October 2005

Granitifiandre is
The market leader manufacturer of full-body, top-ofthe-range vitrified stoneware porcelain

Granitifiandre wants to become

The market leader alternative to quarried marble, stone and granite

The two main collections

Geologica
Launched in 1998 offering the most technologically advanced and aesthetically pleasing material available to the international architectural market

Geotecnica
The traditional brand for material characterised by high technical features

The top line product: Geologica

The best alternative to marble, granite and stone because: it is a unique product considering the combination of aesthetical and technological features like:
2-3 times lower absorbency rate; breaking strength 2.5 times higher than granite and 7-8 times higher than marble; 3 times greater deep abrasion resistance; acid resistance

better price to quality and versatility relation minimal environmental impact

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Worldwide references
H. Crowne Plaza, Geneve,CH Porsche, Leipzig (D) Shopping Mall,
(Canada)

Shopping Mall,
Utha (USA)

Imp. War Museum (UK)

Lacoste

(Berlino)

Emporio Armani (Fiumicino)

Worldwide references
Private House (Taipei) Heathrow Airport (London) Heathrow Express (London)

Dealer Mercedes (Roma)

Galleria Ferrari (Maranello)

Budapest Airport

The Stone Marble and Granite Industry

1450 E 462 819
Expected CAGR 2003-2010E

964E
+8,5%

1995

2003

2005

2010

Total mln square meters output

Total consumption 2003 vs 2002 +11%

Thanks to Geologica, Granitifiandre can profit from the growth of the quarried marble and granite market
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Stone and Marble Industry

2003 consumption in Granitifiandres main served markets
Thousand sqm TOTAL CONSUMPTION 2003 03 vs 02 TOTAL CONSUMPTION 2003 03 vs 02 MARKET SHARE

Italy United States Spain Germany France Switzerland Canada

62.100 70.890 49.060 44.420 26.030 10.270 3.050

3,5% 32,7% 14,4% 3,2% 17,0% -3,1% 23,0%

1.600 870 54 545 963 121 104

- 0,3% 1,2% - 26,8% 15,5% 5,8% 9,4% -10,2%

2,9% 1,2% 0,1% 1,2% 3,7% 1,1% 3,4%

Granitifiandre owns a total market share of nearly 1%

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Source: Stone 2004, company data

The Stone and Marble Industry

Characterized by: scarcity of quarried materials, possible quarrying restrictions, fragmentation and very low revenues and margins

Granitifiandre
Through the planned increase of the production capacity in Germany and US Granitifiandre target is to double the current market share
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German plant
Commercial agreements signed with the largest German distributor and with the German manufacturer leader in the residential sector of prestige traditional ceramics more than 60 different products already developed and industrialised, all in addition to the Granitifiandre Brand offer and presented under a new Brand name - Porcelaingres intense promotional activity done in the last months and more than 300 new customers already in place 1 million sqm sold in 2004 more than 850 thousand sqm. sold in the period Jan-Jun 2005
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USA plant
Production cycle began in the first half of 2005

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USA plant
USA a real opportunity
the market is showing a growing trend in consumption of hard flooring materials - 260 million sqm in 2003 in the ceramic sector and 71 million sqm in the quarry industry cagr of 15% in the last 5 years; 80% of the total consumption relate to imported materials; the new plant will permit the Group to: radically modify the current commercial policy principally centred on the Key accounts; provide an adequate service to the North American distribution chains. The sales activity began in June with a turnover of 470 thousand while the backlog order amounts at more than 1.5 million.
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USA plant
USA a real opportunity
the weakness of the dollar since 2001 to-date has widened to a similar extent the competitive advantage; the development of an innovative technology for the production of glazed stoneware porcelain products using dry glaze will permit GF to complete the range of offer with materials for the residential part of the market with evident advantages in terms of cost of productions. The range was officially presented to the Coverings Trade at Orlando at the beginning of May, the main trade fair in the American market

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USA plant
Agreements with more than 30 Distributors
StonePeak Ceramics plans to add several more distributor partners from various parts of the country by the end of the year. An exclusive distributor event hosted by the company has been held Thursday, August 4, in Chicago.

At the exclusive event, executives from StonePeak Ceramics have unveiled several programs that will benefit the distributors and their customers, including a comprehensive logistics program to provide timely shipment of products. The company will also introduce an online delivery tracking system 14 to allow a real-time shipment monitoring.

Italian plant new product development

new luxury collection of 6 different materials for prestigious projects

new Brand for mosaics and complementary materials in the most diverse shapes for the luxury residential market
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Sales and marketing strategy

Granitifiandre with over 150 promotion and sales personnel can reach up to 10,000 decision makers per year all over the world Sound marketing policy designed to strengthen its brand image and to built stable relationships with the key decision makers Strong vertical integration for a turn-key service

Standard channel
Manufacturer Distributor Consumer Trade Client
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Designer

Sales and marketing strategy

Main key accounts

New entry

New entry

New entry

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Sales and marketing strategy: growth

Since 1999: Geologica stores (proprietary and franchises)
1999 - 2001

Prato - Milan - Bologna - Prague Chicago - Lyons - Florence Frankfurt - Edinburgh - Thessalonika Raab Karcher n17: Berlin (2) - Dortmund - Frankfurt - Colonia Bremen - Mannheim - Stuttgard (2) - Wurzburg - Hannover Munchen - Dusseldorf - Hamburg - Leipzig - Dresden - Neurnberg Rome (2) - Palermo (2) - Castellarano - Paris - Istanbul - Hong Kong Atens - Budapest (2) - London - Taipei - Venezia - Vicenza - Chieti Zurigo - Bordeaux - Bruxelles - Cipro - Sydney - Vitoria - Parma Forl - Viterbo - Pordenone Santo Domingo - Napoli - Bahrein Perugia - Arezzo - Kiev - Salzburg

since 2001

60 Shops in operation: Italy 19 - Abroad 41 6 new shops expected in the next 6 months: Puerto Rico-Paris-Misano-Barcelona-Potenza-Shanghai. There is also a Granitifiandre shop in: San Francisco - Belgrad - Boston
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Last openings
Perugia Berlin Arezzo

Salzburg

Taipei

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Sales and marketing strategy: growth

Expansion of the complementary services to enlarge the value chain creating added value to the offer in a concept of turnkey service Engineering for walls and raised flooring: 2004 sales 4,3 ml; first half-year 2005 sales 2 ml Granitech (+ 4.8% vs 1H 04). Leading company in the precision cutting: 2004 sales 12,5 ml; first half-year 2005 sales 8 ml Hydrodesign (+ 34.5% vs 1H 04).
Fitting and installation

Focus on post sale services: 2004 sales 14 ml; first half-year 2005 sales 6.5 ml (+ 8.5% vs 1H 04).
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Granitifiandre: a successful history

Sales
180 150 120 90 60 30 0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 23,2 12,9 27,9 14,9 31,5 16,5 31,5 23,2 29,1 21,3 30,8 23,8 34,2 26,5 35,6 27,1 29,8 20,5 27,0 15,9 91,9 92,9 105,7 115,7 111,6 123,4

Ebitda

Ebit
141,6 152,6 148,6 162,8

Sales CAGR 1988 - 2003: 10%

(**) 2003 and 2004 results significantly affected by the start up costs of the two new production investments and the Euro/USD exchange rates evolution
1995 - 1997 figures: financial statements of Granitifiandre S.p.A. 1998 - 2000 figures: pro-forma financial statements of Granitifiandre 2001/2004 figures actual 21 2004 figuers in conformity with the IAS/IFRS

Profit and loss account

Profit & Loss (**) (mln Euro) 1H 2005 1H 2004 2004
Sales increased by 6.4%, approx. 7% at Sales Total Revenues Ebitda
EBITDA % on sales

2005 results

84,6 94,6 14,1

16,6%

79,5 85,6

162,8 172,3

constant exchange rates; Ebitda margin impacted by: simultaneous commencement of the two production plants in North America and Germany and relative prototypes costs; additional costs due to the start-up of production activity at the American plant, that had an impact of approx. 1.5 ml; persistent unfavourable US Dollar/Euro exchange rate evolution; estimated dollar

14,7 27,0 18,5% 16,6%

9,6
12,1%

Operating Income
OPERATING INCOME % on sales

8,5
10,0%

15,9
9,8%

Result before Taxes & Minority

PBT % on sales

10,4
12,3%

9,1
11,5%

14,8
9,1%

Net Result before Minority interest Net result of the Group

NP % on sales (**) Figuers in conformity with IAS/IFRS

4,7 3,8
4,5%

3,9 3,2
4,1%

8,0
7,3
4,5%

impact 0,44 ml; increased production costs- energy (+ 1.5 ml) and transportation costs (+ 0.6 ml).

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Balance sheet
Balance Sheet (**) (mln Euro) 1H 2005 2004

2005 results
Euro 19.7 ml invested in the period, relating to

Immaterials Materials Financial assets Total fixed assets Current assets Current debts Net Working Capital TFR Provisions and others long term Long term liabilities Total capital employed Cash and banks Current bank debts Long term debts Net financial position Equity Total source of capital
(**) Figuers in conformity with IAS/IFRS

7,4 138,9 2,2 148,5 130,5 (79,3) 51,2 (7,7) (0,8) (8,6) 191,1 (8,1) 35,6 4,4 32,0 159,2 191,1

7,1 123,9 1,9 132,9 110,8 (68,9) 41,9 (7,7) (0,8) (8,5) 166,2 (12,1) 19,5 4,1 11,5 154,7 166,2

the latest extension works at the North American plant and to a new polishing line at the Italian plant; Euro 9,7 ml the cash flow generated from operating activities in the period; Net Working Capital impacted by: a higher stock level due to the increased production activities at the German plant and to the build up of the minimum levels of raw materials necessary for production at the North American plant; receivables and payables increased proportionally to the turnover generated.

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Sales by product
Description Vitrified brand stoneware Granitech Division - material Branded products Granitech Division - structure Branded products and structure Vitrified stoneware - low range Polishing services Semi-finished products Fitting and installation services Processing Others Other revenues Total net consolidated sales 30/6/2005
6 months

30/6/2004
6 months

Difference

31/12/2004
12 months

59.086 715 59.801 1.244 61.045 45 3.541 4.187 6.487 8.028 1.260 23.547 84.593

54.819 439 55.258 1.430 56.688 224 4.306 4.373 5.977 5.968 1.952 22.800 79.488

4.543 (186) 4.358 (179) (766) (186) 510 2.060 (692) 747 5.105

8,2% -13,0% 7,7% -80,1% -17,8% -4,3% 8,5% 34,5% -35,4% 3,3% 6,4%

112.011 1.199 113.210 3.130 116.340 293 8.121 8.016 13.999 12.482 3.526 46.437 162.777

Sales of brand material: increase of +8.2% (+9.02 at constant exchange rates); this significant result is due to a growth of +2.3% in the first quarter and +13.2% in second one, indicating a very positive trend. Europe +7.4%: Significant increase in absolute values equal to approximately Euro 1.7 million. All of the principal countries recorded significant turnover growth: Germany (+14%), Holland (+51%), Russia (+15%), Czech Republic (+54%), Romania (+94%), and Hungary (+35%), indicative of the positive impact on sales by the German subsidiary Porcelaingres, that almost doubled the sales volume compared to the same period of 2004, (at the half-year exceeded Euro 8.7 million). Italy + 12.9% the market, following the strategic redefinition of the geographic areas served by the three factories of the Group, in the short/medium-term will become increasingly more important for the Italian factory and is showing a positive development. Rest of the world +4,5%. Polishing services: recorded a decrease in values following the extraordinary maintenance work made in the period that temporarily reduced the production capacity with a temporary increase in production costs ; Processing + 34.5%: Significant increase in absolute values equal to approximately Euro 2.1 ml. The services performed by the Hydrodesign group felt the positive effects of the huge investments made in 2004

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Structure of the Group

Granitifiandre SpA Castellarano RE Trans Ceramica Ltd Chicago Usa 96,7% StonePeak Ceramics Inc. Delaware Usa 99,0%

Geologica Milano Srl Milano 90,0%

Technoposa Srl Castellarano RE 51,0%

Porcelaingres Gmbh Vetschau D 99,9%

Savoia Canada Inc. Toronto CA 60,01%

Hydrodesign Srl Castellarano RE 51,0%

Kaleidos Design SL Castellon de la Plana E 85,0%

Granitifiandre Praha Sro Praga CZ 66,0%

Ceramiche Riunite Srl Bologna 50,0% 2,5%

Geologica Castellarano Srl Castellarano RE 51,0%

Technopose Sarl Parigi FR 91,48% - (*)

Bedel Paris Sa Champigny FR 56,0%

TechGeo Sl Castellon de la Plana E 50,001%

Floornature.com SpA Fiorano Modenese MO 90,0%

Geologica Parma Srl Parma 51,0%

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Shareholders structure
As at September 30, 2005
EUROMOBILIARE A.M. S.G.R. SPA DEUTSCHE BANK AG 3,94% 3,27%

MARKET 29,20% IRIS GROUP 63,59%

Outstanding shares: 36.862.678

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October 2005

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