Gruppo Editoriale L Espresso Società per azioni

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4 Gruppo Editoriale L Espresso Società per azioni Annual Report 2008 The Annual Report has been translated from that issued in Italy, from the Italian into the English language solely for the convenience of international readers.

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6 Gruppo Editoriale L Espresso Contents Financial Highlights 9 Report of the Board of Directors at December 31, 2008 Operating performance and consolidated results at December, Results by area 14 Subsequent events and outlook 18 Consolidated results at December 31, Results of Parent Company Gruppo Editoriale L Espresso SpA at December 31, Reconciliation between the Parent Company s Financial Statements and the Consolidated Financial Statements 29 Main risks and uncertainties to which the Parent Company and the Group are exposed 29 Other information 31 Proposed allocation of 2008 Net Profit 32 Information required by Consob Regulation no Report on Corporate Governance 49 Consolidated Financial Statements at December 31, 2008 Consolidated Balance Sheet 70 Consolidated Income Statement 71 Statement of Consolidated Cash Flows 72 Statement of Changes in the Consolidated Shareholders Equity 73 Notes to the Consolidated Financial Statements at December 31, Attachments 128 Certification of the Consolidated Financial Statements pursuant to art. 154 bis of Legislative Decree no. 58 February 24, Report of the Independent Auditors 139 Financial Statements of Parent Company Gruppo Editoriale L Espresso SpA at December 31, 2008 Balance Sheet 142 Income Statement 143 Statement of Cash Flows 144 Statement of Changes in the Shareholders Equity 145 Notes to the Financial Statements of Gruppo Editoriale L Espresso SpA at December 31, Certification of the Financial Statements of Gruppo Editoriale L Espresso SpA pursuant to art. 154 bis of Legislative Decree no. 58 February 24, Report of the Board of Statutory Auditors 203 Report of the Independent Auditors 209 Summary reclassified financial data of subsidiaries 213

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8 Gruppo Editoriale L Espresso Company Gruppo Editoriale L Espresso Società per Azioni Share Capital Euro 61,384, Tax ID and Rome Company Register no VAT no Registered office Rome, Via Cristoforo Colombo, 149 Secondary office Rome, Via Cristoforo Colombo, 90 Board of Directors: Chairman Vice Chairman Managing Director Directors Board of Statutory Auditors: Chairman Statutory Auditors Independent Auditors Carlo De Benedetti Marco Benedetto Monica Mondardini Agar Brugiavini Rodolfo De Benedetti Francesco Dini Sergio Erede Mario Greco Maurizio Martinetti Luca Paravicini Crespi Tiziano Onesti Enrico Laghi Luigi Macchiorlatti Vignat Deloitte & Touche SpA

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10 Gruppo Editoriale L Espresso Financial Highlights Consolidated operating data ( million) Revenues Gross operating profit Operating profit Pre-tax profit Net profit Consolidated financial data ( million) Dec. 31, 2007 Dec. 31, 2008 Net capital employed Shareholders' Equity (incl. minority interests) Group Shareholders' Equity Minority interests Net financial position (265) (279) Dividends distributed (67) (69) Personnel Employees at year-end Average number of employees Main ratios ROS (Operating profit/revenues) 16,4% 9,3% ROCE (Operating profit/net capital employed) 22,3% 12,4% ROE (Net profit/shareholders' Equity) 17,5% 4,2%

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14 Report of the Board of Directors 13 Report of the Board of Directors at December 31, 2008 Operating performance and consolidated results at december 31, 2008 Consolidated results % change ( million) 2008/2007 Revenues, of which: 1, , % circulation % advertising % add-on products % Gross operating profit % Operating profit % Profit before taxes % Net profit % Dec.31, Dec.31, ( million) Net financial position (264.9) (278.9) Shareholders Equity before minority interests Group Shareholders Equity minority interests Employees 3,414 3,344 Results of the Espresso Group for the 2008 financial year must be put into perspective in the context of the strong global downturn affecting the economy as a whole and the publishing sector in particular. The already critical state of the publishing sector in the first half of the year has in fact strongly deteriorated in the second half of 2008 as a result of the drastic contraction of advertising investment caused by the ensuing recession. According to data published by Nielsen Media Research, the advertising market as a whole registered in 2008 a 2.8% decline on the previous year (while advertising on the press declined by 7.1%), as a result of a stable first half and a progressive decline in the second half. In the 4th Quarter, advertising spending declined by 9.5% for the market as a whole, and by 13.4% for the press. The contraction of advertising spending affected the Espresso Group whose sales declined consistently. To face the current and expected future evolution of the market, the Group adopted a number of measures aimed at containing costs, consisting primarily of a reduction in promotional campaigns and personnel costs, and the launch of corporate reorganization plans. Once fully operational, savings resulting from these measures will amount to 47 million per year, and will imply extraordinary charges amounting to 25.6 million ( 22.1 million at the gross operating profit level). The entire amount of extraordinary charges was recorded in 2008, against only a portion ( 15.7 million) of expected future cost savings. ***** Consolidated net revenues of the Espresso Group amounted in 2008 to 1,025.5 million, down 6.6% on 1,098.2 million in In the year, advertising revenues of the Group amounted to million, down 7.4% on 2007, due in particular to lower sales registered by newspaper la Repubblica and by the Group s periodicals, in addition to the decline in advertising revenues of the radio and television sector. Advertising on local newspapers was instead more stable, while advertising sales of the Group s Internet sites grew again strongly. Excluding revenues from add-on products, circulation revenues amounted to million, in line with the previous year. Circulation of la Repubblica and L espresso declined however significantly on the previous year, due primarily to the decision to eliminate or reduce a number of initiatives with a high promotional content but whose contribution to revenues was marginal. Revenues from the sale of add-on products declined by 10.2% to million, a performance to be deemed as very positive considering the strong market contraction scenario in which it was achieved. Consolidated gross operating profit amounted to million, down 36.2% on million in Such performance reflects the contraction of

15 14 Report of the Board of Directors the advertising market and the recording of 22.1 million in non-recurring reorganization charges, offset only in part by savings already achieved in the year as a result of cost reduction measures implemented. The decline affected all sectors of activity and is due to a generalized reduction in advertising revenues affecting all of the Group s media. Consolidated net profit amounted, after the recording of 13.3 million in extraordinary tax accruals, to 20.6 million, down from 95.6 million in At December 31, 2008, consolidated net financial debt amounted to million, up 14.1 million on million at the end of Cash generated from operating activities amounted to million and was more then offset by the payment of 68.8 million in dividends for the 2007 financial year, capital expenditure, which absorbed 47.2 million, and the acquisition of 4,385,000 treasury shares for 9.1 million. At December 31, 2008, the Group employed 3,344 persons, 70 less than the 3,414 it employed at the end of the previous year, reflecting the first effects of reorganization plans being implemented. Results by area Repubblica Division The Repubblica Division includes the development, production and marketing of publishing products relating to newspaper la Repubblica (national newspaper, 9 local editions, supplements and monthly magazines Velvet and XL), in addition to the Repubblica.it Internet site. Operating highlights % change ( million) 2008/2007 Revenues % Operating and personnel costs (458.6) (447.6) -2.4% Gross operating profit % Depreciation, amortization and write-downs (12.9) (12.9) - Operating profit % Employees Figures for the division include the share in revenues and costs of the parent company that may not be attributed to a specific activity In 2008, newspaper la Repubblica confirmed, for the eighth consecutive poll, its ranking as the most read information newspaper in Italy, with 3.1 million readers, 4.2% more than in the previous year. Internet site Repubblica.it continued to be enriched with new multimedia content, modern interactive instruments and stronger coverage of local news. In January 2009 the site registered 13 million unique users (an average of over 1.1 million per day), consolidating its leadership in the market. Particular attention was devoted to the development of new editorial products distributed on mobile phones, including the latest generation of smartphones. The Repubblica Mobile service improved its offer with news and service information (cinema, dining out, etc.) which vary according to the place in which the user is located at the time of the request. In December, the application was the most visited mobile news center, with 185 thousand unique monthly users and 2.1 million page views.

16 Report of the Board of Directors 15 ***** Results of the Repubblica Division for 2008 were strongly affected by the sharp downturn affecting the national press. Circulation of major domestic newspapers declined on the previous year. In the first ten months of 2008, information dailies having a circulation of over 100,000 copies registered a 3.6% decline on the corresponding period in the previous year. Similarly, sales of add-on products sold in conjunction with newspapers registered, in a continuing declining segment, a further contraction, after a long period of strong growth protracted until Advertising sales of national newspapers registered in the year an 8.7% decline (source: FCP), which was almost double in the last quarter, in which they were down 15%. Advertising on the web continued instead to grow, registering a 13.9% increase on 2007, though still representing in absolute terms a small portion of total advertising revenues, unable to compensate to a significant degree the decline of advertising on the press. ***** In this market scenario, total revenues of the division declined by 6.3% on the previous year, to million. Circulation revenues, net of revenues from add-on products, were stable on 2007 (down 0.9%). Circulation of la Repubblica declined instead significantly (by -10.4%, to an average of 557 thousand copies per issue) due primarily to the decision to modify a number of marketing initiatives, among which educational program Repubblica@Scuola for which the distribution of the printed copies of the newspaper was replaced with its digital version. Revenues from the sale of add-on products declined slightly on the previous year (down 3.1%), despite the strong downturn in the market. This was made possible thanks to the continuing success of comic books series Tex, launched in 2007, and the overall success of new initiatives and in particular the Corso di inglese (English course), cinema and theater DVD series. Advertising revenues registered an overall decline of 10.1%, with a strong contraction of national commercial ads of la Repubblica and periodicals sold in conjunction with the newspaper, while advertising on Internet site Repubblica.it increased (up 23.5%). Gross operating profit of the division amounted to 44 million, down 33.3% on 66 million in In view of the reduction in turnover, a number of cost reduction measures allowing to offset in part the decline in revenues were implemented. Periodicals Division The Periodicals Division includes weekly magazine L espresso, monthly magazine National Geographic and periodicals Limes, Micromega and Guide de L espresso, in addition to the respective Internet sites. Operating highlights % change ( million) 2008/2007 Revenues 94,2 82,1-12,8% Operating and personnel costs (81,6) (75,6) -7,3% Gross operating profit 12,6 6,5-48,6% Depreciation, amortization and write-downs (1,1) (1,1) -0,4% Operating profit 11,5 5,4-53,2% Employees Figures for the division include the share in revenues and costs of the parent company that may not be attributed to a specific activity In 2008 the Group s periodicals reported a growth in readership. In particular, weekly magazine L espresso reached an average 2.4 million readers, representing a 5.3% increase on As for all Group publications, the Internet site of L Espresso has grown in importance through an enhanced offer, allowing users to read and comment the anticipation of articles to be published in the printed edition and to hold debates with authors on issues selected by readers. In January 2009, the number of unique users of the site exceeded 1.2 million and page views were over 6.1 million.

17 16 Report of the Board of Directors ***** Periodicals as a whole registered at the end of October 2008 a 5.9% decline in circulation across all segments of the market. Advertising revenues for the sector declined overall by 5.5%, with news magazines registering a much sharper decline of 11.6% (source: FCP). ***** Total revenues of the Division declined in 2008 to 82.1 million, a 12.8% reduction on the previous year. Net of the contribution of add-on products, circulation revenues registered a slight decline (down 1.1%). In terms of circulation, the Group s main periodical, L espresso, was the most affected, registering a 6.8% decline to an average of 369 thousand copies per issue, caused by the decision taken in the year to suspend some distribution methods that were scarcely remunerative. The other publications registered a stable circulation, averaging 118 thousand copies per issue for National Geographic, and 13 and 14 thousand copies respectively for Limes and Micromega. Advertising sales declined by 14.5%, reflecting the downturn in the market. In view of the negative situation, the Group implemented, already in the first half of the year, a number of measures aimed at reducing production costs and inefficient marketing initiatives. These measures allowed to limit the impact of the reduction in revenues on the gross operating profit of the division, that declined from 12.6 million in 2007, to 6.5 million in Local newspapers The Local newspapers Division includes 16 local newspapers and a bi-weekly magazine, in addition to the respective Internet sites. Operating highlights % change ( million) 2008/2007 Revenues % Operating and personnel costs (207.0) (212.6) +2.7% Gross operating profit % Depreciation, amortization and write-downs (12.9) (15.7) +21.6% Operating profit % Employees 1,277 1,242 The Group s local newspaper network reached in 2008 an average of over 3.1 million readers per day, posting a 7% increase in readership on the previous year. A good performance was also registered by the related Internet sites which have now steadily exceeded a monthly average of 1 million unique users, with peaks of over 1.5 million users. Success with the public is allowing advertising online to take off, with sales albeit still small in absolute terms more than doubling on the previous year thanks in particular to the contribution of classified ads (commercial ads and personnel recruitment). ***** The local newspapers market has also experienced a downturn, though less marked than the national newspaper segment, both in terms of circulation and advertising sales. Circulations of local newspapers at the end of October recorded a 1.2% reduction on previous year, while advertising revenues for the whole year declined by 5.7% on 2007 (source: FCP). ***** Total revenues of the Group s local newspapers amounted in 2008 to million, down 2.3% on the previous year. Circulation revenues remained stable and the slight decline in total revenues (down 1.6% on 2007) is due to lower sales of add-on products. Circulation of the Group s local newspapers averaged 467 thousand copies per issue, as compared with 473 thousand copies in Circulation increased for Il Centro (up 2%), Trentino Alto Adige newspapers (up 0.6%), La Città (up 0.9%) and Nuova

18 Report of the Board of Directors 17 Sardegna (up 1.6%), while it declined slightly for Emilia Romagna s (Gazzetta di Modena, Gazzetta di Reggio and Nuova Ferrara) and Tuscany s newspapers (Il Tirreno), affected by a more competitive environment. Advertising revenues were in line with the previous year (down 0.1%), registering a slight increase in local advertising (up 1.3%), allowing to offset the 10.1% decline in national advertising. These results appear all the more positive when compared with the performance of the related market, described above. Despite the better than the market performance, gross operating profit of the Group s local newspapers declined from 69.7 million in 2007 to 57.8 million in 2008, as a result of the slight decline in revenues coupled with an increase in operating costs and depreciation charges, which grew primarily due to extraordinary charges on streamlining plans to be introduced. Radio The Radio sector includes the Group s three national radio stations Radio Deejay, Radio Capital and m2o, and the respective Internet sites. Operating highlights % change ( million) 2008/2007 Revenues % Operating and personnel costs (42.0) (47.4) +12.8% Gross operating profit % Depreciation, amortization and write-downs (3.9) (4.4) +14.3% Operating profit % Employees According to Audiradio figures for 2008, the Group s three radio stations had a contradicting performance: Radio Deejay recorded an average daily audience of 5.2 million listeners (13 million in the week), confirming its ranking, despite the decline in audience, as one of the leading Italian private radio stations. Radio m2o s audience continue instead to grow, reaching an average daily audience of one and a half million listeners (up 3.7% on one year ago), and an average weekly audience of 3.7 million (up 4.4%), while Radio Capital s average daily audience declined to 1.6 million listeners, 5.9 million in the week. The acceleration imparted in the year to multimedia activities, developed in a complementary manner by exploiting synergies with the radio stations, allowed to strengthen the role of the three radio stations on all platforms on which products are distributed (ranging from the Internet to mobile phones and satellite), achieving strong results in areas such as web streaming, podcasts and new applications for smartphones. Radio Deejay s social network has grown to reach over 400 thousand users in the month and an official channel of the radio station, allowing the exchange and broadcast of video content among members of the of the Internet community, has recently been launched on You Tube. The offer of products on mobile phones has also developed steadily through the availability of podcasts on traditional mobile phones and the launch of the new ideejay application for smartphones allowing users to listen to the radio station live, consult rankings, videos and photos, in addition to being able to interact with programs being broadcasted. A few weeks from the launch, over 100 thousand downloads were made. ***** The radio market had a performance in line with the previous year, both in terms of audiences and advertising revenues, which have however shown a continuing decline, which has become steeper in the last quarter in which advertising revenues registered a 6.7% decline on the corresponding period in the previous year (source: FCP). ***** After many years in which they registered a significant growth, in 2008 the Group s radio stations recorded a decline in revenues due to both the stronger competitive scenario and the downturn in the sector.

19 18 Report of the Board of Directors In 2008, advertising revenues of the radio station declined by 8.2% on With regard to costs, 2008 absorbed the effect of the structural increase in broadcasting costs (the average number of broadcasting stations in operation grew from 891 in 2007, to 916 in 2008), of higher costs incurred in the enrichment of the programs broadcasted by the three radio stations and larger promotional costs of Radio Deejay. Despite the critical economic situation, gross operating profit for 2008 was equal to 31.6 million, which, though declining by 28.2% on the previous year, still reflects a high operating margin (40% of sales). Rete A - All Music Operating highlights % change ( million) 2008/2007 Revenues % Operating and personnel costs (23.3) (27.2) +16.6% Gross operating profit (0.6) (9.0) n.s. Depreciation, amortization and write-downs (3.1) (4.8) +54.7% Operating profit (3.7) (13.7) n.s. Employees After investing in the enhancement of the image and content of the television station, and reporting negative results as a consequence of lower than expected advertising revenues, in the second half of 2008 the TV station simplified its programming schedule, suspending all main entertainment programs in favor of a prevalently musical programming. The structure was also streamlined to bring it into line with reduced personnel requirements. With regard to investments in network infrastructure, the transition from analogue to digital terrestrial television was started in the year with the coming into operation of digital broadcasting stations is Sardinia, the first Italian region in which analog television was switched off. In the last quarter of 2008, Rete A has therefore had to bear the investment for the activation in the region of the multiplexes for both frequencies assigned to it. Based on the schedule set by the competent ministry, the digitalization process will continue in 2009 involving Valle d Aosta, Western Piemonte, Trentino-Alto Adige, Lazio and Campania regions. Once the switch-off of analog television is complete, Rete A will control over ten channels covering the whole national territory. ***** The Group s television sector reported a 19.6% decline in revenues as advertising revenues were negatively affected, in addition to the negative economic environment, by the discontinuity of the programming schedule in the year. At the same time, costs increased by 16.6% due essentially to extraordinary charges on the corporate reorganization carried out in the second half of the year, which will result in a significant reduction in costs in As a result of the above described factors, the television segment reported a gross operating loss of 9 million. Subsequent events and outlook The deepening economic crisis and the increasingly negative outlook for 2009 determined a drastic reduction in advertising investments from the last months of The first months of 2009 point to a continuing negative trend of advertising expenditure without showing any possible sign of recovery in the short-term, which makes forecasts very difficult. The strong deterioration of results and the critical outlook impose the adoption of more effective cost reduction measures with the aim of ensuring the continuity and the development of the Group s media, whose value continues to be confirmed by the key positions they occupy in the respective markets. With this end, management is currently devoted to the implementation of cost reduction plans already launched, and to the formulation of new measures to achieve a more efficient and effective corporate and organizational structure. Top management intends moreover to strengthen the Group s management action by monitoring directly critical areas, as already the case of its advertising concessionaire.

20 Report of the Board of Director 19 Consolidated results at december 31, 2008 Consolidated Income Statement ( million) Revenues 1, ,025.5 Change in inventories 0.7 (2.6) Other operating income Purchases (167.3) (150.1) Services received (422.5) (388.0) Other operating charges (20.5) (30.5) Investments valued at equity Personnel costs (284.0) (330.7) Depreciation, amortization and write-downs (42.8) (47.2) Operating profit Financial income (expense) (17.6) (19.6) Pre-tax profit Income taxes (66.5) (54.5) Net profit Minority interests (0.9) (0.6) GROUP NET PROFIT 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.

21 20 Report of the Board of Director Consolidated Balance Sheet ASSETS Dec. 31, Dec. 31, ( million) Intangible assets with an indefinite useful life Other intangible assets Intangible assets Property, plant and equipment Investments valued at equity Other investments Non-current receivables Deferred tax assets NON-CURRENT ASSETS Inventories Trade receivables Marketable securities and other financial assets Tax receivables Other receivables Cash and equivalents CURRENT ASSETS TOTAL ASSETS 1, ,411.9 LIABILITIES AND SHAREHOLDERS EQUITY Dec. 31, Dec. 31, ( million) Share capital Reserves Retained earnings (loss carry-forwards) Net profit (loss) Group Shareholders Equity Minority interests SHAREHOLDERS EQUITY Financial debt Provisions for risks and charges Employee termination indemnities and other retirement benefits Deferred tax liabilities NON-CURRENT LIABILITIES Financial debt Provisions for risks and charges Trade payables Tax payables Other payables CURRENT LIABILITIES TOTAL LIABILITIES TOTAL LIABILITIES AND SHAREHOLDERS EQUITY 1, ,411.9

22 Report of the Board of Director 21 Balance Sheet Intangible assets amount to million, up 7.2 million on December 31, 2007 ( million) due primarily to investments in radio broadcasting frequencies made by subsidiary Elemedia ( 5.9 million) and Rete A ( 1 million). Property, plant and equipment amount to 221 million, up 0.6 million on December 31, 2007 ( million). Net capital expenditure made in the year, equal to 45.5 million, was in fact offset almost in full by the 40.8 million depreciation expense for the period and by 4.1 million in write-downs relating primarily to printing equipment and other production equipment no longer in use. Investments amount to 30.3 million, in line with 31 million at December 31, Non-current receivables amount to 1.5 million and consist of security deposits and tax receivables on advances paid on employee termination indemnities. The item is in line with December 31, Deferred tax assets amount to 47.6 million and include temporary differences between amounts recorded in the balance sheet and those recognized for tax purposes. The 2 million increase is due primarily to the higher taxes payable on risk and personnel provisions that are temporarily not deductible, only partly offset by the 6.2 million drawdown of the provision by subsidiary Elemedia to offset taxes for the period. Inventories amount to 27.7 million and include inventories of paper, printing material, publications and products sold optionally with publications. The 2.8 million decline on December 31, 2007 is due primarily to lower stocks of add-on products. Trade receivables amount to million, down 44.9 million on December 31, 2007 due primarily to lower advertising sales in the last quarter of the year with respect to the same period in Tax receivables amount to 20.8 million, down 2.1 million on 23 million at December 31, 2007 due to the use of tax credits on investments (as per Law no.62/2001, the so-called Publishing Law) to offset taxes due for the year. Other receivables amount to 23.5 million and include 5 million of grants covering part of the interest payments on subsidized loans stipulated at the end of 2005 ( 8.6 million at December 31, 2007); advances to suppliers, agents and freelance workers; accrued income relating to rent and rights on licenses for the sale of add-on products to be published in the first months of Cash and equivalents, held in the form of short-term deposits, decline by 31.4 million on December 31, 2007 to million. Cash flow generated by operations ( million) was more than absorbed by the payment of 68.8 million in dividends, the acquisition of treasury stock for 9.1 million, the scheduled repayment 16.9 million in loans, and a net outflow of 47.2 million for investing activities.

23 22 Report of the Board of Director Shareholders Equity at December 31, 2008 amounted to million ( million at December 31, 2007), of which million belonging to the Group ( million at the end of 2007), and 10.8 million relating to minority interests ( 11.1 million at December 31, 2007). In compliance with the resolution taken by the Shareholders Meeting of April 17, 2008, a total of 25,215,000 treasury shares were annulled and the capital stock was thus reduced from 65,167, to 61,384, As a result of this operation, the Reserve for treasury stock, recorded under IFRS as a reduction of the Shareholders Equity, was reduced by 95.3 million, against a parallel reduction of 3.8 million in the share capital, the 80.5 million reduction of the Share premium reserve, thus being reduced to zero, and the 11 million write down of the Voluntary reserve. As a result of the annulment, treasury shares held by the parent at December 31, 2008, whose value is subtracted from the Shareholders Equity, were 6,635,000, representing 1.62% of the share capital. Non-current financial payables amounted to million and include 300 million of bonds issued on October 27, 2004 and subsidized 10-year loans extended in the last quarter of Current and non-current risk provisions amounted to 58.9 million, up 32.6 million on 26.3 million at the end of The increase is due primarily to accruals for extraordinary charges linked to corporate reorganization plans launched in 2008, in addition to a 13.3 million extraordinary tax accrual. For more detail we refer to the related notes in the financial statements. Employee termination indemnities and other retirement benefits amount to 90.9 million ( 92.6 million at December 31, 2007). The 1.7 million decline is due primarily to the employee termination indemnities and fixed indemnities for managers of newspapers paid out in the year ( 8.5 million), offset only in part by the financial effect of the valuation of provisions (interest cost) and the discounted-back value of accruals relating to Fixed Indemnities (service cost), in addition to the cost of phantom stock options, equal in total to 6.8 million. Deferred tax liabilities amount to 108 million ( million at December 31, 2007) and include 38.8 million relating to the tax impact of the recording of TV broadcasting frequencies of All Music. The 5.1 million increase is due primarily to the deduction of accumulated amortization on intangible assets with an indefinite useful life. Current financial debt amounts to 19.9 million, down 0.6 million on December 31, 2007, due to the termination of some leasing contracts at the end of Trade payables amount to million, down 39.5 million due primarily to the containment of production costs (paper and printing) of newspapers and periodicals of the Group, to cost savings in the production and launch of add-on products, to lower commissions due by the advertising concessionaire to agents and media centers, and to different payment terms. Tax payables amount to 19.3 million, declining by 5.4 million due to lower Ires and Irap (corporate tax and regional tax on productive activities) and VAT payables. Other payables amount to 98.3 million, up 6.8 million on 91.4 million at December 31, 2007 due primarily to higher payables to employees as a result of reorganization plans underway.

24 Report of the Board of Director 23 Changes in the Consolidated Net Financial Position ( million) SOURCES OF FUNDS Net profit (loss) for the period, including minority interests Depreciation, amortization and write-downs Accruals to provisions for stock option costs Net change in provisions for personnel costs (15.1) (1.7) Net change in provisions for risks and charges Losses (gains) on disposal of fixed assets (0.8) (1.5) Write down (revaluation) of equity investments Adjustment for investments valued at equity (0.2) (0.9) Cash flow from operating activities Decrease (Increase) in non-current receivables Increase in payables / Decrease in deferred tax assets Increase in payables/ Decrease in tax receivables 16.2 (3.3) Decrease (Increase) in inventories Decrease (Increase) in trade and other receivables (19.6) 49.0 Increase (Decrease) in trade and other payables 19.6 (33.1) Changes in current assets CASH FLOW FROM OPERATING ACTIVITIES Net divestments in equity investments Increases in capital and reserves Other changes TOTAL SOURCES OF FUNDS USES OF FUNDS Net investment in fixed assets (41.7) (53.0) Net equity investments (0.3) - (Acquisition) sale of treasury stock (58.6) (9.1) Dividends (paid) (67.2) (68.8) Other changes - (0.9) TOTAL USES OF FUNDS (167.7) (131.9) Financial surplus (deficit) (2.1) (14.1) BEGINNING NET FINANCIAL POSITION (262.7) (264.9) ENDING NET FINANCIAL POSITION (264.9) (278.9) Changes in the net financial position are commented in the paragraph that follows.

25 24 Report of the Board of Director Consolidated Statement of Cash Flows and Net Debt The comparison between financial flows from January 1, 2008 and December 31, 2008 and those for the same period in 2007 are reported in the table that follows. ( million) OPERATING ACTIVITIES Net profit (loss) for the period, including minority interests Adjustments: - Depreciation, amortization and write-downs Accruals to provisions for stock option costs Net change in provisions for personnel costs (15.1) (1.7) - Net change in provisions for risks and charges Losses (gains) on disposal of fixed assets (0.8) (1.5) - Adjustments to the value of financial assets Adjustment for investments valued at equity (0.2) (0.9) - Dividends (received) - (0.1) Cash flow from operating activities Changes in current assets and other flows CASH FLOW FROM OPERATING ACTIVITIES of which: Interest received (paid) (13.7) (13.8) Income taxes received (paid) (46.2) (39.7) INVESTING ACTIVITIES Outlay for purchase of fixed assets (40.5) (55.5) Outlay for purchase of investments (2.4) - Received on disposal of fixed assets Public grants received Dividends received CASH FLOW FROM INVESTING ACTIVITIES (40.7) (47.2) FINANCING ACTIVITIES Increases in capital and reserves (Acquisition) sale of treasury stock (58.6) (9.1) Issue (repayment) of other financial payables (17.4) (16.9) Dividends (paid) (67.2) (68.8) Other changes (0.3) (0.8) CASH FLOW FROM FINANCING ACTIVITIES (143.1) (95.7) Increase (decrease) in cash and cash equivalents (20.2) (31.5) Cash and cash equivalents at beginning of the period CASH AND CASH EQUIVALENTS AT END OF THE PERIOD The lower cash flow from operating activities for 2008 (down 52.3 million) on 2007 was due, in addition to the decline in the operating results, to changes in deferred tax assets and of VAT payables, in addition to the rise in trade and other receivables. In 2007, 3.8 million of deferred tax assets were recorded in compliance with new Employee Termination Indemnity rules and the provision for deferred tax assets of subsidiary Elemedia was drawn down by 12.3 million to offset taxes due in the period. On the other hand, financial

26 Report of the Board of Director 25 year 2007 was affected by the net 10.2 million impact of the decline in provisions for deferred taxes (both tax assets and liabilities) due to the restatement of the same to adjust them to new IRES (corporate tax) and IRAP (regional tax on productive activities) tax rates. In 2008 instead, deferred tax assets increase by 8.8 million due to higher taxes payable on temporarily non-deductible risk and personnel provisions, offset only in part by the drawdown of 6.2 million of the provision by subsidiary Elemedia. Accruals and uses of the deferred tax provision in the year resulted a 8.6 million decline in cash flow. The 3.3 million decline in tax payables/receivables in 2008 is due primarily to lower IRES (corporate tax)/irap (regional tax on productive activities) payables, down 4.5 million, and to lower VAT payables, down 5.2 million, only in part offset by the 6.4 million use/collection of tax credits and other tax receivables. The lower flow as compared to that generated in 2007 (down 19.5 million) can be traced to a higher use/collection of tax receivables in 2007, to higher VAT payables accrued in 2007 due in part to the first-time inclusion in the Group s VAT consolidation procedure of subsidiaries Rete A and All Music and, finally, to a different amount of tax payables at the end of Trade payables and other payables decline between January 1 and December 31, 2008 by 33.1 million due to lower costs for the production and launch of add-on products with respect to 2007, and to the performance of the different business areas. In 2007, instead, trade payables had increased by 19.6 million due to the existence at the end of the year of Employee Termination Indemnities accrued but not yet paid out to pension funds as provided by applicable norms, and to higher operating costs due to the larger volume of add-on products distributed in the last quarter of Finally, fluctuations in trade receivables in the two years under examination are closely correlated with the performance of the advertising market, already commented in detail in the first part of the present report. Cash flow from investing activities was is negative by 47.2 million due primarily to capital expenditure made in the year. In 2008 new radio and television broadcasting frequencies were acquired and existing low and high frequency broadcasting equipment were upgraded ( 15.3 million), investments were made in the rotary presses and other printing equipment of la Repubblica, local newspapers and magazines ( 24.6 million), while offices, editorial offices and radio recording studios were acquired and renovated ( 9.9 million), information systems were updated, networks upgraded and projects for the renewal of the editorial system were undertaken ( 6.2 million). Cash flow from financing activities absorbed resources amounting to 95.7 million. In the year, dividends payments amounted to 68.8 million while 4,385,000 shares of the company were acquired for 9.1 million, and 16.9 million of loans were repaid.

27 26 Report of the Board of Director The table that follows shows the breakdown of the net financial position of the Group. ( million) Dec. 31, Dec. 31, Financial receivables from Group companies - - Financial payables to Group companies - - Cash and bank deposits Current account overdrafts (0.0) (0.0) Net cash and cash equivalents Marketable securities and other financial assets Bond issue (307.9) (307.2) Other bank debt (107.8) (91.7) Other financial debt (1.4) (0.7) Other financial assets (liabilities) (417.0) (399.6) NET FINANCIAL POSITION (264.9) (278.9) ) Results of Parent Company Gruppo Editoriale L Espresso SpA at December 31, 2008 Income Statement ( million) Revenues Change in inventories 0.4 (1.7) Other operating income Purchases (113.5) (100.5) Services received (311.8) (288.6) Other operating charges (8.9) (12.0) Personnel costs (109.1) (129.1) Depreciation, amortization and write-downs (14.0) (14.0) Operating profit Financial income (expense) (15.3) (14.0) Dividends Pre-tax profit Income taxes (24.0) (28.2) NET PROFIT

28 Report of the Board of Director 27 Balance Sheet ASSETS Dec. 31, Dec. 31, ( million) Intangible assets with indefinite useful life Other intangible assets Intangible assets Property, plant and equipment Investments Non-current receivables Deferred tax assets NON-CURRENT ASSETS Inventories Trade receivables Tax receivables Other receivables Cash and cash equivalents CURRENT ASSETS TOTAL ASSETS 1, ,045.0 LIABILITIES AND SHAREHOLDERS EQUITY Dec. 31, Dec. 31, ( million) Share capital Reserves Retained earnings (loss carry-forwards) Net profit (loss) SHAREHOLDERS EQUITY Financial payables Provisions for risks and charges Employee severance and other retirement benefits Deferred tax liabilities NON-CURRENT LIABILITIES Financial payables Provisions for risks and charges Trade payables Tax payables Other payables CURRENT LIABILITIES TOTAL LIABILITIES TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 1, ,045.0

29 28 Report of the Board of Director Statement of Cash Flows and Net Debt The comparison between financial flows from January 1, 2008 and December 31, 2008 and those for the same period in 2007 are reported in the table that follows. ( million) OPERATING ACTIVITIES Net income (loss) for the period, including minority interests Adjustments: - Depreciation, amortization and write-downs Accruals to provisions for stock option costs Net change in provisions for personnel costs (6.6) (0.8) - Net change in provisions for risks and charges (0.3) Losses (gains) on disposal of fixed assets (0.0) (0.0) - Adjustments to the value of financial assets Dividends (received) (135.5) (55.3) Cash flow from operating activities Changes in current assets and other flows CASH FLOW FROM OPERATING ACTIVITIES of which: Interest received (paid) (13.6) (11.4) Income taxes (paid) received (19.6) (13.0) INVESTING ACTIVITIES Outlay for purchase of fixed assets (8.0) (13.7) Outlay for purchase of investments (1.7) (10.0) Received on disposal of fixed assets Public grants received Dividends received CASH FLOW FROM INVESTING ACTIVITIES FINANCING ACTIVITIES Increases in capital and reserves (Acquisition) sale of treasury stock (58.6) (9.1) Issue (repayment) of other financial debt (5.9) (5.0) Dividends (paid) (67.2) (68.8) Other changes CASH FLOW FROM FINANCING ACTIVITIES (131.3) (82.9) Increase (decrease) in cash and cash equivalents 47.2 (10.2) Cash and cash equivalents at beginning of the period CASH AND CASH EQUIVALENTS AT END OF THE PERIOD The operating performance was described in the section on individual divisions to which we refer. Below we discuss the financial performance of the Group. Capital expenditure of the parent company in 2008 amounted to 13.7 million and consisted primarily in investments for the optimization of the operation of new rotary presses and their technological upgrade, the development of editorial systems of la Repubblica and L espresso,

30 Report of the Board of Director 29 the development of information systems and network infrastructure, in addition to ordinary maintenance work at the editorial offices. At December 31, 2008, financial debt of the parent company amounted to million, up slightly from million at December 31, The cash flow from operations, amounting to 39.9 million, together with the collection of 55.3 million in dividends from subsidiaries were able to offset almost in full capital expenditure made in the year, described above, the payment of 68.8 million in dividends, and the outlay of 9.1 million for the purchase of treasury stock, the planned repayment of 5 million in bank loans, and the payment of 10 million to cover subsidiary s losses. At the end of December, the Group employed 966 persons, 6 less than at December 31, Reconciliation between the Parent Company s Financial Statements and the Consolidated Financial Statements ( thousand) Net profit Shareholders Equity at Dec. 31, 2007 Dec. 31, 2008 Parent company s financial statements 166,162 49, , ,719 Netting of intragroup dividends (141,147) (66,100) - - Shareholders Equity and net profit of subsidiaries 62,963 33, , ,529 Netting of carrying value of consolidated subsidiaries 475 2,745 (449,835) (457,827) Goodwill of publications, trademarks and frequencies 6, , ,305 Effect of valuation on equity of affiliated companies ,866 27,750 Other consolidation adjustments 82 (86) 2,045 1,969 Consolidated Financial Statements 95,598 20, , ,445 Main risks and uncertainties to which the Parent Company and the Group are exposed The main risk factors to which the Group is exposed, linked to the publishing sector, can be classified as follows: general economic risk; operating risks; financial risks. General economic risk The operations of the Group and its financial situation is influenced by the various factors affecting the general economic outlook. In particular, the economic downturn and the current uncertain outlook for the short and medium term had a negative impact on household spending and investments made by businesses and, as a result, on the advertising market. The contraction in orders and sales spurred by a decline in consumption induced in fact companies to postpone the launch of new products and to reduce advertising spending. In the current market situation in which the strong decline in advertising sales and a smaller decline in circulations are causing a marked reduction in margins, the Group reacted by implementing cost reduction measures and devising new measures implying the future adoption of more effective measures aimed at ensuring the continuity and development of the Group s assets.

31 30 Report of the Board of Director Operating risks Risk of fluctuations in paper prices As it is active in the publishing sector, the Group acquires large quantities of paper and is therefore particularly exposed to fluctuations in the price of paper. To achieve a more efficient management of paper purchases and to strengthen its bargaining position with counterparts, thus promoting competition among suppliers, the management of paper purchases for the Group is centralized. In the past, the Group stipulated a number of paper swap contracts on a portion of its paper needs. As, however, it assessed their ineffectiveness in the medium term, the Group has decided to discontinue the use of such instruments. Credit risk The 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 on trade receivables. Though there are no significant concentrations of such risks, the Group however adopts operating procedures that bar the sale of publications, advertising spaces and other services to customers that do not possess an adequate risk profile or provide collateral guarantees. Despite these procedures, it is not possible to rule out that in the current market conditions a number of customers may fall behind with payments or not honor them altogether. The Group has therefore accrued a congruous provision for doubtful accounts. With regard to financial receivables, investments in short-term financial instruments and trading 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 sector It cannot be ruled out that the Group may be required to face liabilities resulting from legal and tax litigation of various nature. The Group has consistently accrued adequate amounts to provision for risks 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 to all employees on an ongoing basis, the consistent application of which is continuously monitored. With reference to Legislative Decree 231/2001 on administrative responsibilities of entities other than individuals, it is acknowledged that all Group companies have adopted an Organizational, Management and Control Model that is continuously updated in compliance with the most recent applicable norms. The Group is finally subject to risks deriving from changes in norms and regulations regarding in particular the radio and television sector and the resulting needs to comply with such changes. The Group monitors these changes actively and holds a constructive dialog with competent authorities to ensure the timely application of new norms issued. Financial risk The 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 implies the application of prudence and limited risk criteria in the choice of financial and investment policies, prohibiting all speculative operations except for those adequately motivated and approved by the Board of Directors of the parent company. The parent company manages and coordinates a centralized intragroup current account, in which all subsidiaries take part, aiming at obtaining economic advantages in relationships with financial

32 Report of the Board of Director 31 counterparts and stronger operating efficiency. Centralization allows in fact more efficient planning and 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 power with the banking system. Further information on risks deriving from financial instruments are provided as required under IFRS in the related section of the notes. * * * Gruppo Editoriale L Espresso SpA, the Parent Company, is exposed to the same risks to which the 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 the financial position of the Group at December 31, 2008, the Company does not believe there exist uncertainties regarding the ability of the Group to continue to carry out its operations. Other information As a result of the annulment of 25,215,000 treasury shares and simultaneous reduction of the share capital by an equivalent amount, treasury shares held by the parent at December 31, 2008 were 6,635,000 (of nominal value 0.15), representing 1.62% of the share capital. Gruppo Editoriale L Espresso acknowledges that, as every year, it has updated the Safety Protocol in compliance with Legislative Decree no.196 dated June 30, 2003 that includes the Personal Information Protection Code. The Company has moreover adopted all technical and organizational measures prescribed by law with regard to the treatment of personal information and has already taken steps to make such document compatible with the obligation recently introduced by the Authority for Privacy of nominating an Officer in charge of the administration of the system. - - Gruppo Editoriale L Espresso makes reference to the risk evaluation Document provided for by the law on workplace safety that mandates an analysis of risks present in the company and the subsequent devising of measures and timing for the implementation of the same to minimize risks and maintain an adequate level of security. With reference to the management of working activities, the above analysis did not uncover any specific risk situations. In 2008 Group companies carried out training/tutoring, in accordance with priorities established, on emergency management, on risks connected with the use of video terminals and on specific risks, involving personnel selected to manage risk issues. Health monitoring activities provided for in current protocols were also planned. In compliance with the newly issued Legislative Decree no. 81 dated April 9, 2008 effective May 15, 2008 all documents on risk evaluation and all security documentation were updated.

33 32 Report of the Board of Director 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 in the notes to the accounts. A list of companies included in the consolidation is reported in Attachment 1 of the Notes to the Consolidated Financial Statements at December 31, Proposed allocation of 2008 Net Profit To our Shareholders: the Financial Statements of Gruppo Editoriale L Espresso SpA that we submit to your approval close reporting a net profit of 49,668, We propose not to distribute any dividend for financial year 2008 and to allocate net profit entirely to retained earnings, having the Legal Reserve already reached an amount equal to 20% of the share capital.

34 Information required by Consob - Resolution no

35

36 Information required by Consob - Resolution no Benefits based on financial instruments Stock option plans Stock option plans for managers of the parent company and its subsidiaries holding top positions within the Group assign the right to exercise at a pre-determined price and for a set term an option for the underwriting of new shares to be issued by the company pursuant to the related stock option plan resolutions. The related rules regulate, among other terms and conditions, also the case in which the assignee of the said options ceases for whatever reason to be employed by the company. Starting from 2001, ad hoc stock option plans were assigned to Marco Benedetto, Managing Director of the company till December , giving him the right to acquire from the company at a predetermined price and for a set term, a number of shares equal to the options already assigned to him. Employee stock option plans Current stock option plans are: 2000 Stock option plan On February 23, 2000, the Board of Directors, in application of the proxy assigned by the Shareholders 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 of which 0.15 of nominal value and of premium over par, determined in relation to the higher between the official price and the listed price on the Italian Stock Market (Borsa Italiana S.p.A.) on February 22, 2000 to service the 2000 Stock Option Plan. The stock option plan provides for the options 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, 2000 and at subsequent quarterly intervals until September 30, 2010; b) up to a maximum for each quarter of 6% of options assigned in the period between December 31, 2000 and March 31, 2004, and at subsequent quarterly intervals until September 30, 2010; c) the residual 4% of options assigned starting from June 30, 2004 and up until September 30, To the present date no option was exercised and, pursuant to the stock option plan, 870,000 options have expired. The residual number of shares is thus 1,285,000. April 24, 2001 Stock option plan On April 24, 2001, the Board of Directors, in application of the proxy assigned by the Shareholders Meeting on April 6, 2001, resolved a capital increase pursuant to article 2441, last comma, 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 provision article 9, comma IV of the Testo Unico tax law that makes reference to the simple arithmetic mean of official stock market prices of the company s shares in the previous month, to service the April 24, 2001 Stock Option Plan. The stock option plan provides for the options 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, 2001 and at subsequent quarterly intervals until September 30, 2011; b) up to a maximum for each quarter of 6% of options assigned in the period between December 31, 2001 and March 31, 2005, and at subsequent quarterly intervals until September 30, 2011; c) the residual 4% of options assigned starting from June 30, 2005 and up until September 30, 2011.

37 36 Information required by Consob - Resolution no To the present date no option was exercised and, pursuant to the stock option plan, 352,500 options have expired. The residual number of shares is thus 577,500. October 24, 2001 Stock option plan On October 24, 2001, the Board of Directors, in application of the proxy assigned by the Shareholders 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 provision article 9, comma IV of the Testo Unico tax law that makes reference to the simple arithmetic mean of official stock market prices of the company s shares in the previous month, to service the October 24, 2001 Stock Option Plan. The stock option plan provides for the options 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, 2002 and at subsequent quarterly intervals until March 31, 2012; b) up to a maximum for each quarter of 6% of options assigned in the period between June 30, 2002 and September 30, 2005, and at subsequent quarterly intervals until March 31, 2012; c) the residual 4% of options assigned starting from December 31, 2005 and up until March 31, To the present date 728,100 options were exercised and, pursuant to the stock option plan, 43,700 options have expired. The residual number of shares is thus 113,200. March 6, 2002 Stock option plan On March 6, 2002, the Board of Directors, in application of the proxy assigned by the Shareholders Meeting on April 6, 2001, resolved a capital increase pursuant to article 2441, last comma, of the Italian Civil Code, for a total of 1,330,000 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 provision article 9, comma IV of the Testo Unico tax law that makes reference to the simple arithmetic mean of official stock market prices of the company s shares in the previous month, to service the March 6, 2002 Stock Option Plan. The stock option plan provides for the options 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, 2002 and at subsequent quarterly intervals until September 30, 2012; b) up to a maximum for each quarter of 6% of options assigned in the period between December 31, 2002 and March 31, 2006, and at subsequent quarterly intervals until September 30, 2012; c) the residual 4% of options assigned starting from June 30, 2006 and up until September 30, To the present date 902,375 options were exercised and, pursuant to the stock option plan, 120,500 options have expired. The residual number of shares is thus 307,125. July 24, 2002 Stock option plan On July 24, 2002, the Board of Directors, in application of the proxy assigned by the Shareholders Meeting on April 6, 2001, resolved a capital increase pursuant to article 2441, last comma, of the Italian Civil Code, for a total of 1,322,500 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 provision article 9, comma IV of the Testo Unico tax law that makes reference to the simple arithmetic mean of official stock market prices of the company s shares in the previous month, to service the July 24, 2002 Stock Option Plan. The stock option plan provides for the options to be exercised by each assignee in the following periods: a) up to a maximum of 12% of the total of options

38 Information required by Consob - Resolution no assigned starting from December 31, 2002 and at subsequent quarterly intervals until September 30, 2012; b) up to a maximum for each quarter of 6% of options assigned in the period between March 31, 2003 and June 30, 2006, and at subsequent quarterly intervals until December 31, 2012; c) the residual 4% of options assigned starting from September 30, 2006 and up until December 31, To the present date 831,250 options were exercised and, pursuant to the stock option plan, 123,200 options have expired. The residual number of shares is thus 368,050. February 26, 2003 Stock option plan On February 26, 2003, the Board of Directors, in application of the proxy assigned by the Shareholders 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 of which 0.15 of nominal value and 2.71 of premium over par, determined in relation to the provision article 9, comma IV of the Testo Unico tax law that makes reference to the simple arithmetic 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 the options 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 quarterly intervals until September 30, 2013; b) up to a maximum for each quarter of 6% of options assigned in the period between December 31, 2003 and March 31, 2007, and at subsequent quarterly intervals until September 30, 2012; c) the residual 4% of options assigned starting from June 30, 2007 and up until September 30, To the present date 784,775 options were exercised and, pursuant to the stock option plan, 147,000 options have expired. The residual number of shares is thus 435,725. July 23, 2003 Stock option plan On July 23, 2003, the Board of Directors, in application of the proxy assigned by the Shareholders Meeting on April 6, 2001, resolved a capital increase pursuant to article 2441, last comma, of the Italian Civil Code, for a total of 1,332,500 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 provision article 9, comma IV of the Testo Unico tax law that makes reference to the simple arithmetic mean of official stock market prices of the company s shares in the previous month, to service the July 23, 2003 Stock Option Plan. The stock option plan provides for the options 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 December 31, 2003 and at subsequent quarterly intervals until December 31, 2013; b) up to a maximum for each quarter of 6% of options assigned in the period between March 31, 2004 and June 30, 2007, and at subsequent quarterly intervals until December 31, 2013; c) the residual 4% of options assigned starting from September 30, 2007 and up until September 30, To the present date 575,600 options were exercised and, pursuant to the stock option plan, 157,050 options have expired. The residual number of shares is thus 599,450. February 25, 2004 Stock option plan On February 26, 2004, the Board of Directors, in application of the proxy assigned by the Shareholders 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 of

39 38 Information required by Consob - Resolution no which 0.15 of nominal value and 4.80 of premium over par, determined in relation to the provision article 9, comma IV of the Testo Unico tax law that makes reference to the simple arithmetic 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 the options 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 quarterly intervals until September 30, 2014; b) up to a maximum for each quarter of 6% of options assigned in the period between December 31, 2004 and March 31, 2008, and at subsequent quarterly intervals until September 30, 2013; c) the residual 4% of options assigned starting from June 30, 2008 and up until September 30, To the present date no options were exercised and, pursuant to the stock option plan, 266,500 options have expired. The residual number of shares is thus 1,218,500. July 28, 2004 Stock option plan On July 28, 2004, the Board of Directors, in application of the proxy assigned by the Shareholders Meeting on April 6, 2001, resolved a capital increase pursuant to article 2441, last comma, of the Italian Civil Code, for a total of 1,450,000 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 provision article 9, comma IV of the Testo Unico tax law that makes reference to the simple arithmetic mean of official stock market prices of the company s shares in the previous month, to service the July 28, 2004 Stock Option Plan. The stock option plan provides for the options 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 December 31, 2004 and at subsequent quarterly intervals until December 31, 2014; b) up to a maximum for each quarter of 6% of options assigned in the period between March 31, 2005 and June 30, 2008, and at subsequent quarterly intervals until December 31, 2014; c) the residual 4% of options assigned starting from September 30, 2008 and up until December 31, To the present date no options were exercised and, pursuant to the stock option plan, 224,500 options have expired. The residual number of shares is thus 1,225,500. February 23, 2005 Stock option plan On February 23, 2005, the Board of Directors, in application of the proxy assigned by the Shareholders 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 of which 0.15 of nominal value and 4.60 of premium over par, determined in relation to the provision article 9, comma IV of the Testo Unico tax law that makes reference to the simple arithmetic 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 the options 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 attribution; b) up to a maximum for each quarter of 6% of options assigned at the end of each of the 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 fifteen quarter subsequent to six calendar months from the date of their attribution and up until September 30, To the present date no options were exercised and, pursuant to the stock option plan, 237,100 options have expired. The residual number of shares is thus 1,247,900.

40 Information required by Consob - Resolution no July 27, 2005 Stock option plan On July 27, 2005, the Board of Directors, in application of the proxy assigned by the Shareholders Meeting on April 6, 2001, resolved a capital increase pursuant to article 2441, last comma, of the Italian Civil Code, for a total of 1,455,000 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 provision article 9, comma IV of the Testo Unico tax law that makes reference to the simple arithmetic mean of official stock market prices of the company s shares in the previous month, to service the July 27, 2005 Stock Option Plan. The stock option plan provides for the options to be exercised by each assignee in the following periods: a) up to a maximum of 12% of the total 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 fifteen quarter subsequent to December 31, 2005 and up until December 31, To the present date no options were exercised and, pursuant to the stock option plan, 189,300 options have expired. The residual number of shares is thus 1,265, Stock option plan On April 26, 2006, the Board of Directors, in application of the proxy assigned by the Shareholders Meeting on April 6, 2001, resolved a capital increase pursuant to article 2441, last comma, of the Italian Civil Code, for a total of 2,900,000 shares of 0.15 nominal value to be reserved for the underwriting of employees of the parent company and its subsidiaries holding stock options issued pursuant to the 2006 Stock option plan that provides for the options to be assigned in two installments. 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 of official stock market prices of the company s shares in the month that precedes the assignment of the options. 1 st Installment On May 17, 2006, the first installment of 1,450,000 options was assigned at 4.33 each. Assignees of the options may exercise the same in the following periods: a) up to a maximum of 12% of the total of options assigned at December 31, 2006; 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, 2006; c) up to a maximum of 4% of options assigned at the end of the fifteen quarter subsequent to December 31, 2006 and up until December 31, To the present date no options were exercised and, pursuant to the stock option plan, 178,800 options have expired. The residual number of shares is thus 1,271, nd Installment On November 15, 2006, the second installment 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 maximum of 12% of the total of options assigned at June 30, 2007; b) up to a maximum for each quarter of 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 fifteen quarter subsequent to June 30, 2007 and up until June 30, To the present date no options were exercised and, pursuant to the stock option plan, 176,800 options have expired. The residual number of shares is thus 1,253,200.

41 40 Information required by Consob - Resolution no ***** Based on the above, at December 31, 2008, unexercised stock options giving the right to purchase shares of the company amount to 11,168,050, representing 2.73% of the overall share capital of the company. Stock option plans attributed to Marco Benedetto, Current stock option plans in favor of Marco Benedetto are: 1) the February 25, 2004 stock option plan, assigning 600,000 options for the acquisition of an equivalent number of shares at 4.95, exercisable on a daily basis from March 31, 2006 until March 31, 2009; 2) the July 28, 2004 stock option plan, assigning 600,000 options for the acquisition of an equivalent number of shares at 4.80, exercisable on a daily basis from March 31, 2006 until March 31, 2009; 3) the February 23, 2005 stock option plan, assigning 750,000 options for the acquisition of an equivalent number of shares at 4.75, exercisable on a daily basis from March 31, 2007 until March 31, 2010; 4) the July 27, 2005 stock option plan, assigning 750,000 options for the acquisition of an equivalent number of shares at 4.65, exercisable on a daily basis from March 31, 2007 until March 31, 2010; 5) the 2006 stock option plan, assigning 1,700,000 options for the acquisition of an equivalent number of shares. On May 17, 2006 a first installment of 850,000 shares exercisable at 4.33 per share on a daily basis from June 15, 2007 until June 15, 2013, while on November 15, 2006 a second installment of 850,000 shares exercisable at 3,96 per share on a daily basis from December 15, 2007 until December 15, 2013 were assigned. The exercise price of options is determined in accordance with article 9, comma IV of the Testo Unico tax law and make therefore reference to the official stock market price of shares in the month prior to their assignment. Phantom stock option plans 2007 phantom stock option plan The Shareholders Meeting of April 18, 2007, resolved a phantom stock option plan for 2007 for a maximum of 5,200,000 stock options of which 1,250,000 for Marco Benedetto, and which, pursuant to the Rules for the 2007 phantom stock option plan, provides for the assignment of options that may be exercised over several years, giving the right to a variable extraordinary compensation based on the difference between the market price of the stock of the parent company at the time of the exercise of the option ( Normal Value ), and the market price of the stock at the time of the assignment of the option ( Initial Value ). Said Rules regulate, among other terms and conditions, also the fate of the options in case the assignee of the same ceases for whatever reason to be employed by the company. The market value adopted in the calculation of the gross compensation accruing to each beneficiary are (i) the simple arithmetic mean of official stock market price recorded in the fifteen days prior to the assignment of the options (May-October 2007) in the case of the Initial Value and (ii) the simple arithmetic mean, over time, of official stock market price recorded between the first

42 Information required by Consob - Resolution no and the fifteenth day of the month in which each exercise period falls (from the 16 th to the 31 st of March, from the 16 th to the 30 th of June, from the 16 th to the 30 th of September and from the 16 th to the 31 st of December of each year). 1 st Installment On May 15, 2007, the first installment of 2,517,500 options was assigned at 3.84 each. Assignees of the options may exercise the same in the following periods: a) up to a maximum of 12% of the total of options assigned at September 30, 2007; 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, 2007; c) up to a maximum of 4% of options assigned at the end of the fifteen quarters subsequent to September 30, 2007 and up until September 30, To the present date no options were exercised and, pursuant to the stock option plan, 69,500 options have expired. The residual number of shares is thus 2,448, nd Installment On October 15, 2007, the second installment of 2,517,500 options was assigned at 3.60 each. Assignees of the options may exercise the same in the following periods: a) up to a maximum of 12% of the total of options assigned at March 31, 2008; b) up to a maximum for each quarter of 6% of options assigned at the end of each of the fourteen quarters subsequent to March 31, 2008; c) up to a maximum of 4% of options assigned at the end of the fifteen quarters subsequent to March 31, 2008 and up until March 31, To the present date no options were exercised and, pursuant to the stock option plan, 81,800 options have expired. The residual number of shares is thus 2,435, phantom stock option plan The Shareholders Meeting of April 17, 2008, resolved a phantom stock option plan for 2007 for a maximum of 6,025,000 stock options of which 1,600,000 for Marco Benedetto, and which, pursuant to the Rules for the 2008 phantom stock option plan, provides for the assignment of options that may be exercised over several years, giving the right to a variable extraordinary compensation based on the difference between the market price of the stock of the parent company at the time of the exercise of the option ( Normal Value ), and the market price of the stock at the time of the assignment of the option ( Initial Value ). Said Rules regulate, among other terms and conditions, also the fate of the options in case the assignee of the same ceases for whatever reason to be employed by the company. The market value adopted in the calculation of the gross compensation accruing to each beneficiary are (i) the simple arithmetic mean of official stock market price recorded in the fifteen days prior to the assignment of the options (May-October 2008) in the case of the Initial Value and (ii) the simple arithmetic mean, over time, of official stock market price recorded between the first and the fifteenth day of the month in which each exercise period falls (from the 16 th to the 31 st of March, from the 16 th to the 30 th of June, from the 16 th to the 30 th of September and from the 16 th to the 31 st of December of each year). 1 st Installment On May 15, 2008, the first installment of 2,987,500 options was assigned at 2,22 each. Assignees of the options may exercise the same in the following periods: a) up to a maximum of 12% of the total of options assigned at September 30, 2008; b) up to a maximum for each quarter of

43 42 Information required by Consob - Resolution no % of options assigned at the end of each of the fourteen quarters subsequent to September 30, 2008 and; c) the residual 4% at June 30, To the present date no options were exercised and, pursuant to the stock option plan, 70,000 options have expired. The residual number of shares is thus 2,917, nd Installment On October 15, 2008, the second installment of 2,782,500 options was assigned at 1.37 each. Assignees of the options may exercise the same in the following periods: a) up to a maximum of 12% of the total of options assigned at March 31, 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 March 31, 2009 and; c) the residual 4% at December 31, To the present date no options were exercised and, pursuant to the stock option plan, 22,500 options have expired. The residual number of shares is thus 2,760,000.

44 Information required by Consob - Resolution no Information Required by Consob - art Resolution n Table 2 STOCK OPTION ASSIGNED TO DIRECTORS AND MANAGING DIRECTORS ON CHARGE AT DECEMBER 31, 2008 Stock options held at Stock options granted Stock options exercised Stock options Stock options held at beginning of the year in the year in the year expired in the end of the year the year (A) (B) 1) 2) 3) 4) 5) 6) 7) 8) 9) 10) 11) 12) 13) 14) Name Position No. of Average Average No. of Average Average No. of Average Average No. of Average No. of Average Average and Surname stock exercise expiration stock exercise expiration stock exercise market stock exercise stock exercise expiration options price (years) options price (years) options price price options price options price (years) Marco Benedetto Managing Director 4,650, ,650, Corrado Corradi General Manager of Espresso Division 260, , Carlo Ottino General Manager of Repubblica Division 523, , Note: average expiration was calculated considering exclusively the last expiration date for each stock option plan still effective, regardless of the period in which the exercise of the stock option is possible (further detail is provided in the information provided above the present table).

45 44 Information required by Consob - Resolution no Information Required by Consob - art Resolution n Table 3 INVESTMENTS HELD BY DIRECTORS, STATUTORY AUDITORS AND GENERAL MANAGERS IN CHARGE AT DECEMBER 31, 2008 Name and Surname Stake held in No. of shares No. of shares No. of shares No. of shares owned acquired sold owned at at in the year in the year December 31, December 31, Carlo De Benedetti Gruppo Editoriale L Espresso SpA 220,776, ,776,235 of which: through CIR SpA (1) 220,775, ,775,235 through Romed SpA (2) 1, ,000 Luca Paravicini Crespi Gruppo Editoriale L Espresso SpA 4,827, ,827,212 of which: through trust company Biennebi SpA (3) 580, ,545 through Alpa SpA (4) 4,246, ,246,667 Carlo Ottino Gruppo Editoriale L Espresso SpA 19, ,600 (1) Cir - Compagnie Industriali Riunite SpA - strada Volpiano, 53 - Leinì (Torino) - VAT No (2) ROMED SpA - via Valeggio n.41 - Torino - VAT No (3) Fiduciaria Biennebi SpA - via San Pietro all'orto, 22 - Milano - VAT No (4) Alpa Srl, via San Pietro all'orto, 22 Milano - VAT No

46 Information required by Consob - Resolution no Information Required by Consob - ART Resolution n Table 1 COMPENSATIONS PAID IN THE FINANCIAL YEAR 2008 TO DIRECTORS, STATUTORY AUDITORS AND GENERAL MANAGERS A) B) C) D) (1) (2) (3) (4) Name and Position Term of Expiration Emoluments for the position Non-monetary Bonus and Other surname held position held of position in the company that prepares benefits other compensations the financial statements incentives Carlo De Benedetti (1) Chairman Jan. 1, Dec. 31, 2008 approval of the 2008 Fin Stat. 530, Carlo Caracciolo (2) Honorary President and Director Jan. 1, Dec. 15, 2008 dead on Dec. 15, , ,000 Marco Benedetto (3) Managing Director until Dec. 31, 2008; Vice-Chairman since Jan. 1, 2009 Jan. 1, Dec. 31, 2008 approval of the 2008 Fin Stat. 1,220,000-1,035,000 1,209,000 Agar Brugiavini (4) Director Jan. 1, Dec. 31, 2008 approval of the 2008 Fin Stat. 40, Rodolfo De Benedetti (5) Director Jan. 1, Dec. 31, 2008 approval of the 2008 Fin Stat. 30, Francesco Dini (6) Director Jan. 1, Dec. 31, 2008 approval of the 2008 Fin Stat. 20, Sergio Erede (6) Director Jan. 1, Dec. 31, 2008 approval of the 2008 Fin Stat. 20, Mario Greco (4) Director Jan. 1, Dec. 31, 2008 approval of the 2008 Fin Stat. 40, Monica Mondardini (7) Director; Managing Director since Jan. 1, 2009 Sep. 16, Dec. 31, 2008 approval of the 2008 Fin Stat. 155, Luca Paravicini Crespi (4) Director Jan. 1, Dec. 31, 2008 approval of the 2008 Fin Stat. 40, Alberto Piaser (6) Director Jan. 1, Sep. 16, 2008 resigned on Sep. 16, , Tiziano Onesti (8) Chairman of the Board of Statutory Auditors Jan. 1, Dec. 31, 2008 approval of the 2008 Fin Stat. 50, ,750 Enrico Laghi (9) Permanent Auditor Jan. 1, Dec. 31, 2008 approval of the 2008 Fin Stat. 33, Luigi Macchiorlatti Vignat (9) Permanent Auditor Jan. 1, Dec. 31, 2008 approval of the 2008 Fin Stat. 33, Corrado Corradi (10) General Manager of the Espresso Division Jan. 1, Dec. 31, 2008 until revoked - 3,106 93, ,344 Carlo Ottino (10) General Manager of the Repubblica Division Jan. 1, Dec. 31, 2008 until revoked - 3,222 92, ,521 Fabio Tacciaria (11) General Manager of the Parent Company Jan. 1, Jul. 31, 2008 resigned on Jun. 31, , ,895 2,315,413 (1) Emoluments include those for the position of Chairman, Director and member of the Remuneration Committee held. All emolumentys are paid out to ROMED SpA. (2) Emoluments include those for the position of Director; other compensation includes emoluments for positions as director in other Group companies. (3) Emoluments include those for the position of Managing Director and Director; bonus relates to incentives provided for the results achived in 2007 and 2008; other compensations include those provided according to a nonconcorrential agreement and emoluments for the position as director in other Group companies. (4) Emoluments include those for the position of Director, member of the Remuneration Committee and member of the Internal Audit Committee. (5) Emoluments include those for the position of Director, member of the Remuneration Committee. (6) Emoluments include those for the position of Director. (7) Emoluments include those for the position of Director held since Sep. 16, 2008 until Dec. 31, (8) Emoluments include those for the position of Chairman of the Board of Statutory Auditors; other compensations includes emoluments for the position of member of the Monitoring Board and the position of Statutory Auditor held in other Group companies. (9) Emoluments include those for the position of Permanent Statutory Auditors. (10) Bonus relates to the results achieved in 2007; other compensations include emoluments for employment work. (11) Bonus relates to the results achieved in 2007; other compensations include emoluments for employment work, TFR accrued since 1991, indemnities for holidays, other contractual indemnities and emoluments for position as director in other Group companies.

47 46 Information required by Consob - Resolution no Information required by Consob - art. 149-duodecies - Regulation n TABLE 1) COMPENSATION (*) IN 2008 FOR SERVICES SUPPLIED BY INDEPENDENT AUDITORS TO GRUPPO EDITORIALE L'ESPRESSO SPA Service supplied Independent Aiditors Service supplied to Compensation ( 000) Auditing Deloitte & Touche SpA Gruppo Editoriale L Espresso SpA 162 Certification: ADS audit PricewaterhouseCoopers SpA Gruppo Editoriale L Espresso SpA 58 (*) Compensation does not include VAT, expenses and Consob ntributions TABLE 2) COMPENSATION (*) IN 2008 FOR SERVICES SUPPLIED BY INDEPENDENT AUDITORS TO SUBSIDIARIES Service supplied Independed Auditors Service supplied to Compensation ( 000) Auditing Deloitte & Touche SpA Subsidiaries 485 Certification: ADS audit PricewaterhouseCoopers SpA Subsidiaries 77 (*) Compensation does not include VAT, expenses and Consob contributions

48 Corporate Governance Report

49

50 Corporate Governance Report 49 Corporate Governance Report 1. Issuer s profile 1.1) Short profile of the Espresso Group Gruppo Editoriale L Espresso S.p.A. (hereinafter the Company ) is one of the leading media groups in Italy, with interests in daily newspaper and periodical publishing, radio, advertising, Internet and television. The Espresso Group publishes the national daily newspaper la Repubblica, the national weekly newsmagazine L espresso, fifteen local daily newspapers (and one bi-weekly magazine), operates three national commercial radio stations, including Radio Deejay (first in listeners appreciation among commercial radio stations in Italy), and All Music, a national television network. The Espresso Group qualifies as a branded content company capable of circulating own high-quality original contents to its readers and listeners everywhere and at any moment of the day, thanks to its multiplatform strategy. Company s documents concerning the corporate governance model adopted, and any additional document of interest for the market, are available both in the dedicated Corporate Governance section on the institutional website and at Borsa Italiana S.p.A. (Italian Stock Exchange). These documents are available also in English. 1.2) Corporate Government System adopted The Company adopted a Corporate Government system in line with recommendations 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 promoted by Borsa Italiana S.p.A. At the Board of Directors meeting held on February 21, 2007, the Company adopted the most recent version of its Corporate Governance model. On the same occasion, among other decisions, the Company s Managing Director was appointed Executive Director in charge of the Internal Control System; Giuseppe Gianoglio, head of Internal Audit of the Parent Company CIR S.p.A., was indicated as the person in charge of Internal Control; and Independent Director Agar Brugiavini, was appointed lead independent director. The Meeting held on April 18, 2007 approved amendments to the Company s By-laws to comply with the new legislation on corporate law. Among other changes, list voting was introduced for the appointment of the Board of Directors together with the relevant threshold criteria for list submission, while the position of Manager in charge of drafting the Company accounting and corporate records was created in October The corporate governance system can be more precisely examined through an analysis of all the items in this report. 1.3) Recent changes in the corporate governance structure From January 1, 2009, the composition of the Board of Directors was changed. In line with the resolution of the Board of Directors meeting of September 16, 2008, in fact, as a result of the resignation of Marco Benedetto from the position of Managing Director, from January 1, 2009 Monica Mondardini is the new Managing Director of the Company, while Marco Benedetto was appointed Vice President. After the death of the Company s Honorary Chairman, Carlo Caracciolo, on January 28, 2009, the Board co-opted as Director Maurizio Martinetti. Finally, following the resignation of the General Manager of the holding company, Fabio Tacciaria, on October 22, 2008 Oliviero Maria Brega was appointed to the position of Manager in charge of drafting the Company accounting and corporate records.

51 50 Corporate Governance Report 2. Information on the ownership structure (pursuant to art.123bis TUF) a) Share Capital structure The Company s subscribed and paid-up share capital is at present 61,384, We remind that on September 4, 2008, a total of 25,215,000 treasury shares, representing 5.8% of the share capital, were annulled - in compliance with current regulations and the resolution of the Meeting of April 17, and the capital stock was thus reduced by a corresponding amount from 65,167, to the current 61,384, Share Capital components are as here below: Number of shares % vs. share cap. Listed Rights and obligations Ordinary Shares 409,231, % MTA No shares with limited or no voting rights were issued; similarly, no convertible bonds are in circulation on the market, or warrants giving right to subscribe newly issued shares. Prior to 2006, the Company adopted stock option plans which entailed a capital increase and are described in the Financial Statements in section Information required by Consob-Resolution n.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 No restriction exists on share transfer. c) Significant holdings (Partecipazioni Rilevanti) as of December 31, 2008 Below is a list of the names of the Shareholders according to the records of the Company s stock ledger as of December 31, 2008 supplemented by the notices received pursuant to art. 120 TUF as well as further information available to the Company. Controlling Shareholders Percentage of ordinary Percentage Declarer capital of voting capital Carlo De Benedetti % % Estate of Carlo Caracciolo di Melito % % Assicurazioni Generali 2.791% 2.841% Fond. Cassa di Risp. di Trieste 2.653% 2.701% Giulia Maria Crespi Mozzoni 2.359% 2.401% Shareholders directly holding more than 2% Percentage of ordinary Percentage Cir S.p.A % % Estate of Carlo Caracciolo di Melito % 11,940% Fond. Cassa di Risp. di Trieste 2.653% 2.701% Alpa S.r.l % 2.112%

52 Corporate Governance Report 51 d) Shares carrying special rights None of the Company shares carry any special rights of control. e) Employee share ownership: mechanism to exercise voting rights No specific mechanism is provided to exercise voting rights in case of employee share ownership. f) Restrictions to exercise voting rights No restrictions to exercise voting rights exist. g) Inter-shareholders agreements No agreement among shareholders pursuant to art. 120 of TUF (Finance Act) is known. h) Appointment and replacement of Directors The Shareholders Meeting held on April 18, 2007 modified art. 15 of the Company s By-laws, introducing list voting procedures for the appointment of Directors. In particular, 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 this list; b) Lists may be submitted by Shareholders representing collectively at least 2.5% of Share Capital with voting rights in ordinary meetings, or any different percentage as may be determined in compliance with laws and regulations; c) The shareholders who, individually or collectively, represent as a whole less than 20% of share capital with voting rights in ordinary meetings, may submit lists containing a maximum number of 3 candidates; d) If no list is submitted or admitted to voting, or the number of directors appointed is lower than the number determined by the Shareholders Meeting, a new Shareholders Meeting shall be called; e) To be valid for the appointment of Directors, the required vote percentage in lists must reach at least half the percentage required for list submission; moreover, candidates must possess requisites 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 for under TUF for Statutory Auditors; i) if only one list is submitted or admitted to voting, all Directors shall be selected from this list; j) One or more Director position vacancies, due to resignation or other causes, shall be filled by replacement in compliance with art of the Italian Civil Code, ensuring that all the applicable requirements are fulfilled. Lists of candidates for Director positions shall be deposited with the Company s registered office and published in the Company s website within at least fifteen days prior to the Shareholders Meeting called to decide upon the renewal of this administrative body. These lists shall include - for each candidate - relevant professional profile, statement of personal honorability, and absence of any cause for ineligibility and incompatibility, in compliance with laws, together with the candidate s statement of independence.

53 52 Corporate Governance Report Consob Resolution no of January 27, 2009, in compliance with art. 143-ter of TUF, established that the minimum shareholding threshold required for list submission for Gruppo Editoriale l Espresso S.p.A.. is 2.5%. i) Proxies for share capital increase and authorization to purchase own shares i.1) Proxies for Share Capital increase The Extraordinary Shareholders Meeting held on April 26, 2006 conferred, for a five-year term, 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 no premium shares, which may also belong to particular categories, to be offered for subscription and to exercise warrants or conversion of debenture loans, even if issued by third parties, or for free allotment to assignees, through transfer to capital of the available part of reserves and funds recorded in the last approved balance sheet; (ii) up to a maximum amount of 10mn nominal value, through the issue of ordinary shares to be reserved for subscription to the employees of the Company, controlling companies and subsidiaries, in compliance with art paragraph 8 of the Italian Civil Code; the Board of Directors is entitled to fix issue price - not lower than the nominal value -, subscription requirements, limits of share availability and, as a general rule, conditions and terms of the above subscription. While the first proxy was not executed, the second one, at present, has been executed for 435,000 through the issue of a maximum number of 2,900,000 shares with nominal value 0.15 per share, to be reserved for subscription to the employees of the Company and its subsidiaries, in compliance with art. 2441, paragraph 8 of the Italian Civil Code, in relation with Regulations for 2006 Stock Option Plan. No share subscription has been executed for this increase. A more precise analytical description of Stock Option Plans, and related share capital increase resolutions 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 s website in the Financial Information section. i.2) Authorization to purchase own shares The Shareholders Meeting held on April 17, 2008, having outlined that the buy back might be a means to create value for the shareholders - and considering the Group s capital structure - has revoked for the period left and the part not yet used, the previous proxy to purchase own shares; it has, contextually, authorized a new proxy having the following characteristics a) duration: 18 months; b) maximum number of ordinary shares that can be purchased: 20,000,000, that is about 4.6% of share capital; c) price of each purchase shall not be higher nor lower than 10% vis-à-vis the reference price recorded by ordinary shares in the session of the regulated market preceding every single operation. In compliance with this proxy and with the proxies conferred over the previous years, as of December 31, 2008, keeping into account the annulment of treasury shares described above in paragraph 2.a, the Company s total amount of own shares was 6,635,000, equal to 1.62% of the shares composing the Share Capital of Gruppo Editoriale L Espresso S.p.A.. l) Change of control clause The Company has not entered into any agreement which includes a clause coming into force in the event of change of control.

54 Corporate Governance Report 53 m) Indemnity for Directors in the event of resignation, dismissal or cessation of employment following a take-over bid No agreement providing for any such indemnity has been entered into between the Company and the members of the Board of Directors. 3. Compliance As per aforesaid in item 1 of this report, the Board of Directors on February 21, 2007 adopted the recommendations of the most recent March 2006 version of the Code. 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. Management and coordination activity The controlling Company Cir S.p.A. governs the Company s management and coordination. All subsidiaries directly or indirectly controlled by Gruppo Editoriale L Espresso S.p.A. have indicated this Company as the subject that exercises the management and coordination over the same. 5. Board of Directors 5.1) Composition As stated in the Company s By-laws, the Board of Directors shall consist of a minimum of 7 to a maximum of 19 members. At the ordinary Shareholders Meeting held on April 26, 2006, 10 members composing the Board of Directors were appointed, to be in office for three financial years, ending with the approval of 2008 Financial Statements. Keeping into account recent changes, the Board of Directors is currently made up as follows: Name Position In office List Exec. Non Indep. Indep. % Other since Exec. TUF BoD positions Carlo De Benedetti Chairman April 26, 2006 M X 100% 5 Marco Benedetto Vice-Chairman Jan. 1, 2009 M X 100% - Monica Mondardini Managing Director (*) X 100% 4 Agar Brugiavini Director April 26, 2006 M X X 100% - Rodolfo De Benedetti Director M X 80% 6 Francesco Dini Director M X 100% 1 Sergio Erede Director M X 60% 10 Mario Greco Director M X X 80% 6 Maurizio Martinetti Director Jan. 28, 2009 (**) X n/a - Luca Paravicini Crespi Director April 26, 2006 M X X 100% 6 (*) co-opted on September 16, 2008 (*) co-opted on January 28, 2009 NOTE Position: please state if Chairman, Deputy Chairman, Managing Director, etc. List: please indicate M/m, if Director was elected by majority or minority list (art. 144-decies, of Consob Issuers Regulations) Exec.: please tick if Director can be qualified as executive Non exec.: please tick if Director can be qualified as non-executive

55 54 Corporate Governance Report Indep.: please tick if Director can be qualified as independent, in compliance with Code criteria: please indicate at foot of Table if the criteria have been either integrated or modified (Section 5.5 of this document) Indep. TUF: please tick if Director is qualified for independence in compliance with art. 148 par. 3 of TUF (art. 144-decies, Consob Issuers Regulations) % BoD: please indicate percentage of Director s attendance to the Board s meetings (in calculating this percentage, please consider the number of meetings attended vis-à-vis the Board s meetings convened over the financial year or after taking office) Other positions: please indicate total of positions covered in other companies listed in regulated markets (also abroad), finance companies, banks, insurance companies, or large companies, identified on the basis of the criteria drafted by the Board of Directors. A list of these companies is attached to this document (Table 1) and includes reference to the corresponding Director, also stating if the company in which the Director has taken office is or is not part of the Group to which the Issuer either refers or belongs. Please note that the criteria adopted to qualify the Directors as independent Directors have been neither integrated nor modified vis-à-vis the Code provisions. Name Position EC % EC AC % AC RC % RC ICC % I.C.C. Carlo De Benedetti Chairman C 100% Marco Benedetto Vice-Chairman Monica Mondardini Managing Director Agar Brugiavini Director M 67% M 100% Rodolfo De Benedetti Director M 67% Francesco Dini Director Sergio Erede Director Marco Greco Director M 100% M 67% Maurizio Martinetti Director Luca Paravicini Crespi Director M 100% M 100% NOTE EC: Executive Committee; please indicate C/M if Chairman/Member of Executive Committee: N/A. % EC: please indicate percentage of Director s attendance to Executive Committee meetings (in calculating this percentage, please consider the number of meetings attended vis-à-vis Executive Committee meetings convened over the financial year or after taking office): N/A A.C.: Appointment Committee; please indicate C/M if Chairman/Member of the Appointment Committee: N/A % A.C.: please indicate percentage of Director s attendance to Appointment Committee meetings (in calculating this percentage, please consider the number of meetings attended vis-à-vis Appointment Committee meetings convened over the financial year or after taking office): N/A R.C.: please indicate C/M if Chairman/Member of Remuneration Committee % R.C.: please indicate percentage of Director s attendance to Remuneration Committee meetings (in calculating this percentage, please consider the number of meetings attended vis-à-vis Remuneration Committee meetings convened over the financial year or after taking office) I.C.C.: please indicate C/M if Chairman/Member of the Internal Control Committee % I.C.C.: please indicate percentage of Director s attendance to Internal Control Committee meetings (in calculating this percentage, please consider the number of meetings attended vis-à-vis Internal Control Committee meetings convened over the financial year or after taking office). The number of Non-executive and Independent Directors and their status are sufficient to guarantee 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 any potential conflict of interest.

56 Corporate Governance Report ) Limits on cumulation of positions held in other companies The Directors - in acting advisedly and autonomously - shall accept position when they are sure that they can dedicate enough time to accurately fulfill their duties, taking into account cumulation of positions in other companies listed in the regulated markets, banks, finance companies, insurance companies and large companies. Furthermore they shall be requested 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 maximum number of positions that each Director can cumulate; the Board s attitude is to wait for Consob s indications and, in any case, to reserve the right to decide upon every single issue. 5.2) Role of the Board of Directors 5.2.1) Board of Directors operational aspects In compliance with the Company s By-laws, the Board of Directors meetings shall normally take place on a quarterly basis, convened by the Chairman and, in any case, whenever imposed by the Company s needs. The Board meetings shall be convened also upon request of at least two Directors - or of the Board of Statutory Auditors, or of at least one of its members - upon prior notice to the Chairman. The Chairman, or the person acting in his stead, can call the Board of Directors meeting, by letter, registered letter, telegram, fax, or any equivalent means ensuring that delivery takes place at least within five days from the date of the meeting. In case of urgent issues, time is reduced to one day. Furthermore, the Chairman has the powers to transmit to Directors - as agreed upon with the Managing Director - reasonably in advance on the date of the meeting, and with the exceptions related to the confidential and/or urgent nature of resolutions - any document and information needed to enable the members of the Board to express their well-pondered opinion on the issues submitted to their analysis and approval. The Board of Directors has regulated the inflow of information issued by the Chairman and the Managing Director: they shall report back on the exercise of proxies in connection with the activities 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 quarterly basis - on their activity and Company s most important transactions regarding economic and financial strategies, in particular as refers to transactions entailing a potential conflict of interest. Moreover, if any particular need for a timely intervention occurs, information can be transmitted directly, in writing or verbally, and/or by telephone ) Company s activities performed in 2008 and envisaged for 2009 In 2008 the Board of Directors meeting was held five times. The duration of each meeting was of 11/2 hours. In addition to the unscheduled meeting of January 28, 2009 (held to co-opt a new director in replacement of the deceased Honorary Chairman Carlo Caracciolo), out of the four meetings scheduled for 2009, one meeting has already been held as of today ) Role of the Board of Directors According to the Company s By-laws the Board of Directors is empowered with ordinary and extraordinary administration, and right to carry out any action deemed necessary and opportune

57 56 Corporate Governance Report 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 concerning the Group s objectives, and the most significant data in the annual budget and/or - if they have been drafted - the multiannual plans, and all the transactions regarding acquisition or disposal of holdings. As a general rule, the Board has reserved the right to evaluate and approve in advance any significant transaction carried out by the Parent Company and any subsidiaries; 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 financial situation and/or the related medium and long-term commitments involved. The Board has not fixed any specific quantity indicator, and preferred to carry out an ad hoc evaluation on every single transaction, considering also the kind of business involved. In addition, the Board has maintained decision-making powers as concerns all the transactions with the related parties with special characteristics, as it is better specified further on in item 13 of this report. The Directors - coherently with the objective of creating value for the shareholders - in performing their task shall also take into consideration the strategic guidelines defined for the group 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 the Board 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 Control system 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 the contributions of the Board of Statutory Auditors, of the Internal Control Committee and the Independent Auditors. The above controls and evaluations are carried out through random sampling in all the Group s subsidiaries. Moreover, Directors and top managers shall also inform the other Directors of the Parent Company and the Board of Statutory Auditors of any interest that - on their own or third party account - they may have in a certain transaction carried out not only by the Parent Company but also by any of its subsidiaries. Upon the Remuneration Committee s proposal and the Board of Statutory Auditors advise, the Board of Directors determines the remunerations of the Chairman and the Managing Director, while the Shareholders Meeting directly decides upon the overall remuneration to be distributed among the members of the Board of Directors. At every meeting of the Board of Directors, the Chairman and the Managing Director shall produce an extensive report on the Company s performance and provide estimates over the subsequent months trend. At least once in the financial year the Board of Directors carries out an assessment of size, composition and functioning of the Board itself and related Committees. To this date the Board has given a positive judgment on its own work and composition, not deeming it opportune to introduce any other professional skill. The Shareholders Meeting has not authorized as a general rule or as a preventive measure any departure from the rules prohibiting competition pursuant to art of the Italian Civil Code. 5.3) Representative bodies At the Board of Directors meeting held on April 26, 2006 the members conferred to Chairman

58 Corporate Governance Report 57 Carlo De Benedetti and to Managing Director, separately, all the most extensive powers of representation and ordinary management, except for the appointment of Editors in Chief and General Managers, which remain with the powers of the Board of Directors. No expense limits have been imposed, with the exception of: 1) purchase of machinery over 10mn; 2) financing, leasing or credit facility agreements including secured loans over 5mn; 3) granting of warranties, pledged securities, mortgages, privileges and guarantees over 5mn; 4) purchase, sale and exchange of holdings and properties over 5mn. Following the mentioned resignation of Marco Benedetto, on September 16, 2008 the Board of Directors appointed Monica Mondardini to the position of Managing Director since January 1, 2009, conferring the same proxies previously held by Marco Benedetto ) Chairman The Company Chairman Carlo De Benedetti, controlling shareholder of the Issuer, though empowered with the above management functions, does not hold the chief executive officer position, which is held by the Managing Director instead ) Information to the Board of Directors The Chairman and the Managing Director, at all meetings and in any case - at least on a quarterly basis - have regularly informed the Board of Directors on the activities implemented over the financial year in compliance with their proxies, and also provided the Directors with updated information on the most significant corporate events, the decisions made and the transactions implemented, including those with the related parties or under potential conflict of interest. 5.4) Non-executive Directors Only the Chairman and the Managing Director are Executive Directors. Directors are aware of their tasks and responsibilities in connection with their positions. The Chairman and the Managing Director shall report back to the Board on the most significant new legislative provisions and regulations concerning the Company and the related corporate bodies, in order to enhance their understanding of the Company. 5.5) Independent Directors The Italian Civil Code provides for the Board of Directors to be made up by an adequate number of Independent Directors. Three Non-executive Directors of the Company currently qualify as Independent Directors. Based on criteria set forth in paragraph 3.C.1 of the Italian Civil Code, Directors may qualify as 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, also through their participation in shareholders agreements; b) are not or have been, over the past three financial years, a top level representative of the Company or of any of its strategically important subsidiaries, or of a company or entity that, either directly or through a shareholders agreement, controls the Company or has a significant influence over the same; c) directly or indirectly (e.g. through subsidiaries in which it has an important role, or as partner of a professional firm or a consulting firm) has not, or has not had over the previous year, any significant business, financial or professional relationship with either:

59 58 Corporate Governance Report the Company or any of its subsidiaries, or any of its top level representatives; a company or entity that, 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. d) does not and has not received, over the past three financial years, from the Company or any of its subsidiaries any remuneration of significance in addition to the fixed indemnity received as Independent 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 independent 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 components of the Board of Directors - or two, where the Board is made up by more than seven members - must possess requisites of independence set for Statutory Auditors pursuant to paragraph 3 of article 148 of TUF, which does not consider as independent: a) the spouse, relatives within the fourth degree of Directors of the Company, Directors of the Company, the spouse, relatives within the fourth degree of Directors of subsidiaries of the Company and of its parent company, in addition to those companies that control and share with it a common control. b) persons that are employees of, or have any other financial or professional relationship with the Company or its subsidiaries or parent companies, in addition to those companies that share with it a common control, or Directors of the Company and persons described in the paragraph above, that may compromise their independence. In compliance with terms and conditions agreed upon with the Board of Statutory Auditors - the Board has verified if Directors Brugiavini, Greco and Parravicini Crespi have valid independence requisites and, after positive judgment, has circulated the relevant information to the market. Over this financial year, the Independent Directors have convened into the Internal Control Committee (item 11 of this document). 5.6) Lead independent director As provided for in the Italian Civil Code, the Board of Directors has appointed Prof. Agar Brugiavini as lead independent director, to whom the Non-executive Directors (especially Independent Directors) shall refer to enable an enhanced contribution to the activity and functioning of the Board. The lead independent director collaborates with the Chairman, to guarantee that the 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 subjects deemed 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

60 Corporate Governance Report 59 periodical meetings convened by the Internal Control Committee and Remuneration Committee. Over this financial year, these Committees have organized joint-meetings with the Board of Statutory Auditors, the Monitoring Body pursuant to Legislative Decree 231/2001, and the Independent Auditors. Any information concerning the Company and its organizational and control systems, together with any information related to the financial results has been acquired through quite a number of meetings and conference calls held with the Company s Internal Auditors and the management. 6. Handling of company information The Company has adopted a procedure to manage and disclose to the public its documents and confidential matters and, in particular, the so-called privileged information: this procedure is available in the institutional website in the Corporate Governance section. The handling of privileged information has been entrusted to the Chairman and/or the Managing Director. Information is disclosed through press releases issued by the External Relations 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 obliged to observe the relevant confidentiality provisions related to all the documents and information 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 its institutional website in the Corporate Governance section, the new relevant persons, pursuant to the TUF and Consob regulations, have been identified as the following: 1) the members of the Corporate Boards of the listed parent company, as well as the members of the Corporate Boards of the subsidiaries whose book value represents more than 50% of the Parent 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 may influence the future performance and outlook of the Company. Any purchase, sale, underwriting or exchange of shares or connected financial instruments shall be reported by the end of the financial year, in compliance with the terms and conditions hereinafter. The Relevant persons shall report to Consob and to the Company on any transaction carried out within five stock market trading days from the date of their execution. The Company shall disclose all the above information within the first day after reception of the information. The Company 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 on any transaction concluded within the fifteenth day subsequent to the date of execution of the transaction. Also in this case the Company may take the place of the person in charge of this communication - provided that a specific agreement to this end exists. The Company has, moreover, created and made operational the Register of persons having access to privileged information ( Register ) which records the persons who, by virtue of their working and professional activity or position within the Company, have access to privileged information. The Register, kept according to easy access procedures and promptly available data, keeps record

61 60 Corporate Governance Report 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 the date of each information update regarding the subject. The Company has disclosed the criteria adopted for keeping the Register, as well as the procedures 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. 7. The Board of directors internal committees At the meeting held on April 26, 2006, the Board of Directors appointed the Internal Control Committee and the Remuneration Committee, and not deemed it necessary to create the Nomination Committee. Directors who are members of the internal committees have been granted a yearly compensation of 10,000 in addition to their compensation as Directors. The Board has also established that, in implementing their activity, these Committees shall abide to the guidelines set forth in the Code. Committees are composed of three or more members, the majority of whom are Independent Directors, and minutes of their meetings are kept. Committees have access to the Company s information 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 Committee but, if necessary for the implementation of their activity, they are entitled to expense. 8. Appointment committee As stated in item above, the Company has decided not to create a Appointment Committee. 9. Remuneration committee The Remuneration Committee is composed by the Chairman Carlo De Benedetti, the Director Rodolfo De Benedetti, and by the three Independent Directors Agar Brugiavini, Mario Greco and Luca Paravicini Crespi. The decision to include the Chairman in the Remuneration Committee was made because of his extensive skills and in-depth knowledge of the Company issues. Directors shall leave the meeting venue when the proposal concerning their remuneration is discussed or - if required by the majority of Directors - they may remain in the venue but shall abstain from voting. The Managing Director is frequently invited to participate in the meetings, especially when the evaluation of the remuneration plan concerning the top managers of the Company or of its subsidiaries takes place. Over this financial year the Remuneration Committee meeting was held three times to determine, among other decisions, the Chairman and the Managing Director s emolument for 2008, and to submit to the Board of Directors a phantom stock option plan in favor of the Managing Director and other employees of the Company and of its subsidiaries, in addition to setting, upon express proxy of the Board of Directors, compensation for the resigning Managing Director and that of the new one. This Committee has, moreover, examined the remuneration policies in favor of the top level management of the Company and of its subsidiaries, which includes a number of incentives linked to the attainment of specific objectives.

62 Corporate Governance Report 61 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 s institutional website in the Financial Information section. As per item 7 above, the Remuneration Committee has no expense budget, but, if deemed necessary, it can authorize expenses destined to consulting, research or anything else needed to implement its activity. Minutes of the meetings of this Committee are kept. 10. Remuneration of Directors Chairman Carlo De Benedetti is granted a fixed remuneration, but is not granted a variable remuneration linked to the attainment of any particular economic or financial objective, since he is not the Chief Executive Officer. The Chairman - coherently with his customary conduct always adopted in his entrepreneurial and managerial experiences - is not likewise the beneficiary of any stock option plan. Managing Director Marco Benedetto, being CEO, receives a fixed remuneration and also a variable one according to the performance of the year s economic and financial results, and is also the beneficiary of incentives in shares. In this regard, we remind that in 2008 Marco Benedetto was the beneficiary of a phantom stock option plan whose details are described in the Financial Statements in Information required by Consob Resolution no section - available on the Company s institutional website in the Financial Information section. Besides the yearly remuneration, no remuneration or incentive plans are provided for in favor of Non-Executive and Independent Directors. As aforementioned, an additional remuneration is provided for in favor of the Directors who participate in the Internal Control Committee and Remuneration Committee. Top level managers of the Company and of its subsidiaries have a significant part of their remuneration linked to the attainment of specific economic and financial objectives and are, moreover, considered among the beneficiaries of the phantom stock option plans. The remuneration paid in 2008 to the members of the Board and to the General Managers is quantified in detail in the Financial Statements in the Information required by Consob Resolution no section. 11. Internal control committee The Internal Control Committee is composed by Independent Directors Agar Brugiavini, Mario Greco and Luca Paravicini Crespi. Two of these members have a remarkable experience in accountancy and finance. Both the Chairman of the Board of Statutory Auditors and the person in charge of Internal Control are invited to participate in the Internal Control Committee meetings; in turn, also the Company s Holding General Manager and other managers of the Company and of its subsidiaries are invited to report to the Board on some specific issues. The Internal Control Committee - whose meetings were held three times in through a number of periodical meetings held with the persons in charge of the various activities of the Company, the Board of Statutory Auditors and the Independent Auditors, has assessed that Company s operations are effectively and efficiently conducted, financial information is reliable and the applicable regulations are complied with. 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;

63 62 Corporate Governance Report - 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 applied are correctly and consistently used in the drafting of the consolidated financial statements; - analyzing - jointly with the Board of Statutory Auditors - the proposals formulated by the Independent Auditors; - reporting to the Board at least on a half-yearly basis - on the occasion of the approval of the Financial Statements and half-yearly Report - on the activity performed and on the adequacy of the Internal Control System; As aforementioned, the Internal Control Committee is entitled to have access to the Company s information and functions necessary to fulfill its tasks. All the minutes of the meetings have been recorded and, even if no expense budget has been assigned, the Committee is entitled to authorize the expenses deemed necessary to acquire information, consulting, collaboration, surveys or anything of the like. 12. Internal Control System The Internal Control System consists of the set of rules, procedures and organizational structures aimed to enable - through an adequate process of identification, measurement, management and monitoring of the main risks - a sound and correct conduct of the Company, consistent with its scheduled objectives. The Internal Control System contributes to guaranteeing that corporate assets are safeguarded, corporate operations are carried out efficiently and effectively, financial information is reliable, and laws and regulations are complied with. The Board of Directors is responsible for the Internal Control System. To this end, the Board of Directors is assisted by the Internal Control Committee, the Executive Director in charge of the Internal Control System, the person in charge of Internal Control, and the Internal Audit Department. The Board of Directors, assisted by the Internal Control Committee, over this financial year has assessed that the Internal Control System has adequately, efficiently and effectively fulfilled its tasks. This activity has been performed through a series of meetings with the Company s management, visits to the operational offices, analysis of the procedures set forth by the Internal Audit Department, meetings with the Board of Statutory Auditors and the Independent Auditors, as well as with the Monitoring Body - pursuant to Legislative Decree 231/ whose activity is equally dedicated (even if with different objectives) to assess the sound performance of the Internal Control System. 12.1) Executive Director in charge of the Internal Control System Having recognized the utmost importance of the Internal Control System functionality, the Board of Directors decided that the position of Executive Director in charge of the Internal Control System should be assigned to the Managing Director. The Executive Director in charge, with the assistance of the person in charge of Internal Control and the cooperation of the Company s organization, has carefully carried out the identification of the main corporate risks, has verified and, where necessary, modified the set of procedures of the Internal Control System.

64 Corporate Governance Report ) Person in charge of Internal Control Therefore, 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 ). His remuneration for this position is already included in the remuneration granted to him by the Parent 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 his hierarchical position is not subordinated to any other employee responsible for the operational areas, including the administration and finance areas. The person in charge has had direct access to all the information necessary to fulfill his task and has periodically reported back to the Internal Control 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 plan implemented by the Company s Internal Audit Department, and has cooperated with the Internal Control Committee and the Monitoring Body. 12.3) Organizational Model pursuant to Legislative decree 231/2001 The Company and its subsidiaries have adopted the Organization, Management and Control Model (hereinafter the Model ) pursuant to Legislative decree 231/01, mainly aiming to prevent crimes committed in relationships with the public administration milieu, such as corruption, extortion and fraud, but also the so-called corporate crimes, namely, among others, false corporate statements, false financial statements, and finally, workplace health & safety crimes. This document includes General Issues and Special Issues. In General Issues, after mentioning the principles of Legislative decree 231/01 and the guidelines issued by Confindustria, the Model s basic contents are illustrated, together with the criteria 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) conduct guidelines; (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 clearly identify crimes that might be committed in implementing various corporate processes, and the conduct 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, through autonomous powers of initiative and control and is responsible for verifying the Model execution and observance, by regularly monitoring its efficiency and proposing any possible updates to be submitted to the competent bodies. The Monitoring Body is composed by Giuseppe Gianoglio, the manager responsible for Internal Audit of Gruppo CIR, Tiziano Onesti, Chairman of the Board of Statutory Auditors, and Andrea Russo, a lawyer - specialist in these issues. The Monitoring Body has regularly reported its activity to the Board of Directors. No censurable misconduct has emerged. 12.4) Independent Auditors The Shareholders Meeting of April 18, 2007 deliberated to assign to Deloitte Touche S.p.A. the task of auditing the Parent Company s and consolidated financial statements, as well as the limited audit on the half-yearly results pursuant to Legislative decree n.58 of February 24, 1998.

65 64 Corporate Governance Report 12.5) Manager in charge of drafting the accounting and corporate records Since October 22, 2008 the Manager in charge of drafting the accounting and corporate records of Gruppo Editoriale L Espresso S.p.A. is Oliviero Maria Brega. According to the Company s By-laws, the professional requisites for this Manager position are: an adequate experience in accounting and finance issues and the Board of Directors approval of his appointment, upon proposal of the Managing Director and prior advise of the Statutory Auditors. In the performance of his current duties, Oliviero Maria Brega, is already 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-yearly report and the documents subject to certification; d) participate in drawing up the information systems which have an impact on the economic and financial situation; e) organize an adequate structure, by either employing the available internal resources - such as those related 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 of the subsidiaries, to identify the specific procedures aimed to correctly fulfill all the tasks and activities in compliance with law. 13. Interests of the Directors and transactions with related parties The Board of Directors shall give prior approval to all the transactions with related parties - as they are defined in the relevant Consob Communication - including intragroup transactions, except typical or routine transactions, and transactions that can be considered as implemented according to standard conditions. The typical or routine transactions are those implemented in the regular course of the Company s business and the transactions which, because of their characteristics, do not involve any critical element or risk. The transactions implemented according to standard conditions are those executed according to the same conditions applied by the Company to any other third party. For the transactions with related parties subject to its prior approval, the Board of Directors shall receive adequate information regarding the nature of correlation, the executing procedures of the transaction, the prerequisites - also economic ones - for its implementation, and the assessment procedures adopted. In consideration of the nature, value or other characteristics of the transaction, the Board of Directors shall ascertain that the transaction is concluded with the assistance of independent experts. In the transactions with related parties subject to approval by the Board of Directors, the Directors who are in a potential conflict of interest shall give timely and exhaustive information to the Board on the existence of the interest and related circumstances. Moreover, after discussion, in view of voting procedures they shall leave the meeting or, if required by the majority 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 the Board of Directors - as typical or routine ones, or standard transactions - the Directors

66 Corporate Governance Report 65 who hold proxies shall ascertain that adequate information is kept on record - also arranged by type or groups of transactions - concerning nature, transaction executing procedures, and prerequisites - also economic ones - for implementation. 14. Appointment of Statutory Auditors The appointment of Statutory Auditors is based on lists submitted by the shareholders, in which candidates are listed according to a progressive number. The right of submission of lists is conferred to the Shareholders who, individually or jointly with other shareholders, altogether own 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 documents certifying the right of list submission, and be deposited at the Company s headquarters within at least fifteen days from the day of first call of meeting; this provision shall be mentioned in the notice of call. The lists shall be deposited according to the terms provided in the Company s Bylaws, and each list shall also include the candidates statements of acceptance of candidacy and certification - under their responsibility - that no cause for ineligibility or incompatibility exists, and that the requisites for the respective positions are available as provided for in the regulations and By-laws. Any list non-compliant with the above regulations 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 the election 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 who have 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 Auditor shall take over upon selection from the same list of the replaced Statutory Auditor. Consob s resolution n of January 27, 2009, stated that the minimum shareholding threshold required for list submission is 2.5%. 15. Statutory Auditors According to the Company s By-laws the Board of Statutory Auditors shall comprise three Permanent Statutory Auditors and three Substitute Statutory Auditors who shall be in office for three financial years and can be re-elected. The Board of Statutory Auditors, appointed on April 26, 2006 and holding office till approval of 2008 Financial Statements is composed as follows: Name Position In office since List Indep. as % Part. BoSA Other per Code positions Tiziano Onesti Chairman April 26, 2006 m X 100% 1 Enrico Laghi Permanent Statutory Auditor M X 83% 2 Luigi Macchiorlatti Vignat Permanent Statutory Auditor M X 83% 1 Gabriele Perrotti Substitute Statutory Auditor m X - - Riccardo Zingales Substitute Statutory Auditor M X - - Silvano Cipolla Substitute Statutory Auditor M X - - NOTE Position: please state if Chairman, Permanent Statutory Auditor or Substitute Statutory Auditor. List: please indicate M/m, if the Statutory Auditor was elected by majority or minority list (art. 144-decies, of Consob Issuers Regulations)

67 66 Corporate Governance Report Indep: please tick if Statutory Auditor can be qualified as independent in compliance with Code criteria: please indicate at foot of table if criteria have been either integrated or modified % Part. BoSA: please indicate percentage of Statutory Auditors attendance in Board of Statutory Auditors meetings (in calculating this percentage, please consider the number of meetings attended vis-à-vis the Board s meetings convened over the financial year or after taking office). Other positions: please indicate total of positions covered in the Companies as per Libro V, Titolo V, Capi V, VI e VII (Book V, Charter V, Subpar. V, VI and VII) of the Italian Civil Code, as resulting from the list in annex, pursuant to art. 144-quinquiesdecies of Consob Issuers Regulations, supervisory activity report drafted by the Statutory Auditors pursuant to art. 153, subparagraph 1 of TUF. Note. Awaiting enforcement of art. 144-quinquiesdecies of Consob Issuers Regulations, the total number of positions covered in other companies listed in regulated markets is disclosed (Table 2). In financial year 2008 the Board of Statutory Auditors meeting was held six times. Validity of the Statutory Auditors independence and integrity requisites in compliance with the Code s criteria was ascertained. Statutory Auditors having an interest in a specified Company transaction shall timely inform the other Statutory Auditors and the Chairman of the Board of Directors on nature, terms and scope of their interest. The Board of Statutory Auditors has also monitored the condition of independence of the Independent 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 monitoring task a proactive role that fosters debate on internal control issues and on issues pertinent to the role assigned by the law to the Board of Statutory Auditors. In this framework, the Board of Statutory Auditors focused its activity around the exchange of information with the Group s administrative bodies, top management and other control bodies. 16. Relationships with the Shareholders In its institutional website the Company has created an extensive userfriendly section containing all the relevant information for the shareholders. Alessandro Alacevich is the Manager in charge of Investor Relations and in charge of managing the flow of direct information addressed to shareholders, financial analysts and institutional investors, in compliance with the regulations fixed for the disclosure of the Company s information and documents. The Company has always actively pursued the aim to create and maintain a sound dialogue with the shareholders and the market, through various communication channels: presentation of the Company and Group s results in Shareholders Meetings through the presentation of slides; meetings with the financial analysts and institutional investors in Italy and abroad; circulation to the public of press releases and presentations in the Company s website. 17. Shareholders meetings Admittance to Shareholders Meetings is reserved either to the shareholders whose qualified intermediary has given due notice to the Company - pursuant to the regulations in force for participation in the meeting - within at least two working days prior to the meeting, or to the shareholders who have obtained the relevant certification by the same intermediary within the same term. The shares indicated in the notice or certification shall remain unavailable till the end of the meeting.

68 Corporate Governance Report 67 The Company has adopted a set of Rules, which is not an integral part of the Company s Bylaws, that regulates the correct and functional course of the Company s ordinary and extraordinary Shareholders Meeting. This set of Rules guarantees to each shareholder the right to speak on the issues under discussion. The Board of Directors has reported back to the Shareholders Meeting on the activity performed, and also actively worked to ensure that the shareholders are provided with such adequate information to enable decision-making with such full knowledge as required at this Meeting level. Changes in the market capitalization of the Company occurred in the year were in line with the changes occurred in the market. 18. Changes occurred from the closing date of the financial year of reference Other than the changes in the composition of the Board of Directors described above, since the closing date of financial year 2008, no change has occurred in the corporate governance structure. We note however that with the approval of the financial statements for the 2008 financial year, the term of both the Board of Directors and that of the Board of Statutory Auditors expires. The Company will therefore update the Report on Corporate Governance in the course of the present year.

69 68 Corporate Governance Report Table 1 List 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 Chairman of Cofide S.p.A. and CIR S.p.A.; Honorary Chairman and Director of Sogefi S.p.A.(CIR Group); Chairman of Supervisory Board of M&C Management & Capitali S.p.A.; Member of Supervisory Board Compagnie Financière Edmond de Rothshild Rodolfo De Benedetti Chairman of Sogefi S.p.A. (CIR Group) and Sorgenia S.p.A. (the latter unlisted, CIR Group); Managing Director of Cofide S.p.A. and CIR S.p.A.; Director of Allianz S.p.A. and Banque Syz S.A. (unlisted) Francesco Dini Director of Sorgenia S.p.A. (unlisted, CIR Group) Sergio Erede Chairman of AON Italia S.p.A. (unlisted); Vice-Chairman of Banca Nazionale del Lavoro S.p.A.; Interpump Group S.p.A. and Luxottica Group S.p.A.; Director of Manuli Rubber Industries S.p.A., Società Italo Britannica L.Manetti - H. Roberts S.p.A (unlisted) and Gruppo IPG Holding S.r.l. (unlisted); Member of Supervisory Committee of Foncière des Régions (listed foreign company) Mario Greco Managing Director of Zurich Financial Services; Director of Saras S.p.A. and Indesit Company S.p.A.; Chairman of Zurich Life &Pensions, Zurich Investments and Zurich Life Insurance Italia (not listed) Monica Mondardini Director of Generali España Holding, Banco Vitalicio, La Estrella and La Vasco Navarra (unlisted foreign companies) Luca Paravicini Crespi Director of CIR S.p.A. and Piaggio & C. S.p.A.; Director of Consilium Sgr S.p.A. (unlisted), Scala Group S.p.A. (unlisted), Education.it S.p.A. (unlisted) and Il Gallione S.p.A. (unlisted) NOTE. If not indicated, the Company shall be intended as "listed" Table 2 List of positions held by Permanent Statutory Auditors of Gruppo Editoriale L'Espresso S.p.A. in other companies listed in a regulated market Board of Statutory Auditors Members Tiziano Onesti Enrico Laghi Luigi Macchiorlatti Vignat Other positions Permanent Statutory Auditor of E.N.I. S.p.A. Director of Beni Stabili S.p.A.; Permanent Statutory Auditor of Pirelli & C. S.p.A. Permanent Statutory Auditor of Banca Intermobiliare di Investimenti e Gestioni S.p.A.

70 Consolidated Financial Statements at December 31, 2008

71 70 Consolidated Finanacial Statements Consolidated Balance Sheet ASSETS Note December 31, December 31, ( thousand) Intangible assets with an indefinite useful life Other intangible assets Intangible assets (1) Property, plant and equipment (2) Investments valued at equity (3) Other investments (4) Non-current receivables (5) Deferred tax assets (6) NON-CURRENT ASSETS Inventories (7) Trade receivables (8) Marketable securities and other financial assets (9) Tax receivables (10) Other receivables (11) Cash and cash equivalents (12) CURRENT ASSETS TOTAL ASSETS LIABILITIES AND SHAREHOLDERS EQUITY Note December 31, December 31, ( thousand) Share capital (13) Reserves (14) Retained earnings (loss carry-forwards) (14) Net profit (loss) Group Shareholders Equity Minority interests (15) SHAREHOLDERS EQUITY Financial debt (16) Provisions for risks and charges (17) Employee termination and other retirement benefits (18) Deferred tax liabilities (6) NON-CURRENT LIABILITIES Financial debt (16) Provisions for risks and charges (17) Trade payables (19) Tax payables (20) Other payables (21) CURRENT LIABILITIES TOTAL LIABILITIES TOTAL LIABILITIES AND SHAREHOLDERS EQUITY Notes from page 77 to 126 are an integral part of the present Financial Statements.

72 Consolidated Financial Statements 71 Consolidated Income Statement ( thousand) Note Revenues (22) Change in inventories (7) 662 (2.618) Other operating income (23) Purchases (24) ( ) ( ) Services received (25) ( ) ( ) Other operating charges (26) (20.459) (30.453) Valuation of investments at equity (3) Personnel costs (27) ( ) ( ) Depreciation, amortization and write-downs (28) (42.815) (47.205) Operating profit Financial income (expense) (29) (17.576) (19.606) Pre-tax profit Income taxes (30) (66.494) (54.489) Net profit Minority interests (31) (923) (603) ) GROUP NET PROFIT Earnings per share, basic (32) 0,230 0,051 Earnings per share, diluted (32) 0,221 0,049 Notes from page 77 to 126 are an integral part of the present Financial Statements.

73 72 Consolidated Finanacial Statements Statement of Consolidated Cash Flow ( thousand) Note OPERATING ACTIVITIES Net profit (loss) for the period, including minority interests Adjustments: - Depreciation, amortization and write-downs (28) Accruals to provisions for stock option costs (27) Net change in provisions for personnel costs (18) (15.065) (1.693) - Net change in provisions for risks and charges (17) Losses (gains) on disposal of fixed assets (828) (1.515) - Adjustments to the value of financial assets Adjustment for investments valued at equity (238) (884) - Dividends (received) - (99) Cash flow from operating activities Changes in current assets and other flows CASH FLOW FROM OPERATING ACTIVITIES of which: Interest received (paid) (13.730) (13.806) Income taxes received (paid) (46.156) (39.698) INVESTING ACTIVITIES Outlay for purchase of fixed assets (40.479) (55.513) Outlay for purchase of equity investments (2.412) - Received on disposal of assets Public grants received Dividends received - 99 CASH FLOW FROM INVESTING ACTIVITIES (40.708) (47.188) FINANCING ACTIVITIES Increases in capital and reserves (Acquisition) sale of treasury stocks (58.562) (9.129) Issue (repayment) of other financial debt (17.385) (16.943) (Dividends paid) (67.180) (68.821) Other changes (33) (339) (770) CASH FLOW FROM FINANCING ACTIVITIES ( ) (95.663) Increase (decrease) in cash and cash equivalents (20.157) (31.457) Cash and cash equivalents at beginning of the year CASH AND CASH EQUIVALENTS AT END OF THE YEAR Notes from page 77 to 126 are an integral part of the present Financial Statements.

74 Consolidated Financial Statements 73 Statement of changes in the consolidated Shareholders Equity Share Share Treasury IFRS Stock option Equity Retained Net Group Minority Total ( thousand) capital premium stocks reserve reserve reserves earnings profit Sh. Equity Interests Sh. Equity Balance at December 31, (47.838) Movement of net profit ( ) Dividends (67.180) - (67.180) (346) (67.526) Capital increases, capital contributed by shareholders Stock options Treasury stock transactions - - (58.562) (58.562) - (58.562) Transfers between reserves (22.056) Other changes Net profit(loss) Balance at December 31, ( ) Movements of net profit (95.598) Dividends (68.821) - (68.821) (893) (69.714) Capital increases, capital contributed by shareholders Stock options Treasury stock transactions (3.782) (80.570) (10.974) - (9.129) - (9.129) Transfers between reserves (63) - (70.564) Other changes Net profit(loss) BBalance at December 31, (20.203)

75

76 Notes to the Consolidated Financial Statement

77

78 Notes to the Consolidated Financial Statement 77 Notes to the Consolidated Financial Statement 1. General information Gruppo Editoriale L Espresso SpA (the company or parent company ) and those companies in which it holds either directly or indirectly an interest (further on in the present document referred jointly to as the Espresso Group or the Group ) operates mainly in the publishing sector 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 coordination 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 stock is included in the MIDEX index. The present consolidated annual report at December 31, 2008 was approved by the Board of Directors of the parent company on February 25, Form and content of the financial statements The present consolidated financial statements were prepared in accordance with international accounting principles (International Accounting Standards IAS and International Financial Reporting Standards IFRS), as integrated by the related interpretations (Standing Interpretations Committee SIC and International Financial Reporting Interpretations Committee IFRIC) issued by the International Accounting Standards Boards (IASB). The general principle adopted in the preparation of the financial statements is that of the historical cost for all assets and liabilities, with the exception of derivative instruments and certain 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 as accounting principles adopted, are unchanged from those adopted for the approved financial statements at December 31, The classification adopted in the Balance Sheet, both for assets and liabilities, is that of current and non-current, as, unlike the classification by degree of liquidity, the former is deemed to be the criteria that best represents the financial situation of the Group. The Balance Sheet is divided into two separate facing sections. The order of reporting is Assets, Shareholders Equity and Liabilities from the least to the most liquid (from non-current to current). For sake of simplicity and to use the same format also for interim and quarterly reports, Financial Statements include only major captions and all sub-classifications (e.g. nature of the debtor/creditor, expiration term, etc.) are instead disclosed in the notes. The contents of the Balance Sheet are in compliance with minimum requirements established by IAS 1 as, with the exclusion of publications, radio frequencies and trademarks, classified under Intangible assets with an indefinite useful life, no significant or particular item was deemed to require separate reporting. Income Statement items were classified by nature as, considering the activity of the Group, it has not been deemed that a classification by destination could better represent the operating performance of the Company. In the Statement of Cash Flows, prepared according to the indirect method, cash flows from operating, investing and financing

79 78 Notes to the Consolidated Financial Statement activities, and those from discontinued operations are reported separately. The Statement of Changes in the Consolidated Shareholders Equity shows income and charges for the period and other changes in reserves. Unless otherwise specified, amounts reported in the Financial Statements and tables are stated in thousands of euro, rounded off to the nearest unit. 3. Principles of consolidation The consolidation includes the Financial Statements of the parent company, its subsidiaries and affiliated companies. Subsidiaries are those companies in which the parent company exercises decisional power over financial and operating policies. Control is deemed to occur when more than half of actual voting rights or those potentially exercisable at a shareholders meeting are held 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 voting rights or those potentially exercisable at the date of the financial statements. Subsidiaries are consolidated from the date at which the Group acquires control and deconsolidated from the date at which control is lost. Subsidiaries and affiliated companies are recorded at the acquisition cost, corresponding to the value of assets acquired, shares issued or liabilities generated at the time of acquisition, in addition to other costs incurred in the acquisition. The excess of the acquisition cost over the book value of assets of subsidiaries acquired by the Group is recorded as goodwill, while that of affiliated companies acquired is included in the value of the investment. The accounting treatment of goodwill is described in note 4.1. Subsidiaries were consolidated under the line-by-line method, thus including all assets and liabilities, costs and revenues of subsidiaries, regardless of the share held. The book value of consolidated companies was therefore netted against the related portion of the Shareholders Equity. Transactions, balances and unrealized gains and losses among Group companies were therefore eliminated. The share in the Shareholders Equity and profits accruing to minority shareholders were recorded separately under Shareholders Equity in the Consolidated Balance Sheet and under a separate caption in the Consolidated Income Statement. Subsequent to their acquisition, investments in affiliated companies are recorded under the equity method, recording the share of the Group in the profit and in the change in reserves, respectively in the income statement and in the balance sheet under Shareholders Equity. The share in unrealized gains and losses between affiliated companies was eliminated. When the Group s share in the loss of an affiliated company is equal or higher than the book value of the investment, the Group does not recognize further losses unless is has obligations 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 a financial year of the same duration. 4. Valuation criteria 4.1 Intangible assets Intangible assets are initially recorded at the acquisition or production cost. The acquisition cost is represented by the fair value of the price paid for the asset, inclusive of any direct cost incurred to put the asset to use. The acquisition cost is the equivalent of price paid in cash at the time of the acquisition. In case the amount paid for the acquisition is deferred beyond

80 Notes to the Consolidated Financial Statement 79 normal payment terms, the difference with respect to the equivalent cash price is recorded as interest over the longer payment term. The cost of intangible assets developed internally is recorded by separating costs incurred in the research phase (not capitalized) and costs incurred in the subsequent development phase (capitalized). In case the two phases cannot be separated, the whole project is accounted for as research. Interest charges on the acquisition are not capitalized. The book value of intangible assets is in line with the amount expected to be retrieved through future use or disposal. At least once a year and in case there arise doubts as to possibility to retrieve the book value of an asset, the latter is subjected to an impairment test, as described in note 4.5. Publications, trademarks and frequencies The useful life of newspaper mastheads and trademarks is considered as undefined. Broadcasting frequencies are also considered as assets having an indefinite useful life as they are used based on concessions whose term is limited or specific licenses limited in time but renewable subject to the fulfillment of the same objective and specific requisites on which the issue and maintenance of the license were based. Such assets are not amortized and are instead subjected annually, or any time there is an indication that the asset may have experienced a loss in value, to an impairment test. Losses in value are recorded in the income statement under Depreciation, amortization and write-downs. Goodwill Goodwill 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 of affiliated 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 an impairment test. Consequently, goodwill is allocated from the date of acquisition or by the end of the subsequent financial year, to one or more cash generating units (CGU). Reductions in value resulting from an impairment test do not give rise to adjustments in subsequent years and are recorded in the income statement under Depreciation, amortization and write-downs. Other intangible assets Other 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 balance sheet, barring specific 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 financial period to keep into account possible significant changes. 4.2 Property, plant and equipment Property, plant and equipment are recorded at cost. The cost is represented by the fair value of the price paid for the acquisition of the asset, inclusive of any direct cost incurred to put the asset to use. The acquisition cost is the equivalent of the price paid in cash at the time of the acquisition. In case the amount paid for the acquisition is deferred beyond normal payment

81 80 Notes to the Consolidated Financial Statement terms, the difference with respect to the equivalent cash price is recorded as interest over the longer payment term. Interest charges on the acquisition are never capitalized. The capitalization of costs for the upgrade, update or improvement of structural elements owned or leased from third parties is carried out exclusively when the same fulfill the requisites that allow their separate classification as assets or part of assets. Ordinary maintenance costs are charged to the income statement. After the initial recording, property, plant and equipment are carried at cost, net of accumulated depreciation (with the exception of land) and possible durable losses in value. The amortizable value of each significant component of a tangible asset having a different useful life 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 redefined at least at the end of each financial period to keep into account possible significant changes. Capitalized costs relating to leasehold improvements are attributed to the classes of assets to which they relate and amortized over the shorter between the residual term of the lease and the residual useful life of the asset to which the leasehold improvement relates. The book value of property, plant and equipment is in line with the amount expected to be retrieved through future use. In case doubts arise as to possibility to retrieve the book value of an asset, the latter is subjected to an impairment test, as described in note 4.5. The original value 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 deriving from ownership are classified as financial leases. Assets held under a financial lease are recorded at the lower between the current value of the asset leased and the present value of minimum lease payments provided for in the lease contract. Such payments are accounted for as 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 are charged to the income statement over the life of the lease. Assets held under a financial lease are depreciated in line with assets owned. Leasing contracts in which the lessor holds a significant share of risks and benefits deriving from ownership are classified as operating leases. Lease payments are recorded in the income statement 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 of the asset is not recorded, except in the case of a write-down in the value of the asset. 4.4 Grants Grants are recorded when there exists, regardless of the formal granting of the amount, a reasonable certainty that the company will meet the conditions for the entitlement to the grant and that the same will actually be received. Capital grants are recorded in the balance sheet as deferred income. The contribution is credited to the income statement based on the useful life of the asset for which it is granted 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 at providing immediate financial help to the company not correlated to future costs are recorded as income in the year in which they become receivable.

82 Notes to the Consolidated Financial Statement Loss in value of assets A loss in value of an asset originates whenever the book value of an asset is higher than the amount expected to be retrieved from the same. At each accounting date, the presence of factors 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 is recorded where appropriate. Assets not yet available for use, those recorded in the financial statements in the current financial year, intangible assets having an indefinite useful life and goodwill are subject at least annually to an impairment test, independently from the presence of factors indicating possible loss in value. The retrievable value of an asset is the higher between its fair market value, net of sales costs, and its 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 use independently from positive cash flows generated by other assets or groups of assets, in which case the test is carried out at the level of the smallest Cash Generating Unit that includes the said asset. The original value of the asset is restored whenever the reasons for the loss in value cease to exist, with the exception of goodwill whose original value is not restored. 4.6 Investments valued at equity Investments in affiliated companies or those in which the parent company exercises a significant influence, are recorded at equity. For a more detailed analysis of accounting principles regarding financial assets, see note Other investments Investments in companies in which the parent company does not exercise a significant influence are valued at fair value, or at cost, net of any loss in value, in case the current value of the investment cannot be determined in a reliable manner. For a more detailed analysis of accounting principles regarding financial assets, see note Marketable securities Marketable securities are represented by financial assets having a fixed maturity which the company has the intention and the ability to hold to maturity and as such carried at the amortized cost. For a more detailed analysis of accounting principles regarding financial assets, see note Inventories Inventories are recorded at the lower of the acquisition cost, determined applying the weighted average cost method, and the net realizable value. The cost is represented 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 sale price under normal conditions, net of completion costs and selling expenses. Write-downs are reversed in subsequent years when the reasons for their recording cease to exist Trade receivables Trade receivables are recorded at the fair value of future cash flows, written-down for losses in value.

83 82 Notes to the Consolidated Financial Statement 4.11 Contract work in progress Contract 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, contractual revenues and related costs are recorded under the stages of completion method. The percentage of completion is determined according to the ratio between costs and time employed in the activity carried out at the closing date of the accounts and total costs estimated to the completion. When it appears probable that total costs will exceed contractual revenues, the expected loss is taken to the income statement. In the case of projects for which a reliable estimate is not available, contractual revenues are recorded 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 invoices issued against the work carried out up until the date of the financial statements. When costs incurred and profits recorded (net of losses) are higher that invoices issued, the difference is recorded among current assets under Trade receivables. When invoices issued are higher than the sum of costs incurred and profits recorded (net of losses), the difference is accounted for among current liabilities under Trade payables Cash and cash equivalents Cash and cash equivalents are represented by short-term investments in highly liquid assets that may easily be converted in known amounts of cash posing a minimal risk of fluctuation in 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 of cash, demand deposits with banks, other highly liquid short-term financial assets with an original maturity not exceeding 3 months, and bank overdrafts. For the purposes of the balance sheet, the latter are included among financial payables under current liabilities Financial assets Financial 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. 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 generating a fixed cash flow or one that may be determined, which the Group intends and has the ability to hold to maturity; loans and other financial receivables, consisting of financial assets generating a fixed cash flow 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 statement as available-for-sale financial assets;

84 Notes to the Consolidated Financial Statement 83 available-for-sale financial assets, consisting of financial assets other than the above or those designated as such from inception. Acquisitions and sales of financial assets are recorded at the settlement date. The acquisition cost 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 income statement and Available-for-sale financial assets are valued at fair value, while Financial assets held 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 of Financial assets valued at fair value, recorded also in the income statement are recorded in the income statement in the year in which they occur. Unrealized gains and losses resulting from fluctuations in the fair value of Available-for sale financial assets are recorded under Shareholders Equity. The fair value of financial assets is determined according to listed bid prices or through the use of financial models. The fair value of unlisted financial assets is estimated using specific estimation 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. Losses in value accounted for are reversed in case the circumstances that led to their recording no longer exist, with the exception of assets valued at cost Share capital The 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 Treasury stock Treasury stock is recorded in a specific Shareholders Equity reserve. Gains or losses on the purchase, sale, issue or cancellation of treasury stock are not recorded in the income statement Fair value reserves Fair value reserves include changes in the fair value, net of the related tax effect, of items recorded at fair value with compensation in the Shareholders Equity Other reserves Other reserves are represented by specific capital reserves Retained earnings (loss carry-forwards) Retained earnings (loss carry-forwards) include the part not distributed and not accrued to mandatory reserve (in case of profits) or not balanced (in case of losses), of profits and losses for previous years. The item includes also transfers from other equity reserves freed-up, in addition to the effect of the change in accounting principles and relevant errors Employee benefits Short-term benefits Short-term employee benefits are recorded in the income statement over the period in which the employment takes place.

85 84 Notes to the Consolidated Financial Statement Post-retirement benefits The 2007 Budget Law (Law 296/2006) and related implementation regulations introduced, from January 1, 2007, substantial changes in norms regarding Employee Termination Indemnities (TFR), among which the choice left to workers as to the destination of individual indemnities accruing from such date. In particular, new norms provide for the payment by the company of indemnities accrued from January 1, 2007 to the pension fund of choice or, in case the worker has opted to maintain accrued benefits with the company, into a treasury account set-up with INPS the national Social Security Fund. These normative changes resulted in a new accounting treatment of Employee Termination Indemnities. Before the reform introduced with Law 296/2006, under international accounting principles Employee Termination Indemnities were considered as a defined benefit plan, while now only indemnities accrued up to December 31, 2006 continue to qualify as such, while indemnities accrued after such date are treated as a defined contribution plan and thus all obligations of the company are fulfilled with the periodical payment of a contribution to other entities. The amount recorded in the Income Statement is therefore no longer that of discounted back indemnities, but the amounts actually paid to the pension fund of choice of the employee or the INPS treasury account, calculated pursuant to article 2120 of the Italian Civil Code. Defined benefit plans Employee termination indemnities (limited to the share accrued up to December 31, 2006) and Fixed indemnity for managers of newspapers are determined by independent actuaries to estimate the amount of the future benefits that the employees have accrued at the balance sheet date. All actuarial effects are recorded in the Income Statement. Defined contribution plans The Group participates in defined contribution plans contributing to mandatory, contractual or voluntary public or private pension plans. As already mentioned, Employee Termination Indemnities, calculated pursuant to article 2120 of the Italian Civil Code, are paid out to the different pension plans or to the separate treasury service offered by INPS, as determined by individual employees. The payment of contributions extinguishes the obligation of the Group towards its employees. Contributions constitute therefore costs for the period in which they are due. Financial asset-based compensation The Group recognizes additional benefits to certain top managers through plans based on financial instruments. Plans adopted by the Group provide for the awarding of stock options or the attribution of extraordinary bonuses contingent on the achievement of a certain stock market price by the shares of the Company (phantom stock options). Stock Options The cost of such operations involving shares, recorded in the income statement among personnel costs, is calculated based on the fair value of options at the time at which they are assigned. The cost is recorded in the period included between the date at which the options are assigned and that at which they become exercisable, and is recorded also under Shareholders Equity. The fair value of the options thus determined is not updated or reviewed at the end of each accounting period.

86 Notes to the Consolidated Financial Statement 85 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, on the 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 applied the above principles to stock option plans assigned before November 7, Phantom stock options The cost of such operations, recorded in the income statement among personnel costs, is calculated based on the fair value of options at the time at which they are assigned. The cost is recorded in the period included between the date at which the rights are assigned and that at which they become exercisable, and is recorded also under the related liability item (i.e. Sundry personnel provisions). Until the liability is cancelled, the fair value is recalculated at each accounting date and at the date of the actual outlay, recording all changes in the income statement Provisions for risks and charges, potential assets and liabilities Provisions for risks and charges are accrued against possible liabilities whose amount and/or timing is uncertain and whose fulfillment requires the use of financial resources. Accruals are made exclusively when there exists an actual obligation, either legal or implicit, towards third parties that requires the use of financial resources, and whenever a reliable estimate of the obligation can be made. The accrual recorded represents the best estimate of the liability relating to the fulfillment of the obligation at the date of the financial statements. Accruals made 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 discounting effect is relevant, the amount accrued is represented by the present value of expected future payments needed to extinguish the obligation. Potential gains and losses are not recorded in the financial statements, though adequate information about the same is provided Financial liabilities Financial liabilities are recorded initially at the fair value of amounts received or to be paid, net of transaction costs, and subsequently carried at the amortized cost Derivative instruments Derivative contracts are recorded in the balance sheet at fair value. The recording of 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 directly in the income statement. In the case of contracts designated as hedging contracts, the Group documents the relationship with 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 risk hedged, the criteria with which the effectiveness of the hedging contract will be evaluated, and the related risk. The effectiveness of the hedge is evaluated by comparing fluctuations in the fair value or the cash flow of the instrument hedged with

87 86 Notes to the Consolidated Financial Statement fluctuations in the fair value or the cash flow of the hedging instrument. The effectiveness of the hedge is evaluated both at the start of the operation and regularly throughout the duration of the hedge. The evaluation is in any case carried out at least at each accounting date. More specifically, the hedge is considered as efficient when the fluctuation in the fair value or the cash flow of the instrument is almost entirely offset by the fluctuation in the fair value or cash flow of the hedging instrument and results are included in an interval between 80% and 125%. Fair Value Hedge instruments are accounted for by recording in the income statement changes in the fair value of the hedging instrument and the instrument covered, regardless of the valuation criteria adopted for the latter. Adjustments to the book value of hedged financial instruments generating interest are amortized in the income statement over the residual term of the asset/liability hedged using the effective interest rate method. Cash Flow Hedge instruments are accounted for by suspending under Shareholders Equity the portion of the change in the fair value of the hedging instrument which is recognized as effective, while recording in the income statement the ineffective part. Changes recorded directly under Shareholders Equity are released to the income statement in the same year or in the 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 differently for Fair Value Hedges and Cash Flow Hedges. In the case of Fair Value Hedges the underlying instrument recorded in the financial statements ceases to be hedged from the date at which the hedging contract is terminated and the instrument is thus again valued according to the method used in absence of a hedge. In case of financial instruments valued at the amortized cost, the difference between the valuation at the fair value of the risk covered and the amortized cost at the date of the termination of the hedge-accounting period, is amortized over the residual life of the financial instruments based on rules used in the calculation of the effective rate of interest. In the case of Cash Flow Hedges, the gain or loss suspended in the Shareholders Equity remain suspended until the transaction 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 Cost and revenue recognition Revenues from the disposal of assets are valued at the fair value of the amount received or receivable, keeping into account trade discounts, where appropriate. Revenues from the provision of services are accounted for under the percentage of completion method, defined as the ratio between the amount of services provided at the accounting date and the total value of services to be provided. Revenues from contract work are recorded as described in note 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 case under 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 are recorded in the period in which distribution is resolved.

88 Notes to the Consolidated Financial Statement Taxes Income 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 the financial statements and that reported for tax purposes, and the carry-forward of losses and tax 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 future in case such retrieval (elimination) did not have a tax effect. The tax effect of operations or other events are recorded in the income statement or directly under Shareholders Equity in the same manner as operations or events that originate a tax liability and on the basis of tax rates applicable at the balance sheet 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 the income statement or under Shareholders Equity as appropriate Currency Entries in the financial statements of each Group company are recorded in the currency of the primary economic environment in which each company operates ( functional currency ). The consolidated financial statements are prepared in euro, which is the functional currency of the parent company. Transactions denominated in other currencies are translated into the functional currency at the exchange rate at the date of the transaction. Foreign-exchange gains and losses arising from the settlement of these transactions and the translation of assets and liabilities denominated in currencies other than the functional currency are recorded in the income statement. 5. Segment information Sectors of activity and primary and secondary sectors in which the Group is active were determined keeping into account the principal source and nature of risks and returns of the Group, the organizational structure and the internal reporting system. In particular, as the Group s risks and returns are influenced exclusively by differences in products and services rendered, the primary reporting schedule adopted by the Group is the breakdown by type of activity, while information by geographical area is not applicable and is therefore not provided. For assets or liabilities that cannot be attributed to an individual sector, specific parameters were applied in their attribution. Assets and liabilities of the National newspapers- Periodicals and Radio-Internet sectors, are unified because the distinctives of the sectors, with particular reference to the marketing of editorial products, do not allow for an objective assessment of individual values. Assets and liabilities that may not be attributed using specific parameters are reported separately in the table below. Transactions between sectors are carried out at remunerative terms, in line with market conditions applicable to the respective sectors.

89 88 Notes to the Consolidated Financial Statement Consolidated operating and financial data by sector National Local Elisions and newspapers Periodicals newspapers Radio Internet Television Advertising Other activities adjustments TOTAL ( million) Revenues from others , ,025.5 Revenues from other sectors (664.4) (616.3) - - Non-monetary costs (3.0) (17.5) (0.5) (2.8) (4.4) (12.8) (0.8) (3.2) (0.2) (0.7) (0.2) (4.0) (3.0) (8.6) (2.3) (3.3) (13.5) (51.6) Depreciation, amortization and write-downs (12.9) (12.9) (1.1) (1.1) (12.9) (15.7) (3.9) (4.4) (0.5) (0.6) (3.1) (4.8) (0.4) (0.4) (8.1) (7.3) (0.1) (0.1) (42.8) (47.2) Operating profit (0.8) (3.6) (13.7) (0.2) (0.0) Financial income (expense) (17.6) (19.6) Taxes and minority interests (67.4) (55.1) Net profit (loss) National newspapers Local newspapers Radio and Internet Television Advertising Other activities Elisions and TOTAL and periodicals adjustments ( million) Net capital expenditure Assets 1, , (776.4) (742.6) 1, ,343.5 Tax Assets Total Assets 1, ,411.9 Liabilities (403.3) (361.3) Tax liabilities Total Liabilities

90 Notes to the Consolidated Financial Statement Change in accounting principles, errors and adjustments to estimates Accounting principles adopted are modified from one financial year to the next only in case the change is required by an accounting principle or it contributes to provide more reliable and 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 information is adapted accordingly. Such approach is adopted only when it is impractical to restate the accounts for comparative purposes. The application of a new or modified accounting principle is accounted for as required by the same principle. In case the principle does not provide for the transition, the change is accounted for under the retrospective method or, when this is impractical, through the use of projections. In case of relevant errors, the method described in the paragraph above with reference to accounting principles applies. In case of immaterial errors, the recording is carried out in the income statement in the period in which it is detected. Changes in estimates that have an impact exclusively on the income statement are accounted for through the use of projections in the same in the year in which the review takes place in case changes affect only such year, or in the year in which the review takes place and in subsequent years in case the change has an impact also in subsequent accounting periods. 7. Subsequent events Events occurred after the date of the financial statements are events occurred between such date and the date at which the publication of the same is authorized. The date of approval for the publication of the financial statements is the date at which the Board of Directors approves them. Such date is indicated in note 1. Subsequent events relate to facts that provide evidence of situations existing at the date of the financial statements (subsequent events that imply adjustments) or facts providing evidence of situations after the balance sheet date (subsequent events that do not require adjustments). The effect related to the first is recorded in the financial statements and the appropriate note is adjusted accordingly, while in the second case only relevant information is provided in the notes, where relevant. 8. New IFRS and IFRIC interpretations The Group did not opt for the early adoption of the following Principles, Interpretations and Updates of principles already published and approved by the EU, whose application is mandatory from January 1, 2009, and for which the Group is evaluating the possible effect of the introduction of the same: IFRS 8 Operating segments; IAS 23 Borrowing costs (revised in 2007); Amendments to IFRS 2 Vesting Conditions and Cancellations; IFRIC 13 Customer Loyalty Programmes; IFRIC 14 IAS 19 The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction ; IAS 1 Presentation of Financial Statements (revised in 2007); Amendments to IAS 32 and IAS 1 Financial instruments puttable at fair value and obligations arising on liquidation;

91 90 Notes to the Consolidated Financial Statement Amendments to IFRS 1 and IAS 27 Cost of an Investment in a Subsidiary, Jointly Controlled Entity or Associate; Improvements to International Financial Reporting Standards The Group is also evaluating the effect of the possible application of the principles listed below, for which at the date of approval of the present financial statements competent EU Authorities had not yet concluded the approval process: IAS, IFRS and IFRIC interpretations Effective Amendments to IAS 39 Financial Instruments: Recognition and Measurement, and IFRS 7 Financial Instruments: Disclosures Reclassification of Financial Assets Effective date and transition July 1, 2008 Revised IFRS 3 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 Eligible Hedged Items July 1, 2009 Revised IFRS 1 First-time Adoption of International Financial Reporting Standards July 1, 2009 IFRIC 12 Service Concession Arrangements January 1, 2008 IFRIC 15 Arrangements for the Construction of Real Estate January 1, 2009 IFRIC 16 Hedges of a Net Investment in a Foreign Operation October 1, 2008 IFRIC 17 Distributions of Non-cash Assets to Owners July 1, 2009 IFRIC 18 Transfers of Assets from Customers July 1, Main causes of uncertainty over estimates Estimates are made primarily in the context of the recording of write-downs in the value of assets, to estimate returns of publications, accruals to provisions for bad accounts, employee benefits, taxes and other accruals and provisions. Estimates and assumptions are reviewed periodically and the effects of each resulting change are reflected immediately in the income statement. In particular, the current uncertain outlook for the short and medium term, accompanied by the contraction of advertising sales and, to a lesser extent, that of circulations, has made estimates of future performance and cash flow projections difficult. These projections are used in the determination of the value in use of Cash Generating Units to assess the retrievability of the book value of intangible assets with an indefinite useful life and that of equity investments, and, given the current situation, it cannot therefore 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 by management, 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 of publications and the related add-on products are carried out monthly and constantly updated through the use of statistical methods applied to up-to-date information on sales. Estimates of legal risks keep into account the nature of the litigation pending (civil and penal). Estimates for homogeneous risk are weighted against the performance in the previous three years. Historical data shows a stable trend. 10. Consolidation area Companies included in the consolidation area are listed in Attachment 1.

92 Notes to the Consolidated Financial Statement 91 Subsidiary Rotonord SpA, a wholly-owned subsidiary of Rotocolor SpA that took over from its parent part of the printing of newspaper la Repubblica, formerly carried out by third parties, was consolidated from January 1, Notes to balance sheet items Assets Intangible assets (1) Intangible assets are made up as follows: Dec. 31, 2007 Dec. 31, 2008 Publications and trademarks 400, ,245 Frequencies 211, ,502 Goodwill 37,346 37,346 Industrial patents and intellectual property rights 8 95 Concessions and licenses 3,580 3,861 Work in progress Other intangible assets - 11 TOTAL INTANGIBLE ASSETS 653, ,404 of which: Intangible assets with an indefinite useful life 649, ,093 Intangible assets with a defined useful life 3,982 4,311 Research and Development costs were not capitalized and no write-up of intangible assets was carried out. The breakdown of intangible assets and changes in the period are shown in the tables that follow.

93 92 Notes to the Consolidated Financial Statement Intangible assets with an indefinite useful life Publications and trademarks Dec. 31, 2008 Opening balance Original cost 400,245 Accumulated amortization and write-downs - Opening balance 400,245 ADJUSTMENTS TO ORIGINAL COST Increases - Decreases - Reclassifications - Closing balance Original cost 400,245 Accumulated amortization and write-downs - Closing balance 400,245 Frequencies Dec. 31, 2008 Opening balance Original cost 211,620 Accumulated amortization and write-downs - Opening balance 211,620 ADJUSTMENTS TO ORIGINAL COST Increases 7,401 Decreases (519) Reclassifications - Closing balance Original cost 218,502 Accumulated amortization and write-downs - Closing balance 218,502

94 Notes to the Consolidated Financial Statement 93 Goodwill Dec. 31, 2008 Opening balance Original cost 37,346 Accumulated amortization and write-downs - Opening balance 37,346 ADJUSTMENTS TO ORIGINAL COST Increases - Decreases - Reclassifications - Closing balance Original cost 37,346 Accumulated amortization and write-downs - Closing balance 37,346 A detailed list of intangible assets with an indefinite useful life and the respective book value for the current year and the previous one are shown in the table below: Book value at Book value at Dec. 31, 2007 Dec. 31, la Repubblica 229, , La Nuova Sardegna 6,113 6, Finegil Editoriale 48,898 48, Editoriale FVG 104, , Alto Adige 5,120 5, La Città La Sentinella del Canavese Free Press 3,372 3, Radio frequencies 74,301 80, TV frequencies 137, , Deejay trademark 1,171 1, All Music goodwill 34,840 34,840 Goodwill of other activities 2,507 2,507 TOTAL 649, ,093 The impairment test carried out at December 31, 2008 on publications, frequencies, trademarks and goodwills, considered assets having an indefinite useful life, did not 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 the higher between fair value less cost to sell and value in use. The table that follows shows main information used to carry out the impairment test for each cash generating unit or group of units whose value is significant:

95 94 Notes to the Consolidated Financial Statement Cash Criterion Sector Impairment Generating Unit used loss 1. La Repubblica Value in use National newspapers - 2. La Nuova Sardegna Value in use Local newspapers - 3. Finegil Editoriale Value in use Local newspapers - 4. FVG Value in use Local newspapers - 5. Alto Adige Value in use Local newspapers - 6. La Città Fair Value Local newspapers - 7. La Sentinella del Canavese Value in use Local newspapers - 8. Free Press Value in use Local newspapers - 9. Radio: Deejay frequencies and trademark Fair Value/Value in use Radio TV: All Music frequencies and goodwill Fair Value Television - Determination of value in use of Cash Generating Units The value in use of Cash Generating Units was determined by discounting back - at an appropriate rate - future cash flows, both positive and negative, generated by the unit in its productive phase and upon disposal. In other terms, the value in use was estimated by applying the Discounted Cash Flow model using the unlevered (or asset side) version that applies a formula that includes the discounting back of cash flows analytically expected during the period of the anticipatory plans ( ) and the expected terminal value of the cash generating unit. The first year of the anticipatory plans corresponds to the last 2009 budget. In order to estimate correctly the value in use of a Cash Generating Unit, it has been necessary to estimate the cash flows generated by it over time; expectations regarding possible fluctuations 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. In particular, as already noted in paragraph 9 above, current uncertainties regarding the short and medium term outlook induced management to reconsider expected growth rates of revenues and margins included in plans made in the previous year. A decline in advertising revenues has therefore been budgeted for the first year of the plan to keep into account the strong contraction of advertising revenues already recorded in the last quarter of A gradual recovery is expected for subsequent years, taking advertising sales in 2013 back to levels recorded in We note also that in the determination of the terminal value of Cash Generating Units, a zero growth rate was prudentially employed. With regard to the characteristics of cash flows to be discounted, international accounting principles explicitly require that in the estimation of the discounted value, positive and negative cash flows generated by financial management and financial flows relating to taxes must not be 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 the Espresso Group (WACC), equal to 7.8%. The determination of fair value less costs to sell of Cash Generating Units IAS 36 establishes that the fair value less costs to sell of an asset or a group of assets (for example a Cash Generating Unit) is best expressed through a price set in a binding sale offer between independent parties, net of direct costs incurred in the disposal of the asset. In case such evidence does not exist, the fair value net cost to sell can be determined making reference, in order of

96 Notes to the Consolidated Financial Statement 95 importance, to the following values: the current price 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 different approach according to the publishing activity for which, in absence of an active trading market, direct multiples were used (Enterprise value/sales, Enterprise value/ebitda, Enterprise value/ebit), and assets in the radio and television sector, for which a price/users type of multiple was adopted (Enterprise value/population reached by the signal), observing transfer prices of similar frequencies in relation to the population that may potentially be 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 television sector was calculated based on prices recorded on the sale of similar frequencies, verified through an assessment of the potential audience reached by the signal. The use of this approach allows to estimate the fair value of radio and television frequencies by correlating the market price of the frequency and the number of inhabitants reached by the signal. In particular, in the case of radio frequencies, the parameter used ranges from 1.5 to 3 times the number of inhabitants reachable by the FM broadcasting stations of the Radio Deejay, Radio Capital and m20 Cash Generating Units, while in the case of television frequencies, the parameter applied is included between 3 and 3.6 times. Due to the scarcity of recent transactions involving television frequencies in Italy, the value in use of television frequencies has also been determined to assess the retrievability of the book value of the assets, was determined assuming a development of digital terrestrial television in line with the current national plan that involves the gradual switch-off of analogical broadcasting in favor of digital terrestrial television. Other intangible assets The table below shows the useful life of intangible assets having a definite useful life and the amortization rate used: Useful life Amortization rate Industrial patents and intellectual property rights 3 years 33.33% Concessions and licenses 3-5 years 20%-33.33% Other intangible assets 3-6 years 16.67%-33.33%

97 96 Notes to the Consolidated Financial Statement The breakdown and changes in intangible assets is shown below: Industrial patents and intellectual property rights Dec. 31, 2008 Opening balance Original cost 4,521 Accumulated amortization and write-downs (4,513) Opening balance 8 ADJUSTMENTS TO ORIGINAL COST Increases - Decreases - Reclassifications 90 ADJUSTMENTS TO PROVISIONS Increases (3) Decreases - Reclassifications - Closing balance Original cost 4,611 Accumulated amortization and write-downs (4,516) Closing balance 95 Concessions and licenses Dec. 31, 2008 Opening balance Original cost 39,371 Accumulated amortization and write-downs (35,791) Opening balance 3,580 ADJUSTMENTS TO ORIGINAL COST Increases 2,428 Decreases (46) Aggregation/(sale) of businesses 4 Reclassifications 176 ADJUSTMENTS TO PROVISIONS Increases (2,327) Decreases 46 Reclassifications - Closing balance Original cost 41,933 Accumulated amortization and write-downs (38,072) Closing balance 3,861

98 Notes to the Consolidated Financial Statement 97 Work in progress Dec. 31, 2008 Opening balance Original cost 394 Opening balance 394 ADJUSTMENTS TO ORIGINAL COST Increases 359 Decreases (4) Reclassifications (405) Closing balance Original cost 344 Closing balance 344 Other intangible assets Dec. 31, 2008 Opening balance Original cost 4,614 Accumulated amortization and write-downs (4,614) Opening balance - ADJUSTMENTS TO ORIGINAL COST Increases - Decreases - Reclassifications 14 ADJUSTMENTS TO PROVISIONS Increases (3) Decreases - Reclassifications - Closing balance Original cost 4,628 Accumulated amortization and write-downs (4,617) Closing balance 11

99 98 Notes to the Consolidated Financial Statement Property, plant and equipment (2 A breakdown of the category is provided below: Dec. 31, 2007 Dec. 31, 2008 Land 7,047 8,685 Industrial and civil building 51,902 55,090 Leasehold improvements 18,484 15,408 Plant and machinery 128, ,243 Technical equipment Furniture, fixtures and vehicles 12,449 10,736 Assets under construction 1,157 3,659 Other assets TOTAL PROPERTY, PLANT AND EQUIPMENT 220, ,980 In view of the homogeneity of assets recorded in the balance sheet, the expected useful life of assets by category and the related depreciation rates is as follows: Useful life Depreciation rate Land - - Industrial and civil buildings 33 years 3.00% Printing plants 7 years 15.50% Generic plant 10 years 10.00% Other plant 5 years 20.00% Rotary presses 5 years 20.00% Full color rotary presses 10 years 10.00% Industrial equipment 4 years 25.00% Vehicles 4 years 25.00% Furniture, fixtures and ordinary equipment 8 years 12.50% Electronic equipment 3 years 33.33% Editorial systems 4 years 25.00% Leasehold improvements Term of contract Term of contract A breakdown of property, plant and equipment owned and assets held under a leasing contract is included in the tables that follow.

100 Notes to the Consolidated Financial Statement 99 Land Dec. 31, 2008 Opening balance Original cost 7,047 Write-downs - Opening balance 7,047 ADJUSTMENTS TO ORIGINAL COST Increases 1,874 Decreases (236) Reclassifications - Closing balance Original cost 8,685 Write-downs - Closing balance 8,685 of which: Leasing principal 129 Guarantees and commitments 1,039 Industrial and civil buildings Dec. 31, 2008 Opening balance Original cost 81,364 Accumulated depreciation and write-downs (29,462) Opening balance 51,902 ADJUSTMENTS TO ORIGINAL COST Increases 5,072 Decreases (7) Reclassifications 601 ADJUSTMENTS TO PROVISIONS Increases (2,483) Decreases 5 Reclassifications - Closing balance Original cost 87,030 Accumulated depreciation and write-downs (31,940) Closing balance 55,090 of which: Leasing principal 796 Accumulated depreciation on leased assets (200) Guarantees and commitments 6,707

101 100 Notes to the Consolidated Financial Statement The leased building in Rimini is held by subsidiary A. Manzoni&C. and it hosts offices. The contract was stipulated on December 11, 2000 with leasing company SBS Leasing SpA, and has a term of 144 months. The value of the building, assessed through an independent survey, on which leasing payments were calculated, is 644 thousand and is in line with market value. The book value includes 97 thousand of accessory costs on the leasing contract and 184 thousand of leasehold improvements. Interest is calculated at a fixed rate of interest set in the contract. The cumulative value of leasing payments is equal to 876 thousand and includes the principal amount, interest and the value of the buy-back option, worth 6 thousand. Leasehold improvements Dec. 31, 2008 Opening balance Original cost 45,459 Accumulated amortization and write-downs (26,975) Opening balance 18,484 ADJUSTMENTS TO ORIGINAL COST Increases 1,283 Decreases (86) Reclassifications - ADJUSTMENTS TO PROVISIONS Increases (4,359) Decreases 86 Reclassifications - Closing balance Original cost 46,656 Accumulated amortization and write-downs (31,248) Closing balance 15,408

102 Notes to the Consolidated Financial Statement 101 Plant and machinery Dec. 31, 2008 Opening balance Original cost 440,309 Accumulated depreciation and write-downs (312,265) Opening balance 128,044 ADJUSTMENTS TO ORIGINAL COST Increases 28,308 Decreases (2,636) Reclassifications 1,268 ADJUSTMENTS TO PROVISIONS Increases (31,225) Decreases 2,460 Reclassifications 24 Closing balance Original cost 467,249 Accumulated depreciation and write-downs (341,006) Closing balance 126,243 of which: Leasing principal 10,916 Accumulated depreciation on leased assets (10, 873) Guarantees and commitments 210,920 Plant leased relates primarily to subsidiary Rotosud. The lease contract relates to printing plant and machinery and was stipulated with leasing company Intesa Leasing on September 30, 1998 for a term of 10 years. The principal value of the asset leased is 10,846 thousand. Lease payments are made quarterly and amount to 313 thousand each, in addition to an advance payment of 2,169 thousand made upon signing the lease contract. The asset was redeemed at the expiration of the contract, in Leans on plant and equipment relate to secured guarantees in favor of banks that extended in 2005 subsidized loans on rotary presses, printing equipment and similar equipment.

103 102 Notes to the Consolidated Financial Statement Technical equipment Dec. 31, 2008 Opening balance Original cost 3,368 Accumulated depreciation and write-downs (2,999) Opening balance 369 ADJUSTMENTS TO ORIGINAL COST Increases 161 Decreases (158) Reclassifications - ADJUSTMENTS TO PROVISIONS Increases (215) Decreases 159 Reclassifications - Closing balance Original cost 3,371 Accumulated depreciation and write-downs (3,055) Closing balance 316 of which: Guarantees and commitments 183 Furniture, fixtures and vehicles Dec. 31, 2008 Opening balance Original cost 78,407 Accumulated depreciation and write-downs (65,958) Opening balance 12,449 ADJUSTMENTS TO ORIGINAL COST Increases 4,370 Decreases (1,027) Aggregation/(sale) of businesses 13 Reclassifications 29 ADJUSTMENTS TO PROVISIONS Increases (6,074) Decreases 1,000 Reclassifications (24) Closing balance Original cost 81,792 Accumulated depreciation and write-downs (71,056) Closing balance 10,736 of which: Guarantees and commitments 90

104 Notes to the Consolidated Financial Statement 103 Work in progress Dec. 31, 2008 Opening balance Original cost 1,157 Opening balance 1,157 ADJUSTMENTS TO ORIGINAL COST Increases 4,275 Decreases - Reclassifications (1,773) Closing balance Original cost 3,659 Closing balance 3,659 Other assets Dec. 31, 2008 Opening balance Original cost 9,836 Accumulated depreciation and write-downs (8,926) Opening balance 910 ADJUSTMENTS TO ORIGINAL COST Increases 462 Decreases (138) Reclassifications - ADJUSTMENTS TO PROVISIONS Increases (516) Decreases 125 Reclassifications - Closing balance Original cost 10,160 Accumulated depreciation and write-downs (9,317) Closing balance 843 of which: Leasing principal 1,320 Accumulated depreciation on leased assets (944) Assets held under a financial lease relate to subsidiary Ksolutions, consisting of hardware and software necessary to serve a contract with the Sardinia Region, and to subsidiary A. Manzoni&C. that leases hardware equipment. The latter contracts were stipulated with leasing company ECS International Italia respectively on November 13, 2006, on February 26, 2007 and on June 1, 2008 for a term of 48 months. The cumulative value of the assets leased amounts to 762 thousand. Interest is set at a fixed rate and lease payments amount to 826 thousand, inclusive of principal and interest.

105 104 Notes to the Consolidated Financial Statement Investments valued at equity (3) The table that follows shows investments valued at equity and the percentage share owned. % ownership Dec. 31, 2007 Dec. 31, 2008 Le Scienze SpA 50% 50% Editoriale Corriere Romagna Srl 49% 49% Editoriale Libertà SpA 35% 35% Altrimedia SpA 35% 35% The tables that follow show the value of investments valued at equity and changes in the year. Dec. 31, 2007 Increase Decrease Dividends Net profit Dec. 31, 2008 Le Scienze SpA (121) Editoriale Corriere Romagna Srl 3, (40) 3,035 Editoriale Libertà SpA 22, ,560 Altrimedia SpA (140) TOTAL INVESTMENTS VALUED AT EQUITY 26, (261) 1,145 27,750 The retrievable value of investments in Editoriale La Libertà and Editoriale Corriere di Romagna was determined, in accordance with IAS 36, as the larger between the fair value net cost to sell and the value in use. The first was estimated based on market multiples, while the second was quantified on the basis of the expected cash flows generated by operating activities. The impairment test on Editoriale La Libertà and Editoriale Corriere di Romagna resulted in values in line with those at which the two investments are carried. Financial highlights of the mentioned affiliated companies are reported below. Assets Liabilities Dec. 31, 2007 Dec. 31, 2008 Dec. 31, 2007 Dec. 31, 2008 Le Scienze SpA 3,430 4,065 3,036 3,296 Editoriale Corriere Romagna Srl 3,914 3, Editoriale Libertà SpA 24,120 24,279 9,370 7,486 Altrimedia SpA 4,310 4,404 2,671 2,705 Revenues Net profit/(loss) Le Scienze SpA 4,163 4, Editoriale Corriere Romagna Srl (82) Editoriale Libertà SpA 16,047 15,311 2,301 2,043 Altrimedia SpA 10,828 10, The financial year of the above companies coincides with that of Gruppo Editoriale L Espresso S.p.A.

106 Notes to the Consolidated Financial Statement 105 Other investments (4) Book value at December 31, ,088 Acquisitions - (Sale/write-down of investments) (1,520) Book value at December 31, ,568 At December 31, 2008 investment in affiliated company E-Ink Corporation Inc. (US), considered as non-strategic, was written down by 1,400 thousand. The table that follows shows other investments, changes in the percentage of ownership and the book value of the investment. % held Book value Dec. 31, 2007 Dec. 31, 2008 Dec. 31, 2007 Dec. 31, 2008 Rotonord SpA (not operational in 2007) 100% 100% Telelibertà SpA 19% 19% ANSA Soc. Coop.a r.l % 18.48% 2,209 2,209 E-Ink Corporation Inc. 0.05% 0.05% 1, Trento Press Service Srl 14.4% 14.4% A.G.F. Srl 10% 10% 3 3 Audiradio Srl 3.6% 3.6% Other investments TOTAL OTHER INVESTMENTS 4,088 2,568 Rotonord SpA, a wholly-owned subsidiary of Rotocolor SpA, was consolidated line-by-line from January 1, The financial year of the above companies coincides with that of Gruppo Editoriale L Espresso SpA. Non-current receivables (5) Dec. 31, 2007 Dec. 31, 2008 Withholding taxes on employee termination indemnities receivable Long-term security deposits 1,524 1,202 Other non-current financial receivables TOTAL NON-CURRENT RECEIVABLES 1,910 1,486 Deferred/Prepaid tax assets (6) The tables that follow show changes in deferred/prepaid tax assets.

107 106 Notes to the Consolidated Financial Statement Prepaid taxes Taxable amount Dec. 31, 2007 Dec. 31, 2008 On personnel provisions 4,398 10,865 On risk provisions 19,901 35,892 On write-down of current assets 26,936 34,642 On write-down of property, plant and equipment 12,009 13,525 On write-down of financial instruments 7,256 5,793 On previous years losses 93,274 68,486 TOTAL 163, ,203 Prepaid tax assets Dec. 31, 2007 Dec. 31, 2008 On personnel provisions 1,208 2,988 On risk provisions 5,244 10,326 On write-down of current assets 7,918 9,651 On write-down of property, plant and equipment 3,579 4,232 On write-down of financial instruments 2,023 1,593 On previous years losses 25,659 18,843 TOTAL 45,631 47,633 Deferred tax assets Taxable amount Dec. 31, 2007 Dec. 31, 2008 On personnel provisions 18,860 16,848 On risk provisions On write-up of current assets On write-up of property, plant and equipment 308, ,103 On write-up of financial instruments 5,076 3,886 TOTAL 332, ,093 Deferred tax liabilities Dec. 31, 2007 Dec. 31, 2008 On personnel provisions 5,202 4,635 On risk provisions On write-up of current assets 3 31 On write-up of property, plant and equipment 96, ,102 On write-up of financial instruments 1,591 1,220 TOTAL 102, ,032

108 Notes to the Consolidated Financial Statement 107 Elements whose deferred effect is not recorded Dec. 31, 2008 portion that may be carried forward indefinitely Deductible temporary differences - - Unused loss carry-forwards 11,317 - Unused tax credits - - The unused loss carry-forwards are essentially related to the subsidiary Ksolutions. Inventories (7) Dec. 31, 2007 Dec. 31, 2008 Inventories, Accum. Inventories, Inventories, Accum. Inventories, gross depreciation net gross depreciation net Paper (raw materials) 22,211 (608) 21,603 23,193 (1,936) 21,257 Printing materials (raw materials) 2,432 (254) 2,178 3,505 (254) 3,251 Publications (finished products) Add-on products (finished products) 5,830 (3,104) 2,726 1,539 (722) 817 Returns (finished products) 10,135 (7,959) 2,176 13,584 (11,977) 1,607 Other goods 2,429 (1,354) 1,075 1,448 (1,305) 143 TOTAL INVENTORIES 43,811 (13,279) 30,532 43,897 (16,194) 27,703 At December 31, 2008, the decline in inventories recorded in the income statement amounted to 2,826 thousand (as compared with a decline of 5,096 thousand at December 31, 2007), of which 2,618 thousand relating to the decline in inventories included under Change in finished products inventories (at December 31, 2007 such change was positive by 662 thousand), and 208 thousand relating to the decline in paper, raw material and other goods inventories included under Purchases (as compared with negative 5,758 thousand in the same period in the previous year). Trade receivables (8) Dec. 31, 2007 Dec. 31, 2008 Newsstands and distributors 19,004 18,793 Advertising and exchanges 269, ,561 Other trade receivables 13, Receivables from Group companies TOTAL TRADE RECEIVABLES 303, ,309 At December 31, 2008, the provision for doubtful accounts amounted to 19,002 thousand ( 13,381 thousand at December 31, 2007). Dec. 31, 2008 Opening balance 13,381 Write-downs 8,595 Uses (2,974) Closing balance 19,002

109 108 Notes to the Consolidated Financial Statement Receivables from other Group companies consist of trade receivables of the parent company from subsidiaries Le Scienze and Editoriale Libertà. Marketable securities and other financial assets (9) Balance at December 31, Purchases - Sales/repayments - Balance at December 31, Tax receivables (10) Dec. 31, 2007 Dec. 31, 2008 Corporate income tax (Ires) and regional tax on productive activities (Irap) receivable 989 2,739 Ires/Irap to be reimbursed 8,455 6,677 VAT receivable 681 2,268 Grants on publishing ex Law 62/2001 receivable 6,073 3,027 Other tax receivables 6,771 6,137 TOTAL TAX RECEIVABLES 22,969 20,848 Receivables for grants relate to tax credits on capital expenditure as per Law 62/2001 (Law on Publishing) which grants a 3% tax credit on eligible capital investments for the following five years. Grants not pertaining to the year are discounted and used-up over time based on the depreciation schedule of the assets to which they relate. Other receivables (11) Dec. 31, 2007 Dec. 31, 2008 Contributions and subsidies receivable Receivable on interest subsidies 8,609 5,033 Social security receivables Security deposits 1, Advances to suppliers and agents 1,481 1,905 Receivable from employees and associates 1, Other receivables 13,977 14,129 TOTAL OTHER RECEIVABLES 27,574 23,507 Receivables on interest subsidies relate to subsidies provided by Law to loans concluded in 2005 to finance the full-color project. The change on the previous year is due on the one hand to the restatement, on the basis of new parameters provided by the Department for Information and Publishing, of receivables at December 31, 2007, determining an increase in their book value of 1,774 thousand and, on the other hand, to the payment made in 2008 by the mentioned Department of 5,350 thousand in contributions.

110 Notes to the Consolidated Financial Statement 109 Other receivables consist mainly of prepaid rights and freelance work for the publication of addon products to be launched in the first months of 2009, in addition to prepaid rent. Cash and cash equivalents (12) Dec. 31, 2007 Dec. 31, 2008 Bank deposits 151, ,198 Cash on hand Checks Accrued interest on current account balances TOTAL CASH AND EQUIVALENTS 152, ,693 Current account balances are highly liquid short-term financial investments that are readily convertible into known cash amounts and not subject to relevant fluctuations in value. Such investments are made according to the financial needs of the Group, have maturities averaging around three months and are remunerated at a pre-set fixed rate (averaging around 3.19%) based on Euribor. Liabilities and Shareholders Equity Share capital (13) At December 31, 2008, the share capital amounted to 61,384, and was made up by 409,231,788 shares with par value of 0.15 each. With respect to December 31, 2007, the share capital declined by 3,782,250 as a result of the cancellation of 25,215,000 shares. Dec. 31, 2007 Dec. 31, 2008 No. of shares resolved 448,722, ,507,188 No. of ordinary shares issued 434,446, ,231,788 of which: Treasury stock 27,465,000 6,635,000 All ordinary shares issued are fully paid-in. There do not exist shares on which there is a restriction on the distribution of dividends, with the exception of the provisions of article 2357 of the Italian Civil Code regarding treasury stock. Reserves (14) The breakdown of reserves and changes incurred in the period are reported in the Statement of Changes in the Consolidated Shareholders Equity. As resolved by the Shareholders' Meeting, authorizing the Board of Directors to acquire on the market ordinary shares of Gruppo Editoriale L Espresso SpA, in 2008 a total of 4,385,000 shares were acquired for 9,129 thousand, which, considering treasury shares acquired in previous years and the annulment of 25,215,000 shares pursuant to the resolution taken by the Shareholders Meeting of April 17, 2008, brings the total of treasury shares held by the parent at December 31, 2008 to 6,635,000, representing 1.62% of the share capital. With regard to the above, we remind that a total of 25,215,000 treasury shares, representing 5.8% of the share capital, were annulled and the capital stock was thus reduced by a

111 110 Notes to the Consolidated Financial Statement corresponding amount. As a result of this operation, the Reserve for treasury stock, recorded under IFRS as a reduction of the Shareholders Equity, was reduced by 95.3 million, against a parallel reduction of 3.8 million in the capital stock, the 80.5 million reduction of the Share premium reserve, thus being reduced to zero, and the 11 million write down of the Voluntary reserve. The reduction in the share capital became effective on September 4, 2008, having expired the term for oppositions of ninety days provided by article 2445 of the Italian Civil Code. Minority interests (15) Dec. 31, 2007 Dec. 31, 2008 Editoriale FVG SpA 9,242 9,206 Edigraf Srl Seta SpA 1,667 1,406 TOTAL MINORITY INTERESTS 11,103 10,813 Financial debt (16) Dec. 31, 2007 Dec. 31, 2008 Maturing between Maturing 1 and 5 years over 5 years Bonds 304, ,797 3, ,707 Bank loans 91,515 75,528 56,173 19,355 Leasing payables TOTAL NON-CURRENT FINANCIAL DEBT 396, ,768 59, ,062 At December 31, 2008, the value of the bond issue amounted to 304,483 thousand, of which 686 thousand represents the short-term portion, and 303,797 thousand the long-term one. In application of IAS 39, the bond issue is valued at the amortized cost, calculated applying the effective interest rate. According to such valuation method, the value of the bond issue includes both directly attributable costs (equal originally to 1,995 thousand, declining at December 31, 2008 to 1,273 thousand), and proceeds from the early termination, in March 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 5,756 thousand at December 31, 2008). The 10-year bond issue, placed in October 2004, has a face value of 300 million and bears a 5.125% coupon. The effective tax rate is equal to 4.824%. Dec. 31, 2007 Dec. 31, 2008 Bonds 3,392 3,424 Bank overdrafts Bank loans 16,251 16,220 Leasing and other financial payables TOTAL CURRENT FINANCIAL DEBT 20,549 19,923 The short-term portion of bonds payable includes, in addition to the current portion of the bond issue, amounting to 686 thousand, also the related interest accrued at December 31, 2008, equal to 2,738 thousand (unchanged from December 31, 2007).

112 Notes to the Consolidated Financial Statement 111 Bank loans are made up as follows: Dec. 31, 2007 Dec. 31, 2008 Non-current secured loans 91,515 75,429 Non-current unsecured loans - 99 Total non-current loans 91,515 75,528 Current secured loans 16,246 16,220 Current unsecured loans 5 - Total current loans 16,251 16,220 TOTAL BANK LOANS 107,766 91,748 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 and Repayment Repurchases Balance at Dec. 31, 2007 changes in term of principal Dec. 31, 2008 Short-term portion (859) (62) 256 Coming due between 1 and 5 years 513 (70) Coming due over 5 years TOTAL 1, (859) (62) 699 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 portion Opening balance 10,466 5,486 2,465 7,889 26,306 15,460 10,846 Uses (3,710) (38) (1,627) (3,660) (9,035) (8,118) (917) Transfers current/non-current ,591 (3,591) Accruals/(release) 4, ,431 19,840 41,195 23,806 17,389 Change due to discounting back Ending balance 11,895 5,537 17,302 24,128 58,862 34,739 24,123 Non-current portion Legal Social Early Sundry Total proceedings security retirement risks provisions litigation incentives Opening balance 5,329 3, ,292 10,846 Uses (734) - (183) - (917) Transfers current/non-current (2,164) (358) (484) (585) (3,591) Accruals/(release) 3, ,668 17,389 Change due to discounting back Ending balance 6,146 3, ,434 24,123

113 112 Notes to the Consolidated Financial Statement Current portion Legal Social Early Sundry Total proceedings security retirement risks provisions litigation incentives Opening balance 5,137 1,928 1,798 6,597 15,460 Uses (2,976) (38) (1,444) (3,660) (8,118) Transfers current/non-current 2, ,591 Accruals/(release) 1, ,190 6,172 23,806 Change due to discounting back Ending balance 5,749 2,268 17,028 9,694 34,739 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 for the Financial Statements at December 31, 2007), gross of the related tax effect. Provisions for legal proceedings and labor litigation include risks deriving from libel suits, common to all publishers, risks connected with trade litigation, labor litigation and risks connected with social security audits. The provision for early retirement incentives relates to the accrual of costs expected to be incurred in the restructuring of some subsidiaries. The provision for sundry risks includes previous years tax accruals for 13,342 thousand (see note 30), tax litigation on premium transactions and other contractual risks. Provisions for Employee termination indemnity and other retirement benefits (18) Defined benefit plans The Provision for Employee termination indemnity accrued at December 31, 2006 by companies with more than 50 employees and accrued at December 31, 2008 by all other companies, in addition to the Fixed Indemnities for managers of newspapers, fall within the defined benefit plan category and are therefore determined according to actuarial methods. Both Plans represent the present value of the future 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% Amounts recorded in the Balance Sheet were calculated as follows:

114 Notes to the Consolidated Financial Statement 113 Employee termination indemnity provision Dec. 31, 2008 Opening balance 84,107 Accrual for employment in the period (service cost) 192 Increase due to interest (interest cost) 4,209 Actuarial (gain) loss 320 Benefits paid (7,520) Ending balance 81,308 Other personnel provisions Dec. 31, 2008 Opening balance 8,120 Accrual for employment in the period (service cost) 504 Increase due to interest (interest cost) 370 Actuarial (gain) loss 342 Benefits paid (965) Ending balance 8,371 Provision for phantom stock options Dec. 31, 2008 Opening balance 412 Accruals 855 Uses Ending balance 1,267 The average number for the period and the actual number of employees are shown in the table that follows: Average number of employees Number of employees at period-end Dec. 31, 2007 Dec. 31, 2008 Journalists 1,214 1,229 1,221 1,228 Manual workers Office workers 1,470 1,463 1,474 1,420 Managers Fixed-term employees Total 3,414 3,426 3,414 3,344

115 114 Notes to the Consolidated Financial Statement Benefits based on financial instruments The Group recognizes additional benefits to the Managing Director and other employees of the parent company and its subsidiaries holding top positions within the Group through compensation plans based on financial instruments. Plans adopted by the Group provide for the awarding of stock options or the attribution of rights to beneficiaries of extraordinary bonuses contingent on the achievement of a certain stock market price by the shares of the Company (phantom stock options). Stock option plans launched between 2000 and 2006 assign the right to exercise, at a predetermined price and for a set term, an option for the underwriting of new shares to be issued by the company pursuant to the related stock option plan 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 employed by the company. In years 2001 to 2006, specific stock option plans were assigned to the Managing Director of the company, Marco Benedetto, in charge until December 31,2008, giving him the right to acquire from the company at a pre-determined price and for a set term, a number of shares equal to the options already assigned to him. For information regarding stock option plans, please see the Information on share-based compensation in the Consob Regulation n Attachment 2a) and 2b) summarize information relating to each stock option plan in force at December 31, As indicated in Attachment 2a), options to underwrite shares of the Company not yet exercised at the present date amount to 11,168,050, equal to 2.73% of the Company s share capital. The phantom stock option plan for 2007 and 2008, described in the Information on benefits based on financial instruments in the Consob Regulation n provides the assignment of options that may be exercised over several years, giving the right to a variable extraordinary compensation based on the difference between the market price of the stock of the parent company at the time of the exercise of the option ( Normal Value ), and the market price of the stock at the time of the assignment of the option ( Initial Value ). The regulation sets, among other terms and conditions, also the fate of the options in case the assignee of the same ceases for whatever reason to be employed by 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 the stochastic approach, and makes reference to discreet binomial models elaborated from 1979 by Cox, Rubinstein and Ross with the intent of providing a general application of the Black-Scholes model. Main assumptions used in determining the fair value of stock option plans are summarized in the table below. Feb. 26, July 23, Feb. 25, July 28, Feb. 23, July 27, 2006 Plan 2003 Plan 2003 Plan 2004 Plan 2004 Plan 2005 Plan 2005 Plan I tranche II tranche Average strike price Expected 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

116 Notes to the Consolidated Financial Statement 115 Parameters used in calculating the value of phantom stock options (whose value is calculated at each accounting date, in compliance with accounting principles applied) are: 2007 Plan 2008 Plan 1st tranche 2nd tranche 1st tranche 2nd tranche Average strike price Annualized dividend yield per share % % % % Expected volatility 60.20% 60.20% 60.20% 60.20% Risk-free rate % % % % Fair Value at accounting date The expected volatility rate reflects the official estimate of the Italian Stock Exchange regarding the implicit 3-month volatility measured on the market for call options on Gruppo Editoriale l Espresso shares. At December 31, 2008, the total cost of stock option plans recorded in the financial statements amounted to 1,480 thousand, of which 403 thousand relating to stock options ( 2,017 thousand in 2007), and 1,077 thousand relating to phantom stock options ( 509 thousand at December 31, 2007). The decline in costs over the previous year was due to the net effect of the expiration in 2007 of the term for the exercise of options assigned to Marco Benedetto and partially compensed by the issue of a new phantom stock option plan for Trade payables (19) Dec. 31, 2007 Dec. 31, 2008 Payables to suppliers of: Paper 43,049 29,283 Printing services 14,314 10,264 Transport and distribution 5,224 4,648 Capital goods 10,645 11,125 Promotions 7,372 6,632 Products sold optionally with publications 15,949 15,448 Freelance work 7,838 5,647 Other editorial costs 2,373 4,682 Utilities and maintenance 2,436 4,405 Other suppliers 76,654 54,235 Advances received Other payables 1,045 1,194 TOTAL TRADE PAYABLES 187, ,595 Terms of payment range normally between 60 and 90 days.

117 116 Notes to the Consolidated Financial Statement Tax payables (20) Dec. 31, 2007 Dec. 31, 2008 Corporate (Ires) and regional tax on productive activities (Irap) payables 2, Ires payable to parent company 6,371 4,953 Withholding tax and personal income taxes 10,678 11,818 VAT payable 5,410 1,777 Other tax payables TOTAL TAX PAYABLES 24,705 19,263 Other payables (21) Dec. 31, 2007 Dec. 31, 2008 Social Security payables 22,045 23,683 Payable to personnel for holidays 19,369 20,576 Other payables to personnel 13,761 19,365 Payable to Directors, Auditors and minority shareholders Accrued liabilities 3,076 2,955 Payable on subscriptions 9,830 9,591 Payables for contributions ex Law 62/ ,630 9,366 Forfeiting of grants on subsidized loans 5,579 6,485 Other accrued liabilities 5,603 5,468 TOTAL OTHER PAYABLES 91,449 98, Notes to the Income Statement Revenues (22) Circulation 405, ,150 Advertising 657, ,216 Printing services provided to others 1,914 1,893 Conferences, seminars and training Rights and trademark royalties 2,304 1,340 Sale of contents Sale of internet services 2,018 1,294 Software development services 3, Mobile Radio and TV services provided 1, Sale of rejects and returns 4,338 4,085 Sale of other products and services 19,315 14,775 TOTAL REVENUES 1,098,166 1,025,548

118 Notes to the Consolidated Financial Statement 117 Other operating income (23) Grants 5,670 5,573 Capital gains on disposal of assets 862 1,580 Extraordinary gains 6,735 5,823 Rent Other operating income 4,321 4,680 TOTAL OTHER OPERATING INCOME 17,640 17,689 Purchases (24) Paper for newspapers and periodicals 111,278 97,871 Paper for add-on products and promotions 14,675 7,890 Printing materials 18,219 22,007 Purchase of add-on products and supports 13,947 15,938 Consumables 4,670 4,622 Other goods 4,708 1,885 Capitalized purchases for internal construction (4) - Change in raw material and merchandise inventories (206) (138) TOTAL PURCHASES 167, ,075 Services received (25) Printing and other work carried out by third parties 75,681 55,998 Distribution 35,554 34,202 Reproduction rights and other copyright costs 31,431 31,497 Promotions 27,902 26,322 Publisher fees 15,437 13,829 Agent and agency fees 41,084 30,687 Editing costs 69,895 67,549 Radio and TV productions 3,042 2,478 Advisory 15,100 15,266 Traveling expenses 12,822 11,638 Postage, telephone and data transmission 9,452 8,655 Maintenance and utilities 23,431 25,872 Technical equipment operation 8,340 5,556 Rent 22,174 22,815 Security and cleaning 5,981 6,066 Other services 25,157 29,578 TOTAL SERVICES RECEIVED 422, ,008

119 118 Notes to the Consolidated Financial Statement Other operating charges (26) Accrual to provision for risks and charges 5,921 10,015 Taxes and duties 1,901 2,363 Public relations and gifts 1,338 1,027 Membership fees 2,141 2,182 Settlements and reimbursements 1, Extraordinary losses 3,300 3,457 Write-down of receivables 3,292 9,511 Other operating charges 1,509 1,345 TOTAL OTHER OPERATING CHARGES 20,459 30,453 Personnel costs (27) Wages and salaries 202, ,782 Social Security 66,711 68,564 Accruals for employee termination indemnity 1,007 15,053 Accruals for retirement benefits 1, Accruals for paid holidays 655 1,158 Accruals for contract renewals Stock options and phantom stock options 2,431 1,254 Early retirement incentives 2,126 23,063 Other personnel costs 6,987 10,328 TOTAL PERSONNEL COSTS 284, ,701 In 2007, accruals for employee termination indemnities included the positive effect of the curtailment, amounting to 11,6 thousand. In 2008, instead, 22.1 million of charges on restructuring plans launched in the year by some Group companies were recorded. Depreciation, amortization and write-downs (28) Intangible asset amortization 2,618 2,333 Tangible asset amortization 40,077 40,804 Write-down of property, plant and equipment 120 4,068 TOTAL DEPRECIATION, AMORTIZATION AND WRITE-DOWNS 42,815 47,205 In 2008, 3.5 million of write-downs of plant and equipment carried out as part of restructuring plans were recorded.

120 Notes to the Consolidated Financial Statement 119 Financial income (expense) (29) Dividends - 99 Interest received on current accounts and short-term deposits 6,759 5,962 Foreign-exchange gains Financial income from application of IAS 10 - Other financial income 1, Net financial income 8,111 6,764 Interest paid on current account overdrafts (58) (43) Accessory banking expenses (570) (468) Interest on bonds issued (14,751) (14,721) Interest on loans and financing (5,045) (4,372) Foreign-exchange losses (97) (319) Leasing payments (115) (49) Financial charges on application of IAS (4,916) (4,975) Other financial charges (135) (122) Interest expense (25,687) (25,069) Write-downs and losses on investments - (1,400) TOTAL FINANCIAL INCOME/(EXPENSE) (17,576) (19,606) Income taxes (30) Current taxes 52,173 38,011 Deferred and prepaid taxes 14,321 3,136 Previous years taxes - 13,342 TOTAL TAX EXPENSE 66,494 54,489 Income taxes amount to 54,489 thousand and include 13,342 thousand of extraordinary tax accruals. With regard to the latter, we note that in December 2008 the Supreme Cassation Court in Joint Session, called to rule on issues relating to usufruct rights on shares owned by foreign subjects, severely censored these operations, adopting the principle according to which no benefit can be drawn from operations carried out with the sole intent of obtaining a tax benefit without any specific other economic advantage. In the case of the usufruct of shares, the unrightful tax advantage was detected mainly in the obtainment of the tax credit which could not otherwise have been obtained by the foreign shareholder. Such new orientation of the Court induced the Group to carefully analyze the possible implications of the same on pending litigation regarding usufruct, for which, given the positive pronouncements obtained so far before the competent Tax Commissions, the risk that such contestations could give rise to a tax liability had always been considered as remote. In this regard, having taken into consideration the severity of conclusions reached by the Supreme Court, the Group has undertaken, also on the basis of authoritative tax advisors opinions, to accrue at December 31, 2008 an amount equal to thousand, deeming the probable risk

121 120 Notes to the Consolidated Financial Statement on pending litigation to be only that relating to tax credits on dividends and withholding taxes paid, in addition to interest accrued. The Group will however continue to uphold in the next phases of litigation, its conviction about the rightfulness of transactions carried out. For completeness, we acknowledge that the highest possible potential liability, represented by higher tax liabilities ascertained by Tax Authorities and the related interest accrued, would amount to 27,600 thousand, net of fines, deemed not applicable due to the condition of objective uncertainty generated by the change in the orientation of the Court. The table that follows shows a reconciliation between the theoretical tax expense (determined in 2007 using an IRES (corporate) tax rate of 33% and an IRAP (regional tax on productive activities) rate of 4.25%, and for 2008 using an IRES tax rate of 27.5% and an IRAP rate of 3.9%), and the actual tax expense ) Pre-tax profit as reported in the accounts 163,015 75,716 2) a. Theoretical income taxes IRES (at national tax rate) 53,795 20,822 b. Tax effect of non-deductible costs 4,142 3,473 c. Tax effect of losses that do not originate deferred tax assets in the year d. Tax effect of previous years losses that originate deferred tax assets in the year (788) (11) e. Prepaid taxes not accrued in previous years (393) - f. Deferred tax effect due to reduction in IRES rates (deferred tax assets and liabilities) (9,391) - g. Tax effect on reduction of IRES rates (accrual for the year) h. Dividends - (26) i. Non-taxable income/grants (1,224) (1,283) 3) Income taxes (IRES) 46,789 23,862 4) Regional tax on productive activities (IRAP) 19,705 17,285 5) Prevoius years taxes - 13,342 6) Total income taxes as reported in the accounts 66,494 54,489 Average effective tax rate IRES + IRAP (3) and (4) 40.79% 54.34% Average effective tax rate on total income taxes (6) 40.79% 71.96% Theoretical tax rate 37.25% 31.40% Minority interests (31) Minority interests consist of the portion of net profit attributable to minority interests of Editoriale FVG, Seta and Edigraf. Income per share (32) Base income per share is calculated by dividing the net profit for the period pertaining to the Group by the weighted average number of ordinary shares in circulation in the period (excluding treasury stock). The diluted income per share is calculated by dividing the net profit for the period attributed to ordinary shareholders by the weighted average number of ordinary shares in circulation in the period, adjusted for the diluting effect of stock options. The table that follows shows income per share and other information used in the calculation of the basic and diluted income per share.

122 Notes to the Consolidated Financial Statement Net profit 95,598 20,624 Weighted average number of shares in circulation ( 000) 416, ,276 Basic earnings per share Net profit 95,598 20,624 Weighted average number of shares in circulation ( 000) 416, ,276 No. of options ( 000) 16,784 16,177 Diluted earnings per share Dividends paid (33) In 2007, dividends paid for the 2006 financial year, as resolved by the Shareholders Meeting held on April 18, 2007 in a proportion of 0.16 for each of the 419,871,988 ordinary shares in circulation (keeping into account treasury stock), amounted to 67,180 thousand. The Shareholders Meeting held of April 17, 2008 resolved the distribution of an ordinary dividend of 68,821 thousand, to be distributed to shareholders in a proportion of 0.17 for each of the 404,831,788 ordinary shares in circulation (keeping into account treasury stock). 13. Other information 13.1 Net financial position The net financial position of the Group is shown in the table below. Dec. 31, 2007 Dec. 31, 2008 Financial receivables from Group companies - - Financial payables to Group companies - - Cash and deposits 152, ,693 Bank overdrafts (13) (23) Cash and cash equivalents 152, ,670 Marketable securities and other financial assets Bond issue (307,875) (307,221) Other bank debt (107,766) (91,748) Other financial debt (1,406) (699) Other financial assets (liabilities) (416,997) (399,618) NET FINANCIAL POSITION (264,870) (278,948)

123 122 Notes to the Consolidated Financial Statement 13.2 Significant non-recurring events and operations In compliance with Consob Communication dated July 28, 2006, we acknowledge that in 2008 the Group did not carry out significant non-recurring operations, as defined in said Communication Transactions resulting from atypical or unusual operations In compliance with Consob Communication dated July 28, 2006, we acknowledge that in 2008 the Group did not carry out significant atypical or unusual operations, as defined in said Communication Risk management Financial risk The 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 implies the application of prudence and limited risk criteria in the choice of financial and investment policies, prohibiting all speculative operations except for those motivated and approved by the Board of Directors of the parent company. The parent company Gruppo Editoriale L Espresso SpA manages and coordinates a centralized intragroup current account, in which all subsidiaries take part, aiming at obtaining economic advantages in relationships with financial counterparts and stronger operating efficiency. Centralization allows in fact more efficient planning and 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 power with the banking system. The Group, whose rating issued by Standard&Poors is BB+ with a negative outlook, uses prevalently two channels to raise financial resources: the international bond market and longterm bank loans extended against investments in publishing activities for which subsidies are provided 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 parent company 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 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 include covenants or clauses providing for the early repayment of the same. In addition to the bond issue mentioned above, in November 2005 the parent company and some subsidiaries were extended ten-year loans amounting to 112 million, subsidized pursuant to the Law on publishing, 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 to prevent liquidity risks. Were it however to be in need of additional financial resources in addition to those provided by the operating cash flow, the Group will be in a position to draw on a number of uncommitted credit lines which are currently unutilized. The Group is currently not exposed to financial risk connected with fluctuations in interest rates or exchange rates. Price risk As it is active in the publishing sector, the Group acquires large quantities of paper. To achieve a more efficient management of paper purchases and to strengthen its bargaining position with

124 Notes to the Consolidated Financial Statement 123 counterparts, thus promoting competition among suppliers, the management of paper purchases for the Group was unified. In the past, the Group stipulated a number of paper swap contracts on a portion of its annual paper needs. As, however, it assessed their ineffectiveness in the medium term, the Group has decided to discontinue the use of such instruments. Credit risk The 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 on trade receivables. Though there are no significant concentrations of such risks, the Group however adopts operating procedures that bar the sale of products or services to customers that do not possess an adequate risk profile or provide collateral guarantees. With regard to financial receivables, investments in short-term financial instruments and trading in derivatives are carried out only with banks that possess a high credit standing. Following the tables that follow in which (i) financial assets and liabilities are subdivided by class/category, (ii) financial assets are reported by maturity, and (iii) the contractual expiration of financial liabilities is indicated. Classes of financial instruments Note Book Financial Fair value of Loans and Invest- Available Fair Effect Effect value assets valued financial financia ments for-sale value on the on the 2007 at fair value assets held receivables held to financial IS Sh. Eq. FINANCIAL in the income for trading maturity assets + / (-) + / (-) ASSETS statement purposes Non-current assets Other investments (4) 4, ,088 4, Other receivables* (5) 1, , , Current assets Trade receivables (8) 303, , ,253 (3,301) - Other receivables * (11) 16, , ,851 (1) - Marketable securities (9) Cash (12) 152, , ,140 6,766 - * The item does not include accrued income and tax receivables

125 124 Notes to the Consolidated Financial Statement Note Book Financial Fair value of Financial Fair value Effect on Effect on value liabilities financial liabilities the IS the Sh. Eq valued at fair liabilities held valued at the + / (-) + / (-) FINANCIAL value in the for trading amortized LIABILITIES income stat. purposes cost Non-current liabilities Bonds (16) (304,483) - - (304,483) (280,981) - - Other financial debt (16) (92,028) - - (92,028) (84,508) - - Current liabilities Bank overdrafts (16) (13) - - (13) (13) (58) - Bonds (current portion) (16) (3,392) - - (3,392) (3,392) (14,751) - Other financial debt (16) (17,144) - - (17,144) (20,717) (5,160) - Trade payables (19) (187,046) - - (187,046) (187,046) - - Note Book Financial Fair value of Loans and Invest- Available Fair Effect Effect value assets valued financial financia ments for-sale value on the on the 2008 at fair value assets held receivables held to financial IS Sh. Eq. FINANCIAL in the income for trading maturity assets + / (-) + / (-) ASSETS statement purposes Non-current assets Other investments (4) 2, ,568 2, Other receivables* (5) 1,273 1,273 1, Current assets Trade receivables (8) 258, , ,309 (8,446) Other receivables * (11) 13,248 13,248 13,248 (17) Marketable securities (9) Cash (12) 120, , ,693 5,962 * The item does not include accrued income and tax receivables Note Book Financial Fair value of Financial Fair value Effect on Effect on value liabilities financial liabilities the IS the Sh. Eq valued at fair liabilities held valued at the + / (-) + / (-) FINANCIAL value in the for trading amortized LIABILITIES income stat. purposes cost Non-current liabilities Bonds (16) (303,797) (303,797) (239,321) 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)

126 Notes to the Consolidated Financial Statement 125 Financial assets by maturity Notes Total Not Expiring over 90 Write- Balance at Dec. 31, 2007 receivable matured in > days days days days downs Non-current assets Other receivables* (5) 1,595 1, Current assets Trade receivables (8) 303, ,308 71,945 35,205 10,835 5,656 20,249 - trade receivables, gross 316, ,492 80,142 35,892 11,214 5,885 27,151 - Accumulated depreciation (13,381) (5,184) (8,197) (687) (379) (229) (6,902) (3,301) Other receivables * (11) 16,851 16,851 - other receivables, gross 17,235 17,235 - Provision for doubtful accounts (384) (384) (1) TOTAL 321, ,754 71,945 35,205 10,835 5,656 20,249 (3,302) (*): Other receivables do not include accrued income and tax receivables. Notes Total Not Expiring over 90 Write- Balance at Dec. 31, 2008 receivable matured in > days days days days downs Non-current assets Other receivables* (5) 1,273 1, Current assets Trade receivables (8) 258, ,222 77,087 33,889 12,974 7,488 22,736 - trade receivables, gross 277, ,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, other receivables, gross 13,623 13, Provision for doubtful accounts (384) (384) (17) TOTAL 272, ,743 77,087 33,889 12,974 7,488 22,736 (8,612) 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 TOTAL months and 1 year and 2 years and 3 years and 4 years and 5 years years Bond issues - 15,375 15,375 15,375 15,375 15, , ,625 Other financial debt 11,239 10,358 20,188 18,883 17,211 14,628 34, ,784 - bank loans 10,484 10,176 19,960 18,672 17,149 14,566 34, ,278 - leasing payables ,502 - other financial debt Bank overdrafts Trade payables 187, ,046 TOTAL 198,298 25,733 35,563 34,258 32,586 30, , ,468

127 126 Notes to the Consolidated Financial Statement less than between 6 mo. between 1 between 2 between 3 between 4 over 5 TOTAL months and 1 year and 2 years and 3 years and 4 years and 5 years years Bond issues - 15,375 15,375 15,375 15,375 15, , ,250 Other financial debt 10,164 10,096 19,000 17,472 14,659 14,084 20, ,674 - bank loans 10,023 9,952 18,730 17,352 14,573 14,077 20, ,906 - leasing payables Bank overdrafts Trade payables 147, ,595 TOTAL 157,782 25,471 34,375 32,847 30,034 29, , , Commitments In addition to liens on printing plant and rotary presses granted to banks in the context of loans extended in 2005 (see note 2), at December 31, 2008, commitments of the Group amounted to 5,373 thousand and consisted of: contracts for the purchase of plant and equipment ( 2,638 thousand) relating primarily to the Repubblica Division and the Padova and Livorno operating divisions of Finegil Editoriale and Editoriale Nuova Sardegna in the context of the full color project; a contract for the purchase of the Mantova new operating complex of Finegil Editoriale ( 418 thousand). Guarantees granted amount to 2,317 thousand and relate to guarantees granted by the parent company in favor of subsidiaries Elemedia and A. Manzoni&C. on the lease of the respective offices, and of subsidiary Ksolutions in favor of the Public Administration for contracts involving the supply of services by the subsidiary.

128 Attachments

129 128 Attachments Consolidated companies ATTACHMENT No. 1 Name and Registered Share % Held by activity office capital the company ( '000) PARENT COMPANY Gruppo Editoriale L Espresso SpA Rome CIR SpA publishing SUBSIDIARIES CONSOLIDATED LINE-BY-LINE A. Manzoni & C. SpA Milan 15, Gruppo Editoriale L Espresso SpA advertising concessionaire All Music SpA Milan 6, Rete A SpA content provider C.P.S. SpA Rome Gruppo Editoriale L Espresso SpA pre-printing EAG SpA Pavia Finegil Editoriale SpA publishing Edigraf Srl Trieste Editoriale FVG SpA printing Editoriale FVG SpA Udine 87, Gruppo Editoriale L Espresso SpA publishing Editoriale La Città SpA Salerno Finegil Editoriale SpA publishing Editoriale La Nuova Sardegna SpA Sassari Finegil Editoriale SpA publishing Editoriale Metropoli SpA Rome Elemedia SpA publishing Edizioni Nuova Europa SpA Ivrea Finegil Editoriale SpA publishing (Turin) Elemedia SpA Rome 25, Gruppo Editoriale L Espresso SpA radio, internet and satellite Tv broadcasting Finegil Editoriale SpA Rome 18, Gruppo Editoriale L Espresso SpA publishing Kataweb News Srl Rome Elemedia SpA internet publishing Ksolutions SpA San Giuliano 1, Elemedia SpA internet services Terme (Pisa) Rete A SpA Milan 13, Gruppo Editoriale L Espresso SpA television broadcasting Rotocolor SpA Rome 23, Gruppo Editoriale L Espresso SpA printing Rotonord SpA Rome Rotocolor SpA printing Rotosud SpA Oricola 2, Gruppo Editoriale L Espresso SpA printing (L Aquila) Saire Srl Milan Gruppo Editoriale L Espresso SpA printing Selpi SpA Rome 1, Gruppo Editoriale L Espresso SpA services 30 Finegil Editoriale SpA S.E.T.A. SpA Bolzano Gruppo Editoriale L Espresso SpA publishing Somedia SpA Milan Gruppo Editoriale L Espresso SpA services Note: amounts in thousands of euro unless otherwise specified

130 Attachments 129 Name and Registered Share % Held by activity office capital the company ( '000) ASSOCIATES CONSOLIDATED AT EQUITY Altrimedia SpA Piacenza Finegil Editoriale SpA advertising concessionaire Editoriale Corriere Romagna Srl Forlì 2, Finegil Editoriale SpA publishing Editoriale Libertà SpA Piacenza 1, Finegil Editoriale SpA publishing Le Scienze SpA Rome Gruppo Editoriale L Espresso SpA publishing SUBSIDIARIES AND ASSOCIATES VALUED AT COST Benedettine Srl (in liquidation) Piacenza Finegil Editoriale SpA real estate Cellularmania.com Srl (in liquidation) Rome Elemedia SpA internet services Enotrya Srl (in liquidation) Rome Elemedia SpA e-commerce Uhuru Multimedia Srl (non operational) Rome Ksolutions SpA internet services OTHER COMPANIES VALUE AT COST Agenzia ANSA Soc. Coop. a r.l. Rome Gruppo Editoriale L Espresso SpA press agency 3.81 Finegil Editoriale SpA 3.17 Editoriale La Nuova Sardegna SpA 3.28 Editoriale FVG SpA 2.53 S.E.T.A. SpA 1.88 EAG Spa Agenzia Informativa Adriatica d.o.o. Capodistria Editoriale FVG SpA production and trasmission of information (Slovenia) A.G.F. Srl Rome Gruppo Editoriale L Espresso SpA photo agency Audiradio Milan A. Manzoni & C. SpA market research Club DAB Italia - consortium Milan Elemedia SpA radio broadcasting service Consorzio Emittenti Radio televisive - CERT Bologna Rete A SpA radio broadcasting service Consorzio Colle Maddalena Turin Rete A SpA radio broadcasting service Note: amounts in thousands of euro unless otherwise specified

131 130 Attachments Name and Registered Share % Held by activitiy office capital the company ( '000) Consuledit Società Consortile a r.l. Milan Gruppo Editoriale L Espresso SpA market research 3.99 Finegil Editoriale SpA 0.62 Editoriale La Nuova Sardegna SpA 0.49 S.E.T.A. SpA 0.47 Editoriale FVG SpA 0.39 EAG SpA E-Ink Corporation Cambridge 165,456 (US$ '000) 0.05 Gruppo Editoriale L Espresso SpA printing technologies (USA - MA) Immobiliare Editori Giornali Srl Rome S.E.T.A. SpA real estate 0.12 Editoriale La Nuova Sardegna SpA Presto Technologies Inc. (non-operating) Cambridge 7,664 (,000) $ USA 7.83 Elemedia SpA internet services (Mass., USA) Telelibertà SpA Piacenza Finegil Editoriale SpA TV broadcasting services Trento Press Service Srl Gardolo di Trento S.E.T.A. SpA newspapers distribution (Trento) Note: amounts in thousands of euro unless otherwise specified

132 Attachments 131 Employees Stock Option Plans at December 31, 2008 ATTACHMENT 2 (a) Options in circulation Options cancelled Options exercised Options in circulation at Options that may be at beginning in the period in the period end of the period exercised at end of of the period the period No. of Weighted No. of Weighted No. of Weighted Average market No. of Average price Average No. of Weighted options average price options average price options average price price at options for period expiration options average price for period for period for period exercise date (years) for period 2000 Stock Option Plan , , ,60 1, ,60 April 24, 2001 Stock Option Plan , , ,25 2, ,25 October 24, 2001 Stock Option Plan , , ,51 3, ,51 March 6, 2002 Stock Option Plan , , ,30 3, ,30 July 24, 2002 Stock Option Plan , , ,36 4, ,36 February 26, 2003 Stock Option Plan , , ,86 4, ,86 July 23, 2003 Stock Option Plan , , ,54 5, ,54 February Stock Option Plan , , ,95 5, ,95 July 28, 2004 Stock Option Plan , , ,80 6, ,80 February 23, 2005 Stock Option Plan , , ,75 6, ,75 July 27, 2005 Stock Option Plan , , ,65 7, , Stock Option Plan - 1st tranche , , ,33 8, , Stock Option Plan - 2nd tranche , , ,96 8, ,96 TOTAL , , ,86 5, ,24

133 132 Attachments Stock Option Plans attributed to Marco Benedetto ai December 31, 2008 ATTACHMENT 2 (b) Options in circulation Options cancelled Options exercised Options in circulation at Options that may be at beginning in the period in the period end of the period exercised at end of of the period the period No. of Weighted No. of Weighted No. of Weighted Average market No. of Average price Average No. of Weighted options average price options average price options average price price at options for period expiration options average price for period for period for period exercise date (years) for period February 25, 2004 Stock Option Plan , ,95 0, ,95 July 28, 2004 Stock Option Plan , ,80 0, ,80 February 23, 2005 Stock Option Plan , ,75 1, ,75 July 27, 2005 Stock Option Plan , ,65 1, , Stock Option Plan - 1st tranche , ,33 4, , Stock Option Plan - 2nd tranche , ,96 5, ,96 TOTAL , ,53 2, ,53

134 Certification of the Consolidated Financial Statements pursuant to article 81-ter of Consob Regulation no

135

136 135 Certification of the Consolidation Financial Statements pursuant to article 154-bis of Italian Decreen.58 of February 24,1998 1) The undersigned Monica Mondardini, Managing Director, and Oliviero Maria Brega, 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: the adequacy in relation to the characteristics of the Company and the effective application of the administrative and accounting procedures used in the preparation of the Consolidation Financial Statements during the year ) It is also certified that: 2.1) the Consolidation Financial Statements as of December 31, 2008: a) are prepared in accordance with International Financial Reporting Standards as adopted by the European Union pursuant to Regulation (EC) n.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 present the financial condition, result of operations and cash flows of the Issuer 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 Issuer and the group companies included in consolidation, together with a description of its exposure to major risks and uncertainties. Signed by Monica Mondardini Signed by Oliviero Maria Brega Rome, February 25, 2009 This certification has been translated into The English language solely for the convenience of international readers Gruppo Editoriale L Espresso SpA Sede legale Via Cristoforo Colombo Roma Tel. 06/84781 Fax 06/ Cap. Soc. Euro ,20 i.v. - R.E.A. Roma n P.IVA Codice Fiscale e Iscriz. Registro Imprese di Roma n Società soggetta all attività di direzione e coordinamento di CIR S.p.A.

137

138 Report of the Independent Auditors

139

140 Report of the Independent Auditors Gruppo Editoriale L Espresso

141

142 Financial Statements of the Parent Company Gruppo Editoriale L Espresso SpA at December 31, 2008

143 142 Financial Statements of the Parent Company Balance Sheet ASSETS Note Dec 31, Dec 31, (euro) Intangible assets with an indefinite useful life 220,660, ,660,859 Other intangible assets 2,186,886 2,525,892 Intangible assets (1) 222,847, ,186,750 Property, plant and equipment (2) 60,932,448 60,103,827 Investments (3) 391,852, ,452,524 Non-current receivables (4) 355, ,424 Deferred tax assets (5) 10,880,437 14,886,309 NON-CURRENT ASSETS 686,869, ,002,833 Inventories (6) 25,386,816 22,635,642 Trade receivables (7) 125,486, ,403,549 of which: trade receivables to related parties 106,975,400 (85.2%) 84,652,848 (83.5%) Tax receivables (8) 18,357,150 14,848,005 of which: trade receivables to related parties 1,536,742 (8.4%) 185,681 (1.3%) Other receivables (9) 11,357,181 10,897,683 Cash and cash equivalents (10) 224,813, ,168,010 of which: cash and cash equivalents to related parties 89,661,263 (39.9%) 98,592,522 (50.3%) CURRENT ASSETS 405,400, ,952,889 TOTAL ASSETS 1,092,269,589 1,044,955,722 LIABILITIES AND SHAREHOLDERS EQUITY Note Dec 31, Dec 31, (euro) Share capital (11) 65,167,018 61,384,768 Reserves (12) 80,113,273 86,083,500 Retained earnings (loss carry-forwards) 64,152, ,582,252 Net profit (loss) 166,161,981 49,668,766 SHAREHOLDERS EQUITY 375,594, ,719,287 Financial debt (13) 332,984, ,311,407 Provisions for risks and charges (14) 5,472,701 18,531,529 Employee termination indemnity and other retirements benefits (15) 41,025,571 40,185,313 Deferred tax liabilities (5) 39,666,643 43,045,147 NON-CURRENT LIABILITIES 419,149, ,073,395 Financial debt (13) 125,891, ,474,683 of which: financial payables to related parties 117,393,406 (93.2%) 98,929,604 (92.0%) Provisions for risks and charges (14) 4,019,207 11,637,553 Trade payables (16) 115,641,354 90,176,178 of which: trade payables to related parties 23,576,097 (20.4%) 20,021,460 (22.2%) Tax payables (17) 10,388,649 11,821,294 of which: tax payables to related parties 2,910,531 (28.0%) 6,561,973 (55.5%) Other payables (18) 41,584,981 47,053,332 CCURRENT LIABILITIES 297,525, ,163,040 TOTAL LIABILITIES 716,675, ,236,435 TOTAL LIABILITIES AND SHAREHOLDERS EQUITY 1,092,269,589 1,044,955,722 Notes from page 153 to page 199 are an integral part of the present Financial Statements.

144 Financial Statements of the Parent Company 143 Income Statement Note (euro) Revenues (19) 618,807, ,735,173 of which: portion relating to affiliated companies 339,457,703 (54.9%) 302,761,448 (52.8%) Change in inventories (6) 395,516 (1,743,550) Other operating income (20) 8,031,654 8,655,728 of which: portion relating to affiliated companies 565,149 (7.0%) 80,106 (0.9%) Purchases (21) (113,491,609) (100,451,313) of which: portion relating to affiliated companies (1,723,069) (1.5%) 1,002,849 (-) Services received (22) (311,843,729) (288,588,543) of which: portion relating to affiliated companies (104,380,664) (33.5%) (103,247,464) (35.8%) Other operating charges (23) (8,879,672) (12,038,052) of which: portion relating to affiliated companies (184) (-) (2,977) (0.0%) Personnel costs (24) (109,060,755) (129,049,931) of which: portion relating to affiliated companies (324,489) (0.3%) (346,037) (0.3%) Depreciation, amortization and write-downs (25) (13,973,081) (13,973,310) OPERATING PROFIT 69,985,807 36,546,203 Financial income (expense) (26) (15,288,579) (13,978,344) of which: portion relating to affiliated companies (3,008,693) (19.7%) 33,373 (-) Dividends (27) 135,500,045 55,279,351 of which: portion relating to affiliated companies 135,500,045 (100.0%) 55,279,351 (100.0%) Pre-tax profit 190,197,273 77,847,210 Income taxes (28) (24,035,292) (28,178,444) NET PROFIT 166,161,981 49,668,7661 Earnings per share, basic (29) Earnings per share, diluted (29) Notes from page 149 to page 195 are an integral part of the present Financial Statement

145 144 Financial Statements of the Parent Company Statement of Cash Flows ( 000) Note OPERATING ACTIVITIES Net profit (loss) 166,162 49,669 Adjustments: - Depreciation, amortization and write-downs (25) 13,974 13,973 - Fair value stock option (24) 2, Net change in provisions for personnel costs (15) (6,550) (841) - Net change in provisions for risks and charges (14) (326) 20,677 - Losses (gains) on disposal of assets (5) (1) - Adjustments to the value of financial assets 1,400 - Dividends (received) (135,500) (55,279) Cash flow from operating activities 39,772 30,001 Change in current assets and other flows 11,328 9,934 of which: portion relating to related parties (10,476) (-) 23,771 (-) CASH FLOW FROM OPERATING ACTIVITIES 51,100 39,935 of which: Interest received (paid) through banks (13,595) (11,424) of which: portion relating to related parties (3,039) (22.4%) (80) (0.7%) Income taxes received (paid) (19,620) (13,043) of which: portion relating to related parties * (14,995) (76.4%) (7,539) (57.8%) INVESTING ACTIVITIES Outlay for purchase of assets (8,036) (13,716) Outlay for purchase of investments (1,700) (10,000) Received on disposal of assets 1, Grants received 1,229 Dividends received (27) 135,500 55,279 of which: portion relating to related parties 135,500 (100.0%) 55,279 (100.0%) CASH FLOW FROM INVESTING ACTIVITIES 127,353 32,803 FINANCING ACTIVITIES Increases in capital and reserves 345 (Acquisition) sale of treasury stock (58,562) (9,129) Issue (repayment) of other financial debt (5,874) (4,973) Dividends (paid) (30) (67,180) (68,821) of which: portion relating to related parties (35,324) (52.6%) (37,532) (54.5%) Other changes 7 3 CASH FLOW FROM FINANCING ACTIVITIES (131,264) (82,920) Increase (decrease) in cash and cash equivalents 47,189 (10,182) Cash and cash equivalents at beginning of the period 60, ,420 CASH AND CASH EQUIVALENTS AT END OF THE PERIOD 107,420 97,238 of which: portion relating to related parties (27,732) (-) (338) (-) * Current income taxes paid upon participation in the tax consolidation procedure Notes from page 149 to page 195 are an integral part of the present Financial Statements

146 Financial Statements of the Parent Company 145 Statement of Changes in the Shareholders Equity Share Share Treasury IFRS Stock option Equity Retained Net Sh. ( 000) Capital Premium Stocks Reserve Reserve Reserves earnings Profit Equity Balance at December 31, ,150 80,242 (47,838) 46,322 8,354 44,817 49,827 85, ,802 Movements in net profit 85,928 (85,928) - Dividends (67,180) (67,180) Capital increases, capital contributed by shareholders Stock options 2,017 2,017 Treasury stock transactions (58,562) (58,562) Transfers between reserves 4,422 (4,422) - Other changes Net profit (loss) 166, ,162 Balance at December 31, ,167 80,570 (106,400) 50,744 10,371 44,827 64, , ,594 Movements in net profit 166,162 (166,162) - Dividends (68,821) (68,821) Capital increases, capital contributed by shareholders - Stock options Treasury stock transactions (3,782) (80,570) 86,197 (10,974) (9,129) Transfers between reserves (63) 63 - Other changes 3 3 Net profit (loss) 49,669 49,669 Balance at December 31, ,385 - (20,203) 50,681 10,774 44, ,583 49, ,719

147

148 Notes to the Financial Statements of Gruppo Editoriale L Espresso SpA

149

150 Notes to the Financial Statements of the Parent Company 149 Notes to the Financial Statements of the Parent Company 1. General information Gruppo Editoriale L Espresso SpA (the Company ) operates mainly in the publishing sector and more specifically in the newspapers and periodicals segment, and in the segment of on-line publishing. 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 coordination 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 stock is included in the MIDEX index. The present statutory accounts at December 31, 2008 were approved by the Board of Directors of the Company on February 25, Form, content and accounting principles The present financial statements were prepared in accordance with international accounting principles (International Accounting Standards IAS and International Financial Reporting Standards IFRS), as integrated by the related interpretations (Standing Interpretations Committee SIC and International Financial Reporting Interpretations Committee IFRIC) issued by the International Accounting Standards Boards (IASB). The general principle adopted in the preparation of the financial statements is that of the historical cost for all assets and liabilities, with the exception of derivative instruments and certain 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, are unchanged from those adopted for the approved Financial Statements at December 31, The classification adopted in the Balance Sheet, both for assets and liabilities, is that of current and non-current, as, unlike the classification by degree of liquidity, the former is deemed to be the criteria that best represents the financial situation of the Group. The Balance Sheet is divided into two separate facing sections. The order of reporting is Assets, Shareholders Equity and Liabilities from the least to the most liquid (from non-current to current). For sake of simplicity and to use the same format also for interim and quarterly reports, Financial Statements include only major captions and all sub-classifications (e.g. nature of the debtor/creditor, expiration term, etc.) are instead disclosed in the notes. The contents of the Balance Sheet are in compliance with minimum requirements established by IAS 1 as, with the exclusion of publications, radio frequencies and trademarks, classified under Intangible assets with an indefinite useful life, no significant or particular item was deemed to require separate reporting. Income Statement items were classified by nature as, in view of the nature of the Company s activities, a classification by destination is not deemed to provide a better description of the Company s operating performance. In the Statement of Cash Flows, prepared using the indirect method, cash flows from operating, investing and financing activities, and those from discontinued operations are reported separately. The statement of changes in the Shareholders Equity reports income and charges for the period, in addition to other changes in reserves. Unless otherwise specified, amounts reported in the Financial Statements and tables are stated in thousands of euro, rounded off to the nearest unit.

151 150 Notes to the Financial Stamements of the Parent Company 3. Valuation criteria 3.1 Intangible assets Intangible assets are initially recorded at the acquisition or production cost. The acquisition cost is represented by the fair value of the price paid for the asset, inclusive of any direct cost incurred to put the asset to use. The acquisition cost is the equivalent of price paid in cash at the time of the acquisition. In case the amount paid for the acquisition is deferred beyond normal payment terms, the difference with respect to the equivalent cash price is recorded as interest over the longer payment term. The cost of intangible assets developed internally is recorded by separating costs incurred in the research phase (not capitalized) and costs incurred in the subsequent development phase (capitalized). In case the two phases cannot be separated, the whole project is accounted for as research. Interest charges on the acquisition are not capitalized. The book value of intangible assets is in line with the amount expected to be retrieved through future use or disposal. At least once a year and in case there arise doubts as to possibility to retrieve the book value of an asset, the latter is subjected to an impairment test, as described in note 3.5. Publications The useful life of publications mastheads is considered as undefined. Such assets are not amortized and are instead subjected annually, or any time there is an indication that the asset may have experienced a loss in value, to an impairment test. Losses in value are recorded in the income statement under Depreciation, amortization and write-downs. Goodwill Goodwill 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 of affiliated 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 an impairment test. Consequently, goodwill is allocated from the date of acquisition or by the end of the subsequent financial year, to one or more cash generating units (CGU). Reductions in value resulting from an impairment test do not give rise to adjustments in subsequent years and are recorded in the income statement under Depreciation, amortization and write-downs. Other intangible assets Other 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 balance sheet, barring specific relevant cases, the useful life of other intangible assets is estimated at 3 to 5 years. Amortization criteria applied are reviewed and redefined at least at the end of each financial period to keep into account possible significant changes. 3.2 Property, plant and equipment Property, plant and equipment are recorded at cost, represented by the fair value of the price paid for the acquisition of the asset, inclusive of any direct cost incurred to put the asset to use. The acquisition cost is the equivalent of the price paid in cash at the time of the acquisition. In case

152 Notes to the Financial Statements of the Parent Company 151 the amount paid for the acquisition is deferred beyond normal payment terms, the difference with respect to the equivalent cash price is recorded as interest over the longer payment term. Interest charges on the acquisition are never capitalized. The capitalization of costs for the upgrade, update or improvement of structural elements owned or leased from third parties is carried out exclusively when the same fulfill the requisites that allow their separate classification as assets or part of assets. Ordinary maintenance costs are charged to the income statement. After the initial recording, property, plant and equipment are carried at cost, net of accumulated depreciation (with the exception of land) and possible durable losses in value. The amortizable value of each significant component of a tangible asset having a different useful life 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 redefined at least at the end of each financial period to keep into account possible significant changes. Capitalized costs relating to leasehold improvements are attributed to the classes of assets to which they relate and amortized over the shorter between the residual term of the lease and the residual useful life of the asset to which the leasehold improvement relates. The book value of property, plant and equipment is in line with the amount expected to be retrieved through future use. In case doubts arise as to possibility to retrieve the book value of an asset, the latter is subjected to an impairment test, as described in note 3.5. The original value is restored when the reasons that gave rise to the impairment cease to exist. 3.3 Leasing contracts Leasing contracts relating to assets for which the Company bears all costs and benefits deriving from ownership are classified as financial leases. Assets held under a financial lease are recorded at the lower between the current value of the asset leased and the present value of minimum lease payments provided for in the lease contract. Such payments are accounted for as 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 are charged to the income statement over the life of the lease. Assets held under a financial lease are depreciated in line with assets owned. Leasing contracts in which the lessor holds a significant share of risks and benefits deriving from ownership are classified as operating leases. Lease payments are recorded in the income statement 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 of the asset is not recorded, except in the case of a write-down in the value of the asset. 3.4 Grants Grants are recorded when there exists, regardless of the formal granting of the amount, a reasonable certainty that the company will meet the conditions for the entitlement to the grant and that the same will actually be received. Capital grants are recorded in the balance sheet as deferred income and not as an adjustment to the value of the item for which the grant has been obtained. The contribution is credited to the income statement based on the useful life of the asset for which it is granted 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 at providing immediate financial help to the company not correlated to future costs are recorded as income in the period in which they become receivable.

153 152 Notes to the Financial Stamements of the Parent Company 3.5 Loss in value of assets A loss in value of an asset originates whenever the book value of an asset is higher than the amount expected to be retrieved from the same. At each accounting date, the presence of factors 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 is recorded where appropriate. Assets not yet available for use, those recorded in the financial statements in the current financial year, intangible assets having an indefinite useful life and goodwill are subject at least annually to an impairment test, independently from the presence of factors indicating possible loss in value. The retrievable value of an asset is the higher between its fair market value, net of sales costs, and its 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 use independently from positive cash flows generated by other assets or groups of assets, in which case the test is carried out at the level of the smallest Cash Generating Unit that includes the said asset. The original value of the asset is restored whenever the reasons for the loss in value cease to exist, with the exception of goodwill whose original value is not restored. 3.6 Investments Investments in affiliated companies are recorded at cost, net of losses in value. For a more detailed analysis of accounting principles regarding financial assets, see note Marketable securities Marketable securities are represented by financial assets having a fixed maturity which the company has the intention and the ability to hold to maturity and as such carried at the amortized cost. For a more detailed analysis of accounting principles regarding financial assets, see note Inventories Inventories are recorded at the lower of the acquisition cost, determined applying the weighted average cost method, and the net realizable value. The cost is represented 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 sale price under normal conditions, net of completion costs and selling expenses. Write-downs are reversed in subsequent years when the reasons for their recording cease to exist. 3.9 Trade receivables Trade receivables are recorded at the fair value of future cash flows, written-down for losses in value Contract work in progress Contract 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, contractual revenues and related costs are recorded under the stages of completion method. The percentage of completion is determined according to the ratio between costs and time employed in the activity carried out at the closing date of the accounts and total costs estimated to the

154 Notes to the Financial Statements of the Parent Company 153 completion. When it appears probable that total costs will exceed contractual revenues, the expected loss is taken to the income statement. In the case of projects for which a reliable estimate is not available, contractual revenues are recorded 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 invoices issued against the work carried out up until the date of the financial statements. When costs incurred and profits recorded (net of losses) are higher that invoices issued, the difference is recorded among current assets under Trade receivables. When invoices issued are higher than the sum of costs incurred and profits recorded (net of losses), the difference is accounted for among current liabilities under Trade payables Cash and cash equivalents Cash and cash equivalents are represented by short-term investments in highly liquid assets that may easily be converted in known amounts of cash posing a minimal risk of fluctuation in 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 of cash, demand deposits with banks, other highly liquid short-term financial assets with an original maturity not exceeding 3 months, and bank overdrafts. For the purposes of the balance sheet, the latter are included among financial payables under current liabilities Financial assets Financial 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 generating a fixed cash flow or one that may be determined, which the Company intends and has the ability to hold to maturity; loans and other financial receivables, consisting of financial assets generating a fixed cash flow 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 statement as available-for-sale financial assets; available-for-sale financial assets, consisting of financial assets other than the above or those designated as such from inception. Acquisitions and sales of financial assets are recorded at the settlement date. The acquisition cost 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 income statement and Available-for-sale financial assets are valued at fair value, while Financial assets held to maturity and Loans and other financial receivables are valued at the amortized cost.

155 154 Notes to the Financial Stamements of the Parent Company Realized and unrealized gains and losses resulting from fluctuations in the fair value of Financial assets valued at fair value, recorded also in the income statement are recorded in the income statement in the year in which they occur. Unrealized gains and losses resulting from fluctuations in the fair value of Available-for sale financial assets are recorded under Shareholders Equity. The fair value of financial assets is determined according to listed bid prices or through the use of financial models. The fair value of unlisted financial assets is estimated using specific estimation 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. Losses in value accounted for are reversed in case the circumstances that led to their recording no longer exist, with the exception of assets valued at cost Share capital The 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 Treasury stock Treasury stock are recorded in a specific Shareholders Equity reserve. Gains or losses on the purchase, sale, issue or cancellation of treasury shares are not recorded in the income statement Fair value reserves Fair value reserves include changes in the fair value, net of the related tax effect, of items recorded at fair value with compensation in the Shareholders Equity Other reserves Other reserves are represented by specific capital reserves Retained earnings (loss carry-forwards) Retained earnings (loss carry-forwards) include the part not distributed and not accrued to mandatory reserve (in case of profits) or not balanced (in case of losses), of profits for previous years. The item includes also transfers from other equity reserves freed-up, in addition to the effect of the change in accounting principles and relevant errors Employee benefits Short-term benefits Short-term employee benefits are recorded in the income statement in the period in which the employment takes place. Post-retirement benefits The 2007 Budget Law (Law 296/2006) and related implementation regulations introduced, from January 1, 2007, substantial changes in norms regarding Employee Termination Indemnities (TFR), among which the choice left to workers as to the destination of individual indemnities accruing from such date. In particular, new norms provide for the payment by the

156 Notes to the Financial Statements of the Parent Company 155 company of indemnities accrued from January 1, 2007 to the pension fund of choice or, in case the worker has opted to maintain accrued benefits with the company, into a treasury account set-up with INPS the national Social Security Fund. These normative changes resulted in a new accounting treatment of Employee Termination Indemnities. Before the reform introduced with Law 296/2006, under international accounting principles Employee Termination Indemnities were considered as a defined benefit plan, while now only indemnities accrued up to December 31, 2006 continue to qualify as such, while indemnities accrued after such date are treated as a defined contribution plan and thus all obligations of the company are fulfilled with the periodical payment of a contribution to other entities. The amount recorded in the Income Statement is therefore no longer that of discounted back indemnities, but the amounts actually paid to the pension fund of choice of the employee or the INPS treasury account, calculated pursuant to article 2120 of the Italian Civil Code. Defined benefit plans Employee termination indemnities (limited to the share accrued up to December 31, 2006) and Fixed indemnity for managers of newspapers are determined by independent actuaries to estimate the amount of the future benefits that the employees have accrued at the balance sheet date. All actuarial effects are recorded in the Income Statement. Defined contribution plans The Group participates in defined contribution plans contributing to mandatory, contractual or voluntary public or private pension plans. As already mentioned, Employee Termination Indemnities, calculated pursuant to article 2120 of the Italian Civil Code, are paid out to the different pension plans or to the separate treasury service offered by INPS, as determined by individual employees. The payment of contributions extinguishes the obligation of the Group towards its employees. Contributions constitute therefore costs for the period in which they are due. Financial asset-based compensation The Company recognizes additional benefits to certain top managers through plans based on financial instruments. Plans adopted by the Company provide for the awarding of stock options or the attribution of extraordinary bonuses contingent on the achievement of a certain stock market price by the shares of the Company (phantom stock options). Stock Options The cost of such operations involving shares, recorded in the income statement among personnel costs, is calculated based on the fair value of options at the time at which they are assigned. The cost is recorded in the period included between the date at which the options are assigned and that at which they become exercisable, and is recorded also under Shareholders Equity. The fair value of 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, on the contrary, the related amount is reclassified under Retained earnings (loss carry-forwards).

157 156 Notes to the Financial Stamements of the Parent Company In the transition to IFRS, the Company took advantage of a specific waiver and has not applied the above principles to stock option plans assigned before November 7, Phantom stock options The cost of such operations, recorded in the income statement among personnel costs, is calculated based on the fair value of options at the time at which they are assigned. The cost is recorded in the period included between the date at which the rights are assigned and that at which they become exercisable, and is recorded also under the related liability item (i.e. Sundry personnel provisions). Until the liability is cancelled, the fair value is recalculated at each accounting date and at the date of the actual outlay, recording all changes in the income statement Provisions for risks and charges, potential assets and liabilities Provisions for risks and charges are accrued against possible liabilities whose amount and/or timing is uncertain and whose fulfillment requires the use of financial resources. Accruals are made exclusively when there exists an actual obligation, either legal or implicit, towards third parties that requires the use of financial resources, and whenever a reliable estimate of the obligation can be made. The accrual recorded represents the best estimate of the liability relating to the fulfillment of the obligation at the date of the financial statements. Accruals made 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 discounting effect is relevant, the amount accrued is represented by the present value of expected future payments needed to extinguish the obligation. Potential gains and losses are not recorded in the financial statements, though adequate information about the same is provided Financial liabilities Financial liabilities are recorded initially at the fair value of amounts received or to be paid, net of transaction costs, and subsequently carried at the amortized cost Derivative instruments Derivative contracts are recorded in the balance sheet at fair value. The recording of 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 directly in the income statement. In the case of contracts designated as hedging contracts, the Group documents the relationship with 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 risk hedged, the criteria with which the effectiveness of the hedging contract will be evaluated, and the related risk. The effectiveness of the hedge is evaluated by comparing fluctuations in the fair value or the cash flow of the instrument hedged with fluctuations in the fair value or the cash flow of the hedging instrument. The effectiveness of the hedge is evaluated both at the start of the operation and regularly throughout the duration of the hedge. The evaluation is in any case carried out at least at each accounting date. More specifically, the hedge is considered as efficient when the fluctuation in the fair value or the cash flow of the instrument is almost

158 Notes to the Financial Statements of the Parent Company 157 entirely offset by the fluctuation in the fair value or cash flow of the hedging instrument and results are included in an interval between 80% and 125%. Fair Value Hedge instruments are accounted for by recording in the income statement changes in the fair value of the hedging instrument and the instrument covered, regardless of the valuation criteria adopted for the latter. Adjustments to the book value of hedged financial instruments generating interest are amortized in the income statement over the residual term of the asset/liability hedged using the effective interest rate method. Cash Flow Hedge instruments are accounted for by suspending under Shareholders Equity the portion of the change in the fair value of the hedging instrument which is recognized as effective, while recording in the income statement the ineffective part. Changes recorded directly under Shareholders Equity are released to the income statement in the same year or in the 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 differently for Fair Value Hedges and Cash Flow Hedges. In the case of Fair Value Hedges the underlying instrument recorded in the financial statements ceases to be hedged from the date at which the hedging contract is terminated and the instrument is thus again valued according to the method used in absence of a hedge. In case of financial instruments valued at the amortized cost, the difference between the valuation at the fair value of the risk covered and the amortized cost at the date of the termination of the hedge-accounting period, is amortized over the residual life of the financial instruments based on rules used in the calculation of the effective rate of interest. In the case of Cash Flow Hedges, the gain or loss suspended in the Shareholders Equity remain suspended until the transaction 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 Cost and revenue recognition Revenues from the disposal of assets are valued at the fair value of the amount received or receivable, keeping into account trade discounts, where appropriate. Revenues from the provision of services are accounted for under the percentage of completion method, defined as the ratio between the amount of services provided at the accounting date and the total value of services to be provided. Revenues from contract work are recorded as described in note 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 case under 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 are recorded in the period in which distribution is resolved Taxes Income 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 the financial statements and that reported for tax purposes, and the carry-forward of losses and

159 158 Notes to the Financial Stamements of the Parent Company tax 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 future in case such retrieval (elimination) did not have a tax effect. The tax effect of operations or other events are recorded in the income statement or directly under Shareholders Equity in the same manner as operations or events that originate a tax liability and on the basis of tax rates applicable at the balance sheet 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 the income statement or under Shareholders Equity as appropriate Currency Entries in the financial statements are recorded in the currency of the primary economic environment in which each entity operates ( functional currency ). The financial statements are prepared in euro. Transactions denominated in other currencies are translated into the functional currency at the exchange rate at the date of the transaction. Foreign-exchange gains and losses arising from the settlement of these transactions and the translation of assets and liabilities denominated in currencies other than the functional currency are recorded in the income statement. 4. Change in accounting principles, errors and adjustments to estimates Accounting principles adopted are modified from one financial year to the next only in case the change is required by an accounting principle or it contributes to provide more reliable and 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 information is adapted accordingly. Such approach is adopted only when it is impractical to restate the accounts for comparative purposes. The application of a new or modified accounting principle is accounted for as required by the same principle. In case the principle does not provide for the transition, the change is accounted for under the retrospective method or, when this is impractical, through the use of projections. In case of relevant errors, the method described in the paragraph above with reference to accounting principles applies. In case of immaterial errors, the recording is carried out in the income statement in the period in which it is detected. Changes in estimates that have an impact exclusively on the income statement are accounted for through the use of projections in the same in the year in which the review takes place in case changes affect only such year, or in the year in which the review takes place and in subsequent years in case the change has an impact also in subsequent accounting periods. 5. Subsequent events Events occurred after the date of the financial statements are events occurred between such date and the date at which the publication of the same is authorized. The date of approval for the publication of the financial statements is the date at which the Board of Directors approves them. Such date is indicated in note 1. Subsequent events relate to facts that provide evidence of situations existing at the date of the financial statements (subsequent events that imply adjustments) or facts providing evidence of situations after the balance sheet date (subsequent events that do not require adjustments). The

160 Notes to the Financial Statements of the Parent Company 159 effect related to the first is recorded in the financial statements and the appropriate note is adjusted accordingly, while in the second case only relevant information is provided in the notes, where relevant. 6. New IFRS and IFRIC interpretations The Company did not opt for the early adoption of the following Principles, Interpretations and Updates of principles already published and approved by the EU, whose application is mandatory from January 1, 2009, and for which the Group is evaluating the possible effect of the introduction of the same: IFRS 8 Operating segments; IAS 23 Borrowing costs (revised in 2007); Amendments to IFRS 2 Vesting Conditions and Cancellations; IFRIC 13 Customer Loyalty Programmes; IFRIC 14 IAS 19 The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction ; IAS 1 Presentation of Financial Statements (revised in 2007); Amendments to IAS 32 and IAS 1 Financial instruments puttable at fair value and obligations arising on liquidation; Amendments to IFRS 1 and IAS 27 Cost of an Investment in a Subsidiary, Jointly Controlled Entity or Associate; Improvements to International Financial Reporting Standards (IFRS) The Company is also evaluating the effect of the possible application of the principles listed below, for which at the date of approval of the present financial statements competent EU Authorities had not yet concluded the approval process: IAS, IFRS and IFRIC interpretations Effective Amendments to IAS 39 Financial Instruments: Recognition and Measurement, and IFRS 7 Financial Instruments: Disclosures Reclassification of Financial Assets Effective date and transition July 1, 2008 Revised IFRS 3 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 Eligible Hedged Items July 1, 2009 Revised IFRS 1 First-time Adoption of International Financial Reporting Standards July 1, 2009 IFRIC 12 Service Concession Arrangements January 1, 2008 IFRIC 15 Arrangements for the Construction of Real Estate January 1, 2009 IFRIC 16 Hedges of a Net Investment in a Foreign Operation October 1, 2008 IFRIC 17 Distributions of Non-cash Assets to Owners July 1, 2009 IFRIC 18 Transfers of Assets from Customers July 1, Main causes of uncertainty over estimates Estimates are made primarily in the context of the recording of write-downs in the value of assets, to estimate returns of publications, accruals to provisions for bad accounts, employee benefits, taxes and other accruals and provisions. Estimates and assumptions are reviewed

161 160 Notes to the Financial Stamements of the Parent Company periodically and the effect of each resulting change are reflected immediately in the income statement. In particular, the current uncertain outlook for the short and medium term, accompanied by the contraction of advertising sales and, to a lesser extent, that of circulations, has made estimates of future performance and cash flow projections difficult. These projections are used in the determination of the value in use of Cash Generating Units to assess the retrievability of the book value of intangible assets with an indefinite useful life and that of equity investments, and, given the current situation, it cannot therefore 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 by management, 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 of publications and the related add-on products are carried out monthly and constantly updated through the use of statistical methods applied to up-to-date information on sales. Estimates of legal risks keep into account the nature of the litigation pending (civil and penal). Estimates for homogeneous risk are weighted against the performance in the previous three years. Historical data shows a stable trend.

162 Notes to the Financial Statements of the Parent Company Notes to Balance Sheet items Assets Intangible assets (1) Intangible assets are made up as follows: Dec. 31, 2007 Dec. 31, 2008 Publications 220, ,661 Concessions and licenses 1,930 2,212 Intangible assets under development TOTAL INTANGIBLE ASSETS 222, ,187 of which: Intangible assets with an indefinite useful life 220, ,661 Intangible assets with a defined useful life 2,187 2,526 No intangible asset was generated internally. Research and development costs were not capitalized and no write-up of intangible assets was carried out. The breakdown of intangible assets and changes in the period are shown in the tables that follow. Intangible assets with an indefinite useful life Publications Dec. 31, 2008 Opening balance Original cost 220,661 Write-downs - Opening balance 220,661 ADJUSTMENTS TO ORIGINAL COST Increases - Decreases - Closing balance Original cost 220,661 Write-downs - Closing balance 220,661 Intangible assets with an indefinite useful life include newspaper la Repubblica whose accounting value is equal to 220,527 thousand and is unchanged from December 31, The impairment test carried out on the newspaper, representing a Cash Generating Unit, did not 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 the higher between fair value less cost to sell and the value in use.

163 162 Notes to the Financial Stamements of the Parent Company Determination of value in use of Cash Generating Units The value in use of Cash Generating Units was determined by discounting back at an appropriate rate future cash flows, both positive and negative, generated by the unit in its productive phase and upon disposal. In other terms, the value in use was estimated by applying the Discounted Cash Flow model using the unlevered (or asset side) version that applies a formula that includes the discounting back of cash flows analytically expected during the period of the anticipatory plans ( ) and the expected terminal value of the cash generating unit. The first year of the anticipatory plans corresponds to the last 2009 budget. In order to estimate correctly the value in use of a Cash Generating Unit, it has been necessary to estimate the cash flows generated by it over time; expectations regarding possible fluctuations 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. In particular, as already noted in paragraph 7 above, current uncertainties regarding the short and medium term outlook induced management to reconsider expected growth rates of revenues and margins included in plans made in the previous year. A decline in advertising revenues has therefore been budgeted for the first year of the plan to keep into account the strong contraction of advertising revenues already recorded in the last quarter of A gradual recovery is expected for subsequent years, taking advertising sales in 2013 back to levels recorded in We note also that in the determination of the terminal value of Cash Generating Units, a zero growth rate was prudentially employed. With regard to the characteristics of cash flows to be discounted, international accounting principles explicitly require that in the estimation of the discounted value, positive and negative cash flows generated by financial management and financial flows relating to taxes must not be 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 the Espresso Group (WACC), equal to 7.8%. The determination of fair value less costs to sell of Cash Generating Units IAS 36 establishes that the fair value less costs to sell of an asset or a group of assets (for example a Cash Generating Unit) is best expressed through a price set in a binding sale offer between independent parties, net of direct costs incurred in the disposal of the asset. In case such 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 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 using direct multiples (Enterprise value/sales, Enterprise Value/EBITDA, Enterprise Value/EBIT). Such approach is made necessary by the absence of an active trading market for similar Cash Generating Units and by the difficulty in comparing transactions concluded on the market for units similar to the ones under examination. 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.

164 Notes to the Financial Statements of the Parent Company 163 Other intangible assets Concessions, licenses and trademarks were amortized using a rate of 33.33% in view of an estimated useful life of 3 years. Changes in individual items are shown in the table below: Concessions and licenses Dec. 31, 2008 Opening balance Original cost 18,148 Accumulated amortization and write-downs (16,218) Opening balance 1,930 ADJUSTMENTS TO ORIGINAL COST Increases 1,453 Decreases - Reclassifications 132 ADJUSTMENTS TO PROVISIONS Increases (1,303) Decreases - Closing balance Original cost 19,733 Accumulated amortization and write-downs (17,521) Closing balance 2,212 Work in progress Dec. 31, 2008 Opening balance Original cost 257 Opening balance 257 ADJUSTMENTS TO ORIGINAL COST Increases 314 Reclassifications (257) Closing balance Original cost 314 Closing balance 314

165 164 Notes to the Financial Stamements of the Parent Company Property, plant and equipment (2) Dec. 31, 2007 Dec. 31, 2008 Land 1,064 1,064 Industrial and civil building 5,479 5,249 Leasehold improvements 12,164 9,719 Plant and machinery 36,436 38,503 Furniture, fixtures and vehicles 5,697 3,820 Work in progress and advances 11 1,640 Other assets TOTAL PROPERTY, PLANT AND EQUIPMENT 60,932 60,104 In view of the homogeneity of assets recorded in the balance sheet, barring specific relevant cases, the expected useful life of tangible assets by category is as follows: Useful life Depreciation rate Land - - 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% 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.

166 Notes to the Financial Statements of the Parent Company 165 Land Dec. 31, 2008 Opening balance Original cost 1,064 Opening balance 1,064 ADJUSTMENTS TO ORIGINAL COST Increases - Decreases - Closing balance Original cost 1,064 Closing balance 1,064 Industrial and civil buildings Dec. 31, 2008 Opening balance Original cost 9,897 Accumulated depreciation and write-downs (4,418) Opening balance 5,479 ADJUSTMENTS TO ORIGINAL COST Increases 68 Decreases - ADJUSTMENTS TO PROVISIONS Increases (298) Decreases - Closing balance Original cost 9,965 Accumulated depreciation and write-downs (4,716) Closing balance 5,249

167 166 Notes to the Financial Stamements of the Parent Company Leasehold improvements Dec. 31, 2008 Opening balance Original cost 30,696 Accumulated depreciation and write-downs (18,532) Opening balance 12,164 ADJUSTMENTS TO PROVISIONS Increases 412 Decreases - ADJUSTMENTS TO PROVISIONS Increases (2,857) Decreases - Closing balance Original cost 31,108 Accumulated depreciation and write-downs (21,389) Closing balance 9,719 Plant and machinery Dec. 31, 2008 Opening balance Original cost 149,583 Accumulated depreciation and write-downs (113,147) Opening balance 36,436 ADJUSTMENTS TO ORIGINAL COST Increases 8,345 Decreases (333) ADJUSTMENTS TO PROVISIONS Increases (6,278) Decreases 333 Closing balance Original cost 157,595 Accumulated depreciation and write-downs (119,092) Closing balance 38,503 of which: Lens and commitments 59,206

168 Notes to the Financial Statements of the Parent Company 167 Furniture, fixtures and vehicles Dec. 31, 2008 Opening balance Original cost 40,986 Accumulated depreciation and write-downs (35,289) Opening balance 5,697 ADJUSTMENTS TO ORIGINAL COST Increases 1,318 Decreases (117) ADJUSTMENTS TO PROVISIONS Increases (3,185) Decreases 107 Closing balance Original cost 42,187 Accumulated depreciation and write-downs (38,367) Closing balance 3,820 Work in progress Dec. 31, 2008 Opening balance Original cost 11 Opening balance 11 ADJUSTMENTS TO ORIGINAL COST Increases 1,504 Reclassifications 125 Closing balance Original cost 1,640 Closing balance 1,640

169 168 Notes to the Financial Stamements of the Parent Company Other assets Dec. 31, 2008 Opening balance Original cost 1,646 Accumulated depreciation and write-downs (1,565) Opening balance 81 ADJUSTMENTS TO ORIGINAL COST Increases 80 Decreases ADJUSTMENTS TO PROVISIONS Increases (52) Decreases Closing balance Original cost 1,726 Accumulated depreciation and write-downs (1,617) Closing balance 109 Increases in the year amount to 11,727 thousand and are due primarily to Plant and machinery ( 8,345 thousand). The item benefited from investments amounting to 5,132 thousand for the acquisition of an additional printing element to extend the number of pages of the newspaper (from 96 to 128), and from the expenditure of 3,213 thousand on the completion and upgrade of the offset department of the Milan printing center. Plant and machinery are still encumbered by leans relating primarily to secured guarantees in favor of banks that extended subsidized loans on rotary presses and other printing plant in Investments (3) Changes in investments are reported below: Dec. 31, 2008 Opening balance Original cost 445,149 Write-downs (53,296) Opening balance 391,853 ADJUSTMENTS TO ORIGINAL COST Increases 10,000 Decreases - ADJUSTMENTS TO PROVISIONS Increases (1,400) Write-ups - Closing balance Original cost 455,149 Write-downs (54,696) Closing balance 400,453

170 Notes to the Financial Statements of the Parent Company 169 The value of investments amounts to 400,453 thousand, up 8,600 thousand on the previous year as a result of the 10 million contribution made to cover losses of subsidiary Rete A S.p.A., partly offset by the 1,400 write-down in the investment in affiliate E-ink Corporate USA. The table that follows shows investments included in the category, changes in the percentage of ownership and the respective book value: Investments in: % held Book value Dec. 31, 2007 Dec. 31, 2008 Dec. 31, 2007 Dec. 31, 2008 Subsidiaries Finegil Editoriale S.p.A % % 66,413 66,413 Manzoni & C. S.p.A % % 14,631 14,631 Elemedia S.p.A % % 36,098 36,098 Rotosud S.p.A % % 5,104 5,104 C.P.S. S.p.A % % Rotocolor S.p.A % % 22,326 22,326 Somedia S.p.A % % Editoriale FVG S.p.A % 92.12% 101, ,711 Selpi S.p.A.* 70.00% 70.00% Rete A S.p.A % % 130, ,000 S.E.T.A. S.p.A % 71.00% 8,640 8,640 Saire Srl % % 1,723 1,723 Total subsidiaries 388, ,553 Affiliated companies Le Scienze S.p.A % 50.00% 1,361 1,361 Total affiliated companies 1,361 1,361 Other investments A.G.F. Srl 10.00% 10.00% 3 3 Agenzia ANSA Società Coop. a r.l. 3.21% 3.81% Consuledit Soc. consortile a r.l. 6.62% 6.62% 1 1 E-Ink corporation Inc. 0.05% 0.05% 1, Total other investments 1, Total investments 391, ,453 * 30% of Selpi S.p.A. is held indirectly by subsidiary Finegil Editoriale Spa Summary financial data of subsidiaries and affiliated companies is included in section Reclassification of subsidiaries essential data at December 31, The financial year of the above companies coincides with that of Gruppo Editoriale L Espresso S.p.A.

171 170 Notes to the Financial Stamements of the Parent Company Non-current receivables (4) Non-current receivables are made up as follows: Dec. 31, 2007 Dec. 31, 2008 Long-term security deposits TOTAL NON-CURRENT RECEIVABLES Deferred/prepaid tax assets (5) The tables that follow show changes in deferred/prepaid tax assets. Prepaid taxes Taxable amount Dec. 31, 2007 Dec. 31, 2008 On personnel provisions 1,840 5,144 On risk provisions 8,885 16,183 On write-down of current assets 15,151 20,716 On write-down of property, plant and equipment 6,596 5,071 On write-down of financial instruments 6,596 5,756 TOTAL 39,068 52,870 Tax amount Dec. 31, 2007 Dec. 31, 2008 On personnel provisions 505 1,415 On risk provisions 2,095 4,611 On write-down of current assets 4,625 5,711 On write-down of property, plant and equipment 1,841 1,566 On write-down of financial instruments 1,815 1,583 TOTAL 10,881 14,886 Deferred tax assets Taxable amount Dec. 31, 2007 Dec. 31, 2008 On write-down of personnel provisions 9,053 7,864 On write-up of property, plant and equipment 120, ,011 On revaluation of financial instruments TOTAL 129, ,987 Tax amount Dec. 31, 2007 Dec. 31, 2008 On write-down of personnel provisions 2,490 2,163 On write-up of property, plant and equipment 37,150 40,851 On revaluation of financial instruments TOTAL 39,667 43,045

172 Notes to the Financial Statements of the Parent Company 171 Inventories (6) At December 31, 2008, raw material (paper) inventories amounted to 22,635 thousand, down 2,752 thousand at December 31, 2007 (of which 1,744 due to materials inventories and 1,008 to merchandise). The decline at December 31, 2007 over the previous year was equal to 5,011 thousand. The tables that follow show a detail of inventories. Inventories, Accumulated Inventories, Dec. 31, 2007 gross depreciation net Paper (raw materials) 20,419 (608) 19,811 Publications (finished goods) Add-on products and multimedia supports (finished goods) 13,799 (9,901) 3,898 Printing materials 243 (243) - Other goods 1,179 (275) 904 TOTAL INVENTORIES 36,414 (11,027) 25,387 Inventories, Accumulated Inventories, Dec. 31, 2008 gross depreciation net Paper (raw materials) 21,564 (1,936) 19,628 Publications (finished goods) Add-on products and multimedia supports (finished goods) 14,278 (11,977) 2,301 Printing materials 321 (243) 78 Other goods 275 (275) - TOTAL INVENTORIES 37,066 (14,431) 22,635 Trade receivables (7) Dec. 31, 2007 Dec. 31, 2008 Newsstands and distributors 13,265 13,614 Other trade receivables 5,245 3,136 Receivables from Group companies 106,976 84,653 TOTAL TRADE RECEIVABLES 125, ,403 At December 31, 2008 trade receivables amounted to 101,403 thousand, down 24,083 thousand on December 31, 2007 due primarily to lower advertising sales in the last quarter of 2008 with respect to the last quarter in For further detail regarding receivables from Group companies and related maturities, see note 10.2 on Related parties and note 10.3 on Risk management. At December 31, 2008, the Provision for doubtful accounts amounted to 5,426 thousand (up from 2,498 thousand at December 31, 2008).

173 172 Notes to the Financial Stamements of the Parent Company Changes in the year are shown below: Dec. 31, 2008 Opening balance 2,948 Write-downs 3,368 Uses of provision (890) Ending balance 5,426 Tax receivables (8) Dec. 31, 2007 Dec. 31, 2008 Regional tax on productive activities (Irap) receivable Ires/Irap to be reimbursed 8,343 6,572 VAT receivable 332 1,388 VAT receivable from other Group companies 1, Grants on publishing ex Law 62/2001 receivable 1, Other tax receivables 6,365 5,682 TOTAL TAX RECEIVABLES 18,357 14,848 At December 31, 2008, tax receivables amounted to 14,848 thousand, down 3,509 thousand on December 31, 2007 due to the collection of 2,989 thousand in tax credits (of which 1,739 thousand of principal, and 1,250 thousand in interest), and to the use of tax credits on investments subsidized by Law 62/2001 (Law on Publishing), which grants a 3% tax credit on eligible capital investments for the following five years. Other receivables (9) Dec. 31, 2007 Dec. 31, 2008 Receivable on interest subsidies 2,570 1,904 Social security receivables Security deposits Advances to suppliers Receivables from employees and free lance workers Other receivables Accrued income 7,020 7,512 TOTAL OTHER RECEIVABLES 11,357 10,898 Receivables on interest subsidies relate to subsidies provided by Law on loans concluded in 2005 to finance the full-color project. The change from December 31, 2007 was caused by the restatement on the basis of parameters supplied by the Department for information and publishing or receivables existing at December 31, 2007, determining a 563 thousand increase, and to payments made by the same Department in the year of part of these grants amounting to 1,229 thousand. Other receivables consist mainly of prepaid rights pertaining to future years, in addition to prepaid rent.

174 Notes to the Financial Statements of the Parent Company 173 Cash and cash equivalents (10) Dec. 31, 2007 Dec. 31, 2008 Cash on hand Bank deposits 134,838 97,318 Accrued interest Financial receivables and interest from Group companies 89,661 98,593 TOTAL CASH AND CASH EQUIVALENTS 224, ,168 Cash and cash equivalents decline by 28,645 thousand on the previous year as cash generated by operating activities was more than absorbed by the outlay for dividends, capital expenditure and the acquisition of treasury shares. Current account balances are highly liquid short-term financial investments that are readily convertible into known cash amounts and not subject to relevant fluctuations in value. Such investments are made according to the financial needs of the Group, have maturities averaging around three months and are remunerated at a pre-set fixed rate (averaging around 3.19%) based on Euribor. Financial receivables and interest from Group companies are reported in the table included in note 10.2 on Related parties and relate to centralized treasury management operations. The increase in financial receivables from Group companies is due primarily to the amount receivable from subsidiary Manzoni & C. S.p.A. ( 53,301 thousand), which at December 31, 2007 amounted to 35,464 thousand.

175 174 Notes to the Financial Stamements of the Parent Company Liabilities and Shareholders Equity Shareholders Equity The table below shows Shareholders Equity and the availability of individual components for distribution. Shareholders Equity component Total amount Uses Portion Uses in the last 3 ( 000) available financial years Covering of losses Other SHARE CAPITAL 61,385 3,782 EQUITY RESERVES Share premium - 80,570 Capital contributions 17,850 ABC 17,850 Dividend equalization reserve 3,869 ABC 3,869 Revaluation reserve (ex Law 413/91) 786 ABC 786 TOTAL EQUITY RESERVES 22,505 22,505 80,570 INCOME RESERVES Legal reserve 12,277 B 12,277 Legal reserve 756 ABC 756 Voluntary reserve 20,203 Voluntary reserve 819 B 819 Voluntary reserve 130,150 ABC 130,150 10,990 Retained earnings 11 ABC 11 Reserve ex Law 675/ ABC 490 Reinvested capital gains reserve (ex art. 54) 934 ABC 286 Merger differences 7,870 ABC 7,870 TOTAL INCOME RESERVES 173, ,659 10,990 IFRS RESERVE Increases 51,729 2,469 Decreases (831) Retained earnings (819) TOTAL IFRS RESERVES 50,079 2,469 TREASURY STOCK RESERVE (20,203) (95,326) RESERVE FOR STOCK OPTION COSTS 10,774 TOTAL SHARE CAPITAL AND RESERVES 298, , Legend: A available for capital increases B available for loss coverage C available for distribution to shareholders At December 31, 2008, available reserves amounted to 177,633 thousand, of which 164,537 thousand were available for distribution. Share capital (11) At December 31, 2008, the share capital amounted to 61,384, and was made up by 409,231,788 shares with par value of 0.15 each. With respect to December 31, 2007, the share capital declined by 3,782,250 as a result of the cancellation of 25,215,000 shares.

176 Notes to the Financial Statements of the Parent Company 175 Dec. 31, 2007 Dec. 31, 2008 No. of shares resolved 448,722, ,507,188 No. of ordinary shares issued 434,446, ,231,788 of which: Treasury stock 27,465,000 6,635,000 All ordinary shares issued are fully paid-in. There do not exist shares on which there is a restriction on the distribution of dividends, with the exception of the provisions of article 2357 of the Italian Civil Code regarding treasury stock. Reserves (12) The breakdown of reserves and changes incurred in the period are reported in the Statement of Changes in the Shareholders Equity. As resolved by the Shareholders Meeting, authorizing the Board of Directors to acquire on the market ordinary shares of Gruppo Editoriale L Espresso S.p.A., in 2008 a total of 4,385,000 shares were acquired for 9,129 thousand, which, taking into account treasury shares acquired in previous years and the annulment of 25,215,000 shares pursuant to the resolution taken by the Shareholders Meeting of April 17, 2008, brings the total of treasury shares held by the parent at December 31, 2008 to 6,635,000, representing 1.62% of the share capital. With regard to the above, we remind that a total of 25,215,000 treasury shares, representing 5.8% of the share capital, were annulled and the capital stock was thus reduced by a corresponding amount. As a result of this operation, the Reserve for treasury stock, recorded under IFRS as a reduction of the Shareholders Equity, was reduced by 95.3 million, against a parallel reduction of 3.8 million in the capital stock, the 80.5 million reduction of the Share premium reserve, thus being reduced to zero, and the 11 million write down of the Voluntary reserve. The reduction in the share capital became effective on September 4, 2008, having expired the term for oppositions of ninety days provided by article 2445 of the Italian Civil Code. Financial debt (13) Non-current financial debt Dec. 31, 2007 Dec. 31, 2008 Maturing between Maturing between Maturing 1 and 2 years 2 and 5 years over 5 years Bonds 304, , , ,707 Bank loans 28,502 23,514 5,159 12,716 5,639 TOTAL NON-CURRENT FINANCIAL DEBT 332, ,311 5,878 15, ,346 At December 31, 2008, the value of the bond issue amounted to 304,483 thousand, of which 686 thousand represents the short-term portion, and 303,797 thousand the long-term one. In application of IAS 39, the bond issue is valued at the amortized cost, calculated applying the effective interest rate. According to such valuation method, the value of the bond issue includes both directly attributable costs (equal originally to 1,995 thousand, declining at December 31, 2008 to 1,273 thousand), and proceeds from the early termination, in March 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 5,756

177 176 Notes to the Financial Stamements of the Parent Company thousand at December 31, 2008). The 10-year bond issue, placed in October 2004, has a face value of 300 million and bears a 5.125% coupon. The effective tax rate is equal to 4.824%. Current financial debt Dec. 31, 2007 Dec. 31, 2008 Bonds 3,392 3,424 Bank loans 5,106 5,121 Financial payables to Group companies 117,393 98,930 TOTAL CURRENT FINANCIAL DEBT 125, ,475 The short-term portion of bonds payable includes, in addition to the current portion of the bond issue, amounting to 686 thousand, also the related interest accrued at December 31, 2008, equal to 2,738 thousand. The 18,416 thousand decline in financial payables to Group companies is due mainly to payables to Finegil Editoriale S.p.A. Bank loans are made up as follows: Dec. 31, 2007 Dec. 31, 2008 Non-current secured loans 28,502 23,514 Non-current unsecured loans - - Total non-current loans 28,502 23,514 Current secured loans 5,106 5,121 Current unsecured loans - - Total current loans 5,106 5,121 TOTAL BANK LOANS 33,608 28,635 Provisions for risks and charges (14) The table that follows shows changes in provisions for risks and charges occurred in the year, and the breakdown between current and non-current portion: Legal Social security Early retirement Sundry Total proceedings litigations incentives risks provisions Opening balance 4,283 2,246-2,964 9,493 Uses (1,884) - - (1,500) (3,384) Transfers current/non-current Accruals/(release) 1,826 (20) 6,150 15,881 23,837 Change due to discounting back Ending balance 4,371 2,272 6,150 17,376 30,169

178 Notes to the Financial Statements of the Parent Company 177 Non-current portion Legal Social security Early retirement Sundry Total proceedings litigations incentives risks provisions Opening balance 2,923 1, ,473 Uses (524) (524) Transfers current/non-current (1,163) (357) - (501) (2,021) Accruals/(release) 1,826 (20) - 13,575 15,381 Change due to discounting back Ending balance 3,208 1,517-13,807 18,532 Current portion Legal Social security Early retirement Sundry Total proceedings litigations incentives risks provisions Opening balance 1, ,262 4,020 Uses (1,360) - - (1,500) (2,860) Transfers current/non-current 1, ,021 Accruals/(release) - - 6,150 2,306 8,456 Change due to discounting back Ending balance 1, ,150 3,569 11,637 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, common to all publishers, risks connected with trade litigation, labor litigation and risks connected with social security audits. The provision for early retirement benefits relates to the accrual made for corporate reorganization costs. The provision for sundry risks includes previous years tax accruals for 13,342 thousand (described in note 28), tax litigation on premium transactions and other contractual risks. Provisions for Employee termination indemnity and other retirement benefits (15) Defined benefit plans The Provision for Employee termination indemnity falls within the defined benefit plan category and is therefore determined according to actuarial methods. Both Plans represent the present value of the future legal obligation.

179 178 Notes to the Financial Stamements of the Parent Company 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% 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 balance sheet amount to 40,185 (down 841 thousand on December 31, 2007) and are shown in the tables below: Provision for Employee termination indemnity Dec. 31, 2008 Opening balance 35,073 Accrual for employment in the period (service cost) (72) Increase due to interest (interest cost) 1,754 Actuarial (gain) loss 164 Benefits paid (3,586) Other changes 296 Ending balance 33,629 Other personnel provisions Dec. 31, 2008 Opening balance 5,739 Accrual for employment in the period (service cost) 289 Increase due to interest (interest cost) 254 Actuarial (gain) loss 274 Benefits paid (825) Other changes 81 Ending balance 5,812 Provision for phantom stock option Dec. 31, 2008 Opening balance 214 Accruals 530 Ending balance 744

180 Notes to the Financial Statements of the Parent Company 179 The average number for the period and the actual number of employees are shown in the table that follows: Average number Number of employees of employees at year-end Dec. 31, 2007 Dec. 31, 2008 Journalists Office workers Managers Total Benefits based on financial instruments Stock option and phantom stock option plans in force at December 31, 2008 and the related characteristics are described in the notes to the Consolidated Financial Statements. At December 31, 2008, the total cost of stock option plans recorded in the financial statements amounted to 1,157 thousand, of which 403 thousand relating to stock options ( 2,017 thousand in 2007), and 755 thousand relating to phantom stock options ( 310 thousand at December 31, 2007). The decline in costs over the previous year was due to the net effect of the expiration in 2007 of the term for the exercise of options assigned to Marco Benedetto and of the issue of a new phantom stock option plan for Trade payables (16) Dec. 31, 2007 Dec. 31, 2008 Payables to suppliers of: Paper 36,348 24,209 Printing services 9,322 6,270 Transport and distribution 4,522 4,007 Utilities and telephone 1,614 1,284 Capital goods 2,794 2,572 Promotions 4,830 3,413 Products sold optionally with publications 13,107 14,172 Freelance work 4,728 2,962 Other editorial costs (photos, investigations and agencies) 2,090 2,644 Other suppliers 12,710 8,622 Trade payables to Group companies 23,576 20,021 TOTAL TRADE PAYABLES 115,641 90,176 Terms of payment of trade payables range normally between 60 and 90 days. They decline by 25,465 thousand on December 31, Trade payables to Group companies are analyzed in note 10.2.

181 180 Notes to the Financial Stamements of the Parent Company Tax payables (17) Dec. 31, 2007 Dec. 31, 2008 Ires payable to parent company 1,739 3,317 Withholding tax and personal income taxes 4,011 5,024 VAT payable 3, Group VAT payable 1,172 3,245 Other tax payables 64 8 TOTAL TAX PAYABLES 10,389 11,822 Other payables (18) Dec. 31, 2007 Dec. 31, 2008 Social Security payables 8,841 9,979 Payable to personnel for holidays 12,125 12,965 Other payables to personnel 4,924 8,595 Payable to Directors, Auditors and minority shareholders Payable on subscriptions 7,567 7,494 Payables for contributions ex Law 62/2001 3,792 2,867 Forfeiting of grants on subsidized loans 1,681 1,951 Other accrued liabilities 2,622 3,168 TOTAL OTHER PAYABLES 41,585 47,053 Sundry payables to personnel grow by 3,671 thousand on December 31, 2007 due primarily to higher payables to personnel arising on reorganization plans. 9. Income statement Revenues (19) Circulation 279, ,549 Advertising 327, ,637 Fees for the distribution of other party s products Conference, seminars and training Rights and trademark royalties Sale of other services 6,187 7,163 Sale of internet services Sale of other products 1,508 2,914 Sale of returns and rejects 3,107 3,207 TOTAL REVENUES 618, ,735

182 Notes to the Financial Statements of the Parent Company 181 Overall revenues of Gruppo Editoriale L Espresso SpA decline by 7.3% on the previous year. The decline in advertising sales and, to a lesser extent, of circulation revenues, must in fact be viewed in the context of the global economic downturn, affecting in particular the publishing sector through a sharp decline in advertising revenues, particularly in the second half of the year. Advertising sales of Internet site Repubblica.it were instead positive (up 23.5%), though still too small in absolute terms to offset to a significant degree the negative performance of advertising on the press. Circulation revenues were negatively affected by both the decline in circulation of publications, and the more limited decline in sales of add-on products, whose margins are however in line with the previous year. Other operating income (20) Grants 2,947 2,663 Rent Capital gains on disposal of assets Extraordinary gains 2,583 3,038 Other operating income 2,445 2,898 TOTAL OTHER OPERATING INCOME 8,031 8,655 Purchases (21) Paper for newspapers and periodicals 89,026 76,818 Paper for add-on products and promotions 14,525 8,156 Goods and merchandise purchased 8,644 12,571 Consumables 1,911 2,080 Change in raw material and merchandise inventories (615) 826 TOTAL PURCHASES 113, ,451 The 13,040 thousand reduction in purchase costs is due mainly to the lower circulation of publications.

183 182 Notes to the Financial Stamements of the Parent Company Services received (22) Printing and other work carried out by third parties 124, ,020 Editing costs 38,511 36,759 Distribution 25,050 27,190 Reproduction rights and other copyright costs 24,055 24,733 Promotions 36,123 22,139 Publisher fees 3 - Consulting fees 9,915 9,462 Telephone and data transmission 2,867 2,965 Maintenance and utilities 4,130 4,716 Leases and rentals 8,826 8,935 Other services 37,904 38,670 TOTAL SERVICES RECEIVED 311, ,589 The cost of services received declines by 23,254 thousand due primarily to the lower sales volume. Other operating charges (23) Accrual to provision for risks and charges 1,905 4,142 Taxes and duties Public relations and gifts Membership fees 1,136 1,190 Settlements and reimbursements Extraordinary losses 1,973 1,690 Write-down of receivables 1,212 3,368 Other operating charges TOTAL OTHER OPERATING CHARGES 8,880 12,038 Other operating charges amounted in 2008 to 12,038 thousand, up 3,158 thousand on 2007 due mainly to estimated charges on contractual risks and the write-down of receivables.

184 Notes to the Financial Statements of the Parent Company 183 Personnel costs (24) Wages and salaries 78,406 83,264 Social Security 24,366 25,168 Accruals for employee termination indemnity (336) 6,067 Accruals for retirement benefits Accruals for contract renewals Corporate restructuring costs - 7,283 Stock options and phantom stock options 2, Other personnel costs 3,682 5,773 TOTAL PERSONNEL COSTS 109, ,050 Personnel costs grew 19,989 thousand on 2007 (in which the effect of the curtailment of termination indemnities resulted in a positive contribution of 5,361 thousand) due primarily to the impact of restructuring costs. Depreciation, amortization and write-downs (25) Intangible asset amortization 1,735 1,303 Tangible asset amortization 12,238 12,148 Write-down of property, plant and equipment TOTAL DEPRECIATION, AMORTIZATION AND WRITE-DOWNS 13,973 13,973 Financial income (expense) (26) Interest received on current accounts and short-term deposits 6,233 5,328 Foreign-exchange gains Other financial income 2,515 4,953 Net financial income 8,823 10,440 Interest paid on current account overdrafts (20) - Accessory banking expenses (135) (68) Interest on loans and financing (1,567) (1,349) Interest on bonds issued (14,751) (14,721) Foreign-exchange losses (81) (161) Financial charges on application of IAS (2,226) (2,231) Other financial charges (5,331) (4,488) Net financial charges (24,111) (23,018) Write-downs and losses on investments - (1,400) TOTAL FINANCIAL INCOME(EXPENSE) (15,288) (13,978)

185 184 Notes to the Financial Stamements of the Parent Company The net financial expense amounted to 13,978 thousand, down 1,310 thousand on 2007 due to higher financial income (up 1,617 thousand), lower interest charges (down 1,093 thousand), and the write-down of a non-strategic equity investment. Dividends (27) from subsidiaries Finegil Editoriale S.p.A. 37,826 23,973 Selpi S.p.A Editoriale FVG S.p.A. 4,051 6,401 Elemedia S.p.A. 90,000 20,000 Rotosud S.p.A. 2,475 1,564 CPS S.p.A S.E.T.A. S.p.A Rotocolor S.p.A Somedia S.p.A from affiliated companies Le Scienze S.p.A TOTAL DIVIDENDS 135,500 55,279 Dividends received in 2008 amounted to 55,279 thousand, down 80,221 thousand on 2007 in which the Company received extraordinary dividends from subsidiaries Finegil Editoriale S.p.A. ( 18,161 thousand) and Elemedia S.p.A. ( 60 million). Income taxes (28) Income taxes amount to 28,178 thousand and are made up as follows: Current taxes 21,192 15,464 Deferred and prepaid taxes 2,843 (628) Previous years taxes - 13,342 TOTAL TAX EXPENSE 24,035 28,178 Income taxes grow by 4,143 on the previous year due to the combined effect of the 9,199 thousand reduction in current and deferred taxes, and of extraordinary tax accruals for 13,342 thousand. With regard to the latter, we note that in December 2008, the Supreme Cassation Court in Joint Session, called to rule on issues relating to usufruct rights on shares owned by foreign subjects, severely censored these operations, adopting the principle according to which no benefit can be drawn from operations carried out with the sole intent of obtaining a tax benefit without any specific other economic advantage. In the case of the usufruct of shares, the unrightful tax advantage was detected mainly in the obtainment of the tax credit which could not otherwise have been obtained by the foreign shareholder.

186 Notes to the Financial Statements of the Parent Company 185 Such new orientation of the Court induced the Company to carefully analyze the possible implications of the same on pending litigation regarding usufruct, for which, given the positive pronouncements obtained so far before the competent Tax Commissions, the risk that such contestations could give rise to a tax liability had always been considered as remote. In this regard, having taken into consideration the severity of conclusions reached by the Supreme Court, the Company has undertaken, also on the basis of authoritative tax advisors opinions, to accrue at December 31, 2008 an amount equal to thousand, deeming the probable risk on pending litigation to be only that relating to tax credits on dividends and withholding taxes paid, in addition to interest accrued. The Company will however continue to uphold in the next phases of litigation, its conviction about the rightfulness of transactions carried out. For completeness, we acknowledge that the highest possible potential liability, represented by higher tax liabilities ascertained by Tax Authorities and the related interest accrued, would amount to 27,600 thousand, net of fines, deemed not applicable due to the condition of objective uncertainty generated by the change in the orientation of the Court. Current taxes decline by 5,728 thousand on 2007 due to the reduction in the operating profit and the decline in tax rates introduced by the 2008 Budget Law. The impact of deferred taxes is positive, improving by 3,471 on 2007, due to differences relating to accruals to risk provisions that are temporarily not deductible. The table that follows shows a reconciliation between the theoretical tax expense (determined in 2007 using an IRES (corporate) tax rate of 33% and an IRAP (regional tax on productive activities) rate of 4.25%, and for 2008 using an IRES tax rate of 27.5% and an IRAP rate of 3.9%), and the actual tax expense ) Profit before taxes as reported in the accounts 190,197 77,847 2) a. Theoretical income tax expense IRES (at national tax rate) 62,765 21,408 b. Tax effect of non-deductible costs 1,863 1,091 c. Deferred tax effect on reduction of IRES tax rate (on deferred tax assets and liabilities at beginning of the year) (5,300) - d. Tax effect on reduction of IRES (accrual for deferred taxes for the year) e. Dividends (43,656) (14,442) f. Non-taxable income/grants (420) (254) 3) Income taxes (IRES) 15,562 7,803 4) Regional tax on productive activities (IRAP) 8,473 7,033 5) Previous years taxes - 13,342 6) Total taxes reported in the accounts 24,035 28,178 Average effective tax rate IRAP + IRES (3) and (4) 12.64% 19,06% Average effective tax rate on total income taxes (6) 12.64% 36.20% Theoretical tax rate 37.25% 31.40% Base income per share (29) Base income per share is calculated by dividing the net profit for the period by the weighted average number of ordinary shares in circulation in the period (excluding treasury shares). The diluted income per share is calculated by dividing the net profit for the year attributed to ordinary shareholders by the weighted average number of ordinary shares in circulation in the period, adjusted for the diluting effect of stock options.

187 186 Notes to the Financial Stamements of the Parent Company The table that follows shows income per share and other information used in the calculation of the basic and diluted income per share Net profit 166,162 49,669 weighted average number of ordinary shares in circulation ( 000) 416, ,276 Basic income per share Net profit 166,162 49,669 weighted average number of ordinary shares in circulation ( 000) 416, ,276 No, of options ( 000) 16,784 16,177 Diluted income per share Dividends paid (30) In 2008, dividends paid for the 2007 financial year, as resolved by the Shareholders Meeting held on April 17, 2008 in a proportion of 0.17 for each of the 404,831,788 ordinary shares in circulation (keeping into account treasury shares), amounted to 68,821 thousand. 10. Other information 10.1 Net financial position The net financial position of the parent company is shown in the table that follows: Dec. 31, 2007 Dec. 31, 2008 Financial receivables from Group companies 89,661 98,593 Financial payables to Group companies (117,393) (98,930) Cash on hand and current account deposits 135,152 97,575 Net cash and cash equivalents 107,420 97,238 Bond issue (307,875) (307,221) Other bank debt (33,608) (28,635) Other financial assets (liabilities) (341,483) (335,856) NET FINANCIAL POSITION (234,063) (238,618) 10.2 Related parties Transactions 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 the period under consideration there were nor atypical or unusual transactions falling outside the scope of ordinary business or significant non recurring events and transactions to report. It is to be noted that the conclusion of operations with related parties is subject to a specific procedure approved by the Board of Directors, available for consultation both on the Company s site and with Borsa Italiana S.p.A. Gruppo Editoriale L Espresso S.p.A. holds with its subsidiaries and affiliated companies both trade relationships and relationships involving the provision of services and of operating and financial advice. Among the most important trade relationships are those held with subsidiary A. Manzoni & C. S.p.A., concessionaire for advertising sales, those with subsidiary Elemedia S.p.A. for the management of sites, and those held with

188 Notes to the Financial Statements of the Parent Company 187 subsidiaries Rotocolor S.p.A., Rotosud S.p.A., CPS S.p.A., and Finegil Editoriale S.p.A., supplying typeset and printing services. The Company also manages a current account 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 noted that the provision of such services on the part of the parent company is deemed as preferable to the provision of the same on the part of third parties thanks, among other things, to the wide knowledge and experience CIR S.p.A. has acquired over time on the company 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 majority of its subsidiaries participate in parent company s CIR tax consolidation procedure. On June 30, 2007, participation in the parent company s tax consolidation procedure was extended for years and, at the end of 2008, the General Rules for the tax consolidation of the CIR Group were revised to bring them in line with changes introduced with the 2008 Budget Law. In 2008, Gruppo Editoriale L Espresso S.p.A. and the majority of its subsidiaries continued to 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.

189 188 Notes to the Financial Stamements of the Parent Company Relationships between Gruppo Editoriale L Espresso S.p.A. and other Group companies Costs Revenues Financial Financial Receivables Payables Guarantees charges income Trade Financial Trade Financial granted (*) SUBSIDIARIES Finegil Editoriale S.p.A. 15,909 4, , ,291 3,092 40,146 Editoriale La Nuova Sardegna S.p.A. 4, ,868 10,811 EAG S.p.A. 1, ,911 1,728 Edizioni Nuova Europa S.p.A ,123 - Editoriale La Città S.p.A S.E.T.A. S.p.A ,881 1,192 Editoriale FVG S.p.A ,288 6, ,971 1,621 Elemedia S.p.A. 9,315 3, , ,202 1, Rete A S.p.A ,356-20, ,073 All Music S.p.A , A. Manzoni & C. S.p.A.. 3, ,488 1,286 83,978 53,301 1, Editoriale Metropoli S.p.A. 10, , C.P.S. S.p.A. 2, ,629 1,117 Rotonord S.p.A. 10, , Rotosud S.p.A. 24, , ,696 12,694 23,431 Rotocolor S.p.A. 18, ,341 12,139 18,465 Somedia S.p.A. 5, ,555 3,047 - Selpi S.p.A ,063 - Saire S.r.l Kataweb News S.r.l Ksolutions S.p.A , AFFILIATED COMPANIES Le Scienze S.p.A , Editoriale Libertà S.p.A PARENT COMPANIES Cofide S.p.A CIR S.p.A. 2, (*) including dividends received by subsidiaries 10.3 Risk management Financial risk The 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 that implies the application of prudence and limited risk criteria in the choice of financial and investment policies, prohibiting all speculative operations except for those motivated and approved by the Board of Directors. The Company manages and coordinates a centralized intragroup current account, in which all subsidiaries take part, aiming at obtaining economic advantages in relationships with financial counterparts and stronger operating efficiency. Centralization allows in fact more efficient

190 Notes to the Financial Statements of the Parent Company 189 planning and control of financial flows, ensures higher consistency in financing and investment choices, optimizes the overall risk profile of the Company and, above all, strengthens its contractual power with the banking system. The Company, whose rating issued by Standard&Poors is BB+ with a negative outlook, uses prevalently two channels to raise financial resources: the international bond market and longterm bank loans extended against investments in publishing activities for which subsidies are provided 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 Company 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 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 include covenants or clauses providing for the early repayment of the same. In addition to the bond issue mentioned above, in November 2005 the Company was extended ten-year loans amounting to 33.8 million, subsidized pursuant to the Law on publishing, 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 such as to prevent liquidity risks. Were it however to be in need of additional financial resources in addition to those provided by the operating cash flow, the Company will be in a position to draw on a number of uncommitted credit lines which are currently unutilized. The Company is currently not exposed to financial risk connected with fluctuations in interest rates or exchange rates. Price risk As it is active in the publishing sector, the Company acquires large quantities of paper. To achieve a more efficient management of paper purchases and to strengthen its bargaining position with counterparts, thus promoting competition among suppliers, the management of paper purchases for the Group was unified. In the past, the Company stipulated a number of paper swap contracts on a portion of its paper needs. As, however, it assessed their ineffectiveness in the medium term, the Group has decided to discontinue the use of such instruments. Credit risk The credit risk exposure of the Company relates to trade and financial receivables. Due to the sector in which it operates, the Company is not subject to significant credit risk on trade receivables. Though there are no significant concentrations of such risks, the Company however adopts operating procedures that bar the sale of products or services to customers that do not possess an adequate risk profile or provide collateral guarantees. With regard to financial receivables, investments in short-term financial instruments and trading in derivatives are carried out only with banks that possess a high credit standing. *** Following the tables in which (i) financial assets and liabilities are subdivided by class/category, (ii) financial assets are reported by maturity, and (iii) the contractual expiration of financial liabilities is indicated.

191 190 Notes to the Financial Stamements of the Parent Company Classes of financial instruments Note Book Financial Fair value of Loans and Invest- Available Fair Effect Effect value assets valued financial financia ments for-sale value on the on the 2007 at fair value assets held receivables held to financial IS Sh. Eq. FINANCIAL in the income for trading maturity assets + / (-) + / (-) ASSETS statement purposes Non-current assets Other investments (3) 1, ,939 1, Other receivables* (4) Current assets Trade receivables (7) 125, , ,486 (1,212) - Other receivables * (9) 4, , , Cash (10) 224, , ,813 8,503 - * The item does not include accrued income and tax receivable Note Book Financial Fair value of Financial Fair value Effect on Effect on value liabilities financial liabilities the IS the Sh. Eq valued at fair liabilities held valued at the + / (-) + / (-) FINANCIAL value in the for trading amortized LIABILITIES income stat. purposes cost Non-current liabilities Bonds (13) (304,483) - - (304,483) (280,981) - - Other financial debt (13) (28,502) - - (28,502) (26,400) - - Current liabilities Bank overdrafts (13) (20) - Bonds (current portion) (13) (3,392) - - (3,392) (3,392) (14,751) - Other financial debt (13) (122,499) - - (122,499) (123,614) (6,846) - Trade payables (16) (115,641) - - (115,641) (115,641) - - Note Book Financial Fair value of Loans and Invest- Available Fair Effect Effect value assets valued financial financia ments for-sale value on the on the 2008 at fair value assets held receivables held to financial IS Sh. Eq. FINANCIAL in the income for trading maturity assets + / (-) + / (-) ASSETS statement purposes Non-current assets Other investments (3) Other receivables* (4) Current assets Trade receivables (7) 101, , ,403 (3,219) Other receivables * (9) 3,386 3,386 3,386 Marketable securities (10) 196, , ,168 9,802 * The item does not include accrued income and tax receivables

192 Notes to the Financial Statements of the Parent Company 191 Note Book Financial Fair value of Financial Fair value Effect on Effect on value liabilities financial liabilities the IS the Sh. Eq valued at fair liabilities held valued at the + / (-) + / (-) FINANCIAL value in the for trading amortized LIABILITIES income stat. purposes cost Non-current liabilities Bonds (13) (303,797) (303,797) (239,321) Other financial debt (13) (23,514) (23,514) (22,016) Current liabilities Bank overdrafts (13) Bonds (current portion) (13) (3,424) (3,424) (3,424) (14,721) Other financial debt (13) (104,051) (104,051) (104,989) (5,789) Trade payables (16) (90,176) (90,176) (90,176) Financial assets by maturity Note Total Not Expiring over 90 Write- Balance at Dec. 31, 2007 receivable matured in > days days days days downs Non-current assets Other receivables* (4) Current assets Trade receivables (7) 125, ,173 4, , ,871 - trade receivables, gross 128, ,043 5,391 1,135 1, ,474 - Accumulated depreciation (2,948) (1,870) (1,078) (206) (152) (117) (603) (1,212) Other receivables * 4,337 4,337 - other receivables, gross 4,440 4,440 - Provision for doubtful accounts (9) (103) (103) TOTAL 130, ,866 4, , ,871 (1,212) Note (*): Other receivables do not include accrued income and tax receivables. Note Total Not Expiring over 90 Write- Balance at Dec. 31, 2008 receivable matured in > days days days days downs Non-current assets Other receivables* (4) Current assets Trade receivables (7) 101,403 99,201 2, trade receivables, gross 106, ,454 4, ,875 - Accumulated depreciation (5,426) (3,253) (2,173) (57) (11) (9) (2,096) (3,368) Other receivables * 3,386 3,386 - other receivables, gross 3,489 3,489 - Provision for doubtful accounts (9) (103) (103) TOTAL 105, ,960 2, (3,368) Note (*): Other receivables do not include accrued income and tax receivables.

193 192 Notes to the Financial Stamements of the Parent Company Financial liabilities by maturity less than between 6 mo. between 1 between 2 between 3 between 4 over 5 TOTAL months and 1 year and 2 years and 3 years and 4 years and 5 years years Bond issues 15,375 15,375 15,375 15,375 15, , ,625 Other financial debt 120,636 3,209 6,283 6,117 5,746 4,301 10, ,310 - bank loans 3,243 3,209 6,283 6,117 5,746 4,301 10,018 38,917 - financial payables to Group companies 117, ,393 Bank overdrafts Trade payables 115, ,641 TOTAL 236,277 18,584 21,658 21,492 21,121 19, , ,576 less than between 6 mo. between 1 between 2 between 3 between 4 over 5 TOTAL months and 1 year and 2 years and 3 years and 4 years and 5 years years Bond issues 15,375 15,375 15,375 15,375 15, , ,250 Other financial debt 102,078 3,116 6,098 5,931 4,301 4,131 5, ,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 Bank overdrafts Trade payables 90, ,176 TOTAL 192,254 18,491 21,473 21,306 19,676 19, , , Commitments In addition to liens on printing plant and rotary presses granted to banks against loans extended, described in the related note to the Financial Statements, at December 31, 2008 the Company had commitments to purchase equipment and software for editing systems, data security, administration and other uses, amounting to 1,502 thousand ( 1,126 thousand at December 31, 2007). Guarantees granted amount to 88,091 thousand ( 101,654 thousand at December 31, 2007) and relate to guarantees in favor of subsidiaries Finegil Editoriale S.p.A., Editoriale La Nuova Sardegna S.p.A., EAG S.p.A., SETA S.p.A., Editoriale FVG S.p.A., Rete A S.p.A., All Music S.p.A., CPS S.p.A., Rotosud S.p.A. and Rotocolor S.p.A., granted primarily against loans extended ( 85,894 thousand), guarantees against assets leased by 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. amount to 85,894 thousand and have a repayment schedule ending June 30, 2015, with an average annual reimbursement of about 10 million, with the exception of years 2009 and 2011 in which 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 years by some subsidiaries participating in the Group s VAT scheme amount to 15,834 thousand ( 11,834 thousand in 2007).

194 Notes to the Financial Statements of the Parent Company Condensed Financial Statements of CIR S.p.A. (art bis comma 4 of the Italian Civil Code) The Company is subject to the direction and coordination of its parent CIR S.p.A., as resulting from corporate deeds and correspondence. Pursuant to article 2497-bis, paragraph 4, of the Italian Civil Code, below we provide summary financial information relating to the last approved Financial Statements of CIR. For a correct and more complete understanding of the financial position and performance of CIR S.p.A. at December 31, 2007, and of the results of the company for the year ended at such date, we refer to the financial statements of the company which are available at the head office of Borsa Italiana S.p.A., complete with an Auditing Report of independent auditor PricewaterhouseCoopers S.p.A.

195 194 Notes to the Financial Stamements of the Parent Company CIR Compagnie Industriali Riunite S.p.A. Financial Statements at December 31, 2007 Balance Sheet ASSETS Dec. 31, Dec. 31, ( 000) Intangible assets Property, plant and equipment 4,576 3,381 Land and buildings 17,604 19,258 Investments 944,483 1,029,798 Sundry receivables Deferred tax assets 1,429 1,234 NON-CURRENT ASSETS 968,361 1,054,025 Sundry receivables 86,032 74,464 of which: related parties 34,450 15,163 Marketable securities 206,494 65,645 Financial assets available for sale - 50,735 Cash and cash equivalents 64,732 77,839 CURRENT ASSETS 357, ,683 TOTAL ASSETS 1,325,619 1,322,708 LIABILITIES AND SHAREHOLDERS EQUITY Dec. 31, Dec. 31, ( 000) Share capital 390, ,465 Reserves 311, ,337 Retained earnings (loss carry-forwards) 201, ,051 Net profit (loss) 36,697 79,920 SHAREHOLDERS EQUITY 940, ,773 Bonds 295, ,806 Deferred taxes 180 Personnel provisions 1,558 3,212 NON-CURRENT LIABILITIES 297, ,018 Bank overdrafts 2 - Financial payables to related parties 43,757 14,197 Other payables 40,709 11,561 of which: related parties 2,571 5,924 Provisions for risks and charges 3,035 14,159 CURRENT LIABILITIES 87,503 39,917 TOTAL LIABILITIES AND SHAREHOLDERS EQUITY 1,325,619 1,322,708

196 Notes to the Financial Statements of the Parent Company 195 CIR Compagnie Industriali Riunite S.p.A Financial Statements at December 31, 2007 Income Statement ( 000) Revenues 7,150 6,276 of which: related parties 5,560 6,441 Services received (9,719) (10,854) of which: related parties (1,955) (2,251) Personnel costs (9,091) (8,062) Other operating costs (1,772) (1,978) Depreciation, amortization and write-downs (548) (822) Operating profit (14,854) (13,602) Financial income 12,728 9,963 of which: related parties 180 1,154 Interest charges (20,958) (18,835) of which: related parties (1,954) (995) Dividends 61, ,523 of which: affiliated companies 61, ,491 Revenues from security trading 1,520 13,977 Charges from security trading (4,913) (56,138) Adjustments to the value of financial assets (6,973) (6,587) Profit before taxes 27,629 55,301 Previous years taxes - - Income taxes 9,068 24,619 NET PROFIT 36,697 79,920

197

198 Certification of the Financial Statements pursuant to article 81-ter of Consob Regulation no

199

200 199 Certification of the Financial Statements pursuant to article 154-bis of Italian Decree n.58 of February 24,1998 1) The undersigned Monica Mondardini, Managing Director, and Oliviero Maria Brega, 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: the adequacy in relation to the characteristics of the Company and the effective application of the administrative and accounting procedures used in the preparation of the Financial Statements during the year ) It is also certified that: 2.1) the Financial Statements as of December 31, 2008: a) are prepared in accordance with International Financial Reporting Standards as adopted by the European Union pursuant to Regulation (EC) n.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 present the financial condition, result of operations and cash flows of the Issuer; 2.2) the Report on operations contains a reliable analysis of the performance and results of operations, as well as the situation of the Issuer, together with a description of its exposure to major risks and uncertainties. Signed by Monica Mondardini Signed by Oliviero Maria Brega Rome, February 25, 2009 This certification has been translated into The English language solely for the convenience of international readers Gruppo Editoriale L Espresso SpA Sede legale Via Cristoforo Colombo Roma Tel. 06/84781 Fax 06/ Cap. Soc. Euro ,20 i.v. - R.E.A. Roma n P.IVA Codice Fiscale e Iscriz. Registro Imprese di Roma n Società soggetta all attività di direzione e coordinamento di CIR S.p.A.

201

202 Report of the Board of Statutory Auditors

203

204 Report of the Board of Statutory Auditors 203 To our Shareholders: in the financial year closed December 31, 2008 the Board of Statutory Auditors of Gruppo Editoriale L Espresso S.p.A. ( GELE or the Company ) carried out monitoring activities provided by the Law, in application of principles adopted by the Italian accounting profession and regulations issued by Consob with regard to internal audit and the activities of Statutory Auditors. In the year, the Board of Statutory Auditors acquired information necessary to carry out its task both from direct contact with management and by attending all Board of Directors Meetings held in the year, in addition to receiving information received from the respective Boards of Statutory Auditors of subsidiaries, pursuant to paragraphs one and two of article 151, Legislative Decree no.58/ Based on information received and of analysis carried out by the Board of Statutory Auditors, we ascertained compliance with the Law and the By-laws, and conformity with principles of correct management of main economic, financial and asset transactions carried out by the Company, verifying that these were not manifestly imprudent, were not manifestly imprudent or risky, were not in potential conflict of interest or in contrast with resolutions taken, such as to compromise the integrity of the Company s assets. 2. In 2008 and subsequent to the closing of the financial year, the Board of Statutory Auditors did not detect any atypical and/or unusual operation carried out with third parties, related parties or Group companies. With regard to ordinary operations between Group companies or related parties, the Board evaluated positively the appropriateness of amounts involved and the respect of the interests of the Company. The Board of Statutory Auditors acknowledges that the conclusion of transactions with related parties is regulated by a set of rules, approved by the Board of Directors of the Company, described in the Report on Corporate Governance for 2008, to which we refer. 3. The Board of Statutory Auditors deems the information on intragroup and related parties transactions provided by the Board of Directors in the Notes to the Accounts to be adequate. 4. The Auditing Report issued on April 3, 2009 by independent auditor Deloitte & Touche S.p.A. pursuant to article 156 of Legislative Decree 58/98 attests that the Statutory Accounts and the Consolidated Financial Statements at December 31, 2008 truly and fairly represent the financial position and the profit of the Company and the Group, and that the Report of the Board is consistent with said financial statements. 5. In 2008 and after the closing of the financial year, the Board of Statutory Auditors did not receive any report pursuant to article 2408 of the Italian Civil Code. 6. No denunciation was filed. 7. Upon express acknowledgment of Directors, it is noted that in 2008 the Company appointed independent auditors Deloitte & Touche S.p.A. for additional tasks other than auditing, relating to agreed-upon procedures on the circulation of press (Accertamento Diffusione

205 204 Report of the Board of Statutory Auditors Stampa) for 2007, for which said auditors received a compensation of?58 thousand (in addition to VAT and expenses). Similar appointments were made by subsidiaries, resulting in an additional compensation of?77 thousand (in addition to VAT and expenses). 8. Upon express acknowledgment of Directors, it is noted that in 2008 the Company did not make appointments to any person linked to independent auditors Deloitte & Touche S.p.A. by long-term relationships. 9. Wherever required, the Board of Statutory Auditors issued opinions limited to its responsibilities. 10. In 2008, as reported also in the Report on Corporate Governance, the Board of Directors of the Company held 5 meetings, the Internal Control Committee met 3 times and the Remuneration Committee met 3 times. The Board of Statutory Auditors met 6 times in the year. The Board of Statutory Auditors attended: (i) all Board of Directors Meetings; (ii) all meetings held by the Internal Control Committee through its Chairman or another designated Auditor. 11. The Board of Statutory Auditors ascertained and monitored, within the scope of its mandate, the respect of correct management principles through direct observation, gathering of information from management and through meetings with the officer in charge of internal control, the Internal Control Committee and the independent auditors involving exchange of data and relevant information. With regard to the decisional processes of the Board of Directors, the Board of Statutory Auditors ascertained, also though direct participation to Board meetings, compliance with the Law and the By-laws of management decisions taken by the Board and verified the economic and financial appropriateness of transactions and the consequent respect of the interests of the Company. 12. The Board of Statutory Auditors ascertained and monitored the adequacy of the organizational structure of the Company and its related functioning. 13. The Board of Statutory Auditors evaluated and monitored the adequacy of the internal auditing system through: (i) periodical meeting with the officer in charge of internal control; (ii) meetings with the Internal Control Committee and (iii) the gathering of documents and information. Based on activities carried out, the Board, keeping into account the evolutional character of any control system and the need for the continuous adjustment of the organization to ever changing needs and risks to which it is subjected, has not detected critical points worthy of mention in the present report. 14. The Board of Statutory Auditors monitored the adequacy of the administrative and accounting system to assess the reliability of the latter in providing a fair representation of the Company s operations by obtaining information on an ongoing basis from persons responsible for each sector, examining records and reviewing work carried out by the independent auditors Deloitte & Touche S.p.A., in addition to information obtained through meetings held with the officer in charge of preparing the Company s accounts. In this regard, the Board acknowledges that the Managing Director and the officer in charge of preparing the Company s accounts issued on February 25, 2009, the attestation provided under article 154-bis, comma 5, of

206 Report of the Board of Statutory Auditors 205 Legislative Decree no. 58/98, according to the format set in article 81-ter of Consob Regulation no.11971/ The Board of Statutory Auditors monitored the adequacy of instructions imparted, also pursuant to article 114, comma 2 of Legislative Decree no. 58/98, which were found to be adequate in complying with reporting requirements set by Law. In this regard it is to be noted that the procedure for the handling of privileged information was included in the Organizational and Managerial Models (as per Legislative Decree 231/2001) adopted by all subsidiaries. 16. The Board of Statutory Auditors ascertained, through direct verification and information received from independent auditors Deloitte & Touche S.p.A., compliance with norms regulating the preparation and form of the Financial Statements, the Consolidated Financial Statements and the Report on Operations. 17. The Company adopted corporate governance rules in line with the recommendations contained in the Code of Conduct issued by the Committee for Corporate Governance of listed companies promoted by the Italian Stock Market (Borsa Italiana SpA), as described in the Report on Corporate Governance. The Board of Directors of the Company, made up by 10 members, includes 8 non-executive directors, 3 of which were qualified by the Board of Directors as independent on the basis of criteria described in the Report on Corporate Governance, to which we refer. The Board of Statutory Auditors verified the correct application of criteria and control procedures adopted by the Board in evaluating the independence of its members. The Board of Directors created among its members an Internal Control Committee, made up by three independent directors, and a Remuneration Committee, comprising the Chairman, one non-executive director and three independent directors. The Report on Corporate Governance shows how the choice of including in the Remuneration Committee the Chairman (executive) was motivated by his ample and in-depth knowledge of the Company. Also with regard to independent directors, having acknowledged that the Chairman of the Board of Directors is entrusted with operating responsibilities and is the legal representative of GELE s parent company, created, in compliance with rules set in the Code of Conduct, the Lead Independent Director position, appointing one of the independent directors to the position. Further information on the Corporate Governance is provided in the Annual Report on Corporate Governance issued by the Company, to which we refer. 18. The monitoring and control activity of the Board of Statutory Auditors did not uncover significant facts that require reporting to competent Authorities or regulating bodies, or worthy of mention in the present Report. 19. The Board of Directors, having acknowledged the results reported in the Financial Statements at December 31, 2008, has no objection to make on the proposed allocation of net income formulated by the Board of Directors. THE BOARD OF STATUTORY AUDITORS Rome, April 3, 2009

207 206 Report of the Board of Statutory Auditors Attachment to the Report of the Board of Statutory Auditors of Gruppo Editoriale L Espresso SpA 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 we include a description of positions held by members of the Board of Statutory Auditors at the date 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 Civil Code. Information in parenthesis indicates weather the company is listed and the financial year in which the term of the position expires: Tiziano Onesti: Chairman of the Board of Statutory Auditors of Agenzia Giornalistica Italia SpA (2009), Finegil Editoriale SpA (2009), Gruppo Editoriale L Espresso SpA (listed, 2008), Indipendenza SpA in liq. (2010), La Grande Cucina SpA (2010), NewCo. RAI International SpA (2009), Pm & Partners SpA SGR (2008), Sagrim SpA in liquidation (2010), Saiim SpA in liquidation (2010), Satimag Srl (2010), Servizi Aerei SpA (2009), Villa York Srl in liquidation (2010); Permanent Auditor of ENI SpA (listed, 2010), Euler Hermes Siac SpA (2009), Ford Italia SpA (2009), Mazda Motor Italia SpA (2010), Nbc Universal Global Networks Italia Srl (2008); Siac Services Srl (2010), Sviluppo Italia Puglia SpA (2008). Enrico Laghi: Chairman of the Board of Statutory Auditors of ICQ Holding SpA (2010), Rai Cinema SpA (2009); Permanent Auditor of 01 Distribution Srl (2010), Fendi Srl (2010), Gruppo Editoriale L Espresso SpA (listed, 2008), Manzano Sviluppo Srl (2008), Pirelli & C. SpA (listed, 2008), Rainet SpA (2010), Servizi Aerei SpA (2009); Director of Beni Stabili SpA (listed, 2009); Managing Director of Europrom 2000 Srl (2009). Luigi Macchiorlatti Vignat: Chairman of the Board of Statutory Auditors of SELF G1 Srl (2008), SELF G3 Srl (2008), Self Gardino SpA (2009), Self Immobiliare Srl (2010), SELF Srl (2009), Sirena SpA (2009); Permanent Auditor of Banca Intermobiliare di Investimenti e Gestioni SpA (listed, 2010), Bonifiche San Martina Srl (2010), Cirinvest SpA (2009), Covema Vernici SpA (2010), Dry Products SpA (2009), Energia Lombarda SpA (2010), Energia Molise SpA (2008), Euvis SpA (2009), Ghisalba SpA (2008), Gruppo Editoriale L Espresso SpA (listed, 2008), HSS SpA (2010), Immobiliare Alessia Srl (2009), La Ginestra Srl (2009), LNG Med Gas Srl (2009), M. Otto Srl (2009), SELF G2 Srl (2008), Sorgenia Minervino SpA (2009), Sorgenia Solar SpA (2010); Director of FMT Srl (2009), Meccanodora SpA (2009).

208 Report of the Independent Auditors

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210 Report of the Independent Auditors 209

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212 Summary reclassified financial data of subsidiaries

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214 Gruppo Editoriale L Espresso 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 (24.589) Editoriale La Nuova Sardegna SpA E A G SpA (1.565) S.E.T.A. SpA (898) Edizioni Nuova Europa SpA (94) Editoriale La Città SpA (46) (50) (83) (135) Editoriale FVG SpA Edigraf Srl 521 (66) Editoriale Metropoli SpA Elemedia SpA (20.811) Rete A SpA (19.590) (6.612) (9.867) (8.382) All Music SpA (2.366) (3.861) (3.016) A. Manzoni & C. SpA (39.017) (2.608) Rotosud SpA C.P.S. SpA (339) Rotocolor SpA Rotonord SpA Selpi SpA Saire Srl Somedia SpA (2.338) Kataweb News Srl Ksolutions SpA (2.216) (2.935) (2.911) (2.983) (3.240)

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