receivables (19) 95,422 56,817

Other current assets (15) 242,670 223,574

Cash and cash equivalents (20) 288,131 542,998

Total current assets

2,099,771 2,021,603

Non-current assets held for sale (21) 3,154 3,194

Total assets 2,956,840 2,539,699


60

(€/000) Note 30 June 2012 31 December 2011

SHAREHOLDERS’ EQUITY

Issued capital 62,400 62,400

less Treasury Shares (3,120) (3,120)

Legal reserve 5,543 5,543

Retained earnings (losses) 141,602 105,401

Other reserves 8,356 8,326

Other components of comprehensive income 116,899 4,593

Total capital and reserves 331,680 183,143

Profit/(loss) for the period 17,567 36,142

Total Group equity 349,247 219,285

Shareholders‟ equity and minority interests 36,896 25,836

Total Group equity and minority interests (22) 386,143 245,121

LIABILITIES

Non-current financial liabilities (23) 218,340 227,921

Provisions for risks and charges (24) 28,046 26,021

Other non-current liabilities (25) (28) 7,508 8,227

Employee benefits (26) 4,222 4,271

Deferred tax liabilities (8) 26,001 4,532

Amounts due to clients after 12 months (17) 771,137 798,395

Total non-current liabilities

1,055,254 1,069,366

Amounts due to clients within 12 months (17) 413,595 361,598

Trade payables (27) 525,602 490,066

Current financial liabilities (23) 470,267 293,338

Tax payables (28) 73,909 55,259

Other current liabilities (25) 32,070 24,951

Total current liabilities

1,515,443 1,225,212

Total liabilities

2,570,697 2,294,578

Total shareholders’ equity and liabilities 2,956,840 2,539,699


61

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’

EQUITY

Components of comprehensive

income

(€/000)

Share

capital Treasury

shares Legal

reserve Other

reserves

Cash

flow

hedge

reserve

Provisions

for

exchange

differences

Provisions

for

actuarial

gains/losses

on

employee

benefits

Retained

earnings

(losses)

Profit/(loss)

for the

period

Total

Group

equity Minority

interests

Total

Group

equity

and

minority

interests

Balance at 1

January 2011 62,400 (3,120) 3,936 4,769 (395) 5,816 (336) 63,081 62,148 198,299 19,975 218,273

Translation

differences on

foreign assets 322 322 322

Cash flow hedge (560) (560) 0 (560)

Actuarial

gains/(losses) on

employee

benefits (254) (254) (254)

Total

gains/(losses)

recognised in

equity 0 0 0 0 (560) 322 (254) 0 0 (493) 0 (493)

Profit/(loss) for

the period 36,142 36,142 3,932 40,074

Dividends (12,995) (12,995) (12,995)

Distribution of

profit for

previous year 1,608 4,254 56,285 (62,148) (0) (0)

Purchase of

minority interest

in Todini and

other companies (1,899) (1,899) 1,749 (150)

Other changes 1,201 (971) 230 181 410

Balance at 31

December 2011 62,400 (3,120) 5,543 8,326 (955) 6,138 (590) 105,400 36,142 219,284 25,836 245,121


62

Components of comprehensive income

(€/000)

Share

capital Treasury

shares Legal

reserve Other

reserves AFS

reserve

Cash

flow

hedge

reserve

Provisions

for

exchange

differences

Provisions

for

actuarial

gains/losses

on

employee

benefits

Retained

earnings

(losses)

Profit/(loss)

for the

period

Total

Group

equity Minori-

ties

Total

Group

equity

and

minority

interests

Balance at 1 January 2012 62,400 (3,120) 5,543 8,326 0 (955) 6,138 (590) 105,400 36,142 219,284 25,836 245,121

Valuation of equity inv. in

Impregilo 112,069 112,069 112,069

Translation differences on

foreign assets 351 351 351

Cash flow hedge (88) (88) (88)

Actuarial gains/(losses) on

employee benefits 0 0 0

Total gains/(losses)

recognised in equity 0 0 0 0 112,069 (88) 351 0 0 0 112,331 0 112,331

Profit/(loss) for the period 17,567 17,567 8,617 26,184

Dividends 0 0

Valuation of equity inv. in

Impregilo 0 0

Capital to be contributed

(minority interests) 0 2,349 2,349

Distribution of profit for

previous year 36,142 (36,142) 0 0

Other changes 31 (26) 60 64 94 158

Balance at 30 June 2012 62,400 (3,120) 5,543 8,356 112,069 (1,043) 6,463 (590) 141,602 17,567 349,247 36,896 386,143


63

CONSOLIDATED CASH FLOW STATEMENT

June 2012 2011

Net profit for the period Note 26,184 19,947

Depreciation and amortisation (10) (12) 39,941 32,257

Impairment losses on receivables (18) 0 30

Provision for risks and charges (24) 3,969 160

Effects of valuation of subsidiaries (13) 841 829

Change in deferred taxes (8) 7,788 3,350

Change in inventories (16) (27,487) (22,533)

Change in amounts due from clients (17) (151,920) (88,408)

Change in amounts due to clients (17) 24,740 399,507

Change in trade receivables (18) (95,937) (148,729)

Change in trade payables (27) 35,655 17,935

Tax paid

0 0

Change in employee benefits (26) (49) (380)

Change in tax receivables (19) (38,605) (17,104)

Change in tax payables (28) 18,650 33,033

Other current and non-current assets/liabilities (15) (25) (13,663) (45,197)

Other changes

0 0

Net cash flow from operating activity

(169,893) 184,697

Net investment in property, plant and equipment (10) (11) (109,087) (39,717)

Net investment in intangible assets (12) (60) (89)

Acquisition of equity investment in Todini

0 0

Net liquidity acquired 0 0

Price paid 0 0

Acquisition of other equity investments (13) (146,669) 0

Loans to associates and other Group companies (14) 134 (5,275)

Disposal of fixed assets (10) 2,686 8,411

Write-down of property, plant and equipment (10) 0 0

Receivables arising from concessions (14) (336) (372)

Other changes (15) (25) (1,742) 334

Net cash flow generated/(absorbed) by investing activity (255,074) (36,708)

Net dividends paid (13) 0 (12,810)

Change in financial payables (leasing + factoring) (23) 27,611 27,236

Change in payables to banks (23) 124,656 57,298

Other changes 3,251 273

Net cash flow generated/(absorbed) by financing activity 155,518 71,997

TOTAL CASH FLOW (269,449) 219,986

Net cash and cash equivalents at beginning of period 455,302 135,258

Net cash and cash equivalents at end of period 185,853 355,243

Salini Costruttori Group

Notes to Financial Statements - Half-Year Financial Report as at 30 June 2012

64

NOTES TO FINANCIAL STATEMENTS



65

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Form, content and other general information

Company information

Salini Costruttori S.p.A. is one of the largest Italian groups that has been operating in the

construction sector for large engineering works for over 60 years, and in particular, in the

construction of roads, motorways, railroads, dams, hydroelectric plants, tunnels, aqueducts,

and civil and industrial buildings in general in Italy and abroad. In addition to its core

business, in recent years Salini Costruttori has been developing projects in the area of project

financing, and is diversifying its operations in new sectors such as the environment, the

distribution of energy, water and gas and the agricultural industry.

At present much of the Group‟s work is carried out abroad, particularly in Ethiopia, Nigeria,

Uganda, Dubai, Sierra Leone, Morocco, Zimbabwe, Malaysia, Libya and Kazakhstan. In

Italy, the main project consists of building the Rome metro B1 line.

The parent company Salini Costruttori S.p.A. is a public limited company with its registered

office at Via del Lauro 3, Milan.

The interim consolidated financial statements are presented in thousands of euros, unless

otherwise indicated.

In 2008 the Salini Costruttori Group decided to initiate a project to convert to international

accounting standards (IAS/IFRS) and voluntarily prepare consolidated financial statements as

at 31 December 2008, 30 June and 31 December 2009, 30 June and 31 December 2010, 30

June and 31 December 2011 and 30 June 2012 according to these standards in order to

comply with the standards prevailing in the construction company sector, including with

respect to procedures for accessing international tender announcements. Thus, these

consolidated financial statements, which were prepared voluntarily according to IFRS, do not

replace the consolidated financial statements prepared in accordance with the law which

continue to be prepared in accordance with domestic accounting standards.

Declaration of compliance with IFRS

These interim consolidated financial statements were prepared in accordance with the

International Financial Reporting Standards published by the International Accounting

Standards Board (“IASB”) and adopted by the European Union. IFRS means all revised

international accounting standards (“IAS”) and all interpretations of the International

Financial Reporting Interpretations Committee (“IFRIC”), including those previously issued

by the Standing Interpretations Committee (“SIC”).

Form and content of the interim consolidated financial statements

The consolidated financial statements are made up of the statements required by IAS 1 as

revised by the IASB and approved under Regulation (EC) No 1274/2008 effective on 1

January 2009. This format was already used for the presentation of the interim consolidated

financial statements as at 30 June 2009. To be specific, the interim consolidated financial

statements as at 30 June 2012 were prepared on the basis of IAS 34 Interim Financial

Reporting and consist of the following statements:



66

a separate income statement, which contains a classification of costs according to their

nature, in addition to EBIT;

a statement of comprehensive income;

a statement of financial position, which is prepared by classifying the assets and liabilities

according to the “current/non-current” criterion. Minority interests are represented in the

consolidated balance sheet, in shareholders‟ equity and separately from shareholders‟

equity attributable to the Group;

a consolidated cash flow statement, which is prepared by reporting financial flows

generated by operating, investing and financing activities according to the “indirect

method”, as permitted by IAS 7 (Statement of Cash Flows);

a statement of changes in equity;

explanatory notes.

The interim consolidated financial statements were prepared based on the historical cost

principle, except for items which in accordance with IFRS are measured at fair value as

indicated in the measurement criteria below.

To improve the presentation of the financial statements and for a better reflection of the

contractual nature of some contractual advances received from clients, the Group has decided

to report these amounts under liabilities in “Amounts due to clients”, distinguishing between

the non-current and current portion.

The interim consolidated financial statements are presented in euros and all figures are

rounded to the nearest thousand, unless otherwise indicated.

Pursuant to IFRS 8, the Company decided to voluntarily provide segment reporting

information.

2. Changes in accounting standards and disclosure

The accounting standards used are the same as those used to prepare the comparative financial

statements at 31 December 2011 with the exception of IFRIC standards and interpretations in

effect starting 1 January 2012; see Note 5 for further information.

The interim consolidated financial statements do not report all the information required in the

preparation of the annual consolidated financial statements. For this reason it is necessary to

read the interim consolidated financial statements together with the consolidated financial

statements as at 31 December 2011.

3. Accounting standards adopted

Principles and scope of consolidation

The interim consolidated financial statements of the Salini Costruttori Group include the

balance sheet, income statement and financial position of the parent company, Salini

Costruttori S.p.A., and the Italian and foreign operating companies in which Salini Costruttori

S.p.A. has a direct or indirect controlling interest. The financial statements as at 30 June 2012

approved by the corporate bodies of the entities included in the scope of consolidation were

used for the consolidation. The financial statements included in the consolidation process are

prepared by adopting, for each entity, the same accounting standards as the parent company

and making any consolidation adjustments necessary to harmonise items that are affected by

the adoption of different accounting standards; intercompany balances, transactions, income

and costs are all eliminated. Minority interests are reported in the consolidated balance sheet,



67

in shareholders‟ equity and separately from shareholders‟ equity attributable to the Group;

even the share of consolidated Group profit attributable to minority interests is reported

separately.

All assets and liabilities of foreign companies within the scope of consolidation and in a

currency other than the euro are converted using the exchange rates prevailing on the

reporting date (current exchange rate method), while the corresponding income and costs are

converted at the average exchange rates for the period. The different conversion rates

resulting from the application of this method are classified under shareholders‟ equity until

disposal of the investment.

Non-operating subsidiaries, or those that do not report amounts material for the purposes of

the consolidated financial statements, are excluded from the scope of consolidation and are

measured according to the equity method, since they are not relevant for the true and fair

representation of the operating, financial and cash position of the Group.

Investments in associates and joint ventures in which Salini Costruttori S.p.A. directly or

indirectly has a significant influence and holds between 20% and 50% of the capital are

measured according to the equity method as defined in IAS 28 and IAS 31 respectively,

recognising the share of profits or losses accrued during the period in the income statement.

The risk arising from any losses exceeding the carrying amount of the investment is set aside

in a special fund insofar as the investor is committed to fulfilling legal or constructive

obligations towards the investee company or otherwise covering its losses.

Other equity investments are measured at fair value with the effects recognised in

shareholders‟ equity; when the fair value can no longer be reliably estimated, equity

investments are measured at cost. This value is adjusted where there is evidence of an

impairment loss. If the reasons for the write-downs no longer apply, the value of equity

investments are reinstated commensurate with the write-downs made and the corresponding

effect carried through profit and loss.

The list of Group companies can be found in Note 41. Compared with 31 December 2011, the

scope of consolidation has changed due to:

inclusion of Salini S.p.A. (a wholly owned subsidiary established on 6 December

2011) in the scope of consolidation;

the establishment of Metro B S.r.l. (52.52% Salini S.p.A.) for the execution of

executive design activities, works management and construction of the extension of

metro line B of the Rome metro system from Rebibbia to Casal Monastero;

the establishment of Piscine dello Stadio S.c.r.l. (70% Todini Costruzioni Generali

S.p.A.).

Property, plant and equipment

Property, plant and equipment are measured at historical cost, including any directly related

ancillary expenses, in addition to financial expenses incurred during the period of construction

of the assets. Assets acquired through business combinations prior to 1 January 2007 have

been recognised at their carrying amount, determined based on the previous accounting

standards used for these combinations, as a substitute for the cost.

The cost, as determined above, of assets used only during a certain period, is systematically

depreciated on a straight-line basis each financial year based on their estimated technical and

economic life, using depreciation rates intended to represent the estimated useful life of the

assets. If material components of these assets have a different useful life, these components



68

are recognised separately. The useful life estimated by the Group for the various asset classes

is as follows:

Years

Buildings 15-33

Plant and

machinery 5-7

Equipment 3-9

Land, whether undeveloped or developed for civil or commercial buildings, is not depreciated

since it has an indefinite useful life.

As previously mentioned, capital assets acquired under finance leases are recognised as

tangible fixed assets and offset by the corresponding payable. The lease payment is broken

down into its components of interest expense, recognised in the income statement, and capital

repayment, deducted from financial debt.

When the asset is sold or when there are no longer any expected future economic benefits

from its use, it is eliminated from the balance sheet and any profit or loss (calculated as the

difference between the disposal value and carrying amount) is recognised in the income

statement in the year in which it is eliminated.

Investment property

Investment property includes immovable property held for the purpose of obtaining economic

benefits from lease payments or for capital appreciation purposes.

Investment property is initially measured at historical cost, including negotiation costs. The

carrying amount includes the cost relating to the replacement of an investment property when

that cost is incurred, on condition that the recognition criteria are satisfied, and excludes

routine maintenance costs. Following initial recognition, the Group has opted to keep

historical cost as the measurement criterion for investment property.

Investment property is derecognised when it is sold or when the investment is permanently

unusable and future economic benefits are not expected from its sale. Any profits or losses

arising from the withdrawal or disposal of an investment property are recognised through

profit and loss during the period in which the withdrawal or disposal took place.

The reclassification from or to investment property takes place when, and only when, there is

a change in use. For reclassifications from an investment property to property used directly,

the reference value of the property for subsequent recognition is the fair value at the date of

change in use. If a directly used property becomes an investment property, the Group

recognises these assets in accordance with the criteria indicated in the paragraph on “Property,

plant and equipment” until the date of change in use.

No fixed asset held on the basis of an operating lease has been classified as investment

property.

The useful life of buildings classified under this item is between 20 and 33 years.



69

Intangible assets

Intangible assets acquired separately are initially recognised in assets at historical cost,

determined according to the same procedures as those indicated for tangible assets. Intangible

assets acquired through business combinations are recognised at fair value at the acquisition

date, if this value can be determined reliably.

Intangible assets produced internally, excluding development costs, are not capitalised and are

recorded in the income statement for the period in which they are incurred.

Intangible fixed assets may have a finite or indefinite useful life. Within the Group, the

following types of intangible assets are currently present:

Years

Intellectual property rights 3

Concessions and licences 9

Other 9

The Group has no assets with an indefinite useful life.

Following initial recognition, intangible assets with a finite useful life are recognised at cost,

net of amortisation and any accumulated impairment losses. The period and method of

amortisation are reviewed at the end of each financial year, or more frequently if necessary.

Intangible assets with a finite useful life are amortised, from the point at which the asset is

available for use, on the basis of their residual possibility of use, in relation to the useful life

of the asset. The period and method of amortisation applied is reviewed at the end of each

financial year, or more frequently if necessary.

Gains and losses arising from the disposal of an intangible asset are determined as the

difference between the disposal value and the carrying amount of the asset and are recognised

through profit and loss on disposal.

Financial expenses

Financial expenses relating directly to the acquisition, construction or production of an asset

that requires a fairly long period of time before being available for use are capitalised as part

of the cost of the asset itself. All other financial expenses are recognised as a cost for the

period in which they are incurred. The Group capitalises financial expenses for all activities

that qualify for capitalisation and for which construction began on or after 1 January 2009.

Assets held under finance or operating leases

Finance leases, which substantially transfer to the Group all risks and rewards incidental to

ownership of the leased asset, are capitalised under tangible fixed assets on inception of the

lease at the fair value of the leased asset, or at the present value of the lease payments,

whichever is lower. This will be offset by a payable for an equal amount, which is gradually

reduced based on the lease repayment plan.

Lease payments are divided between the principal and interest, so as to obtain the application

of a constant interest rate on the residual balance (principal amount). Interest is charged to the

income statement. Assets are depreciated by applying the criterion and rates indicated in the

previous paragraph on tangible fixed assets.



70

Contracts in which the lessor substantially retains all risks and rewards incidental to

ownership are classified as operating leases. Operating lease payments are charged to the

income statement over the term of the lease.

Any sale and leaseback transactions to repurchase – under a lease – an asset previously held

are recognised as a financing transaction. The assets involved in the transaction remain

classified in the Group‟s balance sheet assets with consistent accounting treatment, and a

liability is recognised to offset the financial flows arising from the sale. Any capital gain that

should arise from the disposal is recognised through profit and loss on an accrual basis. This

entails an entry under accrued liabilities and the gradual allocation to income in the income

statement, based on the term of the lease.

Impairment losses on non-financial assets

At the end of each reporting period, the Group assesses whether there is any evidence that the

value of assets may have been subjected to impairment. If so, or if an annual impairment test

is required, the Group estimates the value. The recoverable value is the fair value of the asset

or cash-generating unit, less costs to sell, or, if higher, its value in use. Recoverable value is

determined for each individual asset, unless its cash flows are not broadly independent of

those generated by other assets or groups of assets. Impairment is recognised if the carrying

amount of an asset exceeds its recoverable value and, accordingly, this amount is written

down to its recoverable value. When establishing value in use, the Group discounts estimated

future cash flows to present value using a pre-tax discounting rate that reflects market

assessments of the time value of money and the specific risks associated with the asset. When

establishing fair value less costs to sell, a suitable valuation model is used. These calculations

are made using special valuation multiples, the prices of listed shares for investee companies

whose shares are publicly traded, and other fair value indicators available.

Impairment losses on operating assets are recognised through profit and loss in the cost

category that best reflects the purpose of the asset affected by the impairment loss. This does

not apply to assets that have previously been revalued, where the revaluation has been

recognised in shareholders‟ equity. In this case the impairment loss is recognised in

shareholders‟ equity for an amount equal to the previous revaluation.

At each reporting date, the Group assesses whether there is any evidence that the impairment

loss previously recognised has ceased to apply (or has been reduced) and, if so, estimates the

recoverable value. The value of an asset previously written down may be reversed only where

there have been changes in the estimates on which the calculation of the recoverable value

determined after the recognition of the last impairment loss was based. The reversal may not

exceed the carrying amount that would have been recorded, net of depreciation and

amortisation, had an impairment loss not been recognised in prior periods. This reversal is

recognised through profit and loss unless the asset is not recognised at the revalued amount, in

which case the reversal is treated as a revaluation increase.

Works in progress under contract

Construction agreements in the course of completion are measured based on the contractual

payments accrued with reasonable certainty in relation to the progress of the works, according

to the percentage of completion method, so as to allocate the income and net profit from the

contract to the relevant period, in proportion to the progress of the works. Works in progress

under contract are reported net of any provisions for impairment losses and amounts invoiced

at specific stages of the work (progress payments). The corresponding comparison is carried

out for each contract and, if the differential is positive due to works in progress exceeding the



71

amount of the progress payments, the difference is classified under assets in the “Amounts

due from clients” item. If, on the other hand, this differential is negative, the difference is

classified under balance sheet liabilities in the “Amounts due to clients” item.

Conversely, invoicing for advances constitutes a financial transaction and does not count

towards income recognition. Therefore, since they represent a financial transaction, advances

are always recognised as a liability since they are not received in respect of works carried out.

These advances are however gradually reduced, usually based on contractual agreements, to

offset the invoices raised under the contract.

Contractual income, in addition to contractual payments, includes variants, price revisions and

any claims insofar as it is likely that these represent income that can be estimated reliably.

In the event that a loss is expected from the performance of a contract, the full amount of the

loss is recognised at the point at which it occurs, irrespective of the stage of completion of the

contract.

Inventories

Inventories are carried at the lower of cost or net estimated realisable value. Cost is

determined by applying the weighted average cost method. The item in question also includes

buildings and assets under construction and held for sale.

Cash and cash equivalents

Cash and cash equivalents are recognised at nominal value and include cash instruments, i.e.

are available on demand or in the very short term, have cleared and are free of redemption

charges.

For the purposes of the consolidated cash flow statement, cash and cash equivalents are

represented by cash funds as defined above, net of bank overdrafts repayable on demand.

Non-current assets held for sale

Non-current assets, and groups of assets awaiting disposal, are classified as held for sale when

it is expected that their carrying amount will be recovered through disposal rather than

through continued use. These assets are recognised at their previous carrying amount and fair

value net of costs attributable to the sale, whichever is lower. Income from discontinued

operations, or in the course of disposal, is reported separately in the income statement. In

accordance with paragraph 34 of IFRS 5 “Non-current Assets Held for Sale and Discontinued

Operations”, the comparative income statement is restated based on the same assumptions.

Financial assets

IAS 39 makes provision for the following types of financial instruments: financial assets at

fair value through profit and loss, loans and receivables, investments held to maturity and

available-for-sale assets. All financial assets are initially recognised at fair value, plus, in the

case of assets other than those at fair value through profit and loss, ancillary expenses.

The Group determines the classification of its financial assets after initial recognition and,

where appropriate and permitted, reviews this classification at the end of each financial year.

All regular-way purchases and sales of financial assets are recognised on the trade date, or on

the date on which the Group enters into a commitment to purchase the asset. Regular-way

purchases and sales mean all transactions in financial assets involving the delivery of assets



72

during the period envisaged by the regulations and by standard practice in the market in which

the trade takes place.

Financial assets at fair value through profit and loss

This category includes assets held for trading and assets designated on initial recognition as

financial assets at fair value through profit and loss.

Assets held for trading are all assets purchased with a view to their immediate sale.

Derivatives, including separate derivatives, are classified as financial instruments held for

trading unless they are designated as effective hedging instruments. Gains or losses on assets

held for trading are recognised through profit and loss.

Where a contract contains one or more embedded derivatives, the Group assesses whether the

derivative could be separated from the host contract when it becomes a party to the contract.

The revaluation is carried out only if there are changes in the contractual terms that

significantly alter the cash flows that would be otherwise required.

Investments held to maturity

Financial assets that are not derivatives and that are characterised by fixed or determinable

payments at maturity are classified as “investments held to maturity” when the Group plans

and is able to hold them until maturity.

Following initial recognition, financial investments held to maturity are measured on the basis

of amortised cost, using the effective interest rate method. Gains and losses are recognised

through profit and loss once the investment is derecognised or following an impairment loss,

as well as through amortisation.

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments

that are not listed on an active market. Following initial recognition, these assets are measured

on an amortised cost basis using the effective discount rate method net of any provisions for

impairment losses. Gains and losses are recognised through profit and loss when the loans and

receivables are derecognised or following an impairment loss, as well as through

amortisation.

Available-for-sale financial assets

Available-for-sale financial assets are financial assets, other than derivative financial

instruments, which are designated as such or are not classified in any of the three previous

categories. Following initial recognition, financial assets held for sale are measured at fair

value and unrealised gains and losses are recognised as part of comprehensive income in the

available-for-sale assets reserve until elimination of the investment, when the accumulated

gains or losses are reclassified in the income statement.

Fair value

For securities widely traded on regulated markets, fair value is determined with reference to

the stock market price at the close of trading on the reporting date. For investments without an

active market, fair value is determined using measurement techniques based on: recent

transaction prices between independent parties; the present market value of a substantially

similar instrument; and the analysis of discounted financial flows or option pricing models.

Amortised cost

Financial assets held to maturity and loans and receivables are measured at amortised cost.

Amortised cost is calculated using the effective interest rate method net of any provisions for

impairment losses. The calculation takes into account any premium or discount on the



73

purchase and includes the transaction costs and commission that are an integral part of the

effective interest rate.

Impairment loss on financial assets

The Group verifies at each reporting date whether a financial asset or a group of financial

assets has been subjected to an impairment loss.

Assets measured according to the amortised cost method

If there is objective evidence that a loan or receivable recognised at amortised cost has been

impaired, the amount of the impairment loss is measured as the difference between the

carrying amount and the present value of the estimated future cash flows (excluding future

losses not yet incurred) discounted at the original effective interest rate of the financial asset

(i.e. the effective interest rate calculated at the initial recognition date). The carrying amount

of the asset will be reduced through the use of a provision. The amount of the loss will be

recognised through profit and loss.

If the amount of the impairment loss is subsequently reduced and this reduction can

objectively be traced to an event occurring after the impairment was recognised, this value

may be reinstated. Any subsequent reversals are recognised through profit or loss, provided

that the carrying amount of the asset does not exceed the amortised cost at the reversal date.

For trade receivables, provisions for impairment losses are established when there is objective

evidence (such as the probability of the debtor becoming insolvent or having serious financial

difficulties) that the Group will be unable to recover the entire amount due according to the

original terms of the invoice. The carrying amount of the receivable is reduced through

recourse to a special reserve. Receivables subjected to impairment are cancelled once these

are confirmed as irrecoverable.

Available-for-sale financial assets

At each reporting date, the Group assesses whether there are any impairment losses on

available-for-sale financial assets. In the case of equity instruments, this consists of a material

and prolonged reduction in the fair value of the instrument to less than its cost. In the event of

impairment of an available-for-sale financial asset, a value equal to the difference between its

cost (net of the repayment of principal and amortisation) and its present fair value, net of any

previous impairment losses recognised through profit and loss, will be reversed from other

components of comprehensive income to the income statement. Reversals relating to equity

instruments classified as available for sale are not recognised through profit and loss.

Reversals relating to debt instruments are recognised in other components of comprehensive

income. If the increase in the fair value of the instrument can be objectively attributed to an

event occurring after the loss had been recognised through profit and loss.

Financial liabilities

Loans and interest-bearing finance

Financial liabilities, other than derivative financial instruments, are initially recognised at the

fair value of the payment received, net of the transaction costs that are directly attributable to

the issuance of the financial liability itself; these are subsequently measured at amortised cost,

in other words at the initial value, net of the capital repayments already made, adjusted (up or

down) by the amortisation (using the effective interest rate method) of any differences

between initial value and value at maturity.



74

Financial liabilities at fair value through profit and loss

Financial liabilities at fair value through profit and loss include liabilities held for trading and

financial liabilities designated at fair value with changes carried through profit and loss at the

time of initial recognition.

Liabilities held for trading are all those acquired with a view to their immediate sale.

Derivatives, including separate derivatives, are classified as financial instruments held for

trading unless they are designated as effective hedging instruments. Gains or losses on

liabilities held for trading are recognised through profit and loss.

Financial guarantees given

Financial guarantees given by the Group are contracts that require an outflow to reimburse the

holder for a loss incurred following a default by a debtor on a payment due at maturity based

on the contractual terms of the debt instrument. Financial guarantee contracts are initially

recognised as liabilities at fair value, plus transaction costs that are directly attributable to the

issuance of the guarantee. Liabilities are subsequently measured at the best estimate of the

outflow required to meet the effective obligation at the reporting date, or, if higher, the

amount initially recognised.

Derivative financial instruments and hedge accounting

Initial recognition and subsequent measurement.

The Group only uses derivative financial instruments for some interest rate swaps to hedge

the risks arising mainly from interest rate fluctuations. These derivative financial instruments

are initially recognised at fair value on the date on which the contract is signed and are

subsequently measured at fair value. They are recognised as assets when the fair value is

positive and as liabilities when the fair value is negative.

Any gains or losses arising from changes in fair value on derivatives are recognised directly

through profit and loss, except for the effective part of cash flow hedges, which is recognised

in shareholders‟ equity.

For the purposes of hedge accounting, hedges are classified as:

fair value hedges, if they hedge the risk of a change in fair value of the underlying

asset or liability or an irrevocable commitment not recognised (except for foreign

exchange risk);

cash flow hedges, if they hedge exposure to changes in cash flows attributable to a

specific risk associated with an asset or liability recognised, a transaction that is

extremely likely to take place or a foreign exchange risk linked to an irrevocable

commitment that has not been recognised;

hedges of a net investment in a foreign operation.

On establishing a hedge, the Group designates and formally documents the hedge to which it

intends to apply hedge accounting, its risk management objectives and the strategy pursued.

The documentation includes identifying the hedging instrument, the item or transaction to be

hedged, the nature of the risk and the procedures whereby the company intends to measure the

effectiveness of the hedge in offsetting exposure to changes in fair value of the hedged item or

cash flows linked to the hedged risk. These hedges are expected to be highly effective in

offsetting exposure of the hedged item to changes in fair value or financial flows attributable

to the hedged risk; the assessment of whether these hedges are in fact highly effective is

carried out on a continuous basis during the periods for which they were designated.

Transactions that satisfy the hedge accounting criteria are recognised as follows:



75

Fair value hedges

The change in fair value of interest rate hedges is recognised through profit and loss under

financial expenses. The change in fair value of hedging instruments attributable to the hedged

item is recognised as part of the carrying amount of the hedged item, and is also recognised

through profit and loss under financial expenses.

With regard to fair value hedges for items recognised according to the amortised cost method,

the adjustment of the carrying amount is amortised in the income statement over the

remaining period to maturity. The amortisation may begin as soon as an adjustment is made,

but no later than the date on which the hedged item ceases to be adjusted by the changes in its

fair value attributable to the hedged risk.

If the hedged item is cancelled, the unamortised fair value is recognised immediately through

profit and loss.

The Group has no fair value hedges.

Cash flow hedges

The portion of profit or loss on the hedged instrument relating to the effective hedge is

recognised under other comprehensive income in the “cash flow hedge” reserve, while the

ineffective portion is recognised directly through profit and loss under financial expenses.

Amounts recognised as other comprehensive income are transferred to the income statement

during the period in which the hedged transaction influences the income statement, for

example when the financial income or expense is recognised or when a planned sale takes

place. When the hedged item is the cost of a non-financial asset or liability, the amounts

recognised under other comprehensive income are transferred at the initial carrying amount of

the asset or liability.

If the proposed transaction or irrevocable commitment is no longer expected to take place, the

accumulated gains or losses recognised in the cash flow hedge reserve are transferred to the

income statement. If the hedging instrument reaches maturity or is sold, cancelled or

exercised without being replaced, or if its designation as a hedge is revoked, amounts

previously recognised in the cash flow hedge reserve remain there until the proposed

transaction or irrevocable commitment has an impact on the income statement.

At the reporting date, the Group had 12 cash flow hedge derivatives outstanding. See Note 23

for more information.

Hedging a net investment in a foreign operation

The hedging of a net investment in a foreign operation, including the hedging of a monetary

item recognised as part of a net investment, are recognised in the same way as cash flow

hedges. Gains or losses on the hedging instrument are recognised under other comprehensive

income for the effective part of the hedge, while the remainder (ineffective) are recognised

through profit and loss. On the disposal of the foreign asset, the accumulated value of such

comprehensive gains or losses is transferred to the income statement.

The Group does not have any hedges of net investments in foreign operations.

Derecognition of financial assets and liabilities

Financial assets

A financial asset (or, where applicable, part of a financial asset or part of a group of similar

financial assets) is derecognised when:



76

the rights to receive financial flows from the asset are extinguished;

the Group retains the right to receive financial flows from the asset, but has assumed a

contractual obligation to pay them immediately and in full to a third party;

the Group has transferred the right to receive financial flows from the asset and (a) has

substantially transferred all risks and rewards incidental to ownership of the financial asset, or

(b) has neither transferred nor substantially retained all risks and rewards incidental to

ownership, but has transferred control of the asset.

In cases where the Group has transferred the right to receive financial flows from an asset and

has neither transferred nor substantially retained all risks and rewards and has not lost control

over the asset, the asset is recognised by the Group to the extent of its residual interest therein.

The residual interest, which takes the form of a guarantee on the transferred asset, is measured

at the lower of the initial carrying amount of the asset and the maximum value of the

consideration that the Group could be required to pay.

In cases where the residual interest takes the form of an option issued and/or acquired on the

transferred asset (including options settled in cash or similar), the measurement of the

Group‟s interest corresponds to the amount of the transferred asset that the Group could

repurchase; however, in the case of a put option issued on an asset measured at fair value

(including options settled in cash or using similar instruments), the measurement of the

Group‟s residual interest is limited to the fair value of the asset transferred or the exercise

price of the option, whichever is lower.

Financial liabilities

A financial liability is derecognised when the underlying obligation is extinguished, cancelled

or fulfilled.

In cases where an existing financial liability is replaced by another from the same provider,

under substantially different conditions, or the conditions of an existing liability are

substantially modified, such exchange or modification is treated as a derecognition of the

original liability and the recognition of a new liability, with any differences between the

carrying amounts recognised through profit and loss.

Treasury shares

Treasury shares are recorded as a reduction to shareholders' equity.

Employee benefits

The liability relating to short-term benefits guaranteed to employees, paid during the period of

employment, is recognised based on the amount accrued at the end of the reporting period.

Liabilities relating to employment benefits paid during or after the period of employment

under defined benefit plans, represented by the employee termination benefits plan and the

loyalty bonus scheme provided by Article 66 of the national collective agreement of 5 July

1995 for the building industry, are recognised during the vesting period, net of any assets used

to service the plan and advances paid, and are determined based on actuarial assumptions and

recognised on an accrual basis in line with the period of service necessary to qualify for

benefits; the liabilities are measured by independent actuaries.

The method used to measure defined benefit plans is the Projected Unit Credit Method

(PUCM).



77

With regard to termination benefits, this method consists of calculating the average present

value of obligations under the plan, accrued based on the employee‟s length of service prior to

the measurement date, taking into account the employee‟s future contributions. The

calculation method, applied on an individual basis for the population measured, can be

divided into the following stages: 1) projection of the fund already set aside and future

contributions, which will accrue whenever payment takes place; 2) calculation of the probable

payments that will have to be made if the employee leaves the company due to dismissal,

resignation, disability, death or retirement, or in the event of taxes or an advance payment

request; 3) discounting, at the measurement date, of each probable payment; and 4)

recalculation of the probable benefits discounted based on the length of service at the

measurement date, compared with the total length of service whenever settlement takes place.

The same method is used to measure the loyalty bonus, the calculation of which does not

include future contributions from the employee or the possibility of advances.

Note that from the 2007 financial year, the Group absorbed the effects of changes introduced

by the 2007 Finance Act and subsequent decrees and regulations relating to the allocation of

termination benefits accrued from 1 January 2007, applicable for companies with an average

of more than 50 employees in 2006. It follows from this that, for Group companies affected

by the changes:

the termination benefits accrued at 31 December 2006 remain a defined benefit plan;

the termination benefits allocated to a supplementary pension from the date of this

option (or at the end of the six-month statutory period, unless otherwise indicated)

represent a defined contribution plan;

the termination benefits allocated after 1 January 2007 to the treasury fund represent a

defined contribution plan.

For termination benefits accrued at 31 December 2006, while maintaining the status of a

defined benefit plan, the calculation method has changed due to the absence of future

contributions; in fact, the liability linked to accrued termination benefits is measured for

actuarial purposes at 1 January 2007 (or the date on which the decision was made to allocate

these to a supplementary pension) without using the Projected Unit Credit Method (PUCM),

since the employee benefits accrued prior to 31 December 2006 (or the date on which the

decision was made to allocate these to a supplementary pension) could be considered almost

entirely vested (with the sole exception of the revaluation) in accordance with paragraph 67(b)

of IAS 19.

Conversely, the accounting treatment of amounts accrued from 1 January 2007 is similar to

that for other contribution payments, both in the case of the supplementary pension option,

and in the event of allocation to the INPS treasury fund.

In addition, in accordance with IAS 19, these changes entail the recalculation of the

termination benefits accrued at 31 December 2006; this recalculation (“curtailment”, as

defined in paragraph 109 of IAS 19) is essentially based on the exclusion of future payments

and the related assumed increases from the actuarial calculation.

Gains and losses arising from the actuarial calculation for both defined benefit plans are

recognised in comprehensive income during the period in which they occur. These actuarial

gains and losses are classified immediately under retained earnings and are not reclassified in

the income statement in subsequent periods.



78

Provisions for risks and charges

Provisions for risks and charges are recognised when there is a present (legal or constructive)

obligation towards third parties arising from a prior event, if an outflow of resources is

probable to satisfy the obligation and the amount of the obligation can be reliably estimated.

Provisions are recognised at the value representing the best estimate of the amount that the

company would pay to extinguish the obligation or to transfer it to third parties at the

reporting date. If the impact of discounting the value of money is significant, the provisions

are determined by discounting expected future financial flows at a discount rate that reflects

the current market valuation of the time value of money. When the discounting is carried out,

the increase in the provision due to the passage of time is recorded as a financial expense.

Income

Income other than from work in progress under contract is recognised insofar as it is possible

to determine its fair value reliably and it is probable that the related economic benefits will

materialise. Depending on the type of transaction, income is recognised on the basis of the

following specific criteria:

- income from sales of goods is recognised when the material risks and rewards of

ownership of the assets are transferred to the buyer;

- income from the provision of services is recognised with reference to the stage of

completion of the assets based on the same criteria as for work in progress under contract.

If it is not possible to determine the amount of income reliably, this is recognised based on

the costs incurred which are expected to be recovered;

- income from lease payments and royalties is recognised during the accrual period, based

on the contractual agreements signed.

Interest income (and interest expenses) is recognised based on interest accrued on the value of

the corresponding financial assets and liabilities, using the effective interest rate method.

Dividends received from companies other than subsidiaries, associates or joint ventures are

recognised on the vesting of the shareholders‟ right to receive them, following a resolution by

shareholders of investee companies to distribute dividends.

Income tax

Current income taxes are calculated on the basis of an estimate of taxable income. The tax

rates and legislation used to calculate the amount are those issued or substantially in force at

the reporting date in countries where the Group operates and generates its taxable income.

The liability for regional income tax (IRAP) and corporate income tax (IRES) to be paid

directly to the tax administration is reported in the balance sheet under current liabilities in the

“Current tax liabilities” item, net of payments on account made. Any positive difference is

recognised under current assets in the “Current tax assets” item.

Deferred and prepaid taxes are calculated using the liability method on temporary differences

between assets recognised in the financial statements and the corresponding values recognised

for tax purposes. Prepaid tax assets are also recognised on tax losses carried forward by the

company.

Deferred tax liabilities are recognised against all taxable temporary differences, except for:

a) when deferred tax liabilities arise from the initial recognition of goodwill or of an asset or

liability in a transaction which is not a business combination and which, at the time of the



79

transaction itself, has no impact either on net profit calculated for the purposes of the

financial statements, or on profit or loss calculated for tax purposes;

b) with reference to taxable temporary differences associated with equity investments in

subsidiaries, associates and joint ventures, in the event that the reversal of temporary

differences can be verified and it is likely that this will not occur in the foreseeable future.

Deferred tax assets are recognised for all deductible temporary differences and for tax assets

and liabilities carried forward, insofar as it is probable that there will be adequate future

taxable income to justify the use of deductible temporary differences and of tax assets and

liabilities carried forward, except for cases where:

- the deferred tax asset associated with the deductible temporary differences derives from

the initial recognition of an asset or liability in a transaction which is not a business

combination and which, at the time of the transaction, has no influence either on net profit

calculated for the purposes of the financial statements, or on profit or loss calculated for

tax purposes;

- with reference to taxable temporary differences associated with equity investments in

subsidiaries, associates and joint ventures, deferred tax assets are recognised only to the

extent that it is probable that the deductible temporary differences will be reversed in

future and there is adequate taxable income against which the temporary differences could

be used.

Prepaid tax assets are recognised when their recovery is deemed probable, based on the

estimated future availability of sufficient taxable income for the realisation of the prepaid

taxes themselves. The recoverable nature of the prepaid tax assets is reviewed at each

reporting date.

Deferred tax assets and liabilities are measured based on the tax rates expected to apply to the

financial year in which such assets are realised or liabilities extinguished, considering the

prevailing rates and those already published or substantially published at the reporting date.

Current taxes relating to items recognised outside profit and loss are recognised in

shareholders‟ equity or in the statement of comprehensive income in line with the recognition

of the item to which they relate. Deferred tax assets and liabilities are offset, when there is a

legal right to offset current tax assets against current tax liabilities and the deferred taxes

relate to the same fiscal entity and the same tax authority.

Conversion of items and translation of financial statements in foreign currency

The consolidated financial statements are presented in euros, which is the functional and

presentation currency of the parent company.

Balances included in the financial statements of each Group company are entered in the

currency of the primary economic environment in which the entity operates (functional

currency). Items expressed in a different currency from the functional currency, whether

monetary (cash, assets and liabilities to be collected or paid with fixed or determinable

amounts, etc.) or non-monetary (inventories, work in progress, advances to suppliers of goods

and/or services, goodwill, intangible assets, etc.) are initially recognised at the exchange rate

in force on the date on which the transaction takes place. Thereafter the monetary elements

are converted into the functional currency based on the prevailing exchange rate at the

reporting date and differences arising from the conversion are recognised through profit and

loss. Non-monetary items are maintained at the conversion rate on the transaction date, except

in the event of a persistent unfavourable trend in the reference exchange rate. Exchange rate



80

differences relating to non-monetary items receive the accounting treatment (income

statement or shareholders‟ equity) envisaged for changes in value of such items.

The rules for the translation of financial statements expressed in foreign currency are as

follows:

- assets and liabilities included in the financial statements, even if only for comparison

purposes, are translated at the exchange rate in force on the reporting date;

- costs and revenue and income and expenses included in the financial statements, even if

only for comparison purposes, are translated at the average exchange rate for the reporting

period, or at the exchange rate on the date of the transaction, if this differs significantly

from the average rate;

- components of shareholders‟ equity, excluding net profit, are converted at historical

exchange rates;

- the “translation reserve” contains both exchange rate differences generated by the

conversion of amounts at a different rate to the closing rate, and those generated from the

translation of shareholders‟ equity at a different exchange rate to the rate used at year-end;

- exchange rate differences arising from conversion are recognised in the statement of

comprehensive income.

The exchange rates in use at 30 June 2012 were as follows (source: Bank of Italy):

Country Currency Name Exchange rate on 30

June 2012

Annual average exchange rate (as published by the

Italian Foreign Exchange Office)

Albania Albanian Lek ALL 138.144000 139.226440

Algeria Algerian Dinar DZD 99.806000 97.705703

Argentina Argentine Peso ARS 5.643200 5.690965

Azerbaijan Azerbaijan Manat (new) AZN 0.987811 1.018552

Belarus Belarusian Ruble BYR 10,437.100000 10,654.176905

Bulgaria Bulgarian Lev BGN 1.955800 1.955800

Chile Chilean Peso CLP 636.581000 638.710969

Denmark Danish Krone DKK 7.433400 7.434952

United Arab Emirates Emirati Dirham AED 4.624280 4.761903

Ethiopia Ethiopian Birr ETB 22.268200 22.625718

Georgia Georgian Lari GEL 2.051420 2.133945

Japan Japanese Yen JPY 100.130000 103.310236

Jordan Jordanian Dinar JOD 0.892631 0.919196

Guinea-Conakry Guinean Franc GNF 8,784.260000 9,058.007854

Kazakhstan Kazakhstani Tenge KZT 188.113000 192.097866

India Indian Rupee INR 70.120000 67.596305

Libya Libyan Dinar LYD 1.582560 1.630058

Malawi Malawian Kwacha MWK 340.737000 253.551015

Malaysia Malaysian Ringgit MYR 3.996000 4.002237

Morocco Moroccan Dirham MAD 11.070800 11.116759

Moldova Moldovan Leu MDL 15.191500 15.391072

Nigeria Nigerian Naira NGN 205.224000 206.557987

Poland Polish Zloty PLN 4.248800 4.245900

United Kingdom British Pound GBP 0.806800 0.822519

Romania Romanian Leu RON 4.451300 4.390408

Sierra Leone Sierra Leonean Leone SLL 5,473.520000 5,645.608107

United States US Dollar USD 1.259000 1.296469

Sudan Sudanese Pound SDD 3.370220 3.470518



81

Switzerland Swiss Franc CHF 1.203000 1.204827

Tunisia Tunisian Dinar TND 2.002010 1.992525

Turkey Turkish Lira TRY 2.283400 2.336096

Ukraine Ukrainian Hryvnia UAH 10.174800 10.403605

Uganda Ugandan Shilling UGX 3,111.880000 3,172.781166

Zimbabwe Zimbabwean Dollar ZWD 455.632000 469.192236

4. Discretionary measurements and significant accounting estimates

The preparation of the consolidated financial statements and accompanying notes in

accordance with IFRS requires the management to make estimates and assumptions based on

subjective opinions, past experience and reasonable and realistic assumptions in view of the

information known at the time of the estimate. These estimates have an impact on the values

of the assets and liabilities and information relating to contingent assets and liabilities at the

reporting date, as well as on the amount of revenue and costs for the period under review. The

actual amounts could be significantly different, following possible changes in the factors used

to determine such estimates. Estimates are periodically reviewed.

Below are the most significant accounting estimates made on the basis of assumptions and

subjective opinions.

Accounting area Accounting estimates

Provision for

impairment losses

on receivables

The recoverability of receivables is measured by taking into account the risk of non-payment,

ageing and bad debts recognised in the past for similar types of receivables.

Provisions,

contingent liabilities

and employee

benefits

Provisions linked to legal disputes, arbitration and tax disputes are the result of a complex

estimation process which is partly based on the probability of losing the case. Provisions linked to

employee benefits, particularly termination benefits, are determined based on actuarial assumptions;

changes in these assumptions could have a material impact on these provisions.

Income from work

in progress A significant part of the Group‟s activities is typically carried out on the basis of contracts that

involve a determined payment when the contract is awarded. This means that the margins on

contracts of this type could change compared with the original estimates, depending on the

recoverability or otherwise of the additional expenses and/or costs that the Group could incur during

the performance of the contracts.

Income tax Income tax (current and deferred) is calculated in each country in which the Group operates based

on a prudent interpretation of the prevailing tax legislation. This process at times involves complex

estimates to determine taxable income and deductible and taxable temporary differences between

carrying amounts and taxable amounts. In particular, prepaid tax assets are recognised insofar as it

is probable that a future taxable income will be available against which they can be recovered. The

measurement of the recoverability of prepaid tax assets, recognised in relation both to tax losses that

can be used in subsequent periods and deductible temporary differences, takes into account the

estimate of future taxable income and is based on conservative tax planning.

Derivatives and

equity instruments The fair value of derivatives and equity instruments is determined both on the basis of values

recognised on regulated markets or quotations supplied by financial counterparties, and based on

valuation models that also take into account subjective valuations such as estimated cash flows,

expected price volatility, etc.

Goodwill See Note 6 for details of the estimates used to measure the recoverability of goodwill and any

evidence of impairment.

In the absence of a standard or interpretation specifically applicable to a certain transaction,

the management defines, through subjective weighted assessments, the accounting policies to



82

be adopted with a view to providing a set of financial statements that give a true and fair view

of the financial position, results from operations and cash flows of the Group, that reflect the

economic substance of the transactions, and are neutral, prepared on a prudent basis and

complete in all material respects.

5. Accounting standards and interpretations effective from 1 January

2012

Since 1 January 2012 the following international accounting standards and interpretations

have been applied, as published in the Official Journal of the European Union (OJEC) in

January 2012:

IAS 12 (Deferred taxes: recovery of underlying assets)

This amendment to IAS 12 includes the refutable assumption that the carrying amount of an

investment property, measured using the fair value model specified by IAS 40, will be

recovered through its sale, and that, as a result, the related deferred tax assets should be

measured on a sale basis. This assumption is refuted if the investment property can be

depreciated and is held with the intent of using over time substantially all the benefits

deriving from the investment property instead of realising these benefits from its sale. In

particular, IAS 12 requires that the deferred tax asset created by a non-depreciable asset

measured using the revaluation model specified by IAS 16 should always reflect the tax

impact of the recovery of the carrying amount of the underlying asset through its sale. The

effective date for adopting this amendment is for annual periods beginning 1 January 2012 or

later.

IFRS 7 (Supplemental information - Transfers of financial assets)

The IASB issued an amendment to IFRS 7 that improves disclosures for financial assets. The

disclosure refers to the assets transferred (as defined by IAS 39). If the assets transferred are

not entirely derecognised from the financial statements, the company must provide

information that allows users of the financial statements to understand the relationship

between the assets that have not been derecognised and the related liabilities. If the assets are

fully derecognised but the company maintains a residual involvement, disclosure must be

provided that allows users of the financial statements to assess the nature of the entity's

residual involvement in the derecognised assets and the related risks.

The amendment of this standard had no impact on the Group's accounting policies, financial

position or results.

IFRS 1 (Severe hyperinflation and removal of fixed dates for first-time adopters)

When the date of the transition to IFRS corresponds to or follows the date the functional

currency is normalised, the company may decide to measure all assets and liabilities held

before the normalisation date using their fair value on the date of the transition to IFRS. Fair

value may be used as the assumed cost for these assets and liabilities in the opening IFRS

statement of financial position. However, this exemption may only be applied to assets and

liabilities that were subject to severe hyperinflation.

The amendment of this standard had no impact on the Group's accounting policies, financial

position or results.



83

6. Business combinations

Impairment test on equity investment in Todini Costruzioni Generali S.p.A. (acquired in

2010)

On 15 January 2010, the Group finalised the acquisition of 60% of Todini Costruzioni

Generali S.p.A. from Todini Finanziaria S.p.A. This resulted in the creation of Italy‟s third

largest group in the infrastructure sector and one of Europe‟s largest companies.

The acquisition was recognised according to the acquisition method. The consolidated

financial statements include the results of the consolidated financial statements of Todini

Costruzioni Generali S.p.A. for the entire period.

The business combination generated goodwill, including minority interests (in accordance

with the full goodwill approach envisaged by the IFRS Revised), totalling €2,039, composed

of:

€1,224 attributable to the Group;

€815 attributable to minorities.

Net cash acquired was €40,974.

In the financial statements for the year ended 31 December 2010, the Group recognised the

entire amount of goodwill in its own consolidated financial statements (€2,039) and

minorities in shareholders‟ equity (€815).

In accordance with IAS 36, at least annually the Group must perform an impairment test in

order to recognise any indicators of loss that could lead to a total or partial write-down of the

goodwill recorded in the financial statements.

The Group had performed the impairment test as of the reporting date of these interim

consolidated financial statements.

Todini Costruzioni Generali S.p.A. is considered a single cash-generating unit (CGU).

Recoverable value has been estimated with reference to value in use. For this purpose, in

order to calculate the value in use of the CGU, the figures contained in the Group‟s five-year

business plan were used, recently approved by the Board of Directors of the parent company.

In particular, the underlying assumptions that led to the calculation of cash flows for the

period are as follows:

EBITDA;

depreciation and amortisation for the period;

investments for the period;

notional taxes calculated on EBIT for the period;

change in net working capital for the period.

After five years, cash flows are determined as the average flows indicated in the five-year

plan, without allowing for any growth.

The discount rate used for discounting the cash flows thus determined is based on the Group‟s

particular circumstances and operating segments and is derived from its weighted average

cost of capital (WACC). WACC takes into account both debt and shareholders‟ equity. The

cost of shareholders‟ equity is derived from the average rate of return of the top 10 Italian

companies in the construction sector (figures current as at 31 December 2011). The cost of

debt is based on the interest-bearing finance that the Group has to cover. The ratio between

shareholders‟ equity and financial debt used to calculate WACC is derived from the average



84

ratio of the top 10 Italian companies in the construction sector (figures current as at 31

December 2011).

The recoverable value thus calculated is higher than the carrying amount of the CGU, equal to

net invested capital at the interim reporting date. Therefore, the management has not detected

any impairment losses and has maintained intact the value of goodwill in the financial

statements.

Acquisition of minority interests in Todini Costruzioni Generali S.p.A.

On 25 March 2011, the Extraordinary Shareholders‟ Meeting of Todini Costruzioni Generali

S.p.A. approved the €42 million capital increase in return for payment. This increase was

subscribed by the parent company in the amount of €25.2 million. As a result, the parent

company‟s stake in Todini Costruzioni Generali S.p.A. rose from 60% to 77.7141%, effective

from 1 January 2011. The difference between the acquisition price (€25.2 million) and the

value of the minority interests acquired (€23.5 million), or €1.7 million, was recognised in

shareholders‟ equity under “Other reserves”, in accordance with IAS 27 (paragraphs 30 and

31).

7. Segment reporting

For management purposes, the Group is organised into two strategic business units, identified

based on the type of products supplied, and presents two operating segments for reporting

purposes. These are as follows:

construction sector;

property sector and other activities.

The management separately monitors the operating results of the two business units in order

to make decisions concerning the allocation of resources and the assessment of performance.

Segment performance is measured based on profit or loss.

Transfer prices between operating segments are defined under the same conditions as those

applied to arm‟s length transactions.



85

June 2012 (€/000) Construction Property and

other

activities

Consolidation

adjustments Consolidated

total

Income from third parties 818,360 2,690 0 821,049

Inter-segment income 456 1,643 (2,099) (0)

Total Income 818,816 4,333 (2,099) 821,049

Costs of production (626,727) (4,630) 2,601 (628,757)

Value Added 192,088 (298) 501 192,292

Personnel costs (95,376) (1,880) 0 (97,256)

Other operating costs (3,493) (264) 0 (3,757)

EBITDA 93,220 (2,442) 501 91,279

Depreciation and amortisation (38,472) (1,267) (204) (39,943)

Allocation to provisions (1,664) 0 0 (1,664)

Write-downs (2,113) 0 0 (2,113)

(Capitalised costs) 0 0 0 0

EBIT 50,971 (3,708) 297 47,560

Equity-accounted investments (638) 19,161 (19,356) (833)

Net financial income and expenses (2,427) (2,272) (308) (5,008)

of which:

loan payments and interest 11 43 0 54

interest income from banks 5,745 55 0 5,799

total interest income 5,756 97 0 5,853

bank overdrafts and finance (11,138) (341) 0 (11,479)

bank loans 0 (2,370) 0 (2,370)

leases (1,612) 0 0 (1,612)

total interest expense (12,750) (2,711) 0 (15,461)

EBT 47,906 13,180 (19,367) 41,719

Taxes (16,540) 992 13 (15,535)

Income from continuing operations 31,366 14,172 (19,354) 26,184

Profit/(loss) attributable to minorities 8,670 (52) 0 8,617

Profit attributable to the Group 22,697 14,224 (19,354) 17,567



86

The following table reports key items for June 2011:

June 2011 (€/000) Construction

Property and

other

activities

Consolidation


total

Income from third parties 605,332 4,253 0 609,586

Inter-segment income 386 1,549 (1,935) 0

Total Income 605,718 5,802 (1,935) 609,586

Costs of production (451,062) (2,113) 1,787 (451,387)

Value Added 154,656 3,689 (148) 158,198

Personnel costs (81,241) (1,267) 0 (82,508)

Other operating costs (8,967) (271) 0 (9,238)

EBITDA 64,449 2,151 (148) 66,452

Depreciation and amortisation (31,185) (1,264) 0 (32,449)

Allocation to provisions (91) (0) 0 (91)

Write-downs (3) 0 0 (3)

(Capitalised costs) 0 0 0 0

EBIT 33,170 887 (148) 33,910

Equity-accounted investments 554 181 (1,713) (978)

Net financial income and expenses 3,305 (918) 0 2,387

of which:

loan payments and interest 366 0 0 366

interest income from banks 1,690 12 0 1,702

total interest income 2,056 12 0 2,068

bank overdrafts and finance (6,728) (6) 0 (6,734)

bank loans (1,786) (593) 0 (2,379)

leases (1,351) 0 0 (1,351)

factoring (224) 0 0 (224)

total interest expense (10,090) (599) 0 (10,688)

EBT 37,029 150 (1,860) 35,319

Taxes (15,789) 417 0 (15,372)

Income from continuing operations 21,240 567 (1,860) 19,947

Profit/(loss) attributable to minorities 329 (61) 0 269

Profit attributable to the Group 20,911 627 (1,860) 19,678



87

The following table illustrates the segmentation of the main balance sheet items at 30 June

2012:

June 2012 (€/000) Construction Property and

other activities Consolidation


total

Intangible assets 2,380 0 0 2,380

Property, plant and equipment 309,310 80,005 (68) 389,248

Equity-accounted investments 9,817 297,368 (292,645) 14,541

Other equity investments 381,162 1,334 (242) 382,255

Other fixed assets 4,048 228 (150) 4,127

Total Fixed Assets (A) 706,719 378,936 (293,105) 792,550

Inventories 172,776 40,442 0 213,217

Amounts due from clients 589,756 0 0 589,756

Amounts due to clients (1,184,732) 0 0 (1,184,732)

Intercompany receivables 26,313 7,250 (14,397) 19,166

Receivables from clients 649,796 2,033 (423) 651,406

Other assets 240,831 1,739 100 242,670

Tax receivables 108,917 26,527 0 135,443

subtotal 603,656 77,990 (14,720) 666,926

Intercompany payables (41,677) (311) 231 (41,757)

Payables to suppliers (482,922) (1,126) 203 (483,845)

Other liabilities (128,628) (17,267) 6,407 (139,488)

subtotal (653,226) (18,705) 6,841 (665,090)

Operating Working Capital (B) (49,570) 59,286 (7,879) 1,836

Employee benefits (3,365) (857) 0 (4,222)

Provisions for risks and charges (27,953) (98) 4 (28,046)

Total Reserves (C) (31,318) (955) 4 (32,268)

USES (A+B+C) 625,831 437,267 (300,979) 762,118

Cash funds 288,131





Net Financial Payables/Receivables (1) (375,975)



Shareholders’ Equity (2) 386,143

FUNDING (1+2) 762,118



88

The following table reports key items for 2011:

Year 2011 (€/000) Construction Property and

other activities Consolidation


total

Intangible assets 2,419 0 0 2,419

Property, plant and equipment 244,776 78,289 0 323,065

Equity-accounted investments 41,608 6,263 (32,988) 14,883

Other equity investments 123,552 506 (69) 123,989

Other fixed assets 3,064 41 0 3,105

Total Fixed Assets (A) 415,418 85,099 (33,056) 467,461

Inventories 145,648 40,082 0 185,730

Amounts due from clients 437,836 0 0 437,836

Amounts due to clients (1,159,992) 0 0 (1,159,992)

Intercompany receivables 55,084 2,041 (37,092) 20,033

Receivables from clients 552,908 1,734 (39) 554,602

Other assets 222,711 773 89 223,574

Tax receivables 78,148 5,009 0 83,157

subtotal 332,343 49,638 (37,042) 344,939

Intercompany payables (54,533) (28,659) 28,659 (54,533)

Payables to suppliers (434,969) (562) 0 (435,531)

Other liabilities (87,918) (28,929) 23,878 (92,969)

subtotal (577,420) (58,151) 52,537 (583,034)

Operating Working Capital (B) (245,077) (8,513) 15,495 (238,095)

Employee benefits (3,468) (803) 0 (4,271)

Provisions for risks and charges (26,007) (13) 0 (26,021)

Total Reserves (C) (29,475) (817) 0 (30,292)

USES (A+B+C) 140,866 75,770 (17,562) 199,073

Cash funds 542,998





Net Financial Payables/Receivables (1) 46,048



Shareholders’ Equity (2) 245,121

FUNDING (1+2) 199,073

The following paragraphs contain information about the geographical breakdown of the main

items.

Increases in tangible and intangible assets mainly relate to the construction segment.



89

8. Income tax

(€/000) 1st Half 2012 1st Half 2011 Change Current regional income tax (IRAP) for the period 1,332 1,827 (495)

Current corporate income tax (IRES) for the period 1,192 5,906 (4,714)

Foreign current taxes 326 1,797 (1,471)

Prior period taxes 4,956 40 4,916

Current taxes 7,086 9,571 (1,764)

Deferred taxes 7,728 5,801 1,927

Income taxes in the consolidated income

statement 15,535 15,372 163

Income taxes recognised in the comprehensive

income statement (34) 51 (84)

Total income taxes 15,501 15,423 79

The expected average tax rate calculated on profit for the entire period is 23%.

Note that at 30 June 2012 deferred taxes generated an asset balance of €14,020 as evidenced

in the following table:

(€/000) 30/06/2012 30/06/2011 Change Deferred tax assets 40,022 27,996 12,026

Deferred tax liabilities (26,001) (11,210) (14,791)

Total deferred taxes 14,020 16,786 (2,766)

9. Notes on the comprehensive income statement

As shown in the statement, comprehensive income for the period differs from net income for

the period by €112,331. This is completely due to:

translation differences of foreign assets (these mainly relate to differences on

translation into euros of the financial statements of the subsidiary Salini Nigeria and

the Dubai branch, the functional currency of which is different to the Group‟s

functional currency);

valuation of equity investments (AFS reserve): this was entirely due to the equity

investment in Impregilo S.p.A. which was revalued by €112,069 in the first half of

2012. For additional information, see Note 13;

recording of the change in the fair value of derivatives designated as cash flow hedges,

limited to the effective amount of €(122);

tax impact of €34 due entirely to cash flow hedge transactions.

10. Property, plant and equipment

These total €324,888, an increase compared with 31 December 2011 of €67,313. They are

composed as follows:



90

Land and

buildings Plant and

machinery Vehicles Industrial

and

commercial

equipment

Other

assets Leased

assets Work in

progress TOTAL

Historical cost at 1 January 2012 41,955 130,216 61,964 51,889 17,982 248,642 15,713 568,360

Exchange rate adjustment 512 871 270 167 44 (5) 40 1,897

Investments 1,419 36,244 12,537 8,497 1,733 28,846 21,038 110,313

Disposals (359) (1,551) (1,136) (987) (362) (0) (2,223) (6,618)

Repurchase of leased assets 0 0 0 0 0 0 0 0

Reclassification under non-current assets

held for sale 0 0 0 0 0 0 0 0

Other changes (5,406) 1,131 (1,033) 2 109 (665) (51) (5,914)

Historical cost at 30 June 2012 38,121 166,911 72,601 59,567 19,505 276,817 34,518 668,039

Accumulated depreciation at 1 January

2012 (8,516) (73,569) (40,870) (40,689) (11,861) (135,280) 0 (310,785)

Exchange rate adjustment (107) (483) (175) (138) (27) 0 72 (857)

Depreciation and amortisation (823) (11,440) (4,343) (4,353) (989) (16,803) 0 (38,750)

Write-downs/Reversals 0 0 0 0 0 0 0 0

Disposals 97 774 887 562 285 0 (855) 1,750

Repurchase of leased assets 0 0 0 0 0 0 0 0

Reclassification under non-current assets

held for sale 0 0 0 0 0 0 0 0

Other changes 1,655 2,275 700 369 (13) 550 0 5,536

Exchange rate adjustment for depreciation

and amortisation charges (7) (28) (7) (0) (1) 0 0 (44)

Accumulated depreciation at 30 June

2012 (7,702) (82,472) (43,807) (44,250) (12,606) (151,532) (783) (343,151)

Net amount at 1 January 2012 33,439 56,647 21,094 11,199 6,120 113,363 15,713 257,575

Net amount at 30 June 2012 30,419 84,439 28,794 15,317 6,899 125,285 33,735 324,888

The decrease in buildings and land of €3,020 is due mainly to the following changes:

increases for purchases and internal construction: in Dubai a total of €1,058, and at the

subsidiary Todini Costruzioni Generali S.p.A., a total of €269 in Tunisia, €68 in

Azerbaijan, €20 in Belarus and €3

in Italy for the Valico Bypass;

decreases due to depreciation: a total of €81 in Italy, €237 in Dubai, €14 in Ethiopia,

€26 in Uganda, and at subsidiaries: €167 for Zeis, €73 for Nigeria, €224 for Todini

Costruzioni Generali S.p.A.;

decreases due to discontinued operations: a total of €110 at Todini Costruzioni

Generali S.p.A. in Italy for Milano Lecco (with the resulting write-off of accumulated

depreciation of €97), and €249 in Tunisia;

increases due to exchange rates totalling €398;

decreases due to reclassification and other allocations totalling €5,406 due to decreases

resulting from reclassification to another category at the subsidiary CMT I/S totalling

€3,779 and €1,627 in Dubai.

The increases and decreases of items relative to plant and machinery, equipment and other

assets are due to acquisitions and/or incremental expenses and decommissioning for the year,

prompted by investments for new work sites and the replacement of assets employed in the

production process.



91

These same items include €125,285 in production assets under finance leases net of related

accumulated depreciation, including €93,339 for Salini S.p.A. and €31,946 for Todini

Costruzioni Generali S.p.A.

Specifically, the changes in the historical cost of plant and machinery, vehicles, equipment

and other assets include:

increase due to new income-producing assets acquired for €87,856 of which €28,846

acquired under financial leases;

disposals by sale totalling €4,036;

gains on exchange rate adjustments totalling €1,345;

negative changes for reclassifications and other allocations totalling €457.

The plant and machinery, vehicles, equipment and other assets depreciation provision

includes:

increase due to depreciation for the period totalling €37,927 of which €16,803 for

assets acquired under financial leases;

changes from sale of assets totalling €2,509;

positive changes for exchange rate differences totalling €859;

negative changes for other allocations of €3,880.

A large part of the balance of work in progress was for new fixed assets and for the

installation of capital equipment in the production cycle at work sites in Ethiopia (€20,729)

and in Dubai (€56). The changes concerning the subsidiary Todini Costruzioni Generali

S.p.A. showed an increase of €252, of which €85 in Kazakhstan and €167 in Ukraine.

11. Investment property

This item totalled €61,205. It was down from the financial statements at 31 December 2011:

Total

Balance at 1 January 2012 62,296

Investments/(Disposals) 0

Reclassifications under assets held for sale (IFRS 5) 0

Depreciation and amortisation (1,091)

Balance at 30 June 2012 61,205

12. Intangible assets

The balance of this item is €2,381, representing a net decrease of €38 compared with the

amount at 31 December 2011. A breakdown of these assets is given below:



92

Intellectual

property

rights

Concessions,

licences and

trademarks Goodwill

Assets in

course of

construction

and

payments

on account

Other Total

Historical cost at 1 January 2011 1,262 3,244 2,039 48 508 7,101

Decreases 0 0 0 0 0

Purchases and capitalised costs 196 120 0 0 316

Historical cost at 31 December 2011 1,458 3,364 2,039 48 508 7,417

Decreases 0 0 0 0 0

Purchases and capitalised costs 68 8 0 0 76

Historical cost at 30 June 2012 1,527 3,372 2,039 48 508 7,494

Accumulated amortisation at 1 January 2011 1,049 2,913 0 48 456 4,465

Amortisation 218 263 0 52 533

Other changes 0 0 0 0 0

Accumulated amortisation at 31 December 2011 1,267 3,176 0 48 508 4,998

Amortisation 72 28 0 0 100

Other changes 0 15 0 0 15

Accumulated amortisation at 30 June 2012 1,339 3,219 0 48 508 5,113

Net amount at 1 January 2011 213 331 2,039 0 52 2,636

Net amount at 31 December 2011 191 188 2,039 0 0 2,419

Net amount at 30 June 2012 188 153 2,039 0 0 2,381

The decrease of €38 compared with 31 December 2011 is due to normal operating

performance, with investments for the period totalling €76 and amortisation totalling €100.

Increases were mainly for investments in software and licences.

The balance of the item is therefore composed as follows:

- €188 for “Intellectual property rights”, which include software amortised on a straight-

line basis over three financial years;

- €153 for “Concessions, licences and trademarks”: this amount mainly consists of the

concession acquired in Uganda for the use of land for the erection of work-site

structures;

- €2,039 in goodwill from business combinations relating to the purchase of Todini

Costruzioni Generali S.p.A.



93

13. Equity investments

The analysis of equity investments is as follows:

(€/000) 2011 Reclassifications/

acquisitions/disposals Dividends Revaluations/

write-downs

Change in

consolidation

scope

Hedge

accounting 2012

Equity-accounted

investments 14,883 592 0 (841) (120) 27 14,541

Other equity

investments 123,989 146,197 0 112,069 0 0 382,254

Total equity

investments 138,872 146,788 0 111,227 (120) 27 396,795

The value of equity-accounted investments relates to investments in associates and joint

ventures and in subsidiaries in liquidation or that have essentially ceased trading.

The decrease of €342 is due mainly to the net effect of the following:

- change of €120 in the scope of consolidation due to the full consolidation of Salini

S.p.A.

- establishment of the company Salini Rus OOO totalling €73;

- the capital contribution of €670 to G.A.B.I.RE S.r.l. and a reclassification of €(201) to

cover the provision for risks;

- the contribution of €50 to the property company Marinella S.r.l.;

- write-down of the associates Co.Ge.Fin S.r.l. totalling €581, G.A.B.I.RE S.r.l. totalling

€193 and Irina S.r.l. in liquidation totalling €33.

In 2011 a 15% stake was acquired in Impregilo S.p.A. for €122,739 which was transferred

during the period to Salini S.p.A.

During the first half of 2012 Salini S.p.A. acquired a further 13.1% for €146,197, bringing its

stake to 28.1% at 30 June 2012. In accordance with IAS 39, the equity investment was

adjusted to fair value, which was identified as the price quoted on the stock exchange on 29

June 2012 (the last available day). This adjustment resulted in a revaluation of €112,069 with

the impact allocated to shareholders' equity.

At 30 June 2012, the holding was classified under Equity investments in other companies

since, despite the percentage of shares held, it was not in a position to exercise any notable

influence over the investee. Paragraph 7 of IAS 28 states that the existence of significant

influence by an entity is usually evidenced upon the occurrence of one of the following

situations:

(a) representation on the board of directors or equivalent governing body of the investee;

(b) participation in policy-making processes, including participation in decisions about

dividends or other distributions;

(c) material transactions between the entity and its investee;

(d) interchange of managerial personnel;

(e) the provision of essential technical information.

At 30 June 2012, none of these conditions applied.



94

The following table illustrates changes in provisions for risks on equity investments:

(€/000) 2011 Provisions Use (BS) Reversal (IS) 2012

Provisions for risks on equity

investments (2,170) 0 240 8 (1,922)

(2,170) 0 240 8 (1,922)

Provisions for risks on equity investments reflect the shortfall in own funds, for the Group,

compared with the carrying amount of the equity investments themselves.

The use included €39 related to the associate Astaldi-Federici-Todini and €201 for

G.A.B.I.RE S.r.l., while the reversal was related to the subsidiary Edilfi S.c.a r.l. in

liquidation.

A statement of changes in equity investments during the period is appended to these notes.

14. Financial assets

Non-current financial assets

Non-current financial assets total €24,497, as shown in the following table:

(€/000) 30/06/2012 31/12/2011

Change on

balance

sheet

Change on

income

statement

Financial assets resulting from disposals (Corso del Popolo) 11,096 10,761 335 335

Loans to associates - ZEIS Group 0 0 0 0

Non-current receivables due from subsidiaries 310 309 1 0

Non-current receivables due from associates 9,759 9,930 (171) 0

Non-current receivables due from parent companies 0 0 0 0

Non-current receivables due from others 3,332 3,294 37 0

TOTAL NON-CURRENT FINANCIAL ASSETS 24,497 24,295 202 335

Non-current financial assets consist of i) €13,401 relating to receivables due for interest-

bearing finance granted to non-consolidated associates and subsidiaries and other companies

of Todini Costruzioni Generali S.p.A.; and ii) €11,096 relating to rights of claim arising from

concession activities (Corso del Popolo S.p.A.).

15. Other assets

Other non-current assets

Other non-current assets totalling €4,127 were for security deposits, the most significant

amounts of which were: €1,805 in Dubai, €1,148 in Italy, €243 in Uganda, €227 in Denmark

and €145 in Ethiopia.

Other current assets

Other current assets total €242,670 and are mainly composed of:



95

(€/000) June 2012 2011 Change

Advances to suppliers 164,617 150,689 13,928

Receivables from other companies 52,235 50,334 1,900

Insurance prepayments 11,033 11,325 (292)

Lease prepayments 614 1,125 (511)

Other 14,172 10,100 4,072

Total other current assets 242,670 223,574 19,097

Receivables for advances to suppliers for Salini were mainly related to Denmark and Turkey,

for Salini Italia and related branch offices (mainly: Uganda, Ethiopia, Dubai, Kazakhstan,

Sierra Leone and Zimbabwe) and for Todini Costruzioni Generali S.p.A. in relation to

Ukraine, Italy and related branch offices (mainly: Albania, Azerbaijan, Belarus, Georgia and

Kazakhstan). The increase in advances to suppliers totalling €13,928 was due to increases and

decreases prompted mainly by: (i) the increase of €8,464 in the contract in Denmark; (ii) the

launch of new work sites and resulting disbursement of advances to suppliers/sub-contractors

totalling €6,179 in Turkey, €7,310 in Ukraine and €5,221 in Georgia; (iii) the increase in

advances to leasing companies amounting to €1,374; (iv) the increase in production,

especially at new work sites, and thus, the recovery of a portion of advances disbursed,

totalling €15,381 in Ukraine and €4,270 in Kazakhstan; and (v) the disbursement of new

advances totalling €1,471 in Belarus, €1,364 in Georgia, €815 in Azerbaijan, €738 in Ethiopia

and €605 in Malaysia.

Receivables from other companies mainly included receivables from partners Acciona and

Ghella S.p.A. in the temporary partnership established with Salini Costruttori S.p.A. to

execute the TAV/S. Ruffillo contract amounting to €18,344 following the agreement reached

with those companies in October 2002. This item also included Todini Costruzioni Generali

S.p.A. receivables from G.A.B.I.RE S.r.l. totalling €18,001 for the disposal of Cediv and

receivables totalling €9,083 from Todini Finanziaria S.p.A. for receivables, which were in

turn sold to Co.Ge.Fin. S.r.l.

16. Inventories

Inventories total €213,217, as shown in the following table:

(€/000) 2012 2011 Change

Raw materials, ancillary materials and consumables 171,910 143,917 27,993

Building work in progress 36,900 36,553 348

Finished products and goods for resale 3,541 3,529 12

Prepayments 866 1,731 (865)

Total Inventories 213,217 185,730 27,487



96

The geographical breakdown of the item is as follows:

2012 % 2011 % Change

Italy 43,348 20% 44,737 24% (1,390)

Albania 242 0% 172 0% 69

Algeria 935 0% 1,035 1% (100)

Azerbaijan 8,540 4% 7,814 4% 726

Belarus 31 0% 0 0% 31

Denmark 147 0% 0 0% 147

Dubai 4,150 2% 3,681 2% 470

Ethiopia 91,847 43% 71,049 38% 20,798

Kazakhstan 25,050 12% 21,711 12% 3,339

Malaysia 3,522 2% 1,043 1% 2,479

Nigeria 12,418 6% 12,630 7% (212)

Sierra Leone 2,781 1% 3,239 2% (458)

Tunisia 3,422 2% 3,687 2% (266)

Ukraine 5,484 3% 6,442 3% (957)

Uganda 3,428 2% 5,836 3% (2,408)

Zimbabwe 4,632 2% 2,655 1% 1,977

Turkey 3,240 1% 0 0% 3,240

Total inventories 213,217 185,730 27,487

The net increase in inventories of €27,487 is mainly due to works in Ethiopia, Kazakhstan,

Malaysia and Turkey.

The table below indicates the changes in raw materials, ancillary materials and consumables:

Raw materials, ancillary materials and

consumables


Change on income statement 27,521

Exchange rate effect 471


Inventories of raw materials, ancillary materials and consumables are essentially composed of

construction materials and spare parts for operating machinery; the increase of €27,993 is

largely due to procurement at work sites in Ethiopia (€20,798), at Kazakhstan work sites

(€3,339) and at work sites in Turkey (€3,240).

These amounts were due to the significant procurement of materials and spare parts necessary

to operate complex works combined with the inability to find these materials on local

markets.

Building work in progress consisted of land parcels of Plus S.r.l., a subsidiary of Zeis S.r.l.,

totalling €36,900. The changes totalling €348 were for the increase on land parcels of

Consorzio Tiburtino.

Changes are shown in the following table:



97

Building work in progress


Spin-off to GABIRE (Ardea land parcels) 0

Change on income statement 348


17. Amounts due from clients/amounts due to clients

Current assets in the balance sheet included the item “Amounts due from clients” which

totalled €589,756 at 30 June 2012, an increase of €151,919 compared to 31 December 2011.

The following table shows the amount of work in progress recorded according to the

percentage of completion method net of losses incurred or estimated on the reporting date and

invoicing for progress on works:

(€/000) June 2012 2011

Change

from 31/12

to 30/06 CURRENT ASSETS Works in progress under contract 5,681,514 4,964,232 717,282

Provisions for risks on works in progress (2,859) (4,132) 1,272

Prepayments from clients (5,088,899) (4,522,263) (566,636)

Total amounts due from clients 589,756 437,837 151,919

The item “Amounts due to clients within 12 months”, presented in the balance sheet under

current liabilities, totals €413,595, up by €51,998 compared with 31 December 2011. This

item is composed as follows:

(€/000) June 2012 2011

Change

from 31/12

to 30/06 CURRENT LIABILITIES Works in progress under contract 1,093,041 1,005,565 87,476

Provisions for risks on works in progress (261) (261) 0

Prepayments to clients (1,238,783) (1,149,807) (88,976)

Total negative works in progress (146,003) (144,502) (1,501)

Contractual advances within 12 months (267,593) (217,095) (50,497)

Total amounts due to clients within 12 months (413,595) (361,598) (51,998)

The item “Amounts due to clients after 12 months”, presented in the balance sheet under non-

current liabilities, totals €771,137, a reduction of €27,258 compared with 31 December 2011.

This item, which includes the amount of the advance to be refunded, as contractually agreed,

to the client after 12 months, is composed as follows:

(€/000) June 2012 2011

Change

from 31/12

to 30/06 Contractual advances after 12 months (771,137) (798,395) 27,258

Total amounts due to clients after 12 months (771,137) (798,395) 27,258



98

The most significant contractual advances totalled €456,402 for work sites in Ethiopia,

€159,451 in Denmark, €111,897 in Nigeria and €20,473 in Turkey.

Works in progress under contract posted to liabilities represents the negative net value

resulting, for each individual contract, from the algebraic sum of works in progress,

provisions for contractual risks and partial billing.

The following table contains an analysis of the geographical breakdown of the items:

(€/000) Works in

progress Provision

for risks Prepayments Amounts

from

clients

Negative

works in

progress

Advances

within 12

months

Advances

after 12

months

Amounts

due to

clients

30/06/2012 -

SALINI A B C A+B+C>0 D=(A+B+C<0) E F D+E+F Italy 506,172 (313) (445,562) 60,443 (147) 0 0 (147)

Dubai 237,980 0 (206,779) 31,202 0 (2,778) 0 (2,778)

Ethiopia 1,592,629 0 (1,566,729) 79,206 (53,305) (64,254) (456,402) (573,962)

Uganda 500,051 0 (499,843) 5,336 (5,128) (5) 0 (5,133)

Sierra Leone 79,313 0 (79,306) 1,498 (1,491) 0 0 (1,491)

Zimbabwe 23,459 0 (24,886) 0 (1,427) (5,818) (6,833) (14,078)

Nigeria 710,095 0 (733,441) 33,069 (56,415) (10,242) (111,897) (178,554)

Turkey 6,520 0 0 6,520 0 (8,774) (20,473) (29,247)

Malaysia 65,260 0 (89,121) 0 (23,861) 0 (7,250) (31,111)

Denmark 138,552 0 (142,782) 0 (4,229) 0 (159,451) (163,680)

Kazakhstan 194,614 0 (161,396) 33,219 0 (44,697) 0 (44,697)

TOTAL SALINI 4,054,645 (313) (3,949,843) 250,492 (146,003) (136,568) (762,306) (1,044,877)

(€/000) Works in

progress Provision


from

clients

Negative

works in

progress

Advances

within 12

months

Advances

after 12

months

Amounts

due to

clients

30/06/2012 -

TODINI A B C A+B+C>0 D=(A+B+C<0) E F D+E+F Italy 1,296,383 0 (1,180,776) 115,608 0 (10,809) 0 (10,809)

Albania 46,003 0 (38,772) 7,231 0 0 0 0

Algeria 196,020 0 (169,063) 26,957 0 0 (719) (719)

Azerbaijan 311,831 0 (253,827) 58,004 0 (20,323) 0 (20,323)

Belarus 24,354 0 (22,362) 1,992 0 (7,707) (1,479) (9,186)

Dubai 61,260 (2,141) (38,515) 20,604 0 (2,527) 0 (2,527)

Georgia 50,811 (106) (45,792) 4,913 0 (12,373) (6,633) (19,006)

Kazakhstan 330,275 0 (297,677) 32,598 0 (32,001) 0 (32,001)

Romania 0 0 0 0 0 0 0 0

Tunisia 85,686 (560) (67,804) 17,322 0 (4,391) 0 (4,391)

Ukraine 317,287 0 (263,252) 54,035 0 (40,893) 0 (40,893)

TOTAL TODINI 2,719,910 (2,807) (2,377,839) 339,264 0 (131,024) (8,831) (139,855)

TOTAL

30/06/2012 -

SALINI +

TODINI

6,774,555 (3,120) (6,327,682) 589,756 (146,003) (267,593) (771,137) (1,184,732)



99

(€/000) Works in

progress Provision


from

clients

Negative

works in

progress

Advances

within 12

months

Advances

after 12

months

Amounts

due to

clients

31/12/2011 –

SALINI A B C A+B+C>0 D=(A+B+C<0) E F D+E+F Italy 468,005 (313) (395,410) 72,429 (147) 0 0 (147)

Dubai 215,588 0 (192,414) 23,174 0 (3,451) 0 (3,451)

Ethiopia 1,408,352 0 (1,377,226) 69,316 (38,190) (63,158) (475,220) (576,568)

Uganda 487,660 0 (488,316) 612 (1,268) 0 0 (1,268)

Sierra Leone 70,970 0 (71,003) 968 (1,001) 0 0 (1,001)

Zimbabwe 6,178 0 (8,723) 0 (2,545) (4,693) (6,833) (14,071)

Nigeria 661,605 0 (697,581) 23,123 (59,099) (8,509) (94,358) (161,966)

Turkey 0 0 0 0 0 0 (29,372) (29,372)

Malaysia 31,624 0 (61,701) 0 (30,078) 0 (9,479) (39,556)

Denmark 63,520 0 (65,475) 0 (1,955) 0 (159,451) (161,406)

Kazakhstan 147,960 0 (132,727) 15,233 0 (57,141) 0 (57,141)

TOTAL SALINI 3,561,462 (313) (3,490,577) 204,855 (134,283) (136,952) (774,712) (1,045,947)

(€/000) Works in

progress Provision


from

clients

Negative

works in

progress

Advances

within 12

months

Advances

after 12

months

Amounts

due to

clients

31/12/2011 -

TODINI A B C A+B+C>0 D=(A+B+C<0) E F D+E+F Italy 1,239,608 0 (1,138,178) 101,430 0 (4,513) (5,461) (9,975)

Albania 35,818 0 (31,239) 4,579 0 0 0 0

Algeria 193,242 0 (167,306) 25,935 0 0 (734) (734)

Azerbaijan 293,646 0 (246,577) 47,069 0 (2,887) (16,007) (18,894)

Belarus 2,266 0 0 2,266 0 (5,601) (1,479) (7,080)

Dubai 57,484 (2,968) (37,897) 16,620 0 (857) 0 (857)

Georgia 45,846 (366) (42,753) 2,727 0 (9,179) 0 (9,179)

Kazakhstan 292,470 0 (274,530) 17,940 0 (40,554) 0 (40,554)

Romania 0 0 0 0 0 0 0 0

Tunisia 73,132 (745) (57,974) 14,413 0 (4,885) 0 (4,885)

Ukraine 174,820 0 (185,040) 0 (10,219) (11,666) 0 (21,886)

TOTAL TODINI 2,408,333 (4,079) (2,181,493) 232,980 (10,219) (80,144) (23,682) (114,045)

TOTAL

31/12/2011 -

SALINI +

TODINI

5,969,795 (4,392) (5,672,070) 437,835 (144,502) (217,096) (798,394) (1,159,992)

Works in progress total €6,775 million, an increase compared with 31 December 2011 of

€805 million. The income statement shows a change of €780 million; the difference is due to

the effect of exchange rate fluctuations following the application of the current method for

companies/branches of the Group that present their financial statements in a currency other

than the euro. For more information, see the Directors‟ Report.

18. Trade receivables

Trade receivables total €670,572, as indicated in the following table:



100

(€/000) 30/06/2012 31/12/2011 Change

Receivables from clients 679,803 583,664 96,139

Receivables from associates 19,037 19,914 (876)

Provision for impairment losses on receivables for penalty

interest (18,934) (18,957) 24

Provision for impairment losses on trade receivables (9,335) (9,986) 651

Total trade receivables 670,572 574,635 95,937

The following table contains a geographical breakdown of the aforementioned receivables:

(€/000) June 2012 % 2011 % Change

Italy 104,140 16% 92,654 16% 11,486

Algeria 9,097 1% 12,236 2% (3,139)

Azerbaijan 5,856 1% 6,764 1% (907)

Belarus 4,362 1% 0 0% 4,362

Dubai 27,493 4% 41,837 7% (14,344)

Ethiopia 101,121 15% 69,927 12% 31,194

Kazakhstan 41,340 6% 36,397 6% 4,943

Malaysia 14,945 2% 11,806 2% 3,138

Nigeria 218,485 33% 213,296 37% 5,189

Sierra Leone 12,552 2% 12,438 2% 114

Tunisia 3,867 1% 4,076 1% (209)

Ukraine 84,668 13% 34,607 6% 50,061

Uganda 3,116 0% 2,892 1% 224

Zimbabwe 12,176 2% 8,254 1% 3,923

Other 27,355 3% 27,452 6% (98)

Total trade receivables 670,572 574,635 95,937

During the period, a net increase in receivables accrued totalling €95,937.

The net effect was due to the following main changes that occurred during the period:

in Italy the increase was mainly prompted by invoices issued on the Capo Boi and Valico

Bypass projects of the subsidiary Todini Costruzioni Generali S.p.A.

in Albania, Algeria, Azerbaijan and Dubai, the decrease was due to the receipt of works

certificates;

in Belarus the balance corresponds to the first invoicing for works completed;

in Ethiopia the large increase of €31,194 was mostly due to the issuance of new certificates

and the receipt of previous certificates totalling €7,905 related to the Gibe III project, and

the new project for the construction of the hydroelectric plant called “Grand Ethiopian

Renaissance Dam” in the amount of €25,489;



101

in Ukraine the positive change was due to the increase in production on the new project in

the “Roads and motorways” segment, the work for which was completed by JV Todini

Akkord Salini.

The “Receivables from associates” item has not undergone any significant changes.

At the end of the period, the provision for impairment losses on receivables had a balance of

€9,335. The largest amounts were attributable to receivables from clients of the Sierra Leone

branch totalling €5,931, clients of the Algerian branch of the subsidiary Todini Costruzioni

Generali S.p.A. totalling €2,034, clients of the Greek branch of the subsidiary Todini

Costruzioni Generali S.p.A. totalling €354 and €1,016 in receivables from clients and other

Italian customers. This provision decreased by €651 during the period as shown in the table

below:

(€/000) 30/06/2012 31/12/2011

Opening balance (9,986) (15,820)

Allocation to provision 0 0

Use 0 6,482

Other changes 651 (648)

Closing balance of the provision for impairment

losses on receivables (9,335) (9,986)

“Other changes” includes reclassifications to other items and the impact of changes in

exchange rates.

No new allocations were made.

The provision for impairment losses on receivables for penalty interest had a balance of

€18,934 at the end of the year; of this amount, €15,800 was attributable to the branch office in

Sierra Leone, €3,004 to the JV in Zimbabwe and €130 to the head office in Italy. This

provision decreased by €23 during the period as shown in the table below:

(€/000) 30/06/2012 31/12/2011

Opening balance (18,957) (19,475)

Allocation to provision (270) (221)

Use 705 1,191

Other changes (411) (452)

Ending balance of provision for impairment losses

on receivables for penalty interest (18,934) (18,957)

The most significant change is represented by the release of a provision totalling €705

established for the Sierra Leone branch, following collection of the related receivable by the

client.

19. Tax receivables

These total €95,422, an increase of €38,605 compared with 2011:



102

June 2012 2011 Change

Italy 25,258 20,971 4,288

Abroad 70,163 35,846 34,317

Total tax receivables 95,422 56,817 38,605

The balance at 30 June 2012 mainly consisted of a VAT credit balance in Italy of €17,971, of

which €2,637 was for Salini S.p.A. In addition there were credits for TVA and indirect taxes

mainly in the following areas: in Ethiopia (€13,377), Kazakhstan (€1,739), Azerbaijan

(€7,554), at Salini Nigeria Ltd (€2,353), in Belarus (€3,688), Ukraine (€8,247), Tunisia

(€1,335), Algeria (€629) and Albania (€989).

20. Cash and cash equivalents

This item has decreased compared with the previous period by €254,867 and is composed as

follows:

(€/000) June 2012 2011 Change

Non-restricted bank and postal deposits 258,310 500,874 (242,564)

Restricted bank and postal deposits 28,635 41,242 (12,607)

Cash in hand 1,186 882 304

Total cash and cash equivalents 288,131 542,998 (254,867)

The balance of cash and cash equivalents represents active bank account balances at the end

of the year and the amounts of cash, cheques and securities existing at the registered office,

the work sites and the foreign subsidiaries.

Restricted deposits at 30 June 2012 mainly refer to cash collateral of €1,500 at the Albanian

branch of the subsidiary Todini Costruzioni Generali S.p.A. and to deposits at the subsidiaries

CMT I/S of €11,697 and Salini Kolin CGF totalling €15,437.

The following table shows the change in short-term bank overdrafts:

ANALYSIS OF CASH AND CASH EQUIVALENTS June 2012 2011

CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE

PERIOD

Cash funds at start of period (29) 542,998 216,267

Bank overdrafts repayable on demand (32) (87,696) (81,009)

455,302 135,258

CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD

Cash funds at end of period (29) 288,131 542,998

Bank overdrafts repayable on demand (32) (102,277) (87,696)

185,854 455,302



103

21. Non-current assets held for sale

This item totalled €3,154 and consisted mainly of:

- the former Galbani building located on Via Blaserna (owned by Zeis) totalling €2.1 million;

- the Le Torrine country house (owned by San Vittorino) totalling €1 million.

Total


Assets sold (40)


22. Shareholders' equity

Shareholders‟ equity totals €386,143, of which €349,247 is attributable to the Salini

Costruttori Group and €36,896 to minorities.

The share capital of the parent company Salini Costruttori at 31 December 2011 is composed

of 120,000,000 ordinary shares with a nominal value of €0.52 each for a total of €62,400. The

parent company holds 11,708,900 treasury shares with a nominal value of €0.52 equal to

9.76% of share capital. Book value is €3,120, and treasury shares are reported as a reduction

to shareholders' equity. No parent company shares are held by subsidiaries. There were no

changes compared to 31 December 2011.

The legal reserve totalling €5,543 represented 8.88% of share capital.

Other reserves amounted to €8,356, and were up by €31 compared to 31 December 2011 due

to the adjustments indicated in the statement of shareholders' equity.

Reserves relating to components of comprehensive income at 30 June 2012 total €116,899,

with an increase of €112,305 compared with the previous period. In particular, the increase of

€112,069 was due to the adjustment of the equity investment in Impregilo S.p.A. to fair value,

which was identified as the price quoted on the stock exchange on 29 June 2012 (the last

available day). In accordance with IAS 39, changes were allocated to the specific reserve. See

Note 9 for details on changes.

Minority interests total €36,896. This has increased during the period by €11,060 due to the

following changes:

profit for the period of €8,617;

impact on minority interests (capital to be paid in) of €2,349;

other changes of €94.

At 30 June 2012 retained earnings totalled €141,602, an increase of €36,202 mainly due to the

allocation of a portion of the profit for the previous year of €36,142.



104

23. Financial liabilities

Financial liabilities total €688,607, and have increased compared with 2011 by €167,348, as

detailed below:

(€/000) June 2012 2011 Change

Payables to banks 538,218 396,420 141,797

Financial payables to shareholders 3,576 2,890 686

Payables to other lenders for leases 143,871 119,472 24,399

Loan and financing costs and accrued financial

expenses 1,280 961 319

Financial payables to subsidiaries 0 34 (34)

Derivative instruments (negative fair value) 1,662 1,481 181

Total financial liabilities 688,607 521,258 167,348

of which non-current portion 218,340 227,921 (9,581)

of which current portion 470,267 293,337 176,930

The following table contains a breakdown of payables to banks, divided into current and non-

current:

(€/000) Current Non-current June 2012 2011 Change June 2012 2011 Change

Debit balances 102,277 87,696 14,581 19 0 19

Short-term loans (30-90 days) 12,343 15,225 (2,883) 0 0 0

Financing 283,278 129,488 153,791 81,766 102,380 (20,614)

Loans 8,328 10,870 (2,542) 51,486 51,722 (236)

Total payables to banks 406,227 243,279 162,948 133,271 154,102 (20,831)

The net increase of €142,117 in payables to banks was mainly due to a new loan obtained by

the subsidiary Salini S.p.A. in the amount of €132 million (€108 million on the reporting date)

to finance the operations of works in progress.

Bank overdrafts amount to about €102 million and mainly relate to Todini Costruzioni

Generali S.p.A. (of €67 million), Salini Nigeria (of €14 million), the Morocco branch of

Salini S.p.A. (of €5.9 million) and Salini S.p.A. (of about €14 million).



105

The following table gives a detailed breakdown of loans and finance:

Lending bank type rate 2012

portion 2013

portion 2014

portion 2015

portion 2016

portion

portion

> 5

years Total

Salini Costruttori - BNL Mortgage loan 6 month Euribor + 1.75% 5,117 4,943 4,976 0 0 0 15,036

Salini Costruttori - BNL Mortgage loan 6 month Euribor +

1.75% 1,028 992 997 0 0 0 3,016

Zeis - MPS (formerly

Antonveneta) Mortgage loan 6 month Euribor +

1.5% 1,857 1,753 1,793 1,834 1,875 12,178 21,290

IASV - MPS (formerly Antonveneta) Mortgage loan Variable 136 133 136 139 142 0 686

Zeis - MPS (formerly

Antonveneta) Mortgage loan Variable 79 81 82 82 83 842 1,249

Plus - Banca Popolare di

Milano Mortgage loan Variable 0 0 0 0 0 18,425 18,425

Skye Bank Financing 28% 112 0 0 0 0 0 112

Total loans 8,328 7,903 7,983 2,055 2,100 31,445 59,814

Lending bank type rate 2012

portion 2013

portion 2014

portion 2015

portion 2016

portion

portion

> 5

years Total

Centrobanca (syndicated

loan) Financing 3 month Euribor +

2 p. 15,583 15,632 3,929 0 0 0 35,144

Intesa San Paolo Financing 3 month Euribor +

2.50 p. 13,219 12,254 12,344 12,428 0 0 50,245

Natixis Financing 3 month Euribor + +3.25 p. 108,690 0 0 0 0 0 108,690

Cat Financials Financing 5.20% 960 727 857 903 951 0 4,397

National Bank of Abu

Dhabi Financing 3 month Euribor +

3 p. 10,634 0 0 0 0 0 10,634

BNP Paribas Dubai Financing 6 month Libor +

1.5% 477 2,162 2,162 0 0 0 4,802

Commercial Bank of Dubai Financing 4,864 0 0 0 0 0 4,864

Commercial Bank of

Dubai Advance on

certificates 4,152 0 0 0 0 0 4,152

ATF Banca Financing 9.98% 12,580 3,035 0 0 0 0 15,615

Skye Bank Advance on

certificates 25.00% 5,424 0 0 0 0 0 5,424

Skye Bank Advance on certificates 23.00% 3,571 0 0 0 0 0 3,571

UniCredit current a/c

finance 47856 Financing 1 month Euribor +

1.60 33,170 0 0 0 0 0 33,170

Yapi Kredi Bank Financing 7.00% 3,669 0 0 0 0 0 3,669

Pasha Bank Financing 7% within 80 days

18% beyond 80

days 765 4,916 0 0 0 0 5,681

ATF Banca Fin. No

K069-201 Financing 9.98% 14,096 0 0 0 0 0 14,096

MPS Financing 6 month Euribor + 1.25 p. 349 513 557 600 647 7,180 9,845

Ubae Advance on

certificates 3 month Euribor +

3.25 p. 35,013 0 0 0 0 0 35,013

C.R. Firenze advance a/c Advance on


2.50 p. 5,000 0 0 0 0 0 5,000

B.Sardegna advance on contracts

Advance on certificates

3 month Euribor + +2 p. 2,132 0 0 0 0 0 2,132

B.Sard advance on

SaL40003 Advance on


+2 p. 5,000 0 0 0 0 0 5,000

B. Popolare di Lodi

advance a/c Advance on


+2.50 p. 1,900 0 0 0 0 0 1,900

Cariparma advance a/c Advance on certificates

3 month Euribor + 1 p. 2,000 0 0 0 0 0 2,000

Total finance 283,248 39,239 19,849 13,931 1,597 7,180 365,044



106

There were financial covenants required by financial institutions for certain loans on the

books at 30 June 2012. Compliance with these covenants is required only for the annual

consolidated financial statements prepared in accordance with provisions introduced by

Legislative Decree 127/1991 (consolidated financial statements according to Italian GAAP).

Payables due to other lenders total €143,871 and are composed as follows:

(€/000) Current Non-current

June 2012 2011 Change June 2012 2011 Change

Receivables assigned with recourse 0 0 0 0 0 0

Indirect factoring transactions 30,946 23,684 7,262 0 0 0

Leases (Todini) 5,345 6,610 (1,264) 21,475 26,369 (4,895)

Leases (Salini) 25,723 18,250 7,474 60,382 44,559 15,822

Total payables to other lenders 62,015 48,544 13,471 81,856 70,929 10,928

Payables to other lenders rose by €24,399, of which €13,471 was short term and €10,928 was

medium/long term. This change was mainly due to: (i) the increase in leases of €17,137 and

(ii) the indirect increase in factoring transactions of €7,262 as a result of which the Company

obtained an increase in payment deferrals following the sale of its payables to suppliers to

financial institutions.



107

Derivative instruments

The Group uses external sources of funding in the form of short-term and medium/long-term

variable-rate debt.

Accordingly, an optimal balance must be found between fixed-rate and variable-rate debt in

the financing structure, in order to reduce financial costs and volatility, selectively

implementing hedging transactions through simple derivative instruments that convert

variable-rate debt to fixed-rate debt (IRS).

At 30 June 2012, the Group had the following derivative contracts with major credit

institutions:

five derivative contracts taken out by the parent company;

one contract taken out by the associate Casada (in which Zeis holds a 25% stake);

six taken out by the associate Co.Ge.Fin., in which Todini Costruzioni Generali S.p.A.

has a 51% stake. These instruments, which were originally taken out by Todini

Costruzioni Generali S.p.A., were transferred to Co.Ge.Fin as a part of the

deconsolidation transaction at the end of December 2010.

The following table summarises the key features of these transactions:

Company Bank Contract date

Maturity date

Hedge accounting Type Purpose

Notional amount (€/000)

MtM at 30 June 2012

Underlying financial

risk

Liability hedged

Co.Ge.Fin. Centrobanca 30-Sept-09 31-July-14 YES IRS Hedging 2,500 (60) interest

rate variable-rate loan

Co.Ge.Fin. Banca Pop. Vicenza 30-Sept-09 31-July-14 YES IRS Hedging 2,500 (60)

interest rate

variable-rate loan

Co.Ge.Fin. Banca Carige 30-Sept-09 31-July-14 YES IRS Hedging 2,500 (55) interest


Co.Ge.Fin. Intesa 30-Sept-09 31-July-14 YES IRS Hedging 12,500 (304) interest


Co.Ge.Fin. Banca Popolare di Sondrio 1-Oct-09 31-July-14 YES IRS Hedging 2,500 (55)

interest rate

variable-rate loan

Co.Ge.Fin. Banca Etruria 30-Sept-09 31-July-14 YES IRS Hedging 2,500 (58) interest


Salini Costruttori BNP 31-July-09 27-Feb-15 YES IRS Hedging 15,000 (457)

interest rate

variable-rate loan

Salini Costruttori BNP 21-Sept-09 31-Mar-15 YES IRS Hedging 3,000 (94)

interest rate

variable-rate loan

Casada UniCredit 29-July-03 1-Aug-13 NO IRS Hedging 1,021 (26) interest


Salini Costruttori

Banca Popolare di Lodi 12-Feb-10 1-Aug-16 YES IRS Hedging 2,171 (103)

interest rate

variable-rate lease

Salini Costruttori

Banca Popolare di Lodi 13-May-10 1-Dec-16 YES CAP Hedging 6,538 7

interest rate

variable-rate lease

Salini Costruttori Intesa 29-Mar-11 25-Jan-16 YES IRS Hedging 25,000 (926)

interest rate

variable-rate loan

With regard to the hedges for loans taken out with UniCredit (by the associate Casada), the

notional amounts of which amount to €1 million respectively, the Group did not believe it was



108

efficient to apply hedge accounting given the cost and complexity of applying this accounting

treatment in view of the insignificant amounts being hedged. Changes in the amount of these

financial instruments were recognised directly in the income statement under financial

expenses.

With regard to the hedge accounting hedges created by the parent company, the change in fair

value of the effective part of the derivatives had a negative impact on the Group's

shareholders' equity resulting in a cash flow hedge reserve of €1,043 (€955 at 31 December

2011), together with the related impact from prepaid taxes of €396. To offset the current

financial liabilities, the fair value of the derivatives was recognised at €1,662, net of accrued

cash flows applicable to the period of €221. The positive fair value of the CAP taken out with

Banca Popolare di Lodi totalling €4 was recognised under current financial assets. The

ineffective portion of €10 was recognised through profit and loss.

24. Provisions for risks and charges

Provisions for risks and charges total €28,046 and have increased by €2,025 compared with

2011, as indicated in the following table:

(€/000) Work in

progress

expenses

Subsidiaries’

losses hedge

Completed

contracts

risk

Provision

for

country

risks

Other

provisions TOTAL

Balance at 31 December 2011 5,366 2,170 20 0 18,464 26,021

Allocation to provisions 1,393 7 0 0 2,568 3,969

Uses (432) (252) 0 0 (1,258) (1,943)

Other changes (135) (3) 0 0 138 0

Balance at 30 June 2012 6,192 1,922 20 0 19,912 28,046

In particular, in a tax deficiency notice dated 1 April 2011, the Treasury Police stated

observations for IRES and IRAP purposes for the years from 2006 to 2010 with respect to the

subsidiary Todini Costruzioni Generali S.p.A. with reference to the proper timing of some

reserves (“claims”) and with reference to the years 2006, 2008, 2009 and 2010 for the

application of VAT instead of registration tax on amounts paid as compensation, interest for

late payment or compensatory interest, based on agreements pursuant to Article 31-bis of Law

109/94 and on arbitral awards or settlements. In December 2012, Todini Costruzioni Generali

S.p.A. addressed all of the above observations for IRES and IRAP purposes for the years from

2007 to 2010 through a tax settlement with instalment payments in 12 quarterly instalments.

The subsidiary also addressed VAT observations for the years 2008, 2009 and 2010 through

the removal of those concerning interest for late payment or compensatory interest and with

the total reversal of penalties for incorrect invoicing and false reporting, again through a tax

settlement with instalment payments in 12 quarterly instalments. Pursuant to Article 60,

paragraph 7 of Presidential Decree 633/1972, Todini Costruzioni Generali S.p.A. will exercise

recourse to clients for the higher amount of VAT paid at that time through the issuance of

supplementary invoices.

With regard to tax year 2006, which was already covered in an assessment notice, in January

2013 a partial annulment order was served in self-defence with the total annulment of

adjustments made for IRES and IRAP purposes, and the reversal of penalties for the false

reporting and invoicing for the higher amount of VAT assessed for 2006. The right of

recourse to the client may also be exercised for this VAT.



109

Thus, in order to reflect the impact from the aforementioned order, as at 30 June 2012, in

accordance with IAS 10 - Events after the Reporting Period, an adjustment was made in the

amount of €2,120 to the risk provision allocated by Todini Costruzioni Generali S.p.A. as at

31 December 2011 to cover the risk related to this dispute totalling €1,170. Thus, as at 30

June 2012 the tax reserve (Other reserves) totalled €3,290.

Details on the other main items that formed the balance of the provisions for risks and charges

at 30 June 2012 are as follows:

The provision for losses at holdings was set up in relation to commitments to hedge

losses exceeding the holdings‟ own equity, in particular for Groupement Italgisas -

Kenitra (Morocco) and Ital.Sa.Gi. Sp.Z.O.O. In the subsidiary Todini Costruzioni

Generali S.p.A. the provision is mainly for the losses on Edilfi S.c.a r.l. in liquidation,

Rupe Orvieto S.c.a r.l., Albacem 2007 in liquidation and Consorzio Astaldi-Federici-

Todini.

The provision for risks on completed contracts, with a balance of €20, refers to the

Poland contract.

The provision for risks on work in progress rose by €826 during the period due to total

negative reclassifications of €135 concerning provisions that were previously

classified under other provisions by mistake. In particular, it rose due to the effect of

the allocation of closing costs for projects that are no longer operational in Dubai

(€630) and Uganda (€618) and other areas (€126). The decrease of €432 was mainly

due to the use of the provision allocated in previous years in Dubai;

The provision for risks for legal disputes (Other provisions) of €15,304 increased by

€596 during the year and decreased by €1,258; it includes allocations made for

contingent liabilities for pending lawsuits and provisions for legal expenses. To be

specific, the balance at 30 June 2012 included €11,035 related to the dispute of the

subsidiary Todini Costruzioni Generali S.p.A. against Altarea Sca (a company under

French law) and Altarea Italia S.r.l. that arose between the parties in relation to alleged

damages resulting from the failure to award the publicly announced international

tender assignment of the concession for a portion of the complex of the former

Mercati Generali (announcement published in the Official Journal of the European

Union on 6 November 2003, Series S, No 214, and in the Official Journal of the

Italian Republic on 7 November 2003, II, No 259) concerning: “the upgrading of the

area of the former Mercati Generali by making it available for youth centre services”;

compared to the balance at 31 December 2011, there was an increase for the period for

the provision of legal interest; the decrease for the period was due mainly to costs

incurred on the Bujagali project (Uganda) totalling €1,189 and allocated to the

provision in previous years.



110

25. Other liabilities

Other liabilities total €39,578, of which €7,508 is the non-current portion and €32,070 the

current portion, as detailed below:

(€/000) June 2012 2011 Change Social security payables 6,395 5,552 843

Other payables 33,183 27,626 5,557

Total other liabilities 39,578 33,178 6,400

of which non-current portion 7,508 8,227 (719)

of which current portion 32,070 24,951 7,119

The social security payables totalling €6,395 rose by €843, mainly due to Italy.

Other payables stand at €33,183; the non-current portion totals €7,508 (€8,227 at 31

December 2011) and includes an amount of €5,733 related to the TAV advance for the

Verona-Padua high-speed line contract, paid to the Group by the Consorzio Iricav Due. This

item is unchanged from the previous financial year.

The current portion of other payables, totalling €25,675 (€19,399 at 31 December 2011), rose

by €6,276 compared to 31 December 2011. This change was mainly related to the item for

payables to employees for amounts accrued but not paid.

26. Employee benefits

Employee benefits totalled €4,222, a decrease of €49 compared with 31 December 2011 due

to normal employee turnover.

27. Trade payables

Trade payables total €525,602, as indicated in the following table:

(€/000) June 2012 2011 Change

Payables to suppliers 483,844 435,531 48,313

Payables to associates and subsidiaries 41,758 54,535 (12,777)

Total trade payables 525,602 490,066 35,536

The geographical breakdown of the item is as follows:



111

June 2012 % 2011 % Change

Italy 168,888 32% 220,844 45% (51,955)

Abu Dhabi 4 0% 0 0% 4

Albania 4,696 1% 3,976 1% 720

Algeria 12,307 2% 12,781 3% (474)

Argentina 11 0% 12 0% (1)

Azerbaijan 14,412 3% 18,437 4% (4,025)

Belarus 5,306 1% 956 0% 4,350

Chile 39 0% 41 0% (3)

Denmark 30,471 6% 33,744 7% (3,274)

United Arab Emirates 14,239 3% 20,383 4% (6,144)

Ethiopia 84,319 16% 50,272 10% 34,047

Georgia 7,126 1% 6,043 1% 1,083

Jordan 8 0% 8 0% 0

Greece 2,158 0% 3,385 1% (1,227)

Kazakhstan 51,981 10% 45,475 9% 6,505

Libya 135 0% 5 0% 129

Malaysia 32,596 6% 9,760 2% 22,836

Morocco 609 0% 715 0% (106)

Nigeria 19,017 4% 20,229 4% (1,212)

Poland 18 0% 6 0% 12

Romania 290 0% 291 0% (1)

Sierra Leone 12,674 2% 4,169 1% 8,504

Tunisia 7,422 1% 7,508 2% (86)

Turkey 3,215 1% 36 0% 3,179

Ukraine 38,446 7% 22,100 5% 16,346

Uganda 8,023 2% 4,919 1% 3,104

Zimbabwe 7,191 1% 3,969 1% 3,222

525,602 490,066 35,536

Note in particular:

Italy's payables amount to €168,888, of which €761 relates to the parent company,

€86,865 to Salini S.p.A. and €81,261 to Todini Costruzioni Generali S.p.A. The Salini

S.p.A. balance also includes payables to suppliers relating to purchases made centrally for

foreign offices and payables towards Italian associates:

2012 2011 Change

Suppliers for Italy 61,173 93,102 (31,929)

Suppliers for Dubai 108 108 0

Suppliers for Ethiopia 1,369 1,876 (507)

Suppliers for Morocco 1 1 0

Suppliers for Sierra Leone 431 576 (145)

Suppliers for Uganda 6 6 0

Payables to associates 23,777 23,897 (119)

Total payables Italy 86,865 119,566 (32,701)



112

28. Tax payables

This item totalled €73,909, with an increase of €18,650 compared with 31 December 2011

due mainly to the increase for VAT in Ukraine of €12,910 and in Denmark of €4,036.

29. Related party transactions

There are no material transactions with related parties, including intercompany transactions,

of a non-recurring or unusual and/or atypical nature.

The following tables contain information on material transactions of a capital, financial and

economic nature at 30 June 2012 and 31 December 2011:

30 June 2012

30 June 2012 Financial

assets Receivables Payables Income Costs Financial

income Financial

expenses

Provisions

to cover

losses

Guarantees

and

commitments

Albacem 2007 in liquidation 40 34 (78) Consorzio Costral in liquidation 0 3 34 0 Edilfi S.c.a.r.l. in liquidation 270 9 18 (228) Todedil S.c.a.r.l. in liquidation 0 0 1 Subsidiaries 309 46 53 0 0 0 0 (306) 0

Salini Saudi Arabia Company Ltd 202 Alburni S.c.a.r.l. in liquidation 137 226 0 Bata S.r.l. 4 0 C.P.R. 2 0 0 C.P.R. 3 0 0 0 0 Casada S.r.l. 0 0 Cediv 316 72 Co.Ge.Fin. 7,526 128 5,062 6 Colle Todi S.c.a.r.l. in liquidation 235 39 6 4 Con.Sal. S.c.n.c. in liquidation 43 160 (12) Cons Pizzarotti Todini .Keff-

Eddir 675 3,704 10,790 0

Cons. Aft in liquidation 375 0 524 1,500

Cons.Aft Taksebt 741 0 Cons.Astaldi-Federici-Todini KRAMIS 1,240 3,492 889 0

Consorzio Kallidromo 0 945 889 Corina S.c.a.r.l. in liquidation CUS (Consorzio Umbria Sanità) 0 0 Forum S.c. a r.l. 173 0 Ga.bi.re S.r.l. 108 201 33 Galileo S.c.a.r.l. 0 0 0 0 1,000

Group. d'entre. Salini Strabag (Guinea) 174 5

Groupement Italgisas (Morocco)

in liquidation 741 (842)

Irfur S.c.a.r.l. in liquidation Irina S.r.l. in liquidation 0 0 Irrigazione Furore 0 Ital.Sa.Gi. Sp.Z.O.O. (Poland) 0 (222) Joint Venture Salini-Impregilo

(Sudan)

Joint Venture Salini-Necso (Ethiopia) 5,340 4 0 0



113

Risalto S.r.l. in liquidation 0 0 0 Rupe Orvieto S.c.a.r.l. 111 7 6 3 (68) S.Ruffillo S.c. a r.l. 2,288 23,425 11,835

Sa.Di.Pe. S.c. a r.l. in liquidation Immobiliare Marinella S.r.l. 0 Scat 5 S.c.a.r.l. in liquidation 0 0

Sedi S.c.a.r.l. 0 0 0 5,746

Tormini S.c.a.r.l. in liquidation 0 0 0 0 0 Trasimeno S.c.a.r.l. 0 Valico S.c.a.r.l. in liquidation 52 41 0 3 Variante di Valico S.c. a r.l. in liquidation 0 (5)

Associates 10,022 18,555 42,435 121 10 0 0 (1,149) 20,081

Iricav Due 244 6,516 732 (336) Pantano S.c.r.l. 99 4 Todini Finanziaria S.p.A. 9,083 Other companies 9,327 6,615 0 736 0 0 (336) 0

Previndai+Prevedi+Other funds 402 408 Pension funds 402 408 0 0 0 0

Directors/Key management

personnel 624 4,530


personnel 624 4,530 0 0 0 0

31 December 2011

31 December 2011 Financial

assets

Receiva

bles Payables Income Costs

Financial

income

Financial

expenses

Provisions to

cover losses

Guarantees

and

commitments

Albacem 2007 in liquidation 40 34 (77)

Consorzio Costral in liquidation 0 3 30

Edilfi S.c.a.r.l. in liquidation 270 5 18 (236)

Todedil S.c.a.r.l. in liquidation 0 9 10

Subsidiaries 309 51 58 0 0 0 0 (313) 0

Alburni S.c.a.r.l. in liquidation 143 225 3 Bata S.r.l. 4 0 C.P.R. 2 47 46 C.P.R. 3 0 2 60 2 Casada S.r.l. 3 5 Cediv 222 142 Co.Ge.Fin. 7,526 19 17,984 10

Colle Todi S.c.a.r.l. in liquidation 251 86 10 58

Con.Sal. S.c.n.c. in liquidation 43 160 (12) Cons Pizzarotti Todini .Kef-Eddir 677 3,704 10,788 3,938

Cons. Aft in liquidation 375 0 624 1,500

Cons. Aft Taksebt 741 0 Cons. Astaldi-Federici-Todini KRAMIS 1,240 3,598 889 0

Consorzio Kallidromo 86 945 38 Corina S.c.a.r.l. in liquidation CUS (Consorzio Umbria Sanità) 0 6 Forum S.c. a r.l. 174 7



114

G.A.B.I.RE S.r.l. 80 133 39 Galileo S.c.a.r.l. 19 23 10 23 1,000

Group. d'entre. Salini Strabag (Guinea) 0 5

Groupement Italgisas (Morocco) in

liquidation 741 (842)

Irfur S.c.a.r.l. in liquidation Irina S.r.l. in liquidation 0 22 Irrigazione Furore 0 Ital.Sa.Gi. Sp.Z.O.O. (Poland) 47 (222) Joint Venture Salini-Impregilo

(Sudan)

Joint Venture Salini-Necso

(Ethiopia) 6,635 4 2,341 28 164

Risalto S.r.l. in liquidation 0 37 (2) Rupe Orvieto S.c.a.r.l. 130 7 10 (68) S. Ruffillo S.c.a.r.l. 2,473 23,115 11,835

Sa.Di.Pe. S.c. a r.l. in liquidation Immobiliare Marinella S.r.l. 12 Scat 5 S.c.a.r.l. in liquidation 7 0

Sedi S.c.a.r.l. 22 0 31 5,746

Tormini S.c.a.r.l. in liquidation 0 0 0 0 0 Trasimeno S.c.a.r.l. 0 Valico S.c.a.r.l. in liquidation 19 45 10 0 Variante di Valico S.c. a r.l. in

liquidation 0 (5)

Associates 9,930 19,825 54,452 2,640 164 0 164 (1,151) 24,019

Iricav Due 244 5,875 157 (336) Pantano S.c.r.l. 121 46 Todini Finanziaria S.p.A. 9,083 Other companies 9,327 5,996 0 203 0 0 (336) 0

Previndai+Prevedi+Other funds 360 461 Pension funds 360 461 0 0 0 0


personnel 236 6,771

*

Directors/Key management personnel 236 6,771 0 0 0 0

* of which €3,528 was for a property recorded under the fixed assets of Zeis S.r.l.



115

30. Commitments and guarantees and contingent liabilities

Guarantees

The total value of guarantees given is €2,862,708, as detailed below:

(€/000) 30/06/2012

Bonds for bank facilities 513,479

Bonds for warranties on work 502,070

Bonds for participation in bidding 53,964

Other bonds 1,141,805

Mortgages on property 651,390

Total direct guarantees given 2,862,708

Third-party guarantees issued to the Group

Guarantees issued by credit institutions and insurance companies in the interest of Italian and

foreign suppliers and subcontractors in relation to their contractual obligations towards the

Group totalled €79,606.

Contingent liabilities

In judgments 3940/2006 and 9904/2007, immediately appealed by the Company, the Court of

Rome held it unlawful to value holdings in subsidiaries by the equity method pursuant to

Article 2426(4) of the Italian Civil Code, as recommended by national accounting standard

21, which the Company has always diligently applied. The accounting method used by the

Company is in line with all the different case law, civil and corporate doctrine on the subject,

as well as with the national accounting standards precisely because it allows the economic

result to be presented more clearly and correctly in the separate financial statements. This

accounting method continues to meet with the acceptance of the Board of Statutory Auditors

and the independent auditors.

As pertinent, however, shown below are the effects on shareholders‟ equity in the unlikely

event that judgment 3940/2006 should become final:

1) Application of Article 2426(4) of the Italian Civil Code according to the rulings of the

judgment (table in euros):



116

2003 REVALUATIONS:

Co.Ge.Ma. S.p.A. - Aprilia (LT) 113,347

Aeroponica Aprilia S.r.l. - Aprilia (LT) 35,928

Colosseum 2000 S.c.p.a. - RM 284

Salcost Finance Ltd - Dublin (IRL) 64,261

S.I.Ba. S.p.A. – RM 209,053

Group. d'enterprise Sal.It. - Khemisset (Morocco) 1,994,428

Salini Nigeria Ltd - (Nigeria) 9,916,181

TOTAL REVALUATIONS 12,333,480

DEFERRED TAXES ON 2003 REVALUATIONS:

Co.Ge.Ma. S.p.A. - Aprilia (LT) (1,870)

Aeroponica Aprilia S.r.l. - Aprilia (LT) (593)

Colosseum 2000 S.c.p.a. - RM (5)

Salcost Finance Ltd - Dublin (IRL) (1,060)

S.I.Ba. S.p.A. – RM (3,449)

Group. d'enterprise Sal.It. - Khemisset (Morocco) (32,908)

Salini Nigeria Ltd - (Nigeria) (163,617)

(203,502)

DIVIDENDS DISTRIBUTED ON 2003 REVALUATIONS:

Co.Ge.Ma. S.p.A. - Aprilia (LT) (113,347)

Aeroponica Aprilia S.r.l. - Aprilia (LT) (27,898)

Group. d'enterprise Sal.It. - Khemisset (Morocco) (1,457,561)

Salini Nigeria Ltd - (Nigeria) (9,916,181)

TOTAL DIVIDENDS DISTRIBUTED (11,514,986)

CHANGES FROM COMPANIES LIQUIDATED/DISPOSED OF ON 2003 REVALUATIONS:

Colosseum 2000 S.c.p.a. - RM (284)

S.I.Ba. S.p.A. – RM (209,053)

Salcost Finance Ltd - Dublin (IRL) (64,261)

Aeroponica Aprilia S.r.l. - Aprilia (LT) (8,030)

Group. d'enterprise Sal.It. - Khemisset (Morocco) (536,867)

TOTAL CHANGES FROM COMPANIES LIQUIDATED/DISPOSED OF (818,495)

REVERSAL OF DEFERRED TAXES ON 2003 REVALUATIONS:

Co.Ge.Ma. S.p.A. - Aprilia (LT) 1,870

Group. d'enterprise Sal.It. - Khemisset (Morocco) 32,908

S.I.Ba. S.p.A. – RM 3,449

Colosseum 2000 S.c.p.a. - RM 5

Salcost Finance Ltd - Dublin (IRL) 1,060

Aeroponica Aprilia S.r.l. - Aprilia (LT) 593

Salini Nigeria Ltd - (Nigeria) 163,617

203,503

RESIDUAL 2003 REVALUATIONS TO BE REALISED (0)

PROFIT FOR THE YEAR 2003 ALLOCATED TO NON-DISTRIBUTABLE RESERVE PURSUANT TO ARTICLE 2426(4) OF THE ITALIAN CIVIL CODE, AS PER THE SHAREHOLDERS’ RESOLUTION OF 7 JULY 2004

(7,848,733)

ADDITIONAL NON-DISTRIBUTABLE RESERVE AS PER ARTICLE 2426(4) OF THE ITALIAN CIVIL CODE, TO BE ESTABLISHED BY DRAWING €50.4 MILLION FROM DISTRIBUTABLE RESERVES

none

2) Valuation of receivable with the Zimbabwe joint venture according to the rulings of the

judgment

- Full write-down of receivable recognised on 2003 financial statement €(7,298)

- Write-down made in the first half of 2007 €6,442

- Write-down included in 2006 financial statements for contractual risks

provision

€1,202

- Difference none

No effects are noted on shareholders‟ equity or on earnings for the year at 30 June 2012.

Even in the unlikely event that the aforementioned judgment should become final, the

reserves available and the allocations made are sufficient to absorb its effects.



117

In addition, it is noted that even if judgment 9904/2007 should become final, there would be

no effects on the Company‟s shareholders‟ equity, as it appears from the analysis below (table

in euros):

2002 REVALUATIONS: Total Period 2002 Prior profits

Co.Ge.Ma. S.p.A. - Aprilia (LT) 760,269 120,424 639,846 Aeroponica Aprilia S.r.l. - Aprilia (LT) 233,102 52,311 180,791 Salini Hydro Ltd (Bumbuna Falls European Consortium for Contract C Ltd) 2,570,546 34,173 2,536,373 Colosseum 2000 S.c.p.a. - RM 1,926 1,926 0 Salcost Finance Ltd - Dublin (IRL) 13,088 1,860 11,228 Salcost France s.a. - Paris (F) 28,733 0 28,733 S.I.Ba. S.p.A. – RM 927,832 146,909 780,923 Group. d'enterprise Sal.It. - Khemisset (Morocco) 242,439 0 242,439 Madonna dei Monti S.r.l. 74,146 74,146 0 Salini Nigeria Ltd - (Nigeria) 13,304,366 10,817,201 2,487,165

SUBTOTAL 18,156,448 11,248,951 6,907,497 TOTAL REVALUATIONS 18,156,448

DEFERRED TAXES ON 2002 REVALUATIONS: Co.Ge.Ma. S.p.A. - Aprilia (LT) (258,492) (40,944) (217,548) Aeroponica Aprilia S.r.l. - Aprilia (LT) (66,675) (17,786) (48,889) Salini Hydro Ltd (Bumbuna Falls European Consortium for Contract C Ltd) (349,594) (4,648) (344,947) Colosseum 2000 S.c.p.a. - RM (655) (655) 0 Salcost France s.a. - Paris (F) (488) 0 (488) Salcost Finance Ltd - Dublin (IRL) (223) (32) (191) S.I.Ba. S.p.A. – RM (315,463) (49,949) (265,514) Group. d'enterprise Sal.It. - Khemisset (Morocco) (32,972) 0 (32,972) Madonna dei Monti S.r.l. (25,210) (25,210) 0 Salini Nigeria Ltd - (Nigeria) (1,492,990) (1,471,139) (21,850)

(2,542,761) DIVIDENDS DISTRIBUTED ON 2002 REVALUATIONS: Co.Ge.Ma. S.p.A. – period 2003 (316,000) Co.Ge.Ma. S.p.A. – period 2004 (100,000) Co.Ge.Ma. S.p.A. – period 2005 (344,269) (760,269) Aeroponica Aprilia S.r.l. - period 2002 (37,000) Aeroponica Aprilia S.r.l. - period 2003 (52,000) Aeroponica Aprilia S.r.l. - period 2004 (35,000) Aeroponica Aprilia S.r.l. - period 2005 (99,000) Aeroponica Aprilia S.r.l. - period 2006 (10,102) (233,102) S.I.Ba. S.p.A. - period 2003 (850,000) (850,000) Group. d'enterprise Sal.It. - period 2005 (242,439) (242,439) Salini Nigeria Ltd - period 2002 (2,326,500) Salini Nigeria Ltd - period 2003 (1,652,707) Salini Nigeria Ltd - period 2004 (1,057,358) Salini Nigeria Ltd - period 2005 (3,024,517) Salini Nigeria Ltd - period 2006 (5,243,284) (13,304,366) (15,390,176)

TOTAL DIVIDENDS DISTRIBUTED (15,390,176)

CHANGES FROM COMPANIES LIQUIDATED/DISPOSED OF ON 2003 REVALUATIONS: S.I.Ba. S.p.A. - liquidation 2004 (77,832) Salcost Finance Ltd - Dublin (IRL) (13,088) Colosseum 2000 S.c.p.a. - RM (1,926)

TOTAL CHANGES FROM COMPANIES LIQUIDATED/DISPOSED OF (92,846)

REVERSAL OF DEFERRED TAXES ON 2003 REVALUATIONS: Co.Ge.Ma. S.p.A. - Aprilia (LT) 258,492 Colosseum 2000 S.c.p.a. - RM 655 Group. d'enterprise Sal.It. - Khemisset (Morocco) 32,972 S.I.Ba. S.p.A. – RM 315,463 Salcost Finance Ltd - Dublin (IRL) 223 Aeroponica Aprilia S.r.l. - Aprilia (LT) 66,675 Salini Nigeria Ltd - (Nigeria) 1,492,990

2,167,468

RESIDUAL 2002 REVALUATIONS TO BE REALISED 2,298,134

PROFIT FOR THE YEAR 2002 ALLOCATED TO NON-DISTRIBUTABLE RESERVE PURSUANT TO ARTICLE 2426(4) OF THE ITALIAN CIVIL CODE, AS PER THE SHAREHOLDERS’ RESOLUTION OF 3 JULY 2003

(10,231,780)

ADDITIONAL NON-DISTRIBUTABLE RESERVE AS PER ARTICLE 2426(4) OF THE ITALIAN CIVIL CODE, TO BE ESTABLISHED BY DRAWING €50.4 MILLION FROM DISTRIBUTABLE RESERVES

none



118

31. Subsequent events

For significant events occurring after the end of the period in June 2012 see the Interim

Directors‟ Report.



119

32. Salini Costruttori Group companies

(€/000) Registered office Share capital €x1,000 % stake Participating firms

Parent company

Salini Costruttori S.p.A. Milan 62,400

Fully consolidated subsidiaries

Salini S.p.A. Rome 62,400 100.00% Salini Costruttori S.p.A. Todini Costruzioni Generali S.p.A. Rome 56,907 77.7141% Salini S.p.A. Salini Hydro Ltd Dublin (Ireland) 5 100.00% Salini S.p.A. Co.Ge.Ma. S.p.A. Rome 1,032 100.00% Salini S.p.A. Metro B S.r.l. Rome 20,000 52.52% Salini S.p.A. Metro B1 S.c. a r.l. Rome 100 80.70% Salini S.p.A. RI.MA.T.I. S.c. a r.l. Rome 100 83.42% Salini S.p.A.

Salini Nigeria Ltd Nigeria Naira 10,000 99.00% 1.00%

Salini S.p.A. Co.ge.ma. S.p.A.

Zeis S.r.l. Rome 10,000 100.00% Salini Costruttori S.p.A. Immobiliare San Vittorino Rome 819 93.00% Zeis S.r.l. Infernetto S.r.l. Rome 10 100.00% Zeis S.r.l. Plus S.r.l. Rome 765 55.46% Zeis S.r.l. Dirlan S.r.l. Rome 46 100.00% Plus S.r.l. Nores S.r.l. Rome 100 87.12% Plus S.r.l. Consorzio Tiburtino Rome 10 87.17% Plus S.r.l. Joint Venture Salini Impregilo Mukorsi (Zimbabwe) 8 99.90% Salini S.p.A. Salini Bulgaria AD Sofia (Bulgaria) Lev 50 100.00% Salini S.p.A. TB Metro S.r.l. Rome 100 51.00% Salini S.p.A. Madonna dei Monti S.r.l. Rome 46 100.00% Salini Costruttori S.p.A. Hemus Motorway AD Sofia (Bulgaria) Lev 1,300 51.00% Salini S.p.A. Sa.Co.Lav. S.c. a r.l. in liquidation Rome 10 100.00% Salini S.p.A.

Salini Malaysia SDN. BHN Kuala Lumpur Myr 1,100 90.00% 10.00%

Salini S.p.A. Co.Ge.Ma. S.p.A.

Salini Polska sp.zoo Warsaw Pln 393 100.00% Salini S.p.A. CMT I/S Copenhagen 0 59.99% Salini S.p.A.

Salini India Private Ltd India 14 95.00%

5.00% Salini Costruttori S.p.A. Co.Ge.Ma. S.p.A.

Salini Kolin CGF Joint Venture Turkey 4 38.00% Salini S.p.A. Sa.Ma. S.c.ar.l. in liquidation Rome 0 99.00% Salini S.p.A.

JV Todini Akkord Salini Costruttori Rivne Ukraine 100 25.00% 40.00%

Salini S.p.A. Todini Costruzioni Generali S.p.A.

JV Todini Takenaka LLCC Baku Azerbaijan 0 60.00% Todini Costruzioni Generali S.p.A.

Corso del Popolo S.p.A. Terni 1,200 55.00% Todini Costruzioni Generali S.p.A.

Corso del Popolo Engineering S.c.a.r.l. Rome 10 55.00% Todini Costruzioni Generali S.p.A.

Consorzio FAT Rome 46 99.00%

1.00% Todini Costruzioni Generali S.p.A. Co.Ge.Ma. S.p.A.

EURL Todini Algeriè Algiers (Algeria) 63 100.00% Todini Costruzioni Generali S.p.A.

GMTI S.c.a.r.l. Algiers (Algeria) 11 100.00% Todini Costruzioni Generali S.p.A.

Groupement Sci Sonatro Algiers (Algeria) 0 60.00% Todini Costruzioni Generali S.p.A.

Consorzio Todini Aktor Metro Athens (Greece) 0 55.00% Todini Costruzioni Generali S.p.A.

Marmore S.c.a.r.l. in liquidation Rome 10 88.49% Todini Costruzioni Generali S.p.A.

Maver S.c.a.r.l. in liquidation Rome 10 100.00% Todini Costruzioni Generali S.p.A.

Nobiallo S.c.a.r.l. in liquidation Rome 10 90.00% Todini Costruzioni Generali S.p.A.

Perugia 219 S.c.a.r.l. Pantalla di Todi (PG) 10 55.00% Todini Costruzioni Generali S.p.A.

Piscine S.c.r.l. Rome 10 70.00% Todini Costruzioni Generali S.p.A.



120

Piscine dello Stadio S.r.l. Terni 870 70.00% Todini Costruzioni Generali S.p.A.

Todini Central Asia Astana (Kazakhstan) 1,438 100.00% Todini Costruzioni Generali S.p.A.

Groupement Todini Enaler Algiers (Algeria) 0 84.00% Todini Costruzioni Generali S.p.A.

Groupement Todini Hamila Sousse (Tunisia) 0 100.00% Todini Costruzioni Generali S.p.A.

Subsidiaries consolidated according to the equity method

Salcost France S.r.l. in liquidation Paris (France) 15 100.00% Salini Costruttori S.p.A.

Salini Rus OOO Moscow (Russia) 74 99.00% Salini S.p.A.

Albacem 2007 in liquidation Tirana (Albania) 1 100.00% Todini Costruzioni Generali S.p.A.

Consorzio Costral in liquidation Rome 20 70.00% Todini Costruzioni Generali S.p.A.

Edilfi S.c.a.r.l. in liquidation Rome 10 100.00% Todini Costruzioni Generali S.p.A.

Todedil S.c.a.r.l. in liquidation Todi (PG) 10 85.00% Todini Costruzioni Generali S.p.A.

Associates consolidated according to the equity method

Ga.bi.re. S.r.l. Rome 10 60.00% Salini Costruttori S.p.A.

Con.Sal. S.c.n.c. in liquidation Rome 15 30.00% Salini S.p.A.

Forum S.c. a r.l. Rome 51 20.00% Salini S.p.A.

Group. d'entre. Salini Strabag Guinea 10 50.00% Salini S.p.A.

Groupement Italgisas in liquidation Kenitra (Morocco) 620 30.00% Salini S.p.A.

Ital.Sa.Gi. Sp.Z.O.O. Katowice (Poland) Zl. 40 33.00% Salini S.p.A.

Joint Venture Salini-Necso Addis Ababa (Ethiopia) 20 50.00% Salini S.p.A.

S.Ruffillo S.c. a r.l. Rome 60 35.00% Salini S.p.A.

Casada S.r.l. Rome 98 25.00% Zeis S.r.l.

Immobiliare Marinella S.r.l. Rome 10 33.33% Zeis S.r.l.

Alburni S.c.a.r.l. in liquidation Rome 7 47.14% Todini Costruzioni Generali S.p.A.

Bata S.r.l. in liquidation Bari 102 27.55% Todini Costruzioni Generali S.p.A.

C.P.R. 2 Naples 2 35.97% Todini Costruzioni Generali S.p.A.

C.P.R. 3 Naples 2 35.97% Todini Costruzioni Generali S.p.A.

Colle Todi S.c.a.r.l. in liquidation Rome 10 66.67% Todini Costruzioni Generali S.p.A.

Cons Pizzarotti Todini .Keff-Eddir Parma 100 0.01% Todini Costruzioni Generali S.p.A.

Cons. Aft in liquidation Rome 46 33.33% Todini Costruzioni Generali S.p.A.

Cons.Astaldi-Federici-Todini Rome 100 49.95% Todini Costruzioni Generali S.p.A.

Consorzio Kallidromo Athens (Greece) 29 20.70% Todini Costruzioni Generali S.p.A.

CUS (Consorzio Umbria Sanità) Perugia 10 31.00% Todini Costruzioni Generali S.p.A.

Galileo S.c.a.r.l. Pantalla di Todi (PG) 10 40.00% Todini Costruzioni Generali S.p.A.

Irina S.r.l. in liquidation Naples 103 36.00% Todini Costruzioni Generali S.p.A.

Risalto S.r.l. in liquidation Rome 89 33.33% 33.33%

Todini Costruzioni Generali S.p.A. Salini S.p.A.

Rupe di Orvieto S.c.a.r.l. in liquidation Orvieto (TR) 29 42.86% Todini Costruzioni Generali S.p.A.

Scat 5 S.c.a.r.l. in liquidation Rome 26 24.99% Todini Costruzioni Generali S.p.A.

Sedi S.c.a.r.l. Rome 10 34.00% Todini Costruzioni Generali S.p.A.

Trasimeno S.c.a.r.l. in liquidation Pantalla di Todi (PG) 10 30.00% Todini Costruzioni Generali S.p.A.

Valico S.c.a.r.l. in liquidation Rome 10 50.00% Todini Costruzioni Generali S.p.A.

Variante di Valico S.c.a.r.l. in liquidation Rome 90 33.33% 33.33%

Todini Costruzioni Generali S.p.A. Salini S.p.A.

Co.Ge.Fin S.r.l. Rome 10 51.00% Todini Costruzioni Generali S.p.A.



121

33. Changes in equity investments A) Holdings in subsidiaries 31 December 2011 Changes in period 30 June 2012

Historical

cost

Revaluations/ Payments

Write-downs/ Dividends

Reclassifications/ acquisitions/

disposals

Carrying amount

Risks provision


disposals

Dividends Revaluations/ write-downs

Provisions

Provision reversal/

use

Payments Total Historical

cost




disposals

Carrying amount

Risks provision

Subsidiaries:

Salini S.p.A. 120 0 0 0 120 0 (120) 0 0 0 0 0 (120) 120 0 0 (120) 0 0

Salcost France S.r.l. in liquidation 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Subsidiaries of the subsidiary SALINI S.p.A.:

Salini Rus OOO 0 0 0 0 0 0 73 0 0 0 0 0 73 0 0 0 73 73 0

Subsidiaries of the subsidiary Todini S.p.A.:

Albacem 2007 in liquidation 0 0 (1) 0 0 (77) 0 0 0 0 0 0 0 0 0 (1) 0 (1) (77)

Cogeca S.c.a.r.l. in liquidation 10 0 (11) 0 0 (0) 0 0 0 0 0 0 0 10 0 (11) 0 (1) (0)

Consorzio Costral in liquidation 14 0 0 0 14 0 0 0 0 0 0 0 0 14 0 0 0 14 0

Edilfi S.c.a.r.l. in liquidation 10 0 (10) 0 0 (236) 0 0 0 0 8 0 8 10 0 (10) 0 0 (228)

Todedil S.c.a.r.l. in liquidation 9 0 (0) 0 9 0 0 0 0 0 0 0 0 9 0 (0) 0 9 0

TOTAL SUBSIDIARIES 43 1 (23) 0 143 (314) (47) 0 0 0 8 0 (39) 163 0 (23) (47) 94 (306)

143 (314) (47) 0 0 0 8 0 (39) 94 (306)

B) Equity investments in associates 31 December 2011 Changes in period 30 June 2012

Historical

cost




disposals

Carrying amount

Risks provision


disposals

Dividends Revaluations/writ

e-downs Provisions

Provision reversal


cost




disposals

Carrying amount

Risks provision

Associates

G.A.B.I.RE. S.r.l. 17 0 (17) 0 0 (201) (201) 0 (193) 0 201 670 477 687 0 (210) (201) 276 0

Associates of the subsidiary SALINI S.p.A.:

Con.Sal. S.c.n.c. - RM in liquidation (a) 5 0 (5) 0 0 (12) 0 0 0 0 0 0 0 5 0 (5) 0 0 (12)

Forum S.c. a r.l. - RM 10 0 0 0 10 0 0 0 0 0 0 0 0 10 0 0 0 10 0

Group. d'entreprises Salini Strabag 5 0 0 0 5 0 0 0 0 0 0 0 0 5 0 0 0 5 0

Groupement Italgisas - Kenitra (Morocco) (IN LIQUIDATION)

186 0 (186) 0 0 (842) 0 0 0 0 0 0 0 186 0 (186) 0 0 (842)

Ital.Sa.Gi. Sp.Z.O.O. – Katowice (Poland)

325 0 (325) 0 0 (222) 0 0 0 0 0 0 0 325 0 (325) 0 0 (222)

JV Salini Acciona 9 0 0 0 9 0 0 0 0 0 0 0 0 9 0 0 0 9 0

Risalto S.r.l. – RM (IN LIQUIDATION) 30 0 0 0 30 (2) 0 0 0 0 0 0 0 30 0 0 0 30 (2)

S. Ruffillo – RM 21 0 0 0 21 0 0 0 0 0 0 0 0 21 0 0 0 21 0

Variante di Valico S.c. a r.l. (IN LIQUIDATION)

30 0 0 0 30 (5) 0 0 0 0 0 0 0 30 0 0 0 30 (5)

- Associates of the subsidiary ZEIS S.r.l.:

Casada S.r.l. - RM (27) 3,782 (150) 0 3,605 0 0 0 67 0 0 0 67 (27) 3,849 (150) 0 3,672 0

Immob.Marinella S.r.l. 2,046 714 (102) 0 2,658 0 0 0 (69) 0 0 50 (19) 2,096 714 (171) 0 2,639 0

Total associates of SALINI + SALINI COSTRUTTORI

2,657 4,496 (785) 0 6,369 (1,285) (201) 0 (195) 0 201 720 525 3,377 4,563 (1,047) (201) 6,692 (1,084)

Associates of the subsidiary TODINI S.p.A.:

Alburni S.c.a.r.l. in liquidation 3 20 0 0 23 0 0 0 (1) 0 0 0 (1) 3 20 (1) 0 22 0

Bata S.r.l. in liquidation 28 74 (28) 0 74 0 0 0 (0) 0 0 0 (0) 28 74 (28) 0 74 0

Co.ge.fin. S.r.l. 9,213 0 (1,827) 0 7,386 0 0 0 (581) 0 0 0 (581) 9,213 0 (2,408) 0 6,805 0

Colle Todi S.c.a.r.l. in liquidation 7 2 0 0 9 0 0 0 0 0 0 0 0 7 2 0 0 9 0

C.P.R. 3 1 1 0 0 2 0 0 0 0 0 0 0 0 1 1 0 0 2 0

Cons.AFT in liquidation** 15 0 0 0 15 0 0 0 0 0 0 0 0 15 0 0 0 15 0

Cons.Astaldi-Federici-Todini** 50 0 (50) 0 0 (503) 0 0 0 0 39 0 39 50 0 (50) 0 (0) (464)

C.P.R. 2 1 2 0 0 3 0 0 0 (2) 0 0 0 (2) 1 2 (2) 0 1 0

Cons Pizzarotti Todini .Keff-Eddir* 50 0 0 0 50 0 0 0 0 0 0 0 0 50 0 0 0 50 0

CUS (Consorzio Umbria Sanità) 3 0 0 0 3 0 0 0 0 0 0 0 0 3 0 0 0 3 0

Consorzio Kallidromo 8 0 (2) 0 6 0 0 0 0 0 0 0 0 8 0 (2) 0 6 0

Galileo S.c.a.r.l. 4 0 0 0 4 0 0 0 0 0 0 0 0 4 0 0 0 4 0

Irina S.r.l. in liquidation 308 773 (360) 0 721 0 0 0 (33) 0 0 0 (33) 308 773 (393) 0 688 0

Risalto S.r.l. 30 0 (6) 0 24 0 0 0 0 0 0 0 0 30 0 (6) 0 24 0

Rupe Orvieto S.c.a.r.l. 0 0 0 0 0 (68) 0 0 0 0 0 0 0 0 0 0 0 0 (68)

Scat 5 S.c.a.r.l. 6 0 0 0 6 0 0 0 0 0 0 0 0 6 0 0 0 6 0

Sedi S.c.a.r.l. 3 0 0 0 3 0 0 0 0 0 0 0 0 3 0 0 0 3 0

Trasimeno S.c.a.r.l. in liquidation 3 0 0 0 3 0 0 0 0 0 0 0 0 3 0 0 0 3 0

Valico S.c.a.r.l. 5 0 3 0 8 0 0 0 0 0 0 0 0 5 0 3 0 8 0

Variante di Valico 30 2 (2) 0 30 0 0 0 0 0 0 0 0 30 2 (2) 0 30 0

Total TODINI associates 9,770 874 (2,272) 0 8,370 (571) 0 0 (618) 0 39 0 (579) 9,770 874 (2,890) 0 7,754 (532)

TOTAL ASSOCIATES 12,427 5,370 (3,057) 0 14,739 (1,856) (201) 0 (813) 0 240 720 (54) 13,147 5,437 (3,937) (201) 14,448 (1,616)

14,739 (1,856) (201) 0 (813) 0 240 720 (54) 14,448 (1,616)

31 December 2010 Changes in period 30 June 2012

Historical

Cost Revaluations/

Payments Write-downs/

Dividends


disposals

Carrying amount

Risks provision


disposals

Dividends Revaluations/ write-downs

Provisions Provision reversal


Cost Revaluations/

Payments

Write-downs/Dividen

ds


disposals

Carrying amount

Risks provision

D) Other enterprises

Spoleto Crediti e Servizi S. Coop. a r.l. 84 0 0 0 84 0 0 0 0 0 0 0 0 84 0 0 0 84 0

Imprebanca S.p.A. 500 0 0 0 500 0 0 0 0 0 0 0 0 500 0 0 0 500 0

BCC Roma 0 0 0 0 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Other enterprises under the subsidiary SALINI S.p.A.:

Impregilo S.p.A. 122,739 0 0 0 122,739 0 146,197 0 112,069 0 0 0 258,265 122,739 112,069 0 146,197 381,004 0

Consorzio Iricav Due 71 0 0 0 71 0 0 0 0 0 0 0 0 71 0 0 0 71 0

Others (four minor equity investments) 78 0 (3) 0 75 0 0 0 0 0 0 0 0 78 0 (3) 0 75 0

Other companies of the subsidiary ZEIS S.r.l.:

Azioni Roma Mercato 426 0 0 0 426 0 0 0 0 0 0 0 0 426 0 0 0 426 0

Total other companies of SALINI + SALINI COSTRUTTORI

123,898 0 (3) 0 123,896 0 146,197 0 112,069 0 0 0 258,265 123,898 112,069 (3) 146,197 382,160 0

Other enterprises under the subsidiary Todini S.p.A.:

Cons. IECAF 1 0 0 0 1 0 0 0 0 0 0 0 0 1 0 0 0 1 0

Costruttori Rom.Riun.Grandi Opere S.p.A.

52 0 0 0 52 0 0 0 0 0 0 0 0 52 0 0 0 52 0

A.Constructor JV Kallidromo 6 0 0 0 6 0 0 0 0 0 0 0 0 6 0 0 0 6 0

JV Todini diekat 8 0 0 0 8 0 0 0 0 0 0 0 0 8 0 0 0 8 0

Nomisma S.p.A. 27 0 0 0 27 0 0 0 0 0 0 0 0 27 0 0 0 27 0

CAAF Interregionale 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Total other TODINI enterprises 93 0 0 0 93 0 0 0 0 0 0 0 0 93 0 0 0 93 0

TOTAL OTHER ENTERPRISES 123,991 0 (3) 0 123,989 0 146,197 0 112,069 0 0 0 258,265 123,991 112,069 (3) 146,197 382,254 0

(a) Equity interest in an enterprise resulting in unlimited liability – Article 2361 of the Italian Civil Code

123,989 0 146,197 0 112,069 0 0 0 258,265 382,254 0

138,870 (2,170) 145,948 0 111,255 0 248 720 258,172 396,795 (1,922)

For the Board of Directors

CEO

Pietro Salini

Auditors’ review report on the interim consolidated financial statements (Translation from the original Italian text) To the Board of Directors of Salini Costruttori S.p.A.

1. We have reviewed the interim consolidated financial statements, comprising the consolidated statement of financial position, the consolidated income statement, the consolidated statement of comprehensive income, the consolidated statement of changes in shareholders’ equity, the consolidated cash flow statement and the related notes to financial statements, of Salini Costruttori S.p.A. and its subsidiaries (the “Salini Costruttori Group”) as of June 30, 2012. Management of Salini Costruttori S.p.A. is responsible for the preparation of the interim consolidated financial statements in conformity with the International Financial Reporting Standards applicable to interim financial reporting (IAS 34) as adopted by the European Union. Our responsibility is to issue this review report based on our review. These interim consolidated financial statements have been prepared, on a voluntary basis, in conformity with the International Financial Reporting Standards applicable to interim financial reporting (IAS 34) as adopted by the European Union, for presentation purposes only, in accordance with the prevailing standards applicable to construction companies, taking also into account the access procedures of international tender offers.

2. We conducted our review in accordance with review standards recommended by Consob (the Italian Stock Exchange Regulatory Agency) in its Resolution no. 10867 of July 31, 1997. Our review consisted mainly of obtaining information on the accounts included in the interim consolidated financial statements and the consistency of the accounting principles applied, through discussions with management, and of applying analytical procedures to the financial data presented in these consolidated financial statements. Our review did not include the application of audit procedures such as tests of compliance and substantive procedures on assets and liabilities and was substantially less in scope than an audit conducted in accordance with generally accepted auditing standards. Accordingly, we do not express an audit opinion on the interim consolidated financial statements as we expressed on the annual consolidated financial statements.

With respect to the consolidated financial statements of the prior year and the interim consolidated financial statements of the corresponding period of the prior year, presented for comparative purposes, reference should be made to our reports issued on 1 August 2012 and on 14 March 2012, respectively.

2

3. Based on our review, nothing has come to our attention that causes us to believe that the interim consolidated financial statements of Salini Costruttori Group as of June 30, 2012 are not prepared, in all material respects, in conformity with the International Financial Reporting Standards applicable to interim financial reporting (IAS 34) as adopted by the European Union.

4. As disclosed by the Directors in the notes to financial statements, the Court of first instance of Rome, with rulings n. 3940/2006 and n. 9904/2007, annulled the resolutions of the Salini Costruttori S.p.A. shareholders' meetings that had resolved upon the approval of the Company’s financial statements for the years ended December 31, 2003 and 2002 and the respective distribution of dividends. The Company appealed against such rulings.

Rome, February 7, 2013

Reconta Ernst & Young S.p.A. Signed by: Mauro Ottaviani, Partner This report has been translated into the English language solely for the convenience of international readers.

Documents

Salcostruttori Cons 06 2012 Ifrs En1