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Gruppo Editoriale L’EspressoSocietà per azioni

Annual Report 2009


Annual Report 2009

5| Gruppo Editoriale L’Espresso |

Contents

Financial Highlights 9

Report of the Board of Directors at December 31, 2009 Operating performance and consolidated results at December, 31 2009 13 Results by area 14 Subsequent events and outlook 18 Consolidated results at December 31, 2009 19

Results of Parent Company Gruppo Editoriale L’Espresso SpA at December 31, 2009 26

Reconciliation between the Parent Company’s Financial Statements and the Consolidated Financial Statements 29

Main risk and uncertainties to which the Parent Company and the Group are exposed 29

Other information 32 Proposed allocation of 2009 Net Profit 32

Information required by Consob Regulation nu. 11971 35

Report on Corporate Governance 49

Consolidated Financial Statements at December 31, 2009 Consolidated Financial Statements 75 Consolidated Income Statement 76 Statement of Consolidated Cash Flows 77 Statement of Changes in the Consolidated Shareholders’ Equity 78 Notes to the Consolidated Financial Statements at December 31, 2009 79 Attachments 137

Certification of the Consolidated Financial Statements pursuant to art. 154 bis of Legislative Decree no. 58 February 24, 1998 143

Report of the Independent Auditors 147

Financial Statements of Parent Company Gruppo Editoriale L’Espresso SpA at December 31, 2009 Statements of Financial position 152 Income Statement 153 Statement of Cash Flows 154 Statement of Changes in the Shareholders’ Equity 155

Notes to the Financial Statements of Gruppo Editoriale L’Espresso SpA at December 31, 2009 157

Certification of the Financial Statements of Gruppo Editoriale L’Espresso SpA pursuant to art. 154 bis of Legislative Decree no.58 February 24, 1998 209

Report of the Board of Statutury Auditors 213 Report of the Independent Auditors 221

Summary reclassified financial data of subsidiaries 225

7

Company Gruppo Editoriale L’Espresso Società per Azioni

Share Capital Euro 61.438.738,20

Tax ID and Rome Company Register no. 00488680588

VAT no. 00906801006

Registered office Rome, Via Cristoforo Colombo, 149Secondary office Rome, Via Cristoforo Colombo, 90

Board of Directors:Chairman Carlo De Benedetti

Managing Director Monica Mondardini

Directors Agar Brugiavini Rodolfo De Benedetti Giorgio Di Giorgio Francesco Dini Sergio Erede Mario Greco Maurizio Martinetti Tiziano Onesti Luca Paravicini Crespi

Board of Statutory Auditors:Chairman Giovanni Barbara

Statutory Auditors Enrico Laghi Luigi Macchiorlatti Vignat

Independent Auditors Deloitte & Touche SpA

| Gruppo Editoriale L’Espresso |

9| Gruppo Editoriale L’Espresso |

Financial Highlights

Consolidated operating data

(€ million) 2008 2009Revenues 1,026 887Gross operating profit 143 107Operating profit 95 64Pre-tax profit 76 44Net profit 21 6

Consolidated financial data

(€ million) Dec. 31, 2008 Dec. 31, 2009Net capital employed 768 704Shareholders' Equity (incl. minority interests) 489 495Group Shareholders' Equity 478 486Minority interests 11 10

Net financial position (279) (208)Dividends distributed (69) –

Personnel

2008 2009Employees at year-end 3,344 3,116Average number of employees 3,426 3,203

Main ratios

2008 2009ROS (Operating profit/revenues) 9.3% 7.2%ROCE (Operating profit/Net capital employed) 12.4% 9.1%ROE (Net profit/Shareholders' Equity) 4.2% 1.2%

Report of the Board of Directors

Operating performance and consolidated resultsat december 31, 2009

Consolidated results 2008 2009 %change(€ million) 2009/2008Revenues, of which: 1,.025.5 886.6 -13.5%• circulation 276.3 274.2 -0.8%• advertising 608.2 496.9 -18.3%• add-on products 114.9 100.6 -12.4%Gross operating profit 142.5 106.7 -25.2%Operating profit 95.3 63.9 -32.9%Profit before taxes 75.7 44.3 -41.5%Net profit 20.6 5.8 -71.8%

December 31, December 31,(€ million) 2008 2009Net financial position (278.9) (208.2)Shareholders’ Equity before minority interests 489.3 495.4• Group Shareholders’ Equity 478.4 485.6• minority interests 10.8 9.8Employees 3,344 3,116

Market reviewResults of the Espresso Group for the 2009financial year must be put into perspective in thecontext of the strong global downturn affectingthe economy as a whole and the publishing sectorin particular.The recession determined a significant contractionof advertising revenues. According to data publishedby Nielsen Media Research, advertising investmentsdeclined in 2009 by 13.4% on the previous year,affecting to a different degree all media.With a decline in advertising of 21.6%, the pressis one of the sectors most affected by the downturn.Non-free newspapers registered a smaller decline(down 16%), in comparison to periodicals and thefree press, that suffered strongly, down respectivelyby 28.7% and 26.6%.The radio sector recorded a 7.7% decline inadvertising, performing best among traditionalmedia, while the Internet registered a 5.1% growth

in advertising, though registering a considerableslowdown on its previous growth trend.In line with the general decline in consumption,circulation of newspapers and periodicals registereda negative performance, with circulation of news-papers declining by 6.2%, that of weekly magazinesby 6.8%, and that of monthly magazines by 8.5%(source: ADS, year on year at October 2009).

Operating performanceConsolidated net revenues of the Espresso Groupamounted in 2009 to €886.6 million, down13.5% on €1,025.5 million in 2008.In the year, circulation revenues (net of add-onproducts) of the Group amounted to €274.2million (down 0.8% on 2008), holding well in astrongly recessive context.Circulation of la Repubblica in particular was upby 1.4% thanks to the good performance of news-stand sales. Overall circulation of the newspaperregistered instead a decline due entirely to theelimination or the reduction of a number of initia-tives with a high promotional content, whose con-tribution to revenues was marginal.Circulation revenues of local newspapers and thenumber of copies sold were in line with 2008,reflecting the good performance of the Group’spublications.Finally, circulation revenues of periodicals, whichrepresent less than 10% of the Group’s total, reg-istered a 7.4% decline, in line with the market.In the year, advertising revenues of the Groupamounted to €496.9 million, down 18.3% on2008, reflecting primarily the dowturn registeredby the sector as a whole.With regard to the principal sector in which theGroup operates – that of daily newspapers –advertising revenues declined 14.9%, performingconsiderably better than the sector as a whole.Market shares of the Group’s local newspapersand la Repubblica grew, reflecting the continuingimprovement in the performance of the advertisingconcessionaire. A stronger performance than therespective market was also registered by Radio

13Report of the Board of Directors | Gruppo Editoriale L’Espresso |

Report of the Board of Directors at December 31, 2009

Deejay, whose advertising sales declined by 6.7%,and by the Repubblica.it Internet site, whoseadvertising revenues were up 9.0%.

Revenues from the sale of add-on products declinedby 12.4% to €100.6 million, a performance to bedeemed in any case as positive considering thestrong market contraction.

Operating costs declined by 11.9% on 2008, with apermanent reduction of €97.6 million alreadyachieved in 2009 thanks to the implementation ofthe corporate reorganization plan expected toproduce €140 million in yearly savings once fullyunderway. Extraordinary reorganization chargesresulting from the plan were expensed in full inthe year (€31.7 million).

Consolidated gross operating profit amounted to€106.7 million, down 25.2% on €142.5 millionin 2008. The drastic reduction in advertising rev-enues was in fact offset to a significant degree byreductions in costs.

Consolidated operating profit amounted to €63.9million (as compared with €95.3 million in 2008)while consolidated net profit amounted, after €11.4million in extraordinary tax provisions, to €5.8million (as compared with €20.6 million in theprevious year).At December 31, 2009, consolidated net financialdebt amounted to €208.2 million, down €70.8million on €278.9 million at the end of 2008.Cash generated from operating activities amountedto €98.1 million (as compared with €117.8million in 2008) and expenditure in investmentswere €25.6 million (as compared with €53 millionin the previous year).

At December 31, 2009, the Group employed3,116 persons, 228 less (-6.8%) than at the end ofthe previous year, reflecting the first effects ofreorganization plans being implemented.

Results by area

Repubblica Division

OperationsThe Repubblica Division includes the development,production and marketing of publishing productsrelating to newspaper la Repubblica (nationalnewspaper, 9 local editions, supplements andmonthly magazines Velvet and XL), in addition tothe Repubblica.it Internet site.In 2009, the printed edition of the newspaper hada good sales performance while the Repubblica.itInternet site recorded a growth in audience, addingto the offer new services for mobile phones.Internet site Repubblica.it registered in Decemberan average of 1.4 million unique users (source:Audiweb), up 38.2% on the same period in 2008.The site thus consolidated its leadership position inthe information site market, with an advantage,also in December, of 17% on its nearest competitor.An iPhone version of the Repubblica Mobileservice was launched in the year, offering newsand information tailored to the customer’s needsand based on his or her interests and location atthe time of the request. After a promotional freeoffer for a limited period of time, the service iscurrently offered under subscription and was wellreceived by an ever growing public of iPhoneusers.The printed edition of the newspaper has alsoundergone changes with regard to its format, thegraphic grid and the transformation of supplementsSalute (health) and Viaggi (travel), which are nowsections of the newspaper.

The National Newspapers marketIn a market characterized by a strong contractionin consumption, the circulation of main domesticnewspapers declined sharply, with circulation as awhole declining by 6.2%, and the circulation ofinformation dailies with an average circulation ofover 100,000 copies per issue declining by 9.2%(source: ADS, October 2009, YoY).With regard to advertising sales, non-free newspa-pers in general registered in 2009 a 16% decline

14 | Gruppo Editoriale L’Espresso | Report of the Board of Directors

on the previous year, while national newspapersrecorded an 18.1% reduction (source: FCP).Advertising on the Internet continued instead togrow (up 5.1% for the year), though at a muchslower pace than in the previous years.

Operating highlights * 2008 2009 %change(€ million) 2009/2008Revenues 404.8 347.8 -14.1%

Operating and personnel costs (386.7) (337.2) -12.8%

Gross operating profit 18.0 10.6 -41.2%

Depreciation, amortization and write-downs (12.8) (13.1) +2.4%

Operating profit 5.2 (2.5) n.s.

Employees 700 661

* excluding revenues and profits from add-on products

Total revenues of the division declined by 14.1%on the previous year, to €347.8 million.

Revenues from newsstand sales of the newspapergrow slightly on the previous year (up 1.4%)thanks to relatively strong sales in the second halfof the year. Total circulation however declined(down 12.9%) to an average of 485 thousandcopies per issue due to the decision to suspend orreduce drastically the number of promotions.Advertising revenues of the division declinedoverall by 18.8%, while advertising sales of thenewspaper registered a 16.1% reduction (againstan 18.1% reduction recorded by national newspa-pers).Weekly supplements and monthly magazines,however, reported the strongest declines in adver-tising sales.In view of the drastic reduction of advertising rev-enues, the Group formulated and implemented arigorous cost reduction plan that has producedsignificant results already in 2009. Operating costswere cut by 12.8% without reducing in any waythe scope of activity of the division.Despite the reduction in costs already achieved,the operating profit of the division declined from aprofit of €5.2 million in 2008, to a loss of €2.5million in 2009. We expect however the divisionto return to profit in 2010 thanks to the full effectof cost cutting measures implemented.

Revenues from add-on products sold by thedivision, not included in the above figures, amountedto €73.6 million, down from €87 million in 2008.

Local newspapers

The Local newspapers Division includes 17 localnewspapers, one of which a bi-weekly magazine,in addition to the respective Internet sites.In 2009 the Group launched a project for theenhancement of the role of local newspapers’Internet sites, with the development of a new andricher editorial formula. The project is currentlybeing tested on newspaper Il Tirreno’s site andwill subsequently be extended to all other localnewspapers of the Group.

The local newspapers marketThe local newspapers market held relative well incomparison with other printed media, both interms of circulation and advertising revenues. At the end of October, circulation was down 1.5%on the end of October 2008 (source: ADS), againsta 6.2% decline of circulation for domestic news-papers as a whole. Advertising revenues for 2009declined by 13.7% on 2008 (source: FCP), a muchlower contraction than that registered by domesticnewspapers in general.

Operating highlights Anno Anno %change(€ million) 2008 2009 2009/2008

Revenues * 250.4 227.8 -9.0%Operating and personnel costs (197.5) (185.7) -6.0%Gross operating profit 52.9 42.1 -20.5%Depreciation, amortization and write-downs (10.8) (9.5) -11.6%Operating profit 42.2 32.6 -22.8%Employees 1,242 1,181 * net of intragroup sales

Total revenues of the Group’s local newspapersamounted in 2009 to €227.8 million, down 9%on the previous year.Circulation revenues remained stable on 2008 andthe circulation of the Group’s 17 local newspaperswas stable at an average of 460 thousand copiesper issue.


Advertising revenues declined by 12.8% on 2008,representing a smaller decline than the market asa whole. The decline was stronger for the nationaladvertising component, while local advertisingregistered a more limited contraction. The operating profit of the division amounted to€32.6 million, down from €42.2 million in 2008.Despite the significant reduction in advertisingrevenues, the division maintains a strong operatingmargin (14.3% of sales), thanks to cost reductionmeasures and efficiency improvements achieved inthe year, whose effects are expected to grow in2010.

Periodicals division

The Periodicals Division includes weekly magazineL’espresso, monthly magazine National Geo-graphic and periodicals Limes, Micromega andGuide de L’espresso, in addition to the respectiveInternet sites.In 2009, the periodicals division focused on devel-oping the offer of online services and increasingthe Internet customer base.The Internet site of L’espresso in 2009 continuedto record a growth in audience, with unique usersreaching in December the 1.5 million (mark up31% on December 2008), and page views reaching10.8 million.The new Food&Wine site, launched in the year, isin line with the tradition set by L’espresso’sRestaurant Guide and Wine Guide. The site offersarticles, photos and videos on Italian and interna-tional food and wine events, featuring interviewswith chefs, wine experts and critics, in addition torecipes of great chefs and readers.Finally, an iPhone application called RestaurantGuide was also launched. The new applicationcan be purchased online and allows to navigateamong reviews of restaurants, comparing pricesand ratings, finding restaurants in the area inwhich one is interested or located, receivinginstructions on the shortest route to follow.

The periodicals marketThe economic crisis hit the periodicals marketparticularly hard, both in terms of circulation andadvertising revenues.In 2009, sales of the Group’s periodicals registereda contraction, in comparable terms, of 7.7%,affecting all market segments, with weekly maga-zines reporting a 6.8% decline and monthly mag-azines reporting a decline of 8.5%.Similarly, advertising revenues of the Group peri-odicals declined by 28.7%, while news magazinesperformed even worse, reporting a 32.6% decline(source: FCP).

Operating highlights Anno Anno %change(€ million) 2008 2009 2009/2008Revenues * 56.7 43.9 -22.7%Operating and personnel costs (57.8) (48.2) -16.7%Gross operating profit (1.1) (4.3) n.s.Depreciation, amortization and write-downs (1.1) (0.8) -23.9%Operating profit (2.2) (5.2) n.s.Employees 112 99

* excluding revenues and profits from add-on products

Total revenues of the division amounted in 2009 to€43.9 million, with a 22.7% reduction on theprevious year.Circulation revenues registered a 9.9% decline.Weekly magazine L’espresso recorded a signifi-cantly less steep decline in revenues (down5.1%) thanks to the good newsstand sales. Thecirculation of the magazine declined howeversharply (down 11.6% to an average of 326thousand copies per issue), largely due to thecancellation of a number of promotional offersthat were scarcely remunerative.Circulation revenues of other publications registereda steeper decline due primarily to the lowernumber of issues and the reduction of specialissues of the magazines. Circulations were insteadstable, with magazine National Geographic report-ing an average of 107 thousand copies per issueand magazines Limes and Micromega reportingan average circulation respectively of 14 and 13thousand copies per issue.


Advertising revenues declined by 33.7%, reflectingthe strong contraction of the sector and inparticular that of the news magazine segment.In view of the drastic reduction of advertising rev-enues, the Group formulated and implemented arigorous cost reduction plan that has producedsignificant results already in 2009. As a result,operating costs declined by 16.7% without reducingin any way the scope of activity of the division.Despite cost reduction measures already imple-mented, the operating profit of the division remainsnegative and amounts to a loss of €5.2 million. Inthis respect, it must be noted that the effects of thecost reduction plan implemented were not yetfully felt in 2009, while a significant part isexpected to be achieved in 2010.Revenues from add-on products sold by thedivision, not included in the above figures, amount-ed to €23.4 million, down from €25.3 million in2008.

Radio Division

The Radio sector includes the Group’s threenational radio stations Radio Deejay, RadioCapital and m2o, and the respective Internet sites.According to Audiradio’s figures for the last twomonths of 2009, Radio Deejay continues to rankamong the top commercial radio stations, first inthe week with 12.8 million listeners and with anaverage daily audience of over 5.2 million. RadioCapital recorded an average weekly audience ofover 5.2 million and an average daily audience ofabout 1.6 million listeners, while m2o consolidatedits average weekly audience at 2.5 million, andits average daily public at 1.2 million.In 2009, the three radio stations continued todevelop their presence on all distribution platforms(Internet, satellite and mobile phones), encouragedby the good performance of the first multimediaexperiences. Radio Deejay’s program podcastscurrently rank at the top of iTunes’ downloadrankings. Recent iPhone applications allowing tolisten to live radio programs, view rankings,videos, photos, and to interact with programs

being broadcasted, were very successful in termsof downloads and number of mobile customers.All of the Group radio stations, moreover, providestreaming of programs with a high video quality,have a strong presence on social networks, and arealso available on the Sky satellite platform.

The radio sectorThe Group’s radio stations continued to grow,reaching in 2009 a daily average of 39.3 millionlisteners, up 2.7% on 2008.Advertising revenues of the division howeverdeclined by 7.7% on 2008, a decline which,thanks to the strong recovery registered in the lastquarter of the year, was in any case considerablysmaller than that of all other traditional media.


Revenues 79.0 69.9 -11.6%Operating and personnel costs (47.4) (44.8) -5.5%Gross operating profit 31.6 25.1 -20.7%Depreciation, amortization and write-downs (4.4) (4.4) +0.6%Operating profit 27.2 20.7 -24.2%Employees 167 158

Revenues of the Group’s radio stations declined by11.6% on 2008 due to a 10.6% reduction inadvertising revenues. The decline was less steepfor Radio Deejay (down 6.7%), while it wasstronger for the other radio stations due to theirsmaller size.Despite the significant decline in revenues, theoperating profit amounted to €20.7 million, with astrong operating margin (29.6%) that is amongthe highest in the domestic radio sector.


Television Broadcasting Division

The division includes the activities of Rete A,owner of an analog channel and two digital mul-tiplex frequencies and TV publisher of the DeejayTV television channel (which in 2009 replaced theAll Music channel).The transition to digital terrestrial broadcastingcontinued in 2009 with the switch-off of theanalog signal in the Valle d’Aosta, Western Pied-mont, Trentino Alto Adige, Lazio and Campaniaregions. At the same time, Rete A started tomarket its broadcasting capabilities and, at theend of the year, signed a contract with News Cor-poration for the provision of bandwidth for thenew Cielo digital TV channel.With regard instead to the Group’s own televisionchannel, 2009 proved to be a transition year inwhich the brand and program schedule were dis-continued, while a reorganization plan was imple-mented. The new format is in strong synergy withthe Group’s main radio station making use ofRadio Deejay’s artists and entertainers, whileusing external services for all production needs.The new programming schedule is coming intoline in the first months of 2010.Finally, in 2009 a reorganization plan involvingthe discontinuation of all production activitiesand the resulting downsizing of the dedicatedstructure was implemented.


Revenues 18.2 8.8 -51.9%Operating and personnel costs (27.2) (16.5) -39.3%Gross operating profit (9.0) (7.7) n.s.Depreciation, amortization and write-downs (4.8) (3.8) -20.3%Operating profit (13.7) (11.5) n.s.Employees 77 63

Revenues of the television division declined sharplydue to the drastic reduction in advertising saleswhich were penalized, in addition to the economicdownturn, by the discontinuation of the programschedule that took place in the second half of 2008.

The operating profit for the year was stronglynegative (a loss of €11.5 million), though the sig-nificant reduction in costs allowed to reduce theloss with respect to the one reported in 2008.

Subsequent events and outlook

After the date of December 31, 2009 no one sig-nificant subsequent event occurred.The macroeconomic scenario for 2010 remainsunclear. Expectations for a weak growth of theItalian economy and thus of domestic consumptiondo not point to a strong recovery of advertisingexpenditure.Despite the positive trend registered by the Group’sadvertising revenues in the first months of 2010,expectations for the year as a whole are still uncer-tain.In this context, the Group expects however toreap further benefits from cost reduction measuresimplemented, in addition to the new impulseimparted to the advertising concessionaire that isallowing it to improve its competitive position inthe advertising market.The Group is finally active in implementing astrong editorial development plan in the newmedia that will result in the growing distributionof contents on all new platforms.


Consolidated results at December 31, 2009

Consolidated Income Statement

Below is exposed the Consolidated Income Statement at December 31, 2009, in relation to theresluts at December 31, 2008.

€ million 2008 2009

Revenues 1,025.5 886.6Change in inventories (2.6) (0.8)Other operating income 17.7 19.8Purchases (150.1) (120.2)Services received (388.2) (340.8)Other operating charges (30.3) (23.1)Investments valued at equity 1.1 1.0Personnel costs (330.7) (316.0)Depreciation, amortization and write-downs (47.2) (42.7)

Operating profit 95.3 63.9Financial income (expense) (19.6) (19.6)

Pre-tax profit 75.7 44.3Income taxes (54.5) (38.8)

Net profit 21.2 5.5Minority interests (0.6) 0.3

GROUP NET PROFIT 20.6 5.8

Revenues and operating results were discussed in detail in the first part of the present report,to which we make reference for a more detailed analysis.


Consolidated Statement of Financial Position

ASSETS Dec. 31, Dec. 31,(€ million) 2008 2009Intangible assets with an indefinite useful life 656.1 656.4Other intangible assets 4.3 3.1Intangible assets 660.4 659.5Property, plant and equipment 221.0 203.6Investments valued at equity 27.8 28.3Other investments 2.6 2.5Non-current receivables 1.5 1.3Deferred tax assets 47.6 48.6

NON-CURRENT ASSETS 960.8 943.8Inventories 27.7 23.2Trade receivables 258.3 229.9Marketable securities and other financial assets 0.1 25.2Tax receivables 20.8 20.6Other receivables 23.5 17.4Cash and equivalents 120.7 135.0

CURRENT ASSETS 451.1 451.4

TOTAL ASSETS 1,411.9 1,395.2

LIABILITIES AND SHAREHOLDERS’ EQUITY Dec. 31, Dec. 31,(€ million) 2008 2009Share capital 61.4 61.4Reserves 245.9 217.1Retained earnings (loss carry-forwards) 150.6 201.2Net profit (loss) 20.6 5.8Group Shareholders’ Equity 478.4 485.6Minority interests 10.8 9.8

Group Shareholders’ Equity 478.4 485.6Minority interests 10.8 9.8

SHAREHOLDERS’ EQUITY 489.3 495.4Financial debt 379.8 348.6Provisions for risks and charges 24.1 40.4Employee termination and other retirement benefits 90.9 83.9Deferred tax liabilities 108.0 111.0

NON-CURRENT LIABILITIES 602.9 583.9Financial debt 19.9 19.8Provisions for risks and charges 34.7 48.8Trade payables 147.6 147.6Tax payables 19.3 12.7Other payables 98.3 86.9

CURRENT LIABILITIES 319.8 315.9

TOTAL LIABILITIES 922.7 899.8

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY 1,411.9 1,395.2


Statement of Financial Position

Intangible assets amount to €659.5 million, down €0.9 million on December 31, 2008(€660.4 million) due to amortization and write-downs amounting to €2.5 million, offset onlyin part by €1.6 million in capital expenditure made in the year.

Property, plant and equipment amounts to €203.6 million, down €17.4 million on December31, 2008 (€221 million). Net capital expenditure made in 2009, equal to €22.9 million, wasin fact more than offset by the €39.1 million depreciation expense for the year and by €1.1million in write-downs relating to printing equipment no longer in use.

Investments amount to €30.8 million, in line with December 31, 2008 (€30.3 million).

Non-current receivables amount to €1.3 million and consist of security deposits and taxreceivables on advances paid on employee termination indemnities. The item is in line with€1.5 million at December 31, 2008.

Deferred tax assets amount to €48.6 million (€47.6 million at December 31, 2008) andinclude temporary differences between amounts recorded in the Statement of Financial Positionand those recognized for tax purposes. The €0.9 million increase in the year is due primarilyto the higher taxable income of the parent company due to the provisions for risks and chargesand to the provision for personnel costs which are temporarily non-deductible, offset only inpart by uses of accumulated losses by subsidiary Elemedia.

Inventories amount to €23.2 million and include inventories of paper, printing materials, pub-lications and products sold optionally with publications. The €4.5 million decline onDecember 31, 2008 is due primarily to lower stocks of paper and add-on products.

Trade receivables amount to €229.9 million, down €28.4 million on December 31, 2008 dueprimarily to lower advertising sales.

Marketable securities amount to €25.2 million and consist primarily of bonds acquired in theyear to diversify short-term investments.

Tax receivables amount to €20.6 million and are in line with €20.8 million at December 31,2008. Higher Ires (corporate tax) and Irap (Regional tax on productive activities) receivables,were in fact offset by the collection of Irpeg receivables, and the usage of tax credits oninvestments (Law no. 62/2001 on Publishing Sector), offsetting taxes payable for the period.

Other receivables amount to €17.4 million and include advances to suppliers, agents andfreelance workers, in addition to accrued income relating to rent and rights on licenses for thesale of add-on products and radio programs to be distributed in the first half of 2010. The €6.1million reduction is due primarily to the collection of the residual share of grants covering partof the interest payments on subsidized loans stipulated at the end of 2005, amounting to €5million.


Cash and equivalents amounted to €135 million and increase by €14.3 million on December31, 2008. Cash flow generated by operations (€88.7 million) more than offset the net outflowof €75 million for investing and financing activities.

Shareholders’ Equity at December 31, 2009 amounted to €495.4 million (€489.3 million atDecember 31, 2008), of which €485.6 million belonging to the Group (€478.3 million at theend of 2008), and €9.8 million relating to minority interests (€10.4 million at December 31,2008). Own shares held by the parent at December 31, 2009, whose value is subtracted fromthe Shareholders’ Equity, amounted to 7,980,000 (par value €0.15 each), representing 1.95%of the share capital.

Non-current financial payables at December 31, 2009 amount to €348.6 million and includea subsidized 10-year loans extended in the last quarter of 2005, and €300 million of bondsissued on October 27, 2004.

Current and non-current risk provisions amounted at December 31, 2009 to €89.3 million, up€30.4 million on €58.9 million at the end of 2008. The increase is due primarily to provisionsfor extraordinary charges linked to corporate reorganization plans launched, and to a €14.7million extraordinary tax provision. Further detail is provided in the notes to the accounts.

Employee termination indemnities and other retirement benefits amounted to €83.9 million(€90.9 million at December 31, 2008). The €7 million decline is due primarily to the employeetermination indemnities and fixed indemnities for managers of newspapers paid out in the year(€11.9 million), offset only in part by the financial effect of the valuation of provisions (interestcost) and the discounted-back value of provisions relating to Fixed Indemnities (service cost),equal in total to €6.2 million.

Deferred tax liabilities amount to €111 million (€108 million at December 31, 2008) andinclude €36.6 million relating to the tax impact of the recording of TV broadcasting frequen-cies.

Current financial debt amounts to €19.8 million and consists primarily of the short-termportion of subsidized loans and the bond issue, the latter of which inclusive of interest accruedat December 31, 2009. The item is in line with €19.9 million at December 31, 2008.

Trade payables amount to €147.6 million and are unchanged on December 31, 2008.

Tax payables amount to €12.7 million, declining by €6.5 million due to lower Ires and Irap(corporate tax and regional tax on productive activities) due to the parent company in thecontext of the fiscal consolidation procedure.

Other payables amount to €86.9 million, down €11.4 million on €98.3 million at December31, 2008 due primarily to lower payables to employees, primarily on paid leave.


Changes in the Consolidated Net Financial Position

(€ million) 2008 2009

SOURCES OF FUNDSNet profit (loss) for the period, including minority interests 21.2 5.5Depreciation, amortization and write-downs 47.2 42.7Accruals to pProvisions for stock option costs 0.4 2.0Net change in provisions for personnel costs (1.7) (7.0)Net change in provisions for risks and charges 32.6 30.2Losses (gains) on disposal of fixed assets (1.5) (0.3)Losses (gains) on disposal of investments - 0.4Write-downs (revaluations) of investments 1.4 0.6Adjustment for investments valued at equity (0.9) (0.6)Cash flow from operating activities 98.7 73.5Decrease (Increase) in non-current receivables 0.4 0.2Increase in payables / Decrease in deferred tax assets 3.1 2.0Increase in payables/ Decrease in tax receivables (3.3) (6.3)Decrease (Increase) in inventories 2.8 4.5Decrease (Increase) in trade and other receivables 49.0 34.5Increase (Decrease) in trade and other payables (33.1) (10.7)Changes in current assets 19.0 24.2CASH FLOW FROM OPERATING ACTIVITIES 117.7 97.7Net divestments in equity investments 0.1 -Increases in capital and reserves - 0.4

TOTAL SOURCES OF FUNDS 117.8 98.1USES OF FUNDSNet investment in fixed assets (53.0) (24.9)Net - (0.7)Acquisition of treasury stockown shares (9.1) (1.1)Dividends paid (68.8) -Other changes (0.9) (0.7)

TOTAL USES OF FUNDS (131.9) (27.3)Financial surplus (deficit) (14.1) 70.8

BEGINNING NET FINANCIAL POSITION (264.9) (278.9)

ENDING NET FINANCIAL POSITION (278.9) (208.2)


Consolidated Statement of Cash Flows and Net Debt

The comparison between financial flows from January 1, 2009 to December 31, 2009 andthose for the same period in 2008 are reported in the table that follows.

(€ million) 2008 2009

SOURCES OF FUNDSNet profit (loss) for the period, including minority interests 21.2 5.5Adjustments: - Depreciation, amortization and write-downs 47.2 42.7- PAccruals to provisions for stock option costs 0.4 2.0- Net change in provisions for personnel costs (1.7) (7.0)- Net change in provisions for risks and charges 32.6 30.2- Losses (gains) on disposal of fixed assets (1.5) (0.3)- Losses (gains) on disposal of equity investments- (2.3)- Adjustments to the value of financial assets 1.4 0.6- Adjustment for investments valued at equity (0.9) (0.6)- Dividends (received) (0.1) (0.0)Cash flow from operating activities 98.6 70.8Changes in current assets and other flows 12.8 17.9

CASH FLOW FROM OPERATING ACTIVITIES 111.4 88.7of which: Interest received (paid) (13.8) (17.3)Income taxes (paid) received (39.7) (33.0)

INVESTING ACTIVITIESOutlay for purchase of fixed assets (55.5) (26.9)Outlay for purchase of investments - (2.7)Received on disposal of fixed assets 2.7 2.3Public grants received 5.5 5.2(Purchase) sale of marketable securities - (24.8)Dividends received 0.1 0.0Other changes - 1.8

CASH FLOW FROM INVESTING ACTIVITIES (47.2) (45.2)

FINANCING ACTIVITIESIncreases in capital and reserves - 0.4(Purchase) sale of treasury stockown shares (9.1) (1.1)Issue (repayment) of bonds- (12.1)Issue (repayment) of other financial payables (16.9) (16.4)Dividends (paid) (68.8) -Other changes (0.8) (0.7)

CASH FLOW FROM FINANCING ACTIVITIES (95.7) (29.8)

Increase (decrease) in cash and cash equivalents (31.5) 13.7

Cash and cash equivalents at beginning of the period 152.1 120.7

CASH AND CASH EQUIVALENTS AT END OF THE PERIOD 120.7 134.4


Cash flow from operating activities for 2009 amounts to €88.7 million, down €22.7 millionon 2008 (€111.4 million) due entirely to the results of operations.

Cash flow from investing activities is negative by €45.2 million due primarily to net capitalexpenditure made in the year (€26.9 million) and the purchase of bonds (€24.8 million).With regard to capital expenditure, in 2009 existing low- and high-frequency broadcastingequipment were upgraded (€2.8 million); part of the analog television broadcasting networkof Rete A was switched off (€3.2 million); investments were made in the rotary presses andother printing equipment of la Repubblica, local newspapers and magazines (€13.5 million);information systems were updated, networks upgraded and projects for the renewal of theeditorial system were undertaken (€3.4 million); and, finally, offices, editorial offices and radiorecording studios were renovated (€3.1 million). In 2009, part of the amount payable atDecember 31, 2008 for purchases made in the previous year primarily on printing equipmentand radio and television equipment, was paid out.With regard to the purchase of marketable securities, in 2009 the Group acquired €24.8million of fixed-rate bonds to diversify liquidity investments.

Financing activities absorbed resources amounting to €29.8 million. In 2009, a total of1,345,000 shares of the company were acquired for €1.1 million, €16.4 million of loans wererepaid, and €14.5 million of nominal value (a book value of €14.7 million) of the bond issuewas repurchased, resulting in a capital gain of €2.6 million.

The table that follows shows the breakdown of the financial position of the Group.

31-dic 31-dic(€ million) 2008 2009

Financial receivables from Group companies - 1.4Financial payables to Group companies - -Cash and bank deposits 120.7 133.6Current account overdrafts (0.0) (0.6)Net cash and cash equivalents 120.7 134.4Marketable securities 0.1 25.2Bond issue (307.2) (291.7)Other bank debt (91.7) (75.4)Other financial debt (0.7) (0.6)Other financial assets (liabilities) (399.6) (342.6)

NET FINANCIAL POSITION (278.9) (208.2)


Results of parent company Gruppo Editoriale L’Espresso at December 31, 2009

On September 21, 2009, subsidiaries CPS SpA and Selpi SpA were merged with the parentcompany Gruppo Editoriale L'Espresso SpA. For accounting and tax purposes, the merger iseffective January 1, 2009. To provide a meaningful comparison of figures for 2009 and 2008,those for 2008 have been restated in a separate column.

Income Statement

Anno Anno 2008 Anno(€ million) 2008 proforma 2009Revenues 573.7 575.4 494.2Change in inventories (1.7) (1.7) (0.7)Other operating income 8.7 8.7 10.0Purchases (100.5) (100.9) (79.8)Services received (288.6) (286.9) (248.3)Other operating charges (12.0) (12.1) (9.2)Personnel costs (129.1) (130.5) (129.9)Depreciation, amortization and write-downs (14.0) (14.0) (14.0)

Operating income 36.5 37.9 22.1Financial income (expense) (14.0) (13.9) (12.8)Dividends 55.3 54.2 42.0Pre-tax profit 77.8 78.2 51.4Income taxes (28.2) (28.7) (21.0)

NET PROFIT 49.7 49.5 30.4



ASSETS Dec. 31, Dec. 31, 2008 Dec. 31,(€ million) 2008 Pro-forma 2009Intangible assets with indefinite useful life 220.7 220.7 220.7Other intangible assets 2.5 2.5 1.8Total intangible assets 223.2 223.2 222.4Property, plant and equipment 60.1 60.1 51.0Investments 400.5 399.0 408.4Non-current receivables 0.4 0.4 0.4Deferred tax assets 14.9 14.9 21.5

NON-CURRENT ASSETS 699.0 697.6 703.8Inventories 22.6 22.7 19.2Trade receivables 101.4 102.7 101.3Marketable securities and other financial assets - - 25.1Tax receivables 14.8 14.9 14.7Other receivables 10.9 10.9 9.8Cash and cash equivalents 196.2 195.5 182.4

CURRENT ASSETS 346.0 346.7 352.6

TOTAL ASSETS 1,045.0 1,044.3 1,056.4

PASSIVO Dec. 31, Dec. 31, 2008 Dec. 31,(€ million) 2008 Pro-forma 2009Share capital 61.4 61.4 61.4Reserves 86.1 87.8 86.9Retained earnings (loss carry-forwards) 150.6 150.6 201.2Net profit (loss) 49.7 49.5 30.4

SHAREHOLDERS' EQUITY 347.7 349.2 379.9Financial debt 327.3 328.0 307.3Provisions for risks and charges 18.5 18.5 34.5Employee severance and other retirement benefits 40.2 40.6 36.6Deferred tax liabilities 43.0 43.0 45.6

NON-CURRENT LIABILITIES 429.1 430.1 424.0Financial debt 107.5 103.9 86.1Provisions for risks and charges 11.6 11.6 26.0Trade payables 90.2 90.0 91.5Tax payables 11.8 12.0 7.3Other payables 47.1 47.4 41.5

CURRENT LIABILITIES 268.2 264.9 252.5

TOTAL LIABILITIES 697.2 695.0 676.4

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 1,045.0 1,044.3 1,056.4


Statement of Cash Flows and Net Debt

The comparison between financial flows from January 1, 2009 and December 31, 2009 andthose for the same period in 2008 are reported in the table that follows.

(€ million) 2008 2009

OPERATING ACTIVITIESNet income (loss) 49.7 30.4Adjustments: - Depreciation, amortization and write-downs 14.0 14.0- Fair value stock optionsAccruals to provisions for stock option costs 0.4 2.0- Net change in provisions for personnel costs (0.8) (4.0)- Net change in provisions for risks and charges 20.7 30.3- Losses (gains) on disposal of fixed assets (0.0) (0.0)- Losses (gains) on disposal of equity investments and marketable securities- (2.6)- Adjustments to the value of financial assets 1.4 (0.1)- Adjustment for investments valued at equityDividends (received) (55.3) (42.0)Cash flow from operating activities 30.0 28.0Changes in current assets and other flows 9.9 (9.0)

CASH FLOW FROM OPERATING ACTIVITIES 39.9 18.9of which: Interest received (paid) (11.4) (14.5)Income taxes (paid) received (13.0) (14.2)

INVESTING ACTIVITIESOutlay for purchase of fixed assets (13.7) (5.1)Outlay for purchase of investments (10.0) (10.6)Received on disposal of assets 0.0 0.2Public grants received1.2 1.9(Purchase) of marketable securities and assets held for disposal - (24.8)Dividends received 55.3 42.0

CASH FLOW FROM INVESTING ACTIVITIES 32.8 3.6

FINANCING ACTIVITIESIncreases in capital and reserves - 0.4(Purchase) sale of treasury stockown shares (9.1) (1.1)Issue (repayment) of bonds- (12.1)Issue (repayment) of other financial debt (5.0) (5.2)Dividends (paid) (68.8) -Other changes 0.0 (0.0)

CASH FLOW FROM FINANCING ACTIVITIES (82.9) (18.0)Increase (decrease) in cash and cash equivalents (10.2) 4.6Cash and cash equivalents at beginning of the period 107.4 97.2CASH AND CASH EQUIVALENTS AT END OF THE PERIOD - 3.0

DISPONIBILITA' LIQUIDE NETTE FINALI 97,2 104,9


The operating performance was described in the section on individual divisions to which werefer. Below we discuss the financial performance of the Group.

Capital expenditure of the parent company in 2009 amounted to €5.1 million and consistedprimarily in investments for the optimization of the operation of new rotary presses and theirtechnological upgrade, the development of editorial systems of la Repubblica and L’espresso,the development of information systems and network infrastructure, in addition to ordinarymaintenance work at the editorial offices.

At December 31, 2009, the financial debt of the parent company amounted to €185.9 million,down €50.5 million from €236.4 million at December 31, 2008. The decline was achievedthanks to the positive cash flow from operations, amounting to €67 million, only a small portionof which was absorbed by capital expenditure made in the year; to the outlay of €1.1 million forthe purchase of own shares; and to the payment of €10.5 million to cover subsidiary’s losses.

At the end of December 2009, the parent company employed 944 persons, 49 less than the 993it employed, including merged companies, at December 31, 2008.

Reconciliation between the Parent Company’s Financial Statements and the ConsolidatedFinancial Statements

Net profit Shareholders’ Equity at(€’000 thousand) 2008 2009 Dec. 31, 2008 Dec. 31, 2009 Parent company’s financial statements 49,669 30,387 347,719 379,925Netting of intragroup dividends (66,100) (45,276) - -Shareholders’ Equity and net profit of subsidiaries 33,512 19,954 350,529 333,109Netting of carrying value of consolidated subsidiaries 2,745 326 (457,827) (465,894)Goodwill of publications, trademarks and frequencies - (67) 208,305 208,238Effect of valuation on equity of affiliated companies 884 564 27,750 28,334Other consolidation adjustments (86) (63) 1,969 1,893

Other consolidation adjustments 20,624 5,825 478,445 485,605

Main risks and uncertainties to which the parent company and the Group are exposed

Main risk factors to which the Espresso Group is exposed as a consequence of the sector inwhich it operates are classified in the following categories:- risks connected with the general performance of the economy- risks relating to operations- financial risks

General economic riskThe operations of the Group and its financial situation is influenced by the various factorsaffecting the general economic outlook. In particular, the economic downturn and the currentuncertain outlook for the short and medium term had a negative impact on household spending


and investments made by companies and, as a result, on the advertising market. Thecontraction in orders and sales spurred by a decline in consumption induced in fact companiesto postpone the launch of new products and to reduce advertising spending.In the current market situation in which the strong decline in advertising sales has caused asharp reduction in margins, the Group reacted by implementing a radical cost reduction planexpected to generate €140 million in savings per year, thus bringing costs in line with reducedrevenues and ensuring the continuity and development of the Group’s assets.

Operating risksRisk of fluctuations in paper pricesAs it is active in the publishing sector, the Group acquires large quantities of paper and istherefore particularly exposed to fluctuations in the price of paper. To achieve a more efficientmanagement of paper purchases and to strengthen its bargaining position with counterparts,thus promoting competition among suppliers, the management of paper purchases for theGroup is centralized.In the past, the Group stipulated a number of paper swap contracts on a portion of its paperneeds. As, however, it assessed their ineffectiveness in the medium term, the Group has decidedto discontinue the use of such instruments.

Credit riskThe credit risk exposure of the Group relates to trade and financial receivables. Due to thesector in which it operates, the Group is not subject to significant credit risk on tradereceivables. Though there are no significant concentrations of such risks, the Group howeveradopts operating procedures that bar the sale of publications, advertising spaces and otherservices to customers that do not possess an adequate risk profile or provide collateralguarantees. Despite these procedures, it is not possible to rule out that in the current marketconditions a number of customers may fall behind with payments or not honor themaltogether. The Group has therefore accrued a congruous provision for doubtful accounts.With regard to financial receivables, investments in short-term financial instruments andtrading in derivatives are carried out only with banks that possess a high credit standing.

Legal risks, risk of compliance with and changes in regulations for the sectorIt cannot be ruled out that the Group may be required to face liabilities resulting from legal and taxlitigation of various nature. The Group has consistently accrued adequate amounts to provision forrisks and charges recorded in the financial statements (see the related section in the notes).The Group has adopted a set of rules constituting a Code of Conduct that are transmitted toall employees on an ongoing basis, the consistent application of which is continuouslymonitored. With reference to Legislative Decree 231/2001 on administrative responsibilities ofentities other than individuals, it is acknowledged that all Group companies have adopted anOrganizational, Management and Control Model that is continuously updated in compliancewith the most recent applicable norms.The Group is finally subject to risks deriving from changes in norms and regulations regardingin particular the radio and television sector and the resulting needs to comply with suchchanges. The Group monitors these changes actively and holds a constructive dialog with com-petent authorities to ensure the timely application of new norms issued.


Financial riskThe management of financial risk is regulated by a set of rules that outline the objectives,strategies, guidelines and operating procedures.In the management of financial resources and treasury the Group adopts a procedure thatimplies the application of prudence and limited risk criteria in the choice of financial andinvestment policies, prohibiting all speculative operations except for those adequatelymotivated and approved by the Board of Directors of the parent company.The parent company manages and coordinates a centralized intragroup current account, inwhich all subsidiaries take part, aiming at obtaining economic advantages in relationships withfinancial counterparts and stronger operating efficiency. Centralization allows in fact moreefficient planning and control of financial flows, ensures higher consistency in financing andinvestment choices, optimizes the overall risk profile of the Group and, above all, strengthensits contractual power with the banking system.Further information on risks deriving from financial instruments are provided – as requiredunder IFRS – in the related section of the notes.

* * * *

Gruppo Editoriale L’Espresso SpA, the parent company, is exposed to the same risks to whichthe Group as a whole is exposed, described above.

* * * *

Based on the operating results and the cash flows generated in the last years, in addition to thefinancial position of the Group at December 31, 2009, the Company does not believe thereexist uncertainties regarding the ability of the Group to continue to carry out its operations.

Certification pursuant to art. 37 of Consob Resolution no. 16191/07 (Market Regulation)In relation to requirements set in article 2.6.2, comma 15, of the Italian Stock MarketRegulations, keeping into account the provisions of article 37 of Consob Regulation16191/2007, it is hereby certified that there do not exist conditions such as to inhibit the listingof Gruppo Editoriale L'Espresso S.p.A. shares on the Screen-based Trading Circuit organizedand managed by Borsa Italiana S.p.A.With regard to the direction and coordination of its parent company CIR S.p.A. (CIR), GruppoEditoriale L'Espresso complied with disclosure requirements established by article 2497-bis ofthe Italian Civil Code, has full autonomy in dealing with its customers and suppliers, and doesnot share with CIR a centralized treasury management service. As indicated in the Report onCorporate Governance, it is acknowledged that the number of Independent Directors and theirstatus are sufficient to guarantee that their opinion in the Board’s decision-making processwields a significant influence.


Other informationOwn shares held by the parent at December 31, 2009 were 7,980,000 (of nominal value€0.15), representing 1.95% of the share capital.

* * * *

Gruppo Editoriale L’Espresso has updated the “Safety Protocol” in compliance with the termsissued by Legislative Decree no.196 dated June 30, 2003 that includes the “PersonalInformation Protection Code” and has adopted in its internal procedures, measures providedfor in the General Authorization of the Authority for Privacy no. 1/2009 regarding sensitiveinformation in the workplace.The Company is moreover committed to adopt technical and organizational measures aimedat protecting information relating to employees, professionals and third parties, acquired in thecontext of its operations and to avoid any improper use of the same.To such end, Gruppo Editoriale L’Espresso attests that the treatment of personal informationby the Company’s divisions is carried out in the respect of rights and fundamental freedoms,and of the dignity of persons involved.Gruppo Editoriale L’Espresso is moreover committed to adopt all necessary technical and organi-zational and security measures aimed at averting the risk of destruction, loss of data, unauthorizedaccess or inappropriate use of data contained in all data banks containing personal data.

* * * *

Gruppo Editoriale L'Espresso makes reference to the Risk Evaluation Document provided forby the law on workplace safety that mandates an analysis of risks present in the company andthe subsequent devising of measures and timing for the implementation of the same tominimize risks and maintain an adequate level of security.In the year, the Company provided training and information, in accordance with priorities set, onemergency management, on video terminals and other residual risks, with the involvement of thepersons in charge within the Company, in addition to the training of representative of security workers.Health monitoring activities provided for in current protocols were also planned and implemented.In compliance with legislative decree no. 106 of August 3, 2009, amending Legislative Decreeno. 81 of April 9, 2008, documents and procedures on risk evaluation and all security docu-mentation, were reviewed and updated.

* * * *

With regard to information on transactions with subsidiaries, affiliated and parent companies,direction and coordination activities, and risk management, we refer to the related sections inthe notes to the accounts.A list of companies included in the consolidation is reported in Attachment 1 of the “Notes tothe Consolidated Financial Statements at December 31, 2009”.

Proposed allocation of 2009 Net ProfitTo our Shareholders:the Financial Statements of Gruppo Editoriale L’Espresso SpA that we submit to your approvalclose reporting a net profit of €30,386,899.73.We propose not to distribute any dividend for financial year 2009 and to allocate net profitentirely to retained earnings, having the Legal Reserve already reached an amount equal to20% of the share capital.


Information required by Consob - Resolution no. 11971

Information required by Consob - Resolution no. 11971 | Gruppo Editoriale L’Espresso | 35

Benefits based on financial instruments(Information required by Consob Regulation no. 11971)

Stock option plansThe Group recognizes additional benefits to certain top managers of the parent company andGroup companies through plans based on financial instruments. In particular, plans adoptedby the Group provide for the awarding of stock options.In the past, the Group recognized also plans providing for the attribution of extraordinarybonuses contingent on the achievement of a certain stock market price by the shares of theCompany (phantom stock options), but, as a consequence of recent changes in the tax treat-ment of employee share-based compensation, the Shareholders’ Meeting of Gruppo EditorialeL'Espresso SpA of April 22, 2009, resolved the cancellation of existing 2007 and 2008 Phan-tom Stock Option Plans and their replacement with an Extraordinary Stock Option Plan (i)reserved exclusively to the beneficiaries of the cancelled Phantom Stock Option plans and stillemployed by the Group, and (ii) regulated, mutatis mutandis, by the same terms and conditionsas those applicable to the phantom stock option plan.All stock option plans adopted by the Group assign to beneficiaries the right to exercise, at apre-determined price and for a set term, an option for the underwriting of new shares to beissued after specific resolutions. The related rules regulate, among other terms and conditions,also the case in which the assignee of said options ceases for whatever reason to be employedby the company.

Employee stock option plansCurrent stock option plans are:

“2000” Stock option planOn February 23, 2000, the Board of Directors, in application of the proxy assigned by theShareholders’ Meeting on April 29, 1996, resolved a capital increase pursuant to article 2441,last comma, of the Italian Civil Code, for a total of 2,155,000 shares at a price of €25.60 ofwhich €0.15 of nominal value and €25.45 of premium over par, determined in relation to thehigher between the official price and the listed price on the Italian Stock Market (Borsa ItalianaS.p.A.) on February 22, 2000 to service the “2000” Stock Option Plan. The stock option planprovides for the options to be exercised by each assignee in the following periods: a) up to amaximum of 12% of the total of options assigned starting from September 30, 2000 and atsubsequent quarterly intervals until September 30, 2010; b) up to a maximum for each quarterof 6% of options assigned in the period between December 31, 2000 and March 31, 2004, andat subsequent quarterly intervals until September 30, 2010; c) the residual 4% of optionsassigned starting from June 30, 2004 and up until September 30, 2010.To the present date no option was exercised and, pursuant to the stock option plan, 1,010,000 optionshave expired. The residual number of shares is thus 1,145,000.

“April 24, 2001” Stock option planOn April 24, 2001, the Board of Directors, in application of the proxy assigned by the Share-holders’ Meeting on April 6, 2001, resolved a capital increase pursuant to article 2441, lastcomma, of the Italian Civil Code, for a total of 930,000 shares at a price of €6.25 of which€0.15 of nominal value and €6.10 of premium over par, determined in relation to the provi-

sion article 9, comma IV of the Testo Unico tax law that makes reference to the simple arith-metic mean of official stock market prices of the company’s shares in the previous month, toservice the “April 24, 2001” Stock Option Plan. The stock option plan provides for the optionsto be exercised by each assignee in the following periods: a) up to a maximum of 12% of thetotal of options assigned starting from September 30, 2001 and at subsequent quarterly inter-vals until September 30, 2011; b) up to a maximum for each quarter of 6% of options assignedin the period between December 31, 2001 and March 31, 2005, and at subsequent quarterlyintervals until September 30, 2011; c) the residual 4% of options assigned starting from June30, 2005 and up until September 30, 2011.To the present date no option was exercised and, pursuant to the stock option plan, 450,000options have expired. The residual number of shares is thus 480,000.

October 24, 2001 Stock option planOn October 24, 2001, the Board of Directors, in application of the proxy assigned by theShareholders’ Meeting on April 6, 2001, resolved a capital increase pursuant to article 2441,last comma, of the Italian Civil Code, for a total of 885,000 shares at a price of €2.51 of which€0.15 of nominal value and €2.36 of premium over par, determined in relation to the provi-sion article 9, comma IV of the Testo Unico tax law that makes reference to the simple arith-metic mean of official stock market prices of the company’s shares in the previous month, toservice the “October 24, 2001” Stock Option Plan. The stock option plan provides for theoptions to be exercised by each assignee in the following periods: a) up to a maximum of 12%of the total of options assigned starting from March 31, 2001 and at subsequent quarterlyintervals until March 31, 2012; b) up to a maximum for each quarter of 6% of optionsassigned in the period between June 30, 2002 and September 30, 2005, and at subsequent quar-terly intervals until March 31, 2012; c) the residual 4% of options assigned starting fromDecember 31, 2005 and up until March 31, 2012.To the present date 728,100 options were exercised and, pursuant to the stock option plan,56,300 options have expired. The residual number of shares is thus 100,600.

“March 6, 2002” Stock option planOn March 6, 2002, the Board of Directors, in application of the proxy assigned by the Share-holders’ Meeting on April 6, 2001, resolved a capital increase pursuant to article 2441, lastcomma, of the Italian Civil Code, for a total of 1,330,000 shares at a price of €3.30 of which€0.15 of nominal value and €3.15 of premium over par, determined in relation to the provi-sion article 9, comma IV of the Testo Unico tax law that makes reference to the simple arith-metic mean of official stock market prices of the company’s shares in the previous month, toservice the “March 6, 2002” Stock Option Plan. The stock option plan provides for the optionsto be exercised by each assignee in the following periods: a) up to a maximum of 12% of thetotal of options assigned starting from September 30, 2002 and at subsequent quarterly inter-vals until September 30, 2012; b) up to a maximum for each quarter of 6% of options assignedin the period between December 31, 2002 and March 31, 2006, and at subsequent quarterlyintervals until September 30, 2012; c) the residual 4% of options assigned starting from June30, 2006 and up until September 30, 2012.To the present date 902,375 options were exercised and, pursuant to the stock option plan,169,425 options have expired. The residual number of shares is thus 258,200.

36 | Gruppo Editoriale L’Espresso | Information required by Consob - Resolution no. 11971

“July 24, 2002” Stock option planOn July 24, 2002, the Board of Directors, in application of the proxy assigned by the Share-holders’ Meeting on April 6, 2001, resolved a capital increase pursuant to article 2441, lastcomma, of the Italian Civil Code, for a total of 1,322,500 shares at a price of €3.36 of which€0.15 of nominal value and €3.21 of premium over par, determined in relation to the provi-sion article 9, comma IV of the Testo Unico tax law that makes reference to the simple arith-metic mean of official stock market prices of the company’s shares in the previous month, toservice the “July 24, 2002” Stock Option Plan. The stock option plan provides for the optionsto be exercised by each assignee in the following periods: a) up to a maximum of 12% of thetotal of options assigned starting from December 31, 2002 and at subsequent quarterly inter-vals until September 30, 2012; b) up to a maximum for each quarter of 6% of options assignedin the period between December 31, 2002 and March 31, 2006, and at subsequent quarterlyintervals until December 31, 2012; c) the residual 4% of options assigned starting from Sep-tember 30, 2006 and up until December 31, 2012.To the present date 831,250 options were exercised and, pursuant to the stock option plan,202,300 options have expired. The residual number of shares is thus 288,950.

“February 26, 2003” Stock option planOn February 26, 2003, the Board of Directors, in application of the proxy assigned by theShareholders’ Meeting on April 6, 2001, resolved a capital increase pursuant to article 2441,last comma, of the Italian Civil Code, for a total of 1,367,500 shares at a price of €2.86 ofwhich €0.15 of nominal value and €2.71 of premium over par, determined in relation to theprovision article 9, comma IV of the Testo Unico tax law that makes reference to the simplearithmetic mean of official stock market prices of the company’s shares in the previous month,to service the “February 26, 2003” Stock Option Plan. The stock option plan provides for theoptions to be exercised by each assignee in the following periods: a) up to a maximum of 12%of the total of options assigned starting from September 30, 2003 and at subsequent quarterlyintervals until September 30, 2013; b) up to a maximum for each quarter of 6% of optionsassigned in the period between December 31, 2003 and March 31, 2007, and at subsequentquarterly intervals until September 30, 2012; c) the residual 4% of options assigned startingfrom June 30, 2007 and up until September 30, 2013.To the present date 784,775 options were exercised and, pursuant to the stock option plan,190,225 options have expired. The residual number of shares is thus 392,500.

“July 23, 2003” Stock option planOn July 23, 2003, the Board of Directors, in application of the proxy assigned by the Share-holders’ Meeting on April 6, 2001, resolved a capital increase pursuant to article 2441, lastcomma, of the Italian Civil Code, for a total of 1,332,500 shares at a price of €3.54 of which€0.15 of nominal value and €3.39 of premium over par, determined in relation to the provi-sion article 9, comma IV of the Testo Unico tax law that makes reference to the simple arith-metic mean of official stock market prices of the company’s shares in the previous month, toservice the “July 23, 2003” Stock Option Plan. The stock option plan provides for the optionsto be exercised by each assignee in the following periods: a) up to a maximum of 12% of thetotal of options assigned starting from December 31, 2003 and at subsequent quarterly inter-vals until December 31, 2013; b) up to a maximum for each quarter of 6% of options assignedin the period between March 31, 2003 and December 31, 2007, and at subsequent quarterly

37Information required by Consob - Resolution no. 11971 | Gruppo Editoriale L’Espresso |

intervals until December 31, 2013; c) the residual 4% of options assigned starting from Sep-tember 30, 2007 and up until September 30, 2013.To the present date 575,600 options were exercised and, pursuant to the stock option plan,255,350 options have expired. The residual number of shares is thus 501,550.

“February 25, 2004” Stock option planOn February 26, 2004, the Board of Directors, in application of the proxy assigned by theShareholders’ Meeting on April 6, 2001, resolved a capital increase pursuant to article 2441,last comma, of the Italian Civil Code, for a total of 1,485,000 shares at a price of €4.95 ofwhich €0.15 of nominal value and €4.80 of premium over par, determined in relation to theprovision article 9, comma IV of the Testo Unico tax law that makes reference to the simplearithmetic mean of official stock market prices of the company’s shares in the previous month,to service the “February 25, 2004” Stock Option Plan. The stock option plan provides for theoptions to be exercised by each assignee in the following periods: a) up to a maximum of 12%of the total of options assigned starting from September 30, 2004 and at subsequent quarterlyintervals until September 30, 2014; b) up to a maximum for each quarter of 6% of optionsassigned in the period between December 31, 2004 and March 31, 2008, and at subsequentquarterly intervals until September 30, 2013; c) the residual 4% of options assigned startingfrom June 30, 2008 and up until September 30, 2014.To the present date no options were exercised and, pursuant to the stock option plan, 437,500options have expired. The residual number of shares is thus 1,047,500.

“July 28, 2004” Stock option planOn July 28, 2004, the Board of Directors, in application of the proxy assigned by the Share-holders’ Meeting on April 6, 2001, resolved a capital increase pursuant to article 2441, lastcomma, of the Italian Civil Code, for a total of 1,450,000 shares at a price of €4.80 of which€0.15 of nominal value and €4.65 of premium over par, determined in relation to the provi-sion article 9, comma IV of the Testo Unico tax law that makes reference to the simple arith-metic mean of official stock market prices of the company’s shares in the previous month, toservice the “July 28, 2004” Stock Option Plan. The stock option plan provides for the optionsto be exercised by each assignee in the following periods: a) up to a maximum of 12% of thetotal of options assigned starting from December 31, 2004 and at subsequent quarterly inter-vals until December 31, 2014; b) up to a maximum for each quarter of 6% of options assignedin the period between March 31, 2005 and June 30, 2008, and at subsequent quarterly inter-vals until December 31, 2014; c) the residual 4% of options assigned starting from September30, 2008 and up until December 31, 2014.To the present date no options were exercised and, pursuant to the stock option plan, 392,500options have expired. The residual number of shares is thus 1,057,500.

“February 23, 2005” Stock option planOn February 23, 2005, the Board of Directors, in application of the proxy assigned by theShareholders’ Meeting on April 6, 2001, resolved a capital increase pursuant to article 2441,last comma, of the Italian Civil Code, for a total of 1,485,000 shares at a price of €4.75 ofwhich €0.15 of nominal value and €4.60 of premium over par, determined in relation to theprovision article 9, comma IV of the Testo Unico tax law that makes reference to the simplearithmetic mean of official stock market prices of the company’s shares in the previous month,


to service the “February 23, 2005” Stock Option Plan. The stock option plan provides for theoptions to be exercised by each assignee in the following periods: a) up to a maximum of 12%of the total of options assigned starting from six calendar months from the date of their attri-bution; b) up to a maximum for each quarter of 6% of options assigned at the end of each ofthe fourteen quarters subsequent to six calendar months from the date of their attribution; c)up to a maximum of 4% of options assigned at the end of the fifteenth quarter subsequent tosix calendar months from the date of their attribution and up until September 30, 2015.To the present date no options were exercised and, pursuant to the stock option plan, 352,900options have expired. The residual number of shares is thus 1,132,100.

“July 27, 2005” Stock option plan On July 27, 2005, the Board of Directors, in application of the proxy assigned by the Share-holders’ Meeting on April 6, 2001, resolved a capital increase pursuant to article 2441, lastcomma, of the Italian Civil Code, for a total of 1,455,000 shares at a price of €4.65 of which€0.15 of nominal value and €4.50 of premium over par, determined in relation to the provi-sion article 9, comma IV of the Testo Unico tax law that makes reference to the simple arith-metic mean of official stock market prices of the company’s shares in the previous month, toservice the “July 27, 2005” Stock Option Plan. The stock option plan provides for the optionsto be exercised by each assignee in the following periods: a) up to a maximum of 12% of thetotal of options assigned at December 31, 2005; b) up to a maximum for each quarter of 6%of options assigned at the end of each of the fourteen quarters subsequent to December 31,2005; c) up to a maximum of 4% of options assigned at the end of the fifteenth quarter sub-sequent to December 31, 2005 and up until December 31, 2015.To the present date no options were exercised and, pursuant to the stock option plan, 300,100options have expired. The residual number of shares is thus 1,154,900.

“2006” Stock option plan On April 26, 2006, the Board of Directors, in application of the proxy assigned by the Share-holders’ Meeting on April 6, 2001, resolved a capital increase pursuant to article 2441, lastcomma, of the Italian Civil Code, for a total of 2,900,000 shares of €0.15 nominal value to bereserved for the underwriting of employees of the parent company and its subsidiaries holdingstock options issued pursuant to the “2006 Stock option plan” that provides for the options tobe assigned in two installments.The exercise price for the two installments is determined in relation to the provision article 9, commaIV of the Testo Unico tax law that makes reference to the simple arithmetic mean of official stockmarket prices of the company’s shares in the month that precedes the assignment of the options.

1st TrancheOn May 17, 2006, the 1st tranche of 1,450,000 options was assigned at €4.33 each. Assigneesof the options may exercise the same in the following periods: a) up to a maximum of 12% ofthe total of options assigned at December 31, 2006; b) up to a maximum for each quarter of6% of options assigned at the end of each of the fourteen quarters subsequent to December 31,2006; c) up to a maximum of 4% of options assigned at the end of the fifteenth quarter sub-sequent to December 31, 2006 and up until December 31, 2016.To the present date no options were exercised and, pursuant to the stock option plan, 270,200options have expired. The residual number of shares is thus 1,179,800.


2nd TrancheOn November 15, 2006, the 2nd tranche of 1,430,000 options was assigned at €3,96 each.Assignees of the options may exercise the same in the following periods: a) up to a maximumof 12% of the total of options assigned at June 30, 2007; b) up to a maximum for each quarterof 6% of options assigned at the end of each of the fourteen quarters subsequent to June 30,2007; c) up to a maximum of 4% of options assigned at the end of the fifteenth quarter sub-sequent to December 31, 2006 and up until June 30, 2017.To the present date no options were exercised and, pursuant to the stock option plan, 258,600options have expired. The residual number of shares is thus 1,171,400.

Extraordinary 2009 Stock option planOn April 22, 2009, the Board of Directors, in application of the proxy assigned by the Share-holders’ Meeting on April 26, 2006, resolved a capital increase pursuant to article 2441, lastcomma, of the Italian Civil Code, for a total of 6,790,000 shares of €0.15 nominal value, tobe reserved for the underwriting of employees of the parent company and its subsidiaries hold-ing stock options issued pursuant to the “Extraordinary 2009 Stock option plan” that providesfor the options to be assigned in four tranches at an exercise price based on the parameters setfor the mentioned Phantom Stock Option plans. In particular, a 1st Tranche of 1,520,000 stockoptions was assigned at a price of €3.84, a 2nd Tranche of 1,520,000 stock options wasassigned at a price of €3.60, a 3rd Tranche of 1,790,000 stock options was assigned at a priceof €2.22, and a 4th Tranche of 1,840,000 stock options was assigned at a price of €1.37.Pursuant to the Rules of the stock option plan, options are attributed for all purposes at thedate of the resolution of the Board of Directors. Options thus attributed mature and becomeexercisable, at the same terms set for the Phantom Stock Option plans, and more in detail:

1st Tranche– 54% of the options of the 1st Tranche from June 30, 2009;– up to a maximum for each quarter of 6% of options of the 1st Tranche at the end of each ofthe seven quarters subsequent to June 30, 2009;

– the residual 4% of the 1st Tranche options from June 30, 2011.All 1st Tranche options may be exercised up until the Final Term of September 30, 2017.To the present date no options were exercised and, pursuant to the stock option plan, 24,400options have expired. The residual number of shares is thus 1,495,600.

2nd Tranche– 42% of the options of the 2st Tranche from June 30, 2009;– up to a maximum for each quarter of 6% of options of the 2nd Tranche at the end of each of the nine

quarters subsequent to June 30, 2009;– the residual 4% of the 2nd Tranche options from December 30, 2011.All 2nd Tranche options may be exercised up until the Final Term of March 31, 2018.To the present date no options were exercised and, pursuant to the stock option plan, 31,000 optionshave expired. The residual number of shares is thus 1,489,000.


3rd Tranche– 30% of the options of the 3rd Tranche from June 30, 2009;– up to a maximum for each quarter of 6% of options of the 3rd Tranche at the end of eachof the eleven quarters subsequent to June 30, 2009;

– the residual 4% of the 3rd Tranche options from June 30, 2012.All 3rd Tranche options may be exercised up until the Final Term of September 30, 2018.To the present date no options were exercised and, pursuant to the stock option plan, 37,600options have expired. The residual number of shares is thus 1,752,400.

4th Tranche– 18% of the options of the 4th Tranche from June 30, 2009;– up to a maximum for each quarter of 6% of options of the 4th Tranche at the end of eachof the thirteen quarters subsequent to June 30, 2009;

– the residual 4% of the 4th Tranche options from December 30, 2012.All 4th Tranche options may be exercised up until the Final Term of March 31, 2019.To the present date 201,300 options were exercised and, pursuant to the stock option plan,85,200 options have expired. The residual number of shares is thus 1,553,500.

Ordinary 2009 Stock option planOn April 22, 2009, the Board of Directors, in application of the proxy assigned by the Share-holders’ Meeting on April 26, 2006, resolved a capital increase pursuant to article 2441, lastcomma, of the Italian Civil Code, for a total of 5,000,000 shares of €0.15 nominal value to bereserved for the underwriting of the Managing Director and General Manager of the Companyand to employees of the parent company and its subsidiaries holding stock options issued pur-suant to the “Ordinary 2009 Stock option plan” that provides for the options to be assignedin two tranches.The exercise price for the two installments is determined in relation to the provision article 9,comma IV of the Testo Unico tax law that makes reference to the simple arithmetic mean ofofficial stock market prices of the company’s shares in the month that precedes the assignmentof the options.

1st TrancheOn May 14, 2009, the 1st tranche of 2,500,000 options was assigned at €1 each. Assignees ofthe options may exercise the same in the following periods: a) up to a maximum of 12% of thetotal of options assigned at September 30, 2009; b) up to a maximum for each quarter of 6%of options assigned at the end of each of the fourteen quarters subsequent to September 30,2009; c) up to a maximum of 4% of options assigned at the end of the fifteenth quarter sub-sequent to September 30, 2009 and up until September 30, 2019.To the present date no options were exercised and, pursuant to the stock option plan, 158,500options have expired. The residual number of shares is thus 2,341,500.

2nd TrancheOn October 14, 2009, the 2nd tranche of 2,500,000 options was assigned at €1.86 each.Assignees of the options may exercise the same in the following periods: a) up to a maximumof 12% of the total of options assigned at March 31, 2010; b) up to a maximum for each quar-ter of 6% of options assigned at the end of each of the fourteen quarters subsequent to March


31, 2010; c) up to a maximum of 4% of options assigned at the end of the fifteenth quartersubsequent to March 31, 2010 and up until March 31, 2020.To the present date no options were exercised pursuant to the stock option plan.

* * * *

Based on the above, at December 31, 2009, unexercised stock options giving the right to pur-chase shares of the company amount to 21,042,000, representing 5.14% of the overall sharecapital of the company.


43

Information required by Consob - Art. 79 - Regulation no. 11971 - Table 2

STOCK OPTION ASSIGNED TO DIRECTORS AND MANAGING DIRECTORS ON CHARGE AT DECEMBER 31, 2009

Nota: Il calcolo delle scadenze medie è stato effettuato considerando esclusivamente le scadenze ultim

e per ciascun piano di stock option in essere, prescindendo dai periodi in cui è possibile l’esercizio delle opzioni (m

aggiori

dettagli sono forniti nell’informativa che precede questa tabella).

Optio

ns held at beg

inning

of the

yea

rOp

tions assigne

d in th

e year

Optio

ns exercised

in th

e year

Optio

ns expire

din th

e year

Optio

ns held at end

of the

yea

r

(A)

(B)

1)2)

3)4)

5)6)

7)8)

9)10)

11)

12)

13)

14)

Name

Position held

No. of stock

options

Average

exercise

price

Average

expiration

(years)

No. of

stock

options

Average

exercise

price

Average

expiration

(years)

No. of

stock

options

Average

exercise

price

Average

exercise

price

No. of

stock

options

Average

exercise

price

No. of

stock

options

Average

exercise

price

Average

expiration

(years)

Monica Mondardini

Managing Director

- -

- 1,000,000

1.43

10.00

- -

- -

- 1,000,000

1.43

10.00

Corrado Corradi

General M

anager

of Espresso Division

260,000

4.39

6.82

520,000

2.18

9.07

45.600

1.23

2.25

- -

734,400

3.02

7.93

Carlo Ottino

General M

anager

of Repubblica Division

523,400

4.43

6.69

840,000

2.19

9.07

55,200

1.25

1.88

- -

1,308,200

3.13

7.72


Information required by Consob - Art. 79 – Regulation no. 11971 - Table 3

INVESTM

ENTS HELD BY DIRECTORS, STATUTORY AUDITORS AND GENERAL MANAGERS IN OFFICE AT DEC. 31, 2009

(1) C

IR - Compagnie Industriali Riunite SpA - Via Valeggio n. 41- Torino - P

artita IVA 00519120018

(2) R

OMED SpA - Via Valeggio n. 41 - Torino - P


(3) N

uda proprietà - Fiduciaria Biennebi SpA - Via San Pietro all’Orto n. 22 - M

ilano- P


(4) N

uda proprietà - Alpa Srl - V

ia San Pietro all’Orto n. 22 - M

ilano - Partita IVA 09866410153

Name

Stak

e he

ld in

No. o

f sha

res ow

ned

at Dec

. 31, 200

8Nu

mber o

f shares

acquire

d in th

e year

Number o

f shares

sold in

the year

No. o

f shares

owned at Dec.

31, 2

009

Carlo De Benedetti

of which: through CIR SpA (1)

through Romed SpA (2)

Gruppo Editoriale L'Espresso SpA

220,776,235

--

220,776,235

220,775,235

--

220,775,235

1,000

--

1,000

Luca Paravicini Crespi

of which: through trust com

pany Biennebi SpA (3)

through Alpa Spa (4)


4,827,212

--

4,827,212

580,545

--

580,545

4,246,667

--

4,246,667

Corradi Corrado


-45,600

-45,600

Carlo Ottino


19,600

55,200

55,200

19,600


Information required by Consob - Art. 78 - Regulation no. 11971 - Table 1

COMPENSATION PAID IN 2009 TO DIRECTORS, STATUTORY AUDITORS AND GENERAL MANAGERS

(1) Emolum

ents include those for the position of C

hairm

an, Director and m

ember of the Rem

uneration Committee. All em

olum

ents are paid out by RO

MED SpA.

(2) Emolum

ents include those for the position of M

anaging Director and of D

irector; other com

pensation includes emolum

ents for salaries as employee.

(3) Emolum

ents include those for the position of D

irector from

January 1

, 2009 to April 22, 2009.

(4) Emolum

ents include those for the position of Director, of m

ember of the Rem

uneration Committee and of of m

ember of the Internal Audit Committee.

(5) Emolum


irector and m

ember of the Rem

uneration Committee.

(6) Emolum

ents include those for the position of Director and of of m

ember of the Internal Audit Committee.

(7) Emolum


irector; other com


ents for the position of D

irector in other Group com

panies and professional w

ork.

(8) Emolum


hairm

an of the Board of Statutory Auditors from

January 1

, 2009 to April 22, 2009; other com


ents for posistions covered in the first months of 2009

as mem

ber of the Monitoring Board and Chairman of the Board of Statutory Auditors held in other Group com

panies.

(9) Emolum


hairm

an of the Board of Statutory Auditors; other com


ents for posistion of mem

ber of the Monitoring Board.

(10) Other com


ents for the posistion of Permanent Statutory Auditor.

(11) The bonus relates to results achieved in 2008; other com

pensation include salaries as employee.

A)B)

C)D)

(1)

(2)

(3)

(4)

Name

Positio

n he

ldTerm

of p

osition

held

Expiratio

of term

Emolum

ents fo

r the position

in th

e co

mpany th

atprep

ares th

e fin

ancial statements

Non-monetary

benefits

Bonus and

other

incentives

Other

compensation

Carlo De Benedetti (1)

Chairman

Jan. 1, 2009 - D

ec. 31, 2009

approval of 2011 Fin. Stat.

463,333

--

-Monica Mondardini (2)

Managing Director

Jan. 1, 2009 - D

ec. 31, 2009


320,000

--

704,424

Marco Benedetto (3)

Vice Chairm

anJan. 1, 2009 - A

pr. 22, 2009


6,667

--

-Agar Brugiavini (4)

Director

Jan. 1, 2009 - D

ec. 31, 2009


40,000

--

-Rodolfo De Benedetti (5)

Director

Jan. 1, 2009 - D

ec. 31, 2009


30,000

--

-Francesco Dini (3)

Director

Jan. 1, 2009 - D

ec. 31, 2009


20,000

--

-Sergio Erede (3)

Director

Jan. 1, 2009 - D

ec. 31, 2009


20,000

--

-Giorgio Di Giorgio (6)

Director

Apr. 22, 2009 - D

ec. 31, 2009approval of 2011 Fin. Stat.

20,000

--

-Mario Greco (4)

Director

Jan. 1, 2009 - D

ec. 31, 2009


40,000

--

-Maurizio Martinetti (7)

Director

Jan. 28, 2009 - D


18,333

--

769,458

Tiziano Onesti (6)

Director

Apr. 22, 2009 - D


20,000

--

-Luca Paravicini (4)

Director

Jan. 1, 2009 - D

ec. 31, 2009


40,000

--

-Tiziano Onesti (8)

Chairman of the Board of Statutory Auditors

Jan. 1, 2009 - A

pr. 22, 2009


16,667

--

9,271

Giovanni Barbara (9)

Chairman of the Board of Statutory Auditors

Apr. 22, 2009 - D


33,333

--

6,667

Enrico Laghi (10)

Permanent Auditor

Jan. 1, 2009 - D

ec. 31, 2009


33,500

--

-Luigi M

acchiorlatti Vignat (10)Permanent Auditor

Jan. 1, 2009 - D

ec. 31, 2009


33,500

--

-Corrado Corradi (11)

Director General of Espresso Division

Jan. 1, 2009 - D

ec. 31, 2009

until revoked

-3,320

117,300

221,862

Carlo Ottino (11)

Director General of R

epubblica Division

Jan. 1, 2009 - D

ec. 31, 2009

until revoked

-3,333

117,941

288,803


Information required by Consob - art. 149-duodecies - Regulation no. 11971

Table 1)

COMPE

NSATION (*) IN 2009 FOR

SER

VICE

S SU

PPLIED

BY INDE

PEND

ENT AU

DITORS

TO GR

UPPO

EDITORIALE L'E

SPRE

SSO SP

A

Service supp

lied

Inde

pend

ent A

udito

rs S

ervice

supplied to Com

pensation (€

thousand)

Auditing Deloitte & Touche SpA Gruppo Editoriale L’Espresso SpA 184

ADS audit Deloitte & Touche SpA Gruppo Editoriale L’Espresso SpA 74

(*) C

ompensation does not include VAT, expenses and Consob contributions

Table 2)

COMPE

NSATION (*) IN 2009 FOR

SER

VICE

S SU

PPLIED

BY INDE

PEND

ENT AU

DITORS

TO SU

BSIDIARIES

Service supp

lied

Inde

pend

ent A

udito

rs S

ervice

supplied to Com

pensation (€

thousand)

Auditing Deloitte & Touche SpA Subsidiaries 524

Certification: ADS audit Deloitte & Touche SpA Subsidiaries 91

(*) C

ompensation does not include VAT, expenses and Consob contributions

Corporate Governance Report

February 2010

FOREWORDThe present Report aims at illustrating the corporate governance system adopted by GruppoEditoriale L'Espresso S.p.A. (hereinafter also the “Company”) which is in line with recommen-dations published in the Code of Conduct (Codice di Autodisciplina, hereinafter also the“Code”) issued by the Committee for the Corporate Governance of Listed Companies and pro-moted by Borsa Italiana S.p.A. (hereinafter also the “Code”).In compliance with applicable norms and regulations, the Report contains also information onshareholders and, after having been approved by the Board of Directors on February 24, 2010,it will be made available to shareholders together with documents provided for theShareholders’ Meeting to be called, and simultaneously transmitted to Borsa Italiana (theItalian Stock Market) to improve its availability to the public. The Report will also be madeavailable in the dedicated “Corporate Governance” section on the institutional website .

1. ISSUER’S PROFILE1.1) Short profile of the Espresso GroupGruppo Editoriale L'Espresso S.p.A. is one of the leading media groups in Italy, with interestsin daily newspaper and periodical publishing, radio, advertising, Internet and television. TheEspresso Group publishes the national daily newspaper la Repubblica, the national weeklynewsmagazine L'espresso, fifteen local daily newspapers (and one bi-weekly magazine),operates three national commercial radio stations, including Radio Deejay (one of the firsts inlisteners’ appreciation among commercial radio stations in Italy), and Deejay TV, a nationaltelevision network. The Espresso Group qualifies as a branded content company capable of cir-culating own high-quality original contents to its readers and listeners everywhere and at anymoment of the day, thanks to its multiplatform strategy.

1.2) Corporate Government System adopted As indicated above, the Corporate Government system adopted by the Company is based onprinciples and criteria set forth in the Code adopted by the Board of Directors on February 21,2007. On the same occasion, among other decisions, the positions of Executive Director incharge of the Internal Control System, that of person in charge of Internal Control; and of leadindependent director were created.The Meeting held on April 18, 2007 approved amendments to the Company’s By-laws tocomply with the new legislation on corporate law. Among other changes, list voting wasintroduced for the appointment of the Board of Directors together with the relevant thresholdcriteria for list submission, while the position of Manager in charge of drafting the Company’accounting and corporate records was created. The corporate governance system can be more precisely examined through an analysis of allthe items in this report.

49Corporate Governance Report | Gruppo Editoriale L’Espresso |

Corporate Governance ReportGruppo Editoriale L’Espresso SpA

2. INFORMATION ON THE OWNERSHIP STRUCTURE (pursuant to art.123 bis TUF)a) Share Capital structure (ex art.123 bis, paragraph 1, sub a), TUF)The Company’s subscribed and paid-up share capital is at present €61,438,738.20 and is madeup by 409,591,588 ordinary voting shares.Share Capital components are as here below:

Number of shares % vs. share cap. Listed Rights and obligationsOrdinary Shares 409,591,588 100% MTA -

No shares with limited or no voting rights were issued; similarly, no convertible bonds are incirculation on the market, or warrants giving right to subscribe newly issued shares.In the past, the Company adopted stock option plans which entailed a capital increase and aredescribed in the Financial Statements in section “Information required by Consob-Resolutionn.11971”, available both on the Company’s institutional website in “Financial Information”section, and in the information drafted in compliance with art. 84bis of Issuers’ Regulations,which is also available in “Information to the Market” section of the Company’s website.

b) Share transfer restrictions (ex art.123 bis, paragraph 1, sub b), TUF)No restriction exists on share transfer.

c) Significant holdings (Partecipazioni Rilevanti) (ex art.123 bis, paragraph 1, sub c), TUF)Below we report a list of Shareholders of the Company as resulting from the Company Registerat December 31, 2009 as subsequently integrated with communications made pursuant toarticle 120 of TUF and other information available to the Company.

Controlling Shareholders

Declarer Percentage of ordinary capital Percentage of voting capital

Carlo De Benedetti 53.902% 54.973%

Eredità Carlo Caracciolo di Melito 11.721% 11.954%

Fond. Cassa di Risp. Di Trieste 2.651% 2.704%

Giulia Maria Crespi Mozzoni 2.357% 2.404%

Shareholders directly holding more than 2%

Direct Shareholder Percentage of ordinary capital Percentage of voting capitalCir S.p.A. 53.901% 54.972%

Eredità Carlo Caracciolo di Melito 11.721% 11.954%

Fond. Cassa di Risp. di Trieste 2.651% 2.704%

Alpa S.r.l. 2.074% 2.115%

d) Shares carrying special rights (ex art.123 bis, paragraph 1, sub d), TUF)None of the Company shares carry any special rights of control.e) Employee share ownership: mechanism to exercise voting rights (ex art.123 bis, paragraph 1, sube), TUF)

50 | Gruppo Editoriale L’Espresso | Corporate Governance Report

No specific mechanism is provided to exercise voting rights in case of employee share ownership.

f) Restrictions to exercise voting rights (ex art.123 bis, paragraph 1, sub f), TUF)No restrictions to exercise voting rights exist.

g) Inter-shareholders agreements (ex art.123 bis, paragraph 1, sub g), TUF)Non sono noti accordi tra azionisti ai sensi dell’art.122 del TUF.

h) Change of control clauses (ex art.123 bis, paragraph 1, sub h), TUF)La società non ha stipulato accordi che prevedano la cosiddetta clausola di “change of control”ovvero clausole che acquistano efficacia in caso di cambiamento di controllo azionario diGruppo Editoriale L’Espresso SpA.

i) Proxies for share capital increase and authorization to purchase own shares (ex art.123 bis,paragraph 1, sub m), TUF)

i.1) Proxies for Share Capital increase The Extraordinary Shareholders’ Meeting held on April 26, 2006 conferred, for a five (5)-yearterm, proxy to the Board of Directors to execute a Share Capital Increase:(i) up to a maximum amount of €300mn, nominal value, through the issue of premium or nopremium shares, which may also belong to particular categories, to be offered for subscriptionand to exercise warrants or conversion of debenture loans, even if issued by third parties, orfor free allotment to assignees, through transfer to capital of the available part of reserves andfunds recorded in the last (approved) Statement of Financial Position;(ii) up to a maximum amount of €10 million nominal value, through the issue of ordinaryshares to be reserved for subscription to the employees of the Company, controlling companiesand subsidiaries, in compliance with art. 2441 paragraph 8 of the Italian Civil Code; the Boardof Directors is entitled to fix issue price - not lower than the nominal value - subscriptionrequirements, limits of share availability and, as a general rule, conditions and terms of theabove subscription.While the first proxy was not executed, the second one, at present, has been executed for €2,203,500 through the issue of a maximum number of 14,690,000 shares with nominal value€0.15 per share, to be reserved for subscription to the employees of the Company and its sub-sidiaries in relation to the 2006 and the 2009 Stock Option Plans.A more precise analytical description of Stock Option Plans, and related share capital increaseresolutions deliberated for their exercise over the years, is available in the Financial Statements,in the “Information required by Consob Resolution no.11971”, as well as on the Company’swebsite in the “Financial Information” section.

i.2) Authorization to purchase own sharesThe Shareholders’ Meeting held on April 22, 2009, having outlined that the buy back ofcompany shares might be a means to create value for the shareholders - and considering theGroup’s capital structure - has revoked for the period left and the part not yet used, theprevious proxy to purchase own shares; it has, contextually, authorized a new proxy havingthe following characteristics a) duration: 18 months; b) maximum number of ordinary sharesthat can be purchased: 20,000,000, that is about 4.9% of share capital; c) price of each


purchase shall not be higher nor lower than 10% vis-à-vis the reference price recorded byordinary shares in the session of the regulated market preceding every single operation.Said proxy has thus far not been utilized. It is however noted that, in compliance with theproxies conferred over the previous years, as of December 31, 2009, keeping into account theannulment of 25,215,000 own shares carried out in 2009, the Company’s total amount of ownshares was 7,980,000, equal to 1.95% of the shares composing the Share Capital of GruppoEditoriale L'Espresso S.p.A..

l) Management and coordination activity (ex art.2497 and following of the Italian Civil Code)Parent company Cir S.p.A. governs the Company’s management and coordination. All sub-sidiaries directly or indirectly controlled by Gruppo Editoriale L’Espresso S.p.A. haveindicated this Company as the subject that exercises the management and coordination overthe same.

3. COMPLIANCE (ex art.123 bis, paragraph 2, sub a), TUF)As already reported above, the Board of Directors on February 21, 2007 adopted the recom-mendations of the Code, available on the www.borsaitaliana.it site.Neither the Company nor any subsidiaries (hereinafter also “the Group”) are subject to non-Italian law provisions which may affect the structure of the Company’s corporate governance.

4. BOARD OF DIRECTORS4.1) Appointment and replacement of Directors (ex art.123 bis, paragraph 1, sub l), TUF)Article 15 of the Company’s By-laws state that: a) The members of the Board of Directors shall be appointed from lists of candidates. If only

one list is submitted or admitted for voting, all the Directors shall be appointed from thislist;

b) Lists may be submitted by Shareholders representing collectively at least 2.5% of ShareCapital with voting rights in ordinary meetings, or any different percentage as may be deter-mined in compliance with laws and regulations;

c) The shareholders who, individually or collectively, represent as a whole less than 20% ofshare capital with voting rights in ordinary meetings, may submit lists containing amaximum number of 3 candidates;

d) If no list is submitted or admitted to voting, or the number of directors appointed is lowerthan the number determined by the Shareholders’ Meeting, a new Shareholders’ Meetingshall be called;

e) To be valid for the appointment of Directors, the required vote percentage in lists must reachat least half the percentage required for list submission; moreover, candidates must possessrequisites of honorability provided for under the TUF for Statutory Auditors;

f) all the Directors – less one – shall be appointed from the most voted list;g) one Director shall be appointed from the second most voted list, which shall not, in any

way, be in any relation with the shareholders who have submitted the first most voted list; h) at least one of the Board members - and at least two if the Board of Directors comprises

more than seven members – must possess the requisite of independence as provided forunder TUF for Statutory Auditors;


i) if only one list is submitted or admitted to voting, all Directors shall be selected from thislist;

j) One or more Director position vacancies, due to resignation or other causes, shall be filledby replacement in compliance with art. 2386 of the Italian Civil Code, ensuring that all theapplicable requirements are fulfilled.

Lists of candidates for Director positions shall be deposited with the Company’s registeredoffice and published in the Company’s website within at least fifteen days prior to theShareholders’ Meeting called to decide upon the renewal of this administrative body. These listsshall include - for each candidate - relevant professional profile, statement of personalhonorability, and absence of any cause for ineligibility and incompatibility, in compliance withlaws, together with the candidate’s statement of independence.Consob Resolution no.17148 of January 27, 2010, in compliance with art. 147-ter of TUF,established confirmed that the minimum shareholding threshold required for list submissionfor Gruppo Editoriale l'Espresso S.p.A. at 2.5%.Consob Resolution no.17148 of January 27, 2010, in compliance with art. 147-ter of TUF,established confirmed that the minimum shareholding threshold required for list submissionfor Gruppo Editoriale l'Espresso S.p.A. at 2.5%.

4.2) Composition (ex art.123 bis, paragraph 1, sub d), TUF)As stated in the Company’s By-laws, the Board of Directors shall consist of a minimum of 7 toa maximum of 19 members. At the ordinary Shareholders’ Meeting held on April 22, 2009, 11 members composing theBoard of Directors were appointed, to be in office for three financial years, ending with theapproval of 2011 Financial Statements. The composition of the Board of Directors in office andother related information is reported in Table 2 attached to the present Report, to which werefer. The number of Non-executive and Independent Directors and their status are sufficient toguarantee that their opinion in the Board’s decision-making process is authoritative enough,and can contribute to reach a well-balanced judgment, especially required in the event of anypotential conflict of interest.Please note that the criteria adopted to qualify the Directors as independent Directors havebeen neither integrated nor modified vis-à-vis the Code provisions.

4.2.1) Limits on cumulation of positions held in other companiesThe Directors - in acting advisedly and autonomously - shall accept position when they aresure that they can dedicate enough time to accurately fulfill their duties, taking intoaccount cumulation of positions in other companies listed in the regulated markets, banks,finance companies, insurance companies and large companies. Furthermore they shall berequested to inform the Board of any activity possibly in competition with this Company,and of any relevant change involved. The Board has not deemed it necessary to fix a maxi-mum number of positions that each Director can cumulate; the Board’s attitude is to waitfor Consob’s indications and, in any case, to reserve the right to decide upon every singleissue.


4.3) Role of the Board of Directors (ex art.123 bis, paragraph 2, sub d), TUF)

4.3.1) Board of Directors’ operational aspectsIn compliance with the Company’s By-laws, the Board of Directors meetings shall normallytake place on a quarterly basis, convened by the Chairman and, in any case, whenever imposedby the Company’s needs. The Board meetings shall be convened also upon request of at leasttwo Directors - or of the Board of Statutory Auditors, or of at least one of its members –uponprior notice to the Chairman.The Chairman, or the person acting in his stead, can call the Board of Directors’ meeting, byletter, registered letter, telegram, fax, e-mail or any equivalent means ensuring that deliverytakes place at least within five days from the date of the meeting. In case of urgent issues, timeis reduced to one day.Furthermore, the Chairman has the powers to transmit to Directors – as agreed upon with theManaging Director - reasonably in advance on the date of the meeting, and with the exceptionsrelated to the confidential and/or urgent nature of resolutions - any document and informationneeded to enable the members of the Board to express their well-pondered opinion on the issuessubmitted to their analysis and approval.The Board of Directors has regulated the inflow of information issued by the Chairman andthe Managing Director: they shall report back on the exercise of proxies in connection with theactivities performed and, in any case, at least on a quarterly basis.The By-laws also regulate the information flow addressed to the Board of Statutory Auditors.Directors shall timely report back to the Board of Statutory Auditors - at least on a quarterlybasis - on their activity and Company’s most important transactions regarding economic andfinancial strategies, in particular as refers to transactions entailing a potential conflict ofinterest. Moreover, if any particular need for a timely intervention occurs, information can betransmitted directly, in writing or verbally, and/or by telephone.

4.3.2) Company’s activities performed in 2009 and envisaged for 2010In 2009 the Board of Directors meeting was held 8 times. The duration of each meeting was of1½ hours.In addition to the unscheduled meeting of January 12, 2010 (held to approve, in compliancewith the law and the By-laws, the proposed merger of Editoriale Metropoli S.p.A. into GruppoEditoriale L'Espresso S.p.A.), out of the four meetings scheduled for 2010, one meeting hasalready been held as of today.

4.3.3) Role of the Board of DirectorsAccording to the Company’s By-laws the Board of Directors is empowered with ordinary andextraordinary administration, and right to carry out any action deemed necessary andopportune to fulfill the Company’s objectives, except those reserved to the Shareholders’Meeting by law and/or Company’s By-laws. In particular, the Board of Directors reserved the right to examine the strategic guidelines con-cerning the Group’s objectives, and the most significant data in the annual budget and/or - ifthey have been drafted - the multiannual plans, and all the transactions regarding acquisitionor disposal of holdings. As a general rule, the Board has reserved the right to evaluate andapprove in advance any significant transaction carried out by the Parent Company and anysubsidiaries; in this case “significant transactions” are those particularly significant for the


Group’s strategy, in view of their possible effects on the consolidated economic and financialsituation and/or the related medium and long-term commitments involved. The Board has notfixed any specific quantity indicator, and preferred to carry out an ad hoc evaluation on everysingle transaction, considering also the kind of business involved.In addition, the Board has maintained decision-making powers as concerns all the transactionswith the related parties with special characteristics, as it is better specified further on in item12 of this report.The Directors - coherently with the objective of creating value for the shareholders - inperforming their task shall also take into consideration the strategic guidelines defined for thegroup to which the Issuer belongs, and the benefits deriving from this belonging. Also all the decisions regarding the corporate governance are submitted to the approval of theBoard of Directors.In addition, the Board of Directors periodically evaluates the adequacy of the organizational,administrative and general accounting systems, especially as regards the Internal Controlsystem and the potential conflicts of interest within the Company and the Group’s companies:it may also have recourse to the activity of the person in charge of Internal Control, and to thecontributions of the Board of Statutory Auditors, of the Internal Control Committee and theIndependent Auditors. As the companies involved in the Group’s consolidation are not quitenumerous, the above controls and evaluations are carried out through random sampling in allthe Group’s subsidiaries. Moreover, Directors and top managers shall also inform the otherDirectors of the Parent Company and the Board of Statutory Auditors of any interest that - ontheir own or third party account - they may have in a certain transaction carried out not onlyby the Parent Company but also by any of its subsidiaries.Upon the Remuneration Committee’s proposal and the Board of Statutory Auditors’ advise, theBoard of Directors determines the remunerations of the Chairman and the Managing Director,while the Shareholders’ Meeting directly decides upon the overall remuneration to bedistributed among the members of the Board of Directors.At every meeting of the Board of Directors, the Chairman and the Managing Director shallproduce an extensive report on the Company’s performance and provide estimates over thesubsequent months’ trend.At least once in the financial year the Board of Directors carries out an assessment of size, com-position and functioning of the Board itself and related Committees. To this date the Board hasgiven a positive judgment on its own work and composition, not deeming it opportune tointroduce any other professional skill.The Shareholders’ Meeting has not authorized as a general rule or as a preventive measure anydeparture from the rules prohibiting competition pursuant to art. 2390 of the Italian Civil Code.

4.4) Representative bodiesThe Board of Directors meeting held on April 22, 2009 conferred:– to the Chairman Carlo De Benedetti all the most extensive powers of representation,

including the legal representation of the Company. The Board has also attributed to itsChairman its own role of publisher, with the responsibility to overview the editorial line ofGruppo Editoriale L'Espresso S.p.A., formulating proposals for the appointment, revocationor transfer of Editors in Chief of publications.

– to Managing Director Monica Mondardini, all the most extensive powers of representationand ordinary management, except for the appointment of Editors in Chief and General Man-


agers, which remain with the powers of the Board of Directors. No expense limits have beenimposed, with the exception of: 1) purchase of machinery over €10mn; 2) financing, leasingor credit facility agreements including secured loans over €5mn; 3) granting of warranties,pledged securities, mortgages, privileges and guarantees over €5mn; 4) purchase, sale andexchange of equity investments and properties over €5mn.

4.4.1) ChairmanThe Company Chairman Carlo De Benedetti, controlling shareholder of the Issuer, while thechief executive officer position is the Managing Director Monica Mondardini.

4.4.2) Information to the Board of DirectorsThe Chairman and the Managing Director, at all meetings and in any case - at least on aquarterly basis - have regularly informed the Board of Directors on the activities implementedover the financial year in compliance with their proxies, and also provided the Directors withupdated information on the most significant corporate events, the decisions made and thetransactions implemented, including those with the related parties or under potential conflictof interest.

4.5) Other executive DirectorsOnly the Chairman and the Managing Director are Executive Directors.Directors are aware of their tasks and responsibilities in connection with their positions. TheChairman and the Managing Director shall report back to the Board on the most significantnew legislative provisions and regulations concerning the Company and the related corporatebodies, in order to enhance their understanding of the Company.

4.6) Independent DirectorsThe Italian Civil Code provides for the Board of Directors to be made up by an adequatenumber of Independent Directors. Five Non-executive Directors of the Company currentlyqualify as Independent Directors.Based on criteria set forth in paragraph 3.C.1 of the Italian Civil Code, Directors may qualifyas Independent Directors when they:a) do not, either directly or indirectly, also through subsidiaries, trustees or third parties,

control the Company or are in a position to significantly influence the Company, alsothrough their participation in shareholders’ agreements;

b) are not or have been, over the past three financial years, a top level representative of theCompany or of any of its strategically important subsidiaries, or of a company or entitythat, either directly or through a shareholders’ agreement, controls the Company or has asignificant influence over the same;

c) directly or indirectly (e.g. through subsidiaries in which it has an important role, or aspartner of a professional firm or a consulting firm) has not, or has not had over the previousyear, any significant business, financial or professional relationship with either:

· the Company or any of its subsidiaries, or any of its top level representatives;· a person which, either directly or through a shareholders’ agreement, controls the Company

or, in the case of a company or entity, any of its top level representatives;or are not, and have not been in the past three financial year, an employee of any of the saidsubjects;


d) does not and has not received, over the past three financial years, from the Company or any of itssubsidiaries any remuneration of significance in addition to the fixed indemnity received asIndependent Director, including the inclusion in stock option plans and phantom stock option plans;

e) have not been directors of the Company for more than nine years out of the last twelve;f) do not cover the position of Executive Director in any other company in which another

Executive Director of the Company holds a position as director;g) are not partners or directors of a company or entity that is part of the network of the inde-

pendent auditors of the Company;h) are not a close relative of any person that is in any of the situations described in the

paragraphs above.Should any of the other hypotheses indicated in the Italian Civil Code occur as a condition of

non-independence of Non-executive Directors, the Board shall assess, for every single case,if the prerequisites needed to qualify as Independent Director are valid or not.

Based on the provisions of paragraph 4, article 147-ter of TUF, at least one of the componentsof the Board of Directors – or two, where the Board is made up by more than sevenmembers – must possess requisites of independence set for Statutory Auditors pursuant toparagraph 3 of article 148 of TUF, which does not consider as independent:

a) il coniuge i parenti e gli affini entro il quarto grado degli amministratori della società, gli ammin-istratori, il coniuge, i parenti e gli affini entro il quarto grado degli amministratori delle societàda questa controllate, delle società che la controllano e di quelle sottoposte a comune controllo;

b) coloro che sono legati alla società od alle società da questa controllate od alle società chela controllano od a quelle sottoposte a comune controllo ovvero agli amministratori dellasocietà ed ai soggetti di cui al punto precedente da rapporti di lavoro autonomo osubordinato ovvero da altri rapporti di natura patrimoniale o professionale che ne com-promettano l’indipendenza.

During the year, the Board has verified if Directors Brugiavini, Di Giorgio, Greco, Onesti andParravicini Crespi have valid independence requisites and, after positive judgment, hascirculated the relevant information to the market. The Board of Statutory Auditors had nocomments regarding the result of the verify.Over this financial year, the Independent Directors have convened into the Internal ControlCommittee (item 10 of this document).

4.7) Lead indipendent directorAs provided for in the Italian Civil Code, the Board of Directors has appointed Prof. AgarBrugiavini as lead independent director, to whom the Non-executive Directors (especially Inde-pendent Directors) shall refer to enable an enhanced contribution to the activity and functioningof the Board. The lead independent director collaborates with the Chairman, to guarantee thatthe Directors receive complete and timely information flows. The lead independent director has,among others, the power to call – either autonomously or upon request of other Directors –special meetings exclusively open only to Independent Directors to discuss upon the subjectsdeemed interesting for the functioning of the Board or for the Company’s management.The lead independent director has implemented his activity mainly by taking part into the peri-odical meetings convened by the Internal Control Committee and Remuneration Committee.Over this financial year, these Committees have organized joint-meetings with the Board ofStatutory Auditors, the Monitoring Body pursuant to Legislative Decree 231/2001, and theIndependent Auditors. Any information concerning the Company and its organizational and


control systems, together with any information related to the financial results has beenacquired through quite a number of meetings and conference calls held with the Company’sInternal Auditors and the management.

5. HANDLING OF COMPANY INFORMATION The Company has adopted a procedure to manage and disclose to the public its documents andconfidential matters and, in particular, the so-called privileged information: this procedure isavailable in the institutional website , in the “Corporate Governance” section.The handling of privileged information has been entrusted to the Chairman and/or theManaging Director. Information is disclosed through press releases issued by the “ExternalRelations” office, while communication with institutional investors is performed through the“Investor relations” office. All Directors – in compliance with the confidentiality clauses provided by the regulations in force- are required to observe the relevant confidentiality provisions related to all the documents andinformation acquired in performing their tasks, and to respect the relevant internal procedure.Subsequent to the adoption of the new Code of Conduct for Internal Dealing, published in itsinstitutional website in the “Corporate Governance” section, the new relevant persons,pursuant to the TUF and Consob regulations, have been identified as the following: 1) themembers of the Corporate Boards of the listed parent company, as well as the members of theCorporate Boards of the subsidiaries whose book value represents more than 50% of theParent Company’s assets; 2) the managers of both the Parent Company and of its subsidiaries,who hold management positions and powers to adopt such management decisions that mayinfluence the future performance and outlook of the Company; 3) the manager in charge ofpreparing the Company’s records described in paragraph 4 of art. 154 bis TUF (herein alsoreferred to as the “Manager of 154-bis compliance”) of the parent company.Any purchase, sale, underwriting or exchange of shares or connected financial instrumentsshall be reported by the end of the financial year, in compliance with the terms and conditionshereinafter.The Relevant persons shall report to Consob and to the Company on any transaction carriedout within five stock market trading days from the date of their execution. The Company shalldisclose all the above information within the first day after reception of the information. TheCompany may also take the place of the relevant persons in making the above communications,always in compliance with the above said terms.Any other person holding a stake equal to at least 10% of the Company’s share capital,represented by voting shares, or any other subject controlling the same, shall in turn report onany transaction concluded within the fifteenth day subsequent to the date of execution of thetransaction. Also in this case the Company may take the place of the person in charge of thiscommunication - provided that a specific agreement to this end exists. The Company has, moreover, created and made operational the Register of persons having accessto privileged information (“Register”) which records the persons who, by virtue of their workingand professional activity or position within the Company, have access to privileged information.The Register, kept according to easy access procedures and promptly available data, keepsrecord of the identity of the subject (either a person or a legal entity) entitled to have access -on a regular or occasional basis – to privileged information, the reason for registration and thedate of each information update regarding the subject.


The Company has disclosed the criteria adopted for keeping the Register, as well as theprocedures necessary to manage and retrieve the related data. Finally, the Company has appointed Massimo Segre as person in charge of keeping the Register,receiving, managing, and disclosing the information to the market.

6. THE BOARD OF DIRECTORS’ INTERNAL COMMITTEES (ex art.123 bis, paragraph 2, sub d), TUF)At the meeting held on April 22, 2009, the Board of Directors appointed the Internal ControlCommittee and the Remuneration Committee, and not deemed it necessary to create the Nom-ination Committee. Directors who are members of the internal committees have been granteda yearly compensation of €10,000 in addition to their compensation as Directors. The Boardhas also established that, in implementing their activity, these Committees shall abide to theguidelines set forth in the Code.Committees are composed of three or more members, the majority of whom are IndependentDirectors, and minutes of their meetings are kept. Committees have access to the Company’sinformation and functions necessary to perform their tasks and are entitled to invite non-members to participate in their meetings.No budget is assigned to the Remuneration Committee or to the Internal Control Committeebut, if necessary for the implementation of their activity, they are entitled to expense.

7. NOMINATION COMMITTEEAs stated in item above, the Company has decided not to create a Nomination Committee.

8. REMUNERATION COMMITTEE The Remuneration Committee is composed by the Chairman Carlo De Benedetti, the DirectorRodolfo De Benedetti, and by the three Independent Directors Agar Brugiavini, Mario Grecoand Luca Paravicini Crespi. The Board has decided not to change the composition of thecommittee which thus continues to include the Chairman due to his extensive skills and in-depth knowledge of Company issues.Directors shall leave the meeting venue when the proposal concerning their remuneration is dis-cussed or - if required by the majority of Directors - they may remain in the venue but shallabstain from voting.The Managing Director is frequently invited to participate in the meetings, especially when theevaluation of the remuneration plan concerning the top managers of the Company or of its sub-sidiaries takes place.Over this financial year the Remuneration Committee met to determine, among otherdecisions, the Chairman and the Managing Director’s emoluments, and to submit to the Boardof Directors a proposal, made in light of normative changes regarding the tax treatment ofemployee share-based incentive plans, to replace the 2007 and 2008 stock option plans withthe “2009 Extraordinary Stock Option Plan”, and to approve an ordinary stock option planfor 2009.In 2009, the Remuneration Committee met twice and the average duration of the meetings wasthirty minutes. The Managing Director was invited to participate in one meeting.Two meetings of the committee were scheduled for 2010, one of which was already kept.


Details of the phantom stock option plan are reported in the Financial Statements in the section“Information required by Consob Resolution no.11971”, available on the Company’sinstitutional website in the “Financial Information” section.As per item 6 above, the Remuneration Committee has no expense budget, but, if deemed nec-essary, it can authorize expenses destined to consulting, research or anything else needed toimplement its activity. Minutes of the meetings of this Committee are kept.

9. REMUNERATION OF DIRECTORSChairman Carlo De Benedetti is granted a fixed remuneration, but is not granted a variableremuneration linked to the attainment of any particular economic or financial objective, as hedoes not cover the position of Chief Executive Officer. The Chairman - coherently with his cus-tomary conduct always adopted in his entrepreneurial and managerial experiences - is notlikewise the beneficiary of any stock option plan.Managing Director Monica Mondardini, in her capacity of CEO, receives a fixed remunerationand also a variable one according to the performance of the year’s economic and financialresults, and is also the beneficiary of incentives in shares.Besides the yearly remuneration, no remuneration or incentive plans are provided for in favorof Non-Executive and Independent Directors. No indemnity is moreover due to Directors incase of resignation, firing or severance resulting from a public acquisition offer. Asaforementioned, an additional remuneration is provided for in favor of the Directors who par-ticipate in the Internal Control Committee and Remuneration Committee.Top level managers of the Company and of its subsidiaries have a significant part of their remu-neration linked to the attainment of specific economic and financial objectives and are amongthe beneficiaries of stock option plans.The remuneration paid in 2009 to the members of the Board and to the General Managers isreported in detail in the Financial Statements in the “Information required by ConsobResolution no.11971” section.

10. INTERNAL CONTROL COMMITTEE10.1) Composition and functioning of the Internal Control Committee.The Board of Directors’ meeting of April 22, 2009 called to make appointments for positionwhose term had expired, increased from three to five the number of members of the InternalControl Committee. The Internal Control Committee is thus currently composed byIndependent Directors Agar Brugiavini, Giorgio di Giorgio, Mario Greco, Tiziano Onestiand Luca Paravicini Crespi. Three of these members have significant experience inaccountancy and finance. Both the Chairman of the Board of Statutory Auditors, or anyother auditor designated by the same, the person in charge of Internal Control and the Headof Internal Audit are invited to participate in the Internal Control Committee meetings. Other top managers of the Company and of its subsidiaries are also periodically invited toreport to the Board on some specific issues.The Internal Control Committee - whose meetings were held five times in 2009 - through anumber of periodical meetings held with the persons in charge of the various activities of theCompany, the Board of Statutory Auditors and the Independent Auditors, has assessed thatCompany’s operations are effectively and efficiently conducted, financial information isreliable and the applicable regulations are complied with. The average duration of the meetings


was about one hour and thirty minutes. Five meetings of the committee were scheduled for2010, one of which was already kept on February 19, 2010.

10.2) Functions of the Internal Control Committee.The Internal Control Committee, as coherent with recommendations provided for in the Code,is entrusted with the following tasks:– assisting the Board of Directors in fulfilling the tasks related to Internal Control, giving, if

needed, its opinion on some specific issues;– evaluating the action plan prepared by the person in charge of Internal Control and receiving

his regular reports;– evaluating the action plan drafted for the audit and analyzing the letters of recommendation

possibly released by the Independent Auditors;– ascertaining - jointly with the manager in charge of drafting the Company’s accounting and

corporate records and with the Independent Auditors - that the accounting principles appliedare correctly and consistently used in the drafting of the consolidated financial statements;

– analyzing - jointly with the Board of Statutory Auditors - the proposals formulated by theIndependent Auditors;

– reporting to the Board at least on a half-yearly basis - on the occasion of the approval of theFinancial Statements and half-yearly Report - on the activity performed and on the adequacyof the Internal Control System;

As aforementioned, the Internal Control Committee is entitled to have access to the Company’sinformation and functions necessary to fulfill its tasks. All the minutes of the meetings have beenrecorded and, even if no expense budget has been assigned, the Committee is entitled toauthorize the expenses deemed necessary to acquire information, consulting, collaboration,surveys or anything of the like.

11. INTERNAL CONTROL SYSTEM ForewordThe Internal Control System consists of the set of rules, procedures and organizationalstructures aimed to enable - through an adequate process of identification, measurement, man-agement and monitoring of the main risks – the achievement of the following goals:– to support the achievement of corporate strategic and operating goals (effectiveness,

efficiency of operations and safeguard of corporate assets);– to prevent or limit the consequences of unexpected events through appropriate strategies for

the identification and management of risks and opportunities;– to verify that risk levels set are not exceeded;– to ensure compliance with applicable laws and regulations;– to ensure the reliability, accuracy and timeliness of financial reporting;– to ensure the control over a correct and transparent flow of information within and without

the company.The internal control system is centralized and pervades the whole group. Its tasks areimplemented through consistent identification and measuring procedures, and common riskevaluation methods.In past years, the company set guidelines for its internal control system, introducing changes tocomply with regulations issued. These guidelines are aimed at rationalizing the internal control


system through i) the mapping and classification of persons involved and the main risks that arerelevant for the purposes of internal control; ii) the charting of main reporting flows within thegroup, and iii) the description of responsibilities and the related applicable environments.The company has identified the objectives of its internal control system in line with the bestdomestic and international practices and is currently implementing the system.

Main characteristics of the risk management and internal control systems in the context of financialreporting

1) Phases of the risk management and internal control systems in the context of financial reporting.In defining its internal control system, the company, in compliance with current regulations andconsistent with best practice in the field, follows the process described below:a) identification and evaluation of risks applicable to financial reporting;b) identification of controls on risks identified at the process level;c) evaluation of controls and management of the monitoring process, in terms both of

completeness and of operating efficiency, with the end of reducing risks to a level considered“acceptable” (information flows, management of gaps, remedy plans, reporting system, etc.).

Said process is managed by the manager in charge of preparing the company’s accounting andcorporate records (hereinafter also the “manager in charge”), who overviews all administrativeand accounting procedures, mapping and homogenizing those in use, defining action to betaken at the process level, information systems or procedures aimed at eliminating possiblecontrol deficiencies.Below we report a description of individual phases of the process.a) Identification and valuation of risks applicable to financial reportingThe risk assessment activity is carried out annually with the aim of determining, on the basisof quantitative analysis and according to valuations and qualitative parameters:

1. consolidated companies to be included in the analysis;2. risks on the group and operating subsidiary level relating to the general context of the

internal control system;3. determination of general risks incurred by information technology systems that support

relevant processes;4. processes that feed into the consolidated accounts that are deemed relevant due to their

inherent risk, for each operating subsidiary considered;5. identification, for each relevant process, of specific risks relating to financial reporting.

The risk assessment process carried out at the consolidated level to determine the perimeter ofthe analysis, is based on the combined application of two analytic parameters, one primarilyquantitative (setting numeric thresholds with which to compare figures in the consolidatedaccounts and in those of consolidated companies), and one qualitative (assessment bymanagement, based on knowledge of the company, of non-numerical aspects that constitutepotential risks so as to deem necessary or unnecessary the inclusion of a certain company/processin the perimeter of the analysis).b) Identification of controlsOnce identified the main risks and associated the same with relevant processes, the relatedcontrols in place are assessed. This mapping constitutes the instrument with which:

– main risks relating to relevant processes and to the controls that have been set to managesuch risks, are represented;


– controls in place are reviewed to ascertain their ability to manage and reduce the riskassessed, and, in particular, the correct recording of the related items in the accounts.

The identification of risks and the related controls is carried out with the aim of managing riskspertaining to financial reporting, including the financial statements.

Mapping of risks constitutes the element on which testing activities aimed at monitoring theappropriateness and effectiveness of controls in place are based.

c) Evaluation of controls and monitoring processIn compliance with applicable regulations and in line with the mentioned best practices, a planof monitoring activities (providing, where necessary, for their refining and optimization) isdrafted annually to evaluate the operating efficiency of controls. The plan defines strategies andtiming of tests carried out in the monitoring activity.The monitoring of processes and controls that are part of the model includes, in addition totesting activities and the reporting of results of the same, also the management and eliminationof gaps found.

2) Roles and departments involved.The organizational structure of Gruppo Editoriale L’Espresso S.p.A. provides for the followingsubdivision of activities with regard to the implementation, maintenance and development ofthe control model for financial reporting:

Operating personnelOperating personnel carries out the controls necessary to carry out the respective task and inparticular controls aimed at ensuring a correct representation of financial reporting.

Manager in chargeThe manager in charge, together with the Managing Director, is responsible primarily forimplementing administrative and accounting procedures that regulate the formation ofperiodical financial reporting, of monitoring the application of administrative and accountingprocedures indicate and issue to the market its certification of having complied with the aboverequirements and of the reliability of financial reporting published.To the above end, the manager in charge updates periodically the perimeter of intervention,drafts the annual plan of activities and communicates to all interested parties the schedule ofactivities, the timing of the same and the expected results. For further information on the figureof the manager in charge see paragraph 11.5).

Internal Audit DepartmentIt assists the manager in charge in carrying out activities planned, with particular reference totesting activities and reports to the manager in charge the results of activities carried outthrough specific reports.Operating roles carried out by the above departments are part of the greater scheme of thecompany’s corporate governance, organized along the traditional model that includes corporateboards or positions with different control functions, among which the Board of Directors,responsible for the internal control system, the Internal Control Committee, the executivedirector in charge of overviewing the internal control system, the manager in charge of internalcontrol, and the Monitoring Board as per Legislative Decree no. 231/01.The Board of Directors, supported by the activity of the Internal Control Committee, has in


the year reviewed, with a positive opinion, the adequacy, effectiveness and regular functioningof the internal control system through a series of meetings with management and exchanges ofinformation, visits to operating divisions, review of procedures relating to internal audit,meetings with the Board of Statutory Auditors and the Independent Auditors, in addition tothe Monitoring Board as per Legislative Decree no. 231/01, whose activity is also aimed(though with a different goal) at verifying the functioning of the internal control system.

11.1) Executive Director in charge of the Internal Control SystemHaving recognized the utmost importance of the Internal Control System functionality, theBoard of Directors decided that the position of Executive Director in charge of the InternalControl System should be assigned to the Managing Director.The Executive Director in charge, with the assistance of the person in charge of InternalControl and the cooperation of the Company’s organization, has carefully carried out the iden-tification of the main corporate risks, has verified and, where necessary, modified the set ofprocedures of the Internal Control System.

11.2) Person in charge of Internal ControlTherefore, Giuseppe Gianoglio, Internal Audit Manager of the Parent Company CIR S.p.A.,was identified as person in charge of Internal Control (hereinafter "person in charge"). Hisremuneration for this position is already included in the remuneration granted to him by theParent Company. The Company has its own Internal Audit Department, which, functionally,reports to the person in charge of Internal Control.The person in charge of Internal Control is not responsible for any of the operational areas and hishierarchical position is not subordinated to any other employee responsible for the operationalareas, including the administration and finance areas. The person in charge has had direct accessto all the information necessary to fulfill his task and has periodically reported back to the InternalControl Committee, the Board of Statutory Auditors and the Executive Director in charge.The person in charge has no assigned budget, but is entitled to expense, if required by circumstances.Over this financial year the person in charge has supervised the progress of the action planimplemented by the Company’s Internal Audit Department, and has cooperated with theInternal Control Committee and the Monitoring Body.

11.3) Organizational Model pursuant to Legislative decree 231/2001The Company and its subsidiaries have adopted the “Organization, Management and ControlModel” (hereinafter the “Model”) pursuant to Legislative decree 231/01, mainly aiming to preventcrimes committed in relationships with the public administration milieu, such as corruption, extortionand fraud, but also the so-called corporate crimes, namely, among others, false corporate statements,false financial statements, workplace health & safety crimes, and, finally, recently introduced crimesregarding organized crime, crimes against industry and commerce, violation of copyright laws andinducement to withhold testimony or give false testimony in criminal proceedings.This document includes “General Issues” and “Special Issues”.In “General Issues”, after mentioning the principles of Legislative decree 231/01 and theguidelines issued by Confindustria, the Model’s basic contents are illustrated, together with thecriteria for staff training and Model circulation within the Company.The contents of “Special Issues” are: (i) map of sensitive areas; (ii) Code of Ethics; (iii) conductguidelines; (iv) general principles of Internal Control System; and (v) protocols of control


drafted for all the corporate processes at risk. In particular, these protocols aim to clearlyidentify crimes that might be committed in implementing various corporate processes, and theconduct provisions and specific activities aimed to reasonably prevent the related crime risks.The Monitoring Body is in charge of supervising the Model application and adequacy, throughautonomous powers of initiative and control and is responsible for verifying the Modelexecution and observance, by regularly monitoring its efficiency and proposing any possibleupdates to be submitted to the competent bodies.The Monitoring Body is composed by Giuseppe Gianoglio, the manager responsible forInternal Audit of Gruppo CIR, Giovanni Barbara, Chairman of the Board of StatutoryAuditors, and Andrea Russo, a lawyer - specialist in these issues. The Monitoring Body has regularly reported its activity to the Board of Directors. Nocensurable misconduct has emerged.

11.4) Independent AuditorsThe Shareholders’ Meeting of April 18, 2007 deliberated to assign to Deloitte Touche S.p.A. the taskof auditing the 2007 – 2015 Parent Company’s and consolidated financial statements, as well as thelimited audit on the half-yearly results pursuant to Legislative decree n. 58 of February 24, 1998.

11.5) Manager in charge of drafting the accounting and corporate recordsThe Board of Directors appointed Alessandro Alachevich, CFO, as Manager in charge ofdrafting the accounting and corporate records of Gruppo Editoriale L'Espresso S.p.A.According to the Company’s By-laws, the professional requisites for this Manager position are: anadequate experience in accounting and finance issues and the Board of Directors’ approval of hisappointment, upon proposal of the Managing Director and prior advise of the Statutory Auditors.In the performance of his current duties, Alessandro Alacevich, is endowed with adequate

powers and means to fulfill this assignment. In particular, he is therefore entitled to: a) access all the information deemed necessary to fulfill his tasks;b) dialogue with the administration and control bodies in order to jointly coordinate the

activities to be implemented;c) assess and monitor the adequacy of the procedures adopted by the Company which have an

impact on the Parent Company’s and consolidated financial statements, the half-yearlyreport and the documents subject to certification;

d) participate in drawing up the information systems which have an impact on the economicand financial situation;

e) organize an adequate structure, by either employing the available internal resources - such as thoserelated to the information systems, control, and internal audit - or, if necessary, in outsourcing;

f) coordinate action with the administration and control bodies, or with the management ofthe subsidiaries, to identify the specific procedures aimed to correctly fulfill all the tasks andactivities in compliance with law.

12. INTERESTS OF THE DIRECTORS AND TRANSACTIONS WITH RELATED PARTIES The Board of Directors shall give prior approval to all the transactions with related parties - asthey are defined in the relevant Consob Communication - including intragroup transactions,except typical or routine transactions, and transactions that can be considered as implementedaccording to standard conditions.


The typical or routine transactions are those implemented in the regular course of the Com-pany’s business and the transactions which, because of their characteristics, do not involveany critical element or risk. The transactions implemented according to standard conditionsare those executed according to the same conditions applied by the Company to any otherthird party.For the transactions with related parties subject to its prior approval, the Board of Directorsshall receive adequate information regarding the nature of correlation, the executing proceduresof the transaction, the prerequisites – also economic ones – for its implementation, and theassessment procedures adopted. In consideration of the nature, value or other characteristics ofthe transaction, the Board of Directors shall ascertain that the transaction is concluded withthe assistance of independent experts. In the transactions with related parties subject to approval by the Board of Directors, theDirectors who are in a potential conflict of interest shall give timely and exhaustive informationto the Board on the existence of the interest and related circumstances. Moreover, afterdiscussion, in view of voting procedures they shall leave the meeting or, if required by themajority of the other Directors, may remain in the venue but shall abstain from voting.For the transactions with related parties, including intragroup transactions not submitted to theBoard of Directors - as typical or routine ones, or standard transactions – the Directors whohold proxies shall ascertain that adequate information is kept on record - also arranged by typeor groups of transactions - concerning nature, transaction executing procedures, andprerequisites – also economic ones – for implementation.With reference to Consob’s recent Resolution no. 17221 of March 12, 2010, approving thefinal draft of the “Regulations containing provisions related to transactions with relatedparties”, the Company will amend its internal procedures within the term provided by Law tobring them into line with principles set forth in said Regulations.

13. APPOINTMENT OF STATUTORY AUDITORSThe appointment of Statutory Auditors is based on lists submitted by the shareholders, inwhich candidates are listed according to a progressive number. The right of submission of listsis conferred to the Shareholders who, individually or jointly with other shareholders, altogetherown shares with voting right equal to at least 2.5% of the voting capital.The lists submitted by the shareholders shall include the candidates’ curriculum vitae, the doc-uments certifying the right of list submission, and be deposited at the Company’s headquarterswithin at least fifteen days from the day of first call of meeting; this provision shall bementioned in the notice of call. The lists shall be deposited according to the terms provided inthe Company’s By-laws, and each list shall also include the candidates’ statements ofacceptance of candidacy and certification - under their responsibility - that no cause forineligibility or incompatibility exists, and that the requisites for the respective positions areavailable as provided for in the regulations and By-laws. Any list non-compliant with the aboveregulations shall be considered as not submitted.In the event that only one list is submitted, all Statutory Auditors shall be selected from this list.The list which obtains the second place for number of votes shall be considered valid for theelection of one Permanent Statutory Auditor, who shall be the Chairman of the Board;however, this candidate shall not be, even indirectly, in any relationship with the members whohave submitted or voted the list that has resulted first for number of votes.


In the event of replacement of a Permanent Statutory Auditor, the Substitute Statutory Auditorshall take over upon selection from the same list of the replaced Statutory Auditor.The 2.5% minimum shareholding threshold required for list submission was confirmed byConsob Resolution no. 17148 of January 27, 2010.

14. STATUTORY AUDITORSAccording to the Company’s By-laws the Board of Statutory Auditors shall comprise three Per-manent Statutory Auditors and three Substitute Statutory Auditors who shall be in office forthree financial years and can be re-elected.The Board of Statutory Auditors, appointed on April 22, 2009 and holding office tillapproval of 2011 Financial Statements. For the composition of the Board of Statutory Auditors and other related information, pleasesee table 3 attached to the present report.In financial year 2009 the Board of Statutory Auditors meeting was held six times. The averageduration of meetings was about 2 hours. Five meetings are scheduled for 2010, one of whichhas already been held on February 9, 2010.Validity of the Statutory Auditors’ independence and integrity requisites in compliance with theCode’s criteria was ascertained.Statutory Auditors having an interest in a specified Company transaction shall timely informthe other Statutory Auditors and the Chairman of the Board of Directors on nature, terms andscope of their interest.The Board of Statutory Auditors has also monitored the condition of independence of theIndependent Auditors, by assessing compliance with the relevant provisions and regulations. The Board of Statutory Auditors carried out its activities so as to add to its traditional mon-itoring task a proactive role that fosters debate on internal control issues and on issuespertinent to the role assigned by the law to the Board of Statutory Auditors. In thisframework, the Board of Statutory Auditors focused its activity around the exchange ofinformation with the Group’s administrative bodies, top management and other controlbodies.

15. RELATIONSHIPS WITH THE SHAREHOLDERS In its institutional website , the Company has created an extensive user-friendly sectioncontaining all the relevant information for the shareholders.Alessandro Alacevich, CEO of the Company, is the Manager in charge of “Investor Relations”and in charge of managing the flow of direct information addressed to shareholders, financialanalysts and institutional investors, in compliance with the regulations fixed for the disclosureof the Company’s information and documents.The Company has always actively pursued the aim to create and maintain a sound dialoguewith the shareholders and the market, through various communication channels: presentationof the Company and Group’s results in Shareholders’ Meetings through the presentation ofslides; meetings with the financial analysts and institutional investors in Italy and abroad; cir-culation to the public of press releases and presentations in the Company's website.


16. SHAREHOLDERS’ MEETINGS Pursuant to the By-laws, Shareholders’ Meetings are called through the publication of a noticecontaining the date of the upcoming meeting, the time and place at which it will be held, onthe Gazzetta Ufficiale della Repubblica Italiana or on newspaper la Repubblica at least thirtydays before the date of the meeting, barring other relevant law provision. The notice may alsocontain the date of the meeting on second call.Shareholders who, either individually or jointly, represent at least 2.5% of the company’sshares with voting rights at the ordinary meeting or any other percentage representation thatmay be set by law or regulation, may request, within five days of the publication of the noticeof meeting, the addition of issues to be discussed at the meeting to its agenda, indicating in theirrequest the arguments to be added. The integration is not admitted for issues on which theMeeting resolves, pursuant to the law, upon proposal of the Board of Directors or on the basisof a project or report drafted by the same. Integration to the agenda admitted are published onthe Gazzetta Ufficiale della Repubblica Italiana or on newspaper la Repubblica at least tendays before the date of the meeting.Admittance to Shareholders’ Meetings is reserved either to the shareholders whose qualifiedintermediary has given due notice to the Company - pursuant to the regulations in force forparticipation in the meeting - within at least two working days prior to the meeting, or to theshareholders who have obtained the relevant certification by the same intermediary within thesame term.The shares indicated in the notice or certification shall remain unavailable till the end of themeeting.Meetings are regularly convened and resolutions taken are considered valid, both in ordinaryand extraordinary session, on first and second call, subject to the provisions and quorums setby law.The Company has adopted a set of Rules, which is not an integral part of the Company’s By-laws, that regulates the correct and functional course of the Company’s ordinary andextraordinary Shareholders’ Meeting. This set of Rules guarantees to each shareholder the rightto speak on the issues under discussion.The Company is active in including within the term provided new rules regarding rights ofshareholders of listed companies set, in compliance with EU Directive 2007/36, to facilitate theparticipation of shareholders to meetings and, in particular, the exercise of the vote.The Board of Directors has reported back to the Shareholders’ Meeting on the activityperformed, and also actively worked to ensure that the shareholders are provided with suchadequate information to enable decision-making with such full knowledge as required at thisMeeting level.Changes in the market capitalization of the Company occurred in the year were in line with thechanges occurred in the market and in the specific sector.

17. CHANGES OCCURRED FROM THE CLOSING DATE OF THE FINANCIAL YEAR OF REFERENCE No change has occurred in the corporate governance structure since the closing date offinancial year 2009.

Rome, March 24, 2010


Table 1List of positions held by Directors of Gruppo Editoriale L'Espresso S.p.A. in other companies listed in regulated markets (also abroad),and in finance companies, banks, insurance companies of a significant size

Board of Directors

Members Other positions

Carlo De Benedetti Honorary Chairman of Cofide S.p.A. e CIR S.p.A.; Honorary Chairman and Director of Sogefi S.p.A. (CIR group);

Honorary Chairman of M&C Management & Capitali S.p.A.; Membre du Conseil de Surveillance de La Compagnie

Financière Edmond de Rothshild.

Rodolfo De Benedetti Chairman of Sogefi S.p.A. (CIR group) and Sorgenia S.p.A. (not listed, CIR group); Managing Director of Cofide S.p.A.

e CIR S.p.A.; Director of Allianz S.p.A. and of Banque Syz S.A. (not listed).

Giorgio Di Giorgio Director of P&G SgR S.p.A., Arepo BP S.p.A. and La Centrale Merchant S.r.l. (not listed).

Francesco Dini Director of Sorgenia S.p.A. (not listed, CIR group).

Sergio Erede Chairman of AON Italia S.p.A.; Vice Chairman of Banca Nazionale del Lavoro S.p.A. (not listed); Director of Interpump

Group S.p.A., and Luxottica Group S.p.A.; Director of Manuli Rubber Industries S.p.A., Manifatture Lane Gaetano

Marzotto & Figli S.p.A., Società Italo Britannica L. Manetti - H. Roberts S.p.A. and Gruppo IPG Holding S.r.l. (not

listed); Statutory Auditor of Foncière des Régions (listed)

Mario Greco Managing Director of Global Life Zurich Financial Services; Director of Saras S.p.A. and Indesit Company S.p.A (not

listed).

Monica Mondardini Director of Generali España Holding, Banco Vitalicio and La Estrella (listed).

Tiziano Onesti Permanent Auditor of ENI S.p.A.

Luca Paravicini Director of CIR S.p.A., Piaggio & C. S.p.A., Consilium Sgr S.p.A. (not listed), Scala Group S.p.A. (not listed),

Education.it S.p.A. (not listed) and Il Gallione S.p.A. (not listed).

NOTE If not indicated, the company shell be intended as “listed”


Board of Dire

ctorss

Internal

Audit

Committee

Remun

eration

Committee

Poss

ible

No

mination

Committee

Poss

ible

Exec

utive

Committee

Poss

ible

Othe

r co

mmittee

Positio

nMem

ber

In office

from

Expiratio

n of te

rmList

(M/m

) *Executive

Non-

executive

Independent

as per Code

Independent

as per TUF

% **

No. o

f other

positio

ns***

****

****

****

****

****

****

Chai

rman

Carlo

De

Bene

detti

22-a

pr-0

9ap

prov

al o

f 201

1 fin

anci

al s

tate

men

tsM

x10

0%5

x10

0%

Man

agin

g Di

rect

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onic

a M

onda

rdin

i"

"M

x10

0%3

Dire

ctor

Agar

Bru

giav

ini

""

Mx

x10

0%-

x10

0%x

100%

Dire

ctor

Rodo

lfo D

e Be

nede

tti"

"M

x10

0%6

x10

0%

Dire

ctor

Gior

gio

di G

iorg

io"

"M

xx

67%

3x

75%

Dire

ctor

Fran

cesc

o Di

ni

""

Mx

89%

1

Dire

ctor

Serg

io E

rede

""

Mx

56%

9

Dire

ctor

Mar

io G

reco

""

Mx

x56

%3

x10

0%x

50%

Dire

ctor

Mau

rizio

Mar

tinet

ti "

"m

x10

0%-

Dire

ctor

Tizia

no O

nest

i"

"M

xx

83%

1x

100%

Dire

ctor

Luca

Par

avic

ini

""

Mx

x10

0%6

x10

0%x

100%

----

----

----

----

----

----

----

DIREC

TORS

LEAVING

OFFICE IN THE

YEAR

----

----

----

----

----

----

----

---

Nam

e

Indica

te th

e qu

orum

for s

ubmitting lists at tim

e of la

st app

ointmen

t: 2.5%

Num

ber o

f mee

tings

hel

d in

the

year

BoD:

8IA

C: 5

RC: 2

NC:

EC:

Othe

r co

mm

ittee

:

Table 2: com

positio

n of th

e Bo

ard of Dire

ctors an

d of Com

mittee

s

The

Ordi

nary

Sha

reho

lder

s' M

eetin

g of

Apr

il 22

, 200

9 ap

poin

ted

for a

thre

e ye

ar te

rm e

xpiri

ng w

ith th

e ap

prov

al o

f the

201

1 Fi

nanc

ial S

tate

men

ts, a

Boa

rd o

f Dire

ctor

s m

ade

up b

y ele

ven

mem

bers

.The

follo

wing

two

lists

wer

e su

bmitt

ed fo

r the

app

oint

men

t of t

he B

oard

of D

irect

ors:

a li

st s

ubm

itted

by C

IR S

.p.A

., th

e m

ajor

ity s

hare

hold

er, a

nd a

list

sub

mitt

ed b

y the

Est

ate

of C

arlo

Car

acci

olo

di M

elito

, a m

inor

ity s

hare

hold

er. I

nco

mpl

ianc

e wi

th th

e By

-laws

, ten

Dire

ctor

s we

re a

ppoi

nted

from

the

maj

ority

list

and

one

from

the

min

ority

list

. For

any

oth

er in

form

atio

n re

latin

g to

list

s su

bmitt

ed o

r inf

orm

atio

n on

the

pers

onal

or p

rofe

ssio

nal

char

acte

ristic

s of

the

dire

ctor

s, p

leas

e se

e th

e re

late

d se

ctio

n on

the

inst

itutio

nal s

ite w

ww.g

rupp

oesp

ress

o.it.

NOTE

*In

this

col

umn,

M/m

indi

cate

s wh

ethe

r the

mem

ber w

as a

ppoi

nted

from

the

list v

oted

by t

he m

ajor

ity (M

) or b

y the

min

ority

(m) o

f sha

reho

lder

s.**

This

col

umn

indi

cate

s th

e pe

rcen

tage

of D

irect

ors'

atte

ndan

ce in

Boa

rd m

eetin

gs.

This

per

cent

age

is c

alcu

late

d-à-

vis

the

Boar

d’s

mee

tings

con

vene

d ov

er th

e fin

anci

al ye

ar o

r afte

r tak

ing

offic

e.**

*Th

is c

olum

n in

dica

tes

the

num

ber o

f pos

ition

s as

dire

ctor

or a

udito

r cov

ered

by

the

pers

on in

oth

er c

ompa

nies

list

ed in

regu

late

d m

arke

ts, i

nclu

ding

fore

ign

mar

kets

, in

finan

ce c

ompa

nies

, ban

ks, i

nsur

ance

com

pani

es o

r com

pani

es o

f rel

evan

t size

. A li

st o

f the

se c

ompa

nies

for e

ach

dire

ctor

mus

t be

atta

ched

to th

e Re

port,

spe

cify

ing

whet

her t

he c

ompa

nies

in w

hich

the

posi

tion

was

cove

red

is p

art o

f the

sam

eGr

oup

as th

e co

mpa

ny o

r not

.**

**In

this

col

umn,

an

X in

dica

tes

mem

bers

hip

of th

e di

rect

or in

a c

omm

ittee

.



Table 3: Composition of the Board of Statutory Auditors

The Ordinary Shareholders' Meeting of April 22, 2009 appointed for a three year term expiring with the approval of the 2011 FinancialStatements the Board of Statutory Auditors shown above. The following two lists were submitted for the appointment of the Board of StatutoryAuditors: a list submitted by CIR S.p.A., the majority shareholder, and a list submitted by the Estate of Carlo Caracciolo di Melito, a minorityshareholder. In compliance with the By-laws, the Chairmanof the Board of Statutory Auditors was appointed from the from the minority list thatcame second in the voting. For any other information relating to lists submitted or information on the personal or professional characteristicsof the auditors please see the related section on the institutional site www.gruppoespresso.it.

NOTE* In this column, M/m indicates whether the member was appointed from the list voted by the majority (M) or by the minority (m) of share-

holders.** This column indicates the percentage of Statutory Auditors’ attendance in Board of Statutory Auditors’ meetings. This percentage is cal-

culated-à-vis the Board’s meetings convened over the financial year or after taking office.*** This column indicates the total of director or auditor positions covered in the Companies as perarticle 148bis of TUF. A complete list of

positions is enclosed pursuant to art. 144-quinquiesdecies of Consob Issuers’ Regulations, supervisory activity report drafted by theStatutory Auditors pursuant to art. 153, subparagraph 1 of TUF.

Collegio sindacale

Position Member In office from

Expiration of term

List (M/m) *

Independent as per Code % ** No. of other

positions ***

Chairman Giovanni Barbara 22-apr-09approval of

2011 financialstatements

m x 100% 6

Permanent Auditor Enrico Laghi " " M x 100% 3

Permanent Auditor Luigi Macchiorlatti Vignat " " M x 100% 1

Substitute Auditor Mauro Ianiro " " m - - -

Substitute Auditor Riccardo Zingales " " M - - -

Substitute Auditor Silvano Cipolla " " M - - -

---------------------------- AUDITORS LEAVING OFFICE IN THE YEAR -------------------------------

Name

Indicate the quorum for submitting lists at time of last appointment: 2.5%

Number of meetings held in the year: 6

Consolidated Financial Statements

at December 31, 2009

Consolidated Financial Statements | Gruppo Editoriale L’Espresso | 75

Consolidated Financial Statements

ASSETS Note Dec. 31, Dec. 31,(€ thousand) 2008 2009

Intangible assets with an indefinite useful life 656,093 656,419Other intangible assets 4,311 3,119

Intangible assets (1) 660,404 659,538Property, plant and equipment (2) 220,980 203,617Investments valued at equity (3) 27,750 28,334Other investments (4) 2,568 2,486Non-current receivables (5) 1,486 1,272Deferred tax assets (6) 47,633 48,561

NON-CURRENT ASSETS 960,821 943,808Inventories (7) 27,703 23,243Trade receivables (8) 258,309 229,945Marketable securities and other financial assets (9) 50 25,179Tax receivables (10) 20,848 20,630Other receivables (11) 23,507 17,368Cash and cash equivalents (12) 120,693 135,012

CURRENT ASSETS 451,110 451,377

TOTAL ASSETS 1,411,931 1,395,185

LIABILITIES AND SHAREHOLDERS’ EQUITY Note Dec. 31, Dec. 31,(€ thousand) 2008 2009

Share capital (13) 61,385 61,439Reserves (14) 245,853 217,096Retained earnings (loss carry-forwards) (14) 150,583 201,245Net profit (loss) 20,624 5,825

Group Shareholders’ Equity 478,445 485,605Minority interests (15) 10,813 9,824

SHAREHOLDERS’ EQUITY 489,258 495,429Financial debt (16) 379,768 348,582Provisions for risks and charges (17) 24,123 40,407Employee termination and other retirement benefits (18) 90,946 83,907Deferred tax liabilities (6) 108,032 110,999

NON-CURRENT LIABILITIES 602,869 583,895Financial debt (16) 19,923 19,804Provisions for risks and charges (17) 34,739 48,844Trade payables (19) 147,595 147,553Tax payables (20) 19,263 12,735Other payables (21) 98,284 86,925

CURRENT LIABILITIES 319,804 315,861

TOTAL LIABILITIES 922,673 899,756

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY 1,411,931 1,395,185

Notes from page 83 to 138 are an integral part of the present financial statements.

Consolidated Income Statement

(€ thousand) Note 2008 2009

Revenues (22) 1,025,548 886,649 Change in inventories (7) (2,618) (771) Other operating income (23) 17,689 19,829 Purchases (24) (150,066) (120,165) Services received (25) (388,185) (340,818) Other operating charges (26) (30,285) (23,056) Valuation of investments at equity (3) 1,145 1,013 Personnel costs (27) (330,701) (316,018) Depreciation, amortization and write-downs (28) (47,205) (42,728)

Operating profit 95,322 63,935 Financial income (expense) (29) (19,606) (19,621)

Pre-tax profit 75,716 44,314 Income taxes (30) (54,489) (38,826)

Net profit 21,227 5,488 Minority interests (13) - -

Group Net Profit 21,227 5,488 Earnings per share, basic (31) (603) 337

EARNINGS PER SHARE, DILUTED 20,624 5,825 Financial income (expense) (32) 0.051 0.015 Pre-tax profit (32) 0.049 0.014

Consolidated Statement of Comprehensive Income


NET PROFIT 21,227 5,488 Other comprehensive income components: Profit/(loss) on restatement of financial assets held for disposal - (21) Tax effect of Other profit/(loss) - 6 Other comprehensive income components, net of tax effect - (15) TOTAL COMPREHENSIVE INCOME 21,227 5,473 Total comprehensive income attributable to: Shareholders of the parent company 20,624 5,810 Minority interests (603) 337


76 | Gruppo Editoriale L’Espresso | Consolidated Financial Statements

Statement Consolidated of Cash Flows


OPERATING ACTIVITIES Net profit (loss) for the period, including minority interests 21,227 5,488 Adjustments: - Depreciation, amortization and write-downs (28) 47,205 42,728 - Provisions for stock option costs 403 1,998 - Net change in provisions for personnel costs (18) (1,693) (7,039) - Net change in provisions for risks and charges (17) 32,556 30,188 - Losses (gains) on disposal of fixed assets (1,515) (325) - Losses (gains) on disposal of investments - (2,278) - Adjustments to the value of financial assets 1,400 629 - Adjustment for investments valued at equity (884) (564) - Dividends (received) (99) (24) Cash flow from operating activities 98,600 70,801 Changes in current assets and other flows 12,794 17,912

CASH FLOW FROM OPERATING ACTIVITIES 111,394 88,713

of which: Interest received (paid) (13,806) (16,995) Income taxes received (paid) (39,698) (32,997)

INVESTING ACTIVITIES Outlay for purchase of fixed assets (55,513) (26,934) Outlay for purchase of equity investments - (2,708) Received on disposal of assets 2,692 2,273 Public grants received 5,534 5,188 (Purchase) sale of securities and assets held for disposal - (24,835) Dividends received 99 24 Other changes - 1,777

CASH FLOW FROM INVESTING ACTIVITIES (47,188) (45,215)

FINANCING ACTIVITIES Increases in capital and reserves - 434 (Acquisition) sale of own shares (9,129) (1,086) Issue (repayment) of bonds - (12,060) Assumptio (repayment) of other financial debt (16,943) (16,393) (Dividends paid) (33) (68,821) - Other changes (770) (663)

CASH FLOW FROM FINANCING ACTIVITIES (95,663) (29,768)

Increase (decrease) in cash and cash equivalents (31,457) 13,730 Cash and cash equivalents at beginning of the year 152,127 120,670

CASH AND CASH EQUIVALENTS AT END OF THE YEAR 120,670 134,400


77Consolidated Financial Statements | Gruppo Editoriale L’Espresso |

78 | Gruppo Editoriale L’Espresso | Consolidated Financial Statements

Statement of changes in the consolidated Shareholders’ Equity

Sha

re Sha

re Treasury Fair v

alue

IFR

SStock option cost E

quity

Re

tained

Net G

roup Sh. Minority Total

(€ th

ousand

) C

apita

l Premium Stocks Reserve

Re

serve Re

serve reserves earnings profit Equity

interests S

h. Equity

Balance at Decem

ber 3

1, 2007 65,167 80,570 (106,400) - 50,744 10,371 275,162 64,153 95,598 535,365 11,103 546,468

Movem

ents in

net profit - - - - -

- - 95,598 (95,598) - - -

Dividend

s - - - - -

- - (6

8,821) - (6

8,821) (893) (6

9,714)

Capital increases, cap

ital contribu

ted by sha

reholders - - - - -

- - - -

- - -

Stock options

- - - - -

40

3 -

- - 4

03 -

403

Own shares tran

sactions

(3

,782

) (8

0,57

0) 86,19

7 - -

- - (1

0,974) - (9,129) - (9,129)

Tran

sfers between capital a

nd re

serves

- - - - (63

) - (70

,564

) 7

0,627 -

- - -

Other c

hang

es - - - - -

- 3 - -

3

-

3

Net p

rofit(loss) - - - - -

- - -

20,624 20,624 6

03 21,227

Balance at Decem

ber 3

1, 2008 61,385 - (20,203) - 50,681 10,774 204,601 150,583 20,624 478,445 10,813 489,258

Movem

ents in

net profit - - - - -

- - 20,624 (20,624) - - -

Dividend

s - - - - -

- - - -

- (652) (652)


ital contribu

ted by sha

reholders 54

3

80 - - -

- - - -

434 -

434

Stock options

- - - - -

1,99

8 -

- - 1

,998 -

1,998

Own shares tran

sactions

- - (1,08

6) - -

- - - -

(1

,086) - (1,086)

Tran


nd re

serves

- - - -

2

02 (1,19

5) (29

,045

) 3

0,038 -

- - -

Other c

hang

es - - - - -

- 4 - -

(11) - (11)

Net p

rofit(loss) - - - (15

) - - - -

5

,825 5

,810 (337) 5,473

Balance at Decem

ber 3

1, 2009 61,439 380 (21,289) (15) 50,883 11,577 175,560 201,245 5,825 485,605 9,824 495,429

Notes to the Consolidated Financial Statements

Notes to the Consolidated Financial Statements | Gruppo Editoriale L’Espresso | 81

Notes to the Consolidated Financial Statements

1. General InformationGruppo Editoriale L’Espresso SpA (the “company” or “parent company”) and those companiesin which it holds either directly or indirectly an interest (further on in the present documentreferred jointly to as the “Espresso Group” or the “Group”) operates mainly in the publishingsector and more specifically in the newspapers and periodicals segment, that of radio stations,advertising, online publishing, and analog and digital terrestrial and satellite television.Gruppo Editoriale L’Espresso SpA has its registered office in Italy at Via Cristoforo Colombo,149, Rome.CIR Compagnie Industriali Riunite S.p.A., holds control of the Company and exercises coor-dination and direction functions pursuant to article 2497 of the Italian Civil Code.The Espresso stock is listed on the screen-based trading circuit (Mercato Telematico Azionario,MTA) of the Italian Stock Exchange (Reuters code: ESPI.MI, Bloomberg code: ES IM). The present consolidated annual report at December 31, 2007 was approved by the Board ofDirectors of the parent company on February 24, 2010.

2. Form and content of the financial statementsThe present consolidated financial statements were prepared in accordance with internationalaccounting principles (International Accounting Standards, - IAS and International FinancialReporting Standards, - IFRS), as integrated by the related interpretations (StandingInterpretations Committee - SIC and International Financial Reporting InterpretationsCommittee, IFRIC) issued by the International Accounting Standards Boards (IASB). The general principle adopted in the preparation of the financial statements is that of thehistorical cost for all assets and liabilities, with the exception of derivative instruments andcertain financial assets/liabilities, some of which are accounted for at their fair value.The classification, form, order and nature of items in the financial statements, as well asaccounting principles adopted (with the exception of those described in note 8 below), areunchanged from those adopted for the approved financial statements at December 31, 2008. The classification adopted in the Statement of Financial Position, both for assets and liabilities,is that of “current” and “non-current” as, contrary to the classification by liquidity, suchcriteria is deemed to provide a better representation of the Group’s financial position. TheStatement of Financial Position is divided into two separate facing sections. The order ofreporting is Assets, Shareholders’ Equity and Liabilities (from the least current to the most). Inorder not to make the reporting unnecessarily complex and to use the same format for interimreports, financial statements include only major captions and all sub-classifications (e.g. natureof the debtor/creditor, expiration term, etc.) are instead disclosed in the notes. The contents ofthe Statement of Financial Position are in compliance with minimum requirements establishedby IAS 1 as, with the exclusion of publications, radio frequencies and trademarks, classifiedunder “Intangible assets with an indefinite useful life”, no significant or particular item wasdeemed to require separate reporting. Income Statement items were classified by nature as, con-sidering the activity of the Group, it has not been deemed that a classification by destinationcould better represent the operating performance of the Company. In the Statement of CashFlows, prepared according to the indirect method, cash flows from operating, investing andfinancing activities, and those from discontinued operations are reported separately. The

Statement of Changes in the Consolidated Shareholders’ Equity shows income and charges forthe period and other changes in reserves.Unless otherwise specified, amounts reported in the financial statements and tables are statedin thousands of euro, rounded off to the nearest unit.

3. Principles of consolidationThe consolidation includes the Financial Statements of the parent company, its subsidiaries andaffiliated companies. Subsidiaries are those companies in which the parent company exercisesdecisional power over financial and operating policies. Control is deemed to occur when morethan half of actual voting rights or those potentially exercisable at a shareholders’ meeting areheld by the company either directly or indirectly at the date of the financial statements.Affiliated companies are those in which the parent company exercises a significant influence.Such influence is deemed to occur when the Group controls 20% or more of actual votingrights or those potentially exercisable at the date of the financial statements.Subsidiaries are consolidated from the date at which the Group acquires control anddeconsolidated from the date at which control is lost.Subsidiaries and affiliated companies are recorded at the acquisition cost, corresponding to thevalue of assets acquired, shares issued or liabilities generated at the time of acquisition, inaddition to other costs incurred in the acquisition. The excess of the acquisition cost over thebook value of assets of subsidiaries acquired by the Group is recorded as goodwill, while thatof affiliated companies acquired is included in the value of the investment. The accountingtreatment of goodwill is described in note 4.1.Subsidiaries were consolidated under the line-by-line method, thus including all assets andliabilities, costs and revenues of subsidiaries, regardless of the share held. The book value of con-solidated companies was therefore netted against the related portion of the Shareholders’ Equity.Transactions, balances and unrealized gains and losses among Group companies were thereforeeliminated. The share in the Shareholders’ Equity and profits accruing to minority shareholderswere recorded separately under Shareholders’ Equity in the Consolidated Statement of FinancialPosition and under a separate caption in the Consolidated Income Statement.Subsequent to their acquisition, investments in affiliated companies are recorded under theequity method, recording the share of the Group in the profit and in the change in reserves,respectively in the income statement and in the Statement of Financial Position underShareholders’ Equity. The share in unrealized gains and losses between affiliated companieswas eliminated. When the Group’s share in the loss of an affiliated company is equal or higherthan the book value of the investment, the Group does not recognize further losses unless is hasobligations to cover losses or has made payments on behalf of the affiliated company.All financial statements of Group companies are prepared at the same date and relate to afinancial year of the same duration.

4. Valuation Criteria 4.1 Intangible assetsIntangible assets are initially recorded at the acquisition or production cost. The acquisitioncost is represented by the fair value of payments and any additional costs directly incurred forpreparing the asset for use. The purchase cost is the equivalent of price paid in cash at the time

82 | Gruppo Editoriale L’Espresso | Notes to the Consolidated Financial Statements

of the acquisition. In case the amount paid for the acquisition is deferred beyond normalpayment terms, the difference with respect to the equivalent cash price is recorded as interestover the longer payment term. The cost of intangible assets developed internally is recorded byseparating costs incurred in the research phase (not capitalized) and costs incurred in thesubsequent development phase (capitalized). In case the two phases cannot be separated, thewhole project is accounted for as research.The book value of intangible assets is in line with the amount expected to be retrieved throughfuture use or disposal. At least once a year and in case there arise doubts as to possibility to retrievethe book value of an asset, the latter is subjected to an impairment test, as described in note 4.6.

Publications, trademarks and frequenciesThe useful life of newspaper mastheads and trademarks is considered as undefined.Broadcasting frequencies are also considered as assets having an indefinite useful life as theyare used based on concessions whose term is limited or specific licenses limited in time butrenewable subject to the fulfillment of the same objective and specific requisites on which theissue and maintenance of the license were based. Such assets are not amortized and are insteadsubjected annually, or any time there is an indication that the asset may have experienced a lossin value, to an impairment test. Losses in value are recorded in the income statement under“Depreciation, amortization and write-downs”.

GoodwillGoodwill represents the premium paid over the fair value of the share of assets and liabilities,including potential ones, at the time of acquisition. Goodwill arising from the acquisition ofaffiliated companies is included in the value of the related equity investment.Goodwill acquired for a consideration is not amortized and is subjected at least annually to animpairment test. With such end, goodwill is allocated from the date of acquisition or by theend of the subsequent financial year, to one or more cash generating unit (CGU). Reductionsin value resulting from an impairment test do not give rise to adjustments in subsequent yearsand are recorded in the income statement under “Depreciation, amortization and write-downs” and are not restored in subsequent years.

Other intangible assetsOther intangible assets are represented by industrial patents and intellectual property rights,concessions, licenses, trademarks and similar rights, and software. They are recorded at cost,net of accumulated amortization calculated on a straight line over their expected useful life,and possible durable losses in value.In view of the homogeneity of assets recorded in the Statement of Financial Position, barringspecific relevant cases, the useful life of other intangible assets is estimated at 3 to 6 years.Amortization criteria applied are reviewed and redefined at least at the end of each financialperiod to keep into account possible significant changes.

4.2 Property, plant and equipmentProperty, plant and equipment at the beginning are recognized at purchase price or atproduction cost net of accumulated depreciation. Cost includes associated expenses and anydirect cost incurred at the moment acquisition and necessary to make the asset ready for use.The capitalization of costs for the upgrade, update or improvement of structural elements

83Notes to the Consolidated Financial Statements | Gruppo Editoriale L’Espresso |

owned or leased from third parties is carried out exclusively when the same fulfill the requisitesthat allow their separate classification as assets or part of assets. Ordinary maintenance costsare charged to the income statement.After the initial recording, property, plant and equipment are carried at cost, net ofaccumulated depreciation (with the exception of land) and possible durable losses in value. Theamortizable value of each significant component of a tangible asset having a different usefullife is calculated on a straight line over its expected useful life.Amortization criteria, the useful life of assets and their residual value are reviewed and redefinedat least at the end of each financial period to keep into account possible significant changes.Capitalized costs relating to leasehold improvements are amortized over the shorter betweenthe residual term of the lease and the residual useful life of the asset to which the leaseholdimprovement relates.The book value of property, plant and equipment is in line with the amount expected to beretrieved through future use. In case doubts arise as to possibility to retrieve the book value ofan asset, the latter is subjected to an impairment test, as described in note 4.6. The originalvalue is restored when the reasons that gave rise to the impairment cease to exist.

4.3 Leasing Leasing contracts relating to assets for which the Group bears all costs and benefits derivingfrom ownership are classified as financial leases. Assets held under a financial lease arerecorded at the lower between the current value of the asset leased and the present value ofminimum lease payments provided for in the lease contract. Such payments are accounted foras interest and principal so as to obtain a fixed rate of interest on the residual part of the debt.Residual lease payments, net of interest, are recorded as financial debt. Interest payments arecharged to the income statement over the life of the lease. Assets held under a financial leaseare depreciated in line with the nature of the good.Leasing contracts in which the lessor holds a significant share of risks and benefits derivingfrom ownership are classified as operating leases. Lease payments are recorded in the incomestatement in equal installments over the life of the lease contract.In sale and lease-back operations, the difference between the sale price and the book value ofthe asset is not recorded, except in the case of a write-down in the value of the asset.

4.4 GrantsGrants are recorded when there exists, regardless of the formal granting of the amount, a rea-sonable certainty that the company will meet the conditions for the entitlement to the grant andthat the same will actually be received. Capital grants are recorded in the Statement of Financial Position as deferred income. The con-tribution is credited to the income statement based on the useful life of the asset for which it isgranted by discounting it so as to net out the related amortization expense recorded. Grants receivable as compensation for expenses and costs already incurred or aimed atproviding immediate financial help to the company not correlated to future costs are recordedas income in the year in which they become receivable.

4.5 Borrowing CostsBorrowing costs incurred for an investment in assets which normally require a certain periodof time to be prepared for use or for sale (qualifying assets), are capitalized and amortized over


the life of the assets to which they relate. All other interest charges are recorded in the incomestatement in the year in which they are incurred.

4.6 Loss in value of assetsA loss in value of an asset originates whenever the book value of an asset is higher than theamount expected to be retrieved from the same. At each accounting date, the presence offactors indicating a possible loss in value is assessed. Whenever one of these factors is present,the retrievable value of the asset is assessed through an impairment test and the write-down isrecorded where appropriate. Assets not yet available for use, those recorded in the financialstatements in the current financial year, intangible assets having an indefinite useful life andgoodwill are subject at least annually to an impairment test, independently from the presenceof factors indicating possible loss in value.The retrievable value of an asset is the higher between its fair value, net of sales costs, andits value in use. The retrievable value is calculated with reference to each individual asset,unless the said asset is able to generate positive financial flows deriving from ongoing useindependently from positive cash flows generated by other assets or groups of assets, inwhich case the test is carried out at the level of the smallest Cash Generating Unit thatincludes the said asset. The original value of the asset is restored whenever the reasons forthe loss in value cease to exist, with the exception of goodwill whose original value is notrestored.

4.7 Investments valued at equityLe partecipazioni in società collegate, ovvero quelle nelle quali la Capogruppo esercitainfluenza significativa, sono rilevate secondo il metodo del patrimonio netto.Ai fini di una più completa trattazione dei principi riguardanti le attività finanziarie, sirimanda alla Nota 4.13.

4.8 Other investmentsInvestments in affiliated companies or those in which the parent company exercises asignificant influence, are recorded at equity.For a more detailed analysis of accounting principles regarding financial assets, see note 4.13.

4.9 Assets held for disposalItem Assets held for disposal include non-current assets (or groups of assets) whose bookvalue will be retrieved primarily through the sale of the same rather than their continuinguse. Assets held for disposal are valued at the lower of their net book value and fair value,net of disposal costs.

4.10 InventoriesInventories are recorded at the lower of the acquisition or production cost, determinedapplying the weighted average cost method, and the presumed net realizable value. Thecost is represented by the fair value of the price paid and any other cost that may beattributed, with the exception of interest expenses. The net realizable value is representedby the estimated sale price under normal conditions, net of completion costs and sellingexpenses. Write-downs are reversed in subsequent years when the reasons for theirrecording cease to exist.


4.11 Trade receivablesTrade receivables are recorded at the fair value of future cash flows, written-down for losses in value.

4.11 Contract work in progressContract work in progress is represented by specific projects being completed on behalf of others.In the case of projects for which the outcome can be estimated in a reliable manner, contractualrevenues and related costs are recorded under the stages of completion method. The percentageof completion is determined according to the ratio between costs and time employed in theactivity carried out at the closing date of the accounts and total costs estimated to thecompletion. When it appears probable that total costs will exceed contractual revenues, theexpected loss is taken to the income statement.In the case of projects for which a reliable estimate is not available, contractual revenues arerecorded in line with costs incurred, provided such costs are expected to be retrieved.The sum of costs incurred and of profits recorded on each project is compared with invoicesissued against the work carried out up until the date of the financial statements. When costsincurred and profits recorded (net of losses) are higher that invoices issued, the difference isrecorded among current assets under “Trade receivables”. When invoices issued are higherthan the sum of costs incurred and profits recorded (net of losses), the difference is accountedfor among current liabilities under “Trade payables”.

4.12 Cash and cash equivalentsCash and cash equivalents are represented by short-term investments in highly liquid assetsthat may easily be converted in known amounts of cash posing a minimal risk of fluctuationin value, and by transactions carried out in the context of centralized treasury management.For the purposes of the Statement of Cash Flows, cash and cash equivalents consist ofcash, demand deposits with banks, other highly liquid short-term financial assets with anoriginal maturity not exceeding 3 months, and bank overdrafts. For the purposes of theStatement of Financial Position, the latter are included among financial payables undercurrent liabilities.

4.13 Financial assetsFinancial assets are classified into the following categories:• financial assets valued at fair value, recorded also in the income statement;• financial assets held to maturity;• loans and other financial receivables; • available-for-sale financial assets.The Group carries out the classification of financial assets at the time of acquisition. Financialassets are classified as follows:• financial assets valued at fair value, recorded also in the income statement, consisting of

financial assets acquired primarily with the intent of realizing a gain from short-term trading(over a term no longer than 3 months), or financial assets designated as such from inception;

• financial assets held to maturity, consisting of financial assets having a set maturity and gen-erating a fixed cash flow or one that may be determined, which the Group intends and hasthe ability to hold to maturity;

• loans and other financial receivables, consisting of financial assets generating a fixed cashflow or one that may be determined, not listed on a market and different from those classified


from inception as financial assets valued at fair value, recorded also in the income statementas available-for-sale financial assets;

• available-for-sale financial assets, consisting of financial assets other than the above or thosedesignated as such from inception.

Acquisitions and sales of financial assets are recorded at the settlement date. The acquisitioncost corresponds to the fair value at the acquisition date, inclusive of transaction costs.After the initial recording, Financial assets valued at fair value, recorded also in the incomestatement and Available-for-sale financial assets are valued at fair value, while Financialassets held to maturity and Loans and other financial receivables are valued at theamortized cost.Realized and unrealized gains and losses resulting from fluctuations in the fair value ofFinancial assets valued at fair value, recorded also in the income statement are recorded in theincome statement in the year in which they occur. Unrealized gains and losses resulting fromfluctuations in the fair value of Available-for sale financial assets are recorded underShareholders’ Equity, while realized gains and losses are recorded in the Income Statement inthe year in which they are generated, together with those previously recorded underShareholders’ Equity.The fair value of financial assets is determined according to listed bid prices or through the use offinancial models. The fair value of unlisted financial assets is estimated using specific estimationtechniques adjusted to the specific condition of the issuer. Financial assets for which the currentvalue cannot be reliably determined are recorded at cost, adjusted downwards for losses in value.At each financial closing date, the presence of factors indicating loss of value is assessed. Lossesin value accounted for are reversed in case the circumstances that led to their recording nolonger exist, with the exception of assets valued at cost.

4.14 Share capitalThe share capital is represented by capital underwritten and paid-up.Costs strictly correlated with the issue of shares are recorded as a reduction of the share capital,provided they are directly attributable to operations involving the same.

4.15 Own sharesOwn shares is recorded in a specific Shareholders’ Equity reserve. Gains or losses on thepurchase, sale, issue or cancellation of own shares are not recorded in the income statement.

4.16 Fair value reservesFair value reserves include changes in the fair value, net of the related tax effect, of itemsrecorded at fair value with compensation in the Shareholders’ Equity.

4.17 Other reservesOther reserves are represented by specific capital reserves.

4.18 Retained earnings (loss carry-forwards)Retained earnings (loss carry-forwards) include the part not distributed and not accrued tomandatory reserve (in case of profits) or not balanced (in case of losses), of profits and lossesaccrued. The item includes also transfers from other equity reserves freed-up, in addition to theeffect of the change in accounting principles and relevant errors.


4.19 Employee benefits

Short-term benefitsShort-term employee benefits are recorded in the income statement over the period in whichthe employment takes place.

Post-retirement benefitsThe 2007 Budget Law (Law 296/2006) and related implementation regulations introduced,from January 1, 2007, substantial changes in norms regarding Employee TerminationIndemnities (TFR), among which the choice left to workers as to the destination of individualindemnities accruing from such date. In particular, new norms provide for the payment by thecompany of indemnities accrued from January 1, 2007 to the pension fund of choice or, in casethe worker has opted to maintain accrued benefits with the company, into a treasury accountset-up with INPS – the national Social Security Fund. These normative changes resulted in anew accounting treatment of Employee Termination Indemnities.Before the reform introduced with Law 296/2006, under international accounting principlesEmployee Termination Indemnities were considered as a “defined benefit plan”, while nowonly indemnities accrued up to December 31, 2006 continue to qualify as such, whileindemnities accrued after such date are treated as a “defined contribution plan” and thus allobligations of the company are fulfilled with the periodical payment of a contribution to otherentities. The amount recorded in the Income Statement is therefore no longer that of discountedback indemnities, but the amounts actually paid to the pension fund of choice of the employeeor the INPS treasury account, calculated pursuant to article 2120 of the Italian Civil Code.

Defined benefit plansEmployee termination indemnities (limited to the share accrued up to December 31, 2006 bycompanies with more than 50 employees) and Fixed indemnity for managers of newspapers aredetermined by independent actuaries to estimate the amount of the future benefits that theemployees have accrued at the Statement of Financial Position date. All actuarial effects arerecorded in the Income Statement.

Defined contribution plansThe Group participates in defined contribution plans contributing to mandatory, contractualor voluntary public or private pension plans. As already mentioned, Employee TerminationIndemnities accrued by companies with more than 50 employees, calculated pursuant to article2120 of the Italian Civil Code, are paid out to the different pension plans or to the separatetreasury service offered by INPS, as determined by individual employees. The payment of con-tributions extinguishes the obligation of the Group towards its employees. Contributionsconstitute therefore costs for the period in which they are due.

Financial asset-based compensationThe Group recognizes additional benefits to certain top managers through plans based onfinancial instruments. Plans adopted by the Group over time provide for the awarding of stock options or theattribution of extraordinary bonuses contingent on the achievement of a certain stock marketprice by the shares of the Company (phantom stock options).


Stock OptionsThe cost of such operations involving shares, recorded in the income statement among personnelcosts, is calculated based on the fair value of options at the time at which they are assigned. Thecost is recorded in the period included between the date at which the options are assigned and thatat which they become exercisable, and is recorded also under Shareholders’ Equity. The fair valueof the options thus determined is not updated or reviewed at the end of each accounting period.When options are exercised before or at expiration, the respective value recorded under Shareholders’Equity is reclassified under the “Share premium reserve”. Whenever options expire unexercised, onthe contrary, the related amount is reclassified under “Retained earnings (loss carry-forwards)”.In the transition to IFRS, the Group took advantage of a specific waiver and has not appliedthe above principles to stock option plans assigned before November 7, 2002.

Phantom stock optionsThe cost of such operations, recorded in the income statement, is calculated based on the fairvalue of options at the time at which they are assigned. The cost is recorded in the periodincluded between the date at which the rights are assigned and that at which they become exer-cisable, and is recorded also under the related liability item. Until the liability is cancelled, the fair value is recalculated at each accounting date and at thedate of the actual outlay, recording all changes in the income statement.

4.20 Provisions for risks and charges, potential assets and liabilitiesProvisions for risks and charges are accrued against possible liabilities whose amount and/ortiming is uncertain and whose fulfillment requires the use of financial resources. Provisionsare made exclusively when there exists an actual obligation, either legal or implicit, towardsthird parties that requires the use of financial resources, and whenever a reliable estimate ofthe obligation can be made. The provision recorded represents the best estimate of the liabilityrelating to the fulfillment of the obligation at the date of the financial statements. Provisionsmade are reviewed at each accounting date and adjusted to the best available estimate.Where the payment of the obligation takes place beyond normal payment terms and the dis-counting effect is relevant, the amount accrued is represented by the present value of expectedfuture payments needed to extinguish the obligation.Potential gains and losses are not recorded in the financial statements, though adequateinformation about the same is provided.

4.21 Financial liabilitiesFinancial liabilities are recorded initially at the fair value of amounts received or to be paid, netof transaction costs, and subsequently carried at the amortized cost.

4.22 Derivative instrumentsDerivative contracts are recorded in the Statement of Financial Position at fair value. The recordingof differences in the fair value varies according to the purpose of the derivative instrument(speculative or hedging) and the nature of the risk hedged (fair value hedge or cash flow hedge).In the case of contracts designated as speculative, changes in the fair value are recorded directlyin the income statement. In the case of contracts designated as hedging contracts, the Group documents the relationshipwith the instrument hedged at the time it enters into the contract. The documentation includes


the identification of the hedging contract, the item or operation hedged, the nature of the riskhedged, the criteria with which the effectiveness of the hedging contract will be evaluated, andthe related risk. The effectiveness of the hedge is evaluated by comparing fluctuations in thefair value or the cash flow of the instrument hedged with fluctuations in the fair value or thecash flow of the hedging instrument. The effectiveness of the hedge is evaluated both at thestart of the operation and regularly throughout the duration of the hedge. The evaluation is inany case carried out at least at each accounting date. More specifically, the hedge is consideredas efficient when the fluctuation in the fair value or the cash flow of the instrument is “almostentirely” offset by the fluctuation in the fair value or cash flow of the hedging instrument andresults are included in an interval between 80% and 125%.Fair Value Hedge instruments are accounted for by recording in the income statement changesin the fair value of the hedging instrument and the instrument covered, regardless of thevaluation criteria adopted for the latter. Adjustments to the book value of hedged financialinstruments generating interest are amortized in the income statement over the residual term ofthe asset/liability hedged using the effective interest rate method.Cash Flow Hedge instruments are accounted for by suspending under Shareholders’ Equity theportion of the change in the fair value of the hedging instrument which is recognized aseffective, while recording in the income statement the ineffective part. Changes recordeddirectly under Shareholders’ Equity are released to the income statement in the same year or inthe years in which the asset or liability hedged influences the income statement.The effect on the financial statements of the termination of a hedge contract are recorded differentlyfor Fair Value Hedges and Cash Flow Hedges. In the case of Fair Value Hedges the underlyinginstrument recorded in the financial statements ceases to be hedged from the date at which thehedging contract is terminated and the instrument is thus again valued according to the method usedin absence of a hedge. In case of financial instruments valued at the amortized cost, the differencebetween the valuation at the fair value of the risk covered and the amortized cost at the date of thetermination of the hedge-accounting period, is amortized over the residual life of the financialinstruments based on rules used in the calculation of the effective rate of interest. In the case of CashFlow Hedges, the gain or loss suspended in the Shareholders’ Equity remain suspended until thetransaction takes place, when it is no longer probable or it is no longer expected to be carried out,or when flows originally hedged have an impact on the income statement.

4.23 Cost and revenue recognitionRevenues from the disposal of assets are valued at the fair value of the amount received orreceivable, keeping into account trade discounts, where appropriate. Revenues from the provision of services are accounted for under the percentage of completionmethod, defined as the ratio between the amount of services provided at the accounting dateand the total value of services to be provided. Revenues are recorded in accordance with the following criteria:• revenues from the sale of publications are recorded at the time of shipping, net of related returns;• revenues from the sale of advertising are recorded at the time of publication.Costs are recorded according to criteria in line with those applied for revenues, and in any caseunder the accrual method.Interest received and paid is recorded based on the accrual method, keeping into account theeffective rate of interest applicable to maturity.Dividends are recorded in the period in which distribution is resolved.


4.24 TaxesIncome taxes are calculated based on expected taxable income and current tax regulations.Deferred and prepaid taxes arising from timing differences between the profit reported in thefinancial statements and that reported for tax purposes, and the carry-forward of losses andtax credits not retrieved, are also recorded, provided their retrieval (elimination) reduces(increases) future tax payments with respect to the amount that would be payable in the futurein case such retrieval (elimination) did not have a tax effect. The tax effect of operations orother events are recorded in the income statement or directly under Shareholders’ Equity in thesame manner as operations or events that originate a tax liability and on the basis of tax ratesapplicable at the Statement of Financial Position date. In case of changes in the said tax rates,the book value of deferred tax assets and liabilities is adjusted and entries are made in theincome statement or under Shareholders’ Equity as appropriate.

4.25 CurrencyEntries in the financial statements of each Group company are recorded in the currency of theprimary economic environment in which each company operates (“functional currency”). Theconsolidated financial statements are prepared in euro, which is the functional currency of theparent company.Transactions denominated in other currencies are translated into the functional currency at theexchange rate at the date of the transaction. Foreign-exchange gains and losses arising from thesettlement of these transactions and the translation of assets and liabilities denominated in cur-rencies other than the functional currency are recorded in the income statement.

5. Segment InformationThe determination of sectors of activity of the Group and the presentation of the related infor-mation was carried out, in accordance with IFRS 8, on the basis of periodical internal reportsused by management to allocate resources and analyze results.The adoption of the new principle did not imply a significant revision of segmentation criteriaused in the past, which were already consistent with internal reports, based on goods andservices made. In particular, as the Group’s risks and returns are influenced exclusively by dif-ferences in products and services rendered, the reporting schedule adopted by the Group is thebreakdown by type of activity, while information by geographical area is not applicable and istherefore not provided. For assets that cannot be attributed to an individual sector, specificparameters were applied in their attribution. Assets of the “National newspapers-Periodicals”and “Radio-Internet” sectors, are grouped together because the distinctives of the sectors, withparticular reference to the marketing of editorial products, do not allow for an objectiveassessment of individual values. Assets that may not be attributed using specific parameters arereported separately in the table below.Transactions between sectors are carried out at remunerative terms, in line with marketconditions applicable to the respective sectors.Accounting principles under which segment information is reported in the notes are consistentwith those adopted in the preparation of the consolidated financial statements.



Segment information

2009 National Add-on Local Other Elisions and (in millions of euro) newspapers Periodicals products newspapers Radio Internet Television Advertising activities adjustments TOTAL

Circulation revenues 131.3 24.1 94.8 126.1 0.6 0.0 - 0.2 - (2.3) 374.8

Advertising revenues 208.9 18.3 0.5 98.0 64.0 2.0 6.8 495.3 1.0 (398.0) 496.9

Other revenues 7.6 1.5 1.6 3.6 5.3 13.0 2.0 1.8 59.2 (80.6) 15.0

Total revenues 347.8 43.9 97.0 227.8 69.9 15.1 8.8 497.3 60.2 (480.9) 886.6

Revenues from other sectors (218.4) (19.3) (1.3) (101.8) (67.8) (13.0) (7.6) (2.5) (58.7) 490.6 -

Net revenues 129.4 24.5 95.6 126.0 2.1 2.1 1.1 494.7 1.5 9.6 886.6

Operating profit (2.5) (5.2) 24.3 32.6 20.7 0.4 (11.5) - 5.3 (0.3) 63.9

Financial income (expense) (19.6)

Taxes and minority interests (38.5)

Group net profit 5.8

2008 National Add-on Local Other Elisions and (in millions of euro) newspapers Periodicals products newspapers Radio Internet Television Advertising activities adjustments TOTAL

Circulation revenues 132.1 26.7 107.7 129.1 0.5 0.0 - 0.2 - (5.2) 391.2

Advertising revenues 263.6 28.3 0.8 115.2 73.3 2.9 16.0 606.1 1.6 (499.4) 608.2

Other revenues 9.1 1.7 3.7 6.2 5.3 11.3 2.3 2.3 76.0 (91.7) 26.2

Total revenues 404.8 56.7 112.3 250.4 79.0 14.2 18.2 608.6 77.6 (596.3) 1,025.5

Revenues from other sectors (271.8) (29.3) (1.6) (117.0) (75.1) (12.1) (16.0) (3.6) (69.8) 596.3 -

Net revenues 132.9 27.4 110.7 133.4 4.0 2.1 2.2 605.0 7.9 (0.1) 1,025.5

Operating profit 5.2 (2.2) 33.6 42.2 27.2 (0.8) (13.9) - 3.8 0.1 95.3

Financial income (expense) (19.6)

Taxes and minority interests (55.1)

Group net profit 20.6

National 2009 newspapers and Local Radio and Other Elisions and (in millions of euro) periodicals newspapers Internet Television Advertising activities adjustments TOTAL

Net capital expenditure 4.1 18.8 3.0 3.7 (0.7) (4.6) - 24.5

Assets 1,020.1 392.9 116.7 194.2 215.2 85.6 (698.7) 1,326.0

Deferred tax assets 69.2

Total Assets 1,395.2

National 2008 newspapers and Local Radio and Other Elisions and (in millions of euro) periodicals newspapers Internet Television Advertising activities adjustments TOTAL

Net capital expenditure 13.5 17.2 11.6 6.0 0.2 6.5 - 55.0

Assets 1,015.2 406.5 118.2 192.5 250.1 103.5 (742.6) 1,343.5

Deferred tax assets 68.5

Total Assets 1,411.9


6. Change in accounting principles, errors and adjustments to estimates Accounting principles adopted are modified from one financial year to the next only in casethe change is required by an accounting principle or it contributes to provide more reliableand relevant information on the effect of transactions carried out on the financial position,economic performance or financial flows of the entity involved.The effect of changes in accounting principles is recorded retrospectively in the Shareholders’Equity for the first accounting year in which the change is introduced, and comparative infor-mation is adapted accordingly. Such approach is adopted only when it is impractical torestate the accounts for comparative purposes. The application of a new or modifiedaccounting principle is accounted for as required by the same principle. In case the principledoes not provide for the transition, the change is accounted for under the retrospectivemethod or, when this is impractical, through the use of projections.In case of relevant errors, the method described in the paragraph above with reference toaccounting principles applies. In case of immaterial errors, the recording is carried out in theincome statement in the period in which it is detected.Changes in estimates that have an impact exclusively on the income statement are accountedfor through the use of projections in the same in the year in which the review takes place incase changes affect only such year, or in the year in which the review takes place and in sub-sequent years in case the change has an impact also in subsequent accounting periods.

7. Subsequent eventsEvents occurred after the date of the financial statements are events occurred between suchdate and the date at which the publication of the same is authorized. The date of approvalfor the publication of the financial statements is the date at which the Board of Directorsapproves them. Such date is indicated in note 1.Subsequent events relate to facts that provide evidence of situations existing at the date of thefinancial statements (subsequent events that imply adjustments) or facts providing evidenceof situations after the Statement of Financial Position date (subsequent events that do notrequire adjustments). The effect related to the first is recorded in the financial statements andthe appropriate note is adjusted accordingly, while in the second case only relevantinformation is provided in the notes, where relevant.

8. New IFRS and IFRIC interpretations Accounting principles, amendments and interpretations adopted in 2009The accounting principles, amendments and interpretations applied for the first time by theGroup from January 1, 2009 that generated relevant effects on the consolidated financialstatements are the following:

IAS 1 Revised - Presentation of Financial Statements: the revised version of IAS 1 no longerallows the presentation of income items such as income and expense (defined as “changesgenerated by non-shareholder transactions) in the Statement of Changes in Equity, requiringa separate indication from the changes generated by transactions with shareholders.According to the revised version of IAS 1, in fact, all changes generated by transactions withnonshareholders must be shown in a single separate statement showing the performance for

the period (consolidated statement of comprehensive income) or in two separate statements(a consolidated income statement and a consoldated statement of comprehensive income).These changes must be shown separately even in the Statement of Changes in Equity. TheGroup applied the revised version of this standard retrospectively as from January 1 2009,opting to show all changes generated by transactions with non shareholders in twostatements showing performance for the period, entitled “Consolidated Income Statement”and “Consolidated Statement of Comprehensive Income” respectively.

IFRS 8 - Operating segments: this standard requires disclosure to be given on the operatingsectors of the Group and replaces the need to determine the primary reporting segment(business) and the secondary reporting segment (geographical) of the Group. The adoption of this amendment did not affect the financial position or the performance ofthe Group.The Group established that the operating sectors were the same as those establishedpreviously in accordance with IAS 14 Segment reporting. The information on this subject isgiven in Note 5.

Amendment to IFRS 7 - Financial instruments: Additional disclosures: the improvement,applicable as from January 1 2009, was issued with a view to increasing the level ofdisclosure when measuring instruments at fair value and to boosting the effect of the existingprinciples on the subject of disclosures regarding the liquidity risk of financial instruments.In particular, the amendment requires disclosure to be given of the way the fair value meas-urement of financial instruments is carried out on the basis of a ranking. The adoption of thisstandard had effects only on the type of information given in the Notes.

IAS 23 Revised - Borrowing costs: the revised version of this standard no longer has theoption, adopted by the Group until December 31, 2008, allowing borrowing costs to be rec-ognized immediately to the income statement when incurred for an investment in assetswhich normally require a certain period of time to be prepared for use or for sale (qualifyingassets). Moreover this version of the standard was amended as part of the Improvement 2008process conducted by the IASB, with the aim of revising the definition of borrowing costs tobe considered for capitalization. No significant accounting effects were picked up in 2009 as a result of the adoption of this principle.

Amendment to IFRS 2 - Vesting conditions and cancellation: the amendment establishes thatfor the purposes of measuring share-based payments, only the servicing and performanceconditions can be considered as vesting conditions of the plans. Any other clauses must beconsidered as non-vesting conditions and incorporated into the fair value calculation at theaward date of the plan. The amendment also clarifies that, in the event of cancellation of theplan, the same accounting treatment should be applied whether the cancellation originatesfrom the company or from the counterparty.This principle was applied retrospectively by the Group from January 1 2009. However fromits application no accounting effects have emerged for the Group.

Improvement to IAS 19 - Employee benefits: the improvement clarifies the defintion ofcost/income in relation to past period of service and establishes that in the event of the


reduction of a plan, the effect immediately recognizable to the income statement must includeonly the reduction of the benefits for future periods, while the result of any reductions relatingto past period of service must be considered as a negative cost in relation to past service. Since no changes in plans have taken place as from Jenuary 1, 2009, no accounting effectswere noted.

Improvement to IAS 28 - Investments in associates: the improvement establishes that forinvestments consolidated using the equity method any impairment is not allocated to the indi-vidual asset (and in particular to goodwill) constituting the carrying amount of theinvestment, but to the value of the investment as a whole. Thus if the conditions exist for asubsequent recovery of value, this must be recognized in full.Since no accounting effects resulted from the adoption of this new principle, the Group didnot mark up the value of any goodwill included in the carrying amount of its investments.

Amendments and interpretations applied as from January 1 2009 but not relevant for the GroupThe following amendments and interpretations, applicable as from January 1 2009, regulatesituations not present at this financial statement date:- Improvement allo IAS 16 - Immobili, impianti e macchinari;- Improvement allo IAS 20 - Contabilizzazione e informativa dei contributi pubblici;- Improvement allo IAS 38 - Attività immateriali;- Emendamento allo IAS 32 - Strumenti finanziari: Presentazione e allo IAS 1 – Presentazione del Bilancio - Strumenti finanziari; - Improvement allo IAS 29 - Informazioni contabili in economie iperinflazionate;- Improvement allo IAS 36 - Perdite di valore di attività;- Improvement allo IAS 39 - Strumenti finanziari: rilevazione e valutazione;- Improvement allo IAS 40 - Investimenti immobiliari;- IFRIC 13 - Programmi di fidelizzazione dei clienti;- IFRIC 15 - Contratti per la costruzione di beni immobili;- IFRIC 16 - Copertura di una partecipazione in un’impresa estera.

Accounting principles, amendments and interpretations not yet applicable for which theGroup has not opted for early applicationThe Group did not opt for the early adoption of the following principles, interpretations andupdates of principles already published and approved by the European Union, whoseadoption is mandatory from January 1, 2009 and for which the Group is evaluating the effectof the adoption of the same:

IAS/IFRS and IFRIC interpretation Effective

IFRS 3 (revised in 2008) - Business Combinations July 1, 2009Amendments to IAS 27 - Consolidated and Separate Financial Statements July 1, 2009Amendments to IAS 39 - Financial Instruments: Recognition and Measurement, Hedge Accounting. July 1, 2009IFRIC 17 - Distributions of Non-cash Assets to Owners November 1, 2009 IFRIC 18 - Transfers of Assets from Customers November 1, 2009 Improvements to IFRS (2008) - Amendments to IFRS 5 July 1, 2009Amendments to IAS 32 - Classification of Rights Issues February 1, 2010


The Group is currently evaluating the possible impact of the adoption of the principles andinterpretations listed below, for which at the date of the present financial statements,competent EU Authorities have not yet concluded the approval process.

IAS/IFRS and IFRIC interpretation EffectiveAmendment to IFRIC 14 – Prepayments of a Minimum Funding Requirement January 1, 2011IFRIC 19 – Extinguishing Financial Liabilities with Equity Instruments July 1, 2010Improvements to IFRS (2009) January 1, 2010 Amendments to IFRS 2 Group Cash-settled Share-based Payment Transactions January 1, 2010Amendments to IFRS 1 - Additional Exemptions for first time adopters January 1, 2010Revised IAS 24 (revised in 2009) – Related party Disclosures January 1, 2011

IFRS 9 – Financial instruments January 1, 2013

9. Main causes of uncertainty over estimatesEstimates are made primarily in the context of the recording of write-downs in the value ofassets, to estimate returns of publications, provisions for bad accounts, employee benefits,taxes and other provisions. Estimates and assumptions are reviewed periodically and theeffect of each resulting change are reflected immediately in the income statement. Inparticular, the current uncertain outlook for the short and medium term, accompanied by thecontraction of advertising sales, has made estimates of future performance and cash flow pro-jections difficult. These projections are used in the determination of the value in use of Cashgenerating unit to assess the retrievability of the book value of intangible assets with anindefinite useful life and that of equity investments, and, given the current situation, it cannottherefore be ruled out that actual performance may diverge in the future from estimates. Cir-cumstances and events that may affect future performance will be monitored closely by man-agement, that will assess on an ongoing basis possible losses in the value of assets and, wherenecessary, adjust the book value of the same accordingly.Estimates of returns of publications and the related add-on products are carried out monthlyand constantly updated through the use of statistical methods applied to up-to-dateinformation on sales. Estimates of legal risks keep into account the nature of the litigationpending (civil and penal). Estimates for homogeneous risk are weighted against theperformance in the previous three years. Historical data shows a stable trend.

10. Consolidation area At December 31, 2009, subsidiary Edigraf Srl, sold in October 2009, was no longer includedin the consolidation, while subsidiary Ksolutions SpA, currently being liquidated and nolonger operational, was consolidated at cost instead of line by line basis as was the case atDecember 31, 2008. With regard to consolidated companies valued at cost, we note thedisposal of the investment in E-Ink Corporation and the completion of the liquidation ofUhuru Multimedia Srl, already not operational at December 31, 2008.The consolidation area has undergone changes from December 31, 2008 due to the mergerof subsidiaries already consolidated line-by-line with the parent company. In particular:


• on July 21, 2009, subsidiaries EAG SpA, Edizioni Nuova Europa SpA, Editoriale La Cittàdi Salerno SpA were merged by incorporation into Finegil Editoriale SpA, and subsidiariesRotonord SpA and Saire Srl were merged by incorporation into Rotocolor SpA;

• on September 21, 2009, subsidiaries CPS SpA and Selpi SpA were merged by incorporationinto Gruppo Editoriale L’Espresso SpA;

• on December 1, 2009, subsidiary Kataweb News was merged by incorporation intoElemedia SpA.

Companies included in the consolidation area are listed in Attachment 1.

11. Notes to balance sheet statement of financial position items

Assets

Intangible assets (1)Intangible assets are made up as follows:

Dec. 31, 2008 Dec. 31, 2009Publications and trademarks 400,245 400,245Frequencies 218,502 218,901Goodwill 37,346 37,273Industrial patents and intellectual property rights 95 93Concessions and licenses 3,861 2,880Assets in process & advance payments 344 106Other intangible assets 11 40

TOTAL INTANGIBLE ASSETS 660,404 659,538of which:Intangible assets with an indefinite useful life 656,093 656,419Intangible assets with a defined useful life 4,311 3,119

Research and Development costs were not capitalized and no revaluation of intangible assetswas carried out.The breakdown of intangible assets and changes in the period are shown in the tables thatfollow.


Intangible assets with an indefinite useful life

Publications and trademarksDec. 31, 2009

Opening balanceOriginal cost 400,245Accumulated amortization and write-downs -Opening balance 400,245ADJUSTMENTS TO ORIGINAL COSTIncreases -Decreases -Reclassifications -Closing balanceOriginal cost 400,245Accumulated amortization and write-downs -Closing balance 400,245

FrequenciesDec. 31, 2009

Opening balanceOriginal cost 218,502Accumulated amortization and write-downs -Opening balance 218,502ADJUSTMENTS TO ORIGINAL COSTIncreases 399Decreases -Reclassifications -Closing balanceOriginal cost 218,901Accumulated amortization and write-downs -Closing balance 218,901

GoodwillDec. 31, 2009

Opening balanceOriginal cost 37,346Write-downs -Opening balance 37,346ADJUSTMENTS TO ORIGINAL COSTIncreases -Decreases (73)Reclassifications -Closing balanceOriginal cost 37,273Write-downs -Closing balance 37,273


A detailed list of intangible assets with an indefinite useful life and the respective book valuefor the current year and the previous one are shown in the table below:

Book value at Book value atDec. 31, 2008 Dec. 31, 2009

1. La Repubblica 229,952 229,9522. La Nuova Sardegna 6,113 6,1133. Finegil Editoriale publications (North-West, Padua, Livorno and Central-South Divisions) 49,989 49,9894. Editoriale FVG publications - Messaggero Veneto 62,742 62,7425. Editoriale FVG publications - Il Piccolo) 41,785 41,7856. Alto Adige 5,120 5,1207. Free Press 3,372 3,3728. Radio frequencies (Radio Deejay, Radio Capital, m2o) 80,219 80,6189. TV frequencies (Rete A – All Music) 138,283 138,28310. Deejay trademark 1,171 1,17111. All Music –Rete A goodwill 34,840 34,840Goodwill of other activities 2,507 2,434TOTAL 656,093 656,419

The impairment test carried out at December 31, 2009 on publications, radio and TVfrequencies, trademarks and goodwills, considered assets having an indefinite useful life, didnot result in the emergence of losses in value to be recorded in the financial statements. The expected retrievable value of assets was estimated based on fair value less cost to sell andvalue in use.The table that follows shows main information used to carry out the impairment test for eachcash generating unit or group of units whose value is significant:

Cash Generating Unit Criterion used Sector Impairment loss1. La Repubblica Value in use National newspapers -2. La Nuova Sardegna Value in use Local newspapers -3 Finegil Editoriale publications (North-West, Padua, Livorno and Central-South Divisions) Value in use Local newspapers -

4. Editoriale FVG publications - Messaggero Veneto Value in use Local newspapers -5. Editoriale FVG publications - Il Piccolo Value in use Local newspapers6. Alto Adige Value in use Local newspapers -7. Free Press Value in use Local newspapers -8. Radio: Deejay frequencies and trademark Fair Value/Value in use Radio -9. TV: frequencies and goodwill Fair value Television -

Determination of value in use of Cash generating unitThe value in use of Cash generating unit was determined by discounting back – at anappropriate rate – future cash flows, both positive and negative, generated by the unit in itsproductive phase and upon disposal. In other terms, the value in use was estimated byapplying the Discounted Cash Flow model using the unlevered (or asset side) version thatapplies a formula that includes the discounting back of cash flows analytically expected


during the period of the anticipatory plans (2010-2014) and the expected terminal value ofthe cash generating unit. In order to estimate correctly the value in use of a Cash Generating Unit, it has been nec-essary to estimate the cash flows generated by it over time; expectations regardingpossible fluctuations in the amount and timing of cash flows; the discounting back rateto be applied; possible risk factors inherent in the long-term nature of the capitalinvestment made in the unit.With regard to the characteristics of cash flows to be discounted, internationalaccounting principles explicitly require that in the estimation of the discounted value,positive and negative cash flows generated by financial management and financial flowsrelating to taxes must not be taken into account. Cash flows to be discounted aretherefore only operating cash flows, unlevered and differential (as they relate to thespecific unit).In the specific case the discounting rate adopted is the average cost of capital employedby the Espresso Group (WACC), equal to 9.1%.

The determination of fair value less costs to sell of Cash generating unitIAS 36 establishes that the fair value less costs to sell of an asset or a group of assets (forexample a Cash Generating Unit) is best expressed through a price “set” in a binding saleoffer between independent parties, net of direct costs incurred in the disposal of theasset. In case such evidence does not exist, the fair value net cost to sell can bedetermined making reference, in order of importance, to the following values: the currentprice negotiated in an active market; the price recorded in previous similar transactions;the price estimated on the basis of other information gathered by the company.In the specific case, the fair value less cost to sell was determined following a differentapproach according to the publishing activity for which, in absence of an active tradingmarket, direct multiples were used (Enterprise value/Sales, Enterprise Value/EBITDA,Enterprise Value/EBIT), and assets in the radio and television sector, for which aprice/users type of multiple was adopted (Enterprise Value/population reached by thesignal), observing transfer prices of similar frequencies in relation to the populationpotentially reached by the related signal.To determine the possible “price” of a Cash Generating Unit in the publishing sector,entity side multiples, either of the trailing (historical/punctual multiples) or leading(expected/average multiples) indicator type.The estimated fair value less cost to sell of operating units in the radio and televisionsector was calculated based on prices recorded on the sale of similar frequencies, verifiedthrough an assessment of the potential audience reached by the signal. The use of thisapproach allows to estimate the fair value of radio and television frequencies bycorrelating the market price of the frequency and the number of inhabitants reached bythe signal.

Main assumptions on which the 2010-2014 anticipatory plans and sensitivity analysisare basedResults and operating cash flows generated by individual CGUs of the Group were cal-culated based on the 2010-2014 anticipatory plans drafted by management on the basis


of reasonable assumptions consistent with historical data. These represent the bestestimate of the economic conditions prevailing in the period considered. The first year ofthe anticipatory plans corresponds to the lust budget prepared for 2010 and approved bythe Board of Directors on January 12, 2010.As already mentioned in note 9 above, the current uncertainties regarding the short andmedium term outlook induced management to review expected growth rates of profitsand margins.With regard to the Group’s advertising revenues, a stable trend had been forecated for2010, in a market expected by major operators to show a further slight decline, thanksto sales efficiency improvements achieved. Starting with the second year of the plan(2011), a gradual recovery was forecasted, taking advertising revenues in 2014 back tolevels recorded in 2008. With regard instead to circulation revenues, the 2010-2014anticipatory plan predicted a performance of the different pubblications in line with therespective trends registered in the last two years. .It should also be noted that in the determination of the terminal value of cash generatingunits, a zero growth rate was prudentially used.With regard to the cash generating units that had a value of the masthead and/orfrequency and/or goodwill considered relevant for the purposes of the consolidatedfinancial statements and for which impairment tests carried out showed a positivedifference between the fair value less cost to sell and/or of the value in use with respectto the carrying amount of the same that was lower than 50%, a sensitivity analysis ofresults was carried out to determine which combination of variables would equalize theretrievable value of the CGU in question with its carrying amount.In particular, for the publishing CGUs, this analysis for the “Messaggero Veneto” and “IlPiccolo” CGU gave the following results:• in the case of the Messaggero Veneto CGU, value in use would be equal to thecarrying amount assuming a 6% decline in advertising revenues from 2011 and a 4.5%decline in the number of copies sold. As an alternative, taking as valid the assumptionsregarding circulation and advertising revenues contained in the 2010-2014 anticipatoryplan, value in use would be equal to the carrying amount if the discount rate of expectedcash flows (wacc pre-tax) were 13.8% instead of the 9.1% currently used;• in the case of the Il Piccolo CGU, value in use would be equal to the carrying amountassuming a growth rate for advertising of 2% starting from 2011 and a 2% decline inthe number of copies sold. As an alternative, taking as valid the assumptions regardingcirculation and advertising revenues contained in the 2010-2014 anticipatory plan, valuein use would be equal to the carrying amount if the discount rate of expected cash flows(wacc pre-tax) were 10.8% instead of the 9.1% currently used.Moreover, in the case of CGUs in the radio and television sector, the parameter used todetermine the fair value less cost to sell ranged from 1.5 to 3 times the number ofinhabitants reachable by the FM broadcasting stations of the Radio Deejay, RadioCapital and m2o, while for Cash Generating Units in the television sector, the parameterapplied is included between 3.4 and 3.8 times. In the latter case, the fair value of the ReteA – All Music CGU would be equal to its carrying amount using a price multiplier of 2.3times the number of inhabitants reached by the signal. Due to the scarcity of recent trans-actions involving television frequencies in Italy, the value in use of frequencies used toconfirm the retrievable value recorded in the financial statements, was calculated


assuming, among other paramenters, a growth in revenues from the lease of digital fre-quencies linked to the gradual transition from analog to digital television, in line withthe national plan for the switch-off of analog broadcasting.

Other intangible assetsThe table below shows the useful life of intangible assets having a definite useful life and theamortization rate used:

Useful life Amortization rateIndustrial patents and intellectual property rights 3 years 33.33%Concessioni e licenze 3-5 anni 20,00%-33,33%Concessions and licenses 3-5 years 20%-33.33%

The breakdown and changes in intangible assets is shown below:

Industrial patents and intellectual property rights Dec. 31, 2009Opening balance Original cost 4,611Accumulated amortization and write-downs (4,516)Opening balance 95ADJUSTMENTS TO ORIGINAL COST Increases -Decreases -Acquisition/(disposal) of companies (17)Reclassifications -ADJUSTMENTS TO PROVISIONS Increases -Decreases -Acquisition/(disposal) of companies 15Reclassifications -Closing balance Original cost 4.594Accumulated amortization and write-downs (4.501)Closing balance 93


Concessions and licenses Dec. 31, 2009Opening balance Original cost 41.933Accumulated amortization and write-downs ( 38.072)Opening balance 3.861ADJUSTMENTS TO ORIGINAL COST Increases 1.391Decreases (464)Acquisition/(disposal) of companies (2.442)Reclassifications 116

ADJUSTMENTS TO PROVISIONS Increases (2.473)Decreases 465Acquisition/(disposal) of companies 2.395Reclassifications 31Closing balance Original cost 40.534Accumulated amortization and write-downs (37.654)Closing balance 2.880

Assets in process and advance payments Dec. 31, 2009Opening balance Original cost 344Opening balance 344

ADJUSTMENTS TO ORIGINAL COST Increases 103Decreases -Reclassifications (341)Closing balance Original cost 106Closing balance 106


Other intangible assetsDec. 31, 2009

Opening balanceOriginal cost 4,628Accumulated amortization and write-downs (4,617)Opening balance 11ADJUSTMENTS TO ORIGINAL COSTIncreases 40Decreases -Acquisition/(disposal) of companies (30)Reclassifications 31ADJUSTMENTS TO PROVISIONSIncreases -Decreases -Acquisition/(disposal) of companies 19Reclassifications (31)Closing balanceOriginal cost 4,669Accumulated amortization and write-downs (4,629)Closing balance 40

Property, plant and equipment (2)The breakdown of the category is shown below: Dec. 31, 2008 Dec. 31, 2009Land 8,685 8,812Buildings and construction 55,090 52,394Leasehold improvements 15,408 13,245Plant and machinery 126,243 117,772Technical equipment 316 204Furniture, fixtures and vehicles 10,736 8,127Assets under construction 3,659 2,536Other assets 843 527TOTALE IMMOBILIZZAZIONI MATERIALI 220.980 203.617


In view of the homogeneity of assets recorded in the Statement of Financial Position, barringspecific relevant cases, the expected useful life of assets by category and the relateddepreciation rates is as follows:

Useful life Depreciation rateLand - -Industrial and civil buildings 33 years 3%Printing plants 7 years 15,5%Generic plant 10 years 10%Other plant 5 years 20%Rotary presses 5 years 20%Full color rotary presses 10 years 10%Industrial equipment 4 years 25%Vehicles 4 years 25%Furniture, fixtures and ordinary equipment 8 years 12.5%PCs and audio-video equipment 3 years 33%Editorial systems 4 years 25%Leasehold improvements Term of contract Term of contract

A breakdown of property, plant and equipment owned and assets held under a leasingcontract is included in the tables that follow.

Land Dec. 31, 2009Opening balance Original cost 8,685Write-downs -Opening balance 8,685ADJUSTMENTS TO ORIGINAL COST Increases 345Decreases (202)Acquisition/(disposal) of companies (16)Reclassifications -Closing balance Original cost 8,812Write-downs -Closing balance 8,812of which: Leasing principal 129Guarantees and commitments 1,039


Industrial and civil buildings Dec. 31, 2009Opening balance Original cost 87,030Accumulated amortization and write-downs (31,940)Opening balance 55,090ADJUSTMENTS TO ORIGINAL COST Increases 350Decreases (546)Acquisition/(disposal) of companies (492)Reclassifications 356ADJUSTMENTS TO PROVISIONS Increases (2,597)Decreases 94Acquisition/(disposal) of companies 145Reclassifications (6)Closing balance Original cost 86,698Accumulated amortization and write-downs (34,304)Closing balance 52,394of which: Leasing principal 796Accumulated depreciation on leased assets (224)Guarantees and commitments 6,707


The leased building in Rimini is held by subsidiary A. Manzoni&C. and it hosts offices. Thecontract was stipulated on December 11, 2000 with leasing company UBI Leasing SpA basedin Brescia, and has a term of 144 months. The value of the building, assessed through an inde-pendent survey, on which leasing payments were calculated, is €644 thousand and is in linewith market value. The book value includes accessory costs of the leasing contract amountingto €97 thousand and €184 thousand of leasehold improvement costs. Interest is calculatedat a fixed rate of interest set in the contract. The cumulative value of leasing payments isequal to €876 thousand and includes the principal amount, interest and the value of the buy-back option, worth €6 thousand.

Leasehold improvements Dec. 31, 2009Opening balance Original cost 46,656Accumulated amortization and write-downs (31,248)Opening balance 15,408ADJUSTMENTS TO ORIGINAL COST Increases 1,415Decreases (414)Acquisition/(disposal) of companies (119)Reclassifications 344ADJUSTMENTS TO PROVISIONS Increases (3,857)Decreases 413Acquisition/(disposal) of companies 32Reclassifications 23Closing balance Original cost 47,882Accumulated amortization and write-downs (34,637)Closing balance 13,245


Plant and machinery Dec. 31, 2009Opening balance Original cost 467,249Accumulated amortization and write-downs (341,006)Opening balance 126,243ADJUSTMENTS TO ORIGINAL COST Increases 13,596Decreases (53,042)Acquisition/(disposal) of companies (1,218)Reclassifications 6,831ADJUSTMENTS TO PROVISIONS Increases (28,702)Decreases 53,189Acquisition/(disposal) of companies 867Reclassifications 8Closing balance Original cost 433,416Accumulated amortization and write-downs (315,644)Closing balance 117,772of which: Leasing principal 10,846Accumulated depreciation on leased assets (10, 846)Guarantees and commitments 211,461

Liens on plant and equipment relate to secured guarantees in favor of banks that extended in2005 subsidized loans on rotary presses, printing equipment and similar equipment.


Technical equipment Dec. 31, 2009Opening balance Original cost 3,371Accumulated amortization and write-downs (3,055)Opening balance 316ADJUSTMENTS TO ORIGINAL COST Increases 52Decreases (32)Acquisition/(disposal) of companies (15)Reclassifications 10ADJUSTMENTS TO PROVISIONS Increases (165)Decreases 33Acquisition/(disposal) of companies 12Reclassifications (7)Closing balance Original cost 3,386Accumulated amortization and write-downs (3,182)Closing balance 204of which: Guarantees and commitments 183

Furniture, fixtures and vehicles Dec. 31, 2009Opening balance Original cost 81,792Accumulated amortization and write-downs (71,056)Opening balance 10,736ADJUSTMENTS TO ORIGINAL COST Increases 2,003Decreases (1,294)Acquisition/(disposal) of companies (237)Reclassifications 237ADJUSTMENTS TO PROVISIONS Increases (4,504)Decreases 1,250Acquisition/(disposal) of companies 145Reclassifications (209)Closing balance Original cost 82,501Accumulated amortization and write-downs (74,374)Closing balance 8,127of which: Guarantees and commitments 90


Assets under construction and advance payments Dec. 31, 2009Opening balance Original cost 3,659Opening balance 3,659ADJUSTMENTS TO ORIGINAL COST Increases 6,329Decreases (91)Acquisition/(disposal) of companies (2)Reclassifications (7,359)Closing balance Original cost 2,536Closing balance 2,536

Other assets Dec. 31, 2009Opening balance Original cost 10,160Accumulated depreciation and write-downs (9,317)Opening balance 843ADJUSTMENTS TO ORIGINAL COST Increases 219Decreases (25)Acquisition/(disposal) of companies (4,400)Reclassifications (225)ADJUSTMENTS TO PROVISIONS Increases (430)Decreases 24Acquisition/(disposal) of companies 4,330Reclassifications 191Closing balance Original cost 5,729Accumulated depreciation and write-downs (5,202)Closing balance 527of which: Leasing principal 952Accumulated depreciation on leased assets (673)

Assets held under a financial lease relate primarily to subsidiary A. Manzoni&C. that leasescomputers. These contracts were stipulated with leasing company ECS International Italiarespectively on November 13, 2006, on February 26, 2007, June 1, 2008, May 1, 2009,November 1, 2009, and December 1, 2009, all for a term of 48 months. The cumulative valueof the assets leased amounts to €952 thousand. Interest is set at a fixed rate and leasepayments amount to €1,030 thousand, inclusive of principal and interest.


Investments valued at equity (3)

The table that follows shows investments valued at equity and the percentage share owned.

% ownershipDec. 31, 2008 Dec. 31, 2009

Le Scienze SpA 50% 50%Editoriale Corriere Romagna Srl 49% 49%Editoriale Libertà SpA 35% 35%Altrimedia SpA 35% 35%Premium Publisher Network Consorzio - 29.63%

The tables that follow show changes in investments valued at equity:

Dec. 31, 2008 Increase Decrease Dividends Net profit Dec. 31, 2009Le Scienze SpA 385 - - (309) 282 358Editoriale Corriere Romagna Srl 3,035 - - - (43) 2,992Editoriale Libertà SpA 23,560 - - - 647 24,207Altrimedia SpA 770 - - (140) 127 757Premium Publisher Network Consorzio - 20 - - - 20TOTAL INVESTMENTS VALUED AT EQUITY 27,750 20 - (449) 1,013 28,334

The impairment test carried out at December 31, 2009 on Editoriale La Libertà andEditoriale Corriere di Romagna resulted in values in line with those at which the twoinvestments are carried.The retrievable value of investments in Editoriale Libertà and Editoriale Corriere di Romagnawas determined, in accordance with IAS 36, as the larger between the fair value net cost tosell and the value in use, evalueted using the same method of which described in the notenumber 11.1.In particular, the sensitivity analysis on the investment in Editoriale Libertà value in useshould be equal to the book value of the investment assuming a 1.5% decline in advertisingfrom 2011 and a 1.6% decline in copies sold. As an alternative, holding as valid theassumptions on advertising and circulation revenues contained in the 2010-2014 anticipatoryplans, the value in use at December 31, 2009 would have been equal to the book value of theinvestment if the discount rate (WACC pre-tax) were 11.28% instead of the 9.1% currentlyused.


Financial highlights of the mentioned affiliated companies are reported below.

Assets Liabilities Dec. 31, 2008 Dec. 31, 2009 Dec. 31, 2008 Dec. 31, 2009Le Scienze SpA 4,065 4,170 3,296 3,456Editoriale Corriere Romagna Srl 3,866 3,741 557 518Editoriale Libertà SpA 24,279 25,102 7,486 6,460Altrimedia SpA 4,404 4,195 2,705 2,534

Revenues Profit/(loss) 2008 2009 2008 2009Le Scienze SpA 4,416 4,237 617 568Editoriale Corriere Romagna Srl 300 170 (82) (86)Editoriale Libertà SpA 15,311 14,751 2,043 1,849Altrimedia SpA 10,416 9,453 460 362

The financial year of the above companies coincides with that of Gruppo EditorialeL’Espresso S.p.A.

Other investments (4)

Book value at December 31, 2008 2,568Acquisitions -Sale/write-down of investments (82)Book value at December 31, 2009 2,486

The table that follows shows other investments, changes in the percentage of ownership andthe book value of the investment.

% held Book value Dec. 31, 2008 Dec. 31, 2009 Dec. 31, 2008 Dec. 31, 2009Telelibertà SpA 19% 19% 190 190ANSA Soc. Coop.a r.l. 18.48% 18.48% 2,209 2,209E-Ink Corporation Inc. 0.05% - 81 -Trento Press Service Srl 14.40% 14.40% 37 37Audiradio Srl 3.6% 3.6% 26 26Other investments 25 24TOTAL OTHER INVESTMENTS 2,568 2,486

The financial year of the above companies coincides with that of Gruppo EditorialeL’Espresso S.p.A.


Non-current receivables (5)

Dec. 31, 2008 Dec. 31, 2009Withholding taxes on employee termination indemnities receivable 213 217Long-term security deposits 1,202 1,053Other non-current financial receivables 71 2TOTAL NON-CURRENT RECEIVABLES 1,486 1,272

Deferred/Prepaid tax assets (6) The tables that follow show changes in deferred/prepaid tax assets.

Prepaid taxes

Taxable amount Dec. 31, 2008 Dec. 31, 2009On personnel provisions 10,865 10,083On risk provisions 35,892 53,223On write-down of current assets 34,642 43,523On write-down of property, plant and equipment 13,525 9,037On write-down of financial instruments 5,793 7,874On previous years’ losses 68,486 49,686TOTAL 169,203 173,426

Prepaid tax assetsDec. 31, 2008 Dec. 31, 2009

Da fondi del personale 2.988 2.773Da fondi rischi 10.326 15.165Da svalutazione delle attività correnti 9.651 12.065Da svalutazione delle attività immobilizzate 4.232 2.724Da svalutazione strumenti finanziari 1.593 2.165Da perdite fiscali (di esercizi precedenti) 18.843 13.669TOTALE 47.633 48.561


Deferred taxesTaxable amount

31/12/2008 31/12/2009Da minore valutazione dei fondi del personale 16.848 14.069Da minore valutazione dei fondi rischi 144 179Da maggiore valutazione delle attività correnti 112 111Da maggiore valutazione delle attività immobilizzate 326.103 339.151Da rivalutazione strumenti finanziari 3.886 3.606TOTALE 347.093 357.116

Deferred tax liabilitiesDec. 31, 2008 Dec. 31, 2009

On less valuation of personnel provisions 4,635 3,869On less valuation of risk provisions 44 56On major valuation of current assets 31 31On major valuation of property, plant and equipment 102,102 105,911On revaluation of financial instruments 1,220 1,132TOTAL 108,032 110,999

Inventories (7)Dec. 31, 2008 Dec. 31, 2009

Inventories, Accum. Inventories, Inventories Accum Inventories gross depreciation net gross depreciation netPaper (raw materials) 23,193 (1,936) 21,257 20,387 (2,134) 18,253Printing materials (raw materials) 3,475 (254) 3,221 2,912 (270) 2,642Publications (finished products) 628 - 628 974 - 974Add-on products (finished products) 1,539 (722) 817 507 - 507Returns (finished products) 13,584 (11,977) 1,607 8,853 (8,054) 799Other goods 1,478 (1,305) 173 464 (396) 68TOTAL INVENTORIES 43,897 (16,194) 27,703 34,097 (10,854) 23,243

At December 31, 2009, the decline in inventories recorded in the income statement amountedto €4,460 thousand (as compared with a decline of €2,826 thousand at December 31, 2008),of which €771 thousand relating to the decline in inventories included under “Change infinished products inventories” (at December 31, 2008 such change was negative by €2,618thousand), and €3,689 thousand relating to the decline in paper, raw material and othergoods inventories included under “Purchases” (as compared with negative €208 thousand atDecember 31, 2008).


Trade receivables (8) Dec. 31, 2008 Dec. 31, 2009Newsstands and distributors 15,975 15,623Advertising and exchanges 225,736 201,640Other trade receivables 16,154 11,687Receivables from Group companies 444 995TOTAL TRADE RECEIVABLES 258,309 229,945

At December 31, 2009, the provision for doubtful accounts amounted to €18,029 thousand(€19,002 thousand at December 31, 2008). Changes in the year are shown below:

Dec. 31, 2009Opening balance 19,002Acquisition/disposal of companies (1,193)Write-downs 4,036Uses (3,816)Closing balance 18,029

Receivables from other Group companies consist of trade receivables of the parent companyfrom subsidiary Le Scienze.

Marketable securities and other financial assets (9)

Dec. 31, 2008 Dec. 31, 2009Treasury bonds and similar 50 13,261Bonds - 11,624Interest accrued - 294TOTAL MARKETABLE SECURITIES AND OTHER FINANCIAL ASSETS 50 25,179

In 2009, the Group acquired bonds worth €25,087 thousand (of which €234 thousand ofaccrued interest) to diversify the investment of liquid assets. These bonds, which bear anaverage fixed and floating interest of 5.21% and expire between July 30, 2010 and February29, 2012, are classified as “financial assets available for sale” and thus valued at fair value.The net effect of this valuation recorded on shareholder’s equity was €15 thousand.


Tax receivables (10)

Dec. 31, 2008 Dec. 31, 2009Corporate income tax (Ires) and regional tax on productive activities (Irap) receivable 2,739 3,741Ires receivable from parent company - 4,139Ires/Irap to be reimbursed 6,677 4,637VAT receivable 2,268 736Grants on publishing ex Law 62/2001 receivable 3,027 2,429Other tax receivables 6,137 4,948TOTAL TAX RECEIVABLES 20,848 20,630

Receivables for grants relate to tax credits on capital expenditure as per Law 62/2001 (Law onPublishing) which grants a 3% tax credit on eligible capital investments for the following fiveyears. Grants not pertaining to 2009 were discounted and are used-up over time based on thedepreciation schedule of the assets to which they relate.In 2009, €2,991 thousand of income tax reimbursements were received, of which €1,983thousand of principal and €1,009 thousand of interest.

Other receivables (11)

Dec. 31, 2008 Dec. 31, 2009Contributions and subsidies receivable 465 310Receivable on interest subsidies 5,033 -Social security receivables 481 397Security deposits 510 440Advances to suppliers and agents 1,905 1,361Receivable from employees and associates 984 1,319Other receivables 14,129 13,541TOTAL OTHER RECEIVABLES 23,507 17,368

Receivables on interest subsidies relate to subsidies provided by Law to loans concluded in2005 to finance the full-color project, collected in full in the year.Other receivables consist mainly of prepaid rights and freelance work for the publication ofadd-on products and television programs to be launched in the 1st Half of 2010.


Cash and cash equivalents (12)

31/12/2008 31/12/2009Financial receivables from Group companies - 1,438Current account deposits 120,198 133,280Cash on hand 196 129Checks 82 83Accrued interest on current accounts 217 82TOTAL CASH AND CASH EQUIVALENTS 120,693 135,012

Current account balances are highly liquid short-term financial investments that are readilyconvertible into known cash amounts and not subject to relevant fluctuations in value. Suchinvestments are made according to the financial needs of the Group, have maturitiesaveraging around three months and are remunerated at a pre-set fixed rate based on Euribor(averaging around 1%).

Liabilities and shareholders’ equity

Share capital (13)At December 31, 2009, the share capital amounted to €61,438,738.20 and was made up by409,591,588 shares with par value of €0.15 each. With respect to December 31, 2008, theshare capital grew by €53,970 as a result of the underwriting of 359,800 shares to servicestock option plans.

Dec. 31, 2008 Dec. 31, 2009No. of shares resolved 423,507,188 435,297,188No. of ordinary shares issued 409,231,788 409,591,588 of which: Own shares 6,635,000 7,980,000

All ordinary shares issued are fully paid-in. There do not exist shares on which there is arestriction on the distribution of dividends, with the exception of the provisions of article2357 of the Italian Civil Code regarding own shares.

Reserves (14) The breakdown of reserves and changes occurred in the period are reported in the Statementof Changes in the Consolidated Shareholders’ Equity.As resolved by the Shareholders’ Meeting, authorizing the Board of Directors to acquire onthe market ordinary shares of Gruppo Editoriale L’Espresso S.p.A., in the 2009 a total of1,345,000 shares were acquired for €1,087 thousand, which, considering own sharesacquired in previous years and the annulment of 25,215,000 shares in 2008, brings the totalof own shares held by the parent at December 31, 2009 to 7,980,000, representing 1.95% ofthe share capital.


Benefits based on financial instrumentsThe Group recognizes additional benefits to the Managing Director and other employees ofthe parent company and its subsidiaries holding top positions within the Group through com-pensation plans based on financial instruments. Plans adopted by the Group provide for the attribution of rights to shares (stock options).Plans adopted by the Group in the past provided also for the attribution of rights tobeneficiaries of extraordinary bonuses contingent on the achievement of a certain stockmarket price by the shares of the Company (phantom stock options). In light of recentchanges in tax regulations regarding incentives for employees, however, the Shareholders’Meeting of the parent company held on April 22, 2009, resolved to cancel phantom stockoption plans for 2007 and 2008 and to replace them with an extraordinary stock option planregulated, mutatis mutandis, by the same terms and conditions as those applicable to thephantom stock option plan.Said Shareholders’ Meeting resolved also to attribute to Group employees an ordinary stockoption plan for 2009.All stock option plans adopted by the Group (2000 – 2009) assign to beneficiaries the rightto exercise, at a pre-determined price and for a set term, an option for the underwriting ofnew shares to be issued by the company to be issued pursuant to specific resolutions. Therelated rules regulate, among other terms and conditions, also the case in which the assigneeof said options ceases for whatever reason to be employed by the company.For information regarding stock option plans, please see the “Information on share-basedcompensation” section.Attachment 2) summarizes information relating to each stock option plan in force atDecember 31, 2009. In particular, as shown in Attachment 2), unexpired stock options thathave not to this day been exercised, amount to 21,042,000, representing 5.14% of the sharecapital of the Company.

*****

Stock option plans adopted by the Group were valued according to the binomial tree method.Such method is commonly used in the valuation of financial options according to thestochastic approach, and makes reference to discreet “binomial” models elaborated from1979 by Cox, Ross and Rubinstein with the intent of providing a general application of theBlack-Scholes model.Main assumptions used in determining the fair value of stock option plans (2003– 2006) aresummarized in the table below.

Feb. 26, 2003 July 23, 2003 Feb. 25, 2004 July 28, 2004 Feb. 23, 2005 July 27, 2005 2006 Plan Plan Plan Plan Plan Plan Plan 1st tranche 2nd tranche Average strike price 2.86 3.54 4.95 4.80 4.75 4.65 4.33 3.96Expected volatility 40.83% 27.23% 24.19% 25.86% 20.84% 18.41% 17.51% 16.56%Risk-free rate 4.08% 4.17% 4.31% 4.49% 3.79% 3.42% 4.35% 4.10%Fair Value 0.4292 0.5533 1.1173 0.9070 0.6650 0.6960 0.8016 0.6938

While, main assumptions used in determining the fair value of the 2009 stock option plan aresummarized in the table below.


2009 Extraordinary Stock Option Plan 2009 Ordinary Stock Option Plan I tranche II tranche III tranche IV tranche I tranche II tranchePrezzo medio di esercizio 3,84 3,60 2,22 1,37 1,00 1,86Volatilità attesa 68,44% 68,44% 68,44% 68,44% 68,44% 41,25%Tasso free risk 3,48% 3,48% 3,48% 3,48% 3,48% 3,46%Fair value 0,1596 0,1699 0,2404 0,3195 0,5431 0,8927

The expected volatility was based on the official estimate of the Italian Stock Exchange in thethree-month implicit volatility recorded in the call option market of Espresso stock.At December 31, 2009, the total cost of stock option plans recorded in the financial statementsamounted to €907 thousand (€1,480 thousand at December 31, 2008, of which €403thousand relating to stock options and €1,077 thousand relating to phantom stock options).

Minority interests (15)

Dec. 31, 2008 Dec. 31, 2009Editoriale FVG SpA 9,206 8,783Edigraf Srl 201 -Seta SpA 1,406 1,041TOTAL MINORITY INTERESTS 10,813 9,824

Financial debt (16) Maturing Maturing Dec. 31, 2008 Dec. 31, 2009 between 1-5 years over 5 yearsBonds 303,797 288,430 288,430 -Bank loans 75,528 59,823 53,352 6,471Leasing payables 443 329 329 -TOTAL NON-CURRENT FINANCIAL DEBT 379,768 348,582 342,111 6,471

Dec. 31, 2008 Dec. 31, 2009Bonds 3,424 3,290Bank overdrafts 23 612Bank loans 16,220 15,608Leasing and other financial payables 256 294TOTAL CURRENT FINANCIAL DEBT 19,923 19,804

At December 31, 2009, the value of the bond issue amounted to €289,114 thousand, ofwhich €684 thousand represents the short-term portion, and €288,430 thousand the long-term one. In application of IAS 39, the bond issue is valued at the amortized cost, calculatedapplying the effective interest rate. According to such valuation method, the value of the bondissue includes both directly attributable costs (equal originally to €1,995 thousand, decliningat December 31, 2009 to €1,026 thousand), and proceeds from the early termination, inMarch 2005, of an interest rate swap converting the fixed interest rate payable on the bonds


into a floating rate of interest (such proceeds amounted originally to €9,020 thousand,declining to €4,640 thousand at December 31, 2009). In 2009, a small portion of the bond issue, with a face value of €14,500 thousand, was repur-chased (€14,698 thousand of book value). The operation resulted in a capital gain of €2,638thousand.In compliance with the terms and condition of the bond issue, the bonds repurchased arebeing cancelled.The 10-year bond issue, placed in October 2004, has a face value of €300 million (nowreduced to €285.5 million) and bears a 5.125% coupon. The effective tax rate is equal to4.824%.The short-term portion of bonds payable includes, in addition to the current portion of thebond issue amounting to €684 thousand, also the related interest accrued at December 31,2009, equal to €2,606 thousand.Bank loans are made up as follows:

Dec. 31, 2008 Dec. 31, 2009Non-current secured loans 75,429 58,384Non-current unsecured loans 99 1,439Total non-current loans 75,528 59,823Current secured loans 16,220 14,209Current unsecured loans - 1,399Total current loans 16,220 15,608TOTAL BANK LOANS 91,748 75,431

Further information on loan terms is provided in note 13.4 on Risk management.Leasing payables are shown in the table that follows:

Balance at Increases Acquisitions/ Repayment Balance at Dec. 31, 2008 and changes disposal of principal Repurchases Dec. 31, 2009 in term of companies Short-term portion 256 294 (3) (253) - 294Coming due between 1 and 5 years 443 (114) - - - 329Coming due over 5 years - - - - - -TOTAL 699 180 (3) (253) - 623


Provisions for risks and charges (17)

Legal Social Early Sundry Total of which: of which: proceedings security retirement risks provisions current non-current litigation incentives portion portionOpening balance 11,895 5,537 17,302 24,128 58,862 34,739 24,123Acquisitions/disposal of companies (1,653) - - (575) (2,228) - -Uses (3,455) (26) (9,303) (1,120) (13,904) (13,315) (589)Transfers current/non-current - - - - - 3,281 (3,281)Provisions/(release) 3,230 (415) 25,604 17,779 46,198 26,367 19,831Change due to discounting back 267 46 - 10 323 - 323Ending balance 10,284 5,142 33,603 40,222 89,251 48,844 40,407

Non-current portion Legal Social security Early retirement Sundry Total proceedings litigation incentives risks provisionsOpening balance 6,146 3,269 274 14,434 24,123Acquisitions/disposal of companies - - - - -Uses (341) (26) - (222) (589)Transfers current/non-current (2,566) - (274) (441) (3,281)Provisions/(release) 2,896 (415) - 17,350 19,831Change due to discounting back 267 46 - 10 323Ending balance 6,402 2,874 - 31,131 40,407

Current portion Legal Social security Early retirement Sundry Total proceedings litigation incentives risks provisionsOpening balance 5,749 2,268 17,028 9,694 34,739Acquisitions/disposal of companies (1,653) - - (575) (2,228)Uses (3,114) - (9,303) (898) (13,315)Transfers current/non-current 2,566 - 274 441 3,281Provisions/(release) 334 - 25,604 429 26,367Change due to discounting back - - - - -Ending balance 3,882 2,268 33,603 9,091 48,844

Excluding the provision for social security litigation (discounted at the legal rate of interest),the non-current components of provisions for risks and charges were discounted at a 5% rate(unchanged from the rate used in the Financial Statements at December 31, 2008), gross ofthe related tax effect.

Provisions for legal proceedings and labor litigation include risks deriving from libel suits,common to all publishers, risks connected with trade and labor litigation, and thoseconnected with social security audits.


The provisions for early retirement incentives relates to the provision of costs expected to beincurred in the reorganization of some subsidiaries.

The provision for sundry risks includes €28,022 thousand of tax provisions made in previousyears (for a detailed analysis see note 30 on Taxes), tax litigation on premium transactionsand other contractual risks.

Provisions for Employee termination indemnity and other retirement benefits (18)

Defined benefit plans

Provisions for Employee termination indemnity accrued up until December 31, 2006 by com-panies with more than 50 employees and those accrued at December 31, 2009 by all othercompanies, in addition to the indemnity for managers of newspapers, fall within the definedbenefit plan category and are therefore determined according to actuarial methods. BothPlans represent the present value of the future legal obligation.

Benefits are calculated based on the following:

EMPLOYEE TERMINATION INDEMNITY OTHER PERSONNEL PROVISIONSYearly discounting back rate 5.0% 5.0%Yearly inflation rate 2.0% 2.0%Yearly increase in retributions - 3.0%

Amounts recorded in the Statement of Financial Position were calculated as follows:

Employee termination indemnity provision

Dec. 31, 2009Opening balance 81,308Acquisition/(Disposal) of companies (241)Provision for employment in the period (service cost) 221Increase due to interest (interest cost) 4,054Actuarial (gain) loss 691Benefits paid (9,950)Ending balance 76,083

Other personnel provisions Dec. 31, 2009Opening balance 8,371Provision for employment in the period (service cost) 822Increase due to interest (interest cost) 383Actuarial (gain) loss 216Benefits paid (1,968)

Ending balance 7,824


Provision for phantom stock options Dec. 31, 2009Opening balance 1,267Provisions -Uses (1,267)Ending balance -

The average number for the year and the actual number of employees are shown in the tablethat follows:

Average number of employees Number of employees at year-end 2008 2009 Dec. 31, 2008 Dec. 31, 2009Journalists 1,229 1,215 1,228 1,211Manual workers 487 462 480 453Office workers 1,463 1,347 1,420 1,304Managers 127 114 125 103Fixed-term employees 119 65 91 45Total 3,426 3,203 3,344 3,116

Trade payables (19) Dec. 31, 2008 Dec. 31, 2009Debiti verso fornitori: • Paper 29,283 27,872• Printing services 10,264 10,071• Transport and distribution 4,648 4,755• Capital goods 11,125 10,433• Promotions 6,632 7,586• Products sold optionally with publications 15,448 18,500• Freelance work 5,647 5,456• Other editorial costs 4,682 4,439• Utilities and maintenance 4,405 6,627• Other suppliers 54,235 50,886Advances received 32 40Other payables 1,194 888TOTAL TRADE PAYABLES 147,595 147,553

Terms of payment range normally between 60 and 90 days.


Tax payables (20) Dec. 31, 2008 Dec. 31, 2009

Corporate (Ires) and regional tax on productive activities (Irap) payables 693 22

Ires payable to parent company 4,953 -

Withholding tax and personal income taxes 11,818 10,656

VAT payable 1,777 2,024

Other tax payables 22 33

TOTAL TAX PAYABLES 19,263 12,735

Other payables (21) Dec. 31, 2008 Dec. 31, 2009

Social Security payables 23,683 23,480

Payable to personnel for holidays 20,576 15,177

Other payables to personnel 19,365 16,938

Payable to Directors, Auditors and minority shareholders 795 441

Accrued liabilities 2,955 2,836

Payable on subscriptions 9,591 9,379

Payables for contributions ex Law 62/2001 9,366 7,454

Forfeiting of grants on subsidized loans 6,485 5,593

Other accrued liabilities 5,468 5,627

TOTAL OTHER PAYABLES 98,284 86,925


12. Notes to the income statement

Revenues (22)

2008 2009Circulation 391,150 374,780Advertising 608,216 496,856Printing services provided to others 1,893 817Sale of rejects and returns 4,085 1,347Sale of internet and mobile services 2,971 3,710Conferences, seminars and training 306 135Rights and trademark royalties 1,340 718Sale of contents 541 411Sale of other services 10,343 7,047Sale of other products and services 4,703 828TOTAL REVENUES 1,025,548 886,649

Other operating income (23)

2008 2009Grants 5,573 4,549Capital gains on disposal of assets 1,580 395Extraordinary gains 5,823 6,123Rent 33 57Other operating income 4,680 8,705TOTAL OTHER OPERATING INCOME 17,689 19,829

In 2009, Other operating income includes €824 thousand of income recorded on the release ofprovisions for risks and charges on reorganization plan costs of some Group companies.

Purchases (24)

2008 2009Paper for newspapers, periodicals and add-on products 105,801 83,653Printing materials 21,522 15,999Purchase of add-on products and supports 15,623 12,518Consumables 4,719 3,710Other goods 2,193 596Change in raw material and merchandise inventories 208 3,689TOTAL PURCHASES 150,066 120,165


Services received (25)

2008 2009Printing and other work carried out by third parties 52,521 47,007Distribution 34,110 28,259Reproduction rights and other copyright costs 31,051 28,349Promotions 25,922 22,166Publisher fees 13,829 10,478Agent and agency fees 30,687 34,229Editing costs 67,392 56,265Radio and TV productions 2,478 1,681Advisory 15,984 12,866Traveling expenses 11,638 9,934Postage, telephone and data transmission 7,551 6,661Maintenance and utilities 25,938 24,508Technical equipment operation 7,214 4,715Rent 22,906 22,914Security, cleaning and refuse disposal 6,085 5,395Other services 32,879 25,391TOTAL SERVICES RECEIVED 388,185 340,818

Other operating charges (26) 2008 2009Provision for risks and charges 10,015 9,132Taxes and duties 2,363 2,274Public relations and gifts 1,027 690Membership fees 2,182 2,227Settlements and reimbursements 385 618Extraordinary losses 3,457 2,487Write-down of receivables 9,511 4,626Other operating charges 1,345 1,002TOTAL OTHER OPERATING CHARGES 30,285 23,056

In 2010, allowances to the provisions for risks and charges include €1,678 thousand of reorgan-ization costs of some subsidiaries.


Personnel costs (27)

2008 2009Wages and salaries 276,981 265,502Provisions for employee termination indemnity 15,055 14,975Provisions for retirement benefits 846 1,038Provision for paid leave costs 2,150 (4,187)Provisions for contract renewals 1,024 -Stock options and phantom stock options 1,254 907Early retirement incentives 23,063 31,441Other personnel costs 10,328 6,342TOTAL PERSONNEL COSTS 330,701 316,018

In 2009, early retirement incentives include €30,836 thousand of charges linked toreorganization plans launched by some subsidiaries.The total cost incurred in the year for compensation of management amounts to €2.4 millionand includes €0.2 million of employee termination indemnities and similar post retirementindemnities, and €0.3 million of stock option costs.

Depreciation, amortization and write-downs (28)

2008 2009Intangible asset amortization 2,333 2,161Tangible asset depreciation 40,804 39,110Write-down of intangible assets - 312Write-down of property, plant and equipment 4,068 1,145TOTAL DEPRECIATION, AMORTIZATION AND WRITE-DOWNS 47,205 42,728

In 2009, item write-down of property, plant and equipment include €1,085 thousand of write-downs on printing plant and equipment carried out as part of reorganization plans imple-mented.


Financial income (expense) (29)

2008 2009Dividends 99 24Interest received on current accounts and short-term deposits 5,962 1,632Foreign-exchange gains 180 88Other financial income 622 643Net financial income 6,764 2,363Interest on bank overdrafts (43) (16)Accessory banking expenses (468) (458)Interest on bonds issued (14,721) (14,396)Interest on loans and financing (4,372) (3,725)Foreign-exchange losses (319) (108)Leasing payments (49) (27)Financial charges on application of IAS (4,975) (4,760)Other financial charges (122) (167)Interest expense (25,069) (23,657)Gains/(losses) on security trading - 2,278Write-down and losses on investments (1,400) (629)TOTAL FINANCIAL INCOME/(EXPENSE) (19,606) (19,621)

Taxes (30)In 2009, income taxes amounted to €38,826 thousand and were made up as follows:

2008 2009Current taxes 38,011 22,110Deferred and prepaid taxes 3,136 5,361Loss carry-forwards 13,342 11,355TOTAL TAX EXPENSE 54,489 38,826

Income taxes amounted to €38,826 thousand and included €11,355 thousand of extraordinarytax provisions.With regard to extraordinary tax provisions, we note that in December 2008, a pronouncementof the Supreme Cassation Court in Joint Session, called to rule on issues relating to usufructrights on shares owned by foreign subjects, induced the Company to accrue at December 31,2008 an amount equal to €13,342 thousand deemed as the only probable risk outstanding,that of a negative outcome of a tax litigation over withholding tax credits on dividends andthe related amounts withheld, in addition to interest accrued.In light of the most recent jurisprudence on the matter and, in particular, of the ruling of theLazio Region Tax Commission of December 2009, management deemed it appropriate tomake an additional provision of €11,355 thousand, net of the related tax effect, consideringas probable the risk of the commission recognizing as taxable also the amount spent toacquire the usufruct, in addition to interest accrued.After said provision, the provision for risks and charges amounts at December 31, 2009 to


€28,022 thousand, equal to the full amount of risk appraised, net of sanctions, as the riskhas been classified only as possible.For the sake solely of completeness, we acknowledge that the highest possible potentialliability, net of the related tax effect and including the mentioned sanctions, would amountto about €43.9 million.At December 31, 2009, current taxes amounted to €22,110 thousand, down €15,901thousand on December 31, 2008 due primarily to the reduction in the operating profit.

The table that follows shows a reconciliation between the theoretical tax expense and actualtax expense (calculated with IRES at 27.5% and IRAP at 3.9%).

2008 2009

1) Pre-tax profit as reported in the accounts 75,716 44,314

2) a. Theoretical income taxes (at national tax rate) 20,822 12,186

b. Tax effect of non-deductible costs 4,360 2,352

c. Tax effect of losses that do not originate deferred tax assets in the year (11) -

d. Prepaid taxes not accrued in previous years - 33

e. Dividends (26) (6)

f. Non-taxable income/grants (1,283) (1,431)

3) Income taxes (IRES) 23,862 13,068,

4) Regional tax on productive activities (IRAP) 17,285 14,403

5) Previous years taxes 13,342 11,355

6) Total income taxes as reported in the accounts 54,489 38,826

Average effective tax rate 71.96% 87.62%

Theoretical tax rate 31.40% 31.40%

Minority interests (31)Minority interests consist of the portion of net profit attributable to minority interests of Edi-toriale FVG and Seta.

Income per share (32)Base income per share is calculated by dividing the net profit for the period pertaining to theGroup by the weighted average number of ordinary shares in circulation in the period(excluding own shares).The diluted income per share is calculated by dividing the net profit for the period attributedto ordinary shareholders by the weighted average number of ordinary shares in circulation inthe period, adjusted for the diluting effect of stock options.The table that follows shows income per share and other information used in the calculationof the diluted income per share.


2008 2009

Net profit 20,624 5,825

Weighted average number of shares in circulation (‘000) 404,276 401,512

Earnings per share, basic 0.051 0.015

2008 2009

Net profit 20,624 5,825

Weighted average number of shares in circulation (‘000) 404,276 401,512

No. of options (‘000) 16,177 20,832

Earnings per share, diluted 0.049 0.014

Dividends paid (33)In 2008, dividends paid for the 2007 financial year, as resolved by the Shareholders’ Meetingheld on April 17, 2008 in a proportion of €0.17 for each of the 404,831,788 ordinary sharesin circulation (keeping into account own shares), amounted to €68,821 thousand.As resolved by the Shareholders’ Meeting of April 22, 2009, in 2009 no dividend wasdistributed for the 2008 financial year.

13. Other information

13.1 Net financial position

The net financial position of the Group is shown in the table below.

Dec. 31, 2008 Dec. 31, 2009

Financial receivables from Group companies - 1,438

Financial payables to Group companies - -

Cash and deposits 120,693 133,574

Bank overdrafts (23) (612)

Cash and cash equivalents 120,670 134,400

Marketable securities and other financial assets 50 25,179

Bond issue (307,221) (291,720)

Other bank debt (91,748) (75,431)

Other financial debt (699) (623)

Other financial assets (liabilities) (399,618) (342,595)

NET FINANCIAL POSITION (278,948) (208,195)


13.2 Non-recurrent events and significant operationsPursuant to Consob Communication of July 28, 2006, it is acknowledged that in the year theGroup did not carry out significant non-recurrent transactions, as defined in the same Communi-cation.

13.3 Transactions deriving from atypical and/or unusual operations

Pursuant to Consob Communication of July 28, 2006, it is acknowledged that in the year the Groupdid not carry out atypical and/or unusual transactions, as defined in the same Communication.

13.4 Risk management

Financial riskThe management of financial risk is regulated by a set of rules that outline the objectives, strategies,guidelines and operating procedures.In the management of financial resources and treasury the Group adopts a procedure that impliesthe application of prudence and limited risk criteria in the choice of financial and investmentpolicies, prohibiting all speculative operations except for those motivated and approved by theBoard of Directors of the parent company. The parent company manages and coordinates a centralized intragroup current account, in whichall subsidiaries take part, aiming at obtaining economic advantages in relationships with financialcounterparts and stronger operating efficiency. Centralization allows in fact more efficient planningand control of financial flows, ensures higher consistency in financing and investment choices,optimizes the overall risk profile of the Group and, above all, strengthens its contractual powerwith the banking system.The Group, whose rating issued by Standard&Poors is BB with a negative outlook, uses prevalentlytwo channels to raise financial resources: the international bond market and long-term bank loansextended against investments in publishing activities for which subsidies are provided by the Italianlaw, reducing the interest rate on the loan by several percentage points.In this framework and in view of the good market liquidity and low interest rates, the parentcompany placed on the market in October 2004 a €300 million, 10-year bond, bearing a 5.125%fixed rate of interest, the proceeds of which were used to repay a €200 million bond issue maturedon August 1, 2005 and to provide liquidity for acquisitions and investments. The €300 millionbond issue and related interest payments are unsecured and do not include covenants or clausesproviding for the early repayment of the same. In addition to the bond issue mentioned above, in November 2005 the parent company wasextended ten-year loans amounting to €33.8 million, subsidized pursuant to the Law onpublishing, at an interest rate, net of the State subsidy, of about 2.35%. With the above operations, the Group ensured abundant long-term financial resources such as toprevent liquidity risks. Were it however to be in need of additional financial resources in additionto those provided by the operating cash flow, the Group will be in a position to draw on a numberof uncommitted credit lines which are currently unutilized.The Group is currently not exposed to financial risk connected with fluctuations in interest rates orexchange rates.


Price riskAs it is active in the publishing sector, the Group acquires large quantities of paper. To achievea more efficient management of paper purchases and to strengthen its bargaining positionwith counterparts, thus promoting competition among suppliers, the management of paperpurchases for the Group was unified. In the past, the Group stipulated a number of paper swap contracts on a portion of its paperneeds. As, however, it assessed their ineffectiveness in the medium term, the Group hasdecided to discontinue the use of such instruments.

Credit riskThe credit risk exposure of the Group relates to trade and financial receivables.Due to the sector in which it operates, the Group is not subject to significant credit risk ontrade receivables. Though there are no significant concentrations of such risks, the Grouphowever adopts operating procedures that bar the sale of products or services to customersthat do not possess an adequate risk profile or provide collateral guarantees. With regard tofinancial receivables, investments in short-term financial instruments and trading inderivatives are carried out only with banks that possess a high credit standing.

* * * *

In compliance with the new accounting principle IFRS 7 we report in the tables that follow inwhich (i) financial assets and liabilities are subdivided by class/category, (ii) financial assets arereported by maturity, and (iii) the contractual expiration of financial liabilities is indicated.As required under IFRS 7, moreover, in the case of financial instruments recorded in theStatement of Financial Position, the hierarchical level of fair value valuation is also indicated.


Classes of financial instruments

Note Book Assets at FV Assets at FV Loans and Investments Available Fair Effect Effect value through P&L through P&L receivables held to for sale value on Income on equity designated classified maturity assets Statement 2008 as such from as held FINANCIAL ASSETS initial recognition

Non-current assets

Other investments (4) 2,568 - - - - 2,568 2,568 - -

Other receivables* (5) 1,273 - - 1,273 - - 1,273 13 -

Current assets

Trade receivables (8) 258,309 - - 258,309 - - 258,309 (8,446) -

Other receivables * (11) 13,248 - - 13,248 - - 13,248 (17) -

Marketable securities (9) 50 50 - - - - 50 - -

Cash (12) 120,693 - - 120,693 - - 120,693 5,962 -

Note Book Liabilities Liabilities at FV Liabilities Fair Effetto a Effetto a value at FV through through P&L at the value on Income on equity P&L designated designated as amortized Statement 2008 as such from held for trading FINANCIAL LIABILITIES initial recognition

Non-current liabilities

Bonds (16) (303,797) - - (303,797) (242,059) - -

Other financial debt (16) (75,971) - - (75,971) (70,796) - -

Current liabilities

Bank overdrafts (16) (23) - - (23) (23) (43) -

Bonds (current portion) (16) (3,424) - - (3,424) (3,424) (14,721) -

Other financial debt (16) (16,476) - - (16,476) (19,533) (4,421) -

Trade payables (19) (147,595) - - (147,595) (147,595) (108) -

* The item does not include accrued income


Note Book Assets at FV Assets at FV Loans Investments Available Fair Effect value through P&L through P&L and held to for sale value on Income on equity designated classified as receivables maturity assets Statement 2009 as such from held for sale FINANCIAL ASSETS initial recognition

Non-current assets

Other investments (4) 2,486 - - - - 2,486 2,486 56 -

Other receivables* (5) 1,055 - - 1,055 - - 1,055 9 -

Current assets


Other receivables * (11) 7,410 - - 7,410 - - 7,410 (100) -

Marketable securities** (9) 25,179 52 - - - 25,127 25,179 346 (21)

Cash (12) 135,012 - - 135,012 - - 135,012 1,682 -

Note Book Liabilities at FV Liabilities at FV Liabilities Fair Effect on Effect value through P&L through P&L at the value Income equity2009 as such from designated as amortized cost Statement FINANCIAL LIABILITIES initial recognition held for trading


Bonds (16) (288,430) - - (288,430) (265,545) - -


Current liabilities

Bank overdrafts (16) (612) - - (612) (612) (16) -



Trade payables (16) (147,553) - - (147,553) (147,553) - -

* The item does not include accrued income

** The fair value of securities is determined based on the listed price in an active market (“Level 1” according to the classification contained in IFRS 7 § 27A).


Financial assets by maturity

note Total Not yet Overdue 0 - 30 31 - 60 61 - 90 over 90 Write-downsDec. 31, 2008 receivable due by days days days days

Non-current assets

Other receivables (5) 1,273 1,273 - - - - - -

Current assets

Trade receivables (8) 258,309 181,222 77,087 33,889 12,974 7,488 22,736 -

trade receivables, gross 277,311 190,409 86,902 35,062 13,394 7,777 30,669 -

Accumulated depreciation (19,002) (9,187) (9,815) (1,173) (420) (289) (7,933) (8,595)

Other receivables * (11) 13,248 13,248 - - - - - -

other receivables, gross 13,632 13,632 - - - - - -

Provision for doubtful accounts (384) (384) - - - - - (17)

TOTAL 272,830 195,743 77,087 33,889 12,974 7,488 22,736 (8,612)

Note (*): Other receivables do not include accrued income and tax receivables.

note Total Not yet Overdue 0 - 30 31 - 60 61 - 90 over 90 Write-downsDec. 31, 2009 receivable due by days days days days

Non-current assets


Current assets

Trade receivables (8) 229,945 165,227 64,718 31,073 9,414 5,170 19,061 -

trade receivables, gross 247,974 174,810 73,164 32,112 9,675 5,418 25,959 -

Accumulated depreciation (18,029) (9,583) (8,446) (1,039) (261) (248) (6,898) (4,036)

Other receivables * (11) 7,410 7,410 - - - - - -

other receivables, gross 7,894 7,894 - - - - - -

Provision for doubtful accounts (484) (484) - - - - - (100)

TOTAL 238,410 173,692 64,718 31,073 9,414 5,170 19,061 (4,136)

Note (*): Other receivables do not include accrued income and tax receivables.


Contractual expiration of financial liabilities

less than between 6 mo. between 1 between 2 between 3 between 4 over 5 At Dec. 31, 2008 6 months and 1 year and 2 years and 3 years and 4 years and 5 years years TOTAL

Bond issues - 15,375 15,375 15,375 15,375 15,375 315,375 392,250

Other financial debt 10,164 10,096 19,000 17,472 14,659 14,084 20,199 105,674

- bank loans 10,023 9,952 18,730 17,352 14,573 14,077 20,199 104,906

- leasing payables 141 144 270 120 86 7 - 768

Bank overdrafts 23 - - - - - - 23

Trade payables 147,595 - - - - - - 147,595

TOTAL 157,782 25,471 34,375 32,847 30,034 29,459 335,574 645,542

less than between 6 mo. between 1 between 2 between 3 between 4 over 5 At Dec. 31, 20089 6 months and 1 year and 2 years and 3 years and 4 years and 5 years years TOTAL

Bond issues - 14,632 14,632 14,632 14,632 300,132 - 358,660

Other financial debt 9,545 9,448 17,519 14,701 14,117 13,589 6,611 85,530

- bank loans 9,387 9,288 17,347 14,564 14,072 13,589 6,611 84,858

- leasing payables 158 160 172 137 45 - - 672

Bank overdrafts 612 - - - - - - 612

Trade payables 147,553 - - - - - - 147,553

TOTAL 157,710 24,080 32,151 29,333 28,749 313,721 6,611 592,355

13.5 Commitments

In addition to liens on printing plant and rotary presses granted to banks in the context ofloans extended in 2005 (see note 2), at December 31, 2009, commitments of the Groupamounted to €4,166 thousand and consisted of:• contracts for the purchase of plant and equipment (€1,493 thousand) relating primarily

to the Repubblica Division and the Northwest and Livorno operating divisions of FinegilEditoriale and Editoriale Nuova Sardegna in the context of the full color project;

• a contract for the purchase of the Printing Center of the of Finegil Editoriale’s PaduaDivision (€1,135 thousand).

Guarantees granted amount to €1,538 thousand and relate to guarantees granted by theparent company in favor of subsidiaries Elemedia and A. Manzoni&C. on the lease of therespective offices.


Attachments

139Attachments | Gruppo Editoriale L’Espresso |

Consolidated companies

ATTACHMENT 1

Name Registered Share capital % held byand activity office (€ thousand)

PARENT COMPANYGruppo Editoriale L’Espresso SpA Rome 61,439 CIR SpA

publishing

SUBSIDIARIES CONSOLIDATED LINE-BY-LINE- A. Manzoni & C. SpA Milan 15,000 100 Gruppo Editoriale L’Espresso SpA

advertising concessionaire

- All Music SpA Milan 6,500 100 Rete A SpA

content provider

- Editoriale FVG SpA Udine 87,960 92.12 Gruppo Editoriale L’Espresso SpA

publishing

- Editoriale La Nuova Sardegna SpA Sassari 776 100 Finegil Editoriale SpA

publishing

- Editoriale Metropoli SpA Rome 500 100 Gruppo Editoriale L’Espresso SpA

publishing

- Elemedia SpA Rome 25,000 100 Gruppo Editoriale L’Espresso SpA

radio, internernet and satellite TV

- Finegil Editoriale SpA Rome 18,161 100 Gruppo Editoriale L’Espresso SpA

publishing

- Rete A SpA Milan 13,198 100 Gruppo Editoriale L’Espresso SpA

TV broadcasting

- Rotocolor SpA Rome 23,000 100 Gruppo Editoriale L’Espresso SpA

printing

- Rotosud SpA Oricola 2,860 100 Gruppo Editoriale L’Espresso SpA

printing (AQ)

- S.E.T.A. SpA Bolzano 775 71 Gruppo Editoriale L’Espresso SpA

publishing

- Somedia SpA Milan 500 100 Gruppo Editoriale L’Espresso SpA

services

Note: amounts in thousands of euro unless otherwise specified

Name Registered Share % held byand activity office capital

(€ thousand)

AFFILIATED COMPANIES CONSOLIDATED ON EQUITY- Altrimedia SpA Piacenza 517 35 Finegil Editoriale SpAadvertising concessionaire- Editoriale Corriere Romagna Srl Forlì 2,856 49 Finegil Editoriale SpApublishing- Editoriale Libertà SpA Piacenza 1,000 35 Finegil Editoriale SpApublishing- Le Scienze SpA Rome 103 50 Gruppo Editoriale L’Espresso SpApublishing- Premium Publisher Network consorzio Milan 68 29.63 Gruppo Editoriale L’Espresso SpAinternet services

SUBSIDIARIES AND AFFILIATED COMPANIES VALUED AT COST- Benedettine Srl (in liquidation) Piacenza 255 35 Finegil Editoriale SpAreal estate- Cellularmania.com Srl (in liquidation) Rome 10 100 Elemedia SpAinternet services- Enotrya Srl (in liquidation) Rome 78 70 Elemedia SpAe-commerce- Ksolutions SpA (in liquidation) Milan 1,000 100 Elemedia Spainternet services

OTHER COMPANIES VALUED AT COST- Agenzia ANSA Soc. Coop. a r.l. Rome 11,921 3.81 Gruppo Editoriale L’Espresso SpA news agency 5.69 Finegil Editoriale SpA

3.17 Editoriale La Nuova Sardegna SpA3.28 Editoriale FVG SpA2.53 S.E.T.A. SpA

- Agenzia Informativa Adriatica d.o.o. Capodistria 13 19 Editoriale FVG SpAproduction and transmission of information (Slovenia)- A.G.F. Srl Rome 30 10 Gruppo Editoriale L’Espresso SpAphoto agency- Audiradio Srl Milan 258 3.63 A. Manzoni & C. SpAmarket research- Club DAB Italia - consorzio Milan 15 16.67 Elemedia SpAradio broadcating services- Consorzio Emittenti Radio Televisive - CERT Bologna 178 6.67 Rete A SpAradio broadcating services- Consorzio Colle Maddalena Torino 62 4.17 Rete A SpAradio broadcating services- Consuledit Società Consortile a r.l. Milan 20 6.62 Gruppo Editoriale L’Espresso SpAmarket research 4.38 Finegil Editoriale SpA

0.62 Editoriale La Nuova Sardegna SpA

0.49 S.E.T.A. SpA0.47 Editoriale FVG SpA

- Immobiliare Editori Giornali Srl Rome 830 0.17 S.E.T.A. SpAreal estate 0.12 Editoriale La Nuova Sardegna SpA- Presto Technologies Inc. (not operational) Cambridge 7,664 7.83 Elemedia SpAinternet services (Mass., USA) (US$ thousand)- Telelibertà SpA Piacenza 500 19 Finegil EditorialeSpATV broacasting services- Trento Press Service Srl Gardolo di Trento 260 14.4 S.E.T.A. SpAnewspaper distribution (TN)

Note: amounts in thousands of euro unless otherwise specified

140 | Gruppo Editoriale L’Espresso | Attachments

141Attachments | Gruppo Editoriale L’Espresso |

Em

ploy

ee s

tock

opt

ion

plan

s at

dec

embe

r 3

1,

2009

ATTACH

MEN

T 2

2000 Stock Option Plan 1,285,000 25.60

140,000 25.60 1,145,000 25.60 0.75 1,145,000 25.60

April 24, 2001 Stock Option Plan

577,500 6.25

97,500 6.25 480,000 6.25 1.75 480,000 6.25

October 24, 2001 Stock Option Plan 113,200 2.51

12,600 2.51 100,600 2.51 2.25 100,600 2.51

March 6, 2002 Stock Option Plan 307,125 3.30

48,925 3.30 258,200 3.30 2.75 258,200 3.30

July 24, 2002 Stock Option Plan 368,050 3.36

79,100 3.36 288,950 3.36 3.00 288,950 3.36

February 26, 2003 Stock Option Plan

435,725 2.86

43,225 2.86 392,500 2.86 3.75 392,500 2.86

July 23, 2003 Stock Option Plan 599,450 3.54

97,900 3.54 501,550 3.54 4.00 501,550 3.54

February 25. 2004 Stock Option Plan

1,218,500 4.95

171,000 4.95 1,047,500 4.95 4.75 1,047,500 4.95

July 28, 2004 Stock Option Plan 1,225,500 4.80

168,000 4.80 1,057,500 4.80 5.00 1,057,500 4.80

February 23, 2005 Stock Option Plan

1,247,900 4.75

115,800 4.75 1,132,100 4.75 5.75 1,132,100 4.75

July 27, 2005 Stock Option Plan 1,265,700 4.65

110,800 4.65 1,154,900 4.65 6.00 1,154,900 4.65

2006 Stock Option Plan - I tranche 1,271,200 4.33

91,400 4.33 1,179,800 4.33 7.00 999,000 4.33

2006 Stock Option Plan - II tranche 1,253,200 3.96

81,800 3.96 1,171,400 3.96 7.50 855,000 3.96

Ordinary 2009 Stock Option Plan - I tranche 1,520,000 3.84 24,400 3.84 1,495,600 3.84 7.75 997,500 3.84

Ordinary 2009 Stock Option Plan - II tranche 1,520,000 3.60 31,000 3.60 1,489,000 3.60 8.25 815,100 3.60

Ordinary 2009 Stock Option Plan - III tranche 1,790,000 2.22 37,600 2.22 1,752,400 2.22 8.75 746,100 2.22

Ordinary 2009 Stock Option Plan - IV tranche 1,840,000 1.37 85,200 1.37 201,300 1.37 1,553,500 1.37 9.25 339,000 1.37

Extraordinary 2009 Stock Option Plan 2009 - I tranche 2,500,000 1.00 158,500 1.00 2,341,500 1.00 9.75 291,500 1.00

Extraordinary 2009 Stock Option Plan 2009 - II tranche 2,500,000 1.86 2,500,000 1.86 10.25

Total 11,16

8,05

0 6

.86 11

,670

,000

2.14 1

,436

,250

6

.24 359

,800

1.21 21

,042

,000

4

.38 7

.12 12,60

2,00

0 5.97

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at end of the period

Optio

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at end of the period

No.

of options

Weighted

average

price

for period

No.

of options

Weighted

average

price for

period

No.

of options

Weighted

average

price

for period

No.

of options

Weighted

average

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for period

No.

of options

Weighted

average

price

for period

Average

market price

at exercise

date

No.

of options

Average

price

for period

Average

expiration

(years)

Certification of the Consolidated Financial Statements pursuant to art. 154 bis

of Legislative Decree no. 58 February 24, 1998

| Gruppo Editoriale L’Espresso | 145

Certification of the Consolidated Financial Statements pursuant to art. 154 bis

of Legislative Decree no. 58 February 24, 1998

1) The undersigned Monica Mondardini, Managing Director, and Alessandro Alachevich,

Dirigente preposto alla redazione dei documenti contabili societari (Manager in charge of

drafting the corporate and accounting documents) of Gruppo Editoriale L'Espresso S.p.A.,

certify, having also considered the provisions of article 154–bis, paragraphs 3 and 4, of Italian

Decree no. 58 of February 24, 1998:

1) · the adequacy in relation to the characteristics of the Company, and

1) · the effective application of the administrative and accounting procedures used in the

preparation of the 2009 Consolidated Financial Statements.

2) It is also certified that:

2.1) the Consolidation Financial Statements as of December 31, 2009:

a) are prepared in accordance with International Financial Reporting Standards as adopted by

the European Union pursuant to Regulation (EU) no.1606/2002 of the European Parliament

and Council dated July 19, 2002 and with the provisions issued in implementation of article

9 of Italian Decree no. 38 of February 28, 2005;

b) agree with the results of the accounting records and entries;

c) fairly and correctly represent the financial condition, result of operations and cash flows of

the Company and of the group companies included in consolidation;

2.2) the Report on operations contains a reliable analysis of the performance and results of

operations, as well as the situation of the Company and the group companies included in

consolidation, together with a description of its exposure to major risks and uncertainties.

Signed by Signed by

Monica Mondardini Alessandro Alachevich

Rome, February 24, 2010

This certification has been translated into The English language solely for the convenience of

international readers

Report of the Independent Auditors

149Report of the Independent Auditors | Gruppo Editoriale L’Espresso |

150

| Gruppo Editoriale L’Espresso | Report of the Independent Auditors

Financial Statements of the Parent Company

Gruppo Editoriale L’Espresso SpA

al 31 dicembre 2009


ASSETS Note December 31, Proforma December 31,(euro) 2008 2008 2009 Intangible assets with an indefinite useful life 220,660,859 220,660,859 220,660,859 Other intangible assets 2,525,892 2,533,000 1,760,161

Intangible assets (1) 223,186,750 223,193,859 222,421,020 Property, plant and equipment (2) 60,103,827 60,144,137 50,965,059 Investments (3) 400,452,524 398,974,059 408,443,617 Non-current receivables (4) 373,424 373,424 425,136 Deferred tax assets (5) 14,886,309 14,888,716 21,515,014

NON-CURRENT ASSETS 699,002,833 697,574,194 703,769,845 Inventories (6) 22,635,642 22,666,120 19,226,237 Trade receivables (7) 101,403,549 102,697,179 101,319,094 of which: trade receivables to related parties 84,652,848 (83.5%) 85,336,758 (84.2%)

Marketable securities (8) - - 25,127,285 Tax receivables (9) 14,848,005 14,868,617 14,700,529 of which: trade receivables to related parties 185,681 (1.3%) 3,614,891 (24.6%)

Other receivables (10) 10,897,683 10,927,288 9,775,554 Cash and cash equivalents (11) 196,168,010 195,539,227 182,438,739 of which: cash and cash equivalents to related parties 98,592,522 (50.3%) 80,612,487 (44.2%)

CURRENT ASSETS 345,952,889 346,698,431 352,587,438

TOTAL ASSETS 1,044,955,722 1,044,272,625 1,056,357,284

LIABILITIES AND SHAREHOLDERS’ EQUITY Note December 31, Proforma December 31,(euro) 2008 2008 2009

Share capital (12) 61,384,768 61,384,768 61,438,738 Reserves (13) 86,083,500 87,767,759 86,854,917 Retained earnings (loss carry-forwards) 150,582,252 150,582,252 201,243,666 Net profit (loss) 49,668,766 49,507,890 30,386,900

SHAREHOLDERS’ EQUITY 347,719,287 349,242,670 379,924,221 Financial debt (14) 327,311,407 327,980,152 307,331,958 Provisions for risks and charges (15) 18,531,529 18,531,529 34,452,040 Employee termination indemnity andother retirements benefits (16) 40,185,313 40,623,211 36,592,580 Deferred tax liabilities (5) 43,045,147 43,011,018 45,600,769

NON-CURRENT LIABILITIES 429,073,395 430,145,909 423,977,347 Financial debt (14) 107,474,683 103,927,521 86,139,303 of which: financial payables to related parties 98,929,604 (92.0%) 76,956,902 (89.3%)

Provisions for risks and charges (15) 11,637,553 11,646,185 25,993,927 Trade payables (17) 90,176,178 89,955,540 91,486,395 of which: trade payables to related parties 20,021,460 (22.2%) 16,591,473 (18.1%)

Tax payables (18) 11,821,294 11,976,149 7,317,326 of which: tax payables to related parties 6,561,973 (55.5%) 2,303,261 (31.5%)

Other payables (19) 47,053,332 47,378,652 41,518,764 CURRENT LIABILITIES 268,163,040 264,884,046 252,455,716 TOTAL LIABILITIES 697,236,435 695,029,955 676,433,062 TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY 1,044,955,722 1,044,272,625 1,056,357,284

152 | Gruppo Editoriale L’Espresso | Financial Statements of the Parent Company

Income Statement

INCOME STATEMENT Note Proforma (euro) 2008 2008 2008

Revenues (20) 573,735,173 575,417,767 494,150,812 of which: portion relating to affiliated companies 302,761,448 (52.8%) 239,395,751

(48.4%)Change in inventories (6) (1,743,550) (1,743,550) (651,934) Other operating income (21) 8,655,728 8,674,067 9,952,982 of which: portion relating to affiliated companies 80,106 (0.9%) 204,442 (2.1%)

Purchases (22) (100,451,313) (100,887,013) (79,772,541) of which: portion relating to affiliated companies 1,002,849 (-) 2,638,609 (-)

Services received (23) (288,588,543) (286,921,110) (248,335,407) of which: portion relating to affiliated companies (103,247,464) (35.8%) (89,083,934) (35.9%)

Other operating charges (24) (12,038,052) (12,124,398) (9,248,086) of which: portion relating to affiliated companies (2,977) (0.0%) (1,586) (0.0%)

Personnel costs (25) (129,049,931) (130,472,663) (129,927,169) of which: portion relating to affiliated companies (346,037) (0.3%) (384,876) (0.3%)

Depreciation, amortization and write-downs (26) (13,973,310) (14,004,189) (14,027,059)

Operating profit 36,546,203 37,938,910 22,141,598 Financial income (expense) (27) (13,978,344) (13,858,642) (12,772,311) of which: portion relating to affiliated companies 33,373 (-) 552,230 (-)

Dividends (28) 55,279,351 54,164,151 41,982,641 of which: portion relating to affiliated companies 55,279,351 (100.0%) 41,982,641 (100.0%)

Pre-tax profit 77,847,210 78,244,418 51,351,928 Income taxes (29) (28,178,444) (28,736,528) (20,965,029)

NET PROFIT 49,668,766 49,507,890 30,386,900 Earnings per share, basic (30) 0.123 0.122 0.076 Earnings per share, diluted (30) 0.118 0.118 0.072

Operating profit

NET PROFIT 49,668,766 49,507,890 30,386,900

Other comprehensive income components

Profit/(loss) on restatement of financial assets held for disposal - - (20,725)

Tax effect of Other profit/(loss) - - 5,699

Other comprehensive income components, net of tax effect - - (15,026)

TOTAL COMPREHENSIVE INCOME 49,668,766 49,507,890 30,371,874

153Financial Statements of the Parent Company | Gruppo Editoriale L’Espresso |

Statement of Cash Flows


OPERATING ACTIVITIES

Net profit (loss) 49,669 30,387Adjustments: - Depreciation, amortization and write-downs (26) 13,973 14,027- Provisions for stock option costs (25) 403 1,998- Net change in provisions for personnel costs (16) (841) (4,031)of which: portion relating to affiliated companies 379 (-) 546 (-)

- Net change in provisions for risks and charges (15) 20,677 30,268- Losses (gains) on disposal of assets (1) (6)- Losses (gains) on disposal of investments and securities (2,638)- Adjustments to the value of financial assets 1,400 (56)- Dividends (received) (55,279) (41,983)Cash flow from operating activities 30,001 27,966Change in current assets and other flows 9,934 (9,036)of which: portion relating to related parties 23,771 (-) (8,905) (98.6%)

CASH FLOW FROM OPERATING ACTIVITIES 39,935 18,930of which: Interest received (paid) (11,424) (14,182)

of which: portion relating to related parties (80) (0.7%) 536 (-) Income taxes received (paid) (13,043) (14,240)

of which: portion relating to related parties * (7,539) (57.8%) (8,446) (59.3%) INVESTING ACTIVITIES Outlay for purchase of assets (13,716) (5,054)Outlay for purchase of investments (10,000) (10,578)Received on disposal of assets 11 209Grants received 1,229 1,904(Purchase) sale of securities assets held for disposal - (24,833)Dividends received (28) 55,279 41,983

of which: portion relating to related parties 55,279 (100.0%) 41,983 (100.0%) CASH FLOW FROM INVESTING ACTIVITIES 32,803 3,631

FINANCING ACTIVITIES Increases in capital and reserves - 434(Acquisition) sale of own shares (9,129) (1,086)Issue (repayment) of bonds - (12,060)Issue (repayment) of other financial debt (4,973) (5,243)Dividends (paid) (68,821) -

of which: portion relating to related parties (37,532) (54.5%) - Other changes 3 (15)CASH FLOW FROM FINANCING ACTIVITIES (82,920) (17,970)Increase (decrease) in cash and cash equivalents (10,182) 4,591Cash and cash equivalents at beginning of the period 107,420 97,238Contributed by mergers - 3,040Total cash and cash equivalents at beginning of the period 107,420 100,278CASH AND CASH EQUIVALENTS AT END OF THE PERIOD 97,238 104,869

of which: portion relating to related parties (338) (-) 3,655 (3.5%)

* Current income taxes paid upon participation in the tax consolidation procedure

154 | Gruppo Editoriale L’Espresso | Financial Statements of the Parent Company

155Financial Statements of the Parent Company | Gruppo Editoriale L’Espresso |

Statement of Changes in the Shareholders’ Equity

S

tock

Eq

uity R

etained Ne

t Sh.

Sha

re S

hare O

wn IFRS

Op

tion reserves earnings profit

E

quity

(€ th

ousand

) Cap

ital Premium sha

res Re

serve Re

serve

Balanc

e at Dec

embe

r 31, 200

7 65

,167

8

0,57

0 (1

06,400

) 50,74

4 10,37

1 44,827 64,153 166,162 375,594

Movem

ents in

net profit

- - - - - 166,162 (1

66,162) -

Dividend

s - - - - - - (68,821) - (6

8,821)


ital contribu

ted by sha

reholders

-

- - -

-

- - - -

Stock options

- - - - 403

- - -

4

03

Own shares tran

sactions

(3,782

) (8

0,57

0) 86,19

7 -

-

- (10,974) - (9,129)

Tran


nd re

verses

- - - (63) -

- 6

3 - -

Other c

hang

es - - - -

- 3

- - 3

Net p

rofit (loss) - - - - - - - 49,669 49,669

Balanc

e at Dec

embe

r 31, 200

8 61

,385

- (20,20

3) 50

,681

1

0,77

4 44,830 1

50,583 49,669 347,719

Movem

ents in

net profit

- - - - - -

49,669 (49,669) -

Dividend

s

- - - - - - -


ital contribu

ted by sha

reholders 5

4 38

0 - - - - - -

4

34

Stock options

- - - - 1,998

- - -

1

,998

Own shares tran

sactions

- - (1,087

) -

-

- - - (1,087)

Tran


nd re

verses

- - - 20

2 (1,195

) -

993 - -

Merger d

ifferences - - - - - 1,523 - -

1

,523

Other c

hang

es - - - - - (1,035) - - (1,035)

Net p

rofit (loss) - - - - - (15) -

3

0,387 30,372

Balanc

e at Dec

embe

r 31, 200

9 61

,439

380

(2

1,29

0) 50

,883

1

1,57

7 45,303 2

01,245 30,387 379,924

Notes to the Financial Statements of

Gruppo Editoriale L’Espresso SpA

Notes to the Financial Statements of the parent company | Gruppo Editoriale L’Espresso | 159

Notes to the Financial Statements of the parent company

1. General InformationGruppo Editoriale L’Espresso S.p.A. (the “Company”) operates mainly in the publishing sector andmore specifically in the newspapers and periodicals segment, and in the segment of on-line publishing.Gruppo Editoriale L’Espresso S.p.A. has its registered office in Italy at Via Cristoforo Colombo,149, Rome, Italy. CIR Compagnie Industriali Riunite S.p.A., holds control of the Company and exercisescoordination and direction functions pursuant to article 2497 of the Italian Civil Code.The Espresso stock is listed on the screen-based trading circuit (Mercato Telematico Azionario,MTA) of the Italian Stock Exchange (Reuters code: ESPI.MI, Bloomberg code: ES IM).The present statutory accounts at December 31, 2008 were approved by the Board of Directorsof the Company on February 24, 2010.

2. Form, content and accounting principlesThe present financial statements were prepared in accordance with international accountingprinciples (International Accounting Standards, – IAS and International Financial ReportingStandards, – IFRS), as integrated by the related interpretations (Standing Interpretations Com-mittee – SIC and International Financial Reporting Interpretations Committee, IFRIC) issuedby the International Accounting Standards Boards (IASB). The general principle adopted in the preparation of the financial statements is that of thehistorical cost for all assets and liabilities, with the exception of derivative instruments andcertain financial assets/liabilities, some of which are accounted for at their fair value.The classification, form, order and nature of items in the financial statements, as well asaccounting principles adopted (with the exception of those described in note 6 below), areunchanged from those adopted for the approved financial statements at December 31, 2008. The classification adopted in the Statement of Financial Position, both for assets and liabilities, isthat of “current” and “non-current” as, contrary to the classification by liquidity, such criteria isdeemed to provide a better representation of the Group’s financial position. The Statement ofFinancial Position is divided into two separate facing sections. The order of reporting is Assets,Shareholders’ Equity and Liabilities (from the least current to the most). In order not to make thereporting unnecessarily complex and to use the same format for interim reports, financial statementsinclude only major captions and all sub-classifications (e.g. nature of the debtor/creditor, expirationterm, etc.) are instead disclosed in the notes. The contents of the Statement of Financial Position arein compliance with minimum requirements established by IAS 1 as, with the exclusion ofpublications, radio frequencies and trademarks, classified under “Intangible assets with an indefiniteuseful life”, no significant or particular item was deemed to require separate reporting. IncomeStatement items were classified by nature as, considering the activity of the Group, it has not beendeemed that a classification by destination could better represent the operating performance of theCompany. In the Statement of Cash Flows, prepared according to the indirect method, cash flowsfrom operating, investing and financing activities, and those from discontinued operations arereported separately. The Statement of Changes in the Consolidated Shareholders’ Equity showsincome and charges for the period and other changes in reserves.Unless otherwise specified, amounts reported in the financial statements and tables are statedin thousands of euro, rounded off to the nearest unit.

2008 figures (proforma)On September 21, 2009, subsidiaries C.P.S. SpA and Selpi SpA were merged by incorporationinto the parent company. For the purposes of accounting and tax records the merger took effectfrom January 1, 2009 and the operation generated a €1,523 thousand merger difference. Toallow a better comparison of figures for 2009 and those for previous years, the financialstatements include, alongside with the parent company’s pre-merger figures for 2008, a column(proforma 2008) that shows the same data that includes retroactively the effect of the mergers.These figures were obtained applying the following criteria:- the statements of financial position and the income statements of companies were aggregateditem by item;- balances between Group companies and dividends were eliminated;- the book value of investments held by the parent was offset against the correspondingportion of the Shareholders’ Equity, recording the difference under “merger differences”;- accounting balances of merged companies, valued before the merger under Italian accountingprinciples, were reclassified under IAS/IFRS.

3. Valuation criteria 3.1 Intangible assetsIntangible assets are initially recorded at the acquisition or production cost. The acquisitioncost is represented by the fair value of payments and any additional costs directly incurred forpreparing the asset for use. The purchase cost is the equivalent of price paid in cash at the timeof the acquisition. In case the amount paid for the acquisition is deferred beyond normalpayment terms, the difference with respect to the equivalent cash price is recorded as interestover the longer payment term. The cost of intangible assets developed internally is recorded byseparating costs incurred in the research phase (not capitalized) and costs incurred in thesubsequent development phase (capitalized). In case the two phases cannot be separated, thewhole project is accounted for as research. The book value of intangible assets is in line with the amount expected to be retrieved throughfuture use or disposal. At least once a year and in case there arise doubts as to possibility to retrievethe book value of an asset, the latter is subjected to an impairment test, as described in note 3.6.

PublicationsThe useful life of publications’ mastheads is considered as undefined. Such assets are notamortized and are instead subjected annually, or any time there is an indication that the assetmay have experienced a loss in value, to an impairment test. Losses in value are recorded in theincome statement under “Depreciation, amortization and write-downs”.

GoodwillGoodwill represents the premium paid over the fair value of the share of assets and liabilities,including potential ones, at the time of acquisition. Goodwill arising from the acquisition ofaffiliated companies is included in the value of the related equity investment. Goodwill acquiredfor a consideration is not amortized and is subjected at least annually to an impairment test. Withsuch end, goodwill is allocated from the date of acquisition or by the end of the subsequentfinancial year, to one or more cash generating units (CGU). Reductions in value resulting from animpairment test do not give rise to adjustments in subsequent years and are recorded in the incomestatement under “Depreciation, amortization and write-downs”.

160 | Gruppo Editoriale L’Espresso | Notes to the Financial Statements of the parent company

Other intangible assetsOther intangible assets are represented by industrial patents and intellectual property rights,concessions, licenses, trademarks and similar rights, and software. They are recorded at cost,net of accumulated amortization calculated on a straight line over their expected useful life,and possible durable losses in value.In view of the homogeneity of assets recorded in the Statement of Financial Position, barringspecific relevant cases, the useful life of other intangible assets is estimated at 3 to 6 years.Amortization criteria applied are reviewed and redefined at least at the end of each financialperiod to keep into account possible significant changes.

3.2 Property, plant and equipmentProperty, plant and equipment at the beginning are recognized at purchase price or atproduction cost net of accumulated depreciation. Cost includes associated expenses and anydirect cost incurred at the moment acquisition and necessary to make the asset ready for use.The capitalization of costs for the upgrade, update or improvement of structural elementsowned or leased from third parties is carried out exclusively when the same fulfill the requisitesthat allow their separate classification as assets or part of assets. Ordinary maintenance costsare charged to the income statement.After the initial recording, property, plant and equipment are carried at cost, net ofaccumulated depreciation (with the exception of land) and possible durable losses in value. Theamortizable value of each significant component of a tangible asset having a different usefullife is calculated on a straight line over its expected useful life.Amortization criteria, the useful life of assets and their residual value are reviewed and redefinedat least at the end of each financial period to keep into account possible significant changes.Capitalized costs relating to leasehold improvements are amortized over the shorter betweenthe residual term of the lease and the residual useful life of the asset to which the leaseholdimprovement relates.The book value of property, plant and equipment is in line with the amount expected to beretrieved through future use. In case doubts arise as to possibility to retrieve the book value ofan asset, the latter is subjected to an impairment test, as described in note 3.6. The originalvalue is restored when the reasons that gave rise to the impairment cease to exist.

3.3 LeasingLeasing contracts relating to assets for which the Company bears all costs and benefits derivingfrom ownership are classified as financial leases. Assets held under a financial lease arerecorded at the lower between the current value of the asset leased and the present value ofminimum lease payments provided for in the lease contract. Such payments are accounted foras interest and principal so as to obtain a fixed rate of interest on the residual part of the debt.Residual lease payments, net of interest, are recorded as financial debt. Interest payments arecharged to the income statement over the life of the lease. Assets held under a financial leaseare depreciated in line with the nature of the good. Leasing contracts in which the lessor holds a significant share of risks and benefits derivingfrom ownership are classified as operating leases. Lease payments are recorded in the incomestatement in equal installments over the life of the lease contract. In sale and lease-back operations, the difference between the sale price and the book value ofthe asset is not recorded, except in the case of a write-down in the value of the asset.

161Notes to the Financial Statements of the parent company | Gruppo Editoriale L’Espresso |

3.4 GrantsGrants are recorded when there exists, regardless of the formal granting of the amount, a rea-sonable certainty that the company will meet the conditions for the entitlement to the grant andthat the same will actually be received. Capital grants are recorded in the Statement of Financial Position as deferred income. The con-tribution is credited to the income statement based on the useful life of the asset for which it isgranted by discounting it so as to net out the related amortization expense recorded. Grants receivable as compensation for expenses and costs already incurred or aimed atproviding immediate financial help to the company not correlated to future costs are recordedas income in the year in which they become receivable.

3.5 Borrowing CostsBorrowing costs incurred for an investment in assets which normally require a certain periodof time to be prepared for use or for sale (qualifying assets), are capitalized and amortized overthe life of the assets to which they relate. All other interest charges are recorded in the incomestatement in the year in which they are incurred.

3.6 Loss in value of assetsA loss in value of an asset originates whenever the book value of an asset is higher than the amountexpected to be retrieved from the same. At each accounting date, the presence of factors indicatinga possible loss in value is assessed. Whenever one of these factors is present, the retrievable value ofthe asset is assessed through an impairment test and the write-down is recorded where appropriate.Assets not yet available for use, those recorded in the financial statements in the current financialyear, intangible assets having an indefinite useful life and goodwill are subject at least annually to animpairment test, independently from the presence of factors indicating possible loss in value.The retrievable value of an asset is the higher between its fair value, net of sales costs, and itsvalue in use. The retrievable value is calculated with reference to each individual asset, unlessthe said asset is able to generate positive financial flows deriving from ongoing useindependently from positive cash flows generated by other assets or groups of assets, in whichcase the test is carried out at the level of the smallest Cash Generating Unit that includes thesaid asset. The original value of the asset is restored whenever the reasons for the loss in valuecease to exist, with the exception of goodwill whose original value is not restored.

3.7 InvestmentsInvestments in affiliated companies are recorded at cost, net of losses in value. For a moredetailed analysis of accounting principles regarding financial assets, see note 3.12.

3.8 Assets held for disposalItem Assets held for disposal include non-current assets (or groups of assets) whose book value willbe retrieved primarily through the sale of the same rather than their continuing use. Assets held fordisposal are valued at the lower of their net book value and fair value, net of disposal costs.

3.9 InventoriesInventories are recorded at the lower of the acquisition or production cost, determinedapplying the weighted average cost method, and the assumed net realizable value. The cost isrepresented by the fair value of the price paid and any other cost that may be attributed, with


the exception of interest expenses. The net realizable value is represented by the estimated saleprice under normal conditions, net of completion costs and selling expenses. Write-downs arereversed in subsequent years when the reasons for their recording cease to exist.

3.10 Trade receivablesTrade receivables are recorded at the fair value of future cash flows, written-down for losses in value.

3.10 Contract work in progressContract work in progress is represented by specific projects being completed on behalf of others.In the case of projects for which the outcome can be estimated in a reliable manner, contractualrevenues and related costs are recorded under the stages of completion method. The percentageof completion is determined according to the ratio between costs and time employed in theactivity carried out at the closing date of the accounts and total costs estimated to thecompletion. When it appears probable that total costs will exceed contractual revenues, theexpected loss is taken to the income statement.In the case of projects for which a reliable estimate is not available, contractual revenues arerecorded in line with costs incurred, provided such costs are expected to be retrieved.The sum of costs incurred and of profits recorded on each project is compared with invoicesissued against the work carried out up until the date of the financial statements. When costsincurred and profits recorded (net of losses) are higher that invoices issued, the difference isrecorded among current assets under “Trade receivables”. When invoices issued are higherthan the sum of costs incurred and profits recorded (net of losses), the difference is accountedfor among current liabilities under “Trade payables”.

3.11 Cash and cash equivalentsCash and cash equivalents are represented by short-term investments in highly liquid assets thatmay easily be converted in known amounts of cash posing a minimal risk of fluctuation invalue, and by transactions carried out in the context of centralized treasury management.For the purposes of the Statement of Cash Flows, cash and cash equivalents consist of cash,demand deposits with banks, other highly liquid short-term financial assets with an originalmaturity not exceeding 3 months, and bank overdrafts. For the purposes of the Statement ofFinancial Position, the latter are included among financial payables under current liabilities.

3.12 Financial assetsFinancial assets are classified into the following categories:• financial assets valued at fair value, recorded also in the income statement;• financial assets held to maturity;• loans and other financial receivables; • available-for-sale financial assets.The Company carries out the classification of financial assets at the time of acquisition.Financial assets are classified as follows:• financial assets valued at fair value, recorded also in the income statement, consisting of

financial assets acquired primarily with the intent of realizing a gain from short-term trading(over a term no longer than 3 months), or financial assets designated as such from inception;

• financial assets held to maturity, consisting of financial assets having a set maturity and gen-erating a fixed cash flow or one that may be determined, which the Group intends and hasthe ability to hold to maturity;


• loans and other financial receivables, consisting of financial assets generating a fixed cashflow or one that may be determined, not listed on a market and different from thoseclassified from inception as financial assets valued at fair value, recorded also in the incomestatement as available-for-sale financial assets;

• available-for-sale financial assets, consisting of financial assets other than the above or thosedesignated as such from inception.

Acquisitions and sales of financial assets are recorded at the settlement date. The acquisitioncost corresponds to the fair value at the acquisition date, inclusive of transaction costs.After the initial recording, Financial assets valued at fair value, recorded also in the incomestatement and Available-for-sale financial assets are valued at fair value, while Financial assetsheld to maturity and Loans and other financial receivables are valued at the amortized cost.Realized and unrealized gains and losses resulting from fluctuations in the fair value ofFinancial assets valued at fair value, recorded also in the income statement are recorded in theincome statement in the year in which they occur.Unrealized gains and losses resulting from fluctuations in the fair value of Available-for salefinancial assets are recorded under Shareholders’ Equity, while realized gains and losses arerecorded in the Income Statement in the year in which they are generated, together with thosepreviously recorded under Shareholders’ Equity.The fair value of financial assets is determined according to listed bid prices or through the useof financial models. The fair value of unlisted financial assets is estimated using specificestimation techniques adjusted to the specific condition of the issuer.Financial assets for which the current value cannot be reliably determined are recorded at cost,adjusted downwards for losses in value.At each financial closing date, the presence of factors indicating loss of value is assessed. Lossesin value accounted for are reversed in case the circumstances that led to their recording nolonger exist, with the exception of assets valued at cost.

3.13 Share capitalThe share capital is represented by capital underwritten and paid-up.Costs strictly correlated with the issue of shares are recorded as a reduction of the share capital,provided they are directly attributable to operations involving the same.

3.14 Treasury share Own shareOwn shares is recorded in a specific Shareholders’ Equity reserve. Gains or losses on thepurchase, sale, issue or cancellation of own shares are not recorded in the income statement.

3.15 Fair value reservesFair value reserves include changes in the fair value, net of the related tax effect, of itemsrecorded at fair value with compensation in the Shareholders’ Equity.

3.16 Other reservesOther reserves are represented by specific capital reserves.

3.17 Retained earnings (loss carry-forwards)Retained earnings (loss carry-forwards) include the part not distributed and not accrued tomandatory reserve (in case of profits) or not balanced (in case of losses), of profits and losses


accrued. The item includes also transfers from other equity reserves freed-up, in addition to theeffect of the change in accounting principles and relevant errors.

3.18 Employee benefitsShort-term benefits

Short-term employee benefits are recorded in the income statement over the period in whichthe employment takes place.

Post-retirement benefitsThe 2007 Budget Law (Law 296/2006) and related implementation regulations introduced,from January 1, 2007, substantial changes in norms regarding Employee TerminationIndemnities (TFR), among which the choice left to workers as to the destination of individualindemnities accruing from such date. In particular, new norms provide for the payment by thecompany of indemnities accrued from January 1, 2007 to the pension fund of choice or, in casethe worker has opted to maintain accrued benefits with the company, into a treasury accountset-up with INPS – the national Social Security Fund. These normative changes resulted in anew accounting treatment of Employee Termination Indemnities.Before the reform introduced with Law 296/2006, under international accounting principlesEmployee Termination Indemnities were considered as a “defined benefit plan”, while nowonly indemnities accrued up to December 31, 2006 continue to qualify as such, whileindemnities accrued after such date are treated as a “defined contribution plan” and thus allobligations of the company are fulfilled with the periodical payment of a contribution to otherentities. The amount recorded in the Income Statement is therefore no longer that of discountedback indemnities, but the amounts actually paid to the pension fund of choice of the employeeor the INPS treasury account, calculated pursuant to article 2120 of the Italian Civil Code.

Defined benefit plansEmployee termination indemnities (limited to the share accrued up to December 31, 2006 bycompanies with more than 50 employees) and Fixed indemnity for managers of newspapers aredetermined by independent actuaries to estimate the amount of the future benefits that theemployees have accrued at the Statement of Financial Position date. All actuarial effects arerecorded in the Income Statement.

Defined contribution plansThe Group participates in defined contribution plans contributing to mandatory, contractualor voluntary public or private pension plans. As already mentioned, Employee TerminationIndemnities accrued by companies with more than 50 employees, calculated pursuant to article2120 of the Italian Civil Code, are paid out to the different pension plans or to the separatetreasury service offered by INPS, as determined by individual employees. The payment of con-tributions extinguishes the obligation of the Group towards its employees. Contributionsconstitute therefore costs for the period in which they are due.

Financial asset-based compensationThe Group recognizes additional benefits to certain top managers through plans based onfinancial instruments.


Plans adopted by the Group over time provide for the awarding of stock options or theattribution of extraordinary bonuses contingent on the achievement of a certain stock marketprice by the shares of the Company (phantom stock options).

Stock OptionsThe cost of such operations involving shares, recorded in the income statement amongpersonnel costs, is calculated based on the fair value of options at the time at which they areassigned. The cost is recorded in the period included between the date at which the optionsare assigned and that at which they become exercisable, and is recorded also underShareholders’ Equity. The fair value of the options thus determined is not updated or reviewedat the end of each accounting period.When options are exercised before or at expiration, the respective value recorded under Shareholders’Equity is reclassified under the “Share premium reserve”. Whenever options expire unexercised, onthe contrary, the related amount is reclassified under “Retained earnings (loss carry-forwards)”.In the transition to IFRS, the Group took advantage of a specific waiver and has not appliedthe above principles to stock option plans assigned before November 7, 2002.

Phantom stock optionsThe cost of such operations, recorded in the income statement, is calculated based on the fairvalue of options at the time at which they are assigned. The cost is recorded in the periodincluded between the date at which the rights are assigned and that at which they become exer-cisable, and is recorded also under the related liability item.Until the liability is cancelled, the fair value is recalculated at each accounting date and at thedate of the actual outlay, recording all changes in the income statement.

3.19 Provisions for risks and charges, potential assets and liabilitiesProvisions for risks and charges are accrued against possible liabilities whose amount and/ortiming is uncertain and whose fulfillment requires the use of financial resources. Provisions aremade exclusively when there exists an actual obligation, either legal or implicit, towards thirdparties that requires the use of financial resources, and whenever a reliable estimate of the obli-gation can be made. The provision recorded represents the best estimate of the liability relatingto the fulfillment of the obligation at the date of the financial statements. Provisions made arereviewed at each accounting date and adjusted to the best available estimate.Where the payment of the obligation takes place beyond normal payment terms and the dis-counting effect is relevant, the amount accrued is represented by the present value of expectedfuture payments needed to extinguish the obligation.Potential gains and losses are not recorded in the financial statements, though adequateinformation about the same is provided.

3.20 Financial liabilitiesFinancial liabilities are recorded initially at the fair value of amounts received or to be paid, netof transaction costs, and subsequently carried at the amortized cost.

3.21 Derivative instrumentsDerivative contracts are recorded in the Statement of Financial Position at fair value. The recordingof differences in the fair value varies according to the purpose of the derivative instrument


(speculative or hedging) and the nature of the risk hedged (fair value hedge or cash flow hedge).In the case of contracts designated as speculative, changes in the fair value are recorded directlyin the income statement. In the case of contracts designated as hedging contracts, the Group documents the relationshipwith the instrument hedged at the time it enters into the contract. The documentation includesthe identification of the hedging contract, the item or operation hedged, the nature of the riskhedged, the criteria with which the effectiveness of the hedging contract will be evaluated, andthe related risk. The effectiveness of the hedge is evaluated by comparing fluctuations in the fairvalue or the cash flow of the instrument hedged with fluctuations in the fair value or the cashflow of the hedging instrument. The effectiveness of the hedge is evaluated both at the start ofthe operation and regularly throughout the duration of the hedge. The evaluation is in any casecarried out at least at each accounting date. More specifically, the hedge is considered as efficientwhen the fluctuation in the fair value or the cash flow of the instrument is “almost entirely” offsetby the fluctuation in the fair value or cash flow of the hedging instrument and results are includedin an interval between 80% and 125%.Fair Value Hedge instruments are accounted for by recording in the income statement changesin the fair value of the hedging instrument and the instrument covered, regardless of thevaluation criteria adopted for the latter. Adjustments to the book value of hedged financialinstruments generating interest are amortized in the income statement over the residual term ofthe asset/liability hedged using the effective interest rate method.Cash Flow Hedge instruments are accounted for by suspending under Shareholders’ Equity theportion of the change in the fair value of the hedging instrument which is recognized aseffective, while recording in the income statement the ineffective part. Changes recordeddirectly under Shareholders’ Equity are released to the income statement in the same year or inthe years in which the asset or liability hedged influences the income statement.The effect on the financial statements of the termination of a hedge contract are recorded differentlyfor Fair Value Hedges and Cash Flow Hedges. In the case of Fair Value Hedges the underlyinginstrument recorded in the financial statements ceases to be hedged from the date at which thehedging contract is terminated and the instrument is thus again valued according to the methodused in absence of a hedge. In case of financial instruments valued at the amortized cost, thedifference between the valuation at the fair value of the risk covered and the amortized cost at thedate of the termination of the hedge-accounting period, is amortized over the residual life of thefinancial instruments based on rules used in the calculation of the effective rate of interest. In thecase of Cash Flow Hedges, the gain or loss suspended in the Shareholders’ Equity remain suspendeduntil the transaction takes place, when it is no longer probable or it is no longer expected to becarried out, or when flows originally hedged have an impact on the income statement.

3.22 Cost and revenue recognitionRevenues from the disposal of assets are valued at the fair value of the amount received orreceivable, keeping into account trade discounts, where appropriate. Revenues from the provision of services are accounted for under the percentage of completionmethod, defined as the ratio between the amount of services provided at the accounting dateand the total value of services to be provided. Revenues are recorded in accordance with the following criteria:• revenues from the sale of publications are recorded at the time of shipping, net of related returns;• revenues from the sale of advertising are recorded at the time of publication.


Costs are recorded according to criteria in line with those applied for revenues, and in any caseunder the accrual method. Interest received and paid is recorded based on the accrual method,keeping into account the effective rate of interest applicable to maturity. Dividends arerecorded in the period in which distribution is resolved.

3.23 TaxesIncome taxes are calculated based on expected taxable income and current tax regulations.Deferred and prepaid taxes arising from timing differences between the profit reported in thefinancial statements and that reported for tax purposes, and the carry-forward of losses andtax credits not retrieved, are also recorded, provided their retrieval (elimination) reduces(increases) future tax payments with respect to the amount that would be payable in the futurein case such retrieval (elimination) did not have a tax effect. The tax effect of operations orother events are recorded in the income statement or directly under Shareholders’ Equity inthe same manner as operations or events that originate a tax liability and on the basis of taxrates applicable at the Statement of Financial Position date. In case of changes in the said taxrates, the book value of deferred tax assets and liabilities is adjusted and entries are made inthe income statement or under Shareholders’ Equity as appropriate.

3.24 CurrencyEntries in the financial statements are recorded in the currency of the primary economic envi-ronment in which each entity operates (“functional currency”). The financial statements areprepared in euro.Transactions denominated in other currencies are translated into the functional currency at theexchange rate at the date of the transaction. Foreign-exchange gains and losses arising from thesettlement of these transactions and the translation of assets and liabilities denominated in cur-rencies other than the functional currency are recorded in the income statement.

4. Change in accounting principles, errors and adjustments to estimatesAccounting principles adopted are modified from one financial year to the next only in case thechange is required by an accounting principle or it contributes to provide more reliable andrelevant information on the effect of transactions carried out on the financial position,economic performance or financial flows of the entity involved.The effect of changes in accounting principles is recorded retrospectively in the Shareholders’Equity for the first accounting year in which the change is introduced, and comparativeinformation is adapted accordingly. Such approach is adopted only when it is impractical torestate the accounts for comparative purposes. The application of a new or modifiedaccounting principle is accounted for as required by the same principle. In case the principledoes not provide for the transition, the change is accounted for under the retrospective methodor, when this is impractical, through the use of projections.In case of relevant errors, the method described in the paragraph above with reference toaccounting principles applies. In case of immaterial errors, the recording is carried out in theincome statement in the period in which it is detected.Changes in estimates that have an impact exclusively on the income statement are accountedfor through the use of projections in the same in the year in which the review takes place incase changes affect only such year, or in the year in which the review takes place and insubsequent years in case the change has an impact also in subsequent accounting periods.


5. Subsequent eventsEvents occurred after the date of the financial statements are events occurred between such dateand the date at which the publication of the same is authorized. The date of approval for thepublication of the financial statements is the date at which the Board of Directors approvesthem. Such date is indicated in note 1.Subsequent events relate to facts that provide evidence of situations existing at the date of thefinancial statements (subsequent events that imply adjustments) or facts providing evidence ofsituations after the Statement of Financial Position date (subsequent events that do not requireadjustments). The effect related to the first is recorded in the financial statements and theappropriate note is adjusted accordingly, while in the second case only relevant information isprovided in the notes, where relevant.

6. New IFRS and IFRIC interpretationsAccounting principles, amendments and interpretations adopted in 2009The accounting principles, amendments and interpretations applied for the first time by theCompany from January 1, 2009 that generated relevant effects on the financial statements arethe following:

IAS 1 Revised – Presentation of Financial Statements: the revised version of IAS 1 no longerallows the presentation of income items such as income and expense (defined as “changesgenerated by non-shareholder transactions) in the Statement of Changes in Equity, requiring aseparate indication from the changes generated by transactions with shareholders. Accordingto the revised version of IAS 1, in fact, all changes generated by transactions withnonshareholders must be shown in a single separate statement showing the performance for theperiod (statement of comprehensive income) or in two separate statements (a income statementand a consoldated statement of comprehensive income). These changes must be shownseparately even in the Statement of Changes in Equity. The Group applied the revised versionof this standard retrospectively as from January 1 2009, opting to show all changes generatedby transactions with non shareholders in two statements showing performance for the period,entitled “Income Statement” and “Statement of Comprehensive Income” respectively.

Amendment to IFRS 7 – Financial instruments: Additional disclosures: the improvement,applicable as from January 1 2009, was issued with a view to increasing the level of disclosurewhen measuring instruments at fair value and to boosting the effect of the existing principleson the subject of disclosures regarding the liquidity risk of financial instruments. In particular,the amendment requires disclosure to be given of the way the fair value measurement offinancial instruments is carried out on the basis of a ranking. The adoption of this standardhad effects only on the type of information given in the Notes.

IAS 23 Revised – Borrowing costs: the revised version of this standard no longer has theoption, adopted by the Group until December 31, 2008, allowing borrowing costs to berecognized immediately to the income statement when incurred for an investment in assetswhich normally require a certain period of time to be prepared for use or for sale (qualifyingassets). Moreover this version of the standard was amended as part of the Improvement 2008process conducted by the IASB, with the aim of revising the definition of borrowing costs to beconsidered for capitalization.


No significant accounting effects were picked up in 2009 as a result of the adoption of thisprinciple.

Amendment to IFRS 2 – Vesting conditions and cancellation: the amendment establishes thatfor the purposes of measuring share-based payments, only the servicing and performance con-ditions can be considered as vesting conditions of the plans. Any other clauses must beconsidered as non-vesting conditions and incorporated into the fair value calculation at theaward date of the plan. The amendment also clarifies that, in the event of cancellation of theplan, the same accounting treatment should be applied whether the cancellation originatesfrom the company or from the counterparty.This principle was applied retrospectively by the Group from January 1 2009. However fromits application no accounting effects have emerged for the Group.

Improvement to IAS 19 – Employee benefits: the improvement clarifies the defintion ofcost/income in relation to past period of service and establishes that in the event of thereduction of a plan, the effect immediately recognizable to the income statement mustinclude only the reduction of the benefits for future periods, while the result of anyreductions relating to past period of service must be considered as a negative cost in relationto past service. Since no changes in plans have taken place as from Jenuary 1, 2009, no accounting effects werenoted.

Amendments and interpretations applied as from January 1 2009 but not relevant for the GroupThe following amendments and interpretations, applicable as from January 1 2009, regulatesituations not present at this financial statement date:Improvement to IAS 16 – Property, Plant and Equipment;

- Improvement to IAS 20 – Accounting for Government Grants and Disclosure ofGovernment Assistance;

- Improvement to IAS 38 – Intangible Assets;- Amendment to IAS 32 – Financial Instruments: Presentation and to IAS 1 Presentation ofFinancial Statements – Financial Instrument;.

- Improvement to IAS 29 – Financial Reporting in Hyperinflationary Economies;- Improvement to IAS 36 – Impairment of assets;- Improvement to IAS 39 – Financial Instruments: Recognition and Measurement;- Improvement to IAS 40 – Investment Property;- IFRIC 13 – Customer Loyalty Programs.- IFRIC 15 – Agreements for the Construction of Real Estate.- IFRIC 16 – Hedges of a Net Investment in a Foreign Operation.

Accounting principles, amendments and interpretations not yet applicable for which the Company hasnot adopted for early applicationThe Company did not opt for the early adoption of the following principles, interpretationsand updates of principles already published and approved by the European Union, whoseadoption is mandatory from January 1, 2009 and for which the Company is evaluating theeffect of the adoption of the same:


The Company is currently evaluating the possible impact of the adoption of the principles andinterpretations listed below, for which at the date of the present financial statements,competent EU Authorities have not yet concluded the approval process.

7. Main causes of uncertainty over estimatesEstimates are made primarily in the context of the recording of write-downs in the value ofassets, to estimate returns of publications, provisions for bad accounts, employee benefits,taxes and other accruals and provisions. Estimates and assumptions are reviewed periodicallyand the effect of each resulting change are reflected immediately in the income statement. Inparticular, the current uncertain outlook for the short and medium term, accompanied by thecontraction of advertising sales, has made estimates of future performance and cash flow pro-jections difficult. These projections are used in the determination of the value in use of Cashgenerating unit to assess the retrievability of the book value of intangible assets with anindefinite useful life and that of equity investments, and, given the current situation, it cannottherefore be ruled out that actual performance may diverge in the future from estimates.Circumstances and events that may affect future performance will be monitored closely bymanagement, that will assess on an ongoing basis possible losses in the value of assets and,where necessary, adjust the book value of the same accordingly. Estimates of returns ofpublications and the related add-on products are carried out monthly and constantly updatedthrough the use of statistical methods applied to up-to-date information on sales. Estimates oflegal risks keep into account the nature of the litigation pending (civil and penal). Estimates forhomogeneous risk are weighted against the performance in the previous three years. Historicaldata shows a stable trend.



IFRS 3 (revised in 2008) - Business Combinations July 1, 2009

Amendments to IAS 27 - Consolidated and Separate Financial Statements July 1, 2009

Amendments to IAS 39 - Financial Instruments: Recognition and Measurement, Hedge Accounting. July 1, 2009

IFRIC 17 - Distributions of Non-cash Assets to Owners November 1, 2009

IFRIC 18 - Transfers of Assets from Customers November 1, 2009

Improvements to IFRS (2008) - Amendments to IFRS 5 July 1, 2009

Amendments to IAS 32 - Classification of Rights Issues February 1, 2010


Amendment to IFRIC 14 - Prepayments of a Minimum Funding Requirement January 1, 2011

IFRIC 19 - Extinguishing Financial Liabilities with Equity Instruments July 1, 2010

Improvements to IFRS (2009) January 1, 2010

Amendments to IFRS 2 Group Cash-settled Share-based Payment Transactions January 1, 2010

Amendments to IFRS 1 - Additional Exemptions for first time adopters January 1, 2010

Revised IAS 24 (revised in 2009) - Related party Disclosures January 1, 2011

IFRS 9 - Financial instruments January 1, 2013

8. Notes to balance sheet statement of Financial Position Items

Assets

Intangible assets (1)Intangible assets are made up as follows:

Dec. 31, 2008 Proforma 2008 Dec. 31, 2009

Publications 220,661 220,661 220,661Concessions and licenses 2,212 2,219 1,734Intangible assets under development 314 314 26

TOTAL INTANGIBLE ASSETS 223,187 223,194 222,421

of which:

Intangible assets with an indefinite useful life 220,661 220,661 220,661Intangible assets with a defined useful life 2,526 2,533 1,760

No intangible asset was generated internally.Research and development costs were not capitalized and no revaluation of intangible assetswas carried out. The breakdown of intangible assets and changes in the period are shown inthe tables that follow.

Intangible assets with an indefinite useful life

PublicationsDec. 31, 2009

Opening balanceOriginal cost 220.661Write-downs- -Opening balance 220,661

ADJUSTMENTS TO ORIGINAL COSTIncreases -Decreases -

Closing balanceOriginal cost 220.661Write-downs- -Closing balance 220.661

Intangible assets with an indefinite useful life include newspaper la Repubblica whoseaccounting value is equal to €220,527 thousand and is unchanged from December 31, 2008.The impairment test carried out on the newspaper, representing a Cash Generating Unit, didnot result in the emergence of losses in value to be recorded in the financial statements. Theexpected retrievable value of assets was estimated based on the higher between fair value lesscost to sell and the value in use.


Determination of value in use of Cash generating unitThe value in use of Cash generating unit was determined by discounting back – at anappropriate rate – future cash flows, both positive and negative, generated by the unit in its pro-ductive phase and upon disposal. In other terms, the value in use was estimated by applying theDiscounted Cash Flow model using the unlevered (or asset side) version that applies a formulathat includes the discounting back of cash flows analytically expected during the period of theanticipatory plans (2010-2014) and the expected terminal value of the cash generating unit.In order to estimate correctly the value in use of a Cash Generating Unit, it has been necessaryto estimate the cash flows generated by it over time; expectations regarding possiblefluctuations in the amount and timing of cash flows; the discounting back rate to be applied;possible risk factors inherent in the long-term nature of the capital investment made in the unit.With regard to the characteristics of cash flows to be discounted, international accounting prin-ciples explicitly require that in the estimation of the discounted value, positive and negativecash flows generated by financial management and financial flows relating to taxes must notbe taken into account. Cash flows to be discounted are therefore only operating cash flows,unlevered and differential (as they relate to the specific unit).In the specific case the discounting rate adopted is the average cost of capital employed by theEspresso Group (WACC), equal to 9.1%.

The determination of fair value less costs to sell of Cash generating unitIAS 36 establishes that the fair value less costs to sell of an asset or a group of assets (forexample a Cash Generating Unit) is best expressed through a price “set” in a binding sale offerbetween independent parties, net of direct costs incurred in the disposal of the asset. In casesuch evidence does not exist, the fair value net cost to sell can be determined making reference,in order of importance, to the following values: the current price negotiated in an activemarket; the price recorded in previous similar transactions; the price estimated on the basis ofother information gathered by the company.In the specific case, the fair value less cost to sell was determined using direct multiples. Thiswas made necessary by the absence of an active trading market for similar cash generating unitand the difficulty in comparing other transactions in the market involving similar units.To determine the possible “price” of a Cash Generating Unit in the publishing sector, entity sidemultiples, either of the trailing (historical/punctual multiples) or leading (expected/averagemultiples) indicator type.

Intangible assets with a definite useful life“Concessions, licenses and trademarks” were amortized using a rate of 33.33% in view of anestimated useful life of 3 years. Changes in individual items are shown in the table below:

Main assumptions on which the 2010-2014 anticipatory plans and sensitivity analysis are basedResults and operating cash flows generated by individual CGUs of the Group were calculatedbased on the 2010-2014 anticipatory plans drafted by management on the basis of reasonableassumptions consistent with historical data. These represent the best estimate of the economicconditions prevailing in the period considered. The first year of the anticipatory planscorresponds to the lust budget prepared for 2010 and approved by the Board of Directors onJanuary 12, 2010.


As already mentioned in note 7 above, the current uncertainties in the short and mediumterm scenario induced management to review expected growth rates of profits and margins., With regard to the Group’s advertising revenues, a stable trend had been forecated for2010, in a market expected by major operators to show a further slight decline thanks tosales efficiency improvements achieved. Starting with the second year of the plan (2011), agradual recovery was forecasted, taking advertising revenues in 2014 back to levelsrecorded in 2008. With regard instead to circulation revenues, the 2010-2014 anticipatoryplan predicted a performance of the different pubblications in line with the respectivetrends registered in the last two years.It should also be noted that in the determination of the terminal value of cash generatingunits, a zero growth rate was prudentially used.With regard to the la Repubblica cash generating unit, a sensitivity analysis of assumptionsused in the impairment test was not carried out due to the fact that the impairment test indi-cates that a positive difference of the fair value less cost to sell and/or the value in use withrespect to the carrying amount that is widely above the 50% threshold set.

Concessions and licenses

Dec. 31, 2009Opening balanceOriginal cost 19,733Accumulated amortization and write-downs (17,521)Opening balance 2,212

ADJUSTMENTS TO ORIGINAL COSTIncreases 909Merge contribution 271DecreasesReclassifications 120ADJUSTMENTS TO PROVISIONSIncreases 1,515Merge contribution 263Decreases -Closing balanceOriginal cost 21,033Accumulated amortization and write-downs (19,299)Closing balance 1,734


Intangible assets under development

Dec. 31, 2009

Opening balanceOriginal cost 314

Opening balance 314

ADJUSTMENTS TO ORIGINAL COST

Increases 26

Reclassifications 314

Closing balanceOriginal cost 26

Closing balance 26

Property, plant and equipment (2)

Dec. 31, 2008 Proforma 2008 Dec. 31, 2009Land 1,064 1,064 1,064Buildings and construction 5,249 5,249 4,952Leasehold improvements 9,719 9,719 8,179Plant and machinery 38,503 38,512 33,899Furniture, fixtures and vehicles 3,820 3,850 2,704Assets under construction & advance payments 1,640 1,640 100Other assets 109 110 67TOTAL PROPERTY, PLANT AND EQUIPMENT 60,104 60,144 50,965


In view of the homogeneity of assets recorded in the Statement of Financial Position, barringspecific relevant cases, the expected useful life of tangible assets by category is as follows:

Useful life Depreciation rateLand - -Industrial and civil buildings 33 years 3%Printing plants 7 years 15.5%Generic plant 10 years 10%Other plant 5 years 20%Rotary presses 5 years 20%Full color rotary presses 10 years 10%Industrial equipment 4 years 25%Vehicles 4 years 25%Furniture, fixtures and ordinary equipment 8 years 12%Electronic equipment 3 years 33%Editorial systems 4 years 25%Leasehold improvements term of contract term of contract

A breakdown of property, plant and equipment owned is included in the tables that follow.

LandDec. 31, 2009

Opening balanceOriginal cost 1,064Opening balance 1,064ADJUSTMENTS TO ORIGINAL COSTIncreases -Decreases -ReclassificationsClosing balanceOriginal cost 1,064Closing balance 1,064


Buildings and construction

Dec. 31, 2009Opening balanceOriginal cost 9,965Accumulated depreciation and write-downs (4,716)Opening balance 5,249ADJUSTMENTS TO ORIGINAL COSTIncreases 2Decreases -Reclassifications -ADJUSTMENTS TO PROVISIONSIncreases (299)Decreases -Closing balanceOriginal cost 9,967Accumulated depreciation and write-downs (5,015)Closing balance 4,952

Leasehold improvements

Dec. 31, 2009Opening balanceOriginal cost 31,108Accumulated depreciation and write-downs (21,389)Opening balance 9,719ADJUSTMENTS TO PROVISIONSIncreases 761Decreases -Reclassifications 194ADJUSTMENTS TO PROVISIONSIncreases (2,495)Decreases -Closing balanceOriginal cost 32,063Accumulated depreciation and write-downs (23,884)Closing balance 8,179


Plant and machinery

Dec. 31, 2009Opening balanceOriginal cost 157,595Accumulated depreciation and write-downs (119,092)Opening balance 38,503ADJUSTMENTS TO ORIGINAL COSTIncreases 1,491Merge contribution 1,153Decreases (40,279)Reclassifications 1,640ADJUSTMENTS TO PROVISIONSIncreases (7,744)Merge contribution (1,142)Decreases 40,277Closing balanceOriginal cost 121,600Accumulated depreciation and write-downs (87,701)Closing balance 33,899of which:Commitments 61,121

Furniture, fixtures and vehicles

Dec. 31, 2009Opening balanceOriginal cost 42,187Accumulated depreciation and write-downs (38,367)Opening balance 3,820ADJUSTMENTS TO ORIGINAL COSTIncreases 841Merge contribution 65Decreases (478)Reclassifications -ADJUSTMENTS TO PROVISIONSIncreases (1,933)Merge contribution (37)Decreases 426Closing balanceOriginal cost 42,615Accumulated depreciation and write-downs (39,911)Closing balance 2,704


Assets under construction and advance payments

Dec. 31, 2009Opening balanceOriginal cost 1,640Opening balance 1,640ADJUSTMENTS TO ORIGINAL COSTIncreases 100Reclassifications (1,640)Closing balanceOriginal cost 100Closing balance 100

Other assets

Dec. 31, 2009Opening balanceOriginal cost 1,726Accumulated depreciation and write-downs (1,617)Opening balance 109ADJUSTMENTS TO ORIGINAL COSTIncreases -Merge contribution 69Decreases -Reclassifications -ADJUSTMENTS TO PROVISIONSIncreases (42)Merge contribution (69)Decreases -Closing balanceOriginal cost 1,795Accumulated depreciation and write-downs (1,728)Closing balance 67

Capital expenditure on property, plant and equipment in the year amount to €3,195 thousandand are due primarily to the change in the printing format (“Plant and machinery”), whichaccounted for €1,491 thousand (in addition to €1,640 already spent in 2008), the refurbishingof the new Turin offices (€453 thousand recorded under Leasehold improvements), and thedevelopment and security of the information technology network (€459 thousand, recordedunder Furniture, fixtures and vehicles).“Plant and machinery” are still encumbered by liens relating primarily to secured guaranteesin favor of banks that extended subsidized loans on rotary presses and other printing plant in2005.


Investments (3)Changes in investments are reported below:

Dec. 31, 2009Opening balanceOriginal cost 455,149Write-downs (54,696)Opening balance 400,453ADJUSTMENTS TO ORIGINAL COSTIncreases 9,551(Merge contribution (1,479)Decreases (1,481)ADJUSTMENTS TO PROVISIONSIncreases -Revaluations (64)Decreases 1,336Closing balanceOriginal cost 461,740Write-downs (53,296)Closing balance 408,444

The value of investments at December 31, 2009 amounted to €408,444 thousand, up €8million on the previous year primarily as a result of the €5 million contribution made to coverlosses of subsidiary ReteA S.p.A. (€5 million), and A. Manzoni & C. S.p.A. (€3.3 million).On March 25, 2009, the Company acquired from the subsidiary Finegil Editoriale S.p.A a 30%share in Selpi S.p.A. for €657 thousand. The acquisition led to the subsequent merger thatinvolved also C.P.S. S.p.A., generating a net decrease of €1,479 thousand in investments.On September 21, 2009, subsidiary Elemedia S.p.A. acquired the investment in EditorialeMetropoli S.p.A. The transaction was accounted for in application of accounting principlesthat provide for the consistency of values in the transfer of investments within groups. Againstan outlay of €2,270 thousand, the investment was therefore recorded at a book value of€1,231 thousand and the €1,039 difference was recorded under a specific equity reserve.On July 21, 2009, subsidiaries Rotonord SpA and Saire Srl were merged with Rotocolor SpA.The transaction resulted in the annulment of shares in Saire Srl and the parallel €1,723increase in the book value of the investment in Rotocolor S.p.A.Finally, at the end of December 2009, the investment in affiliate E-ink Corporate USA wasdisposed of for €145 thousand, generating a profit of €64 thousand.



The table that follows shows investments included in the category, changes in the percentageof ownership and the respective book value:

Investments in: % held Book value Dec. 31, 2008 Proforma 2008 Dec. 31, 2009 Dec. 31, 2008 Proforma 2008 Dec. 31, 2009SubsidiariesFinegil Editoriale SpA 100.00% 100.00% 100.00% 66,413 66,413 66,413Manzoni & C. SpA 100.00% 100.00% 100.00% 14,631 14,631 17,931Elemedia SpA 100.00% 100.00% 100.00% 36,098 36,098 36,098Rotosud SpA 100.00% 100.00% 100.00% 5,104 5,104 5,104C.P.S. SpA 100.00% - - 779 - -Rotocolor SpA 100.00% 100.00% 100.00% 22,326 22,326 24,049Somedia SpA 100.00% 100.00% 100.00% 428 428 428Editoriale Metropoli SpA - - 100.00% - - 1,231Editoriale FVG SpA** 92.12% 92.12% 92.12% 101,711 101,711 101,711Selpi SpA* 70.00% - - 700 - -Rete A SpA 100.00% 100.00% 100.00% 140,000 140,000 145,000S.E.T.A. SpA** 71.00% 71.00% 71.00% 8,640 8,640 8,640Saire Srl. 100.00% 100.00% 100.00% 1,723 1,723 -Total subsidiaries 398,553 397,074 406,605Affiliated companies Le Scienze SpA 50.00% 50.00% 50.00% 1,361 1,361 1,361Consorzio Premium - - 29.63% - - 20Total affiliated companies 1,361 1,361 1,381

Other investments A.G.F. Srl 10.00% 10.00% 10.00% 3 3 3Ag. ANSA Società Coop. a r.l. 3.21% 3.21% 3.21% 454 454 454Consuledit Soc. consortile a r.l. 6.62% 6.62% 6.62% 1 1 1E-Ink corporation Inc. 0.05% 0.05% 0.05% 81 81 -Total other investments 539 539 458TOTAL INVESTMENTS 400,453 398,974 408,444

* 30% of Selpi S.p.A. is held indirectly by subsidiary Finegil Editoriale Spa** The fair value at December 31, 2009 of these investments valued at cost is estimated, based on the respective anticipatory plan, at €166million in the case of FVG SpA, and at €22 million for S.E.T.A.

Summary financial data of subsidiaries and affiliated companies is included in note 10.2“Related parties”. The financial year of the above companies coincides with that of Gruppo Editoriale L’EspressoS.p.A.

Non-current receivables (4)Non-current receivables are made up as follows:

Dec. 31, 2008 Proforma 2008 Dec. 31, 2009Long-term security deposits 373 373 425TOTAL NON-CURRENT RECEIVABLES 373 373 425

Deferred/prepaid tax assets (5) The tables that follow show changes in deferred/prepaid tax assets. Changes in these items arecommented upon in note (29) on taxes.

Prepaid taxesTaxable amount

Dec. 31, 2008 Proforma 2008 Dec. 31, 2009On personnel provisions 5,144 5,144 4,484On risk provisions 16,183 16,183 31,756On write-down of current assets 20,716 20,728 29,329On write-down of property, plant and equipment 5,071 5,071 3,884On write-down of financial instruments 5,756 5,756 7,875TOTAL 52,870 52,882 77,328

Prepaid tax assetsDec. 31, 2008 Proforma 2008 Dec. 31, 2009

On personnel provisions 1,415 1,415 1,233On risk provisions 4,611 4,611 8,922On write-down of current assets 5,711 5,714 8,075On write-down of property, plant and equipment 1,566 1,565 1,119On write-down of financial instruments 1,583 1,583 2,166TOTAL 14,886 14,888 21,515

Deferred taxesTaxable amount

Dec. 31, 2008 Proforma 2008 Dec. 31, 2009On less valuation of personnel provisions 7,864 7,746 6,245On major valuation of property, plant and equipment 131,011 131,011 141,047On revaluation of financial instruments 112 112 111TOTAL 138,987 138,869 147,403

Deferred tax liabilitiesDec. 31, 2008 Proforma 2008 Dec. 31, 2009

On less valuation of personnel provisions 2,163 2,130 1,717On major valuation of property, plant and equipment 40,851 40,850 43,853On revaluation of financial instruments 31 31 31TOTAL 43,045 43,011 45,601



Inventories (6) At December 31, 2009, raw material (paper) inventories amounted to €19,226 thousand,down €3,440 thousand at December 31, 2008 (of which €2,789 thousand due to materialsinventories and €651 thousand to merchandise). The decline at December 31, 2008 over theprevious year was equal to €2,752 thousand.

The tables that follow show a detail of inventories.

Dec. 31, 2008 Inventories, gross Accumulated depreciation Inventories, netPaper (raw materials) 21,564 (1,936) 19,628 Publications (finished goods) 628 - 628 Add-on products and multimedia supports (finished goods) 14,278 (11,977) 2,301 Printing materials (raw materials) 321 (243) 78 Other goods 275 (275) -

TOTAL INVENTORIES AT DEC. 31, 2008 37,066 (14,431) 22,635 Merger differences: Printing materials 31 - 31

TOTAL INVENTORIES (PROFORMA) AT DEC. 31, 2008 37,097 (14,431) 22,666

Dec. 31, 2009 Inventories, gross Accumulated depreciation Inventories, net

Paper (raw materials) 18,957 (2,098) 16,859Publications (finished goods) 975 - 975Add-on products and multimedia supports (finished goods) 9,357 (8,054) 1,303Printing materials (raw materials) 321 (243) 78 Other goods 286 (275) 11

TOTAL INVENTORIES AT DEC. 31, 2009 29,886 (10,670) 19,226

Trade receivables (7)

Dec. 31, 2008 Proforma 2008 Dec. 31, 2009

Newsstands and distributors 13,614 13,614 11,030Other trade receivables 3,136 4,344 7,449Receivables from Group companies 84,653 84,739 82,840

TOTAL TRADE RECEIVABLES 101,403 102,697 101,319

At December 31, 2009 trade receivables amounted to €101,319 thousand, up €1,378thousand on December 31, 2008 due primarily to the lower volume of intragroup transactions.For further detail regarding receivables from Group companies and related maturities, see note10.2 on “Related parties” and note 10.3 on “Risk management”.At December 31, 2009, the Provision for doubtful accounts amounted to €5,969 thousand (upfrom €5,426 thousand at December 31, 2008).

Changes in the year are shown below:Dec. 31, 2009

Opening balance 5,426Merger differences 31Write-downs 1,148Uses of provision (636)Ending balance 5,969

Marketable securities and other financial assets (8)

Dec. 31, 2008 Proforma 2008 Dec. 31, 2009Treasury bonds and similar - - 13,208Bonds - - 11,624Interest accrued - - 295TOTAL MARKETABLE SECURITIES AND OTHER FINANCIAL ASSETS - - 25,127

In 2009, the Company acquired bonds worth €25,087 thousand (of which €234 thousand ofaccrued interest) to diversify the investment of liquid assets. These bonds, which are fixed andfloating rate, are classified as “financial assets available for sale” and thus valued at fair value.The net effect of such valuation on the Shareholders’ Equity is equal to €15 thousand.

Tax receivables (9)

Dec. 31, 2008 Proforma 2008 Dec. 31, 2009Corporate income tax (Ires) and regional tax on productive activities (Irap) receivable 720 731 794Ires/Irap to be reimbursed - - 535Ires receivable from parent company 6,572 6,576 4,584VAT receivable 1,388 1,388 594VAT receivable from other Group companies 185 175 3,080Grants on publishing ex Law 62/2001 receivable 301 301 297Other tax receivables 5,682 5,698 4,816TOTAL TAX RECEIVABLES 14,848 14,869 14,700

At December 31, 2009, tax receivables amounted to €14,700 thousand, down €169 thousandon December 31, 2008 due to the collection of €2,991 thousand in corporate tax credits (ofwhich €1,983 thousand of principal, and €1,008 thousand in interest), and to the €2,905increase in Group VAT receivables and of €535 thousand of Ires receivable from CIR.



Other receivables (10)

Dec. 31, 2008 Proforma 2008 Dec. 31, 2009Receivable on interest subsidies 1,904 1,904 -Social security receivables 124 132 126Security deposits 94 94 83Advances to suppliers 349 360 254Receivables from employees and outsourced personnel 529 533 616Other receivables 386 386 421Accrued income 7,512 7,518 8,276TOTAL OTHER RECEIVABLES 10,898 10,927 9,776

Receivables on interest subsidies relate to subsidies provided by Law to loans concluded in2005 to finance the full-color project, collected in full in the year.Other receivables consist mainly of prepaid rights pertaining to future years, in addition toprepaid rent.

Cash and cash equivalents (11)

Dec. 31, 2008 Proforma 2008 Dec. 31, 2009Cash on hand 55 56 43Bank deposits 97,318 96,688 101,725Accrued interest on current accounts 202 202 59Financial receivables and interest from Group companies 98,593 98,593 80,612TOTAL CASH AND CASH EQUIVALENTS 196,168 195,539 182,439

Current account balances are highly liquid short-term financial investments that are readily con-vertible into known cash amounts and not subject to relevant fluctuations in value. Such invest-ments are made according to the financial needs of the Group, have maturities averagingaround three months and are remunerated at a pre-set fixed rate (on average 1%) based onEuribor.Cash and cash equivalents decline by €13.1 million on the previous year due to investments insecurities (see note 8).Financial receivables and interest from Group companies are reported in the table included innote 10.2 on Related parties and refer to cash management operations. The decline in financialreceivables from Group companies is due primarily to the decline in the amount receivablefrom subsidiary Manzoni & C. S.p.A. with respect to December 31, 2008.

Liabilities and Shareholders’ Equity

Shareholders’ EquityThe table below shows Shareholders’ Equity and the availability of individual components fordistribution.

Shareholders’ Equity component Total amount Uses Portion Uses in the last(€ thousand) available 3 financial years

Covering of losses Other

SHARE CAPITAL 61,439 - - 3,782EQUITY RESERVES -Share premium 380 - - 80,570Capital contributions 17,854 ABC 17,854 -Dividend equalization reserve 3,869 ABC 3,869 -Revaluation reserve (ex Law 413/91) 786 ABC 786 -

TOTAL EQUITY RESERVES 22,889 22,509 - 80,570

INCOME RESERVES -Legal reserve 12,287 B 12,287 -Legal reserve 746 ABC 746 -Voluntary reserve 21,963 -Voluntary reserve 802 B 802 -Voluntary reserve 178,971 ABC 178,986 - 10,977Retained earnings 12 ABC 12 -Reserve ex Law 675/1977 490 ABC 490 -Reinvested capital gains reserve (ex art. 54) 934 ABC 286 -Merger differences 9,393 ABC 9,393 -

TOTAL INCOME RESERVES 225,598 203,002 - 10,977

IFRS RESERVE -Increases 51,747 2,465 -Decreases (566) -Retained earnings (802) -

TOTAL IFRS RESERVES 50,379 2,465 - -

OTHER RESERVES -Own shares (21,290) - (95,326)Stock option costs 11,577 -Fair value valuation (15) -Business combinations under joint control (1,039) -

OTHER RESERVES (10,767) - - - (95,326)

TOTAL SHARE CAPITAL AND RESERVES 349,537 227,976 - 3

Legend: A – available for capital increases

B – available for loss coverage

C – available for distribution to shareholders

At December 31, 2009, available reserves amounted to €227,976 thousand, of which€214,887 thousand were available for distribution.



Share capital (12)At December 31, 2009, the share capital amounted to €61,438,738.20 and was made up by409,591,588 shares with par value of €0.15 each. With respect to December 31, 2008, theshare capital grew by €53,970 as a result of the underwriting of 359,800 shares to servicestock option plans. Dec. 31, 2008 Dec. 31, 2009

No. of shares resolved 423,507,188 435,297,188

No. of ordinary shares issued 409,231,788 409,591,588

of which:

Own shares 6,635,000 7,980,000

All ordinary shares issued are fully paid-in. There do not exist shares on which there is arestriction on the distribution of dividends, with the exception of the provisions of article 2357of the Italian Civil Code regarding own shares.

Reserves (13) The breakdown of reserves and changes occurred in the period are reported in the Statementof Changes in the Consolidated Shareholders’ Equity.As resolved by the Shareholders’ Meeting, authorizing the Board of Directors to acquire onthe market ordinary shares of Gruppo Editoriale L’Espresso S.p.A., in the 2009 a total of1,345,000 shares were acquired for €1,087 thousand, which, considering own sharesacquired in previous years and the annulment of 25,215,000 shares in 2008, brings the totalof own shares held by the parent at December 31, 2009 to 7,980,000, representing 1.95%of the share capital.Other changes in reserves include the €1,039 thousand difference between the price paid forthe acquisition of the investment in Editoriale Metropoli SpA and the book value of the same,as described in note 3.

Benefits based on financial instrumentsThe Company recognizes additional benefits to some employees holding top positions throughcompensation plans based on financial instruments. Plans adopted by the Company in the past provided also for the attribution of rights to ben-eficiaries of extraordinary bonuses contingent on the achievement of a certain stock marketprice by the shares of the Company (phantom stock options). In light of recent changes intax regulations regarding incentives for employees, however, the Shareholders’ Meeting ofthe Company held on April 22, 2009, resolved to cancel phantom stock option plans for2007 and 2008 and to replace them with an extraordinary stock option plan regulated,mutatis mutandis, by the same terms and conditions as those applicable to the phantomstock option plan.Stock option and phantom stock option plans in force at December 31, 2009 and the relatedcharacteristics are described in the notes to the Consolidated Financial Statements. At December 31, 2009, the total cost of stock option plans recorded in the financialstatements amounted to €563 thousand (€1,157 thousand at December 31, 2008, of which€403 thousand relating to stock options and €755 thousand relating to phantom stockoptions).

Financial debt (14)

Non-current financial debt

Dec. 31, 2008 2008 Dec. 31, 2009 Maturing Maturing Maturing Proforma between 1 between 2 over 5

and 2 years and 5 years yearsBonds 303,797 303,797 288,430 717 287,713 -Bank loans 23,514 24,183 18,902 5,320 11,642 1,940

TOTAL NON-CURRENT FINANCIAL DEBT 327,311 327,980 307,332 6,037 299,355 1,940

Current financial debt

Dec. 31, 2008 Proforma 2008 Dec. 31, 2009Bonds 3,424 3,424 3,290Bank loans 5,121 5,266 5,892Financial payables to Group companies 98,930 95,238 76,957

TOTAL CURRENT FINANCIAL DEBT 107,475 103,928 86,139

In October 2004 the Company placed a 10-year bond issue with a face value of €300 millionbearing a 5.125% coupon (an effective tax rate of 4.824%).In 2009, a small portion of the bond issue, with a face value of €14,500 thousand, wasrepurchased (€14,698 thousand of par value). The operation resulted in a capital gain of€2,638 thousand.In compliance with the terms and condition of the bond issue, the bonds repurchased arebeing cancelled.In application of IAS 39, the bond issue is valued at the amortized cost, calculated applyingthe effective interest rate. According to such valuation method, the value of the bond issueincludes both directly attributable costs (equal originally to €1,995 thousand, declining atDecember 31, 2009 to €1,026 thousand as a result of the buy-back of a portion of the issuethat determined the release of €56 thousand), and proceeds from the early termination, inMarch 2005, of an interest rate swap converting the fixed interest rate payable on the bondsinto a floating rate of interest (such proceeds amounted originally to €9,020 thousand,declining to €4,640 thousand at December 31, 2009, of which €255 thousand as a result ofthe buy-back).At December 31, 2009, the nominal value of the bond issue amounted to €285,500thousand, while its book value amounted to €289,114 thousand (€304,483 thousand atDecember 31, 2008) of which €684 thousand represents the short-term portion, and€288,430 thousand the long-term one.

The short-term portion of bonds payable includes, in addition to the current portion of thebond issue, amounting to €684 thousand, also the related interest accrued at December 31,2009, equal to €2,606 thousand.



In 2009, three loans, amounting in total to €2,838 thousand, were freed from liens onequipment set as collateral.

Financial receivables and interest from Group companies are reported in the table includedin note 10.2 on Related parties and refer to cash management operations. The €18,281thousand decline with respect to December 31, 2008 is due primarily to the decline in theamount receivable from subsidiaries Editoriale La Nuova Sardegna S.p.A. and FinegilEditoriale S.p.A, partly offset by the increase in receivables from subsidiaries RotocolorS.p.A. and All Music S.p.A..Bank loans are made up as follows:

Dec. 31, 2008 Proforma 2008 Dec. 31, 2009

Non-current secured loans 23,514 24,183 17,463Non-current unsecured loans - - 1,439Total non-current loans 23,514 24,183 18,902Current secured loans 5,121 5,242 3,882Current unsecured loans - - 1,399Total current loans 5,121 5,242 5,281

TOTAL BANK LOANS 28,635 29,425 24,183

Provisions for risks and charges (15) The table that follows shows changes in the provision and the breakdown between the currentand the non-current portion.

Legal Social security Early retirement Sundry Totalproceedings litigation incentives risks provisions

Opening balance 4,371 2,272 6,150 17,376 30,169Merge Contribution - - - 9 9Uses (1,267) - (3,284) (174) (4,725)Transfers current/non-current - - - - -Provisions/(release) 1,548 (454) 18,855 14,839 34,788Change due to discounting back 160 38 - 7 205Ending balance 4,812 1,856 21,721 32,057 60,446

Non-current portionLegal Social security Early retirement Sundry Total

proceedings litigation incentives risks provisions

Opening balance 3,208 1,517 - 13,807 18,532Merge Contribution - - - - -Uses (237) - - - (237)Transfers current/non-current (1,308) - - (143) (1,451)Provisions/(release) 1,443 (454) - 16,414 17,403Change due to discounting back 160 38 - 7 205Ending balance 3,266 1,101 - 30,085 34,452

Current portion

Legal Social security Early retirement Sundry Total proceedings litigation incentives risks provisions

Opening balance 1,163 755 6,150 3,569 11,637Merge Contribution - - - 9 9Uses (1,030) - (3,284) (174) (4,488)Transfers current/non-current 1,308 - - 143 1,451Provisions/(release) 105 - 18,855 (1,575) 17,385Ending balance 1,546 755 21,721 1,972 25,994

Excluding the provision for social security litigation (discounted at the legal rate of interest),the non-current components of provisions for risks and charges were discounted at a 5% rate,gross of the related tax effect. Provisions for legal proceedings and labor litigation include risks deriving from libel suits, commonto all publishers, risks connected with trade litigation, labor litigation and risks connected withsocial security audits.The provision for early retirement incentives relates to the provision of costs expected to beincurred in the reorganization of the Company.

The provision for sundry risks includes allowances (equal to €28,022 thousand) for tax carry-forwards, tax litigation, premium transactions and sundry risks. See Note 29.

Provisions for Employee termination indemnity and other retirement benefits (16)

Defined benefit plans

The Provision for Employee termination indemnity falls within the defined benefit plancategory and is therefore determined according to actuarial methods, using parameters thatdiffer slightly from those used prior to the reform of Employee Termination Indemnities thatcame into effect in 2007. No changes applied instead to the calculation of Fixed Indemnitiesfor managers and journalists of newspapers. Both plans represent the present value of thefuture legal obligation.

Benefits are calculated based on the following:

EMPLOYEE TERMINATION INDEMNITY OTHER PERSONNEL PROVISIONS

Yearly discounting back rate 5.0% 5.0%Yearly inflation rate 2.0% 2.0%Yearly increase in retributions 3.0% 3.0%Revaluation rate of employee termination indemnities 1.5%+0.75% of ISTAT inflation index -Advances expected to be paid-out annually* 3% - 6% -* based on seniority



Personnel provisions recorded in the Statement of Financial Position amount to €36,592thousand (down €4,031 thousand on December 31, 2008) and are shown in the tables below:

Provision for Employee termination indemnityDec. 31, 2009

Opening balance 33,629

Merger differences 437

Provision for employment in the period (service cost) 23

Increase due to interest (interest cost) 1,703

Actuarial (gain) loss 383

Benefits paid (4,325)

Other changes (91)


Other personnel provisionsDec. 31, 2009

Opening balance 5,812

Merger differences -

Provision for employment in the period (service cost) 358

Increase due to interest (interest cost) 257

Actuarial (gain) loss 59

Benefits paid (1,189)

Other changes (464)


Provision for phantom stock optionsDec. 31, 2009

Opening balance 744

Merger differences -

Releases/Uses 744

Ending balance -

The average number for the period and the actual number of employees are shown in the tablethat follows:

Average number of employees Number of employees at period-end

2008 Proforma 2008 2009 Dec. 31, 2008 Proforma 2008 Dec. 31, 2009

Journalists 554 554 543 543 543 539

Manual and office workers 393 421 387 388 415 376

Managers 33 33 34 35 35 29

Total 980 1,008 964 966 993 944

Trade payables (17)

Dec. 31, 2008 Proforma 2008 Dec. 31, 2009

Payables to suppliers of:

• Paper 24,209 24,209 23,164

• Printing services 6,270 6,270 6,212

• Transport and distribution 4,007 4,007 4,107

• Utilities and telephone 1,284 1,284 1,490

• Capital goods 2,572 2,572 1,651

• Promotions 3,413 3,413 5,540

• Products sold optionally with publications 14,172 14,172 17,588

• Freelance work 2,962 2,962 3,327

• Other editorial costs (photos, investigations and agencies) 2,644 2,644 2,821

• Other suppliers 8,622 8,843 8,995

Trade payables to Group companies 20,021 19,580 16,591

TOTAL TRADE PAYABLES 90,176 89,956 91,486

Terms of payment of trade payables range normally between 60 and 90 days. Trade payablesare in line with December 31, 2008. Trade payables to Group companies are analyzed in note 10.2.

Tax payables (18)

Dec. 31, 2008 Proforma 2008 Dec. 31, 2009

Ires payable to parent company 3,317 3,439 -

Withholding tax and personal income taxes 5,024 5,068 4,071

VAT payable 228 228 925

Group VAT payable 3,245 3,233 2,303

Other tax payables 8 8 18

TOTAL TAX PAYABLES 11,822 11,976 7,317

Other payables (19)

Dec. 31, 2008 Proforma 2008 Dec. 31, 2009

Social Security payables 9,979 10,059 10,176

Payable to personnel for holidays 12,965 13,095 9,553

Other payables to personnel 8,595 8,619 6,702

Payable to Directors, Auditors and minority shareholders 34 34 30

Payable on subscriptions 7,494 7,494 7,376

Payables for contributions ex Law 62/2001 2,867 2,867 2,197

Forfeiting of grants on subsidized loans 1,951 2,014 1,754

Other accrued liabilities 3,168 3,197 3,731

TOTAL OTHER PAYABLES 47,053 47,379 41,519



9. Income Statement

Revenues (20)

2008 Proforma 2008 2009

Circulation 266,549 266,549 250,215

Advertising 292,637 292,637 233,182

Fees for the distribution of other party’s products 166 166 145

Conference, seminars and training 113 113 36

Rights and trademark royalties 589 589 562

Sale of other services 7,163 8,846 7,610

Sale of Internet services 397 397 486

Sale of other products 2,914 2,914 891

Sale of returns and rejects 3,207 3,207 1,024

TOTAL REVENUES 573,735 575,418 494,151

Overall revenues of Gruppo Editoriale L’Espresso S.p.A. declined by 14.1% on the previousyear. Circulation revenues declined by 6.1% due to the contraction of sales of add-on products,while newsstand sales of La Repubblica recorded an increase, though limited, caused by abetter performance in the second half of the year. Sales of magazine L’espresso also registereda good performance in the second half of the year, though insufficient to offset the overallreduction in sales, which decline by 5.1% in the year.Overall circulation declined significantly, primarily as a result of the decision to suspend thedistribution of promotional copies with a low marginal contribution.Advertising sales recorded an even sharper decline (equal overall to a 20.3% reduction on2008), which was however less marked in the second half of the year, as in the case ofcirculation revenues.

Other operating income (21)

2008 Proforma 2008 2009

Grants 2,663 2,676 2,253

Rent 45 45 45

Capital gains on disposal of assets 11 11 10

Extraordinary gains 3,038 3,044 3,092

Other operating income 2,898 2,898 4,553

TOTAL OTHER OPERATING INCOME 8,655 8,674 9,953

Purchases (22) 2008 Proforma 2008 2009

Paper for newspapers and periodicals 76,818 76,818 59,564

Paper for add-on products and promotions 8,156 8,156 7,474

Goods and merchandise purchased 12,571 12,571 10,595

Printing materials - 138 534

Consumables 2,080 2,385 1,587

Change in raw material and merchandise inventories 826 819 19

TOTAL PURCHASES 100,451 100,887 79,773

The €21,114 thousand reduction in purchase costs is due mainly to the lower circulation ofpublications.

Services received (23) 2008 Proforma 2008 2009

Printing and other work carried out by third parties 113,020 110,603 95,720

Editing costs 36,759 36,772 34,614

Distribution 27,190 27,190 22,165

Reproduction rights and other copyright costs 24,733 24,733 23,853

Promotions 22,139 22,139 16,906

Consulting fees 9,462 9,540 8,519

Telephone and data transmission 2,965 2,971 2,784

Maintenance and utilities 4,716 4,766 4,262

Leases and rentals 8,935 9,183 8,952

Other services 38,670 39,024 30,560

TOTAL SERVICES RECEIVED 288,589 286,921 248,335

The cost of services received declines by €38,586 thousand due primarily to the lower salesvolume.

Other operating charges (24) 2008 Proforma 2008 2009

Provision for risks and charges 4,142 4,142 4,233

Taxes and duties 680 683 595

Public relations and gifts 438 451 308

Membership fees 1,190 1,194 1,189

Settlements and reimbursements 178 178 26

Extraordinary losses 1,690 1,757 1,441

Write-down of receivables 3,368 3,368 1,148

Other operating charges 352 352 308

TOTAL OTHER OPERATING CHARGES 12,038 12,125 9,248



Personnel costs (25)2008 Proforma 2008 2009

Wages and salaries 83,264 84,335 76,266Social Security 25,168 25,499 25,050Provisions for employee termination indemnity 6,067 6,131 6,062Provisions for retirement benefits 563 563 417Early retirement incentives 7,283 7,283 18,925Stock options and phantom stock options 932 932 562Other personnel costs 5,773 5,730 2,645

TOTAL PERSONNEL COSTS 129,050 130,473 129,927

In 2009, personnel costs include €18.9 million of corporate reorganization costs.The total cost incurred in the year for compensation of management amounts to €2.4 millionand includes €0.2 million of employee termination indemnities and similar post retirementindemnities, and €0.3 million of stock option costs.

Depreciation, amortization and write-downs (26)2008 Proforma 2008 2009

Intangible asset amortization 1,303 1,307 1,203Tangible asset depreciation 12,148 12,175 11,890Write-down of property, plant and equipment 522 522 934TOTAL DEPRECIATION, AMORTIZATION AND WRITE-DOWNS 13,973 14,004 14,027

Financial income (expense) (27)2008 Proforma 2008 2009

Interest received on current accounts and short-term deposits 5,328 5,332 1,383

Foreign-exchange gains 159 164 71

Other financial income 4,953 4,953 1,912

Net financial income 10,440 10,449 3,366

Interest paid on current account overdrafts - - (1)

Accessory banking expenses (68) (72) (60)

Interest on loans and financing (1,349) (1,349) (1,177)

Interest on bonds issued (14,721) (14,721) (14,397)

Foreign-exchange losses (161) (161) (79)

Financial charges on application of IAS (2,231) (2,251) (2,166)

Other financial charges (4,488) (4,353) (953)

Net financial charges (23,018) (22,907) (18,833)

Revaluation of equity investments - - 64

Write-downs and losses on investments (1,400) (1,400) (8)

Gains on security trading - - 2,638

TOTAL FINANCIAL INCOME (EXPENSE) (13,978) (13,858) (12,773)

The net financial expense amounted to €12,773 thousand, down €1,085 thousand on 2008due to lower financial income, offset by lower interest charges, the write-down of equity invest-ments and the capital gain generated by the buy-back of a portion of the bond issue.

Dividends (28)2008 Proforma 2008 2009

- from subsidiariesFinegil Editoriale SpA 23,973 23,973 19,069Selpi SpA 652 - -Editoriale FVG SpA 6,401 6,401 5,591Elemedia SpA 20,000 20,000 15,500Rotosud SpA 1,564 1,564 74CPS SpA 463 - -S.E.T.A. SpA 847 847 -Rotocolor SpA 858 858 964Somedia SpA 400 400 400Saire Srl - - 76- from affiliated companiesLe Scienze SpA 121 121 309

TOTAL DIVIDENDS 55,279 54,164 41,983

Dividends received in 2009 amounted to €41,983 thousand, down €12,181 thousand on 2008.

Taxes (29)In 2009, income taxes amounted to €20,965 thousand and were made up as follows:

2008 Proforma 2008 2009

Current taxes 15,464 16,025 10,316Deferred and prepaid taxes (628) (631) (706)Previous years’ taxes 13,342 13,342 11,355

TOTAL TAX EXPENSE 28,178 28,736 20,965

Income taxes for the year amounted to €20,965 thousand and included €11,355 thousand ofextraordinary tax provisions.With regard to extraordinary tax provisions, we note that in December 2008, a ruling of theSupreme Cassation Court in Joint Session, called to rule on issues relating to usufruct rights onshares owned by foreign subjects, induced the Company to accrue at December 31, 2008 anamount equal to €13,342 thousand deemed as the only probable risk outstanding, that of anegative outcome of a tax litigation over withholding tax credits on dividends and the relatedamounts withheld, in addition to interest accrued.In light of the most recent jurisprudence on the matter and, in particular, of the ruling of theLazio Region Tax Commission of December 2009, management deemed it appropriate to makean additional provision of €11,355 thousand, net of the related tax effect, considering asprobable the risk of the commission recognizing as taxable also the amount spent to acquirethe usufruct, in addition to interest accrued.After said provision, the provision for risks and charges amounts at December 31, 2009 to



€28,022 thousand, equal to the full amount of risk appraised, net of sanctions, as the risk hasbeen classified only as possible.For the sake solely of completeness, we acknowledge that the highest possible potentialliability, net of the related tax effect and including the mentioned sanctions, would amount toabout €43.9 million.Current taxes decline by €5,778 thousand on December 31, 2008 due primarily to thereduction in the operating profit. The impact of deferred taxes is in line with the previous year.The tax rate grew from 36.7% in 2008, to 40.8% in 2009 due, in addition to previous years’taxes, to the increase in the IRAP tax rate.

The table that follows shows a reconciliation between the theoretical tax expense (IRES 27.5%and IRAP 3.9%) and actual tax expense.

2008 Proforma 2008 2009

1) Pre-tax profit as reported in the accounts 77,847 78,244 51,3522) a. Theoretical income tax expense (at national tax rate) 21,408 21,517 14,122

b. Tax effect of non-deductible costs 1,091 1,128 579c. Dividends (14,442) (14,150) (10,968)d. Non-taxable income/grants (254) (254) (184)

3) Income taxes (IRES) 7,803 8,241 3,5494) Regional tax on productive activities (IRAP) 7,033 7,153 6,0615) Previous years’ taxes 13,342 13,342 11,3556) Total taxes reported in the accounts 28,178 28,736 20,965Average effective tax rate 36.20% 36.73% 40.83%Theoretical tax rate 31.40% 31.40% 31.40%

Base income per share (30)Base income per share is calculated by dividing the net profit for the period by the weightedaverage number of ordinary shares in circulation in the period (excluding own shares).The diluted income per share is calculated by dividing the net profit for the year attributed toordinary shareholders by the weighted average number of ordinary shares in circulation in theperiod, adjusted for the diluting effect of stock options.The table that follows shows income per share and other information used in the calculationof the diluted income per share.

2008 Proforma 2008 2009Net profit 49,669 49,508 30,387weighted average number of ordinary shares in circulation (‘000) 404,276 404,276 401,512

Base income per share 0.123 0.122 0.076

2008 Proforma 2008 2009Net profit 49,669 49,508 30,387weighted average number of ordinary shares in circulation (‘000) 404,276 404,276 401,512No. of options (‘000) 16,177 16,177 20,832

Diluted income per share 0.118 0.118 0.072

10. Other information

10.1 Net financial positionThe net financial position of the parent company is shown in the table that follows:

Dec. 31, 2008 Proforma 2008 Dec. 31, 2009Financial receivables from Group companies 98,593 98,593 80,612

Financial payables to Group companies (98,930) (95,237) (76,957)

Cash on hand and current account deposits 97,575 96,919 101,826

Net cash and cash equivalents 97,238 100,275 105,481Marketable securities and other financial assets - - 25,127

Bond issue (307,221) (307,221) (291,719)

Other bank debt (28,635) (29,425) (24,795)

Other financial assets (liabilities) (335,856) (336,646) (291,387)NET FINANCIAL POSITION (238,618) (236,371) (185,906)

10.2 Related partiesTransactions between the Company and related parties, including intragroup transactions,are carried out in the normal course of business and are settled at market rates. In theperiod under consideration of the Consob’s communication of July 28, 2006, there were noatypical or unusual transactions falling outside the scope of ordinary business to report. Itis to be noted that the conclusion of operations with related parties is subject to a specificprocedure approved by the Board of Directors, available for consultation both on the Com-pany’s site and with Borsa Italiana S.p.A. Gruppo Editoriale L’Espresso S.p.A. holds withits subsidiaries and affiliated companies both trade relationships and relationships involvingthe provision of services and of operating and financial advice. Among the most importanttrade relationships are those held with subsidiary A. Manzoni & C. S.p.A., concessionairefor advertising sales, those with subsidiary Elemedia S.p.A. for the management of sites,and those held with subsidiaries Rotocolor S.p.A., Rotosud S.p.A. and Finegil EditorialeS.p.A., supplying typeset and printing services. The Company also manages a currentaccount to which all subsidiaries and affiliated companies participate.Gruppo Editoriale L’Espresso S.p.A. receives in turn from its parent company CIR S.p.A.,services and advice on strategic, administrative, financial and tax matters. It is to be notedthat the provision of such services on the part of the parent company is deemed aspreferable to the provision of the same on the part of third parties thanks, among otherthings, to the wide knowledge and experience CIR S.p.A. has acquired over time on thecompany and the sector in which Gruppo Editoriale L’Espresso S.p.A. operates.Starting with the 2004 financial year, Gruppo Editoriale L’Espresso S.p.A. and the majorityof its subsidiaries participate in parent company’s CIR “tax consolidation” procedure. InJune 2007, participation in the parent company’s tax consolidation procedure was extendedfor years 2007-2009 and, at the end of 2008, the General Rules for the tax consolidation ofthe CIR Group were revised to bring them in line with changes introduced with the 2008Budget Law. In 2009, Gruppo Editoriale L’Espresso S.p.A. and the majority of its subsidiaries continuedto adopt the Group’s VAT procedure.



The table below shows operating and financial data of Gruppo Editoriale L’Espresso S.p.A.and its parent companies, subsidiaries and affiliated companies.

Relationships between Gruppo Editoriale L’Espresso S.p.A. and other Group companies

Costs Revenues Financial Financial Receivables Payables Guarantees

(€ thousand) charges Income (*) Trade Financial Tax Trade Financial Tax granted

SUBSIDIARIES

Finegil Editoriale SpA 15,970 5,879 95 19,124 2,028 4,269 - 2,291 - 714 37,415

Editoriale La Nuova Sardegna SpA 2,581 417 23 - 257 - - 263 511 49 7,806

S.E.T.A. SpA 1 329 70 - 212 - - 5,063 44 1,192

Editoriale FVG SpA 5 436 298 5,591 287 - - 1 29,116 21 1,346

Elemedia SpA 10,947 3,703 1 15,850 3,560 12,260 - 1,661 2 593 -

Rete A SpA 271 79 - 432 12 26,517 - - 198 702 6,535

All Music SpA 303 194 46 - 99 - - 91 5,699 94 278

A. Manzoni & C. SpA. 2,618 234,905 1 536 76,515 36,128 2,466 567 - - 6,432

Editoriale Metropoli SpA 9,141 551 7 - 575 - 227 3,991 1,064 - -

Rotosud SpA 19,543 154 147 74 34 - - 1,732 12,769 68 21,396

Rotocolor SpA 26,894 691 175 1,041 321 - 387 3,860 20,012 - 11,667

Somedia SpA 5,524 214 10 400 487 - - 1,261 2,523 19 -

Ksolutions SpA - - - 50 - 1,438 - 9 - - -

AFFILIATED COMPANIES

Le Scienze SpA - 712 - 309 947 - - 864 - -

PARENT COMPANIES

Cofide SpA 36 - - - - - - - - - -

CIR SpA 2,300 - - - - - 535 - - - -

(*)including dividends received by subsidiaries

10.3 Risk management

Financial riskThe management of financial risk is regulated by a set of rules that outline the objectives,strategies, guidelines and operating procedures.In the management of financial resources and treasury the Company adopts a procedure thatimplies the application of prudence and limited risk criteria in the choice of financial andinvestment policies, prohibiting all speculative operations except for those motivated andapproved by the Board of Directors. The Company manages and coordinates a centralized intragroup current account, in which allsubsidiaries take part, aiming at obtaining economic advantages in relationships with financialcounterparts and stronger operating efficiency. Centralization allows in fact more efficientplanning and control of financial flows, ensures higher consistency in financing and investmentchoices, optimizes the overall risk profile of the Company and, above all, strengthens itscontractual power with the banking system.

The Company, whose rating issued by Standard&Poors is BB+ with a negative outlook, usesprevalently two channels to raise financial resources: the international bond market and long-term bank loans extended against investments in publishing activities for which subsidies areprovided by the Italian law, reducing the interest rate on the loan by several percentage points.In this framework and in view of the good market liquidity and low interest rates, the parentcompany placed on the market in October 2004 a €300 million, 10-year bond, bearing a5.125% fixed rate of interest, the proceeds of which were used to repay a €200 million bondissue matured on August 1, 2005 and to provide liquidity for acquisitions and investments. The€300 million bond issue and related interest payments are unsecured and do not includecovenants or clauses providing for the early repayment of the same. In addition to the bond issue mentioned above, in November 2005 the parent company wasextended ten-year loans amounting to €33.8 million, subsidized pursuant to the Law on pub-lishing, at an interest rate, net of the State subsidy, of about 2.35%. With the above operations, the Company ensured abundant long-term financial resources suchas to prevent liquidity risks. Were it however to be in need of additional financial resources inaddition to those provided by the operating cash flow, the Company will be in a position todraw on a number of uncommitted credit lines which are currently unutilized.The Company is currently not exposed to financial risk connected with fluctuations in interestrates or exchange rates.

Price riskAs it is active in the publishing sector, the Company acquires large quantities of paper. Toachieve a more efficient management of paper purchases and to strengthen its bargainingposition with counterparts, thus promoting competition among suppliers, the management ofpaper purchases for the Group was unified. In the past, the Company stipulated a number of paper swap contracts on a portion of its paperneeds. As, however, it assessed their ineffectiveness in the medium term, the Company hasdecided to discontinue the use of such instruments.

Credit riskThe credit risk exposure of the Company relates to trade and financial receivables. Due to thesector in which it operates, the Company is not subject to significant credit risk on tradereceivables. Though there are no significant concentrations of such risks, the Companyhowever adopts operating procedures that bar the sale of products or services to customers thatdo not possess an adequate risk profile or provide collateral guarantees. With regard tofinancial receivables, investments in short-term financial instruments and trading in derivativesare carried out only with banks that possess a high credit standing.

****

In compliance with the new accounting principle IFRS 7 we report in the tables that follow inwhich (i) financial assets and liabilities are subdivided by class/category, (ii) financial assets arereported by maturity, and (iii) the contractual expiration of financial liabilities is indicated.As required under IFRS 7, moreover, in the case of financial instruments recorded in theStatement of Financial Position, the hierarchical level of fair value valuation is also indicated.



Classes of financial instruments

Note Book Assets at FV Assets at FV l Loans and Investments Available Fair Effect Effect value through P&L through P&L receivables held to for sale value on on designated as classified as maturity assets Income equity2008 such from initial held for Stetement FINANCIAL ASSETS recognition saler

Non-current assets

Other investments (3) 539 - - - - 539 539 - -

Other receivables (4) 373 - - 373 - - 373 3 -

Current assets


Other receivables * (10) 3,386 - - 3,386 - - 3,386 - -

Cash (11) 196,168 - - 196,168 - - 196,168 9,802 -

* Does not include accrued interest and tax receivables.

Note Book Assets at FV Assets at FV l Loans and Investments Available Fair Effect Effect value through P&L through P&L receivables held to for sale value on on designated as classified as maturity assets Income equity2008 (Proforma) such from initial held for Stetement FINANCIAL ASSETS recognition saler

Non-current assets

Other investments (3) 539 - - - - 539 539 - -

Other receivables (4) 373 - - 373 - 373 3 -

Current assets

Trade receivables (7) 102,697 - - 102,697 - 102,697 (3,368) -

Other receivables * (10) 3,409 - - 3,409 - 3,409 - -

Cash (11) 195,539 - - 195,539 - 195,539 9,806 -

* Does not include accrued interest and tax receivables.

Note Book Assets at FV Assets at FV l Loans and Investments Available Fair Effetto Effect value through P&L through P&L receivables held to for sale value on on designated as classified as maturity assets Income equity2008 such from initial held for Stetement FINANCIAL ASSETS recognition saler

Non-current assets

Other investments (3) 458 - - - - 458 458 56 -

Other receivables (4) 425 - - 425 - - 425 4 -

Current assets


Marketable Securities** (8) 25,127 - - - 25,127 25,127 346 (21)

Other receivables * (8) 1,499 - - 1,499 - - 1,499 -

Cash (10) 182,439 - - 182,439 - - 182,439 2,807 -

* Does not include accrued interest and tax receivables.** The fair value of securities is determined based on the listed price in an active market (“Level 1” according to the classification containedin IFRS 7 § 27A)

Note Book Liabilities at Liabilities at Liabilities Fair Effect Effect value FV through FV through at the value on on P&L designated P&L designated amortized Income equity2008 as such from as held for cost StatementFINANCIAL LIABILITIES initial recognition trading


Bonds (14) (303,797) - - (303,797) (242,059) - -


Current liabilities

Bank overdrafts (14) - - - -



Trade payables (17) (90,176) - - (90,176) (90,176) -

Note Book Liabilities at Liabilities at Liabilities Fair Effect Effect value FV through FV through at the value on on P&L designated P&L designated amortized Income equity2008 (Proforma) as such from as held for cost StatementFINANCIAL LIABILITIES initial recognition trading


Bonds (14) (303,797) - - (303,797) (242,059) - -


Current liabilities

Bank overdrafts (14) (24) - - (24) (24) - -



Trade payables (17) (89,956) - - (89,956) (89,956) - -



Note Book Liabilities at Liabilities at Liabilities Fair Effect Effect value FV through FV through at the value on on P&L designated P&L designated amortized Income equity2009 as such from as held for cost StatementFINANCIAL LIABILITIES initial recognition trading


Bonds (14) (288,430) - - (288,430) (265,545) - -

Other financial debt (14) (18,902) - (18,902) (17,918) - -

Current liabilities

Bank overdrafts (14) (612) - - (612) (612) (1) -



Trade payables (17) (91,486) - - (91,486) (91,486) - -

Financial liabilities by maturity

Note Total Not yet Overdue 0 - 30 31 - 60 61 - 90 over 90 Write-downsAt Dec. 31, 2008 receivable due by days days days days

Non-current assets

Other receivables (4) 373 373 - - - - - -

Current assets

Trade receivables (7) 101,403 99,201 2,202 465 446 512 779 -

- trade receivables, gross 106,828 102,454 4,375 522 457 521 2,875 -

- Accumulated depreciation (5,426) (3,253) (2,173) (57) (11) (9) (2,096) (3,368)


- other receivables, gross 3,489 3,489 - - - - - -

- Provision for doubtful accounts (103) (103) - - - - - -

TOTAL 105,162 102,960 2,202 465 446 512 779 (3,368)

At Dec. 31, 2008 Note Total Not yet Overdue 0 - 30 31 - 60 61 - 90 over 90 Write-downs(Proforma) receivable due by days days days days

Non-current assets

Other receivables (4) 373 373 - - - - - -

Current assets

Trade receivables (7) 102,697 100,448 2,250 480 450 512 808

- trade receivables, gross 108,154 103,700 4,454 537 461 521 2,935 -

- Accumulated depreciation (5,457) (3,253) (2,204) (57) (11) (9) (2,127) (3,368)

Other receivables 3,409 3,409 - - - - -

- other receivables, gross 3,702 3,512 190 - - - 190 -

- Provision for doubtful accounts (293) (103) (190) - - - (190) -

TOTAL 106,479 104,230 2,250 480 450 512 808 (3,368)

note Total Not yet Overdue 0-30 31-60 61-90 over 90 Write-At Dec. 31, 2009 note receivable due by days days days days downsNon-current assetsOther receivables (4) 425 425 - - - - - -Current assetsTrade receivables (7) 101,319 96,809 4,510 1,359 176 235 2,740 -- trade receivables, gross 107,289 100,354 6,934 1,359 176 235 5,164- Accumulated depreciation (5,970) (3,546) (2,424) - - - (2,424) (1,148)Other receivables (10) 1,499 1,499 - - - - - -- other receivables, gross 1,792 1,499 293 - - - 293 -- Provision for doubtful accounts (293) - (293) - - - (293) -TOTAL 103,244 98,733 4,510 1,359 176 235 2,740 (1,148)

Financial liabilities by maturity

less than 6 between 6 between 1 between 2 between 3 between 4 over 5 months mo. and 1 and 2 and 3 and 4 and 5 years

At Dec. 31, 2008 year years years years years TOTALBond issue - 15,375 15,375 15,375 15,375 15,375 315,375 392,250 Other financial debt 102,078 3,116 6,098 5,931 4,301 4,131 5,887 131,542 - bank loans 3,148 3,116 6,098 5,931 4,301 4,131 5,887 32,612 - financial payables to Group companies 98,930 - - - - - - 98,930 Bank overdrafts - - - - - - - - Trade payables 90,176 - - - - - - 90,176 TOTAL 192,254 18,491 21,473 21,306 19,676 19,506 321,262 613,968


At Dec. 31, 2008 (Proforma) year years years years years TOTALBond issue - 15,375 15,375 15,375 15,375 15,375 315,375 392,250 Other financial debt 102,156 3,193 6,248 6,075 4,440 4,265 6,077 132,454 - bank loans 3,226 3,193 6,248 6,075 4,440 4,265 6,077 33,524 - financial payables to Group companies 98,930 - - - - - - 98,930 Bank overdrafts 23 - - - - - - 23 Trade payables 90,413 - - - - - - 90,413 TOTAL 192,592 18,568 21,623 21,450 19,815 19,640 321,452 615,140


At Dec. 31, 2009 year years years years years TOTALBond issue - 14,632 14,632 14,632 14,632 300,132 - 358,660 Other financial debt 80,099 3,106 6,077 4,438 4,265 4,094 1,983 104,062 - bank loans 3,142 3,106 6,077 4,438 4,265 4,094 1,983 27,105 - financial payables to Group companies 76,957 - - - - - - 76,957 Bank overdrafts 612 - - - - - - 612 Trade payables 91,486 - - - - - - 91,486 TOTAL 172,197 17,738 20,709 19,070 18,897 304,226 1,983 554,820



10.4 CommitmentsIn addition to liens on printing plant and rotary presses granted to banks against loansextended, described in the related note to the Financial Statements, at December 31, 2009 theCompany had commitments to purchase equipment and other assets, amounting to €191thousand (€15,026 thousand at December 31, 2008). Guarantees granted amount to €76,574thousand (€88,091 thousand at December 31, 2008) and relate to guarantees in favor of sub-sidiaries Finegil Editoriale S.p.A., Editoriale La Nuova Sardegna S.p.A., SETA S.p.A.,Editoriale FVG S.p.A., Rete A S.p.A., All Music S.p.A., Rotosud S.p.A. and Rotocolor S.p.A.,granted primarily against loans extended (€74,376 thousand), guarantees against assets leasedby Group companies (€697 thousand), and other guarantees granted in favor of third parties(€1,500 thousand).Loans extended to subsidiaries and guaranteed by Gruppo Editoriale l’Espresso S.p.A. amountto €74,376 thousand and have a repayment schedule ending June 30, 2015, with an averageannual reimbursement of about €10 million, with the exception of years 2010 and 2011 inwhich reimbursements amount respectively to €16.5 million and €24.2 million. The guarantee granted to the Revenue Service against tax credits accrued in the last four yearsby some subsidiaries participating in the Group’s VAT scheme amount to €17,493 thousand(€15,834 thousand in 2008).

10.5 Condensed Financial Statements of CIR S.p.A. (art. 2497-bis comma 4of the Italian Civil Code)The Company is subject to the direction and coordination of its parent CIR S.p.A., as resultingfrom corporate deeds and correspondence. Pursuant to article 2497-bis, paragraph 4, of theItalian Civil Code, below we provide summary financial information relating to the lastapproved financial statements of CIR. For a correct and more complete understanding of thefinancial position and performance of CIR S.p.A. at December 31, 2008, and of the results ofthe company for the year ended at such date, we refer to the financial statements of thecompany which are available at the head office of Borsa Italiana S.p.A., complete with anAuditing Report of independent auditor Deloitte & Touche S.p.A.

CIR Compagnie Industriali Riunite SpA - Financial Statements at December 31, 2008


ASSETS

(€ thousand) Dec. 31, 2007 Dec. 31, 2008

Intangible assets 207 191

Property, plant and equipment 3,381 3,177

Land and buildings 19,258 18,686

Investments 1,029,798 1,017,991

Sundry receivables 147 24

Deferred tax assets 1,234 1,083

NON-CURRENT ASSETS 1,054,025 1,041,152

Sundry receivables 74,464 54,470

of which: related parties 15,163 7,828

Marketable securities 65,645 226,548

Financial assets available for sale 50,735 -

Cash and cash equivalents 77,839 12,317

CURRENT ASSETS 268,683 293,335

TOTAL ASSETS 1,322,708 1,334,487

LIABILITIES AND SHAREHOLDERS’ EQUITY

(€ thousand) Dec. 31, 2007 Dec. 31, 2008

Share capital 375,643 374,101

Reserves 343,159 345,985

Retained earnings (loss carry-forwards) 185,051 221,164

Net profit (loss) 79,920 33,251

SHAREHOLDERS’ EQUITY 983,773 974,501

Bonds 295,806 295,982

Deferred taxes -

Personnel provisions 3,212 2,650

NON-CURRENT LIABILITIES 299,018 298,632

Bank overdrafts - -

Financial payables to related parties 14,197 -

Other payables 11,561 11,307


Provisions for risks and charges 14,159 50,047

CURRENT LIABILITIES 39,917 61,354

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY 1,322,708 1,334,487


CIR Compagnie Industriali Riunite SpA - Financial Statements at December 31, 2008

Income Statement

(€ thousand) 2007 2008

Revenues 8,114 7,053


Services received (10,854) (11,036)

of which: related parties (2,251) (2,280)

Personnel costs (8,062) (5,086)

Other operating costs (1,978) (37,921)

Depreciation, amortization and write-downs (822) (867)

Operating profit (13,602) (47,857)

Financial income 9,963 9,252

of which: related parties 1,154 266

Interest charges (18,835) (17,872)

of which: related parties (995) (209)

Dividends 126,523 138,738


Revenues from security trading 13,977 253

Charges from security trading (56,138) (2,396)

Adjustments to the value of financial assets (6,587) (54,721)

Profit before taxes 55,301 25,397

Income taxes 24,619 7,854

NET PROFIT 79,920 33,251


Certification of the Financial Statements of Gruppo Editoriale L’Espresso S.p.A.

pursuant to art. 154 bis of Legislative Decree no. 58 February 24, 1998


Certification of the Financial Statements of Gruppo Editoriale L’Espresso S.p.A. pursuant to art. 154

bis of Legislative Decree no. 58 February 24, 1998

1) The undersigned Monica Mondardini, Managing Director, and Alessandro Alachevich, Diri-

gente preposto alla redazione dei documenti contabili societari (Manager in charge of draft-

ing the corporate and accounting documents) of Gruppo Editoriale L'Espresso S.p.A., certify,

having also considered the provisions of article 154–bis, paragraphs 3 and 4, of Italian

Decree no. 58 of February 24, 1998:

1) · the adequacy in relation to the characteristics of the Company, and

1) · the effective application of the administrative and accounting procedures used in the

preparation of the 2009 Financial Statements.

2) It is also certified that:

2.1) the Financial Statements as of December 31, 2009:

a) are prepared in accordance with International Financial Reporting Standards as adopted

by the European Union pursuant to Regulation (EU) no.1606/2002 of the European Par-

liament and Council dated July 19, 2002 and with the provisions issued in implementation

of article 9 of Italian Decree no. 38 of February 28, 2005;

b) agree with the results of the accounting records and entries;

c) fairly and correctly represent the financial condition, result of operations and cash flows

of the Company;

2.2) the Report on operations contains a reliable analysis of the performance and results of

operations, as well as the situation of the Company, together with a description of its expo-

sure to major risks and uncertainties.

Signed by Signed by

Monica Mondardini Alessandro Alachevich

Rome, February 24, 2010

This certification has been translated into The English language solely for the convenience of

international readers

Report of the Board of Statutory Auditors

Report of the Board of Statutory Auditors | Gruppo Editoriale L’Espresso | 215

To our Shareholders:the Shareholders’ Meeting of Gruppo Editoriale L’Espresso S.p.A. (the “Company”) of April 22,2009, appointed a new Board of Statutory Auditors for years 2009-2011 comprising the follow-ing members:- Giovanni Barbara (elected from the list submitted by minority shareholders pursuant to art.148 of the Testo Unico Finance Act, TUF);- Enrico Laghi (already Permanent Auditor in the previous Board);- Luigi Macchiorlatti Vignat (already Permanent Auditor in the previous Board);- Mauro Ianiro (Alternate Auditor);- Riccardo Zingales (Alternate Auditor);- Silvano Cipolla (Alternate Auditor).In the financial year closed December 31, 2009 the Board of Statutory Auditors carried out mon-itoring activities provided by the Law, in application of principles adopted by the Italian account-ing profession and regulations issued by Consob with regard to internal audit and the activitiesof Statutory Auditors. In the year closed December 31, 2009, the Board of Statutory Auditors therefore monitored (i)compliance with the Law and the Company’s By-laws, (ii) the respect of principles of correctmanagement, (iii) the adequacy of the organizational structure of the Company, of the internalcontrol system and of the administrative and accounting system, assessing the reliability of thesame in providing a correct representation of the Company’s operations, (iv) on the applicationof corporate governance rules set forth in the Self Conduct Code of listed companies which theCompany has adopted, and (v) on the adequacy of instructions imparted to subsidiaries pursuantto article 114, paragraph 2 of the TUF.In particular, we acknowledge the following:1. The Board monitored the main economic, financial and asset transactions carried out by theCompany of which it gained information by taking part in Board of Directors’ meetings, Share-holders’ meetings and contacts with top management, deeming them to conform with applicablelaws and the By-laws.In particular, in 2009 the Company launched a rationalization program of the Group whichincluded the merger by acquisition with the parent company of subsidiaries: (i) C.P.S. SpA; (ii)Selpi SpA.; (iii) Editoriale Metropoli SpA. The merger of these companies was resolved at theBoard of Directors’ Meeting of January 12, 2010.2. In 2009 the Board of Statutory Auditors did not detect any atypical and/or unusual operationcarried out with third parties, related parties or Group companies.The Board of Statutory Auditors deems transactions carried out with Group companies and relat-ed parties described by the Board of Directors in the Report on Operations and the Notes to theAccounts to be appropriate and to be in the interest of the Company.3. With regard to transactions described in paragraph 2 above, the Board deems informationprovided by the Board of Directors in the Report on Operations and the Notes to the Accountsto be adequate.4. The Auditing Report issued on March 31, 2010 by independent auditor Deloitte & ToucheS.p.A. (the “Independent Auditors”) pursuant to article 156 of Legislative Decree 58/98 do notcontain any exception and/or reference to laws, in addition to attesting that the StatutoryAccounts and the Consolidated Financial Statements at December 31, 2009 clearly, truly and fair-ly represent the financial position, the profit and the cash flow of the Company and the Group.Said reports also attest that the Report of the Board and information contained in paragraph 1,

216 | Gruppo Editoriale L’Espresso 2009 | Report of the Board of Statutory Auditors

sub c), d), f), l), m) and paragraph 2, sub b) of art. 123-bis of T.U.F. are consistent with said finan-cial statements.5. In 2009 and after the closing of the financial year, the Board of Statutory Auditors did notreceive any report pursuant to article 2408 of the Italian Civil Code.6. The Board of Statutory Auditors has no knowledge of any denunciation filed to be disclosedin the present Report.7. In 2009, as apparent from the related acknowledgement issued on March 29, 2010, the Inde-pendent Auditors received from the Company and its subsidiaries a compensation of€165,000.00 for additional tasks other than auditing, relating to certification services.8. In 2009 the Company did not make appointments regarding auditing, tax consulting or of anyother nature, to any person linked to independent auditors Deloitte & Touche S.p.A. by long-term relationships.9. In 2009 the Board of Statutory Auditors issued opinions due as per law and certificationsrequired (opinion on the appointment of the Manager in charge of drafting the Company’srecords pursuant to art. 154-bis del T.U.F., opinion on the annual internal audit plan, opinion onthe remuneration set for the Chairman and the Managing Director). The content of these opin-ions was not in contrast with the resolutions subsequently taken by the Board of Directors.The Board of Statutory Auditors, in compliance with the provisions set forth in the Self ConductCode, has also verified:a) the correct application of criteria and procedures adopted by the Board of Directors to evalu-ate the independence of its members based on criteria set by Law and the Self Conduct Code;b) the validity of independence requisites of Auditors based on criteria set by Law and the SelfConduct Code, notwithstanding the fact that, whenever an Auditor should have a vested interestin an operation carried out by the Company, the same is required to provide timely and exhaus-tive information to the other members of the Board of Statutory Auditors and the Chairman ofthe Board of Directors regarding the nature, terms, origin and extent of said interest.10. In 2009, the Board of Directors of the Company held 8 meetings, the Remuneration Committeemet twice, and the Internal Control Committee met 5 times. The Board of Statutory Auditors met6 times in the year. The Board of Statutory Auditors attended all board and shareholders’ meetings.The former Chairman of the Board of Statutory Auditors, Tiziano Onesti, participated to onemeeting of the Internal Control Committee, while the current Chairman of the Board of StatutoryAuditors attended three meetings of the Internal Control Committee.11. The Board of Statutory Auditors ascertained and monitored, within the scope of its mandate,the respect of correct management principles and the adequacy of the organizational structure ofthe Company in respecting the above principles.With regard to the decisional processes of the Board of Directors, the Board of Statutory Auditorsascertained the compliance with the Law and the By-laws of management decisions taken by theBoard and verified the economic and financial appropriateness of transactions and the conse-quent respect of the interests of the Company.The Board of Statutory Auditors thus deems correct management principles to have been appliedproperly.12. The Board of Statutory Auditors ascertained and monitored the adequacy of the organiza-tional structure of the Company and deems, in light of monitoring activities and within itsresponsibilities, such structure to be overall adequate.13. The Board of Statutory Auditors monitored the internal auditing system of the Company andthe activity carried out by the officer in charge of internal control and of the Internal Audit

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Department, coordinating activities with the Internal Control Committee, the Chairman ofthe Board of Directors in his capacity of Executive Director in charge of Internal Audit, andwith the Monitoring Board.Based on activities carried out, the Board, keeping into account the positive opinion on theadequacy and efficient functioning of the internal audit system expressed by the person incharge of internal audit and by the Board of Directors, deems the system to be overall ade-quate.14. The Board of Statutory Auditors monitored the adequacy of the administrative andaccounting system to assess the reliability of the latter in providing a fair representation ofthe Company’s operations by obtaining information on an ongoing basis from the officerin charge of drafting the Company’s accounting records (the Officer in Charge) and by per-sons responsible for each sector, examining records and reviewing work carried out by theindependent auditors.In this regard, the Board acknowledges that the Managing Director and the officer in chargeof preparing the Company’s accounts issued the attestation provided under article 154-bis,T.U.F. regarding the adequacy and actual application of accounting and administrative pro-cedures set forth in the above article of law, in the preparation of the accounts of the Com-pany at December 31, 2009 and those of its consolidated subsidiaries at the same date. Thisactivity allowed to attest that the statutory and consolidated accounts provide a true andcorrect representation of the financial and operating position of the Company and that ofconsolidated subsidiaries.Based on activities carried out, the Board, keeping into account the positive opinion on theorganizational, administrative and accounting systems of the Company expressed by theBoard of Directors, deems the system to be overall adequate and reliable in providing a cor-rect representation of the Company’s operating performance.15. The Board of Statutory Auditors monitored the adequacy of instructions imparted bythe Company to its subsidiaries pursuant to article 114, paragraph 2 of T.U.F. and on thecorrect flow of information between the same, which were found to be adequate in comply-ing with reporting requirements set by Law.16. In the year, the Board of Statutory Auditors met with the Independent Auditors andexchanged with the same data and information relevant pursuant to article 150, paragraph3 of T.U.F.At these meetings, the Independent Auditors did not communicate any fact or anomaly thatshould be disclosed in the present Report.To allow the exchange of information set forth in article 151, paragraph 2 of T.U.F., in theyear, the Board of Statutory Auditors transmitted to the boards of the Company’s sub-sidiaries a questionnaire regarding (i) monitoring activities carried out in 2009; (ii) admin-istration and control systems adopted, and (iii) operating activities. From the analysis ofthese questionnaires, filled in and returned by the respective boards, no comment or factthat should be disclosed in the present Report emerged.17. The Company adopted corporate governance rules in line with the recommendationscontained in the Code of Conduct issued in March 2006 by the Committee for CorporateGovernance of listed companies promoted by the Italian Stock Market (Borsa Italiana SpA).The corporate governance system adopted by the Company is described in detail in the2009 Report on Corporate Governance approved by the Board of Directors on February24, 2010.

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18. The monitoring and control activity of the Board of Statutory Auditors did not uncovercensurable facts, omissions or irregularities worthy of mention in the present Report.19. The Board of Directors, acknowledges that to its knowledge, no derogation to Lawprovisions was made in the preparation of the Statutory and Consolidated Financial State-ments at December 31, 2009.The Board of Statutory Auditors, in view also of the results of the activity of the Independ-ent Auditors and limited to its responsibilities, does not deem that there exist reasons bar-ring the approval of the Financial Statements at December 31, 2009, as drafted andapproved by the Board of Directors at the meeting of February 24, 2010, and agrees withthe latter in the proposed allocation of net income for the year.

The Board of Statutort Auditors

Rome, April 1, 2010

219Report of the Board of Statutory Auditors | Gruppo Editoriale L’Espresso 2009 |

Attachment to the Report of the Board of Statutory Auditors of Gruppo Editoriale L’EspressoSpA pursuant to art. 153, comma 1, of Legislative Decree no. 58/98

In compliance with article 144-quinquiesdecies of Consob Regulation no. 11971/99, below weinclude a description of position held by members of the Board of Statutory Auditors at thedate of the above report, prepared pursuant to article 153, comma 1, of Legislative Decree no.58/98, with companies defined in Volume V, Title V, Chapters V, VI and VII of the Italian CivilCode. Information in parenthesis indicates weather the company is listed and the financial yearin which the term of the position expires:

- Giovanni Barbara: Chairman of the board of Statutory Auditors of Alitalia – C.A.I. Com-pagnia Aerea Italiana SpA (2010), CAI First (2010), CAI Second (2010), CS Asset ManagementFUNDS SpA (2010), CS Italy SpA (2011), CS Servizi Fiduciari Srl (2011), Gruppo EditorialeL'Espresso SpA (quotata 2011), Direct Line Insurance SpA (2012), Intermarine SpA (2010),Key Client SpA (2012), Piaggio & C. SpA (quotata 2011) .

- Enrico Laghi: Chairman of the board of Statutory Auditors of ICQ Holding SpA (2010), RaiCinema SpA (2009), Pirelli & C. SpA (quotata 2011); Permanent Auditor of 01 DistributionSrl (2010), Fendi Srl (2010), Gruppo Editoriale L'Espresso SpA (quotata 2011), Rainet SpA(2010), Servizi Aerei SpA (2009); Managing Director of Banca Finnat SpA (quotata 2011), BeniStabili SpA (quotata 2012); Sole Director of Europrom 2000 Srl (2009).

- Luigi Macchiorlatti Vignat: Chairman of the board of Statutory Auditors of SELF Srl (2009),SELF G1 Srl (2011), SELF G3 Srl (2011), SELF G4 Srl (2011), Self Gardino SpA (2009), SelfImmobiliare Srl (2010), Sirena SpA (2009); Permanent Auditor of Banca Intermobiliare diInvestimenti e Gestioni SpA (quotata 2010), Bonifiche San Martina Srl (2009), Covema VerniciSpA (2010), Dry Products SpA (2012), Energia Lombarda SpA (2012), Euvis SpA (2011),Ghisalba SpA (2009), Gruppo Editoriale L'Espresso SpA (quotata 2011), Immobiliare AlessiaSrl (2010), KOS SpA (2010), La Ginestra Srl (2009), LNG Med Gas S.r.l (2011), SELF G2 S.r.l(2010), Sorgenia Minervino SpA (2012), Sorgenia Power SpA (2010), Sorgenia Solar SpA(2012).

Report of the Indipendent Auditors

Report of the Indipendent Auditors | Gruppo Editoriale L’Espresso | 223

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ARC

Summary reclassified financial data of subsidiaries


Summary reclassified financial data of subsidiaries

Shareholders’ Net Net Revenues Gross Operating Net Equity financial capital operating profit profit

(€ thousand) position employed profit

Finegil Editoriale SpA 54.065 (24.301) 78.366 150.881 34.788 25.617 17.819Editoriale La Nuova Sardegna SpA 20.140 9.764 10.376 33.100 9.176 6.949 4.086S.E.T.A. SpA 3.588 5.422 (1.834) 18.024 (829) (1.263) (1.260)Editoriale FVG SpA 111.448 29.985 81.463 45.816 4.425 2.856 500Editoriale Metropoli SpA 2.832 1.155 1.677 9.262 2.263 2.211 1.384Elemedia SpA 75.441 (12.104) 87.545 84.714 27.680 22.625 13.784Rete A SpA 10.288 (26.124) 36.412 8.358 (8.726) (11.986) (8.787)All Music SpA 6.956 5.855 1.101 8.146 1.144 616 402A. Manzoni & C. SpA 10.091 (30.204) 40.295 497.255 (9.246) (9.625) (8.910)Rotosud SpA 11.501 2.950 8.551 19.070 3.889 1.111 315Rotocolor SpA 25.694 11.760 13.934 26.915 4.832 1.805 768Somedia SpA 1.065 3.554 (2.489) 4.978 31 (49) (147)

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Annual Report 2009

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