Finaval Consolidated Financial Statements 2007

FINAVAL SPA
Consolidated Financial Statements

as at December 31, 2007
Subject to the direction and co-ordination as per article 2497 of the Civil Code
of Finaval Holding SpA
FINAVAL SPA - CONSOLIDATED FINANCIAL STATEMENTS AT DECEMBER 31, 2007
INDEX
Mission
Group profile
Group structure
Letter to the shareholders
Highlights
The Stock Exchange quotation process
The macro-economic scenario
Business sectors and markets
The fleet, commercial activity, maintenance
Quality, security and environment
Human resources
Operating performance. Balance sheet and financial performance
Management of business risks
Transactions with companies of the Group
Other information
Glossary
Consolidated financial statements at December 31, 2007
Consolidation principles and scope - Accounting principles and policies
Notes to the consolidated financial statements
Attachment 1 - Transition to IFRS
Report of the board Statutory Auditors
Report of the Independent Auditors
FINAVAL SPA Pag. 3

FINAVAL SPA
The Board of Directors Giovanni Fagioli - Chairman

in office until the approval of Stefano Petrucciani
the accounts at December 31, 2009 Angelo Sani
Francesco Zofrea
Paolo Francesco Lo Bue
Paul Thomas
Mark John Richardson
Christopher James Kernon
Jeffrey William Dellapina
The Board of Statutory Auditors Chairman of the Board

in office until the approval of Angelo Ghio
the accounts at December 31, 2007 Standing members
Maria Altamura
Fabio Senese
Independent Auditors Deloitte & Touche S.p.a.
Share Capital Euro 32,293,000.00 - fully paid-in
Registered office Via M. Bufalini 8 - 00161 ROME

Tel. +39 06 44067.1 - Fax +39 06 44067.777
Cod. Fisc. 02596490827 R.E.A. 629316
www.finaval.com
Company which exercises direction and

co-ordination as per art. 2497 of the Civil Code Finaval Holding SpA
FINAVAL SPA Pag. 4

MISSION
The Finaval Group is focused on becoming a key player in European “energy” logistics.
With its affiliates, the Finaval Group boasts a long and consolidated tradition in the areas of petroleum and
petrochemical product Shipping, Engineering and Logistics, featuring strong partnerships with some of the
world’s largest companies operating in the field.
Finaval’s objective is to create value that is capable of satisfying the expectations of all those who are
involved with the Group.
This will be achieved by continuing to improve its cost base and the quality of the products and services its
provides to its customers, as well as focusing attention on the needs of its employees and the pursuit of
sustained growth, including a thorough evaluation of the environmental impact of its own activities and the
development of new and more efficient technologies.
In order to achieve these objectives, the Finaval Group draws on a wealth of managerial and technical
experience from its human resources and focuses on their continued improvement.
FINAVAL SPA Pag. 5

PROFILE OF THE FINAVAL SUB-GROUP IN THE SHIPPING SECTOR - FINAVAL

SHIPPING SECTOR – FINAVAL
FINAVAL is one of the most important European companies in the energy product
shipping sector and it aims to become a key player in “energy” logistics.
The reliability of its ships, which are amongst the first in the world to use a double-hull,
gives increased protection to both the ships cargo and to the environment. The
qualification of its crews, along with continuous maintenance and the use of the most modern technologies
and operating standards (that are in compliance with the most recent regulations), have brought the Finaval
Group to the attention of major multinational oil companies and earned it a well-deserved reputation of
reliability, professionalism and safety.
Attention to the diverse needs of its customers whilst offering a wide range of highly qualified services and its
presence in the strategic areas of transportation are the factors that have led to the success that the Finaval
Group enjoys today. The Finaval Group now enjoys a reputation for efficiency, professionalism and
convenience that national and international markets demand.
COAL LOGISTICS SECTOR – VIANN LOG/MBS

The company MBS - Mediterranean Bulk System N.V. - has been involved in the
storage, logistics and transportation of the coal sector for many years.
Its activities are carried out at the Croatian port of Rijeka – Bakar and the Slovenian
port of Koper. MBS has signed contracts for the unloading and storage of coal for
electrical power plants on the Adriactic coast with both of these ports.
By using port terminals with which it has collaborated for more than ten years and focusing on continued
technical improvements, M.B.S./VIANN LOG offers transportation services to a variety of industrial users. They
can provide ships with elevated draught, for the storage of products, with the possibility of mixing and
blending and reloading and distribution with smaller ships.
ENGINEERING & SYSTEMS SECTOR – KTI MANAGEMENT/TECHNIP KTI

TECHNIP KTI SpA is a process engineering company with more than thirty years of
experience in the planning and realisation of systems for chemical, petrochemical
and refinery industries with annual production activity of more than 400,000 service
hours. Its client list ranges from major oil companies to chemical, petrochemical, pharmaceutical and food
industries to which TECHNIP KTI supplies a wide range of services from consultation on feasibility studies to the
supply of turnkey systems and management and maintenance, operating as general contractor for the
customer.
The development and continued updating of its own technologies, a nucleus of process specialists and more
than 500 projects have made TECHNIP KTI a global technology leader.
PROJECT FORWARDING SECTOR – FINAVAL OFFSHORE SRL

The establishment of Finaval Offshore, which took place in the final months of 2007, is in
line with the Group’s strategy of developing added value high-technology transportation
and logistics.
This initiative, although it features strong new entrepreneurial ideas, is based on the continued respect for the
traditions of the Finaval Holding Group, which had operated in this sector for more than a decade and up until
2001 developing its management skills and business relationships.
FINAVAL SPA Pag. 6

STRUCTURE OF THE FINAVAL SUB-GROUP AT 31/12/2007
FINAVAL HOLDING
50% 100% 100% 29,24%

75%
VIANN LOG LdA Finaval Finaval Sofipart S.r.l.
Finaval SpA
100% Aviation S.r.l. Offshore S.r.l.
76,1%
MBS Nv KTI M. SpA
75%
TECHNIP KTI SpA
Project
Shipping Coal Logistics Forwarding Power
Air Cargo
Finaval Subholding details
FINAVAL HOLDING
25% 75%
Finaval SpA
50% 50% 100%

Novamar International Energetica
Scarl in liquidazione Cabofin S.r.l.
Lda
50%
Naftilos AM Ltd
The main events in 2007 included:
the entry into the share capital of Finaval S.p.A. by Vitol B.v., one of the major global players in the trading
and shipping sector with a shareholding of 25%. In December 2007, an agreement was completed in
which Finaval S.p.A. approved a reserved paid-in share capital increase to the new shareholder for a
holding of 25%.
FINAVAL SPA Pag. 7

Finaval S.p.A. subscribed to a 50% holding in Cabofin S.r.l., operating in short range transportation of
derivative petroleum products.
in November 2007, the Group entered the “Project Forwarding” sector with the incorporation of the
company “Finaval Offshore S.r.l.”, which began operations in 2008;
a series of corporate operations took place in the “Engineering and Systems” sector, which involved the
creation of a sub-holding, Sofipart S.r.l., of which Finaval Holding S.p.A. currently has a holding of 29.24% of
the Share Capital.
In 2008:
in January, the Group exited the “Air Cargo” sector with the sale of its total investment in the company
“Finaval Aviation S.r.l.”.
through its subsidiary Energetica Lda, it attained a 50% holding in the newly incorporated Maltese
company Angelica Shipping Ltd. This company purchased a 46,000 dwt Product tanker, with scheduled
delivery in April.
Winning photos of the 2007 Finaval photo contest, by category:
Best artistic shot (D’Angelo Rosolino) Best detail shot (Demonte Paolo)
Best action shot (Marengo Eddy)
FINAVAL SPA Pag. 8

CHAIRMAN OF THE BOARD OF DIRETORS’ LETTER
Dear Shareholders,
In commenting on 2007, I must highlight the fact that the fiscal year which has just ended was an important
one in our Group’s history, and featured some significant decisions that will certainly influence our future plans
and development.
The year was especially important for Finaval, which, in addition to dealing with its complex day-to-day
operations, faced some important financial challenges.
From a management standpoint, Finaval continued the journey of growth begun in recent years, focusing on
the progressive and balanced expansion of the fleet and concentrating on investments aimed at reducing
the average age of the ships owned by the Group. In this regard, two additional Aframax ships were ordered
from the Korean shipyard Samsung, with delivery scheduled for 2010. Finally, to guarantee both the renewal of
the fleet and a balanced presence in the Product and Crude Oil sectors, agreements were signed for the sale
of M/T Neverland Soul and two of the new Aframax constructions (Hulls 1658 and 1659) in 2008, in order to
proceed with the purchase of four newly constructed 50,000 DWT vessels.
Moreover, throughout the year, we have continued to search for important synergies with competent and
qualified operators in our sector. The joint venture with the Greek group Ancora became operative with the
acquisition and excellent performances by M/T Naftilos AN and together with the purchase, during the first
months of 2008, of another 46,000 DWT Product tanker, we continued to consolidate the excellent business
relationship we have established with the Italian group Cabotaggi S.p.A. through the “Cabofin” joint venture,
ensuring our presence in the short-range oil transport sector, which we consider to be highly strategic.
On the financial front, the second half of the year featured Finaval's stock market listing project. The objective
of this operation was the company’s continued development, in the belief that placement on the market
could enable the company's intrinsic value to be fulfilled.
However, the negative market conditions which occurred prevalently during the final phase of the process led
us to withdraw the offer.
In relation to the strategic-financial plan, and even before preparing the stock market listing, Finaval had been
studying programmes aimed at finalising agreements and consolidating partnerships with important players
operating in the oil industry which are targeted, on the one hand, at improving Finaval’s financial and
economic position by strengthening its own ability to complete and increase investment plans, and on the
other, at developing our know-how and creating important industrial synergies - also through expansion of the
shareholder base.
These objectives were achieved with the entry of a new minority shareholder, Vitol B.V., with which Finaval has
had an established business relationship for many years.
This expansion of the shareholder base, reserved for a key operator in the global oil industry like Vitol B.V., will
allow us to further improve our visibility in the markets in which we operate, creating a base with which we will
be able to attract additional investment.
Vitol will support Finaval by contributing, through its business experience, a strong and extensive presence in
the chartering market and offer financial backing, in order to increase fleet numbers in those sectors that both
FINAVAL SPA Pag. 9

companies consider to contain good profit margins, with the long-term objective of expanding Finaval’s
financial resources and capacity, thereby allowing it to become a key international player in the industry.
A part of this objective is also the judicious policy of the acquisition and divestment of ships of different
tonnage, as mentioned previously.
The strategy adopted for 2008 guarantees our presence in the different sectors of petroleum transportation
with ships of varying tonnage and allows us to forecast a positive operative performance, even in the
presence of a significant weakening of the Dollar, which is expected to be countered by a consistent
contribution in terms of profitability from the extraordinary capital gains on the afore-mentioned sale/purchase
activities.
The growth will continue thanks to the quality and values that characterise the Finaval Group and its team:
based on the achievement of results, its capacity to innovate and complete on international markets, loyalty,
correctness and transparency.
Finaval’s growth is based on the values that have guided the Group and will continue to guide it in the future.
In support of our business model, we confirm our commitment to help Finaval's growth and reach its future
objectives with a sense of responsibility and reliability, transparency and integrity: success is mainly measured
by the way in which it is achieved.
At the heart of our strategy is the central role we assign to our human resources - the importance of enhancing
each person’s abilities and skills and guaranteeing them a correct and stimulating work environment.
We are aware that any organisation’s performance is the sum of the people who work for it each and every
day with commitment, determination and passion, in order to transform it into a Group that is worthy of pride.
With such an important year coming to a close, we now look to future challenges, with a confidence that
derives from our company’s strength, the professionalism and dedication of our partners, the pressures to
adapt that are the basis of our actions and undiminished values which set us apart.
The Chairman
Giovanni Fagioli
FINAVAL SPA Pag. 10

HIGHLIGHTS
In 2007, Finaval SpA recorded a consolidated net profit of Euro 1,679 thousand. Consolidated revenues
from services totalled Euro 62,889 thousand, a decrease of approximately Euro 16,494 thousand from the
previous year as a result of the reclassification of the gas tanker sector among “Discontinued operations”.
The Ebitda was Euro 12,646 thousand. Amortisation and depreciation amounted to Euro 10,503 thousand.
Financial management was a net charge of Euro -1.2 million, an improvement of approximately Euro 681
thousand on 2006.
During 2007, the stock market listing process of company shares was initiated with the Italian Stock
Exchange. After the approvals obtained from both Consob and Borsa Italiana S.p.A. the process was
halted due to the extremely negative performances of the national and international financial markets.
The extraordinary costs incurred during the year, which were mainly related to the afore-mentioned stock
market listing transaction, amounted to Euro 2,731 thousand.
In January, Naftilos A. Marine Ltd, a company of which our Group holds a 50% shareholding, purchased
the 36,000 dwt product tanker Naftilos A.N.
During the course of the year, two new 115,000 dwt Aframax constructions (Hull 1780 and Hull 1781), twin
ships of orders in previous years, were ordered from the Samsung shipyards. These ships are scheduled for
delivery during the second half of 2010.
In April, along with the Italian Group Cabotaggi S.p.A., Finaval invested a 50% holding in a new company,
Cabofin S.r.l., which has been established for the management of Small Size Product ships for short-range
transport. This company began operating activities in September.
In December, a complex sale/purchase transaction for several ships was completed.
Specifically, the sale took place, to be completed in 2008, of 3 Aframax vessels, the Neverland Soul and 2
new constructions ordered at the Samsung Shipyard in 2005 (Hull 1658 and Hull 1659), for a total amount of
USD 227.5 million, and the purchase of 4 Product vessels of 50,000 Dwt, with delivery in 2008, for a total
investment of Euro USD 232 million. These transactions will result in cash inflows of approx. USD 22.4 million in
2008.
Agreements were reached with the Royal Bank of Scotland and Deutsche Schiffsbank for the financing of
two new constructions (Hull 1741 and Hull 1742) that were ordered from the Samsung Heavy Industries
shipyards in 2006.
At year end, with a view to strengthening the balance sheet and financial position and the consolidation
of its partnerships, an important agreement was reached with Vitol B.V., world leader in the petroleum
sector. As a result of this agreement, Finaval S.p.A. approved and implemented a share capital increase
with a 25% holding reserved for Vitol B.V. and also added four senior managers from the Anglo-Dutch
company to its Board of Directors.
In order for a better understanding and transparency of the principal economic and financial events of
the Group in the year, it was decided from the year 2007 to prepare the separate and consolidated
financial statements of the company Finaval SpA in accordance with IAS/IFRS (International Financial
Reporting Standards).
FINAVAL SPA Pag. 11

THE STOCK EXCHANGE QUOTATION PROCESS
The year 2007 for the Company was a year marked by important events, which we describe below. During the
year, in fact, Finaval underwent significant change through the decision, taken at the beginning of the year,
to commence the quotation process of the shares on the Italian Stock Market. The Company approved, within
its development plans, to undertake a public subscription offer of new shares through a share capital increase.
It was considered that the expansion of the shareholder base would allow for the provision of new resources
and, consequently, the strengthening of the financial position and balance sheet, as well as the capacity to
complete and increase the investment plans projected. On July 13, 2007, the Shareholders’ Meeting approved
the quotation of the ordinary shares of the company on the Italian Stock Exchange. At the end of the
application procedures authorisation was obtained for the quotation, first from Borsa Italiana S.p.A. and,
subsequently, on November 6, 2007, from Consob for the publication of the “Information Prospectus” relating
to the public subscription offer and to the admission of the shares on the Italian Stock Exchange.
The public offer took place between November 12 and November 29 and related to 10,380,000 newly issued
shares. It should be underlined that the offer was made in a period when the stock markets were experiencing
the full intensity of the crisis deriving from the “subprime” market which began in August with contained effects
and which, after a false stall, saw more consistent reductions in share prices in November. This general event
was accompanied by a further factor concerning the shipping sector which, following the publication of the
third quarter results of companies already listed, there was a general lowering by the analysts of the principal
market multiples with repercussions on earnings projections.
As a consequence of the above events the Company, although having obtained the necessary authorisations
and having covered its offer, decided to withdraw the Global Offer, due to the difficult national and
international financial market conditions, which resulted in a strong reduction in the placement price. This
decision was taken considering both the benefits deriving from the quotation of the company in terms of
image and prestige and the financial resources towards future business growth. It was considered that listing
the shares in such a difficult market would have meant the wish to pursue an objective in a rigid and short-
sighted manner without the correct dynamism that has always been the hallmark of Finaval S.p.A.
FINAVAL SPA Pag. 12

THE MACRO-ECONOMIC SCENARIO
The year 2007 saw the continuation in the recovery of the world economy, altbeit at a slower pace than in
2006.
Growth slowed in particular in the United States due to the effects from the American subprime crisis. Europe
however recorded robust growth driven by strong demand and progressive improvement in the labour
markets. As in 2006, the emerging countries in the Asiatic region - lead by China - recorded growth above the
average. From these general conditions the price of petrol, metals and food increased as well as in the energy
and raw material sectors and the emerging markets.
During 2007, the financial markets were affected by the problems in the real estate market and in the US
subprime. At the end of June, the provision of credit without limit by the banks, the fall in the prices of
residential property, the excessive dependence on the US securitisation financial sector and the mortgage
sector resulted in a radical revaluation of risks and a temporary stall in the trading of securitised mortgages.
A second key element in the international scenario was represented by the strong increase in energy, and
food raw material prices, due to a multitude of factors, amongst which was the high demand from the
emerging countries.
In relation to 2008, the prospects for the world economy continue to be unsettled. The world macroeconomic
scenario, in fact, is still dominated by the US real estate mortgage crisis which began last summer and has
major implications on the financial markets and world growth.
Particularly in the US, the real estate market crisis and the relative turbulence in the financial markets have
increasingly affected the economic outlook. After the rises in real estate prices and favourable credit
conditions induced a strong expansion in private consumption in recent years, the domestic economies in the
US are expected to return to increased savings, which could mitigate growth in consumption for a number of
years. Therefore, an imminent and robust economic recovery seems improbable; in fact, the American
economy is expected to remain weak also in 2009. The strong expansionist monetary and fiscal policy should
however contribute to stem the downturn avoiding a deep recession. Overall, the American economy in 2008
and in 2009 is expected to achieve contained growth (1.3% for each of the next two years) compared to its
normal growth. In recent months also the Euro zone has reduced its economic forecast, although not as
marked as in the USA. While in 2007 the economic growth in the Euro zone reached 2.6%, in 2008 and 2009 the
forecast growth is only approx. 1.5%.
There are also signs of a slowdown in Japan, which will end 2008 with growth of 1.5%, -20 b.p. compared to the
expectations in October. At present the crisis does not appear to have affected the emerging economies. The
IMF estimates GDP growth in China of 10% this year compared to 11.4% in 2007. The overall developing
economies are expected to grow by 6.9%, a reduction of 20 b.p. compared to the indications in October.
Growth in Africa is forecast at 7%, while Central and Easter Europe is forecast to grow at 4.6% and the former
states of the Soviet Union at 7%.
***********
FINAVAL SPA Pag. 13

In 2007, the price of crude oil saw continuous rises reaching over USD 110 per barrel at the beginning of 2008.
On the offer side there remains the difficulty of the producer countries to adjust to a growing demand due to
insufficient infrastructural investments in the upstream. These decisions are based on a very high level of
irreversibility and as such are impacted largely by economic-political uncertainty. The volatility in prices due to
speculative and geopolitical reasons and the impact of environmental factors could induce a certain caution
in the expansion of the offer in spite of the continual rising petroleum price. In addition, there are difficulties in
sourcing human resources and technology, the skills and the know-how, appropriate for exploration activities
and extraction technically and geographically more complex than in the past.
The weakness of the dollar is also an element which inevitably impacts the world economy and which does
not favour a decrease in the price of petroleum.
In fact, according to a recent study cited by the Financial Times, Venezuela will require a minimum price of
approximately USD 95 per barrel to maintain its international trade balance; this decreases to USD 70 for
Nigeria, USD 60 for Saudi Arabia and USD 50 for Kuwait and Qatar.
***********
In relation to the exchange rates and monetary policy, 2007 saw a strong weakening in the Dollar/Euro rate,
from Euro 1.317 at December 31, 2006 to Euro 1.4721 at December 31, 2007. The recent turbulence in the
financial markets consequent of the “subprime” mortgage crisis has increased the expectations of weakness
in the US Dollar. The prospects of recession relating to the US economy, as illustrated above, does not lead to
expectations of a recovery in the Dollar which should remain at current levels(1,50/1,60)..
Euro Interest rates rose steadily during the year and the Dollar interest rates declined in the final quarter. For the
expectations relating to 2008, it is underlined that in addition to the real economic performance, strong
impact will also arise from the monetary policy by the United States and by Europe, as seen at the beginning
of 2008, with substantial cuts in US interest rates in order to stimulate consumption and investment.
FINAVAL SPA Pag. 14

REFERENCE MARKET
Aframax Sector
The performance of the ships included in this segment, which are managed by the Finaval Group, was
approximately USD 28,200 per day, achieved through a mixture of spot and time charter revenues.
The spot market average for 2007 was approximately USD 31,400 compared with USD 33,800 in 2006, the time
charter (one year) market average was USD 33,160, similar to the previous year. This performance can be
attributed to the normal market dynamics and an increase in the fleet tonnage, which for this particular
segment, has grown by approximately 6.8% in the last 12 months. This sector today accounts for a tonnage of
Euro 79.8 million.
Growth estimates for the fleet at the end of the next year forecast the delivery of an additional 8.6 million dwt,
and scrapping is expected to be about 0.2 million dwt, with an overall increase of 10% in the tonnage on the
current amount.
The order book at year-end shows a tonnage of 29.7 million, equal to 37% of the current fleet, with deliveries
scheduled to arrive until the first part of 2012.
The “second-hand” price for the Aframax vessels has continued to grow, from an average of USD 68.5 million
in 2006 to USD 70.0 million at the end of 2007.
Medium-to long-term prospects in this sector remain mostly positive, thanks to forecasts for continued growth,
in the order of 4-5 per cent annually of global energy demands. In the short-term, there is the possibility of
some tension between supply and demand for transportation, due to the entry of new waterway transport
and the delay in the programmed demolition of old vessels, which even today, are able to provide interesting
freight opportunities. However, this demolition will be mandatory for all ships that fail to meet certain requisites
by 2010.
FINAVAL SPA Pag. 15

Product MR Sector
In this sector, the Finaval fleet is mainly involved with time charter contracts with profit sharing, with only the
M/T Natiflos in the spot market.
The spot market average for 2007 was approximately USD 26,000 compared with USD 27,300 during 2006; the
time charter (one year) market average was USD 20,300 compared with USD 21,000 in the previous year.
This pressure is mainly associated with the increased fleet tonnage, which for this specific segment, has grown
by approximately 7% in the past 12 months. This sector today accounts for a tonnage of Euro 58 million.
Growth estimates for the fleet for the end of next year forecast the delivery of another 9 million dwt and the
expected scrapping of about 1 million dwt, with an overall increase of 12% of tonnage on the current amount.
There are some factors associated with this issue which, despite the economic slowdown, should sustain the
petroleum shipping market, such as:
• Increase and relocation of refinery capacities compared to the geographical area of consumption;
• Increased demand for the shipping of vegetable products;
• Reduction of the fleets’ shipping capacity due to arbitration policies, tightening of inspection
procedures and increase in unloading and maintenance delays.
In fact, the “second-hand” price for products has continued to grow, from an average of USD 46.3 million in
2006 to USD 50.7 million at the end of 2007.
Moreover, the prospects for the sector are well grounded, especially with regard to the structural increases
forecast for refinery activities, particularly in the Far East, India and South America.
FINAVAL SPA Pag. 16

THE FLEET MANAGED

At December 31, 2007, the fleet of Finaval was as follows
SHIP HULL CLASSIFICATION DWT/Mc YEAR OWNERSHIP
Crude
Neverland Double Hull N/A 105,411 2003 Finaval
Neverland Soul Double Hull N/A 115,639 2004 Energetica (*)
Jag Lata Double Hull N/A 105,716 2003 The Gesco
Neverland Gold Double Hull N/A 114,800 2008 Finaval
Neverland Sky Double Hull N/A 114,800 2008 Finaval
TBN3 Double Hull N/A 114,800 2009 Finaval
Products Medium Range

Isola Verde Double Hull N/A 36,457 1994 Finaval
Isola Rossa Double Hull IMO II-Coated 40,727 1997 Finaval
Isola Gialla Double Hull IMO II-Coated 43,157 1999 Finaval
Isola Magenta Double Hull N/A 36,457 1994 Finaval
Naftilos AN Double Hull IMO III 37,379 2003 Naftilos AM (*)
Products Small size

Sichem Singapore Double Hull IMO II 13,141 2006 Eitzen Group
Stellaria Double Hull IMO II - IMO III 14,070 1994 Caliga
Curzola Double Hull IMO II - IMO III 14,070 1993 Caliga
Lpg
Gas Ice N/A Semi/Ref 3,366 m3 1991 Stealth
Gas Artic N/A Semi/Ref 3,366 m3 1992 Stealth
(*) Finaval Group
FINAVAL SPA Pag. 17

COMMERCIAL ACTIVITIES
The following table contains the details regarding the type of use for each ship.
SHIP USE CHARTERERS
Crude
Neverland Tc Reliance
Neverland Soul Spot J.V. Vitol -World wide
Jag Lata Tc - Spot Stena Bulk limited – World wide

Isola Verde Tc Mansel Oil limited
Isola Rossa Tc Mansel Oil limited
Isola Gialla Tc Mansel Oil limited
Isola Magenta Tc Mansel Oil limited
Naftilos AN Spot World wide

Sichem Singapore Spot Mediterranean Area
Stellaria Spot Mediterranean Area
Curzola Spot Mediterranean Area
Lpg
Gas Ice Tc Alfa Trade and Services
Gas Artic Tc Alfa Trade and Services
FINAVAL SPA Pag. 18

MAINTENANCE OF THE FLEET
During 2007, long-term maintenance (class renewal and/or intermediate class and/or improvement
interventions) and extraordinary maintenance work was carried out on the following vessels:
M/V NEVERLAND SOUL (Hull repair following a collision with Pos Leader, Singapore, January 2007)
M/V ISOLA ROSSA (Class Renewal, completed in dry-dock, Class confirmed until May 2010)
M/V ISOLA VERDE (Intermediate Class, complete with dry-dock, Class confirmed until February 2009)
LPG GAS ARCTIC (Class Renewal, completed in dry-dock, Class confirmed until October 2010)
M/V ISOLA MAGENTA (Intermediate Class, completed in dry-dock, Class confirmed until September 2009)
M/V NEVERLAND SOUL

The ship remained anchored in Singapore from 6/02/07 until 16/02/07 for hull repairs resulting from the collision
with the ship Pos Leader, which occurred in the Singapore canal on January 26, 2007.
Once repairs were finished, verifications were made regarding the Class (RINA and DNV) which was confirmed
until November 2009.
During the stoppage, a modification was made to the chain locker (upgrading) to allow for improved
stowage during recovery.
M/V ISOLA ROSSA

The ship remained at the DAEWOO shipyard in Mangalia (Romania) from 17/04/07 until 19/05/07.
During the stoppage, the main engines, the substations and generators, as well as a variety of equipment in
the engine room, on deck and on the bridge were inspected.
Since it was a class renewal inspection, the ship was put into dry-dock to allow the keel to be cleaned and
completely repainted with the use of “TBT free” type anti-vegetative and self-smoothing paint.
Under the surveillance of the class inspectors (RINA and BV), all of the load tanks were inspected and the
correctness of the “GOOD” classification of the protective treatment was confirmed.
All of the ballast compartments were inspected, verifying the integrity of the structures with thickness surveys
carried out by ultrasound.
A partial restoration of the coating in some of the ballast tanks was necessary and upon completion of these
interventions all of the ballast compartments were classified as “GOOD”.
Since the twin ship ISOLA GIALLA had displayed problems with the rudder fin in the past, special attention was
paid to structural verifications of this installation with local reinforcement interventions in order to avoid future
problems. These interventions were carried out under class surveillance. All of the rudder system components
(including the rudder machine as well as the related power units) were taken apart and accurately checked
as well as the entire rudder blade support/centralising system (bearings, bushings, etc.).
These interventions resulted in a prolonged ship stoppage, first in dry-dock and then in the quay, of at least 10
days.
Finally, special attention was paid to the elimination of the observations and the adoption of
recommendations received from the Oil Companies who inspected the ship up until its stoppage for
maintenance and repair work.
Then, the S-VDR system (Simplified Voyage Data Recorder) was installed, which is required by new regulations
as of the first docking after 1/07/2006.
FINAVAL SPA Pag. 19

Finally, during the stoppage, some modifications and improvements were made in order to correct
deficiencies that were found during the year and can be summarised as follows:
retro-fitting of remote control ballast valves;
supply and installation of the new sea anti-fouling system;
supply and installation of a fire alarm system in the sleeping quarters and pump room;
renewal of the bunker boarding line with another of greater diameter;
transformation of tank 81 from Diesel Oil to Fuel Oil with Low Sulphur Content;
installation of “ullage” portholes for load tanks;
upgrade of the boiler with the installation of two new generation burners
The ships left the shipyard with all of its class and statutory certifications renewed until May of 2012.
With the improvement interventions, we can confirm an increase in the ship’s value and that it will continue to
be in line with the highest international regulatory standards and, finally, that it fully satisfies the strictest policies
set by the Oil Companies.
M/V ISOLA VERDE

The ship remained at the DAEWOO shipyard in Mangalia (Romania) from 04/05/2007 until 01/06/2007.
During the stoppage the main engine had a complete overhaul, as did the power units and a number of
machines in the engine room and equipment on deck and on the captain’s bridge were also checked.
Since it was an intermediate class inspection, the ship was put into dry-dock to allow the keel to be cleaned
and completely repainted with the use of “TBT free” type anti-vegetative and self-smoothing paint.
Under the surveillance of the class inspectors (RINA and ABS), all of the load tanks were inspected and the
efficacy of the protective treatment was classified as “GOOD”.
All of the ballast compartments were inspected, verifying the integrity of the structures with thickness surveys
carried out by ultrasound.
The treatment of the ballast compartments was classified as “Fair” and the restoration intervention, given the
good condition of the sacrificial anodes, was postponed until the class renewal stoppage scheduled for 2009.
The most recent analyses of the oil in the rudder system had shown a presence of metals and therefore as a
preventative measure the rudder machine and its relative power units were taken off ship and completely
disassembled at the service centre where inspections and the consequent mechanical work were carried out.
After the work was complete, evolution tests were carried out to verify the perfect working condition of the
rudder system.
Finally, during the stoppage, some modifications and improvements were made in order to correct
deficiencies that were found during the year and can be summarised as follows:
installation of “ullage” portholes for load tanks;
installation of a new “S” band radar;
upgrade of the bulkhead flow load pump axes cooling system;
sanding and painting of the covered bridge
The vessel left the shipyard with all of its class and statutory certificates approved until February of 2009.
FINAVAL SPA Pag. 20

LPG GAS ARCTIC

The ship stayed in the Ravenna shipyard from 23/05/07 until 14/07/07.
Since it was a special survey, thickness surveys were carried out and all of the ballast compartments were
carefully inspected, under the surveillance of the Class Inspectors (RINA and BV) to verify the complete
integrity of the hull.
The interventions that were carried out included the complete inspection of the main engine and the
substations and generators as well as a range of equipment on the deck (compressors/ load pumps) and on
the bridge.
The ship was placed in dry-dock in order to clean and completely repaint the keel with the use of “TBT free”
type anti-vegetative and self-smoothing paint.
The vessel left the shipyard with all of its class and survey certificates renewed until October of 2012.
M/V ISOLA MAGENTA

The ship was held in the San Giorgio Shipyard at the Port of Genoa from 12/09/07 until 1/10/07.
During the stoppage the main engine, the substations and generators as well as a range of engine room
machinery and some equipment on the deck and the bridge were inspected.
Since it was an intermediate class survey, the ship was placed in dry-dock for the cleaning and complete
repainting of the keel with the use of “TBT free” type anti-vegetative and self-smoothing paint.
Under the surveillance of the class inspectors (RINA and ABS), all of the load tanks were inspected and the
efficacy of the protective treatment was classified as “GOOD”.
All of the ballast compartments were inspected in order to verify the integrity of the structures with thickness
surveys carried out by ultrasound, the efficacy of the protective treatment was confirmed and all of the ballast
tanks were classified as “GOOD”.
For this vessel, the most recent analyses of the oil in the rudder system had also displayed the presence of
metals and therefore as a preventative measure the rudder machine and its related power units were taken
off board and completely disassembled at the service centre where inspections and the consequent
mechanical work were carried out.
After the work was complete, evolution tests were carried out to verify the perfect working condition of the
rudder system.
Finally, during the stoppage, additional modifications and improvements were carried out which can be
summarised as follows:
upgrade of the bulkhead flow load pump axes cooling system;
modifications to the mooring system in the manifolds zone; modifications to the mooring system at the
stern in compliance with the most recent regulations issued by the Panama Canal Authorities;
attaining of additional Plimsoll marks to carry 32,000 t and 29,999 t loads;
installation of a new “X” band radar
sanding and painting of the covered bridge

The vessel left the shipyard with all of its class and statutory certificates validated through September of 2009.
FINAVAL SPA Pag. 21

QUALITY, SECURITY AND ENVIRONMENT

At the beginning of 2008, during the “Management re-evaluation” the performances achieved with regard to
the integrated quality and environmental systems for the previous year were analysed and the objectives to
be reached during 2008 were defined.
OBJECTIVES ESTABLISHED IN PREVIOUS EXAMINATION AND ACTIONS TAKEN
Objective: implement the ship Portal to accommodate all procedures, manuals and memoranda. Actions
undertaken: twice yearly, the Quality Department will inspect and request the documentation updates
from the departments and create the “cd” to be provided on board the ships;
Objective: formation of the company at the Ischitella centre as approved by the plan which is currently
under Management Review. Actions undertaken: every two months, training is provided for Officers
according to the subjects contained in Module 1. Training will also occur with the same time period for
those applying the Module II subjects.
Objective: improve the fleet Officer’s level of English language knowledge. Actions undertaken: Two
courses have been provided by the English instructor at the IMA – IMAT centre.
Objective: create a project for the execution of seminars to be held in India (course content, methods,
and instructors). Actions undertaken: this was organised and took place in India. From next year, the
course content for company training will be adopted by the Recruitment agency and the same methods
and content shall be used at the Ischitella centre.
Objective: define periodic meetings to analyse non-compliances and determine the necessary corrective
actions in order to reduce the average number of occurrences. Actions undertaken: Every three months,
Finaval and Teknè managers meet to discuss and analyse the results of the inspection surveys conducted
on board the vessels.
Objective: TMSA to consolidate level 3 and focus on reaching a higher level in those areas where critical
issues have been identified. Actions undertaken: consolidated all of the level 3 elements.
OBJECTIVES 2008
Create the 2008 training programme with management approval.

Create an integration process among the different nationalities on board the vessels (same training
programme, imparting of Finaval policies and objectives).
Implementation of an evaluation system for the acquisition of the course content carried out at the IMA-
IMAT centre in the present and over time.
Implementation of new indicators to verify the performance of the Operations Department. (TCE
Actual/TCE Estimate) and of Chartering.
Develop a project to create an AMOS data analysis system for all of the departments that are involved in
the programme.
Implement an evaluation system of commanders and managers based on the recording and control of
performances.
Implementation of a computerised appraisal system with periodic evaluation and monitoring of averages
and the development of a methodology to render the evaluation system objective.
Develop a project for a training course with the objectives of recruitment and possible career
advancement based on the new STCW provisions.
FINAVAL SPA Pag. 22

HUMAN RESOURCES
Reporting on human resources in the 2006 accounts, 2007 was identified as the year that would allow the
entire business to prepare for the new constructions programmed from 2008 until 2010.
In this regard, we have operated on two different levels:
from an operational standpoint, the internal structure has refined its processes to create an organisation
that can coordinate activities between our technical partner Teknè and the naval unit command.
In fact, the principle focus on strengthening the relationships between the ship, its command and the
operational area (operations offices and crewing) and secondly between the afore-mentioned subjects
and our main supplier, Teknè, has been reaffirmed. This has made the maritime relationship with the Rome
office more “cohesive” and more involved with our partner Teknè’s overall management system, with full
respect for corporate autonomy and objectives. The involvement has been stepped up with trilateral
coordination and communication at all levels: meetings, teleconferences, simple communications
referring to a series of common and strategic organic projects, management, management policy and
voluntary systems of management (quality, TMSA, etc.);
from an administrative standpoint, the company has proved its ability to be able to withstand extremely
intense pressures. In this context, it is worth recalling the commitment shown to welcome our new
shareholders to our Company and our financial and administrative commitment.
With regard to staff, both the quantitative and qualitative rationalisation of Italian personnel can be
considered complete. In this regard, the consolidation of relationships with a very stable nucleus of maritime
crew that display mature overall management policies from previous years are to be noted. With regard to
foreign maritime personnel (we are referring specifically to Indian personnel) a good result has been shown
thanks to the support provided by our partners, which, once again, can also be attributed to good
performances during previous years. In light of the new constructions that are scheduled for delivery,
recruitment plans have been set out for both foreign and Italian personnel, with the objective of acquiring
staff of quality and professionalism. With regard to the office staff, a substantial confirmation of the team and
its main functions is to be noted.
Finally, special mention should be made regarding maritime training: there has been a consolidation of the
relationship with IMA-IMAT, which has been identified as an ideal partner for the management of all aspects of
training. In this regard, besides the modernity of the structures, the centre is notable for its availability and for
having completely adopted the company philosophy, which is oriented not only towards form, but also
towards content. The centre has satisfied our needs up to this point, so much so that we are convinced that
we have created a complete training school. Our financial, human resources and programmed investments
are oriented in this direction. Moreover, this training commitment has guaranteed the involvement of external
agencies, through the development of commonly agreed programmes, carried out at their own centres.
FINAVAL SPA Pag. 23

OPERATIONAL PERFORMANCE
The table below reports Finaval S.p.A.’s key financial results, consolidated with the results from its subsidiary,
Energetica Lda and the joint venture Naftilos A. Marine Ltd and Cabofin S.r.l., compared with the consolidated
results from the previous year.
CONSOLIDATED INCOME STATEMENT 2007 % Changes % 2006 %
Revenues 62,889 141.7% -20.8% 79,383 136.1%

Voyage Costs -18,509 -41.7% -12.1% -21,063 -36.1%
TIME CHARTER EQUIVALENT EARNINGS 44,380 100.0% -23.9% 58,320 100.0%
Hire costs -8,658 -19.5% -15.9% -10,300 -17.7%

Operating costs -14,082 -31.7% -44.1% -25,200 -43.2%
CONTRIBUTION MARGIN 21,640 48.76% -5.2% 22,820 39.1%
Overhead costs -8,803 -19.8% 40.7% -6,257 -10.7%

Other costs and revenues -191 -0.4% -62.9% -515 -0.9%
Result on disposal of vessel 0 0.0% -100.00% -135 -0.2%
EBITDA 12,646 28.5% -20.5% 15,913 27.3%
Amortisation & depreciation -10,503 -23.7% 3.0% -10,196 -17.5%

EBIT 2,143 4.8% -62.5% 5,717 9.8%
Net Financial income (charges) -1,169 -2.6% -36.8% -1,850 -3.2%

PRE-TAX RESULT 974 2.2% -74.8% 3,867 6.6%
Income taxes for the year -329 -0.7% -234.3% 245 0.4%
PROFIT FROM CONTINUING OPERATIONS 645 1.4% -84.31% 4,112 7.1%
Net result from discontinued operations 1,034 2.3% -555.5% -227 -0.4%
NET PROFIT 1,679 3.8% -56.8% 3,885 6.7%
The Contribution Margin, although it has decreased in absolute terms, is 49% of the Base Time Charter
revenues compared with the 39% reported in 2006, confirmation that the choices made with regard to the
divestment from sectors that were considered to have limited profitability have produced an increase in
operational earnings for the company.
With regard to EBITDA, the above improvement has been mainly reabsorbed by organisational costs,
which have been significantly “burdened” with extraordinary costs mainly deriving from the company’s
aborted stock market listing procedure, for a total of approximately Euro 2,731 thousand. This margin was
achieved in spite of a weakened Euro/Dollar exchange rate; on a like-for-like exchange rate the EBITDA in
2007 would have been higher by approx. Euro 2.9 million;
FINAVAL SPA Pag. 24

With respect to forecasts made at the beginning of the year, the results from the Aframax and Product
sectors were negatively impacted by the afore-mentioned depreciation of the Dollar, as well as a second
half-year that saw the markets experience a slowdown compared to the first half of the year.
With regard to Financial Management, the result was impacted in this case positively by the movement in
the Euro/Dollar exchange rate. Euro interest rates rose steadily during the year while Dollar interest rates
declined in the final quarter of the year. However, Finaval has been relatively unaffected by these
movements in that a significant share of its exposure has been covered with hedging transactions.
FINAVAL SPA Pag. 25

BALANCE SHEET AND FINANCIAL PERFORMANCE

The following table contains the consolidated balance sheet data compared with the related consolidated
data from the previous year, followed by the Cash Flow Statement. Of particular note:
shareholders’ equity increased:
− by Euro 2 million due to the profit in the year;
− by Euro 20 million due to the Share Capital increase.
and decreased by approximately Euro 1.5 million due to the consolidation of the company Naftilos A.M.
Ltd and the fair value of the financial assets held-for-sale.
net fixed assets reduced by Euro 41.2 million, mainly for the combined effect:
− of the reclassification under non-current assets held-for-sale of two of the six vessels under construction
and the M/T Neverland Soul.
− of the purchase of the M/T Naftilos AN (consolidated 50%);
− of the additional advances paid to the Korean shipyard Samsung for the ships under construction;
the net debt increased by Euro 8 million, from Euro 124.5 million to Euro 132.5 million, due to the combined
effect of cash flows from operations and the afore-mentioned investments, off-set by the share capital
increase;
the debt/equity ratio decreased from 1.7 to 1.41;
the net working capital decreased by Euro 6.2 million, from Euro -3.6 million to Euro -9.8 million.
CONSOLIDATED BALANCE SHEET (in Euro Millions)
2007 2006 2007 2006

NON-CURRENT ASSETS 159.3 70% 200.5 101% SHAREHOLDERS’ EQUITY 94.1 42% 73.6 37%
Intangible assets 0.1 0% 0.1 0%
Property, plant & equipment 152.6 67% 197.5 100% NET FINANCIAL POSITION 132.5 58% 124.5 63%
Financial assets 6.7 3% 2.9 1% Banks - medium/long-term 104.2 46% 111.4 56%
Banks – short term 50.9 22% 30.0 15%
NET WORKING CAPITAL -9.8 -4% -3.6 -2% Cash and cash equivalents -22.8 -10% -14.2 -7%
Derivative instruments 5.6 2% 2.3 1%
NON-CURRENT ASSETS Ministerial grant contributions -2.2 -1% -1.1 -1%
AVAILABLE FOR SALE 77.1 34% 1.2 1% Securities in portfolio -3.3 -1% -3.8 -2%
100
NET CAPITAL EMPLOYED 226.6 100% 198.1 100% 226.6 100% 198.1 %
FINAVAL SPA Pag. 26

CONSOLIDATED CASH FLOW STATEMENT
Dec 31,07 Dec 31,06
Cash flow generated from operating activities before working capital changes 14,351 16,286
Financial income/(charges) net of translation exchange gains(losses) and the IAS 32 and 39 effects (6,963) (2,040)
Cash flow generated from working capital 4,959 (9,776)
Cash flow generated/(absorbed) from Operating Activities (A) 12,347 4,470
Cash flow generated/(absorbed) from Investing Activities (B) (45,290) (60,336)
Cash flow generated/(absorbed) from Financing Activities (C) 32,582 32,979
Cash flow generated (absorbed) in the year (A+B+C) (361) (22,887)

Effect of the changes in foreign exchange rates (D) 8,916 3,304
Cash and cash equivalents at the beginning of the year (E) 14,232 33,815
Cash and cash equivalents at the end of the year (A+B+C+D+ E) 22,787 14,232
FINAVAL SPA Pag. 27

SIGNIFICANT EVENTS AFTER THE YEAR END

OPERATING PERFORMANCE
The principal events after the year-end were the following:

In January, the Aframax ship, Neverland Soul, was sold.
In February, together with the Shipping Group Ancora, the company Angelica Shipping Ltd was
incorporated with a 50% shareholding in order to proceed with the purchase of a 46,000 dwt Product
vessel, scheduled to be delivered in April.
With regard to the business outlook for 2008, the market is expected to maintain levels similar to those reported
during the previous year; therefore, the year’s performance is expected to be positive and in line with the
forecasts that have been made.
FINAVAL SPA Pag. 28

MANAGEMENT OF BUSINESS RISKS
While carrying out its activity, the Finaval Group has been exposed to business risks, mainly associated with
charter fees, damages to, or losses of, its own “assets”, financial risks related to the Euro/Dollar exchange rates
and movements in interest rates.
Therefore, as in previous years, in 2007 the group has pursued a management policy for these risks, through the
use of long-term commercial contracts, adequate insurance coverage for its own assets and derivative
products undertaken with primary Italian and foreign Credit Institutions.
COMMERCIAL RISKS
Historically, the shipping industry has been characterised by extreme volatility in revenues, usually caused by
factors outside the control of the individual companies. For this reason, several years ago Finaval had already
decided to neutralise a portion of any changes through long-term business agreements with the objective of
stabilising the performances of its own ships. Specifically, long-term contracts have been signed in the “crude
oil” and “product tankers” sector, which provide for a minimum guaranteed charter fee plus a profit-sharing
scheme with the commercial partner for the higher performance of the ship over the minimum level;
It should also be mentioned that the market for derivative instruments on tanker ship freights has been carefully
studied and monitored for several months. It is our opinion, that this may become a useful instrument for the
hedging of business risks associated with the use of ships in “spot” markets.
RISK OF DAMAGE TO OR LOSS OF CORPORATE ASSETS

Finaval’s insurance system is well suited to cover the risks associated with its operations.
Specifically, the appropriate insurance against risks associated with environmental damages from accidental
pollution has been established.
Finaval’s policy in this regard is in line with the practices that are used by the major players in the industry.
In greater detail, the insurance structure includes, among others, the following standard maritime coverage
policies:
“Hull & Machinery”. All of the owned ships are insured for damages to the hull and the engine, including
against acts of war and any total losses. Each ship is insured for at least its book value and well beyond its
related mortgage debt.
“Protection & Indemnity”. The entire fleet has insurance coverage against risks of pollution and spillage up to
USD 1,000 million and unlimited coverage for accidents that may occur involving the crew, the load and third
parties in general. The “P&I” insurance system is of a mutual type, therefore according to the criteria of any
form of mutual insurance, the members of the club share the benefit of a low overall claim rate, just as they
may be called upon for new payments, if requested.
INTEREST RATE RISKS

Finaval’s strategy is to cover up to 70% of its own medium to long-term debt, through transactions of different
types, the combination of which allows for a minimal impact on the financial management of interest rate
fluctuations.
FINAVAL SPA Pag. 29

EXCHANGE RISKS
Finaval SpA is subject to risks deriving from exchange rate fluctuations from ship loans in different currencies.
The accounting standards adopted and applied by the Group require loans to be converted into Dollars at
year-end, with consequent fluctuations in its financial exposure. For this reason, some hedging transactions
were implemented, for at least half of the risk value, which allow for a partial immunisation against the effect
from the fluctuations of the Dollar on the conversion of the debt.
FINAVAL SPA Pag. 30

TRANSACTIONS WITH GROUP COMPANIES
HOLDING AND GROUP COMPANIES

FINAVAL HOLDING SPA
Throughout the year, Finaval Holding SpA carried out its normal activities of financial holding and services for
Finaval SpA. The contract for elected residence and administrative service that Finaval SpA has with Finaval
Holding SpA also continued in 2007. At the end of the year Finaval SpA’s receivables amounted to
approximately Euro 248 thousand and payables to approximately Euro 241 thousand. These positions are of a
commercial nature.
FINAVAL AVIATION SRL

The contract for elected residence and administrative service that Finaval SpA has with Finaval Aviation Srl
also continued in 2007. At 31 December 2007, Finaval had a receivable for approximately Euro 12 thousand.
At the beginning of 2008, Finaval Aviation S.r.l. was sold.
FINAVAL OFFSHORE SRL

In 2007, Finaval SpA signed an elected residence and administrative service contract for an annual amount of
Euro 10 thousand.
FINAVAL SPA Pag. 31

OTHER INFORMATION
RESEARCH AND DEVELOPMENT ACTIVITY

The company did not carry out pure research activities during 2007.
MANAGEMENT AND CONTROL ACTIVITY

Finaval SpA is under the direction and co-ordination of the parent company Finaval Holding SpA which
directly holds 75% of the share capital.
Throughout 2007, Finaval Holding SpA carried out investment holding and service activities for Finaval,
particularly in relation to financial services.
TREASURY SHARES OR QUOTAS IN HOLDING COMPANIES

The company did not carry out any sale/purchase transactions of shares or holdings in holding companies, nor
did it sell or purchase any of its own shares during the year.
LEGISLATIVE DECREE 231/2001

Legislative Decree 231/01 sets out the responsibility of the Company in relation to certain offences committed
in its interest or to the advantage of the persons that cover functions of representation, administration or
management of the company or one of its structures with independent finance and operations, as well as
persons that exercise, even de facto, its management and control (so-called top management), or persons
subject to the direction and supervision of one of the above-mentioned parties (so-called parties under other
management influence).
The decree, and more specifically articles 6 and 7, provide that the Company:
1) is not responsible for offences committed by top management subjects if it can be proven that:
a) the management body adopted, and efficiently implemented, before the offence was committed,
organisational and management models that are suitable to prevent offences of the nature of those that
occurred;
b) the supervision role on the functioning and observation of the models and of their up-dating was appointed
to a public entity organisation equipped with autonomous powers of initiation and control;
b) the persons committed the offence by fraudulently evading the organisational and management models;
c) there was not a lack of or insufficient surveillance by the body, pursuant to letter b);
2) is responsible for offences committed by parties under other management if the offence was made possible
through the failure to observe management or surveillance obligations, with the exclusion, in any case, of the
failure to observe management or surveillance obligations if the body, before the offence was committed,
adopted and efficiently implemented an organisational, management and control method that was suitable
to prevent crimes of the type that occurred.
Finaval SpA, with the resolution by the Board of Directors dated 5 October, 2005, established the adoption of
an organisational, management and control model pursuant to Legislative Decree No. 231 dated 8/6/2001.
This model was certified on March 1, 2006 by RINA.
FINAVAL SPA Pag. 32

In addition to the regulatory and organisational obligations, Finaval has adopted an ethics code, a
combination of the rights, duties and responsibilities of the company which are intended to promote, suggest
or prohibit certain behaviours.
PROTECTION OF PERSONAL DATA

Finaval SpA, in compliance with the provisions contained in Legislative Decree No. 196 dated June 30, 2003
“Code for the Protection of Personal Information”, has drafted and approved a Security Programming
Document.
The Document contains the provisions for security measures that will reduce the risks of destruction or loss, even
accidental, of personal information, unauthorised access or processing that is not allowed or compliant with
the objectives of the collection of the same information, with security combining the technical, computer,
organisational, logistical and security procedure provisions.”
FINAVAL SPA Pag. 33

GLOSSARY
Aframax
Tanker ship of between 80,000 dwt and 120,000 dwt.
B/B - Bare Boat Charter – charter rental contract
A charter in which the bare ship is Chartered without crew for a stated period of time; besides the voyage
costs (bunkers, port charges, canal tolls, etc.), the charterer also pays the running expenses (crew,
maintenance, repairs, lubricants, supplies and insurance), with the exception of reclassified works.
By its nature, the Bare Boat normally covers relatively long time periods.
Ballast
Voyage without load, required for positioning the ship in the next port for loading or docking.
Ballast tanks
Tanks or other spaces used exclusively for the collection of sea water, to ensure the required stability of the
ship during ballast voyages.
Barrel
Unit of measurement for crude oil and petroleum products; a barrel is equal to approximately 159 litres and
there are approximately 7.1 barrels for each tonne.
Bunkers - fuel
Fuel required for the functioning of the ship.
C/P - Charter Party – Rental Contract
Contract between the Ship Owner and the Charterer to establish the terms and conditions that regulate
transport. The contract may be for one or more voyages or for set periods of time.
Charterer - Renter
The contracting party that pays for the transport of the load; normally it is the owner, supplier or receiver of the
load.
Classification Societies – Classification Registries
Independent organisations that control and inspect the construction’s technical conditions and the
performance of the ships, with respect to the rules set forth by the same Registry or National Authorities.
COA - Contract of Affreightment – Transport Contract
A contract between the Ship Owner and the Charterer for the transport, during a given time period, of set
quantities of a load, in predetermined loading and unloading areas, with a certain number of voyages carried
out by ships that are not identified in the contract, but which fall under a predetermined category.
COA and consecutive voyages
Transport contract that completely uses the vessel without continuity solutions for the period of the contract
itself.
Crude
Derivation of the English term Crude Oil; raw petroleum
DH - Double Hull – double hull
Ship constructed with a double hull to reduce the risk of load overflow in the event of strandings or collisions;
the distance between the two hulls is generally 2 – 2.5 metres and the space is used for clean ballasts.
FINAVAL SPA Pag. 34

DB - Double Bottom
The ship has a double hull as far as the bottom; the distance between the two levels is between 2 and 3
metres and the relative volume is normally used to store clean ballast water.
DS - Double Side
The ship has a double hull that is limited to the sides; the distance between the two levels is between 2 and 3
metres and the relative volume is normally used to store clean ballast water.
Dry-dock
A vessel placed in dry-dock for the inspection, repair or painting of the portion of the hull that is submerged. In
normal conditions it is carried out every 2.5 to 3 years.
DWT – dead-weight tonnage
A common measure of ship carrying capacity measured in tons, including the cargo, bunkers, stores and
crew.
Heavy-Lift
A ship that is suitable for the transport of extraordinary loads.
Handymax
Handysize
Hull and machinery insurance (H&M)
Ships body and machinery insurance
Ice Class 1A
Ship classification relating to its ability to operate in water with ice formations of less than 80 cm of thickness.
IMO (International Marittime Organisation)
United Nations Agency that handles the drafting of safety and anti-pollution regulations for maritime traffic.
Knot
Unit of measurement of the speed at sea. A knot is equal to a nautical mile or 1,853 metres per hour.
Marpol 73/78
Anti-pollution regulation drafted by the IMO.
M/C - M/T
Tanker, motor tanker.
M/N - M/V
Motorship, motor vessel.
Off-hire
Period of time during which the vessel does not generate freight, usually because it is undergoing repair or
maintenance activities.
Operating Costs
Costs related to the operation of the ship including crew, insurance, provisions, certifications and lubricants.
Costs related to the voyage and commercial uses, including fuel, port fees and channel transit are excluded.
OPA 90
U.S. Oil Pollution Act of 1990 – Anti-Pollution Regulations in the United States.
Order Book
The number and size of vessels on order.
FINAVAL SPA Pag. 35

Oremulsion
Emulsion of natural tar and water.
Panamax
Tanker ship or bulk carrier suitable to transit the Panama Canal, thus with a maximum length of 32.24 metres.
Vessels that are normally not superior to 80,000 dwt.
P&I Insurance (Protect and Indemnity)
A form of mutual insurance coverage for risks related to environmental pollution from loss of load.
Pool
Cooperation agreement between Owners and common commercial operations among similar vessels, with
distribution of profits.
Product Carrier
Tanker ships suitable for the transport of refined petroleum products (including nafta, diesel fuel, petroleum)
and vegetable oils.
The tanks of these ships are treated with paint or special products.
RO/RO
Roll on Roll off abbreviations. Ferry ship that allows for the movement of land-based means of transport by
alternately loading and unloading them through the bow and stern hatches.
SBT - Segregated Ballast Tanks
Tanks exclusively used for the loading of clean ballast water.
Scrapping
Demolition of a vessel and the re-use of iron parts.
Solas
IMO Regulations relating to the safeguard of life at sea.
Special Survey
Surveillance cycle for the hull and the ship’s machinery and equipment to be completed every five years,
based on verifications and inspections with expiration dates that are set by the Classification Registries.
Spot Market
Use of a ship to move a single cargo based on the current charter market rate.
Suezmax
Tanker ship that is able to navigate the Suez Canal with a full load; normally between 120,000 and 200,000 dwt.
TBN - To be named
Indicates a ship under construction, or in any case, one that has not yet been named.
Technical operations
Technical management of the vessel in relation to class inspections, certifications, maintenance etc.
FINAVAL SPA Pag. 36

FINAVAL SPA
CONSOLIDATED FINANCIAL STATEMENTS
AS AT DECEMBER 31, 2007
FINAVAL SPA Pag. 37

CONSOLIDATED BALANCE SHEET

In Euro thousands
ASSETS Dec 31, 07 Dec 31, 06 NOTES
NON-CURRENT ASSETS
PROPERTY, PLANT & EQUIPMENT
Fleet 129,813 173,913 A
Fleet under construction 20,775 21,400 B
Other assets 2,007 2,149 C
INTANGIBLE ASSETS 52 106 D
FINANCIAL ASSETS
Subsidies 2,241 1,145 E
Other receivables and deposits 5,648 134 F
Equity investments 4,211 6,437 G
Deferred tax assets 66 129 H
TOTAL NON-CURRENT ASSETS 164,813 205,413
CURRENT ASSETS
Inventories of oils, lubricants and services in course 1,747 1,377 I
Trade receivables 7,449 10,833 L
Other receivables 1,788 3,035 M
Cash and cash equivalents 22,787 14,231 N
Derivative financial instruments 32 818 O
Tax assets 724 255 P
TOTAL CURRENT ASSETS 34,526 30,549
NON-CURRENT ASSETS HELD-FOR-SALE 77,092 1,240 Q
TOTAL ASSETS 276,432 237,202
FINAVAL SPA Pag. 38

CONSOLIDATED BALANCE SHEET

In Euro thousands
NOTE
SHAREHOLDERS' EQUITY AND LIABILITIES Dec 31, 07 Dec 31, 06
S
SHAREHOLDERS’ EQUITY
Share Capital 32,293 24,220 I1
Share premium reserve 19,494 7,385 L1
Legal reserve 2,087 2,033 M1
Other reserves 35,910 33,549 N1
Cash Flow hedge Reserve -904 -707 O1
Fair value reserve of financial assets available-for-sale 145 618 P1
Retained earnings 3,425 2,617 Q1
Net profit for the year 1,679 3,885 R1
TOTAL SHAREHOLDERS’ EQUITY 94,130 73,600
NON-CURRENT LIABILITIES
Bank payables 104,227 111,364 A1
Employees benefits 552 779 B1
Deferred tax liabilities 585 567 C1
Provision for future charges 862 202 D1
CURRENT LIABILITIES
Bank payables 50,904 30,036 E1
Derivative financial instruments 5,641 3,075 O
Trade payables 8,654 10,179 F1
Other payables 10,523 7,255 G1
Tax liabilities 354 145 H1
TOTAL LIABILITIES 182,302 163,602
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY 276,432 237,202
FINAVAL SPA Pag. 39

CONSOLIDATED INCOME STATEMENT

In Euro thousands
Dec 31, 07 Dec 31, 06 NOTES
Net revenues 62,889 79,383 1

Port, bunker and commission expenses -18,509 -21,063 2
TIME CHARTER EQUIVALENT EARNINGS 44,380 58,320 3
Hire costs -8,658 -10,300 4

Operating costs -14,082 -25,200 5
FLEET CONTRIBUTION MARGIN 21,640 22,820 6
Overhead costs -8,803 -6,257 7

Other revenues/costs -189 -515 8
Result on disposal of vessel - -135 9
EBITDA 12,646 15,913 10
Amortisation & depreciation -10,503 -10,196 11

EBIT 2,143 5,717 12
Net Financial income (charges) -1,169 -1,850 13

PRE-TAX RESULT 974 3,867
Income taxes -191 -278

Deferred tax charges -138 523
NET PROFIT FROM CONTINUING OPERATIONS 645 4,112 14
Net result from discontinued operations 1,034 -227 15

NET PROFIT 1,679 3,885
FINAVAL SPA Pag. 40

STATEMENT OF CHANGES IN CONSOLIDATED SHAREHOLDERS’ EQUITY
In Euro thousands
Share Share Legal Other Trans. and IAS – IFRS Fair value Retained Result for Group
capital premium reserve reserves hedge Trans. reserve earnings the year shareholder
reserve reserve reserve s' equity
Balance at December 31, 2005 24,220 7,385 1,579 21,962 0 0 30 1,250 13,498 69,924
Allocation of the 2005 result 454 11,703 1,341 -13,498 0
Change in cash flow hedges net of

the tax effect -707 -707
Change in financial assets available-

for-sale at fair value net of the tax
effect 588 588
Total gains/(losses) recognised

directly to equity in the year 0 0 0 0 -707 0 588 0 0 -119
Other movements -116 26 -90
Result 2006 3,885 3,885
Balance at December 31, 2006 24,220 7,385 2,033 33,549 -707 0 618 2,617 3,885 73,600
Allocation of the 2006 result 54 3,023 808 -3,885 0
Change in fair value deriving from

hedging and of financial assets
available-for-sale net of the tax effect -197 -473 -670
Increase in reserved share capital 8,073 12,110 20,183
Other movements -662 -662
Result for the year 1,679 1,679
FINAVAL SPA - CONSOLIDATED FINANCIAL STATMENTS AT DECEMBER 31, 2007
CONSOLIDATED CASH FLOW STATEMENT

In Euro thousands
Operating activities Dec 31,07 Dec 31,06
Profit from operating activities 645 4,112

Adjustments for:
- Adjustment to financial assets (15) (41)
- Income taxes 329 (245)
- Financial (income)/Charges 1,185 1,891
- Depreciation of non-current tangible assets 10,438 10,125
- Amortisation of intangible assets 66 71
- Employee leaving indemnity provision 311 403
- Provisions for risks and future charges 660 0
Purchase/sale of fixed assets 0 135
- Result of discontinued operations net of purchase/sale of fixed assets 718 (227)
- Financial (income)/charges of discontinued operations 15 62
Cash flow generated from operating activities before working capital changes 14,351 16,286
Financial income/(charges) net of exchange gains(losses) and the IAS 32 and 39 effects (6,963) (2,040)
(Increase) / Decrease in trade receivables 3,385 1,566
Increase/ (Decrease) in trade payables (1,526) (17,146)
(Increase) / Decrease in inventories (370) 2,000
(Increase) / Decrease of other current assets/liabilities 4,514 4,649
(Increase) / Decrease in tax receivables and payables (450) (484)
Increase (Decrease) in risks and employee leaving indemnity provision « (538) (650)
Increase / (Decrease) of deferred tax assets and liabilities (55) 289
Cash flow generated from working capital 4,959 (9,776)
Cash flow generated/(absorbed) from Operating Activities (A) 12,347 4,470
Investing activities
(Investments) / Divestments in intangible assets (11) (133)
(Investments) / Divestments in property, plant and equipment 30,095 (59,321)
(Investments) / Divestments in financial assets (4,171) 357
(Investments) / Divestments in non-current assets held-for-sale (75,853) (1,239)
Divestment of discontinued operations 4,651 0
Cash flow generated/(absorbed) from Investing Activities (B) (45,290) (60,336)
Financing activities
Change in bank payables 13,731 33,189
Changes of other payables 0 0
Issue / (Repayment) of bonds 0 0
Change in Shareholders' Equity 18,851 (210)
Cash flow generated/(absorbed) from Financing Activities (C) 32,582 32,979
Cash flow generated (absorbed) in the year (A+B+C) (361) (22,887)

Effect of the changes in foreign exchange rates (D) 8,916 3,304
Cash and cash equivalents at the beginning of the year (E) 14,232 33,815
Cash and cash equivalents at the end of the year (A+B+C+D+E) 22,787 14,232
FINAVAL SPA Pag. 42

FINAVAL SPA
Consolidation scope and criteria

Accounting principles and policies
FINAVAL SPA Pag. 43

Introduction
The consolidated financial statements include the financial statements of Finaval S.p.A., the Parent Company,
and of those companies in which Finaval S.p.A. holds at least 50% of the share capital either directly or
indirectly.
The reporting date of the consolidated financial statements coincides with the year-end of the Parent
Company and its subsidiaries. The companies are included in the consolidation on the basis of the financial
statements prepared by the Directors for approval at the Shareholders’ AGM.
Where necessary, the financial statements of the companies included in the consolidation were appropriately
adjusted to take into account the accounting principles adopted by the Parent Company.
The consolidated financial statements consist of: the balance sheet, income statement, statement of changes
in shareholders’ equity and the cash flow statement together with the explanatory notes prepared in
accordance with the minimum disclosure requirements of IAS 1 and applicable regulations, where applicable,
required by the national legislature and by CONSOB.
The Euro is the presentation currency for the Parent Company and for the other companies included in the
consolidation scope.
All the amounts in the financial statement accounts are shown in thousands of Euro. Any differences deriving
from the rounding of the values in Euro are allocated to an equity reserve.
On the first-time application of the IFRS, for the preparation of the consolidated financial statements at
December 31, 2007, it was necessary, for comparative purposes, to restate the consolidated financial
statements at December 31, 2006 in accordance with IFRS. These latter, however, do not present comparative
data relating to the previous year, as requested by IAS 1.
The consolidated financial statements restated in accordance with IFRS, were obtained by making
reclassifications and adjustments in accordance with the IFRS accounting principles, at January 1, 2006, in
application of IFRS 1. For the purposes of the application of this international accounting standard, at the
transition date to IFRS, the Company prepared an opening balance sheet. This balance sheet is to be
considered as a starting point for the accounting of subsequent operations in accordance with IFRS.
Attachment 1 (Transition to IFRS) reports the effects deriving from the transition from Italian GAAP to IFRS, also
reporting the:
- reconciliation of the consolidated balance sheet accounts at January 1, 2006 and at December 31,
2006;
- reconciliation of the consolidated income statement accounts for the year ended December 31, 2006;
- reconciliation of consolidated shareholders’ equity at January 1, 2006 and December 31, 2006;
- reconciliation of the consolidated income statement for the year ended December 31, 2006;
FINAVAL SPA Pag. 44

Consolidation scope, changes and exclusions at December 31, 2007

The consolidated financial statements include the financial statements of the Parent Company and of its
directly or indirectly held subsidiaries and companies subject to joint control (so-called Joint Ventures) with
third party groups.
The following table contains a list of the companies consolidated by the line-by-line method and by the
proportional method:
In Euro thousands
Company Consolidation % held Registered Share Capital

method offices
Finaval S.p.A. Line-by-line Holding company Rome Euro 32,293

method
Energetica Lda Line-by-line 100% Madeira Euro 5
method
Naftilos A. Marine Ltd Proportional 50% Malta USD 0.7
method
Cabofin S.r.l. Proportional 50% Cagliari Euro 50
method
Consolidation criteria and principles at December 31, 2007

Subsidiary companies
The subsidiary companies are those companies in which the Group has the power to determine, directly or
indirectly, the administrative and management choices, the financial and operating policies and obtain the
relative benefits. Control is generally presumed when the Group holds, directly or indirectly, more than
half of the voting rights exercisable at the ordinary shareholders’ meeting.
The assets and liabilities, as well as the income and costs of the consolidated companies are consolidated
using the line-by-line method at 100%, eliminating the book value of the investments against the related net
equities of the companies.
Receivables and payables, revenues and costs and all transactions involving significant amounts with
companies included in the consolidation scope are eliminated.
Shareholders’ equity and the minority interest result for the year are shown separately in the consolidated
financial statements.
The results of subsidiaries acquired or sold during the year are included in the consolidated income statement
from the date of acquisition until the date of sale.
Gains and losses arising on inter-company sales of tangible fixed assets are eliminated, where considered
material.
Joint Venture
Joint Ventures are companies in which the Group exercises joint control, based on a contractual agreement,
and exists only when the strategic financial and operating decisions of the business require the unanimous
approval of all of the parties that share control. The investments in Joint Ventures are consolidated under the
FINAVAL SPA Pag. 45

proportional method from the date on which the joint control occurs and until the date the joint control
terminates.
Investments in associated companies

The associated companies are companies in which the Group is able to exercise significant influence in the
definition of the financial and operating policies, although not having control or joint control.
The investments in associated companies are recorded in the consolidated financial statements using the
equity method.
The application of the equity method is described below:
- the book value of the investments is aligned to the net equity of the company adjusted, where necessary,
to reflect the application of the accounting principles of the Parent Company and include, where
applicable, the recording of any goodwill identified at the moment of the acquisition;
- the Group profits and losses are recorded in the consolidated income statement at the date when the
significant influence begins and until the date when it terminates. Where losses in the investee result in a
negative net equity, the book value of the investment is written down and any excess pertaining to the
Group is recorded in a specific provision only when the Group is committed to comply with legal or implicit
obligations of the investee or in any case to cover the losses. The equity changes of the investee
companies not derived from the income statement are recorded directly as adjustments to equity;
- the gains not realised generated on operations between the Parent Company and subsidiaries or
associated companies are eliminated for the part pertaining to the Group, where it is not considered
insignificant. The losses not realised are eliminated except when they represent a permanent impairment in
value.
In relation to the general criteria of including joint ventures in consolidated statements, it should be noted that
the Joint Venture “Novamar international Scarl in liquidation” was measured under the equity method.
In relation to this, it is noted that the proportional consolidation method was not used, as the inclusion of this
investment in the consolidation scope would not aid a true and correct presentation.
Business Combinations
Business combinations are recognised utilising the purchase accounting method as per IFRS 3.
The cost of business combinations is calculated at the acquisition date in consideration of the fair value of the
assets given and/or of the liabilities incurred and of capital instruments issued in order to obtain control. In
addition, the fair value of the assets and liabilities acquired are compared with the cost as previously defined.
Any positive difference between the purchase cost and the fair value of the identifiable assets and liabilities
and contingent liabilities is allocated to goodwill.
Any negative difference, following a re-examination of the valuation of the assets and liabilities acquired, is
recognised in the income statement.
FINAVAL SPA Pag. 46

Accounting principles and policies

The measurement of accounts was made in view of the continuity of business activities, as well as taking into
account the economic function of each of the assets and liabilities concerned.
The financial statements were prepared on the basis of the historical cost principle, except for some financial
instruments which are recognised at fair value.
In the preparation of the consolidated financial statements at December 31, 2007, December 31, 2006 and
December 31, 2005, the Group availed of some options permitted by international accounting standards. In
particular:
- Financial Statements presentation and other statements: the assets and liabilities are presented under the
“current/non-current” criteria, while the income statement adopted the presentation by nature of
expenses.
- Cash flow statement: was prepared with the indirect method.
- Employee benefits: as per IAS 19, the Group has decided to record all accumulative actuarial gains and
losses existing at January 1, 2005 and not to adopt the so-called “corridor method” for the actuarial gains
and losses which were generated and will be generated subsequent to this date, in consideration that the
actuarial variations do not produce significant impacts on the income statement such as to justify recourse
to the “corridor” method.
- Intangible and tangible assets: as per IAS 16 (Property, plant and equipment) and IAS 38 (Intangible
assets), the tangible and intangible fixed assets are measured under the cost method, also subsequent to
initial recognition.
- Operations in foreign currencies: foreign currency transactions are recorded at the exchange rate at the
transaction date. Assets and liabilities denominated in foreign currencies are converted at the exchange
rate at the end of the reporting period. The exchange differences generated from the settlement of
monetary accounts or from their conversion at different rates to those in which they were initially recorded
in the year or in previous years are recognised in the income statement.
The most significant accounting principles used in preparing the consolidated financial statements are as
follows:
- The fleet is measured at purchase cost, net of accumulated depreciation and any loss in value.
The cost includes the contractual price and all the other directly attributable charges to the asset and
those incurred before the asset is in condition for use.
The charges incurred for the maintenance and repairs of an ordinary nature are directly charged to the
income statement in the year in which they are incurred. The capitalisation of the costs relating to the
expansion, modernisation or improvement of owned tangible assets or of those held in leasing, is made only
when they satisfy the requirements to be separately classified as an asset or part of an asset in accordance
with the component approach.
The replacement costs of components relating to complex assets are allocated as assets and
depreciated over their residual useful life while the residual value of the component subject to
replacement is recorded in the income statement. In particular, the ships are subject to periodic
stoppages (generally between 30 and 60 months) during which repair and maintenance costs are
FINAVAL SPA Pag. 47

incurred which are separately capitalised and depreciated over the period between each stoppage (so-
called “dry dock”).
Public grants received against investments in the fleet are recorded as a direct reduction of the ships to
which they refer.
The depreciation of the fleet is determined on the basis of the cost of each ship, reducing the estimated
net value from its demolition. Depreciation is calculated from the entry into service of the asset, based on
an economic/technical life of 30 years for tanker ships and 25 years for other ships. For the assets entered
into service during the year, depreciation is calculated based on the number of months in service.
- The account fleet under construction under property, plant and equipment includes the payments
effectively made, the advances paid and the initial costs incurred relating to the new fleet under
construction.
- Factories, buildings, fittings, office machinery and transport vehicles are recognised at purchase cost, net
of accumulated depreciation and any loss in value. The cost includes all charges directly incurred in
bringing the assets to utilisation.
The charges incurred for maintenance and repairs are directly charged to the income statement in the
year in which they are incurred. The costs for improvements, modernisation and transformation of an
incremental nature of tangible fixed assets are allocated as an asset.
The depreciation rates used are as follows:
Category Criteria Rate %
Buildings Straight-line 3%
Plant and machinery Straight-line 10%
Commercial and industrial equipment Straight- line 15%
EDP Straight- line 20%
Furniture and fittings Straight- line 12%
Motor Vehicles Straight- line 25%
In the year in which the assets are purchased, the depreciation is reduced by half, as a reasonable
approximation of the period held in the year.
- An intangible asset is an identifiable non-monetary asset without physical substance, identifiable, subject
to control and capable of generating future economic benefits. These assets are recorded at purchase
and/or production cost, including the costs of bringing the asset to its current use, net of accumulated
amortisation, and any loss in value.
- Loss in value of tangible and intangible assets. At each balance sheet date, the tangible and intangible
fixed assets with definite life are analysed to identify the existence of any indicators, either internally or
externally to the Group, of impairment. Where these indications exist, the recoverable amount of the asset
is estimated to determine the amount of the loss in value, recording the relative write-down in the income
statement. When it is not possible to estimate the recoverable value of an asset individually, the Group
estimates the recoverable value of the cash-generating unit to which the asset belongs. The recoverable
FINAVAL SPA Pag. 48

value of an asset is the higher between the current value less costs to sell and its value in use. To determine
the value in use of an asset, the expected future cash flows are discounted on a pre-tax basis that reflects
the market assessment of the time value of money and the risks specific to the asset. A loss in value is
recorded if the recoverable value is lower than the book value. When the loss on an asset subsequently
reduces, the book value of the asset or of the cash-generating unit of cash flows is increased, up to the
new estimate of the recoverable value but may not exceed the value that the asset would have had, had
the write-down for the loss in value not being made. The restatement of a loss in value is recognised
immediately in the income statement.
- The financial assets consisting of shares and quotas not available-for-sale or for trading, in accordance
with IAS 39, are included in the category “financial assets available-for-sale” and are measured at fair
value with any changes recorded in equity.
- Trade and financial receivables are recorded at fair value and subsequently at amortised cost, on the
basis of the effective interest rate method. When there is an indication of a reduction in value, the asset is
reduced to the value of the discounted future cash flows obtainable.
The amount of the loss, recorded in the income statement, is equal to the difference between the book
value of the asset and the current value of the expected future cash flows using the effective interest rate.
When, in subsequent periods, the reasons for the write-down no longer exist, the value of the assets is
restated up to the value deriving from the application of the amortised cost where no write-down had
been applied.
The receivables are adjusted, where it is deemed necessary, through a provision for doubtful debt so as to
reflect their realisable value.
- The Bare Boat rental contracts are normally considered as operating leases and the instalments, prepaid
or accrued, are recorded in the income statement on the accruals basis.
Where they are considered finance leases, as per IAS 17, the lessee will record the asset under property,
plant and equipment with a corresponding financial payable to the lessor and the lessor will eliminate the
asset from its financial statements and record a financial receivable in relation to the lease contract.
The Bare Boat rental payments, finally, are recorded as a reduction of the payable or receivable for the
capital portion, while the interest portion will be recorded in the income statement based on the effective
interest rate method.
- Oil and fuel inventories are stated at the lower of the purchase cost, determined by the weighted average
cost method, and the net realisable value.
The net realisable value is calculated as the estimated sales price less the costs to sell.
The account “work in progress”, classified under inventories, includes the quota of shipments made at the
end of the year for which an estimate is made of the revenues on a pro-rata basis.
- Non-current assets held-for-sale includes assets of which the book value will be principally recovered
through sale rather than use. For this to be the case, the asset must be available for immediate sale in its
current condition and the sale must be highly probable. The non-current assets held-for-sale are measured,
as per IFRS 5, at the lower between their book value and the fair value, less costs to sell.
FINAVAL SPA Pag. 49

- Cash and cash equivalents includes cash, deposits on demand with banks and other short-term
investments, highly liquid, or easily convertible into cash, and not subject to the risk of a change in value.
These assets are recorded at fair value and relative changes are recognised in the income statement.
- - The employee leaving indemnity provision covers the entire liability matured to employees in compliance
with legislation in force and collective employment agreements.
In relation to this, it is noted that the Finaval Group in the current year recorded the accounting effects
deriving from the changes made to the employee leaving indemnity as per Law 296 of December 27,
2006 ("2007 Finance Law") and subsequent Decrees and Regulations issued at the beginning of 2007. In
particular, the Group recalculated the provision matured at December 31, 2006 and the consequent
“curtailment” (in accordance with paragraph 109 of IAS 19) and whose economic effect, however, is not
significant.
- Financial and trade payables are recorded on initial recognition at fair value and subsequently at
amortised cost, on the basis of the effective interest rate. When there is a change in the expected cash
flows and it is possible to estimate them reliably, the value of the payables are recalculated to reflect this
change, based on the new current value of the expected cash flows and on the internal yield initially
determined.
- The share capital is the amount of the subscribed and paid-in capital by the shareholders of the Parent
Company. The costs directly related to the issue of new shares are classified as a reduction of the
shareholders' equity, net of any deferred fiscal effect.
- The share premium reserve relates to the payments made for the subscription of share capital for an
amount above the nominal value of the shares. This reserve may not be distributed in the presence of
losses carried forward not covered.
- The legal reserve includes the annual allocation of part of the result for the year realised by the Parent
Company (5% each year up to reaching 20% of the share capital) and may only be utilised to cover losses.
- The other reserves include specific profit and capital reserves.
- Retained earnings refer to the part not distributed or recorded under other reserves (in the case of profit)
or recapitalised (in the case of losses) of the results from previous years. The account also includes the
transfers from other equity reserves when they are released from any restrictions.
- The Group obtains subsidies as per article 11 of Law 234/89, which are considered operational subsidies.
These are recorded in the income statement on an accruals basis.
In addition, the Group avails of assistance for the shipping industry as per Law 361/82 and updated by Law
848/84, 234/89 (article 1 and 9 and) and Law 132/94 (article 10). These subsidies are recognised at the
moment of the concession decree by the relevant government authorities and are recorded as a direct
FINAVAL SPA Pag. 50

reduction of the value of the ships to which they refer and recorded in the income statement as a
reduction of the respective depreciation.
The subsidies relating to ships already completely depreciated or no longer owned are recorded in the
income statement under income. The public subsidies are recorded under assets if there exists,
independently of the presence of a formal concession by the relevant government authorities, reasonable
certainty that the company obtaining the subsidy will comply with the conditions required for the
concession and that the subsidies will be received.
- Revenues derived from chartering out the company's own vessels or from transport services are
accounted at the moment of the completion of the service.
The income from the sale of assets is recorded when the risks and rewards related to the ownership of the
asset are transferred to the buyer.
The so-called “shipments at year-end” are those shipments still in course at the balance sheet date, for
which the Group makes an estimate of the expected costs and revenues that will be recorded in relation
to the part of the completed shipment at the balance sheet date. This estimate is made with reference to
the duration and expected destination of the shipment, the consumption of fuel statistically expected and
estimated port expenses.
The charter contracts normally contain specific clauses which regulate the loading and unloading
operations between one journey and another, establishing the maximum duration permitted. Where these
time limits, contractually determined, are exceeded, the shipping company reserves the right to charge
damage for the stoppage period exceeding that contractually agreed. These revenues are called
“demurrage”.
- Costs sustained by the Group in carrying out operations are recorded in the income statement when
relating to goods and services purchased or consumed in the year or when there is no future utility.
- The ordinary maintenance expenses of the ship, incurred for the efficient maintenance of the fleet, are
recorded in the income statement in the year incurred.
- Dividends are recorded on an accruals basis at the moment in which the right arises. The dividends
payable are recorded as liabilities when they are approved by the ordinary shareholders’ meeting which
approves the annual accounts.
- Current income taxes are calculated based on the tax regulations in force at the reporting date. The
Parent Company, from January 1, 2006, with optional choice but binding for a period of 10 years for all the
ships managed by the Group, adhered to the “Tonnage Tax” regime. According to this fiscal regime, the
assessable income for IRES income tax purposes, deriving from the utilisation of ships in international traffic
registered in the Register as per Law No. 30 of February 27, 1998 (Constitution of the International Register)
is calculated on a forfeit basis on the net tonnage of the fleet, in accordance with articles 155 and 161 of
the Consolidated Finance Act. In the calculation of the forfeit income, gains realised on the sale of ships
are also included, with some specific limitations relating to ships already held at the date of subscription to
the new regime. For the activities undertaken by the group through the utilisation of the ships recorded in
the register as per Law No. 30/1998, which do not undertake international traffic, the “Tonnage Tax”
FINAVAL SPA Pag. 51

regime is not applied; however, the reduced rates are contained in Law No. 30/1998, which provides for
the total exemption of the IRAP regional tax and the reduction by 80% of the assessable IRES income taxes.
The deferred taxes are calculated on the temporary differences between the assessable income of an
asset or liability and the relative book value. The deferred tax assets, including those relating to previous
tax losses, are recognised only for those amounts for which it is probable there will be future assessable
income to recover the amounts.
- Loans are initially recognised at nominal value, net of charges and commissions incurred.
- The Group utilises derivative financial instruments principally for the management of financial risks relating
to interest rates and exchange rates. In accordance with IAS 39, derivatives financial instruments may be
accounted for under hedge accounting only when:
the hedging instrument is formally designated and documented at the start of hedging;
the hedge is expected to be highly effective;
the effectiveness can be reliably measured;
the hedge is highly effective during the various accounting periods for which it is designated.
Initially, all the derivative financial instruments are measured and recognised at fair value. Subsequently,
when the financial instruments have the characteristics to be recorded under hedge accounting and the
efficacy is verified, the following accounting treatment is applied:
1. Fair value hedge – If a derivative financial instrument is designated as a hedge to the exposure of the
changes in the current value of an asset or liability in the financial statements attributable to a specific
risk which can have effects on the income statement, the profit or loss after the initial change of the fair
value of the hedge instrument is recognised in the income statement. The profit or loss on the item
hedged, related to the risk realised, changes the book value of that item and is recognised in the
income statement.
2. Cash flow hedge – If a derivative financial instrument is designated as a hedge to the exposure of the
changes in the cash flows of an asset or liability recorded in the financial statements or of an operation
considered highly probable and which may have effects on the income statement, the effective
portion of the profits or of the losses of the financial instrument are recognised in a separate equity
reserve. The cumulative gains or losses are reversed from the net equity and recorded in the income
statement in the same period in which the hedged operation is recorded. The profits or losses
associated to a hedge or to that part of the hedge which has become ineffective are immediately
recorded in the income statement. If a hedge instrument or a relation of a hedge is closed, but the
operation hedged has not yet been realised, the cumulative profits and losses, up to that moment
recorded in equity, are recognised in the income statement when the relative operation is realised. If
the operation hedged is no longer considered probable, the profits or losses not yet realised and
recorded in equity are recognised immediately in the income statement.
The derivative financial instruments that, although effective in the reduction of the financial risks, based on
the provisions contained in the “risk management policy” of the Group, which may not apply hedge
FINAVAL SPA Pag. 52

accounting as per IAS 39, are recorded at fair value and the respective changes are recorded directly in
the income statement.
- Segment information - the Finaval Group operates in the shipping of crude petroleum and petroleum
products. In particular, the group operates through two Business Units, which based on the type of product
transported, are classified as Crude Oil and Product. In 2006, the Group commenced the disposal process
of the tanker fleet owned, retaining however the operational activities in the sector through the
management of the five vessels still owned and not sold at December 31, 2006, as well as the two bare
boat vessels rented (Bare Boat). At December 31, 2007, the Group operations in the Gas sector were
limited to the management of two rented bare boat vessels. It is also reported that the Finaval Group
undertook the transport of chemical products for a number of years. In 2005, however, all the chemical
vessels held by the Group were sold; the sales contract stipulated the continuation by Finaval of the
commercial contracts related to the vessels at the time of the sales, which were concluded during 2006.
From a geographical viewpoint, the Finaval Group operates in a single sector as the world market is not
broken down. This is confirmed by the fact that there are no specific vessels for certain geographic areas.
Discretional valuations and significant accounting estimates relating to the Group

In the preparation of the consolidated financial statements in accordance with IFRS, the Group’s management
must make accounting estimates and assumptions which have an effect on the values of the assets and
liabilities and disclosures contained in the accounts. The actual results may differ from the estimates. The
estimates and assumptions are revised periodically and the effects of any change are promptly reflected in
the financial statements.
FINAVAL SPA Pag. 53

FINAVAL SPA
Notes to the consolidated financial

statements for the year ended
December 31, 2007
FINAVAL SPA Pag. 54

It should be noted that in the analysis of the information shown in the tables and schedules below, differences
may arise in the figures compared to the aggregate financial statements due to roundings made at different
levels.
NOTES TO THE BALANCE SHEET
Non-current assets
Property, plant & equipment
Fleet (Note A)
The account, which at December 31, 2007 amounted to Euro 129,813 thousand, includes the carrying value of
the vessels owned by the Group, recorded net of the relative depreciation provision, and includes the
capitalised cost relating to the dry dock periods, depreciated between dry dock periods. This cost component
is also shown for the vessels not owned but leased under bare boat contracts, while no costs are recorded for
the vessels leased out under bare boat contracts in that, in this case, the maintenance costs are incurred by
the lessee.
The details of the movements are as follows:
In Euro thousands
Net balance Purchases Sales Depreciati Reclassification Net balance
1.1.07 on s 31.12.07
Fleet (historical cost) 249,243 20,359 (5,261) (54,142) 210,199
Fleet (acc. deprec.) (59,099) 2,154 (11,556) 3,293 (65,208)
Total fleet 190,144 20,359 (3,107) (11,556) (50,849) 144,991
Ship purchase grants (16,231) 1,053 (15,178)
Total net fleet 173,913 20,359 (3,107) (10,503) (50,849) 129,813
Note (1): the column “Reclassifications” includes the reclassified values of the ship "Neverland Soul”
under assets held-for-sale
The net decrease of Euro 44,100 thousand compared to the value recorded at December 31, 2006, equal to
Euro 173,913 thousand, is principally due to the combined effect of the following operations:
- reclassification of the net value of vessels held-for-sale of approx. Euro 50,849 thousand;
- depreciation in the year of Euro 10,503 thousand;
- new investments, including the dry dock costs capitalised, of approx. Euro 20,359 thousand;
- net disposals of approx. Euro 3,107 thousand.
Fleet under construction (Note B)

The account, amounting to Euro 20,775 thousand at December 31, 2007, is composed of advances paid to
the Samsung Heavy Industries shipyard and the initial costs incurred (principally construction studies and
analysis, preparation of the “site-office”, borrowing costs and commissions) for the construction of four new
petroleum vessels which will be delivered in 2009 and 2010.
At December 31, 2006, the balance of the account was Euro 21.4 million. The values at December 31, 2006
refer to four vessels to be delivered in 2008 and 2009. In 2007, a further two vessels were ordered with delivery
FINAVAL SPA Pag. 55

in 2010 and agreements were signed for the sale in 2008 of the first two vessels, which were, in accordance
with IFRS 5, reclassified under assets held-for-sale.
The details of the movements are as follows:
In Euro thousands
Fleet under construction
Balance at December 31, 2006 21,400
Increases 25,619
Reclassified to other accounts (26,244)
Other assets (C)

The account includes the value of the other tangible fixed assets capitalised, comprising buildings, plant and
machinery, equipment, EDP, furniture, fittings and automobiles, recorded net of the relative depreciation
provision.
In Euro thousands
Other assets 31/12/2006 31/12/2007 Change
Land and buildings 1,334 1,292 (42)
Plant and machinery 34 30 (4)
Other equipment 7 4 (3)

Other assets 774 681 (93)
Total 2,149 2,007 (142)
The movement in the year is illustrated in the table below:
In Euro thousands
beginning balance changes in the year ending balance
Other move. Other move.
Historic Accum. Balance Purchas Depreci Historica Accum. Balance
Sales historical accum.
al cost Deprec. 2006 es ation l cost Deprec. 2007
cost deprec.
Land and
buildings 1,395 61 1,334 - - - - 42 1,395 103 1,292
Plant &
Machinery 39 5 34 - - - - 4 39 9 30
Other
equip. 31 24 7 - - - - 3 31 27 4
Other assets 1,523 748 774 88 - (1) 3 179 1,610 929 681
Total 2,988 838 2,149 88 - (1) 3 228 3,075 1,068 2,007
It is recalled, as further described in attachment 1 relating to the description of the transition to IFRS, that in the
measurement of the tangible fixed assets subsequent to the initial recognition, the historical cost criteria was
maintained (as an alternative to fair value).
FINAVAL SPA Pag. 56

Intangible assets (Note D)

The movements in the intangible assets account during 2007 are shown in the table below.
In Euro thousands
Intangible assets
Balance at December 31, 2006 106
Increases 12
Amortisation (66)
Balance at December 31, 2007 52
At December 31, 2007, intangible assets amounted to Euro 52 thousand, a decrease of Euro 54 thousand on
the previous year.
The account “Other intangible assets” comprises costs relating to software purchased.
Financial assets
The financial assets recorded in the accounts are comprised of “Ministerial grant contributions”, “Other
receivables and deposits”, “Equity investments” and “Deferred tax assets”.
Subsidies (Note E)
The subsidies consist of the present value quota of the subsidies to be received relating to subsidies provided
by the relevant government authorities for the purchase, construction and demolition of new vessels. The
composition of the receivables for the years 2006 and 2007 are summarised in the table below:
In Euro thousands
Subsidies 31/12/2006 31/12/2007 Cge.
Receivables for subsidies within 12 months 766 2,240 1,474
Receivables for subsidies over 12 months 379 1 (378)
Total 1,145 2,241 1,096
The increase in the account, amounting to approx. Euro 1,096 thousand, is due to the combined effect of the
receipt of the instalments overdue in the year (a decrease of Euro 771 thousand) and new receivables relating
to the demolition of the vessels in the tanker sector due within one year (increase of Euro 1,847 thousand).
Other receivables and deposits (Note F)

For the years ended December 31, 2007 and 2006, the details of the account are shown in the table below:
In Euro thousands
Other receivables and deposits 31/12/2006 31/12/2007 Cge.
Guarantee deposits 117 354 237

Restricted current accounts 5,265 5,265
Other receivables 17 30 13
Total 134 5,649 5,515
FINAVAL SPA Pag. 57

The amount shown in the account “Restricted current accounts” refers to the payment on account relating to
the sale of the M/T Neverland Gold which was paid by the buyer through a restricted current account (so-
called “Joint Account”) to be released on the sale of the ship.
Equity investments (Note G)

The account includes the value of the investments in subsidiaries, associated companies and Joint Ventures,
excluded from the consolidation area and the value of the equity securities, valued at fair value, of the Banco
Popolare dell’Emilia Romagna.
The breakdown of the investments held at December 31, 2007 are shown below:
In Euro thousands
Value at Increases Decreases Other Value
Equity investments % held movement
31/12/2006 Purchases Sales s 31/12/2007
Naftilos A. Marine Ltd 50% 1,678 - - (1,678) -

Novamar Int. Scarl 50% 951 - - (8)- 943
Soc. Marittima Siciliana Srl 50% 13 - - (13)- -
Sub-total 2,642 - - (1,699) 943
Securities in portfolio 3,795 (527) 3,268
Total equity investments 6,437 (2,226) 4,211
As already described, the securities recorded in the financial statements, whose value at December 31, 2007
was Euro 3,268 thousand (Euro 3,795 thousand at December 31, 2006), refers to shares of Banco Popolare
dell’Emilia Romagna, considered as financial assets available-for-sale and, in application of IAS 39, measured
at fair value and recorded in an appropriate equity reserve.
The market value of these shares at December 31, 2006 was above the cost incurred by approx. Euro 921
thousand and, approx. by Euro 394 thousand at December 31, 2007.
Deferred tax assets (Note H)

The principal elements comprising the deferred tax assets are shown below:
In Euro thousands
Average
Temporary differences Amount rate Rate
IRES income taxes
- Sales representatives expenses 254 5.50% 14
- Foreign currency translation costs 664 5.50% 37
IRAP regional taxes
- Sales representatives expenses 333 13
- Shipping costs in the year 55 2
Total deferred tax assets at 31.12.2007 66
FINAVAL SPA Pag. 58

Current assets
Inventories of oil, lubricants and services in course (Note 1)
The inventories include the fuel and lubricants on board the ships at the year-end, recorded at the lower
between purchase cost, determined according to the weighted average cost method and market value, as
well as services in course of execution (shipments at year-end) calculated on a pro-rata basis of the service
provided, for the quota not yet invoiced before the year-end.
The table below shows the balances of the account:
In Euro thousands
Inventories 31/12/2006 31/12/2007 Cge.
Raw material, ancillary and consumables 1,256 1,747 491
Services in course of execution 121 - (121)
Total 1,377 1,747 370
The value of inventories from 2006 to 2007 increased by Euro 370 thousand, substantially due to the higher
number of embarkations managed compared to the end of 2006.
Trade receivables (Note L)

The account includes amounts due within one year of trade receivables, and receivables from subsidiaries,
holding companies and group companies of a commercial nature.
In Euro thousands
Trade receivables 31/12/2006 31/12/2007 Change
Trade receivables 9,220 7,430 (1,790)
Receivables from subsidiary and associated companies 5 - (5)
Receivables from group companies 1,310 12 (1,298)
Receivables from holding companies 298 7 (291)
Total 10,833 7,449 (3,384)
In particular, the trade receivables include the balances at the end of the year of receivables for charters,
demurrage and other. They derive from normal transport and rental operations and are adjusted to their
realisable values through a doubtful debt provision of Euro 133 thousand which has not changed from the
previous year.
The decrease of Euro 1,790 thousand compared to the previous year is principally due to the receipt of existing
receivables.
The receivables from companies subject to common control, excluded from the consolidation scope, amount
to Euro 1,310 thousand at December 31, 2006 and Euro 12 thousand at December 31, 2007, refers to the
company Finaval Aviation Srl. During the year, the financial receivable from the group company Finaval
Aviation Srl was settled.
The receivables from holding companies, amounting to Euro 298 thousand at December 31, 2006 and approx.
Euro 7 thousand at December 31, 2007, represents the receivable of Finaval S.p.A. from Finaval Holding S.p.A.
for various receivables.
During the year, the financial receivable from the group company Finaval Aviation Srl was settled.
FINAVAL SPA Pag. 59

Other receivables (Note M)

The breakdown of the account at December 31, 2007 and 2006 is shown in the table below:
In Euro thousands
Other receivables 31/12/2006 31/12/2007 Cge.
Other receivables 2,193 850 (1,343)
Accrued income 125 64 (61)
Prepayments 717 874 157
Total 3,035 1,788 (1,247)
Other receivables principally relate to receivables from insurance institutions for damages incurred on vessels.
Cash and cash equivalents (Note N)

The account is composed of bank and postal current accounts of the Group at the individual credit institutions
of the Group and cash held by the company. The book value of these assets coincides with the fair value.
The increase at December 31, 2007 of Euro 8,556 thousand is principally due to the share capital payment
made by a new shareholder close to the year-end.
Derivative financial instruments (Note O)

The details of the derivative financial instrument assets and liabilities at December 31, 2007 are shown in the
table below:
In Euro thousands
ASSETS FOR DERIVATIVE INSTRUMENTS Notional Fair value
DERIVATIVES ONINTEREST RATES
Fix Floater Swap Euro 1,666 -
IRS Euro 4,167 10

Zero Cost Collar Floor rising Euro 3,500 1
K-in collar step up Euro 5,022 5
IRS step-up USD 6,087 3
IRS Euro 5,000 13
TOTAL ASSETS FOR DERIVATIVE FINANCIAL INSTRUMENTS 32
FINAVAL SPA Pag. 60

At December 31, 2006, the total assets for derivative instruments amounted to Euro 818 thousand.
In Euro thousands
LIABILITIES FOR DERIVATIVE FINANCIAL INSTRUMENTS Notional Fair value
DERIVATIVES ON INTEREST RATES
IRS with floor EUR 600 3
Collar with k-in floor USD 9,465 27
IRS step-up with floor USD 31,000 335
IRS EUR 3,500 40
IRS USD 48,600 889
FOREIGN EXCHANGE DERIVATIVES
Strip with floor option k-out and k-in 1.261 – 1,60 USD 18,090 820
Strip with floor option k-out and k-in 1,250 – 1,60 USD 9,000 446
Strip with floor option k-out and k-in 1.310 – 1.50 USD 6,474 312
Knoch in Forward USD 5,520 636
TOTAL LIABILITIES FOR DERIVATIVE FINANCIAL INSTRUMENTS 5,641
At December 31, 2006, the total liabilities for derivative instruments amounted to Euro 3,075 thousand.
Tax receivables (Note P)

The tax receivables of approx. Euro 724 thousand at December 31, 2007 and approx. Euro 255 thousand at
December 31, 2006 principally refer to income tax payments on account.
Non-current assets held- for-sale (Note Q)

The account at December 31, 2007 amounts to Euro 77,092 thousand.
The account includes the net book value of the M/T Neverland Soul as well as the advances paid to the
Korean shipyard Samsung for the vessels “Neverland Gold” (Hull 1658) and “Neverland Sky” (Hull 1659) and the
relative costs capitalised. These amounts are reclassified under “Non-current assets held-for-sale” for which, as
at December 31, 2007, preliminary sales agreements were already signed (Memorandum of Agreement).
The account at December 31, 2006 amounted to Euro 1,240 thousand and included the net book value of the
gas tankers still in the fleet at December 31, 2006, but whose sale was approved by the Board of Directors and
for which, at that date, a preliminary sales agreement was already signed (Memorandum of Agreement) with
the client. Specifically this relates to the vessels operating in the LPG segment, “Fiemme” and “Azzurra Prima”.
The valuation of these assets was made at the lower of the inscription value and the fair value less costs to sell.
Non-current liabilities
Bank payables (Note A1)

The account includes the payables to credit institutions for the portion of the loans due within one year; the
bank payables due within one year are recorded under “current liabilities”.
The balances at December 31, 2007 and 2006 are shown in the table below:
FINAVAL SPA Pag. 61

In Euro thousands
Medium/long-term bank payables
In relation to the previous year:

a new mortgage was taken out with Bremer Landesbank to finance the purchase of M/T Naftilos;
the first two “draw downs” were made on the Fortis Bank loan relating to the construction of the
Neverland Gold vessel;
the first draw down of the “DSB” loan was made relating to the construction of the Neverland Sky
vessel;
two loans were drawn down from the Banca Antonveneta for a total amount of Euro 15 million to be
repaid in 2010.
The composition of the Finaval Group bank loans at December 31, 2007 is shown in the table below:
In Euro thousands
Short-
Balance at Medium/Long
Lender Duration Curr. Interest rate term
31/12/2007 term portion
portion
Libor USD 3 months +0,75-
Fortis Bank in pool 01/10/2015 USD 0.95% (LTV) 48,625 8.857 39.768
Libor USD 3 months
Unicredit in pool 01/06/2021 USD +0.80% 33,014 2.445 30.569
"Tranche B" Libor 3 months
Bremer Landersbank 01/01/2019 USD +1,1% "Tranche A” Libor 3 10,911 1.082 9.829
months +0.90%
Interbanca 01/02/2011 EUR Euribor 6 months +1.15% 10,500 3.000 7.500
Banco di Roma 01/02/2011 EUR Euribor 6 months +0.90% 10,132 2.919 7.213
Antonveneta 01/10/2008 EUR Euribor 3 months +1% 1,734 1.734 0
Antonveneta 01/10/2010 EUR Euribor 6 months+1% 4,167 1.667 2.500
Antonveneta 01/12/2010 EUR Euribor 6 months+1% 10,000 3.333 6.667
Unicredit 01/06/2015 EUR Euribor 6 months+1% 934 112 822
DSB USD 1,363 1.363
IFRS adjustments -760 -121 -639
Medium/long term bank loans 130.620 26.391 104,227
In compliance with some loans existing at December 31, 2007, the Group must respect some covenants
relating in particular to the ratio between the assets financed and the value of the loans. At December 31,
2007, the financial covenants were complied with.
The principal loans as at December 31, 2007 are shown below.
Fortis Bank –in Pool

In 2004, the Group completed a restructuring of the existing payable on the vessels in the Product sector, with
the assistance of Fortis Bank SA of Rotterdam, as Lead Bank in a syndicate of Credit Institutions. Through this
operation the pre-existing payable was fully repaid and a new mortgage loan was obtained for an original
amount of USD 56,500 thousand. In 2005, on the acquisition of the Neverland vessel by Finaval, the loan was
increased by a further amount of USD 42,200 thousand and some contractual clauses were renegotiated with
particular regard to the extension of the expiry terms.
FINAVAL SPA Pag. 62

Currently, the contract has a decreasing capital portion, with quarterly repayments, at a Libor variable rate on
USD at 3 months increased by a variable spread between 0.75% and 0.95% based on the ratio between the
total market value of the vessels and the residual payable, and an expiry date of October 2015, including the
so-called “balloon” (final repayment) of USD 11,800 thousand. The loan is secured by a mortgage on the ships
to which the loan refers.
Unicredit Banca d'Impresa – in Pool

This is a loan granted by a syndicate of banks with Unicredit Banca d’Impresa as lead bank, granted to
Energetica LTDA on June 26, 2006, of an original amount of USD 54 million and with secured guarantees on the
vessel financed (Neverland Soul).
The loan is repayable through equal quarterly capital instalments, at a Libor variable interest rates on USD at 3
months increased by a spread of 0.85%.
In January 2008, on the sale of the M/T Neverland Soul, the above-mentioned loan was fully repaid.
Bremer Landesbank Kreditanstalt Oldenburg - Girozentrale

This relates to a loan granted to Naftilos A. Marine Ltd on January 12, 2007, of an original amount of USD 35,200
thousand (USD 30 million for the A Tranche and USD 5.2 million for the B Tranche). The loan, with final repayment
in January 2019, requires quarterly capital repayments and a Libor variable interest rate on USD at 3 months
increased by a spread of 0.95% on the A Tranche and a spread of 1.10% on the B Tranche.
Interbanca
This relates to an interest bearing loan of an original amount of Euro 15 million granted to the Parent Company
on March 14, 2006, which provides for half yearly repayments up to February 2011, at an Euribor interest rate at
6 months increased by a spread of 1.15%.
Banca di Roma
This relates to an interest-bearing mortgage of an original amount of Euro 15 million granted to the Parent
Company on February 16, 2006 with guarantees given by the parent company of Finaval. The loan provides for
half yearly repayments until February 2011 at a rate of Euribor at 6 months increased by a spread of 0.90%.
Banca Antonveneta
This relates to interest bearing loans of a total amount of Euro 20 million granted to the Parent Company
between 2005 and 2007, which provides for half yearly repayments, at a Euribor interest rate at 6 months
increased by a spread of 1%.
As previously described (in accordance with the conditions of some loans as at December 31, 2007), the
Group must comply with some “covenants” principally referring to the loan to value ratio of the vessels and
guaranteed minimum levels of net equity.
All of the “covenants" in the loan contracts had been complied with at December 31, 2007.
FINAVAL SPA Pag. 63

Personnel provisions (Note B1)

This provision relates to the employee leaving indemnity calculated in accordance with IAS 19 on an actuarial
basis.
In accordance with international accounting standards, the employee leaving indemnity is considered a post
employment defined-benefit plan, or rather as defined services, which is recorded utilising the unit credit
projection method.
The changes in the year regarding the present value of retirement benefit obligations were as follows:
In Euro thousands
EMPLOYEE LEAVING INDEMNITY
Opening balance i n the present value of the defined benefit obligation at December 31, 2006 779
Effect of employee indemnity reform (curtailment) (54)
Current service cost 193
Financial charges on obligations undertaken 31
Benefits paid in 2007 (332)
Present value of the defined benefit obligation at December 31, 2007 616
Net actuarial profit/(loss) recognised in the year (64)
Closing balance i n the present value of the defined benefit obligation at December 31, 2007 552
As already described in the paragraph “accounting and consolidation principles”, the Group has decided not
to utilise the corridor method for the gains and losses generated subsequent to January 1, 2005 and to record
all the cumulative actuarial gains and losses existing at that date.
Average number of employees

The average number of employees for the years 2007 and 2006, broken down by category and including
seagoing personnel is as follows:
Average number of employees 31/12/2006 31/12/2007 Change

Executives 3 3 -
Ashore personnel 29 28 (1)
Seagoing personnel 294 234 (60)
Total average personnel 326 265 (61)
Note 1: The data indicated includes 22 Crew referring to the Company Naftilos A.M. Ltd, consolidated proportionally.
Deferred tax liability (Note C1)

The composition of the deferred tax liability at December 31, 2007 is shown below.
In Euro thousands
Temporary differences Amount Average rate Rate
IRES income taxes
- Exchange gains 1,262 5.50% 69
- Deferred gains on disposals 1,963 5.50% 108
- Securities valued at fair value 904 27.50% 249
- Damage income and grants not received 2,186 5.50% 120
- Other net temporary differences 436 5.50% 24
IRAP regional taxes
- shipments at year end 398 15
Deferred tax liability at 31.12.2007 585
FINAVAL SPA Pag. 64

Provision for charges and expenses (Note D1)

The table below shows the composition of the provision for charges and expenses:
In Euro thousands
Risks and future charges 31/12/2006 31/12/2007 Change
Risks on investments – Novamar Int. Holland 118 118 -
Future personnel costs - 660 660
Interest calculated on terminated Mare Glaciale and Capo Horn loan 84 84 -
Total 202 862 660
Current liabilities
Bank payables (Note E1)
The account includes bank overdrafts, the current portion of loans and short-term loans.
The breakdown of the account is shown in the following table:
In Euro thousands
Short-term bank payables 31/12/2006 31/12/2007 Change
Advances 534 53 (477)
Mortgages 21,094 26,391 5,293
Bank loans 8,408 24,460 16,052
Total 30,036 50,904 20,868
Trade payables (Note F1)

The composition of the account, with indication of the geographic breakdown, is shown in the table below:
In Euro thousands
Trade payables 31/12/2006 31/12/2007 Change
Trade payables 9,429 7,853 (1,576)
Payables to subsidiary and associated companies 750 801 51
Total 10,179 8,654 (1,525)
Other payables (Note G1)

The account principally relates to payments on account from clients due within one year, payables to pension
and social security institutions, as well as other payables and accruals and deferred income due within one
year.
The breakdown of the account is shown below:
In Euro thousands
Other payables 31/12/2006 31/12/2007 Change
Advances due within one year 2,711 1,576 (1,135)
Payables to pension and social security institutions 146 179 33
Other payables due within one year 2,541 7,122 4,581
Accrued liabilities 1,027 909 (118)
Deferred income 830 738 (92)
Total 7,255 10,523 3,269
The reduction in the account Deferred Income is principally due to the lower amount of revenues relating to
the subsequent year recorded in the so-called “shipping at year-end”.
FINAVAL SPA Pag. 65

The account other payables at December 31, 2007 principally refers to payables relating to a payment on
account equal to 10% of the sales price of the M/T Neverland Gold (Euro 5,266 thousand) and to payables to
the Danish shipyard Aarthus Bankrupt (Euro 1 million).
Tax payables (Note H1)

The account, amounted to Euro 354 thousand at December 31, 2007 and Euro 145 thousand at December 31,
2006 and principally includes the corporation tax payables.
Shareholders' Equity
Share capital (Note I1)
The share capital fully paid-in amounts to Euro 32,293 thousand, consisting of 32,293,000 ordinary shares of a
par value of Euro 1.00 each. The increase compared to 2006 derives from a paid-in share capital increase
reserved to Vitol B.V. approved on December 19, 2007. The payment by the new shareholder was Euro 20,183
thousand and was recorded as a Share Capital increase of Euro 8,073 thousand and a share premium reserve
increase of Euro 12,110 thousand. Following this operation, Vitol B.V. holds 25% of the share capital while
Finaval Holding holds the remaining 75%.
Share premium reserve (Note L1)

The reserve amounts to Euro 19,495 thousand and includes:
Euro 7,385 thousand as the difference between the nominal value of the convertible bonds and the share
capital increase in 2004 following the conversion of these bonds;
Euro 12,110 thousand relating to the share capital increase detailed in note I1.
Legal reserve (Note M1)

The legal reserve amounts to Euro 2,087 thousand at December 31, 2007 (Euro 2,033 thousand at December 31,
2006) and includes the profits allocated by the Parent Company Finaval S.p.A. up to 5% of the annual profit. This
reserve increased compared to the previous year by Euro 54 thousand following the allocation of the net profit
for 2006.
Other reserves (Note N1)

The other reserves, amounting to Euro 35,910 thousand at December 31, 2007 and Euro 33,549 thousand at
December 31, 2006, principally consist of retained earnings. The increase in 2007 of Euro 2,361 thousand is
principally due to the allocation to the Extraordinary Reserve of almost all of the result for the year of the
Parent Company Finaval S.p.A.. A reduction was recorded for the direct allocation of costs relating to the
above-mentioned share capital increase for an amount of Euro 250 thousand.
Cash Flow Hedge Reserve (Note O1)

This negative reserve of Euro 904 thousand at December 31, 2007 represents the negative fair value at the end
of year of the derivative financial instruments of the Group to hedge against interest rate risks in accordance
with the procedures outlined in the paragraph “management of the financial risks” in the present notes, which
may be treated as hedge accounting. The details of the derivative positions at December 31, 2007 are shown
in the table in Note O.
FINAVAL SPA Pag. 66

Fair value reserve of financial assets held-for-sale (Note P1)

This reserve - positive at December 31, 2006 for Euro 618 thousand and for Euro 145 thousand at December 31,
2007 - refers to the fair value adjustment, represented by the market price at the balance sheet date, of the
shares of Banco Popolare dell’Emilia Romagna held in portfolio by the Parent Company, net of the tax effect.
The change in the fair value of these assets was recorded under equity as treated as financial assets which are
not held for the intention of resale or trading, and therefore are classified under “financial assets held-for-sale”.
Retained earnings (Note Q1)

This account, accounting to Euro 3,425 thousand at December 31, 2007 and Euro 2,617 thousand at
December 31, 2006, also includes the positive effect on the net equity generated from the transition to IFRS.
Net profit for the year (Note R1)

The account refers to the net result of the Finaval Group. The table below shows the statement of changes in
shareholders’ equity in the year.
FINAVAL SPA Pag. 67

STATEMENT OF CHANGES IN CONSOLIDATED SHAREHOLDERS’ EQUITY
In Euro thousands
Share Share Legal Other Trans. and IAS – IFRS Fair value Retained Result for Group
capital premium reserve reserves hedge Trans. reserve earnings the year shareholder
reserve reserve reserve s' equity
Balance at December 31, 2005 24,220 7,385 1,579 21,962 0 0 30 1,250 13,498 69,924
Allocation of the 2005 result 454 11,703 1,341 -13,498 0
Change in cash flow hedges net of

the tax effect -707 -707
Change in financial assets available-

for-sale at fair value net of the tax
effect 588 588
Total gains/(losses) recognised

directly to equity in the year 0 0 0 0 -707 0 588 0 0 -119
Other movements -116 26 -90
Result 2006 3,885 3,885
Allocation of the 2006 result 54 3,023 808 -3,885 0
Change in fair value deriving from

hedging and of financial assets
available-for-sale net of the tax effect -197 -473 -670
Increase in reserved share capital 8,073 12,110 20,183
Other movements -662 -662
Result for the year 1,679 1,679
NOTES TO THE INCOME STATEMENT
Comments are provided below on the composition and changes in the main income statement accounts in
the period 2006 - 2007.
In accordance with IFRS 5, the individual income statement accounts are shown net of the components
relating to discontinued operations, Chemical in 2006 and LPG in 2007, whose results, net of the tax effect,
are reported in the account “Profit (loss) from Discontinued Operations”. In relation to this, it should be noted
that the comparison between the revenue and costs for the periods and the values relating to the LPG
statement are shown on a single line of the income statement at December 31, 2007 and are reported line-
by-line in the previous year. The application of the accounting principle IFRS 5 resulted in a significant
reduction in the income statement accounts “Net Revenues” and to the cost for “Bunkerage”, “Charter
Expenses”, “Seagoing Personnel”, “Maintenance” and “Other Vessel Costs”.
It should be noted that in the analysis of the information shown in the tables and schedules below,
differences may arise in the figures compared to the aggregate financial statements due to roundings made
at different levels.
It should also be noted that in the following analysis, the percentage of the “Net Revenues ” and of the
different income statement accounts is compared to the Time Charter Base revenues equal to 100. The Time
Charter Base comparison, in relation to the Group operating segments, is considered more significant as this
is not impacted by differences in the allocation of the shipping costs in the “Spot” and “Time Charter” type
contracts.
Net revenues (Note 1)

The Finaval Group operates through three Business Units, which, based on the types of product shipped and
the types of market served, are classified as Crude Oil, Product Medium Range and Product Small size. In
particular, this last sector, which in 2007 saw the start-up of its activities through the incorporation of the
“Cabofin” Joint Venture, relates to short range shipping of derivative petroleum products in the
Mediterranean area.
In 2006, the Group commenced the disposal process of the gas tanker fleet owned which was completed in
the first half of 2007, continuing as an operator in this sector through Bare Boat charters. It is also reported that
the Finaval Group undertook the transport of chemical products for a number of years. In 2005, however, all
the chemical vessels held by the Group were sold; the sales contract stipulated the continuation by Finaval
of the commercial contracts related to the vessels at the time of the sales, which were concluded during
2006.
As previously described, in accordance with IFRS 5 the operating result of the Chemical segment in 2006 and
the LPG segment, for the year ended December 31, 2007, is reported, net of the tax effect, in a single line
“Net profit/loss from Discontinued Operations” at the end of the income statement. Summarised income
statements of the Chemical and the Discontinued LPG sectors are shown at the end of the Notes.
Net revenues by area of activity are shown in the table below:
In Euro thousands
Net revenues 31/12/2006 % 31/12/2007 %
Crude Oil 35,861 61.5% 37,231 59.20%
Product Medium Range 19,531 33.5% 23,355 37.14%
Product Small size - - 2,303 3.66%
LPG 23,991 41.1% - -
Total 79,383 136.1% 62,889 141.71%
For a better understanding of revenues, the Spot contracts invoiced include the cost of transport, while the
Time Charter contracts are invoiced net of these costs, which are borne by the charterer.
Net revenues decreased from Euro 79,383 thousand at December 31, 2006 to Euro 62,889 thousand at
December 31, 2007, a reduction of Euro 16,494 thousand in the period (-20.8%). This decrease is principally
due to the exclusion of the income from the Discontinued LPG sector and to the different classification of the
residual amounts referring to the same sector, registered in 2007 together with other income and cost items in
the single income statement account “Net profit (loss) from discontinued operations”.
In the other Business Units, apart from the start-up of the Product Small Size activities, an increase was
registered in both the Business Units already in operation and attributable in the “Crude Oil” sector to the
greater number of Spot charters while in the “Product Medium Range” to the entry into the fleet of the M/T
Naftilos AN.
No subdivision by geographic areas was made as the vessels operate in a single global market and the
individual vessels are not limited to commitments in specific areas.
Port, bunker and commission expenses - voyages costs (Note 2)

The table below shows the breakdown of the account for the years 2007 and 2006:
In Euro thousands
Port, bunker and commission expenses
31/12/2006 % 31/12/2007 %
Bunker 8,091 13.9% 8,560 19.29%
Commissions 903 1.5% 1,046 2.36%
Port expenses 6,152 10.6% 7,830 17.64%
Joint venture management 5,581 9.6% 1,877 4.23%
Changes in inventory 335 0.6% (804) (1.81%)
Total 21,063 36.2% 18,509 41.71%
The transport costs decreased from Euro 21,063 thousand in 2006 to Euro 18,509 thousand in 2007, a reduction
of Euro 2,554 thousand (-12.1%). The decrease in the account “joint venture management” is due to better
contractual terms for Finaval in relation to the joint venture with Vitol SA. This recalculation is applied to the
variation in certain parameter benchmark values relating to the charter market.
Time Charter Equivalent Earnings (Note 3)

The table below shows the Time Charter equivalent earnings by area of activity:
FINAVAL SPA Pag. 70

In Euro thousands
Time Charter equivalent ernings 31/12/2006 % 31/12/2007 %
Crude Oil 22,948 39.3% 21,324 48.05%
Product Small size - - 1,633 3.68%
LPG 16,105 27.6% - -
Total 58,320 100.0% 44,380 100.00%
The Time Charter base equivalent earnings from Euro 58,320 thousand in 2006 to Euro 44,380 thousand in
2007, a decrease of Euro 13,940 thousand (-23.9%).
This decrease is principally due to the exclusion of the income from the Discontinued LPG sector and to the
different classification of the residual amounts referring to the same sector, registered in 2007 together with
other income and cost items in the single income statement account “Net profit (loss) from discontinued
operations”.
With reference to the Crude Oil operations, the decrease derives from different elements principally due to
the weakness of the USD compared to the Euro.
The net revenues relating to the Product Medium Range activities increased due to the expansion of the
fleet following the acquisition of the vessel Naftilos AN.
Hire costs (Time Charter In – Bare Boat In) (Note 4)

In Euro thousands
Hire costs 31/12/2006 % 31/12/2007 %
Time Charter hire costs 6,786 11.6% 8,658 19.5%
Bare boat hire costs 3,514 6.0% 0 0.0%
Total 10,300 17.6% 8,658 19.5%
The charter expenses decreased from Euro 10,300 thousand in 2006 to Euro 8,658 thousand in 2007, a
reduction of Euro 1,644 thousand (-15.9%). This decrease is due to the combined effects of:
a reclassification of the bare boat chartering expenses as relating to two gas tankers to be sold;
an increase in Time Charter expenses due to the commencement of the “Cabofin” activity in the
“Product small size” sector through the spot usage of charters.
Operating costs (Note 5)

In Euro thousands
Operating costs 31/12/2006 % 31/12/2007 %
Seagoing personnel 10,788 18.50% 5,990 13.50%
Maintenance 6,175 10.59% 2,815 6.34%
Other shipping costs 3,763 6.45% 3,081 6.94%
Insurance 2,414 4.14% 1,704 3.84%
Other costs and expenses 2,559 4.39% 791 1.78%
Damage income (499) (0.86%) (299) (0.67%)
Total 25,200 43.21% 14,082 31.73%
FINAVAL SPA Pag. 71

The operating costs decreased from Euro 25,200 thousand in 2006 to Euro 14,082 thousand in 2007, a
decrease of Euro 11,118 thousand (44.1%). The decrease is principally due to the significant reduction in
maritime personnel and maintenance, items significantly impacted by the effects deriving from the
discontinuation of the gas tanker sector, characterised by older vessels and although with lower profitability,
requires a large use of personnel and maintenance.
The salaries of seagoing personnel are shown net of contributions as per Law 30 of 1998, as a form of tax
credit on the employee withholding taxes made by the companies of the Group.
Fleet contribution margin (Note 6)

The fleet contribution margin, a figure which expresses the capacity of the fleet management to cover
general costs, decreased from Euro 22,820 thousand in 2006 (with a percentage of 39.1% on the total Time
Charter equivalent earnings) to Euro 21,640 thousand in 2007 (with a percentage of 48.8% on the total Time
Charter equivalent earnings) and recorded a total decrease of Euro 1,180 thousand, an improvement
compared to the Time Charter equivalent earnings of approx. 9 percentage points.
The Group achieved this result through optimising the mix of services and favouring, as previously described,
the use of own vessels (with higher added value) to chartered vessels.
Overhead costs (Note 7)

The table below shows the breakdown of the account for the years ended December 31, 2007 and 2006:
In Euro thousands
Overhead costs 31/12/2006 % 31/12/2007 %
Employees 2,750 4.7% 3,512 7.9%
General expenses 3,057 5.2% 4,877 11.0%
Rent and equipment 450 0.8% 414 0.9%
Total 6,257 10.7% 8,803 19.8%
Overhead costs increased from Euro 6,257 thousand in 2006 to Euro 8,803 thousand in 2007, an increase of
Euro 2,546 thousand (40.7%). This increase is principally related to the costs incurred for the listing of the
company and as it was interrupted during the final phase of the process, almost all of the related costs were
sustained.
Other revenues/costs (Note 8)

In Euro thousands
Other revenues/costs 31/12/2006 % 31/12/2007 %
Other revenues 1,462 2.5% 642 1.4%
Other costs (1,977) (3.4%) (831) (1.8%)
Total (515) (0.9%) (189) (0.4%)
The accounts other revenues and other costs in 2006 principally include prior year income of Euro 1,175
thousand, prior year charges of Euro 1,558 thousand and charges relating to the consortium management of
the Novamar International of Euro 414 thousand.
FINAVAL SPA Pag. 72

The accounts other revenues and other costs in 2007 principally include prior year income of Euro 566
thousand and prior year charges of Euro 714 thousand.
Result on disposal of vessel (Note 9)

In Euro thousands
Result on disposal of vessel 31/12/2006 % 31/12/2007 %
Gains from sale of ships - 0.0% - -
Losses from sale of ships (135) -0.2% - -
Other income and charges - 0.0% - -
Total (135) -0.2% - -
The losses from the sale of vessels in 2006 related to the sale of the LPG Adrastea.
EBITDA (Note 10)

The Ebitda decreased from Euro 15,913 thousand in 2006 to Euro 12,646 thousand in 2007, a decrease of Euro
3,267 thousand (-20.5%). This reduction is principally related to the increase in overhead costs and to the
contraction in the contribution margin as already described.
The table below shows the breakdown of the EBITDA by sector of activity for the two years:
In Euro thousands
EBITDA (a) 31/12/2006 % 31/12/2007 %
Crude Oil 10,513 45.7% 6,362 29.83%
Product Small size 37 2.27%
Lpg (2,454) -15.2% - -
Total 15,913 27.3% 12,646 28.49%
Notes:
(a) The EBITDA is defined by the directors of the parent company, as the “operating margin”, as resulting from the
consolidated income statement approved by the Board of Directors, before depreciation and amortisation as
accounted in the consolidated income statement.
The EBITDA is not defined as an accounting measure as per IFRS and therefore should not be considered as an
alternative measure for the evaluation of the performance of the Group’s operating results. As the composition of the
EBITDA is not regulated by the applicable accounting standards, the criteria used in the calculation of the Ebitda by
the Group may not be uniform with the criteria adopted by other operators/groups and, therefore, may not be
comparable.
FINAVAL SPA Pag. 73

Amortisation and depreciation (Note 11)
In Euro thousands
Amortisation & depreciation 31/12/2006 % 31/12/2007 %
Depreciation of fleet 10,954 18.8% 11,270 25.39%
Subsidies art. 10 Law 132/94 (715) -1.2% (713) (1.61%)
Subsidies Law 234 14/6/89 (350) -0.6% (348) (0.78%)
Depreciation of other tangible
assets 235 0.4% 228 0.51%
Amortisation of intangible assets 72 0,1% 66 0,1%
Total 10,196 17.5% 10,503 23.67%
The net increase in the fleet depreciation is principally due to the combined effect of:
lower depreciation in the Discontinued LPG sector in the first half of 2007;
higher depreciation in 2007 on the Crude Oil sector Neverland Soul, which entered into fleet at the end
of June 2006;
higher depreciation in 2007 on the Product sector Naftilos AN, which entered into the fleet in January
2007.
The subsidies on plants received relating to the fleet are classified as a direct reduction of the relative
depreciation costs.
EBIT (Note 12)

The operating margin decreased from Euro 5,717 thousand in 2006 to Euro 2,143 thousand in 2007 (-62.5%)
due to the already commented upon gross operating margin as well as higher depreciation recorded in
2007 on the new vessels in the fleet.
The table below shows the breakdown of the EBIT by sector of activity for the two years:
In Euro thousands
EBIT 31/12/2006 % 31/12/2007 %
Crude Oil
7,258 31.6% 1,826 8.56%
Product Medium Range
2,556 13.3% 280 1.31%
Product Small size
- - 37 2.27%
Lpg
(4,097) -25.4% -
Total 5,717 9.8% 2,143 4.83%
Net financial income (charges) (Note 13)

In Euro thousands
Financial Management 31/12/2006 % 31/12/2007 %
Financial income 2,570 4.4% 1,181 2.66%
Interest on mortgages, loans and banks (7.397) -12,7% (8,453) -19.05%
Fair value of derivative instruments (372) -0,6% (2.828) -6,36%
Exchange Differences 3,308 5.7% 8,916 20.09%
Adjustments to financial asset values 41 0,1% 15 0,03%
Total (1,850) -3.2% (1,169) -2.63%
FINAVAL SPA Pag. 74

The positive effect of the exchange differences recorded in 2007 is principally due to the conversion at the
year-end of the financial debt expressed in USD, compared to a depreciation of the US currency against the
Euro during the year.
The increase of Euro 1 million in the interest recorded in 2007 compared to the previous year is principally due
to the charges connected to the new loan granted to the Group for the acquisition of the M/T Naftilos.
Net profit from continuing operations (Note 14)

The table below shows the Group income taxes, current and deferred, for the years 2007 and 2006:
In Euro thousands
31/12/2006 31/12/2007
Profit before taxes 3,867 974

Income taxes (278) (191)
Deferred tax charges 523 (138)
Net profit from continuing operations 4.112 645
Profit/(loss) from discontinued operations (Note 15)

The table below shows the results from Discontinued Operations for the two years.
In Euro thousands
31/12/2006 % 31/12/2007 %
Profit /(loss) from discontinued operations (227) -0.4% 1,034 2.3%
In accordance with IFRS 5, the total gains and losses in the management of the vessels in the Chemical
sector, sold during 2005, but whose operations continued in the initial months of 2006, are reported on a
single line item in the income statement.
In relation to this, the result in the LPG sector in 2007 is principally due to the sale of the fleet which generated
a net gain of Euro 316 thousand and income deriving from ministerial grants of Euro 1,847 thousand for the
demolition of the two vessels.
FINAVAL SPA Pag. 75

The income statements, including the tax effects, for 2006 of the Chemical sector and 2007 of the LPG sector
are shown below.
Chemical Sector
In Euro thousands
31/12/2006 %
Net revenues 7,787 125.9%

Port, bunker and commission expenses (1,601) -25.9%
TIME CHARTER EQUIVALENT EARNINGS 6.186 100,0%
Hire charges (6,368) -102.9%

Operating costs 9 0.1%
FLEET CONTRIBUTION MARGIN (172) -2,9%
Overhead costs - 0.0%

Other revenues/costs 13 0.2%
Result on disposal of vessel - 0.0%
EBITDA (159) -2,6%
Amortisation & depreciation - 0.0%

EBIT (159) -2,6%
Net financial income (charges) (62) -1.0%

PRE-TAX RESULT (222) -3,6%
Income taxes (5) -0.1%

Deferred tax charges - 0.0%
Chemical division net profit (loss) (227) -3.7%
FINAVAL SPA Pag. 76

LPG Sector
In Euro thousands
31/12/2007 %
Net revenues 7,851 126.0%

Port, bunker and commission expenses (1,619) (26.0%)
TIME CHARTER EQUIVALENT EARNINGS 6.232 100,0%
Hire charges (3,207) (51.5%)

Operating costs (3,539) (56.8%)
FLEET CONTRIBUTION MARGIN (514) (8,2%)
Overhead costs (92) (1.5%)

Other revenues/costs 1,859 29.8%
Result on dosposal of vessel 316 5.1%
EBITDA 1,569 (30,2%)
Amortisation & depreciation (519) (8.3%)

EBIT 1,050 16,8%
Net financial income (charges) (15) -0.3%

PRE-TAX RESULT 1,034 16,6%
Income taxes - -
Deferred tax charges - -
LPG division net profit/(loss) 1,034 16,6%
FINAVAL SPA Pag. 77

MANAGEMENT OF FINANCIAL RISKS
The Group adopted a policy for the management of financial risks, based on the business operations and the
strategic guidelines.
With regard to the financial risk, the Group defined a specific risk management policy in order to identify,
evaluate and mitigate the financial risks, also incorporating, where considered appropriate, the utilisation of
derivative financial products.
The Group risk management policy is based on the following criteria:
- the Group manages risks in order to preserve the expected value of the company’s assets;
- the risk management policies operate in order to fully utilise the so-called “natural hedge conditions”,
minimising in this manner the net exposure to financial risks without incurring additional charges on
hedging contracts;
- the derivative hedging contracts are subscribed exclusively against effective exposures to financial risks
which are specifically identified;
- all the risk management operations of the Group are based on the principle of prudence;
- the risk management policy has the purpose of identifying in a timely manner operational events and
market developments which can potentially have an impact on the income statement;
- all the management activities of the financial risks are undertaken within the limits approved by
company Management;
- the personnel responsible for the implementation of the risk management policy have the necessary
professional qualifications and are authorised to operate exclusively within the limits defined by the risk
management policy (and by any further specific powers).
In relation to the details of the derivative financial instruments, reference should be made to note O of
present notes.
Through its activities, the Group is exposed to various risks of a financial nature:
- liquidity risk;
- credit risk;
- foreign currency risks (Euro/USD);
- interest rate risk.
Liquidity risk
The Group is exposed, in the carrying out of the ordinary commercial transactions, to the liquidity risk arising
from the misalignment of cash flows in and out.
In order to ensure its capacity to meet all financial obligations at any moment which are required to seize
possible business opportunities not planned or unforeseen cash disbursements, the Group holds a surplus
credit line.
The excess liquidity is invested temporarily on money markets in readily liquid operations.
The Group has a liquidity plan which is utilised to measure and manage the liquidity risk which permits a
careful planning of the normal liquidity needs.
The contractual maturities of the financial assets and liabilities are shown in the following table:
FINAVAL SPA Pag. 78

In Euro thousands
Amounts due within 1 Amounts due between Amounts due over 5 Total at
Financial assets
year 1 and 5 year year 31/12/2007
Subsidies 2,240 1 2,241
Other receivables and deposits 5,264 384 5,648
Deferred tax assets 66 66
Trade receivables 7,449 7,449
Other receivables 1,788 1,788
Cash and cash equivalents 22,787 22,787
Derivative financial instruments 32 32
Tax assets 724 724
Total financial assets 40,350 385 - 40,735
Financial liabilities
Bank payables 50,904 60,932 43,295 155,131
Derivative financial instruments 5,641 5,641
Trade payables 8,654 8,654
Other payables 10,523 10,523
Tax liabilities 354 354
Total financial assets 76,076 60,932 43,295 180,303
Credit risk
Also in order to mitigate the risk relating to the recoverability of trade receivables, the Group operates
exclusively with commercial partners with recognised standing and high levels of solvency, at both national
and international level.
For this reason, historically specific difficulties of credit collection have not been encountered.
Foreign currency risks (Euro/USD)

The shipping sector trade is normally carried out on a global market, where a large part of the ordinary
commercial transactions and almost all of the negotiations for the purchase/sale of vessels and the
agreement of the relative financial contracts are in foreign currencies (USD). Consequently, the economic
and financial results of the Group are in part impacted by fluctuations between the Euro and the USD.
In this economic environment, the Finaval Group, following a careful analysis of its exposure to the Euro/USD
exchange rate fluctuations and of the opportunities offered on the financial markets, defined its hedging
strategy which provides that:
- subscription of specific hedging contracts of the exchange risk relating to the medium/long term
financial debt denominated in USD. In particular purchase options on US Dollars were acquired with a
protection exchange rate for the duration of the loan which, up to the cap, allows an economic benefit
related to any depreciation in the US currency. Where the US Dollar/Euro should reach the knock-in cap
the company would however be covered by a strike exchange rate fixed by the option compared to
the relative financial risk (so-called “option strip with knock in cap”);
FINAVAL SPA Pag. 79

- with reference to the ordinary commercial transactions there is a so-called “natural hedge” in that the
risk connected to the fluctuations in the value of the invoicing denominated in USD de facto mitigates
the corresponding changes recorded in the commercial payables for the part denominated in USD.
In relation to the impact in the changes in the exchange rate of the Euro/USD on the operational activity, this
change is reflected almost completely on the EBITDA, taking account that the revenues and a significant
portion of the costs are normally in USD and only the overhead costs, part of the crew costs and part of the
maintenance costs are in Euro. The impact at EBITDA level is normally recovered at Net Profit level, in that the
“Financial Management” result off-sets more or less proportionally the changes which impact the EBITDA
level.
In relation to the sensitivity of the company to the exchange risk on the financial instruments, the table below
shows the effects on the income statement and net equity (assuming that other variables, in particular
interest rates, remain constant).
The tables were prepared including the financial asset and liability balances at the year-end denominated in
USD, including the assets and liabilities whose exchange risk was hedged through derivative financial
instruments, and the financial instruments at year end.
There are no significant transactions in foreign currencies other than the US Dollar.
Following the adherence by the Parent Company to the flat rate “tonnage tax”, the changes indicated
below do not have significant tax effects.
Book value +10 notional -10 notional
In Euro thousands IS Effect NE Effect IS Effect NE Effect
Trade receivables 2,554 (162) 186

Trade payables (3,984) 253 (290)
Other receivables and deposits
5,265 (335) 384
Other receivables 1,208 (77) 88
Other payables (9,310) 592 (679)
Cash and cash equivalents 21,288 (1,354) 1,551
Bank payables (93,153) 5,925 (6,789)
Foreign exchange derivatives (4,348) (3,812) 2,711
Total exposure (80,480) 1,030 0 (2,838) 0
Interest rate risk

The shipping sector is typically characterised by a high level of capital and therefore large utilisation of
medium/long term bank debt. The Group financial management is impacted by changes in interest rates,
both in the European and US markets.
In this context, the choice of hedging, and the duration, is therefore made in view of the relative
expectations of the interest rate curve.
FINAVAL SPA Pag. 80

The minimum hedge on the interest risk is fixed at Group level at a quota above 70% of the total
medium/long term financial debt for the period.
The benchmark parameters on the bank debt are prevalently the Euribor and the USD Libor for the period.
The sensitivity of the group to the exchange risk is shown in the table below, based on the other market risks
remaining unchanged (in particular USD/Euro exchange).
Following the adherence by the Parent Company to the flat rate “tonnage tax”, the changes indicated
below do not have significant tax effects.
+100 basis point -100 basis point

In Euro thousands Book value IS Effect NE Effect IS Effect NE Effect
Cash and cash equivalents 22,787 185 (185)
Loans and mortgages (155,131) (1,483) 1,483
Cash flow hedges (905) 470 465 (470) (465)
Other interest rate derivatives (356) 1,759 (1,759)
Total exposure (133,605) 931 465 (931) (465)
The income statement effect of the sensitivity analysis illustrated above was calculated on the basis of the
average book values of the period, as considered more representative compared to the book values at the
end of the period.
FINAVAL SPA Pag. 81

INFORMATION ON DIRECTION AND CO-ORDINATION ACTIVITY
The company is under the direction and co-ordination of the parent company Finaval Holding SpA which
directly holds 75% of the share capital.
In accordance with article 2497 bis of the Civil Code, information is provided as an attachment on the
parent company as at December 31, 2006. For a better and complete understanding of the balance sheet
and financial position of Finaval Holding S.p.A. at December 31, 2006 and the result for the year, reference
should be made to the financial statements, together with the Auditors’ reports, available at the registered
office of the Company.
FINAVAL HOLDING SPA
BALANCE SHEET
ASSETS 31/12/06 31/12/05 LIABILITIES 31/12/06 31/12/05

B. FIXED ASSETS A. SHAREHOLDERS’ EQUITY
II PROPERTY, PLANT 1 EQUIPMENT
Other assets 207 181 I. Share capital 30,000 25,427
Total property, plant & equipment 207 181 IIi. Revaluation reserve 1,105 1,105
III FINANCIAL ASSETS IV. Legal reserve 792 227
Investments in subsidiary companies 43,550 43,450 VII. Other reserves 17,863 6,789
Investments in associated
companies 1,050 1,050
VIII. Retained earnings/(Acc.
Other securities 595 losses) -4,206 -4,206
Total financial fixed assets 45,195 44,500 IX. Net profit for the year 517 11,309
TOTAL FIXED ASSETS 45,401 44,681 TOTAL SHAREHOLDERS’ EQUITY 46,071 40,651
B. PROVISION FOR RISKS AND

C. CURRENT ASSETS CHARGES
II. RECEIVABLES Tax provisions 0 0
Subsidiary companies 1,600 20 Provisions for risks 0 0
Tax receivables 175 36 TOTAL PROVISIONS 0 0
Deferred tax asset 70 70
Other receivables - 335 D. PAYABLES
Total receivables 1,845 461 Social security institutions 1,392 3,737
Other lenders 0 0
IV CASH AND CASH EQUIVALENTS Trade payables 401 393
Bank and postal deposits 1,081 160 Payable to subsidiaries 298 70
Tax liabilities 88 216
Total cash and cash equivalents 1,081 160 Other payables 86 97
TOTAL CURRENT ASSETS 2,926 621 TOTAL PAYABLES 2,266 4,513
E. ACCRUALS AND DEFERRED

D. PREPAID AND ACCRUED INCOME 9 12 INCOME - 150
TOTAL ASSETS 48,336 45,314 TOTAL LIABILIITES 48,336 45,314
FINAVAL SPA Pag. 82

FINAVAL SPA
Attachment 1 - Transition to IFRS
FINAVAL SPA Pag. 83

TRANSITON TO INTERNATIONAL FINANCIAL REPORTING STANDARDS (IAS/IFRS)
First-time adoption of IFRS

As indicated in the Notes, the Company prepared the financial statements as at December 31, 2007 in
accordance with International Financial Reporting Standards (IFRS).
In the first-time adoption of IFRS, it was necessary, for comparative purposes, to restate the financial
statements of the company for the year ended December 31, 2006 in accordance with IFRS, making
reclassifications and adjustments to these accounts prepared in accordance with Italian GAAP in line with
the IFRS accounting principles, from January 1, 2006 in application of IFRS 1.
For the purposes of the application of this international accounting standard, at the transition date to IFRS,
the Company prepared an opening balance sheet at January 1, 2006. This statement, which is considered as
a starting point for the accounting of subsequent operations in accordance with IFRS, was prepared making
the necessary adjustments to the financial statements at December 31, 2005 prepared in accordance with
Italian GAAP, as illustrated below:
• all the assets and liabilities recorded in accordance with IFRS, including those not in accordance with
Italian GAAP, were recorded and measured in accordance with IFRS;
• all the assets and liabilities which are required to be recognised by Italian GAAP, but not permitted by
IFRS, were eliminated;
• some accounts in the financial statements were reclassified in accordance with IFRS.
The company applied the IFRS approved by the European Commission in retrospective manner to all of the
periods prior to January 1, 2006, except some exemptions adopted in accordance with IFRS 1.
The transition to IFRS approved by the European Commission resulted in the maintaining of the estimates
previously made in accordance with Italian GAAP, except in those cases where the adoption of IFRS
required the formulation of estimates in accordance with different methodology. These estimates are based
on the best knowledge of Management at the moment of the transition.
The effect of the adjustment to the new standards on the opening balances of assets and liabilities was
recognised under shareholders’ equity net of the fiscal effect, and under deferred tax assets or deferred tax
liabilities.
The reconciliation schedules attached, as prepared only for the purposes of the transition project for the
preparation of the first full IFRS financial statements in accordance with the IFRS approved by the European
Commission, do not include comparative data and the necessary explanatory notes that would be required
to represent in a true and fair manner the balance sheet, financial position and result of Finaval S.p.A. at
December 31, 2006 in conformity with IFRS approved by the European Commission.
The reconciliations and relative explanatory notes required by IFRS 1 - First time adoption of IFRS - of the net
equity and of the result for the year in accordance with the previous principles (Italian GAAP) and the new
principles are illustrated below.
In particular the paragraphs below provide the following information:
• A description of the accounting principles and policies in accordance with IFRS adopted by the
Company for the preparation of the Separate Financial Statements at December 31, 2007 and which
were considered for the purposes of the preparation of the reconciliations shown below;
• The description of the criteria utilised for the transition from Italian GAAP to IFRS;
FINAVAL SPA Pag. 84

• The reconciliation between the net equity as per Italian GAAP and IFRS approved by the European
Commission at January 1, 2006 (transition date) and at December 31, 2006 (comparative date of
financial statements at December 31, 2007), with separate information on the effects on the single
balance sheet accounts;
• The reconciliation between the net result as per Italian GAAP and IFRS approved by the European
Commission for the year ended December 31, 2006 (comparative date of financial statements at
December 31, 2007), with separate information on the effects on the single income statement accounts.
It should be noted that in the analysis of the information shown in the tables and schedules below,
differences may arise in the figures compared to the aggregate financial statements due to rounding made
at different levels.
Options and exemptions adopted by the Company

The principal options and exemptions which the Company availed of, in accordance with IFRS 1, are listed
below:
• Financial Statements presentation and other statements: for the Balance Sheet the “current/non-
current” (generally applied to industrial and commercial companies) criteria was adopted while for the
Income Statement the cost reclassified by nature was used. The cash flow statement was prepared
applying the indirect method.
• Business Combinations: the operations prior to the transition date were recalculated retrospectively only
with reference to the business combinations completed in 2005; for these operations the application of
the provisions contained in IFRS 3 resulted in the recalculation of the current asset and liabilities referring
to the moment of the acquisition by the Group. The operations prior to January 1, 2005 were not subject
to retrospective calculation.
• Employee benefits: the Company has decided to record all accumulated actuarial gains and losses
existing at January 1, 2006, and not to adopt the so-called “corridor method” for the actuarial gains and
losses which were generated and will be generated subsequent to this date, in consideration that the
actuarial variations do not produce significant impacts on the income statement such as to justify
recourse to the “corridor” method.
• Intangible and tangible assets: the historical cost criteria was retained (as an alternative to fair value) as
the measurement criteria for property, plant and equipment and intangible assets after initial
recognition.
• Inventories (of fuel): according to IAS 2, the cost of inventories must be calculated using the FIFO method
or the weighted average cost formula. The Company decided to utilise the weighted average cost
method for each movement (cost of the fuel where the ships are refuelled).
• Public grants: capital grants are recorded in the balance sheet as an adjustment to the book value of
the asset to which it was obtained.
FINAVAL SPA Pag. 85

Reconciliation of the Balance Sheet at January 1, 2006
EFFECTS ON THE TRANSITION TO IFRS ON THE BALANCE SHEET AS AT JANUARY 1, 2006
ITA - GAAP ADJUSTMENTS RECLASS. IAS-IFRS

NOTES
1/1/2006 IAS-IFRS 1/1/2006
ASSETS
NON-CURRENT ASSETS
Fleet 143,909 3,676 (17,296) 130,289 A-A1
Fleet under construction 16,147 0 0 16,147
Other assets 1,965 0 0 1,965
INTANGIBLE ASSETS 124 (78) 0 46 B
FINANCIAL ASSETS
Subsidies 3,535 (88) 0 3,447 C
Other receivables and deposits 148 0 0 148
Equity investments 3,685 45 0 3,730 D
Deferred tax assets 131 0 0 131
TOTAL NON-CURRENT ASSETS 169,644 3,555 (17,296) 155,903
CURRENT ASSETS
Inventories 5,366 0 (1,988) 3,378 E
Trade receivables 12,400 0 0 12,400
Other receivables 6,967 0 (860) 6,107 F
Cash and cash equivalents 33,815 0 0 33,815
Derivative financial instruments 0 925 1,655 2,580 H1-H2-H3
Tax assets 595 0 0 595
TOTAL NON-CURRENT ASSETS 59,143 925 (1,192) 58,875
TOTAL ASSETS 228,787 4,480 (18,488) 214,778
FINAVAL SPA Pag. 86

EFFECTS ON THE TRANSITION TO IFRS ON THE BALANCE SHEET AS AT JANUARY 1, 2006
ITA - GAAP ADJUSTMENTS RECLASS. IAS-IFRS

NOTES
1/1/2006 IAS-IFRS 1/1/2006
LIABILITIES
Share capital 24,220 0 0 24,220
Share premium reserve 7,385 0 0 7,385
Legal reserve 1,579 0 0 1,579
Extraordinary reserve 0 0 0 0
Other reserves 21,962 0 0 21,962
Cash Flow Hedge Reserve 0 0 0 0
ADV fair value reserve 0 30 0 30 D
IAS/IFRS transition reserve 0 2,616 0 2,616
Retained earnings (25) 0 0 (25)
Net profit/(loss) for the year 12,157 0 0 12,157
TOTAL SHAREHOLDERS’ EQUITY 67,278 2,646 0 69,924
Bank payables 76,814 0 2,754 79,568 F-H3
Personnel provisions 656 15 0 671 G
Deferred tax liabilities 777 26 0 803 I
Provision for risks and charges 1,430 0 (871) 559 H2
Other payables 16,229 0 (16,229) 0 A1
CURRENT LIABILITIES
Bank payables 28,854 0 (211) 28,643 F
Derivative financial instruments 0 1,792 (876) 916 H1-H2-H3
Trade payables 27,326 0 0 27,326
Other payables 8,733 0 (3,055) 5,678 A1-E
Tax liabilities 690 0 0 690
TOTAL LIABILITIES 161,509 1,833 (18,488) 144,854
TOTAL LIABILITIES AND SHAREHOLDERS’

228,787 4,479 (18,488) 214,778
EQUITY
FINAVAL SPA Pag. 87

Reconciliation of the net equity at January 1, 2006
Reconciliation of Shareholders' Equity 1-1-2006 Note

Shareholders' Equity as per Italian GAAP 67,278
“Dry dock” costs 3,676 A
Intangible assets (78) B
Subsidies (88) C
Financial assets available for sale – BPER shares 45 D
Provision for employees – actuarial recalculation (15) G
Derivative financial instruments - hedge on exchange rate (1,282) H1
Derivative financial instruments - hedge on interest rate 414 H2
Deferred tax liabilities (26) I
Shareholders' Equity as per IAS/IFRS 69,924

NOTES TO THE FINANCIAL STATEMENTS AT JANUARY 1, 2006
The principal adjustments made on the opening Balance Sheet in application of IFRS at January 1, 2006 are
illustrated below.
In relation to the tax effects of the adjustments, in virtue of the tax regime adopted by the Company, which
opted for the “Tonnage Tax” flat rate regime from January 1, 2006, they were calculated exclusively with
reference to the transactions where the above-mentioned regime is not applicable and where the effects
are not immaterial.
A) – A1) Fleet and Other receivables

A) “Dry dock” costs
The adjustment relates to the component approach to the ships. For each ship there is a compulsory “dry
dock” period in which repairs, maintenance and replacement of some components is undertaken, which
cannot be made when the ship is in operation. The adjustment was made extrapolating from the original
purchase cost of the ship the relative value of the components requiring periodic substitution in the dry dock
phase. This component is not depreciated on the basis of the entire life of the ship, but based on the period
between one dry dock and the subsequent dry dock (normally between 30 and 60 months, according to the
type of work and maintenance).
For each dry dock stoppage the relative costs are capitalised on the value of the ship.
Adjustment Debit Credit

Fleet - Component capitalised net of the depreciation provision 3,676
IAS/IFRS transition reserve 3,676
Total 3,676 3,676
FINAVAL SPA Pag. 88

A1) Subsidies reserve
As described in the section Accounting Principles, the Company adopted the option in IAS 20 which allows
the recording of subsidies received as a direct reduction of the book value of the asset for which it was
obtained. The reclassification was Euro 17,296 thousand.

Other payables - non-current 16,229
Other payables - current 1,067
Fleet 17,296
Total 17,296 17,296
B). Intangible assets

The adjustment relates to leasehold improvements, capitalised in accordance with Italian GAAP, which may
not however be recorded under intangible assets in application of IFRS, as, although the company avails of
the future related benefit, they do not satisfy the identification requirement established by IAS 38 for the
recording of intangible assets. Based on IAS 38 the definition of an intangible asset requires an intangible
asset to be identifiable to distinguish it clearly from goodwill.

IAS/IFRS transition reserve 78
Intangible assets 78
Total 78 78
C) Subsidies (IAS 39)

The adjustment relates to the discounting of the value of the receivable for public subsidies which will be
received in equal half yearly installments without interest, by September 2009. In accordance with IAS 39, as
relating to a long-term financial asset, the value is calculated on the basis of the relative fair value at the
date it arose. Therefore, these receivables were adjusted to take account of effects deriving from the
discounting of their value at January 1, 2006. The interest rate used was the IRS rate of the period. The implicit
interest income component was consequently separated from the value of the relative receivable and will
be recorded periodically as a financial component.

Subsidies 88
Total 88 88
D) Investments - Available-for-sale financial assets (IAS 39)

Refers to the adjustment to the fair value - represented by the market price at December 31, 2005 - of the
shares of Banca Popolare dell’Emilia Romagna held in portfolio by the Company. The above adjustment
was recorded under equity as treated as financial assets which are not held for the intention of resale or
trading, and therefore are classified under “financial assets available- for-sale”; the positive impact of this
valuation is shown in the table below:
FINAVAL SPA Pag. 89

Equity investments 45
Fair value reserve - assets available-for-sale 15
Deferred tax liability 15
Total 60 60
E) Inventories for services in course of execution (IAS 11).

The reclassification relates to the services in course of execution, valued on a pro-rata basis, net of the
amounts already invoiced, in accordance with IAS 11.

Inventories and services in course of execution 1,988
Total 1,988 1,988
F) Commissions on loans (IAS 39)

In accordance with IAS 39 the commissions on loans, incurred on the granting of the loan and subsequently
paid each year, are reclassified as a decrease in the value of the loan received.

Bank payables – non-current portion 649
Bank payables – current portion 211
Other Receivables - current 860
Total 860 860
G) Employee benefits (IAS 19)

The adjustment relates to the valuation of the existing liabilities against the employee benefits to be paid on
termination of employment and relates to the employee leaving indemnity.
In accordance with IAS 19, this liability was calculated utilising the actuarial valuation methods. In
compliance with the above-mentioned accounting standards, an actuarial valuation was made of the
Employee Leaving Indemnity payable at the balance sheet.
This payable, therefore, was adjusted to take account of the results of the above-mentioned actuarial
valuations.

Personnel provisions 15
Total 15 15
FINAVAL SPA Pag. 90

H) Derivative financial instruments (IAS 39)
H1) Derivative financial instruments - hedges on exchange rates
The adjustment relates to the accounting of the hedging operations of the exchange risk which, in
accordance with IAS 39, does not qualify for hedge accounting application. It refers to the fair value of the
derivative financial instruments on US Dollar loans, to hedge against the change in the exchange rate.
It should be noted however, that the above-mentioned derivative financial instruments, although not qualifying
for hedge accounting operations, are in any case appropriate for the purposes of the financial risks hedged, on
the basis of the provisions contained in the “risk management policy” of the Company.

Derivative financial instruments - Assets 465
Derivative Financial instruments - Liabilities 1,746
Total 1,746 1,746
H2) Derivative financial instruments - hedge on interest rates
The adjustment relates to the accounting of the hedging operations of the interest rate risk which, in
accordance with IAS 39, does not qualify for hedge accounting application. This relates to the fair value of
the derivative financial instruments on loans, to hedge the risk of change in the interest rate.
It should be noted however, that the above-mentioned derivative financial instruments, although not
qualifying for hedge accounting operations, are in any case appropriate for the purposes of the financial
risks hedged, on the basis of the provisions contained in the “risk management policy” of the Company.

Provision for risks and charges 871
Derivative Financial instruments - Liabilities 916
Total 1,331 1,331
H3) Derivative financial instruments

Reclassified under derivative financial instruments are the effects of the exchange risk hedge recorded in
application of Italian GAAP as a direct decrease of the bank debt.

Derivative Financial instruments - Liabilities 1,748
Derivative financial instruments - Assets 1,656
Bank payables – non-current portion 3,404
Total 3,404 3,404
FINAVAL SPA Pag. 91

A1) E) Other payables
The quota of the capital grants due beyond one year are reclassified from non-current other payables for an
amount of Euro 16,229 thousand (as indicated in note A1). In addition, the quota of the capital grants due
beyond one year are reclassified from current other payables for an amount of Euro 1,067 thousand (as
indicated in note A1), as well as the advances received from services in course of execution, for an amount
of Euro 1,988 thousand (as indicated in note E).
I) Deferred tax liabilities

The negative effect of the deferred tax liabilities relating to the transition adjustments to IFRS at January 1,
2006 amount to Euro 26 thousand.
FINAVAL SPA Pag. 92

Reconciliation of the Balance sheet and Income Statement at December 31, 2006
EFFECTS ON THE TRANSITION TO IFRS ON THE BALANCE SHEET AS AT DECEMBER 31, 2006
F.T.A. 1/1/06 RESTATMENT 2006

ADJUSTME NOTES
ADJUSTMENTS RECLASS.
ITA - GAAP NTS IAS-IFRS
31/12/2006 IAS-IFRS IAS-IFRS 31/12/2006
ASSETS
NON-CURRENT ASSETS
Fleet 186,606 3,676 1,102 (17,471) 173,913 A-A1-A2-A3
Fleet under construction 21,400 0 0 0 21,400
Other assets 2,149 0 0 0 2,149
INTANGIBLE ASSETS 164 (78) 20 0 106 B
FINANCIAL ASSETS
Subsidies 1,177 (88) 56 0 1,145 C
Other receivables & deposits 134 0 0 0 134
Equity investments 5,516 45 876 0 6,437 D
Deferred tax assets 129 0 0 0 129
TOTAL NON-CURRENT ASSETS 217,275 3,554 2,055 -17,471 205,413
CURRENT ASSETS
Inventories 2,827 0 0 (1,450) 1,377 E
Trade receivables 10,833 0 0 0 10,833
Other receivables 3,909 0 0 (874) 3,035 F
Cash and cash equivalents 14,231 0 0 0 14,231
Derivative financial instruments 0 925 (107) 0 818 G2
Tax receivables 255 0 0 0 255
TOTAL NON-CURRENT ASSETS 32,055 925 (107) (2,324) 30,549
NON-CURRENT ASSETS HELD-FOR-

SALE 0 0 0 1,240 1,240 A3
TOTAL ASSETS 249,330 4,479 1,948 (18,555) 237,202
FINAVAL SPA Pag. 93

EFFECTS ON THE TRANSITION TO IFRS ON THE BALANCE SHEET AS AT DECEMBER 31, 2006
F.T.A. 1/1/06 RESTATMENT 2006
ADJUSTME
ADJUSTMENTS RECLASS. NOTES
ITA - GAAP NTS IAS-IFRS
31/12/2006 IAS-IFRS IAS-IFRS 31/12/2006
LIABILITIES
Share capital 24,220 0 0 0 24,220
Share premium reserve 7,385 0 0 0 7,385
Legal reserve 2,033 0 0 0 2,033
Extraordinary reserve 0 0 0 0 0
Other reserves 33,549 0 0 0 33,549
Cash Flow Hedge Reserve 0 0 (707) 0 (707) G2
ADV fair value reserve 0 29 587 0 618 D
IAS/IFRS transition reserve 0 2,617 0 (2,617) 0
Retained earnings 0 0 0 2,617 2,617
Net profit/(loss) for the year 3,077 0 808 0 3,885
TOTAL SHAREHOLDERS’ EQUITY 70,264 2,647 689 0 73,600
Bank payables 111,960 0 0 (596) 111,364 F-G3
Personnel provisions 772 14 (7) 0 779 H
Deferred tax liabilities 245 26 296 0 567 I
Provision for risks and charges 652 0 0 (450) 202 G1-G2
Other payables 15,166 0 0 (15,166) 0 A2
CURRENT LIABILITIES
Bank payables 30,175 0 0 (139) 30,036 F
Derivative financial instruments 0 1,793 971 311 3,075 G1-G2-G3
Trade payables 10,179 0 0 0 10,179
Other payables 9,770 0 0 (2,515) 7,255 A2-E
Tax liabilities 145 0 0 0 145
TOTAL LIABILITIES 179,064 1,833 1,260 (18,555) 163,602
TOTAL LIABILITIES AND

SHAREHOLDERS’ EQUITY 249,328 4,479 1,948 (18,555) 237,202
FINAVAL SPA Pag. 94

EFFECTS ON THE TRANSITION TO IFRS ON THE INCOME STATEMENT AS AT DECEMBER 31, 2006
RESTATMENT 2006 IAS-IFRS CHEMICAL IAS-IFRS

ITA - GAAP ADJ. RECLASS. TOTAL. DIVISION FINAL NOTES
31/12/2006 IAS-IFRS 31/12/2006 31/12/2006
INCOME STATEMENT
Net revenues 87,171 0 0 87,171 7,787 79,384

Port, bunker and commission expenses 22,664 0 0 22,664 1,601 21,063
TIME CHARTER EQUIVALENT EARNINGS 64,507 0 0 64,507 6,186 58,321
Hire charges 16,668 0 0 16,668 6,367 10,301

Operating costs 27,160 (1,970) 0 25,190 (9) 25,199 A-H
FLEET CONTRIBUTION MARGIN 20,679 1,970 0 22,649 (172) 22,821
Overhead costs 6,268 (10) 0 6,258 0 6,258 H

Other costs and revenues (503) 0 0 (503) 12 (515)
Result on disposal of vessel (201) 66 0 (135) 0 (135) A1
EBITDA 13,707 2,046 0 15, 753 -160 15,913
Amortisation & depreciation 9,305 891 0 10,196 0 10,196 A-A1-B

EBIT 4,402 1,155 0 5,557 -160 5,717
G1-G2-
Net financial income (charges) (1,570) (342) 0 (1,912) (62) (1,850) C-H
PRE-TAX RESULT 2,832 813 0 3,645 (222) 3,867
Income taxes 283 0 0 283 5 278

Deferred tax charges (528) 5 0 (523) 0 (523) I
NET PROFIT FROM CONTINUING
OPERATIONS 3,077 808 0 3,885 (227) 4,112
PROFIT/(LOSS) FROM DISCONTINUED

OPERATIONS (227)
NET PROFIT 3,077 808 0 3,885 (227) 3,885
FINAVAL SPA Pag. 95

Reconciliation of Net Equity and Result for the year ended December 31, 2006
Reconciliation of Shareholders' Equity 31-12-2006 Note

Shareholders' Equity as per Italian GAAP 70,264
“Dry dock” costs 4,779 A-A1
Intangible assets (58) B
Subsidies (32) C
Financial assets available for sale – BPER shares 921 D
Derivative financial instruments - hedge on exchange rate (2,057) G1
Derivative financial instruments - hedge on interest rate 111 G2
Provision for employees – actuarial recalculation (7) H
Shareholders' Equity as per IAS/IFRS 73,600
Reconciliation of the Income Statement 31-12-2006 Note

Net result as per Italian GAAP 3,077
“Dry dock” costs 1,102 A-A1
Intangible assets 20 B
Subsidies 56 C
Derivative financial instruments - hedge on exchange rate (775) G1
Derivative financial instruments - hedge on interest rates 403 G2
Provision for employees – actuarial recalculation 7 H
Net result as per IAS/IFRS 3,885

NOTES TO THE BALANCE SHEET AT DECEMBER 31, 2006
The nature of the principal adjustments and reclassifications at December 31, 2006 made on the Balance
Sheet and on the Income statement in application of IFRS are shown below.
In relation to the tax effects of the adjustments, in virtue of the tax regime adopted by the Company, which
opted for the “Tonnage Tax” flat rate regime from January 1, 2006, they were calculated exclusively with
reference to the transactions where the above-mentioned regime is not applicable and where the effects
are not immaterial.
A) – A1)- A2)-A3) Fleet and Other receivables

The value of the fleet is adjusted and reclassified to take into account the following effects:
A) “Dry dock” costs (IAS 16)

Fleet - Component capitalised net of the depreciation provision 4,760
Depreciation - Fleet 787
Operating costs - maintenance 1,947
Total 5,547 5,547
FINAVAL SPA Pag. 96

A1) Lower losses from sale of ships
The adjustment below is due to the different net book value of the gas tanker fleet in application of IFRS
compared to Italian GAAP and to the consequent recording of a lower loss in the sale of 2007:
Fleet 18
Depreciation - Fleet 124
Purchase/sale result of fixed assets 66
Total 142 142
A2) Capital grants reserve (IAS 20)

The reclassification of December 31, 2006 amounted to Euro 16,231 thousand, as shown in the table below:

Other payables - non-current 15,166
Fleet 16,231
Total 16,231 16,231
A3) Non-current assets held for sale

The net book value is recorded of the gas tankers still in the fleet at December 31, 2006, but whose sale was
already approved by the Board of Directors and for which, at that date, a preliminary sales agreement was
already signed (Memorandum of Agreement) with the buyer. Specifically this relates to the vessels operating
in the LPG segment, “Fiemme” and “Azzurra Prima”.

Non-current assets held for sale 1,240
Fleet 1,240
Total 1,240 1,240
B) Intangible assets (IAS 38)

Intangible assets 58
Amortisation - intangible assets 20
Total 78 78
C) Subsidies (IAS 39)

Financial Management Income 56
Subsidies – non-current 19
Subsidies – current 13
Total 88 88
FINAVAL SPA Pag. 97

D) Investments - Available-for-sale financial assets (IAS 39)
Refers to the adjustment to the fair value - represented by the market price at December 31, 2006 - of the
shares of Banca Popolare dell’Emilia Romagna held in portfolio by the Company. The above adjustment
was recorded under equity as treated as financial assets which are not held for the intention of resale or
trading, and therefore are classified under “financial assets available- for-sale”; the positive impact, net of
the tax effect, of this valuation is shown in the table below:

Equity investments 921
Deferred tax liabilities 304
Total 1,225 1,225
E) Inventories for services in course of execution (IAS 11).

Inventories and services in course of execution 1,450
Total 1,450 1,450
F) Other receivables - commissions on loans (IAS 39)

Bank payables – current portion 139
Other Receivables - current 874
Total 874 874
G) Financial derivative instruments and cash flow hedge reserve

The receivables and payables included under current assets and liabilities for derivative financial instruments
include the fair value on exchange and interest rate trading and hedging derivatives in accordance with
the indications in the table below.
G1) Derivative financial instruments - hedges on exchange rates

the derivative financial instruments on loans, to hedge the risk of change in the exchange rate.
risks hedged, on the basis of the provisions contained in the “risk management policy” of the Company. At
December 31, 2006, there was only one operation no longer qualified as a hedge on the exchange risk.
FINAVAL SPA Pag. 98

Financial Management Charges 775
Derivative financial instruments - liabilities 2,057
Total 2,057 2,057

Provision for risks 348
Derivative financial instruments - liabilities 348
Total 348 348
G2) Derivative financial instruments - hedge on interest rates

the derivative financial instruments on loans, to hedge the risk of change in the interest rate.
risks hedged, on the basis of the provisions contained in the “risk management policy” of the Company.
At December 31, 2006, there was only one operation no longer qualified as a hedge on the interest risk,
following the advanced repayment of the underlying loan.
Financial Management Income 403
Total 818 818

Provision for risks 102
Total 102 102

Cash Flow Hedge Reserve 707
Total 707 707
G3) Derivative financial instruments

The effects of the hedging on the exchange risks recorded in accordance with Italian GAAP as a direct
change in the bank loan was reclassified under derivative instruments.

Total 139 139
FINAVAL SPA Pag. 99

H) Employee benefits (IAS 19)
The net effect on the income statement of 2006 of the adjustment of the Employee Leaving Indemnity in
accordance with IAS 19 was approx. Euro 7 thousand.

Financial Management Charges 26
Personnel provisions 7
Operating costs – Crew Salaries 23
Overhead costs – Ashore salaries 10
Total 40 40
A1) E) Other payables

The quota of the capital grant beyond one year was reclassified to other payables for an amount of Euro
15,166 thousand (as indicated in note A2). In addition, the quota of the capital grants beyond one year, for
an amount of Euro 1,065 thousand (as indicated in note A2), and the advances received on services in
course of execution, for an amount of Euro 1,450 thousand (as indicated in note E) were reclassified from
other current payables.

The negative effect on the deferred tax liability, calculated on the adjustments made to the restated
Balance Sheet in 2006 in accordance with IFRS, was approx. Euro 321 thousand.

NOTES TO THE INCOME STATEMENT AT DECEMBER 31, 2006.
We illustrate the nature of the principal adjustments at December 31, 2006 made on the income statement
in accordance with IFRS.
A) – H) Operating Costs
The adjustment, amounting to Euro 1,970 thousand, principally refers to the reversal of the costs for
maintenance in accordance with IAS 16 in relation to component analysis. For further information reference
should be made to the note in the “Balance Sheet”.
A) – B) Depreciation, amortisation and provisions

In accordance with IFRS, amortisation and depreciation on tangible and intangible assets increased by a
total of Euro 891 thousand, against the combined effect of the following adjustments:
• Recording of higher depreciation on the Fleet, of Euro 911 thousand, in order to reflect the different
depreciation period of the so-called “dry dock” component;
• Reversal of amortisation on intangible assets, recorded for Euro 20 thousand in application of Italian
GAAP, and which for IFRS refer to previous costs recorded in the income statement (see note B of the
comments on the “Balance Sheet”).
FINAVAL SPA Pag. 100

G1) – G2) – C) – H ) Net Financial income (charges)
The results of the financial management of the period were adjusted principally in relation to:
• Recording in the income statement of the positive fair value of the derivatives on the interest rate (Euro
403 thousand) and the negative effect on the exchange rate derivatives (Euro 775 thousand).
Reference should also be made to notes G2 and G1 of the Balance Sheet;
• Recording in the income statement of the fair value of the subsidies receivables, with a positive effect of
Euro 56 thousand (reference should also be made to note C of the Balance Sheet);
• Effect on the year of the recalculation relating to the financial charges of the personnel provision of Euro
26 thousand (reference should also be made to note H of the Balance Sheet).

The negative effect of the deferred tax liability calculated on the adjustments made for the purposes of the
restatement of the 2006 income statement in accordance with IFRS was approx. Euro 5 thousand.
L) Profit/(loss) from discontinued operations

In accordance with IFRS 5, the total gains and losses in the management of the vessels in the Chemical
sector are reported on a single line item in the income statement.
FINAVAL SPA Pag. 101

Finaval Consolidated Financial Statements 2007

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Finaval Consolidated Financial Statements 2007

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FINAVAL SPA

Consolidated Financial Statements

FINAVAL SPA Pag. 3

The Board of Directors Giovanni Fagioli - Chairman

The Board of Statutory Auditors Chairman of the Board

Independent Auditors Deloitte & Touche S.p.a.

Share Capital Euro 32,293,000.00 - fully paid-in

Registered office Via M. Bufalini 8 - 00161 ROME

Company which exercises direction and

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PROFILE OF THE FINAVAL SUB-GROUP IN THE SHIPPING SECTOR - FINAVAL

COAL LOGISTICS SECTOR – VIANN LOG/MBS

ENGINEERING & SYSTEMS SECTOR – KTI MANAGEMENT/TECHNIP KTI

PROJECT FORWARDING SECTOR – FINAVAL OFFSHORE SRL

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STRUCTURE OF THE FINAVAL SUB-GROUP AT 31/12/2007

50% 100% 100% 29,24%

Finaval Subholding details

50% 50% 100%

The main events in 2007 included:

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Winning photos of the 2007 Finaval photo contest, by category:

Best action shot (Marengo Eddy)

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CHAIRMAN OF THE BOARD OF DIRETORS’ LETTER

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THE STOCK EXCHANGE QUOTATION PROCESS

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THE MACRO-ECONOMIC SCENARIO

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THE FLEET MANAGED

SHIP HULL CLASSIFICATION DWT/Mc YEAR OWNERSHIP

Products Medium Range

Products Small size

(*) Finaval Group

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SHIP USE CHARTERERS

Products Medium Range

Products Medium Range

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MAINTENANCE OF THE FLEET

M/V NEVERLAND SOUL

M/V ISOLA ROSSA

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 supply and installation of the new sea anti-fouling system;

M/V ISOLA VERDE

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LPG GAS ARCTIC

M/V ISOLA MAGENTA

 sanding and painting of the covered bridge

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QUALITY, SECURITY AND ENVIRONMENT

 Create the 2008 training programme with management approval.

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CONSOLIDATED INCOME STATEMENT 2007 % Changes % 2006 %

Revenues 62,889 141.7% -20.8% 79,383 136.1%

supply and installation of the new sea anti-fouling system;

sanding and painting of the covered bridge

Create the 2008 training programme with management approval.