Bill 05 Inglese

Transcript

Bill 05 Inglese

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INSO SISTEMI PER LE INFRASTRUTTURE SOCIALI S.P.A.
BALANCE SHEET AND REPORTS AT 31 DECEMBER 2005
INSO spa
Share Capital 15.000.000
R.E.A. Number 261093
VAT Number IT 01226390480
Headquarters: Florence, via A. da Noli 2/4
Management & Administration:
Montelupo Fiorentino (Florence), via Sammontana 11
Agencies:
Via Filzi 25/A
20124 Milan
Via Cristoforo Colombo 112
00147 Rome
Centro Direzionale Isola G/1
Scala D - int. 39
80143 Naples
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© Copyright 2006 Inso spa
Layout: Fried Rosenstock
Printed by:
Grafiche Martinelli, Bagno a Ripoli, Firenze,
July 2006
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SUMMARY
STATUTORY DETAILS AND EXECUTIVES
ORDINARY SHAREHOLDERS’ MEETING
CERTIFICATE OF QUALIFICATION SOA
CERTIFICATE OF APPROVAL ISO
MANAGEMENT’S REPORT
JOB ORDER PORTFOLIO AND COMMERCIAL POLICY WORK IN PROGRESS HOSPITALS INDUSTRIAL AND COMMERCIAL BUILDINGS PHARMACEUTICAL FIELD AND SYSTEMS MEDICAL EQUIPMENT PARTNERSHIPS AND COLLECTIVE WORKS COMPANY ORGANIZATION PROCUREMENT QUALITY AND RESEARCH FINANCIAL MANAGEMENT FINANCIAL RISK MANAGEMENT POLICIES SUMMARY OF ECONOMICAL DATA INTRA-GROUP RELATIONSHIPS BALANCE SHEET AT 31 DECEMBER 2005
FINANCIAL STATEMENT – ASSETS FINANCIAL STATEMENT – LIABILITIES MEMORANDUM ACCOUNTS PROFIT AND LOSS ACCOUNT NOTES TO THE FINANCIAL STATEMENTS
PRINCIPLES APPLIED IN THE FINANCIAL STATEMENTS VALUATION CRITERIA ASSETS LIABILITIES MEMORANDUM ACCOUNTS PROFIT AND LOSS ACCOUNT CASH FLOWS BOARD OF AUDITORS’ REPORT
AUDITOR’S REPORT
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Rendering of the Vimercate Hospital
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STATUTORY DETAILS AND EXECUTIVES
Board of Directors President
Honorary President
Vice President and Managing Director
Members of the Board:
Franco Susini
Gian Luca Cerrina Feroni
Massimo Pagnini
Maurizio Alderighi
Roberto Bruni*
Emanuele Noschese
Mario Primicerio
Fabrizio Pucciarelli
Pierino Rosati
Antonio Tamalio
Oriano Valentini
Ivano Zeppi
Board of Internal Auditors** President
Effective Auditors:
Romano Mosconi
Antonio Bertani
Nazareno Speca
Substitute Auditors:
Lorenzo Navarrini
Vieri Chimenti
Management CEO
Finance Administration & Control Director
Technical Directors:
Emanuele Noschese
Amedeo Andreini
Riccardo Petruzzelli
Auditor * appointed on 15 December 2005, replacing Luigi Minischetti
** reconfirmed by the Shareholders’ Meeting held on 27 April 2006
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New Emergency Dept. – Hospital of Leghorn
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ORDINARY SHAREHOLDERS’ MEETING HELD ON APRIL 27TH, 2006 (ABSTRACT)
Agenda 1) Approval of the Financial Statements draft prepared for the business year ended 31 Dec. 2005 pursuant to Art.
2364 of the Italian Civil Code, as well as of the Management’s, Auditors’ and Independent Auditor’s reports;
consequent resolutions;
2) Replacement of a director by co-optation; Consequent and pertinent resolutions;
3) Renewal of the Board of Auditors for mandate expiry; Consequent resolutions;
4) Any other business.
OMISSIS
The Ordinary Shareholders’ Meeting held on 27 April 2006:
• Approved the financial statements for the year ended 31 December 2005.
• Allocated net year’s profits for 706,012 as specified below:
Euro 36,000
to the legal reserve
Euro 670,012 to Previous Years’ Profit
At the end of the Meeting, the Net Worth of the Company was composed as follows:
Share capital
€ 15.000.0000
Legal reserve
€
Previous years' profits
€
1.041.714
Total net worth
€
16.247.714
206.000
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CERTIFICATE OF QUALIFICATION SOA
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CERTIFICATE OF APPROVAL ISO
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Dear shareholders,
The financial year 2005 closes with a net profit of € 706,012, after absorbing amortization and depreciation for
€ 421,105; risk allocation of € 830,310; net financial expenses of € 808,367 and income taxes of € 1,185,872.
Industrial management confirms increased production above one hundred million Euro for the second consecutive year, with a 4.5% increase allowing us to confirm growth trends for the ending year, as already recorded in
the previous financial years.
Our portfolio reconfirms Your Company’s capacity to manage complex and multidisciplinary projects in the health
care, trade, industrial and infrastructure sectors (through Ergon Consortium) in Italy and abroad by playing with the
most important subjects operating in the relevant sectors in an increasingly competitive market.
Following the trend already identified last year, the domestic market is still characterized by a reduced financial
availability, hence the constant increase in the promotion of projects for wide-scope works to be implemented
with private financial contributions (Project Financing or Building and Management Concessions), particularly in
the infrastructure and health care sectors.
The health care sector is the Company’s core business. While, on the one hand, new market trends are limiting
the great opportunities available to a smaller number of competitors - in 2005, INSO confirmed its position among
the few domestic companies (less than 10) capable of managing such kinds of projects in the health care sectors,
on the other hand, such projects require a considerable commercial effort in terms of internal and external professional resources to be made available, and of costs/investments to be absorbed, as well as a financial commitment that goes far beyond the standard for companies of a similar size in the traditional building industry.
Hence, the need for continuous efforts and an attitude of great determination to pursue a strategy of development in foreign markets and in the most technology-based sectors, for the purpose of improving our cash flows
and profitability.
JOB ORDER PORTFOLIO AND COMMERCIAL POLICY The net order portfolio as at 31.12.2005 was
506.9 million Euro. The year’s awards accounted for 166.9 million Euro, as shown in the table below.
Such a significant picture is the result of the corporate strategy already defined in the 2006-2008 three-year plan,
based on which most trade activities carried out during the year concerned project financing initiatives, both in
the form of tenders for “Building and Management Concession” (art. 19.2 of Law 109/94) and as “Proposals put
forward as potential sponsor” (art. 37 bis of Law 109/94).
Under this framework, the 2 initiatives described below were positively concluded and were therefore considered in our order portfolio as at Dec. 31, 2005:
Management of services
72,8 €/ml (44%)
Hospitals 87,9 €/ml (52%)
• The definitive contractualization
of the Osimo Hospital, located
in the province of Ancona (for an
execution budget of €/ml 30, in
addition to €/ml 135 for the management of services over 11
years). After approving the proposal submitted in December
Others 0,8 €/ml
Medical Equipment
1,8 €/ml
Industrial & Commercial
Buildings 2,5 €/ml (2%)
Pharmaceutical &
Plants 1 €/ml
2003 by CONSORZIO OSPEDALE DI OSIMO, led by INSO, the
public tender for the second
2005 JOB ORDERS: 166.9 €/MIL.
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phase defined by art. 37-bis of
Law 109/94 had no participants,
so the relevant concession contract was signed in October
2005. INSO’s portion amounts
to €/ml 20.2 for designing and
construction, and €/ml 28.5 for
service management.
• Within the framework of our
participation in the program for
the reorganization of the hospital network in the Italian region
Lombardia, Your Company has
been awarded the construction
and management concession
for the Vimercate Hospital, Milan (for a total execution budget
of approximately €/ml 119, in
addition to €/ml 327 for the management of services over 24
Mr. Antonio Aprile, General Manager of ASUR, and Mr. Fabrizio
Pucciarelli President of Osimo Salute SpA, after signing the concession
contract for the Osimo Hospital
years). The proposal submitted
in June 2005 by the group of
companies led by INSO (40%) has been accepted by the awarding Authority Infrastrutture Lombarde Spa and
the relevant concession contract was signed on March 8th, 2006. INSO’s portion of works amounts to €/ml 49
for Designing and Construction of the new hospital facility, and €/ml 44.3 for the management of services.
As regards the rights already acquired on other initiatives in PFI, not yet listed in the order portfolio as at Dec. 31,
2005, we point out that:
• the project for the “Prato-Signa motorway link”, for which Ergon (a 33% subsidiary controlled by INSO) had already been appointed as Sponsor, was positively concluded with the final award of the contract in March 2006;
• the project financing for the “implementation of support action to sustain building and installation reorganization processes, upgrading of system networks, plants, tunnels and cogeneration of AZIENDA OSPEDALIERA
DI CAREGGI” (€ 20 million execution budget, plus over € 130 million to manage services for 18 years) is still
ongoing and waiting for the fulfilment of the ‘phase II’ public tender; INSO is taking part in this tender with a
15% share as principal in the Temporary Association of Companies (ATI) headed by Siram S.p.A., already appointed as Sponsor.
During the year, Your Company
has started 2 more initiatives
which administrative awarding
stages are still ongoing:
• “Ospedale dei Castelli Romani”
in Ariccia (Rome), (proposals put
forward under Art. 37-bis of Law
109/94 - € 100 million investment and approximately € 277
million management) submitted
by the ATI headed by INSO
(with approximately 41%) in June 2005. At present, the procedure for the evaluation of the
proposal has not yet started, as
Rendering of the Vimercate Hospital
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the new regional council, which was created shortly after the submittal, is waiting to define an extension of the
area made available for the new hospital in the town plan of the Municipality of Ariccia, and the entire planning
is being delayed as the municipality has been placed under temporary receivership.
• The new hospital facility called “Nuovo Polo Ospedaliero Unico di Thiene” (proposals put forward under Art.
37-bis of Law 109/94 - € 120 million investment and approximately € 430 million management) submitted by
the ATI headed by INSO (with approximately 36%) in December 2005. This proposal is presently being evaluated from a technical point of view by the Authority that will appoint the relevant Sponsor within April 2006.
To provide an exhaustive picture of the activities carried out by INSO in this sector, we point out that the concessions for the construction of “Ospedale di Alba Bra” and “Ospedale Niguarda (Milan)” have been definitively
awarded to other associations of companies.
The proposal submitted for the construction of the Hospital of Novara has become null for the unilateral cancellation of the tender procedure by the relevant Authority (the cancellation was probably due to a political and technical reorganization of the administration of Regione Piemonte).
Finally, as regards the proposal for the construction of the Hospitals of Prato, Pistoia, Lucca and Massa (with a
budget of over € 360 mln for construction and € 2,000 mln for service management), whereto INSO participated
under the framework of the “Toscana Salute Consortium”, the State Council overturned the decision pronounced
by the TAR (regional administrative court) and confirmed the choice of SIOR Consortium which implied a privilege
for the competitor group. However, the phase II public tender has not yet been called and it is easy to foresee a
further delay for this implementation.
As resulting from the considerations above, out participation in this initiatives implies a great effort and expenditure of corporate resources, both in professional and economic/financial terms, and for the preparation of offers,
while it seems to be appropriate to observe that many of these initiatives are eventually put off or cancelled for
reasons that exclusively pertain the customers, which leads to a loss of corporate investment that could have been
used for other projects. Conversely, Your Company has been awarded 2 contracts for the project/concession of
hospitals (Vimercate and Osimo) over the 5 proposals put forward that have been finally assigned (Niguarda, Alba/Bra and Naples), with a 40% success that ranks INSO among the first few companies in Italy for number of
similar contracts awarded, together with other two important domestic competitors with two awards each.
We still pursue our trade activity even in the traditional public works sector, though with an activity mainly focused
on the definition of additional contracts on job orders in progress, for an aggregate amount of over €/ML 9,
which can be mostly connected with the hospitals of Empoli, Zakyntos, Leghorn and Cannizzaro (Catania).
For the hospital and medical equipment sector, INSO has been awarded two significant job orders with important strategic and technological contents:
• the construction of the Operating Theatres of the Cisanello Hospital of Pisa and annex areas for a total
amount of €/ml 2.88; the operating theatres will be built in the new hospital construction, which works, assigned to Inso, are about to be completed, and will therefore allow for the total completion of this job order.
• the supply of a RIS-PACS System for the Health Care companies of the Wide South-Eastern Area of Tuscany, where INSO was part of an ATI headed by Kodak and GE, and will specifically take care of supplying the
hardware and furniture for an aggregate value of /ml 0.48.
In the infrastructure sector, trade activities were continued to support the Ergon Consortium, which, in addition
to the above-mentioned project for the Prato-Signa motorway link, successfully participated in the tender for the
“Quadrilatero MARCHE UMBRIA SPA” for the maxi lot #2 for the works to complete the Perugia-Ancona segment, for a contract price of approximately € /ml 615 (where INSO took part for €/ml 50).
On foreign markets, trade activities were continued with many works in the Mediterranean area, specifically with
the following projects:
• in Morocco, a first contract has been obtained for the supply of health care furniture & fittings for 5 hospitals
of the Moroccan network, for an amount of €/ml 0.32;
• in Syria, the Al Marah tender (for €/ml 6) is presently ongoing and a longer term tender is being followed in Teshreen;
• in Libya, the contract for the supply of medical equipment to the hospital of Benghazi (€/ml 200) has been awarded to our competitor SIMED but was then suspended due to irregular procedures and the offers are probably
going to be reconsidered or a new call for tenders is going to be organized;
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• in Malta, with a consortium with the Austrian company AME, the Company took part in a call for tenders for
the supply of the health care IT system for the island, which evaluation is still ongoing.
In Greece, a nation where INSO has a traditional presence with a branch that has already completed several important hospitals, the health care market has remained still throughout 2005 due to a slowing down of investments after the Olympic games; a recovery is expected over 2006 and some small-medium calls for tenders have
already been announced, while new PFI are being studied and may be expected to start over next year.
As regards Latin America, many important trade actions have been started in the area and may give interesting
results during the current year, in particular:
• a program for the construction of five new public hospitals using the PPP (public-private partnership) formula is
underway in Chile;
• a technological renewal of the entire hospital park is being scheduled in Venezuela;
• more initiatives are being studied in some Central America countries.
Furthermore, interesting opportunities are appearing in the Persian Gulf area (Emirates and Saudi Arabia).
For the year 2006, contracts for € 206.5 million are estimated to be awarded, which would consolidate our position in the health care sector through project financing, in infrastructures and in the Mediterranean and Latin America markets, while a longer term participation is taking shape in Eastern Europe.
Consistently with the previous year’s predictions, we enhanced the trade sector: the foreign trade network has
been reinforced by hiring a new dedicated Manager, while the capacity to prepare project financing proposals has
been further developed by creating a dedicated team with external and internal experts.
WORK IN PROGRESS The Company’s production amounts to 107 million (+ 4.3 compared to the pre-
vious year). While the positive growth trend that characterized the years between 2000 and 2005 with a 227%
production increase has been confirmed, the 2005 increase was below expectations due to the putting off of the
job order for the supply of medical equipment for the Mater Dei Hospital of Malta, caused by an extension of the
New Law Court in Florence
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building works program not under INSO’s control. For the future, we are confident that the growth trends shown
will be further developed, even though we cannot neglect the fact that working with the public administration the
volume of production is often influenced by the gap between public planning times and the times required for the
real start of works in the yard. If we include the technical overturning of external consortia, production reached
139 million, as shown in the Income Statement, with a 17.8% increase compared to 2004.
In spite of the considerations above, the volume of foreign production remains significant (20%).
Marocco 0,3%
Malta 11,4%
Greece 8,5%
Italy 79,8%
2005 Sales by geographical area: 107 €/mil
Below you will find the analyses of the activities, divided by product sectors.
Medical Equipment
15,5 €/mil (15%)
Others 3,5 €/mil (3%)
Hospitals 49,5 €/mil (46%)
Pharmaceutical & Plants
1,6 €/mil (1%)
Industrial & Commercial Buildings
36,8 €/mil (34%)
2005 Sales by field of activity: 107 €/mil
HOSPITALS All of the realizations in the health sector are part of this category, “turnkey” and not, in-
cluding:
• The new “S. Giuseppe” Hospital of Empoli, which works, started in July 2003, are one of the major production of the Company and the progress of works during 2005 allows us to confirm the identification of the total
completion term as the summer 2006.
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• The Hospital of Parma, where both the “Piastra” and “Ala A” lot works have been completed.
• The Hospital of Leghorn, where works for the 3rd lot are continuing; in particular, during 2005, works have
progressed to the completion of the New Emergency Dept. and a considerable push forward was given to the
works in the other contracted Pavilions.
• The Cisanello Hospital (Pisa), virtually completed for the part described in the initial contract which scope was
the NPO New Hospital Pole (Nuovo Presidio Ospedaliero), and which final conclusion has been put off to
the completion of other works contracted separately by the customer, such as the construction of the new
technological plants. In this framework, Your Company aimed at and was awarded the contract for the construction of 18 operating theatres to be completed within next autumn 2006, in addition to a few additional internal and external works in the buildings of the NPO separately awarded and/or added to the main contract.
At the beginning of 2005, the contract awarded in 2004 for the construction of the new Emergency Dept. adjacent to the NPO, for a value of /ml 18.4, mainly implemented by INSO (87.5%) was finalized; due to different causes connected to authorizations to be obtained, we could not start works in 2005, so this production
will start in the first months the subsequent year to be concluded at the end of 2007.
• The Careggi Hospital (Florence), where the building to be used as Functional Technical Area has been completed and is being operating already; in addition to that, plans have been prepared for the building of the socalled “Volano Sanitario”, which works will be started within spring 2006.
• The Osimo Hospital (Ancona), where, after being awarded the contract, INSO started and almost finished the
designing stage for the new hospital.
• The Attica Hospital of Athens (Greece), a facility with 800 beds consigned in 2003, where the new works to
transform the hospital from a “Local Health Care Facility” to a “University Clinic” have been completed; the
Customer finally accepted the work by returning all the existing performance bonds given as guarantees (an important event that took place beyond the subsequent period).
• The Sotiria Hospital of Athens (Greece), where works for the new operating block have been completed and
the Customer finally accepted the work by returning all the existing performance bonds given as guarantees.
• The Gennimatas Hospital of Athens (Greece), where works for the restoration of the Kofka Pavilion and construction of the new entrance for outpatient clinic departments have been completed and finally accepted by
the Customer, who returned all the existing performance bonds given as guarantees.
• the Hospital of Kavala (Greece), where, after replacing the INSO-THEMELIODOMI Consortium in July 2005,
INSO accepted the direct task of the turn-key construction of the 374- bed hospital, thus reaching 95% of all
the works scheduled for the erection of that facility and realizing a 5.5 million Euro production for the year.
• the Hospital of Zakyntos (Greece), where, after submitting our proposals for improvements to the tender project, the Customer approved variations for a total amount of 3.7 million Euro and the excavation and foundation
pole works were completed, thus realizing a 2.05 million Euro production for the year.
INDUSTRIAL AND COMMERCIAL BUILDING Previous year’s production levels were confirmed for this
sector in 2005, particularly as regards the presence in portfolio of some big job orders:
• the new Law Court (Palazzo di Giustizia) of Florence, which works (consisting in the implementation of all
installations and systems) continued at a significant speed and maintained a constant production rhythm in line
with the times scheduled for the completion of the works within 2006. It is worthwhile mentioning the expressed intention of the Municipality of Florence to call for a tender for the second lot of works, which concomitance with the presence of still ongoing activities may represent a good opportunity not only to optimize
economies of scale, but also to implement one of the most important works of the last few years.
• Cantina Antinori of Cortona (Arezzo), one of the greatest wine cellars in Italy, where works continued up to
the completion of the facilities and most of the internal finishing and systems. The entire work is due to be
completed within the first six months of 2006.
• Cantina Antinori of Ficulle (Terni), which works continued with the construction of most structures and which
completion is estimated to be achieved by summer 2006.
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Mater Dei Hospital, Malta –
Operating Theatre
PHARMACEUTICAL FIELD AND SYSTEMS This sector, which represents a small but very important
market, particularly for its high technological content, has included the following projects:
• The completion of the New Kedrion Plant in Bolognana (Lucca): contract works have been completed, including additional works that became necessary during execution. The plasma treatment plant for the production of hemoderivatives has been opened to operations.
• The finalization of the agreement for the “Tatoi National Blood Center” of Athens, with the Greek Ministry
of Health for the recognition of the higher charges need for €/ml 2.06, consistently with claims forecasts shown
in INSO’s previous years’ financial statements. This agreement led to resume process equipment testing and
validation activities, as well as personnel training activities, which will be concluded before the end of the year.
The Ministry of Health still has to make decisions about the activation of the plant, while the proposal we submitted jointly with Kedrion (the owner of the technology used for the erection of the plant) for the start-up and
management of the plant over the next five years is still pending.
MEDICAL EQUIPMENT As regards this sector, apart from the job order for the renewal of the techno-
logical park of the Cannizzaro Hospital of Catania concluded during the year with a production of €/ml 4, the activity almost exclusively concerned foreign job orders, as appropriate tenders for INSO with turnkey packages or
multivendors are not frequent in Italy.
In 2005, activities were mainly focused on the management of the Mater Dei Hospital of Malta, where supplies
were approved for 40 €/ml (about 65% items) and a total production of €/ml 27 was implemented, of which €/ml
10.3 in 2005. This happened in spite of the considerable slowing down of the works due to delays in the erection
and system installation works not depending on INSO, which caused most equipment to remain stocked in the
warehouse.
The management of the job order for the supply of health care furniture & fittings for the 5 hospitals in Morocco was concluded in compliance with the budget, while in Syria, the job order for the supply of 15 sterilization
stations for the plan concerning the erection of community hospitals underwent a huge extension of the price and
the relevant production will be completed within 2006.
As regards service activities, the maintenance and management of the medical equipment and plants of the Hospital of Cecina (Leghorn) continued, and are due to expire at the end of 2006.
Finally, we should point out that again, during 2005, the majority of our engineering structure has supported the
commercial activity in wide scope initiatives within the corporate strategies pursued, especially – just to mention
a few – the Hospital of Benghazi in Libya and the tenders in Syria.
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Cannizzaro Hospital, Catania –
Delivery Room
PARTNERSHIPS AND COLLECTIVE WORKS Partnerships existing as at Dec. 31, 2005 include:
HBT - HOSPITAL BUILDING & TECHNOLOGIES SCARL, a limited liability consortium incorporated with a 50% holding
with Esaote, existed only for the completion of the Syrian job order because, following the procedure for the transfer of Esaote by the Bracco group concluded with a management buy-out assisted by a pool of the major national banks, the company’s mission should be redefined.
ERGON - ENGINEERING
AND
CONTRACTING SCARL: The stable Consortium ERGON incorporated between INSO
(33%), Consorzio Etruria (34%) and COESTRA (33%), Florence, which objective is to implement great infrastructure works in line with the objectives established in the previous Management’s Report, in the month of February obtained a certification as General Contracting Party under Leg. Decree n° 9 of Jan. 10, 2005 in list I for the
participation on calls for tenders up to amounts of € 350 million.
In the course of 2005, the Company has increased its commercial activity and studied and took part in several
calls for tenders, both individually and in partnership with local and/or national partners, in particular:
• Tender for the construction of the underground line “C” for the town of Rome for an amount of € 2,510.9 million, unfortunately ranked second in the list.
• “Quadrilatero MARCHE UMBRIA SPA” tender for the maxi lot n° 2 of completion works of the Perugia-Ancona segment, awarded at the beginning of 2006 to the temporary grouping of companies that includes ERGON
(with a 25% holding), together with important partners such as the Stable OPERAE Consortium which reference corporation is “Baldassini–Tognozzi–Pontello Spa”, and “Toto Spa”, specialized in infrastructure contracts
on the entire national territory. The total award amount is 615 /ml.
In addition, we point out that after the closing of the financial year, our proposal for a Project Financing for the design, construction and management of the Prato-Signa motorway link (for /ml 187.0) has been awarded and the
group where ERGON was a 25% partner with Società Autostrade S.p.A, SPEA, and Baldassini-Tognozzi had already been appointed as promoter.
AGHITO TECNOLOGIE S.R.L: This company produces and installs operating theatres and partners at 50% INSO with
Malvestio S.p.A. from Padua. In addition to the conclusion of many activities over the past years, in 2005 the company also cooperated in close synergy with INSO to pursue important objectives, including the emergency department and operating theatres for the Cisanello Hospital.
ETRURIA INVESTIMENTI SPA: Our shareholding in EI, a company of the Consorzio Etruria Group devoted to the real
estate sector, has allowed INSO to acquire its right to execute two important job orders within the greater frame-
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work of the above-mentioned “Antinori Operation”. The synergy implemented with Etruria Investimenti, together with the participation of the group leader and of another important partner, has allowed contracts to be finalized with INSO without requiring the direct involvement of INSO itself in the purchase of the real estate (“old cellar”) for € 14.5 ml + VAT; this option was a condition for the negotiation and the participation of group companies
protected INSO’s business consistency, thus avoiding the typical financial burdening of the real estate sector that
would have been its natural consequence.
MMH MOBILE MODULAR HOSPITALS S.P.A., a company where INSO partnered with Swisel Italiana with a 50% holding and which mission is the construction and marketing of mobile hospitals, executed important projects in
2005 for:
• The conclusion of the supply of a mobile emergency hospital for a total value of € 4.8 million to AFMAL (Associazione Fatebenefratelli Malati Lontani), one third of these works is still to be completed.
• The rental of two mobile operating theatres for the Hospital of Bibbiena (Arezzo ASL), determined in concomitance with the restoration of the existing operating theatres and an opportunity offered to develop an important
synergy with INSO wherever INSO plays a role for the functional readjustment of existing facilities without interrupting their operation.
• The supply of 8 mobile units for
the Mexican Government, for a
total amount of 1.3 million Euro.
This project, awarded in December 2005, is still to be executed.
In addition, the companies “Osimo Salute Spa” and “Vimercate
Salute Spa” were incorporated
and respectively dedicated to the
execution of works and the provision of services under the concession contracts signed with the relevant tenders awarded and already indicated in the “Commercial Portfolio” section. These companies have signed concession
agreements on their own with
their respective customers and
will take care of finding the necessary financial resources to integrate public liquidity supported by
the financial institutes that are accompanying them along the project since the offer stage.
Hospital of Bibbiena (Arezzo)
Mobile Operating Theatre
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COMPANY ORGANIZATION MANAGEMENT’S REPORT
“
The company’s employees as at 31.12.2005 were 131 (10 directors, 9 ma-
nagerial staff, 80 clerical staff and 32 workers), of whom 34 units working in Greece, plus 63 external professionals (10 of whom in Greece), for a total of 194 units. On the whole, the personnel remained unchanged compared to 2004, consistently with the increase in production, although an increase in directors and managerial staff
should be recorded to confirm the company’s policy to carry out more technologically advanced activities. This increase should also be seen in connection with the increasing commitment due to the award of new
job orders, mainly with project financing solutions, that need a mul-
132
131
16
19
tidisciplinary and “project-orien-
White Collars
ted” approach, as well as with the
extension of trade activities and
Executives &
Managerial Staff
82
80
Workers
production to foreign markets,
which require versatile personnel
capable of operating autonomou-
34
32
2004
2005
sly.
In Greece, where the Kavala hospital has started operations and
Break down by role (employees)
Themeliodomi’s works have been
taken over, the increase in the
number of staff exclusively accounts for the need of more work-
132
131
ers to be used for this project be-
29
34
Inso Athens Branch
cause works are mainly performed
under
direct
Inso Italy
management,
without using any subcontractor.
103
97
2004
2005
Finally, the increase in the number
of external personnel confirms, on
the one hand, an HR policy aimed
at creating flexibility and capacity
of adapting to production peaks in
Break down by job location (employees)
connection with the different activities carried out by the Company, and on the other hand, it
favours the hiring of young people
with project contracts or stages,
thus consolidating a turnover nor-
186
54
194
63
malization that is physiologically
External partners and
personnel detached by
group companies
Employees
lower than for the average companies of the sector.
132
131
2004
2005
The educational qualification of INSO’s labour force remains elevated, with 47% of graduates (38% in
technical disciplines). In addition to
this, the Company has been committed throughout 2005 to provide
Break down by contract type
21
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”
Technical diploma
(9%)
(17%)
Administrative diploma
(16%)
Civil and mechanical
engineering degree
Electronical biomedical
chemical engineering degree
Architectural degree
(5%)
(44%)
(9%)
Other degrees
Personnel educational background
intensive training activities that have involved over one third of its employees, for a total of 1,204 training hours
mainly devoted to IT, foreign languages and some subjects more closely connected with HR management and
the financial area.
Finally, activities aimed at deploying the new (ORACLE) integrated information system, already extended in 2004
to all central and peripheral corporate units (yards included), is today allowing us to manage almost all corporate
activities “on line” (Internet), thus reaching 100% of personnel both in Italy and abroad.
PROCUREMENT During 2005, supplier selection and qualification activities were increased for all the ca-
tegories of goods of interest for the Company, always with the main objective to contain costs, while ensuring
the high quality of the products and services procured.
Procurement activities were therefore continued successfully by using electronic auction solutions. Furthermore,
Your Company’s expertise has been the subject for a presentation at a conference held on the theme of quality
in procurement at the Chamber of Commerce of Milan in the presence of all the major operators of the sector, a
very prestigious event in the national market
QUALITY AND RESEARCH QUALITY Your Company has always considered “Quality” as the best means to achieve full customer
satisfaction and pursue the objectives defined by the Management. For this purpose, we have adopted a Quality Management System (QMS) that is continuously implemented and improved, and which has allowed us to
obtain Lloyd’s Register’s Quality System Certification since 1999 in compliance with the 1994 edition of the UNI
EN ISO 9001 standard. In addition, we obtained the 2000 edition of the UNI EN ISO 9001 certification (more
widely known as Vision 2000) in December 2002, one year before the term set by the standards (December
14, 2003).
In December 2005, Lloyd’s Register tested our QMS, as required every three years for certification renewal, with
a positive result. The present scope of the certification is: Turnkey design and construction of civil and industrial
Bill 05 Inglese
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“
buildings. Turnkey engineering, supply, installation of turnkey electromedical equipment packages and relevant
maintenance. Design, construction and maintenance of civil and industrial systems.
Today, our corporate Quality Management System is a mature and tested tool to:
• Contribute with even more targeted and effective means to the growth of our organization.
• Allow us to appropriately define, as a Company mainly working with job orders, the activities carried out by the
organization and measure with appropriate Quality Indicators (QIs) whether the goals set in terms of efficiency
and effectiveness have been fulfilled.
For the ongoing year, we are planning to maintain the current certification (two more maintenance audits will be
carried out by Lloyd’s Register, one in May and one in November).
RESEARCH The experimentation of the ASP model for the remote management of digital archives of ra-
diological images conducted in the Pisa Hospital Facility with the cooperation of GE and the University of Pisa was
concluded in August 2005.
The main results were dealt with in a scientific communication at the recent European Congress of Radiology
(Wien, 3-7 March 2006).
In addition, INSO took part with qualified scientific presentations in some important events (Medmatica Conference in Vicenza, a national Radiology Conference held in Montecatini, a Master e-medicine course organized by
the University of Florence).
Within the framework of MMH – Mobile Modular Hospitals’ initiatives, a specific research was promoted for the
definition of the technological and instrumental requirements of Mobile Hospital Units (Mohre Project – Mobile Hospitals Requirements and Equipment). This project, started in the second half of 2004, was concluded in May 2005
and allowed us to focus on the structural requirements and equipment required for product lines which, in the
framework of the business core, should provide an innovative response to the market both in terms of quality and
reaction times. These are very important requirements if we consider that most of our products are used in emergency situations. In addition to the traditional construction of the complete mobile hospital, usually implemented
based on the customer’s specifications, our research was intended to define industrial targeted proposals for:
• light fast-aid units consisting of only two self-sufficient shelters, for a contained basic price, fulfilling the requirements of volunteering organizations and/or Civil Protection Agencies;
• mobile units to be used as “temporary replacement units” for restoration interventions or for temporary needs
in traditional hospital facilities, which technical features should comply with regional accreditation standards, similarly to what happens with fixed hospital facilities.
FINANCIAL MANAGEMENT The net current capital reduction trend already observed in 2004 (3 €/mil,
corresponding to approx. 8%) is confirmed by 2005 data, which show a further 2 €/mil reduction (approx. 6%),
with an aggregate 5 €/mil containment over the 2-year period corresponding to about 13.5% (32 €/mil in 2005,
37 €/mil in 2003). This improvement, together with the 1 €/mil reduction recorded in the sundry receivables/payables balance and the payment of the share capital increase by the new shareholders, has contributed to reduce
net financial indebtedness compared to 12 months earlier.
As at 31.12.2005, a net financial indebtedness of 23 €/mil was recorded, with a considerable improvement compared to 31 €/mil at end 2004 (-8 €/mil, corresponding to 26%) and 40 €/mil at end 2003 (-17 €/mil, corresponding to 42.5%).
The Financial Report with all the details of the factors determining variations is available amidst the financial statement documents.
The reduction in the net financial indebtedness is partly (by about 45%) due to the share capital increase deliberated by the Extraordinary Shareholders’ Meeting held on April 29, 2005, which has led the share capital itself from
10.5 to 15 €/mil through a cash contribution of 3.6 €/mil and a consolidation of reserves by 0.9 €/mil; the share
capital increase allowed us to be included among SICI Investment Fund’s members.
At the end of 2005, the incidence of the indebtedness due beyond the year over the total net indebtedness was
23
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”
about 10%, having passed from
7% to 25% in the course of 2004.
€ 15.000.000
This was only a contingent reduction though, depending on the fact
that the dates of redemption of
€ 10.500.000
still existing medium-term financing was getting closer. However, a
medium/long-term financing contract was signed in December
2005 and disbursed during the first
€ 5.035.455
€ 5.800.000
quarter 2006 with a pool of banks
for an amount of 9 €/mil, with the
purpose of permitting an equilibrated balance to the financial de-
2000
2001
2003
2005
mand of the Malta job order. The
use of this financing instrument in-
Share capital increase
creased, already in the first quarter
2006, up to over 40% the incidence of the indebtedness due beyond the subsequent year over the total net indebtedness.
As already pointed out in the previous report on the accounts, the fluctuations observed in the financial demand
determined by the cyclic trends of job orders suggest that a constant bank credit development policy has been
pursued in order to fulfill the peaks of demand that inevitably characterize the sector where the Company operates. As a consequence, a significant increase in available bank credit was shown in 2005.
The Finance area is planning to further improve the types of financing over 2006 in favour of the medium term;
this would, on the one hand, give a more equilibrated composition to the financial structure, but on the other hand,
it would support Your Company in developing the health care building market, which is increasingly using project
financing solutions. These initiatives, once awarded, determine a long-term financial demand necessary to cover
the equity of the Special Purpose Vehicles established for the purpose. As a matter of fact, due to the scarce resources available, public bodies have mostly shifted their focus onto project financing operations in order to transfer the financial task to private entities, general contractors or promoters, who are then called to lock up their capitals in long or even very long term operations. Obviously, this trend will use increasingly targeted and specialized
financial instruments capable of supporting technically valuable companies not only for the debt capital of the project consortium companies involved, but also for the venture capital. In this segment, the “credit market” in Italy
is starting to take some timid step forward, even though the road to walk is still a long one.
The trend of claims, which usually requires long-term capital locking up, led to an increase in values in 2005 for approx. 2.4 €/mil, as a net result of new records (5.1 €/mil) and positive solutions of some disputes (2.7 €/mil), thus
confirming the validity of previous years’ forecasts. Claims trends did not produce any significant financial effect.
The summary of corporate financial activities over the last year, also intended as a focus by all the company’s departments onto the financial effects of commercial transactions, is eventually inferred from the reduction in the
“Net financial charges/production” ratio, which passed from 1.8% in 2004 to 1% in 2005, as a result of a mix of
not easily repeatable events.
FINANCIAL RISK MANAGEMENT POLICIES Your Company has some financial risks specifically linked
to its operations, the most significant of which are explained below:
Price risk: related to the variations in the cost of raw materials and manpower, normally immunized by adding special price revision and adjustment clauses to contracts.
Currency risk: the Company operates internationally, therefore foreign currency transactions are common. Exchange rate trends affect the value of the contracts received and operating costs assessed in the foreign currency. Your Company uses hedge financial instruments, such as: forward, currency forward purchase and sale, and
Bill 05 Inglese
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“
domestic currency Swaps, in order to minimize the risk related to the exchange rate fluctuation. Our exchange
rate risk management policy is based on an industrial and non-speculative logic, aimed at limiting risks within the
borders of a careful evaluation of all foreign currency records.
Country risk: this is faced, after a very careful evaluation of the customer and product, by using insurance instruments or more appropriate types of payment available on the market.
Liquidity risk: the continuous work carried out by the Company in order to create a sufficient volume of credit lines
to face contingent unfavourable cash flow periods allows us to evaluate this risk as one of no particular significance for Your Company.
As regards all the above and the actions implemented by the Company, we can state that no significant exposure
exists in connection with these types of risk.
SUMMARY OF ECONOMICAL DATA Along with the statements envisaged by law (Profit and Loss Ac-
count/Income Statement and Notes), in order to represent the economic phenomena in a more significant form,
we believe that it would be useful to reclassify the profit and loss account, as done in previous years, on the basis of analytical accounting criteria.
This reclassification is suitable to provide the readers with a more targeted and substantial picture of our ordinary
operations, by removing the typical effects of the sector that sometimes arise as a consequence of the presence
of consortia, as, in these cases, statutory account regulations require the disclosure of gross values related to
credit lines and consortium invoicing (which difference is clearly shown in the total operating income reclassified
below with respect to the EEC presentation).
Please, note that the lower EBITDA compared to forecasts and to the previous year is mainly due to the reduction over time of production in the electromedical equipment job order for the new hospital of Malta, caused by
Value of Production
Direct costs of Production
BALANCE 2000
BALANCE 2001
BALANCE 2002
BALANCE 2003
47.108 100,0%
80.715 100,0%
85.416 100,0%
91.149 100,0%
BALANCE 2004
BALANCE 2005
102.578 100,0%
107.032 100,0%
(40.349)
85,7%
(70.469)
87,3%
(73.445)
86,0%
(77.228)
84,7%
(87.575)
85,4%
(92.900)
86,8%
6.759
14,3%
10.246
12,7%
11.971
14,0%
13.921
15,3%
15.003
14,6%
14.132
13,2%
Cost of labour
(3.518)
7,5%
(4.557)
5,6%
(5.808)
6,8%
(7.239)
7,9%
(6.864)
6,7%
(6.659)
6,2%
General indirect costs
(1.383)
2,9%
(2.297)
2,8%
(2.391)
2,8%
(2.788)
3,1%
(3.141)
3,1%
(3.275)
3,1%
1.858
3,9%
3.392
4,2%
3.772
4,4%
3.894
4,3%
4.998
4,9%
4.198
3,9%
Depreciations
(159)
0,3%
(550)
0,7%
(460)
0,5%
(470)
0,5%
(443)
0,4%
(421)
0,4%
Accruals
(449)
1,0%
(112)
0,1%
(1.224)
1,4%
(528)
0,6%
(494)
0,5%
(830)
0,8%
EBIT
1.250
2,7%
2.729
3,4%
2.088
2,4%
2.896
3,2%
4.061
4,0%
2.947
2,8%
Net financial expenses and services
(803)
1,7%
(745)
0,9%
(711)
0,8%
(1.111)
1,2%
(1.835)
1,8%
(1.061)
1,0%
447
0,9%
1.984
2,5%
1.377
1,6%
1.785
2,0%
2.226
2,2%
1.886
1,8%
(216)
0,5%
(232)
0,3%
378
0,4%
(796)
0,9%
185
0,2%
6
0,0%
Gross Profit
231
0,5%
1.752
2,2%
1.755
2,1%
989
1,1%
2.411
2,4%
1.891
1,8%
Income tax
40
0,1%
(1.025)
1,3%
(622)
0,7%
(769)
0,8%
(1.402)
1,4%
(1.185)
1,1%
Net profit
271
0,6%
727
0,9%
1.133
1,3%
219
0,2%
1.009
1,0%
706
0,7%
Contribution margin
EBITDA
Operating result
Net extraordinary income /expenses
25
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”
reasons not under Your Company's responsibility. The delay in the hospital building works caused by another contractor prevented the customer, FMS, from making the rooms available for INSO to proceed with the scheduled
installation works.
We also point out that the operating result has absorbed approximately € 1 million charges sustained for the
preparation of offers for calls for tenders then awarded to others or still to be awarded; this reflects, on the one
hand, the considerable commercial effort demanded by the new types of competitions and, on the other hand,
the caution used in evaluating costs as at Dec. 31 in the absence of any certainty of award.
INTRAGROUP RELATIONSHIPS The nature of relationships between the parent company (a), subsidia-
ries (b) associated companies (c), and companies controlled by the parent company (d), as well as the most significant commercial and financial debit and credit values are summarized below:
CONSORZIO ETRURIA S.C.A.R.L. (A): relationships with this entity mainly concerned:
• INSO's intervention in the remaining works regarding the execution of “Centro Commerciale Unicoop” of S.
Lorenzo a Greve, a job order for which the Holding acts as assignee of the principal;
• the assignment to the Holding of the contract works for the construction of accommodation facilities in Massarosa;
• services rendered by the Holding, consisting in operations, in addition to some yard works;
• the determination of interests due, if accrued, in the financial optimization of intragroup trade receivables.
Receivables for € 9.7 million and payables for € 1.5 million were posted as at Dec. 31, 2005.
CONSORZIO INSO/VERDOT (B): this company is working at the Tatoi job order in Greece on account of INSO. In 2005,
the agreement for the recognition of higher charges and changes requested from the Customer was signed;
therefore works were resumed and should be completed before the end of 2006. Receivables for € 3.6 million
and payables for € 0.5 million were posted as at Dec. 31, 2005.
CONSORZIO INSO THEMELIODOMI S.C.A.R.L. (B): this company has worked at the Kavala job order in Greece on account
of INSO. In 2005, the relationships between the Consortium and Themeliodomi were settled, and the contract
signed with the Customer was transferred to INSO, who will directly take care of the works. A loan of € 0.08 million and receivables for € 1.9 million plus payables for € 1.2 million were posted as at Dec. 31, 2005.
SOCIETÀ
CONSORTILE
PALAGIUSTIZIA (B): this company is working at the Court of Florence job order on account of
INSO. Payables for € 8.1 million were posted as at Dec. 31, 2005.
ETRURIA INVESTIMENTI SPA (D): no significant economic or financial relationships were recorded in the year. However, the commercial relationships regarding Industrial and Commercial Building works are very important. No
payables or receivables were outstanding as at Dec. 31, 2005.
RSA S. ANTONINO FIESOLE SPA (B): no significant developments were seen in 2005 for the contract for the restoration of the S. Antonino hospital, which have been transferred to INSO by this company. The situation is still evolving and will depend on the ongoing negotiations with the other entities involved. Receivables for € 0.04 million
were posted as at Dec. 31, 2005.
CONSORZIO CORIL (C): this entity completed productions and its liquidation was finalized in 2006 with the cancellation of the company from the Register of Companies. No significant value has bee left outstanding.
CONSORZIO RI.TE.D (C): the research activity ordered to INSO for the transport of natural light in blind environments
was concluded and the consortium was liquidated. Receivables for € 0.1 million and payables for € 0.01 million
Bill 05 Inglese
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“
HBT - HOSPITAL BUILDING & TECNHNOLOGIES SCARL (C): this company ordered INSO a supply of medical equipment
for several hospitals located in the Siriano area. Negotiations are ongoing for an addition to the contract. As regards the basic contract, the following testing is currently underway. A loan of € 0.2 million, and receivables for
€ 0.3 million plus payables for € 0.1 million were posted as at Dec. 31, 2005.
SOCIETÀ CONSORTILE OSPEDALE DI EMPOLI A.R.L. (C): this company was incorporated at the beginning of 2005 for the
coordinated implementation of the building activities required for the expansion and restoration of the hospital of
Empoli (Presidio Ospedaliero di Empoli), Customer USL 11 - Empoli. Receivables for € 7.6 million and payables
for € 2.5 million are posted as at Dec. 31, 2005.
ERGON - ENGINEERING AND CONTRACTING SCARL: (C): relationships with this company concern the completion of the
job order regarding the construction of a road in Malta, as well as some administrative services rendered. Since
this company is a cost/revenue reversal consortium, relationships were mainly of a commercial nature. A shareholders' loan is still ongoing for € 0.002 million. The most significant facts after year closing are the award of important job orders in the infrastructure sector for an aggregate amount of approximately Euro 200 million. Receivables for € 1.9 million and payables for € 1.9 million were posted as at Dec. 31, 2005.
AGHITO TECNOLOGIE S.R.L (C): considerable synergies have matured with this company over 2005. INSO ordered
this associated company to build the operating theatres for the Cisanello hospital of Pisa. A shareholders' loan of
€ 0.3 million, and receivables for € 0.03 million plus payables for € 0.7 million were posted as at Dec. 31, 2005.
ESSERRESSE (C): a commercial relationship developed with this company over 2005. The associated company was
ordered to provide yard services in the plant engineering sector. A shareholders' loan of € 0.06 million and
payables for € 0.1 million were posted as at Dec. 31, 2005.
CONSORZIO OSPEDALE
DI
OSIMO (C): this Consortium, created for the management of the Osimo project financing,
has exhausted its activity with the completion of the procedures concluded with the signature of the concession
with the Customer. The Consortium will be liquidated in 2006 as it had been incorporated during the operating
stage of the construction and management of “Osimo Salute S.p.a.” The economic relationships with this company concerned INSO's contribution to the conclusion of the first project financing stages. Consequently, the consortium deliberated on the recognition of a consideration for the activities carried out. A shareholders' loan of €
0.08 million and receivables for € 0.2 million were posted as at Dec. 31, 2005.
OSIMO SALUTE S.P.A. (C): it is the Special Purpose Vehicle dedicated to the construction and management of the
Osimo hospital under project financing, under art. 37 bis of Law 109/94 and subsequent amendments and integrations. INSO was designated, together with other ATI companies, to build and plan most of the hospital. No significant value has bee left outstanding.
ARETIUM S.R.L. (D): this is INSO's customer for the OBI-Arezzo job order concluded in 2002; the outstanding receivables were collected in 2005.
VIMERCATE SALUTE S.P.A. (C): a company incorporated at the end of 2005, the owner of concession and construction contracts for the new hospital of Vimercate. INSO will be entrusted, together with other ATI companies, with
most of the building activities.
INSO MALTA LTD (B): this company has been incorporated for the management in the Malta territory of services
connected with the execution of the supply and installation contract for the medical equipment in the Mater Dei
hospital of Malta. During 2005, the activities scheduled in this contract were started. A loan of € 0.1 million, plus
receivables for € 0.2 million and payables for € 0.4 million were posted as at Dec. 31, 2005.
27
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M.M.H. S.P.A. (C): INSO has a dual relationship with this company, as client and as supplier. On the one hand,
MMH received job orders for the construction of mobile hospitals; on the other hand, it uses mobile hospital rental
services in its own job orders. Receivables for € 0.6 million were posted as at Dec. 31, 2005.
I.C.I. L.T.D. (B): INSO uses commercial services provided by this subsidiary for the Irish activities and for the commercial activity in some European, South-Eastern Asia and Latin America countries. Payables for € 0.07 million
CALDANA S.R.L. (D): this company is a strategic partner in the prefabricated product sector. Relationships with this
company are related to supply contracts. No payables or receivables were outstanding as at Dec. 31, 2005.
In compliance with reporting requirements, we also point out that:
• Your Company did not purchase and does not hold own shares or parent company's own shares, either directly or through intermediaries or a trust;
• Your Company has secondary headquarters in Greece, Iraq and Egypt.
Dear shareholders,
we invite You to approve the financial statements according to the conditions proposed, allocating profits for €
706.012 to the legal reserve for € 36.000 and to previous years' profits for € 670.012.
If you confirm our proposals, the net worth of the Company will be as follows:
Share capital
€
15.000.000
Legal reserve
€
206.000
Previous years' profits
€
1.041.714
Total net worth
€
16.247.714
For the Board of Directors
The President
(Franco Susini)
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“
BALANCE SHEET AT 31 DECEMBER 2005
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BALANCE SHEET 2005
FINANCIAL STATEMENT – ASSETS ”
31-dec-05
A) Receivables from shareholders for payments still due
31-dec-04
0
0
96.522
21.457
538
312.214
0
117.689
548.420
43.683
0
2.524
321.697
63.374
163.142
594.420
159.688
393.972
226.436
780.096
142.672
503.292
186.951
832.915
360.241
1.289.073
1.320.302
369.141
155.248
1.745.309
176.700
113.700
615.802
615.802
72.897
3.835.015
75.474
3.074.674
5.163.531
4.502.009
343.906.070
0
343.906.070
295.194.507
74.000
295.268.507
II - Accounts receivable
1) Receivables from clients
-amounts receivable within the subsequent year
-amounts receivable beyond the subsequent year
Total receivables from clients
44.867.461
9.718.694
54.586.155
34.919.579
2.040.523
36.960.102
2) Receivables from subsidiaries
Total receivables from subsidiaries
5.690.318
0
5.690.318
5.948.593
0
5.948.593
3) Receivables from associated companies
Total receivable from associated companies
10.726.717
0
10.726.717
1.562.702
0
1.562.702
4) Receivables from controlling companies
Total receivables from controlling companies
9.723.494
0
9.723.494
14.499.600
0
14.499.600
4-bis) Tax credits
Total taxes paid in advance
2.843.362
2.688.366
5.531.728
3.192.933
2.451.959
5.644.892
4-ter) Deferred tax assets
Total deferred tax assets
158.606
659.983
818.589
134.734
777.828
912.562
5) Sundry debtors
Total sundry debtors
2.432.761
0
2.432.761
2.048.820
1.906.000
3.954.820
89.509.762
69.483.271
2.220
2.220
506.228
506.228
3.344.406
26.067
3.370.473
3.596.691
37.920
3.634.611
436.788.525
368.892.617
B) Fixed assets, with separated indication of leased assets
I – Intangible fixed assets
1) Plant and improvement costs
2) R&D costs
3) Industrial patent and intellectual property rights
4) Concessions, licences, trademarks and similar rights
6) Intangible fixed assets under development and payments on account
7) Others
Total intangible fixed asseta
II – Tangible fixed assets
1) Land and buildings
2) Plant and machineries
4) Other tangible fixed asseta
Total tangible fixed asseta
III – Financial fixed assets
1) Shares in:
a) Subsidiaries
b) Associated companies
d) Other companies
2) Receivables
a) to subsidiaries
-amounts collectable after the following year
b) from associated companies
d) from others
Total financial fixed assets
Totale immobilizzazioni
C) Current Assets
I – Inventories
3) Job orders in progress
4) Finished products and goods for re-sale
Total Inventories
Total accounts receivables
III – Financial assets
6) Other securities
Total financial assets
IV - Liquid assets
1) Bank and postal deposits
3) Cash and similars on hand
Total liquid assets
Total Current Assets
D) Accrued income and prepaid expenses
TOTAL ASSETS
469.385
354.058
442.421.441
373.748.684
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FINANCIAL STATEMENT – LIABILITIES BALANCE SHEET 2005
“
31-dec-05
31-dec-04
A) Shareholders’ equity
I - Share capital
II - Share premium reserve
III - Revaluation reserve L.31/12/91 n. 413
IV - Legal reserve
V- Statutory reserve
VI - Reserve for own shares
VII - Other reserves
VIII - Profit (loss) carried forward
IX - Profit (loss) for the year
Total Shareholders’ Equity
15.000.000
0
0
170.000
0
0
0
371.702
706.012
16.247.714
10.500.000
0
0
118.000
0
0
0
314.687
1.009.015
11.941.702
B) Provision for risks and charges
1) pensions and similar liabilities
2) for taxes, including deferred taxes
3) others
Total provision for risks and charges
0
1.686.459
1.470.675
3.157.134
0
928.205
1.050.487
1.978.692
C) Employees’ termination leaving indemnities
1.169.900
1.016.218
23.784.464
2.586.702
26.371.166
27.480.173
7.833.681
35.313.854
D) Account payables
4) Due to banks
-amounts due within the subsequent year
-amounts due beyond the subsequent year
Total due to banks
6) Payments on account
311.892.605
253.671.555
7) Due to suppliers
Total due to suppliers
62.594.556
0
62.594.556
54.270.361
0
54.270.361
9) Due to Subsidiaries
Total due to subsidiaries
10.491.697
0
10.491.697
10.174.236
0
10.174.236
10) Due to Associated Companies
Total due to associated companies
6.267.889
0
6.267.889
840.870
0
840.870
11) Due to controlling companies
Total due to controlling companies
1.495.114
0
1.495.114
912.938
0
912.938
12) due taxes
Total due taxes
1.086.642
0
1.086.642
1.585.447
0
1.585.447
13) Due to welfare and social security agencies
Total due to welfare and social security agencies
471.776
0
471.776
413.130
0
413.130
14) Other payables
Total other payables
928.376
0
928.376
1.082.293
0
1.082.293
421.599.821
358.264.684
Total Account payables
E) Accrued expenses and deferred incomes
TOTAL LIABILITIES
246.872
547.388
442.421.441
373.748.684
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BALANCE SHEET 2005
MEMORANDUM ACCOUNTS ”
31-dec-05
Guarantees furnished
31-dec-04
81.419.228
89.384.581
Commitments
9.605.880
14.440.330
Others
2.900.000
425.007
93.925.108
104.249.918
TOTAL MEMORANDUM ACCOUNTS
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PROFIT AND LOSS ACCOUNT BALANCE SHEET 2005
“
31-dec-05
A) Value of Production
1) Revenue from sales and services
3) Variations in jobs made to order in progress
4) Internal work capitalised on fixed assets
5) Other revenues
Total value of production
31-dec-04
66.800.544
48.711.563
0
25.913.201
141.425.308
5.360.992
97.696.879
83.930
15.880.411
119.022.212
26.859.586
100.286.584
2.770.713
24.419.864
79.592.911
2.880.254
4.678.484
1.634.743
301.482
82.192
4.828.636
1.759.194
293.187
67.890
B) Production costs
6)
7)
8)
9)
Raw, ancillary and consumable materials and goods for re-sale
Cost for outside services
Leases and rentals
Labour costs
a) Wages and salaries
b) Social security contributions
c) Employees’ termination leaving indemnities
e) Other labour costs
Total labour costs
6.696.901
6.948.907
10) Amortization, depreciation and write-downs
a) intangible fixed assets amortization
b) tangible fixed assets amortization
162.876
258.229
139.717
303.674
Total amortisation, depreciation and write-downs
421.105
443.391
11) Change in inventories of raw, ancillary and consumable materials and goods for resale
12) Provisions for risks
14) Other operating expenses
74.000
830.310
972.054
0
494.000
968.829
138.911.253
115.748.156
2.514.055
3.274.056
42
117.000
42
117.000
15.327
587.945
252.728
16.172
256.759
130.882
856.000
403.813
(1.658.560)
(2.016.990)
(1.658.560)
(2.016.990)
(5.849)
(62)
(808.367)
(1.496.239)
0
(385.474)
11.277
0
(385.474)
11.277
722.941
(151.271)
871.250
(249.152)
571.670
622.098
PROFIT (LOSS) BEFORE TAXATION
1.891.884
2.411.192
22) Current, deferred and advanced taxes
1.185.872
1.402.177
706.012
1.009.015
Total cost of production
DIFFERENCE BETWEEN VALUE AND COST OF PRODUCTION ( A - B )
C) Financial income and expenses
15) Income from shareholdings
c) in other companies
Total
16) Other financial income
d) income other than specified above
- from Associated companies
- from controlling companies
- from other companies
Total
17) Interest and other financial expenses
d) Interests payable and other financial payables to other companies
Total
17-bis) exchange gains and losses
Total financial income and expenses
D) Value adjustments of financial assets
18c) Other write-ups
19a) Write-downs on shareholdings
Total adjustments
E) Extraordinary income and charges
20) Extraordinary income
21) Extraordinary charges
Total extraordinary items
PROFIT (LOSS) FOR THE YEAR
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NOTES TO THE FINANCIAL STATEMENTS
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GENERAL PRINCIPLES APPLIED IN DRAWING UP THE FINANCIAL STATEMENT The balance
sheet as at 31.12.05 includes the Statement of Assets and Liabilities, the Profit and Loss Account, and these Notes. It has been prepared based on the provisions contained in the Italian Civil Code, supplemented by the accounting principles established by the National Council of Chartered Accountants.
The Statement of Assets and Liabilities and the Profit and Loss Account have been prepared by taking into consideration the changes introduced by the reform of the law regulating joint-stock companies with Legislative Decree n° 6 of 17 January 2003. For uniformity purposes, as set forth by Art. 2423-ter of the Civil Code, the corresponding items of the previous periods have also been reclassified; conversely, where this operation was not possible, the information required is provided in these Notes.
In compliance with art. 2423 bis of the Civil Code, the following principles were observed in drawing up the balance sheet:
• the items have been evaluated according to caution principles and with the perspective of continuing operations,
as well as taking into account the economic function of the assets and liabilities considered;
• only those results achieved at year-end closing date have been reported;
• income and expenses have been booked and attributed on an accrual basis, irrespective of actual collection and
payment dates;
• risks and losses have been entered on an accrual basis, even if they were recognised after the year-end closing
date;
• heterogeneous items included under single headings were subject to individual evaluation;
• the evaluation criteria were not changed compared to those used for the previous year.
No exceptional events occurred during the year necessitating application of the regulations set out in art. 2423,
sub-section 4, of the civil code providing for recourse to waivers.
The balance sheet is drawn up in Euro currency.
The company is not required to draw up a Consolidated Balance Sheet pursuant to art. 27 sub-sections 3 and 4
of Legislative Decree 127/91 since this is drawn up by the controlling company.
EVALUATION CRITERIA The evaluation criteria adopted comply with the provisions in art. 2426 of the
civil code and have been integrated, where not specifically provided by law, with the accounting principles laid
down by the CNDC/CNR professional organizations.
The most significant evaluation criteria adopted, in agreement with the Board of Auditors for those cases required
by law, are as follows:
INTANGIBLE FIXED ASSETS Intangible assets were booked at their purchase cost, inclusive of any di-
rectly attributable accessory charges. Amortisation, calculated by the straight-line method, based on the criterion
of residual possibility of use of the asset to which it refers, is deducted directly from specific items.
Amortization allowances were entered in the income statement under the item “Amortization of intangible fixed
assets,” and set against relative items in the assets.
The period of amortization is indicated in the comment to the items entered in the assets.
TANGIBLE FIXED ASSETS Tangible fixed assets are entered at purchase or production cost, including
any directly attributable additional charges (transport, hire, customs, insurances, etc.), increased by the revaluation calculated in compliance with monetary revaluation laws.
Amortisation, calculated by the straight-line method, based on the criterion of residual possibility of use of the asset to which it refers, is deducted directly from specific items.
Depreciation allowances were entered in the income statement under the item “Depreciation of intangible fixed
assets,” and set against relative items in the assets.
Ordinary maintenance and repair costs were charged directly to the income statement in the year in which they
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“
occurred while extraordinary costs of incremental nature were posted in the assets and amortized in relation to
the residual possibility of use of the assets concerned.
The period of amortization is indicated in the comment to the items entered in the assets.
Both tangible and intangible fixed assets were written down in the presence of durable value impairment. Subsequently, should this impairment cease to exist, they will be written up for an amount not greater than the value they would have had with continued depreciation.
FINANCIAL FIXED ASSETS, RECEIVABLES FROM SUBSIDIARIES, ASSOCIATES AND OTHER COMPANIES Financial fixed assets comprise shareholdings and receivables from subsidiaries, associates and other companies.
Shareholdings are entered at purchase cost and are inclusive of directly allocable accessory costs adjusted to account for durable losses of value, determined by referring to the equity of the associated companies, appearing
in the last balance sheet available at the time of drawing up this financial statement. Adjustments are entered as
write-downs in the income statement.
In the year in which the reasons for the write-downs cease to exist, the shareholdings are revalued and adjustments are entered in the income statement as a revaluation.
INVENTORIES The following criteria were adopted in the evaluation of inventories:
• raw and ancillary materials, consumables and goods for re-sale were recorded at the lesser between their purchase or production cost and their market value (the specific purchase cost is the cost determinant).
• materials in transit and materials with third parties, not yet made available to the client, are entered at actual
purchase cost;
• multi-annual job orders in progress, destined to continue for several years, are entered on the basis of agreed
contracted payments, determined by applying the cost-to-cost method or the physical measurement method, depending on the specific job order. In determining job orders in progress, account is also taken, for the part for which collection of payment can reasonably be expected, of claims accrued for:
• higher charges for work processes which were unforeseen but necessary to execute the order;
• non-recording or erroneous recording (at the work site) of contractually planned work;
• higher charges for events falling within the client’s sphere of responsibility;
• higher charges due to client behaviours not complying with contractual plans.
These elements are taken into account in the evaluation of job order costs. Requests for interest on delayed payments do not come under the heading of claims and are treated separately under the “Due from Clients” heading.
RECEIVABLES AND PAYABLES Receivable and payable items are entered in the balance sheet at face
value.
The value of receivables has been reduced to the presumed value of realization with adjustments of the face value in a dedicated fund for doubtful receivables.
VALUES EXPRESSED IN FOREIGN CURRENCY Values expressed in a currency differing from the Eu-
ro, if any, except for those currency fixed assets that are booked at cost considering the purchase exchange rate
or the lower exchange rate at year-end if the reduction is deemed to be durable, are analytically adjusted to the
exchange rate as at Dec. 31, 2005, with direct allocation of the effects of the adjustment to the Income Statement. The net profit, if any, is set aside in a special non-distributable reserve until realization.
HEDGING Exchange: hedging currency exchange rate risk operations were booked in compliance with
the applicable accounting principles, requiring the hedging exchange rate difference to be debited/credited in the
37
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income statement on a pro-rata temporis basis. The exchange rate difference regarding the renegotiation of contracts was credited/debited to the Income Statement upon reception of the goods whose purchase was the object
of the hedge contracts.
Interests: as regards Interest Rate Swaps (hereinafter IRS), the Company booked the exchange rate difference
as at the balance sheet date on an pro-rata temporis basis. IRS not defined as hedging instruments, they were
booked at fair value as at balance sheet date by crediting/debiting the respective revenue/charge.
LIQUID ASSETS Liquid assets were entered at face value.
ACCRUALS AND DEFERRALS Since accruals and deferrals relate to two or more successive years, they
are determined on a strict accrual basis.
PROVISION FOR RISKS AND CHARGES The provisions for liabilities and charges cover certain or pro-
bable liabilities or charges, for which the amount or actual date of occurrence could not be determined at the close of the fiscal year.
These provisions were valued on the basis of economic competence, according to a reasonable estimate of the charge.
The criterion used to set aside the provision for contractual risks is based on the average utilizations made compared to work in progress over the last three accounting periods. The ratio is therefore applied to work in progress
at year end to determine the amount of the provision necessary to face future risks.
EMPLOYEES’ TERMINATION LEAVING INDEMNITIES This item reflects the indemnity accrued by sin-
gle employees at the close of the fiscal year, in accordance with the law and labour contracts in force at that date.
INCOME TAX Income tax was determined on the basis of a calculation of taxable income and the relative
debt is entered in “Tax debts”.
Advance tax paid in excess during the year was entered under “Sundry Debtors” in the assets.
In compliance with the Italian Civil Code and the Accounting Principle n° 25 issued by CNDCR (National Council
of Chartered Accountants), the deferred or anticipated taxes posted were calculated on the total amount of all
temporary differences between the value of an asset or liability, according to statutory criteria, and the value given to that asset or liability for tax purposes. Taxes that are deferred or paid in advance are calculated on the basis
of the taxation rates in force at the time the above-mentioned temporary differences are transferred, making separate calculations for IRES and IRAP.
Taxes paid in advance are recorded when it is considered that there is a reasonable likelihood of their future recovery and the transfer times of their relative benefits are foreseeable. Deferred taxes are entered only when it
cannot be demonstrated that future payment is unlikely.
For the purposes of drawing up this balance sheet, on the above assumptions, deferred and advance paid taxes
have been allocated for all temporary differences between the value of an asset or liability, in accordance with civil and fiscal criteria.
REVENUES, INCOME, COSTS AND CHARGES Revenues and costs are charged to the income statement
on an accrual basis, net of returns, discounts, allowances and premiums, applying the general criteria of prudence.
DIVIDENDS They are booked in the year when they were accrued.
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ASSETS B) FIXED ASSETS B-I) Intangible assets NOTES TO THE FINANCIAL STATEMENTS
These items and their amounts are shown in Table 1.
They are detailed as follows:
a) B I 1 – Plant and expansion costs: they were booked among the Assets, net of the amortization calculated as
at Dec. 31, 2005, with the Board of Auditors’ authorization (under Art. 2426, par. 5). They refer to the expenses
sustained for the share capital increases deliberated on May 12, 2003 and April 29, 2005.
b) B I 3 – Industrial patent and intellectual property rights: they were booked net of annual amortization allowances.
c) B I 4 – Concessions, licences, trademarks and similar rights: they amount to € 312,214, net of amortization
calculated as at Dec. 31, 2005 for € 196,608. They were decreased by € 9,483
and refer to:
- € 230,782 to internal and third party costs capitalized for the development and customization of the new integrated computer system of the Company, amortized according to the residual duration of the contract;
- € 30,897 for treasury software implementation;
- € 50,433 for the purchase of minor software licences;
- € 102 for the use of trademarks.
d) B I 6- Assets under construction and payments on account – There are no such items.
In fact, both treasury software implementation and the activities for typing and magnetic storage of radiological
(ASP mode) images were positively concluded.
The values previously recorded in this item were subsequently posted in their respective applicable categories.
e) B I 7 – Other intangible assets: they amount to € 117,689. They refer to pre-operating costs sustained for the
acquisition of new job orders and amortized based on the annual progress of works. Direct amortization for €
45,453 was calculated during the period considered, with no capitalization counter-item.
Amortization calculated for the year was based on the following rates:
BI1
Plant and improvement costs
20,00%
BI3
Industrial patent rights
20,00%
BI4
Licences (ERP software system in ASP mode)
12,50%
BI4
Software
20,00%
BI4
Trademarks
10,00%
39
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Table n° 1) Variations in intangible fixed assets
Historical
value
B I 1) Installation and extension:
Cost of installation
B I 2) R&D costs:
Cost of installation
B I 3) Industrial patent and intellectual property rights:
Industrial property exploitation rights
Industrial patent rights
B I 4) Grants, licences, trademarks and similar rights:
Trademarks
software
B I 6) Fixed assets in progress and payments on account:
Intangible fixed assets in progress
B I 7) Other:
Outstanding costs job orders in progress
Totals
B-II) Tangible fixed assets 72.805
72.805
0
0
44.255
24.422
19.833
445.007
516
444.491
63.374
63.374
272.997
272.997
898.438
Amortization
previous
years
Net value at
31/12/2004
Increases
during year
(Decreases
during year)
Amortization
during year
Net value at
31/12/2005
(29.122)
(29.122)
0
0
(41.731)
(24.422)
(17.309)
(123.310)
(362)
(122.948)
0
0
(109.855)
(109.855)
(304.018)
43.683
43.683
0
0
2.524
0
2.524
321.697
154
321.543
63.374
63.374
163.142
163.142
594.420
84.250
84.250
32.185
32.185
0
0
0
63.815
0
63.815
0
0
0
0
180.250
0
0
0
0
0
0
0
0
0
0
(63.374)
(63.374)
0
0
(63.374)
(31.411)
(31.411)
(10.728)
(10.728)
(1.986)
0
(1.986)
(73.298)
(52)
(73.246)
0
0
(45.453)
(45.453)
(162.876)
96.522
96.522
21.457
21.457
538
0
538
312.214
102
312.112
0
0
117.689
117.689
548.420
These are summarized as follows:
Gross amount of fixed assets
3.106.877
(Ordinary depreciation fund)
(2.326.781)
Net fixed assets
780.096
Investments for the year, net of divestments, totalled € 146,884, confirming the Company’s policy, followed in
the course of the last few years, to preferably use leasing or hiring solutions for consistent financial correlation or
for the use of global support services.
The period’s increase essentially reflects, by over half the amount, the purchase of office furniture and fittings.
Tables n° 2 a, b, and c enclosed show the details of tangible assets and their relevant provisions.
The year’s amortization, posted in the Income Statement, was calculated considering the utilization, destination and
economic-technical duration of the assets, based on the criterion of the residual possibility of utilization, which we
have deemed to be appropriately represented by the rates shown below, unchanged compared to the previous year.
Moderate unit cost assets were posted in their respective categories.
B
B
B
B
B
B
B
B
II
II
II
II
II
II
II
II
1
2
2
2
2
2
4
4
Buildings (non-industrial buildings)
Generic plants
Specific plants
Transport vehicles
Vehicles
Miscellaneous minor equipment
Furniture and office machines
Electric and electronic office machines
12,50%
10,00%
15,00%
20,00%
25,00%
40,00%
12,00%
20,00%
Incidence of depreciation applied compared with historical cost
EEC Code
Description
B II 1
B II 2
B II 4
Land and buildings
Plants, machinery and equipment
Other
% di depreciation 2005
59,84%
80,33%
67,95%
% di depreciation 2004
58,89%
74,81%
69,59%
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Table n° 2/a) Variations in tangible assets
Value at
31/12/2004
B II 1) Land and buildings:
Non-industrial buildings
B II 2) Plant and machineries:
Generic plant and machineries
Specific plant and machineries
Vehicles
Transport vehicles
Assets with a moderate unit cost
B II 4) Other assets:
Electronic office machines
Totals
347.035
347.035
1.998.267
905.324
56.350
0
200.250
100.579
735.764
614.691
170.633
444.058
2.959.993
Increases
during year
62.700
62.700
59.724
5.731
10.894
0
9.154
0
33.945
95.712
81.280
14.432
218.136
(Decreases
during year)
(12.097)
(12.097)
(55.351)
(2.582)
(1.110)
0
(48.514)
0
(3.145)
(3.804)
0
(3.804)
(71.252)
Value at
31/12/2005
397.638
397.638
2.002.640
908.473
66.134
0
160.890
100.579
766.564
706.599
251.913
454.686
3.106.877
Table n° 2/b) Variations in depreciation funds
Value at
31/12/2004
Generic plant and machinery
Specific plant and machinery
Vehicles
Transport vehicles
Totals
204.363
204.363
1.494.975
488.332
32.222
0
175.297
99.350
699.774
427.740
104.497
323.243
2.127.078
Utilization
(6.805)
(6.805)
(48.289)
(904)
(83)
0
(44.157)
0
(3.145)
(3.432)
0
(3.432)
(58.526)
Depreciation allowance
2005
40.392
40.392
161.982
89.537
8.901
0
15.658
176
47.710
55.855
12.640
43.215
258.229
Value at
31/12/2005
237.950
237.950
1.608.668
576.965
41.040
0
146.798
99.526
744.339
480.163
117.137
363.026
2.326.781
Table n° 2/c) Variations in tangible fixed assets
Historical cost at
31/12/2005
Generic plant and machineries
Specific plant and machineries
Vehicles
Transport vehicles
Totals
397.638
397.638
2.002.640
908.473
66.134
0
160.890
100.579
766.564
706.599
251.913
454.686
3.106.877
Total funds at
30/06/2005
237.950
237.950
1.608.668
576.965
41.040
0
146.798
99.526
744.339
480.163
117.137
363.026
2.326.781
Net Value at
31/12/2005
159.688
159.688
393.972
331.508
25.094
0
14.092
1.053
22.225
226.436
134.776
91.660
780.096
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The percentage incidence of the depreciation fund on the gross value of depreciable assets varied due to:
a) Calculation of ordinary depreciation.
b) Investments in durable goods made during the year.
c) Decreases during the year.
The Company booked financial leasings by debiting the individual rental amounts to the Income Statement, in
compliance with the accounting principle consistent with the current applicable legislative interpretation (net
worth method). The method prescribed by International Accounting Principle no. 17 to account for finance leases
would have entailed entering in the balance sheet the leased goods, interest on the financed capital, depreciation
of the leased asset in relation to the residual possibility of use of the specific asset, and the residual debt.
The effects of this recalculation would lead to an increase in the net worth for 682,487 thousand Euro (428,261
after taxation) and to a lower operating result for 58,185 thousand Euro (35,540 after taxation).
We enclose Table 3, as required by Art. 2427, par. 22, of C.C.
S. Giuseppe Hospital in Empoli, Florence
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Prospectus n° 3) summary of the information to be provided with a note to the financial statement, as
per point n° 22 of art. 2427 c.c.
Amount
a) contracts in progress
Leased assets at the end of the previous year net of
aggregate depreciations, for Euro
1.593.109
565.556
Assets leased during the year
58.000
Leased assets redeemed during the year
(207.767)
Depreciation allowance for the year
209.109
Adjustments/write-backs of the value of leased assets
(71.065)
Assets leased at the end of the year net of
aggregate depreciations, for Euro
b) Redeemed assets
Greater aggregate value of redeemed assets, determined according to
the financial methodology, compared to their net book value as at
year end
c) liabilities
Implicit payables for leasing operations at the end of the previous year
of which due on the subsequent year Euro
of which due from 1 to 5 years
of which due beyond 5 years
Implicit payables arisen during the year
1.163.168
A)
203.701
B)
735.801
991.870
316.846
358.178
43.352
Reduction for capital shares reimbursement and redeemed during the year
360.198
Implicit payables for leasing operations at year-end
of which, due on the subsequent year Euro
of which due from 1 to 5 years
of which due beyond 5 years
675.024
C)
d) aggregate gross effect at year-end (A + B - C)
Deferred maxi-rent reversal
Shareholders’ equity variation (D - E)
691.845
9.358
682.487
D)
(254.227)
428.261
E)
F)
e) Net fiscal effect
f) Effect on shareholders’ equity at year-end
PROFIT AND LOSS ACCOUNT
Reversal of rents on leasing operations
416.319
Recording of financial charges on leasing operations
(43.421)
Depreciation allowances
(209.109)
Sale of redeemed assets
(71.065)
Effect on result before tax
92.725
Recording of the fiscal effect
Effect on the year’s operating result
(34.540)
58.185
43
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”
B-III) Financial fixed assets Overall these amount to 3,835,015 Euros, with an increase of 760,341 Euros.
The strategy aimed at the control of sectors closely correlated with the corporate purpose through the intermediary of subsidiaries was further outlined during the year. They comprise:
Shareholdings (Item B III 1) As at Dec. 31, 2005, these amounted to € 2,969,616 against € 2,269,698 in the
previous year. Net variations of € 699,918 during the 2005 fiscal year were attributable to:
• CONSORZIO OSIMO SALUTE SPA (increased by € 331,125), incorporated after identifying “Consorzio Ospedale di
Osimo” as the entity to be awarded the permit for the construction and management of the new hospital “Ospedale San Sabino di Osimo” (AN) under a Project Financing operation in compliance with Art. 37-bis of Law 109/94
and subsequent amendments and additions. The new legal entity will replace the Consortium (which will consequently be wound up) during the concession phase for the construction and management of the hospital. As at
Dec. 31, 2005, the share subscribed was € 331,125, of which € 248,344 still to be paid up. The remaining amount
was fully paid up during the first few months of 2006. The project foresees investments for approximately 28 million Euro and the management of hospital services under a concession agreement for a total of 14 years. Inso
S.p.A., acting as agent in a Temporary Association of Companies (called an “ATI” in Italian), was designated as
the subject entitled with the execution of the majority of the engineering and construction plans for the hospital.
• VIMERCATE SALUTE S.P.A. (increased by € 800,000), a company incorporated at the end of 2005 between the ATI,
which was awarded the construction and management concession (under Articles 19 and 20, paragraph 2 and the
following, of Law 109/1994 and subsequent amendments and additions) regarding the implementation of the new
hospital of Vimercate (MI). The project foresees investments for approximately 119 million Euro and the management of hospital services under a concession agreement for a total of 24 years. Tenths subscribed for €
600,000 were still to be paid up as at Dec. 31, 2005.
• CONSORTIUM
BETWEEN INSO AND
CONSORZIO ETRURIA S.C.A.R.L.
WINDING UP
(decreased by € 14,000): the winding-
up procedure was concluded during the first few months of 2005, with the approval of the 2004 balance sheet.
• SOCIETÀ CONSORTILE OSPEDALE
DI
EMPOLI A.R.L. (increased by € 2,700): a company incorporated at beginning of
2005 for coordinated organization of the building activities required for the expansion and restoration of the hospital “Presidio Ospedaliero di Empoli”, Customer USL 11 - Empoli. Tenths subscribed for € 2,025 were still to
be paid up as at Dec. 31, 2005.
• CISANELLO 2005 S.C.A.R.L. (increase of 5,100 Euros): a company incorporated at end of 2005 in the form of a consortium to manage the coordinated activities for the construction of the Emergency Room facilities of the Cisanello hospital of Pisa, under the contract signed with “Azienda Ospedaliero-Universitaria Pisana”.
• NODALIS S.P.A.
WINDING UP
(decrease of € 425,007): a Company under creditors’ arrangement. As already indi-
cated in the Notes to the 2004 Financial Statements, 3,308 ordinary shares were sold at the beginning of 2005
for € 425,000 realizing capital gains for € 385,467. In the course of the year, based on the information received
on the progress of the winding up procedure, we totally wrote down the share by registering a specific provision
for € 385,474.
As regards Etruria Investimenti S.p.A., the higher value of the share compared to the net worth share reflects
not only the worth of the equity, but also future developments connected with the subsidiary’s activity.
Information regarding the net equity of subsidiary companies as appearing in the last available balance sheet in
our possession is set out in Table 4 enclosed hereto.
1) Balance sheet as at 31/12/2005 held by us
legend
4) closing of first financial year as at 31/12/2006
5) Company liquidated in 2005
6) Balance sheet as at 2005, not approved yet
Pisa
Coriano (Rn)
Milan
Naples
Montelupo F.no
Florence
(2)
(2)
(3)
(3)
(1)
(1)
682.477
102.775
6.222.269
25.740
6.163.711
25.000
13.221.972
10.000
10.000
5.165
25.823
90.000
70.330
120.000
20.000
10.000
750.000
2.000.000
3.111.318
(8.839.503)
1.191
(581.273)
379
556.315
0
(8.862.891)
0
0
0
0
(4.294)
2.670
20.868
0
0
0
0
19.244
(26.056)
19.221
0
0
(45.277)
0
12,000%
4,000%
0,160%
1,000%
13,000%
10,300%
33,000%
50,000%
50,000%
33,330%
50,000%
39,880%
50,000%
35,625%
27,000%
44,150%
40,000%
99,000%
99,000%
51,000%
75,000%
0,000%
99,800%
100,000%
51,000%
Share
held
%
(7.262.492)
152.828
6.310.101
41.564
7.208.874
25.000
6.475.875
10.000
10.000
5.165
20.953
101.214
101.338
152.848
20.000
10.000
750.000
2.000.000
3.181.518
10.579
10.329
437.131
20.000
0
1.234
69.221
10.000
558.494
Equity
corresponding
to last
balance sheet
held by us
(871.499)
6.113
10.096
416
937.154
2.575
84.855
3.300
5.000
2.583
6.984
50.607
40.414
76.424
7.125
2.700
331.125
800.000
1.326.261
10.473
10.226
222.937
15.000
0
1.232
69.221
5.100
334.188
Share of
equity
corresponding
to percentage
held by us
2.269.698
425.007
4.111
10.329
256
1.303.031
2.575
1.745.309
3.300
5.000
2.582
4.191
45.000
28.050
60.000
7.125
0
0
0
155.248
13.684
10.226
255.000
15.000
14.000
1.231
60.000
0
369.141
Value at
31/12/04
1.138.925
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
2.700
331.125
800.000
1.133.825
0
0
0
0
0
0
0
5.100
5.100
Acquisitions
and
subscriptions
(53.533)
(39.533)
0
0
0
0
0
(39.533)
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
(14.000)
0
0
0
(14.000)
Conveyances
and
sales
(385.474)
0
(385.474)
0
0
(385.474)
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
(Write-downs)
Revaluations
2.969.616
0
4.111
10.329
256
1.303.031
2.575
1.320.302
3.300
5.000
2.582
4.191
45.000
28.050
60.000
7.125
2.700
331.125
800.000
1.289.073
13.684
10.226
255.000
15.000
0
1.231
60.000
5.100
360.241
Value at
31/12/05
“
Total shares
Other companies:
Nodalis S.p.A. (in liquidazione)
Consorzio Syntek S.c.a.r.l. (in liquidazione)
Obiettivo Lavoro Soc.Coop.a.r.l.
Consorzio Edinca
Etruria Investimenti S.p.A.
Consorzio Toscana Salute
Total other companies:
(1)
(1)
(2)
(1)
(1)
(2)
(1)
(1)
(1)
(4)
(4)
Associated companies:
Ergon S.c.a.r.l.
H.B.T. S.c.a.r.l.
Consorzio C.O.R.I.L.( in liquidazione)
Consorzio RI.TE.D. (in liquidazione)
Aghito S.r.l.
Esserresse S.r.l.
M.M.H. Mobile Modular Hospitals Spa
Consorzio Ospedale di Osimo
Società consortile Ospedale Empoli A.r.l. Ospem S.r.l.
Osimo Salute Spa
Vimercate Salute Spa
Total associated companies
10.329
10.200
500.000
20.000
0
1.234
50.000
10.000
601.763
Result of last
balance sheet
held by us
8:11
Florence
Genoa
Milan
Rome
Padua
Lecce
Sovicille
Osimo (An)
Florence
Osimo (An)
Milan
(1)
(1)
(1)
(1)
(5)
(6)
(2)
(4)
Capital or
Consortium fund
8-02-2007
Subsidiaries:
Consorzio Inso-Verdot
Florence
Palagiustizia S.c.a.r.l.
Florence
R.S.A.Sant’Antonino Fiesole S.p.a.
Florence
Consorzio Inso-Themeliodomi S.c.a.r.l.
Florence
Consorzio tra Inso e Consorzio Etruria S.c.a.r.l. (in liquidazione)
Florence
Inso Malta Ltd
Malta
ICI Inso Contracting International Ltd
Dublino
Cisanello 2005 Scarl
Montelupo F.no (Fi)
Total subsidiaries:
Table n° 4) List of shares comprising fixed assets
Bill 05 Inglese
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45
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Recivables (B III 2) ”
Receivables amount to € 865,399 are broken down as follows:
B III 2 b) Receivables from associated companies for € 176,700 regarding loans in favour of Inso Themeliodomi for € 76,000 and of Inso Malta L.t.d. for € 100,000;
B III 2 b) Receivables from associated companies for € 615,802 concerning loans in favour of Aghito s.r.l. for
€ 285,947; of Ergon S.c.a.r.l. for € 19,800; of H.B.T. S.c.a.r.l. for € 175,000; and of Esserresse S.r.l. for € 60,000,
and Consorzio Ospedale di Osimo for € 75,055 (a reimbursement expected in 2006).
B III 2 d) Receivables from others for € 72,897 consisting in guarantee deposits, mainly for utilities and real estate rents.
C) CURRENT ASSETS C-I) Inventories C I 3) Work in progress on order:
Work in progress on order:
31/12/2005
31/12/2004
Variation
343.906.070
343.906.070
295.194.507
295.194.507
48.711.563
48.711.563
0
0
74.000
74.000
(74.000)
(74.000)
343.906.070
295.268.507
48.637.563
C I 4) Finished products and goods for re-sale:
On-site materials, finished products, contracted work
Total
Work in progress on order (C I 3) This figure refers to the progressive state of production of job orders at
31.12.05 gross of amounts provisionally invoiced to clients, against contracts still in existence and not formally
completed at year-end. - The quantification of inventories also takes into account “claims” accrued for €
8,137,000 for additional considerations (see evaluation criteria) whose acknowledgement is being pursued in and
out of court. In the merits, based on technical-legal analyses, we maintain that there is a reasonable certainty of
recognition of the amounts shown below.
To complete the information regarding claims provided in the Notes to the 2003 Financial Statements, we are now
going to disclose the historical trends and the present composition, also including the amounts reclassified among
accounts receivable due to the testing of the relevant job orders. As a consequence, the 2004 starting value has
been adjusted including the value of the claims previously registered among accounts receivable from customers.
a
Amount of claims as
at beginning of period
b
Claims acknowledged
during the year
claims
major acknowledgments
minor acknowledgments
receivables collected
23.259.547
10.950.000
3.406
claims
major acknowledgments
minor acknowledgments
receivables collected
15.020.547
Year
Description
2004
2005
Progressive total of claims recognized
c
New claims
of the year
2.711.000
a-b+c
Amount of claims
as at end of period
15.020.547
0
2.454.121
256.946
5.058.000
17.624.426
13.664.473
As regards the reclassification of claims posted in the accounts receivable from customers, see comments to the
“Receivables from Customers” item.
Therefore, total claims in the accounts prepared as at Dec. 31, 2005 amounted to € 17,624,426, of which
€ 8,137,000 posted among job orders in progress and € 9,487,426 among receivables from customers.
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“
C-II) ACCOUNTS RECEIVABLES 31/12/2005
31/12/2004
Variation
Clients
30.610.093
34.337.991
(3.727.898)
Invoices to be issued
27.506.125
6.189.510
21.316.615
(495.103)
(174.585)
(320.518)
57.621.115
40.352.916
17.268.199
418.663
C II 1) Receivables from clients:
(credit notes to be issued)
Total gross amount due from clients
(reserve for doubtful receivables)
(reserve for interest on arrears)
Total net amount due from clients
(489.249)
(907.912)
(2.545.711)
(2.484.902)
(60.809)
54.586.155
36.960.102
17.626.053
C II 2) Subsidiaries:
Trade receivables
4.357.422
2.856.685
1.500.737
1.332.896
3.091.908
(1.759.012)
5.690.318
5.948.593
(258.275)
877.761
740.917
136.844
9.880.761
822.043
9.058.718
C II 3) Associated companies:
Trade receivables
(credit notes to be issued)
(31.805)
(258)
(31.547)
10.726.717
1.562.702
9.164.015
9.293.321
11.715.410
(2.422.089)
430.173
2.784.190
(2.354.017)
9.723.494
14.499.600
(4.776.106)
Credit IRES
817.340
816.248
1.092
Credit IRAP
4.755
27.568
(22.813)
1.855.131
1.815.404
39.727
53.944
65.081
(11.137)
1.538.822
1.796.903
(258.081)
Income taxes paid on account (3% Favè payment on account)
833.235
636.555
196.680
VAT (Favè for fpa)
428.501
487.133
(58.632)
5.531.728
5.644.892
(113.164)
818.589
912.562
(93.973)
818.589
912.562
(93.973)
Total receivables from associated companies
C II 4) Parent companies:
Trade receivables
Total receivables from parent companies
C II 4-bis) Tax credits:
receivables from Italian Treasury:
credit IRPEG/IRES waiting for reimbursement
receivable from Revenue for advanced severance pay
credit VAT
Receivables from foreign Treasury:
Greek Treasury:
Total taxes receivable
C II 4-ter) Imposte anticipate:
Advanced tax payments
Total taxes paid in advance
C II 5) Other receivables:
Treasury withholding tax on interest receivable
Others
Total receivables from others
Total
1.512
1.093
419
2.431.249
3.953.727
(1.522.478)
2.432.761
3.954.820
(1.522.059)
89.509.762
69.483.271
20.026.491
47
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”
The aggregate increase is explained by multiple factors: on the one side, the increase in the value of production;
on the other, in more technical terms, the allocation of 2005 invoices to be issued after authorizations to invoicing received in January 2006.
Due from customers (item C II 1) The increase essentially reflects the registration of invoices to be issued
in connection with the following factors:
• testing of two job orders in Greece, with their consequent allocation among receivables for invoices to be issued for € 9,194,270 (beyond the subsequent period) previously posted among job orders in progress;
• definition, after year closing, of authorizations to invoicing falling under 2005 accounts.
For clarity purposes, we point out that this item includes earmarking for invoices to be issued for € 9,194,270 regarding claims that had been previously posted among “job orders in progress”. In this regard, we highlight that
the legal procedure aimed at recovering the amounts posted in the accounts has been started some time ago and,
in view of its presumable cost, a specific amount has been set aside in a provision for risks. Please, see item “Provision for risks and liabilities” under Liabilities.
Trade receivables posted among current assets have been posted net of both their provision for bad debt and provision for interest on arrears.
The reserve for bad debts was determined by analyzing the specific posts by adopting a cautious appraisal criterion with the purpose of adjusting the value of receivables with their presumable collection value. In the course
of 2005, after collecting a credit that had been totally written down, we used the reserve for the part not collected (€ 279,487) and decreased the amount in excess (€ 130,113). The remaining part of utilization (€ 9,063) is connected to settlement procedures opened in 2005 against insolvent customers, that had already been previously
written down.
For receivables of a contentious nature the same criteria adopted for previous years was applied, since they are
still considered collectable, not having been subjected to forfeiture, prescription or similar limitations.
The provision for interest on arrears has been posted as a contra-entry to invoices to be issued (of which €
2,333,300 in Greece) for some judicial positions. The period’s utilizations are connected with receivables for interest on arrears that have become certain during the period considered. The provision wholly covers receivables
for interest on arrears entered in the balance sheet for which collection is unlikely.
Reserve for doubtful receivables
Reserve for interest on arrears
Balance as at
Dec.31, 2004
Year’s allocation
(utilizations)
Other
movements
Balance as at
Dec. 31, 2005
907.912
0
(288.550)
(130.113)
489.249
Balance as at
Dec.31, 2004
Year’s allocation
(utilizations)
Other
movements
Balance as at
Dec. 31, 2005
2.484.902
148.300
(60.621)
(26.870)
2.545.711
Receivables from subsidiaries (Item C II 2) They refer almost exclusively to receivables from Inso Verdot and
Inso Themeliodomi consortia for reversal of income (consisting of invoices issued and to be issued). By way of
information, we point out that the net receivables/payables balance with subsidiaries is an amount of payables for
€ 4,801,379.
Bill 05 Inglese
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Pagina 49
“
Receivables from associated companies (Item C II 3) These credits are detailed below:
• invoices to be issued to Società Consortile Ospedale di Empoli A.r.l. (Ospem) for works for the construction of
the new hospital of Empoli. Still regarding Ospem s.c.r.l, we also point out that during 2005 Inso acted both as
agent for the ATI members and as the company awarded the works by the Consortium, therefore it offset the accounts receivable existing with the Consortium (for € 10.8 million) with accounts payable to the same entity for
an equal amount. The gross amount resulting from the balance of receivables from associated companies would
have been higher by € 10,855,490.
• reversal of revenues connected with the construction of roads in Malta in favour of Ergon S.c.a.r.l.;
• sales of assets to H.B.T. S.c.a.r.l.;
• two job orders for the construction of mobile hospitals in favour of M.M.H. S.p.A.;
• other minor amounts in favour of other companies.
By way of information, we point out that the net balance between our associated companies’ payables and receivables results in total receivables for € 4,458,828.
Receivables from parent companies (Item C II 4) These are trade receivables from the parent company Con-
sorzio Etruria Scrl; the posting decreased during the period considered. Deferments were granted against payment. By way of information, we point out that the net receivables/payables balance with the parent company is
an amount of receivables for € 8,228,380.
Tax credits (item C II 4-bis) They comprise:
• IRPEG/IRES credit waiting for reimbursement; it pertains to the credit shown in the 1999 income statement
and previous years, whose refund has been requested, inclusive of interest for € 266,025. At the beginning of
2006, a request for refund has been filed with the competent Inland Revenue Agency in order to accelerate collection;
• Value Added Tax (VAT) credit: slightly reduced compared to the previous year;
• IRES credit: referred to the 2005 income statement (concerning the 2004 accounting period);
• IRAP credit: regarding payments on account made during the year, net of the period’s taxation;
• receivables from the Greek Inland Revenue, consisting of foreign income tax advance payments accrued over
the last few years, exceeding the period’s fiscal load, and Value Added Tax.
Defferred tax assets (item C II 4-ter) These have been assessed in compliance with provisions in force and
in accordance with Accounting Principle n° 25 CNDCeR, and account for the temporary difference receivable regarding negative income components, whose deductibility is put off to future years. The increase and reabsorption of this item during the year is shown in the enclosed Table 9.
Receivables from others (Item C II 5) • Other receivables: this item mainly includes an account receivable for a guarantee deposit of € 1,741,640, which has been reduced during the period considered according to the progress of works. Considering that the job
order is expected to be completed before the end of 2006, its collection is estimated to occur within the subsequent year.
The other items include advance payments to suppliers for € 297,857; a receivable from employees for € 59,713,
and other minor credits.
The table below sets out receivables posted in current assets, broken down by type, with an indication of those
falling due after the following year.
49
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”
Receivables broken down by type and due dates residual duration
not exceeding
the year
31/12/2005
residual duration
not exceeding
the year
Total
31/12/2004
residual duration
exceeding
the year
residual duration
not exceeding
the year
Total
Receivables:
From clients
From subsidiaries
From associated companies
From parent companies
Credit taxes
Taxes paid in advance
From others
44.867.461
5.690.318
10.726.717
9.723.494
2.843.362
158.606
2.432.761
9.718.694
0
0
0
2.688.366
659.983
0
54.586.155
5.690.318
10.726.717
9.723.494
5.531.728
818.589
2.432.761
34.919.579
5.948.593
1.562.702
14.499.600
3.192.933
134.734
2.048.820
2.040.523
0
0
0
2.451.959
777.828
1.906.000
36.960.102
5.948.593
1.562.702
14.499.600
5.644.892
912.562
3.954.820
Total
76.442.719
13.067.043
89.509.762
62.306.961
7.176.310
69.483.271
Since the corporate activity is characterised by foreign job orders, the table below lists receivables grouped by geographical area.
Accounts receivable from Italian consortium entities established to control foreign job orders were classified
based on the origin of the relevant Customer.
Italy
Receivables:
From clients
From subsidiaries
From parent companies
Credit taxes
Taxes paid in advance
From others
Total
Greece
Malta
Other EU countries
countries Non-EU
Total
39.960.379
44.777
8.931.268
9.723.494
4.269.992
818.589
2.432.761
13.454.596
5.419.393
0
0
1.261.736
0
0
1.171.180
226.148
1.795.449
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
54.586.155
5.690.318
10.726.717
9.723.494
5.531.728
818.589
2.432.761
66.181.260
20.135.725
3.192.777
0
0
89.509.762
C-III) Financial assets C III 6) Other securities
Total
Other securities (item C III 6) 31/12/2005
31/12/2004
Variation
2.220
506.228
(504.008)
2.220
506.228
(504.008)
The monetary fund subscribed in 2003, which was included in this item in the
previous year’s accounts, has been disinvested in the first days of 2005 with the realization of the only amount
recorded in the 2004 accounts. The present amount refers to a small shareholding.
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“
C-IV) Liquid assets C IV 1) Bank and post office accounts
C IV 3) Cash and similar on hand
Total
31/12/2005
31/12/2004
Variation
3.344.406
3.596.691
(252.285)
26.067
37.920
(11.853)
3.370.473
3.634.611
(264.138)
This item mainly refers cash on hand held in current accounts of the Greek branch, both in ordinary current accounts and in term current accounts held as guarantee against suretyships issued on our account. The item is analyzed in detail in the financial statement enclosed.
Cash on hand at 31.12.05 represents total liquid assets at work sites and headquarters.
D) ACCRUED INCOME AND PREPAID EXPENSES In compliance with art. 2427 C.C., accrued income
and prepaid expenses are detailed below:
31/12/2005
31/12/2004
Variation
Accrued income:
financial revenues from exchange rate hedging operation
exchange rate hedging for adjustment of debts at year end exchange rate
Total accrued income:
48.372
156.840
205.212
582
0
582
47.790
156.840
204.630
Prepaid expenses:
Guarantee and insurance premiums
Factoring commissions
Leasing contract rentals
Hire fees
Interest payable
administrative consultancy services
bank commissions
prepaid expense for renewal of forward exchange operation
Other prepaid expenses
Total prepaid expenses
149.419
0
15.324
22.032
0
0
10.819
65.639
940
264.173
138.494
1.163
25.099
61.417
15.692
8.322
32.879
64.230
6.180
353.476
10.925
(1.163)
(9.775)
(39.385)
(15.692)
(8.322)
(22.060)
1.409
(5.240)
(89.303)
469.385
354.058
115.327
Total
Hospital of Leghorn –
ICU
51
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”
LIABILITIES A) SHAREHOLDERS’ EQUITY The Shareholders’ Equity amounts to € 16,247,714 and shows an increase
of € 4,306,012 compared to December 31st, 2004.
Shareholders’ Equity details as at Dec. 31, 2004 and Dec. 31, 2005 are shown in the enclosed Tables 5/a and 5/b.
More specifically, net equity items relate to the following:
Share capital (Item A I) The share capital as at December 31st, 2005 is € 15,000,000, increased by €
4,500,000 and fully paid up. The following resolutions were made during the Extraordinary Shareholders’ Meeting
held on April 29, 2005:
• revocation of the previous capital increase resolution and consolidation of the share capital to € 10,500,000, fully paid up;
• capital increase of € 4,500,000 through a gratuitous increase with conversion of the capital increase reserve for
€ 900,000 and the addition of € 3,600,000 (of which € 2,750,000 as a share capital increase and € 750,000 as a
share premium reserve, later used for a further gratuitous increase).
The share capital consists of 15,000,000 ordinary shares with a face value of 1 Euro each. The shares are registered and carry equal voting rights. The following shares were held at Dec. 31, 2005:
Consorzio Etruria Soc. Coop. A.r.l.
Sici Sviluppo Imprese Centro Italia S.G.R. S.p.A.
Cassa di Risparmio di S. Miniato S.p.A.
Consorzio Toscano Costruzioni
Selp S.p.A.
Number of
ordinary shares
Total
value
%
9.000.000
3.000.000
1.800.000
600.000
600.000
9.000.000
3.000.000
1.800.000
600.000
600.000
60%
20%
12%
4%
4%
15.000.000
15.000.000
100%
In order to provide better information on the share capital increase over the last five years, see the graph below:
16.000
14.000
12.000
€/1000
52
8-02-2007
10.000
Share Capital
8.000
6.000
4.000
2.000
0
2000
2001
2002
2003
Year
Share Capital Increase
2004
2005
10.500.000
170.000
0
0
Own
reserve
share
0
0
0
0
0
(900.000)
900.000
reserve)
(capital increase
Other reserves
0
0
57.015
314.687
previous years
of
Profit (loss)
314.687
1.009.015
208.139
106.548
previous years
371.702
0
52.000
118.000
reserve
Statutory
0
0
reserve)
of
Profit (loss)
Values at 31/12/2005
0
(750.000)
0
reserve
Legal
118.000
0
reserve
Other reserves
(capital increase
706.012
15.000.000
750.000
reserve
Revaluation
0
11.161
106.839
Own
share
- Operating result 31/12/2005
(Resolution of ord. shareholders meeting of 29/04/2005)
750.000
0
0
0
reserve
Statutory
706.012
706.012
(1.009.015)
1.009.015
result
Operating
1.009.015
1.009.015
(219.300)
219.300
result
Operating
Total
16.247.714
0
3.600.000
0
0
11.941.702
net equity
Total
11.941.702
0
10.932.687
net equity
“
- further gratuitous increase in the company capital
900.000
2.850.000
- payable increase in the company capital
10.500.000
- gratuitous increase in the company capital
(Resolution of ord. shareholders meeting of 29/04/2005)
- Allocation of profit for year ended 31/12/2004
share price
capital
over par
Reserve for
Company
Table n°. 5/b) Equity variations as at 31/12/2005 (art. 2427 no. 4 Civil Code)
- Operating result 31/12/2004
0
Legal
reserve
8:11
- Allocation of profit for year ended 31/12/2003
10.500.000
reserve
Revaluation
8-02-2007
share price
capital
over par
Reserve for
Company
Table n°. 5/a) Equity variations as at 31/12/2005 (art. 2427 no. 4 Civil Code)
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53
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Legal reserve (Item A IV) ”
An increase of Euro 52,000 was recorded following the resolution passed at the
meeting held on April 29, 2005.
Profit carried forward from previous years (Item A VIII) An increase of Euro 57,015 was recorded following
the meeting resolution of April 29, 2005. No dividends were distributed during the year considered.
Profit for the year (Item A IX) Operating profits as at 31.12.05 were € 706,012.
The total amount of the Shareholders’ Equity, which is included in the “tax suspension” program due to costs deducted only in the income statement under Art. 109, paragraph 4, of TUIR (Consolidated Act on Income Taxation),
is Euro 2,914,898.
Pursuant to Art. 2427, paragraph 7, of the Italian Civil Code, we enclose hereto Table n°6 summarising the details
of the Shareholders’ Equity items, with specification of their origin, possibility of utilization and distributability, as
well as of their utilization made in previous periods.
Rendering of the Bargino Wine Cellar for Antinori Wineries – S. Casciano Val di Pesa (Florence)
2005
2005
2002
2003
2003
2004
2005
2002
2003
2003
2003
2003
2004
2004
2004
2005
2005
2005
2005
2005
2005
16.247.714
P.N. amount for covering deductions not based on books
P.N. bound art. 109 c.4 tuir
Residual distributable amount
share premium reserve
establishment 2005
2005 use of capital increase
Values at 31.12.2005
previous years profits
profit appropriation 2002
operating result
profit allocation 2002
profit allocation to previous years profits
profit allocation to legal reserve
operating result
2003 profit allocation to previous years profits
2003 profit allocation to legal reserve
operating result
2004 profit allocation to previous years profits
2004 profit allocation to capital increase reserve
2004 profit allocation to legal reserve
operating result
Values at.12.2005
Net assets 20055
706.012
706.012
share capital increase, distribution to
shareholders, loss covering, allocation to reserve
2.897.714
2.914.898
(17.184)
706.012
106.548
208.139
57.015
50.235
56.604
11.161
52.000
Comments
share capital increase
900.000
(900.000)
2004 profit allocation from reserve for capital increase (900.000 from profits) and share premium reserve
(750.000 capital reserve)
431.068
summary of last
three business years’
utilizations
to cover
for other
losses
reasons
“
1.132.084
(968.932)
(106.548)
(56.604)
219.300
(208.139)
(11.161)
1.009.015
(57.015)
(900.000)
(52.000)
106.548
208.139
57.015
371.702
750.000
(750.000)
0
431.068
(431.068)
0
0
900.000
(900.000)
0
distribution to shareholders, loss covering
2002
2002
2003
2004
2005
2005
2005
reserve for capital increase
use of capital increase
use of capital increase
50.235
56.604
11.161
52.000
170.000
loss covering
loss covering
loss covering
loss covering
2002
2003
2004
2005
2005
legal reserve
1.650.000
share
available
8:11
4.500.000
15.000.000
2005
2005
possibility of utilization
capital increase
5.800.000
4.700.000
amount
2002
2003
year
8-02-2007
capital
capital increase
nature/description
Table n° 6) Analysis of Shareholders’ Equity from the availability and distributability viewpoint (under Art. 2427, n. 7 bis)
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”
B) PROVISION FOR RISKS AND CHARGES Tax provisions
Provision for deferred taxes
Total tax provisions
Other provisions:
Provision for future risks of litigation
Provision for personnel related liabilities
Provision for contractual risks
Total other provisions
Total
Balance as at Dec.
31, 2004
Year’s allocation
(utilizations)
Other
movements
Balance as at Dec.
31, 2005
928.205
928.205
787.852
787.852
0
0
(29.598)
(29.598)
1.686.459
1.686.459
494.682
100.000
455.805
1.050.487
536.000
75.000
219.310
830.310
(59.328)
(71.956)
(253.656)
(384.940)
0
(25.182)
0
(25.182)
971.354
77.862
421.459
1.470.675
1.978.692
1.618.162
(384.940)
(54.780)
3.157.134
• Provision for deferred taxes Deferred taxes are calculated on the basis of the taxation rates in force at the time
when the above-mentioned temporary differences willl be reversed, with separate calculations for IRES and IRAP,
whose detailed tables are enclosed hereto.
• the provision for future risks of litigation amounts to Euro 971,354 for higher charges resulting from an ongoing
litigation, pending and potential cases, of which € 271,057 posted after the settlement of the transaction with our
former sole partner Nuovo Pignone. Provisions set aside for the period refer to the potential charge connected to
the legal proceeding started against a Greek contractor for the settlement of our request for higher charges and
variations. For the merits, see the comments to the “Receivables from customers” item. Utilizations regard a case included in previous provisions.
• Provision for personnel related liabilities: this provision was utilized for € 71,956 to cover bonuses paid to employees during 2005 for the year 2004, decreased for the excess portion of the remaining amount due and replenished for € 75,000 based on an estimate of bonuses due under the labour contract for the year 2005.
• Provision for loss of value of contracts this fund has been used during the year for € 253.656 to breast the higher costs recorded on completion of various job orders and was replenished for € 219.310. The criterion used
for replenishment is based on the average utilizations made compared to work in progress over the last three accounting periods. The ratio is therefore applied to work in progress at year end to determine the amount of the
provision necessary to face future risks. The fund has been adjusted accordingly.
C) EMPLOYEES’ TERMINATION LEAVING INDEMNITIES Managers, employees and factory workers
Balance as at Dec.
31, 2004
Year’s allocation
(utilizations)
Other
movements
Balance as at Dec.
31, 2005
1.016.218
264.681
(73.544)
(37.455)
1.169.900
The amount of the provision, entered including the advance payment of 51,577 Euros, in conformity with Law
662/96, corresponds to the Company’s commitment to its staff for their entitlements at 31.12.05 in compliance
with relative labour contracts and other obligations in force.
The uses made refer to labour positions terminated during 2005.
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“
D) ACCOUNTS PAYABLES 31/12/2005
D 4) Due to banks:
Loans for advances on credits or contracts
Loans for imports 190.935
Medium and long-term loans
Total due to banks
31/12/2004
Variation
17.506.717
0
8.673.514
26.371.166
26.491.254
190.935
8.822.600
35.313.854
(8.984.537)
311.892.605
311.892.605
253.671.555
253.671.555
58.221.050
58.221.050
D 7) Due to suppliers:
Suppliers
Suppliers – invoices to be received
(Credit notes to be received)
Total due to suppliers
48.167.538
14.783.176
(356.158)
62.594.556
48.279.245
6.289.307
(298.191)
54.270.361
(111.707)
8.493.869
(57.967)
8.324.195
D 9) Due to Subsidiaries
Trade debts
Other debts
Invoices to be received
3.037.670
182.504
7.310.613
(39.090)
10.491.697
2.164.709
188.479
7.821.048
0
10.174.236
872.961
(5.975)
(510.435)
(39.090)
317.461
D 10) Due to associated companies:
Trade debts
Other debts
Total receivables from associated companies
102.231
850.369
5.315.289
0
6.267.889
34.036
0
809.912
(3.078)
840.870
68.195
850.369
4.505.377
3.078
5.427.019
D 11) Due to parent companies:
Trade debts
Total receivables from parent companies
143.791
1.401.323
(50.000)
1.495.114
516.508
396.430
0
912.938
(372.717)
1.004.893
(50.000)
582.176
136.712
75.589
792.150
3.545
144.952
62.580
1.361.171
2.830
(8.240)
13.009
(569.021)
715
18.091
13.914
4.177
60.555
1.086.642
0
1.585.447
60.555
(498.805)
D 13) Due to Social Security and Welfare agencies:
Inps and social security agencies
Welfare agencies for vacation entitlement charges
Foreign social security agencies
Total payables to Social Security and Welfare agencies
220.502
218.152
33.122
471.776
205.609
176.927
30.594
413.130
14.893
41.225
2.528
58.646
D 14) Other payables:
Payable to employees
Payable to employees for deferred remuneration
Total other payables
Totale altri debiti
193.979
662.645
71.752
928.376
99.178
566.630
416.485
1.082.293
94.801
96.015
(344.733)
(153.917)
421.599.821
358.264.684
63.335.137
D 6) Payments on account:
Payments on account – clients
Total payments on account
D 12) Due taxes:
Due to Italian revenue authorities
Employees IRPEF withholdings
Self-employed partners IRPEF withholdings
Deferred VAT
Employees severance pay substitute tax
Due to Foreign Treasury
Greek Treasury:
Foreign withholding tax on income (Greece)
Malta Treasury:
Malta VAT report
Total due to revenue
Total
(149.086)
(8.942.688)
57
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”
Your attention is drawn in particular to the following items in the balance sheet, which are set out in detail in the
above chart.
Due to banks (Item D 4) This item includes the loans granted by banks or factoring companies; their sub-
stantial decrease for the year is due to positive corporate cash flow trends.
As at Dec. 31, 2005, short-term net borrowing amounted to 20,414 thousand Euro, reflecting flows expressed in
the financial statement enclosed hereto (under Annex 7).
A list of debts secured by collateral on corporate assets recorded in the accounts as at Dec. 31, 2005:
• remaining loan for Euro 892.374 secured by a lien on equity interests, of which 305.563 due beyond the subsequent year;
• loan for Euro 837.212 (first tranche delivered on a total of Euro 1,450,000) secured by a real-estate mortgage,
totally collectable beyond the subsequent year.
There are still debts for Euro 837,212, due beyond five years.
Payments on account (Item D 6) This item comprises the amounts of non-final invoices issued to clients
for job orders in progress as at Dec. 31, 2005, net of payments on account that have become final payments with
the completion or final testing of the works carried out, booked among revenues for € 66,811,281.
Due to suppliers (Item D 7) This item covers residual payables to suppliers for sales of goods and services
as well as invoices received and to be received. The increase in this value is due to both an increase in production and to the definition of 2005 values after the closing of the accounts.
Payables to suppliers expressed in a currency different from the Euro have been entered as required by Art. 2427,
par. 6, C.C.
We inform Shareholders that the Company insured the currency exchange operations performed for purchase
contracts in dollars for an amount of USD 9.8 million, of which USD 4.6 million remained as at Dec. 31, 2005. The
book-keeping criterion used for this operation is consistent with accounting principles, and the invoices received
and unpaid as at Dec. 31, 2005 were adjusted to the year-end exchange rate. In this regard, see the information
paper prepared as required by art. 2427 bis of C.C. dealt with under point C) of the Income Statement in these
Notes.
Due to subsidiary companies (Item D 9) These refer to amounts due to subsidiaries Consorzio Inso Verdot,
Palagiustizia and Consorzio Inso Themeliodomi for a reversal of costs on the parent company and towards Inso
Malta Ltd for services rendered in connection with the Malta job order.
As reported earlier under receivables from subsidiaries, the value of debts, net of credits, results in total debts of
4,801,379 Euros.
Due to associated companies (Item D 10) They essentially refer to payables to Ergon S.c.a.r.l and Società
Consortile Ospedale di Empoli a.r.l. for cost reversal. As indicated under the item “Receivables from associated
companies”, the value of payables, net of receivables, is € 4,458,828.
Due to parent companies (Item D 11) This amount largely refers to the residual amount payable for invoi-
ces received and to be received (almost the entire value) in connection with services rendered. As indicated under the item “Receivables from parent companies”, the value of payables, net of receivables, is € 8,228,380.
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“
Due taxes (Item D 12) The following is a break-down of this item:
Deferred VAT: this represents the amount due for Valued Added Tax on invoices issued to public bodies for which
the VAT debt is deferred. This amount is set against the VAT credit recorded under item “Tax credits”.
Withholding taxes on income from self-employed and employed work: these refer to the amount withheld and to
be paid in January 2006.
Due to welfare and social security agencies (Item D 13) In essence, these are payables to welfare and so-
cial security agencies which have accrued for employees’ labour contracts and refer both to current and deferred
remuneration in the form of accrued vacation entitlements, paid leave, summer bonuses, etc.
Other payables (Item D 14) These also include payables accrued for employees’ labour contracts for cur-
rent (wages and salaries to be paid in January) and deferred remuneration (accrued holiday, leaves, summer bonuses, etc.) and reimbursement of expenses.
Other payables include guarantee deposits for Euro 38,700 and a payable to the Cometa Pension fund for Euro
5,083 to ensure its members a supplementary pension scheme in addition to the compulsory state pension
scheme.
The following table illustrates payables broken down by type, along with those falling due after the next year.
payables whose residual
duration does not
exceed the year
Payables:
From banks
Payments on account
From suppliers
From subsidiaries
From controlling companies
Taxes
From Social Security agencies
From others
Total
23.784.464
311.892.605
62.594.556
10.491.697
6.267.889
1.495.114
1.086.642
471.776
928.376
419.013.119
31/12/2005
payables whose
residual duration
exceeds the year
2.586.702
0
0
0
0
0
0
0
0
2.586.702
Total
26.371.166
311.892.605
62.594.556
10.491.697
6.267.889
1.495.114
1.086.642
471.776
928.376
421.599.821
payables whose residual
duration does not
exceed the year
27.480.173
253.671.555
54.270.361
10.174.236
840.870
912.938
1.585.447
413.130
1.082.293
350.431.003
31/12/2004
payables whose
residual duration
exceeds the year
7.833.681
0
0
0
0
0
0
0
0
7.833.681
Total
35.313.854
253.671.555
54.270.361
10.174.236
840.870
912.938
1.585.447
413.130
1.082.293
358.264.684
Payables broken down by type and due date Since the corporate activity is characterised by foreign job orders, the table below lists payables grouped by geographical areas.
Italy
Payables:
From banks
Payments on account
From suppliers
From subsidiaries
From controlling companies
Taxes
From Social Security agencies
From others
Total
26.371.166
301.706.879
50.596.376
8.259.435
4.439.183
1.495.114
1.007.996
438.654
896.589
395.211.392
Greece
Malta
0
10.185.726
3.369.814
1.716.285
0
0
18.091
33.122
31787
15.354.825
0
0
1.727.741
449.281
1.828.706
0
60.555
0
0
4.066.283
Other EU
0
0
6.268.675
66.696
0
0
0
0
0
6.335.371
countries Non-EU
0
0
631.950
0
0
0
0
0
0
631.950
Total
26.371.166
311.892.605
62.594.556
10.491.697
6.267.889
1.495.114
1.086.642
471.776
928.376
421.599.821
59
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”
E) ACCRUED EXPENSES AND DEFERRED INCOME In compliance with art. 2427 C.C., accrued liabi-
lities and deferred income are detailed below:
Accrued liabilities:
Interest payable
Guarantee costs
Financial charges for exchange hedging operation
Leasing rentals
Total accrued liabilities
Deferred income:
prepaid expense for renewal of forward exchange operation
commercial/administrative management income
hires
Other prepaid expenses
Total deferred income
Total
31/12/2005
31/12/2004
Variation
1.749
33.896
11.007
11.743
58.395
15.588
5.295
709
0
21.592
(13.839)
28.601
10.298
11.743
36.803
188.477
0
0
0
188.477
246.872
52.788
471.870
988
150
525.796
547.388
135.689
(471.870)
(988)
(150)
(337.319)
(300.516)
The most significant variation shown is the result of the termination of the contract that had led to the interruption of revenues for commercial administrative management on a multi-year job order. As a consequence, this position has been closed and the accounting has been a consequence of the agreement signed.
MEMORANDUM ACCOUNTS 31/12/2005
31/12/2004
Variation
Total guarantees given
66.224.762
5.601.283
3.638.438
2.699.713
1.963.890
1.291.142
81.419.228
71.307.827
2.468.311
8.834.538
4.679.195
800.568
1.294.142
89.384.581
(5.083.065)
3.132.972
(5.196.100)
(1.979.482)
1.163.322
(3.000)
(7.965.353)
Commitments
Leased goods
Insurance policies
Currency forward purchase contracts
Currency forward sale contracts
Other debts
Other commitments
724.356
709.112
4.953.777
1.218.635
2.000.000
9.605.880
1.081.870
663.687
7.194.773
0
5.500.000
14.440.330
(357.514)
45.425
(2.240.996)
1.218.635
(3.500.000)
(4.834.450)
Others
real estate mortgage
Securities as collateral
Total others
2.900.000
0
2.900.000
0
425.007
425.007
2.900.000
(425.007)
2.474.993
93.925.108
104.249.918
(10.324.810)
Guarantees furnished
Performance bonds
Discharge of lien hold back bonds
Bid bonds
Import documentary credits
Other guarantees
Direct suretyships issued in favour of third parties
Total Memorandum Accounts
Guarantees and commitments undertaken by the Company as at Dec. 31, 2005 are detailed below:
Guarantees given the decreasing variation of the net amount of guarantees given is due to the progress of
job orders, that has led to both the cancellation of some commitments and to the reduction of others following
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“
the completion of 50% of the volume of works under the applicable contracts, even though in the presence of
new commitments issued as a guarantee for new contracts.
For greater clarity, we give an indication of guarantees currently in effect, net of counter-guarantees which generate a duplication. Counter-guarantees (as, for example, in the case of guarantees issued by Greek banks in
favour of Inso, which are subject to the issue of a guarantee by an Italian bank, and also in the case of insurance
counter-guarantees for guarantees that existed before the entry of the current Holding, still endorsed by the company’s former sole shareholder, Nuovo Pignone), if added to guarantees in effect, without further specification,
would alter the Memorandum Accounts by duplicating and even triplicating significant amounts.
For completeness purposes, we point out that counter-guarantees for Euro 20,300,799.50 were existing as at
Dec. 31, 2005.
We point out that, during the first few months of 2006, reductions were made to signed contract commitments
for over 10 million Euro. This reduction led to a corresponding reduction in the counter-guarantees issued by banks
and insurance companies.
In compliance with the provisions set forth by art. 2427 of the Civil Code, suretyships issues in favour of subsidiaries amount to 1,878,601 (Consorzio Inso spa Verdot S.a).
Other guarantees include the personal direct suretyship issued for Palagiustizia Scarl for € 1,291,142.
Import documentary credits refer to letters of credit issued to suppliers for an important foreign job order.
Commitments: Leasing – this item is reduced, due to residual rent payments made during 2005. No significant new contracts
were signed in 2005.
Insurance policies: they reflect the instalments still due for CAR and subsequent policies.
Currency forward purchase commitments refer to SWAP operations against purchase and sale contracts in foreign currency; they were reduced after the closing of operations connected with the settlement of trade operations.
Other commitments refer to forward commitments on exchange rate hedging operations (IRS and Cap) and were
reduced after the operations’ expiry.
Others Real estate mortgage: they refer to the Massarosa real estate operation.
Lien: A lien exists on Nodalis S.p.A.’s shares provided as a guarantee for the loan obtained for its acquisition. The
value as at Dec. 31, 2005 has been set to zero since the shares have been completely written down in the period.
New Hospital of Cisanello, Pisa
61
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PROFIT AND LOSS ACCOUNT ”
A) VALUE OF PRODUCTION 31/12/2005
31/12/2004
Variation
A 1) Income from sales and services:
Income from completed job orders
Other revenues
Total revenues from sales and services
66.132.872
667.672
66.800.544
5.309.961
51.031
5.360.992
60.822.911
616.641
61.439.552
A 3) Variation in job orders in progress:
Contracted work
Total variation in job orders in progress
48.711.563
48.711.563
97.696.879
97.696.879
(48.985.316)
(48.985.316)
0
0
83.930
83.930
(83.930)
(83.930)
410.693
48.397
25.454.111
25.913.201
200
73.059
15.807.152
15.880.411
410.493
(24.662)
9.646.959
10.032.790
141.425.308
119.022.212
22.403.096
A 4) Increases for internal work capitalised on fixed assets:
To fixed assets
Total increases for internal work capitalized on fixed assets
A 5) Other revenue and income:
Ordinary contingent assets
Ordinary capital gains
Sundry revenues and income
Total other revenue and income
Total value of production
The value of the company’s production in 2005 reached 141 million Euro, with a percentage increase of 18.8%
compared to the previous year. However, this value was determined by consortium reversals and ATI (temporary
association of companies) member fees which, although compliant with Italian Civil Code provisions, amplified the
real value of production and overlapped the amount of works assigned to Inso by the Consortia and Consortium
entities, with the effect of duplicating the values booked in the Income Statement. This duplication, for the year
considered, was € 31,981,725; therefore, to ensure clarity of disclosure, we have deemed it appropriate to summarise the production value net of said effect as follows:
balance sheet data
duplication effect
adjusted value
66.800.544
48.711.563
0
25.913.201
0
7.905.491
0
24.076.234
66.800.544
40.806.072
0
1.836.967
141.425.308
31.981.725
109.443.583
A 1) Revenues from sales and services
A 3) Variation in job orders in progress
A 4) Increases for internal work capitalised on fixed assets
A 5) Other revenues and income
Total adjusted value of production
The subdivision by geographical area, also including consortium relations and Italian consortia, is:
• ITALY: € 118,919,367 adjusted to € 87,806,094 (see Table above)
• GREECE: € 9,989,244 adjusted to € 9,120,792 (see Table above)
• MALTA: € 12,210,747
• MAROCCO: € 305,950
For more in-depth analysis of this category of activities, please see the Management’s Report.
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Income from sales and services (A 1) This heading covers:
• Income from sale of goods (mainly sale of electromedical equipment), and services rendered on an annual basis (i.e. maintenance of hospital equipment);
• Income from completed job orders pertaining to multi-annual jobs previously included in job orders in progress;
Many jobs were concluded during the year considered for an aggregate value of Euro 66,811,281.
• Other minor non significant income.
Changes in work in progress on order (Item A 3) These reflect the share of works carried out during the
year considered, for multi-year job orders still ongoing as at 31.12.05. The decrease shown compared to the previous year reflects the passage to the revenues item of many job orders that were previously recorded in this
item.
Increases in non current assets due to internal work (Item A 4) Transfer to immovables: Not recorded du-
ring the year.
Other revenue and income (Item A 5) The remaining values, net of the duplication effect mentioned abo-
ve, were determined by:
• Personnel commanded to group companies;
• Ordinary contingent assets;
• Ordinary capital gains: these relate to divestment of machinery used in manufacturing processes;
• Sundry revenues and income: mainly referring to hiring of equipment, re-debiting of staff benefits, miscellaneous services, etc.
B) PRODUCTION COSTS As already indicated in the comments to the production value item, the increase
in production costs compared to the previous year is affected by the “duplication effect” of the values connected
with Temporary Associations of Companies, Consortia and Consortium entities. This amount – Euro 31,981,725 amplifies the value of costs for services. In any case, the increase net of this effect is 20% and is correlated to
the increase in the assets.
Production costs are summarized below:
B-6) Raw, ancillary and consumable material and goods for resale 31/12/2005
31/12/2004
Variation
Purchase of goods
Purchase of ancillary goods
Purchase of raw materials
Purchase of consumable goods
Purchase of instrumentation
Purchase of fuel and lubricants
(Suppliers’ allowances and discounts)
337.942
26.589
14.726.854
409.250
11.206.988
152.378
(415)
2.537.515
136.873
10.191.812
471.097
10.972.086
110.530
(49)
(2.199.573)
(110.284)
4.535.042
(61.847)
234.902
41.848
(366)
Total
26.859.586
24.419.864
2.439.722
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B-7) Services ”
This item covers costs incurred for the following operating services:
Technical consultancy and assistance
Other consultancies
Miscellaneous work by third parties
Reversal of consortium costs
Directors and Auditors Emoluments
Utilities
Insurance
Travel expenses
Transport and handling
Maintenance
Banking services
Factoring contract services and commissions
Cost of management staff, temporary work and other staff-related services
On-going and co-ordinated collaboration
Entertainment expenses
Miscellaneous certification expenses
Advertising, propaganda and sponsorships
Surveillance and concierge services
Cleaning service
Other external services
Other
Total
31/12/2005
31/12/2004
Variation
3.477.659
1.020.421
42.652.196
44.775.251
172.634
425.104
565.343
835.269
357.807
42.337
214.561
168.595
866.818
510.120
66.701
46.050
119.240
137.850
160.769
3.560.755
111.104
3.704.554
870.342
32.470.453
31.143.984
137.638
376.053
906.753
832.767
198.859
15.642
90.975
141.803
1.150.296
409.283
95.595
55.499
85.020
146.562
162.400
6.489.967
108.466
(226.895)
150.079
10.181.743
13.631.267
34.996
49.051
(341.410)
2.502
158.948
26.695
123.586
26.792
(283.478)
100.837
(28.894)
(9.449)
34.220
(8.712)
(1.631)
(2.929.212)
2.638
100.286.584
79.592.911
20.693.673
Services costs include emoluments to Auditors, amounting to Euro 35,416, and Directors for Euro 137,218.
The main fluctuations, apart from the reversal of consortium costs already extensively considered, essentially concern services and are closely linked to the processing phase of individual job orders.
B-8) Leases and Rentals 31/12/2005
31/12/2004
Variation
Office rentals
Housing rentals
Miscellaneous rentals
Hire service
Software fees and licences
Leasing rentals
277.266
116.920
31.026
1.772.611
167.112
405.778
214.054
106.088
2.210
1.874.178
147.817
535.907
63.212
10.832
28.816
(101.567)
19.295
(130.129)
Total
2.770.713
2.880.254
(109.541)
On the whole, these items are consistent with the previous period: The fluctuations shown reflect:
• rents paid for offices, residence and sundry rents increased for the rental of new premises at our registered and
operating headquarters, and rents for new agency offices, as well as flats made available to employees;
• software fees and licences for ERP platform;
• sundry rents decreased in connection with job order progress;
• leasing rents decreased following redemptions for the period..
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B-9) Labour costs B 9 a) Wages and salaries
B 9 b) Social contributions
B 9 c) Severance pay
B 9 e) Other costs
Total
31/12/2005
31/12/2004
Variation
4.678.484
1.634.743
301.482
82.192
4.828.636
1.759.194
293.187
67.890
(150.152)
(124.451)
8.295
14.302
6.696.901
6.948.907
(252.006)
These include gross wages and salaries paid to employees, social security contributions, accruals for severance
indemnity pay, vacation entitlements, paid leave and relative contributions accrued but not paid at 31.12.05. This
cost also includes the “one-off” contract holiday portion for the 2006 renewal of the CCNL (national labour agreement).
The item refers to wages and salaries paid to head-office staff, staff seconded to the Greek branch and staff employed by the latter.
By way of information, the total cost of Athens head-office was € 1,103,937 (for wages, salaries and contributions, etc.) as against € 1,200,855 for the previous period (this value also includes costs for personnel sent abroad
for the amounts paid locally).
INAIL contributions have been set aside on an accrual basis, in compliance with the 2005 self-liquidation method
presented in 2006. The 3.63% decrease in the cost of personnel is confirmed. This decrease is partly due to the
termination of some labour contracts with technical staff and workers who worked at Greek job orders and partly due to the increasing use of so-called “atypical” labour contracts, whose charges are shown among the costs
for services.
During 2005 the average work force was made up as follows:
-
Executives
Senior managers
Office workers
Factory workers
Total
Italy
2005
Greece
2005
Total
2005
9
9
63
22
0
0
24
9
9
9
87
31
103
33
136
31/12/2005
31/12/2004
Variation
162.876
258.229
139.717
303.674
23.159
(45.445)
421.105
443.391
(22.286)
421.105
443.391
(22.286)
B-10) Amortization, depreciation and write-downs Depreciation:
B 10 a) Depreciation of intangible fixed assets
B 10 b) Depreciation of tangible fixed assets
Total depreciation
Total
Depreciation items (B10a and B10b) are detailed in the Statement of Assets and Liabilities; please, see that section for reference.
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”
B-11) Variations in inventories of raw, ancillary, consumable materials and goods for resale B 11) Variations in inventories of raw, ancillary and consumable goods
Variations in raw materials inventories
Opening stock
(Closing stock)
Total variation in raw materials inventories
Total
31/12/2005
31/12/2004
Variation
74.000
0
74.000
74.000
(74.000)
0
0
74.000
74.000
74.000
0
74.000
31/12/2005
31/12/2004
Variation
536.000
75.000
219.310
0
100.000
394.000
536.000
(25.000)
(174.690)
830.310
494.000
336.310
Raw materials in stock during the previous period were sold during 2005.
B-12) Provision for risks B 12) Provision for risks:
Provision set aside for future risks
Provision for company result bonus
Provision for contractual risks
Total
The following provisions have been set aside in the course of 2005:
• Euro 536,000 for risks connected with legal actions regarding the litigation with a Greek customer;
• Euro 75,000 for a performance bonus for employees due based on a trade union agreement;
• Euro 219,310 for contractual risks set aside based on the average use of the last three periods.
In this regard, see comments to the Statement of Assets and Liabilities (paragraph B – Provision for risks and
charges).
B-14) Other operating expenses Below is a detailed break-down of the items under this heading:
31/12/2005
31/12/2004
Variation
Consortium contributions
Contributions to trade unions and trade associations
Bank and insurance guarantee charges
Taxes other than income tax
Ordinary contingent liabilities
Capital losses
Other
1.390
175.855
598.975
54.859
40.669
1.123
99.183
111.711
57.618
604.806
133.598
0
1.069
60.027
(110.321)
118.237
(5.831)
(78.739)
40.669
54
39.156
Total
972.054
968.829
3.225
The fluctuation shown in consortium contributions is due to the closing of Consorzio Coril.
C) FINANCIAL INCOME AND EXPENSES Financial income and charges as at Dec. 31, 2005 amounted
to net charges for Euro 808,367, with a 45.97% increase compared to the previous period. The variation shown
is mainly due to:
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“
• lower charges for the average use of bank credit lines during the period, due to positive corporate cash flow
trends explained by the fact that job orders progressed during 2005 with particularly favourable collection conditions and that customers paid more punctually than in previous years;
• optimisation of treasury management;
• greater revenues for interest income from customers and the parent company.
As regards the financial instruments shown in the table below, we point out that since currency forward purchase
and sale operations and the Cap contract are established to cover trade and financial transactions, they have been
posted according to accounting principles. On the whole, as at Dec. 31, 2005 the market to market quotation
shows a positive value of Euro 163,687.
The Interest Rate Swap contract was booked at fair value by posting the market to market quotation among operating costs.
type of contract
currency forward purchase (SWAP)
currency forward sale (SWAP)
total
Cap
currency
notional capital
market to market
USD
USD
6.106.581
(1.500.000)
4.606.581
211.576
(51.403)
160.173
EURO
500.000
500.000
3.514
3.514
total
Interest rate swap (IRS)
EURO
1.500.000
(364)
1.500.000
(364)
31/12/2005
31/12/2004
Variation
42
42
117.000
117.000
(116.958)
(116.958)
42
117.000
(116.958)
total
C-15) Income from shareholdings from other companies:
Dividends
Total income from shares held in other companies
Total
The dividends received during the period consist in securities posted among marketable securities.
C-16) Other financial income C 16 d) Sundry income:
Interest receivable on ordinary current accounts
Interest receivable on tax credit
interest receivable from customers
Interest receivable from associated companies
Interest receivable from controlling company
Interest receivable on arrears
Provision for write-down of interest receivable on arrears
Sundry financial discounts and interest receivable
Total sundry income
Total
31/12/2005
31/12/2004
Variation
7.238
39.726
98.815
15.327
587.945
165.282
(148.300)
89.967
856.000
4.668
39.726
0
16.172
256.759
569.745
(550.645)
67.388
403.813
2.570
0
98.815
(845)
331.186
(404.463)
402.345
22.579
452.187
856.000
403.813
452.187
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We point out that interests receivable from customers, considerably increased during the year, consist in debits
agreed for extensions granted.
As far as interests from the parent company are concerned, the increase is mainly due to two interest-bearing financing issued and redeemed during the year.
C-17) Interest and other financial expenses Interest payable on ordinary current accounts
Interest payable on bank loans
Interest payable on loans and financing
Interest payable on exports
Interest payable on arrears and deferments
Financial discounts
Sundry interest and charges
Total
31/12/2005
31/12/2004
Variation
7.965
850.826
396.221
0
47.806
486
355.256
131.126
1.285.272
248.244
50.698
24.991
247
276.412
(123.161)
(434.446)
147.977
(50.698)
22.815
239
78.844
1.658.560
2.016.990
(358.430)
31/12/2005
31/12/2004
Variation
36.153
(42.002)
9
(71)
36.144
(41.931)
(5.849)
(62)
(5.787)
C17-bis) Exchange gains and losses Profits on exchange rates
Losses on exchange rates
Total
Profits and losses on exchange rates regard both operations carried out and the year-end realignment of currency positions not covered for foreign exchange risk.
The amount of the differences in exchange rates is considerably reduced due to the presence of exchange rate
hedging operations already mentioned in the Memorandum Accounts.
D) VALUE ADJUSTMENTS OF FINANCIAL ASSETS Write-ups:
D 18 c) Other write-ups
31/12/2005
31/12/2004
Variation
0
11.277
(11.277)
385.474
0
385.474
385.474
11.277
374.197
D 18)
D 19) Write-downs:
D 19 a) Write-down of shareholdings
Total
As already commented in the item regarding long-term investments, in the light of the information obtained following the procedure of composition with creditors granted to Nodalis S.p.A., we have completely written down
the shareholding.
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E) EXTRAORDINARY INCOME AND CHARGES They amount to a net income of € 571,670, with a
9.18% reduction compared to the previous period.
E-20) Income 31/12/2005
31/12/2004
Variation
Contingent assets
Waiving of shareholders’ credit
Extraordinary capital gains
337.474
0
385.467
867.742
3.508
0
(530.268)
(3.508)
385.467
Total
722.941
871.250
(148.309)
The contingent assets balance is attributable mainly to:
• allocation for invoices to be received for previous years, that have become available during the period considered;
• reduction in the performance bonus provision in excess compared to the bonuses given;
• other minor items.
Extraordinary capital gains are the result of the sale of part of Nodalis S.p.A.’s shares.
E-21) Charges 31/12/2005
31/12/2004
Variation
Contingent liabilities
Contract forfeiture
Penalties and fines
Tax amnesty charges
143.548
1.404
6.319
0
233.933
0
14.744
475
(90.385)
1.404
(8.425)
(475)
Total
151.271
249.152
(97.881)
Contingent liabilities essentially arise for costs accrued in previous years regarding invoices received after year
closing and/or insufficient allocations for invoices to be received.
22) TAXES IRES
IRAP
Foreign source income tax
Deferred taxes
Prepaid taxes (reversal)
Total
31/12/2005
31/12/2004
Variation
0
334.004
0
758.254
93.614
0
351.729
1.336
928.205
120.907
0
(17.725)
(1.336)
(169.951)
(27.293)
1.185.872
1.402.177
(216.305)
These items include:
• Year’s IRAP.
• No year’s IRES is shown because the Company enjoys statutory extra-accounts tax deductions. The year’s IRES
is posted among deferred taxes.
• Deferred taxes assessed based on termporary fiscal differences.
• Reversal to cost of prepaid taxes.
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Tables 8 and 9 show the reconcilement between the balance sheet tax burden and the theoretical tax burden, as
required by the accounting principle n°25, as well as a prospectus with an analysis of prepaid and deferred taxes.
Pursuant to Art. 2497 bis of the Civil Code, we hereby declare that the Company is managed and coordinated by
“Cooperativa Consorzio Etruria A.R.L.” located in Via Sammontana 15, Montelupo F.no (FI). The Company is required to prepare consolidated financial statements. Summary information concerning the last approved financial
statements (2004) is provided in Table 10.
These financial statements have been prepared in compliance with legal requirements.
CASH FLOWS Annex n° 7)
(values in thousand Euro)
31/12/2004
A. OPENING (BORROWING)
(INITIAL SHORT-TERM NET FINANCIAL INDEBTEDNESS)
31/12/2005
(36.753)
(23.339)
B. FLOW FROM ACTIVITIES
Operating profit
Amortization
Net variation in the employees’ termination leaving indemnities fund
Other net variations
1.009
444
106
856
706
421
154
1.178
Year’s operating profit before variations in the current assets
2.415
2.459
(8.717)
168
14.925
478
9.269
(12.098)
9.584
14.055
(415)
13.585
C. CASH FLOW FROM (FOR) INVESTMENT ASSETS
(Investments) Disinvestments in net fixed assets:
- intangible
- tangible
- financial
Total C
(184)
(138)
(437)
(759)
(117)
(205)
(8.691)
(9.013)
D. CASH FLOW FROM (FOR) FINANCIAL ASSETS
Medium/long-term receivables from banks within the subsequent year
Share capital increase
Profit allocation/utilization and reserves
Total D
4.904
0
0
4.904
(5.247)
4.500
(900)
(1.647)
13.414
2.925
F. CLOSING (A+E)
(FINAL SHORT-TERM NET FINANCIAL INDEBTEDNESS) (A+E)
(23.339)
(20.414)
Cash and receivables from banks
Short-term payables to banks
TOTAL CASH ON HAND
4.141
(27.480)
(23.339)
3.370
(23.784)
(20.414)
(Increase) Decrease of current assets credits
(Increase) Decrease in inventories
(Increase) Decrease in receivables from suppliers and other debts
(Increase) Decrease in other items of the current assets
Total B
E. CASH FLOW FOR THE YEAR (B+C+D)
6
(97)
(59)
(406)
(367)
(15)
(17)
(21)
44
820
(312)
Reversal of temporary differences deriving from previous years
Dividends
Utilization of the reserve company result bonus
Utilisation of provision for future risks
Utilization of taxed doubtful receivables reserve
Shareholding write-down
Membership fees from previous years
Agency charges from previous years
Differences that are not reversed in subsequent years
Non taxable amount for agency charges
Other non taxable costs
Other non taxed revenues
976
Reversal of temporary differences deriving from previous years
696
806
806
322
(212)
Total current and deferred taxes
tax
806
Ires
0
(0)
(624)
182
(322)
212
Total deferred taxes
2.445
(641)
Total
2.110
Temporary differences taxable in subsequent years
tax base
(0)
(1.892)
552
(976)
641
(696)
624
33%
0,00%
0,00%
(33%)
9,63%
(17,02%)
11,19%
(36,79%)
%
44
1.894
(420)
0
(97)
(59)
0
0
(15)
0
(21)
17
75
536
13
(100)
(1.420)
1.071
192
(641)
1.520
FINANCIAL YEAR 2005
Irap
tax base
7.860
448
1.518
(192)
641
(1.520)
7.412
tax
tax
380
46
46
8
(27)
65
334
334
19
65
(8)
27
(65)
315
4,51%
4,51%
0,26%
0,87%
(0,11%)
0,37%
(0,88%)
4,25%
%
939
1.186
852
852
330
(239)
761
334
334
(605)
247
(330)
239
(761)
Total
tax
tax
Total
4,51%
4,51%
(32,75%)
10,50%
(17,13%)
11,55%
(37,66%)
37,25%
%
“
Total current taxes
Total
Total timing and permanent differences
17
75
536
13
(2.110)
1.892
tax
FINANCIAL YEAR 2005
Irap
tax base
8:11
Agency charges taxable in subsequent years
Provision for company result bonus
Provision for potential liabilities
Tangible fixed assets amortization 50% first financial year
(100)
(289)
(1.721)
tax base
(data in €/000)
8-02-2007
Extraordinary contingent assets
Provision for doubtful receivables reserve
Provision for reserve on job orders in progress
Result before taxes (irap tax base, Greece production net value)
Theoretical tax liability
Description
Ires
Prospectus n° 8) Reconcilement between balance sheet and theorical tax liability, as per PC 25
Bill 05 Inglese
Pagina 71
71
33,00%
33,00%
33,00%
4,25%
Tax rate
Tax
(a)
928
2
67
776
83
Tax base
6
6
-
982
59
97
406
367
21
17
15
33,00%
-
Tax rate
2005 reabsorptions
37,25%
37,25%
33,00%
33,00%
37,25%
33,00%
37,25%
Tax rate
There is no amout credited or charged to the net assets.
No items were excluded from the accounting of deferred taxes receivable and payable
(1) The calculation of IRAP passive deferred taxes on provisions for jobs in progress was performed taking into account the presumed production abroad.
758
4.522
Total
Net economic impact
6
202
2.353
1.961
Tax base
Advances taxes as at 31/12/04
914
178
37
296
364
23
4
6
6
Tax base
2005 reabsorptions
Tax
(b)
Tax
(b)
2
2
-
333
22
36
134
121
8
6
6
37,25%
37,25%
37,25%
37,25%
-
Tax rate
3.530
100
289
1.721
1.420
Tax base
37,25%
33,00%
33,00%
4,25%
Tax rate
Advanced taxes as at 2005
641
536
75
17
13
-
Tax base
Advanced taxes as at 2005
Tax
(c)
Tax
(c)
760
37
95
568
60
239
200
28
6
5
-
37,25%
37,25%
33,00%
33,00%
37,25%
37,25%
-
820
356
29
162
243
21
9
-
8.046
100
491
4.074
3.381
37,25%
33,00%
33,00%
4,25%
1.686
37
162
1.344
143
Tax
Tax base
Tax rate
(a-b+c)
2.341
956
78
490
736
56
25
-
Tax
Tax base
Tax rate
(a-b+c)
Dividends
Contingent assets
Provision for doubtful receivables reserve
Provision for reserve, jobs in progress
Provision for reserve, jobs in progress (1)
Description of temporary differences
94
2.682
Total
37,25%
37,25%
33,00%
33,00%
37,25%
37,25%
33,00%
37,25%
Tax rate
Tax
(a)
8:11
Net economic impact 94
479
100
896
1.103
60
12
17
15
Tax base
8-02-2007
Provision for future risks
Provision for personnel liabilities
Reserve for doubtful debts
Shareholding write-down
Agency charges
50% deprec. 1st year tangible assets
Membership fees
Description of temporary differences
(data in €/000)
72
Prospectus n° 9) description of the temporary differences that required the booking of deferred taxes receivable and payable (art. 2427, point 14 c.c.)
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“
Annex n° 10) summarized data from the last approved balance sheet of “Consorzio Etruria S.c.a.r.l.”
31-dec-04
STATEMENT OF ASSETS AND LIABILITIES
ASSETS
A) Receivables from shareholders for still due payments
B) Fixed assets, with separated indication of leased assets
C) Current Assets
D) Accrued income and prepaid expenses
TOTAL ASSETS
538.023
44.533.754
486.676.705
689.156
532.437.638
LIABILITIES
A) Shareholders’ equity
Share Capital
Reserves
Profit/(Loss) of the financial year
24.617.190
8.862.300
14.060.943
1.693.947
B) Provision for risks and charges
4.970.114
C) Provision for employees’ termination leaving indemnities-
3.479.164
D) Payables
E) Accrued Liabilities and deferred Income
TOTAL LIABILITIES
499.367.126
4.044
532.437.638
PROFIT AND LOSS ACCOUNT
A) Value of Production
125.995.789
B) Cost of production
122.697.087
C) Financial income and charges
D) Value adjustments to financial assets
(1.667.719)
0
E) Extraordinary incomes and charges
344.379
Income Tax for the year
281.415
Profit/(Loss) of the financial year
1.693.947
73
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“
BOARD OF AUDITORS’ REPORT
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Pagina 76
”
Dear Shareholders,
the financial statements for the year ended December 31, 2005, drawn up by the Directors in accordance with
the law and regularly submitted by them to the Board of Auditors together with the relevant tables, the detailed
schedules attached and the Management’s Report, show profits for € 706,012 and can be summarised as follows:
STATEMENT OF ASSETS AND LIABILITIES Assets
€ 442.421.410
Liabilities
€ 442.421.410
Net Worth
€
16.247.714
Share capital
€
15.000.000
Legal reserve
€
170.000
Profit carried forward
€
371.702
Profit/(Loss) for the year
€
706.012
Accounts payable and other Liabilities
€ 426.173.696
Memorandum accounts
€
92.475.108
Difference between production value and costs
€
2.514.055
Financial income and charges
€
(808.367)
Value adjustments to financial assets
€
(385.474)
Extraordinary income and charges
€
571.670
Income tax for the year
€
(1.185.872)
Profit/(Loss) for the year
€
706.012
PROFIT AND LOSS ACCOUNT Dear Shareholders,
during the financial year closed on Dec. 31, 2005 we have audited the company in accordance with the law based
on the principles recommended by the National Board of Bookkeepers and Registered Accountants.
In particular, we have audited the Company’s compliance with the law and corporate bylaws in the presence of
the Auditors who have audited the Company pursuant to Article 2409 bis of the Italian Civil Code and in due consideration of the new statutory requirements established for the Board of Auditors by the reform of the Civil Code.
Namely, we have:
• reviewed the corporate organisation and audited that it had an appropriate structure, a suitable corporate pur-
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“
pose, and adequate procedures in place to ensure compliance with the provisions set forth by special laws concerning business operations; reviewed, but not limited to, the activities carried out for the purpose of complying
with safety standards, privacy provisions, etc;
• reviewed the appropriateness of the management and accounting system in place, as well as the reliability of
this system to truly and correctly reflect management events by obtaining information from the managers of
the different business units, from the responsible accountant, and by analysing corporate records and accounts;
• reviewed labour relations, the national collective labour contracts used (industry and building sectors), the different types of individual employment contracts (fixed term or open-ended contracts), single-project contracts,
training and free-lance professional contracts;
• reviewed the accounting Auditors’ activities based on the records made available by him, upon our request;
• reviewed the maintenance of a financial balance, with particular reference to the evolution of tax credits, indebtedness to banks and suppliers, and the use of credit lines and inter-group financial relationships;
• reviewed the correct keeping of books and corporate records, as well as the relevant formalities;
• reviewed the fulfilment of tax and social security requirements, deadlines and corresponding payments;
• reviewed the consistency of existing insurance policies and suretyships;
• reviewed compliance with procedures, signature powers and the release of indemnity declarations issued in favour of the members of corporate bodies and the management;
• reviewed relationships with associated companies and subsidiaries.
In connection with all the items listed above, on a quarterly basis we have received information from the Directors regarding the activities carried out and the most significant economic, financial and equity operations carried
out by the Company.
The above mentioned auditing activity has been implemented during 6 Board meetings, individual actions and by
attending 8 Board of Directors meetings.
During our auditing activity, there was no evidence that the Company carried out any operation that may be defined as non-compliant with the law or bylaws, clearly ill-advised or reckless, with a potential conflict of interest,
in contrast with the Meeting’s resolutions or such as to damage the integrity of the Company’s assets.
We did not find evidence of any atypical or unusual operation carried out with associated parties, third parties or
intra-group companies, which may have affected significantly the economic, equity or financial standing of the
Company.
Furthermore, we acknowledge that no reports have been received pursuant to Article 2408 of the I.C.C. or were
filed by third parties.
Since account auditing tasks have been assigned to an Auditing Company, we have audited the general approach
used in the Financial Statements and its compliance with the applicable standards and regulations as regards their
preparation and organisation, which we found to be compliant with the applicable principles.
We also point out that:
• the evaluation criteria adopted are compliant with the provision set forth by Article 2426 of the I.C.C. and have
remained unchanged compared to the previous accounting year;
• the items shown in the Statement of Assets and Liabilities and in the Income Statement are those required by
Articles 2424, 2424 bis, 2425, and 2425 bis of the I.C.C.;
• as far as we know, the Directors prepared the Financial Statements without departing from the requirements
set forth by Art. 2423, par. 4 of the I.C.C.;
• the accounting principles adopted in preparing the Financial Statements are compliant with the type of activity
and the operations carried out by the Company;
• no management events have become known to the Board of Auditors during its auditing activities that were
not reflected in the items of the Statement of Assets and Liabilities and Income Statement;
• the Management’s Report contains all the statutory information required by Article 2428 of the I.C.C.;
• the Notes to the Financial Statements provide all the additional information required concerning the figures
shown in the Statement of Assets and Liabilities and Income Statement in compliance with the evaluation criteria adopted pursuant to Art. 2426 of the I.C.C.. They show the main accounting details and contain the information required by Article 2427 of the I.C.C.
77
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”
As to the review of accounts performed by the Auditor, we point out that the Auditor has certified the accounts
as follows: “INSO S.p.A.'s Financial Statements for the year ended December 31st, 2005 are compliant with the
applicable reporting criteria and regulations; therefore, the Financial Statements do provide clear, true and correct
information regarding the financial standing and economic results of the Company”.
Dear Shareholders, based on the audits carried out by us and on those carried out by the independent Auditor, we
invite you to approve the Financial Statements and the appropriation of profits as proposed by the Board of Directors in the Management's Report.
The Board of Internal Auditors
Romano Mosconi - President
Antonio Bertani
Nazareno Speca
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Pagina 79
“
AUDITOR’S REPORT
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Pagina 80
80
”
AUDITORS’ REPORT
In accordance with article 2409-ter of the Italian Civil Code
To the Shareholders of
INSO SPA
1. We have audited the financial statements of INSO SpA as of 31 December 2005. These financial statements
are the responsibility of INSO’s directors. Our responsibility is to express an opinion on these financial statements based on our audit.
2. We conducted our audit in accordance with Auditing Standards generally accepted in Italy. Those standards, require that we plan and perform the audit to obtain the necessary assurance about whether the financial statements are free of material misstatements and, taken as a whole, are presented fairly. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates made by the directors. We believe that our audit provides a reasonable basis for our opinion.
For the opinion on the financial statements of the prior period, which are presented for comparative purposes
as required by law, reference is made to our audit report dated 11 April 2005.
3. In our opinion, the financial statements of INSO SpA as of 31 December 2005 comply with the laws governing
the criteria for their preparation; accordingly, they give a true and fair view of the financial position and of the
results of operations of the Company.
4. As required by law, in the notes of the financial statements INSO SpA reported the key figures of the last financial statements of the company exercising direction and coordination activity over it. Our opinion on INSO
SpA’s financial statements is not extended to these key figures.
Florence, 12 April 2006
PricewaterhouseCoopers SpA
Lamberto Tommasi
(Partner)

Bill 05 Inglese

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