Carraro Group Interim Financial Report as at 30 June 2013

Transcription

1 t Carraro Group Interim Financial Report as at 30 June 2013 DISCLAIMER This document contains forward-looking statements, in particular in the section Business outlook for the current year, in relation to future events and the operating, economic and financial results of the Carraro Group. These forecasts have by their very nature a component of risk and uncertainty, as they depend on the occurrence of future events and developments. The actual results may differ, even significantly, from those announced in relation to a multiplicity of factors.

2 CARRARO S.p.A. Head Office in Campodarsego (PD) at Via Olmo no. 37 Share Capital Euros 23,914,696, fully paid-up. Tax Code, VAT and Registration Number In the Padua Companies Register R.E.A. No GENERAL INFORMATION BOARD OF DIRECTORS ENRICO CARRARO (2) Chairman In office until approval of the 2014 Financial TOMASO CARRARO Deputy Chairman Statements (Appointed, General Meeting ALEXANDER JOSEF BOSSARD Chief Executive Officer ) ARNALDO CAMUFFO (1) (2) Director * FRANCESCO CARRARO Director ANTONIO CORTELLAZZO (1) (2) Director * GABRIELE DEL TORCHIO Director * MARINA PITTINI (2) (1) Director * MARCO REBOA (1) Director * (1) Members of the Auditing and Risk Committee (2) Members of the Nominations, Human Resources and Remuneration Committee * Independent directors BOARD OF STATUTORY AUDITORS ROBERTO SACCOMANI Chairman In office until approval of the 2014 Financial SAVERIO BOZZOLAN Regular Auditor Statements (Appointed, General Meeting MARINA MANNA Regular Auditor ) BARBARA CANTONI Alternate Auditor STEFANIA CENTORBI Alternate Auditor AUDITING COMPANY from 2007 to 2015 PARENT COMPANY PricewaterhouseCoopers S.p.A. Finaid S.p.A. Under the terms and for the purposes of Consob Communication no of 20 February 1997, we state that: The Chairman, Mr Enrico Carraro and the Chief Executive Officer, Mr Alexander Bossard, have been given severally powers of legal representation and use of the corporate signature in relations with third parties and in legal actions; they carry out their work within the limits of the powers conferred on them by the Board of Directors in the meeting of 20 April 2012, in accordance with applicable legal constraints, in terms of matters which cannot be delegated by the Board of Directors and of responsibilities reserved for the Board itself, as well as the principles and limits provided for in the Company s Code of Conduct.

3 CONSOLIDATED INCOME STATEMENT AS AT (amounts in Euro thousands) % % % restated (1) Changes REVENUES FROM SALES 449, % 874, % 474, % -25, % Purchases of goods and materials (net of changes in inventories) -265, % -536, % -290, % 25, % Services and Use of third-party goods and services -77, % -149, % -84, % 7, % Personnel costs -76, % -140, % -73, % -2, % Amortisation, depreciation and impairment of assets -15, % -37, % -16, % % Provisions for risks -3, % -13, % -4, % % Other income and expenses 2, % 4, % 1, % 1, % Internal construction 1, % 4, % 2, % % OPERATING COSTS -433, % -868, % -465, % 31, % OPERATING PROFIT/(LOSS) (EBIT) 15, % 6, % 8, % 6, % Income from equity investments % % - - #DIV/0! Other financial income % 2, % 1, % % Financial costs and expenses -9, % -19, % -10, % % Net gains/(losses) on foreign exchange % % % % GAINS/(LOSSES) ON FINANCIAL ASSETS -9, % -17, % -8, % % PROFIT/(LOSS) BEFORE TAXES 6, % -11, % % 6,640 Current and deferred income taxes -5, % -6, % -5, % % NET PROFIT/(LOSS) % -17, % -5, % 6,102 #DIV/0! Profit/(loss) pertaining to minorities % 2, % % -452 GROUP CONSOLIDATED PROFIT/(LOSS) % -15, % -5, % 5,650 EBITDA 30, % 40, % 24, % 6, % 1 Comparative values for June, have been restated following the application of IAS 19 revised, which changes, among others, the principle of the recognition of actuarial gains and losses relative to termination and post-employment benefits. For further details, see section 3.2. Accounting standards, amendments and interpretations adopted since 1 January 2013 of the Explanatory and Supplementary Notes

4 CONSOLIDATED INTERIM STATEMENT OF FINANCIAL POSITION AS AT (amounts in Euro thousands) restated (1) Property, plant and equipment 202, , ,557 Intangible fixed assets 88,010 86,049 83,286 Real estate investments Holdings in subsidiaries and associates Financial assets 3,302 3,909 5,262 Deferred tax assets 28,156 29,428 28,768 Trade receivables and other receivables 3,478 1,624 4,379 NON-CURRENT ASSETS 326, , ,962 Inventory 166, , ,830 Trade receivables and other receivables 175, , ,988 Financial assets 5,636 4,397 5,152 Cash and cash equivalents 70, ,857 39,653 CURRENT ASSETS 418, , ,623 TOTAL ASSETS 744, , ,585 Share Capital 23,915 23,915 23,915 Reserves 40,088 53,678 56,612 Foreign currency translation reserve -11,210-8,988-4,828 Profit/(Loss) for the period ,299-5,498 Minority interests 7,116 9,810 11,831 SHAREHOLDERS EQUITY 60,061 63,116 82,032 Financial liabilities 197, , ,371 Trade payables and other payables Deferred tax liabilities 2,524 3,467 6,458 Provision for severance indemnity and retirement benefits 19,859 19,676 16,997 Provisions for risks and liabilities 2,600 2,403 3,040 NON-CURRENT LIABILITIES 222, , ,883 Financial liabilities 140, , ,960 Trade payables and other payables 299, , ,935 Current taxes payables 5,079 8,159 10,133 Provisions for risks and liabilities 16,480 18,939 12,642 CURRENT LIABILITIES 461, , ,670 TOTAL SHAREHOLDERS EQUITY AND LIABILITIES 744, , ,585 1 Comparative values for June, have been restated following the application of IAS 19 revised, which changes, among others, the principle of the recognition of actuarial gains and losses relative to termination and post-employment benefits. For further details, see section 3.2. Accounting standards, amendments and interpretations adopted since 1 January 2013 of the Explanatory and Supplementary Notes

5 CASH FLOW AS AT (amounts in Euro thousands) restated (1) Opening Net Financial Position -213, , ,505 Group profit/(loss) ,299-5,498 Profit/(loss) pertaining to minorities 551-2, Amortisation, depreciation and impairment of fixed assets 15,201 33,930 15,786 Cash flow before Net Working Capital 15,904 15,990 10,387 Change in Net Working Capital -44,779 43,509-38,188 Investments in fixed assets -13,138-41,632-13,458 Disinvestments in fixed assets 732 2, Operating Free Cash Flow -41,281 20,146-40,884 Other operating flows 12,693 18,524 10,300 Other investing flows -12,141 3, Other equity flows -3,758-8,627-2,253 Free Cash Flow -44,487 33,802-33,341 Closing Net Financial Position -258, , ,846 ANALYSIS OF NET WORKING CAPITAL AS AT (amounts in Euro thousands) restated (1) Trade Receivables 129,013 88, ,280 Inventory 166, , ,830 Trade Payables - 262, , ,061 Net Working Capital (NWC) 33,131-11,648 70,049 1 Comparative values for June, have been restated following the application of IAS 19 revised, which changes, among others, the principle of the recognition of actuarial gains and losses relative to termination and post-employment benefits. For further details, see section 3.2. Accounting standards, amendments and interpretations adopted since 1 January 2013 of the Explanatory and Supplementary Notes

6 The Carraro Group Carraro is an international industrial Group which is world leader in high-efficiency and eco-compatible power transmission systems, with headquarters in Italy, in Campodarsego (Padova). In line with the process of change begun in reaction to the crisis in 2009, at the beginning of 2013 Carraro has started a project for the change of its organizational set-up. The new set-up is a further development in the organization of the Business Unit, which in recent years has enabled the Group to properly focus on specific markets and applications, with different risk profiles and targeted strategies. The main feature of the reorganization is the merging of the two BUs - transmission systems and components - into a single unit. This is a fundamental step forward in achieving the most from our core business, both in terms of development synergies for new products and for the integration of production processes. This broad-ranging structure also maintains a vertical focus on specific markets and sectors. As a result the new Carraro Drive Tech Business Area, with its more dynamic configuration, can tackle its target markets with a more flexible response and products with a greater added value. In detail, the three Business Areas today are the followings: - Carraro Drive Tech (Transmission systems and components) is specialised in the design, manufacture and sale of transmission systems (axles, transmissions and drives) mainly for agricultural and construction equipment, and also markets a wide range of components and gears for very diverse sectors, from the automotive industry to light power tools, material handling, agricultural applications and construction equipment. - Carraro Divisione Agritalia (Vehicles) designs and manufactures special tractors (from 60 to 100 hp) for third-party brands, and namely John Deere, Massey Ferguson and Claas. Agritalia also provides engineering services for the design of innovative tractor ranges. - Elettronica Santerno (Power electronics) designs, develops, manufactures and markets inverters (electronic power converters) mainly for the photovoltaic industry and industrial automation (HVAC, water treatment, lifting systems and large-scale transport). Reference markets Agriculture In the first half of 2013, the global market for agriculture continued its growth trend, with potential further improvements in the medium-term, especially in countries that are developing fast. Overall turnover in the APAC area (Asia Pacific) is down, whilst demand for tractors of over 100 HP continues to be good. In Europe things are essentially stable, particularly in Northern and Central Europe, with a slow-down in the South. The shrinking of the Indian market appears to be over, with a possible slight increase in the second half of the current year. The Turkish market has made significant progress and seems to be on the verge of new growth, which should continue over the coming months. In South America too, the market is positive, with good fundamentals in the medium term. In the United States the economic trend shows a weak growth, which should continue until the end of the year. From its Indian plant, Carraro Drive Tech has successfully launched the production of a new family of T10.0 transmissions, broadening the range of products supplied in order to meet the growing demand for outsourcing from various OEMs and entering a market segment where the Group was previously not present.

7 Construction equipment In the first half of 2013, demand for earthmoving and construction equipment fell, most markedly in the mining equipment sector. China continues its negative trend with prospects still uncertain for the end of the year, but which could pick up if the government takes further steps to invest in infrastructure and support the liquidity of leading OEMs. The Indian market continues to be sluggish due to the economic uncertainty pending next year's general election. Demand in Europe is trending down. North America is showing signs of recovery in the private housing market, which generates demand in Utility machinery, especially for rental. The mining sector is deep in recession and is not expected to recover in the short term. As a result of planned infrastructure investments over the next five years, Brazil, together with Turkey, is one of the fastest growing areas for construction equipment. In the Brazilian market, Carraro Drive Tech has packed its current range of transmissions with innovative content (new ECOlogy MODE and Direct Drive technology) and has further extended the product range with entry level and premium versions. Renewable energy In the first half of 2013, the photovoltaic market further globalized, with new markets in countries that have decided to invest in this energy source. Within this framework, Santerno obtained significant orders internationally for the supply of inverters in photovoltaic plant, including 19 MW in India, 2.4 MW in Vermont USA (inverters that can be fully integrated with transportable (skid) platforms, suitable for tough climatic conditions), the first part of a large and important order in Australia, 13 MW in Romania for two different plants and 126 MW in Thailand, the largest plant under construction in the Asia Pacific area. In Italy, Santerno has supplied inverters to a 20 MW plant in Salerno, whilst the Quinto Conto Energia providing incentives for the construction of photovoltaic plant has now ended; in the next six months the residential market will be able to continue only if specific tax relief is provided. In the second half of the year, there are good prospects in South East Asia and the American region, which are growth markets in terms of the MW to be constructed, but where prices continue to fall. Industrial Automation In the Industrial Automation sector, the worldwide market is growing slowly. With the aim of expanding in the segment, in just four months, Santerno obtained DNV (Det Norske Veritas) certification for its complete range of PENTA inverters, immediately afterwards signing an important multi-year supply contract with a large Scandinavian distributor in the sector of marine applications. Automotive The Automotive market will grow in 2013 by 3.9%, in particular in the United States and Asia; unlike the premium segment, in which the Group plays an active role, which was a little down in the first part of the year. This influenced the turnover trend in the sector, which is down 24% in the first half of 2013 compared to the same period in PowerTools and Gardening Demand in the PowerTools (electrical tools) segment in 2013 is essentially stable, with signs of a slight uptick here and there, particularly in the APAC area. The leading players are seeking to increase their market share in order to consolidate a very fragmented market. The Gardening (professional gardening) market continues its positive trend with excellent growth in Asia and the Pacific, and in the consumer segment. Demand in both sectors should increase slightly in 2013 (+5% compared to 2012).

8 The turnover achieved in these sectors in the first half of 2013 was down 16% compared to the same period of last year. Market trends as illustrated above are consistent with Group forecasts for This was mainly due to increasing market share, the acquisition of new clients and the development of innovative products. Summary of the first half of Profitability for the first half of 2013 has been positively impacted by the launch of new products with high performance and technology, by penetration into new markets and the acquisition of new clients, supported by actions taken within the framework of the Carraro Group Reorganization Plan, begun at the end of 2012, focussed on the reorganization of industrial activities with the re-insourcing of various processes previously transferred abroad, the continuation of the Partnership project with leading suppliers and for the reduction of fixed costs. The decisions taken by the Group have positively influenced the opinion of banks, leading to important agreements during the 6-month period: specifically, a new Debt Rearrangement Agreement was signed providing greater financial flexibility, aimed at supporting the Group investment plan (150 million Euros in three years) and an agreement was reached with the finance company Friulia SpA leading to an increase in share capital, reserved for them, of the subsidiary SIAP SpA for the purpose of guaranteeing the resources required to support the development of an integrated industrial hub in Friuli. Starting in 2013, the Group analyzes its performance on the basis of the new organizational structure, so in addition to showing economic and equity data by Business Area, it was necessary to reconstruct values as at 30 June 2012 for comparison purposes. As illustrated in the introduction, in the first half of 2013, despite the fall in turnover, the Carraro Group achieved a significant improvement in profitability compared to the same period last year. In particular, positive performance has been led by Drive Tech (mechanical engineering); whilst Elettronica Santerno has reversed the trend, significantly improving its profitability compared to first half of 2012, thanks to the recovery of sales outside Europe, reaching the break even point at the operational level in June. Particularly important has been Group performance in Q2 2013, in which turnover, EBIT and EBITDA have all considerably improved on Q1. Turnover in Q2 was up 25% on Q1; The EBIT incidence to turnover ratio was up from 1.9% as at 31 March 2013 to 4.6% in Q2; also up was the EBITDA to turnover ratio (from 5.7% to 7.7%). Consolidated turnover as at 30 June 2013, about 88% from sales abroad, was million Euros, down 5.3% on million Euros in the first half of The operational business areas in the mechanical engineering sector achieved a turnover which was down 7.7% as at 30 June 2012 whilst Elettronica Santerno returned a turnover up 33.8% due to the important orders obtained in the previous year. Group EBITDA in the first half of 2013 was million Euros (6.8% of turnover) significantly up (+25.1%) compared to million Euros (5.1% or turnover) in the first half of EBITDA in the business areas for mechanical engineering as at 30 June 2013 is million Euros (7.9% of turnover), up 14.8% compared to million Euros (6.3% of turnover) for the first half of 2012, whilst Elettronica Santerno returned a positive EBITDA of 469 thousand Euros (1.3% of turnover), reversing the trend compared to the negative value of million Euros (- 10.7% of turnover) as at 30 June Consolidated EBIT as at 30 June 2013 is million Euros (3.4% of turnover), up 78.0% compared to the million Euros (1.8% of turnover) as at 30 June EBIT for traditional business is million Euros (4.9% of 1 Comparative values for June, have been restated following the application of IAS 19 revised, which changes, among others, the principle of the recognition of actuarial gains and losses relative to termination and post-employment benefits. For further details, see section 3.2. Accounting standards, amendments and interpretations adopted since 1 January 2013 of the Explanatory and Supplementary Notes

9 turnover) compared to million Euros (3.4% of turnover) as at 30 June 2012; EBIT for Santerno is negative in the amount of 751 thousand Euros (-2.0% of turnover) compared to a negative value of million Euros (-15.0% of turnover) in the first half of The net Group profit/ (loss) as at 30 June 2013, distorted by taxation for the period, is back in profit in the amount of 152 thousand Euros, compared to the loss of million Euros as at 30 June Earnings before tax are positive in the amount of million Euros (1.4% of turnover) compared to a loss of 317 thousand Euros (-0.1%) for the first half of The net financial position continues to improve, standing negatively as at 30 June 2013 at million Euros compared to million Euros as at 31 March 2013 up, as anticipated, compared to the million Euros of 31 December 2012 due to the effects of reabsorbing of actions managed at the end of 2012 in order to normalise the trend in net working capital figures and facts In January, on the occasion of the Ag Connect USA Exhibition, the most important event of its kind in North America dedicated to agricultural equipment, which took place in Kansas City, Missouri, Carraro Drive Tech launched the new T10 transmission for tractors up to 120 HP, which is proving very successful due to high-performance technical configuration. In February an important agreement was signed between Carraro Drive Tech and Agco, one of the world's leading three manufacturers of agricultural machinery. This agreement, for 5 years and with an overall value of 25 million Euros, is for the supply of transmission systems for a new range of tractors which will be manufactured in the Changzhou plant in China. On the basis of the agreement, Carraro Drive Tech will supply different types of integrated front axles with a drop box, for Massey Ferguson series BX200 tractors fitted with HP engines; these tractors are designed both for the Chinese market and for export in the United States, the Far East and Africa. Within the framework of the project called Agritalia Production System, for the first time, in the month of March, training was carried out for clients and suppliers of Agritalia, as well as for internal personnel, with the contribution of the Kaizen Institute. In addition to presenting the basic concept of change which characterises the new Agritalia production process, the training led to the creation of two improvement workshops for the production line. Various managers from leading companies cooperated with line operators to find improved or innovative solutions to organise material flow. In April Carraro Drive Tech staged a number of events: - during the Bauma Exhibition in Munich, the world's leading construction equipment show, the most highlydeveloped products were presented for earthmoving applications, with particular attention dedicated to epicycloidal drives for tracked vehicles and winches. Particular interest was shown in the new range of transmissions, partly due to the new technology dedicated to fuel saving and operational efficiency: ECOlogy MODE and Direct Drive. These two innovations with advanced technology for the improvement of the efficiency of transmissions is now available for all product classes: from the new TC1.0 to the consolidated TLB1 and TLB2. - in addition, a commercial agreement was signed with XCMG, one of the most important Chinese manufacturers of earthmoving equipment, for the supply of a series of epicycloidal drives for the largest tracked crane in the world (model XGC88000). In detail, Carraro is present in the vehicle both with the reduction gears and the travel drives as well as the winch drives, with an overall value of about 2 million Euros per vehicle. These drives were designed and manufactured in the German plant of O&K Antriebstechnik, the

10 Group company known at international level for its skills in products destined for high-range applications (heavy duty). In May the following important events took place: - On the occasion of the SNEC, an exhibition organised in Shanghai in China - the world's leading event in the photovoltaic sector in terms of the number of visitors - Santerno, presented to the market the new Sunway TG Outdoor range, which attracted great interest from operators in the sector from all over China and South East Asia. - in the same period Agritalia began supplying its new Powertrain to its Turkish client Basak. Basak is a brand of the Sanko Group, a historic client of Carraro Drive Tech. The cooperation between Agritalia and Drive Tech created this opportunity. Agritalia will supply the entire powertrain (integrated transmission systems complete with engines) to this new client, expected to be about 40 tractors per month with prospects for further growth. In June a new important step forward was taken by Carraro After Sales & Spare Parts which, a year after signing a partnership with CEVA Logistics, for the operational management of the spare parts platform in Italy, has now signed an important agreement with ToolsGroup, a multinational company specialised in the development of systems and solutions for the planning of the services to clients with the reduction of logistics costs, in order to fully develop its own supply chain with a view to integration. In the same month, Santerno signed an important agreement with Energy Absolute, a Thai company active in the cogeneration and biodiesel sector, which with this project enters into the renewable energy sector, for the supply of an integrated system of inverters destined for the largest photovoltaic plant in South-East Asia, to be built in Thailand, in Nakorn Sawan province. Due to this agreement, Santerno will supply a series of 3-phase inverters in outdoor cabinet format, particularly suitable for tough climatic conditions. The same kind of product that was used in the photovoltaic park under construction in Calexico, in the southern California desert, will now be fitted to platforms in the rain forest. At the end of June, preliminary activities were completed for the start-up of the new SAP system (T4T project) for the two SIAP plants in Maniago and Gorizia (over 300 people involved). Following the migration of the data base and completion of start-up tests, these two plants will be the first to activate the new ERP, which will then be gradually extended to the entire Group, with improvements expected at the level of operational efficiency. The Go-Live on 1 July 2013 was successful. Significant events in the first half of 2013 On 13 February 2013, the shareholders' meetings of Carraro Drive Tech SpA and Gear World SpA passed resolutions by majority vote, to merge Gear World SpA into Carraro Drive Tech SpA. The merger was completed with registration of the deed on 29 April On 14 May 2013, the Carraro Group signed a Debt Rearrangement Agreement with leading banks; the previous Framework Agreement expired as at 31 December The new Agreement is for the rearrangement of medium/longterm debt and renews the credit lines for short-term debt for 24 months, with the redefinition of financial parameters. On 28 June 2013, taking effect on 1 July 2013, the Shareholders' Meeting of SIAP SpA passed a resolution to increase its share capital by conferral by the shareholder Carraro Drive Tech SpA of the going concern comprising the Gorizia plant. This operation, which includes a subsequent increase in capital of 3 million Euros, reserved to the shareholder Friulia SpA, will lead to the creation of an integrated production hub in Friuli and will benefit from the ongoing alliance between the Carraro Group and Friulia.

11 Share performance In the first six months of 2013, the share price of Carraro had an up and down trend, in line with the main parameters of the Stock Exchange (FTSE MIB). The average official price over the period was 2.04 Euros, with a minimum on 5 April 2013 of 1.89 Euros and a peak of 2.29 Euros on 10 January Events subsequent to the balance sheet date Nothing to report. BUSINESS OUTLOOK FOR THE CURRENT YEAR On the basis of the current orders portfolio, the second half of the year should produce turnover in line with the first six months of Turnover for the Drive Tech Business Area is expected to be slightly up in the second half of the year compared to the first half, although the sectors will be subject to different trends. For Agritalia, market expectations suggest an increase in the number of tractors sold of about 100 units compared to the same period in 2012, due to increased demand from Turkey. For the Elettronica Santerno Business Area, a slight increase in turnover is expected compared to the first half of the year, due to the acquisition of new sales contracts. Margins for the second half of 2013 will be partially influenced by the changed mixture of products in the turnover, with a slight downturn in the growth trend shown in the first half of the year, but still above the results for the same period in the previous year. Financial expenses in the second half of the year will be negatively impacted by the variation in interest rates and fees arising from the Debt Rearrangement Agreement with banks.

12 ECONOMIC AND EQUITY DATA Turnover Consolidated Group turnover for the first half of 2013 is expected to be million Euros, down 5.3% compared to the turnover for the first half of 2012, which was million Euros. The following table breaks turnover down by market segment: (amounts in Euro thousands) SALES SALES TO THIRD PARTIES INTRA-GROUP SALES Diff. % Diff. % Carraro Drive Tech 368, , , , ,702 8, CARRARO AGRITALIA DIV. 53,190 49, ,306 46, ,884 2, ELETTRONICA SANTERNO 37,575 28, ,515 27, NON- ALLOCATED BUSINESS 6,714 20, ,082 19, TOTAL SEGMENTS 465, , , , ,728 30, INTRA-GROUP ELIMINATIONS -16,728-30, CONSOLIDATE D TOTAL 449, , , , ,728 30, Diff. % The following table breaks down turnover by geographical area: (amounts in Euro thousands) Geographical Area % % difference % '13-'12 North America 59, , Germany 53, , South America 53, , Turkey 33, , France 31, , China 29, , United Kingdom 27, , India 25, , Switzerland 22, , Poland 10, , Other non-e.u. areas. 14, , Other E.U. areas. 33, , Total Abroad 396, , Italy 53, , Total 449, , of which: Total E.U. area 210, , Total non-e.u. area 238, , In analysing turnover by geographic segment, it should be noted that the Group mainly sells to the production sites of OEMs that may reside in different countries from the nations of end users of their products. In the light of the figures set out in the table above, Group sales are increasingly focussed outside Europe, in particular on North America (+15.0% compared to the first half of 2012), Turkey (+61.9%) and South America (+9.6%). Growth in

13 sales in the other areas outside the EU (+71.2%) is mainly from South Africa (+7 million Euros), thanks to the turnover of Elettronica Santerno in that area. As at 30 June 2013, sales to countries outside Europe were over 50% of total turnover. EBITDA and EBIT Figures as at (amounts in Euro thousands) % of turnover % of turnover Diff. % EBITDA (a) 30, , EBIT (b) 15, , (a) understood as the sum of operating profit/(loss), amortisation, depreciation and impairment of fixed assets (b) understood as operating profit/(loss) in the income statement EBITDA as at 30 June 2013 amounts to million Euros (6.8% of turnover) compared to million Euros (5.1% of turnover) in the same period of EBIT is equal to million Euros (3.4% of turnover) compared to million Euros (1.8% of turnover) achieved as at 30 June Margins for the period are significantly better than for the same period last year due to the positive effects of the actions carried out in 2012, as described above. In particular, Elettronica Santerno reversed its trend, achieving a positive value for EBITDA in the period. Below are set out details of the two parameters separating the evolution of the business areas in the mechanical engineering sector and Elettronica Santerno: EBITDA % of turnover % of turnover Diff. % Carraro Drive Tech and Div. Agritalia 33,268 7,9 28, Elettronica Santerno , n.r. EBIT % of turnover % of turnover Diff. % Carraro Drive Tech and Div. Agritalia 20, , Elettronica Santerno , Net financial expenses Figures as at (amounts in Euro thousands) % of turnover % of turnover Diff. % Net financial expenses 8, , Net financial expenses total million Euros (1.9% of turnover) slightly lower than the million Euros (1.9% of turnover) of the first half of The trend in financial expenses benefited in the first half of 2013 from a reduced average financial debt compared to the first half of 2012 and, over the first three months of the year, from interest rates in line with the previous year. Beginning in April 2013 new interest rates apply to the loans covered by the Debt Rearrangement Agreement. 1 Comparative values for June, have been restated following the application of IAS 19 revised, which changes, among others, the principle of the recognition of actuarial gains and losses relative to termination and post-employment benefits. For further details, see section 3.2. Accounting standards, amendments and interpretations adopted since 1 January 2013 of the Explanatory and Supplementary Notes

14 Exchange differences Figures as at (amounts in Euro thousands) % of turnover % of turnover Diff. % Exchange differences n.r. Exchange rate differences as at 30 June 2013 caused losses of 384 thousand Euros (gains of 150 thousand Euros as at 30 June 2012). Net profit/(loss) Figures as at (amounts in Euro thousands) % of turnover % of turnover Diff. % Net profit/(loss) , n.r. (amounts in Euro thousands) % of turnover % of turnover Diff. % Earnings before tax 6, n.r. Current and deferred income taxes -5, , Profit/(loss) pertaining to minorities n.r. Net profit/(loss) , n.r. The first half of 2013 ended with profits of 152 thousand Euros, compared to a loss of million Euros (-1.2% of turnover). Earnings before tax are million Euros (1.4% of turnover), compared to a loss of 317 thousand Euros (- 0.1%) for the first half of The improvement is the result of a significant increase in margins for the Drive Tech Business Area, compared to the same period last year, and to a recovery in margins by Elettronica Santerno. Amortisation, depreciation and impairment of assets Figures as at (amounts in Euro thousands) % of turnover % of turnover Diff. % Amortisation, depreciation and impairment 15, , Investments Figures as at (amounts in Euro thousands) Investments 13,137 13,458 Investments as at 30 June 2013, totalling million Euros, compared to million Euros for the same period last year, were made in the Drive Tech Business Area for support of the re-insourcing project for activities previously carried out abroad, to maintain the efficiency of, and upgrade plants, and in Headquarter for the development of the new SAP management system. Research and Development In 2013, the Group continued its strategy of investing in constant technological innovation. Research and Development expenses for the first half amounted to 8.9 million Euros (2.0% of turnover) compared with million Euros as at 30 June 2012 (2.0% of turnover). 1 Comparative values for June, have been restated following the application of IAS 19 revised, which changes, among others, the principle of the recognition of actuarial gains and losses relative to termination and post-employment benefits. For further details, see section 3.2. Accounting standards, amendments and interpretations adopted since 1 January 2013 of the Explanatory and Supplementary Notes

15 Net financial position Figures as at (amounts in Euro thousands) Net financial position* -258, , ,846 * understood as the sum of amounts payable to banks, short, medium and long-term bonds and loans, net of cash and cash equivalents, negotiable securities and financial receivables. The net financial position as at 30 June 2013 stands in debt in the amount of million Euros compared to million Euros as at 30 June If compared to net exposure as at 31 December 2012, totalling million Euros, the deterioration is due to the effect of actions to reduce net working capital carried out at the end of the year. On the basis of the Debt Rearrangement Agreement signed with banks, the first verification of compliance with the covenants will be carried out based on the financial statements for the period ended 31 December PERSONNEL Workforce trend Figures as at Executives Clerical staff 1,016 1,044 1,062 Factory workers 2,952 2,865 3,005 Temporary workers Total 4,153 4,010 4,299 Group personnel as at 30 June 2013 (including temporary contracts, trainees and temporary workers) stands at 4,153 employees against 4,010 operational staff as at 31 December During the first half of 2013, the number of temporary workers increased (+90 compared to 31 December 2012), in particular in production facilities in Italy, as did the number of factory workers (+87 compared to 31 December 2012), in particular in production sites abroad, including India, Argentina and China. As at 30 June ,891 employees (46% of the total) worked in the Italian production sites of the Group and 2,262 employees (54% of the total) worked in sites abroad. As from November 2012, Elettronica Santerno started a 12 month temporary lay-off period for restructuring.

16 Performance and results of the Carraro Group Business Areas

17 Drivelines & Components - Drive Tech Business Area 1 Starting from the beginning of 2013, the previous separate Business Units, Drivelines and Components, were brought under the same new business area called Carraro Drive Tech which now includes all transmission systems (axles, transmissions and epicycloidal drives) mainly for agricultural machinery, earthmoving equipment and components and gears for similar industrial sectors, from earthmoving equipment to automobiles, from gardening and electric tools to agricultural applications and materials handling. In order to make the results comparable with the previous year, figures for the first half of 2012 was reconstructed in line with the new business model. Revenues from sales as at 30 June 2013 amount to million Euros compared to million Euros in the first half of 2012, down 9.6%. The breakdown of turnover by geographical area shows the increasing focus on markets outside Europe, which are at the same level as previous year, particularly South America, China and India. Overall turnover from foreign markets as at 30 June 2013 was 89.2% of the total turnover from the business area, against 87.2% as at 30 June In terms of sectors of application, the Agricultural and Materials Handling sectors continued their positive trends whilst there was a sharp drop in the Construction Equipment, Mining and Automotive sectors, compared with the same period last year. Turnover for Q was slightly below forecast due to the sudden fall in the Mining sector. Variable margins, although penalized by lower turnover, grew compared to the same period last year, both in absolute terms and in terms of ratio to turnover, due to continuous improvements in industrial processes, and in the efficiency of the procurement of direct materials as well as the start-up of the activities of insourcing, leading to reduced costs for processing by third parties. Industrial costs remained slightly below the previous year and in line with expectations, as did overheads; leading to an increased EBIT compared to the first half of 2012 despite lower turnover, as previously pointed out. EBITDA as at 30 June 2013 is million Euros (8.5% of turnover), up compared to million Euros (6.8% of turnover) as at 30 June EBIT for the first half of 2013 is million Euros (5.2% of turnover), compared to million Euros (3.7% of turnover) for the first half of The net profit of 6,830 million Euros (1.9% of turnover) are up 4.1 million Euros compared to the profits of million Euros (0.7% of turnover) as at 30 June In terms of the net financial position, the improvement over 30 June 2012 is million Euros compared to million Euros and million Euros compared to 31 December Debt was up due to the actions carried out at the end of 2012 to normalise net working capital. 1 Comparative values for June, have been restated following the application of IAS 19 revised, which changes, among others, the principle of the recognition of actuarial gains and losses relative to termination and post-employment benefits. For further details, see section 3.2. Accounting standards, amendments and interpretations adopted since 1 January 2013 of the Explanatory and Supplementary Notes

18 SUBCONSOLIDATED INCOME STATEMENT AS AT CARRARO DRIVE TECH BUSINESS AREA (amounts in Euro thousands) % % % restated (1) Changes REVENUES FROM SALES 368, % 750, % 407, % -38, % Purchases of goods and materials (net of changes in inventories) -218, % -459, % -249, % 31, % Services and Use of third-party goods and services -61, % -128, % -72, % 11, % Personnel costs -59, % -108, % -56, % -2, % Amortisation, depreciation and impairment of assets -12, % -28, % -13, % % Provisions for risks - 2, % -10, % -2, % % Other income and expenses 2, % 6, % 1, % % Internal construction % 1, % % % OPERATING COSTS -349, % -727, % -392, % 43, % OPERATING PROFIT/(LOSS) (EBIT) 19, % 22, % 14, % 4, % Other financial income % 2, % % % Financial costs and expenses -8, % -16, % -8, % % Net gains/(losses) on foreign exchange % % % % GAINS/(LOSSES) ON FINANCIAL ASSETS -7, % -14, % -7, % % PROFIT/(LOSS) BEFORE TAXES 11, % 8, % 7, % 4, % 0! Current and deferred income taxes -4, % -6, % -4, % % NET PROFIT/(LOSS) 7, % 1, % 3, % 3, ,79% Profit/(loss) pertaining to minorities % 1, % % % /0! BUSINESS AREA CONSOLIDATED PROFIT/(LOSS) 6, % 2, % 2, % 4, % EBITDA 31, % 51, % 27, % 3, % 1 Comparative values for June, have been restated following the application of IAS 19 revised, which changes, among others, the principle of the recognition of actuarial gains and losses relative to termination and post-employment benefits. For further details, see section 3.2. Accounting standards, amendments and interpretations adopted since 1 January 2013 of the Explanatory and Supplementary Notes

19 SUBCONSOLIDATED INTERIM STATEMENT OF FINANCIAL POSITION AS AT FOR THE CARRARO DRIVE TECH BUSINESS AREA (amounts in Euro thousands) restated (1) Property, plant and equipment 157, , ,209 Intangible fixed assets 49,360 49,106 48,985 Real estate investments Holdings in subsidiaries and associates Financial assets 3,059 3,526 4,895 Deferred tax assets 19,324 19,877 19,712 Trade receivables and other receivables 3,138 1,282 4,027 NON-CURRENT ASSETS 232, , ,999 Inventory 135, , ,495 Trade receivables and other receivables 126, , ,649 Financial assets 6,173 3,747 5,008 Cash and cash equivalents 52,211 73,051 25,168 CURRENT ASSETS 320, , ,320 TOTAL ASSETS 552, , ,319 Share Capital 30,102 58,902 58,902 Reserves 35,502 4,994 8,502 Foreign currency translation reserve -12,186-9,159-4,610 Profit/(Loss) for the period 6,830 2,449 2,740 Minority interests 3,823 3,649 3,687 SHAREHOLDERS EQUITY 64,071 60,835 69,222 Financial liabilities 38,221 34,031 38,577 Trade payables and other payables Deferred tax liabilities 2,724 3,441 6,442 Provision for severance indemnity and retirement benefits 17,172 17,003 14,637 Provisions for risks and liabilities 1,564 1,564 2,232 NON-CURRENT LIABILITIES 59,701 56,059 61,905 Financial liabilities 185, , ,892 Trade payables and other payables 227, , ,796 Current taxes payables 4,479 7,589 7,765 Provisions for risks and liabilities 11,396 13,439 7,740 CURRENT LIABILITIES 429, , ,193 TOTAL SHAREHOLDERS EQUITY AND LIABILITIES 552, , ,319 1 Comparative values for June, have been restated following the application of IAS 19 revised, which changes, among others, the principle of the recognition of actuarial gains and losses relative to termination and post-employment benefits. For further details, see section 3.2. Accounting standards, amendments and interpretations adopted since 1 January 2013 of the Explanatory and Supplementary Notes

20 CASH FLOW AS AT FOR THE CARRARO DRIVE TECH BUSINESS AREA (amounts in Euro thousands) restated (1) Opening Net Financial Position -140, , ,562 Group profit/(loss) 6,830 2,449 2,740 Profit/(loss) pertaining to minorities 177-1, Amortisation, depreciation and impairment of fixed assets 12,222 28,082 12,907 Cash flow before Net Working Capital 19,229 29,160 16,005 Change in Net Working Capital -28,819 25,938-38,058 Investments in fixed assets -9,070-24,451-3,745 Disinvestments in fixed assets Operating Free Cash Flow -18,282 31,300-25,843 Other operating flows -1,936 20,024 11,547 Other investing flows 2,914 4,319-5,452 Other equity flows -3,771-7,736-1,378 Free Cash Flow -21,075 47,907-21,124 Closing Net Financial Position -161, , ,685 ANALYSIS OF NET WORKING CAPITAL AS AT CARRARO DRIVE TECH BUSINESS AREA (amounts in Euro thousands) restated (1) Trade Receivables 91,440 69, ,748 Inventory 135, , ,496 Trade Payables - 204, , ,394 Net Working Capital (NWC) 22,671-6,148 57,850 1 Comparative values for June, have been restated following the application of IAS 19 revised, which changes, among others, the principle of the recognition of actuarial gains and losses relative to termination and post-employment benefits. For further details, see section 3.2. Accounting standards, amendments and interpretations adopted since 1 January 2013 of the Explanatory and Supplementary Notes

21 Vehicles Agritalia Business Area 1 The first half of 2013 ends with a turnover of million Euros, up 8.0% compared to the million Euros for the same period last year. The sale of tractors reached 1,916 units in line with the 1,915 in the first half of 2012; the increase in turnover comes mainly from the new Powertrain product line on sale since April 2013 to the Turkish client Basak, with which the Divisione Agritalia started their important cooperation. The variable margin for the 6-month period is 15% of turnover, slightly up compared to the 13.7% last year, due to the continuous improvement in the management of production processes. Specific overheads are slightly up compared to the first half of 2012, due in particular to preparation costs incurred for the launch of the new tractor platform, scheduled for the beginning of Profitability is nonetheless up compared to the first half of 2013, in particular EBITDA stands at million Euros (3.5% of turnover), up million Euros (2.3% of turnover) as at 30 June EBIT for the first half of 2013 stands at million Euros (2.4% of turnover), compared to 594 thousand Euros (1.2% of turnover) for the same period in The net profits for the period, amounting to million Euros (2.1% of turnover), are up compared to the figure of 508 thousand Euros (1.0% of turnover) for the period ended 30 June The net financial position as at 30 March 2013 was positive amounting to million Euros compared to million Euros for the first half of 2012 and million Euros as at 31 December Compared to 31 March 2013, when the net financial position stood at million Euros, the situation has improved due to the careful management of net working capital. 1 Comparative values for June, have been restated following the application of IAS 19 revised, which changes, among others, the principle of the recognition of actuarial gains and losses relative to termination and post-employment benefits. For further details, see section 3.2. Accounting standards, amendments and interpretations adopted since 1 January 2013 of the Explanatory and Supplementary Notes

22 SUBCONSOLIDATED INCOME STATEMENT AS AT DIVISIONE AGRITALIA OF CARRARO BUSINESS AREA (amounts in Euro thousands) % % % restated (1) Changes REVENUES FROM SALES 53, % 91, % 49, % 3, % Purchases of goods and materials (net of changes in inventories) -39, % -68, % -36, % -2, % Services and Use of third-party goods and services -4, % -8, % -4, % % Personnel costs -6, % -11, % -5, % % Amortisation, depreciation and impairment of assets % -1, % % % Provisions for risks % -1, % % % Other income and expenses % % % % OPERATING COSTS -51, % -90, % -48, % -3, % OPERATING PROFIT/(LOSS) (EBIT) 1, % 1, % % 657 Other financial income % % % % Financial costs and expenses % % % -38 Net gains/(losses) on foreign exchange % % % -3 - GAINS/(LOSSES) ON FINANCIAL ASSETS % % % -65 PROFIT/(LOSS) BEFORE TAXES 1, % 1, % % 592 Current and deferred income taxes % % % % BUSINESS AREA CONSOLIDATED PROFIT/(LOSS) 1, % 1, % % 587 EBITDA 1, % 2, % 1, % % 1 Comparative values for June, have been restated following the application of IAS 19 revised, which changes, among others, the principle of the recognition of actuarial gains and losses relative to termination and post-employment benefits. For further details, see section 3.2. Accounting standards, amendments and interpretations adopted since 1 January 2013 of the Explanatory and Supplementary Notes

23 SUBCONSOLIDATED INTERIM STATEMENT OF FINANCIAL POSITION AS AT DIVISIONE AGRITALIA OF CARRARO BUSINESS AREA (amounts in Euro thousands) restated (1) Property, plant and equipment 11,002 10,992 12,191 Intangible fixed assets Deferred tax assets 1,698 1,510 2,729 Trade receivables and other receivables NON-CURRENT ASSETS 12,991 12,843 15,312 Inventory 11,744 13,204 18,022 Trade receivables and other receivables 8,918 2,880 2,094 Financial assets Cash and cash equivalents 14,869 12,994 14,803 CURRENT ASSETS 35,537 29,085 34,924 TOTAL ASSETS 48,528 41,928 50,236 Share Capital Reserves 9,435 7,930 8,044 Profit/(Loss) for the period 1,103 1, SHAREHOLDERS EQUITY 10,538 9,441 8,552 Trade payables and other payables 1-1 Deferred tax liabilities Provision for severance indemnity and retirement benefits 1,227 1,222 1,131 Provisions for risks and liabilities NON-CURRENT LIABILITIES 1,958 1,817 1,730 Financial liabilities Trade payables and other payables 33,688 28,482 37,822 Current taxes payables Provisions for risks and liabilities 2,314 2,160 2,116 CURRENT LIABILITIES 36,032 30,670 39,954 TOTAL SHAREHOLDERS EQUITY AND LIABILITIES 48,528 41,928 50,236 1 Comparative values for June, have been restated following the application of IAS 19 revised, which changes, among others, the principle of the recognition of actuarial gains and losses relative to termination and post-employment benefits. For further details, see section 3.2. Accounting standards, amendments and interpretations adopted since 1 January 2013 of the Explanatory and Supplementary Notes

24 CASH FLOW AS AT DIVISIONE AGRITALIA OF CARRARO BUSINESS AREA (amounts in Euro thousands) restated (1) Opening Net Financial Position 13,001 11,083 11,083 Group profit/(loss) 1,103 1, Amortisation, depreciation and impairment of fixed assets 602 1, Cash flow before Net Working Capital 1,705 2,587 1,061 Change in Net Working Capital -54-1,080 2,650 Investments in fixed assets , Disinvestments in fixed assets - 1,599 5 Operating Free Cash Flow 1,089 1,862 3,337 Other operating flows Other investing flows Other equity flows Free Cash Flow 1,874 1,918 3,701 Closing Net Financial Position 14,875 13,001 14,784 ANALYSIS OF NET WORKING CAPITAL AS AT DIVISIONE AGRITALIA OF CARRARO BUSINESS AREA (amounts in Euro thousands) restated (1) Trade Receivables 8,597 2,330 2,908 Inventory 11,744 13,204 18,022 Trade Payables - 31,540-26,787-35,913 Net Working Capital (NWC) - 11,199-11,253-14,983 1 Comparative values for June, have been restated following the application of IAS 19 revised, which changes, among others, the principle of the recognition of actuarial gains and losses relative to termination and post-employment benefits. For further details, see section 3.2. Accounting standards, amendments and interpretations adopted since 1 January 2013 of the Explanatory and Supplementary Notes

25 Electronics Elettronica Santerno Business Area 1 During the first half of 2013, intense activities were carried out to develop foreign markets, particularly the United States, China, Thailand, Australia, India and South Africa. In this way, Santerno was able to drastically reduce its dependence on the Italian market as at 30 June 2013, which now represents only 21% of turnover compared to 70% in In June 2013, the two main orders acquired at the end of 2012 in the United States and South Africa are about 50% towards completion, whilst the new agreements in China and Thailand (where Santerno is helping to build the largest plant in Asia) have now begun to be implemented. For the sector of industrial applications, an important agreement has been reached with a leading North-European operator for the development and sale of products destined for marine applications, a completely new market for Elettronica Santerno; the first phase of DNV certification of products ended successfully and this will contribute to improving sales in the second half of In general, the market trend for the sector of industrial applications was positive in the first half of the year; the forecast for the second half of the year is similarly positive. The first half of 2013 ends with a turnover of million Euros, up 33.8% compared to the million Euros for the same period last year. EBITDA as at 30 December 2013 was positive amounting to 469 thousand Euros (+1.3% of turnover) compared to a negative value of million Euros (-10.8% of turnover) as at 30 June EBIT for the first half of 2013 is negative in the amount of 751 thousand Euros (-2.0% of turnover) compared to a negative value of million Euros (-15.0% of turnover) as at 30 June A net loss was recorded amounting to million Euros (-3.7 % of turnover) compared to a loss of million Euros (-17.6% of turnover) for the first half of The budget for the second half of the year is confirmed, with the aim of braking even by the end of the year. The net financial position as at 30 June 2013 was negative amounting to million Euros compared to million Euros as at 31 December 2012 and million Euros as at 30 June 2012, due to the effect of absorbing cash and cash equivalents arising from the trend in net working capital resulting from the need to set up storage facilities for important orders in the United States, South Africa and Asian countries. This effect will decrease at the end of the year due to collections for these order. 1 Comparative values for June, have been restated following the application of IAS 19 revised, which changes, among others, the principle of the recognition of actuarial gains and losses relative to termination and post-employment benefits. For further details, see section 3.2. Accounting standards, amendments and interpretations adopted since 1 January 2013 of the Explanatory and Supplementary Notes

26 SUBCONSOLIDATED INCOME STATEMENT AS AT THE ELETTRONICA SANTERNO BUSINESS AREA (amounts in Euro thousands) % % % restated (1) Changes REVENUES FROM SALES 37, % 49, % 28, % 9, % Purchases of goods and materials (net of changes in inventories) -18, % -29, % -16, % -1, % Services and Use of third-party goods and services -12, % -14, % -8, % -4, % Personnel costs -6, % -11, % -6, % % Amortisation, depreciation and impairment of assets -1, % -4, % -1, % % Provisions for risks % -1, % % % Other income and expenses % -1, % % % Internal construction % 2, % % % OPERATING COSTS -38, % -61, % -32, % -6, % OPERATING PROFIT/(LOSS) (EBIT) % -12, % -4, % 3, % Other financial income % % % % Financial costs and expenses % % % % Net gains/(losses) on foreign exchange % % % % GAINS/(LOSSES) ON FINANCIAL ASSETS % -1, % % % PROFIT/(LOSS) BEFORE TAXES -1, % -13, % -4, % 3, % Current and deferred income taxes % 1, % % 336 BUSINESS AREA CONSOLIDATED PROFIT/(LOSS) -1, % -11, % -4, % 3, % EBITDA % - 9, % - 2, % 3,464 1 Comparative values for June, have been restated following the application of IAS 19 revised, which changes, among others, the principle of the recognition of actuarial gains and losses relative to termination and post-employment benefits. For further details, see section 3.2. Accounting standards, amendments and interpretations adopted since 1 January 2013 of the Explanatory and Supplementary Notes

27 SUBCONSOLIDATED INTERIM STATEMENT OF FINANCIAL POSITION AS AT THE ELETTRONICA SANTERNO BUSINESS AREA (amounts in Euro thousands) restated (1) Property, plant and equipment 5,637 5,634 5,758 Intangible fixed assets 29,421 29,593 29,082 Deferred tax assets 4,258 4,124 3,022 Trade receivables and other receivables NON-CURRENT ASSETS 39,515 39,551 38,072 Inventory 21,176 14,626 23,288 Trade receivables and other receivables 37,349 24,089 31,734 Financial assets Cash and cash equivalents 4,185 2,404 2,498 CURRENT ASSETS 63,107 41,141 57,664 TOTAL ASSETS 102,622 80,692 95,736 Share Capital 2,500 2,500 2,500 Reserves 33,815 45,345 45,264 Foreign currency translation reserve Profit/(Loss) for the period -1,393-11,524-4,944 SHAREHOLDERS EQUITY 35,158 36,484 42,910 Trade payables and other payables Deferred tax liabilities Provision for severance indemnity and retirement benefits Provisions for risks and liabilities NON-CURRENT LIABILITIES 1, Financial liabilities 21,723 8,906 9,892 Trade payables and other payables 42,719 32,470 38,936 Current taxes payables Provisions for risks and liabilities 1,876 1,844 2,500 CURRENT LIABILITIES 66,463 43,220 52,274 TOTAL SHAREHOLDERS EQUITY AND LIABILITIES 102,622 80,692 95,736 1 Comparative values for June, have been restated following the application of IAS 19 revised, which changes, among others, the principle of the recognition of actuarial gains and losses relative to termination and post-employment benefits. For further details, see section 3.2. Accounting standards, amendments and interpretations adopted since 1 January 2013 of the Explanatory and Supplementary Notes

28 CASH FLOW AS AT BUSINESS AREA ELETTRONICA SANTERNO (amounts in Euro thousands) restated (1) Opening Net Financial Position -6,444 1,583 1,583 Group profit/(loss) -1,393-11,524-4,944 Amortisation, depreciation and impairment of fixed assets 1,220 2,579 1,211 Cash flow before Net Working Capital ,945-3,733 Change in Net Working Capital -11,177 10,353-3,212 Investments in fixed assets -1,059-3,054-1,262 Disinvestments in fixed assets Operating Free Cash Flow -12,409-1,616-8,201 Other operating flows 1,399-6, Other investing flows Other equity flows Free Cash Flow -10,935-8,027-8,631 Closing Net Financial Position -17,379-6,444-7,048 ANALYSIS OF NET WORKING CAPITAL AS AT ELETTRONICA SANTERNO BUSINESS AREA (amounts in Euro thousands) restated (1) Trade Receivables 33,262 20,920 26,156 Inventory 21,176 14,626 23,288 Trade Payables - 35,653-27,938-28,271 Net Working Capital (NWC) 18,785 7,608 21,173 1 Comparative values for June, have been restated following the application of IAS 19 revised, which changes, among others, the principle of the recognition of actuarial gains and losses relative to termination and post-employment benefits. For further details, see section 3.2. Accounting standards, amendments and interpretations adopted since 1 January 2012 of the Explanatory and Supplementary Notes

29 TRANSACTIONS WITH RELATED PARTIES Transactions with related parties carried out during the period gave rise to relationships of a commercial, financial or advisory nature and were expedited at market terms, in the economic interest of the individual companies involved in the transactions. No transactions were carried out that were atypical or unusual with respect to normal business operations and the interest rates and terms applied to and by the companies in their reciprocal financial relationships are in line with market terms. Detailed information on the transactions carried out with related parties are provided in the Explanatory Notes to the Condensed Consolidated Interim Financial Statements. STANDARDS USED IN PREPARING THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS The consolidated annual financial statements are drawn up in compliance with the International Financial Reporting Standards (IFRS) issued by the International Accounting Standard Board ( IASB ) and homologated by the European Union in accordance with Regulation no. 1606/2002 and with the provisions issued in implementation of Art. 9 of Italian Legislative Decree no. 38/2005. The present Condensed Consolidated Interim Financial Statements have been drawn up in abbreviated form in accordance with IAS 34 Interim financial reporting and does not include the information required for the consolidated annual financial statements and must therefore be read together with the consolidated annual financial statements drawn up for the year ended as at 31 December Furthermore, the Condensed Consolidated Interim Financial Statements are based on the assumption of the company as a going concern. ********************** With reference to the provisions of Articles 36 and 39 of Consob Order of (the so-called Market Regulations ) and of Art paragraph 15 of the Stock Exchange Regulations we can confirm that the parent company Carraro S.p.A. meets the conditions required by points a), b) and c) of paragraph 1 of the aforementioned Art. 36 on the subject of accounting situations, articles of association, corporate bodies and administrative and accounting control of its subsidiaries incorporated and regulated in countries that do not belong to the European Union. The Group perimeter includes 26 companies of which 15 are established and regulated in non-european Union countries, specifically in Argentina, Brazil, China, India, Russia and the United States; of these, five, in Argentina, China, India, and the United States, are significant under the terms of Title VI, Section II of the Issuer Regulations (Consob Order 11971/1999).

30 CARRARO S.p.A. Registered office in Campodarsego, Padua (Italy) 37 Via Olmo Share Capital Euros 23,914,696, fully paid-up. Tax Code/VAT Registration Number and In the Padua Companies Register R.E.A. no CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS OF THE CARRARO GROUP AS AT 30 JUNE 2013 BOARD OF DIRECTORS ENRICO CARRARO (2) Chairman In office until approval of the 2014 Financial TOMASO CARRARO Deputy Chairman Statements (Appointed, General Meeting Chief Executive ALEXANDER JOSEF BOSSARD (1) Powers conferred, Board Officer resolution ) ARNALDO CAMUFFO (1) (2) Director * FRANCESCO CARRARO Director ANTONIO CORTELLAZZO (1) (2) Director * GABRIELE DEL TORCHIO Director * MARINA PITTINI (1) (2) Director * MARCO REBOA (1) Director * (1) Members of the Auditing and Risk Committee (2) Members of the Nominations, Human Resources and Remuneration Committee * Independent directors BOARD OF STATUTORY AUDITORS ROBERTO SACCOMANI Chairman In office until approval of the 2014 Financial SAVERIO BOZZOLAN Regular Auditor Statements (Appointed, General Meeting MARINA MANNA Regular Auditor ) BARBARA CANTONI Alternate Auditor STEFANIA CENTORBI Alternate Auditor AUDITING COMPANY from 2007 to 2015 PARENT COMPANY PricewaterhouseCoopers S.p.A. Finaid S.p.A. Under the terms and for the purposes of Consob Communication no of 20 February 1997, we state that: The Chairman, Mr Enrico Carraro and the Chief Executive Officer, Mr Alexander Bossard, have been given severally powers of legal representation and use of the corporate signature in relations with third parties and in legal actions; they carry out their work within the limits of the powers conferred on them by the Board of Directors in the meeting of 20 April 2012, in accordance with applicable legal constraints, in terms of matters which cannot be delegated by the Board of Directors and of responsibilities reserved for the Board itself, as well as the principles and limits provided for in the Company s Code of Conduct.

31 CONSOLIDATED INCOME STATEMENT (amounts in Euro thousands) NOTES restated (1) A) REVENUES FROM SALES 1) Products 440, ,360 2) Services 4,732 2,876 3) Other revenues 4,296 3,104 TOTAL REVENUES FROM SALES 1 449, ,340 B) OPERATING COSTS 1) Purchases of goods and materials 287, ,422 2) Services 74,097 81,308 3) Use of third-party goods and services 2,906 2,906 4) Personnel costs 76,354 73,578 5) Amortisation, depreciation and impairment of assets 15,494 16,427 5.a) depreciation of property, plant and equipment 12,866 13,621 5.b) amortisation of intangible assets 2,283 2,119 5.c) impairment of fixed assets d) impairment of receivables ) Changes in inventories -21,882-5,559 7) Provision for risks and other liabilities 3,917 4,186 8) Other income and expenses -2,856-1,443 9) Internal construction -1,647-2,094 TOTAL OPERATING COSTS 2 433, ,731 OPERATING PROFIT/(LOSS) 15,325 8,609 C) GAINS/(LOSSES) ON FINANCIAL ASSETS 10) Income from equity investments ) Other financial income 979 1,151 12) Financial costs and expenses -9,597-10,227 13) Net gains/(losses) on foreign exchange ) Value adjustments of financial assets - - NET GAINS/(LOSSES) ON FINANCIAL ASSETS 3-9,002-8,926 PROFIT/(LOSS) BEFORE TAXES 6, ) Current and deferred income taxes 4 5,620 5,082 NET PROFIT/(LOSS) FOR THE PERIOD 703-5,399 16) Net profit/(loss) pertaining to minority interest NET GROUP PROFIT/(LOSS) 152-5,498 EARNINGS (LOSSES) PER SHARE 5 - basic, for the profit for the period attributable to ordinary shareholders of the parent company diluted, for the profit for the period attributable to ordinary shareholders of the parent company (1) Comparative values have been restated following the application of IAS 19 revised, which changes, among others, the principle of the recognition of actuarial gains and losses relative to termination and post-employment benefits. For further details, see section 3.2. Accounting standards, amendments and interpretations applied as from 1 January 2012 of the "Notes

32 CONSOLIDATED COMPREHENSIVE INTERIM INCOME STATEMENT (amounts in Euro thousands) restated (1) NET PROFIT/(LOSS) FOR THE PERIOD 703-5,399 Other income components that could be recognized in the income statement in subsequent periods: Change in cash flow hedge reserve ,041 Foreign operation translation exchange differences -2, Taxes on other comprehensive income components Total other income components that could be recognized in the income statement in subsequent periods -3,464-1,283 Other income components that will not be recognized in the income statement in subsequent periods: Change in the provision for discounting employee benefits Taxes on other comprehensive income components Total other income components that will not be recognized in the income statement in subsequent periods OTHER COMPREHENSIVE INCOME COMPONENTS, NET OF TAX EFFECTS -3,654-1,376 TOTAL COMPREHENSIVE INCOME FOR THE PERIOD -2,951 6,775 Total comprehensive income attributable to: Shareholders of the parent company -2,737-6,838 Profit/(loss) pertaining to minorities Total comprehensive income for the period -2,951-6,775 (1) Comparative values have been restated following the application of IAS 19 revised, which changes, among others, the principle of the recognition of actuarial gains and losses relative to termination and post-employment benefits. For further details, see section 3.2. Accounting standards, amendments and interpretations applied as from 1 January 2012 of the "Notes

33 CONSOLIDATED INTERIM STATEMENT OF FINANCIAL POSITION (amounts in Euro thousands) NOTES A) NON-CURRENT ASSETS 1) Property, plant and equipment 6 202, ,656 2) Intangible fixed assets 7 88,010 86,049 3) Real estate investments ) Investments ) Financial assets 10 3,302 3, ) Loans and receivables 3,023 3, ) Other financial assets ) Deferred tax assets 11 28,156 29,428 7) Trade receivables and other receivables 12 3,478 1, ) Trade receivables ) Other receivables 3,478 1,624 TOTAL NON-CURRENT ASSETS 326, ,374 B) CURRENT ASSETS 1) Inventory , ,754 2) Trade receivables and other receivables , , ) Trade receivables 129,013 88, ) Other receivables 46,540 46,210 3) Financial assets 10 5,636 4, ) Loans and receivables 2,472 2, ) Other financial assets 3,164 1,633 4) Cash and cash equivalents 14 70, , ) Cash ) Bank current accounts and deposits 70, , ) Other cash and cash equivalents TOTAL CURRENT ASSETS 418, ,269 TOTAL ASSETS 744, ,643

34 CONSOLIDATED INTERIM STATEMENT OF FINANCIAL POSITION (amounts in Euro thousands) NOTES A) SHAREHOLDERS EQUITY 15 1) Share Capital 23,915 23,915 2) Other Reserves 41,853 54,725 3) Profits/(Losses) brought forward - - 4) Other IAS/IFRS reserves -1, ) Provision for discounting employee benefits ) Foreign currency translation reserve -11,210-8,988 7) Profit/loss for the year pertaining to the group ,299 GROUP SHAREHOLDERS EQUITY 52,945 53,306 8) Minority interests 7,116 9,810 TOTAL SHAREHOLDERS EQUITY 60,061 63,116 B) NON-CURRENT LIABILITIES 1) Financial liabilities , , ) Bonds ) Loans 197, , ) Other financial liabilities ) Trade payables and other payables ) Trade payables ) Other payables ) Deferred tax liabilities 11 2,524 3,467 4) Provision for severance indemnity and retirement benefits 19 19,859 19, ) Provision for severance indemnity 13,985 13, ) Provision for retirement benefits 5,874 5,710 5) Provision for risks and liabilities 20 2,600 2, ) Provision for warranties 1,723 1, ) Provision for legal claims ) Provision for restructuring and reconversion ) Other provisions TOTAL NON-CURRENT LIABILITIES 222, ,680 C) CURRENT LIABILITIES 1) Financial liabilities , , ) Bonds ) Loans 136, , ) Other financial liabilities 4,128 1,743 2) Trade payables and other payables , , ) Trade payables 262, , ) Other payables 36,965 31,792 3) Current taxes payables 18 5,079 8,159 4) Provision for risks and liabilities 20 16,480 18, ) Provision for warranties 9,831 9, ) Provision for legal claims 1,201 1, ) Provision for restructuring and reconversion 3,601 5, ) Other provisions 1,847 2,276 TOTAL CURRENT LIABILITIES 461, ,847 TOTAL LIABILITIES 684, ,527 TOTAL SHAREHOLDERS EQUITY AND LIABILITIES 744, ,643

35 STATEMENT OF CHANGES IN CONSOLIDATED SHAREHOLDERS EQUITY (amounts in Euro thousands) Share Capital Capital reserves Other reserves (1) Provision for discounting employee benefits (1) Treasury stock acquired Reserve cash flow hedge Foreign currency translation reserve Profit/(Loss) for the period Equity of Group Minority interests Total Balance as at (1) 23,915 27,130 29,952 1,345-5, ,447 5,071 77,915 11,768 89,683 Total profit/loss for the year ,498-6, ,775 Transactions with shareholders: - - Allocation of 2011 results (1) 5,071-5, Own share purchase Change in consolidation scope Other changes Total transactions of the period - - 5, , Balance as at ,915 27,130 35,023 1,260-6, ,828-5,498 70,201 11,831 82,032 (amounts in Euro thousands) Share Capital Capital reserves Other reserves Provision for discounting employee benefits Treasury stock acquired Reserve cash flow hedge Foreign currency translation reserve Profit/(Loss) for the period Equity of Group Minority interests Total Balance as at ,915 27,130 34, , ,988-15,299 53,306 9,810 63,116 Total profit/loss for the year , , ,951 Transactions with shareholders: - - Allocation of 2012 results -15,299 15, Own share purchase Change in consolidation scope Other changes 2, ,480-2,480 - Total transactions of the period , ,299 2,376-2, Balance as at ,915 27,130 21, ,539-1,044-11, ,945 7,116 60,061 (1) Comparative values have been restated following the application of IAS 19 revised, which changes, among others, the principle of the recognition of actuarial gains and losses relative to termination and post-employment benefits. For further details, see section 3.2. Accounting standards, amendments and interpretations applied as from 1 January 2012 of the "Notes

36 CONSOLIDATED STATEMENT OF CASH FLOWS (amounts in Euro thousands) NOTES restated (1) Profit/(loss) for the year pertaining to the Group ,498 Profit/(Loss) for the year pertaining to minority interests Tax for the year 5,620 5,082 Profit/(loss) before taxes 6, Depreciation of property, plant and equipment 2 12,866 13,621 Amortisation of intangible assets 2 2,283 2,119 Impairment of intangible assets Provisions for risks 2 3,917 4,186 Provisions for employee benefits 2 2,638 3,316 Net gains/(losses) on foreign exchange Cash flows before changes in Net Working Capital 28,463 22,821 Changes in inventory 13-20,019-6,178 Changes in trade receivables and other receivables 12-43,146-1,633 Changes in trade payables and other payables 17 21,304-18,420 Changes in receivables/payables for deferred taxation Use of funds for employee benefits 19-2,455-3,297 Use of risks funds 20-6,221-6,116 Changes of other financial assets and liabilities 1, Tax consolidation expense and income - 31 Tax payments 4-8,164-3,994 Cash flows from operating activities -29,340-17,558 Investment of property, plant and equipment 6-8,893-10,201 Disinvestments and other movements in property, plant and equipment 6 3, Investments in intangible assets 7-4,244-3,257 Disinvestments and other movements in intangible assets Equity investments/divestments - Effect of forex conversion on equity investments - - Cash flows from Investing activities -9,870-13,593 Changes in current financial assets 10-1, Changes in non-current financial assets Changes in current financial liabilities 16-14,025-8,264 Changes in non-current financial liabilities 16 19,813-19,457 Changes in reserves ,259 Declared dividends Changes in minority interests -3, Cash flows from financing activities 1,225-29,637 Total cash flow for the period -37,985-60,788 Opening cash and cash equivalents 108, ,441 Closing cash and cash equivalents 70,872 39,653 (1) Comparative values have been restated following the application of IAS 19 revised, which changes, among others, the principle of the recognition of actuarial gains and losses relative to termination and post-employment benefits. For further details, see section 3.2. Accounting standards, amendments and interpretations applied as from 1 January 2012 of the "Notes

37 EXPLANATORY AND SUPPLEMENTARY NOTES 1. Introduction Publication of the Consolidated Interim Financial Report and condensed Consolidated Interim Financial Statements of Carraro S.p.A. and subsidiaries, the Carraro Group, for the period running from 1 January 2013 to 30 June 2013 is authorised by resolution taken by the Board of Directors on 1 August Carraro S.p.A. is a joint-stock company registered in Italy at the Padua Companies Register and controlled by Finaid S.p.A. Carraro S.p.A. is not subject to management and coordination activities under the terms of Art et seq of the Civil Code. The controlling shareholder Finaid S.p.A. does not perform any activity of management and coordination in relation to Carraro, and in particular: - Finaid is a purely financial holding; - Finaid does not issue any directions to Carraro; - the Finaid Board of Directors does not approve Carraro s strategic plans or business plans nor does it interfere regularly in its operations; - there are no relationships of a commercial or financial nature between Finaid and Carraro. These condensed consolidated interim financial statements are presented in Euro, as this is the currency in which most of the group s operations are conducted. The foreign companies are included in the consolidated interim financial statements in accordance with the principles described in the notes that follow. Amounts in these financial statements are given in thousand Euro, while amounts in the notes are indicated in million Euro (mln). The Carraro Group companies are principally engaged in the manufacture and marketing of drive systems developed for agricultural tractors, construction equipment, material moving machinery, light commercial vehicles and automobiles, and electronic control and power systems. Carraro S.p.A., as the parent company, has functions of strategic guidance, control and coordination of the three Carraro Group Business Areas: Carraro Drive Tech (under the control of Carraro Drive Tech S.p.A.), Carraro Divisione Agritalia (division part of Carraro S.p.A. itself) e Elettronica Santerno (under the control of Elettronica Santerno S.p.A.). The new Business Area model, effective as from 1 January 2013, replaces the previous four Business Units; in particular, on 29 April 2013, the merger by incorporation of Gear World S.p.A. in Carraro Drive Tech S.p.A.was completed, involving the merger of the two previous Drivelines and Components Business Units in the new Carraro Drive Tech Business Area. The condensed consolidated interim financial statements, in addition to Business Areas, include Carraro International based in Luxembourg which performs financial and treasury management for the Group, as well as commercial activities at the Swiss branch of Carraro Deutschland with headquarters in Hattingen (Germany), financial company which owns 8.01% of Carraro Drive Tech S.p.A. Reporting criteria and accounting principles The consolidated annual financial statements are drawn up in compliance with the International Financial Reporting Standards ( IFRS ) issued by the International Accounting Standard Board ( IASB ) and homologated by the European Union in accordance with Regulation no. 1606/2002 and with the provisions issued in implementing Art. 9 of Italian Legislative Decree no. 38/2005. The present condensed consolidated interim financial statements have been drawn up in abridged form in compliance with IAS 34 Interim Financial Reporting. As such, it do not include all the information required by the consolidated annual financial statements; they must be read together with the consolidated annual financial statements drawn up for the year ended on 31 December In preparing the present condensed interim financial statements, drawn up in accordance with IAS 34 Interim Financial Reporting the same accounting standards have been used as adopted in preparing the consolidated financial statements as at 31 December 2012, with the exception of that described in the paragraph below entitled Accounting standards, amendments and interpretations coming into effect as from 1 January The condensed consolidated interim financial statements were prepared assuming that the company is a going concern. The preparation of the interim financial statements requires management to make estimates and assumptions based on the best information available, which affect the value of revenues, costs, assets and liabilities on the statements and the disclosure in relation to potential assets and liabilities as of the date of the interim financial statements. Some of the measurement processes, and in particular the more complex processes, such as calculating any impairment of non-current assets, are generally only carried out in a complete manner upon preparing the annual financial statements, when all information as may be necessary is available. This is without prejudice to cases where there are indicators of impairment that require an immediate assessment of loss of value.

38 2. Structure and content of the condensed consolidated interim financial statements These condensed consolidated interim financial statements have been prepared in accordance with the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) and ratified by the European Union and to this end the figures of financial statements of the consolidated companies have been reclassified and adjusted appropriately. 2.1 Format of the consolidated financial statements With regard to the format of consolidated accounting schedules, the Company opted to present the following accounting statements. Income Statement Items on the consolidated income statement are classified by their nature. Statement of Comprehensive Income The statement of comprehensive income includes items of income and costs which are not included in the income statement for the year, as requested or allowed by IFRS, such as the variations of the cash flow hedge reserve, and the variations of the currency exchange reserve. Financial position The consolidated interim statement of financial position is presented with separate disclosure of Assets, Liabilities and Shareholders Equity. Assets and Liabilities are in turn presented according to their classification as current and non-current. Statement of Cash Flows The consolidated statement of cash flows illustrates the changes in cash and cash equivalents (as presented in the balance sheet) divided by cash generating area in accordance with the indirect method, as permitted by IAS 7. Statement of Changes in Shareholders Equity The statement of changes in shareholders equity is presented in accordance with the requirements of the international accounting standards, showing the comprehensive income for the period and all changes generated from transactions with shareholders. Accounting statements of transactions with related parties (Consob resolution 15519) With reference to the reporting of related-party transactions in the financial statements, provided for in Consob Resolution of 27 July 2006, balances of a significant amount are specifically indicated, to facilitate understanding of the assets and liabilities, financial position and results of the group, in the table of paragraph 8 below devoted to related party transactions.

39 2.2 Content of the Condensed Consolidated Interim Financial Statements Consolidation area The Carraro Group s condensed consolidated interim financial statements include the financial statements of Carraro S.p.A. and of the companies in which it holds, directly or indirectly, the majority of voting rights at the meeting of shareholders. The definition of a subsidiary is consistent with that given in the Carraro Group s annual financial statements as at 31 December The following companies are consolidated using the line-by-line method: Name Based in Currency Par value Share capital Group stake Parent company: Carraro S.p.A. Campodarsego (PD) EURO 23,914,696 Italian subsidiaries: Carraro Drive Tech S.p.A. Campodarsego (PD) EURO 30,102, % Elettronica Santerno S.p.A. Campodarsego (PD) EURO 2,500, % Energy Engineering S.r.l. Imola (Bologna) EURO 110, % M.G. Mini Gears S.p.A. Padua EURO 5,256, % Siap S.p.A. Maniago (PN) EURO 17,622, % Foreign subsidiaries: Carraro International S.A. Luxembourg EURO 39,318, % Carraro Deutschland GmbH Hattingen (Germany) EURO 10,507, % Carraro Technologies India Pvt. Ltd. Pune (India) INR 18,000, % O&K Antriebstechnik Gmbh Kg Hattingen (Germany) EURO 4,000, % Carraro Argentina S.A. Haedo (Argentina) ARS 105,096, % Carraro China Drive System Qingdao (China) CNY 168,103, % Carraro India Ltd. Pune (India) INR 568,260, % Carraro North America Inc. Norfolk (USA) USD 1, % Fon S.A. Radomsko (Poland) PLN % Santo Andrè Carraro Drive Tech Do Brasil BRL 94.44% (State of Sao Paulo) 1,182,369 Eletronica Santerno Industria e Comercio Ltda Minas Gerais (Brazil) BRL 2,443, % Elettronica Santerno ES.p.A.na S.L. Valencia (Spain) EURO 1,003, % Santerno Inc. San Francisco (USA) USD 1, % Zao Santerno Moscow (Russia) RUB 100, % Santerno Shangai Trading Ltd Shanghai (China) CNY 5,562, % Turbo Gears India Ltd. Pune (India) INR 960,000, % Mini Gears Inc. Virginia Beach (USA) USD 8,910, % Gear World North America Inc. Virginia Beach (USA) USD 20, % Mini Gears Property Virginia Beach (USA) USD 20, % MiniGears Suzhou Co. Ltd. Suzhou (China) CNY 49,487, % Changes in the consolidation area and other operations of company reorganisation There are no changes in the consolidation area in the reference period. As already mentioned in the condensed interim financial report, with deed dated 29 April 2013, having effect as from 1 January 2013, the company Carraro Drive Tech S.p.A. merged the company Gear World S.p.A..

40 3. Consolidation criteria and accounting principles 3.1 Consolidation criteria The figures are consolidated using the line by line method, that is assuming the entire amount of the assets, liabilities, costs and earnings of the individual companies, regardless of the stock held in the company. Subsidiaries are consolidated using financial statement formats in line with the layout adopted by the parent company and compiled in accordance with common accounting standards, as applied for Carraro S.p.A. The carrying amount of consolidated equity interests, held by Carraro S.p.A. or by other companies within the consolidation scope, was offset by the relevant amount of shareholders equity in the subsidiary companies. The amount of shareholders equity and the net profit/(loss) of these third-party shareholders are shown in the Consolidated Statement of Financial Position and Income Statement respectively. Payable and receivables, income and expenditure and all operations undertaken between the companies included within the consolidation scope have been eliminated, including dividends distributed within the Group. Profits not yet realised and capital gains and losses deriving from operations between companies of the Group have also been eliminated. Intra-group losses that indicate impairment are recognised in the consolidated financial statements. Balances in foreign currencies have been converted into Euro using the exchange rate of the end of the period for assets and liabilities, historical exchange rates for shareholders equity items and average exchange rates in the period for the income statement. Exchange differences resulting from this conversion method are shown in a specific shareholders equity item entitled Foreign currency translation reserve. The exchange rates applied for the translation of balances presented in foreign currencies were as follows: Currency Average exchange / Exchange as at Average exchange / Exchange as at Indian Rupee Polish Zloty US Dollar Chinese Renminbi Argentine Peso Russian Ruble Brazilian Real Accounting standards and measurement criteria Accounting standards, amendments and interpretations coming into effect as from 1st January 2013 Standards relevant to the Group for the first half of IAS 19 Revised Employee Benefits", retrospective application from 1 January The Carraro Group opted for the early application, from the Financial Statements as at 31 December 2012, of IAS 19 Revised, according to which actuarial gains/losses are recognised in the Statement of Comprehensive Income and financial income/expenses are classified as interest costs. Moreover, net financial expenses are determined using the discount rate adopted at the beginning of the current reporting period to measure the defined benefit plan obligation. During the first-time adoption of IAS 19, the Carraro Group opted to recognise actuarial components in the income statement under Personnel costs; the amendment, endorsed by the European Commission in June 2012, requires the posting of actuarial gains/losses directly under Shareholders' Equity, with immediate recognition in the Statement of Comprehensive Income. Adoption of IAS 19 Revised by the company, considering the obligation for retrospective application as required by IAS 8, gave rise to the following effects: - recognition in a reserve of Shareholders' equity of actuarial gains/losses, and classification of interest costs under the item Net financial income/expenses; - restatement of the item Personnel costs (net of actuarial gains/losses classified in the Statement of Comprehensive Income) and of Financial Income/Expenses (including the item interest cost) in the 2012 interim Income Statement. The following effects may therefore be identified in these financial statements: - the actuarial loss in the first half 2012 Income Statement, amounting to 0.13 million Euros, under Personnel Costs, was not recognised; the negative change, for the same amount, under the Provision for discounting employee benefits in the Statement of Financial Position and the item Change in the Provision for discounting employee benefits in the Statement of Comprehensive Income were not recognised; moreover, the item Interest cost, amounting to 0.27 million Euros was reclassified from the item Personnel Costs to the item Financial Expenses. - the actuarial loss in the first half 2013 Income Statement, amounting to 0.3 million Euros, was not recognised under Personnel Costs; the negative change, amounting to 0.19 million Euros (net of taxes) of the Provision

41 for discounting employee benefits in the Statement of Financial Position and the item Change in the Provision for discounting employee benefits in the Statement of Comprehensive Income were not recognised; - IFRS 13 Fair value measurement which clarifies how fair value shall be measured for the purposes of financial statements, and applies all IFRSs that require the fair value measurement or presentation of information based on the fair value (forward-looking application as from 1 January 2013). Accounting standards, amendments and interpretations not relevant or not yet applicable and not adopted in advance by the Group - Amendment to IAS 12 "Income Taxes - determination of deferred tax assets on real estate investments" (retrospective application from 1 January 2012). - Amendment to IAS 32 "Financial Instruments: presentation (retroactive application from 1 January 2014). - Amendment to IFRS 7 "Financial Instruments: additional disclosure - transfers of financial assets" (retroactive application as from 1 January 2012). - IFRS 10 Consolidated Financial Statements which replaces SIC 12 Consolidation: special purpose entities (special purpose vehicles) and parts of IAS 27 Consolidated and Separate Financial Statements (retroactive application as from 1 January 2014). - IFRS 11 Joint Arrangements which replaces IAS 31 Interests in Joint Ventures and SIC 13 Jointly Controlled Entities (retroactive application as from 1 January 2014). - IFRS 12 Disclosure of Interest in Other Entities which is a new standard on additional disclosure for all types of interest (retroactive application as from 1 January 2014). Intra-group transactions In accordance with the Consob recommendations of 20 February 1997 (DAC/ ) and 27 February 1998 (DAC/ ) we can confirm that: a) intragroup transactions and transactions with related parties which took place during the period, gave rise to trade, financial or consultancy-related relationships, and were carried out under standard market terms, in the financial interest of the individual companies involved in the transactions; b) no atypical or unusual operations were implemented as compared with normal business management; c) the interest rates and terms applied (paid and received) in financial relationships between the various companies are in line with market terms. 4. Information on business segments and geographical areas Information on Operating Segments is given on the basis of the internal reporting provided to the highest operating decision-making level. For operational purposes, the group manages and controls its business on the basis of the type of products supplied. Three operating segments were identified, corresponding to the following Business Areas: - Carraro Drive Tech (Transmission systems and components): specialised in the design, manufacture and sale of transmission systems (axles, transmissions and planetary drives) mainly for agricultural and construction equipment, and also markets a wide range of components and gears for very diverse sectors, from the automotive industry to light power tools, material handling, agricultural applications and construction equipment; - Carraro Divisione Agritalia (Vehicles): designs and manufactures special tractors (from 60 to 100 hp) for third-party brands; - Elettronica Santerno (Power electronics) designs, develops, manufactures and markets inverters (electronic power converters) mainly for the photovoltaic industry and industrial automation (HVAC, water treatment, lifting systems and large-scale transport). The item other segments brings together the Group s operations not allocated to the three segments, and comprises the central holding and management activities of the Carraro Group. The Management examines separately the results achieved by the operating segments in order to take decisions on the allocation of resources and on assessment of the results.

42 4.1 Business segments The most significant information by business segment is presented in the tables below, with comparisons for the first half of 2013 and first half of a) economic data (amounts in Euro thousands) Drive Tech Div. Agritalia Elettronica Santerno Eliminations and items not allocated Consolidated Total Revenues from sales 368,415 53,190 37,575-10, ,166 Sales to third parties 359,713 51,306 37, ,166 Sales between divisions 8,702 1, ,646 - Operating costs 349,222 51,939 38,326-5, ,841 Purchases of goods and materials 234,874 37,670 24,808-9, ,458 Services 57,138 4,624 11, ,097 Use of third-party goods and services 4, ,800 2,906 Personnel costs 59,027 6,563 6,320 4,444 76,354 Amortisation, depreciation and impairment of assets 12, ,363 1,158 15,494 Changes in inventories -16,819 1,622-6, ,882 Provisions for risks 2, ,917 Other income and expenses -2, ,856 Internal construction ,647 Operating profit/(loss) 19,193 1, ,368 15,325 Gains/(losses) on financial assets -7, ,002 Current and deferred income taxes 4, ,620 Minorities Net profit/(loss) 6,830 1,103-1,393-6, (amounts in Euro thousands) restated (1) Drive Tech Div. Agritalia Elettronica Santerno Eliminations and items not allocated Consolidated Total Revenues from sales 407,328 49,254 28,078-10, ,340 Sales to third parties 398,935 46,889 27, ,340 Sales between divisions 8,393 2, ,045 - Operating costs 392,398 48,660 32,284-7, ,731 Purchases of goods and materials 249,972 41,765 16,503-11, ,422 Services 68,732 4,722 8, ,308 Use of third-party goods and services 3, ,664 2,906 Personnel costs 56,893 5,914 6,099 4,672 73,578 Amortisation, depreciation and impairment of assets 13, ,411 1,115 16,427 Changes in inventories , ,559 Provisions for risks 2, ,186 Other income and expenses -1, ,443 Internal construction ,094 Operating profit/(loss) 14, ,206-2,709 8,609 Gains/(losses) on financial assets -7, ,926 Current and deferred income taxes 4, ,082 Minorities Net profit/(loss) 2, ,944-3,802-5,498 (1) The values have been restated following the application of IAS 19 revised, which changes, among others, the principle of the recognition of actuarial gains and losses relative to termination and post-employment benefits. For further details, see section 3.2. Accounting standards, amendments and interpretations applied as from 1 January 2012 of the "Notes

43 b) balance sheet (amounts in Euro thousands) Drive Tech Div. Agritalia Elettronica Santerno Eliminations and items not allocated Consolidated Total Non-current assets 232,501 12,991 39,515 41, ,018 Current assets 320,334 35,537 63, ,834 Shareholders equity 64,071 10,538 35,158-49,706 60,061 Non-current liabilities 59,701 1,958 1, , ,850 Current liabilities 429,063 36,032 66,463-69, , (amounts in Euro thousands) Drive Tech Div. Agritalia Elettronica Santerno Eliminations and items not allocated Consolidated Total Non-current assets 238,108 12,843 39,551 40, ,374 Current assets 304,668 29,085 41,141 19, ,269 Shareholders equity 60,835 9,441 36,484-43,644 63,116 Non-current liabilities 56,059 1, , ,680 Current liabilities 425,882 30,670 43,220-40, ,847 c) Other information Drive Tech Div. Agritalia Elettronica Santerno Eliminations and items not allocated Consolidated Total Investments (Euro/000) 9, ,060 2,442 13,137 Workforce as at , , restated (1) Drive Tech Div. Agritalia Elettronica Santerno Eliminations and items not allocated Consolidated Total Investments (Euro/000) 9, ,262 2,035 13,458 Workforce as at , ,299 (1) The values have been restated following the application of IAS 19 revised, which changes, among others, the principle of the recognition of actuarial gains and losses relative to termination and post-employment benefits. For further details, see section 3.2. Accounting standards, amendments and interpretations applied as from 1 January 2012 of the "Notes

44 4.2 Geographic areas The Carraro Group s industrial operations are located in various areas of the world: Italy, other European countries, North and South America, Asia and other non-european countries. The Group s sales, deriving from the manufacturing carried out in the above areas are achieved equally with customers in Europe, Asia and the Americas. Other information is better commented in the condensed interim financial report. a) Sales The breakdown of sales by main geographic area is shown in the following table. (amounts in Euro thousands) Geographical Area % % North America 59, , Germany 53, , South America 53, , Turkey 33, , France 31, , China 29, , United Kingdom 27, , India 25, , Switzerland 22, , Poland 10, , Other non-e.u. areas. 14, , Other E.U. areas. 33, , Total Abroad 396, , Italy 53, , Total 449, , of which: Total E.U. area 210, , Total non-e.u. area 238, , b) Assets The following table illustrates the book values of current and non-current assets according to the primary geographic areas of manufacture (amounts in Euro thousands) CURRENT ASSETS NON-CURRENT ASSETS CURRENT ASSETS NON-CURRENT ASSETS Italy 266, , , ,595 Other E.U. countries 220,059 79, ,208 79,698 North America 20,487 3,640 8,806 4,414 South America 46,530 11,050 44,722 12,075 Asia (India, China) 113,995 67, ,665 68,312 Non-E.U. countries Eliminations and items not allocated -249, , , ,808 Total 418, , , ,374

45 c) Investments The table below illustrates the value of investments in the primary geographic areas of manufacture. (amounts in Euro thousands) Italy 10,122 9,944 Other E.U. countries (Germany, Poland) 998 1,484 North America 26 - South America Asia (India, China) 3,368 2,406 Non-E.U. countries - - Eliminations and items not allocated -1, Total 13, , Assets held for sale and non-recurrent Transactions As at 30 June 2013, there were no assets held for sale or non-recurrent transactions. 6. Notes and comments Revenues and costs A) Revenues from sales (Note 1) Analysis by business segment and geographical area See the information provided in section 4 above. B) Operating costs (Note 2) OPERATING COSTS (amounts in Euro thousands) restated (1) 1) PURCHASES OF GOODS AND MATERIALS 287, ,422 2) SERVICES 74,097 81,308 3) USE OF THIRD-PARTY GOODS AND SERVICES 2,906 2,906 4) PERSONNEL COSTS 76,354 73,578 5) AMORTISATION, DEPRECIATION AND IMPAIRMENT OF ASSETS 15,494 16,427 6) CHANGES IN INVENTORIES -21,882-5,559 7) PROVISION FOR RISKS AND OTHER LIABILITIES 3,917 4,186 8) OTHER INCOME AND EXPENSES -2,856-1,443 9) INTERNAL CONSTRUCTION -1,647-2,094 Total 433, ,731 (1) The values have been restated following the application of IAS 19 revised, which changes, among others, the principle of the recognition of actuarial gains and losses relative to termination and post-employment benefits. For further details, see section 3.2. Accounting standards, amendments and interpretations applied as from 1 January 2012 of the "Notes

46 C) Net income from financial assets (note 3) GAINS/(LOSSES) ON FINANCIAL ASSETS (amounts in Euro thousands) restated (1) 10) INCOME FROM EQUITY INVESTMENTS ) OTHER FINANCIAL INCOME 979 1,151 12) FINANCIAL COSTS AND EXPENSES -9,597-10,227 13) NET GAINS/(LOSSES) ON FOREIGN EXCHANGE ) ADJUSTMENTS OF FINANCIAL ASSETS - - Total -9,002-8,926 Net financial expenses totalled million Euros (1.9% of turnover) a slight reduction compared to the million Euros (1.9% of turnover) of the first half of The trend in financial expenses benefited in the first half of 2013 from a reduced average financial debt compared to the first half of 2012 and, over the first three months of the year, from interest rates in line with the previous year. Beginning in April 2013 new interest rates apply to the loans covered by the Debt Rearrangement Agreement. The net exchange differences as at 30 June 2013 were negative at million Euros and include, as well as financial items, also the MTM (Market-to-Market) effects of the measurement at fair value of derivative instruments. Income taxes (note 4) INCOME TAXES (amounts in Euro thousands) restated (1) CURRENT TAXES 5,698 4,593 TAX CONSOLIDATION EXPENSE AND INCOME TAXES FROM PREVIOUS YEARS DEFERRED TAXES PROVISION FOR TAX RISKS RELATIVE TO DIRECT TAXES Total 5,620 5,082 Current taxes Tax on the income of Italian companies is calculated at 27.50%, for IRES (corporation tax), and at 3.90% for IRAP (regional business tax) on the respective taxable income for the period. Taxes for the other foreign companies are calculated at the rates in force in the various countries. Tax consolidation expense and income Carraro S.p.A., Carraro Drive Tech S.p.A., Elettronica Santerno S.p.A. and Energy Engineering S.r.l. adhere to the tax consolidation area of the parent company Finaid S.p.A. The charges/income deriving from the transfer of the IRES taxable base are booked under current taxes. According to the regulations of the Tax Consolidation Agreement, companies of the Carraro Group have the right to relief for use of the tax losses of companies controlled by Finaid, other than those belonging to the Carraro Group. This relief amounts to 3% of the tax losses of the other companies of the Finaid Consolidation area possibly offset with the taxable amounts of Carraro Group companies. The regulations also provide for a mechanism of priority offsetting of the positive and negative taxable amounts between Carraro Group companies with respect to offsetting with the other companies of the Finaid Consolidation. The same mechanism is provided for with reference to the non-deductible expenses as an effect of the Thin Cap Rule. The fiscal consolidation in place between Gear World S.p.A. and its subsidiaries for the period was discontinued with effect from 30 April 2013 due to the merger of Gear World S.p.A. in Drive Tech S.p.A. (1) The values have been restated following the application of IAS 19 revised, which changes, among others, the principle of the recognition of actuarial gains and losses relative to termination and post-employment benefits. For further details, see section 3.2. Accounting standards, amendments and interpretations applied as from 1 January 2012 of the "Notes

47 Deferred taxes These are set aside on the temporary differences between the carrying amount of the assets and liabilities and the corresponding tax value. As well as taxes entered in the income statement for the period, deferred tax assets for million Euros were charged directly to the deferred tax assets shareholders equity. Group earnings or losses per share (note 5) Basic earnings (losses) per share are calculated by dividing the net earnings (net losses) for the year attributable to the company s ordinary shareholders by the weighted average number of outstanding ordinary shares during the year restated (1) Earnings Euro/000 Euro/000 Earnings (Losses) for the purposes of calculation of basic earnings per share 152-5,498 Diluting effect deriving from potential ordinary shares: - - Earnings (Losses) for the purposes of calculation of diluted earnings per share 152-5, Number of shares No./000 No./000 Weighted average number of ordinary shares for calculating of basic earnings (losses) per share: 42,489 43,812 of diluted earnings (losses) per share: 42,489 43,812 Basic earnings (losses) per share (Euro): Diluted earnings (losses) per share (Euro): (1) The values have been restated following the application of IAS 19 revised, which changes, among others, the principle of the recognition of actuarial gains and losses relative to termination and post-employment benefits. For further details, see section 3.2. Accounting standards, amendments and interpretations applied as from 1 January 2012 of the "Notes

48 Property, plant and equipment (Note 6) These items present a net balance of million Euros compared with million Euros in the previous period. The breakdown is as follows: Items (amounts in Euro thousands) Land and buildings Plant and machinery Industrial equipment Other assets Invest. in prog. and deposits Historical cost 78, , ,508 19,597 7, ,269 Provisions for amortisation and impairment -20, ,884-83,038-14, ,613 Net as at , ,369 35,470 5,183 7, ,656 Movements in 2013: Increases 355 1,625 3, ,206 8,893 Decreases Capitalisation ,060 - Depreciation and amortisation ,587-4, ,866 Reclassification - 1, Impairment Translation exchange differences , ,534 Net as at ,113 96,433 34,074 4,878 8, ,365 Made up of: Historical cost 79, , ,681 19,711 8, ,478 Provisions for amortisation and impairment -21, ,559-86,607-14, ,113 As at , leased assets were registered under plant and machinery for 1.73 million Euros. Investments in land and buildings were made in particular by Carraro Argentina, Elettronica Santerno S.p.A., Carraro Technologies and Siap S.p.A. The main investments in plant and machinery were made by MiniGears S.p.A. Poggiofiorito division, O&K Gmbh and Siap S.p.A. The increases in industrial equipment relate mainly to purchases of fusion moulds and tools by Carraro Drive Tech S.p.A., MiniGears S.p.A. and Carraro India. The investments in other goods relate to the purchase of various office materials by Carraro S.p.A., Elettronica Santerno S.p.A. and O&K Gmbh. The increases in amounts relative to Investments in progress and deposits is primarily owing to investments currently under way in Carraro China, Carraro India and O&K Gmbh. The properties of the Group have mortgage loans secured against them for a total of 33.4 million Euros, of which 23.4 million Euros on the properties of Carraro S.p.A., 2.0 million Euros on the properties of Siap S.p.A. and 8 million Euros on the properties of Carraro India Pvt Ltd. Decrease, reclassification and exchange difference values are highlighted by the net value of the historical cost and the amortisation fund. Total

49 Intangible assets (Note 7) These items present a net balance of million Euros compared with million Euros in the previous period. The breakdown is as follows: Items (amounts in Euro thousands) Goodwill Development costs Royalties and patents Licences and Trademarks Invest. in prog. and deposits Other intangible assets Historical cost 63,171 15,774 1,536 24,530 9, ,775 Provisions for amortisation and impairment - -10,283-1,333-17, ,726 Net as at ,171 5, ,271 9, ,049 Movements in 2013: Increases ,897-4,244 Decreases Depreciation and amortisation , ,283 Reclassification Translation exchange differences Net as at ,171 4, ,188 13, ,010 Made up of: Historical cost 63,171 15,774 1,557 24,839 13, ,997 Provisions for amortisation and impairment - -11,092-1,379-18, ,987 The item Licences and trademarks includes the fair value of the Brand (3.30 mln Euro) and the Technology (3.50 mln Euro) recognised in 2007 on acquisition of the company Mini Gears. These intangible fixed assets with a limited useful life are amortised on a straight-line basis over the terms estimated at 10 and 7 years respectively. The other intangible fixed assets with a limited useful life are amortised on a straight-line basis over terms estimated at between 3 and 5 years. Decrease, reclassification and exchange difference values are highlighted by the net value of the historical cost and the amortisation fund. Goodwill Goodwill is allocated to the CGU (cash-generating units), identified in the three new business areas: Drivetech result of the aggregation of Drivelines and Components, Santerno, equivalent to the previous Electronics BU and Agritalia, which corresponds to the previous Vehicles BU as indicated in the following table. These CGUs are subjected to specific impairment testing at least once a year, in application of the provisions of IAS 36 as described in the explanatory notes to the consolidated financial statements as at No elements have arisen up to the current date, compared to the date of the last execution, such to deem that the hypotheses and parameters used in the impairment test shall be reviewed. The amounts of goodwill recognised are shown below (amounts in euro thousands): Total Business Unit (CGU) Changes Drivetech 41,294-41,294 Elettronica Santerno 21,877-21,877 Total 63,171-63,171

50 Investments in progress and deposits The item mainly refers to the development costs incurred by the companies Carraro S.p.A., Carraro Drive Tech S.p.A. and Elettronica Santerno S.p.A. These expenses derive from the design of new product lines developed in connection with similar projects launched by customers. Development costs generated internally are capitalised at cost. Licences and Trademarks The increases mainly refer to licences and patents taken out by Carraro S.p.A. and Carraro Drive Tech S.p.A. for the new ERP management system. Research and development costs (non-capitalisable) During the course of the first half of 2013 research and tests were carried out by some of the personnel employed in both development and production. For these operations, the Group sustained total expenditure of 8.90 million Euro (not capitalised through the lack of the requirements envisaged by IAS 38) (9.48 million Euros in the first half of 2012). Real estate investments (Note 8) These present a net balance of 0.7 million Euro and relate to civil property owned by Carraro S.p.A., Siap S.p.A. and Carraro Argentina SA. Equity investments (Note 9) Equity investments in associates As at 30 June 2013 no equity investments were held in associates. Financial assets (Note 10) (amounts in Euro thousands) Loans to third parties 3,023 3,484 LOANS AND RECEIVABLES 3,023 3,484 Available for sale Other financial assets OTHER FINANCIAL ASSETS NON-CURRENT FINANCIAL ASSETS 3,302 3,909 With third parties 2,472 2,764 LOANS AND RECEIVABLES 2,472 2,764 Fair value of derivatives 1, Other financial assets 1,609 1,252 OTHER FINANCIAL ASSETS 3,164 1,633 CURRENT FINANCIAL ASSETS 5,636 4,397 Non-current loans and receivables These are the medium-/long-term portion of the financial receivable from the company MARIV S.r.l to which the company STM S.r.l was sold, amounting to 1.03 million Euros. The financial receivable will mature on 30 December The item also includes 2 million Euros, relative to the medium-/long-term portion of the financial receivable from the company FON SKB sp. Zo.o. arising from the sale of the company branch of the Polish subsidiary Fabryka Osi Napedowych S.A, on 8 September 2011, which matures on 1 August Other non-current financial assets The item also includes the commissions for 0.15 million Euros, paid to Carraro International for the re-negotiation of the financing falling within the Framework Agreement with the main financing banks, described in note 16. Current loans and receivables They mainly refer to the short-term portion of the financial receivable from MARIV S.r.l., equal to 1.03 million Euros and the remaining financial receivable from the company STM S.r.l. (equal to 0.39 million Euros), which no longer belongs to the Carraro Group. The item also includes 1.02 million Euros for the current portion of the financial receivable from the Company, FON SKB sp. Zo.o.

51 Other current financial assets They include the cash flow hedge derivatives for 1.56 million Euros. The amount refers to the fair value calculated as at on current instruments on currencies. As described in detail in the section on derivative financial instruments (Paragraph 9), gains or losses deriving from hedging instruments are recognised in the consolidated comprehensive income statement and accumulated in a specific shareholders equity reserve for the efficient part, while the remaining (inefficient) portion is recognised in the consolidated income statement. Deferred tax assets and liabilities (Note 11) The carrying amount of net deferred tax assets recognised as at 30 June 2013 was 25.6 million Euros (26.0 million Euros as at 31 December 2012). Deferred tax assets include the benefits associated with retained tax losses, insofar as it is likely that there will be adequate future taxable profits against which these losses can be used in a reasonably short period. Tax losses for which it was decided not to recognise deferred tax assets as at 30 June 2013 amounted to 95.3 million Euros (89.8 million Euros as at ) with a tax effect of 26.5 million Euros (24.9 million Euros as at ). It was also not considered prudent to recognise deferred tax assets with reference to temporarily non-deductible financial expenses for a taxable income of 13.8 million Euros (14 million Euros as at ), with a tax effect of 3.8 million Euros (3.9 million Euros as at ). Trade receivables and other receivables (Note 12) (amounts in Euro thousands) NON CURRENT TRADE RECEIVABLES - - With third parties 3,478 1,624 OTHER NON-CURRENT RECEIVABLES 3,478 1,624 NON-CURRENT TRADE RECEIVABLES AND OTHER RECEIVABLES 3,478 1,624 With related parties With third parties 128,849 87,881 CURRENT TRADE RECEIVABLES 129,013 88,051 With related parties 1,762 1,142 With third parties 44,778 45,068 OTHER CURRENT RECEIVABLES 46,540 46,210 CURRENT TRADE RECEIVABLES AND OTHER RECEIVABLES 175, ,261 Inventory (Note 13) Items (amounts in Euro thousands) Raw materials 100,726 91,115 Work in progress and semifinished products 40,269 30,576 Finished products 50,465 47,805 Goods in transit Total inventories 192, ,939 Provisions for impairment of inventories -25,296-23,185 Total inventories 166, ,754

52 Cash and cash equivalents (Note 14) (amounts in Euro thousands) CASH BANK CURRENT ACCOUNTS AND DEPOSITS 70, ,119 OTHER LIQUID FUNDS OR EQUIVALENT ASSETS TOTAL 70, ,857 Shareholders equity (Note 15) (amounts in Euro thousands) ) Share Capital 23,915 23,915 2) Other Reserves 41,853 54,725 3) Profits/(Losses) brought forward - - 4) Other IAS/IFRS reserves -1, ) Provision for discounting employee benefits ) Foreign currency translation reserve -11,210-8,988 7) Result for the period pertaining to the group ,299 GROUP SHAREHOLDERS EQUITY 52,945 53,306 8) Minority interests 7,116 9,810 The Shareholders Meeting of Carraro S.p.A. held on 19 April 2013 approved a treasury share purchase and disposal plan involving no more than 10% of the share capital, for a term of 18 months, which provides for: a purchase price per ordinary share no less than 30% lower, and no more than 20% higher than the reference price for the share recorded in the stock exchange session on the day prior to each individual transaction, and a sale price per ordinary share no less than 20% lower, and no more than 20% higher than the reference price for the share recorded in the stock exchange session on the day prior to each individual transaction. The same Meeting resolved to cover the loss of Carraro S.p.A. for 2012 amounting to 4,134,183 Euros using the Extraordinary Reserve. The company has issued a single category of ordinary shares which do not give the right to a fixed dividend. No other financial instruments which assign equity and investment rights have been issued. As at 30 June 2013, 2,286,537 were fully acquired for a total investment of million Euros, of which 50,164 in the first half of 2013 for a value equal to 0.1 million Euros. Other reserves The item Other reserves of million Euros, includes the reserves of Carraro S.p.A. relating to profits not distributed or carried forward and others as follows: million Euro relating to the Carraro S.p.A. share premium reserve; million Euros relating to the Carraro S.p.A. legal reserve; million Euros relating to Carraro S.p.A. extraordinary reserve and profits carried forward; million Euros relative to the first-time adoption of IAS/IFRS; - less million Euros for deduction of the reserve corresponding to own share purchase of Carraro S.p.A.; - less million generated by the reduction of the shareholders equities of consolidated companies with respect to the corresponding carrying amounts of the equity investments and consolidation adjustments. Other IAS/IFRS reserves It contains the values derived from the application of the criterion foreseen for the cash flow hedges for negative million Euros.

53 Foreign currency translation reserve This reserve, of million Euros is used to record the exchange differences deriving from the conversion into Euros of the financial statements of foreign subsidiaries. The change to the reserve (negative for million Euros as at and negative for million Euros as at ) particularly derives from the great changes recorded during the period of the Argentine Peso, the Chinese Renminbi and the Indian Rupee. (amounts in Euro thousands) Movements of the period restated (1) Exchange reserve of the parent company s shareholders -8,988-2,222-11,210 Exchange reserve of minority interests Effect of the exchange reserve on the consolidated comprehensive income statement Minority interest For the analysis of movements in Minority interest see the paragraph 2.2. Financial liabilities (Note 16) The classification of the financial liabilities as at and is indicated. -8,945-2,928-11,873 (amounts in Euro thousands) Medium/long-term loans 197, ,809 Other non-current financial liabilities 3 12 NON-CURRENT FINANCIAL LIABILITIES 197, ,821 Medium/long-term loans short-term portion 17,098 59,731 Short-term loans 119,536 92,030 LOANS 136, ,761 Fair value of interest rate derivatives Fair value derivatives on exchange rates 1, Other current financial liabilities 2, OTHER FINANCIAL LIABILITIES 4,128 1,743 CURRENT FINANCIAL LIABILITIES 140, ,504 (1) The values have been restated following the application of IAS 19 revised, which changes, among others, the principle of the recognition of actuarial gains and losses relative to termination and post-employment benefits. For further details, see section 3.2. Accounting standards, amendments and interpretations applied as from 1 January 2012 of the "Notes

54 A breakdown of medium- and long-term financial debts (shown at par value) is presented below, inclusive of the portion expiring before the end of the year. COMPANY (amounts in Euro thousands) LENDER Short-term portion as at Md/ lg-term portion as at EXPIRY RATE RATE TYPE CURRENCY Carraro China Drive System Intesa SanPaolo 1,940 - Jun % variable CNY Carraro India Exim 1,128 3,977 Jun % fixed INR Carraro India Idbi Bank 358 1,165 Sep % variable INR Carraro India Axis 386 1,061 Nov % variable INR Carraro Drive Tech do Brasil Bradesco Financ 9 7 Mar % variable BRL Carraro International BPV Finance - 17,333 Jun % variable EURO Carraro International Banca Antonveneta - 7,500 Jun % variable EURO Carraro International MPS - 6,454 Mar % variable EURO Carraro International Pool of banks - 81,820 May % variable EURO Carraro International Pool of banks (revolving) 10,000 40,000 May % variable EURO Carraro S.p.A. Banca Antonveneta - 15,575 Dec % variable EURO O&K Unicredit Leasing Nov-Dec % variable EURO Eletronica Santerno Industria e Comercio Ltda Santander Leasing 6 - Sept - Nov % -1.46% variable BRL Eletronica Santerno Industria e Comercio Ltda Banco Itauleasing 14 1 Jul % variable BRL SIAP Friulia 985 2,059 Jun % variable EURO MG MINI GEARS SPA Banca Pop.Verona - 16,539 Mar % variable EURO MG MINI GEARS SPA Interbanca Dec % variable EURO MG MINI GEARS SPA Albaleasing May % variable EURO Turbo Gears Siemens Financial Oct-16/Nov 17 13% % variable INR Turbo Gears MCC 736 1,839 Dec % variable EURO Turbo Gears MCC - 5,000 Jul % variable EURO TOTAL 16, ,080 Medium- and long-term financial debts are indicated below according to the year of expiry. Year of expiry (amounts in Euro thousands) 2013 (2nd half) 3, , , , , , , ,369 amortised cost effect and exchange delta -3,852 Total financial debts 214,720 Other current financial liabilities They include cash flow hedge derivatives for a total of million Euros, of which million refers to fair value calculated as at on current instruments on currencies and Euros refers to fair value calculated as at on interest rate derivatives. As described in detail in the section on derivative financial instruments (Paragraph 9), profits or losses deriving from hedging instruments are recognised in the statement of comprehensive income and accumulated in a specific shareholders equity reserve for the efficient portion, while the remaining (inefficient) portion is recognised in the income statement.

55 The net financial position is broken down below. Net financial position (amounts in Euro thousands) Non-current loans payable 197, ,809 Current loans payable 136, ,761 Other non-current financial liabilities 3 12 Other current financial liabilities 2, Financial liabilities: 336, ,374 Non-current loans and receivables -3,023-3,484 Current loans and receivables -2,472-2,764 Other non-current financial assets Other current financial assets -1,609-1,252 Financial assets: -7,272-7,814 Cash Bank current accounts and deposits -70, ,666 Cash and cash equivalents: -70, ,857 Net financial position 258, ,703 of which payables / (receivables): - non-current 194, ,023 - current 63,756 39,680 The Carraro Group has available short term banking credit facilities for a total of million Euros, million Euros used. These facilities may be used for current account overdrafts and short-term loans. Medium- and long-term bank credit facilities amount to a total of million Euros, where million Euros are used (medium- and long-term portion and portion due within the year). On 14 May 2013, the Carraro Group signed a Debt Rearrangement Agreement with leading banks; the previous Framework Agreement expired as at 31 December The new Agreement is for the rearrangement of medium/longterm debt and renews the credit lines for short-term debt for 24 months, with the redefinition of covenants. On the basis of the Debt Rearrangement Agreement signed with banks, the first verification of compliance with the covenants will be carried out based on the financial statements for the period ended December 31, Fair Value The fair value of medium- and long-term financial liabilities, taking account of the fact that these are almost exclusively for variable-rate funding and that the terms being renegotiated with the banking counterparties are in line with the average levels for the market and the segment even considering the residual volatility of the markets and the relative uncertainty in identifying reference conditions as measured is not significantly different overall from the carrying amounts. Management of capital The Carraro Group s main management objective is to ensure that a sound credit rating is maintained, together with adequate levels of the capital indicators so as to support its activities and maximise value for the shareholders. The Carraro Group manages and modifies the capital structure in line with changes in the economic conditions. To maintain or change the capital structure, the Group can adjust the dividends paid to the shareholders, redeem the capital or issue new shares.

56 Trade payables and other payables (Note 17) (amounts in Euro thousands) NON-CURRENT TRADE PAYABLES - - With third parties OTHER NON-CURRENT PAYABLES TRADE PAYABLES AND OTHER NON-CURRENT PAYABLES With related parties 2,278 4,663 With third parties 260, ,790 CURRENT TRADE PAYABLES 262, ,453 With related parties With third parties 36,665 31,792 OTHER CURRENT PAYABLES 36,965 31,792 TRADE PAYABLES AND OTHER CURRENT PAYABLES 299, ,245 Current taxes payables (Note 18) (amounts in Euro thousands) Current taxes payables 5,079 8,159 Employee severance indemnities and retirement benefits (note 19) PROVISION FOR SEVERANCE INDEMNITY AND RETIREMENT BENEFITS (amounts in Euro thousands) Opening severance indemnities in accordance with IAS 19 13,966 12,381 Utilisation of employee severance indemnities Employee severance indemnities transferred to other companies Employee severance indemnities transferred from other companies Current Service Cost 0 10 Interest Cost Actuarial Gains/Losses 194 1,761 Closing severance indemnities in accordance with IAS 19 13,986 13,966 The severance indemnity, calculated according to current Italian laws, is treated for accounting purposes as a definedbenefit fund and as such is recalculated at the end of each accounting period according to a statistical-actuarial criterion which also takes account of the effects of financial discounting. The actuarial valuation of this obligation is carried out according to the actuarial criterion of the projected unit credit method with the support of the data issued by ISTAT, the INPS and the ANIA. The parameters used are as follows: 1) annual discount rate: 3.0%, 2) personnel rotation rate 5%, 3) annual inflation index 2%, 4) advances rate 2%, 5) remuneration increase rate 3%. As from the 2012 Financial Statements, the accounting treatment of employee benefits recognised in the financial statements complies with IAS 19 Revised for defined benefit plans; for further details, see section 3.2. Termination benefits are benefits to employees regulated by the laws in force in Italy and recognised in the financial statements of Italian companies. Sensitivity analysis IAS 19 revised The table below indicates the values of the Employee benefits provision as at calculated based on changes in actuarial assumptions reasonably possible at that date: (amounts in Euro thousands) turnover freq. variation in assumptions inflation rate discount rate +1% +0.25% -0.25% +0.25% -0.25% Provision for employee benefits as at ,018 14,183 13,800 13,710 14,279

57 Pension/retirement funds Pension and similar funds for 5.87 million Euros (5.71 million Euros as at ) mainly relate to the liabilities recognised in the financial statements of the company O&K Antriebstechnik; the actuarial recalculation, except for the structural differences of the relevant plans, follows the same criterion described for the aforementioned Italian termination benefit provisions. As from the 2012 Financial Statements, the accounting treatment of employee benefits recognised in the financial statements complies with IAS 19 Revised for defined benefit plans; Sensitivity analysis IAS 19 revised The table below indicates the values of the O&K Pension Fund as at calculated based on changes in actuarial assumptions reasonably possible at that date: (amounts in Euro thousands) inflation rate +0.25%; discount rate +0.2% Pension fund ,325 Number of employees The number of employees refers only to the fully consolidated companies and is divided into categories: Employees Executives Clerical staff 1,016 1,044 Factory workers 2,952 2,865 Temporary workers Total 4,153 4,010 Provision for risks and liabilities (Note 20) The item can be broken down as follows: (amounts in Euro thousands) Non-current portion Provisions Increases 1st half 2013 Decreases Reclassification Exchange-rate 1st half st half 2013 adjustments Provisions ) WARRANTY 1, ,723 2) LEGAL CLAIMS ) RESTRUCTURING AND RECONV ) OTHERS TOTAL 2, ,600 Current portion 1) WARRANTY 9,040 3,620-2, ,831 2) LEGAL CLAIMS 1, ,201 3) RESTRUCTURING AND RECONV. 5, , ,601 4) OTHERS 2,276 2,202-2, ,847 TOTAL 18,939 5,877-8, ,480 In the period 0.2 million Euros were allocated for future liabilities and charges in Elettronica Santerno S.p.A and Carraro Divisione Agritalia. From the product warranty reserve, 2.7 million Euros was used for customer claims accepted and the reserve was increased by 3.6 million Euros on the basis of the expected warranty costs which will be incurred in relation to the sales made. The use of the costs of legal claims provision relates to personnel disputes. The restructuring provision allocated as at 31 December 2012, concerning the reorganisation and restructuring of the Carraro Group, has been used for an amount of 2.2 million Euros. The item Others includes amounts recognised in the individual companies for future expenses and liabilities. It is pointed out that the item Others, amounting to 1.8 million Euros, is constituted by the MBO (Management By Objectives) provision for 1.57 million Euros.

58 7. Commitments and risks No significant events occurred as worthy of note. 8. Transactions with related parties (Note 21) The Carraro Group is controlled directly by Finaid S.p.A., which as at held % of the shares outstanding. Carraro S.p.A., Carraro Drive Tech S.p.A., Elettronica Santerno S.p.A. and Energy Engineering S.r.l. adhere to the tax consolidation area of the parent company Finaid S.p.A. The charges/income deriving from the transfer of the IRES taxable base are booked under current taxes. According to the regulations of the Tax Consolidation Agreement, companies of the Carraro Group have the right to relief for use of the tax losses of companies controlled by Finaid, other than those belonging to the Carraro Group. This relief amounts to 3% of the tax losses of the other companies of the Finaid Consolidation area possibly offset with the taxable amounts of Carraro Group companies. The regulations also provide for a mechanism of priority offsetting of the positive and negative taxable amounts between Carraro Group companies with respect to offsetting with the other companies of the Finaid Consolidation. The same mechanism is provided for with reference to the non-deductible expenses as an effect of the Thin Cap Rule. The transactions between Carraro S.p.A. and its subsidiaries which are affiliated entities of Carraro S.p.A., were eliminated in the consolidated financial statements and are not pointed out in these notes. The details of the transactions between Carraro Group and other affiliated companies according to principle IAS 24 and Consob requirements, are indicated below. (amounts in euro thousands) Other related parties Financial and equity transactions Trade receivables and other receivables Trade payables and other payables Sales of services FINAID S.p.A. 1,765 2,562 3 Economic transactions Other Revenue Purchases of goods and materials Purchases of services Use of thirdparty goods and services Maus S.p.A Maus U.S.A The positive items relative to Finaid S.p.A. refer mainly to receivables deriving from tax consolidation.

59 9. FINANCIAL INSTRUMENTS 9.1 Derivative financial instruments on currencies The following tables indicate all the key information relating to the portfolio of derivative financial instruments on currencies outstanding as at These are instruments designated to cover: - foreign currency sales budgets; - cash flows of medium- and long-term loans; - imbalances of current receivables and payables in foreign currencies. a) Notional values CONTRACT (amounts in Euro thousands) Swaps (DCS) (1) Swap (DCS) (2) Total notional values Carraro SpA - 4,358 4,358 Carraro Drive Tech 443 4,817 5,260 Carraro Argentina - -6,650-6,650 Carraro India 30,320-2,000 28,320 Carraro International - 4,205 4,205 Elettronica Santerno 8,242-2,581 5,661 Turbo Gears 2,820 7,396 10,216 O&K -1, ,537 Mini Gears SpA SIAP 1,686-1,686 MG Suzhou 6,341-6,341 Carraro China 10,529-10,529 GROUP TOTAL ,838 9,545 69,383 GROUP TOTAL ,185-5,429 52,756 b) Reference currencies and expiry dates of contracts CONTRACT Swaps (DCS) (1) Swap (DCS) (2) Currencies Expiry dates Currencies Expiry dates Carraro SpA - - EUR/USD Jul-Sep 13 Carraro Drive Tech EUR/USD Jul-Oct 13 EUR/USD Jul-Sep 13 Carraro Argentina - - ARS/EUR Jul - Aug 13 Carraro India INR/EUR Jul 13 - Feb 14 INR/EUR Nov-13 Carraro International - - EUR/USD Jul-13 Elettronica Santerno EUR/USD Jul 13 - Mar 14 EUR/USD BRL/EUR Jul-Aug 13 Sep 13 Turbo Gears INR/EUR Jul 13 - Jan 14 INR/EUR Nov-13 O&K EUR/USD Jul 13 - Jan Mini Gears SpA EUR/USD Jul 13 - Feb SIAP EUR/USD Jul 13 - Mar MG Suzhou Carraro China CNY/EUR CNY/USD CNY/EUR CNY/USD Jul 13- Feb 14 Jul 13- Feb Jul 13- Feb 14 Jul-Dec

60 c) Fair value (amounts in Euro thousands) Swaps (DCS) (1) Swap (DCS) (2) Total Carraro SpA Carraro Drive Tech Carraro Argentina Carraro India -1, ,358 Carraro International Elettronica Santerno Turbo Gears O&K Mini Gears SpA 4-4 SIAP MG Suzhou Carraro China GROUP TOTAL , GROUP TOTAL (1) instruments hedging foreign currency sales budget (2) instruments hedging imbalances of current receivables and payables in foreign currencies d) Details of fair values (amounts in Euro thousands) Positive fair value Negative fair value Fair Value positive Fair Value negative CASH FLOW HEDGE Exchange rate risk - Domestic Currency Swap 1,555-1, e) Summary of fair values recognised before tax effect according to their accounting treatment (amounts in Euro thousands) FV recognised in inc stat FV recognised in net equity Total Carraro SpA Carraro Drive Tech Carraro Argentina Carraro India 335-1,693-1,359 Carraro International 1-1 Elettronica Santerno Turbo Gears O&K Mini Gears SpA SIAP MG Suzhou Carraro China GROUP TOTAL ,204-1, GROUP TOTAL

61 In relation to the positioning in the hierarchy of fair values pursuant to IFRS 7 par. 27 the financial instruments described are classifiable as level 2; there were no transfers of level during the period. The fair values as at 30 June 2013 of financial instruments on exchange rates were calculated using the forward exchange rate method. The counterparties with which the contracts are stipulated are leading national and international banking institutions. The financial instruments on currencies are used, on a basis consistent with the financial risk management policy adopted by the group, to hedge the risks deriving from exchange rate fluctuations and concern sales volumes compared with the budget exchange rate and the collections and payment of short and medium-term receivables and payables with respect to the historical value. For accounting purposes in relation to contracts hedging sales budgets in foreign currencies effective at the reporting date, it should be noted that for the transactions executed, especially Domestic Currency Swaps, and in accordance with all the conditions provided by the IAS/IFRS standards, hedge accounting was applied with reference to the type of cash flow hedge. Consequently, the corresponding changes in fair values are reflected in a shareholders equity reserve, net of the tax effect. 9.2 Derivative financial instruments on interest rates a) Notional values and fair value The table shows the details of the notional and fair values and other information regarding the various types of derivative contracts on interest rates in existence as at ; on said date, open agreements concern Carraro International S.A. CONTRACT (amounts in Euro thousands) CURRENCY EXPIRY NOTIONAL NOTIONAL FAIR VALUE FAIR VALUE Interest Rate Swap EUR , Interest Rate Swap EUR ,500 7, Total derivatives from cash flow hedge 7,500 8, In relation to the positioning in the hierarchy of fair values pursuant to IFRS 7 par. 27 the financial instruments described are classifiable as level 2; there were no transfers of level during the period. For determination of the fair value of Interest Rate Swaps the discounted cash flow method was applied. Below is a summary table of the assets and liabilities valued at fair value as at 30 June 2013, as required by IFRS 13, described in paragraph 3.2: (amounts in Euro thousands) Level Level Assets Foreign exchange derivative assets 1, Total Assets 1, Liabilities Foreign exchange derivative liabilities 1, Interest rate derivative liabilities Total Liabilities 2,

62 10. Events subsequent to the reporting date. There were no significant events such as to have any effect on the financial statements and the related disclosures. The Chairman Enrico Carraro

63 Certification of the condensed interim financial statements pursuant to article 154-bis, subsection 5 of Legislative Decree 58/1998 (Consolidated Finance Act) and article 81-ter of Consob Regulation no of 14 May 1999 as amended. 1. The undersigned Alexander Bossard, Chief Executive Officer, and Enrico Gomiero, Director Responsible for producing the company s accounting documents of Carraro S.p.A., taking into account also the provisions of Art bis, paragraphs 3 and 4, of Legislative Decree 58 of 24 February 1998, certify: the adequacy in relation to the characteristics of the enterprise; the effective application of the administrative and accounting procedures for preparation of the consolidated condensed interim financial statements during the first half of 2013; 2. In this regard no significant aspects emerged which require disclosure. 3. We can also certify that: 3.1 the condensed interim financial statements: a) were prepared in conformity with the applicable international accounting standards endorsed by the European Community under the terms of Regulation (EC) N 1606/2002 of the European Parliament and Council, of July 19, 2002; b) correspond to the figures in the accounting documents and books; c) give a true and fair view of the economic, financial and equity position of the Group and of all the companies included in the consolidation; 3.2 The consolidated interim financial report includes a reliable analysis of the references to important events that occurred in the first six months of the year and their impact on the condensed interim financial statements, together with a description of the main risks and uncertainties for the remaining six months of the year. The consolidated interim financial report also includes a reliable analysis of significant operations with related parties. Date: 1 August 2013 /signature/ Alexander Bossard /signature/ Enrico Gomiero

64 REPORT ON THE REVIEW OF THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS To the Shareholders of Carraro SpA 1 We have reviewed the condensed consolidated interim financial statements of Carraro SpA and its subsidiaries ( Carraro Group ) as of 30 June 2013 and for the six months period then ended, which comprise statement of financial position, statement of income, statement of comprehensive income, statement of changes in shareholders equity, statement of cash flows and related explanatory and supplementary notes. The Directors of Carraro SpA are responsible for the preparation of these condensed consolidated interim financial statements in accordance with the International Accounting Standard ( IAS 34 ) applicable to interim financial reporting, as adopted by the European Union. Our responsibility is to issue this report based on our review. 2 Our work was conducted in accordance with the criteria for a review recommended by the National Commission for Companies and the Stock Exchange (Consob) with Resolution n of 31 July The review mainly consisted of making inquiries of company s personnel about the information reported in the condensed consolidated interim financial statements and about the consistency of the accounting principles utilised therein as well as the application of analytical review procedures on the data contained in the above mentioned condensed consolidated interim financial statements. The review excluded certain auditing procedures such as compliance testing and verification and validation tests of the assets and liabilities and was therefore substantially less in scope than an audit performed in accordance with generally accepted auditing standards. Accordingly, unlike an audit on the annual consolidated financial statements, we do not express a professional audit opinion on the condensed consolidated interim financial statements. The condensed consolidated interim financial statements present, for comparative proposes, the data of the consolidated financial statements of the prior year and the condensed consolidated interim financial statements of the prior year period. Regarding the data of the consolidated financial statements of the prior year, reference should be made to our report dated 29 March As disclosed in the explanatory and supplementary notes, with the adoption of the international accounting standard 19 Revised, the Directors of the Company have restated some comparative information of the prior year period compared to that previously presented which were reviewed by us and on which we issued our report dated 9 August We have examined the restatement methods of the comparative information and the related disclosure in the explanatory notes for the purpose of our review of the condensed consolidated financial statements as of 30 June PricewaterhouseCoopers SpA Sede legale e amministrativa: Milano Via Monte Rosa 91 Tel Fax Cap. Soc. Euro ,00 i.v., C.F. e P.IVA e Reg. Imp. Milano Iscritta al n del Registro dei Revisori Legali - Altri Uffici: Ancona Via Sandro Totti 1 Tel Bari Via Don Luigi Guanella 17 Tel Bologna Zola Predosa Via Tevere 18 Tel Brescia Via Borgo Pietro Wuhrer 23 Tel Catania Corso Italia 302 Tel Firenze Viale Gramsci 15 Tel Genova Piazza Dante 7 Tel Napoli Piazza dei Martiri 58 Tel Padova Via Vicenza 4 Tel Palermo Via Marchese Ugo 60 Tel Parma Viale Tanara 20/A Tel Roma Largo Fochetti 29 Tel Torino Corso Palestro 10 Tel Trento Via Grazioli 73 Tel Treviso Viale Felissent 90 Tel Trieste Via Cesare Battisti 18 Tel Udine Via Poscolle 43 Tel Verona Via Francia 21/C Tel

65 3 Based on our review, nothing has come to our attention that causes us to believe that the condensed consolidated interim financial statements of Carraro Group as of 30 June 2013 and for the six months period than ended have not been prepared, in all material respects, in accordance with the International Accounting Standard ( IAS 34 ) applicable to interim financial reporting, as adopted by the European Union. Padua, 8 August 2013 PricewaterhouseCoopers SpA Signed by Massimo Dal Lago (Partner) This report has been translated into the English language from the original, which was issued in Italian, solely for the convenience of international readers. 2 of 2