Salcostruttori Cons 06 2012 Ifrs En1

HALF-YEAR FINANCIAL REPORT SALINI COSTRUTTORI S.p.A.
30 JUNE 2012
PREPARED IN ACCORDANCE WITH INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS)
Interim Directors Report - Half-Year Financial Report as at 30 June 2012
M ISSION
The Salini Costruttori Group is an international general contractor specialising in the construction of major, complex works throughout the world. Inspired by the principles of sustainable development, the Group leverages technological and organisational innovation as well as its extraordinary human and professional resources to develop construction solutions capable of enhancing the resources of communities and contributing to the economic and social improvement of nations.
TABLE OF CONTENTS
INTERIM DIRECTORS REPORT................4 CORPORATE BODIES.5 KEY GROUP DATA..8 GROUP FINANCIAL HIGHLIGHTS.................9 MACROECONOMIC SCENARIO AND REFERENCE MARKETS..13 SUSTAINABLE DEVELOPMENT...16 QUALITY, SAFETY AND ENVIRONMENT..18 CORPORATE GOVERNANCE19 HUMAN RESOURCES.....20 CREATION OF A NATIONAL CHAMPION...21 RESEARCH AND DEVELOPMENT...22 OPERATING PERFORMANCE....23 ANALYSIS OF THE GROUPS INCOME, FINANCIAL POSITION AND CASH FLOW24
The Group today: summary of consolidated financial information24 Income and operating performance of the Group..24 Financial results27 Reclassified consolidated statements.29
PORTFOLIO OF WORK IN HAND.31 BUSINESS PERFORMANCE BY GEOGRAPHICAL AREA................32
Abroad.32 Italy..39
MAIN GROUP COMPANIES...43
SaliniS.p.A..43 Todini Costruzioni Generali S.p.A..48

OTHER INFORMATION..50 TREASURY SHARES..51 MANAGEMENT AND COORDINATION.51 AUDITS.51 ALTERNATIVE PERFORMANCE INDICATORS.51 INFORMATION ON RELATED-PARTY TRANSACTIONS51 EXERCISE OF THE TAX CONSOLIDATION OPTION FOR IRES (CORPORATE INCOME TAX)...52 SUBSEQUENT EVENTS..53 OUTLOOK.54
INTERIM CONSOLIDATED FINANCIAL STATEMETS AT 30 JUNE 2012..54 NOTES TO FINANCIALSTATEMENTS...56
INTERIM DIRECTORS REPORT
CORPORATE BODIES
Corporate bodies
BOARD OF DIRECTORS
Chairman CEO Directors Simonpietro Salini Pietro Salini Simon Pietro Salini Luisa Todini Alessandro Salini Francesco Perrini* David Morganti* Roberto Cera* Gianluca Piredda*
*Independent
INTERNAL CONTROL AND CORPORATE GOVERNANCE COMMITTEE

Committee Members David Morganti Roberto Cera Gianluca Piredda
REMUNERATION COMMITTEE
Committee Members Francesco Perrini David Morganti Gianluca Piredda
EXECUTIVE COMMITTEE
Committee Members Simonpietro Salini Pietro Salini Simon Pietro Salini
BOARD OF STATUTORY AUDITORS

Chairman Statutory Auditors Andrea Monorchio Gennaro Mariconda Claudio Valerio Roberto Parasassi Claudio Volponi
Alternate Auditors
INDEPENDENT AUDITORS
Independent Auditors Reconta Ernst & Young
KEY GROUP DATA

Financial highlights
Group financial highlights

(/000) TOTAL INCOME VALUE ADDED Value Added Ratio EBITDA EBITDA Margin EBIT EBIT Margin EBT EBT Margin NET PROFIT ATTRIBUTABLE TO THE GROUP TOTAL FIXED ASSETS OPERATING WORKING CAPITAL RESERVES Uses SHAREHOLDERS EQUITY NET FINANCIAL DEBT Funding June 2012 821,049 192,292 23.4% 91,279 11.1% 47,560 5.8% 41,719 5.1% 17,567 792,550 1,836 (32,268) 762,118 (386,143) (375,975) (762,118) 2011 1,423,877 350,295 24.6% 173,409 12.2% 91,360 6.4% 74,680 5.2% 36,142 467,461 (238,097) (30,292) 199,073 (245,121) 46,048 (199,073) June 2011 609,586 158,198 26.0% 66,452 10.9% 33,910 5.6% 35,319 5.8% 19,678 307,369 8,583 (21,677) 294,275 (226,087) (68,188) (294,275)
PORTFOLIO OF WORK IN HAND BY SECTOR (/000) Dams and hydroelectric plants Railways and metro systems Civil buildings Roads and motorways 51.0% 31.1% 10.5% 7.4%
June 2012 5,187,414 3,165,158 1,063,075 756,270 10,171,918 48.4% 31.1% 10.5% 10.1%
December 2011 5,019,590 3,227,770 1,086,278 1,047,483 10,381,121
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PORTFOLIO OF WORK IN HAND BY GEOGRAPHICAL AREA (/000) Africa EU Asia Non-EU 58.1% 30.7% 9.0% 2.2%
June 2012 5,908,520 3,123,994 918,100 221,303 10,171,918 55.2% 31.1% 9.6% 4.0%
December 2011 5,735,072 3,230,291 999,517 416,241 10,381,121
OPERATING INCOME BY SECTOR (/000) Dams and hydroelectric plants Railways and metro systems Civil buildings Roads and motorways 32.5% 15.9% 3.7% 47.9%
June 2012 261,413 128,190 29,411 385,947 804,961 30.8% 15.0% 4.7% 49.5%
December 2011 427,492 208,918 65,574 687,719 1,389,703 33.4% 15.6% 3.8% 47.3%
June 2011 198,395 92,642 22,524 281,298 594,859
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OPERATING INCOME BY GEOGRAPHICAL AREA (/000) EU Non-EU Asia Africa America 23.4% 22.1% 19.3% 35.2% 0.0%
June 2012 188,181 178,091 155,562 283,127 804,961 26.6% 8.1% 27.6% 37.7% 0.0%
December 2011 369,058 112,137 384,175 524,333 1,389,703 29.9% 5.5% 23.5% 41.1% 0.0%
June 2011 177,939 32,693 139,926 244,301 594,859
Summary personnel figures PERSONNEL COSTS NUMBER OF EMPLOYEES
JUNE 2012 DECEMBER 2011 JUNE 2011 97,256 18,668 163,001 15,508 82,508 13,723 17.9% 36.0%
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Macroeconomic scenario and reference markets

In recent years the construction market has been characterised by considerable uncertainty, even though worldwide demand for infrastructures has remained steady partly due to the unstoppable urbanisation process affecting emerging and developing economies. The continuing instability in the world economy has heavily hit several areas of business in the construction sector, such as residential and commercial building, resulting in a significant shift of the focus of major players towards projects for the generation of energy, transportation and communications. It should be noted that an increasing demand for infrastructures, and specifically complex and large-scale infrastructures, is encouraging concentration among engineering and construction firms, resulting in companies that are increasingly larger and more diversified, with specific skills for executing more technologically complex projects with greater value added. Competition among the main market players increasingly hinges on testimonials, expertise and adequate funding, and thus the ability to attract new resources and talent, if necessary through acquisitions, has become a critical factor for success. In the current economic situation, the Italian government has focused on measures to stimulate sustainable growth and, specifically in relation to the construction industry, plans to close the infrastructure gap which still exists in our country. Thus, it is hoped that the commitment undertaken by the government in the infrastructure appendix to the Economy and Finance Document of April 2012, will serve as the impetus for the completion of priority civil projects for the country with the launch of new work sites with positive repercussions on employment in the sector. Outside Italy, the most interesting opportunities for large-scale development are in areas such as India, the Far East and Latin America. For these reasons, size and worldwide presence are increasingly critical factors for bringing in new projects. Hand in hand with the increase in size, there will be an increase in the complexity that major worldwide competitors must face taking into account the various political, commercial, regulatory and governance frameworks involved. Mega projects undoubtedly offer more attractive profitability margins for a general contractor, especially considering the high level of complexity involved in the design and execution phases for these works, and thus the projects represent interesting opportunities but only for those players that have achieved levels of excellence in the identification, analysis and management of risk. In this environment, the Salini Costruttori Group has been able to see the signs of market change in advance (a strategy leaning toward business areas with greater value added) and has strengthened its position in those countries in which it has managed to establish a strong competitive advantage in recent decades (Africa, Asia and Italy) and at the same time has expanded its area of operations towards new companies that offer interesting growth prospects (Denmark and Latin America). Against this backdrop was the increase, in the first half of the year, in the investment in Impregilo, which continues to pursue the goal of creating a National Champion, meaning a worldwide leader with the know-how, expertise, track record and size needed to compete in the global construction sector through more efficient and effective corporate management. This initiative will help to create a Group characterised by: a global presence with a greater, nearly unequalled sales force; the dimensional size of a market leader, partly due to the foreseeable achievement of significant sales and cost synergies; a combination and enhancement of the management expertise that currently exists within the two groups through the creation of an integrated management team with the Interim Directors Report - Half-Year Financial Report as at 30 June 2012 13
determination and experience necessary to compete on large-scale, highly complex infrastructure projects; a strong financial structure bolstered by a suitable credit standing. With regard to project management, from the time a project is brought in until it is completed and delivered, the Salini Costruttori Group places a particular emphasis on assessing risks with the development of a complex methodology that makes it possible to monitor and manage the various aspects of country risk as well as risks connected with the execution of work, including the safety of its personnel in the latter. The Salini Group works both in Italy and in areas and countries with good political stability and solid economic fundamentals, in general harmony with local administrations and on-site management and without being particularly affected by late payment issues. In the first half of 2012, 35% of production was generated by African projects, 23% by EU projects, 22% by non-EU projects and 19% by Asian projects. The residual value of the portfolio of work in hand at 30 June 2012 amounted to 10.2 billion, and was distributed in areas and countries of the Eurasian and African continents with high expected growth rates. Hydroelectric plants and dams accounted for 51% of these projects; railways and metro systems for 31.1%; roads, motorways and bridges for 7.4%; and industrial and civil infrastructures for the remaining 10.5%. In Sub-Saharan Africa, which represents 53.4% of the Groups portfolio, there has been a consolidated and generalised improvement in many economic and socio-political indicators. Growth prospects remain unchanged for 2012 during which an improvement in aggregate GDP of 5.4% is projected. In Ethiopia the political situation is stable, and the economy is recovering thanks, in particular, to the energy sector, where the Group is making a significant contribution to the growth in investments in production from renewable sources and to agricultural growth. Growth is estimated at 5% and the World Bank is involved with 25 projects for a total commitment of US$ 3.6 billion. In Nigeria, following the April 2011 elections that confirmed the outgoing president, the economy benefited from political stability with a positive impact on expected economic growth of over 7% due to petroleum exports. The authorities restructured the banking industry and began investing in transport and energy infrastructures, sectors in which the World Bank is financing over 20 projects. The Group has a widespread presence in the CIS region, and the country where the most significant projects are located is Kazakhstan, which is rich in gas and hydrocarbons and has an expected growth rate of 5.9%. The World Bank, the European Bank for Reconstruction and Development (EBRD) and the Asian Development Bank (ADB) are active there in the transport, energy and environmental sectors. In Ukraine, which is benefiting from investments by UEFA, and where the World Bank and EBRD are active, growth of 3% is projected, and is bolstered by steel exports. In Azerbaijan, the crossroad between Europe and Asia for oil and gas pipelines, the building and infrastructure sectors are growing due to a public investment plan launched by the government, and GDP is expected to grow by 3.1%. Malaysia is characterised by gradual growth in investment projects as a part of the economic transformation programme planned by the government, with a strong private contribution, a significant degree of commercial receptiveness and a strong banking system. Growth is projected to be 4.4%. Turkey, which represents a significant new market for the Group, has significant investments planned in transport and energy infrastructures which are partially supported by an efficient banking system. The government recently approved a new investment incentive programme. GDP growth is expected to be 2.3%.
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Finally, Denmark, where the Group, as leader of the Copenhagen Metro Team, has the privilege of building one of the most significant urban transport projects in Europe, has one of the most stable and solid economies and one of the lowest public debts in the EU, which will aid the government in making future public investments.
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Sustainable development
Working in numerous and diversified environments means interpreting and respecting the expectations of institutions, clients, local communities, consumers and technical and operating counterparties with different histories and cultures. The Company has translated these requirements into a vision and style of work based on the value of human beings, attention to the environment, the principles of social responsibility and corporate citizenship. This choice gives rise to our commitment to a broad notion of sustainable development, which is a key aspect of our business. The projects we carry out energy from renewable sources, infrastructures to reduce urban traffic congestion, public metro systems with a low environmental impact, development and upgrading of regional infrastructures to boost regional development create lasting value for the communities involved and are a catalyst for further growth. The Group has formalised its working philosophy in a coordinated set of policies, procedures and organisational structures aligned with major international benchmark standards. In particular, since 2010, we have been a member of the United Nations Global Compact, a worldwide initiative for sustainable development, which requires a commitment to aligning our strategies and operations with ten universal principles relating to human rights, labour, the environment and the fight against corruption. At a national level, we are also part of the Global Compact Network Italy, and work together with other member organisations and businesses to execute specific projects and initiatives aimed at advancing the priorities set forth in the Global Compact. The Groups sustainability strategy is implemented by maximising the benefits generated in the areas in which it works, benefiting local stakeholders. Our priorities include creating new jobs, using local suppliers, investing and engaging in initiatives in favour of local communities, and conforming rigorously to high environmental standards. The commitment to use local workers and suppliers has a positive impact on the development of national economies, especially in emerging markets, by increasing workers skill levels and suppliers qualitative standards, while at the same time improving infrastructures and environmental conditions in the areas where we execute our projects. Our complete dedication to human resources is especially concentrated in the areas of health, safety and human rights, through the adoption of widely shared standards and codes of conduct that are supported by a commitment to training and regular dialogue with over 18,650 employees from 80 different countries. The Companys commitment is also characterised by thorough consideration of the needs of local communities. The Head Office divisions as well as on-site management analyse and assess community requirements and, often in partnership with institutions and other organisations, develop investment projects in the areas of education, health, culture and recreation. In recent years, significant resources have been allocated to construct buildings, schools, hospitals and roads. Furthermore, energy and water distribution as well as health care have been provided for local communities. In addition, while projects are under way, Salini allows local communities to access some work site facilities, such as medical clinics, classrooms,
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wells, roads and bridges, which are often turned over to the communities and institutions when the project is complete. Our daily commitment extends from people to the conservation of the environment and natural resources, which are crucial aspects of our business model. For this purpose, the Company structures and conducts its work while guaranteeing the best possible environmental protection, and is committed to continuously improving environmental services, considered an integral part of the Companys financial and operating performance. Our work sites are focused on reducing energy and water consumption by developing innovative projects to re-use and recycle natural resources and scrap generated while works are being conducted. Mitigating the impacts of work site activities on communities is another priority to which the Salini Costruttori Group dedicates the utmost attention, by monitoring and closely managing aspects relating to noise, vibrations, dust and road conditions. Since the environmental aspect includes strategic objectives within a globalised and extremely competitive market, not only in-house human resources and professionals, but also clients, suppliers, authorities and other stakeholders are invited to take part in environmental processes and initiatives. The commitment to constantly maintaining an open dialogue with stakeholders, in order to understand their legitimate expectations and create opportunities for involvement and cooperation, is implemented through tools and highly diversified methods both at corporate level and at the individual work sites, generating positive interactions with increasingly broad groups of internal and external stakeholders. The commitment to transparency is also demonstrated by reaching the A+ application level of the Global Reporting Initiative (GRI-G3) on the 2011 Sustainability Report. This document, which was published in the first half of 2012 and is available on the Company's website, reports the Group's sustainability practices and performance. To protect all stakeholders, the Report was certified externally (KPMG) on a voluntary basis.
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Quality, Safety and Environment

The Quality, Health, Safety and Environment System (QHSE) is a management tool used by senior management to ensure that important activities are continually planned, developed and improved to the full satisfaction of all stakeholders. In the first half of 2012, the review of the QHSE System, which was carried out on the basis of 2011 results, led to the identification of measurable objectives, which are pursued through raising the awareness and ensuring the involvement of head office and work-site units. In addition, the necessary training was provided to the personnel concerned, and especially to delegated executives and managers whose training was arranged by the Health, Safety and Environment Department (HSE) in collaboration with Human Resources and in compliance with current regulations. The performance of the QHSE System was checked by executing internal audits and analysing reports from work sites that indicated a satisfying degree of application of the system. A QHSE System was set up for the newly established Salini S.p.A. that complies with the highest international standards and allowed the Company to obtain the renewal of ISO 9001:2008 certification in June 2012. Lastly, there are plans for the development and integration of several operating procedures with the dual goal of standardising certain aspects for executing projects whilst further improving the overall performance of the QHSE System.
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Corporate governance
The Salini Costruttori Group has approached the issue of Corporate Governance with a wideranging vision and scope. Although it is unlisted, it has adopted a dynamic model compliant with the principles enshrined in the Code of Conduct for Listed Companies, CONSOB recommendations and best practice at national and international level. Its Corporate Governance policies are therefore continuously updated and documented in the Annual Corporate Governance Report. That document describes the corporate governance model in detail, defines the Companys organisation, specifying the roles and responsibilities of each Corporate Body and of the top management, and provides information on the implementation of the provisions of the Code of Conduct. The Internal Control System monitors the practical implementation of governance policies and works effectively to promote their actual and constant execution. The Board of Directors of the parent company Salini Costruttori S.p.A. was re-elected at the Board meeting on 16 July 2012. At that time, the number of directors was increased from seven to nine, of whom three have particular duties, and six are non-executive directors (including four independent directors). The Board will remain in office until the approval of the financial statements at 31 December 2014. During the half-year just ended, the Board met five times, and the main resolutions concerned the review and/or approval of: the Companys and the Groups interim reports; the acquisition of strategic equity investments; the top managements pay policies; economic forecasts.
With regard to the Internal Control System, the Internal Audit Department conducted the audits set forth in the Audit Plan defined at the beginning of the year in order to monitor the suitability of the applicable procedures, as well as the compliance of processes with local and international regulations. During the first half of 2012, the inspections requested by the Supervisory Body at Italian and foreign operating divisions were conducted with the aim of assessing the effectiveness of the Organisation, Management and Control Model. With regard to the environmental offences specified in Directives 2008/99/EC, 2009/123/EC and 2005/35/EC, and referenced in Article 25-undecies of Legislative Decree 231/2001 (introduced following the issuance of Legislative Decree 121 of 7 July 2011), after adjusting the Organisation, Management and Control Model of Salini Costruttori, the update of the Model of Todini Costruzioni Generali S.p.A. (approved by the Board of Directors at its meeting on 27 March 2012) was also completed. Following the establishment of Salini S.p.A. on 6 December 2011, the Supervisory Body was appointed (consisting of two independent directors and an outside professional) for the new company, and the related Code of Ethics and Organisation, Management and Control Model were prepared pursuant to Legislative Decree 231/2001. The documents were approved by the Board of Directors on 21 December 2011. Periodic training sessions on matters relating to Legislative Decree 231/2001 continued for all Group personnel.
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During the year, the Company aligned itself with the regulations in force on IT data security (pursuant to Legislative Decree 196/2003) and updated its Data Security Policy as required by the regulations in force.
Human Resources
As at 30 June 2012, the Salini Group had 18,668 employees, of which 3% are located in Italy and the remaining 97% abroad. The Company's multinational and multiethnic characteristics are emphasised by its presence in 40 countries and its employment of personnel from 80 different countries, distributed as follows based on continent of origin: Africa 12,811 (68.62%) Asia 3,698 (19.81%) Europe 2,109 (11.30%) Americas 49 (0.26%) Oceania 1 (0.001%)
During the first half of the year, the work force rose by 20.37% (+3,160 employees) based on performance that benefited, in particular, from the consolidation of Ethiopian projects and the full operations of the Ulu Jelai project in Malaysia. The presence of female employees on the Company's staff continues to grow with an increase of 29% over 31 December 2011, and female staff now represent 8.52% of the work force (7.93% in 2011). In 2012, the process of recruiting and hiring resources with advanced professional qualifications continued, both with a view to reinforcing the quality of non-central offices and to guarantee suitable and gradual generational turnover. The distribution of employees by age brackets is as follows: < 30 years 8,052 (equal to 43.13%) 30-50 years 8,660 (equal to 46.39%) > 50 years 1,956 (equal to 10.48%)
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If the same figure were compared with the distribution of the Company's employees in 2010 and 2011, it would be immediately obvious that the Group's growth in employment is mainly in the under-30 age bracket, thereby making progress on the goal of making the Company a place that attracts younger resources.
Creation of a National Champion

During the first half of the year, the Salini Costruttori Group expanded its strategic investment in Impregilo S.p.A., a company listed on the Italian stock exchange, reaching a stake of about 28.1% in the share capital. This project was part of the project to create a National Champion, meaning a worldwide leader with the know-how, expertise, track record and size needed to compete in the global construction sector through more efficient and effective business management. This project represents a unique growth opportunity for both Groups (Salini and Impregilo) which would entail the enhancement of the complementarity of the specific skills and
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testimonials obtained in their respective geographical markets in the area of construction of major, complex works. Although it is true that ongoing instability in the world economy continues to have a major impact on certain business areas in the sector (in particular residential and commercial building), it can also be said that major infrastructures remain a priority for the development of national economies, especially in those geographical areas with the highest growth rates. Competition among the main market players increasingly hinges on testimonials and qualified expertise and adequate funding. Thus, the ability to attract new resources and talent, if necessary through acquisitions, has become a critical success factor. In this regard, the creation of a National Champion (Impregilo and Salini) would make it possible to create greater value by generating additional significant benefits such as: a more widespread geographical presence worldwide enriched by the in-depth knowledge of the individual countries in which the two groups have already been operating successfully for decades; a size comparable to major global players in the sector with an obvious impact on opportunities to access larger, more technologically complex infrastructure projects; a strong financial structure characterised by a suitable credit standing; sales and cost synergies achievable by making available to both groups the specific expertise and testimonials obtained in other market segments and pursuing greater efficiency in the integrated management of resources; the creation of value for all shareholders and stakeholders through significant growth in total revenues and operating margins.
Research and development

Research, development and technological innovation have always been essential to the Companys success in the realisation of large-scale projects. If, today, the Group is one of the most advanced in terms of technologies used, project and work site management procedures and security measures adopted, it is thanks to the continuous and increasing commitment of the economic and human resources invested in research and development. In close partnership with qualified professionals and engineering companies at an international level, highly innovative techniques and solutions have been developed to be used on projects of any type, size and complexity. This approach is one of the strengths that make the Group competitive worldwide, even under the most demanding working conditions. The constant bid for innovation has made a significant contribution to the evolution of the entire construction and plant engineering sector, with the Fast Track Implementation method specifically designed to construct large-scale turnkey hydroelectric power plants. The method, based on the simultaneous launch of all critical operational phases, helps to dramatically reduce project timescales by at least 50%. Therefore, a hydroelectric plant begins to generate benefits and revenue streams much sooner than it would with a traditional organisation, delivering a faster return on investment. The Fast Track Implementation method, which Salini has already successfully applied to three large-scale hydroelectric plants, can be used for many project types that require swift completion times, anywhere in the world.
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OPERATING PERFORMANCE
Analysis of the Group's results
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Analysis of the Groups income, financial position and cash flow

The Group today: summary of consolidated financial information
The interim consolidated financial statements as at 30 June 2012 report pre-tax profit of 41.7 million and income of 821.0 million. The first six months of the year were positive confirmation of the Group's operating and technical capabilities in the complex works segment. The exponential growth in total income, which rose by 211.5 million over the same period in 2011, is concrete evidence of the structural strength of the Group, which despite the domestic and European environment of continuing economic contraction, has managed to maintain a strong upward trend in production in accordance with the objectives stated in its business plans. Against this backdrop, operating margins have improved in absolute terms, especially with regard to EBITDA (91.3 million, +37.4%) and EBIT (47.6 million, +40.3%). Net financial debt of 376 million was the anticipated result of planned investment policies, including the purchase of shares of Impregilo S.p.A. in an amount totalling about 269 million over the last 12 months. This equity investment, which is considered strategic, was recorded under non-current financial assets. Reaching a level of 10.2 billion, the portfolio of work in hand confi rms the quality of the Group's sales activities which are aimed at seizing opportunities in those markets that are less vulnerable to slowdowns in the current economic situation. Finally, the expansion of industrial activities also had a positive impact on the increase in Group employment, and the headcount grew by 3,160 employees (20.37%), from 15,508 employees at 31 December 2011 to 18,668 at 30 June 2012.
Income and operating performance of the Group

Key consolidated income figures /000
Total Income EBITDA EBIT EBT Net Profit Net profit/Total income
30 June 2012
821,049 91,279 47,560 41,719 17,567 2.1%
30 June 2011 Change %

609,586 66,452 33,910 35,319 19,678 3.2% 34.7% 37.4% 40.3% 18.1% -10.7%
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Production
In the first half of 2012, income rose sharply (34.7% on an annual basis) to a level of 821.0 million.
(/000) Production in Italy Production abroad TOTAL June 2012 113,611 707,438 821,049 2011 320,446 1,103,431 1,423,877 June 2011 171,027 438,559 609,586
Income from projects being completed abroad, which represent 86.1% of the total for the period (71.9% at 30 June 2011), rose by 61.3%, which more than offset the decline of 33.6% in the Italian market. Continued growth in international operations is confirmation of the Group's strong competitive position in geographical areas with high potential such as Africa and Asia, which represent 54% of total value of production. Operating income amounted to 804.9 million, accounting for 98.0% of turnover (+35.3% over the same amount reported on 30 June 2011). In this regard, there was a significant contribution from the Gibe III and GERDP projects (Ethiopia), the Cityringen project (Denmark), the Zhytomir project (Ukraine) and Kyzlorda project (Kazakhstan) and growing operations in Malaysia, Belarus and Zimbabwe.
OPERATING INCOME BY GEOGRAPHICAL AREA (/000) EU Non-EU Asia Africa America 23.4% 22.1% 19.3% 35.2% 0.0% June 2012 188,181 178,091 155,562 283,127 804,961 26.6% 8.1% 27.6% 37.7% 0.0% December 2011 369,058 112,137 384,175 524,333 1,389,703 29.9% 5.5% 23.5% 41.1% 0.0% June 2011 177,939 32,693 139,926 244,301 594,859
In terms of operating income, the road and motorway area continued to be the most significant with 47.9% of operating income for the year (+210 million over 30 June 2011, an increase of 35.3%) due mainly to the full operations of road lots for the reconstruction of the International Transit Corridor Western Europe - Western China in Kazakhstan and works to rehabilitate the motorway section along the Kiev-Chop motorway in Ukraine. The dams and hydroelectric plants segment, which had no change in the percentage of the Group's total business volume, grew by about 63 million over the same period in 2011 (+31.8%) mainly due to the contribution of the Gibe III and Grand Ethiopian Renaissance Dam projects located in Ethiopia. Similar comments can be made for transport infrastructures (+35 million over 30 June 2011, an increase of 37.6%). The highlights of this area are the contribution of works to build line B1 of the Rome metro system and the new Cityringen ring road in Copenhagen. Income in the civil building segment rose by 26.0% as a result of the completion of pending projects, almost all of which are in Italy.
OPERATING INCOME BY SECTOR (/000) Dams and hydroelectric plants Railways and metro systems Civil buildings Roads and motorways 32.5% 15.9% 3.7% 47.9% June 2012 261,413 128,190 29,411 385,947 804,961 30.8% 15.0% 4.7% 49.5% December 2011 427,492 208,918 65,574 687,719 1,389,703 33.4% 15.6% 3.8% 47.3% June 2011 198,395 92,642 22,524 281,298 594,859
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Other non-operating income, amounting to 16.1 million, is mainly the result of the supply of goods and services which, by their nature, are not part of the Group's core business (e.g., disposals of materials, services provided to third parties and rentals).
Costs
Costs of production totalled 629 million, which was an increase of 177 million over the previous year, as a direct result of higher production volume for the period. Personnel costs, which came in at 97 million, rose in absolute terms (+14.7 million), but absorbed only 11.8% of total income compared to 13.5% reported for the same period of the previous year. The Group continues to focus on the creation of a structure with high professionalism and effectiveness among both workers and management in order to optimise cost synergies between direct production and sub-contracted production.
Results of operations
Operating margins confirm the major income-earning capacity of pending projects and the selective quality of the project portfolio. This is reflected in the level of key profitability indices applicable to interim operating statements such as ROS, which at a level of 5.8% confirms the good profitability of unit sales in monetary terms. At 91.3 million EBITDA was up 24.8 million over the same period of the previous ye ar (+37.4%) with an EBITDA margin of 11.1%. EBIT reached a level of 47.6 million, representing an increase of 13.6 million over 30 June 2011.
Period results
EBT (earnings before taxes) totalled 41.7 million (+18.1% over the 35.3 million at 30 June 2011) representing 5.1% of income. The estimate of current and deferred taxes for the period was determined in accordance with current tax regulations. For additional information on the calculation of taxes, see Note 8 in the notes to the financial statements.
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Financial results
Key consolidated financial position figures (/000)
Net fixed assets Operating working capital Reserves Net invested capital Shareholders equity Net financial position
30 June 2012
792,550 1,836 (32,268) 762,118 386,143 (375,975)
31 December 2011
467,461 (238,097) (30,292) 199,073 245,121 46,048
Net fixed assets, which totalled 792.6 million, increased by 325.1 million over the previous period mainly due to increases in property, plant and equipment and the valuation of equity investments. Financial assets rose at a particularly impressive pace: compared to 31 December 2011 their growth (+257.9 million) was largely due to the acquisition of the stake in Impregilo S.p.A. and its measurement at fair value. Net invested capital of 762.1 million (+563.0 million compared to December 2011) reflects the excellent performance of production activities, the growth of which during the period had a proportional impact on operating working capital, especially with regard to inventories for works in progress, certification levels and exposure to suppliers.
Net financial position

As at 30 June 2012 the net financial position amounted to (376) million and, in keeping with management's expectations, during this period of the year this figure resulted from investments scheduled to sustain growth in production volume and support the launch of new projects, and from investments made in the shares of Impregilo S.p.A. in an amount totalling about 269 million. The projections of the five-year business plan, which were met, and in certain cases exceeded by the positive performance during the period under review, lead to the reasonable assumption that by the end of the current year, there will be an improvement in financial debt. The financial ratios, and especially the leverage ratio, remain in balance.
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(/000) Cash funds Current financial assets Current financial liabilities NET FINANCIAL DEBT, current portion Non-current financial assets Non-current financial liabilities NET FINANCIAL DEBT, non-current portion NET FINANCIAL DEBT
June 2012 288,131 4 (470,267) (182,132) 24,497 (218,340) (193,843) (375,975) 0
2011 542,998 14 (293,338) 249,674 24,295 (227,921) (203,626) 46,048
Change (254,867) (10) (176,929) (431,806) 202 9,581 9,783 (422,024)
Net Debt/Equity Net Debt/EBITDA
0.97 2.06
(0.19) (0.27)
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Reclassified consolidated statements

Reclassified income statement
(/000) Income Other income Total Income Costs of production Value Added Personnel costs Other operating costs EBITDA Depreciation and amortisation Allocation to provisions Write-downs (Capitalised costs) EBIT Financial income and expenses (net) Pre-tax profit/(loss) Taxes Net Profit Profit/(loss) attributable to minority interests Profit/(loss) attributable to the Group
June 2012 804,868 16,181 821,049 (628,757) 192,292 (97,256) (3,757) 91,279 (39,943) (1,664) (2,113) 0 47,560 (5,841) 41,719 (15,535) 26,184 8,617 17,567 98.0% 2.0%
June 2011 596,518 13,067 97.9% 2.1%
Change % 34.9% 23.8% 34.7% 39.3% 21.6% 17.9% -59.3% 37.4% 23.1% ns ns -100.0% 40.3% ns 18.1% 1.1% 31.3% ns -10.7%
100.0% 609,586 100.0% 76.6% (451,387) 74.0% 23.4% 11.8% 0.5% 11.1% 4.9% 0.2% 0.3% 0.0% 5.8% -0.7% 5.1% 1.9% 3.2% 1.0% 2.1% 158,198 (82,508) (9,238) 66,452 (32,449) (91) (3) 0 33,910 1,409 35,319 (15,372) 19,947 269 19,678 26.0% 13.5% 1.5% 10.9% 5.3% 0.0% 0.0% 0.0% 5.6% 0.2% 5.8% 2.5% 3.2% 0.0% 3.2%
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6,5%
Reclassified statement of financial position

(/000) Intangible assets Property, plant and equipment Equity investments Other fixed assets Total fixed assets (A) Inventories Amounts due from clients Amounts due to clients Trade receivables Other assets Tax receivables subtotal Trade payables Other liabilities subtotal Operating Working Capital (B) Employee benefits Provisions for risks and charges Total reserves (C) Total uses (D=A+B+C) (/000) Cash and cash equivalents Current financial assets Non-current financial assets Current financial liabilities Non-current financial liabilities Net financial payables/receivables Shareholders equity Minority interests Shareholders equity Total funding June 2012 2,380 389,248 396,795 4,127 792,550 213,217 589,756 (1,184,732) 670,572 242,670 135,443 666,926 (525,602) (139,488) (665,090) 1,836 (4,222) (28,046) (32,268) 762,118 2012 288,131 4 24,497 (470,267) (218,340) (375,975) 349,247 36,896 386,143 762,118 2011 2,419 323,065 138,872 3,105 467,461 185,730 437,836 (1,159,992) 574,635 223,573 83,157 344,939 (490,066) (92,969) (583,036) (238,097) (4,271) (26,021) (30,292) 199,073 2011 542,998 14 24,295 (293,338) (227,921) 46,048 219,285 25,836 245,121 199,073 Change (39) 66,183 257,923 1,022 325,089 27,487 151,920 (24,740) 95,937 19,097 52,286 321,987 (35,536) (46,519) (82,054) 239,933 49 (2,025) (1,976) 563,045 Change (254,867) (10) 202 (176,929) 9,581 (422,024) 129,962 11,060 141,022 563,045 Change % -1.6% 20.5% 185.7% 32.9% 70% 14.8% 34.7% 2.1% 16.7% 8.5% 62.9% 93.3% 7.3% 50.0% 14.1% -101% -1.2% 7.8% 7% 283% Change % -46.9% -72.7% 0.8% 60.3% -4.2% -916% 59.3% 42.8% 58% 283%
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Portfolio of work in hand

As at 30 June 2012 the portfolio of work in hand amounts to about 10.2 billion, a figure that reflects the excellent results achieved by the Group in terms of sales penetration capabilities. The new projects secured over the last 12 months (a total of 856 million) were mainly the result of the roads and motorways and hydroelectric plants areas. The size and trends of the portfolio of work in hand confirm the high growth potential of total revenues expected in the coming years, as well as the strategic ability to operate in markets which are less exposed to the economic downturn, by dedicating itself to competitive sectors of excellence such as dams, hydroelectric plants and transport infrastructures. Overall, 16% of the portfolio of work in hand refers to domestic projects (1.7 billion) and the remaining 84% is from initiatives abroad, with Europe representing 17% (1.7 billion), Africa 58% (5.9 billion) and Asia 9% (0.9 billion). Driven by Ethiopia and Nigeria with growth of 5% over June 2011, Africa continued the upward trend of recent years and is turning out to be the Group's main market, especially in the area of dams and hydroelectric plants. Business development in Europe has been particularly impressive with new projects representing 36% of the portfolio of work in hand generated over the last 12 months.
The dams and hydroelectric plants sector (5,187 million) accounts for 51% and is therefore the Groups core business, although the impact of railway and metro system initiatives is increasing; with a value of 3,165 million, they represent 31.1% of the total work to be executed.
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Business performance by geographical area

Abroad
The Groups global mission is particularly apparent from its presence in foreign countries through permanent offices, branches and local companies which, due to their integration within the various markets, are ready to take advantage of the strategic potential and business opportunities to be found there. Within the portfolio of work in hand, the value of international business (8,498 million) accounts for 84% of the total. The sectors concerned are summarised below (/million): Dams and hydroelectric plants Railways and metro systems Civil buildings Roads and motorways 5,187.4 1,590.9 984.9 735.2 8,498.4 51% 16% 10% 7% 84%
International market activity, totalling 707.4 million, represents 86.2% of total income as at 30 June 2012. The sectors that contributed to operating income abroad are Roads and Motorways (47.9%), Dams and Hydroelectric Plants (37.4%), Railways and Metro Systems (11.7%) and Civil Buildings (3.0%). Below is a brief description of the key events relating to the main projects of the first six months of 2012. AFRICA Ethiopia Work on the Gibe III project continues. The contract for this work, signed on 19 July 2006 with a value of 1,470 million, involves building a hydroelectric plant with a capacity of
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1,870 MW, consisting of an RCC (roller-compacted concrete) dam which is 243 metres high, with a surface powerhouse. Other permanent works include a total of 75 km of access roads, a new bridge over the Omo river and camps and facilities for the client. In addition, in 2010 an agreement was signed with the client for the construction of a 66 kV electrical line from the Sodo-Wolayta substation to the Gibe III work site. This line and its substations will remain the property of the client EEPCo (Ethiopian Electric Power Corporation), but to compensate for this, Salini will be supplied with electricity at a preferential rate below the national standard. On 30 December 2010, Salini Costruttori and EEPCo entered into an agreement to construct the Grand Ethiopian Renaissance Dam (GERDP), which will be the largest dam in Africa (1,800 m long, 170 m high with an overall volume of 10 million cubic metres), along with two powerhouses located on the banks of the Blue Nile, equipped with a total of 16 turbines each with installed capacity of 375 MW. The project is valued at over 3.3 billion. Currently, excavations are being carried out for the main dam, the bridge is being built over the Nile, and work is being done to divert the river, roads and work-site installations. On 12 March 2012 Addendum No 2 was signed to formalise the request for an increase in voltage on the electrical line between Beles and the GERDP from the originally planned level of 132 kV to 400 kV. This change resulted in an increase of 42 million in the contract amount resulting in a new project total of 3,377 million. The Gibe II (420 MW) and Beles (460 MW) hydroelectric projects, with contractual values of 397 million and 467 million, respectively, were completed and the relevant taking-over certificate issued. The contracts are in the defect liability period awaiting receipt of the final certificate. Nigeria The work relating to the Gurara Dam and Water Transfer Project, Lot A Dam and Associated Works project is in progress. The current value of the job, inclusive of the various contract addenda issued over the years (the contract was signed on 30 January 2001) is approximately 545 million. The dam, consisting of 9 million m3 of earth and rock-fill, the intake structure and the 30 MW hydropower plant are complete; the power transmission line, the irrigation perimeter and some road works still need to be finished. The project should be completed within two years. Work continues on the project called Development of Idu Industrial Area Engineering Infrastructure (with a contract amount of about 237 million) consisting of works involving the primary urbanisation of a new neighbourhood in the capital Abuja to be used for industrial purposes. The sewer and drainage networks have been completed; 60% of the road network, including four viaducts, has been asphalted, and construction is being launched for the water supply and power supply networks. Works are also continuing in relation to the design and execution of the Nigeria Cultural Centre and Millennium Tower (with a contract valued at about 421 million). The tower has reached a height of 110 metres (of the 170-metre final height), the underground parking structures under the square are complete, the artificial tunnel linking the two project plots is complete, and structures of two of the seven buildings making up the Cultural Centre are in the advanced phase of construction. The section of urban motorway related to the project Extension of Inner Southern Expressway (ISEX), which was assigned by the Federal Capital Development Authority and
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is valued at about 65 million under an agreement signed on 13 January 2010, is in the advanced stage of construction. At present, two of the four main viaducts are complete, the drainage works are nearly completed, and a section of the road has been asphalted. The Dualisation of Suleja Minna Road in Niger State project acquired in November 2010, worth approximately 50 million, is currently under way. At present, earthmoving and drainage works are under way, and the construction of two bridges has begun. Similarly, the Development of District 1 Abuja North Phase IV West project is being developed. This projects overall value is approximately 250 million, and the awarding process was carried out in two steps (phase 1 on 30 December 2010 and phase 2 on 5 March 2012). At present the mobilisation of the work site is under way, and the construction of one of the project's main viaducts has been started. Sierra Leone Activities relating to the management and maintenance of the Bumbuna hydroelectric power plant and the related transmission line are progressing steadily. Electricity generation takes place in coordination with the National Power Authority, which is responsible for the countrys electricity distribution. The contract value, originally 10.2 million, was increased to 22.3 million as a result of an addendum signed on 18 November 2011. The same applies to the Rehabilitation of 21.2 km of urban town roads project for the rehabilitation of several sections of main roads located in the four main cities of Sierra Leone. When three new contract addenda were signed, in June and October 2011 and March 2012, the projects value increased from the original 10.3 million to 23.4 million. On 16 March 2010, work on the Rehabilitation of the Masiaka-Bo highway (164 km) contract was completed. On 9 August 2012 the final acceptance certificate was issued. Uganda In June 2012 the inauguration of the fifth and final turbine was completed at the Bujagali Hydroelectric Power Project. Civil works were terminated, and only certain finishing and environmental rehabilitation work remains. With the construction of a dam and hydroelectric power plant (255 MW) on the White Nile, the Bujagali project, the total value of which is about US$ 284 million, has significantly increased electricity available in Uganda, thereby satisfying domestic demand and putting an end to a long and problematic energy shortage, and at the same time favouring a considerable acceleration in local economic development. In addition, a reserve for extension of time and additional costs was negotiated with the client, which in addition to the completion certificate, resulted in a bonus of about US$ 17 million. In addition, the growing realisation of the importance of using the best practices dictated by key international treaties and conventions such as the Universal Declaration of Human Rights, the Kyoto Protocol, the United Nations Convention against Corruption and the Rio Declaration on Environmental Development led to Salini being given the momentous URI award in the Engineering and Construction sector. Uganda Responsible Investment (URI) created this form of recognition to reward those companies that have distinguished themselves as the most responsible investors in areas such as workers' rights, product quality, the prevention of discrimination and corruption and environmental protection.
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Finally, Salini Hydro Ltd (a wholly owned subsidiary), which was awarded the Bujagali Hydroelectric Power Project Engineering, Procurement and related services with a value of approximately US$ 330 million, has finished the activities it was assigned for the execution of electromechanical works. Algeria The maintenance period for the Autoroute Est-Ouest, troncon Bouira-El Adjiba project (27 km motorway section), carried out by the Groupement Todini Enaler, came to an end in 2011. The documentation needed to issue the avenant de cloture (final acceptance certificate) was submitted to the client and is currently being assessed. With regard to the Algiers Inter-City Collector, the completion of the intermediate section between the railway and the Omar Rahsim High School commenced, which enabled surface links to be made with the old sewer network. On the next level down, the catch basin accessing the subterranean basin has been completed, while there continue to be certain geotechnical problems at well 5 in the next level up. Thus, as a result of force majeure, works in this area are currently suspended. In agreement with the client, a series of surveys to identify the most appropriate technical solution are currently under way so that efforts to complete the aforementioned well 5 can be completed. Tunisia At the beginning of the year, work on the road project called La Marsa was completed through the construction of a four-lane widening in both directions of the existing road over a 6-kilometre section. Preliminary testing was completed without qualification, and the client's signature is being awaited for the issuance of the final test. In 2010 the contract was awarded for the construction of the Sfax-Gabes motorway which is a part of the Maghrebine Autoroute. This work, fully financed by the European Investment Bank (EIB), involves building two motorway lots of approximately 25 km each in southern Tunisia and has a value of approximately 81 million. Work, which began in March 2010, has been significantly delayed due to the social unrest that led President Ben Ali to flee the country and also due to the revolutionary uprisings that occurred in bordering Libya. In agreement with the other companies awarded Sfax-Gabes lots, a claim was submitted to the client, for which the EIB has already granted an agreement in principle. Similarly, the client accepted the reason for the claims, but the calculation methods and amounts must still be established. In May 2012, the service order for the beginning of works on the Oued Zarga - Bou Salem motorway section was received. The project, which is valued at about 44 million, is located in the north-western area of the country and co-financed by FADES. It consists of the construction of 18 kilometres of new motorway. The two operating projects are a part of the large Autoroutes Maghrebine project which will foster trade and economic development in the Mediterranean area by joining Mauritania to Egypt passing through Morocco, Algeria, Tunisia and Libya.
35
Zimbabwe The addendum to complete the Tokwe Mukorsi dam was signed on 8 April 2011 with the Zimbabwean government, represented by the Ministry of Water Resources Development and Management. The addendum, with a value of approximately 66 million, also requires the full collection of delayed receivables due from the client, totalling approximately 11 million. In the first half of 2012, two contract changes valued at a total of 5.7 million were recognised bringing the new contract value to about 73 million. During its first year of operation, the work site completed about 43 kilometres of road, the senior and junior fields were completely redone as were the workshop and warehouse. Dam installation was organised, excavations on the left and right face are under way, and the rock quarry was opened on the main dam. Libya In 2010, a contract awarding the rehabilitation of the Kufra airport runways was signed, worth around 53 million. The guarantees required under the contract have been submitted, and we are currently waiting for the contract advance. The commercial activities aimed at formalising the contracts relating to the Kufra Urbanisation project and Tripoli Airport were interrupted due to rioting in 2011 and the country's uncertain political situation. However, it is expected that the signed documents will be received by the end of the second half of 2012. ASIA United Arab Emirates In Dubai, works related to the Ras Al Khor Crossing - Improvement of Interchange No 1 on Sheikh Zayed Road project were completed and the road is open to traffic. The main structures built are three underpasses with a total length of 1,128 metres and 20 concrete bridges. In June, the client issued the taking-over certificate, which will soon be followed by the completion certificate. In addition, an agreement was reached with the client involving the payment of AED 45 million to the project as additional compensation for the extension of time and other additional costs. The Comprehensive Improvements of the parallel roads project, involving the construction of a stretch of motorway (lots 2C and 3A) in the city of Dubai, was delayed as a result of the continuing financial and liquidity crisis which has affected the Emirates economy. With renewed funding capacity due in part to the recognition of several claims by the client for lot 2C (AED 40 million), the work sites have resumed contractually required works, which consist, among other things, of the completion of 30 bridges, new road paving totalling about 200,000 square metres and a large number of sub-services. Malaysia In Malaysia, the Ulu Jelai hydroelectric project is currently under way, which includes a first lot relating to the access roads (CW1) and a second lot (CW2+EM1) that involves building an RCC (roller-compacted concrete) dam 90 metres high, an underground powerhouse with 372 MW installed capacity, complete with hydro-electromechanical equipment with intake works, and approximately 25 km of tunnels. The contractual value is 484 million. Construction works, which are managed by the subsidiary Salini Malaysia in a consortium with the local partner TMSB (Salini 90%, TMSB 10%) will last until 2016. At present the access road, which is about 10 km long (lot CW1), is nearly finished; the excavation of three
36
of the five tunnels that make up the underground section of the project has begun on lot CW2EM1, and excavations for the dam are under way. Kazakhstan Work continues on the project awarded in December 2009 for the rebuilding of the Western Europe - Western China International Transit Corridor, one of the most important sections of road in Kazakhstans road infrastructure. The contract is divided into 11 lots and has a total value of approximately 645 million. It involves building and rehabilitating the existing road corridor over a total distance of 630 km. As is customary in the country, the volume of production in the first half of the year was affected by adverse weather conditions that interfered with full operation in the first three months of the year. Azerbaijan During the previous year, as set forth in the work plan, the three road projects KurdamirUjar, Baku-Samur and Baku-Shamachi were completed. Thus, during the half year under review, work focused exclusively on the construction of the new motorway section called Alat-Masalli Highway which is broken down into two separate lots. Work mainly involved the production of road rises, the spreading of the first layers of stabilised base and the beginning of bridge construction. Georgia Works for the Sveneti-Ruisi project are in the completion phase. This project is for the construction of a four-lane motorway section, and includes building a twin-tube tunnel 800 m in length. On 28 November 2011 the lot was opened to traffic. Works for the tunnels electromechanical systems are still in the production phase, and are expected to be installed in October 2012. The mobilisation and initial production activities related to the construction of the new Kutaisi Bypass along the East-West Highway in the Zestafoni-Kutaisi-Samtredia section were begun at the beginning of the year. The project, which is valued at about 45 million, is managed through a subsidiary in which the Japanese company Takenaka has a minority interest. A ground-breaking ceremony was held in Kutaisi in February 2012, attended by the President of Georgia, the financing institution JICA and the local authorities. In March 2012, again in a consortium with the Japanese company Takenaka, a new contract was awarded with a value of about 53 million for the construction of a 27-kilometre, highspeed, two-lane relief road in the Kutaisi-Samtredia section. On 18 July 2012 the order was received to commence work, which was done with the initial mobilisation of equipment and staff. India On 24 November 2011 Salini India Private Ltd was established with its registered office in New Delhi; it is owned 95% by Salini Costruttori, and 5% by Co.Ge.Ma. At the end of January 2012 the first offer was submitted for the EPC construction of an 850 MW hydroelectric dam in Kashmir called GVK Ratle HEP, in relation to which client negotiations are still pending. Another hydroelectric project called Pakal Dul (1,000 MW) is also being studied, as is the Shapurkandi river dyke. Various other initiatives in the country are also under preliminary development, especially in the hydroelectric sector. Interim Directors Report - Half-Year Financial Report as at 30 June 2012 37
SOUTH AMERICA A branch office was opened in Chile in order to expand the Groups business in that country and throughout South America in general. In this regard, there were also commercial initiatives in Ecuador, Peru, Brazil, Argentina and Chile. CENTRAL AMERICA In June 2012 the Panama branch office was established to promote the Group's presence in Central America and the Caribbean islands. AUSTRALIA On 13 June 2012, Salini Australia Pty Ltd was established with head office in Brisbane in Queensland; it is wholly owned by Salini S.p.A. Business development activities are under way to bring in orders, as are preliminary activities aimed at obtaining the certifications and authorisations necessary to operate in the country's construction sector. EUROPE Denmark On 7 January 2011, the subsidiary Copenhagen Metro Team I/S, a company established under Danish law, with shareholders including Salini, Tecnimont and S.e.l.i., signed a contract to build the new line of the Copenhagen metro, which will be one of the most modern transport infrastructures in the world. The Copenhagen Cityringen Project consists of designing and building the new circular metro line located in the city centre, including 17 stations and expected traffic of 240,000 passengers per day. The original contract value of 1,497 million was updated to 1,544 million following the additional five addenda formalised during the year, which were in addition to the three optioned by the client in 2011. In addition to the design of stations and underground sections, construction works are currently under way on the first 16 sites of the 21 planned sites (17 stations and 4 shafts) of which the client took delivery. Ukraine The works to rehabilitate the road section along the Kiev-Chop motorway are complete, the road has been opened to traffic and the taking-over certificates have been received. The guarantee period lapsed on 30 June 2012. On 5 August 2011, the joint venture including Salini Costruttori, the subsidiary Todini Costruzioni Generali S.p.A. and the Azerbaijani company Akkord won the tender to rehabilitate the Kiev-Zhytomir motorway section, along the same route as the Kiev-Chop contract. The contractual value of the four lots assigned amounts to roughly 205 million and the works, which according to the contract should take 15 months to carry out, began immediately after the award documents were signed.
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The contract was part of the activities in preparation for the upcoming European Football Championships, also known as Poland-Ukraine 2012, and therefore the timescales and especially the execution procedures were strongly influenced by this sporting event. As per the specific request of the client (State Road Administration of Ukraine), on 31 May 2012 there was a partial delivery of the work with the completion of the binder layer and the opening of the road to traffic in order to allow through traffic following the European Football Championships. Following the European Championships, the work site resumed full operation, and it is anticipated that the project will be delivered in the second half of the year. Albania Works to construct the Levan Dames main road section continue smoothly, and had physically progressed by 90% at 30 June 2012. The contract has a total value of approximately 42 million and involves, inter alia, the construction of 19 bridges. Turkey On 17 November 2011, the subsidiary SKG, which is owned by Salini, the local company Kolin and Generali Costruzioni Ferroviarie received an order to begin works for the Rehabilitation and reconstruction of the Kosekoy-Gezbe section of the Ankara Istanbul highspeed train project. This initiative, a symbol of the modernisation of Turkeys transport system, includes dismantling the existing railway as well as building a new double track railway 55.6 km in length, which will link the countrys two capitals. The project also involves building the railway superstructure and carrying out signalling, electrification and telecommunications works. The contracts value is 147 million. In March, a ceremony was held to lay the first stone at Kosekoy Station, attended by representatives from senior government, Salini management and the Italian Consul of Istanbul. The dismantling of the pre-existing railroad section is in advanced stages of completion, while earthmoving and structural works have just begun. Belarus On 19 July 2011, a contract was signed to carry out resurfacing work on the M5 MinskGomel road section. Work physically began in November 2011 after the client handed over the four lots assigned. Earthmoving (excavations and ridges) continued during the half year, and works of art, such as gratings and bridges, have been started. The proposed term of the contract is 600 days, and its value is approximately 88 million.
Italy
Within the portfolio of work in hand, the value of domestic business (1,673 million) accounts for 16% of the total. The sectors comprising it are summarised below (/million):
Railways and metro systems Civil buildings Roads and motorways
1,574.2 15% 78.1 0.8% 21.1 0.2% 1,673.4 16% 39
Domestic market activity, totalling 113.6 million, represents 13.8% of total income as at 30 June 2012. The sectors that contributed to operating income in Italy are Roads and motorways (48.2%), Railways and metro systems (43.8%) and Civil buildings (8.1%). The most significant events regarding these activities in the first half of 2012 are described below. Rome metro, B1 line On 13 June 2012, with the attendance of the mayor of Rome and senior city officials, the new section of line B1 connecting Piazza Bologna with Piazza Conca d'Oro was put into operation. The final accounting of the contract, the liquidation of remaining reserves posted and the administrative regularisation of additional works related to requirements and requested changes are to be settled with the client. At the same time, the section of the line's tunnel was completed from Piazza Conca d'Oro to Jonio station, while the construction of parking and feed shafts are in the advanced stage of construction. As at 30 June, physical completion of the project was equal to 70% of the contract amount. The Group also won the tender to extend the Rome metro B line from Rebibbia to Casal Monastero. The project, assigned by Roma Metropolitane to a consortium including Vianini and Ansaldo, will be conducted using the property development technique, and its value is calculated as 948 million. The main works will be Rebibbia terminus, the San Basilio station and the Torraccia/Casal Monastero station with about 3.8 km of tunnels, an interchange junction and parking facilities with 2,500 parking places. On 18 June 2012 the Conference of Services was initiated for the approval of the final project and changes made during the tender. Milan-Naples A1 Motorway, upgrading of the Apennine section between Sasso Marconi and Barberino di Mugello, the La Quercia-Aglio section This initiative is for works to extend and modernise the A1 Motorway base tunnel Lot 9-11 Valico Bypass. This job is part of the larger project being carried out by Autostrade per lItalia S.p.A. to develop the A1 by building the Valico Bypass, in order to improve road conditions and reduce the time it takes to travel between Bologna and Florence. The symbolic structure of the Valico Bypass is the Base Tunnel: a tunnel with divided carriageways (160 m2 section, approximately 8.6 km long), which will connect the Emilia Romagna and Tuscany regions, linking the future Badia Nuova service area in the north with the new Poggiolino junction to the south. In 2012 the substantial completion of production work in the tunnel is to be announced where several fittings for electrical systems are to be finished. With regard to external works, the layouts of base tunnel entrances and the Poggio Civitella are being finished, while works at the Castiglione dei Pepoli junction in Badia Nova are on schedule. Overall, works have progressed by 93%, in line with the project schedule, which estimates a final delivery date by the end of 2012. Construction of road infrastructure to replace the Capo Boi-Terra Mala S.S.125 trunk road
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In Sardinia, work continues on the construction of the road infrastructure to replace the S.S.125 trunk road from the Capo Boi junction to the Terra Mala junction. At 30 June 2012, overall works had progressed to about 77% and mainly involved the completion and testing of new viaducts and tunnels. On 28 March 2012, through an amicable agreement pursuant to Article 240 of Legislative Decree 163/2006, amounts totalling 22.6 million were recognised for reserves recorded until IPC 12, for works carried out until 19 September 2011, inclusive. Rome-Fiumicino motorway, construction of parallel roads and access roads Works to construct the Rome-Fiumicino motorway section were completed in June 2011. The completion of certain finishing work, which will not interfere with the roadway, was deferred due to delays in the issuance of the necessary permits by the Archaeological Superintendence Office. Lastly, on 21 March 2012 the client prepared the final work completion report. Final testing should be concluded by the beginning of 2013. Naples, construction of a railway section for heavy underground transport, PiscinolaSecondigliano section Activities to carry out civil engineering works on the Piscinola-Secondigliano railway, as part of the modernisation and upgrading of the Naples-Alifana line, were suspended during the second half of 2011 due to the clients failure to make contractual payments. The non-payment is due to the financial difficulties of the Campania Regional Authority, resulting in a funding shortfall for the subsidiary Metrocampania Nordest S.r.l. and making it extremely difficult to pay the amounts due. The Company has taken all measures deemed necessary to obtain payment, while at the same time maintaining a conflict-free relationship with the client, which still considers the lot in question strategic for the completion of the circular metro system. Terni, public works as part of activities to complete the detailed Zona Corso del Popolo plan In the concession department, activities relating to the execution of public works in the Municipality of Terni to complete the detailed Zona Corso del Popolo plan continue. The contract signed with the local council involves managing the public car park, which is almost completely finished, for a period of 30 years. Furthermore, the Principal also approved the executive project for the architectural, structural and engineering upgrade of the municipal building, the value of which is approximately 2.1 million. The deadline for overall testing and the start date for the concession have been set for May 2013. Civil buildings: Property-related activities In the first half of the year, the subsidiary Zeis S.r.l. strengthened the management and development activities of the Group's property operations both directly, through the lease and sale of buildings, and indirectly, through its subsidiaries. To be specific, the sale of units in the property located on Via Blaserna continued with the concurrent assignment of all residential housing. In terms of indirect activities, the property initiative at the area of the former SDO in Rome was particularly interesting. In February 2012, Galla Placidia S.c.r.l. (71.75% owned by the subsidiary Plus S.r.l.) was established and charged with organising and coordinating, on behalf of consortium members, Interim Directors Report - Half-Year Financial Report as at 30 June 2012 41
activities related to the contractual execution of residential building works on areas identified within the Detailed Plan of the Eastern Tiburtino District in Rome. The areas were delivered in March 2012, and thus excavation and underpinning work has begun. On 1 March 2012 a concession agreement was entered into with the Municipality of Terni, with a 29-year term, for the design, construction and management of a multi-purpose sports complex called Le Piscine dello Stadio. The initiative, which calls for the construction of indoor and outdoor swimming pools, fitness facilities, a shopping and restaurant area, and an outdoor green area enhanced by city walkways, is based on the use of modern technologies with low environmental impact and the rational, targeted use of alternative energy sources. In June a consortium company was set up to complete the works, and at the end of July, demolition and work-site development work was begun.
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Main Group companies

Below is a brief analysis of the consolidated figures as at 30 June 2012 for the main Group companies.
Salini S.p.A.
On 30 November 2011, the Board of Directors of parent company Salini Costruttori S.p.A. resolved to establish a wholly owned limited company named Salini S.p.A., the aim of which will be to design and build infrastructural works. The same meeting also approved the contribution in kind by the sole partner Salini Costruttori S.p.A. effective at 1 January 2012 of the business unit operating in the infrastructure construction sector to the aforementioned Salini S.p.A., inclusive of all associated contracts undertaken directly or indirectly in Italy and abroad. That transaction, to be considered an essential component of the parent companys corporate reorganisation project, was completed through the establishment of Salini S.p.A. on 6 December 2011 and the subsequent contribution of the business unit, including its equity, assets and liabilities, examined in the report of the independent expert, appointed pursuant to the procedure set forth in Article 2343-ter, paragraph 2, letter b), of the Italian Civil Code. Pursuant to letter G) of the articles of association of Salini S.p.A., the first financial year ends on 31 December 2012, and thus the summary tables provide no comparison with the previous year. The first interim consolidated financial statements of Salini S.p.A. as at 30 June 2012 report pre-tax profit of 47.5 million with total income of 818.8 million. If the consolidated income statement of only the business unit of Salini Costruttori specialising in infrastructural construction, which was the subject of the transfer noted above, were taken into consideration, the increase in total income compared to 30 June 2011 would be 35.2% with significant growth in EBITDA (+28.6 million) and EBIT (+17.4 million). The significant improvements in profit margins for the half year are confirmation of the capabilities and efficiency achieved at the Company in building complex works by maximising cost synergies to favour high technical expertise.
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(/000) Income Other income Total Income Costs of production Value Added Personnel costs Other operating costs EBITDA Depreciation and amortisation Allocation to provisions Write-downs (Capitalised costs) EBIT Financial income and expenses (net) Pre-tax profit/(loss) Taxes Net Profit Profit/(loss) attributable to minority interests Profit/(loss) attributable to the Group June 2012 802,933 15,908 818,841 (625,835) 193,007 (96,485) (3,497) 93,025 (38,681) (1,664) (2,113) 0 50,568 (3,109) 47,459 (16,648) 30,811 8,670 22,141 98.1% 1.9% 100.0% 76.4% 23.6% 11.8% 0.4% 11.4% 4.7% 0.2% 0.3% 0.0% 6.2% -0.4% 5.8% 2.0% 3.8% 1.1% 2.7%
Production As at 30 June 2012 consolidated income of Salini S.p.A. totalled 818.8 million, an increase of 213.1 million over the same period of the previous year if the consolidated income statement of only the business unit of Salini Costruttori S.p.A. specialising in infrastructural construction, which was the subject of the transfer, were taken into consideration. Foreign projects represented 86.4% of the total for the year. Operating income amounted to 802.9 million, accounting for 98.1% of turnover. In this regard, there was a significant contribution from the Ethiopian hydroelectric projects of Gibe III and the Grand Ethiopian Renaissance Dam, road projects of Zhytomir in Ukraine and Kyzilorda in Kazakhstan, and the project involving the construction of the Copenhagen metro system in Denmark.
OPERATING INCOME BY GEOGRAPHICAL AREA (/000) EU Non-EU Asia Africa America 22.4% 22.8% 19.6% 35.3% 0.0% June 2012 179,585 182,682 157,166 283,500 802,933
The road and motorway area continued to be the most significant with 48% of operating income for the period due mainly to the operations of road lots for the reconstruction of the International Transit Corridor Western Europe - Western China in Kazakhstan and works to rehabilitate the motorway section from Kiev to Zhytomir along the Kiev-Chop motorway in Ukraine.
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OPERATING INCOME BY SECTOR (/000) Dams and hydroelectric plants Railways and metro systems Civil buildings Roads and motorways 32.6% 16.0% 3.4% 48.1%
June 2012 261,413 128,190 27,384 385,947 802,933
Other non-operating income, amounting to 15.9 million, is essentially the result of the supply of goods and services which, by its nature, is not part of the core business (e.g., technical and administrative services provided to third parties and disposals of materials). Costs Costs of production amounted to 76.4% of total income and were largely in line with the percentages reported by the Group in previous years. Personnel costs of 96.5 million represented 11.8% of total income. If the equivalent cost as at 30 June 2011 were taken into account only for the unit of Salini Costruttori S.p.A. specialising in infrastructural construction, it could be shown that the relative percentage for the last 12 months fell from 13.4% to 11.8% as noted above. Period result EBITDA for the first half of 2012 totalled 93.0 million, with an EBITDA margin of 11.4%. If a comparison were to be made with margins as at 30 June 2011 from the income statement of only the unit of Salini Costruttori S.p.A. specialising in infrastructural construction, EBITDA growth would have been 28.6 million. Similar considerations can be applied to EBIT, which amounted to 50.6 million and an EBIT margin of 6.2% Pre-tax profit net of minority interests totalled 38.8 million or 4.7% of revenues.
45
Reclassified statement of financial position

(/000) Intangible assets Property, plant and equipment Equity investments Other fixed assets Total fixed assets (A) Inventories Amounts due from clients Amounts due to clients Trade receivables Other assets Tax receivables subtotal Trade payables Other liabilities subtotal Operating Working Capital (B) Employee benefits Provisions for risks and charges Total reserves (C) Total uses (D=A+B+C) (/000) Cash and cash equivalents Current financial assets Non-current financial assets Current financial liabilities Non-current financial liabilities Net financial payables/receivables Shareholders equity Minority interests Shareholders equity Total funding June 2012 285,328 0 24,542 (431,288) (109,974) (231,392) 370,705 28,119 398,824 630,216 June 2012 2,380 316,670 389,198 4,048 712,297 172,776 589,756 (1,184,732) 675,562 276,594 73,563 603,518 (524,840) (128,941) (653,781) (50,262) (3,828) (27,911) (31,818) 630,216
Fixed assets totalled 712.3 million and consisted mainly of technical equipment assigned to work sites and the value of the investment in Impregilo S.p.A. totalling about 381 million. Net invested capital, amounting to 630.2 million, reflects the evolving trend in production for the period, whose positive performance impacted the Company's capital structure in a balanced manner.
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Net financial position

(/000) Cash funds Current financial assets Current financial liabilities NET FINANCIAL DEBT, current portion Non-current financial assets Non-current financial liabilities NET FINANCIAL DEBT, non-current portion NET FINANCIAL DEBT June 2012 285,328 0 (431,288) (145,960) 24,542 (109,974) (85,432) (231,392) 0 Net Debt/Equity Net Debt/EBITDA 0.58 1.24
Net financial position for the period was temporarily affected by the investment made to acquire the equity investment in Impregilo S.p.A. However, financial ratios remained in balance in terms of both the timing of repayments of financial liabilities and leverage capacity. Direct guarantees given Guarantees given totalled 2,707.0 million and were mainly for bonds for new credit facilities established on behalf of subsidiaries, associates and other investee companies, project-related bonds issued on behalf of the Group by banks and insurance companies in favour of client companies for various purposes, as well as other bonds issued for various purposes (financial administration and corporate guarantees). Guarantees and bonds issued by third parties in favour of the Company Indirect guarantees and those issued by credit institutions and insurance companies on behalf of domestic and foreign suppliers/subcontractors, or in favour of other foreign financial institutions for contractual obligations towards the Group, totalled 79.6 million.
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Todini Costruzioni Generali S.p.A.

The interim consolidated financial statements as at 30 June 2012 for Todini Costruzioni Generali S.p.A. report pre-tax profit of 22.7 million, an increase of 22.2 million compared to the prior year EBT figure. Similarly, total income of 318.6 million was an improvement of 90.2 million (+39.5%) over 30 June 2011. In terms of profit margins, the performance of EBIT was particularly impressive: at 30.5 million, it represented an increase over the same period in 2011 (+24.9 million over 2011). The growth in EBITDA (+152.6%) was also noteworthy: the increase of 24.7 million brought the figure to 40.9 million.

(/000) Income Other income Total Income Costs of production Value Added Personnel costs Other operating costs EBITDA Depreciation and amortisation Allocation to provisions Write-downs (Capitalised costs) EBIT Financial income and expenses (net) Pre-tax profit/(loss) Taxes Net Profit Profit/(loss) attributable to minority interests Profit/(loss) attributable to the Group June 2012 314,992 3,558 318,550 (243,933) 74,618 (31,065) (2,691) 40,861 (9,907) (415) 0 0 30,538 (7,804) 22,734 (11,588) 11,145 10,452 693 98.9% 1.1% 100.0% 76.6% 23.4% 9.8% 0.8% 12.8% 3.1% 0.1% 0.0% 0.0% 9.6% -2.4% 7.1% 3.6% 3.5% 3.3% 0.2% June 2011 220,999 7,359 228,357 (173,804) 54,554 (32,644) (5,735) 16,174 (10,612) (6) (3) 0 5,554 (5,036) 517 (202) 315 1 314 96.8% 3.2% 100.0% 76.1% 23.9% 14.3% 2.5% 7.1% 4.6% 0.0% 0.0% 0.0% 2.4% -2.2% 0.2% 0.1% 0.0% 0.0% 0.1% Change % 42.5% -51.6% 39.5% 40.3% 36.8% -4.8% -53.1% 152.6% -6.6% ns ns -100.0% ns ns ns ns ns ns ns
Production As at 30 June 2012, the Todini Group's total consolidated income was 318.6 million, up 39.5% compared to the same period of last year, mainly due to the positive performance of projects abroad, which specifically accounted for 81% of the total for the year. Consolidated operating income accounts for 98.9% of turnover, and amounted to 315.0 million. Annual growth of 42.5% was mainly due to the contribution of the Eastern Europe and Asian areas whose projects included a contract for the rehabilitation of the Kiev-Zhytomir motorway section in Ukraine and work on the reconstruction of the International Transit Corridor Western Europe - Western China in Kazakhstan. In terms of geographical areas, 18% of operating income was earned in Italy and 82% abroad, with a notable contribution from the non-EU and Asian areas. To be specific, the increase in
48
production in the non-EU area (+143.4 million) was due to road projects in Ukraine and Belarus, the contracts for which were assigned in the second half of 2011. The roads and motorways sector is the Company's absolute core business, accounting for 97% of income (94% in 2011), while the other sectors contributed only marginally to production volumes.
Operating income by geographical area (/000) Italy EU (excluding Italy) Non-EU Asia Africa TOTAL OPERATING INCOME 30 June 2012 58,157 0 176,162 64,283 16,389 314,992 % 18% 0% 56% 20% 5% 100% 30 June 2011 87,594 71 32,716 89,685 15,196 225,261 % 39% 0% 15% 40% 7% 100%
Operating income by sector (/000) Dams and hydroelectric plants Railways and metro systems Civil buildings Roads and motorways TOTAL OPERATING INCOME
30 June 2012 2,785 243 6,579 305,386 314,992
% 1% 0% 2% 97% 100%
30 June 2011 5,231 6,342 2,789 210,899 225,261
% 2% 3% 1% 94% 100%
Other non-operating income, amounting to 3.6 million, is essentially the result of the supply of goods and services which, by its nature, is not part of the core business (e.g., technical and administrative services provided to third parties and disposals of materials). Costs Costs of production accounted for 76.6% of total income and reflect growth that is proportional to the increase in operating income for the period. Personnel costs came out at 31.1 million (-1.6 million compared to 2011), and their impact decreased to 9.8% from 14.3% reported in the first half of last year. Period result As a result of the positive performance indicated above, pre-tax profit, net of minority interests, totalled 12.3 million, or 3.9% of revenues, and an increase of 11.8 million compared to 30 June 2011. The estimate of current and deferred taxes for the period was determined in accordance with current tax regulations.
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OTHER INFORMATION
50
Treasury shares
At 30 June 2012 the company held 11,708,900 treasury shares with a nominal value of 0.52 each representing 9.76% of share capital.
Management and coordination

Salini Costruttori S.p.A. is not subject to the management and coordination of any company.
Audits
The Company has appointed the independent auditors Reconta Ernst & Young S.p.A. to audit the interim consolidated financial statements, prepared on a voluntary basis in accordance with the IFRS adopted by the European Union, for the three-year period 2010-2012.
Alternative performance indicators

The Companys management assesses the financial and operating performance of the Group and business lines based on certain indicators not covered by IFRS. Below is a description, as required by the CESR/05-178b recommendation, of the components of each of these indicators. EBITDA: this is obtained by stripping out the following elements from EBIT, as defined below: (i) depreciation and amortisation of tangible and intangible fixed assets; (ii) writedowns and provisions; and (iii) costs capitalised for internal work. EBIT (net operating profit): means earnings before interest and taxes, unadjusted. EBIT also excludes income and expenses deriving from the management of non-consolidated equity investments and securities, in addition to the proceeds from any disposals of consolidated shareholdings, classified in the financial statements under financial income and expenses or, for the proceeds from equity-accounted investments, under the heading Effects of measuring equity investments according to the equity method. EBT (earnings before taxes): is calculated as EBIT net of financial income and expenses, in addition to the effects of measuring equity investments according to the equity method. Net Debt/Equity ratio: this is obtained from the ratio between net financial position according to the CESR (Committee of European Securities Regulators) as the numerator and net equity as the denominator, excluding treasury shares. Net Financial Position (net financial debt): this is obtained by subtracting the amount of noncurrent financial receivables and receivables from concessions, as well as other specific components, from net financial debt, calculated in accordance with the CESR recommendation of 10 February 2005. Net fixed assets: means total non-current assets; specifically it refers to tangible fixed assets, intangible assets, investments and other non-current items. Operating Working Capital: is obtained from the algebraic sum of receivables and payables from the core business (trade receivables and payables, inventories, work in progress, tax credits, advances from clients, residual components of current assets and liabilities). Net Invested Capital: is the sum of total fixed assets, operating working capital, provisions for risks and provisions for employee benefits. ROS (Return on Sales): this indicator is calculated as the ratio between EBIT and Total Income. ROE (Return on Equity): this is calculated as the ratio between earnings for the period and Group equity.
51
ROI (Return on Investment): this is calculated as the ratio between EBIT and Net Invested Capital. Current Asset Ratio: this is calculated as the ratio between current assets and current liabilities.
Information on related-party transactions

Please see the relevant section of the notes to the financial statements for details of transactions with related parties. These transactions essentially concern the exchange of goods, the provision of services, funding and the use of financial resources with the Companys subsidiaries, associates and other investee companies, in addition to optimising the Groups centralised cash management activities. The aforementioned transactions are part of the Companys ordinary business and are conducted under normal market conditions, that is, at arms length.
Exercise of the tax consolidation option for IRES (Corporate Income Tax)
Together with the subsidiaries Zeis S.r.l., Co.Ge.Ma. S.p.A., Madonna dei Monti S.r.l., TBMetro S.r.l., Todini Costruzioni Generali S.p.A., G.A.B.I.RE S.r.l. and Salini S.p.A., the Company exercised the option for group taxation for IRES purposes pursuant to Article 117 et seq. of the Combined Income Tax Law (TUIR) and the Ministerial Decree of 9 June 2004. The provisions referenced call for the calculation of overall profit as the algebraic sum of the total net profits of the participating companies. The economic and financial implications of joining the group taxation regime concerned are governed by special regulations signed by the parties.
52
Subsequent events
In the first months following the end of the first half of the year, Salini S.p.A. expanded its strategic investment in Impregilo S.p.A., a company listed on the Italian stock exchange, reaching a stake of about 29.83% in the share capital. Impregilo's Ordinary Shareholders' Meeting, the first session of which was held on 12 July 2012, and the second on 17 July 2012, approved the following measures by a majority vote with the attendance of shareholders holding over 80% of share capital: removal of all directors in office; the term of the new board of directors is set to last three years ending on the occasion of the Shareholders' Meeting called to approve the financial statements as at 31 December 2014; appointment of the following candidates, all of whom were taken from the list submitted by the promoter, Salini, with the exception of candidate G. Capaldo, who was taken from the list submitted by IGLI S.p.A.: - Marina BROGI - Roberto CERA - Claudio COSTAMAGNA - Alberto GIOVANNINI - Claudio LAUTIZI - Laudomia PUCCI - Pietro SALINI - Giuseppina CAPALDO - Mario Giuseppe CATTANEO - Laura CIOLI - Massimo FERRARI - Pietro GUINDANI - Geert LINNEBANK - Giorgio Rossi CAIRO - Simon Pietro SALINI
Thus, the new Board of Directors consists of fifteen members, of whom nine are independent. The Chairman is Claudio Costamagna, and Pietro Salini was appointed as CEO. On 25 September 2012 the Boards of Directors of Impregilo S.p.A. and Salini Costruttori S.p.A. approved an agreement for organisational and commercial cooperation between the Impregilo Group and Salini Group in order to launch a common strategy aimed at seizing market opportunities, increasing value and achieving cost savings as a result of operating and industrial synergies. The agreement, which is consistent with the objectives that inspired the National Champion project, and respects the companies' respective individuality and autonomy, will allow both groups to benefit from an optimal working relationship from a commercial, managerial and profit standpoint. The document, which sets the main objectives as the enhancement of the strong geographical complementarity of the two groups, the diversification of risk and implementation of the financial structure, lays the foundation for the creation of a National Champion in the construction sector that can serve as one of the catalysts for the recovery of the national economy by simultaneously creating new employment opportunities in Italy and in those countries where it will be asked to work. In terms of commercial activity, a noteworthy event was the assignment of the project for the construction of a water purification plant in Adyan near the city of Lagos in Nigeria.
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This project, called Adyan Waterworks Phase II, calls for the construction of a purification plant for water taken from the Ogun River, as well as a pumping station and an 8.2-kilometre cast iron feeder pipeline. Once operational, the project, which is valued at about 250 million, will have a treatment capacity of about 340,000 m3/day, providing the city of Lagos with a significant improvement in the quality and quantity of drinking water for daily consumption. The Adyan project represents the completion of the water cycle of the Group's technical activities: from the construction of storage basins for irrigation or industrial uses to the production of clean energies and purification for non-industrial purposes. Finally, in December 2012, in a tax settlement hearing, the subsidiary Todini Costruzioni Generali S.p.A. addressed IRES and IRAP observations for the years 2007 to 2010 and VAT observations for the years 2008, 2009 and 2010 that were contained in the official audit report of 1 April 2011 concerning the proper timing of certain reserves (claims) and the application of VAT instead of registration tax on amounts paid as compensation, interest for late payment or compensatory interest, based on agreements pursuant to Article 31-bis of Law 109/94 and on arbitral awards or settlements. Pursuant to Article 60, paragraph 7 of Presidential Decree 633/1972, Todini Costruzioni Generali S.p.A. will exercise recourse to clients for the higher amount of VAT paid at that time through the issuance of supplementary invoices. With regard to tax year 2006, which was already covered in an assessment notice, in January 2013 a partial annulment order was served in self-defence with the total annulment of adjustments made for IRES and IRAP purposes, and the reversal of penalties for the false reporting and invoicing for the higher amount of VAT assessed for 2006. The right of recourse to the client may also be exercised for this VAT. Thus, in order to reflect the impact from the aforementioned order, as at 30 June 2012 an adjustment was made in the amount of 2,120 to the risk provision allocated by Todini Costruzioni Generali S.p.A. as at 31 December 2011 to cover the risk related to this dispute totalling 1,170. Thus, as at 30 June 2012, the tax reserve (Other reserves) totalled 3,290.
Outlook
The size and growth in the portfolio of work in hand, together with operating results for the first half, make it possible to confirm expectations that the growth objectives contained in the 2012-2015 business plan can be achieved in the periods following the reporting period. The significant growth capacity in terms of total income generated in a macroeconomic environment characterised by overall contraction, together with the growth in operating margins, is confirmation of the present and future income and financial quality of existing projects, including significant initiatives in the dam and hydroelectric plants sector (Ethiopia), the railways and metro systems sector (Denmark and Turkey) and the roads and motorways sector (Ukraine and Kazakhstan). The important new award of the hydroelectric project in Nigeria and the beginning of works on contracts recently awarded in Tunisia, Georgia and Turkey provide the assurance of additional significant development. The ability to work in areas and countries with good political stability and solid economic fundamentals, the search for new opportunities by widening the scope of operations in new areas such as Latin America, together with the desire to create a National Champion through the integration with the Impregilo Group lead us to reasonably project that we will
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achieve the goal of establishing ourselves as the leader in the sector involving the construction of complex works.
CEO Pietro Salini
55
INTERIM CONSOLIDATED FINANCIAL STATEMENTS at 30 June 2012
Interim Consolidated Financial Statements - Half-Year Financial Report as at 30 June 2012
56
CONSOLIDATED INCOME STATEMENT

(/000)
Note
30 June 2012 804,868 16,181 821,049
30 June 2011 596,518 13,067 609,586
Income Other operating income Total income
Cost of sales Cost of services Personnel costs Amortisation, depreciation and write-downs Other operating costs Total costs Costs capitalised for internal work Operating income Financial income Financial expenses Income/(expenses) from equity-accounted investments Pre-tax profit Income tax Income from operations (8)
(214,057) (414,700) (97,256) (42,055) (5,421) (773,489) 0 47,560 43,278 (48,286) (833) 41,719 (15,535) 26,184
(137,188) (314,199) (82,508) (32,451) (9,329) (575,676) 0 33,910 57,555 (55,168) (978) 35,319 (15,372) 19,947
Net profit for the period attributable to: Net profit for the period attributable to the Group Net profit/(loss) for the period attributable to minority interests
26,184
19,947
17,567 8,617
19,678 269
57
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

(/000) Net profit Cumulative translation adjustment Actuarial gains/(losses) on employee benefits Cash flow hedge Valuation of equity investment in Impregilo (FV) Total comprehensive income statement profit/(loss) before tax Taxes Total comprehensive income statement profit/(loss) after tax (9) (9) (9) Note 30 June 2012 26,184 351 0 (122) 112,069 112,298 34 112,331 30 June 2011 19,947 680 0 184 0 864 (51) 814
Total profit/(loss) after tax Attributable to: Owners of the parent Minority interests
138,515
20,761
129,898 8,617
20,492 269
58
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(/000)
Note (10) (11) (12) (13) (13) (14) (15) (8)
30 June 2012 324,888 61,205 2,380 14,541 382,255 24,497 4,127 40,022 853,914
31 December 2011 257,575 62,296 2,419 14,883 123,989 24,295 3,105 26,340 514,902 185,730 437,836 574,635 14 56,817 223,574 542,998 2,021,603
ASSETS Property, plant and equipment Investment property Intangible assets Investments in associates and JV Other equity investments Non-current financial assets Other non-current assets Deferred tax assets Total non-current assets Inventories Amounts due from clients Trade receivables Current financial assets Tax receivables Other current assets Cash and cash equivalents Total current assets (19) (15) (20) (16) (17) (18)
213,217 589,756 670,572 4 95,422 242,670 288,131 2,099,771
Non-current assets held for sale
(21)
3,154
3,194
Total assets
2,956,840
2,539,699
59
(/000)
Note
30 June 2012
31 December 2011
SHAREHOLDERS EQUITY Issued capital less Treasury Shares Legal reserve Retained earnings (losses) Other reserves Other components of comprehensive income Total capital and reserves Profit/(loss) for the period Total Group equity Shareholders equity and minority interests Total Group equity and minority interests (22) 62,400 (3,120) 5,543 141,602 8,356 116,899 331,680 17,567 349,247 36,896 386,143 62,400 (3,120) 5,543 105,401 8,326 4,593 183,143 36,142 219,285 25,836 245,121
LIABILITIES Non-current financial liabilities Provisions for risks and charges Other non-current liabilities Employee benefits Deferred tax liabilities Amounts due to clients after 12 months Total non-current liabilities (23) (24) (25) (28) (26) (8) (17) 218,340 28,046 7,508 4,222 26,001 771,137 1,055,254 227,921 26,021 8,227 4,271 4,532 798,395 1,069,366
Amounts due to clients within 12 months Trade payables Current financial liabilities Tax payables Other current liabilities Total current liabilities Total liabilities Total shareholders equity and liabilities
(17) (27) (23) (28) (25)
413,595 525,602 470,267 73,909 32,070 1,515,443 2,570,697 2,956,840
361,598 490,066 293,338 55,259 24,951 1,225,212 2,294,578 2,539,699
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CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS EQUITY

Components of comprehensive income Provisions for actuarial gains/losses on employee benefits
Share capital (/000) Balance at 1 January 2011 Translation differences on foreign assets Cash flow hedge Actuarial gains/(losses) on employee benefits Total gains/(losses) recognised in equity Profit/(loss) for the period Dividends Distribution of profit for previous year Purchase of minority interest in Todini and other companies Other changes Balance at 31 December 2011
Treasury shares
Legal reserve
Cash Other flow reserves hedge reserve
Provisions for exchange differences
Retained earnings (losses)
Profit/(loss) for the period
Total Group equity
Minority interests
Total Group equity and minority interests
62,400
(3,120)
3,936
4,769
(395)
5,816
(336)
63,081
62,148
198,299
19,975
218,273
322 (560)
322 (560) 0
322 (560)
(254)
(254)
(254)
(560)
322
(254)
(493)
(493)
36,142 (12,995)
36,142 (12,995)
3,932
40,074 (12,995)
1,608
4,254
56,285
(62,148)
(0)
(0)
(1,899) 1,201 62,400 (3,120) 5,543 8,326 (955) 6,138 (590) (971) 105,400 36,142
(1,899) 230 219,284
1,749 181 25,836
(150) 410 245,121
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Components of comprehensive income Provisions for actuarial gains/losses on employee benefits Total Group equity and minority interests
Share capital (/000)
Treasury shares
Legal reserve
Other reserves
AFS reserve
Cash flow hedge reserve
Provisions for exchange differences
Retained earnings (losses)
Profit/(loss) for the period
Total Group equity
Minorities
Balance at 1 January 2012
62,400
(3,120)
5,543
8,326
(955)
6,138
(590)
105,400
36,142
219,284
25,836
245,121
Valuation of equity inv. in Impregilo Translation differences on foreign assets
112,069
112,069
112,069
351
351
351
Cash flow hedge Actuarial gains/(losses) on employee benefits Total gains/(losses) recognised in equity
(88) 0
(88) 0
(88) 0
112,069
(88)
351
112,331
112,331
Profit/(loss) for the period Dividends Valuation of equity inv. in Impregilo Capital to be contributed (minority interests) Distribution of profit for previous year Other changes Balance at 30 June 2012 62,400 (3,120) 5,543 31 8,356 112,069 (1,043) (26) 6,463 (590)
17,567
17,567 0 0 0
8,617
26,184 0 0
2,349
2,349 0
36,142 60 141,602
(36,142)
0 64 94 36,896
158 386,143
17,567
349,247
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CONSOLIDATED CASH FLOW STATEMENT
June 2012 Net profit for the period Depreciation and amortisation Impairment losses on receivables Provision for risks and charges Effects of valuation of subsidiaries Change in deferred taxes Change in inventories Change in amounts due from clients Change in amounts due to clients Change in trade receivables Change in trade payables Tax paid Change in employee benefits Change in tax receivables Change in tax payables Other current and non-current assets/liabilities Other changes Net cash flow from operating activity Net investment in property, plant and equipment Net investment in intangible assets Acquisition of equity investment in Todini Net liquidity acquired Price paid Acquisition of other equity investments Loans to associates and other Group companies Disposal of fixed assets Write-down of property, plant and equipment Receivables arising from concessions Other changes Net cash flow generated/(absorbed) by investing activity Net dividends paid Change in financial payables (leasing + factoring) Change in payables to banks Other changes Net cash flow generated/(absorbed) by financing activity TOTAL CASH FLOW Net cash and cash equivalents at beginning of period Net cash and cash equivalents at end of period (13) (23) (23) (13) (14) (10) (10) (14) (15) (25) (10) (11) (12) (26) (19) (28) (15) (25) Note (10) (12) (18) (24) (13) (8) (16) (17) (17) (18) (27) 26,184 39,941 0 3,969 841 7,788 (27,487) (151,920) 24,740 (95,937) 35,655 0 (49) (38,605) 18,650 (13,663) 0 (169,893) (109,087) (60) 0 0 0 (146,669) 134 2,686 0 (336) (1,742) (255,074) 0 27,611 124,656 3,251 155,518 (269,449) 455,302 185,853
2011 19,947 32,257 30 160 829 3,350 (22,533) (88,408) 399,507 (148,729) 17,935 0 (380) (17,104) 33,033 (45,197) 0 184,697 (39,717) (89) 0 0 0 0 (5,275) 8,411 0 (372) 334 (36,708) (12,810) 27,236 57,298 273 71,997 219,986 135,258 355,243
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Salini Costruttori Group
NOTES TO FINANCIAL STATEMENTS
Notes to Financial Statements - Half-Year Financial Report as at 30 June 2012
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Form, content and other general information
Company information Salini Costruttori S.p.A. is one of the largest Italian groups that has been operating in the construction sector for large engineering works for over 60 years, and in particular, in the construction of roads, motorways, railroads, dams, hydroelectric plants, tunnels, aqueducts, and civil and industrial buildings in general in Italy and abroad. In addition to its core business, in recent years Salini Costruttori has been developing projects in the area of project financing, and is diversifying its operations in new sectors such as the environment, the distribution of energy, water and gas and the agricultural industry. At present much of the Groups work is carried out abroad, particularly in Ethiopia, Nigeria, Uganda, Dubai, Sierra Leone, Morocco, Zimbabwe, Malaysia, Libya and Kazakhstan. In Italy, the main project consists of building the Rome metro B1 line. The parent company Salini Costruttori S.p.A. is a public limited company with its registered office at Via del Lauro 3, Milan. The interim consolidated financial statements are presented in thousands of euros, unless otherwise indicated. In 2008 the Salini Costruttori Group decided to initiate a project to convert to international accounting standards (IAS/IFRS) and voluntarily prepare consolidated financial statements as at 31 December 2008, 30 June and 31 December 2009, 30 June and 31 December 2010, 30 June and 31 December 2011 and 30 June 2012 according to these standards in order to comply with the standards prevailing in the construction company sector, including with respect to procedures for accessing international tender announcements. Thus, these consolidated financial statements, which were prepared voluntarily according to IFRS, do not replace the consolidated financial statements prepared in accordance with the law which continue to be prepared in accordance with domestic accounting standards. Declaration of compliance with IFRS These interim consolidated financial statements were prepared in accordance with the International Financial Reporting Standards published by the International Accounting Standards Board (IASB) and adopted by the European Union. IFRS means all revised international accounting standards (IAS) and all interpretations of the International Financial Reporting Interpretations Committee (IFRIC), including those previously issued by the Standing Interpretations Committee (SIC). Form and content of the interim consolidated financial statements The consolidated financial statements are made up of the statements required by IAS 1 as revised by the IASB and approved under Regulation (EC) No 1274/2008 effective on 1 January 2009. This format was already used for the presentation of the interim consolidated financial statements as at 30 June 2009. To be specific, the interim consolidated financial statements as at 30 June 2012 were prepared on the basis of IAS 34 Interim Financial Reporting and consist of the following statements:
65
Salini Costruttori Group a separate income statement, which contains a classification of costs according to their nature, in addition to EBIT; a statement of comprehensive income; a statement of financial position, which is prepared by classifying the assets and liabilities according to the current/non-current criterion. Minority interests are represented in the consolidated balance sheet, in shareholders equity and separately from shareholders equity attributable to the Group; a consolidated cash flow statement, which is prepared by reporting financial flows generated by operating, investing and financing activities according to the indirect method, as permitted by IAS 7 (Statement of Cash Flows); a statement of changes in equity; explanatory notes. The interim consolidated financial statements were prepared based on the historical cost principle, except for items which in accordance with IFRS are measured at fair value as indicated in the measurement criteria below. To improve the presentation of the financial statements and for a better reflection of the contractual nature of some contractual advances received from clients, the Group has decided to report these amounts under liabilities in Amounts due to clients, distinguishing between the non-current and current portion. The interim consolidated financial statements are presented in euros and all figures are rounded to the nearest thousand, unless otherwise indicated. Pursuant to IFRS 8, the Company decided to voluntarily provide segment reporting information. 2. Changes in accounting standards and disclosure
The accounting standards used are the same as those used to prepare the comparative financial statements at 31 December 2011 with the exception of IFRIC standards and interpretations in effect starting 1 January 2012; see Note 5 for further information. The interim consolidated financial statements do not report all the information required in the preparation of the annual consolidated financial statements. For this reason it is necessary to read the interim consolidated financial statements together with the consolidated financial statements as at 31 December 2011. 3. Accounting standards adopted
Principles and scope of consolidation The interim consolidated financial statements of the Salini Costruttori Group include the balance sheet, income statement and financial position of the parent company, Salini Costruttori S.p.A., and the Italian and foreign operating companies in which Salini Costruttori S.p.A. has a direct or indirect controlling interest. The financial statements as at 30 June 2012 approved by the corporate bodies of the entities included in the scope of consolidation were used for the consolidation. The financial statements included in the consolidation process are prepared by adopting, for each entity, the same accounting standards as the parent company and making any consolidation adjustments necessary to harmonise items that are affected by the adoption of different accounting standards; intercompany balances, transactions, income and costs are all eliminated. Minority interests are reported in the consolidated balance sheet,
66
Salini Costruttori Group in shareholders equity and separately from shareholders equity attributable to the Group; even the share of consolidated Group profit attributable to minority interests is reported separately. All assets and liabilities of foreign companies within the scope of consolidation and in a currency other than the euro are converted using the exchange rates prevailing on the reporting date (current exchange rate method), while the corresponding income and costs are converted at the average exchange rates for the period. The different conversion rates resulting from the application of this method are classified under shareholders equity until disposal of the investment. Non-operating subsidiaries, or those that do not report amounts material for the purposes of the consolidated financial statements, are excluded from the scope of consolidation and are measured according to the equity method, since they are not relevant for the true and fair representation of the operating, financial and cash position of the Group. Investments in associates and joint ventures in which Salini Costruttori S.p.A. directly or indirectly has a significant influence and holds between 20% and 50% of the capital are measured according to the equity method as defined in IAS 28 and IAS 31 respectively, recognising the share of profits or losses accrued during the period in the income statement. The risk arising from any losses exceeding the carrying amount of the investment is set aside in a special fund insofar as the investor is committed to fulfilling legal or constructive obligations towards the investee company or otherwise covering its losses. Other equity investments are measured at fair value with the effects recognised in shareholders equity; when the fair value can no longer be reliably estimated, equity investments are measured at cost. This value is adjusted where there is evidence of an impairment loss. If the reasons for the write-downs no longer apply, the value of equity investments are reinstated commensurate with the write-downs made and the corresponding effect carried through profit and loss. The list of Group companies can be found in Note 41. Compared with 31 December 2011, the scope of consolidation has changed due to: inclusion of Salini S.p.A. (a wholly owned subsidiary established on 6 December 2011) in the scope of consolidation; the establishment of Metro B S.r.l. (52.52% Salini S.p.A.) for the execution of executive design activities, works management and construction of the extension of metro line B of the Rome metro system from Rebibbia to Casal Monastero; the establishment of Piscine dello Stadio S.c.r.l. (70% Todini Costruzioni Generali S.p.A.).
Property, plant and equipment Property, plant and equipment are measured at historical cost, including any directly related ancillary expenses, in addition to financial expenses incurred during the period of construction of the assets. Assets acquired through business combinations prior to 1 January 2007 have been recognised at their carrying amount, determined based on the previous accounting standards used for these combinations, as a substitute for the cost. The cost, as determined above, of assets used only during a certain period, is systematically depreciated on a straight-line basis each financial year based on their estimated technical and economic life, using depreciation rates intended to represent the estimated useful life of the assets. If material components of these assets have a different useful life, these components
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Salini Costruttori Group are recognised separately. The useful life estimated by the Group for the various asset classes is as follows: Years 15-33 5-7 3-9
Buildings Plant and machinery Equipment
Land, whether undeveloped or developed for civil or commercial buildings, is not depreciated since it has an indefinite useful life. As previously mentioned, capital assets acquired under finance leases are recognised as tangible fixed assets and offset by the corresponding payable. The lease payment is broken down into its components of interest expense, recognised in the income statement, and capital repayment, deducted from financial debt. When the asset is sold or when there are no longer any expected future economic benefits from its use, it is eliminated from the balance sheet and any profit or loss (calculated as the difference between the disposal value and carrying amount) is recognised in the income statement in the year in which it is eliminated. Investment property Investment property includes immovable property held for the purpose of obtaining economic benefits from lease payments or for capital appreciation purposes. Investment property is initially measured at historical cost, including negotiation costs. The carrying amount includes the cost relating to the replacement of an investment property when that cost is incurred, on condition that the recognition criteria are satisfied, and excludes routine maintenance costs. Following initial recognition, the Group has opted to keep historical cost as the measurement criterion for investment property. Investment property is derecognised when it is sold or when the investment is permanently unusable and future economic benefits are not expected from its sale. Any profits or losses arising from the withdrawal or disposal of an investment property are recognised through profit and loss during the period in which the withdrawal or disposal took place. The reclassification from or to investment property takes place when, and only when, there is a change in use. For reclassifications from an investment property to property used directly, the reference value of the property for subsequent recognition is the fair value at the date of change in use. If a directly used property becomes an investment property, the Group recognises these assets in accordance with the criteria indicated in the paragraph on Property, plant and equipment until the date of change in use. No fixed asset held on the basis of an operating lease has been classified as investment property. The useful life of buildings classified under this item is between 20 and 33 years.
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Salini Costruttori Group Intangible assets Intangible assets acquired separately are initially recognised in assets at historical cost, determined according to the same procedures as those indicated for tangible assets. Intangible assets acquired through business combinations are recognised at fair value at the acquisition date, if this value can be determined reliably. Intangible assets produced internally, excluding development costs, are not capitalised and are recorded in the income statement for the period in which they are incurred. Intangible fixed assets may have a finite or indefinite useful life. Within the Group, the following types of intangible assets are currently present: Years 3 9 9
Intellectual property rights Concessions and licences Other
The Group has no assets with an indefinite useful life. Following initial recognition, intangible assets with a finite useful life are recognised at cost, net of amortisation and any accumulated impairment losses. The period and method of amortisation are reviewed at the end of each financial year, or more frequently if necessary. Intangible assets with a finite useful life are amortised, from the point at which the asset is available for use, on the basis of their residual possibility of use, in relation to the useful life of the asset. The period and method of amortisation applied is reviewed at the end of each financial year, or more frequently if necessary. Gains and losses arising from the disposal of an intangible asset are determined as the difference between the disposal value and the carrying amount of the asset and are recognised through profit and loss on disposal. Financial expenses Financial expenses relating directly to the acquisition, construction or production of an asset that requires a fairly long period of time before being available for use are capitalised as part of the cost of the asset itself. All other financial expenses are recognised as a cost for the period in which they are incurred. The Group capitalises financial expenses for all activities that qualify for capitalisation and for which construction began on or after 1 January 2009. Assets held under finance or operating leases Finance leases, which substantially transfer to the Group all risks and rewards incidental to ownership of the leased asset, are capitalised under tangible fixed assets on inception of the lease at the fair value of the leased asset, or at the present value of the lease payments, whichever is lower. This will be offset by a payable for an equal amount, which is gradually reduced based on the lease repayment plan. Lease payments are divided between the principal and interest, so as to obtain the application of a constant interest rate on the residual balance (principal amount). Interest is charged to the income statement. Assets are depreciated by applying the criterion and rates indicated in the previous paragraph on tangible fixed assets.
69
Salini Costruttori Group Contracts in which the lessor substantially retains all risks and rewards incidental to ownership are classified as operating leases. Operating lease payments are charged to the income statement over the term of the lease. Any sale and leaseback transactions to repurchase under a lease an asset previously held are recognised as a financing transaction. The assets involved in the transaction remain classified in the Groups balance sheet assets with consistent accounting treatment, and a liability is recognised to offset the financial flows arising from the sale. Any capital gain that should arise from the disposal is recognised through profit and loss on an accrual basis. This entails an entry under accrued liabilities and the gradual allocation to income in the income statement, based on the term of the lease. Impairment losses on non-financial assets At the end of each reporting period, the Group assesses whether there is any evidence that the value of assets may have been subjected to impairment. If so, or if an annual impairment test is required, the Group estimates the value. The recoverable value is the fair value of the asset or cash-generating unit, less costs to sell, or, if higher, its value in use. Recoverable value is determined for each individual asset, unless its cash flows are not broadly independent of those generated by other assets or groups of assets. Impairment is recognised if the carrying amount of an asset exceeds its recoverable value and, accordingly, this amount is written down to its recoverable value. When establishing value in use, the Group discounts estimated future cash flows to present value using a pre-tax discounting rate that reflects market assessments of the time value of money and the specific risks associated with the asset. When establishing fair value less costs to sell, a suitable valuation model is used. These calculations are made using special valuation multiples, the prices of listed shares for investee companies whose shares are publicly traded, and other fair value indicators available. Impairment losses on operating assets are recognised through profit and loss in the cost category that best reflects the purpose of the asset affected by the impairment loss. This does not apply to assets that have previously been revalued, where the revaluation has been recognised in shareholders equity. In this case the impairment loss is recognised in shareholders equity for an amount equal to the previous revaluation. At each reporting date, the Group assesses whether there is any evidence that the impairment loss previously recognised has ceased to apply (or has been reduced) and, if so, estimates the recoverable value. The value of an asset previously written down may be reversed only where there have been changes in the estimates on which the calculation of the recoverable value determined after the recognition of the last impairment loss was based. The reversal may not exceed the carrying amount that would have been recorded, net of depreciation and amortisation, had an impairment loss not been recognised in prior periods. This reversal is recognised through profit and loss unless the asset is not recognised at the revalued amount, in which case the reversal is treated as a revaluation increase. Works in progress under contract Construction agreements in the course of completion are measured based on the contractual payments accrued with reasonable certainty in relation to the progress of the works, according to the percentage of completion method, so as to allocate the income and net profit from the contract to the relevant period, in proportion to the progress of the works. Works in progress under contract are reported net of any provisions for impairment losses and amounts invoiced at specific stages of the work (progress payments). The corresponding comparison is carried out for each contract and, if the differential is positive due to works in progress exceeding the
70
Salini Costruttori Group amount of the progress payments, the difference is classified under assets in the Amounts due from clients item. If, on the other hand, this differential is negative, the difference is classified under balance sheet liabilities in the Amounts due to clients item. Conversely, invoicing for advances constitutes a financial transaction and does not count towards income recognition. Therefore, since they represent a financial transaction, advances are always recognised as a liability since they are not received in respect of works carried out. These advances are however gradually reduced, usually based on contractual agreements, to offset the invoices raised under the contract. Contractual income, in addition to contractual payments, includes variants, price revisions and any claims insofar as it is likely that these represent income that can be estimated reliably. In the event that a loss is expected from the performance of a contract, the full amount of the loss is recognised at the point at which it occurs, irrespective of the stage of completion of the contract. Inventories Inventories are carried at the lower of cost or net estimated realisable value. Cost is determined by applying the weighted average cost method. The item in question also includes buildings and assets under construction and held for sale. Cash and cash equivalents Cash and cash equivalents are recognised at nominal value and include cash instruments, i.e. are available on demand or in the very short term, have cleared and are free of redemption charges. For the purposes of the consolidated cash flow statement, cash and cash equivalents are represented by cash funds as defined above, net of bank overdrafts repayable on demand. Non-current assets held for sale Non-current assets, and groups of assets awaiting disposal, are classified as held for sale when it is expected that their carrying amount will be recovered through disposal rather than through continued use. These assets are recognised at their previous carrying amount and fair value net of costs attributable to the sale, whichever is lower. Income from discontinued operations, or in the course of disposal, is reported separately in the income statement. In accordance with paragraph 34 of IFRS 5 Non-current Assets Held for Sale and Discontinued Operations, the comparative income statement is restated based on the same assumptions. Financial assets IAS 39 makes provision for the following types of financial instruments: financial assets at fair value through profit and loss, loans and receivables, investments held to maturity and available-for-sale assets. All financial assets are initially recognised at fair value, plus, in the case of assets other than those at fair value through profit and loss, ancillary expenses. The Group determines the classification of its financial assets after initial recognition and, where appropriate and permitted, reviews this classification at the end of each financial year. All regular-way purchases and sales of financial assets are recognised on the trade date, or on the date on which the Group enters into a commitment to purchase the asset. Regular-way purchases and sales mean all transactions in financial assets involving the delivery of assets
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Salini Costruttori Group during the period envisaged by the regulations and by standard practice in the market in which the trade takes place. Financial assets at fair value through profit and loss This category includes assets held for trading and assets designated on initial recognition as financial assets at fair value through profit and loss. Assets held for trading are all assets purchased with a view to their immediate sale. Derivatives, including separate derivatives, are classified as financial instruments held for trading unless they are designated as effective hedging instruments. Gains or losses on assets held for trading are recognised through profit and loss. Where a contract contains one or more embedded derivatives, the Group assesses whether the derivative could be separated from the host contract when it becomes a party to the contract. The revaluation is carried out only if there are changes in the contractual terms that significantly alter the cash flows that would be otherwise required. Investments held to maturity Financial assets that are not derivatives and that are characterised by fixed or determinable payments at maturity are classified as investments held to maturity when the Group plans and is able to hold them until maturity. Following initial recognition, financial investments held to maturity are measured on the basis of amortised cost, using the effective interest rate method. Gains and losses are recognised through profit and loss once the investment is derecognised or following an impairment loss, as well as through amortisation. Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not listed on an active market. Following initial recognition, these assets are measured on an amortised cost basis using the effective discount rate method net of any provisions for impairment losses. Gains and losses are recognised through profit and loss when the loans and receivables are derecognised or following an impairment loss, as well as through amortisation. Available-for-sale financial assets Available-for-sale financial assets are financial assets, other than derivative financial instruments, which are designated as such or are not classified in any of the three previous categories. Following initial recognition, financial assets held for sale are measured at fair value and unrealised gains and losses are recognised as part of comprehensive income in the available-for-sale assets reserve until elimination of the investment, when the accumulated gains or losses are reclassified in the income statement. Fair value For securities widely traded on regulated markets, fair value is determined with reference to the stock market price at the close of trading on the reporting date. For investments without an active market, fair value is determined using measurement techniques based on: recent transaction prices between independent parties; the present market value of a substantially similar instrument; and the analysis of discounted financial flows or option pricing models. Amortised cost Financial assets held to maturity and loans and receivables are measured at amortised cost. Amortised cost is calculated using the effective interest rate method net of any provisions for impairment losses. The calculation takes into account any premium or discount on the
72
Salini Costruttori Group purchase and includes the transaction costs and commission that are an integral part of the effective interest rate. Impairment loss on financial assets The Group verifies at each reporting date whether a financial asset or a group of financial assets has been subjected to an impairment loss. Assets measured according to the amortised cost method If there is objective evidence that a loan or receivable recognised at amortised cost has been impaired, the amount of the impairment loss is measured as the difference between the carrying amount and the present value of the estimated future cash flows (excluding future losses not yet incurred) discounted at the original effective interest rate of the financial asset (i.e. the effective interest rate calculated at the initial recognition date). The carrying amount of the asset will be reduced through the use of a provision. The amount of the loss will be recognised through profit and loss. If the amount of the impairment loss is subsequently reduced and this reduction can objectively be traced to an event occurring after the impairment was recognised, this value may be reinstated. Any subsequent reversals are recognised through profit or loss, provided that the carrying amount of the asset does not exceed the amortised cost at the reversal date. For trade receivables, provisions for impairment losses are established when there is objective evidence (such as the probability of the debtor becoming insolvent or having serious financial difficulties) that the Group will be unable to recover the entire amount due according to the original terms of the invoice. The carrying amount of the receivable is reduced through recourse to a special reserve. Receivables subjected to impairment are cancelled once these are confirmed as irrecoverable. Available-for-sale financial assets At each reporting date, the Group assesses whether there are any impairment losses on available-for-sale financial assets. In the case of equity instruments, this consists of a material and prolonged reduction in the fair value of the instrument to less than its cost. In the event of impairment of an available-for-sale financial asset, a value equal to the difference between its cost (net of the repayment of principal and amortisation) and its present fair value, net of any previous impairment losses recognised through profit and loss, will be reversed from other components of comprehensive income to the income statement. Reversals relating to equity instruments classified as available for sale are not recognised through profit and loss. Reversals relating to debt instruments are recognised in other components of comprehensive income. If the increase in the fair value of the instrument can be objectively attributed to an event occurring after the loss had been recognised through profit and loss. Financial liabilities Loans and interest-bearing finance Financial liabilities, other than derivative financial instruments, are initially recognised at the fair value of the payment received, net of the transaction costs that are directly attributable to the issuance of the financial liability itself; these are subsequently measured at amortised cost, in other words at the initial value, net of the capital repayments already made, adjusted (up or down) by the amortisation (using the effective interest rate method) of any differences between initial value and value at maturity.
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Salini Costruttori Group Financial liabilities at fair value through profit and loss Financial liabilities at fair value through profit and loss include liabilities held for trading and financial liabilities designated at fair value with changes carried through profit and loss at the time of initial recognition. Liabilities held for trading are all those acquired with a view to their immediate sale. Derivatives, including separate derivatives, are classified as financial instruments held for trading unless they are designated as effective hedging instruments. Gains or losses on liabilities held for trading are recognised through profit and loss. Financial guarantees given Financial guarantees given by the Group are contracts that require an outflow to reimburse the holder for a loss incurred following a default by a debtor on a payment due at maturity based on the contractual terms of the debt instrument. Financial guarantee contracts are initially recognised as liabilities at fair value, plus transaction costs that are directly attributable to the issuance of the guarantee. Liabilities are subsequently measured at the best estimate of the outflow required to meet the effective obligation at the reporting date, or, if higher, the amount initially recognised. Derivative financial instruments and hedge accounting Initial recognition and subsequent measurement. The Group only uses derivative financial instruments for some interest rate swaps to hedge the risks arising mainly from interest rate fluctuations. These derivative financial instruments are initially recognised at fair value on the date on which the contract is signed and are subsequently measured at fair value. They are recognised as assets when the fair value is positive and as liabilities when the fair value is negative. Any gains or losses arising from changes in fair value on derivatives are recognised directly through profit and loss, except for the effective part of cash flow hedges, which is recognised in shareholders equity. For the purposes of hedge accounting, hedges are classified as: fair value hedges, if they hedge the risk of a change in fair value of the underlying asset or liability or an irrevocable commitment not recognised (except for foreign exchange risk); cash flow hedges, if they hedge exposure to changes in cash flows attributable to a specific risk associated with an asset or liability recognised, a transaction that is extremely likely to take place or a foreign exchange risk linked to an irrevocable commitment that has not been recognised; hedges of a net investment in a foreign operation. On establishing a hedge, the Group designates and formally documents the hedge to which it intends to apply hedge accounting, its risk management objectives and the strategy pursued. The documentation includes identifying the hedging instrument, the item or transaction to be hedged, the nature of the risk and the procedures whereby the company intends to measure the effectiveness of the hedge in offsetting exposure to changes in fair value of the hedged item or cash flows linked to the hedged risk. These hedges are expected to be highly effective in offsetting exposure of the hedged item to changes in fair value or financial flows attributable to the hedged risk; the assessment of whether these hedges are in fact highly effective is carried out on a continuous basis during the periods for which they were designated. Transactions that satisfy the hedge accounting criteria are recognised as follows:
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Salini Costruttori Group Fair value hedges The change in fair value of interest rate hedges is recognised through profit and loss under financial expenses. The change in fair value of hedging instruments attributable to the hedged item is recognised as part of the carrying amount of the hedged item, and is also recognised through profit and loss under financial expenses. With regard to fair value hedges for items recognised according to the amortised cost method, the adjustment of the carrying amount is amortised in the income statement over the remaining period to maturity. The amortisation may begin as soon as an adjustment is made, but no later than the date on which the hedged item ceases to be adjusted by the changes in its fair value attributable to the hedged risk. If the hedged item is cancelled, the unamortised fair value is recognised immediately through profit and loss. The Group has no fair value hedges. Cash flow hedges The portion of profit or loss on the hedged instrument relating to the effective hedge is recognised under other comprehensive income in the cash flow hedge reserve, while the ineffective portion is recognised directly through profit and loss under financial expenses. Amounts recognised as other comprehensive income are transferred to the income statement during the period in which the hedged transaction influences the income statement, for example when the financial income or expense is recognised or when a planned sale takes place. When the hedged item is the cost of a non-financial asset or liability, the amounts recognised under other comprehensive income are transferred at the initial carrying amount of the asset or liability. If the proposed transaction or irrevocable commitment is no longer expected to take place, the accumulated gains or losses recognised in the cash flow hedge reserve are transferred to the income statement. If the hedging instrument reaches maturity or is sold, cancelled or exercised without being replaced, or if its designation as a hedge is revoked, amounts previously recognised in the cash flow hedge reserve remain there until the proposed transaction or irrevocable commitment has an impact on the income statement. At the reporting date, the Group had 12 cash flow hedge derivatives outstanding. See Note 23 for more information. Hedging a net investment in a foreign operation The hedging of a net investment in a foreign operation, including the hedging of a monetary item recognised as part of a net investment, are recognised in the same way as cash flow hedges. Gains or losses on the hedging instrument are recognised under other comprehensive income for the effective part of the hedge, while the remainder (ineffective) are recognised through profit and loss. On the disposal of the foreign asset, the accumulated value of such comprehensive gains or losses is transferred to the income statement. The Group does not have any hedges of net investments in foreign operations. Derecognition of financial assets and liabilities Financial assets A financial asset (or, where applicable, part of a financial asset or part of a group of similar financial assets) is derecognised when:
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Salini Costruttori Group the rights to receive financial flows from the asset are extinguished; the Group retains the right to receive financial flows from the asset, but has assumed a contractual obligation to pay them immediately and in full to a third party;
the Group has transferred the right to receive financial flows from the asset and (a) has substantially transferred all risks and rewards incidental to ownership of the financial asset, or (b) has neither transferred nor substantially retained all risks and rewards incidental to ownership, but has transferred control of the asset. In cases where the Group has transferred the right to receive financial flows from an asset and has neither transferred nor substantially retained all risks and rewards and has not lost control over the asset, the asset is recognised by the Group to the extent of its residual interest therein. The residual interest, which takes the form of a guarantee on the transferred asset, is measured at the lower of the initial carrying amount of the asset and the maximum value of the consideration that the Group could be required to pay. In cases where the residual interest takes the form of an option issued and/or acquired on the transferred asset (including options settled in cash or similar), the measurement of the Groups interest corresponds to the amount of the transferred asset that the Group could repurchase; however, in the case of a put option issued on an asset measured at fair value (including options settled in cash or using similar instruments), the measurement of the Groups residual interest is limited to the fair value of the asset transferred or the exercise price of the option, whichever is lower. Financial liabilities A financial liability is derecognised when the underlying obligation is extinguished, cancelled or fulfilled. In cases where an existing financial liability is replaced by another from the same provider, under substantially different conditions, or the conditions of an existing liability are substantially modified, such exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, with any differences between the carrying amounts recognised through profit and loss. Treasury shares Treasury shares are recorded as a reduction to shareholders' equity. Employee benefits The liability relating to short-term benefits guaranteed to employees, paid during the period of employment, is recognised based on the amount accrued at the end of the reporting period. Liabilities relating to employment benefits paid during or after the period of employment under defined benefit plans, represented by the employee termination benefits plan and the loyalty bonus scheme provided by Article 66 of the national collective agreement of 5 July 1995 for the building industry, are recognised during the vesting period, net of any assets used to service the plan and advances paid, and are determined based on actuarial assumptions and recognised on an accrual basis in line with the period of service necessary to qualify for benefits; the liabilities are measured by independent actuaries. The method used to measure defined benefit plans is the Projected Unit Credit Method (PUCM).
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Salini Costruttori Group With regard to termination benefits, this method consists of calculating the average present value of obligations under the plan, accrued based on the employees length of service prior to the measurement date, taking into account the employees future contributions. The calculation method, applied on an individual basis for the population measured, can be divided into the following stages: 1) projection of the fund already set aside and future contributions, which will accrue whenever payment takes place; 2) calculation of the probable payments that will have to be made if the employee leaves the company due to dismissal, resignation, disability, death or retirement, or in the event of taxes or an advance payment request; 3) discounting, at the measurement date, of each probable payment; and 4) recalculation of the probable benefits discounted based on the length of service at the measurement date, compared with the total length of service whenever settlement takes place. The same method is used to measure the loyalty bonus, the calculation of which does not include future contributions from the employee or the possibility of advances. Note that from the 2007 financial year, the Group absorbed the effects of changes introduced by the 2007 Finance Act and subsequent decrees and regulations relating to the allocation of termination benefits accrued from 1 January 2007, applicable for companies with an average of more than 50 employees in 2006. It follows from this that, for Group companies affected by the changes: the termination benefits accrued at 31 December 2006 remain a defined benefit plan; the termination benefits allocated to a supplementary pension from the date of this option (or at the end of the six-month statutory period, unless otherwise indicated) represent a defined contribution plan; the termination benefits allocated after 1 January 2007 to the treasury fund represent a defined contribution plan.
For termination benefits accrued at 31 December 2006, while maintaining the status of a defined benefit plan, the calculation method has changed due to the absence of future contributions; in fact, the liability linked to accrued termination benefits is measured for actuarial purposes at 1 January 2007 (or the date on which the decision was made to allocate these to a supplementary pension) without using the Projected Unit Credit Method (PUCM), since the employee benefits accrued prior to 31 December 2006 (or the date on which the decision was made to allocate these to a supplementary pension) could be considered almost entirely vested (with the sole exception of the revaluation) in accordance with paragraph 67(b) of IAS 19. Conversely, the accounting treatment of amounts accrued from 1 January 2007 is similar to that for other contribution payments, both in the case of the supplementary pension option, and in the event of allocation to the INPS treasury fund. In addition, in accordance with IAS 19, these changes entail the recalculation of the termination benefits accrued at 31 December 2006; this recalculation (curtailment, as defined in paragraph 109 of IAS 19) is essentially based on the exclusion of future payments and the related assumed increases from the actuarial calculation. Gains and losses arising from the actuarial calculation for both defined benefit plans are recognised in comprehensive income during the period in which they occur. These actuarial gains and losses are classified immediately under retained earnings and are not reclassified in the income statement in subsequent periods.
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Salini Costruttori Group Provisions for risks and charges Provisions for risks and charges are recognised when there is a present (legal or constructive) obligation towards third parties arising from a prior event, if an outflow of resources is probable to satisfy the obligation and the amount of the obligation can be reliably estimated. Provisions are recognised at the value representing the best estimate of the amount that the company would pay to extinguish the obligation or to transfer it to third parties at the reporting date. If the impact of discounting the value of money is significant, the provisions are determined by discounting expected future financial flows at a discount rate that reflects the current market valuation of the time value of money. When the discounting is carried out, the increase in the provision due to the passage of time is recorded as a financial expense. Income Income other than from work in progress under contract is recognised insofar as it is possible to determine its fair value reliably and it is probable that the related economic benefits will materialise. Depending on the type of transaction, income is recognised on the basis of the following specific criteria: income from sales of goods is recognised when the material risks and rewards of ownership of the assets are transferred to the buyer; income from the provision of services is recognised with reference to the stage of completion of the assets based on the same criteria as for work in progress under contract. If it is not possible to determine the amount of income reliably, this is recognised based on the costs incurred which are expected to be recovered; income from lease payments and royalties is recognised during the accrual period, based on the contractual agreements signed.
Interest income (and interest expenses) is recognised based on interest accrued on the value of the corresponding financial assets and liabilities, using the effective interest rate method. Dividends received from companies other than subsidiaries, associates or joint ventures are recognised on the vesting of the shareholders right to receive them, following a resolution by shareholders of investee companies to distribute dividends. Income tax Current income taxes are calculated on the basis of an estimate of taxable income. The tax rates and legislation used to calculate the amount are those issued or substantially in force at the reporting date in countries where the Group operates and generates its taxable income. The liability for regional income tax (IRAP) and corporate income tax (IRES) to be paid directly to the tax administration is reported in the balance sheet under current liabilities in the Current tax liabilities item, net of payments on account made. Any positive difference is recognised under current assets in the Current tax assets item. Deferred and prepaid taxes are calculated using the liability method on temporary differences between assets recognised in the financial statements and the corresponding values recognised for tax purposes. Prepaid tax assets are also recognised on tax losses carried forward by the company. Deferred tax liabilities are recognised against all taxable temporary differences, except for: a) when deferred tax liabilities arise from the initial recognition of goodwill or of an asset or liability in a transaction which is not a business combination and which, at the time of the
78
Salini Costruttori Group transaction itself, has no impact either on net profit calculated for the purposes of the financial statements, or on profit or loss calculated for tax purposes; b) with reference to taxable temporary differences associated with equity investments in subsidiaries, associates and joint ventures, in the event that the reversal of temporary differences can be verified and it is likely that this will not occur in the foreseeable future. Deferred tax assets are recognised for all deductible temporary differences and for tax assets and liabilities carried forward, insofar as it is probable that there will be adequate future taxable income to justify the use of deductible temporary differences and of tax assets and liabilities carried forward, except for cases where: the deferred tax asset associated with the deductible temporary differences derives from the initial recognition of an asset or liability in a transaction which is not a business combination and which, at the time of the transaction, has no influence either on net profit calculated for the purposes of the financial statements, or on profit or loss calculated for tax purposes; with reference to taxable temporary differences associated with equity investments in subsidiaries, associates and joint ventures, deferred tax assets are recognised only to the extent that it is probable that the deductible temporary differences will be reversed in future and there is adequate taxable income against which the temporary differences could be used.
Prepaid tax assets are recognised when their recovery is deemed probable, based on the estimated future availability of sufficient taxable income for the realisation of the prepaid taxes themselves. The recoverable nature of the prepaid tax assets is reviewed at each reporting date. Deferred tax assets and liabilities are measured based on the tax rates expected to apply to the financial year in which such assets are realised or liabilities extinguished, considering the prevailing rates and those already published or substantially published at the reporting date. Current taxes relating to items recognised outside profit and loss are recognised in shareholders equity or in the statement of comprehensive income in line with the recognition of the item to which they relate. Deferred tax assets and liabilities are offset, when there is a legal right to offset current tax assets against current tax liabilities and the deferred taxes relate to the same fiscal entity and the same tax authority. Conversion of items and translation of financial statements in foreign currency The consolidated financial statements are presented in euros, which is the functional and presentation currency of the parent company. Balances included in the financial statements of each Group company are entered in the currency of the primary economic environment in which the entity operates (functional currency). Items expressed in a different currency from the functional currency, whether monetary (cash, assets and liabilities to be collected or paid with fixed or determinable amounts, etc.) or non-monetary (inventories, work in progress, advances to suppliers of goods and/or services, goodwill, intangible assets, etc.) are initially recognised at the exchange rate in force on the date on which the transaction takes place. Thereafter the monetary elements are converted into the functional currency based on the prevailing exchange rate at the reporting date and differences arising from the conversion are recognised through profit and loss. Non-monetary items are maintained at the conversion rate on the transaction date, except in the event of a persistent unfavourable trend in the reference exchange rate. Exchange rate
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Salini Costruttori Group differences relating to non-monetary items receive the accounting treatment (income statement or shareholders equity) envisaged for changes in value of such items. The rules for the translation of financial statements expressed in foreign currency are as follows: - assets and liabilities included in the financial statements, even if only for comparison purposes, are translated at the exchange rate in force on the reporting date; - costs and revenue and income and expenses included in the financial statements, even if only for comparison purposes, are translated at the average exchange rate for the reporting period, or at the exchange rate on the date of the transaction, if this differs significantly from the average rate; - components of shareholders equity, excluding net profit, are converted at historical exchange rates; - the translation reserve contains both exchange rate differences generated by the conversion of amounts at a different rate to the closing rate, and those generated from the translation of shareholders equity at a different exchange rate to the rate used at year-end; - exchange rate differences arising from conversion are recognised in the statement of comprehensive income. The exchange rates in use at 30 June 2012 were as follows (source: Bank of Italy):
Annual average exchange rate (as Exchange rate on 30 published by the June 2012 Italian Foreign Exchange Office) 138.144000 139.226440 99.806000 97.705703 5.643200 5.690965 0.987811 1.018552 10,437.100000 10,654.176905 1.955800 1.955800 636.581000 638.710969 7.433400 7.434952 4.624280 4.761903 22.268200 22.625718 2.051420 2.133945 100.130000 103.310236 0.892631 0.919196 8,784.260000 9,058.007854 188.113000 192.097866 70.120000 67.596305 1.582560 1.630058 340.737000 253.551015 3.996000 4.002237 11.070800 11.116759 15.191500 15.391072 205.224000 206.557987 4.248800 4.245900 0.806800 0.822519 4.451300 4.390408 5,473.520000 5,645.608107 1.259000 1.296469 3.370220 3.470518
Country
Currency
Name
Albania Algeria Argentina Azerbaijan Belarus Bulgaria Chile Denmark United Arab Emirates Ethiopia Georgia Japan Jordan Guinea-Conakry Kazakhstan India Libya Malawi Malaysia Morocco Moldova Nigeria Poland United Kingdom Romania Sierra Leone United States Sudan
Albanian Lek Algerian Dinar Argentine Peso Azerbaijan Manat (new) Belarusian Ruble Bulgarian Lev Chilean Peso Danish Krone Emirati Dirham Ethiopian Birr Georgian Lari Japanese Yen Jordanian Dinar Guinean Franc Kazakhstani Tenge Indian Rupee Libyan Dinar Malawian Kwacha Malaysian Ringgit Moroccan Dirham Moldovan Leu Nigerian Naira Polish Zloty British Pound Romanian Leu Sierra Leonean Leone US Dollar Sudanese Pound
ALL DZD ARS AZN BYR BGN CLP DKK AED ETB GEL JPY JOD GNF KZT INR LYD MWK MYR MAD MDL NGN PLN GBP RON SLL USD SDD
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Switzerland Tunisia Turkey Ukraine Uganda Zimbabwe Swiss Franc Tunisian Dinar Turkish Lira Ukrainian Hryvnia Ugandan Shilling Zimbabwean Dollar CHF TND TRY UAH UGX ZWD 1.203000 2.002010 2.283400 10.174800 3,111.880000 455.632000 1.204827 1.992525 2.336096 10.403605 3,172.781166 469.192236
4.
Discretionary measurements and significant accounting estimates
The preparation of the consolidated financial statements and accompanying notes in accordance with IFRS requires the management to make estimates and assumptions based on subjective opinions, past experience and reasonable and realistic assumptions in view of the information known at the time of the estimate. These estimates have an impact on the values of the assets and liabilities and information relating to contingent assets and liabilities at the reporting date, as well as on the amount of revenue and costs for the period under review. The actual amounts could be significantly different, following possible changes in the factors used to determine such estimates. Estimates are periodically reviewed. Below are the most significant accounting estimates made on the basis of assumptions and subjective opinions.
Accounting area Provision for impairment losses on receivables Provisions, contingent liabilities and employee benefits Income from work in progress Accounting estimates The recoverability of receivables is measured by taking into account the risk of non-payment, ageing and bad debts recognised in the past for similar types of receivables.
Provisions linked to legal disputes, arbitration and tax disputes are the result of a complex estimation process which is partly based on the probability of losing the case. Provisions linked to employee benefits, particularly termination benefits, are determined based on actuarial assumptions; changes in these assumptions could have a material impact on these provisions. A significant part of the Groups activities is typically carried out on the basis of contracts that involve a determined payment when the contract is awarded. This means that the margins on contracts of this type could change compared with the original estimates, depending on the recoverability or otherwise of the additional expenses and/or costs that the Group could incur during the performance of the contracts. Income tax (current and deferred) is calculated in each country in which the Group operates based on a prudent interpretation of the prevailing tax legislation. This process at times involves complex estimates to determine taxable income and deductible and taxable temporary differences between carrying amounts and taxable amounts. In particular, prepaid tax assets are recognised insofar as it is probable that a future taxable income will be available against which they can be recovered. The measurement of the recoverability of prepaid tax assets, recognised in relation both to tax losses that can be used in subsequent periods and deductible temporary differences, takes into account the estimate of future taxable income and is based on conservative tax planning. The fair value of derivatives and equity instruments is determined both on the basis of values recognised on regulated markets or quotations supplied by financial counterparties, and based on valuation models that also take into account subjective valuations such as estimated cash flows, expected price volatility, etc. See Note 6 for details of the estimates used to measure the recoverability of goodwill and any evidence of impairment.
Income tax
Derivatives and equity instruments
Goodwill
In the absence of a standard or interpretation specifically applicable to a certain transaction, the management defines, through subjective weighted assessments, the accounting policies to
81
Salini Costruttori Group be adopted with a view to providing a set of financial statements that give a true and fair view of the financial position, results from operations and cash flows of the Group, that reflect the economic substance of the transactions, and are neutral, prepared on a prudent basis and complete in all material respects. 5.
Accounting standards and interpretations effective from 1 January 2012
Since 1 January 2012 the following international accounting standards and interpretations have been applied, as published in the Official Journal of the European Union (OJEC) in January 2012: IAS 12 (Deferred taxes: recovery of underlying assets) This amendment to IAS 12 includes the refutable assumption that the carrying amount of an investment property, measured using the fair value model specified by IAS 40, will be recovered through its sale, and that, as a result, the related deferred tax assets should be measured on a sale basis. This assumption is refuted if the investment property can be depreciated and is held with the intent of using over time substantially all the benefits deriving from the investment property instead of realising these benefits from its sale. In particular, IAS 12 requires that the deferred tax asset created by a non-depreciable asset measured using the revaluation model specified by IAS 16 should always reflect the tax impact of the recovery of the carrying amount of the underlying asset through its sale. The effective date for adopting this amendment is for annual periods beginning 1 January 2012 or later. IFRS 7 (Supplemental information - Transfers of financial assets) The IASB issued an amendment to IFRS 7 that improves disclosures for financial assets. The disclosure refers to the assets transferred (as defined by IAS 39). If the assets transferred are not entirely derecognised from the financial statements, the company must provide information that allows users of the financial statements to understand the relationship between the assets that have not been derecognised and the related liabilities. If the assets are fully derecognised but the company maintains a residual involvement, disclosure must be provided that allows users of the financial statements to assess the nature of the entity's residual involvement in the derecognised assets and the related risks. The amendment of this standard had no impact on the Group's accounting policies, financial position or results. IFRS 1 (Severe hyperinflation and removal of fixed dates for first-time adopters) When the date of the transition to IFRS corresponds to or follows the date the functional currency is normalised, the company may decide to measure all assets and liabilities held before the normalisation date using their fair value on the date of the transition to IFRS. Fair value may be used as the assumed cost for these assets and liabilities in the opening IFRS statement of financial position. However, this exemption may only be applied to assets and liabilities that were subject to severe hyperinflation. The amendment of this standard had no impact on the Group's accounting policies, financial position or results.
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6.
Business combinations
Impairment test on equity investment in Todini Costruzioni Generali S.p.A. (acquired in 2010) On 15 January 2010, the Group finalised the acquisition of 60% of Todini Costruzioni Generali S.p.A. from Todini Finanziaria S.p.A. This resulted in the creation of Italys third largest group in the infrastructure sector and one of Europes largest companies. The acquisition was recognised according to the acquisition method. The consolidated financial statements include the results of the consolidated financial statements of Todini Costruzioni Generali S.p.A. for the entire period. The business combination generated goodwill, including minority interests (in accordance with the full goodwill approach envisaged by the IFRS Revised), totalling 2,039, composed of: 1,224 attributable to the Group; 815 attributable to minorities. Net cash acquired was 40,974. In the financial statements for the year ended 31 December 2010, the Group recognised the entire amount of goodwill in its own consolidated financial statements (2,039) and minorities in shareholders equity (815). In accordance with IAS 36, at least annually the Group must perform an impairment test in order to recognise any indicators of loss that could lead to a total or partial write-down of the goodwill recorded in the financial statements. The Group had performed the impairment test as of the reporting date of these interim consolidated financial statements. Todini Costruzioni Generali S.p.A. is considered a single cash-generating unit (CGU). Recoverable value has been estimated with reference to value in use. For this purpose, in order to calculate the value in use of the CGU, the figures contained in the Groups five-year business plan were used, recently approved by the Board of Directors of the parent company. In particular, the underlying assumptions that led to the calculation of cash flows for the period are as follows: EBITDA; depreciation and amortisation for the period; investments for the period; notional taxes calculated on EBIT for the period; change in net working capital for the period. After five years, cash flows are determined as the average flows indicated in the five-year plan, without allowing for any growth. The discount rate used for discounting the cash flows thus determined is based on the Groups particular circumstances and operating segments and is derived from its weighted average cost of capital (WACC). WACC takes into account both debt and shareholders equity. The cost of shareholders equity is derived from the average rate of return of the top 10 Italian companies in the construction sector (figures current as at 31 December 2011). The cost of debt is based on the interest-bearing finance that the Group has to cover. The ratio between shareholders equity and financial debt used to calculate WACC is derived from the average Notes to Financial Statements - Half-Year Financial Report as at 30 June 2012 83
Salini Costruttori Group ratio of the top 10 Italian companies in the construction sector (figures current as at 31 December 2011). The recoverable value thus calculated is higher than the carrying amount of the CGU, equal to net invested capital at the interim reporting date. Therefore, the management has not detected any impairment losses and has maintained intact the value of goodwill in the financial statements. Acquisition of minority interests in Todini Costruzioni Generali S.p.A. On 25 March 2011, the Extraordinary Shareholders Meeting of Todini Costruzioni Generali S.p.A. approved the 42 million capital increase in return for payment. This increase was subscribed by the parent company in the amount of 25.2 million. As a result, the parent companys stake in Todini Costruzioni Generali S.p.A. rose from 60% to 77.7141%, effective from 1 January 2011. The difference between the acquisition price (25.2 million) and the value of the minority interests acquired (23.5 million), or 1.7 million, was recognised in shareholders equity under Other reserves, in accordance with IAS 27 (paragraphs 30 and 31). 7.
Segment reporting
For management purposes, the Group is organised into two strategic business units, identified based on the type of products supplied, and presents two operating segments for reporting purposes. These are as follows: construction sector; property sector and other activities.
The management separately monitors the operating results of the two business units in order to make decisions concerning the allocation of resources and the assessment of performance. Segment performance is measured based on profit or loss. Transfer prices between operating segments are defined under the same conditions as those applied to arms length transactions.
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June 2012 (/000) Income from third parties Inter-segment income Total Income Costs of production Value Added Personnel costs Other operating costs EBITDA Depreciation and amortisation Allocation to provisions Write-downs (Capitalised costs) EBIT Equity-accounted investments Net financial income and expenses
of which: loan payments and interest interest income from banks total interest income bank overdrafts and finance bank loans leases total interest expense
Construction 818,360 456 818,816 (626,727) 192,088 (95,376) (3,493) 93,220 (38,472) (1,664) (2,113) 0 50,971 (638) (2,427)
Property and Consolidation Consolidated other adjustments total activities 2,690 1,643 4,333 (4,630) (298) (1,880) (264) (2,442) (1,267) 0 0 0 (3,708) 19,161 (2,272) 0 (2,099) (2,099) 2,601 501 0 0 501 (204) 0 0 0 297 (19,356) (308) 821,049 (0) 821,049 (628,757) 192,292 (97,256) (3,757) 91,279 (39,943) (1,664) (2,113) 0 47,560 (833) (5,008)
11 5,745 5,756 (11,138) 0 (1,612) (12,750)
43 55 97 (341) (2,370) 0 (2,711)
0 0 0 0 0 0 0
54 5,799 5,853 (11,479) (2,370) (1,612) (15,461)
EBT Taxes Income from continuing operations Profit/(loss) attributable to minorities Profit attributable to the Group
47,906 (16,540) 31,366 8,670 22,697
13,180 992 14,172 (52) 14,224
(19,367) 13 (19,354) 0 (19,354)
41,719 (15,535) 26,184 8,617 17,567
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The following table reports key items for June 2011:
June 2011
(/000)
Property and Consolidation Consolidated Construction other adjustments total activities 605,332 386 605,718 (451,062) 154,656 (81,241) (8,967) 64,449 (31,185) (91) (3) 0 33,170 554 3,305 4,253 1,549 5,802 (2,113) 3,689 (1,267) (271) 2,151 (1,264) (0) 0 0 887 181 (918) 0 (1,935) (1,935) 1,787 (148) 0 0 (148) 0 0 0 0 (148) (1,713) 0 609,586 0 609,586 (451,387) 158,198 (82,508) (9,238) 66,452 (32,449) (91) (3) 0 33,910 (978) 2,387
Income from third parties Inter-segment income Total Income Costs of production Value Added Personnel costs Other operating costs EBITDA Depreciation and amortisation Allocation to provisions Write-downs (Capitalised costs) EBIT Equity-accounted investments Net financial income and expenses
of which: loan payments and interest interest income from banks total interest income bank overdrafts and finance bank loans leases factoring total interest expense
366 1,690 2,056 (6,728) (1,786) (1,351) (224) (10,090)
0 12 12 (6) (593) 0 0 (599)
0 0 0 0 0 0 0 0
366 1,702 2,068 (6,734) (2,379) (1,351) (224) (10,688)
EBT Taxes Income from continuing operations Profit/(loss) attributable to minorities Profit attributable to the Group
37,029 (15,789) 21,240 329 20,911
150 417 567 (61) 627
(1,860) 0 (1,860) 0 (1,860)
35,319 (15,372) 19,947 269 19,678
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The following table illustrates the segmentation of the main balance sheet items at 30 June 2012:
June 2012 (/000) Intangible assets Property, plant and equipment Equity-accounted investments Other equity investments Other fixed assets Total Fixed Assets (A) Inventories Amounts due from clients Amounts due to clients Intercompany receivables Receivables from clients Other assets Tax receivables subtotal Intercompany payables Payables to suppliers Other liabilities subtotal Operating Working Capital (B) Employee benefits Provisions for risks and charges Total Reserves (C) USES (A+B+C) Cash funds Current financial assets Non-current financial assets Current financial liabilities Non-current financial liabilities Net Financial Payables/Receivables (1) Shareholders equity Minority interests Shareholders Equity (2) FUNDING (1+2) Construction 2,380 309,310 9,817 381,162 4,048 706,719 172,776 589,756 (1,184,732) 26,313 649,796 240,831 108,917 603,656 (41,677) (482,922) (128,628) (653,226) (49,570) (3,365) (27,953) (31,318) 625,831 Property and other activities 0 80,005 297,368 1,334 228 378,936 40,442 0 0 7,250 2,033 1,739 26,527 77,990 (311) (1,126) (17,267) (18,705) 59,286 (857) (98) (955) 437,267 Consolidation adjustments 0 (68) (292,645) (242) (150) (293,105) 0 0 0 (14,397) (423) 100 0 (14,720) 231 203 6,407 6,841 (7,879) 0 4 4 (300,979) Consolidated total 2,380 389,248 14,541 382,255 4,127 792,550 213,217 589,756 (1,184,732) 19,166 651,406 242,670 135,443 666,926 (41,757) (483,845) (139,488) (665,090) 1,836 (4,222) (28,046) (32,268) 762,118 288,131 4 24,497 (470,267) (218,340) (375,975) 349,247 36,896 386,143 762,118
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The following table reports key items for 2011:

Year 2011 (/000) Construction Property and other activities Consolidation adjustments Consolidated total
Intangible assets Property, plant and equipment Equity-accounted investments Other equity investments Other fixed assets Total Fixed Assets (A) Inventories Amounts due from clients Amounts due to clients Intercompany receivables Receivables from clients Other assets Tax receivables subtotal Intercompany payables Payables to suppliers Other liabilities subtotal Operating Working Capital (B) Employee benefits Provisions for risks and charges Total Reserves (C) USES (A+B+C) Cash funds Current financial assets Non-current financial assets Current financial liabilities Non-current financial liabilities Net Financial Payables/Receivables (1) Shareholders equity Minority interests Shareholders Equity (2) FUNDING (1+2)
2,419 244,776 41,608 123,552 3,064 415,418 145,648 437,836 (1,159,992) 55,084 552,908 222,711 78,148 332,343 (54,533) (434,969) (87,918) (577,420) (245,077) (3,468) (26,007) (29,475) 140,866
0 78,289 6,263 506 41 85,099 40,082 0 0 2,041 1,734 773 5,009 49,638 (28,659) (562) (28,929) (58,151) (8,513) (803) (13) (817) 75,770
0 0 (32,988) (69) 0 (33,056) 0 0 0 (37,092) (39) 89 0 (37,042) 28,659 0 23,878 52,537 15,495 0 0 0 (17,562)
2,419 323,065 14,883 123,989 3,105 467,461 185,730 437,836 (1,159,992) 20,033 554,602 223,574 83,157 344,939 (54,533) (435,531) (92,969) (583,034) (238,095) (4,271) (26,021) (30,292) 199,073 542,998 14 24,295 (293,338) (227,921) 46,048 219,285 25,836 245,121 199,073
The following paragraphs contain information about the geographical breakdown of the main items. Increases in tangible and intangible assets mainly relate to the construction segment.
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Salini Costruttori Group 8.
Income tax
1st Half 2012 1,332 1,192 326 4,956 7,086 7,728 15,535 (34) 15,501 1st Half 2011 1,827 5,906 1,797 40 9,571 5,801 15,372 51 15,423 Change (495) (4,714) (1,471) 4,916 (1,764) 1,927 163 (84) 79
(/000) Current regional income tax (IRAP) for the period Current corporate income tax (IRES) for the period Foreign current taxes Prior period taxes Current taxes Deferred taxes Income taxes in the consolidated income statement Income taxes recognised in the comprehensive income statement Total income taxes
The expected average tax rate calculated on profit for the entire period is 23%. Note that at 30 June 2012 deferred taxes generated an asset balance of 14,020 as evidenced in the following table:
(/000) Deferred tax assets Deferred tax liabilities Total deferred taxes 30/06/2012 40,022 (26,001) 14,020 30/06/2011 27,996 (11,210) 16,786 Change 12,026 (14,791) (2,766)
9. Notes on the comprehensive income statement As shown in the statement, comprehensive income for the period differs from net income for the period by 112,331. This is completely due to: translation differences of foreign assets (these mainly relate to differences on translation into euros of the financial statements of the subsidiary Salini Nigeria and the Dubai branch, the functional currency of which is different to the Groups functional currency); valuation of equity investments (AFS reserve): this was entirely due to the equity investment in Impregilo S.p.A. which was revalued by 112,069 in the first half of 2012. For additional information, see Note 13; recording of the change in the fair value of derivatives designated as cash flow hedges, limited to the effective amount of (122); tax impact of 34 due entirely to cash flow hedge transactions. 10.
Property, plant and equipment
These total 324,888, an increase compared with 31 December 2011 of 67,313. They are composed as follows:
89

Land and buildings Plant and machinery Vehicles Industrial and commercial equipment Other assets Leased assets Work in progress TOTAL
Historical cost at 1 January 2012 Exchange rate adjustment Investments Disposals Repurchase of leased assets Reclassification under non-current assets held for sale Other changes Historical cost at 30 June 2012
41,955 512 1,419 (359) 0 0 (5,406) 38,121
130,216 871 36,244 (1,551) 0 0 1,131 166,911
61,964 270 12,537 (1,136) 0 0 (1,033) 72,601
51,889 167 8,497 (987) 0 0 2 59,567
17,982 44 1,733 (362) 0 0 109 19,505
248,642 (5) 28,846 (0) 0 0 (665) 276,817
15,713 40 21,038 (2,223) 0 0 (51) 34,518
568,360 1,897 110,313 (6,618) 0 0 (5,914) 668,039
Accumulated depreciation at 1 January 2012 Exchange rate adjustment Depreciation and amortisation Write-downs/Reversals Disposals Repurchase of leased assets Reclassification under non-current assets held for sale Other changes Exchange rate adjustment for depreciation and amortisation charges Accumulated depreciation at 30 June 2012 Net amount at 1 January 2012 Net amount at 30 June 2012
(8,516) (107) (823) 0 97 0 0 1,655 (7) (7,702) 33,439 30,419
(73,569) (483) (11,440) 0 774 0 0 2,275 (28) (82,472) 56,647 84,439
(40,870) (175) (4,343) 0 887 0 0 700 (7) (43,807) 21,094 28,794
(40,689) (138) (4,353) 0 562 0 0 369 (0) (44,250) 11,199 15,317
(11,861) (27) (989) 0 285 0 0 (13) (1) (12,606) 6,120 6,899
(135,280) 0 (16,803) 0 0 0 0 550 0 (151,532) 113,363 125,285
0 72 0 0 (855) 0 0 0 0 (783) 15,713 33,735
(310,785) (857) (38,750) 0 1,750 0 0 5,536 (44) (343,151) 257,575 324,888
The decrease in buildings and land of 3,020 is due mainly to the following changes: increases for purchases and internal construction: in Dubai a total of 1,058, and at the subsidiary Todini Costruzioni Generali S.p.A., a total of 269 in Tunisia, 68 i n Azerbaijan, 20 in Belarus and 3 in Italy for the Valico Bypass; decreases due to depreciation: a total of 81 in Italy, 237 in Dubai, 14 in Ethiopia, 26 in Uganda, and at subsidiaries: 167 for Zeis, 73 for Nigeria, 224 for Todini Costruzioni Generali S.p.A.; decreases due to discontinued operations: a total of 110 at Todini Costruzioni Generali S.p.A. in Italy for Milano Lecco (with the resulting write-off of accumulated depreciation of 97), and 249 in Tunisia; increases due to exchange rates totalling 398; decreases due to reclassification and other allocations totalling 5,406 due to decreases resulting from reclassification to another category at the subsidiary CMT I/S totalling 3,779 and 1,627 in Dubai. The increases and decreases of items relative to plant and machinery, equipment and other assets are due to acquisitions and/or incremental expenses and decommissioning for the year, prompted by investments for new work sites and the replacement of assets employed in the production process.
90
Salini Costruttori Group These same items include 125,285 in production assets under finance leases net of related accumulated depreciation, including 93,339 for Salini S.p.A. and 31,946 for Todini Costruzioni Generali S.p.A. Specifically, the changes in the historical cost of plant and machinery, vehicles, equipment and other assets include: increase due to new income-producing assets acquired for 87,856 of which 28,846 acquired under financial leases; disposals by sale totalling 4,036; gains on exchange rate adjustments totalling 1,345; negative changes for reclassifications and other allocations totalling 457. The plant and machinery, vehicles, equipment and other assets depreciation provision includes: increase due to depreciation for the period totalling 37,927 of which 16,803 for assets acquired under financial leases; changes from sale of assets totalling 2,509; positive changes for exchange rate differences totalling 859; negative changes for other allocations of 3,880. A large part of the balance of work in progress was for new fixed assets and for the installation of capital equipment in the production cycle at work sites in Ethiopia (20,729) and in Dubai (56). The changes concerning the subsidiary Todini Costruzioni Generali S.p.A. showed an increase of 252, of which 85 in Kazakhstan and 167 in Ukraine. 11.
Investment property
This item totalled 61,205. It was down from the financial statements at 31 December 2011:
Total Balance at 1 January 2012 Investments/(Disposals) Reclassifications under assets held for sale (IFRS 5) Depreciation and amortisation Balance at 30 June 2012 62,296 0 0 (1,091) 61,205
12.
Intangible assets
The balance of this item is 2,381, representing a net decrease of 38 compared with the amount at 31 December 2011. A breakdown of these assets is given below:
91
Assets in course of Intellectual Concessions, construction property licences and Goodwill Other and rights trademarks payments on account Historical cost at 1 January 2011 Decreases Purchases and capitalised costs Historical cost at 31 December 2011 Decreases Purchases and capitalised costs Historical cost at 30 June 2012 Accumulated amortisation at 1 January 2011 Amortisation Other changes Accumulated amortisation at 31 December 2011 Amortisation Other changes Accumulated amortisation at 30 June 2012 1,262 0 196 1,458 0 68 1,527 1,049 218 0 1,267 72 0 1,339 3,244 0 120 3,364 0 8 3,372 2,913 263 0 3,176 28 15 3,219 0 0 2,039 0 2,039 2,039 48 0 0 48 0 0 48 48 0 0 48 0 0 48 508 0 0 508 0 0 508 456 52 0 508 0 0 508
Total
7,101 0 316 7,417 0 76 7,494 4,465 533 0 4,998 100 15 5,113
Net amount at 1 January 2011
213
331
2,039
52
2,636
Net amount at 31 December 2011
191
188
2,039
2,419
Net amount at 30 June 2012
188
153
2,039
2,381
The decrease of 38 compared with 31 December 2011 is due to normal operating performance, with investments for the period totalling 76 and amortisation totalling 100. Increases were mainly for investments in software and licences. The balance of the item is therefore composed as follows: 188 for Intellectual property rights, which include software amortised on a straightline basis over three financial years; 153 for Concessions, licences and trademarks: this amount mainly consists of the concession acquired in Uganda for the use of land for the erection of work-site structures; 2,039 in goodwill from business combinations relating to the purchase of Todini Costruzioni Generali S.p.A.
92
Equity investments
The analysis of equity investments is as follows:

(/000) Equity-accounted investments Other equity investments Total equity investments 2011 Change in Reclassifications/ Revaluations/ Hedge Dividends consolidation acquisitions/disposals write-downs accounting scope 592 146,197 146,788 0 0 0 (841) 112,069 111,227 (120) 0 (120) 27 2012
14,883 123,989 138,872
14,541
0 382,254 27 396,795
The value of equity-accounted investments relates to investments in associates and joint ventures and in subsidiaries in liquidation or that have essentially ceased trading. The decrease of 342 is due mainly to the net effect of the following: change of 120 in the scope of consolidation due to the full consolidation of Salini S.p.A. establishment of the company Salini Rus OOO totalling 73; the capital contribution of 670 to G.A.B.I.RE S.r.l. and a reclassification of (201) to cover the provision for risks; the contribution of 50 to the property company Marinella S.r.l.; write-down of the associates Co.Ge.Fin S.r.l. totalling 581, G.A.B.I.RE S.r.l. totalling 193 and Irina S.r.l. in liquidation totalling 33. In 2011 a 15% stake was acquired in Impregilo S.p.A. for 122,739 which was transferred during the period to Salini S.p.A. During the first half of 2012 Salini S.p.A. acquired a further 13.1% for 146,197, bringing its stake to 28.1% at 30 June 2012. In accordance with IAS 39, the equity investment was adjusted to fair value, which was identified as the price quoted on the stock exchange on 29 June 2012 (the last available day). This adjustment resulted in a revaluation of 112,069 with the impact allocated to shareholders' equity. At 30 June 2012, the holding was classified under Equity investments in other companies since, despite the percentage of shares held, it was not in a position to exercise any notable influence over the investee. Paragraph 7 of IAS 28 states that the existence of significant influence by an entity is usually evidenced upon the occurrence of one of the following situations: (a) representation on the board of directors or equivalent governing body of the investee; (b) participation in policy-making processes, including participation in decisions about dividends or other distributions; (c) material transactions between the entity and its investee; (d) interchange of managerial personnel; (e) the provision of essential technical information. At 30 June 2012, none of these conditions applied.
93
Salini Costruttori Group The following table illustrates changes in provisions for risks on equity investments:
(/000) Provisions for risks on equity investments
2011 (2,170) (2,170)
Provisions 0 0
Use (BS) 240 240
Reversal (IS) 8 8
2012 (1,922) (1,922)
Provisions for risks on equity investments reflect the shortfall in own funds, for the Group, compared with the carrying amount of the equity investments themselves. The use included 39 related to the associate Astaldi-Federici-Todini and 201 for G.A.B.I.RE S.r.l., while the reversal was related to the subsidiary Edilfi S.c.a r.l. in liquidation. A statement of changes in equity investments during the period is appended to these notes. 14.
Financial assets
Non-current financial assets Non-current financial assets total 24,497, as shown in the following table:
(/000) Financial assets resulting from disposals (Corso del Popolo) Loans to associates - ZEIS Group Non-current receivables due from subsidiaries Non-current receivables due from associates Non-current receivables due from parent companies Non-current receivables due from others TOTAL NON-CURRENT FINANCIAL ASSETS 30/06/2012 11,096 0 310 9,759 0 3,332 24,497 31/12/2011 10,761 0 309 9,930 0 3,294 24,295 Change on Change on balance income sheet statement 335 0 1 (171) 0 37 202 335 0 0 0 0 0 335
Non-current financial assets consist of i) 13,401 relating to receivables due for interestbearing finance granted to non-consolidated associates and subsidiaries and other companies of Todini Costruzioni Generali S.p.A.; and ii) 11,096 relating to rights of claim arising from concession activities (Corso del Popolo S.p.A.).
15.
Other assets
Other non-current assets Other non-current assets totalling 4,127 were for security deposits, the most significant amounts of which were: 1,805 in Dubai, 1,148 in Italy, 243 in Uganda, 227 in Denmark and 145 in Ethiopia. Other current assets Other current assets total 242,670 and are mainly composed of:
94
(/000) Advances to suppliers Receivables from other companies Insurance prepayments Lease prepayments Other Total other current assets
June 2012 164,617 52,235 11,033 614 14,172 242,670
2011 150,689 50,334 11,325 1,125 10,100 223,574
Change 13,928 1,900 (292) (511) 4,072 19,097
Receivables for advances to suppliers for Salini were mainly related to Denmark and Turkey, for Salini Italia and related branch offices (mainly: Uganda, Ethiopia, Dubai, Kazakhstan, Sierra Leone and Zimbabwe) and for Todini Costruzioni Generali S.p.A. in relation to Ukraine, Italy and related branch offices (mainly: Albania, Azerbaijan, Belarus, Georgia and Kazakhstan). The increase in advances to suppliers totalling 13,928 was due to increases and decreases prompted mainly by: (i) the increase of 8,464 in the contract in Denmark; (ii) the launch of new work sites and resulting disbursement of advances to suppliers/sub-contractors totalling 6,179 in Turkey, 7,310 in Ukraine and 5,221 in Georgia; ( iii) the increase in advances to leasing companies amounting to 1,374; (iv) the increase in production, especially at new work sites, and thus, the recovery of a portion of advances disbursed, totalling 15,381 in Ukraine and 4,270 in Kazakhstan; and (v) the disbursement of new advances totalling 1,471 in Belarus, 1,364 in Georgia, 815 in Azerbaijan, 738 in Ethiopia and 605 in Malaysia. Receivables from other companies mainly included receivables from partners Acciona and Ghella S.p.A. in the temporary partnership established with Salini Costruttori S.p.A. to execute the TAV/S. Ruffillo contract amounting to 18,344 following the agreement reached with those companies in October 2002. This item also included Todini Costruzioni Generali S.p.A. receivables from G.A.B.I.RE S.r.l. totalling 18,001 for the disposal of Cediv and receivables totalling 9,083 from Todini Finanziaria S.p.A. for receivables, which were in turn sold to Co.Ge.Fin. S.r.l. 16.
Inventories
Inventories total 213,217, as shown in the following table:

(/000) Raw materials, ancillary materials and consumables Building work in progress Finished products and goods for resale Prepayments Total Inventories 2012 171,910 36,900 3,541 866 213,217 2011 143,917 36,553 3,529 1,731 185,730 Change 27,993 348 12 (865) 27,487
95
The geographical breakdown of the item is as follows:

2012 % 20% 0% 0% 4% 0% 0% 2% 43% 12% 2% 6% 1% 2% 3% 2% 2% 1% 2011 44,737 172 1,035 7,814 0 0 3,681 71,049 21,711 1,043 12,630 3,239 3,687 6,442 5,836 2,655 0 185,730 % 24% 0% 1% 4% 0% 0% 2% 38% 12% 1% 7% 2% 2% 3% 3% 1% 0% Change (1,390) 69 (100) 726 31 147 470 20,798 3,339 2,479 (212) (458) (266) (957) (2,408) 1,977 3,240 27,487
Italy Albania Algeria Azerbaijan Belarus Denmark Dubai Ethiopia Kazakhstan Malaysia Nigeria Sierra Leone Tunisia Ukraine Uganda Zimbabwe Turkey Total inventories
43,348 242 935 8,540 31 147 4,150 91,847 25,050 3,522 12,418 2,781 3,422 5,484 3,428 4,632 3,240 213,217
The net increase in inventories of 27,487 is mainly due to works in Ethiopia, Kazakhstan, Malaysia and Turkey. The table below indicates the changes in raw materials, ancillary materials and consumables:
Raw materials, ancillary materials and consumables Balance at 1 January 2012 Change on income statement Exchange rate effect Balance at 30 June 2012 143,918 27,521 471 171,910
Inventories of raw materials, ancillary materials and consumables are essentially composed of construction materials and spare parts for operating machinery; the increase of 27,993 is largely due to procurement at work sites in Ethiopia (20,798), at Kazakhstan work sites (3,339) and at work sites in Turkey (3,240). These amounts were due to the significant procurement of materials and spare parts necessary to operate complex works combined with the inability to find these materials on local markets. Building work in progress consisted of land parcels of Plus S.r.l., a subsidiary of Zeis S.r.l., totalling 36,900. The changes totalling 348 were for the increase on land parcels of Consorzio Tiburtino. Changes are shown in the following table:
96
Building work in progress Balance at 1 January 2012 Spin-off to GABIRE (Ardea land parcels) Change on income statement Balance at 30 June 2012 36,553 0 348 36,900
17.
Amounts due from clients/amounts due to clients
Current assets in the balance sheet included the item Amounts due from clients which totalled 589,756 at 30 June 2012, an increase of 151,919 compared to 31 December 2011. The following table shows the amount of work in progress recorded according to the percentage of completion method net of losses incurred or estimated on the reporting date and invoicing for progress on works:
(/000) CURRENT ASSETS Works in progress under contract Provisions for risks on works in progress Prepayments from clients Total amounts due from clients June 2012 2011 Change from 31/12 to 30/06 717,282 1,272 (566,636) 151,919
5,681,514 (2,859) (5,088,899) 589,756
4,964,232 (4,132) (4,522,263) 437,837
The item Amounts due to clients within 12 months, presented in the balance sheet under current liabilities, totals 413,595, up by 51,998 compared with 31 December 2011. This item is composed as follows:
(/000) CURRENT LIABILITIES Works in progress under contract Provisions for risks on works in progress Prepayments to clients Total negative works in progress Contractual advances within 12 months Total amounts due to clients within 12 months June 2012 2011 Change from 31/12 to 30/06 87,476 0 (88,976) (1,501) (50,497) (51,998)
1,093,041 (261) (1,238,783) (146,003) (267,593) (413,595)
1,005,565 (261) (1,149,807) (144,502) (217,095) (361,598)
The item Amounts due to clients after 12 months, presented in the balance sheet under noncurrent liabilities, totals 771,137, a reduction of 27,258 compared with 31 December 2011. This item, which includes the amount of the advance to be refunded, as contractually agreed, to the client after 12 months, is composed as follows:
Change from 31/12 to 30/06 27,258 27,258
(/000) Contractual advances after 12 months Total amounts due to clients after 12 months
June 2012 (771,137) (771,137)
2011 (798,395) (798,395)
97
Salini Costruttori Group The most significant contractual advances totalled 456,402 for work sites in Ethiopia, 159,451 in Denmark, 111,897 in Nigeria and 20,473 in Turkey. Works in progress under contract posted to liabilities represents the negative net value resulting, for each individual contract, from the algebraic sum of works in progress, provisions for contractual risks and partial billing. The following table contains an analysis of the geographical breakdown of the items:
(/000) 30/06/2012 SALINI Italy Dubai Ethiopia Uganda Sierra Leone Zimbabwe Nigeria Turkey Malaysia Denmark
Amounts Works in Provision Prepayments from progress for risks clients A 506,172 237,980 1,592,629 500,051 79,313 23,459 710,095 6,520 65,260 138,552 B (313) 0 0 0 0 0 0 0 0 0 0 (313)
Negative works in progress
Advances Advances within 12 after 12 months months E 0 F 0 0
Amounts due to clients D+E+F (147) (2,778) (573,962) (5,133) (1,491) (14,078) (178,554) (29,247) (31,111) (163,680)
C A+B+C>0 D=(A+B+C<0) (445,562) (206,779) (1,566,729) (499,843) (79,306) (24,886) (733,441) 0 (89,121) (142,782) (161,396) (3,949,843) 60,443 31,202 79,206 5,336 1,498 0 33,069 6,520 0 0 33,219 250,492 (147) 0 (53,305) (5,128) (1,491) (1,427) (56,415) 0 (23,861) (4,229)
(2,778) (64,254) (456,402) 0 (5) 0 0 (6,833) (5,818) (10,242) (111,897) (8,774) (20,473) 0 (7,250) 0 (159,451) 0 (44,697)
Kazakhstan 194,614 TOTAL SALINI 4,054,645
0 (44,697) (146,003) (136,568) (762,306) (1,044,877)
(/000) 30/06/2012 TODINI Italy Albania Algeria Azerbaijan Belarus Dubai Georgia Kazakhstan Romania Tunisia
Amounts Works in Provision Prepayments from progress for risks clients A 1,296,383 46,003 196,020 311,831 24,354 61,260 50,811 330,275 0 85,686 B 0 0 0 0 0 (2,141) (106) 0 0 (560) 0 (2,807)
Negative works in progress
Advances Advances within 12 after 12 months months E (10,809) 0 0 (20,323) (7,707) (2,527) (12,373) (32,001) 0 (4,391) F 0 0 (719) 0 (1,479) 0 (6,633) 0 0 0 0 (8,831)
Amounts due to clients D+E+F (10,809) 0 (719) (20,323) (9,186) (2,527) (19,006) (32,001) 0 (4,391) (40,893) (139,855)
C A+B+C>0 D=(A+B+C<0) (1,180,776) 115,608 0 (38,772) (169,063) (253,827) (22,362) (38,515) (45,792) (297,677) 0 (67,804) (263,252) (2,377,839) 7,231 26,957 58,004 1,992 20,604 4,913 32,598 0 17,322 54,035 339,264 0 0 0 0 0 0 0 0 0
Ukraine 317,287 TOTAL TODINI 2,719,910 TOTAL 30/06/2012 SALINI + TODINI
0 (40,893) 0 (131,024)
6,774,555
(3,120)
(6,327,682)
589,756
(146,003) (267,593) (771,137) (1,184,732)
98
(/000) 31/12/2011 SALINI Italy Dubai Ethiopia Uganda Sierra Leone Zimbabwe Nigeria Turkey Malaysia Denmark Kazakhstan TOTAL SALINI
Amounts Negative Works in Provision Prepayments from works in progress for risks clients progress
A B C A+B+C>0 D=(A+B+C<0)
Advances Advances within 12 after 12 months months

E F
Amounts due to clients

D+E+F
468,005 215,588 1,408,352 487,660 70,970 6,178 661,605 0 31,624 63,520 147,960 3,561,462
(313) 0 0 0 0 0 0 0 0 0 0 (313)
(395,410) (192,414) (1,377,226) (488,316) (71,003) (8,723) (697,581) 0 (61,701) (65,475) (132,727) (3,490,577)
72,429 23,174 69,316 612 968 0 23,123 0 0 0 15,233 204,855
(147) 0 (38,190) (1,268) (1,001) (2,545) (59,099) 0 (30,078) (1,955)
0 (3,451) 0 0 (4,693) (8,509) 0 0
0 0 0 0 (6,833) (94,358) (29,372) (9,479)
(147) (3,451) (576,568) (1,268) (1,001) (14,071) (161,966) (29,372) (39,556) (161,406)
(63,158) (475,220)
0 (159,451)
0 (57,141) 0 (57,141) (134,283) (136,952) (774,712) (1,045,947)
(/000) 31/12/2011 TODINI Italy Albania Algeria Azerbaijan Belarus Dubai Georgia Kazakhstan Romania Tunisia Ukraine TOTAL TODINI TOTAL 31/12/2011 SALINI + TODINI
Amounts Negative Works in Provision Prepayments from works in progress for risks clients progress
A B C A+B+C>0 D=(A+B+C<0)
Advances Advances within 12 after 12 months months

E F
Amounts due to clients

D+E+F
1,239,608 35,818 193,242 293,646 2,266 57,484 45,846 292,470 0 73,132 174,820 2,408,333
0 0 0 0 0 (2,968) (366) 0 0 (745) 0 (4,079)
(1,138,178) (31,239) (167,306) (246,577) 0 (37,897) (42,753) (274,530) 0 (57,974) (185,040) (2,181,493)
101,430 4,579 25,935 47,069 2,266 16,620 2,727 17,940 0 14,413 0 232,980
0 0 0 0 0 0 0 0 0 0 (10,219) (10,219)
(4,513) 0 0 (2,887) (5,601) (857) (9,179) (40,554) 0 (4,885) (11,666) (80,144)
(5,461) 0 (734) (16,007) (1,479) 0 0 0 0 0 0 (23,682)
(9,975) 0 (734) (18,894) (7,080) (857) (9,179) (40,554) 0 (4,885) (21,886) (114,045)
5,969,795
(4,392)
(5,672,070)
437,835
(144,502) (217,096) (798,394) (1,159,992)
Works in progress total 6,775 million, an increase compared with 31 December 2011 of 805 million. The income statement shows a change of 780 million; the difference is due to the effect of exchange rate fluctuations following the application of the current method for companies/branches of the Group that present their financial statements in a currency other than the euro. For more information, see the Directors Report. 18.
Trade receivables
99
Trade receivables total 670,572, as indicated in the following table:

(/000) Receivables from clients Receivables from associates Provision for impairment losses on receivables for penalty interest Provision for impairment losses on trade receivables Total trade receivables
30/06/2012 679,803 19,037 (18,934) (9,335) 670,572
31/12/2011 583,664 19,914 (18,957) (9,986) 574,635
Change 96,139 (876) 24 651 95,937
The following table contains a geographical breakdown of the aforementioned receivables:

(/000) Italy Algeria Azerbaijan Belarus Dubai Ethiopia Kazakhstan Malaysia Nigeria Sierra Leone Tunisia Ukraine Uganda Zimbabwe Other Total trade receivables
June 2012 104,140 9,097 5,856 4,362 27,493 101,121 41,340 14,945 218,485 12,552 3,867 84,668 3,116 12,176 27,355 670,572
% 16% 1% 1% 1% 4% 15% 6% 2% 33% 2% 1% 13% 0% 2% 3%
2011 92,654 12,236 6,764 0 41,837 69,927 36,397 11,806 213,296 12,438 4,076 34,607 2,892 8,254 27,452 574,635
% 16% 2% 1% 0% 7% 12% 6% 2% 37% 2% 1% 6% 1% 1% 6%
Change 11,486 (3,139) (907) 4,362 (14,344) 31,194 4,943 3,138 5,189 114 (209) 50,061 224 3,923 (98) 95,937
During the period, a net increase in receivables accrued totalling 95,937. The net effect was due to the following main changes that occurred during the period: in Italy the increase was mainly prompted by invoices issued on the Capo Boi and Valico Bypass projects of the subsidiary Todini Costruzioni Generali S.p.A. in Albania, Algeria, Azerbaijan and Dubai, the decrease was due to the receipt of works certificates; in Belarus the balance corresponds to the first invoicing for works completed; in Ethiopia the large increase of 31,194 was mostly due to the issuance of new certificates and the receipt of previous certificates totalling 7,905 related to the Gibe III project, and the new project for the construction of the hydroelectric plant called Grand Ethiopian Renaissance Dam in the amount of 25,489;
100
Salini Costruttori Group in Ukraine the positive change was due to the increase in production on the new project in the Roads and motorways segment, the work for which was completed by JV Todini Akkord Salini. The Receivables from associates item has not undergone any significant changes. At the end of the period, the provision for impairment losses on receivables had a balance of 9,335. The largest amounts were attributable to receivables from clients of the Sierra Leone branch totalling 5,931, clients of the Algerian branch of the subsidiary Todini Costruzioni Generali S.p.A. totalling 2,034, clients of the Greek branch of the subsidiary Todini Costruzioni Generali S.p.A. totalling 354 and 1,016 in receivables from clients and other Italian customers. This provision decreased by 651 during the period as shown in the table below:
(/000) Opening balance Allocation to provision Use Other changes Closing balance of the provision for impairment losses on receivables 30/06/2012 (9,986) 0 0 651 (9,335) 31/12/2011 (15,820) 0 6,482 (648) (9,986)
Other changes includes reclassifications to other items and the impact of changes in exchange rates. No new allocations were made. The provision for impairment losses on receivables for penalty interest had a balance of 18,934 at the end of the year; of this amount, 15,800 was attributable to the branch office in Sierra Leone, 3,004 to the JV in Zimbabwe and 130 to the head office in Italy. This provision decreased by 23 during the period as shown in the table below:
(/000) Opening balance Allocation to provision Use Other changes Ending balance of provision for impairment losses on receivables for penalty interest 30/06/2012 (18,957) (270) 705 (411) (18,934) 31/12/2011 (19,475) (221) 1,191 (452) (18,957)
The most significant change is represented by the release of a provision totalling 705 established for the Sierra Leone branch, following collection of the related receivable by the client. 19.
Tax receivables
These total 95,422, an increase of 38,605 compared with 2011:

101

June 2012 Italy Abroad Total tax receivables 25,258 70,163 95,422 2011 20,971 35,846 56,817 Change 4,288 34,317 38,605
The balance at 30 June 2012 mainly consisted of a VAT credit balance in Italy of 17,971, of which 2,637 was for Salini S.p.A. In addition there were credits for TVA and indirect taxes mainly in the following areas: in Ethiopia (13,377), Kazakhstan (1,739), Azerbaijan (7,554), at Salini Nigeria Ltd (2,353), in Belarus (3,688), Ukraine (8,247), Tunisia (1,335), Algeria (629) and Albania (989). 20.
Cash and cash equivalents
This item has decreased compared with the previous period by 254,867 and is composed as follows:
(/000) Non-restricted bank and postal deposits Restricted bank and postal deposits Cash in hand Total cash and cash equivalents
June 2012 258,310 28,635 1,186 288,131
2011 500,874 41,242 882 542,998
Change (242,564) (12,607) 304 (254,867)
The balance of cash and cash equivalents represents active bank account balances at the end of the year and the amounts of cash, cheques and securities existing at the registered office, the work sites and the foreign subsidiaries. Restricted deposits at 30 June 2012 mainly refer to cash collateral of 1,500 at the Albanian branch of the subsidiary Todini Costruzioni Generali S.p.A. and to deposits at the subsidiaries CMT I/S of 11,697 and Salini Kolin CGF totalling 15,437. The following table shows the change in short-term bank overdrafts:
ANALYSIS OF CASH AND CASH EQUIVALENTS

CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD Cash funds at start of period Bank overdrafts repayable on demand (29) (32)
June 2012
2011
542,998 (87,696) 455,302
216,267 (81,009) 135,258
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD Cash funds at end of period Bank overdrafts repayable on demand (29) (32) 288,131 (102,277) 185,854 542,998 (87,696) 455,302
102
Non-current assets held for sale
This item totalled 3,154 and consisted mainly of: - the former Galbani building located on Via Blaserna (owned by Zeis) totalling 2.1 million; - the Le Torrine country house (owned by San Vittorino) totalling 1 million.
Total Balance at 1 January 2012 Assets sold Balance at 30 June 2012 3,194 (40) 3,154
22.
Shareholders' equity
Shareholders equity totals 386,143, of which 349,247 is attributable to the Salini Costruttori Group and 36,896 to minorities. The share capital of the parent company Salini Costruttori at 31 December 2011 is composed of 120,000,000 ordinary shares with a nominal value of 0.52 each for a total of 62,400. The parent company holds 11,708,900 treasury shares with a nominal value of 0.52 equal to 9.76% of share capital. Book value is 3,120, and treasury shares are reported as a reduction to shareholders' equity. No parent company shares are held by subsidiaries. There were no changes compared to 31 December 2011. The legal reserve totalling 5,543 represented 8.88% of share capital. Other reserves amounted to 8,356, and were up by 31 compared to 31 December 2011 due to the adjustments indicated in the statement of shareholders' equity. Reserves relating to components of comprehensive income at 30 June 2012 total 116,899, with an increase of 112,305 compared with the previous period. In particular, the increase of 112,069 was due to the adjustment of the equity investment in Impregilo S.p.A. to fair value, which was identified as the price quoted on the stock exchange on 29 June 2012 (the last available day). In accordance with IAS 39, changes were allocated to the specific reserve. See Note 9 for details on changes. Minority interests total 36,896. This has increased during the period by 11,060 due to the following changes: profit for the period of 8,617; impact on minority interests (capital to be paid in) of 2,349; other changes of 94. At 30 June 2012 retained earnings totalled 141,602, an increase of 36,202 mainly due to the allocation of a portion of the profit for the previous year of 36,142.
103
23.
Financial liabilities
Financial liabilities total 688,607, and have increased compared with 2011 by 167,348, as detailed below:
(/000) Payables to banks Financial payables to shareholders Payables to other lenders for leases Loan and financing costs and accrued financial expenses Financial payables to subsidiaries Derivative instruments (negative fair value) Total financial liabilities of which non-current portion of which current portion
June 2012 538,218 3,576 143,871 1,280 0 1,662 688,607 218,340 470,267
2011 396,420 2,890 119,472 961 34 1,481 521,258 227,921 293,337
Change 141,797 686 24,399 319 (34) 181 167,348 (9,581) 176,930
The following table contains a breakdown of payables to banks, divided into current and noncurrent:
(/000)
Current June 2012 2011 87,696 15,225 129,488 10,870 243,279
Non-current Change June 2012 14,581 (2,883) 153,791 (2,542) 162,948 19 0 81,766 51,486 133,271 2011 0 0 102,380 51,722 154,102 Change 19 0 (20,614) (236) (20,831)
Debit balances Short-term loans (30-90 days) Financing Loans Total payables to banks
102,277 12,343 283,278 8,328 406,227
The net increase of 142,117 in payables to banks was mainly due to a new loan obtained by the subsidiary Salini S.p.A. in the amount of 132 million (108 million on the reporting date) to finance the operations of works in progress. Bank overdrafts amount to about 102 million and mainly relate to Todini Costruzioni Generali S.p.A. (of 67 million), Salini Nigeria (of 14 million), the Morocco branch of Salini S.p.A. (of 5.9 million) and Salini S.p.A. (of about 14 million).
104
Salini Costruttori Group The following table gives a detailed breakdown of loans and finance:
portion >5 years 0 0
Lending bank Salini Costruttori - BNL Salini Costruttori - BNL Zeis - MPS (formerly Antonveneta) IASV - MPS (formerly Antonveneta) Zeis - MPS (formerly Antonveneta) Plus - Banca Popolare di Milano Skye Bank Total loans
type Mortgage loan Mortgage loan Mortgage loan Mortgage loan Mortgage loan Mortgage loan Financing
rate 6 month Euribor + 1.75% 6 month Euribor + 1.75% 6 month Euribor + 1.5% Variable Variable Variable 28%
2012 portion 5,117 1,028 1,857 136 79 0 112 8,328
2013 portion 4,943 992 1,753 133 81 0 0 7,903
2014 2015 portion portion 4,976 997 1,793 136 82 0 0 7,983 0 0 1,834 139 82 0 0 2,055
2016 portion 0 0
Total 15,036 3,016 21,290 686 1,249 18,425 112 59,814
1,875 12,178 142 83 0 842
0 18,425 0 0
2,100 31,445
Lending bank Centrobanca (syndicated loan) Intesa San Paolo Natixis Cat Financials National Bank of Abu Dhabi BNP Paribas Dubai Commercial Bank of Dubai Commercial Bank of Dubai ATF Banca Skye Bank Skye Bank UniCredit current a/c finance 47856 Yapi Kredi Bank Pasha Bank ATF Banca Fin. No K069-201 MPS Ubae
type Financing Financing Financing Financing Financing Financing Financing Advance on certificates Financing Advance on certificates Advance on certificates Financing Financing Financing Financing Financing
rate 3 month Euribor + 2 p. 3 month Euribor + 2.50 p. 3 month Euribor + +3.25 p. 5.20% 3 month Euribor + 3 p. 6 month Libor + 1.5%
2012 portion 15,583 13,219 108,690 960 10,634 477 4,864 4,152
2013 portion 15,632 12,254 0 727 0 2,162 0 0 3,035 0 0 0 0 4,916 0 513 0 0 0 0 0 0 39,239
2014 2015 portion portion 3,929 12,344 0 857 0 2,162 0 0 0 0 0 0 0 0 0 557 0 0 0 0 0 0 19,849 0 12,428 0 903 0 0 0 0 0 0 0 0 0 0 0 600 0 0 0 0 0 0 13,931
2016 portion 0 0 0 951 0 0 0 0 0 0 0 0 0 0 0 647 0 0 0 0 0 0 1,597
portion >5 years 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 7,180 0 0 0 0 0 0 7,180
Total 35,144 50,245 108,690 4,397 10,634 4,802 4,864 4,152 15,615 5,424 3,571 33,170 3,669 5,681 14,096 9,845 35,013 5,000 2,132 5,000 1,900 2,000 365,044
9.98% 25.00% 23.00% 1 month Euribor + 1.60 7.00% 7% within 80 days 18% beyond 80 days 9.98% 6 month Euribor + 1.25 p. 3 month Euribor + 3.25 p. 3 month Euribor + 2.50 p. 3 month Euribor + +2 p. 3 month Euribor + +2 p. 3 month Euribor + +2.50 p. 3 month Euribor + 1 p.
12,580 5,424 3,571 33,170 3,669 765 14,096 349 35,013 5,000 2,132 5,000 1,900 2,000 283,248
Advance on certificates Advance on C.R. Firenze advance a/c certificates B.Sardegna advance on Advance on contracts certificates B.Sard advance on Advance on SaL40003 certificates B. Popolare di Lodi Advance on advance a/c certificates Advance on Cariparma advance a/c certificates Total finance
105
Salini Costruttori Group There were financial covenants required by financial institutions for certain loans on the books at 30 June 2012. Compliance with these covenants is required only for the annual consolidated financial statements prepared in accordance with provisions introduced by Legislative Decree 127/1991 (consolidated financial statements according to Italian GAAP). Payables due to other lenders total 143,871 and are composed as follows:
(/000) June 2012 Receivables assigned with recourse Indirect factoring transactions Leases (Todini) Leases (Salini) Total payables to other lenders 0 30,946 5,345 25,723 62,015
Current 2011 0 23,684 6,610 18,250 48,544 Change June 2012 0 7,262 (1,264) 7,474 13,471 0 0 21,475 60,382 81,856
Non-current 2011 0 0 26,369 44,559 70,929 Change 0 0 (4,895) 15,822 10,928
Payables to other lenders rose by 24,399, of which 13,471 was short term and 10,928 was medium/long term. This change was mainly due to: (i) the increase in leases of 17,137 and (ii) the indirect increase in factoring transactions of 7,262 as a result of which the Company obtained an increase in payment deferrals following the sale of its payables to suppliers to financial institutions.
106
Salini Costruttori Group Derivative instruments The Group uses external sources of funding in the form of short-term and medium/long-term variable-rate debt. Accordingly, an optimal balance must be found between fixed-rate and variable-rate debt in the financing structure, in order to reduce financial costs and volatility, selectively implementing hedging transactions through simple derivative instruments that convert variable-rate debt to fixed-rate debt (IRS). At 30 June 2012, the Group had the following derivative contracts with major credit institutions: five derivative contracts taken out by the parent company; one contract taken out by the associate Casada (in which Zeis holds a 25% stake); six taken out by the associate Co.Ge.Fin., in which Todini Costruzioni Generali S.p.A. has a 51% stake. These instruments, which were originally taken out by Todini Costruzioni Generali S.p.A., were transferred to Co.Ge.Fin as a part of the deconsolidation transaction at the end of December 2010. The following table summarises the key features of these transactions:
Company Bank Contract date Maturity date Hedge accounting Type Purpose Notional amount (/000) 2,500 MtM at 30 June 2012 (60) Underlying financial risk interest rate interest rate interest rate interest rate interest rate interest rate interest rate interest rate interest rate interest rate interest rate interest rate Liability hedged variablerate loan variablerate loan variablerate loan variablerate loan variablerate loan variablerate loan variablerate loan variablerate loan variablerate loan variablerate lease variablerate lease variablerate loan
Co.Ge.Fin.
Centrobanca Banca Pop. Vicenza Banca Carige
30-Sept-09
31-July-14
YES
IRS
Hedging
Co.Ge.Fin.
30-Sept-09
31-July-14
YES
IRS
Hedging
2,500
(60)
Co.Ge.Fin.
30-Sept-09
31-July-14
YES
IRS
Hedging
2,500
(55)
Co.Ge.Fin.
Intesa
30-Sept-09
31-July-14
YES
IRS
Hedging
12,500
(304)
Co.Ge.Fin.
Banca Popolare di Sondrio
1-Oct-09
31-July-14
YES
IRS
Hedging
2,500
(55)
Co.Ge.Fin. Salini Costruttori Salini Costruttori Casada Salini Costruttori Salini Costruttori Salini Costruttori
Banca Etruria
30-Sept-09
31-July-14
YES
IRS
Hedging
2,500
(58)
BNP
31-July-09
27-Feb-15
YES
IRS
Hedging
15,000
(457)
BNP
21-Sept-09
31-Mar-15
YES
IRS
Hedging
3,000
(94)
UniCredit Banca Popolare di Lodi Banca Popolare di Lodi Intesa
29-July-03
1-Aug-13
NO
IRS
Hedging
1,021
(26)
12-Feb-10
1-Aug-16
YES
IRS
Hedging
2,171
(103)
13-May-10
1-Dec-16
YES
CAP
Hedging
6,538
29-Mar-11
25-Jan-16
YES
IRS
Hedging
25,000
(926)
With regard to the hedges for loans taken out with UniCredit (by the associate Casada), the notional amounts of which amount to 1 million respectively, the Group did not believe it was Notes to Financial Statements - Half-Year Financial Report as at 30 June 2012 107
Salini Costruttori Group efficient to apply hedge accounting given the cost and complexity of applying this accounting treatment in view of the insignificant amounts being hedged. Changes in the amount of these financial instruments were recognised directly in the income statement under financial expenses. With regard to the hedge accounting hedges created by the parent company, the change in fair value of the effective part of the derivatives had a negative impact on the Group's shareholders' equity resulting in a cash flow hedge reserve of 1,043 (955 at 31 December 2011), together with the related impact from prepaid taxes of 396. To offset the current financial liabilities, the fair value of the derivatives was recognised at 1,662, net of accrued cash flows applicable to the period of 221. The positive fair value of the CAP taken out with Banca Popolare di Lodi totalling 4 was recognised under current financial assets. The ineffective portion of 10 was recognised through profit and loss.
24.
Provisions for risks and charges
Provisions for risks and charges total 28,046 and have increased by 2,025 compared with 2011, as indicated in the following table:
Provision for Other country provisions risks 0 18,464 0 2,568 0 (1,258) 0 138 0 19,912
(/000) Balance at 31 December 2011 Allocation to provisions Uses Other changes Balance at 30 June 2012
Work in progress expenses 5,366 1,393 (432) (135) 6,192
Subsidiaries losses hedge 2,170 7 (252) (3) 1,922
Completed contracts risk 20 0 0 0 20
TOTAL 26,021 3,969 (1,943) 0 28,046
In particular, in a tax deficiency notice dated 1 April 2011, the Treasury Police stated observations for IRES and IRAP purposes for the years from 2006 to 2010 with respect to the subsidiary Todini Costruzioni Generali S.p.A. with reference to the proper timing of some reserves (claims) and with reference to the years 2006, 2008, 2009 and 2010 for the application of VAT instead of registration tax on amounts paid as compensation, interest for late payment or compensatory interest, based on agreements pursuant to Article 31-bis of Law 109/94 and on arbitral awards or settlements. In December 2012, Todini Costruzioni Generali S.p.A. addressed all of the above observations for IRES and IRAP purposes for the years from 2007 to 2010 through a tax settlement with instalment payments in 12 quarterly instalments. The subsidiary also addressed VAT observations for the years 2008, 2009 and 2010 through the removal of those concerning interest for late payment or compensatory interest and with the total reversal of penalties for incorrect invoicing and false reporting, again through a tax settlement with instalment payments in 12 quarterly instalments. Pursuant to Article 60, paragraph 7 of Presidential Decree 633/1972, Todini Costruzioni Generali S.p.A. will exercise recourse to clients for the higher amount of VAT paid at that time through the issuance of supplementary invoices. With regard to tax year 2006, which was already covered in an assessment notice, in January 2013 a partial annulment order was served in self-defence with the total annulment of adjustments made for IRES and IRAP purposes, and the reversal of penalties for the false reporting and invoicing for the higher amount of VAT assessed for 2006. The right of recourse to the client may also be exercised for this VAT.
108
Salini Costruttori Group Thus, in order to reflect the impact from the aforementioned order, as at 30 June 2012, in accordance with IAS 10 - Events after the Reporting Period, an adjustment was made in the amount of 2,120 to the risk provision allocated by Todini Costruzioni Generali S.p.A. as at 31 December 2011 to cover the risk related to this dispute totalling 1,170. Thus, as at 30 June 2012 the tax reserve (Other reserves) totalled 3,290. Details on the other main items that formed the balance of the provisions for risks and charges at 30 June 2012 are as follows: The provision for losses at holdings was set up in relation to commitments to hedge losses exceeding the holdings own equity, in particular for Groupement Italgisas Kenitra (Morocco) and Ital.Sa.Gi. Sp.Z.O.O. In the subsidiary Todini Costruzioni Generali S.p.A. the provision is mainly for the losses on Edilfi S.c.a r.l. in liquidation, Rupe Orvieto S.c.a r.l., Albacem 2007 in liquidation and Consorzio Astaldi-FedericiTodini. The provision for risks on completed contracts, with a balance of 20, refers to the Poland contract. The provision for risks on work in progress rose by 826 during the period due to total negative reclassifications of 135 concerning provisions that were previously classified under other provisions by mistake. In particular, it rose due to the effect of the allocation of closing costs for projects that are no longer operational in Dubai (630) and Uganda (618) and other areas (126). The decrease of 432 was mainly due to the use of the provision allocated in previous years in Dubai; The provision for risks for legal disputes (Other provisions) of 15,304 increased by 596 during the year and decreased by 1,258; it includes allocations made for contingent liabilities for pending lawsuits and provisions for legal expenses. To be specific, the balance at 30 June 2012 included 11,035 related to the dispute of the subsidiary Todini Costruzioni Generali S.p.A. against Altarea Sca (a company under French law) and Altarea Italia S.r.l. that arose between the parties in relation to alleged damages resulting from the failure to award the publicly announced international tender assignment of the concession for a portion of the complex of the former Mercati Generali (announcement published in the Official Journal of the European Union on 6 November 2003, Series S, No 214, and in the Official Journal of the Italian Republic on 7 November 2003, II, No 259) concerning: the upgrading of the area of the former Mercati Generali by making it available for youth centre services; compared to the balance at 31 December 2011, there was an increase for the period for the provision of legal interest; the decrease for the period was due mainly to costs incurred on the Bujagali project (Uganda) totalling 1,189 and allocated to the provision in previous years.
109
25.
Other liabilities
Other liabilities total 39,578, of which 7,508 is the non-current portion and 32,070 the current portion, as detailed below:
(/000) Social security payables Other payables Total other liabilities of which non-current portion of which current portion June 2012 6,395 33,183 39,578 7,508 32,070 2011 5,552 27,626 33,178 8,227 24,951 Change 843 5,557 6,400 (719) 7,119
The social security payables totalling 6,395 rose by 843, mainly due to Italy. Other payables stand at 33,183; the non-current portion totals 7,508 (8,227 at 31 December 2011) and includes an amount of 5,733 related to the TAV advance for the Verona-Padua high-speed line contract, paid to the Group by the Consorzio Iricav Due. This item is unchanged from the previous financial year. The current portion of other payables, totalling 25,675 (19,399 at 31 December 2011), rose by 6,276 compared to 31 December 2011. This change was mainly related to the item for payables to employees for amounts accrued but not paid. 26.
Employee benefits
Employee benefits totalled 4,222, a decrease of 49 compared with 31 December 2011 due to normal employee turnover. 27.
Trade payables
Trade payables total 525,602, as indicated in the following table:
(/000) Payables to suppliers Payables to associates and subsidiaries Total trade payables
June 2012 483,844 41,758 525,602
2011 435,531 54,535 490,066
Change 48,313 (12,777) 35,536
The geographical breakdown of the item is as follows:
110

June 2012 Italy Abu Dhabi Albania Algeria Argentina Azerbaijan Belarus Chile Denmark United Arab Emirates Ethiopia Georgia Jordan Greece Kazakhstan Libya Malaysia Morocco Nigeria Poland Romania Sierra Leone Tunisia Turkey Ukraine Uganda Zimbabwe 168,888 4 4,696 12,307 11 14,412 5,306 39 30,471 14,239 84,319 7,126 8 2,158 51,981 135 32,596 609 19,017 18 290 12,674 7,422 3,215 38,446 8,023 7,191 525,602 % 32% 0% 1% 2% 0% 3% 1% 0% 6% 3% 16% 1% 0% 0% 10% 0% 6% 0% 4% 0% 0% 2% 1% 1% 7% 2% 1% 2011 220,844 0 3,976 12,781 12 18,437 956 41 33,744 20,383 50,272 6,043 8 3,385 45,475 5 9,760 715 20,229 6 291 4,169 7,508 36 22,100 4,919 3,969 490,066 % 45% 0% 1% 3% 0% 4% 0% 0% 7% 4% 10% 1% 0% 1% 9% 0% 2% 0% 4% 0% 0% 1% 2% 0% 5% 1% 1% Change (51,955) 4 720 (474) (1) (4,025) 4,350 (3) (3,274) (6,144) 34,047 1,083 0 (1,227) 6,505 129 22,836 (106) (1,212) 12 (1) 8,504 (86) 3,179 16,346 3,104 3,222 35,536
Note in particular: Italy's payables amount to 168,888, of which 761 relates to the parent company, 86,865 to Salini S.p.A. and 81,261 to Todini Costruzioni Generali S.p.A. The Salini S.p.A. balance also includes payables to suppliers relating to purchases made centrally for foreign offices and payables towards Italian associates:
2012 Suppliers for Italy Suppliers for Dubai Suppliers for Ethiopia Suppliers for Morocco Suppliers for Sierra Leone Suppliers for Uganda Payables to associates Total payables Italy 61,173 108 1,369 1 431 6 23,777 86,865 2011 93,102 108 1,876 1 576 6 23,897 119,566 Change (31,929) 0 (507) 0 (145) 0 (119) (32,701)
111
Tax payables
This item totalled 73,909, with an increase of 18,650 compared with 31 December 2011 due mainly to the increase for VAT in Ukraine of 12,910 and in Denmark of 4,036. 29.
Related party transactions
There are no material transactions with related parties, including intercompany transactions, of a non-recurring or unusual and/or atypical nature. The following tables contain information on material transactions of a capital, financial and economic nature at 30 June 2012 and 31 December 2011:
30 June 2012 Provisions Financial Financial to cover income expenses losses (78) 34 18 1 53 0 (228) 0 0 0 0 (306) 0
Guarantees and commitments
30 June 2012
Financial assets
Receivables Payables Income
Costs
Albacem 2007 in liquidation Consorzio Costral in liquidation Edilfi S.c.a.r.l. in liquidation Todedil S.c.a.r.l. in liquidation Subsidiaries
40 0 270 0 309
34 3 9 0 46
Salini Saudi Arabia Company Ltd Alburni S.c.a.r.l. in liquidation Bata S.r.l. C.P.R. 2 C.P.R. 3 Casada S.r.l. Cediv Co.Ge.Fin. Colle Todi S.c.a.r.l. in liquidation Con.Sal. S.c.n.c. in liquidation Cons Pizzarotti Todini .KeffEddir Cons. Aft in liquidation Cons.Aft Taksebt Cons.Astaldi-Federici-Todini KRAMIS Consorzio Kallidromo Corina S.c.a.r.l. in liquidation CUS (Consorzio Umbria Sanit) Forum S.c. a r.l. Ga.bi.re S.r.l. Galileo S.c.a.r.l. Group. d'entre. Salini Strabag (Guinea) Groupement Italgisas (Morocco) in liquidation Irfur S.c.a.r.l. in liquidation Irina S.r.l. in liquidation Irrigazione Furore Ital.Sa.Gi. Sp.Z.O.O. (Poland) Joint Venture Salini-Impregilo (Sudan) Joint Venture Salini-Necso (Ethiopia)
202 137 4 0 0 316 128 235 43 3,704 0 741 3,492 945 0 108 0 174 741 0 0 0 0 (222) 0 0 0 0 72 6 6 0 0 226 0 0
7,526
5,062 39 160 10,790 524 0 889 889 0 173 201 0 5
4 (12) 0 1,500 0
675 375 1,240 0
0 33 0 0 1,000
(842)
5,340
112

Risalto S.r.l. in liquidation Rupe Orvieto S.c.a.r.l. S.Ruffillo S.c. a r.l. Sa.Di.Pe. S.c. a r.l. in liquidation Immobiliare Marinella S.r.l. Scat 5 S.c.a.r.l. in liquidation Sedi S.c.a.r.l. Tormini S.c.a.r.l. in liquidation Trasimeno S.c.a.r.l. Valico S.c.a.r.l. in liquidation Variante di Valico S.c. a r.l. in liquidation Associates 0 111 2,288 0 0 0 0 0 0 52 0 0 0 41 0 10,022 18,555 42,435 121 10 0 0 0 5,746 0 0 0 3 (5) (1,149) 20,081 0 7 23,425 0 (68) 11,835
Iricav Due Pantano S.c.r.l. Todini Finanziaria S.p.A. Other companies Previndai+Prevedi+Other funds Pension funds Directors/Key management personnel Directors/Key management personnel
244 9,083 9,327
6,516 99 6,615 402 402 624 624 0
732 4 736 408 408 4,530 4,530 0 0 0 0
(336)
(336)
31 December 2011
31 December 2011
Financial assets
Receiva bles
Payables
Income
Costs
Financial income
Financial Provisions to expenses cover losses
Guarantees and commitments
Albacem 2007 in liquidation Consorzio Costral in liquidation Edilfi S.c.a.r.l. in liquidation Todedil S.c.a.r.l. in liquidation Subsidiaries
40 0 270 0 309
34 3 5 9 51 30 18 10 58 0 0 0 0
(77) (236) (313) 0
Alburni S.c.a.r.l. in liquidation Bata S.r.l. C.P.R. 2 C.P.R. 3 Casada S.r.l. Cediv Co.Ge.Fin. Colle Todi S.c.a.r.l. in liquidation Con.Sal. S.c.n.c. in liquidation Cons Pizzarotti Todini .Kef-Eddir Cons. Aft in liquidation Cons. Aft Taksebt Cons. Astaldi-Federici-Todini KRAMIS Consorzio Kallidromo Corina S.c.a.r.l. in liquidation CUS (Consorzio Umbria Sanit) Forum S.c. a r.l. 677 375 7,526 4
143
225 47
3 0 46 60 5 142 2
0 3 222 19 251 43 3,704 0 741 1,240 86 3,598 945 0
17,984 86 160 10,788 624 0 889 38 6 174
10 10 58 (12) 3,938 1,500
113

G.A.B.I.RE S.r.l. Galileo S.c.a.r.l. Group. d'entre. Salini Strabag (Guinea) Groupement Italgisas (Morocco) in liquidation Irfur S.c.a.r.l. in liquidation Irina S.r.l. in liquidation Irrigazione Furore Ital.Sa.Gi. Sp.Z.O.O. (Poland) Joint Venture Salini-Impregilo (Sudan) Joint Venture Salini-Necso (Ethiopia) Risalto S.r.l. in liquidation Rupe Orvieto S.c.a.r.l. S. Ruffillo S.c.a.r.l. Sa.Di.Pe. S.c. a r.l. in liquidation Immobiliare Marinella S.r.l. Scat 5 S.c.a.r.l. in liquidation Sedi S.c.a.r.l. Tormini S.c.a.r.l. in liquidation Trasimeno S.c.a.r.l. Valico S.c.a.r.l. in liquidation Variante di Valico S.c. a r.l. in liquidation Associates 22 0 0 0 0 19 45 0 9,930 19,825 54,452 2,640 164 0 164 10 0 (5) (1,151) 24,019 12 7 31 0 0 0 0 5,746 47 80 19 0 741 133 23 5 (842) 39 10 23 1,000
22 0 (222)
6,635 0 130 2,473
4 37 7 23,115
2,341
28
164 (2)
10
(68) 11,835
Iricav Due Pantano S.c.r.l. Todini Finanziaria S.p.A. Other companies Previndai+Prevedi+Other funds Pension funds Directors/Key management personnel Directors/Key management personnel
244 9,083 9,327
5,875 121 5,996 360 360 0
157 46 203 461 461 6,771 * 6,771 0 0 0 0
(336)
(336)
236 236
* of which 3,528 was for a property recorded under the fixed assets of Zeis S.r.l.
114
30.
Commitments and guarantees and contingent liabilities
Guarantees The total value of guarantees given is 2,862,708, as detailed below:

(/000) Bonds for bank facilities Bonds for warranties on work Bonds for participation in bidding Other bonds Mortgages on property Total direct guarantees given
30/06/2012 513,479 502,070 53,964 1,141,805 651,390 2,862,708
Third-party guarantees issued to the Group Guarantees issued by credit institutions and insurance companies in the interest of Italian and foreign suppliers and subcontractors in relation to their contractual obligations towards the Group totalled 79,606. Contingent liabilities In judgments 3940/2006 and 9904/2007, immediately appealed by the Company, the Court of Rome held it unlawful to value holdings in subsidiaries by the equity method pursuant to Article 2426(4) of the Italian Civil Code, as recommended by national accounting standard 21, which the Company has always diligently applied. The accounting method used by the Company is in line with all the different case law, civil and corporate doctrine on the subject, as well as with the national accounting standards precisely because it allows the economic result to be presented more clearly and correctly in the separate financial statements. This accounting method continues to meet with the acceptance of the Board of Statutory Auditors and the independent auditors. As pertinent, however, shown below are the effects on shareholders equity in the unlikely event that judgment 3940/2006 should become final: 1) Application of Article 2426(4) of the Italian Civil Code according to the rulings of the judgment (table in euros):
115

2003 REVALUATIONS: Co.Ge.Ma. S.p.A. - Aprilia (LT) Aeroponica Aprilia S.r.l. - Aprilia (LT) Colosseum 2000 S.c.p.a. - RM Salcost Finance Ltd - Dublin (IRL) S.I.Ba. S.p.A. RM Group. d'enterprise Sal.It. - Khemisset (Morocco) Salini Nigeria Ltd - (Nigeria) TOTAL REVALUATIONS DEFERRED TAXES ON 2003 REVALUATIONS: Co.Ge.Ma. S.p.A. - Aprilia (LT) Aeroponica Aprilia S.r.l. - Aprilia (LT) Colosseum 2000 S.c.p.a. - RM Salcost Finance Ltd - Dublin (IRL) S.I.Ba. S.p.A. RM Group. d'enterprise Sal.It. - Khemisset (Morocco) Salini Nigeria Ltd - (Nigeria) DIVIDENDS DISTRIBUTED ON 2003 REVALUATIONS: Co.Ge.Ma. S.p.A. - Aprilia (LT) Aeroponica Aprilia S.r.l. - Aprilia (LT) Group. d'enterprise Sal.It. - Khemisset (Morocco) Salini Nigeria Ltd - (Nigeria) TOTAL DIVIDENDS DISTRIBUTED CHANGES FROM COMPANIES LIQUIDATED/DISPOSED OF ON 2003 REVALUATIONS: Colosseum 2000 S.c.p.a. - RM S.I.Ba. S.p.A. RM Salcost Finance Ltd - Dublin (IRL) Aeroponica Aprilia S.r.l. - Aprilia (LT) Group. d'enterprise Sal.It. - Khemisset (Morocco) TOTAL CHANGES FROM COMPANIES LIQUIDATED/DISPOSED OF REVERSAL OF DEFERRED TAXES ON 2003 REVALUATIONS: Co.Ge.Ma. S.p.A. - Aprilia (LT) Group. d'enterprise Sal.It. - Khemisset (Morocco) S.I.Ba. S.p.A. RM Colosseum 2000 S.c.p.a. - RM Salcost Finance Ltd - Dublin (IRL) Aeroponica Aprilia S.r.l. - Aprilia (LT) Salini Nigeria Ltd - (Nigeria) 113,347 35,928 284 64,261 209,053 1,994,428 9,916,181 12,333,480
(1,870) (593) (5) (1,060) (3,449) (32,908) (163,617) (203,502) (113,347) (27,898) (1,457,561) (9,916,181) (11,514,986)
(284) (209,053) (64,261) (8,030) (536,867) (818,495)
1,870 32,908 3,449 5 1,060 593 163,617 203,503
RESIDUAL 2003 REVALUATIONS TO BE REALISED PROFIT FOR THE YEAR 2003 ALLOCATED TO NON-DISTRIBUTABLE RESERVE PURSUANT TO ARTICLE 2426(4) OF THE ITALIAN CIVIL CODE, AS PER THE SHAREHOLDERS RESOLUTION OF 7 JULY 2004
(0) (7,848,733)
ADDITIONAL NON-DISTRIBUTABLE RESERVE AS PER ARTICLE 2426(4) OF THE ITALIAN CIVIL CODE, TO BE ESTABLISHED BY DRAWING 50.4 MILLION FROM DISTRIBUTABLE RESERVES
none
2) Valuation of receivable with the Zimbabwe joint venture according to the rulings of the judgment - Full write-down of receivable recognised on 2003 financial statement - Write-down made in the first half of 2007 - Write-down included in 2006 financial statements for contractual risks provision - Difference (7,298) 6,442 1,202 none
No effects are noted on shareholders equity or on earnings for the year at 30 June 2012. Even in the unlikely event that the aforementioned judgment should become final, the reserves available and the allocations made are sufficient to absorb its effects.
116
In addition, it is noted that even if judgment 9904/2007 should become final, there would be no effects on the Companys shareholders equity, as it appears from the analysis below (table in euros):
2002 REVALUATIONS: Co.Ge.Ma. S.p.A. - Aprilia (LT) Aeroponica Aprilia S.r.l. - Aprilia (LT) Salini Hydro Ltd (Bumbuna Falls European Consortium for Contract C Ltd) Colosseum 2000 S.c.p.a. - RM Salcost Finance Ltd - Dublin (IRL) Salcost France s.a. - Paris (F) S.I.Ba. S.p.A. RM Group. d'enterprise Sal.It. - Khemisset (Morocco) Madonna dei Monti S.r.l. Salini Nigeria Ltd - (Nigeria) SUBTOTAL TOTAL REVALUATIONS DEFERRED TAXES ON 2002 REVALUATIONS: Co.Ge.Ma. S.p.A. - Aprilia (LT) Aeroponica Aprilia S.r.l. - Aprilia (LT) Salini Hydro Ltd (Bumbuna Falls European Consortium for Contract C Ltd) Colosseum 2000 S.c.p.a. - RM Salcost France s.a. - Paris (F) Salcost Finance Ltd - Dublin (IRL) S.I.Ba. S.p.A. RM Group. d'enterprise Sal.It. - Khemisset (Morocco) Madonna dei Monti S.r.l. Salini Nigeria Ltd - (Nigeria) DIVIDENDS DISTRIBUTED ON 2002 REVALUATIONS: Co.Ge.Ma. S.p.A. period 2003 Co.Ge.Ma. S.p.A. period 2004 Co.Ge.Ma. S.p.A. period 2005 Aeroponica Aprilia S.r.l. - period 2002 Aeroponica Aprilia S.r.l. - period 2003 Aeroponica Aprilia S.r.l. - period 2004 Aeroponica Aprilia S.r.l. - period 2005 Aeroponica Aprilia S.r.l. - period 2006 S.I.Ba. S.p.A. - period 2003 Group. d'enterprise Sal.It. - period 2005 Salini Nigeria Ltd - period 2002 Salini Nigeria Ltd - period 2003 Salini Nigeria Ltd - period 2004 Salini Nigeria Ltd - period 2005 Salini Nigeria Ltd - period 2006 TOTAL DIVIDENDS DISTRIBUTED CHANGES FROM COMPANIES LIQUIDATED/DISPOSED OF ON 2003 REVALUATIONS: S.I.Ba. S.p.A. - liquidation 2004 Salcost Finance Ltd - Dublin (IRL) Colosseum 2000 S.c.p.a. - RM TOTAL CHANGES FROM COMPANIES LIQUIDATED/DISPOSED OF REVERSAL OF DEFERRED TAXES ON 2003 REVALUATIONS: Co.Ge.Ma. S.p.A. - Aprilia (LT) Colosseum 2000 S.c.p.a. - RM Group. d'enterprise Sal.It. - Khemisset (Morocco) S.I.Ba. S.p.A. RM Salcost Finance Ltd - Dublin (IRL) Aeroponica Aprilia S.r.l. - Aprilia (LT) Salini Nigeria Ltd - (Nigeria) Total 760,269 233,102 2,570,546 1,926 13,088 28,733 927,832 242,439 74,146 13,304,366 18,156,448 Period 2002 120,424 52,311 34,173 1,926 1,860 0 146,909 0 74,146 10,817,201 11,248,951 18,156,448 Prior profits 639,846 180,791 2,536,373 0 11,228 28,733 780,923 242,439 0 2,487,165 6,907,497
(258,492) (66,675) (349,594) (655) (488) (223) (315,463) (32,972) (25,210) (1,492,990)
(40,944) (17,786) (4,648) (655) 0 (32) (49,949) 0 (25,210) (1,471,139) (2,542,761)
(217,548) (48,889) (344,947) 0 (488) (191) (265,514) (32,972) 0 (21,850)
(316,000) (100,000) (344,269) (37,000) (52,000) (35,000) (99,000) (10,102) (850,000) (242,439) (2,326,500) (1,652,707) (1,057,358) (3,024,517) (5,243,284)
(760,269)
(233,102) (850,000) (242,439)
(13,304,366) (15,390,176)
(15,390,176)
(77,832) (13,088) (1,926) (92,846)
258,492 655 32,972 315,463 223 66,675 1,492,990 2,167,468
RESIDUAL 2002 REVALUATIONS TO BE REALISED PROFIT FOR THE YEAR 2002 ALLOCATED TO NON-DISTRIBUTABLE RESERVE PURSUANT TO ARTICLE 2426(4) OF THE ITALIAN CIVIL CODE, AS PER THE SHAREHOLDERS RESOLUTION OF 3 JULY 2003 ADDITIONAL NON-DISTRIBUTABLE RESERVE AS PER ARTICLE 2426(4) OF THE ITALIAN CIVIL CODE, TO BE ESTABLISHED BY DRAWING 50.4 MILLION FROM DISTRIBUTABLE RESERVES
2,298,134 (10,231,780)
none
117
31.
Subsequent events
For significant events occurring after the end of the period in June 2012 see the Interim Directors Report.
118
32.
Salini Costruttori Group companies

Registered office Share capital x1,000 % stake Participating firms
(/000)
Parent company Salini Costruttori S.p.A. Fully consolidated subsidiaries Salini S.p.A. Todini Costruzioni Generali S.p.A. Salini Hydro Ltd Co.Ge.Ma. S.p.A. Metro B S.r.l. Metro B1 S.c. a r.l. RI.MA.T.I. S.c. a r.l. Salini Nigeria Ltd Zeis S.r.l. Immobiliare San Vittorino Infernetto S.r.l. Plus S.r.l. Dirlan S.r.l. Nores S.r.l. Consorzio Tiburtino Joint Venture Salini Impregilo Salini Bulgaria AD TB Metro S.r.l. Madonna dei Monti S.r.l. Hemus Motorway AD Sa.Co.Lav. S.c. a r.l. in liquidation Salini Malaysia SDN. BHN Salini Polska sp.zoo CMT I/S Salini India Private Ltd Salini Kolin CGF Joint Venture Sa.Ma. S.c.ar.l. in liquidation JV Todini Akkord Salini Costruttori JV Todini Takenaka LLCC Corso del Popolo S.p.A. Corso del Popolo Engineering S.c.a.r.l. Consorzio FAT EURL Todini Algeri GMTI S.c.a.r.l. Groupement Sci Sonatro Consorzio Todini Aktor Metro Marmore S.c.a.r.l. in liquidation Maver S.c.a.r.l. in liquidation Nobiallo S.c.a.r.l. in liquidation Perugia 219 S.c.a.r.l. Piscine S.c.r.l.
Milan
62,400
Rome Rome Dublin (Ireland) Rome Rome Rome Rome Nigeria Rome Rome Rome Rome Rome Rome Rome Mukorsi (Zimbabwe) Sofia (Bulgaria) Rome Rome Sofia (Bulgaria) Rome Kuala Lumpur Warsaw Copenhagen India Turkey Rome Rivne Ukraine Baku Azerbaijan Terni Rome Rome Algiers (Algeria) Algiers (Algeria) Algiers (Algeria) Athens (Greece) Rome Rome Rome Pantalla di Todi (PG) Rome
62,400 56,907 5 1,032 20,000 100 100 Naira 10,000 10,000 819 10 765 46 100 10 8 Lev 50 100 46 Lev 1,300 10 Myr 1,100 Pln 393 0 14 4 0 100 0 1,200 10 46 63 11 0 0 10 10 10 10 10
100.00% Salini Costruttori S.p.A. 77.7141% Salini S.p.A. 100.00% Salini S.p.A. 100.00% Salini S.p.A. 52.52% Salini S.p.A. 80.70% Salini S.p.A. 83.42% Salini S.p.A. 99.00% Salini S.p.A. 1.00% Co.ge.ma. S.p.A. 100.00% Salini Costruttori S.p.A. 93.00% Zeis S.r.l. 100.00% Zeis S.r.l. 55.46% Zeis S.r.l. 100.00% Plus S.r.l. 87.12% Plus S.r.l. 87.17% Plus S.r.l. 99.90% Salini S.p.A. 100.00% Salini S.p.A. 51.00% Salini S.p.A. 100.00% Salini Costruttori S.p.A. 51.00% Salini S.p.A. 100.00% Salini S.p.A. 90.00% Salini S.p.A. 10.00% Co.Ge.Ma. S.p.A. 100.00% Salini S.p.A. 59.99% Salini S.p.A. 95.00% Salini Costruttori S.p.A. 5.00% Co.Ge.Ma. S.p.A. 38.00% Salini S.p.A. 99.00% Salini S.p.A. 25.00% Salini S.p.A. 40.00% Todini Costruzioni Generali S.p.A. 60.00% Todini Costruzioni Generali S.p.A. 55.00% Todini Costruzioni Generali S.p.A. 55.00% Todini Costruzioni Generali S.p.A. 99.00% Todini Costruzioni Generali S.p.A. 1.00% Co.Ge.Ma. S.p.A. 100.00% Todini Costruzioni Generali S.p.A. 100.00% Todini Costruzioni Generali S.p.A. 60.00% Todini Costruzioni Generali S.p.A. 55.00% Todini Costruzioni Generali S.p.A. 88.49% Todini Costruzioni Generali S.p.A. 100.00% Todini Costruzioni Generali S.p.A. 90.00% Todini Costruzioni Generali S.p.A. 55.00% Todini Costruzioni Generali S.p.A. 70.00% Todini Costruzioni Generali S.p.A.
119

Piscine dello Stadio S.r.l. Todini Central Asia Groupement Todini Enaler Groupement Todini Hamila Terni Astana (Kazakhstan) Algiers (Algeria) Sousse (Tunisia) 870 1,438 0 0 70.00% Todini Costruzioni Generali S.p.A. 100.00% Todini Costruzioni Generali S.p.A. 84.00% Todini Costruzioni Generali S.p.A. 100.00% Todini Costruzioni Generali S.p.A.
Subsidiaries consolidated according to the equity method Salcost France S.r.l. in liquidation Salini Rus OOO Albacem 2007 in liquidation Consorzio Costral in liquidation Edilfi S.c.a.r.l. in liquidation Todedil S.c.a.r.l. in liquidation Paris (France) Moscow (Russia) Tirana (Albania) Rome Rome Todi (PG) 15 74 1 20 10 10 100.00% Salini Costruttori S.p.A. 99.00% Salini S.p.A. 100.00% Todini Costruzioni Generali S.p.A. 70.00% Todini Costruzioni Generali S.p.A. 100.00% Todini Costruzioni Generali S.p.A. 85.00% Todini Costruzioni Generali S.p.A.
Associates consolidated according to the equity method Ga.bi.re. S.r.l. Con.Sal. S.c.n.c. in liquidation Forum S.c. a r.l. Group. d'entre. Salini Strabag Groupement Italgisas in liquidation Ital.Sa.Gi. Sp.Z.O.O. Joint Venture Salini-Necso S.Ruffillo S.c. a r.l. Casada S.r.l. Immobiliare Marinella S.r.l. Alburni S.c.a.r.l. in liquidation Bata S.r.l. in liquidation C.P.R. 2 C.P.R. 3 Colle Todi S.c.a.r.l. in liquidation Cons Pizzarotti Todini .Keff-Eddir Cons. Aft in liquidation Cons.Astaldi-Federici-Todini Consorzio Kallidromo CUS (Consorzio Umbria Sanit) Galileo S.c.a.r.l. Irina S.r.l. in liquidation Risalto S.r.l. in liquidation Rupe di Orvieto S.c.a.r.l. in liquidation Scat 5 S.c.a.r.l. in liquidation Sedi S.c.a.r.l. Trasimeno S.c.a.r.l. in liquidation Valico S.c.a.r.l. in liquidation Variante di Valico S.c.a.r.l. in liquidation Co.Ge.Fin S.r.l. Rome Rome Rome Guinea Kenitra (Morocco) Katowice (Poland) Addis Ababa (Ethiopia) Rome Rome Rome Rome Bari Naples Naples Rome Parma Rome Rome Athens (Greece) Perugia Pantalla di Todi (PG) Naples Rome Orvieto (TR) Rome Rome Pantalla di Todi (PG) Rome Rome Rome 10 15 51 10 620 Zl. 40 20 60 98 10 7 102 2 2 10 100 46 100 29 10 10 103 89 29 26 10 10 10 90 10 60.00% Salini Costruttori S.p.A. 30.00% Salini S.p.A. 20.00% Salini S.p.A. 50.00% Salini S.p.A. 30.00% Salini S.p.A. 33.00% Salini S.p.A. 50.00% Salini S.p.A. 35.00% Salini S.p.A. 25.00% Zeis S.r.l. 33.33% Zeis S.r.l. 47.14% Todini Costruzioni Generali S.p.A. 27.55% Todini Costruzioni Generali S.p.A. 35.97% Todini Costruzioni Generali S.p.A. 35.97% Todini Costruzioni Generali S.p.A. 66.67% Todini Costruzioni Generali S.p.A. 0.01% Todini Costruzioni Generali S.p.A. 33.33% Todini Costruzioni Generali S.p.A. 49.95% Todini Costruzioni Generali S.p.A. 20.70% Todini Costruzioni Generali S.p.A. 31.00% Todini Costruzioni Generali S.p.A. 40.00% Todini Costruzioni Generali S.p.A. 36.00% Todini Costruzioni Generali S.p.A. 33.33% Todini Costruzioni Generali S.p.A. 33.33% Salini S.p.A. 42.86% Todini Costruzioni Generali S.p.A. 24.99% Todini Costruzioni Generali S.p.A. 34.00% Todini Costruzioni Generali S.p.A. 30.00% Todini Costruzioni Generali S.p.A. 50.00% Todini Costruzioni Generali S.p.A. 33.33% Todini Costruzioni Generali S.p.A. 33.33% Salini S.p.A. 51.00% Todini Costruzioni Generali S.p.A.
120

Subsidiaries: Salini S.p.A. Salcost France S.r.l. in liquidation Subsidiaries of the subsidiary SALINI S.p.A.: Salini Rus OOO Subsidiaries of the subsidiary Todini S.p.A.: Albacem 2007 in liquidation Cogeca S.c.a.r.l. in liquidation Consorzio Costral in liquidation Edilfi S.c.a.r.l. in liquidation Todedil S.c.a.r.l. in liquidation 0 10 14 10 9 0 0 0 0 0 (1) (11) 0 (10) (0) 0 0 0 0 0 0 0 14 0 9 (77) (0) 0 (236) 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 8 0 0 0 0 0 0 0 0 0 8 0 0 10 14 10 9 0 0 0 0 0 (1) (11) 0 (10) (0) 0 0 0 0 0 (1) (1) 14 0 9 (77) (0) 0 (228) 0 0 0 0 0 0 0 73 0 0 0 0 0 73 0 0 0 73 73 0 120 0 0 0 0 0 0 0 120 0 0 0 (120) 0 0 0 0 0 0 0 0 0 0 0 (120) 0 120 0 0 0 0 0 (120) 0 0 0 0 0
Changes in equity investments

31 December 2011 Historical cost Revaluations/ Payments Write-downs/ Dividends Reclassifications/ acquisitions/ disposals Carrying amount Risks provision Reclassifications/ acquisitions/ disposals Dividends Changes in period Revaluations/ write-downs Provisions Provision reversal/ use Payments Total Historical cost Revaluations/ Payments 30 June 2012 Write-downs/ Dividends Reclassifications/ acquisitions/ disposals Carrying amount Risks provision
A) Holdings in subsidiaries
TOTAL SUBSIDIARIES
43
(23)
143
(314)
(47)
(39)
163
(23)
(47)
94
(306)
143
(314)
(47)
(39)
94
(306)
B) Equity investments in associates Historical cost Associates G.A.B.I.RE. S.r.l. Associates of the subsidiary SALINI S.p.A.: Con.Sal. S.c.n.c. - RM in liquidation (a) Forum S.c. a r.l. - RM Group. d'entreprises Salini Strabag Groupement Italgisas - Kenitra (Morocco) (IN LIQUIDATION) Ital.Sa.Gi. Sp.Z.O.O. Katowice (Poland) JV Salini Acciona Risalto S.r.l. RM (IN LIQUIDATION) S. Ruffillo RM Variante di Valico S.c. a r.l. (IN LIQUIDATION) - Associates of the subsidiary ZEIS S.r.l.: Casada S.r.l. - RM Immob.Marinella S.r.l. Total associates of SALINI + SALINI COSTRUTTORI (27) 2,046 2,657 3,782 714 4,496 5 10 5 186 325 9 30 21 30 0 0 0 0 0 0 0 0 0 17 0 Revaluations/ Payments
31 December 2011 Write-downs/ Dividends Reclassifications/ acquisitions/ disposals Carrying amount Risks provision Reclassifications/ acquisitions/ disposals Dividends
Changes in period Revaluations/writ e-downs Provisions Provision reversal Payments Total Historical cost Revaluations/ Payments
30 June 2012 Write-downs/ Dividends Reclassifications/ acquisitions/ disposals Carrying amount Risks provision
(17)
(201)
(201)
(193)
201
670
477
687
(210)
(201)
276
(5) 0 0 (186) (325) 0 0 0 0
0 0 0 0 0 0 0 0 0
0 10 5 0 0 9 30 21 30
(12) 0 0 (842) (222) 0 (2) 0 (5)
0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0
5 10 5 186 325 9 30 21 30
0 0 0 0 0 0 0 0 0
(5) 0 0 (186) (325) 0 0 0 0
0 0 0 0 0 0 0 0 0
0 10 5 0 0 9 30 21 30
(12) 0 0 (842) (222) 0 (2) 0 (5)
(150) (102) (785)
0 0 0
3,605 2,658 6,369
0 0 (1,285)
0 0 (201)
0 0 0
67 (69) (195)
0 0 0
0 0 201
0 50 720
67 (19) 525
(27) 2,096 3,377
3,849 714 4,563
(150) (171) (1,047)
0 0 (201)
3,672 2,639 6,692
0 0 (1,084)
Associates of the subsidiary TODINI S.p.A.: Alburni S.c.a.r.l. in liquidation Bata S.r.l. in liquidation Co.ge.fin. S.r.l. Colle Todi S.c.a.r.l. in liquidation C.P.R. 3 Cons.AFT in liquidation** Cons.Astaldi-Federici-Todini** C.P.R. 2 Cons Pizzarotti Todini .Keff-Eddir* CUS (Consorzio Umbria Sanit) Consorzio Kallidromo Galileo S.c.a.r.l. Irina S.r.l. in liquidation Risalto S.r.l. Rupe Orvieto S.c.a.r.l. Scat 5 S.c.a.r.l. Sedi S.c.a.r.l. Trasimeno S.c.a.r.l. in liquidation Valico S.c.a.r.l. Variante di Valico 3 28 9,213 7 1 15 50 1 50 3 8 4 308 30 0 6 3 3 5 30 20 74 0 2 1 0 0 2 0 0 0 0 773 0 0 0 0 0 0 2 0 (28) (1,827) 0 0 0 (50) 0 0 0 (2) 0 (360) (6) 0 0 0 0 3 (2) 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 23 74 7,386 9 2 15 0 3 50 3 6 4 721 24 0 6 3 3 8 30 0 0 0 0 0 0 (503) 0 0 0 0 0 0 0 (68) 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 (1) (0) (581) 0 0 0 0 (2) 0 0 0 0 (33) 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 39 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 (1) (0) (581) 0 0 0 39 (2) 0 0 0 0 (33) 0 0 0 0 0 0 0 3 28 9,213 7 1 15 50 1 50 3 8 4 308 30 0 6 3 3 5 30 20 74 0 2 1 0 0 2 0 0 0 0 773 0 0 0 0 0 0 2 (1) (28) (2,408) 0 0 0 (50) (2) 0 0 (2) 0 (393) (6) 0 0 0 0 3 (2) 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 22 74 6,805 9 2 15 (0) 1 50 3 6 4 688 24 0 6 3 3 8 30 0 0 0 0 0 0 (464) 0 0 0 0 0 0 0 (68) 0 0 0 0 0
Total TODINI associates
9,770
874
(2,272)
8,370
(571)
(618)
39
(579)
9,770
874
(2,890)
7,754
(532)
TOTAL ASSOCIATES
12,427
5,370
(3,057)
14,739
(1,856)
(201)
(813)
240
720
(54)
13,147
5,437
(3,937)
(201)
14,448
(1,616)
14,739
(1,856)
(201)
(813)
240
720
(54)
14,448
(1,616)
31 December 2010 Historical Cost D) Other enterprises Spoleto Crediti e Servizi S. Coop. a r.l. Imprebanca S.p.A. BCC Roma Other enterprises under the subsidiary SALINI S.p.A.: Impregilo S.p.A. Consorzio Iricav Due Others (four minor equity investments) Other companies of the subsidiary ZEIS S.r.l.: Azioni Roma Mercato Total other companies of SALINI + SALINI COSTRUTTORI Other enterprises under the subsidiary Todini S.p.A.: Cons. IECAF Costruttori Rom.Riun.Grandi Opere S.p.A. A.Constructor JV Kallidromo JV Todini diekat Nomisma S.p.A. CAAF Interregionale Total other TODINI enterprises 1 52 6 8 27 0 93 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 52 6 8 27 0 93 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 426 123,898 0 0 0 (3) 0 0 426 123,896 0 0 0 146,197 0 0 122,739 71 78 0 0 0 0 0 (3) 0 0 0 122,739 71 75 0 0 0 146,197 0 0 0 0 0 84 500 0 0 0 0 0 0 0 0 0 0 84 500 1 0 0 0 0 0 0 0 0 0 Revaluations/ Payments Write-downs/ Dividends Reclassifications/ acquisitions/ disposals Carrying amount Risks provision Reclassifications/ acquisitions/ disposals Dividends
Changes in period Revaluations/ write-downs Provisions Provision reversal Payments Total Historical Cost Revaluations/ Payments
30 June 2012 Writedowns/Dividen ds Reclassifications/ acquisitions/ disposals Carrying amount Risks provision
0 0 0
0 0 0
0 0 0
0 0 0
0 0 0
84 500 0
0 0 0
0 0 0
0 0 0
84 500 0
0 0 0
112,069 0 0
0 0 0
0 0 0
0 0 0
258,265 0 0
122,739 71 78
112,069 0 0
0 0 (3)
146,197 0 0
381,004 71 75
0 0 0
0 112,069
0 0
0 0
0 0
0 258,265
426 123,898
0 112,069
0 (3)
0 146,197
426 382,160
0 0
0 0 0 0 0 0 0
0 0 0 0 0 0 0
0 0 0 0 0 0 0
0 0 0 0 0 0 0
0 0 0 0 0 0 0
1 52 6 8 27 0 93
0 0 0 0 0 0 0
0 0 0 0 0 0 0
0 0 0 0 0 0 0
1 52 6 8 27 0 93
0 0 0 0 0 0 0
TOTAL OTHER ENTERPRISES
123,991
(3)
123,989
146,197
112,069
258,265
123,991
112,069
(3)
146,197
382,254
(a) Equity interest in an enterprise resulting in unlimited liability Article 2361 of the Italian Civil Code 123,989 0 146,197 0 112,069 0 0 0 258,265 382,254 0
138,870
(2,170)
145,948
111,255
248
720
258,172
396,795
(1,922)
For the Board of Directors CEO Pietro Salini
121
Auditorsreviewreportontheinterimconsolidatedfinancialstatements (TranslationfromtheoriginalItaliantext) To the Board of Directors of Salini Costruttori S.p.A. 1. We have reviewed the interim consolidated financial statements, comprising the consolidated statement of financial position, the consolidated income statement, the consolidated statement of comprehensive income, the consolidated statement of changes in shareholders equity, the consolidated cash flow statement and the related notes to financial statements, of Salini Costruttori S.p.A. and its subsidiaries (the Salini Costruttori Group) as of June 30, 2012. Management of Salini Costruttori S.p.A. is responsible for the preparation of the interim consolidated financial statements in conformity with the International Financial Reporting Standards applicable to interim financial reporting (IAS 34) as adopted by the European Union. Our responsibility is to issue this review report based on our review. These interim consolidated financial statements have been prepared, on a voluntary basis, in conformity with the International Financial Reporting Standards applicable to interim financial reporting (IAS 34) as adopted by the European Union, for presentation purposes only, in accordance with the prevailing standards applicable to construction companies, taking also into account the access procedures of international tender offers. We conducted our review in accordance with review standards recommended by Consob (the Italian Stock Exchange Regulatory Agency) in its Resolution no. 10867 of July 31, 1997. Our review consisted mainly of obtaining information on the accounts included in the interim consolidated financial statements and the consistency of the accounting principles applied, through discussions with management, and of applying analytical procedures to the financial data presented in these consolidated financial statements. Our review did not include the application of audit procedures such as tests of compliance and substantive procedures on assets and liabilities and was substantially less in scope than an audit conducted in accordance with generally accepted auditing standards. Accordingly, we do not express an audit opinion on the interim consolidated financial statements as we expressed on the annual consolidated financial statements. With respect to the consolidated financial statements of the prior year and the interim consolidated financial statements of the corresponding period of the prior year, presented for comparative purposes, reference should be made to our reports issued on 1 August 2012 and on 14 March 2012, respectively.
2.
3.
Based on our review, nothing has come to our attention that causes us to believe that the interim consolidated financial statements of Salini Costruttori Group as of June 30, 2012 are not prepared, in all material respects, in conformity with the International Financial Reporting Standards applicable to interim financial reporting (IAS 34) as adopted by the European Union. As disclosed by the Directors in the notes to financial statements, the Court of first instance of Rome, with rulings n. 3940/2006 and n. 9904/2007, annulled the resolutions of the Salini Costruttori S.p.A. shareholders' meetings that had resolved upon the approval of the Companys financial statements for the years ended December 31, 2003 and 2002 and the respective distribution of dividends. The Company appealed against such rulings.
4.
Rome, February 7, 2013 Reconta Ernst & Young S.p.A. Signed by: Mauro Ottaviani, Partner
This report has been translated into the English language solely for the convenience of international readers.

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HALF-YEAR FINANCIAL REPORT SALINI COSTRUTTORI S.p.A.

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

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

SaliniS.p.A..43 Todini Costruzioni Generali S.p.A..48

INTERIM CONSOLIDATED FINANCIAL STATEMETS AT 30 JUNE 2012..54 NOTES TO FINANCIALSTATEMENTS...56

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

INTERIM DIRECTORS REPORT

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

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

INTERNAL CONTROL AND CORPORATE GOVERNANCE COMMITTEE

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

BOARD OF STATUTORY AUDITORS

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

KEY GROUP DATA

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

Group financial highlights

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

December 2011 5,019,590 3,227,770 1,086,278 1,047,483 10,381,121

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

December 2011 5,735,072 3,230,291 999,517 416,241 10,381,121

June 2011 198,395 92,642 22,524 281,298 594,859

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

June 2011 177,939 32,693 139,926 244,301 594,859

Summary personnel figures PERSONNEL COSTS NUMBER OF EMPLOYEES

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

Macroeconomic scenario and reference markets

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

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

Quality, Safety and Environment

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

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

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

Creation of a National Champion

Research and development

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

Analysis of the Groups income, financial position and cash flow

Income and operating performance of the Group

30 June 2011 Change %

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

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

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

Net financial position

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

June 2012 288,131 4 (470,267) (182,132) 24,497 (218,340) (193,843) (375,975) 0

2011 542,998 14 (293,338) 249,674 24,295 (227,921) (203,626) 46,048

Change (254,867) (10) (176,929) (431,806) 202 9,581 9,783 (422,024)

Net Debt/Equity Net Debt/EBITDA

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

Reclassified consolidated statements

June 2011 596,518 13,067 97.9% 2.1%

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

Reclassified statement of financial position

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

Portfolio of work in hand

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

Business performance by geographical area

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

Railways and metro systems Civil buildings Roads and motorways

1,574.2 15% 78.1 0.8% 21.1 0.2% 1,673.4 16% 39

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

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

Main Group companies

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