The Board of Directors of IFIL, which met today in Turin under the chairmanship of Gianluigi
Gabetti, approved the consolidated financial statements and the draft statutory financial statements
for the year ended December 31, 2005, which will be submitted to the Shareholders’ Meeting
convened for May 24, 2005 in first call and May 25, 2005 in second call.
The IFIL Group closed the year 2005 with the best result in its history, partly as a result of
extraordinary transactions: consolidated profit, in fact, is € 1,090 million, a decisive increase over
the profit of € 124 million reported in 2004. The change of € 966 million is basically due to the net
improvement in the results of the Fiat group and the Sequana Capital group.
The consolidated net financial position of the “Holdings System” at December 31, 2005 is a cash
position of € 348 million. This is a reduction of € 332 million compared to the cash position at the
end of 2004 (€ 680 million) mainly as a result of the investments made in Fiat (-€ 580 million) and
Sanpaolo IMI (-€ 263 million) and the net proceeds from the sale of La Rinascente (+€ 529
million).
Consolidated equity at the end of 2005 amounts to € 5,186 million. This is a sharp increase
compared to the end of the prior year (€ 3,722 million) thanks to the consolidated profit for the year,
the fair value adjustments to the investment in Sanpaolo IMI (€ 220 million) and other net positive
changes (€ 154 million).
IFIL S.p.A. reported a profit of € 99 million, with an increase of € 19 million compared to the profit
of € 80 million in 2004.
The Board of Directors voted to put forward a motion to the Stockholders’ Meeting to pay
dividends of € 0.08 for each ordinary share and € 0.1007 for each savings share, for a total
maximum amount of € 86.9 million (+18.5% compared to the prior year). The ex-dividend date is
June 5, 2006 and dividends will paid starting on June 8, 2005.
The Board also voted to put forward a motion to the Stockholders’ Meeting to renew the
authorization for the purchase and disposition of treasury stock. In particular, the authorization vests
the Board with the right to purchase on the market, for 18 months from the date of the stockholders’
resolution, up to a maximum of 90 million ordinary and/or savings shares for a maximum outlay of
€ 450 million, at a price of not less and not more than 15% of the market price of the stock in the
trading session on the day before each single transaction. The request for the authorization to buyback
treasury stock will allow the Company to take action in the event of: share price fluctuations
outside normal variations connected with stock market performance and in conformity with market
practice; introducing stock option plans for employees and directors of the Company and companies
of the group; using the treasury stock as a source of investment for an efficient utilization of
company cash resources; share exchanges. IFIL, also through the subsidiary Soiem, currently holds
14,596,040 ordinary treasury shares, equal to 1.41% of the class of stock and 1.36% of capital
stock.
Corporate Governance
The Board of Directors, in view of the new company law, has updated or instituted certain
organizational procedures for treating privileged information, for carrying out related party
transactions and for managing the register of the persons who have access to privileged information.
The Board also arranged for the periodical verification of the existence of the requisites for
independence with regard to the directors Giancarlo Lombardi, Antonio Maria Marocco, Claudio
Saracco and Giuseppe Recchi. The annual report on Corporate Governance will be available at the
corporate offices, at Borsa Italiana S.p.A. and on the Company’s website at least 15 days before the
Shareholders’ Meeting at the same time the illustrative reports are filed on the matters of business in
the agenda.
Major events in 2005
The major event of the year was the € 580 million investment in Fiat made in September. This
transaction allowed IFIL to maintain its investment in Fiat unchanged, defending the value of its
most important investment and ensuring the conditions necessary for management to bring to a
close the work begun two years ago. The signs that emerged during the course of the year – such as
the improvement in the industrial operations of Fiat Auto, the increase in market share thanks to the
success of the new models, the reduction of indebtedness and the industrial agreements reached
with leading international partners – confirm the soundness of the decisions made and reinforce
confidence in the success of the current turnaround plan which management of the Group is
conducting with full commitment, firmness and determination.
The investment in Fiat was proceeded by two important transactions. The first regarded the
conclusion of the monetization of Rinascente, which led to a net gain of € 459 million and net
proceeds of € 529 million for IFIL. With the second transaction, IFIL increased its investment in
Sanpaolo IMI by € 263 million, bringing the holding in that bank to 5.86% of ordinary capital
stock.
2005 was a particularly intensive year, also for the French operations of the IFIL Group, which, at
the beginning of the year, abandoned the name of Worms & C.ie and took the name of Sequana
Capital: the sale of Permal Group to the American company Legg Mason made it possible to cash in
on an investment in the investment funds segment while management conducted vital work in the
paper business with the aim of improving industrial management and raising profitability.
A detailed reorganization plan was begun by Alpitour, whose result was impacted by an exceptional
coincidence of negative climatic, geopolitical and market factors which occurred during 2005. The
current development plan of the tourism group, under the guidance of new management coming
from IFIL, is directed towards a decisive inversion of the trend with a medium term prospective.
Investment in Banca Leonardo
At the end of November 2005, IFIL displayed its interest in the project for the acquisition and
recapitalization of Banca Leonardo S.p.A., anticipating an investment of approx. € 45 million to
purchase about 10% of the capital of the company. The project, which aims to build up the bank to
develop investment banking operations, is subject to the approval of the pertinent authorities.
Significant subsequent events
On February 7, 2006, the IFIL Board of Directors accepted the resignation of the independent
director Pietro Ferrero and co-opted Carlo Sant’Albano, appointing him as Chief Executive Officer
and Managing Director, and electing him to the Executive Committee. At the same time, Gianluigi
Gabetti left the post of Chief Executive Officer, keeping the position of Chairman and President of
the Company. Moreover, Tiberto Brandolini d’Adda and John Elkann were appointed Deputy
Chairmen, while the independent director Giuseppe Recchi was appointed a member of the
Compensation and Nominating Committee, replacing Pietro Ferrero.
On February 21, 2006 Consob formally notified IFIL S.p.A. of its objections under art. 187-septies
of Legislative Decree 58/1998 in relation to the content of the press release dated August 24, 2005.
IFIL was also notified of its administrative responsibility under Legislative Decree 231/2001. IFIL
believes no rule has been violated and has confidence in demonstrating it by producing its
objections.
Bonds falling due
In accordance with Borsa Italian S.p.A. instructions, IFIL provides disclosure of that fact that its
bonds IFIL 2003-2006 of € 100 million will fall due in December 2006.
Business outlook
For fiscal 2006, IFIL S.p.A. expects to report a profit.
On a consolidated level, taking into account the forecasts formulated by the major holdings, the
IFIL Group expects to show a profit in 2006, although lower than the profit reported in 2005, which
was the highest in the Group’s history.
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